Laws of the People's Republic of China

The Ministry of Power Industry

Interim Provisions for Submission and Approval Procedure on Electric Power Project Invested Directly by Foreigners

DianJi [1996] No. 732

December 9, 1996

Chapter I General Provisions

1.

In accordance with Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures, Law of the People's Republic of China on the Chinese-foreign Contractual Joint Venters, Law of the People's Republic of China on Foreign-capital Enterprises, Law of the people's Republic of China on Electric Power and the relevant law and regulations, especially stipulates the provision combining the provision for the submission and approval of procedure on fundamental construction and the reality of electric industry.

2.

Electric power projects invested by foreign businessmen must conform to the national enterprise policy, and are placed into the national five-year plan or ten-year plan except the projects approved by State Council especially.

3.

The procedures for the submission and approval of electric power projects invested by incorporate enterprises aboard, which are established by Hong Kong, Macao, Taiwan or the Chinese mainland, are enforced according to the provision.

4.

The provision is confined to the electric power projects invested by Chinese-foreign JVs, Chinese-foreign cooperative enterprises and exclusively foreign-owned enterprises.

5.

The provision isn't apply for the projects that the Chinese side utilizes stock capital to cooperate with foreign businessmen by the method of JV and cooperative business operation and privilege projects as well.

6.

The nuclear projects invested directly by foreign businessmen must more be in conformity with Provisions for the Submission and Approval of Front-end Engineering Concerning the Construction projects of Nuclear Power Plants (trial implementation).

Chapter II The Procedure of Submission and Approval on Chinese-Foreign JV Projects and Chinese-Foreign Cooperative Projects

7.

From a letter of proposal of a project to building cooperative enterprises, Chinese-foreign Joint Venture projects and Chinese-foreign cooperative projects (hereinafter called jointly owned projects) are approved as followings:

(1)

Apply for a letter of proposal of a project;

(2)

Apply for a feasibility study report;

(3)

Apply for building Chinese-foreign jointly owned enterprises

8.

Apply for a letter of proposal of a project

On promise of completing a preliminary feasibility study report and examined by the province-level electric administrative department or the authorized unit (hereinafter called the province-level electric administrative department) (belonging to the electric administrative department in charge of power grids among provinces, a preliminary feasibility study report is examined by the electric administrative department in charge of power grids among provinces), the competent department of the project will apply to the province-level electric administrative department, which will submit the letter of proposal of the project to Ministry of Electric Power (belonging to the electric administrative department in charge of power grids among provinces, the preliminary feasibility study report should apply to the electric administrative department in charge of power grids among provinces, and which submits it to Ministry of Electric Industry after examining). As the same time, the letter of proposal of the project is submitted to the State Planning Commission in writing (infrastructure projects) or the Economic and Trade Committee of China ("big for small" technical transformation projects) and the government administrative organs concerned. The project that requires the government administrative organs concerned to loan, meanwhile, notice the bank concerned in writing. After examining, Ministry of Electric Industry hands over it to the State Planning Commission or the Economic and Trade Committee to approve.

9.

the enclosure that the letter of proposal of the cooperative project requires is as the same as one of a domestic project, but need to be added as follows:

(1)

The jointly owned letter of intent signed by each side of the jointly owned enterprise;

(2)

the credit certificate and investigation condition.

Before both side of the jointly owned enterprise formally sign the letter of intent, the project must be examined by the province-level electric administrative department or above, and agreed by Ministry of Electric Power officially, otherwise, it isn't accepted.

10.

Apply for the feasibility study report of a project

After the State Planning Commission or the State Economic and Trade Committee replies the letter of proposal of project, the authorized unit of the project trusts a electric engineering designing institute or a consultation institute that has qualification to work out the feasibility study report of the project.

After the feasibility study report of the project is examined and passed by the department concerned (now referring to Electric Power Designing Institute or the Hydroelectric Power Designing institute), the authorized unit of the project will apply to the province-level electric administrative department, in which submits the feasibility study report to Ministry of Electric Power Industry for approval (belonging to the province-level electric administrative department in charge of power grids among provinces, the feasibility study report should apply to the province-level electric administrative department in charge of power grids among provinces, which hands over it to Ministry of Electric Power Industry after examining). As the same time, it is submitted to the State Planning Commission or the State Economic and Trade Committee or the government administrative organ concerned in writing. The project that requires the national bank concerned to loan, meanwhile, notices it to the bank concerned in writing.

After examining, Ministry of Electric Industry hands over it to the State Planning Commission or the State Economic and Trade Committee to approve, a important project is handed over to State Council by the State Planning Commission or the State Economic and Trade Committee to approve.

11.

The feasibility study report must at least include the following files:

(1)

The replying files given by the State Planning Commission and the State Economic and Trade Committee on the letter of proposal of the jointly owned project;

(2)

The examining opinions given by the electric administrative departments at different levels or the authorized department concerned to the feasibility study report;

(3)

The examining files given by the department concerned under the Central Government and the province-level local government concerning land, water, environmental protection, fuel and transportation, etc.

(4)

The preliminary designing files designed firstly (concept design files) could meet the requirements of the bargaining book of equipments, invitation for bid and discussion for bid;

(5)

the files of invitation for bid and discussion for bid of equipments including parameter, function and price, etc.;

(6)

the contracted files of invitation for bid and discussion for bid given by the engineering construction unit; qualification and achievement investigation of enterprises at home and abroad who participate in competition;

(7)

the implementary files on the financing method and financing condition at broad of projects agreed by Ministry of Electric Industry after examining (initial a financing loan agreement);

(8)

Capital fund of project and a supporting domestic capital in financing (including the supporting project of power transmission and converting current);

(9)

The concrete acceptance files and replying files on the electric price and sales price of power grids of the jointly owned projects given by the local province-level price administrative department;

(10)

The jointly owned protocol and initial contracts of purchase and sale of electric power that is examined and agreed by Ministry of Electric Power Industry, the protocol concerning combining electric network, fuel, transportation, land, water and the usage of other public facilities, etc.;

(11)

The copy of the business license, certificate of legal representative, financing chronology and certificate of investment of each jointly owned side;

(12)

There are planning views for the immigrant settlement of a reservoir that the province-level locate department gives concerning hydroelectric projects.

12.

Apply for establishing Chinese-foreign JVs

After the feasibility study report of project is ratified officially, it is reported to Ministry of Electric Industry by the province-level department in charge in order to have a preliminary examination concerning building the Chinese-foreign JV project. After Ministry of Electric Industry agrees, the cooperators of the Chinese side could select Ministry of Electric Industry or the local government to submit it to the organ having examination and approval rights to ratify. The relevant files of submission and approval could be conformity with the provision of Article 9 in Regulations for the Implementation of the Law of the People's Republic of China Concerning Chinese-Foreign Equity Joint Ventures and Article 7 in Rules of the Implementation of the Law of the People's Republic of China Concerning Chinese-Foreign Contractual JV. The project enterprise that isn't agreed preliminarily, Ministry of Electric Industry couldn't undertake relevant responsibilities.

The project enterprise that is allowed should apply to industrial and commercial administration for registration, and take out a business license. After the project enterprise takes out the business license, it should submit the copy of the business license as Attachment to Ministry of Electric Power Industry within 30 days.

Chapter III Procedure of Submission and Approval on Solely Foreign-owned Projects

13.

From starting work to establishing foreign-owned enterprises, the project invested by foreign business exclusively is ratified as follows:

(1)

Apply to a preliminary application;

(2)

Apply to a application for a project;

(3)

Apply to build a exclusively foreign-owned enterprise.

14.

Apply to a preliminary application

Foreign businessmen submit a preliminary application for the project invested by foreign businessmen exclusively to the local province-level local government and the local electric administrative department.

After the local province-level local department and the local electric administrative department examines and agrees, the preliminary application for the project is submitted to Ministry of Electric Power Industry by the province-level electric administrative department (belonging to the province-level electric administrative department in charge of power grids among provinces, it should be submitted to the electric administrative department in charge of power grids among provinces, which hands over it to Ministry of Electric Power Industry after examining). At the same time, the preliminary application for the project is submitted to the State Planning Commission or the State Economic and Trade Committee and the government administrative organ concerned. After Ministry of Electric Industry examines, hands over it to the State Planning Commission or the State Economic and Trade Committee to approve.

15.

the encloses with the preliminary application are as follows:

(1)

the examining opinions that the province-level local government, the province-level electric administrative department, the electric administrative department in charge of power grids among provinces give to the preliminary application;

(2)

Certificate and investigation of foreign capital credit.

16.

Apply to a application for project

After the State Planning Commission or the State Economic and Trade Committee ratifies the preliminary application officially and foreign businessmen complete the relevant earlier stage work, could submit the report of the project to the local province-level government and the local electric administrative department.

After the province-level local government and the local electric administrative department pass examining and approving, the report of the project is submitted to Ministry of Electric Industry by the local province-level electric administrative department (belonging to the province-level electric administrative department in charge of power grids among provinces, to which the report of the project is submitted. After examining and approving, the province-level electric administrative department in charge of power grids among provinces submits the report of the project to Ministry of Electric Power Industry). As the same time, the report of the project is submitted to the State Planning Commission or the State Economic or Trade Committee and the government administrative organ concerned in writing.

After examining, Ministry of Electric Power hands over it to the State Planning Commission or the State Economic or Trade Committee and the government administrative organ concerned to approve.

17.

Files that is submitted with the application for the project must include as follows:

(1)

The feasibility study report examined by Ministry of Electric Power or the authorized department concerned;

(2)

The replied files given by the State Planning Commission or the State Economic and Trade Committee concerning the application for the project;

(3)

The examining views by the electric administrative departments at different levels on the application for the project;

(4)

The replied files given by the department concerned under the Central Government and the province-level local government on land, water, environmental protection, fuel, transportation, etc.;

(5)

The replied files of the construction plan given by the electric administrative departments concerned at different levels concerning the power plant placed in the system;

(6)

The concrete acceptance files and the replied files given by the local province-level administrative department of commodity prices on the electric price of power grids and the electric price of purchase and sale;

(7)

Initial a contract of purchase and sale examined by Ministry of Electric Power Industry;

(8)

Protocols and contracts on combining electric network, fuel, transportation, land, water, the usage of other public facilities and the running management of the power plant;

(9)

the list of the enterprise legal representative or the number of the board of directors;

(10)

The copy of the business license of investors, certificate of the legal representative, financing chronology and application for investment;

(11)

Articles of enterprises;

(12)

If two or above foreign businessmen jointly apply for establishing exclusively foreign-owned enterprises, should take out the copy of the contract signed;

(13)

Detailed list of import goods

(14)

Implementary files of construction capital given auxiliarily.

18.

Apply for establishing exclusively foreign-owned enterprises

After the application for project is approved, foreign businessmen could apply to the organ who has approval rights according to the provisions of chapter two in Law of the People's Republic of China on Wholly Foreign-Owned Enterprises and Rules for the Implementation of the Law of the People's Republic of China Concerning Wholly Foreign-Owned Enterprises, the relevant files of submission and approval should is submitted to Ministry of Electric Power Industry for keeping on record by the local electric department.

The project enterprise who is approved should apply to industrial and commercial administration for registration, and take out a business license. After receiving the business license, the project enterprise should submit the copy of the business license as enclose to Ministry of Electric Power in writing within 30 days.

Chapter IV Supplementary Provisions

19.

At present Ministry of Electric Power namely refers to Ministry of Electric Power Industry in the provision.

The province-level electric administrative department namely refers to Electric Power Industry Bureaus of province, municipality directly under the Central Government and autonomous region now.

At the moment the electric administrative department in charge of power grids among provinces namely is the electric administrative department among provinces.

20.

The provision is explained by Ministry of Electric Power Industry.

21.

The provision shall enter into force as of the date of formal issuance, at the same time, the old relevant provisions is expired.

Attachment:Enclose Basic Requirements of the Main Application Files

Letter of intent:

The basic condition, method of investment, jointly owned mode, amount of capital invested, structure of capital fund, financing condition, the principle of allocation of interest and risk partition of each side of investment.

Letter of intent couldn't have exclusiveness and clauses that hinder the enforcement of project in the further just express the intent of each side of cooperation to the project.

A preliminary application on construction projects invested by foreigners exclusively:

Aim of enterprise, scope and scale of operation, the kinds of product and technological and economical indexes, the usage of technology and facilities, sale of electric power, requirements to land, fuel, water and public facilities, etc., and the questions on requiring State Council to make comprehensive balance, and could gain the department concerned to approve in writing.

A letter of proposal for a project:

1.

Sketch necessity of construction of a project according to the local economic status, present situation and forecasting of load. "Big for small" technical transformation projects and cogeneration projects, and make a explanation to the especial condition. Sketch the engineering circumstances tended.

2.

Necessity of absorbing foreign capital, the basic condition each side of cooperation, structure, rights and interests, operation, management, financing, important data of jointly owned enterprises and exclusively foreign-owned enterprises, etc.

3.

Mode and scale of construction, and source of equipments.

4.

Construction conditions: Explain the questions on the site plan of the plant, water resource, fuel, transportation, site of ash, environmental protection, insert system, etc., and files of intent of the department concerned.

5.

Estimate and source of investment, a preliminary economic evaluation. Estimate static total investment and dynamic total investment according to the last year price level including to the project sent. Basic condition of loan, registered capital, supporting basic condition of domestic capital, rate of progress of project, preliminary economic evaluation and price calculation, annual balance sheet of both foreign capital and domestic capital.

6.

Business Administration.

A feasibility study report of a thermal electric project:

1.

Necessity of construction

Analyze the local electric network of the project or the load status of the using power area according to the local economic status and development plan, and explain the present situation of the electric system and the main questions, affect and effectiveness of the project in the system, and make electric power balance and quantity balance of electricity combining with other electric construction in the electric network.

About "Big for small" technical transformation and cogeneration project, that's more, explain the social and economic effectiveness on energy consumption and environmental protection, etc. Explain the substitute condition concerning "big for small" projects. Supply and requirements of heat load is more explained concerning cogeneration. Necessity and rationality of the revert system plan is explained.

2.

Necessity of the usage of foreign capital

The reason that foreign capital is used, jointly owned mode or optimization of the selection of exclusively foreign-owned mode, standard of selecting investors and competition process, basic condition each side of investors, operating scope and scale of jointly owned enterprises and exclusively foreign-owned enterprises, organs and management of enterprise, etc.

3.

Mode of construction, scale, facilities and source

General capacity of the electric power plant, scale for the period, mode of construction, settlement of schedule, selecting standard and comparation of construction unit.

Type of equipment (quality of equipment, advanced level of technology, running achievement, price, service, etc., all of these have competitiveness), the scope divide between import equipment and domestic equipment, scope and standard of domestic acceptance, list and method of purchase of enterprises being qualified for bid.

Parameter, capability, mode and construction condition of heat network should be explained on cogeneration project.

4.

Construction conditions

The site of a plant: Make sure geographic location of electric power plant, earthquake, geology, landforms and hydrologic condition of plant area, the shoreline and land used by projects, removal of the house, cubic meter of earth and stone, the written files on building the plant and using land agreed by the local government or the authorized department concerned.

Water resource:Explain the condition of the local water resource, make sure water resource used by the plant, method of taking water and cooling method of machine set, the written files on water and land used by the plant, which is agreed by the local water resource department in charge.

Fuel:Define types of machine set and amount used, make sure source of fuel and supply capability, the written files on supplying fuel, which is agreed by the department concerned or enterprise to supply fuel.

Transport:The kinds of transport conditions of plant, the method of transport and route of equipment and fuel, transport equipment and purchase of tool, and working capacity of transport facilities, the transport plan and the letter of assignment fulfilled by the transport unit that are agreed by the transport administrative department.

Get rid of ash and site of ash: amount of emission of ash and method of ash elimination, location of ash elimination, age limit of stock ash, the written file on land used by site of ash, which is agreed by the department concerned.

Environmental protection:Environmental condition of the local electric plant, the kinds of environmental facilities and indexes, construction and operation effecting on environment, the written views of engineering construction that is agreed by the environmental protection unit, the evaluation report on environment effect must be approved by the national environmental protection unit.

Insert system and project of issue: voltage grade, return circuit, line length of the electric system inserted, the scale of newly built (expanded) converting station, newly added quantity and capacity of converting station, all working amount of transmission and transformation of circuit supporting electric network.

The written files on the system and its plan inserted by the plant invested by jointly owned enterprises (or exclusively foreign-owned enterprises), which is agreed by the electric network administrative department.

5.

Estimate and source of investment

Estimate static total amount of investment according to the last year price level (including to the supporting transmission and transformation of circuit and the second-part construction investment), after considering factors such as interest of construction period and reserve funds of price difference, etc., calculate dynamic total amount of investment of project.

Define the proportion of capital funds in total amount of investment, share owned by each side of investment, method of investment, allocation of profit and method of draw, make sure the principle of capital assignment over construction period interest.

Amount, source and condition of loan at both home and abroad (such as interest, grace period, period of repayment and method of guarantee, etc.), annual using plan and repayment plan of capital at both home and abroad. Letter of intent of loan supplied by the international financial institution to project, financing condition of foreign investors.

6.

Economic evaluation

Economic evaluation is enforced strictly according to Guiding Views of Economic Evaluation Work on the Strengthening of Electric Foreign Project and Rules for the Implementation of the Economic Evaluation on Electric Industry on Absorbing Foreign Investment Building Thermal Electric Project. The relevant contents with supplying heat such as heat price, etc., should be added on cogeneration projects.

7.

Operating management

Make sure construction of projects, operation, management, supervisor mode of management and dispatch, define distribution of advanced completion and commissioning of projects and compensating principle of damage of lack, Explain heat net investment and supervisor mode of construction and operation, the kinds of indexes and standard of operation and repair, settlement and continuous method of capital, rights and interests, debt on the expiration of operation, etc.

A feasibility study report of a hydroelectric power project:

Any content that has similarity with thermal electric project such as deep requirements basing on the feasibility study report of the thermal electric project concerning forecasting of load, necessity of absorbing foreign capital, method of construction.

In addition, there are complementary explanations in the following aspects:

1.

Explain affect and the comprehensive efficiency of exploration from the geographical location of the plant concerning necessity of construction.

2.

Explanations on construction scale:

(1)

Normal retaining level, backwater level, adjustment of reservoir capacity, adjustment of function.

(2)

General installed capacity, installed numbers, single-machine capacity, type of machine, guaranteed out-put, annual generated energy, maximum designed waterhead, minimum designed waterhead, etc.

(3)

Pivotal composition, arrangement, type and scale of dim and plant building, etc.

3.

Construction condition:

(1)

Hydrology: drainage area controlled by dim address, annual average flow, yearly total flow, designing flood discharge, checking flood discharge, natural average output quantity of desert, etc.

(2)

Geology: construction geology, hydrological geology, basic earthquake intensity, etc.

(3)

Immigrants of reservoir: drowned index, immigrant settlement plan and enforcement condition, etc.

(4)

Building materials.

(5)

Engineering amount of main body and schedule settlement of construction.

4.

list of purchasing equipment by the method of using foreign capital.

5.

Economic evaluation is analyzed and calculated according to Interim Provisions of Financial Evaluation on Hydroelectric Construction Project (trial implementation) and Rules for the Implementation of Economic Evaluation on Hydroelectric Construction Project (trial implementation) and the relevant provisions.

6.

Speciality index table of a implementray project, engineering drawing of site, pivotal floor plan, etc.

A protocol of jv or a cooperative protocol:

The above-mentioned text basing on letter of intent is implemented, revised and enriched according to views of examination and approval on a recommend letter of project.

Contracts of jointly owned enterprises:

Refer to Article 14 in Regulations for the Implementation of the Law of the People's Republic of China Concerning Chinese-Foreign Joint Ventures.

Articles of enterprises:

Refer to Article 16 in Regulations for the Implementation of the Law of the People's Republic of China Concerning Chinese-Foreign Joint Ventures.

Application for building exclusively foreign-owned enterprises:

Refer to Article 15 in Rules of the Implementation of the Law of the People's Republic of China Concerning exclusively Foreign-Owned Enterprises.

Articles of exclusively foreign-owned enterprises:

Refer to Article 16 in Rules of the Implementation of the Law of the People's Republic of China Concerning Exclusively Foreign-Owned enterprises