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Published: 2008-03-26

Chengdu AES Kaihua Gas Turbine Power Co. Ltd. Cooperative Joint Venture Contract - Chengdu Huaxi Electric Power (Group) Co. Ltd., China National Aero-Engine Corp., and AES China Generating Co. Ltd.



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


                CHENGDU HUAXI ELECTRIC POWER (GROUP) COMPANY LTD.



                   AND CHINA NATIONAL AERO-ENGINE CORPORATION

                                       AND

                      AES CHINA GENERATING COMPANY LIMITED


                                   COOPERATIVE

                             JOINT VENTURE CONTRACT

                            FOR THE ESTABLISHMENT OF

           SINO-FOREIGN CHENGDU AES KAIHUA GAS TURBINE POWER CO., LTD.



                                  NOVEMBER 28, 1995




                                TABLE OF CONTENTS
                                                                        PAGE
                                                                        ----

ARTICLE 1.                 GENERAL PROVISIONS  ............................1
ARTICLE 2.                 DEFINITIONS  ...................................1
ARTICLE 3.                 PARTIES TO THIS CONTRACT  ......................4
ARTICLE 4.                 ESTABLISHMENT OF COOPERATIVE  JOINT
                           VENTURE COMPANY  ...............................5
ARTICLE 5.                 PURPOSE, SCOPE AND SCALE OF PRODUCTION
                           AND OPERATION  .................................6
ARTICLE 6.                 TOTAL AMOUNT OF INVESTMENT AND
                           REGISTERED CAPITAL  ............................6
ARTICLE 7.                 ANNUAL CAPITAL RETURN  ........................11
ARTICLE 8.                 RESPONSIBILITIES OF THE PARTIES  ..............11
ARTICLE 9.                 BOARD OF DIRECTORS  ...........................13
ARTICLE 10.                MANAGEMENT ORGANIZATION  ......................17
ARTICLE 11.                SITE  .........................................18
ARTICLE 12.                SALE OF ELECTRICITY  ..........................18
ARTICLE 13.                CONSTRUCTION  .................................18
ARTICLE 14.                FUEL SUPPLY  ..................................19
ARTICLE 15.                LABOR MANAGEMENT  .............................19
ARTICLE 16.                FINANCIAL AFFAIRS AND ACCOUNTING  .............19
ARTICLE 17.                TAXATION AND INSURANCE  .......................22
ARTICLE 18.                THE JOINT VENTURE TERM  .......................23
ARTICLE 19.                BREACH OF CONTRACT  ...........................23
ARTICLE 20.                TERMINATION AND LIQUIDATION  ..................24
ARTICLE 21.                FORCE MAJEURE  ................................26
ARTICLE 22.                SETTLEMENT OF DISPUTES  .......................27
ARTICLE 23.                APPLICABLE LAW  ...............................28
ARTICLE 24.                MISCELLANEOUS PROVISIONS  .....................29

SIGNATURES                 ...............................................32

APPENDIX 1.                RED LINE SITE MAP
APPENDIX 2.                ANNUAL CAPITAL RETURNS
APPENDIX 3.                ARTICLES OF ASSOCIATION
APPENDIX 4.                LIST OF IMPORTED EQUIPMENT
APPENDIX 5.                FORMATION OF EACH PARTY







                       COOPERATIVE JOINT VENTURE CONTRACT
                       ----------------------------------

                          ARTICLE 1. GENERAL PROVISIONS


THIS  CONTRACT is made in Beijing,  the People's  Republic of China on this 28th
day of November, 1995 by and among  --------------------  Chengdu Huaxi Electric
Power (Group) Shareholding Company Ltd.  (hereinafter referred to as 'Party A'),
China National Aero-engine  Corporation  (hereinafter  referred to as 'Party B')
and AES China Generating Company Limited (hereinafter referred to as 'Party C').
Each of Party A, Party B and Party C shall hereinafter  individually be referred
to as a 'Party' and collectively as the 'Parties'.

After  friendly  consultations  conducted in accordance  with the  principles of
equality and mutual  benefit,  the Parties have agreed to organize  Sino Froeign
Chengdu AES KAIHUA GAS Turbine Power Company, Ltd. (the 'Company') in accordance
with the Law of the People's Republic of China on Sino-Foreign Cooperative Joint
Venture  Enterprises (the 'Cooperative Joint Venture Law'),law of Corporation of
P.R.  China other  relevant  laws and  regulations,  and the  provisions of this
Contract. Therefore, the creation of this contract:

                             ARTICLE 2. DEFINITIONS

2.01     Definitions

         For purposes of this Joint Venture Contact,  the capitalized  terms set
         forth below shall have the following corresponding meanings:

         1.       'Affiliate': Any company, through ownership of voting stock or
                  otherwise,  directly or indirectly,  controlling or controlled
                  by a Party;  the term  'control'  being  used in the  sense of
                  power to elect  directors  or to direct  the  management  of a
                  company.

         2.       'Articles  of   Association':   The   Company's   articles  of
                  associations, signed by the Parties, approved by the Company's
                  Board of Directors and the Examination and Approval Authority,
                  as amended from time to time when  necessary with the approval
                  from the Board of Directors, attached as Appendix 3.

         3.       'Bank Supervision Agreement': An agreement between the Company
                  and  the  Bank  of  China   for   supervising   each   Party's
                  distributable as defined in Article 16.01 (d) (v).

         4.       'Board' or 'Board of Directors':  The highest authority of the
                  Company established in accordance with procedures set forth in
                  Article 9 of this Contract.

         5.       'Business License': The business license issued to the Company
                  by the local  branch of State  Administration  of Industry and
                  Commerce.

         6.       'Chairman':  Chairman  of the  Company's  Board  of  Directors
                  appointed in accordance with Article 9 of this Contract.

         7.       'China': The People's Republic of China.

         8.       'Company':  Sino-Foreign  ChengDu AES KAIHUA Gas Turbine Power
                  Company Ltd. , a cooperative  joint venture limited  liability
                  company organized by the Parties pursuant to this Contract.

         9.       'Commencement  of  Operation':   Date  on  which  the  Company
                  declares the GT Plant in commercial  operation defined as Date
                  of  Commercial   Operation  in  the  Power  Purchase  Contract
                  executed  between the Company and ChengDu Huaxi Electric Power
                  share holding company (Group).

         10.      'EPC  Contract':  the fixed  price,  fixed  schedule and fixed
                  scope  construction  contract  for the  design,  construction,
                  completion and commissioning of the GT Plant.

         11.      'Contract':  The  Cooperative  Joint Venture  Contract for the
                  establishment and operation of Sino-Foreign ChengDu AES KAIHUA
                  Gas Turbine Power Co., Ltd.

         12.      'DGM of  Finance':  Deputy  General  Manager of Finance of the
                  Company  appointed  in  accordance  with  Article  10 of  this
                  Contract. The DGM of Finance will also be the Chief Accountant
                  of the Company.

         13.      'DGM of  Operations':  Deputy General Manager of Operations of
                  the Company  appointed in  accordance  with Article 10 of this
                  Contract.  The  DGM of  Operations  will  also  be  the  Chief
                  Engineer.

         14.      'Directors':  Member  of  the  Company's  Board  of  Directors
                  appointed in accordance with Article 9 of this Contract.

         15.      'Despatch  Agreement':  The electric power despatch  agreement
                  entered into between the Company and the ChengDu Power Bureau.

         16.      'Examination and Approval Authority':  The Ministry of Foreign
                  Trade and Economic  Cooperation  of the  People's  Republic of
                  China or its authorized organization.

         17.      'Fuel  Supply  Contract':  Supply  contract  for the long term
                  supply of Natural  Gas to the GT Plant to be  entered  into by
                  and between the Company and the gas supplier.

         18.      'General Manager': General Manager of the Company appointed in
                  accordance with Article 10 of this Contract.

         19.      'GT Plant ': The entire facility of a 63 MW combined cycle gas
                  turbine  generating plant,  complete with power generation and
                  control   equipment,   and  all  common  services,   ancillary
                  equipment, facility and the site.

         20.      'Interconnection  Agreement':  The  interconnection  agreement
                  entered into by and between the Company and the ChengDu  Power
                  Bureau.

         21.      'Joint  Venture  Term':  The  term  of the  cooperative  joint
                  venture as defined in Article 18 of this Contract.

         22.      'Loan  Contracts':  Contracts  to be entered  into between the
                  Company  and Party B and Party C or an entity  arranged by the
                  aforesaid  Parties and  acceptable  to all of the Parties,  to
                  provide loans to the Company in  accordance  with Article 6.03
                  hereof.

         23.      'Owner's Engineer': qualified engineering firm retained by the
                  Company to supervise the execution of the work  contracted for
                  under the EPC Contract.

         24.      'Power Bureau':  The ---------------  ChengDu Power Bureau, an
                  economic  entity  legally  authorised  to execute  on-grid and
                  dispatch   contracts,   in   charge   of   the   transmitting,
                  distribution, of electricity in the ChengDu area.

         25.      'Power Purchase Contract': Contract to be entered into between
                  the Company and ChengDu Huaxi  Electric  Power Co. (Group) for
                  the long-term sale of electricity.

         26.      'RMB': The lawful currency of the People's Republic of China.

         27.      'Site': The land in CHENGDU CITY, SICHUAN PROVINCE, China upon
                  which the GT Plant and all required  auxiliary  facilities are
                  located.

         28.      'State Land Use Right Transfer Contracts':  Contracts with the
                  same  length  as the Joint  Venture  Term to be  entered  into
                  between the Company and ---------- Land Administration  Bureau
                  or his Authorized Organization for the land use right transfer
                  of the Site.

         29.      'Third Party':  Any party or parties other than the parties of
                  the Contract .

         30.      'USD': The lawful currency of the United States of America.

         31.      'Vice  Chairmen':  Vice  Chairmen  of the  Company's  Board of
                  Directors  appointed  in  accordance  with  Article  9 of this
                  Contract.

                       ARTICLE 3. PARTIES TO THIS CONTRACT

3.01     The Parties

         The Parties to this Contract are :

         (a)      Party A, Huaxi  Electric  Power Company  (Group) a corporation
                  registered in ChengDu City,  Sichuan Province,  China with its
                  legal address at: No.24  NanSanDuan  Y.Huan road ChengDu City,
                  SiChuan Province, PRC


                  Legal Representative of Party A :

                  Name:             Qu De Lin
                  Position:         General Manager
                  Nationality:      Chinese

         (b)      Party B , China National  Aero-engine  Corporation,  a Chinese
                  economic  legal  entity  registered  in China  with its  legal
                  address at:

                  No. 16 Donghuangchenggen, Dongcheng District, Beijing, China .

                  Legal Representative of Party B:

                  Name:             ZHOU Xiaoqing
                  Position:         General  Manager
                  Nationality:      Chinese

         (c)      Party C, AES  China  Generating  Company  Limited,  a  company
                  registered in Bermuda with its legal  address at 9/F.,  Allied
                  Capital Resources Building,  32-38 Ice House Street,  Central,
                  Hong Kong.

                  Legal Representative of Party C :

                  Name:             Paul  T. Hanrahan
                  Position:         President
                  Nationality:      USA

       For the legal person formation of party A & B, please see appendix 5.


          ARTICLE 4. ESTABLISHMENT OF COOPERATIVE JOINT VENTURE COMPANY

4.01     Establishment of the Company

         The Parties hereby agree to organize the Company in accordance with the
         Sino-foreign  Cooperative  Joint  Venture Law,  Coparative  Law,  other
         relevant laws and  regulations  of the Peoples  Republic of China,  and
         with the provisions of this Contract.

4.02     Name and Address of the Company;

         (a)      The name of the Company shall be ' O-D Ia (0)I x/  (degree)(R)
                  OA   E(1) (pound)-  ?- --(a) E1/4 --u O-D   I P  (1)-- E3/4 in
                  Chinese, and ChengDu AES KAIHUA GAS Turbine Power Co. Ltd.' in
                  English.

         (b)      The  legal  address  of the  Company  shall be  Chengdu  City,
                  Sichuan Province, China.

4.03     Limited Liability Company

         The form of  organization  of the Company shall be a limited  liability
         company.  Creditors of the Company  shall have  recourse  solely to the
         assets of the Company and not to the assets of the individual  Parties.
         Except as otherwise provided herein,  once a Party has paid in full its
         contribution to the registered  capital of the Company and the loans in
         accordance  with the Contract,  it shall not be required to provide any
         further  funds  to or on  behalf  of the  Company  by  way  of  capital
         contribution,  loan, advance, guarantee or otherwise. The Company shall
         indemnify  the  Parties  against  any  and  all  losses,   damages,  or
         liabilities  in respect of any third  party  claims  arising out of the
         operation of the Company. Subject to the aforementioned  responsibility
         limitations,  all Parties to this Contract shall share risks and losses
         incurred by the  Company  within the limit of its  respective  share in
         registered capital contribution.

4.04     Laws and Decrees

         The Company is an economic entity  established  pursuant to the laws of
         the People's  Republic of China. The Company has the legal status of an
         independent  legal  person.  The  activities  of the  Company  shall be
         governed  and  protected by the laws,  decrees and  relevant  rules and
         regulations of the People's Republic of China.


         ARTICLE 5. PURPOSE, SCOPE AND SCALE OF PRODUCTION AND OPERATION

5.01     Operation Purpose of the Company

         The Company's operation objectives are to build, own and operate the GT
         Plant  located in ChengDu  Sichuan  Province,  China,  to sell electric
         power to the grid and to achieve a  satisfactory  return on  investment
         for the Parties.

5.02     Scope of Company Business

         The  Company's   scope  of  business  will  be  to  generate  and  sell
         electricity to the grid.

5.03     Construction Scale

         The  company  shall  construct  a 63  MW  combined  cycle  gas  turbine
         generating plant.


         ARTICLE 6. TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL

6.01     Total Investment


         The total  amount of  investment  required by the Company is  presently
         estimated to be 29.8 million US Dollars.


6.02     Registered Capital

         The  registered  capital  of the  Company  shall  be 11.92  million  US
         Dollars.

6.03     Loans

         The balance  between the total  investment and the  registered  capital
         will be  contributed as loans provided or arranged by Party B and Party
         C upto 17.88  million  US  Dollars.  Any  addition  funding  needed and
         approved by the Board  shall be  provided by all Parties in  accordance
         with their share of Registered Capital. The terms and conditions of the
         loans will be fully defined in the Loan Contracts.

6.04     Contributions of Registered Capital

         (a)      Party A's Contribution to Registered  Capital:  Party A agrees
                  to contribute an amount of RMB  equivalent to 4.172 million US
                  Dollars to the registered capital of the Company.  This amount
                  represents  35.00% of the  registered  capital of the Company.
                  The value of Party A's contribution in RMB shall be calculated
                  at the USD/RMB Exchange Rate as announced by the People's Bank
                  of China on the date the contribution is made.

         (b)      Party B's Contribution to Registered  Capital:  Party B agrees
                  to  contribute  3.576  million US  Dollars  to the  registered
                  capital of the Company.  This amount  represents 30.00% of the
                  registered capital of the Company.

         (c)      Party C's Contribution to Registered  Capital:  Party C agrees
                  to  contribute  4.172  million US  Dollars  to the  registered
                  capital of the  Company.  This  amount  represents  35% of the
                  registered capital of the Company.

6.05     Payment of Registered Capital and Conditions Precedent thereto

         Each  Party  agrees to make  their  first  contribution  of  registered
         capital to the  Company,  which shall not be less than 15% of the total
         amount of their respective portions of registered capital share, within
         thirty (30) days after satisfaction of the conditions  precedent listed
         below.  The Parties agree to hold a Board of Directors  meeting as soon
         as possible  after  receiving  the  Business  License of the Company to
         execute the contracts  listed below and decide a contribution  schedule
         for  the  balance  of the  registered  capital  according  to  relevant
         regulations and construction need.

         Conditions precedent to payment of registered capital are:

         (a)      Issuance of approval by the Examination and Approval Authority
                  approving  this  Contract  and  the  Articles  of  Association
                  without  varying the terms hereof or imposing  any  additional
                  terms or conditions;

         (b)      Issuance of a duplicate of the Company's  Business  License by
                  the local branch of the State  Administration for Industry and
                  Commerce of China;

         (c)      Approval  from  the  local  Foreign  Exchange   Administration
                  Bureau,  approving  that the Company will have the priority in
                  converting  RMB into foreign  exchange to satisfy its need for
                  foreign exchange.

         (d)      Execution  and  approval of the State Land Use Right  Contract
                  for the Site,  the Power  Purchase  Contract,  the Fuel Supply
                  Contract,  the CAREC Personnel  Contract and the AES Personnel
                  Contract,  the  Loan  Contracts,  the EPC  Contract,  the Bank
                  Supervision  Agreement,  the  Interconnection  Agreement,  the
                  Despatch  Agreement  and  other  aspects  of the  transactions
                  described in the Contract.  Approval shall be from all Chinese
                  government  authorities  required to approve  these  Contracts
                  without varying the terms or imposing any additional  terms or
                  conditions.  If any  of the  above  contracts  do not  require
                  approval in accordance with Chinese laws and  regulations,  no
                  Party  may  claim a lack of  approval  as a reason to not fund
                  their registered capital.

         (e)      Opening of a bank account with a relevant  bank in the name of
                  the Company;

         (f)      Approval  by the  --------  Provincial  Pricing  Bureau of the
                  tariff formula in the Power  Purchase  Contract for the entire
                  term of the Contract which determines the price of electricity
                  sold  by the  Company  to the  Huaxi  Electric  Power  Company
                  (Group) Ltd. in accordance with the Policy of fund raising for
                  power generating.

         (g)      Obtain a legal  opinion from the legal  counsel of each Party,
                  stating  that the  Joint  Venture  Company  has  obtained  all
                  required  approvals,  and that  all the  contracts  listed  in
                  Article 6.05(d) are legal and enforceable.

         (h)      Approval by each parties board of directors to authorize  each
                  party to enter into this Contract.

         Each of the aforesaid  conditions  precedent must be met satisfactorily
         to each of the Parties.  In the event any of the above  conditions have
         not been met  thirty  (30) days  after the  Company  has been  issued a
         duplicate  of its  Business  License,  and the  Parties do not agree in
         writing  to waive  such  conditions  precedent,  or extend the time for
         their  fulfillment,  any Party shall have the right to  terminate  this
         Contract.  Should any Party terminate the Contract, no Party shall have
         the right to require  that Party to make further  contributions  to the
         registered  capital  nor shall any Party  claim any  damages  from that
         Party.

         If  within  thirty  (30)  days  after  satisfaction  of the  conditions
         precedent,  any Party has not made its  contribution  to the registered
         capital of the Company,  or if a Party fails to make  contributions  in
         accordance  with the  schedule  approved  by the  Board,  the  Party or
         Parties  failing  to make such  contribution  shall be  charged  with a
         penalty  equal to 0.05% of the  delinquent  part of  payment on a daily
         basis,  from the date of the scheduled  contribution  until the date of
         the actual contribution, and shall be in default under this Contract.

6.06     Drawdown of Loans

         Loans provided or arranged by Party B and Party C shall be deposited to
         the bank  account  of the  Company  in  accordance  with the  financial
         requirements of the construction  progress. The specific dates shall be
         set in the Loan  Contracts.  Failure to make  payments  on time will be
         treated in accordance with the provisions of the Loan Contracts.

6.07     Investment Certificate

         After each Party  submits its  contribution  in full to the  registered
         capital, a certified public accountant  registered in China will verify
         the  contribution  and  issue  a  contribution   verification   report.
         Thereupon,  the Company shall issue an investment  certificate  to each
         Party  having  made  its  contribution,  which  will be  signed  by the
         Chairman and the Vice Chairmen of the Board.


6.08     Assignment of Registered Capital

         (a)      APPROVAL OF THE BOARD OF DIRECTORS AND RIGHT OF FIRST REFUSAL:
                  Any  Party to this  Contract  may  assign,  sell or  otherwise
                  transfer all or part of its ownership  interest in the Company
                  (such Party being hereinafter referred to as 'the Transferring
                  Party') to any Third  Party  (hereinafter  referred  to as the
                  'Transferee'),   provided  such   transfers  get  a  unanimous
                  approval of the Board of  Directors.  Such  transfers  will be
                  allowed  provided  the  other  Parties  have a right  of first
                  refusal  to  purchase  the  interest  in  the  Company   being
                  transferred under the same terms and conditions agreed between
                  the  Transferring  Party and the Transferee.  The Transferring
                  Party shall  notify the other  Parties in writing of the terms
                  and  conditions of the  transfer.  If the other Parties do not
                  exercise  their right of first refusal within thirty (30) days
                  after  receipt  of such  notice,  they  will be deemed to have
                  consented to the  transfer.  The  Transferring  Party may then
                  transfer its  ownership  interest in the Company  provided the
                  Transferee  executes a document by which it becomes a Party to
                  this Contract and expressly  assumes the Transferring  Party's
                  obligations  herein. The requirement for unanimous approval of
                  the Board do not apply if a Party is  assigning  its rights to
                  distributions from the Company as security to obtain loans for
                  itself  or an  Affiliate.  Nor  shall  the  Company  take  any
                  collatural  responsibility  for it.  If a Party is  assigning,
                  selling  or  otherwise  transferring  all or any  part  of its
                  rights, title and interest in the Company to an Affiliate, the
                  right of first refusal shall not apply.

         (b)      GOVERNMENT  APPROVAL:  Any  sale or  assignment  of  ownership
                  interest in the Company shall be submitted to the  Examination
                  and Approval  Authority of this Contract for  examination  and
                  approval.  The sale or assignment  shall become effective only
                  after the approval is  received.  Upon receipt of the approval
                  from such Examination and Approval Authority the Company shall
                  register the change in ownership  with the local branch of the
                  State Administration for Industry and Commerce of China.

         (c)      SIMULTANEOUS   TRANSFER  OF   REGISTERED   CAPITAL  AND  LOANS
                  INTEREST:  Any Party to this  Contract  assigning,  selling or
                  otherwise  transferring all or part of its registered  capital
                  interest  in  the  Company  to  any  third  party  shall  also
                  transfer, or cause to be transferred,  a proportional share of
                  its loans to the Company.

6.09     Increase of Registered Capital

         Any increase in the  registered  capital must be first agreed to by the
         Parties and unanimously approved by the Board of Directors before being
         submitted to the  Examination  and Approval  Authority of this Contract
         for approval. In principle, increases in registered capital will be met
         by the Parties in  proportion  to their then  existing  interest in the
         Company's  registered  capital.  Upon approval by such  Examination and
         Approval  Authority,   the  Company  shall  register  the  increase  in
         registered  capital with the local  branch of the State  Administration
         for Industry and Commerce of China.

6.10     Failure to Make Registered Capital Contributions

         In  the  event  any  Party  fails  to  make  its   registered   capital
         contribution  (or any portion  thereof) as provided  herein or fails to
         provide its share of any increase in the Company's  registered  capital
         as  described  in Article  6.09  above,  then in  addition to any other
         rights the Company may have against the  defaulting  Party as described
         in Article 6.05, the Company shall offer such  unsubscribed  portion of
         registered  capital to the non-defaulting  Parties.  The non-defaulting
         Parties will be offered the portion not paid by the defaulting Party in
         proportion to each Party's registered capital contribution. Such change
         in each Party's investment ratio and transfer in interest of registered
         capital as described in this paragraph shall be subject to the approval
         of the Examination and Approval Authority of this Contract.

6.11     Development Expenses

         Development  expenses  shall only include the expenses  incurred by the
         Parties for the sole  purpose of  preliminary  work of the GT Plant and
         those  agreed upon by the  Parties.  The Parties  hereby agree that the
         development  expenses  for  Party  A is  [***]  and  Party  B is  [***]
         respectively  and for Party C is [***].  These  amounts  will be either
         counted as part of the registered capital contribution  provided by the
         Parties or paid to the Parties by the Company,  in accordance  with the
         decision of the Board.

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

                        ARTICLE 7. ANNUAL CAPITAL RETURN

7.01     The investment  return rate for the Parties is calculated  based on the
         GT Plant  operating  at full load with an annual  equivalent  operation
         hour of [***] hours. After all taxes and contribution to required funds
         according to relevant  regulations are paid, the USD financial internal
         return rate (FIRR) on equity for the Parties  shall be [***].  Based on
         an annual  equivalent  full load operation hour of [***] hours,  and an
         FIRR of [***], the annual capital returns of the Parties  calculated in
         USD  (including  profit  distribution)  are  calculated  and  listed in
         Appendix 2.

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

7.02     In the event  that the  annual  equivalent  full load  operating  hours
         exceeds [***] hours, or the generation  costs are reduced,  the Parties
         may get  annual  returns  in the  current  year  greater  than those in
         Appendix 2 in the current year.

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

                   ARTICLE 8. RESPONSIBILITIES OF THE PARTIES

8.01     Responsibilities of Party A

         In addition to its other obligations under this Contract, Party A shall
         have the following responsibilities :

         (a)      Be responsible for obtaining all necessary approvals,  permits
                  and licenses for the establishment of the Company and have the
                  obligation  to use their  best  efforts in  obtaining  all the
                  approvals necessary for the ongoing operation of the Company;

         (b)      Be responsible  for carrying out all  registration  procedures
                  for land use right for the Site, and all other land use rights
                  needed by the Company,  in a timely  manner so as not to delay
                  development and construction of the GT Plant.

         (c)      Obtain, on behalf of the Company,  all infrastructure  needed,
                  including  external  water supply,  power supply,  Gas supply,
                  transportation,  communications,  and other  services,  on the
                  most favorable terms and conditions available;

         (d)      Assist the Company in applying for the most  preferential  tax
                  treatment  and other  investment  incentives  available  under
                  applicable laws and regulations;

         (e)      Assist the Company in obtaining  necessary approvals to import
                  raw materials and  equipment.  Assist the Company in arranging
                  for transportation of imported materials and equipment between
                  Chinese ports and the Site;

         (f)      Assist the Company with the  procedures  for procuring  import
                  licenses and facilitating  customs  formalities for the import
                  of machinery  and  equipment,  fuel,  materials,  supplies and
                  office equipment on preferential terms;

         (g)      Assist the Company's expatriates to obtain all necessary entry
                  visas and work permits;

         (h)      Assist the Company in opening  Renminbi  and foreign  currency
                  bank accounts;

         (i)       Assist the Company in recruiting qualified Chinese personnel;

         (j)      Obtain necessary  approvals for the Company to utilize various
                  methods  permitted  under  Chinese  law to balance its foreign
                  exchange as needed and to meet the Company's  foreign exchange
                  needs,  including  Party C's ability to convert  dividends and
                  return  of  capital  into  foreign   exchange  for  remittance
                  overseas;

         (k)      Handle other reasonable  matters entrusted by the Company from
                  time to time.

8.02     Responsibilities of Party  B:

         In addition to its other obligations under this Contract, Party B shall
         have the following responsibilities :

         (a)      Be responsible  for drafting  feasibility  study report of the
                  project,  and submitting  engineering and technical  documents
                  necessary for the examination and approval of the project;

         (b)      Be responsible for importing  machinery  equipment as an agent
                  entrusted by the Company;

         (c)      Assist the Company's expatriates to obtain all necessary entry
                  visas and work permits;

         (d)      Assist the Company in  appointing  qualified  O&M personnel of
                  the  GT  Power  Plant  and  in   arranging   the  training  of
                  personnel;According  to the needs of the  Company,  assist the
                  Company  in  the   recruitment  and  employment  of  qualified
                  operations and maintenance  personnel for the GT Plant; assist
                  the Company to arrange training;

         (e)      Be  responsible   for  preparing  the  Company's   engineering
                  construction proposals;

         (f)      Handle other reasonable  matters entrusted by the Company from
                  time to time.

8.03     Responsibilities of Party  C:

         In addition to its other obligations under this Contract, Party C shall
         have the following responsibilities :

         (a)      Assist  the  Company in  purchasing  equipment,  supplies  and
                  materials  inside or outside  China to ensure that they are of
                  the proper quantity and quality;

         (b)      Introduce   modern   management   techniques   and   financial
                  management expertise to the Company;

         (c)      Assist Company staff and  representatives in arranging foreign
                  visas/work permits for overseas training,  as required for the
                  operation and management of the GT Plant;

         (d)      Assist  the  Company  in   recruiting   qualified   expatriate
                  personnel and  international  consultants,  as required by the
                  Company;

         (e)      Handle other reasonable  matters entrusted by the Company from
                  time to time.

         (f)      Assist the Company is obtaining  working  capital loan for the
                  operation of the GT Plant.

                          ARTICLE 9. BOARD OF DIRECTORS

9.01     Formation of the Board

         (a)      The Board of  Directors  shall be  established  on the date of
                  registration of the Company.

         (b)      The Board shall  consist of nine(9)  Directors  including  the
                  Chairman of the Board,  three(3) of whom shall be appointed by
                  Party A,  three(3) by Party B and  three(3) by Party C. At the
                  time this  Contract is executed  and at any time a Director is
                  appointed or removed,  each Party shall provide written notice
                  to the other  Parties of the names of its appointed or removed
                  Directors.

         (c)      In general,  each  Director  shall be appointed  for a term of
                  four (4) years and may serve  consecutive terms if reappointed
                  by the Party  originally  appointing  him. Each Director shall
                  serve and may be removed by the Party who made that Director's
                  appointment. In the event a Director vacates the Board through
                  retirement,  resignation,  illness, disability or death, or in
                  the event a Director  is  removed by the Party who  originally
                  appointed  that Director,  the Party who originally  appointed
                  that  Director  may  appoint  a  successor  to  serve  out the
                  departing Director's remaining term.

         (d)      Directors will serve without remuneration,  but all reasonable
                  costs incurred by the Directors in performance of their duties
                  as members of the Board will be borne by the Company.

         (e)      The  Chairman of the Board shall be  appointed by Party A. The
                  Chairman of the Board shall be the legal representative of the
                  Company.  The Chairman will exercise his authority  within the
                  limits  prescribed  by the  Board and in  compliance  with the
                  Company Law of P.R.  China and may not under any  circumstance
                  contractually bind the Company or otherwise take any action on
                  behalf of the  Company  without  prior  approval of the Board.
                  Whenever  the  Chairman  of the Board is unable to perform his
                  responsibilities  for any  reason,  one Vice  Chairman  may be
                  designated by the Chairman or the Board to temporarily  assume
                  the Chairman's duties until the Chairman is able to resume his
                  position as Chairman.

         (f)      There shall be two Vice Chairmen, one appointed by Party B and
                  one appointed by Party C.

         (g)      The  Company  hereby  indemnifies  each  Director  against any
                  claims arising from that Director's  action in his capacity as
                  a Director of the  Company,  except for such acts in violation
                  of criminal laws.

9.02     Powers of the Board

         (a)      The Board of Directors  shall be the highest  authority of the
                  Company;

         (b)      Resolutions  involving  the  following  matters  may  only  be
                  adopted  at a duly  constituted  and  convened  meeting of the
                  Board  whereupon  such   resolution   receives  the  unanimous
                  affirmative  vote of each  and  every  Director  of the  Board
                  voting in person or by proxy at such meeting :

                  (i)      Amendment of the Articles of Association;

                  (ii)     Merger,  integration  of  the  Company  with  another
                           organization, or establishment of subsidiaries of the
                           Company;

                  (iii)    Dissolution of the Company;

                  (iv)     Increase or transfer of the registered capital of the
                           Company;

                  (v)      Sale of any assets of the Company.

                  (vi)     Execution,  supplement,  modification,   termination,
                           substitution  or  assignment  by the  Company  of any
                           credit or financing  agreements,  any power  purchase
                           contract,  long term fuel  supply and  transportation
                           contract,  operation  and  management  contract,  and
                           major   construction   contract  or  other   material
                           contract;

                  (vii)    Additional capital  requirement or financing amounts,
                           above  total  investment  amounts  as  set  forth  in
                           Article 6.01;

                  (viii)   Appointment  of General  Manager  and Deputy  General
                           Managers of the Company; and

                  (ix)     Annual  operation  goals,   financial  budget,  final
                           financial  accounts and profit  distribution plans of
                           the Company. If no unanimous agreement is achieved on
                           the profit  distribution,  the  balance of the profit
                           shall be  distributed  after the allocation of 10% of
                           the after-tax profit to the required funds.

         (c)      All other issues that require a resolution by the Board may be
                  raised  at  a  duly  convened  meeting  of  the  Board.   Such
                  resolution  must  be  adopted  by the  affirmative  vote  of a
                  majority of the Directors present at such meeting in person or
                  by  proxy.  In the  event  that the Board has a tie vote , the
                  Chairman shall have the deciding vote.

         (d)      Any matter to be decided by the Board may be decided without a
                  meeting if all  Directors  consent in writing to such  matter.
                  Such  written  consent  will be filed with the  minutes of the
                  Board proceedings and will have the same force and effect as a
                  unanimous vote taken by the Directors physically present.

9.03     Meetings

         (a)      ANNUAL  MEETINGS:  The first meeting of the Board of Directors
                  will be held within  fifteen(15)  business  days from the date
                  the  Company is issued a  duplicate  of its  Business  License
                  pursuant to this Contract. Thereafter, the Board shall meet at
                  least  once  every  year.   Meetings  shall  be  held  at  the
                  registered  address of the  Company  or such other  address in
                  China or abroad as is designated by the Board. The Chairman of
                  the Board will set the  meeting's  agenda  after  consultation
                  with  the  Vice  Chairmen  of  the  Board,   The  Chairman  is
                  responsible for convening and presiding over all meetings.

         (b)      PROXY:  Meetings  may be attended by Directors in person or by
                  proxy.  If a  Director  is  unable to  participate  in a Board
                  meeting,  he may issue a proxy and entrust a representative to
                  participate in the meeting on his behalf.  The  representative
                  so entrusted shall have the rights and powers as stated in the
                  proxy.

         (c)      INTERIM  MEETINGS:  Interim  meetings of the Board may be held
                  provided  five(5)  or more  of the  Directors  submit  written
                  requests  for such  meetings to the  Chairman  specifying  the
                  matters to be discussed.  Within thirty (30) days upon receipt
                  of such written  notice,  the Chairman will convene an interim
                  meeting of the Board. If the Chairman is unable to participate
                  in an interim meeting, in his absence the Vice Chairman taking
                  his  place  shall  decide  on the  time and  location  of such
                  interim meetings.

         (d)      QUORUM:  Six (6)  Directors,  including  at least one Director
                  from  each  Party  ,  present  in  person  or by  proxy  shall
                  constitute a quorum  necessary  for the conduct of business at
                  any  meeting  of  the  Board  . If at  any  properly  convened
                  meeting,  no quorum is  constituted  because less than six (6)
                  Directors are present in person or by proxy or there is not at
                  least one  Director  from each  Party  present in person or by
                  proxy then the meeting shall be  cancelled,  then the Chairman
                  shall call another  meeting with seven (7) days'  notice.  Any
                  Director  absent  from  a  meeting  without  giving  a  reason
                  therefor  and  without  having  appointed  a  proxy  shall  be
                  considered to have abstained from voting. Resolutions,  except
                  those  concerning  the issues  prescribed in Article  9.02(b),
                  will  be  valid  if  passed  by a  majority  of the  Directors
                  present.

         (e)      NOTICE OF MEETING: The notice of a Board meeting shall be sent
                  to all directors fifteen (15) days in advance of each meeting.
                  The notice shall state the  time,venue  and main agenda of the
                  meeting. including relevant documents and information.

         (f)      MINUTES:  The Board will cause  complete and accurate  minutes
                  (in  both  English  and  Chinese)  to be kept of all  meetings
                  (including  a  copy  of the  notice  of  the  meeting)  and of
                  business transacted at such meetings.  Minutes of all meetings
                  of the Board shall be distributed to all the Directors as soon
                  as practicable  after each meeting but not later than ten (10)
                  days from the date of such meeting. Any director who wishes to
                  propose any  amendment  or addition  thereto  shall submit the
                  same in writing to the Chairman and the  Vice-Chairmen  within
                  one (1)  week  after  receipt  of the  proposed  minutes.  The
                  minutes  shall be finalized by the Chairman and  Vice-Chairmen
                  not later than thirty (30) days after the relevant meeting and
                  signed by all the directors  within one (1) week after receipt
                  of the final minutes.

                       ARTICLE 10. MANAGEMENT ORGANIZATION

10.01    Management Organization

         The Company shall adopt a management  system under which the management
         organization  shall be  responsible  to and under the leadership of the
         Board of  Directors.  The Company  management  shall  include a General
         Manager,  a DGM  of  Operations,  a DGM of  Finance,  and a  number  of
         Department Managers.  Party C shall nominate the General Manager, Party
         B shall  nominate  DGM of  Operations,  who is  concurrently  the Chief
         Engineer and Party A shall  nominate  the first DGM of Finance,  who is
         concurretly  the Chief  Account,  and the Board of  Directors  needs to
         unanimously  approve the appointment of the General Manager and the two
         Deputy  General  managers.  The  term of  appointment  for the  General
         Manager and the two Deputy  General  managers  shall be four (4) years.
         The General Manager and Deputy General  managers may be removed only by
         a majority  resolution  of the  Board.  If the  General  Manager or the
         Deputy General  Manager is removed by the Board or finishes his tenure,
         a successor shall be nominated by the Parties for approval by the Board
         of Directors.

10.02    Responsibilities and Powers of the General Manager

         The General  Manager shall at all times be  responsible to the Board of
         Directors  and will carry out all matters  entrusted by the Board.  The
         DGM of  Operations  and the DGM of Finance  shall  assist  the  General
         Manager.  The  General  Manager  shall be in charge  of the  day-to-day
         operation and management of the Company. The DGM of Operations shall be
         in charge of the operation and maintenance of the GT Plant.  The DGM of
         Finance shall be responsible for the financial  affairs of the Company.
         The  General  Manager , the DGM of  Operations  and the DGM of  Finance
         shall meet regularly to discuss and solve important issues arising from
         the operation and management of the Company.

10.03    Operation and  Management

         The Company will be responsible for the operation and management of the
         GT Plant . The Company  will  endeavor to introduce  modern  management
         techniques to ensure high availability and efficiency of the GT Plant.

                                ARTICLE 11. SITE

11.01    Site

         The area of the Site for the GT  Plant  is  approximately  MU.  Details
         regarding  the Site are set  forth  in the Red Line  Site Map  attached
         hereto as Appendix 1.

11.02    Land Use Rights

         The Company shall enter into a State Land Use Rights Transfer  Contract
         with the Chengdu Land Bureau and its authorized  department in order to
         obtain  for at least  the Term of this  Contract  land use right of the
         Site for a term no less than the term of the Joint Venture Contract.

                         ARTICLE 12. SALE OF ELECTRICITY

12.01    Power Sales

         The sale of electricity  produced by the GT Plant will be made pursuant
         to the Power Purchase  Contract entered into by and between the Company
         and Huaxi  Electric  Power (Group)  Shareholding  Company Ltd. The PPC,
         shall state clearly that the Huaxi Electric Power (Group)  Shareholding
         Company  Ltd.  shall be  responsible  for  arranging  the  execution of
         on-grid  agreement and dispatch  agreement  entered into by and between
         the Company & the Power Bureau.

12.02    Tariff Determination

         The tariff of the power  generated by the GT Plant shall be  determined
         by the tariff formula prescribed in the Power Purchase Contract entered
         into by and between the Company and the Huaxi  Electric  Power  (Group)
         Shareholding   Company   Ltd.,   and   approved   by   relevant   price
         administration departments.

                            ARTICLE 13. CONSTRUCTION

13.01    Construction Management

         The  Parties  agree  that  Party B and A shall be  responsible  for the
         construction  of the GT Plant.  The  Company  shall  enter  into an EPC
         Contract  with  Party B. The EPC  Contract  shall  be  comparable  with
         internationally  accepted  parties in similar  projects in the areas of
         construction schedules, quality and cost. The detailed clauses shall be
         specified  in the EPC  Contract.  The Company  shall  employ an Owner's
         Independent Engineer to supervise and manage the construction of the GT
         Plant.

                             ARTICLE 14. FUEL SUPPLY

14.01    Fuel Supply

         The Company  will sign a long-term  natural  gas supply  contract  with
         Chengdu  Huachuan  Oil and  Natural  Gas  Exploration  and  Development
         Corporation.

                           ARTICLE 15.  LABOR MANAGEMENT

15.01    Governing Principles

         The  Company  shall  be  responsible  for  its  own  labor  management,
         recruitment,  employment , dismissal, resignation, wages and welfare of
         working personnel in accordance with the 'Labor Management  Regulations
         of  the  PRC  for   Foreign   Investment   Enterprises'   (the   'Labor
         Regulations') and other relevant  regulations.  The organization chart,
         qualifications and number of employees shall be determined by the Board
         of Directors in accordance with the operating needs of the Company.

15.02    Operation and Management Personnel

         The Company  shall enter into a Contract with Party B,  specifying  the
         terms and conditions under which the Company shall engage qualified and
         professional   operation  and  management   personnel  from  an  entity
         designated by Party B & A. When necessary, the Company shall also enter
         into an  agreement  with Party C  specifying  the terms and  conditions
         under which the Company shall engage the required  personnel from Party
         C (the 'AES Personnel Contract').

                  ARTICLE 16. FINANCIAL AFFAIRS AND ACCOUNTING

16.01    Accounting System

         (a)      The  DGM of  Finance,  under  the  leadership  of the  General
                  Manager,  shall be responsible for the financial management of
                  the Company.

         (b)      The DGM of Finance  shall  prepare  the  Company's  accounting
                  system  and  procedures  in  accordance  with the  'Accounting
                  System  of  the   People's   Republic  of  China  for  Foreign
                  Investment  Enterprises' and the 'Financial  Management System
                  of the  People's  Republic  of China  for  Foreign  Investment
                  Enterprises'. The Company shall also conduct its accounting in
                  accordance  with such  internationally  recognized  accounting
                  principles  as any foreign  lender to the Company may require.
                  The  Company's  accounting  system  and  procedures  shall  be
                  submitted  to the Board for  approval.  Once  approved  by the
                  Board, the accounting system and procedures shall be filed for
                  the record  with the  government  department  in charge of the
                  Company and with the relevant local  department of finance and
                  tax authorities.

         (c)      The Company shall adopt RMB as its bookkeeping base currency.

         (d)      The  distribution  of  available  cash shall be carried out in
                  accordance with the following priority of payments:

                  (i)      Operation and  maintenance  costs  (including VAT) of
                           the GT Plant and management costs of the Company;

                  (ii)     Principal  and interest  payments due pursuant to the
                           Loan Contracts;

                  (iii)    Income and any other taxes;

                  (iv)     Contributions to statutory funds; and

                  (v)      Profits for distribution.

         (e)      All  accounting  records,  vouchers  and books of the  Company
                  shall be made and kept in Chinese.  At the request of Party C,
                  some part of the records and books will be provided to Party C
                  in English.  All Company  accounting  statements shall be made
                  and kept in English and Chinese.


16.02    Auditing

         (a)      The  Company  will  engage  an  independent   accounting  firm
                  registered  in China as its  auditor to examine and verify the
                  annual   financial   report.   The  Parties  agree  that  such
                  accounting firm shall be of  international  standard and shall
                  be  appointed  by the Board.  The Company  shall submit to the
                  Parties an annual  statement of final accounts  (including the
                  audited  profit and loss  statement  and the balance sheet for
                  the fiscal  year)  within two (2) months  after the end of the
                  fiscal year.  Such  documentation  will be submitted  together
                  with  an  audit  report   prepared  by  the  accounting   firm
                  registered in China.

         (b)      Each Party may, at its own expense,  appoint an accountant who
                  is either an  accountant  registered  abroad or  registered in
                  China. On behalf of the Party, the independent  accountant may
                  audit the Company's  accounts.  Such accountants will be given
                  reasonable access to the Company's  financial records and will
                  keep confidential all documents under their auditing.

         (c)      The  Company  shall  present to the  Parties  balance  sheets,
                  profit and loss statements and other supplementary information
                  requested by the Board on a monthly  basis.  Such  information
                  will be provided to the Parties in both English and Chinese.

16.03    Bank Accounts and Foreign Exchange Control

         The Company will open a foreign exchange account and a Renminbi account
         at banks  within or outside  China;  such banks will be approved by the
         State  Administration  of  Exchange  Control  of China.  The  Company's
         foreign exchange  transactions  shall be handled in accordance with the
         regulations of China relating to foreign exchange control.

16.04    Foreign Exchange Balance

         (a)      In the event the Company borrows foreign currency from lenders
                  not located in China,  the Company shall,  in accordance  with
                  applicable  foreign  exchange   regulations  of  the  People's
                  Republic of China,  open USD cash  accounts at a bank approved
                  by the relevant  authorities for the repayment of principal of
                  and the payment of interest on, foreign currency loans.

         (b)      Funds in the Company's  foreign exchange account shall be used
                  as  determined  by the Board of Directors  to satisfy  foreign
                  exchange  debt,  expenses,  remittances  of  profit  and other
                  remittances  in  accordance  with  relevant  foreign  exchange
                  regulations of the People's Republic of China.

         (c)      All  remittances  to  Party  C  due  in  accordance  with  the
                  provisions  of this  Contract  shall be made to a foreign bank
                  account  designated by Party C in United States  Dollars or in
                  any other freely convertible  foreign currencies in accordance
                  with  the  foreign  exchange  regulations  of  China  and  the
                  commitment   of   local   foreign   exchange    administration
                  departments. The Company shall pay for the fee occurred in the
                  conversion.  The  Company  may also  remit all or a portion of
                  remittances due to Party C in RMB if Party C elects to do so.

         (d)      From the time the profit  distribution plan is approved by the
                  Board of Directors until the actual time of exchange, the risk
                  of foreign  exchange  rate  fluctuating  shall be borne by the
                  Company.

16.05    Fiscal Year

         The Company  shall adopt the calendar  year as its fiscal  year,  which
         shall begin on January 1 and end on  December 31 of the same year.  The
         first  fiscal year of the Company  shall  commence on the date that the
         Company is established and granted a Business License, and shall end on
         the immediately succeeding December 31.

16.06    Distribution of Profits

         (a)      After the payment of any applicable  related taxes and fees by
                  the Company,  the Board will determine the annual  allocations
                  to the required funds as required by Chinese  accounting  laws
                  and  regulations.  The sum of the  annual  allocations  to the
                  required  funds  shall be 10% of the  after-tax  profit of the
                  year under  consideration  (unless otherwise required by law).
                  Any  increase or decrease in the  percentage  to the  required
                  funds must be unanimously approved by the Board of Directors.

         (b)      All distributable  profits shall be distributed to the Parties
                  in  proportion  to their  respective  share of the  Registered
                  Capital.

         (c)      If the Company  carries losses from the prior year, the profit
                  of the current  year shall be used first to cover  losses.  No
                  profit shall be  distributed  unless the deficit from previous
                  years is made up.  The  profit  retained  by the  Company  and
                  carried over from the prior year may be  distributed  together
                  with the distributable profit of the current year.


                       ARTICLE 17. TAXATION AND INSURANCE

17.01    Taxes

         (a)      The Company and its Chinese and expatriate employees shall pay
                  tax under the relevant tax laws of China.

         (b)      Following  approval of this  Contract by the  Examination  and
                  Approval Authority, the Company will submit an application for
                  confirmation   of  the  Company  as  a  technically   advanced
                  enterprise in accordance  with the  'Implementing  Measures of
                  the  Ministry of Foreign and Economic  Relations  and Trade on
                  the  Conformation  and  Examination  of  Export  Oriented  and
                  Technologically  Advanced  Enterprises and Foreign Investment'
                  in order to obtain the most favorable tax rats.

17.02   Insurance

         The  insurance  for the  Company  for  various  kinds of risks shall be
         purchased from insurance  companies  registered within PRC. The Company
         shall undertake to procure the following types of insurance:

         (a)      Property  All  Risks  Insurance  ,  Contractor's  All Risk and
                  Erection    All   Risks    Insurance    (including    domestic
                  transportation  insurance for equipment)  before and after the
                  construction  completion  of the GT Plant  and  thereafter  in
                  respect of any upgrading or maintenance works to the GT Plant;

         (b)      Property All Risks Insurance,  Machinery Breakdown  Insurance,
                  Business Interruption Insurance,  Machinery Breakdown Business
                  Interruption  Insurance,  Bodily  Injury  Insurance,  Personal
                  Accident  Insurance and Additional  Cover for Medical Expenses
                  for the period  after the  construction  completion  of the GT
                  Plant; and

         (c)      other insurance  coverage which the Board of Directors decides
                  is necessary.

                       ARTICLE 18. THE JOINT VENTURE TERM

18.01    Joint Venture Term

         The term of the Joint Venture  established  under this  Contract  shall
         commence  on the date the  Company is granted a  Business  License  and
         shall terminate  sixteen (16) years  thereafter ( including one year of
         construction) .

18.02    Extensions to the Joint Venture Term

         The term of the Joint Venture  Contract may be extended upon  unanimous
         approval of the Parties.  An application  for such extension  should be
         filed with the original Examination and Approval Authority at least six
         months prior to the expiration of the term of this Contract.

                         ARTICLE 19. BREACH OF CONTRACT

19.01    Breach of Contract

         In the event the Company is unable to continue its operation or achieve
         the business  purposes  stipulated in this Contract due to failure of a
         Party  to  fulfill  its   obligations   under  this  Contract  and  its
         Appendices, the non-defaulting Parties will have the right to terminate
         this Contract in accordance  with Article 20 herein and the liabilities
         arising  from breach of contract  shall be borne by the Party in breach
         as provided for in this  Contract and its  Appendices.  The  defaulting
         Party shall make the  consequent  payment  arisen from such a breach to
         the non-defaulting parties.

                     ARTICLE 20. TERMINATION AND LIQUIDATION

20.01    Termination

         (a)      TERMINATION OF THIS  CONTRACT:  No Party shall have the right,
                  in its sole  discretion and without  cause,  to terminate this
                  Contract.  This  Contract  may only be  terminated  under  the
                  following circumstances:

                  (i)      The  Contract  expires  at the  end of  the  Term  as
                           described in Article 18 hereof;

                  (ii)     The Parties unanimously agree in writing to terminate
                           this Contract at any time;

                  (iii)    Subject to the  notification  requirements of Section
                           20.02 herein,  a Party may submit  written  notice to
                           the other  Parties  of its desire to  terminate  this
                           Contract  upon the  occurrence of an event of default
                           as further described in Section (b) below.

         (b)      CAUSES FOR TERMINATION: Any of the following occurrences shall
                  be considered causes for termination:

                  (i)      A Party materially breaches this Contract or violates
                           the  Articles  of  Association,  and such  breach  or
                           violation  is not cured  within  thirty  (30) days of
                           written   notice  to  the   defaulting   Party  by  a
                           non-defaulting Party;

                  (ii)     The  Company,  or any, or all of the  Parties  become
                           bankrupt,   or  is  the  subject  of  liquidation  or
                           dissolution   proceedings   or  ceases  to  carry  on
                           business  or becomes  unable to pay its debts as they
                           come  due  and  as a  result  there  are  significant
                           adverse consequences to the Company;

                  (iii)    Any superior  authority having authority over a Party
                           requires any provision of this Contract to be revised
                           in  such  a  way  as  to  cause  significant  adverse
                           consequences to the Company or to the other Parties;

                  (iv)     The  conditions or  consequences  of Force Majeure as
                           hereinafter   defined  in  Article  21  significantly
                           interfere with the normal  functioning of the company
                           for a period in excess of  eighteen  (18)  months and
                           the Parties are unable to find an equitable  solution
                           pursuant to Article 22 hereof ;

                  (v)      Any  Party  fails  to make  its  contribution  to the
                           registered capital in accordance with Article 6.05;

                  (vi)     Any Party fails to make its contribution to the loans
                           in accordance with Article 6.06;

                  (vii)    The Power Purchase Contract is terminated.

20.02    Notification Procedure

         Mere  submission  by any  Party of a  notice  indicating  a  desire  to
         terminate this Contract shall not by itself constitute a termination of
         this  Contract.  In the event that any Party gives  notice  pursuant to
         Article  20.01  hereof  of a desire to  terminate  this  Contract,  the
         Parties  shall within a two (2) month period after such notice is given
         conduct  negotiations  and  endeavor  to resolve  the  situation  which
         resulted in the giving of such notice.  In the event that the situation
         which  resulted  in the  giving  of such  notice  is not cured and that
         matters are not resolved to the  satisfaction of the Parties within two
         (2) months of such notice,  the notifying Party may follow the relevant
         procedures  and  laws  and  apply  to  the   Examination  and  Approval
         Authorities for the termination of the Contract.  In the event a breach
         is  committed  by a  Party  to  this  Contract  which  results  in  the
         termination  of this  Contract,  the  Party in  breach  will  bear full
         liability and costs associated with such breach of Contract.

20.03    Normal Termination of the Contract

         The Contract  shall be terminated  upon  expiration of the term of this
         Contract  as per  specified  in Article  18.01,  unless it is  extended
         pursuant to Article 18.02 hereof.

20.04    Liquidation

         (a)      DISSOLUTION  OF THE  COMPANY:  The Company  shall be dissolved
                  upon  expiration  of the  term of this  Contract  pursuant  to
                  Article  18  hereof,  or  upon  earlier  termination  of  this
                  Contract  pursuant to Article 20.01 hereof.  The Company shall
                  carry out the  procedures  for  liquidation  of the Company in
                  accordance with the law of the People's Republic of China.

         (b)      LIQUIDATION  COMMITTEE:  The Board of  Directors  shall form a
                  Liquidation   Committee,   comprised   of  three  (3)  members
                  appointed  by Party A, three (3) members  appointed by Party B
                  and three (3) members  appointed by Party C (the  'Liquidation
                  Committee').   The  Liquidation   Committee  shall  conduct  a
                  thorough  examination  of the  assets and  liabilities  of the
                  Company and develop a liquidation plan in compliance with this
                  Contract  and  with  relevant  laws  and  regulations  of  the
                  People's Republic of China for the liquidation of the Company.
                  No member of the Liquidation Committee shall have the power to
                  take any action binding on the Liquidation Committee or on the
                  Board  of  Directors  or  the  Company   without  the  express
                  authorization   and  the  unanimous   consent  of  the  entire
                  Liquidation   Committee.   All  actions  of  the   Liquidation
                  Committee  shall require the unanimous  approval of the entire
                  Liquidation  Committee.  The Liquidation  Committee will value
                  and  liquidate  the  Company's  assets  based  on  the  actual
                  circumstances of the Company valued as a going concern,  so as
                  to cause the Parties to receive the then market  value for the
                  assets.  The  final  liquidation  plan  shall  be  unanimously
                  approved by the entire Liquidation Committee.

         (c)      LIQUIDATION PLAN:
                  Upon  expiration  of the Joint  Venture  Term as  described in
                  Article  18  hereof,  or  upon  earlier  termination  of  this
                  Contract  pursuant to Article  20.01 hereof,  the  liquidation
                  plan shall provide  first for payment of the  Company's  debts
                  and expenses.  Following such payments,  the Company's  assets
                  shall  be  distributed  to  Party  A,  Party  B  and  Party  C
                  proportionally  in  accordance  with each  Party's  registered
                  capital share of the Company.

                            ARTICLE 21. FORCE MAJEURE

21.01    Force Majeure

         (a)      'Force  Majeure'  shall mean all  events  which are beyond the
                  control  of the  Parties  to  this  Contract,  and  which  are
                  reasonably  unforeseen,  unavoidable  or  insurmountable,  and
                  which  arise  after the  signing  of this  Contract  and which
                  prevent  total  or  partial  performance  by any  Party of its
                  obligations  under this  Contract.  Such events shall  include
                  earthquakes,   typhoons,   flood,  fire,  strikes,   political
                  disturbances,  war,  or any other  instances  which can not be
                  foreseen, prevented or controlled.

         (b)      If occurrence  of an event of Force  Majeure  prevents a party
                  from fulfilling its obligations under this Contract, the Party
                  will be suspended from performing such obligations provided;

                  (i)      Suspension of  performance is of no greater scope and
                           no longer  duration  than is  reasonably  required to
                           correct  consequences  caused  by the  event of Force
                           Majeure; and

                  (ii)     Suspension  of  performance  will  not  apply  to any
                           obligation to make payments under this Contract.

         (c)      In the event any Party is  unable to  fulfill  its  obligation
                  under this  Contract as a result of Force  Majeure,  the Party
                  claiming Force Majeure shall promptly inform the other Parties
                  in   writing   within  15  days  of  such   occurrence.   Such
                  notification   will  state  the  nature  of  the  event,   the
                  anticipated  duration  and any  action  taken by the  affected
                  party to mitigate the effect.  In the event of Force  Majeure,
                  the Parties shall immediately consult with each other in order
                  to find an  equitable  solution  and shall use all  reasonable
                  endeavors to minimize the consequences of such Force Majeure.


                       ARTICLE 22. SETTLEMENT OF DISPUTES

22.01    Conciliation and Mediation

         Any dispute in connection  with this  Contract will be settled  through
         friendly consultation or conciliation among the Parties.  Consultations
         will  occur  immediately  upon the  request  of one  Party to the other
         Parties  regarding  disputes.  Disputes may also be mediated by a third
         party  appointed by the Parties to this  Contract.  If mediation is not
         successful  within 30 days,  disputes may also be submitted to binding,
         non -appealable arbitration for settlement.

22.02    Arbitration

         The following  rules and  procedures  will apply to an  arbitration  of
         disputes between the Parties under this Contract.

         (a)      Arbitration  under  this  Contract  will  be  conducted  by an
                  arbitral  tribunal in  accordance  with  UNCITRAL  arbitration
                  rules  contained  in  Resolution  31/98  adopted by the United
                  Nations  General  Assembly on December  15, 1976 and  entitled
                  'Arbitration   Rules  of  the  United  Nations  Commission  on
                  International  Trade Law' or its amendments as in force at the
                  time such arbitration is commenced. Should there be a conflict
                  between  the rules and  provisions  of this  Contract  and the
                  arbitration  rules,  the  provisions  of  this  Contract  will
                  govern.

         (b)      The arbitral tribunal will have three (3) members.  Each Party
                  will  appoint one  arbitrator  within 30 days after  giving or
                  receiving demand for  arbitration.  The third arbitrator shall
                  be  appointed by the other two  arbitrators  within 10 days of
                  the  appoint  of  the  second   arbitrator.   If  any  of  the
                  arbitrators are not appointed within the time limits set forth
                  in  this  section,   arbitrators  will  be  appointed  by  the
                  Secretary General of the  International  Center for Settlement
                  Disputes.

         (c)      All  arbitrators  must be fluent in Mandarin and English.  The
                  arbitration  will be conducted  in Mandarin  and English.  Any
                  subsequent  arbitration award will also be written in Mandarin
                  and English.

         (d)      The site and the organization for arbitration can be Singapore
                  International   Arbitration  Centre  or  other   international
                  locations  and  arbitration  organizations  acceptable  to the
                  Parties.

         (e)      The final  arbitration  award  will  specify  with  reasonable
                  detail the facts of the dispute and the reasons justifying the
                  tribunal's   decision.   The  Parties   agree  to  accept  the
                  arbitration  award as final and binding.  The Parties renounce
                  their right to appeal the arbitration award.

         (f)      The  Parties  agree  to  bear  all  costs  as  determined  and
                  allocated in the arbitration award.

22.03    Continuing Rights and Obligations

         The  Parties  shall  continue to exercise  their  remaining  respective
         rights, and fulfill their remaining respective obligations,  under this
         Contract, except in respect of those matters under dispute.

22.04    Waiver of Immunity

         To the extent the Parties may claim for  themselves or their assets and
         revenues,  immunity  from suit,  execution,  attachment  or other legal
         process,  the  Parties  agree not to claim such  immunity  and agree to
         irrevocably  waive  such  immunity  to the  full  extent  permitted  by
         applicable law.


                           ARTICLE 23. APPLICABLE LAW

23.01    Applicable Law

         The validity,  interpretation and implementation of this Contract shall
         be  governed  by the laws of the  People's  Republic of China which are
         published  and  publicly  available.  In the  event  that  there  is no
         published and publicly  available  law in China  governing a particular
         matter  relating to this Contract,  reference  shall be made to general
         international commercial practices.

23.02    Economic Adjustment for Change of Law

         As used herein 'Change of Law' means the  promulgation of any new laws,
         rules or regulations in China or the amendment or interpretation of any
         existing laws, rules or regulations in China relating to taxes,  custom
         duties, environmental issues or other matters concerning this Contract.
         In the event that a Change of Law  adversely and  materially  affects a
         Party's  economic  benefit  under  this  Contract,  the  Parties  shall
         promptly  consult  with  each  other and use their  best  endeavors  to
         implement  adjustments  necessary  to maintain  each  Party's  economic
         benefits derived from this Contract.  The basis of this adjustment will
         be no less favorable  than the economic  benefits it would have derived
         if such laws,  rules or regulations had not been promulgated or amended
         or so interpreted.

23.03    Preferential Treatment

         The Company and the Parties shall be entitled to any tax, investment or
         other benefits or preferences  that become  available or publicly known
         after the signing of this  Contract and which are more  favorable  than
         those set forth in this Contract.


                      ARTICLE 24. MISCELLANEOUS PROVISIONS

24.01    Environmental

         The  Company  shall  undertake  environmental  protection  measures  in
         accordance  with  the  'Law  of  the  People's  Republic  of  China  on
         Environmental Protection' and other relevant laws and regulations.

24.02    Waiver

         To the extent permitted by Chinese law, failure or delay on the part of
         any Party  hereto to exercise a right,  power or  privilege  under this
         Contract  and the  Appendices  hereto  shall  not  operate  as a waiver
         thereof or other rights, powers or privileges;  nor shall any single or
         partial  exercise of a right,  power or  privilege  preclude  any other
         future exercise thereof.

24.03    Binding Effect

         This  Contract  is made  for  the  benefit  of the  Parties  and  their
         respective  lawful  successors and assignees and is legally  binding on
         them.  This Contract may not be changed  orally,  but only by a written
         instrument  signed  by all  Parties  and  approved  by the  appropriate
         Examination and Approval Authority.

24.04    Language

         This  Contract  is  executed  in the  Chinese  language  in  eight  (8)
         originals  and in the  English  language in eight (8)  originals.  Both
         language versions shall be equally effective.

24.05    Entire Agreement

         This Contract and the Appendices  attached to this Contract  constitute
         the entire  agreement  between the Parties  with respect to the subject
         matter  of  this  Contract  and   supersede   all  prior   discussions,
         negotiations and agreements  between them. In the event of any conflict
         between the terms and  provisions  of this Contract and the Articles of
         Association the terms and provisions of this Contract shall prevail.

24.06    Notices

         Any notice or written  communication  provided for in this  Contract by
         any  Party to the  others,  including  but not  limited  to any and all
         offers,  writings,  or  notices  to be  given  thereunder,  shall be in
         writing made in English and Chinese , and shall be  sufficiently  given
         if  addressed  as set  forth  below and sent by  registered  mail or an
         internationally  recognized overnight courier services,  hand delivered
         or  transmitted  clearly by facsimile,  however all facsimile  shall be
         confirmed by courier service delivered letter,  promptly transmitted or
         addressed to the  appropriate  Party.  The date of actual  receipt of a
         notice or communication  thereunder shall be deemed to be the effective
         date. All notices and  communications  shall be sent to the appropriate
         address set forth  below,  until the same is changed by notice given in
         writing to the other Parties.

         PARTY A:                   Chengdu Hua Xi Electric Power (Group) Share
                                    holding Company Ltd.
         Address:
         Telephone No.: 
         Facsimile No.: 
         Attention:                 Qu Delin
         Zip Code:

         PARTY B:                   China National Aero-engine Corporation
         Address:                   No. 16 Donghuangchenggen, Dongcheng
                                    District, Beijing, China
         Telephone No.:             8610 4054595
         Facsimile No.:             8610 4036107
         Attention:                 Zhou Xiaoqing
         Zip Code:                  100717

         PARTY C:                   AES China Generating Company Limited
         Address:                   9/F, Allied Capital Resources Bldg.,
                                    32-38 Ice House Street, Central, HK
         Telephone No.:             (852) 28425111
         Facsimile No.:             (852) 25301673
         Attention:                 Edward C. Hall III

24.08    Appendices

         The Appendices  listed below are made an integral part of this Contract
         and are equally binding with Articles 1 through 24 herein.

         Appendix 1.       Red Line Site Map
         Appendix 2.       Annual Capital Returns
         Appendix 3.       Articles of Association
         Appendix 4.       List of Imported Equipment
         APPendix 5.       List of Companies Represented by Each Party





SIGNATURES

         IN  WITNESS  WHEREOF,  each of the  Parties  hereto  have  caused  this
         Contract to be executed by their duly authorized representatives on the
         date first set forth above.


         PARTY A :         Chengdu Hua Xi Electric Power (Group) Share holding
                           Company Ltd.

                           [Signature Illegible]
                           ------------------------

         Name:             Cheng Zhigang
         Title:            General Manager Assistant
         Nationality:      Chinese


         PARTY B :         China National Aero-engine Corporation
                           [Signature Illegible]
                           ------------------------

         Name:             Li Yue Ting
         Title:            Deputy General Manager
         Nationality:      Chinese


         PARTY C :         AES China Generating  Company Limited

                           [Signature Illegible]
                           ------------------------

         Name:             Thomas T.M. Wu
         Title:            Vice President
         Nationality:      U.S.A.