Connected Transaction/Continuing Connected Tran...

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                     DATANG INTERNATIONAL POWER GENERATION CO., LTD.

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

                                 (Stock Code: 00991)


                                     ANNOUNCEMENT
                                CONNECTED TRANSACTION 
                                         AND
                            CONTINUING CONNECTED TRANSACTIONS


AGREEMENT ON ACQUISITION OF DESULFURIZATION ASSETS 


The Board announced that on 31 October 2012, certain power plants of the Company 
entered into the Agreement on Acquisition of Desulfurization Assets with Datang 
Environment Company, a wholly-owned subsidiary of CDC. Pursuant to such agreement, 
each of such certain power plants of the Company agreed to transfer the 
Desulfurization Assets to Datang Environment Company at an aggregate consideration of 
RMB1,378.4168 million in accordance with the relevant requirements of the State. 



FRANCHISING CONTRACT


On 31 October 2012, certain power plants of the Company entered into the Franchising 
Contract with Datang Environment Company. Pursuant to such contract, each of such 
certain power plants of the Company authorized Datang Environment Company to carry 
out franchising in respect of the Desulfurization Assets of the corresponding 
coal-fired power generating units and operate, maintain and manage the 
Desulfurization Assets during the franchise period. Datang Environment Company shall 
enjoy desulfurization tariffs and relevant preferential policies of the PRC and shall 
reimburse and compensate certain power plants of the company for the costs incurred 
for desulfurization, including water, electricity and gas, in accordance with the 
relevant requirements on desulfurization franchising in the State.



LISTING RULES IMPLICATIONS


As at the date of this announcement, CDC is the controlling Shareholder of the 
Company, which together with its subsidiaries hold approximately 34.71% of the issued 
share capital of the Company. Datang Environment Company is a wholly-owned subsidiary 
of CDC. Datang Environment Company is therefore a connected person of the Company and 
the transaction under the Agreement on Acquisition of Desulfurization Assets 
constitutes connected transaction of the Company and the transactions under the 
Franchising Contract constitute continuing connected transactions of the Company.

Since all of the applicable percentage ratios (as defined in Rule 14.07 of the 
Listing Rules) in respect of each of (i) the aggregated transaction amount under the 
Agreement on Acquisition of Desulfurization Assets; and (ii) the aggregated 
transaction amount under the Franchising Contract are above 0.1% but under 5%, the 
transactions under the Agreement on Acquisition of Desulfurization Assets and the 
Franchising Contract are only subject to the reporting and announcement requirements 
under Chapter 14A the Listing Rules, but are exempt from the approval by the 
independent Shareholders of the Company under the requirements of Chapter 14A of the 
Listing Rules.



BACKGROUND


In order to further implement the "Notice of Implementation of Pilot Plan of Flue Gas 
Desulfurization Franchising in Coal-fired Power Plant" (NDRC Environment & Resources 
(2007) No. 1570) (the "Notice"), the twenty-ninth meeting of the seventh session of 
the Board considered and approved on 27 September 2012 the desulfurization 
franchising of the coal-fired power plants of the Company. Flue gas desulfurization 
franchising in coal-fired power plant refers to: with the assistance of relevant 
government authorities in arrangement and coordination, coal-fired power plant will 
grant the income right formed by the desulfurization tariffs and the 
desulfurization-related preferential policies introduced by the PRC government to 
specialized desulfurization companies by way of contractual arrangements. The 
specialized desulfurization companies will bear the responsibilities of carrying out 
the investment, construction, operation, maintenance and day-to-day management 
activities of the desulfurization facilities and will undertake the desulfurization 
responsibilities as stipulated in the relevant contract.
 
On 31 October 2012, certain power plants of the Company entered into the Agreement on 
Acquisition of Desulfurization Assets with Datang Environment Company, a wholly-owned 
subsidiary of CDC. Pursuant to such agreement, each of such certain power plants of 
the Company agreed to transfer the Desulfurization Assets to Datang Environment 
Company at an aggregate consideration of RMB1,378.4168 million in accordance with the 
relevant requirements of the State. 

On 31 October 2012, certain subsidiaries and power plant of the Company entered into 
the Franchising Contract with Datang Environment Company. Pursuant to such contract, 
each of such certain power plants of the Company authorized Datang Environment 
Company to carry out franchising of the Desulfurization Assets and operate, maintain 
and manage the Desulfurization Assets during the franchise period after the 
completion of the disposal of Desulfurization Assets. Datang Environment Company 
shall enjoy the desulfurization tariffs and relevant preferential policies of the PRC 
and shall be responsible for the costs incurred for desulfurization, including water, 
electricity and gas, in accordance with the relevant requirements on desulfurization 
franchising in the State.



AGREEMENT ON ACQUISITION OF DESULFURIZATION ASSETS


Date 

31 October 2012


Parties

Transferor: (i)    Zhangjiakou Power Plant 
            (ii)   Chaozhou Power Generation Co., Ltd. 
            (iii)  Lvsigang Power Generation Co., Ltd. 

Transferee:     Datang Environment Company


Material Terms of the Agreement on Acquisition of Desulfurization Assets

The terms of the three Agreements on Acquisition of Desulfurization Assets entered 
into by certain power plants of the Company with Datang Environment Company are 
substantially the same, the material terms of which are summarized as follows:

1.   Datang Environmental Company agrees to purchase the Desulfurization Assets from 
     each of Zhangjiakou Power Plant, Chaozhou Power Generation Co., Ltd. and 
     Lvsigang Power Generation Co., Ltd.
 
     The Desulfurization Assets include all facilities, equipment, spare parts, 
     plants and related information of the desulfurization installations ancillary to
     the coal-fired power generation units of Zhangjiakou Power Plant, Chaozhou Power
     Generation Co. Ltd. and Lvsigang Power Generation Co. Ltd.

2.   Consideration: The consideration for the transfer of the Desulfurization Assets 
     was arrived at after arm's length negotiation between the parties with reference
     to the unaudited book value and the assessed value of the Desulfurization Assets 
     after valuation. The consideration shall not be less than the assessed value of 
     the Desulfurization Assets and their unaudited book value. The related tax 
     incurred during the transfer process of the Desulfurization Assets shall be 
     borne by Datang Environment Company according to the actual amount incurred.

     The assessed values for the Desulfurization Assets of Zhangjiakou Power Plant, 
     Chaozhou Power Generation Co., Ltd. and Lvsigang Power Generation Company as of
     the valuation date on 30 April 2012 by adopting costs approach are as follows:

     (a)   Upon the assessment by Beijing China Alliance Appraisal Co., Ltd., an 
           independent third party of the Company, the book value (as at 30 April 
           2012) and the assessed value of the Desulfurization Assets of Zhangjiakou 
           Power Plant are RMB413.8634 million and RMB372.9472 million, respectively.

     (b)   Upon the assessment by Beijing China Alliance Appraisal Co., an independent
           third party of the Company, Ltd., the book value (as at 30 April 2012) and 
           the assessed value of the Desulfurization Assets of Chaozhou Power 
           Generation Company as at 30 April 2012 are RMB644.6411 million and 
           RMB438.8566 million, respectively.

     (c)   Upon the assessment by Beijing Zhong Tian He Assets Appraisal Co., Ltd., an 
           independent third party of the Company, the book value (as at 30 April 2012)
           and assessed value of the Desulfurization Assets of Lvsigang Power 
           Generation Company are RMB315.1050 million and RMB319.9123 million, 
           respectively.

     After arm's length negotiation between the parties considering the book values 
     and assessed values of the Desulfurization Assets as set out above, the 
     consideration for the transfer of the Desulfurization Assets of Zhangjiakou Power
     Plant, Chaozhou Power Generation Co., Ltd. and Lvsigang Power Generation Co., 
     Ltd., are RMB413.8634 million, RMB644.6411 million and RMB319.9123 million, 
     respectively, which amount to an aggregate consideration of approximately 
     RMB1,378.4168 million.
 
3.   Conditions precedent to the agreement: The transfer of the Desulfurization 
     Assets and the related franchising arrangement shall be approved by the parties 
     in accordance with their respective articles of associations and rules of 
     proceedings and the Company Law of the PRC.  

4.   Payment terms of the consideration: The consideration for the transfer of the 
     Desulfurization Assets is payable by Datang Environment Company in three 
     installments as set out below.

     The first installment, being RMB275.6833 million and represents 20% of the total
     consideration, shall be payable by  Datang Environment Company by way of cash 
     within 10 days after the effective date of the agreement.

     The second installment, being RMB689.2082 million and represents 50% of the 
     total consideration, shall be payable by Datang Environment Company by way of 
     cash within 10 days after the delivery of Desulfurization Assets.

     The third installment, being RMB413.5253 million and represents 30% of the total 
     consideration, shall be payable by Datang Environment Company by way of cash by
     25 December 2012. 


Effective date 

The Agreement on Acquisition Desulfurization Assets shall become effective when it is 
duly signed by the parties with their respective company chops affixed and the 
conditions precedent to the agreement are fulfilled.


Gain from the transfer of the Desulfurization Assets

The Company expects to record a gain of approximately RMB4.8073 million from the 
disposal of the Desulfurization Assets under the Agreement on Acquisition of 
Desulfurization Assets. Such gain is calculated from the differences between the 
aggregated unaudited book value of the Desulfurization Assets as at 30 April 2012, 
i.e., approximately RMB1,373.6095 million, and the total consideration for the 
transfer, i.e., approximately RMB 1,378.4168 million. 

It is expected that the gain from the transfer of the Desulfurization Assets will 
mainly be used to fulfill the funding requirements of the Group for corporate 
development, new project development, repayment of or substitution for new bank 
borrowings. 
 
The revenues from desulfurization electricity fee of the certain power plants of the 
Company amounted to approximately RMB399.2638 million and approximately RMB570.6287 
million for the two years ended 31 December 2010 and 31 December 2011, respectively.


FRANCHISING CONTRACT 


Date 

31 October 2012


Parties

(i)    Zhangjiakou Power Plant 
(ii)   Chaozhou Power Generation Co., Ltd.
(iii)  Lvsigang Power Generation Co., Ltd. 
(iv)   Datang Environment Company


Material Terms of the Franchising Contract

The terms of the three Franchising Contracts are substantially the same, the material 
terms of which are summarized as follows:

1.   Each of Zhangjiakou Power Plant, Chaozhou Power Generation Co., Ltd. and 
     Lvsigang Power Generation Co., Ltd. authorized Datang Environment Company to
     carry out franchising of the Desulfurization Assets and operate, maintain and 
     manage the Desulfurization Assets during the franchise period. Datang 
     Environment Company shall enjoy the desulfurization tariffs and relevant 
     preferential policies of the PRC and shall be responsible for the costs incurred 
     for desulfurization, including water, electricity and gas, in accordance with 
     the relevant requirements on desulfurization franchising in the State.

2.   Desulfurization tariffs: desulfurization tariffs mean the increased electricity 
     price resulting from the installation of desulphurization facilities, which is 
     approved by the national pricing authority and is included in the on-grid 
     tariffs. As at the date of the signing of Franchising Contract, the 
     desulfurization tariff is RMB0.015 /kWh.
 
3.   Desulfurization electricity fee: desulfurization electricity fee means the power
     generation fee required to be paid by the power grid company to Datang 
     Environment Company and shall be collected from the power grid company by 
     certain power plants of the Company on behalf of Datang Environment Company
     based on the on-grid power generation of certain power plants of the Company and
     the desulfurization tariffs resulting from the desulfurization franchising 
     carried out by Datang Environment Company for the power generation of certain 
     power plants of the Company pursuant to the requirements of the current national
     policies on tariffs (increased desulfurization tariffs) and the "Notice" as well 
     as the relevant purchase and sale of electricity contract.

     Desulfurization electricity fee = on-grid power generation x desulfurization 
     tariffs

4.   The settlement of desulfurization electricity fee: the power grid company shall 
     pay on-grid electricity fee to certain power plants of the Company. After 
     receiving such on-grid electricity fee, certain power plants of the Company 
     shall transfer the desulfurization tariffs to Datang Environment Company 
     according to the desulfurization electricity fee pricing principle as set out in
     paragraph (3) of this section.

     Considering the State's policy and the business plan of the Company, it is
     estimated that the total desulfurization electricity fees charged by Datang
     Environment Company for the provision of desulfurization services to certain 
     power plants of the Company for each of the three years ending 31 December 2012,
     31 December 2013 and 31 December 2014 shall not exceed approximately RMB90 
     million, RMB540 million and RMB540 million, respectively.

     The desulfurization electricity fees aforementioned are calculated from the 
     expected corresponding on-grid power generation of the power generation units 
     with annual utilization hours of 5,500 hours of certain power plants of the
     Company during the relevant periods, and the current desulfurization electricity
     tariff (RMB0.015/kWh). 

     The Company did not carry out the transactions relating to the franchising of 
     the Desulfurization Assets with Datang Environment Company in the past.

5.   Settlement of water, electricity and gas costs incurred for desulfurization: 
     during the franchise period, Datang Environment Company shall reimburse and 
     compensate certain power plants of the Company for the costs incurred for 
     desulfurization, including water, electricity and gas.
 
     Based on the calculation of the corresponding on-grid power generation of the
     power generation units with annual utilization hours of 5,500 hours of certain 
     power plants of the Company, it is estimated that the total costs incurred for 
     desulfurization, such as water, electricity and gas, to be reimbursed and 
     compensated by Datang Environment Company to certain power plants of the Company 
     for each of the of the three years ending 31 December 2012, 31 December 2013 and 
     31 December 2014 shall not exceed approximately RMB28 million, RMB 166 million 
     and RMB166 million, respectively.

6.   The franchise period: the franchise period is the same as the operating period 
     of the power generation facilities at which the franchise project is located.

     Since the Desulfurization Assets are the supporting and ancillary facilities of
     the coal-fired power generating units, the franchise period of the 
     Desulfurization Assets are the same as the operating periods of their 
     corresponding power generating facilities. The term of the Franchising Contract 
     is expected to exceed three years. The Company will re-set the annual caps after
     the expiration of the annual cap for the year ending 31 December 2014 and 
     re-comply with the relevant reporting, announcement and independent
     Shareholders' approval (if applicable) in accordance with the relevant 
     requirements of the Listing Rules.

The Company will engage an independent financial advisor to give independent advice 
on the term of the Franchising Contract in accordance with Rule 14A.35 of the Listing 
Rules and to explain why a longer period for the contract is required and to confirm 
that it is normal business practice for contracts of this type to be of such duration. 
The Company will issue a supplemental announcement in this regard as soon as 
practicable.  


Effective date

The Franchising Contract shall become effective when it is duly signed by the legal 
representatives or the authorized representatives of the parties and when the 
following conditions are fulfilled��(1) the approvals by the respective board of 
directors or general meeting in accordance with the provisions of the Articles of 
Association and the Rules of Proceedings of the parties are obtained; and (2) the 
parties have entered into the Agreement on Acquisition of Desulfurization Assets and 
such agreement has become effective.



INFORMATION ON THE PARTIES


1.   The Company, which is principally engaged in the construction and operation of 
     power plants, the sale of electricity and thermal power, the repair and 
     maintenance of power equipment and power-related technical services, with its 
     main service areas located in the PRC.
 
2.   Zhangjiakou Power Generation Company, a power plant located at 14 kilometers
     southeast of Zhangjiakou city, Hebei Province and is owned by the Company. It
     currently has eight 300MW coal-fired generation units (2,400MW in total) and the 
     assets of compatible desulfurization facilities. The power generated mainly 
     supplies the Beijing-Tianjin-Tangshan power grid. 

3.   Chaozhou Power Generation Company, a subsidiary of the Company, incorporated in 
     November 2003. It has two sets of 600MW and two set of 1,000MW coal-fired 
     generation units (3,200MW in total) and the assets of compatible desulfurization 
     facilities. The power generated mainly supplies the Guangdong power grid. The 
     Company holds 52.5% of the equity interest in Chaozhou Power Generation Company.

4.   Lvsigang Power Generation Company, a subsidiary of the Company, incorporated in 
     September 2003. It has four 660MW coal-fired generation units (2,640MW in total)
     and the assets of compatible desulfurization facilities. The power generated 
     mainly supplies the Jiangsu power grid. The Company holds 55% of the equity 
     interest in Lvsigang Power Generation Company.

5.   Datang Environment Company, a wholly-owned subsidiary of CDC, incorporated in 
     July 2011. It is principally engaged in development of environmental technology 
     and service, the operation and administration of environmental pollution control
     facilities, the production and sales of environmental facilities and products,
     desulfurization and denitration of exhaust gas, etc. 



REASONS FOR AND BENEFITS OF ENTERING INTO THE AGREEMENT ON ACQUISITION OF 
DESULFURIZATION ASSETS AND THE FRANCHISING CONTRACT


The National Development and Reform Commission and State Environment Protection 
Administration jointly promulgated the Notice. The Notice urges the implementation of 
pilot plan of flue gas desulfurization franchising in coal-fired power plant in the 
power plants of the five major power generation groups. Flue gas desulfurization 
franchising in coal-fired power plant is a major initiative of the PRC for increasing 
its effort on energy conservation and emission reduction. In early 2008, Inner 
Mongolia Datang International Tuoketuo Power Generation Co., Ltd., a subsidiary of 
the Company, was selected as the pilot unit to implement desulfurization facilities 
franchising, and achieved satisfactory results. To further enforce the Notice, the 
Company intends to continue the implementation of desulfurization franchising by its 
coal-fired power generating units.
 
The implementation of franchising for desulfurization projects by certain power 
plants of the Company can effectively revitalize the Desulfurization Assets in stock 
of the Company, while the proceeds of transferring the Desulfurization Assets can be 
used to finance the construction and operation of the enterprise, repaying or 
substituting new bank loans, and effectively ease the financial pressure of the 
Company and reduce the Company's asset-to-liability ratio, thereby enhancing the 
profitability and the capacity of sustainable development of the Company. Meanwhile 
the professional management advantage of Datang Environment Company can be brought 
into full play, the operational efficiency of the desulfurization facilities can be 
enhanced, and the risks concerning environmental protection can be reduced, and the 
operational costs of the Company can be saved. 

The Directors (including the independent non-executive Directors) are of the view 
that the implementation of desulfurization franchising is in compliance with the 
national environmental policies, and is favorable to the improvement of the economic 
indicators of power generation companies and the enhancement of the operational and 
management performance of desulfurization facilities. The terms of the Agreement on 
Acquisition of Desulfurization Assets and the Franchising Contract (including the 
term relating to the franchise period) have been determined on normal commercial 
terms, and the relevant transactions are fair, reasonable and in the interests of the 
Company and its Shareholders as a whole.



LISTING RULES IMPLICATIONS


As at the date of this announcement, CDC is the controlling Shareholder of the 
Company, which together with its subsidiaries hold approximately 34.71% of the issued 
share capital of the Company. Datang Environment Company is a wholly-owned subsidiary 
of CDC. Datang Environment Company is therefore a connected person of the Company and 
the transaction under the Agreement on Acquisition of Desulfurization Assets the 
transactions under the Franchising Contract constitute continuing connected 
transactions of the Company.

Since all of the applicable percentage ratios (as defined in Rule 14.07 of the 
Listing Rules) in respect of each of (i) the aggregated transactions amount under the 
Agreement on Acquisition of Desulfurization Assets; and (ii) the aggregated 
transactions amount under the Franchising Contract are above 0.1% but under 5%, the 
transactions under the Agreement on Acquisition of Desulfurization Assets and the 
Franchising Contract are only subject to the reporting and announcement requirements 
under Chapter 14A the Listing Rules, but are exempt from the approval by the 
independent Shareholders of the Company under the requirements of Chapter 14A of the 
Listing Rules.
 


BOARD'S APPROVAL


None of the Director has any material interest in the Agreement on Acquisition of 
Desulfurization Assets and the Franchising Contract. Those connected Directors, 
including Liu Shunda, Hu Shengmu and Fang Qinghai, who are the principal management 
staff of CDC, have abstained from voting at the Board's meeting for approval of the 
relevant transactions in accordance with the requirements of the listing rules of the 
Shanghai Stock Exchange.



DEFINITIONS


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



"Agreement on Acquisition of             three agreements on the transfer of the
 Desulfurization Assets"                 Desulfurization Assets of coal-fired 
                                         generation units and relevant assets all 
                                         dated 31 October 2012 entered into between 
                                         Datang Environment Company and each of (i) 
                                         Zhangjiakou Power Plant; (ii) Chaozhou Power 
                                         Generation Co. Ltd.; (iii) Lvsigang Power 
                                         Generation Co. Ltd. 

"Board"                                  the board of Directors

"CDC"                                    China Datang Corporation, a state-owned
                                         enterprise established under the laws of the 
                                         PRC and is the controlling shareholder of 
                                         the Company according to the Listing Rules

"certain power plants of the Company"    those subsidiaries and power plants of the 
                                         Company implementing flue gas 
                                         desulfurization franchising, namely 
                                         Zhangjiakou Power Plant, Chaozou Power 
                                         Generation Co. Ltd. and Lvsigang Power 
                                         Generation Co. Ltd.

"Chaozhou Power Generation Company"      Guangdong Datang International Chaozhou 
                                         Power Generation Co., Ltd., a subsidiary of
                                         the Company, details of which are set out in
                                         the section entitled "Information on the 
                                         Parties"

"Company"                                Datang International Power Generation Co.,
                                         Ltd., a sino-foreign joint stock limited 
                                         company incorporated in the PRC on 13
                                         December 1994, whose H Shares are listed on
                                         the Stock Exchange and the London stock 
                                         exchange and whose A Shares are listed on 
                                         the Shanghai stock exchange

"connected person"                       has the meanings prescribed to it under the
                                         Listing Rules

"connected transaction"                  has the meanings prescribed to it under the
                                         Listing Rules

"Datang Environment Company"             China Datang Environmental Technology Co. 
                                         Ltd., a subsidiary of the Company, details 
                                         of which are set out in the section entitled 
                                         "Information on the Parties"

"Desulfurization Assets"                 the desulfurization installations and 
                                         related assets, including facilities, 
                                         equipment, spare parts, plants and related 
                                         information, ancillary to the coal-fired 
                                         power generation units of Zhangjiakou Power
                                         Plant, Chaozhou Power Generation Co. Ltd. 
                                         and, Lvsigang Power Generation Co. Ltd.

"Directors"                              the director(s) of the Company

"Franchising Contract"                   three contracts on the flue gas 
                                         desulfurization franchising all dated 31 
                                         October 2012 entered into between Datang 
                                         Environment Company and each of (i) 
                                         Zhangjiakou Power Plant; (ii) Chaozhou Power
                                         Generation Co. Ltd.; (iii) Lvsigang Power 
                                         Generation Co. Ltd. 

"Group"                                  the Company and its subsidiaries

"Listing Rules"                          the Rules Governing the Listing of 
                                         Securities on The Stock Exchange 

"Lvsigang Power Generation Company"      Jiangsu Datang International Lvsigang Power 
                                         Generation Company Ltd., a subsidiary of the
                                         Company, details of which are set out in the
                                         section entitled "Information on the 
                                         Parties"

"PRC"                                    the People's Republic of China

"RMB"                                    Renminbi, the lawful currency of the PRC

"Shareholder(s)"                         the holder(s) of the Share(s)

"Stock Exchange"                         The Stock Exchange of Hong Kong Limited

"Zhangjiakou Power Plant"                A power plant located at 14 kilometers 
                                         southeast of Zhangjiakou city, Hebei 
                                         Province and is owned by the Company, 
                                         details of which are set out in the section 
                                         entitled "Information on the Parties"

"%"                                      percent



                                                            By Order of the Board  
                                                                  Zhou Gang     
                                                            Secretary to the Board 

Beijing, the PRC, 2 November 2012

As at the date of this announcement, the Directors of the Company are:
Liu Shunda, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Liu Haixia, 
Guan Tiangang, Mi Dabin, Ye Yonghui, Li Gengsheng, Li Yanmeng*, Zhao Zunlian*, 
Li Hengyuan*, Zhao Jie*, Jiang Guohua*

*  Independent non-executive Directors