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1、Memorandum to:Proposal for International CooperationDear :This memorandum represents an inquiry of Jiangsu Electric Power Company (“Jiangsu Power”) for establishing an international cooperation with with the over-arching objective of developing a sustainable, trust-based, and mutually beneficial, lo
2、ng-term relationship.INTRODUCTION TO JIANGSU POWERJiangsu Power is the monopoly transmission & distribution electricity company of Chinas Jiangsu province, an administrative region with 74 million people, and an GDP of EUR123bn in 2002. Jiangsu Power today is a leading transmission & distribution co
3、mpany with 2002 revenues of EUR4.9bn, total assets of EUR10.6bn, and an installed base of 24 million customers.Over the past three years, Jiangsu Power has enjoyed rapid development, with revenue growing at a compounded annual rate of 18% and fixed capital investment in grid construction totaling EU
4、R1.4bn in 2002. In 2002, Jiangsu provinces power consumption was 124.5 TWh, growing over 15% from the previous year. Currently, Jiangsu Power has 3,933 kilometers of 500 KV lines, 9,078 kilometers of 220 KV lines and 11,909 kilometers of 110 KV lines. The Company is ranked Chinas third largest provi
5、ncial electricity company in terms of capacity (20.7 GW) and Chinas second largest provincial electricity company in terms of power consumption (124.5 TWh).As in many developing countries, Chinas electricity industry is undergoing broad and fundamental reform. By the early 1990s, foreign investors w
6、ere allowed to invest in independent power producers. In year-end 2002, the State Power Corporation, the government operator of Chinas electricity industry, was separated into five gencos and two gridcos, each with individual P&L responsibilities. This separation of the transmission & distribution b
7、usiness from generation business and the associated corporatization of transmission & distribution companies bring a new set of challenges to Jiangsu Power. In recognition of the increasingly competitive nature of its business environment, Jiangsu Power is undertaking systematic measures to comprehe
8、nsively enhance its commercial capabilities. THE OBJECTIVEJiangsu Power has a grand and ambitious vision: to be one of the worlds leading transmission and distribution companies by 2010. Mr. Kou Shi Qing, the companys top leader is committed to realizing that vision through the cultivation and devel
9、opment of world-class leadership and managerial processes, technology, and human talent. Despite challenges such as regulatory uncertainty in tariff pricing and social responsibilities in employment and network build-out, Mr. Kou believes Jiangsu Power has the intrinsics to achieve its goal. Further
10、more, Jiangsu Power believes partnering with will accelerate the realization of its company vision because it can learn and benefit from s first-rate managerial processes, technology, and operational best practices to continuously elevate the quality of Jiangsu Powers people and processes. The compa
11、ny also believes that could benefit from cooperation with Jiangsu Power by gaining the following: Opportunity to participate in China electricity industrys rapid development China is already the worlds second largest consumer of electricity at 1,326bn KWh, and its power consumption is growing at 10+
12、percent every year, far ahead of the pace of other nations. On the supply side, China experienced a dramatic build-out of its generation capabilities over the past decade; by 2002, installed capacity stood at 350 GW, having grown at a compounded annual growth rate of 8.1% since 1989. The speed and s
13、cale of the expansion in Chinas electricity industry is unprecedented. Foreign enterprises can already invest in generation projects today. In the future, it is anticipated that there is potential for the transmission & distribution businesses to also be opened to foreign investment. For an internat
14、ional transmission and distribution company like , this creates numerous investment and cooperation opportunities. In order to prepare and position for this impending opportunity, international companies need to start now to develop a deep understanding of Chinas market conditions. Establishing rela
15、tionships with a leading Chinese partner such as Jiangsu Power will help create an important foothold in China, heightening its profile to regulators, government officials, and other key stakeholders. Potential savings in joint sourcing/purchasing Jiangsu Power is one of Chinas best transmission and distribution companies. Its rapid growth (power consumption in Jiangsu Province increased by 15% in 2002 vs. 2001) has compelled the company to spend a total of EUR1.4bn in grid infrastructure. From now to 2
