09:51 HUANENG POWER<00902> - Announcement (1) The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. HUANENG POWER INTERNATIONAL, INC. (a Sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 902) CONTINUING CONNECTED TRANSACTION On 21st March 2005, the Company entered into the Transportation Service Agreement with Time Shipping, pursuant to which the Company will purchase transportation service from Time Shipping in 2005 whereby the estimated aggregate service fee payable by the Company to Time Shipping during the year ending 31st December 2005 will not exceed RMB611 million. The transportation service fee was determined on arm's length terms. Huaneng Group holds 50% interests in Time Shipping and 51.98% interest in HIPDC, the controlling shareholder of the Company. Therefore, the transactions as contemplated by the Transportation Service Agreement constitute continuing connected transactions to the Company under Rule 14A.34 of the Hong Kong Listing Rules. Since the relevant percentage ratios of such transactions calculated in accordance with the Hong Kong Listing Rules are all less than 2.5%, such transactions are only subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Hong Kong Listing Rules and are exempted from the independent shareholders' approval requirements. The Company will also comply with the requirements under Rules 14A.37 to 14A.41 of the Hong Kong Listing Rules in respect of annual review of continuing connected transactions. Background of the Company The Company and its subsidiaries develop, construct, operate and manage large-scale coal-fired power plants throughout China. The Company is one of the largest independent power producers in China and owns a total generation capacity of 21,418 MW on an equity basis, which is calculated by reference to the equity interest of the Company in its power plants. Transportation Service Agreement Time Shipping is a limited company incorporated in the PRC. Its principal scope of business includes provision of goods transportation services along China's coastal area and the lower and middle stream of Yangtze River. The relationship between the Company and Time Shipping is as follows: Huaneng Group is an indirect controlling shareholder of the Company, holding an approximately 51.98% interests in HIPDC. Currently, HIPDC holds approximately 43.12% of the total issued share capital of the Company. As Time Shipping is 50% held by Huaneng Group, the transactions contemplated by the Transportation Service Agreement constitute continuing connected transactions to the Company under Rule 14A.34 of the Hong Kong Listing Rules. The Transportation Service Agreement was entered into by the Company and Time Shipping on 21st March 2005. According to the Transportation Service Agreement, Time Shipping will provide maritime transportation services for carriage of coal for the Company's power plants during the year ending 31st December 2005. The service fee is calculated by reference to the carriage volume and was negotiated at arm's length terms. The estimated aggregate service fee for the year ending 31st December 2005 shall not exceed RMB611 million (`Cap'). The estimation is based on the existing scale and operations of the power plants of the Company, as well as anticipated development and growth of the Company, which the Company deems reasonable. Time Shipping operates a sizeable fleet specializing in the provision of domestic maritime transportation services in China. Given the reliability and high quality of Time Shipping's management and services, the Directors (including independent non-executive Directors) are of the opinion that the Transportation Services Agreement are entered into: (i) in the ordinary and usual course of businesses of the Company; (ii) on normal commercial terms (on arm's length basis or on terms no less favorable to the Company than terms available from independent third parties); and (iii) on terms that are fair and reasonable and in the interests of the Company and its shareholders as a whole. As the percentage ratios of these transactions calculated in accordance with the Hong Kong Listing Rules are all less than 2.5%, the transactions contemplated by the Transportation Service Agreement are only subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Hong Kong Listing Rules and are exempted from independent shareholders' approval requirement. The