DISCLOSEABLE AND CON. TRANS.

Datang Intl Power Generation Co Ld
31 January 2007

If you are in any doubt as to any aspect of this circular or as to the action to
be taken, you should consult a licensed securities dealer, bank manager,
solicitor, professional accountant or other professional adviser.



If you have sold or transferred all your shares in DATANG INTERNATIONAL POWER
GENERATION CO., LTD., you should at once hand this circular to the purchaser or
transferee or to the bank, licensed securities dealer or other agent through
whom the sale or transfer was effected for transmission to the purchaser or
transferee.



The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this circular, makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising from
or in reliance upon the whole or any part of the contents of this circular.



                DATANG INTERNATIONAL POWER GENERATION CO., LTD.

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

                                (Stock Code: 991)



                     DISCLOSEABLE AND CONNECTED TRANSACTION



    Independent Financial Adviser to the Independent Board Committee and the
                            Independent Shareholders

                                      DBS

A letter from the Board of the Company is set out on pages 4 to 10 of this
circular. A letter from the Independent Board Committee is set out on pages 11
to 12 of this circular. A letter from DBS Asia Capital Limited containing its
advice to the Independent Board Committee and the Independent Shareholders is
set out on pages 13 to 17 of this circular.

31 January 2007



                                    CONTENTS


                                                                                                                   Page
Definitions                                                                                                           1
Letter from the Board                                                                                                 4
Letter from the Independent Board Committee                                                                          11
Letter from DBS Asia                                                                                                 13
Appendix - General information                                                                                      18



                                  DEFINITIONS



In this circular, unless the context otherwise requires, the following
expressions have the following meanings:
'A Share(s)'                    the domestic listed ordinary share(s) of the Company with a nominal value of RMB1.00
                                each

'Associates'                    has the meaning ascribed to it under the Listing Rules

'BEIG'                          Beijing Energy Investment (Group) Company Limited ('Chinese Words), a substantial
                                Shareholder of the Company holding approximately 11.96% of the issued share capital
                                of the Company

'Board'                         board of Directors

'CDGC'                          China Datang Corporation ('Chinese Words), a state-owned enterprise established
                                under the laws of the PRC and a substantial Shareholder of the Company holding
                                approximately 34.96% of the issued share capital of the Company

'Company'                       Datang International Power Generation Co., Ltd.  ('Chinese Words), a sino-foreign
                                joint stock limited company incorporated in the PRC on 13 December 1994, of which
                                the H Shares are listed on The Stock Exchange of Hong Kong Limited and The London
                                Stock Exchange Limited and the A Shares are listed on the Shanghai Stock Exchange

'connected person'              has the meaning ascribed to it under the Listing Rules

'DBS Asia'                      DBS Asia Capital Limited, the independent financial adviser to the Independent Board
                                Committee and the Independent Shareholders in respect of the Investment Agreement, a
                                licensed corporation for types 1 (dealing in securities), 4 (advising on securities)
                                and 6 (advising on corporate finance) regulated activities under the SFO

'Directors'                     directors of the Company

'EGM'                           the extraordinary general meeting of the Company to be held to consider and, if
                                thought fit, approve the Investment Agreement

'Group'                         The Company and its subsidiaries

'H Share(s)'                    the overseas listed foreign share(s) of the Company with a nominal value of RMB1.00
                                each and are listed on The Stock Exchange of Hong Kong Limited and The London Stock
                                Exchange Limited

'HK$'                           Hong Kong dollar(s), the lawful currency of Hong Kong

'Hong Kong'                     the Hong Kong Special Administrative Region of the PRC

'Independent board Committee'   the independent board committee of the Company, comprising five independent
                                non-executive Directors, namely Mr. Xie Songlin, Mr. Xu Daping, Mr. Liu Chaoan, Mr.
                                Yu Changchun and Mr. Xia Qing

'Independent Shareholders'      Shareholders other than BEIG and CDGC and their Associates

'Investment Agreement'          the investment agreement in relation to jointly establish Tuoketuo No. 2 Power Co.
                                for the purposes of planning, constructing and operating the Tuoketuo Power Plant
                                Project, dated on 9 January 2007 entered into between the Company, BEIG, CDGC and
                                MDHN

'Latest Practicable Date'       26 January 2007, being the latest practicable date prior to the printing of this
                                circular for ascertaining certain information contained in this circular

'Listing Rules'                 Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

'MDHN'                          Inner Mongolia Mengdian Huaneng Thermal Power Corporation Limited, of which the
                                shares are listed and traded on the Shanghai Stock Exchange

'PRC'                           the People's Republic of China

'RMB'                           Renminbi, the lawful currency of the PRC

'SEPA'                          the State Environment Protection Administration

'Shareholder(s)'                the holder(s) of the share(s) of the Company

'Tuoketuo No. 2 power Co.'      Inner Mongolia Datang International Tuoketuo No. 2 Power Generation Company Limited

'Tuoketuo Power Company'        Inner Mongolia Datang International Tuoketuo Power Generation Company Limited, a
                                subsidiary of the Company, of which its 60% shares are held by the Company

'Tuoketuo Power plant Project'  the power plant project of Phases IV and V of Tuoketuo power plant with a capacity
                                of 4 x 600MW

'%'                             per cent.



For the purpose of this circular, HK$1.00 is equivalent to RMB1.0028.



                DATANG INTERNATIONAL POWER GENERATION CO., LTD.

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

                                (Stock Code: 991)
Executive Directors:                                        Registered office:
Mr. Zhang Yi                                                No. 482 Guanganmennei Avenue
Mr. Yang Hongming                                           Xuanwu District
                                                             Beijing, 100053
Non-executive Directors:                                     PRC
Mr. Zhai Ruoyu (Chairman)
Mr. Hu Shengmu                                              Principal place of business
Mr. Fang Qinghai                                            in Hong Kong:
Mr. Liu Haixia                                              c/o Huen Wong & Co. in association with
Ms. Guan Tiangang                                           Fried, Frank, Harris, Shriver & Jacobson LLP
Mr. Su Tiegang                                              1105-1108 Gloucester Tower
Mr. Ye Yonghui                                              The Landmark
Mr. Tong Yunshang                                           15 Queen's Road Central
                                                             Hong Kong
Independent non-executive Directors:
Mr. Xie Songlin
Mr. Xu Daping
Mr. Liu Chaoan
Mr. Yu Changchun
Mr. Xia Qing
                                                            31 January 2007

To the Shareholders

Dear Sir or Madam,



DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

The Board is pleased to announce that on 9 January 2007, the Company entered
into the Investment Agreement with BEIG, CDGC and MDHN to establish Tuoketuo No.
2 Power Co. for the purposes of planning, constructing and operating the
Tuoketuo Power Plant Project. The Company, BEIG, CDGC and MDHN agreed to
contribute to the establishment of Tuoketuo No. 2 Power Co. in the proportion of
40%, 25%, 20% and 15%, respectively.



According to the Listing Rules, as the assets and consideration ratios (as
defined in Rule 14.07 of the Listing Rules) is more than 5% but less than 25%,
the Investment Agreement constitutes a discloseable transaction of the Company
which is subject to the notification and publication requirements as set out in
Rules 14.34 to 14.39 of the Listing Rules.



As at the date of the Investment Agreement, BEIG held approximately 11.86% of
the issued share capital of the Company and 25% of the interest of Tuoketuo
Power Company, a subsidiary of the Company; CDGC held approximately 34.96% of
the issued share capital of the Company and MDHN held 15% of the interest of
Tuoketuo Power Company. Accordingly, each of BEIG, CDGC and MDHN is a connected
person of the Company under the Listing Rules and therefore the Investment
Agreement constitutes a connected transaction of the Company under the Listing
Rules. As the assets and consideration ratios (as defined in Rule 14.07 of the
Listing Rules) is more than 2.5%, the Investment Agreement is subject to the
reporting, announcement and independent shareholders' approval requirements
under Chapter 14A of the Listing Rules. The Company will also disclose the
relevant details in the next published annual report and accounts of the Company
in accordance with the relevant requirements as set out in Rule 14A.45 of the
Listing Rules.



The purpose of this circular is to provide you with further details of the
Investment Agreement, to set out the recommendation of the Independent Board
Committee and to set out the letter of advice from DBS Asia to the Independent
Board Committee and the Independent Shareholders in respect of the Investment
Agreement.



INVESTMENT AGREEMENT

Date

9 January 2007

Parties
1.                     The Company,
2.                     BEIG,
3.                     CDGC
4.                     MDHN.



Major terms of the Investment Agreement

Pursuant to the Investment Agreement, the Company, BEIG, CDGC and MDHN agreed to
contribute in cash to the establishment of Tuoketuo No. 2 Power Co. in the
proportion of 40%, 25%, 20% and 15%, respectively, for the purposes of planning,
constructing and operating the Tuoketuo Power Plant Project.



The total investment amount of the Tuoketuo Power Plant Project is approximately
RMB10,193,530,000 (equivalent to approximately HK$10,165,067,810), subject to
the final approval by the relevant government authorities in the PRC. The final
registered capital of Tuoketuo No. 2 Power Co. will account for approximately
20% of the total investment amount of the project, i.e. approximately
RMB2,038,710,000 (equivalent to approximately HK$2,033,017,551).



Pursuant to the Investment Agreement, the Company, BEIG, CDGC and MDHN will be
responsible for contributing in cash in the proportion of 40% (i.e.
approximately RMB815,484,000, equivalent to approximately HK$813,207,020), 25%
(i.e. approximately RMB509,677,500, equivalent to approximately HK$508,254,388),
20% (i.e. approximately RMB407,742,000, equivalent to approximately
HK$406,603,510) and 15% (i.e. approximately RMB305,806,500, equivalent to
approximately HK$304,952,633), respectively, to the registered capital of
Tuoketuo No. 2 Power Co.. There is no time limit specified in the Investment
Agreement within which the parties shall contribute in full to the registered
capital of Tuoketuo No. 2 Power Co. and it is expected that the parties to the
Investment Agreement will contribute their respective shares to the registered
capital of Tuoketuo No. 2 Power Co. in stages in line with the construction
progress of the Tuoketuo Power Plant Project.



As at the date of this circular, the parties to the Investment Agreement have
not contributed any registered capital to Tuoketuo No. 2 Power Co. The Company's
contribution to the registered capital of Tuoketuo No. 2 Power Co. will be
funded by internal resources.



Pursuant to the Investment Agreement, all funds required for the construction of
the Tuoketuo Power Plant Project will be funded by the registered capital of
Tuoketuo No. 2 Power Co. and financing resources in the PRC, i.e. loans from
banks. If necessary, the respective parties to the Investment Agreement will
severally guarantee against such financing in proportion to their respective
capital contributions in Tuoketuo No. 2 Power Co. and Tuoketuo No. 2 Power Co.
will provide counter-guarantee with its assets or other applicable means against
the guarantees given by the respective parties to the Investment Agreement. In
the event of any further capital injection or other guarantees against
borrowings required upon the Company, the Company will comply with the relevant
requirements under the Listing Rules if and when necessary.



Effective date of the Investment Agreement

The Investment Agreement will become effective when the respective parties to
the Investment Agreement have respectively obtained approvals from their
authorities for the investment items in the Investment Agreement. As at the date
of this circular, the Company still has to submit the Investment Agreement to
its general meeting for consideration and approval.



Other major terms of the Investment Agreement

The term of operation of Tuoketuo No. 2 Power Co. shall be 30 years from the
date of issuance of the business licence.



In order to enable the Company to obtain over 50% of the voting rights in the
general meetings and board meetings of Tuoketuo No. 2 Power Co. upon its
establishment, CDGC and the Company entered into a separate agreement and
pursuant to which, CDGC agreed that while exercising the voting rights on the
general meetings and board meetings of Tuoketuo No. 2 Power Co., CDGC will vote
in line with the Company. As a result, Tuoketuo No. 2 Power Co. will become a
subsidiary of the Company and the results of Tuoketuo No. 2 Power Co. will be
consolidated into the Group's financial statements.



Upon obtaining the approval from the relevant government authorities regarding
the Tuoketuo Power Plant Project, the Tuoketuo Power Plant Project will
commence, including the construction of plant, the purchase and the installation
of facilities. The Company is not in a position to ascertain the time when such
government approval will be issued. The Company estimates that the power
generating units to be built by the Tuoketuo No. 2 Power Co will commence
commercial operation in stages within 24 months from the commencement of
construction of the Tuoketuo Power Plant Project.



Regarding the recent orders given to the Company by SEPA on environmental
protection issues, the Company considers that there will be no immediate impact
on the Tuoketuo Power Plant Project since part of the project has already been
approved by SEPA, while the remaining part is still in the initial preparation
stage. Further, the Company will actively coordinate with various parties and
implement environmental protection measures, so as to meet the requirements of
SEPA as soon as practicable.



REASONS FOR AND BENEFITS OF ENTERING INTO THE INVESTMENT AGREEMENT

The Tuoketuo Power Plant Project is located in a place with abundant coal
resources. As such, fuel supplies with relatively low costs for the project can
be guaranteed which will help lower the operation costs of the Tuoketuo Power
Plant Project. Upon completion, the project will supply electricity directly to
the North China Power Grid. Beijing-Tianjian-Tangshan ('BTT') area, which is
within the North China Power Grid, is the load centre for electricity
consumption with fast economic growth.



The Company considers that the Tuoketuo Power Plant Project, upon its
completion, will benefit from the growing demand for electricity in the BTT
area, which in turn will enhance the Company's profitability as a whole. The
Directors consider that the entering into the Investment Agreement will
facilitate the profit growth of the Company.



The Directors consider that the terms of the Investment Agreement were
negotiated on an arm's length basis between the Company and the parties
thereto and were determined on normal commercial terms. The Directors consider
that the terms of Investment Agreement are fair and reasonable and in the best
interest of the Company and the Shareholders as a whole.



INFORMATION RELATING TO TUOKETUO NO. 2 POWER CO.

Pursuant to the Investment Agreement, Tuoketuo No. 2 Power Co., upon its
establishment, will plan, construct and operate the Tuoketuo Power Plant Project
which comprises four 600MW air-cooling coal-fired power generating units.
Located in Hohhot City, Inner Mongolia Autonomous Region, the PRC, all the
electricity generated by the power plant will be transmitted to the North China
Power Grid.



INFORMATION RELATING TO THE GROUP

The Group is principally engaged in the development and operation of power
plants, the sale of electricity and thermal power, and the repair, testing and
maintenance of power equipment and power related technical services, with its
main service areas in the PRC.



INFORMATION RELATING TO BEIG

BEIG is a wholly state-owned company which is allowed to engage in any business
activities within the scope of operation as permitted by the laws and
regulations. BEIG is principally engaged in the development and investment of
various forms of energy.



INFORMATION RELATING TO CDGC

CDGC is a state-owned enterprise; its main scope of operations are the
development, investment, construction, operation and management of power energy,
organisation of power (thermal) production and sales, power technology
development and consultation, and so forth.



INFORMATION RELATING TO MDHN

MDHN is a joint stock limited company and its scopes of operation are coal-fired
power generation and supply of thermal power.



DISCLOSEABLE AND CONNECTED TRANSACTIONS

According to the Listing Rules, as the assets and consideration ratios (as
defined in Rule

14.07 of the Listing Rules) is more than 5% but less than 25%, the Investment
Agreement constitutes a discloseable transaction of the Company which is subject
to the notification and publication requirements as set out in Rules 14.34 to
14.39 of the Listing Rules.



As at the date of the Investment Agreement, BEIG held approximately 11.86% of
the issued share capital of the Company and 25% of the interest of Tuoketuo
Power Company, a subsidiary of the Company; CDGC held approximately 34.96% of
the issued share capital of the Company and MDHN held 15% of the interest of
Tuoketuo Power Company. Accordingly, each of BEIG, CDGC and MDHN is a connected
person of the Company under the Listing Rules and therefore the Investment
Agreement constitutes a connected transaction of the Company under the Listing
Rules. As the assets and consideration ratios (as defined in Rule 14.07 of the
Listing Rules) is more than 2.5%, the Investment Agreement is subject to the
reporting, announcement and Independent Shareholders' approval requirements
under Chapter 14A of the Listing Rules. The Company will also disclose the
relevant details in the next published annual report and accounts of the Company
in accordance with the relevant requirements as set out in Rule 14A.45 of the
Listing Rules.



EGM

The Company will convene the EGM to, among other things, consider and approve
the Investment Agreement and the transaction contemplated thereunder. A notice
convening the EGM will be announced separately and despatched to the
Shareholders as soon as reasonably practicable.



Shareholders having material interests in the transaction and their respective
Associates will abstain from voting. Therefore, each of BEIG and CDGC and their
respective Associates will abstain from voting at the EGM in accordance with the
Listing Rules and that the voting will be taken by way of a poll.



POLL PROCEDURE

Pursuant to the Articles of Association, a general voting shall be made at the
Shareholders' meeting by a show of hands. However, the following persons
shall have the right to request for a voting by poll before or after a voting by
show of hands:


                    
(A)                 the chairman of the meeting; or
                    
(B)                 at least two Shareholders present in person or by proxy entitled to vote at the meeting; or
                    
(C)                 one or more Shareholders present in person or by proxy representing 10% or more of the total voting
                    rights of all the Shareholders.


A person who has made a request for voting by poll can withdraw such demand.



Pursuant to Rule 14A.52 of the Listing Rules, the vote taken at the EGM must be
taken by poll. The Company will announce the results of the poll on the next
business day following the EGM.



RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee as
set out on pages 11 to 12 of this circular which contains its recommendation to
the Independent Shareholders on the terms of the Investment Agreement. Your
attention is also drawn to the letter of advice received from DBS Asia, the
independent financial adviser to the Independent Board Committee and the
Independent Shareholders as set out on pages 13 to 17 of this circular which
contains, among others, its advice to the Independent Board Committee and the
Independent Shareholders in relation to the terms of the Investment Agreement,
the casting of votes for or against the resolution approving the Investment
Agreement by poll at the EGM as well as the principal factors and reasons
considered by it in concluding its advice.



ADDITIONAL INFORMATION

No gain or loss by the Company will arise and there will be no material impact
on the assets and liabilities of the Company as a result of the establishment of
Tuoketuo No. 2 Power Co. when the Investment Agreement becomes effective.



Upon the establishment of Tuoketuo No. 2 Power Co., it will become a subsidiary
of the Company. The results of Tuoketuo No. 2 Power Co. will be consolidated
into the results of the Company and the assets and liabilities of Tuoketuo No. 2
Power Co. will be included in the consolidated accounts of the Company.



Your attention is also drawn to the general information as set out in the
appendix of this circular.



                   Yours faithfully, By Order of the Board of

                DATANG INTERNATIONAL POWER GENERATION CO., LTD.

                                 Yang Hongming

                               Company Secretary

                DATANG INTERNATIONAL POWER GENERATION CO., LTD.

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

                                (Stock Code: 991)

Legal address and head office

 No.482 Guanganmennei Avenue Xuanwu District Beijing, 100053 The PRC

31 January 2007

To the Independent Shareholders

Dear Sir or Madam,



                     DISCLOSEABLE AND CONNECTED TRANSACTION



We refer to the circular issued by the Company to the Shareholders dated 31
January 2007 (the 'Circular') of which this letter forms part. Terms defined
in this Circular shall have the same meanings in this letter unless the context
otherwise requires.





Under the Listing Rules, the transaction contemplated under the Investment
Agreement and the entering into the Investment Agreement constitutes a
discloseable and connected transaction for the Company and is subject to the
approval of the Independent Shareholders at the EGM.



We have been appointed as the Independent Board Committee to consider the terms
of the Investment Agreement and to advise the Independent Shareholders in
connection with the Investment Agreement as to whether, in our opinion, their
terms are fair and reasonable so far as the Independent Shareholders are
concerned and whether the Investment Agreement is in the interests of the
Company and the Shareholders as a whole. DBS Asia has been appointed as the
independent financial adviser to advise us in this respect.



We wish to draw your attention to the letter from the Board and the letter from
DBS Asia as set out in this circular. Having considered the principal factors
and reasons considered by, and the advice of, DBS Asia as set out in its letter
of advice, we consider that the Investment Agreement is on normal commercial
terms, and that the Investment Agreement is in the best interests of the Company
and the Shareholders as a whole.



We also consider that the terms of the Investment Agreement are fair and
reasonable so far as the Independent Shareholders are concerned. Accordingly, we
recommend the Independent Shareholders to vote in favour of the ordinary
resolution to approve the Investment Agreement in the EGM.



                               Yours faithfully,

              For and on behalf of the Independent Board Committee

           Xie Songlin, Xu Daping, Liu Chaoan, Yu Changchun Xia Qing

                      Independent non-executive Directors



The following is the text of the letter of advice from DBS Asia, the independent
financial adviser to the Independent Board Committee and Independent
Shareholders, in relation to the discloseable and connected transactions, which
has been prepared for the purpose of inclusion in this circular

DBS

31 January 2007

To the Independent Board Committee and Independent Shareholders of Datang
International Power Generation Co., Ltd.



Dear Sirs,

   DISCLOSEABLE AND CONNECTED TRANSACTIONINVESTMENT AGREEMENTRELATING TO THE
                  ESTABLISHMENT OF THE TUOKETUO NO.2 POWER CO.

INTRODUCTION

We refer to our engagement as the independent financial adviser to the
Independent Board Committee and Independent Shareholders in relation to the
Investment Agreement, details of which are set out in the letter from the Board
as set out in the circular (the 'Circular') to the Shareholders dated 31
January 2007, of which this letter forms part.  Expressions used in this letter
shall have the same meaning as defined in the Circular.



As at the date of the Investment Agreement, BEIG held approximately 11.86% of
the issued share capital of the Company and 25% of the interest of Tuoketuo
Power Company, a subsidiary of the Company; CDGC held approximately 34.96% of
the issued share capital of the Company and MDHN held 15% of the interest of
Tuoketuo Power Company. Accordingly, each of BEIG, CDGC and MDHN is a connected
person of the Company under the Listing Rules and the entering into of the
Investment Agreement constitutes a connected transaction of the Company under
the Listing Rules.



Our scope of work under this engagement is to assess the fairness and
reasonableness of the terms of the Investment Agreement insofar as the
Independent Shareholders are concerned and whether from this perspective the
Investment Agreement is in the interest of the Company and its Shareholders as a
whole.  It is not within our scope of work to opine on any other aspects of the
Investment Agreement.  In addition, it is not within our terms of reference to
comment on the commercial merits of the Investment Agreement which is the
responsibility of the Directors.



In arriving at our opinion, we have relied on the information, opinions and
facts supplied, and representations made to us, by the Directors, and advisers
and representatives of the Company (including those contained or referred to in
the Circular).  We have also assumed that the information and representations
contained or referred to in the Circular were true and accurate in all material
respects at the time they were made and continue to be so at the date of the
despatch of the Circular.  We have no reason to doubt the truth, accuracy and
completeness of the information and representations provided to us by the
Directors.  We have also relied on certain information available to the public
and have assumed such information to be accurate and reliable, and we have not
independently verified the accuracy of such information.  We have been advised
by the Directors and believe that no material facts have been omitted from the
Circular.



We consider that we have reviewed sufficient information to reach an informed
view, to justify reliance on the accuracy of the information contained in the
Circular and to provide a reasonable basis for our opinion. We have not,
however, conducted an independent verification of the information nor have we
conducted any form of in-depth investigation into the businesses and affairs or
the prospects of the Company or any of its respective subsidiaries or
associates.



PRINCIPAL FACTORS CONSIDERED

In arriving at our opinion with regard to the terms of the Investment Agreement,
we have considered the principal factors set out below:



1. BACKGROUND OF THE PARTIES TO THE INVESTMENT AGREEMENT

The parties to the Investment Agreement are the Company, BEIG, CDGC and MDHN.



The Company is principally engaged in the development and operations of power
plants, the sale of electricity and thermal power, and the repair, testing and
maintenance of power equipment and power related technical services, with its
main operation in the PRC.



BEIG is a PRC state-owned enterprise which is principally engaged in the
development and investment of various forms of energy. CDGC is a PRC state-owned
enterprise which is principally engaged in the development, investment,
construction, operation and management of power energy, organisation of power
(thermal) production and sales, power technology development and consultation.
Both BEIG and CDGC are substantial shareholders of the Company. MDHN is a joint
stock limited company established in the PRC and listed on the Shanghai Stock
Exchange. Its principal business is coal-fired power generation and supply of
thermal power.



2.     REASONS FOR AND BENEFITS OF ENTERING INTO THE INVESTMENT AGREEMENT

Pursuant to the Investment Agreement, Tuoketuo No. 2 Power Co., upon its
establishment, will plan, construct and operate the Tuoketuo Power Plant Project
which comprises four 600MW air-cooling coal-fired power generating units. Given
that the principal business of the Company is the development and operations of
power plants, and the sale of electricity and thermal power, we consider that
the entering into of the Investment Agreement is within the normal and ordinary
course of business of the Company.



Located in Hohhot City, Inner Mongolia Autonomous Region, the PRC, it is planned
that all the electricity generated by the Tuoketuo Power Plant Project will be
transmitted to the North China Power Grid.  Beijing-Tianjian-Tangshan ('BTT')
area, which is within the North China Power Grid, is the load centre for
electricity consumption with fast economic growth. According to the China
Population Information and Research Centre website, the growth in gross domestic
product ('GDP') of Beijing, Tianjin and Hebei (the province where Tangshan is
located) in 2005 were approximately 11.1%, 14.5% and 13.4%, respectively. The
Company considers that the Tuoketuo Power Plant Project, upon its completion,
will benefit from the growing demand for electricity in the BTT area, which in
turn might enhance the Company's profitability as a whole. As advised by the
management of the Company, one of the power plants of the Company in the region
has already been operating at near full capacity. The Directors consider that
the entering into the Investment Agreement will enable the Group to further
capture the demand for electricity in the region. We also note that the Tuoketuo
Power Plant Project is located near Junger coalfield, which has abundant coal
resources, and is one of the largest open-air coal mine in the PRC with an
estimated reserve of 26.8 billion tonnes. Accordingly, the management of the
Company consider that the fuel supplies with relatively low costs for the
project are readily available which will help to lower the operation costs of
the Tuoketuo Power Plant Project.



In addition, as advised by the Directors, the Tuoketuo Power Plant Project is
structured as a joint venture project which is expected to enable the Company to
spread its risks associated with the project and to enable the Company to
diversify its resources into other viable projects.



3.     MAJOR TERMS OF THE INVESTMENT AGREEMENT

Pursuant to the Investment Agreement, the Company, BEIG, CDGC and MDHN agreed to
contribute in cash for the establishment of Tuoketuo No. 2 Power Co. in the
proportion of 40%, 25%, 20% and 15%, respectively, for the purposes of planning,
constructing and operating the Tuoketuo Power Plant Project.



The total investment amount of the Tuoketuo Power Plant Project is approximately
RMB10,193,530,000 (equivalent to approximately HK$10,165,067,810), subject to
the final approval by the relevant government authorities in the PRC. The final
registered capital of Tuoketuo No. 2 Power Co. will account for approximately
20% of the total investment amount of the project, i.e. approximately
RMB2,038,710,000 (equivalent to approximately HK$2,033,017,551).



Based on the Investment Agreement, the Company, BEIG, CDGC and MDHN will be
responsible for contributing in cash in the proportion of 40% (i.e.
approximately RMB815,484,000, equivalent to approximately HK$813,207,020), 25%
(i.e. approximately RMB509,677,500, equivalent to approximately HK$508,254,388),
20% (i.e. approximately RMB407,742,000, equivalent to approximately
HK$406,603,510) and 15% (i.e. approximately RMB305,806,500, equivalent to
approximately HK$304,952,633), respectively, to the registered capital of
Tuoketuo No. 2 Power Co.. There is no time limit specified in the Investment
Agreement within which the parties shall contribute in full to the registered
capital of Tuoketuo No. 2 Power Co. and it is expected that the parties to the
Investment Agreement will contribute their respective shares to the registered
capital of Tuoketuo No. 2 Power Co. in stages in line with the construction
progress of the Tuoketuo Power Plant Project. Such contribution of capital by
stages is common among power plant projects of substantial size and will be
beneficial to the cashflow position of the joint venture partners.



Pursuant to the Investment Agreement, all funds required for the construction of
the Tuoketuo Power Plant Project will be funded by the registered capital of
Tuoketuo No. 2 Power Co. and financing resources in the PRC, i.e. loans from
banks. If necessary, the respective parties to the Investment Agreement will
severally guarantee against such financing in proportion to their respective
capital contributions in Tuoketuo No. 2 Power Co. and Tuoketuo No. 2 Power Co.
will provide counter-guarantee with its assets or other applicable means against
the guarantees given by the respective parties to the Investment Agreement.



In order to enable the Company to obtain over 50% of the voting rights in the
general meetings and board meetings of Tuoketuo No. 2 Power Co. upon its
establishment, CDGC and the Company have entered into a separate agreement and
pursuant to which, CDGC agreed that while exercising the voting rights on the
general meetings and board meetings of Tuoketuo No. 2 Power Co., CDGC will vote
in line with the Company. As a result, Tuoketuo No. 2 Power Co. will become a
subsidiary of the Company under accounting treatment and the results of Tuoketuo
No. 2 Power Co. will be consolidated into the Group's financial statements.



The Directors consider that the terms of the Investment Agreement were
negotiated on an arm's length basis between the Company and the parties
thereto and were determined on normal commercial terms.  The Directors consider
that the terms of the Investment Agreement are fair and reasonable given that
the Company, BEIG, CDGC and MDHN each proportionally share their respective cash
contribution to the registered capital and they will severally guarantee the
third party borrowings in proportion to their respective capital contributions
in Tuoketuo No. 2 Power Co. if so required. As the terms of the Investment
Agreement stipulated that the joint venture partners contribute proportionally
to their respective share of registered capital and, where necessary, provide
guarantees for loan financing based on their respective proportional interests
in the project, we are of the view that the terms of the Investment Agreement
are fair and reasonable as far as the interests of the Independent Shareholders
are concerned.



4. WORKING CAPITAL

The Company's capital contribution to the registered capital of Tuoketuo No.
2 Power Co. will be funded by internal resources.



We were advised by the Company that in the event of any further capital
injection or other guarantees against borrowings are required by the Company,
the Company will comply with the relevant requirements under the Listing Rules
if and when necessary.



We have discussed with the Directors the impact of the capital contribution
pursuant to the Investment Agreement on the working capital position of the
Company and have reviewed the financial statements of the Company for the six
months ended 30 June 2006. We understand that the Company has conducted detailed
feasibility and cashflow studies on the Company's participation in the
Tuoketuo No. 2 Power Plant Project. We are satisfied that the Company has
sufficient working capital for financing its obligations pursuant to the
Investment Agreement.



OPINION

Having considered the principal factors discussed above, we are of the opinion
that the terms of the Investment Agreement is fair and reasonable so far as the
interests of Independent Shareholders are concerned and from this perspective
the Investment Agreement is in the interests of the Company and the Shareholders
as a whole.  Accordingly, we recommend the Independent Shareholders to vote in
favour of the ordinary resolution to be proposed at the EGM to approve the
Investment Agreement.



                               Yours faithfully,

                              For and on behalf of

                            DBS ASIA CAPITAL LIMITED

                                Kelvin S. K. Lau

                               Managing Director



APPENDIX   GENERAL INFORMATION



1.     RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules
for the purpose of giving information with regard to the Company. The Directors
collectively and individually accept full responsibility for the accuracy of the
information contained in this circular and confirm, having made all reasonable
enquiries that to the best of their knowledge and belief, there are no other
facts the omission of which would make any statement in this circular
misleading.



2.     DISCLOSURE OF INTERESTS

Directors, supervisors and chief executive of the Company

                   (i)        As at Latest Practicable Date, none of the
Directors, supervisors and chief executive of the Company have any interests and
short positions in the shares, underlying shares and/or debentures (as the case
may be) of the Company or any of its associated corporations (within the meaning
of the SFO) which was required to be notified to the Company and the Stock
Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest
and short position which any such Director, chief executive or supervisor is
taken or deemed to have under such provisions of the SFO) or which was required
to be entered into the register required to be kept by the Company under section
352 of the SFO or which was otherwise required to be notified to the Company and
the Stock Exchange pursuant to the Model Code for Securities Transactions by
Directors of Listed Issuers in the Listing Rules.



                   (ii)       As at the Latest Practicable Date, none of the
Directors, proposed Directors, supervisors or proposed supervisors of the
Company has any direct or indirect interest in any assets which have since 31
December 2005 (being the date to which the latest published audited financial
statements of the Company were made up) been acquired or disposed of by or
leased to any member of the Group, or are proposed to be acquired or disposed of
by or leased to any member of the Group.



Substantial shareholders of the Company

As at Latest Practicable Date, so far as the Directors, supervisors and chief
executive are aware, each of the following persons, not being a Director, chief
executive or supervisor of the Company, had an interest in the Shares which
falls to be disclosed to the Company and the Stock Exchange under the provisions
of Division 2 and 3 of Part XV of the SFO:


                                                                    Percentage
                                                     Number of        to total       Percentage to           Percentage
                                                        issued    issued share        total issued             to total
                             Class of                 ordinary  capital of the            domestic             issued H
Name                           Shares              shares held         Company              shares               shares
China Datang                 Domestic         1,979,620,580(L)          34.96%              46.78%                   -
Corporation                    Shares
 (Note 1)
Beijing Energy               Domestic          671,792,400 (L)          11.86%              15.87%                   -
Investment                     Shares
(Group)
Company
(Note 2)
Hebei                        Domestic          671,792,400 (L)          11.86%              15.87%                   -
Construction                   Shares
Investment
Company
(Note 3)
Tianhin Jinneng              Domestic          606,006,300 (L)          10.70%              14.32%                   -
Investment                     Shares
Company
(Note 4)
J.P. Morgan                  H Shares          155,888,845 (L)           2.75%                  -             10.90%(L)
Chase & Co.                                    124,317,000 (P)           2.19%                                 8.69%(P)
Templeton Asset              H Shares           99,698,320 (L)           1.76%                  -              6.97%(L)
Management
Limited
Allianz SE                   H Shares           100,308,000(L)           1.77%                  -              7.01%(L)
                                                    142,000(S)             0 %                                 0.01%(S)
UBS AG                       H Shares           92,316,088 (L)           1.63%                  -              6.45%(L)
                                                 17,568,000(S)           0.31%                                 1.23%(S)
Halbis Capital               H Shares            85,176,000(L)           1.50%                  -              5.95%
Management
(Hong Kong)
Limited



(L) means long position (S) means short position (P) means lending pool

Notes:

1.            Each of Mr. Zhai Rouyu, Mr. Hu Shengmu and Mr. Fang Qinghai, all
non-executive Director, is an employee of China Datang Corporation.

2.            Each of Mr. Liu Haixia and Ms. Guan Tiangang, both non-executive
Director, is an employee of Beijing Energy Investment (Group) Company.

3.            Each of Mr. Su Tiegang and Mr. Ye Yonghui, both non-executive
Director, is an employee of Hebei Construction Investment Company.

4.            Mr. Tong Yunshang, a non-executive Director, is an employee of
Tianjin Jinneng Investment Company.



Save as disclosed above and so far as the Directors, supervisors and chief
executive are aware, as at the Latest Practicable Date, no other person had an
interest or short position in the Company's shares or underlying shares (as
the case may be) which would fall to be disclosed to the Company and the Stock
Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.



Substantial Shareholders in other members of the Group


                                                                                     Percentage shareholding of
                                      Shareholders holding 10% or more               shareholders in other
Other members of the Group            in other members of the Group                  members of the Group
Inner Mongolia Datang                 Beijing Power Investment (Group)               25%
International                         Company Limited
Tuoketuo Power Generation              
Company Limited
                                      Inner Mongolia Mengdian                        15%
                                      Huaneng Thermal Power
                                      Company Limited
                                       

Tianjin Datang International          Tianjin Jinneng Investment Company             25%
Panshan Power Generation               
Company Limited
 

Shanxi Datang Shentou Power           Tianjin Jinneng Investment Company             40%
Generation Company Limited             
 

Shanxi Datang International           Shanxi Jinneng Hezhong Investment              20%
Yungang Thermal Power                 and Guarantee Company Limited
Company Limited                        
 

Yunnan Datang International           Yunnan Development and Investment              15%
Honghe Power Generation               Company Limited
Company Limited                        
 
                                      Yunnan Xiaolongtan Mining Bureau               10%
                                       
Gansu Datang Liancheng Power          State Power Development                        25%
Generation Company Limited            Company Limited
                    
                                      Gansu Power Construction and                   20%
                                      Investment Company Limited
                                       
Hebei Datang International            Tangshan Construction Investment               20%
Tangshan Thermal Power                Company
Company Limited                         
 

Yunnan Datang Nalan                   Honghezhou Development and                     20%
Hydropower                            Investment Company Limited
Development Company                    
 
                                      Jinping Power Company Limited                  15%
                                       

                                      Beijing Huake Power Engineering                14%
                                      and Technology Company Limited
                                       

Yunnan Datang International           Beijing State Power Anrong Power               25%
Lixianjiang Hydropower                Investment Company Limited
Development Company Limited            
 

Shanxi Datang International           Shanxi Huafu Power Investment                  20%
Yuncheng Power Generation             Company Limited
Company Limited                        
 

Jiangsu Datang International          Nantong Zhonghe Holding                        10%
Lusigang Power Generation             Company Limited
Company Limited                        
 

Guangdong Datang International        Beijing China Power Huaze                      12%
Chaozhou Power Generation             Investment Company Limited
Company Limited                        
 

Fujian Datang International Ningde    Fujian Hesheng Group Company                   25%
Power Generation Company              Limited
Limited                                
 
                                      Mindong Power Investment                       10%
                                      Company Limited
                                       
                                      Shanxi Huafu Power Investment                  10%
                                      Dompany Limited
                                       
Chongqing Datang International        Chongqing Hangyun Construction                 24.5%
Wulong Hydropower Development         Development Company Limited
Company Limited                        
 
                                      Chongqing Dingtai Power (Group)                24.5%
                                      Company Limited
                                       

Yunnan Datang International           Yunnan Wenshan Power Company                   25%
Wenshan                               Limited
Hydropower Development                 
Company Limited
                                      State Power Kunming Survey and                 15%
                                      Design Research Institute
                                       

Hebei Datang International            Hebei Construction Investment                  30%
Wangtan Power Co., Ltd.               Company
                    

Chongqing Datang                      Chongqing City Construction                    30%
International Shizhu Power            Investment Company
Generation Company Limited.            
 
Inner Mongolia Datang                 Duolun Province Hyropower                      41%
International Duolun                  Generation Company Limited
Hyropower Multiple                     
Development Company
Limited.
 

Sichuan Datang International          Gan Zi Province Gan Bao                        20%
Gan Zi Hydropower                     Hydropower Generation
Generation Development                Development Company Limited
Company Limited                        
 




Save as disclosed above, as at the Latest Practicable Date, there was no other
person (other than a Director, supervisor or chief executive of the Company or a
member of the Group), who had an interest or short position in the Shares or
underlying Shares which would fall to be disclosed to the Company under the
provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or
indirectly, interested in 10% or more of the nominal value of any class of share
capital carrying rights to vote in all circumstances at general meetings of any
other member of the Group.



3.     SERVICE AGREEMENTS

As at the Latest Practicable Date, none of the Directors, proposed directors,
supervisors or proposed supervisors of the Company had any existing or proposed
service contract with any member of the Group (excluding contracts expiring or
determinable by the Company within one year without payment of compensation
(other than statutory compensation).



4.     INTEREST IN CONTRACT

As at the Latest Practicable Date, none of the Directors or supervisors of the
Company was materially interested in any contract or arrangement entered into by
any member of the Group since 31 December 2005, being the date to which the
latest published audited financial statements of the Company were made up, and
which was significant in relation to the business of the Group.



5.     MATERIAL CHANGES

The Directors, supervisors and chief executive are not aware of any material
adverse change in the financial or trading position of the Group since 31
December 2005, being the date to which the latest published audited financial
statements of the Group were made up.



6.     COMPETING INTEREST

As at the Latest Practicable Date, none of the directors, supervisors and chief
executive of the Company and its subsidiaries, or their respective Associates
has interests in the businesses which compete or are likely to compete, either
directly or indirectly, with the businesses of the Company and its subsidiaries.



7.     EXPERT

(a)      The following sets out the qualifications of the expert which has given
its opinion or advice as contained in this circular:

Name                         Qualifications

DBS Asia Capital Limited     Deemed licensed corporation to engage in types 1 (dealing in securities),
                             4 (advising on securities) and 6 (advising on corporate finance) regulated
                             activities under the SFO



(b)    As at 25 January 2007, the holding company of DBS Asia and its
subsidiaries (collectively the 'DBS Group') held, directly or indirectly, in
aggregate 952,000 shares of the Company, representing approximately 0.017% of
the issued share capital of the Company. Save as disclosed above, DBS Asia did
not have any shareholding, direct or indirect, in any member of the Group or any
right (whether legally enforceable or not) to subscribe for or to nominate
persons to subscribe for securities in any member of the Group on 25 January
2007.



(c)    DBS Asia does not have any interest, direct or indirect, in any assets
which have been acquired or disposed of by or leased to any member of the Group,
or which are proposed to be acquired or disposed of by or leased to any member
of the Group since 31 December 2005, the date to which the latest published
audited financial statements of the Company were made up.



(d)    DBS Asia has given and has not withdrawn its written consent to the issue
of this circular with the inclusion of its letter and references to its name in
the form and context in which they are included.



(e)    The letter and recommendation given by DBS Asia are given as of the date
of this circular for incorporation herein.



8 .    LITIGATION

No member of the Company and its subsidiaries is at present engaged in any
litigation or arbitration of material importance to the Company and its
subsidiaries and no litigation or claim of material importance to the Company
and its subsidiaries is known to the Directors, supervisors, chief executive and
the Company to be pending or threatened by or against any member of the Company
and its subsidiaries.



9.     DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the Investment Agreement and the agreement dated 6 September 2006
entered between the Company and CDGC is available for inspection at the
principal place of business in Hong Kong of the Company at Rooms 1105-1108,
Gloucester Tower, The Landmark, 15 Queen's Road Central, Hong Kong during
normal business hours from the date of this circular up to and including 14
February 2007:



10.   MISCELLANEOUS

(a)      The English text of this circular shall prevail over the Chinese text.

(b)      The registered and head office of the Company is situated at No. 482,
Guanganmennei Avenue, Xuanwu District, Beijing, the PRC.

(c)      The place of business of the Company in Hong Kong is at c/o Huen Wong &
Co. in association with Fried, Frank, Harris, Shriver & Jacobson LLP 1105-1108
Gloucester Tower, The Landmark,15 Queen's Road Central, Hong Kong.

(d)      The Hong Kong share registrar and transfer office of the Company is
Computershare Hong Kong Investor Services Limited at 46/F, Hopewell Centre, 183
Queen's Road East, Wanchai, Hong Kong.

(e)      The secretary of the Company is Mr. Yang Hongming, who is a senior
economist and had graduated from North China Power College.

(f)       The Company has been using its best endeavour in finding a suitable
candidate to assume the position of qualified accountant, as required under Rule
3.24 of the Listing Rules (the 'Rule'), since the effective date of the Rule.
Due to the practical difficulties in finding a candidate who has relevant
experience in the power industry, the Company has yet to appoint a qualified
accountant as required under the Rule and the Company will continue to use its
best endeavour in finding a suitable candidate to assume such position as soon
as practicable.


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