Shareholder Loan Contract - Jiaozuo Wan Fang Power Co. Ltd. and AES China Power Holding Co. Ltd.


                            SHAREHOLDER LOAN CONTRACT

     This SHAREHOLDER  LOAN CONTRACT (this  'Contract') is made and entered into
as of April 26,  1996 by and  between  JIAOZUO  WAN FANG POWER  COMPANY  LIMITED
('Borrower'),  a Sino-foreign cooperative joint venture enterprise organized and
existing  under the laws of the  People's  Republic of China  (Business  License
number is 00037-1) with its registered  office in Jiaozuo City,  Henan Province,
China  (telephone  no:  391-329-3144)  and AES CHINA POWER HOLDING CO. (L), LTD.
('Lender'),  a Labuan  company  wholly-owned  by AES China  Generating  Co. Ltd.
(Company no: LL00460).

1.   The Loans.
     ---------

     Subject to the terms and conditions of this Contract, Lender agrees to make
to Borrower loans in an aggregate amount not to exceed US$ 68,584,000 (including
interest during construction as provided in Section 3 hereof) in accordance with
the Joint  Venture  Contract  dated as of March 27, 1996 between  Jiaozuo  Power
Partners,  L.P. and Jiaozuo  Aluminum Mill (the 'Joint  Venture  Contract')  and
based on the exchange rate of US$ 1 to RMB 8.3, which loans will be divided into
the Tranche A Loans to be used mostly for the first unit in an aggregate  amount
not to exceed US$ 34,292,000  (the 'Tranche A Loans') and the Tranche B Loans to
be used  mostly for the  second  unit in an  aggregate  amount not to exceed US$
34,292,000  (the  'Tranche  B  Loans';  each such  Tranche  A or  Tranche B Loan
individually  a 'Loan' and  collectively  the 'Loans') from time to time between
April 26,  1996 and July 1, 1998 (the  'Termination  Date').  The Loans shall be
evidenced by a promissory note of Borrower, substantially in the form of Exhibit
A (the  'Note').  Subject  to the  conditions  set forth in Section 6, each Loan
shall be made (a) in accordance with the drawdown schedule attached as Exhibit B
and (b) on a day on which banks are authorized to open for business in New York,
New York, the United States of America (a 'Banking Day').

2.   Maturity.
     --------

     (a) Borrower shall repay the aggregate  outstanding principal amount of the
Loans in accordance with the amortization schedule attached as Exhibit C. In any
event,  Borrower shall repay such Loans in full by July 1, 2006.  Borrower shall
take all necessary  actions to ensure that its cash on hand due to  depreciation
may be used to repay the principal of the Loans and shall so use such  available
cash.

     (b)  Borrower  shall have the right to prepay the Loans at any time or from
time to time. Each of such optional  prepayments  shall be in an amount not less
than US$ 5 million  and shall be made with at least  six  months  prior  written
notice to Lender.  A Loan prepaid may not be reborrowed.  The prepayments of the
Loans  will be  applied  in  inverse  order of  maturity  to the then  remaining
installments of principal to become due as set forth in Exhibit C.

3.   Interest and Fees.
     -----------------

                                      -1-


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

     (a)  Borrower  shall pay interest on the Loan(s)  outstanding  from time to
time at the rate of 11% per annum.  Interest  on the Loans  shall be computed on
the basis of the actual  number of days elapsed in a year of 360 days.  Interest
on the Tranche A Loans shall accrue until the Unit One Commercial Operation Date
(as defined in the Power  Purchase and Sale Contract  dated as of April 26, 1996
between  Borrower and the Henan Electric Power  Corporation (the 'Power Purchase
and Sale Contract')) and be added to principal.  Interest on the Tranche B Loans
shall accrue  until the Unit Two  Commercial  Operation  Date (as defined in the
Power  Purchase  Agreement) and be added to principal.  Interest  payments shall
begin after the Unit One Commercial  Operation Date in the case of the Tranche A
Loans  and  after  the Unit  Two  Commercial  Operation  Date in the case of the
Tranche B Loans.  Interest payments shall be payable quarterly in arrears on the
first day of each January, April, July and October starting from the second such
date to occur after the Unit One  Commercial  Operation  Date in the case of the
Tranche A Loans and after the Unit Two Commercial  Operation Date in the case of
the  Tranche B Loans and on final  maturity  of the Loans  (each  such  date,  a
'Payment Date'). Lender shall calculate and notify Borrower of the actual amount
of each interest payment 15 days prior to each Payment Date.

     (b) Borrower shall pay to Lender a guarantee fee of [***]% per annum on the
Loan(s)  outstanding,  which shall be computed on the basis of the actual number
of days elapsed in a year of 360 days. Such guarantee fee shall accrue until the
Unit One  Commercial  Operation Date in the case of the Tranche A Loans or until
the Unit Two Commercial Operation Date in the case of the Tranche B Loans and be
added to the  principal of the Loans.  Payment of the  guarantee fee shall begin
after the Unit One Commercial  Operation Date in the case of the Tranche A Loans
or after the Unit Two  Commercial  Operation  Date in the case of the  Tranche B
Loans and shall be payable  quarterly  in arrears on each Payment  Date.  Lender
shall  calculate and notify Borrower of the actual amount of each payment of the
guarantee fee 15 days prior to each Payment Date.
     
     (c) If Borrower  fails to pay any sum payable under this Contract when due,
Borrower  shall  from time to time on demand pay  interest  on such sum from and
including  the due date to the date of actual  payment  (after as well as before
judgment) at a per annum  interest  rate equal to [***]% above the interest rate
specified in Section 3(a).

4.   Method of Payment.
     -----------------

     All sums,  including all  principal,  interest and fees,  payable to Lender
shall be payable in US Dollars  not later than 10:00 a.m.  Beijing  time on each
Payment  Date to the account of Lender in Hong Kong (no.  08611939) at Citibank,
N.A.,  or such other  account  within or outside of China as Lender  notifies to
Borrower.

5.   Representations and Warranties.
     ------------------------------

                                      -2-



     Borrower represents as of this date and the date each Loan is made that:

     (a) Borrower is a Sino-foreign  cooperative  joint venture  enterprise duly
established  and  existing  in good  standing  under  the  laws of the  People's
Republic of China;

     (b) the execution,  delivery and performance of this Contract, the Note and
each other  document  delivered in  connection  herewith or therewith are within
Borrower's power,  have been duly authorized by all necessary legal action,  and
do not contravene any law or any contractual restriction binding on Borrower;

     (c) this  Contract  is, and the Note and each other  document  delivered in
connection  herewith or therewith  when executed  will be, the legal,  valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms;

     (d)  all  governmental  approvals  necessary  for  the  execution  of  this
Contract,  the Note and each other document delivered in connection  herewith or
therewith have been obtained and all  governmental  approvals  necessary for the
performance and enforceability hereof and thereof shall have been obtained prior
to and shall be in full force and effect on the date of each drawdown hereunder;

     (e) the obligations of Borrower  hereunder and under the Note and any other
document  executed in connection  herewith or therewith  constitute  the direct,
unconditional  and  general  obligations  of  Borrower  and  the  sum  of all of
Borrower' other  indebtedness  does not exceed RMB five million except the loans
provided by other  shareholders  of Borrower in the amount of not  exceeding RMB
243,963,000,  the  working  capital  loans  or the list of debts of over RMB one
million each specified in Appendix D hereto;

     (f) Borrower is not in default  under any  agreement or obligation to which
it is a party or by which it may be bound; and

     (g) no Event of Default (as hereinafter  defined),  and no event which with
the giving of notice or the passing of time, or both,  would constitute an Event
of Default, has occurred and is continuing.

6.   Conditions Precedent.
     --------------------

     The  obligation  of Lender to make each Loan  hereunder  is  subject to the
fulfillment,  as  determined  solely  by  Lender,  of the  following  conditions
precedent  at  least  three  Banking  Days  prior to the  proposed  date of each
drawdown of such Loan (except as otherwise  indicated  below) and the  continued
fulfillment of such conditions on the date of such drawdown:

                                      -3-



     (a) All documents,  licenses,  approvals and permits required in connection
with the  establishment of Borrower as a Sino-foreign  cooperative joint venture
and the design, construction,  ownership,  operation and management of the Power
Plant (as  defined  in the Power  Purchase  and Sale  Contract)  shall have been
obtained and are in full force and effect;  without  limiting the  generality of
the foregoing,  such approvals shall include approval by the Ministry of Foreign
Trade and  Economic  Cooperation  of China of the  Joint  Venture  Contract  and
Borrower's  Articles of Association,  approval by the Henan  Provincial  Pricing
Bureau of the pricing  formula set forth in Appendix A to the Power Purchase and
Sale Contract,  approval by the relevant  government  department of the Land Use
Rights (as defined in the Joint  Venture  Contract),  approval  by the  relevant
government  department  of the early  return of the  registered  capital  to the
Foreign Party (as defined in the Joint Venture Contract), issuance of Borrower's
business license,  approval regarding access to the foreign exchange  adjustment
center or foreign exchange banks, and approvals referred to in Article 2.3(a) of
the Joint Venture Contract;

     (b) All registered  capital and other loans required to be funded under the
Joint  Venture  Contract  by any party as of such date shall have been funded in
full;

     (c) Lender shall have received the Note,  duly executed by Borrower,  which
shall be in full force and effect;

     (d)  Lender  shall  have   received   satisfactory   evidence  of  the  due
authorization,  execution and delivery of this Contract, the Note and each other
document delivered in connection herewith or therewith by Borrower;

     (e)  Lender  shall  have  received  certified  copies  of all  governmental
approvals and filings  required for the  execution,  delivery,  performance  and
enforceability of this Contract,  the Note and each other document  delivered in
connection  herewith or  therewith  and such  approvals  and filings are in full
force and effect;

     (f) Each of the representations and warranties set forth in Section 5 shall
be true and correct in all material respects;

     (g) Borrower shall have performed in all material  respects its obligations
required to be performed  under this Contract,  the Note and all other documents
delivered in connection herewith or therewith;

     (h) All  contracts  referenced  in the  Joint  Venture  Contract  including
without  limitation  all  Project  Contracts  (as  defined in the Joint  Venture
Contract)  and all other  material  contracts  required in  connection  with the
construction of the Project (as defined in the Power Purchase and Sale Contract)
shall have been  executed and  delivered by all parties  thereto and are in full
force and effect;

                                      -4-



     (i) Lender's independent  engineer or, at the request of Lender,  Borrower,
shall have  certified  in a manner  satisfactory  to Lender that all  applicable
construction milestones as set forth in Exhibit B have been met;

     (j) Borrower shall have purchased the insurance policies required by Lender
and such policies shall be in full force and effect;

     (k) Borrower  shall have  received  from Jiaozuo  Aluminum Mill evidence in
form and substance  satisfactory  to Lender that Chinese banks have committed to
provide Renminbi loans needed for the Project;

     (l) Lender shall have  received a favorable  opinion of Zheng,  Liu, Yuan & Zhou Law Office with respect to the  transactions  contemplated  hereby and such
other approvals, opinions and documents as Lender may reasonably request; and

     (m)  Fifteen  Banking  Days  prior  to each  requested  date of  borrowing,
Borrower  shall  submit  an  application  for  borrowing  to  Lender in form and
substance  reasonably  satisfactory to Lender. Each such application shall state
the requested  amount and date of the borrowing  which date shall not be earlier
than the  relevant  drawdown  date  specified  in  Exhibit B, shall be signed by
Borrower and shall constitute a representation  and warranty by Borrower that it
is in  compliance  with all the  conditions  precedent  set forth  herein  and a
reaffirmation   as  of  the  requested   drawdown  date  of  all  of  Borrower's
representations and warranties contained herein.

7.   Covenants.
     ---------

     (a) Borrower shall at all times (i) preserve and maintain in full force and
effect its existence as a cooperative joint venture under the laws of China, its
qualification  to do  business  in  Henan  Province,  China  and in  each  other
jurisdiction  in which the conduct of its business  requires such  qualification
and (ii) obtain and maintain in full force and effect all governmental approvals
required at any time in connection with the construction, maintenance, ownership
or  operation  of the  Facility  (as  defined  in the  Power  Purchase  and Sale
Contract).
     
     (b)  Borrower  shall (i)  perform  and  observe  all of its  covenants  and
agreements  contained in any Project Contract or any other document  relating to
the  Facility to which it is a party and (ii)  maintain in full force and effect
each of those project documents.

     (c)  Borrower  shall  comply,   and  shall  ensure  that  the  Facility  is
constructed and operated, with governmental requirements.

     (d)  Borrower  shall  promptly  provide  to  Lender  copies  of  Borrower's
construction,  operation and financial reports and other information relating to
the construction or operation of the Facility.

                                      -5-



     (e) Borrower shall promptly register the Loans (no later than 15 days after
the date hereof) with Jiaozuo foreign exchange control  departments and obtain a
registration certificate (the 'Registration Certificate').

     (f) Borrower  shall use the proceeds of the Loans solely for the purpose of
financing the  construction and start-up of the Facility and funding the working
capital for the operation of Borrower.

     (g) Borrower shall notify Lender immediately of the occurrence of any Event
of  Default or of any event  which  would  become an Event of  Default  with the
passage of time or giving of notice or both.

     (h)  Borrower  shall  not,  without  the prior  written  consent of Lender,
assign,  sell,  mortgage,  encumber or  otherwise  transfer  any interest in any
assets of Borrower other than  transfers in the ordinary  course of its business
that would not have a materially  adverse effect on Borrower or the  performance
of its obligations hereunder.

     (i) Prior to any due date for any  repayment of the principal of and/or the
payment  of  interest  on the  Loans,  Borrower  shall (A) use the  Registration
Certificate  and the notice  regarding such  repayment  and/or payment to obtain
from the registration  department a verification  and approval  certificate with
respect to such repayment  and/or  payment;  and (B) use such  verification  and
approval  certificate  and  the  Registration   Certificate  to  handle  matters
regarding the  remittance  from the foreign debt account of the principal of and
interest on the Loans outside of China at the relevant bank.

     (j) At the  beginning  of each  year,  Borrower  shall  submit to the local
foreign exchange  administration a report stating the amount of foreign currency
purchased in the  preceding  year for the purpose of repaying  the  principal of
and/  paying the  interest  on the Loans and a plan  regarding  the  purchase of
foreign currency for the current year.

8.   Events of Default.
     -----------------

     (a) Each of the following events and occurrences  shall constitute an Event
of Default under this Contract:
     
          (i) any  representation  or warranty  of Borrower  proves to have been
     untrue when made or renewed;

          (ii)  Borrower  fails to repay when due any  principal  amounts of the
     Loans,  or Borrower  fails to pay within three  Banking Days after the date
     due  any  interest  or fee  payment,  due  pursuant  to the  terms  of this
     Contract,  the Note or any  document  delivered in  connection  herewith or
     therewith;

          (iii)  Borrower  fails to perform or violates  any other  provision of
     this Contract (including without limitation the covenants), the Note or any

                                      -6-



[*** Filed separately with the Commission pursuant to a request for Confidential
Treatment.]


     document  delivered in connection  herewith or therewith,  which  continues
     unremedied for 30 days after notice thereof from Lender;

          (iv) except as otherwise provided in clause (ii) above, Borrower fails
     to pay when due any  indebtedness  for which it is liable,  contingently or
     otherwise,  or any such  indebtedness  is  accelerated or is required to be
     prepaid prior to the stated maturity thereof;

          (v)  any  approval  or  permit   required  for  the   performance   or
     enforceability of the obligations of Borrower under this Contract, the Note
     or any other document delivered in connection herewith or therewith expires
     or is not renewed upon  expiration  or is terminated or revoked or modified
     in any material respect;

          (vi) any approval or permit  required in  connection  with the Project
     expires or is not renewed upon  expiration  or is  terminated or revoked or
     modified in any material respect;  

          (vii) any Project  Contract is materially  breached by a party thereto
     or such contract ceases to be in full force and effect;
     
          (viii) Borrower becomes insolvent or unable to pay its debts when due,
     or commits  any act of  bankruptcy  including  filing any  petition  in any
     bankruptcy,  winding-up or  reorganization  proceeding,  or acknowledges in
     writing its  insolvency  or  inability  to pay its debts,  or any  petition
     relating to bankruptcy is filed with respect to it by its creditors; or

          (ix) One or more  judgments  aggregating  at least  US$100,000 (or its
     equivalent)  that is not covered by insurance is entered  against  Borrower
     and is not satisfied, vacated or bonded pending appeal within 60 days after
     entry.

     (b) If an Event of Default shall occur and be continuing, Lender shall have
no  further  obligation  to make Loans to  Borrower  and Lender may by notice to
Borrower  declare all outstanding  Loans and accrued  interest thereon and other
amounts payable hereunder to be immediately due and payable,  whereupon all such
amounts shall become  forthwith due and payable  without demand or notice of any
kind and  without  the  consent,  decree or  authorization  of any  governmental
entity. In the event of an Event of Default, Lender shall also have the right to
liquidate Borrower and its assets.

9.   Intercreditor Arrangements.
     --------------------------

     Borrower and Lender each  acknowledge that Borrower has also entered into a
loan contract with Jiaozuo Aluminum Mill for a loan amount up to RMB 243,963,000
(the 'Other Loan Contract').  Borrower represents that all loans under the Other
Loan Contract  shall be made at an interest rate  (including  all fees and other
charges) of equal to or less than  [***]% per cent per annum,  and that the term
of the Other Loan  Contract  shall be no shorter than eight

                                      -7-



years.  The drawdown  schedules for the Loans and the loans under the Other Loan
Contract shall be determined by Borrower's  Board of Directors.  Any amounts due
under  this  Loan  Contract  and the Other  Loan  Contract  shall  rank in equal
priority.  If Borrower has insufficient funds available to repay in full amounts
due under the Loan Contract and the Other Loan Contract,  such  available  funds
shall  be  distributed  pro  rata on the  basis  of the  total  amount  of loans
outstanding under this Contract and under the Other Loan Contract, provided that
at the time of such  distribution  Loans due to Lender under this Contract shall
be computed on US Dollar cash basis and loans due to lender under the Other Loan
Contract shall be calculated on Renminbi cash basis.

10.  Entire Agreement; Amendments.
     ----------------------------

     This Contract  constitutes the entire  agreement of the parties hereto with
respect to the subject matter hereof and may be amended only by an instrument in
writing signed by the parties hereto.

11.  Indemnity.
     ---------

     (a) Borrower  shall pay all stamp duties in connection  with this Contract,
the Note and each other document delivered in connection  herewith and therewith
and shall reimburse Lender for any other cost, loss or damage (including without
limitation any taxes  excluding taxes imposed on the net income of Lender by the
jurisdiction of its  registration  and other costs resulting from changes in law
after the date hereof) incurred by Lender in connection with any Loan (including
interest and fees), this Contract,  the Note or any other document  delivered in
connection  herewith or therewith.  The payment of such stamp duties by Borrower
and the  reimbursement by Borrower of such other cost, loss or damage (including
taxes as stated  above)  shall be in addition to  Borrower's  obligation  to pay
interest as set forth in Sections 3 (a) and (c).

     (b) Without  limiting the generality of clause (a) above, if Borrower shall
be obligated to withhold and pay any taxes required under the applicable laws of
China  or  under  any  agreement   between  China  and  any  country  which  has
jurisdiction  over Lender or Borrower,  the  interest  rate  hereunder  shall be
automatically and accordingly  increased and Borrower shall make such additional
interest  payment  so  that  the net  amounts  received  by  Lender  after  such
withholding shall equal the amounts which would have been received by Lender had
no such withholding been made.

     (c) The indemnity provisions of this Section 11 shall survive the repayment
of the Loans and the termination of this Contract.

12.  Notice.
     ------

     All notices  hereunder  shall be in writing and shall be either  personally
delivered,  or  transmitted  by  postage  prepaid  registered  air  mail,  or by
facsimile to the party addressed at the relevant address set forth above. Either
party may change its address by notice to the other.

                                      -8-



13.  Governing Law.
     -------------

     This Contract shall be governed by and  interpreted in accordance  with the
laws of England  without regard to its procedural  rules which would lead to the
adoption of laws of other countries due to conflicts of laws.

14.  Submission to Jurisdiction.
     --------------------------

     (a)  Borrower  hereby  irrevocably   consents  that  any  legal  action  or
proceeding  against  it or  any  of  its  assets  with  respect  to  any  of the
obligations  arising  under or relating to this  Contract  may be brought in any
English  court,  as Lender may elect,  and by  execution  and  delivery  of this
Contract,  Borrower hereby irrevocably submits to and accepts with regard to any
such action or proceeding, for itself and in respect of its property,  generally
and  unconditionally,  the  non-exclusive  jurisdiction of the aforesaid courts.
Borrower hereby  irrevocably  designates,  appoints and empowers AES Electric in
England (address:  Burleigh House, 17-19 Worple Way, Richard TW10 6AG, U.K.), as
its agent to receive for and on its behalf  service of process in England in any
legal action or proceeding with respect to this Contract,  the Note or any other
document delivered in connection herewith or therewith. The foregoing,  however,
shall not limit the  rights  of  Lender  to serve  process  in any other  manner
permitted  by law or to bring  any  legal  action  or  proceeding  or to  obtain
execution of judgment in any  jurisdiction,  including  without  limitation  the
People's Republic of China.

     (b)  Borrower  hereby  waives  any right it may have  under the laws of any
jurisdiction  to commence by  publication  any legal action or  proceeding  with
respect to this Contract, the Note or any other document delivered in connection
herewith or therewith.

     (c) Borrower  hereby  irrevocably  waives any objection which it may now or
hereafter  have to the  laying of the venue of any  suit,  action or  proceeding
arising  out of or  relating to this  Contract,  the Note or any other  document
delivered in  connection  herewith or  therewith  in England and hereby  further
irrevocably waives any claim that England is not a convenient forum for any such
suit, action or proceeding.

15.  Arbitration.
     -----------

     (a) Notwithstanding Section 14, Lender may, in its sole discretion,  choose
to submit any dispute  arising out of or in  connection  with this  Contract for
binding arbitration in Stockholm, Sweden under the auspices of the International
Chamber of Commerce in accordance with the Rules of Conciliation and Arbitration
of the  International  Chamber  of  Commerce  as in  effect  on the date of this
Contract (except to the extent this Section 15 specifies different procedures in
which  event  such  procedures  will  govern  the  arbitration  to the extent so
specified).  Lender may choose  arbitration  with  respect to any dispute at any
time either before or after any filing of any claim,  action or proceeding  with
any court by either  party,  provided,  however,  that once Lender

                                      -9-



makes  such  a  choice,  the  relevant  dispute  will  be  settled  finally  and
exclusively  by  arbitration  irrespective  of (i) whether any claim,  action or
proceeding has already been  commenced in any court,  (ii) the magnitude of such
dispute or (iii) whether such dispute would otherwise be considered  justiciable
or ripe for  resolution  by a court or  arbitral  tribunal.  In the event that a
claim,  action or proceeding  has already been  commenced in a court when Lender
chooses to submit the relevant dispute for arbitration, both parties hereto will
immediately  discontinue  and withdraw the claim,  action or proceeding from the
court so that the  dispute may be handled  exclusively  by  arbitration.  Once a
dispute is submitted by Lender to arbitration, Borrower shall not have any right
to file any claim,  action or proceeding in any court in respect of such dispute
or any  matter  relating  to such  dispute  so that the  dispute  may be handled
exclusively  by  arbitration.  Any  action by Lender to submit any  dispute  for
arbitration  shall  not  prevent  Lender  from  bringing  any  claim,  action or
proceeding in any court with respect to any other  dispute.  Borrower  shall not
have any right to submit any dispute to  arbitration.  Any  settlement and award
rendered  through  arbitration  proceeding  will be final and  binding  upon the
parties  hereto if the decision is in writing and  contains a reasoned  analysis
explaining the arbitrators'  reasons for rendering the award.  This Contract and
the rights and  obligations  of the parties hereto will remain in full force and
effect  pending  the award in such  arbitration  proceeding,  which  award  will
determine whether and when termination of this Contract shall become effective.

     (b) The arbitration will be conducted in English and Chinese.

     (c) There will be three arbitrators.  Each party will select one arbitrator
within 30 days after Lender  elects to commence  arbitration.  Such  arbitrators
will be freely  selected,  and the  parties  hereto will not be limited in their
selection  to any  prescribed  list.  Within 30 days after the  selection of the
latter of the two arbitrators selected by the parties, the two arbitrators shall
select  the third  arbitrator;  if the two  arbitrators  do not select the third
within  such  30  day  period,  the  arbitrating  body  will  select  the  third
arbitrator.  If a party does not  appoint an  arbitrator  who has  consented  to
participate  within 30 days after the  selection  of the first  arbitrator,  the
relevant  appointment  will be made by the  arbitrating  body.  The costs of the
arbitration will be borne by the parties hereto as determined by the arbitration
tribunal  taking  into  account  the  relative  merits of the  positions  of the
parties.

     (d) The  parties  hereto  agree  that the  arbitral  award may be  enforced
against  the  parties  or their  assets  wherever  they may be found  and that a
judgment upon the arbitral award may be entered in any court having jurisdiction
thereof.  Accordingly,  the parties hereto  irrevocably agree that any action to
enforce such  judgment may be  instituted  wherever  appropriate  and each party
hereby irrevocably waives, to the fullest extent permitted by law, any objection
which  it may  have  now  or  hereafter  to  the  laying  of  the  venue  or the
jurisdiction  or the convenience of the forum of any such action and irrevocably
submits generally and  unconditionally  to the jurisdiction of any such court in
any such action.

                                      -10-



16.  Banking Day Adjustment.
     ----------------------

     If the date on which a payment is due is not a Banking Day, such date shall
be changed to the next succeeding Banking Day (or to the first preceding Banking
Day if the next succeeding Banking Day is in another calendar month).

17.  Information.
     -----------

     Borrower  shall  provide  Lender  with  such  information   concerning  the
condition and operation of Borrower,  financial or otherwise, as Lender may from
time to time request.

18.  Waiver; Cumulative Rights.
     -------------------------

     The  failure or delay of Lender to require  performance  by Borrower of any
provisions of this Contract shall not affect its right to require performance of
such provision  unless and until such  performance has been waived in writing by
Lender.  Each and every  right  granted to Lender  hereunder  or under any other
document delivered in connection herewith, or allowed to it at law or in equity,
shall be cumulative and may be exercised in part or in whole from time to time.

19.  Assignment.
     ----------

     This Contract  shall be binding upon and shall be  enforceable  by Borrower
and Lender and their  respective  successors  and assigns,  except that Borrower
shall have no right to assign or transfer its rights or obligations hereunder.

20.  Set-Off.
     -------

     Nothing herein contained shall limit the right of set-off, lender's lien or
counterclaim which may be available to Lender under applicable law.

21.  Severability.
     ------------

     If any or more of the provisions  contained in this  Contract,  the Note or
any other document delivered in connection herewith shall be invalid, illegal or
unenforceable  in any respect under any applicable  law, the validity,  legality
and enforceability of the remaining provisions contained herein or therein shall
not in any way be affected or impaired.

22.  Counterparts.
     ------------

     This  Contract  may be signed in any  number of  counterparts.  Any  single
counterpart  or a set of  counterparts  signed,  in either case, by both parties
hereto shall constitute a full and original contract for all purposes.

23.  Language.
     --------
                                      -11-



     This  Contract  shall be written and  executed in both  Chinese and English
versions, each of which shall have equal force and effect.

24.  Construction.
     ------------

     Unless otherwise stated, all references made in this Contract to 'Sections'
and 'Exhibits' shall refer, respectively,  to Sections of, and Exhibits to, this
Contract. References herein to this Contract include the Exhibits hereto.

25.  Effectiveness.
     -------------

     This Contract  shall become  effective upon the signing hereof and upon the
registration of the Loans with the State Administration of Exchange Control.
     
     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
caused  this  Contract  to be  executed  by  their  respective  duly  authorized
signatories as of the day and year first written above.

BORROWER                                 JIAOZUO WAN FANG POWER COMPANY LIMITED
- --------


                                         By: /s/ [SIGNATURE ILLEGIBLE]
                                             -----------------------------
                                         Name:
                                         Title:


LENDER                                   AES CHINA POWER HOLDING CO. (L), LTD.
- ------

                                         By: /s/ Edwared C. Hall, III
                                             -----------------------------
                                         Name:
                                         Title:
















                                      -12-


                                    EXHIBIT A

                             Form of Promissory Note
                             -----------------------

US$ _________________                                              Date:

     FOR VALUE  RECEIVED,  Jiaozuo Wan Fang Power Company  Limited  ('Borrower')
hereby  unconditionally  promises to pay to the order of AES China Power Holding
Co. (L),  Ltd.  ('Lender')  at the account of Lender (no.  ________________)  at
__________________________, the principal sum of [amount of Loans in words] (US$
[_________])  or, if less,  the  unpaid  principal  of the Loans  made by Lender
pursuant to the Loan Contract dated as of [ ______ ] between Borrower and Lender
(the 'Loan  Contract')  in the  amounts and at the times  specified  in the Loan
Contract.

     Borrower  hereby  promises  also to pay  interest  on the unpaid  principal
amount of the Loans  from the date such  Loans are made  until paid at the rates
and at the times provided in the Loan Contract.

     All payments of principal and interest under this Note shall be paid in the
currency and at the place specified in the Loan Contract.

     If Borrower fails to pay any sum payable under this Note when due, Borrower
shall from time to time on demand pay  interest  on such sum from and  including
the due date to the date of actual payment (after as well as before judgment) at
the rate provided in the Loan Contract.

     If an Event of Default shall occur and be continuing,  the principal of and
accrued  interest  on this Note may be  declared  to be due and  payable  in the
manner and with the effect provided in the Loan Contract.

     Borrower hereby waives presentment,  demand,  protest or notice of any kind
in connection with this Note.

     Terms not otherwise defined in this Note have the same meaning herein as in
the Loan Contract.

     This Note shall be governed by and  interpreted in accordance with the laws
of  England  without  regard to its  procedural  rules  which  would lead to the
adoption of laws of other  countries  due to conflicts  of laws.

                                             JIAOZUO WAN FANG POWER
                                             COMPANY LIMITED



                                             By:  ________________________
                                             Name:
                                             Title:

                                      -1-



                                    EXHIBIT B


                                Drawdown Schedule

               [To be determined by Borrower's Board of Directors]


Date                   Amount                        Construction Milestone
















                                      -1-


                                    EXHIBIT C


                              AMORTIZATION SCHEDULE


                TRANCHE A                                 TRANCHE B
- -------------------------------------      -------------------------------------

NUMBER   DATE          PAYMENT AMOUNT
 1       1-Jan-98      70% of 1997 DEPRECUAITON 
                                                                          
                      PAYMENT                                            PAYMENT
                      AMOUNT                                              AMOUNT
                      (PERCENT                                       (PERCENT OF
                      OF PRINCIPAL                                     PRINCIPAL
                      OUTSTANDING                                    OUTSTANDING
NUMBER  DATE          AS OF 2-JAN-98)      NUMBER  DATE        AS OF UNIT 2 COD)
2      1-Apr-98          0.21%
3      1-Jul-98          0.23%             1       1-Jul-98                0.23%
4      1-Oct-98          0.26%             2       1-Oct-98                0.26%
5      1-Jan-99          0.30%             3       1-Jan-99                0.30%
6      1-Apr-99          0.34%             4       1-Apr-99                0.34%
7      1-Jul-99          0.38%             5       1-Jul-99                0.38%
8      1-Oct-99          0.43%             6       1-Oct-99                0.43%
9      1-Jan-00          0.49%             7       1-Jan-00                0.49%
10     1-Apr-00          0.55%             8       1-Apr-00                0.55%
11     1-Jul-00          0.62%             9       1-Jul-00                0.62%
12     1-Oct-00          0.70%             10      1-Oct-00                0.70%
13     1-Jan-01          0.79%             11      1-Jan-01                0.80%
14     1-Apr-01          0.90%             12      1-Apr-01                0.90%
15     1-Jul-01          1.01%             13      1-Jul-01                1.02%
16     1-Oct-01          1.15%             14      1-Oct-01                1.15%
17     1-Jan-02          1.30%             15      1-Jan-02                1.30%
18     1-Apr-02          1.46%             16      1-Apr-02                1.47%
19     1-Jul-02          1.65%             17      1-Jul-02                1.66%
20     1-Oct-02          1.87%             18      1-Oct-02                1.87%
21     1-Jan-03          2.11%             19      1-Jan-03                2.12%
22     1-Apr-03          2.39%             20      1-Apr-03                2.39%
23     1-Jul-03          2.70%             21      1-Ju1-03                2.70%
24     1-Oct-03          3.05%             22      1-Oct-03                3.05%
25     1-Jan-04          3.44%             23      1-Jan-04                3.45%
26     1-Apr-04          3.89%             24      1-Apr-04                3.90%
27     1-Jul-04          4.40%             25      1-Jul-04                4.41%
28     1-Oct-04          4.97%             26      1-Oct-04                4.98%
29     1-Jan-05          5.61%             27      1-Jan-05                5.63%
30     1-Apr-05          6.34%             28      1-Apr-05                6.36%
31     1-Jul-05          7.17%             29      1-Jul-05                7.18%
32     1-Oct-05          8.10%             30      1-Oct-05                8.12%
33     1-Jan-06          9.15%             31      1-Jan-06                9.17%
34     1-Apr-06         10.34%             32      1-Apr-06               10.36%
35     1-Jul-06         11.69%             33      1-Jul-06               11.71%
                        ------                                            ------



    Total              100.00%                 Total                     100.00%






                                    EXHIBIT D


              LIST OF BORROWER'S DEBTS OF OVER RMB ONE MILLION EACH



























                                      -1-