Environmental and Social Performance Report

Loan number: 2422/7279 January 2010 to June 2010

PRC: Municipal District Energy Infrastructure Development Project

Prepared by Dalkia Asia Pte. Ltd.

For the Asian Development Bank

This report has been submitted to ADB by Dalkia Asia Pte. Ltd. and is made publicly available in accordance with ADB’s public communications policy (2005). It does not necessarily reflect the views of ADB.

SCHEDULE 18

SEMI-ANNUAL ENVIRONMENTAL

AND SOCIAL PERFORMANCE REPORT

FOR THE HALF-YEAR ENDED JUNE 30, 2010

SEMI-ANNUAL ENVIRONMENTAL AND SOCIAL

PERFORMANCE REPORT

(ESPR)

Reporting Period: January 2010 – June 2010

ESPR Completion Date: September 30, 2010

I. Introduction

A. Main Information

Dalkia (Jiamusi) Urban Heating Dalkia Sunshine (Harbin) Heat Power Co., Ltd. Co., Ltd. Incorporation 2007-4-5 2007-7-13 • Dalkia Asia Pte. Ltd. (65%) • Dalkia Asia Pte. Ltd. (95%) • Jiamusi New Times Urban • Harbin Property Heating Group Corporate Structure Infrastructure Construction Co. Ltd (5%) and Investment (Group) Co. Ltd. (35%) Owner and operator of a district Owner and operator of a district heating network serving the city of heating plant and network in the Description Jiamusi, third largest city in southwest of Harbin, capital of Heilongjiang Province, under a 25 Heilongjiang Province year concession contract

B. Description a) Dalkia Jiamusi In 2007, Dalkia Asia signed a concession agreement with the municipality of Jiamusi, for a duration of 25 years, to manage the former municipal heating company’s network and treble its size. Dalkia Asia set up a JV, Dalkia (Jiamusi) Urban Heating Co., Ltd., with Jiamusi New Times Urban Infrastructure Construction and Investment (Group) Co. Ltd. (which belongs to the municipality). Dalkia Jiamusi is mainly involved in heating distribution. During the heating season 09/10, the heating area was 8,532,203 m2. The main heat production sources are from 2 cogenerations which belong to third parties. They are located at the West and East sides of Jiamusi. Dalkia Jiamusi also owns a 100-MWth-boiler plant, “Jing Jiang”, located in the northern part of the town of Jiamusi, and 7 small peak-boilers plants in 2009.

Important improvements in energy savings and pollution reduction have been achieved while we were improving simultaneously heating service quality b) Dalkia Harbin

In 2007, Dalkia acquired majority interest in Yangguang, the company undertaking the development and operation of the South West heating network of Harbin City. The remaining shares of Yangguang are held by the municipal heating group of Harbin City.

Dalkia Harbin is both involved in the production and distribution of heating to supply the southern part of the Yangguang District. During the heating season 09/10, the heating area increased to 2,822,938 m2. Dalkia Harbin currently owns a thermal plant (5 x 58MW HOB), and we are planning to build a cogeneration plant; in addition, Dalkia Harbin owns 2 other small peak boiler houses.

Dalkia Harbin contributes actively to energy savings and pollution reduction.

C. Construction

Construction period can only take place between 2 heating seasons in reason of the extreme weather conditions during winter. New connection contract are signed after the heating season; thereafter detailed Planning / Design / Procurement period starts and lasts approximately 4 months, thus construction works can only start from July.

January February March April May June July August September October November December

Hearting Season

Planning / Design / Procurement Period

Construction Period

The reduction of primary energy use and CO2 emissions during heating seasons are mainly made possible through:

 The expansion of the networks which enable to connect building previously supplied by small coal boilers;  The energy efficiency through the installation of new substation (where the energy was supplied directly)  The improvements in operation (automation, temperature control, network control, production efficiency…)  The modernization and/or modification of the network which enable to supply energy more efficiently, and drastically reduce the water loss (Jiamusi);

II. Environmental and Social Management

A. Environmental Management System Implementation

In December 2009, the Environmental Policy of Dalkia China was updated based on our performance of QHSE and we kept implementing it during the first half of 2010:

• environment impacts identification;

• emergency situation management;

• risk analysis / management;

• risk mapping;

• issued more procedures for operation & management;

• internal audit;

• organization optimization with QHSE standards in all Chinese entities;

• qualified individuals and teams; and • QHSE seminar & training. Departments in each entity (highlighted in orange in the organization charts below) have been implemented to develop environmental and social tools and procedures/standards.

DALKIA (JIAMUSI) URBAN HEATING Co., Ltd. DALKIA SUNSHINE (HARBIN) HEAT POWER Co., Ltd.

GM 1 GM 1

Technical Director Main Plant Technical Administration Labor Union 1 Construction Operation VGM Finance Director Director VGM President General Counsel 1 1 1 1 1 1 Assistant Technical Director 1 Assistant 1 Engineering prophase Quality & Economic Heat networks networksHeat Economy 3 Economy Manager Engineering Commercial Main Plant IT Security Security IT Purchase Technical Contract Finance Finance 1 Admin. E.H.S. 103 HR HR 38 16 10 5 1 9 56 7 5 3 4 4 ISO &Safety Dept. Cost Control Team Commercial Dept. Operation Dept. Administration Purchase Dept. Finance Dept. Female Union Female Union Quality Dept. Technical & Legal Dept. HR Dept. Member IT Dept. IT Dept. 113 10 26 14 10 59 16 13 4 6 1 5

Heat Heat Heat

Heat Networks NetworksHeat NetworksHeat NetworksHeat Automation Electrical networks networks networks Chemical Branch 2 Branch 3 Branch 4 Branch 1 Workshop Workshop branch 1 branch 2 branch 3 Workshop 15 12 23 15 15 15 88 82 90 67

Overhauling Coal Boiler Workshop Management Workshop 28 11 6

These departments constantly communicate with Dalkia China’s QHSE team.

Moreover, a wide range of training courses and seminars were held during the first half of 2010 to enhance our local teams’ ability and performance. The training targeted not only the employees in charge of QHSE, but also operators and technicians, managers.

A complete list of the trainings that took place during the first half of 2010 is shown below (the ones specific to QHSE are highlighted in yellow):

Jiamusi Harbin Contents Position of attendees Name/Type of the training Contents Position of attendees Name/Type of the training Case study-Individual heating technical/ EHS Target 2010; operator All Employees EHS reconstruction operation Accident Reporting Procedures technical/ Case study-Substation operation operator Mask Usage and Maintenance Operator EHS operation Case study-Heating supply technical/ General training of PPE usage and operator Operator EHS regulation operation maintenance technical/ technical/ Substation automation control operator Heating network balance technology Network manager operation operation technical/ Overseas training- Estonia heating technical/ Saphir training Instrument worker Technical manager operation network supervising and management operation Substation supervising and Network manager, EHS technical/ Fire Certification training EHS specialist EHS management training engineer operation Navision training for sourcing and Sourcing manager, technical/ Electrician Certification training Electrician EHS warehouse Finance manager operation EHS specialist Certification technical/ EHS specialist EHS Saphir training IT specialist training operation technical/ Cost control system training statistician Orientation training New employees Orientation operation technical/ Pre-job training statistician Effective Coach for line managers supervisor/manager Management operation technical/ Instrument training statistician Project Cost training Accountant Management operation technical/ Quality management training line managers HR relevant policy Introduction All employees Management operation Effective Coach for Supervisor/manager Management Internal Control training Line managers Management line managers Internal Control for finance Finance staffs Management

technical/ DH system training Operator operation Basic theory of water and technical/ Chemistry attendant sewage operation technical/ Automation Control training Thermal operator operation technical/ Electrical devices training Electrical operator operation

In addition, several new procedures were issued or drafted to standardize our managerial and operation / maintenance process. The Emergency Situation Reaction Procedure and the Prevention of Legionella Risk have been drafted and will be published during the second half of 2010.

Procedures are implemented to enhance skills of our employees, improve Dalkia’s overall operations, and therefore ensure QHSE performance; these procedures include practical engineering, technical methods, operational software, etc. according to Veolia group, international and national standards. Our operations thus comply with national and local regulations / standards, and with Environmental Policy stated by Dalkia Asia and Dalkia China as well. Finally, special handbooks prepared by Dalkia Company were introduced to Dalkia China as guideline for its management and operation such as:

Finally, Dalkia China shall annually report to Dalkia headquarter about its energy consumption and general efficiency, emission level, H&S situation etc. The reporting shall be done at the beginning of each year.

This reporting is derogatory for each entity worldwide and enables Dalkia Company to follow up and develop tools and procedures to harmonize Dalkia Company’s overall operations. These indicators are published and shared within all entities.

III. COMPLIANCE WITH THE ENVIRONMENTAL AND SOCIAL REQUIREMENTS AS SPECIFIED IN THE LOAN AGREEMENT

A. Compliance with Country Requirements

Each Dalkia’s entity needs to comply with national and local laws, regulations, standards and codes.

• As mentioned in the Reporting for Year 2009, the intranet of Dalkia China lists all the national and local laws, regulations, standards and codes related to our operations and sector (bilingual version). This list is continuously upgraded by a dedicated employee from Dalkia China. Every employee has a continuous access. QHSE Department in each entity, under the supervision of Dalkia China, has the responsibility to implement procedures to comply with these national and local laws, regulations, standards and codes. The following pictures are snapshots of the intranet pages where standards, laws and regulations can be downloaded:

• Internal QHSE inspections and audits regularly take place (the following picture show the Risk Analysis Audit Report Cover Page and 2 example sheets). An action plan is prepared after an inspection / audit (if needed), and its application and performance is under supervision of entities’ QHSE employees and Dalkia China management.

Thanks to all the measures explained above, there have been or have no QHSE issues that did or will lead to any event of default up to June 30, 2010.

B. Compliance with Environmental and Social Requirements

Existing projects are in compliance with the Environmental and Social Requirements defined in the Facility Agreement and Dalkia policy as well:

• A Reporting System has been implemented to communicate on a Annually, Semi-Annually and Immediate basis as defined in Clauses 17 and 19;

• Implementation of Schedules 7 and 8 (together with Schedule 17) is still in progress;

• Compliance with national and local laws, regulations, standards and codes;

• Integration in the organization of QHSE standards and procedures through management, trainings, seminars, QHSE campaign and other means (handbooks…);

• Implementation of departments dedicated to HQSE;

• Implementation of audits and inspections ;

• Continuous reinforcement/improvement of the QHSE policies, standards and objectives;

• Continuous experience and competencies shared with Dalkia’s entities all over the world;

• Improvement of community relations. C. Management of subcontractor & suppliers

As a part of a global company, we are aware that our sourcing strategies have significant impact on the economic, social and environmental fabric of local communities. Since our choices can influence our employees and community's quality of life -in either a positive or a negative way- we feel that we have duty of care to heighten our subcontractors / suppliers' awareness and performance. While being mindful to favour local outsourcing / purchasing, our teams are engaged in a gradual process of bringing purchaser practice into line with sustainable development values and criteria. QHSE requirements are included in every contract.

Subcontractors and suppliers selection generally consists of:

• Information Gathering: to optimize existing or find potential subcontractors / suppliers;

• Subcontractors / Suppliers Contact: through subcontractor / supplier identifying, quotation, proposals, and tender or direct contact process, a respective contract may be made with the subcontractors / suppliers;

• Background Review: References for product/service quality are consulted, and any requirements for follow-up services including installation, maintenance, and warranty are investigated.

Dalkia, through its long presence in China and particularly in Heilongjiang province, has established an extensive list of local suppliers. Indeed, important synergies have be made in the selection and control of subcontractors / suppliers due to 1) Dalkia Jiamusi and Dalkia Harbin have both the same scope of business and 2) they are both located in Heilongjiang province.

Note that the subcontractors / suppliers proposals and contracts will be reviewed by the local senior management and Dalkia China purchase team as well.

We continuously monitor our existing subcontractors / suppliers on sustainable development criteria, insert contractual clauses in our relations with subcontractors / suppliers, introduce adherence to sustainable development. However we also seek opportunities with new potential subcontractors / suppliers which may further emphasize sustainable development.

The audit program and corrective action for any non-conformity raised will be monitored by the management and contract review processes. These audits are designed to ensure that subcontractors / suppliers’ services / products are meeting not only the required Dalkia’s service and QHSE levels but also national and local standards.

We recognize the safety, health, environmental and ethical impacts of all outsource / supply decisions, and will involve our subcontractors / suppliers in addressing issues that may arise and expect them to assist us in minimizing any negative effects. We will not engage in any activity with subcontractors / suppliers which might be deemed to be anti-competitive or in breach of any statutory requirements in any country or trading region. IV. ENVIRONMENTAL AND SOCIAL PROGRESS OF PROJECT(S) UNDERWAY

The development of heating surface, compared to Heating Season 08/09, did not lead to an increase of the unit energy consumption. Through the improvement in the operation and maintenance and efficient construction plans, our local teams succeeded in saving energy sensitively and in reducing emissions on one part; and in improving heating services and customer satisfaction on the other part. The main tasks of Dalkia Jiamusi and Dalkia Harbin, from the end of the heating season up to June 30, 2010, are to prepare detailed Planning / Design / Procurement to launch the construction.

Construction period is usually short (from July to October) as our local teams, in coordination with the local authorities, prepare from the end of the heating season, construction planning and budget to connect HOBs and develop network. This process can be challenging as property developer may change their plans many times. Once Planning and Design are completed, our local teams launch the procurement process which can last long as local teams, in coordination with Dalkia China, needs to carefully review proposals in order to meet QHSE and budget targets.

Planning shall meet environmental and development requirements stated by the local government.

• During this reporting period, construction has not yet started, thus no delays have occurred;

• During this reporting period, there were no environmental and social issues, or unanticipated environmental or social impacts;

• During the reporting period, there were no land acquisition, resettlement, or indigenous people issues;

• During this reporting period, there are no unresolved social and environmental status;

• Our local entities comply with the ADB, national and local Environmental and Social Requirements.

In order to improve our operations and service quality, below is the description, status, and completion timetable of our EMS up to June 30, 2010:

Step EMS items Discription Entities Status The Dalkia China has entrusted the Technical & Operation Department, in which Structure and The subsidiaries of Dalkia has designated an environment manager, in charge 1 Environmental Dept. is involved, with the establishment and deployment of the Environmental Done responsibility in particular of the deployment of this system within his/her scope. Management System necessary to the application of its Environmental Policy. Dalkia China has defined its environmental policy (Zhang Zeming, Dec. 2008) in the framework Environmental The subsidiaries deploy this policy within its scope and distributes to all its 2 of the commitment to sustainable development of Dalkia Asia (Roland Schoorl, September Done policy personnel. 2008 ). Dalkia China has identified main environmental impacts relating to environmental performance The subsidiaries of Dalkia Chiina should identify the installations and sites Identification of significant associated with our activities. The priority risks and its relevant audit and inspection rules, to concerned (priority installations), and evaluates the reality of the impacts Partially 3 environmental verify the deployment of measures designed to comply with contractual obligations and and risks on each one of them, in particular by deploying the audit and done impacts control priority risks, are in progress. inspection plans on these priority installations. Dalkia China is now defining a regulation management process that applies in particular for Dalkia China makes sure that updates issued by the Country and the Group requirements of national laws, regulations and standards about environmental protection and 4 Regulatory watch are applied within its scope and conducts a watch and an update of its own normal sustainable development. Each Functional Department ensures a watch and updates, if measures. necessary, the provisions implemented in its domain (documents, tools, directives etc.). Dalkia China is building a training modules based on the Group’s environmental management Dalkia China and its subsidiaries are planning to raise the awareness of its Training of 5 system. Moreover, a level of application of the environmental aspect characterizes each personnel to environmental issues and organizes training sessions for the in progress personnel training module identified in the Group’s training catalogue. concerned people. Dalkia China has described the main operational impact control instructions (air releases, soil, The subsidiaries deploy the instructions and emergency measures within water, waste, noise etc.) and the emergency measures related to our major risks (pollution, their scope and the operating tools (or makes sure that those in place Emvironmental fire, explosion, leak etc.). Operating tools (CAM, energy management etc.) include incorporate regulatory and internal requirements on the environment). Partially 6 management environmental instructions (the handbooks) related to its activities. Action plans are Within their scopes they deploy Group & Dalkia China's action plans and done program implemented at the country level to control environmental impacts and risks. All these develop their own environmental impact and risk control plans, in particular measures form the EMP of Dalkia China. after audits and inspections performed on priority installations. Dalkia China is identifying the main environmental data necessary to establish performance The subsidiaries take the measures necessary to the acquisition of data in measurement indicators in this field and to the progress of the action plans undertaken. The the required reliability conditions and supplies country reporting as well as periodically 7 Reporting reporting framework is described and managed by the Technical & Operation Department. the Group reporting. At its level it analyzes progress and performance updating Data are annually reported to the Veolia Environnement Sustainable Development Report. indicators. Environmental systems should be deployed and their effectiveness monitored by the QHSE The subsidiaries include in its annual management review the examination Management 8 managers under the responsibility of the Technical and Operations Director. The latter of environmental systems within its scope, their effectiveness and decides in progress review participates in the top management of Dalkia China. on the actions necessary as applicable. Dalkia China has designed offers focused on controlling the environment. Awareness and The subsidiaries deploy awareness and reporting systems within its scope Customer Partially 9 reporting systems (satisfaction survey, complaint handling etc.) take into account the with a large share aimed at environmental issues. It widely distributes Relations done environmental aspect. institutional media related to the environment.

The implementation of the EMS is under the guidance of the General Manual and the EMS Introduction Book:

V. SUMMARY OF SAFETY PERFORMANCE AND ANY CORRECTIVE ACTIONS

a) Accident and Incident data from sites Jiamusi Harbin Number of accident without Lost Days 0 1 Number of Accident with Lost Days 0 0 Number of fatal accident 0 0 Number of Lost Days from Accident 0 0 Frequency Rate FR1 (Accidents with Lost Days) 0 0 Frequency Rate FR2 (Accidents with and without Lost Days) 0 2 Severity Rate SR 0 0 The accident took place during the repair of a rain water pipe, and one finger of an employee was injured by a small fixing part of the pipe. It was a slight injury which did not lead to a loss of working day of the employee. FR2 is calculated as follows  (Nb of Accident x 10^6) / Annual Average Worked Hours / Total Staff

b) Highlights on H&S improvement

 Jiamusi site • Implementation of a range of H&S management procedures, which were released by Dalkia China during the first half of 2010, such as Dangerous Work Permission Policy, H&S inspection Policy, H&S Management Procedure for Construction Project, Special Equipment Safety Management Regulation; • Implementation of a constant safety checking and appraisal system in working places; • Implementation by the local EHS department of corrective actions due to some findings during inspections such as the lack of protective handrail in a dangerous area or the lack of wearing PPE; • Reinforcement of the safety control for subcontractors, including signing safety agreement, issuing the EHS handbook for subcontractor; • Completion of the modification of the fire fighting system in the coal transportation belt station of Jin Jiang boiler house (Dalkia Jiamusi’s largest boilers house); • Completion of the regular testing for special equipments including boilers, hoisting machinery, special vehicles, etc; • Installation of 345 safety signs, and 170 safety posters on site; • Creation and implementation of non-smoking policy (modification of 6 H&S management regulations and implementation of 2 emergency plans).

 Harbin site • Implementation of a range of H&S management procedures on site which were released by Dalkia China during the first half year of 2010, such as Dangerous Work Permission Policy, H&S inspection Policy, H&S Management Procedure for Construction Project, Special Equipment Safety Management Regulation; • Implementation of corrective action plans according to Dalkia China’s safety inspection and local EHS team’s daily inspections (mainly same as findings in Jiamusi); • Completion of the checking and testing for all lightning protection system; • Installation of 240 safety signs, 120 safety posters and 25 emergency escape maps (in the main heating plant and substations); • Installation of 225 new fire extinguishers and implementation of necessary modifications on the fire fighting system in the main heating plant in accordance with the local fire fighting bureau requirements; • Modification and implementation of the fire fighting safety management regulations, the smoking regulation and PPE regulation management regulation; • Creation and implementation of procedures to control dangerous works based on the dangerous works permission policy of Dalkia China; • Reinforcement of the safety inspection; • Speed up the application process of qualification on special equipment; • Completion of the regular safety testing for some electrical detection equipment and tools.

c) Trainings and programs on H&S

Jiamusi Harbin Contents Position of attendees Name/Type of the training Contents Position of attendees Name/Type of the training EHS Target 2010; Fire Certification training EHS specialist EHS All Employees EHS Accident Reporting Procedures Electrician Certification training Electrician EHS Mask Usage and Maintenance Operator EHS EHS specialist Certification General training of PPE usage and EHS specialist EHS Operator EHS training maintenance technical/ Quality management training line managers Orientation training New employees Orientation operation Effective Coach for Substation supervising and Network manager, technical/ Supervisor/manager Management line managers management training EHS engineer operation Effective Coach for line managers supervisor/manager Management

d) Fires and other Emergencies

During the reporting period, there were no fires, or explosions, or major accidental releases to the environment. VI. SUSTAINABLE DEVELOPMENT INITIATIVES AND COMMUNITY RELATIONS.

A. Any initiatives to improve environmental performance

Dalkia Jiamusi and Dalkia Harbin initiated some events or methods to improve our performances in environmental matters:

• Pursuance of the installation of internal de-sulphurization system using the limestone

feeding system in order to reduce SO2 emission in Harbin.

• Progress in implementation of the “Continuous Monitoring System” (CMS) in order to monitor emissions level more accurately in Harbin in cooperation with the local Environmental Protection Bureaus (EPBs);

• Implementation, supervision, monitoring and improvement of the annual environmental and safety plan and objectives, and key performance indicators (KPI) in all sites. Dalkia China has strengthened QHSE policy and objectives for 2010 as shown below:

Items & Indicators 2007 2008 2009 2010 Number of Accident Without Lost Days 0 0 0 ≤10 Number of Accident With Lost Days 4 3 2 ≤2 Number of Lost Days from Accident 185 272 107 200 Number of Staff ( FTE) 261.2 743.8 1,019 1,019 Annual average Working Hours (WH)per employee 1,912 2,159 2,028 2,028 Number of fatal accident 0 0 0 0 Frequency Rate FR1 8 1.9 1 ≤1 (Accidents With Lost Days) Frequency Rate FR2 8 1.9 1 ≤6 (Accidents With and Without Lost Days) Severity Rate SR 0.37 0.17 0.05 ≤0.1 Number of pollution accident 0 0 0 0 Compliance to national pollution prevention policies 100% 100% 1 Exceeding emission standards of SO2 (in times) 9 (CTC ) ≤10 (Dalkia China) Number of environmental problem complaints 4(Jiamusi) As few as possible reduction of pollutant amount 10%(2009) Remark 1: CTC means Dalkia Changyang Thermal Energy (Chongqing) Co., Ltd.

• We continuously implement and improve trainings as the steady improvement of our staff skills will result in higher energy efficiency and service quality, and therefore will positively impact the environment and the community;

• To ensure that the EMS is being well implemented in all our sites in China; we thus will continue to internally audit our entities (safety situation audit, environmental impacts identification and improvement, risk mapping, relevant external issues checking around our sites, etc…). B. Any initiatives to implement and improve sustainable development in operations

We progressively implement relevant initiatives for further improvement and obtain a sustainable development in China by:

• optimizing the limestone feeding system and adjusting limestone consumption based on the coal quality burned;

• renovating the ground of coal storage yard in Harbin in order to avoid any groundwater pollution and explosion risks of fuel storage tank;

• implementing and improving trainings ;

• Defining and implementing a resettlement plan on the bases of Schedule 8 (from the Facility Agreement);

• Keeping closer contact with community. C. Customer Relations and satisfaction a) General In China, Dalkia has developed a corporate internet website in Chinese in order to communicate about Dalkia Group and specifically about its operation in Asia. (http://www.dalkia.cn/). This website is not different from Dalkia Group’s corporate website, except that there is a Chinese version.

Dalkia Jiamusi has developed many means in order to communicate with the community as the acquired company had been operating the heating network for many years which is different for Dalkia Harbin. b) Customers communication The means below are detailed in the Reporting for Year 2009.  Newspapers  Internet  Local radio  Question stand in Jiamusi main square

Two new means were developed since the Reporting for Year 2009:

 Public Service Ads: the “Q&A of Heat Campaign” was launched during last Heating Season in Jiamusi which comprises:  Info flash Info flashes were daily broadcasted at around 8h00 (after news time) during the peak of heating season. It presented key information, with images, about the heating operations and systems.  Flyer The flyers were distributed in 2 ways: in booths and by home delivery.

It emphasizes more on principles and national regulations than the info flash.  Customer survey sheet Stick together with the flyer. Some booths were installed to collect these customer survey sheets.  Film Dalkia was authorized by CCTV and its source partners to broadcast a science education film about district heating system.

c) Customers Services Improvement In order to improve the service quality of our newly acquired entities, we implement new systems that successfully work in our other operation sites worldwide.  Centralized Collecting Office Before the acquisition, acquired entities heavily relied on “fee collectors” to recover heating fees. As this method is not efficient, we decided to centralize the fees recovery into one sole collecting office.  Surveys Dalkia has a constant will to improve its services. We therefore do surveys and monitor the results as we believe that it is a valuable way to assess the progress of our operations. Currently, this method has only been implemented in Jiamusi and we intend to implement such method as well in Harbin. For example, small customer surveys (shown below) were distributed in Jiamusi during last heating seasons. (please refer to section VI.C.b) for more details).

A managerial procedure for service survey is now at the drafting level and would be issued for all entities of Dalkia China soon.

D. Community

a) Social responsibility Through its ultimate mother company, Veolia Group, Dalkia has a strong social policy which reflects in our entities as well. Dalkia actively involves itself in the local community as we believe that not only through energy we can build a better environment but through the community as well.  Money Donation to disaster-hit area (such as the Qinghai earthquake in April 2010);  Donation of food to poor families;  Provide paid-works to jobless women to make up insulation quilts. b) Awards (only Jiamusi) Date Award Jury Level Industrial and Commercial Bureau of February 2010 “Provincial Trustworthy Enterprise” Provincial Heilongjiang Province “2009 trade union objectives management March 2010 units” and “Advanced unit on creation, General Labour Union of Jiamusi City Local openness, democratic management” Communist Party of Jiamusi City / Jiamusi April 2010 “Jiamusi 3-stars company of 2009” Local Municipality government Leading Group for Factory Affairs of 2010 “democratic management - advanced unit” Provincial Heilongjiang Province Department of Housing and Urban and 2010 “cities heating industry service -model unit" Provincial Rural Construction of Heilongjiang Province