Taixing Improvement Summary

Since May, 2010

Table of Content

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• Executive Summary• Improvements on SHE Practice • Improvements on Overall Plant Management

- Operation & Maintenance- Business Management and Employee Relationship- Human Resource- Inventory Management- Actions Under Implementation

Executive Summary (1/2)

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This report summarizes the numerous actions taken by Taixing Covanta Cogeneration Co., Ltd that

are improving the overall plant management since May 2010.

- Drive the approval of boiler retrofit project with support and help of CVA Asia Office;

- Most improvements are taking place on the Health and Safety side. The health and safety

awareness is raising among all levels of employees. A SHE department have been created;

appropriate PPE have been provided to all employees; fire protection system has been

improved; housekeeping is more efficient; electrical risk assessment has been conducted;

chemicals and confined space risk management have been improved; Systematic training

plan has been developed and implemented.

- On the environmental protection side, the plant has been equipped with new flue gas

monitoring system; the flue gas emission are better controlled by using the most functional

boiler, by better coal management, by better preventive maintenance and by improving the

cleaning system.

Executive Summary (2/2)

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- Capex project management has been enhanced by consolidating the department

functions and by developing regulated vendor selection process. Capex project

execution is smooth for the EfW facility and for the boiler retrofit.

- Operating performance are improving in particular the coal usage efficiency and the

profit margin;

- Good sign of improvements can be also observed with respect of employee

relationship, HR practice, business management, inventory management.

- Besides, many activities are undertaking on site in terms of maintenance and plant

management.

Improvements on SHE PracticeSince May, 2010

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PPE Improvement Employees are going to wear the new Company uniforms

which is more resistant to chemicals. Safety shoes, earplug, safety glasses and helmet have been

distributed to all employees. Employees exposed to dust and coal has been equipped

with approved respirator (N95); and training on how to use the respirator has been provided to them.

Chemical resisting glove for chemical user, and face shield for grinding and cutting protection have been distributed to employees exposed to this type of risk.

Replaced the simple safety belt by full body harness for the maintenance team and other employees who have to work at height

Setup PPE wearing procedure with safety labels on site

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Fire Protection System Improvement (1/2) Over 120 fire extinguishers have been renewed

Over 40 fire hydrants has been renewed

Boosting pump for firefightingwater network has been fixed

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Fire Protection System Improvement (2/2) Monthly inspection carried out by safety engineer

Firefighting water pump is tested weekly

Recording process has been successfully developed

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Housekeeping

Allocated 15 garbage bins through the facility

Cleared construction debris kept during many years on site

Enhanced housekeeping activities

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Emergency Evacuation Drill

Undertake Emergency

Evacuation Drill in the plant.

This will be done every year.

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Fire Fighting Equipments Practice

Firefighting exercises have been implemented in

order to guarantee that plant’s employees can

use efficiently the fire extinguishers.

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Electrical Safety Assessment Qualified third party contractor conducted an electrical safety on site assessment, over 120 electrical

cabinets have been checked with IR detectors on Nov 15th. The final report will be submitted end of

November.

We will then implement the actions plan developed by contractor based on the final report. The situation

highlighted in the pictures below will be corrected before year end.

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Chemicals Management

MSDS Sheets have been distributed to

departments exposed with chemicals.

Emergency shower and eye wash station has

been installed in chemicals storage room.

Chemical storage room has been

constructed. Chemicals stored outdoor have

been moved to this storage room.

All Chemicals tanks and chemical storage

room have been labeled with simplified

MSDS sheets.13

Confined Space Management

Assess All confined spaces area

have been identified and properly

labeled.

Multiple gas detector has been

recently purchased and is

available for all employees who

may have access to confined

space areas. Employees have

been trained on how to use it.

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HSE Training Work at height training to maintenance; Hazardous communication training to chemicals users;

Respiratory protection training to employees exposed to dust; Special equipments certificates (crane, boiler, pressure vessel

etc) for operators have been renewed Contractors safety training to all contractors before they start

working in facility First aiders training by in house clinic doctor. Total of 27

employees have been trained and 4 first aid kits have been

distributed throughout the facility.

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Others (1/2) Implement the safety tips before weekly meeting. Install SHE bulletin board to share SHE information

as the safety policy. Develop a noise monitoring program in order

identify noisy workplaces and protect the

employees accordingly.

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Others (2/2) Develop safety walking path in facility for

employees. Install emergency line breakers for coal and

slag conveyors. Set up monthly safety meeting with all

department heads. Implement a daily safety site inspection by

SHE department.

Flue gas emission is now monitored. New

online monitoring equipments have been

installed. The Flue gas emission is now better

controlled by using the most efficient boilers

and by improving the cleaning system.

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Better operating performance (1/2)

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Optimization of the monthly operational KPI. KPIs are becoming more consistent with monthly

financial performance. The management team of the plant can now monitor the performance of the

plant and develop actions for improvement.

Enhanced shift competition program to improve the operating performance.

Provide performance bonus to other production supporting departments to improve the operating

performance.

Improve the coal usage rate and further stabilize the profit margin by better coal management and by

stable operating performance.

Improve the maintenance activity by better planning of the preventive maintenance. Preventive

maintenance man hours almost reached 65% averagely from August to October in comparison to

corrective maintenance hours. This result in a better availability of critical equipments.

Better operating performance (2/2)

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KPI Average 2009

10/01 10/02 10/03 10/04 10/05 10/06 10/07 10/08 10/09 10/10

Gross margin 22% 10.69% 2.96% 6.44% 0.34% -2.46% 8.06% 12.43% 13.80% 9.09% 13.71%

Coal Price 562 658 671 707 682 703 717 724 727 709 707

Ton steam billed/ ton std coal

N/A 6.13 5.80 6.13 5.79 5.62 6.26 6.54 6.58 5.79 6.51

Preventive maintenance / Corrective maintenance

No record

No record

No record

No record

No record

No record

26.3%/73.7%

34.9%/65.1%

69.7%/30.3%

71.1%/28.9%

57%/43%

Improvements on Business Management and Employees relationship

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Innovatively installed pressure reducing valve to collect more waste heat from one steam

reverse supplier. Approximately 2 tons/hr cheap waste steam is added to steam supply

which generates more profit.

Involve more basic staff in some decision making process, e.g., prepare questionnaire to

inquire employee’s comments on uniform style, conducted public survey among

employees before EfW staffing process.

Improve lunch menu in the plant;

Improvements on Human Resource

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Under situation of no new hire, organized the staffing process to allocate 31 employees to

new EfW facility, 3 employees to project department and 5 employees from supporting

department to operation department without effecting stable and safe plant operation;

Create a new HSE department composed of 1 manager, 1 supervisor and 2 engineers;

Create a new business management department responsible for Purchases and sales

activity;

Establish a Web based E-learning program in cooperation with Shanghai office to improve

the knowledge of the staffs and to improve the HS, environmental and operating;

performance of the plant; This program includes 16 hours of video and cover all aspects of

WtE Operation activity. This program is part of the knowledge transfer program between

US and China.

Improvements on Inventory Management

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A survey has been carried out by professional engineer who has been working in

Quezon. All recommendation stated in the audit report have been implemented.

Strictly conduct monthly coal inventory take.

A new methodology has been implemented to make coal pile calibrations more

accurate and scientific. This improved methodology resulted in a more accurate

estimation of the volume of the coal pile;

Strictly conduct totalizer monthly and quarterly calibration;

The coal inventory is efficiently managed and controlled.

Technical Assistance provided by Covanta Energy since

May 2010

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One senior Covanta Energy consultant came to Taixing for audit and training on the

coal inventory management. He reviewed complete coal handling procedure and

provided guidance to Taixing Management team for a better control coal inventory .

The regional Health and Safety Manager has conducted a one week audit on site on

Health And Safety under the leadership of One senior Covanta Energy Health and

Safety Manager. An action plan has been developed and most of the actions have been

implemented or are under implementation.

The General Manager and the Regional Health and Safety Manager (now based full time

in Taixing) have been trained in one of the Covanta Energy First Class facility in

Philippines. During this training the management team learnt how to develop an

efficient O&M and HSE management system.

Actions Under Implementation

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Anti-corrosion Lining of steel structure of coal barn;

Renovate the insulation of economizer and air pre-heater of boiler 5 & 6;

Install automatic coal sampling machine on coal conveyor;

Repair the bucket elevator for emergency coal loading system;

Maintain the chemical storage tank area;

Increase height of one deminineralized water tank to have larger storage capacity;

Upgrade the on site surveillance system to better monitor the plant operation;

Replace the fire fighting water network;

Implementation of PPE wearing and discipline;

Install more bulletin boards in plant to enhance communication for safety and

operation issues.