On-Lending Agreement on Using German Export Credit - Shanxi Branch of China Construction Bank and Yangcheng International Power Company Ltd.


Information contained herein, marked with [***], is being filed pursuant to a
request for confidential treatment.

                                                Serial Number: CCBSXZD-970001-B









               On-Lending Agreement on Using German Export Credit

                  by Yangcheng International Power Company Ltd.



                                     between



                    Shanxi Branch of China Construction Bank
                                  (the Lender)




                                       and


                   Yangcheng International Power Company Ltd.
                                 (the Borrower)







                                                    /    /1997



                                       1






                                    Contents


Article 1. Definitions

Article 2. Amount and Use of the Loan

Article 3. Preconditions for Using the Loan

Article 4. Withdrawal and Term of Withdrawal

Article 5. Interest on the Loan and Expenses

Article 6. Repayment and Early Prepayment

Article 7. Interest in Arrears

Article 8. Force Majeure

Article 9. Insurance

Article 10. Taxation

Article 11. Guarantee

Article 12. Agreed Matters

Article 13. Events of Default

Article 14. Obligation of the Borrower independent of the 'Commercial Contract'

Article 15. The Lender's Exercise of Rights

Article 16. The Lender's Commitments

Article 17. Assignment and Change of Rights and Obligations

Article 18. Amendment and Supplement

Article 19. Settlement of Disputes

Article 20. Appendices



                                       2



Article 21. Miscellaneous

Article 22. Effectiveness

Article 23. Termination

Article 24. Mode of Notification



                                       3




Appendices:

1.   Accord on the Repayment of Special Fund of Foreign Loan by Yangcheng 
     International Power Company
     Ltd. ('Special Fund Accord')

2.   'The Plan for the Finalization of Capital of Yangcheng International 
     Power Company Ltd.'

3.  'Guarantee for Repayment'

4.  'Schedule for Repayment of Principal with Interest'.

                                       4





               On-Lending Agreement on Using German Export Credit

                  by Yangcheng International Power Company Ltd.





The Borrower: Yangcheng International Power Company Ltd.
Address: No.151, Shuangtasi Street, Taiyuan City, Shanxi Province.

The Lender: Shanxi Branch of China Construciton Bank
Address:  No. 6, Yingzexi Avenue Taiyuan City, Shanxi Province.


         In order to construct Phase I Project of the Shanxi Yangcheng Power
Plant, the Borrower has entrusted China Construction Bank to raise fund
overseas. Authorized by the Head Office of China Construction Bank, the Lender
and the Borrower have, through friendly discussions and in accordance with the
Foreign Financing Agreement executed between the Head Office of China
Construction Bank and the Foreign Lending Bank, reached the following Agreement
concerning the use of the above- mentioned loan:



Article 1: Definitions.

  Except as provided otherwise, in this On-Lending Agreement:

'Project' shall refer to Phase I Project of Shanxi Yangcheng Power Plant.

'Foreign Lending Bank' shall refer to the German KFW Bank.

'Foreign Financing Agreement' shall refer to the Financing Agreement executed
on August 29,1996 between China Construction Bank and German KFW Bank concerning
using the German Export Credit with respect to the Commercial Contract
No.961JBJGB/011022DE US as well as amendments made thereafter.

'Import Agent' shall refer to China Power Technology Import - Export Company.

'Exporter' shall refer to Siemens Company and Foster Wheeler Inc.

                                       5


'Guarantor' shall refer to North China Electric Power Group Corporation, Shanxi
Provincial Power Company, Jiangsu Provincial Power Company, Shanxi Province
Economic Construction and Investment Corporation, Jiangsu Province Investment
Corporation.

'Commercial Contract' shall refer to the No. 961JBJGB/011022DE.US contract
executed on August 22,1996 between China Electric Power Technology Import-Export
Company and German Siemens and US Foster Wheeler Inc.

'The Day for Issuing and Accepting the Certificate' shall refer to the date for
issuing and accepting the Certificate set forth in the Commercial Contract.

'Insurance Institution for Export Credit' shall refer to the Holmes Export
Credit Security Bureau.


'Insurance Premium for Export Credit' shall refer to the Export Credit Insurance
Premium collected by Holmes Export Credit Security Bureau.

'Day' shall refer to the actual number of days including festivals and
holidays.

'Business day' shall refer to a day when both China Construction Bank and the
New York Federal Reserve Bank are open for business.

'Interest Payment Day' shall refer to the Interest Payment Day set forth in
the Foreign Financing Agreement.

'Repayment Day' shall refer to the Repayment Day set forth in the Foreign
Financing Agreement.

'Withdrawal Term' shall refer to the period from the effective date of this
Agreement to the deadline of withdrawal set forth in the Foreign Financing
Agreement.

'Payment of Instruments' shall refer to the Instruments which shall be
submitted when making payment for the Commercial Contract.

'LIBOR' shall refer to the Libor set forth in the Foreign Financing Agreement.

 The headings of Articles hereof are inserted for convenience of reference only
and are not intended to affect the interpretation of this Agreement.


                                       6



Article 2:  Amount and Use of the Loan:

2.1. The total amount of on-lending under this On-lending Agreement shall not
     exceed [***], among which: [***] is for the payment of part of the payable
     under the Commercial Contract; [***] is for the payment of construction
     interest; [***] is for the payment of [***] of the export credit insurance
     premium (the actual incurred fees shall govern.)

2.2. In the event that the actual on-lending amount is less than the on-lending
     amount under this On-lending Agreement, the rights and obligations of the
     Borrower and Lender to the actual on-lending amount shall not be affected.



Article 3: Preconditions for Using the Loan.

The loan under this On-lending Agreement can only be used when all the following
conditions are met:

3.1. Precondition for the initial withdrawal.

3.1.1. The Borrower shall submit the following documents at least 30 days prior
     to the date of initial withdrawal to the Lender and the Lender shall
     confirm the receipt of the following documents:

1)   Duplicate of the Borrower's effective business license issued by
     administration authorities for industry & commerce.
2)   The JV Contract of the Borrower, the Articles of Association of the
     enterprise, approval documents of MOFTEC or other documents having the same
     effect.
3)   The project establishment document approved by the State Planning
     Commission.
4)   The Borrower's letter of authorization authorizing the China Construction
     Bank to raise fund overseas.
5)   The State Planning Commission's approval to the project feasibility study
     report and other relevant documents.
6)   The Borrower's receipt of foreign exchange on-lending loan, registration
     certificate issued by the local Administration of Exchange Control and
     notice for establishment of account for repayment of principal with
     interest of the foreign exchange on-lending loan.
7)   Duplicate of the Commercial Contract.
8)   Duplicate of the Power Purchase Contract.
9)   Duplicate of the Engineering Procurement and Construction Services
     Contract.
10)  Unconditional and irrevocable letter of guarantee for repayment provided by
     the Borrower's guarantor.


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.

                                       7

   
11)  The report for project commencement concerning Yangcheng Power Plant and
     its associated power transmission and substation project approved by
     competent State authorities.
12)  Effective evidence that the Borrower has obtained the valid certificate for
     insurance issued by insurance corporation of China in accordance with
     Article 9 of this Agreement.
13)  The procurement list of the Borrower and other documents deemed necessary
     by the Lender.

3.1.2. The Foreign Financing Agreement has been signed by the parties and has
     become effective.

3.1.3. The Foreign Lending Bank has notified the Lender that the export credit
     insurance has become effective.

3.1.4. The Borrower has opened a foreign exchange on-lending special account and
     a foreign exchange on-lending loan account for the repayment of principal
     with interest in China Construction Bank or its designated branches.

3.1.5. The Borrower has committed no event of default or any action that might
     lead to events of default.

3.2. Preconditions for each withdrawal (including the initial withdrawal)

3.2.1. The Foreign Financing Agreement remains valid.

3.2.2. The capital of the project as well as auxiliary RMB fund shall be
     finalized according to the plan. (Schedule for finalization of capital is
     described in Appendix 2)

3.2.3. The Borrower has paid all the expenses due pursuant to Article 5.2. of
     this Agreement.

3.2.4. Effective evidence that the Borrower has obtained the valid certificate
     for insurance issued by insurance corporation of China in accordance with
     Article 9 of this Agreement.

3.2.5. The procurement of goods which does not follow the procurement list
     approved by the Lender and the Foreign Lending Bank has not occurred.

3.2.6. The Borrower has not committed any event of default or any action leading
     to event of default.


                                       8



3.2.7. No amendment in relation to amount, time and altering the purpose of the
     equipment of the 'Commercial Contract' without the consent of the Lender
     has occurred or no other material amendment has been made without the
     affirmation of the Lender.

3.2.8. The Borrower has reiterated that the guarantee made in this Agreement is
     true, accurate and valid.


3.3. The fact that the Lender has not submitted any written or oral requirement
     to the Borrower to fulfill the articles and clauses set forth in the
     preconditions, or that the Lender has granted the loan to the Borrower
     without the Borrower's satisfaction of the conditions set forth in the
     above mentioned articles and clauses, or that the Lender has given a grace
     period to the Borrower's fulfillment of the preconditions shall not be
     taken for granted that the Lender has waived the right of recourse to the
     Borrower's nonperformance or be interpreted as the Lender's amendment to
     the On-lending Agreement.


Article 4:  Withdrawal and Term of Withdrawal

4.1. The Borrower hereby authorizes the Lender to require the Foreign Lending
     Bank to pay the amount of the Commercial Contract to the export traders
     through the payment agent bank in accordance with the stipulations set
     forth in Foreign Financing Agreement. This authorization is irrevocable and
     shall not be amended without the consent of the Lender.

4.2. Within 5 days after the Lender has signed and accepted relevant instruments
     under the Commercial Contract, the instruments shall be submitted to the
     Import Agent for examination. The Import Agent shall, within 15 days after
     the receipt of the instruments, notify the Lender in written form of its
     comments. The Lender shall take the responsibility to instruct the Foreign
     Lending Bank whether to make such payment.

4.3. The deadline of the withdrawal under this On-lending Agreement shall be
     subject to the date set forth in the Foreign Financing Agreement.

4.4. If the Borrower applies for an extension of the withdrawal term, it shall
     submit a written application to the Lender at least 45 days in advance. The
     Lender shall then communicate with the Foreign Lending Bank, and if the
     Foreign Lending Bank consents to it, the formalities for extending the
     withdrawal for the Borrower may be


                                       9



     processed. If not, the Borrower must make withdrawal on schedule, otherwise
     the unused part shall be automatically canceled.



Article 5. Interest  on the Loan and Expenses.

5.1. Interest.

5.1.1. The annual interest rate of the loan under this Agreement shall be [***].

5.1.2. The Borrower shall pay interest to the Lender once in accordance with the
     balance of the loan on each Interest Payment Day, the interest shall be
     calculated by the actual number of days on the basis of 360 days a year
     (subject to the Foreign Financing Agreement). Detailed interest payment
     plan as well as the method of payment shall be carried out in accordance
     with the 'Schedule for Repayment of Principal with interest' (Appendix 3),
     and 'Special Fund Accord' (Appendix 1).

5.1.3. The capitalization of the insurance premium of the export credit and
     interest incurred in the construction period shall be carried out in
     accordance with the stipulations set forth in the Foreign Financing
     Agreement.

5.1.4. In the event that the last day of the interest period falls on a
     non-business day, the interest period shall be deferred to the next
     business day; in the event that the next business day falls on the next
     calendar month, it shall be advanced to the last business day of the
     current calendar month.

5.2. Expenses:

5.2.1. Commitment fees of the Foreign Lending Bank.

         The annual rate is: [***] starting from August 29,1996 to the deadline
of withdrawal stipulated by the Foreign Lending Bank, the commitment fees shall
be calculated and collected quarterly in US Dollars in accordance with the
actual number of days and the unpaid balance of the loan on the basis of 360
days a year and 30 days a month. It shall be paid by the Borrower to the Foreign
Lending Bank through the Lender in accordance with the Foreign Financing
Agreement.

5.2.2. On-lending fees of the Lender.

       The annual rate is [***] in the grace period and [***] in the repayment
period. It shall be paid by the Borrower to the Lender in accordance with the
balance of the loan. The method of payment shall be identical as that described
in the above mentioned Article 5.1.2.


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.

                                       10



5.2.3. Other expenses incurred under the Foreign Financing Agreement and this
     Agreement, including but not being limited to attorney's fees,
     notarization expenses, travel expenses, expenses for presentation of
     lawsuit agency letter expenses and stamp tax incurred in the preparation of
     this Agreement and other relevant documents, negotiations, signing and
     implementation shall be paid by the Borrower in accordance with the request
     for payment invoice of the other party.

5.3. The interest and expenses as stipulated in the above article, the fees
     collected by foreign organizations and the on-lending fees shall be paid in
     US Dollars cash, while the remainder shall be paid in RMB. The detailed
     method of payment shall be subject to the 'Notice of Payment' submitted by
     the Lender and it shall be paid within 7 days after such notice has been
     received.



Article 6. Repayment and Prepayment.

6.1. Repayment of the loan.

6.1.1. This on-lending loan shall be repaid in US dollars.

6.1.2. The detailed repayment plan of the Borrower shall be subject to the
     'Schedule for Repayment of the Principal with Interest' (Appendix 3).

6.1.3. The detailed method of repayment shall be carried out in accordance with
     the 'Special Fund Accord' (Appendix 1) signed between the Borrower and the
     Lender.

6.1.4. In this Agreement, all the Borrower's payment to the Lender shall be made
     in the following sequence: payment of interest in arrears, expenses,
     interest and principal. If the maturity date of any payable in this
     Agreement is not a business day, it shall be deferred to the following
     business day, the time deferred shall be included in the calculation of
     interest for this period.

6.2. Prepayment

6.2.1. In accordance with this On-lending Agreement, the Borrower can prepay the
     loan after seeking written consent from the Lender in advance, but the
     Borrower shall notify the Lender the amount of prepayment at least 45 days
     in advance. If it is a partial prepayment, the amount of prepayment shall
     be specified.

6.2.2. The prepayment shall begin with the last installment of repayment set
     forth in the 'Schedule of Repayment of Principal with Interest' (Appendix
     3) in reverse order.


                                       11



6.2.3. The prepayment shall be made together with the corresponding interest and
     charges thereof.

6.2.4. If the prepayment requires the approval of relevant departments in
     accordance with the stipulations, the Borrower shall provide the duplicate
     of the relevant approval document to the Lender.

6.2.5. The request of the Borrower for prepayment is irrevocable and the amount
     of the prepayment shall not be reapplied for use.


6.2.6. The compensation fees for the Foreign Lending Bank arising from
     prepayment shall be borne by the Borrower.


Article 7. Interest in Arrears

7.1. If the Borrower fails to repay any maturity payment including principal,
     interest and expenses in accordance with the stipulations in this
     Agreement, the Lender shall calculate and collect interests in arrears with
     respect to the part of payment in arrears starting from the date of payment
     (inclusive) to the date of actual date of payment (inclusive). The interest
     rate shall be the highest of the following:

                                     [***]


7.2. If the overdue exceeds half a year, compound interest shall be accrued.

7.3. The collection of the interest in arrears shall not affect the
     implementation of Article 13 of this Agreement.




Article 8. Force Majeure.

In the event that one of the following happens:

1)   The export credit insurance has not been obtained or the insurance of the
     export credit ceases to be effective.
  
2)   Due to economic crisis or the abrupt change in the financial market, the
     corresponding loan funds can not be raised or the cost of the Foreign
     Lending Bank has increased.


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.

                                       12



3)   Due to international or domestic political legal and taxation reasons, the
     Foreign Lending Bank can not fulfill the obligations of lending set forth
     in the Foreign Financing Agreement.

4)   Due to adjustment and change in state policies, the Lender`s continuance of
     granting loans to the Borrower or of refraining from recovering the loans
     will be illegal or a breach of state policy.

5)   Due to the occurrence of other events of force majeure,


the Lender is entitled to the following:

1)   In accordance with the requirement of the Borrower, and under the
     conditions set forth in the stipulations of the Foreign Financing
     Agreement, the Lender will negotiate with the Foreign Lending Bank and
     handle it in accordance with the result of the negotiations.
  
2)   Declaring the termination of the on-lending loan.

3)   Require the Borrower to repay promptly the principal with the relevant
     interest and fees.


Article 9:  Insurance

9.1. Upon the effectiveness of the Commercial Contract, the Borrower shall
     directly make or cause the contractor for transportation, installation or
     construction to cover insurance for domestic transportation of imported
     goods, installation project, construction project and property all risks in
     a Chinese insurance institution acknowledged by the Lender with respect to
     equipment under such contract in the delivery, construction and repayment
     periods. The Lender shall be considered as the first beneficiary, all the
     insurance coverage shall be linked with each other and allow of no
     suspension in the duration of insurance.

9.2. The Borrower shall transfer all the interests under the insurance policy to
     the Lender pursuant to the stipulation of Article 9.1., the insurance
     benefits shall first be used to repay the principal with interest and
     expenses of the loan . With the written consent of the Lender, such
     insurance benefits can be continuously used in the project construction
     under this Agreement.


                                       13


9.3. The Borrower shall be responsible for renewing the insurance on time before
     the expiration of the insurance policy and the Borrower shall not suspend
     the insurance for whatever reason within the validity of this Agreement.

9.4. If the Borrower fails to fulfill the above mentioned requirements, the
     Borrower shall undertake that in case of any loss to the assets, the
     Borrower shall not refrain from undertaking any of its obligations to the
     Lender for whatever reason.

9.5. The Borrower shall bear the insurance premium incurred by insurance
     coverage.





Article 10. Taxation.
    
     The tax payable by the Lender under the Foreign Financing Agreement shall
be borne by the Borrower. The Lender shall on behalf of the Borrower, submit
application to relevant tax authority for exemption of tax in connection with
the withholding tax on foreign interest income under the Foreign Financing
Agreement. The tax payable under this On-lending Agreement shall be carried out
in accordance with Chinese tax law and relevant stipulations.


Article 11. Guarantee

The Borrower hereby guarantees:

11.1. Upon the effectiveness of this On-lending Agreement, the Borrower shall
     timely, unconditionally and consecutively fulfill the responsibility and
     obligation of repayment of principal with interest as well as other
     obligations set forth in this Agreement without any impact whatever because
     of gain or loss or repayment ability.

11.2. The Borrower is a legal person which is established in accordance with
     Chinese law, existing, and engaging in legal business activities, and is
     entitled to execute and perform this On-lending Agreement. The Borrower has
     completed all necessary legal and administrative formalities for the
     execution and performance of this On-lending Agreement.

11.3. The documents that the Borrower has provided and will provide are true,
     accurate, valid and up-to-date in accordance with the requirements.

11.4. The Borrower's execution and performance of this On-lending Agreement do
     not violate any of the current Chinese laws, rules and regulations, nor do
     they violate any contract or agreement to which the Borrower is a party.


                                       14



11.5. Any contract or agreement which the Borrower executes with a third party
     at present and in the future shall not affect and damage all the interests
     of the Lender under this On-lending Agreement.

11.6. The Borrower is not involved in or will not be involved in any significant
     arbitration or legal process, nor is it subject to any compulsory
     administrative measures taken by any government department. (These
     arbitration or legal process or administrative measures will have
     significantly adverse impact on its finance, operation and management).

11.7. All the assets incurred by the loan under this Agreement shall not be used
     as any other form of mortgage or any form of guaranty during the term of
     performance of this Agreement without the written consent of the Lender.

11.8. At each withdrawal and repayment, the Borrower reiterates that the above
     statement and guarantee remain true, valid and accurate.



Article 12: Agreed Matters

12.1. The distribution principle of repaying loan first and sharing profit
     second shall be carried out in accordance with the plan for repayment of
     principal with interest.

12.2. Any material amendment to the procurement list between the Borrower and
     the Exporter shall obtain written consent from the Lender in advance.

12.3. Any amendment to the Commercial Contract concerning the amount, time,
     change of purpose of the equipment or other material amendment confirmed by
     the Lender, or any transfer of right and obligation under the Commercial
     Contract shall obtain written consent from the Foreign Lending Bank and the
     Lender in advance.

12.4. Without the written consent of the Lender, the Borrower shall not sell,
     rent or transfer any equipment under the Commercial Contract or use these
     equipment aboard.

12.5. In enlarging its scope of business stipulated in the business license
     before the execution of this Agreement, or in enlarging the scope of
     operation and management approved by relevant government authority, or in
     selling, renting and assigning assets under this Agreement or in changing
     its business, the Borrower shall solicit written consent from the Lender
     before submitting it to the administrative department for industry and
     commerce or relevant government authority for approval.

12.6. If the Borrower engages in any form of mortgage, pledge, or guaranty for
     its assets and interests or engages in other actions that may have
     significantly adverse

                                       15


     impact on its assets and interests, it shall notify the Lender in time and
     obtain written consent from the Lender in advance.

12.7. The Borrower shall, at the request of the Lender, provide the Lender all
     relevant information concerning its operation and finance in time, accept
     the supervision from the Lender and provide convenient conditions to the
     Lender for examining the use and repayment of the loan as well as the
     production and operation status of the Borrower.

12.8. The Borrower shall promptly notify the Lender of any adverse change in the
     repayment of loan and operation and financial conditions of the Borrower,
     and put forth its proposal or measure for settlement or handling.

12.9. If it is necessary for the Borrower to take any significant actions such
     as restructuring, reorganization, merger, acquisition, equity transfer,
     equity mortgage or contracting, it shall notify the Lender in advance and
     seek written consent from the Lender in advance.

12.10. The Borrower shall within 30 days at the end of each quarter provide the
     Lender the balance sheet, the profit and loss statement and other financial
     statement for the preceding quarter , and shall provide the Lender within 3
     months at the end of each fiscal year the balance sheet, the profit and
     loss statement and other financial statement as well as other relevant
     information of the preceding fiscal year which have been audited by an
     accounting firm.

12.11. The Borrower shall provide the project schedule report and operation
     status report to the Lender in time at request.

12.12. The Borrower shall run its business steadily and maintain good financial
     status.

12.13. The Borrower shall promptly inform the following to the Lender, if:

1)   Any arbitration or legal action involving the Borrower and this project;

2)   Mandatory measures have been taken by any relevant governmental authority
     against any property of the Borrower;

3)   Any event that seriously hinders and endangers the normal performance of
     the Foreign Financing Agreement and the Commercial Contract;

4)   Other information with respect to the project which is required by the
     Lender.

12.14. Any action taken by the Import Agent shall be considered as having been
     consented and authorized by the Lender in accordance with the Commercial
     Contract or this Agreement and relevant amendments and appendices and shall
     constitute the responsibilities and obligations of the Borrower. If the
     Import Agent or Exporter fails to perform the Commercial Contract or this
     Agreement and its corresponding amendments

                                       16


     as well as the stipulations set forth in the appendices, the Lender shall
     not undertake the corresponding consequences.

12.15. The Borrower shall strictly carry out the stipulations set forth in the
     'Special Fund Accord' (Appendix 1).

12.16. The Borrower must assign all the RMB settlement of accounts and
     import-export settlement of accounts to the Lender or its designated branch
     for handling.

12.17. The Lender holds that the financial status of the Guarantor has
     deteriorated to such an extent as to suspend operation or to go bankrupt or
     to be incapable of performing its obligations under the Guaranty Agreement;
     the Guarantor may be confronted with possible events of liquidation or
     being merged or dissolved and rescinded which may produce adverse impact on
     the interests of the Lender; the Guarantor is involved or will be involved
     in significant arbitration or legal proceedings and debt dispute which will
     affect the implementation of this On-lending Agreement. Once the Lender has
     confirmed the occurrence of the above situation, the Lender is entitled:

12.17.1. To ask the Borrower to find a new guarantor acceptable to the Lender
     within the time-limit (no longer than 45 days) set by the Lender with
     respect to the guaranty obligations undertaken by the above Guarantor.

12.17.2. If the Borrower fails to provide the guarantee acceptable to the Lender
     within the above time-limit, the Borrower is considered to have committed
     events of default as stipulated in Article 13, the Lender may take any
     appropriate action which it is entitled to take in accordance with the
     stipulations set forth in the Articles on Events of Default.

12.18. Any matter not determined in this Agreement but included in the
     stipulations set forth in the Foreign Financing Agreement shall be included
     in the supplementary agreement to this Agreement, the Articles in the
     supplementary agreement shall be determined by the Lender in accordance
     with the Foreign Financing Agreement, and both the Lender and the Borrower
     shall execute and perform.


Article 13. Events of Default

13.1. Any of the following actions or events are considered as the Borrower's
     events of default:

1)   The Borrower fails to repay the principal and pay interest and other
     expenses in accordance with the stipulations set forth in this Agreement.

2)   The Borrower fails to fulfill any obligations under this Agreement and
     other relevant documents.


                                       17



3)   The Borrower's guarantee in this On-lending Agreement and the notification
     or other document made or submitted accordingly is proved to be seriously
     inconsistent with facts or inaccurate or incapable of being performed.

4)   The Lender holds that the financial status of the Borrower has deteriorated
     so gravely that it may cease operation or go bankrupt or be incapable of
     fulfilling this Agreement.

5)   Any agreement, contract or other document related to this Agreement is
     suspended or declared invalid.

6)   The Borrower may be confronted with events of liquidation or being merged
     or dissolved and rescinded which will produce adverse impact on the
     interests of the Lender.

7)   The Borrower fails to repay in time any other debt which it owes to the
     China Construction Bank and the Lender holds that the Borrower's default
     under any other debt agreement will affect the Borrower's repayment of any
     debt under this Agreement.

8)   The Borrower has been involved or shall be involved in any significant
     arbitration or legal proceedings and debt disputes (the Lender holds that
     these arbitration or legal proceedings or debt disputes may produce adverse
     impact on the Borrower's performance of this Agreement.)

9)   The Commercial Contract is totally or partially suspended or canceled, or
     any event which seriously affects the proper performance of the contract
     has occurred.

10)  The Borrower opens an account or handles settlements in a bank which is not
     designated by the Lender.

11)  The tariff approved by the domestic relevant authority is not enough to
     ensure the repayment of principal with interest.

12)  The capital which shall be finalized in accordance with the Plan for the
     Finalization of Capital has not been finalized on schedule and the
     associated RMB fund has not been finalized on schedule.


13.2. In the event that any of the above-mentioned events of default occur, the
     Lender is entitled to take one or several of the following measures:

1)    To notify the Borrower to correct it within a definite time;
2)    To suspend withdrawal promptly;

                                       18


3)   To announce the maturity of all the loan and require immediate repayment of
     all the loan and its corresponding interest and fees;
4)   The Lender may ask the Borrower to compensate for any loss and the
     additional expenses accordingly because of the Borrower's default.



Article 14. Obligation of the Borrower Independent of the Commercial Contract

         Any disputes or other event occurred between the seller and the
purchaser under the Commercial Contract shall not affect any obligation which
shall be undertaken by the Borrower under this On-lending Agreement. The
Borrower shall not for this reason delay in or refrain from performing the
obligation of repaying principal with interest and other fees on schedule.


Article 15. The Lender's Exercise of Rights

        The fact that the Lender has not exercised or has not exercised in time
any obligations under this On-lending Agreement in the course of the
implementation of the Agreement shall not be regarded as a waive of its rights
and shall not affect any obligation which the Borrower shall undertake under law
and this On-lending Agreement.


Article 16. The   Lender's Commitments

16.1. The Lender will provide the Borrower reasonable reserve loan in the
     construction period and circulating fund loan in the operation period.

16.2. The Lender shall conform to the international practice and general
     practice followed by foreign banks to raise funds overseas and strive for
     better condition for loans in accordance with the financing plan accepted
     by the both parties through negotiations.

16.3. The Lender shall conform to the change and trend of the international
     financing market, try its best to provide financing services such as
     restructuring of debt, and try hard to save interest and expenses and to
     reduce the cost of fund for the Borrower.

16.4. If the Borrower applies for an extension of the loan, the Lender will try
     its best to negotiate with the Foreign Lending Bank. If the Foreign Lending
     Bank agrees to the extension, the Lender will handle the extension
     formalities for the Borrower in time.

16.5. If the fund transfer is delayed in withdrawal and repayment on account of
     the Lender's responsibility, the Lender shall undertake the corresponding
     responsibility.

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16.6. The Lender shall keep confidential of all the documents, data and business
     information which are provided by the Borrower and marked with the word
     'Confidential'.


Article 17. Assignment of Rights and Obligations

17.1. The rights and obligations of the Borrower under this On-lending Agreement
     can be assigned only if written consent from the Lender is obtained in
     advance.

17.2. The Lender may in the light of its business or needs, assign its rights
     and obligations under this Agreement totally or partially to a third party
     which it thinks appropriate but it must seek written consent from the
     Borrower in advance pursuant to the Foreign Financing Agreement.


Article 18. Amendment and Supplement

       In case of adjustment in policy or other uncovered matters, this
On-lending Agreement may be amended and supplemented through joint consultations
between both parties pursuant to the Foreign Financing Agreement and on the
precondition on ensuring that the principal, the interest and relevant expenses
of the loan under this On-lending Agreement are paid on schedule. Both the
amendment and the supplement shall constitute an inseparable part of this
On-lending Agreement and have the same effectiveness as this On-lending
Agreement.



Article 19. Settlement of Disputes

         Should there be any dispute between the Lender and the Borrower in the
course of the implementation of this On-lending Agreement, it shall first be
settled through friendly consultation. If no agreement can be reached, any party
may institute legal proceedings at a people's court with jurisdiction in
accordance with the law.


Article 20. Effectiveness of Appendices

         The appendices of this On-lending Agreement constitute an inseparable
part of the On-lending Agreement and have the same effectiveness as this
On-lending Agreement. Appendix 3 may be adjusted and/or supplemented by the
Lender in accordance with the stipulations of the Foreign Financing Agreement or
the corresponding notification of the Foreign Lending Bank.


Article 21. Miscellaneous

                                       20


         If the reform in the state foreign currency control system and changes
in other policies are related to the use and repayment of the foreign exchange
under this Agreement, the Lender shall notify the Borrower on time and amend
relevant articles of this Agreement in accordance with the stipulations of the
state.


Article 22. Effectiveness

22.1. This On-lending Agreement becomes effective on the day when all of the
     following conditions are satisfied and in accordance with the notification
     of the Lender.

1)   The execution of this Loan Agreement.
2)   The execution of the Foreign Financing Agreement.
  
22.2. This On-lending Agreement is prepared in two original copies, each party
     shall keep one while duplicates will be delivered to the relevant parties.


Article 23. Termination

         This On-lending Agreement ceases to be effective automatically on the
day when all the principal, interest and other corresponding expenses under this
Agreement have been paid by the Borrower.


Article 24. Mode of Notification

         The correspondence documents in the course of the performance of this
Agreement shall be delivered accurately by the Lender and the Borrower to the
following addresses.(If there is any change, the other Party shall be notified
in time):

The Lender:
Address:  No. 9, Taoyuan North Road, Taiyuan City, Shanxi Province
Name:  International Business Department of Shanxi Branch
       of China Construction Bank
Tel:  0351-4031672/4031685
Fax:  0351-4031683
Zip Code:  030002

The Borrower:
Address:
Name:  Yangcheng International Power Company Ltd.
Tel:
Fax:
Zip Code:

If notified by fax, the original must be mailed by registered courier service
immediately after the fax is sent. If it is mailed by registered courier
service, the date of mail shall govern.


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Borrower:                                      Lender:
Yangcheng International Power Shanxi           Branch of China
Company Ltd.                                   Construction Bank


(Seal):                                        (Seal):


Signature of Authorized                        Signature of Authorized
Representative:                                Representative:


Place of Execution:                            Place of Execution:


Date of Execution:                             Date of Execution:





                                       22






Appendix I.

      Accord on the Repayment of Special Fund of Foreign Loan by Yangcheng
                        International Power Company Ltd.

         In order to construct Phase I Project of the Shanxi Yangcheng Power
Plant, the Shanxi Branch of China Construction Bank ('the Lender') and
Yangcheng International Power Company Ltd. ('the Borrower') have executed this
On-lending Agreement at a total amount not exceeding [***]. To ensure the
use, the repayment of the principal with interest and the payment of relevant
expenses of the Foreign Exchange Loan under the above-mentioned On-lending
Agreement, the Lender and the Borrower have reached the following agreement
through friendly consultations:


Article One. Establishment of the Relevant Account of Special Fund and Its
Purpose

         The Borrower applies for establishment of the following accounts within
10 days upon the effectiveness of this On-lending Agreement:

1.   The Borrower applies to the Administration of Exchange Control for opening
     the 'Special Account for the Foreign Exchange On-lending Loan' and the
     'Account for Repayment of Principal with Interest of Foreign Exchange
     On-lending Loan' in the Lender's International Business Department .

2.   The Borrower shall open a RMB fund special account in an institution
     designated by the Lender which shall be used to deposit RMB funds with
     respect to foreign exchange settlement and relevant expenses incurred under
     the On-lending Agreement.


Article Two.  Sources of the Fund of the Special Account


         In order to ensure the timely performance of the foreign payment, the
Borrower shall reserve the following funds in accordance with the following
sequence as the sources for repayment. (If there is any change in the
accounting system of the State, both parties may make corresponding adjustment
pursuant to a new accounting system):


[***] Filed separately with the Commission pursuant to a request for
confidential treatment.

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1.   The depreciation fund of fixed assets which will be withdrawn by Phase I
     Project of the Yangcheng Power Company Ltd. in accordance with relevant
     stipulations.

2.   The profit which may be used for repayment by Phase I Project of the
     Yangcheng Power Plant in accordance with the relevant stipulations.

3.   Foreign exchange income of Phase I Project of the Yangcheng Power Plant.

4.   Overall benefits of the Borrower and other income and ownership interests
     which can be used for repayment.

5.   The exempted or refunded taxes which may be used for repayment after it has
     been submitted to relevant authorities for approval.

6.   Other legal fund sources.


Article 3. Use of the Account

1.   The Borrower shall, in accordance with the 'Schedule for Repayment of
     Principal with Interest' or the notification of the Lender and from the day
     the first unit is put into operation to within 30 days of the Payment Day,
     deposit the required funds pro rata (the specific proportion shall be
     determined through consultations between both parties on a monthly basis in
     the Special Account for the Foreign Exchange On-lending and Account for the
     Repayment of Principal with Interest of Foreign Exchange On-lending which
     are opened at the Lender's Bank by the Borrower.

2.   The depreciation funds of fixed assets which are withdrawn in accordance
     with the stipulations for imported equipment of Phase I Project of
     Yangcheng Power Plant must be deposited in the Borrower's RMB Special
     Account which is opened at the Lender's designated institution.

3.   The RMB settlement must be handled in the designated institution of the
     Lender after Phase I Project of Yangcheng Power Plant is put into
     operation.

4.   After Phase I Project of Yangcheng Power Plant is put into operation, the
     settlement of the foreign exchange shall be handled in the International
     Business Department of the Lender, the foreign exchange earnings for
     ensuring the repayment shall promptly be deposited in the Account for the
     Repayment of Principal with Interest of Foreign Exchange On-lending.

5.   The Borrower shall repay the principal with interest of the matured foreign
     exchange loan with the kind of currency stipulated in the loan agreement.
     If the Borrower makes repayment with the kind of currency agreed to by the
     Lender, the Lender shall act as an intermediary in foreign exchange trading
     in accordance with the current


                                       24


     exchange rate, the risk of the foreign exchange rate shall be undertaken by
     the Borrower.

6.   The Lender shall, on the basis of the balance of the funds in the Special
     Account of the Borrower, pay interest in accordance with the stipulations.



Article 4. Management of the Special Funds

1.   The Borrower shall, in accordance with the stipulations of this Accord,
     deposit the foreign exchange and RMB funds used for foreign payments in the
     above mentioned account in time. In the event that the Borrower has not
     deposited the above mentioned funds in the designated account within 7
     business days of the bank before making foreign payment, the Lender is
     entitled to handle the formalities for direct transfer.

2.   Without prior written consent from the Lender, the Borrower shall not
     within the term of repayment handle the settlement of RMB set forth in
     Article 3.3. and the settlement of import-export set forth in Article 3.4
     in any bank which is not the Lender's Bank.

3.   The Borrower shall deposit in time a full amount in the 'Account for the
     Repayment of Principal with Interest of Foreign Exchange On-lending' and be
     ready for payment in foreign exchange. The payable funds that are not paid
     because of the Borrower's insufficient funds shall without exception be
     considered as overdue. The Lender will collect the interest in arrears with
     respect to the funds in arrears and in accordance with the stipulations set
     forth in this On-lending Agreement.

4.   While making foreign payment, with respect to the balance due of the
     arrears of the aggregate payment resulting from exchange rate changes
     because of engaging in foreign exchange trading, the Lender may temporarily
     make the advance first and then deduct the advance in the next foreign
     payment together with the accrued interest in accordance with the
     stipulated corresponding loan interest rate. With respect to the balance of
     the fund in the 'Special Account of Payment of Foreign Exchange', interests
     will be paid by the Lender in accordance with the stipulations of the China
     Construction Bank.

5.   The bank charges incurred in settlement and sales of foreign exchange and
     in foreign exchange trading and international settlement as well as other
     relevant expenses under this On-lending Agreement shall all be borne by the
     Borrower.

6.   Should there be any adjustment in the state policy, this Accord shall be
     amended through consultation between the Borrower and the Lender under the
     precondition that the principal and interest of the loan under the
     above-mentioned On-lending Agreement as well as other relevant expenses are
     paid on schedule.


                                       25


7.   This Accord shall constitute Appendix I to the above-mentioned On-lending
     Agreement.

Yangcheng International Power Company Ltd.
(Official Seal):
Authorized Representative:


Shanxi Branch of China Construction Bank
(Official  Seal):
Authorized Representative:


Date of Signature:


                                       26




Appendix II.


'The Plan for the Finalization of Capital of Yangcheng International
Power Company Ltd.'


                                       27




Appendix III.

'Schedule for Repayment of Principal with Interest'

(Executed in accordance with the Schedule for Repayment of Principal with
Interest provided by the foreign banks)



                                       28