Shanghai Electric : VOLUNTARY ANNOUNCEMENT

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SHANGHAI ELECTRIC GROUP COMPANY LIMITED 上海電氣集團股份有限公司

(A joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 02727)

VOLUNTARY ANNOUNCEMENT

ANNOUNCEMENT ON THE PROGRESS OF MATERIAL ARBITRATION

I. General Information on the Material Arbitration Application

On 23 February 2021, Shanghai Electric Group Company Limited (the "Company") received a notice of acceptance issued by the Singapore International Arbitration Centre for an arbitration brought by Reliance Infra Projects (UK) Limited (the "First Applicant"), Reliance Infrastructure Limited (the "Second Applicant") and Sasan Power Limited (the "Third Applicant") (collectively, the "Applicants") against the Company. According to this arbitration application, the Applicants require the Company to compensate its losses of approximately USD416 million.

II. Background of the Case, Requests and Reasons under the Arbitration

In June 2008, the Company and the First Applicant entered into the Equipment Supply and Service Contract (the "Contract") with a contracted amount of USD1,311,000,000, pursuant to which, the Company (as the supplier) shall provide major equipment and relevant services for the Sasan 6*660MW Ultra Large Supercritical Coal-fired Power Station Project in India (the "Project"), the Second Applicant issued the letter of guarantee for the payment obligations of the First Applicant under the Contract, and the Third Applicant owned and operated the power station.

Since the First Applicant still fails to pay for the equipment purchased and other relevant payables to the Company after the Project commenced commercial operation for several years, the Company has filed to the Singapore International Arbitration Centre for arbitration in December 2019, requiring the Second Applicant to pay for equipment purchased and other relevant fees in the amount of at least USD135,320,728.42 to the Company as agreed in the letter of guarantee (the "First Arbitration"). For details, please refer to the announcement of the Company dated 17 December 2019. In December 2020, the Company applied for the property preservation over the Second Applicant in the High Court of Delhi, India in connection with the First Arbitration. On 19 January 2021, the High Court of Delhi, India issued a temporary injunction requiring the Second Applicant not to dispose of the assets of its two subsidiaries.

On 23 February 2021, the Company received a notice of acceptance for an arbitration brought by the Applicants against the Company issued by the Singapore International Arbitration Center. According to this arbitration application, the Applicants require the Company to compensate for their losses of approximately USD416 million, including USD132 million in operating losses of the power station due to unplanned unit outage, USD220.6 million losses in the electricity fee revenue due to the failure to complete the commissioning of the 3# unit on time, USD47.18 million in repair and maintenance costs, USD16 million in discounted costs of the total contract consideration and interest, arbitration fees, attorney fees and other expenses (the "Second Arbitration").

The disputes involved in the First Arbitration and the Second Arbitration are referring to the same project.

III. Impact of the Arbitration on the Profit of the Company for the Current or Subsequent Periods

Up to 31 December 2020, the Company has treated the receivables of the Project as accounts receivable and contract assets, respectively, of which the balance of the accounts receivable was USD126,583,067.11 and the Company has made total provisions for bad debts in the amount equivalent to RMB356,278,854.14 according to the aging of the relevant accounts receivable. The balance of contract assets was USD21,850,000.00, which was the corresponding retention monies related to the Project for which the final completion certificate has yet to be issued by the owner and the Company has made total provisions for bad debts in the amount equivalent to RMB1,524,299.70 according to the aging of the relevant contract assets. As the case has not been brought to trial in tribunal, the impact of this arbitration on the profit of the Company for the current or subsequent periods is subject to uncertainties.

The Company will carry out corresponding accounting treatment according to the requirements of relevant accounting standards and actual conditions based on the trial progress and results. Meanwhile, the Company will perform its obligation of information disclosure and make timely announcement on the progress of the cases based on the progress of these arbitration cases.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

By order of the Board

Shanghai Electric Group Company Limited

ZHENG Jianhua

Chairman of the Board

Shanghai, the PRC, 24 February 2021

As at the date of this announcement, the executive directors of the Company are Mr. ZHENG Jianhua, Mr. HUANG Ou, Mr. ZHU Zhaokai and Mr. ZHU Bin; the non-executive directorsof the Company are Ms. YAO Minfang and Ms. LI An; and the independent non-executive directors of the Company are Dr. XI Juntong, Dr. XU Jianxin and Dr. LIU Yunhong.

* For identification purpose only