AES To Build 150 MW Hydroelectric Plant with Long Term Contract in Panama; Company to Add a Total of 940 MW to Its Global Fleet

Business Wire, Jan 26, 2006

ARLINGTON, Va. -- In a meeting today with Panama's President Martin Torrijos, the AES Corporation (NYSE:AES) announced plans to construct a $320 million hydroelectric power plant in Panama. When completed, the 150 MW plant will increase AES's total generation capacity in Panama to 620 MW, making AES the largest producer of electricity in the country, based on today's market analysis.

The plant, Changuinola 75, will be located in the Changuinola River Basin, approximately 220 miles northwest of Panama City in the Province of Bocas del Toro. The project includes a 10-year power purchase agreement with Panama's largest utility, Union Fenosa SA. AES has begun the engineering and geo-technical work and plans to begin construction in 2007. The plant is scheduled to be operational by mid-2010.

"This plant will provide a new, clean and low cost source of electricity for Panama at a time when the country is experiencing extremely high energy costs and high demand growth," said Andres Gluski, president of AES Latin America, at today's meeting at the Palacio de las Garzas (Presidential Palace) in Panama. "It will integrate the Province of Bocas del Toro into the national electric system of Panama, providing its people with a more reliable and affordable source of electricity. It will also reduce the nation's traditional dependence on imported oil."

AES has been doing business in Panama since 1999. The company currently manages and operates four hydroelectric power plants in Panama.

Other new growth projects to begin in 2006

Changuinola becomes AES's third growth investment entering the design and/or construction phases in 2006. AES has already begun construction of a new thermal generation plant in Chile and this spring will begin construction on the company's first power plant in Bulgaria. Collectively, these plants will generate a total of 940 MW of electricity and will support continued economic growth in Panama, Chile and Bulgaria.

"As global demand for electricity continues to increase, AES is uniquely positioned to meet the energy needs of high growth markets, while strategically growing our own global portfolio," said AES President and Chief Executive Officer Paul Hanrahan. "Clearly, we're starting the year on a good path toward pursuing well-structured growth investments in 2006."

670 MW Lignite-Fired Plant in Bulgaria

In December, Hanrahan signed agreements to secure $965 million of non-recourse debt financing for the construction of a $1.4 billion power plant in Bulgaria. Through this investment, AES will become the single largest foreign investor in Bulgaria. The project will be the largest foreign greenfield investment in south east Europe and the first large scale power plant to be built in Bulgaria in more than 20 years.

The 670 MW lignite-fired power plant will sell power under a 15-year power purchase agreement with the national electric utility in Bulgaria, Natsionalna Elektricheska Kompania (NEK), and will purchase fuel locally under a 15-year lignite supply agreement with the state-owned mining company, Mini Maritza Itzok.

120 MW Thermal Plant in Chile

Through its subsidiary AES Gener S.A., AES is constructing a new thermal generation plant in Llay Llay, Chile. The $37 million investment will increase AES Gener's power generation capacity to 2,557 MW, or 21% of the country's total anticipated generation capacity in 2006. AES Gener is currently the second largest electricity generator in the country. AES has been in Chile since 2000 and is one of the largest foreign investors in the Chilean electricity sector.

The 120 MW facility, called San Pedro, will provide an additional source of power to help meet Chile's growing energy needs. The plant will be able to burn either diesel or natural gas as fuel, which will help diversify and stabilize the country's power sector. The plant will begin supplying electricity to Chile's central grid in May 2006.

About AES

AES is one of the world's largest global power companies, with 2004 revenues of $9.5 billion. With operations in 26 countries on five continents, AES provides power to people in more countries around the world than any other company. Through 123 generation facilities and 14 regulated utilities, AES has the capacity to generate 44,000 megawatts of electricity and provide power to 100 million people worldwide. Our global workforce of 30,000 people is committed to operational excellence and meeting the world's growing power needs. To learn more about AES, please visit www.aes.com or contact AES media relations at media@aes.com.

Safe Harbor Disclosure: This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES's current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to continued normal levels of operating performance and electricity demand at our distribution companies and operational performance at our contract generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience. Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES's filings with the Securities and Exchange Commission, including, but not limited to the risks discussed under the caption "Cautionary Statements and Risk Factors" in AES's 2004 annual report on Form 10-K. Readers are encouraged to read AES's filings to learn more about the risk factors associated with AES's business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.