Power Purchase and Sale Contract - Jiaozuo Wan Fang Power Co. Ltd. and Henan Electric Power Corp.


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

                        POWER PURCHASE AND SALE CONTRACT


                                     BETWEEN



                     JIAOZUO WAN FANG POWER COMPANY LIMITED


                                       AND


                        HENAN ELECTRIC POWER CORPORATION







                           Dated as of April 25, 1996





                                TABLE OF CONTENTS
                                                                     Page

Section 1.    Definitions And Explanation Of Terms.....................1

Section 2.    Term Of Contract.........................................5

Section 3.    Conditions To Obligations................................5

Section 4.    Sale And Purchase........................................5

Section 5.    Operation And Maintenance................................7

Section 6.    Outages..................................................7

Section 7.    Emergencies..............................................7

Section 8     Interconnection..........................................8

Section 9.    Measurement Of Electric Energy...........................8

Section 10.   Change Of Law............................................10

Section 11.   Method Of Payment........................................10

Section 12.   Force Majeure............................................11

Section 13.   Events Of Default........................................12

Section 14.   Waiver...................................................13

Section 15.   Conciliation And Arbitration.............................14

Section 16.   Representations, Warranties And Undertakings.............15

Section 17.   Liability Of Parties.....................................16

Section 18.   Assignment...............................................17

Section 19.   Amendment Of Contract....................................17

Section 20.   Language.................................................17

Section 21.   Notices..................................................17

Section 22.   Applicable Law...........................................18

Section 23.   Severability.............................................18

Section 24.   Entire Agreement.........................................19

Section 25.   No Third Party Beneficiaries.............................19

Appendix A    Pricing
Appendix B    Point Of Interconnection
Appendix C    Technical Limits
Appendix D    Capacity Test Procedures

                                      (i)

                        POWER PURCHASE AND SALE CONTRACT


          This Power  Purchase and Sale Contract  (this  'Contract')  is entered
into as of April 25,  1996,  by and between  HENAN  ELECTRIC  POWER  CORPORATION
('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 a portion of the energy produced by the Facility.


                                    SECTION 1

                      DEFINITIONS AND EXPLANATION OF TERMS

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

          'Aluminum  Company' means Jiaozuo Aluminum Mill, a Chinese  enterprise
registered with the Jiaozuo  Municipal  Administration  of Industry and Commerce
with  its  principal  office  located  at 31 Tanan  Road,  Jiaozuo  City,  Henan
Province, China.

          'Aluminum  Mill Power  Supply  Contract'  means the  contract  between
Seller and the Aluminum Company pursuant to which Seller agrees to sell, and the
Aluminum  Company  agrees to purchase,  a portion of the energy  produced by the
Facility.

          '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 the  Industrial  and Commercial
Bank of China is open for business in Jiaozuo City, Henan Province, China.

                                       1


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

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

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

          'Emergency'  means a condition on Purchaser's  electrical system under
which continued  deliveries of energy from the Facility will materially harm the
safe and  reliable  operation  of such  system or result  in  disruption  of its
electric service or create a danger to persons or property.

          '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  the  land  located  in  Jiaozuo  City,  Henan
Province, China on which the Facility is to be located.

          'FORCE MAJEURE' means any of the following events, which causes 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

                                       2


[***]  Filed   separately  with  the  Commission   pursuant  to  a  request  for
confidential information Power Corporation.

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

          'Minimum  Take'  means (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 sum of all energy  produced by the
second 125  megawatt  unit of the  Facility to be  completed  and  delivered  to
Purchaser  plus the  product  of (x) [***]  megawatts  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)
[***] megawatts  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) [***]  megawatts  MULTIPLIED  by (y) [***]
hours,  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) [***]  megawatts  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 megawatt
numbers  in  clauses  (i),  (ii)  and  (iii)  above so long as  Seller  notifies
Purchaser  in writing of such  adjustment  at least  twelve  months  before such
adjustment  takes  effect.  In  addition,  the  Minimum  Take shall be  adjusted
pursuant to Section 4.1 (C) hereof or Section 4.2 of the Dispatch Contract.

          '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.

          'Point of  Interconnection'  means the physical  point as described in
Appendix B at which interconnection is made between the Facility and Purchaser's
transmission facilities.

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

                                       3


          'Prudent   Electrical   Practices'   means  those  codes,   rules  and
regulations  stipulated  by the  Ministry  of  Electric  Power  of the  People's
Republic of China, other relevant Governmental Instrumentality or other relevant
bodies duly authorized by the government 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 in the manner provided
in the Dispatch Contract and is for inspection, testing, preventive maintenance,
repairs or replacement.

          '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 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 the
certificate to be delivered by Seller to Purchaser.

          'Unit Two Testing Date' means the date on which the Testing

                                       4

[***]  Filed   separately  with  the  Commission   pursuant  to  a  request  for
confidential information Power Corporation.


Period for the second unit of the Facility to be completed commences.


                                    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.


                                    SECTION 3

                            CONDITIONS TO OBLIGATIONS

          The  obligations  of  Purchaser  and Seller  under this  Contract  are
conditioned  upon  (i)  execution  of  a  mutually   satisfactory  Dispatch  and
Interconnection  Contract in respect of the Facility (the  'Dispatch  Contract')
between  Seller and  Dispatcher  (as defined  therein)  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 and the Dispatch Contract.


                                    SECTION 4

                                SALE AND PURCHASE

4.1 (A) In accordance  with the terms and  conditions of this  Contract,  Seller
agrees to sell, and Purchaser agrees to purchase,  energy produced and delivered
to the Point of  Interconnection  by the  Facility.  From and after the Unit One
Testing Date,  Purchaser shall pay Seller for energy by making  Purchaser Energy
Payments in accordance with Section 11 and Appendix A.

    (B) The parties acknowledge that the minimum output of energy to be


                                       5

[***]  Filed   separately  with  the  Commission   pursuant  to  a  request  for
confidential information Power Corporation.


purchased by Purchaser will not be less than the Minimum Take. 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,  provided  that when  calculating  such  shortfall  Purchaser  Energy
Payment, the Energy Payment shall not include any amounts in respect of the Fuel
Charge (as defined in Appendix A). The amount of such shortfall payment shall be
calculated  and made  within 30 days  after the end of a relevant  Minimum  Take
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,  Change in Law or an Emergency,  Purchaser  shall, in cooperation  with
Dispatcher,  revise the dispatch  schedule so as to permit  Seller to deliver as
much energy as possible in order to achieve the Minimum Take.

     (C) If Seller is unable to deliver  capacity to  Purchaser  pursuant to the
dispatch curves specified in the dispatch  schedule because the Aluminum Company
is taking capacity (in kilowatts) in excess of its entitlement  specified in the
Aluminum Mill Power Supply  Contract,  such excess  amount of energy (i.e.,  the
amount of energy in kilowatt  hours equal to the product of the excess  capacity
multiplied  by the number of hours the  Aluminum  Company is taking  such excess
capacity)  taken by the  Aluminum  Company  shall be deducted in  computing  the
Minimum Take.  Seller shall provide one month prior written  notice to Purchaser
of any planned increase or decrease in the Aluminum Company's use of electricity
exceeding 10 megawatts.

     (D) Seller may sell and  Purchaser  may purchase  energy in addition to the
Minimum  Take at the price set forth in Appendix A.  Starting  from the Unit One
Testing Date, for each  kilowatt-hour  of such  additional  energy  purchased by
Purchaser above the Minimum Take,  Seller shall pay an Excess  Generation Fee to
Purchaser equal to [***]% of the profits,  as specified in the pricing  formula,
prior to paying income taxes from sales of energy to Purchaser  above and beyond
the Minimum Take. If the Seller is required by relevant  government  authorities
to pay any taxes,  including  income  taxes,  or any amount put into the reserve
funds,  including  income  taxes on the amounts put into the reserve  funds,  on
account of the amount paid to Purchaser as an Excess  Generation  Fee,  then the
total of such taxes and reserve fund payments shall be subtracted in calculating
the Excess  Generation  Fee.  The amount of such  payment by Seller to Purchaser
shall be calculated  and such payment shall be made within 60 days after the end
of each Minimum  Take  period.  If such payment is not made in full to Purchaser
prior to the end of this  60-day  period,  a late fee will be  payable by Seller
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.

                                       6

[***]  Filed   separately  with  the  Commission   pursuant  to  a  request  for
confidential information Power Corporation.


4.2 To the extent energy is generated prior to the Unit One Testing Date, Seller
agrees to sell and Purchaser agrees to purchase all such energy. Purchaser shall
pay the Purchaser Energy Payment for such energy.  Seller shall pay to Purchaser
a per kWh fee for  coordinating  receipt of such energy  equal to RMB [***] yuan
within 20 days after the end of any month in which such energy is purchased.  If
such  payment is not made in full to  Purchaser  prior to the end of this 20-day
period,  a late fee will be  payable  by  Seller  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.

4.3  Purchaser  may reject and choose not to make any payment for energy that is
produced by Seller in willful violation of the Dispatch Contract.


                                    SECTION 5

                            OPERATION AND MAINTENANCE

5.1 Seller shall be subject to dispatch by  Dispatcher  pursuant to the Dispatch
Contract.

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

5.3 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 as soon as practicable of any change to the Technical Limits.


                                    SECTION 6

                                     OUTAGES

          Provisions  regarding  outages of the  Facility  and power  supply for
starting, testing and restarting the Facility shall be specified in the Dispatch
Contract.  To the extent  Seller  needs power from  Purchaser,  Purchaser  shall
provide  such power to Seller  pursuant to a power sale  agreement to be entered
into between Seller and Purchaser.


                                    SECTION 7

                                   EMERGENCIES

          Emergencies  shall be handled  pursuant to  provisions of the Dispatch
Contract.


                                       7


                                    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  design,  control,  operate  and own  all  interconnection
equipment  (necessary for its system to accept  capacity and energy from Seller)
located at the Point of  Interconnection.  Such equipment  shall be designed and
constructed pursuant to an interconnection  construction contract.  Seller shall
provide  Purchaser a loan in the amount of [RMB 82 million]  yuan for such work.
The term  and  interest  rate  for  such  loan,  together  with  other  relevant
provisions,  shall be  specified  in a separate  agreement  to be  entered  into
between Seller and Purchaser. 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's electric
system as a result of Purchaser's  load  additions or other changes  required by
Purchaser  shall be borne entirely by Purchaser.  Purchaser shall also cooperate
with  Seller  and the  Aluminum  Company  in order to  switch  the  lines  which
currently  provide power to the Aluminum  Company to Seller's  lines so that the
Aluminum  Company can accept power  directly from Seller  starting from the Unit
One Testing Date.

8.3 Subject to the  provisions  of the  Construction  Contract,  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.

8.4 Purchaser  shall be responsible at its own expense for making all changes to
its system necessary to accept capacity and energy from Seller.  Purchaser shall
at its own expense design,  construct,  maintain and repair all  interconnection
facilities from its system to the Point of Interconnection.


                                    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


                                       8


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
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

                                       9


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 OF 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  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 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


                                       10


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

12.1 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;

                                       11


     (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  payment  obligations  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 or any Governmental  Instrumentality  (including breach by
Purchaser of its obligations  under this Contract or breach by Dispatcher of its
obligations under the Dispatch Contract).

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;

                                       12


     (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.

Nothing in this  Section 13 shall  preclude  Seller from  exercising  its rights
under Section 10, if applicable, or any other rights or remedies hereunder.

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 Following termination of this Contract by Seller due to Purchaser's default
hereunder,  Purchaser shall, to the extent permitted by law, transmit any energy
produced by Seller to any entity  designated  by Seller which is  interconnected
with Purchaser.  Purchaser shall be paid its reasonable  costs for  transmitting
such energy.

13.5 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

13.6 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.


                                   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

                                       13


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
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.

                                       14


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  approval  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;

     (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;

                                       15


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

                                       16


                                   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:

                           Henan Electric Power Corporation
                           No. 11 South Songshan Road
                           Zhengzhou, Henan, China 450052

                           Attention:  Xu Xing Long
                           Facsimile No.:  86-371-790-5034
                           Telephone No.: 86-371-790-5015

                                       17


                  (B)      In the case of Seller, to:

                           Jiaozuo Wan Fang Power Company Limited
                           Dai Wang Zheng
                           Jiaozuo City, Henan, China

                           Attention:       Edward C. Hall III
                           Facsimile No.:   N/A
                           Telephone No.:   N/A

                           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.


                                       18


                                   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.


          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.


                                             HENAN  ELECTRIC  POWER  CORPORATION


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


                                             JIAOZUO  WAN  FANG  POWER COMPANY 
                                             LIMITED

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


                                       19


                                   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.


                                      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
                                      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.


                                      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


                                      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
   
                                        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.







                                        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-Jun-96

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 last transmission line
tower located outside the fence of the Seller's 220 kV switchyard.



                                   APPENDIX C

                                TECHNICAL LIMITS

1.   Electrical System Characteristics

     (a)  Voltage:            220 kV (equipment should be suitable for grid
                              voltage variations from 213 kV - 252 kV)

     (b)  Power Factor:       Power factor operating range at the 220 kV Point
                              of Interconnection is 0.85 (lag) to 1.0 power
                              factor

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


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

     (a)  Capacity of Generating Equipment.

          (i)       147 MVA generating capacity

          (ii)      125 MW continuous capacity

          (iii)     Generator step-up transformers are rated 150 MVA.

     (b)  Minimum Stable Load.  The Parties agree not to dispatch the Facility
          below 72% load.  If the performance test demonstrates that the unit 
          cannot maintain a stable operation at 72% dispatch without the use of
          oil, the Parties will explore whether technological modifications to 
          the boiler are possible.  If such modification is technically 
          certified that it will not cause damage to the operation of the 
          boiler, Seller shall make the technological modification to the 
          Facility, provided, however, if the costs of such modification exceeds
          0.1% of the total investment, the Parties agree to settle the problem
          through mutual negotiations in the spirit of equality and mutual
          respect.

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





                                       1


          Normal Operation

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


     (d)  Maximum Loadong and Deloading Rates.

          Mode      Load      Ramp Rate
                    (MW)      (MW/min.)
          ----      ----      ---------

          Cold     0 - 20       0.17
          Cold    20 - 125      0.39









                                       2

                                   APPENDIX D

                            CAPACITY TEST PROCEDURES


1.   Guidelines
     ----------

     After a unit is  sufficiently  complete  so that such unit and all  systems
     associated with it are capable of safe operation in accordance with Prudent
     Electrical  Practices,  Seller shall  conduct a capacity  test as described
     below.  Seller  shall give  Purchaser  and the  engineer at least five days
     prior written  notice of the date on which a capacity  test will  commence.
     Purchaser  may for  reasonable  cause defer a capacity  test for up to five
     days fom the date requested by Seller.  Seller,  Purchaser and the engineer
     shall  each   designate  and  make   available   qualified  and  authorized
     representatives to observe a capacity test as described in this Appendix D,
     and to  monitor  the  taking  of  measurements  to  determine  the level of
     achievement. Testing and measuring procedures used in a capacity test shall
     be in accordance with Chinese standards and codes. A capacity test may, but
     is not required to be, run  concurrently  with the performance  tests under
     the construction contracts.


2.   Capacity Test.
     --------------

     A capacity  test shall  establish  the Rated  Capacity for a Unit and shall
     consist of  continuous,  full load  operation for  twenty-four  hours.  The
     result of any capacity test shall be the net electrical  capacity  averaged
     over the duration of the capacity test, expressed in MW and measured at the
     Point of Interconnection. Upon the conclusion of the initial capacity test,
     Seller may elect to either (a) within  five days submit the results of such
     capacity  test to Purchaser,  witha copy to the engineer,  or (b) deliver a
     notice to Purchaser with a copy to the engineer stating Seller's  intention
     to perform a second  capacity  test no  earlier  than two days and no later
     than seven days after the  Purchaser's  receipt of such  notice.  If Seller
     electes to perform such second  capacity  test,  Seller shall,  within five
     days  after the  conclusion  of such  capacity  test  submit  to  Purchaser
     ('Sellers  Notice') with a copy to the engineer,  the results of either the
     initial capacity test or the second capacity test, as Seller may elect.


3.   Notice of Results.
     ------------------

     If Purchaser concurs with the information in Seller's Notice,  the engineer
     shall,  within five days of receipt of  Seller's  Notice,  provide  written
     notice to Seller and  Purchaser  certifying  the  results  of the test.  If
     Purchaser  disputes any or all of the results contained in Seller's notice,
     representatives  of Seller,  Purchaser,  and the  engineer  shall meet at a
     mutually  acceptable  location to review and discuss  the  dispute.  Within
     fourteen days of receipt of Seller's Notice, the engineer shall decide what
     the disputed levels of capacity were.


                                       1


     Such  decision  shall be certified in a notice to Seller and  Purchaser and
     shall be binding.



4.   Achievement of Testing Date.
     ----------------------------

     The testing  date of a unit shall be deemed to have  occured as of the date
     such unit has completed a capacity test, as certified by the engineer.



5.   Disposition of Output.
     ----------------------

     At all times during start-up, preliminary testing, capacity tests, or other
     operations of a unit in  furtherance  of achieving the Testing Date of such
     unit, Purchaser shall, at no expense to Seller, arrange for the disposition
     of each unit's output of electricity.











                                       2