Netjoy Holdings Limited - Proxy Solicitation & Information Statement 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should obtain independent professional advice.

If you have sold or transferred all your shares in Huaneng Power International, Inc., you should at once hand this circular and where applicable, the form of proxy and reply slip to the purchaser or transferee or to the bank, or a licensed securities dealer 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) (Stock Code: 902)

CONTINUING CONNECTED TRANSACTIONS

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the board of Directors of Huaneng Power International, Inc. is set out on pages 4 to 18 of this circular. A letter from the Independent Board Committee of Huaneng Power International, Inc. is set out on pages 19 to 20 of this circular. A letter from DBS containing its advice to the Independent Board Committee and the independent shareholders of Huaneng Power International, Inc. is set out on pages 21 to 28 of this circular.

A notice convening the EGM to be held at 9 a.m. on 23 December 2008 at the headquarters of the Company at West Wing, Building C, Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District, Beijing, the People’s Republic of China is set out on pages 36 to 38 of this circular.

If you intend to attend the EGM, you should complete and return the reply slip in accordance with the instructions printed thereon as soon as possible.

Whether or not you are able to attend, you should complete and return the form of proxy in accordance with the instructions printed thereon and return it to Hong Kong Registrars Limited at Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event by not later than 24 hours before the time appointed for holding such meeting or any adjournment thereof.

Completion and return of the form of proxy will not preclude you from attending and voting at the EGM should you so wish.

7 November 2008

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2.	Relationship between the Company, Huaneng Group and Huaneng Finance . . . . . . .	6
3.	Huaneng Group Framework Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
4.	Huaneng Finance Framework Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
5.	The EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
6.	Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
7.	Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		19
Letter from DBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		21
Appendix	— General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
Notice of	Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	36

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DEFINITIONS

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

“A Shares” domestic tradable shares in the ordinary share capital of the Company with a nominal value of RMB1.00 each, which are listed on the Shanghai Stock Exchange; “ADSs” American Depositary Shares, each representing the ownership of 40 H Shares, which are listed on the New York Stock Exchange Inc.; “associates” has the meaning ascribed to it in the Listing Rules; “Board” the board of Directors of the Company; “Company”, “HPI” Huaneng Power International, Inc., a sino foreign joint stock limited company incorporated in the PRC and the H Shares, ADSs and A Shares of which are listed on the Hong Kong Stock Exchange, the New York Stock Exchange Inc. and the Shanghai Stock Exchange, respectively, and its subsidiaries (as the case may be); “connected persons” has the meaning ascribed to it in the Listing Rules; “DBS” DBS Asia Capital Limited, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the cash deposit transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps), and a licensed corporation for Types 1 (dealing in securities), 4 (advising on securities) and 6 (advising on corporate finance) regulated activities under the SFO;

“Director(s)” the director(s) (including independent non-executive directors) of the Company;
“EGM” an extraordinary general meeting of the Company to be held for shareholders of the Company on 23 December 2008 to consider and approve, among other things, the Huaneng Group Framework Agreement and the Huaneng Finance Framework Agreement (and the caps of the transactions as contemplated thereby);
“H Shares” overseas listed foreign shares in the ordinary share capital of the Company with a nominal value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange;

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DEFINITIONS

“HIPDC”

Huaneng International Power Development Corporation;

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC;

“Hong Kong Listing Rules”

the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange;

“Huaneng Finance”

China Huaneng Finance Corporation Limited;

“Huaneng Finance Framework Agreement”

the framework agreement on the continuing connected transactions (for years 2009 to 2011) between Huaneng Power International, Inc. and China Huaneng Finance Corporation Limited entered into between the Company and Huaneng Finance on 21 October 2008;

“Huaneng Group” China Huaneng Group;
“Huaneng Group Framework Agreement”

the framework agreement on the continuing connected transactions (for 2009) between Huaneng Power International, Inc. and China Huaneng Group entered into between the Company and Huaneng Group on 21 October 2008;

“Independent Board Committee” a committee of the Board established for the purpose of considering the terms and the transaction caps of the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement, comprising Mr. Liu Jipeng, Mr. Yu Ning, Mr. Shao Shiwei, Mr. Zheng Jianchao and Mr. Wu Liansheng the independent non-executive Directors of the Company; “Independent Shareholders” Shareholders other than Huaneng Group, Huaneng Finance and their respective associates, and who are not involved in, or interested in the transactions contemplated by the Huaneng Group Framework Agreement and the Huaneng Finance Framework Agreement;

“Latest Practicable Date”
3 November 2008, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein;
“PRC” the People’s Republic of China;
“RMB” Renminbi, the lawful currency of the PRC;
“SFO”
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

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	DEFINITIONS
“Shanghai Listing Rules”	The Rules Governing the Listing of securities on the Shanghai
	Stock Exchange;
“Shareholders”	the shareholders of the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“subsidiaries”	has the meaning ascribed to it in the Listing Rules.

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LETTER FROM THE BOARD

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(a sino foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 902)

Directors:

Cao Peixi Huang Long Wu Dawei Huang Jian Liu Guoyue Fan Xiaxia Shan Qunying Xu Zujian Huang Mingyuan Liu Shuyuan

Legal Address:

West Wing, Building C Tianyin Mansion No. 2C Fuxingmennan Street Xicheng District Beijing 100031 PRC

Independent Non-executive Directors:

Liu Jipeng Yu Ning Shao Shiwei Zheng Jianchao Wu Liansheng

7 November 2008

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

1. INTRODUCTION

On 21 October 2008, the Board made an announcement (“Announcement”) regarding, among other things, the continuing connected transactions arising from the Huaneng Group Framework Agreement and the Huaneng Finance Framework Agreement. As stated in the Announcement, the Company shall issue a circular to the Shareholders containing further information of the continuing connected transactions as contemplated by the Huaneng Group Framework Agreement and the Huaneng Finance Framework Agreement.

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LETTER FROM THE BOARD

Under the Hong Kong Listing Rules, the conduct of purchase of coal and transportation services by the Company from Huaneng Group and its subsidiaries and associates under the Huaneng Group Framework Agreement and the conduct of deposit transactions under the Huaneng Finance Framework Agreement (together with their respective caps) both require independent shareholders’ approvals.

To comply with the requirements of the Hong Kong Listing Rules, the Independent Directors of the Company will advise the Independent Shareholders in connection with the terms of the continuing connected transactions (including the respective proposed caps) regarding the purchase of coal and transportation services contemplated under the Huaneng Group Framework Agreement and the deposit transactions contemplated under the Huaneng Finance Framework Agreement. The letter from the Independent Board Committee to the Independent Shareholders is included in this circular. DBS has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the terms in respect of the purchase of coal and transportation services under the Huaneng Group Framework Agreement and in respect of the deposit transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps) and whether the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposit transactions under the Huaneng Finance Framework Agreement are in the interests of the Company and its shareholders as a whole. The letter of advice from DBS to the Independent Board Committee and the Independent Shareholders is included in this circular.

Under the Hong Kong Listing Rules, DBS is only required to opine on the continuing connected transactions relating to the purchase of coal and transportation services contemplated under the Huaneng Group Framework Agreement and the deposit transactions contemplated under the Huaneng Finance Framework Agreement and, in which case, DBS will not provide opinion on the other transactions contemplated under the Huaneng Group Framework Agreement and, where applicable, the Huaneng Finance Framework Agreement (the “Other Transactions”). Notwithstanding such arrangement, the Company still includes details of the Other Transactions in this circular so that the Shareholders can have a full picture of all transactions as contemplated under the Huaneng Group Framework Agreement and the Huaneng Finance Framework Agreement. The Company believes that on such basis, the Independent Shareholders have been provided with sufficient information so as to make an informed decision in the voting of the relevant proposed resolutions.

The purposes of this circular are:

(i) to provide you with further information in relation to the transactions as contemplated by the Huaneng Group Framework Agreement and the Huaneng Finance Framework Agreement;
(ii) to set out the letter of advice from DBS to the Independent Board Committee and the Independent Shareholders and the recommendation of the Independent Board Committee as advised by DBS; and
(iii) to seek your approval of the ordinary resolution in relation to the transactions as contemplated by the Huaneng Group Framework Agreement and the Huaneng Finance Framework Agreement (together with their respective caps), which are set out in the notice of the EGM.

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LETTER FROM THE BOARD

2. RELATIONSHIP BETWEEN THE COMPANY, HUANENG GROUP AND HUANENG FINANCE

The Company and its subsidiaries mainly develop, construct, operate and manage large-scale power plants in China nationwide. It is one of the largest independent electricity power suppliers in China, owning a generation capacity of 37,593 MW on equity basis.

Huaneng Group is principally engaged in the operation and management of industrial investments; the development, investment, construction, operation and management of power source; organizing the generation and sale of power (and heat); and the development, investment, construction, production and sale of products in relation to information, transportation, new energy and environmental protection industries.

Huaneng Finance is a non-bank financial institution in the PRC. The principal business of Huaneng Finance includes deposit-taking, loans handling, acceptance and discounting of bills, inter-bank borrowing and foreign investment.

Huaneng Group is the controlling shareholder of HIPDC, holding a 51.98% direct interest and a 5% indirect interest in HIPDC. At the same time, Huaneng Group holds a 8.75% direct interest in the issued shares of the Company. Through its wholly-owned subsidiary, China Hua Neng Group Hong Kong Limited (“China Hua Neng Group HK”), Huaneng Group indirectly holds certain H shares of the Company, representing 0.16% of the issued shares of the Company. As at the Latest Practicable Date, HIPDC was the controlling shareholder of the Company, holding 42.03% of the issued shares of the Company. In addition, Huaneng Group holds a 51% interest in Huaneng Finance.

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LETTER FROM THE BOARD

The relationship between the Company, Huaneng Group and Huaneng Finance is illustrated as follows:

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----- Start of picture text -----

Huaneng Group
5% [()] 51.98%
HIPDC 8.91% [(#)]
42.03%
The Company 51%
20%
Huaneng Finance
----- End of picture text -----*

Huaneng Group, through China Hua Neng Group HK, indirectly holds a 100% interest in Pro-Power Investment Limited which in turns holds a 5% interest in HIPDC. Therefore, Huaneng Group holds a 5% indirect interest in HIPDC.
Of the 8.91% interest, 0.16% represents the interest in the H shares of the Company held by Huaneng Group through China Hua Neng Group HK.

Under the Hong Kong Listing Rules, Huaneng Group and Huaneng Finance are connected persons of the Company while the transactions between the Company and Huaneng Group, and Huaneng Finance (each include their respective subsidiaries and associates) constitute connected transactions of the Company, subject to the compliance with the relevant disclosures and/or independent shareholders approval requirements as stipulated in the Hong Kong Lising Rules (as the case may be).

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LETTER FROM THE BOARD

3. HUANENG GROUP FRAMEWORK AGREEMENT

The Company has entered into various framework agreements with Huaneng Group’s subsidiaries on 3 January 2008 for the purpose of governing the conduct of certain continuing connected transactions between the Company and Huaneng Group (and its subsidiaries and associates) in 2008. Such agreements will expire on 31 December 2008. In order to continue such transactions, the Company, as approved by the Board, entered into the Huaneng Group Framework Agreement with Huaneng Group on 21 October 2008 for a term commencing on 1 January 2009 and expiring on 31 December 2009. Pursuant to the agreement, the Company will conduct the following transactions with Huaneng Group and its subsidiaries and associates on an on-going basis:

(1) Purchase of ancillary equipment and parts

Due to operational need, the Company has to outsource ancillary equipments and parts (mainly including the raw materials and equipments for the infrastructure construction work for power plants) for the purpose of renovation and maintenance. Pursuant to the framework agreement endered into on 3 January 2008 with respect to the purchase of ancillary equipment and parts in 2008 by the Company from Huaneng Group and its subsidiaries and associates, the annual cap of such transactions for 2008 was set at RMB 1.056 billion (please refer to the announcement of the Company dated 3 January 2008). During the period from 1 January 2008 to 31 August 2008, the aggregate transaction amount (unaudited) in respect of the purchase of ancillary equipment and parts by the Company from Huaneng Group and its subsidiaries and associates was approximately RMB 256 million. According to the management policy of the Company and its subsidiaries, the Company will through tender process enter into arrangement with entities which can offer the lowest prices/most favorable terms to the Company for the purchase of ancillary equipment and parts. The Company and its subsidiaries thus purchased part of the ancillary equipment and parts during 2008 from independent third parties at prices which were relatively lower than the prices offered by Huaneng Group and its subsidiaries and associates. For 2009, the aggregate transaction amount with respect to the purchase of ancillary equipment and parts by the Company from Huaneng Group and its subsidiaries and associates under the Huaneng Group Framework Agreement is estimated not to exceed RMB1.12 billion. Such cap is estimated on the basis of the existing overall business scale and operation of the power plants of the Company, the anticipated development and growth of such power plants as deemed reasonable by the Company, as well as taking into account the benefit of offering favourable prices on bulk purchases by Huaneng Group and its subsidiaries and associates and the increase in the controlling generation capacity of the Company in 2009. Up to 30 September 2008, a total of two new thermal generating units of the Company commenced operation in 2008. The total generation capacity on an equity basis increased by 1,200 MW. As a result of the increase in operating generating units and generation capacity, the Company has been experiencing an increasing demand for ancillary equipment and parts to meet its operational need. The transaction amount in relation to the connected transactions of purchasing ancillary equipment and parts in 2009 will therefore increase.

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LETTER FROM THE BOARD

The competitive advantage of Huaneng Group and its subsidiaries and associates in the supply of ancillary equipment and parts is that they are able to offer more favourable prices for bulk purchase of ancillary equipment and parts. Taking into consideration the ability of Huaneng Group and its subsidiaries and associates to offer more favourable prices for ancillary equipment and parts, and owing to their close relationship with the Company, Huaneng Group and its subsidiaries and associates are able to provide the Company with the ancillary equipment and parts in a timely and reliable manner, thereby minimizing the management and operational costs of the Company.

Pursuant to the Huaneng Group Framework Agreement, the terms and the prices with respect to the purchase of ancillary equipment and parts by the Company from Huaneng Group and its subsidiaries and associates are negotiated at arm’s length terms, taking into account the then prevailing market conditions; but in any event at the terms and prices no less favourable than those offered to the Company by an independent third parties for the same or similar type of ancillary equipment and parts. In addition, the payment of such purchases will be settled in cash in arrears, or in accordance with the payment terms agreed by the relevant parties in the contracts to be entered into pursuant to the framework agreement.

The Board (including the Independent Directors) is of the view that the transactions for the purchase of ancillary equipment and parts as contemplated by the Huaneng Group Framework Agreement were entered into (1) in the ordinary and usual course of business of the Company; (2) on normal commercial terms (on arm’s length basis or on terms no less favourable to the Company than terms available from independent third parties); and (3) on terms that are fair and reasonable and in the interest of the Company and its shareholders as a whole.

As the applicable percentage ratios relating to the scale of the subject transactions calculated in accordance with Rule 14.07 of the Hong Kong Listing Rules do not exceed 2.5%, such transactions are therefore only subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Hong Kong Listing Rules but are exempt from the independent shareholders’ approval requirements. In addition, the Company will with respect to the subject transactions comply with the requirements under Rule 14A.37 to 14A.40 of the Hong Kong Listing Rules in respect of the annual review of these continuing connected transactions. If the actual aggregate amount of such transactions during the year ending 31 December 2009 exceeds the above cap (i.e. RMB1.12 billion), the Company will further comply with the requirements under Rule 14A.36 of the Hong Kong Listing Rules.

(2) Purchase of coal and transportation services

Coal is the major raw material of the Company for power generation. Pursuant to the Huaneng Group Framework Agreement, the Company will purchase coal and coal transportation services from Huaneng Group and its subsidiaries and associates at prices and charges calculated by reference to RMB/ton and the actual weight of carriage, with arm’s length terms taking into account the then market conditions, and in any event the terms of the purchases of coal and the transportation service shall be no less favourable than those offered by independent third parties to the Company for the same or similar type of coal supply or transportation services.

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LETTER FROM THE BOARD

Pursuant to the framework agreement entered into on 3 January 2008 with respect to the purchase of coal and transportation services in 2008 by the Company from Huanang Group’s subsidiaries and associates, the cap of the aggregate transaction amount for 2008 was set at RMB 5.9 billion (please refer to the announcement dated 3 January 2008 and the circular dated 17 January 2008 issued by the Company). During the period from 1 January 2008 to 31 August 2008, the aggregate transaction amount (unaudited) for purchase of coal and transportation services by the Company from Huaneng Group and its subsidiaries and associates was approximately RMB 3.873 billion. For 2009, the aggregate transaction amount with respect to the purchase of coal and transportation services by the Company from Huaneng Group and its subsidiaries and associates under the Huaneng Group Framework Agreement is estimated not to exceed RMB8.39 billion. The payment of the consideration will be settled in cash in arrears, or in accordance with the payment terms agreed by the relevant parties in the contracts to be entered into pursuant to the framework agreement. The cap of such amount is set on the basis of the prevailing overall business scale and operation of the power plants of the Company, and the anticipated development and growth of such power plants as deemed reasonable by the Company, taking into account the benefit of offering favourable terms on bulk purchase by Huaneng Group and its subsidiaries and associates. The relatively substantial increase in the cap of the aforementioned estimates transaction amount of 2009 as compared to the cap of 2008 is due to: (1) substantial increase in coal demanded by the newly operating generation units of the Company; and (2) the need for increasing coal supply from Huaneng Group and its subsidiaries and associates for the purpose of stabilizing the source of coal supply.

The competitive advantage of Huaneng Group and its subsidiaries and associates in the supply of coal and transportation services is that they can offer more favourable terms for bulk purchase of coal and transportation services. Taking into consideration the ability of Huaneng Group and its subsidiaries and associates to offer more favourable terms for purchases of coal and transportation services, and owing to their close relationship with the Company, Huaneng Group and its subsidiaries and associates are able to provide the Company with coal and transportation in a timely and reliable manner, thereby minimizing the management and operational costs of the Company. In addition, Huaneng Group and its subsidiaries and associates operate a sizeable fleet specializing in the provision of domestic maritime transportation services in China. Given that the reliability and the relative high quality of management and transportation services provided by Huaneng Group and its subsidiaries and associates could reduce the operational risks and enhance the efficiency of the daily operation of the Company, the Directors (including the Independent Directors) are of the view that the transactions for the purchase of coal and transportation services from Huaneng Group and its subsidiarties and associates contemplated under the Huaneng Group Framework Agreement were entered into (1) in the ordinary and usual course of business of the Company; (2) on normal commercial terms (on arm’s length basis or on terms no less favourable to the Company than terms available from independent third parties); and (iii) on terms that are fair and reasonable and in the interest of the Company and its shareholders as a whole.

As the applicable percentage ratios relating to the transaction scale for the purchase of coal and transportation services from Huaneng Group and its subsidiaries and associates calculated in accordance with Rule 14.07 of the Hong Kong Listing Rules exceed 2.5%, such transactions are therefore subject to the reporting, announcement and independent shareholders’ approval requirements under Rules 14A.45 to 14A.48 of the Hong Kong Listing Rules.

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LETTER FROM THE BOARD

(3) Provision of management services

Due to operational need, Huaneng Group and its subsidiaries and associates has to outsource certain services for its power plants. During the period from 1 January 2008 to 31 August 2008, the aggregate transaction amount (unaudited) in respect of provision of power plants management services by the Company to Huaneng Group and its subsidiaries and associates was approximately RMB 25 million. The Company estimates that the aggregage transaction amount with respect to the provision of power plants management services by the Company to Huaneng Group and its subsidiaries and associates in 2009 under the Huaneng Group Framework Agreement will not exceed RMB 42 million. The estimate of such cap is based on the prevailing overall business scale and operation of such party of the Company, the anticipated development and growth of such party as deemed reasonable by the Company. The Company believes that the provision of management services to Huaneng Group and its subsidiaries and associates by the Company will bring operating benefits to the Company.

Pursuant to the Huaneng Group Framework Agreement, the terms and prices with respect to the provision of power plants management services by the Company to Huaneng Group and its subsidiaries and associates are negotiated at arm’s length terms, taking into account the then prevailing market conditions; but in any event at the terms and conditions no less favourable than those offered by the Company to the independent third parties for the provision of the same and similar type of management services. In addition, the payment of the service fees will be settled in cash in arrears, or in accordance with the payment terms agreed by the relevant parties in the contracts to be entered into pursuant to the framework agreement.

The Board (including the Independent Directors) is of the view that the transactions for the provision of power plants management services contemplated under the Huaneng Group Framework Agreement were entered into: (1) in the ordinary and usual course of business of the Company; (2) on normal commercial terms (on arm’s length basis or on terms no more favourable than those offered by the Company to third parties); and (3) on terms that are fair and reasonable and in the interest of the Company and its shareholders as a whole.

As the applicable percentage ratios relating to the scale of the subject transactions calculated in accordance with Rule 14.07 of the Hong Kong Listing Rules do not exceed 0.1%, such transactions are therefore exempt from the reporting, announcement and the independent shareholders’ approval requirements. If the actual aggregate amount of such transactions during the year ending 31 December 2009 exceeds the above cap (i.e. RMB 42 million), the Company will further comply with the requirements under Rule 14A.36 of the Hong Kong Listing Rules.

(4) Leasing of power transmission facilities, land and office spaces

For operational need, the Company has to rent power transmission facilities, land and office spaces for power plants from Huaneng Group and its subsidiaries and associates. Pursuant to an agreement relating to provision of transmission and transformer facilities entered into between the Company and HIPDC on 4 December 1997, HIPDC agreed to lease the transmission and transformer facilities to the Company for a term of 20 years starting from 1 July 1997, the annual fees of which shall not exceed 12% of the book value of such transmission and transformer facilities. For compliance with the Shanghai Listing Rules, such agreement (and the transactions contemplated

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LETTER FROM THE BOARD

thereby) will be terminated upon the taking effect of the Huaneng Group Framework Agreement. In 2007, the fees paid by the Company under such agreement were RMB140,771,000. In 2007, the aggregate amount of rent paid by the Company to Huaneng Group and its subsidiaries and associates for renting the land and office spaces was RMB27,334,000. During the period from 1 January 2008 to 31 August 2008, the aggregate fees (unaudited) which have already been paid by the Company to Huaneng Group and its subsidiaries and associates for leasing of the power transmission facilities, land and office were RMB18 million. Pursuant to the Huaneng Group Framework Agreement, the Company will obtain leasing services of power transmission facilities, land and office spaces from Huaneng Group and its subsidiaries and associates in 2009. The aggregate transaction amount with respect to the leasing of power transmission facilities, land and office spaces by Huaneng Group and its subsidiaries and associates to the Company in 2009 is estimated not to exceed RMB169 million. The estimate of such cap amount is based on the prevailing overall business scale and operation of the power plants of the Company, the anticipated development and growth of such power plants as deemed reasonable by the Company, taking into account the benefit of offering favourable prices by Huaneng Group and its subsidiaries and associates.

On aspect of leasing facilities, land and office space, taking into consideration the ability of Huaneng Group and its subsidiaries and associates to offer more favourable prices for leasing power transmission facilities, land and office spaces, and owing to their close relationship with the Company, Huaneng Group and its subsidiaries and associates are able to provide the Company with the facilities, land and office spaces in a timely and reliable manner, thereby minimizing the management and operational costs of the Company.

Pursuant to the Huaneng Group Framework Agreement, the terms and the prices with respect to the leasing of power transmission facilities, land and office spaces to the Company by Huaneng Group and its subsidiaries and associates are negotiated at arm’s length terms, taking into account the then prevailing market conditions; but in any event at the leasing terms and prices no less favourable than those offered to the Company by independent third parties for the same or similar type of facilities, land and office spaces. In addition, the payment will be settled in cash in arrears, or in accordance with the payment terms agreed by the relevant parties in the contracts to be entered into pursuant to the framework agreement.

The Board (including the Independent Directors) is of the view that the transactions for the leasing of power transmission facilities, land and office spaces contemplated under the Huaneng Group Framework Agreement were entered into: (1) in the ordinary and usual course of business of the Company; (2) on normal commercial terms (on arm’s length basis or on terms no less favourable to the Company than terms available from independent third parties); and (3) on terms that are fair and reasonable and in the interest of the Company and its shareholders as a whole.

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LETTER FROM THE BOARD

requirements under Rule 14A.37 to 14A.40 of the Hong Kong Listing Rules in respect of the annual review of these continuing connected transactions. If the actual aggregate amount of such transactions during the year ending 31 December 2009 exceeds the above cap (i.e. RMB169 million), the Company will further comply with the requirements under Rule 14A.36 of the Hong Kong Listing Rules.

(5) Purchase of technical services and engineering contracting services

As a power company, the Company has to outsource information technology services and industry-specific technical engineering contracting services to meet its operation and production needs. Such services mainly include maintenance of power plants monitoring system, real-time consolidation of project data, trial run of generating units and monitoring of facilities construction work. Pursuant to the relevant framework agreement entered into on 3 January 2008 with respect to the purchase of technical services and engineering contracting services by the Company from Huanang Group and its subsidiaries and associates, the cap for the aggregate transaction amount for 2008 was set at RMB275 million (please refer to the announcement of the Company dated 3 January 2008). During the period from 1 January 2008 to 31 August 2008, the aggregate transaction amount (unaudited) for purchase of technical services and engineering contracting services by the Company from Huaneng Group and its subsidiaries and associates was approximately RMB102 million. For 2009, the aggregate transaction amount with respect to the purchase of technical services and engineering contracting services between the Company and Huaneng Group and its subsidiaries and associates under the Huaneng Group Framework Agreement is estimated not to exceed RMB237 million. The estimate of such cap is based on the prevailing overall business scale and operation of the power plants of the Company, the anticipated development and growth of such power plants as deemed reasonable by the Company, having taken into account the benefit of offering favourable prices for purchase of technical services and engineering contracting services by Huaneng Group and its subsidiaries and associates.

The competitive advantage of Huaneng Group and its subsidiaries and associates in the provision of technical services and engineering contracting services is that they can offer more favourable prices for provision of technical services and engineering contracting services. Taking into consideration the ability of Huaneng Group and its subsidiaries and associates to offer more favourable prices for provision of technical services and engineering contracting services, and owing to their close relationship with the Company, Huaneng Group and its subsidiaries and associates are able to provide the Company with the technical services and engineering contracting services in a timely and reliable manner, thereby minimizing the management and operational costs of the Company. In addition, certain subsidiaries and associate of Huaneng Group specialize in the research of information technology and domestic renewable energy technology, as well as the installation of thermal power facilities in the PRC. Given the ability of Huaneng Group and its subsidiaries and associate to provide reliable and efficient information technology services, and advanced and comprehensive industry-specific technology services and engineering contracting services, it is anticipated that the operation costs of the Company will be reduced.

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LETTER FROM THE BOARD

Pursuant to the Huaneng Group Framework Agreement, the terms and the prices with respect to the purchase of technical services and engineering contracting services by the Company from Huaneng Group and its subsidiaries and associates are negotiated at arm’s length terms, taking into account the then prevailing market conditions; but in any event at the terms and prices no less favourable than those offered to the Company by independent third parties for the same or similar type of technical services and engineering contracting services. In addition, the payment of consideration will be settled in cash in arrears, or in accordance with the payment terms agreed by the relevant parties in the contracts to be entered into pursuant to the framework agreement.

The Board (including the Independent Directors) is of the view that the transactions for the purchase of technical services and engineering contracting services as contemplated under the Huaneng Framework Agreement were entered into: (1) in the ordinary and usual course of business of the Company; (2) on normal commercial terms (on arm’s length basis or on terms no less favourable to the Company than terms available from independent third parties); and (3) on terms that are fair and reasonable and in the interest of the Company and its shareholders as a whole.

As the applicable percentage ratios relating to the scale of the subject transactions calculated in accordance with Rule 14.07 of the Hong Kong Listing Rules do not exceed 2.5%, such transactions are therefore only subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Hong Kong Listing Rules but are exempt from the independent shareholders’ approval requirements. In addition, the Company will with respect to the subject transactions comply with the requirements under Rule 14A.37 to 14A.40 of the Hong Kong Listing Rules in respect of the annual review of these continuing connected transactions. If the actual aggregate amount of such transactions during the year ending 31 December 2009 exceeds the above cap (i.e. RMB237 million), the Company will further comply with the requirements under Rule 14A.36 of the Hong Kong Listing Rules.

4. HUANENG FINANCE FRAMEWORK AGREEMENT

Pursuant to the relevant framework agreement entered into between the Company and Huaneng Finance dated 7 March 2006, the Company has from time to time placed deposits with Huaneng Finance at rates which are no less favourable than the rates available from an independent third party for similar services in the PRC. In addition, the Company has also utilized the notes discounting services provided by Huaneng Finance by paying it a service fee lower than the service fees charged by an independent third party for similar services in the PRC. For the period from 2006 to 2008, the outstanding balances of the deposits should not exceed RMB6 billion on a daily basis and the total amount of the notes discounting should not exceed RMB1,850 million per annum (please refer to the announcement dated 10 March 2006 and the circular dated 31 March 2006 issued by the Company). As such framework agreement would expire on 31 December 2008, the Company entered into the Huaneng Finance Framework Agreement with Huaneng Finance on 21 October 2008 to extend the arrangement for another term of 3 years commencing on 1 January 2009 and expiring on 31 December 2011. For the years 2006, 2007 and the period from January to August 2008 (unaudited), the maximum outstanding balances of the deposits placed with Huaneng Finance, on a daily basis, were RMB5,544 million, RMB4,907 million and RMB5,055 million, respectively. The Company estimates that the during the period from 2009 to 2011, the outstanding balances of the deposits to be placed with Huaneng Finance on a daily basis will not exceed RMB6 billion.

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LETTER FROM THE BOARD

The proposed cap for the deposits has taken into the following consideration: (1) the increasing asset scale and the amount of deposits of the Company; (2) the increase in the daily outstanding balances of deposits placed at Huaneng Finance arising from financing transactions such as issuance of the short-term financial instruments (the Company has approved the issuance of short-term financial instruments with an aggregate principal amount up to RMB10 billion at the annual general meeting of 2007, of which RMB5 billion has already been issued); and (3) the fact that the Company has acquired a 20% equity interest in Huaneng Finance since December 2005, and the Company will generate a higher return deriving from a growth of profits at Huaneng Finance as a result of the Company’s support to Huaneng Finance.

The deposit transactions form part of the daily operations of the Company. The commercial terms (including the rates) offered by Huaneng Finance in respect of such transaction are no less favourable than those offered by domestic commercial banks for provision of similar services to the Company. The Directors are of the view that the deposit transactions do not have any effect on the assets and liabilities of the Company. Instead, the Company can earn interests out of the deposit transactions. As the Company has already deposited the remaining cash with a number of other independent financial institutions, the Company considers that the arrangement of deposits with Huaneng Finance helps diversify the Company’s risk in relation to its deposits.

In addition, the Company will also use the notes discounting services and loan advancement services provided by Huaneng Finance as Huaneng Finance is more efficient in terms of notes discounting services and loan advancement services than the general domestic commercial banks that perform similar services for the Company (mainly due to the fact that less time is required to process the transactions). As such, the Company considers that the provision of notes discounting services and loan advancement services by Huaneng Finance will benefit the Company by increasing the operation efficiency in the use of fund. For the years 2006, 2007 and the period from January to August 2008, the total amount of notes discounting services provided by Huaneng Finance were RMB114 million, RMB350 million and RMB0 million, respectively, while the maximum outstanding loan amount provided by Huaneng Finance to the Company, on a daily basis, were RMB3.745 billion, RMB3.553 billion and RMB3.092 billion, respectively. The Company estimates that for each of the three years from 2009 to 2011, the total amount of notes discounting will not exceed RMB1 billion and the total outstanding amount of loan, on a daily basis, will not exceed RMB6 billion.

Pursuant to the Huaneng Finance Framework Agreement, Huaneng Finance shall provide deposit interest, notes discounting services and loan advancement services on normal commercial terms that are no less favourable than those offered by independent third parties for similar services to the Company.

The Board (including the Independent Directors) is of the view that the Huaneng Finance Framework Agreement was entered into: (1) in the ordinary and usual course of business of the Company; (2) on normal commercial terms (on arm’s length basis or on terms no less favourable to the Company than terms available from independent third parties); and (3) on terms that are fair and reasonable and in the interest of the Company and its shareholders as a whole.

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LETTER FROM THE BOARD

As the applicable percentage ratios relating to the scale of the deposit transactions with Huaneng Finance and its subsidiaries and associates contemplated under the Huaneng Finance Framework Agreement calculated in accordance with Rule 14.07 of the Hong Kong Listing Rules exceed 2.5%, such transactions are therefore subject to the reporting, announcement and independent shareholders’ approval requirements under Rules 14A.45 to 14A.48 of the Hong Kong Listing Rules. Further, as the proposed cap for such deposit transactions exceed 5% of all applicable percentage ratios calculated in accordance with Rule 14.07 of the Hong Kong Listing Rules, such deposit transactions also constitute discloseable transactions under Chapter 14 of the Hong Kong Listing Rules.

With respect to the notes discounting and loan advancement, given that the notes discounting services and loan advancement services are provided by Huaneng Finance for the benefit of the Company and on normal commercial terms that are comparable to or more favourable than those offered by independent third parties for similar services in the PRC and that no security over the assets of the Company is granted in respect of such services, the transactions for notes discounting services and loan advancement services contemplated under the Huaneng Finance Framework Agreement are exempt from reporting, announcement and independent shareholders’ approval requirements under Rule 14A.65(4) of the Hong Kong Listing Rules.

5. THE EGM

Under the Hong Kong Listing Rules, the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposit transactions under the Huaneng Finance Framework Agreement constitute continuing connected transactions to the Company. The aggregate of the transaction scale of each of such type of transactions exceeds 2.5% of the applicable percentage ratios as calculated pursuant to Rule 14.07 of the Listing Rules. Pursuant to Rule 14A.18 of the Listing Rules, the Company shall obtain the Independent Shareholders’ approvals for the conduct of the transactions of purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposit transactions under the Huaneng Finance Framework Agreement and their respective proposed caps thereof. On the other hand, pursuant to the Shanghai Listing Rules, the conduct of all transactions with Huaneng Group (together with its subsidiaries and associates, all being treated as the concerted related parties of the Company under the Shanghai Listing Rules) as set out in this circular shall be approved by the Independent Shareholders of the Company. The EGM will be held for considering and approving the Huaneng Group Framework Agreement and the Huaneng Finance Framework Agreement and their respective proposed caps thereof by the Independent Shareholders. Huaneng Group, HIPDC and their respective associates and Shareholders who are involved in, or interested in the transactions contemplated by the Huaneng Group Framework Agreement and the Huaneng Finance Framework Agreement (holding an aggregate of 6,141,786,667 shares in the Company, representing approximately 50.94% of the total issue shares of the Company as at the Latest Practicable Date) will abstain from voting at the EGM, at which the proposed resolution will be passed by way of ordinary resolution and voting will be taken by way of a poll in accordance with the requirements of the Listing Rules. The Notice of EGM is set out on pages 36 to 38 of this circular.

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LETTER FROM THE BOARD

A reply slip and a form of proxy for use by the Independent Shareholders at the EGM are 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, Xicheng District, Beijing, PRC as soon as possible but in any event not later than 3 December 2008. The enclosed form of proxy should be completed and returned to the Company’s H Share Registrar, Hong Kong Registrars Limited, at Rooms 1806-07, 18th Floor, 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.

6. RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders of the Company, which is set out on pages 19 to 20 of this circular, and which contains their recommendation in respect of the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps).

The letter of advice from DBS to the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the terms of the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps) and whether the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement are in the interests of the Company and its shareholders as a whole is set out on pages 21 to 28 of this circular.

The Independent Board Committee, having taken into account the advice of DBS, considers that the terms of the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps) are fair and reasonable so far as the Independent Shareholders are concerned and that the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps) are in the interests of the Company and its shareholders as a whole. Accordingly, it recommends that the Independent Shareholders vote in favour of the relevant resolutions to approve the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (together with their respective proposed caps).

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LETTER FROM THE BOARD

7. OTHER INFORMATION

Your attention is drawn to the general information set out in the appendix to this circular.

Yours faithfully By order of the Board Huaneng Power International, Inc. Cao Peixi

Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(a sino foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 902)

Registered office: West Wing, Building C Tianyin Mansion 2C Fuxingmennan Street Xicheng District Beijing 100031 The People’s Republic of China 7 November 2008

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We, the Independent Board Committee of Huaneng Power International, Inc., are advising the Independent Shareholders in connection with the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps), details of which are set out in the letter from the Board contained in the circular (“Circular”) of the Company to the Shareholders dated 7 November 2008, of which this letter forms a part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

Under the Listing Rules, the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement constitute continuing connected transactions to the Company. Accordingly, the conduct of the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps) will require the approval of the Independent Shareholders at the EGM.

We wish to draw your attention to the letter of advice from DBS set out on pages 21 to 28 of the Circular. We have discussed the letter and the opinion contained therein with DBS.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered, inter alia, the factors and reasons considered by, and the opinion of, DBS, as stated in its aforementioned letter, we consider the terms of the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps) to be fair and reasonable so far as the Independent Shareholders are concerned. We are of the view that the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps) are in the interests of the Company and its shareholders as a whole. Accordingly, we recommend that the Independent Shareholders vote in favour of the ordinary resolutions in the Notice of EGM set out at the end of the Circular to be proposed at the EGM to be held on 23 December 2008 and thereby approve the transactions relating to the purchase of coal and transportation services under the Huaneng Group Framework Agreement and the deposits transactions under the Huaneng Finance Framework Agreement (and their respective proposed caps).

Yours faithfully, Liu Jipeng Yu Ning Shao Shiwei Zheng Jianchao Wu Liansheng Independent Directors

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LETTER FROM DBS

The following is the text of the letter of advice from DBS, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, in relation to the continuing connected transactions, which has been prepared for the purpose of inclusion in this circular.

7 November 2008

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to (i) the purchase of coal and transportation services by the Company from Huaneng Group and its subsidiaries and associates under the Huaneng Group Framework Agreement (the “Coal Purchase”); and (ii) the provision of deposit services by Huaneng Finance to the Company under the Huaneng Finance Framework Agreement (the “Deposit Services”) (together, the “Continuing Connected Transactions”), details of which are set out in the letter from the Board in the circular of the Company to its Shareholders dated 7 November 2008 (the “Circular”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

On 21 October 2008, the Board made an announcement (the “Announcement”) regarding, amongst other things, the Continuing Connected Transactions. As stated in the Announcement, the Company shall issue a circular to the Shareholders containing further information of the Continued Connected Transactions and will convene a general meeting for obtaining the Independent Shareholders’ approvals for the conduct of the Continuing Connected Transactions (and their relevant proposed caps).

Huaneng Group is the controlling shareholder of HIPDC, holding a 51.98% direct interest and a 5% indirect interest in HIPDC. At the same time, Huaneng Group holds a 8.75% direct interest in the issued shares of the Company. Through its wholly-owned subsidiary, China Hua Neng Group Hong Kong Limited, Huaneng Group indirectly holds certain H shares of the Company, representing 0.16% of the issued shares of the Company. As at the Latest Practicable Date, HIPDC was the controlling shareholder of the Company, holding 42.03% of the issued shares of the Company. In addition, Huaneng Group holds a 51% interest in Huaneng Finance.

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LETTER FROM DBS

Under the Hong Kong Listing Rules, Huaneng Group and Huaneng Finance are connected persons of the Company and the Continued Connected Transactions between the Company and Huaneng Group, and Huaneng Finance (each include their respective subsidiaries and associates) constitute non-exempt continuing connected transactions of the Company, subject to the compliance with the relevant disclosures and independent shareholders approval requirements as stipulated in the Hong Kong Listing Rules.

Our scope of work under this engagement is to assess whether the Continuing Connected Transactions are on normal commercial terms, in the ordinary and usual course of business, fair and reasonable and in the interests of the Company and the Shareholders as a whole, and to advise the Independent Board Committee and the Independent Shareholders on whether the Independent Shareholders should vote in favour of the Continuing Connected Transactions at the EGM.

BASIS OF OUR OPINION

In arriving at our opinion, we have relied on the information, opinions and facts supplied, and representations made, to us by the Directors, advisers and representatives of the Company (including those contained or referred to in the Circular). We have also assumed that the information and representations contained or referred to in the Circular were true and accurate in all respects at the time they were made and continue to be so at the date of dispatch of the Circular. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors, advisers and representatives of the Company (including those contained or referred to in the Circular). We have also relied on certain information available to the public and have assumed such information to be accurate and reliable, and we have not independently verified the accuracy of such information. We have been advised by the Directors and believe that no material facts have been omitted from the Circular.

We consider that we have reviewed sufficient information to reach an informed view, to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our opinion. We have not, however, conducted an independent verification of the information nor have we conducted any form of in-depth investigation into the businesses and affairs or other prospects of the Company or any of its subsidiaries or associates.

I COAL PURCHASE

As stated in the letter from the Board contained in the Circular, on 21 October 2008, the Company and Huaneng Group entered into the Huaneng Group Framework Agreement for a term commencing from 1 January 2009 and expiring on 31 December 2009, pursuant to which the Company has agreed to engage Huaneng Group and its subsidiaries and associates for certain transactions, including the Coal Purchase, subject to the terms and conditions in the Huaneng Group Framework Agreement.

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LETTER FROM DBS

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion with regards to the terms of the Coal Purchase, we have considered the following principal factors and reasons:

1. Background

Background of the Company

Background of Huaneng Group

Huaneng Group is principally engaged in the operation and management of industrial investments; the development, investments, construction, operation and management of power source; organising the generation and sale of power (and heat); and the development, investment, construction, production and sale of products in relation to information, transportation, new energy and environmental protection industries.

2. Reasons for and benefits of the Coal Purchase

As stated in the letter from the Board contained in the Circular, coal is the major raw material of the Company. Huaneng Group and its subsidiaries and associates have a competitive advantage of quoting favourable terms for bulk purchase of coal and transportation services. The Company will purchase coal and transportation services from Huaneng Group and its subsidiaries and associates on terms that shall be no less favourable than those offered by independent third parties to the Company for the same or similar type of coal supply or transportation services. Huaneng Group and its subsidiaries and associates are able to provide the Company with coal and transportation in a timely and reliable manner with greater flexibility afforded to the Company and its subsidiaries in terms of ordering and receiving coal as compared to independent third party coal suppliers. In addition, the quality of the coal meets the requirements of the Company and its subsidiaries and the location of the coal supply has the advantage of greater proximity to the relevant power plants of the Company and its subsidiaries. All these factors serve to minimise the management and operational costs of the Company. In addition, Huaneng Group and its subsidiaries and associates operate a sizeable fleet specialising in the provision of domestic maritime transportation services in China. The reliability and relative high quality of management and transportation services provided by Huaneng Group and its subsidiaries and associates could reduce the operational risks and enhance the efficiency of the daily operation of the Company.

Given the above, the Directors are of the view that the transactions for the Coal Purchase were entered into (i) in the ordinary and usual course of business of the Company; (ii) on normal commercial terms (on arm’s length basis or on terms no less favourable to the Company than terms available from independent third parties); and (iii) on terms that are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

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LETTER FROM DBS

3. Terms of the Coal Purchase

Pursuant to the Huaneng Group Framework Agreement, the Company will purchase coal and transportation services from Huaneng Group and its subsidiaries and associates at prices and charges calculated with reference to RMB/ton and the actual weight of carriage, at arm’s length terms taking into account the then market conditions, and in any event the terms of the Coal Purchase shall be no less favourable than those offered by independent third parties to the Company for the same or similar type of coal supply or transportation services.

We have performed a review on the relevant coal and transportation services contracts, samples of coal delivery notes including the coal unit price contained therein and the historical trend of coal prices with no exception noted.

Taking into consideration of (i) the reasons for and benefits of the Coal Purchase as mentioned above; and (ii) the terms of the Coal Purchase which are based on normal commercial terms and in the ordinary course of business of the Company; we concur with the Directors’ opinion that the terms of the Coal Purchase are fair and reasonable and the Coal Purchase is in the interests of the Company and its Shareholders as a whole.

4. Proposed cap for the Coal Purchase

Pursuant to the framework agreement entered into on 3 January 2008 with respect to the purchase of coal and transportation services in 2008 by the Company from Huaneng Group and its subsidiaries and associates, the cap of the aggregate transaction amount for 2008 was set at RMB5.90 billion. For the 8 months ended 31 August 2008, the Company has purchased coal and transportation services from Huaneng Group and its subsidiaries and associates for an aggregate amount of approximately RMB3.87 billion (unaudited) which represented 65.6% of the cap for 2008. The estimated annual cap amount for the Coal Purchase for the year ending 31 December 2009 shall not exceed RMB8.39 billion, an increase of approximately 42.2% from the cap for 2008 of RMB5.90 billion. The proposed cap for the Coal Purchase in 2009 is set on the basis of the prevailing overall business scale and operation of the power plants of the Company, and the anticipated development and growth of such power plants as deemed reasonable by the Company, taking into account the benefit of favourable bulk purchase terms offered by Huaneng Group and its subsidiaries and associates. The relatively substantial increase in the proposed cap for the Coal Purchase in 2009 as compared to the cap of 2008 is due to (i) the substantial increase in coal volume demanded by the newly operating generation units of the Company; and (ii) the need for increasing coal supply from Huaneng Group and its subsidiaries and associates for the purpose of stabilising the coal supply. As advised by the Company, in the first half of 2008, 12 desulphurised generating units with a total generation capacity of 5,522MW have commenced operations. As a result of the increase in the operating generating units and the scale of generation capacity, total demand for coal of the Company is expected to increase in 2009.

The Directors advised that after considering (i) the ability of Huaneng Group and its subsidiaries and associates to provide coal and transportation services to the Company in a timely and reliable manner; (ii) the fact that the Company will purchase coal and transportation services from Huaneng Group and its subsidiaries and associates on terms no less favourable than those offered by

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LETTER FROM DBS

independent third parties to the Company for the same or similar type of coal supply or transportation services; and (iii) the expected increase in demand for and the prices of coal in 2009; the Company expects to increase the Coal Purchase for the purpose of stabilising the coal supply of the Company.

Having considered the reasons above in determining the cap of the Coal Purchase, we are of the view that the estimated cap amount of RMB8.39 billion for the year ending 31 December 2009 is fair and reasonable.

II DEPOSIT SERVICES

As stated in the letter from the Board contained in the Circular, on 21 October 2008, the Company and Huaneng Finance entered into the Huaneng Finance Framework Agreement for a term commencing on 1 January 2009 and expiring on 31 December 2011, pursuant to which Huaneng Finance has agreed to provide the Company with certain financial services, including the Deposit Services, subject to the terms and conditions in the Huaneng Finance Framework Agreement.

PRINCIPAL FACTORS CONSIDERED

In arriving at our opinion with regards to the terms of the Deposit Services, we have considered the following principal factors and reasons:

1. Background of Huaneng Finance

Huaneng Finance is a non-bank institution in the PRC. The principal business of Huaneng Finance includes deposit-taking, loan handling, acceptance and discounting of bills, inter-bank borrowing and investment.

2. Major terms of the Deposit Services

As stated in the letter from the Board contained in the Circular, the Deposit Services form part of the daily operations of the Company and the commercial terms (including the rates) offered by Huaneng Finance in respect of the Deposit Services are no less favourable than those offered by domestic commercial banks for the provision of similar services to the Company.

The Board (including the Independent Directors) is of the view that the Huaneng Finance Framework Agreement was entered into (i) in the ordinary and usual course of business of the Company; (ii) on normal commercial terms (on terms no less favourable to the Company than terms available from independent third parties); and (iii) on terms that are fair and reasonable and in the interests of the Company and its shareholders as a whole.

3. Reasons for and benefits of depositing with Huaneng Finance

The rates offered by Huaneng Finance and all other commercial banks in the PRC are subject to the guidelines published by the People’s Bank of China (the “PBOC”), and the rates offered by Huaneng Finance to the Company are on normal commercial terms and are no less favourable than

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LETTER FROM DBS

those offered by independent third parties to the Company for similar services in the PRC. We have compared the deposit rates offered by Huaneng Finance to the Company with the deposit rates published by the PBOC. The deposit rates offered by Huaneng Finance to the Company represent the highest published PBOC deposit rates.

The Directors are of the view that the deposit transactions do not have any effect on the assets and liabilities of the Company. Instead, the Company can earn interests out of the deposit transactions. As the Company has already deposited the remaining cash with a number of other independent financial institutions, the Company considers that the arrangement of deposits with Huaneng Finance helps diversifying the Company’s risk in relation to its deposits. We are of the view that the arrangement of the deposits with Huaneng Finance and other independent financial institutions helps diversifying the Company’s risk in relation to its deposits.

4. Assessment of the financial risks on the deposits with Huaneng Finance

Since Huaneng Finance is not as sizable as the major commercial banks in the PRC, the Directors have assessed the financial risks involved in placing deposits with Huaneng Finance. In assessing the financial risks involved in placing deposits with Huaneng Finance, we understand that the Directors have taken into account the following factors:

(a) Huaneng Finance is regulated by the China Banking Regulatory Commission (the “CBRC”). Pursuant to the Administrative Rules Governing Corporate Financial Institutions (企業集團財務公司管理辦法) promulgated by the CBRC on 27 July 2004 and amended on 28 December 2006 (the “CFI Rules”), group finance companies, such as Huaneng Finance, are not allowed to engage in (i) offshore business (except for assisting member companies in settling trade payables and receivables); or (ii) non-financial services business. In addition, such companies’ business shall be conducted in compliance with the following gearing ratio requirements: (i) the capital adequacy ratio shall not be lower than 10%; (ii) the inter-bank borrowing balances shall not be more than the total registered capital; (iii) the total amount of outstanding guarantees shall not be more than the total registered capital; (iv) the short-term securities investments to total registered capital ratio shall not be more than 40%; (v) the long-term investment to total registered capital ratio shall not be more than 30%; and (vi) the self-owned fixed assets to total registered capital ratio shall not be more than 20%;
(b) Huaneng Finance has been in compliance with all the major financial services rules and regulations and it has maintained a sound internal control system;
(c) the capital adequacy ratios of Huaneng Finance as at 31 December 2007 and 31 August 2008 were approximately 15.49% and 17.61% respectively, which were higher than the required capital adequacy ratio of 10% in the PRC;
(d) the Company holds 20% interest in Huaneng Finance and is able to appoint two directors to the board of Huaneng Finance. Huaneng Finance has also set up a risk management committee and the Company has appointed one member to that committee; and

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LETTER FROM DBS

(e) according to the Articles of Association of Huaneng Finance, only Huaneng Group is obliged to increase its contributed capital in Huaneng Finance when Huaneng Finance is in financial difficulties.

Given the above and the fact that Huaneng Finance is a member of the state-owned Huaneng Group, the Directors consider the financial risks involved in placing deposits with Huaneng Finance are not significant. We have reviewed the CFI Rules, the Articles of Association and the operating manual of the risk management committee of Huaneng Finance. Taking account of the factors considered by the Directors in their assessment, in particular the fact that Huaneng Finance is regulated by the CBRC with clear risk management policies, we consider that the assessment of the Directors is based on reasonable ground and concur with the Directors that the financial risks involved are not significant.

5. Proposed cap for the Deposit Services

Pursuant to the relevant framework agreement entered into between the Company and Huaneng Finance dated 7 March 2006, the Company has from time to time placed deposits with Huaneng Finance, subject to the outstanding balances of the deposits not exceeding RMB6 billion on a daily basis for the period from 1 January 2006 to 31 December 2008.

As such framework agreement would expire on 31 December 2008, the Company entered into the Huaneng Finance Framework Agreement with Huaneng Finance on 21 October 2008 to extend the Deposit Services for another term of 3 years commencing on 1 January 2009 and expiring on 31 December 2011. The Company estimates that the maximum outstanding balances of the deposits to be placed with Huaneng Finance for the period from 2009 to 2011, as stipulated in the Huaneng Finance Framework Agreement, will not exceed RMB6 billion on a daily basis.

The proposed cap for the Deposit Services has taken into consideration the followings: (i) the increasing asset scale and the amount of deposits of the Company; (ii) the increase in the daily outstanding balances of deposits placed with Huaneng Finance arising from financing transactions such as the issuance of short-term financial instruments (the Company has approved the issuance of short-term financial instruments with an aggregate principal amount of up to RMB10 billion at the annual general meeting of 2007, of which RMB5 billion has already been issued); and (iii) the fact that the Company has acquired a 20% equity interest in Huaneng Finance since December 2005, and the Company will be able to share in the growth in profits at Huaneng Finance as a result of the Company’s support to Huaneng Finance. The Board (including the independent non-executive Directors) is therefore of the view that the proposed cap is fair and reasonable.

According to the Circular, for each of the years ended 31 December 2006 and 31 December 2007 and the 8 months ended 31 August 2008, the maximum outstanding balances of the deposits placed with Huaneng Finance were RMB5,544 million, RMB4,907 million and RMB5,055 million respectively, all of which are lower than the proposed cap. The maximum outstanding balance for the year ended 31 December 2007 represented approximately 65% of the total bank balance of the Company and its subsidiaries as at 31 December 2007. The Company expects an increase in the daily outstanding balance of deposits arising from financing transactions such as the issuance of up to RMB5 billion short-term financial instruments (being the remainder of the short-term financial

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LETTER FROM DBS

instruments with an aggregate principal amount of up to RMB10 billion approved at the annual general meeting of 2007). Accordingly, the Directors advised that the proposed cap which is set at RMB6 billion is necessary to accommodate the increase in bank deposits taking into account the implementation of the financing transactions.

Based on our discussions with the Company and taking into account the factors and reasons discussed above, we are of the view that the proposed cap for the Deposit Services is reasonably determined.

OPINION

Taking into consideration the above principal factors and reasons, we are of the opinion that the Continuing Connected Transactions are on normal commercial terms, in the ordinary and usual course of business of the Company, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to advise the Independent Shareholders to vote in favor of the Continuing Connected Transactions at the EGM.

Yours faithfully, For and on behalf of DBS ASIA CAPITAL LIMITED George Hongchoy Liu Xiao Feng Managing Director Managing Director

— 28 —

GENERAL INFORMATION

APPENDIX

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 INTEREST

(a) Directors and Supervisors of the Company

As at the Latest Practicable Date, none of the Directors, chief executive or Supervisors of the Company has interests or short positions in the shares and underlying shares of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO) or which are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange.

(b) Substantial Shareholders

As at the Latest Practicable Date, save as disclosed below, so far as is known to the Board, no persons (not being a Director, chief executive or Supervisor of the Company) had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at the general meeting of any other member of the Company:

					Approximate
				Approximate	percentage of	Approximate
				percentage of	shareholding	percentage of
				shareholding	in the	shareholding
				in the	Company’s	in the
				Company’s	total issued	Company’s
	Class of	Number of		total issued	domestic	total issued
Name of shareholder	shares	shares held	Capacity	share capital	shares	H shares
Huaneng International	Domestic	5,066,662,118(L)	Beneficial	42.03%(L)	56.30%(L)	—
Power Development	shares		owner
Corporation#
China Huaneng Group#	Domestic	1,055,124,549(L)	Beneficial	8.75%(L)	11.72%(L)	—
	shares		owner
China Huaneng Group #	H shares	20,000,000(L)	Beneficial	0.16%(L)	—	0.65%(L)
			owner
Hebei Provincial	Domestic	603,000,000(L)	Beneficial	5.00%(L)	6.7%(L)	—
Construction	shares		owner
Investment Company

— 29 —

GENERAL INFORMATION

APPENDIX

					Approximate
				Approximate	percentage of	Approximate
				percentage of	shareholding	percentage of
				shareholding	in the	shareholding
				in the	Company’s	in the
				Company’s	total issued	Company’s
	Class of	Number of		total issued	domestic	total issued
Name of shareholder	shares	shares held	Capacity	share capital	shares	H shares
JP Morgan Chase H	H Shares	51,490,939(L)	Beneficial	0.42%(L)	—	1.68%(L)
Shares & Co.(2)			owner
		800,000(L)	Investment	0.006%(L)	—	0.02%(L)
			manager
		120,041,660(L)	Custodian/	0.99%(L)	—	3.92%(L)
			approved
			lending
			agent
		28,717,425(S)	Beneficial	0.23%(S)	—	0.93%(S)
			owner
		800,000(S)	Investment	0.006%(S)	—	0.02%(S)
			manager
Barclays Global	H Shares	231,762,168(L)	Interest of	1.92%(L)	—	7.58%(L)
Investors UK			controlled
Holdings Limited(3)			corporations
		11,230,000(S)	Interest of	0.09%(S)	—	0.36%(S)
			controlled
			corporations
Barclays PLC(3)	H Shares	231,762,168(L)	Interest of	1.92%(L)	—	7.58%(L)
			controlled
			corporations
		11,230,000(S)	Interest of	0.09%(S)	—	0.36%(S)
			controlled
			corporations

Notes:

(1) The letter “L” denotes a long position. The letter “S” denotes a short position. The letter “P” denotes interest in a lending pool.
(2) JPMorgan Chase & Co. held interest in a total of 172,332,599 H shares (Long position) and 29,517,425 H shares (Short position) in the Company by virtue of its control over the following corporations, which held direct interest in the Company:
2.1 JF Asset Management Limited held 800,000 H shares (Long position) and 800,000 H shares (Short position) in the Company. JP Asset Management Limited was a wholly-owned subsidiary of JPMorgan Asset Management (Asia) Inc.. JPMorgan Asset Management (Asia) Inc. was a wholly-owned subsidiary of JPMorgan Asset Management Holdings Inc. which in turn was a wholly-owned subsidiary of JPMorgan Chase & Co..

— 30 —

GENERAL INFORMATION

APPENDIX

2.2 J.P. Morgan Structured Products B.V. held 966,000 H shares (Short position) in the Company. J.P. Morgan Structured Products B.V. was a wholly owned subsidiary of J.P. Morgan International Finance Limited. J.P. Morgan International Finance Limited was a wholly-owned subsidiary of Bank One International Holdings Corporation which in turn was a wholly-owned subsidiary of J.P. Morgan International Inc.. J.P. Morgan International Inc. was a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. which in turn was a wholly-owned subsidiary of JPMorgan Chas & Co..
2.3 J.P. Morgan Witefriars Inc. held 29,150,612 H shares (Long position) and 6,359,425 H shares (Short position) in the Company. J.P. Morgan Witefriars Inc. was a wholly-owned subsidiary of J.P. Morgan Overseas Capital Corporation which in turn was a wholly-owned subsidiary of J.P. Morgan International Finance Limited. As referred to in item 2.2 above, J.P. Morgan International Finance Limited was a wholly-owned subsidiary of Bank One International Holdings Corporation which in turn was a wholly-owned subsidiary of J.P. Morgan International Inc.. J.P. Morgan International Inc. was a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. which in turn was a wholly-owned subsidiary of JPMorgan Chas & Co..
2.4 Bear, Stearns International Limited held 1,085,063 H shares (Long position) and 892,000 H shares (Short position) in the Company. Bear, Stearns International Limited was a wholly-owned subsidiary of Bear Stearns Holdings Limited which in turn was a wholly owned subsidiary of Bear Stearns UK Holdings Limited. Bear Stearns UK Holdings Limited was a wholly owned subsidiary of The Bear Stearns Companies LLC which in turn was a wholly-owned subsidiary of JPMorgan Chase & Co..
2.5 J.P. Morgan Securities Ltd. held 21,255,264 H shares (Long position) and 20,500,000 H shares (Short position) in the Company. J.P. Morgan Securities Ltd. was owned as to 98.95% by J.P. Morgan Chase International Holdings Limited which in turn was a wholly-owned subsidiary of J.P. Morgan Chase (UK) Holdings Limited. J.P. Morgan Chase (UK) Holdings Limited was a wholly-owned subsidiary of J.P. Morgan Capital Holdings Limited which in turn was a wholly-owned subsidiary of J.P. Morgan International Finance Limited. As referred to in item 2.2 above, J.P. Morgan International Finance Limited was a wholly-owned subsidiary of Bank One International Holdings Corporation which in turn was a wholly-owned subsidiary of J.P. Morgan International Inc.. J.P. Morgan International Inc. was a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. which in turn was a wholly-owned subsidiary of JPMorgan Chas & Co..

The entire interest of JP Morgan Chase & Co. in the Company including a lending pool of 120,041,660 H shares (Long position) held by JPMorgan Chase Bank, N.A. which was a wholly-owned subsidiary of JPMorgan Chase & Co.. Besides, 3,000,000 H shares (Long position) and 7,325,425 H shares (Short position) were held through derivates as follows:

966,000 H shares (Short position) — through cash settled derivatives (on exchange)

3,000,000 H shares (Long position) and 3,109,425 H shares (Short position) — through physically settled derivatives (off exchange)

3,250,000 H shares (Short position) — through cash settled derivatives (off exchange)

(3) Barclays PLC held interest in a total of 231,762,168 H shares (Long position) and 11,230,000,000 H shares (Short position) in the Company by virtue of its control over the following corporations, which held direct interest in the Company:
3.1 Barclays Global Investors, N.A. held 17,279,314 H shares (Long position) and 11,230,000 H shares (Short position) in the Company. Barclays Global Investors, N.A. was a wholly-owned subsidiary of Barclays California Corporation which in was a wholly-owned subsidiary of Barclays Global Investors Finance Limited. Barclays Global Investors Finance Limited was a wholly-owned subsidiary of Barclays Global Investors UK Holdings Limited which was in turn a wholly-owned subsidiary of Barclays PLC.

— 31 —

GENERAL INFORMATION

APPENDIX

3.2 Barclays Global Fund Advisors held 190,355,680 H shares (Long position) in the Company. Barclays Global Fund Advisors was a wholly-owned subsidiary of Barclarys Global Investors, N.A. which in turn was a wholly-owned subsidiary of Barclays California Corporation. Barclays California Corporation was a wholly-owned subsidiary of Barclays Global Investors Finance Limited. As referred to in item 3.1 above, Barclays Global Investors Finance Limited was a wholly-owned subsidiary of Barclays Global Investors UK Holdings Limited which was in turn a wholly-owned subsidiary of Barclays PLC.
3.3 Barclays Global Investors Ltd. held 23,847,174 H shares (Long position) in the Company. Barclarys Global Investors Ltd. was a wholly-owned subsidiary of Barclays Global Investors UK Holdings Limited. As referred to in item 3.1 above, Barclays Global Investors UK Holdings Limited was a wholly-owned subsidiary of Barclays PLC.
3.4 Barclays Global Investors (Deutschland) AG held 280,000 H shares (Long position) in the Company. Barclays Global Investors (Deutschland) AG was a wholly-owned subsidiary of Barclays Global Investors Holdings Deutschland GmbH which in turn was a wholly-owned subsidiary of Barclays Global Investors UK Holdings Limited. As referred to in item 3.1 above, Barclays Global Investors UK Holdings Limited was a wholly-owned subsidiary of Barclays PLC.
As of date of this circular, Huaneng Group holds 51.98% direct interests and an additional 5% indirect interests in HIPDC.
China Huaneng Group held 20,000,000 H shares through its wholly owned subsidiary, China Hua Neng Group Hong Kong Limited.

Save as disclosed above, the Company is not aware of any other person (other than the directors, supervisors and senior executives of the Company) having any interests or short positions in the shares and underlying shares of the Company as at the Latest Practicable Date as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.

As at the Latest Practicable Date, save as disclosed below, so far as is known to the Board, no director is a director or employee of a company which has an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under provisions of Divisions 2 and 3 of Part XV of the SFO:

(i) Mr. Cao Peixi is the chairman and president of China Huaneng Group;
(ii) Mr. Huang Long is the vice president of China Huaneng Group and a director of Huaneng International Power Development Corporation;
(iii) Mr. Wu Dawei is the president of China Huaneng Group; and
(iv) Mr. Huang Jin is the deputy chief economist and chief of Financial Planning of China Huaneng Group

3. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Company and its subsidiaries since 31 December 2007, being the date to which the latest published audited accounts of the Company and its subsidiaries were made up to.

— 32 —

GENERAL INFORMATION

APPENDIX

4. LITIGATION

None of the Company and its subsidiaries was at present engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company and its subsidiaries as at the Latest Practicable Date.

5. CONSENT OF EXPERT

The following expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter or statements and references to its name in the form and context in which they appear:

Name Qualification DBS Licensed corporation under the SFO to engage in Types 1 (dealing in securities), 4 (advising on securities) and 6 (advising on corporate finance) regulated activities

As at the Latest Practicable Date, the above expert was not beneficially interested in the share capital of the Company and its subsidiaries nor did it have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in the Company and its subsidiaries.

As at the Latest Practicable Date, the above expert did not have any direct or indirect interest in any assets which had been since 31 December 2007 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to the Company and its subsidiaries, or were proposed to be acquired or disposed of by or leased to the Company and its subsidiaries.

6. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into, or proposed to enter into, a service contract with the Company or its subsidiaries which does not expire or is not terminable by the Company and its subsidiaries within one year without payment of compensation, other than statutory compensation.

7. DIRECTORS’ INTERESTS IN THE COMPANY AND ITS SUBSIDIARIES’ ASSETS OR CONTRACTS

As at the Latest Practicable Date, none of the Directors or Supervisors of the Company had any interest in any assets which have been since 31 December 2007 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to the Company and its subsidiaries, or were proposed to be acquired or disposed of by or leased to the Company and its subsidiaries.

— 33 —

GENERAL INFORMATION

APPENDIX

As at the Latest Practicable Date, none of the Directors or Supervisors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which was significant in relation to the business of the Company.

8. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or their respective associates has interests in the businesses, other than being a Director, which compete or are likely to compete, either directly or indirectly, with the businesses of the Company (as would be required to be disclosed under Rule 8.10 of the Hong Kong Listing Rules if each of them were a controlling shareholder).

9. PROCEDURE FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to Article 66 of the articles of association of the Company, at any shareholders’ general meeting, a resolution shall be decided on a show of hands unless a poll is demanded:

(a) by the chairman of the meeting;
(b) by at least two (2) shareholders present in person or by proxy entitled to vote thereat; or
(c) by one (1) or more shareholders present in person or by proxy and representing 10% or more of all shares carrying the right to vote at the meeting,

before or after a vote is carried out by a show of hands.

The demand for a poll may be withdrawn by the person who demands the same.

10. MATERIAL CONTRACTS

The following contracts (including contracts not entered into in the ordinary course of business) have been entered into by the Company and its subsidiaries within the two years immediately preceding the date of this circular, and are or may be material:

(a) Huaneng Group Framework Agreement;
(b) Huaneng Finance Framework Agreement;
(c) Transfer Agreement as defined in the circular dated 10 May 2008 of the Company;
(d) An agreement regarding the acquisition of interests in Huaneng Nanjing Jinling Power Limited Company entered into between the Company and HIPDC on 3 December 2007, details of which were set out in the Company’s announcement dated 3 December 2007; and
(e) An agreement regarding the subscription of new equity interests in China Huaneng Finance Corporation entered into between the Company and China Huaneng Finance Corporation on 23 October 2007, details of which were set out in the Company’s announcement dated 23 October 2007.

— 34 —

GENERAL INFORMATION

APPENDIX

11. MISCELLANEOUS

(a) Mr. Gu Biquan is the Company Secretary and Board Secretary of the Company. Pursuant to a waiver granted by the Stock Exchange to the Company from strict compliance with Rules 8.17 and 19A.16 of the Listing Rules in relation to the appointment of Mr. Gu Biquan as the Company secretary of the Company dated 20 December 2007, the Company has arranged Mr. Zhang Xinmin, a fellow member of the Association of Chartered Certified Accountants, to provide assistance to Mr. Gu Biquan in the discharge of his duties as the Company Secretary under the Listing Rules.
(b) Ms. Zhou Hui is the Qualified Accountant of the Company. Ms. Zhou Hui is a PRC qualified accountant. Pursuant to a waiver granted by the Stock Exchange to the Company from strict compliance with Rule 3.24 of the Listing Rules in relation to the appointment of a qualified accountant to of the Company dated 17 July 2006, the Company has arranged Mr. Zhang Xinmin, a fellow member of the Association of Chartered Certified Accountants, to provide assistance to Ms. Zhou Hui in the discharge of her duties as a qualified accountant under the Listing Rules.
(c) The head office and legal address of the Company is West Wing, Building C, Tianyin Mansion, No. 2C, Fuxingmennan Street, Xicheng District, Beijing, PRC. The H Share registrar of the Company in Hong Kong is Hong Kong Registrars Limited at 46/F Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(d) In the case of any discrepancy, the English text of this circular and form of proxy shall prevail over the Chinese text.

12. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Herbert Smith at 23/F., Gloucester Tower, 15 Queen’s Road Central, Hong Kong during normal business hours on any weekday (except public holidays) from the date of this circular up to and including 23 December 2008:

(a) the Articles of Association of the Company;
(b) the letter from the Independent Directors Committee, as set out in this circular;
(c) the letter from DBS, the independent financial adviser, as set out in this circular;
(d) the written consent of DBS referred to in this appendix;
(e) the material contracts referred to in paragraph 10 of this appendix;
(f) the annual report of the Company for the year ended 31 December 2007;
(g) the Huaneng Group Framework Agreement; and
(h) the Huaneng Finance Framework Agreement.

— 35 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [291 x 45] intentionally omitted <==

(a sino foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 902)

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 23 December 2008 at the headquarters of the Company at West Wing, Building C, Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District, Beijing, the People’s Republic of China for the purpose of considering and, if thought fit, passing the following resolutions:

Special Resolution:

To consider and approve the proposal regarding the issuance of mid-term financial instruments by the Company

Ordinary Resolutions:

To consider and approve the framework agreement on the continuing connected transactions (for 2009) between Huaneng Power International Inc. and China Huaneng Group , the continuing connected transactions as contemplated thereby and the transaction caps thereof (note 1)
To consider and approve the framework agreement on the continuing connected transactions (for years 2009 to 2011) between Huaneng Power International Inc. and China Huaneng Finance Corporation Limited, the continuing connected transactions as contemplated thereby and the transaction caps thereof (note 1)

By Order of the Board Gu Biquan Company Secretary

7 November 2008

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:

For definitions and details, please refer to the circular dated 7 November 2008 issued by the Company.

— 36 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

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 4:30 p.m. on 21 November 2008 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.
(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 provide 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 3 December 2008.
(iii) Shareholders may send the above reply slip to the Company in person, by post or by fax (Attn: The Securities Department).

— 37 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

Closure of Register of Members

The register of members of the Company will be closed from 23 November 2008 to 22 December 2008 (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:

46th Floor Hopewell Centre 183 Queen’s Road East, Hong Kong

(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

— 38 —

AI assistant

Netjoy Holdings Limited — Proxy Solicitation & Information Statement 2008

50390_rns_2008-11-06_6a10fd14-e5a0-413a-b82f-e1f94f409e40.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

CONTINUING CONNECTED TRANSACTIONS

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

CONTENTS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

Independent Non-executive Directors:

To the Shareholders

CONTINUING CONNECTED TRANSACTIONS

1. INTRODUCTION

LETTER FROM THE BOARD

LETTER FROM THE BOARD

2. RELATIONSHIP BETWEEN THE COMPANY, HUANENG GROUP AND HUANENG FINANCE

LETTER FROM THE BOARD

Of the 8.91% interest, 0.16% represents the interest in the H shares of the Company held by Huaneng Group through China Hua Neng Group HK.

LETTER FROM THE BOARD

3. HUANENG GROUP FRAMEWORK AGREEMENT

(1) Purchase of ancillary equipment and parts

LETTER FROM THE BOARD

(2) Purchase of coal and transportation services

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(3) Provision of management services

(4) Leasing of power transmission facilities, land and office spaces

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(5) Purchase of technical services and engineering contracting services

LETTER FROM THE BOARD

4. HUANENG FINANCE FRAMEWORK AGREEMENT

LETTER FROM THE BOARD

LETTER FROM THE BOARD

5. THE EGM

LETTER FROM THE BOARD

6. RECOMMENDATIONS

LETTER FROM THE BOARD

7. OTHER INFORMATION

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

CONTINUING CONNECTED TRANSACTIONS

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

LETTER FROM DBS

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

LETTER FROM DBS

BASIS OF OUR OPINION

I COAL PURCHASE

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background

Background of Huaneng Group

2. Reasons for and benefits of the Coal Purchase

LETTER FROM DBS

3. Terms of the Coal Purchase

4. Proposed cap for the Coal Purchase

LETTER FROM DBS

II DEPOSIT SERVICES

PRINCIPAL FACTORS CONSIDERED

1. Background of Huaneng Finance

2. Major terms of the Deposit Services

3. Reasons for and benefits of depositing with Huaneng Finance

LETTER FROM DBS

4. Assessment of the financial risks on the deposits with Huaneng Finance

LETTER FROM DBS

5. Proposed cap for the Deposit Services

LETTER FROM DBS

OPINION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTEREST

(a) Directors and Supervisors of the Company

(b) Substantial Shareholders

As of date of this circular, Huaneng Group holds 51.98% direct interests and an additional 5% indirect interests in HIPDC.

China Huaneng Group held 20,000,000 H shares through its wholly owned subsidiary, China Hua Neng Group Hong Kong Limited.

3. MATERIAL ADVERSE CHANGE

4. LITIGATION

5. CONSENT OF EXPERT

6. SERVICE CONTRACTS

7. DIRECTORS’ INTERESTS IN THE COMPANY AND ITS SUBSIDIARIES’ ASSETS OR CONTRACTS

8. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

Netjoy Holdings Limited Proxy Solicitation & Information Statement 2008