UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1996
Commission file number 0-23148
AES CHINA GENERATING CO. LTD.
(Exact name of registrant as specified in its charter)
BERMUDA 98-0152612
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3/F(W), Golden Bridge Plaza
No. 1 (A) Jianguomenwai Avenue
Beijing 100020
People's Republic of China Not Applicable
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 8610-6508-9619
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, par value $0.01 per share (NASDAQ National Market System)
(Title of each class)
---------------
AMENDMENT 2
The undersigned registrant hereby amends, as set forth in the
pages attached hereto, its Annual Report on Form 10-K for the fiscal year ended
November 30, 1996:
The Registrant's Annual Report on Form 10-K for the fiscal
year ended November 30, 1996 is hereby amended to file a revised version of
Exhibit 10.44. Revised Exhibit 10.44 is attached hereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
AES CHINA GENERATING CO. LTD.
(Registrant)
Date: April 11, 1997 /s/ Jeffery A. Safford
-----------------------------
Jeffery A. Safford
Vice President
Chief Financial Officer and
Secretary
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Document Numbered Page
- ------- -------- -------------
10.44* Operation and Offtake Contract between Anhui
Provincial Electric Power Corporation, Anhui
Liyuan-AES Power Company Ltd. and Hefei Zhongli
Energy Company Ltd.
- -------
* Certain information identified in this exhibit has been omitted pursuant to a
request to the Commission for confidential treatment.
Exhibit 10.44
Information contained herein, marked with [***], is being filed separately
with the Commission pursuant to a request for confidential treatment.
ANHUI PROVINCIAL ELECTRIC POWER CORPORATION
AND
ANHUI LIYUAN-AES POWER COMPANY LTD.
AND
HEFEI ZHONGLI ENERGY COMPANY LTD.
OPERATION AND OFFTAKE CONTRACT
OF
HEFEI COMBINED-CYCLE POWER PLANT
SEPTEMBER, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
CHAPTER 1 GENERAL.....................................................3
CHAPTER 2 DEFINITIONS.................................................3
CHAPTER 3 REPRESENTATIONS, WARRANTIES AND COMMITMENTS
OF THE PARTIES ............................................8
CHAPTER 4 CONDITIONS AND REQUIREMENTS FOR INTERCONNECTION OF THE
POWER PLANT................................................12
CHAPTER 5 METERING OF ELECTRICITY....................................13
CHAPTER 6 OPERATION OF THE POWER PLANT...............................13
CHAPTER 7 RESPONSIBILITIES OF PARTY B AND PARTY A....................17
CHAPTER 8 OTHER OPERATION MATTERS....................................19
CHAPTER 9 ON-GRID QUANTITY...........................................19
CHAPTER 10 ON-GRID TARIFF AND SETTLEMENT OF ELECTRICITY FEE...........20
CHAPTER 11 RESPONSIBILITY AND INDEMNITY...............................24
CHAPTER 12 DEFAULT AND TERMINATION....................................25
CHAPTER 13 FORCE MAJEURE..............................................27
CHAPTER 14 INSURANCE..................................................29
CHAPTER 15 GOVERNING LAWS AND DISPUTE RESOLUTION......................30
CHAPTER 16 ASSIGNMENT.................................................32
CHAPTER 17 NOTICE.....................................................32
CHAPTER 18 OTHER PROVISIONS...........................................33
APPENDIX 1 INVOICE FORMAT.............................................37
APPENDIX 2 AFTER-TAX CAPITAL RETURN...................................39
APPENDIX 3 CALCULATION OF TERMINATION FEES............................40
APPENDIX 4 ON-GRID TARIFF FORMULA.....................................41
APPENDIX 5 METERING AND RECORDING OF ELECTRICAL ENERGY................51
APPENDIX 6 PRE-OPERATION AND OPERATION SERVICES.......................53
APPENDIX 7 NECESSARY INSURANCE........................................59
APPENDIX 8 FUEL SPECIFICATION.........................................60
APPENDIX 9 FUEL OIL SUPPLY CONTRACT....................................61
<PAGE>
CHAPTER 1 GENERAL
This Operation and Offtake Contract (hereinafter referred to as "this
Contract") was entered into on ------- 1996 in Hefei City, the People's Republic
of China between the Anhui Provincial Electric Power Corporation on the one part
(hereinafter referred to as "Party A") and a consortium comprising Anhui
Liyuan-AES Power Company Ltd. and Hefei Zhongli Energy Company Ltd. on the other
part (each a Sino-foreign cooperative joint venture company, organized and
existing under the laws of the People's Republic of China and collectively
referred to as "Party B", and separately referred to as "Liyuan-AES" and "Hefei
Zhongli" respectively, together being jointly and severally responsible for the
liabilities and obligations of Party B hereunder). In this Contract, Party A and
Party B are individually termed as the "Party" or collectively as "the Parties".
The Parties reached the following agreement through friendly consultations in
accordance with relevant laws and regulations of the People's Republic of China
and on the basis of the principles of equality and mutual benefit.
CHAPTER 2 DEFINITIONS
2.01 DEFINITIONS
Unless otherwise stated in the provisions of this Contract, the
following terms, either in singular or plural, shall have the meanings set forth
below:
1) "AFTER-TAX CAPITAL RETURN" shall mean the amount in respect of
each Year set out in Appendix 2 representing the return to Party
B on its investment in the Power Plant at the Annual Minimum
On-Grid Quantity.
2) "ANNUAL ACTUAL ON-GRID QUANTITY" means the On-Grid Quantity of
electricity generated by the Power Plant as measured at the
Delivery Point, dispatched by Party A and which this Contract
requires is purchased by Party A in any Year.
3) "ANNUAL GENERATION PLAN" means the plan proposed in November of
each Year by Party A, agreed by Party B, that allows the Power
Plant to at least generate the Annual Minimum On-Grid Quantity.
4) "ANNUAL MINIMUM ON-GRID QUANTITY" shall mean the annual minimum
quantity to be generated by the Power Plant (prior to the Tariff
Commencement Date of the ST Unit is as specified in Clause 9.01
and thereafter will, subject to Clause 9.01(3), stand at [***]
kwh) which is sold to the Party A and purchased and to be paid on
time by Party A in accordance with the "Take or Pay" principle in
every Year during the Commercial Operation Period.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
5) "APPROVED GENERATION COST" shall mean in respect of a given Year,
the Planned Generation Cost(in RMB Fen per KWH), approved by the
Anhui Provincial Pricing Bureau.
6) "CHANGES OF LAW" shall mean the promulgation, implementation,
amendment, reinterpretation or repeal of any laws, taxes,
withholding taxes, regulations, rules or policies by any Chinese
governmental authority relevant to the construction, operation
and maintenance of the Power Plant, the production, delivery and
sale of electrical energy, or any other matters since the
execution of this Contract; or the promulgation, extension,
amendment or withdrawal of any approval, consent or permit by any
Chinese governmental authority relevant to the construction,
operation and maintenance of the Power Plant, the production,
delivery and sale of electrical energy or any other matters which
has resulted in the failure of Party B to achieve its After-tax
Capital Return or of the Investors to receive their expected
profit as set out in the Joint Venture Contracts or otherwise has
a material and adverse impact upon the rights and obligations of
Party B or the Investors in other respects.
7) "CERTIFICATE OF PERFORMANCE ACCEPTANCE" shall mean the
certificate which, according to Clause 5.3.3. of the EPC
Contract, shall be agreed to by the Owner's Engineer in writing
and signed by the Parties in respect of the achievement of
Performance Acceptance of a Generating Unit or the Power Plant.
8) "COMMERCIAL OPERATION DATE" shall mean in respect of a Generating
Unit or the Power Plant the date specified in the Certificate of
Performance Acceptance which is issued pursuant to Clause 5.3.3
of the EPC Contract.
9) "COMMERCIAL OPERATION PERIOD" shall mean the period from the
Commercial Operation Date of the Power Plant to the date of
termination of the Joint Venture Contract.
10) "COMMISSIONING" shall mean the testing of the Power Plant (
including Performance Test and Reliability Run) in accordance
with Article 5 of EPC Contract.
11) "DELIVERY POINT" means the physical point where the Power Plant
and the Grid are to be connected at the Site as more particularly
described in Clause 4.02.
12) "EPC CONTRACT" shall mean the engineering, procurement and
construction services contract entered into by and between Party
B and the EPC Contractor on -------- 1996.
13) "EPC CONTRACTOR" shall mean the Anhui Mingda Electric Power EPC
Contract Company Ltd.
14) "EXCESS ON-GRID QUANTITY" shall mean the portion of Annual Actual
On-grid Quantity which is in excess of the Annual Minimum On-Grid
Quantity in a Year.
15) "FUEL OIL SUPPLY CONTRACT" shall mean a contract entered into by
and between Party A as operator of the Power Plant and the fuel
oil supplier for the long-term supply of fuel oil to the Power
Plant that satisfies the Fuel Specification. For details see
Appendix 9 hereof.
16) "FUEL SPECIFICATION" means the fuel specification set out in
Appendix 8.
17) "GENERATING UNIT" shall mean any one of the two GT Units or the
ST Unit which form the component parts of the Power Plant.
18) "GT#1 UNIT" shall mean the first gas turbine generating unit
which is composed of PG6551B and its ancillary facilities and
which will go into operation first.
19) "GT#2 UNIT" shall mean the second gas turbine generating unit
which is composed of PG6551B and its ancillary facilities and
which will go into operation after the GT#1 Unit.
20) "INHERIT EQUIPMENT DEFECTS" shall mean the defects of the major
equipments of the Power Plant (gas turbine, steam turbine,
generator) which could not be found during the Commissioning and
warranty period, and is of manufacturing defects in nature, and
is not caused by normal wear and tear and degredation, and can
not be prevented with monitoring and maintenance(ie. such defects
causing the forced outages of the Power Plant exceeding
thirty(30) days accumulatively in a given Year). Such defects can
only be called Inherit Equipment Deftects if only the Parties
agree or after the conclusive determination by the Experts in
accordance with Section 15.03 of this Contract, and the Experts
can only be selected from world renowned independent engineering
firms or the members of related committee of the IEEE.
21) "INTERCONNECTION CONTRACT" shall mean the contract executed by
and between Party B and Party A for the connection of the Power
Plant to the Power Grid.
22) "INTERCONNECTION FACILITIES" means all facilities and equipment
including any telecommunications systems and equipment
telemetering equipment, transmission lines and associated
equipment transformers and associated equipment; relay and
switching equipment and protective devices and safety equipment
which must be constructed or installed to connect the Power Plant
to the first transmission tower of the Grid.
23) "INVESTOR" means each of Anhui Liyuan Electric Power Development
Company limited, Hefei municipal Construction and Investment
Company and AES Anhui Power Company Ltd.
24) "JOINT VENTURE CONTRACTS" shall mean the contracts executed on
March 18 , 1996 and --------, 1996 respectively by and between
Anhui Liyuan Electric Power Development Company Ltd., Hefei
Municipal Construction and Investment Company and AES-Anhui Power
Company Ltd. As well as all subsequent Admendments to the above
contracts in connection with the establishment and reorganization
of the Anhui Liyuan-AES Power Company Ltd. and the Hefei Zhongli
Energy Company Ltd.
25) "LAND AND FACILITY LEASE AGREEMENT" shall mean the agreement
entered into by and between Party B and the owner of the land
useright and facility in connection with the lawful use of part
of the land and facility within the Hefei Power Plant during the
term of the Joint Venture.
26) "LENDER" shall mean any legal person or natural person providing
financing for the Power Plant.
27) "LOAN REPAYMENT DATE" shall mean the date on which the principal,
interest, expenses, costs and all other amounts payable under the
US$ Loan Contracts have been completely repaid in accordance with
the US$ Loan Contracts.
28) "MONTH" shall mean a calendar month.
29) "ON-GRID QUANTITY" means quantity of active electricity measused
at the metering point and sold to Party A.
30) "ON-GRID TARIFF" shall mean the on-grid tariff per KWH which is
approved by Anhui Provincial Pricing Bureau. The On-grid Tariff
shall be determined and adjusted in accordance with the On-grid
Tariff Formula in Appendix 4.
31) "ON-GRID TARIFF FORMULA" shall mean the document agreed to by
both Parties and approved by the Anhui Provincial Pricing Bureau
which stipulates the initial On-grid Tariff and subsequent
On-grid tariff adjustment as more fully described in Appendix 4
hereof.
32) "OPERATION SERVICES" means the services described in Part II of
Appendix 6.
33) "OWNER'S ENGINEER" shall mean the independent engineering
consultant or engineering firm with international reputation
which is engaged by Party B to be responsible for monitoring and
supervising the EPC Contractor in performing the EPC Contract
including engineering, design, construction and performance
acceptance under the EPC Contract.
34) "POWER GRID" shall mean the electricity transmission grid of
Anhui Province.
35) "POWER PLANT" shall mean the total facilities of a combined cycle
generating set (the gross output under ISO condition is 115.2 MW)
consisting of 2 GT Units, one ST Unit, the heat recovery boilers
and the relevant equipment, the control equipment and all common
facilities, ancillary facilities the Interconnection Facilities
and the Site.
36) "PRE-OPERATION SERVICES" means the services described in Part I
of Appendix 6.
37) "PLANNED GENERATION COST" shall mean for a given Year the cost
per KWH to Party A of the generating the Annual Minimum On-Grid
Quantity calculated and agreed by Party A and Party B in
accordance with clause 10.03(1) and Appendix 4, and submitted to
the Anhui Provincial Pricing Bureau for approval.
38) "PRUDENT UTILITY PRACTICE" shall mean the international standard,
practices or methods generally followed for the design,
construction, commissioning, operation and maintenance of the
Power Plant and the generation and transmission of electricity on
the basis of the principles of safety, high efficiency, economy
and reliability and in compliance with the manufacturers
recommendations.
39) "QUARTER" shall mean a calendar quarter(for example, the first
quarter of a Year shall mean January, February and March)
40) "RENMINBI OR RMB" shall mean the lawful currency of the People's
Republic of China.
41) "STANDARD OIL CONSUMPTION" shall mean the oil consumed by the
Power Plant based on the Characteristic of gas turbine including
additional fuel consumption for degradation, stirrup and shut
down.
42) "SITE" shall mean the land located at Hefei City, Anhui Province,
People's Republic of China leased by Party B on which the Power
Plant will be constructed as more particularly described in
Appendix G of the EPC Contract.
43) "ST UNIT" shall mean the VEGA 206 steam turbine unit and its
ancillary facilities which will make use of exhaust heat of the
gas turbines to generate electricity.
44) "TAKE OR PAY" shall mean that except in the case of a Force
Majeure event stipulated in this Contract or Inherit Equipment
Defects or the Party B's default stipulated in the Section 12.02
hereof, Party A shall at least pay to Party B the amount for the
Annual Minimum On-Grid Quantity at the On-Grid Tariff. Even if
Party A decides to reduce its purchase quantity, or is unable to
purchase all the Annual Minimum On-Grid Quantity, it has to pay
to Party B the same amount as if it has purchased all the Annual
Minimum On-Grid Quantity.
45) "TARIFF COMMENCEMENT DATE" shall mean the earlier date of the
following: for the GT#1 and GT#2 Units: (i) the Commercial
Operations Date of both GT#1 and GT#2 Units, or (ii) August 1,
1997; for the ST Unit: (i) the Commercial Operations Date of ST
Unit, or (ii) July 1, 1998.
46) "TECHNICAL SPECIFICATION" means the design specification of the
Power Plant as referred to in the EPC Contract.
47) "US DOLLAR OR USD OR US$" shall mean the lawful currency of the
United States of America.
48) "US$ LOAN CONTRACTS" shall mean US$ loan contract or contracts
entered by Liyuan-AES and/or Hefei Zhongli with one or more
Lenders by which to obtain construction funds for the Power
Plant.
49) "US$ LOAN EXPENSES" shall mean the total amount payable by
Liyuan-AES and/or Hefei Zhongli to Lenders prior to the Loan
Repayment Date (including without limitation principal, interest,
expenses, costs or any other amounts) pursuant to the US$ Loan
Contracts.
50) "VARIABLE COST" shall mean the cost per KWH for fuel, water,
materials, repair and maintenance and all other costs and
expenses that vary directly with the production of electricity by
the Power Plant as approved by the Anhui Provincial Pricing
Bureau.
51) "YEAR" shall mean a calendar Year from January 1 to December 31.
CHAPTER 3 REPRESENTATIONS, WARRANTIES AND COMMITMENTS
OF THE PARTIES
3.01 THE PARTIES
The Parties to this Contract are as follows:
(1) Party A: Anhui Provincial Electric Power Corporation which is
established pursuant to Chinese laws and registered at the Bureau for Industry
and Commerce of Anhui Province. It has an independent status of a legal person
and its legal address is No. 415 Wuhu Road, Hefei City, Anhui Province.
Legal representative
Name: Guangjie Cheng
Title: General Manager
Nationality: Chinese
The Anhui Provincial Electric Power Corporation is an integrated
electric power enterprise of the Anhui Province of China is also one of the
member companies of the East China Electric Power Group of China. It is
responsible for the production, management, dispatch and construction of
electric power of the whole province, including the administration of the urban
and rural electric power trade of the whole province. The Corporation which has
42 units directly under its jurisdiction is engaged in diversified operation
including electric power production, management, dispatch, construction,
scientific research and education.
(2) Party B: a consortium comprising Anhui Liyuan-AES Power Company,
Ltd. and Hefei Zhongli Energy Company, Ltd. each of which are Sino-Foreign
cooperative joint ventures established and existing pursuant to Chinese laws.
(i) Anhui Liyuan-AES Power Company, Ltd. is a limited liability
company registered at the local bureau for industry and
commerce. Its legal address is No. 415 Wuhu Road, Hefei
City, Anhui Province.
Legal Representative
Name: Guangjie Cheng
Title: Chairman of the Board of Directors
Nationality: Chinese
(ii) Hefei Zhongli Energy Company, Ltd. is a limited liability
company registered at the local bureau for industry and
commerce. Its legal address is No. 415 Wuhu Road, Hefei
City, Anhui Province.
Legal Representative
Name: Guangjie Cheng
Title: Chairman of the Board of Directors
Nationality: Chinese
3.02 REPRESENTATIONS AND WARRANTIES
Owing to the shortage of electric power supply, particularly the
shortage of supply in peaking capacity in Anhui Province, Party B plans to
develop, construct and own the Hefei Combined-Cycle Power Plant in the northern
suburb of Hefei City, Anhui Province. The facilities of the Power Plant which
include two GT Units, one ST Unit and other relevant and ancillary facilities
will be interconnected with the Power Grid and be placed under the dispatch and
management of the Party A. The Power Plant will supply electrical energy to the
Power Grid and will be used by the Hefei city on a priority basis. Party B
hereby appoints Party A to operate and maintain the Power Plant.
As consideration for Party B's investment in the Power Plant, Party A
agrees to purchase the Annual Minimum On-Grid Quantity every Year in accordance
with the principle of "Take or Pay". Party A agrees to operate and maintain the
Power Plant in accordance with the terms of this Contract.
To that effect:
(a) Party A hereby represents and warrants that:
(1) Party A is a state-owned enterprise established in
accordance with Chinese laws and validly existing, it has
observed all applicable Chinese laws, and to the best of its
knowledge it is not aware of any pending legal action or is
subject to any legal proceedings which might lead to the
dissolution of Party A:
(2) Party A has all the necessary right and capacity for action
to enter into and perform this Contract, and has sufficient
financial resources necessary to make all payments required
to be made by it from time to time pursuant to this Contract
(including without limitation payment for the Annual Minimum
On-Grid Quantity) and has the capacity to undertake all its
other obligations and liabilities under this Contract.
(3) Party A has obtained all necessary approvals and support
from the provincial government departments and other
relevant departments for its execution and implementation of
this Contract;
(b) Anhui Liyuan-AES Power Company, Ltd. represents and warrants
as follows:
(1) Anhui Liyuan-AES is a Sino-Foreign cooperative joint venture
established in accordance with Chinese laws and validly
existing, it has observed all applicable Chinese laws, and
to the best of its knowledge it is not aware of any pending
legal action or is subject to any legal proceedings which
might lead to the dissolution of Liyuan-AES.
(2) Anhui Liyuan-AES has obtained all the necessary right and
capacity to execute and perform this Contract.
(c) Hefei Zhongli represents and warrants as follows:
(1) Hefei Zhongli is a Sino-Foreign cooperative joint venture
respectively established in accordance with Chinese laws and
validly existing, it has observed all applicable Chinese
laws, and to the best of its knowledge it is not aware of
any pending legal action or is subject to any legal
proceedings which might lead to the dissolution of Hefei
Zhongli.
(2) Hefei Zhongli has obtained all the necessary right and
capacity to execute and perform this Contract.
3.03 COMMITMENT
(a) Party A hereby undertakes as follows:
(1) Party A will operate and maintain the Power Plant and
Interconnection Facilities in accordance with the Prudent Utility
Practice and without unfavorable impact upon the Power Plant and shall
cause the Power Plant to be connected to the Power Grid, so that the
Power Plant can meet the requirements of the Technical Specifications
and the Interconnection Contract and conform to the health, safety and
environmental protection standards as imposed by relevant Chinese laws
and regulations;
(2) Party A shall issue dispatch instructions to the Power Plant in
accordance with the Technical Specifications and the Interconnection
Contract, and shall ensure that the Power Grid will accept electricity
generated by the Power Plant in accordance with such instructions; Any
dispatch instructions issued by Party A shall be in accordance with
Prudent Utility Practice, this Contract, the Interconnection Contract
and the Technical Specifications.
(3) Party A shall purchase on the basis of the On-grid Tariff all the
Annual Minimum On-Grid Quantity, and Excess On-Grid Quantity generated
by the Power Plant;
(4) Party A shall do its best efforts to assist Party B in obtaining
all necessary governmental approvals including without limitation the
approval of the Anhui Provincial Pricing Bureau of the On-Grid Tariff
(and its adjustment in accordance with the terms of this Contract).
(b) Party B hereby undertakes as follows:
(1) Party B shall appoint the Anhui Mingda Electric Power EPC Contract
Company Ltd., the wholly-owned subsidiary of Party A, as the EPC
Contractor, so as to ensure that the design and construction of the
Power Plant (including the Interconnection Facilities) will meet the
requirements of the Technical Specifications and the Interconnection
Contract and conform to the health, safety and environmental protection
standards as imposed by relevant Chinese laws and regulations;
(2) Party B hereby appoints Party A (and Party A hereby accepts the
appointment) to operate and maintain the Power Plant in accordance with
the Prudent Utility Practice so as not to produce any unfavorable
impact on the voltage level and frequency of the Power Grid;
(3) Party B shall, pursuant to the provisions of this Contract, sell
the Annual Minimum On-Grid Quantity, and Excess On-Grid Quantity
generated by the Power Plant to Party A.
CHAPTER 4 CONDITIONS AND REQUIREMENTS FOR
INTERCONNECTION OF THE POWER PLANT
4.01 INTERCONNECTION OF THE POWER PLANT WITH THE POWER GRID
Party A shall obtain all necessary approvals relevant to the
interconnection of the Power Plant with the Power Grid. Both Parties shall
strictly abide by the Interconnection Contract and ensure normal production of
the Power Plant and the safe operation of the Power Grid.
4.02 DELIVERY POINT
The Delivery Point shall mean either the first 220KV transmission tower
or from the Power Plant. Party A shall own and maintain the transmission
facilities from the Grid to the and the Delivery Point, while Party B shall own
and maintain the transmission facilities connecting the Power Plant and the
Delivery Point.
4.03 TRANSMISSION AND INTERCONNECTION
Party A shall be responsible for the design, construction, operation
and maintenance of any extension to the Grid ("the Grid Extension") required to
interconnect the Power Plant and the Grid. Party B entrusts the EPC Contractor
to be responsible for designing and constructing the Interconnection Facilities,
in accordance with the terms of the EPC Contract. Party A as the operator of the
Power Plant shall be responsible for the operation and maintenance of the
Interconnection Facilities. The constraction fund of [***] for the
Interconnection Facility and the Grid Extension has been encloded in the total
price of EPC Contract as stipulated in section 4.5 of the EPC Contract.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
The construction and testing of the Grid Extension by Party A shall
proceed simultaneously with the construction and testing of GT#1 Unit of the
Power Plant and shall be completed one month before the start-up and
synchronization of the GT#1 Unit. Party A's obligation to purchase the Annual
Minimum On-Grid Quantity and to pay electricity fee pursuant to this Contract
shall be calculated from the Tariff Commencement Date of the GT#1 and GT#2 Units
irrespective of whether or not the Grid Extension has been completed by that
date.
4.04 TELECOMMUNICATIONS
The communication and dispatch automation equipment between the Power
Plant and the Dispatch Center is a part of this Project. Party A shall own the
equipment between the Delivery Point and the Dispatch Center, while Party B
shall own the equipment between the Delivery Point and the Power Plant. All
procurement and installation of such equipment shall be performed by the EPC
Contractor according the EPC Contract and the total cost of the procurement and
installation of such equipment shall also be included in the total turnkey cost
of the EPC Contract.
CHAPTER 5 METERING OF ELECTRICITY
5.01 ON-GRID METERING DEVICE
The electrical energy metering point (the "Metering Point") is
installed at the higher voltage side of the main transformer of each Generating
Unit. Time-phased active and reactive electrical energy metering devices shall
be installed at the metering point. In order to meet the requirement of the
metering system of the Power Grid, Party B's metering device shall have the
function of meeting the technical requirements for total load and remote gauging
transmission of the Power Grid and shall be equipped with data memory
transmission and delivery device. The above metering devices will measure Party
B's on-grid electricity quantity in kwhs.
5.02 METERING OF ELECTRICITY FROM THE POWER GRID
After the Commercial operation of each Unit of the Power Plant is
synchronized for power generation, the high voltage auxiliary transformer shall
install metering device interconnected with the Power Grid which can measure the
quantity of electricity that Party B purchases from Party A. The price of such
electricity shall be the average of retail price of all power plants without
investment or loans from contral goverment in Anhui Province.
5.03 MANAGEMENT OF METERING DEVICES
Party B entrusts the EPC Contractor and Party A operator to be
responsible for purchasing, installing, replacing and managing the various sets
of metering devices of the above-mentioned metering points. The calibration of
the metering devices shall be done by qualified state-approved firms in
accordance with stipulations and jointly participated in by both Parties.
5.04 FAULT PROCESSING OF METERING DEVICES
In case of any anomaly or fault in metering devices during operation
which may affect the functioning of electrical energy metering devices, Party A
shall notify Party B on time and make arrangements to restore normal metering.
The method of metering and the On-Grid Quantity during abnormal period shall be
determined in accordance with the procedures stipulated in Appendix 5 hereof.
CHAPTER 6 OPERATION OF THE POWER PLANT
6.01 ENGAGEMENT OF OPERATION
Party B hereby engages Party A as operator of the Power Plant to
manage, operate and maintain the Power Plant and to provide Operation Services
and Pre-Operation Services as stipulated in this Contract as well as a supply of
fuel oil that satisfies the Fuel Specification. The term of engagement shall be
the same as the term of this Contract.
6.02 BASIC REQUIREMENTS
1) Party A shall perform of the Pre-Operation Services and the
Operation Services in compliance with the any laws and regulations of the
People's Republic of China and the provisions this Contract and the requirements
of the Interconnection Contract and the Dispatch Agreement relevant to the
operation and maintenance of the Power Plant. Party A will, on demand, indemnify
Party B on and from any costs, losses or expenses(including fines) incurred or
imposed as a consequence of any breach of this paragraph, and pay directly the
related expenses and penalties under the Interconnection Contract and the
Dispatch Agreement to the dispatcher of the Power Grid.
2) Party A shall operate the Power Plant in accordance with the Prudent
Utility Practice and shall perform the Operation Services on the basis of the
goal of achieving the After-tax Capital Return.
3) Party A shall ensure that the Power Plant is maintained and
overhauled on a regular and proper basis and that the Power Plant can generate
the greater of (i) the Annual Minimum On-Grid Quantity and (ii) the annual
actual demand of the Power Grid, every Year during the Commercial Operation
Period.
4) Party A shall operate the Power Plant in accordance with Technical
Specifications, operation regulations of the Ministry of Electric Power and in
compliance with the recommendation of the equipment manufactures, and shall try
in every possible way to generate as much electricity as possible on a stable
basis and within the allowable limits of the Power Grid.
6.03 PRE-OPERATION SERVICES
Party A shall perform the Pre-Operation Services and the other services
listed below from the date of execution of this Contract until the Commercial
Operation Date of the Power Plant.
1) Party A shall be responsible for doing a good job of production
readiness before the Commercial Operation Date of the Power Plant and to carry
out on-post training for production personnel.
2) provide all the necessary personnel and material for Party B so as
to enable Party B and the EPC Contractor to perform their obligations in
connection with the construction and Commissioning of the Power Plant.
3) provide relevant advises and support to Party B in connection with
the construction of the Power Plant and the Commissioning of the Generating
Units and participate in the Commissioning of the Generating Units pursuant to
requests put forward by Party B from time to time.
4) perform the Pre-Operation Services specified in Appendix 6 hereof.
6.04 OPERATION SERVICES
On and from the Commercial Operation Date, Party A shall provide the
following services:
1) To perform all its duties and obligations in connection with the
operation and maintenance of the Power Plant in accordance with the terms of
this Contract.
2) To provide relevant advises and support to Party B in connection
with the operation and maintenance of the Power Plant and pursuant to requests
put forward by Party B from time to time.
3) To provide the Operation Services specified in Appendix 6 hereof.
6.05 FUEL OIL SUPPLY
During the Commercial Operation Period, Party A shall be responsible
for supplying to the Power Plant on a long term basis fuel oil that satisfies
the Fuel Specification so as to ensure that the Power Plant has sufficient fuel
oil to generate the Annual Minimum On-Grid Quantity stipulated in Article 9
hereof and the Excess On-Grid Quantity that matches the annual actual demand of
the Power Grid at any time in the Commercial Operation Period. Subject to the
agreement from Party B, Party A shall enter into the Fuel Oil Supply Contract
for the long term supply of fuel oil to the Power Plant. For details see the
Fuel Oil Supply Contract in Appendix 9.
It shall be deemed the responsibility of Party A, if the fuel oil does
not satisfy the Fuel Specification or is in short supply, thus resulting in the
failure of the Power Plant to generate the Annual Minimum On-Grid Quantity and
the Excess On-Grid Quantity that matches the annual actual demand of the Power
Grid at any time in the Commercial Operation Period.
6.06 GENERATION PLAN AND COST BUDGET
Party A shall be responsible for formulating the Annual Generation Plan
and assisting Party B in calculating the Planned Generation Cost of the Power
Plant in November of each Year for the following Year. The Annual Generation
Plan shall guarantee the generation of the Annual Minimum On-Grid Quantity. The
Planned Generation Cost shall take into account the expected or potential
increase in the generation costs incurred in the succeeding Year. The Planned
Generation Cost shall become the Approved Generation Cost of the succeeding Year
upon approval of the Anhui Provincial Pricing Bureau and the approved Generation
lost shall be deducted from the Electricity Fee in accordance with Section
10.03, Section 10.04 and Appendix 1 of this Contract.
If on or after the end of a given Year the actual cost to Party A of
generating the Annual Minimum On-Grid Quantity is recognized by both Parties as
exceeding the Approved Generation Cost for the Year, the excess portion shall be
paid by Party A. Such excess plus the actual interest cost incurred by Party A
in funding such excess ("Total Excess Amount") shall be included in the proposed
On-grid Tariff of the succeeding Year. Upon approval by Anhui Provincial Pricing
Bureau, such Total Excess Amount shall become a part of the Approved Generation
Cost of the succeeding Year and be deducted from the monthly Electricity Fee
according to Section 10.03, Section 10.04, and Appendix 1 of this Contract.
If the On-grid Tariff for the succeeding Year is lower than the
proposed On-grid Tariff submitted for approval and the On-grid Tariff does not
include the full amount of the Total Excess Amount referred to in previous
paragraph, then the Total Excess Amount shall be divided in to two parts: (a)
the part not due to the changes in inflation and foreign exchange shall be borne
by the Party A and (b) the part due to the changes in inflation and foreign
exchange(if any) shall be borne by Party B and repaid to Party A in equal
Monthly installments at the end of each Month from the "Annual Adjustment Fees"
listed in Appendix 4.
If the actual cost to Party A of generating the Annual Minimum On-Grid
Quantity is lower than the Approved Generation Cost in any Year, taking into
account the efforts which Party A has made in the management and operation of
the Power Plant, Party B will (provided the Planned Generation Cost for the
following is not reduced by the Anhui Provincial Pricing Bureau) reward [***] of
the difference between the Approved Generation Cost and actual cost to Party A
of generating the Annual Minimum On-Grid Quantity.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
6.07 INFORMATION
At the request of Party B, Party A shall periodically furnish to Party
B information monthly in connection with the operation and maintenance of the
Power Plant and its performance of the Pre-Operation Services and the Operation
Services. Party A shall also, pursuant to Appendix 6 hereof, furnish to Party B
a monthly statement which includes a financial statement and a production
statement (For details, see Appendix 6 hereof). At any time during the
Commercial Operation Period, Party B has the right of access to all records and
information of the Power Plant.
6.08 STAFF
Party A shall, after consultations with Party B, appoint a qualified,
competent and experienced person as the manager of the Power Plant who is
concurrently the deputy general manager for operation of Party B and who shall
not be replaced without prior consultation with Party B. If such manager
resigns, or is dismissed, or fails to perform his (or her) duties for other
causes, Party A shall consult with Party B as soon as possible, so that another
qualified, competent and experienced person to fill this vacancy can be quickly
appointed.
6.09 SUBCONTRACTING
1) Party A shall not delegate or subcontract the entire Pre-Operation
or Operation Services to a third party or parties.
2) Subject to Section 6.09 1) hereof, Party A may with the prior
written consent of Party B, subcontract if necessary part of the Pre-Operation
Services or Operation Services to experts or other subcontractors, so as to
ensure that Party A can perform its responsibilities. Such subcontracting can
not relieve Party A from any of its duties, responsibilities or obligations
under this Contract. Party A shall be fully responsible for the actions and
defaults of its subcontractors just as they are Party A's own actions and
defaults.
6.10 STRICTNESS OF RESPONSIBILITY
The responsibility and liability of Party A under this Contract is
strict. Party A shall not be relieved of any of its responsibilities or
liabilities under this Contract because of Party B's performance, or
non-performance, or delayed performance of its obligations under this Contract,
or because of Party B's act or default.
CHAPTER 7 RESPONSIBILITIES OF PARTY B AND PARTY A
7.01 RESPONSIBILITIES OF PARTY B
1) INITIAL WORKING CAPITAL
Prior to the Commercial Operation Date of the GT#1 Unit, Liyuan-AES and
Hefei Zhongli shall provide Party A an initial working capital amounting to
[***].
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
2) PAYMENTS FOR PRE-OPERATION SERVICES
To enable Party A to perform the Pre-Operation Services pursuant to
Section 6.03 hereof and in view of the fact that the EPC Contractor is Party A's
wholly-owned subsidiary, Party A hereby acknowledges and agrees that the total
price of the EPC Contract, as stipulated in Section 4.1 of the EPC Contract,
payable to the EPC Contractor shall be deemed to include an amount in respect of
the Pre-Operation Services and no additional amount shall be payable to Party A
under this Contract in respect of the Pre-Operational Services.
3) PAYMENTS FOR OPERATION SERVICE
To enable Party A to perform the Operation Services as the operator of
the Power Plant, Party B shall pay Party A a monthly operation and management
fee. The operation and management fee shall be included in the Planned
Generation Cost of the succeeding Year. The operation and management fee shall
only be payable to Party A to the extent it is included in the Approved
Generation Cost as part of the On-grid Tariff for the succeeding Year.
4) BONUS FEES
Within 30 days after the end of each Year, Party A shall inform Party B
in written form the due amount of bonus payable for the previous Year in
accordance with this Contract ("Bonus Notice"). The amount of bonus shall
include the bonus for costsaving (as provided for in clause 6.06) and the bonus
for Excess On-Grid Quantity(as provided for in clause 9.03). Within 14 days of
receiving the Bonus Notice and the last Electricity Fee Payment of the year,
Party A and Party B shall settle the bonus payment.
7.02 RESPONSIBILITY OF PARTY A
Party A shall ensure that the Power Plant generates the Annual Minimum
On-Grid Quantity and shall purchase the Annual Minimum On-Grid Quantity in
accordance with the principle of "Take or Pay", and shall pay electricity fees
on time. Starting from the Commercial Operation Date, Party A shall in its own
name arrange and obtain necessary and supplementary working capital for
production according to needs and the accrued interest expenses therefrom shall
be included in the Planned Generation Cost submitted to the Anhui Provincial
Pricing Bureau for approval. Party A's obligation to make payment for the Annual
Minimum On-Grid Quantity in accordance with the principle of "Take or Pay" shall
not be affected by any circumstance, other than Force Majeure or the Party B's
default stipulated in Section 12.02 hereof, including without limitation:
(i) any delay in the construction or commissioning of the Power Plant or any
Unit of the Power Plant including the Interconnection Facilities;
(ii) any delay in the construction or commissioning of the Grid Extension;
(iii)the inability of the Power Plant to deliver the Annual Minimum On-Grid
Quantity for any reason including without limitation:
(a) any failure or inability of Party A to obtain fuel, spare parts or
replacement parts, services or other matters or things;
(b) any act or default of any employee, agent or officer of Party A,
(c) the inability of the Interconnection Facilities, the Grid Extension or
the Power Grid to receive or transmit electricity; or
(d) any outages at the Power Plant, whether scheduled or forced outages.
CHAPTER 8 OTHER OPERATION MATTERS
8.01 OPERATION PLAN
Prior to the end of November each Year, Party A shall formulate the
Annual Generation Plan for the following Year which determines the anticipated
term of outage because of major and minor overhaul as well as the anticipated
average load curve of power generation.
8.02 EMERGENCY PLAN
Party A shall hold regular meetings with Party B in respect of power
demands and offtake obligations, so that , subject to the above provisions,
Party A can amend the relevant operation schedule if necessary, but the
amendment of the operation schedule shall not affect the liability of Party A to
purchase the Annual Minimum On-Grid Quantity in accordance with the principle of
"Take or Pay".
8.03 RECORDS
The Parties shall keep complete and detailed records and all other
information which they need, so as to carry out properly this Contract.
The above-mentioned records shall be kept for at least 60 Months from
the date of formation, or for a longer period required by the supervisory
authorities having jurisdiction over the Parties, but the Parties are not
allowed to deal with or destroy any of the above records upon expiration of 60
months without 30 days' prior written notice to the other Party. Under the
circumstances of giving reasonable notice to any other Party at a proper time in
advance, any Party has the right to review in any business hours the operation
and dispatch records and information in connection with this Contract or Power
Grid which the other Party has kept within the term of keeping all the records
and information pursuant to this Article.
CHAPTER 9 ON-GRID QUANTITY
9.01 ANNUAL MINIMUM ON-GRID QUANTITY
Party A, as the operator and offtaker of the Power Plant shall
guarantee the Power Plant to generate the Annual Minimum On-Grid Quantity:
(1) GT#1 Unit and GT#2 Unit: From the Tariff Commencement Date of the
GT#1 and GT#2 Unit to the end of the same Year (Dec. 31) when the Tariff
Commencement Date of the ST Unit starts, the Annual Minimum On-Grid Quantity of
two Units shall be [***] KWH calculated pro rata if it less than a Year ( 365
days); plus
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
(2) ST Unit: From the Tariff Commencement Date of the ST Unit to the
end of that Year (Dec. 31), the Annual Minimum On-Grid Quantity of the Unit
shall be [***] KWH calculated pro rata if it reaches a Year (365 days); or
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
(3) From the first Year following the Tariff Commencement Date of the
ST Unit to the expiration of the term of the Joint Venture Contract, the Annual
Minimum On-Grid Quantity of the Power Plant each Year shall be [***] KWH.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
9.02 EXCESS ON-GRID QUANTITY
In order to maximize Party B's profits and to encourage Party A to
purchase as much electricity as is generated, Party A shall purchase the Excess
On-Grid Quantity at the On-grid Tariff, the net profits from this income after
deducting the Variable Cost and taxes payable by Party B will first be used to
make up any shortfalls in Party B's After-tax Capital Return in accordance with
Appendix 2 for the current Year, and then the remaining amount ("Remaining
Amount") distributed in accordance with the following principles:
(1) If the Annual Actual On-Grid Quantity exceeds the Annual Minimum
On-Grid Quantity by [***], then [***] of the Remaining Amount
shall be paid to Party A;
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
(2) If the Annual Actual On-Grid Quantity exceeds the Annual Minimum
On-Grid Quantity by more than [***], then [***] of the Remaining
Amount from any output in excess of [***] over the Annual Minimum
On-Grid Quantity shall be paid to Party A;
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
(3) The remaining portion shall be distributed to Party B.
9.03 VARIABLE COST
Party A shall also receive as operator the Variable Cost for each KWH
of Excess On-Grid Quantity but shall not be entitled to the Approved Generation
Cost.
CHAPTER 10 ON-GRID TARIFF AND SETTLEMENT OF ELECTRICITY FEE
10.1 ON-GRID TARIFF
Party A and Party B have, through full negotiations, reached unanimity
in respect of the On-grid Tariff on the following principles:
1) The composition of the On-grid Tariff
The composition of the On-grid Tariff shall be calculated and
adjusted in accordance with Appendix 4 hereof.
2) The principles for submitting the proposed On-grid Tariff for
approval
a) Theannual On-Grid Quantity of the Power Plant shall be the
Agreed Annual kilowatt-hours as defined in Appendix 4 which
also is the same as Annual Minimum On-Grid Quantity of [***]
kwh as specified in section 9.01 such number is set at the
time of signing this Contract based on [***] in the On- Grid
Tariff Formula of Article 2 of Appendix 4 and the
characteristics of gas turbine PG6551B;
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
b) It is based on the amount of principal and interest
repayment as stipulated in the US$ Loan Contracts, the term
for repayment and the amount of anticipated After-tax
Capital Return (as provided for in Appendix 2) and Planned
Generation Cost during the term of the joint venture based
on the number of utilization hours as listed in the
preceding section;
c) To set up the Annual adjustment fees which will be used to
compensate for the increase in costs or any adverse effect
on amounts payable under the US$ Loan Contracts or the
After-tax Capital Return resulting from changes in such
factors as fuel costs, exchange rates, and taxation and any
other factors;
d) The performance parameter of a Generating Unit which was
determined before it was put into commercial operation shall
be one of the bases for calculation;
e) The total revenue of the Power Plant in each Year under the
above-mentioned conditions shall be sufficient to pay all
the costs expenses After-tax Capital Return and the other
items, composing the On-grid Tariff as detailed in Appendix
4.
3) Adjustment of On-grid Tariff
By the end of November of each Year after the Commercial
Operation Date of the Power Plant, Party B shall, in compliance
with the On-grid Tariff Formula in Appendix 4 hereof and the
adjustment mechanism provided for in Appendix 4, and taking into
consideration all the factors stipulated in Section 10.1 (1)and
(2), calculate the tariff and then submit the on-grid tariff for
the following Year after full consultation with Party A in order
to compensate any increase in cost resulting from the changes in
fuel, exchange rate, taxation and other factors.
4) Approval and Implementation of the On-grid Tariff
Party B shall be responsible for calculating the proposed tariff
and for submitting it to the Anhui Provincial Pricing Bureau for
approval after full consultation with Party A. The approved
On-grid Tariff shall be the settlement price for the On-Grid
Quantity and shall be strictly implemented by both Parties.
If the approved On-grid Tariff is lower than the proposed tariff
submitted for approval, Party A shall use its best efforts to
generate and purchase more On-Grid Quantity, so as to offset the
unfavorable impact on Party B resulting from the On-grid Tariff
being less than the proposed tariff submitted for approval.
10.02 ELECTRICITY FEE
1) On-Grid Quantity Before the Tariff Commencement Date
In accordance with the provision of Section 5.2.5 under the EPC
Contract and subject to the provision of Section 7.01 2) hereof, the revenue on
all the generated by each Generating Unit before its corresponding Tariff
Commencement Date shall belong to the EPC Contractor while all cost, including
fuel cost and generation cost, associated with such revenue shall be borne by
the EPC Contractor.
2) Failure to Accept Annual Minimum On-Grid Quantity
Starting from the Commercial Operation Date of the Power Plant, if
Party A fails to accept the Annual Minimum On-Grid Quantity, in addition to
paying the electricity fees for the Actual On-Grid Quantity in accordance with
the On-grid Tariff, Party A shall also pay a compensation fee for the difference
between the Annual Minimum On-Grid Quantity and the Actual On-Grid Quantity.
Such compensation fee shall be calculated as follows:
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
3) Annual Minimum On-Grid Quantity and Excess On-Grid Quantity
Party A shall purchase all the Annual Minimum On-Grid Quantity and the
Excess On-Grid Quantity generated by the Power Plant in accordance with the
On-grid Tariff.
10.03 METHOD OF SETTLEMENT
1) Party B shall make a calculation of the On-grid Tariff and the
Planned Generation Cost. This Planned Generation Cost will be
part of the tariff calculation prior to the end of November of
each Year and submit it to the Anhui Provincial Pricing Bureau
for approval after full consultation with Party A. The Planned
Generation Cost shall include the Variable Cost, salary and
welfare overhaul expense and other costs of Party A as stipulated
in Appendix 4 hereof. In settling the electricity fees, both
Parties must strictly implement the Approved Generation Cost and
the On-grid Tariff.
2) Party A is both the operator and the offtaker of the Power Plant.
In respect of Party B, it is the Party A's strict responsibility
to ensure the generation of Annual Minimum On-Grid Quantity and
the purchase of Annual Minimum On-Grid Quantity. In order to
accelerate the turnover of funds, both Parties agree that the
electricity fees which Party A pays to Party B and the Approved
Generation Cost which Party B pays to Party A in respect of each
KWH of generation up to the level of the Annual Minimum On-Grid
Quantity shall adopt the method of offsetting and deduction. Only
Approved Generation Cost shall be deducted from each amount
payable by Party A pursuant to this Contract, together with the
provision of a tax payment receipt to Party B in connection with
the VAT and other Tax (as in Appendix 4 ) relevant to power
generation which is withheld by Party A, (the above tax payment
receipt shall be the amount to be paid in full in accordance with
the state regulation on electric power VAT and in which the VAT
for purchase is not withheld.) the balance after deduction shall
be remitted to the bank account designated by Party B in the form
of a written notice to Party B.
3) Party A shall open a special-purpose account for settling
electricity fees in the Anhui Branch of the Bank of China, and
will settle accounts with Liyuan-AES and Hefei Zhongli, Party A
shall guarantee that there is sufficient funds in the
special-purpose account for settling electricity fees so as to
pay all the accounts due and payable under this Contract
(including without limitation this Section 10.03 , Section 10.04
and Section 12.05). Liyuan-AES and Hefei Zhongli shall
respectively open accounts in the Anhui Branch of the Bank of
China whose account numbers are respectively
Liyuan-AES:---------, and Hefei Zhongli: --------; Party A shall
execute a relevant agreement with the Anhui Branch of the Bank of
China to cause the latter to transfer each [***] of all the
amounts respectively to the above two bank accounts from the
special-purpose account for settlement which Party A shall pay in
accordance with the stipulations of this Contract.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
4) Party A shall pay electricity fees to Party B prior to the 14th
of each month which is equivalent to [***] of the electricity fee
of the preceding month actual on-grid quantity, and shall have
settled the electricity fees for the Minimum On-Grid Quantity of
the Preceding Quarter prior to the 14th of the first month of
each Quarter which shall be calculated as [***]; The electricity
fees for the first half of the year and the preceding year shall
be settled prior to July 14 and January 14 each Year on the basis
of the greater of the following On-Grid Quantity:
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
(a) the minimum On-Grid Quantity calculated pro rata time,
(b) Actual On-Grid Quantity.
5) If Party B is requested to pay value added tax(VAT) or other Tax
(as in Appendix 4) in respect of any sums received from Party A
under this Contract, the amount of such business tax shall be
Other Tax (as in Appendix 4)shall be reimbursed to Party B by
Party A for Party B on demand.
10.04 INVOICES AND PAYMENT
1) The representatives appointed by Party A and Party B shall
jointly make meter readings on the first working day every month.
Party B shall deliver the invoice prior to the 7th of each month,
and Party A shall pay the amount of money specified in the
invoice within the term stipulated in Section 10.03(c) after
having received the invoice, interest shall be accrued for late
payment, and Party A shall pay to Party B late payment penalty on
the basis of [***] per day on an accumulative basis from the date
due and payable to the actual payment date.
Party A's excess payment or under payment as shown in any invoice shall
be deducted or increased from the payable amount due in the next invoice.
This Section is also applicable to any payments to be Paid under this
Contract by Party B to Party A.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
2) Invoice in dispute: Should there be any dispute over the invoice
amount, Party A shall still pay the full invoice amount to Party
B. Upon resolution of the dispute, if any amount is to be
refunded to Party A it shall include together with the interest
on the basis of [***] per day on an accumulative basis shall be
returned to Party A. Such interest shall accrue from the date
when Party A starts to pay according to the invoice until the
date when the required amount has been returned to Party A.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
3) Party A's payment obligations under this Contract are absolute,
unconditional and independent of any other transactions between
both Parties.
CHAPTER 11 RESPONSIBILITY AND INDEMNITY
11.01 Party A shall bear responsibility for and shall have no recourse to Party
B and/or its Contractor for the project-related property loss or damage
including damage to, premature, deterioration of or loss of the Power Plant,
personal injury and all expenses arising therefrom or relating thereto,
including but not limited to reasonable legal fees which must be suffered by
Party B and /or its Contractor arising out of Party A's negligence breach of the
Contract or other act or default. Party A also agrees to fully indemnify Party B
and/or its Contractor in respect of the above-mentioned conditions, but such
indemnity shall not be extended to any loss, damage, injury (or any relevant
claim) or relevant fees or expenses arising out of Party B's and/or its
Contractor's action or inaction or failure to take measures to reduce the
consequences.
11.02 Party B shall bear responsibility for and shall have no recourse to Party
A and/or its Contractor for the project-related property loss or damage,
personal injury and all expenses arising therefrom or relating thereto,
including but not limited to reasonable legal fees which must be suffered by
Party A and/or its Contractor arising out of Party B's negligence or improper
action. Party B also agrees to fully indemnify Party A and/or its Contractor in
respect of the above-mentioned conditions, but such indemnity shall not be
extended to any loss, damage, injury (or any relevant claim) or relevant fees or
expenses arising out of Party A's and/or its Contractor's action or inaction or
failure to take measures to reduce the consequences.
11.03 If any third party institutes a claim or legal proceedings against the
indemnified Party in respect of indemnity matters stipulated in this Contract,
the indemnified Party is entitled ( but is not obliged ) to respond to the
claim, to defend the claim or to institute legal action and may decide to
appoint an attorney to represent it in respect of any claims, defense or action,
and the relevant reasonable fees and expenses thereto shall be included in the
indemnity responsibility borne by the indemnifier pursuant to this Contract.
But if the indemnifier recognizes in written form to have indemnified
the indemnified in respect of all the losses pursuant to what is stipulated in
Sections 11.01 and 11.02, the indemnifier, after having promptly notified the
indemnified in advance and paid the indemnified for the reasonable fees and
expenses, is entitled to counterplead in respect of the claim or legal
proceedings, and to appoint an attorney by itself with all the relevant fees at
its own expense.
Without the prior consent of the other Party in written form, any Party
shall not settle or compromise presumptuously by itself any claim or legal
proceedings from which it is entitled to obtain indemnity from the other Party,
but the other Party shall not refuse to agree for no reason; unless the other
Party refuses to agree for no reason, if one Party is originally entitled to
obtaining indemnity from the other Party, but it presumptuously resolves such
claim or legal proceedings or makes a compromise thereto without the consent of
the other Party in written form, then the other Party can relieve any indemnity
obligation which it bears to the Party which makes the settlement or compromise.
The indemnity as stipulated in Sections 11.01 and 11.02 shall under no
circumstances be extended to indirect loss or damage, and neither Party shall
bear any responsibility in relation to indirect loss or damage arising out of
its performance of obligations or exercise of rights pursuant to this Contract.
CHAPTER 12 DEFAULT AND TERMINATION
12.01 TERM OF EFFECTIVENESS
This Contract shall come into effect on the date as defined in Section
18.01 hereof, and the purchase of electricity shall start from the Tariff
Commencement Date of the GT#1 and GT#2 Units until the termination of the Joint
Venture Contract unless otherwise sooner terminated in accordance with this
Contract.
12.02 DEFAULT
1) Unless the default of Party B is due to Party A's default, the
following events shall be considered as the default of Party B:
a) Liyuan-AES or Hefei Zhongli Energy goes bankrupt or become
insolvent and such condition has remained unremedied for
ninety (90) days;
b) Party B has abandoned this project for six (6) months.
2) The following event shall be considered as the default of Party
A:
a) Party A fails to make payment pursuant to this Contract and
such case has remained unremedied for forty five (45) days;
b) Party A breaches any other obligation stipulated in this
Contract and such case has remains unremedied for forty five
(45) days;
c) Party A as the operator of the Power Plant fails to generate
electricity for twenty (20) days (except for planned major
and minor overhaul and Force Majeure);
d) Party A, pursuant to laws, is dissolved or reorganized,
provided that Party A shall not be considered to be in
default if the reorganization does not affect the ability of
the reorganized entity to perform Party A's obligations
under this Contract and the re-organized entity has
undertaken unconditionally the obligations of Party A under
this Contract (the past or the future) .
12.03 TERMINATION IN ADVANCE
1) If any event described in Section 12.02 occurs, any Party may
terminate this Contract in advance and do so in accordance with
the following termination procedures:
a) The Party which exercises the right of terminating this Contract
shall notify the defaulting party of its intention to terminate
this Contract and shall describe in details the condition of
default;
b) After the defaulting party has received the termination notice,
it shall remedy or mitigate the condition of within forty five
(45) days or fifteen days (15) (in the case of failure to make
payment pursuant to this Contract. If such condition is not
remedied within the stipulated period, the Party which exercises
the right of terminating this Contract may issue the final
notification of termination to the defaulting Party.
2) Party B may terminate this Contract in advance if the Central,
Provincial or local government of the People's Republic of China
requisitions, levies by coercion, or nationalizes the assets or
rights and interests of Party B or the Investors.
3) Party B may terminate this Contract in advance if the On-grid
Tariff proposed by Party B to Anhui Provincial Pricing Bureau is
not approved at the level first proposed by Party B for two
consecutive Years.
12.04 NORMAL TERMINATION
If this Contract terminates upon its expiration, Party A shall repay
the initial working capital amounting to [***] to Party B.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
12.05 TERMINATION FEES
If this Contract is terminated by Party B because of Party A's default
or pursuant to Section 12.03 hereof, Party A shall forthwith pay to Party B
termination fees calculated in accordance with Appendix 3 : Calculation of
Termination Fees. After Party A has paid the termination fees, all Party B's
assets and rights and interest shall be transferred to Party A.
CHAPTER 13 FORCE MAJEURE
13.01 DEFINITION OF FORCE MAJEURE
"Force Majeure" shall mean any of the following events:
1) war, hostility or insurrection;
2) plague or other epidemics;
3) fire not caused by negligence or deliberate arson;
4) lightning;
5) earthquake;
6) other natural forces including natural calamities.
Provided that no event shall be regarded as a Force Majeure event
unless it simultaneously bears the following six features:
1) arising after the execution of this Contract;
2) unforeseen or unavoidable;
3) beyond the control of a relevant party;
4) occurring within the Power Plant Site;
5) directly hampering the performance of this Contract by one
Party; and
6) unpreventable in spite of all the best efforts made by the
relevant Party.
13.02 NOTIFICATION OF FORCE MAJEURE
1) The Party claiming Force Majeure (the "Force Majeure Party")
shall promptly notify the other Party of any Force Majeure event,
no later than five working days after the following date:
a) The commencement date of a Force Majeure event that causes
loss or damage to the Power Plant; or
b) The date that in the event of a Force Majeure event that
does not cause loss or damage to the Power Plant, such Party
knows or ought reasonably to know of the occurrence of the
Force Majeure event.
Notwithstanding the above, if the Force Majeure event results in the
suspension of communication so that the Force Majeure Party is unable to issue
the notice within the above-stipulated time limit, the Force Majeure Party shall
promptly issue notice as soon as the communication is restored but shall not be
later than one working day after the communication is restored to normal.
The Force Majeure Party shall within 15 days provide the details of the
Force Majeure event and the certificate issued by the local notary organization
or equivalent organization which will account for the reasons why a part or all
of the obligations of this Contract cannot be performed out or must be
postponed.
2) The Force Majeure Party must notify the other Party in respect of
the following:
a) The cessation of the Force Majeure event; and
b) The cessation of the impact of the Force Majeure event upon
the enjoyment of rights or performance of obligations of
such Party under this Contract.
The above notice shall be issued promptly after the conditions
mentioned in a) and b) above are known to such Party. With the exception of the
suspension of communication as stipulated in the second paragraph of Section
13.02 (1), the notice must under any of the above-mentioned circumstances, be
issued within two working days after having known the relevant conditions.
3) If notice of the Force Majeure event is not issued to the other Party
in strict compliance with the provisions of Section 13.02(1), a Party
shall not be entitled to claim relief from the Force Majeure event and
shall be relieved from performing to obligations under this Contract.
13.03 MITIGATION OF CONSEQUENCES
The Party affected by the Force Majeure event shall mitigate the
consequences of the Force Majeure event upon its enjoyment of its rights or the
performance of its obligations under this Contract.
13.04 DELAY CAUSED BY FORCE MAJEURE EVENT
Subject to Sections 13.02(3) and Section 13.03, if one or more Force
Majeure events or their consequences result in any Party's incapability or delay
in performing its obligations under this Contract, such Party shall to the
extent necessary be excused from performing its obligations hereunder while the
Force Majeure event (or its effects ) are in existence. Correspondingly, the
term of performance of contractual obligations by such Party, and the expiration
date of the Contract shall be extended. The number of days of postponement shall
be the same as those which one or more Force Majeure events have their sustained
impact upon the period of material and adverse affect upon such Party's
performance of its obligations under this Contract, or
Provided that notwithstanding anything else to the contrary referred to
above, no relief shall be granted to the affected Party to the extent that the
affected Party would not have been able to perform its obligations under this
Contract had the Force Majeure event not occurred.
The other Party shall not bear any liability for any loss or expense
suffered by the affected Party as a result of a Force Majeure event.
13.05 ADJUSTMENT TO THE ANNUAL MINIMUM ON-GRID QUANTITY BECAUSE OF FORCE
If Party A is a affected by a Force Majeure event and is entitled to
relief from the performance of its obligations hereunder in accordance with the
provisions of Section 13.01, 13.02, 13.03 and 13.04 then the Annual Minimum
On-Grid Quantity shall be adjusted as follows:
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
Provided that the Annual Minimum On-Grid Quantity shall not under any
circumstances be reduced below that minimum volume necessary to ensure that
adequate revenue is derived by Party B to enable Liyuan-AES and Hefei Zhongli to
pay the US$ Loan Expenses due under the US$ Loan Contracts.
CHAPTER 14 INSURANCE
14.01 INSURANCE FROM THE PARTY B
Liyuan-AES and Hefei Zhongli shall jointly obtain and maintain the
insurance listed in Appendix 7 and shall include business interruption and lost
profit insurance caused by machinary breakdown. The insurance premium shall be
included in the On-grid Tariff.
14.02 INSURANCE FROM PARTY A
Party A shall in its own name obtain and maintain insurance in
connection with workers and staff and vehicles and as required by relevant laws
and regulations of the People's Republic of China.
14.03 ASSISTANCE WITH CLAIMS
Party A shall comply with all the demands of such insurance and shall
provide Party B all information and assistance within its capability to enable
Party B to make or process claims under its insurance. Party A shall promptly
notify Party B as soon as any accident or event bearing on insurance occurs.
CHAPTER 15 GOVERNING LAWS AND DISPUTE RESOLUTION
15.01 The execution, effectiveness, interpretation, performance and dispute
resolution of this Contract shall be in compliance with publicly available laws
promulgated in the People's Republic of China. Any specific matter in connection
with this Contract which is stipulated neither in the publicly available laws of
China nor in the international agreement or treaty to which China is a Party may
refer to generally accepted international practice. If there is any new
stipulation in Chinese laws during the implementation of this Contract and its
effectiveness is retrospective, the stipulation of the new law shall apply. If
any Change in Law affects the implementation of this Contract and the interests
of any of the investors, Party A and Party B shall promptly hold necessary
consultations and make necessary adjustment, and then submit the adjusted matter
to the relevant competent authority for examination and approval , so as to
ensure that the rights interests and financial returns of Liyuan-AES, Hefei
Zhongli, the Investors and Party A are not affected by any Change in Law.
15.02 DISPUTE RESOLUTION
Any dispute in relation to or arising from this Contract shall first of
all be settled by all means through friendly negotiations by all the Parties in
dispute. If the Parties in dispute fail to settle the dispute through friendly
negotiations within 14 days after the dispute in question, and if the matter in
dispute falls within the scope of technical or accounting expertise, or it is
agreed by the Parties in dispute to submit it to the experts for settlement or
according to the stipulation of this Contract, then any Party is entitled to
submit the above dispute to the experts for arbitration pursuant to Section
15.03; as to any other disputes any party is entitled to submit the dispute to
arbitrate settlement pursuant to Section 15.04.
15.03 EXPERT
1) Thenomination of the expert shall be agreed to by the Parties. If the
both Parties fail to designate jointly an expert acceptable to them,
both Parties shall each designate one expert and the two experts will
jointly designate a third expert to form an expert group.
2) Any Party to the dispute shall submit relevant dispute in the form of
written notice to experts for decision, and shall put forward a
written explanation in connection with the dispute.
3) Such expert has the full right to self-determination to decide on
relevant procedures within the permissible scope of law so as to
ensure impartial, prompt and economical settlement of the dispute, but
such expert must adopt the procedures which both Parties deem
appropriate for the settlement of the dispute.
4) Unless otherwise agreed to by both Parties, such expert shall decide
on the matter which is submitted to him (her) for arbitration.
5) Such decision must be delivered in written form to both Parties within
28 days after the submission of the written explanatory notes as
described in Section 15.03(2) hereof and shall include the result of
arbitration and the causes thereto.
6) Such expert makes a decision only in the capacity of an expert within
the scope of its professional function and not in the capacity of and
function as an arbitrator under applicable laws, therefore, any
articles and provisions of laws that are related to an arbitrator or
arbitration are not applicable to such expert and the decision he
(she) makes, or the procedures by which such expert makes a decision.
7) If any Party does not accept the experts decision, the Parties to the
dispute shall within 14 days and in accordance with the procedures
stipulated above, jointly call in another expert who shall be
empowered to settle the dispute. The submission of the dispute to the
second expert for resolution for the second time shall abide by the
stipulation of Section 15.03 hereof.
8) The decision made by the second expert for the second time is final,
definitely established and binding on all the Parties to the dispute
which have no right whatsoever to submit such decision to any court or
arbitral body.
9) The expert expenses shall be shared on an average basis by the both
Parties to the dispute, meantime, the Parties shall bear respectively
their expenses for preparing and submitting written explanatory notes
to experts.
15.04 CONSULTATION, MEDIATION, ARBITRATION
The Parties shall meet within seven (7) days after a Party has received
a written notice of a dispute from the other Party. Any dispute may be settled
through friendly consultation or conciliation among the Parties if they agree to
do so. Disputes may also be mediated by a third party appointed jointly by the
Parties . If the settlement of the dispute by consultation or mediation is not
successful within sixty (60) consecutive days of a Party's receipt of said
notice in respect of a dispute, the dispute may be submitted by any Party to
binding, non-appealable arbitration for final adjudication.
Arbitration Procedures
Any Party may, after serving notice to the other Party of its intention
for arbitration, submit the dispute to the China International Economic and
Trade Arbitration Commission for arbitration in accordance with its rules then
in force. The arbitrated award shall be final and binding on both Parties. The
costs of arbitration shall be borne by the losing Party unless otherwise
stipulated in the arbitration award.
The arbitration court shall be composed of three arbitrators with a
third arbitrator whose nationality shall be different from that of the other two
arbitrators. The arbitration shall be made in Chinese and English.
Unless the Parties otherwise agree, the arbitration shall occur in Beijing.
The Parties shall continue to perform all of their obligations and
responsibilities while the arbitration is in process.
CHAPTER 16 ASSIGNMENT
16.01 Neither Party shall assign or transfer their rights, benefits or
obligations under this Contract to any other Party except in the following
circumstances:
1) Assignment of Party A: Subject to the approval of Party B, Party A may
assign its rights and obligations under this Contract to its legal
successor. Such successor shall provide evidence to the satisfaction
of Party B of its ability, experience and economic strength to
continue to perform the obligations under this Contract. In addition,
such legal successor shall explicitly agree in written form that it is
completely bound by the obligations under this Contract.
2) Assignment of the Party B: Party B may assign its rights and
obligations under this Contract to its Corporation, subsidiaries,
Investors or associated company. Such assignment shall be for the
purpose of construction, ownership and operation of the project.
Meanwhile, the assignee shall fully agree in written form that it is
bound by the obligations of Party B under this Contract. Party B may
also assign its rights and obligations under this Contract or its
revenue from electricity operation to any financial institution or to
other Lenders as security. In case such financial institution or other
Lender exercises its rights under such assignment security, or such
financial institution or other Lender undertakes Party B's
obligations, the assignee shall perform Party B's obligations under
this Contract.
CHAPTER 17 NOTICE
17.01 (1) Any notice issued pursuant to this Contract shall be made in written
form, and shall be signed by the officially authorized staff or representative
or any of the following persons of the notice-issuing Party, and is delivered by
courier, or telex or fax to the following address or other address as may be
notified to the other Party by the following persons):
(a) Party A: Anhui Provincial Electric Power Corporation
Address: #415, Wuhu Road, Hefei City, Anhui Province
Fax No. : 86-551-3633393
Addressee: Cheng Guangjie
(b) Party B :
Anhui Liyuan-AES Power Company Ltd.
Address : #415, Wuhu Road, Hefei City
Fax No. : 86-551-3637642
Addressee : Thomas T.M. Wu
Hefei Zhongli Energy Company Ltd.
Address : #415, Wuhu Road, Hefei City
Fax No. : 86-551-3637642
Addressee : Thomas T.M. Wu
(2) Any of the above-mentioned notice shall be deemed to have been
delivered or received under the following circumstances;
(a) If delivered by hand, it is delivered to or placed in the
addressee's address;
(b) If delivered by mail, it is the fifth day (not Sunday or public
holiday) after mailing;
(c) If delivered by telex or fax, it is the next day; and any notice
sent by telex or fax shall be deemed to have been received after
confirming the correct response code of the text.
17.02 All the notices shall become effective at the actual time of receipt.
CHAPTER 18 OTHER PROVISIONS
18.01 CONDITIONS
The rights and obligations of both Parties under this Contract shall be based on
the following conditions as conditions precedent:
1) All the conditions precedent stipulated in Section 6.05 of each Joint
Venture Contract have been fulfilled;
2) The Fuel Oil Supply Contract and the Interconnection Contract have
been drafted in accordance with the stipulated form and have been
officially executed and come into full force.
The date of the fulfillment of the above-mentioned conditions precedent
shall be the date of effectiveness of this Contract, and Party B shall notify
Party A in written form within five working days after the date of
effectiveness.
18.02 PERFORMANCE GUARANTEE
Party A shall cause [***] to issue for Party A's performance of the
payment obligations under this Contract a payment guarantee amounting to [***]
with Party B as the beneficiary. If Party A fails to settle the electricity fees
for the first half of the Year the previous Year before July 14 and January 14
each Year respectirely pursuant to Section 10.03 and 10.04 and fails to pay
termination fee pursuant to Section 12.05 of the Contract, Party B may ask for
payment from [***]. The performance guarantee of payment shall be fully valid
throughout the effectiveness of this Contract. The guaranty fee shall be paid by
Party B and be included in the On-grid Tariff each year.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
18.03 WRITTEN AMENDMENT
The amendment of this Contract is subject to written agreement by the
both Parties.
18.04 HEADINGS
The headings contained in this Contract are inserted for the sake of
convenience, they do not constitute a part of this Contract, nor can the heading
be used in any form to interpret this Contract.
18.05 WAIVER
Failure of a Party to exercise and delay in exercising or carrying out
any right or remedial measure under this Contract does not constitute a waiver
of such right or remedial measure. Separate or partial exercising or carrying
out any right or remedial measure under this Contract does not exclude or
restrict further exercising or carrying out such right or remedial measure. The
right and remedial measure stipulated in this Contract are concurrently
applicable and does not exclude any right or remedial measure stipulated in
laws.
18.06 LANGUAGE
This Contract is written in English and Chinese. Both the English and
Chinese versions are equally authentic.
18.07 FINAL REPRESENTATION
This Contract (including all its appendices) represents the entire
understanding reached by the both Parties in respect of the subject matter of
this Contract and shall supersede any written or verbal understanding, proposal
or other document in relation to this Contract heretofore.
18.08 CONFIDENTIALITY
1) A Party shall keep confidential the Contract and confidential all
agreements and documents as well as all other information (whether
they are technical or commercial documents) which are related to the
construction, operation maintenance, management and financing of the
Power Plant, which are of a confidential nature. Except for the
purpose of performing the obligations under this Contract, all the
above-mentioned agreements, documents and information shall not be
made public or be disclosed or used in other form (except as
stipulated by law or relevant management authority, or being disclosed
to Party B's potential lenders, Party B's Investors, professional
consultants to all the Parties to this Contract or the professional
consultants to the above-mentioned lenders and Investors).
2) The stipulation in Section 18.08(1) is not applicable to the
following:
(a) Any information which is made public not because of violation of
this Contract;
(b) The receiving Party has already possessed the information before
the disclosure herein before, and such information was obtained
without undertaking any obligation of keeping it confidential;
(c) Any information which is obtained from a third party who may
freely disclose it without undertaking any obligation of keeping
it confidential.
18.09 SUCCESSOR AND ASSIGNEE
This Contract is binding on the Parties to this Contract and their
respective successors and permissible assignees.
18.10 PARTIAL INEFFECTIVENESS
If a part of any article of this Contract is adjudicated by a law of
competent jurisdiction to be unlawful, invalid or unenforceable, it shall not
affect the lawfulness, validity or enforceability of the other articles of this
Contract, nor shall it affect the lawfulness of any other provision of this
Contract.
<PAGE>
IN WITNESS WHEREOF, each of the Parties hereto have caused this Contract to be
executed by their duly authorized representatives on the date first set forth
above and have caused it to be effective.
Party A: Anhui Provincial Electric Power Corporation
Name : [Signature Illegible]
Title :
Nationality :
Party B: Anhui Liyuan-AES Power Company Ltd. Hefei Zhongli Energy Company Ltd.
Name : [Signature Illegible] Name : [Signature Illegible]
Title : Title :
Nationality : Nationality :
<PAGE>
APPENDIX 1 INVOICE FORMAT
Invoice for Electricity Fee Payment from Month: Date:
to Month: Date:
Date of Meter Recording:
Date of Table fill - in:
This month is the _ month of this Quarter,
The meter reading of the preceding month was-----------,
The meter reading of this month is----------,
The Actual On-Grid Tariff this month is -----------.
The Actual On-Grid Quantity of the first month of this Quarter is --------.
The Actual On-Grid Quantity of the second month of this Quarter is ---------.
The On-Grid Quantity of the third month of this Quarter is----------.
Payment due under the current month --------------.
Payment due from previous months---------------
Amount payable (Payment due under current month + Payment due from previous
months)-----------------
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
Sum of money due =
1) For the first, second, fourth, fifth, seventh, eighty,
tenth, and eleventh month:
[***]
2) For the third and ninth month:
[***]
3) For the sixth month to be calculated in accordance with
the greater of the following two formulas:
[***]
4) for the twelfth month
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
<PAGE>
APPENDIX 2 AFTER-TAX CAPITAL RETURN
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
<PAGE>
APPENDIX 3 CALCULATION OF TERMINATION FEES
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
<PAGE>
APPENDIX 4 ON-GRID TARIFF FORMULA
ANHUI LIYUAN-AES POWER COMPANY LTD.
HEFEI ZHONGLI ENERGY COMPANY LTD.
ON-GRID TARIFF FORMULA
<PAGE>
ARTICLE 1. AGREEMENT
The formula of calculating the On-grid Tariff of the Hefei 115MW Gas Turbine
Combined-cycle Power Plant is determined through the joint study and discussion
of all the Investors. The formation, structure and calculation method of this
formula have been unanimously agreed to and confirmed by all the Investors.
The Investors:
AES Anhui Power Company Limited
Anhui Liyuan Electric Power Development Company Ltd.
Hefei Municipal Construction & Investment Company
The Joint Ventures(hereinafter referred as the "Company"):
Anhui Liyuan-AES Power Company Ltd. (hereinafter refereed as "Liyuan-AES")
Hefei Zhongli Energy Company Ltd. (hereinafter refereed as "Hefei Zhongli")
<PAGE>
ARTICLE 2 THE APPROVED ON-GRID TARIFF
In the fourth quarter of each Year, Liyuan - AES and Hefei Zhongli shall
estimate and submit for approval the On-grid Tariff of the succeeding Year in
accordance with the following formula:
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
where:
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
The agreed annual kilowatt-hours (herein refereed as "Agreed Annual
Kilowatt-hours")refers to the Annual Minimum On-Grid Quantity [***] specified in
the Operation and Offtake Contract plus the auxiliary load of the Power Plant.
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
The On-grid Tariff shall be estimated in Renminbi. The US dollar portion shall
be converted at the median price of the official foreign exchange rate on the
last business day prior to the estimation of the On-grid Tariff.
Full details and method of calculation are given in Article 3 and 4.
<PAGE>
ARTICLE 3 METHOD OF THE ON-GRID TARIFF CALCULATION
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
<PAGE>
ARTICLE 4 ANNUAL ADJUSTMENT TO THE ON-GRID TARIFF
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
<PAGE>
APPENDIX 5 METERING AND RECORDING OF ELECTRICAL ENERGY
1. [***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
2. Under normal operation, electricity from the Power Plant to the Power Grid
shall be transmitted through the --- KV step-up substation of the Power
Plant----------- and the -- KV transmission lion.
3. The accuracy of electrical Energy metering devices shall comply with
accuracy standards for Class 1 metering device, namely:
Active Power Meter: Grade 0.5
Reactive Power Meter: Grade 2.0
PT: Grade 0.2
CT: Grade 0.2
The metering devices shall be managed in accordance with "Regulations
for Management of Electric Energy Meters" promulgated by the Ministry of
Electric Power.
4. Under normal operation, the auxiliary power of the Power Plant shall be
provided by the high-voltage station service transformer; in case of outage
of the station service transformer, it shall be provided by the KV start-up
transformer.
5. The electricity transmitted from the Power Plant to the Power Grid shall be
calculated in accordance with the following formula:
[***]
[***] Filed separately with the Commission pursuant to a request for
confidential treatment.
This formula shall also be used for calculate the Actual On-Grid
Quantity.
6. The electricity transmitted from the Power Grid to the Power Plant shall be
the active power quantity measured by KWH meter Breaker #4, #5 and #6 at
the high voltage side of the start-up transformer.
7. Party B and Party A shall jointly designate the operator of the Power Plant
to be responsible for recording all KWH meters. At noon of the last day of
each month or at other time in the same day as agreed upon by the Parties,
Party B and Party A shall send representatives to the site to witness the
recording. In case that any one party is absent at such an agreed time, the
Party present shall witness the recording alone, and the result of such
recording shall be binding on both Parties.
8. Party B and Party A shall jointly appoint a qualified institution to
calibrate all meters and their auxiliary equipment every Year. At the time
when calibration takes place, Party B and Party A shall send
representatives to the site to witness the calibration. In case any Party
side is absent at such an agreed time, the Party present shall witness the
calibration alone, and the result of such calibration shall be binding on
both Parties.
9. If any Party finds, for some reason, that the above metering device is
inaccurate, that party shall immediately notify the other Party of the
situation. The inaccurate metering device shall be tested and recalibrated
promptly. The output of electric energy during the period of inaccuracy
shall be calculated at a temporary metering point determined by both
Parties.
<PAGE>
APPENDIX 6 PRE-OPERATION AND OPERATION SERVICES
PART I PRE-OPERATION SERVICES
Before the Commercial Operation Date of the units, Party A shall
provide the following pre-operation services:
1 PREPARATION FOR OPERATION
-------------------------
Party A shall
1.1 in consultation with the Party B establish the maintenance
and administrative management system for the Power Plant;
1.2 three months prior to the full start-up and interconnection of the Unit
I of the Power Plant, formulate and submit to the Party B the operation
and safety codes applicable to the Power Plant (provisional copy).
Within three months after commencement of commercial operation of the
Power Plant, the above codes shall be improved and followed during
operation of the Power Plant. Copies of such codes shall be sent to
Party B for the record;
1.3 develop a complete set of training program for the Power Plant's O & M
employees to familiarize themselves with the Power Plant and to fulfill
their responsibility satisfactorily. The training program shall include
seminars, site visits, and training given by Construction contractor of
the Power Plant and equipment manufacturers. The training program shall
be based on technical data and manuals provided by the construction
contractor of the Power Plant, including information about start-up,
operation, basic maintenance, fire fighting and safety;
1.4 in consultation with the Party B, formulate a criteria for recruitment
of employees of the Power Plant, and recruit qualified and experienced
employees according to such criteria;
1.5 assist Party B in monitoring, operating and testing the Power Plant;
1.6 send to Party B and relevant operational (a) departments technical data
and final drawings provided by the construction contractor of the Power
Plant, while the original copy of which shall be debt in the safest
place in the Power Plant;
1.7 in consultation with Party B, formulate a list of all consumables,
spare parts, tools and materials needed by the Power Plant, and
purchase the above things needed by the Power Plant during the first
Year of commercial operation;
1.8 in consultation with Party B, formulate a detailed maintenance plan and
methods for the first Year of commercial operation of the Power Plant;
and in consideration of the rights and obligations of Party B,
formulate a skeleton plan for the scheduled overhaul for the first two-
Year commercial operation of the Power Plant.
2 START-UP, INTERCONNECTION, COMMISSIONING AND TEST
-------------------------------------------------
Party A shall
2.1 provide spare parts, consumables, fuel oil, water, coal and lubricants
necessary for timely, safe and stable start-up of the Units;
2.2 be responsible for implementing and ensuring the Units to meet the
conditions for interconnection as stipulated in Article 2 of the
Interconnection Contract;
2.3 provide sufficient numbers of qualified and experienced engineers to
perform start-up, commissioning, interconnection and 72-hour and 24-
hour performance tests of the Units;
2.4 Provide all necessary electrical energy for carrying out commissioning
of the Power Plant (including those needed for start-up);
2.5 record in detail and keep all the data of the start-up and performance
tests of the Power Plant:
2.6 provide other necessary services.
PART II OPERATION SERVICES
1 RECRUITMENT AND TRAINING
------------------------
Party A Shall
1.1 ensure the required personnel of the Power Plant; in case of any
vacancy, recruit qualified and experienced staff;
1.2 provide relevant class and site training for new employees, to train
them to be qualified employees for their duties;
1.3 ensure the continuity of training programs, the staff training shall
include safety measures. O & M procedures, and establish relevant
examination and promotion system;
1.4 provide other necessary services related to recruitment and training.
2 OPERATION OF THE POWER PLANT
----------------------------
2.1 Party A shall maintain, operate, test and inspect the Power Plant:
1) to keep the Power Plant in good condition during the term of
the Joint Venture Contract.
2) to maintain high availability and efficiency of generation
facilities of the Power Plant:
3) to minimize the occurrence of accidents and damages, and to
minimize their duration.
2.2 provide to the Party B on a timely basis and at monthly intervals
reports on operation, repairs, tests, maintenance and examination of
the Units;
2.3 carry out the performance test stipulated by the Ministry of Electric
Power for similar thermal power plants;
2.4 ensure that the Power Plant shall abide by all applicable laws,
regulations, safety rules and other stipulations.
2.5 perform relevant obligations and responsibilities of the Party B
related to the operation of the Power Plant as stipulated in the
"Interconnection Contract" and "Dispatch Contract"; if any reduction of
power generation occurs due to Party A's responsibility, Party A (the
Operator of the Power Plant) shall indemnify the Party B for the losses
incurred by such reductions. As the operator of the Power Plant, Party
A shall indemnify the Party B for any penalties under Sections 3.7,
3.11 and 8.2 of the Interconnection Contract ;
2.6 be responsible for daily maintenance and overhaul as well as major and
minor repair, and for providing planned or provisional emergency
maintenance;
2.7 make annual generation and maintenance plan in accordance with the
"Operation and Offtake Contract" and implement the same;
2.8 dispose of all the unnecessary materials and wastes of the Power Plant.
3. MANAGEMENT
----------
Party A shall
3.1 keep the Power Plant in good operation condition and maintain
appropriate level of spare parts reservation according to good utility
practice of similar thermal power plants;
3.2 manage the necessary maintenance of the Power Plant;
3.3 in the event of any emergency or unusual event affecting the normal
operation of the Power Plant, take all necessary measures to minimize
injury to persons and damage to the Power Plant and promptly report to
the Party B the nature of such emergency or unusual event and its
consequences.
4. PROCUREMENT
-----------
Party A shall
4.1 check regularly the demands for spare parts, consumables and materials
of the Power Plant (taking into account the designed life of equipment,
actual overhaul records and any technical changes to the Power Plant),
and formulate corresponding plans and make purchasements according to
these plans;
4.2 be responsible for organizing the coal supply, and ensure enough fuel
for continuous, steady and safe operation of the Power Plant, at least
to meet the need of generating the Annual Minimum On-Grid Quantity.
5 STATEMENTS AND REPORTS
----------------------
Party A shall, before delivery of the first Unit for operation, provide
suggestions on forms of the following daily, monthly and annual reports, and
determine the forms in consultation with the Party B.
5.1 DAILY REPORTS
Party A shall provide the Party B with daily reports on the daily
operation of the Power Plant, including without limitation the following items:
1) net generation of each unit;
2) coal consumption of each Unit;
3) causes for deviation of each Unit from the daily load curve;
4) description of emergencies or unusual events resulting in
deduction of power generation and personal injuries.
5.2 MONTHLY REPORTS
Party A shall, within the first 10 days of each month, provide to the
Party B a monthly report on the performance of the Units for the previous month.
The report shall include, but not be limited to the following:
1) statistical statement on operation in the form required by the
Ministry of Electric Power;
2) major repair and maintenance activities carried out during the
previous month, and those planned for the next month;
3) expenses of the previous month and those planned for the next
month;
4) statistical statement of safety and accidents of the Power
Plant during the previous month;
5) summary of unusual events and accidents during the previous
month, and measures already taken by Party A to mitigate the
effects.
5.3 ANNUAL REPORT
Party A shall, within 60 days after the end of each calendar Year,
submit to the JV Company an annual report which shall include but not be limited
to the following:
1) statistical summary of annual operation;
2) summary of repair and maintenance;
3) statistical summary of safety and accidents;
4) financial statement;
5) summary of any disputes relating to the Power Plant;
6) environmental monitoring;
7) other information reasonably required by Party B
5.4 OTHER REPORTS
Party A shall provide:
1) a safety report required by relevant authority in connection
with personal injuries or damages of the Power Plant
2) other reports reasonably required by Party B;
6. ACCESS TO THE POWER PLANT
-------------------------
6.1 Party A shall provide all necessary working and living facilities to
the resident representatives of the Party B in the Power plant.
6.2 Party A shall allow representatives or consultants from Party B to
inspect and monitor the operation of the Power Plant at any time.
6.3 Party A shall, upon request of Party B, allow Party B or its
representatives to have access at any time to any information, data and
records held by Party A.
7. OTHER RESPONSIBILITY
--------------------
Party A shall be responsible for responding to other demands on the
Power Plant raised by relevant authorities in charge of electric power.
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APPENDIX 7 NECESSARY INSURANCE
1 Third party Liability Insurance
2 Personal injury and Medical Insurance
3 Property All Risk Insurance ( Substitute Value)
4 Vehicle Insurance (Vehicles and the Third Party Liability Insurance)
5 Employer's Liability Insurance
6 Profit Loss Insurance-Limit: 6 month After tax - capital - Return and
US$ loan Expenses.
7 Water Transport and Land Transport Cargo Insurance
8 Boiler and Machinery (including construction and operation periods)
Insurance
All insurance shall be bought in accordance with the phase IV Wuhu Project
Operation insurance Contract in type term, limits, deductibles. expect as noted.
<PAGE>
APPENDIX 8 FUEL SPECIFICATION
ITEM VALUE
1) Alkyl 16 min 50
2) Distillate temperature
50%, oC, max 300
90%, oC, max 355
95%, oC, max 365
3) Viscose, 20 oC, cst, max 3-8
4) Residual carbon, (m/m) 0.4
10% Evaporation Remains
5) Ash, %(m/m) max 0.025
6) Sulfur contain, % max 0.2
7) Water contain, % max mark
8) Flash point, oC, min 60
9) Condensing point, oC, max 0
10) Copper corrosion, 50 oC, 3 hours qualified
11) Acid water dissolved no
12) Actual colloidal, ml/100mg, max 70
13) LHV, KJ/Kg 43,100
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APPENDIX 9 FUEL OIL SUPPLY CONTRACT
For this Appendix, please reference the Fuel Oil Supply Contract entered and
provided by Party A.
