THE INVESTMENT IN TLPC AND TLP COGEN

No. EGCO 310/056 Date : February 14, 2001 Attn : President of the Stock Exchange of Thailand Subject: The investment in TLPC and TLP COGEN Electricity Generating Public Company Limited (EGCOMP) would like to inform that the Board of Directors of EGCOMP at the Meeting No.13/2000 held on December 16, 2000 passed the resolution to investment in TLP Cogeneration Company Limited (TLP COGEN) which was established to develop a 106 MW Combined Cycle Cogeneration Power Project at Rayong Industrial Park. Its project cost will be approximately Baht 3,253,000,000: equity portion of Baht 1,060,000,000 and debt portion of Baht 2,193,000,000. 60 MW capacity will be sold to Electricity Generating Authority of Thailand (EGAT) under the 21-year Power Purchase Agreement (PPA) with EGAT. The Commercial Operation Date will be by January 2003. The remaining capacity and steam will be sold to private industrial users in Rayong Industrial Park. In order to purchase TLP COGEN's shares, EGCOMP signed Share Sale and Purchase Agreement with Thai LNG Power Corporation Limited (TLPC) on February 14, 2001. Ultimately, EGCOMP has an objective to hold 80% of TLP COGEN's shares whereas Electric Power Development Company Limited (EPDC) will hold the remaining portion of 20%. Since TLP COGEN is the subsidiary of TLPC and EGCOMP would like to manage TLP COGEN with the utmost efficiency, the Executive Board of EGCOMP at the meeting No. 2/2544 held on January 29, 2001 approved EGCOMP to sign the agreement in order to purchase TLPC's shares from Energy and Infrastructure Development Company Limited (EID), Petro Asia International Corporation Limited (Petro Asia), Thai LNG Company Limited (Thai LNG), Thanayong Public Company Limited (Thanayong), and Italian Thai Development Public Company Limited (ITD). Accordingly, the agreement was signed on February 12, 2001. The details on the purchase of TLPC's and TLP COGEN's shares are as follows: 1. The signing of Agreement to purchase TLPC's shares on February 12, 2001. At present, TLPC consists of 75,000,000 shares and its shareholders' structure is - Petroleum Authority of Thailand (PTT) 30,000,000 shares (40%) - EID 3,000,000 shares (4%) - Petro Asia 6,997,499 shares (6.33%) - Thai LNG 7,499,999 shares (10%) - Thanayong 9,997,499 shares (13.33%) - ITD 10,005,000 shares (13.34%) - EGCOMP 7,500,000 shares (10%) On February 12, 2001, EGCOMP signed the agreement in order to purchase TLPC's shares from EID, Petro Asia, Thai LNG, Thanayong, and ITD in the amount of 37,499,997 shares or approximately 50% of total shares (75,000,000 shares). However, the purchase transaction will occur upon the following conditions; a. TLPC has to transfer 60% of TLP COGEN's shares to EGCOMP (The Share Sale and Purchase agreement was signed on February 14, 2001) b. TLP COGEN has to sign Loan Agreement with the financial institutions for the construction cost of power plant at Rayong Industrial Park. The Agreement is expected to be signed by February, 2001. The details on the purchase of TLPC's shares are as follows: - The amount of TLPC's shares EGCOMP will purchase from EID 3,000,000 shares(4%) - The amount of TLPC's shares EGCOMP will purchase from Petro Asia 6,997,499 shares (6.33%) - The amount of TLPC's shares EGCOMP will purchase from Thai LNG 7,499,999 shares (10%) - The amount of TLPC's shares EGCOMP will purchase from Thanayong 9,997,499 shares (13.33%) - The amount of TLPC's shares EGCOMP will purchase from ITD 10,005,000 shares (13.34%) - Par value 10.00 Baht/share - Issued and paid-up share capital 5.00 Baht/share - Projection on the book value of share 3.68 Baht/share - Share price EGCOMP purchased at the discount price of paid-up share capital 4.68 Bath/share - The total price EGCOMP purchased TLP COGEN's shares from 5 aforementioned companies 175,499,985.96 Baht After purchasing TLPC's shares, the structure of TLPC's shareholders will be EGCOMP 44,999,997 shares (60%) PTT 30,000,000 shares (40%) Besides, EGCOMP has shown its strong intention to purchase 30,000,000 TLPC's shares (40%) from PTT subject to the cabinet approval. At the cabinet meeting held on February 6,2001, the cabinet approved PTT to sell off its TLPC's shares. Therefore, if EGCOMP purchases TLPC's shares from PTT, EGCOMP will finally hold 100% of TLPC shares. The main objective for EGCOMP to hold the entire shares in TLPC is to have the significant control in TLP COGEN which develops the Combined Cycle Cogeneration Project. On the top of this, EGCOMP has no intention to operate in other businesses of TLPC. 2. The signing of TLP COGEN's Shares Sale and Purchase Agreement on February 14,2001 Currently, TLPC holds 50,000,000 shares or 100 % stake in TLP COGEN and on February 14, 2001, EGCOMP signed Share Sale and Purchase Agreement with TLPC in order to purchase 30,000,000 TLP COGEN's share or 60 % stake in TLP COGEN from TLPC. The details on the purchase of TLP COGEN's shares are as follows: - The amount of TLP COGEN's shares EGCOMP will purchase from TLPC 30,000,000 shares (60%) - Par value 10.00 Baht/share - Issued and paid-up share capital 4.00 Baht/share - Unaudited book value of share as at December 2000 and operating expenditure has been written off 2.48 Baht/share - Share price EGCOMP purchased at the price equivalent to paid-up share capital 4.00 Bath/share - The total price EGCOMP purchased TLP COGEN's shares from TLPC 120,000,000 Baht After purchasing TLP COGEN's shares, the structure of TLP COGEN's shareholders will be EGCOMP 30,000,000 shares (60%) PTT 20,000,000 shares (40%) Since TLP COGEN's share capital has not been fully paid up, the Executive Board of EGCOMP at the meeting No. 2/2001 held on January 29, 2001 passed the resolution to proceed the paid-up share capital as needed. The paid-up share capital will be proportionate to shareholders' portion. TLP COGEN initially needs further paid-up share capital of 2 Baht/share for the performance bond with EGAT. Thus, EGCOMP will pay a total of 60,000,000 Baht. The investment in TLP COGEN Project will add value to EGCOMP. The project return is 14.68% in accordance with EGCOMP's investment guideline. Its major revenue comes from generating and supplying electricity to EGAT under the secured long term PPA. Moreover, it enhances EGCOMP's competitiveness especially when the power pool system established because TLP COGEN's Combined Cycle Cogeneration power plant is located in Rayong Industrial Park, which is the load center; thus, the distance to transmit the electricity to the users is shorter and leads to small losses and lower wheeling charge. The tariff from TLP COGEN will be lower than the tariff from other power producers whose plants located farther than TLP COGEN Plant. In addition, it provides favorable impact the stability of the national power system and the average cost of electricity production. Yours sincerely, Sitthiporn Ratanopas Managing Director