09:30     SHANDONG POWER<01071> - Announcement (6)                            

    The No.1 Construction Engineering Company was awarded the work as         
    contemplated under the Zhangqiu No.1 Construction Agreements after an     
    open tender process. The terms of the Zhangqiu No.1 Construction          
    Agreements were negotiated on an arm's length basis and on normal         
    commercial terms in the ordinary and usual course of business of the      
    Group. The construction is scheduled to be completed by December,         
    2002.                                                                     
                                                                              
    The Zhangqiu No.2 Construction Agreement                                  
                                                                              
    Zhangqiu entered into the Zhangqiu No.2 Construction Agreement with       
    the No.2 Construction Engineering Company pursuant to which Zhangqiu      
    has agreed to engage the No.2 Construction Engineering Company to         
    provide certain construction and installation services involved in the    
    construction of the two 135MW fuel generating units in Zhangqiu,          
    Shandong Province, the PRC to be constructed by Zhangqiu. The             
    principal terms of the Zhangqiu No.2 Construction Agreements are set      
    out as follows:                                                           
                                                                              
    Date    :       9th July, 2002                                            
                                                                              
    Parties :       Zhangqiu; and                                             
                                                                              
                    the No.2 Construction Engineering Company, a wholly-owned 
    subsidiary of SEPCO                                                       
                                                                              
    Consideration   :       an aggregate of approximately RMB10,250,000       
    (approximately HK$9,670,000), which will be funded out of the Group's     
    internal resources.                                                       
                                                                              
    Payment terms   :       under the Zhangqiu No.2 Construction Agreement,   
    the consideration shall be payable in the following manner:               
                                                                              
            (a)     10% of the consideration shall be payable as an advance   
    payment following the signing of the Zhangqiu No.2 Construction Agreement;
                                                                              
            (b)     a progress payment, being a proportional sum of the       
    consideration determined based on the work-in-progress carried out each   
    month, shall be payable monthly; and                                      
                                                                              
            (c)     10% of the consideration shall be retained by Zhangqiu as 
    retention funds which shall be payable following the expiry of an one-    
    year period after completion of the work as contemplated under the        
    agreement and the issuance of a warranty certificate by Zhangqiu.         
                                                                              
    The No.2 Construction Engineering Company was awarded the work as         
    contemplated under the Zhangqiu No.2 Construction Agreements after an     
    open tender process. The terms of the Zhangqiu No.2 Construction          
    Agreement were negotiated on an arm's length basis and on normal          
    commercial terms in the ordinary and usual course of business of the      
    Group.                                                                    
                                                                              
    Directors' opinion                                                        
                                                                              
    The Directors, including the independent non-executive Directors,         
    consider that the terms of each of the Zhangqiu Exploration and Design    
    Agreement, the Zhangqiu No.1 Construction Agreements and the Zhangqiu     
    No.2 Construction Agreement are fair and reasonable so far as the         
    Company and its shareholders are concerned, and that the entering into    
    of these agreements and the transactions thereunder are in the            
    interests of the Company and in the ordinary and usual course of          
    business of the Group.                                                    
                                                                              
    Connected party relationship                                              
                                                                              
    As SEPCO is a connected person of the Company and each of the No.1        
    Construction Engineering Company, the No.2 Construction Engineering       
    Company and the Consultancy Council is a wholly-owned subsidiary of       
    SEPCO, each of these entities is considered a connected person of the     
    Company under the Listing Rules. Accordingly, the entering into of        
    each of the Zhangqiu No.1 Construction Agreements and the Zhangqiu        
    No.2 Construction Agreement and the transactions contemplated under       
    the Zhangqiu Exploration and Design Agreement constitute connected        
    transactions of the Company within paragraph 14.23(1) of the Listing      
    Rules.                                                                    
                                                                              
    As the aggregate consideration to be paid by Zhangqiu under the           
    Zhangqiu No.1 Construction Agreements, the Zhangqiu No.2 Construction     
    Agreement and the Zhangqiu Exploration and Design Agreement represents    
    an amount less than 3% of the book value of the relevant net tangible     
    assets of the Group and, therefore, falls within the de minimis           
    provision under paragraph 14.25(1) of the Listing Rules, the entering     
    into by Zhangqiu of these agreements and the transactions thereunder      
    are required to be disclosed by way of a press announcement but no        
    approval from the shareholders of the Company is required. Details of     
    the these agreements will be included in the Company's next annual        
    report in accordance with paragraph 14.25(1) of the Listing Rules.