Subordinated Mortgage Contract - Wuhu Shaoda Electric Power Development Co. Ltd. and AES China Holdings Co. Ltd.


             WUHU SHAODA ELECTRIC POWER DEVELOPMENT COMPANY LIMITED
                                  as Mortgagor



                                       and



                     AES CHINA HOLDINGS COMPANY (L) LIMITED
                                  as Mortgagee





                         SUBORDINATED MORTGAGE CONTRACT







                             CHADBOURNE & PARKE LLP
                            AMERICAN ATTORNEYS AT LAW

                           SUITE 3704, PEREGRINE TOWER
                           LIPPO CENTRE, 89 QUEENSWAY
                                    HONG KONG





                                    CONTENTS


Number   Clause Heading                                                Page
- ------   --------------                                                ----

1.       Definitions.....................................................1
2.       Loan............................................................2
3.       Interest........................................................2
4.       Repayment and Term..............................................3
5.       Charge..........................................................3
6.       Custody of Title Documents......................................3
7.       Management of the Equipment.....................................4
8.       Insurance of the Equipment......................................4
9.       Discharge of Mortgage...........................................5
10.      Mortgagor's Representations and Warranties......................5
11.      Further Assurance...............................................6
12.      Mortgagor's Undertakings........................................6
13.      Events of Default...............................................8
14.      Disposition of the Charged Assets...............................8
15.      Indemnities....................................................10
16.      Deduction......................................................10
17.      Evidence of Debt...............................................11
18.      Suspense Account...............................................11
19.      Expenses.......................................................11
20.      Power of Attorney..............................................12
21.      Notice.........................................................12
22.      Governing Law and Dispute Settlement...........................13
23.      Miscellaneous..................................................13
24.      Validity of Contract...........................................14
25.      Subordinated Security..........................................14


Execution Block


Appendix 1        Equipment.............................................16
Appendix 2        Buildings.............................................17



THIS  SUBORDINATED   MORTGAGE  CONTRACT   (hereinafter   referred  to  as  the 
'Contract')  is  made  on  the         day  of                    1996
                               --------       --------------------
BETWEEN:

(1)        WUHU SHAODA ELECTRIC POWER DEVELOPMENT COMPANY LIMITED, an equity
           joint venture company formed under the laws of the People's Republic
           of China, with its legal address at Commercial Office Building, West
           Huangshan Road, Wuhu, Anhui Province, People's Republic of China
           (hereinafter referred to as the 'Mortgagor'); and

(2)        AES CHINA HOLDINGS COMPANY (L) LIMITED, a Labuan company of Lot A,
           Level 3, Wisma Oceanic, Jalan OKK Awang Besar, 87007, Federal
           Territory of Labuan, Malaysia (hereinafter referred to as the
           'Mortgagee').


WHEREAS:

(1)        By the AES Loan Agreement (as defined below), the Mortgagee has
           agreed to make available to the Mortgagor a loan facility of up to
           US$18,000,000, the proceeds of which shall be used by the Mortgagor
           in accordance with the purposes set out in clause 2 of the AES Loan
           Agreement.

(2)        It is a condition precedent to the Mortgagee making the Facility
           available to the Mortgagor that the Mortgagor enters into this
           Contract with the Mortgagee.


IN WITNESS WHEREOF, the Mortgagor and the Mortgagee shall enter into this
Contract to set forth the respective rights and obligations of both parties.


1.         DEFINITIONS

1.01       Unless the context requires otherwise, the following terms and
           expressions used in this Contract shall have the same meanings as
           follows:

           (1)      'AES Loan Agreement' means the US$18,000,000 loan agreement
                    entered into between the Mortgagor and the Mortgagee dated
                    the date hereof;

           (2)      'Cash' means the currency of any country from time to time
                    held by the Mortgagor, including cash and deposits of any
                    kind (including interest) that are kept in a bank or other
                    financial institution in China or any other country;



                                       1


           (3)      'Charged Assets' means all or any part of the property,
                    assets and rights of the Mortgagor hereby charged including,
                    without limitation, the Receivables, Cash, Equipment,
                    buildings (see Appendix 2 for details) and Inventory;

           (4)      'Equipment' means all items of equipment purchased or from
                    time to time purchased by the Mortgagor including, without
                    limitation, all equipment listed in Appendix 1, all
                    equipment purchased, imported or installed by the Mortgagor
                    and any additions, unused components and users' manuals and
                    technical documents relating to any of the foregoing;

           (5)      'Event of Default' means any event of default specified
                    under Clause 13 herein;

           (6)      'Inventory' means raw materials purchased for the production
                    of electricity by the Mortgagor;

           (7)      'Junior Secured Indebtedness' means all or any sums (whether
                    principal, interest, fees or other expenses) now or at any
                    time hereafter due, owing or incurred by the Mortgagor under
                    the AES Loan Agreement or any Subordinated Security Document
                    to which it is a party and all other monies hereby secured;

           (8)      'Receivables' means the payment arising from time to time in
                    the ordinary course of business but are still due and owing
                    to the Mortgagor; and

           (9)      'Subordinated Security Documents' means all or any security
                    document defined under the AES Loan Agreement.

1.02       Unless defined herein otherwise or the context herein requires
           otherwise, the terms and expressions used in this Contract shall have
           the same meanings as those in the AES Loan Agreement.


2.         LOAN

           The Mortgagee shall provide the Mortgagor with a loan facility not
           exceeding US$18,000,000 the terms of which shall be governed in all
           respects by the AES Loan Agreement.


3.         INTEREST

           The Mortgagor undertakes to pay interest on the loan fully and
           punctually in accordance with the AES Loan Agreement. Details on the
           calculation and payment of interest shall be governed by the AES Loan
           Agreement.


                                       2


4.         REPAYMENT AND TERM

           The Mortgagor undertakes to repay the loan principal and to pay all
           other amounts due and owing under the AES Loan Agreement fully and
           punctually in accordance with the AES Loan Agreement. Details on the
           timing and amounts of principal repayments and other payments shall
           be governed by the AES Loan Agreement.


5.         CHARGE

5.01       In consideration of the Mortgagee agreeing to make the Facility
           available to the Mortgagor upon the terms and conditions of the AES
           Loan Agreement and the punctual observance and performance by the
           Mortgagor of all other obligations of the Mortgagor contained in the
           AES Loan Agreement or any Subordinated Security Document to which it
           is a party, the Mortgagor as sole legal beneficial owner grants to
           the Mortgagee a third-priority mortgage of and security interest in
           all the undertakings, property, assets and rights of the Mortgagor
           whatsoever and wheresoever both present and future including, without
           limitation, the Receivables, Cash, Equipment, Inventory and buildings
           and all its related rights and its uncalled capital for the due and
           punctual payment of the Junior Secured Indebtedness in full when due.
           THIS MORTGAGE IS SUBORDINATE IN RIGHT TO THE CHARGES CREATED TO
           SECURE THE OBLIGATIONS OF THE BORROWER UNDER THE SENIOR LOAN
           AGREEMENT, AND THE ENFORCEMENT OF THIS MORTGAGE SHALL BE LIMITED IN
           ACCORDANCE WITH THE PROVISIONS OF THE SENIOR SUBORDINATION AGREEMENT
           AND THE PRIORITY DEED.

5.02       This Contract shall be a continuing security and shall remain in full
           force and effect until the Junior Secured Indebtedness has been paid
           in full, notwithstanding the change in the constitution or status of
           the Mortgagor, insolvency or liquidation or any incapacity to act as
           a company or any intermediate settlement of account or other matter
           whatsoever. This Contract is in addition to (and independent of) any
           Charge, guarantee or other right or claim now or at any time
           hereafter held by the Mortgagee. This Contract shall not be rendered
           ineffective by any change or amendment made between the Mortgagor and
           Mortgagee to the AES Loan Agreement.


6.         CUSTODY OF TITLE DOCUMENTS

           The Mortgagor shall deliver to the Facility Agent with copies to the
           Mortgagee the purchase contract(s) for the Equipment, warranties from
           the manufacturers, insurance receipts, import and customs clearing
           documents and any other subsidiary documents reasonably requested by
           the Mortgagee for safekeeping and custody, provided that the
           Mortgagor

                                       3


           shall arrange for the delivery of the originals of such
           documents to the Mortgagee as soon as all amounts owed to the Senior
           Financing Parties under the Senior Loan Agreement have been paid in
           full. All relevant and reasonable custody fees shall be borne by the
           Mortgagor.


7.         MANAGEMENT OF THE EQUIPMENT

7.01       The Equipment shall be possessed, owned and used by the Mortgagor.
           The Mortgagor shall use the Equipment reasonably and the Equipment
           shall be used in a way permitted by the laws of the People's Republic
           of China and the provisions of the AES Loan Agreement.

7.02       Without written consent from the Mortgagee, the Mortgagor shall not
           structurally change, disassemble or remove any Equipment, except for
           daily maintenance. Any additional facilities and installations made
           to the Equipment in contravention of this sub-clause shall
           automatically become part of the Equipment.

7.03       The Mortgagee shall not be responsible for any loss or damage arising
           from any defect (whether apparent or latent) of the Equipment. The
           Mortgagee shall not bear any responsibility if a third party claims
           against the Mortgagor for loss or damage. If the Mortgagee suffers
           any loss, the Mortgagor shall forthwith compensate the Mortgagee for
           such loss.


8.         INSURANCE OF THE EQUIPMENT

8.01       Prior to the first drawing under the AES Loan Agreement, the
           Mortgagor shall insure the Equipment on such terms and in amounts as
           specified in the Subordinated Insurance Assignment, in each case with
           such insurance company as appointed or agreed by the Mortgagee. The
           benefits of the policies shall be assigned to the Mortgagee until the
           Junior Secured Indebtedness is paid in full. Prior to the repayment
           of the Junior Secured Indebtedness, the Mortgagor shall not for
           whatsoever reason discontinue or materially change the insurance. If
           the Mortgagor discontinues or materially changes the insurance, the
           Mortgagee shall have the right but not the obligation to insure the
           same on its behalf, any reasonable fee or actual loss arising shall
           be unconditionally reimbursed by the Mortgagor.

8.02       The originals of the insurance policies shall be delivered to the
           Facility Agent for safe-keeping, the cost of which shall be borne by
           the Mortgagor, provided that the Mortgagor shall arrange for the
           delivery of such originals to the Mortgagee as soon as all amounts
           owed to the Senior Financing Parties under the Senior Loan Agreement
           have been paid in full.

8.03       In accordance with the Subordinated Insurance Assignment, the
           Mortgagor shall irrevocably appoint the Facility Agent as its duly
           authorized


                                       4


           representative to receive and handle the compensation
           monies paid under the insurances until all amounts owed to the Senior
           Financing Parties under the Senior Loan Agreement have been paid in
           full.

8.04       If any Event of Default occurs or is still existing and the aforesaid
           compensation monies under the insurances are not sufficient to cover
           the Junior Secured Indebtedness, the Mortgagee shall have the right
           of recourse to the Mortgagor until the Mortgagor repays all its
           indebtedness in full.


9.         DISCHARGE OF MORTGAGE

           Upon payment in full of all the Junior Secured Indebtedness and
           performance of all the obligations and responsibilities hereunder and
           under the AES Loan Agreement and the Subordinated Security Documents,
           the Mortgagee shall, at the request of the Mortgagor and at a
           reasonable fee to be paid by the Mortgagor, discharge the security
           over the Charged Assets created by this Contract and assist the
           Mortgagor to cancel the registration of the Charge hereunder at the
           appropriate inland customs office and other relevant departments and
           return all the title documents of the relevant Charged Assets
           possessed by the Mortgagee for safe-keeping to the Mortgagor.


10.        MORTGAGOR'S REPRESENTATIONS AND WARRANTIES

10.01      The Mortgagor represents and warrants to the Mortgagee that:

           (1)      the obligations of the Mortgagor under this Contract are
                    legal, valid and binding;

           (2)      the Mortgagor is the sole legal and beneficial owner of the
                    Charged Assets and has full power to mortgage the same to
                    the Mortgagee. Except for (i) the relevant Charges created
                    to secure the obligations of the Borrower under the Senior
                    Loan Agreement, (ii) the Charge created herein, (iii) the
                    CPIL Security, (iv) any lien set up to provide goods for the
                    Mortgagor, (v) any lien arising from the exercise of legal
                    rights in the ordinary course of business and (vi) any
                    Charge that has been notified to the Mortgagee in writing
                    and which has been approved by the Mortgagee, the Charged
                    Assets are free from any Charge or other guarantee. The
                    Charged Assets are also free from any third party's lease,
                    right to use or other rights;

           (3)      the Mortgagor has already obtained all necessary approvals
                    and permits, if any, from the relevant government
                    authorities in the People's Republic of China for or in
                    connection with the execution and performance of this
                    Contract;

                                       5


           (4)      the whole purchase price, maintenance fees and other tax and
                    fees of the Charged Assets have been punctually paid in
                    full;

           (5)      the Mortgagor is not in default under any law, regulation or
                    contractual terms in relation to the Charged Assets; and

           (6)      no litigation, arbitration or administrative proceeding is
                    currently taking place or pending or threatened in relation
                    to the Charged Assets.

10.02      The Mortgagor also represents and warrants to the Mortgagee that the
           foregoing representations and warranties will be true and accurate
           throughout the continuance of this Contract.


11.        FURTHER ASSURANCE

11.01      In performance or satisfaction of the Charge hereunder enjoyed by the
           Mortgagee over the Charged Assets or to facilitate the assignment of
           its rights and obligations hereunder by the Mortgagee, the Mortgagor
           undertakes to comply with all reasonable instructions of the
           Mortgagee in full (whether the Charge hereunder has been effective).
           The relevant assignment fees shall be borne by the Mortgagor.

11.02      The Mortgagor undertakes to comply with all reasonable instructions
           from the Mortgagee to handle at any time relevant matters that are
           necessary for the rights hereunder (or suffers the Mortgagee to
           handle the same) and the Mortgagor also undertakes that the Mortgagee
           can act at any time in the name of the Mortgagor in accordance with
           the laws and the provisions of this Contract.


12.        MORTGAGOR'S UNDERTAKINGS

12.01      Unless the Mortgagee otherwise agrees in writing, the Mortgagor 
           undertakes:

           (1)      to keep all its Charged Assets in good repair and in good
                    working condition; if there is any damage (wear and tear
                    excepted), the Mortgagor shall forthwith notify the
                    Mortgagee and carry out repairs to its best endeavors, and
                    prevent further damage;

           (2)      to comply with all the relevant laws and provisions of this
                    Contract in connection with the proper use of the Charged
                    Assets and the Mortgagor shall, upon the request of the
                    Mortgagee, forthwith reimburse the Mortgagee for any
                    reasonable sums and fees for the performance of the
                    aforesaid obligations;


                                       6


           (3)      to permit the Mortgagee or any other person appointed by the
                    Mortgagee at all reasonable times to view the state and
                    condition of the Charged Assets;

           (4)      the Mortgagee may, upon the occurrence of an Event of
                    Default, appoint a valuer to appraise the value of any asset
                    at all reasonable times, the reasonable cost of which shall
                    be borne by the Mortgagor;

           (5)      upon receipt of any notice, order or other documents issued
                    by the Chinese government authorities in connection with the
                    Charged Assets, the Mortgagor shall take every necessary
                    steps to comply with the aforesaid notice, order or other
                    documents within the time limit set out by law or fourteen
                    (14) days after the receipt of such documents (whichever is
                    earlier), and take all necessary steps to send a copy of
                    such document to the Mortgagee within the aforesaid period
                    of time;

           (6)      to promptly inform the Mortgagee of the occurrence of any
                    Event of Default and any litigation, arbitration or
                    administrative proceeding (including any actual or
                    prospective litigation, arbitration or administrative
                    proceeding);

           (7)      to pay all the taxes, management fee and other fees in
                    connection with the Charged Asset in accordance with the
                    relevant laws and the provisions of this Contract;

           (8)      in accordance with all the reasonable instructions of the
                    Mortgagee, assist the Mortgagee in handling the approvals,
                    consents and relevant legal procedures in connection with
                    this Contract;

           (9)      to notify the Mortgagee within fourteen (14) days of the
                    purchase of new Equipment; and

           (10)     promptly register this Contract as a third-priority mortgage
                    with all appropriate governmental authorities in China and
                    maintain all such registration(s).

12.02      Unless  the  Mortgagee  otherwise  agrees in  writing, the Mortgagor
           undertakes  not to do any of the following:

           (1)      except for (i) the relevant Charges created to secure the
                    obligations of the Borrower under the Senior Loan Agreement,
                    (ii) the Charge created herein, (iii) the CPIL Security,
                    (iv) any lien set up to provide goods for the Mortgagor and
                    (v) any lien arising from the exercise of legal rights in
                    the ordinary course of business and bearing no relationship
                    to borrowings, mortgage or charge over the Charged Assets or
                    any part thereof (whether or not in priority over the Charge
                    hereunder);


                                       7


           (2)      with or without consideration, lease, sub-let, license,
                    share, sell, assign, appoint a trustee or in any other way
                    deal with the Charged Assets or any part thereof;

           (3)      use the Charged Assets for purposes other than the ordinary
                    course of business;

           (4)      do or cause to be done any act (including negligent
                    behavior) which may in any way significantly increase the
                    insurance premium or render the insurance invalid; and

           (5)      permit the use of the Charged Assets to do any act which is
                    contrary to the relevant laws and the provisions of this
                    Contract.


13.        EVENTS OF DEFAULT

13.01      Each of the following events shall be an Event of Default:

           (1)      the Mortgagor fails to pay any sum payable under this
                    Contract or any other Subordinated Security Document to
                    which it is a party when due or otherwise in accordance with
                    the provisions hereof or thereof;

           (2)      the Mortgagor fails duly and punctually to perform or comply
                    with any of its other obligations or undertakings hereunder
                    or under any of the other Subordinated Security Documents;
                    and

           (3)      an Event of Default or prospective Event of Default has
                    occurred and is continuing under the AES Loan Agreement.

13.02      If any Event of Default under Clause 13.01 herein has occurred, the
           Mortgagee shall have the right to request the Mortgagor to repay
           forthwith the whole Junior Secured Indebtedness and shall also have
           the right to dispose of the Charged Assets in accordance with laws
           and provisions of this Contract and subject to the provisions of the
           Senior Subordination Agreement. Any losses to the Mortgagor arising
           from the exercise of the aforesaid rights of the Mortgagee shall not
           be borne by the Mortgagee.


14.        DISPOSITION OF THE CHARGED ASSETS

14.01      Subject to the provisions of the Senior Subordination Agreement and
           the Priority Deed, upon the occurrence of any Event of Default under
           Clause 13 herein, the Mortgagee shall forthwith have all the rights
           and power under the laws of the People's Republic of China and this
           Contract, including (without limitation) the right to:


                                       8



           (1)      immediately possess and enjoy the Charged Assets or any part
                    thereof in accordance with laws;

           (2)      sell by public auction or sell or lease the Charged Assets
                    or any part thereof by any means legally permissible and
                    receive reasonable rent or proceeds and, with respect to
                    leasing, for a term as determined by the actual market
                    situation with respect to the Charged Assets; and

           (3)      employ a receiver to deal with the aforesaid matter, such
                    receiver's reasonable salary and remuneration for the
                    account of the Mortgagor. Such receiver shall be regarded as
                    the agent of the Mortgagor and the Mortgagor shall be wholly
                    responsible for the acts and omissions of such receiver.

14.02      In accordance with laws, the receiver may:

           (1)      request the tenant to pay the rent or the use fees, issue
                    effective leases and receipts or litigate, initiate legal
                    proceedings, detain assets or use other means to recover
                    rent or fees; such requests, receipts and claims shall be
                    issued in the name of the Mortgagor or Mortgagee and no
                    enquiry as to the scope of power of the receiver is required
                    for payment to the receiver; and

            (2)     upon written notice from the Mortgagee, apply the monies
                    received under any insurance in respect of the Charged
                    Assets towards its repair or continued operation.

14.03      Upon the occurrence of an Event of Default and subject to the
           provisions of the Senior Subordination Agreement and the Priority
           Deed, the Mortgagee shall have the power to dispose of any Charged
           Assets or any part thereof in accordance with laws without the
           consent of the Mortgagor or other persons. The Mortgagee shall have
           the power to execute all documents relating to the sale and lease of
           the Charged Assets (including the related cancellation document) and
           any loss arising shall not be borne by the Mortgagee.

14.04      The Mortgagee can dispose of the Charged Assets or appoint a receiver
           to dispose of the Charged Assets in accordance with this Clause 14
           and, subject to the provisions of the Senior Subordination Agreement
           and the Priority Deed, can apply the monies received from the
           disposition of Charged Assets in the following order of priority:

           (1)      firstly, in payment of all reasonable costs in the
                    disposition of the Charged Assets, including (but without
                    limitation) the fees and remuneration of the receiver;

           (2)      secondly, in payment of all the custom duties and other
                    taxes required by law in connection with the Charged Assets;


                                       9


           (3)      thirdly, in satisfaction of the Junior Secured Indebtedness;

           and the remaining balance, after the above deductions, shall be paid
           to the Mortgagor and other persons entitled to the above sum in full
           by the Mortgagee. If the monies received by the Mortgagee from the
           disposal of the Charged Assets does not satisfy the Junior Secured
           Indebtedness in full, the Mortgagor shall reimburse the Mortgagee for
           any shortfall.

14.05      The Mortgagee shall not be responsible for any loss to the Mortgagor
           arising from the exercise of the Mortgagee's powers and rights in
           accordance with law or the provisions of this Contract.


15.        INDEMNITIES

15.01      The Mortgagor shall bear, pay for and compensate the Mortgagee for
           all fees, damages, expenditures, legal responsibilities, legal costs
           and other claims of the Mortgagee arising from an Event of Default
           under Clause 13 herein. The Mortgagor's indemnity undertaking shall
           be separated from this Contract and shall be independent from the
           obligations hereunder. This obligation shall be effective
           notwithstanding any judgment or order obtained by the Mortgagor
           during winding-up, liquidation or bankruptcy and notwithstanding any
           relaxation of the time limit or concession made in respect of any
           claim.

15.02      Payment hereunder shall be in US Dollars. If a judgment or order or
           part payment received during the winding up of the Mortgagor is not
           paid in US Dollars, the Mortgagee may, on receipt of such payment,
           purchase US Dollars through normal banking procedures with such
           payments received.

15.03      If the amount of the US Dollars which may be so purchased (after
           deducting any costs of exchange and any other related costs) is less
           than the amount due, the Mortgagor shall indemnify the Mortgagee
           against the shortfall.


16.        DEDUCTION

           All sums payable by the Mortgagor under this Contract shall be paid
           in full without set-off, deduction or counterclaim or any restriction
           or condition and free and clear of any tax (other than an Excluded
           Tax) or other deductions or withholdings of any nature. The Mortgagor
           shall be responsible for paying the full amount of any such deduction
           or withholding to the relevant taxation or other authority. If the
           Mortgagor is required by any law or regulation to make any deduction
           or withholding, the Mortgagor shall compensate for such additional
           amount as will ensure that the Mortgagee receives the full amount
           which it would have received if no such deduction or withholding had
           been required.



                                       10


17.        EVIDENCE OF DEBT

           Any statement of account showing a sum payable by the Mortgagor
           hereunder and signed as correct by an authorized officer of the
           Mortgagee shall, in the absence of manifest error, be conclusive
           evidence of the amount so due.


18.        SUSPENSE ACCOUNT

18.01      The Mortgagee may place and keep any monies received hereunder to the
           credit of a suspense account for a period not exceeding six (6)
           months (or if the liquidation or winding-up proceeding has been
           commenced by the Mortgagor who is liable for such payment, the period
           shall be so long as the Mortgagee may think fit) in order to preserve
           the rights of the Mortgagee to sue or prove for the whole amount of
           its claims against the Mortgagor. Prior to actual use of such sums
           for the repayment of the Junior Secured Indebtedness in full or in
           part, no interest shall be payable for such sums that are placed to
           the credit of the suspense account.


19.        EXPENSES

19.01      The Mortgagor shall pay or be required to pay all the stamp duty,
           other taxes, notary fees and registration (including registration of
           mortgage) fees and all other similar fees under this Contract or
           documents referred to under this Contract, and the Mortgagor shall,
           upon the request of the Mortgagee, reimburse the Mortgagee for all
           the reasonable expenses (including legal fees, translation fees,
           travelling or other miscellaneous expenses) in connection with the
           negotiation, preparation, execution of this Contract, the exercise of
           its right and power hereunder and enforcement of this Contract.

19.02      If the Mortgagor does not punctually repay the Junior Secured
           Indebtedness in full, the Mortgagor shall be responsible for all
           reasonable expenses incurred by the Mortgagee in enforcing its rights
           hereunder (including, without limitation, any administration fee,
           management fee, insurance fee or any other cost related to the
           disposition of the Charged Assets).

19.03      In the event the Mortgagor has not paid any tax or fee in accordance
           with the AES Loan Agreement or this Contract and the Mortgagee elects
           to make payment thereof on behalf of the Mortgagor, the Mortgagor
           shall repay such sum and pay interest on such sum to the Mortgagor,
           and the interest shall be calculated in accordance with clause 15.01
           of the AES Loan Agreement from the time the payment is due to the
           time the Mortgagee receives such payment in full.


                                       11


20.        POWER OF ATTORNEY

           The Mortgagor irrevocably appoints the Mortgagee to be its
           attorney-in-fact. At the time any Event of Default specified under
           Clause 13 herein occurs and subject to the provisions of the Senior
           Subordination Agreement, the Mortgagee shall sign any document or do
           any act in the name of or otherwise on behalf of the Mortgagor that
           the Mortgagee reasonably considers necessary to carry out any
           obligations imposed on the Mortgagor hereunder or to exercise any of
           the powers hereby conferred or in connection with any disposition of
           the Charged Assets or the exercise of any rights in respect thereof
           or to give to the Mortgagee the full benefit of this security. The
           Mortgagor ratifies and confirms and agrees to ratify and confirm any
           instrument and act which such attorney-in-fact may execute or do.


21.        NOTICE

21.01      Each notice, demand or other communication to be given or made under
           this Contract shall be in writing and delivered or sent to the
           relevant party at its address or telex number or fax number set out
           below (or such other address or telex number or fax number as the
           addressee has by five (5) days' prior written notice specified to the
           other party):

           To the Mortgagor:        Wuhu Shaoda Electric Power Development
                                    Company Limited
                                    Commercial Office Building
                                    West Huangshan Road
                                    Wuhu, Anhui Province
                                    People's Republic of China

           Fax Number:              (86-553) 382-3224
           Attention:               Zhai Dao Ping


           To the Mortgagee:        AES China Holdings Company (L) Limited
                                    9th Floor, Allied Capital Resources Building
                                    32-38 Ice House Street
                                    Central, Hong Kong

           Fax Number:              (852) 2530-1673
           Attention:               Jeff Safford
                                    Chief Financial Officer

           Any notice, demand or other communication so addressed to the
           relevant party shall be deemed to have been delivered (1) if given or
           made by telex, when dispatched with confirmed answerback, (2) if
           given or made by letter, when actually delivered to the relevant
           address and (3) if given or made by 

                                       12


          fax, when dispatched.

21.02      Any correspondence and documents between the Mortgagee and the 
           Mortgagor shall be written in English.


22.        GOVERNING LAW AND DISPUTE SETTLEMENT

22.01      This Contract and its Appendix  shall be governed by and construed in
           accordance  with the laws of the People's Republic of China.

22.02      The Mortgagee shall have the right to dispose of the Charged Assets
           and request payment from the Mortgagor through litigation or
           enforcement of a judgment in Hong Kong, China or any other
           jurisdictions where the Mortgagor has a place of business or owns
           assets. The Mortgagor acknowledges that this Contract is protected
           under the laws of the People's Republic of China and at the same time
           protected under the jurisdictions aforesaid.

22.03      The Borrower irrevocably waives any immunity to which it or its
           property may at any time be or become entitled (whether characterized
           as sovereign immunity or otherwise) from any set-off or legal action
           in China or elsewhere, including immunity from service of process,
           immunity from jurisdiction of any court of tribunal, and immunity of
           any of its property from attachment prior to judgment or from
           execution of a judgment.


23.        MISCELLANEOUS

23.01      Any amendment, alteration, supplement or cancellation of the
           provisions of this Contract shall not be made orally unless it is
           confirmed and signed by both the Mortgagee and the Mortgagor.

23.02      No failure or delay by the Mortgagee in exercising any right, power
           or remedy hereunder shall impair such right, power or remedy or
           operate as a waiver thereof, nor shall any single or partial exercise
           of the same preclude any further exercise thereof or the exercise of
           any other right, power or remedy. The exercise of the aforesaid
           rights, powers and remedies herein provided by the Mortgagee may be
           at the same time, separate or cumulative, and the Mortgagee may
           exercise any other rights, powers and remedies provided by law.

23.03      The Mortgagee shall have the right to assign all or part of its
           interests hereunder to another party without the consent of the
           Mortgagor. The Mortgagor shall not assign any of its rights and
           obligations hereunder.

23.04      The Mortgagee  shall include its successors and  assignees.  The 
           Mortgagor  shall include its successors and permitted assignees.



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23.05      The illegality, invalidity and unenforceability of any provisions of
           this Contract shall not affect the validity of any other provision of
           this Contract. The Mortgagor agrees to perform all of its obligations
           under this Contract. In the event that such situation arises, the
           Mortgagee has the right to terminate this Contract and forthwith
           request payment for the Junior Secured Indebtedness.


24.        VALIDITY OF CONTRACT

24.01      This Contract shall be signed by the authorized representatives of
           each party at-------------- Municipality.

24.02      This Contract is executed in Chinese in six (6) originals of each, 
           all of which are equally effective; three (3) copies of which shall 
           be given to the Mortgagee, one (1) copy to the Mortgagor and one (1)
           each to a notary public in Beijing and Beijing Inland Customs.


25.        SUBORDINATED SECURITY

           Notwithstanding any other provision to the contrary, this Deed must
           be read and construed in all respects, and the exercise of any rights
           under this Deed and the enforcement of any rights under this Deed
           must be subject in each case to the terms of the:

           (a)      Senior Subordination Agreement; and

           (b)      Priority Deed.



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           In the event of any conflict or inconsistency between the terms of
           this Deed of the one part and the Senior Subordinated Agreement or
           the Senior Priority Deed of the other part, the latter documents will
           prevail.


           Mortgagor:          Wuhu Shaoda Electric Power Development Company
                               Limited

           Signature:  /s/ [SIGNATURE ILLEGIBLE]        Company Chop:
           Representative:
           Occupation:
           Date:
           Witness:  /s/ [SIGNATURE ILLEGIBLE]



           Mortgagee:          AES China Holdings Company (L) Limited

           Signature: /s/ [SIGNATURE ILLEGIBLE]         Company Chop:
           Representative:
           Occupation:
           Date:
           Witness:  /s/ [SIGNATURE ILLEGIBLE]


                                       15

                                   Appendix 1

                                    Equipment



                             [Please see attached.]







                                       16

                                   Appendix 2

                                    Buildings



                             [Please see attached.]






                                       17