China Power Investment Corporation¡V 67% interest

Company Subsidiaries:

• Pingdingshan Yaomeng Power Generating Company Limited 100% Generation and sale of electricity
• Anhui Huainan Pingwei Electric Power Generating Company Limited 100% China Generation and sale of electricity
• Pingdingshan Yaomeng No.2 Power Generating Company Limited 100% Development of power plants
• Huainan Pingwei No.2 Electric Power Generating Company Limited 100% Development of power plants

The Group is the flagship company of CPI Group, one of the leading independent power producers in China. The principal business is to develop, construct, own, manage and operate large power plants in China. The Group believes significant experience and capability in developing, constructing, managing and operating power plants will enable them to take advantage of the opportunities presented by China's power market.

As CPI Group's flagship company, the Group is the only company within CPI Group with the mandate to develop, construct, manage and operate power plants nationwide within the PRC. Among China¡¦s five national power generating groups, the Group will be the only listed vehicle incorporated outside mainland China immediately following the completion of the Global Offering.

The Directors believe that the Group has the following competitive advantages:

• benefit from the affiliation with CPI Group and CPI Holding and expect to enjoy a high level of flexibility as a listed subsidiary incorporated outside of Mainland China.
• have, and will have, control of and at least 50% of the ownership interest in the operational and planned power plants.
• the power plants are advantageously located in more affluent regions with high GDP growth rates or near coalmines.
• enjoy a high level of operational efficiency.
• have a rigorous cost control program.
• have a highly professional management team that has significant experience in developing, constructing, managing, operating and acquiring power plants in China. Most of the management team members have substantial experience in power plant management, financial planning or human resources management, as well as extensive industry knowledge and expertise in power generation technology.

• Revenue and profit may be adversely affected by the PRC government¡¦s control over tariffs.
• Reductions in dispatched output may adversely affect revenue and profit.
• Increases in fuel costs and disruption in fuel supply or shortage of transportation resources may adversely affect profit and the normal operation of power plants.
• Regulatory reform of the PRC power industry may adversely affect the business.
• Delays in power plant development or acquisition may adversely affect the expansion plans.
• If the Group is unable to successfully exercise the call option over the equity interest in Shanghai Power, the future growth and operational results may be negatively impacted.
• The construction of power plants is subject to risks which could give rise to delays or cost overruns.
• Require substantial capital for investing in or acquiring new power plants and failure to obtain capital on reasonable commercial terms will increase the financing costs and cause delay in expansion plans.
• Operating power plants involves many risks and the Group may not have sufficient insurance coverage to cover the economic losses if any of the power plants ordinary operation is interrupted.
• Face increasing competition from existing and new power plants, which could reduce the average utilization hours, limit the growth opportunities and adversely affect the revenues and profitability.
• May encounter difficulties in controlling the costs should the PRC government adopt stricter environmental laws.
• do not possess the title certificates in respect of certain land and buildings occupied by the Group
• Dividend distributions to existing shareholder prior to the completion of the Global Offering should not be treated as indicative of future dividend policy; nor can the Group provide any assurance on the amount of future distributions, if any.

Forecast for the year ending December 31, 2004

The Group intends to reinforce the position by increasing the installed capacity and power output of the power plants, while delivering growth in shareholder value. To achieve the goal, the Group will pursue the following strategies:

• Leverage the close relationship with and strong support from CPI Group and CPI Holding.

• Expand and upgrade existing power plants.

• Expand, develop and acquire power plants in advantageous locations.

• Emphasize the development of high-capacity, highly efficient and environmentally friendly power plants.

• Pursue further development and acquisition opportunities through the management of power plants for CPI Group and CPI Holding.
• Implement rigorous cost control measures on an ongoing basis.

The net proceeds of the Global Offering that the Group expects to receive from subscription for the Offer Shares (after deducting the underwriting fees and estimated expenses payable and assuming the Over-allotment Option is not exercised) are estimated to be approximately HK$1,970 million (RMB2,090 million), assuming an Offer Price of HK$2.35 per Share, being the mid-point of the stated range of the Offer Price of between HK$2.10 and HK$2.60 per Share. The Group at present intends to apply the net proceeds as follows: