Power Purchase and Sale Contract - Jiaozuo Wan Fang Power Co. Ltd. and Jiaozuo Aluminum Mill


                        POWER PURCHASE AND SALE CONTRACT




                                     BETWEEN



                     JIAOZUO WAN FANG POWER COMPANY LIMITED


                                       AND


                              JIAOZUO ALUMINUM MILL








                           Dated as of April 26, 1996




                                TABLE OF CONTENTS

                                                   

SECTION 1.    DEFINITIONS AND EXPLANATION OF TERMS.

SECTION 2.    TERM OF CONTRACT

SECTION 3.    CONDITIONS TO OBLIGATIONS

SECTION 4.    SALE AND PURCHASE

SECTION 5.    OPERATION AND MAINTENANCE

SECTION 6.    OUTAGES

SECTION 7.    EMERGENCIES

SECTION 8.    INTERCONNECTION

SECTION 9.    MEASUREMENT OF ELECTRIC ENERGY

SECTION 10.   CHANGE IN LAW

SECTION 11.   METHOD OF PAYMENT

SECTION 12.   FORCE MAJEURE

SECTION 13.   EVENTS OF DEFAULT.

SECTION 14.   WAIVER

SECTION 15.   CONCILIATION AND ARBITRATION

SECTION 16.   REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

SECTION 17.   LIABILITY OF PARTIES

SECTION 18.   ASSIGNMENT

SECTION 19.   AMENDMENT OF CONTRACT

SECTION 20.   LANGUAGE

SECTION 21.   NOTICES

SECTION 22.   APPLICABLE LAW

SECTION 23.   SEVERABILITY
                                      (i)

SECTION 24.   ENTIRE AGREEMENT

SECTION 25.   NO THIRD PARTY BENEFICIARIES

SECTION 26.   CONSTRUCTION



APPENDIX A    PRICING

APPENDIX B    POINTS OF INTERCONNECTION

APPENDIX C    TECHNICAL LIMITS

APPENDIX D    CAPACITY TEST PROCEDURES


                                      (ii)


          This Power  Purchase and Sale Contract  (this  'Contract')  is entered
 into as of April 26, 1996, by and between JIAOZUO  ALUMINUM MILL  ('Purchaser')
 and JIAOZUO WAN FANG POWER COMPANY LIMITED ('Seller').


                                    RECITALS

          A. Seller  intends to construct,  finance,  own,  manage,  operate and
 maintain a  coal-fired  electric  generating  facility to be located in Jiaozuo
 City, Henan Province, China, consisting of two 125 megawatt coal-fired electric
 generating units.

          B. Seller wishes to make  available and sell and Purchaser  desires to
 receive and purchase electricity from the Facility.

          C. In  consideration  of the premises and of the mutual  covenants and
 agreements set forth herein, the parties hereto, intending to be legally bound,
 hereby agree as follows:


                                    AGREEMENT


                                    SECTION 1

                      DEFINITIONS AND EXPLANATION OF TERMS

          As  used in this  Contract  (including  the  Appendices  hereto),  the
 following  capitalized  terms (in the English  version  hereof) and  underlined
 terms (in the Chinese version hereof) shall have the meanings set forth below.

          'Bankruptcy'  means,  with  respect  to a party,  (i) a party  makes a
 general  assignment  for the benefit of its  creditors;  (ii) a party takes any
 action for its winding-up or liquidation or for the  appointment of a receiver,
 trustee or similar officer of it or of any of its revenues and assets; or (iii)
 a party  consents  to any of the actions  described  in clause (ii) being taken
 against it.

          'Business  Day'  means  any day on which  Bank of  China  are open for
 business in Jiaozuo City, Henan Province, China.

          'Change in Law' has the meaning given such term in Section 10.

          'Commercial  Operation Date' or 'COD' means either or both of the Unit
 One COD and the Unit Two COD.

          'Construction Contract' means the Contract for Engineering,

                                       1

Procurement  and  Construction  Services  to be  entered  into  for the  design,
engineering and construction of the Facility.

          'Coordination  Committee'  has the meaning  given that term in Section
 5.8.

          'Dispatch Contract' has the meaning given that term in Section 3.

          'Dollar'  or '$' means the lawful  currency  of the  United  States of
 America.

          'Energy Payment' means the Energy Payment described in Appendix A.

          'Facility'  means the coal-fired  electric  generating  facility to be
 constructed,  financed,  owned and  operated  by Seller and  located in Jiaozuo
 City,  Henan  Province,  China  consisting  of two coal  boilers  and two steam
 turbine  generating units each with an expected  capacity of approximately  125
 megawatts and an aggregate  expected capacity of approximately 250 megawatts as
 well as all associated fuel handling and transport and generation equipment and
 components.

          'Facility  Site'  means that real  property  located in Jiaozuo  City,
 Henan Province, China on which the Facility is to be located.

          'Force Majeure' means any of the following events,  which cause either
 or both of the parties to be unable to perform its or their  obligations  under
 this  Contract:  war,  hostility,  public  disturbance,  strikes,  other  labor
 disputes and work stoppages, failure or interruption of transportation or other
 utilities,  epidemic, fire, flood, earthquake,  storm, tidal wave or other acts
 of nature,  and all other  similar  events  beyond the  control of the  parties
 affected thereby.

          'Governmental  Instrumentality'  means the  government of the People's
 Republic of China or any province, municipality or other political subdivision,
 instrumentality,  ministry, department,  agency, court, authority,  corporation
 which has authority to exercise governmental  functions or commission under the
 direct or indirect control of any such body.

          'Grid'  means the power grid under the  control of the Henan  Electric
 Power Corporation.

          'HEPC' means the Henan Electric Power Corporation.

          'Joint Venture  Contract' means the Cooperative Joint Venture Contract
 for the Jiaozuo Wan Fang Power Company  Limited  between  Purchaser and Jiaozuo
 Power Partners, L.P.

          'Minimum  Take'  means (i) for the  period  beginning  on the Unit One
 Testing Date and ending on the date immediately preceding the Unit Two

                                       2

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


Testing  Date,  the  kilowatt-hour  amount  equal to the  product  of (x)  [***]
kilowatts multiplied by (y) [***]% multiplied by (z) the number of hours in this
period; (ii) for the period beginning on the Unit Two Testing Date (if such date
is not the  first  day of a  calendar  year)  and  ending on the last day of the
calendar  year in which the Unit Two  Testing  Date  occurs,  the  kilowatt-hour
amount  equal to the  product of (x) [***]  kilowatts  multiplied  by (y) [***]%
multiplied  by (z) the  number  of  hours in this  period;  and  (iii)  for each
calendar year thereafter,  the kilowatt-hour  amount equal to the product of (x)
[***] hours multiplied by (y) [***] kilowatts, except that for the calendar year
during which the  expiration  date of this Contract  occurs (if such  expiration
date is not the last day of such  calendar  year),  the  Minimum  Take means the
kilowatt-hour  amount equal to the product of (x) [***] kilowatts  multiplied by
(y) [***]%  multiplied by (z) the number of hours in such calendar year prior to
the  expiration  date;  provided that Seller may adjust the Minimum Take for any
year by adjusting  the kilowatt  numbers in clauses (i), (ii) and (iii) above so
long as  Seller  notifies  Purchaser  in  writing  of such  adjustment  at least
thirteen months before such adjustment takes effect.  Purchaser may also request
Seller to adjust the Minimum Take for any calendar year, provided that Purchaser
makes such  request at least  thirteen  months  prior to the  beginning  of such
calendar year.

          'New Mill' means Purchaser's  aluminum  production facility located at
 Daiwang Zhen,  Jiaozuo City,  including the existing  production  lines with an
 annual  capacity  of 40,000 tons of aluminum  and any new  aluminum  production
 lines to be added by Purchaser to such facility or any other facility.

          'Old Mill' means Purchaser's  aluminum  production facility located in
 the city of Jiaozuo with an annual capacity of 13, 000 tons of aluminum.

          'Permit'  means  any  permit,  license,  approval,   consent,  waiver,
 authorization or other requirement required in connection with the Project from
 any Governmental Instrumentality under applicable laws or regulations.

          'Permit Event' means (i) any Permit not being granted upon application
 having  been duly  made;  (ii) any  Permit  ceasing to remain in full force and
 effect,  or not being renewed upon  application  having been duly made or being
 renewed upon terms and conditions which are less favorable to Seller than those
 originally imposed;  (iii) the attachment to any Permit subsequent to its grant
 of any terms or conditions which adversely affect any of Seller's rights or the
 performance by Seller of any of its obligations; or (iv) the requirement of any
 Permit not required as of the date of this Contract.

          'Points of Interconnection'  means the physical points on the Facility
 Site as  described in Appendix B at which  interconnection  is made between the
 Facility and Purchaser,  such points being subject to the  requirements set out
 in Appendix C.

          'Power  Purchase and Sale Contract'  means the Power Purchase and Sale
 Contract between Seller and HEPC.

                                       3


          'Project'  means  the  Facility,  the  Facility  Site,  and all  other
 equipment and property that may become part of either of the foregoing.

          'Prudent   Electrical   Practices'   means  those  codes,   rules  and
 regulations  stipulated  by the  Ministry  of  Electric  Power of the  People's
 Republic of China or other relevant Governmental  Instrumentality in respect of
 power plant operation and maintenance,  control or other related matters. Where
 there are no such codes, rules and regulations,  'Prudent Electrical Practices'
 means those practices that are generally  accepted for use in the international
 electric  utility  industry  and  commonly  used in safe and  prudent  electric
 utility  engineering  and  operations  to design,  engineer,  construct,  test,
 operate and maintain equipment.

          'Purchaser  Energy Payment' means the Energy Payment per kilowatt hour
 described in Appendix A times the number of kilowatt  hours  delivered  for the
 relevant period as measured pursuant to Section 9.

          'Rated  Capacity' means the capacity  (expressed in kilowatts (kW)) of
 the two 125 megawatt units of the Facility to generate energy, as determined in
 a completed  performance  test conducted for each such unit prior to its COD in
 accordance with the test procedures contained in Appendix D.

          'RMB' or 'Renminbi' means the lawful currency of the People's Republic
 of China.

          'Scheduled  Outage'  means a planned  interruption  of the  Facility's
 generating capability that has been scheduled in advance and is for inspection,
 testing, preventive maintenance, repairs or replacement.

          'Shortage Period' has the meaning given such term in Section 7.2.

          'Technical  Limits' means the limits and  constraints  relating to the
 operation and maintenance of the Facility, as described in Appendix C.

          'Testing  Date' means  either or both of the Unit One Testing Date and
 the Unit Two Testing Date.

          'Testing  Period'  means,  for each unit of the  Facility,  the period
 commencing on the date on which, in the opinion of Seller and as set forth in a
 certificate  to be  delivered by Seller to  Purchaser,  such unit is capable of
 producing energy for sale to Purchaser  (whether or not Purchaser has completed
 construction of the interconnection described in Section 8.2) and ending on the
 Commercial Operation Date for such unit.

          'Unit One Commercial Operation Date' or 'Unit One COD' means the first
 date  following  the  Testing  Period for the first unit of the  Facility to be
 completed on which such unit,  in the opinion of Seller and as evidenced by the
 completion  of a  performance  test  during the Testing  Period,  is capable of
 producing  and  delivering,  and does  produce,  energy  for sale to  Purchaser
 pursuant  to the  terms  and  conditions  of this  Contract,  as set forth in a
 certificate to be delivered by Seller to Purchaser.

          'Unit One Testing Date' means the date on which the Testing Period for
 the first unit of the Facility to be completed commences.

          'Unit Two Commercial Operation Date' or 'Unit Two COD' means the first
 date  following  the Testing  Period for the second unit of the  Facility to be
 completed on which such unit,  in the opinion of Seller and as evidenced by the
 completion  of a  performance  test  during the Testing  Period,  is capable of
 producing  and  delivering,  and does  produce,  energy  for sale to  Purchaser
 pursuant  to the  terms  and  conditions  of this  Contract,  as set forth in a
 certificate

                                       4

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


to be delivered by Seller to Purchaser.

          'Unit Two Testing Date' means the date on which the Testing Period for
 the second unit of the Facility to be completed commences.

          'Unscheduled Outage' means any interruption of the Seller's generating
 capability  that is not a Scheduled  Outage except any  interruption  caused by
 Seller in bad faith which results in damages to Purchaser.


                                    SECTION 2

                                TERM OF CONTRACT

          This  Contract  shall  become  effective  upon signing by the parties.
 Unless  terminated  pursuant  to Section 13, this  Contract  shall  continue in
 effect  until  the date that is [***]  years  after the  Business  License  (as
 defined in the Joint  Venture  Contract) is issued to Seller  (including  [***]
 years of construction).


                                    SECTION 3

                            CONDITIONS TO OBLIGATIONS

          The  obligations  of  Purchaser  and Seller  under this  Contract  are
 conditioned upon (i) execution by Seller and the HEPC of the Power Purchase and
 Sale  Contract  and of a mutually  satisfactory  dispatch  and  interconnection
 contract in respect of the Facility (the 'Dispatch  Contract') and (ii) receipt
 of all applicable approvals from all relevant Governmental Instrumentalities of
 the electricity  pricing  formula set forth in Appendix A and, if required,  of
 this Contract, the Power Purchase and Sale Contract and the Dispatch Contract.

                                    SECTION 4

                                SALE AND PURCHASE

4.1 (A) In accordance with the terms and conditions of this Contract, from

                                       5



and after the Unit One Testing Date, Seller agrees to sell, and Purchaser agrees
to purchase,  all of the New Mill's and,  after the completion of the connecting
lines  between  the  Facility  and the Old  Mill,  the  Old  Mill's  electricity
requirements  from the  Facility  (whether  such  lines  will be built  shall be
decided by Purchaser), provided, however, that (i) Seller shall not be obligated
to provide at any time more than the  capacity  number  (in  kilowatts)  used to
calculate the Minimum  Take;  and (ii)  Seller's  obligations  to sell energy to
Purchaser are subject to Seller's  obligations under the Power Purchase and Sale
Contract. Purchaser may not purchase any electricity from any third party unless
and only to the extent the  Facility  is unable to provide all of the New Mill's
and, after the  completion of the connecting  lines between the Facility and the
Old Mill, the Old Mill's electricity requirements.  If Purchaser anticipates any
material  change in its demand for power,  it shall notify  Seller  immediately.
Upon written  request by  Purchaser,  Seller may (but shall not be obligated to)
adjust the capacity  number (in  kilowatts)  used to calculate the Minimum Take.
From and after the Unit One Testing Date,  Purchaser shall pay Seller for energy
by making  Purchaser  Energy  Payments in accordance with (i) the Approval Reply
Concerning the Method for Calculating the Price for the Electricity  Sold to the
Grid from Jiaozuo Wan Fang Power Company  Limited  (2x125MW  Units) by the Henan
Provincial  Pricing  Bureau  (Yu  Jia  Gong Zi No.  088  (1998))  including  its
Appendix,  Method for Calculating the Price for the Electricity Sold to the Grid
from Jiaozuo Wan Fang Power Company Limited  (attached hereto as Appendix A) and
(ii) Section 11,  provided that the price for energy sold hereunder shall be the
same as the price for energy  sold to HEPC  pursuant to the Power  Purchase  and
Sale Contract.

          (B) The parties  acknowledge  that the minimum  output of energy to be
 purchased  by  Purchaser  during any period  shall not be less than the Minimum
 Take applicable to that period. If for any reason (except a Force Majeure event
 affecting  Purchaser)  Purchaser  does not  purchase  the  Minimum  Take in any
 period,  Purchaser  shall  nevertheless  be obligated to make Purchaser  Energy
 Payments  to Seller in the  amounts  which  would  have been due had  Purchaser
 purchased the Minimum Take in such period,  i.e., Purchaser shall still pay the
 Purchaser  Energy Payment in respect of the amount of such shortfall  (assuming
 the Facility  would have operated at full Rated  Capacity),  provided that such
 Purchaser  Energy  Payment shall not include any amounts in respect of the Fuel
 Charge  (as  defined  in  Appendix  A).  The  amount of such  payment  shall be
 calculated  and made within 30 days after the end of the  relevant  period.  If
 during the course of any period it could be reasonably expected that Seller may
 have  difficulty  delivering  the Minimum Take as a result of Force  Majeure or
 Change in Law,  Seller shall have the right to revise the power supply schedule
 already agreed to by Seller and Buyer so as to permit Seller to deliver as much
 energy as possible in order to achieve the Minimum Take.

          (C)  After  the Unit  Two  Commercial  Operation  Date,  Seller  shall
 endeavor to provide power to Purchaser constantly  throughout the year, subject
 to the Technical Limits,  Prudent Electrical Practices and Seller's obligations
 under the Power Purchase and Sale Contract and the Dispatch Contract.

                                       6



                                    SECTION 5

                            OPERATION AND MAINTENANCE

5.1  Subject  to the  requirements  in  Section  4.1(A)  and  the  Minimum  Take
requirements  in  Section  4.1(B),  (i) on or  prior  to July  31 of each  year,
Purchaser shall provide Seller in writing with Purchaser's  annual plan of power
demand (in both kilowatts and kilowatt hours) for the following year, and Seller
may, in consultation with Purchaser,  modify such plan in writing on or prior to
November  30 of each  year;  (ii) on or prior to the first  day of March,  June,
September  and  December,   Purchaser  shall  provide  Seller  in  writing  with
Purchaser's  quarterly  plan of power  demand (in both  kilowatts  and  kilowatt
hours)  for  the  following  quarter,  and  Seller  may,  in  consultation  with
Purchaser,  modify  such plan in  writing  on or prior to the last day of March,
June,  September  and  December;  and (iii) on or prior to the first day of each
month,  Purchaser shall provide Seller in writing with Purchaser's  monthly plan
of power demand (in both kilowatts and kilowatt hours) for the following  month,
and Seller may, in consultation  with Purchaser,  modify such plan in writing on
or prior to the last day of each month.

5.2  Purchaser  shall  follow the plans (as  modified by Seller)  referred to in
clause 5.1. If Purchaser plans or anticipates any change  exceeding + or - 3% of
such plans,  Purchaser shall immediately submit a written  application to Seller
for such planned or anticipated change.  Seller shall make reasonable efforts to
satisfy  Purchaser's   application,   having  regard  to,  among  other  things,
Purchaser's  needs,  the  Technical  Limits,  Prudent  Electrical  Practices and
Seller's obligations under the Power Purchase and Sale Contract and the Dispatch
Contract.

5.3 If there is any  change in  Purchaser's  operation  which has an  unexpected
material impact on Purchaser's  power  consumption,  Purchaser shall immediately
notify  Seller of such  change and shall  coordinate  with Seller with a view to
minimizing any adverse effect of such change, provided,  however, no such change
shall in any way affect  Purchaser's  obligation to purchase the Minimum Take or
its  obligation to purchase all the New Mill's and,  after the completion of the
connecting  lines  between  the  Facility  and the  Old  Mill,  the  Old  Mill's
electrical requirements from Seller as provided in Section 4.1(A).

5.4 Upon Seller's  request,  Purchaser  shall provide daily,  monthly and annual
summary reports to Seller  concerning  Purchaser's  operating  condition and its
power consumption.

5.5 If, due to any reason  including any reason  involving  the Grid,  Seller is
unable to  provide  power in  accordance  with plans  agreed  upon by Seller and
Purchaser, Seller shall immediately notify Purchaser in writing.

5.6 Seller shall cause the Facility to be operated and  maintained in accordance
with Prudent Electrical Practices and this Contract.

                                       7


5.7 Seller  shall  establish  and  provide to  Purchaser  a copy of the  initial
technical  limits 30 days prior to the expected  Unit One Testing Date and shall
notify Purchaser immediately in writing of any change to the technical limits.

5.8 The parties shall  establish a  coordination  committee  (the  'Coordination
Committee'), consisting of two representatives from each party. Responsibilities
of the Coordination  Committee shall include coordination between the parties on
such issues as the construction of the Facility,  the connection of the Facility
with  Purchaser,  Purchaser's  power  consumption  plan and  Seller's  Scheduled
Outages and  Unscheduled  Outages.  The  Coordination  Committee shall meet on a
regular basis. If either party notifies the other party that it wishes to hold a
meeting of the Coordination  Committee in addition to the regular meetings,  the
parties shall hold such a meeting as soon as practical.

                                    SECTION 6

                                     OUTAGES

6.1  Seller  may  schedule  a  Scheduled  Outage  at any time so long as  Seller
provides  Purchaser  with a 30 days prior  written  notice.  In the event that a
Scheduled  Outage is caused by any action or  omission of the Grid and it is not
feasible to provide such 30 days prior written  notice,  Seller shall provide to
Purchaser  a written  notice  with  respect to the  Scheduled  Outage as soon as
practicable.

6.2 Seller shall provide Purchaser with an estimate of the nature,  duration and
scope of any Scheduled Outage.

6.3 As the need for any Unscheduled Outage is determined,  Seller shall promptly
provide  Purchaser  with an estimate of the nature,  duration  and scope of such
outage. Seller will not be considered in default under this Contract as a result
of any Unscheduled Outage.

6.4 After the Unit Two Testing  Date,  if an outage  occurs with respect of both
units  of  the  Facility,   Seller  shall  immediately  notify  Purchaser.  Upon
Purchaser's  request,  Seller shall apply to HEPC to provide  power to Purchaser
pursuant to agreement  already reached between  Purchaser and HEPC. In the event
that HEPC  agrees to provide  power to  Purchaser,  Seller  shall,  pursuant  to
arrangements to be made between the parties hereto,  transmit to Purchaser power
purchased by Purchaser  from HEPC by using  Seller's  connecting  lines with the
Grid. In the event that HEPC refuses to provide power to Purchaser, Seller shall
not have any liability.

                                    SECTION 7

                                   EMERGENCIES

7.1 Seller shall provide Purchaser with a copy of the emergency procedure agreed
to by Seller and HEPC for the Facility at least 30 days before

                                       8


the Unit One Testing Date.

7.2 Seller  shall,  during  any  period of  shortage  of energy  that  Purchaser
sustains (a 'Shortage Period'), at the request of Purchaser,  use all reasonable
efforts to supply  such energy as the  Facility is able to generate  during such
period within the Technical  Limits and in  accordance  with Prudent  Electrical
Practices.  If a  Scheduled  Outage  would  occur at the same time as a Shortage
Period, Seller shall, upon the request of Purchaser,  use all reasonable efforts
to  reschedule  the  Scheduled  Outage  or, if the  Scheduled  Outage has begun,
restore energy production as soon as possible.

                                    SECTION 8

                                 INTERCONNECTION

8.1 Energy  produced by Seller and sold to Purchaser  pursuant to this  Contract
shall be made  available  and  delivered  by Seller to Purchaser at the Point of
Interconnection.

8.2 Purchaser shall at its own expense design,  construct,  control, operate and
own all  interconnection  equipment located beyond the Point of Interconnection.
Such interconnection  will be completed and capable of transmitting  electricity
at least 150 days prior to the Unit One Testing  Date.  The cost of additions or
changes to any of Purchaser's substations, transformers,  transmission lines, or
any  other  portions  of  Purchaser  as a  result  of  Purchaser's  purchase  of
electricity  under this Contract or other changes required by Purchaser shall be
borne entirely by Purchaser.  Purchaser  shall not be liable for obtaining power
to commission and energize the Facility.

8.3 Seller shall be responsible at its own expense for the  engineering,  design
and  construction  of the  interconnection  from the  Facility  to the  Point of
Interconnection.  Seller shall  provide two Points of  Interconnection  150 days
prior to the Unit One Testing Date and a third Point of Interconnection 150 days
prior to the  Unit  Two  Testing  Date.  All  these  three  points  shall be hot
stand-bys to one another.

8.4 Purchaser shall provide to Seller within 90 days after the execution of this
Contract  a report  with  respect  to the  level of  harmonics  produced  by its
rectifying  equipment.  If the level of harmonics  exceeds that specified by the
power  industry,  Purchaser  shall  purchase  and install at its own cost needed
harmonic  filtering  equipment.  The  harmonics  content  should comply with the
Electrical  Energy Quality and Public Grid's Harmonics  promulgated by the State
Technology  Monitoring  Bureau in 1993 or the latest  applicable  regulations on
harmonics content.

8.5 As soon  as the  initial  testing  of the  first  unit  of the  Facility  is
completed,  Purchaser  shall, at its cost,  change the 110 kV lines which supply
power to Purchaser  from the Grid at the time of the  execution of this Contract
over to the Point of  Interconnection  so that the  Facility can supply power to
Purchaser  directly  starting  from the Unit One  Testing  Date.  Such lines are
further described in Appendix B.
 :  PAGE>
                                   SECTION 9

                         MEASUREMENT OF ELECTRIC ENERGY

9.1 All measurements of energy delivered by Seller to Purchaser shall be made at
various outlet lines at the high-voltage side of the Point of Interconnection by
suitable  kilowatt and  dual-direction  active and reactive power  kilowatt-hour
meters.  Seller shall install,  own and operate two sets of meters in conformity
with  Purchaser's  metering  standards  and  operating  procedures  and  Prudent
Electrical Practices (except that Purchaser shall be responsible for reading the
meters at midnight 12 o'clock on the last day of each month with representatives
of  Seller  being  present).  Purchaser's  representative  shall  sign a written
statement  of each meter  reading at the time of reading the meters.  One set of
such  meters  will be the  primary  meters and the other set will be the back-up
meters.  Readings  on the  primary  meters  will be the  measurement  of  energy
delivered.  Testing, calibrating and recalibrating of metering equipment will be
in  accordance  with  Prudent  Electrical  Practices  and  performed  jointly by
representatives  of Purchaser and Seller under the  supervision and direction of
the electric  energy  measurement  authority of Henan Province,  China.  Neither
Seller nor Purchaser may change the metering facilities for the Facility without
the consent of the other party.

9.2 If either party disputes a meter's accuracy or condition, it shall so advise
the  other  party in  writing.  The other  party  shall,  within  15 days  after
receiving such notice,  advise the disputing party in writing as to its position
concerning  the meter's  accuracy.  If the  parties are unable to resolve  their
disagreement,  then they shall  engage  either the electric  energy  measurement
authority of Henan Province, China or an unaffiliated,  qualified third party to
test  the  meter.  Should  the  meter be found  in good  order  and  registering
accurately  (within the standard set forth in Section 9.4), the disputing  party
shall  bear the cost of  inspection;  otherwise  the cost  shall be borne by the
owner of the meter.

9.3 Seller agrees to repair and recalibrate any malfunctioning  meter at its own
expense as soon as reasonably possible.

9.4 If the primary meter used to measure  energy fails to register,  the back-up
meter will be used to measure energy.  If the difference in measurements made by
the  primary  meter and the  back-up  meter  exceeds  0.5  percent of the energy
measured by the primary  meter in any month,  the meters  shall be repaired  and
recalibrated and an adjustment shall be made correcting all measurements made by
the  inaccurate  or  defective  meter for the amount of the  inaccuracy  in that
month, in the following manner:

          (A) As may be agreed upon by the parties, or

          (B) In the event that the  parties  cannot  agree on the amount of the
 adjustment  necessary to correct the  measurements  made by any  inaccurate  or
 defective meter, the parties shall use the back-up meter, if installed and

                                       10



registering  accurately,  to determine the amount of such inaccuracy,  provided,
however,  that such meter is tested in the same manner as the primary meter.  In
the event that the back-up meter is also found to be inaccurate by more than 0.5
percent,  then the parties shall use the Purchaser's meter on the far end of the
interconnection  line,  if such meter is believed by the parties to be operating
properly,  adjusted  for  reasonable  line  losses.  In the  event  there is not
agreement as to the accuracy of this set of meters,  the parties shall  estimate
the amount of the necessary adjustment referring to operating data maintained in
the Facility's control system.

          (C) In the event the parties  cannot agree on the actual period during
 which  the  inaccurate  measurements  were  made,  the  period  for  which  the
 measurements  are to be adjusted  shall be the last one-half of the period from
 the last previous test of the meter.

          (D) To the extent the adjustment  period covers a period of deliveries
 for which  payment has already  been made by  Purchaser,  Seller  shall use the
 corrected measurements to recompute the amount due and Seller or Purchaser,  as
 applicable,  shall  make up the  difference  between  the paid  and  recomputed
 amounts.  Payment of such difference by the owing party shall be made not later
 than 30 days after  such  party  receives  notice of the  amount  due.  If such
 payment is not made in full prior to the end of this 30-day period,  a late fee
 will be payable by the owing  party  equal to 0.04% of such  unpaid  amount for
 each day in the first 60 days such amount remains unpaid and equal to 0.08% for
 each day thereafter.  Any payment of such unpaid amounts shall be applied first
 to payment of the late payment interest charge and then to the principal amount
 outstanding.


                                   SECTION 10

                                  CHANGE IN LAW

          If a Change in Law occurs which requires new capital  expenditures for
 the  Project,  increases  Seller's  operating  costs  of the  Project,  imposes
 restrictions upon Seller's  operation of the Project which deny Seller the full
 economic  benefit of this Contract or interferes  with Seller's  performance of
 its obligations hereunder,  the price of energy shall be adjusted and submitted
 for  approval  pursuant  to the  formula set forth in Appendix A so as to place
 Seller in the same economic position as if such Change in Law had not occurred.
 A  certificate  of Seller  setting  forth the basis for  determination  of such
 payment adjustment shall be delivered to Purchaser.  As used herein, 'Change in
 Law' shall mean any Permit Event,  any change in any law,  statute,  ordinance,
 rule, regulation or Prudent Electrical Practices (including the adoption of any
 new law, statute, ordinance, rule, regulation or Prudent Electric Practices) or
 interpretation thereof by any Governmental Instrumentality from those in effect
 on the  date of  execution  of this  Contract,  or any  prohibition  or acts by
 government or public

                                       11


agency which causes either or both of the parties to be unable to perform its or
their obligations hereunder.


                                   SECTION 11

                                METHOD OF PAYMENT

11.1 On or before the fifth Business Day of each calendar  month  beginning with
the first full  calendar  month after the Unit One Testing  Date,  Seller  shall
submit to Purchaser a billing  statement showing the amount payable by Purchaser
hereunder  as Purchaser  Energy  Payments,  and the  calculation  thereof,  with
respect to the  immediately  preceding  month.  Purchaser shall pay such amounts
within 20 calendar  days after  Purchaser's  receipt of the  billing  statement.
Payment shall be made by transfer to Seller's account in a bank to be designated
by Seller.

11.2 Notwithstanding the foregoing, if a Purchaser Energy Payment is not paid in
full to Seller on or before  the close of  business  on the date due, a late fee
will be payable by Purchaser  equal to 0.04% of such unpaid  amount for each day
in the first  sixty days such amount  remains  unpaid or equal to 0.08% for each
day  thereafter.  Any payments of such unpaid  amount shall be applied  first to
payment of any late payment  interest  charge and then to the  principal  amount
outstanding.

11.3  In  the  event  Purchaser  disputes  all  or any  portion  of any  billing
statement,  Purchaser shall  nevertheless pay the full amount when due and shall
give written  notice of the dispute to Seller.  Such notice  shall  identify the
disputed  bill and contain a detailed  statement of the amount and nature of the
dispute. No adjustment shall be made for disputed amounts unless notice is given
together with a detailed  statement of the claim. A billing  statement  shall be
deemed  final and not  subject to  dispute by  Purchaser  if  Purchaser  has not
delivered a notice  disputing such billing  statement  within three months after
Purchaser's  receipt  of  such  billing  statement.  Seller  shall  give  prompt
consideration  to any dispute and shall notify  Purchaser of its position within
30 days following  receipt of Purchaser's  written  notice.  If Seller shall not
have responded to Purchaser within such 30 day period, Seller shall be deemed to
have accepted  Purchaser's  position.  Upon final  determination  of the correct
amount and all necessary  adjustments,  any  overpayment by Purchaser  (together
with  interest  thereon  at a rate of  0.04%  per  day),  shall be  credited  to
Purchaser in the monthly billing statement next submitted to Purchaser.

11.4 All payments under this Contract shall be made in Renminbi.


                                   SECTION 12

                                  FORCE MAJEURE
 
                                      12



12.1 If a party is wholly or partially unable to perform its obligations arising
under this Contract due to Force Majeure, the party claiming Force Majeure shall
give the other party written notice  describing the Force Majeure event together
with a  certificate  stating  that such party is wholly or  partially  unable to
perform its  obligations  under this  Contract as a result of such Force Majeure
event.

12.2 If, as a result of Force Majeure,  a party is rendered  wholly or partially
unable to perform  its  obligations  under this  Contract,  that party  shall be
excused to the extent so affected; provided that:

          (A) the suspension of performance  shall be of no greater scope and of
 no longer duration than is required by the Force Majeure event;

          (B) no obligations  under this Contract which shall have arisen before
 the Force  Majeure  event  shall be  excused  as a result of the Force  Majeure
 event;

          (C) no obligations to make payment shall be excused as a result of the
 Force Majeure event; and

          (D) the party claiming Force Majeure shall use its reasonable  efforts
 to remedy its inability to perform.


                                   SECTION 13

                                EVENTS OF DEFAULT

13.1  Purchaser  may give a notice  of  termination  of this  Contract  upon the
occurrence and continuance of any of the following events of default:

          (A) Bankruptcy of Seller;

          (B) Seller abandons the Project for a period of 12 consecutive months;
 or

          (C) Seller fails to perform any of its material obligations under this
 Contract which continues unremedied for 30 days after notice from Purchaser (or
 if such failure  cannot be remedied  within 30 days,  such longer period not to
 exceed six months as may be reasonably necessary to remedy such failure);

provided, however, that Purchaser may not terminate this Contract as a result of
any event listed above which is caused  directly or  indirectly by any action or
omission by Purchaser,  HEPC,  any  Governmental  Instrumentality  or any entity
party  to a  Project  Contract  (as  defined  in  the  Joint  Venture  Contract)
(including breach by Purchaser of its obligations under this Contract, breach by
HEPC of its obligations under the Power Purchase and Sale Contract and breach by
the coal supplier of the coal supply contract for the Project).

                                       13



13.2  Seller  may  give a  notice  of  termination  of this  Contract  upon  the
occurrence and continuance of any of the following events of default:

          (A) Bankruptcy of Purchaser;

          (B) a Permit Event;

          (C) any  Governmental  Instrumentality  fails to perform or repudiates
 any of its obligations under any of the documents set forth in Section 3 or any
 Permit;

          (D) any  Governmental  Instrumentality  expropriates  or  threatens to
 expropriate Seller or any assets or rights of Seller or takes other action that
 adversely  affects the enjoyment by Seller of its rights, or the performance by
 Seller of any of its obligations under this Contract;

          (E)  Purchaser  fails to pay when due any amount  payable by Purchaser
 under this Contract;

          (F) Purchaser fails to perform any of its material  obligations (other
 than payment  obligations  referred to in clause (E) above) under this Contract
 which continues unremedied for 30 days after notice from Seller; or

          (G) any Governmental  Instrumentality imposes restrictions prohibiting
 or  materially  limiting  Seller's  or its  principals'  ability to  repatriate
 profits or revenues from the Project outside China.

13.3 Any  termination  notice shall specify the event of default  giving rise to
the  termination  notice.  Following the termination  notice,  the parties shall
consult  for a period of up to 90 days as to what steps  shall be taken.  At the
expiration  of the 90 day period and unless  the  parties  shall have  otherwise
agreed or the event of default giving rise to the termination  notice shall have
been remedied,  the party having given the termination notice may terminate this
Contract by giving  written  notice to the other party,  whereupon this Contract
shall terminate on the date specified for termination in such notice.

13.4 In the event of any breach or  default  under  this  Contract  other than a
default  referred to in Section 13.1,  Purchaser shall not be relieved of any of
its  liabilities  or  obligations  hereunder,  including its  obligation to make
Purchaser  Energy Payments  whether  becoming due before or after such breach or
default and to pay any past due amounts.

13.5 Nothing in this Section 13 shall preclude Seller from exercising its rights
under Section 10, if applicable,  or any other rights or remedies hereunder. The
rights upon default  provided  herein are  cumulative  and not  exclusive of any
other rights upon default  available  under  Chinese law;  provided that neither
party  shall  have any right to  terminate  this  Contract  except as  expressly
provided in this Section 13.

                                       14



                                   SECTION 14

                                     WAIVER

          Failure  by either  party to  exercise  any of its  rights  under this
 Contract shall not  constitute a waiver of such rights.  Neither party shall be
 deemed to have  waived any right  resulting  from any failure to perform by the
 other party unless it has made such waiver specifically in writing.


                                   SECTION 15

                          CONCILIATION AND ARBITRATION

15.1 Dispute  Settlement.  Except as otherwise  provided in this  Contract,  the
parties shall attempt to settle any dispute arising out of or in connection with
this  Contract   through  friendly   consultation   between   themselves.   Such
consultation  shall begin  promptly  after one party has  delivered to the other
party a written request for such  consultations.  If the parties do not reach an
amicable  solution  within 30 days of receipt of such notice,  either party may,
with notice to the other party,  submit the dispute for binding  arbitration  in
Beijing, China, under the auspices of the China international Economic and Trade
Arbitration  Commission  ('CIETAC')  in accordance  with the CIETAC  Arbitration
Rules as in effect  on the date of this  Contract  (except  to the  extent  this
Section 15 specifies different procedures,  in which event such procedures shall
govern the arbitration,  including the selection of the arbitration  panel). The
parties  agree  that any  dispute  arising  out of or in  connection  with  this
Contract  shall be  submitted  exclusively  to  arbitration  as provided in this
Section  15. Any  settlement  and award  rendered  through  such an  arbitration
proceeding  shall be final and binding  upon the  parties if the  decision is in
writing and contains a reasoned analysis explaining the arbitrators' reasons for
rendering the award.  The parties agree that the arbitral  award may be enforced
against  the  parties  or their  assets  wherever  they may be found  and that a
judgment upon the arbitral award may be entered in any court having jurisdiction
thereof.  Accordingly,  the parties irrevocably agree that any action to enforce
such  judgment  may be  instituted  wherever  appropriate  and each party hereby
irrevocably  waives, to the fullest extent permitted by law, any objection which
it may have now or hereafter to the laying of the venue or the  jurisdiction  or
the  convenience  of the  forum  of any  such  action  and  irrevocably  submits
generally and  unconditionally to the jurisdiction of any such court in any such
action.

15.2 Language. The arbitration shall be conducted in English and Chinese and the
arbitration shall refer to the English and Chinese texts of this Contract.

15.3  Arbitrators.  There shall be three  arbitrators.  The  parties  shall each
select one  arbitrator  within 30 days after giving or receiving  the demand for
arbitration.  The two arbitrators selected by the parties shall select the third
arbitrator. If a party does not appoint an arbitrator who has consented to

                                       15



participate  within 30 days after the  selection  of the first  arbitrator,  the
relevant  appointment  shall be made by the  arbitrating  body. The costs of the
arbitration  shall be borne by the  parties  as  determined  by the  arbitration
tribunal,  taking  into  account the  relative  merits of the  positions  of the
parties.

15.4 Submission to  Jurisdiction;  Defenses.  Each party is subject to civil and
commercial law and irrevocably  agrees that this Contract is a commercial rather
than a public or  governmental  activity and neither  party is entitled to claim
immunity from legal  proceedings  with respect to itself or any of its assets on
the grounds of  sovereignty  or otherwise  under any law or in any  jurisdiction
where an action may be brought  for the  enforcement  of any of the  obligations
arising under or relating to this Contract. To the extent that a party or any of
its assets has or hereafter  may acquire any right to immunity from any set-off,
legal  proceedings,  attachment  or  execution  of  judgment  on the  grounds of
sovereignty  or otherwise,  each party hereby  irrevocably  waives such right to
immunity  in  respect  of its  obligations  arising  under or  relating  to this
Contract.

15.5  Continued  Performance.  The  parties  hereby  agree  to carry  out  their
respective  obligations under this Contract,  including  without  limitation all
payment obligations, notwithstanding any pending dispute or controversy.


                                   SECTION 16

                  REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

16.1 Seller represents and warrants as follows:

          (A) it is a Sino-foreign  cooperative joint venture duly organized and
 existing under the laws of the People's Republic of China;

          (B) it has full legal right,  power and authority to execute,  deliver
 and perform this Contract and the  contracts and documents  referred to in this
 Contract to which it is a party;

          (C) it has taken all appropriate and necessary action to authorize the
 execution,  delivery and  performance  of this  Contract and the  contracts and
 documents referred to in this Contract to which it is a party; and

          (D)  it  has  obtained  all  consents,  approvals  and  authorizations
 necessary for the valid  execution,  delivery and  performance of this Contract
 and the contracts  and documents  referred to in this Contract to which it is a
 party,  provided,  however,  that Appendix A to this Contract is subject to the
 approval of the relevant  price  authorities  before this Contract shall become
 effective.

16.2 Purchaser represents and warrants as follows:

          (A) it is a Chinese  enterprise  duly organized and existing under the
 laws of the People's Republic of China;

                                       16

          (B) it has full legal right,  power and authority to execute,  deliver
 and perform this Contract and the  contracts and documents  referred to in this
 Contract to which it is a party;

          (C) it has taken all appropriate and necessary action to authorize the
 execution,  delivery and  performance  of this  Contract and the  contracts and
 documents referred to in this Contract to which it is a party; and

          (D)  it  has  obtained  all  consents,  approvals  and  authorizations
 necessary for the valid  execution,  delivery and  performance of this Contract
 and the contracts  and documents  referred to in this Contract to which it is a
 party,  provided,  however,  that Appendix A to this Contract is subject to the
 approval of the relevant  price  authorities  before this Contract shall become
 effective.

16.3 If from time to time a financial  institution  which is proposing to extend
loan facilities or credit support to Seller reasonably requests any financial or
other information, Purchaser will promptly provide such information.


                                   SECTION 17

                              LIABILITY OF PARTIES

17.1 Seller shall indemnify Purchaser and its officers,  principals,  directors,
agents and employees  from and against all direct  damages to the extent arising
from third party  claims and losses for damage to property or injury to or death
of persons  arising  from the  negligence,  bad faith or willful  misconduct  of
Seller or its officers, principals, directors, agents or employees in connection
with the  performance of Seller's  duties under this Contract or Seller's breach
of this Contract.  Such indemnity  shall not apply to the extent that any claims
or losses  are caused by or arise out of any  intentional  or  negligent  act or
omission,  bad  faith  or  willful  misconduct  by  Purchaser  or its  officers,
principals, directors, employees or agents.

17.2 Purchaser shall indemnify Seller and its principals,  officers,  directors,
employees and agents from and against all direct  damages to the extent  arising
from third party  claims and losses for damage to property or injury to or death
of persons  arising  from the  negligence,  bad faith or willful  misconduct  of
Purchaser  or its  officers,  principals,  directors,  employees  or  agents  in
connection  with the  performance of  Purchaser's  duties under this Contract or
Purchaser's  breach  of this  Contract.  Such  indemnity  shall not apply to the
extent  that any claims or losses are caused by or arise out of any  intentional
or negligent act or omission,  bad faith or willful  misconduct by Seller or its
principals, officers, directors, employees or agents.

17.3 Neither party nor its officers, principals,  directors, employees or agents
shall be liable  to the  other  party or its  officers,  principals,  directors,
employees or agents for claims for incidental, consequential or indirect

                                       17



damages to persons or property,  whether arising in tort, contract or otherwise,
connected  with or resulting  from  performance  or  non-performance  under this
Contract.

                                   SECTION 18

                                   ASSIGNMENT

          Assignments by either party of this Contract shall require the consent
 of the other party,  provided,  however, such consent shall not be unreasonably
 withheld.


                                   SECTION 19

                              AMENDMENT OF CONTRACT

          This  Contract  may be amended or modified  only by an  instrument  in
 writing signed by both parties.


                                   SECTION 20

                                    LANGUAGE

          This  Contract will be executed in four  counterparts  in both Chinese
 and English versions. Each version shall be of equal force and effect.


                                   SECTION 21

                                     NOTICES

          Any notice  required or  permitted to be given  hereunder  shall be in
 writing and shall be (i)  personally  delivered,  (ii)  transmitted  by postage
 prepaid  registered  mail  (airmail if  international),  (iii)  transmitted  by
 internationally recognized courier service, or (iv) transmitted by facsimile to
 the parties as follows, as elected by the party giving such notice:


                  (A)      In the case of Purchaser, to:

                           Jiaozuo Aluminum Mill
                           160 Tanan Road
                           Jiaozuo
                           Henan
                           China

                                       18


                           Attention:  Mr. Jin Bao Qing
                           Facsimile No.:  (86-391) 393-3739
                           Telephone No.: (86-391) 393-3993

                  In the case of Seller, to:

                  (B)      In the case of Seller, to:

                           Jiaozuo Wan Fang Power Company Limited
                           Daiwang Zhen, Jiaozuo
                           Henan, China

                           Attention:
                           Facsimile No.:
                           Telephone No.:  391-329-3144

                           and

                           AES China Generating Co., Ltd.
                           9/F, Allied Capital Resources Building
                           32-38 Ice House Street
                           Central, Hong Kong

                           Attention:       Paul Hanrahan
                           Facsimile No.:   852-2530-1673
                           Telephone No.:  852-2842-5111

Except as otherwise specified herein, all notices and other communications shall
be  deemed  to have  been duly  given on (i) the date of  receipt  if  delivered
personally,  (ii) 7 days after the date of posting if transmitted by mail, (iii)
3 days after delivery to the courier if transmitted by courier, or (iv) the date
of  transmission  with  confirmed  answer  back  if  transmitted  by  facsimile,
whichever  shall first  occur.  Any party may change its  address  for  purposes
hereof by notice to the other party.  All notices  hereunder shall be in English
and Chinese.


                                   SECTION 22

                                 APPLICABLE LAW

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


                                   SECTION 23

                                  SEVERABILITY

          The  invalidity  of any provision or portion of this Contract will not
 affect the validity of the remainder of this Contract.

                                       19



                                   SECTION 24

                                ENTIRE AGREEMENT

          This Contract contains the complete agreement between the parties with
 respect to the matters  contained  herein and supersedes all other  agreements,
 whether written or oral, with respect to the matters contained herein.

                                   SECTION 25

                          NO THIRD PARTY BENEFICIARIES

Except as otherwise  expressly  stated  herein,  this Contract is intended to be
solely for the benefit of Purchaser and Seller and their  respective  successors
and permitted  assigns and is not intended to and shall not confer any rights or
benefits on any third party not a signatory hereto.

                                   SECTION 26

                                  CONSTRUCTION

          Unless  otherwise  stated,  all  references  made in this  Contract to
 'Sections'  and  'Appendices'  shall refer,  respectively,  to Sections of, and
 Appendices to, this Contract.  References  herein to this Contract  include the
 Appendices hereto.  References herein to 'month' and 'year' shall mean calendar
 month and calendar year, respectively, unless otherwise specified.

          IN WITNESS WHEREOF,  the parties,  intending to be legally bound, have
 caused this Contract to be executed by their duly authorized representatives as
 of the day and year written above.


                                       JIAOZUO WAN FANG POWER COMPANY LIMITED

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


                                       JIAOZUO ALUMINUM MILL

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

                                       20

                                   APPENDIX A



     Unless otherwise defined herein, capitalized terms (in the English version
hereof) and underlined terms (in the Chinese version hereof) used but not
defined in this Appendix A shall have the same meanings set forth in the Power
Purchase and Sale Contract to which this Appendix A is attached.

     Energy Payment ('SP') shall be expressed in RMB per kilowatt hour. For each
Base Output Period, as herein defined, the Energy Payment shall be calculated
annually on the date which is 60 days prior to the end of each Calendar Year and
shall be in accordance with the following formula:

         SP = (PC + FC + EC + QC + TC) x [1 + VAT Rate x (1 + OT Rate)]

     (1) 'PC' is the Unit Production Charge which shall be expressed in RMB per
kilowatt hour and shall be caluclated pursuant to the following formula:

PC = RMB Operation and Maintenance Costs + ($ Operation and Maintenance Costs x
Conversion Factor)
- --------------------------------------------------------------------------------
                                  Base Output


               +    Annual Depreciation Amount + Fuel Expenses
                   --------------------------------------------
                                    Base Output
 
Where:

The Unit Production Charge does not include VAT credit.

'Operation and Maintenance Costs' shall be, for each period referred to in the
definition of Base Output below (each such period, a 'Base Output Period'), all
RMB and Dollar operation and maintenance costs of the Project for such period
and shall include, without limitation, all costs of salaries, wages and benefits
for the Chinese and foreign employees (including trade union contributions and
relevant allocations not covered in After Tax Enterprise Profit Retention),
management (including the management of Seller), maintenance, water, ash
disposal, materials, dispatch service fee, environmental compliance, insurance
premiums, land use, administration, ratable funding for major maintenance
overhauls, interest on working capital, costs associated with the exchange of
RMB for Dollars, and amortization of deferred expenses*. All costs will include
estimates of price escalation for the applicable period.

     Operation and Maintenance Costs will be separated into costs budgeted to be
actually incurred and payable in RMB (RMB Operation and Maintenance Costs) and
in Dollars ($ Operation and Maintenance Costs) to be used in the formula for the
Unit Production Charge.


                                      A-1

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


- ----------
*    Deferred expenses will include costs to establish Seller, etc.


'Fuel Expenses' shall be, for each Base Output Period,  budgeted amounts for all
fuel costs,  including  all costs of fuel supply,  transportation,  exchange and
storage,  necessary for the Facility to produce the Base Output.  All costs will
include estimates of price escalation for the applicable period. The budgets for
Fuel  Expenses  will  include  assumptions  of the coal price per ton, the plant
average  consumption  rate (in  grams/kWh),  coal  quality and heat  content and
assumptions  of the oil price per ton,  oil  quality  and heat  content  and the
annual oil consumption  determined by the number of annual unit starts and other
operations requiring oil.

         'Annual Depreciation Amount' =
         ------------------------------

              (Fixed Asset Total Book Value)  x  Classified Depreciation Rate;

Where:

'Fixed Asset Total Book Value' equals the total project cost to complete the
Project including all compensation made in accordance with the construction
contracts, construction management costs, any taxes or fees imposed on the
Project, working capital, debt service reserves and all development fees
unanimously agreed to by the investors in Seller. Also included in the total
Project cost which is required for the completion of Project construction will
be the interest accrued on all debt during construction and other relevant
expenses.

'Classified  Depreciation  Rate'  shall mean the  depreciation  rate  determined
according to the classified service life provided in the relevant document.

'Base  Output'  shall mean (i) for the period  beginning on the Unit One Testing
Date and ending on the date immediately preceding the Unit Two Testing Date, the
kilowatt-hour  amount  equal to the  product of the Rated  Capacity of the first
unit of the Facility  multiplied by [***] % multiplied by the number of hours in
this period; (ii) for the period beginning on the Unit Two Testing Date (if such
date is not the first day of a calendar  year) and ending on the last day of the
calendar  year in which the Unit Two  Testing  Date  occurs,  the  kilowatt-hour
amount  equal to the  product  of the  Rated  Capacity  of the two  units of the
Facility multiplied by [***] % multiplied by the number of hours in this period;
and (iii) for each calendar year thereafter,  the kilowatt-hour  amount equal to
the product of the Rated Capacity of the two units of the Facility multiplied by
[***] hours,  except that for the calendar year during which the expiration date
of the Power Purchase and Sale Contract  occurs (if such  expiration date is not
the last day of such calendar year), the Base Output shall be the  kilowatt-hour
amount  equal to the  product  of the  Rated  Capacity  of the two  units of the
Facility  multiplied  by  [***] %  multiplied  by the  number  of  hours in such
calendar year prior to the expiration date.

'Conversion Factor' shall equal
                                      A-2


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

                                        (Average  Conversion  Rate(t) - 
                                         Average  Conversion Rate(m - 1)
Average Conversion Rate(m) x [1 +  (-------------------------------------------]
                                           Average Conversion Rate(m - 1)

where:

  (m)     shall mean the 30 day period immediately preceding the date of
          calculation

  (t)     shall mean the 12 month period immediately prior to the date of
          calculation

  (m - 1) shall mean the 30 day period immediately preceding the 12 month period
          prior to the date of calculation

'Average Conversion Rate' shall equal the average of the Conversion Rate for
each day over the applicable period.

'Conversion Rate' shall mean the closing selling exchange rate of Renminbi for
Dollars published by the People's Bank of China (or any successor entity
publishing such rate).

At such time as the Renminbi is freely  convertible and an international  market
based forward rate is  available,  the  Conversion  Factor shall be set equal to
such quoted  forward  exchange  rate of Renminbi for Dollars which is six months
from the beginning of each Base Output Period.

         (2) 'FC' is the Unit Profit Charge Before Tax which shall be expressed
in RMB per kilowatt hour and shall be calculated pursuant to the following
formula:

                      FC =       Unit Profit
                               --------------
                             1 - Income Tax Rate


Unit Profit = (Foreign Party's Annual Profit          Chinese Party's
               x Conversion  Factor)                   Annual Profit
              -------------------------------  +  -----------------------  +
                       Base  Output                     Base Output   
                                                 

(Annual $ Debt Service  Payment x  Conversion  Factor) + Annual RMB Debt 
 Service Payment
- -------------------------------------------------------------------------  +
                                   Base Output


Annual  Depreciation  Loan  Repayment     After Tax Enterprise Profit Retention
- -------------------------------------  +  ------------------------------------- 
            Base  Output                              Base Output         
                                          


Where:

'Annual  Profit'  shall be the annual  amounts  listed on Exhibit A-1 which have
been calculated to yield a projected  [***] % financial  internal rate of return
on registered capital over the joint venture term of Seller.

'Registered  Capital  Contribution'  shall  be  equal  to the  total  registered
capital, denominated in RMB, provided by Seller's joint venture partners through
the Unit Two Commercial Operation Date.


                                      A-3


'Annual $ Debt Service  Payment'  shall be an annual Dollar payment in an amount
equal  to  the  annual  amount  required  to pay  all  principal  on the  Dollar
denominated debt financing for the Project.

'Annual RMB Debt Service Payment' shall be an annual RMB payment in an amount
equal to the annual amount required to pay all principal on the RMB denominated
debt financing for the Project.

'After Tax Enterprise Profit Retention' shall be all amounts required pursuant
to law to be set aside by Seller from the after-tax profits of the Project
deposited in the Reserve Fund, Enterprise Development Fund and the Bonus and
Welfare Fund for Staff and Workers,  and any other similar funds  required to be
set up and  funded  by any other  government  entity  in the  future.  After Tax
Enterprise  Profit Retention for each annual period shall be determined for each
Base Output Period based on the amount of after-tax  profits estimated by Seller
for each such year.

'Income Tax Rate' shall be the actual  percentage  tax rate that will be applied
to Seller in the Base Output Period.

'Annual  Depreciation  Loan  Repayment'  shall equal that  portion of the annual
depreciation fund which is used to pay the principal of the debt.

     (3) 'OT Rate' is the  Other Tax Rate  which  shall be the rate  payable  in
respect  of any  taxes  that  Seller  is  obligated  to pay  other  than  VAT on
production  sales.  Details  of this  component  would be  established  upon the
introduction of those new taxes. **

* Purchaser  recognizes that the intent of this provision is to cause the Energy
Payment to Seller to be adjusted so that the net amount  received  after payment
of all taxes and fees other than VAT equals the net amount  that would have been
received had the taxes and fees not been imposed.

     (4) 'VAT Rate' shall be the actual VAT rate  applicable  to Seller's  sales
revenues at Base Output.

     (5) 'EC' is the Unit  Financial  Charge which shall be expressed in RMB per
kilowatt hour and shall be calculated pursuant to the following formula:

                       EC =   Financial Expenses
                              ------------------
                                  Base Output

'Financial Expenses' shall mean, during the operation period of the Project, the
interest of the loan for the construction of, and expenses incurred in financing
the operations of the Project,  projected on an annual basis. Financial Expenses
related to the Dollar debt shall include interest,  related fees and withholding
taxes


                                      A-4

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


(grossed up for taxes payable by Seller)  imposed  pursuant to relevant  Chinese
regulations on the Dollar  denominated debt financing for the Project multiplied
by Conversion Factor, that is:


     Financial Expenses related to the $ Debt Financing x Conversion Factor

RMB  Financial   Expenses  shall  include  interest  and  related  fees  on  RMB
denominated debt financing for the Project.

     (6) 'QC' is the Unit Net Non-Business Expenditures which shall be expressed
in RMB per  kilowatt  hour and shall be  calculated  pursuant  to the  following
formula:

        QC = Non-Business Expenditures - Non-Business Income
             -----------------------------------------------
                              Base Output

'Non-Business  Expenditures'  and  'Non-Business  Income'  mean  the  amount  of
expenditures and income,  respectively,  of Seller which have no direct relation
to the operation of the Project.

     (7) The Unit True-Up  Charge  ('TC') shall be expressed in RMB per kilowatt
hour and shall be calculated pursuant to the following formula:

TC =    Cost Recovery Balance at the Time of Price Calculation X 
         (1 + True-up Charge Interest Rate/2)
        --------------------------------------------------------
                               Base Output

Where:

'Cost  Recovery  Balance' for any given month,  shall be equal to Cost  Recovery
Balance for the previous month x (1 + True-up Charge Interest Rate/12)

+ Cost Recovery for the month

- - Cost Recovery  Balance that has been absorbed in the Energy Payment,  pursuant
to a power price adjustment provided in this section.

'True-up Charge Interest Rate' shall equal [***] % per annum.

'Cost Recovery'  shall equal the difference  between the total sum of the actual
costs and the total sum of the budgeted costs of all of the components contained
in this  price  formula,  which  reflects  economic  changes  in the  underlying
assumptions  contained in the price formula.  Factors which affect components in
this price  formula  include,  but are not  limited  to: (i) fuel price  changes
affecting Fuel Expenses; (ii) raw material price changes affecting Operation and
Maintenance Costs; (iii) changes in the Conversion Rate affecting the Conversion
Factor;  (iv) changes to the type or rate of taxes affecting the Other Tax Rate,
Income  Tax Rate or VAT Rate,  (v)  changes  in various  funds  which  Seller is
   
                                   A-5

required to maintain  affecting  After Tax  Enterprise  Profit  Retention;  (vi)
policy-related changes in expenditures (including a Change in Law) affecting any
of the price  formula  components;  and (vii) any  other  costs not  within  the
control of Seller (except for increased costs due solely to operations in excess
of the Base Output).

References in this Appendix A to annual  periods shall be deemed to refer to the
actual length of the relevant Base Output Period.







                                      A-6

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



                                   APPENDIX A1
                                     PROFIT


Chinese Party Registered Capital                     132,911 (000 RMB)

Foreign Party Registered Capital                     37,364 (000 USD)

Registered Capital Contribution Date                 1-Jun-96

Commercial Operation Date                            1-Jan-98

Return on Investment During  Construction = 

          Registered Capital Contributed X ([***] ^L)


Where: L equals the number of years of construction

Annual Profit = (Registered Capital contributed + Return on Investment During
Construction) x IRR Factor

Where:

IRR FACTOR =       20          1
                   E     --------------
                   n=1   1/(1+ [***])^n


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

     Foreign Party Annual Profit                 Chinese Party Annual Profit
  Year                 Amount (000 USD)       Year              Amount (000 RMB)



 [***]                      [***]             [***]                  [***]




The above  numbers  shall be adjusted to reflect the actual amount of Registered
Capital Contributed,  the actual date of Registered Capital Contribution and the
actual Commercial Operation Date.


                                   APPENDIX B

                            POINT OF INTERCONNECTION

     The  Point of  Interconnection  shall be at the 110 KV  transmission  frame
towers located inside the south fence of the Seller's 110 KV switchyard.





                                   APPENDIX C

                                TECHNICAL LIMITS

1.   Electrical System Characteristics

     (a)  Voltage:          110 kV (equipment should be suitable for grid
                            voltage variations from 107 kV - 126 kV).  During
                            plant operation, Seller's main transformer output
                            voltage shall coordinate with Purchaser's receiving
                            voltage.

     (b)  Power Factor:     Power factor operating range at the 110 kV
                            Point of Interconnection is 0.85 (lag) to 1.0
                            power factor.

     (c)  Grid Frequency:   50 Hertz - 2.0 Hertz to + 1.0 Hertz

2.   Individual Generating Unit Characteristics. The values contained in
     this Appendix C are based on achieving an installed capacity of 115
     MW net per Unit.  (Parasitic load has been deducted)

     (a)  Capacity of Generating Equipment.

          (i)    147 MVA generating capacity

          (ii)   125 MW continuous capacity

          (iii)  Generator main transformers are rated 150 MVA.

     (b)  Start-up Times.  Start-up times are from boiler light-off to full
          load, and do not include time for mobiliation and purging, for which
          fifteen (15) minutes minimum is required. Start-up times are minimum.

          Normal Operation

          Coal Start from ambient            10 hours
          Warm Start after 40 hours           7 hours
          shutdown
          Hot Start after 10 hours            4 hours
          shutdown

     (c)  Maximum Loading and Deloading Rates.

          Mode      Load      Ramp Rate
                    (MW)      (MW/min.)
          ----      ----      ---------
          Cold      0-20      0.17
          Cold      20-125    0.39




                                   APPENDIX D

                            CAPACITY TEST PROCEDURES


     Capacity  Test to establish  the Rated  Capacity of a Unit will be the same
test as described in Appendix D (Capacity Test Prodecures) of the Power Purchase
and Sale Contract between Seller and Henan Electric Power Corporation. Purchaser
agrees to accept the result of such capacity test.