Conformed Copy - L4200 - Xiaolangdi Multipurpose Project: Stage II - Supplemental Letter 2

Page 1 PEOPLE’S REPUBLIC OF CHINA YELLOW RIVER WATER AND HYDROPOWER DEVELOPMENT CORPORATION September 11, 1997 International Bank for Reconstruction and Development 1818 H. Street N.W. Washington, D.C. 20433 United States of America Re: Loan No. 4200 CHA (Xiaolangdi Multipurpose Project: Stage II) Representations Ladies and Gentlemen: In connection with the Project Agreement (the Project Agreement) to be entered into today between the International Bank for Reconstruction and Development (the Bank) and Yellow River Water and Hydropower Development Corporation (YRWHDC), YRWHDC hereby undertakes and warrants to the Bank that: 1. The financial statements of YRWHDC dated December 31, 1995, copies of which have been furnished to the Bank, correctly set forth the financial and operating condition of YRWHDC as of such date and since such date there have been no material adverse changes in the financial and operating conditions of YRWHDC. 2. YRWHDC is not engaged in litigation as plaintiff or defendant, the outcome of which might materially and adversely affect its financial condition. 3. YRWHDC has no outstanding agreements or liabilities, contingent or otherwise (including taxes) which might materially and adversely affect its financial condition. 4. No debt of YRWHDC is secured by any mortgage, pledge, charge, priority or other lien, and no contract or arrangement exists for the creation of any such mortgage, pledge, charge, priority or other lien. 5. There are no existing defaults in the payment of principal of, or interest or other charges on, any of YRWHDC’s debts. 6. YRWHDC is not in violation of, and the execution and delivery of the YRWHDC Project Agreement and the compliance with all its terms do not and will not result in any violation of, any provisions of any existing agreement, franchise, concession, license or permit, or of any law, regulation or any other legal rule of a similar nature presently in effect and applicable to YRWHDC. 7. YRWHDC is a duly existing state-owned enterprise under the laws of the People’s Republic of China with full authority to carry out is present business, to carry out Parts A through C of the Project and to execute and deliver the Project Agreement and has furnished to the Bank true copies of all legislation presently in force and effect and governing or applicable to the operations of YRWHDC as well as of the articles as presently in effect and governing YRWHDC. It is our mutual understanding that, in making the Loan and entering into the Project Agreement with YRWHDC, the Bank may rely on the representations contained herein. Very truly yours, YELLOW RIVER WATER AND HYDROPOWER DEVELOPMENT CORPORATION Page 2 By: /s/ Zhou Wenzhong Authorized Representative