AES Reaches Agreement With the Hungarian Government.

Business Editors

ARLINGTON, Va.--(BUSINESS WIRE)--Dec. 20, 2001

The AES Corporation (NYSE:AES) announced today that its subsidiary, AES Summit Generation Limited, has resolved its disputes with Magyar Villamos Muvek Rt. (MVM), Allami Privatizacios es Vagyonkezelo Rt. (APV) and the Republic of Hungary in connection with the 1996 privatization of the AES Tisza II Eromu Kft. and AES Borsod Energetikai Kft. power companies.

The disputes arose due to differing interpretations of the obligations of the parties to the original privatization over the construction of a new power plant at Borsod, the Borsod CFB, the retrofit of AES Tisza II and environmental liabilities.

AES Tisza II Eromu and MVM also today signed a new fifteen-year power purchase agreement under which all of the output of the station will be purchased by MVM. AES Tisza II also has the obligation to make certain investments into the power station. AES Borsod Energetikai Kft and MVM also agreed to increase the amount of generation purchased by MVM from the two coal plants over the next few years.

AES owns a 99% interest in AES Tisza II, an 860 MW oil and gas fired power station, AES Borsod, a 171 MW coal fired power station, AES Tiszapalkonya, a 250 MW power station and AES Lyukobanya, a coal mine in North East Hungary.

Allan Dyer, Managing Director of AES Tisza II Eromu, said: "Our businesses have proven flexible and very much needed in Hungary. We look forward to the future, as we continue to be a part of the one of the strongest developing economies in Central Europe."

Dennis Bakke, President and Chief Executive Officer of AES, stated: "We are pleased that AES and the Government of Hungary have reached an understanding as to the nature of the commitments contained within the 1996 privatization agreements. We look forward to continuing to serve the people of Hungary with clean, safe and reliable electricity and heat."

Kalman Katona, Chairman and Chief Executive Officer of MVM, stated: "We are pleased to see the end of the debate as this will offer ground to mutually favorable cooperation and will assist the safe operation of the Hungarian electricity system. We are also happy with adding AES to our portfolio of other leading international power generation companies whose subsidiaries have concluded long-term power purchase agreements with MVM."

MVM is the national electricity trading, generating and transmission company and purchaser of electricity generated in Hungary. It has previously concluded power purchase agreements with, among other companies, the Hungarian subsidiaries of RWE, Electricite de France and Tractabel.

MVM and its subsidiaries are also active in the generation of electrical energy, international trade, the development of the national grid and dispatch. With the new Hungarian Electricity Act in mind MVM is preparing for the upcoming competition and re-dedicates itself to customers, just as to supply electricity safely, securely and at competitive prices with awareness to the environment.

AES is a leading global power company comprised of competitive generation, distribution and retail supply businesses in Argentina, Australia, Bangladesh, Brazil, Cameroon, Canada, Chile, China, Colombia, Czech. Republic, Dominican Republic, El Salvador, Georgia, Germany, Hungary, India, Italy, Kazakhstan, the Netherlands, Nigeria, Mexico, Oman, Pakistan, Panama, Qatar, Sri Lanka, Tanzania, Ukraine, the United Kingdom, the United States and Venezuela.

The company's generating assets include interests in one hundred and eighty four facilities totaling over 62 gigawatts of capacity. AES's electricity distribution network has over 946,000 km of conductor and associated rights of way and sells over 135,000 gigawatt hours per year to over 19 million end-use customers.

In addition, through its various retail electricity supply businesses, the company sells electricity to over 154,000 end-use customers.

AES is dedicated to providing electricity worldwide in a socially responsible way.

This news release may include forward-looking statements. Actual events and results may differ materially from those projected. Factors that could affect actual results are discussed in AES's filings with the Securities and Exchange Commission, and readers are encouraged to read those filings to learn more about the risk factors associated with AES's businesses.

For more general information visit our web site at www.aesc.com or contact investor relations at [e-mail].