Taiwan Power Company1

Taipower Coal Demandand

Procurement Plan

Presented by Edward K. M. ChenDirector of Fuel Department

Taiwan Power Company

At The 8TH Meeting of R.O.C. / AustraliaJoint Energy and Minerals Trades

Taipei, August 2000

Taiwan Power Company2

Contents1. Introduction2. Coal Demand

• Coal-fired Units• Consumption Forecast• Power Plant Characteristics & Environmental Restrictions • Coal Quality Comparison

3. Procurement Plan• Taipower Policy• Procurement Methods• Procurement Plan for Year 2002

4. Taipower and Australian Coal Industry• Status of Current Contracts• Bengalla JV

Taiwan Power Company3

Year

Type Million KLOE Million KLOE Million KLOE

Electricity 10.06 34% 44.20 49% 53.50 46% Petroleum 15.38 52% 33.90 37% 45.20 39% Coal 2.37 8% 10.00 11% 9.40 8% Natural Gas 1.77 6% 2.80 3% 5.70 5% Renewable Energy - - 2.10 2%

Total 29.58 90.90 115.90

Remark: KLOE – Kiloliters of Oil Equivalent

1980 2000 2010

Energy Consumption in Taiwan

1980

34%

8%

6%52%

Electricity Petroleum Coal Natural Gas Renewable Energy

2000

11% 3%

49%

37%

2010

5% 2%8%

39%

46%

Taiwan Power Company4

Make-up of Generating Capacity in Taiwan

2000

Hydro14.9%

Coal33.4%

Oil18.2%

NG16.1%

Nuclear17.4%

2010

Hydro10.1%

Coal32.8%

Oil7.8%

NG32.6% Nuclear

16.7%

Total : 29,634MW Total : 46,891MW

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Make-up of Electricity Generation in Taiwan

2000

Hydro5.7%

Coal39.5%

Oil15.5%

NG10.5%

Co-gen5.2%

Nuclear23.6%

2010

Hydro3.2%

Coal43.5%

Oil3.2%

NG22.7%

Co-gen4.5%

Nuclear23.0%

Total : 156,511Gwh Total : 236,880Gwh

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Existing Coal-fired Units in Taiwan

Station UnitDate of

CommercialOperation

InstalledCapacity

(MW)Owner Station Unit

Date ofCommercialOperation

InstalledCapacity

(MW)Owner

#1 Jan. 1960 75 TPC #7 May 1996 550 TPC

#2 Nov. 1961 125 〞Taichung

#8 Jun. 1997 550 〞Shenao

#3 May 1966 200 〞 #1 May 1982 500 TPC

#1 Jul. 1968 300 TPC #2 May 1983 500 〞Linko

#2 Mar. 1972 300 〞 #3 Mar. 1985 550 〞

#1 May 1991 550 TPC

Hsinta

#4 Feb. 1986 550 〞

#2 Sep. 1991 550 〞 #1 Jul. 1969 300 TPC

#3 Jul. 1992 550 〞Talin

#2 May 1970 300 〞

#4 Oct. 1992 550 〞 #1 Jun. 1999 600 FPG

#5 Mar. 1996 550 〞 #2 Sep. 1999 600 FPG

Taichung

#6 May 1996 550 〞

Mailiao

#3 Sep. 2000 600 FPG

Total (22 Units) 9,900MW

Remarks: 1. Shenao #1- #3 are planned to be retired in 2006.

2. Linko #1 is planned to be retired in 2008.

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650 650550 550

0

100

200

300

400

500

600

700

MW

2001 2002 2003 2004 2005

Planned Coal-fired Units in Taiwan

Hoping #1(IPP)

Hoping #2(IPP) Taichung #9

(TPC)Taichung #10

(TPC)

2001-2005 Planed: 2,400MW

2008-2009 Additional Capacity:2,300MW

2001-2009 Total : 4,700MW

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19.00

20.00

21.00

22.00

23.00

24.00

25.00

26.00

Million MT

Year

Taipower Coal Consumption Forcast

Coal 21.99 22.52 22.33 21.98 23.82 24.41 24.09 24.17 24.30 23.72 22.53

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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Plant Emission Limit Equip't Status Coal Usage

Shenao#1-#375MWe*1

125MWe*1200MWe*1

SOx:500PPmNOx: 300PPm

w/o FGD、no ash pond low ash Indonesian

Linkou#1-#2300MWe*2

SOx:200PPmNOx: 300→ 240PPm

w/ FGD high V.M. Australian

Taichung#1-#4550MWe*4

SOx:100PPmNOx:250→ 100PPm

w/ FGD 、 w/o SCR Indonesian + Australian or SA

Taichung#5-#8550MWe*4

SOx:100PPmNOx:100PPm

w/ FGD & w/ SCR Indonesian + Australian or SA

Hsinta#1-#2500MWe*2

SOx: 80PPmNOx: 200PPm

w/ FGD 、 w/o SCR E-type coal *2 + KPC*1 + Australian*2

Hsinta#3-#4550MWe*2

SOx:170→ 80PPmNOx:220P→ 80PPm

FGD 、 SCR underconstruction

E-type coal + low sulfur bituminous coal

Talin#1-#2300MWe*2

SOx:200PPmNOx:300→ 220PPm

w/o FGD 、 w/o SCR E-type coal + low sulfur bituminous coal

Environmental Restrictions and Coal Usage For Taipower Coal-fired Power Plants

Taiwan Power Company10

Import Term Contract Coal Quality Comparison

Quality Item

Origin

H.V.(Kcal/Kg) S Ash V.M. AFT Others

Western U.S. ~ 6,900 ~ 0.6% ~ 9% ~ 40% ~ 1250OC

Indonesian 5,700 ~ 6,600 0.4%~ 0.9% ~ 6% ~ 41% ~ 1200 OC Black fly ash

Low ash, extra low S coal ~ 5,100 <0.2% <4% ~ 41% ~ 1200 OC

South African ~ 6,300 ~ 0.6% 14% 26% ~ 1400 OC Low Na2O, High N

C-type Australian ~ 6,300 0.6% 14% 28% ~ 1500 OC

D-type Australian ~ 6,400 0.6% 12% 33% ~ 1400 OC

Chinese Mainland ~ 6,200 ~ 0.4% 7% 33% ~ 1200 OC

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20.13(97.9% )

0.44 (2.1% )

18.43 (90.5% )

1.94 (9.5% )

16.51 (73.2% )

6.06 (26.8% )

16.63 (76.9% )

4.99 (23.1% )

-

5.00

10.00

15.00

20.00

25.00

Million Mt

1997 1998 1999 2000

Share of Low Ash, Extra Low Sulphur Sub-bituminous Coal in Taipower Market

Low Ash, Extra Low Sulfur Sub-bituminous Coal

Ordinary Coal

Taiwan Power Company12

Procurement Plan

Taipower Policy:

Diversification

Direct Contacts for Term Contract Supply

Adequate Level of Participation in the Spot Market

Strict Quality Requirements

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Procurement Methods Term Contract (1) 70% Min. of Total Requirements

(2) Selective Tendering

(3) Uniform Upper Percentage Limit for All

Regions Except Chinese Mainland Spot Purchase (1) 30% Max. of Total Requirements (2) Open Tendering

Both Term Contract Procurement and Spot Purchases Are Carried Out on An International Bid Basis.

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Procurement Plan for Year 2002 The uniform upper percentage limit of 35% is proposed subject to final approval by Taipower board of directors. 85% of total requirements are allocated for nominal tonnage to be covered by term contracts.

4-5 term contract tenders are expected to be issued in Q4 2001.

Spot purchase tenders will be issued roughly on a quarterly basis.

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4.65 (31% )

3.88 (26% )

4.58 (31% )

1.88 (12% )

5.79 (38% )

3.74 (25% )

4.09 (27% )

1.56 (10% )

6.04 (42% )

4.05 (28% )

3.26 (19% )

1.18 (8% )

4.99 (29% )

8.11 (47% )

3.26 (19% )

0.94 (5% )

5.14 (32% )

7.7 (48% )

2.47 (15% )

0.4 (2% )

0.5 (3% )

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

Million Mt

1996 1997 1998 1999 2000

Make-up of Taipower Term Contract Coal Tonnages by Country of Origin

Chinese Mainland

America

South Africa

Indonesia

Australia

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0.47(20% )

1.71 (75% )

0.11(5% )

0.92 (17% )

3.62 (67% )

0.84 (16% )

0.3 (5% )

5.23 (90% )

0.3 (5% )

0.14 (3% )

5.07 (96% )

0.06 (1% )

5.09 (94% )

0.32 (6% )

-

1.00

2.00

3.00

4.00

5.00

6.00

Million Mt

1996 1997 1998 1999 2000

Make-up of Taipower Spot Coal Tonnages by Country of Origin

Others

Indonesia

Australia

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5.12 (30% )

5.59 (32% )

4.58 (26% )

1.88 (11% )

0.11 (1% )

6.72 (33% )

7.36 (35% )

4.09 (20% )

1.56 (8% )

0.84 (4% )

6.34 (31% )

9.28 (46% )

3.26 (16% )

1.18 (6% )

0.3 (1% )

5.13 (23% )

13.18 (58% )

3.26 (14% )

0.94 (4% )

0.06 (1% )

5.14 (24% )

12.79 (59% )

2.47 (11% )

0.4 (2% )

0.82 (4%)

-

5.00

10.00

15.00

20.00

25.00

Million Mt

1996 1997 1998 1999 2000

Make-up of Taipower Total Import Coal Tonnagesby Country of Origin

Others

America

South Africa

Indonesia

Australia

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Term Contracts with Australian Coal Suppliers

SupplierNumber ofContracts

Duration

Coalex Pty. Ltd. 1 1982 ~ 2002

CNA Operations Pty. Ltd. 1 1995 ~ 2002

Camberwell Coal Pty. Ltd. 1 1996 ~ 2002

Apollo Resources Pty.Ltd. 1 1996 ~ 2001

Ensham Coal Sales Pty.Ltd. 1 1997 ~ 2003

Macquarie Coal Marketing Pty. Ltd. 21998 ~ 20041998 ~ 2005

Bengalla Coal Sales Company Pty. Ltd. 1 1999 ~ 2005

Dartbrook Coal (Sales) Pty. Ltd. 1 2001 ~ 2005

Total Number of Contracts 9

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Bengalla Joint Venture Structure

CAN40%

Taipower10%

Wesfarmers40% Mitsui

10%

Taiwan Power Company20

5.87.0 7.0 7.0

7.5

-1.02.03.04.05.06.07.08.0

Million Mt.

2001 2002 2003 2004 2005

Bengalla Mine 2001-2005 Production Plan