On-Lending Agreement - Shanxi Branch of the China Construction Bank and Yangcheng International Power Co. Ltd.


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

                              ON-LENDING AGREEMENT

                                 by and between

                  Shanxi Branch of the China Construction Bank
                                  (the Lender)

                                       and

                   Yangcheng International Power Company Ltd.
                                 (the Borrower)







                                     , 1997


                                       




                                Table of Contents

         Article 1         Definition

         Article 2         Amount and Purpose of the Loan

         Article 3         Preconditions for Using the Loan

         Article 4         Use of the Loan

         Article 5         Interest and Fees of the Loan

         Article 6         Repayment

         Article 7         Overdue Interest

         Article 8         Change in Situation

         Article 9         Insurance

         Article 10        Tax

         Article 11        Guarantee

         Article 12        Promises

         Article 13        Events of Default

         Article 14        The Lender's Exercise of Rights

         Article 15        Assignment of the Rights and Obligations of the
                           Lender and the Borrower

         Article 16        Amendment and Supplement

         Article 17        Dispute Resolution

         Article 18        Effectiveness of the Annexes

         Article 19        Miscellaneous

         Article 20        Effectiveness

         Article 21        Modes of Notification


                                       2



Annexes:

     1. 'Regarding the Accord on the Repayment of Special-purpose Funds of the
        On-lending Loan for Issuance of Bonds Overseas' by the Yangcheng
        International Power Company Ltd. (hereinafter referred to as 'the Accord
        on Special-purpose Funds')

     2. Letter of Guaranty for Repayment

     3. 'Schedule on the Repayment of Special-purpose Funds of the On-lending
        Loan for Issuance of Bonds Overseas' by the Yangcheng International
        Power Company Ltd. (hereinafter referred to as 'the Schedule for
        Repayment of Principal with Interest')



                                       3






                              ON-LENDING AGREEMENT

         Borrower:  Yangcheng International Power Company Ltd.

         Address:   No. 15, Shuangtashi Street, Taiyuan City, Shanxi Province

         Lender:    Shanxi Branch of  China Construction Bank

         Address:   No. 6, Yingze Street (west), Taiyuan City, Shanxi Province


         In order to construct the Shanxi Yangcheng Power Plant project, the
Borrower entrusts the China Construction Bank to raise funds overseas. In
accordance with the entrustment of the Borrower and with the approval of the
State Planning Commission, the State Administration of Exchange Control and the
State Administration of Taxation, the China Construction Bank signed in Hong
Kong on April 4, 1997 a relevant agreement with overseas financial institutions
on the issuance of [***] bonds.

         With the authorization of the Head Office of the China Construction
Bank, the Lender and the Borrower have, through friendly consultations, reached
the following agreement in connection with the [***] of the funds raised through
the issuance of the above-mentioned bonds:

         Article 1   Definition

         Unless otherwise specifically stipulated, in this On-lending Agreement:

         'Offering Circular' shall mean the circular issued on April 4, 1997.

         'Terms of Bonds' shall mean the terms as recorded in the bonds.

         'Lender' shall mean the Shanxi Branch of the China Construction Bank.

         'Borrower' shall mean the Yangcheng International Power Company Ltd.

         'Guarantor' shall mean the legal entity which issues guaranty for the
repayment of principal, interest and relevant fees under this On-lending
Agreement, namely the North China Electric Power Group Corporation, Jiangsu
Provincial International Trust and Investment Company, Shanxi Energy Enterprise
(Group) Company, Shanxi Provincial Power Company and Jiangsu Provincial Power
Company.


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

                                       4


         'Issuer' shall mean the China Construction Bank.

         'Fiscal Agent' shall mean the Chase Manhattan Bank, London Branch or
its successor the Chase Manhattan Bank, Hong Kong Branch.

         'Managing Agents' shall mean

         1)  Bayerische Landesbank Girozentral, Hong Kong Branch;
         2)  Daiwa Securities (H.K.) Ltd.
         3)  The Development Bank of Singapore Ltd.
         4)  Merrill Lynch Far East Limited
         5)  Sakura Finance Asia Limited

          'Fiscal Agency Agreement' shall mean the Fiscal Agency Agreement
executed on April 4, 1997 by and between the Issuer and the Fiscal Agents.

         'Subscription Agreement' shall mean the Bonds Subscription Agreement
executed on April 4, 1997 by and between the Issuer and the Managing Agents.

         'Bonds' shall mean, pursuant to the Fiscal Agency Agreement, the
issuance of a total amount of [***] bonds at US$ floating interest rate with a
term of five years.

         'Net Proceeds from Bonds' shall mean an amount of [***] million
which is the balance from the total proceeds from the issuance of bonds minus
the total commission for the issuance of bonds and other expenses.

         'External Agreements' shall mean in general the Fiscal Agency
Agreement, the Subscription Agreement, the Offering Circular and the Terms of
Bonds.

         'Business Day' shall mean a day when the China Construction Bank and
the commercial banks of Hong Kong, New York and London are open for business.

         'Maturity Date of Bonds' shall mean the interest payment day of April
11, 2002 on which the Issuer shall accept the request for honor on the part of
bondholders.

         'Interest Payment Day' shall mean April 11 and October 11 of each year
from the issuance of bonds on April 11, 1997 to the Maturity Date of Bonds
(inclusive), if such day falls on a non-business day, it shall be adjusted
pursuant to Article 5.1.3 of this Agreement, but the date as notified by the
Lender shall prevail in the end.

         'Interest Period' shall mean the period beginning from an Interest
Payment Day (inclusive) to the next Interest Payment Day (non-inclusive), but
the first Interest Period shall begin in 1997.

         'Interest Rate of Overseas Fund-raising' shall mean the six-month [***]
as stipulated in the External Agreements.


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

                                       5



         'On-lending Fee Rate' shall mean the rate of on-lending fees under this
Agreement whose annual rate is %.

         'Issuance Underwriting Fee' shall mean the commission charges collected
by the underwriting banking syndicate from the Issuer for underwriting bonds.

         'Determination Date for Interest Rate' shall mean the date for
determining the US$ floating interest rate as stipulated in the External
Agreements.

         'LIBOR' shall mean the LIBOR US$ floating interest rate as referred to
in the External Agreements.

         Clause headings in this Agreement are inserted for convenience only and
shall be ignored in construing this Agreement.

         Article 2   Amount and Purpose of the Loan

         2.1  The on-lending loan under this On-lending Agreement is a part of
              the total [***] which are issued by the Issuer
              pursuant to the trust of the Borrower, the amount of the Loan
              being [***].

         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  To provide at least 30 days prior to drawing money and subject to
              the confirmation of the Lender the receipt of the following
              documents:

               (1) A photo copy of the Borrower's effective business license
                   issued by the authority for industry and commerce;

               (2) A copy of the latest articles of association of the
                   Borrower's  enterprise or other document with equal
                   effectiveness;

               (3) A copy of the SPC's approval document to the proposal for the
                   construction project of the Borrower;

               (4) The Borrower's letter of authorization authorizing the China
                   Construction Bank to raise funds overseas;

               (5) A copy of the approval document of relevant governmental
                   authority which has listed the project in the State or
                   provincial plan;

               (6) The foreign exchange (on-lending) loan registration and the
                   notice for the opening of the account for repayment of
                   investment with


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

                                       6


                   interest of foreign exchange (on-lending) loan which are
                   issued by the local administration of exchange control have
                   been obtained by the Borrower;

               (7) The unconditional, irrevocable and payment-upon-demand letter
                   of guaranty for repayment provided by the Borrower's
                   Guarantor pursuant to the form and content in Annex 2;

               (8) Effective evidence that the Borrower has covered insurance
                   with a Chinese insurance company in accordance with the
                   stipulations of this Agreement;

               (9) The report for project commencement approved by a competent
                   authority of the State;

               (10) The Borrower has obtained the foreign debt registration
                   issued by the local administration of foreign exchange;

               (11) The signature book and specimen official seal (signature) of
                   the authorized signatory of the Borrower;

               (12) Other documents deemed necessary by the Lender.

         3.2   The letter of guaranty for repayment issued by the Guarantor
               pursuant to the form and content in Annex 2 has become effective.

         3.3   The Borrower has paid all the fees due pursuant to Article 5.2.1
               and Article 5.2.2 of this Agreement at the request of the Lender.

         3.4   The Borrower has committed no act of default as described in
               Article 13 or any act that might lead to default.

         3.5   The Guarantor has not violated any obligation stipulated in the
               letter of guaranty for repayment.

         3.6   The Borrower reaffirms that the guaranty which it makes in this
               Agreement is true, accurate and effective.

         Article 4   Use of the Loan

         The Lender will credit the loan under this Agreement to the account
which the Borrower has opened in the Lender's bank on April 11, 1997, namely the
date when the funds collected from the issuance of bonds have been credited to
the Lender's account. Regardless of when the Borrower will use the loan, the
interest on the loan under this On-lending Agreement shall be accrued from April
11, 1997.

         Article 5   Interest and Fees of the Loan


                                       7



         5.1     Interest

         5.1.1   The Borrower shall pay interest on time pursuant to the
                 interest rate of the loan which under this Agreement is the sum
                 of the interest rate for overseas fund-raising and the rate of
                 on-lending fee, namely the sum of the six months [***]
                 after the Determination Date of Interest Rate and the rate
                 of on-lending fee [***]. The specific interest rate as notified
                 to the Borrower by the Lender shall govern.

         5.1.2   The Borrower shall pay interest to the Lender at each
                 corresponding Interest Payment Day on the basis of the balance
                 on the loan. The interest shall be calculated by the actual
                 number of days on the basis of 360 days a year. The specific
                 interest payment schedule and method of payment shall be
                 carried out in accordance with the 'Schedule on Repayment of
                 Investment with Interest' (Annex 3) and the 'Accord on
                 Special-purpose Funds' (Annex 1) respectively.

         5.1.3   If the Interest Payment Day falls on a non-business day, the
                 next business day shall be taken as the Interest Payment Day
                 pursuant to the stipulation on Business Day in the External
                 Agreements; if the next business day falls on another calendar
                 month, it shall be advanced to the last business day of the
                 current calendar month, but the date as notified by the Lender
                 shall govern in the end.

         5.2     Fees

         5.2.1   The fees (including issuance underwriting fee, issuance
                 miscellaneous expenses and financial agency fee) totaling
                 [***] (the Issuer's overseas attorney fees which are
                 not included hereto shall be decided by the Lender in a
                 specific notice) under the Fiscal Agency Agreement and the
                 Subscription Agreement which are collected from the Issuer by
                 the Fiscal Agent and the Managing Agents shall be deducted
                 directly from the loan by the Lender.

         5.2.2   The corresponding fees (including but not being limited to
                 attorney fees, travel expenses and contractual fees) incurred
                 by the Lenders in arranging the on-lending loan shall all be
                 borne by the Borrower.

         5.3     The interest and fees as stipulated in the above articles with
                 the exception of Article 5.2.2 shall all be paid in US Dollar
                 cash while the fees as described in Article 5.2.2 shall be paid
                 in US Dollar cash or RMB at the request of the Lender and the
                 specific method of payment shall be carried out in accordance
                 with the 'Payment Notice' delivered by the Lender.

         5.4     All the payments made by the Borrower to the Lender under this
                 Agreement shall be executed in the precedence of payments of
                 expenses, overdue payment, interest and principal.


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

                                       8


         5.5     If the maturity date of any payable under this Agreement falls
                 on a non-business day, it shall be postponed to the next
                 business day; if the next business day falls on another
                 calendar month, it shall be advanced to the last business day
                 of the current calendar month, but the date as notified by the
                 Lender shall govern in the end.

         Article 6   Repayment

         6.1     The date of repayment for the Loan under this Agreement is the
                 Maturity Date of Bonds, namely the Interest Payment Date on
                 April 11, 2002, but the occurrence of an event of default as
                 stipulated in Article 13 of this On-lending Agreement is an
                 exception.

         6.2     The loan principal totaling [***] under this
                 Agreement shall be repaid in lump-sum US Dollar cash.

         6.3     The 'Schedule on the Repayment of Investment with Interest'
                 (Annex 3) provided by the Lenders shall govern the specific
                 repayment schedule.

         6.4     The specific method of repayment shall be carried out in
                 accordance with the 'Accord on Special-purpose Funds' (Annex 1)
                 executed by and between the Borrower and the Lender.

         Article 7   Overdue Interest

         7.1     If the Borrower fails to repay any sum (including principal,
                 interest and fees) due pursuant to the stipulations of this
                 Agreement, the Lender will accrue overdue interest from the
                 Borrower in relation to the overdue amount from the accrual
                 date (including such date) to the actual payment day (including
                 such day), the overdue interest will be the higher of the
                 following:

                 (1)  1.3 times as much as the Lender's cash loan interest rate
                      in the same period;
                 (2)  The loan interest rate (the sum of the overseas
                      fund-raising interest rate and the rate of on-lending fee)
                      under this Agreement [***].

         7.2     If the overdue exceeds one interest period, a compound interest
                 shall be accrued on the overdue sum.

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

         Article 8   Change in Situation

         If due to changes in factors such as domestic and foreign laws and
decrees and market conditions which hinder the performance of the External
Agreements or lead


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

                                       9


to bondholder's demand for redeeming its bonds in advance, the Lender may take
corresponding measures pursuant to the External Agreements, including the demand
for the Borrower's prepayment.

         Article 9   Insurance

         9.1     The Borrower shall cover full insurance for the assets incurred
                 by this Loan or the assets incurred by the original external
                 debt funds which are replaced by utilizing this Loan, and
                 shall, in respect of imported equipment, cover imported
                 commodity domestic transportation insurance, installment
                 insurance, construction project insurance, property insurance
                 and other necessary insurance with a Chinese insurance
                 institution in connection with the equipment under such
                 Agreement in the delivery, construction and repayment periods.
                 All the insurance coverages shall dovetail and allow of no
                 suspension in the duration of insurance and the insurance
                 amount shall not be lower than the sum of principal and
                 interest of the loan under this Agreement.

         9.2     The insurance proceeds shall first be used to repay the
                 investment and interest of the Loan and its fees, but such
                 insurance proceeds may continue to be used for purposes
                 stipulated in this Agreement with the written consent of the
                 Lender.

         9.3     The Borrower shall renew in time the insurance policy prior to
                 its expiration. During the effective period of this Agreement,
                 the Borrower shall not suspend the insurance for whatever
                 reason. If the Borrower suspends the insurance, the Lender has
                 the right to cover the insurance on its behalf and the
                 insurance premium shall be paid by the Borrower within ten days
                 after having received the Lender's notice with the overdue
                 interest to be accrued for the overdue in accordance with
                 Article 7 of this Agreement.

         9.4     The insurance premium incurred for insurance under this Article
                 shall be borne by the Borrower.

         Article 10   Tax

         10.1    The tax which the Issuer pays and/or will pay under the
                 External Agreements shall all be borne by the Borrower in
                 accordance with the proportion of its on-lending loan in the
                 funds collected through issuance of bonds.

         10.2    The tax payable under this Agreement shall be carried out in
                 accordance with Chinese tax laws and relevant regulations, and
                 the Borrower shall submit relevant tax payment receipt to the
                 Lender at the Lender's request.

         Article 11   Guarantee


                                       10


         The Borrower hereby guarantees that:

         11.1    since the effectiveness of this On-lending Agreement it will,
                 pursuant to the stipulations of this Agreement, perform
                 unconditionally and consecutively all its responsibilities and
                 obligations of repaying the principal with interest under this
                 Agreement and other obligations as stipulated in this Agreement
                 without being affected in any way because of its loss incurred
                 or its ability or inability of repayment;

         11.2    the Borrower is a legal entity or institution which is
                 established, exists and engages in legal business activities in
                 accordance with the laws of China, is entitled to execute and
                 perform this Agreement, and has completed all necessary legal
                 and administrative procedures in executing and performing this
                 On-lending Agreement;

         11.3    all the documents which the Borrower has provided and will
                 provide to the Lender are true, accurate, effective and latest
                 as required;

         11.4    the Borrower's execution and performance of this Agreement does
                 not violate any of the current Chinese laws, regulations and
                 rules nor does it violate any contract or agreement to which
                 the Borrower is a party;

         11.5    the Borrower has covered full insurance in connection with the
                 assets incurred by external debt funds which are obtained
                 through utilizing this Loan and that it has, in respect of
                 imported equipment, covered imported commodity domestic
                 transportation insurance, installment insurance, construction
                 project insurance, property insurance and other necessary
                 insurance with a Chinese insurance institution in connection
                 with the equipment under such contract in the delivery,
                 construction and repayment periods;

         11.6    any agreement which the Borrower enters into or shall enter
                 into with a third party shall not affect or harm all the
                 interests which the Lender enjoys under this Agreement;

         11.7    the Borrower, the Borrower's assets and the Borrower's officers
                 are not involved or will not be involved in any significant
                 arbitration or legal proceedings, nor are they subject to
                 mandatory administrative measure of any governmental authority
                 (these arbitration, or legal proceedings, or administrative
                 measures will produce significant adverse impact on its
                 finance, operation and management);

         11.8    all the assets incurred by external debt funds under this
                 Agreement shall not be used as any other form of mortgage or
                 any form of guaranty during the term of execution of this
                 Agreement without the written consent of the Lender;


                                       11


         11.9    the Borrower reaffirms at each withdrawal and repayment that
                 the above-mentioned representation and guaranty remain true,
                 effective and accurate.

         Article 12   Promises

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

         12.2    If the Borrower extends the business scope as stipulated in its
                 business license or the scope of business and management as
                 approved by relevant governmental authority, or assigns any of
                 its assets or changes its business, it must seek written
                 consent from the Lender before submitting it to the
                 administrative authority for industry and commerce or relevant
                 governmental authority for approval;

         12.3    If the Borrower engages in any form of mortgage, pledge or
                 guaranty for its assets and interests, it must inform the
                 Lender and seek written consent from the Lender in advance;

         12.4    The Borrower must, at the request of the Lender, provide all
                 the information materials in time in connection with its
                 business and finance to the Lender, accept the Lender's
                 supervision and provide convenient conditions to the Lender in
                 inspecting the use and repayment of the loan and the production
                 and operation status of the Borrower;

         12.5    If any adverse change on the part of the Borrower has occurred
                 or will occur which will affect its repayment capability or its
                 operation and financial status, the Board of Directors must
                 make a decision thereto or the Borrower must inform the Lender
                 within ten days of the occurrence of the above instance and put
                 forth its proposal or measure for settlement or handling;

         12.6    If the Borrower requires to take any significant action such as
                 restructuring, reorganization, merger, acquisition, equity
                 transfer or equity mortgage, it shall inform the Lender in
                 advance and seek written consent from the Lender in advance;

         12.7    The Borrower must within thirty days at the end of each quarter
                 provide the financial statement, profit and loss statement and
                 other financial reports for the preceding quarter to the
                 Lender, and must within three months at the end of each
                 financial year provide the financial statement, profit and loss
                 statement, other financial reports and relevant information for
                 the preceding year which are audited by an accounting firm to
                 the Lender;

         12.8    The Borrower must run its business steadily and maintain good
                 financial status;


                                       12


         12.9    The Borrower shall inform immediately the following matters to
                 the Lender:

                 (1)  Any arbitration or legal action in relation to the
                      Borrower or this project;
                 (2)  Mandatory measure has been taken by any relevant
                      governmental authority against any property of the
                      Borrower;
                 (3)  Other information in connection with the project which is
                      required by the Lender.

         12.10   The Borrower hereby acknowledges as follows:

         1.      The funds which are collected through this issuance of the
                 bonds are partly aimed at raising funds for the Borrower, and
                 the China Construction Bank, for the sole benefit of the
                 Borrower, has as far as possible obtained the most favorable
                 conditions and terms in signing the External Agreements with
                 relevant parties at the request of the Borrower;

         2.      The Borrower commits that regardless of whether the Borrower
                 uses the loan pursuant to this Agreement, the Borrower will:

                 (1)  bear the expenses and risks which shall be borne by the
                      Borrower and which are incurred in the course of execution
                      and performance of the External Agreements in connection
                      with this loan and pursuant to the stipulation of this
                      Agreement, and will, pursuant to the notification of
                      the Lender, compensate in full the Issuer and the Lender
                      for any expense and loss sustained because of the External
                      Agreements and related to this loan;
                 (2)  the calculation of the loan interest under this Agreement
                      shall start from April 11, 1997 in accordance with
                      relevant stipulation on interest calculation in the
                      External Agreements;

         3.      The Borrower commits that in compensating the Lender's loss or
                 in notifying the Lender to make prepayment pursuant to relevant
                 terms of this Agreement, the Borrower, after having received
                 the above notification, must immediately repay the loan
                 pursuant to the requirement of the notification, meanwhile, the
                 Borrower irrevocably authorizes the Lender to make direct
                 deduction, transfer and use in case of compensating for the
                 loss of the Lender or notifying the Borrower to make prepayment
                 pursuant to relevant terms of this Agreement;

         4.      Unless the records are wrong, otherwise the records of the
                 Lender shall govern in respect of the debt records of the loan
                 under this Agreement.

         12.11   The Borrower must strictly carry out the stipulations of the
                 'Accord on Special-purpose Funds' (Annex 1);


                                       13


         12.12   The Borrower guarantees that the repayment of the loan under
                 this Agreement is not subordinate to any other debt of the
                 Borrower;

         12.13   The Lender is entitled to exercise supervision and examination
                 over the Borrower pursuant to the stipulation of this
                 Agreement;

         12.14   The Borrower must deliver all the RMB settlement of accounts
                 and the import-export settlement of accounts to the Lender or
                 their designated branch for handling;

         12.15   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; that the Guarantor 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; and that 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 confirms the occurrence
                 of the above situation, the Lender is entitled:

                   (1) to demand that the Borrower shall, in connection with the
                       above-mentioned guaranty obligations undertaken by the
                       Guarantor, find a new guarantor acceptable to the Lender
                       within the time-limit (no longer than 45 days) set by the
                       Lender;
                   (2) if the Borrower fails to provide the guaranty acceptable
                       to the Lender within the above time-limit, the Borrower
                       is regarded as having committed an event of default as
                       stipulated in Article 13, the Lender may take any
                       appropriate action which it is entitled to take pursuant
                       to the terms of the event of default;

         12.16   Any undetermined matters in this Agreement, if being stipulated
                 in the External Agreements, will be included in the
                 supplementary agreement to this Agreement, the terms in the
                 supplementary agreement will be determined by the Lender
                 pursuant to the External Agreements and both the Lender and the
                 Borrower shall execute and perform.

         12.17   In order to meet the need of the Borrower for paying the
                 principal and interest for the issuance of bonds, the Lender
                 will, on the basis of the foreign debt quotas acquired by the
                 Borrower, raise funds for the Borrower pursuant to relevant
                 stipulations for such foreign debt quotas, so as to enable the
                 Borrower to repay the principal and pay the interest and
                 relevant fees of the on-lending loan under this On-lending
                 Agreement.

              Article 13   Events of Default


                                       14



         13.1    Any of the following acts or events shall constitute the
                 Borrower's event of default:

                 (1)  The Borrower fails to repay principal and pay interest
                      and other fees pursuant to the stipulations of this
                      On-lending Agreement;
                 (2)  The Borrower fails to perform any obligation which it
                      shall undertake pursuant to the stipulations of this
                      On-lending Agreement and relevant documents;
                 (3)  The Borrower's guaranty in this On-lending Agreement and
                      the notification or other document made or delivered
                      therefrom are proved to be significantly inconsistent with
                      facts or inaccurate or incapable of performance;
                 (4)  The Lender holds that the fact that the Borrower has made
                      guaranty, mortgage and pledge in connection with its
                      assets and interests has gravely affected its performance
                      of all the obligations under this Agreement;
                 (5)  The Lender holds that the financial status of the
                      Borrower and the Guarantor has deteriorated so gravely
                      that they may suspend operation or go bankrupt or not be
                      able to perform their obligations under this Agreement;
                 (6)  Any agreement, contract or document related to this
                      On-lending Agreement is suspended for implementation or
                      declared invalid;
                  (7) The Borrower has been or will be confronted with events
                      of liquidation or being merged or dissolved and rescinded
                      which will produce adverse impact on the interests of the
                      Lender;
                  (8) The Borrower fails to repay in time any other debt which
                      it owes the China Construction Bank and the Lender holds
                      that the Borrower's default in any other debt agreement
                      will affect the Borrower's repayment of any debt under
                      this Agreement;
                  (9) The Borrower, the Borrower's assets or the Borrower's
                      officers have been involved or shall be involved in any
                      significant arbitration or legal proceedings and debt
                      dispute (the Lender holds that these arbitration or legal
                      proceedings or debt dispute may produce adverse impact on
                      the Borrower's performance of this Agreement), however, if
                      the Borrower's officers are involved or shall be involved
                      in any significant arbitration or legal proceedings and
                      debt dispute which are merely individual actions unrelated
                      to their titles, then such actions shall not constitute
                      the Borrower's default;
                  (10) The Borrower arbitrarily embezzles any portion of the
                      loan under this Agreement;
                  (11) The Borrower opens an account or handles settlement in a
                      bank which is not designated by the Lender;
                  (12) The Guarantor violates any obligation stipulated in the
                       letter of guaranty; 

         13.2   In case any of the above-mentioned events of default occurs,
                 the Lender is entitled to take one or several of the following
                 measures:


                                       15


                  (1) to correct  within a definite time in accordance with
                      the notification of the Lender;
                  (2) to suspend withdrawal immediately;
                  (3) to declare 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 therefrom because of the
                      Borrower's default.

         Article 14   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 this Agreement shall not be regarded as its waiver of rights
and shall not affect any obligation which the Borrower shall undertake under law
and this On-lending Agreement.

         Article 15   Assignment of the Rights and Obligations of the Lender and
                      the Borrower

         15.1    The rights and obligations of the Lender under this On-lending
                 Agreement may be legally assigned.

         15.2    The assignment of the rights and obligations of the Borrower
                 under this On-lending Agreement can be executed only after
                 seeking written consent from the Lender in advance.

         Article 16   Amendment and Supplement

         If there is adjustment in relevant policy of the State or other
uncovered matters in this On-lending Agreement, it may be jointly consulted,
amended and supplemented by both parties in accordance with the stipulations of
the External Agreements on the prerequisite of ensuring non-violation of the
External Agreements and timely repayment of investment and payment of interest
and relevant fees and of not harming the interests of the Lender. The amendment
and supplement shall constitute an inseparable part of this On-lending Agreement
and shall be as equally authentic as this Agreement.

         Article 17   Dispute Resolution

         17.1    The signed text of the 'External Agreements' shall govern in
                 connection with the final interpretation of the written
                 language and terms which have occurred and are used in this
                 Agreement in relation to the External Agreements.

         17.2    Should there be any dispute between the Borrower and the Lender
                 in the course of entrustment and on-lending, 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 according to law.


                                       16



         Article 18   Effectiveness of the Annexes

         The annexes to this On-lending Agreement are the inseparable parts of
this On-lending Agreement and shall be as equally authentic as this Agreement.
Annex 3 may be adjusted and/or supplemented by the Lender in accordance with
corresponding stipulations of the External Agreements.


         Article 19   Miscellaneous

         If the reform in the foreign currency system of the State and other
changes in policy are related to the use and repayment of foreign currency, the
Lender shall notify the Borrower on time and redefine relevant terms of this
Agreement pursuant to relevant stipulations of the State. Should there be any
change, the terms after the change shall govern.

         Article 20   Effectiveness

         20.1    This On-lending Agreement will come into force upon the
                 Lender's notification after all the following conditions are
                 satisfied:

         (1)     Execution of this Loan Agreement;

         (2)     Effectiveness of the External Agreements.

         This Agreement will automatically cease to be effective upon the date
when the Borrower has paid all the loan principal, interest and any other fees
stipulated in this Agreement.

         20.2    This On-lending Agreement is prepared in five original copies
                 with the Lender retaining three and the Borrower retaining two
                 and with duplicates delivered to relevant parties.

         Article 21   Mode of Notification

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

         Lender:           Address:

                           Name:

                           Tel.:

                           Fax:


                                       17


                           Postcode:



         Borrower:         Address:

                           Name:

                           Tel.:

                           Fax:

                           Postcode:

         If it is 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.



Borrower:                                 Lender:



(seal)                                    (seal)






Signature of Legal Representative         Signature of Legal Representative
(or his or her authorized                 (or his or her authorized
representative):                          representative):






Place of Signature:                       Date of Signature:



                                       18




Annex 1

                  Accord on Special-purpose Funds in Connection
                      with the Repayment of On-lending Loan
                         for Issuance of Bonds Overseas

         In order to meet the need for construction and development of the
Yangcheng Power Plant Project, the Shanxi Branch of the China Construction Bank
(hereinafter referred to as the Lender) and the Yangcheng International Power
Company Ltd. (hereinafter referred to as the Borrower) have signed the
On-lending Agreement totaling [***]. For the sake of ensuring the timely use
and repayment of the principal and payment of interest and relevant fees of the
foreign debt under the above-mentioned Agreement, both the Borrower and the
Lender have reached the following accord through friendly consultations:

         Article 1   Opening and Purposes of Relevant Account of Special-purpose
                     Funds

                  The Borrower applies for opening the following accounts within
         10 days upon the effectiveness of this Accord:

         1.   The Borrower applies to the Administration of Exchange Control
              for opening an account in the Lender's International Business
              Department which will be used for repaying the special-purpose
              funds of the foreign debt.
         2.   The Borrower shall open a special-purpose RMB fund account (its
              name will be determined separately) in an institution designated
              by the Lender. The RMB funds in the account will be used to make
              payment in regulated and rationed foreign exchange as well as
              relevant fees incurred under this Accord.

         Article 2   Sources of the Funds of the Special-purpose Account

         In order to ensure the timely performance of external payment, the
Borrower shall reserve the following funds 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 the new accounting system):

         1.   The depreciation fund of fixed assets which shall be withdrawn
              for imported equipment of the project and which shall be used for
              repayment;
         2.   The additional profits which may be used for repayment pursuant
              to relevant stipulations after the completion of the project;
         3.   Foreign currency earnings after the completion of the project;
         4.   Development fund for the enterprise;


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

                                       19


         5.   Overall benefits of the Borrower and other income and funds under
              enterprise control which may be used for repayment;
         6.   The exempted or refunded taxes which may be used for repayment
              after submission to relevant authorities for approval.

         Article 3   Use of the Account

         1.   The Borrower shall, pursuant to the 'Schedule for Repayment of
              Principal with Interest' or the notification of the Lender,
              deposit the required funds not later than six months before the
              Date of Payment in the 'Special-purpose Fund Account for the
              Repayment of Foreign Debt' or the RMB special-purpose fund account
              which is opened at the Lender's Bank.
         2.   The depreciation funds of fixed assets that are withdrawn from
              imported equipment of the project must be deposited in the
              Borrower's RMB special-purpose account which is opened at an
              institution designated by the Lender.
         3.   After the project has gone into operation, the RMB settlement in
              the credit period must be handled in the Lender or its branch .
         4.   After the project has gone into operation, the settlement for the
              import and export of products in the credit period must be handled
              in the International Business Department of the Lender, and the
              foreign currency earnings designated for repayment shall
              immediately be deposited in the Borrower's 'Special-purpose Fund
              Account for the Repayment of Foreign Debt'
         5.   The Borrower shall repay the principal with interest on the
              matured foreign currency loan with the kind of currency stipulated
              in the loan agreement. If the Borrower makes repayment with other
              kind of currency agreed to by the Lender, the Lender will act as
              an intermediary in foreign exchange trading in accordance with the
              exchange rate announced by the Administration of Exchange Control
              at that time with the exchange rate risk borne by the Borrower.
         6.   The Lender will, on the basis of current deposit, accrue and pay
              interest on the Borrower's balance of the funds in the
              special-purpose fund account.

         Article 4    Management of Special-purpose Funds

         1.   The Borrower shall, pursuant to the stipulations of this Accord,
              deposit in time the foreign currency and RMB funds used for
              external payment in the above account. The Lender is entitled to
              handle directly the procedures of transfer for any delayed
              payment.

         2.   Without prior written consent of the Lender, the Borrower shall
              not handle RMB settlement stipulated in Article 3.3 and import and
              export settlement stipulated in Article 3.4 in any bank other than
              the Lender's during the repayment period.

                  If it is discovered that the Borrower handles the
         above-mentioned settlement in any bank other than the Lender's, the
         Lender is entitled to withhold from the Borrower's deposit account a
         sum which is [***] of the total


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

                                       20


         amount of each default in settlement. The default fine withheld
         pursuant to the above-mentioned stipulation shall not affect the
         performance of the terms of 'Events of Default' under the On-lending
         Agreement.

         3.   The Borrower shall deposit in time a full amount of rationed or
              regulated foreign exchange in the 'Special-purpose Fund Account
              for Repayment of Foreign Debt' so as to make it available for
              payment in foreign currency. The Lender shall handle any of the
              Borrower's unpaid payable account because of delayed or
              insufficient amount of rationed or regulated foreign exchange as
              an overdue, and overdue interest shall be accrued on the overdue
              sum in accordance with the stipulations of the On-lending
              Agreement.

         4.   Owing to foreign exchange trading during the period of external
              payment, the Lender may temporarily advance the balance of the
              arrears of the payment resulting from change in exchange rate and
              then withhold it in the next external payment with the accrued
              interest pursuant to the stipulated corresponding loan interest
              rate. The Lender shall, on the basis of the current deposit for
              foreign currency, accrue and pay interest on the balance of the
              foreign currency special-purpose fund account for external
              payment.

         5.   The banking charges incurred in foreign exchange rationing,
              regulation and trading as well as other relevant fees under this
              On-lending Agreement shall all be borne by the Borrower.

         6.   Should there be any major policy adjustment by the State, this
              Accord may be amended through joint consultations between the
              Borrower and the Lender on the premise of ensuring to repay on
              schedule the principal with interest and relevant fees to relevant
              foreign parties under the above-mentioned On-lending Agreement.


                  Yangcheng International Power Company Ltd.
                              (official seal)

                  Signature of Authorized Representative:

                  Shanxi Branch of China Construction Bank
                              (official seal)

                  Signature of Authorized Representative:

                           Date of Signature:




                                       21




Annex 2

                        Letter of Guaranty for Repayment

China Construction Bank:

         Whereas the Yangcheng International Power Company Ltd. (the Borrower)
has entrusted the China Construction Bank to raise funds through issuing bonds
overseas, the Borrower and the Shanxi Branch of the China Construction Bank (the
Lender) has for this purpose executed the On-lending Agreement totaling
[***]. This Guarantor sincerely guarantees that the Borrower will repay on
time the principal, interest and fees in foreign currency under the
above-mentioned Agreement, and has hereby established this letter of guaranty
which specifies the liabilities for guaranty as follows:

         1.   This letter of guaranty is an unconditional and irrevocable one
              whose amount guaranteed is the sum of all the principal, interest
              and fees under the above-mentioned Agreement.

         2.   In the event that the Borrower fails to deliver on schedule all
              or part of the principal, interest and fees of the matured loan
              under the above-mentioned Agreement because of difficulties in
              making repayment or any other causes, the Guarantor will undertake
              collateral liability and shall, within 15 working days after
              having received a written notice from the Lender, guarantee to pay
              in full to the Lender the foreign currency amount payable by the
              Borrower as mentioned in the notice. If this Guarantor is unable
              to perform the above-mentioned liability for guaranty, this
              Guarantor hereby accepts that the Lender may directly deduct or
              entrust the bank of deposit to deduct the corresponding amount
              from any account of this Guarantor.

          3.  All the assets of this Guarantor, including but not being limited
              to all the fixed assets, real estate, stock ownership and working
              asset owned by this Guarantor, are the material guaranty for
              issuing this letter of guaranty by this Guarantor. If this
              Guarantor fails to perform its liability for guaranty pursuant to
              the stipulation of this letter of guaranty, the Lender is entitled
              to acquire through legal procedures the corresponding assets which
              this Guarantor offers as a guarantee.
                  The Lender is also entitled to ask this Guarantor which, on
              the basis of all its assets as the material guaranty for this
              letter of guaranty, will set up a mortgage to which the Lender is
              the beneficiary.

         4.   This letter of guaranty takes effect as of today and will remain
              effective when the Lender agrees to the Borrower's postponement of
              payment, while the amount guaranteed will be decreasing with the
              Borrower's repayment of the loan until the guaranteed amount has
              been repaid in full by the Borrower or the Guarantor.


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

                                       22


                  This Guarantor hereby confirms that the extension of the
         above-mentioned loan may be regarded as having obtained prior consent
         from this Guarantor and that this Guarantor agrees to undertake
         collateral liability. This Guarantor waives its right of raising a plea
         against any demand for repayment of loan or for performance of guaranty
         obligations on the part of the Lender.

         5.   This Guarantor hereby confirms that it agrees to undertake
              collateral liability.

         6.   This letter of guaranty is of the nature of a continuing
              liability for guaranty which is affected neither by any
              instruction of the higher unit of the Guarantor nor by any
              agreement and document which the Borrower has concluded with any
              unit; nor is it affected in any way by any change in the
              Borrower's position or financial status, such as whether it goes
              bankrupt, is closed, suspended, merged and transferred, turns to
              be a joint stock company, or is purchased; nor is it affected by
              any change in the nature of its enterprise, scope of business,
              articles of association, and organization and institution.

         7.  This Guarantor is a legal entity which is lawfully established,
              is issued with a business license by the administration for
              industry and commerce, is possessed of property as guaranty which
              is sufficient to repay the above-mentioned amount of guaranty, and
              can guarantee to perform the obligations under this letter of
              guaranty during the term of guaranty.

         8.   In the event of any situation which may affect its ability for
              guaranty during the effective term of this letter of guaranty,
              this Guarantor shall notify both the Borrower and the Lender and
              shall guarantee the continued effectiveness of the guaranty. This
              Guarantor shall not assign its obligation for guaranty without the
              prior written consent of the Lender.

         9.   This Guarantor hereby confirms that the content and form of the
              above-mentioned Agreement and its annexes have been accepted by
              this Guarantor.

         10.  This letter of guaranty remains effective when both the Borrower
              and the Lender agree to make amendments to the above-mentioned
              Agreement.

         11.  This Guarantor hereby agrees that any accommodation and grace
              granted to the Borrower by the Lender will not affect the
              obligations of the Guarantor under this letter of guaranty.

                Guarantor: ____________________
                              (official seal)

                Legal Representative: ___________________
                                           (signature)


                                       23


                Address of the Guarantor: _________________

                The Guarantor's bank of deposit and account number:_____________



                                                day           month         year



                                       24