Sichuan Energy Investment Development : DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE EPC CONTRACT

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四川能投發展股份有限公司

Sichuan Energy Investment Development Co., Ltd.*

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 01713)

DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO THE EPC CONTRACT

BACKGROUND

On 17 May 2021, after trading hours, Xingwen Electricity, a wholly-owned subsidiary of the Company, entered into the EPC Contract with Sichuan Energy Construction, a connected person, and Southwest Institute, an independent third party, pursuant to which, the Contractors agreed to provide engineering, procurement and construction services to the Company for the Project.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Sichuan Energy Construction is a subsidiary of Energy Investment Group which is one of the Controlling Shareholders. Accordingly, Sichuan Energy Construction is an associate of Energy Investment Group and therefore a connected person of the Company under Rule 14A.07 and the entering into of the EPC Contract constitutes a connected transaction for the Company pursuant to Chapter 14A of the Listing Rules.

As one of the applicable percentage ratios in respect with the EPC Contract exceeds 5% but is less than 25%, the transaction contemplated therein constitutes (i) a discloseable transaction of the Company which is subject to reporting and announcement requirements under Chapter 14 of the Listing Rules; and (ii) a connected transaction of the Company which is subject to the Independent Shareholders' approval requirements, in addition to the reporting, circular and announcement requirements, under Chapter 14A of the Listing Rules.

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GENERAL

A EGM will be convened for the independent Shareholders to consider and, if thought fit, approve the discloseable and connected transaction under the EPC Contract. Energy Investment Group and its associates, being one of the Controlling Shareholders of the Company as at the date of this announcement, will abstain from voting on the resolution in relation to the EPC Contract at the EGM. The resolution will be passed as an ordinary resolution and voted on by poll in accordance with the requirements of the Listing Rules.

A circular containing, among other things, (i) further details of the EPC Contract; (ii) a letter of advice from an independent financial advisor to the Independent Board Committee and the Independent Shareholders in relation to the entering into of the EPC Contract; (iii) the recommendations from the Independent Board Committee; and (iv) notice to convene the EGM and proxy form, will be despatched to the Shareholders in due course in accordance with the Listing Rules.

THE EPC CONTRACT

On 17 May 2021, Xingwen Electricity entered into the EPC Contract with the Contractors, pursuant to which Sichuan Energy Construction and Southwest Institute will provide engineering, procurement and construction services to Xingwen Electricity. The principal terms of the EPC Contract are set out below:

Date:	17 May 2021 (after trading hours)
Parties:	1.	Xingwen Electricity;
	2.	Sichuan Energy Construction; and
	3.	Southwest Institute
Project:	Lianhua 220 kV transformer substation construction project in Xingwen
	County
Construction Area:	Xingwen County, Yibin City, Sichuan Province, the PRC
Construction Period:	Upon receiving the Independent Shareholders' approval for the EPC
	Contract in the forthcoming EGM in accordance with the Listing Rules, the
	construction period shall be 365 calendar days, commencing from the date
	of the work commencement notice issued by the supervisor of the Project
Scope of Service:	1.	All the contractors' works in relation to the Project, including
		survey, design, construction, equipment and materials procurement,
		installation, commissioning, trial operation, defect elimination and

line relocation and modification involved in the feasibility study; and

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2. All ancillary works including the safety of engineering construction and personnel, maintenance of the environment in the surrounding area, drafting and approval of the thematic reports of the Project required by the relevant laws and regulations, and maintenance and management of the Project before handover

Period of warranty: One year (commencing from the issuance of the project handover certificate after examination and handover of the Project)

Consideration:The contract price of RMB88,383,170 is determined based on the estimated quantities of works for the Project under the EPC Contract under which, the final settlement amount shall be subject to the completion settlement audit report issued by a third-party audit agency with corresponding audit qualifications entrusted by Xingwen Electricity

Conditions Precedent: The EPC Contract shall become effective subject to the satisfaction of the following conditions precedent:

1. the authorised representative or its agent of each party to the EPC contract having executed the EPC Contract and affixed the relevant official seal thereto, and the Contractors having provided a performance guarantee to the satisfaction of Xingwen Electricity
2. the Independent Shareholders having approved the EPC Contract and the transactions contemplated therein at the forthcoming EGM in accordance with the Listing Rules

Payment terms:Xingwen Electricity shall pay the contract price to the Contractors in the following manner:

1. upon the fulfilment of the conditions precedent set out in the EPC Contract, a prepayment to the Contractors equivalent to 10% of the contract price within 14 days after receiving the surety bond and payment request submitted by the Contractors;
2. 30% of the total equipment and materials fee under the EPC contract within one month after the completion of review of preliminary design of the Project;
3. up to 90% of the contract price requested by the Contractors monthly based on the actual amount of the construction work completed each month;
4. up to 95% of the final settlement amount price upon the completion of acceptance and handover of the Project. Based on the Company's past experience and estimation, the final settlement amount shall not be more than 20% above the contract price; and

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5. the remaining 5% of the final settlement amount will serve as the quality warranty money and shall be paid to the Contractors after receiving payment request submitted by the Contractors within one month after the expiry of a one-year warranty period, and upon satisfying Xingwen Electricity that the Contractors have discharged all responsibilities in relation to defect elimination (if any)

REASONS AND BENEFITS FOR ENTERING INTO THE EPC CONTRACT

Firstly, the construction of the Project is in line with the "13th Five-Year" power grid development plan, which will not only introduce new power sources to Xingwen County to satisfy the local economic and social development needs of Xingwen County, but will also further develop and improve the 220kV backbone grid of the provincial Yibin power grid to improve the grid structure, and the reliability and quality of power supply. Secondly, prior to commencing the public tendering of the Project, the Company has considered that the Project is of large scale with complicated technical requirements, and involves various fields such as survey, design, construction and equipment and materials, and therefore agreed the bidders to form a consortium to participate in the bidding. Thirdly, after conducting the public tendering and having being reviewed by the tender evaluation penal, Sichuan Energy Construction and Southwest Institute were awarded the Project. The tendering procedures fully complied with the Tendering and Bidding Law of the People's Republic of China* 《( 中華人民共和國招標投標法 》) and other relevant laws and regulations. Fourthly, as a well-knownEPC-service provider in power infrastructure construction in the PRC, Sichuan Energy Construction possesses the requisite qualification and extensive experience, and is familiar with the relevant requirements of the Company's power construction projects based on previous cooperation, which will help to ensure the quality and timely completion of project construction and the economic benefits brought to the Company.

The EPC Contract has been approved by the Board. The Directors (excluding the independent non-executive Directors) are of the view that the terms and conditions of the EPC Contract were arrived at after arm's length negotiation, are fair and reasonable, on normal commercial terms, and are in the interest of the Group and its Shareholders as a whole.

IMPLICATION UNDER THE LISTING RULES

As at the date of this announcement, Sichuan Energy Construction, is a subsidiary of Energy Investment Group, which is one of the Controlling Shareholders. Accordingly, Sichuan Energy Construction is an associate of Energy Investment Group and therefore a connected person of the Company under Rule 14A.07 of the Listing Rules and the entering into of the EPC Contract constitute connected transactions for the Company pursuant to Chapter 14A of the Listing Rules.

As one of the applicable percentage ratios in respect with the EPC Contract exceed 5% but is less than 25%, the transaction contemplated therein constitutes (i) a discloseable transaction of the Company which is subject to reporting and announcement requirements under Chapter 14 of the Listing Rules; and

1. a connected transaction of the Company which is subject to the Independent Shareholders' approval requirements, in addition to the reporting, circular and announcement requirements, under Chapter 14A of the Listing Rules.

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As Mr. Xiong Lin, Mr. Li Hui and Ms. Xie Peixi were the Directors nominated by Energy Investment Group, they have abstained from voting on the Board resolutions to approve the EPC Contract voluntarily. Saved and except for the aforesaid, none of the Directors has a material interest in the EPC Contract and was required to abstain from voting on the Board resolutions in relation to the EPC Contract.

INFORMATION OF THE PARTIES

The Group

The Group is a vertically integrated power supplier and service provider in Yibin City, Sichuan Province, with a full power supply value chain covering power generation and electricity distribution and sales.

Sichuan Energy Construction

Sichuan Energy Construction is a limited liability company incorporated in the PRC on 3 March 2006 and a subsidiary owned by Energy Investment Group, one of the Controlling Shareholders, which is primarily engaged in project planning, project investment, design and consulting, construction, operation in engineering construction.

Energy Investment Group is principally engaged in investment covering various industries including power, chemical, tourism, natural gas, coalbed gas and shale gas, and new technology and materials. Energy Investment Group is in turn held by Sichuan Development Co. as to 67.8%. Sichuan Development Co. is a wholly state-owned enterprise incorporated in the PRC principally engaged in the investment, financing, operation and management of assets and its investment covers various industries including transportation, energy, water, tourism, agriculture, development of predominant resources and environment and other areas authorized by the People's Government of Sichuan Province.

Southwest Institute

Southwest Institute is a limited liability company incorporated in the PRC on 16 January 1998 and is a wholly-owned subsidiary of China Energy Engineering Group Planning and Engineering Co., Ltd.* ( 中國 能源建設集團規劃設計有限公司). It is principally engaged in power planning research, consultation, assessment and engineering survey, design, service, general contracting, supervision, development of relevant proprietary technology product and other businesses.

China Energy Engineering Group Planning and Engineering Co., Ltd. is in turn wholly owned by China Energy Engineering Corporation Limited* ( 中國能源建設股份有限公司), which is a company listed on the main board of the Stock Exchange (SEHK: 3996). China Energy Engineering Group Planning and Engineering Co., Ltd. is an investment holding company while China Energy Engineering Corporation Limited is principally engaged in the construction contracts business.

To the best knowledge of the Directors, Southwest Institute, China Energy Engineering Group Planning and Engineering Co., Ltd., China Energy Engineering Corporation Limited and their controlling shareholders are third parties independent of the Company and its connected persons (as defined under the Listing Rules).

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