Panda Energy International Inc. and Northland Power Income Fund announce completion of $99 million investment transaction

DALLAS & TORONTO, Dec. 23, 2003 — Panda Energy International Inc. and Northland Power Income Fund announce that they have completed an investment by Northland Power in Panda entities that indirectly own two combined-cycle cogeneration power plants located in the U.S. totaling 410 MW.

The investment totaled approximately US$ 99 million and was utilized by Panda to retire existing debt.

The plants, located in Maryland and North Carolina, are combined-cycle cogeneration power facilities that use natural gas as their primary fuel. The 230 MW Panda-Brandywine Facility, which is located just outside Washington, D.C., has been operating since 1996 and sells electrical capacity and energy to Potomac Electric Power Company pursuant to a power purchase agreement that extends until 2021.

The 180 MW Panda-Rosemary Facility, located in Roanoke Rapids, North Carolina, has been operating since 1990 and it sells electrical capacity and energy to Virginia Electric and Power Company under a power purchase agreement that extends until 2015.

The terms of the investment transaction resulted in Northland Power, through its wholly-owned subsidiary, Iroquois Falls Power Corp., acquiring a 19% equity interest in Panda Energy Corporation (“PEC”), including a 9.5% voting interest; purchasing an option to increase its equity interest in PEC to 49% in 2021; and providing a term loan repayable over an 18 year period ending in 2021 to a subsidiary of PEC. Proceeds from the Northland Power investment were used by Panda to redeem and repurchase the existing Panda Funding Corporation Pooled Project Bonds due in 2012.

Northland Power financed this investment through the issuance of 10,135,000 Trust Units on December 15, 2003 arranged through a syndicate of underwriters led by CIBC World Markets Inc. together with funds on hand. A more detailed description of the Investment Transaction can be found in the final short form prospectus published in support of the issuance of the Trust Units. The prospectus is available online at www.sedar.com.

Harris Nesbitt Corp., a member of BMO Financial Group, acted as exclusive financial advisor to Panda.

Northland Power Income Fund is a trust that directly and through its wholly-owned subsidiary, Iroquois Falls Power Corp., owns a 120 MW cogeneration power plant located in Iroquois Falls, Ontario and a 25% interest in a 110 MW cogeneration plant located near Kingston, Ontario that supply electricity to Ontario Electricity Financial Corporation and steam to neighbouring industrial facilities.

Headquartered in Dallas, Texas, Panda Energy International, Inc., is a privately held non-regulated electric generation company whose primary focus is the acquisition, ownership and operation of state-of-the-art, environmentally clean, low-cost power plants. The company has developed and built plants in North Carolina, Maryland, Texas, Arkansas and Arizona. Internationally Panda has built plants in China and Nepal. For more information, visit online: www.pandaenergy.com.

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