Undertaking and Subordination Deed - AES China Holding Co. Ltd., Anhui Liyuan Electric Power Development Co. Ltd., China Power International Holding Ltd., Wuhu Energy Development Co., Wuhu Shaoda Electric Power Development Co. Ltd., and CCIC Finance Ltd.


                              DATED 26th June 1996



                      AES CHINA HOLDING COMPANY (L) LIMITED

                                       and

             ANHUI LIYUAN ELECTRIC POWER DEVELOPMENT COMPANY LIMITED
                                      
                                       and

                    CHINA POWER INTERNATIONAL HOLDING LIMITED

                                       and

                         WUHU ENERGY DEVELOPMENT COMPANY
                  together as Sponsors and Subordinated Lenders

                                       and

             WUHU SHAODA ELECTRIC POWER DEVELOPMENT COMPANY LIMITED
                                   as Borrower

                                       and

                              CCIC FINANCE LIMITED
                     on its own behalf and as facility agent
                       for the Lenders referred to herein


                      ------------------------------------


                       UNDERTAKING AND SUBORDINATION DEED


                      -------------------------------------





                                Baker & McKenzie
                           14th Floor  Hutchison House
                                    Hong Kong

                                    CONTENTS


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

 1.   Interpretation.........................................................2
 2.   Project Undertakings...................................................3
 3.   Subordination of Indebtedness..........................................5
 4.   Acknowledgement by Borrower............................................9
 5.   Continuing Security....................................................9
 6.   Representations and Warranties.........................................9
 7.   Undertakings..........................................................11
 8.   Borrower's Representations, Warranties and Undertaking................13
 9.   Claims by Subordinated Lenders........................................14
10.   Taxes and Other Deductions............................................14
11.   Costs, Charges and Expenses...........................................14
12.   Indemnity.............................................................15
13.   Further Assurance.....................................................16
14.   Evidence of Debt......................................................16
15.   Suspense Account......................................................16
16.   Waiver and Severability...............................................17
17.   Miscellaneous.........................................................17
18.   Assignment............................................................19
19.   Notices...............................................................19
20.   Governing Law and Jurisdiction........................................21


Execution    ...............................................................23



THIS DEED is made on the   26th    day of  June   1996
                         --------        ---------


BETWEEN:

 (1)       AES CHINA HOLDING COMPANY (L) LIMITED of Lot A, Level 3, Wisma
           Oceanic, Jalan Okk Awang Besar, 87007, Federal Territory of Labuan,
           Malaysia ('AES');

 (2)       ANHUI LIYUAN ELECTRIC POWER DEVELOPMENT COMPANY LIMITED of No.
           415 Wuhu Road, Hefei, Anhui Province, People's Republic of China
           ('Anhui Liyuan');

 (3)       CHINA POWER INTERNATIONAL HOLDING LIMITED of Suite 5306, 53/F,
           Central Plaza, 18 Harbour Road, Wanchai, Hong Kong ('CPIL');

 (4)       WUHU ENERGY DEVELOPMENT COMPANY of Commercial Office Building,
           Huangshan West Road, Wuhu, Anhui Province, People's Republic of China
           ('Wuhu');

           (AES, Anhui Liyuan, CPIL and Wuhu shall in their respective
           capacities as Joint Venture Parties and sponsors of the Project and
           as provider of subordinated loans as envisaged in Clause 2.02 of this
           Deed, be collectively referred to as the 'Sponsors' and, in their
           respective capacities as lenders under Subordinated Loan Agreements
           only, be collectively referred to as the 'Subordinated Lenders');

(5)        WUHU SHAODA ELECTRIC POWER DEVELOPMENT COMPANY LIMITED, an equity
           joint venture company formed under the Law of the People's Republic
           of China on Joint Ventures Using Chinese and Foreign Investment and
           whose registered office is at Commercial Office Building, West
           Huangshan Road, Wuhu, Anhui Province, People's Republic of China, as
           borrower (the 'Borrower'); and

(6)        CCIC FINANCE LIMITED of 38th Floor, Bank of China Tower, 1 Garden
           Road, Central, Hong Kong on its own behalf and as facility agent for
           the Lenders referred to below (in such capacity, the 'Facility
           Agent').


WHEREAS:

 (A)       By a loan agreement (the 'Loan Agreement') dated 22nd April 1996 made
           between (1) the Borrower, (2) CCIC Finance Limited, as arranger (the
           'Arranger'), (3) Bank of China, Hong Kong Branch, Cho Hung Bank, DKB
           Asia Limited, Dresdner Bank AG Hong Kong Branch, The First National
           Bank of Chicago, The Industrial Bank of Japan, Limited, Korea First
           Bank and Westdeutsche Landesbank Girozentrale, Hong Kong Branch, as
           co-arrangers (the 'Co-Arrangers'), (4) the banks and other financial
           institutions named therein as lenders (the 'Lenders'), (5) Bank of
           China, Anhui Branch, as security agent (the 'Security Agent') and (6)
           the Facility Agent, the Lenders have agreed to make available to the
           Borrower a term loan facility of up to sixty-five million Dollars
           (US$65,000,000), upon the terms set out therein.

(B)        It is a condition precedent to the Lenders making the Facility
           available to the Borrower that the Sponsors, the Subordinated Lenders
           and the Borrower enter into this Deed.


NOW THIS DEED WITNESSES as follows:

1.         INTERPRETATION

1.01       Definitions and Construction. In this Deed, unless the context
           requires otherwise:

           (a)      terms and expressions defined in or construed for the
                    purposes of the Loan Agreement shall have the same meanings
                    or be construed in the same manner when used in this Deed;

           (b)      'Committed Subordinated Loan Agreements' shall mean the AES
                    Loan Agreement, the Anhui Liyuan Loan Agreement and the Wuhu
                    Loan Agreement;

           (c)      the expression 'Facility Agent' shall mean the Facility
                    Agent acting on its own behalf and as facility agent for the
                    Lenders and the expression 'Lenders' shall include the
                    Arranger, the Lead Managers, and the Security Agent in their
                    respective capacities as such;

           (d)      'Relevant Percentage' means:

                    (i) in relation to AES, twenty-five per cent (25%); 
                    (ii) in relation to Anhui Liyuan, twenty per cent (20%); 
                    (iii) in relation to CPIL, forty-five per cent (45%); and 
                    (iv) in relation to Wuhu, ten per cent (10%);

           (e)      'Secured Indebtedness' means all and any sums (whether
                    principal, interest, fees or otherwise) which are or at any
                    time may become payable by the Borrower under the Loan
                    Agreement or any Security Document to which it is a party
                    and all other monies hereby secured;

           (f)      'Subordinated Indebtedness' means all and any sums, in
                    whatever currency, which are now or may hereafter become
                    due, owing or incurred by the Borrower to the Subordinated
                    Lenders, whether in respect of principal, interest or
                    otherwise, on account of any advance, loan or payment made
                    to or for the account of the Borrower;

           (g)      'Subordinated Loan Agreement' means any loan agreement,
                    facility letter or other document now or hereafter entered
                    into between the Subordinated Lenders and the Borrower
                    creating or evidencing the Subordinated Indebtedness (or any
                    part thereof) including, without limitation, the Committed
                    Subordinated Loan Agreements.

1.02       The Subordinated Lenders and the Sponsors. References to the
           Subordinated Lenders and the Sponsors shall mean and include each and
           every person liable hereunder as Subordinated Lender or Sponsor, as
           the case may be (except the Borrower) or, where the context permits,
           any one or more of them and all representations, warranties,
           undertakings, agreements and obligations of the Subordinated Lenders
           and the Sponsors herein expressed or implied shall, unless the
           context requires otherwise, be deemed to be made, given or assumed by
           each of the Subordinated Lenders and the Sponsors severally.

1.03       Loan Agreement. To the extent applicable and required by relevant
           law, the terms and conditions of the Loan Agreement shall be deemed
           to be incorporated into this Deed by reference and this Deed shall be
           read and construed as if such terms and conditions had been set out
           in full herein.

1.04       Successors and Assigns. The expressions 'Subordinated Lenders',
           'Borrower', 'Facility Agent', 'Sponsors' and 'Lenders' shall where
           the context permits include their respective personal
           representatives, successors and permitted assigns and any persons
           deriving title under them.

1.05       Miscellaneous. In this Deed, unless the context requires otherwise,
           references to statutory provisions shall be construed as references
           to those provisions as replaced, amended, modified or re-enacted from
           time to time; words importing the singular include the plural and
           vice versa and words importing a gender include every gender;
           references to this Deed, the Loan Agreement, any other Security
           Document, any Project Contract or any other document referred to
           herein shall be construed as references to such document as the same
           may be amended or supplemented (provided that any required consent or
           approval for such amendment or supplement has been obtained) from
           time to time; unless otherwise stated, references to Clauses are to
           clauses of this Deed. Clause headings are inserted for reference only
           and shall be ignored in construing this Deed.


2.         PROJECT UNDERTAKINGS

2.01       Undertaking. In consideration of the Lenders agreeing to make the
           Facility available to the Borrower upon the terms and conditions of
           the Loan Agreement and as a continuing security for the due and
           punctual payment of the Secured Indebtedness and the due and punctual
           performance and observance by the Borrower of all other obligations
           of the Borrower contained in the Loan Agreement or any Security
           Document to which it is a party, each of the Sponsors hereby
           unconditionally and irrevocably undertakes with the Facility Agent
           that:

           (a)      it will use its best efforts to procure that the Borrower
                    shall proceed with, and complete, the Installation in
                    accordance with the EPC Contract and the Installation Plan
                    and any other requirements of the Loan Agreement and that
                    the Project Completion Date shall occur on or before the
                    Scheduled Completion Date, provided that its obligation to
                    advance, or otherwise make available funds to the Borrower
                    in respect of such obligation shall be limited as set forth
                    in paragraphs (b) and (c) below;

           (b)      from time to time upon the Borrower or the Facility Agent
                    having determined in accordance with the Loan Agreement that
                    a Cost Overrun has occurred or is likely to occur it will
                    pay to or procure that there be paid to the Borrower by way
                    of further equity contribution to the Borrower, an amount
                    equal to its Relevant Percentage of each payment required to
                    be made by the Borrower on account of Installation Costs
                    which the Borrower is not able or entitled to fund from its
                    own resources or by means of any advance under any
                    Subordinated Loan Agreement or an Advance under the
                    Facility, such payments by the Sponsors to be made in such
                    amounts and at such times as shall be necessary to ensure
                    that (assuming each of the Sponsors makes its respective
                    payment hereunder) the Borrower is able to satisfy those
                    Installation Costs immediately upon their becoming due;

           (c)      it will pay to or procure that there be paid to the
                    Borrower, from time to time, an amount equal to its Relevant
                    Percentage of each sum required by the Borrower to meet any
                    Working Capital Deficit and, for this purpose 'Working
                    Capital Deficit' means, for any relevant period, any amount
                    by which the payment obligations of the Borrower (other than
                    under the Loan Agreement or any Subordinated Loan Agreement)
                    during that period exceed the funds available to the
                    Borrower to satisfy such outgoings during that period
                    provided that no Working Capital Deficit shall arise prior
                    to the first Actual Completion Date (as defined in the
                    Operation and Offtake Contract) to occur of either Unit of
                    the Power Plant;

           (d)      procure that the Project is not abandoned or cancelled, in
                    whole or in part.

2.02       Payments. Each of the Sponsors hereby unconditionally and irrevocably
           undertakes with the Facility Agent that it shall make payments or
           advances to the Borrower pursuant to Clause 2.01(b) and Clause
           2.01(c) above as and when required in writing by the Borrower or the
           Facility Agent (accompanied, if the requirement relates to a payment
           under Clause 2.01(b) in respect of Cost Overrun, by a certification
           from the Technical Consultant that a Cost Overrun has occurred or is
           reasonably likely to occur) from time to time so as to enable the
           Borrower to meet its relevant liabilities when due. The Sponsors
           shall make all payments pursuant to Clause 2.01(b) by way of cash
           contribution to the capital of the Borrower (making a corresponding
           increase in the registered capital of the Borrower) and shall make
           all payments pursuant to Clause 2.01(c) by way of advance of
           subordinated debt on terms and in currencies (being Dollars or RMB)
           to be agreed between the Sponsors and the Borrower from time to time
           (but subject always to the provisions of this Deed).

2.03       Lenders. If any Sponsor (the 'Defaulting Sponsor') fails to perform
           its obligations under the foregoing provisions of this Clause 2, the
           Lenders and/or the Facility Agent may (but shall not be obliged to)
           proceed to perform all or any of such obligations on behalf of the
           Defaulting Sponsor by procuring completion of the Installation and
           the occurrence of the Project Completion Date or by making payment of
           amounts payable under the foregoing provisions of this Clause 2, as
           appropriate, and the Defaulting Sponsor shall, from time to time,
           forthwith upon receiving the Facility Agent's first written demand,
           pay to the Facility Agent the amount so paid together with interest
           thereon at the rate referred to in clause 16 of the Loan Agreement,
           calculated from the date of such payment by the Lenders and/or the
           Facility Agent until full reimbursement, both before and after
           judgement.

3.         SUBORDINATION OF INDEBTEDNESS

3.01       Subordination. In consideration of the Lenders agreeing to make the
           Facility available to the Borrower upon the terms and conditions of
           the Loan Agreement and as a continuing security for the due and
           punctual payment of the Secured Indebtedness and the due and punctual
           performance and observance by the Borrower of all other obligations
           of the Borrower contained in the Loan Agreement or any Security
           Document to which it is a party, each of the Subordinated Lenders
           agrees that throughout the continuance of this Deed and so long as
           the Secured Indebtedness or any part thereof remains owing:

           (a)      subject to Clauses 3.02, 3.05 and 3.07, the Subordinated
                    Indebtedness owing to it:

                    (i)      is, and shall remain, subordinated and the payment
                             thereof deferred to all and any rights, claims and
                             actions which the Facility Agent or any Lender may
                             now or hereafter have against the Borrower in
                             respect of the Secured Indebtedness;

                    (ii)     shall not be repaid or repayable, in whole or in 
                             part,  except with the prior written consent of 
                             the Majority Lenders;

                    (iii)    may accrue interest, but such interest shall not be
                             payable;

                    (iv)     is and shall  remain  unsecured by any Charge over
                             the whole or any part of the assets of the 
                             Borrower;

                    (v)      is not,  and shall not  become  capable  of being,
                             subject to any right of set-off or counterclaim;

           (b)      subject to Clauses 3.02, 3.05 and 3.07, it shall not claim,
                    request, demand, sue for, take or receive (whether by
                    set-off or in any other manner and whether from the Borrower
                    or any other person) any money or other property in respect
                    of the Subordinated Indebtedness or any part thereof;

           (c)      if any monies (including the proceeds of any set-off or
                    counterclaim) or other property are received directly or
                    indirectly in respect of the Subordinated Indebtedness by or
                    on behalf of it in breach of any of the provisions of this
                    Deed, it will hold the same upon trust to be applied first
                    in or towards payment of the Secured Indebtedness and
                    second, as to any balance remaining after irrevocable and
                    unconditional payment and discharge in full of the Secured
                    Indebtedness, in or towards payment of the Subordinated
                    Indebtedness, upon such terms as the Subordinated Lenders
                    shall have agreed among themselves;

           (d)      subject to Clause 3.07, if any Charge is created as security
                    for the Subordinated Indebtedness then, immediately on the
                    creation thereof, the benefit of such Charge shall be
                    assigned or transferred in favour of the Facility Agent as
                    security for the Secured Indebtedness and any instrument or
                    agreement evidencing such Charge shall be deposited with the
                    Facility Agent;

           (e)      it shall require the Borrower to, and shall ensure that the
                    Borrower shall pay to the Facility Agent or as the Facility
                    Agent may direct any amounts which, if paid to such
                    Subordinated Lender, would be subject to the trust mentioned
                    in paragraph (c) above.

3.02       Proceedings for Winding-Up of Borrower. In any proceedings for the
           compulsory or voluntary winding-up, liquidation or dissolution of the
           Borrower (or any proceedings analogous thereto):

           (a)      the Facility Agent and the Lenders shall be entitled to
                    receive payment in full of the Secured Indebtedness before
                    the Subordinated Lenders shall be entitled to receive any
                    payment on account of the Subordinated Indebtedness or any
                    part thereof;

           (b)      the Subordinated Lenders agree that they will prove for the
                    full amount of their claims in respect of the Subordinated
                    Indebtedness and that in accordance with the trust mentioned
                    in Clause 3.01(c), any amounts payable to the Subordinated
                    Lenders in respect of the Subordinated Indebtedness shall be
                    applied in payment or satisfaction of the Secured
                    Indebtedness until the whole of the Secured Indebtedness
                    shall have been certified by the Facility Agent as having
                    been discharged and the remaining balance (if any) may be
                    applied towards payment of the amounts owing to the
                    Subordinated Lenders in respect of the Subordinated
                    Indebtedness, upon such terms as the Subordinated Lenders
                    shall have agreed among themselves.

3.03       Subordinated Loan Agreements.  The Subordinated Lenders agree that:

           (a)      each and every Subordinated Loan Agreement now or hereafter
                    entered into shall be subject in every respect to the terms
                    of this Deed;

           (b)      insofar as the terms of any Subordinated Loan Agreement or
                    any transaction in connection therewith are or may be
                    inconsistent with the terms of this Deed, the terms
                    contained herein shall prevail;

           (c)      in respect of any Subordinated Loan Agreement proposed to be
                    entered into after the date hereof, the prior written
                    approval of the terms thereof shall first be obtained from
                    the Facility Agent;

           (d)      no amendment shall be made to any Subordinated Loan
                    Agreement except in writing and with the Facility Agent's
                    prior written approval of the terms thereof, such approval
                    not to be unreasonably withheld;

           (e)      immediately after the execution of any Subordinated Loan
                    Agreement, or any agreement for the amendment of any
                    Subordinated Loan Agreement, copies thereof shall be
                    delivered to the Facility Agent as evidence thereof;

           (f)      no repayment or prepayment of principal may be made by the
                    Borrower (or payment in respect thereof accepted by the
                    Subordinated Lenders) under any Committed Subordinated Loan
                    Agreement unless if and to the extent that, subject to
                    Clause 3.01(a)(ii) and the other provisions of this Deed,
                    contemporaneously with or immediately prior to such
                    repayment or prepayment to any Subordinated Lender, a
                    repayment or prepayment of the Loan in at least a rateable
                    amount is made by the Borrower under the Loan Agreement. For
                    these purposes, 'rateable amount' means an amount equal to
                    X% of the Loan, where 'X' is the proportion, expressed as a
                    percentage, that the amount of the proposed repayment or
                    prepayment under the relevant Committed Subordinated Loan
                    Agreement bears to the total principal amount outstanding
                    under that Committed Subordinated Loan Agreement.

3.04       Application. All monies and other property received by the Facility
           Agent in respect of the Subordinated Indebtedness may be applied by
           the Facility Agent in or towards satisfaction of the Secured
           Indebtedness in such manner as the Facility Agent (acting on the
           instructions of the Majority Lenders) may decide.

3.05       Permitted Payments. The Borrower shall be entitled to make payments
           of principal and interest under and in accordance with the terms of
           the AES Loan Agreement, the Anhui Liyuan Loan Agreement, the Wuhu
           Loan Agreement and the arrangements relating to the other
           Subordinated Indebtedness made pursuant to Clause 2.01(c) as
           envisaged in clause 14 of the Loan Agreement provided that at the
           relevant time no Event of Default or prospective Event of Default has
           occurred and is continuing.

3.06       Directions and Authorisations.  Each Subordinated Lender hereby 
           irrevocably:

           (a)      directs the Borrower to pay to the Facility Agent (or as the
                    Facility Agent may direct) any amounts which, if paid to
                    such Subordinated Lender would be subject to the trust
                    mentioned in Clause 3.01(c);

           (b)      authorises the Facility Agent, in the event of a compulsory
                    or voluntary winding up, liquidation or dissolution of the
                    Borrower (or any proceedings analogous thereto) to ask,
                    demand, sue or prove for, and take and receive, in the name
                    of such Subordinated Lender or otherwise, all amounts
                    payable to such Subordinated Lender on account of any
                    Subordinated Indebtedness owing by the Borrower, and the
                    Subordinated Lender further covenants that in such event at
                    the request of the Facility Agent, it will take all such
                    action and execute all such documents as the Facility Agent
                    may reasonable require in order to enable the Facility Agent
                    to recover such Subordinated Indebtedness or any part
                    thereof.

3.07       AES Security and CPIL Security.  Notwithstanding any other provision
           of this Deed:

           (a)      the AES Lender(s) shall be entitled to take the benefit of
                    Charges and other security from the Borrower as security for
                    the performance of the Borrower's obligations under the AES
                    Loan Agreement provided that the rights of the AES Lender(s)
                    in respect of such Charges or other security shall be
                    subordinated to, and in all respects shall rank in priority
                    after, the rights of the Agents, the Arranger, the
                    Co-Arrangers and the Lenders on the terms of this Deed and
                    the Priority Deed and provided further that each such Charge
                    or other security (and each document creating or evidencing
                    the same) shall be dated at least one day after, and (in
                    respect of each such document to be filed or registered)
                    shall be filed or registered on and with effect from a day
                    which is at least one day after, the date of the Charges,
                    other security and Security Documents in favour of the
                    Agent(s), the Arranger, the Co-Arrangers and the Lenders (or
                    any of them);

           (b)      AES (and any other AES Lender(s)) shall be entitled to
                    initiate enforcement proceedings under the AES Loan
                    Agreement or otherwise take action to foreclose any Charges
                    or other security granted as security therefor in accordance
                    with its respective terms with the consent of the Majority
                    Lenders (such consent being required only so long as any
                    amount remains to be lent under the Loan Agreement or the
                    Secured Indebtedness or any part thereof remains owing) and
                    in accordance with the terms of this Deed and the Priority
                    Deed provided that, in any event, any proceeds of such
                    enforcement shall be held and dealt with subject to the
                    terms and conditions of this Deed and the Priority Deed
                    provided further that, notwithstanding any of the foregoing,
                    AES may accelerate the due date of all obligations of the
                    Borrower under the AES Loan Agreement where the Lenders have
                    accelerated the repayment of the Loan pursuant to Clause
                    15.02(a) of the Loan Agreement);

           (c)      CPIL shall be entitled to take the benefit of Charges and
                    other security from the Borrower as security in connection
                    with the provision of the Guarantee (subject to the
                    provisions of the Guarantee) provided that the rights of
                    CPIL in respect of such Charges or other security shall be
                    subordinated to, and in all respects shall rank in priority
                    after, the rights of the Agents, the Arranger, the
                    Co-Arrangers and the Lenders on the terms of this Deed and
                    the Priority Deed;

           (d)      CPIL shall be entitled to initiate enforcement proceedings
                    under the CPIL Security Documents or otherwise take action
                    to foreclose any Charges or other security granted thereby
                    in accordance with its respective terms with the consent of
                    the Majority Lenders (such consent being required only so
                    long as any amount remains to be lent under the Loan
                    Agreement or the Secured Indebtedness or any part thereof
                    remains owing) and in accordance with the terms of this Deed
                    and the Priority Deed provided that, in any event, any
                    proceeds of such enforcement shall be held and dealt with
                    subject to the terms and conditions of this Deed and the
                    Priority Deed and provided further that each such Charge or
                    other security (and each document creating or evidencing the
                    same) shall be dated at least one day after, and (in respect
                    of each such document to be filed or registered) shall be
                    filed or registered on and with effect from a day which is
                    at least one day after, the date of the Charges, other
                    security and Security Documents in favour of the Agent(s),
                    the Arranger, the Co-Arrangers and the Lenders (or any of
                    them).

4.         ACKNOWLEDGEMENT BY BORROWER

           The Borrower acknowledges the subordination of the Subordinated
           Indebtedness and warrants and undertakes throughout the continuance
           of this Deed and so long as the Secured Indebtedness or any part
           thereof remains owing that:

           (a)      it will make all payments due in respect of the Subordinated
                    Indebtedness in accordance with the provisions of this Deed
                    and it will comply with all the other provisions of this
                    Deed and it will not do, take part in or take the benefit of
                    anything which would or may breach the provisions of this
                    Deed;

           (b)      it will promptly notify the Facility Agent whenever it
                    incurs any Subordinated Indebtedness;

           (c)      it has no notice of any prior disposal of or Charge over the
                    Subordinated Indebtedness or any part thereof to any other
                    person other than any disposal pursuant to Clause 7.03.


5.         CONTINUING SECURITY

           This Deed shall be a continuing security and shall remain in full
           force and effect until the Secured Indebtedness has been paid in
           full, notwithstanding the insolvency, bankruptcy or liquidation or
           any incapacity or change in the constitution or status of any of the
           Sponsors, the Subordinated Lenders, the Borrower or any other person
           or any intermediate settlement of account or other matter whatsoever.
           This Deed is in addition to, and independent of, any Charge,
           guarantee or other security or right or remedy now or at any time
           hereafter held by or available to the Facility Agent or any Lender.


6.         REPRESENTATIONS AND WARRANTIES

6.01       Representations  and  Warranties.  Each of the Sponsors and the 
           Subordinated Lenders represents and warrants severally and for 
           itself to the Facility Agent that:

           (a)      it has full power, authority and legal right to enter into
                    and engage in the transactions contemplated by this Deed and
                    has taken or obtained all necessary corporate and other
                    action to authorise the execution and performance of this
                    Deed;

           (b)      this Deed constitutes its legal, valid and binding
                    obligations enforceable in accordance with its terms;

           (c)      neither the execution of this Deed nor the performance by it
                    of any of its obligations or the exercise of any of its
                    rights hereunder will conflict with or result in a breach of

                    any law, regulation, judgment, order, authorisation,
                    agreement or obligation applicable to it or cause any
                    limitation placed on it to be exceeded or, except as
                    indicated in Clause 3.07, result in the creation of or
                    oblige it to create a Charge in respect of the Subordinated
                    Indebtedness;

           (d)      all authorisations required from any governmental or other
                    authority or from any of its shareholders or creditors for
                    or in connection with the execution, validity and
                    performance of this Deed have been obtained and are in full
                    force and effect;

           (e)      it is not necessary in order to ensure the validity,
                    enforceability or admissibility in evidence in proceedings
                    of this Deed in its country of incorporation or any other
                    relevant jurisdiction that it or any other document be filed
                    or registered with any authority in its country of
                    incorporation or elsewhere or that any tax be paid in
                    respect thereof except as set out in appendix 2 of the Loan
                    Agreement;

           (f)      the Sponsors and the Subordinated Lenders are generally
                    subject to civil and commercial law and to legal proceedings
                    and neither the Sponsors and the Subordinated Lenders nor
                    any of their assets or revenues are entitled to any immunity
                    or privilege (sovereign or otherwise) from any set-off,
                    judgment, execution, attachment or other legal process;

           (g)      no material litigation, arbitration or administrative
                    proceeding is currently taking place or pending or, to the
                    best of its knowledge, information and belief, threatened
                    against it or its assets or revenues.

6.02       Additional Representations and Warranties.  Each of the Subordinated
           Lenders additionally represents and warrants severally and for 
           itself to the Facility Agent that:

           (a)      the Subordinated Loan Agreements in existence at the date
                    hereof are valid and in full force and effect and the
                    provisions thereof have been fully complied with and the
                    Borrower is not in default in respect of any provision
                    thereof;

           (b)      except as provided in Clause 7.03, each Subordinated Lender
                    is the sole beneficial owner of the Subordinated
                    Indebtedness owing to it and no Charge exists over all or
                    any part of the Subordinated Indebtedness (except as created
                    under or pursuant to this Deed).

6.03       Continuing Representation and Warranty. Each of the Sponsors and the
           Subordinated Lenders also represents and warrants to and undertakes
           with the Facility Agent severally and for itself that the foregoing
           representations and warranties set out in Clause 6.01 (in the case of
           the Sponsors and the Subordinated Lenders) and Clause 6.02 (in the
           case of the Subordinated Lenders only) with respect to it will be
           true and accurate throughout the continuance of this Deed with
           reference to the facts and circumstances subsisting from time to

           time, provided that the representation and warranty in Clause 6.01(b)
           shall (where applicable) be subject (as to matters of law only) to
           appendix 3 of the Loan Agreement.


7.         UNDERTAKINGS

7.01       Affirmative undertakings. Each of the Sponsors severally and for
           itself undertakes and agrees with the Facility Agent throughout the
           continuance of this Deed and so long as any sum remains owing
           hereunder that it will, unless the Majority Lenders otherwise agree
           in writing:

           (a)      supply to the Facility Agent in sufficient number for each
                    Lender:

                    (i)      as soon as they are available, but in any event
                             within one hundred and eighty (180) days after the
                             end of each of its financial years, copies of its
                             financial statements in respect of such financial
                             year (including a profit and loss account and
                             balance sheet) audited and certified without
                             qualification by (a) in the case of AES and CPIL, a
                             firm of independent accountants acceptable to the
                             Facility Agent and (b) in the case of Anhui Liyuan
                             and Wuhu, an independent public accountant
                             acceptable to the Facility Agent;

                    (ii)     as soon as they are  available,  but in any event 
                             within one hundred and twenty (120) days  after  
                             the end of  each  half of each  of its  financial 
                             years,  copies  of its unaudited  financial  
                             statements  (including  a profit and loss  account
                             and  balance sheet) prepared on a basis consistent
                             with its audited financial  statements  together
                             with a certificate  signed by its principal  
                             financial officer to the effect that such financial
                             statements  are  true in all  material  respects  
                             and  present  fairly  its financial  position  as 
                             at the end of, and the  results of its  operations
                             for, such half-year period;

                    (iii)    promptly on request, such additional financial or
                             other information relating to it as the Facility
                             Agent may from time to time reasonably request;

           (b)      keep proper records and books of account in respect of its
                    business and permit the Facility Agent and/or any
                    professional consultants appointed by the Facility Agent at
                    all reasonable times to inspect and examine its records and
                    books of account;

           (c)      promptly inform the Facility Agent of the occurrence of any
                    Event of Default or prospective Event of Default;

           (d)      maintain its corporate existence and conduct its business in
                    a proper and efficient manner and in compliance with all
                    laws, regulations, authorisations, agreements and
                    obligations applicable to it and pay all taxes imposed on it
                    when due;

           (e)      procure that there is no change of the parties to the Joint
                    Venture Contract or to the ownership or control (direct or
                    indirect) of the Borrower and each Sponsor save in
                    accordance with clause 13.01(f) of the Loan Agreement;

           (f)      no amendment or supplement shall be made to the Joint
                    Venture Contract or the articles of incorporation of the
                    Borrower;

           (g)      ensure that its obligations under this Deed at all times
                    rank at least pari passu with all its unsecured obligations
                    save for obligations that are mandatorily preferred by law;

           (h)      punctually pay all sums due from it and otherwise comply
                    with its obligations under this Deed and the other Security
                    Documents to which it is a party;

           (i)      do or permit to be done every act or thing which the
                    Facility Agent may from time to time require for the purpose
                    of enforcing the rights of the Facility Agent hereunder;

           (j)      except as expressly permitted by the terms of this Deed not
                    do or knowingly cause or permit to be done anything which
                    may in any way depreciate, jeopardise or otherwise prejudice
                    the value of the Facility Agent's security hereunder.

7.02       Subordination Undertakings. Each Subordinated Lender undertakes and
           agrees with the Facility Agent throughout the continuance of this
           Deed and so long as the Secured Indebtedness or any part thereof
           remains owing that it will, unless the Majority Lenders otherwise
           agree in writing:

           (a)      not create or attempt or agree to create or permit to arise
                    or exist any Charge over all or any part of the Subordinated
                    Indebtedness or any interest therein or, subject to Clause
                    7.03, otherwise assign, deal with or dispose of all or any
                    part of the Subordinated Indebtedness (except under or
                    pursuant to this Deed);

           (b)      subject to the provisions of this Deed, at all times remain
                    the beneficial owners of the Subordinated Indebtedness;

           (c)      not vary the liability of the Borrower in relation to the
                    Subordinated Indebtedness;

           (d)      upon the request of the Facility Agent, supply to the
                    Facility Agent such information regarding the amount and
                    terms of the Subordinated Indebtedness as the Facility Agent
                    may require;

           (e)      subject to the provisions of this Deed, duly observe and
                    perform all its obligations under the Subordinated Loan
                    Agreements;

           (f)      do or permit to be done every act or thing which the
                    Facility Agent may from time to time require for the purpose
                    of enforcing the rights of the Facility Agent hereunder;

           (g)      not do or knowingly cause or permit to be done anything
                    which may in any way depreciate, jeopardise or otherwise
                    prejudice the value of the Facility Agent's security
                    hereunder;

           (h)      ensure that each date for repayment of principal and payment
                    of interest under the Committed Subordinated Loan Agreement
                    to which it is a party shall be an Interest Payment Date;

           (i)      promptly inform the Facility Agent of any breach of this
                    Deed known to it;

           (j)      maintain its corporate existence and conduct its business in
                    a proper and efficient manner and in compliance with all
                    laws, regulations, authorisations, agreements and
                    obligations applicable to it and pay all taxes imposed on it
                    when due;

           (k)      ensure that its obligations under this Deed at all times
                    rank at least pari passu with all its unsecured obligations
                    save for obligations that are mandatorily preferred by law;

           (l)      punctually pay all sums due from it and otherwise comply
                    with its obligations under this Deed and the other Security
                    Documents (if any) to which it is a party.

7.03       AES Loan Agreement. So long as the AES Loan Agreement remains a
           Subordinated Loan Agreement, AES may (i) sub-participate all or any
           part of its interest under the AES Loan Agreement and (ii) assign all
           or any of its rights under the AES Loan Agreement (with the Facility
           Agent's prior written consent, such consent not to be unreasonably
           withheld) provided that each such assignee shall accede to this Deed
           as a Subordinated Lender and, for avoidance of doubt, not as a
           Sponsor, by executing and delivering to the Facility Agent an
           accession deed in form and substance acceptable to the Facility
           Agent. AES shall not transfer or dispose of all or any part of its
           obligations to advance or make available funds to the Borrower under
           the AES Loan Agreement or purport to do so.


8.         BORROWER'S REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

8.01       Representations and Warranties. The Borrower represents and warrants
           to the Facility Agent in the terms of Clause 6.02(a) and also
           represents, warrants and undertakes to the Facility Agent that such
           representation and warranty will be true and accurate from time to
           time throughout the continuance of this Deed with reference to the
           facts and circumstances subsisting from time to time.

8.02       Undertakings.  The Borrower undertakes and agrees with the Facility
           Agent in the  terms of Clause 7.02(d) to (g) inclusive.

9.         CLAIMS BY SUBORDINATED LENDERS

           Each Subordinated Lender severally represents to and undertakes with
           the Facility Agent that it has not taken and will not take any
           security in respect of its liability under this Deed whether from the
           Borrower or any other person. So long as any sum remains owing by the
           Borrower to the Facility Agent or the Lenders, no Subordinated Lender
           shall exercise any right of subrogation, contribution or any other
           rights of a surety or enforce any security or other right or claim
           against the Borrower (whether in respect of its liability under this
           Deed or otherwise) or any other person who has guaranteed or given
           any security in respect of the Secured Indebtedness or, subject to
           the provisions of this Deed, claim in the insolvency or liquidation
           of the Borrower or any such other person in competition with the
           Facility Agent or the Lenders. If any Subordinated Lender receives
           any payment or benefit in breach of this Clause, it shall hold the
           same upon trust for the Facility Agent as a continuing security for
           the Secured Indebtedness.


10.        TAXES AND OTHER DEDUCTIONS

           All sums payable by the Sponsors and the Subordinated Lenders under
           this Deed shall be paid in full without set-off 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. If the Sponsors or the Subordinated Lenders or any other
           person are required by any law or regulation to make any deduction or
           withholding (on account of tax (other than an Excluded Tax) or
           otherwise) from any payment for the account of any Lender or the
           Facility Agent, the relevant Sponsors or Subordinated Lenders shall,
           together with such payment, pay such additional amount as will ensure
           that such Lender or the Facility Agent receives (free and clear of
           any tax (other than an Excluded Tax) or other deductions or
           withholdings) the full amount which it would have received if no such
           deduction or withholding had been required. The Sponsors and the
           Subordinated Lenders shall promptly forward to the Facility Agent
           copies of official receipts or other evidence showing that the full
           amount of any such deduction or withholding has been paid over to the
           relevant taxation or other authority.


11.        COSTS, CHARGES AND EXPENSES

           Each of the Sponsors and the Subordinated Lenders and the Borrower
           shall from time to time forthwith on demand pay to or reimburse the
           Facility Agent and the Lenders for:

           (a)      all reasonable costs, charges and expenses (including legal
                    and other fees on a full indemnity basis and out of pocket
                    expenses) reasonably incurred by the Facility Agent or any
                    Lender in connection with the preparation, execution and
                    registration of any amendment to or extension of, or the
                    giving of any consent or waiver in connection with this
                    Deed; and

           (b)      all reasonable costs, charges and expenses (including legal
                    and other fees on a full indemnity basis and out of pocket

                    expenses) reasonably incurred by the Facility Agent or any
                    Lender in exercising any of its or their rights or powers
                    hereunder or in suing for or seeking to recover any sums due
                    hereunder or otherwise preserving or enforcing its or their
                    rights hereunder or in defending any claims brought against
                    it or them in respect of this Deed or in releasing or
                    re-assigning this Deed upon payment of all monies hereby
                    secured and until payment of the same in full, all such
                    costs, charges and expenses shall be secured by this Deed.

           The liability of such Sponsor and each Subordinated Lender in respect
           of amounts due under this Clause 11 shall be borne severally by them
           in the proportions of their Relevant Percentages, provided, that in
           the event that any amount becomes payable to the Facility Agent
           and/or the Lenders under this Clause 11 solely by virtue of the
           action or inaction of certain only of the Sponsors or the
           Subordinated Lenders, those relevant Sponsors and/or Subordinated
           Lenders shall bear sole liability and responsibility in respect of
           such amount so payable and where there is more than one such Sponsor
           or Subordinated Lender, so liable and responsible, such liability and
           responsibility shall be borne jointly and severally among them. To
           the extent practicable, the Facility Agent shall consult the relevant
           Sponsor or Subordinated Lender and the Borrower before incurring any
           major expenditure.


12.        INDEMNITY

12.01      Sponsors' and Subordinated Lenders' General Indemnity. Each Sponsor
           and Subordinated Lender shall indemnify the Facility Agent and each
           Lender against all losses, liabilities, damages, costs and expenses
           incurred by it or them in the execution or performance of the terms
           and conditions hereof and against all actions, proceedings, claims,
           demands, costs, charges and expenses which may be incurred, sustained
           or arise in respect of the non-performance or non-observance of any
           of the undertakings and agreements on the part of that Sponsor or
           Subordinated Lender herein contained or in respect of any matter or
           thing done or omitted by it relating in any way whatsoever to the
           Subordinated Indebtedness of that Subordinated Lender.

12.02      Borrower's General Indemnity. The Borrower shall indemnify the
           Facility Agent and each Lender against all losses, liabilities,
           damages, costs and expenses incurred by it or them in the execution
           or performance of the terms and conditions hereof and against all
           actions, proceedings, claims, demands, costs, charges and expenses
           which may be incurred, sustained or arise in respect of the
           non-performance or non-observance of any of the undertakings and
           agreements on the part of the Sponsors, the Subordinated Lenders and
           the Borrower herein contained or in respect of any matter or thing
           done or omitted relating in any way whatsoever to the Subordinated
           Indebtedness.

12.03      Currency Indemnity. If an amount due to the Facility Agent from the
           Subordinated Lenders, the Sponsors and/or the Borrower in one
           currency (the 'first currency') is received by the Facility Agent in
           another currency (the 'second currency'), the obligations of
           Subordinated Lenders, the Sponsors and/or the Borrower, as the case
           may be, to the Facility Agent in respect of such amount shall only be
           discharged to the extent that the Facility Agent may purchase the

           first currency with the second currency in accordance with normal
           banking procedures. If the amount of the first currency which may be
           so purchased (after deducting any costs of exchange and any other
           related costs) is less than the amount so due, the relevant
           Subordinated Lender, Sponsor or the Borrower, as the case may be,
           shall indemnify the Facility Agent against the shortfall. This
           indemnity shall be an obligation of the Subordinated Lenders,
           Sponsors and the Borrower independent of and in addition to its other
           obligations under this Deed.

12.03      Payment and Security. The Facility Agent may retain and pay out of
           any money in the Facility Agent's hands all sums necessary to effect
           the indemnity contained in this Clause and all sums payable by the
           Sponsors, the Subordinated Lenders and the Borrower under this Clause
           shall form part of the monies hereby secured.


13.        FURTHER ASSURANCE

13.01      Further Assurance. Each of the Sponsors, the Subordinated Lenders and
           the Borrower shall at any time and from time to time (whether before
           or after the security hereby created shall have become enforceable)
           execute such further legal or other mortgages, charges or assignments
           and do all such transfers, assurances, acts and things as the
           Facility Agent may require over or in respect of the Subordinated
           Indebtedness to secure all monies, obligations and liabilities hereby
           covenanted to be paid or hereby secured or for the purposes of
           perfecting and completing any assignment of the Facility Agent's
           rights, benefits or obligations hereunder and the Sponsors, the
           Subordinated Lenders and the Borrower shall also give all notices,
           orders and directions which the Facility Agent may require.

13.02      Enforcement of Facility Agent's Rights. Each of the Sponsors, the
           Subordinated Lenders and the Borrower will do or permit to be done
           everything which the Facility Agent may from time to time require to
           be done for the purpose of enforcing the Facility Agent's rights
           hereunder and will allow the names of the Sponsors, the Subordinated
           Lenders and the Borrower (as the case may be) to be used as and when
           required by the Facility Agent for that purpose.


14.        EVIDENCE OF DEBT

           Any statement of account purporting to show an amount due from the
           Borrower under the Loan Agreement or any Security Document to which
           it is a party or from any Sponsor or Subordinated Lender under this
           Deed and signed as correct by a duly authorised officer of the
           Facility Agent shall, in the absence of manifest error, be conclusive
           evidence of the amount so due.


15.        SUSPENSE ACCOUNT

           The Facility Agent may place and keep any monies received by virtue
           of this Deed (whether before or after the insolvency, bankruptcy or
           liquidation of any of the Sponsors, Subordinated Lenders or the
           Borrower) to the credit of a suspense account for so long as the
           Facility Agent may think fit in order to preserve the rights of the

           Facility Agent or any Lender to sue or prove for the whole amount of
           its claims against the Sponsors, the Subordinated Lenders, the
           Borrower or any other person.


16.        WAIVER AND SEVERABILITY

           No failure or delay by the Facility Agent or any Lender 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 rights, powers
           and remedies herein provided are cumulative and do not exclude any
           other rights, powers and remedies provided by law. If at any time any
           provision of this Deed is or becomes illegal, invalid or
           unenforceable in any respect under the law of any jurisdiction, the
           legality, validity and enforceability of such provision under the law
           of any other jurisdiction, and of the remaining provisions of this
           Deed, shall not be affected or impaired thereby.


17.        MISCELLANEOUS

17.01      Continuing Obligations. The liabilities and obligations of the
           Sponsors, the Subordinated Lenders and the Borrower under this Deed
           shall remain in force notwithstanding any act, omission, event or
           circumstance whatsoever, until full, proper and valid payment of the
           Secured Indebtedness.

17.02      Protective  Clauses.  Without limiting Clause 17.01, neither the
           liability  of the  Sponsors,  the Subordinated  Lenders  or the  
           Borrower  nor the  validity  or  enforceability  of this  Deed  shall
           be prejudiced, affected or discharged by:

           (a)      the granting of any time or indulgence to the Borrower or
                    any other person;

           (b)      any variation or modification of the Loan Agreement, any of
                    the Security Documents or any other document referred to
                    therein;

           (c)      the invalidity or unenforceability of any obligation or
                    liability of the Borrower under the Loan Agreement or any of
                    the Security Documents to which it is a party;

           (d)      any invalidity or irregularity in the execution of the Loan
                    Agreement or this Deed or any of the other Security
                    Documents;

           (e)      any deficiency in the powers of the Borrower to enter into
                    or perform any of its obligations under the Loan Agreement
                    or any of the Security Documents to which it is party or any
                    irregularity in the exercise thereof or any lack of
                    authority by any person purporting to act on behalf of the
                    Borrower;

           (f)      the insolvency, bankruptcy or liquidation or any incapacity,
                    disability or limitation or any change in the constitution
                    or status of the Borrower or any of the Sponsors or
                    Subordinated Lenders;

           (g)      any other Security Document, Charge, guarantee or other
                    security or right or remedy being or becoming held by or
                    available to the Facility Agent or any Lender or by any of
                    the same being or becoming wholly or partly void, voidable,
                    unenforceable or impaired or by the Facility Agent or any
                    Lender at any time releasing, refraining from enforcing,
                    varying or in any other way dealing with any of the same or
                    any power, right or remedy the Facility Agent or any Lender
                    may now or hereafter have from or against the Borrower or
                    any other person;

           (h)      any waiver, exercise, omission to exercise, compromise,
                    renewal or release of any rights against the Borrower or any
                    other person or any compromise, arrangement or settlement
                    with any of the same;

           (i)      any act, omission, event or circumstance which would or may
                    but for this provision operate to prejudice, affect or
                    discharge this Deed or the liability of the Sponsors and the
                    Subordinated Lenders or the Borrower hereunder,

           and each of the Subordinated Lenders and Sponsors hereby consents to
           all acts and omissions of any Agent and the Lenders pertaining to the
           above.

17.03      Binding Nature of Deed. Each of the Sponsors and the Subordinated
           Lenders agrees to be bound by this Deed notwithstanding that any
           other person who was intended to sign or be bound by this Deed fails,
           for any reason, so to sign or be bound or that this Deed is for any
           reason invalid or unenforceable against such person.

17.04      Release of Sponsors/Subordinated Lenders. Without prejudice to the
           generality of Clause 17.02, the Facility Agent or any Lender may
           release any of the Sponsors and/or the Subordinated Lenders from
           liability under this Deed or vary or modify the obligations of or
           grant any time or indulgence to or make any other arrangements with
           any of the Sponsors and/or the Subordinated Lenders without affecting
           or discharging its rights against the other Sponsors and/or
           Subordinated Lenders.

17.05      Unrestricted Right of Enforcement. This Deed may be enforced without
           the Facility Agent or any Lender first having recourse to any other
           security or rights or taking any other steps or proceedings against
           the Sponsors, the Subordinated Lenders, the Borrower or any other
           person or may be enforced for any balance due after resorting to any
           one or more other means of obtaining payment or discharge of the
           monies obligations and liabilities hereby secured.

17.06      Discharges and Releases. Notwithstanding any discharge, release or
           settlement from time to time between the Facility Agent or any Lender
           and the Sponsors, the Subordinated Lenders or the Borrower, if any
           security, disposition or payment granted or made to the Facility
           Agent or any Lender in respect of the Secured Indebtedness by the
           Sponsors, the Subordinated Lenders, the Borrower or any other person
           is avoided or set aside or ordered to be surrendered, paid away,
           refunded or reduced by virtue of any provision, law or enactment
           relating to bankruptcy, insolvency, liquidation, winding-up,
           composition or arrangement for the time being in force or for any
           other reason, the Facility Agent shall be entitled hereafter to
           enforce this Deed as if no such discharge, release or settlement had
           occurred.

17.07      Amendment. Any amendment or waiver of any provision of this Deed and
           any waiver of any default under this Deed shall only be effective if
           made in writing and signed by the Facility Agent.


18.        ASSIGNMENT

18.01      The  Sponsors,  the  Subordinated  Lenders  and  the  Borrower.  
           Subject  to  Clause  7.03,  none of the  Sponsors, the Subordinated
           Lenders and the Borrower shall assign any of their rights hereunder.

18.02      The Lenders. The Lenders may assign or grant participations in all or
           any part of their rights under this Deed and make disclosures in
           accordance with the provisions of clause 22 of the Loan Agreement but
           as if references therein to the Borrower were references to the
           Sponsors, the Subordinated Lenders or the Borrower (as the case may
           be).


19.        NOTICES

19.01      Delivery. Each notice, demand or other communication to be given or
           made under this Deed 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              AES China Holding Company (L) Limited
           Subordinated        c/o AES China Generating Co. Ltd.
                               9/F., Allied Capital Resources Building
                               32-38 Ice House Street
                               Central
                               Hong Kong

                               Fax Number: (852) 2530 1673
                               Attention : Jeffery A. Safford,
                                            Chief Financial Officer


                               Anhui Liyuan Electric Power Development 
                                 Company Limited
                               No.415 Wuhu Road
                               Hefei
                               Anhui Province
                               People's Republic of China

                               Fax Number: (0551) 363 7642
                               Attention : Long Wen Ming/Suan Jie/Chen 
                                           Liang Bao

                    China Power International Holding Limited
                    Suite 5306, 53/F, Central Plaza
                    18 Harbour Road
                    Wanchai
                    Hong Kong

                    Fax Number:       (852) 2802 3922
                    Attention :       Zhao Xin Yan/Wang Zi Chao


                    Wuhu Energy Development Company
                    Commercial Office Building
                    Huangshan West Road
                    Wuhu
                    Anhui Province
                    People's Republic of China

                    Fax Number:       (0553) 382 3224
                    Attention :       Zhai Dao Ping


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

                    Fax Number:       (0553) 382 3224
                    Attention :       Zhai Dao Ping


  To the Facility   CCIC Finance Limited
  Agent:            38th Floor
                    Bank of China Tower
                    1 Garden Road
                    Central
                    Hong Kong

                    Telex Number:        61931
                    Answerback  :       CCICX HX
                    Fax Number  :       (852) 2877 2105
                    Attention   :       Loans Administration Department

19.02      Deemed Delivery. Any notice, demand or other communication so
           addressed to the relevant party shall be deemed to have been
           delivered (a) if given or made by letter, when actually delivered to
           the relevant address; (b) if given or made by telex, when despatched
           with confirmed answerback and (c) if given or made by fax, when
           despatched.

20.        GOVERNING LAW AND JURISDICTION

20.01      Law.  This Deed and the rights  and  obligations  of the  parties
           hereunder  shall be  governed  by and construed in accordance with 
           the laws of England.

20.02      Jurisdiction. Each of the Sponsors, the Subordinated Lenders and the
           Borrower agrees that any legal action or proceeding arising out of or
           relating to this Deed may be brought in the courts of England and
           irrevocably submits to the non-exclusive jurisdiction of such courts.

20.03      Process Agent. Each of the Sponsors, the Subordinated Lenders and the
           Borrower irrevocably appoints Messrs. Rowe & Maw (attention: Mr.
           Bernd Ratzke, Ref 26866/0001) of 20 Blackfriars Lane, London EC4V
           6HT, England as their agent to receive and acknowledge on their
           behalf service of any writ, summons, order, judgment or other notice
           of legal process in England. If for any reason the agent named above
           (or its successor) no longer serves as agent of any Sponsor,
           Subordinated Lender or the Borrower for this purpose, the relevant
           Sponsor, Subordinated Lender or the Borrower (as the case may be)
           shall promptly appoint a successor agent satisfactory to the Facility
           Agent and notify the Facility Agent thereof provided that until the
           Facility Agent receives such notification, it shall be entitled to
           treat the agent named above (or its said successor) as the agent of
           such Sponsor, Subordinated Lender and/or the Borrower (as the case
           may be) for the purposes of this Clause. The Sponsors, the
           Subordinated Lenders and the Borrower agree that any such legal
           process shall be sufficiently served on them if delivered to such
           agent for service at its address for the time being in England
           whether or not such agent gives notice thereof to the Sponsors, the
           Subordinated Lenders and the Borrower.

20.04      No Limitation on Right of Action. Nothing herein shall limit the
           right of the Facility Agent and the Lenders to commence any legal
           action against the Sponsors, the Subordinated Lenders or the Borrower
           and/or their property in any other jurisdiction or to serve process
           in any manner permitted by law, and the taking of proceedings in any
           jurisdiction shall not preclude the taking of proceedings in any
           other jurisdiction whether concurrently or not.

20.05      Waiver; Final Judgment Conclusive. Each of the Sponsors, the
           Subordinated Lenders and the Borrower irrevocably and unconditionally
           waives any objection which it may now or hereafter have to the choice
           of England as the venue of any legal action arising out of or
           relating to this Deed. The Sponsors, the Subordinated Lenders and the
           Borrower also agree that a final judgment against them in any such
           legal action shall be final and conclusive and may be enforced in any
           other jurisdiction, and that a certified or otherwise duly
           authenticated copy of the judgment shall be conclusive evidence of
           the fact and amount of their indebtedness.

20.06      Waiver of Immunity. Each of the Sponsors, the Subordinated Lenders
           and the Borrower irrevocably waives any immunity to which it or its
           property may at any time be or become entitled, whether characterised
           as sovereign immunity or otherwise, from any set-off or legal action
           in England or elsewhere, including immunity from service of process,
           immunity from jurisdiction of any court or tribunal, and immunity of
           any of its property from attachment prior to judgment or from
           execution of a judgment.

IN WITNESS whereof the Sponsors, the Subordinated Lenders and the Borrower have
executed this Deed on the day and year first above written.


THE SPONSORS AND THE SUBORDINATED LENDERS
- -----------------------------------------

THE COMMON SEAL of                            )
AES CHINA HOLDING COMPANY                     )
(L) LIMITED                                   )  /s/Edward C. Hall, III
was hereunto affixed                          )  /s/Jeffery A. Safford
in the presence of:                           )
        
      [Signature Illegible]

EXECUTED as, and DELIVERED as, a Deed         )
by ANHUI LIYUAN ELECTRIC POWER                )
DEVELOPMENT COMPANY LIMITED                   )  [Signature Illegible]
                                              )
acting by its authorised signatory            )
in the presence of:                           )

      /s/David W. Platt
         David W. Platt
         Solicitor
         Hong Kong

THE COMMON SEAL of                            )
CHINA POWER INTERNATIONAL                     )
HOLDING LIMITED                               )  [Signature Illegible]
was hereunto affixed                          )
in the presence of:                           )

      /s/David W. Platt
         David W. Platt
         Solicitor
         Hong Kong

EXECUTED as, and DELIVERED as, a Deed         )
by WUHU ENERGY DEVELOPMENT                    )
COMPANY                                       )  [Signature Illegible]
acting by its authorised signatory            )
in the presence of:                           )

      /s/David W. Platt
         David W. Platt
         Solicitor
         Hong Kong


THE BORROWER
- ------------

EXECUTED as, and DELIVERED as, a Deed         )
by WUHU SHAODA ELECTRIC POWER                 )
DEVELOPMENT COMPANY LIMITED                   )
                                              )  [Signature Illegible]
acting by its authorised signatory            )
in the presence of:                           )

             /s/David W. Platt
                David W. Platt
                Hong Kong


THE FACILITY AGENT
- ------------------

SIGNED for and on behalf of                   )
CCIC FINANCE LIMITED                          )  [Signature Illegible]
by                                            )









TO ALL TO WHOM these presents shall come, I, MARK JONATHAN ROBERTS Notary Public
by authority duly admitted and practising at do hereby certify that on the 14TH
day of MAY 1996 at 4TH FLOOR ALEXANDRA HOUSE, HONG KONG aforesaid there
personally came before me JEFFERY ATWOOD SAFFORD and EDWARD C. HALL III the
subscribing witnesses to the foregoing instrument who declared and said that
they were present and did see the affixation of the Common Seal of AES CHINA
HOLDING COMPANY (L) LIMITED thereto in accordance with the Memorandum and
Articles of Association of AES CHINA HOLDING COMPANY (L) LIMITED.

IN FAITH AND TESTIMONY whereof I have hereunto set my hand and seal of office at
HONG KONG this 14TH day of MAY in the year one thousand nine hundred and
ninety-SIX (1996).




                                                    /s/ Mark Roberts
                                                    -----------------------
                                                    Signature

                                                    Mark Jonathan Roberts
                                                    Notary Public
                                                    3rd - 6th Floors
                                                    Alexandra House
                                                    Hong Kong