CEM today submitted its Vision on the Future Electricity Infrastructure in Macao and a formal response document to the GDSE Public Consultation Paper of the future Macao Electricity Market Reform Proposal.

CEM Chief Executive Officer Franklin Willemyns said CEM welcomes MSAR’s initiative to debate on the future electricity market. CEM also supports the public consultation as a first step to determine the best solution by evaluating different options through informed and open discussions. However, Willemyns noted that decisions should be taken with extreme caution since any significant change in the existing electricity market may have profound impact on the overall economy of Macao in the long term.

Willemyns pointed out in the introduction that during the last 23 years CEM had remarkable achievements:

• Reliability has achieved a 99.999% level, which is one of the highest in the world

• Tariffs are lower than in most developed world cities including 20% lower than Singapore and comparable to Hong Kong Island.

• Employee productivity has been improved by a factor of 8 during the last 23 years; CEM’s current productivity level is by far better than comparable small system operators.

In his presentation, Willemyns also pointed out that the future challenge of the industry is how best to cope with the future expansion in demand, provide high reliability, maintain stable and reasonable tariffs, as well as contribute to the general economic and social development of Macao.

In CEM’s vision of the future development of the electricity infrastructure, there are two very important elements: (1) local electricity generation capacity should be increased in Macao; (2) while at the same time the more than 20 years good cooperation with Guangdong Power Grid should be continued.

Given the existing price of Natural Gas, the production of electricity in Macao by means of high-efficiency combined cycle generators is very competitive. As an example, the variable cost of our existing CCB generation is around 0.65 MOP/kWh. There is sufficient land available at the current Coloane Power Plant which can provide a set of existing infrastructure, including port facilities, warehouses, experienced staff and others.

Investing in high-efficiency gas generation in Macao has many advantages as compared to other options:

— Very competitive from a cost perspective

— Higher reliability

— Less dependency on other sources

— Better bargaining power when negotiating with the suppliers of other sources

— Environmentally friendly

— Potential benefits from Kyoto protocol CDM

— Maintains an important local industry within the Territory

— Provides employment for Macao citizens

Willemyns also indicated that when preparing for the CEM submission, opinions from different academics, industry specialists as well as local association representatives were considered. Investors have also provided their point of views. CEM’s submission has included analysis of the potential risks and costs associated with market reform precedents in other parts of the world.

Willemyns noted that CEM’s submission has the sole purpose of contributing to the debate on the best solution for Macao and its people. He hoped that CEM’s contributions could help Macao to design the future of the electricity supply that best suits Macao’s needs.

In his conclusion Willemyns expressed that CEM has always worked closely with the Macao Government and the Macao people. Willemyns reaffirmed CEM’s commitment to continuing to do so in the future. He emphasized that CEM is always open to any reform proposals that are good for Macao and at the same time allow a reasonable business for the investors.

About CEM

CEM was established in 1972 to supply electricity as an essential and reliable service to Macao. CEM pledges to be a proactive partner for the sustainable development of Macao by providing reliable, safe and clean power services as well as ensuring the continuous improvement in the overall quality of society. CEM is fully committed to continuously upgrading its operation efficiency, improving the quality of customer service, and supporting the well being of Macao as a whole.