ConfidentialMemorandumto:<insertname><inserttitle><insertdepartment/division><insertcompanyname>ProposalforInternationalCooperationDear<insertname>:ThismemorandumrepresentsaninquiryofJiangsuElectricPowerCompany(“JiangsuPower”)forestablishinganinternationalcooperationwith<insertcompanyname>withtheover-archingobjectiveofdevelopingasustainable,trust-based,andmutuallybeneficial,long-termrelationship.INTRODUCTIONTOJIANGSUPOWERJiangsuPoweristhemonopolytransmission&distributionelectricitycompanyofChina’sJiangsuprovince,anadministrativeregionwith74millionpeople,andanGDPofEUR123bnin2002.JiangsuPowertodayisaleadingtransmission&distributioncompanywith2002revenuesofEUR4.9bn,totalassetsofEUR10.6bn,andaninstalledbaseof24millioncustomers.Overthepastthreeyears,JiangsuPowerhasenjoyedrapiddevelopment,withrevenuegrowingatacompoundedannualrateof18%andfixedcapitalinvestmentingridconstructiontotalingEUR1.4bnin2002.In2002,Jiangsuprovince’spowerconsumptionwas124.5TWh,growingover15%fromthepreviousyear.Currently,JiangsuPowerhas3,933kilometersof500KVlines,9,078kilometersof220KVlinesand11,909kilometersof110KVlines.TheCompanyisrankedChina’sthirdlargestprovincialelectricitycompanyintermsofcapacity(20.7GW)andChina’ssecondlargestprovincialelectricitycompanyintermsofpowerconsumption(124.5TWh).Asinmanydevelopingcountries,China’selectricityindustryisundergoingbroadandfundamentalreform.Bytheearly1990s,foreigninvestorswereallowedtoinvestinindependentpowerproducers.Inyear-end2002,theStatePowerCorporation,thegovernmentoperatorofChina’selectricityindustry,wasseparatedintofivegencosandtwogridcos,eachwithindividualP&Lresponsibilities.Thisseparationofthetransmission&distributionbusinessfromgenerationbusinessandtheassociatedcorporatizationoftransmission&distributioncompaniesbringanewsetofchallengestoJiangsuPower.Inrecognitionoftheincreasinglycompetitivenatureofitsbusinessenvironment,JiangsuPowerisundertakingsystematicmeasurestocomprehensivelyenhanceitscommercialcapabilities.THEOBJECTIVEJiangsuPowerhasagrandandambitiousvision:tobeoneoftheworld’sleadingtransmissionanddistributioncompaniesby2010.Mr.KouShiQing,thecompany’stopleaderiscommittedtorealizingthatvisionthroughthecultivationanddevelopmentofworld-classleadershipandmanagerialprocesses,technology,andhumantalent.Despitechallengessuchasregulatoryuncertaintyintariffpricingandsocialresponsibilitiesinemploymentandnetworkbuild-out,Mr.KoubelievesJiangsuPowerhastheintrinsicstoachieveitsgoal.Furthermore,JiangsuPowerbelievespartneringwith<insertcompanyname>willacceleratetherealizationofitscompanyvisionbecauseitcanlearnandbenefitfrom<insertcompanyname>’sfirst-ratemanagerialprocesses,technology,andoperationalbestpracticestocontinuouslyelevatethequalityofJiangsuPower’speopleandprocesses.Thecompanyalsobelievesthat<insertcompanyname>couldbenefitfromcooperationwithJiangsuPowerbygainingthefollowing:¶OpportunitytoparticipateinChinaelectricityindustry’srapiddevelopment–Chinaisalreadytheworld’ssecondlargestconsumerofelectricityat1,326bnKWh,anditspowerconsumptionisgrowingat10+percenteveryyear,faraheadofthepaceofothernations.Onthesupplyside,Chinaexperiencedadramaticbuild-outofitsgenerationcapabilitiesoverthepastdecade;by2002,installedcapacitystoodat350GW,havinggrownatacompoundedannualgrowthrateof8.1%since1989.ThespeedandscaleoftheexpansioninChina’selectricityindustr...
