To Transform Corporate Operation Mode and Enhance Group's Internal     Control

    To build a strong headquarter, enhance the role as a strategic decision-making     center, management and control center, as well as power grid dispatching center,     SGCC completes the system of decision-making, implementation and supervision,     optimizes strategic planning, comprehensive planning, all-round budget,     comprehensive business performance appraisal and internal control etc., upgrades     efficiency, quality in an all-round way.

    To Integrate Various Resources in Allaround Corporate Operation Mode     and Enhance Group's Internal

    SGCC will centralize capital management, implement internal market operation, so         as to decrease financing cost and improve capital efficiency .

    To vigorously push forward standardized construction of the power grid. Insist on     the principle of building cost effective grid with high quality based on right plan,     SGCC completed the typical design for 110-500kV transmission and distribution     projects.

    To promote centralized bidding, in 2005, SGCC arranged 6 batches of bundled     bidding activities for procurement of major equipments for power grid projects of     330kV and above, the final bidding price was RMB 14.2 billion yuan, saving RMB1.4     billion yuan compared with the budget. To intensify cost control.

    SGCC emphasizes to tap potential, strictly controls cost, strives to controllable cost,     intensifies line loss management and recovery of tariff, increases the income and     reduces the expenditure.

    Implementation of Performance Benchmarking

    SGCC set up a management system of benchmarking and regular mechanism;     improved index system and carried out business diagnosis; sorted out management     procedures and gathered management flaws; set up the benchmarker and     summarized the typical experiences to improve performance. In 2005, after     implementing benchmarking, SGCC strengthened fundamental management,     improved consolidated management and professional operation, steadily improved     economic indexes, and also created a sound study environment of finding out     differences with advanced companies and working for the first-class performance.