

                                                                  EXECUTION COPY

                       AMENDMENT NO. 1 TO CREDIT AGREEMENT

         AMENDMENT dated as of May 22, 1997 to the Credit  Agreement dated as of
August  2,  1996  (the  "Credit  Agreement")  among  THE  AES  CORPORATION  (the
"Borrower"),  the BANKS party  thereto (the "Banks")  BARCLAYS BANK PLC,  MORGAN
GUARANTY  TRUST  COMPANY  OF NEW  YORK,  UNION  BANK  OF  CALIFORNIA,  N.A,  and
NATIONSBANK, N.A., as Fronting Banks (the "Fronting Banks"), and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Agent (the "Agent").

                              W I T N E S S E T H :

         WHEREAS,  the parties  hereto  desire to amend the Credit  Agreement to
permit the Borrower and its Subsidiaries to incur certain debt;

         NOW, THEREFORE, the parties hereto agree as follows:

         SECTION  1.  Definitions;  References.  Unless  otherwise  specifically
defined herein,  each term used herein which is defined in the Credit  Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof",  "hereunder",  "herein" and "hereby" and each other similar  reference
and  each  reference  to  "this  Agreement"  and each  other  similar  reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.

         SECTION 2.  New Defined Terms.  Section 1.01 of the Credit Agreement is
amended to insert the following defined terms:

                  "Additional  Permitted  Subordinated Debt Agreement" means the
         indenture or other agreement pursuant to which any Additional Permitted
         Subordinated  Debt is issued or incurred,  as the same may,  subject to
         Section 5.11, be amended,  modified or supplemented  and in effect from
         time to time.


<PAGE>



                  "Additional  Permitted  Subordinated  Debt"  means Debt of AES
         (other than Debt evidenced by the Existing  Subordinated  Notes) (i) in
         an aggregate  principal  amount of not more than  $250,000,000 and (ii)
         which does not require any scheduled payment of principal prior to June
         1, 2003 and which has subordination provisions no less favorable to the
         Banks than those applicable to the Existing 10 1/4% Subordinated  Notes
         and other terms and provisions  applicable to AES and its  Subsidiaries
         that  are no  more  restrictive  in any  material  respect  (including,
         without  limitation,  covenants  and events of default) than (i) in the
         case of Additional  Permitted  Subordinated Debt incurred under a bank-
         type facility, those existing hereunder, (ii) in all other cases, those
         applicable to the Existing 10 1/4%  Subordinated  Notes or (iii) in any
         case, those otherwise acceptable to the Required Banks.

                  "CEMIG"  means  Companhia   Energetica  de  Minas  Gerais,  an
         integrated utility located in the state of Minas Gerais, Brazil.

                  "ESEBA" means Empresa  Social de Energia de Buenos Aires S.A.,
         an integrated  utility servicing Buenos Aires which is being privatized
         by the government of Argentina.

         SECTION 3. Amendments to Defined Terms.  (a) Definition of Consolidated
Tangible  Net Worth.  The  definition  of  "Consolidated  Tangible Net Worth" in
Section 1.01 of the Credit  Agreement is amended to insert "(A)" after the words
"stockholders'  equity" in the  parenthetical  clause  contained  in clause (ii)
thereof  and to  replace  the word  "but"  following  the word  "LIGHT"  in such
parenthetical  clause with the expression:  "and (B) the amount  attributable to
the equity Investment by AES and its Consolidated  Subsidiaries in CEMIG, but in
each case".

         (b) Definition of  Subordinated  Debt. The definition of  "Subordinated
Debt" in  Section  1.01 of the  Credit  Agreement  is amended to delete the word
"and" in the second  line  thereof  and to add the  following  phrase at the end
thereof: "and the Additional Permitted Subordinated Debt".

         (c)  Definition  of  Subordinated  Note  Indenture.  The  definition of
"Subordinated Note Indenture" in Section 1.01 of the Credit Agreement is amended
to delete the word "and" in the second  line  thereof  and to add the  following
phrase at the end  thereof:  "and the  Additional  Permitted  Subordinated  Debt
Agreement."

                                       2
<PAGE>



         SECTION  4.  Limitations  on Project  Exposure.  The last  sentence  of
Section  5.07 of the Credit  Agreement  is amended  to read in its  entirety  as
follows:

         "The  foregoing  restriction  shall not, so long as no Event of Default
hereunder  is then  continuing,  prohibit  or limit AES or any  Subsidiary  from
making Investments in (a) AES Light for the purpose of allowing AES Light to pay
principal,  interest and other  amounts due and owing under the  Existing  Light
Non-Recourse  Facility,  (b) any Subsidiary having a direct or indirect interest
in ESEBA (an "ESEBA Subsidiary") for the purpose of allowing an ESEBA Subsidiary
to pay  principal,  interest and other  amounts due and owing in respect of Debt
incurred for the purpose of acquiring an interest in ESEBA or (c) any Subsidiary
having a direct or  indirect  interest in CEMIG (a "CEMIG  Subsidiary")  for the
purpose of allowing a CEMIG  Subsidiary  to pay  principal,  interest  and other
amounts due and owing in respect of Debt  incurred  for the purpose of acquiring
an interest in CEMIG".

         SECTION 5. Debt.  Section  5.08 of the Credit  Agreement  is amended to
read in its entirety as follows:

         "SECTION  5.08.  Debt.  (a) AES shall  not,  and shall not  permit  any
Subsidiary to, incur, assume,  create or suffer to exist any Debt (including any
Guarantees of Debt and obligations in respect of letters of credit), except for:

                           (i) Debt under the  Financing  Documents  (subject to
                  Section 5.15);

                           (ii) Debt incurred by a Subsidiary (A) (1) to finance
                  the  development,  acquisition,  construction,  maintenance or
                  working capital  requirements  of a Power Project  operated or
                  managed (including on a joint basis with others),  directly or
                  indirectly,  by  AES  and  in  which  such  Subsidiary  has an
                  interest  or (2) in respect of any letter of credit  issued in
                  replacement of funds on deposit in any debt service reserve or
                  other  similar  account  of such  Subsidiary  (up to a maximum
                  aggregate  stated  amount of all such letters of credit of all
                  Subsidiaries  equal to  $100,000,000)  to the extent that such
                  funds so  replaced  are  received  by AES as a result  of such
                  funds being used to pay dividends or make distributions on the
                  capital stock of such  Subsidiary and any other  Subsidiary in
                  the chain of ownership between AES and such Subsidiary and (B)
                  that is not also the Debt of,  or  Guaranteed  by,  any  other
                  Subsidiary with an interest in any other Power Project (except
                  for Debt incurred by AES Rio Diamante,  Inc. consisting solely
                  of its pledge

                                       3
<PAGE>



                  of stock of AES Ocean Springs Ltd. to secure the Debt of other
                  Subsidiaries  of AES that is  permitted  under this  paragraph
                  (ii),   the   proceeds  of  which  are  used  to  finance  the
                  acquisition  by  such  Subsidiaries  from  the  government  of
                  Argentina  of equity  interests in certain  business  units of
                  ESEBA);

                           (iii) Debt existing on the date hereof and identified
                  on Schedule I;

                           (iv) Debt owing to AES or a  Consolidated  Subsidiary
                  of AES;

                            (v) Debt of AES or its  Subsidiaries  representing a
                  refinancing,  replacement  or refunding  of Debt  permitted by
                  clauses (ii) and (iii) above;  provided that (A) the aggregate
                  principal  amount of such Debt  outstanding  or available will
                  not be increased at the time of such refinancing,  replacement
                  or refunding (other than (1) in the case of Debt  refinancing,
                  replacing  or  refunding  Debt  under the  Existing  AES Light
                  Non-Recourse  Facility,  an increase of up to  $17,500,000  in
                  excess of the  aggregate  principal  amount of Debt  under the
                  Existing  AES  Light  Non-Recourse   Facility  that  is  being
                  refinanced,  replaced or refunded  and (2) in the case of Debt
                  ("Barbers Point Refinancing Debt")  refinancing,  replacing or
                  refunding Debt of AES Barbers Point,  Inc.  outstanding on May
                  15, 1997 (so long as such Barbers Point  Refinancing  Debt has
                  no scheduled  principal  repayments,  or principal payments at
                  the  option  of  the  holder  thereof  in the  absence  of the
                  occurrence  of  specified  events,  prior to June 1,  2004) an
                  increase  of up to  $300,000,000  in excess  of the  aggregate
                  principal amount of Debt that is being refinanced, replaced or
                  refunded to the extent that proceeds in at least the amount of
                  such increase are received by AES as a result of such proceeds
                  being  used  to pay  dividends  or make  distributions  on the
                  capital stock of such  Subsidiary and any other  Subsidiary in
                  the chain of ownership between AES and such  Subsidiary),  (B)
                  no  Obligor  shall be liable  for any such Debt  except to the
                  extent that it was liable for the Debt so refinanced, replaced
                  or refunded,  except that in the case of any Debt refinancing,
                  replacing  or  refunding  Debt  under the  Existing  AES Light
                  Non-Recourse  Facility,  any  Subsidiary  that has a direct or
                  indirect  interest  in LIGHT  but does not have any  direct or
                  indirect interest in any other Power Project may be liable for
                  such Debt and (C) if any Debt being  refinanced,  replaced  or
                  refunded is

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<PAGE>



                  subordinated  to the Debt of either  Borrower  hereunder or of
                  any Subsidiary under any Guarantee thereof, such Debt shall be
                  subordinated at least to the same extent;

                           (vi)  Guarantees by AES of Debt  permitted by clauses
                  (ii)(A)(1)  and (to the  extent  that the same  constitutes  a
                  refinancing  of Debt permitted  under such clause  (ii)(A)(1))
                  (v) above;

                           (vii) Additional Permitted Subordinated Debt; and

                           (viii)  Other  Debt  not  described  in  clauses  (i)
                  through  (vii) above in an aggregate  principal  amount at any
                  time outstanding not to exceed $2,000,000.

                  (b) AES shall not issue any Additional Permitted  Subordinated
         Debt unless (i) both before and after giving effect to such issuance no
         Default shall have  occurred and be continuing  and (ii) on a pro forma
         basis after giving effect to such issuance and the  application  of the
         proceeds  thereof,  AES would have been in compliance with Section 5.16
         and 5.17 as of the last day of the  fiscal  quarter  ended  on, or most
         recently  ended prior to, the date of such issuance  (assuming for this
         purpose that such Additional Permitted Subordinated Debt was issued and
         the proceeds applied on the first day of the period of four consecutive
         fiscal quarters ended on such last day)."

         SECTION 6.  Representations  of Borrower.  The Borrower  represents and
warrants that (i) the  representations  and warranties of the Borrower set forth
in Article 4 of the  Credit  Agreement  will be true on and as of the  Amendment
Effective  Date and (ii) no Default will have occurred and be continuing on such
date.

         SECTION 7.  Governing  Law.  This  Amendment  shall be  governed by and
construed in accordance with the laws of the State of New York.

         This  Amendment  may be signed in any number of  counterparts,  each of
which shall be an original,  with the same effect as if the  signatures  thereto
and hereto were upon the same instrument.

         SECTION 8.  Effectiveness.  This Amendment shall become effective as of
the date  hereof on the date (the  "Amendment  Effective  Date")  upon which the
Agent shall have received from each of the Borrower and the Required Banks a

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<PAGE>



counterpart   hereof  signed  by  such  party  or  facsimile  or  other  written
confirmation  (in form  satisfactory  to the Agent) that such party has signed a
counterpart hereof.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.

                                                     THE AES CORPORATION

                                                     By /s/
                                                       -------------------------
                                                       Title:

         BANKS
         -----

                                                     MORGAN GUARANTY TRUST
                                                     COMPANY OF NEW YORK

                                                     By /s/
                                                       -------------------------
                                                       Title:

                                                     BARCLAYS BANK PLC

                                                     By /s/
                                                       -------------------------
                                                       Title:

                                                     UNION BANK OF CALIFORNIA,
                                                      N.A.

                                                     By /s/
                                                       -------------------------
                                                       Title:

                                       6


<PAGE>




                                                     NATIONSBANK, N.A.

                                                     By /s/
                                                       -------------------------
                                                       Title:


                                                     AUSTRALIA AND NEW ZEALAND
                                                     BANKING GROUP LIMITED

                                                     By /s/
                                                       -------------------------
                                                       Title:


                                                      THE FIRST NATIONAL BANK
                                                      OF BOSTON

                                                     By /s/
                                                       -------------------------
                                                       Title:


                                                     THE BANK OF NOVA SCOTIA

                                                     By /s/
                                                       -------------------------
                                                       Title:


                                                     CREDIT LYONNAIS NEW YORK
                                                     BRANCH

                                                     By /s/
                                                       -------------------------
                                                       Title:


                                       7

<PAGE>



                                                    DRESDNER BANK AG, NEW YORK
                                                    AND GRAND CAYMAN

         BRANCHES

                                                    By /s/
                                                      -------------------------
                                                      Title:

                                                    By /s/
                                                      -------------------------
                                                      Title:



                                                    THE FIRST NATIONAL BANK OF
                                                    CHICAGO

                                                    By /s/
                                                      -------------------------
                                                     Title:



                                                    THE INDUSTRIAL BANK OF JAPAN
                                                    TRUST COMPANY

                                                    By /s/
                                                      -------------------------
                                                     Title:



                                                    TORONTO DOMINION (NEW YORK),
                                                    INC.

                                                    By /s/
                                                      -------------------------
                                                     Title:



                                                    CIBC INC.

                                                    By /s/
                                                      -------------------------
                                                     Title:

                                       8
<PAGE>





                                                  CREDIT LOCAL DE FRANCE

                                                  By /s/
                                                    ----------------------------
                                                    Title:


                                                  CREDIT SUISSE

                                                  By /s/
                                                    ----------------------------
                                                    Title:


                                                  By /s/
                                                    ----------------------------
                                                   Title:


                                                  ING (U.S.) CAPITAL CORPORATION

                                                  By /s/
                                                    ----------------------------
                                                    Title:


                                                  By /s/
                                                    ----------------------------
                                                    Title:


                                                  THE NIPPON CREDIT BANK, LTD.,
                                                  LOS ANGELES AGENCY

                                                  By /s/
                                                    ----------------------------
                                                    Title:


                                                  RIGGS BANK N.A.

                                       9
<PAGE>



                                           By /s/
                                             -----------------------------------
                                             Title:


                                           THE SANWA BANK LIMITED,
                                            NEW YORK BRANCH

                                           By /s/
                                             -----------------------------------
                                             Title:


                                           THE SAKURA BANK LIMITED

                                           By /s/
                                             -----------------------------------
                                             Title


         FRONTING BANKS
         --------------

                                           BARCLAYS BANK PLC, as Fronting Bank

                                           By /s/
                                             -----------------------------------
                                             Title:


                                           UNION BANK OF CALIFORNIA, N.A.,
                                            as Fronting Bank

                                           By /s/
                                             -----------------------------------
                                             Title:



                                           NATIONSBANK, N.A., as Fronting Bank

                                           By /s/
                                             -----------------------------------
                                             Title:

                                       10
<PAGE>


                                           MORGAN GUARANTY TRUST
                                           COMPANY OF NEW YORK,
                                           as Fronting Bank


                                           By /s/
                                             -----------------------------------
                                             Title:

         AGENT
         -----

                                           MORGAN GUARANTY TRUST
                                           COMPANY OF NEW YORK, as Agent


                                           By /s/
                                             -----------------------------------
                                             Title:




                                       11









