CKI and Hopewell Invest RMB 4 Billion in Guangzhou East South West Ring Road

29 March, 1998 - Hong Kong

Cheung Kong Infrastructure Holdings Limited (CKI) and Hopewell Holdings Limited (Hopewell) jointly announced that details of their contract with Guangzhou Freeway Company (Guangzhou Freeway) regarding the construction and operation of the Guangzhou East South West Ring Road (E-S-W Ring Road) have been finalized, and approval from relevant government departments has just been obtained, marking another milestone in this joint venture project.

The E-S-W Ring Road is regarded as one of Guangzhou's 10 major infrastructure projects by the Guangzhou Municipal Government. The contract for the construction and operation of this project was originally signed in 1992 between Hopewell and Guangzhou Freeway. CKI, Hopewell and Guangzhou Freeway entered into a supplemental agreement regarding the South East (SE) portion in 1996. Subsequently, details regarding the South West (SW) portion were finalised, and cooperation terms for the SE portion were amended to combine the SE and SW portions into a single, integrated project.

The total investment for the entire length of the E-S-W Ring Road amounts to RMB 4.5 billion, of which CKI and Hopewell will each invest RMB 2 billion, and Guangzhou Freeway will be responsible for RMB 500 million. The E-S-W Ring Road is not only a major project for Hopewell, but it also represents CKI's largest single infrastructure investment in Mainland China. Capital payment is on schedule - 80% of the capital for the SE portion has been made as of March 1998, and the capital injection programme for the SW portion will commence in early April this year, for which CKI and Hopewell have already made financial arrangements.

The joint venture will last for a period of 30 years from the commencement of full commercial operation. Guangzhou Freeway and the Hong Kong investors (CKI and Hopewell) will share profit during the joint venture period as follows: 10%/90% during the first 10 years, 25%/75% during the second 10 years, and 35%/65% for the last 10 years.

The total length of the E-S-W Ring Road is about 39 km, of which 19 km is the SE portion and 20 km the SW portion. Situated on the outskirts of Guangzhou City, the E-S-W Ring Road will be a dual 3-lane expressway, employing French technology in its advanced, automated toll collection system.

Guangzhou City has expanded significantly in size in recent years, with a total urban population reaching four million. Guangzhou has over 900,000 registered motor vehicles, and traffic in the city is heavily congested. With the completion of the E-S-W Ring Road, the number of access roads connecting to Guangzhou City will increase from 8 to 12. Guangzhou City will then become the major transportation hub of Guangdong Province, offering a wide network of major highways passing through and interconnecting at the city centre, thereby easing traffic congestion in and out of the city, as well as within the city centre.

Guangzhou Freeway will be responsible for turnkey construction of the E-S-W Ring Road on a fixed price and fixed completion timing basis, thereby minimising the risk of cost overruns and construction delays. Construction is currently on schedule - a 6km section of the SE portion that links the Guangzhou Northern Ring Road to Huangpu Daidao has been operational since September 1997. The SE and SW portions will be completed by June 1999 and July 2001, respectively.

Completion of the project is high on the priority list for the Guangzhou Municipal Government, and with the strong support of the Guangzhou Municipal Government, CKI and Hopewell - the quality and construction progress of the project will be carefully monitored and controlled. Construction efficiency has been high, and according to the current rate of construction, the entire length of the E-S-W Ring Road should be operational ahead of schedule in the year 2001 - in time for the Ninth National Sports Competition to be held in Guangzhou City.

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