Huaneng Power International (HUNGF) 20-F 2010 FY Annual report (foreign)

华能国际电力股份有限公司

HUANENG POWER INTERNATIONAL, INC.

Annual Report On Form 20-F

2009

As filed with the Securities and Exchange Commission on April 19, 2010

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 20-F

(Mark One)

£	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
R	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
OR
£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
£	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ……………….

For the transaction period form ____________ to __________

Commission file number: 1-13314

华能国际电力股份有限公司

HUANENG POWER INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

PEOPLE'S REPUBLIC OF CHINA

(Jurisdiction of incorporation or organization)

WEST WING, BUILDING C, TIANYIN MANSION,

2C, FUXINGMENNAN STREET, BEIJING, PEOPLE'S REPUBLIC OF CHINA

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of Each Class	Name of each exchange on which registered
Ordinary American Depositary Shares	New York Stock Exchange
Overseas Listed Foreign Shares of RMB1.00 each	New York Stock Exchange*

Securities registered or to be registered pursuant to Section 12(g) of the Act.

NONE

(Title of Class)

______________________

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

NONE

(Title of Class)

______________________

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

Domestic Shares of RMB1.00 each	9,000,000,000
Overseas Listed Foreign Shares of RMB1.00 each	3,055,383,440

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  R No  £

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes  £ No  R

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  R No  £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer R Accelerated filer £ Non-accelerated filer £

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  £ International Financial Reporting Standards as issued by the International Accounting Standards Board   R         Other £

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17  £ Item 18  £

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  £ No  R

_______________

* Not for trading, but only in connection with the registration of American Depositary Shares.

TABLE OF CONTENTS

Page

PART I.				1
	ITEM 1	Identity of Directors, Senior Management and Advisers		1
	ITEM 2	Offer Statistics and Expected Timetable		1
	ITEM 3	Key Information		1
		A.	Selected financial data	1
		B.	Capitalization and indebtedness	2
		C.	Reasons for the offer and use of proceeds	2
		D.	Risk factors	3
	ITEM 4	Information on the Company		9
		A.	History and development of the Company	9
		B.	Business overview	11
		C.	Organizational structure	20
		D.	Property, plants and equipment	22
	ITEM 4A	Unresolved Staff Comments		37
	ITEM 5	Operating and Financial Review and Prospects		37
		A.	General	37
		B.	Operating results	39
		C.	Financial position	48
		D.	Liquidity and cash resources	49
		E.	Trend information	54
		F.	Employee benefits	55
		G.	Guarantee on loans and restricted assets	55
		H.	Off-balance sheet arrangements	55
		I.	Performance of significant investments and their prospects	55
		J.	Tabular disclosure of contractual obligations and commercial commitments	56
		K.	Business plan	56
	ITEM 6	Directors, Senior Management and Employees		57
		A.	Directors, members of the supervisory committee and senior management	57
		B.	Compensation for Directors, Supervisors and Executive Officers	61
		C.	Board practice	62
		D.	Employees	63
		E.	Share ownership	64
	ITEM 7	Major Shareholders and Related Party Transactions		64
		A.	Major shareholders	64
		B.	Related party transactions	65
		C.	Interests of experts and counsel	69
	ITEM 8	Financial Information		69
		A.	Consolidated statements and other financial information	69
		B.	Significant changes	70
	ITEM 9	The Offer and Listing		70
		A.	Offer and listing details and markets	70
	ITEM 10	Additional Information		71
		A.	Share capital	71
		B.	Memorandum and articles of association	71
		C.	Material contracts	77
		D.	Exchange controls	77
		E.	Taxation	78
		F.	Dividends and paying agents	82
		G.	Statement by experts	82
		H.	Documents on display	82
		I.	Subsidiary information	83
	ITEM 11	Quantitative and Qualitative Disclosures About Market Risk		83
	ITEM 12	Description of Securities Other than Equity Securities		85
PART II.				87
	ITEM 13	Defaults, Dividend Arrearages and Delinquencies		87
	ITEM 14	Material Modifications to the Rights of Security Holders and Use of Proceeds		87
	ITEM 16	Reserved		87
	ITEM 16A	Audit Committee Financial Expert		87
	ITEM 16B	Code of Ethics		88

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ITEM 16C	Principal Accountant Fees and Services	88
ITEM 16D	Exemptions from the Listing Standards for Audit Committees	89
ITEM 16E	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	89
ITEM 16F	Change in Registrant's Certifying Accountant	89
ITEM 16G	Corporate Governance	89
ITEM 17	Financial Statements	91
ITEM 18	Financial Statements	91
ITEM 19	Exhibit	91

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INTRODUCTION

We maintain our accounts in Renminbi yuan ("Renminbi" or "RMB"), the lawful currency of the People's Republic of China (the "PRC" or "China"). References herein to "US$" or "US Dollars" are to United States Dollars, references to "HK$" are to Hong Kong Dollars, and references to “S$” are to Singapore Dollars. References to ADRs and ADSs are to American Depositary Receipts and American Depositary Shares, respectively. Translations of amounts from Renminbi to US Dollars are solely for the convenience of the reader. Unless otherwise indicated, any translations from Renminbi to US Dollars or from US Dollars to Renminbi were translated at the average rate announced by the People's Bank of China (the "PBOC Rate") on December 31, 2009 of US$1.00 to RMB6.8282. No representation is made that the Renminbi or US Dollar amounts re ferred to herein could have been or could be converted into US Dollars or Renminbi, as the case may be, at the PBOC Rate or at all.

References to "A Shares" are to common tradable shares issued to domestic shareholders.

References to the "central government" refer to the national government of the PRC and its various ministries, agencies and commissions.

References to the "Company", "we", "our" and "us" include, unless the context requires otherwise, Huaneng Power International, Inc. and the operations of our power plants and our construction projects.

References to "HIPDC" are to Huaneng International Power Development Corporation and, unless the context requires otherwise, include the operations of the Company prior to the formation of the Company on June 30, 1994.

References to "Huaneng Group" are to China Huaneng Group.

References to the "key contracts" refer to coal purchase contracts entered into between the Company and coal suppliers for the amount of coals at the annual national coal purchase conferences attended by, among others, representatives of power companies, coal suppliers and railway authorities. These conferences were coordinated and sponsored by National Development and Reform Commission (“NDRC”). The Company enjoys priority railway transportation services with respect to coal purchased under such contracts. Starting from 2008, NDRC ceased to coordinate annual national coal purchase conference. At the end of each year subsequent to 2008, the Ministry of Railways will promulgate the railway transportation capacity plan for the next year. References to the "key contracts" for the year 2008 and thereafter refer to coal pur chase contracts entered into between the Company and coal suppliers under the guidance of such railway transportation capacity plan, which, once confirmed by the Ministry of Railways, secures the railway transportation capacity for the coal purchased thereunder.

References to "local governments" in the PRC are to governments at all administrative levels below the central government, including provincial governments, governments of municipalities directly under the central government, municipal and city governments, county governments and township governments.

References to "power plants" or "our power plants" are to the power plants that are wholly-owned by the Company or to the power plants in which the Company owns majority equity interests.

References to “power companies” or “our power companies” are to the power companies in which we hold minority equity interests.

References to the "PRC Government" include the central government and local governments.

References to "provinces" include provinces, autonomous regions and municipalities directly under the central government.

References to “Singapore” are to the Republic of Singapore.

References to the "State Plan" refer to the plans devised and implemented by the PRC Government in relation to the economic and social development of the PRC.

References to "tons" are to metric tons.

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Previously, the Overseas Listed Foreign Shares were also referred to as the "Class N Ordinary Shares" or "N Shares". Since January 21, 1998, the date on which the Overseas Listed Foreign Shares were listed on The Stock Exchange of Hong Kong Limited by way of introduction, the Overseas Listed Foreign Shares have been also referred to as "H Shares".

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GLOSSARY

actual generation	The total amount of electricity generated by a power plant over a given period of time.
auxiliary power	Electricity consumed by a power plant in the course of generation.
availability factor	For any period, the ratio (expressed as a percentage) of a power plant's available hours to the total number of hours in such period.
available hours	For a power plant for any period, the total number of hours in such period less the total number of hours attributable to scheduled maintenance and planned overhauls as well as to forced outages, adjusted for partial capacity outage hours.
capacity factor	The ratio (expressed as a percentage) of the gross amount of electricity generated by a power plant in a given period to the product of (i) the number of hours in the given period multiplied by (ii) the power plant's installed capacity.
demand	For an integrated power system, the amount of power demanded by consumers of energy at any point in time.
dispatch	The schedule of production for all the generating units on a power system, generally varying from moment to moment to match production with power requirements. As a verb, to dispatch a plant means to direct the plant to operate.
GW	Gigawatt. One million kilowatts.
GWh	Gigawatt-hour. One million kilowatt-hours. GWh is typically used as a measure for the annual energy production of large power plants.
installed capacity	The manufacturers' rated power output of a generating unit or a power plant, usually denominated in MW.
kV	Kilovolt. One thousand volts.
kW	Kilowatt. One thousand watts.
kWh	Kilowatt-hour. The standard unit of energy used in the electric power industry. One kilowatt-hour is the amount of energy that would be produced by a generator producing one thousand watts for one hour.
MVA	Million volt-amperes. A unit of measure used to express the capacity of electrical transmission equipment such as transformers.
MW	Megawatt. One million watts. The installed capacity of power plants is generally expressed in MW.
MWh	Megawatt-hour. One thousand kilowatt-hours.
peak load	The maximum demand on a power plant or power system during a specific period of time.

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planned generation	An annually determined target gross generation level for each of our operating power plants used as the basis for determining planned output.
total output	The actual amount of electricity sold by a power plant in a particular year, which equals total generation less auxiliary power.
transmission losses	Electric energy that is lost in transmission lines and therefore is unavailable for use.

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PART I.

ITEM 1 Identity of Directors, Senior Management and Advisers

Not applicable.

ITEM 2 Offer Statistics and Expected Timetable

Not applicable.

ITEM 3	Key Information
A.	Selected financial data

Our consolidated balance sheet data as of December 31, 2009 and 2008 and the consolidated income statement and cash flow data for each of the years in the three-year period ended December 31, 2009 are derived from the historical financial statements included herein. Our consolidated balance sheet data as of December 31, 2007, 2006 and 2005 and income statement and cash flow data for each of the years in the two-year period ended December 31, 2006, are derived from the historical financial statements not included herein. The revenue and other income has been reclassified to consistent with the current year's presentation. The Selected Financial Data should be read in conjunction with the consolidated financial statements and "Item 5 - Operating and Financial Review and Prospects". The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The Selected Financial Data may not be indicative of future earnings, cash flows or financial position.

	Year Ended December 31,
	2005			2006			2007			2008			2009			2009
RMB and US Dollars in thousands except per share data	(RMB)			(RMB)			(RMB)			(RMB)			(RMB)			(US$)(1)
Income Statement Data
IFRS
Operating revenue		40,370,261			44,422,501			49,892,049			67,835,114			76,862,896			11,256,685
Sales tax		(113,475	)		(148,057	)		(139,772	)		(106,385	)		(151,912	)		(22,248	)
Operating expenses		(33,245,435	)		(35,705,591	)		(41,817,349	)		(68,964,955	)		(67,537,281	)		(9,890,934	)
Profit/ (Loss) from operations		7,011,351			8,568,853			7,934,928			(1,236,226	)		9,173,703			1,343,503
Interest income		53,685			51,910			53,527			83,522			60,397			8,845
Financial expenses, net		(1,178,076	)		(1,523,214	)		(1,927,988	)		(3,707,943	)		(4,309,325	)		(631,107	)
Investment income		60,872			28,415			585,379			51,061			56,675			8,300
Gain/ (Loss) on fair value      changes		-			100,180			87,132			(54,658	)		(33,638	)		(4,926	)
Share of profits of associates		644,376			790,629			586,323			72,688			756,164			110,741
Profit/ (Loss) before tax		6,592,208			8,016,773			7,319,301			(4,791,556	)		5,703,976			835,356
Income tax (expense)/benefit		(1,044,297	)		(1,127,699	)		(838,270	)		239,723			(593,787	)		(86,961	)
Profit/ (Loss) for the year		5,547,911			6,889,074			6,481,031			(4,551,833	)		5,110,189			748,395
Attributable to:
Equity holders of the Company		4,871,794			6,071,154			6,161,127			(3,937,688	)		4,929,544			721,939
Minority interests		676,117			817,920			319,904			(614,145	)		180,645			26,456
Basic earnings/(loss) per share		0.40			0.50			0.51			(0.33	)		0.41			0.06
Diluted earnings/(loss) per share		0.40			0.50			0.51			(0.33	)		0.41			0.06

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	As of December 31,
	2005			2006			2007			2008			2009			2009
RMB and US Dollars in thousands	(RMB)			(RMB)			(RMB)			(RMB)			(RMB)			(US$)(1)
Balance Sheet Data
IFRS
Current assets		12,063,175			13,564,516			18,551,059			20,018,177			24,189,765			3,542,627
Property, plant and equipment		78,997,297			90,444,225			90,125,919			116,737,198			140,777,336			20,617,049
Available-for-sale financial assets		1,033,225			1,458,759			3,462,158			1,524,016			2,555,972			374,326
Investments in associates		4,593,984			5,418,213			8,731,490			8,758,235			9,568,576			1,401,332
Land use rights and other non-      current assets		2,016,144			2,282,884			2,658,583			3,643,431			4,911,678			719,322
Power generation licence		-			-			-			3,811,906			3,898,121			570,886
Deferred income tax assets		64,075			98,429			211,654			316,699			374,733			54,880
Goodwill		671,796			671,796			555,266			11,108,096			11,610,998			1,700,448
Total assets		99,439,696			113,938,822			124,296,129			165,917,758			197,887,179			28,980,870
Current liabilities		(23,107,142	)		(26,842,684	)		(31,376,561	)		(52,486,200	)		(59,581,608	)		(8,725,815	)
Non-current liabilities		(30,188,367	)		(36,487,446	)		(40,839,926	)		(70,871,605	)		(87,657,451	)		(12,837,563	)
Total liabilities		(53,295,509	)		(63,330,130	)		(72,216,487	)		(123,357,805	)		(147,239,059	)		(21,563,378	)
Net assets		46,144,187			50,608,692			52,079,642			42,559,953			50,648,120			7,417,492
Total equity		46,144,187			50,608,692			52,079,642			42,559,953			50,648,120			7,417,492

	Year Ended December 31,
	2005			2006			2007			2008			2009			2009
RMB and US Dollars in thousands except per share data	(RMB)			(RMB)			(RMB)			(RMB)			(RMB)			(US$)(1)
Cash Flow Data
IFRS
Purchase of property,      plant and equipment		(13,842,293	)		(15,998,575	)		(14,223,310	)		(27,893,520	)		(22,426,098	)		(3,284,335	)
Net cash provided by      operating activities		10,652,419			14,005,841			12,078,833			5,185,893			14,980,990			2,193,988
Net cash used in investing      activities		(15,413,369	)		(15,915,542	)		(16,257,355	)		(47,957,065	)		(24,880,261	)		(3,643,751	)
Net cash (used in) /      provided by financing      activities		5,119,559			2,473,002			8,287,893			41,255,291			9,503,886			1,391,858
Other Financial Data
IFRS
Dividend declared per      share		0.25			0.28			0.30			0.10			0.21			0.03
Number of ordinary shares      (’000)		12,055,383			12,055,383			12,055,383			12,055,383			12,055,383			12,055,383

_____________

Note:

(1) The US Dollar data has been translated from RMB solely for convenience at the PBOC Rate on December 31, 2009 of US$1.00 to RMB6.8282. See “Item 10 Additional Information — Exchange controls for more information on exchange rates between RMB and US Dollars”.

B. Capitalization and indebtedness

Not applicable.

C. Reasons for the offer and use of proceeds

Not applicable.

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D. Risk factors

Risks relating to our business and the PRC's power industry

Government regulation of on-grid power tariffs and other aspects of the power industry may adversely affect our business

Similar to electric power companies in other countries, we are subject to governmental and electric grid regulations in virtually all aspects of our operations, including the amount and timing of electricity generations, the setting of on-grid tariffs, the performance of scheduled maintenance and compliance with power grid control and dispatch directives and environment protection. There can be no assurance that these regulations will not change in the future in a manner which could adversely affect our business.

The on-grid tariffs for our planned output are subject to a review and approval process involving the NDRC and the relevant provincial government. Prior to April 2001, the on-grid tariffs of our planned output were designed to enable us to recover all operating and debt servicing costs and to earn a fixed rate of return. Since April 2001, however, the PRC government has started to gradually implement a new on-grid tariff-setting mechanism based on the operating terms of power plants as well as the average costs of comparable power plants. Pursuant to the NDRC circular issued in June 2004, the on-grid tariffs for our newly built power generating units commencing operation from June 2004 have been set on the basis of the average cost of comparable units adding tax and reasonable return in the regional grid. Any future reductions in our tariffs, or our inability to raise tariffs (for example, to cover any increased costs we may have to incur) as a result of the new on-grid tariff-setting mechanism, may adversely affect our revenue and profit.

In addition, the PRC government started in 1999 to experiment with a program to effect power sales through competitive bidding in some of the provinces where we operate our power plants. The on-grid tariffs for power sold through competitive bidding are generally lower than the pre-approved on-grid tariffs for planned output. Although the power sales through competitive bidding in the last few years constituted only a small fraction of our total output, the PRC government is in the process of gradually expanding the program with a view to create a market-oriented electric power industry. Any increased power sales through competitive bidding may reduce our on-grid tariffs and adversely affect our revenue and profits.

Furthermore, the PRC government started in 2009 to promote the practice of direct power purchase by large power end-users. Pursuant to the circular jointly issued by NDRC, The State Electricity Regulatory Commission (“SERC”) and China National Energy Administration in June 2009, the direct power purchase price consists of direct transaction price, on-grid dispatch and distribution price and governmental levies and charges, in which the direct transaction price shall be freely determined through negotiation between the power generation company and the large power end-user. The price of direct power purchase shall be subject to the demand in the power market, and may increase due to power supply shortfall. In terms of power generation company engaged in direct power purchase, direct power sales constitute a portion of th e total power sales, thus affecting the on-grid power sales of the company. As of December 31, 2009, most of the provinces and municipalities in China have not promulgated detailed implementation rules with respect to direct power purchase. Furthermore, the scale and mode of the transaction are also subject to the structure and level of development of the local economy. Although the direct power purchase may act as an alternative channel for our power sales, there is uncertainty as to the effect of the practice of direct power purchase over our operating results.The on-grid tariff-setting mechanism is evolving with the reforming of the PRC electric power industry. There is no assurance that it will not change in a manner which could adversely affect our business and results of operations. See “Item 4 Information of the Company – B. Business Overview – Pricing Policy”.

If our power plants receive less dispatching than planned generation, the power plants will sell less electricity than planned

Our profitability depends, in part, upon each of our power plants generating electricity at a level sufficient to meet or exceed the planned generation, which in turn will be subject to local demand for electric power and dispatching to the grids by the dispatch centres of the local grid companies.

The dispatch of electric power generated by a power plant is controlled by the dispatch centre of the applicable grid companies pursuant to a dispatch agreement with us and to governmental dispatch regulations. In each of the markets we operate, we compete against other power plants for power sales. No assurance can be given that the dispatch centres will dispatch the full amount of the planned generation of our power plants. A reduction by the dispatch centre in the amount of electric power dispatched relative to a power plant's planned generation could have an adverse effect on the profitability of our operations. However, we have not encountered any such event in the past.

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In August 2007, General Office of the State Council issued a notice, providing that the energy saving and electricity dispatch shall consolidate with the development of the power market, which optimize the power market. The SERC is conducting research on how to effectively combine the energy saving and electricity dispatch with the development of the power market, and the detailed measures are still in the process of drafting. In October 2008, the SERC approved the trial implementation of the policy of energy saving and electricity dispatch in certain pilot provinces. There can be no assurance that such implementation will not results in any decrease in the amount of the power dispatched of any of our power plants.

The power industry reform may affect our business

PRC government in 2002 announced and started to implement measures to further reform the power industry, with the ultimate goal to create a more open and fair power market. As part of the reform, five power generating companies, including Huaneng Group, were created or restructured to take over all the power generation assets originally belonging to the State Power Corporation of China. In addition, two grid companies were created to take over the power transmission and distribution assets originally belonging to the State Power Corporation of China. An independent power supervisory commission, the SERC, was created to regulate the power industry. It is uncertain how these reform measures and any further reforms are going to be implemented and how they will impact our business.

On April 6, 2007, the PRC State Council issued the Opinions on Implementing Further Reform in Power Industry during the “Eleventh Five-Year Plan” period, or the Implementing Opinions, which confirm the direction of reform and present further guidance. According to the Implementing Opinions, the government encourages environment protection and renovation and replacement of outdated generating units. The further reform will not only bring opportunities to power industry but also intensify the competition which may affect our business.

We are effectively controlled by Huaneng Group and HIPDC, whose interests may differ from those of our other shareholders

Huaneng Group, directly or through its wholly-owned subsidiary, and HIPDC directly hold 8.92% and 42.03% of our total outstanding shares respectively. As Huaneng Group is HIPDC’s parent company, they may exert effective control over us in concert. Their interests may sometimes conflict with those of our other minority shareholders. There is no assurance that Huaneng Group and HIPDC will always vote their shares, or direct the directors nominated by them to act in a way that will benefit our other minority shareholders.

Disruption in coal supply and its transportation as well as increase in coal price may adversely affect the normal operation of our power plants

A substantial majority of our power plants are fueled by coal. We have obtained coal for our power plants through a combination of purchases pursuant to the key contracts and purchases in the open market. We have not experienced shutdowns or reduced electricity generation caused by inadequate coal supply or transportation services, there can be no assurance that, in the event of national coal supply shortfalls, our operations will not be adversely affected. In addition, our results of operation are sensitive to the fluctuation of coal price. Since 2003, the continuous increase of coal price has increased our costs substantially and caused our profits to decline. Although the government has established a coal-electricity price linkage mechanism to allow power generating companies to increase their power tariffs to respond to the increase of coal price, the implementation of the mechanism involves significant uncertainties. There is no assurance that we will be able to adjust our power tariff to pass on the increase of coal price to our customers. For a detailed discussion of the coal-electricity price linkage mechanism, see “Item 4 Information of the Company-B Business Overview – Pricing Policy”. Starting from 2009, in furtherance of the coal purchase reform, NDRC ceased to coordinate annual coal purchase conference and will no longer make allocation of coal supply to power companies. The price and amount of coal supply will be determined based on the free negotiation between power companies, coal suppliers, and the railway authorities, which increases the uncertainty of the coal supply and the coal price and may adversely affect our operations.

Power plant development, acquisition and construction are a complex and time-consuming process, the delay of which may negatively affect the implementation of our growth strategy

We develop, construct, manage and operate large power plants; success depends upon our ability to secure all required PRC Government approvals, power sales and dispatch agreements, construction contracts, fuel supply and transportation and electricity transmission arrangements. Delay or failure to secure any of these could increase cost or delay or prevent commercial operation of the affected power plant. Although each of our power plants in operation and the power plants under construction received all required PRC Government

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approvals in a timely fashion, no assurances can be given that all the future projects will receive approvals in a timely fashion or at all.

We have generally acted as, and intend to continue to act as, the general contractor for the construction of our power plants. As with any major infrastructure construction effort, the construction of a power plant involves many risks, including shortages of equipment, material and labor, labor disturbances, accidents, inclement weather, unforeseen engineering, environmental, geological, delays and other problems and unanticipated cost increases, any of which could give rise to delays or cost overruns. Construction delays may result in loss of revenues. Failure to complete construction according to specifications may result in liabilities, decrease power plant efficiency, increase operating costs and reduce earnings. Although the construction of each of our power plants was complete d on or ahead of schedule and within its budget, no assurance can be given that construction of future projects will be completed on schedule or within budget.

In addition, from time to time, we may acquire existing power plants from HIPDC, Huaneng Group or other parties. The timing and the likelihood of the consummation of any such acquisitions will depend, among other things, on our ability to obtain financing and relevant PRC Government approvals and to negotiate relevant agreements for terms acceptable to us.

Substantial capital is required for investing in or acquiring new power plants and failure to obtain capital on reasonable commercial terms will increase our finance cost and cause delay in our expansion plans

An important component of our growth strategy is to develop new power plants and acquire operating power plants and related development rights from HIPDC, Huaneng Group or other companies on commercially reasonable terms. Our ability to arrange financing and the cost of such financing depend on numerous factors, including general economic and capital market conditions, credit availability from banks or other lenders, investor confidence in us and the continued success of our power plants. The People’s Bank of China has reduced RMB benchmark lending interest rates for five consecutive times from September to the end of 2008 to counteract the impact of international financial crisis on China’s economy. Chinese government has implemented appropriately liberated monetary pol icies during 2009, thus creating a favorable environment for the Company to control financing costs. Chinese government is expected to continue implementing the liberated monetary policies during 2010 to enhance the recovery of China’s economy from the international financial crisis. However, there is no assurance that the lending interest rates would not be raised in the future. Although we have historically been able to obtain financing on terms acceptable to us, there can be no assurance that financing for future power plant developments and acquisitions will be available on terms acceptable to us or, in the event of an equity offering, that such offering will not result in substantial dilution to existing shareholders.

Operation of power plants involves many risks and we may not have enough insurance to cover the economic losses if any of our power plants’ ordinary operation is interrupted

The operation of power plants involves many risks and hazards, including breakdown, failure or substandard performance of equipment, improper installation or operation of equipment, labor disturbances, natural disasters, environmental hazards and industrial accidents. The occurrence of material operational problems, including but not limited to the above events, may adversely affect the profitability of a power plant.

Our power plants in the PRC currently maintain insurance coverage that is typical in the electric power industry in the PRC and in amounts that we believe to be adequate. Such insurance, however, may not provide adequate coverage in certain circumstances. In particular, in accordance with industry practice in the PRC, our power plants in the PRC do not generally maintain business interruption insurance, or any of third party liability insurance other than that included in construction all risks insurance or erection all risks insurance to cover claims in respect of bodily injury or property or environment damage arising from accidents on our property or relating to our operation. Although each of our power plants has a good record of safe operation, there is no assurance that the af ore-mentioned accidents will not occur in the future.

If the PRC government adopts new and stricter environmental laws and additional capital expenditure is required for complying with such laws, the operation of our power plants may be adversely affected and we may be required to make more investment in compliance with these environmental laws

Our power plants, like all coal-fired power plants, discharge pollutants into the environment. We are subject to central and local government environmental protection laws and regulations, which currently impose base-level discharge fees for various polluting substances and graduated schedules of fees for the discharge of waste substances. The amount of discharge fees shall be determined by the local environmental protection authority based on the periodic inspection of the type and volume of pollution discharges. In addition, such environmental protection laws and regulations also set up the goal for the overall control on the discharge

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volume of key polluting substances. These laws and regulations impose fines for violations of laws, regulations or decrees and provide for the possible closure by the central government or local government of any power plant which fails to comply with orders requiring it to cease or cure certain activities causing environmental damage. In 2007, the PRC government issued additional policies on discharge of polluting substances and on desulphurization for coal-fired generating units. Certain provinces have raised the rates of waste disposal feessince 2008. Such increases in the discharge fees and in the environmental protection expenditure will lead to an increase of the operating costs of power plants like ours and may have adverse impact on our operating results.

We attach great importance to the environmental related matters of our existing power plants and our power plants under construction. We have implemented a system that is designed to control pollution caused by our power plants, including the establishment of an environmental protection office at each power plant, adoption of relevant control and evaluation procedures and the installation of certain pollution control equipment. We believe our environmental protection systems and facilities for the power plants are adequate for us to comply with applicable central government and local government environmental protection laws and regulations. The PRC Government may impose new, stricter laws and regulations which would require additional expenditure on environmental protection.

The PRC is a party to the Framework Convention on Climate Change ("Climate Change Convention"), which is intended to limit or capture emissions of "greenhouse" gases, such as carbon dioxide. Ceilings on such emissions could limit the production of electricity from fossil fuels, particularly coal, or increase the costs of such production. At present, ceilings on the emissions of "greenhouse" gases have not been assigned to developing countries under the Climate Change Convention. Therefore, the Climate Change Convention would not have a major effect on the Company in the short-term because the PRC as a developing country is not obligated to reduce its emissions of “greenhouse” gases at present, and the PRC government has not adopted relevant control standards and policies . If the PRC were to agree to such ceilings, or otherwise reduce its reliance on coal-fired power plants, our business prospects could be adversely affected.

Our business benefits from certain PRC government tax incentives. Expiration of, or changes to, the incentives could adversely affect our operating results

Prior to January 1, 2008, according to the relevant income tax law, foreign invested enterprises were, in general, subject to statutory income tax of 33% (30% enterprise income tax and 3% local income tax). If these enterprises are located in certain specified locations or cities, or are specifically approved by State Tax Bureau, a lower tax rate would be applied. Effective from January 1, 1999, in accordance with the practice notes on the PRC income tax laws applicable to foreign invested enterprises investing in energy and transportation infrastructure businesses, a reduced enterprise income tax rate of 15% (after the approval of State Tax Bureau) was applicable across the country. We applied this rule to all of our wholly owned operating power plants after obtaining the approval of State Tax Bureau. In addition, certain power plants were exempted from enterprise income tax for two years starting from the first profit-making year, after offsetting all tax losses carried forward from the previous years (at most of five years), followed by a 50% reduction of the applicable tax rate for the next three years. The statutory income tax was assessed individually based on each of their results of operations.

On March 16, 2007, the Enterprise Income Tax Law of PRC, or the New Enterprise Income Tax Law, was enacted, and became effective on January 1, 2008. The New Enterprise Income Tax Law imposes a uniform income tax rate of 25% for domestic enterprises and foreign invested enterprises. Therefore, our power plants subject to a 33% income tax rate prior to January 1, 2008 are subject to a lower tax rate of 25% starting on January 1, 2008. With regard to our power plants entitled to a reduced enterprise income tax rate of 15% prior to January 1, 2008, their effective tax rate is being gradually increased to 25% within a five-year transition period commencing on January 1, 2008. Accordingly, the effective tax rate of our wholly-owned po wer plants will increase over time. In addition, although our power plants currently entitled to tax exemption and reduction under the income tax laws and regulations that are effective prior to the the New Enterprise Income Tax Law will continue to enjoy such preferential treatments until the expiration of the same, newly established power plants will not be able to benefit from such tax incentives, unless they can satisfy specific qualifications, if any, provided by then effective laws and regulations on preferential tax treatment.

Pursuant to Guo Shui Han [2009] 33 document, starting from January 1, 2008, the Company and its branches calculate and pay income tax on a combined basis according to relevant tax laws and regulations. The original regulation specifying locations for power plants and branches of the Company to make enterprise income tax payments was abolished. The income tax of subsidiaries remains to be calculated individually based on their individual operating results.

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The increase of applicable income tax rate and elimination of the preferential tax treatment with regard to certain of our power plants may adversely affect our financial condition and results of operations. Moreover, our historical operating results may not be indicative of our operating results for future periods as a result of the expiration of the tax benefits currently available to us.

In addition, according to the New Enterprise Income Tax Law and its implementation rules, any dividends derived from the distributable profits accumulated from January 1, 2008 and are paid to the shareholders who are non-resident enterprises in the PRC will be subject to the PRC withholding tax at the rate of 10%. The withholding tax will be exempted if such dividends are derived from the distributable profits accumulated before January 1, 2008. Under a notice issued by the State Administration of Taxation of the PRC on November 6, 2008, we are required to withhold PRC income tax at the rate of 10% on annual dividends paid for 2008 and later years payable to our H Share investors who are non-resident enterprises.

If there is a devaluation of Renminbi or Singapore dollar, our debt burden will increase and the dividend return to our overseas shareholders may decrease

As a power producer operating mainly in China, we collect our revenues in Renminbi and have to convert Renminbi into foreign currencies to (i) repay some of our borrowings which are denominated in foreign currencies, (ii) purchase foreign made equipment and parts for repairs and maintenance, and (iii) pay out dividend to our overseas shareholders.

The value of the Renminbi against the US dollar and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions. The conversion of Renminbi into foreign currencies, including US dollars, has historically been set by the People's Bank of China. On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the US dollar. Under the new policy, the Renminbi is permitted to fluctuate within a band against a basket of certain foreign currencies. This change in policy resulted initially in an approximately 2.0% appreciation in the value of the Renminbi against the US dollar. Since the adoption of this new policy, the value of Renminbi against the US dollar has fluctuated on a daily basis withi n narrow ranges, but overall has further strengthened against the US dollar. There remains significant international pressure on the PRC government to further liberalize its currency policy, which could result in a further and more significant appreciation in the value of the Renminbi against the US dollar. However, there is no assurance that there will not be a devaluation of Renminbi in the future. If there is such devaluation, our debt servicing cost will increase and the return to our overseas investors may decrease.

Our revenues from SinoSing Power and its subsidiary, Tuas Power Ltd. (“Tuas Power”), are collected in Singapore dollar. However, commencing from 2008, the operation results of SinoSing Power and its subsidiary are consolidated into our financial statements, which use Renminbi as the functional currency and presentation currency. As a result, we are exposed to foreign exchange fluctuations between Renminbi and Singapore dollar. Appreciation of Renminbi against Singapore dollar may cause a foreign exchange loss upon conversion of SinoSing Power and its subsidiary’s operating results denominated in Singapore dollar into Renminbi, which may have adverse impact on our operation results.

Forward-looking information may prove inaccurate

This document contains certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this document, the words "anticipate," "believe," "estimate," "expect," "going forward" and similar expressions, as they relate to us or our management, are intended to identify forward-looking statement. Such statements reflect the current views of our management with respect to future events and are subject to certain risks, uncertainties and assumptions, including the risk factors described in this document. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary mate rially from those described herein as anticipated, believed, estimated or expected. We do not intend to update these forward-looking statements.

Risks relating to the PRC

China's economic, political and social conditions as well as government policies could significantly affect our business

As of December 31, 2009, the majority of our business, assets and operations are located in China. The economy of China differs from the economies of most developed countries in many respects, including government involvement, level of development, economy growth rate, control of foreign exchange, and allocation of resources.

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The economy of China has been transitioning from a planned economy to a more market-oriented economy.  Although the majority of productive assets in China are still owned by the PRC government at various levels, in recent years the PRC government has implemented economic reform measures emphasizing utilization of market forces in the development of the economy of China and a high level of management autonomy.  Some of these measures will benefit the overall economy of China, but may have a negative effect on us.  For example, our operating results and financial condition may be adversely affected by changes in taxation, changes in power tariff for our power plants, changes in the usage and costs of State controlled transportation services, and changes in State policies affecting the power industry.

Interpretation of PRC laws and regulations involves significant uncertainties

The PRC legal system is based on written statutes and their interpretation by the Supreme People's Court.  Prior court decisions may be cited for reference but have limited value as precedents.  Since 1979, the PRC government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade.  However, because these laws and regulations are relatively new, and because of the limited volume of published cases and judicial interpretation and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncer tainties.  In addition, as the PRC legal system develops, we cannot assure that changes in such laws and regulations, and their interpretation or their enforcement will not have a material adverse effect on our business operations.

We are subject to certain PRC regulations governing PRC companies that are listed overseas.  These regulations contain certain provisions that are required to be included in the articles of association of these PRC companies and are intended to regulate the internal affairs of these companies.  The PRC Company Law and these regulations, in general, and the provisions for protection of shareholders' rights and access to information, in particular, are less developed than those applicable to companies incorporated in Hong Kong, the US, the UK and other developed countries or regions.  Such limited investor protections are compensated for, to a certain extent, by the Mandatory Provisions for the Articles of Association of Companies to be Listed Overseas an d certain additional requirements that are imposed by the Listing Rules of The Hong Kong Stock Exchange with a view to reduce the magnitude of differences between the Hong Kong Company Law and PRC Company Law.  The articles of association of all PRC companies listed in Hong Kong must incorporate such Mandatory Provisions and these additional requirements.  Although our Articles of Association have incorporated such provisions and requirements, there can be no assurance that our shareholders will enjoy protections to which they may be entitled in other jurisdictions.

Risks relating to our operations in Singapore

Tuas Power Ltd. (“Tuas Power”), one of our wholly-owned subsidiaries, operates in Singapore.  Tuas Power is a power generation company incorporated in Singapore which is engaged in the business of generation, wholesale and retail of power.  With two 600 MW oil-fired steam generating units and four 367.5 MW gas-fired combined cycle generating units, Tuas Power has a total generating capacity of 2,670 MW.  The total assets and revenue of Tuas Power represented approximately 13% and 14%, respectively, of our total assets and revenue as of and for the year ended December 31, 2009.

The operations of Tuas Power are subject to a number of risks, including, among others, risks relating to electricity pricing, dispatching, fuel supply, project development, capital expenditure, environmental regulations, government policies, and Singapore’s economic, political and social conditions.  Any of these risks could materially and adversely affect the business, prospects, financial condition and results of operations of Tuas Power.

Decrease in market demand and intensified competition may adversely affect Tuas Power’s business and results of operations.

Power demand in Singapore is dependent upon the economic development of Singapore.  Due to the impact of the global financial crisis and economic downturn, Singapore’s economy had a negative growth in 2009, and the power demand had a moderate decrease in 2009. Power demand is expected to see a moderate growth in 2010 on the back of emerging global recovery. Significant and sustained adverse changes in Singapore’s economy and a material reduction in power demand in Singapore may adversely affect Tuas Power’s business, prospects, financial condition and results of operations.

The Singapore electricity industry had traditionally been vertically integrated and owned by the government.  Since 1995, much progress has been made to liberalize the electricity industry for greater

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efficiency and innovation.  Steps taken to liberalize the power industry include corporatization of the Public Utilities Board (“PUB”) in 1995, establishment of Singapore Electricity Pool (“SEP”) in 1998, formation of Energy Market Authority (“EMA”) in 2001, and the evolvement of the SEP into the New Electricity Market of Singapore (“NEMS”) in 2003, and respective divestment of three major generating companies (Tuas Power, PowerSenoko, PowerSeraya) by Temasek Holdings in 2008 and 2009.  The liberalization of Singapore’s power market and the further deregulation of its power industry have resulted in more intense competition among the power generating companies in Singapore.  Tuas Power is one of t he three largest power generating companies in Singapore.  If Tuas Power is unable to compete successfully against other power generating companies in Singapore, its business, prospects, financial condition and results of operations may be adversely affected.

Decrease in the quantity of generating capacity covered by Tuas Power’s vesting contracts may further expose Tuas Power to electricity price volatility and adversely affect its business and results of operations.

Tuas Power derives its revenue mainly from sale of electricity to the National Electricity Market of Singapore (the “NEMS”) through a bidding process and vesting contracts under which a significant portion of power sales is predetermined by EMA. Vesting contracts are a form of bilateral contract imposed/vested on the major power generating companies in Singapore. The vesting contract regime in Singapore is targeted at mitigation of market power in the wholesale electricity spot market. The regime achieves this objective by assigning a quantity of vesting contracts to generating companies, thereby limiting their incentives to exercise whatever level of market power they may possess. Vesting contract price is set by the Energy Market Authority (the “EMA”), which is Singapore’s power market regulator. It is set at the long run marginal cost of the most efficient base-loaded technology plant employed in Singapore and is reviewed every two years. On a quarterly basis, the EMA allows for the vesting contract price to be adjusted to account for inflation and changes in fuel prices. Such mechanism helps protect the profit margins of the power generating companies in the Singapore market such as Tuas Power to a large degree. The quantity of each power generation company’s capacity reserved for vesting contracts depends on the proportion of such power generation company’s capacity to total capacity in the NEMS system. The contract quantity and price are recalculated every three months.  For the period from January 1, 2009 to December 31, 2009, power sold through vesting contracts represented approximately 60% of Tuas Power's total power sold.

As an important governmental policy in Singapore’s power market, vesting contracts may continue as long as the EMA considers that  high market concentration persists and that power generating companies may potentially exercise their market power.  Although it is expected that it will take at least eight to ten years for market concentration to be substantially diluted, the Singapore government recently planned to decrease the quantities of capacity covered by vesting contracts.  The timetable and details for such plan remain uncertain and Tuas Power is actively communicating with the EMA and requesting a relatively stable policy.  Any significant decrease in the quantity of capacity covered by Tuas Power’s vesting contracts will further expose Tuas Power to electricity price vola tility and may have an adverse impact on its business and results of operations.

The fuel cost of Tuas Power is exposed to the volatility of international fuel price and foreign currency risk.

The fuel for Tuas Power consists of oil and gas.  Since the procurement price of gas is closely linked to oil price, the fuel cost of Tuas Power is exposed to the volatility of international oil price.  In addition, the commitments for the purchase of fuel are denominated in US dollars, which further exposes Tuas Power to foreign currency risk.  The increase in fuel price and the appreciation of US dollars against Singapore dollar would increase the fuel cost of Tuas Power and adversely affects its results of operations.

ITEM 4 Information on the Company

A. History and development of the Company

Our legal and commercial name is Huaneng Power International, Inc.  Our head office is at West Wing, Building C, Tianyin Mansion, 2C, Fuxingmennan Street, Beijing, People's Republic of China and our telephone number is (8610) 66491999.  We were established in June 1994 as a company limited by shares organized under the laws of the People's Republic of China.

On April 19, 2006, we carried out the reform to convert all non-tradable domestic shares to tradable domestic shares. According to the reform plan, Huaneng Group and HIPDC offered three shares to each holder of A Shares for every ten shares held by them.  The total number of shares offered in connection with the reform was 150,000,000 shares. As a result, all non-tradable domestic shares were permitted to be listed on stock exchange for trading with certain selling restrictions. The period of selling restrictions is sixty months for the non-tradable shares held by Huaneng Group and HIPDC, and one year for most non-tradable shares held by

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others starting from April 19, 2006. As of March 31, 2010, approximately 6.122 billion of our shares, including our shares directly held by Huaneng Group and HIPDC, remained subject to selling restrictions. The reform did not affect the rights of shareholders of our overseas listed foreign shares.

On March 25, 2008, we signed a letter of intent with Huaneng Group on the transfer of the equity of SinoSing Power, which is a wholly-owned subsidiary of Huaneng Group that was established to acquire 100% equity interest in Tuas Power Ltd. from Temasek Holdings (Private) Limited.  Huaneng Group’s equity investment in SinoSing Power is US$985 million.  On April 29, 2008, we entered into a transfer agreement with Huaneng Group in this regard, pursuant to which we should pay the consideration in full, of which US$788 million settled by assignment of debts and the remaining balance of approximately RMB1.572 billion paid in cash in Renminbi.  On June 27, 2008, we completed the acquisition of SinoSing Power. Tuas Power Ltd., with a total installed capac ity of 2,670MW, became one of our indirectly wholly-owned subsidiaries.

As resolved at the shareholders’ meeting held on May 13, 2008, our company has been given a mandate to issue within the PRC short-term debentures of a principal amount not exceeding RMB10 billion within 12 months from the date on which the shareholders’ approval was obtained. On July 25, 2008, we issued short-term RMB denominated debentures in the amount of RMB5 billion with a maturity period of 365 days, a unit face value of RMB100 and an interest rate of 4.83%.  On February 24, 2009, we issued the second tranche of the short-term debenture in the amount of RMB5 billion, with a maturity period of 365 days, a unit face value of RMB100 and an interest rate of 1.88%. These two tranches of short-term debentures were repaid in July 2009 and February 2010, respectively.

As resolved at the extraordinary general meeting held on December 23, 2008, our company has been given a mandate to issue within the PRC medium-term notes of a principal amount not exceeding RMB10 billion within 12 months from the date on which the shareholder’s approval was obtained. On May 14, 2009, we issued medium-term RMB denominated notes in the amount of RMB4 billion, with a maturity period of 5 years, a unit face value of RMB100 and an interest rate of 3.72%.

As resolved at the 2008 annual general meeting held on June 18, 2009, our company has been given a mandate to issue within the PRC short-term debentures of a principal amount not exceeding RMB10 billion within 12 months from the date on which the shareholder’s approval was obtained. On September 9, 2009, we issued the first tranche of the short-term RMB denominated debenture in the amount of RMB5 billion with a maturity period of 270 days, a unit face value of RMB100 and an interest rate of 2.32%. On March 23, 2010, we issued the second tranche of the short-term debenture in the amount of RMB5 billion, with a maturity period of 270 days, a unit face value of RMB100 and an interest rate of 2.55%.

On March 31, 2009, we entered into a transfer agreement with Huaneng New Energy Industrial Holding Limited Company (“Huaneng New Energy”) , a subsidiary of Huaneng Group, pursuant to which we agreed to acquire from Huaneng New Energy its 65% equity interest in Huaneng Qidong Wind Power Generation Co., Ltd. (“Qidong Wind Power”) for a consideration of RMB103 million.  Phase I of Qidong Wind Power has a generating capacity of 91.5 MW and commenced operations in March 2009. In September 2009, we completed the acquisition of 65% equity interest in Qidong Wind Power.

On April 21, 2009, we entered into a transfer agreement with Huaneng Group, pursuant to which we agreed to acquire the 55% equity interest in Tianjin Huaneng Yangliuqing Co-generation Limited Liability Company held by Huaneng Group for a consideration of RMB1.076 billion.  On the same day, we entered into a transfer agreement with HIPDC, pursuant to which we agreed to acquire the 41% equity interest in Huaneng Beijing Co-generation Limited Liability Company held by HIPDC for a consideration of RMB1.272 billion. In September 2009, we completed the acquisition of 55% equity interest in Tianjin Huaneng Yangliuqing Co-generation Limited Liability Company and 41% equity interest in Huaneng Beijing Co-generation Limited Liability Company. We exercise effective control over Huaneng Beijing Co-generation Limited Liability Compan y. As a result of these acquisitions, our company's generation capacity is increased by 1,006MW on an equity basis.

On November 11, 2009, Tuas Power commenced the construction of Tembusu multi-utilities complex at Jurong Island, Singapore. The complex consists of a co-generation plant, a desalination plant and a wastewater treatment facility. The cogeneration plant will have three biomass clean coal cogeneration units which use circulating fluidized bed technology and three gas fired boilers, with a capacity to supply up to 1000 t/h of steam and a power generation capacity of 165 MW. The project has a total investment of SGD2 billion and is expect to be completed in two phases with the co-generation plant to commence commercial operation in 2012.

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On December 31, 2009, we entered into an equity interest transfer contract with Shandong Electric Power Corporation (“Shandong Power”) and Shandong Luneng Development Group Company Limited (“Luneng Development”), pursuant to which we agreed to acquire 100% equity interest in each of Yunnan Diandong Energy Limited Company, Yunnan Diandong Yuwang Energy Limited Company, Shandong Zhanhua Co-generation Limited Company, Jilin Luneng Biological Power Generation Limited Company and Qingdao Luneng Jiaonan Port Limited Company, 60.25% equity interest in Fujian Luoyuanwan Luneng Harbour Limited Liability Company, 58.3% equity interest in Fuzhou Port Luoyuanwan Pier Limited Liability Company, 73.46% equity interest in Luoyuan Luneng Ludao Pier Limited Liability Company, and 53% equity interest in Luneng Sea Transporta tion Limited Company, as well as the preliminary stage project achievements of 4x660MW coal-fired project of Rizhao Lanshan and 2x660MW coal-fired project of Luoyuanwan from Shandong Power, and 39.75% equity interest in Fujian Luoyuanwan Luneng Harbour Limited Liability Company from Luneng Development, for an aggregate consideration of RMB8.625 billion. As of April 15, 2010, the proposed transaction was still subject to approvals by relevant governmental authorities.

As resolved at the extraordinary general meeting and the H Share class meeting held on March 16, 2010, respectively, we would issue (i) no more than 1,200 million new A Shares by way of placement to no more than 10 designated investors including Huaneng Group, which would subscribe for no more than 400 million new A Shares, and (ii) no more than 400 million new H Shares to China Hua Neng Hong Kong Company Limited (“Hua Neng HK”), a wholly-owned subsidiary of Huaneng Group. The subscription price for new A Shares shall be no less than RMB7.13 per share and will be determined on the book-building basis after obtaining the approvals for the new issue. The subscription price for new H Shares shall be HK$4.97 per share. The proposed issue of new A Shares and H Shares has been approved by the State Assets Supervision and Adm inistration Commission of the State Council, and is subject to approvals by relevant governmental authorities in accordance with applicable PRC laws and regulations.

See “Item 5 Operating and Financial Review and Prospects — Liquidity and Cash Resources” for a description of our principal capital expenditures since the beginning of the last three financial years.

B. Business overview

We are one of the China's largest independent power producers.  As of March 31, 2010, we had controlling generating capacity of 49,443MW, and a total generating capacity of 45,912MW on an equity basis.

Operations in China

We are engaged in developing, constructing, operating and managing power plants throughout China. Our domestic power plants are located in 17 provinces, provincial-level municipalities and autonomous regions. We also have a wholly-owned power plant in Singapore.

In 2009, the Chinese government has taken a series of measures including economic stimulus packages and various monetary and fiscal policies, which enabled China’s macro economy to recover gradually from the adverse impact of the international financial crisis. Recovery of downstream industries continued to contribute to the growing power demand. Meanwhile, coal price in the domestic market declined from the previous year, indicating that the policy guidance in respect of electricity tariff adjustment implemented by the NDRC has gradually effected on the macro-economy. The macro economic conditions of China have provided opportunities for the development of China’s power industry and the growth of power generating companies. In response to the international financial crisis and complicated operating conditions, our man agement and all employees worked together and made every effort to actively deal with the challenges. We achieved the target of turning a loss into a gain and made new progress in the areas of safe production, operation management, energy saving, environmental protection, project development, capital operation and corporate governance. With respect to our operations in Singapore, Tuas Power achieved remarkable annual operating result in 2009, thus making contribution to our profit growth.

In the year of 2009, new generating units with a total installed capacity of 5,832 MW were put into commercial operations, , including our Huade Wind Power Plant, which has an installed capacity of 49.5 MW. In 2009, our total domestic power generation from all operating power plants on a consolidated basis amounted to 203.520 billion kWh, representing a 10.23% increase as compared to the same period of the previous year. The annual average utilization hours of our coal-fired generating units reached 5,220 hours, representing 381 hours above the average rate of the coal-fired generating units in China. Our fuel cost per unit of power sold by coal-fired power plants decreased by 13.73% to RMB214.53 per MWh.

We believe our significant capability in the development and construction of power projects, as exemplified in the completion of our projects under construction ahead of schedule, and our experience gained

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in the successful acquisitions of power assets in recent years will enable us to take full advantage of the opportunities presented in China's power market and made available to us through our relationship with HIPDC and Huaneng Group.

With respect to the acquisition or development of any project, we will consider, among other factors, changes in power market conditions, and adhere to prudent commercial principles in the evaluation of the feasibility of the project.  In addition to business development strategies, we will continue to work on our profit enhancement through relentlessly strengthening cost control, especially in respect of fuel costs and construction costs, so as to hedge against fluctuations in fuel price and increase competitiveness in the power market.

Operations in Singapore

In 2008, we acquired Tuas Power which is one of the three largest power generating companies in Singapore and had a total generating capacity of 2,670 MW as of December 31, 2009.  We have consolidated Tuas Power’s results of operations since March 2008. In 2009, the power generated by Tuas Power in Singapore accounted for 24.30% of the total power generated in Singapore, maintaining a similar level from 2008.

Development of power plants

The process of identifying potential sites for power plants, obtaining government approvals, completing construction and commencing commercial operations is usually lengthy.  However, because of our significant experience in developing and constructing power plants, we have been able to identify promising power plant projects and to obtain all required PRC Government approvals in a timely manner.

Opportunity identification and feasibility study

We initially identify an area in which additional electric power is needed by determining its existing installed capacity and projected demand for electric power.  The initial assessment of a proposed power plant involves a preliminary feasibility study.  The feasibility study examines the proposed power plant's land use requirements, access to a power grid, fuel supply arrangements, availability of water, local requirements for permits and licenses and the ability of potential customers to afford the proposed power tariff.  To determine projected demand, factors such as economic growth, population growth and industrial expansion are used.  To gauge the expected supply of electricity, the capacities of existing plants and plants under construc tion or development are studied.

Approval process

Prior to July 2004, any project proposal and supporting documents for new power plants must first be submitted to the NDRC for approval and then be submitted to the State Council.  In July 2004, the State Council of the PRC reformed the fixed asset investment regulatory system in China.  Under the new system, new projects in the electric power industry that do not use government funds will no longer be subject to the examination and approval procedure.  Instead, they will only be subject to a confirmation and registration process.  Coal-fired projects will be subject to confirmation by the NDRC. Wind power projects with installed capacity exceeding 50 MW will be subject to confirmation and registration with the relevant department of the centr al government while wind power project with installed capacity lower than 50 MW will be subject to confirmation and relevant local government departments. Wind power projects confirmed by local government departments at provincial level shall also be filed with the NDRC and China National Energy Administration.

Joint venture power projects are subject to additional governmental approvals.  Approval by Ministry of Commerce is also required when foreign investment is involved.

In January 2007, the Office of the National Energy Leading Group and the NDRC with the approval of the State Council jointly issued the opinions to accelerate shutdowns of small coal-fired generating units. Power generating companies are encouraged to close small coal-fired generating units and replace them with newly built large units, and their new projects may be granted priority in the confirmation and registration process on the basis of their proactive implementation of the opinions.

Permits and contracts

In developing a new power plant, we and third parties are required to obtain permits before commencement of the project.  Such permits include operating licenses and similar approvals related to plant site, land use, construction, and the environment.  To encourage the cooperation and support of the local

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governments of the localities of the power plants, it has been and will be our policy to seek investment in such power plants by the relevant local governments.

Power plant construction

We have generally acted as the general contractor for the construction of our power plants.  Equipment procurement and installation, site preparation and civil works are subcontracted to domestic and foreign subcontractors through a competitive bidding process.  All of our power plants were completed on or ahead of schedule, enabling certain units to enter service and begin generating income earlier than the estimated in-service date.

Import duties

China's general import-tariff level has been declining since China acceded to the WTO in November 2001.  China's average import-tariff rate was reduced annually from 15.3% in 2001 to 9.9% in 2005 and 2006.  Starting from January 1, 2007, the average import-tariff rate was further reduced to 9.8%. In general, China's accession to WTO will bring its import-tariff to a level consistent with the average level of all other WTO members.

Under the relevant PRC laws and regulations, foreign invested enterprises, or “FIE”, will be entitled to import duty exemption in respect of self-use imported equipment and raw materials for investment projects that fall into the encouraged category under the Catalogue for the Guidance of Foreign Investment Industries (the “Catalogue”).  Pursuant to the current Catalogue effective on December 1, 2007, construction and operation of power stations using integrated gasification combined cycle, circulating fluidized bed with a generating capacity of 300MW or above, pressurized fluided bed combustor with a generating capacity of 100MW or above and other clean combustion technologies belong to the category of encouraged projects.  Therefore, our construction projects that meet the conditions for encouraged projects under the current catalogue are eligible for import-duty exemption for imported generating units.

In addition, pursuant to the Interim Rules to Promote Structural Adjustment of Industries and Guidance Catalogue for Structural Adjustment of Industries issued in December 2005, our power plants construction projects with independent legal person status belong to an encouraged category of investments, and therefore are eligible for exemption from import duty and related value-added tax with regard to the imported equipments used in such projects, subject to the approval of the relevant government authorities.

Plant start-up and operation

We have historically operated and intend to continue to operate our power plants.  Our power plants have established management structures based on modern management techniques.  We select the superintendent for a new power plant from the senior management of our operating plants early in the construction phase of the new plant, invest in the training of operational personnel, adopt various rational management techniques and structure its plant bonus program to reward efficient and cost-effective operation of the plant in order to ensure the safety, stability and high level of availability of each power plant.  Our senior management meets several times a year with the superintendents of the power plants as a group, fostering a team approach to operation s, and conducts annual plant performance reviews with the appropriate superintendent, during which opportunities to enhance the power plant's performance and profitability are evaluated.

After a coal-fired generating unit is constructed, the contractor tests its installation and systems.  Following such tests, the contractor puts the unit through a continuous 168-hour trial run at full load.  After successfully passing the continuous 168-hour test and obtaining approval from the local governments, the unit may commence its commercial operation. Trial run of wind power project consists of two phases: (i) trial run of single wind power generating unit and (ii) trial run of the entire wind power project as a whole. After successfully passing the trial run, the wind power project may commence its commercial operation.

Development of Power Plants in Singapore

The Singapore electricity industry had traditionally been vertically integrated and owned by the government.  Since 1995, steps has been taken to liberalize the power industry.  The EMA is a statutory body responsible for the economic, technical and competition regulation of the gas and electricity industry in Singapore.  In carrying out its functions as the regulator of the power sector, EMA is empowered under the Electricity Act to issue and enforce licences, codes of practices and performance standards.  Energy Market Company Pte Ltd. (the “EMC”), a subsidiary of the EMA, is the market company licensed to operate the wholesale market, or the NEMS.

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In Singapore, a company is required to hold a generation license issued by the EMA if it generates electricity by means of one or more generating units with capacity of 10 MW or above. If connected to the power grid, the generating unit(s) must be registered with the EMC and will have to compete with other power generating companies to secure dispatch in the NEMS.

To ensure adequate electricity supply in Singapore, the EMA targets a minimum reserve margin (the excess of generating capacity over peak electricity demand) of 30% based on a loss of load probability (a measure of the probability that a system demand will exceed capacity during a given period, often expressed as the estimated number of days over a year) of three days per year. The 30% required reserve margin is to cater for scheduled maintenance as well as forced outages of generating units in the system.  If the reserve margin falls below the required 30% due to demand growth and/or plant retirements, it would be an indication that new generation investments in generation units are needed to maintain system security.

The EMA intends to keep the increase and decrease in generating capacity to be commercially driven as far as practicable. As a precaution against the risk of insufficient generating capacity in the system to maintain system security, the EMA has planned to put in place a capacity assurance scheme to incentivize new generation planting in case new generating capacity that is required to maintain system security is not forthcoming from the market.

By most measures of market power, the Singapore market is highly concentrated as the three largest power generating companies account for approximately 90% of total power capacity.  Although such high market concentration is expected to decrease over time, it is expected to remain as a concern for at least the next decade. Therefore, it is unlikely that the EMA will allow the three largest power generating companies to increase their licensed capacity and these generating companies will have to rely on the optimization of their existing capacity within license cap to improve efficiency and forestall new entry.

Pricing policy

Prior to April 2001, the on-grid tariffs for our planned output were designed to enable us to recover all operating and debt servicing costs and to earn a fixed rate of return. Since April 2001, however, the PRC government has started to gradually implement a new on-grid tariff-setting mechanism based on the operating terms of power plants as well as the average costs of comparable power plants.

On July 3, 2003, the State Council approved the tariff reform plan and made it clear that the long-term objective of the reform is to establish a standardized and transparent tariff-setting mechanism.

Pursuant to the NDRC circular issued in June 2004, on-grid tariffs for newly built power generating units commencing operation from June 2004 should be set on the basis of the average cost of comparable units adding tax and reasonable return in the regional grid. It provides challenges and incentives for power generating companies to control costs for building new generating units.

On March 28, 2005, the NDRC issued the Interim Measures on Regulation of On-grid Tariff, the Interim Measures on Regulation of Transmission and Distribution Tariff, and the Interim Measures on Regulation of End-user Tariff, or collectively the Interim Measures, to provide guidance for the reform of tariff-setting mechanism in the transition period. Under the Interim Measures, tariff is classified into on-grid tariff, transmission and distribution tariff and end-user tariff. Transmission and distribution tariff will be instituted by the government. End-user tariff will be based on on-grid tariff and transmission and distribution tariff.  The government is responsible to regulate and supervise power tariffs in light of the principles of efficiency, incentives, and investment encouragement and taking into consideration of affordability.

In December 2004, the NDRC proposed and the State Council approved to establish a linkage mechanism between coal and power prices, pursuant to which, the NDRC may adjust power tariffs if the change of the average coal price reaches 5% within a period of six months compared with the preceding same period. The change in a period, if less than 5%, will be carried forward to the future periods until the accumulated amounts reach 5%. With a target to encourage power generating companies to reduce cost and improve efficiency, only around 70% of coal price increases will be allowed to pass to end-users through an increase of power tariffs, and power generating companies will bear the remaining 30%. In May 2005, the NDRC activated the coal-electricity price linkage mechanism for the first t ime to increase on-grid tariffs and end-user tariffs in the northeastern region, central region, eastern region, northwestern region and southern region. We accordingly increased the on-grid tariffs of our power plants in the northeastern region, central region, eastern region and northwestern region on May 1, 2005 and in the southern region on July 15, 2005. In June 2006, the coal-electricity price linkage mechanism was reactivated by the NDRC to increase on-grid tariffs and end-user tariffs

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in the northeastern region, central region, eastern region, northwestern region and southern region. We accordingly increased the on-grid tariffs of most of our power plants in the same regions on June 30, 2006.

In May 2007, NDRC and the State Environment Protection Administration jointly promulgated Interim Administrative Measures on Electricity Price of Coal-fired Generating Units installed with Desulphurization Facilities and the Operations of Such Facilities, which provided that a premium for desulphurization may be charged on the price of the electricity generated by generating units installed with desulphurization facilities on and from the date on which such desulphurization facilities are tested and accepted by relevant environment protection regulator.  Such pricing policy is also applicable to the old generating units which are installed with desulphurization facilities.  The new measures are more stringent on the regulation of the coal-fired power plants with desulphurization facilities, setting forth the categories under which the price including a desulphurization premium will be offset or otherwise penalized based on the ratio of utilization of the relevant desulphurization facilities on annual basis.  As of December 31, 2009, all of our existing coal-fired generating units have installed and operated the desulphurization facilities and all the generating units will meet the standards for environmental protection.

In June 2008, NDRC issued Notice of Raising the Power Tariff, pursuant to which, the power tariff in provincial grids nationwide was increased by an average of RMB0.025 per kWh. In August 2008, NDRC issued Notice of Raising the On-grid Tariffs of the Thermal Power Plants, pursuant to which, the on-grid tariff of thermal power plants, including plants fueled by coal, oil, gas and co-generation, was increased by an average of RMB0.02 per kWh.

On February 25, 2009, NDRC, SERC and China National Energy Administration jointly promulgated the Notice regarding Cleaning up the Concessional Tariff Scheme, pursuant to which, (i) the concessional tariff scheme at local level is banned, and (ii) certain measures, such as direct purchase by large end-users and adopting peak and off-peak power pricing policy, will be carried out to reduce enterprises’ power cost.  In addition, the notice emphasizes the supervision and inspection over the setting of power tariff. On October 11, 2009, in order to promote a fair market condition and the optimization of electric power resources, NDRC, SERC and China National Energy Administration jointly promulgated the Circular on Regulating the Administration of Electric Power Transaction Tariff to regulate the tariff setting mechanism for the on-grid tariff, transmission and distribution tariff and end-user tariff and clean up the local preferential power tariffs provided to high energy consumption companies.

Pursuant to a notice issued by NDRC, with effect from November 20, 2009, certain adjustments on the on-grids tariffs have been made in various regions of China in order to resolve the inconsistencies in tariffs, rationalize the tariff structure and promote the development of renewable energy.

In terms of power tariff for wind power projects, pursuant to the applicable policies and regulations, the PRC is categorized into four wind resource zones, and the onshore wind power projects approved after August 1, 2009 and in the same zone are subject to the same standard on-grid tariff applicable to that zone. In addition, the power grid companies are generally required to purchase all of the electricity generated by wind power generating units.

Pricing Policy in Singapore

All licensed power plants in Singapore sell their plant output into the NEMS under a half-hourly competitive bidding process, during which a clearing price is determined based on the projected system demand. All successful bids/power plants that are cleared in each half hour will be dispatched automatically by control signals from the Power System Operator, a division of the EMA, and in turn will receive the cleared price as determined earlier. The cleared price paid to the power plants is the nodal price at their point of injection, and the Market Clearing Engine, the computer software that creates dispatch schedules and determines market clearing prices, automatically produces a different price at each node on the network.

As there is no certainty in the price or the dispatch levels for any power plants, operators of power plants may enter into short or long-term financial arrangements with other counterparties or their own subsidiary company involved in the electricity retail market (to end consumers of electricity) to secure stability in their revenue stream and manage the commercial risks associated with operations in a competitive market.  

In addition, the major power generating companies, including Tuas Power, are obliged to hold vesting contracts.  Vesting contracts are a form of bilateral contract imposed/vested on the generating companies who had been licensed by the EMA before the start of the NEMS.  Market Support Services Licensee is the counterparty to all of the vesting contracts, and the vesting contracts are settled between the parties through the EMC’s settlement system. The quantity of each power generation company’s capacity covered by vesting

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contracts depends on the proportion of its capacity to total capacity in the NEMS system. Vesting contract price is set by the EMA at the long run marginal cost and is adjusted by the EMA on a periodic basis for changes in the long run marginal cost and on a quarterly basis for inflation and changes in fuel prices. Such mechanism helps protect the profit margins of the power generating companies in the Singapore market to a large degree. The contract quantity and price are currently recalculated every three months.

The electricity that retailers on-sell to contestable consumers (currently defined as customers with average monthly usage of 10,000kWh and above) has to be purchased from the NEMS. The retailers pay for their electricity purchases at the Uniform Singapore Energy Price, which is a weighted average of nodal prices and is determined on a half-hourly basis in the NEMS.

Power sales

Each of our power plants has entered into a written agreement with the local grid companies for the sales of its power output.  Generally, the agreement has a fixed term of one year and provides that the annual utilization hours of the power plant will be determined with reference to the average annual utilization hours of the similar generating units connected to the same grid.

In 2003, SERC and the State Administration of Commerce and Industry jointly promulgated a model contract form (the "Model Contract Form") for use by power grid companies and power generating companies in connection with electricity sale and purchase transactions.  The Model Contract Form contains provisions on the parties' rights and obligations, amount of electricity subject to purchase, payment method and liabilities for breach of contract, etc.  We believe that the publication of the Model Contract Form has facilitated the negotiation and execution of electricity purchase contracts between power grid companies and power generating companies in a fair, transparent and efficient manner.  In 2009, all of the agreements entered into between our power pla nts and the local grid companies were based on the Model Contract Form.

Power sales through competitive bidding are one of the targets of power market reform. The PRC government started in 1999 to experiment with a program to effect power sales through competitive bidding in some provinces, and has been gradually expanding the program with a view to creating a market-oriented electric power industry. Pursuant to the opinions regarding promotion of electric power system reform in the period of “The Eleventh Five-Year Plan” adopted by the State Council in November 2006, the SERC will speed up the reform to establish an electric power market suitable to China’s circumstances. Furthermore, the PRC government started in 2009 to experiment with a program for di rect power purchase by large power end-users, and has promulgated relevant rules governing the price and method of direct power purchase transaction as well as the market entrance and exit mechanism. In accordance with the above policies, we are conducting research on the program for direct power purchase by large power end-users. However, since the detailed implementation rules governing the program at local level are different among the regions in terms of market entrance condition, scope of experiment, and price and method of direct power purchase, these rules are subject to approvals by relevant central governmental authorities. As of December 31, 2009, the direct power purchase by large power end-users has not been implemented in the regions in which we operate our power plants.

Establishing regional power markets and increasing the use of the bidding method are the general trend in China's power market reform, which is conducive to creating a competition environment that is fair, transparent and equitable. Power sales through bidding process has been experimented in the power market in the Northeastern region and Eastern region. However, as of March 31, 2010, the use of the bidding method in power sales has not been resumed yet.  We believe that this reform will benefit us in the long-term.  We will adopt different bidding strategies and fully take advantage of the large scales of our power plants in accordance with the specific circumstances of different power grids and different power plants, thereby maximizing our profits in the powe r bidding process.  We also believe that our large and highly efficient generating units are competitive in a more open, orderly and fair market.

In 2008, with the purpose of improving energy usage efficiency, the government implemented an electricity optimized-dispatch policy in Henan Province, Sichuan Province, Jiangsu Province, Guangdong Province and Guizhou Province on a pilot basis, as a result of which, the utilization hours of low energy consumption and low pollution generating units have been improved. We believe that our large generating units with high efficiency and low emission in Henan, Jiangsu and Guangdong provinces are competitive in the market.

The following table sets forth the average power tariff (RMB/MWh) of electric power sold by our power plants in China, for each of the five years ended December 31, 2009 and the approved power tariff for 2010.

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	Year Ended December 31,
	2005		2006		2007		2008		2009		2010
	Average Tariff (1)		Average Tariff (1)		Average Tariff (1)		Average Tariff (1)		Average Tariff(1)		Approved Tariff(1)
Dalian Power Plant		317.58		315.95		323.27		338.05		368.66		376.70
Dandong Power Plant		301.67		322.76		330.38		340.82		366.30		378.50
Yingkou Power Plant(2)		360.09		334.47		343.37		360.45		383.58		375.00
												390.00
Yingkou Cogeneration Power Plant		--		--		--		--		375.00		375.00
Fuzhou Power Plant		367.06		342.46		369.61		401.22		412.24		429.30
Shang’an Power Plant(2)		319.91		340.22		344.47		356.52		372.41		402.30
												386.80
Nantong Power Plant		343.00		344.92		339.47		385.53		401.71		425.00
Nanjing Power Plant		340.65		345.56		342.99		375.47		407.58		425.00
Taicang Power Plant(2)
Phase I		360.00		361.64		359.69		401.60		412.19		433.10
Phase II		--		371.50		358.08		396.48		398.36		433.10
Huaiyin Power Plant(2)
Phase I		346.43		366.44		--		--		--		--
Phase II		373.77		362.26		357.47		396.80		415.73		430.00
Phase III		--		362.26		357.47		396.80		415.73		430.00
Shidongkou I		320.30		358.85		369.54		377.35		425.76		440.60
Shidongkou II		357.60		357.08		347.93		377.04		411.80		425.60
Shanghai CCGT Power Plant		--		--		--		602.57		629.00		629.00
Shantou Power Plant(2)
Phase I		462.83		487.55		497.7		522.42		547.00		540.71
Phase II		--		446.54		453.2		472.96		502.23		496.20
Dezhou Power Plant(2)     (Phases I, II & III)		349.56		360.68		360.45		394.08		418.92		423.40
Jining Power Plant(2)
Phases I, II		323.41		342.42		310.90		356.56		397.40		--
Phase III		323.41		342.42		370.90		384.29		408.47		413.40
Co-generation		--		--		--		--		397.40		397.40
Weihai Power Plant		398.93		402.99		403.00		422.78		459.90		463.50
Xindian Power Plant
Phases I, II		337.25		350.54		379.71		371.86		--		--
Phase III		--		351.90		356.01		370.99		404.30		404.30
Changxing Power Plant		392.83		408.90		428.16		450.86		479.71		471.70
Yushe Power Plant
Phase I		319.37		316.16		332.53		345.77		352.89		336.30
Phase II		256.00		268.21		274.16		289.32		316.62		336.30
Qinbei Power Plant		299.77		311.20		311.86		339.85		370.47		391.20
Jinggangshan Power Plant(2)
Phase I		353.90		369.87		366.94		379.99		415.37		428.00
Phase II		--		--		--		--		406.60		407.00
Yueyang Power Plant
Phase I		341.34		360.88		366.49		388.53		434.39		440.50
Phase II		--		363.38		378.91		398.62		434.05		440.50
Luohuang Power Plant(2)
Phases I, II		300.90		314.87		308.65		338.27		365.70		378.30
Phase III		--		337.30		337.30		354.89		381.07		388.30
Pingliang Power Plant		211.43		216.27		223.31		238.89		261.02		281.50
Yuhuan Power Plant		--		360.95		415.05		444.92		467.54		457.00

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	Year Ended December 31,
	2005		2006		2007		2008		2009		2010
	Average Tariff (1)		Average Tariff (1)		Average Tariff (1)		Average Tariff (1)		Average Tariff(1)		Approved Tariff(1)
Rizhao Power Plant Phase II		--		--		--		--		394.24		397.40
Jinling Power Plant
CCGT		--		--		481.99		528.73		544.97		545.00
Coal-fired		--		--		--		--		--		415.00
Qidong Wind Power Plant		--		--		--		--		487.70		487.70
Haimen Power Plant		--		--		--		--		497.45		496.20
Beijing Cogeneration Power Plant		--		--		--		--		482.42		491.80
Yangliuqing Cogeneration Power Plant(2)		--		--		--		--		408.12		436.80
		--		--		--		--		--		382.00
Huade Wind Power Plant		--		--		--		--		--		540.00

__________

Notes:	(1)	Includes value-added tax.
	(2)	For the 2010 approved tariff, some power plants may have several different approved tariffs which will be applied to the different generating units of such plants.

Power sales in Singapore

As of December 31, 2009, the total licensed capacity in commercial operation in Singapore was 2,670 MW. In 2009, the peak demand for electricity was 5,876 MW and the annual average load was 4,603 MW.  The power market in Singapore is competitive, and power generating companies sell their power output through bidding process and vesting contracts. As of December 31, 2009, power sold through vesting contracts presented approximately 55% of the total power sold by the power generating companies.

Tuas Power is required to sell a substantial portion of its electric power output to the NEMS through a competitive bidding process. The gas-fired combined cycle units of Tuas Power enjoy advantages in the competitive biddings of the pool market given their relatively low cost and high efficiency. Tuas Power in turn receives the price cleared in the market for its output. The uncertainty of the revenue associated the sale of electricity in the NEMS is effectively hedged via vesting contracts and direct retail sales which is carried out through a Tuas Power’s subsidiary. According to EMA, for each of the past five years ended December 31, 2009, the average annual pool price per MWh of the NEMS was S$109.90, S$132.42, S$124.57, S$162.53, and S$109.90, respectively.  Tuas Power sells all its electricity output into th e NEMS, but the actual settlement tariffs deviate from the pool prices due to the effect of vesting contracts and retail sales. For the period from January 1, 2009 to December 31, 2009, power sold through vesting contracts and retail sales represented approximately 88% of Tuas Power's total power sold for the same period.

Fuel supply arrangements

In 2009, the majority of our power plants were fueled by coal, gas or oil.

Coal

Most of the coal supply for our coal-fired power plants is obtained from numerous coal producers in Shanxi Province.

In recent years, as part of its efforts to make a transition from a comprehensive planned economy to a "socialist market economy", the PRC has experimented with a variety of methods of setting coal prices. In 1996, the government allowed coal prices to fluctuate within a range around a reference price for coal allocated under the State Plan to be used in electricity generation, and set maximum allowable prices in various coal-producing areas for coal used in electricity generation.

From 2002 to 2003, there was no longer official State Plan for coal supplies, but the government continued to coordinate the coal prices at the annual national coal purchase conferences attended by, among others, representatives of each of power companies, coal suppliers, and the railway authorities and sponsored

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and coordinated by NDRC. Power companies obtain allocations for coal on a plant-by-plant basis. Each of the power plants then signs supply contracts with the coal suppliers, and with the railway and shipping companies for the amount of coal and transportation allocated to them. From 2004 to 2008, although such annual coal purchase conferences continue to be held, only key contracts are negotiated and executed at such conferences. Starting from 2009, in furtherance of the coal purchase reform, NDRC ceased to coordinate annual coal purchase conference and took measures to reduce government’s involvement in the coal supply negotiation. NDRC will no longer make allocation of coal supply to power companies, but instead will consolidate and publish overall framework for the coal demand and supply. The price and amount of coal suppl y will be determined based on the free negotiation between power companies, coal suppliers, and the railway authorities.

In 2005, coal price increased by a substantial amount compared to the same period in 2004. We purchased 68.08 million tons of coal and consumed 66.03 million tons of coal. Of our total coal purchases, 55% was purchased under the key contracts and medium and long-term agreements, and the remainder was purchased in the open market.  The coal purchase price for our company, including transportation costs and miscellaneous expenses, averaged approximately RMB338.03 per ton.

In 2006, the national supply and demand of coal reached equilibrium. We purchased 67.76 million tons of coal and consumed 68.83 million tons of coal. Of our total coal purchases, 62% was purchased under the key contracts, and the remainder was purchased in the open market. The coal purchase price for our company, including transportation costs and miscellaneous expenses, averaged approximately RMB343.73 per ton.

In 2007, the power generating companies and coal suppliers were permitted to negotiate coal price and execute coal purchase contracts. The government will take temporary interventional measures to regulate coal price only in exceptional circumstances. In 2007, we purchased 76.72 million tons of coal and consumed 77.20 million tons of coal. Of the coal purchases in 2007, 63.3% was purchased under the key contracts and the remainder was purchased in the open market. The coal purchase price for our company, including transportation costs and miscellaneous expenses, averaged approximately RMB417.77 per ton.

In 2008, the average of coal price increased significantly, which adversely affected our results of operations.  In 2008, we purchased 88.2 million tons of coal and consumed 85.15 million tons of coal. Of the coal purchases in 2008, 55.4% was purchased under the key contracts and the remainder was purchased in the open market. The coal purchase price for our company, including transportation costs and miscellaneous expenses, averaged approximately RMB584.94 per ton.  Our average unit fuel cost in 2008 increased by 46.54% from that in 2007. In 2008, we managed to secure the coal supply by enhancing the coordination between purchase and transportation to stabilize the main supply channel and exploring coal supply resources outside China.

In 2009, the average of coal price decreased significantly. In 2009, we purchased 85.92 million tons of coal and consumed 89.07 million tons of coal. Of the coal purchased in 2009, 56.7% was purchased under the key contracts and the remainder was purchased in the open market. The coal purchase price for our company, including transportation costs and miscellaneous expenses, averaged approximately RMB525.14 per ton. Our average unit fuel cost in 2009 decreased by 13.50% from that in 2008. In 2009, we managed to secure coal supply by expanding our coal import from coal supply resources outside China, which also attributed to a decrease in our average unit fuel cost in 2009.

We strive to reduce our fuel costs in a number of ways, including seeking to purchase high quality coal at competitive prices directly from coal mines or coal shipment terminals, improving coal storage management and inspection and demanding compensation from suppliers for failure to deliver coal of the specified quantity and quality in accordance with the relevant purchase arrangements. We have also started to experiment in some of our power plants with a method of mixing different types of coal as a measure of cost reduction. In order to address the shortage of coal supplies, we have entered into certain medium and long-term agreements with major coal suppliers to secure stable coal supplies for a term of 3 to 5 years. At the same time, we also increase the percentage of the key c oal supply contracts with coal suppliers, the coal purchase price of which is typically lower than the purchase price on open market. Through these measures, we seek to further strengthen the stable coal supplies for our power plants.

We have secured our coal supply for 2010 by entering into key contracts with coal suppliers. We have also entered into coal import contracts to supplement the coal supply for our power plants located in coastal regions, which is expected to further stabilize our fuel cost. However, due to the uncertainties in the coal market and coal transportation capacity, new challenges may arise with respect to the price and supply of coal, thus creating pressure on our cost control.

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Gas

Huaneng Shanghai Combined Cycle Gas Turbine Power Plant ("Shanghai CCGT") is a gas-fired power plant. The gas supply for Shanghai CCGT is transported through the pipeline of "West-East Gas Transport Project ".

Huaneng Jinling Combined Cycle Gas Turbine Power Plant (“Jinling CCGT”) is a gas-fired power plant. The gas supply for Jinling CCGT is transported through the pipeline of “West-East Gas Transport Project”.

Tuas Power has four 367.5 MW gas-fired combined cycle generating units.  The gas supply for Tuas Power is provided by Gas Supply Pte Ltd and Sembcorp Pte Ltd.

Oil

Tuas Power has two 600 MW oil-fired steam generating units.  The oil supply for Tuas Power is purchased from open market.

Repairs and maintenance

Each of our power plants has a timetable for routine maintenance, regular inspections and repairs.  Such timetables and the procedures for the repairs and maintenance of generating units comply with the relevant regulations promulgated by the former Ministry of Electricity Power.

Pursuant to our procedures, generating units are currently operating on a cycle of four to six years.  In each cycle, there are four different levels of maintenance:

(i)	regular checks and routine maintenance are carried out throughout the period during which generating unit is in operation;
(ii)	a small-scale servicing is performed every year, which takes approximately 20 days;
(iii)	a medium-scale check-up is carried out between the two overhauls, the length of which depends on the actual condition of the generating unit at the time of the check-up and the inspections and improvements to be carried out; and
(iv)	a full-scale overhaul is conducted at the end of each operating cycle, which takes approximately 60 days.

C. Organizational structure

We are 42.03% owned by HIPDC, which in turn is a subsidiary of Huaneng Group. Huaneng Group was established in 1988 with the approval of the State Council. Huaneng Group also holds an 8.92% equity interest in us either directly or through its wholly-owned subsidiary.  In 2002, Huaneng Group was restructured as one of the five independent power generation group companies to take over the power generation assets originally belonging to the State Power Corporation of China.  Huaneng Group has a registered capital of RMB20 billion and is controlled and managed by the central government.  Huaneng Group is principally engaged in the development, investment, construction, management and operation of energy related projects as well as the production and sale of electricity.  In addition to this core business, Huaneng Group also engages in the development, investment, construction, production and sale of projects and products in the information, transportation, new energy source and environmental industries.

HIPDC was established in 1985 as a joint venture with 51.98% of its equity interests currently owned by Huaneng Group. HIPDC is engaged in developing, investing, operating and constructing power plants in China.  Some of the power plants currently owned and operated by us were originally built and later transferred to us by HIPDC.  Both Huaneng Group and HIPDC have agreed to give us preferential rights in the power development business and power assets transfers.

The following organizational chart sets forth the organizational structure of HIPDC and us as of March 31, 2010:

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Notes:	(1)	Huaneng Group indirectly holds 100% equity interests in Pro-Power Investment Limited through its wholly-owned subsidiary, China Hua Neng Hong Kong Company Limited, and Pro-Power Investment Limited in turn holds 5% equity interests in HIPDC. As a result, Huaneng Group indirectly holds additional 5% equity interests in HIPDC.
	(2)	Of the 8.92% equity interest, 8.75% was directly held by Huaneng Group, and the remaining 0.17% was held by Huaneng Group through its wholly-owned subsidiary, China Hua Neng Hong Kong Company Limited.

For a detailed discussion of the Company’s subsidiaries, see Note 9 to the Financial Statements.

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D. Property, plants and equipment

The following table presents certain summary information on our power plants as of March 31, 2010.

Plant or Expansion		Province/ Municipality	Actual In-service Date	Current Installed Capacity	Ownership	Attributable Capacity	Type of Fuel
(Names as defined below)				(MW)	%	MW
Dalian	Phase I	Liaoning	Unit I: Sep. 1988	2 x 350	100%	700	Coal
			Unit II: Dec. 1988
	Phase II		Unit III: Jan. 1999	2 x 350	100%	700	Coal
			Unit IV: Jan. 1999
Dandong		Liaoning	Unit I: Jan. 1999	2 x 350	100%	700	Coal
			Unit II: Jan. 1999
Yingkou	Phase I	Liaoning	Unit I: Jan. 1996	2 x 320	100%	640	Coal
			Unit II: Dec. 1996
	Phase II		Unit III: Aug. 2007	2 x 600	100%	1,200	Coal
			Unit IV: Oct. 2007
Yingkou Co-generation		Liaoning	Unit I: Dec. 2009	2 x 330	100%	660	Coal
			Unit II: Dec. 2009
Fuzhou	Phase I	Fujian	Unit I: Sep. 1988	2 x 350	100%	700	Coal
			Unit II: Dec. 1988
	Phase II		Unit III: Oct. 1999	2 x 350	100%	700	Coal
			Unit IV: Oct. 1999
Shang’an	Phase I	Hebei	Unit I: Aug. 1990	2 x 350	100%	700	Coal
			Unit II: Dec. 1990
	Phase II		Unit III: Oct. 1997	2 x 300	100%	600	Coal
			Unit IV: Oct. 1997
	Phase III		Unit V: Jul 2008	2 x 600	100%	1,200	Coal
			Unit VI: Aug 2008
Nantong	Phase I	Jiangsu	Unit I: Sep. 1989	2 x 352	100%	704	Coal
			Unit II: Mar. 1990
	Phase II		Unit III: Jul. 1999	2 x 350	100%	700	Coal
			Unit IV: Oct. 1999
Nanjing		Jiangsu	Unit I: Mar. 1994	2 x 320	100%	640	Coal
			Unit II: Oct. 1994
Taicang	Phase I	Jiangsu	Unit I: Dec. 1999	2 x 320	75%	480	Coal
			Unit II: Apr. 2000
	Phase II		Unit III: Jan. 2006	2 x 630	75%	945	Coal
			Unit IV: Feb. 2006
Huaiyin (1)	Phase II	Jiangsu	Unit III: Jan. 2005	2 x 330	63.64%	420	Coal
			Unit IV: Mar. 2005
	Phase III		Unit V: May 2006	2 x 330	63.64%	420	Coal
			Unit VI: Sep. 2006
Jinling	CCGT	Jiangsu	Unit I: Dec. 2006	2 x 390	60%	468	Gas
			Unit II: Mar. 2007
	Coal-fired		Unit III: Dec. 2009	1,030	60%	618	Coal
Qidong		Jiangsu	Unit I - Unit LXI	91.5	65%	59.5	Wind
Shidongkou I(2)		Shanghai	Unit I: Feb. 1988	4 x 325	100%	1,300	Coal
			Unit II: Dec. 1988
			Unit III: Sep. 1989
			Unit IV: May 1990
Shidongkou II		Shanghai	Unit I: Jun. 1992	2 x 600	100%	1,200	Coal
			Unit II: Dec. 1992
Shanghai CCGT		Shanghai	Unit I: May 2006	3 x 390	70%	819	Gas
			Unit II: Jun. 2006
			Unit III: Jul. 2006
Shantou	Phase I	Guangdong	Unit I: Jan. 1997	2 x 300	100%	600	Coal
			Unit II: Jan. 1997
	Phase II		Unit III: Oct. 2005	1 x 600	100%	600	Coal

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Plant or Expansion		Province/ Municipality	Actual In-service Date	Current Installed Capacity	Ownership	Attributable Capacity	Type of Fuel
(Names as defined below)				(MW)	%	MW
Haimen		Guangdong	Unit I: Jul. 2009	2 x 1,036	100%	2,072	Coal
			Unit II: Oct. 2009
Dezhou(3)	Phase I	Shandong	Units I: 1992	1 x 330	100%	330	Coal
			Unit II: 1992	1 x 320	100%	320	Coal
	Phase II		Units III: Jun. 1994	1 x 300	100%	300	Coal
			Unit IV: May 1995	1 x 320	100%	320	Coal
	Phase III		Units V: Jun. 2002	2 x 700	100%	1,400	Coal
			Unit VI: Oct 2002
Jining(4)	Coal-fired	Shandong	Unit V: Jul. 2003	2 x 135	100%	270	Coal
			Unit VI: Aug. 2003
	Co-generation		Unit I: Nov. 2009	2 x 350	100%	700	Coal
			Unit II: Dec. 2009
Weihai(5)	Phase II	Shandong	Units III: Mar. 1998	2 x 320	60%	384	Coal
			Unit IV: Nov. 1998
Xindian(6)	Phase III	Shandong	Unit V: Sep 2006	2 x 300	95%	570	Coal
			Unit VI: Nov. 2006
Rizhao	Phase I	Shandong	Unit I: Apr. 2000	2 x 350	44%	308	Coal
			Unit II: Apr. 2000
	Phase II		Unit III: Dec 2008	2 x 680	100%	1,360	Coal
			Unit IV: Dec 2008
Changxing		Zhejiang	Unit I: Jan. 1992	1 x 135	100%	260	Coal
			Unit II: Aug. 1992	1 x 125
Yuhuan	Phase I	Zhejiang	Unit I: Nov. 2006	2 x 1,000	100%	2,000	Coal
			Unit II: Dec. 2006
	Phase II		Unit III: Nov. 2007	2 x 1,000	100%	2,000	Coal
			Unit IV: Nov. 2007
Yushe	Phase I	Shanxi	Unit I: Jun. 1994	2 x 100	60%	120	Coal
			Unit III: Dec 1994
	Phase II		Unit IV: Oct. 2004	2 x 300	60%	360	Coal
			Unit II: Nov. 2004
Qinbei	Phase I	Henan	Unit I: Nov. 2004	2 x 600	60%	720	Coal
			Unit II: Dec. 2004
	Phase II		Unit III: Nov. 2007	2 x 600	60%	720	Coal
			Unit IV: Nov. 2007
Jinggangshan	Phase I	Jiangxi	Unit I: Dec. 2000	2 x 300	100%	600	Coal
			Unit II: Aug. 2001
	Phase II		Unit III: Nov. 2009	2 x 660	100%	1,320	Coal
			Unit IV: Dec. 2009
Yueyang	Phase I	Hunan	Unit I: Sep. 1991	2 x 362.5	55%	398.75	Coal
			Unit II: Dec. 1991
	Phase II		Unit III: Mar. 2006	2 x 300	55%	330	Coal
			Unite IV: May 2006
Luohuang	Phase I	Chongqing	Unit I: Sep. 1991	2 x 360	60%	432	Coal
			Unit II: Feb. 1992
	Phase II		Unit III: Dec. 1998	2 x 360	60%	432	Coal
			Unit IV: Dec. 1998
	Phase III		Unit V: Dec. 2006	2 x 600	60%	720	Coal
			Unit VI: Jan. 2007
Pingliang(7)		Gansu	Unit I: Sep. 2000	3 x 325	65%	633.75	Coal
			Unit II: Jun. 2001
			Unit III: Jun. 2003
			Unit IV: Nov. 2003	1 x 300	65%	195	Coal
			Unit V: Feb. 2010	2 x 600	65%	780	Coal
			Unit VI: March 2010
Huade		Inner Mongolia	Unit I – Unit XXXIII	49.5	99%	49	Wind

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Plant or Expansion		Province/ Municipality	Actual In-service Date	Current Installed Capacity	Ownership	Attributable Capacity	Type of Fuel
(Names as defined below)				(MW)	%	MW
Beijing Co-generation		Beijing	Unit I: Jan. 1998	2 x 165	41%	135.3	Coal
			Unit II: Jan. 1998
			Unit III: Dec. 1998	2 x 220	41%	180.4	Coal
			Unit IV: Jun. 1999
			Unit V: Apr. 2004	75	41%	30.75	Coal
Yangliuqing Co-generation		Tianjin	Unit I: Dec. 1998	4 x 300	55%	660	Coal
			Unit II: Sep. 1999
			Unit III: Dec. 2006
			Unit IV: May 2007
Tuas	Phase I	Singapore	Unit I: Mar. 1999	2 x 600	100%	1,200	Oil
			Unit II: Dec 1999
	Phase II		Unit III: Nov 2001	4 x 367.5	100%	1,470	Natural Gas
			Unit IV: Jan 2002
			Unit V: Feb 2005
			Unit VI: Sep 2005

Notes:

(1)	The Unit II of Huaiyin was shut down in January 2009.
(2)	The installed capacities of Unit I and Unit IV of Shidongkou I were expanded to 325 MW in January 2009.
(3)	The installed capacity of Unit IV of Dezhou was expanded to 320 MW in January 2009.
(4)	The Unit IV of Jining was shut down in June 2009.
(5)	The installed capacities of Unit III and Unit IV of Weihai were expanded to 320 MW in January 2009.
(6)	The Unit III and Unit IV of Xindian was shut down in September 2009.
(7)	The installed capacities of Unit I, Unit II and Unit III of Pingliang were expanded to 325 MW in January 2009.

The following table presents the availability factors and the capacity factors of our coal-fired operating power plants in China for the years ended December 31, 2007, 2008, and 2009.

	Availability factor (%)						Capacity factor (%)
	2007		2008		2009		2007		2008		2009
Dalian		97.31		92.86		92.35		83.39		74.01		68.38
Dandong		96.39		90.35		93.40		80.58		68.45		66.51
Yingkou		95.97		91.19		86.53		73.07		66.42		63.12
Fuzhou		93.80		91.53		95.87		66.34		66.11		69.40
Shang’an		92.42		94.05		92.66		63.36		53.18		53.99
Nantong		92.93		92.45		92.28		67.58		67.53		63.55
Nanjing		92.61		85.57		90.14		65.25		61.70		65.17
Taicang		93.35		89.60		94.11		68.60		65.71		73.17
Huaiyin		93.87		91.89		90.98		55.38		54.84		54.06
Shidongkou I		89.06		89.70		88.04		64.35		60.79		63.81
Shidongkou II		90.58		89.86		93.30		75.70		71.47		63.65
Shantou		88.74		88.13		89.84		70.38		66.60		58.96
Dezhou		92.21		90.62		92.67		56.95		60.24		63.75
Jining		96.08		89.15		85.91		59.48		68.61		68.23
Weihai		96.51		93.58		93.55		54.73		60.96		66.35
Xindian		85.62		92.42		88.69		52.03		45.98		63.65
Changxing		91.18		89.68		92.49		70.37		66.38		69.60
Yushe		94.48		88.04		95.35		81.22		70.45		63.69
Qinbei		96.72		97.51		93.91		64.96		49.87		59.50

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	Availability factor (%)						Capacity factor (%)
	2007		2008		2009		2007		2008		2009
Jinggangshan		91.67		92.12		87.88		67.10		60.76		54.45
Yueyang		93.24		86.64		92.07		58.14		51.69		45.01
Luohuang		91.30		89.28		91.17		49.62		49.62		50.69
Pingliang		94.97		92.41		93.46		77.15		68.31		48.30
Yuhuan		94.23		90.32		91.03		60.05		55.33		56.83
Rizhao II		-		8.41		91.51		-		69.14		61.33
Beijing		-		-		94.80		-		-		59.37
Yangliuqing		-		-		93.99		-		-		57.14
Haimen		-		-		99.57		-		-		56.53

The details of our operating power plants and construction projects as of March 31, 2010 are described below.

Power Plants in Liaoning Province

Huaneng Dalian Power Plant ("Dalian Power Plant") is located on the outskirts of Dalian, on the coast of Bohai Bay.  Dalian Power Plant, including Phase I and Phase II, has an installed capacity of 1,400 MW and consists of four 350 MW coal-fired generating units which commenced commercial operations in 1988 and 1999 respectively.

The coal supply for Dalian Power Plant is obtained from several coal producers located mostly in Northern Shanxi Province.  The coal is transported by rail from the mines to Qinhuangdao port and shipped by special 27,000 ton automatic unloading ships to the wharf at the Dalian Power Plant.  The wharf is owned and maintained by the Dalian Port Authority and is capable of handling 30,000 ton vessels. Dalian Power Plant typically stores 200,000 tons of coal on site.

In 2009, Dalian Power Plant obtained 54% of its total consumption of coal pursuant to the key contracts and the remainder in the open market.  The weighted average cost of coal for Dalian Power Plant in 2009 was RMB554.02 (2008: RMB644.20) per ton.

Dalian Power Plant sells its electricity to Liaoning Electric Power Company.

Huaneng Dandong Power Plant ("Dandong Power Plant") is located on the outskirts of the city of Dandong in Liaoning. Dandong Power Plant had originally been developed by HIPDC which, pursuant to the Reorganization Agreement, transferred all its rights and interests therein to us effective December 31, 1994.  In March 1997, we began the construction of Dandong Power Plant, which comprises two 350 MW coal-fired generating units.

The coal supply for Dandong Power Plant is obtained from several coal producers in Northern Shanxi Province.  The coal is transported by rail from the mines to Qinhuangdao port and shipped by barge to the Dandong port in Dandong, where it is unloaded and transported to Dandong Power Plant using special coal handling facilities.  The wharf is owned and maintained by Dandong Power Plant and is capable of handling 28,000 ton vessels.  Dandong Power Plant typically stores 220,000 tons of coal on site.

In 2009, Dandong Power Plant obtained 58% of its total consumption of coal pursuant to the key contracts and the remainder in the open market.  The weighted average cost of coal for Dandong Power Plant in 2009 was RMB543.91 (2008: RMB567.64) per ton.

Dandong Power Plant sells its electricity to Liaoning Electric Power Company.

Huaneng Yingkou Power Plant ("Yingkou Power Plant") is located in Yingkou City in Liaoning Province.  Yingkou Power Plant Phase I has an installed capacity of 640 MW and consists of two 320 MW supercritical coal-fired generating units which commenced commercial operations in January and December 1996, respectively. Yingkou Power Plant Phase II has an installed capacity of 1,200MW and consists of two 600 MW coal-fired generating units which commenced operations in August and October 2007, respectively.

The coal supply for Yingkou Power Plant is mainly obtained from Shanxi Province.  In 2009, Yingkou Power Plant obtained 54% of its total consumption of coal pursuant to the key contracts and the remainder in the open market.  The weighted average cost of coal for Yingkou Power Plant in 2009 was RMB503.98(2008: RMB534.56) per ton. Yingkou Power Plant typically stores 400,000 tons of coal on site.

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Yingkou Power Plant sells its electricity to Liaoning Electric Power Company.

Huaneng Yingkou Co-generation Power Plant (“Yingkou Co-generation Power Plant”) is located in Yingkou City in Liaoning Province. Yingkou Co-generation Power Plant has an installed capacity of 660 MW and consists of two 330 MW generating units which commenced operation in December 2009.

The coal supply for Yingkou Co-generation Power Plant is mainly obtained from Inner Mongolia Autonomous Region. Yingkou Co-generation Power Plant typically stores 140,000 tons of coal on site.

Yingkou Co-generation Power Plant sells its electricity to Liaoning Electric Power Company.

Power Plants in Fujian Province

Huaneng Fuzhou Power Plant ("Fuzhou Power Plant") is located on the south bank of the Min River, southeast of the city of Fuzhou. Fuzhou Power Plant, including Phase I and Phase II, has an installed capacity of 1,400 MW and consists of four 350 MW coal-fired generating units which commenced commercial operations in 1988 and 1999, respectively.

The coal supply for Fuzhou Power Plant is obtained from several coal producers located mostly in Northern Shanxi Province.  The coal is transported by rail from the mines to Qinhuangdao port and by ship down to the east coast of China and up to the Min River to a wharf located at Fuzhou Power Plant.  We own and maintain the wharf, which is capable of handling vessels of up to 20,000 tons and of unloading 10,000 tons to 15,000 tons of coal per day.  Fuzhou Power Plant typically stores 180,000 tons of coal on site.

In 2009, the Fuzhou Power Plant obtained 72% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market.  The weighted average cost of coal for Fuzhou Power Plant in 2009 was RMB581.93 (2008: RMB724.65) per ton.

Fuzhou Power Plant sells its electricity to Fujian Electricity Power Company.

Construction Project in Fujian Province

Huaneng Fuzhou Power Plant Phase III (“Fuzhou Power Plant Phase III”) is planned to consist of two 660 MW generating units with a total installed capacity of 1,320 MW. We own 100% of the equity interests in this project.

Power Plants in Hebei Province

Huaneng Shang’an Power Plant ("Shang’an Power Plant") is located on the outskirts of Shijiazhuang. Shang’an Power Plant has been developed in three separate expansion phases. The Shang’an Power Plant Phase I has an installed capacity of 700 MW and consists of two 350 MW coal-fired generating units which commenced commercial operations in 1990. Shang’an Power Plant Phase II shares with the Shang’an Power Plant Phase I certain facilities, such as coal storage facilities and effluence pipes, which have been built to accommodate the requirements of plant expansions.  The Shang’an Power Plant Phase II utilizes two 300 MW coal-fired generating units, which commenced commercial operation in 1997. The Shang’an Power Plant Phase III h as an installed capacity of 1200 MW and consists of two 600 MW supercritical coal-fired generating units which commenced commercial operations in July and August 2008, respectively. Unit 5 of Shang’an Power Plant is the first 600MW supercritical air-cooling unit which commenced operation in the PRC.

The coal supply for Shang’an Power Plant is obtained from numerous coal producers in Central Shanxi Province, which is approximately 64 kilometers from Shang’an Power Plant.  The coal is transported by rail from the mines to the Shang’an Power Plant.  We own and maintain the coal unloading facilities which are capable of unloading 10,000 tons of coal per day.  Shang’an Power Plant typically stores 300,000 tons of coal on site.

In 2009, Shang’an Power Plant obtained 51% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market.  The weighted average cost of coal for Shang’an Power Plant in 2009 was RMB496.76 (2008: RMB464.05) per ton.

Shang’an Power Plant sells its electricity to Hebei Electric Power Company.

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Construction Project in Hebei Province

Huaneng Kangbao Wind Power Plant ("Kangbao Wind Power") is planned to consist of generating units with a total installed capacity of 49.5 MW. We own 100% of the equity interests in this project.

Power Plants in Jiangsu Province

Huaneng Nantong Power Plant ("Nantong Power Plant") is located in the city of Nantong. Nantong Power Plant, including Phase I and Phase II, has an installed capacity of 1,404 MW and consists of two 352 MW and two 350 MW coal-fired generating units which commenced commercial operations in 1989, 1990 and 1999, respectively.

The coal supply for Nantong Power Plant is obtained from several coal producers located mostly in Northern Shanxi Province.  The coal is transported by rail from the mines to Qinhuangdao port and then shipped to the Nantong Power Plant. Nantong Power Plant typically stores 300,000 tons of coal on site.

In 2009, Nantong Power Plant obtained 65% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market.  The weighted average cost of coal for Nantong Power Plant in 2009 was RMB543.16 (2008: RMB589.59) per ton.

Nantong Power Plant sells its electricity to Jiangsu Electric Power Company.

Huaneng Nanjing Power Plant ("Nanjing Power Plant") has an installed capacity of 640 MW consisting of two 320 MW coal-fired generating units which commenced commercial operations in March and October 1994, respectively.

The coal supply for the Nanjing Power Plant is obtained from several coal producers located in the Shanxi and Anhui Provinces.  The coal is transported by rail from the mines to Yuxikou Port and Pukou Port and shipped to the plant's own wharf facilities.  The wharf is capable of handling 6,000 ton vessels.  Nanjing Power Plant typically stores 120,000 tons of coal on site and consumes 5,000 tons of coal per day when operating at maximum generating capacity.

In 2009, Nanjing Power Plant obtained approximately 21% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market.  The weighted average cost of coal for Nanjing Power Plant in 2009 was RMB612.56 (2008: RMB623.60) per ton.

Nanjing Power Plant sells its electricity to Jiangsu Electric Power Company.

Huaneng Taicang Power Plant ("Taicang Power Plant") is located in the vicinity of Suzhou, Wuxi and Changzhou, which is the most affluent area in Jiangsu Province. Taicang Power Plant is an ancillary facility of the China-Singapore Suzhou Industrial Park.  Taicang Power Plant Phase I consists of two 300 MW coal-fired generating units, which commenced operation in December 1999 and April 2000 respectively. Taicang Phase II Expansion consists of two 600 MW coal-fired generating units, which commenced operation in January and February 2006, respectively. In April 2008, the installed capacities of the four units of Taicang Power Plant were upgraded to 320 MW, 320 MW, 630 MW and 630 MW, respectively, which increased the total installed capacity of Taicang Power Plant to 1,900 MW .

The coal supply for Taicang Power Plant is primarily from Shenhua in Inner Mongolia and Datong in Shanxi Province. In 2009, Taicang Power Plant obtained approximately 55% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market.  The weighted average cost of coal for Taicang Power Plant in 2009 was RMB561.51 (2008: RMB623.15) per ton. Taicang Power Plant typically stores 350,000 tons of coal on site.

Taicang Power Plant sells its electricity to Jiangsu Electric Power Company.

Huaneng Huaiyin Power Plant ("Huaiyin Power Plant") is located in the Centre of the Northern Jiangsu Power Grid.  The plant's two 220 MW coal-fired generating units commenced operation in November 1993 and August 1994, respectively.  In order to reduce energy consumption and increase capacity, one generating unit of Huaiyin Power Plant was upgraded in October 2001, which increased the maximum generating capacity of that unit to 220 MW.  In 2002, upgrading of the second generating unit was completed, and the actual generating capacity of Huaiyin Power Plant is 440 MW. In December 2007, Unit I of Huaiyin Power Plant was shut down. The other two 330 MW coal-fired generating units of Huaiyin Power Plant Phase II Expansion have commenced commercial operation s in January and March 2005, respectively. Huaiyin Power Plant Phase III consists of two 330 MW coal-fired generating units, and was put into operations in May and September 2006, respectively. In

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December 2008, we acquired an additional 10% equity interest in Huaiyin Power Plant Phase I and increased our interest to 100%.  We hold 63.64% equity interest in Phase II and Phase III of Huaiyin Power Plant. In January 2009, Unit II of Huaiyin Power Plant was shut down.

The coal supply for the Huaiyin Power Plant is primarily from Anhui Province, Henan Province and Shanxi Province. Huaiyin Power Plant typically stores 180,000 tons of coal on site.  In 2009, Huaiyin Power Plant obtained approximately 14% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market.  The weighted average cost of coal for Huaiyin Power Plant in 2009 was RMB596.98 (2008: RMB668.84) per ton.

Huaiyin Power Plant sells its electricity to Jiangsu Electric Power Company.

Huaneng Nanjing Jinling Power Plant (“Jinling Power Plant”) is located in Nanjing, Jiangsu. Jinling Power Plant (CCGT) consists of two 390 MW gas-fired generating units, which commenced operation in December 2006 and March 2007, respectively. Jinling Power Plant (Coal-fired) consists of one 1,030 MW domestic ultra-supercritical coal-fired generating unit, which passed the 168-hour trial run in December 2009. We hold 60% equity interest in Phase I and Phase II of Jinling Power Plant.

The gas supply for Jinling Power Plant (CCGT) is transported through the pipeline of “West-East Gas Transport Project”.  The coal supply for Jinling Power Plant (Coal-fired) is primarily from Shanxi Province and Inner Mongolia Autonomous Region. Jinling Power Plant (Coal-fired) typically stores 300,000 tons of coal on site.

Jinling Power Plant sells its electricity to Jiangsu Electric Power Company.

Huaneng Qidong Wind Power Plant (“Qidong Wind Power Plant”) is located in Nantong City, Jiangsu. Qidong Wind Power Phase I has an installed capacity of 91.5 MW and commenced commercial operation in March 2009. We hold 65% equity interest in Qidong Power Plant. As of December 2009, the installed capacity of Qidong Wind Power Plant attributable to us was 59.5 MW.

Qidong Wind Power Plant sells its electricity to Jiangsu Electric Power Company.

Power Plants in Shanghai Municipality

Huaneng Shanghai Shidongkou First Power Plant ("Shidongkou I") is located in the northern region of the Shanghai Power Grid.  The plant comprises four 325 MW coal-fired generating units, which commenced operation in February and December 1988, September 1989 and May 1990 respectively, and has a total installed capacity of 1,300 MW. The installed capacities of Unit II and Unit III were expanded from 300 MW to 325 MW in September 2007 and January 2008, respectively. The installed capacities of Unit I and Unit V were expanded from 300 MW and 320 MW to 325 MW and 325 MW in January 2010, respectively.

The coal supply for Shidongkou I is primarily from Shanxi Province, Anhui Province and Henan Province. In 2009, Shidongkou I obtained all of its total consumption of coal in the open market. The weighted average cost of coal for Shidongkou I in 2009 was RMB607.50 (2008: RMB763.85) per ton. Shidongkou I Power Plant typically stores 150,000 tons of coal on site.

Shidongkou I sells its electricity to Shanghai Municipal Electric Power Company.

Huaneng Shanghai Shidongkou Second Power Plant ("Shidongkou II") is located in the northern suburbs of Shanghai. Shidongkou II has an installed capacity of 1,200 MW and consists of two 600 MW coal-fired super-critical units which commenced commercial operations in June and December 1992, respectively.

The coal supply for Shidongkou II is obtained from several coal producers located mostly in Northern Shanxi Province. The coal is transported by rail from the mines to Qinhuangdao port or Tianjin port and shipped to the plant's own wharf facilities.  The wharf is capable of handling 35,000 ton vessels. Shidongkou II typically stores 180,000 tons of coal on site.

In 2009, Shidongkou II obtained 74% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market.  The weighted average cost of coal for Shidongkou II in 2009 was RMB562.44 (2008: RMB573.63) per ton.

Shidongkou II sells its electricity to Shanghai Municipal Electric Power Company.

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Huaneng Shanghai Combined Cycle Gas Turbine Power Plant (“Shanghai CCGT”) is located in Baoshan District of Shanghai Municipality. Shanghai CCGT consists of three 390 MW gas-fired combined-cycle generating units with a total installed capacity of 1,170 MW, which were put into operation in May, June and July 2006, respectively.

The gas supply for Shanghai CCGT is transported through the pipeline of “West-East Gas Transport Project”. Shanghai CCGT generates electricity during the peak load periods and sells its electricity to Shanghai Municipal Electric Power Company.

Power Plants in Guangdong Province

Huaneng Shantou Coal-Fired Power Plant ("Shantou Power Plant") had originally been developed and constructed by HIPDC which transferred all its rights and interests therein to us effective on December 31, 1994. Located on the outskirts of the city of Shantou, Shantou Power Plant was set up with the support of the Shantou municipal government and the Guangdong provincial government. Shantou Power Plant Phase I consists of two 300 MW coal-fired generating units with boilers, which commenced commercial operation in January 1997. Shantou Power Plant Phase II consists of one 600 MW coal-fired generating unit and commenced operation in October 2005.

The coal supply for Shantou Power Plant is obtained from several coal producers located mostly in the northern area of Shanxi Province. The coal is transported by rail from the mines to Qinhuangdao port and by ship down the east coast of China to the wharf located at Shantou Power Plant, which is maintained by the Shantou Port Authority and is capable of handling 35,000 ton vessels. The Shantou Power Plant typically stores 300,000 tons of coal on site.

In 2009, the Shantou Power Plant obtained 48% of its total consumption of coal pursuant to the key contracts and the remainder was purchased in the open market. The weighted average costs of coal for Shantou Power Plant in 2009 was RMB583.26 (2008: RMB637.95) per ton.

Shantou Power Plant sells its electricity to Guangdong Electric Power Company.

Huaneng Haimen Power Plant (“Haimen Power Plant”) is located in Shantou City, Guangdong Province. Haimen Power Plant has an installed capacity of 2,072 MW and consists of two 1,036 MW generating units which commenced operation in July 2009 and October 2009, respectively.

The coal supply for Haimen Power Plant is mainly imported from Indonesia. In 2009, Haimen Power Plant obtained 69% of its total consumption of coal pursuant to the key contracts (including certain coal import contracts) and the remainders in the open market. The weighted average cost of coal for Haimen Power Plant in 2009 was RMB568.34 per ton. Haimen Power Plant typically stores 400,000 tons of coal on site.

Haimen Power Plant sells its electricity to Guangdong Electric Power Company.

Power Plants in Shandong Province

Huaneng Dezhou Power Plant ("Dezhou Power Plant") is located in Dezhou City, near the border between Shandong and Hebei Provinces, close to an industrial zone that is an important user of electric power for industrial and commercial purposes.

Dezhou Power Plant comprises of three phases, with Phase I consisting of one 320MW and one 330MW coal-fired generating units, Phase II consisting of two 300 MW coal-fired generating units, and Phase III consisting of two 700 MW coal-fired generating units. The installed capacity of Unit IV was upgraded from 300 MW to 320 MW in January 2009.

Dezhou Power Plant is approximately 200 km from Taiyuan, Shanxi Province, the source of the plant's coal supply.  The plant is located on the Taiyuan-Shijiazhuang-Dezhou rail line, giving it access to transportation facilities for coal. In 2009, Dezhou Power Plant obtained approximately 97% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market. The weighted average cost of coal for Dezhou Power Plant in 2009 was RMB478.22 (2008: RMB399.02) per ton. The plant is connected to the main trunk rail line at Dezhou by a dedicated 3.5 km spur line owned by us. Dezhou Power Plant typically stores 400,000 tons of coal on site.

Dezhou Power Plant sells its electricity to Shandong Electric Power Company.

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Huaneng Jining Power Plant ("Jining Power Plant") is located in Jining City, near the Jining load centre and near numerous coal mines. Yanzhou coal mine, which is adjacent to the plant, alone has annual production of approximately 20 million tons. Jining Power Plant typically stores 100,000 tons of coal on site.

Jining Power Plant facilities have undergone replacement, renovation and construction as necessary. Jining Power Plant has higher rates of auxiliary power and coal consumption than many larger and newer plants. In 2006, Units I and II of Jining Power Plant with a total capacity of 100 MW were shut down. In 2007 Unit III of Jining Power Plant with the capacity of 115 MW was shut down. In June 2009, Unit IV of Jining Power Plant with the capacity of 110 MW was shut down. As a result, Jining Power Plant currently consists of two coal-fired generating units, with an aggregate installed capacity of 270 MW. In addition, Jining Power Plant (Co-generation) has an installed capacity of 700 MW and consists of two 350 MW generating units which commenced operation in November and December 2009, respectively.

In 2009, Jining Power Plant obtained approximately 66% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market.  The weighted average cost of coal for Jining Power Plant in 2009 was RMB520.22 (2008: RMB482.39) per ton.

Jining Power Plant sells its electricity to Shandong Electric Power Company.

Huaneng Weihai Power Plant ("Weihai Power Plant") is located approximately 16 km southeast of Weihai City, on the shore of the Bohai Gulf.  Its location provides access to cooling water for operations and transportation of coal as well as ash and slag disposal facilities. We hold a 60% interest in Weihai Power Plant, the remaining 40% interest of which is owned by Weihai Power Development Bureau ("WPDB").

Weihai Power Plant Phase I consists of two 125 MW generating units (Units I and II), and Phase II consists of two 320 MW generating units (Units III and IV). Unit I began commercial operation in May 1994 and was shut down in December 2008, and Unit II began commercial operation in January 1995 and was shut down in November 2008. Unit III and Unit IV commenced commercial operation in March and November 1998, respectively. Each of the Units III and IV was upgraded from 300 MW to 320 MW in January 2009.

In 2009, Weihai Power Plant obtained approximately 35% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market. The weighted average cost of coal for Weihai Power Plant in 2009 was RMB552.92 (2008: RMB651.39) per ton.  The coal supply for Weihai Power Plant is obtained from Shanxi Province and Inner Mongolia. Weihai Power Plant typically stores 160,000 tons of coal on site.

Weihai Power Plant sells its electricity to Shandong Electric Power Company.

Huaneng Xindian Power Plant ("Xindian Power Plant") is located in Zibo City of Shandong Province. Xindian Power Plant has an installed capacity of 450 MW and consists of two 225 MW coal-fired generating units which commenced commercial operations in December 2001 and January 2002, respectively, and were shut down in September 2009. Xindian Power Plant Phase III Expansion consists of two 300 MW generating units with a total installed capacity of 600 MW, which were put into operation in September and November 2006, respectively.

The coal supply for Xindian Power Plant is obtained from several coal producers located mostly in Shanxi Province. In 2009, Xindian Power Plant obtained 43% of its total consumption of coal pursuant to the key contracts and the remainder in the open market. The weighted average cost of coal for Xindian Power Plant in 2009 was RMB535.90 (2008: RMB537.93) per ton. Xindian Power Plant typically stores 250,000 tons of coal on site.

Xindian Power Plant sells its electricity to Shandong Electric Power Company.

Huaneng Rizhao Power Plant (“Rizhao Power Plant”) is located in Rizhao City of Shandong Province. Rizhao Power Plant currently has an aggregate installed capacity of 2,060 MW. As of December 31, 2009, the installed capacity of Rizhao Power Plant attributable to us was 1,668 MW. Rizhao Power Plant Phase I has an installed capacity of 700 MW and consists of two 350 MW coal-fired generating units which commenced commercial operations both in April, 2000. We acquired an additional 10% equity interests in Phase I of Rizhao Power Plant in July 2008 and increased our interest to 44%.

We hold 100% equity interest in Phase II of Rizhao Power Plant, which commenced commercial operation in December 2008 and consists of two 680 MW supercritical coal-fired generating units.The coal supply for Phase II of Rizhao Power Plant is obtained from Shanxi Province. In 2009, Phase II of Rizhao Power

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Plant obtained 6% of its total consumption of coal pursuant to the key contracts and the remainder in the open market. The weighted average cost of coal for Phase II of Rizhao Power Plant in 2009 was RMB543.70 per ton. Phase II of Rizhao Power Plant typically stores 200,000 tons of coal on site.

Rizhao Power Plant sells its electricity to Shandong Electric Power Company.

Power Plants in Zhejiang Province

Huaneng Changxing Power Plant ("Changxing Power Plant") is located at the intersection of Zhejiang Province, Jiangsu Province and Anhui Province. Changxing Power Plant is a key power plant in northern Zhejiang area.  It has one 125 MW and one 135 MW coal-fired generating units which commence operation in January and August 1992, respectively.

The coal supply for Changxing Power Plant is primarily from Jungar in Inner Mongolia and Xuzhou in Jiangsu Province.  In 2009, Changxing Power Plant obtained approximately 64% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market.  The weighted average cost of coal for Changxing Power Plant in 2009 was RMB543.67 (2008: RMB561.21) per ton. Changxing Power Plant typically stores 80,000 tons of coal on site.

Changxing Power Plant sells its electricity to Zhejiang Electric Power Company.

Huaneng Yuhuan Power Plant (“Yuhuan Power Plant”) is located in Taizhou of Zhejiang Province. Yuhuan Power Plant Phase I consists of two 1,000 MW ultra-supercritical coal-fired generating units with a total installed capacity of 2,000 MW. Unit I and Unit II were put into operations in November 2006 and December 2006, respectively.  Yuhuan Power Plant Phase II consists of two 1,000 MW ultra-supercritical coal-fired generating units with a total installed capacity of 2,000 MW, which commenced operations in November 2007.

The coal supply for Yuhuan Power Plant is primarily obtained from Shanxi Province and Inner Mongolia Autonomous Region. In 2009, Yuhuan Power Plant obtained approximately 78% of its total consumption of coal pursuant to the key contracts and the remainder was obtained in the open market. The weighted average cost of coal for Yuhuan Power Plant in 2009 was RMB547.33 (2008: RMB646.91) per ton. Yuhuan Power Plant typically stores 500,000 tons of coal on site.

Yuhuan Power Plant sells its electricity to Zhejiang Electric Power Company.

Power Plant in Shanxi Province

Huaneng Yushe Power Plant ("Yushe Power Plant") is located in Yushe County of Shanxi Province.  Yushe Power Plant Phase I has an installed capacity of 200 MW and consists of two 100 MW coal-fired generating units which commenced commercial operations in August and December 1994, respectively.

Two 300 MW coal-fired generating units of Yushe Power Plant Phase II commenced commercial operations in November and December 2004, respectively.

The coal supply for Yushe Power Plant is obtained from several coal producers located mostly in Shanxi Province. In 2009, Yushe Power Plant obtained approximately 93% of its total consumption of coal from the key contracts and the remainder was obtained in the open market. The weighted average cost of coal for Yushe Power Plant in 2009 was RMB415.94 (2008: RMB410.11) per ton. Yushe Power Plant typically stores 500,000 tons of coal on site.

Yushe Power Plant sells its electricity to Shanxi Electric Power Company.

Power Plant in Henan Province

Huaneng Qinbei Power Plant (“Qinbei Power Plant”) is located in Jiyuan City of Henan Province. Its installed capacity is 2,400 MW which consists of four 600 MW supercritical coal-fired generating units. Two units commenced commercial operations in November and December 2004, and the other two units commenced commercial operation in November 2007.

The coal supply for Qinbei Power Plant is obtained from Shanxi Province.  In 2009, Qinbei Power Plant obtained 7% of its total consumption of coal pursuant to the key contracts and the remainder was obtained

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in the open market. The weighted average cost of coal for Qinbei Power Plant in 2009 was RMB543.48 (2008: RMB522.81) per ton. Qinbei Power Plant typically stores 270,000 tons of coal on site.

Qinbei Power Plant sells its electricity to Henan Electric Power Company.

Power Plants in Jiangxi Province

Huaneng Jinggangshan Power Plant ("Jinggangshan Power Plant") is located in Ji’an City of Jiangxi Province. Jinggangshan Power Plant has an installed capacity of 1,920 MW and consists of two 300 MW coal-fired generating units which commenced commercial operation in December 2000 and August 2001 respectively, and two 660 MW generating units which commenced commercial operation in November and December 2009, respectively.

The coal supply for Jinggangshan Power Plant is obtained from Henan Province, Anhui Province and Jiangxi Province. In 2009, Jinggangshan Power Plant obtained 65% of its total coal consumption pursuant to the key contracts and the remainder in the open market. The weighted average cost of coal for Jinggangshan Power Plant in 2009 was RMB595.72 (2008: RMB514.14) per ton. Jinggangshan Power Plant typically stores 255,000 tons of coal on site.

Jinggangshan Power Plant sells its electricity to Jiangxi Electric Power Company.

Power Plant in Hunan Province

Huaneng Yueyang Power Plant ("Yueyang Power Plant") is located in Yueyang City of Hunan Province.  Yueyang Power Plant Phase I has an installed capacity of 725 MW and consists of two 362.5 MW sub-critical coal-fired generating units which commenced commercial operation in September and December 1991 respectively. Yueyang Power Plant Phase II consists of two 300MW coal-fired generating units with installed capacity of 600 MW, which were put into operation in March and May 2006, respectively.

The coal supply for Yueyang Power Plant is obtained from Datong in Shanxi Province. In 2009, Yueyang Power Plant obtained 59% of its total consumption of coal pursuant to the key contracts and the remainder in the open market. The weighted average cost of coal for Yueyang Power Plant in 2009 was RMB559.28 (2008: RMB531.71) per ton. Yueyang Power Plant typically stores 500,000 tons of coal on site.

Yueyang Power Plant sells its electricity to Hunan Electric Power Company.

Construction Project in Hunan Province

Huaneng Yongzhou Xiangqi Hydropower Station (“Yongzhou Xiangqi Hydropower Station”) is planned to consist of four 20 MW hydraulic generating units with a total installed capacity of 80 MW. We own 100% equity interest in this project.

Huaneng Yueyang Power Plant Phase III (“Yueyang Power Plant Phase III”) is planned to consist of two 600 MW generating units with a total installed capacity of 1200 MW. We own 55% equity interest in this project.

Power Plant in Chongqing Municipality

Huaneng Luohuang Power Plant ("Luohuang Power Plant") is located in Chongqing Municipality.  Each of Phase I and Phase II of Luohuang Power Plant has an installed capacity of 720 MW and consists of two 360 MW coal-fired generating units.  The two units in Phase I commenced commercial operation in September 1991 and February 1992 respectively, and the two units in Phase II commenced commercial operation in December 1998.  Luohuang Power Plant Phase III consist of two 600 MW coal-fired generating units with an installed capacity of 1,200 MW, which were put into operations in December 2006 and January 2007, respectively.

The coal supply for Luohuang Power Plant is obtained from Chongqing Municipality. In 2009, Luohuang Power Plant obtained 40% of its coal supplies from the key contracts and the remainder from the open market. The weighted average cost of coal for Luohuang Power Plant in 2009 was RMB397.16 (2008: RMB368.94) per ton. Luohuang Power Plant typically stores 450,000 tons of coal on site.

Luohuang Power Plant sells its electricity to Chongqing Municipal Electric Power Company.

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Power Plants in Gansu Province

Huaneng Pingliang Power Plant ("Pingliang Power Plant") is located in Pingliang City of Gansu Province. Pingliang Power Plant consists of three 325 MW and one 300 MW coal-fired generating units which commenced commercial operation in 2000, 2001 and June and November 2003 respectively. The installed capacity of Unit I, Unit II and Unit III of Pingliang Power Plant were expanded from 300 MW to 325 MW in January 2010, respectively.

Pingliang Power Plant Phase II consists of two 600 MW generating units with a total installed capacity of 1200 MW, which commenced commercial operation in February 2010 and March 2010, respectively.

The coal supply for Pingliang Power Plant is obtained from local coal mines. In 2009, Pingliang Power Plant obtained all of its coal supplies from the key contracts. The weighted average cost of coal for Pingliang Power Plant in 2009 was RMB358.80 (2008: RMB219.74) per ton. Pingliang Power Plant typically stores 230,000 tons of coal on site.

Pingliang Power Plant sells its electricity to Gansu Electric Power Company.

Construction Project in Gansu Province

Huaneng Gansu Ganhekou Wind Power Plant II ("Ganhekou Wind Power Plant II") is planned to consist of generating units with a total installed capacity of 199.5 MW. We own 100% equity interest in this project.

Huaneng Gansu Qiaowan Wind Power Plant II ("Qiaowan Wind Power Plant II") is planned to consist of generating units with a total installed capacity of 201 MW. We own 100% equity interest in this project.

Huaneng Gansu Qiaowan Wind Power Plant III ("Qiaowan Wind Power Plant III") is planned to consist of generating units with a total installed capacity of 101 MW. We own 100% equity interest in this project.

Power Plant in Inner Mongolia Autonomous Region

Huaneng Huade Wind Power Plant (“Huade Wind Power Plant”) is located in Huade, Inner Mongolia Autonomous Region. It has an installed capacity of 49.5 MW and consists of 33 wind power generating units which commenced commercial operation in 2009. We own 99% equity interest in this project.

Huade Wind Power Plant sells its electricity to Inner Mongolia Power (Group) Co., Ltd.

Power Plant in Beijing Municipality

Huaneng Beijing Co-generation Power Plant (“Beijing Co-generation Power Plant”) is located in Beijing Municipality. Beijing Co-generation Power Plant has an installed capacity of 845 MW and consists of two 165 MW generating units, two 220 MW generating units and one 75 MW generating units which commenced commercial operation in January 1998, January 1998, December 1998, June 1999 and April 2004, respectively. We hold 41% equity interest in Beijing Co-generation Power Plant and believe we exercise effective control over Beijing Co-generation Power Plant.

The coal supply for Beijing Co-generation Power Plant is mainly obtained from Inner Mongolia Autonomous Region. In 2009, Beijing Co-generation Power Plant obtained 100% of its total consumption of coal pursuant to the key contracts. The weighted average cost of coal for Beijing Co-generation Power Plant in 2009 was RMB525.06 per ton. Beijing Co-generation Power Plant typically stores 165,000 tons of coal on site.

Beijing Co-generation Power Plant sold its to through North China Electric Power Company in 2009.

Power Plant in Tianjin Municipality

Tianjin Huaneng Yangliuqing Co-generation Power Plant (“Yangliuqing Co-generation Power Plant”) is located in Tianjin Municipality. Yangliuqing Co-generation Power Plant has an installed capacity of 1,200 MW and consists of four 300 MW coal-fired co-generation units which commenced commercial operation in December 1998, September 1999, December 2006 and May 2007, respectively. We hold 55% equity interest in Yangliuqing Co-generation Power Plant.

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The coal supply for Yangliuqing Co-generation Power Plant is mainly obtained from Shanxi Province and Inner Mongolia Autonomous Region. In 2009, Yangliuqing Co-generation Power Plant obtained 39% of its total consumption of coal pursuant to the key contracts and the remainders in the open market. The weighted average cost of coal for Yangliuqing Co-generation Power Plant in 2009 was RMB520.40 per ton. Yangliuqing Co-generation Power Plant typically stores 300,000 tons of coal on site.

Yangliuqing Co-generation Power Plant sold its electricity to North China Electric Company in 2009.

Power Plant in Singapore

Tuas Power is one of the three largest power generating companies in Singapore, which is located at 60 Tuas South Avenue 9 of west coast of Singapore. Its total installed generating capacity is 2,670 MW, representing approximately 26% of the aggregate installed generating capacity of Singapore as of December 31, 2009. Phase I consists of two 600 MW oil-fired steam generating units and commenced commercial operation in 1999. Phase II consists of four units of 367.5 MW Combined Cycle Plants utilizing natural gas. The four units of Phase II commenced commercial operation in 2001, 2002, 2005 and 2005, respectively.

The oil supply of Tuas Power is obtained through auction in the open market. The gas supply is obtained from Gas Supply Pte Ltd and Sembcorp Pte Ltd.

Construction Project in Singapore

Tembusu multi-utilities complex is planned to consist of a co-generation plant, a desalination plant and a wastewater treatment facility, with a total installed capacity of 165 MW. Tuas Power owns 100% equity interest in this project.

Competition and dispatch

All power plants in China are subject to dispatch conducted by various dispatch centres.  A dispatch centre is required to dispatch electricity pursuant to the Regulations on the Administration of Electric Power Dispatch Networks and Grids, issued by the State Council with effect from November 1, 1993, and in accordance with its agreements with power plants subject to its dispatch.  Power generating companies are also required to enter into on-grid dispatch agreements with power grid companies.  As a result, there is competition for favorable dispatch treatment in the PRC electric power industry, especially during the off-peak load periods.  More efficient power plants usually operate at higher output than less efficient power plants. 
60;We believe that in order to increase system stability, large and efficient power plants such as ours will be preferred as base load plants to generate power for the grids to which they connect.  We believe that our dispatch arrangements with the local power corporations and dispatch centres, superior quality equipment, lower coal consumption rate, higher efficiency of plant operation, lower emission levels and larger capacity represent competitive advantages in the markets in which we operate.

A number of foreign power developers and foreign companies (including Hong Kong companies), have been pursuing investment opportunities in the PRC electric power industry, which opportunities include the development of power plants (through joint ventures with PRC partners) or the purchase of interests in existing power plants.  While we believe that we currently possess advantages over such foreign developers because of our extensive experience in the electric power industry of China and our close relationships with the central and local governments, there can be no assurance that we will not experience increased competition in the future.

In addition to competing with other foreign-invested power generating companies for favorable dispatch arrangements, since 2002, we have also been facing competition from four other major power generating groups: China Power Investment Corporation, China Huadian Power Corporation, China Guodian Power Corporation and China Datang Power Corporation, which were created following the break-up of the former State Electric Corporation in 2002.  Although we were not affected by this reform measure as we have developed good working relationship with the dispatch centres and the relevant government departments in the areas where our power plants are located, there can be no assurance that such good working relationship will not be adversely affected as more power generating compani es compete for favorable dispatch treatment.

As power generating companies were separated from power grid companies and more competitors entered into the market, the SERC issued the Interim Measures Regarding Promotion of Openness, Fairness and Equitableness of Power Dispatch, requiring power dispatch centers to treat all competitors indiscriminately in respect of dispatch administration and information disclosure except in cases where safe and stable operation of the electric power system requiring different treatment.

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In 2008, with the purpose of improving energy usage efficiency, the government implemented an electricity optimized-dispatch policy in Henan Province, Sichuan Province, Jiangsu Province, Guangdong Province and Guizhou Province on a pilot basis, and plans to roll out to others if the trial operation is successful. In addition, as of December 31, 2009, in all regions in which we operate power plants, the government’s power administrative departments take differential power generation plan policies to improve the planned useful hours of the environmental protection and energy convention units.

Competition and Dispatch in Singapore

The Singapore power market is highly concentrated, as the three largest power generating companies account for approximately 90% of total generating capacity. Tuas Power competes in the NEMS using its portfolio of gas fired and oil fired generating units. It was able to maintain its market share of approximately 24.3% in the NEMS for 2009. Its major competitors include Senoko Power which is owned by a Japanese/French consortium led by Marubeni Group, PowerSeraya which is owned by YTL Group of Malaysia, SembCorp Cogen and Keppel Merlimau Cogen. Tuas Power’s generating units are relatively new with a track record of steady operation and high reliability. The technical and economic parameters of Tuas Power's units make Tuas Power one of the leaders in Singapore’s power industry.

In the NEMS, power generating companies compete to generate and sell electricity every half-hour by offering their capacity (specifying price/quantity pairs). The EMC, the operator of Singapore’s wholesale electricity market, determines the least-cost dispatch quantities and the corresponding market-clearing or spot prices based on the offers made by power generating companies. The spot prices in the NEMS reflect the least-cost market solution for the dispatch of energy and provision of operating reserves. In general, this means that each power generation company that submitted an offer below the spot price will be dispatched, and a power generation company that submitted an offer above the spot price will not be dispatched. The spot price that power generation companys receive is a nodal price, which may vary according to t heir location on the network. Nodal prices would be higher in areas where higher transmission losses are incurred in getting the electricity to the load facilities.

Environmental regulation

We are subject to the PRC Environmental Protection Law, the regulations of the State Council issued thereunder, the PRC Law on the Prevention and Treatment of Water Pollution, the PRC Law on the Prevention and Treatment of Air Pollution, the Emission Standard of Air Pollutants for Thermal Power Plants (the "New Emission Standards") thereunder and the PRC Law on Ocean Environment Protection (collectively the "National Environmental Laws") and the environmental rules promulgated by the Local Governments in whose jurisdictions our various power plants are located (the "Local Environmental Rules").  According to the National Environmental Laws, the State Environmental Protection Bureau sets national environmental protection standards and local environmental protection bureaus may set stricter local standards. Enterprises are required to comply with the stricter of the two standards.

At present, new projects are subject to the environmental evaluation approval. The project proposal is required to be submitted to the State Environmental Protection Administration (“SEPA”) for approval.

Effective July 1, 2003, all power plants in China became subject to the pollutant discharge levy system, pursuant to which discharge fees are levied based on the actual amount of pollutants discharged. As a result, all of our power plants are now required to pay discharge fees in such manner. Under this new regulation, the discharge fees for sulphur dioxide were increased from RMB0.63 per kilogram in 2006 to RMB1.26 per kilogram in 2009. Discharge fees for nitrous oxide were increased to RMB0.63 per kilogram on July 1, 2004. The discharge fees for the dust have been RMB0.28 per kilogram since July 1, 2003. The discharge fees for waste water were increased gradually. Since 2008, certain provinces have raised the rates of waste disposal fees. In 2007, 2008 and 2009, we paid to the loc al governments total discharge fees of approximately RMB507 million, RMB537 million and RMB431 million, respectively.

According to the New Emission Standards, promulgated by SEPA and State Technology Supervision Administration with effect from January 1, 2004, more restrictive standards to control sulfur dioxide and nitrous oxide emissions are applicable to all thermal power plant projects for which environmental impact study reports are yet to be approved.  These restrictive standards govern both the total sulfur dioxide and nitrous oxide emissions from the power plant and the emission density of each chimney.

In order to meet with the requirement of the New Emission Standards, we have installed flue gas desulphurization (“FGD”) facilities and denitrification facilities with all of our newly constructed generating

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units.  We have also carried out sulfur disposal reform on the existing generating units. As of the end of 2009, we have installed and operated desulphurization facilities on all our existing coal-fired generating units.

In order to reduce fly ash, we use very high-efficiency electrostatic precipitators. Each power plant is also equipped with a waste water treatment facility to treat water used by the power plant before it is released into the river or the sea. We pay discharge fees on the basis of measurements made at discharge points of each plant where waste is released. All of the disposal equipment and facilities for sulfur dioxide, fly ash, waste water and noise in our existing power plants completely satisfy the existing national standard.

We believe we have implemented systems that are adequate to control environmental pollution caused by our facilities. In addition to the measures identified above, each power plant has its own environment protection office and staff responsible for monitoring and operating the environmental protection equipment.  The environmental protection departments of the local governments monitor the level of emissions and base their fee assessments on the results of their tests.

We believe our environmental protection systems and facilities for the power plants are adequate for us to comply with the currently effective national and local environmental protection regulations.  It is expected that the PRC Government will impose additional and stricter regulations to implement the emission plan which would require additional expenditure in compliance with environmental regulations.

Environmental Regulation in Singapore

Tuas Power’s generation operations are mainly subjected mainly to Singapore’s Environmental Protection and Management Act and Environmental Public Health Act. The former sets out requirements pertaining to control of pollution and management of hazardous substance while the latter focuses mainly on proper waste management.

To address the environmental concerns and regulatory requirements, Tuas Power has in place an environmental management system.  All generating units are equipped with pollution control facilities. Stage I steam plants burns low sulfur content fuel oil and employs electro-precipitator to control sulfur dioxide and particulates emission respectively. Stage II combined-cycle plants burns natural gas and are fitted with low-nitrogen oxide burners to control nitrogen oxide emission. Source emission testing is performed annually and the results are submitted to the Pollution Control Department.

Tuas Power has dedicated wastewater treatment plant to treat its oily wastewater and process wastewater prior to discharge into the sea. The treatment processes are automated to prevent accidental adverse discharge and critical parameters are monitored on a real-time basis. Trade effluent testing is performed annually and the results are shared with the Pollution Control Department.

Land contamination is prevented through well-designed storage and containment procedures. Specific areas for storage of waste and hazardous substances are designated within the power plant.

Waste generated in Tuas Power plants is identified and managed accordingly. Waste with residual value, such as waste oil, is resold to licensed collectors for reuse while other waste is disposed through licensed disposal contractors.

Hazardous substances which have potential to cause environmental pollution are controlled within the power plant compound. Operators who handle these chemicals are competent and the storage concept of these substances is designed to prevent and mitigate the impact of any abnormal release. Regular audits are conducted to ensure these hazardous substances are managed properly and the findings and recommendations for improvements are reported to the Pollution Control Department.

Insurance

We currently maintain property all risks insurance and machinery breakdown insurance for all of our power plants, and construction all risks insurance or erection all risks insurance for all of our newly built and expansion projects as well as large-scaled upgrading projects. Our current insurance coverage on our property, plant and equipment (including construction all risk insurance) is maintained with Yongcheng Property and Casualty Insurance Company, and co-insured by PICC Property and Casualty Company Ltd. and China Pacific Property Insurance Co., Ltd., which amounted approximately RMB182 billion. In July 2009, we renewed the liabilities insurance for our directors and officers with a coverage of US$10 million.

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We do not maintain any third party liability insurance to cover claims in respect of bodily injury or property or environment damage arising from accidents on our property or relating to our operation other than the third party additional risk insurance included in construction all risk insurance or erection all risk insurance. We do not usually carry business interruption insurance either, which is not customarily carried by power companies in the PRC. We believe that our insurance coverage is adequate and is standard for the power industry in China.  Please refer to the section entitled “Risk Factors – Risks relating to the Company and the PRC Power Industry – Operating power plants involves many risks and we may not have sufficient insurance coverage to cover the economic losses if any of our power p lant’ s ordinary operation is interrupted.”

Tuas Power purchases key insurance policies at the beginning of each fiscal year. Tuas Power has purchased industrial all risks and business interruption insurance for all of its power plants. The existing insurance coverage is maintained with American Home Assurance Company, First Capital Insurance Ltd, ACE Insurance Ltd and Royal & Sun Alliance Insurance Plc (Singapore Branch). The insured value under this policy is approximately S$2.16 billion with a Business Interruption cover of S$30 million.  The product and public liability policy is currently maintained with Allianz Insurance Company of Singapore Pte Ltd. The policy will indemnify Tuas Power against damages which Tuas Power shall be legally liable to pay arising out of injury and/or damage in connection with its business. The directors and office insurance po licy was purchased from Chubb and American Home Assurance. Tuas Power also purchased a three-year environment liability insurance policy from American Home Assurance.

ITEM 4A Unresolved Staff Comments

None

ITEM 5 Operating and Financial Review and Prospects

A. General

The principal activities of the Company are investment, construction, operation and management of power plants. The Company provides stable and reliable electricity supply to customers through grid operators where the operating plants are located. The Company is committed to scientific development, increasing economic efficiency, enhancing returns for shareholders, conserving resources and protecting the environment.  The Company also attaches importance to social responsibilities and makes active efforts to build a harmonious society.

Since its incorporation, the Company has continued to expand its operating scale, thus increasing its operating revenue.  The Company has also been the industry leader in terms of competitiveness, effectiveness of resources utilization and environmental protection. Currently, the Company is one of the largest listed power producers in China.  Its power generation operations are widely located, covering the Northeast China Grid, the Northern China Grid, the Northwest China Grid, the Eastern China Grid, the Central China Grid, the Southern China Grid and Singapore.

Looking back in 2009, the general recovery of China’s economy and increase in power demand has improved the Company’s operating conditions. With the strong support of the shareholders and concerted efforts of the employees, the Company thoroughly applied the scientific development view, focused on the annual production and operation targets, responded actively to changes in power, coal and capital markets, continued pursuing market expansion, enhanced cost control and capital management with the view to reduce cost and improve efficiency, and achieved the annual target of turning loss into profit. In the meantime, the Company continued to diligently fulfill its social responsibilities to provide sufficient, reliable and clean electric power and achieved new progress in the areas of energy saving, project construction, generating units renovation and environmental protection.

Critical accounting policies

The Company and its subsidiaries have identified the policies below as critical to our business operations and the understanding of our results of operations.  The impact of and any associated risks related to these policies on the business operations are discussed throughout the Operating and Financial Review and Prospects where such policies affect our reported and expected financial results.  For a detailed discussion on the application of these and other accounting policies, see Note 2 to the Financial Statements in Item 17 of this Annual Report on Form 20-F. Note that our preparation of this Annual Report on Form 20-F requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and l iabilities at the date of our financial statements, and the reported amount of revenue and expenses during the reported periods.  There can be no assurance that actual results will not differ from those estimates.

37

Depreciation of property, plant and equipment

Depreciation of property, plant and equipment is provided based on book value less estimated residual value over estimated useful life using straight-line method. For those impaired property, plant and equipment, depreciation is provided based on book value after deducting impairment provision over estimated useful life. The estimated useful lives are as follows:

	2009
Port facilities	20-40 years
Buildings	8-35 years
Electric utility plant in service	5-35 years
Transportation facilities	6-14 years
Others	3-18 years

At the end of each year, the Company and its subsidiaries review the estimated useful life, residual value and the depreciation method of the property, plant and equipment for adjustment when necessary.

Management of the Company decides the estimated useful lives of property, plant and equipment and respective depreciation. The accounting estimate is based on the expected wear and tear incurred during power generation. Wear and tear can be significantly different following renovation each time. When the useful lives differ from the original estimated useful lives, management will adjust the estimated useful lives accordingly. It is possible that the estimates made based on existing experience are different to the actual outcomes within the next financial period and could cause a material adjustment to the depreciation and carrying amount of property, plant and equipment.

Useful life of power generation licence

The Company and its subsidiaries acquired the power generation licence as part of the business combination with Tuas Power Ltd. (“Tuas Power”). The power generation licence is initially recognized at fair value at the acquisition date. It is of indefinite useful life and is not amortized. It is tested annually for impairment and carried at cost less accumulated impairment loss. Useful life of the power generation licence is reviewed by the Company and its subsidiaries each financial period to determine whether events and circumstances continue to support the indefinite useful life assessment. As of year end, management of the Company and its subsidiaries considered the estimated useful life for its power generation licence as indefinite. This estimate is based on the expected renewal of power generation licence without significant restriction and cost, together with the consideration on related future cash flows generated and the expectation of management in continuous operations. Based on existing knowledge, that outcomes within the next financial period that are different from assumptions could require a change on carrying amount of power generation licence.

Impairment of long-lived assets

Goodwill and power generation licence is tested annually for impairment and carried at cost less any accumulated impairment loss. Impairment loss on goodwill is not reversed. Goodwill is allocated to cash-generating units (“CGUs”) according to synergy effect arising from the business combination. The Company and its subsidiaries allocate goodwill to those CGUs based on operating regions.

Property, plant and equipment, intangible assets with definite useful lives and long-term equity investments not accounted for as financial assets are tested for impairment when there is any impairment indication on balance sheet date.  If impairment test result shows that the recoverable amount of asset is less than its book value, that difference is recognized as impairment provision. Recoverable amount is the higher of fair value less cost to sell of the asset and present value of its expected future cash flow. Asset impairment is calculated and recognized on individual asset basis. If it is difficult to estimate recoverable amount for the individual assets, the recoverable amount is determined based on the recoverable amount of the CGU to which asset belongs. CGU is the smallest group of assets that independently gen erates cash flows.

Key assumptions applied in the impairment tests include the expected tariff rates, demands of electricity in specific regions where these power plants are located and fuel cost. Management determined these key assumptions based on past performance and its expectations on market development. If different judgments were applied, estimates could differ significantly.  Actual results could vary materially from these estimates.

Newly adopted accounting policies

The following new standards and amendments to standards are adopted for the first time to the financial year beginning January 1, 2009.

38

o	International Accounting Standards (“IAS”) 1 (revised), ‘Presentation of financial statements’. The revised standard prohibits the presentation of items of income and expenses (i.e. ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity. All ‘non-owner changes in equity’ to be required to be shown in a performance statement.
	Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income).
	The Company and its subsidiaries elected to present one performance statement and these financial statements have been prepared under the revised disclosure requirements. Since the change in accounting policy only impacts presentation, there is no impact on earnings per share.
o	Amendments to IFRS 1 and IAS 27, ‘Cost of an investment in a subsidiary, jointly controlled entity and associate’. The amendment to the part of IAS 27 is relevant to the Company and its subsidiaries. The amendments to IAS 27 remove the definition of cost method and require an entity to record dividend income from its subsidiaries or associates when its rights to receive the dividends are established, i.e. including dividend distributed out of pre-acquisition and post-acquisition retained earnings in the statement of comprehensive income. The Company and its subsidiaries early apply this amendment prospectively from 1 January 2009 in their separate financial statements. These amendments have no material impact on those financial statements in the current year.
o	IFRS 8, ‘Operating segments’. IFRS 8 replaces IAS 14 ‘Segment reporting’ and requires a ‘management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in separation of port operations out of the original PRC geographical segment and included in ‘all other segments’ and Singapore geographical segment is grouped into the PRC geographical segment without port operations as a single ‘power segment’. In addition, the segment information disclosed is based on the information for internal reporting purpose which is under China Accounting Standard for Business Enterprises (“PRC GAAP”).
	Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision makers have been identified as directors and certain senior management of the Company that make strategic decisions.
	IFRS 8 amends certain disclosure items which the Company and its subsidiaries have restated comparative information accordingly.
o	Amendment to IFRS 7, ‘Financial instruments: disclosures’. The amendment enhances the disclosure requirements about fair value measurement and reinforces existing principles for disclosure about liquidity risk. The amendment introduces a three-level hierarchy for fair value measurement disclosures and requires some specific quantitative disclosures for financial instruments on the lowest level in the hierarchy. It also requires the Company and its subsidiaries to provide additional disclosures about the relative reliability of fair value measurements. In addition, the amendment clarifies and enhances the existing requirements for the disclosure of liquidity risk primarily requiring a separate liquidity risk analysis for derivative and non-derivative financial liabilities. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share.
o	The IASB has issued an improvement document in May 2008 and one of the amendments to IFRS 7 required the exclusion of interest income from net financial expenses. The Company and its subsidiaries have separately presented interest income in the consolidated statement of comprehensive income in the current year and restated prior period comparative accordingly. Since the change in accounting policy only impacts presentation, there is no impact on earnings per share.

New accounting pronouncements

For a detailed discussion of new accounting pronouncements, see Note 2(z) to the Financial Statements.

B. Operating results

Our financial statements are prepared under IFRS.  The following management’s discussion and analysis is based on the financial information prepared under IFRS.

39

Year ended December 31, 2009 compared with year ended December 31, 2008

	For the Year Ended December 31
	2009			2008			Increased/ (Decreased)
	RMB’000			RMB’000			%
Operating revenue		76,862,896			67,835,114			13.31
Sales tax		(151,912	)		(106,385	)		42.79
Operating expenses
Fuel		(44,861,375	)		(49,810,275	)		(9.94	)
Maintenance		(2,035,297	)		(1,702,274	)		19.56
Depreciation		(8,572,103	)		(7,718,773	)		11.06
Labor		(3,595,340	)		(3,164,613	)		13.61
Service fees on transmission and transformer facilities of HIPDC transformer  HIPDC		(140,771	)		-			-
Purchase of electricity		(3,639,440	)		(2,726,028	)		33.51
Others		(4,692,955	)		(3,842,992	)		22.12
Total operating expense		(67,537,281	)		(68,964,955	)		(2.07	)
Profit/(Loss) from operations		9,173,703			(1,236,226	)		842.07
Interest income		60,397			83,522			(27.69	)
Financial expenses, net
Interest expense		(4,260,400	)		(4,064,779	)		4.81
Exchange gain and bank charges , net		(48,925	)		356,836			(113.71	)
Total financial expenses, net		(4,309,325	)		(3,707,943	)		16.22
Share of profits of associates		756,164			72,688			940.29
Loss from fair value changes		(33,638	)		(54,658	)		(38.46	)
Investment income		56,675			51,061			10.99
Profit/(Loss) before income tax expense		5,703,976			(4,791,556	)		219.04
Income tax (expense)/benefit		(593,787	)		239,723			347.70
Profit/(Loss) for the year		5,110,189			(4,551,833	)		212.27
Attributable to:
Equity holders of the Company		4,929,544			(3,937,688	)		225.19
Minority interests		180,645			(614,145	)		129.41
		5,110,189			(4,551,833	)		212.27

For the year ended December 31, 2009, the Company’s total power generation on a consolidated basis amounted to 203.520 billion kWh, representing a 10.23% increase from the year ended December 31, 2008. The increase in the Company’s power generation was mainly attributable to the newly acquired power plants and the commencement of new generating units. The Company completed its acquisitions of Huaneng Beijing Co-generation Limited Liability Company, Tianjin Huaneng Yangliuqing Co-generation Limited Liability Company and Huaneng Qidong Wind Power Generation Co., Ltd. in September 2009. The three power generation companies mentioned are consolidated into the financial statements of the Company theresince.

The power generation of the Company’s domestic power plants for the year ended December 31, 2009 was listed below (in billion kWh):

Domestic Power Plant	Power generation in 2009		Power generation in 2008		Change
Dalian		8.386		9.102		-7.87	%
Fuzhou		8.511		8.129		4.70	%
Nantong		7.816		8.329		-6.16	%
Shang’an		11.824		9.299		27.15	%
Shidongkou II		6.691		7.534		-11.19	%
Dezhou		14.910		14.022		6.33	%
Shidongkou I		6.847		6.757		1.33	%
Shantou Coal-fired		6.198		7.020		-11.71	%
Dandong		4.078		4.209		-3.11	%
Nanjing		3.654		3.469		5.33	%
Jining		2.044		2.290		-10.74	%
Changxing		1.585		1.516		4.55	%

40

Weihai	3.720	4.495		-17.24	%
Rizhao Phase II	7.307	-		N/A
Taicang	11.537	10.389		11.05	%
Huaiyin	7.293	7.458		-2.21	%
Yuhuan	19.913	19.442		2.42	%
Xindian	3.345	4.241		-21.13	%
Yushe	4.464	4.951		-9.84	%
Qinbei	12.510	10.514		18.98	%
Luohuang	10.843	11.506		-5.76	%
Shanghai CCGT	0.847	0.598		41.64	%
Yueyang	5.225	6.016		-13.15	%
Yingkou	9.402	10.735		-12.42	%
Yingkou Co-generation	0.123	-		N/A
Jinggangshan	3.194	3.202		-0.25	%
Pingliang	5.077	7.201		-29.50	%
Jinling CCGT	2.273	2.204		3.13	%
Qidong Wind Power	0.153	-		N/A
Haimen	3.349	-		N/A
Beijing Co-generation	4.394	4.998	*	-12.08	%
Yangliuqing Co-generation	6.007	6.793	*	-11.57	%

* Beijing Co-generation and Yangliuqing Cogeneration were newly acquired generation plants by the Company in 2009. The power generation for these two power plants in 2008 included herein is for reference only and is not included in the aggregate power generation of the Company in 2008.

In respect of the tariff, the Company’s average tariff of coal-fired power plants for the year ended December 31, 2009 was RMB412.28 per MWh, increase of RMB28.16 per MWh from the year ended December 31, 2008.

In respect of fuel supply and cost controls, the decrease of coal market price contributed to a decrease in fuel cost of the Company. Compared to the last year, the Company’s unit fuel cost per unit of power sold by coal-fired power plants decreased by 13.73% to RMB214.53 per MWh.

Combining the foregoing factors, the operating revenue of the Company and its subsidiaries for the year ended December 31, 2009 increased 13.31% from last year. For the year ended December 31, 2009, the Company and its subsidiaries recorded a net profit attributable to equity holders of the Company of RMB4.930 billion, representing an increase of 225.19% compared to a net loss attributable to equity holders of the Company of RMB3.938 billion for the year ended December 31, 2008. The profit was primarily due to (i) the new generating units’ commencement of operation, (ii) newly acquired power plants in 2009, (iii) the carryover effect of the acquisition of SinoSing Power in the first half of 2008, (iv) the carryover effect of the adjustment to power tariffs in the second half of 2008, which attributed to an increase in operating revenue and (v) the decrease in fuel purchas e price which attributed to the decrease in fuel cost.

Operating revenue

Operating revenue primarily represents power sale revenue. For the year ended December 31, 2009, the consolidated operating revenue of the Company and its subsidiaries amounted to RMB76.863 billion, representing a 13.31% increase from RMB67.835 billion for the year ended December 31, 2008. The increase in operating revenue was primarily attributable to the new generating units’ commencement of operations and the acquisitions. The operation of new generating units contributed RMB4.841 billion to the increase, and the acquisitions contributed RMB1.326 billion to the increase.

The following table sets forth the average tariff rate of the Company and its subsidiaries, as well as percentage changes from 2008 to 2009.

	Average tariff rate (VAT inclusive) (RMB/MWh)
Power Plant	2008		2009		Change
Coal-fired Power Plants
Dalian		338.05		368.66		9.05	%
Fuzhou		401.22		412.24		2.75	%
Nantong		385.53		401.71		4.20	%
Shang’an		356.52		372.41		4.46	%
Shantou Coal-fired		496.60		525.38		5.80	%
Dandong		340.82		366.30		7.48	%
Shidongkou II		377.04		411.80		9.22	%
Nanjing		375.47		407.58		8.55	%
Dezhou		394.08		418.92		6.30	%
Weihai		422.78		459.90		8.78	%
Jining		378.41		406.10		7.32	%
Shidongkou I		377.35		425.76		12.83	%

41

Taicang I	401.60	412.19	2.64	%
Changxing	450.86	479.71	6.40	%
Huaiyin Phase II	396.80	415.73	4.77	%
Xindian	371.86	N/A	N/A
Yushe	305.07	320.53	5.07	%
Yingkou	360.45	383.58	6.42	%
Jinggangshan	379.99	414.16	8.99	%
Luohuang	344.98	373.42	8.24	%
Yueyang	392.58	434.26	10.62	%
Qinbei	339.85	370.47	9.01	%
Pingliang	238.89	261.02	9.26	%
Yuhuan	444.92	467.54	5.08	%
Taicang II	396.48	398.36	0.47	%
Xindian II	370.99	404.30	8.98	%
Haimen	N/A	497.45	N/A
Rizhao Phase II	N/A	394.24	N/A
Yingkou Co-generation	N/A	375.00	N/A
Beijing Co-generation	467.29	482.42	3.24	%
Yangliuqing Co-generation	389.03	408.12	4.91	%
Other Power Plants
Shanghai CCGT	602.57	629.00	4.39	%
Jinling CCGT	528.73	544.97	3.07	%
Tuas Power	984.53	765.31	-22.27	%
Qidong Wind Power	-	487.70	N/A

Sales tax

Sales tax mainly consists of taxes associated with value-added tax surcharges. According to relevant administrative regulations, these surcharges include City Construction Tax and Education Surcharges calculated at prescribed percentages on the amounts of the value-added tax paid. These surcharges are not applicable to direct foreign investments that have been approved by the government, thus not payable by certain power plants of the Company. For the year ended December 31, 2009, the sales tax amounted to RMB152 million, representing a 42.79% increase from the RMB106 million for the year ended December 31, 2008.

Operating expenses

For the year ended December 31, 2009, the total operating expenses of the Company and its subsidiaries was RMB67.537 billion, representing a 2.07% decrease from RMB68.965 billion for the year ended December 31, 2008.

The decrease was primarily attributable to the decrease in fuel prices. The operation of new generating units contributed RMB3.846 billion to the increase in operating expenses. Excluding the factor attributable to the operation of new generating units, the operating expenses decreased by RMB5.274 billion as compared to the operating expenses for the year ended December 31, 2008.

Fuel

Fuel cost represents the majority of the operating expense for the Company and its subsidiaries. For the year ended December 31, 2009, fuel cost of the Company and its subsidiaries decreased 9.94% to RMB44.861 billion from RMB49.81 billion for the year ended December 31, 2008. The decrease was primarily attributable to the decrease in fuel price. The operation of new generating units accounted for RMB2.921 billion of the increase in fuel cost. Excluding the factor attributable to the operation of new generating units, the fuel cost decreased by RMB7.87 billion as compared to the fuel cost for the year ended December 31, 2008.

For the year ended December 31, 2009, the average price (excluding tax) of natural coal was RMB460.83 per ton, representing a 11.32% decrease from RMB519.66 per ton for the year ended December 31, 2008. Due to the decrease in coal price, the unit fuel cost per unit of power sold by the Company’s coal-fired power plants decreased 13.73% to RMB214.53.

Maintenance

For the year ended December 31, 2009, the maintenance expenses of the Company and its subsidiaries amounted to RMB2.035 billion, representing a 19.56% increase from RMB1.702 billion for the year ended December 31, 2008. The operation of new generating units, newly acquired power plants and the maintenance expenses of the existing generating units accounted for RMB110 million, RMB46 million and RMB177 million of the increase, respectively.

42

Depreciation

For the year ended December 31, 2009, depreciation expenses of the Company and its subsidiaries increased by 11.06% to RMB8.572 billion from RMB7.719 billion for the year ended December 31, 2008. The increase was primarily attributable to the Company’s expansion.

Labor

Labor costs consist of salaries to employees and contributions payable for employees´ housing fund, medical insurance, pension and unemployment insurance, as well as training costs. For the year ended December 31, 2009, the labor costs of the Company and its subsidiaries amounted to RMB3.595 billion, representing a 13.61% increase from RMB3.165 billion for the year ended December 31, 2008. The increase was primarily attributable to the operation of new generating units and newly acquired power plants.

Other operating expenses (including electricity power purchase costs and service fees paid to HIPDC)

Other operating expenses include environmental protection expenses, land fee, insurance premiums, office expenses, amortization, and SinoSing Power’s electricity power purchase costs. For the year ended December 31, 2009, other operating expenses (including power purchase costs) of the Company and its subsidiaries was RMB8.473 billion, representing an 28.99% increase from RMB6.569 billion for the year ended December 31, 2008. The increase was primarily attributable to the operation of new generating units and acquisitions, as well as the provision for impairment loss on assets of Xindian Power Plant upon the shutdown of its generating units. The operation of new generating units, other expenses of Yingkou Port and the provision for impairment loss on property, plant and equipment contributed RMB265 mil lion, RMB266 million and RMB630 million to the increase of other operating expenses for the year ended 31 December 2009, respectively.

Financial expenses

Financial expenses consist of interest expense, bank charges and net exchange differences.

Interest expense

For the year ended December 31, 2009, the interest expense of the Company and its subsidiaries was RMB4.260 billion, representing a 4.81% increase from RMB4.065 billion for the year ended December 31, 2008. The increase was primarily attributable to expensing instead of capitalizing interest upon commercial operations of new generating units, which accounted for RMB360 million of the increase. Excluding the factor of new generating units, the decrease in interest rate of borrowings attributed to a decrease in the interest expense.

Net exchange differences and bank charges

For the year ended December 31, 2009, the exchange gains less bank charges of the Company and its subsidiaries amounted to RMB-49 million, representing a significant change compared to RMB357 million for the year ended December 31, 2008. For the year ended December 31, 2009, exchange gains of the Company and its subsidiaries was RMB41 million, representing a decrease of RMB368 million from RMB409 million for the year ended December 31, 2008.

Share of profit of associates

For the year ended December 31, 2009, the share of profit of associates was RMB756 million, an RMB683 million increase from RMB73 million for the year ended December 31, 2008. The increase was primarily due to the increase of profitability of associates for the year ended December 31, 2009.

Enterprise Income Tax (“EIT”)

For the year ended December 31, 2009, the Company and its subsidiaries recorded an EIT expense of RMB594 million, representing an 347.70% increase from RMB-240 million for the year ended December 31, 2008. The increase was primarily due to the net impact of increase of the Company’s profit for the year ended December 31, 2009 and utilization of previously unrecognized tax losses.

Profit for the year, Profit attributable to the Company’s equity holders and Minority interests

43

For the year ended December 31, 2009, the Company and its subsidiaries recorded a net profit of RMB5.110 billion, an increase of RMB9.662 billion as compared to net loss of RMB4.552 billion for the year ended December 31, 2008. The recovery from loss position was largely attributable to (i) the operation of new generating units, (ii) newly acquired power plants in 2009, (iii) the carryover effect of the acquisition of SinoSing Power in the first half of 2008, (iv) the carryover effect of the increase in power tariffs in the second half of 2008 which attributed to an increase in operating revenue, and (v) the decrease in fuel purchase price which attributed to the decrease in fuel cost. For the year ended December 31, 2009, the profit attributable to equity holders of the Company was RMB4.930 billion, represe nted an increase of RMB8.868 billion from a loss of RMB3.938 billion for the year ended December 31, 2008. Combining the foregoing factors, the minority interests increased to RMB181 million for the year ended December 31, 2009 from RMB-614 million for the year ended December 31, 2008.

Year ended December 31, 2008 compared with year ended December 31, 2007

	For the Year Ended December 31
	2008			2007			Increased/ (Decreased)
	RMB’000			RMB’000			%
Operating revenue		67,835,114			49,892,049			35.96
Sales tax		(106,385	)		(139,772	)		(23.89	)
Operating expenses
Fuel		(49,810,275	)		(27,790,310	)		79.24
Maintenance		(1,702,274	)		(1,534,016	)		10.97
Depreciation		(7,718,773	)		(7,225,964	)		6.82
Labor		(3,164,613	)		(2,786,109	)		13.59
Service fees on transmission and transformer facilities of HIPDC transformer  HIPDC		-			(140,771	)
Purchase of electricity		(2,726,028	)		-
Others		(3,842,992	)		(2,340,179	)		64.22
Total operating expense		(68,964,955	)		(41,817,349	)		64.92
(Loss)/Profit from operations		(1,236,226	)		7,934,928			(115.58	)
Interest income		83,522			53,527			56.04
Financial expenses, net
Interest expense		(4,064,779	)		(2,132,122	)		90.64
Exchange gain and bank charges , net		356,836			204,134			74.80
Total financial expenses, net		(3,707,943	)		(1,927,988	)		92.32
Share of profits of associates		72,688			586,323			(87.60	)
(Loss)/Gain on fair value changes		(54,658	)		87,132			(162.73	)
Investment income		51,061			585,379			(91.28	)
(Loss)/Profit before income tax expense		(4,791,556	)		7,319,301			(165.46	)
Income tax benefit/(expense)		239,723			(838,270	)		(128.60	)
(Loss)/Profit for the year		(4,551,833	)		6,481,031			(170.23	)
Attributable to:
Equity holders of the Company		(3,937,688	)		6,161,127			(163.91	)
Minority interests		(614,145	)		319,904			(291.98	)
		(4,551,833	)		6,481,031			(170.23	)

The Company completed its acquisition of SinoSing Power in the first half of 2008. SinoSing Power and its subsidiary, Tuas Power, are consolidated into the financial statements of the Company.

For the year ended December 31, 2008, the Company’s total domestic power generation on a consolidated basis amounted to 184.628 billion kWh, representing a 6.30% increase from the year ended December 31, 2007. Yingkou Power Plant, Yuhuan Power Plant, Qinbei Power Plant and Shang’an Power Plant have recorded significant increase in power generation. The increase in the Company’s domestic power generation was mainly attributable to: (i) the commencement and stable operation of a number of new power generating units in 2008, was a key factor for the Company’s power generation growth;(ii) the Company’s enhancement in its marketing efforts, in response to the significant changes of economic environment in 2008, including the formulation of feasible and effective marketing strategies and measures that fully show case the

44

competitive advantages of the power plants of the Company which accelerated the growth of power generation of the Company; and(iii) the Company’s maintenance program has resulted in optimizations the capacity of generating units.

The power generation of the Company’s domestic power plants for the year ended December 31, 2008 was listed below (in billion kWh):

Domestic Power Plant	Power generation in 2008		Power generation in 2007		Change
Dalian		9.102		10.227		-11.00	%
Fuzhou		8.129		8.136		-0.09	%
Nantong		8.329		8.345		-0.19	%
Shang’an		9.299		7.216		28.87	%
Shidongkou II		7.534		7.957		-5.32	%
Dezhou		14.022		13.22		6.07	%
Shidongkou I		6.757		6.99		-3.33	%
Shantou Coal-fired		7.020		7.408		-5.24	%
Dandong		4.209		4.941		-14.81	%
Nanjing		3.469		3.658		-5.17	%
Jining		2.290		2.579		-11.21	%
Changxing		1.516		1.603		-5.43	%
Weihai		4.495		4.075		10.31	%
Taicang		10.389		10.817		-3.96	%
Huaiyin		7.458		8.539		-12.66	%
Yuhuan		19.442		11.772		65.15	%
Xindian		4.241		4.785		-11.37	%
Yushe		4.951		5.692		-13.02	%
Qinbei		10.514		7.12		47.67	%
Luohuang		11.506		11.241		2.36	%
Shanghai CCGT		0.598		0.533		12.20	%
Yueyang		6.016		6.748		-10.85	%
Yingkou		10.735		6.207		72.95	%
Jinggangshan		3.202		3.527		-9.21	%
Pingliang		7.201		8.11		-11.21	%
Jinling CCGT		2.204		2.242		-1.69	%

In respect of the tariff, the Company’s domestic average tariff for the year ended December 31, 2008 was RMB387.34 per MWh, increase of RMB27.63 per MWh from the year ended December 31, 2007. The Company’s overseas average tariff for the year ended December 31, 2008 was RMB984.53 per MWh.

In respect of fuel supply and cost controls, the high coal market price and the upward adjustments on the key coal contracts contributed to the significant increase in fuel cost of the Company. Compared to the last year, the Company’s unit fuel cost per unit of power sold in PRC increased by 46.54% to RMB253.66 per MWh. The Company’s unit fuel cost per unit of power sold outside PRC was RMB799.27 per MWh.

Combining the foregoing factors, the operating revenue of the Company and its subsidiaries for the year ended December 31, 2008 increased 35.96% from last year. For the year ended December 31, 2008, the Company and its subsidiaries recorded a loss attributable to equity holders of the Company of RMB3.938 billion, representing a decrease of 163.91% compared to the profit attributable to equity holders of the Company of RMB6.161 billion for the year ended December 31, 2007. The loss was primarily due to the significant increase in fuel price.

Operating revenue

Operating revenue represents the fair value of the consideration received or receivable for electricity sold (net of VAT or GST and after taking into account amounts received in advance). For the year ended December 31, 2008, the consolidated operating revenue of the Company and its subsidiaries amounted to RMB67.835 billion, representing a 35.96% increase from RMB49.892 billion for the year ended December 31, 2007. The increase in operating revenue was primarily attributable to the new generating units’ commencement of operation and the acquisition. The operation of new generating units contributed RMB7.011 billion to the increase, and SinoSing Power contributed RMB10.36 billion to the increase, of which about RMB3.586 billion were revenue from retail business.

The following table sets forth the average tariff rate of the Company and its subsidiaries, as well as percentage changes from 2007 to 2008.

45

	Average tariff rate (VAT inclusive) (RMB/MWh)
Power Plant	2007		2008		Change
Dalian		323.27		338.05		4.57	%
Fuzhou		369.61		401.22		8.55	%
Nantong		339.47		385.53		13.57	%
Shang’an		344.47		356.52		3.50	%
Shantou Coal-fired		476.26		496.60		4.27	%
Dandong		330.38		340.82		3.16	%
Shidongkou II		347.93		377.04		8.37	%
Nanjing		342.99		375.47		9.47	%
Dezhou		360.45		394.08		9.33	%
Weihai		403.00		422.78		4.91	%
Jining		350.80		378.41		7.87	%
Shidongkou I		369.54		377.35		2.11	%
Taicang		359.69		401.60		11.65	%
Changxing		428.16		450.86		5.30	%
Huaiyin Phase II		357.47		396.80		11.00	%
Xindian		379.71		371.86		-2.07	%
Yushe		288.45		305.07		5.76	%
Yingkou		343.37		360.45		4.97	%
Jinggangshan		366.94		379.99		3.56	%
Luohuang		319.86		344.98		7.85	%
Yueyang		372.19		392.58		5.48	%
Qinbei		311.86		339.85		8.98	%
Pingliang		223.31		238.89		6.98	%
Yuhuan		415.05		444.92		7.20	%
Taicang II		358.08		396.48		10.72	%
Xindian II		356.01		370.99		4.21	%
Jinling CCGT		481.99		528.73		9.70	%
Consolidated (Domestic)		359.71		387.34		7.68	%

Sales tax

Sales tax mainly consists of taxes associated with value-added tax surcharges. According to relevant administrative regulations, these surcharges include City Construction Tax and Education Surcharges calculated at prescribed percentages on the amounts of the value-added tax paid. These surcharges are not applicable to direct foreign investments that have been approved by the government, thus not payable by certain power plants of the Company. For the year ended December 31, 2008, the sales tax amounted to RMB106 million, representing a 23.89% decrease from the RMB140 million for the year ended December 31, 2007.

Operating expenses

For the year ended December 31, 2008, the total operating expenses of the Company and its subsidiaries was RMB68.965 billion, representing a 64.92% increase from RMB41.817 billion for the year ended December 31, 2007.

The increase was primarily attributable to the increase in fuel prices, the operation of new generating units and the acquisition. The operation of new generating units contributed RMB6.774 billion to the increase, and SinoSing Power contributed RMB9.840 billion. Excluding these two factors, the operating expenses increased by RMB10.534 billion due to the significant increase in coal prices.

Fuel

Fuel cost represents the majority of the operating expense for the Company and its subsidiaries. For the year ended December 31, 2008, fuel cost of the Company and its subsidiaries increased 79.24% to RMB49.81 billion from RMB27.79 billion for the year ended December 31, 2007. The increase was primarily attributable to fuel price rise, operation of new generating units and the acquisition. The operation of new generating units accounted for RMB5.447 billion of the increase, and SinoSing Power contributed RMB5.885 billion.

For the year ended December 31, 2008, the average price (excluding tax) of natural fuel coal was RMB524.53 per ton, representing a 40.34% increase from RMB373.76 for the year ended December 31, 2007. Because of the significant price rise, the Company’s unit fuel cost per unit of power sold in PRC increased 46.54% to RMB253.66 per MWh.

Maintenance

For the year ended December 31, 2008, the maintenance expenses of the Company and its subsidiaries amounted to RMB1.702 billion, representing a 10.97% increase from RMB1.534billion for the year ended December 31, 2007. The increase was primarily due to the operation of new generating units and acquisition, the operation of new generation units contributed a total increase of RMB208 million. SinoSing Power accounted for RMB37 million of the increase. The maintenance expenses of the existing generators have decreased when compared to previous financial year.

46

Depreciation

For the year ended December 31, 2008, depreciation expenses of the Company and its subsidiaries increased by 6.82% to RMB7.719 billion from RMB7.226 billion for the year ended December 31, 2007. The increase was primarily attributable to the Company’s expansion.

Labor

Labor costs consist of salaries to employees and contributions payable for employees´ housing fund, medical insurance, pension and unemployment insurance, as well as training costs. For the year ended December 31, 2008, the labor costs of the Company and its subsidiaries amounted to RMB3.165 billion, representing a 13.59% increase from RMB2.786 billion for the year ended December 31, 2007. RMB75 million of the increase was attributable to SinoSing Power and, the remaining was mainly attributable to operation of new generating units and the higher mandatory contributions payable for social security purposes.

Other operating expenses (including electricity power purchase costs)

Other operating expenses include environmental protection expenses, land fee, insurance premiums, office expenses, amortization, and SinoSing Power’s electricity power purchase costs. For the year ended December 31, 2008, other operating expenses of the Company and its subsidiaries was RMB6.569 billion, representing an 180.71% increase from RMB2.340 billion for the year ended December 31, 2007. The increase was primarily attributable to the operation of new generating units and the acquisition, the operation of new operating units contributed RMB318 million. SinoSing Power contributed to the operating expenses of approximately RMB3.509 billion, of which RMB2.726 billion was electricity power purchase cost.

Financial expenses

Financial expenses consist of interest expense, bank charges and net exchange differences.

Interest expense

For the year ended December 31, 2008, the interest expense of the Company and its subsidiaries was RMB4.065 billion, representing a 90.64% increase from RMB2.132 billion for the year ended December 31, 2007. The increase was primarily attributable to the extra financing to pay increased fuel costs; expensing instead of capitalizing interest upon commercial operation of new generating units, which accounted for RMB640 million of the increase; and the financing to acquire SinoSing Power, which accounted for RMB309 million of the increase.

Net exchange differences and bank charges

For the year ended December 31, 2008, the exchange gains less bank charges of the Company and its subsidiaries amounted to RMB357 million, compared to RMB204 million for the year ended December 31, 2007. For the year ended December 31, 2008, the Company and its subsidiaries realized net exchange gains of RMB409 million from foreign loans of domestic operation, representing an increase of RMB177 million from RMB232 million for the year ended December 31, 2007. SinoSing Power also accounted for RMB47 million of the increase.

Share of profit of associates

For the year ended December 31, 2008, the share of profit of associates was RMB73 million, an RMB513 million decrease from RMB586 million for the year ended December 31, 2007. The decrease was primarily due to reduced profit of associates engaged in power generation caused by higher fuel price.

Enterprise Income Tax (“EIT”)

The Company’s domestic operations are subject to the newly adopted PRC tax law which took effect on January 1, 2008. SinoSing Power and Tuas Power are subject to an enterprise income tax rate of 18% in Singapore. For the year ended December 31, 2008, the Company and its subsidiaries recorded an EIT benefit of RMB240 million, representing a 128.60% decrease from an EIT expense of RMB838 million for the year ended December 31, 2007. SinoSing Power contributed an RMB95 million increase in the Company’s EIT expense. The decrease in EIT was mainly due to the significant operating loss qualifying for deferred tax assets recognition for the year ended December 31, 2008.

47

Loss for the year, Loss attributable to the Company’s equity holders and Minority interests

For the year ended December 31, 2008, the Company and its subsidiaries recorded a loss of RMB4.552 billion, or a decrease of RMB11.033 billion compared to profit of RMB6.481 billion for the year ended December 31, 2007. The loss was largely attributable to increased fuel prices. For the year ended December 31, 2008, the loss attributable to equity holders of the Company was RMB3.938 billion, represented a decrease of RMB10.099 billion compared to profit of RMB6.161 billion for the year ended December 31, 2007. The loss attributable to equity holders of the Company from overseas operations was RMB1.0 million. Combining the foregoing factors, the minority interests decreased to RMB-614 million for the year ended December 31, 2008 from RMB320 million for the year ended December 31, 2007.

C. Financial position

General

The assets and liabilities of the Company and its subsidiaries experienced significant change during the year 2009, due to newly acquired power plants and continued investments in construction projects.

Assets

As of December 31, 2009, total assets of the Company and its subsidiaries amounted to RMB197.887 billion, representing a 19.27% increase from RMB165.918 billion as of December 31, 2008. Including which, non-current assets increased by 19.05% to RMB173.697 billion, primarily due to the continued investment in construction projects and acquisitions of power plants. Current assets increased by RMB4.172 billion, or 20.84%, to RMB24.190 billion, primarily due to the increase in accounts receivable as a result of the expansion of our operation scale and input VAT recoverables arising from acquisitions of property, plant and equipment and construction materials.

Liabilities

As of December 31, 2009, total liabilities of the Company and its subsidiaries amounted to RMB147.239 billion, representing a 19.36% increase from RMB123.358 billion as of December 31, 2008, primarily attributable to the increased borrowings for construction projects. Non-current liabilities of the Company and its subsidiaries mainly consisted of bank loans and bonds. The increase of current liabilities was largely attributable to increased short-term debentures.

As of December 31, 2009, interest-bearing debts of the Company and its subsidiaries totaled RMB129.220 billion. The interest-bearing debts consisted of long-term loans (including those maturing within a year), long-term bonds, short-term loans, short-term debentures and notes payable. Including which, the interest-bearing debts denominated in foreign currencies amounted to RMB8.195 billion.

Shareholder’s equity

Excluding the impact of profit and profit appropriations, the Company’s equity items increased for the year ended December 31, 2009, primarily attributable to after-tax increase of RMB773 million for increase in fair value of the listed shares held by the Company and after-tax increase of RMB575 million from the movements of hedging reserves of Tuas Power.

Major financial position ratios

	2009		2008
Current ratio		0.41		0.38
Quick ratio		0.34		0.28
Ratio of liability and shareholders' equity		3.50		3.35
Multiples of interest earned		1.79		-0.14

Formula of the financial ratios:

Current ratio = balance of current assets as of year end / balance of current liabilities as of year end

Quick ratio = (balance of current assets as of year end - net inventories as of the year end) / balance of current liabilities as of year end

48

Ratio of liabilities and shareholders' equity = balance of liabilities as of year end / balance of shareholders' equity as of year end (excluding minority interests)

Multiples of interest earned = (profit before tax + interest expense) / interest expenditure (inclusive of capitalized interest)

The current ratio and quick ratio remained at relatively low level as of December 31, 2009 and 2008, and there is slightly increased at the year end of 2009 from the year end of 2008. The increase in the ratio of liabilities and shareholders’ equity at the year end of 2009 from the year end of 2008 was primarily due to the increased borrowings for construction projects. The multiples of interest earned increased, primarily attributable to the increase in operating profit for the year ended December 31, 2009.

D. Liquidity and cash resources

The primary sources of funding for the Company and its subsidiaries have been cash provided by internal funds from operating activities, short-term and long-term loans and proceeds from issuances of bonds, and the primary use of funds have been for working capital, capital expenditure and repayments of short-term and long-term borrowings.

As of December 31, 2009, net current liabilities of the Company and its subsidiaries were approximately RMB35.392 billion. Based on the Company’s proven financing record, readily available banking facilities and sound credibility, the Company believes it is able to duly repay outstanding debts, obtain long-term financing and secure funding necessary for its operations. The Company has also capitalized on its good credit record to make short-term borrowings at relatively lower interest rates, thus reducing its interest expenses.

Cash flows from operating activities

	For the Year Ended December 31,
	2009			2008			2007
	RMB’000			RMB’000			RMB’000
Cash flows from operating activities
Profit/(Loss) before income tax expense		5,703,976			(4,791,556	)		7,319,301
Non-cash items adjustments		12,751,842			11,609,206			7,680,319
Changes in working capital		(3,043,647	)		(1,289,849	)		(1,781,479	)
Interest received		59,919			72,940			52,825
Income tax paid		(491,100	)		(414,848	)		(1,192,133	)
Net cash provided by operating activities		14,980,990			5,185,893			12,078,833

Net cash provided by operating activities is the main source of cash for the Company. For the year ended December 31, 2009, net cash provided by operating activities of the Company and its subsidiaries was RMB14.981 billion. The net cash provided by operating activities was higher than that of the prior year mainly because of a profit before income tax expense of RMB5.704 billion due to (i) the operation of new generating units, (ii) newly acquired power plants in 2009, (iii) the carryover effect of the acquisition of SinoSing Power in the first half of 2008, (iv) the carryover effect of the increase in power tariffs in the second half of 2008 which attributed to an increase in operating revenue, and (v) the decrease in fuel purchase price which attributed to the decrease in fuel co st . The net cash provided by operating activities amounted to RMB5.186 billion in 2008 which was lower than that of RMB12.079 billion in 2007, mainly due to a loss before income tax expense of RMB4.792 billion due to the increase of fuel price and the increase in inventory of RMB2.159 billion.

49

Cash flows used in investing activities

	For the year ended December 31,
	2009			2008			2007
	RMB’000			RMB’000			RMB’000
Cash flows from investing activities
Purchase of property, plant and equipment		(22,426,098	)		(27,893,520	)		(14,223,310	)
Proceeds from disposals of property, plant and equipment, net		39,272			25,336			270,131
Prepayments of land use rights		(167,435	)		(76,050	)		(216,752	)
Prepayments of territorial waters use right		-			-			(152,409	)
Increase in other non-current assets		(27,138	)		(16,004	)		(6,247	)
Cash dividend received		540,182			381,854			518,934
Capital injections in associates		(548,500	)		(281,754	)		(1,654,000	)
Purchases of financial assets at fair value through profit or loss		-			-			(370,189	)
Cash paid for acquiring available-for-sale financial assets		-			(146,375	)		(449,457	)
Proceeds from trading of available-for-sale financial assets		-			-			603,411
Cash consideration paid for acquisitions		(2,355,762	)		(21,772,563	)		(485,750	)
Acquisition of minority interest of a subsidiary		-			(67,485	)		-
Cash from acquisition of subsidiaries		419,885			1,624,108			259,924
Cash outflow upon deemed disposal of Sichuan Hydropower		-			-			(322,176	)
Cash received on repayment of a loan receivable		-			254,255			-
Others		(354,667	)		11,133			(29,465	)
Net cash used in investing activities		(24,880,261	)		(47,957,065	)		(16,257,355	)

Net cash used in investing activities amounted to approximately RMB24.880 billion, RMB47.957 billion and RMB16.257 billion in 2009, 2008 and  2007. The cash used in investing activities in 2009 was mainly for the acquisition of power plants and capital expenditure for construction projects. The increase in net cash used in investing activities in 2008 was mainly for the acquisition of Tuas Power and increased capital expenditure for construction projects.

Net cash used in investing activities was primarily the capital expenditure used in purchasing and constructing fixed assets. In 2010, the Company will continue to invest large amount of capital into the construction of projects.

Cash flows from financing activities

	For the year ended December 31,
	2009			2008			2007
	RMB’000			RMB’000			RMB’000
Cash flows from financing   activities
Issuance of short-term bonds		9,960,000			4,980,000			4,980,000
Repayments of short-term          bonds		(5,000,000	)		(5,000,000	)		(5,000,000	)
Drawdown of short-term          loans		40,892,075			57,696,660			23,898,505
Repayments of short-term          loans		(29,251,246	)		(39,483,770	)		(19,771,700	)
Drawdown of long-term          loans		32,505,000			36,656,286			8,186,176
Repayments of long-term          loans		(37,317,607	)		(10,254,438	)		(3,492,975	)
Issuance of long-term bonds		3,939,850			3,933,302			5,903,644
Interest paid		(5,378,244	)		(4,731,749	)		(2,722,935	)
Net capital injection from          minority shareholders of          the subsidiaries		260,533			1,162,562			116,890
Government grants		420,766			236,013			-
Dividends paid to          shareholders of the          Company		(1,241,633	)		(3,570,334	)		(3,375,507	)
Dividends paid to minority          shareholders of the          subsidiaries		(253,971	)		(301,662	)		(434,205	)
Others		(31,637	)		(67,579	)		-
Net cash provided by          financing activities		9,503,886			41,255,291			8,287,893

50

Net cash inflow provided by financing activities in 2009 amounted to RMB9.504 billion primarily because (i) the proceeds from loans exceeded repayments of loans by approximately RMB6.8 billion and (ii) the proceeds from short-term debentures exceeded repayments of short-term debentures by approximately RMB5.0 billion and (iii) the Company issued long-term bonds in the amount of RMB4.0 billion and net capital injection from minority shareholders of the subsidiaries amounted to RMB0.261 billion, the net cash inflow was partially offset by the dividends and interest of approximately RMB6.874 billion.

Net cash inflow provided by financing activities in 2008 amounted to RMB41.255 billion primarily because (i) the proceeds from loans exceeded repayments of loans by approximately RMB44.6 billion and (ii) the Company issued long-term bonds in the amount of RMB4.0 billion and net capital injection from minority shareholders of the subsidiaries amounted to RMB1.162 billion, the net cash inflow was partially offset by the dividends and interest of approximately RMB8.604 billion.

Net cash inflow provided by financing activities in 2007 amounted to RMB8.288 billion primarily because (i) the Company issued long-term bonds in the amount of RMB6.0 billion, and (ii) our proceeds from loans exceeded repayments of loans which were offset by dividends and interest by approximately RMB2.287 billion.

Cash and cash equivalents

	For the year ended December 31,
	2009			2008			2007
	RMB’000			RMB’000			RMB’000
Exchange gain / (loss)		55,742			(229,759	)		(4,298	)
Net (decrease) / increase in cash and cash equivalents		(339,643	)		(1,745,640	)		4,105,073
Cash and cash equivalents, beginning of the year		5,566,625			7,312,265			3,207,192
Cash and cash equivalents as of the end of the year		5,226,982			5,566,625			7,312,265

As of December 31, 2009, the cash and cash equivalents of the Company and its subsidiaries denominated in RMB, Singapore dollar, US dollar and Japanese Yen were RMB3.391 billion, RMB1.580 billion, RMB475 million and RMB6 million, respectively.

As of December 31, 2008, the cash and cash equivalents of the Company and its subsidiaries denominated in RMB, Singapore dollar, US dollar and Japanese Yen were RMB4.390 billion, RMB1.165 billion, RMB5.737 million and RMB6.105 million, respectively.

As of December 31, 2007, the Company’s cash and cash equivalents amounted to RMB7.312 billion, of which, cash in RMB accounted for RMB0.528 million, current deposits in RMB accounted for RMB7.311 billion, and current deposits in US dollar accounted for RMB1.111 million.

Capital expenditure and cash resources

Capital expenditures on acquisitions

On March 31, 2009, the Company purchased from Huaneng New Energy, a subsidiary of Huaneng Group, 65% equity interest in Qidong Wind Power for a consideration of RMB103 million.

In September 2009, the Company purchased 55% equity interest in Tianjin Huaneng Yangliuqing Co-generation Limited Liability Company and 41% equity interest in Huaneng Beijing Co-generation Limited Liability Company for a consideration of approximately RMB2.348 billion.

In July 2008, the Company purchased an additional 10% equity interest in Phase I of Rizhao Power Plant for a consideration of approximately RMB135 million, and increased our interest to 44%.

In December 2008, the Company purchased an additional 10% equity interest in Huaiyin Power Plant Phase I for a consideration of approximately RMB67.4 million, and increased our interest to 100%.

SinoSing Power was incorporated in Singapore by Huaneng Group as a wholly owned subsidiary on March 10, 2008. On March 24, 2008, SinoSing Power acquired 100% equity interests in Tuas Power from Temasek Holdings (Private) Limited (“Temasek”). On April 29, 2008, the Company entered into a transfer agreement with Huaneng Group, pursuant to which the Company agreed to acquire from Huaneng Group the 100% equity interest in SinoSing Power. The consideration to be paid by the Company comprised (i) approximately US$985 million for capital investment in SinoSing Power by Huaneng Group; and (ii) an

51

aggregate amount of approximately RMB176 million for all related expenses (including loan interest) directly incurred by Huaneng Group in relation to its acquisition of the 100% equity interest in Tuas Power. The consideration totaled RMB7.08 billion.

The Company continues to follow the strategy of a balance between development and acquisition by proactively seeking new acquisition opportunities to ensure the sustainable growth of profitability and shareholders' value. Since there are uncertainties associated with asset acquisition projects and their scales, the level of capital expenditures required are also uncertain. However, the Company believes that its cash flows from operating activities and the sound financing capability should provide it with a sufficient cash supply for asset acquisition projects.

Capital expenditures on construction and renovation projects

The capital expenditures for the year ended December 31, 2009 amounted to approximately RMB22.620 billion, mainly applied in construction and renovation projects, including RMB167 million for Yuhuan project, RMB747 million for Yueyang expansion project, RMB419 million for Yingkou expansion project, RMB1.371 billion for Qinbei expansion project, RMB233 million for Shang’an expansion project, RMB1.751 billion for Haimen project, RMB1.393 billion for Jinggangshan expansion project, RMB2.458 billion for Jinling (Coal-fired) expansion project, RMB2.035 billion for Shanghai Power Company project, RMB674 million for Jining Co-generation project, RMB346 million for Huade Wind Power project, RMB1.483 billion for Yingkou Co-generation project, RMB1.238 billion for Fuzhou expansion proje ct, RMB748 million for Weihai expansion project and RMB1.225 billion for Pingliang expansion project. The expenditures on other construction projects and renovation amounted to RMB2.251 billion and RMB4.081 billion, respectively.

The capital expenditures on construction and renovation amounted to approximately RMB27.986 billion and RMB14.701 billion in 2008 and 2007, respectively.

The capital expenditures above are sourced mainly from internal funds, debt financing and cash flows provided by operating activities.

The Company expects to have significant capital expenditures in the next few years. During the course, the Company will make active efforts to improve project planning process on commercially viable basis. The Company will also actively develop newly planned projects to pave the way for its long-term growth. The Company expects to finance the above capital expenditures through internal funding, debt financing and cash flows provided by operating activities.

The following table sets forth the cash requirements, usage plans and cash resources of the Company for the next two years.

Project	Capital expenditure arrangements		Contractual arrangements		Financing methods	Funding resources arrangements	Financing costs and note on usage
	2010	2011	2010	2011
	(RMB in billions)
Thermal power projects	14.47	17.715	14.47	17.715	Debts and planned equity financing	Internal cash funding & bank loans, etc.	Within the floating range of benchmark lending interest rates of PBOC
Hydropower projects	0.5	0.1	0.5	0.1	Debts financing	Internal cash funding & bank loans, etc.	Within the floating range of benchmark lending interest rates of PBOC
Wind power projects	1.203	4.5	1.203	4.5	Debts and planned equity financing	Internal cash funding & bank loans, etc.	Within the floating range of benchmark lending interest rates of PBOC
Port projects	0.5	1.67	0.5	1.67	Debts financing	Internal cash funding & bank loans, etc.	Within the floating range of benchmark lending interest rates of PBOC
Renovation projects	4.669	4.719	4.669	4.719	-	Internal cash funding	-

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Cash resources and anticipated financing costs

The Company expects to finance its capital expenditure and acquisition primarily from internal fundings, cash flow from operating activities and debts and equity financing.

Good operating results and sound credit status provide the Company with strong financing capabilities. As of December 31, 2009, the Company and its subsidiaries had aggregate undrawn banking facilities of RMB27.962 billion.

As resolved at the 2008 annual general meeting of shareholders on June 18, 2009, the Company was mandated to issue within the PRC unsecured short-term debentures of principal amount up to RMB10 billion in one or multiple tranches within 12 months from the date of the meeting. The Company has completed the issue of unsecured of short-term debentures in two installments on September 9, 2009 and March 23, 2010, each at principal amount of RMB5 billion bearing annual interest rate of 2.32% and 2.55%, respectively. Both of the bonds were denominated in Renminbi, issued at par value, and would mature in 270 days. The effective interest rate for the debentures were 2.87% and 3.10% per annum. As resolved at the 2007 annual general meeting of shareholders on May 13, 2008, the Company was mandated to issue within the PRC unsecured short-ter m debentures of principal amount up to RMB10 billion in one or multiple tranches within 12 months from the date of the meeting. The Company has completed the issue of short-term debentures in two installments on July 25, 2008 and February 24, 2009, each at principal amount of RMB5 billion bearing annual interest rate of 4.83% and 1.88%, respectively. Both of the debentures were denominated in Renminbi, issued at par value, and would mature in 365 days. The effective interest rates for the two debentures were 5.25% and 2.29% per annum, respectively. The RMB5 billion unsecured short-term debentures issued by the Company on July 25, 2008 was repaid in July 2009.

As resolved at the extraordinary shareholders meeting on December 23, 2008, the Company was mandated to issue within the PRC medium-term notes of a principal amount up to RMB10 billion in one or multiple tranches within 12 months from the date of the meeting. The Company has completed the issue of first tranche medium-term notes on 14 May 2009 at principal amount of RMB4 billion with interest rate of 3.72% per annum. The medium-term notes were denominated in RMB, issued at par value, and would mature in 5 years. The effective interest rate for these medium-term notes was 4.06% per annum.\\

As of December 31, 2009, short-term borrowings of the Company and its subsidiaries totaled RMB24.730 billion (2008: RMB28.745 billion). Including which, bank loans were charged at interest rates ranging between 1.30% and 7.47% per annum (2008: 1.42% to 7.47%). Short-term debentures payable by the Company and its subsidiaries totaled RMB10.101 billion (2008: RMB5.096 billion).

As of December 31, 2009, long-term borrowings of the Company and its subsidiaries totaled approximately RMB80.517 billion (2008: approximately RMB65.573 billion), consisting of borrowings denominated in RMB of approximately RMB57.344 billion (2008: approximately RMB53.043 billion), in US dollars of approximately US$1.046 billion (2008: approximately US$1.641 billion), and in Euro of approximately Euro105 million (2008: approximately Euro 56 million). Included in the above, US dollar denominated borrowings were approximately US$820 million (2008: US$1.319 billion) floating-rate borrowings. Japanese Yen and Singapore dollar denominated borrowings were all floating-rate borrowings. For the year ended December 31, 2009, long-term borrowings of the Company and its subsidiaries bore inter est rates from 1.44% to 7.56% (2008: 1.31% to 7.74%) per annum.

The Company and its subsidiaries will closely monitor any change in the currency and interest rate markets and cautiously assess the currency and interest rate risks.

Combining the current development of the power generation industry and the growth of the Company, the Company will make continuous efforts to not only meet cash requirements of daily operations, constructions and acquisitions, but also establish an optimal capital structure to minimize the cost of capital and manage financial risks through effective financial management activities, thus maintaining sustainable and stable returns to the shareholders.

Other financing requirements

The objective of the Company is to bring long-term, steadily growing returns to shareholders. In line with this objective, the Company follows a proactive, stable and balanced dividend policy. In accordance with the profit appropriation plan of the board of directors of the Company (subject to the approval of the shareholders´ meeting), the Company expects to pay a cash dividend of approximately RMB2.5316 billion relating to the year 2009.

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Maturity profile of loans

The following table sets forth the maturity profile of the Company’s loans as of December 31, 2009.

Maturity Profile
(RMB billions)	2010		2011		2012		2013		2014
Principal proposed to be repaid		48.8		14.4		14.9		5.0		4.7
Interest proposed to be repaid		4.2		3.2		2.4		2.0		1.7
Total		53.0		17.6		17.3		7.0		6.4
__________________________________

Notes:   (1) This table is prepared according to the amounts started in the contracts which have been entered into;

(2) The amount of the principal to be repaid in 2010 is relatively large compared to the amount presented in the “Tabular disclosure  contractual obligations and commercial commitments” because this includes expected repayment of short-term loans and short-term debentures.

E. Trend information

The major trend of the electricity power market

According to the National Power Industry Statistics Express for 2009 issued by China Electricity Council, as of December 31, 2009, nationwide installed capacity reached 874,000 MW, representing a 10.34% year-on-year increase. For the year ended December 31, 2009, power generated throughout PRC reached 3.6639 trillion kWh, representing a 6.71% year-on-year increase. Thermal power accounted for 2.9922 trillion kWh, or approximately 81.66% of the total capacity, representing a 6.7% increase from the year ended December 31, 2008. A large number of power generating projects were completed and put into operation during 2009, further easing the power shortage and contributing to a generally balanced power market in China. Consequentl y, the utilization hours of generating equipment dropped continuously and considerably. For the year ended December 31, 2009, nationwide average accumulated utilization hours of power plants with 6,000 KW and above capacities were 4,527 hours, representing a decrease of 121 hours from the year ended December 31, 2008. Utilization hours of thermal power generating equipment were 4,839 hours, representing a decrease of 46 hours from the same period last year.

According to the 2010 SERC meeting, it is expected that, in 2010, the SERC will further reform power market and maintain the power market order through further reinforcing market supervision to protect the rights of various market participants. The Company believes that the continuous regulations and reform of the power market will improve the external environment for its healthy growth.

In response to new market circumstance, the Company will strive to increase equipment reliability; enhance marketing efforts; strengthen research and application of government policies on energy saving and emission reduction as well as related generation and dispatch practices, and on direct power purchase by large power end-users. It will also pursue market expansion, and take full advantages of its generating units on efficiency, energy saving and environment protection to increase utilization hours. The Company will also set up rolling planning adjustment mechanism to design appropriately and develop, construct and complete rapidly construction projects in those areas favorable for power market in line with government guidelines, increase overall competitive strengths, maintain t he ability for sustained development, and enhance the Company’s capabilities in risk management and continuous growth.

The trend of the fuel supply

Coal supply shortage is expected to continue in 2010. Due to the integration of local coal resources and increase in the international energy price and shipping costs, the price of coal continued to increase since the second half of the year 2009. As a result, the price of coal supply is expected to be more unstable and uncertain in 2010 and regional supply shortage may arise for the supply of certain types of coal.

Under such circumstance, the Company will refine price control objectives and streamline purchase structure.  The Company will also exploit its advantages in other markets and other resources to pursue coal resources outside PRC, make joint efforts with coal suppliers to develop coal-exploration and extraction projects, and explore new avenues to acquire coal resources. Meanwhile, the Company will strive to control fuel costs by enhanced inspection of coal supplies and the variety of heat value.

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The financial foreign exchange market

The Company has strong capacity, good reputation and sound financing channels both domestically and internationally.

Domestic business. Although the People’s Bank of China has recently raised the Renminbi deposit reserve requirement ratio, the PRC government is expected to continue implementing liberated monetary policies during 2010. Therefore, the interest of Renminbi is not likely to rise in the foreseeable future. The Company expects no material adverse impact on its operating results from foreign exchange movement in foreseeable future on the Company, because the Company’s foreign liabilities are mostly denominated in US dollar and lesser in Euro and the conversion rate between Renminbi and US dollar is expected to stay stable.

Overseas business. SinoSing Power completed its refinancing in 2009, through which all of its outstanding loans denominated in US dollar were refinanced through loans denominated in Singapore dollar, matching the functional currency of its operation. As a result, no currency risk is expected to have material adverse impact on the overseas operations of the Company.

F. Employee benefits

As of December 31, 2009, the Company and its subsidiaries had 33,587 employees, of which 245 were located outside PRC. The Company and its subsidiaries provided employees with competitive remuneration and linked such remuneration to operating results as working incentives for the employees. Currently, the Company and its subsidiaries do not have any non-cash remuneration packages.

Based on the development plans of the Company and its subsidiaries and the requirements of individual positions, together with consideration of specific characteristics of individual employees, the Company and its subsidiaries tailored various training programs for their employees on management skills, technical skills and marketing skills. These programs enhanced both the knowledge and operational skills of the employees.

G. Guarantee on loans and restricted assets

 As of December 31, 2009, the Company provided guarantee for long-term bank borrowings of SinoSing Power, a wholly owned subsidiary, amounting to RMB14.942 billion. As of December 31, 2009, the Company and its subsidiaries have pledged for the following borrowings:

The Company pledged certain accounts receivable for certain short-term loans borrowed in the second half of 2009. As at 31 December 2009, the balance of secured loans amounted to RMB698 million, and the pledged accounts receivable amounted to approximately RMB1.032 billion.

As of December 31, 2009, secured short-term loans of RMB142 million represented the discounted notes receivable with recourse.

As of December 31, 2009, restricted bank deposits amounted to RMB225 million, which were mainly deposits for letters of credits.

The Company had no significant contingent liabilities as of December 31, 2009.

H. Off-balance sheet arrangements

As of December 31, 2009, there was no off-balance sheet arrangements which have or reasonably likely to have an effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

I. Performance of significant investments and their prospects

The Company acquired 25% equity interest in Shenzhen Energy Group Co., Ltd. (“Shenzhen Energy Group”) for RMB2.39 billion on April 22, 2003, and acquired 200 million shares from Shenzhen Energy, a subsidiary of Shenzhen Energy Group, in December 2007. These investments brought a profit of RMB487 million for the Company for the year ended December 31, 2009 under IFRS. Shenzhen Energy issued new shares to Shenzhen Energy Group in acquiring most of the assets of Shenzhen Energy Group and Shenzhen Energy Group will be deregistered ultimately. Upon Shenzhen Energy Group’s liquidation, the Company will hold directly 25.01% equity interest in Shenzhen Energy. This investment is expected to provide steady returns to the Company.

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The Company held directly 60% equity interest in Sichuan Hydropower as of December 31, 2006. In January 2007, Huaneng Group increased its capital investment in Sichuan Hydropower by RMB615 million, thus reducing the Company’s equity interest in Sichuan Hydropower to 49% and making Huaneng Group the controlling shareholder of Sichuan Hydropower. This investment brought a profit of RMB208 million for the year ended December 31, 2009 under IFRS. This investment is expected to provide steady returns to the Company.

J. Tabular disclosure of contractual obligations and commercial commitments

A summary of payments due by period of our contractual obligations and commercial commitments as of December 31, 2009 is shown in the tables below. A more complete description of these obligations and commitments is included in the Notes to Financial Statements as referenced below.

Contractual Cash Obligations
(RMB million)	2010		2011-2012	2013-2014	Thereafter		Total
Long-term Loans from a Shareholder(1)		-	-	800		-		800
Long-term Bank Loans(1)		10,233	21,953	8,854		37,832		78,872
Other Long-term Loans(1)		74	7,321	73		346		7,814
Long-term bonds(2)		-	1,000	5,700		7,300		14,000
Interest Payments		3,625	5,535	3,704		9,700		22,564
Operating Lease - Head Office(3)		26	-	-		-		26
Operating Lease - Nanjing Power Plant(3)		1	3	3		45		52
Operating Lease - Dezhou Power Plant(3)		30	60	60		282		432
Operating Lease - Shang’an Power Plant(3)		2	4	4		56		66
Operating Lease - Tuas Power Generation Pte Ltd. (3)		15	-	-		-		15
		14,006	35,876	19,198		55,561		124,641
Other Commercial Commitments
(RMB million)		2010	2011-2012	2013-2014	Thereafter		Total
Long – term gas purchase contract(4)		6,213	12,426	7,476		6,246		32,361
Other commitments(3)		35,219	86	-		-		35,305
		41,432	12,512	7,476		6,246		67,666

Notes:

(1)	See Note 22 to the Financial Statements, “Long-term Loans”.
(2)	See Note 23 to the Financial Statements, "Long-term Bonds".
(3)	See Note 37 to the Financial Statements, “Commitments”.
(4)	The numbers shown in the table above were calculated based on the minimum purchases stipulated in the long-term gas contracts disclosed in Note 37 to financial statements.

The Company and its subsidiaries have various defined contribution plans in accordance with the local conditions and practices in the provinces in which they operate.  The Company and its subsidiaries pay fixed contributions into separate entities (funds) and will have no further payments obligations if the funds do not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. Disclosures of the pension plans including the contribution amounts are included in Note 35 to the Financial Statements.

K. Business plan

In 2010, the primary objective of the Company is to secure safe, stable and increasing power generation, the Company will (i) continue to pursue power market expansion, strengthen market analysis and forecast, strive to increase utilization hours, and aim to generate approximately 230.0 billion kWh and reach average utilization hours of 5,100 hours for its coal-fired generating units; (ii) strengthen the uniform management of fuel purchases and transportation, stabilize and expand the principal channels of coal supply, explore global coal market, and reduce fuel costs; (iii) reduce operating cost and administrative expenses, strive to strengthen its profitability; (iv) continue its focus on energy saving and environment protection, strive to reduce energy consumptions of the generat ing units, to ensure sound results of major economic indicators; (v) improve project management for those projects under construction, strive to increase the operating stability and capability of new generating units that commence commercial operation, accelerate project development, so as to lay a solid

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foundation for long term development and sustained growth; (vi) speed up the construction of large coal-fire power plants and co-generation projects, as well as the development of coal-fire integration projects in compliance with the prevailing energy policies of the PRC government; and (vii) undertake investments, development and constructions of projects of wind power, hydropower, solar power and other renewable energy, in compliance with the government’s energy policies and requirements for development of renewable energy.

In order to achieve the 2010 operating targets, the Company plans to (i) improve reliability of its generating units by strictly complying with the Company’s safe production guidelines, (ii) increase utilization hours by enhancing sales and marketing efforts to, and closely cooperating with, the dispatch centers of local grid companies, (iii) control fuel cost by continuously analyzing the change of fuel market to strengthen coal supply planning, enhancing the distribution and emergency response management, adjusting coal inventory constantly and optimizing the coal supply structure, (iv) reduce administrative expenses and other non-operating expenses by stricter adherence to budget, (v) increase efficiency and reduce energy consumptions of the generating units by upgrading ex isting generating units with new energy-saving technologies, (vi) increase its production capacity by completing on schedule the projects-under-construction and commencement of commercial operations of these projects, (vii) explore development opportunities in regions with high power demand and adequate coal supply, and (viii) optimize its generating capacity structure to ensure sustainable development by increasing its investments in the development of wind power, hydropower, solar power and other clean energy projects, as well as the clean development mechanism projects, with the view to increase the proportion of renewable and new energies in its power generating capacity.

ITEM 6 Directors, Senior Management and Employees

A. Directors, members of the supervisory committee and senior management

Directors

The table below sets forth certain information concerning our directors as of March 31, 2010. The current term for all of our directors is three years, which will expire in May 2011.

Name	Age	Position with us
Cao Peixi	54	Chairman of the Board of Directors
Huang Long	56	Vice Chairman of the Board of Directors
Wu Dawei	56	Director
Huang Jian	47	Director
Liu Guoyue	46	Director, President
Fan Xiaxia	47	Director, Vice President
Shan Qunying	56	Director
Xu Zujian	55	Director
Huang Mingyuan	51	Director
Liu Shuyuan	59	Director
Liu Jipeng	53	Independent Director
Yu Ning	55	Independent Director
Shao Shiwei	64	Independent Director
Zheng Jianchao	70	Independent Director
Wu Liansheng	39	Independent Director

Cao Peixi, aged 54, has served as Chairman and President of China Huaneng Group since August 27, 2008. He also serves as Deputy Head and Head of Qingdao Power Plant; Assistant to the Chief of Shandong Power Bureau; Deputy Chief (Vice President) of Shandong Power Bureau (Group Corporation); Chairman and President of Shandong Power Group Corporation; Vice President, President of China Huadian Corporation; and Chairman of Huadian Power International Corporation Limited. He graduated from Shandong University specializing in electrical engineering. He holds a post-graduate degree of master in engineering and is a senior engineer.

Huang Long, aged 56, has served as Vice Chairman of the Company since March 7, 2006. He also serves as Vice President of Huaneng Group and the Director of HIPDC. He served as the manager of the International Co-operation Department and Business Department of HIPDC, and Vice President and Secretary to the Board of the Company.  He graduated from North Carolina State University in the U.S. with a M.S. degree in communications and auto-control. He is a senior engineer.

Wu Dawei, aged 56, has served as the Director of the Company since May 13, 2008. He also serves as the Chief of Power Development Department of Huaneng Group, Director and President of HIPDC and Chairman of Huaneng Shanghai Combined-cycle Power Limited Liability Company. He previously served as Deputy General Manager of Huaneng Shanghai Shidongkou II Power Plant, Deputy General Manager of Shanghai branch of the Company, the General Manager of Huaneng Shanghai Shidongkou II Power Plant, Vice President of the Company, Deputy Chief Engineer of Huaneng Group, President of Huaneng Group East China Branch,

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and President of the Company's East China Branch. He has obtained a Master of Business Administration degree from the Central Europe International Business School. He is a senior engineer.

Huang Jian, aged 47, has served as the Director of the Company since August 27, 2008. He served as Deputy Chief of the Cost Office of the Finance Department; Chief of Cost General Office of the Finance Department of HIPDC; Chief Accountant of Beijing Branch of HIPDC; Deputy Manager of the Finance Department of HIPDC; Deputy Chief Accountant, Chief Accountant, Vice President and Company Secretary of the Company and Deputy Chief Economist and Chief of Financial Planning of Huaneng Group. Mr. Huang graduated from the accounting department of Institute of Fiscal Science of the Ministry of Finance with a post-graduate degree of master in economics. He is a senior accountant.

Liu Guoyue, aged 46, has served as the Director of the Company since May 13, 2008. He also serves as the Director of Shanghai Times Navigation Transportation Limited Company and Director of Xian Thermal Research Institute Limited Company. He also served as Deputy General Manager and General Manager of Huaneng Shijiazhuang Branch (Shang’an Power Plant), Director of Huaneng Dezhou Power Plant, and Vice President of the Company. He graduated from North China Power University, specializing in thermal engineering. He holds a doctor’s degree in engineering. He is a senior engineer.

Fan Xiaxia, aged 47, has served as the Director of the Company since May 13, 2008. He also serves as the President of the Company, Deputy General Manager of the Company’s Nantong Branch, Deputy Manager of Project Management Department of HIPDC, Deputy Manager and Manager of International Co-operation and Business Department of the Company, Manager of Project Management Department of the Company, Assistant to President of the Company and General Manager of the Company’s Zhejiang Branch Yuhuan Power Plant Preparatory Office. He graduated from Beijing Construction Institute with a bachelor degree, specializing in civil engineering. He is a senior engineer.

Shan Qunying, aged 56, is the Director of the Company. He is the Vice President of Hebei Provincial Construction Investment Company, Chairman of Hebei Provincial Natural Gas Limited Company, Chairman of Hebei Xintai Power Generation Limited Company and Hebei Construction Investment Power Fuel Management Limited Company, Vice Chairman of Guodian Construction Investment Inner Mongolia Energy Limited Company, Vice Chairman of Hong Kong Yanshan Development Limited Company, Vice Chairman of Yanshan International Investment Limited Company and Director of Hebei Construction Investment New Energy Limited Company. He had been the Energy & Communication Division Chief of Hebei Provincial Construction Investment Company. He graduated from Management Institute of Tianjin University h olding an EMBA degree. He is a senior engineer.

Xu Zujian, aged 55, has served as the Director of the Company since May 13, 2008. He also serves as the Vice President of Jiangsu Province Guoxin Asset Management Group Limited Company, and Chairman of Jiangsu Investment Management Co. Ltd. He was Vice President of Jiangsu Provincial International Trust & Investment Corporation, President of Jiangsu Provincial Investment & Management Limited Liability Company. He graduated from Liaoning Finance University majoring in infrastructure finance, holding a bachelor’s degree. He is a senior economist.

Huang Mingyuan (Ms), aged 51, has served as the Director of the Company since May 13, 2008. She also serves as the Vice President of Fujian Investment Enterprise Group Company, the President of Xiamen Fuda Photosensitive Materials Company Limited, a Director of Xiamen International Bank, Macau Luso International Bank and Guangfa Huafu Securities Company Limited and Industrial Securities Co., Ltd. She had been the director of the Office of Information Leading Group of Fujian Province, the department head to the Management Office of Fujian Province Economic and Trade (Medicine) Committee, and the Secretary General of the Leading Committee for Market Reorganization and Restructuring and Order of Economy. She graduated from the Business School of De Montfort University in the Unit ed Kingdom, specializing in business administration holding a Postgraduate Degree and was awarded a Master degree in business administration.

Liu Shuyuan, aged 59, has served as the Director of the Company since May 13, 2008. He also serves as the Chairman of Liaoning Energy Investment (Group) Limited Liability Company, Member of the 11th session of the Political Committee of Liaoning Province, Deputy Chief of the Hong Kong-Macau-Taiwan Immigrants Committee of the Political Committee of Liaoning Province, Vice Chairman of Liaoning Province International Trade Promotion Committee, Liaoning Province Entrepreneurs Committee and Liaoning Province Economical Cultural Development Committee. He previously served as the Deputy General Manager of Liaoning Provincial Trust and Investment Corporation, the Vice President, Director and President of Liaon ing Changye (Group) Limited Liability Company (Liaoning Energy Corporation), Director and General Manager of Liaoning Energy Investment (Group) Limited Liability Company and Supervisor of the Company. He is an on-job postgraduate

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of PRC Liaoning Province Communist Party School specializing in economic management. He is a senior economic engineer and senior operating manager.

Liu Jipeng, aged 53, has served as the Independent Director of the Company since May 13, 2008. He also serves as a director and mentor of PhD candidates at the Law and Economics Research Centre at China University of Political Science and Law. He graduated from the Economic Department of the graduate school of China Academy of Social Science with a master's degree in economics. He is a certified public accountant.

Yu Ning, aged 55, has served as the Independent Director of the Company since May 13, 2008. He also serves as the Independent Director of Industrial Fund Management Limited Company and Guojin Securities Limited Company and the President of All China Lawyers Association. Mr. Yu Ning served as Deputy Director and Director of CCP Central Disciplinary Inspection Commission, practicing lawyer at Beijing Times Highland Law Firm, part-time professor at Peking University, and mentor of master postgraduates at the Law School of Tsinghua University. He was the independent director of Jiangsu Lianyungang Port Co. Ltd. and Vice President of All China Lawyers Association. He graduated from the law department of Peking University in 1996. He is a qualified lawyer.

Shao Shiwei, aged 64, has served as the Independent Director of the Company since May 13, 2008. He had been the Deputy Chief of the Electricity for Agriculture of the State Energy Department, the Chief of the Law and Regulation of the State Electricity Department, Assistant General Manager of the National Electric Power Company, Deputy Secretary General of the Office Department, the President of Huadong Yixing Water Pumping and Energy Reserve Company Limited, the President and General Manager of Huadong Grid Network Company, and Chairman of the Supervisory Committee of Shanghai Electric Power Co., Ltd.. He graduated from Tianjin University specializing in power plant, power grid and power system. He is a senior engineer.

Zheng Jianchao, aged 70, has served as the Independent Director of the Company since May 13, 2008. He also serves as the Deputy Chief of China Electrical Engineering Association, Honorary Vice Chancellor and President of China Electricity Science Research Institute and the Chief of the Science Technology Committee of China Guangdong Nuclear Power Group Corporation. He had been the Independent Director of the Company, Vice Chancellor and Chancellor of China Electrical Science Research Institute, Deputy Chief of the Academy of Science and Technology Committee of China Electricity Science Research Institute. In 1995, he had been elected as an associate member of China Technology Institute. He graduated from electrical machinery engineering faculty of Tsinghua University, speciali zing in high voltage technology and holding a Postgraduate Degree. He is a senior engineer.

Wu Liansheng, aged 39, has served as the Independent Director of the Company since May 13, 2008. He also serves as a Professor, Ph. D. Tutor and head of the Department of Accounting of Guanghua Management Institution of Beijing University and Independent Director of Rongsheng Real Property Development Joint Stock Limited Company. After obtaining his doctorate, Mr. Wu Liansheng was engaged in a two year post-doctorate research in Xiamen University. Afterwards, he commenced working in Guanghua Management Institute of Beijing University as the Lecturer, Associate Professor, Professor, Ph. D. Tutor and concurrently served as the Deputy Head and Head of the Accounting Department. He graduated from Zhongnan University with a doctorate degree in Management (Accounting) in July 1999.

Supervisors

The table below sets forth certain information concerning our supervisors as of March 31, 2010. The current term for all of our supervisors is three years, which will expire in May 2011.

Name	Age	Position with us
Guo Junming	44	Chairman of the Supervisory Committee
Yu Ying	54	Vice Chairman of the Supervisory Committee
Wu Lihua	54	Supervisor
Gu Jianguo	43	Supervisor
Wang Zhaobin	54	Supervisor
Dai Xinmin	48	Supervisor

Guo Junming, aged 44, has served as Chairman of the Board of Supervisors of the Company since January 18, 2006. He also serves as Chief Accountant of Huaneng Group and Chairman of Huaneng Capital Services Limited Company.  He served as the Deputy Director of the Financial Department and the Chief of the Financial Accounting Division of Grid Construction Branch Company (Grid Construction Department) of State Power Corporation, Deputy Manager of the Finance Department of Huaneng Group, Vice President and President of China Huaneng Finance Corporation Limited, President of Huaneng Capital Services Limited Company, Deputy Chief Accountant and Manager of Finance Department of Huaneng Group. He graduated from Shanxi Finance

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and Economic Institute specializing in business finance and accounting and holds a bachelor's degree. He is a senior accountant.

Yu Ying (Ms.), aged 54, has served as Vice Chairman of the Company’s Supervisory Committee since May 11, 2005. She also serves as President of Dalian Municipal Investment Corporation.    She served as Vice Director of Social Affair Department of Dalian Municipal Planning Commission, Director of Fixed Assets Investment Department of Dalian Municipal Development and Planning Commission, Assistant to President of Dalian International Trusts Investment Corporation and Chairman and President of Dalian State-owned Asset Management Limited Company. She graduated from Northeast Finance and Economics University, specializing in international finance and international trade, with a master degree in Economics. She is a senior economist.

Wu Lihua (Ms), aged 54, has served as the Supervisor of the Company since May 13, 2008. She also serves as the Chief Accountant of HIPDC. She had been the Deputy Manager of the Finance Department of HIPDC, Deputy Manager of the Finance Department and the Manager of Diversified Businesses Management Department of the Company, Vice Chairman of the Preparatory Committee of Huaneng Insurance Company, Vice President of Yongcheng Property Insurance Holding Company Limited and the Manager of Finance Department of HIPDC. She graduated from the Renmin University of China (Second), specializing in Financial Accounting with a bachelor’s degree. She is a senior accountant.

Gu Jianguo, aged 43, has served a Supervisor of the Company since November 17, 2005. He also serves as President of Nantong Investment & Management Limited Company.    He served as Deputy Chief and Chief of General Department, Investment Department, Finance Department and Foreign Economic Affairs Department of the Nantong Municipal Planning Committee, Vice President of Nantong Ruici Investment Limited Company, Executive President of Ruici Hospital, President of Ruici (Maanshan) Development Limited Company, Chairman and President of Nantong Zhonghe Guarantee Limited Company, Chief Officer of Nantong Municipal Investment Management Centre and Director and President of Nantong Investment Management Limited Company. He g raduated from Nanjing Aviation University, holding a bachelor’s degree.He is an economic engineer.

Wang Zhaobin, aged 54, has served as a Supervisor of the Company since May 11, 2005. He also serves as Manager of the Corporate Culture Department of the Company.  He served as the Chief of the Organization Affairs Bureau of the PRC Electricity Department, Chief of the Human Resources Department and the Retirement Department of Huaneng Power, Deputy Secretary of Communist Party Committee, Secretary of the Communist Party Discipline Inspection Committee, Chairman of the Labor Union of Huaneng Beijing Power Plant, Deputy Manager and Manager of the Corporate Department and Manager of Administration Department of the Company. He graduated from China Beijing Municipal Communist Party School, specializing in economic management, holding a bach elor’s degree. He is a corporate culture specialist.

Dai Xinmin, aged 48, has served as the Supervisor of the Company since May 13, 2008. He also serves as the Manager of the Audit and Supervisory Department of the Company. He had been the Deputy Chief of the Property Right Bureau to the State Owned Assets Management Committee, the Deputy Chief Accountant, Deputy Manager of the Finance Department of Huaneng Group, the Chief Accountant of Huaneng Comprehensive Property Rights Company and the Deputy Secretary General of the Asset Operation Department of Huaneng Group. He graduated from Shanghai Finance Institute, specializing in industrial economics and holding a bachelor’s degree. He is a economic engineer.

Other Executive Officers

Gu Biquan, aged 52, has served as the Vice President and secretary to the Board of Directors of the Company since October, 2007. He was Deputy Chief and Chief of Capital Market Department, Chief and Deputy Manager of the Secretariat of the Administration Department of HIPDC, and Manager of Capital Market Department, Assistant to the President, Manager of Administration Department of the Company. He also served as Deputy Chief of Power Development Department of Huaneng Group, Vice President and secretary to the Board of Directors of HIPDC. He graduated from Beijing Broadcasting Television University, specializing in electronic engineering. He is an engineer.

Lin Weijie, aged 46, has served as the Vice President of the Company since April 2008. He was the Deputy General Manager of the Shantou Coal-fired Power Plant, General Manager of Huaneng Shantou Branch (Coal-fired Power Plant), Deputy General Manager of Huaneng Guangdong Branch (Shantou Power Plant) and Huaneng Fuzhou Branch (Power Plant), Deputy General Manager of Huaneng Shanghai Branch, General Manager of Shanghai Shidongkou Second Power Plant, Deputy Manager (officer in charge) of Marketing and Sales Department, Manager of the Planning and Development Department, and Assistant to President of the

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Company. Mr. Lin graduated from South China Polytechnic University, specializing in business management, and has a master degree in management. He is a senior engineer.

Ye Xiangdong, aged 42, has served as the Vice President of the Company since April 2008. He was the Deputy General Manager and General Manager of Huaneng Chongqing Branch (Luohuang Power Plant), President of Huaneng Chongqing Luohuang Power Generation Limited Liability Company (Luohuang Power Plant), Deputy Manager of Safety and Production Department, Manager of Project Management Department and Assistant to President of the Company. He graduated from Chongqing University, specializing in thermal transmission and holds a master degree in science. Mr. Ye is a senior engineer.

Lin Gang, aged 45, has served as the Vice President of the Company since April 2008. He was the Deputy Chief of Project Department of HIPDC, Assistant to General Manager and Deputy General Manager of Huaneng Beijing Branch (Thermal Power Plant), Deputy Manager of General Planning Department, Deputy Manager (officer in-charge) of Marketing and Sales Department of the Company, President of Huaneng Northeast Branch, Manager of Marketing and Sales Department of the Company and Assistant to President of the Company. Mr. Lin graduated from North China Power University, specializing in thermal power, and holds a master degree in science. He is a senior engineer.

Zhou Hui (Ms.), aged 46, has served as Chief Accountant of the Company since October 2007.  She served as Deputy Chief of the Finance Division and Price Management Division of the Finance Department, Chief of Division II of Finance Department of HIPDC, Deputy Manager and Manager of the Company’s Finance Department, and Deputy Chief Accountant, Chief Accountant and Manager of Finance Department of the Company. She graduated from Renmin University of China with a master’s degree in financial accounting. Ms. Zhou is a senior accountant.

Zhao Ping, aged 47, has served as the Chief Engineer of the Company since April 2008. He was the Deputy Chief of Production Technology Office of the Production Department of HIPDC, Assistant to the General Manager of Huaneng Fuzhou Branch (Power Plant), Deputy Manager of the Production Department of HIPDC, Deputy Manager of Safety and Production Department and Planning and Development Department, Manager of International Co-operation and Business Department, Manager of Safety and Production Department and Deputy Chief Engineer of the Company. He graduated from Tsinghua University, specializing in thermal engineer and holds a master degree in science. Mr. Zhao is a senior engineer.

Du Daming, aged 43, has served as the Vice President of the Company. He had been secretary of the general manager of HIPDC, deputy chief and chief of the Secretariat of the Administration Department of Huaneng Group, deputy chief of the Secretariat of the Administration Department of the Company, Assistant Chief of the Office of the Board of Directors of the Company, deputy manager of the Secretariat of the Administration Department and Deputy Director (officer in-charge) of the Administration Office of Huaneng Group, Deputy Chief of the Office of the Board of Directors of the Company, Director of the Administration Office of Huaneng Group, and Chief of the Administration Office of the Company. He graduated from North China Power University, specializing in electric system and its automation, holding a master’s degree in engineering. He is a senior engineer.

Gao Shulin, aged 49, is Chief Economist of the Company. He was deputy chief engineer and deputy General Manager of Jinzhou Power Plant, General Manager of Shenhai Thermal Power Plant, deputy chief of General Planning Department of Liaoning Electric Industry Bureau, Manager of Production Department, director of Liaoning Electric Power Research Institute, General Manager of Huaneng Beijing Co-generation Power Plant, Deputy Manager of the Human Resources Department of the Company, President of Huaneng Nuclear Power Development Co., Ltd. and Manager of Planning Development Department of the Company. He graduated from Tsinghua University, specializing in nuclear reactor engineering, holding a bachelor’s degree in engineering. He is a senior engineer.

B. Compensation for Directors, Supervisors and Executive Officers

The table below sets forth the compensation on individual basis for the directors, supervisors and other executive officers for the year ended December 31, 2009:

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Name	Position with the Company	Remuneration Paid by the Company in 2009 (1)
		(RMB in thousand)
Directors
Mr. Cao Peixi	Chairman of the Board of Directors	-
Mr. Huang Long	Vice Chairman of the Board of Directors	-
Mr. Wu Dawei	Director	131
Mr. Huang Jian	Director	-
Mr. Liu Guoyue	Director and President	804
Mr. Fan Xiaxia	Director and Vice President	804
Mr. Shan Qunying	Director	48
Mr. Xu Zujian	Director	48
Ms. Huang Mingyuan	Director	48
Mr. Liu Shuyuan	Director	48
Mr. Liu Jipeng	Independent Director	74
Mr. Yu Ning	Independent Director	74
Mr. Shao Shiwei	Independent Director	74
Mr. Zheng Jianchao	Independent Director	74
Mr. Wu Liansheng	Independent Director	74
Sub-total:		2,301
Supervisors
Mr. Guo Junming	Chairman of the Supervisory Committee	-
Ms. Yu Ying	Vice Chairman of the Supervisory Committee	48
Ms. Wu Lihua	Supervisor	-
Mr. Gu Jiangou	Supervisor	48
Mr. Wang Zhaobin	Supervisor	570
Mr. Dai Xinmin	Supervisor	568
Sub-total		1,234
Other Executive officers
Mr. Gu Biquan	Vice President and Secretary to the Board	712
Mr. Lin Weijie	Vice President	694
Mr. Ye Xiangdong	Vice President	694
Mr. Lin Gang	Vice President	693
Ms. Zhou Hui	Chief Accountant	711
Mr. Zhao Ping	Chief Engineer	693
Mr. Du Daming	Vice President (appointed in December 2009)	567
Mr. Gao Shulin	Chief Economist (appointed in December 2009)	567
Sub-total:		5,331
Total		8,866

__________

Notes:

(1) The remuneration paid by the Company in 2009 includes the basic salaries, performance salaries and pension, please see Note 36 to the Item 17 Financial Statements, “Directors’, supervisors’ and senior management’ emoluments”.

The total remuneration paid to our directors, supervisors and executive officers is comprised of basic salaries, performance salaries and pension. Of these, performance salaries account for approximately 60% of the total remuneration, which are determined on the basis of their performance. In addition, directors and supervisors who are also officers or employees of us receive certain other benefits, such as subsidized or free health care services, housing and transportation, which are customarily provided by large enterprises in the PRC to their employees.  Each of the Company’s independent directors receives annual after-tax cash compensation of RMB60,000. We do not have any service contract with any director that provides for benefits upon termination of employment .

C. Board practice

As of the end of 2003, we, in accordance with the resolutions passed at a shareholders’ general meeting, have set up four special committees, namely, the Audit Committee, the Strategy Committee, the Nomination

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Committee, and the Remuneration and Appraisal Committee, and formulated the working regulations for such committees in accordance with the relevant rules and regulations.  All committees operate in accordance with the working rules and utilize their members’ specific background, experience and industry expertise to provide advice to us, so as to enhance our operation efficiency and to make the decision-making process more rationalized.

The main duties of the Audit Committee are to assist our board in performing its statutory and fiduciary duties of supervising our accounting, financial reports, internal controls and compliance, including but not limited to, assisting our board in supervising (i) the integrity of our financial statements; (ii) our compliance with the applicable laws and regulations; (iii) the qualification and independence of our independent auditors and (iv) the performances of our independent auditors and internal auditing department.

The main duties of the Strategy Committee are to advise on, and conduct research in relation to, its long-term development strategies and decisions regarding significant investments.

The main duties of the Nomination Committee are to conduct study and provide advice in relation to the requirements for selection of directors and managers and the relevant procedures; to search for the qualified candidates of directors and managers, and to examine the candidates of directors and managers and advise matters in relation thereto.

The main duties of the Remuneration and Appraisal Committee are to conduct research on the appraisal guidelines for directors and managers, to carry out performance appraisals and provide advice accordingly, and to conduct research on the remuneration policy and proposal regarding the directors and senior management.

The members of Audit Committee are Mr. Wu Liansheng (Chairman), Mr. Liu Jipeng, Mr. Yu Ning, Mr. Shao Shiwei and Mr. Zheng Jianchao.

The members of Strategy Committee are Mr. Huang Long (Chairman), Mr. Wu Dawei, Mr. Huang Jian, Mr. Liu Guoyue, Mr. Fan Xiaxia, Mr. Shao Shiwei and Mr. Zheng Jianchao.

The members of Nomination Committee are Mr. Shao Shiwei (Chairman), Mr. Fan Xiaxia, Mr. Shan Qunying, Ms. Huang Mingyuan, Mr. Liu Jipeng, Mr. Yu Ning and Mr. Wu Liansheng.

The members of Remuneration and Evaluation Committee are Mr. Liu Jipeng (Chairman), Mr. Liu Guoyue, Mr. Xu Zujian, Mr. Liu Shuyuan, Mr. Shao Shiwei, Mr. Zheng Jianchao and Mr. Wu Liansheng.

D. Employees

As of December 31, 2009, we employed 33,587 people. Of these, 298 are headquarters management staff, 26,921 are power plant personnel directly involved in the management and operation of the power plants and the remainder are maintenance personnel, ancillary service workers and others. Over 59% our work force graduated from university or technical college. As of December 31, 2007 and 2008, we had approximately 22,899 and 28,130 employees respectively.

We conduct continuing education programs for our employees at the head office and at each power plant. We provide training in foreign language, computer, accounting and other areas to our professionals and technicians in their relevant fields.  Employees are trained in accordance with the different requirements for professional and managerial positions.

We have reformed the labor system by introducing individual labor contracts.  Currently, all employees are employed under employment contracts, which specify the employee's position, responsibilities, remuneration and grounds for termination. Short-term employment contracts have fixed terms of typically one to five years, at the end of which they may be renewed with the agreement of both the Company and the employees.

The contract system imposes discipline, provides incentives to adopt better work methods and provides us with a greater degree of management control over our work force.  We believe that, by linking remuneration to productivity, the contract system has also improved employee morale.

Each of our power plants also has a trade union and the employees of our headquarters are also members of a trade union.  These trade unions protect employee's rights, aim to fulfill our economic objectives, encourage employees to participate in management decisions and mediate disputes between us and union

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members.  We have not been subject to any strikes or other labor disturbances interfering with our operations, and we believe that our relations with our employees are good.

Total remuneration of our employees includes salaries, bonuses and allowances.  The employees also receive certain benefits in the form of education and health services subsidized by the Company and other miscellaneous subsidies.

In compliance with the relevant regulations, we and our employees participate in the local government pension plan under which all the employees are entitled to the pensions payments upon retirement.  See Note 35 to the Financial Statements.

The Company also participates in the social insurance program administered by the social security institution, under which all the employees are entitled to certain social insurance benefits, subject to adjustments in accordance with relevant PRC regulations. The Company is in compliance with all social insurance regulations and has no outstanding overdue for any social insurance contribution.

E. Share ownership

None of our directors, supervisors or senior management owns any of our shares.

ITEM 7 Major Shareholders and Related Party Transactions

A. Major shareholders

Our outstanding ordinary shares consist of A Shares and H Shares, each with a par value of RMB1.00 per share.  The following table set forth certain information regarding our major shareholders as of April 15, 2010.

Shareholder	Number of shares		Approximate percentage in the total issued domestic share capital %		Approximate percentage in the total issued share capital %
Huaneng International Power Development Corporation		5,066,662,118		56.30		42.03
China Huaneng Group(1)		1,075,124,549		11.72		8.92
Hebei Provincial Construction Investment Company		603,000,000		6.70		5.00

____________

Note: (1) Of the 1,075,124,549 shares, 1,055,124,549 shares are directly held by Huaneng Group, 20,000,000 shares are held by Huaneng Group through its wholly-owned subsidiary, China Hua Neng Hong Kong Company Limited.  In addition, Huaneng Group indirectly holds 22% of our total issued shares through HIPDC, its 51.98% owned subsidiary.

As of April 1, 2004, HIPDC and Hebei Provincial Construction Investment Company ("HPCIC") directly holds 42.39% and 7.50% of our total issued shares, respectively. Huaneng Group indirectly holds 22% of our total issued shares through HIPDC, its 51.98% owned subsidiary.

In 2004, Shantou Electric Power Development Company transferred a total of 58 million shares to HIPDC, and the shareholdings of HIPDC increased to 43.12%. In 2005, HIPDC transferred a total of 40 million shares to Liaoning Energy Investment (Group) Limited Liability Company, and therefore decreased its shareholdings in us to 42.78%.

In 2006, all of our shareholders of non-tradable domestic shares except HIPDC transferred a total of approximately 1.1 billion shares to Huaneng Group, representing 9.24% of our total issued shares. Among others, HPCIC transferred approximately 301 million shares to Huaneng Group, and decreased its shareholdings in us to 5.00%.

On April 19, 2006, we carried out our reform plan to convert all non-tradable domestic shares into tradable domestic shares. According to the plan, Huaneng Group and HIPDC transferred a total of 150 million shares to our shareholders of A Shares. As a result, the direct shareholdings of Huaneng Group and HIPDC decreased to 8.75% and 42.03%, respectively.

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In June and July of 2008, through its wholly-owned subsidiary, China Hua Neng Hong Kong Company Limited, Huaneng Group acquired 20 million H shares from open market.  As a result, the shareholding of Huaneng Group increased to 8.92%.

As resolved at the extraordinary general meeting and the H Share class meeting held on March 16, 2010, respectively, we would issue (i) no more than 1,200 million new A Shares by way of placement to no more than 10 designated investors including Huaneng Group, which would subscribe for no more than 400 million new A Shares, and (ii) no more than 400 million new H Shares to China Hua Neng Hong Kong Company Limited (“Hua Neng HK”), a wholly-owned subsidiary of Huaneng Group. The subscription price for new A Shares shall be no less than RMB7.13 per share and will be determined on the book-building basis after obtaining the approvals for the new issue. The subscription price for new H Shares shall be HK$4.97 per share. The proposed issue of new A Shares and H Shares has been approved by the State Assets Supervision and Adm inistration Commission of the State Council, and is subject to approvals by relevant governmental authorities in accordance with applicable PRC laws and regulations.

Before we were established in 1994, HIPDC and other seven promoters entered into the Shareholders' Agreement dated May 31, 1994 (the "Shareholders' Agreement") which, among other things, grants to HIPDC the right to vote all the shares owned by each of the other promoters so as to enable HIPDC to have majority voting rights in general meetings for so long as we are in existence.  In addition, directors designated by HIPDC will have majority representation on our board of directors and each of the other promoters will have one representative designated by it appointed as a member of our board of directors.  The Shareholders' Agreement also provides that for so long as we are in existence (i) HIPDC and the other signatories to the Shareholders' Agreement will maint ain their combined shareholdings to ensure their collective majority control of us, (ii) HIPDC has certain priority rights to purchase the shares held by the other signatories to the Shareholders' Agreement and (iii) if HIPDC does not exercise its priority rights to purchase such shares, each of the signatories to the Shareholders' Agreement other than HIPDC has a priority right to purchase such shares on a pro rata basis and (iv) no shares may be sold or transferred unless their transferees agree to abide by the terms of the Shareholders' Agreement. As a result of the Shareholders' Agreement, HIPDC held 70.09% of the total voting rights of the outstanding shares and, subject to the Shareholders’ Agreement, had the power to control the election of all of our directors and to direct our management and policies.

On May 12, 2006, HIPDC and other promoters (including the shareholders who assumed the rights and obligations of original promoters as a result of  share transfer) entered into an amendment to the Shareholders’ Agreement, pursuant to which, each promoter  shall be entitled to exercise its own voting rights at the shareholders’ general meeting. Consequently, HIPDC currently holds 42.03% of our total voting rights. Since HIPDC's parent company, Huaneng Group, currently holds, directly or through its wholly owned subsidiary, 8.92% of our total voting rights. HIPDC is able to exert control over us when acting in concert with Huaneng Group.

B. Related party transactions

Guarantees

The table below sets forth information on guarantees provided by Huaneng Group, HIPDC and the Company to the related parties in 2009 for the purposes of financing their operation, construction and renovation.

Guarantor	Guarantee	Interest Rate	Largest Amount Outstanding in 2009		Amount Outstanding As of March 31, 2010
		(%)	(RMB)		(RMB)
Huaneng Group	The Company	6.36		230,635,655		185,895,652
(Ultimate Parent of the Company)	The Company	LIBOR + 0.075		281,090,368		215,960,777
	Luohuang Power Company(1)	5.95		494,543,109		246,971,265
	Qinbei Power Company(2)	LIBOR+0.43		48,818,570		29,255,570
	Qinbei Power Company(2)	LIBOR+0.3		45,029,762		26,221,786
	Yangliuqing Power Company(3)	2.15		561,074,102		497,219,333
HIPDC	The Company	5.95		317,920,975		158,767,452
	The Company	6.60		260,395,156		185,770,641

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	The Company	6.60	108,598,708	81,350,119
	The Company	6.54	409,285,125	233,593,181
	The Company	5.95	367,310,836	244,576,513
	The Company	5.20	4,000,000,000	4,000,000,000
	The Company	5.00	2,000,000,000	2,000,000,000
The Company	SinoSing Power Company(4)	SIBOR+1.65	13,030,822,028	13,026,548,803	��
	SinoSing Power Company(4)	SIBOR+1.65	1,910,937,830	1,910,311,173
	SinoSing Power Company(4)	LIBOR+1.25	342,025,880	-
	SinoSing Power Company(4)	LIBOR+1.25	3,009,827,744	-
	SinoSing Power Company(4)	SIBOR+1.25	692,727,450	-
	Rizhao Power Company(5)	5.94	8,500,000	-
	Rizhao Power Company(5)	7.83	8,500,000	-
	Rizhao Power Company(5)	7.83	8,500,000	-
	Rizhao Power Company(5)	5.94	18,062,500	-

____________

Notes:

(1)	Luohuang Power Company is a subsidiary of the Company.
(2)	Qinbei Power Company is a subsidiary of the Company.
(3)	Yangliuqing Power Company is a subsidiary of the Company.
(4)	SinoSing Power Company is a subsidiary of the Company.
(5)	Rizhao Power Company is an associate of the Company.

Loans

The table below sets forth the loans made by Huaneng Group, Huaneng Finance, Huaneng New Energy and the Company to the related parties in 2009 for the purposes of financing their operation, construction and renovation.

Loans
Lender	Borrower	Interest Rate	Largest Amount Outstanding in 2009	Outstanding Balance as of March 31, 2010
		(%)	(RMB)	(RMB)
Huaneng Group	The Company	5.02	2,000,000,000	-
(Ultimate Parent of the Company)	Yushe Power Company(1)	4.60	225,000,000	225,000,000
	Yushe Power Company(1)	4.05	75,000,000	75,000,000
	Qinbei Power Company(2)	4.60	375,000,000	375,000,000
	Qinbei Power Company(2)	4.32	125,000,000	125,000,000
Huaneng Finance	Yushe Power Company(1)	4.86	130,000,000	130,000,000
(Subsidiary of Huaneng Group)	Yushe Power Company(1)	4.78	30,000,000	-
	Yushe Power Company(1)	4.78	100,000,000	-
	Yangliuqing Power Company(3)	4.86	100,000,000	100,000,000
	Weihai Power Company(4)	4.78	100,000,000	100,000,000
	Weihai Power Company(4)	6.72	50,000,000	-
	Weihai Power Company(4)	4.78	100,000,000	-

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	Weihai Power Company(4)	4.78	100,000,000	-
	Huaiyin II Power Company(10)	4.78	200,000,000	-
	Taicang II Power Company(13)	4.78	90,000,000	-
	Taicang II Power Company(13)	4.78	200,000,000	-
	Yueyang Power Company(12)	4.78	130,000,000	-
	Pingliang Power Company(8)	5.99	150,000,000	-
	Pingliang Power Company(8)	5.02	140,000,000	-
Huaneng New Energy	Qidong Wind Power(5)	5.35	343,000,000	-
(Subsidiary of Huaneng Group)
The Company	Shanghai Power Company(6)	5.31	500,000,000	500,000,000
	Shanghai Power Company(6)	5.31	1,000,000,000	1,000,000,000
	Shanghai Power Company(6)	5.31	520,000,000	750,000,000
	Shanghai Power Company(6)	5.58	1,700,000,000	1,700,000,000
	Daditaihong(7)	5.31	110,000,000	110,000,000
	Daditaihong(7)	5.31	60,000,000	60,000,000
	Daditaihong(7)	4.78	50,000,000	85,000,000
	Daditaihong(7)	5.58	40,000,000	-
	Daditaihong(7)	4.78	140,000,000	140,000,000
	Yushe Power Company(1)	4.51	280,000,000	280,000,000
	Yushe Power Company(1)	4.05	135,000,000	135,000,000
	Pingliang Power Company(8)	4.78	400,000,000	400,000,000
	Pingliang Power Company(8)	4.05	1,060,000,000	1,060,000,000
	Weihai Power Company(4)	4.51	600,000,000	600,000,000
	Weihai Power Company(4)	4.51	200,000,000	-
	Weihai Power Company(4)	4.51	200,000,000	-
	Weihai Power Company(4)	4.78	-	400,000,000
	Weihai Power Company(4)	4.05	400,000,000	400,000,000
	Jinling Power Company(9)	4.51	400,000,000	400,000,000
	Huaiyin II Power Company(10)	4.32	2,000,000,000	2,000,000,000
	Huaiyin II Power Company(10)	4.25	320,000,000	320,000,000
	Luohuang Power Company(11)	4.32	1,300,000,000	1,300,000,000
	Yueyang Power Company(12)	4.16	1,100,000,000	1,100,000,000
	Qinbei Power Company(2)	4.16	600,000,000	600,000,000
	Qinbei Power Company(2)	4.78	50,000,000	50,000,000
	Taicang II Power Company(13)	4.09	500,000,000	500,000,000
	Taicang II Power Company(13)	4.51	500,000,000	-
	Taicang II Power Company(13)	4.05	900,000,000	900,000,000
	Taicang II Power Company(13)	4.05	400,000,000	400,000,000
	Xindian Power Company(14)	4.05	1,000,000,000	1,000,000,000
	Xindian Power Company(14)	4.78	40,000,000	70,000,000
	Yangliuqing Power Company(3)	3.79	850,000,000	850,000,000
	Yangliuqing Power Company(3)	4.05	100,000,000	100,000,000
	Beijing Power Company(15)	3.79	400,000,000	400,000,000
	Yingkou Power Company(16)	3.72	700,000,000	700,000,000
	Yingkou Power Company(16)	5.20	700,000,000	700,000,000

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____________

Notes:

(1)	Yushe Power Company is a subsidiary of the Company.
(2)	Qinbei Power Company is a subsidiary of the Company.
(3)	Yangliuqing Power Company is a subsidiary of the Company..
(4)	Weihai Power Company is a subsidiary of the Company.
(5)	Qidong Wind Power is a subsidiary of the Company.
(6)	Shanghai Power Company is a subsidiary of the Company.
(7)	Daditaihong is a subsidiary of the Company.
(8)	Pingliang Power Company is a subsidiary of the Company.
(9)	Jinling Power Company is a subsidiary of the Company.
(10)	Huaiyin II Power Company is a subsidiary of the Company.
(11)	Luohuang Power Company is a subsidiary of the Company.
(12)	Yueyang Power Company is a subsidiary of the Company.
(13)	Taicang II Power Company is a subsidiary of the Company.
(14)	Xindian Power Company is a subsidiary of the Company.
(15)	Beijing Power Company is a subsidiary of the Company.
(16)	Yingkou Power Company is a subsidiary of the Company.

Lease Agreement

Pursuant to a leasing agreement between HIPDC and us signed on December 26, 2000, HIPDC agreed to lease Tianyin Mansion with a total area of 27,800 square meters to us for 5 years, and the annual rent is RMB25 million.  The leasing agreement was effective retroactively as of January 1, 2000.  In 2005, the leasing agreement was renewed for 5 years with the annual rent of RMB26 million.

Acquisition of Beijing Co-generation Power Plant and Yangliuqing Co-generation Power Plant

On April 21, 2009, we entered into a transfer agreement with Huaneng Group, pursuant to which we agreed to acquire the 55% equity interest in Yangliuqing Co-generation Power Plant held by Huaneng Group for a consideration of RMB1.076 billion.  On the same day, we entered into a transfer agreement with HIPDC, pursuant to which we agreed to acquire the 41% equity interest in Beijing Co-generation Power Plant held by HIPDC for a consideration of RMB1.272 billion. We completed both of the above acquisitions in September 2009.

Acquisition of Qidong Wind Power

On March 31, 2009, we entered into a transfer agreement with Huaneng New Energy, a subsidiary of Huaneng Group, pursuant to which we agreed to acquire from Huaneng New Energy its 65% equity interest in Qidong Wind Power for a consideration of RMB103 million. We completed the acquisition of Qidong Wind Power in September 2009.

Transactions with Huaneng Group

On October 20 2009, we entered into the Framework Agreement with Huaneng Group, our ultimate controlling shareholder, for a term commencing on January 1, 2010 expiring on December 31, 2010. Pursuant to the Huaneng Group Framework Agreement, we will conduct the following transactions with Huaneng Group and its subsidiaries and associates: (i) purchase of ancillary equipment and parts; (ii) purchase of coal and transportation services; (iii) sale of products; (iv) leasing of facilities, land and office spaces; (v) purchase of technical services and engineering contracting services; and (vi) provision of entrusted sale services.

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Transactions with Huaneng Finance

On October 21, 2008, we entered into the Huaneng Finance Framework Agreement with Huaneng Finance, a subsidiary of Huaneng Group, for a term commencing on January 1, 2009 and expiring on December 31, 2011. Pursuant to the Huaneng Finance Framework Agreement, we will enter into the following transactions with Huaneng Finance: (i) placing cash deposits by us with Huaneng Finance; (ii) provision of notes discounting services by Huaneng Finance to us; and (iii) provision of loan advancement by Huaneng Finance to us. Such transactions will be conducted on an on-going basis and will constitute continuing connected transactions under the Hong Kong Listing Rules. During the period from 2009 to 2011, the maximum outstanding balance of the deposits to be placed with Huaneng Finance under the Huaneng Finance Framework Agreement, on a daily basis, will not exceed RMB 6 billion. As of December 31, 2009, we placed with Huaneng Finance current deposits of approximately RMB2,742 million, which bore interest rates ranging from 0.36% to 1.35% per annum.

Entrusted Management Arrangements with Huaneng Group and HIPDC

We have entered into certain entrusted management arrangements with Huaneng Group and HIPDC in relation to the management of thermal power plants.  Services under such entrusted management arrangements include comprehensive planned management, annual planned management, power operation and sale management, production management of power plants, fuel management, construction management, financial management, human resources and labor wages management, comprehensive affairs management, shareholding management and reporting/co-ordination management. By entering into these entrusted management arrangements, we will further accumulate management experience as a result of the expansion of our operation scale and set a precedent for large-scale and multi-entities entrusted manage ment in the PRC.  These entrusted management arrangements will also enable us to obtain direct knowledge of the development status of more power markets, thereby exploring new development opportunities.

Coal purchases

In 2009, we paid RMB1,099.75 million and RMB1,195.21 million, RMB 1,517.26 million and RMB 396.64 million, respectively, to Huaneng Energy & Communications Holdings Co., Ltd. (“HEC”) and its subsidiaries, Hulunbeier Energy Company Ltd. (“Hulunbeier Energy”), Rizhao Power Company and other related parties of Huaneng Group for coal purchase. For a detailed discussion of related party transactions, see Note 34 to the Financial Statements.

C. Interests of experts and counsel

Not applicable.

ITEM 8  Financial Information

A. Consolidated statements and other financial information

See pages F-1 to F-89.

Legal proceedings

We are not a defendant in any material litigation or arbitration and no litigation or claim of material importance is known to us or any member of the Board of Directors of us to be pending or threatened against us.

Dividend distribution policy

Our Board of Directors will determine the payment of dividends, if any, with respect to our shares on a per share basis.  Any final dividend for a financial year shall be subject to shareholders' approval.  The Board may declare interim and special dividends at any time under general authorization by a shareholders' ordinary resolution. A decision to declare or to pay any dividends in the future, and the amount of any dividends, will depend on our results of operations, cash flows, financial condition, future prospects and other factors which our Directors may determine as important.

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For holders of our H shares, cash dividend payments, if any, shall be declared by our Board of Directors in Renminbi and paid in HK Dollars.  The depositary will convert the HK Dollar dividend payments and distribute them to holders of ADSs in US Dollars, less expenses of conversion.

Dividends may be paid only out of our distributable profits (less allocation to the statutory funds of 10% of our net income determined in accordance with PRC GAAP) and may be subject to any applicable PRC withholding tax.  Our Articles of Association limit our distributable profits to the lower of the amount determined in accordance with PRC GAAP and IFRS.  Subject to the above, we expect to carry a positive, balanced and stable dividend distribution policy.

Our board has proposed a final dividend of RMB0.21 per ordinary share (tax inclusive) for the year ended December 31, 2009, which is equivalent to RMB8.40 per ADS. The total dividend to be paid amounted to approximately RMB2.5316 billion.

B. Significant changes

On March 24, 2010, we issued the short-term debenture in the amount of RMB5 billion, with a maturity period of 270 days, a unit face value of RMB100 and an interest rate of 2.55%.

ITEM 9 The Offer and Listing

A. Offer and listing details and markets

The Company's ADSs have been listed on the New York Stock Exchange since October 6, 1994. The table below sets forth, for the periods indicated, the high and low closing prices of the ADSs on the New York Stock Exchange.

	Closing Price Per ADS
	High		Low
	(US$)		(US$)
2005		31.24		26.21
2006		36.35		24.05
2007		57.12		33.19
2008		42.15		16.57
2009
2008    First Quarter		42.15		24.00
Second Quarter		36.85		26.00
Third Quarter		34.87		24.74
Fourth Quarter		29.47		16.57
2009    First Quarter		31.03		22.65
Second Quarter		29.93		24.81
Third Quarter		34.43		26.17
Fourth Quarter		29.20		21.60
2009    October		29.20		25.28
November		27.86		25.00
December		25.66		21.60
2010    January		24.38		21.72
February		24.71		22.43
March		24.42		23.02

______________

Source: Reuters

Each ADS represents 40 H shares. As of March 31, 2010, there were 143 registered holders of American Depositary Receipts evidencing ADS.

On January 21, 1998, we listed our H shares on the Hong Kong Stock Exchange. On February 26, 1998, we placed 250 million H Shares Placement at the price of HK$4.40 per H share or US$22.73 per ADS. In May, 2004, we affected a two-for-one stock split by way of stock dividend for all our outstanding shares including H shares. The table below sets forth, for the periods indicated, the high and low closing prices of H shares on the Hong Kong Stock Exchange.

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	Closing Price Per H shares
	High		Low
	(HK$)		(HK$)
2005		6.10		5.10
2006		7.00		4.70
2007		10.8		6.51
2008		8.22		2.96
2009
2008      First Quarter		8.22		4.61
Second Quarter		7.03		4.76
Third Quarter		6.49		4.78
Fourth Quarter		5.76		2.96
2009      First Quarter		6.00		4.45
Second Quarter		6.08		4.80
Third Quarter		6.71		5.02
Fourth Quarter		5.70		4.19
2009      October		5.70		5.00
November		5.37		4.73
December		4.96		4.19
2010      January		4.82		4.24
February		4.85		4.33
March		4.78		4.46

_______________

Source: Reuters

As of March 31, 2010, there were 609 registered holders of H Shares.

ITEM 10 Additional Information

A. Share capital

Not applicable.

B. Memorandum and articles of association

The following is a brief summary of certain provisions of our Articles of Association, as amended,the Company Law and certain other applicable laws and regulations of the PRC.  Such summary does not purport to be complete.  For further information, you and your advisors should refer to the text of our Articles of Association, as amended, and to the texts of applicable laws and regulations.

Objects and Purposes

We are a joint stock limited company established in accordance with the Standard Opinion for Joint Stock Limited Companies (the “Standard Opinion”) and certain other relevant laws and regulations of the PRC. We are registered with the PRC State Administration for Industry and Commerce with business license number Qi Gu Guo Zi No. 000496.  Article 10 of our Articles of Association provides that our scope of businesses includes, among other things, investment, construction, operation and management of power plants; development, investment and operation of other export-oriented enterprises related to power plants; and production and supply of thermal heat.

Directors

Our directors shall be elected at our shareholders' general meeting. Because the shares do not have cumulative voting rights, a holder of a majority of the shares is able to elect all of the directors.  Our directors shall be elected for a term of three years and may serve consecutive terms upon re-election, except that independent directors may only serve a maximum of two consecutive terms of six years.  Our directors are not required to hold any shares in us, and there is no age limit requirement for the retirement or non-retirement of our directors.

Where a director is materially interested, directly or indirectly, in a contract, transaction or arrangement (including any proposed contract, transaction or arrangement) with us, he or she shall declare the nature and extent of his or her interests to the board of directors at the earliest opportunity, whether or not such contract, transaction or arrangement is otherwise subject to the approval of the board.  A director shall not vote, and shall

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not be counted in the quorum of the meeting, on any resolution concerning any contract, transaction or arrangement where the director owns material rights or interests therein.  A director is deemed to be interested in a contract, transaction or arrangement in which his associate (as defined by Article 133 of the Articles of Association) is interested.

Unless the interested director discloses his interests to the board and the contract, transaction or arrangement in which the director is materially interested is approved by the board at a meeting in which the director neither votes nor is counted in the quorum, such contract, transaction or arrangement may be revoked by us except with respect to a bona fide party thereto who does not have notice of the director's interests.

We are prohibited from making loans or providing guarantees to our directors and their associates except where such loan or guarantee is made or provided under a service contract as approved by our shareholders at the shareholders’ general meeting and to meet expenditure requirement incurred or to be incurred by the director for the purposes of the Company or for the purpose of enabling the director to perform his or her duties properly.

Matters relating to the remuneration of our directors shall be determined by the shareholders' general meeting.

Dividends

Distribution of dividends may be proposed by our board of directors for approval by an ordinary resolution of our shareholders at the shareholders’ general meeting. The Articles of Association allows for cash or stock dividends.

Dividends may only be distributed after allowance has been made for:

· recovery of losses, if any;

· allocations to the statutory surplus reserve fund; and

· allocations to a discretionary surplus reserve fund.

The allocation to the statutory surplus reserve fund is 10% of our net income determined in accordance with the PRC accounting rules.

The Articles of Association require that cash dividends and other distribution with respect of H Shares be declared in Renminbi and paid by the Company in US dollars or Hong Kong dollar in terms of the H Shares listed on the Hong Kong Stock Exchange. The Articles of Association further stipulate that for dividends and other distributions paid in currencies other than Renminbi, we shall use an exchange rate equal to the median closing exchange rate of Renminbi for such currencies announced by PBOC for two working days in the week preceding the date on which such dividends or other distributions are declared.

We will appoint receiving agents to receive, on behalf of the holders of H Shares, any dividend distributions and all other money owing by us in respect of such shares (Receiving Agents). The Receiving Agents will comply with the laws and regulations of the applicable stock exchanges on which our shares are listed. Any Receiving Agent appointed on behalf of the holders of H Shares listed on the Hong Kong Stock Exchange will be a company registered as a trust corporation under the Trustee Ordinance of Hong Kong.

Dividends payments may be subject to PRC withholding tax.

Voting Rights and Shareholders’ Meetings

Our board of directors shall convene a shareholders’ annual general meeting once every year and within six months from the end of the preceding financial year. Our board shall convene an extraordinary general meeting within two months after the occurrence of any one of the following events:

· where the number of directors is less than the number required by the PRC Company Law or two-thirds of the number specified in our Articles of Association;

· where our unrecovered losses reach one-third of the total amount of our share capital;

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· where shareholder(s) holding 10% or more of our issued shares so request(s);

· whenever our board deems necessary or our supervisory committee so requests; or

· other circumstances as provided in the Articles of Association.

Resolutions proposed by shareholder(s) holding 3% or more of the total number of voting shares shall be included in the agenda for the relevant annual general meeting if (i) they are submitted to the board of directors no later than 10 days before the annual general meeting is to be held and (ii) they are matters which fall within the scope of the functions and powers of shareholders’ general meeting and have clear subject and concrete terms to be voted upon. The board of directors shall publish a supplementary notice of annual general meeting specifying the resolutions proposed to other shareholders. Upon publication of the supplementary notice, no alteration to the proposed resolutions or addition of other proposed resolutions will be accepted.

All shareholders’ meetings must be convened by our board by written notice given to shareholders not less than 45 days before the meeting. Based on the written replies received by us 20 days before a shareholders’ meeting, we shall calculate the number of voting shares represented by shareholders who have indicated that they intend to attend the meeting. Where the number of voting shares represented by those shareholders amount to more than one-half of our total voting shares, we shall convene the shareholders’ general meeting. Otherwise, we shall, within five days before holding the shareholders’ general meeting, inform the shareholders again of the motions to be considered and the date and venue of the meeting by way of public announcement. After the announ cement is made, the shareholders’ meeting may be convened. The accidental omission by us to give notice of a meeting to, or the non-receipt of notice of a meeting by, a shareholder will not invalidate the proceedings at that shareholders’ meeting.

Shareholders at meetings have the power, among other things, to examine and approve our profit distribution plans and plans to recover loses, the annual budget, an increase or reduction of registered share capital, the reports of our board of directors and supervisory committee, the issuance of debentures, and the plans for merger, division, dissolution or liquidation; to elect or remove our directors and supervisors who are not elected as employees’ representatives; and to review and amend our Articles of Association. In addition, the rights of a class of shareholders may not be modified or abrogated, unless approved by a special resolution of shareholders at a general shareholders’ meeting and by a special resolution of shareholders of that class of shares at a separat e meeting. Our Articles of Association enumerate, without limitation, certain amendments which would be deemed to be a modification or abrogation of the rights of a class of shareholders, including increasing or decreasing the number of shares of such class or the number of shares of a class with voting or distribution rights or privileges equal or superior to the shares of such class, removing or reducing rights to receive dividends in a particular currency, and creating shares with voting or distribution rights or privileges equal or superior to shares of such class.

Each share is entitled to one vote on all such matters submitted to a vote of our shareholders at the shareholders’ general meetings, except for meetings of a special class of shareholders where only holders of shares of the affected class are entitled to vote on the basis of one vote per share of the affected class.

Shareholders are entitled to attend and vote at meetings either in person or by proxy. Proxies must be in writing and deposited at our legal address, or such other place as is specified in the meeting notice, not less than 24 hours before the time for holding the meeting at which the proxy proposes to vote or the time appointed for the passing of the relevant resolution(s). When the instrument appointing a proxy is executed by the shareholder’s attorney-in-fact, such proxy when deposited must be accompanied by a notary certified copy of the relevant power of attorney or other authority under which the proxy was executed.

Except for those actions discussed below which require supermajority votes (‘‘special resolutions’’), resolutions of the shareholders are passed by a simple majority of the voting shares held by shareholders who are present in person or by proxy. Special resolutions must be passed by more than two-thirds of the voting shares held by shareholders who are present in person or by proxy.

The following decisions must be adopted by special resolution:

· an increase or reduction of our registered share capital or the issuance of shares, including stock distributions, of any class, warrants and other similar securities;

· issuance of debentures;

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· our division, merger, dissolution, liquidation and change of the legal form;

· amendments to our Articles of Association;

· acquisition or disposal of material assets or providing guarantee in the amount exceeding 30% of our most recent audited total assets within one year; and

· any other matters our shareholders have resolved by way of an ordinary resolution at a general meeting to be of a nature which may have a material impact on us and should be adopted by special resolution.

In addition, amendments to the Articles of Association require the approval and consent of the relevant PRC authorities.

All other actions taken by the shareholders, including the appointment and removal of our directors and supervisors and the declaration of cash dividend payments, will be decided by an ordinary resolution of the shareholders.

Any shareholder resolution which is in violation of any laws or regulations of the PRC will be null and void.

Liquidation Rights

In the event of our liquidation, the ordinary shares held by overseas shareholderswill rank pari passu with the ordinary shares held by the domestic shareholders, and any of our assets remaining after payments (in order of priority) of (a) the costs of liquidation (b) wages and social insurance fees payable to or for our employees for the past three years prior to the date of liquidation; (c) overdue taxes and tax surcharges, funds and other amounts payable pursuant to the applicable administrative regulations; and (d) bank loans, corporate bonds and other debts, will be divided among our shareholders in accordance with the class of shares and their proportional shareholdings.

Further Capital Call

Shareholders are not liable to make any further contribution to the share capital other than according to the terms, which were agreed by the subscriber of the relevant shares at the time of subscription.

Increases in Share Capital and Preemptive Rights

The Articles of Association require the approval by a special resolution of the shareholders prior to authorizing, allotting, issuing or granting shares, securities convertible into shares or options, warrants or similar rights to subscribe for any shares or such convertible securities. New issues of shares must also be approved by the relevant PRC authorities.

Shareholders do not have preemptive rights with respect to new issues of shares of the Company.

Reduction of Share Capital and Purchase by Us of Our Shares and General Mandate to Repurchase Shares

We may reduce our registered share capital only upon obtaining the approval of the shareholders by a special resolution and, in certain circumstances, of relevant PRC authorities. The number of H Shares, which may be purchased is subject to the Hong Kong Takeovers and Share Repurchase Codes.

Restrictions on Large or Controlling Shareholders

Our Articles of Association provide that, in addition to any obligation imposed by laws and administration regulations or required by the listing rules of the stock exchanges on which our shares are listed, a controlling shareholder shall not exercise his voting rights in a manner prejudicial to the interests of the shareholders generally or of some part of the shareholders:

(1)             to relieve a director or supervisor from his or her duty to act honestly in our best interests;

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(2)             to approve the expropriation by a director or supervisor (for his or her own benefit or for thebenefit of another person) of our assets in any way, including, without limitation, opportunities which may benefit us; or

(3)             to approve the expropriation by a director or supervisor (for his or her own benefit or for the benefit of another person) of the individual rights of other shareholders, including, without limitation, rights to distributions and voting rights (save according to a restructuring of our company which has been submitted for approval by the shareholders in a general meeting in accordance with our Articles of Association).

A controlling shareholder, however, will not be precluded by our Articles of Association or any laws and administrative regulations or the listing rules of the stock exchanges on which our shares are listed from voting on these matters.

A controlling shareholder is defined by our Articles of Association as a shareholder whose capital contribution represents 50% or more of the total capital of our company, or a shareholder whose shares represent 50% or more of the total issued share capital of our company, or a shareholder whose capital contribution or shares is less than 50% but obtain significant voting right to influence the result of the shareholder’ general meeting or the resolutions passed thereby.

Disclosure

The Listing Agreement imposes a requirement on us to keep the Hong Kong Stock Exchange, our shareholders and other holders of our listed securities informed as soon as reasonably practicable of any information relating to us and our subsidiaries, including information on any major new developments which are not public knowledge, which:

· is necessary to enable them and the public to appraise the position of us and our subsidiaries;

· is necessary to avoid the establishment of a false market in its securities; and

· might be reasonably expected materially to affect market activity in and the price of its securities.

There are also requirements under the Listing Rules for us to obtain prior shareholders’ approval and/or to disclose to shareholders details of certain acquisitions or disposals of assets and other transactions (including transactions with controlling shareholders).

Sources of Shareholders’ Rights

The PRC’s legal system is based on written statutes and is a system in which decided legal cases have little precedent value. Prior to the effectiveness of the Company Law, the PRC did not have a comprehensive body of laws governing joint stock limited companies. The rights and obligations of our shareholders are principally contained in our constitutive documents and the Standard Opinion, under which we were established. In December 1993, the Standing Committee of the 8th National People’s Congress adopted the PRC Company Law, which superseded the Standard Opinion. In accordance with Article 229 of the Company Law, we must comply with the relevant requirements of the Company Law within an unspecified time period. As a result, we amended our Articles of Association pursu ant to the Company Law on June 6, 1995. On October 27, 2005, the Company law was amended by the Standing Committee of the 10th National People’s Congress, and came into force on January 1, 2006.

Currently, the primary sources of shareholder's rights are our Articles of Association, as amended, the PRC Company Law and the Listing Rules of the Hong Kong Stock Exchange, which, among other things, impose certain standards of conduct, fairness and disclosure on us, our directors and our controlling shareholder. To facilitate the offering and listing of shares of PRC companies overseas, and to regulate the behavior of companies whose shares are listed overseas, the State Council Securities Committee and the State Commission for Restructuring the Economic System issued on August 27, 1994 the Mandatory Provisions for Articles of Association of Company Listing Overseas (the ‘‘Mandatory Provisions’’). These Mandatory Provisions become entrenched in that, once they are incorporated into the Articles of Association of a PRC company, any amendment to those provisions will only become effective after approval by the State-owned Assets Supervision and Administration Commission of the State Council. The Listing Rules require a number of additional provisions to the Mandatory Provisions to be included in the Articles of Association of PRC companies listing H

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Shares on the Hong Kong Stock Exchange (the ‘‘Additional Provisions’’). The Mandatory Provisions and the Additional Provisions have been incorporated into our Articles of Association.

In addition, upon the listing of and for so long as the H Shares are listed on the Hong Kong Stock Exchange, we are subject to the relevant ordinances, rules and regulations applicable to companies listed on the Hong Kong Stock Exchange, including the Listing Rules of the Hong Kong Stock Exchange, the Securities (Disclosure of Interests) Ordinance (the ‘‘SDI Ordinance’’), the Securities (Insider Dealing) Ordinance and the Hong Kong Codes on Takeovers and Mergers and Share Repurchases (the ‘‘Hong Kong Takeovers and Repurchase Codes’’).

Enforceability of Shareholders’ Rights

There has not been any public disclosure in relation to the enforcement by holders of H Shares of their rights under constitutive documents of joint stock limited companies or the Company Law or in the application or interpretation of the PRC or Hong Kong regulatory provisions applicable to the PRC joint stock limited companies.

The Company Law, as amended in October 2005 and effective in January 2006, has granted shareholders with the rights to bring derivative suits. Within the Company Law, Shareholders holding more than 1 percent of the shares of the company for more than 180 consecutive days are entitled to request the supervisory committee (in terms of directors and senior management) or the board of directors (in terms of supervisors) to bring legal proceedings, or bring legal proceedings in their own name on behalf of the company where it is in emergency and the Company will be subject to irreparable loss if not to do so, against directors, supervisors or senior management who fail to comply with the laws and regulations or the company’s Articles of Association in the course of performing their duties and cause loss to the company;

Our Articles of Association provide that all differences or claims:

· between a holder of H Shares and us;

· between a holder of H Shares and any of our directors, supervisors, general managers or other senior officers; or

· between a holder of H Shares and a holder of domestic ordinary shares, arising from any provision of our Articles of Association, any right or obligation conferred or imposed by the Company Law or any other relevant law or administrative regulation which concerns our affairs

must, with certain exceptions, be referred to arbitration at either the China International Economic and Trade Arbitration Commission in the PRC or the Hong Kong International Arbitration Center. Our Articles of Association provide that such arbitration will be final and conclusive. In June 1999, an arrangement was made between the People’s Courts of the PRC and the courts of Hong Kong to mutually enforce arbitration rewards rendered in the PRC and Hong Kong according to their respective laws. This new arrangement was approved by the Supreme Court of the PRC and the Hong Kong Legislative Council and became effective on February 1, 2000.

The holders of H Shares will not be able to bring actions on the basis of violations of the Listing Rules and must rely on the Hong Kong Stock Exchange to enforce its rules. The SDI Ordinance establishes certain obligations in relation to disclosure of shareholder's interests in Hong Kong listed companies, the violation of which is subject to prosecution by the Securities and Futures Commission of Hong Kong. The Hong Kong Takeovers and Repurchase Codes do not have the force of law and are only standards of commercial conduct considered acceptable for takeover and merger transactions and share repurchases in Hong Kong as established by the Securities and Futures Commission and the securities and futures industry in Hong Kong.

We have appointed CT Corporation System, New York, as our agent to receive service of process with respect to any action brought against us in certain courts in New York under the United States federal and New York State’s securities laws. However, as the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts within the United States, the United Kingdom, Japan or most other the Organization for Economic Cooperation and Development countries, administrative actions brought by regulatory authorities, such as the Commission, and other actions which result in foreign court judgments, could (assuming such actions are not required by PRC law and the Articles of Association to be arbitrated) only be enforced in the PRC on a reciproc al basis or according to relevant international treaty to which China is a party if such judgments or rulings do not violate the basic principles of the law of the PRC or

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the sovereignty, security and public interest of the society of the PRC, as determined by a People’s Court of the PRC which has the jurisdiction for recognition and enforcement of judgments. We have been advised by our PRC counsel, Haiwen & Partners, that there is uncertainty as to the enforceability in the PRC of actions to enforce judgments of United States courts arising out of or based on the ownership of H Shares or ADSs, including judgments arising out of or based on the civil liability provisions of United States federal or state securities laws.

Restrictions on Transferability and the Share Register

H Shares may be traded only among investors who are not PRC persons, and may not be sold to PRC investors. There are no restrictions on the ability of investors who are not PRC residents to hold H Shares.

As provided in the Articles of Associations we may refuse to register a transfer of H Shares listed on Hong Kong Stock Exchange unless:

· a fee (for each instrument of transfer) of HK dollar 2.50, or any higher fee as agreed by the Hong Kong Stock Exchange, has been paid to us;

· the instrument of transfer only involves H Shares;

· the stamp duty chargeable on the instrument of transfer has been paid;

· the relevant share certificate and upon the reasonable request of the board of directors, any evidence in relation to the right of the transferor to transfer the shares have been submitted;

· if it is intended to transfer the shares to joint owners, then the maximum number of joint owners must not exceed four;

· we do not have any lien on the relevant shares.

We are required to maintain original share register for holders of H Shares in Hong Kong and a copy of the register at our legal address. Shareholders have the right to inspect and, for a reasonable charge, to copy the share register. No transfers of ordinary shares shall be recorded in our share register within 20 days prior to the date of a shareholders’ general meeting or within 5 days prior to the record date established for the purpose of distributing a dividend.

We have appointed Hong Kong Registrars Limited to act as the registrar of our H Shares. This registrar maintains our register of holders of H Shares in Hong Kong and enters transfers of shares in such register upon the presentation of the documents described above.

C. Material contracts

See “Item 7.  Major Shareholders and Related Party Transactions — B. Related Party Transactions” for certain arrangements we have entered into with HIPDC and Huaneng Group.

D. Exchange controls

The existing foreign exchange regulations have significantly reduced government foreign exchange controls for transactions under the current account, including trade and service related foreign exchange transactions and payment of dividends.  We may undertake current account foreign exchange transactions without prior approval from the State Administration of Foreign Exchange or its local branch offices by performing certain required procedures.  The PRC government has stated publicly that it intends to make the Renminbi freely convertible in the future.  However, we cannot predict whether the PRC government will continue its existing foreign exchange policy and when the PRC government will allow free conversion of Renminbi to foreign currency.

Foreign exchange transactions under the capital account, under most circumstances, including principal payments in respect of foreign currency-denominated obligations, continue to be subject to significant foreign exchange controls and require the approval of the State Administration of Foreign Exchange or its local branch offices.  These limitations could affect our ability to obtain foreign exchange through debt or equity financing, or to obtain foreign exchange for capital expenditures.

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The conversion of Renminbi into foreign currencies, including US dollars, has historically been set by the People's Bank of China based on the previous day’s PRC inter-bank foreign exchange market rate and current exchange rates on the world financial markets.  On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the US dollar. Under the new policy, the Renminbi is permitted to fluctuate within a band against a basket of certain foreign currencies based on market supply and demand.  This change in policy resulted initially in an approximately 2.0% appreciation in the value of the Renminbi against the US dollar.  Since the adoption of this new policy, the value of Renminbi against the US dollar has fluctuated on a daily basis within narrow ranges, but ov erall has further strengthened against the US dollar.  In the second half of 2008, the overall appreciation in the value of the Renminbi against the US dollar has discontinued, and the value of Renminbi against the US dollar fluctuated within narrow ranges.  There remains significant international pressure on the PRC government to further liberalize its currency policy, which could result in a further and more significant appreciation in the value of the Renminbi against the US dollar. However, there is no assurance that there will not be a devaluation of Renminbi in the future. If there is such a devaluation, our debt servicing cost will increase and the return to our overseas investors may decrease.

The following table sets forth information concerning exchange rates between the Renminbi and the U.S. dollar for the periods indicated:

	Noon Buying Rate
Period	End	Average(1)	High	Low
	(RMB per US$1.00)
2005	8.0702	8.1826	8.2765	8.0702
2006	7.8041	7.9579	8.0702	7.8041
2007	7.2946	7.6052	8.0300	7.7232
2008	6.8225	6.8193	7.2946	6.7800
2009	6.8259	6.8298	6.8395	6.8180
October	6.8264	6.8267	6.8292	6.8248
November	6.8265	6.8271	6.8300	6.8255
December	6.8259	6.8275	6.8299	6.8244
2010  January	6.8268	6.8269	6.8295	6.8258
February	6.8258	6.8285	6.8330	6.8258
March	6.8258	6.8262	6.8270	6.8254

_______________

Source: For periods prior to December 31, 2008, the noon buying rates of the Federal Reserve Bank of New York; for periods subsequent to December 31, 2008, Federal Reserve Statistical Release, Board of Governors of the Federal Reserve System.

Note: (1) Annual averages are calculated by using the average of the exchange rates on the last day of each month during the relevant year. Monthly averages are calculated by using the average of the daily rates during the relevant month.

E. Taxation

The following is a summary of (i) certain tax consequences from acquiring, owning and disposing the H Shares and ADSs based on tax laws of the PRC, the United States and the Income Tax Treaty between the PRC and the United States (the "Tax Treaty") as in effect on the date of this annual report, and is subject to changes in PRC or United States law, including changes that could have retroactive effect, and (ii) the principal PRC taxes to which we are subject to.  The following summary does not take into account or discuss the tax laws of any countries or regions other than the PRC and the United States, nor does it take into account the individual circumstances of an investor.  This summary does not purport to be a complete technical analysis or examination of al l potential tax effects relevant to an investment in the H Shares or ADSs and current and prospective investors in all jurisdictions of the H Shares or ADSs are advised to consult their tax advisors as to PRC, United States or other tax consequences of the purchase, ownership and disposition of the H Shares or ADSs.  This summary also does not purport to be a complete technical analysis or examination of all potential PRC taxes that may be levied upon us.

PRC tax considerations

Tax on dividends

Individual investors

According to the current PRC tax regulations, dividends paid by PRC companies to individual investors are ordinarily subject to a PRC withholding tax levied at a flat rate of 20%. However, such withholding tax is not applicable with respect to those PRC companies which have their shares listed on an overseas stock exchange, such as H Shares and ADSs, because of an exemption issued first in 1993 and then

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confirmed in 1994. The relevant tax authority has not collected withholding tax on dividend payments on H shares or ADSs.

In the event that the exemption is no longer available or is withdrawn, a 20% tax may be withheld on dividends in accordance with the PRC individual income tax law. Such withholding tax may be reduced under an applicable treaty on the avoidance of double taxation.

Enterprises

In accordance with the New Enterprise Income Tax Law that became effective on January 1, 2008, dividends derived from the revenues accumulated from January 1, 2008 and are paid by PRC companies to non-resident enterprises are generally subject to a PRC withholding tax levied at a rate of 10% unless exempted or reduced pursuant to an applicable double-taxation treaty or other exemptions. Dividends paid by PRC companies to resident enterprises, including enterprises established under the laws of non-PRC jurisdictions but whose “de facto management body” is located in the PRC, are not subject to any PRC withholding tax, unless the dividends are derived from the publicly traded shares which have not been held continuously by the resident enterprises for twelve months.  According to the Notice on the Issues Concerning Withholding the Enterprise Income Tax on the Dividends Paid by Chinese Resident Enterprise to H Share Holders Which Are Overseas Non-resident Enterprises issued by the State Administration of Taxation on November 6, 2008, Chinese resident enterprises are required to withhold PRC enterprise income tax at the rate of 10% on dividends paid for 2008 and later years payable to their respective H Shares holders who are non-resident enterprises.

Capital gains tax on sales of shares

As discussed above, gains realized upon the sale of overseas shares issued by PRC companies by foreign individual investors are not subject to tax on capital gains.

In accordance with the New Enterprise Income Tax Law, capital gains realized by foreign enterprises which are non-resident enterprises in China upon the sale of oversea shares are generally subject to a PRC withholding tax levied at a rate of 10%, unless exempted or reduced pursuant to an applicable double-taxation treaty or other exemptions. The capital gains realized by resident enterprises, including enterprises established under the laws of non-PRC jurisdictions but whose “de facto management body” is located in the PRC, upon the sales of oversea shares are subject to the PRC corporate income tax.

Tax treaties

Non-PRC Investors residing in countries which have entered into double-taxation treaties with the PRC may be entitled to a reduction of the withholding tax imposed on the payment of dividends to such Foreign Holders of us.  The PRC currently has double-taxation treaties with a number of countries, including Australia, Canada, France, Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom and the United States.

Stamp tax

Under the Provisional Regulations of The People's Republic of China Concerning Stamp Tax, which became effective in October, 1988, PRC stamp tax should not be imposed on the transfer of H Shares or ADSs of PRC publicly traded companies.

Taxation of the Company

Income tax

Prior to January 1, 2008, according to the relevant income tax law, foreign invested enterprises were, in general, subject to statutory income tax of 33% (30% enterprise income tax and 3% local income tax). If these enterprises are located in certain specified locations or cities, or are specifically approved by State Tax Bureau, a lower tax rate would be applied. Effective from January 1, 1999, in accordance with the practice notes on the PRC income tax laws applicable to foreign invested enterprises investing in energy and transportation infrastructure businesses, a reduced enterprise income tax rate of 15% (after the approval of State Tax Bureau) was applicable across the country. We applied this rule to all of our wholly owned operating power plants after obtaining the approval of State Tax Bureau. In addition, certain power p lants were exempted from enterprise income tax for two years starting from the first profit-making year, after offsetting all tax losses carried forward

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from the previous years (at most of five years), followed by a 50% reduction of the applicable tax rate for the next three years. The statutory income tax was assessed individually based on each of their results of operations.

On March 16, 2007, the Enterprise Income Tax Law of PRC, or the New Enterprise Income Tax Law, was enacted, and became effective on January 1, 2008.  The New Enterprise Income Tax Law imposes a uniform income tax rate of 25% for domestic enterprises and foreign invested enterprises. Therefore, our power plants  subject to a 33% income tax rate prior to January 1, 2008 are subject to a lower tax rate of 25% starting on January 1, 2008. With regard to our power plants entitled to a reduced enterprise income tax rate of 15% prior to January 1, 2008, their effective tax rate is being gradually increased to 25% within a five-year transition period commencing on January 1, 2008. Accordingly, the effective tax rate of our who lly-owned power plants will increase over time. In addition, although our power plants currently entitled to tax exemption and reduction under the income tax laws and regulations that are effective prior to the New Enterprise Income Tax Law will continue to enjoy such preferential treatments until the expiration of the same, newly established power plants will not be able to benefit from such tax incentives, unless they can satisfy specific qualifications, if any, provided by then effective laws and regulations on preferential tax treatment.

Pursuant to Guo Shui Han [2009] 33 document, starting from January 1, 2008, the Company and its branches calculate and pay income tax on a combined basis according to relevant tax laws and regulations. The original regulation specifying locations for power plants and branches of the Company to make enterprise income tax payments was abolished. The income tax of subsidiaries remains to be calculated individually based on their individual operating results.

Value-added tax

Since January 1, 1994, the government has implemented a turnover tax system applicable to FIEs.  Under the turnover tax provisions, we have to collect from our electricity customers and pay to the PRC tax authorities a value-added tax ("VAT") on our sales.  The tax rate on sales of electricity by us is 17% of total sales.  The amount of VAT payable by us is the VAT on sales reduced by the VAT paid by us on our purchases of coal, fuel and other inputs.

United States federal income tax considerations

The following is a summary of United States federal income tax considerations that are anticipated to be material for US Holders (as defined below) who purchase H shares or ADSs of the Company.  This summary is based upon existing United States federal income tax law, which is subject to change, possible with retroactive effect.  This summary does not discuss all aspects of United States federal income taxation which may be important to particular investors in light of their individual investment circumstances, such as investors subject to special tax rules including: financial institutions, insurance companies, broker-dealers, tax-exempt organizations, and, except as described below, non-US Holders, or to persons that will hold H shares or ADSs as part of a stra ddle, hedge, conversion, or constructive sale transaction for United States federal income tax purposes or that have a functional currency other than the United States Dollar, all of whom may be subject to tax rules that differ significantly from those summarized below.  In addition, this summary does not discuss any foreign, state, or local tax consideration.  This summary assumes that investors will hold their H shares or ADSs as "capital assets" (generally, property held for investment) under the United States Internal Revenue Code.  Each prospective investor is urged to consult its tax advisor regarding the United Stated federal, state, local, and foreign income and other tax considerations of the purchase, ownership, and disposition of H shares or ADSs.

For purposes of this summary, a US Holder is a beneficial owner of H shares or ADSs that is for United States federal income tax purposes:

· an individual who is a citizen or resident of the United States;

· a corporation, partnership or other entity created in or organized under the laws of, the United States or any state or political subdivision thereof;

· an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source;

· a trust the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust; or

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· a trust that was in existence on August 20, 1996, was treated as a United States person, for United States federal income tax purposes, on the previous day and elected to continue to be so treated.

A beneficial owner of the H shares or ADSs that is not a US Holder is referred to herein as a “Non-US Holder”.

If a partnership (including any entity treated as a partnership for United States federal income tax purposes) holds ADS or H shares, the tax treatment of a partner in such partnership will depend upon the status of the partner and the activities of the partnership.  Partners in such a partnership should consult their tax advisors as to the particular United States federal income tax consequences applicable to them.

A foreign corporation will be treated as a "passive foreign investment company" (a "PFIC"), for United States federal income tax purposes, if 75% or more of its gross income consists of certain types of "passive" income or 50% or more of its assets are passive.  The Company presently believes that it is not a PFIC and does not anticipate becoming a PFIC.  This is, however, a factual determination made on an annual basis and is subject to change.  The following discussion assumes that the Company will not be subject to treatment as a PFIC for United States federal income tax purposes.

US holders

For United States federal income tax purposes, a US Holder of an ADS will be treated as the owner of the proportionate interest of the H shares held by the depositary that is represented by an ADS and evidenced by such ADS.  Accordingly, no gain or loss will be recognized upon the exchange of an ADS for the holders' proportionate interest in the H shares.  A US Holder's tax basis in the withdrawn H shares will be the same as the tax basis in the ADS surrendered therefore, and the holding period in the withdrawn H shares will include the period during which the holder held the surrendered ADS.

Dividends

Any cash distributions paid by the Company out of earnings and profits, as determined under United States federal income tax principles, will be subject to tax as ordinary dividend income and will be includible in the gross income of a US Holder upon receipt.  Cash distributions paid by the Company in excess of its earnings and profits will be a return of capital to the extent of the US Holder's adjusted tax basis in its shares or ADSs, which will not be subject to tax.  Any excess will be treated as gain from the sale or exchange of a capital asset which will be treated as discussed below.  Dividends paid in Hong Kong Dollar will be includible in income in a United States Dollar amount based on the United States Dollar - Hong Kong Dollar exchange rate prevailing at the time of receipt of such dividends by the depositary, in the case of ADSs, or by the US Holder, in the case of H shares held directly by such US Holder.  A non-corporate holder of ADS or shares of Common Stock will generally be subject to tax on such dividend income at a maximum U.S. federal rate of 15% rather than the marginal tax rates generally applicable to ordinary income.  Dividends received on H shares or ADSs will not be eligible for the dividends received deduction allowed to corporations.  Any subsequent gain or loss in respect of such Hong Kong Dollar arising from exchange rate fluctuations will be ordinary income or loss.  This gain or loss will generally be treated as United States source income for United States foreign tax credit limitation purposes.  If the Depository converts the Hong Kong Dollar to US Dollar on the date it receives such Hong Kong Dollar, United States persons will not recognize any such gain or loss.

Dividends received on H shares or ADSs will be treated, for United States federal income tax purposes, as foreign source income.  A US Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on H shares or ADSs.  US Holders who do not elect to claim a foreign tax credit for foreign income tax withheld may instead claim a deduction, for United States federal income tax purposes, in respect of such withholdings, but only for a year in which the US Holder elects to do so for all creditable foreign income taxes.  In certain circumstances, a US Holder may not claim a foreign tax credit (and instead may claim a deduction) for foreign taxes impos ed on the payment of a dividend if the US Holder:

· has not held the H shares or ADSs for at least 16 days in the 30-day period beginning 15 days before the ex-dividend date, during which it is not protected from risk of loss;

· is obligated to make payments related to the dividends; or

· subject to the promulgation of future Treasury regulations that are anticipated to be retroactively applied, holds the H shares or ADSs in an arrangement in which the expected economic profit of the US Holder is insubstantial compared to the value of the foreign tax credit expected to be obtained as a result of the arrangement.

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A distribution of additional shares of the Company's stock to US Holders with respect to their H shares or ADSs that is pro rata to all the Company's shareholders may not be subject to Unites States federal income tax.  The tax basis of such additional shares will be determined by allocating the US Holders' adjusted tax basis in the H shares or ADSs between the H shares or ADSs and the additional shares, based on their relative fair market values on the date of distribution.

Sale or other disposition of H shares or ADSs

A US Holder will recognize capital gain or loss upon the sale or other disposition of H shares or ADSs in an amount equals to the difference between the amount realized upon the disposition and the US Holder's adjusted tax basis in such H shares or ADSs, as each is determined in US Dollars.  Any capital gain or loss will be long-term if the H shares or ADSs have been held for more than one year and will generally be United States source gain or loss.  The claim of a deduction in respect of a capital loss, for United States federal income tax purposes, may be subject to limitations.  Under the Tax Treaty, any such gain should be treated as foreign source income.

PFIC considerations

If the Company were to be classified as a PFIC in any taxable year, a U.S. Holder would be subject to special rules generally intended to reduce or eliminate any benefits from the deferral of United States federal income tax that a U.S. Holder could derive from investing in a foreign company that does not distribute all of its earnings on a current basis.  In such event, a U.S. Holder of the H shares or ADSs may be subject to tax at ordinary income tax rates on (i) any gain recognized on the sale of the H shares or ADSs and (ii) any "excess distribution" paid on the H shares or ADSs (generally, a distribution in excess of 125% the average annual distributions paid by the Company in the three preceding taxable years).  In addition, a U.S. Holder may be subject to an interest charge on such gain or excess distribution.

Non-US holders

An investment in H shares or ADSs by a Non-US Holder will not give rise to any United States federal income tax consequences unless:

· the dividends received or gain recognized on the sale of H shares or ADSs by such person are treated as effectively connected with the conduct of a trade or business by such person in the United States as determined under United States federal income tax law; or

· in the case of gains recognized on a sale of H shares or ADSs by an individual, such individual is present in the United States for 183 days or more and certain other conditions are met.

In order to avoid back-up withholding on dividend payments made in the United States, a Non-US Holder of the H shares or ADSs may be required to complete, and provide the payer with, an Internal Revenue Service Form W-8, or other documentary evidence, certifying that such holder is an exempt foreign person.

F. Dividends and paying agents

Not applicable.

G. Statement by experts

Not applicable.

H. Documents on display

We are subject to the information reporting requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance with the Act, file certain reports and other information with the SEC.  You may read and copy and report, statement or other information filed by us at the SEC's public reference rooms in Washington, D.C., New York and Chicago, Illinois.  Please call the SEC at 1-800-0330 for further information on the public reference rooms. Our reports and other information filed with the SEC are also available to the

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public from commercial document retrieval services and the website maintained by the SEC at http://www.sec.gov.

I. Subsidiary information

Not applicable.

ITEM 11 Quantitative and Qualitative Disclosures About Market Risk

Our primary market risk exposures are fluctuations fuel prices, foreign exchange rates and interest rates.

Equity price risk

The Company and its subsidiaries are exposed to equity security risk because of investments held by the Company and its subsidiaries and classified on the balance sheets as available-for-sale. The exposure of such a risk is presented on the balance sheets.

Detailed information relating to the available-for-sale investments is disclosed in Note 10 to the financial statements. Being a strategic investment in nature, the Company has a director in the Board of the investee and exercises influence in safeguarding the interest. The Company and its subsidiaries also closely monitor the pricing trends in the open market in determining their long-term strategic stakeholding decisions.

Foreign exchange rate risk

A portion of our Renminbi revenues are converted into other currencies to (i) repay our debts denominated in currencies other than RMB, and (ii) pay for imported equipment.

The exchange rate of Renminbi to foreign currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions.  The conversion of Renminbi into foreign currencies, including US dollars, has historically been set by the People's Bank of China.  On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the US dollar.  Under the policy, the Renminbi is permitted to fluctuate within a band against a basket of certain foreign currencies.  This change in policy resulted initially in an approximately 2.0% appreciation in the value of the Renminbi against the US dollar.  Since the adoption of this new policy, the value of Renminbi against the US dollar has fluctuated on a daily basis within narrow ranges, but overall has further strengthened against the US dollar.  There remains significant international pressure on the PRC government to further liberalize its currency policy. We cannot assure you that any future movements in the exchange rate of the Renminbi against the US dollar and other currencies will not adversely affect our results of operations and financial conditions.

SinoSing Power and its subsidiaries exposed to foreign exchange risk on fuel purchase that is denominated primarily in US dollars. They use forward exchange contracts to hedge almost all of its estimated foreign exchange exposure in respect of forecast fuel purchases over the following three months. The Company and its subsidiaries classify its forward foreign currency contracts as cash flow hedges.

The following table provides information, by maturity date, regarding our foreign currency sensitive financial instruments, which consist of bank balances and cash, short-term and long-term debt obligations, capital commitments and forward exchange contracts as of December 31, 2009 and average interest rates for the year ended December 31, 2009.

(RMB expressed in million, except interest rate and exchange rate)

	As of December 31, 2009
	Expected Maturity Date													Total recorded value	Fair value
	2010		2011		2012		2013		2014		Thereafter
On-balance sheet financial        instruments
Bank balances and cash:
In US Dollar	475		-		-		-		-			-		475	475
In Japanese Yen	6		-		-		-		-			-		6	6
Debts
Fixed rate bank loans (US Dollar)	649		647		158		35		35			18		1,542	1,607
Average interest rate	6.260	%	6.465	%	6.360	%	6.360	%	6.360	%		6.360	%
Fixed rate bank loans (Euro)	92		92		92		92		92			565		1025	911

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Average interest rate	2.079	%	2.081	%	2.083	%	2.085	%	2.089	%	2.093	%
Variable rate bank and other loans (US Dollar)	63		483		474		474		474		3,634		5,602	5,602
Average interest rate	1.460	%	1.455	%	1.453	%	1.450	%	1.446	%	1.444	%
Variable rate other loans (JPY)	18		8		-		-		-		-		26	26
Average interest rate	2.760	%	2.760	%	-		-		-		-
Capital commitments (US Dollar)	32		1		-		-		-		-		33	33
Capital commitments (Euro)	3		85		-		-		-		-		88	88
Gas purchase commitments (US           Dollar)	5,519		5,519		5,519		5,519		569		-		22,645	22,645
Forward exchange contracts           (Receive US$/Pay S$)
Contract amount	2,668		40		4		-		-		-		2,712	(9	)
Average Contractual Exchange Rate	1.41		1.43		1.43		NA		NA		NA		NA	NA

Note:

(1) The interest rates for variable rate bank and other loans are calculated based on the individual year end indices.

Due to refinancing of SinoSing Power through which all of its outstanding loans denominated in US dollar were refinanced through loans denominated in Singapore dollar, the loans denominated in US dollar decreased from RMB11.22 billion as of December 31, 2008 to RMB7.14 billion as of December 31, 2009. The outstanding balance of the Company’s loans denominated in foreign currencies other than US dollar has changed continually as a result of repayments of the loans by the Company according to agreed-upon repayment schedules or acquisition of new power plants.  The loans denominated in JPY decreased from RMB53 million as of December 31, 2007 to RMB26 million as of December 31, 2009.  The loans denominated in Euro increased from RMB650 million as of December 31, 2007 to RMB1,025 million as of December 31, 2009.

Interest rate risk

We are exposed to interest rate risk primarily resulting from fluctuations in interest rates on our debts. Upward fluctuations in interest rates increase the cost of new variable rate debts and the interest cost of outstanding floating rate borrowings.

At present, the interest rate of the Company's loans with the term of more than one year denominated in RMB is subject to the change on the benchmark interest rate published and adjusted by the People’s Bank of China. Different interest rate level corresponds to loans with different term. On the other hand, the interest rate of the Company's loans with the term of one year or less is not subject to the change in such benchmark interest rate in accordance with the loan agreements. New loan contracts entered hereafter will be subject to current benchmark interest rate. A portion of the Company’s loans denominated in foreign currency are fixed rate loans, which are not subject to the changes in market interest rate.  Due to the loan borrowed in relation to the acq uisition of SinoSing Power, the portion of the loans denominated in foreign currency with floating interest rate increased, which subjects the finance cost of the Company to the fluctuation of market interest rate.  In the current year, the Company entered into a floating-to-fixed interest rate swap agreement to hedge against cash flow interest rate risk of part of the loan. According to the interest rate swap agreement, the Company agrees with the counterparty to settle the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts quarterly until 2019. The notional amount of the outstanding interest rate swap at December 31, 2009 was US$ 400 million.

The loans borrowed by SinoSing Power are denominated in Singapore dollars, and the majority of them are with floating interest rate, which subjects the finance cost of the Company to the fluctuation of market interest rate. In addition, SinoSing Power completed its refinancing in 2009, through which all of its outstanding loans denominated in US dollar were refinanced through loans denominated in Singapore dollar, matching the functional currency of its operation.

The table below provides information about the Company and its subsidiaries’ derivative financial instruments and other financial instruments that are sensitive to changes in interest rates, including interest rate swaps and debt obligations. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate swaps, the table presents notional amounts and weighted average interest rates by expected (contractual) maturity dates. Notional amounts are used to calculate the contractual payments to be exchanged under the contract. Weighted average variable rates are based on implied forward rates in the yield curve at the reporting date.

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	As of December 31, 2009
	Expected Maturity Date												Total recorded value	Fair value
	2010		2011		2012		2013		2014		Thereafter
Debts
Fixed rate shareholder's, bank and other loans	33,818		12,619		13,654		4,013		3,857		16,675		84,636	84,511
Average interest rate	4.888	%	4.905	%	5.165	%	5.187	%	5.177	%	5.178	%
Variable rate bank and other loans	163		767		845		845		845		17,146		20,611	20,611
Average interest rate	2.192	%	2.205	%	2.218	%	2.232	%	2.248	%	2.265	%
Short-term bonds	10,101		-		-		-		-		-		10,101	10,101
Average interest rate	2.581	%	-		-		-		-		-
Long-term bonds	-		-		988		-		5,623		7,189		13,800	14,176
Average interest rate	5.340	%	5.340	%	5.340	%	5.279	%	5.279	%	5.758	%
Interest Rate Derivatives
Variable to Fixed	-		219		219		219		219		1,857		2,731	40
Average pay rate	4.400	%	4.400	%	4.400	%	4.400	%	4.400	%	4.400	%	NA	NA
Average receive rate	1.489	%	3.341	%	4.604	%	5.419	%	6.017	%	6.481	%	NA	NA

Note:

(1) The interest rates for variable rate bank and other loans are calculated based on the individual year end indices.

As of December 31, 2009, the Company’s floating rate loans denominated in foreign currency amounted to RMB5,628 million, accounting for approximately 68.68% of the total foreign loans, most of which was denominated in US dollar, and the average credit spread is 95 bps. In addition, SinoSing Power’s loans denominated in Singapore dollar are floating rate loans and amounted to RMB14,982 million as of December 31, 2009.  The interest rates of the loans denominated in US dollar and Singapore dollar are relatively low at the current market condition and there would be no drastic fluctuation within the foreseeable period, thus it would not cause any material adverse effect on the finance cost of the Company. The Company has paid special attention to the trend of international interest rate market by keeping up with the market conditions and predicting the future trend, and has made efforts to explore the feasibility of risk management by application of derivative financial instruments.  The Company expects to implement the relevant plan according to its internal approval procedures and use interest rate swap and other derivative financial instruments to control its interest rate risk upon appropriate time.

Commodity price risk

We exposed to fuel price risk on fuel purchases. SinoSing Power and its subsidiaries use fuel oil swap to hedge against such risk. The table below provides information about the fuel swap contracts that are sensitive to changes in fuel prices, including contract volumes, the weighted average contract prices, and the total contract amount by expected maturity dates.

	As of December 31, 2009
	Expected Maturity Date												Total recorded value		Fair value
	2010		2011		2012		2013		2014		Thereafter
Fuel swap contracts
Contract Volumes (MT)		587,470		12,920		3,300		-		-		-		603,690	NA
Weighted Average Price (US$/MT)		442.85		434.71		428.80	NA		NA		NA		NA		NA
Contract Amount (RMB ’million)		1,785		39		10		-		-		-		1,834	142

For other detailed information of the market risk, please refer to the Note 3(a) to the "Financial Statements ".

ITEM 12 Description of Securities Other than Equity Securities

A.           Debt Securities

Not applicable.

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B.           Warrants and Rights

Not applicable.

C.           Other Securities

Not applicable.

D.           American Depositary Shares

Depositary Fees and Charges

Under the terms of the Deposit Agreement for Huaneng Power International, Inc.’s American Depositary Shares (ADSs), an ADS holder may have to pay the following services fees to the Depositary:

Services	Fees
Issuance of ADSs	$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) issued
Cancellation of ADSs	$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) canceled
Distribution of cash dividends or other cash distributions	$2.00 (or less) per 100 ADSs (or portion of 100 ADSs) held
Distribution of ADSs pursuant to stock dividends, free stock distributions or exercises of rights	$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) held
Distribution of securities other than ADSs or rights to purchase additional ADSs	$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) held

An ADS holder will also be responsible to pay certain fees and expenses incurred by the Depositary and certain taxes and governmental charges such as:

·           taxes and other governmental charges;

·           such registration fees as may from time to time be in effect for the registration of transfers of H Shares generally on the H Share register of the Company or Foreign Registrar and applicable to transfers of H Shares to the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals;

·           such cable, telex and facsimile transmission expenses as are expressly provided in the Deposit Agreement;

·           such expenses as are incurred by the Depositary in the conversion of foreign currency; and

·           any other charge payable by the Depositary, any of the Depositary's agents, including the Custodian, or the agents of the Depositary's agents in connection with the servicing of H Shares or other Deposited Securities.

Depositary Payments for the Year 2009

In 2009, we received the payment of US$4,409.48 and US$3,683.76 (inclusive of withholding tax) from the Bank of New York Mellon, the Depositary for our ADR program, for the reimbursement of our expenses related to training and contribution to investors’ relation activities, respectively.

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PART II.

ITEM 13 Defaults, Dividend Arrearages and Delinquencies

None.

ITEM 14 Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

ITEM 15 Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2009 (the "Evaluation Date"), the end of the fiscal year covered by this annual report. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our chairman of the board, or principal executive officer, and chief accountant, or principal financial officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission as of the end of the period covered by this annual report. Based on that evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2009 at providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2009 has been audited by PricewaterhouseCoopers, an independent registered public accounting firm, as stated in their report which appears herein.

Huaneng Beijing Co-generation Limited Liability Company and Tianjin Huaneng Yangliuqing Co-generation Limited Liability Company, which were acquired by us and consolidated into our financial statements in 2009, were excluded from the scope of our management assessment and auditor attestation requirements for internal control over financial reporting for the fiscal year ended December 31, 2009.  Their total assets in aggregate represent 4% and total revenues in aggregate represent 2% of the Company's related consolidated financial statement amounts as of and for the year ended December 31, 2009.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2009, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16 Reserved

ITEM 16A Audit Committee Financial Expert

The Board of Directors has determined that Mr. Wu Liansheng and Mr. Liu Jipeng qualify as Audit Committee Financial Experts in accordance with the terms of Item 16A of Form 20-F.  Mr. Wu Liansheng and

87

Mr. Liu Jipeng were respectively appointed as our independent non-executive directors on May 13, 2008.  See "Item 6 Directors, Senior Management and Employees — A. Directors, members of the supervisory committee and senior management”.

ITEM 16B Code of Ethics

Although, as of the date of this annual report, we do not have, in form, a code of ethics that applies to the Company's principal executive officer, principal financial officer and principal accounting officer (collectively, the "Senior Corporate Officers"), we believe that, as a substantive matter, the Senior Corporate Officers are subject to a set of written requirements under the PRC law that are substantially similar to the ethical standards described under Item 16B(b) of Form 20-F.  Joint stock companies that are incorporated in China and listed on both PRC and foreign stock exchanges are heavily regulated by the central government.  To a large extent, these requirements, which are designed to promote honest and ethical conduct and compliance with applicable laws and regulations by the directors and senior executives of such companies, are not merely ethical requirements, but more importantly, statutory obligations that are legally binding on these individuals under the PRC Company Law, relevant rules and regulations promulgated by China Securities Regulatory Commission and the Mandatory Provisions of Articles of Association of Overseas Listed Companies.

ITEM 16C Principal Accountant Fees and Services

           PricewaterhouseCoopers has served as our independent public auditors for each of the fiscal years in the two-year period ended December 31, 2009, for which audited consolidated financial statements appear in this annual report on Form 20-F.

The following table shows information about fees payable by us to PricewaterhouseCoopers:

	For the year ended December 31,
(RMB million)	2009	2008
Audit fees	21.4	25.0
Audit-related fees	1.1	0.2
Tax fees	-	-
All other fees	-	-
Total	22.5	25.2

Audit Services are defined as the standard audit work that needs to be performed each year in order to issue an opinion on the consolidated financial statements and internal control over financial reporting of the Company and its subsidiaries.  It also includes other audit services which are those services that only the external auditors reasonably can provide, such as auditing of non-recurring transactions and application of new accounting policies, audits of significant and newly implemented system controls and pre-issuance reviews of quarterly financial results.

Audit-related Services include those other assurances and related services provided by auditors, but not restricted to those that can only reasonably be provided by the external auditors signing the auditors' report, that are reasonably related to the performance of the audit or review of the Company's financial statements such as acquisition due diligence, consultations concerning financial accounting and reporting standards.

Tax Services include the assistance with compliance and reporting of corporate income tax and value-added tax, assistance with our assessment of new or changing tax regimes, assessment of our transfer pricing policies and practices, and assistance with assessing relevant rules, regulations and facts going into our correspondence with tax authorities.

Audit Committee Pre-approval Policies and Procedures

The Audit Committee of the Company's Board of Directors is responsible, among other things, for the oversight of the external auditors subject to the requirements of the PRC Law and the Company's Articles of Association.  The Audit Committee has adopted a policy regarding pre-approval of audit and permissible non-audit services to be provided by our independent auditors (the "Policy").  Under the Policy, proposed services either (i) may be pre-approved by the Audit Committee without consideration of specific case-by-case services ("general pre-approval"); or (ii) require the specific pre-approval of the Audit Committee ("specific pre-approval").  General pre-approval applies to services of recurring and predictable nature.  These types of serv ices, once approved by the Audit Committee in the beginning, will not require further approval in future, except when actual fees and expenses exceed pre-approved budget levels.  In such a case, the Audit Committee may authorize one of its members to approve budget increases subject to the requirement that such member

88

provide a report on his decision to approve or deny an application for budget increases to the Audit Committee at an Audit Committee meeting held immediately after such member grants or denies the approval.

Specific pre-approval applies to all other services.  These services must be approved by the Audit Committee on a case-by-case basis after an application including proposed budget and scope of services to be provided by our independent auditors is submitted to the Audit Committee.

For 2008 and 2009, all of the services provided by PricewaterhouseCoopers were pre-approved by the Audit Committee.

ITEM 16D Exemptions from the Listing Standards for Audit Committees

Not applicable.

ITEM 16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

ITEM 16F Change in Registrant's Certifying Accountant

Not applicable.

ITEM 16G Corporate Governance

Comparison of New York Stock Exchangecorporate governance rules and China corporate governance rules for listed companies:under the amended Corporate Governance Rules of New York Stock Exchange (NYSE), foreign issuers (including the Company) listed on the NYSE are required to disclose a summary of the significant differences between their domestic corporate governance rules and NYSE corporate governance rules that would apply to a U.S. domestic issuer.  A summary of such differences is listed below:

NYSE corporate governance rules	Corporate governance rules applicable to the domestically listed companies in China and the Company’s governance practices
Director Independence
A listed company must have a majority of independent directors on its board of directors. No director qualifies as “independent’’ unless the board of directors affirmatively determines that the director has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). In addition, a director must meet certain standards to be deemed independent. For example, a director is not independent if the director is, or has been within the last three years, an employee of the listed company, or if the director has received, during any twelve-month period within the last three years, more than US$120,000 in direct compensation from the listed company.	It is required in China that any listed company must establish an independent director system and set forth specific requirements for the qualification of independent directors. For example, an independent director shall not hold any other position in the listed company other than being a director and shall not be influenced by the main shareholders or the controlling persons of the listed company, or by any other entities or persons with whom the listed company has a significant relationship. The Company has complied with the relevant Chinese corporate governance rules and has implemented internal rules governing the independence and responsibilities of independent directors. The Company determines the independence of independent directors every year.
To empower non-management directors to serve as a more effective check on management, the non-management directors of each listed company must meet at regularly scheduled executive sessions without management.	No similar requirements.
Nominating/Corporate Governance Committee
Listed companies must have a nominating/corporate governance committee composed entirely of independent directors.	The board of directors of a listed company may, through the resolution of the shareholders’ meeting, establish a nominating committee composed entirely of directors, of which the

89

		independent directors shall be the majority and the convener. The Company has established a nominating committee.
The nominating/corporate governance committee must have a written charter that addresses the committee’s purposes and responsibilities which, at minimum, must be to: search for eligible people for the board of directors, select and nominate directors for the next session of the shareholders’ annual meeting, study and propose corporate governance guidelines, supervise the evaluation of the board of directors and management, and evaluate the performance of the committee every year.		Relevant responsibilities of the nominating/corporate governance committee are similar to those stipulated by the NYSE rules, but the main responsibilities do not include the research and recommendation of corporate governance guidelines, the supervision of the evaluation of the board of directors and management, or the annual evaluation of the committee.
Compensation Committee
Listed companies must have a compensation committee composed entirely of independent directors.		The board of directors of a listed company can, through the resolution of shareholders’ meeting, have a compensation and evaluation committee composed entirely of directors, of whom the independent directors are the majority and act as the convener.
The written charter of the compensation committee must state, at least, the following purposes and responsibilities:		The responsibilities are similar to those stipulated by the NYSE rules, but the committee is not required to produce a report on the executive compensation or make an annual performance evaluation of the committee. The board of directors of the Company has established a compensation and evaluation committee composed mainly of independent directors who act as the convener, and the committee has a written charter.
(1)	review and approve the corporate goals associated with CEO’s compensation, evaluate the performance of the CEO in fulfilling these goals, and based on such evaluation determine and approve the CEO’s compensation level;
(2)	make recommendations to the board with respect to non-CEO executive officer compensation, and incentive-compensation and equity-based plans that are subject to board approval;
(3)	produce a committee report on executive compensation as required by the SEC to be included in the annual proxy statement or annual report filed with the SEC.
The charter must also include the requirement for an annual performance evaluation of the compensation committee.
Audit Committee
Listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 of Exchange Act. It must have a minimum of three members, and all audit committee members must satisfy the requirements for independence set forth in Section 303A.02 of NYSE Corporate Governance Rules as well as the requirements of Rule 10A-3b (1) of the Exchange Act.		The board of directors of a listed company can, through the resolution of the shareholders’ meeting, establish an audit committee composed entirely of directors, of which the independent directors are the majority and act as the convener, and, at minimum, one independent director is an accounting professional.

90

The written charter of the audit committee must specify that the purpose of the audit committee is to assist the board oversight of the integrity of financial statements, the company’s compliance with legal and regulatory requirements, qualifications and independence of independent auditors and the performance of the listed company’s internal audit function and independent auditors.	The responsibilities of the audit committee are similar to those stipulated by the NYSE rules, but according to the domestic practices, the Company is not required to make an annual performance evaluation of the audit committee, and the audit committee is not required to prepare an audit report to be included in the Company’s annual proxy statement. The Board of Directors of the Company has established an audit committee that satisfies relevant domestic requirements and the audit committee has a written charter.
The written charter must also require the audit committee to prepare an audit committee report as required by the SEC to be included in the listed company’s annual proxy statement as well as an annual performance evaluation of the audit committee.
Each listed company must have an internal audit department.	China has a similar regulatory provision, and the Company has an internal audit department.
Shareholders must be given the opportunity to vote on equity-compensation plans and material revisions thereto, except for employment incentive plans, certain awards and plans in the context of mergers and acquisitions.	The relevant regulations of China require the board of directors to propose plans on the amount and types of director compensation for the shareholders’ meeting to approve. The compensation plan of executive officers is subject to approval by the board and announced at the shareholders’ meeting and disclosed to the public upon the approval of the board of directors.
Corporate governance guidelines
Listed companies must adopt and disclose corporate governance guidelines, involving director qualification standards, director compensation, director continuing education, annual performance evaluation of the board of directors, etc.	CSRC has issued the Corporate Governance Rules, with which the Company has complied.
Code of ethics for directors, officers and employees
Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.	China does not have such requirement for a code for ethics. But, the directors and officers must perform their legal responsibilities in accordance with the Company Law of PRC, relative requirements of CSRC and Mandatory Provisions to the Charter of Companies Listed Overseas.
Each listed company’s CEO must certify to the NYSE each year that he or she is not aware of any violation by the Company of NYSE corporate governance listing standards and he or she must promptly notify the NYSE on writing of any material non-compliance with any applicable provisions of Section 303A.	No similar requirements.

ITEM 17 Financial Statements

See pages F-1 through F-89 following Item 19.

ITEM 18 Financial Statements

Not applicable.

ITEM 19 Exhibit

91

1.1	Articles of Association dated June 18, 2009.
3.1	Shareholders’ Agreement dated May 31, 1994, incorporated by reference to Exhibit 9.1 of our Registration Statement on Form F-1, filed with the SEC on August 24, 1994.  Amendment to Shareholders’ Agreement dated May 12, 2006, incorporated by reference to Exhibit 3.1 of our annual report on Form 20-F for the year ended December 31, 2006, filed with the SEC on April 16, 2007.
8	A list of subsidiaries.
12.1	Certifications of Principal Executive Officer pursuant to Rule 13a-14(a) promulgated under the U.S. Securities Exchange Act of 1934.
12.2	Certifications of Principal Financial Officer pursuant to Rule 13a-14(a) promulgated under the U.S. Securities Exchange Act of 1934.
13.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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THIS PAGE IS INTENTIONALLY LEFT BLANK

Report of Independent Registered Public Accounting Firm

To the shareholders of Huaneng Power International, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive  income, changes in equity and cash flows present fairly, in all material respects, the financial position of Huaneng Power International, Inc. (the "Company") and its subsidiaries at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.  Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control - Integrated Framework issued by the Comm ittee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Item 15 appearing on page 87 of the Annual Report on Form 20-F-2009.  Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and International Standards on Auditing.  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respec ts.  Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management's Report on Internal Control over Financial Reporting of the Annual Reports on Form 20-F, management has excluded Huaneng Beijing Co-generation Limited Liability Company (“Beijing Cogeneration”)  and Tianjin Huaneng Yangliuqing Co-generation Limited Liability Company (“Yangliuqing Power Company”) from its assessment of internal control over financial reporting as of December 31, 2009 because Beijing Cogeneration and Yangliuqing Power Company were acquired during 2009. We have also excluded these entities from our audit of internal control over financial reporting. Their total assets in aggregate represent 4% and total revenues in aggregate represent

F-1

2%, of the Company's related consolidated financial statement amounts as of and for the year ended December 31, 2009.

PricewaterhouseCoopers

Hong Kong

March 23, 2010

F-2

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB or US$, except per share data)

			For the year ended December 31,
	Note		2009						2008			2007
			RMB			US$			RMB			RMB
Operating revenue		5		76,862,896			11,256,685			67,835,114			49,892,049
Sales tax				(151,912	)		(22,248	)		(106,385	)		(139,772	)
Operating expenses
Fuel				(44,861,375	)		(6,570,015	)		(49,810,275	)		(27,790,310	)
Maintenance				(2,035,297	)		(298,072	)		(1,702,274	)		(1,534,016	)
Depreciation				(8,572,103	)		(1,255,397	)		(7,718,773	)		(7,225,964	)
Labor				(3,595,340	)		(526,543	)		(3,164,613	)		(2,786,109	)
Service fees on transmission and     transformer facilities of HIPDC				(140,771	)		(20,616	)		-			(140,771	)
Purchase of electricity				(3,639,440	)		(533,001	)		(2,726,028	)		-
Others				(4,692,955	)		(687,290	)		(3,842,992	)		(2,340,179	)
Total operating expense				(67,537,281	)		(9,890,934	)		(68,964,955	)		(41,817,349	)
Profit / (Loss) from operations				9,173,703			1,343,503			(1,236,226	)		7,934,928
Interest income				60,397			8,845			83,522			53,527
Financial expenses, net
Interest expense				(4,260,400	)		(623,942	)		(4,064,779	)		(2,132,122	)
Exchange gain and bank charges, net				(48,925	)		(7,165	)		356,836			204,134
Total financial expense, net				(4,309,325	)		(631,107	)		(3,707,943	)		(1,927,988	)
Share of profits of associates		8		756,164			110,741			72,688			586,323
(Loss) / Gain on fair value changes		6		(33,638	)		(4,926	)		(54,658	)		87,132
Investment income				56,675			8,300			51,061			585,379
Profit / (Loss) before income tax expense		6		5,703,976			835,356			(4,791,556	)		7,319,301
Income tax (expense) / benefit		31		(593,787	)		(86,961	)		239,723			(838,270	)
Profit / (Loss) for the year				5,110,189			748,395			(4,551,833	)		6,481,031
Other comprehensive income / (loss) for the year, net of tax
Available-for-sale financial asset revaluation reserve				773,967			113,349			(1,563,388	)		675,624
Proportionate share of other comprehensive income of investee measured using the equity method of accounting				8,795			1,288			3,096			-
Cash flow hedges				604,645			88,551			(476,601	)		-
Currency translation differences				173,548			25,416			(536,638	)		-
Other comprehensive income / (loss) for the year, net of tax				1,560,955			228,604			(2,573,531	)		675,624
Total comprehensive income / (loss) for the year				6,671,144			976,999			(7,125,364	)		7,156,655
Profit / (Loss)attributable to:
-Equity holders of the Company				4,929,544			721,939			(3,937,688	)		6,161,127
-Minority interests				180,645			26,456			(614,145	)		319,904
				5,110,189			748,395			(4,551,833	)		6,481,031
Total comprehensive income / (loss) attributable to:
-Equity holders of the Company				6,489,317			950,370			(6,509,014	)		6,836,751
-Minority interests				181,827			26,629			(616,350	)		319,904
				6,671,144			976,999			(7,125,364	)		7,156,655
Dividends paid		21		1,241,633			181,839			3,570,334			3,375,507
Proposed dividend		21		2,531,631			370,761			1,205,538			3,616,615
Proposed dividend per share        (expressed in RMB per share)		21		0.21			0.03			0.10			0.30
Earnings / (Loss)per share for profit /        (loss) attributable to the equity holders        of the Company (expressed in RMB        per share)
- Basic and diluted		32		0.41			0.06			(0.33	)		0.51

The accompanying notes are an integral part of these financial statements.

F-3

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2009 AND 2008

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB or US$)

			As of December 31,
	Note		2009				2008
			RMB		US$		RMB
ASSETS
Non-current assets
Property, plant and equipment		7		140,777,336		20,617,049		116,737,198
Investments in associates		8		9,568,576		1,401,332		8,758,235
Available-for-sale financial assets		10		2,555,972		374,326		1,524,016
Land use rights		11		3,843,719		562,918		2,895,359
Power generation licence		12		3,898,121		570,886		3,811,906
Deferred income tax assets		29		374,733		54,880		316,699
Derivative financial assets		13		44,863		6,570		-
Goodwill		14		11,610,998		1,700,448		11,108,096
Other non-current assets		15		1,023,096		149,834		748,072
Total non-current assets				173,697,414		25,438,243		145,899,581
Current assets
Inventories		16		4,083,986		598,106		5,169,847
Other receivables and assets		17		4,468,940		654,483		1,272,478
Accounts receivable		18		10,042,903		1,470,798		7,794,500
Derivative financial assets		13		141,886		20,779		15,479
Bank balances and cash		33		5,452,050		798,461		5,765,873
Total current assets				24,189,765		3,542,627		20,018,177
Total assets				197,887,179		28,980,870		165,917,758

F-4

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONT’D)

AS OF DECEMBER 31, 2009 AND 2008

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB or US$)

			As of December 31,
	Note		2009						2008
			RMB			US$			RMB
EQUITY AND LIABILITIES
Capital and reserves attributable to equity holders of the Company
Share capital		19		12,055,383			1,765,529			12,055,383
Capital surplus				10,041,203			1,470,549			8,642,617
Surplus reserves		20		6,096,100			892,783			6,096,100
Currency translation differences				(362,067	)		(53,025	)		(534,433	)
Retained earnings
Proposed dividend		21		2,531,631			370,761			1,205,538
Others				11,761,933			1,722,552			9,364,115
				42,124,183			6,169,149			36,829,320
Minority interests				8,523,937			1,248,343			5,730,633
Total equity				50,648,120			7,417,492			42,559,953
Non-current liabilities
Long-term loans		22		71,266,755			10,437,122			59,027,181
Long-term bonds		23		13,800,115			2,021,047			9,834,688
Deferred income tax liabilities		29		1,839,362			269,377			1,371,572
Derivative financial liabilities		13		850			124			17,242
Other non-current liabilities		24		750,369			109,893			620,922
Total non-current liabilities				87,657,451			12,837,563			70,871,605
Current liabilities
Accounts payable and other liabilities		25		14,524,620			2,127,152			10,867,480
Taxes payables		26		650,800			95,311			420,464
Dividends payable				20,734			3,037			56,734
Salary and welfare payables				290,527			42,548			212,236
Derivative financial liabilities		13		13,403			1,963			542,442
Short-term bonds		27		10,101,460			1,479,374			5,095,936
Short-term loans		28		24,729,816			3,621,718			28,745,488
Current portion of long-term loans		22		9,250,248			1,354,712			6,545,420
Total current liabilities				59,581,608			8,725,815			52,486,200
Total liabilities				147,239,059			21,563,378			123,357,805
Total equity and liabilities				197,887,179			28,980,870			165,917,758

These consolidated financial statements have been approved for issue by the Board of Directors on March 23, 2010.

The accompanying notes are an integral part of these financial statements.

F-5

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB)

	Attributable to equity holders of the Company																								Minority interests			Total equity
	Share capital		Capital surplus												Surplus reserves		Currency translation differences		Retained earnings			Total
			Share premium		Hedging reserve		Available-for-sale financial asset revaluation reserve			Other capital reserve		Subtotal
Balance as of January 1, 2007		12,055,383		8,506,769		-		998,825			482,204		9,987,798			5,454,467		-		15,959,861			43,457,509			7,151,183			50,608,692
Profit for the year ended December 31, 2007		-		-		-		-			-		-			-		-		6,161,127			6,161,127			319,904			6,481,031
Other comprehensive income:
Fair value changes from available-for-sale            financial asset – gross		-		-		-		1,607,251			-		1,607,251			-		-		-			1,607,251			-			1,607,251
Fair value changes from available-for-sale            financial asset – tax		-		-		-		(483,366	)		-		(483,366	)		-		-		-			(483,366	)		-			(483,366	)
Reversal of deferred income tax		-		-		-		79,105			-		79,105			-		-		-			79,105			-			79,105
Disposals of available-for-sale financial asset		-		-		-		(527,366	)		-		(527,366	)		-		-		-			(527,366	)		-			(527,366	)
Total comprehensive income for the year ended December 31, 2007		-		-		-		675,624			-		675,624			-		-		6,161,127			6,836,751			319,904			7,156,655
Deemed disposal of a subsidiary		-		-		-		-			-		-			-		-		-			-			(2,216,278	)		(2,216,278	)
Acquisition of a subsidiary		-		-		-		-			-		-			-		-		-			-			225,718			225,718
Net capital injection from minority shareholders of subsidiaries		-		-		-		-			-		-			-		-		-			-			116,890			116,890
Dividends relating to 2006		-		-		-		-			-		-			-		-		(3,375,507	)		(3,375,507	)		(446,355	)		(3,821,862	)
Transfer to dedicated capital		-		-		-		-			-		-			631,806		-		(631,806	)		-			-			-
Others		-		-		-		-			-		-			9,827		-		-			9,827			-			9,827
Balance as of December 31, 2007		12,055,383		8,506,769		-		1,674,449			482,204		10,663,422			6,096,100		-		18,113,675			46,928,580			5,151,062			52,079,642

F-6

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB)

	Attributable to equity holders of the Company																										Minority interests			Total equity
	Share capital		Capital surplus													Surplus reserves		Currency translation differences			Retained earnings			Total
			Share premium		Hedging reserve			Available-for-sale financial asset revaluation reserve			Other capital reserve		Subtotal
Balance as of  January 1, 2008		12,055,383		8,506,769		-			1,674,449			482,204		10,663,422			6,096,100		-			18,113,675			46,928,580			5,151,062			52,079,642
Loss for the year ended  December  31, 2008		-		-		-			-			-		-			-		-			(3,937,688	)		(3,937,688	)		(614,145	)		(4,551,833	)
Other comprehensive income:
Fair value changes from available-for-sale            financial asset - gross		-		-		-			(2,084,517	)		-		(2,084,517	)		-		-			-			(2,084,517	)		-			(2,084,517	)
Fair value changes from available-for-sale            financial asset - tax		-		-		-			521,129			-		521,129			-		-			-			521,129			-			521,129
Proportionate share of other comprehensive             income of investee measured using the equity            method of accounting - gross		-		-		-			4,128			-		4,128			-		-			-			4,128			-			4,128
Proportionate share of other comprehensive            income of investee measured using the equity            method of accounting - tax		-		-		-			(1,032	)		-		(1,032	)		-		-			-			(1,032	)		-			(1,032	)
Changes in fair value of effective portion of            cash flow hedges - gross		-		-		(1,059,646	)		-			-		(1,059,646	)		-		-			-			(1,059,646	)		-			(1,059,646	)
Changes in fair value of effective portion of            cash flow hedges - tax		-		-		190,736			-			-		190,736			-		-			-			190,736			-			190,736
Cash flow hedges recorded in shareholders’ equity            reclassified to inventory - gross		-		-		638,469			-			-		638,469			-		-			-			638,469			-			638,469
Cash flow hedges recorded in shareholders’ equity            reclassified to inventory - tax		-		-		(114,924	)		-			-		(114,924	)		-		-			-			(114,924	)		-			(114,924	)
Cash flow hedges recorded in shareholders’ equity            reclassified to exchange gain and bank charges,            net - gross		-		-		(160,043	)		-			-		(160,043	)		-		-			-			(160,043	)		-			(160,043	)
Cash flow hedges recorded in shareholders’ equity            reclassified to exchange gain and            bank charges, net - tax		-		-		28,807			-			-		28,807			-		-			-			28,807			-			28,807
Currency translation differences		-		-		-			-			-		-			-		(534,433	)		-			(534,433	)		(2,205	)		(536,638	)
Total comprehensive loss for the year ended December 31, 2008		-		-		(476,601	)		(1,560,292	)		-		(2,036,893	)		-		(534,433	)		(3,937,688	)		(6,509,014	)		(616,350	)		(7,125,364	)
Acquisitions of subsidiaries (Note 39)		-		-		-			-			-		-			-		-			-			-			35,047			35,047
Dividends relating to 2007 (Note 21)		-		-		-			-			-		-			-		-			(3,606,334	)		(3,606,334	)		(310,246	)		(3,916,580	)
Net capital injection from minority shareholders of subsidiaries		-		-		-			-			-		-			-		-			-			-			1,522,730			1,522,730
Acquisition of minority interest of subsidiaries		-		-		-			-			-		-			-		-			-			-			(55,867	)		(55,867	)
Others		-		-		-			-			16,088		16,088			-		-			-			16,088			4,257			20,345
Balance as of  December 31, 2008		12,055,383		8,506,769		(476,601	)		114,157			498,292		8,642,617			6,096,100		(534,433	)		10,569,653			36,829,320			5,730,633			42,559,953

F-7

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB)

Attributable to equity holders of the Company										Minority interests	Total equity
Share capital	Capital surplus					Surplus reserves	Currency translation differences	Retained earnings	Total
	Share premium	Hedging reserve	Available-for-sale financial asset revaluation reserve	Other capital reserve	Subtotal

Balance as of January 1, 2009	12,055,383	8,506,769	(476,601	)	114,157		498,292	8,642,617		6,096,100	(534,433	)	10,569,653		36,829,320		5,730,633		42,559,953
Profit for the year ended December 31, 2009	-	-	-		-		-	-		-	-		4,929,544		4,929,544		180,645		5,110,189
Other comprehensive income:
Fair value changes from available-for-sale     financial asset - gross	-	-	-		1,031,956		-	1,031,956		-	-		-		1,031,956		-		1,031,956
Fair value changes from available-for-sale financial asset - tax	-	-	-		(257,989	)	-	(257,989	)	-	-		-		(257,989	)	-		(257,989	)
Proportionate share of other comprehensive     income of investee measured using the     equity method of accounting - gross	-	-	-		11,727		-	11,727		-	-		-		11,727		-		11,727
Proportionate share of other comprehensive     income of investee measured using the     equity method of accounting - tax	-	-	-		(2,932	)	-	(2,932	)	-	-		-		(2,932	)	-		(2,932	)
Changes in fair value of effective portion     of cash flow hedges - gross	-	-	859,498		-		-	859,498		-	-		-		859,498		-		859,498
Changes in fair value of effective portion     of cash flow hedges - tax	-	-	(148,014	)	-		-	(148,014	)	-	-		-		(148,014	)	-		(148,014	)
Cash flow hedges recorded in shareholders’ equity     reclassified to inventory - gross	-	-	(128,241	)	-		-	(128,241	)	-	-		-		(128,241	)	-		(128,241	)
Cash flow hedges recorded in shareholders’ equity     reclassified to inventory - tax	-	-	16,277		-		-	16,277		-	-		-		16,277		-		16,277
Cash flow hedges recorded in shareholders’ equity     reclassified to exchange gain and     bank charges, net - gross	-	-	(8,025	)	-		-	(8,025	)	-	-		-		(8,025	)	-		(8,025	)
Cash flow hedges recorded in shareholders’ equity     reclassified to exchange gain and     bank charges, net - tax	-	-	1,259		-		-	1,259		-	-		-		1,259		-		1,259
Cash flow hedges recorded in shareholders’ equity     reclassified to interest expense - gross	-	-	15,854		-		-	15,854		-	-		-		15,854		-		15,854
Cash flow hedges recorded in shareholders’ equity     reclassified to interest expense - tax	-	-	(3,963	)	-		-	(3,963	)	-	-		-		(3,963	)	-		(3,963	)
Currency translation differences	-	-	-		-		-	-		-	172,366		-		172,366		1,182		173,548
Total comprehensive income for the year ended     December 31, 2009	-	-	604,645		782,762		-	1,387,407		-	172,366		4,929,544		6,489,317		181,827		6,671,144
Acquisitions of subsidiaries (Note 39)	-	-	-		-		-	-		-	-		-		-		2,421,569		2,421,569
Dividends relating to 2008 (Note 21)	-	-	-		-		-	-		-	-		(1,205,633	)	(1,205,633	)	(70,625	)	(1,276,258	)
Net capital injection from minority shareholders of     subsidiaries	-	-	-		-		-	-		-	-		-		-		260,533		260,533
Others	-	-	-		-		11,179	11,179		-	-		-		11,179		-		11,179
Balance as of  December 31, 2009	12,055,383	8,506,769	128,044		896,919		509,471	10,041,203		6,096,100	(362,067	)	14,293,564		42,124,183		8,523,937		50,648,120

The accompanying notes are an integral part of these financial statements.

F-8

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB or US$)

		For the year ended December 31,
	Note	2009						2008			2007
		RMB			US$			RMB			RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Profit / (Loss) before income tax expense			5,703,976			835,356			(4,791,556	)		7,319,301
Adjustments to reconcile profit / (loss) before income tax expense to net cash provided by operating activities:
Depreciation			8,572,103			1,255,397			7,752,706			7,229,108
Provision for impairment loss on property, plant and equipment			629,674			92,217			-			7,044
Amortization of land use rights			91,633			13,420			74,800			46,447
Amortization of other non-current assets			53,235			7,796			44,478			17,813
Amortization of housing loss			32,744			4,795			36,751			38,059
Gain on deemed disposal of Huaneng Sichuan  Hydropower Co., Ltd. (“Sichuan Hydropower”)			-			-			-			(17,864	)
Gain on disposal of available-for-sale financial asset			-			-			-			(527,366	)
Provision for impairment on goodwill			-			-			130,224			-
Provision for / (Reversal of) provision for doubtful accounts			677			99			10,951			(1,466	)
Provision for / (Reversal of)  inventory obsolescence			29,889			4,377			3,901			(6,615	)
Loss / (Gain) on fair value changes			33,638			4,926			54,658			(87,132	)
Investment income			(37,063	)		(5,428	)		(51,061	)		(40,149	)
Loss  / (Gain) on disposals or write-off of property, plant and equipment			53,033			7,767			54,056			(238,037	)
Unrealized exchange gain, net			(151,560	)		(22,196	)		(410,827	)		(231,795	)
Share of profits of associates			(756,164	)		(110,741	)		(72,688	)		(586,323	)
Interest income			(60,397	)		(8,845	)		(83,522	)		(53,527	)
Interest expense			4,260,400			623,942			4,064,779			2,132,122
Changes in working capital
Inventories			1,328,674			194,586			(2,159,007	)		(190,332	)
Other receivables and assets			(374,736	)		(54,881	)		104,165			(201,660	)
Accounts receivable			(2,361,918	)		(345,906	)		566,249			(1,498,184	)
Restricted cash			(21,053	)		(3,083	)		21,247			(13,520	)
Other non-current liabilities			-			-			-			251,761
Accounts payable and other liabilities			542,386			79,433			566,371			195,770
Taxes payable			(2,196,174	)		(321,633	)		(370,796	)		(40,650	)
Salary and welfare payables			(4,801	)		(703	)		(22,345	)		(270,994	)
Others			43,975			6,440			4,267			(13,670	)
Interest received			59,919			8,775			72,940			52,825
Income tax expense paid			(491,100	)		(71,922	)		(414,848	)		(1,192,133	)
Net cash provided by operating activities			14,980,990			2,193,988			5,185,893			12,078,833

F-9

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB or US$)

		For the year ended December 31,
	Note	2009						2008			2007
		RMB			US$			RMB			RMB
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment			(22,426,098	)		(3,284,335	)		(27,893,520	)		(14,223,310	)
Proceeds from disposals of property, plant and equipment			39,272			5,751			25,336			270,131
Prepayments of land use rights			(167,435	)		(24,521	)		(76,050	)		(216,752	)
Prepayments of territorial waters use right			-			-			-			(152,409	)
Increase in other non-current assets			(27,138	)		(3,974	)		(16,004	)		(6,247	)
Cash dividend received			540,182			79,110			381,854			518,934
Capital injections in associates			(548,500	)		(80,329	)		(281,754	)		(1,654,000	)
Purchases of financial assets at fair value through profit     or loss			-			-			-			(370,189	)
Cash paid for acquiring available-for-sale financial assets			-			-			(146,375	)		(449,457	)
Proceeds from trading of available-for-sale financial assets			-			-			-			603,411
Cash consideration paid for acquisitions			(2,355,762	)		(345,005	)		(21,772,563	)		(485,750	)
Acquisition of minority interest of a subsidiary			-			-			(67,485	)		-
Cash from acquisitions of subsidiaries	39		419,885			61,493			1,624,108			259,924
Cash outflow upon deemed disposal of Sichuan     Hydropower			-			-			-			(322,176	)
Cash received on repayment of a loan receivable			-			-			254,255			-
Others			(354,667	)		(51,941	)		11,133			(29,465	)
Net cash used in investing activities			(24,880,261	)		(3,643,751	)		(47,957,065	)		(16,257,355	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of short-term bonds			9,960,000			1,458,657			4,980,000			4,980,000
Repayments of short-term bonds			(5,000,000	)		(732,257	)		(5,000,000	)		(5,000,000	)
Drawdown of short-term loans			40,892,075			5,988,705			57,696,660			23,898,505
Repayments of short-term loans			(29,251,246	)		(4,283,888	)		(39,483,770	)		(19,771,700	)
Drawdown of long-term loans			32,505,000			4,760,405			36,656,286			8,186,176
Repayments of long-term loans			(37,317,607	)		(5,465,219	)		(10,254,438	)		(3,492,975	)
Issuance of long-term bonds			3,939,850			576,997			3,933,302			5,903,644
Interest paid			(5,378,244	)		(787,652	)		(4,731,749	)		(2,722,935	)
Net capital injection from minority shareholders of the     subsidiaries			260,533			38,155			1,162,562			116,890
Government grants			420,766			61,622			236,013			-
Dividends paid to shareholders of the Company			(1,241,633	)		(181,839	)		(3,570,334	)		(3,375,507	)
Dividends paid to minority shareholders of the     subsidiaries			(253,971	)		(37,194	)		(301,662	)		(434,205	)
Others			(31,637	)		(4,634	)		(67,579	)		-
Net cash provided by financing activities			9,503,886			1,391,858			41,255,291			8,287,893
Exchange gain / (loss)			55,742			8,927			(229,759	)		(4,298	)
NET (DECREASE)/ INCREASE IN CASH AND CASH     EQUIVALENTS			(339,643	)		(48,978	)		(1,745,640	)		4,105,073
Cash and cash equivalents, beginning of the year			5,566,625			814,477			7,312,265			3,207,192
CASH AND CASH EQUIVALENTS, END OF THE YEAR	33		5,226,982			765,499			5,566,625			7,312,265

The accompanying notes are an integral part of these financial statements.

F-10

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

1.	COMPANY ORGANIZATION AND PRINCIPAL ACTIVITIES
	Huaneng Power International, Inc. (the “Company”) was incorporated in the People’s Republic of China (the “PRC”) as a Sino-foreign joint stock limited company on June 30, 1994.  The registered address of the Company is West Wing, Building C, Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District, Beijing, the PRC.  The Company and most of its subsidiaries are principally engaged in the generation and sale of electric power to the respective regional or provincial grid companies in the PRC. SinoSing Power Pte. Ltd. (“SinoSing Power”) and its subsidiaries, newly acquired entities of the Company in 2008, are principally engaged in the power generation and sale in the Republic of Singapore (“Singapore”).
	The directors consider Huaneng International Power Development Corporation (“HIPDC”) and China Huaneng Group (“Huaneng Group”) as the parent company and ultimate parent company of the Company, respectively. Both HIPDC and Huaneng Group are incorporated in the PRC.  Neither Huaneng Group nor HIPDC produced financial statements available for public use.
2.	PRINCIPAL ACCOUNTING POLICIES
	The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
	(a)	Basis of preparation
	These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets and derivative financial assets and liabilities. This basis of accounting differs from that used in the preparation of the statutory financial statements of the Company and its subsidiaries (“PRC statutory financial statements”). The PRC statutory financial statements of the Company and its subsidiaries comprising the financial statements have been prepared in accordance with the relevant accounting principles and regulations applicable to the Company and its subsidiaries, as appropriate in the PRC.  Appropriate adjustments have been made to the PRC statutory financial statements to conform to IFRS.  Differences arising from the restatement have not been incorporated in the statutory accounting records of the Company and its subsidiaries.
	The consolidated financial statements are expressed in Renminbi (“RMB”), the national currency of the PRC.  Solely for the convenience of the reader, the December 31, 2009 financial statements have been translated into United States Dollars (US$) at the rate of US$1.00=RMB 6.8282announced by the People's Bank of China on December 31, 2009.  No representation is made that Renminbi amounts could have been, or could be, converted into US$ at the rate on December 31, 2009, or at any other certain rate.
	The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company and its subsidiaries’ accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

F-11

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(a)	Basis of preparation (cont’d)
	As of and for the year ended December 31, 2009, a portion of the Company and its subsidiaries’ funding requirements for capital expenditures were partially satisfied by short-term financing. Consequently, as of December 31, 2009, the Company and its subsidiaries have a negative working capital balance of approximately RMB 35.4 billion. Taking into consideration of the expected operating cash flows of the Company and its subsidiaries and the undrawn available banking facilities, the Company and its subsidiaries will refinance and / or restructure certain short-term borrowings into long-term borrowings and also consider alternative sources of financing, where applicable. Therefore, the directors of the Company are of the opinion that the Company and its subsidiaries will be able to meet its liabilities as and when they fall due within the next twelve months and have prepared these consolidated financial statements on a going concern basis.
	The following new standards and amendments to standards are adopted for the first time to the financial year beginning January 1, 2009.
	•	International Accounting Standards (“IAS”) 1 (revised), ‘Presentation of financial statements’. The revised standard prohibits the presentation of items of income and expenses (i.e. ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity. All ‘non-owner changes in equity’ to be required to be shown in a performance statement.
		Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income).
		The Company and its subsidiaries elected to present one performance statement and these financial statements have been prepared under the revised disclosure requirements. Since the change in accounting policy only impacts presentation, there is no impact on earnings per share.
	•	Amendments to IFRS 1 and IAS 27, ‘Cost of an investment in a subsidiary, jointly controlled entity and associate’. The amendment to the part of IAS 27 is relevant to the Company and its subsidiaries. The amendments to IAS 27 remove the definition of cost method and require an entity to record dividend income from its subsidiaries or associates when its rights to receive the dividends are established, i.e. including dividend distributed out of pre-acquisition and post-acquisition retained earnings in the statement of comprehensive income. The Company and its subsidiaries early apply this amendment prospectively from January 1, 2009 in their separate financial statements. These amendments have no material impact on those financial statements in the current year.

F-12

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(a)	Basis of preparation (cont’d)
	The following new standards and amendments to standards are adopted for the first time to the financial year beginning January 1, 2009. (cont’d)
	•	IFRS 8, ‘Operating segments’. IFRS 8 replaces IAS 14 ‘Segment reporting’ and requires a ‘management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in separation of port operations out of the original PRC geographical segment and included in ‘all other segments’ and Singapore geographical segment is grouped into the PRC geographical segment without port operations as a single ‘power segment’. In addition, the segment information disclosed is based on the information for internal reporting purpose which is under China Accounting Standard for Business Enterprises (“PRC GAAP”).
		Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision makers have been identified as directors and certain senior management of the Company that make strategic decisions.
		IFRS 8 amends certain disclosure items which the Company and its subsidiaries have restated comparative information accordingly.
	•	Amendment to IFRS 7, ‘Financial instruments: disclosures’. The amendment enhances the disclosure requirements about fair value measurement and reinforces existing principles for disclosure about liquidity risk. The amendment introduces a three-level hierarchy for fair value measurement disclosures and requires some specific quantitative disclosures for financial instruments on the lowest level in the hierarchy. It also requires the Company and its subsidiaries to provide additional disclosures about the relative reliability of fair value measurements. In addition, the amendment clarifies and enhances the existing requirements for the disclosure of liquidity risk primarily requiring a separate liquidity risk analysis for derivative and non-derivative financial liabilities. As the change in accounting policy only resul ts in additional disclosures, there is no impact on earnings per share.
	•	The IASB has issued an improvement document in May 2008 and one of the amendments to IFRS 7 required the exclusion of interest income from net financial expenses. The Company and its subsidiaries have separately presented interest income in the consolidated statement of comprehensive income in the current year and restated prior period comparative accordingly. Since the change in accounting policy only impacts presentation, there is no impact on earnings per share.

F-13

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(b)	Consolidation
	The consolidated financial statements include the financial statements of the Company and all of its subsidiaries made up to December 31.
		(i)   Subsidiaries
		Subsidiaries are investees over which the Company and its subsidiaries have the power to exercise control, i.e. the power to govern the financial and operating policies and obtains benefits from the operating activities of the investees. When determining whether the Company and its subsidiaries exercise control over an investee, the impact from potential voting rights of the investee, such as currently convertible bonds and exercisable warrants, etc. is taken into account.
		Subsidiaries are consolidated from the date when control is transferred to the Company and its subsidiaries. They are de-consolidated from the date when control ceases. All the significant intra-group balances, transactions and unrealized profit or loss are eliminated in the preparation of the consolidated financial statements. The portion of the shareholders’ equity of the subsidiaries, which is not attributable to the parent company, is separately presented as minority interests in the shareholders’ equity in the consolidated financial statements.
		When there is any inconsistency on the accounting policies or financial period adopted between subsidiaries and the Company, the financial statements of subsidiaries are adjusted according to the accounting policies or financial period adopted by the Company.
		The purchase method of accounting is used to account for the acquisitions of subsidiaries by the Company and its subsidiaries (including acquisitions from common control shareholders). The acquisition cost is measured at the fair value of the assets given and liabilities incurred or assumed on the acquisition date, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values on the acquisition date. The excess of acquisition costs over the proportionate share of the fair value of the identifiable net assets acquired is recorded as goodwill (Note 2(g)). If acquisition costs are less than the proportionate share of the fair value of the net assets of the subsidiary acquired, the difference i s recognized directly in profit and loss.

F-14

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(b)	Consolidation (cont’d)
		(ii)   Transactions with minority interests
		The Company and its subsidiaries regard transactions with minority interests as transactions with parties external to the Company and its subsidiaries. Disposals to minority interests result in gains and losses to the Company and its subsidiaries are recorded in profit and loss. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant equity share acquired of the carrying amounts of net assets of the subsidiaries.
		(iii)   Associates
		Associates are investees over which the Company and its subsidiaries have significant influence on the financial and operation decisions. Investments in associates are initially recognized at cost and are subsequently measured using the equity method of accounting. The excess of the initial investment cost over the proportionate share of the fair value of identifiable net assets of investee acquired is included in the initial investment cost (Note 2(g)). Any shortfall of the initial investment cost to the proportionate share of the fair value of identifiable net assets of investee acquired is recognized in current period profit and loss and long-term investment cost is adjusted accordingly.
		When applying equity method, the Company and its subsidiaries adjust net profit or loss of the investees, including the fair value adjustments on the net identifiable assets of the associates and the adjustments to align with the accounting policies of the Company and different financial periods. Current period investment income is then recognized based on the proportionate share of the Company and its subsidiaries in the investees’ net profit or loss. Net losses of investees are recognized to the extent of book value of long-term equity investments and any other constituting long-term equity investments in investees in substance.
		The Company and its subsidiaries will continue to recognize investment losses and provision if they bear additional obligations which meet the recognition criteria under the provision standard. The Company and its subsidiaries adjust the carrying amount of the investment and directly recognize into related other comprehensive income and equity items based on their proportionate share on other shareholders’ other comprehensive income and equity movements of the investees other than net profit or loss, given there is no change in shareholding ratio. When the investees appropriate profit or declare dividends, the book value of long-term equity investments are reduced correspondingly by the proportionate share of the distribution. Profit or loss from transactions between the Company and its subsidiaries and the associates is e liminated to the extent of interest of the Company and its subsidiaries in the associates. Loss from transactions between the Company and its subsidiaries and the associates is fully recognized and not eliminated when there is evidence for asset impairment.

F-15

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(b)	Consolidation (cont’d)
		(iii)   Associates (cont’d)
		Gains and losses arising from dilution of investments in associates are recognized in the consolidated statement of comprehensive income.
	(c)	Segment reporting
	The Company and its subsidiaries determine the operation segment based on the internal organization structure, management requirement and internal reporting system and thereafter determine the reportable segment and present the segment information.
	An operating segment represents a component of the Company and its subsidiaries that meets all the conditions below: (i) the component earns revenue and incurs expenses in its daily operating activities; (ii) chief operating decision makers of the Company and its subsidiaries can regularly review the operating results of the component in order to make decisions on allocating resources and assessing performance; (iii) the financial position, operating results, cash flows and other related financial information of the component are available. When the two or more operating segments exhibit similar economic characteristics and meet certain conditions, the Company and its subsidiaries will combine them as one reportable segment.
	(d)	Foreign currency translation
		(i)  Functional and presentation currency
		Items included in the financial statements of each of the Company and its subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is the Company’s functional and presentation currency.
		(ii)  Transactions and balances
		Foreign currency transactions are translated into the functional currency using the spot exchange rate on the transaction dates. On balance sheet date, foreign currency monetary items are translated into functional currency at the spot exchange rate on balance sheet date. Exchange differences are directly expensed in current period profit and loss unless they arises from foreign currency loans borrowed for purchasing or construction of qualifying assets which is eligible for capitalization and qualifying cash flow hedges which are deferred in equity.

F-16

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(d)	Foreign currency translation (cont’d)
		(iii)  Group companies
		The operating results and financial position of the foreign subsidiaries are translated into presentation currency as follows:
		Asset and liability items in each balance sheet of foreign operations are translated at the closing rates at the balance sheet date; equity items excluding retained earnings are translated at the spot exchange rates at the date of the transactions. Income and expense items in the statement of comprehensive income of the foreign operations are translated at average exchange rates approximating the rate on transaction dates. All resulting translation differences above are recognized as a separate component of equity.
		The cash flows denominated in foreign currencies and cash flows of overseas subsidiaries are translated at average exchange rates approximating the rates at the dates when cash flows incurred. The impact of the foreign currency translation on the cash and cash equivalents is presented in the statement of cash flows separately.
		When a foreign operation is partially disposed of or sold, translation differences that were recorded in equity are recognized in the statement of comprehensive income as part of the disposal gain or loss.
	(e)	Property, plant and equipment
		Property, plant and equipment consists of port facilities, buildings, electric utility plant in service, transportation facilities, others and construction-in-progress (“CIP”). Property, plant and equipment acquired or constructed are initially recognized at cost and carried at the net value of cost less accumulated depreciation and accumulated impairment loss.
		Cost of CIP comprises construction expenditures, other expenditures necessary for the purpose of preparing the CIP for its intended use and those borrowing costs incurred before the assets ready for intended use that are eligible for capitalization. CIP is not depreciated until such time as the relevant asset is completed and ready for its intended use.
		Subsequent costs about property, plant and equipment are included in the asset’s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Company and its subsidiaries and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. Other subsequent expenditures not qualifying for capitalization are charged in the current period profit or loss when they are incurred.

F-17

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(e)	Property, plant and equipment (cont’d)
	Depreciation of property, plant and equipment is provided based on book value less estimated residual value over estimated useful life using straight-line method. For those impaired property, plant and equipment, depreciation is provided based on book value after deducting impairment provision over estimated useful life. The estimated useful lives are as follows:

	Estimated useful lives
Port facilities	20 – 40 years
Buildings	8 – 35 years
Electric utility plant in service	5 – 35 years
Transportation facilities	6 – 14 years
Others	3 – 18 years

At the end of each year, the Company and its subsidiaries review the estimated useful life, residual value and the depreciation method of the property, plant and equipment for adjustment when necessary.
Property, plant and equipment is derecognized when they are disposed of, or expected that cannot bring economic benefit through use or disposal. The amount of disposal income arising from sale, transfer, disposal or write-off of the property, plant and equipment less book value and related tax expenses is recorded in ‘operating expenses – others’ in the statement of comprehensive income.
The carrying amount of property, plant and equipment is written down immediately to its recoverable amount when its carrying amount is greater than its recoverable amount (Note 2(h)).
(f)	Power generation licence
The Company and its subsidiaries acquired the power generation licence as part of the business combination with Tuas Power Ltd. (“Tuas Power”). The power generation licence is initially recognized at fair value at the acquisition date. It is of indefinite useful life and is not amortized. It is tested annually for impairment and carried at cost less accumulated impairment loss. Useful life of the power generation licence is reviewed by the Company and its subsidiaries each financial period to determine whether events and circumstances continue to support the indefinite useful life assessment.
(g)	Goodwill
Goodwill represents the excess of the acquisition cost over the share of the Company and its subsidiaries on the fair value of the net identifiable assets of the acquired subsidiary / associate at the date of acquisition. Goodwill arising from acquisitions of associates is included in ‘investments in associates’ and is tested for impairment as part of the overall balance. Separately recognized goodwill is tested annually for impairment and carried at cost less any accumulated impairment loss. Impairment loss on goodwill is not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

F-18

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(g)	Goodwill (cont’d)
	When performing impairment test, the carrying amount of goodwill is allocated to cash-generating units (“CGUs”) according to synergy effect arising from the business combination (Note 14). The Company and its subsidiaries allocate goodwill to those CGUs based on operating regions.
	(h)	Impairment of investments in subsidiaries, associates and non-financial assets
	Separately presented goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually regardless of whether there are indications of impairment. Property, plant and equipment, intangible assets with definite useful lives and long-term equity investments not accounted for as financial assets are tested for impairment when there is any impairment indication on balance sheet date. If impairment test result shows that the recoverable amount of asset is less than its book value, that difference is recognized as impairment provision. Recoverable amount is the higher of fair value less cost to sell of the asset and present value of its expected future cash flows. Asset impairment is calculated and recognized on individual asset basis. If it is difficult to estimate recoverable amount for the indiv idual assets, the recoverable amount is determined based on the recoverable amount of the CGU to which asset belongs. CGU is the smallest group of assets that independently generates cash flows.
	Except for goodwill, all impaired non-financial assets are subject to review for possible reversal of impairment at each reporting date.
	(i)	Financial assets
	Financial assets are classified as the following categories at initial recognition: at fair value through profit or loss, loans and receivables and available-for-sale. The classification depends on the intention and ability of the Company and its subsidiaries to hold the financial assets.
		(i)   Financial assets at fair value through profit or loss
		Financial assets at fair value through profit or loss include financial assets held for trading and designated upon initial recognition as at fair value through profit or loss. Derivatives are classified as held for trading unless they are designated as hedges.
		(ii)   Loans and receivables
		Loans and receivables refer to the non-derivative financial assets for which there is no quotation in the active market with fixed or determinable amount. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which these are classified as non-current assets. Loans and receivables are primarily classified as ‘accounts receivable’, ‘other receivables and assets’, ‘loans to subsidiaries’, ‘other non-current assets’ and ‘bank balances and cash’ in the balance sheets.

F-19

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(i)	Financial assets (cont’d)
		(iii)  Available-for-sale financial assets
		Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of financial assets at fair value through profit or loss, loans and receivables and held-to-maturity financial assets. They are included in current assets when management intends to dispose of the available-for-sale financial assets within 12 months of the balance sheet date.
		(iv)  Recognition and measurement
		Regular purchases and sales of financial assets are recognized at fair value initially on trade-date – the date on which the Company and its subsidiaries commit to purchase or sell the asset.  Transaction costs relating to financial assets at fair value through profit or loss are directly expensed in the profit and loss as incurred. Transaction costs for other financial assets are included in the carrying amount of asset at initial recognition. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or all risks and rewards related to the ownership of the financial assets have been transferred to the transferee.
		Financial assets at fair value through profit or loss and available-for-sale are subsequently measured at fair value. When an active market exists for a financial instrument, fair value is determined based on quoted prices in the active market. When no active market exists, fair value is determined by using valuation techniques. Valuation techniques includes making reference to the prices used by knowledgeable and willing parties in a recent transaction, the current fair value of other financial assets that are same in substance, discounted cash flow method and option pricing model, etc.. When applying valuation techniques, the Company and its subsidiaries use market parameters to the fullest extent possible and use specific parameters of the Company and its subsidiaries as little as possible. Loans and receivables are carried a t amortized cost using effective interest method.
		Changes in the fair value of financial assets at fair value through profit or loss are recorded in ‘loss from fair value change’.
		Except for impairment loss and translation differences on monetary financial assets, changes in the fair value of available-for-sale financial assets are recognized in other comprehensive income. When these financial assets are derecognized, the accumulated fair value adjustments recognized in equity are included in the statement of comprehensive income as ‘investment income’. Dividends on available-for-sale financial assets are recorded in ‘investment income’ when the right of the Company and its subsidiaries to receive payments is established.

F-20

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(i)	Financial assets (cont’d)
		(v)   Impairment of financial assets
		Except for financial assets at fair value through profit or loss, the Company and its subsidiaries perform assessment on the book value of financial assets on balance sheet date. Provision for impairment is made when there is objective evidence showing that a financial asset is impaired.
		When there is significant or prolonged decline in fair value of the available-for-sale financial asset, changes in the fair value that originally recorded in equity is recorded as impairment loss. Impairment loss on available-for-sale equity instrument is not reversed through profit and loss.
		When financial assets carried at amortized cost are impaired, the carrying amount of the financial assets is reduced to present value of estimated future cash flows (excluding future credit losses that have not been incurred). The impaired amount is recognized as assets impairment loss in the current period. If there is objective evidence that the value of the financial assets is recovered as a result of objective changes in circumstances occurring after the impairment loss was originally recognized, the originally recognized impairment loss is reversed through the profit and loss. For the impairment test of receivables, please refer to Note 2(j).
		(vi)  Derivative financial instruments and hedging activities
		Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Gain or loss arising from subsequent change in the fair value of derivative financial instruments is recognized in profit and loss except for those effective portion of gain or loss on the derivative financial instruments designated as cash flow hedges which is recognized directly in other comprehensive income. Cash flow hedge represents a hedge against the exposure to variability in cash flows, which such cash flow is originated from a particular risk associated with a highly probable forecast transactions and variable rate borrowings and could affect the statement of comprehensive income.
		The hedged items of cash flow hedge are the designated items with respect to the risks associated with future cash flow change of the Company and its subsidiaries. Hedging instruments are designated derivative for cash flow hedge whose cash flows are expected to offset changes in the cash flows of a hedged item.
		The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedge item is more than 12 months.

F-21

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(i)	Financial assets (cont’d)
		(vi)   Derivative financial instruments and hedging activities (cont’d)
		The Company and its subsidiaries document their assessments, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. The Company and its subsidiaries apply ratio analysis method to evaluate the ongoing effectiveness of the cash flow hedge.
		The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the statement of comprehensive income within ‘loss from fair value change’.
		Amounts accumulated in equity are reclassified to the profit and loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the statement of comprehensive income within ‘interest expense’. The gain or loss relating to the effective portion of exchange forward hedging foreign currency denominated payables is recognized in the statement of comprehensive income within ‘exchange gain and bank charges, net’. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. In case the Company and its subsidiaries expect all or a portion of net loss previously recognized directly in other comprehensive income will not be recovered in future financial periods, the irrecoverable portion will be reclassified into profit and loss.
		When a hedging instrument expires or is sold, terminated or exercised or when a hedge no longer meets the criteria for hedge accounting, the Company and its subsidiaries will discontinue hedge accounting. Any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the profit and loss.  When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statement of comprehensive income within ‘loss from fair value change’.

F-22

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(j)	Loans and receivables
	Loans and receivables primarily including accounts receivable, notes receivable, other receivables, loan to subsidiaries, etc. are recognized initially at fair value. Loans and receivables are subsequently measured at amortized cost less provision for doubtful debts using the effective interest method.
	When there is objective evidence that the Company and its subsidiaries will not be able to collect all amounts due according to the original terms of the receivables, impairment test is performed on individual account and related provision for doubtful accounts is made based on the shortfall between carrying amounts and respective present value of estimated future cash flows. The carrying amounts of the receivables are reduced through the use of allowance accounts, and the amount of the provision is recognized in the statement of comprehensive income within ‘operating expenses – others’. When a receivable is uncollectible, it is written off against the allowance account for the receivable. Subsequent recoveries of amounts previously written off are credited against ‘operating expenses – others’ ; in the statement of comprehensive income.
	(k)	Inventories
	Inventories include fuel for power generation, materials for repairs and maintenance and spare parts, etc. and are stated at lower of cost and net realizable values.
	Inventories are initially recorded at cost and are charged to fuel costs or repairs and maintenance respectively when used, or capitalized to property, plant and equipment when installed, as appropriate, using weighted average cost basis. Cost of inventories includes costs of purchase and transportation costs.
	When the forecast transaction that is hedged results in the recognition of the inventory, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the inventory.
	Provision for inventory obsolescence is determined by the excess of cost over net realizable value. Net realizable values are determined based on the estimated selling price less estimated conversion costs during power generation, selling expenses and related taxes in the ordinary course of business.

F-23

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(l)	Related parties
	Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control.
	(m)	Cash and cash equivalents
	Cash listed in the statement of cash flows represents cash on hand and deposits held at call with banks. Cash equivalents refers to short-term (3 months or less), highly-liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
	(n)	Borrowings
	Borrowings are recognized initially at fair value less transaction costs and subsequently measured at amortized cost using the effective interest method. Borrowings are classified as current liabilities unless the Company and its subsidiaries have an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
	(o)	Payables
	Payables primarily including accounts payable and other liabilities, etc. are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
	(p)	Taxation
		(i)   Value-added tax (“VAT”)
		The domestic power sales of the Company and its subsidiaries are subjected to VAT. VAT payable is determined by applying 17% on the taxable revenue after offsetting deductible input VAT of the period.
		(ii)  Goods and service tax (“GST”)
		The overseas power sales of the Company and its subsidiaries are subjected to goods and service tax of the country where they operate. GST payable is determined by applying 7% on the taxable revenue after offsetting deductible GST of the period.
		(iii)  Current and deferred income tax
		The income tax expense for the period comprises current and deferred income tax. Income tax expense is recognized in profit and loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity.  In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

F-24

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(p)	Taxation (cont’d)
		(iii)  Current and deferred income tax (cont’d)
		On March 16, 2007, the National People’s Congress promulgated the “Corporate Income Tax Law of the People’s Republic of China” which became effective from January 1, 2008. Domestic entities of the Company and its subsidiaries which originally enjoyed preferential tax treatments will transit to 25% gradually in five years from January 1, 2008 onwards. Domestic subsidiaries with original applicable tax rate of 33% apply tax rate of 25% from January 1, 2008 onwards. Pursuant to Guo Fa [2007] 39 document, starting from January 1, 2008, entities which originally enjoyed two-year tax exemption and three-year 50% reduction tax treatments, continue to follow the original tax laws, administrative regulations and relevant documents until respective expiration dates. However, those not being entitled to preferential tax treatment as a result of tax losses, the preferential period started from 2008 onwards.
		The income tax rate applicable to Singapore subsidiaries changed from 18% in 2008 to 17% from January 1, 2009 onwards.
		Pursuant to Guo Shui Han [2009] 33 document, starting from January 1, 2008, the Company and its branches calculate and pay income tax on a combined basis according to relevant tax laws and regulations. The original regulation specifying locations for power plants and branches of the Company to make enterprise income tax payments was abolished. The income tax of subsidiaries remains to be calculated individually based on their individual operating results.
		Deferred income tax assets and liabilities are recognized based on the differences between tax bases of assets and liabilities and respective book value (temporary differences). For deductible tax losses or tax credit that can be brought forward in accordance with tax law requirements for deduction of taxable income in subsequent years, it is considered as temporary differences and related deferred income tax assets are recognized.  No deferred income tax liability is recognized for temporary difference arising from initial recognition of goodwill. For those temporary differences arising from initial recognition of an asset or liability in a non-business combination transaction that affects neither accounting profit nor taxable profit (or deductible loss) at the time of the transaction, no deferred income tax asset and liability is recognized.
		The Company and its subsidiaries recognize deferred income tax assets to the extent that it is probable that taxable profit will be available to offset the deductible temporary difference, deductible tax loss and tax credit.
		On the balance sheet date, deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or liability is settled.
		Deferred income tax assets and deferred income tax liabilities are offset when meeting all the conditions below:
			(1)	The Company and its subsidiaries have the legal enforceable right to settle current income tax assets and current income tax liabilities;
			(2)	Deferred income tax assets and deferred income tax liabilities are related to the income tax levied by the same tax authority of the Company and its subsidiaries.

F-25

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(q)	Employee benefits
	Employee benefits include all expenditures relating to the employees for their services. The Company and its subsidiaries recognize employee benefits as liabilities during the accounting period when employees render services and allocates to related cost of assets and expenses based on different beneficiaries.
	In connection with pension obligations, the Company and its subsidiaries operate various defined contribution plans in accordance with the local conditions and practices in the countries and provinces in which they operate. A defined contribution plan is a pension plan under which the Company and its subsidiaries pay fixed contributions into a separate publicly administered pension insurance plan on mandatory and voluntary bases. The Company and its subsidiaries have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognized as employee benefit expenses when incurred. Prepaid contributions are recognized as assets to the extent that a cash refund or a reduction in the future payment is available.
	(r)	Government grants
	Government grants are recognized when the Company and its subsidiaries fulfill the conditions attaching to them and are able to receive them. When government grants are received in the form of monetary assets, they are measured at the amount received or receivable. When the grant is in the form of non-monetary assets, it is measured at fair value. When fair value cannot be measured reliably, nominal amount is assigned.
	Asset-related government grant is recognized as deferred income and is amortized evenly in profit and loss over the useful lives of related assets.
	Income-related government grant that is used to compensate subsequent related expenses or losses of the Company and its subsidiaries are recognized as deferred income and recorded in the profit and loss when related expenses or losses incurred. When the grant is used to compensate expenses or losses that were already incurred, they are directly recognized in current period profit and loss.

F-26

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(s)	Revenue and income recognition
	Revenue is recognized based the following methods:
	Revenue and income are recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and its subsidiaries and the amount of the revenue and income can be measured reliably.
		(i)  Electricity sales revenue
		Electricity sales revenue represents the fair value of the consideration received or receivable for electricity sold in the ordinary course of the activities of the Company and its subsidiaries (net of VAT or GST and after taking into account amounts received in advance). Revenue is earned and recognized upon transmission of electricity to the customers and the power grid controlled and owned by the respective regional or provincial grid companies.
		(ii)  Service income
		Service revenue refers to amounts received from service of port loading and conveying. The Company and its subsidiaries recognize revenue when the relevant service was provided.
		(iii)  Interest income
		Interest income from deposits is recognized on a time proportion basis using effective yield method.
	(t)	Leases
	Leases where all the risks and rewards incidental to ownership of the assets are in substance transferred to the lessees are classified as finance leases. All other leases are operating leases.
		(i)  Operating leases (lessee)
		Operating lease expenses are capitalized or expensed on a straight-line basis over the lease term.
		(ii)  Finance lease (lessor)
		The Company and its subsidiaries recognize the aggregate of the minimum lease receipts and the initial direct costs on the lease inception date as the receivable. The difference between the aggregate of the minimum lease receipts and the initial direct costs and sum of their respective present values is recognized as unrealized finance income. The Company and its subsidiaries adopt the effective interest method to allocate such unrealized finance income over the lease term. On balance sheet date, the Company and its subsidiaries present the net amount of finance lease receivable after deducting any unrealized finance income in non-current assets and current assets, respectively.
		Please refer to Note 2(i)(v) for impairment test on finance lease receivable.

F-27

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(u)	Borrowing costs
	Borrowing costs incurred for the construction of any qualifying assets (including in property, plant and equipment) are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed.
	(v)	Purchase of electricity
	The overseas subsidiary of the Company recognized electricity purchase cost when it purchases the electricity and transmits to its customers.
	(w)	Financial guarantee contracts
		(i)  Classification
		The Company issues financial guarantee contracts that transfer significant insurance risk.
		Financial guarantee contracts are those contracts that require the issuer to make specified payments to reimburse the holders for losses they incur because specified debtors fail to make payments when due in accordance with the original or modified terms of debt instruments.
		(ii)  Liability adequacy test
		At each balance sheet date, the Company and its subsidiaries perform liability adequacy tests to ensure the adequacy of the contract liabilities. In performing these tests, current best estimates of future contractual cash flows and related administrative expenses are used. Any deficiency is immediately charged to the statement of comprehensive income and by subsequently establishing a provision for losses arising from liability adequacy test.
	(x)	Dividend distribution
	Cash dividend is recognized as a liability in the period when the dividend is approved in the shareholders’ meeting.
	(y)	Contingencies
	Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but disclosed when an inflow of economic benefit is probable.

F-28

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(z)	Standards and amendments to published standards that are not yet effective but relevant to the Company and its subsidiaries
	The following standards and amendments to existing standards have been published that are mandatory for the accounting periods of the Company and its subsidiaries beginning on or after January 1, 2010 or later, but the Company and its subsidiaries have not early adopted:
	•	IAS 24 (Revised), ‘Related party disclosures’ (effective for annual period beginning on or after January 1, 2011). The revised standard introduces an exemption from all of the disclosure requirements of IAS 24 for transactions among government-related entities and the government. Those disclosures are replaced with a requirement to disclose:
		-	the name of the government and the nature of their relationship; and
		-	the nature and amount of any individually-significant transactions; and
		-	the extent of any collectively-significant transactions qualitatively or quantitatively.
		It also clarifies and simplifies the definition of a related party. The Company and subsidiaries will apply this standard prospectively to related party disclosures from January 1, 2011.
	•	IAS 27 (Revised), 'Consolidated and separate financial statements' (effective for annual period beginning on or after July 1, 2009). The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value and a gain or loss is recognized in profit and loss. The Company and its subsidiaries will apply this standard prospectively to transactions with non-controlling interests from January 1, 2010.
	•	IAS 38 (Amendment), ‘Intangible Assets’ (effective for annual period beginning on or after July 1, 2009). The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has similar economic useful lives. The Company and its subsidiaries will apply this amendment prospectively to all business combinations from January 1, 2010.
	•	IFRS 3 (Revised), ‘Business combinations’ (effective for annual period beginning on or after July 1, 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the consolidated statement of comprehensive income. There is a choice on an acquisition by acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.  All acquisition-related costs should be expensed. The Company and subsidiaries will apply this standard prospectively to all business combinations from January 1, 2010.

F-29

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

2.	PRINCIPAL ACCOUNTING POLICIES (CONT’D)
	(z)	Standards and amendments to published standards that are not yet effective but relevant to the Company and its subsidiaries (cont’d)
		•	IFRS 5 (Amendment), ‘Non-current assets held for sale and discontinued operations’. The amendment is part of the IASB’s annual improvements project published in May 2008 and April 2009. The amendment provides clarification that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. It clarifies that all assets and liabilities of a subsidiary are classified as held for sale if a partial disposal sale plan results in loss of control, and relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met. The amendment also clarifies that the general requirement of IAS 1 still apply, particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimat ion uncertainty) of IAS 1. The Company and its subsidiaries and company will apply IFRS 5 (amendment) from January 1, 2010. It is not expected to have a material impact on the Company and its subsidiaries’ or the Company’s financial statements.
		•	IFRS 9, ‘Financial Instruments’ (effective for annual period beginning on or after January 1, 2013). The standard requires financial assets to be classified into two measurement categories: those to be measured subsequently at fair value, and those to be measured subsequently at amortized cost. The decision is to be made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. An instrument is subsequently measured at amortized cost only if it is a debt instrument and both the objective of the entity’s business model is to hold the asset to collect the contractual cash flows, and the asset’s contractual cash flows represent only payments of principal and interest (that is, it has only ‘basic loan features’). All other debt instruments are to be measured at fair value through profit or loss. All equity instruments are to be measured subsequently at fair value. Equity instruments that are held for trading will be measured at fair value through profit or loss. For all other equity investments, an irrevocable election can be made at initial recognition, to recognize unrealized and realized fair value gains and losses through other comprehensive income rather than profit or loss. There is to be no recycling of fair value gains and losses to profit or loss. This election may be made on an instrument-by-instrument basis. Dividends are to be presented in profit or loss, as long as they represent a return on investment. The Company and subsidiaries will apply this standard prospectively to financial instruments from January 1, 2013.

F-30

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

3.	FINANCIAL, CAPITAL AND INSURANCE RISKS MANAGEMENT
	(a)	Financial risk management
	Risk management, including the management on the financial risks, is carried out under the instruction of the Strategic Committee of Board of Directors and the Risk Management Team. The Company works out general principles for overall management as well as management policies covering specific areas. In considering the importance of risks, the Company identifies and evaluates risks at head office and individual power plant level, and requires analysis and proper communication for the information collected periodically.
	SinoSing Power and its subsidiaries are subject to financial risks that are different from the entities operating within the PRC. They have a series of controls in place to maintain the cost of risks occurring and the cost of managing the risks at an acceptable level. Management continually monitors the risk management process to ensure that an appropriate balance between risk and control is achieved. SinoSing Power and its subsidiaries have their written policies and financial authorization limits in place they are reviewed periodically. These financial authorization limits seek to mitigate and eliminate operational risks by setting approval thresholds required for entering into contractual obligations and investments
		(i)	Market risk
			(1) Foreign exchange risk
			Foreign exchange risk of the entities operating within the PRC primarily arises from loans denominated in foreign currencies of the Company and its subsidiaries. SinoSing Power and its subsidiaries are exposed to foreign exchange risk on accounts payable and other payables that are denominated primarily in US$, a currency other than Singapore dollar (“S$”), their functional currency. Please refer to Notes 22 and 25 for details. The Company and its subsidiaries manage exchange risk through closely monitoring interest and exchange market.
			As of December 31, 2009, if RMB had weakened / strengthened by 5% (2008 and 2007: 5%) against US$ and 3% (2008 and 2007: 3%) against € with all other variables constant, exchange gain of the Company and its subsidiaries would have been RMB 357 million (2008 and 2007: RMB 393 million and RMB 174 million) and RMB 31 million (2008 and 2007: RMB 16 million and RMB 20 million) lower / higher, respectively. The ranges of such sensitivity disclosed above were based on the observation on the historical trend of related exchange rates during the previous year under analysis.
			As of December 31, 2009, if S$ had weakened / strengthened by 10% (2008: 10%) against US$ with all other variables constant, exchange gain of SinoSing Power and its subsidiaries would have been RMB 93 million (2008: RMB 398 million) lower / higher, respectively. The ranges of such sensitivity disclosed above were based on the management’s experience and forecast.
			SinoSing Power and its subsidiaries also exposed to foreign exchange risk on fuel purchase that is denominated primarily in US$. They use forward exchange contracts to hedge almost all of its estimated foreign exchange exposure in respect of forecast fuel purchases over the following three months. The Company and its subsidiaries classify its forward foreign currency contracts as cash flow hedges. Please refer to Note 13 for details.

F-31

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

3.	FINANCIAL, CAPITAL AND INSURANCE RISKS MANAGEMENT (CONT’D)
	(a)	Financial risk management (cont’d)
		(i)	Market risk (cont’d)
			(2) Price risk
			The available-for-sale financial assets of the Company and its subsidiaries are exposed to equity security price risk. The exposure of such a risk is presented on the balance sheets.
			Detailed information relating to the available-for-sale financial assets are disclosed in Note 10. Being a strategic investment in nature, the Company has a director in the Board of the investee and exercises in fluence in safeguarding the interest. The Company also closely monitors the pricing trends in the open market in determining their long-term strategic stakeholding decisions.
			The Company and its subsidiaries exposed to fuel price risk on fuel purchases. The Company and its subsidiaries entered into various long-term agreements to avoid the significant price changes. SinoSing Power and its subsidiaries also use fuel oil swap to hedge against such a risk and designate them as cash flow hedges. Please refer to Note 13 for details.
			(3) Cash flow interest rate risk
			The interest rate risk of the Company and its subsidiaries primarily arises from loans. Loans borrowed at variable rates expose the Company and its subsidiaries to cash flow interest rate risk. The exposures of these risks are disclosed in Note 22 to the financial statements. The Company will enter into interest rate swap agreements with banks when considered appropriate to hedge against cash flow interest rate risk.
			As of December 31, 2009, if interest rates on RMB-denominated borrowings had been 50 basis points (2008 and 2007: 50 basis points) higher/lower with all other variables held constant, interest expense for the year would have been RMB 339million (2008 and 2007: RMB 294 million and RMB 198 million) higher/lower. If interest rates on US$-denominated borrowings had been 50 basis points (2008 and 2007: 50 basis points) higher/lower with all other variables held constant, interest expense for the year would have been RMB 14 million (2008 and 2007: RMB 56 million and RMB 17 million) higher/lower. If interest rates on S$-denominated borrowings had been 100 basis points (2008: 100 basis points) higher/lower with all other variables held constant, interest expense for the year would have been RMB 150 million (2008: RMB 114 million) higher /lower. The ranges of such sensitivity disclosed above were based on the observation on the historical trend of related interest rates during the previous year under analysis.
			In the current year, the Company entered into a floating-to-fixed interest rate swap agreement to hedge against cash flow interest rate risk of a loan. According to the interest rate swap agreement, the Company agrees with the counterparty to settle the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts quarterly until 2019. Please refer to Note 13 for details.

F-32

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

3.	FINANCIAL, CAPITAL AND INSURANCE RISKS MANAGEMENT (CONT’D)
	(a)	Financial risk management (cont’d)
		(ii)  Credit risk
		Credit risk arises from bank deposits, credit exposures to customers and other receivables. The maximum exposures of bank deposits, accounts and other receivables are disclosed in Notes 33, 18, and 17 to the financial statements, respectively.
		Bank deposits are placed with banks and financial institutions which are regulated, including which a significant portion is deposited with a non-bank financial institution which is a related party of the Company. The Company has a director in the Board of this non-bank financial institution and exercises influence. Corresponding maximum exposures of these bank deposits are disclosed in Note 34(a)(i) to the financial statements.
		Most of the power plants of the Company and its subsidiaries operating within PRC sell electricity generated to their sole customers, the power grid companies of their respective provinces or regions where the power plants operate. These power plants communicate with their individual grid companies periodically and believe that adequate provision for doubtful accounts have been made in the financial statements.
		SinoSing Power and its subsidiaries derive their revenue mainly from sale of electricity to the National Electricity Market of Singapore operated by Energy Market Company Pte Ltd., which is not expected to have high credit risk.
		A subsidiary of SinoSing Power also derives its revenue mainly from retailing electricity to consumers with monthly consumption of more than 10,000kWh. These customers engage in a wide spectrum of manufacturing and commercial activities in a variety of industries. The subsidiary holds cash deposits and guarantees from creditworthy financial institutions to secure substantial obligations of the customers.
		The concentrations of accounts receivable are disclosed in Note 5.
		(iii)  Liquidity risk
		Liquidity risk management is to primarily ensure the ability of the Company and its subsidiaries to meet its liabilities as and when they are fall due. The liquidity reserve comprises the undrawn borrowing facility and cash and cash equivalents available as of each month end in meeting its liabilities.
		The Company and its subsidiaries maintained flexibility in funding by cash generated by their operating activities and availability of committed credit facilities.
		Financial liabilities due within 12 months are presented as the current liabilities in the balance sheets. The repayment schedules of the long-term loans and long-term bonds and cash flows of derivative financial liabilities are disclosed in Notes 22, 23 and 13, respectively.

F-33

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

3.	FINANCIAL, CAPITAL AND INSURANCE RISKS MANAGEMENT (CONT’D)
	(b)	Fair value estimation
			(i)  Fair value measurements
			Effective January 1, 2009, the Company and its subsidiaries adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value; this requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
			•	Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities.
			•	Level 2- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
			•	Level 3- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
			The following table presents the assets and liabilities of the Company and its subsidiaries that are measured at fair value at December 31, 2009.

	The Company and its subsidiaries
	Level 1		Level 2			Level 3		Total
Assets
Financial assets at fair value through profit or loss (Note 13)
– Trading derivatives		-		(4,123	)		-		(4,123	)
Derivatives used for hedging (Note 13)		-		190,872			-		190,872
Available-for-sale financial assets (Note 10)
– Equity securities*		2,293,999		-			-		2,293,999
Total assets		2,293,999		186,749			-		2,480,748
Liabilities
Financial liabilities at fair value through profit or loss (Note 13)
– Trading derivatives		-		6,276			-		6,276
Derivatives used for hedging (Note 13)		-		7,977			-		7,977
Total liabilities		-		14,253			-		14,253

* The available-for-sale financial asset that is measured at fair value in the table above represents the equity interest in China Yangtze Power Co., Ltd. (“Yangtze Power”). In 2009, the Company transferred Yangtze Power from level 2 into level 1 upon the resumption of trading of shares of Yangtze Power in the Shanghai Stock Exchange after the restructuring since May 2008 (Note 10).

F-34

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

3.	FINANCIAL, CAPITAL AND INSURANCE RISKS MANAGEMENT (CONT’D)
	(b)	Fair value estimation (cont’d)
		(i)  Fair value measurements (cont’d)
		The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Company and its subsidiaries is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise equity investment in Yangtze Power classified as available for sale.
		The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
		If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
		Specific valuation techniques used to value financial instruments include:
		·	The forward exchange contracts and fuel oil swaps are both valued using quoted market prices or dealer quotes for similar instruments.
		·	The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.
		Instruments included in level 2 comprise forward exchange contracts, fuel oil swaps and interest rate swap.
		(ii)  Fair value disclosures
		The carrying value less provision for doubtful accounts of accounts receivable, other receivables and assets, accounts payable and other liabilities, short-term bonds and short-term loans are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company and its subsidiaries for similar financial instruments.
		The estimated fair value of long-term loans including current maturities and long-term bonds was approximately RMB 80.39 billion and approximately RMB 14.18 billion as of December 31, 2009 (2008: RMB 65.49 billion and RMB 11.31 billion), respectively. The aggregate book value of these liabilities was approximately RMB 80.52 billion and RMB 13.80 billion as of December 31, 2009 (2008: RMB 65.57 billion and RMB 9.83 billion), respectively.

F-35

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

3.	FINANCIAL, CAPITAL AND INSURANCE RISKS MANAGEMENT (CONT’D)
	(c)	Capital risk management
	The objectives of the Company and its subsidiaries when managing capital are to safeguard the ability of the Company and its subsidiaries in continuing as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
	The Company and its subsidiaries monitor capital by using debt ratio analysis. This ratio is calculated as total liabilities (sum of current liabilities and non-current liabilities) divided by total assets as shown in consolidated balance sheet. During 2009, the strategy of the Company and its subsidiaries remained unchanged from 2008. The debt ratio of the Company and its subsidiaries as of December 31, 2009 was 74.41% (2008: 74.35%).
	(d)	Insurance risk management
	The Company and its subsidiaries issue contracts that transfer significant insurance risk.
	The risk relates to the financial guarantees provided to banks by the Company on the borrowings of an associate and a subsidiary. The risk under any one financial guarantee contract is the possibility that the insured event (default of a specified debtor) occurs and the uncertainty of the amount of the resulting claims. By the nature of a financial guarantee contract, this risk is predictable.
	Experience shows credit risks from the specified debtors are relatively remote. The Company maintains a close watch on the financial position and liquidity of the associate and subsidiary for which financial guarantees have been granted in order to mitigate such risks (Note 2(w)(ii)). The Company takes all reasonable steps to ensure that they have appropriate information regarding any claim exposures.
4.	CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
	Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
	The Company and its subsidiaries make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
	(a)	Accounting estimates on impairment of goodwill and power generation licence
	The Company and its subsidiaries perform test annually whether goodwill and power generation licence have suffered any impairment in accordance with the accounting policies stated in Notes 2(g) and 2(f), respectively. The recoverable amounts of CGU or CGUs have been determined based on value-in-use calculations. These calculations require the use of estimates (Notes 14 and 12). It is reasonably possible, based on existing knowledge, that outcomes within the next financial period that are different from assumptions could require a material adjustment to the carrying amount of goodwill and power generation licence.

F-36

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

4.	CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONT’D)
	(b)	Useful life of power generation licence
	As of year end, management of the Company and its subsidiaries considered the estimated useful life for its power generation licence as indefinite. This estimate is based on the expected renewal of power generation licence without significant restriction and cost, together with the consideration on related future cash flows generated and the expectation of management in continuous operations. Based on existing knowledge, that outcomes within the next financial period that are different from assumptions could require a change on carrying amount of power generation licence.
	(c)	Useful lives of property, plant and equipment
	Management of the Company decided the estimated useful lives of property, plant and equipment and respective depreciation. The accounting estimate is based on the expected wears and tears incurred during power generation. Wears and tears can be significantly different following renovation each time. When the useful lives differ from the original estimated useful lives, management will adjust the estimated useful lives accordingly. It is possible that the estimates made based on existing experience are different to the actual outcomes within the next financial period and could cause a material adjustment to the depreciation and carrying amount of property, plant and equipment.
	(d)	Estimated impairment of property, plant and equipment
	The Company and its subsidiaries test whether property, plant and equipment suffered any impairment whenever any impairment indication exists. In accordance with Note 2(h), an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount. It is reasonably possible, based on existing knowledge, that outcomes within the next financial period that are different from assumptions could require a material adjustment to the carrying amount of property, plant and equipment.
	(e)	Approval of construction of new power plants
	The receiving of the ultimate approval from National Development and Reform Commission (“NDRC”) on certain power plant construction projects of the Company and its subsidiaries is a critical estimate and judgment of the directors. Such estimate and judgment are based on initial approval documents received as well as their understanding of the projects. Based on historical experience, the directors believe that the Company and its subsidiaries will receive final approval from NDRC on the related power plant projects. Deviation from the estimate and judgment could result in significant adjustment to the carrying amount of property, plant and equipment.

F-37

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

5.	REVENUE AND SEGMENT INFORMATION
	Revenues recognized during the year are as follows:

	For the year ended December 31,
	2009		2008		2007
Sales of power		75,951,682		67,492,499		49,764,187
Sales of steam		464,940		117,454		48,188
Port service		177,448		-		-
Others		268,826		225,161		79,674
Total		76,862,896		67,835,114		49,892,049

Directors and certain senior management of the Company perform the function as chief operating decision makers (collectively referred to as the “senior management”). The senior management reviews the internal reporting of the Company and its subsidiaries in order to assess performance and allocate resources. The Company has determined the operating segments based on these reports. Currently, the operating segments of the Company were grouped into power segment and all other segments (port operations).

Senior management assesses the performance of the operating segments based on a measure of profit / (loss) before income tax expense under PRC GAAP in related periods excluding dividend income received from available-for-sale financial assets and operating results of those centrally managed and resource allocation functions in headquarters. Other information provided, except as noted below, to the senior management of the Company is measured under PRC GAAP.

Segment assets exclude prepaid income tax, deferred income tax assets, available-for-sale financial assets and assets related to those centrally managed and resource allocation functions in headquarters that are not attributable to any operating segment (“corporate assets”). Segment liabilities exclude current income tax liabilities, deferred income tax liabilities and liabilities related to those centrally managed and resource allocation functions in headquarters that are not attributable to any operating segment (“corporate liabilities”). These are part of the reconciliation to total balance sheet assets and liabilities.

F-38

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

5.	REVENUE AND SEGMENT INFORMATION (CONT’D)
	All sales among the operating segments were performed at market price or close to market price, and have been eliminated as internal transactions when preparing consolidated financial statements.
	Segmental and geographical information for the years ended December 31, 2009 and 2008 are disclosed below. As the Company and its subsidiaries were principally operated in power generation business in the PRC prior to 2008, management considered to exclude 2007 related disclosures below except for major customers information for meaningful disclosures.

(Under PRC GAAP)

	Power segment			All other segments			Total
For the year ended December 31, 2009
Total revenue		79,564,883			379,426			79,944,309
Inter-segment revenue		-			(201,978	)		(201,978	)
Revenue from external customers		79,564,883			177,448			79,742,331
Segment results		6,234,631			7,982			6,242,613
Interest income		63,972			714			64,686
Interest expense		(4,235,474	)		(39,439	)		(4,274,913	)
Depreciation and amortization		(9,166,607	)		(46,136	)		(9,212,743	)
Net loss on disposal of property, plant and equipment		(61,966	)		-			(61,966	)
Share of profits of associates		664,497			-			664,497
Income tax expense		(654,888	)		(1,803	)		(656,691	)
For the year ended December 31, 2008
Total revenue		72,198,019			-			72,198,019
Inter-segment revenue		-			-			-
Revenue from external customers		72,198,019			-			72,198,019
Segment results		(4,104,740	)		-			(4,104,740	)
Interest income		90,811			-			90,811
Interest expense		(4,168,273	)		(1,188	)		(4,169,461	)
Depreciation and amortization		(8,541,111	)		(1	)		(8,541,112	)
Net loss on disposal of property, plant and     equipment		(53,277	)		-			(53,277	)
Share of profits of associates		96,181			-			96,181
Income tax benefit		185,939			-			185,939
December 31, 2009
Segment assets		188,444,809			1,517,972			189,962,781
Including:
Additions to non-current assets (excluding     financial assets and deferred income tax assets)		27,563,073			36,967			27,600,040
Investments in associates		8,715,779			-			8,715,779
Segment liabilities		(137,099,373	)		(792,750	)		(137,892,123	)
December 31, 2008
Segment assets		169,772,662			1,462,563			171,235,225
Including:
Additions to non-current assets (excluding     financial assets and deferred income tax assets)		51,347,593			1,440,471			52,788,064
Investments in associates		7,916,751			-			7,916,751
Segment liabilities		(121,092,939	)		(743,517	)		(121,836,456	)

F-39

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

5.	REVENUE AND SEGMENT INFORMATION (CONT’D)
	A reconciliation of revenue from external customers to operating revenue is provided as follows:

	For the year ended December 31,
	2009			2008
Revenue from external customers (PRC GAAP)		79,742,331			72,198,019
Reconciling item:
Impact of business combination under common control*		(2,884,007	)		(4,372,882	)
Impact of IFRS adjustment**		4,572			9,977
Operating revenue per consolidated statement of comprehensive income		76,862,896			67,835,114

A reconciliation of segment result to profit / (loss) before income tax expense is provided as follows:

	For the year ended December 31,
	2009			2008
Segment results (PRC GAAP)		6,242,613			(4,104,740	)
Reconciling items:
Loss related to the headquarters		(281,069	)		(351	)
Investment income from China Huaneng Finance Co., Ltd. (“Huaneng Finance”)		88,291			37,591
Impact of business combination under common control*		(4,742	)		(365,545	)
Impact of IFRS adjustments**		(341,117	)		(358,511	)
Profit / (Loss) before income tax expense per consolidated statement of comprehensive income		5,703,976			(4,791,556	)

Reportable segments’ assets are reconciled to total assets as follows:

	As of December 31, 2009		As of December 31, 2008
Total segment assets (PRC GAAP)		189,962,781		171,235,225
Reconciling items:
Investment in Huaneng Finance		570,917		563,269
Deferred income tax assets		547,664		426,120
Prepaid income tax		40,815		172,758
Available-for-sale financial assets		2,555,972		1,524,016
Corporate assets		318,977		147,075
Impact of business combination under common control*		-		(9,480,805	)
Impact of IFRS adjustments**		3,890,053		1,330,100
Total assets per consolidated balance sheet		197,887,179		165,917,758

F-40

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

5.	REVENUE AND SEGMENT INFORMATION (CONT’D)
	Reportable segments’ liabilities are reconciled to total liabilities as follows:

	As of December 31, 2009			As of December 31, 2008
Total segment liabilities (PRC GAAP)		(137,892,123	)		(121,836,456	)
Reconciling items:
Current income tax liabilities		(292,509	)		(34,762	)
Deferred income tax liabilities		(1,386,493	)		(1,091,023	)
Corporate liabilities		(5,709,119	)		(5,772,768	)
Impact of business combination under common control*		-			5,720,148
Impact of IFRS adjustments**		(1,958,815	)		(342,944	)
Total liabilities per consolidated balance sheet		(147,239,059	)		(123,357,805	)

Other material items:

	Reportable segment total			Headquarters			Investment income from Huaneng Finance		Impact of business combination under common control*		Impact of IFRS adjustments**			Total
For the year ended  December 31,  2009
Interest expense		(4,274,913	)		(159,070	)		-		173,583		-			(4,260,400	)
Depreciation and     amortization		(9,212,743	)		(20,384	)		-		725,416		(242,004	)		(8,749,715	)
Share of profits     of associates		664,497			-			88,291		-		3,376			756,164
Income tax     expense		(656,691	)		-			-		16,671		46,233			(593,787	)
For the year ended December 31, 2008
Interest expense		(4,169,461	)		(176,604	)		-		281,286		-			(4,064,779	)
Depreciation and     amortization		(8,541,112	)		(17,095	)		-		911,670		(262,198	)		(7,908,735	)
Share of profits     of associates		96,181			-			37,591		-		(61,084	)		72,688
Income tax benefit		185,939			-			-		33,886		19,898			239,723

*

Under PRC GAAP, the business combination under common control is accounted for under merger accounting method; the operating results for all periods presented are retrospectively restated by combining the financial information of the businesses acquired as if they had been combined from the date when the combing entities first came under the control of the controlling party. Therefore, the financial information of business acquired before the acquisition date is shown as the difference between PRC GAAP and IFRS.

**

The GAAP adjustments above were primarily brought forward from prior years. Such differences will be gradually eliminated following subsequent depreciation and amortization of related assets or the extinguishment of liabilities.

F-41

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

5.	REVENUE AND SEGMENT INFORMATION (CONT’D)
	Geographical information (Under IFRS):
	(i)	External revenue generated from the following countries:

	For the year ended December 31,
	2009		2008
PRC		66,355,907		57,421,766
Singapore		10,506,989		10,413,348
		76,862,896		67,835,114

(ii) Non-current assets (excluding financial assets and deferred income tax assets) are located in the following countries:

	As of December 31, 2009		As of December 31, 2008
PRC		149,590,150		123,273,419
Singapore		21,056,775		20,687,670
		170,646,925		143,961,089

The information on the portion of external revenue of the Company and its subsidiaries which is generated from sales to major customers of the Company and its subsidiaries at amount equal to or more than 10% of external revenue is as follows:

	For the year ended December 31,
	2009					2008
	Amount		Proportion			Amount		Proportion
ShanDong Electric Power Corporation		10,457,022		14	%		7,895,766		12	%
JiangSu Electric Power Company		10,555,992		14	%		9,565,878		14	%
ZheJiang Electric Power Corporation		8,154,374		11	%		7,487,033		11	%

	For the year ended December 31,
	2007
	Amount		Proportion
ShanDong Electric Power Corporation		7,231,393		15	%
JiangSu Electric Power Company		8,902,323		18	%
LiaoNing Electric Power Corporation		6,112,328		12	%
Shanghai Municipal Electric Power Company		5,067,567		10	%

F-42

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

6．	PROFIT / (LOSS) BEFORE INCOME TAX EXPENSE
	Profit / (Loss) before income tax expense was determined after charging and (crediting) the following:

	For the year ended December 31,
	2009			2008			2007
Interest expense on bank loans:
-           wholly repayable within five years		3,163,483			3,200,296			1,854,879
-           not wholly repayable within five years		1,234,327			976,670			567,464
Interest expense on long-term loans from Huaneng Group:
-           wholly repayable within five years		52,969			38,768			-
-           not wholly repayable within five years		-			99,435			137,942
Interest expense on other long-term loans:
-           wholly repayable within five years		136,193			4,584			14,945
-           not wholly repayable within five years		5,588			1,078			-
Interest expense on long-term bonds		676,902			499,115			7,030
Interest expense on short-term bonds		287,024			242,720			163,951
Total interest expense		5,556,486			5,062,666			2,746,211
Less: amounts capitalized in property, plant and equipment		(1,296,086	)		(997,887	)		(614,089	)
		4,260,400			4,064,779			2,132,122
Loss / (Gain) on fair value change of derivative financial instruments		33,638			54,658			(87,132	)
Gain on deemed disposal of Sichuan Hydropower		-			-			(17,864	)
Auditors’ remuneration		29,015			30,555			34,688
Loss / (Gain)  on disposals or write-off of property, plant and equipment,		53,033			54,056			(238,037	)
Operating leases:
-           Property, plant and equipment		157,717			32,894			34,366
-           Land use rights		38,677			39,318			40,819
Depreciation of property, plant and equipment		8,572,103			7,752,706			7,229,108
Impairment loss of property, plant and equipment		629,674			-			7,044
Impairment of goodwill		-			130,224			-
Amortization of land use rights		91,633			74,800			46,447
Amortization of other non-current assets		53,235			44,478			17,813
Cost of inventories consumed		45,694,202			50,476,167			28,330,667
Provision for / (Reversal of) doubtful accounts		677			10,951			(1,466	)
Bad debts recovery		(2,623	)		(50,096	)		(5,318	)
Provision for / (Reversal of) inventory obsolescence		29,889			3,901			(6,615	)

Other operating expenses consist of impairment loss of property, plant and equipment, environmental protection expenses, substituted power arrangement expenses, insurance and other miscellaneous expenses, etc.

F-43

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

7. PROPERTY, PLANT AND EQUIPMENT

	Port facilities			Buildings			Electric utility plant in service			Transportation facilities			Others			Construction-in-progress			Total
As of  January 1, 2008
Cost		-			2,234,479			114,342,118			206,956			2,452,285			12,853,213			132,089,051
Accumulated depreciation		-			(570,368	)		(39,965,221	)		(112,691	)		(1,314,852	)		-			(41,963,132	)
Net book value		-			1,664,111			74,376,897			94,265			1,137,433			12,853,213			90,125,919
Year  ended December 31, 2008
Beginning of the year		-			1,664,111			74,376,897			94,265			1,137,433			12,853,213			90,125,919
Reclassification		-			(11,526	)		(32,261	)		-			43,787			-			-
Acquisition		-			-			5,983,679			-			12,460			80,441			6,076,580
Additions		1,315,393			29,211			185,228			-			201,613			27,029,948			28,761,393
Transfer from CIP		-			41,538			14,919,194			-			112,805			(15,073,537	)		-
Disposals / Write-off		-			(4,099	)		(72,385	)		-			(2,375	)		-			(78,859	)
Depreciation charge		-			(96,468	)		(7,413,970	)		(12,385	)		(239,293	)		-			(7,762,116	)
Currency translation     differences		-			-			(377,920	)		-			(823	)		(6,976	)		(385,719	)
End of the year		1,315,393			1,622,767			87,568,462			81,880			1,265,607			24,883,089			116,737,198
As of December 31, 2008
Cost		1,315,393			2,276,367			141,065,871			206,956			2,749,454			24,883,089			172,497,130
Accumulated depreciation		-			(653,600	)		(49,812,854	)		(125,076	)		(1,483,847	)		-			(52,075,377	)
Accumulated impairment loss		-			-			(3,684,555	)		-			-			-			(3,684,555	)
Net book value		1,315,393			1,622,767			87,568,462			81,880			1,265,607			24,883,089			116,737,198
Year  ended December 31, 2009
Beginning of the year		1,315,393			1,622,767			87,568,462			81,880			1,265,607			24,883,089			116,737,198
Reclassification		-			8,694			(107,894	)		-			99,200			-			-
Acquisitions		-			280,075			6,988,261			-			61,346			287,515			7,617,197
Additions		-			1,659			118,039			-			202,974			25,415,657			25,738,329
Transfer from CIP		-			219,143			17,796,894			26,083			151,557			(18,193,677	)		-
Disposals / Write-off		-			(785	)		(204,394	)		-			(21,581	)		-			(226,760	)
Depreciation charge		(37,411	)		(77,553	)		(8,201,190	)		(13,538	)		(249,638	)		-			(8,579,330	)
Impairment charge		-			-			(629,674	)		-			-			-			(629,674	)
Currency translation     differences		-			-			107,732			-			3,366			9,278			120,376
End of the year		1,277,982			2,054,000			103,436,236			94,425			1,512,831			32,401,862			140,777,336
As of December 31, 2009
Cost		1,315,393			3,160,319			173,909,736			233,023			3,389,767			32,401,862			214,410,100
Accumulated depreciation		(37,411	)		(1,106,319	)		(66,075,937	)		(138,598	)		(1,876,936	)		-			(69,235,201	)
Accumulated impairment loss		-			-			(4,397,563	)		-			-			-			(4,397,563	)
Net book value		1,277,982			2,054,000			103,436,236			94,425			1,512,831			32,401,862			140,777,336

Interest expense of approximately RMB 1,296 million (2008 and 2007: RMB 998 million and RMB 614 million) arising on borrowings for the construction of power plants were capitalized during the year and are included in ‘Additions’ in property plant and equipment. A capitalization rate of approximately 5.14% (2008 and 2007: 6.21% and 5.30%) per annum was used.

In 2009, impairment losses of certain property, plant and equipment of Huaneng Xindian Power Plant and Huaneng Weihai Power Limited Liability Company (“Weihai Power Company”) were provided upon the shutdown of respective generators amounting to RMB 550 million and RMB 80 million, respectively. The recoverable amounts are determined based on fair value less costs to sell assessed by an independent valuer. The fair values are determined by reference to the market price.

In 2008, no impairment was recognized based on assessments.

F-44

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

7.	PROPERTY, PLANT AND EQUIPMENT (CONT’D)
	As of December 31, 2007, impairment losses of certain property, plant and equipment in Huaneng Shantou Power Plant amounting to RMB 49.04 million was reversed upon the disposal of related property, plant and equipment.
8.	INVESTMENTS IN ASSOCIATES

	2009			2008
Beginning of the year		8,758,235			8,731,490
Acquisition of equity interest in Shenzhen Energy Investment Co., Ltd.     (“SEI”)		-			200
Acquisition of 10% equity interest in Shandong Rizhao Power Company     Ltd. (“Rizhao Power Company”)		-			134,554
Establishment of Yangquan Coal Industry Group Huaneng  Coal-fired     power  Investment  Co., Ltd.  (“Yangmei Huaneng Company”)		-			147,000
Additional investments in Yangmei Huaneng Company		343,000			-
Establishment of Huaneng Shidaowan Nuclear Power Development Co.,     Ltd. (“Shidaowan Nuclear Power”)		150,000			-
Establishment of Bianhai Railway Co., Ltd. (“Bianhai Railway”)		55,500			-
Share of other comprehensive income		8,795			3,096
Share of profit before income tax expense		1,008,784			187,518
Share of income tax expense		(252,620	)		(114,830	)
Dividends		(503,118	)		(330,793	)
End of the year		9,568,576			8,758,235

Investments in associates as of December 31, 2009 included goodwill of approximately RMB 1,490 million (2008: RMB 1,490 million).

F-45

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

8.	INVESTMENTS IN ASSOCIATES (CONT’D)
	As of December 31, 2009, investments in associates of the Company and its subsidiaries, all of which are unlisted except for SEI which is listed in the Shenzhen Stock Exchange, were as follows:

Name of associate	Country of incorporation	Registered capital	Business nature and scope of operation	Percentage of equity interest held
		in Yuan or Dollar		Direct	Indirect
Rizhao Power Company	PRC	RMB1,245,587,900	Power generation	44%	-
Shenzhen Energy Group Co., Ltd.  (“SEG”)	PRC	RMB955,555,556	Development, production and sale of regular energy, new energy and energy construction project, etc.	25%	-
SEI*	PRC	RMB2,202,495,332	Energy and investment in related industries	9.08%	-
Hebei Hanfeng Power Generation Limited Liability Company	PRC	RMB1,975,000,000	Power generation	40%	-
Chongqing Huaneng Lime Company Limited (“Lime Company”)	PRC	RMB50,000,000	Lime production and sale, construction materials, chemical engineering product	-	25%
Huaneng Finance	PRC	RMB2,000,000,000	Provision for financial service including fund deposit services, lending, finance lease arrangements, notes discounting and entrusted loans and investment arrangement within Huaneng Group	20%	-
Huaneng Sichuan Hydropower Co., Ltd.	PRC	RMB979,600,000	Development, investment, construction, operation and management of hydropower	49%	-
Yangmei Huaneng Company	PRC	RMB1,000,000,000	Investment, development, consulting and management services of coal and power generation projects	49%	-
Shidaowan Nuclear Power	PRC	RMB1,000,000,000	Preparation for construction of Yashuidui power plant project	30%	-
Bianhai Railway	PRC	RMB150,000,000	Railway construction, freight transportation, materials supplies, agency service, logistics and storage at coastal industrial base in Yingkou, Liaoning	37%	-

* The Company holds 200 million shares, representing 9.08% shareholding of SEI, which is also the subsidiary of SEG, one of the Company’s associates. The Company considered the nature of the investment and classified this as an associate. The 200 million shares mentioned above are subject to a lock-up period of 3 years from the acquisition date. As there is no published price quotation for shares with such specific lock-up arrangement, there is no price information available for the disclosure purpose.

The gross amounts of operating results, assets and liabilities (excluding goodwill) of the associates of the Company and its subsidiaries were as follows:

	2009			2008
Assets		78,738,065			78,806,094
Liabilities		(49,216,096	)		(51,201,920	)
Operating revenue		20,108,958			7,937,524
Profit attributable to equity holders of associates		2,055,591			299,872

F-46

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

9.	INVESTMENTS IN SUBSIDIARIES
	As of December 31, 2009, the investments in subsidiaries of the Company and its subsidiaries, all of which are unlisted, were as follows:
	(i)	Subsidiaries acquired from business combinations under common control

Name of subsidiary	Country of incorporation	Type of legal entity	Registered capital	Business nature and scope of operations	Percentage of equity interest held
			in Yuan or Dollar		Direct		Indirect
Huaneng (Suzhou Industrial Park) Power Generation Co. Ltd.	PRC	Limited liability company	RMB632,840,000	Power generation	75%		-
Huaneng Qinbei Power Co., Ltd.	PRC	Limited liability company	RMB810,000,000	Power generation	60%		-
Huaneng Yushe Power Generation Co., Ltd.	PRC	Limited liability company	RMB615,760,000	Power generation	60%		-
Huaneng Hunan Yueyang Power Generation Limited Liability Company (“Yueyang Power Company”)	PRC	Limited liability company	RMB1,055,000,000	Power generation	55%		-
Huaneng Chongqing Luohuang Power Generation Limited Liability Company	PRC	Limited liability company	RMB1,748,310,000	Power generation	60%		-
Huaneng Pingliang Power Generation Co., Ltd. (“Pingliang Power Company”)	PRC	Limited liability company	RMB924,050,000	Power generation	65%	6	-
Huaneng Nanjing Jinling Power Co., Ltd. (“Nanjing Jinling Power Company”)	PRC	Limited liability company	RMB1,302,000,000	Power generation	60%		-
Huaneng Qidong Wind Power Generation     Co., Ltd.(“Qidong Wind Power”)	PRC	Limited liability company	RMB200,000,000	Development of wind power project, production and sales of electricity	65%		-
Tianjin Huaneng Yangliuqing Co-generation Limited Liability Company (“Yangliuqing Power Company”)	PRC	Limited liability company	RMB1,537,130,909	Power generation, heat supply	55%		-
Huaneng Beijing Co-generation Limited Liability Company (“Beijing Cogeneration”) (i)	PRC	Limited liability company	RMB1,600,000,000	Construction and operation of power plants and related  construction projects	41%		-

The subsidiaries above and the Company are all controlled by Huaneng Group before and after the acquisitions.

F-47

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

9.	INVESTMENTS IN SUBSIDIARIES (CONT’D)
	As of December 31, 2009, the investments in subsidiaries of the Company and its subsidiaries, all of which are unlisted, were as follows: (cont’d)
	(ii)	Subsidiariesacquired from business combinations not under common control or acquired through other ways

Name of subsidiary	Country of incorporation	Type of legal entity	Registered capital	Business nature and scope of operations	Percentage of equity interest held
			in Yuan or Dollar		Direct	Indirect
Weihai Power Company	PRC	Limited liability company	RMB761,838,300	Power generation	60%	-
Huaneng Taicang Power Co., Ltd.	PRC	Limited liability company	RMB804,146,700	Power generation	75%	-
Huaneng Huaiyin Power Generation Co. Ltd. (“Huaiyin Power Company”)	PRC	Limited liability company	RMB265,000,000	Power generation	100%	-
Huaneng Huaiyin II Power Limited Company	PRC	Limited liability company	RMB930,870,000	Power generation	63.64%	-
Huaneng Xindian Power Co., Ltd.	PRC	Limited liability company	RMB100,000,000	Power generation	95%	-
Huaneng Shanghai Combined Cycle Power Limited Liability Company	PRC	Limited liability company	RMB699,700,000	Power generation	70%	-
Huaneng International Power Fuel Limited Liability Company	PRC	Limited liability company	RMB200,000,000	Wholesale of coal	100%	-
Huaneng Shanghai Shidongkou Power Generation Limited Liability Company (i)	PRC	Limited liability company	RMB990,000,000	Power generation	50%	-
Huade County Daditaihong Wind Power Utilization Limited Liability Company	PRC	Limited liability company	RMB5,000,000	Wind power development and utilization	99%	-
Huaneng Nantong Power Generation Limited Liability Company	PRC	Limited liability company	RMB1,560,000,000	Power generation	70%	-
Huaneng Yingkou Port Limited Liability Company (i)	PRC	Limited liability company	RMB720,235,000	Loading and conveying service	50%	-
Huaneng Hunan Xiangqi Hydropower Co., Ltd.	PRC	Limited liability company	RMB100,000,000	Construction, operation and management of hydropower and related projects	100%	-
Huaneng Yingkou Power Generation Limited Liability Company	PRC	Limited liability company	RMB830,000,000	Production and sales of electricity and heat	100%	-

F-48

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

9.	INVESTMENTS IN SUBSIDIARIES (CONT’D)
	As of December 31, 2009, the investments in subsidiaries of the Company and its subsidiaries, all of which are unlisted, were as follows: (cont’d)
	(ii)	Subsidiariesacquired from business combinations not under common control or acquired through other ways (cont’d)

Name of subsidiary	Country of incorporation	Type of legal entity	Registered capital	Business nature and scope of operations	Percentage of equity interest held
			in Yuan or Dollar		Direct	Indirect
Zhuozhou Liyuan Cogeneration Co., Ltd.	PRC	Limited liability company	RMB5,000,000	Construction, operation and management of cogeneration power plants and related projects	100%	-
Kaifeng Xinli Power Generation Co., Ltd	PRC	Limited liability company	RMB146,920,000	Power generation	-	55%
SinoSing Power	Singapore	Limited liability company	US$985,000,100	Investment holding	100%	-
Tuas Power	Singapore	Limited liability company	S$1,178,050,000	Power generation and related byproducts, derivatives; developing power supply resources and operating electricity	-	100%
Tuas Power Supply Pte Ltd.	Singapore	Limited liability company	S$500,000	Power sales	-	100%
Tuas Power Generation Pte Ltd.	Singapore	Limited liability company	S$1,183,000,001	Power generation and related byproducts, derivatives; developing power supply resources, operating electricity and power sales	-	100%
Tuas Power Utilities Pte Ltd.	Singapore	Limited liability company	S$2	Provision of utility services	-	100%
TPGS Green Energy Pte Ltd.	Singapore	Limited liability company	S$1,000,000	Provision of utility services	-	75%
New Earth Pte Ltd.	Singapore	Limited liability company	S$10,111,841	Consultancy in waste recycling	-	60%
New Earth Singapore Pte Ltd.	Singapore	Limited liability company	S$12,516,050	Industrial waste management and recycling	-	75%
TP Utilities Pte Ltd.	Singapore	Limited liability company	S$1	Provision of utility services	-	100%

Note:

(i) Pursuant to agreements with other shareholders, the Company has controls over these entities.

F-49

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

10.

AVAILABLE-FOR-SALE FINANCIAL ASSETS

Available-for-sale financial assets represent the 1.56% (2008: 1.82%) equity interest in Yangtze Power and the 10% (2008: 10%) equity interest in Shanxi Xishan Jinxing Energy Co., Ltd. (“Jinxing Energy”). Yangtze Power is a listed company and Jinxing Energy is unlisted, both are incorporated in the PRC. As of December 31, 2009, the Company held approximately 171.71 million (2008: 171.71 million) shares of Yangtze Power. The fair value of Yangtze Power as of December 31, 2009 was determined based on the closing market price of RMB 13.36 per share quoted in the Shanghai Stock Exchange on the last trading day of 2009 (2008: trading of shares of Yangtze Power has been suspended as a result of a major assets restructuring since May 8, 2008. The fair value per share deriving from fair value of similar financial assets amou nted to RMB 7.35.).

	2009		2008
Beginning of the year		1,524,016		3,462,158
Investment in Jinxing Energy		-		146,375
Revaluation gains / (loss)		1,031,956		(2,084,517	)
End of the year		2,555,972		1,524,016

	There were no impairment provisions on available-for-sale financial assets in 2007, 2008 and 2009.
11.	LAND USE RIGHTS
	Details of land use rights are as follows:

	As of December 31,
	2009		2008
Outside Hong Kong, held on:
Leases of between 10 to 50 years		3,817,381		2,868,599
Leases of over 50 years		26,338		26,760
		3,843,719		2,895,359

F-50

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

12.	POWER GENERATION LICENCE
	The movements in the carrying amount of power generation licence during the years are as follows:

	2009		2008
Beginning of the year		3,811,906		-
Movement:
Opening net book value		3,811,906		-
Acquisitions (Note 39)		-		4,073,278
Currency translation differences		86,215		(261,372	)
Closing net book value		3,898,121		3,811,906
End of the year		3,898,121		3,811,906

Impairment test of power generation licence

Power generation licence belongs to the single CGU-Tuas Power. The recoverable amount of the CGU is determined based on value-in-use calculation. Management has based their assessment of recoverable amount on value-in-use calculations which includes cash flow projections of the CGU in Singapore electricity market in the following 20 years, together with an appropriate terminal value. The period of cash flows beyond 5 years was considered reasonable in the circumstances given that it approximates the useful lives of the underlying operating assets.

Key assumptions used for value-in-use calculation:

Management has assessed that, amongst all assumptions used in the value-in-use calculations, the most sensitive key assumption is the discount rate which was arrived at based on weighted average cost of capital. The discount rate applied in determining the recoverable amounts of the CGU was 6.9%. An absolute change in the discount rate of 0.5% would result in approximately RMB 1,531 million change in the recoverable amount of the CGU.

Other key assumptions include projection of its business performance based on estimation of future electricity tariffs, volume of electricity sold, fuel prices and other operating expenses, which are largely based on advices from the financial advisor engaged and an external study conducted by industry specialist to project the market demand and supply situation, as well as forward trend of electricity prices. On average, the growth and inflation rate of 2.8% and 1.1% respectively was used in consideration of future expansion plans and new development projects as part of the long term strategy. The growth rate used did not exceed the long term average growth rate for the Singapore market.

Based on the assessments, no impairment was provided for power generation licence.

F-51

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

 (Amounts expressed in thousands of RMB unless otherwise stated)

13.	DERIVATIVE FINANCIAL INSTRUMENTS
	Details of derivative financial instruments are as follows:

	As of December 31,
	2009			2008
Derivative financial assets
－Cash flow hedge (fuel oil swap contracts)		151,286			(17,008	)
－Cash flow hedge (exchange forwards contracts)		-			1,767
－Cash flow hedge (interest rate swap contracts)		39,586			-
－Financial instruments at fair value through profit or loss (fuel oil swap contracts)		(4,123	)		30,720
Total		186,749			15,479
Less: non-current portion
－Cash flow hedge (fuel oil swap contracts)		5,277			-
－Cash flow hedge (interest rate swap contracts)		39,586			-
Total non-current portion		44,863			-
Current portion		141,886			15,479
Derivative financial liabilities
－Cash flow hedge (fuel oil swap contracts)		(1,368	)		540,519
－Cash flow hedge (exchange forward contracts)		9,345			12,379
－Financial instruments at fair value through profit or loss (fuel oil swap contracts)		6,276			6,786
Total		14,253			559,684
Less: non-current portion
－Cash flow hedge (fuel oil swap contracts)		-			17,242
－Cash flow hedge (exchange forwards contracts)		850			-
Total non-current portion		850			17,242
Current portion		13,403			542,442

For the year ended December 31, 2009 and 2008, no material ineffective portion was recognized in the profit or loss arising from cash flow hedges.

An overseas subsidiary of the Company uses exchange forward contracts to hedge its foreign exchange risk arising from highly probable forecast purchase transactions. The subsidiary also uses fuel oil swap contracts to hedge its fuel price risk arising from highly probable forecast purchases of fuel purchases.

The Company uses an interest rate swap contract to hedge its interest rate risk against one of its variable-rate loans. The notional principal amount of the outstanding interest rate swap contract as of December 31, 2009 was US$ 400 million (2008: N/A). Through this arrangement, the Company pays an annual fixed interest at 4.40% while the original annual floating interest expense (6-month LIBOR+1%) attached in the loan is offset by the receivable leg of the interest rate swap. Such a swap is settled on a quarterly basis from September 2009 to September 2019.

F-52

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

13.	DERIVATIVE FINANCIAL INSTRUMENTS (CONT’D)
	The analysis of contractual cash inflows / (outflows) of major derivative financial instruments are as follows:

			Cash flows
	Carrying Amount		Contractual cash flows			Within 1 year			Between 1 to 2 years			Between 2 to 3 years
As of December 31, 2009
Derivative financial assets
Fuel derivatives used for hedging (net settlement)		147,163		147,163			141,889			4,326			948
Derivative financial liabilities
Fuel derivatives used for hedging (net settlement)		4,908		(4,908	)		(4,908	)		-			-
Forward exchange contracts used for hedging
- inflow				2,684,751			2,641,444			39,433			3,874
- outflow				(2,712,479	)		(2,668,293	)		(40,230	)		(3,956	)
		9,345		(27,728	)		(26,849	)		(797	)		(82	)
As of December 31, 2008
Derivative financial assets
Fuel derivatives used for hedging (net settlement)		13,712		13,712			14,668			(238	)		(718	)
Forward exchange contracts used for hedging
- inflow				190,120			144,230			44,887			1,003
- outflow				(189,906	)		(143,231	)		(45,762	)		(913	)
		1,767		214			999			(875	)		90
Derivative financial liabilities
Fuel derivatives used for hedging (net settlement)		547,305		(547,305	)		(529,671	)		(17,634	)		-
Forward exchange contracts used for hedging
- inflow				2,068,406			2,044,632			21,084			2,690
- outflow				(2,114,248	)		(2,090,716	)		(20,894	)		(2,638	)
		12,379		(45,842	)		(46,084	)		190			52

F-53

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

14.	GOODWILL
	The movements in the carrying amount of goodwill during the years are as follows:

As of December 31, 2007
Cost	555,266
Movement in 2008:
Opening net book value	555,266
Acquisitions	11,408,202
Impairment charge	(130,224	)
Currency translation differences	(725,148	)
Closing net book value	11,108,096
As of December 31, 2008
Cost	11,238,320
Accumulated impairment loss	(130,224	)
Net book value	11,108,096
Movement in 2009:
Opening net book value	11,108,096
Acquisitions (Note 39)	263,708
Currency translation differences	239,194
Closing net book value	11,610,998
As of December 31, 2009
Cost	11,741,222
Accumulated impairment loss	(130,224	)
Net book value	11,610,998

Impairment tests for goodwill

Goodwill is allocated to the CGUs of the Company and its subsidiaries.

The carrying amounts of significant goodwill allocated to individual CGUs which all of them belonged to power segment are as follows:

	2009		2008
Yueyang Power Company		100,907		100,907
Pingliang Power Company		107,735		107,735
Tuas Power		10,903,073		10,663,879
Beijing Cogeneration		103,286		-
Yangliuqing Power Company		151,459		-

The recoverable amount of a CGU is determined based on value-in-use calculations. For domestic CGUs, these calculations use cash flow projections based on management’s financial budgets covering a five-year period. The Company expects cash flows beyond the five-year period will be similar to that of the fifth year based on existing production capacity. In connection to the goodwill arising from acquisition of Tuas Power, management has based its assessment of recoverable amount on value-in-use calculations which includes cash flow projections of the CGU in Singapore electricity market in the following 20 years, together with an appropriate terminal value. The period of cash flows beyond 5 years was considered reasonable in the circumstances given that it approximates the useful lives of the underlying operating assets. On average, the growth and inflation rate of 2.8% and 1.1% respectively was used in consideration of future expansion plans and new development projects as part of the long term strategy. The growth rate used did not exceed the long term average growth rate for the Singapore market.

F-54

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

14.	GOODWILL (CONT’D)
	Impairment tests for goodwill (cont’d)
	Discount rates used for value-in-use calculations:

Yueyang Power Company	8.7%
Pingliang Power Company	8.7%
Tuas Power	6.9%
Beijing Cogeneration	8.7%
Yangliuqing Power Company	8.7%

	Key assumptions used for value-in-use calculations:
	Key assumptions applied in the impairment tests include the expected tariff rates, demands of electricity in specific regions where these power plants are located and fuel cost. Management determined these key assumptions based on past performance and its expectations on market development. The discount rates used reflect specific risks relating to individual CGUs. Management believes that any reasonably possible change in any of these key assumptions on which recoverable amounts of individual CGUs are based may cause carrying amounts of individual CGUs to exceed their recoverable amounts.
	In 2009 and 2007, no goodwill was impaired. In 2008, based on the assessments, except for the goodwill arising from acquisition of Huaiyin Power Company, no goodwill was impaired. The management expects to shut down generators of Huaiyin Power Company in the future, full impairment of related goodwill was provided based on the result of impairment test.
15.	OTHER NON-CURRENT ASSETS
	Details of other non-current assets are as follows:

	As of December 31,
	2009		2008
Intangible assets		403,074		91,369
Deferred housing loss		29,312		54,963
Prepayments for switchhouse and metering station		16,894		17,746
Prepaid connection fees		124,007		144,932
Prepaid territorial waters use right		146,042		149,097
Finance lease receivable		148,637		97,776
Prepayments for equipments		-		155,732
Others		155,130		36,457
Total		1,023,096		748,072

The intangible assets consist of software, patented technologies and land use right granted by government.

F-55

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

16.	INVENTORIES
	Inventories comprised:

	As of December 31,
	2009			2008
Fuel (coal and oil) for power generation		2,986,233			3,986,445
Material and supplies		1,283,431			1,328,951
		4,269,664			5,315,396
Less: provision for inventory obsolescence		(185,678	)		(145,549	)
		4,083,986			5,169,847

Movements of provision for inventory obsolescence during the years are analyzed as follows:

	2009			2008
Beginning of the year		(145,549	)		(30,147	)
Acquisitions		(8,380	)		(119,630	)
Provision		(31,023	)		(4,326	)
Write-offs		736			354
Reversal		1,134			425
Currency translation differences		(2,596	)		7,775
End of the year		(185,678	)		(145,549	)

F-56

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

17.	OTHER RECEIVABLES AND ASSETS
	Other receivables and assets comprised the following:

	As of December 31,
	2009			2008
Prepayments for inventories		783,672			307,494
Prepayments for constructions		407,920			275,085
Prepayments for investments		387,000			30,000
Prepaid income tax		40,815			172,758
Others		41,792			208,869
Total prepayments		1,661,199			994,206
Staff advances		13,032			11,421
Dividend receivables		-			-
Others		638,399			293,143
Subtotal other receivables		651,431			304,564
Less: provision for doubtful accounts		(38,628	)		(26,292	)
Total other receivables, net		612,803			278,272
VAT recoverable		2,194,938			-
Gross total		4,507,568			1,298,770
Net total		4,468,940			1,272,478

Please refer to Note 34 for details of other receivables and assets due from the related parties.

The gross amounts of other receivables and assets of the Company and its subsidiaries are denominated in the following currencies:

	As of December 31,
	2009		2008
RMB		4,424,479		1,276,814
S$ (RMB equivalent)		82,686		9,556
US$ (RMB equivalent)		403		287
JPY (RMB equivalent)		-		12,028
AUD(RMB equivalent)		-		85
Total		4,507,568		1,298,770

F-57

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

17.	OTHER RECEIVABLES AND ASSETS (CONT’D)
	Other receivables and assets do not contain significant impaired assets. Movements of provision for doubtful accounts during the years are analyzed as follows:

	2009			2008
Beginning of the year		(26,292	)		(30,463	)
Additions from acquisitions		(15,602	)		-
Provision		(1	)		-
Reversal		18			1,719
Write-off		3,249			2,452
End of the year		(38,628	)		(26,292	)

As of December 31, 2009, there was no indication of impairment relating to other receivables which were not past due and no provision was made. Other receivables of RMB 89 million (2008: RMB 68 million) were past due but not impaired. These receivables were contracts bounded with repayment terms on demand. The ageing analysis of these other receivables was as follows:

	As of December 31,
	2009		2008
Between 1 to 2 years		28,455		14,057
Between 2 to 3 years		11,902		13,428
Over 3 years		48,743		40,371
		89,100		67,856

As of December 31, 2009, other receivables of RMB 45 million (2008: RMB 30 million) were impaired. The individually impaired receivables have been long outstanding without any repayment agreements in place or possibility of renegotiation. It was assessed that a portion of the receivables is expected to be recovered. The ageing of these other receivables was as follows:

	As of December 31,
	2009		2008
Between 2 to 3 years		-		3,023
Over 3 years		44,874		26,570
		44,874		29,593

18.	ACCOUNTS RECEIVABLE
	Accounts receivable comprised the following:

	As of December 31,
	2009			2008
Accounts receivable		9,717,681			7,153,834
Notes receivable		351,630			666,255
		10,069,311			7,820,089
Less: provision for      doubtful accounts		(26,408	)		(25,589	)
		10,042,903			7,794,500

F-58

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

18.	ACCOUNTS RECEIVABLE (CONT’D)
	The gross amounts of account receivables of the Company and its subsidiaries are denominated in the following currencies:

	As of December 31,				��
	2009		2008
RMB		9,167,806		6,803,558
S$ (RMB equivalent)		817,416		1,014,725
US$ (RMB equivalent)		84,089		1,806
Total		10,069,311		7,820,089

The Company and its subsidiaries usually grant about one month’s credit period to local power grid customers from the end of the month in which the sales are made, except for SinoSing Power which credit period ranged from 5 to 60 days from the dates of billing. As of December 31, 2009, accounts receivable (within one month and no provision) of the Company and its subsidiaries amounted to approximately RMB 1,032 million (2008: RMB 505 million) was secured to a bank as collateral against a short-term loan of RMB 698 million. (2008: RMB 500 million) (Note 28).

Movements of provision for doubtful accounts during the years are analyzed as follows:

	2009			2008
Beginning of the year		(25,589	)		(50,573	)
Provision		(1,110	)		(26,296	)
Reversal		416			13,626
Write-off		-			36,947
Currency translation differences		(125	)		707
End of the year		(26,408	)		(25,589	)

Ageing analysis of accounts receivable was as follows:

	As of December 31,
	2009		2008
Within 1 year		10,035,455		7,819,926
Between 1 to 2 years		29,726		-
Between 2 to 3 years		-		12
Over 3 years		4,130		151
		10,069,311		7,820,089

As of December 31, 2009, the maturity period of the notes receivable ranged from 3 to 7 months (2008: from 4 to 7 months).

As of December 31, 2009, accounts receivable of RMB 26 million (2008: RMB 26 million) were impaired, due to the bankruptcy of the clients. The amount of the provision was RMB 26 million as of December 31, 2009 (2008: RMB 26 million). The ageing of these accounts receivable was as follows:

	As of December 31,
	2009		2008
Between 1 to 2 years		1,143		25,589
Between 2 to 3 years		25,265		-
Over 3 years		-		-
		26,408		25,589

F-59

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

18.

ACCOUNTS RECEIVABLE (CONT’D)

As of December 31, 2009, there was no indication of impairment relating to accounts receivable which were not past due and no provision was made. Accounts receivable of RMB 10 million (2008: RMB 20 million) were past due but not impaired. These mainly related to overdue notes receivable which will be collected when related supporting documents are provided. The ageing analysis of these accounts receivable was as follows:

	As of December 31,
	2009		2008
2 months to 1 year		9,611		19,423
Between 1 to 2 years		-		-
Between 2 to 3 years		-		12
Over 3 years		-		151
		9,611		19,586

19. SHARE CAPITAL

	As of December 31, 2009		As of December 31, 2008
A shares, par value of RMB 1.00 each		9,000,000		9,000,000
Overseas listed foreign shares, par value of RMB 1.00 each		3,055,383		3,055,383
Total		12,055,383		12,055,383

	As of December 31, 2009, the authorized share capital of the Company was approximately RMB 12,055 million (2008: RMB 12,055 million), divided into 12,055,383,440 (2008: 12,055,383,440) shares of RMB 1.00 (2008: RMB 1.00) each.
	All shares issued by the Company were fully paid. The holders of domestic shares and overseas listed foreign shares, with minor exceptions, are entitled to the same economic and voting rights. Of the issued A shares, 5,933,596,773 shares (2008: 5,933,596,773 shares) are freely tradable while the remaining A shares can only be traded after lock-up periods.
20.	SURPLUS RESERVES
	According to the Company Law of the PRC, the Company’s articles of association and board resolutions, the Company appropriates 10% of each year’s net profit to the statutory surplus reserve until such a reserve reaches 50% of the registered share capital when the Company can opt out. Upon the approval from relevant authorities, this reserve can be used to make up any losses incurred or to increase share capital. Except for offsetting against losses, this reserve cannot fall below 25% of the share capital after being used to increase share capital. According to the Company’s articles of association and board resolutions on March 23, 2010, the Company intends to appropriate 10% of this year’s net profit under PRC GAAP to the statutory surplus reserve, accounting to approximately RMB 508 million (2008: no ap propriation made as a result of loss-making; 2007:10% of net profit).
	Appropriation of discretionary surplus reserve is proposed by the Board of Directors, and approved by the general meeting of shareholders. This reserve can be used to make up any losses incurred in prior years or to increase the share capital after obtaining relevant approvals. For the year ended December 31, 2009, no provision was made to the discretionary surplus reserve (2008 and 2007: nil).
	According to the articles of association, distributable profit of the Company is derived based on the lower of amounts determined in accordance with (a) the PRC accounting standards and (b) IFRS. The amount of distributable profit resulting from the current year operation for the year ended December 31, 2009 was approximately RMB 4.93 billion (2008: nil; 2007: RMB 5.40 billion). The cumulative balance of distributable profit as of December 31, 2009 was approximately RMB 13.831 billion (2008: RMB 9.914 billion).

F-60

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

21.	DIVIDENDS
	On March 23, 2010, the Board of Directors proposed a cash dividend of RMB 0.21 per share, totaling approximately RMB 2,531.6 million. This proposal is subject to the approval of the shareholders at the annual general meeting. These financial statements do not reflect this dividends payable, which will be accounted for in shareholders’ equity as an appropriation of retained earnings for the year ending December 31, 2010.
	On June 18, 2009, upon the approval from the annual general meeting of the shareholders, the Company declared 2008 final dividend of RMB 0.10 (2007 final dividend: RMB 0.30) per ordinary share, totaled approximately RMB 1,206 million (2008: RMB 3,606 million).
22.	LONG-TERM LOANS
	Long-term loans comprised the following:

	As of December 31,
	2009			2008
Loans from Huaneng Group (a)		800,000			2,800,000
Bank loans (b)		72,052,664			62,509,065
Other loans (c)		7,664,339			263,536
		80,517,003			65,572,601
Less: Current portion of long-term loans		(9,250,248	)		(6,545,420	)
		71,266,755			59,027,181

(a)	Loans from Huaneng Group
	Details of loans from Huaneng Group of the Company and its subsidiaries are as follows:

	As of December 31, 2009
	Original currency	RMB equivalent	Less: Current portion	Non-current portion	Annual interest rate
	’000
Loans from Huaneng Group
Unsecured
RMB
- Fixed rate	800,000	800,000	-	800,000	4.05%-4.60%

	As of December 31, 2008
	Original currency	RMB equivalent	Less: Current portion	Non-current portion	Annual interest rate
	’000
Loans from Huaneng Group
Unsecured
RMB
- Fixed rate	2,800,000	2,800,000	-	2,800,000	4.32%-5.67%

F-61

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

22.	LONG-TERM LOANS (CONT’D)
	(b)	Bank loans
		Details of bank loans of the Company and its subsidiaries are as follows:

	As of December 31, 2009
	Original currency		RMB equivalent		Less: Current portion			Non-current portion		Annual interest rate
		’000
Bank loans
Unsecured
RMB
- Fixed rate		48,971,239		48,971,239		(8,316,379	)		40,654,860		3.60%-7.56	%
US$
- Fixed rate		225,791		1,541,744		(648,187	)		893,557		5.95%-6.97	%
- Variable rate		816,208		5,573,234		(43,204	)		5,530,030		1.44%-3.57	%
S$
- Variable rate		3,074,120		14,941,760		(77,444	)		14,864,316		2.41%-2.46	%
€
- Fixed rate		104,591		1,024,687		(91,539	)		933,148		2.00%-2.15	%
				72,052,664		(9,176,753	)		62,875,911

	As of December 31, 2008
	Original currency		RMB equivalent		Less: Current portion			Non-current portion		Annual interest rate
		’000
Bank loans
Unsecured
RMB
- Fixed rate		50,112,930		50,112,930		(5,757,660	)		44,355,270		3.60%-7.74	%
US$
- Fixed rate		321,710		2,198,760		(655,570	)		1,543,190		5.95%-6.97	%
- Variable rate		1,312,055		8,967,373		(43,245	)		8,924,128		2.61%-5.15	%
S$
- Variable rate		145,745		692,727		-			692,727		2.41%-2.74	%
€
- Fixed rate		55,624		537,275		(51,406	)		485,869		2.00	%
				62,509,065		(6,507,881	)		56,001,184

F-62

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

22.	LONG-TERM LOANS (CONT’D)
	(c)	Other loans
		Details of other loans of the Company and its subsidiaries are as follows:

	As of December 31, 2009
	Original currency		RMB equivalent		Less: Current portion			Non-current portion		Annual interest rate
		’000
Other loans
Unsecured
RMB
- Fixed rate		7,573,000		7,573,000		(36,420	)		7,536,580		4.05%-5.35	%
US$
- Variable rate		4,286		29,263		(19,508	)		9,755		2.99%-5.87	%
S$
- Variable rate		7,350		35,725		-			35,725		4.25	%
JPY
- Variable rate		357,143		26,351		(17,567	)		8,784		2.76%-5.80	%
				7,664,339		(73,495	)		7,590,844

	As of December 31, 2008
	Original currency		RMB equivalent		Less: Current portion			Non-current portion		Annual interest rate
		’000
Other loans
Unsecured
RMB
- Fixed rate		130,000		130,000		-			130,000		5.10	%
US$
- Variable rate		7,143		48,818		(19,527	)		29,291		3.24%-5.87	%
S$
- Variable rate		8,350		39,688		-			39,688		4.25	%
JPY
- Variable rate		595,238		45,030		(18,012	)		27,018		1.31%-5.80	%
				263,536		(37,539	)		225,997

As of December 31, 2009, the balance of other long-term loans that drawn from Huaneng Finance amounted to approximately RMB 230 million (2008: RMB 130 million) with annual interest rate of 4.86% (2008: 5.10%).

As of December 31, 2009, the balance of other long-term loans that drawn from Huaneng New Energy Industrial Holding Limited Company (“Huaneng New Energy”) amounted to approximately RMB 343 million with annual interest rate of 5.35%. (2008: Nil)

F-63

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

22.	LONG-TERM LOANS (CONT’D)
	The maturity of long-term loans is as follows:

	Loans from Huaneng Group				Bank loans						Other loans
	As of December 31,				As of December 31,						As of December 31,
	2009		2008		2009			2008			2009			2008
1 year or less		-		-		9,176,753			6,507,881			73,495			37,539
More than 1 year but not more than 2 years		-		-		11,200,847			14,728,355			2,184,960			37,539
More than 2 years but not more than 3 years		-		-		9,362,619			9,549,310			5,136,420			148,770
More than 3 years but not more than 4 years		800,000		-		4,021,916			4,555,384			36,420			-
More than 4 years but not more than 5 years		-		800,000		4,665,916			8,046,147			36,420			-
More than 5 years		-		2,000,000		33,624,613			19,121,988			196,624			39,688
		800,000		2,800,000		72,052,664			62,509,065			7,664,339			263,536
Less: amount due within 1 year included under current liabilities		-		-		(9,176,753	)		(6,507,881	)		(73,495	)		(37,539	)
		800,000		2,800,000		62,875,911			56,001,184			7,590,844			225,997

The analysis of the above is as follows:

	As of December 31,
	2009		2008
Loans from Huaneng Group
- Wholly repayable within five years		800,000		800,000
- Not wholly repayable within five years		-		2,000,000
		800,000		2,800,000
Bank loans
- Wholly repayable within five years		30,509,912		36,866,955
- Not wholly repayable within five years		41,542,752		25,642,110
		72,052,664		62,509,065
Other loans
- Wholly repayable within five years		7,285,614		223,848
- Not wholly repayable within five years		378,725		39,688
		7,664,339		263,536

The interest payment schedule of long-term loans in the future years are summarized as follows:

	As of December 31,
	2009		2008
1 year or less		3,702,854		4,475,483
More than 1 year but not more than 2 years		2,815,074		2,806,836
More than 2 years but not more than 5 years		5,094,834		5,291,741
More than 5 years		7,236,737		4,973,166
Total		18,849,499		17,547,226

F-64

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

23.	LONG-TERM BONDS
	The Company issued bonds with maturity of 5 years, 7 years and 10 years in December 2007 with face values of RMB 1 billion, RMB 1.7 billion and RMB 3.3 billion bearing annual interest rates of 5.67%, 5.75% and 5.90%, respectively. The total actual proceeds received by the Company were approximately RMB5.885 billion. These bonds are denominated in RMB and issued at par. Interest is payable annually while principal will be paid when the bonds fall due. The annual effective interest rates of those bonds are 6.13%, 6.10% and 6.17%, respectively. Interest paid per annum during the tenure of the bonds are RMB 57 million, RMB 98 million and RMB 195 million. As of December 31, 2009, interest payables for these bonds above amounted to approximately RMB 6.79 million (2008: RMB 6.79 million).
	The Company issued bonds with maturity of 10 years in May 2008 with face value of RMB 4 billion bearing annual interest rate of 5.20%. The actual proceeds received by the Company were approximately RMB 3.933 billion. These bonds are denominated in RMB and issued at par. Interest is payable annually while principal will be paid when the bonds fall due. The annual effective interest rate of bond is 5.42%. Interest paid per annum during the tenure of the bonds is RMB 208 million. As of December 31, 2009, interest payable for these bonds above amounted to approximately RMB 134.19 million (2008: RMB 134.19 million).
	Please refer to Note 34(c) for details of long-term bonds of the Company guaranteed by HIPDC and state-owned banks.
	The Company issued medium-term notes with maturity of 5 years in May 2009 with face value of RMB 4 billion bearing annual interest rate of 3.72%. The actual proceeds received by the Company were approximately RMB 3.940 billion. These notes are denominated in RMB and issued at par. Interest is payable annually while principal will be paid when the notes fall due. The annual effective interest rate of these notes is 4.06%. Interest paid per annum during the tenure of the notes is RMB 149 million. As of December 31, 2009, interest payable for these notes above amounted to approximately RMB 94.17 million.
24.	OTHER NON-CURRENT LIABILITIES

	As of December 31,
	2009		2008
Environmental subsidies(a)		610,161		532,887
Other		140,208		88,035
		750,369		620,922

(a) Such grants represented primarily subsidies for the construction of desulphurization equipment and other environmental protection projects.

In 2009, the government grants which were credited to the statement of comprehensive income amounted to RMB 53.33 million (2008 and 2007: RMB 22.05 million and RMB14.57 million).

F-65

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

25.	ACCOUNTS PAYABLE AND OTHER LIABILITIES
	Accounts payable and other liabilities comprised:

	As of December 31,
	2009		2008
Accounts and notes payable		4,386,461		3,009,966
Amounts received in advance		932,625		877,287
Payables to contractors for construction		5,812,941		4,304,810
Other payables to contractors		932,092		444,927
Advances from Yingkou Port Bureau		-		720,235
Accrued interest		558,494		469,823
Accrued pollutants discharge fees		75,303		64,367
Accrued water-resources fees		59,272		48,253
Accrued service fee of intermediaries		43,217		45,355
Others		1,724,215		882,457
		14,524,620		10,867,480

Please refer to Note 34 for details of accounts payable and other liabilities due to the related parties.

The carrying amounts of accounts payable and other liabilities of the Company and its subsidiaries are denominated in the following currencies:

	As of December 31,
	2009		2008
RMB		13,532,676		9,655,505
S$ (RMB equivalent)		433,844		437,590
US$ (RMB equivalent)		525,152		651,487
JPY (RMB equivalent)		32,948		122,764
GBP (RMB equivalent)		-		134
Total		14,524,620		10,867,480

The ageing analysis of accounts and notes payable was as follows:

	As of December 31,
	2009		2008
Accounts and notes payable
Within 1 year		4,365,569		2,967,346
Between 1 to 2 years		5,875		29,558
Over 2 years		15,017		13,062
Total		4,386,461		3,009,966

26.	TAXES PAYABLES
	Taxes payable comprise:

	As of December 31,
	2009		2008
VAT payable		237,422		280,922
Income tax payable		292,509		21,357
Others		120,869		118,185
		650,800		420,464

F-66

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

27.	SHORT-TERM BONDS
	The Company issued unsecured short-term bonds with face values of RMB 5 billion and RMB 5 billion bearing annual interest rates of 1.88% and 2.32% on February 24, 2009 and on September 9, 2009, respectively. Such bonds are denominated in RMB and issued at face value and will mature in 365 days and 270 days from the issuance date. The annual effective interest rates of those bonds are 2.29% and 2.87%, respectively. As of December 31, 2009, interest payables for these bonds above amounted to approximately RMB 116.05 million.
	The Company issued unsecured short-term bonds amounting to RMB 5 billion bearing annual interest rate of 4.83% on July 25, 2008. Such bonds are denominated in RMB and issued at face value and was mature in 365 days from the issuance date. The annual effective interest rate of this bond is 5.25%. As of December 31, 2009, such short-term bonds were fully repaid on schedule.
28.	SHORT-TERM LOANS
	Short-term loans are as follows:

	As of December 31, 2009							As of December 31, 2008
	Original currency		RMB equivalent		Annual interest rate			Original currency		RMB equivalent		Annual interest rate
		’000							’000
Secured
RMB
- Fixed rate		698,362		698,362		3.89%-4.54	%		500,000		500,000		4.54	%
- Fixed rate-discounted notes receivable		141,594		141,594		2.28%-5.70	%		884,957		884,957		2.28%-7.92	%
$$
- Variable rate		-		-		-			2,246,482		10,677,531		1.84%-2.25	%
				839,956							12,062,488
Unsecured
RMB
- Fixed rate		23,885,000		23,885,000		3.79%-7.47	%		16,683,000		16,683,000		4.54%-7.47	%
$$
- Variable rate		1,000		4,860		1.81%-2.10	%		-		-		-
				23,889,860							16,683,000
				24,729,816							28,745,488

As of December 31, 2009, secured short-term loans of RMB 142 million (2008: RMB 885 million) represented the discounted notes receivable with recourse. As these notes receivable were yet to mature, the proceeds received were recorded as short-term loans.

As of December 31, 2008, secured short-term loan of RMB 10,678 million was secured by the shares of a subsidiary of the SinoSing Power. Such loans were repaid during 2009. As of December 31, 2009, secured short-term loans of RMB 698 million (2008: RMB 500 million) is secured by accounts receivable of the Company with net book value amounting to RMB 1,032 million (2008: RMB 505 million).

As of December 31, 2009, short-term loans from Huaneng Finance amounted to RMB 100 million (2008: RMB 1,290 million). For the year ended December 31, 2009, the annual interest rates for these loans ranged from 4.78% to 6.72% (2008: from 4.78% to 7.47%).

F-67

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

29.	DEFERRED INCOME TAX
	Periods which deferred income tax assets and liabilities are expected to recover and realize are as follows:

	As of December 31,
	2009			2008
Deferred income tax assets:
- Deferred income tax assets to be recovered after more than 12 months		771,134			441,273
- Deferred income tax assets to be recovered within 12 months		285,599			329,633
		1,056,733			770,906
Deferred income tax liabilities:
- Deferred income tax liabilities to be realized after more than 12 months		(2,359,869	)		(1,749,712	)
- Deferred income tax liabilities to be realized within 12 months		(161,493	)		(76,067	)
		(2,521,362	)		(1,825,779	)
		(1,464,629	)		(1,054,873	)

The offset amounts of deferred income tax assets and liabilities are as follows:

	As of December 31,
	2009			2008
Deferred income tax assets		374,733			316,699
Deferred income tax liabilities		(1,839,362	)		(1,371,572	)
		(1,464,629	)		(1,054,873	)

The gross movement on the deferred income tax accounts is as follows:

	2009			2008
Beginning of the year		(1,054,873	)		(880,891	)
Acquisitions (Note 39)		(279,569	)		(1,162,824	)
Credited to profit and loss (Note 31)		295,372			288,288
(Charged) / Credited to other     comprehensive income		(392,430	)		626,222
Currency translation differences		(33,129	)		74,332
End of the year		(1,464,629	)		(1,054,873	)

F-68

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

29.	DEFERRED INCOME TAX (CONT’D)
	The movements in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdictions, are as follows:
	Deferred income tax assets:

	Hedging reserve			Amortization of land use rights			Provision for impairment losses			Depreciation			Accrued expenses		Tax refund on purchase of domestically manufactured equipment			Deductible tax losses			Others			Total
As of January 1, 2008		-			16,681			45,530			37,170			8,197		126,742			10,913			52,069			297,302
Acquisitions		(15,399	)		-			-			569			-		-			-			22,599			7,769
Credited / (Charged) to profit     and loss		2,944			(265	)		(11,609	)		2,162			5,045		(15,483	)		325,872			44,105			352,771
Credited to other     comprehensive income		116,956			-			-			-			-		-			-			-			116,956
Currency translation     differences		(2,236	)		-			-			(118	)		-		-			-			(1,538	)		(3,892	)
As of December 31, 2008		102,265			16,416			33,921			39,783			13,242		111,259			336,785			117,235			770,906
Acquisitions		-			-			9,000			29,738			-		-			-			5,401			44,139
Credited / (Charged) to profit     and loss		5,405			(294	)		166,790			(1,555	)		72,670		235,111			(182,437	)		52,994			348,684
Charged to other     comprehensive income		(106,150	)		-			-			-			-		-			-			-			(106,150	)
Currency translation     differences		(1,520	)		-			431			75			-		-			-			168			(846	)
As of December 31, 2009		-			16,122			210,142			68,041			85,912		346,370			154,348			175,798			1,056,733

F-69

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

29.	DEFERRED INCOME TAX (CONT’D)
	The movements in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdictions, are as follows: (cont’d)
	Deferred income tax liabilities:

	Hedging reserve			Fair value gains			Amortization of goodwill and negative goodwill			Amortization of land use rights			Depreciation			Power generation licence			Others			Total
As of January 1, 2008		-			(608,750	)		(153,776	)		(67,129	)		(345,480	)		-			(3,058	)		(1,178,193	)
Acquisitions		-			-			-			(76,600	)		(365,261	)		(728,732	)		-			(1,170,593	)
Credited / (Charged) to profit and loss		-			-			43,292			3,365			(91,277	)		-			(19,863	)		(64,483	)
Credited / (Charged) to other comprehensive income		-			521,129			-			-			-			-			(11,863	)		509,266
Currency translation differences		-			-			-			4,829			26,503			46,761			131			78,224
As of December 31, 2008		-			(87,621	)		(110,484	)		(135,535	)		(775,515	)		(681,971	)		(34,653	)		(1,825,779	)
Acquisitions		-			-			-			(273,469	)		(50,239	)		-			-			(323,708	)
Credited / (Charged) to profit and loss		-			-			47,988			8,909			(154,090	)		37,536			6,345			(53,312	)
Charged to other comprehensive income		(28,291	)		(257,989	)		-			-			-			-			-			(286,280	)
Currency translation differences		-			-			-			(1,307	)		(16,760	)		(14,216	)		-			(32,283	)
As of December 31, 2009		(28,291	)		(345,610	)		(62,496	)		(401,402	)		(996,604	)		(658,651	)		(28,308	)		(2,521,362	)

F-70

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

29.

DEFERRED INCOME TAX (CONT’D)

Deferred income tax assets are recognized for tax loss carried-forwards to the extent that the realization of the related tax benefits through the future taxable profits is probable. The Company and its subsidiaries did not recognize deferred income tax assets in respect of certain losses that can be carried forward against future taxable income. The expiry dates of the tax losses to be utilized are summarized as follows:

	As of December 31,
	2009		2008
Year of expiry
2009		N/A		8,502
2010		-		69,804
2011		-		44,038
2012		2,432		269,160
2013		710,974		2,530,945
2014		481,107		N/A
		1,194,513		2,922,449

30.	ADDITIONAL FINANCIAL INFORMATION ON BALANCE SHEETS
	As of December 31, 2009, the net current liabilities of the Company and its subsidiaries amounted to approximately RMB 35,392 million (2008: RMB 32,468 million). On the same date, total assets less current liabilities were approximately RMB 138,306 million (2008: RMB 113,432 million).

F-71

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

31.	INCOME TAX EXPENSE
	Income tax expense comprised:

	For the year ended December 31,
	2009			2008			2007
Current income tax expense		889,159			48,565			1,033,570
Deferred income tax (Note 29)		(295,372	)		(288,288	)		(195,300	)
		593,787			(239,723	)		838,270

No Hong Kong profits tax has been provided as there were no estimated assessable profits in Hong Kong for the year (2008 and 2007: nil). The reconciliation of the effective income tax rate from the statutory income tax rate is as follows:

	For the year ended December 31,
	2009			2008			2007
Average statutory tax rate		20.82	%		20.06	%		18.03	%
Effect of tax holiday		(1.54	%)		(1.21	%)		(3.86	%)
Tax credit relating to domestically manufactured     equipment*		-			(2.52	%)		(2.24	%)
Deductible tax loss not recognized as deferred income     tax assets in the current year		1.76	%		(9.67	%)		0.58	%
Utilization of previously unrecognized tax losses		(7.18	%)		-			(0.56	%)
Impact of the tax rate differential on existing deferred     income tax balance		(3.52	%)		1.32	%		(0.61	%)
Others		0.07	%		(2.98	%)		0.11	%
Effective tax rate		10.41	%		5.00	%		11.45	%

*	This represented tax credit granted to certain power plants on their purchases of certain domestically manufactured equipment upon the approval of the tax bureaus.
The average statutory tax rate for the years ended December 31, 2009, 2008 and 2007 represented the weighted average tax rate of the Company and its subsidiaries calculated on the basis of the relative amounts of profit before tax and the applicable statutory tax rates.
The aggregated effect of the tax holiday was approximately RMB 88 million for the year ended December 31, 2009 (2008 and 2007: RMB 58 million and RMB 282 million).

F-72

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

32.	EARNINGS / (LOSS) PER SHARE
	The basic earnings / (loss) per share is calculated by dividing the consolidated net profit / (loss) attributable to the shareholders of the Company by the weighted average number of the Company’s outstanding ordinary shares during the year:

	2009		2008			2007
Consolidated net profit / (loss) attributable to shareholders of the Company		4,929,544		(3,937,688	)		6,161,127
Weighted average number of the Company’s outstanding ordinary shares		12,055,383		12,055,383			12,055,383
Basic earnings / (loss) per share		0.41		(0.33	)		0.51

	There was no dilutive effect on earnings / (loss) per share since the Company had no dilutive potential ordinary shares for the years ended December 31, 2009, 2008 and 2007.
33.	NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
	Bank balances and cash comprised the following:

	As of December 31,
	2009		2008		2007
Restricted cash		225,068		199,248		220,495
Cash and cash equivalents		5,226,982		5,566,625		7,312,265
Total		5,452,050		5,765,873		7,532,760

The bank balances and cash of the Company and its subsidiaries are denominated in the following currencies:

	As of December 31,
	2009		2008		2007
RMB		3,391,121		4,438,146		7,374,824
S$(RMB equivalent)		1,579,518		1,164,861		-
US$ (RMB equivalent)		475,458		156,762		157,936
JPY(RMB equivalent)		5,953		6,104		-
Total		5,452,050		5,765,873		7,532,760

There is no material non-cash transaction for the year ended December 31, 2009 and 2008. Except for the deemed disposal of Sichuan Hydropower, there is no material non-cash transaction for the year ended December 31, 2007.

Undrawn borrowing facilities

As of December 31, 2009, the Company and its subsidiaries had undrawn unsecured borrowing facilities amounting to approximately RMB 27.96 billion (2008: RMB 28.10 billion). Management expects to drawdown the available facilities in accordance with the level of working capital and / or planned capital expenditure of the Company and its subsidiaries.

F-73

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

34.	RELATED PARTY BALANCES AND TRANSACTIONS
	The related parties of the Company and its subsidiaries that had transactions with the Company and its subsidiaries are as follows:

Names of related parties	Nature of relationship
Huaneng Group	Ultimate parent company
HIPDC	Parent company
Xi’an Thermal Power Research Institute Co., Ltd. (“Xi’an Thermal”) and its subsidiaries	Subsidiaries of Huaneng Group
Huaneng Energy & Communications Holdings Co., Ltd. (“HEC”) and its subsidiaries	Subsidiaries of Huaneng Group
China Huaneng (Group) Baiyanghe Power Plant (“Baiyanghe Power Plant”)	A branch of Huaneng Group
Qufushengcheng Heat-Power Company Ltd.         (“Qufushengcheng Heat-Power Company”)	A subsidiary of Huaneng Group
Huaneng Hulunbeier Energy Development Company Ltd. (“Hulunbeier Energy”)	A subsidiary of Huaneng Group
Huaneng New Energy	A subsidiary of Huaneng Group
Huaneng Group Technology Innovation Center	A subsidiary of Huaneng Group
Shandong Huaneng Power Generation Co., Ltd	A subsidiary of Huaneng Group
Rizhao Power Company	An associate of the Company
Huaneng Finance	An associate of the Company
Lime Company	An associate of a subsidiary
State-owned enterprises*	Related parties of the Company

*	Huaneng Group is a state-owned enterprise. In accordance with the IAS 24, ‘Related Party Disclosures’, state-owned enterprises and their subsidiaries, other than entities under Huaneng Group, directly or indirectly controlled by the PRC government are also considered as related parties of the Company and its subsidiaries.
	The majority of the business activities of the Company and its subsidiaries are conducted with state-owned enterprises. For the purpose of the related party balances and transactions disclosure, the Company and its subsidiaries have established procedures to determine, to the extent possible, the identification of the ownership structure of its customers and suppliers as to whether they are state-owned enterprises. However, many state-owned enterprises have a multi-layered corporate structure and the ownership structures change over time as a result of transfers and privatization programs. Nevertheless, management believes that all material related party balances and transactions have been adequately disclosed.
In addition to the related party information shown elsewhere in the financial statements, the following is a summary of significant related party transactions entered into in the ordinary course of business between the Company and its subsidiaries and their related parties during the year and significant balances arising from related party transactions as of year end.

F-74

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

34.	RELATED PARTY BALANCES AND TRANSACTIONS (CONT’D)
	(a)	Related party balances
	(i)	Cash deposits in a related party

	As of December 31,
	2009		2008
Deposits in Huaneng Finance
- Savings deposit		2,742,184		3,539,564

	For the year ended December 31, 2009, the annual interest rate for these saving deposits placed with Huaneng Finance ranged from 0.36% to 1.35%(2008 and 2007:0.36% to 1.44% and 0.72% to 1.53%) per annum.
(ii)	As described in Note 22, certain loans of the Company and its subsidiaries were borrowed from Huaneng Group.
(iii)	As described in Notes 22 and 28, certain loans of the Company and its subsidiaries were borrowed from Huaneng Finance.
(iv)	As of December 31, 2009 and 2008, the balances with Huaneng Group, HIPDC, subsidiaries, associates and other related parties are unsecured, non-interest bearing and receivable/repayable within one year other than prepayments for equipment of approximately RMB156 million  in 2008 which are presented in non-current assets. As of and for the years ended December 31, 2009, 2008 and 2007, no provision is made on receivable balances from these parties.
	Other receivables and assets comprised the following balances due from the related parties:

	As of December 31,
	2009		2008
Prepayments to Huaneng Group*		-		160,000
Prepayments to HIPDC		119,590		-
Prepayments to associates		37,712		-
Prepayments to other related parties		22,338		28,967
Total		179,640		188,967

*	This represented a prepayment to a branch of Huaneng Group for the purchase of its capacity quota in prior year which has been completed in 2009.
Accounts payable and other liabilities comprised the following balances due to the related parties:

	As of December 31,
	2009		2008
Due to Huaneng Group		280,250		2,505
Due to HIPDC		50,800		101,608
Due to associates		7,045		21,084
Due to other related parties		676,316		132,862
Total		1,014,411		258,059

F-75

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

34.	RELATED PARTY BALANCES AND TRANSACTIONS (CONT’D)
	(a)	Related party balances (cont’d)
	(v)	Included in the balance sheets, the balances with state-owned enterprises are as follows:

	As of December 31,
	2009		2008
	RMB million		RMB million
Receivables and other assets		10,047		7,137
Cash at banks		791		631
Borrowings		99,379		74,410
Accounts payable and other liabilities		3,896		4,032

As of December 31, 2009, accounts receivable of approximately RMB 1,032 million (2008: RMB 505 million) was secured to a bank as collateral against a short-term loan of RMB 698 million (2008: RMB 500 million). Except for cash at banks, borrowings and accounts receivable mentioned above, all the balances of assets and liabilities with state-owned enterprises mentioned above are unsecured, non-interest bearing and receivable/repayable within one year. As of December 31, 2009, no provision (2008: nil) was made on receivable balances.

Terms of the long-term loans, short-term loans and cash at banks are described in Notes 22, 28 and 33, which have no material difference with the terms with third parties.

F-76

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

34.	RELATED PARTY BALANCES AND TRANSACTIONS (CONT’D)
	(b)	Related party transactions

		For the year ended December 31,
		2009			2008			2007
Huaneng Group
Management service fee income for management services     rendered to certain power plants*			-			39,162			41,785
Interest expense on long-term loans			(52,969	)		(139,249	)		(137,942	)
Acquisition of 5% additional equity interest in Qinbei Power Company			-			-			(65,750	)
Acquisition of 100% equity interest in SinoSing Power (Note 39)			-			(7,080,055	)		-
Acquisition of 55% equity interest in Yangliuqing Power Company (Note 39)			(1,076,000	)		-			-
HIPDC
Management service fee income for management services     rendered to certain power plants*			-			14,084			3,981
Service fees expenses on transmission and transformer facilities			(140,771	)		-			(140,771	)
Rental charge on land use rights of Huaneng Nanjing Power     Plant			(1,334	)		(1,334	)		(1,334	)
Rental charge on office building			(26,600	)		(26,000	)		(26,000	)
Acquisition of Jinling Power Company			-			-			(420,000	)
Acquisition of 41% equity interest in Beijing Cogeneration (Note 39)			(1,175,117	)		-			-
Baiyanghe Power Plant
Cost incurred for substituted power arrangement for Baiyanghe     Power Plant			-			15,162			-
Net income for substituted power arrangement to Baiyanghe Power Plant			-			-			6,245
Huaneng Finance	��
Discounting of notes receivable			-			-			354,517
Discounting charges			-			-			(4,673	)
Drawdown of short-term loans			100,000			1,590,000			2,247,700
Drawdown of long-term loans			-			130,000			-
Interest expense on short-term loans			(40,880	)		(115,180	)		(138,292	)
Interest expense on long-term loans			(7,648	)		(502	)		-
Huaneng New Energy
Acquisition of 65% equity interest in Qidong Wind Power (Note 39)			(103,000	)		-			-
Interest expense on long-term loans			(4,483	)		-			-
HEC and its subsidiaries
Purchase of coal from HEC and its subsidiaries and service fee     occurred for transportation			(1,099,754	)		(4,198,340	)		(2,907,428	)
Purchase of equipment from HEC and its subsidiaries			(811,838	)		(458,015	)		(247,764	)
Sale of coal to HEC and its subsidiaries			-			13,916			-
Lime Company
Purchase of lime from Lime Company			(92,392	)		(73,188	)		(63,506	)

F-77

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

34.	RELATED PARTY BALANCES AND TRANSACTIONS (CONT’D)
	(b)	Related party transactions (cont’d)

For the year ended December 31,
2009	2008	2007

Xi’an Thermal and its subsidiaries
Technical services and industry-specific technological project contracting services obtained from Xi’an Thermal and its subsidiaries	(158,658	)	(217,140	)	(139,234	)
Purchase of equipment from Xi'an Thermal and its subsidiaries	(64,177	)	-		-
Hulunbeier Energy
Purchase of coal from Hulunbeier Energy	(1,195,212	)	(167,153	)	(8,562	)
Qufushengcheng Heat-Power Company
Net income for substituted power arrangement	-		-		23,065

Rizhao Power Company
Purchase of coal from Rizhao Power Company	(1,517,257	)	(8,296	)	-
Agency fee income from purchase of coal for Rizhao Power Company	8,084		-		-
Subsidiaries of Huaneng Group
Agency fee income from purchase of coal for subsidiaries of Huaneng Group	28,680		-		-
Other related parties of Huaneng Group
Purchase of coal from Other related parties of Huaneng Group	(396,642	)	-		-
Huaneng Group Technology Innovation Center
Technical services and industry-specific technological project contracting services obtained from Huaneng Group Technology Innovation Center	(42,400	)	-		-

*	During this year, the Company provides management service to certain power plants owned by Huaneng Group and HIPDC. The Company did not receive any management fee.
	During this year, Shandong Huaneng Power Generation Co., Ltd., a subsidiary of Huaneng Group, provided management services to certain branches and subsidiaries of the Company which located in Shandong Province. The Company did not pay any management fee for such arrangements.

F-78

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

34.	RELATED PARTY BALANCES AND TRANSACTIONS (CONT’D)
	(b)	Related party transactions (cont’d)
	Transactions with state-owned enterprises

	For the year ended December 31,
	2009			2008			2007
	RMB million			RMB million			RMB million
Sales of electricity		65,549			57,124			49,628
Purchases of fuel		(25,536	)		(26,323	)		(17,888	)
Acquisitions of property, plant and equipment		(11,120	)		(11,981	)		(5,331	)
Subcontracting labor for  construction and renovation		(3,871	)		(3,217	)		(2,092	)
Drawdown of short-term loans		24,935			43,706			18,299
Drawdown of long-term loans		31,901			35,764			8,136
Interest expense of loans and bonds to banks and other financial institutions		(4,027	)		(3,553	)		(1,905	)

(c) Guarantees

	As of December 31,
	2009		2008
(i)   Long-term loans guaranteed by
- Huaneng Group		1,349,547		1,100,117
- HIPDC		3,015,661		1,463,511
- State-owned enterprises		-		3,100,000
(ii)  Certain long-term bank loans of Rizhao Power Company guaranteed by the Company		-		(43,563	)
(iii)  Long-term bonds guaranteed by
- HIPDC		4,000,000		4,000,000
- State-owned banks		6,000,000		6,000,000

(d)  Pre-tax benefits and social insurance of key management personnel

	For the year ended December 31,
	2009		2008		2007
Salaries		7,105		7,121		6,930
Pension		1,101		1,539		1,529
Total		8,206		8,660		8,459

F-79

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

35.	LABOR COST
	Other than the salaries and staff welfare, the labor cost of the Company and its subsidiaries mainly comprises the following:
	All PRC employees of the Company and its subsidiaries are entitled to a monthly pension upon their retirements. The PRC government is responsible for the pension liability to these employees on retirement. The Company and its subsidiaries are required to make contributions to the publicly administered retirement plan for their PRC employees at a specified rate, currently set at 18% to 22%(2008 and 2007: 18% to 22%), of the basic salary of the PRC employees. The retirement plan contributions paid by the Company and its subsidiaries for the year ended December 31, 2009 were approximately RMB 343 million (2008 and 2007: RMB 311 million and RMB 281 million), including approximately RMB 329 million (2008 and 2007: RMB 300 million and RMB 278 million) charged to the statement of comprehensive income.
	In addition, the Company and its subsidiaries have also implemented a supplementary defined contribution retirement scheme for PRC employees. Under this scheme, the employees are required to make a specified contribution based on the number of years of service with the Company and its subsidiaries, and the Company and its subsidiaries are required to make a contribution equal to two to three times the employees’ contributions. The employees will receive the total contributions upon their retirement. For the year ended December 31, 2009, the contributions to supplementary defined contribution retirement scheme paid by the Company and its subsidiaries amounted to approximately RMB 143 million (2008 and 2007: RMB 203 million and RMB 257 million), including approximately RMB137 million (2008 and 2007: RMB 195 million and RMB 2 51 million) charged to profit and loss.
	SinoSing Power and its subsidiaries in Singapore appropriate a specified rate, currently set at 5% to 14.5% of the basic salary to central provident funds in accordance with the local government regulations. The contributions paid by SinoSing Power and its subsidiaries for the year ended December 31, 2009 are approximately RMB 10.94 million (2008: RMB 6.04 million), which all charged to profit and loss.
	The Company and its subsidiaries have no further obligation for post-retirement benefits beyond the above annual contributions made.
	In addition, the Company and its subsidiaries also make contributions of social insurance and housing funds to the social security institution at specified rates of the basic salary and no more than the upper limit. The housing funds and social insurance contributions paid by the Company and its subsidiaries were charged to the costs or expenses, the amount of which  for the year ended December 31, 2009 were approximately RMB 224 million (2008 and 2007: RMB 214 million  and RMB 196 million) and RMB 235 million (2008 and 2007: RMB 200 million and RMB 182 million).

F-80

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

36.	DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENT’ EMOLUMENTS
	(a)	Pre-tax benefits and social insurance of directors and supervisors
	The remuneration of every director and supervisor of the Company for the year ended December 31, 2009 is set out below:

	Fees		Basic salaries		Performance salaries		Pension		Total
Name of director
Mr. Cao Peixi		-		-		-		-		-
Mr. Huang Long		-		-		-		-		-
Mr. Wu Dawei1		-		-		131		-		131
Mr. Huang Jian		-		-		-		-		-
Mr. Liu Guoyue		-		161		539		104		804
Mr. Fan Xiaxia		-		161		539		104		804
Mr. Shan Qunying		48		-		-		-		48
Mr. Xu Zujian		48		-		-		-		48
Ms. Huang Mingyuan		48		-		-		-		48
Mr. Liu Shuyuan		48		-		-		-		48
Mr. Liu Jipeng		74		-		-		-		74
Mr. Yu Ning		74		-		-		-		74
Mr. Shao Shiwei		74		-		-		-		74
Mr. Zheng Jianchao		74		-		-		-		74
Mr. Wu Liansheng		74		-		-		-		74
Sub-total		562		322		1,209		208		2,301
Name of supervisor
Mr. Guo Junming		-		-		-		-		-
Ms. Yu Ying		48		-		-		-		48
Ms. Wu Lihua		-		-		-		-		-
Mr. Gu Jianguo		48		-		-		-		48
Mr. Wang Zhaobin		-		134		351		85		570
Mr. Dai Xinmin		-		133		351		84		568
Sub-total		96		267		702		169		1,234
Total		658		589		1,911		377		3,535

F-81

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

36.	DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENT’ EMOLUMENTS (CONT’D)
	(a)	Pre-tax benefits and social insurance of directors and supervisors (cont’d)
	The remuneration of every director and supervisor of the Company for the year ended December 31, 2008 is set out below:

	Fees		Basic salaries		Performance salaries		Pension		Total
Name of director
Mr. Cao Peixi		-		-		-		-		-
Mr. Huang Long		-		-		-		-		-
Mr. Wu Dawei		-		83		319		90		492
Mr. Huang Jian		-		-		-		-		-
Mr. Liu Guoyue		-		112		538		114		764
Mr. Fan Xiaxia		-		112		538		113		763
Mr. Shan Qunying		48		-		-		-		48
Mr. Xu Zujian		48		-		-		-		48
Ms. Huang Mingyuan		24		-		-		-		24
Mr. Liu Shuyuan		48		-		-		-		48
Mr. Liu Jipeng		74		-		-		-		74
Mr. Yu Ning		74		-		-		-		74
Mr. Shao Shiwei		37		-		-		-		37
Mr. Zheng Jianchao		37		-		-		-		37
Mr. Wu Liansheng		37		-		-		-		37
Mr. Li Xiaopeng		-		-		-		-		-
Mr. Huang Yongda		-		-		-		-		-
Mr. Na Xizhi		-		86		12		64		162
Mr. Ding Shida		24		-		-		-		24
Mr. Qian Zhongwei		37		-		-		-		37
Mr. Xia Donglin		37		-		-		-		37
Mr. Wu Yusheng		37		-		-		-		37
Sub-total		562		393		1,407		381		2,743
Name of supervisor
Mr. Guo Junming		-		-		-		-		-
Ms. Yu Ying		48		-		-		-		48
Ms. Wu Lihua		-		-		-		-		-
Mr. Gu Jianguo		48		-		-		-		48
Mr. Wang Zhaobin		-		135		490		140		765
Mr. Dai Xinmin		-		92		255		78		425
Mr. Shen Zongmin		24		-		-		-		24
Ms. Zou Cui		-		43		139		51		233
Sub-total		120		270		884		269		1,543
Total		682		663		2,291		650		4,286

F-82

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

36.	DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENT’ EMOLUMENTS (CONT’D)
	(a)	Pre-tax benefits and social insurance of directors and supervisors (cont’d)
	The remuneration of every director and supervisor of the Company for the year ended December 31, 2007 is set out below:

	Fees		Basic salaries		Performance salaries		Pension		Total
Name of director
Mr. Li Xiaopeng		-		-		-		-		-
Mr. Huang Yongda		-		-		-		-		-
Mr. Huang Long		-		-		-		-		-
Mr. Na Xizhi		-		222		627		197		1,046
Mr. Wu Dawei		-		124		544		123		791
Mr. Shan Qunying		40		-		-		-		40
Mr. Ding Shida		40		-		-		-		40
Mr. Xu Zujian		40		-		-		-		40
Mr. Liu Shuyuan		40		-		-		-		40
Mr. Qian Zhongwei		60		-		-		-		60
Mr. Xia Donglin		60		-		-		-		60
Mr. Liu Jipeng		60		-		-		-		60
Mr. Wu Yusheng		60		-		-		-		60
Mr. Yu Ning		60		-		-		-		60
Sub-total		460		346		1,171		320		2,297
Name of supervisor
Mr. Guo Junming		-		-		-		-		-
Ms. Yu Ying		40		-		-		-		40
Mr. Gu Jianguo		40		-		-		-		40
Mr. Shen Zongmin		40		-		-		-		40
Ms. Zou Cui		-		126		458		138		722
Mr. Wang Zhaobin		-		125		457		134		716
Sub-total		120		251		915		272		1,558
Total		580		597		2,086		592		3,855

F-83

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

36.	DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENT’ EMOLUMENTS (CONT’D)
	(a)	Pre-tax benefits and social insurance of directors and supervisors (cont’d)
	1	During the year, the emoluments received by Mr. Wu Dawei related to his annual bonus when he acted as the general manager of Shanghai Branch of the Company between January and August 2008.
	During the year, no option was granted to the directors or the supervisors (2008 and 2007: nil).
	During the year, no emolument was paid to the directors or the supervisors (including the five highest paid employees) as an inducement to join or upon joining the Company or as compensation for loss of office (2008 and 2007: nil).
	No director or supervisor had waived or agreed to waive any emoluments during the years 2007, 2008 and 2009.
	(b)	Five highest paid individuals
	The five individuals whose emoluments were the highest in the Company and its subsidiaries for the year include two (2008: two and 2007: one) directors and no (2008: one and 2007: nil) supervisor whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining three (2008: two and 2007: four) individuals during the year (fell within the range of nil to RMB1 million) are as follows:

	For the year ended December 31,
	2009		2008		2007
Basic salaries		441		292		536
Performance salaries		1,393		1,091		2,406
Pension		283		330		657
		2,117		1,713		3,599

37.	COMMITMENTS
	(a)	Capital and operational commitments
		(i)	Commitments mainly relate to the construction of new power projects, certain complementary facilities and renovation projects for existing power plants and the purchase of coal. Details of such commitments are as follows:

	As of December 31,
	2009		2008
Contracted but not provided for
- purchase of inventories		7,242,155		5,536,211
- construction		19,438,254		18,262,567
Sub-total		26,680,409		23,798,778
Authorized but not contracted for
- purchase of inventories		61,260		85,087
- construction		1,704,416		746,675
Sub-total		1,765,676		831,762
Total		28,446,085		24,630,540

F-84

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

37.	COMMITMENTS (CONT’D)
	(a)	Capital and operational commitments (cont’d)
		(ii)	On December 31, 2009, the Company entered into an Equity Interest Transfer Agreement with Shandong Electric Power Corporation (“Shandong Power”) and Shandong Luneng Development Group Company Limited (“Luneng Development”), pursuant to which the Company agreed to acquire from Shandong Power and Luneng Development the Target Equity Interests for an aggregate consideration of RMB 8.625 billion. Target Equity Interests, which includes 100% equity interest of Yunnan Diandong Energy Limited Company, 100% equity interest of Yunnan Diandong Yuwang Energy Limited Company, 100% equity interest of Shandong Zhanhua Co-generation Limited Company, 100% equity interest of Jilin Luneng Biological Power Generation Limited Company, 60.25% equity interest of Fujian Luoyuanwan Luneng Harbour Limited Liability Company, 58.30% equity interest of Fuzhou Port Luoyuanwan Pier Limited Liability Company, 73.46% equity interest of Luoyuan Luneng Ludao Pier Limited Liability Company, 100% equity interest of Qingdao Luneng Jiaonan Port Limited Company, 53% equity interest of Shandong Luneng Sea Transportation Limited Company, all of which are owned by Shandong Power; and 39.75% equity interest of Fujian Luoyuanwan Luneng Harbour Limited Liability Company owned by Luneng Development.
			The acquisitions above have been approved by the Board of Directors on December 30, 2009, and are now subject to the approval of State-owned Assets Supervision and Administration Commission of the State Council.
		(iii)	Jinling Power Company entered into a Gas Purchase Agreement with PetroChina Company Limited (“PTR”) on December 29, 2004, pursuant to which Jinling Power Company purchases gas from PTR from the date on which it commenced commercial operations to December 31, 2023. According to the agreement, Jinling Power Company is required to pay to PTR at a minimum annual price equivalent to 486.9 million standard cubic meter of gas from 2008 to the end of gas supply period, which amounted to approximately RMB 694 million (2008: RMB 694 million) based on current market price as of December 31, 2009. The purchase price is negotiated annually between the contracting parties based on the latest ruling set out by the NDRC. For the year ended December 31, 2009, the annual purchase amounted to RMB 629 million (2008: RMB 688 million).
		(iv)	As of December 31, 2009, SinoSing Power has the following purchase commitments with subsidiaries of Temasek Holdings (Private) Limited (“Temasek”):
			·	Purchase of 17.6 billion British Thermal Unit (“BBtu”) of natural gas per day from Gas Supply Pte Ltd. during the plateau period up to December 31, 2014 with possible decrease in gas purchase volume thereafter. The agreement will be terminated on or before 2023 subject to the termination provisions within the agreement. As of December 31, 2009, the unit contract price was RMB 88,584 (2008: RMB 101,949) per BBtu. Purchase for the year ended December 31, 2009 amounted to approximately S$ 116 million (equivalent to RMB 544 million) (2008: S$ 111 million (equivalent to RMB 542 million)).
			·	Purchase of 157.5 BBtu of natural gas per day from SembCorp Gas Pte Ltd. during the plateau period up to December 31, 2013 with possible decrease in gas purchase volume thereafter. The agreement will be terminated on or before 2023 subject to the termination provisions within the agreement. As of December 31, 2009, the unit contract price was RMB 86,109 (2008: RMB 97,060) per BBtu. Purchase for the year ended December 31, 2009 amounted to approximately S$ 881 million (equivalent to RMB 4,147 million) (2008: S$ 892 million (equivalent to RMB 4,357 million)).

F-85

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

37.	COMMITMENTS (CONT’D)
	(b)	Operating lease commitments
	The Company has various operating lease arrangements with HIPDC for land and buildings. Some of the leases contain renewal options and most of the leases contain escalation clauses. Lease terms do not contain restrictions on the Company’s activities concerning dividends, additional debts or further leasing.
	Total future minimum lease payments under non-cancelable operating leases are as follows:

	As of December 31,
	2009		2008
Land and buildings
- not later than 1 year		44,099		31,707
- later than 1 year and not later than 2 years		3,253		3,253
- later than 2 years and not later than 5 years		9,760		9,760
- later than 5 years		101,378		104,632
		158,490		149,352

In addition, in accordance with a 30-year operating lease agreement signed by Huaneng Dezhou Power Plant (“Dezhou Power Plant”) and Shandong Land Bureau for the land occupied by Dezhou Power Plant Phases I and II in June 1994, annual rental amounted to approximately RMB 30 million effective from June 1994 and is subject to revision at the end of the fifth year from the contract date. Thereafter, the annual rental is subject to revision once every three years. The increment for each rental revision is restricted to no more than 30% of the previous annual rental amount. For the years ended December 31, 2009, the annual rentals were approximately RMB 30 million (2008 and 2007: approximately RMB 30 million).

38.

FINANCIAL GUARANTEES

	As of December 31,
	2009		2008
Financial guarantees
- granted to an associate		-		43,563
		-		43,563

Based on historical experience, no claims have been made against the Company and its subsidiaries since the dates of granting the financial guarantees described above.

F-86

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

39.	MATERIAL BUSINESS COMBINATION
	In September 2009, the Company acquired 65% equity interest of Qidong Wind Power from Huaneng New Energy at a consideration of RMB 103 million. The acquired business contributed consolidated revenue of RMB 18 million and consolidated profit of RMB 1 million to the Company and its subsidiaries for the period from date of acquisition to December 31, 2009.
	In September 2009, the Company acquired 41% equity interest of Beijing Cogeneration and 55% equity interest of Yangliuqing Power Company from HIPDC and Huaneng Group at a consideration of RMB 1,175 million and RMB 1,076 million, respectively. The acquired business contributed consolidated revenue of RMB 1,308 million and consolidated profit of RMB 147 million to the Company and its subsidiaries for the period from the date of acquisition to December 31, 2009.
	Should the above acquisitions had occurred on January 1, 2009, unaudited consolidated revenue and unaudited consolidated profit of the Company and its subsidiaries for the year would have been RMB 79,747 million and RMB 5,005 million, respectively.
	Details of consideration and goodwill arising from the acquisitions of Qidong Wind Power, Beijing Cogeneration and Yangliuqing Power Company by the Company are as follows:

Purchase consideration:
- Cash paid	2,354,117
- Direct costs relating to the acquisition	1,645
	2,355,762

F-87

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

39.	MATERIAL BUSINESS COMBINATION (CONT’D)
	The assets and liabilities arising from the acquisitions of Qidong Wind Power, Beijing Cogeneration and Yangliuqing Power Company are as follows:

	Qidong Wind Power						Beijing Cogeneration						Yangliuqing Power Company						Total
	Fair value			Acquiree’s carrying amount			Fair value			Acquiree’s carrying amount			Fair value			Acquiree’s carrying amount			Fair value			Acquirees’ carrying amount
Cash and cash equivalents		31,643			31,643			332,587			332,587			55,655			55,655			419,885			419,885
Property, plant and equipment		936,565			899,361			2,962,292			2,828,123			3,643,370			3,589,113			7,542,227			7,316,597
Land use rights		3,990			3,990			850,181			42,398			291,629			-			1,145,800			46,388
Deferred income tax assets		-			3,745			-			28,925			-			11,469			-			44,139
Other non-current assets		-			-			7,092			7,092			2,477			2,477			9,569			9,569
Inventories		-			-			109,333			109,333			144,327			144,327			253,660			253,660
Receivables		7,492			7,492			227,386			227,386			228,221			228,221			463,099			463,099
Payables		(201,099	)		(201,099	)		(333,743	)		(333,743	)		(81,825	)		(81,825	)		(616,667	)		(616,667	)
Salary and welfare payables		(140	)		(140	)		(59,309	)		(59,309	)		(1,430	)		(1,430	)		(60,879	)		(60,879	)
Borrowings		(600,000	)		(600,000	)		(1,280,756	)		(1,280,756	)		(2,525,074	)		(2,525,074	)		(4,405,830	)		(4,405,830	)
Deferred income tax liabilities		(5,556	)		-			(199,011	)		-			(75,002	)		-			(279,569	)		-
Net identifiable assets acquired		172,895			144,992			2,616,052			1,902,036			1,682,348			1,422,933			4,471,295			3,469,961
Minority interests		(78,713	)					(1,543,471	)					(757,057	)					(2,379,241	)
Goodwill		8,963						103,286						151,459						263,708
Total purchase price		103,145						1,175,867						1,076,750						2,355,762	��
Consideration paid in cash		103,000						1,175,117						1,076,000						2,354,117
Direct cost relating to acquisitions		145						750						750						1,645
Less: cash and cash equivalents from the subsidiaries acquired		(31,643	)					(332,587	)					(55,655	)					(419,885	)
Net cash paid for acquiring the subsidiaries		71,502						843,280						1,021,095						1,935,877

Goodwill arising from the acquisitions is attributable to the high profitability of the acquired businesses and the significant synergies expected to arise after the acquisitions of the Company on the equity interests in the subsidiaries stated above.

F-88

HUANENG POWER INTERNATIONAL, INC. AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

(Prepared in accordance with International Financial Reporting Standards)

(Amounts expressed in thousands of RMB unless otherwise stated)

39.	MATERIAL BUSINESS COMBINATION (CONT’D)
	On March 24, 2008, SinoSing Power acquired 100% equity interest of Tuas Power from Temasek. The acquired business contributed consolidated revenue of RMB 10,413 million and consolidated profit of RMB 549 million to the Company and its subsidiaries for the period from date of acquisition to December 31, 2008. Should the acquisition had occurred on January 1, 2008, unaudited consolidated revenue and unaudited consolidated loss of the Company and its subsidiaries for the year would have been RMB 70,383 million and RMB 4,587 million, respectively.
	Details of consideration and goodwill arising from the acquisition of Tuas Power by SinoSing Power are as follows:

Consideration paid in cash	21,675,288
Directly incremental costs	88,164
Total cost of combination	21,763,452

The goodwill is attributable to leading position and profitability of Tuas Power in its market.

The assets and liabilities arising from the acquisition of Tuas Power are as follows:

	Fair value			Acquiree’s carrying amount
Cash and cash equivalents		1,619,108			1,619,108
Property, plant and equipment		6,074,396			5,715,125
Land use rights		614,549			213,757
Power generation licence		4,073,278			24,767
Deferred income tax assets		650			650
Other non-current assets		189,863			165,097
Inventories		746,360			746,360
Derivative financial assets		180,595			180,595
Receivables		1,297,323			1,297,323
Payables		(3,007,452	)		(3,007,452	)
Salary and welfare payables		(14,952	)		(14,952	)
Borrowings		(102,592	)		(102,592	)
Derivative financial liabilities		(98,180	)		(98,180	)
Deferred income tax liabilities		(1,163,474	)		(293,474	)
Minority interests		(35,047	)		(35,047	)
Net identifiable assets acquired		10,374,425			6,411,085
Goodwill		11,389,027
Total purchase price		21,763,452
Consideration paid in cash		21,675,288
Direct costs relating to acquisition		82,583
Less: cash and cash equivalents from the subsidiary acquired		(1,619,108	)
Net cash paid for acquiring the subsidiary		20,138,763

40.	SUBSEQUENT EVENT
	The Company and its subsidiaries issued RMB5 billion of unsecured short-term bonds at par value bearing coupon rate of 2.55% per annum on 23 March 2010. These bonds will be matured in 270 days.

F-89

Signature

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

HuanengPower International, Inc.
By:	/s/Gu Biquan
	Name:	Gu Biquan
	Title:	Vice President and Secretary to the Board

Date: April 19, 2010