Netjoy Holdings Limited - Proxy Solicitation & Information Statement 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ACTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Huaneng Power International, Inc., you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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 circular.

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(A Sino-foreign joint stock limited company incorporated in the People’s Republic of China)

ON-GOING CONNECTED TRANSACTION

Financial Adviser to Huaneng Power International, Inc.

Deutsche Bank

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A letter from the Board of Huaneng Power International, Inc. (the “Company”) is set out on pages 3 to 11 of this circular.

A notice convening an Extraordinary General Meeting of the Company to be held at 9:00 a.m. on 23rd December, 2002 at Beijing International Convention Centre at No.8 Beichen East Road, Chaoyang District, Beijing, the People’s Republic of China has already been sent to the shareholders of the Company on 7th November, 2002 and is set out on pages 28 to 43 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed reply slip and form of proxy in accordance with the instructions printed thereon as soon as possible and in any event the form of proxy should be returned not less than 24 hours before the time appointed for holding such meeting.

Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or at any adjourned meeting should you so wish.

22nd November, 2002

Huaneng Power International, Inc.

		Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		3
1.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	ENTRUSTED MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3.	RATIONALE FOR THE TRANSACTION AND PRICING FACTORS . . . . . . . . . . . . . . .	5
4.	INFORMATION REGARDING THE ENTRUSTED POWER PLANTS . . . . . . . . . . . . . .	6
5.	CONNECTED TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
6.	DIRECTORS’ OPINION ON THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
7.	WAIVER TO BE SOUGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
8.	CONNECTED TRANSACTION UNDER SHANGHAI LISTING RULES . . . . . . . . . . . .	10
9.	THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
APPENDIX I — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12
APPENDIX II — LETTER FROM BEIJING H&J VANGUARD
	CONSULTING LIMITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . .		28

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Huaneng Power International, Inc.

DEFINITIONS

In this document, unless the context otherwise requires, the following expressions have the following meanings:

“Associate” the meaning ascribed to it in the Hong Kong Listing Rules; “Company” Huaneng Power International, Inc.; “Deutsche Bank” Deutsche Bank AG, Hong Kong Branch; “Directors” the directors of the Company; “Entrusted Management” the management of the Entrusted Power Plants entrusted by Huaneng Group and HIPDC to the Company pursuant to the Entrusted Management Agreement;
“Entrusted Management the entrusted management agreement entered into among the Agreement” Company, Huaneng Group and HIPDC on 6th November, 2002;
“Entrusted Power Plants” the power plants currently or in the future managed or controlled by Huaneng Group or HIPDC, the management of which will be entrusted to the Company in accordance with the Entrusted Management Agreement;
“EGM” an extraordinary general meeting of the Company to be held on 23rd December, 2002 for shareholders of the Company to consider and approve the Transaction;
“HIPDC”
Huaneng International Power Development Corporation;
“Hong Kong Listing Rules” the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange;
“Huaneng Group” China Huaneng Group; “Independent Directors” the independent directors of the Company, who are invited to advise the Independent Shareholders in connection with the Transaction;
“Independent Shareholders”
shareholders of the Company other than Huaneng Group, HIPDC and their respective Associates;
“Latest Practicable Date” 6th November, 2002, being the latest practicable date prior to the publication of this circular for ascertaining certain information referred to in this announcement;

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Huaneng Power International, Inc.

DEFINITIONS

“Net Installed Capacity”	the	total of the installed capacity of controlled power plants	total of the installed capacity of controlled power plants	total of the installed capacity of controlled power plants
	(of	which be calculated on 100% equity	basis)	and
	uncontrolled power plants (of which be calculated on owned
	equity basis);
“PRC”	the	People’s Republic of China;
“RMB”	the	lawful currency of the PRC;
“SDI Ordinance”	the	Securities (Disclosure of Interests) Ordinance (Chapter
	396	of the Laws of Hong Kong);
“Shanghai Listing Rules”	The	Listing Rules of Shanghai Stock Exchange;
“Stock Exchange”	The	Stock Exchange of Hong Kong Limited; and
“Transaction”	the	subject of the Entrusted Management Agreement.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

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(A Sino-foreign joint stock limited company incorporated in the People’s Republic of China)

Directors: Li Xiaopeng Wang Xiaosong Ye Daji Chen Baoliang Huang Long Hu Jianmin Wu Dawei Liu Guoyue Wang Defang Shan Qunying Yang Shengming

Xu Zujian Liu Shuyuan Bai Changnian Shen Weibing Shen Zongmin

Legal Address: West Wing, Building C, Tianyin Mansion, No. 2C Fuxingmennan Street, Xicheng District, Beijing 100031, People’s Republic of China.

Independent Directors:

Gao Zongze Zheng Jianchao Qian Zhongwei

22nd November, 2002

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

1. INTRODUCTION

On 7th November, 2002, the Board of Directors announced that the Company had entered into the Entrusted Management Agreement with Huaneng Group and HIPDC pursuant to which Huaneng Group and HIPDC agreed to engage the Company to manage the Entrusted Power Plants.

Huaneng Group is an indirect controlling shareholder of the Company, holding a 51.98% interest in HIPDC. As of the Latest Practicable Date, HIPDC held 2,554,840,000 domestic shares in the Company, representing 42.58% of the total issued share capital (domestic shares and foreign shares) of the Company. Accordingly, the transaction contemplated by the Entrusted Management Agreement constitutes a connected transaction for the Company within the meaning of the Hong Kong Listing Rules.

The purpose of this circular is to provide you with further information in relation to the Entrusted Management Agreement, and to set out the opinion provided by the PRC independent financial advisor under Shanghai Listing Rules, and the Notice of the EGM.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

2. ENTRUSTED MANAGEMENT AGREEMENT

The Entrusted Management Agreement was approved by the Directors at the board meeting held on 5th November, 2002 and signed by Huaneng Group, HIPDC and the Company on 6th November, 2002.

Date of the Entrusted 6th November, 2002 Management Agreement:

Parties: Entrusting Party: Huaneng Group HIPDC Managing Party: The Company

Assets entrusted: (i) 17 Entrusted Power Plants currently managed and power plants in the future controlled by the Huaneng Group;
(ii) 5 Entrusted Power Plants currently managed and power plants in the future controlled by HIPDC.

Service rendered: Management service provided by the Company in respect of the Entrusted Power Plants. The Entrusted Management Agreement has a term of 5 years. Upon the expiry of the Entrusted Management Agreement, unless any party intends otherwise, it will continue to be operational. The Entrusted Management Agreement may also be terminated by, inter alia, (i) Huaneng Group and/or HIPDC giving 30 days notice to the Company or (ii) the Company giving 90 days notice to Huaneng Group and/or HIPDC.

Service fee: The total management fee per year in respect of the Entrusted Management is approximately RMB50.6 million.

If the aggregate Net Installed Capacity of the Entrusted Power Plants exceeds 14,000 MW, the monthly service fee payable by Huaneng Group and/or HIPDC to the Company shall be adjusted as follows:

the service fee payable for the previous month x	the aggregate of the actual Net Installed Capacity consigned under the Entrusted Management for that month
	the aggregate of the actual Net Installed Capacity consigned under the Entrusted Management for the previous month

The service fee (excluding the incentive/penalty element) is payable monthly by Huaneng Group and HIPDC to the Company. The service fee in respect of the Entrusted Management was determined on the basis of normal commercial terms and arm’s length negotiation between the parties thereto with reference to international practice.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

Condition:

The Entrusted Management Agreement is subject to the Transaction (including the Entrusted Management Agreement) being approved and adopted by the Independent Shareholders.

3. RATIONALE FOR THE TRANSACTION AND PRICING FACTORS

The Company currently operates 17 power plants in the PRC with a net generation capacity of 13,895 MW. The Company develops, constructs, operates and manages large thermal power plants in China nationwide. It is the largest independent power producer in China.

The Company is able to gain more management experience and improve its management abilities through the management of the Entrusted Power Plants, thereby minimizing competition with related parties. By reason of the above, the Company will be able to further strengthen its leading position in the power generation market of the PRC. At the same time as streamlining the management structure of the thermal power generation assets of the Huaneng Group, the Entrusted Management is in accordance with the long-term development strategy of the Company.

The Entrusted Management will also enable the Company to obtain direct knowledge of the development status of more power markets, thereby exploring new development opportunities. The Entrusted Management will be one of the main driving forces of the Company’s future development.

The service fee payable by Huaneng Group and HIPDC comprises the following three components:

(i) costs (including set-up, operational and other recurrent items to be incurred by the Company in managing the Entrusted Power Plants), namely RMB46 million per annum;
(ii) a premium to cover estimation risks which represents 10% of the costs, namely RMB4.6 million per annum; and
(iii) an incentive / penalty component which is calculated based on the confirmed results of the Entrusted Management and shall not exceed 15% of the costs in (i), namely either an incentive or a penalty of not more than RMB6.9 million per annum.

The costs in (i) will be adjusted annually in accordance with the Entrusted Management Agreement, which will be by reference to the inflation rate of the previous year as published by the State Statistic Department and the salary component of the service fee will be adjusted by the percentage increase approved by the board of the Company. This methodology is consistent with international practice and is equitable to all shareholders of the Company.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

4. INFORMATION REGARDING THE ENTRUSTED POWER PLANTS

The Entrusted Power Plants include 17 plants currently managed by Huaneng Group with a total Net Installed Capacity of 10,799 MW and 5 plants currently managed by HIPDC with a total Net Installed Capacity of 3,644 MW.

(1) Entrusted Power Plants currently managed by Huaneng Group

				Registered		Installed	Installed	Percentage
	Name of			Capital		capacity		of ownership
	Entrusted	Date of	Nature	(RMB		(no. of		by Huaneng
	Power Plant	establishment	of entity	thousands)	Location	units x MW)		Group	Other shareholders
1.	Huaneng Group	1st February,	State-owned		Shandong	2 x 220		100%
	Xindian Power	2001	branch entity		Province Zibo	2 x 100
	Plant				City
2.	Huaneng Group	1st February,	State-owned		Shandong	3	x 50	100%
	Baiyang River	2001	branch entity		Province Zibo
	Power Plant				City
3.	Yimin Huaneng	18th May,	Limited	583,900	Inner	2 x 500		51%	Liaoning Provincial
	Dongdian Coal-	1995	Liability		Mongolia				Power Company,
	Fired Power		Company		Autonomus				Heilongjiang Provincial
	Limited				Region				Power Company and Jilin
	Liability				Hulunbei-				Provincial Power
	Company				ermeng				Company
4.	Tianjin Huaneng	17th May,	Limited	300,000	Tianjin City	2 x 300		54.02%	Tianjin Municipal Jinneng
	Yangliuqing	1996	Liability			1 x 125			Investment Company and
	Power		Company			2 x 100			Huabei Power
	Generation								Development Company
	Limited
	Liability
	Company
5.	Jinggangshan	18th March,	Limited	529,850	Jiangxi	2 x 300		60%	Jiangxi Provincial Power
	Huaneng Power	1996	Liability		Province Jian				Company and Jiangxi
	Generation		Company		City				Provincial Investment
	Limited								Company
	Liability
	Company
6.	Daqing Huaneng	24th	Limited	110,000	Heilongjiang	1 x 200		70%	Heilongjiang Provincial
	Xinhua Power	December,	Liability		Province	2 x 100			Power Development
	Generation	1997	Company		Daqing City	2	x 50		Company
	Limited
	Liability
	Company
7.	Shanxi Huaneng	29th	Limited	80,000	Shanxi	2x100		50%	Shanxi Provincial
	Yushe Power	November,	Liability		Province				Regional Power Company
	Limited	1994	Company		Yushe County				and Shanxi Provincial
	Liability								Power Company
	Company
8.	Suzhou	15th	Limited	20,000	Jiangsu		1x6	53.45%	Suzhou Municipal Huqiu
	Huaneng	September,	Liability		Province		1x3		District State-owned
	Thermal Power	1997	Company		Suzhou City				(Collective) Asset
	Limited								Management Company
	Liability								and Jiangsu Changjiang
	Company								Energy Saving Industrial
									Development Company

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

				Registered		Installed	Percentage
	Name of			Capital		capacity	of ownership
	Entrusted	Date of	Nature	(RMB		(no. of	by Huaneng
	Power Plant	establishment	of entity	thousands)	Location	units x MW)	Group	Other shareholders
9.	Henan Huaneng	26th	Limited	10,000	Henan	2x600	55%	Henan Provincial
	Qinbei Power	December,	Liability		Province			Construction and
	Generation	2001	Company		Jiyuan City			Investment Corporation,
	Limited							Henan Provincial Power
	Liability							Company and Henan
	Company							Provincial Jiyuan City
								Construction and
								Investment Company
10.	Hubei Huaneng	4th January,	Limited	90,595	Hubei	3x100	53.25%	Hubei Provincial Power
	Sujiawan Power	1999	Liability		Province			Company, Hubei Yangxin
	Generation		Company		Wuhan City			Aluminium Plant,
	Limited							E’cheng Iron and Steel
	Liability							Group Limited Liability
	Company							Company and Hubei
								Aluminium Group
								Limited Liability
								Company
11.	Changshan	25th August,	State-owned	60,000	Jilin Province	2x100	68.27%	Jilin Provincial Energy
	Huaneng	1997			Songyuan City			and Transportation
	Thermal Power							Corporation
	Plant
12.	Wuhan	13th	Company	650,000	Hubei	4x300	40%	Central China Power
	Huazhong	September,	Limited by		Province		(Note 1)	Corporation, Wuhan
	Huaneng Power	1996	Shares		Wuhan City			Power Development
	Generation Joint							Company, Central China
	Stock Limited							Power Development
	Company							Company and Wuhan
								Tianli Property Company
13.	Guangdong	3rd December,	Limited	360,000	Guangdong	2x300 4x125	49%	Guangdong Provincial
	Yuehwa Power	1986	Liability		Province		(Note 2)	Yuedian Asset Operation
	Generation		Company		Guangzhou			Company Limited
	Limited				City
	Liability
	Company
14.	Inner Mongolia	12th May,	Company	944,980	Inner	4x200	12.73%	Inner Mongolia Power
	Mengdian	1994	Limited by		Mongolia	3x100		(Group) Limited Liability
	Huaneng		Shares		Autonomous	5x50		Company, state-owned
	Thermal Power		(Listed)		Region	3x25		shares, listed RMB
	Generation				Huhehaote			domestic shares
	Company				City
	Limited
15.	Liaoning	31st August,	Sino-Foreign	716,457.7	Liaoning	2x200	32.97%	Liaoning Energy
	Nenggang	1998	Co-operation	(actual	Province			Corporation and Liaogang
	Power Plant			paid up	Fushun City			Power Company Limited
	Company			capital
	Limited			477,890)

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

				Registered		Installed	Percentage
	Name of			Capital		capacity	of ownership
	Entrusted	Date of	Nature	(RMB		(no. of	by Huaneng
	Power Plant	establishment	of entity	thousands)	Location	units x MW)	Group	Other shareholders
16.	Haikou Thermal	20th October,	Company	540,510	Hainan	2x125	15.55%	Hainan Provincial Power
	Power	1994	Limited by		Province	1x100		Company, Zhongyin
	Generation		Shares		Haikou City			Group Investment
	Company							Company Limited,
	Limited							Haikou Gangao Power
								Investment Company,
								Huaneng (Hainan) Joint
								Stock Company, Hainan
								Qiongshen Property
								Development Company
								Limited, Hainan
								Provincial State-owned
								Assets Administration
								Bureau, Hainan Foreign
								Economic and Trade
								Bidding Company and
								Hainan Tianhe Industrial
								Company
17.	Hegang Power	24th February,	Limited	300,000	Heilongjiang	2x300	13%	Northern China Power
	Generation	1998	Liability		Province			Corporation, Guohua
	Limited		Company		Hegang City			Energy Company Limited,
	Liability							Heilongjiang Provincial
	Company							Power Development
								Company and
								Heilongjiang Provincial
								Power Company

(2) Entrusted Power Plants currently managed by HIPDC

				Registered		Installed
				Capital		capacity	Percentage of
	Name of Entrusted	Date of		(RMB		(no. of	ownership	Other
	Power Plant	establishment	Nature of entity	thousands)	Location	units x MW)	by HIPDC	shareholders
1.	HIPDC Chongqing	8th June, 1985	Branch of Sino-		Chongqing	4x360	(Note 3)	(Note 4)
	Branch Company		foreign equity		City
	(Luohuang Power		joint venture
	Plant)
2.	HIPDC Chongqing	8th June, 1985	Branch of Sino-		Chongqing	2x36.75	(Note 3)	(Note 4)
	Branch Company		foreign equity		City	1x35.1
	(Chongqin CCGT)		joint venture
3.	HIPDC Yueyang	16th October,	Branch of Sino-		Hunan	2x362.5	(Note 3)	(Note 4)
	Branch Company	1996	foreign equity		Province
			joint venture		Yueyang
4.	HIPDC Yingkou	27th February,	Branch of Sino-		Liaoning	2x300	(Note 3)	(Note 4)
	Branch Company	1988	foreign equity		Province
			joint venture		Yingkou
5.	HIPDC Beijing	21st January,	Branch of Sino-		Beijing City	2x165	(Note 3)	(Note 4)
	Branch Company	1991	foreign equity			2x220
	(Beijing Huaneng		joint venture
	Thermal Power Plant)

Note 1: Huaneng Group has the management right of such power plant.

Note 2: The board of directors is controlled by Huaneng Group.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

Note 3: The structure of the investment is subject to confirmation. However, HIPDC will have an interest in them of more than 50%.

Note 4: Beneficiaries nominated by the local governments.

5. CONNECTED TRANSACTION

As Huaneng Group and HIPDC are indirect and direct substantial shareholders of the Company due to HIPDC’s 42.58% ownership of the Company and Huaneng Group’s 51.98% ownership in HIPDC, under the Hong Kong Listing Rules, Huaneng Group and HIPDC are connected persons of the Company. The Transaction therefore constitutes a connected transaction for the Company under Rule 14.25(1) of the Hong Kong Listing Rules.

The estimated service fee payable in respect of the Transaction per annum falls below the deminimus threshold of the higher of HK$10,000,000 or 3% of the net tangible assets of the Company (and its subsidiaries) under Rule 14.25(1) of the Hong Kong Listing Rules.

6. DIRECTORS’ OPINION ON THE TRANSACTION

The Directors (including the Independent Directors) consider that the Transaction is and will be carried out in the Company’s ordinary course of business on an arm’s length basis, on normal commercial terms and is fair and reasonable to the shareholders of the Company. The Directors believe that the consideration under the Transaction is reasonable and is fair to both the Company and all its shareholders. The Entrusted Management is in accordance with the long-term development strategy of the Company.

7. WAIVER TO BE SOUGHT

As the Directors consider that it would be impracticable for the Company to comply strictly with the connected transactions requirements of the Hong Kong Listing Rules on each occasion when the Transaction arises, the Company will apply to the Hong Kong Stock Exchange for a waiver of the Transaction from strict compliance with such requirements:

(a) the Transaction will be (i) in the ordinary and usual course of business of the Company; and (ii) either on normal commercial terms, or on terms no less favourable than those available to (or from) independent third parties; or (iii) where there is no available comparison for the purpose of determining whether (i) or (ii) is satisfied, on terms that are fair and reasonable so far as the shareholders of the Company are concerned;
(b) the aggregate value of the Transaction in each financial year will not exceed 3% of the net tangible assets of the Company (as disclosed in the Company’s published consolidated accounts) during the latest period:
(c) details of the Transaction as required by Rule 14.25(1)(A) to (D) of the Hong Kong Listing Rules to be disclosed in the Company’s next and subsequent published annual reports;

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

(d) the Independent Directors shall review annually the Transaction and confirm in the Company’s annual report that the Transaction has been conducted in the manner stated in conditions (a) and (b) above; and
(e) the auditors of the Company shall review annually the Transaction, and confirm to the board of Directors in writing (a copy of which will be provided to the Stock Exchange) that the Transaction:
(i) received the approval of the Directors;
(ii) has been entered into at price levels consistent with the pricing policies as stated in the relevant agreements;
(iii) has been entered into in accordance with the terms of the agreement governing the Transaction; and
(iv) has not exceeded the cap as set out in condition (b) above.

Where, for whatever reason, the auditor declines to accept the engagement or is unable to provide the letter, the Directors shall notify the Stock Exchange immediately.

8. CONNECTED TRANSACTION UNDER SHANGHAI LISTING RULES

As the A shares of the Company are listed on the Shanghai Stock Exchange, the Company is required, in addition to the Hong Kong Listing Rules, also to comply with the Shanghai Listing Rules.

The Transaction constitutes a connected transaction under the Shanghai Listing Rules, which shall be subject to the approval of the Company’s shareholders. The connected persons (as defined under the Shanghai Listing Rules) shall abstain from voting on resolutions related to the Transactions.

In accordance with Rule 7.3.11(9) of the Shanghai Listing Rules, the Company has appointed Beijing H&J Vanguard Consulting Limited ( ) (“Hejun”) as the PRC independent financial advisor to the Independent Directors in respect of the Transaction.

Details of Hejun’s views regarding the Transaction are set out in Appendix II on pages 14 to 27 of this Circular for information only.

The Independent Directors are of the view that (1) the board of Directors has met the relevant requirements of the Shanghai Listing Rules and the articles of association of the Company regarding approval of the relevant resolutions of the Transaction; and (2) the Transaction arising therefrom is fair to the Company’s shareholders.

Huaneng Power International, Inc.

— 10 —

LETTER FROM THE BOARD

9. THE EGM

The Company will convene an EGM at 9:00 a.m. on 23rd December, 2002 at Beijing International Convention Centre at No. 8 Beichen East Road, Chaoyang District, Beijing, PRC to seek the approval by the Independent Shareholders of the Entrusted Management Agreement. Huaneng Group, HIPDC and their respective Associates will abstain from voting in the EGM in respect of the ordinary resolution to approve the Entrusted Management Agreement. Notice of the EGM is set out on pages 28 to 43 in this circular.

A reply slip and a form of proxy for use by the Independent Shareholders at the Extraordinary General Meeting is enclosed with this circular. Whether or not you intend to attend the meeting in person, you are requested to complete and return the reply slip in accordance with the instructions printed thereon to the registered office of the Company at West Wing, Building C, Tianyin Mansion, 2C, Fuxingmennan Street, Xichang District, Beijing, PRC as soon as possible but in any event by [2nd December], 2002. The enclosed form of proxy should be completed and returned to the Company’s H Share Registrar, Hong Kong Registrars Limited, at 1901-5, 19/F, Hopewell Centre, 183 Queen’s Road East, Hong Kong or the registered office of the Company in accordance with the instructions printed thereon as soon as practicable and in any event by not later than 24 hours before the time appointed for the holding of the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting should you so wish.

Yours faithfully, For and on behalf of Huaneng Power International, Inc. Wang Xiaosong Vice Chairman

— 11 —

Huaneng Power International, Inc.

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Hong Kong Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(1) As at the Latest Practicable Date, none of the Directors or Supervisors had any interest in the securities of the Company or any associated corporation (within the meaning of the SDI Ordinance) which (i) would be required to be notified to the Company and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests which a Director or Supervisor would be taken or deemed to have under section 31, or Part I of the schedule to, the SDI Ordinance); or (ii) would be required to be entered in the register kept by the Company pursuant to section 29 of the SDI Ordinance; or (iii) would be required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.
(2) As at the Latest Practicable Date, HIPDC held 2,554,840,000 domestic shares, representing approximately 42.58% of the total issued share capital (both domestic shares and foreign shares) of the Company. Apart from HIPDC and other than Huaneng Group which holds 51.98% of the equity interest in HIPDC, so far as is known to the Directors or supervisors, as at the Latest Practicable Date, there was no other person who was interested, directly or indirectly, in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company.
(3) None of the Directors or supervisors is materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Company.
(4) As at the Latest Practicable Date, none of the Directors or supervisors had entered, or proposed to enter, into a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.
(5) As at the Latest Practicable Date, none of the Directors or supervisors had any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to the Company, or was proposed to be acquired, or disposed of by, or leased to the Company, since 31st December, 2001, the date to which the latest published financial statements of the Company and its subsidiaries were made up.

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Huaneng Power International, Inc.

GENERAL INFORMATION

APPENDIX I

3. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Company since 31st December, 2001, the date to which the latest published audited financial statements of the Company and of its subsidiaries were made up.

4. CONSENT

Hejun has given and has not withdrawn its written consent to the issue of this circular with the inclusion of and references to its name and letter or report (as the case may be), in the form and context in which it appears.

5. MISCELLANEOUS

(1) The legal address of the Company is at West Wing, Building C, Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District, Beijing, The People’s Republic of China.
(2) The share registrar of the Company in Hong Kong is Hong Kong Registrars Limited at 1901-5 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(3) The secretary of the Company is Mr. Huang Long.

6. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the offices of Herbert Smith at 23rd Floor, Gloucester Tower, 11 Pedder Street, Hong Kong during normal business hours on any day (except public holidays) up to and including 23rd December, 2002:

Resolutions of the board of Directors and minutes signed by the Directors;
Entrusted Management Agreement; and
Opinion of Beijing H&J Vanguard Consulting Limited (as the PRC independent financial advisor).

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

7th November, 2002

Dear Sirs,

Special Reminder

Huaneng Power International, Inc. is a public company listed on the New York Stock Exchange, The Stock Exchange of Hong Kong Limited and Shanghai Stock Exchange.

Huaneng Power International, Inc. has appointed Beijing H&J Vanguard Consulting Limited as the PRC independent financial advisor in respect of this Connected Transaction according to the request of Shanghai Stock Exchange.

This Independent Financial Advisor’s Report is primarily prepared for review by the independent shareholders in the PRC.

I. Interpretation

Unless the context otherwise requires, the following expressions have the following meanings:

Huaneng International/the Company:	Huaneng Power International, Inc.
Huaneng Group:	China Huaneng Group
HIPDC:	Huaneng International Power Development
	Corporation
Entrusted Management Agreement:	the entrusted management agreement entered into
	between Huaneng International, Huaneng Group
	and HIPDC on 6th November, 2002
Connected Transaction:	the connected transaction under which Huaneng
	Group and HIPDC propose to entrust Huaneng
	International with the management of their existing
	and/or future thermal power generation assets
	according to the terms and conditions set out in the
	Entrusted Management Agreement
Announcement:	the announcement on the Connected Transaction of
	Huaneng Power International, Inc. published by
	the Board of Directors of Huaneng International on
	7th November, 2002

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

Entrusted Power Plants:

Entrusted Power Plants: the thermal power generation assets or interests currently or in the future managed or controlled by Huaneng Group or HIPDC, the management of which will be entrusted to Huaneng International in accordance with the Entrusted Management Agreement. A list of the Entrusted Power Plants is set out in clause 1 “List of Entrusted Power Plants” of Section 4 “Basic Information about the Entrusted Items” of this report. According to the terms of the Entrusted Management Agreement, the scope of the Entrusted Power Plants shall be consistent with Schedule 1 of the Entrusted Management Agreement, as amended from time to time Shanghai Listing Rules: The Listing Rules of Shanghai Stock Exchange, as amended from time to time PRC/Local Independent Financial Beijing H&J Vanguard Consulting Limited Advisor:

II. Introduction

On 7th November, 2002, the Board of Directors of Huaneng International published an Announcement stating that, pursuant to the Entrusted Management Agreement entered into between Huaneng International, Huaneng Group and HIPDC on 6th November, 2002, Huaneng International accepted the entrusted management of the Entrusted Power Plants from Huaneng Group and HIPDC. Huaneng Group and HIPDC will pay a corresponding service fee to Huaneng International. Huaneng Group holds a 51.98% interest in HIPDC and HIPDC holds 42.58% of the shares in Huaneng International. The transaction contemplated under the Entrusted Management Agreement constitutes a connected transaction for Huaneng International.

Beijing H&J Vanguard Consulting Limited has been appointed by Huaneng International to act as the PRC Independent Financial Advisor of this Connected Transaction to give an independent opinion to the independent domestic shareholders of the Company in relation to the legality, necessity and fairness of this Connected Transaction in order to assist them in making a decision when voting on the Connected Transaction at an Extraordinary General Meeting to be held on 23rd December, 2002. Accordingly, we issue an independent financial advisor’s report in relation to this Connected Transaction. This report is prepared according to the recognised practices and ethical standards of the industry and on the basis of objective and equitable principles and the spirit of diligence and responsibility, in accordance with the laws and regulations of the Company Law of The People’s Republic of China, Securities Law of The People’s Republic of China and Shanghai Listing Rules and after careful study of the relevant information provided by the parties to the transaction and

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

acquisition of a thorough understanding of this Connected Transaction. The parties to this Connected Transaction are responsible for the authenticity, accuracy, completeness and timeliness of the information provided by them. We hereby state as follows:

A. We are not interested with the parties to this Connected Transaction;
B. We have not appointed or authorised any other organisation or individual to provide us with any information which is not included in this Independent Financial Advisor’s Report or to give any explanation or description in relation to the contents of this report.

III. Connected Relationship and Basic Information of the Connected Parties

A. Connected Relationship and Connected Transaction

Huaneng International, Huaneng Group and HIPDC entered into the Entrusted Management Agreement on 6th November, 2002. According to the Entrusted Management Agreement, Huaneng Group and HIPDC agreed to entrust the management of the Entrusted Power Plants to Huaneng International and pay service fees to Huaneng International.

Huaneng Group holds a 51.98% interest in HIPDC and is the controlling shareholder of HIPDC. HIPDC holds 42.58% of the shares of Huaneng International and is the largest shareholder of Huaneng International. According to article 12 of clause 3 of Section 3 “Connected Transaction” of the Shanghai Listing Rules, this transaction constitutes a connected transaction. The Board of Directors of Huaneng International should give an opinion as to whether the transaction is in the interest of the Company and appoint an independent financial advisor to give an opinion as to whether the Connected Transaction is fair and reasonable so far as all its shareholders are concerned.

B. Basic information about the parties to the Connected Transaction
(1) Huaneng International

Address: West Wing, Building C, Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District, Beijing Registered capital: RMB6 billion Legal representative: Mr. Li Xiaopeng Stock abbreviation: Huaneng International Stock code: 600011 (Shanghai), 902 (Hong Kong), HNP (New York) Industry: Power generation

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

Major business:

investment, construction, operation and management of power plants; development, investment and operation of other related enterprises mainly engaged in the export business

Huaneng International was established on 30th June, 1994. In October 1994, the Company for the first time publicly issued 1.25 billion overseas-listed foreign shares and was listed on the New York Stock Exchange, USA by way of the issue of 31,250,000 American Depository Receipts (“ADR”, each ADR represents 40 foreign shares). In May 1997, Huaneng International successfully issued US$200,000,000 convertible notes in the international capital markets. In June 1997, the Company further issued US$30,000,000 convertible notes. In January 1998, the foreign shares of Huaneng International were listed on The Stock Exchange of Hong Kong Limited by way of an introduction. In March 1998, Huaneng International successfully placed 250,000,000 H shares and at the same time placed 400,000,000 State-owned Legal Person Shares to HIPDC. In November 2001, Huaneng International issued 350,000,000 Renminbi denominated ordinary shares (A Shares), of which: 250,000,000 shares were issued to the public and 100,000,000 State-owned Legal Person Shares were placed to HIPDC. At present, the tradable A Shares of Huaneng International listed on the Shanghai Stock Exchange amount to 250,000,000 shares with a total share capital of RMB6 billion.

As regards to the shareholding structure of Huaneng International, HIPDC has a 42.58% shareholding, other legal person investors have a 28.25% shareholding, domestic public shareholders have a 4.17% shareholding and foreign shareholders have a 25% shareholding.

Currently, Huaneng International is the largest independent power generation company in the PRC and wholly-owns 12 power plants, has a controlling interest in three power plants and has an interest in two power plants. The power plants are extensively located in provinces and cities of the PRC with fast economic growth, including Liaoning, Hebei, Shandong, Jiangsu, Shanghai, Zhejiang, Fujian and Guangdong.

(2) Huaneng Group Registered address: A23 Fuxing Road, Haidian District, Beijing Registered capital: RMB1.9 billion Legal representative: Mr. Li Xiaopeng

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Huaneng Power International, Inc.

LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

APPENDIX II

Major businesses: investing in power stations, coal, minerals, railways, transportation, petrochemical, energy-saving facilities, steel, timber, cement and related industries by way of exclusive funds derived from the substitution of oil by coal; investing in exported products which generates foreign exchange; organising power generation and sale; trading of products developed and produced by the Group and the relevant necessary raw materials; technical development and introduction of technologies in substituting oil by coal and reasonable utilisation of energy, and the sale of those developed technologies; equipment leasing and import and export business as approved by the Ministry of Economics and Trade; managing and co-ordinating various businesses of the members of the group; providing technical and information advisory services.

Huaneng Group was duly established upon the approval of the State Council in 1998. It is a large State-owned enterprise group with power generation as its core business. It was established from the State oil to coal substitution professional funds for the purpose of implementing the State policy on substituting oil by coal. As at the end of year 2001, the total amount of the consolidated assets of Huaneng Group was RMB145.6 billion; the total amount of consolidated liabilities was RMB103.5 billion; net assets amounted to RMB42.1 billion; the total amount of the consolidated profit was RMB4.35 billion; the realised sales income for the year was RMB34 billion.

(3) HIPDC

Registered address: 2C Fuxingmennan Street, Xicheng District, Beijing Registered capital: US$450,000,000 Legal representative: Mr. Li Xiaopeng Major businesses: construction and operation of power plants and the

construction and operation of power plants and the relevant construction works, including raising funds inside and outside the PRC, importing principal and ancillary equipment and machinery and providing raw materials, fuel and materials for the construction and operation of the power plants

HIPDC is a Sino-foreign joint venture limited liability company jointly invested and established by Huaneng Refined Coal Company, BOC (Hong Kong) Investment Company Limited, China Resources (Holdings) Company Limited, China Construction Bank and China Water Conservancy Power Foreign Company in June 1985 upon approval of the State Council. The shareholding held by Huaneng Refined

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

Coal Company is currently held by Huaneng Group whereas the shareholding held by China Construction Bank is currently held by China Xinda Trust Investment Company. As at the end of 2001, the net assets of HIPDC amounted to RMB13.173 billion and the realised net profit for the year amounted to RMB1.587 billion.

IV. Basic Information about the Entrusted Power Plants

A. List of Entrusted Power Plants

According to the Entrusted Management Agreement, the scope of the Entrusted Power Plants shall be consistent with Schedule 1 of the Entrusted Management Agreement duly amended from time to time. The Entrusted Power Plants set out in Schedule 1 are as follows:

Entrusted by Huaneng Group

Huaneng Group Xindian Power Plant

Huaneng Group Baiyang River Power Plant

Yimin Huaneng Dongdian Coal-Fired Power Limited Liability Company

Tianjin Huaneng Yangliuqin Power Generation Limited Liability Company

Jinggangshan Huaneng Power Generation Limited Liability Company

Daqing Huaneng Xinhua Power Generation Limited Liability Company

Shanxi Huaneng Yushe Power Limited Liability Company

Suzhou Huaneng Thermal Power Limited Liability Company

Henan Huaneng Qinbei Power Generation Limited Liability Company

Hubei Huaneng Sujiawan Power Generation Limited Liability Company

Changshan Huaneng Thermal Power Plant

Wuhan Huazhong Huaneng Power Generation Joint Stock Limited Company

Guangdong Yuehwa Power Generation Limited Liability Company

Inner Mongolia Mengdian Huaneng Thermal Power Generation Company Limited

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

Liaoning Nenggang Power Plant Company Limited

Haikou Thermal Generation Company Limited

Hegang Power Generation Company Limited

Entrusted by HIPDC

HIPDC Chongqin Branch Company (Luohuang Power Plant)

HIPDC Chongqing Branch Company (Chongqing CCGT)

HIPDC Yueyang Branch Company

HIPDC Yingkou Branch Company

HIPDC Beijing Branch Company (Beijing Huaneng Thermal Power Plant)

Please refer to the Announcement published by Huaneng International for the specific operational information of the Entrusted Power Plants listed above.

V. Principles in relation to this Connected Transaction

To comply with the provisions of the laws, legal stipulations and relevant policies of the State;

To comply with the principles of equal negotiations and equal consideration;

To comply with the principles of openness, fairness, fair play and honesty;

To fully protect the interests of all the shareholders, particularly the interests of the independent shareholders.

VI. Matters relating to the Entrusted Management

The Entrusted Management Agreement was signed by Huaneng Group, HIPDC and Huaneng International on 6th November, 2002.

A. Details of the Entrusted Management

According to the provisions of the Entrusted Management Agreement, Huaneng International shall provide management service in respect of the Entrusted Power Plants to the entrusting parties in accordance with all applicable regulations, with reference to the management and operation experience applicable to thermal power plants both inside and outside the PRC and advance and effective management methods formed by the Company over the past years. The management service provided by Huaneng International shall include all or part of the provisions stipulated in Chapter 2 of the Entrusted Management Agreement but shall not exceed

— 20 —

Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

the management right to which the entrusting parties are entitled in respect of any Entrusted Power Plant according to the law or pursuant to the relevant agreements or arrangements, including: comprehensive planned management, annual planned management, power operation and sale management, production management of power plants, fuel management, construction management, financial management, human resources and labour wages management, comprehensive affairs management, shareholding management and reporting/co-ordination management.

B. Principles used in determining the service fee for the entrusted management

According to the Entrusted Management Agreement, Huaneng Group and HIPDC shall pay a service fee to Huaneng International. The service fee comprises of the following three components:

costs (including set-up, operational, staff and other recurrent items to be incurred by Huaneng International in managing the Entrusted Power Plants);
premium (which covers estimation risks); and
an incentive/penalty component.

The costs as referred to in (1) above will be adjusted annually in accordance with the Entrusted Management Agreement, which is by reference to the inflation rate and the salary component will be adjusted by the percentage increase approved by the board of the Company.

C. Service fee of this entrustment

Huaneng Group, HIPDC and Huaneng International agree that the service fee will comprise the following three components:

costs, namely RMB46 million per annum;
a premium to cover estimation risks which represents 10% of the costs, namely RMB4.6 million per annum; and
an incentive/penalty component which is calculated based on the confirmed results and does not exceed 15% of the costs, namely either an incentive or a penalty of not more than RMB6.9 million.

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

There will be no adjustments of the service fee if the aggregate Net Installed Capacity of the Entrusted Power Plants does not exceed 14,000 MW. If the aggregate net installed capacity of the Entrusted Power Plants exceeds 14,000 MW, the monthly service fee payable by Huaneng Group and/or HIPDC to the Company shall be adjusted as follows:

the aggregate of the actual net installed capacity consigned under the entrusted management the service fee payable for that month x for the previous month the aggregate of the actual net installed capacity consigned under the entrusted management for the previous month

The total service fee will be adjusted annually by reference to the inflation rate of the previous year as published by the State Statistic Department and the salary component will be adjusted by the percentage increase approved by the board of the Company.

D. Confirmation of Results

Huaneng Group and HIPDC will confirm the management services of Huaneng International according to, including but not limited to, the following two categories of results confirmation standards: (i) extent of annual achievement compared with the budget (including but not limited to indications such as power output, profit); and (ii) safe production.

E. Payment Method of Service Fee

Huaneng Group and HIPDC will pay the service fee to Huaneng International in cash. The costs and the premium component of the service fee will be settled monthly. Huaneng Group and HIPDC will pay the service fee for the current month to Huaneng International before the tenth day of each month. The incentive or penalty component of the service fee will be paid no later than a period of 90 days after conclusion of each year after confirmation of the performance by Huaneng International.

F. Conditions for Taking Effect of the Entrusted Management Agreement

The Entrusted Management Agreement becomes effective after approval by Huaneng Group, HIPDC and Huaneng International through appropriate procedures and approval at an Extraordinary General Meeting of Huaneng International.

G. Period for the Performance of the Entrusted Management Agreement

Except otherwise agreed by Huaneng Group, HIPDC and Huaneng International, the term of the Entrusted Management Agreement will be 5 years. Upon expiry of the term of the Entrusted Management Agreement, the Entrusted Management Agreement will continue to be effective unless any party intends otherwise. This entrustment may be: (i) terminated as a result of a breach by Huaneng International; (ii) terminated as a result of a breach by Huaneng Group

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

and/or HIPDC; (iii) terminated as a result of the issue of 30 days’ prior termination notice by Huaneng Group and/or HIPDC to Huaneng International or issue of 90 days’ prior termination notice by Huaneng International to Huaneng Group and/or HIPDC; and (iv) terminated if Huaneng Group and/or HIPDC and/or Huaneng International becomes bankrupt or loses its repayment ability.

VII. Opinion of the Independent Financial Advisor

A. Basic Assumptions

Our opinion on this Connected Transaction is given on the following assumptions:

the information on which we have relied is true, accurate and complete;
there is no material change in the existing laws, legal stipulations, guiding principles and policies of the State;
there is no material change in the social and operating environment in which Huaneng International, Huaneng Group, HIPDC and the Entrusted Power Plants involved in this Connected Transaction are situated;
there is no material adverse change caused by other unforeseen or force majeure factors.
B. Factors of Consideration

We have considered the following factors when issuing our opinion on this Connected Transaction:

main terms of the Entrusted Management Agreement;
completion of the legal works of this Connected Transaction;
performance of the legal procedures of this Connected Transaction;
prices of power generation companies in the major markets including the PRC, Hong Kong and South-east Asia;
important data of similar transactions in the PRC, Hong Kong etc;
operation and market conditions of the Entrusted Power Plants.
C. Assessment on this Connected Transaction

After conducting careful and necessary investigations and reviewing the documents, data and information which we consider necessary for issuing this opinion including but not limited

— 23 —

Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

to the basic information on the Entrusted Management Agreement, the parties to the transaction and the subject enterprises involved in this Connected Transaction and information on the securities markets available to the public, and after conducting relevant inquiries and detailed discussions on the relevant matters, our opinion is as follows:

This entrusted management transaction is legal

Huaneng International and Huaneng Group and HIPDC have signed the Entrusted Management Agreement in relation to this Connected Transaction, pursuant to which Huaneng Group and HIPDC represent and warrant that there is no third party consent relating to all Entrusted Power Plants without which this entrustment may not be conducted.

At the 22nd meeting of the Third Board of Directors of Huaneng International held on 5th November, 2002, the relevant resolutions related to this Connected Transaction were adopted. Directors of Huaneng International having an interest in this transaction have not participated in the voting of the resolution related to this Connected Transaction.

As the entrusted parties, Entrusted Power Plants and relevant intermediaries have performed the relevant legal work according to the legal procedures, we consider that this Connected Transaction is lawful.

This entrusted management transaction will have an active impact on the future production of Huaneng International

Huaneng International is currently the largest power generation company in the PRC and is listed on the Shanghai Stock Exchange of the PRC, the Hong Kong Stock Exchange and the New York Stock Exchange of the USA. The Company possesses extensive experience and resources in the operation and management of power generation, in particular management of thermal power generation assets. Huaneng Group and HIPDC own substantial thermal power generation assets. Accordingly, Huaneng Group and HIPDC are willing to entrust Huaneng International with the management of the thermal power assets controlled by them or in which they have interests in order to enhance the management efficiency of the assets, to ensure reasonable allocation of resources and to permit full performance of Huaneng International’s experience and ability in the management of thermal power generation assets.

This entrustment will bring an active impact on the future development of Huaneng International.

After implementation of this entrustment, Huaneng International will be entrusted with the management of power assets with an installed capacity of 14,443 MW, thus increasing the installed capacity under the management of Huaneng International from 14,820 MW to 29,263 MW, representing an increase of 97% which will enhance the ability and experience of the Company in the operation and management of large-scale power generation assets.

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

This entrustment will bring new sources of income for Huaneng International. The annual revenue of Huaneng International in 2001 was RMB15,791,000,000. The annual revenue of Huaneng International will increase by RMB57,500,000 as a result of the service fee of this entrustment if the Company receives the costs, the premium and the incentive component in full.

This entrustment will further strengthen the leading position of Huaneng International in the power generation market of the PRC. Through the management of new power assets, Huaneng International will have the opportunity to broaden its operation and management scope of the power markets in Liaoning Province, Shandong Province and Hebei Province, etc. and enter into the rapidly developing power markets of Hubei Province, Hunan Province, Inner Mongolia, Chongqing, etc. Accordingly, the power assets of Huaneng International by way of shareholding, equity participation and entrusted management will cover 19 provinces, cities and autonomous regions in the PRC.

This entrustment will lay a foundation for future mergers and acquisitions by Huaneng International. Huaneng International will ascertain information of the Entrusted Power Plants during the process of operation and management thereby obtaining more experience in the operation and management of such plants. It also establishes a foundation for potential acquisitions or assets restructuring. All the above will have an active impact on the operation and development of the Company.

The service fee of this entrusted management transaction is reasonable

We consider that the pricing method of the service fee of this entrusted management has been formulated after full consideration of the potential costs and risks arising from the provision of the management services by Huaneng International to the Entrusted Power Plants and included a certain proportion of profit margin. After our detailed examination of the pricing method of the service fee, we are of the opinion that: the pricing method of the service fee of this entrustment is reasonable and appropriate which reflects the value of the management services provided by Huaneng International.

The risk faced by Huaneng International in this entrusted management transaction is relatively small

The Entrusted Management Agreement also sets out an incentive and penalty mechanism for Huaneng International, and also stipulates the maximum incentive and penalty amounts on the basis of the confirmed results. We are of the opinion that such provision is instrumental in encouraging and supervising the due performance of the obligations stipulated in the Entrusted Management Agreement by Huaneng International. The maximum incentive or penalty amounts shall not exceed 15% of the management costs, and, accordingly the risks faced by Huaneng International during the normal performance of the Agreement is controlled to a certain extent.

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

Both Huaneng Group and HIPDC are large State-owned power generation companies in the PRC. The debt structures of the two companies are reasonable with good credit ratings. It is anticipated that the implementation of management of the Entrusted Power Plants will further enhance the operation efficiency of the power plants and improve and enhance the financial conditions of the two companies. The amount of the service fee stipulated in the Entrusted Management Agreement is relatively small compared with the recurrent operating expenses of the two companies. As the service fee has to be paid each month according to the relevant provisions, we consider that the possibility of default in the payment of the service fee is very minimal.

Based on the above considerations, we believe this Connected Transaction has been concluded through arm’s length negotiations between the parties to the transaction and the terms are reasonable. The Connected Transaction is also fair as far as all the shareholders of Huaneng International are concerned. This entrusted transaction will be instrumental in enhancing the management experience of Huaneng International and will make an impact on the future development of the Company, and the potential risk faced by Huaneng International will be relatively small in this transaction.

D. Independent Opinion

We consider that this Connected Transaction complies with the relevant laws and legal stipulations of the Contract Law of The People’s Republic of China, Company Law of The People’s Republic of China, Securities Law of The People’s Republic of China and the Shanghai Listing Rules and the provisions of the Articles of Association of Huaneng International and adheres to the principle of fairness, reasonableness, justness and honesty, and the consideration of the transaction is reasonable without damaging the interests of the Company and independent shareholders of the Company.

VIII. Reminder to the Shareholders

A. This Connected Transaction falls into the category of a connected transaction between a listed company and its controlling shareholders and the parent company of the controlling shareholders.
B. Gao Zongze, Zheng Jianchao and Qian Zhongwei, independent directors of Huaneng International are of the opinion that:
The voting procedures of the Board of Directors of Huaneng International in relation to this Connected Transaction and this Connected Transaction comply with the provisions of the Articles of Association of the Company and the Shanghai Listing Rules.

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Huaneng Power International, Inc.

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

  2. This Connected Transaction is fair as far as Huaneng International and all its shareholders are concerned.

C. This Connected Transaction is subject to approval at the Extraordinary General Meeting of Huaneng International to be held on 23rd December, 2002. According to the provisions of the Shanghai Listing Rules, when voting is being conducted on this Connected Transaction at the general meeting, associates interested in this Connected Transaction will abstain from voting in respect of the relevant resolution relating to this Connected Transaction at the general meeting.
D. We would especially remind all the independent shareholders of Huaneng International to carefully read the relevant documents, including the Entrusted Management Agreement, the board resolutions and the Announcement on the connected transaction. The above documents are kept at the Securities Department of Huaneng International.
IX. Documents for inspection
A. Resolutions of the 22nd meeting of the Third Board of Directors of Huaneng International;
B. Entrusted Management Agreement entered into between Huaneng International, Huaneng Group and HIPDC; and
C. Announcement on the Connected Transaction.

Beijing H&J Vanguard Consulting Limited

7th November, 2002

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [255 x 40] intentionally omitted <==

(A Sino-foreign joint stock limited company incorporated in the People’s Republic of China)

Notice is hereby given that an extraordinary general meeting of Huaneng Power International, Inc. (the “Company”) will be held at 9:00 a.m. on 23rd December, 2002 (Monday) at Beijing International Convention Centre at No. 8 Beichen East Road, Chaoyang District, Beijing, The People’s Republic of China, for the purpose of considering and, if thought fit, passing the following special resolution and ordinary resolutions:

Special Resolution:

To consider and approve the amendments to the articles of association of the Company (for details of the amendments, see Note 1) .

Ordinary resolutions:

To consider and approve the proposal for change of session of directors (for biographies of the candidates of directors, see Note 2) :
2.1 Elect Mr. Li Xiaopeng as Director of the Company.
2.2 Elect Mr. Wang Xiaosong as Director of the Company.
2.3 Elect Mr. Ye Daji as Director of the Company.
2.4 Elect Mr. Huang Jinkai as Director of the Company.
2.5 Elect Mr. Liu Jinlong as Director of the Company.
2.6 Elect Mr. Shan Qunying as Director of the Company.
2.7 Elect Mr. Yang Shengming as Director of the Company.
2.8 Elect Mr. Xu Zujian as Director of the Company.
2.9 Elect Mr. Gao Zongze as Independent Director of the Company.
2.10 Elect Mr. Zheng Jianchao as Independent Director of the Company.
2.11 Elect Mr. Qian Zhongwei as Independent Director of the Company.
2.12 Elect Mr. Xia Donglin as Independent Director of the Company.

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

To consider and approve the proposal for change of session of supervisors (for biographies of the candidates of supervisors, see Note 3) :
3.1 Elect Mr. Wei Yunpeng as Supervisor of the Company.
3.2 Elect Mr. Pan Jianmin as Supervisor of the Company.
3.3 Elect Mr. Liu Shuyuan as Supervisor of the Company.
3.4 Elect Mr. Li Yonglin as Supervisor of the Company.
3.5 Elect Mr. Shen Weibing as Supervisor of the Company.
3.6 Elect Mr. Shen Zongmin as Supervisor of the Company.
4 To approve the establishment of Strategy Committee, Audit Committee, Nomination Committee, and Remuneration and Appraisal Committee under the Board of Directors.
To approve and confirm the terms of the Entrusted Management Agreement (as defined in the announcement made by the Company dated 7th November, 2002) entered into by the Company, China Huaneng Group and Huaneng International Power Development Corporation on 6th November, 2002, and the transaction contemplated therein.

By Order of the Board Huang Long Company Secretary

7th November, 2002

Registered address of the Company:

West Wing, Building C, Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District, Beijing 100031, The People’s Republic of China

Notes:

Proposed amendments to the Articles of Association
1.1 The original second and third paragraphs of Article 1 which provides that:—

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NOTICE OF EXTRAORDINARY GENERAL MEETING

the “Special Regulations of the State Council Relating to Issuance of Shares and Overseas Listing of Joint Stock Limited Companies” (hereinafter referred to as the “Special Regulations”), the “Mandatory Provisions of the Articles of Association for Companies Listing Overseas” (hereinafter referred to as the “Mandatory Provisions”) and the relevant provisions of other applicable laws and administrative regulations together with the articles of association adopted by the First General Shareholders Meeting held on 30th June, 1994 (hereinafter referred as the “Original Articles”)

The State Commission of Restructuring the Economic System of the People’s Republic of China, pursuant to the document Ti Gai Sheng (1994) No. 74, and the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic of China, pursuant to the document Wai Jing Mao Han Zi No. 338, approved the establishment of the Company by the promoter method. The Company registered at the State Administration for Industry and Commerce of the People’s Republic of China and obtained its business license on 30th June, 1994. The number of its business license is Gong Shang Qi He Zi No. 0496.”

is hereby amended as follows:—

“These Articles of Association (hereinafter referred to as the “Articles of Association” or the “Company’s Articles of Association”) are formulated in accordance with the “Company Law of the People’s Republic of China” (hereinafter referred to as the “Company Law”), the “Special Regulations of the State Council Relating to Issuance of Shares and Overseas Listing of Joint Stock Limited Companies” (hereinafter referred to as the “Special Regulations”), the “Mandatory Provisions of the Articles of Association for Companies Listing Overseas” (hereinafter referred to as the “Mandatory Provisions”) and the relevant provisions of other applicable laws and administrative regulations together with the articles of association adopted by the First General Shareholders Meeting held on 30th June, 1994 together with the subsequent amendments made up to the date when this articles of association (hereinafter referred as the “Original Articles”) take effect.”

The State Commission for Restructuring the Economic System of the People’s Republic of China, pursuant to the document Ti Gai Sheng (1994) No. 74, and the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic of China, pursuant to the document Wai Jing Mao Han Zi No. 338, approved the establishment of the Company by the promoter method. The Company registered at the State Administration for Industry and Commerce of the People’s Republic of China and obtained its business license on 30th June, 1994. The registration number of its business license is Gong Shang Qi He Zi No. 000496.”

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

1.2 The original Article 4 which provides that:—

“The legal representative of the Company is the Chairman of the Board of Directors”.

is hereby amended as follows:—

“The Chairman of the Board of Directors is the legal representative of the Company.”

1.3 The original Article 17 which provides that:—

“Subject to approval of the Company’s plans to issue overseas listed foreign shares and domestic shares by the securities supervisory authorities of the State Council, the Board of Directors of the Company may make arrangement to implement such plans for the issue of such shares.

The Company’s plan to issue overseas listed foreign shares and domestic shares respectively pursuant to the provisions aforesaid may be implemented respectively within 15 months from the date of approval of the Securities Commission of the State Council.”

is hereby amended as follows:—

1.4 The original Article 18 which provides that:—

“In issuing the planned shares, the Company shall issue the domestic shares and the overseas listed foreign shares in one tranche, respectively. Subject to the approval by the State Council Securities Committee, the Company may issue shares in different tranches in special circumstances.”

is hereby amended as follows:—

“In issuing the planned shares, the Company shall issue the domestic shares and the overseas listed foreign shares in one tranche, respectively. Subject to the approval by the State Council’s securities regulatory bodies, the Company may issue shares in different tranches in special circumstance.”

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

1.5 the original Article 84 which provides that:—

“Except for other classes of shareholders, holders of domestic shares and overseas listed foreign shares are deemed to be different classes of shareholders.

The special procedures for approval by class shareholders shall not apply to the following circumstances:

(1) where the Company issues, upon approval by special resolution of the shareholders in a general meeting, either separately or concurrently once every twelve months, not more than twenty percent (20%) of each of the existing issued domestic shares and overseas listing foreign shares of the Company;
(2) where the Company’s plan to issue domestic shares and overseas listed foreign shares upon its establishment is implemented within fifteen (15) months from the date of approval by the State Council Securities Committee.”

is hereby amended as follows:—

“Except for other classes of shareholders, holders of domestic shares and overseas listed foreign shares are deemed to be different classes of shareholders.

The special procedures for approval by class shareholders shall not apply to the following circumstances:

(1) where the Company issues, upon approval by special resolution of the shareholders in a general meeting, either separately or concurrently once every twelve months, not more than twenty percent (20%) of each of the existing issued domestic shares and overseas listed foreign shares of the Company;
(2) where the Company’s plan to issue domestic shares and overseas listed foreign shares upon its establishment is implemented within fifteen (15) months from the date of approval by the State Council’s securities regulatory bodies.”
1.6 The original Article 85 which provides that:—

“The Company shall have a board of directors which shall consist of nineteen (19) members. There shall be one (1) Chairman and one (1) Vice-Chairman.”

is hereby amended as follows:—

“The Company shall have a board of directors comprising of 12 directors. External directors shall account for more than (and including) half of the total number of members of the board of directors, of which independent directors (directors not holding any post other than being a director of the Company and there is no relationship with the Company and major shareholders of the Company which might hinder their independent and objective

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

judgment, the same below) shall account for more than (and including) one-third of the total number of members of the board of directors, and that the independent directors shall include at least one accounting professional. The board of directors shall have a Chairman and Deputy Chairman.

The board of directors shall establish Audit, Nomination, Strategy, Remuneration and Appraisal committees. All the members of such special committees shall comprise of directors, of which independent directors shall account for the majority of the members of the Audit, Nomination, Remuneration and Appraisal committees and shall act as the convenor.”

1.7 The original Article 86 which provides that:—

“Directors shall be elected by shareholders at shareholders’ general meetings. The term of the office of the directors shall be three years. Directors may be re-elected after the expiration of their term.

A person nominated for election as a director, unless he is a Director whose term is complete (or he has been selected by the Board of Directors) shall give notice in writing to the Company’s shareholders of his intentions and of his willingness to be elected at least seven (7) days before the date of such shareholders’ general meeting.

The Chairman and Vice-Chairman shall be elected and removed by more than one-half of the total number of directors. The Chairman and Vice-Chairman have three (3) year terms and may be re-elected after the expiration of their terms.

The shareholders’ general meeting may, by ordinary resolution, remove any director before the expiration of his term of office (but without prejudice to such director’s right to claim damages based on any contract) on the condition that all the relevant laws and administrative regulations are fully complied with.

A director is not required to hold shares in the Company.”

is hereby amended as follows:—

“Directors shall be elected by shareholders at shareholders’ general meetings. The term of the office of the directors shall be not more than three years. Directors may be re-elected after the expiration of their term.

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

The Chairman and Vice-Chairman shall be elected and removed by more than one-half of the total number of directors. The terms of Chairman and Vice-Chairman shall be same as the term of the relevant session and may be re-elected after the expiration of their terms.

The Board of Directors shall put forward a proposal at a shareholders’ meeting to remove those independent directors who fail to attend a board meeting in person three times in succession and those directors who fail to attend a board meeting in person twice in succession and fail to appoint other directors to attend. Except the above circumstances and conditions disallowing the holding of the post of director stipulated in the Company Law, an independent director may not be removed without reason before expiration of his term of office. If an Independent Director is removed prior to expiration of his term of office, the Company shall disclose the same as a special disclosure. The removed Independent Director may make a public announcement if he considers the reason for his removal is inappropriate.

A director is not required to hold shares in the Company.”

1.8 The following three new Articles 87, 88 and 89 be added immediately after the original Article 86:—

“Article 87

Directors may tender their resignation prior to expiration of their term of office. If a director resigns, he should submit a written resignation report to the board of directors. Independent Directors also have to state the circumstances relating to their resignation or which they consider necessary to arouse the concern of the shareholders and creditors of the Company.

If the resignation of a director causes the number of board members of the Company to be less than the quorum, the resignation report of such director shall only become effective when the succeeding director fills his vacancy created as a result of his resignation. The directors shall convene an extraordinary general meeting as soon as possible and elect a director to fill the vacancy created as a result of the resignation of the director. Before the passing of a resolution in relation to the election of directors at a shareholders’ meeting, the power of the director tendering his resignation and the members of the Board of Directors shall be subject to reasonable restrictions.

If the proportion of independent directors in the Board of Directors is less than the minimum requirement stipulated in the Articles of Association as a result of the resignation of an independent director, the resignation report of such Independent Director shall be effective when his vacancy is filled by the succeeding Independent Director.

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

Article 88

Independent directors shall comply with the following basic requirements:

(1) possessing the qualifications for acting as a director of the Company according to the laws, administrative regulations and other relevant stipulations;
(2) possessing independence as required by the relevant laws, administrative regulations and departmental rules;
(3) possessing basic knowledge in relation to the operation of listed companies and being familiar with the relevant laws, administrative regulations and rules;
(4) possessing more than five years’ working experience relating to law or economics or that is necessary for the performance of duties of independent directors;
(5) other conditions stipulated in the Articles of Association.

Article 89

Candidates for Independent Directors of the Company shall be nominated by the Board of Directors, Supervisory Committee and shareholders singly or jointly holding more than 1% of the issued shares of the Company.

1.9 The original Article 104 which provides that:—

“The Supervisory Committee shall consist of three (3) supervisors, one of whom is the chairman of the committee. The term of office for a supervisor is three (3) years and a supervisor is eligible for re-election after the expiration of the three year term.

The election and removal of the Chairman of the Supervisory Committee shall be passed by two-thirds or more than two-thirds of its members.”

is hereby amended as follows:—

“The Supervisory Committee shall consist of seven (7) Supervisors, one of whom is the Chairman of the committee and one acts as Vice-Chairman. External supervisors shall account for more than half of the total number of members of the Supervisory Committee. The term of office for a Supervisor shall not more than three (3) years and a Supervisor is eligible for re-election after the expiration of the three year term.

The election and removal of the Chairman and Vice Chairman of the Supervisory Committee shall be passed by two-thirds or more than two-thirds of its members.”

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

1.10 The original Article 105 which provides that:—

“The members of the Supervisory Committee shall be two (2) representatives of the shareholders and one (1) employee representative. The election and removal of the representatives of the shareholders shall be decided at shareholders’ general meetings. The election and removal of the employee representative shall be democratically decided by the employees of the Company.”

is hereby amended as follows:—

“The members of the Supervisory Committee shall be six (6) representatives of the shareholders and one (1) employee representative. The election and removal of the representatives of the shareholders shall be decided at shareholders’ general meetings. The election and removal of the employee representative shall be democratically decided by the employees of the Company.”

1.11 The following new Article 116 be added immediately after Article 112:

“Independent directors must possess independence. The following personnel shall not act as Independent Directors:

(1) personnel holding posts in the Company or subsidiaries of the Company and the immediate family of such personnel or persons possessing major social relationship (immediate family shall mean spouses, parents, children etc; major social relationship shall mean siblings, fathers-in-law, mothers-in-law, sons-in-law, daughters-in-law, spouses of siblings, siblings of spouses etc);
(2) natural person shareholders directly or indirectly holding more than 1% of the issued shares of the Company or the top 10 shareholders of the Company and their immediate family;
(3) personnel holding any post in the shareholders units directly or indirectly holding more than 5% of the issued shares of the Company or the top 5 shareholder units of the Company and their immediate family;
(4) personnel under the circumstances as set out in (1) to (3) above within the latest year;
(5) personnel providing financial, legal or advisory services to the Company or subsidiaries of the Company;
(6) personnel confirmed by the securities regulatory organ of the State Council not being allowed to act as Independent Directors.”

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

1.12 The original Article 134 which provides that:—

“The financial statements of the Company shall not only be prepared in accordance with PRC accounting standards and regulations but also be prepared in accordance with international accounting standards or the accounting standards of the place where the shares are listed. If there are material differences in the financial statements prepared using two different accounting standards, the differences should be set out in the notes to the financial statements. In distributing after-tax profits of the relevant fiscal year, the after-tax profits shall be the smaller amount in those two financial statements.”

is hereby amended as follows:—

“The financial statements of the Company shall not only be prepared in accordance with PRC accounting standards and regulations but also be prepared in accordance with international accounting standards. If there are material differences in the financial statements prepared using two different accounting standards, the differences should be set out in the notes to the financial statements. In distributing after-tax profits of the relevant fiscal year, the after-tax profits shall be the smaller amount in those two financial statements.”

1.13 The original Article 135 which provides that:—

“Any interim results or financial information publicly announced or disclosed by the Company shall be prepared in accordance with PRC accounting standards and regulations and , at the same time, shall also be prepared in accordance with international accounting standards or the accounting standards of the place where the shares are listed.”

is hereby amended as follows:—

“Any interim results, annual results or other relevant financial information publicly announced or disclosed by the Company shall be prepared in accordance with PRC accounting standards and regulations and, at the same time, shall also be prepared in accordance with international accounting standards.”

1.14 The original Article 136 which provides that:—

“In each fiscal year, the Company shall publicly announce twice its financial reports. The interim financial reports shall be publicly announced within sixty (60) days after the end of the first six (6) months of the fiscal year and the annual financial reports shall be publicly announced within one hundred and twenty (120) days after the end of the fiscal year.”

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

is hereby amended as follows:—

“In each fiscal year, the Company shall publicly announce four times its financial reports. The first quarterly report shall be published with thirty (30) days after the end of the first six (6) months of the preceding accounting year. The interim financial reports shall be publicly announced within sixty (60) days after the end of the first six (6) months of the accounting year. The third quarterly report shall be publicly announced with thirty (30) days after the end of the first nine (9) months of the preceding accounting year. The annual financial reports shall be publicly announced within one hundred and twenty (120) days after the end of the fiscal year.”

1.15 The original Article 143 which provides that:—

“The Company shall appoint an independent firm of accountants that satisfies the relevant requirements of the PRC to audit the annual financial reports of the Company and review other financial information.”

is hereby amended as follows:—

“The Company shall appoint an independent firm of accountants that satisfies the relevant requirements of the PRC to audit or review the financial reports of the Company.”

1.16 the original Article 164 which provides that:—

“Amendments to these Articles of Association which involve the provisions in the Mandatory Provisions shall be effective after approval by the company approval authority designated by the State Council and the State Council Securities Committee. If the amendments involve registration matters of the Company, the Company shall amend its registration in accordance with the applicable laws.”

is hereby amended as follows:—

“Amendments to these Articles of Association which involve the provisions in the Mandatory Provisions shall be effective after approval by the company approval authority designated by the State Council. If the amendments involve registration matters of the Company, the Company shall amend its registration in accordance with the applicable laws.”

The numbering of the Articles shall be adjusted accordingly in light of the amendments.

2. Biographies of candidates of directors

Li Xiaopeng Mr. Li is Vice President of State Power Corporation, Chairman of Huaneng Power International, Inc. (the “Company”), Chairman and President of Huaneng International Power Development Corporation (“HIPDC”), as well as Chairman and President of China Huaneng Group. From June, 1994 to January, 2000, Mr. Li was Vice President, President and Vice Chairman of the

Huaneng Power International, Inc.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Company as well as Vice President and Vice Chairman of HIPDC. Before joining HIPDC, he had successively served as Engineer of the Power System Research Division, as Deputy Division Chief of the Planning and Operations Division, and as General Manager of the Power Technology and Economic Research Division, Electric Power Research Institute. Mr. Li is a senior engineer and graduated from the North China Institute of Electric Power specializing in power plants and power systems.

Wang Xiaosong Mr. Wang is Vice Chairman of the Company, Director and Vice President of HIPDC, and Director and Vice President of China Huaneng Group. From June, 1994 to January, 2000, he was General Manager of the Securities Department of the Company, Vice President of the Company and Vice President of HIPDC. Before joining the Company, he had served as Deputy General Manager of Fushun Power Plant, General Manager of Yuanbaoshan Power Plant and Chief of the Labour and Wages Division of Northeast Power Administration. Mr. Wang is a senior engineer and graduated from Beijing Institute of Electric Power specializing in thermal power engineering.

Ye Daji Mr. Ye is Director and President of the Company and Director of China Huaneng Group. He has been Deputy General Manager of Huaneng Shanghai Branch and General Manager of Huaneng Shanghai Shidongkou Second Power Plant. From December, 1995 to January, 2000, he was Vice President of the Company and Vice President of HIPDC. Before joining the Company, he had served as Deputy Chief Engineer of Shanghai Shidongkou Power Plant. Mr. Ye is a senior engineer and graduated from Shanghai Jiaotong University specializing in mechanical engineering.

Huang Jinkai Mr. Huang is the Vice Chairman of the board of directors of China Huaneng Group. He served as Director (General Manager) of the Northeast Power Administration, Chairman of HIPDC and General Manager (Director) of North China Power Group Corporation (Power Administration). He is a senior engineer.

Liu Jinlong Mr. Liu is the Vice Chairman of China Huaneng Group. He served as General Manager of Central China Power Group Corporation and Director of Central China Power Administration, Chairman, General Manager, Vice Chairman of China Huaneng Group. Mr. Liu is a senior engineer.

Shan Qunying Mr. Shan is Director of the Company and Vice President of Hebei Provincial Construction Investment Company. He had been the Division Chief of Hebei Provincial Construction Investment Company. Mr. Shan is a senior engineer and graduated from Beijing Steel Institute specializing in automation.

Yang Shengming Mr. Yang is Director of the Company, Vice President of Fujian International Trust and Investment Company Limited and Chairman of Fujian International Leasing Company. Mr. Yang is a senior economist and graduated from Beijing Light Industries Institute.

Xu Zujian Mr. Xu is Director of the Company, and Chairman of Jiangsu Investment Management Co. Ltd. He was the Vice President of Jiangsu International Trust and Investment Company Limited, President of Jiangsu Investment Management Co. Ltd., Director and Vice President of Jiangsu International Asset Management Group Limited Company. Mr. Xu is a senior economist. He graduated from Liaoning Finance Institute majoring in infrastructure finance.

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

Gao Zongze Mr. Gao is an Independent Director of the Company and Senior Partner at C&I Partners. He is an approved arbitrator of China International Economic and Trade Arbitration Commission and China Marine Affairs Arbitration Commission and President of All China Lawyers Association. Mr. Gao graduated from Dalian Marine Institute and received a master’s degree in law from the Law Department of the Graduate School of the Institute of China Academy of Social Sciences.

Zheng Jianchao Mr. Zheng is an Independent Director of the Company and Honorary President of Electric Power Research Institute in China and Chairman of its Academic Committee. He was elected to the Chinese Academy of Engineering in 1995 and became Deputy Director of the Energy and Mining Engineering Department of the Academy. He was also a member of the Academic Committee of CIGRE, Vice President of China Electrical Engineering Institute and editor-in-chief of the Journal of Chinese Electrical Engineering. Mr. Zheng graduated from Qinghua University majoring in electrical engineering and graduated from its Graduate School in 1965.

Qian Zhongwei Mr. Qian is an Independent Director of the Company and the Vice President of the United Association of China Electric Enterprises. He has been the Deputy Chief Engineer, Chief Engineer and Deperty head of the Eastern China Power Industry Management Bureau, Head of Shanghai Electricity Bureau and President of Eastern China Power Group Company. Mr. Qian is a senior engineer and graduated from the electrical engineering department of Qinghua University.

Xia Donglin Mr. Xia is a professor and Ph.D. master of the Economic and Management School of Qinghua University. He is also the Advisory Specialist of the Accounting Standard Committee of the PRC Ministry of Finance, committee member of the China Accountiing Society, and independent director of Zhejiang Zhongdai companies. Mr. Xia was the manager of Zhonghua Finance Accounting and Advisory Company, head of Department Accounting of Economic and Management School of Qinghua University, Mr. Xia is a registered accountant (non-practising member). He graduated from the Finance and Administration Science Research Institute of Ministry of Finance, specialising in accounting and was awarded a PH.D. degree.

3. Biographies of candiates of Supervisors

Wei Yunpeng Mr. Wei is the Chief Accountant of China Huaneng Group, Adjunct Chief Accountant of Huaneng International Power Development Corporation, Chairman of China Huaneng Finance Limited Liability Company. He served as Chief Accountant of the Company. He is senior accountant.

Pan Jianmin Mr. Pan is a Supervisor of the Company and General Manager of the Finance Department of China Huaneng Group. He has served as Deputy Division Chief of the Finance Department and Deputy General Manager of the Supervising and Auditing Department of China Huaneng Group and Deputy General of Beijing Huaneng Real Estate Development Company. Mr. Pan is a senior accountant and graduated from Liaoning Economic and Finance Institute specializing in infrastructure finance and credit.

Huaneng Power International, Inc.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Liu Shuyuan Mr. Liu is Director of the Company and President of Liaoning Enterprises Group Company and Liaoning Energy Corporation. He has been the General Manager of Liaoning Tieling Steel Plant, Director of Tieling Municipal Construction Commission and Assistant to the Mayor. Mr. Liu is a senior economist and a postgraduate specializing in economic management.

Li Yonglin Mr. Li is the head of the Power Department of Dalian Municipal Construction Investment Company. He was a departmental grade researcher of the Energy Exchange Department of Dalian Municipal Planning Committee. Mr. Li graduated from Changchun Hydro-electric School of Ministry of Hydro-electric Power, specializing in power plants, grids and power systems.

Shen Weibing Mr. Shen is the chief officer of Nantong Investment Management Center. He was the vice president and president of Nantong Municipal Oil Company, vice president and legal representative of Nantong Municipal Construction Investment Company, and deputy chief officer and chief officer of Nantong Investment Management Centre. Mr. Shen graduated from the Department of Materials Management of Beijing Materials Management Institute. In 2002, he studied the MBA course in Nanjing University and obtained a master degree in busines administration. Mr. Shen is a senior economist.

Shen Zongmin Mr. Shen is the President of Shantou Electric Power Development Company and Chairman of Shantou Power Development Joint Stock Company Limited. Previously, he was the President of Shantou Light Industry Mechanical (Group) Company.

4. Eligibility for attending the Extraordinary General Meeting

Holders of the Company’s foreign Shares whose names appear on the HK$ Dividend foreign Shares Register and/or the US$ Dividend foreign Shares Register maintained by Hong Kong Registrars Limited and holders of domestic shares whose names appear on the domestic shares register maintained by the Company at the close of business on 29th November, 2002 are eligible to attend the Extraordinary General Meeting.

Proxy
(i) A member eligible to attend and vote at the Extraordinary General Meeting is entitled to appoint, in written form, one or more proxies to attend and vote on behalf of him. A proxy needs not be a shareholder.
(ii) A proxy should be appointed by a written instrument signed by the appointor or its attorney duly authorised in writing. If the form of proxy is signed by the attorney of the appointor, the power of attorney authorising that attorney to sign or other authorisation document(s) shall be notarised.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

(iii) To be valid, the power of attorney or other authorisation document(s) which have been notarised together with the completed form of proxy must be delivered, in the case of holders of domestic shares, to the Company and, in the case of holders of foreign Shares, to Hong Kong Registrars Limited, not less than 24 hours before the time designated for holding of the Extraordinary General Meeting.
(iv) A proxy may exercise the right to vote by a show of hands or by poll. However, if more than one proxy is appointed by a shareholder, such proxies shall only exercise the right to vote by poll.
Registration procedures for attending the Extraordinary General Meeting
(i) A shareholder or his proxy shall produce proof of identity when attending the meeting. If a shareholder is a legal person, its legal representative or other persons authorised by the board of directors or other governing body of such shareholder may attend the Extraordinary General Meeting by producing a copy of the resolution of the board of directors or other governing body of such shareholder appointing such persons to attend the meeting.
(ii) Holders of foreign Shares and domestic shares intending to attend the Extraordinary General Meeting should return the reply slip for attending the Extraordinary General Meeting to the Company on or before 2nd December, 2002.
(iii) Shareholders may send the above reply slip to the Company in person, by post or by fax.
Closure of Register of Members

The register of members of the Company will be closed from 22nd November, 2002 to 22nd December, 2002 (both days inclusive).

Other Businesses
(i) The Extraordinary General Meeting will not last for more than half day. Shareholders who attend shall bear their own travelling and accommodation expenses.
(ii) The address of the share registrar for Foreign Shares of the Company, Hong Kong Registrars Limited is at:

1901-5

19/F, Hopewell Centre 183 Queen’s Road East Hong Kong

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

(iii) The registered address of the Company is at:

West Wing, Building C Tianyin Mansion 2C Fuxingmennan Street Xicheng District Beijing 100031 The People’s Republic of China

Telephone No.: (+86)-10-66491999 Facsimile No.: (+86)-10-66491860

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Huaneng Power International, Inc.

AI assistant

Netjoy Holdings Limited — Proxy Solicitation & Information Statement 2002

50390_rns_2002-11-27_866ba793-9e12-4d4d-9126-928b036a9666.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ACTION

ON-GOING CONNECTED TRANSACTION

Financial Adviser to Huaneng Power International, Inc.

Deutsche Bank

CONTENTS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

CONNECTED TRANSACTION

1. INTRODUCTION

LETTER FROM THE BOARD

2. ENTRUSTED MANAGEMENT AGREEMENT

LETTER FROM THE BOARD

3. RATIONALE FOR THE TRANSACTION AND PRICING FACTORS

4. INFORMATION REGARDING THE ENTRUSTED POWER PLANTS

(1) Entrusted Power Plants currently managed by Huaneng Group

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(2) Entrusted Power Plants currently managed by HIPDC

LETTER FROM THE BOARD

5. CONNECTED TRANSACTION

6. DIRECTORS’ OPINION ON THE TRANSACTION

7. WAIVER TO BE SOUGHT

8. CONNECTED TRANSACTION UNDER SHANGHAI LISTING RULES

9. THE EGM

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

3. MATERIAL ADVERSE CHANGE

4. CONSENT

5. MISCELLANEOUS

6. DOCUMENTS FOR INSPECTION

Special Reminder

I. Interpretation

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

II. Introduction

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

III. Connected Relationship and Basic Information of the Connected Parties

(3) HIPDC

IV. Basic Information about the Entrusted Power Plants

A. List of Entrusted Power Plants

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

V. Principles in relation to this Connected Transaction

VI. Matters relating to the Entrusted Management

A. Details of the Entrusted Management

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

D. Confirmation of Results

E. Payment Method of Service Fee

G. Period for the Performance of the Entrusted Management Agreement

VII. Opinion of the Independent Financial Advisor

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

D. Independent Opinion

VIII. Reminder to the Shareholders

APPENDIX II LETTER FROM BEIJING H&J VANGUARD CONSULTING LIMITED

Special Resolution:

Ordinary resolutions:

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE OF EXTRAORDINARY GENERAL MEETING

2. Biographies of candidates of directors

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE OF EXTRAORDINARY GENERAL MEETING

3. Biographies of candiates of Supervisors

4. Eligibility for attending the Extraordinary General Meeting

More from Netjoy Holdings Limited

Netjoy Holdings Limited Proxy Solicitation & Information Statement 2002