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,
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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
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[*** 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.
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'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
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[*** 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
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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.
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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.
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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
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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.
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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
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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
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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.
Power Purchase and Sale Contract - Jiaozuo Wan Fang Power Co. Ltd. and Jiaozuo Aluminum Mill
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