CLARIFICATION ON GIVING UP 2 SPP PROJECTS

No. EGCO 310/47 Date: February 1, 2000 Attn : The President of the Stock Exchange of Thailand Subject : Clarification on giving up 2 SPP projects According to the news in Krungthep Turakij dated January 31, 2000 page no. 20 stated at the head line that "EGCOMP has decided to give up 2 SPP projects", Electricity Generating Public Company Limited (EGCOMP) would like to clarify this above mentioned as follows: 1. EGCOMP did not cancel either investment in Power Project, located in Roi Ed or Yala Power as stated in the news 2. As a matter of fact, EGCOMP has been supported by National Energy Policy Office (NEPO) to study in any ways possible with the aim to make the biomass project viable, because the two biomass projects can help the country to save petroleum cost which contains a large portion of foreign expenditures. Besides, the biomass projects shall benefit most to Thailand since the biomass project will use renewable fuel, which will reduce the pollution and the other problems which caused by nonrenewable petroleum fuel 3. According to the biomass feasibility studies, cost of feasibility studies, cost of power plant and investment cost per megawatt are much more expensive than other general SPP projects and IPP projects approximately 50% and 100% respectively. Although EGCOMP may be more competitive in seeking financial resources and developing projects than any other companies, EGCOMP cannot deny that the biomass projects yield high risk and unattractive returns. However, currently the government is considering a fair incentive formula to the biomass projects since they are beneficial to the country as a whole. The aforesaid formula shall accept renewable fuel risks, including prices and supply, in order to achieve creditable projects. At the present, EGCOMP is working with NEPO and Electricity Generating Authority of Thailand (EGAT) regarding the fair incentive formula, which already agreed internally by all parties. 4. At the same time, EGCOMP has contacted with Japan Bank for International Cooperation (JBIC) in order to seek soft loan for the mentioned projects. EGCOMP expects to implement the two biomass projects in accordance with the companys investment guidelines policy, which concerns most at shareholders value. Sincerely yours, Worawit Khamkanist Managing Director