1 Project General

　 1.1 Project No.: 106

　 1.2 Project Contact Unit: Nanning General Plant for Power Generation Equipment

　 1.3 Negotiating Representative: Wei Zhimin

　　 Tel.: +86-771-485660l 13707716664

　　 Fax: +86-771-4835276

　 1.4 Project Site: No. 22, Middle Wuyi Road,Nanning 530031

　 1.5 Total Investment: USD 3.02 million

　 1.6 Pattern of Cooperation : Asset Restructuring

2 Project Scope, Size and Capital Compositions

　 Production of turbine generator, excitation device for speed regulator, oil pressure device, valves and automatic control device and other hydraulic power products.

3 Brief Introduction of the Project Contact Unit

　 Nanning General Plant for Power Generation Equipment is one of the top ten manufacturers of hydraulic power equipment in China. It is also one of the 230 key enterprises under key supervision control by Guangxi government and is subject to the management by Nanning Zhuangning Assets Management Co., Ltd. With a history of 36 years in the field of production and design of whole plant hydraulic power equipment, the plant has a total registered staff members of 1850 people of whom 952 are staff on the job. The plant passed the IS0900l ： 2000 Quality Certification System in March of 2003.

4 Project Market Analyses

　 The development in the field of hydraulic power will reach a climax in the first twenty years in the new century, reaching a total installed capacity of two hundred million KW by then. Firstly, the Ministry of Water resources is now working out a planning for the replacement of fuel with hydraulic power and 886 counties and cities have drawn up plans to replace fuel with hydraulic power for ecological protection project. The Ministry of Water resources has urged by issuing the Document No. [2001] 468 that in the tenth five-year plan, a total of 400 electrization counties will be built with electricity supply to all the villages with a power use rate of over 95%, averaging over 500KW for power consumption per person. Secondly, the capacity of hydraulic projects under construct has exceeded 30 million KW. The planned installed capacity for the period from 2002 to 2010 is expected to exceed 40 million KW, with an average annual installed capacity of 10 million KW . If the investment is calculated at 8000yuan/KW, the average planned annual investment in hydraulic power stations is 80 billion yuan. A market capacitance of 8 billion yuan is available each year if it is calculated at 10% of the total investment in equipment. Thirdly, at the requirement of the Department of Agricultural Power under the Ministry of Water Resources, over 50000 small and medium-sized hydraulic power stations will require less people on duty by the year 2010. Therefore, in the next 8 to 10 years to come, there is an annual market capacitance of about 10 billion yuan for automation renovation. Thus there is a huge market potential .

5 Supporting Facilities for the Project

　 The plant has some mechanical machining equipment that is the largest in the middle and south of China and 310 sets of production equipment such as the 16m vertical lathe, 8m numerical control lathe, 14m horizontal lathe and 100t crane, etc. Of these equipment, 36 sets are of large-sized, precision and rare equipment with a heavy-duty workshop with a hoisting capacity of 100t, an annual production capacity of 150mw turbine generators with a single unit capacity of 100mw. With a strong technical development capacity, the plant has set up a technical center at provincial level and succeeded in development of the CAD system for small and medium-sized turbine generator sets.

6 Project Competitive Advantages

　 With advanced technologies, the turbine generators manufactured by the plant are sold to every part of China as well as to foreign countries such as the Philippines, Tanzania, Indonesia, Cuba, Vietnam and Burma, etc.