As Filed with the Securities and Exchange Commission on June 11, 1997
                                                 Registration No. 333-
                                                                  333-
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                       
                                   FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                                       
                          Panda Global Energy Company
            (Exact name of Registrant as specified in its charter)
    Cayman Islands                    4900                   Not Applicable
(State or other                (Primary Standard             (I.R.S. Employer
Jurisdication of           Industrial Classification        Identification No.)
incorporation or                 Code Number
organization)             
                                       
                          Panda Global Holdings, Inc.
                                       
     (Exact name of Co-Registrant (Guarantor) as specified in its charter)
      Delaware                       4900                     75-2697755
(State or other                (Primary Standard             (I.R.S. Employer
Jurisdication of           Industrial Classification        Identification No.)
incorporation or                 Code Number)
organization)                                       

      L. Stephen Rizzieri                         L. Stephen Rizzieri
Vice President and General Counsel       Vice President and General Counsel
  Panda Global Energy Company                   Panda Global Holdings, Inc.
4100 Spring Valley Road, Suite 1001      4100 Spring Valley Road, Suite 1001
      Dallas, Texas  75244                        Dallas, Texas  75244
         (972) 980-7159                              (972) 980-7159

(Name, address, including zip code,      (Name, address, including zip code, 
and telephone, including area code,      and telephone, including area code
of registrant's principal executive      of guarantor's principal executive
  offices and agent for service)           offices and agent for service)
                                       
       Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement
                                       
                               
  If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. ___

  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ___

  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ___

  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  ___

                                       
                            CALCULATION OF REGISTRATION FEE
                                       Proposed      Proposed         
Title of Each Class of   Amount to     Maximum       Maximum     Amount of
   Securities to be         be         Offering     Aggregate   Registration
      Registered        Registered      Price        Offering       Fee
                                       Per Unit       Price
  12-1/2% Registered                                                   
 Senior Secured Notes  $155,200,000    93.444%     $145,025,088   $43,947
       due 2004

  The Registrant and the Co-Registrant hereby amend this Registration Statement
on such date or dates as may be necessary to delay its effective date until the
Registrant  and  the  Co-Registrant  shall  file  a  further  amendment   which
specifically  states that this Registration Statement shall  thereafter  become
effective  in  accordance with Section 8(a) of the Securities Act  of  1933  or
until  the  Registration Statement shall become effective on such date  as  the
Commission, acting pursuant to said Section 8(a), may determine.


                          PANDA GLOBAL ENERGY COMPANY
                          PANDA GLOBAL HOLDINGS, INC.
                             Cross Reference Sheet
                                       
                                       
  1. Forepart of the Registration
     Statement and Outside Front Cover
     Page of Prospectus                 Outside Front Cover Page of Prospectus;
                                        Facing Pages

  2. Inside Front and Outside Back
     Cover Pages of Prospectus          Inside  Front  and Outside  Back  Cover
                                        Pages of Prospectus

  3. Summary Information, Risk Factors
     and Ratio of Earnings to Fixed
     Charges                            Prospectus   Summary;   Risk   Factors;
                                        Unaudited   Consolidated   Pro    Forma
                                        Financial Data of the Company; Selected
                                        Financial Data of the Issuer;  Selected
                                        Financial Data of the Company

  4. Use  of  Proceeds                  Use  of Proceeds

  5. Determination of Offering Price    *

  6. Dilution                           *

  7. Selling Security Holders           *

  8. Plan  of  Distribution             Outside Front Cover Page of Prospectus;
                                        Prospectus Summary; The Exchange Offer;
                                        Plan of Distribution

  9. Description of Securities to be
     Registered                         Prospectus Summary; Description of  the
                                        Exchange  Notes,  the  Exchange   Notes
                                        Guarantee,   the   Issuer   Loan,   the
                                        Shareholder  Loans and  the  Collateral
                                        Documents

 10. Interests of Named Experts and
     Counsel                            Legal Matters; Experts

 11. Information with Respect to the
     Registrant and the Co-Registrant   Outside Front Cover Page of Prospectus;
                                        Available    Information;    Prospectus
                                        Summary; Risk Factors; Business of  the
                                        Issuer,     the     Company,      Panda
                                        International  and Their  Subsidiaries;
                                        Use    of   Proceeds;   Capitalization;
                                        Unaudited   Consolidated   Pro    Forma
                                        Financial Data of the Company; Selected
                                        Financial Data of the Issuer;  Selected
                                        Financial   Data   of   the    Company;
                                        Management's Discussion and Analysis of
                                        Financial  Condition  and  Results   of
                                        Operations  of the Issuer; Management's
                                        Discussion  and Analysis  of  Financial
                                        Condition and Results of Operations  of
                                        the   Company;   The  Exchange   Offer;
                                        Certain  Tax  Considerations   of   the
                                        Exchange  Offer;  Description  of   the
                                        Projects;       Management;       Legal
                                        Proceedings;   Description   of   Other
                                        Indebtedness;   Description   of    the
                                        Exchange  Notes,  the  Exchange   Notes
                                        Guarantee,   the   Issuer   Loan,   the
                                        Shareholder  Loans and  the  Collateral
                                        Documents; Plan of Distribution;  Legal
                                        Matters;  Experts; Index  to  Financial
                                        Statements; Certain Defined Terms;  The
                                        Electric  Power Industry and Regulation
                                        in  the  PRC  and  the  United  States;
                                        Consolidated Pro Forma Report;  Luannan
                                        Engineering   Report;   Luannan    Coal
                                        Consultant's     Report;      Ownership
                                        Structure  of the Issuer, the  Company,
                                        Panda  International  and  Certain   of
                                        Their Subsidiaries.

 12. Disclosure of Commission Position
     on Indemnification for Securities
     Act Liabilities                    *

*     Not applicable


                      SUBJECT TO COMPLETION, JUNE 11,1997



PROSPECTUS
                              OFFER TO EXCHANGE
               12-1/2% Registered Senior Secured Notes due 2004
              which have been registered under the Securities Act
                          for any and all outstanding
                    12-1/2% Senior  Secured Notes due 2004              [LOGO]
                                      of
                          PANDA GLOBAL ENERGY COMPANY
                    Fully and Unconditionally Guaranteed by
                          PANDA GLOBAL HOLDINGS, INC.
                                       
       THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
                      ON        , 1997, UNLESS EXTENDED.
      Panda  Global Energy Company, a Cayman Islands company (the "Issuer"),  a
subsidiary  of  Panda  Global  Holdings,  Inc.,  a  Delaware  corporation  (the
"Company"),  hereby  offers, upon the terms and subject to the  conditions  set
forth  in  this  Prospectus and in the accompanying Letter of Transmittal  (the
"Letter  of  Transmittal," which together with this Prospectus  constitute  the
"Exchange Offer"), to exchange up to $155,200,000 in aggregate principal amount
of  its  12-1/2%   Registered Senior Secured Notes,  due  2004  (the  "Exchange
Notes")  for  a  like  principal amount of its issued and  outstanding  12-1/2%
Senior Secured Notes, due 2004 (the "Old Notes") that were issued and sold in a
transaction  exempt  from registration under the Securities  Act  of  1933,  as
amended  (the  "Securities  Act").   The  terms  of  the  Exchange  Notes   are
substantially identical to the terms of the Old Notes, except that the Exchange
Notes  (i)  have been registered under the Securities Act, and (ii) holders  of
the Exchange Notes will not be entitled to certain rights of holders of the Old
Notes under the Registration Rights Agreement (as defined herein), which rights
will  terminate upon the consummation of the Exchange Offer.  Such rights  will
also terminate as to holders of Old Notes who are eligible to tender their  Old
Notes  for exchange in the Exchange Offer and fail to do so.  See "The Exchange
Offer -- Termination of Certain Rights."  The Exchange Notes will evidence  the
same debt as the Old Notes which they replace and will be issued under, and  be
entitled to the benefits of, the indenture governing the Old Notes dated  April
22,  1997 (the "Exchange Notes Indenture").  As of the date of this Prospectus,
$155,200,000  principal amount of Old Notes is outstanding. The Old  Notes  and
the  Exchange  Notes  are  sometimes referred to  herein  collectively  as  the
"Existing Notes."

      The  Exchange Notes will bear interest from the date of issuance, at  the
rate  per  annum set forth above, payable semiannually in cash  in  arrears  on
April 15 and October 15 of each year, commencing October 15, 1997.  Interest on
the  Old Notes accepted for exchange will accrue thereon to, but not including,
the  date of issuance of the Exchange Notes and will be paid together with  the
first interest payment on the Exchange Notes issued in exchange therefor.   The
principal  of  the  Exchange Notes is payable semiannually in  installments  as
described  herein, commencing October 15, 2000. The Exchange Notes will  mature
on April 15, 2004, and will be redeemable at the option of the Issuer, in whole
or  in  part, at any time on or after April 15, 2002, at the redemption  prices
set  forth herein, plus accrued and unpaid interest to the redemption date.  In
addition,  the  Issuer  is  required to redeem  the  Exchange  Notes  upon  the
occurrence of certain events as set forth herein.  Payment of principal of, and
premium,   if   any,  and  interest  on  the  Exchange  Notes  is   fully   and
unconditionally  guaranteed  by  the  Company  (the  "Company  Guaranty").  See
"Prospectus  Summary  --  Terms of the Exchange Notes  --  The  Exchange  Notes
Guarantee.  See  "Description  of  the  Exchange  Notes,  the  Exchange   Notes
Guarantee,   the  Issuer  Loan,  the  Shareholder  Loans  and  the   Collateral
Documents."

     Subject to the terms and conditions of the Exchange Offer, the Issuer will
accept  for  exchange any and all Old Notes validly tendered and not  withdrawn
prior  to 5:00 p.m., New York City time, on             , 1997, unless extended
by  the  Issuer in its sole discretion (the "Expiration Date"). Tenders of  Old
Notes  may be withdrawn at any time prior to the Expiration Date.  The Exchange
Offer  is  not conditioned upon any minimum aggregate principal amount  of  Old
Notes being tendered or accepted for exchange.  However, the Exchange Offer  is
subject to certain customary conditions.  The Old Notes may be tendered only in
integral  multiples of $1,000.  See "The Exchange Offer --  Conditions  of  the
Exchange Offer."

     Prior to the consummation of  the Exchange Offer, there has been no public
market  for  the Exchange Notes.  The Issuer does not intend to apply  for  the
listing  of  the Exchange Notes on any securities exchange or to seek  approval
for  quotation  through any automated quotation system, and  no  active  public
market  for  the  Exchange Notes is currently anticipated.   There  can  be  no
assurance that an active public market for the Exchange Notes will develop.

                                          (continued on next page)

  See "Risk Factors" beginning on page 21 for a discussion of certain matters
    that should be considered in connection with the Exchange Offer and an
               investment in the Exchange Notes offered hereby.
                                       
 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
          EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
         HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
            UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.   ANY
             REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
                                       
                The date of this Prospectus is          , 1997.
                                       
      (cover page continued)
      
           The Old Notes were originally issued and sold on April 22, 1997 in a
      transaction not registered under the Securities Act in reliance upon  the
      exemptions provided in Section 4(2) of the Securities Act, and Rule  144A
      ("Rule  144A")  and  Regulation S promulgated under the  Securities  Act.
      Accordingly, the Old Notes may not be offered or sold, except pursuant to
      an  exemption  from, or in a transaction not subject to, the registration
      requirements   of  the  Securities  Act.  Based  upon   their   view   of
      interpretations provided to third parties by the staff of the  Securities
      and  Exchange Commission (the "Commission"), the Issuer and  the  Company
      believe that the Exchange Notes issued pursuant to the Exchange Offer may
      be  offered  for  resale,  resold and otherwise  transferred  by  holders
      thereof (other than any holder which (i) is an "affiliate" of the Company
      or  the  Issuer  within  the meaning of Rule 405  promulgated  under  the
      Securities  Act (an "Affiliate"), (ii) is a broker-dealer which  acquired
      Old  Notes  directly  from the Issuer, or (iii) is a broker-dealer  which
      acquired  Old  Notes  as  a  result of market  making  or  other  trading
      activities) without registration under the Securities Act, provided  that
      such  Exchange Notes are acquired in the ordinary course of such holders'
      business and such holders are not engaged in, and do not intend to engage
      in,  and  have  no  arrangement  or  understanding  with  any  person  to
      participate in, a distribution of such Exchange Notes. Each broker-dealer
      that receives Exchange Notes for its own account pursuant to the Exchange
      Offer  must  notify  the  Company and the Issuer  that  it  has  acquired
      Exchange Notes for its own account (which notification must be made  in
      the  applicable location in the Letter of Transmittal that is  delivered
      by  such  broker-dealer along with such broker-dealer's Old  Notes to be
      exchanged pursuant  to  the  terms  of  the  Exchange  Offer),  and  must
      acknowledge  that  it  will deliver a prospectus in connection  with  any
      resale of such Exchange Notes.  The Letter of Transmittal states that  by
      so acknowledging and by delivering a prospectus, a broker-dealer will not
      be  deemed to admit that it is an "underwriter" within the meaning of the
      Securities  Act.  This Prospectus, as it may be amended  or  supplemented
      from  time  to  time, may be used by a broker-dealer in  connection  with
      resales  of  Exchange Notes received for its own account in exchange  for
      Old  Notes where such Old Notes were acquired by such broker-dealer as  a
      result  of  market  making  activities or other trading  activities.  The
      Company and the Issuer have agreed to make available for a period  of  up
      to  two hundred and seventy (270) consecutive days after consummation  of
      the   Exchange  Offer  a  prospectus  meeting  the  requirements  of  the
      Securities Act to any such broker-dealer for use in connection  with  any
      such  resale,  subject  to  certain  conditions in the Registration Rights
      Agreement.   A  broker-dealer  that  delivers  such  a  prospectus  to  a
      purchaser  in connection with such resales will be subject to certain  of
      the civil liability provisions under the Securities Act and will be bound
      by the provisions of the Registration Rights Agreement (including certain
      indemnification  provisions).  Any holder who  tenders  in  the  Exchange
      Offer  for the purpose of participating in a distribution of the Exchange
      Notes,  and  any other holder that cannot rely upon such interpretations,
      must comply with the registration and prospectus delivery requirements of
      the Securities Act in connection with a secondary resale transaction.  In
      addition, to comply with the securities laws of certain jurisdictions, if
      applicable,  the  Exchange Notes may not be offered or sold  unless  they
      have  been registered or qualified for sale in such jurisdictions  or  an
      exemption  from  registration  or  qualification  is  available  and  the
      conditions thereto have been met.
      
            The  Exchange Notes issued pursuant to the Exchange Offer  will  be
      issued  in  the  form  of a fully registered global bond  which  will  be
      deposited with, or on behalf of, The Depository Trust Company ("DTC") and
      registered in the name of its nominee.  Beneficial interest in the global
      bond  representing  the Exchange Notes will be shown  on,  and  transfers
      thereof will be effected only through, records maintained by DTC and  its
      participants.   After the initial issuance of such global bond,  Exchange
      Notes in certificated form will be issued in exchange for the global bond
      only  as set forth in the Exchange Notes Indenture.  See "Description  of
      the  Exchange Notes, the Exchange Notes Guarantee, the Issuer  Loan,  the
      Shareholder  Loans and the Collateral Documents -- Book  Entry;  Delivery
      and Form."
      
            NO  PERSON  HAS  BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION  AS  TO
      WHETHER ANY HOLDER OF OLD NOTES SHOULD TENDER OLD NOTES PURSUANT  TO  THE
      EXCHANGE OFFER.  NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
      TO   MAKE  ANY  REPRESENTATIONS,  OTHER  THAN  THOSE  CONTAINED  IN  THIS
      PROSPECTUS  OR  IN  THE LETTER OF TRANSMITTAL. IF  GIVEN  OR  MADE,  SUCH
      RECOMMENDATIONS, INFORMATION OR REPRESENTATIONS MUST NOT BE  RELIED  UPON
      AS  HAVING  BEEN  AUTHORIZED BY THE ISSUER OR THE  COMPANY.  NEITHER  THE
      DELIVERY  OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES HEREUNDER
      SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION
      CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE  HEREOF
      OR  THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN  OR
      IN  THE AFFAIRS OF THE ISSUER OR THE COMPANY SINCE THE DATE HEREOF.  THIS
      PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION  OF  AN
      OFFER  TO  BUY ANY SECURITIES OTHER THAN THE SECURITIES COVERED  BY  THIS
      PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION  OF
      AN  OFFER TO BUY ANY SUCH SECURITIES BY ANY PERSON IN ANY JURISDICTION IN
      WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

                       ENFORCEMENT OF CIVIL LIABILITIES
                                       
      The  Issuer is an exempted company organized under the laws of the Cayman
Islands.  Substantially all of the assets of the Issuer are located outside  of
the  United States.  As a result, it may be difficult for investors  to  effect
service  of  process  upon the Issuer within the United States  or  to  enforce
against  the  Issuer  in  a U.S. court judgments obtained  in  U.  S.   courts,
including  judgments  predicated upon the civil  liability  provisions  of  the
federal securities laws of the United States ("Federal Securities Laws").   The
Issuer  has designated CT Corporation System in New York City as its agent  for
service of process in the United States with respect to the Exchange Notes (and
the  Old  Notes)  and  the  indentures relating  to  the  Exchange  Notes  (the
"Indentures")  and the Collateral Documents (as defined below)  in  any  United
States or New York State court located in the Borough of Manhattan, the City of
New  York  and  the  State of New York, and the Issuer  has  submitted  to  the
jurisdiction of such courts in connection with such matters.

      The  Issuer has been advised by its legal counsel in the Cayman  Islands,
Maples & Calder, that a final judgment for the payment of money rendered by any
federal or state court in the United States based upon civil liability, whether
or  not predicated solely upon the Federal Securities Laws, will be enforced in
the  Cayman Islands without any re-examination on its merits, provided that (i)
enforcement of such judgment conforms to general principles of equity and  (ii)
the  performance of any obligation thereunder is not fraudulent or contrary  to
public policy.

                                 DEFINED TERMS
                                       
     Unless  otherwise  specified, all references in this Prospectus  to  "U.S.
dollars," "dollars" or "$" are to United States dollars, and all references  to
"Renminbi" or "RMB" are to Renminbi, which is the legal tender currency of  the
People's Republic of China.
     
     Unless  otherwise specified, translation of amounts from Renminbi to  U.S.
dollars  for the convenience of the reader has been made in this Prospectus  at
the noon buying rate in New York City for cable transfers in foreign currencies
as  certified for customs purposes by the Federal Reserve Bank of New York (the
"Noon  Buying  Rate") on April 4, 1997 of $1.00 = RMB 8.3268. No representation
is  made that the Renminbi amounts could have been, or could be, converted into
U.S.  dollars  at  that  rate  or  at  any  other  rate.  See  "Risk  Factors--
Considerations  Relating to the PRC--Government Control of Currency  Conversion
and  Exchange Rate Risks" and "Foreign Exchange System in the PRC and  Exchange
Rate Information."
     
     All  capitalized  terms used in this Prospectus and not otherwise  defined
herein  have  the  meanings assigned in the glossary  included  as  Appendix  A
hereto, or in "Description of the Exchange Notes, the Exchange Notes Guarantee,
the  Issuer Loan, the Shareholder Loans and the Collateral Documents -- Certain
Definitions."  See also "Certain Technical Terms Commonly Used in  the  Utility
Industry" set forth in Part II of the Appendix A hereto.
     
                             AVAILABLE INFORMATION
                                       
      The  Company and the Issuer have filed with the Commission a Registration
Statement  on Form S-1 (the "Registration Statement") under the Securities  Act
with  respect  to  the Exchange Notes offered hereby and the Company  Guaranty.
This  Prospectus constitutes a part of the Registration Statement and does  not
contain all of the information set forth in the Registration Statement  or  the
exhibits  thereto, certain parts of which have been omitted in accordance  with
the   rules  and  regulations  of  the  Commission.   For  further  information
pertaining  to  the  Company, the Issuer, the Exchange Notes  and  the  Company
Guaranty,  reference  is  made  to the Registration  Statement,  including  the
exhibits thereto.  Statements made in this Prospectus concerning the provisions
of  any documents to which reference is made are not necessarily complete  and,
in  the  case  of  documents filed as exhibits to the  Registration  Statement,
reference  is  made to the copy of the documents so filed for a  more  complete
description  of  the matter involved, and each such statement shall  be  deemed
qualified in its entirety by such reference.

      As  a result of this offering, the Company and the Issuer will be subject
to  periodic  reporting and other informational requirements of the  Securities
Exchange  Act  of  1934,  as amended (the "Exchange  Act").   The  Registration
Statement  and the exhibits thereto, as well as the periodic reports and  other
information  filed  by the Company and the Issuer with the Commission,  may  be
inspected  and  copied  at  the public reference  facility  maintained  by  the
Commission  at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,  Washington,
D.C.  20549,  and  at the regional offices of the Commission located  at  Seven
World  Trade Center, Suite 1300, New York, New York 10048 and Citicorp  Center,
500  West Madison Street, Suite 1400, Chicago, Illinois 60661.  Copies of  such
material  may  also be obtained at prescribed rates from the  Public  Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.

      The  Company's and the Issuer's obligations to file periodic reports with
the  Commission pursuant to the Exchange Act may be suspended if  the  Exchange
Notes  are  held  of record by fewer than 300 holders at the beginning  of  any
fiscal  year of the Company or the Issuer, respectively, other than the  fiscal
year  in which the Registration Statement becomes effective.  Pursuant  to  the
Indentures, the Company has agreed that the Company will furnish to the Trustees
copies of annual, quarterly and current reports that it would be required to 
file under the Exchange Act whether or not it is subject to such reporting
requirements. In addition, subject to the limitations set forth in  the 
Indentures, upon the written request of a holder  of  Old  Notes,  the Issuer
or the Company will provide without charge to such holder or prospective
investor,  a  copy of such information as is required by Rule  144A  to enable
resales  of Old Notes to be made pursuant to Rule 144A.  Any such request will
be subject to the confidentiality provisions set forth below. Written requests
for such information should be addressed to Panda Global Energy Company, or 
Panda Global Holdings, Inc., c/o Panda Energy International, Inc., 
4100 Spring Valley Road, Suite 1001, Dallas, Texas 75244, Attention:
General Counsel.

      By requesting additional information relating to the offering of Exchange
Notes  at  a  time when neither the Company nor the Issuer is  subject  to  the
reporting requirements of Section 13 or 15(d) of the Exchange Act, each  holder
and  prospective investor agrees to keep confidential the various documents and
all  written information which from time to time have been or will be disclosed
to  it  concerning the Issuer, the Company or any of their affiliates which  is
not  publicly available, and agrees not to disclose any portion of the same  to
any  person  other than to its own consultants, except as may  be  required  by
applicable law or in a legal proceeding involving the Company or the Issuer.

     
                DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
                                       
     This  Prospectus includes "forward-looking statements" within the  meaning
of  Section 27A of the Securities Act and Section 21E of the Exchange Act.  All
statements  other  than  statements  of  historical  fact  included   in   this
Prospectus,  including,  without  limitation,  statements  regarding  financial
position,   projects  under  development,  construction   or   other   budgets,
information  contained  in  the  Independent Engineers'  and  the  Consultants'
Reports  and  plans  and objectives for future operations, are  forward-looking
statements.  Although the Issuer and the Company believe that the  expectations
reflected in such forward-looking statements are reasonable, they can  give  no
assurance  that  such expectations will prove to have been  correct.  Important
factors  that could cause actual results to differ materially from the Issuer's
and  the  Company's expectations ("Cautionary Statements") are disclosed  under
"Risk  Factors,"  in  the  assumptions made by the  Independent  Engineers  and
Consultants  and contained in their reports, and elsewhere in this  Prospectus.
All  subsequent written and oral forward-looking statements attributable to the
Issuer,  the Company or persons acting on their behalf are expressly  qualified
in their entirety by the Cautionary Statements.
     
     In  providing  its conclusions set forth in the Independent Engineers'  or
Consultants'  Reports,  each Independent Engineer or  Consultant  made  certain
assumptions. Although the author of each report believes that the use of  these
assumptions in its report is reasonable, assumptions are inherently subject  to
significant uncertainties and, if actual conditions differ from those  assumed,
actual   results   will  differ  from  those  projected,  perhaps   materially.
Accordingly,  the  conclusions  and projections contained  in  the  Independent
Engineers'  and  Consultants' Reports may not be indicative of  future  events.
Therefore,  no  representations are made, nor  should  any  be  inferred,  with
respect  to  the  likely existence of any particular future  set  of  facts  or
circumstances.  If  actual  results are less  favorable  than  the  conclusions
presented  in  the  Independent Engineers' or Consultants' Reports  or  if  the
assumptions  used  in  formulating  the  conclusions  presented  prove  to   be
incorrect,  the  ability of a direct or indirect Subsidiary of  the  Issuer  to
repay  its  indebtedness to the Issuer and to make distributions to its  equity
holders  and  thus  ultimately  to the Issuer, the  Issuer's  ability  to  make
payments  of  interest and principal on the Exchange Notes when  due,  and  the
Company's  ability to meet its obligations under the Exchange Notes  Guarantee,
may  be  materially  and  adversely affected. See "Risk Factors--Reliance  upon
Projections  and  Underlying Assumptions Contained in Independent  Consultants'
Reports."
     
*****************************************************************************

Neither  the  Issuer,  the Company nor any of their representatives  makes  any
recommendation  to any holder of Old Notes as to whether to tender  or  refrain
from  tendering Old Notes pursuant to the Exchange Offer.  Neither the  Issuer,
the  Company nor any of their representatives makes any representation  to  any
offeree  of  the  Exchange Notes offered hereby regarding the legality  of  any
investment  by  such offeree or purchaser under applicable legal investment  or
similar  laws.   Each holder of Old Notes should consult with his  or  her  own
advisors  as  to  legal,  tax,  business,  financial  and  related  aspects  of
participation in the Exchange Offer and must make his or her own decision  with
respect to the Exchange Offer.

                              PROSPECTUS SUMMARY
                                       
     The  following summary is qualified in its entirety by, and should be read
in  conjunction  with, the more detailed information and the Issuer's  and  the
Company's  financial data, including the notes thereto, appearing elsewhere  in
this Prospectus. All references to the Company which pertain to events prior to
March  7,  1997  relate  solely  to  the business  and  operations  of  certain
subsidiaries of Panda Energy International, Inc., which are now subsidiaries of
the  Company. See "Business of the Issuer, the Company, Panda International and
Their Subsidiaries--The Issuer, the Company and Panda International." Investors
should carefully consider the information set forth under "Risk Factors"  prior
to  making  any  decision to invest in the Exchange Notes. For  definitions  of
certain  terms  used herein, see the glossary included as Appendix  A  to  this
Prospectus,  and  "Description  of  the  Exchange  Notes,  the  Exchange  Notes
Guarantee, the Issuer Loan, the Shareholder Loans on the Collateral Documents -
- Certain Definitions."
     
                          The Issuer and the Company
                                       
     Panda Global Energy Company (the "Issuer") is a wholly-owned subsidiary of
Panda  Global  Holdings, Inc. (the "Company"). The Company  is  an  independent
power  company  principally engaged in the development, acquisition,  ownership
and  operation  of power generation facilities and activities  related  thereto
("Projects") in the United States and internationally. The Company's  principal
business  strategy is to use its and its affiliates' experience  to  profitably
develop, construct, finance and manage Projects to provide low-cost electricity
and  electric  generating capacity particularly, in the case  of  international
Projects,  in  areas of the world where demand for power exceeds  supply  by  a
significant  factor.  The Company believes there is and  will  continue  to  be
significant demand for new generating capacity worldwide and that much of  this
new  capacity  will  be provided by independent power developers  such  as  the
Company   and   its  affiliates,  due  to  their  low  costs  and   development
capabilities.
     
     The  Company's  current  portfolio of Projects is comprised  of  (i)  100%
indirect  ownership of a 180 megawatt ("MW") natural gas-fired,  combined-cycle
cogeneration facility located in Roanoke Rapids, North Carolina (the  "Rosemary
Facility") which commenced commercial operations in December 1990 and (ii) 100%
indirect ownership of the lessee under a long-term leveraged lease of a 230  MW
natural  gas-fired, combined-cycle cogeneration facility located in Brandywine,
Maryland,  near  Washington, D.C. (the "Brandywine Facility")  which  commenced
commercial  operations  in  October  1996.  The  Company  indirectly  owns   an
approximately 83% ownership interest in a 2x50 MW coal-fired cogeneration power
plant  together with a steam and hot water generation and distribution facility
and  other  related facilities under construction in Luannan  County,  Tangshan
Municipality,  Hebei  Province, People's Republic of China  (collectively,  the
"Luannan  Facility").  Preliminary construction work on  the  Luannan  Facility
commenced in December 1996, and full construction activity commenced  upon  the
closing  of  the  offering  of  the Old Notes on April  22,  1997  (the  "Prior
Offering"). The Company is also actively developing several other domestic  and
international  Projects which may be added to its portfolio of  Projects.   See
"Risk Factors -- Additional Indebtedness -- Effective Subordination of Exchange
Notes and Exchange Notes Guarantee."
     
                             The Luannan Facility
                                       
     The  Luannan  Facility will be comprised of two coal-fired  steam/electric
generating  units, each nominally rated at 50 MW but with nameplate  capability
of  up  to 60 MW gross output under full condensing conditions. Electric  power
generated by the Luannan Facility will be interconnected to the Beijing-Tianjin-
Tangshan Regional Power Network (the "Jing-Jin-Tang Grid") serving the Beijing-
Tianjin-Tangshan region, where the economy has witnessed significant growth  in
recent years. In addition, steam will be extracted from the steam turbines  for
distribution by pipeline to local commercial and industrial users and used  for
local  heating.  Coal will be delivered by truck to the Luannan  Facility  from
nearby mines.
     
     All  electrical output of the Luannan Facility will be sold pursuant to  a
20-year  power  purchase agreement (the "Luannan Power Purchase Agreement")  to
North China Power Group Company ("North China Power Company"), the business arm
of the North China Power Group ("North China Power"). Certain components of the
power  price are subject to contractual adjustment to reflect changes  in  coal
costs, local inflation, U.S. inflation, and foreign exchange rate fluctuations.
North China Power is one of the five interprovincial power groups in China  and
is subject to the supervision of the Ministry of Electric Power of the PRC (the
"MOEP").  North China Power's service area includes Beijing and Tianjin,  which
are  among the largest and most economically developed cities in China, as well
as  Hebei  Province, Shanxi Province and western Inner Mongolia. The  financial
statements of North China Power included in its 1995 annual report (prepared in
accordance with Chinese accounting principles) indicate total assets (excluding
assets in Inner Mongolia) of RMB 70.0 billion ($8.4 billion) as of December 31,
1995,  and  revenue of approximately RMB 27.2 billion ($3.3 billion) (excluding
revenue  generated  from  Inner  Mongolia) for 1995.  North  China  Power  also
reported that it was ranked as one of the top three government-owned industrial
enterprises (in terms of revenues) in China in 1995.
     
     Preliminary  construction  work  on  the  Luannan  Facility  commenced  in
December  1996,  and  the Issuer and the Company believe  that  the  commercial
operation  date of the Luannan Facility will occur by August 1999. The  Luannan
Facility is being constructed pursuant to a fixed-price, turnkey contract  (the
"Luannan  EPC  Contract") with Harbin Power Engineering  Company  Limited  (the
"Luannan  EPC  Contractor").  The  Luannan EPC  Contractor  is  a  wholly-owned
subsidiary  of  Harbin Power Equipment Company, Ltd. ("Harbin  Power"),  which,
with  its  subsidiaries,  is one of the largest manufacturers  of  power  plant
equipment  in  China  and  is  listed on the  Hong  Kong  Stock  Exchange.  The
obligations of the Luannan EPC Contractor will be subject to a retainage of 10%
of  the  Luannan  EPC Contract price. Liquidated damages, if any,  are  payable
under  the  Luannan  EPC Contract up to a maximum of 35%  of  the  Luannan  EPC
Contract price and are guaranteed by the Export-Import Bank of China ("CHEXIM")
in  this  amount (the "CHEXIM Guarantee").  Senior unsecured debt of CHEXIM  is
rated  A3  by  Moody's Investors Service, Inc. ("Moody's").  Harbin  Power  has
guaranteed  the  payment  and  performance  obligations  of  the  Luannan   EPC
Contractor  (the  "Luannan  EPC Guarantee"). The  Luannan  EPC  Contractor  has
significant experience, having constructed eight 50 MW cogeneration  facilities
in  China  of  similar  design to the Luannan Facility and numerous  additional
50  MW non-cogeneration units. In 1995, the annual designed production capacity
of  the facilities constructed by the Luannan EPC Contractor and its affiliates
was 3,000 MW of thermal power and 1,000 MW of hydro power.
     
     Operations  and  maintenance services for the  Luannan  Facility  will  be
provided  by  Duke/Fluor  Daniel  International  Services  (the  "Luannan   O&M
Contractor").  The Luannan O&M Contractor is actively engaged in the  operation
and maintenance of electric generation facilities throughout the world.
     
     The  Issuer  believes  that the Luannan Facility  will  use  approximately
450,000  metric  tons  of coal per year.  The principal  fuel  supply  for  the
Luannan  Facility  will  come from the Qianjiaying Mine,  which  is  owned  and
operated  by Kailuan Coal Mining Administration ("Kailuan Coal"), a state-owned
mining  company,  and is located 30 kilometers from the Luannan  Facility.  The
Qianjiaying  Mine produced approximately 3.67 million metric tons  of  coal  in
1996.  Kailuan Coal has contractually committed to supply up to 300,000  metric
tons per year of coal from the Qianjiaying Mine to the Luannan Facility for ten
years.  The Luannan Facility has also entered into coal supply agreements  with
five  other local coal mines (collectively with Kailuan Coal, the "Luannan Coal
Suppliers") to secure up to an additional 310,000 metric tons per year of  coal
for  ten  years.   The  Luannan Coal Suppliers are  all  located  within  a  50
kilometer  radius  of the location of the Luannan Facility, thereby  minimizing
transportation costs. The coal will be transported by truck from the  mines  to
the Luannan Facility.
     
     Transmission facilities will be constructed, owned and operated  by  North
China  Power  Company and will connect the Luannan Facility with the  Jing-Jin-
Tang  Grid  (the  "Luannan Transmission Facilities"). The Luannan  Transmission
Facilities  will be comprised of three newly constructed substations,  upgrades
to   an  existing  substation  and  switching  station,  and  approximately  43
kilometers  of  new  110  kV  transmission lines to  interconnect  the  Luannan
Facility to the Jing-Jin-Tang Grid. North China Power Company has guaranteed it
will  complete  the  construction  of the Luannan  Transmission  Facilities  to
receive the total electrical output of the Luannan Facility within 18 months of
receiving notice to proceed.
     
Ownership and Financing

     The  Luannan  Facility will be owned and operated by four separate  equity
joint  venture companies (each singularly, a "Joint Venture," and collectively,
the  "Joint  Ventures"). The Company owns an approximately 83% indirect  equity
interest  in each of the Joint Ventures; entities owned by Luannan County  (the
"County  Partners")  own  an approximate 12% interest  in  each  of  the  Joint
Ventures  with  the  remaining  5%  being owned  indirectly  by  the  Company's
strategic  partners.   The  Company  believes  that  all  government  approvals
required  to  date to form the Joint Ventures and develop the Luannan  Facility
have  been obtained based on the opinion of its Chinese counsel and advice from
the  Hebei Provincial Planning Commission, the Commission of Foreign Trade  and
Economic  Cooperation  of Hebei Province and the County Partners.  The  Luannan
Engineering  Report (as defined below) concludes that there  is  no  reason  to
believe  that other approvals required for construction of the Luannan Facility
will not be granted.
     
     The  Issuer and the Company believe the total cost of the Luannan Facility
will  be  approximately  $118.8 million, of which (i) $71.3  million  has  been
funded from the proceeds of the offering of Old Notes consummated on April  22,
1997  (plus  interest  thereon and other income expected to  be  earned  during
construction)  in  the  form of loans to the Joint Ventures  (the  "Shareholder
Loans"),  (ii)  $41.8  million also has been funded from the  proceeds  of  the
offering of Old Notes consummated on April 22, 1997 (plus interest thereon  and
other  income expected to be earned during construction) in the form of  equity
contributions  to  the  Joint  Ventures (the "JV  Equity  Contributions"),  and
(iii) $5.7 million has been funded by the County Partners in the form of equity
contributions to the Joint Ventures from the same amounts paid to such partners
by  the  Joint Ventures to acquire certain water and land use rights and  water
wells from them.

     The Old Notes were rated B2 by Moody's and B by Duff & Phelps Credit 
Rating Co. ("Duff & Phelps").  There can be no assurance that these ratings
will be maintained.
     
                             The Rosemary Facility
                                       
     The  Rosemary  Facility  is a 180 MW combined-cycle cogeneration  facility
located in Roanoke Rapids, North Carolina, which is indirectly wholly-owned  by
the  Company. The Rosemary Facility, in operation since 1990, uses natural  gas
as  its  primary fuel to produce electricity and thermal energy in the form  of
steam.  The  electric capacity of and electric energy produced by the  Rosemary
Facility  are  sold  to Virginia Electric and Power Company ("VEPCO")  under  a
power  purchase  agreement with 18 years remaining.  Steam  and  chilled  water
produced  by the Rosemary Facility are sold to a textile mill adjacent  to  the
Rosemary  Facility under a contract with 18 years remaining. A  partnership  of
wholly-owned subsidiaries of the Company which owns the Rosemary Facility  (the
"Rosemary   Partnership")  has  entered  into  agreements  with   Natural   Gas
Clearinghouse  for  natural  gas  supply and  fuel  management  services,  with
Transcontinental Gas Pipe Line Corporation, Texas Gas Transmission  Corporation
and  CNG Transmission Corporation for firm and interruptible transportation  of
natural  gas and with certain other parties to provide pipeline operation,  gas
balancing  and  interruptible transportation services. Panda  Global  Services,
Inc.,  an indirect wholly-owned subsidiary of Panda Energy International,  Inc.
("Panda  International") provides operations and maintenance  services  to  the
Rosemary Facility.
     
     In  July 1996, Panda-Rosemary Funding Corporation, a wholly-owned Delaware
special purpose finance subsidiary of the Rosemary Partnership, consummated the
offering and sale of $111.4 million in aggregate principal amount of its 8 5/8%
First  Mortgage Bonds due 2016 (the "Rosemary Bonds"). The Rosemary Bonds  were
rated  Baa3  by Moody's and BBB- by Duff & Phelps.  See   "Risk  Factors  --
Additional  Indebtedness   --   Effective Subordination of Exchange Notes and
Exchange Notes Guarantee".
     
                            The Brandywine Facility
                                       
     The  Brandywine Facility is a 230 MW combined-cycle cogeneration  facility
located  at Brandywine, Maryland, near Washington, D.C. The Brandywine Facility
is  leased by an indirect wholly-owned subsidiary of the Company pursuant to  a
lease  which expires in December 2016 with General Electric Capital Corporation
("GE  Capital"). The Brandywine Facility utilizes natural gas  as  its  primary
fuel  to  produce  electricity and thermal energy in the  form  of  steam.  The
electric  capacity  of and electric energy produced by the Brandywine  Facility
are  sold  to  Potomac  Electric Power Company pursuant  to  a  power  purchase
agreement (the "Brandywine Power Purchase Agreement") which expires in  October
2021. Thermal energy produced by the Brandywine Facility is sold to a distilled
water  production facility owned by an indirect wholly-owned subsidiary of  the
Company.  The Brandywine Facility purchases firm and interruptible natural  gas
supplies  from  Cogen  Development  Company,  which  are  transported  to   the
Brandywine  Facility  on  either  a  firm or interruptible  basis  through  the
interstate  pipeline  facilities of Columbia Gas Transmission  Corporation  and
Cove Point LNG Limited Partnership and the local gas distribution facilities of
Washington Gas Light Company. The Brandywine Facility has contracted with Ogden
Brandywine  Operations,  Inc., a subsidiary of Ogden  Corporation,  to  provide
operations  and  maintenance  services to the Brandywine  Facility.  See  "Risk
Factors -- Additional Indebtedness -- Effective Subordination of Exchange Notes
and Exchange Notes Guarantee".
     
                        Panda Interfunding Corporation
                                       
     The  Rosemary  Facility and the Brandywine Facility  are  each  indirectly
owned  by  Panda Interfunding Corporation, a Delaware corporation  ("PIC"),  an
indirect  wholly-owned subsidiary of the Company. In July 1996, a  wholly-owned
subsidiary of PIC, Panda Funding Corporation ("PFC"), issued $105.5 million  in
bonds (the "Series A Bonds") which were rated Ba3 by Moody's and BB- by Duff  &
Phelps. The Series A Bonds are fully and unconditionally guaranteed by PIC.
     
                              Additional Projects
                                       
     In  the  future,  Panda  International and its affiliates  (including  the
Company) may develop additional Projects. Subject to certain conditions,  Panda
International  and its affiliates (including the Company) will be  required  to
transfer  to  PIC their interests in certain additional Projects, if  any,  for
which  a  power purchase agreement is entered into prior to July 31,  2001  and
which  reach Financial Closing or achieve Commercial Operations (as such  terms
are  defined in the PIC Additional Projects Contract) prior to July  31,  2006.
Additional  Projects, if any, which are not required to be transferred  to  PIC
may, at the option of Panda International and its affiliates, be transferred to
the  Issuer or the Company, provided that, if additional indebtedness is to  be
incurred  by  the Issuer or the Company in connection with any such  additional
Project so transferred, certain conditions are satisfied.  See "Risk Factors --
Additional Indebtedness -- Addition of Projects to PIC Portfolio" and "-- Risk
Factors -- Additional Indebtedness -- Addition of Projects to the Issuer or the
Company."
     
Effective Subordination of Exchange Notes and Exchange Notes Guarantee;
Collateral
     
     The  Exchange Notes and the Exchange Notes Guarantee will be the exclusive
obligations of the Issuer and the Company, respectively, and not of the Project
Entities which own or operate the Rosemary Facility or the Brandywine Facility,
the  Joint Ventures or any other affiliate of the Issuer. The Project  Entities
and  the Joint Ventures are highly leveraged and their debt agreements restrict
their ability to pay dividends, make distributions or otherwise transfer funds,
through  intermediate  entities,  to  the Company.  The  restrictions  in  such
agreements   generally  require  that,  prior  to  the  payment  of  dividends,
distributions  or  other  transfers, Project Entities and  the  Joint  Ventures
provide  for  the  payment of other obligations, including operating  expenses,
debt  service and the funding of reserves. The Project Entities and  the  Joint
Ventures are separate and distinct legal entities and have no obligation to pay
any  amounts due pursuant to the Exchange Notes or to make any funds  available
therefor,  whether by dividends, loans or other payments, and do not  guarantee
the  payment  of the Exchange Notes. Thus, payments on the Exchange  Notes  are
effectively  subordinated  to the payment of all  obligations  of  the  Project
Entities  and the Joint Ventures. In addition, the Company's right  to  receive
any assets of the Project Entities or the Joint Ventures upon their liquidation
or  reorganization  will be effectively subordinated  to  the  claims  of  such
Project  Entities' or Joint Ventures' creditors (including trade creditors  and
holders of other debt issued by such Project Entity). As of March 31, 1997, the
Project  Entities  had approximately $338.6 million of indebtedness  and  other
liabilities  (including  payments on the long-term  lease  for  the  Brandywine
Facility), which is effectively senior to obligations of the Company under  the
Exchange  Notes  Guarantee.  See  "Risk Factors  --  Additional  Indebtedness",
"Description  of  Other Indebtedness--The Rosemary Bonds" and  "Description  of
Other Indebtedness--The Brandywine Financing".
     
     Similarly, the Company is highly leveraged as a result of the issuance  of
the Series A Bonds by PFC (an indirect wholly-owned subsidiary of the Company),
which are collateralized in part by all of the issued and outstanding shares of
PIC  (also  an  indirect  wholly-owned subsidiary  of  the  Company).  The  PFC
Indenture restricts the ability of PIC to pay dividends, make distributions  or
otherwise transfer funds, through PEC, to the Company. PIC and PFC are separate
and  distinct  legal  entities and have no obligation to pay  any  amounts  due
pursuant to the Exchange Notes or to make any funds available therefor, whether
by  dividends,  loans or other payments, and do not guarantee  payment  of  the
Exchange  Notes.  Thus,  payments on the Exchange Notes  are  also  effectively
subordinated  to  the  payment of all obligations  of  PFC.  In  addition,  the
Company's  right  to  receive  any  assets  of  PIC  upon  its  liquidation  or
reorganization  will  be  effectively  subordinated  to  the  claims  of  PFC's
creditors (including holders of the Series A Bonds). As of March 31, 1997,  PFC
had  approximately $106.6 million of indebtedness and other liabilities,  which
is  effectively  senior to the obligations of the Company  under  the  Exchange
Notes Guarantee. See "Risk Factors -- Additional Indebtedness" and "Description
of Other Indebtedness--The PFC Bonds."
     
     The  Exchange Notes are fully and unconditionally guaranteed by the Company
("Exchange Notes Guarantee").  The Exchange Notes Guarantee is secured by
pledges, or grants of security interests (i)  by  Panda International of 100%
of the Capital Stock of  the Company;  (ii) by the Company of 100% Capital
Stock of PEC; and (iii)  by  the  Company,  of  and in its  interest  in 
accounts, established in  the  Company's name with the  Company  Indenture
Trustee, into which certain distributions related to the Luannan Facility  are
(or  will be) deposited.  The Exchange  Notes  are secured  by pledges, or
grants of security interests (i) by the Issuer  of  at  least 90% of the
Capital Stock of  Pan-Sino; (ii) the Issuer Note issued by Pan-Western; (iii)
in the event that Pan-Sino is merged into Pan-Western, the Issuer will pledge
at least 99%  of  the  Capital Stock of Pan-Western to the Senior Secured
Notes  Trustee; (v) in the event that Pan-Sino is  merged into the Issuer,
the Issuer will assume Pan-Sino's obligations  under the Pan-Sino 
Pledge Agreement; (v) by Pan-Western of the Luannan Facility  Notes issued by
the Joint Ventures; and (vi) by the Company of 100%  of  the  Capital  Stock
of the Issuer. Individually,  and in the aggregate, the pledges of  the 
Capital Stock of each of PEC, Pan-Sino and  Pan-Western do not constitute a
"substantial portion" (as defined in Rule 3-10 of Regulation S-X promulgated
under the Securities Act) of the  collateral securing the Exchange Notes and
the  Exchange Notes  Guarantee. Separate financial statements of each  of
the PEC, Pan-Sino and Pan-Western  are not  presented in  this Prospectus
because the Company and the Issuer believe that such disclosure is not
material to a prospective purchaser of the Exchange Notes.

      Investors  should consider carefully all the information set forth  under
"Risk Factors" prior to making any decision to invest in the Exchange Notes.

     The  following chart details, in summary form, the corporate structure  of
Panda  International and its subsidiaries. See Appendix G, "Ownership Structure
of   the  Issuer,  the  Company,  Panda  International  and  Certain  of  Their
Subsidiaries."
    
		[Panda International Organizational Subsidiary Chart here]
                                       
     
     Notes:      Intermediate   entities  with  no  significant   assets   or
         liabilities have been excluded from the above chart except  for  the
         entity mentioned in note (1).
     
      (1)      Panda  Funding Corporation ("PFC"), a wholly-owned  subsidiary
         of  Panda  Interfunding Corporation ("PIC"), is the  issuer  of  the
         Series  A Bonds. See "Description of Other Indebtedness --  The  PFC
         Bonds."
                                PRIOR OFFERING

      On  April  22,  1997  (the "Issue Date"), the Issuer issued  $155,200,000
aggregate  principal  amount  of its Old Notes in  a  private  placement  under
Section  4(2) of the Securities Act and Rule 144A and Regulation S  promulgated
thereunder  (the  "Prior  Offering").  The Old Notes were  sold  to  Donaldson,
Lufkin & Jenrette. (the "Initial Purchaser") pursuant to the Purchase Agreement
and  were  placed by the Initial Purchaser with Qualified Institutional  Buyers
and  institutional Accredited Investors (as defined in Section 501(a) (1), (2),
(3)  or  (7)  under  the Securities Act).  Pursuant to the Registration  Rights
Agreement  entered  into  between  the Company,  the  Issuer  and  the  Initial
Purchaser  in  connection with the Prior Offering, the Issuer and  the  Company
agreed  to file a shelf registration statement covering the Old Notes (a "Shelf
Registration Statement") or to effect a registered exchange offer for  the  Old
Notes  pursuant  to  which the holders of the Old Notes would  be  offered  the
opportunity  to  exchange their Old Notes for registered Exchange  Notes.   The
Registration  Rights  Agreement  provides  that  if  such  an  exchange   offer
registration statement (an "Exchange Offer Registration Statement") or a  Shelf
Registration  Statement is not declared effective within  150  days  after  the
Issue  Date, the Issuer and the Company, jointly and severally, shall be liable
to  pay  liquidated damages, during the first 90-day period commencing  on  the
151st  day  following the Issue Date in an amount equal to $.05  per  week  per
$1,000  principal amount of Exchange Notes, with such amount increasing  by  an
additional $.05 per week per $1,000 principal amount of Exchange Notes for each
subsequent 90-day period, up to a maximum of $.50 per week per $1,000 principal
amount  of  Old Notes. The Registration Statement with respect to the  Exchange
Offer  was  declared effective by the Commission on           ,  1997,  thereby
avoiding the aforementioned Liquidated Damages.
                                       

                              THE EXCHANGE OFFER
                                       
      The  Issuer is making the following Exchange Offer to holders of  all  Old
Notes presently outstanding:

The Exchange Offer              For  each $1,000 principal amount of Old  Notes
                          tendered, a holder will be entitled to receive $1,000
                          principal amount of Exchange Notes. As of the date of
                          this Prospectus, $155,200,000 principal amount of Old
                          Notes  is  outstanding.  The terms  of  the  Exchange
                          Notes are substantially identical to the terms of the
                          Old  Notes, except that the Exchange Notes  (i)  will
                          have  been registered under the Securities  Act,  and
                          (ii)  holders  of  the Exchange  Notes  will  not  be
                          entitled  to  certain rights of holders  of  the  Old
                          Notes  under the Registration Rights Agreement, which
                          rights  will terminate upon the consummation  of  the
                          Exchange  Offer.  Such rights will also terminate  as
                          to  holders of Old Notes who are eligible  to  tender
                          their  Old  Notes for exchange in the Exchange  Offer
                          and  fail  to  do  so.  See "The  Exchange  Offer  --
                          Termination  of  Certain Rights" and "Description  of
                          the Exchange Notes, the Exchange Notes Guarantee, the
                          Issuer Loan, the Shareholder Loans and the Collateral
                          Documents - Old Notes Registration Rights."

Expiration Date                The Exchange Offer will expire at 5:00 p.m., New
                          York City time, on            , 1997, unless extended
                          in  the  Issuer's sole discretion.  See "The Exchange
                          Offer  --  Expiration Date; Extensions;  Termination;
                          Amendments."

Withdrawal of Tenders           Tenders  of Old Notes may be withdrawn  at  any
                          time  prior to the Expiration Date.  Thereafter, such
                          tenders are irrevocable.  See "The Exchange Offer  --
                          Withdrawal of Tenders."

Interest on the Exchange
  Notes and Accrued
  Interest on the Old
  Notes                         The Exchange Notes will bear interest from  the
                          date  of  their issuance.  Interest on the Old  Notes
                          accepted for exchange will accrue thereon to, but not
                          including, the date of issuance of the Exchange Notes
                          and  will  be  paid together with the first  interest
                          payment  on  the  Exchange Notes issued  in  exchange
                          therefor.

Conditions of the
  Exchange Offer                 The  Exchange  Offer  is  subject  to  certain
                          customary  conditions, which may  be  waived  by  the
                          Issuer.  The  Exchange Offer is not conditioned  upon
                          any  minimum aggregate principal amount of Old  Notes
                          being  tendered or accepted for exchange.  Old  Notes
                          may be tendered only in integral multiples of $1,000.
                          See "The Exchange Offer -- Conditions of the Exchange
                          Offer."

Procedures for Tendering
  Old Notes                     Each holder of Old Notes wishing to accept  the
                          Exchange  Offer  must, prior to the Expiration  Date,
                          either   (i)   complete  and  sign  the   Letter   of
                          Transmittal,  in  accordance  with  the  instructions
                          contained herein and therein, and deliver such Letter
                          of   Transmittal,   together   with   any   signature
                          guarantees  and any other documents required  by  the
                          Letter  of Transmittal, to the Exchange Agent at  its
                          address  set  forth on the back cover  page  of  this
                          Prospectus and the tendered Old Notes must either  be
                          (a) physically delivered to the Exchange Agent or (b)
                          transferred pursuant to the procedures for book-entry
                          transfer described herein and a confirmation of  such
                          book-entry transfer must be received by the  Exchange
                          Agent  prior  to the Expiration Date, or (ii)  comply
                          with  the  guaranteed delivery procedures  set  forth
                          herein.  By executing the Letter of Transmittal, each
                          holder   will  represent  that  the  Exchange   Notes
                          acquired  pursuant to the Exchange  Offer  are  being
                          acquired  in the ordinary course of business  of  the
                          person receiving such Exchange Notes (whether or  not
                          such person is the registered holder of such Exchange
                          Notes),  that  neither the holder  of  such  Exchange
                          Notes  nor  any such other person has an  arrangement
                          with  any  person to participate in the  distribution
                          (within  the  meaning of the Exchange  Act)  of  such
                          Exchange  Notes and that neither the holder  of  such
                          Exchange  Notes  or  any  such  other  person  is  an
                          Affiliate of the Issuer or the Company, or if  it  is
                          an  Affiliate,  it will comply with the  registration
                          and   prospectus   delivery   requirements   of   the
                          Securities  Act to the extent applicable.   See  "The
                          Exchange Offer -- Procedures for Tendering."

Special Procedures for
  Beneficial Owners              Any  beneficial  owner  whose  Old  Notes  are
                          registered   in   the  name  of  a  broker,   dealer,
                          commercial  bank, trust company or other nominee  and
                          who  wishes to tender Old Notes in the Exchange Offer
                          should  contact such registered holder  promptly  and
                          instruct  such  registered holder to tender  on  such
                          beneficial owner's behalf.  See "The Exchange Offer -
                          - Procedures for Tendering."

Guaranteed Delivery
  Procedures                    Holders  of Old Notes who wish to tender  their
                          Old  Notes  and  whose Old Notes are not  immediately
                          available or who cannot deliver their Old Notes,  the
                          Letter of Transmittal or any other documents required
                          by  the  Letter of Transmittal to the Exchange  Agent
                          prior  to  the Expiration Date, may tender their  Old
                          Notes according to the guaranteed delivery procedures
                          set  forth  in  "The  Exchange  Offer  --  Guaranteed
                          Delivery Procedures."

Acceptance of  the Old
  Notes and Delivery of
  the Exchange Notes           Upon satisfaction or waiver of the conditions of
                          the  Exchange  Offer,  the  Issuer  will  accept  for
                          exchange  any  and all Old Notes which  are  properly
                          tendered  and  not withdrawn prior to the  Expiration
                          Date.   The  Exchange Notes issued  pursuant  to  the
                          Exchange  Offer  will be delivered  on  the  earliest
                          practicable date following the Expiration Date.   See
                          "The  Exchange Offer -- Acceptance of Old  Notes  for
                          Exchange; Delivery of Exchange Notes."
Certain Federal Income
  Tax Considerations            For  discussion of certain federal  income  tax
                          consequences  of the exchange of the Old  Notes,  see
                          "Certain  Income Tax Considerations of  the  Exchange
                          Offer."

Effect on Holders who
  Retain Old Notes             Holders of the Old Notes who do not tender their
                          Old Notes in the Exchange Offer will continue to hold
                          such Old Notes and will be entitled to all the rights
                          and  benefits, and will be subject to all limitations
                          applicable   thereto,  under   the   Exchange   Notes
                          Indenture.   All  Old  Notes  not  exchanged  in  the
                          Exchange  Offer  will continue to be subject  to  the
                          restrictions  on transfer provided  for  in  the  Old
                          Notes  and  the  Exchange Notes  Indenture.   To  the
                          extent  that  Old Notes are tendered and accepted  in
                          the  Exchange Offer, the trading market, if any,  for
                          the  Old  Notes  not so tendered could  be  adversely
                          affected.   See  "Risk  Factors  --  Consequences  of
                          Failure to Exchange Old Notes."

Rights of Dissenting
  Holders			  Holders of Old Notes do not have any appraisal rights.
				  See "The Exchange Offer - Terms of the Exchange Offer."

Exchange Agent                  Bankers Trust Company.  See "The Exchange Offer
                          -- The Exchange Agent."

                          Terms of the Exchange Notes
                                       
The  Exchange Offer applies to $155,200,000 aggregate principal amount  of  Old
Notes.  The form and terms of the Exchange Notes are substantially identical to
the  terms  of  the  Old Notes, except that the Exchange Notes  (i)  have  been
registered  under  the  Securities Act, and therefore, will  not  bear  legends
restricting their transfer pursuant to the Securities Act, and (ii) holders  of
the Exchange Notes will not be entitled to certain rights of holders of the Old
Notes under the Registration Rights Agreement, which rights will terminate upon
the consummation of the Exchange Offer.  Such rights will also terminate as  to
holders of Old Notes who are eligible to tender their Old Notes for exchange in
the  Exchange  Offer and fail to do so.  See "Exchange Offer -- Termination  of
Certain  Rights."  The Exchange Notes will evidence the same debt  as  the  Old
Notes  which  they  replace and will be issued under, and be  entitled  to  the
benefits of, the Exchange Notes Indenture.

Issuer                    Panda Global Energy Company, a Cayman
                          Islands company (the "Issuer").
                          
Guarantor                 Panda   Global  Holdings,   Inc.,   a
                          Delaware corporation (the "Company").
                          
Securities Offered        $155,200,000   aggregate    principal
                          amount  of 12-1/2% Registered  Senior
                          Secured Notes due 2004 (the "Exchange
                          Notes").
                          
Maturity Date             April 15, 2004.
                          
Interest Rate             Cash  interest on the Exchange  Notes
                          will    accrue   at   a    rate    of
                          12-1/2% per annum and will be payable
                          semi-annually  in  arrears  on   each
                          April  15  and October 15, commencing
                          October 15, 1997.
                          
Repayment of Principal    Commencing  on October 15,  2000  and
                          through  the payment date of  October
                          15,  2003,  15.4%  of  the  aggregate
                          outstanding principal amount  of  the
                          Exchange    Notes    (assuming    all
                          outstanding  Old Notes  are  tendered
                          and accepted for exchange pursuant to
                          the  Exchange Offer) will  be  repaid
                          semi-annually on the dates and in the
                          amounts  indicated in the  table  set
                          forth below under "Description of the
                          Exchange  Notes, the  Exchange  Notes
                          Guarantee,  the  Issuer   Loan,   the
                          Shareholder Loans and the  Collateral
                          Documents--Ranking,         Maturity,
                          Interest   and   Principal   of   the
                          Exchange Notes."
                          
Ranking                   The  Exchange  Notes will  be  senior
                          obligations  of  the  Issuer  ranking
                          senior  in  right of payment  to  all
                          subordinated  Indebtedness   of   the
                          Issuer and pari passu with all  other
                          Senior Indebtedness of the Issuer.
                          
Exchange Notes            The Exchange Notes will be secured by
  Collateral              the Exchange Notes Collateral (herein
                          so   called).   The  Exchange   Notes
                          Collateral consists of  pledges and a
                          security  interest in certain  assets
                          of  the  Issuer and its Subsidiaries,
                          including, a pledge of (i)  at  least
                          90% of the Capital Stock of Pan-Sino,
                          (ii) 99% of the Capital Stock of Pan-
                          Western,  (iii) the Issuer  Note,
                          (iv)  the Luannan Facility Notes  and
                          the  granting of a security  interest
                          in  certain  funds of the Issuer  and
                          its  Subsidiaries maintained  by  the
                          Exchange Notes Trustee and (v)100% of 
                          the Capital Stock of the Issuer. 
                          
The Exchange Notes        The  Company, as primary obligor  and
 Guarantee                not    merely    as   surety,    will
                          irrevocably,        fully         and
                          unconditionally guarantee on a senior
                          secured  basis  the  performance  and
                          punctual payment when due, whether at
                          stated  maturity, by acceleration  or
                          otherwise, of all obligations of  the
                          Issuer   under  the  Exchange   Notes
                          Indenture  and  the  Exchange  Notes,
                          whether  for  principal, premium,  if
                          any,    and    interest    (including
                          Liquidated   Damages  and  Additional
                          Amounts,  if  any), on  the  Exchange
                          Notes,  expenses, indemnification  or
                          otherwise.
                          
The Exchange Notes        The  Company's obligations under  the
   Guarantee Collateral   Exchange  Notes  Guarantee  will   be
                          secured   by   the   Exchange   Notes
                          Guarantee   Collateral   (herein   so
                          called). The Exchange Notes Guarantee
                          Collateral  consists of a  pledge  of
                          100%  of  the  Capital Stock  of  the
                          Company and of pledges and a security
                          interest  in  certain assets  of  the
                          Company    and    its   Subsidiaries,
                          including:  (i) a pledge of  100%  of
                          the   Capital  Stock  of  PEC,  which
                          indirectly  owns  (a)  100%  of   the
                          Rosemary Facility and (b) 100% of the
                          lessee  under  a long-term  leveraged
                          lease of the Brandywine Facility, and
                          (ii)   the  granting  of  a  security
                          interest  in  certain  funds  of  the
                          Company established and maintained by
                          the Company Indenture Trustee.
                          
Optional Redemption       The Exchange Notes will be redeemable
                          at the option of the Issuer, in whole
                          or in part, at any time on or after
                          April  15,  2002, at  the  redemption
                          prices   set   forth   below    under
                          "Description  of the Exchange  Notes,
                          the  Exchange  Notes  Guarantee,  the
                          Issuer  Loan,  the Shareholder  Loans
                          and    the   Collateral   Documents--
                          Redemption."  In addition,  prior  to
                          April 15, 2000, the Issuer may redeem
                          up  to  $51,733,000 of the originally
                          issued  principal amount of  Existing
                          Notes  at  the redemption  price  set
                          forth   under  "Description  of   the
                          Exchange  Notes, the  Exchange  Notes
                          Guarantee,  the  Issuer   Loan,   the
                          Shareholder Loans and the  Collateral
                          Documents--Redemption" with  the  Net
                          Cash  Proceeds of one or more  Public
                          Equity   Offerings  by  the  Company,
                          Panda International or any direct  or
                          indirect   parent  of  the   Company;
                          provided  that  (i) the  proceeds  of
                          such  offering used for the  purposes
                          of   the   optional  redemption   are
                          contributed as equity to  the  Issuer
                          and (ii) at least $103,467,000 of the
                          aggregate    outstanding    principal
                          amount of Existing Notes would remain
                          outstanding immediately after  giving
                          effect to such redemption.
                          
Mandatory Redemption      Upon the occurrence of certain events
                          of loss or expropriation with respect
                          to  the  Luannan  Facility  described
                          below, the outstanding Existing Notes
                          (together with, under certain limited
                          circumstances, any additional  Senior
                          Indebtedness    of     the     Issuer
                          outstanding  at  the  time)  will  be
                          redeemed  pro rata, at the redemption
                          prices   set   forth   below    under
                          "Description  of the Exchange  Notes,
                          the  Exchange  Notes  Guarantee,  the
                          Issuer  Loan,  the Shareholder  Loans
                          and    the   Collateral   Documents--
                          Redemption."
                          
Redemption at Option of   Upon   the   occurrence  of   certain
  Holders                 Indentures Events of Default relating
                          to   Shareholder   Loan   events   of
                          default,  or if the Luannan  Facility
                          Construction  Cost is less  than  the
                          Projected      Luannan       Facility
                          Construction Cost by more  than  $1.0
                          million, the Issuer will be obligated
                          to make an offer to redeem pro rata a
                          portion  of the outstanding  Exchange
                          Notes  (assuming all outstanding  Old
                          Notes  are tendered and accepted  for
                          exchange  pursuant  to  the  Exchange
                          Offer)  with certain amounts  at  the
                          redemption  prices  set  forth  below
                          under  "Description of  the  Exchange
                          Notes,  the Exchange Notes Guarantee,
                          the   Issuer  Loan,  the  Shareholder
                          Loans  and the Collateral Documents--
                          Redemption," and "Description of  the
                          Exchange  Notes, the  Exchange  Notes
                          Guarantee,  the  Issuer   Loan,   the
                          Shareholder Loans and the  Collateral
                          Documents  --  Certain  Covenants  --
                          Indentures Events of Default.."
                          
Change of Control         Upon a Change of Control, holders  of
                          the  Exchange  Notes  will  have  the
                          right   to  require  the  Issuer   to
                          repurchase their Exchange  Notes,  in
                          whole  or  in  part, at the  purchase
                          price    set   forth   below    under
                          "Description  of the Exchange  Notes,
                          the  Exchange  Notes  Guarantee,  the
                          Issuer  Loan,  the Shareholder  Loans
                          and  the Collateral Documents--Change
                          of Control."
                          
Asset Sale Proceeds       The  Company and the Issuer  will  be
                          obligated  in  certain circumstances,
                          to  use  a  portion of the  net  cash
                          proceeds  of certain sales  or  other
                          dispositions  of  assets,   to   make
                          offers to purchase Exchange Notes  in
                          the  amounts  and at  the  redemption
                          prices   set   forth   below    under
                          "Description  of the Exchange  Notes,
                          the  Exchange  Notes  Guarantee,  the
                          Issuer  Loan,  the Shareholder  Loans
                          and the Collateral Documents--Certain
                          Covenants--Disposition of Proceeds of
                          Asset Sales."
                          
Principal Covenants       The  Indentures, with respect to  the
                          Company  and  its Subsidiaries,  will
                          contain      certain      restrictive
                          covenants,     including,     without
                          limitation,   (i)   limitations    on
                          investments, loans and advances, (ii)
                          limitations  on dividends  and  other
                          payments,   (iii)   limitations    on
                          transactions  with  Affiliates,  (iv)
                          limitations       on       additional
                          indebtedness,   (v)  limitations   on
                          liens, (vi) limitations on agreements
                          restricting      payments,      (vii)
                          limitations  on capital expenditures,
                          (viii)   limitations   on   line   of
                          business  and Permitted Projects  and
                          (ix)   limitations   on   sale    and
                          leaseback  transactions. In addition,
                          the Indentures will limit the ability
                          of   Company   and  the   Issuer   to
                          consolidate,  merge or  sell  all  or
                          substantially all of their assets.
                          
Certain Accounts          In accordance with the Exchange Notes
                          Indenture,  certain funds,  including
                          the Capitalized Interest Fund and the
                          Debt  Service Reserve Fund,  will  be
                          established.  The  Issuer  will  have
                          limited  rights  of withdrawal  under
                          the  above  funds in accordance  with
                          terms and conditions set forth in the
                          Exchange Notes  Indenture.
                          
Capitalized Interest      Upon   the  Issue  Date,  the  Issuer
  Fund                    deposited approximately $48.1 million
                          into  the Capitalized Interest  Fund.
                          Through   the  Capitalized   Interest
                          Expiration  Date (October 15,  1999),
                          interest  payments  on  the  Exchange
                          Notes  will  be  provided  from   the
                          Capitalized Interest Fund.
                          
Debt Service Reserve      Upon   the  Issue  Date,  the  Issuer
  Fund                    deposited  $9.7 million in  the  Debt
                          Service Reserve Fund as a reserve for
                          payments on the Exchange Notes.
                          
Transfer of Exchange      Based    upon    their    view     of
  Notes                   interpretations  provided  to   third
                          parties   by   the   staff   of   the
                          Commission,   the  Issuer   and   the
                          Company  believe  that  the  Exchange
                          Notes issued pursuant to the Exchange
                          Offer  may  be  offered  for  resale,
                          resold  and otherwise transferred  by
                          holders   thereof  (other  than   any
                          holder  which is (i) an Affiliate  of
                          the  Company, or the Issuer,  (ii)  a
                          broker-dealer who acquired Old  Notes
                          directly from the Issuer or  (iii)  a
                          broker-dealer who acquired Old  Notes
                          as a result of market making or other
                          trading      activities)      without
                          registration  under  the   Securities
                          Act,   provided  that  such  Exchange
                          Notes  are  acquired in the  ordinary
                          course of such holders' business  and
                          such holders are not engaged in,  and
                          do  not intend to engage in, and have
                          no  arrangement or understanding with
                          any  person  to  participate  in,   a
                          distribution (within the  meaning  of
                          the  Securities Act) of such Exchange
                          Notes.    Each   broker-dealer    who
                          receives Exchange Notes for  its  own
                          account   pursuant  to  the  Exchange
                          Offer must notify the Company and the
                          Issuer  that it has acquired Exchange
                          Notes  for  its  own  account  (which
                          notification  must  be  made  in  the
                          applicable location in the Letter  of
                          Transmittal that is delivered by such
                          broker-dealer along with such broker-
                          dealer's  Old  Notes to  be exchanged
                          pursuant to the Exchange Offer),  and
                          must acknowledge that it will deliver
                          a  prospectus in connection with  any
                          resale  of such Exchange Notes.   The
                          Letter of Transmittal states that  by
                          so acknowledging and by delivering  a
                          prospectus, a broker-dealer will  not
                          be  deemed  to admit that  it  is  an
                          "underwriter" within the  meaning  of
                          the Securities Act.  This Prospectus,
                          as  it may be amended or supplemented
                          from  time to time, may be used by  a
                          broker-dealer   in  connection   with
                          resales of Exchange Notes received in
                          exchange for Old Notes where such Old
                          Notes  were acquired by such  broker-
                          dealer  as a result of market  making
                          activities    or    other     trading
                          activities.   The  Company  and   the
                          Issuer  have agreed, for a period  of
                          270   consecutive  days   after   the
                          consummation  of the Exchange  Offer,
                          to   make   available  a   prospectus
                          meeting  the  requirements   of   the
                          Securities  Act to any  such  broker-
                          dealer for use in connection with any
                          such resale so long as they notify the
                          Issuer in writing within 30 business
                          days after the consummation of the
                          Exchange Offer that they have acquired 
				  Exchange Notes for their own account.
                          A broker-dealer  that  delivers  such
                          a  prospectus  to   a  purchaser  in
                          connection with such  resales will be
                          subject to certain of the  civil 
                          liability provisions under the 
                          Securities Act and will be bound
                          by the provisions of the Registration
                          Rights  Agreement (including  certain
                          indemnification   provisions).    Any
                          holder  who  tenders in the  Exchange
                          Offer    for    the    purpose     of
                          participating  in a  distribution  of
                          the  Exchange  Notes  and  any  other
                          holder  that  cannot rely  upon  such
                          interpretations, must comply with the
                          registration and prospectus  delivery
                          requirements of the Securities Act in
                          connection  with  a secondary  resale
                          transaction.  In addition, to  comply
                          with  the securities laws of  certain
                          jurisdictions,  if  applicable,   the
                          Exchange Notes may not be offered  or
                          sold unless they have been registered
                          or   qualified  for  sale   in   such
                          jurisdictions  or an  exemption  from
                          registration  or   qualification   is
                          available and the conditions  thereto
                          have  been  met.  See  "The  Exchange
                          Offer  -- Purpose and Effects of  the
                          Exchange   Offer"   and   "Plan    of
                          Distribution"
                          
Registration Rights       The  Exchange  Offer is  intended  to
                          satisfy  certain  rights  under   the
                          Registration Rights Agreement,  which
                          rights     terminate     upon     the
                          consummation  of the Exchange  Offer.
                          Therefore,  the holders  of  Exchange
                          Notes   are  not  entitled   to   any
                          exchange or registration rights  with
                          respect  to the Exchange  Notes.   In
                          addition,    such    exchange     and
                          registration rights will terminate as
                          to  holders  of  Old  Notes  who  are
                          eligible  to tender their  Old  Notes
                          for  exchange  in the Exchange  Offer
                          and fail to do so.  See "The Exchange
                          Offer   --  Termination  of   Certain
                          Rights"  and  "Description   of   the
                          Exchange  Notes, the  Exchange  Notes
                          Guarantee,  the  Issuer   Loan,   the
                          Shareholder Loans and the  Collateral
                          Documents  --  Old Notes Registration
                          Rights."
                          
Use of Proceeds           There will be no cash proceeds to the
                          Issuer   or  the  Company  from   the
                          exchange  of Exchange Notes  for  Old
                          Notes pursuant to the Exchange Offer.
                                       
                                 Risk Factors

     Investment in the Exchange Notes involves substantial risks. See "Risk
Factors."
     
     
  SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA OF THE COMPANY

    Presented below is summary historical consolidated financial data for the
Company as of and for each of the years in the three-year period ended December
31, 1996 and as of and for the three months ended March 31, 1996 and 1997, which
have been derived from the Company's financial statements. Also presented is
unaudited pro forma consolidated financial data as of March 31, 1997, for the
year ended December 31, 1996 and for the three months ended March 31, 1997. The
unaudited pro forma financial data give effect to (i) the issuance of $111.4
million in aggregate principal amount of the Rosemary Bonds and the application
of the net proceeds thereof to refinance Rosemary Partnership project debt and
to fund a portion of the acquisition of Ford Motor Credit Company's ("Ford
Credit") limited partner interest in the Rosemary Partnership and (ii) the
issuance of the Series A Bonds and the application of the net proceeds thereof
(a) to fund a capitalized interest fund, a debt service reserve fund and a
company expense fund relating to the Series A Bonds, (b) to fund the remaining
portion of the acquisition of Ford Credit's limited partner interest in the
Rosemary Partnership and (c) to make a distribution to the Company's parent.
These transactions are reflected in the historical balance sheet data as of
December 31, 1996 and March 31, 1997. The unaudited pro forma statement of
operations data reflect such adjustments as if the transactions had occurred as
of January 1, 1996. Additionally, the unaudited pro forma financial data give
effect to the issuance of $155.2 million par value of Old Notes (issued at a
discount for proceeds of $145.0 million) and the application of the proceeds
thereof to fund the Capitalized Interest Fund and the Debt Service Reserve Fund
established with respect to the Old Notes, to make shareholder loans and equity
contributions to the Joint Ventures and to pay the transaction fees, commissions
and expenses incurred in connection with the Prior Offering. The unaudited pro
forma balance sheet data reflect such adjustments as if the transactions
occurred as of March 31, 1997. The unaudited pro forma statement of operations
data reflect such adjustments as if the transactions had occurred as of January
1, 1996. As required by the Securities and Exchange Commission, the unaudited
pro forma statement of operations data do not reflect the extraordinary loss on
early extinguishment of debt. Such extraordinary loss is reflected in the
historical statement of operations data for the year ended December 31, 1996.
The unaudited pro forma financial data do not purport to be indicative of the
results of operations which would actually have occurred if the transactions
described had occurred as presented in such statements or which may be obtained
in the future. The information in this table should be read in conjunction with
the information contained under the captions "Capitalization," "Unaudited Pro
Forma Consolidated Financial Data of the Company" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations of the Company"
and with the consolidated financial statements of the Company, including the
notes thereto, included elsewhere herein. Dollar amounts are presented in
thousands.
<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31,                   THREE MONTHS ENDED MARCH 31
                                                    --------------------------------------------    --------------------------------
                                                                                       Pro Forma                          Pro Forma 
                                                      1994        1995       1996         1996        1996       1997        1997
                                                    --------    --------    --------    --------    -------    --------    --------
                                                                                      (Unaudited) (Unaudited) (Unaudited)(Unaudited)
<S>                                                 <C>         <C>         <C>         <C>         <C>        <C>         <C>     
Electric capacity and energy sales ..............   $ 30,664    $ 29,859    $ 32,274    $ 32,274    $ 8,015    $ 17,330    $ 17,330
Steam and chilled water sales ...................        650         473         502         502        122         130         130
Interest income .................................        603         895       1,518       8,882        186         430       1,652
                                                    --------    --------    --------    --------    -------    --------    --------
     Total revenue ..............................     31,917      31,227      34,294      41,658      8,323      17,890      19,112

Plant operating expenses ........................      8,940       9,348      12,050      12,050      2,442       8,261       8,261
Development and administrative expenses .........      1,779       2,550       5,187       5,187        803       2,395       2,395
Interest expense ................................     11,018      11,716      19,414      43,492      3,185      10,802      14,427
Depreciation ....................................      4,208       4,210       5,532       5,421      1,053       2,949       2,949
Amortization - Debt issuance costs ..............        600         554         494       1,287        141         174         347
Amortization - Partnership formation costs ......        533         533         533         533        133        --          --
                                                    --------    --------    --------    --------    -------    --------    --------
     Total expenses .............................     27,078      28,911      43,210      67,970      7,757      24,581      28,379
Income (loss) before minority interest ..........      4,839       2,316      (8,916)    (26,312)       566      (6,691)     (9,267)
Minority interest ...............................     (5,700)     (5,048)     (2,405)       --       (1,719)       --          --
                                                    --------    --------    --------    --------    -------    --------    --------
Net loss before extraordinary item ..............       (861)     (2,732)    (11,321)   $(26,312)    (1,153)     (6,691)   $ (9,267)
														    ======== 				   ========
Extraordinary loss on early
 extinguishment of debt .........................       --          --       (21,336)                  --	       --
                                                    --------    --------    --------    		    -------    --------    
     Net loss ...................................   $   (861)   $ (2,732)   $(32,657)               $(1,153)   $(6,691)		
                                                    ========    ========    ========    		    =======    ========    
EBITDA ..........................................   $ 21,198    $ 19,329    $ 17,057    $ 24,421    $ 5,078    $  7,234    $  8,456
</TABLE>
<TABLE>
<CAPTION>

                                                              DECEMBER 31,                        MARCH 31
                                                     ------------------------------   ------------------------------   
                                                                                                            Pro Forma 
                                                      1994        1995       1996       1996       1997       1997
                                                     --------   --------   --------   --------   --------   --------
                                                                                    (Unaudited) (Unaudited)(Unaudited)
<S>                                                  <C>        <C>        <C>        <C>        <C>        <C>     
Cash and other current assets ....................   $ 15,639   $ 11,339   $ 36,626   $ 16,807   $ 32,665   $ 32,665
Power plant and equipment (net) ..................     96,136    220,145    268,725    242,466    269,532    269,532
Reserves and escrow deposits, and other
assets ...........................................     15,477     15,471     40,119     15,320     40,079    190,844
                                                     --------   --------   --------   --------   --------   --------
     Total assets ................................   $127,252   $246,955   $345,470   $274,593   $342,276   $493,041
                                                     ========   ========   ========   ========   ========   ========
Current liabilities ..............................   $ 12,531   $ 18,457   $ 19,667   $ 22,823   $ 13,939   $ 13,939
Long-term debt (including capital
     lease obligation)  less current portion .....    106,343    234,608    427,319    256,145    431,323    576,348
</TABLE>

          SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF THE ISSUER

    The following table sets forth summary consolidated financial data of the
Issuer as of December 31, 1994, 1995 and 1996 and for the period from inception
(July 20, 1994) through December 31, 1994 and the years ended December 31, 1995
and 1996, and as of and for the three months ended March 31, 1996 and 1997.
Although the Issuer was formed on March 10, 1997, a subsidiary of the Issuer,
formed on July 20, 1994, is considered the Issuer's predecessor. The information
presented below, which reflects the operations of the predecessor, has been
derived from the Issuer's financial statements. Because the Issuer has been and
continues to be in the development stage since formation, it has no operating
revenues. The data should be read in conjunction with the Issuer's financial
statements, including the notes thereto, appearing elsewhere in this Prospectus.
See "Capitalization," "Unaudited Consolidated Pro Forma Financial Data of the
Company," "Selected Financial Data of the Issuer" and "Selected Financial Data
of the Company." Dollar amounts are presented in thousands.
<TABLE>
<CAPTION>
                                                                   Period From
                                                                    Inception         Year Ended               Three Months Ended
                                                                    through          December 31,                   March 31,
                                                                    December 31,  ---------------------       ---------------------
                                                                      1994         1995          1996          1996           1997
                                                                      -----       -------       -------       -------       -------
<S>                                                                   <C>         <C>           <C>           <C>           <C>    
STATEMENT OF OPERATIONS DATA                                                                                      (Unaudited)
General and administrative expenses ............................      $ 203       $   444       $ 1,654       $   266       $   555
                                                                      -----       -------       -------       -------       -------
         Net loss ..............................................      $ 203       $   444       $ 1,654       $   266       $   555
                                                                      =====       =======       =======       =======       =======
<CAPTION>
                                                                               December 31,                         March 31,    
                                                                      ---------------------------------       ---------------------
                                                                      1994         1995          1996          1996          1997
                                                                      -----       -------       -------       -------       -------
<S>                                                                   <C>         <C>           <C>           <C>           <C>    
BALANCE SHEET DATA                                                                                                 (Unaudited)
  Cash .........................................................      $ 101       $     6       $   506       $     6       $     6
  Development costs ............................................        428         1,059         3,292         1,550         6,614
                                                                      -----       -------       -------       -------       -------
         Total assets ..........................................      $ 529       $ 1,065       $ 3,798       $ 1,556       $ 6,620
                                                                      =====       =======       =======       =======       =======
  Advances from Panda International ............................      $ 732       $ 1,712       $ 6,099       $ 2,468       $ 9,476
  Shareholder's deficit ........................................       (203)         (647)       (2,301)         (912)       (2,856)
                                                                      -----       -------       -------       -------       -------
         Total liabilities and shareholder's deficit ...........      $ 529       $ 1,065       $ 3,798       $ 1,556       $ 6,620
                                                                      =====       =======       =======       =======       =======
</TABLE>

                Independent Engineers' and Consultants' Reports

     The  Independent Engineers' and Consultants' Reports, and the  summaries
thereof,  contained  in  this Prospectus contain forward-looking  statements,
including  projections, that involve risks and uncertainties. Actual  results
may differ materially from those discussed in the forward-looking statements.
In  providing  its  conclusions set forth in the  Independent  Engineers'  or
Consultants'  Reports, each Independent Engineer or Consultant  made  certain
assumptions (which are fully set forth in the text of each report).  Although
the  author of each Report believes that the use of these assumptions in  its
report  is  reasonable,  assumptions are inherently  subject  to  significant
uncertainties  and,  if actual conditions differ from those  assumed,  actual
results  will  differ from those projected, perhaps materially.  Accordingly,
the  conclusions and projections contained in the Independent Engineers'  and
Consultants'  Reports may not be indicative of future events.  Therefore,  no
representations  are made, nor should any be inferred, with  respect  to  the
likely  existence of any particular future set of facts or circumstances.  If
actual  results  are  less favorable than the conclusions  presented  in  the
Independent Engineers' or Consultants' Reports or if the assumptions used  in
formulating  the  conclusions presented prove to be incorrect,  the  Issuer's
ability  to  make  payments  on the Exchange Notes,  may  be  materially  and
adversely affected. Engineers' and Consultants' Reports not attached as 
appendices to this Prospectus are exhibits to the Registration Statement of 
which this Prospectus forms a part.  All such reports should be read carefully
in conjunction with the summaries thereof in this Prospectus. See "Disclosure
Regarding Forward-Looking Statements" and "Risk  Factors  --  Reliance  upon
Projections  and  Underlying  Assumptions Contained in Engineers' and
Consultants' Reports."
     
     Any  projections  of  future  operations and  economic  results  thereof
contained  in  the Independent Engineers' and Consultants' Reports  have  not
been  prepared in accordance with published guidelines of the Securities  and
Exchange  Commission, the American Institute of Certified Public Accountants,
any   regulatory  or  professional  agency  or  body  or  generally  accepted
accounting principles. Deloitte & Touche LLP, the Issuer's and the  Company's
independent  accountants, has neither examined nor compiled  the  projections
and,  accordingly, does not express an opinion or any other form of assurance
with  respect  thereto.  See  "Risk Factors--Reliance  upon  Projections  and
Underlying Assumptions Contained in Engineers' and Consultants' Reports."
     
Consolidating Financial Analyst's Pro Forma Report

     ICF  Resources, Incorporated ("ICF") has prepared a report, dated  April
11,  1997, and updated June 6, 1997 (as updated, the "Consolidated Pro
Forma  Report"),  that  contains a summary consolidation  of  the  pro  forma
financial  projections  (the  "Consolidated  Pro  Forma")  for  the   Luannan
Facility, the Rosemary Facility and the Brandywine Facility contained in  the
Luannan  Engineering  Report  (as defined below),  the  Rosemary  Engineering
Report  and the Brandywine Pro Forma Report, respectively, each of  which  is
summarized  herein. The Consolidated Pro Forma Report is attached  hereto  as
Appendix C and should be read in its entirety by all prospective investors.
     
     In  preparing  the Consolidated Pro Forma, ICF relied on the  pro  forma
financial   projections  (the  "Luannan  Pro  Forma")  prepared  by   Parsons
Brinckerhoff  Energy  Services,  Inc.  ("Parsons  Brinckerhoff"),  which  are
contained  in  the  Luannan  Engineering  Report,  the  pro  forma  financial
projections  (the  "Rosemary  Pro  Forma")  prepared  by  Burns  &  McDonnell
Engineering Company, Inc. ("Burns & McDonnell"), which are contained  in  the
Rosemary  Engineering  Report, and the pro forma financial  projections  (the
"Brandywine  Pro  Forma")  prepared  by  ICF,  which  are  contained  in  the
Brandywine Pro Forma Report.
     
     The  Consolidated  Pro Forma Report presents the "Company  Debt  Service
Coverage Ratio," which reflects the relationship between the total cash  flow
available  for  Company  debt  service (i.e.,  cash  flow  from  the  Luannan
Facility,  the  Rosemary Facility and the Brandywine  Facility  after  paying
Project-level operating expenses, rent and debt service and debt  service  on
the  Series  A  Bonds (and the Series A-1 Bonds exchanged  therefor),  making
additions to reserves required for Project-level financings and the Series  A
Bonds,  providing  distributions to third-party equity  interest-holders  and
providing  for  certain Company-level items) and Company debt service  (i.e.,
the  cash  debt  service  on  the Exchange Notes net  of  releases  from  the
Capitalized Interest Fund).


Consolidated Summary Projected Consolidated Financial Data
(Projections relating to the Luannan Facility are based on an exchange rate of
RMB 8.5 = $1.00)

<TABLE>
<CAPTION>                                         

                          1997      1998       1999     2000      2001      2002      2003     2004      2005      2006     2007
                                                                  (in thousands)
<S>                    <C>       <C>        <C>      <C>       <C>       <C>       <C>      <C>       <C>       <C>      <C>     
Operations Data:                                                                                                                 
Capacity Revenue:                                                                                                                
Rosemary                $25,382   $25,382    $23,568  $23,568   $23,568   $23,568   $23,568  $23,568   $23,568   $18,123  $18,123
  Brandywine             21,932    21,420     37,940   38,759    48,960    49,739    50,358   50,387    50,253    50,543   52,639
                        -------   -------    -------  -------   -------   -------   -------  -------   -------   -------  -------
    Total Capacity       47,314    46,802     61,508   62,327    72,528    73,307    73,926   73,955    73,821    68,666   70,762
    Revenue
                                                                                                                                 
Energy & Other Revenue:                                                                                                          
  Rosemary                3,850     5,768      7,734   10,010    12,462    13,872    15,692   17,793    20,571    20,283   20,004
  Brandywine             23,495    25,141     26,057   27,092    30,647    33,340    31,954   30,419    33,464    35,545   35,763
  Luannan                     -         -     18,038   46,110    49,040    51,266    53,372   55,230    56,472    58,074   60,060
                        -------   -------    -------  -------   -------   -------   -------  -------   -------   -------  -------
    Total Revenue        74,659    77,712    113,337  145,540   164,677   171,785   174,944  177,397   184,328   182,568  186,590
                                                                                                                                 
EBITDA:                                                                                                                          
  Rosemary               19,552    19,965     18,442   18,770    19,169    19,318    19,593   19,835    20,232    14,442   14,142
  Brandywine             17,994    17,731     34,342   35,359    46,802    47,955    47,955   47,252    47,429    48,105   49,811
  Luannan                     -         -     10,956   27,632    28,937    29,384    29,538   30,352    30,502    30,961   31,751
                        -------   -------    -------  -------   -------   -------   -------  -------   -------   -------  -------
    Total EBITDA         37,546    37,696     63,740   81,761    94,908    96,656    97,086   97,439    98,163    93,507   95,704
                                                                                                                                 
Cash Available for                                                                                                               
Consolidated Debt        39,321    34,139     59,564   79,437    91,382    96,050    96,798   96,733    95,818    90,618   95,132
  Service
                                                                                                                                 
Project & PFC Net Debt   34,956    30,593     46,768   45,890    55,441    57,433    58,224   57,645    57,454    51,576   56,811
Service
                                                                                                                                 
Cash Available for                                                                                                               
Company Debt              5,697       221      9,494   28,856    29,883    33,702    34,849   36,434    37,646    30,550   26,961
  Service
                                                                                                                                 
Senior Secured Notes                                                                                                             
  Cash Interest Payment   9,323    19,400     19,400   19,400    19,056    18,394    17,334   16,031    14,453    12,759   11,469
  Principal Payment (1)       -         -          -    1,650     4,400     8,000     9,900   12,000    14,500    10,700    9,200
  Less:  Capitalized    (9,323)   (19,400)   (19,400)        -         -         -         -        -         -         -        -
                        -------   -------    -------  -------   -------   -------   -------  -------   -------   -------  -------
Interest Fund Release
   Senior Secured Notes                                                                                                          
   Net Debt Service           -         -          -   21,050    23,456    26,394    27,234   28,031    28,953    23,459   20,669
                                                                                                                                 
Balance Sheet Data:                                                                                                              
 Consolidated Cash and  
  Restricted Cash       $81,207   $60,635    $55,795  $68,601   $81,381   $92,120  $101,603 $110,839  $117,544  $130,822 $145,679
 Consolidated Long-     584,812   592,266    590,749  588,305   573,343   551,661   525,814  495,781   460,547   433,032  399,857
  Term Debt (2)
                                                                                                                                 
Key Credit Statistics:                                                                                                           
  Company Debt Service      (3)       (3)        (3)    1.37x     1.27x     1.28x     1.28x    1.30x     1.30x     1.30x    1.30x
  Coverage Ratio
</TABLE> 

Notes:

(1)    Assumes outstanding balance of Senior Secured Notes is refinanced in
       2004 at an equivalent coupon rate and repaid over nine years.
(2)    Consolidated long-term debt includes Rosemary Bonds, Brandywine Facility
       Lease, Series A Bonds and Senior Secured Notes.
(3)    Effectively 1.0x Company Debt Service Coverage Ratio since Capitalized
       Interest Fund Release equals Cash Interest Payment on Senior Secured 
       Notes.


 Luannan Engineering Report
 
     Parsons    Brinckerhoff    Energy   Services,    Inc.    ("Parsons
 Brinckerhoff") has prepared a report, dated April 11, 1997, and updated
 June  6, 1997,  evaluating the  technical,  environmental and economic
 aspects  of the  Luannan Facility  (the "Luannan Engineering Report").
 The Luannan  Engineering Report  is  attached hereto as Appendix D and
 should  be  read  in  its  entirety  by   all  prospective  investors.
 Parsons Brinckerhoff has reviewed the engineering,  cost, construction
 schedule, approvals, contracts  and  financial  performance  estimates
 for  completion, technological risk, variations from practices typical
 in the industry and the  ability of the Luannan Facility to perform as
 intended.  Its principal conclusions include the following:
     
 -    The  design  of  the thermal power plant of the Luannan  Facility
      (the  "Plant") is based on current, proven technology and  is  in
      conformance  with engineering practice and industry standards  in
      the  People's Republic of China. Specifically, the proposed Plant
      will  be similar in design to other thermal power plants designed
      by  Hebei  Electric  Power Design Institute which  are  presently
      operating in China.
 
 -    The  construction  schedule  is reasonable  and  achievable.  The
      Luannan  EPC  Contractor  should  be  able  to  meet  the  agreed
      construction   schedule  and  pass  all  performance   tests   as
      stipulated  within  28  months.  This  schedule  has  been  found
      comparable to similar projects in China.
 
 -    The  Luannan  EPC  Contractor  is an  established  and  reputable
      construction   company  with  both  international  and   domestic
      experience in manufacturing and installing equipment for  similar
      power  generation  projects. The Luannan EPC Contractor's  boiler
      manufacturing facility performs quality control to ISO  standards
      and has achieved ASME certification. The Luannan EPC Contractor's
      list of achievements includes 16 coal fired power plants in China
      plus five international power plant installations completed on  a
      turnkey basis.
 
 -    The budgeted costs of $118.8 million to develop and construct the
      Luannan  Facility are reasonable and represent  a  realistic  and
      attainable  project cost. Most project costs are  denominated  in
      U.S. dollars; however, for steam and heat network, land and water
      use  rights, and transmission line, which are denominated in RMB,
      an exchange rate of RMB 8.30 to $1.00 was used.
 
 -    Based upon the proposed equipment and design criteria, the design
      lives of the main components of the Plant are sufficient for  the
      intended  modes of operation of the Luannan Facility  and  should
      meet the expected Plant performance criteria. With proper design,
      careful,  periodic maintenance and operation of the Plant  within
      design  parameters, a useful life of 20 years  should  be  easily
      achievable.
 
 -    Based  on  the  review of the various government  approvals,  the
      Joint Ventures have obtained the key approvals required from  the
      various  governmental  agencies which are  required  to  commence
      construction  of  the  Plant.  They  have  also  identified   the
      necessary permits that will be required in due course during  the
      construction  and operation. There is no reason to  believe  that
      those licenses and consents not yet received will not be granted.
 
 -    Based  on the review of the various business agreements and their
      amendments,  the  major contracts, including  the  Luannan  Power
      Purchase  Agreement, the Luannan EPC Contract,  the  Luannan  O&M
      Contract,   the  Luannan  Transmission  Facilities   Construction
      Agreement and the Luannan Coal Supply Agreements, are technically
      reasonable and are consistent with each other and the assumptions
      used in the financial analysis.
 
 -    The  technical performance requirements, performance testing  and
      obligations of the parties identified in the Luannan EPC Contract
      are  reasonable and achievable. The Luannan EPC Contract has  the
      necessary  protective terms and conditions and is  comparable  to
      other  turnkey  projects in the United States. EPC  contracts  in
      China are more rigorous than in the U.S. on government approvals,
      design  stages,  and  guarantee  issues  and  less  stringent  on
      environmental issues.
 
 -    This  assessment has concluded that, from an environmental  point
      of  view,  the  Plant is feasible and is capable of  meeting  the
      relevant   emissions  and  discharge  limits  required   by   the
      applicable Chinese standards if all environmental protection  and
      control   measures  recommended  by  the  Environmental   Impacts
      Assessment ("EIA") are implemented.
 
 -    The ash handling system uses appropriate environmental protection
      measures  and the ash disposal plan is reasonable and  achievable
      based  on  the expected quality of the coal and its expected  ash
      content  as  summarized in the Luannan Coal Consultant's  Report.
      The  EIA  indicates  the effluent quality will  comply  with  the
      national environmental standard.
 
 -    The operation and maintenance contractor selected for the Luannan
      Facility is Duke/Fluor Daniel. Duke/Fluor Daniel, a joint venture
      between   Duke   Power  and  Fluor  Daniel,  has   domestic   and
      international experience with coal-fired power plants and has the
      necessary  experience and capability to fulfill the  Luannan  O&M
      Contract.   The  Luannan  O&M Contract  contains  incentives  and
      penalties  in  the contract price adjustment clause which  should
      provide  the Luannan O&M Contractor reasonable initiative  toward
      achieving    excellence   in   Plant   operational   performance.
      Requirements  for  developing operations plans are  contained  in
      Section 2.10 of the Luannan O&M Contract. The Joint Ventures have
      review  and approval authority for all operations plans developed
      by the Luannan O&M Contractor.
 
 -    The  Luannan  Facility  can be expected to  operate  commercially
      throughout  the  term  of the Luannan Power  Purchase  Agreement.
      There  is  a  large  number  of coal-fired  plants  currently  in
      operation in the United States that have been in service for well
      over 30 years.
 
 -    The  Plant  is  capable of meeting the required  performance  and
      availability  levels while operating in the modes agreed  in  the
      Luannan Power Purchase Agreement. The design of the Plant and the
      net dependable capacity performance guaranteed by the Luannan EPC
      Contractor of 102 MW insures that the contractual amount  in  the
      Luannan  Power Purchase Agreement can be met and exceeded  during
      the  peak  hours.  Maximum Plant output of 106  MW  will  further
      exceed   the  stipulated  amount.  The  actual  performance   and
      availability of the Plant will depend on the successful operation
      and maintenance of the facility throughout the Plant's life.
 
 -    The projected dispatch targets for the Plant, as specified by the
      Luannan  Power Purchase Agreement, are achievable and  consistent
      with the design criteria and equipment for the Plant.
 
 -    The  projected  O&M  costs  and capital  expenditures  for  major
      maintenance  are  reasonable and representative  of  the  planned
      operations  of the Luannan Facility. The Joint Ventures  and  the
      Luannan  O&M  Contractor have the responsibility for establishing
      the full-time manpower requirements of the Luannan Facility.
 
 -    Under  the  Luannan Power Purchase Agreement, North  China  Power
      Company is obligated to purchase electricity for a period  of  20
      years beginning on the commercial operation date. The useful life
      of the Luannan Facility will extend beyond this 20-year period.
 
 -    On the basis of the financial analyses presented in Chapter 12 of
      the  Luannan Engineering Report, Parsons Brinckerhoff is  of  the
      opinion  that, in the base case (as described in Section 12.7  of
      the Luannan Engineering Report), the projected operating revenues
      are  adequate  to  pay  the projected operating  and  maintenance
      expenses,  pay the local and federal taxes, provide a minimum  of
      2.02  and  average of 2.19 annual debt service coverage  for  the
      Shareholder  Loans during the repayment period of 10  years,  and
      provide  equity distributions to Pan-Western throughout  the  20-
      year  term  of  the  Luannan Power Purchase  Agreement.  For  the
      financial analysis and projections an exchange rate assumption of
      $1.00=RMB 8.50 was used.
 
 -    Five  sensitivity  cases  were  developed  to  test  the  Luannan
      Facility's performance under operating assumptions different from
      the   base  case.  As  shown  in  Section  12.8  of  the  Luannan
      Engineering  Report,  the selected changes  did  not  yield  debt
      coverage  ratios significantly different from that  in  the  base
      case.
 
 Luannan Coal Consultant's Report
 
     Marston  &  Marston,  Inc.  (the "Luannan  Coal  Consultant")  has
 prepared  a  report  dated  April  11, 1997, and updated June 6, 1997, 
 reviewing the availability of coal and arrangements for the transportation
 of coal to the  Luannan Facility  (the "Luannan Coal Consultant's Report").
 The  Luannan  Coal Consultant's  Report is attached hereto as Appendix E
 and  should  be read  in  its  entirety by all prospective investors.
 Subject  to  the information  contained and the assumptions made in  the
 Luannan  Coal Consultant's Report, the Luannan Coal Consultant offers the
 following conclusion:
     
 -    Although  the Luannan Facility can not be assessed by  the  usual
      Western  standards because the data to do such an  assessment  is
      not  readily available, it is reasonable to believe that  a  coal
      resource  of the appropriate quality is available, at  a  locally
      competitive  price in sufficient quantity to operate the  Luannan
      Facility  successfully,  taking  into  consideration  the   local
      environment.   The  fuel supply strategy, coal supply  agreements
      and  the  coal transportation agreement are appropriate  for  the
      conditions and situation as it exists in China.  Given that  cost
      of  the  fuel supply is a pass-through arrangement in the Luannan
      Power  Purchase  Agreement, the risk  exposure  for  the  Luannan
      Facility will be minimal in terms of the delivered fuel price.
                                       
                                 RISK FACTORS
                                       
      In addition to the other information contained in this Prospectus, before
tendering Old Notes for the Exchange Notes offered hereby, holders of Old Notes
should  consider carefully the following factors as well as the  other  matters
described   in  this  Prospectus.   The  terms  of  the  Exchange   Notes   are
substantially  identical to the terms of the Old Notes, and the Exchange  Notes
will  evidence the same debt as the Old Notes which they replace.  Accordingly,
the  following factors may be generally applicable to the Old Notes as well  as
to the Exchange Notes.

Consequences of Failure to Exchange Old Notes

      Holders  of  Old Notes who do not exchange their Old Notes  for  Exchange
Notes  pursuant  to  the Exchange Offer will continue  to  be  subject  to  the
restrictions on transfer of such Old Notes as described in the legend  thereon,
as  a consequence of the issuance of the Old Notes pursuant to exemptions from,
or  in  transactions  not  subject  to, the registration  requirements  of  the
Securities Act and applicable state securities laws.  In general, the Old Notes
may  not  be  offered  or sold unless registered under the Securities  Act  and
applicable  state  securities  laws, or pursuant  to  an  exemption  therefrom.
Except under certain limited circumstances contained in the Registration Rights
Agreement,  the  Issuer does not intend to register the  Old  Notes  under  the
Securities  Act.   Upon consummation of the Exchange Offer, certain  rights  of
holders of Old Notes who are eligible to tender their Old Notes for exchange in
the  Exchange Offer and fail to do so will terminate.  To the extent Old  Notes
are  tendered and accepted in the Exchange Offer, the trading market,  if  any,
for  the  Old  Notes  not so tendered could be adversely  affected.   See  "The
Exchange  Offer  --  Termination of Certain Rights"  and  "Description  of  the
Exchange  Notes, the Exchange Notes Guarantee, the Issuer Loan, the Shareholder
Loans and the Collateral Documents -- Old Notes Registration Rights."

Financial Risks

  Substantial Leverage
  
     The Issuer, the Company and their subsidiaries are and will continue to be
highly leveraged. As of March 31, 1997, the Company's total consolidated  long-
term indebtedness (including capital lease obligation) was $431.3 million,  its
total   consolidated   assets  were  $342.3  million   and   its   consolidated
shareholder's  deficit  was $103.0 million. As of such  date,  on  a  pro-forma
consolidated  basis, after giving effect to the issuance of the Old  Notes  and
the  application  of  the proceeds therefrom, the Company's total  consolidated
long-term  indebtedness would have been $576.3 million, its total  consolidated
assets  would  have  been  $493.0  million and its  consolidated  shareholder's
deficit   would   have   been  $103.0  million.  The  Company's   Project-level
indebtedness  related to the Rosemary Facility and the Brandywine  Facility  is
collateralized by the assets of the underlying Projects (including, in the case
of the Brandywine Facility, obligations relating to the long-term lease) and  a
pledge  of  the  equity  interests in the entities which  own  or  lease  those
facilities  (such entities, together with other entities which are directly  or
indirectly  owned  by  PIC  and which directly or  indirectly  own  a  Project,
collectively referred to as "Project Entities" and individually as  a  "Project
Entity"). If a lender were to foreclose on a Project's assets (or, in the  case
of  the Brandywine Facility, if the lessor were to terminate the lease),  there
can  be  no  assurance  that the related Project Entities  would  maintain  any
interest in the Project or receive any compensation upon a sale of the  related
assets. In addition, the Series A Bonds are collateralized, among other things,
by  the  stock of intermediate entities which, directly or indirectly, own  the
Project  Entities  that  own  the  Rosemary Facility  and  the  lessee  of  the
Brandywine Facility. If a lender were to foreclose on its security interest  in
the  equity interests of a Project Entity or one of the intermediate  entities,
or  if  a lessor were to terminate a lease, the value of the Company's interest
in  the  affected Project could be effectively eliminated. In addition  to  the
foreclosure  and  lease  termination  risk,  high  leverage  and  the  lack  of
unencumbered collateral could adversely affect the ability of a Project Entity,
and  the  Company,  to obtain additional financing in the  future  for  working
capital,  capital  expenditures or other purposes.  Such  adverse  consequences
could  materially and adversely affect the financial performance of the  Issuer
and  its  ability  to make payments of interest and principal on  the  Exchange
Notes  when  due  and  the ability of the Company to make  payments  under  the
Exchange  Notes Guarantee when due. See "Capitalization," "Unaudited Pro  Forma
Consolidated Financial Data" and "Description of Other Indebtedness."
     
  Dependence on Distributions
  
     The  ability of the Issuer to make payments on the Exchange Notes and  the
ability of the Company to make payments under the Exchange Notes Guarantee will
depend  almost entirely upon the financial performance of the Luannan Facility,
when  constructed and operational, as well as the financial performance of  the
two  Projects  owned  or leased by indirect wholly-owned  subsidiaries  of  the
Company  that  are  currently  in  operation, the  Rosemary  Facility  and  the
Brandywine Facility, and the ability of the intermediate entities that  own  or
lease such Projects to make distributions to the Issuer or the Company, as  the
case  may  be. The failure of a Project to perform as expected or the inability
of one or more of the intermediate entities to make distributions to the Issuer
or the Company, as the case may be, could have a material and adverse effect on
the ability of the Issuer to make payments on the Exchange Notes or the ability
of  the  Company  to perform under the Exchange Notes Guarantee,  respectively.
Each  of  the  Projects  is  subject to a number of  financial,  operating  and
regulatory  risks  that could materially and adversely affect its  performance,
and  the  ability of the intermediate entities to make distributions is subject
to  a  number of contractual and legal restrictions. For example, under Chinese
law,  dividends  may be paid by the Joint Ventures only from  after-tax  income
(determined  according to Chinese accounting principles) and generally  may  be
paid only on an annual basis unless approval for more frequent distributions is
granted.  See "--Considerations Relating to the PRC--Substantial Dependence  on
Debt Service from Joint Ventures; Restrictions on Payment of Dividends" below.
     
     Distributions which the Company may receive with respect to  the  Rosemary
Facility  and the Brandywine Facility would not be sufficient by themselves  to
enable  the  Company, through payments under the Exchange Notes  Guarantee,  to
provide sufficient funds to satisfy the Issuer's payment obligations under  the
Exchange Notes. Therefore, unless the Luannan Facility is completed during  the
time  period currently anticipated by the Issuer, the ability of the Issuer  to
meet  its payment obligations under the Exchange Notes would be materially  and
adversely affected.
     
  Refinancing
  
     A  substantial  percentage  (84.6%) of the  original  aggregate  principal
amount  of  the Exchange Notes will be due and payable on April 15, 2004  in  a
lump  sum.   In order to be able to pay such amount when due, the  Issuer  will
have  to obtain funds to make such payment from additional borrowings or  other
sources.  There can be no assurance that the Issuer will be able to obtain such
funds  in amounts sufficient to pay such principal amount when due and on terms
and  conditions that are satisfactory to the Issuer.  See "Description  of  the
Exchange  Notes, the Exchange Notes Guarantee, the Issuer Loan, the Shareholder
Loans  and  the Collateral Documents--Ranking, Maturity, Interest and Principal
of the Exchange Notes."
     
  Rights of Minority Shareholder in Indirect Subsidiary of Issuer
  
     Pursuant  to  (i)  the  articles  of  association  of  Pan-Western  Energy
Corporation LLC, a Cayman Islands exempted company ("Pan-Western"), an indirect
subsidiary  of the Issuer which owns an approximately 88% interest in  each  of
the Joint Ventures, and (ii) a shareholders agreement among Pan-Western and its
two  shareholders, Pan-Sino Energy Development Company LLC,  a  Cayman  Islands
exempted  company ("Pan-Sino"), and Chinamac (Singapore) Pte Ltd,  a  Singapore
company  ("Chinamac"), which is an affiliate of CMC (as described  below),  the
unanimous  consent of both Pan-Sino and Chinamac is required for the taking  of
various  actions  by  Pan-Western,  including  any  merger,  consolidation   or
dissolution  involving  Pan-Western,  any  sale,  lease,  transfer   or   other
disposition of all or a substantial part of Pan-Western's assets, any amendment
to  the  Pan-Western  charter  documents,  any  modification  of  the  transfer
restrictions  on Pan-Western shares and the declaration of dividends.  Pan-Sino
is  a  95.5%-owned subsidiary of the Issuer which, in turn, owns a 99% interest
in  Pan-Western. Chinamac owns a 1% interest in Pan-Western.   The  Issuer  has
requested that Chinamac agree to waive its rights to require unanimous  consent
for  the taking of any of the foregoing actions in the event of a default under
the Issuer Loan.  While Chinamac has indicated its preliminary agreement to the
Issuer's request, there can be no assurance that Chinamac ultimately will  give
its  consent  to waive such rights. In the event that Chinamac does  not  waive
such  rights,  if  the  Exchange Notes Trustee were to  foreclose  on  the  99%
interest in Pan-Western which is pledged as part of the collateral for Exchange
Notes, the Exchange Notes Trustee, or any purchaser of the pledged interest  in
Pan-Western  pursuant to a foreclosure sale, would be unable  to  take  various
actions that are subject to unanimous consent rights, including the sale of all
or  a  substantial part of Pan-Western's assets and the payment  of  dividends,
without  the consent of Chinamac.  See "--Considerations Relating to the  PRC--
Legal  and Regulatory Considerations" and "Business of the Issuer, the Company,
Panda  International and Their Subsidiaries--The Issuer, the Company and  Panda
International."
     
Additional Indebtedness

     The  Indentures permit the Issuer and its Subsidiaries to incur additional
indebtedness  under  certain circumstances. The Company Indenture  permits  the
Company  and  its  Subsidiaries  also to incur  additional  indebtedness  under
certain  circumstances. Additionally, the loan agreements pursuant to  which  a
portion  of  the proceeds of the Prior Offering will be loaned by  the  Issuer,
through  an  intermediate entity, to the Joint Ventures (the "Shareholder  Loan
Agreements")  permit the Joint Ventures to incur additional indebtedness  under
certain  circumstances. The Rosemary Indenture contains  provisions  permitting
the  Rosemary  Partnership  to  incur  additional  indebtedness  under  certain
circumstances.  In  addition,  PFC may issue  additional  bonds  under  certain
circumstances as permitted under the PFC Indenture. The issuance of  additional
indebtedness  by  the  Issuer, the Company, the Joint  Ventures,  the  Rosemary
Partnership,  PFC  or any other subsidiary of the Issuer or the  Company  would
create  additional potential claims against the issuers of such  debt  and  the
assets which secure such debt, including interests in the Luannan Facility, the
Rosemary  Facility and the Brandywine Facility, as the case may be,  and  could
result  in  a reduction in the cash available for distribution by the  entities
that  own interests in such Projects upstream, thus reducing the cash available
to  make payments on the Exchange Notes and the cash available to make payments
under the Exchange Notes Guarantee. See "Description of the Exchange Notes, the
Exchange  Notes  Guarantee,  the Issuer Loan, the  Shareholder  Loans  and  the
Collateral Documents--Certain Covenants--Limitations on Debt," "Description  of
Other Indebtedness--The PFC Bonds," and "Description of Other Indebtedness--The
Rosemary Bonds."
     
  Effective Subordination of Exchange Notes and Exchange Notes Guarantee
  
     The  Exchange Notes and the Exchange Notes Guarantee will be the exclusive
obligations of the Issuer and the Company, respectively, and not of the Project
Entities which own or operate the Rosemary Facility or the Brandywine Facility,
the  Joint Ventures or any other affiliate of the Issuer. The Project  Entities
and  the Joint Ventures are highly leveraged and their debt agreements restrict
their ability to pay dividends, make distributions or otherwise transfer funds,
through  intermediate  entities,  to  the Company.  The  restrictions  in  such
agreements   generally  require  that,  prior  to  the  payment  of  dividends,
distributions  or  other  transfers, Project Entities and  the  Joint  Ventures
provide  for  the  payment of other obligations, including operating  expenses,
debt  service and the funding of reserves. The Project Entities and  the  Joint
Ventures are separate and distinct legal entities and have no obligation to pay
any  amounts due pursuant to the Exchange Notes or to make any funds  available
therefor,  whether by dividends, loans or other payments, and do not  guarantee
the  payment  of the Exchange Notes. Thus, payments on the Exchange  Notes  are
effectively  subordinated  to the payment of all  obligations  of  the  Project
Entities  and the Joint Ventures. In addition, the Company's right  to  receive
any assets of the Project Entities or the Joint Ventures upon their liquidation
or  reorganization  will be effectively subordinated  to  the  claims  of  such
Project  Entities' or Joint Ventures' creditors (including trade creditors  and
holders of other debt issued by such Project Entity). As of March 31, 1997, the
Project  Entities  had approximately $338.6 million of indebtedness  and  other
liabilities  (including  payments on the long-term  lease  for  the  Brandywine
Facility), which is effectively senior to obligations of the Company under  the
Exchange  Notes Guarantee. See "Description of Other Indebtedness--The Rosemary
Bonds" and "Description of Other Indebtedness--The Brandywine Financing."
     
     Similarly, the Company is highly leveraged as a result of the issuance  of
the  Series  A  Bonds by PFC, which are collateralized in part by  all  of  the
issued  and outstanding shares of PIC. The PFC Indenture restricts the  ability
of  PIC  to  pay  dividends,  make distributions or otherwise  transfer  funds,
through  PEC,  to  the  Company. PIC and PFC are separate  and  distinct  legal
entities and have no obligation to pay any amounts due pursuant to the Exchange
Notes  or to make any funds available therefor, whether by dividends, loans  or
other  payments,  and  do not guarantee payment of the  Exchange  Notes.  Thus,
payments on the Exchange Notes are also effectively subordinated to the payment
of  all  obligations of PFC. In addition, the Company's right  to  receive  any
assets  of  PIC  upon  its liquidation or reorganization  will  be  effectively
subordinated to the claims of PFC's creditors (including holders of the  Series
A  Bonds).  As  of  March  31, 1997, PFC had approximately  $106.6  million  of
indebtedness  and  other  liabilities,  which  is  effectively  senior  to  the
obligations of the Company under the Exchange Notes Guarantee. See "Description
of Other Indebtedness--The PFC Bonds."
     
  Default on Project-level Debt; Enforcement of Rights
  
     If a Project Entity fails to generate cash flows sufficient to service its
debt,  such Project Entity could default on its indebtedness or the payment  of
its lease obligations or breach a related covenant. If a Project Entity were to
default in the payment of any such obligation or in the performance of any such
covenant, the obligees thereunder would be permitted to accelerate the maturity
of   such   indebtedness  or  terminate  such  lease,  which  could   terminate
distributions to the Company from such Project Entity and adversely affect  the
ability  of the Company to perform under the Exchange Notes Guarantee. In  such
circumstances,  Holders of the Exchange Notes may be forced to  accelerate  the
maturity  of  the Exchange Notes to protect their interests at a time  when  it
would  not  otherwise have been in their interests to do so. Furthermore,  such
defaults  could  delay  or  preclude payments on the Exchange  Notes.  See  "--
Financial   Risks--Substantial  Leverage"  and  "--Financial   Risks--Effective
Subordination  of  Exchange  Notes"  above  and  "Management's  Discussion  and
Analysis of Financial Condition and Results of Operations of the Company."
     
  Addition of Projects to PIC Project Portfolio
  
     Pursuant to the PIC Additional Projects Contract, additional Projects,  if
any, developed by Panda International or its affiliates will be transferred  to
the PIC Project Portfolio if certain conditions are satisfied, and it is likely
that  additional series of Pooled Project Bonds will be issued  under  the  PFC
Indenture  to  finance  debt  or equity investments  in  such  Projects,  which
additional series will rank pari passu with the currently outstanding Series  A
Bonds. If the Rosemary Facility or the Brandywine Facility (which already  have
been transferred to the PIC Project Portfolio), or additional Projects, if any,
to  be transferred to the PIC Project Portfolio in the future do not perform up
to  expectations, their inclusion in the PIC Project Portfolio could weaken the
overall  performance  of the PIC Project Portfolio and  reduce  the  cash  flow
available from PIC to the Company, thereby impairing the ability of the Company
to perform under the Exchange Notes Guarantee. While it is the Company's belief
that  diversification  of  the  PIC Project Portfolio  will  reduce  the  risks
associated with poor performance by any one Project or a small portion  of  the
PIC  Project Portfolio, there can be no assurance that this will be  the  case.
See "Description of Other Indebtedness--The PFC Bonds."
     
  Addition of Projects to the Issuer or the Company
  
     Additional  Projects,  if  any, developed by Panda  International  or  its
affiliates  which  are not eligible for transfer to the PIC  Project  Portfolio
may,  at  the election of Panda International or its affiliates, be transferred
to  the Issuer or the Company, provided that, if additional indebtedness is  to
be  issued  by  the Issuer or the Company with respect to any  such  additional
Project, certain conditions are satisfied. If any such Projects transferred  in
the  future  to  the Issuer or the Company do not perform up  to  expectations,
their  inclusion in the Issuer or the Company, as the case may be, could weaken
the  overall  performance  of  the  Issuer or the  Company,  thereby  adversely
affecting the ability of the Issuer to make payments on the Exchange  Notes  or
impairing  the  ability  of  the Company to perform under  the  Exchange  Notes
Guarantee.
     
Repurchase of Exchange Notes Upon a Change of Control

     Upon  the  occurrence  of  a Change of Control, if  certain  minimum  debt
service  coverage ratios are not maintained, the Issuer must offer to  purchase
all  of the Exchange Notes outstanding at a purchase price equal to 101% of the
principal  amount thereof plus accrued and unpaid interest, if  any  (including
Liquidated  Damages and Additional Amounts, if any) to the  date  of  purchase.
There  can be no assurance that the Issuer will have available funds sufficient
to  fund  the purchase of the Exchange Notes upon a Change of Control.  In  the
event  a  Change  of  Control occurs at a time when the Issuer  does  not  have
available  funds sufficient to pay for all of the Exchange Notes  delivered  by
Holders  seeking to accept the Issuer's repurchase offer, an event  of  default
would  occur under the Indentures. The definition of Change of Control includes
an  event  by which all or substantially all of the assets of the Company,  the
Issuer  or  Panda  International  are  sold,  leased,  exchanged  or  otherwise
transferred.  There is little case law interpreting "all or substantially  all"
in  the  context  of  an  indenture. Because there is  no  precise  established
definition of this phrase, there may be uncertainty as to whether a  Change  of
Control  has  occurred as a result of any particular sale, lease,  exchange  or
transfer  of the assets by the Company, the Issuer or Panda International.  Any
such uncertainty may adversely affect the enforceability of the Change of
Control provisions of the Exchange Notes Indenture.  See "Description  of the
Exchange Notes, the Exchange Notes Guarantee,  the  Issuer Loan, the Shareholder
Loans and the Collateral Documents--Change of Control."
     
Reliance  upon  Projections and Contained in  Engineers'
and Consultants' Reports

     Included  as  Appendices  D  and E hereto are  reports  of  engineers  and
consultants  concerning  the  Luannan Facility. Summaries  of  the  reports  of
engineers  and consultants concerning the Rosemary Facility and the  Brandywine
Facility  are contained herein. See "Description of the Projects--The  Rosemary
Facility--Independent Engineers' and Consultants' Reports" and "Description  of
the  Projects--The Brandywine Facility--Independent Engineers' and Consultants'
Reports."   Included  as Appendix C is the Consolidated  Pro  Forma  Report,  a
summary  consolidation of the projections contained in the Rosemary Engineering
Report, the Brandywine Pro Forma Report and the Luannan Engineering Report. The
terms  of  the  Exchange  Notes  have been  structured  on  the  basis  of  the
prospective financial information contained in such reports. For the purpose of
preparing  the  information  contained in such reports,  of  necessity  certain
assumptions  have  been  made with respect to general business,  financial  and
economic  conditions, the prices that will be paid for the electric  generating
capacity  of  and  the  electric energy produced by the Luannan  Facility,  the
Rosemary Facility and the Brandywine Facility, the costs of obtaining fuel  for
such  facilities, the number of hours that the facilities will  be  dispatched,
the cost to complete, and anticipated completion date of, the Luannan Facility,
and  other  matters and contingencies that are not within the  control  of  the
Issuer, the Company or their affiliates and the outcomes of which are difficult
to  predict. The engineers' and consultants' reports contain discussions of the
assumptions  used  in preparing the projections and potential investors  should
review the reports carefully.
     
     Projections  are inherently inaccurate and actual results  are  likely  to
vary  from such projections, sometimes materially. Accordingly, the assumptions
made and the projections prepared by such engineering and consulting firms  are
not necessarily indicative of future performance. No representation is made  or
intended,  nor should any be inferred, with respect to the likely existence  of
any  particular  set  of  facts or circumstances. If actual  results  are  less
favorable  than those projected, or if the assumptions used in formulating  the
projections contained in such reports prove to be incorrect, the ability of the
Issuer to make payments on the Exchange Notes and the ability of the Company to
meet its obligations under the Exchange Notes Guarantee could be materially and
adversely affected.
     
     All  projections  of  future operations and the economic  results  thereof
included  in  the  engineers' and consultants' reports have been  reviewed  and
accepted  by the Issuer on the basis of present knowledge and assumptions  that
the  Issuer believes to be reasonable. These projections have not been prepared
in  accordance  with  published  guidelines  of  the  Securities  and  Exchange
Commission,  the  American  Institute  of  Certified  Public  Accountants,  any
regulatory  or  professional  agency or body or generally  accepted  accounting
principles.  Deloitte & Touche LLP, the Issuer's independent  accountants,  has
neither  examined  nor  compiled any projections  and,  accordingly,  does  not
express  an opinion or any other form of assurance with respect thereto.  After
the  issuance  of  the  Exchange Notes, no engineer or  other  consultant  will
provide  the Holders of the Exchange Notes with revised projections  or  report
any  difference  between  the  projections and  the  actual  operating  results
achieved by the Projects.
     
Project Risks

  Construction Risk
  
     The  construction of any Project, including the Luannan Facility, involves
many  risks,  including  shortages  of  equipment,  material  and  labor,  work
stoppages,  labor  disputes,  weather  interferences,  unforeseen  engineering,
environmental  and  geological problems and unanticipated cost  increases.  For
example,  Tangshan  City, approximately 45 kilometers from  where  the  Luannan
Facility will be located, experienced an earthquake with a force of 7.8 on  the
Richter  scale in July 1976. Any of these events or other unanticipated  events
could  give  rise  to delays or cost overruns. Difficulties  in  obtaining  any
requisite licenses or permits could adversely affect the design or increase the
cost  of a Project, or delay or prevent the completion of construction  or  the
commencement of commercial operations of a Project. Construction-related  risks
can be mitigated through fixed-price "turnkey" construction contracts; however,
there can be no assurance that a contractor will honor its commitments or  have
the financial resources to satisfy its obligations under any liquidated damages
provisions,  or  that any affected Project would continue  to  operate  at  its
design  specifications after the expiration of the contractors'  and  equipment
suppliers'  warranties. There is also a risk that construction delays  will  be
caused  by  events, such as events of force majeure, not covered by  liquidated
damages  or  insurance. See "--Financial Risks--Default on Project-level  Debt;
Enforcement of Rights" above.
     
     While preliminary construction work on the Luannan Facility has commenced,
full   construction  activity  with  respect  to  the  Luannan   Facility   and
construction  of  the Luannan Transmission Facilities has  not  yet  commenced.
Construction  of  the Luannan Facility and the Luannan Transmission  Facilities
could  be delayed or could experience significant cost overruns as a result  of
one  or  more  of the risks described in the previous paragraph.  None  of  the
Issuer,  the  Company, Panda International or the Luannan County Government  is
obligated  to  provide any additional funding to cover any cost overrun.  North
China  Power  Company  is not obligated to begin making payments  for  electric
energy  deliveries under the Luannan Power Purchase Agreement until the Luannan
Facility  is  considered to be in commercial operation  for  purposes  of  such
agreement.  There  can  be  no assurance that any  cost  overrun  or  delay  in
achieving  commercial  operation for purposes of  the  Luannan  Power  Purchase
Agreement  will not have a material adverse effect on the Joint  Ventures  and,
therefore,  on  the  Issuer and its ability to meet  its  obligations  to  make
payments  of  principal and interest on the Exchange Notes when  due.  See  "--
Considerations Relating to the PRC--Legal and Regulatory Considerations" below.
In  the event of certain delays in completion of the Luannan Facility which are
not excused by force majeure or in the event that the Luannan Facility fails to
meet  the  guaranteed performance levels under the Luannan  EPC  Contract,  the
Luannan EPC Contractor is obligated under the terms of the Luannan EPC Contract
to  pay  liquidated  damages to the Joint Ventures and the Joint  Ventures  are
entitled to subtract the amount of such damages from the 10% retainage  of  the
Luannan  EPC  Contract  Price  and to collect  damage  payments  under  certain
guarantees. Liquidated damages, however, are limited to 35% of the Luannan  EPC
Contract Price. There is no assurance that the amount of such damages  will  be
sufficient  to  pay all costs of the Joint Ventures resulting  from  the  event
giving  rise  to  such  damages. See "Description of the Projects--The  Luannan
Facility--Engineering, Procurement and Construction Contract" and  "Description
of   Principal   Documents   Relating  to  the  Luannan  Facility--Engineering,
Procurement and Construction Contract--Price and Payment; Security."  If  North
China  Power  Company fails to complete the Luannan Transmission Facilities  in
time  to  receive electric power from the Luannan Facility, North  China  Power
Company  is liable to the Joint Ventures for any resulting loss or damage,  but
any  recoveries  (to the extent, if any, awarded and collected)  might  not  be
sufficient  to  compensate  the  Joint  Ventures  for  all  losses,   including
consequential  damages. See "--Considerations Relating to  the  PRC--Legal  and
Regulatory Considerations" below.
     
  Start-up Risks
  
     The  commencement  of  commercial operations of the  Luannan  Facility  or
another  newly  constructed  Project involves many  risks,  including  start-up
problems,  the  breakdown or failure of equipment or processes and  performance
below  expected  levels  of  output  or  efficiency.  Generally,  insurance  is
maintained  to protect against certain of these risks, warranties are  obtained
relating  to  the  construction  of  a Project  and  the  equipment  associated
therewith,  and construction contractors and equipment suppliers are  obligated
to  meet  certain performance levels. Such insurance, warranties or performance
guaranties,  however, may not be adequate to cover lost revenues  or  increased
expenses.  As a result, a Project may be unable to fund principal and  interest
payments  under  its financing obligations. A default under  such  a  financing
obligation  could  result  in  the Issuer or the Company  losing  its  indirect
ownership interest in a Project. In addition, power purchase agreements,  which
are  typically entered into with a utility early in the development phase of  a
Project,  often enable the utility to terminate such agreement,  or  to  retain
security  posted by the developer as liquidated damages, if a Project fails  to
commence commercial operations, to attain certain operating levels by specified
dates  or  to make certain specified payments. If such a termination  right  is
exercised,  a  Project may not produce revenues, the default  provisions  in  a
financing agreement would likely be triggered (rendering the Project-level debt
immediately due and payable) and the Project would likely be rendered insolvent
as a result. See "--Financial Risks--Default on Project-Level Debt; Enforcement
of Rights" above.
     
  Operating Risks
  
     The   operation  of  power  generation  facilities  involves  many  risks,
including  the breakdown or failure of power generation equipment, transmission
lines,  pipelines  or  other equipment or processes, the  inability  to  obtain
adequate  fuel  supplies and performance below expected  levels  of  output  or
efficiency  (whether  due  to  misuse,  unexpected  degradation  or  design  or
manufacturing  defects),  failure to keep on hand adequate  supplies  of  spare
parts,  operation  error, labor disputes, catastrophic events  such  as  fires,
floods,  earthquakes and other similar events and the need to comply  with  the
directions  of  the  relevant government authority  or  utility.  Although  the
Rosemary Facility, the Brandywine Facility and the Luannan Facility contain  or
will  contain  certain redundancies and back-up mechanisms,  there  can  be  no
assurance  that  any such breakdown or failure would not prevent  the  affected
facility  from performing under applicable power and steam purchase agreements.
The  Rosemary  Power  Purchase  Agreement and  the  Brandywine  Power  Purchase
Agreement  provide  for a reduction in capacity payments in  the  event  of  an
outage  or  unavailability. North China Power Company will only be required  to
pay  for electric energy actually generated by the Luannan Facility and has  no
obligation  to  pay for capacity or any electric energy not  generated  by  the
Luannan  Facility even if due to an event of force majeure declared  by  either
party  under  the  Luannan Power Purchase Agreement or to  increase  subsequent
purchases  from the Luannan Facility once an event of force majeure  no  longer
exists  in  order  to  make  up  for  electricity  not  purchased  during   the
continuation of such event of force majeure. Moreover, during peak  hours,  the
Luannan  Facility  may  be subject to penalties if certain  minimum  generation
requirements are not met. See "Description of Principal Documents  Relating  to
the  Luannan Facility--Power Purchase Agreement." The occurrence or continuance
of  any of the events described above could increase the cost of operating  the
Rosemary Facility, the Brandywine Facility or the Luannan Facility, reduce  the
payments due from the purchaser under the relevant power purchase agreement  or
otherwise adversely affect the financial condition of any of such Projects.
     
     Although  insurance  is  maintained to protect against  certain  of  these
operating  risks, the proceeds of such insurance may not be adequate  to  cover
lost  revenues  or  increased expenses and, as a result, the  Project  Entities
owning  or  operating such Project might be unable to service the Project-level
obligations.  A  default under such Project-level obligations  by  the  Project
Entities could result in the Company losing its indirect ownership or leasehold
interest  in such Project. See "--Additional Indebtedness--Default on  Project-
Level  Debt; Enforcement of Rights" above. Furthermore, in the event of a major
casualty  or  loss  involving a Project, casualty insurance  proceeds,  to  the
extent  not  applied to repair such Project, would be applied first to  satisfy
Project-level  obligations,  and  it  is unlikely  (unless  such  Project-level
obligations are less than the maximum insurance proceeds payable) that any such
insurance proceeds would be available for mandatory redemption of the  Exchange
Notes.
     
     The  Luannan  Facility  does  not have an  operating  history.  The  Joint
Ventures and the Brandywine Partnership have, respectively, obtained warranties
in limited amounts and for limited periods relating to the Luannan Facility and
its  major  equipment  from the Luannan EPC Contractor and  suppliers  of  such
equipment and relating to the Brandywine Facility and its major equipment  from
Raytheon  and  suppliers of such equipment. However, there can be no  assurance
that  any  of  such  warranties  will  be sufficient  or  effective  under  all
circumstances  or  that the issuer of the warranty will have  adequate  capital
resources  to  meet  its  warranty obligations.  In  addition,  the  warranties
generally are limited to an obligation to repair or replace defective equipment
and do not cover revenues lost while the equipment is out of service.
     
  Dispatchability Risk
  
     The  power  purchase  agreements for the Projects may provide  substantial
leeway  to  the  power purchaser in determining when, and  to  what  extent,  a
facility  is  dispatched.  For example, the Rosemary Power  Purchase  Agreement
provides  VEPCO  the  contractual right to schedule the Rosemary  Facility  for
dispatch  on a daily basis at full capacity, partial capacity or off-line.  The
Rosemary Facility has been used by VEPCO primarily as a peaking plant and, as a
result, the number of hours for which the facility has been dispatched and  the
quantity of electricity produced by the facility have fluctuated throughout the
facility's   operating  history.  Similarly,  the  Brandywine  Power   Purchase
Agreement  permits  PEPCO  to  dispatch at its sole  discretion  a  substantial
portion   of  the  Brandywine  Facility's  capacity.  While  availability-based
capacity  payments and other fixed payments under the power purchase agreements
relating to the Rosemary Facility and the Brandywine Facility are unaffected by
levels of dispatch, revenues would be adversely affected (due to a reduction in
energy  payments  thereunder) if these facilities  were  dispatched  at  levels
materially  below the recent operating experience, in the case of the  Rosemary
Facility, or the anticipated level, in the case of the Brandywine Facility. See
"Description  of  the  Projects--The Rosemary Facility--Sale  of  Capacity  and
Electricity" and "Description of the Projects--The Brandywine Facility--Sale of
Capacity, Electricity and Steam."
     
     Under  the Luannan Power Purchase Agreement, North China Power Company  is
required  to  purchase  and take all net electrical  output  delivered  by  the
Luannan  Facility during specified peak hours without any dispatch limitations.
The  levels  of  dispatch during other hours (and thus the  revenues  that  the
Luannan Facility will receive for electric energy generated during such  hours)
are specified in the Luannan Power Purchase Agreement and the related technical
details (i.e., ramp rates, seasonal adjustments, etc.) will be set forth in  an
Interconnection  Dispatch Agreement to be negotiated with  the  Tangshan  Power
Supply  Bureau  of  North China Power Company shortly prior to  the  commercial
operation  date under the Luannan Power Purchase Agreement. Those  negotiations
may  result in changes to the dispatch rights under the Luannan Power  Purchase
Agreement, and the levels of dispatch that were assumed in connection with  the
preparation  of the Luannan Engineering Report. There can be no assurance  that
the  Interconnection Dispatch Agreement as finally negotiated will  not  change
the  provisions  of  the Luannan Power Purchase Agreement,  including  dispatch
rights and penalties relating thereto. See "Summary--Independent Engineers' and
Consultants' Reports--Luannan Engineering Report," "Description of the Projects-
-The  Luannan Facility--Sales of Power" and "Description of Principal Documents
Relating  to  the Luannan Facility--Power Purchase Agreement"  and  Appendix  D
hereto.
     
  Dependence on, or Lack of, Fixed Payments
  
     The  Rosemary  Facility  and  the Brandywine  Facility  are  dependent  on
capacity  payments  due  from  VEPCO  and  PEPCO,  respectively,  under   their
respective  power purchase agreements to meet their fixed obligations.  In  the
case  of  the Rosemary Facility, capacity payments are payable by VEPCO whether
or not the facility is dispatched, provided that the facility satisfies certain
seasonal  capacity tests which may be required by VEPCO in its sole  discretion
and meets certain minimum availability standards. If these minimum availability
standards  are  not met, then capacity payments otherwise due to  the  Rosemary
Partnership  are subject to rebate or reduction and, in certain  circumstances,
the  Rosemary Partnership may be required to pay liquidated damages  to  VEPCO.
See  "Description of the Projects--The Rosemary Facility--Sale of Capacity  and
Electricity."  In  the case of the Brandywine Facility, capacity  payments  are
payable  by PEPCO whether or not the facility is dispatched, provided that  the
capacity  payments  will  be  reduced  if  the  facility  cannot  maintain  88%
equivalent availability and may be reduced starting in 2006 depending  on  when
and  whether  PEPCO's system peak load exceeds 5,697 MW during  1997,  1998  or
1999.  See  "Description  of  the Projects--The  Brandywine  Facility--Sale  of
Capacity, Electricity and Steam."
     
     Unlike  the  Rosemary  Power Purchase Agreement and the  Brandywine  Power
Purchase Agreement, the Luannan Power Purchase Agreement does not require North
China  Power Company to make any fixed capacity payments. Instead, the  Luannan
Power Purchase Agreement provides that North China Power Company shall purchase
all  electricity generated by the Luannan Facility and delivered  at  specified
levels  during  specified  periods. If, after  taking  into  account  permitted
outages, the Luannan Facility does not deliver a specified minimum quantity  of
electric energy during peak hours, certain of the Joint Ventures will  have  to
compensate  North  China  Power  Company and,  in  certain  events,  after  the
expiration of applicable cure periods, North China Power Company may  terminate
the  Luannan  Power  Purchase Agreement. See "Description of the  Projects--The
Luannan  Facility--Sales  of  Power" and "Description  of  Principal  Documents
Relating to the Luannan Facility--Power Purchase Agreement."
     
  Fuel Related Pricing
  
     Payments related to electric energy purchases by VEPCO and PEPCO under the
Rosemary  Power Purchase Agreement and the Brandywine Power Purchase Agreement,
respectively,  generally adjust upon the same or substantially equivalent  fuel
indices  or  pricing mechanisms that govern adjustments to the  base  commodity
charges  for natural gas under, respectively, the Rosemary Gas Supply Agreement
and  the Brandywine Gas Agreement. Nevertheless, the Rosemary Facility and  the
Brandywine  Facility  are  subject  to the  risk  that  the  fuel  compensation
components of electric energy prices paid under their respective power purchase
agreements  and  their  respective actual fuel costs may  differ.  Accordingly,
increases  in fuel supply costs which are not matched by increases in  electric
energy  prices  could have an adverse effect on the performance  of  these  two
Projects.  See  "Description  of the Projects--The Rosemary  Facility--Sale  of
Capacity  and  Electricity" and "--Gas Supply and Fuel Management"  and  "--The
Brandywine Facility--Sale of Capacity, Electricity and Steam" and "--Gas Supply
and Fuel Management."
     
     The  Luannan Facility will obtain the coal required for its operation from
the  Luannan Coal Suppliers. The price paid by the Joint Ventures for such coal
will  be  determined  periodically on the basis of  market  prices,  which  are
currently  subject  to  partial government control and supervision.  While  the
Luannan Power Purchase Agreement provides for electricity prices based  on  the
recovery of the Joint Ventures' cost of obtaining coal, changing conditions  in
the  coal market could result in a substantial increase in the price the  Joint
Ventures are required to pay for such coal. There can be no assurance that  the
electricity tariffs will fully reflect any such increased coal prices. The Coal
Supply Agreement with Kailuan Coal does not contain any provision governing the
resolution of a dispute between the parties with respect to the price of  coal.
See  "Description  of  the  Projects--The Luannan  Facility--Coal  Supply"  and
"Description  of  Principal  Documents Relating to the  Luannan  Facility--Coal
Supply Agreements."
     
  Regulatory Disallowance
  
     The  Rosemary  Power  Purchase Agreement contains  a  clause  known  as  a
"regulatory  disallowance" provision, which requires the Rosemary  Facility  to
repay  to  VEPCO or reduce any capacity charges in excess of $5.62 per kilowatt
per  month  (as adjusted by the Gross National Product Implicit Price  Deflator
("GNPIPD")  from 1987 dollars) that are disallowed by any regulatory  authority
from recovery by VEPCO in its rate base (except where such disallowance is  due
to  VEPCO's  failure  to  seek recovery or comply with procedural  requirements
governing  recovery of such costs). VEPCO cannot initiate such  a  disallowance
and  must appeal such a disallowance, if practicable. If a disallowance occurs,
the  cash  flow  of the Rosemary Partnership could be materially and  adversely
affected and, consequently, the Company's ability to meet its obligations under
the  Exchange  Notes Guarantee could be materially and adversely affected.  See
"Description  of  the  Projects--The Rosemary Facility--Sale  of  Capacity  and
Electricity." See also Appendix B, "The Electric Power Industry in  the  United
States and United States Regulation."
     
  Fuel Supply Risks
  
     The  Rosemary  Partnership has contracted for  most  of  its  natural  gas
supplies  and  transportation services on an interruptible  basis  because  the
Rosemary  Partnership has assumed that the Rosemary Facility will be dispatched
by  VEPCO  as  a peaking plant, with the bulk of the facility's dispatch  hours
occurring  during the summer months when operational experience  suggests  that
gas  typically  will be available for purchase. The Brandywine Partnership  has
similarly  contracted for approximately one-half of its natural gas supply  and
transportation  on  an  interruptible  basis.  Interruptible  gas  supply   and
transportation  arrangements are subject to interruption or curtailment  during
periods of peak demand for gas. Although independent consultants have found the
fuel  supply  and  delivery  arrangements for the  Rosemary  Facility  and  the
Brandywine   Facility  to  be  reasonable,  if  a  power  purchaser   were   to
significantly increase its dispatch of a facility, unless the facility were  to
arrange for additional firm supply and transportation of natural gas or were to
use alternate fuel, the risk of potential curtailment in natural gas supply and
transportation,  and  thus that a facility would be unavailable  for  dispatch,
would  be  increased. See "--Dispatchability Risk" above, "Description  of  the
Projects--The  Rosemary  Facility--Gas Supply and Fuel Management"  and  "--Gas
Transportation,"  "--The Brandywine Facility--Gas Supply and  Fuel  Management"
and "--Gas Transportation."
     
     If  natural gas supply or transportation is not available to the  Rosemary
Facility  or the Brandywine Facility, each such facility can operate  utilizing
No.  2  fuel  oil. The Rosemary Facility has the capacity to store two  million
gallons  of fuel oil on site, which is enough fuel oil to operate the  facility
at  full  load  for  approximately 168 hours. As a  result  of  current  market
conditions, the Rosemary Partnership purchases its fuel oil supply  on  a  spot
market  basis.  The  Brandywine Facility has on-site storage  for  two  million
gallons  of fuel oil, which is enough fuel oil to operate the facility at  full
load for approximately six days. Under its fuel management plan, the Brandywine
Partnership  will  endeavor  to enter into fuel oil supply  and  transportation
agreements  by  October 10 of each year that will provide  it  with  access  to
adequate  fuel  oil  supplies  for  the immediately  succeeding  winter  season
(November  through March). Future changes in market conditions or  governmental
policy,  however,  could adversely affect the ability of a facility  to  obtain
economical fuel oil supply when needed and, consequently, adversely affect  the
availability of the facility for dispatch. See "--Dispatchability Risk"  above,
"Description  of  the  Projects--The Rosemary Facility--Fuel  Oil"  and  "--The
Brandywine Facility--Fuel Oil."
     
     The  Rosemary  Partnership  owns a 10.26 mile pipeline  which  is  located
under,  over  and upon properties owned by private and governmental  landowners
pursuant to easements and encroachment agreements. Several of the easements and
encroachment  agreements  contain provisions allowing the  underlying  interest
owner  to cause the pipeline to be removed from its current location.  Most  of
such  easements  and  encroachment agreements require the  underlying  interest
owner to provide an alternate location for the pipeline, and in some cases  the
underlying  interest  owner  must share the cost of  relocating  the  pipeline.
However,  two such easements allow the underlying interest owner to  cause  the
pipeline  to be removed, but do not require such owner to provide an  alternate
location  or  share the cost of relocating the pipeline. The  Issuer  does  not
expect  that  the  pipeline will be required to be removed  pursuant  to  these
easements  or, if it were required to be removed, that relocating the  pipeline
from these two easement tracts would significantly interfere with the supply of
natural  gas  to the Rosemary Partnership. However, there can be  no  assurance
that  the Rosemary Partnership could relocate the pipeline, if required  to  do
so,  without  incurring significant expenses or, if the pipeline could  not  be
relocated,  that  the  Rosemary Partnership could  make  arrangements  for  the
delivery of a supply of fuel which would be adequate to assure the availability
of  the  Rosemary  Facility  for dispatch by VEPCO.  See  "Description  of  the
Projects--The Rosemary Facility--Rosemary Pipeline."
     
     The  Rosemary  Gas  Supply  Agreement and  the  Rosemary  Fuel  Management
Agreement  expire on November 30, 2005. The firm transportation  contracts  the
Rosemary  Partnership  has  entered into with Transcontinental  Gas  Pipe  Line
Corporation ("Transco"), Texas Gas Transmission Corporation ("Texas  Gas")  and
CNG  Transmission Corporation ("CNG") expire on November 1, 2006. Certain other
contracts  providing for interruptible transmission services for  the  Rosemary
Facility  are  on  a month-to-month basis. There can be no assurance  that  the
terms  of  any of such contracts can be extended or, if they expire,  that  the
Rosemary Partnership will be able to enter into replacement contracts  or  fuel
transportation  arrangements  on  terms  no  less  favorable  to  the  Rosemary
Partnership  than  those contained in the current agreements.  The  failure  to
extend such terms or to enter into replacement contracts or fuel transportation
arrangements  is  an  event  of  default  under  the  Rosemary  Indenture.  See
"Description  of  the  Projects--The Rosemary  Facility--Gas  Supply  and  Fuel
Management," "--The Rosemary Facility--Gas Transportation" and "Description  of
Other Indebtedness--The Rosemary Financing."
     
     The  Luannan  Coal  Supply Agreement among two of the Joint  Ventures  and
Kailuan Coal, which is expected to supply up to 300,000 metric tons per year of
the  projected  450,000 metric ton annual coal demand of the Luannan  Facility,
provides  that Kailuan Coal may terminate the agreement if the national  energy
policies of the PRC change such that the rules governing the allocation of coal
restrict  its ability to make sales of coal under terms and conditions  similar
to  those set forth in such agreement. While the Luannan Facility is located in
a region of the PRC that has numerous coal mines, in the event that the Luannan
Coal Supply Agreement with Kailuan Coal is terminated under such circumstances,
there  can be no assurance that the Joint Ventures would be able to enter  into
one or more replacement agreements on satisfactory terms.
     
     Moreover,  the prices to be paid by the Joint Ventures for coal  from  the
various   coal  suppliers,  including  Kailuan  Coal,  are  to  be   determined
periodically  on the basis of prevailing prices, which are currently  partially
subject to government control and supervision. While the Luannan Power Purchase
Agreement  provides for electricity prices based on the recovery of  the  Joint
Ventures' cost of obtaining coal, changing conditions in the coal market  could
result  in a substantial increase in the prices the Joint Ventures are required
to  pay for such coal. There can be no assurance that electricity tariffs would
always fully reflect any such increased coal prices.
     
  Dependence on Third Parties and Concentration of Customers
  
     The nature of the Projects is such that each facility generally relies  on
one  power  purchase  agreement  with a single electric  utility  customer  for
substantially all, if not all, of such facility's revenues over the life of the
Project. Furthermore, each power generation facility may depend on a single  or
limited  number of entities to purchase thermal energy, to supply or  transport
natural  gas  or  coal to such facility or to supply other goods  and  services
which  constitute  the  principal  inputs to such  facility's  operations.  Any
material breach by any of these parties of its obligations under its respective
agreement  with  a  facility,  or any event or  circumstance  that  reduces  or
suspends  the payment obligation of the other party to an agreement or  affects
such  party's  ability or willingness to meet its obligations, could  adversely
affect  the Issuer's ability to make payments of interest and principal on  the
Exchange Notes when due or the Company's ability to meet its obligations  under
the  Exchange  Notes Guarantee, as the case may be. The other parties  to  each
Project  agreement  have  the  right  to  terminate  or  withhold  payments  or
performance  under  such agreements upon the occurrence of  certain  events  of
default specified therein, which include the failure of any Project Entity that
is  a party to such agreement to materially perform its obligations thereunder.
Additionally, if a party to a Project agreement were to undergo bankruptcy, the
trustee  in  the  bankruptcy proceeding could disaffirm such  agreement.  If  a
Project  agreement were terminated due to nonperformance by a  Project  Entity,
disaffirmation in a bankruptcy proceeding or for any other reason, there can be
no  assurance that the Project Entity would be able to enter into a  substitute
agreement  having  terms  and  conditions  substantially  equivalent  to  those
contained in such terminated agreement.
     
     In  the case of the Luannan Facility, the primary source of revenues  will
be  payments  for  electricity by North China Power Company under  the  Luannan
Power  Purchase Agreement and by the local industrial and commercial  customers
under  the contracts to supply steam and hot water (collectively, the  "Luannan
Heat  Supply  Contracts"). In addition, one of the Joint Ventures will  receive
revenues  from  the  sale of heat, steam and hot water  from  the  other  Joint
Ventures,  and  another Joint Venture will receive revenues from  the  sale  of
heat,  steam and hot water, principal and interest payments paid by North China
Power  Company on funds lent to it for construction of the Luannan Transmission
Facilities,  and, as currently contemplated by the Joint Ventures, land  rental
usage  fees  from  the other Joint Ventures. Accordingly, the  Joint  Ventures'
operations  and their ability to pay interest and principal on the  Shareholder
Loans  and  to  have  sufficient earnings to pay dividends could  be  adversely
affected  by  any  occurrence or circumstance that reduces or suspends  payment
obligations  of  North  China  Power Company  under  the  Luannan  Transmission
Facilities Loan or the Luannan Power Purchase Agreement or interrupts purchases
of  steam  and  hot water under the Luannan Heat Supply Contracts  and  certain
other contracts relating to the sale of heat and steam among the Joint Ventures
including one or more of the events described under "Operating Risks" above, or
otherwise  affects  such  purchasers' ability  or  willingness  to  meet  their
obligations  under the Luannan Power Purchase Agreement and  the  Luannan  Heat
Supply  Contracts,  respectively. In addition, a breach by  North  China  Power
Company  or such steam or hot water purchasers of their obligations  under  the
Luannan  Power  Purchase Agreement or the Luannan Heat Supply Contracts,  could
also  adversely affect the Joint Ventures' ability to pay the Shareholder Loans
and  have sufficient earnings to pay dividends. North China Power Company's  or
such steam or hot water purchasers' ability to meet their obligations under the
Luannan  Power  Purchase  Agreement  or  the  Luannan  Heat  Supply  Contracts,
respectively, will be dependent on their financial condition generally.
     
Considerations Relating to the PRC

  Political and Economic Considerations
  
     The  Luannan Facility is located in the People's Republic of China and  is
subject  to  significant  political, economic  and  social  uncertainties.  The
economy of the PRC has historically been a planned economy subject to five-year
and  annual  plans  adopted  by Central Government authorities.  Although  most
production  assets in the PRC are still owned ultimately by the  government  of
the  PRC, the level of direct control the government of the PRC exercises  over
the  economy is being gradually relaxed. Since 1978, the government of the  PRC
has generally pursued policies that have encouraged economic reform and foreign
investment. In October 1992, the 14th Congress of the Communist Party of  China
declared  that  the  PRC would adopt a "socialist market economy"  in  which  a
market-oriented  economy would be allowed to develop while the  PRC  government
would  continue  to  set  economic  targets and  guide  growth  through  macro-
regulations. The concept of a socialist market economy was incorporated in  the
PRC's  Constitution in March 1993 and reaffirmed in the PRC's  Ninth  Five-Year
Economic  and Social Development Plan adopted in early 1996. The PRC government
has,  however, implemented various policies from time to time to  restrain  the
rate  of  economic  growth, control inflation and otherwise  regulate  economic
expansion.  There can be no assurance that the PRC government will continue  to
pursue  a  policy of economic reform, especially in the event of  a  change  in
leadership  or unforeseen circumstances causing social or political disruption.
Further  austerity  measures and credit restrictions  or  social  or  political
disruptions  may  adversely  affect the business and  prospects  of  the  Joint
Ventures and their ability to perform their respective contractual obligations,
including  the ability of the Joint Ventures to make payments of principal  and
interest  on  the  Shareholder  Loans  and  their  ability  to  pay  dividends.
Impairment  of the Joint Ventures' ability to make payments on the  Shareholder
Loans  or  to  distribute dividends could materially and adversely  affect  the
ability of the Issuer to meets its obligations to pay interest and principal on
the Exchange Notes when due.
     
     In recent years, the PRC economy has experienced periods of rapid economic
expansion.  This  growth has also been accompanied by rising  inflation,  which
reached  an  annual rate of 21.7% in 1994. The PRC government  has  implemented
policies  from  time to time to restrain the rate of such economic  growth  and
control inflation in order to achieve coordinated economic development. In July
1993,  the  Central  Government began implementation of a number  of  austerity
measures  to  control economic growth and curb inflation, including  increasing
interest rates on bank loans and deposits and postponing certain planned  price
reforms. While inflation has since moderated, to a rate of 6.1% in 1996,  there
can  be  no  assurance that such austerity measures will continue or  that,  if
continued,  they  will  not result in future severe  dislocations  in  the  PRC
economy. Although certain components of the power rate calculation are required
to  be  adjusted  annually, subject to the approval  of  the  Pricing  Approval
Authority  (as  hereinafter defined), to reflect local inflation  in  order  to
mitigate the Luannan Facility's exposure to inflation risks, during periods  of
high inflation governmental authorities could seek to restrain price increases.
High  inflation thus could inhibit governmental approval of increases in  power
rates.
     
     The  Luannan  Facility  is  also exposed to  political  considerations  in
respect  of  its  majority ownership by foreign investment  enterprises  of  an
important  resource in the economy of the region. Pursuant to the Equity  Joint
Venture  Law  of  the  PRC, joint venture enterprises generally  shall  not  be
subject  to nationalization or expropriation. The Equity Joint Venture  Law  of
the  PRC,  however,  provides  that  under certain  circumstances  involving  a
national  emergency,  in order to meet public interest  requirements,  the  PRC
government may expropriate a joint venture enterprise in accordance with  legal
procedures, but appropriate compensation must be paid.
     
  Governmental Control of Currency Conversion and Exchange Rate Risks
  
     Each  Joint Venture will receive all its revenues, and expects to pay  the
major  portion of its operating costs, in Renminbi ("RMB"). The Joint Ventures,
however, must convert a significant portion of their revenues into U.S. dollars
for  the payment of amounts due under the Shareholder Loans, off-shore expenses
(if any), and distributions to Pan-Western. Recent foreign exchange regulations
of  the  PRC,  which  took  effect on July 1, 1996,  allow  foreign  investment
enterprises  ("FIEs")  (such as the Joint Ventures)  to  obtain  their  foreign
exchange  directly from authorized banks and financial institutions which  have
been  given  access by the People's Bank of China (the "PBOC") to the  national
interbank  foreign exchange market, the China Foreign Exchange  Trading  Center
("CFETC").  FIEs  may  also continue to obtain foreign exchange  from  official
foreign exchange adjustment centers ("Swap Centers") under the new regulations.
Although the new foreign exchange regulations enable the Joint Ventures to have
access  to  the  national  foreign exchange markets (either  through  the  Swap
Centers  or  through the CFETC), any remittance of foreign currency  funds  for
repayments of principal and interest on external borrowings of FIEs is  subject
to verification by the State Administration of Foreign Exchange of the PRC (the
"SAFE").  No assurance can be given that an adequate amount of foreign currency
will  be  available  in the Swap Centers or the CFETC at all  times  in  future
periods  or  that SAFE will verify such repayments in a timely manner.  In  the
event  of shortages of foreign currencies, the Joint Ventures may be unable  to
convert  sufficient  Renminbi into foreign currencies to enable  them  to  make
sufficient  U.S.  dollar-denominated payments  and  dividend  distributions  to
enable  Pan-Western to meet its payment obligations with respect to the  Issuer
Note  (as  defined  below).  See "Business of the Issuer,  The  Company,  Panda
International and Their Subsidiaries--The Joint Ventures" and "Foreign Exchange
System in the PRC and Exchange Rate Information."
     
     Although  certain  components  of the power  rate  calculation,  including
certain  financing expenses, are subject to adjustments intended,  among  other
things,  to  mitigate the Luannan Facility's exposure to currency risks,  there
can  be no assurance that the relevant government agency will approve any  such
adjustments,  and  significant  exchange rate fluctuations  during  the  period
between  adjustments may adversely affect the Joint Ventures' ability  to  make
U.S.  dollar payments to Pan-Western with respect to interest and principal  on
the  Shareholder  Loans  and  dividend distributions  in  an  aggregate  amount
sufficient  to enable Pan-Western to meet its payment obligations with  respect
to  the Issuer Note. Although North China Power Company is obligated to use its
best  efforts  to  obtain required approvals to repay the Luannan  Transmission
Facilities Loan in U.S. dollars, there can be no assurance that it will be able
to  obtain such approvals. If such approvals are not obtained, the parties have
agreed  to  permit  North China Power Company to borrow and repay  the  Luannan
Transmission Facilities Loan in Renminbi, in which case the parties have agreed
to  negotiate  an  arrangement  for an equitable  allocation  of  any  currency
exchange  costs  related  to repayments of the Luannan Transmission  Facilities
Loan.  However,  there can be no assurance that any such negotiations  will  be
satisfactorily concluded. Thus, the Joint Ventures may bear all or a portion of
the currency exchange risk on the Luannan Transmission Facilities Loan.
     
     There was a significant devaluation of the Renminbi on January 1, 1994  in
connection  with  the  replacement of the official exchange  rate  with  a  new
managed  floating  rate foreign exchange system. Since then, the  Renminbi  has
from  time  to time appreciated against the U.S. dollar. A devaluation  of  the
Renminbi  against the U.S. dollar after the commercial operation date  for  the
Luannan Facility may adversely affect the ability of the Joint Ventures to make
payments  to  Pan-Western sufficient for Pan-Western to satisfy its obligations
with  respect to the Issuer Note, as more revenues would be needed by the Joint
Ventures  to  meet  their  payment  obligations  under  the  Shareholder   Loan
Agreements and pay dividends and the Joint Ventures may not be able to increase
power  rates  sufficiently  to offset such effects.  See  also  "--Governmental
Regulation of Power Rates" below.
     
  Legal and Regulatory Considerations
  
     The  Joint Ventures have been formed to undertake separate aspects of  the
Luannan  Facility. Under PRC law and regulations, the development  of  a  power
plant  and  the formation of a Sino-foreign joint venture require approvals  of
certain  governmental authorities in the province in which the power plant  and
the  joint  venture are located and, if the total investment (including  equity
contributions  to  the  joint  venture and expected  borrowings  of  the  joint
venture) exceeds certain thresholds (denominated in U.S. dollars), the approval
of  certain Central Government authorities is required. Such thresholds vary by
province,  municipality  and  special economic  zone.  In  the  case  of  Hebei
Province,  where  the  Joint  Ventures  are  located,  provincial  governmental
authorities have authority to approve the development of a power plant and  the
establishment of any Sino-foreign joint venture entity the total investment  in
which  does  not exceed $30.0 million, pursuant to a guideline  issued  by  the
Central  Government  in  1988. HPPC and Hebei COFTEC, the  provincial  approval
authorities for the development of power plants and the establishment of  Sino-
foreign  joint  ventures, respectively, have advised that the approval  of  the
formation  of the Joint Ventures is within their respective approval  authority
limits  because  the  total  investment  (including  equity  contributions  and
borrowings)  of each Joint Venture is less than $30.0 million. As a  result  of
this  $30.0  million  approval limitation, a cost overrun  might  result  in  a
requirement  for  one  or  more  of  the  Joint  Ventures  to  seek  additional
governmental  approvals,  including possibly  Central  Governmental  approvals.
There is no assurance that any such additional approvals, if required, could be
obtained.
     
     Chinese   law  governing  the  appropriate  approval  levels  for  foreign
investment in power plants is not fully developed and there can be no assurance
that  Central  Government authorities will agree with  the  foregoing  position
concerning  the appropriate approval authority for the formation of  the  Joint
Ventures  and  the  Luannan  Facility. Recently,  the  Central  Government  has
reiterated  its  policy  against dividing large  projects  into  several  small
projects  in order to keep within provincial approval limits. There can  be  no
assurance  that  the Central Government authorities will not  characterize  the
Luannan Facility as one project requiring Central Government approval. Projects
and joint ventures using foreign investment not approved in accordance with the
limits of authority set forth by the Central Government are null and void.  Any
approvals or licenses issued in reliance on a project or joint venture approval
which  is  null  and  void (as well as any contracts signed  by  such  a  joint
venture)  would  not  be legally effective, and approvals  or  licenses  to  be
obtained  in  the future with respect to such a project or joint venture  would
not  be  processed.  Furthermore,  although authority  for  specific  approvals
generally is vested in particular government organizations, as discussed above,
the   approval  process  typically  involves  consultation  with  all  relevant
government  organizations, whose opinions are solicited before an  approval  is
issued.  Therefore,  additional  government  departments  or  their  provincial
counterparts may also have opportunities to intervene in the approval process.
     
     The  Issuer has been advised by Cai, Zhang & Lan, Chinese counsel  to  the
Issuer, Pan-Western and the Joint Ventures, that, because each Joint Venture is
technically  viable  and  operational by itself, has its  own  clearly  defined
business scope and purpose, and has followed proper procedures for all required
approvals,  each  Joint  Venture will be treated as a  separate  company,  each
project  in  respect of which each Joint Venture has been established  will  be
treated  as  a  separate project for approval purposes and  Central  Government
approval  is  not  required. Based on the opinion of its  Chinese  counsel  and
advice  from  HPPC, Hebei COFTEC and the County Partners, the  Issuer  believes
that  all government approvals required to date to form the Joint Ventures  and
develop the Luannan Facility have been obtained.
     
     Additional  governmental  approvals will  be  required  to  commence  full
construction activity upon the giving of notice to proceed, during  the  course
of construction and upon the commencement of operation of the Luannan Facility.
The  Company believes that such approvals will be obtained; however, there  can
be  no  assurances  that such approvals will be obtained in  a  timely  manner.
Potential  delay or inability to complete construction of the Luannan  Facility
and   operate  the  Luannan  Facility  when  constructed  could  adversely  and
materially  affect  the  ability of the Issuer to  meet  required  payments  of
principal and interest on the Exchange Notes.
     
     Each  of  the Joint Ventures holds a business license from the SAIC  which
expires  on  June  30, 1997.  In the opinion of Cai, Zhang  &  Lan,  the  Joint
Ventures' respective business licenses were properly issued by the SAIC and are
currently valid. Cai, Zhang & Lan have advised the Issuer that certain  capital
contributions   required  to  be  made  to  the  Joint   Ventures   under   PRC
administrative regulations were not made in a timely manner and, as  a  result,
the  SAIC  has administrative discretion to revoke the Joint Ventures' business
licenses.  While the Issuer and the Joint Ventures believe it is unlikely  that
the  SAIC  would  act to revoke the Joint Ventures' business licenses  on  this
basis  prior to the expiration of the term of the business licenses, there  can
be  no  assurances  in this regard. The required capital contributions  to  the
Joint  Ventures  were made with a portion of the proceeds  of  the  Old  Notes.
Following  the  making  of  such  requisite capital  contributions,  the  Joint
Ventures  believes that the business licenses will be renewed for substantially
longer terms.
     
     Each  of  the Joint Ventures has guaranteed the obligations of  the  other
Joint  Ventures with respect to their Shareholder Loans pursuant to  the  Joint
Venture  Guarantees.  Cai, Zhang & Lan has advised the Issuer  that  each  such
Joint  Venture  Guarantee is a valid and enforceable obligation of  the  maker;
however,  the  inapplicability  of  a  regulation  of  a  central  governmental
authority  requiring approval of certain guarantees of off-shore financings  is
not   free  from  doubt.  If  this  regulation  were  deemed  applicable,   the
enforceability  of  the Joint Venture Guarantees would be subject  to  question
unless such approval was obtained. The Joint Venture Guarantees are payable  in
Renminbi. See "--Governmental Control of Currency Conversion and Exchange  Rate
Risks."
     
     In  an attempt to separate the regulatory and commercial functions of  the
electric   power  industry,  the  PRC  State  Council  formally  approved   the
establishment  of the State Power Corporation of China ("SP") in January  1997.
The  SP is a state-owned legal entity with funds provided directly by the State
Council.  It  will serve as the PRC's principal investor in and/or operator  of
wholly or partially state-owned power-related assets in China. It will also  be
responsible for the operation of interregional transmission facilities and  the
development  of a national power grid. After the establishment of the  SP,  the
MOEP  will  continue  to  exercise the regulatory  function  over  the  Chinese
electricity  industry, but the MOEP's enterprise management  function  and  its
function to operate state assets will be turned over to the SP. As part of  the
reform,  provincial power bureaus will also need to transfer  their  regulatory
functions  to other departments of the local government and become subsidiaries
of the SP. It has been reported that the MOEP itself will also be dissolved and
its  regulatory function will be transferred to the China Electricity  Council,
the  SPC and the State Economic and Trade Commission. There can be no assurance
as to what impact this reform will have on the Luannan Facility.
     
     As  the  PRC legal system continues to develop, changes to existing  laws,
regulations and policies (or in the application thereof), the adoption  of  new
laws  and  the pre-emption of local regulations by national laws may  adversely
affect the Joint Ventures. Although the PRC government has introduced new  laws
and  regulations  since January 1, 1994 to modernize its  securities,  tax  and
secured  lending  systems, China does not yet possess a comprehensive  body  of
business law. Furthermore, experience in the enforcement of contractual  rights
by  foreign  parties  through  legal or arbitration  proceedings  in  China  is
developing.  The  Joint Ventures' activities in China are by  law  subject,  in
certain  cases, to administrative review and approval by various  national  and
local  agencies  of  the  PRC government. While the Issuer  believes  that  all
necessary approvals have been obtained for the entering into and performance of
the  Luannan  Project Documents (including the mechanism in a pricing  document
(the  "Pricing Document" which is separate from, but incorporated by  reference
in,  the  Luannan Power Purchase Agreement) for setting the power sales  tariff
from time to time), such contracts are as yet untested in the PRC legal system.
Although  the  Issuer  believes  that  the  support  of  the  Hebei  Provincial
Government, Hebei COFTEC, North China Power, the Luannan County Government  and
China National Machinery Import & Export Corporation, a state-owned PRC trading
company ("CMC") which, through an affiliate, owns a 1% interest in Pan-Western,
will   benefit  the  operations  of  the  Joint  Ventures  in  connection  with
administrative review and the receipt of any approvals which may be required in
the  future,  there can be no assurance that such approvals will be forthcoming
when necessary or desirable.
     
  Governmental Regulation of Power Rates
  
     Similar  to  electric  power  companies  in  other  countries,  the  Joint
Ventures,  North  China  Power Company and North China  Power  are  subject  to
governmental  and electric power grid regulation in virtually  all  aspects  of
their operations, including the amount and timing of electricity generation and
dispatch, the setting of power rates, performance of scheduled maintenance  and
compliance  with power grid control directives. Rates for electricity  produced
by  power  plants wholly-owned by the MOEP are set by the MOEP and the relevant
price department of the State Planning Commission ("SPC"), and most electricity
has  historically been purchased at such rates. Power rates for power  utilized
within a specific region and produced by power plants not owned by the MOEP are
set  on  the  basis  of discussions between the power plants and  the  relevant
provincial  price  bureau.  In  the case of the  Luannan  Facility,  the  Hebei
Provincial  Price Bureau has delegated its authority to the Tangshan  Municipal
Price  Bureau  (the  "Pricing  Approval  Authority").  The  delegation  letter,
however,  makes  it  clear that the Hebei Provincial  Bureau  can  revoke  such
delegation  at any time if it is necessary for the consistency of  the  state's
electric tariff policy.
     
     Project  electricity prices will be based on factors such as covering  the
Joint Ventures' construction, operating and financing costs and providing for a
rate  of  return  on  investment in the Joint Ventures  based  on  availability
factors  and specific hours of operation. Certain components of the power  rate
calculation  are  subject  to  annual adjustment  to  reflect  local  and  U.S.
inflation and foreign exchange rate fluctuations. The electricity price  to  be
paid  under  the  Luannan Power Purchase Agreement is provided in  the  Pricing
Document,  which,  except for the pricing formula, has  been  approved  by  the
Pricing  Approval Authority. The formula provided in the Pricing Document  sets
forth the basis for future pricing adjustments and has been acknowledged by the
Pricing Approval Authority. However, such an acknowledgment does not constitute
a  guarantee  or promise by the Pricing Approval Authority to approve  a  price
application  calculated in accordance with the formula, and  there  can  be  no
assurance  that  future  price applications by any Joint  Venture  will  be  so
approved.
     
     The  power  price  formula acknowledged by the Pricing Approval  Authority
provides for adjustment of the annual depreciation amount according to  changes
in  a  Chinese  price  index.  The  Joint  Ventures  believe  that  the  annual
depreciation amount should be adjusted according to changes in the U.S. dollar-
Renminbi  exchange  rate.  Since  the  Luannan  Power  Purchase  Agreement  was
executed,  the  Chinese price index has changed by a greater  amount  than  the
change  in  the exchange rates, resulting in an electric price slightly  higher
than  would  have  been  the case if depreciation were  adjusted  according  to
changes  in  those  exchange rates. However, a significant devaluation  of  the
Renminbi  against the U.S. dollar (unless offset by inflation in  China)  could
result in a lower electric price (in U.S. dollar terms) unless the power  price
formula  is  modified so that depreciation is adjusted according to changes  in
these exchange rates. The Joint Ventures have requested such a modification  of
the power price formula and believe it will be implemented.
     
     Although the Joint Ventures have the right to request a determination of a
new  power  rate  whenever they determine that changes in the price  components
require  a  new  determination,  and it is anticipated  that  they  will  apply
annually  for  changes  in such rates, the actual prices  for  electricity  are
subject  to the approval of the Pricing Approval Authority. Neither the  Issuer
nor  the Joint Ventures have any experience in applying for electricity  prices
determined  in accordance with the pricing formula incorporated in the  Pricing
Document.  Use of such a pricing formula to establish electricity prices  is  a
recent development in the Chinese power industry. Although the Issuer, based on
discussions  with  the Pricing Approval Authority, believes  that  the  pricing
formula  will be applied to permit recovery of all Luannan Facility  costs  and
anticipated returns, there can be no assurance that the Joint Ventures will  be
able to charge rates that will generate sufficient revenues to enable the Joint
Ventures  to  meet their obligations to pay principal of and  interest  on  the
Shareholder Loans when due and make distributions to Pan-Western sufficient  in
the aggregate to enable Pan-Western to satisfy its obligations with respect  to
the  Issuer  Note  and to make distributions to the Issuer which  are  in  turn
sufficient for the Issuer to pay interest and principal on the Exchange  Notes,
when  due,  or that any application for an increase in the power rate  will  be
approved by the Pricing Approval Authority.
     
     The  Law of Electric Power (the "Power Law") of the PRC, which was adopted
by  the NPC in late 1995 and which took effect on April 1, 1996, provides  that
the  proper approval authority for certain tariffs relating to inter-provincial
grids (such as the Jing-Jin-Tang Grid) is the relevant price department of  the
SPC. No implementing regulations under this provision have been adopted. It  is
therefore  not possible to predict the extent, if any, to which the  ministries
or  bureaus of the Central Government, such as MOEP or the SPC, might  seek  to
assert authority over pricing approvals relating to the Luannan Facility.   The
Issuer has been advised by Cai, Zhang & Lan, Chinese counsel to the Issuer, Pan-
Western  and the Joint Ventures, that the Pricing Document, which was  approved
by  the  Pricing Approval Authority on October 18, 1995, continues to be  valid
because it was obtained prior to the effectiveness of the Power Law and  should
be  binding  on any future regulator.  However, there can be no assurance  that
Central Government authorities will not take a different position.
     
  Limited Information
  
     There  can be no assurance as to the reliability of the sources from which
information  contained in this Prospectus concerning the PRC,  Hebei  Province,
Beijing,  Tianjin and Tangshan municipalities, North China Power,  North  China
Power  Company and the other Chinese parties described herein has  been  taken.
Official  statistics in the PRC may also be produced on a basis different  from
that  used  in  other,  more  developed countries.  Due  to  doubts  about  the
reliability of available official and public information, the data relating  to
the PRC contained in this Prospectus may be inaccurate and may not be reliable.
     
  Uncertain Enforcement of Foreign Judgments
  
     Experience   with  respect  to  the  implementation,  interpretation   and
enforcement of business law in the PRC is limited. More specifically, there has
been  only  a limited number of situations in which a foreign party has  sought
judicial  enforcement of contracts against a Chinese entity in a PRC  court  or
through   arbitration  proceedings  in  China.  In  addition,  the  means   for
enforcement of monetary judgments in the PRC are not fully developed and may be
affected  by a predilection to favor Chinese entities in disputes with  foreign
parties.  The  Joint  Venture Agreements in respect of the Joint  Ventures  are
governed  by  PRC law and the parties thereto have submitted to arbitration  in
China.  Other  Luannan Project Documents (including the Luannan Power  Purchase
Agreement and the Luannan EPC Contract but excluding the Luannan Operations and
Maintenance Agreement) are also governed by PRC law. The parties to the Luannan
EPC Contract may agree to submit disputes thereunder to arbitration in China if
the  amount  of a dispute does not exceed $1.0 million; either party  also  may
submit a dispute to the International Court of Arbitration of the International
Chamber  of  Commerce ("ICC") for binding arbitration to be held in  Singapore.
The  Luannan  Power  Purchase Agreement similarly provides  that  disputes  not
resolved  by  mutual  discussion shall be settled  by  binding  arbitration  in
Singapore  before  the International Court of Arbitration of  the  ICC.  It  is
unclear  whether an arbitration award resulting from an arbitration  proceeding
between two Chinese legal persons conducted outside of China is enforceable  in
China. Consequently, there can be no assurance that the Joint Ventures would be
able  to  obtain  effective enforcement in a timely  manner  of  the  principal
Luannan  Project Documents against any Chinese party or that Pan-Western  would
be  able to obtain enforcement, in a timely manner, of the obligations  of  the
Joint  Ventures  under the Shareholder Loan Agreements or the  undertakings  by
each  Joint  Venture to fully and unconditionally and irrevocably guarantee  to
Pan-Western the prompt payment and performance by each other Joint  Venture  of
their individual obligations to Pan-Western pursuant to any debt obligation now
or hereafter due.
     
  Substantial Dependence on Debt Service from Joint Ventures; Restrictions on
  Payment of Dividends
  
     The  ability  of  the Issuer to make payments on the Exchange  Notes  will
depend  substantially upon the financial performance of the Joint Ventures  and
the ability of the Joint Ventures to make principal and interest payments under
the  Shareholder  Loans through bank accounts maintained  in  the  PRC  and  to
distribute dividends.
     
     Under  Chinese  law, the Joint Ventures may pay a dividend only  from  net
income after taxes. Dividend distributions to equity joint venture partners are
limited  to  the  net  income of the joint venture as determined  according  to
Chinese accounting principles. Accordingly, the Joint Ventures may be precluded
from  paying  a dividend to Pan-Western in a fiscal year even though  they  may
generate  cash  flow in that year, or have accumulated a surplus sufficient  to
make  such  a  payment. Generally, distributions are determined  on  an  annual
basis;  however, special permission may be granted for quarterly  distributions
(with   appropriate  retention  for  applicable  withholding)  with  an  annual
reconciliation  of actual amounts available for such distributions.  The  Joint
Ventures  intend to request approval to make quarterly distributions;  however,
there  is  no assurance that such approval will be granted. Even if an approval
is  granted,  it  may  be limited to a particular amount  and  may  not  permit
subsequent  quarterly  dividends without additional  approvals.  If  the  Joint
Ventures are unable to pay dividends because of the absence of net income after
taxes  or  if  the payment of dividends is restricted by the annual limitation,
the  ability  of  the  Issuer to obtain the revenues that it  requires  to  pay
interest and principal on the Exchange Notes when due may be impaired. See  "--
Considerations Relating to the PRC--Governmental Control of Currency Conversion
and Exchange Rate Risks" above.
     
     The  PRC  levies a withholding tax on payments of interest in  respect  of
foreign   exchange  loans,  including  bonds  and  notes,   made   to   foreign
corporations; this withholding tax will apply to the payment of interest by the
Joint  Ventures  to Pan-Western on the Shareholder Loans. The current  rate  of
such  withholding tax is 20% of the gross amount of the interest. However,  the
withholding  tax charged on interest paid by the Joint Ventures to  Pan-Western
on   the  Shareholder  Loans  will  be  10%  pursuant  to  certain  provisional
regulations intended to encourage foreign investments in coastal economic  open
zones in the PRC. Due to the nature of these provisional regulations, there can
be  no  assurance  that the reduction in the rate of the withholding  tax  will
continue through the term of the Shareholder Loans. A change in the rate of the
withholding tax to 20% would decrease the net amount of funds to be received by
Pan-Western from the Joint Ventures in repayment of the Shareholder  Loans  and
could  have  a  material adverse effect on the ability of  the  Issuer  to  pay
interest  and  principal on the Exchange Notes when due. See "Business  of  the
Issuer,  The  Company, Panda International and Their Subsidiaries--The  Issuer,
the Company and Panda International."
     
  Amendment of Shareholder Loan Agreements
  
     The Issuer and the Joint Ventures intend that the terms of the Shareholder
Loan  Agreements  between Pan-Western and the Joint Ventures  will  be  amended
after  the  closing of the Prior Offering to modify the interest rate  and  the
principal  amortization schedule.  The Issuer and the Joint Ventures intend  to
file such amendments with the Tangshan branch of SAFE. The Issuer and the Joint
Ventures  believe that such amendments should be accepted for filing  by  SAFE.
However,  there  can  be  no assurances that SAFE will accept  for  filing  the
amendments  to  the  Shareholder  Loan Agreements,  and  the  Shareholder  Loan
Agreements  may  not  be  amended without such filing. If  amendments  are  not
accepted  for  filing,  the interest rate and principal  amortization  schedule
would remain as in the existing Shareholder Loan Agreements and the ability  of
the  Issuer  to  obtain  the  revenues that it requires  to  pay  interest  and
principal on the Exchange Notes when due may be impaired.
     
U.S. Industry Conditions; Restructuring Initiatives; Utility Responses

     The  Federal  Energy  Regulatory Commission (the "FERC")  and  many  state
utility  commissions, including the Virginia State Corporation Commission  (the
"SCC"),  are  currently  studying  a number of  proposals  to  restructure  the
electric  utility industry in the United States to permit utility customers  to
choose  their supplier in a competitive electric energy market. In  April  1996
the  FERC  issued a rule requiring utilities to offer wholesale  customers  and
suppliers open access on their transmission lines on a basis that is comparable
to  the  utilities' own use of the lines. In addition, a number of  bills  have
been  introduced  in  the  United States Congress to promote  electric  utility
restructuring and deregulation of electric rates.
     
     Many  utilities fear that current captive customers may leave their system
to  procure  electricity  from  other electric power  suppliers  and  that  the
utilities  may  thereafter be unable to recover their fixed  costs  from  their
remaining  customers. These potential "stranded" or "transition" costs  include
the  cost  of maintaining electric generating capacity under many QF contracts.
The  restructuring  proposals  being  considered  by  regulatory  agencies  and
Congress  differ  as  to  how,  and to what extent,  utilities'  "stranded"  or
"transition" costs would be recoverable if current captive customers leave  the
utilities' systems. To minimize the risk that "stranded" or "transition"  costs
may  not be recovered by utilities if such restructuring proposals are enacted,
many   utilities  have  implemented  certain  cost  control  strategies.   Such
strategies include attempts to renegotiate, buy out or terminate existing power
purchase  agreements  containing prices that  utilities  believe  will  not  be
competitive in a short-term marginal cost electric energy market. In  addition,
some  utilities have sought to rigorously enforce the terms of such  agreements
and  to  exercise  their  contractual termination  rights  if  the  agreements'
provisions are not strictly observed. Some utilities have engaged in litigation
against Qualifying Facilities to achieve these ends.
     
     On  November 12, 1996, the SCC issued an order that would require VEPCO to
file  a  report  on  its efforts to renegotiate its contracts with  non-utility
generators, which includes the Rosemary Facility. Such report must be filed  on
or before June 1, 1997 and quarterly thereafter. VEPCO has not yet responded to
that  order but previously has filed comments with the SCC indicating  that  it
will  aggressively pursue initiatives to restructure contracts with  Qualifying
Facilities  to minimize its costs. VEPCO has filed a request with the  SCC  for
permission  to  institute a formal QF monitoring program  under  which  certain
facilities  (including  the Rosemary Facility) would  be  required  to  furnish
certain  operational  data  to VEPCO on an annual  basis.  Under  the  proposed
monitoring program, if VEPCO believed, based on data provided by a facility and
any  additional  information,  that  a facility  no  longer  satisfied  the  QF
criteria,  VEPCO  could  institute proceedings with the  FERC  to  revoke  such
facility's QF status. On October 10, 1996, the SCC staff, pursuant to the SCC's
directive, filed a legal memorandum with the SCC discussing VEPCO's proposal in
which the staff argued that the SCC has the legal authority to implement  a  QF
monitoring  program.  On  December 18, 1996,  the  SCC  staff  filed  a  report
recommending that the SCC adopt a QF monitoring program for all QFs that have a
power purchase agreement with VEPCO. The program would direct VEPCO to collect,
audit  and analyze calendar year operating information, including actual annual
operating  results and a copy of meter calibration results, to be submitted  by
all such QFs by May 1 of the following year. VEPCO would report annually to the
SCC the results of its compliance evaluation. On December 30, 1996, VEPCO filed
a  response  in  support  of  the Staff Report. See  "--Maintaining  Qualifying
Facility Status" below.
     
     VEPCO  has been involved in several proceedings with parties with whom  it
has  entered  into power purchase agreements, including several  in  which  the
interpretation  of  the power purchase agreements is being  disputed.  Although
there  is currently no dispute between the Rosemary Partnership and VEPCO,  the
Rosemary  Partnership anticipates that VEPCO will closely monitor the  Rosemary
Partnership's  compliance  with  the  Rosemary  Power  Purchase  Agreement  and
vigorously  enforce  its  rights thereunder. Because the  capacity  and  energy
payments  that the Rosemary Partnership receives from VEPCO under the  Rosemary
Power  Purchase Agreement constitute major sources of revenue for the  Rosemary
Partnership, a termination of the Rosemary Power Purchase Agreement  would,  in
the  absence  of another source of funds, terminate the Rosemary  Partnership's
ability  to  service its Project-level debt and to make distributions,  through
intermediate entities, to the Company. Such termination could adversely  affect
the  ability  of  the Company to meet its obligations under the Exchange  Notes
Guarantee.  See Appendix B, "The Electric Power Industry in the  United  States
and United States Regulation--Federal Energy Regulation."
     
  Maintaining Qualifying Facility Status
  
     PURPA  and  the  regulations  promulgated  thereunder  provide  Qualifying
Facilities  such  as  the  Rosemary Facility and the Brandywine  Facility  with
certain exemptions from federal and state legislation and regulation, including
regulation  of  rates  at  which electricity can be sold.  For  a  cogeneration
facility  to maintain QF status, no more than 50% of the facility may be  owned
by an electric utility, electric utility holding company or combination thereof
and the facility must produce both electricity and a related quantity of useful
thermal energy and satisfy certain operational and efficiency criteria. If  for
any  reason  a  Domestic Project failed to maintain its status as a  Qualifying
Facility,  or  if there were a change in law or regulation that eliminated  the
Project's status as a Qualifying Facility (or exemption from regulation granted
to   Qualifying  Facilities),  the  Project  would  be  subject  to  additional
regulation  and  the  revenues of the Rosemary Partnership and  the  Brandywine
Partnership could be materially and adversely affected. For discussions of  the
steam  sales arrangements that permit the Rosemary Facility and the  Brandywine
Facility  to  maintain their QF status, see "Description of  the  Projects--The
Rosemary  Facility--Steam  and Chilled Water Sales"  and  "Description  of  the
Projects--The Brandywine Facility--Sale of Capacity, Electricity and Steam."
     
     On  February 18, 1997, The Bibb Company ("Bibb") announced that  it  would
sell  the textile mill that purchases steam and chilled water from the Rosemary
Facility to WestPoint Stevens, Inc. ("WestPoint"). The closing of the sale  was
reported  in  the news media on February 21, 1997, but the Rosemary Partnership
has  not  received  formal  notice of such sale from  Bibb  or  WestPoint.  The
contract pursuant to which the Rosemary Partnership has been selling steam  and
chilled  water  to Bibb cannot be assigned by Bibb without the consent  of  the
Rosemary Partnership. The Rosemary Partnership has continued to sell steam  and
chilled  water to the purchaser in substantially the same amounts  as  it  sold
prior to the announcement of the sale. While the Issuer expects that Bibb  will
seek  to  assign the contract to WestPoint, there can be no assurance  that  it
will  do  so. Additionally, if WestPoint were to fail to purchase and  use  the
minimum  quantity of steam necessary for the Rosemary Facility to  satisfy  the
Qualifying  Facility criteria, the Rosemary Facility could continue to  satisfy
the Qualifying Facility criteria if a distilled water facility or other thermal
operation  were  installed  at the Rosemary Facility.  The  Rosemary  Indenture
permits the borrowing of funds to make such enhancements or improvements to the
facility  which  are  necessary to maintain the facility's Qualifying  Facility
status. There can be no assurance, however, that the Rosemary Partnership would
have  or be able to obtain the funds necessary to install such a facility.  See
"Description  of the Projects--The Rosemary Facility--Steam and  Chilled  Water
Sales"  and  Appendix B, "The Electric Power Industry in the United States  and
United States Regulation--State Regulations."
     
Environmental and Other Matters

     In operating any Project, the owner is generally required to comply with a
number  of  statutes  and  regulations relating to the  safety  and  health  of
personnel  and  the public, including the identification, generation,  storage,
handling, transportation, disposal, recordkeeping, labeling, reporting  of  and
emergency  response  in  connection  with  hazardous  and  toxic  materials  or
substances  associated with the facility, limits on noise  emissions  from  the
facility,  safety and health standards, practices and procedures applicable  to
construction  and  operation  of  the  facility  and  environmental  protection
requirements  including standards and limitations relating to the discharge  of
air  and  water pollutants and disposal of solid waste. Failure to comply  with
any  of  such statutes and regulations could have adverse effects on a Project,
including the imposition of criminal or civil liability by regulatory  agencies
or  as  a result of litigation by private parties, imposition of clean-up fines
or  liens  and  the  mandatory expenditure of funds to bring the  Project  into
compliance.
     
     Pursuant  to  the  various  financing, lease, construction,  easement  and
encroachment  agreements, and as is common practice in  the  independent  power
industry,  the  Rosemary  Partnership  and  the  Brandywine  Partnership   have
indemnified third parties against the consequences of each Project's storage or
emission  of hazardous and toxic materials. While the Issuer believes that  the
Rosemary  Facility's and the Brandywine Facility's use of natural  gas  as  the
primary  fuel source provides comparative environmental advantages  over  other
fossil fuel-fired power production technologies, there can be no assurance that
environmental  laws and regulations, whether now existing  or  adopted  in  the
future,  will  not impose significant constraints and increased costs  on  such
facilities'  operations.  The 1990 Amendments to  the  Federal  Clean  Air  Act
require  the  State of North Carolina, the State of Maryland  and  the  federal
government,  at various times, to take regulatory actions that may  affect  the
Domestic Projects. There can be no assurance that each Domestic Project will or
can  satisfy all requirements that may result from actions in response  to  the
1990  Amendments  to the Federal Clean Air Act. See Appendix B,  "The  Electric
Power Industry in the United States and United States Regulation--Environmental
Regulation."
     
     With  respect to the Luannan Facility, the Joint Ventures are  subject  to
the environmental protection laws and regulations of the PRC and the government
of Hebei Province, which currently impose base-level discharge fees for various
polluting substances and graduated schedules of fees for the discharge of waste
substances in excess of applicable standards, require the payment of fines  for
violations of laws, regulations or decrees and provide for the possible closure
of any facility which fails to comply with orders requiring it to cease or cure
certain  activities  causing environmental damage. The Joint  Ventures  believe
that the planned environmental protection systems and facilities of the Luannan
Facility  will  be  in  compliance  with  applicable  environmental  protection
requirements. However, there can be no assurance that the Central Government or
the  government  of  Hebei Province will not impose new,  stricter  regulations
which  would  require  additional  expenditures  by  the  Joint  Ventures   for
environmental protection or compliance.
     
Certain Other Regulatory Risks Relating to Projects in the United States

  Regulatory Approvals
  
     Projects  in  the  United  States  are subject  to  stringent  energy  and
environmental regulation by federal, state and local authorities. Power  plants
in  the  United States are required to comply with numerous federal, state  and
local  statutory  and  regulatory requirements and the  Domestic  Projects  are
required to obtain and maintain in effect numerous approvals relating to energy
and  environmental  laws. There can be no assurance that  existing  regulations
will  not  be  revised, that new laws and regulations will not  be  adopted  or
become  applicable to the Projects or that the Company's business and financial
condition will not be materially and adversely affected by such future  changes
in  laws  and  regulations  (including the possible  loss  of  exemptions  from
regulations). See Appendix B, "The Electric Power Industry in the United States
and United States Regulation."
     
  Gas Transportation Regulation
  
     The various gas transportation agreements for the Projects contemplate the
use  of interstate natural gas pipelines and services. These gas transportation
arrangements,  including  pipeline  facilities  and  the  rates   charged   for
transportation  services,  are  subject to the jurisdiction  of  the  FERC.  In
exercising  such jurisdiction, the FERC maintains or may maintain authority  to
modify  aspects  of  the  rates,  terms and  conditions  that  govern  the  gas
transportation services provided. It is possible that such a modification could
materially  increase the gas transportation costs of each Domestic Project.  In
addition,  certain  provisions  of the gas transportation  agreements  and  the
approved tariffs allow the transporter to terminate, suspend performance  under
or  reduce  the  amount  of  gas transported upon  the  occurrence  of  certain
conditions, such as the taking of an adverse action by a regulatory  authority,
if  the  transporter, in its judgment, deems it necessary to make modifications
or  repairs  to its pipeline facilities or upon the occurrence of an  event  of
force  majeure.  Any  failure  by a transporter to provide  gas  transportation
services  could  have a material adverse effect on a Project's operations.  See
"Description of the Projects--The Rosemary Facility--Gas Transportation" and "-
-The  Brandywine  Facility--Gas Transportation."  See  also  Appendix  B,  "The
Electric  Power  Industry in the United States and United  States  Regulation--
Natural Gas Regulation."
     
  Permitting Risk
  
     Each Project Entity is responsible for obtaining various permits and other
regulatory  approvals required for the operation of its facility. Some  of  the
permits  and  other approvals that are obtained for a particular  facility  may
contain  certain continuing conditions, including the obligation  to  renew  or
extend  the permit or approval by a certain date. Failure to satisfy  any  such
condition  could  prevent the operation of the Project or result  in  fines  or
other additional costs. The Issuer believes that the U.S. Projects developed by
Panda  International have been or will be designed and constructed in order  to
substantially  comply,  insofar  as can be reasonably  controlled,  with  their
respective  permit  and  approval conditions. All material  permits  and  other
regulatory  approvals currently required to operate the Rosemary  Facility  and
the Brandywine Facility have been obtained. If future levels of dispatch of the
Rosemary  Facility  exceed  the levels allowed under  the  facility's  existing
operating  permits  (which  is  projected to be  the  case;  see  the  Rosemary
Engineering  Report),  additional equipment designed to control  air  emissions
would  have  to  be installed in order for the facility to maintain  compliance
with  such  permits.  While  the Rosemary Partnership  has  set  aside  certain
reserves  which it believes are sufficient to fund the cost of such  equipment,
there  can  be no assurance that such reserves will be sufficient  to  pay  the
actual  cost of such equipment if and when required to be installed. There  can
be  no  assurance that in the future the U.S. Projects will operate within  the
limits  established  by  current  or future permits  or  other  approvals.  Any
particular  Project could be adversely affected if regulatory  changes  or  new
permit conditions were implemented which impose more comprehensive or stringent
requirements  resulting in increased compliance costs or which  reduce  certain
benefits expected by the Company.
     
Absence of Market for the Exchange Notes

     The Exchange Notes are being offered to the holders of the Old Notes.  The
Old  Notes  were offered and sold in April 1997 to a small number of  investors
and  are  eligible  for trading in the Private Offerings,  Resale  and  Trading
through Automatic Linkages ("PORTAL") Market, although an active trading market
for the Old Notes has not developed to date.
     
     There  is currently no established market for the Exchange Notes  and  the
Exchange  Notes  will not be eligible for trading in the  PORTAL  Market.   The
Issuer  does  not  intend to list the Exchange Notes or  the  Old  Notes  on  a
securities exchange or seek approval for quotation through any automated dealer
quotation  system.  There can be no assurance that a market  for  the  Exchange
Notes  will  develop or as to the ability of holders of the Exchange  Notes  to
sell  their Exchange Notes or the price at which such holders would be able  to
sell  their  Exchange  Notes.   If a market for the  Exchange  Notes  does  not
develop,  purchasers may be unable to resell the Exchange Notes for an extended
period  of  time,  if at all.  Consequently, a purchaser may  not  be  able  to
liquidate  the  investment readily, and the Exchange Notes may not  be  readily
accepted as collateral for loans.  If a market for the Exchange Notes  were  to
develop,  the Exchange Notes could trade at prices that may be lower  than  the
initial market values or at a discount from their face amount depending on many
factors,   including  prevailing  interest  rates,  the  markets  for   similar
securities,  and the financial performance of the Issuer and its  subsidiaries.
The  liquidity  of,  and trading market for, the Exchange  Notes  also  may  be
adversely affected by general declines in the market for similar securities and
other  factors  that  are  independent of the  financial  performance  of,  and
prospects for, the Issuer.
     
Control by Principal Stockholders

     The  Issuer  is a wholly-owned indirect subsidiary of Panda International.
Robert  and  Janice  Carter, members of their family and Carter  family  trusts
collectively own approximately 38.8% of the outstanding shares of common  stock
of  Panda  International.  In addition, W. M. Huffman (who is  related  to  Mr.
Carter  by marriage), members of Mr. Huffman's family and Huffman family trusts
and  partnerships own approximately 18.5% of the outstanding shares  of  common
stock  of Panda International.  By virtue of their ownership share, the Carters
are  in  a  position  to  influence  the  management  and  direction  of  Panda
International and, through Panda International, its subsidiaries, including the
Issuer  and the Company.  Moreover, the Carters and Huffmans, if they  were  to
act  together  in voting their shares, could control the vote for  election  of
directors,   and   consequently  the  management  and   direction,   of   Panda
International and its subsidiaries, including the Issuer and the Company.   See
"Management -- Stock Ownership of Panda International."
     
BUSINESS OF THE ISSUER, THE COMPANY, PANDA INTERNATIONAL AND THEIR SUBSIDIARIES
                                       
The Issuer, the Company and Panda International

     The  Issuer is a wholly-owned subsidiary of the Company, organized in  the
Cayman  Islands on March 10, 1997. The Company is a wholly-owned subsidiary  of
Panda International, organized in Delaware on March 7, 1997. Each of the Issuer
and  the  Company has been organized for the purposes of (i) investing  in  and
holding  direct and indirect interests in entities engaged in the  development,
construction,  ownership,  operation  and  management  of  electric  generating
facilities, sources of fuel, pipelines and other infrastructure projects,  (ii)
the  marketing  of  electric power, thermal energy  and  fuel,  and  (iii)  the
financing  of  any  of  the above, including the entering into  of  indentures,
contracts  and  other agreements entered into in connection with  the  purposes
described in clauses (i) and (ii) above.
     
     The   Company   and  its  affiliates  are  engaged  in  the   development,
acquisition, construction, ownership and operation of electric power generation
facilities  in  the United States and internationally. Panda International  was
formed  as part of a corporate transaction that took place in October  1995  in
which  all  of  the  capital stock of PEC was exchanged  for  shares  of  Panda
International,  with  the result that PEC became a wholly-owned  subsidiary  of
Panda  International. Upon the formation of the Company, PEC became  a  wholly-
owned subsidiary of the Company. PEC was organized in 1982 by Robert and Janice
Carter, who are the Chairman of the Board and Chief Executive Officer, and  the
Executive  Vice  President,  Treasurer and Secretary,  respectively,  of  Panda
International and the Company. See "Management."
     
     The  principal business strategy of the Company and its affiliates  is  to
use  their  experience  in  developing, constructing,  financing  and  managing
electric  power  generation  facilities to  provide  low-cost  electricity  and
electric  generating capacity. The Company and its affiliates expect to  expand
their presence in the electric power industry by implementing this strategy  in
the  United  States and certain other countries. The Company and its affiliates
have  placed  into  commercial operation facilities  with  electric  generating
capacity of approximately 410 MW, each of which is owned or leased under a long-
term  lease.  In  addition,  Panda International has  executed  power  purchase
agreements relating to four potential Projects (including the Luannan Facility,
in  which  the  Issuer indirectly owns approximately an 83%  interest)  with  a
combined electric generating capacity of approximately 750 MW. See "Description
of the Projects." The Company and its affiliates generally hold their interests
in  Projects  that  are  being developed outside of the United  States  through
intermediate entities (such as the Issuer, Pan-Sino and Pan-Western)  organized
in tax-favorable jurisdictions (such as the Cayman Islands), which in turn hold
interests  in  entities (such as the Joint Ventures) organized in  the  country
where  the  Projects will be located (such as China and as proposed in  Nepal).
U.S.  Projects  are  generally held in limited partnerships  with  general  and
limited   partners  organized  as  Delaware  corporations  that  are   indirect
subsidiaries of the Company. For descriptions of the independent power industry
in the United States and the PRC, see Appendix B hereto. See also "Risk Factors-
-Project Risks" and "Description of the Projects."
     
     With   77   employees,  Panda  International  has  assembled  a  team   of
professionals  with expertise in business development, marketing,  engineering,
design,  construction management, fuel supply, transportation and  exploration,
equipment  procurement,  utility  practices,  contract  management,  regulatory
policy   and  procedures,  project  operation  and  maintenance,  environmental
matters, law and finance and accounting. The Company believes that this  team's
scope  of  expertise  allows  it to compete effectively  for  cogeneration  and
private power development and acquisition opportunities.
     
     The   Company  is  continually  engaged  in  the  evaluation  of   various
opportunities for the development and acquisition of additional electric  power
generation facilities, both in the United States and internationally. China  is
a  strategic target market for the Company and its affiliates as they  continue
to  expand into international power generation. The Company's strategy in China
is  fostered through its business alliance with CMC. The Company considers  its
relationship  with CMC to be an important factor in its dealings with  agencies
of the central, provincial and local governments in the PRC.
     
     The  ownership  structure  of  Panda  International  and  certain  of  its
subsidiaries is shown in Appendix G.
     
      There  were  11,401,212  shares of Common Stock  of  Panda  International
outstanding at March 31, 1997. Of this amount, 4,418,957  shares (38.8%)  are
owned  by  Robert  and  Janice Carter and members of their  family  and  family
trusts.  See  "Management." W.M. Huffman and members of his family  and  family
trusts  and  a  family  partnership own 2,134,443  of  the  outstanding  shares
(18.7%).  Other  directors, officers and employees of Panda  International  own
less  than  1% of the outstanding shares of Common Stock. At March 31,  1997:
(i)  there were outstanding options to acquire 1,209,000 shares of Common Stock
of Panda International (options for 1,050,000 shares being fully vested and for
159,000 shares vesting over a six-year period) held by directors, officers  and
employees of Panda International, and of this amount options for 250,000 shares
are  held  by  Robert Carter and options for 25,000 shares  are  held  by  W.M.
Huffman;  (ii)  Trust Company of the West held warrants to  purchase  1,004,000
shares  of Common Stock of Panda International; and (iii) NNW, Inc. held rights
to  acquire  up  to 181,500 shares of Common Stock of Panda International.  See
"Description  of  the  Projects --  The Panda-Rosemary Facility  --  Cash  Flow
Participation."

The  principal executive offices of the Issuer,  Panda International and the 
Company are located  at  4100 Spring  Valley Road, Suite 1001, Dallas, Texas 
75244. The telephone  number  at such offices is (972) 980-7159.
     
     The Issuer owns 95.5% of the issued and outstanding stock of Pan-Sino. The
remaining  interest in Pan-Sino is owned by National Development  and  Research
Corporation, a Texas corporation ("NDR"). Pursuant to a shareholder  agreement,
NDR's ownership interest in Pan-Sino can increase from 4.5% to a maximum of 10%
(and  the Issuer's equity interest therein can thereby be reduced to 90%) as  a
result of the collective efforts of NDR, Panda International and its affiliates
to develop and achieve financial closing of additional Projects in the PRC. Any
such  change  in  the  equity interest held by the  Issuer  in  Pan-Sino  would
correspondingly  affect the cash-flow interest of the Issuer in  Pan-Sino  with
respect  to  the payment of dividends by Pan-Sino. The right of the  Issuer  to
receive interest payments with respect to the Issuer Note would not be affected
by  a  reduction in the Issuer's equity interest in Pan-Sino, however,  because
the  Issuer Note represents direct obligations of Pan-Western to the Issuer and
has priority in right of payment to equity distributions.
     
     Pan-Sino  owns  a  99% equity interest in Pan-Western.  The  remaining  1%
interest in Pan-Western is owned by Chinamac. Pan-Western owns an 87.92% equity
interest in each of four equity joint venture companies (individually, a "Joint
Venture"  and collectively, the "Joint Ventures") organized under the  laws  of
the  People's Republic of China (the "PRC" or "China"): Tangshan Panda Heat and
Power  Co.,  Ltd. ("Tangshan Panda"), Tangshan Pan-Western Heat and Power  Co.,
Ltd.   ("Tangshan  Pan-Western"),  Tangshan  Cayman  Heat  &  Power  Co.,  Ltd.
("Tangshan Cayman") and Tangshan Pan-Sino Heat Co., Ltd. ("Tangshan Pan-Sino").
Luannan  County  Heat  and  Power Plant ("Luannan Heat  and  Power"),  Tangshan
Luanhua  (Group) Co. ("Luanhua Co.") and Luannan County Heat Company  ("Luannan
Heat  Company")  own the remaining interests in Tangshan Panda,  Tangshan  Pan-
Western  and Tangshan Pan-Sino, respectively. Each of Luannan  Heat  and  Power
and Luanhua Co. owns a 6.04% equity interest in Tangshan Cayman.
     
The Joint Ventures

     The  Joint Ventures have been formed to undertake separate aspects of  the
Luannan Facility. Each Joint Venture has a total investment of less than  $30.0
million. Under Chinese law, a Sino-foreign joint venture in Hebei province with
a  total investment of less than $30.0 million does not require approval of the
Central  Government.  The Issuer has been advised by its Chinese  counsel  that
each  Joint Venture will be treated as a separate project for approval purposes
and  that Central Government approval is not required. Chinese law with respect
to  the  appropriate  approval  levels for  foreign-invested  power  plants  is
developing  and  there can be no assurance that Central Government  authorities
will  not seek to assert jurisdiction over some aspect of the Luannan Facility.
The  Issuer, based on the opinion of its counsel and advice from Hebei  COFTEC,
believes that all required government approvals to form the Joint Ventures  and
develop   the  Luannan  Facility  have  been  obtained.   See  "Risk  Factors--
Considerations Relating to the PRC--Legal and Regulatory Considerations."
     
     Tangshan  Panda  and  Tangshan Pan-Western will each  construct,  own  and
operate  a 50 MW coal-fired cogeneration power unit. Tangshan Cayman  will  own
water  rights, water wells, pipelines, production facilities and certain  steam
production  facilities from which it will sell heat, steam  and  hot  water  to
Tangshan Panda and Tangshan Pan-Western. In addition, Tangshan Cayman will sell
steam  and  hot water to Tangshan Pan-Sino on a wholesale basis. Tangshan  Pan-
Sino  will  engage in retail distribution of steam and hot water to  commercial
and  industrial  users and will own the land use rights, the  Luannan  Facility
buildings  and certain off-site property, the majority of which will be  leased
to  the  other Joint Ventures. In addition, Tangshan Pan-Sino will make certain
loans   in  connection  with  the  construction  of  the  Luannan  Transmission
Facilities.
     
     The  proceeds from the sale of the Old Notes, less amounts to be deposited
in  the Capitalized Interest Fund and the Debt Service Reserve Fund established
with  respect  to  the Old Notes and net of transaction fees,  commissions  and
expenses incurred in connection with the Prior Offering, plus interest earnings
to  be  received by the Issuer, will be loaned by the Issuer to Pan-Western  by
means  of  one  or more loans, each evidenced by a promissory  note  from  Pan-
Western  to the Issuer (collectively, the "Issuer Note"). Pan-Western will  use
such  amount to make Shareholder Loans in the aggregate amount of $71.3 million
and  JV  Equity Contributions in the aggregate amount of $41.8 million  to  the
Joint Ventures. The Joint Ventures will also receive equity contributions  from
the  County Partners in the aggregate amount of $5.7 million, which corresponds
to  the amount to be paid to the County Partners from the proceeds of the Prior
Offering for water and land use rights (including previously constructed wells)
with  respect  to property on which the Luannan Facility will be situated.  The
funds  from the Shareholder Loans and the JV Equity Contributions will be  used
by  the  Joint  Ventures  to finance the development and  construction  of  the
Luannan Facility. Through the Capitalized Interest Expiration Date, interest on
the  Exchange Notes will be provided from the Capitalized Interest Fund  funded
by  the Issuer from a portion of the proceeds of the Prior Offering. After  the
Capitalized  Interest  Expiration  Date,  pursuant  to  the  Shareholder   Loan
Agreements, the Joint Ventures will be required to make principal and  interest
payments  on the Shareholder Loans to Pan-Western. Pan-Western will be required
to  make principal and interest payments on the Issuer Note and the Issuer,  in
turn,  will be required to make principal and interest payments on the Exchange
Notes.  Immediately upon receiving each payment from the Joint  Ventures,  Pan-
Western will pay the full amount of such payment to the Issuer. The Issuer Note
represents a direct obligation of Pan-Western to the Issuer and has priority in
right  of  payment  to equity distributions. Any dividends paid  by  the  Joint
Ventures  will  be  payable  87.92% to Pan-Western and  12.08%  to  the  County
Partners in accordance with their respective equity ownership interests in  the
Joint  Ventures. Any dividends paid by Pan-Western will be payable 99% to  Pan-
Sino  and  1% to Chinamac in accordance with their respective equity  ownership
interests in Pan-Western. Any dividends paid by Pan-Sino will be payable  95.5%
to  the  Issuer  and  4.5%  to NDR in accordance with their  respective  equity
ownership  interests in Pan-Sino, which percentages are subject  to  change  as
described above, subject to limitations on payment of dividends as provided  in
the  Indentures.  See  "Risk  Factors--Considerations  Relating  to  the  PRC--
Substantial  Dependence  on Debt Service from Joint Ventures;  Restrictions  on
Payment  of  Dividends" and "Description of the Exchange Notes, the Guarantors,
the  Issuer  Loan,  the Shareholder Loans and the Collateral Documents--Certain
Covenants--Limitation on Restricted Payments."
     
PEC, PIC, PIC Entities and Project Entities

     In  addition to its ownership interest in the Issuer, the Company owns all
of  the  issued and outstanding stock of PEC which, in turn, owns  all  of  the
issued  and  outstanding  stock of Panda Interfunding Corporation,  a  Delaware
corporation  ("PIC") and 100% of the entities that own the  Kathleen  Facility,
which  is  currently  in development and the subject of litigation  in  various
state and federal forums. The outcome of such litigation will determine whether
construction  of  the  Kathleen  Facility  is  initiated  and  completed.   See
"Description  of  the  Projects--Other  Projects  Under  Development  by  Panda
International--The Kathleen Facility." Pursuant to arrangements with GE Capital
under  the  Brandywine  Financing Documents,  the  Kathleen  Facility  will  be
required  to  be  transferred  to the PIC Project  Portfolio  if  the  Kathleen
Facility  reaches  Financial  Closing  or  Commercial  Operations.  See  "Legal
Proceedings--Heard Proceedings."
     
     PIC has direct wholly-owned subsidiaries ("PIC Entities"), including Panda
Interholding  Corporation, a Delaware corporation ("Interholding").  Under  the
terms of the indenture executed in connection with the issuance of the Series A
Bonds  (the  "PFC  Indenture"), PIC Entities, with certain  exceptions,  cannot
incur  debt, become liable in connection with guaranties or enter into  Project
Agreements, and are subject to certain other restrictions, all for the  purpose
of  assuring that the PIC Entities' primary purpose is to hold Project Entities
and  receive, and distribute to PIC, distributions from Project Entities. Other
PIC Entities may be established in the future and each will be directly wholly-
owned by PIC. Project Entities, on the other hand, are those entities that  are
owned  by PIC Entities and directly or indirectly own Projects or are obligated
under  Project  agreements.  Under the terms  of  the  PFC  Indenture,  Project
Entities are permitted to incur Project Debt, become liable in connection  with
guaranties  created,  required or expressly permitted to  exist  under  Project
agreements and enter into and amend project agreements, in each case subject to
certain restrictions.
     
Administrative and Development Services

     Panda   International   provides   various  administrative,   construction
management  and  operations and maintenance services to  the  Company  and  its
subsidiaries pursuant to an Administrative Services Agreement, which covers the
provision  of such services to the Rosemary, Brandywine and Luannan  Facilities
and  to  future  Projects once they reach Financial Closing, and a  Development
Services Agreement, which covers the provision of such services to Projects  in
the development stage prior to Financial Closing. Such services are invoiced at
Panda  International's  reasonable cost, including a reasonable  allocation  of
related  overhead expenses.  Each agreement was entered into in April 1997  and
has  a  term  which  expires on March 31, 2007. Under the Development  Services
Agreement, Panda International has the right to receive reimbursement  for  its
prior expenditures in connection with development of the Luannan Facility,  its
proposed  hydroelectric project in Nepal and other Projects in development,  to
the  extent of funds available in the Issuer Equity Distribution Fund,  subject
to  certain limitations. See "Description of the Projects--The Panda  of  Nepal
Facility"   and  "Description  of  the  Exchange  Notes,  the  Exchange   Notes
Guarantee, the Issuer Loan, the Shareholder Loans and the Collateral Documents-
-The Funds--The Issuer Funds."
     
                                USE OF PROCEEDS
                                       
     There will be no cash proceeds to the Issuer or the Company resulting from
the Exchange Offer.
     
     The  proceeds from the sale of the Prior Offering were used by the Issuer:
(i)  to  make  a  deposit in the Capitalized Interest Fund in  the  approximate
amount  of  $48.1  million; (ii) to make a deposit in the Debt Service  Reserve
Fund  in the amount of $9.7 million; (iii) to pay transaction fees, commissions
and  expenses  incurred in connection with the Prior Offering estimated  to  be
approximately $6.8 million; and (iv) to make a deposit in the Luannan  Facility
Construction Fund estimated to be in the amount of $80.4 million.  This  amount
has been used, and interest thereon and other income expected to be received by
the  Issuer during construction, will be used, by the Issuer to make the Issuer
Loan to Pan-Western. Pan-Western has used and will use (in the case of interest
and  other income expected to be received during construction) the proceeds  of
the  Issuer Loan to make the JV Equity Contributions and the Shareholder  Loans
to each of the four Joint Ventures. The Joint Ventures will use the proceeds of
the  JV  Equity  Contributions  and Shareholder Loans,  together  with  capital
contributions  from  the  County Partners in the amount  of  $5.7  million,  to
develop and construct the Luannan Facility.



                                 CAPITALIZATION

    The following table sets forth the capitalization of the Issuer and its
consolidated subsidiaries as of march 31, 1997, as adjusted to give pro forma
effect to the issuance of the Old Notes and the application of the estimated net
proceeds therefrom as described in "use of proceeds."

                                                           March 31, 1997
                                                       -------------------------
                                                           (in thousands)
                                                        ACTUAL       AS ADJUSTED
                                                       -------        ---------
Advances from Panda International ..............       $ 9,476        $   9,476

Long-term debt:
         Old Notes due 2004 ....................          --            145,025

Minority interest (1) ..........................          --              5,740

Shareholder's deficit ..........................        (2,856)          (2,856)
                                                       -------        ---------
         Total capitalization ..................       $ 6,620        $ 157,385
                                                       =======        =========

                  The following table sets forth the capitalization of the
Company and its consolidated subsidiaries as of March 31, 1997, as adjusted to
give pro forma effect to the issuance of the Old Notes and the application of
the estimated net proceeds therefrom as described in "Use of Proceeds".

                                                               March 31, 1997
                                                         -----------------------
                                                              (in thousands)
Short-term debt and current portion of long-term debt:    ACTUAL     AS ADJUSTED
                                                         ---------    ---------
         Current portion of Rosemary Bonds due 2016 ..   $   5,502    $   5,502

Long-term debt:
  Old Notes due 2004 .................................        --        145,025
  Series A Bonds due 2012 ............................     105,309      105,309
  Brandywine capital lease obligation ................     222,869      222,869
  Rosemary Bonds due 2016, less current portion ......     103,145      103,145
                                                         ---------    ---------
  Total long-term debt, including capital lease
    obligation .......................................     431,323      576,348

Minority interest (1) ................................        --          5,740

Shareholder's deficit ................................    (102,986)    (102,986)
                                                         ---------    ---------
  Total capitalization ...............................   $ 333,839    $ 484,604
                                                         =========    =========

------------------
NOTE:
(1) MINORITY INTEREST REFLECTS CAPITAL CONTRIBUTIONS BY THE COUNTY PARTNERS TO
    THE JOINT VENTURES.


        UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF THE COMPANY
                                       
     The  following unaudited pro forma consolidated financial data are derived
from  the historical consolidated financial statements of the Company set forth
elsewhere  herein.  The unaudited pro forma consolidated  financial  data  give
effect  to the issuance of $111.4 million in aggregate principal amount of  the
Rosemary Bonds and the application of the net proceeds thereof to refinance the
Rosemary Partnership's project debt and to fund a portion of the acquisition of
Ford  Credit's  limited  partner  interest  in  the  Rosemary  Partnership.  In
addition,  the unaudited pro forma consolidated financial data give  effect  to
the  issuance of $105.5 million in aggregate principal amount of the  Series  A
Bonds and the application of the net proceeds thereof to (a) fund the PIC  Debt
Service  Reserve  Fund, the PIC Capitalized Interest Fund and the  PIC  Company
Expense  Fund,  (b)  to fund the remaining portion of the acquisition  of  Ford
Credit's limited partner interest in the Rosemary Partnership and (c) to make a
distribution  to the Company's parent. As a result of the acquisition  of  Ford
Credit's  limited  partner  interest, the Company owns  100%  of  the  Rosemary
Partnership  and  accordingly, the acquisition  was  accounted  for  using  the
purchase method of accounting. The excess of minority interest over the  amount
paid   to  Ford  Credit  was  allocated  to  plant  and  equipment.  The  above
transactions, which occurred on July 31, 1996, are reflected in the  historical
consolidated  balance sheets of the Company as of December 31, 1996  and  March
31, 1997. The unaudited pro forma consolidated statement of operations data for
the  year  ended  December  31,  1996  reflect  such  adjustments  as  if  such
transactions had occurred as of January 1, 1996.
     
     Additionally,  the  unaudited pro forma consolidated financial  data  give
effect  to the issuance of $155.2 million par value of Old Notes (issued  at  a
discount  for  proceeds  of  $145.0 million) in  the  Prior  Offering  and  the
application of the proceeds thereof to fund the Capitalized Interest  Fund  and
the  Debt  Service Reserve Fund established with respect to the Old  Notes,  to
make  shareholder loans and equity contributions to the Joint Ventures  and  to
pay  the transaction fees, commissions and expenses incurred in connection with
the  Prior  Offering. The unaudited pro forma consolidated balance  sheet  data
reflect such adjustments as if the transactions occurred as of March 31,  1997.
The  unaudited pro forma consolidated statement of operations data reflect such
adjustments as if such transactions had occurred as of January 1, 1996.
     
     As  required  by  the  Securities and Exchange Commission,  the  unaudited
  pro  forma consolidated statement  of operations  data  do  not  reflect  the
extraordinary loss on early extinguishment of debt. Such extraordinary loss  is
reflected in the historical consolidated statement of operations of the Company
for  the year ended December 31, 1996 presented elsewhere herein. The unaudited
pro forma consolidated financial data should be read in conjunction  with  the
notes  thereto  and  the historical consolidated financial  statements  of  the
Company, and the notes thereto, included elsewhere herein.
     
     The  unaudited pro forma consolidated financial data do not purport to  be
indicative  of the results of operations which would actually have occurred  if
the  transactions  described had occurred as presented in  such  statements  or
which may be obtained in the future.




                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                   ROSEMARY        PIC           PRIOR            PRO
                                                      HISTORICAL   OFFERING      OFFERING       OFFERING         FORMA
                                                       --------    -------       --------       --------       --------
Revenue:
<S>                                                    <C>         <C>           <C>            <C>            <C>     
Electric capacity and energy sales .................   $ 32,274    $  --         $   --         $   --         $ 32,274
Steam and chilled water sales ......................        502       --             --             --              502
Interest income ....................................      1,518       --             --            7,364(G)       8,882
                                                       --------    -------       --------       --------       --------
                  Total revenue ....................     34,294       --             --            7,364         41,658

EXPENSES:
Plant operating expenses ...........................     12,050       --             --             --           12,050
Development and administrative expenses ............      5,187       --             --             --            5,187
Interest expense ...................................     19,414        749(A)       5,557 (C)     17,772(H)      43,492
Depreciation .......................................      5,532       --             (111)(E)       --            5,421
Amortization - Debt issuance costs .................        494       (164)(B)        108 (D)        849(I)       1,287
Amortization - Partnership formation costs .........        533       --             --             --              533
                                                       --------    -------       --------       --------       --------
                  Total expenses ...................     43,210        585          5,554         18,621         67,970
                                                       --------    -------       --------       --------       --------
Loss before minority interest ......................     (8,916)      (585)        (5,554)       (11,257)       (26,312)
Minority interest ..................................     (2,405)      --            2,405 (F)       --             --
                                                       --------    -------       --------       --------       --------
                  Net loss before extraordinary item   $(11,321)   $  (585)      $ (3,149)      $(11,257)      $(26,312)
                                                       ========    =======       ========       ========       ========   
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.

                   PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                    FOR THE THREE MONTHS ENDED MARCH 31, 1997
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          PRIOR
                                            HISTORICAL   OFFERING      PRO FORMA
                                            --------     -------       ---------
<S>                                          <C>         <C>           <C>
REVENUE:

Electric capacity and energy sales .......   $ 17,330    $  --         $ 17,330
Steam and chilled water sales ............        130       --              130
Interest income ..........................        430      1,222(G)       1,652
                                             --------    -------       --------
              Total revenue ..............     17,890      1,222         19,112

EXPENSES:
Plant operating expenses .................      8,261       --            8,261
Development and administrative expenses ..      2,395       --            2,395
Interest expense .........................     10,802      3,625(H)      14,427
Depreciation .............................      2,949       --            2,949
Amortization - Debt issuance costs .......        174        173(I)         347
Amortization - Partnership formation costs       --         --             --
                                             --------    -------       --------
              Total expenses .............     24,581      3,798         28,379
                                             --------    -------       --------
Net loss .................................   $ (6,691)   $(2,576)      $ (9,267)
                                             ========    =======       ========

</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.


                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1997
                                 (in thousands)

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                                     Prior                   Pro
                                                                               Historical           Offering                Forma
                                                                               ---------            --------              ---------
<S>                                                                            <C>                  <C>                   <C>      
Current assets:
           Cash and cash equivalents ...............................           $   1,198            $   --                $   1,198
           Restricted cash--current ................................              15,115                --                   15,115
           Accounts receivable .....................................               9,220                --                    9,220
           Fuel oil, spare parts and supplies ......................               6,898                --                    6,898
           Other current assets ....................................                 234                --                      234
                                                                               ---------            --------              ---------
                  Total current assets .............................              32,665                --                   32,665

Plant and equipment:
           Electric generating facilities ..........................             289,097                --                  289,097
           Furniture and fixtures ..................................                 496                --                      496
           Less: accumulated depreciation ..........................             (29,488)               --                  (29,488)
           Development costs .......................................               9,427                --                    9,427
                                                                               ---------            --------              ---------
                  Total plant and equipment, net ...................             269,532                --                  269,532

Debt service reserves and escrow deposits ..........................              32,548             143,941(J)             176,489
Debt issuance costs, net ...........................................               7,531               6,824(K)              14,355
                                                                               ---------            --------              ---------
                  Total assets .....................................           $ 342,276            $150,765              $ 493,041
                                                                               =========            ========              =========
<CAPION>
                      LIABILITIES AND SHAREHOLDER'S DEFICIT
<S>                                                                            <C>                  <C>                  <C>
Current liabilities:
           Accounts payable and accrued expenses:
              Construction costs ......................................        $     --             $   --               $    --
              Interest and letter of credit fees ......................             2,505               --                   2,505
              Operating expenses and other ............................             5,932               --                   5,932
           Current portion of long-term debt ..........................             5,502               --                   5,502
                                                                               ----------           --------             ---------
                  Total current liabilities ...........................            13,939               --                  13,939

Long-term debt, less current portion ..................................           208,454            145,025(L)            353,479
Capital lease obligation ..............................................           222,869               --                 222,869
Minority interest .....................................................              --                5,740(M)              5,740
Commitments and contingencies .........................................              --                 --                    --
Shareholder's deficit .................................................          (102,986)              --                (102,986)
                                                                                ---------           --------             ---------
                  Total liabilities and
                       shareholder's deficit ..........................         $ 342,276           $150,765             $ 493,041
                                                                                =========           ========             =========
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.

                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                (in thousands)
                                       
(A)The  adjustment represents the net effect of (i) the inclusion of $5,605  of
   interest  expense  related to the Rosemary Bonds at an interest  rate  of  8
   5/8%  and (ii) the elimination of actual interest expense of $4,856  related
   to  the  Rosemary Partnership's project debt which was refinanced  with  the
   Rosemary Bonds.

(B)The  adjustment represents the net effect of (i) the inclusion  of  $115  of
   amortization of debt issue costs related to the Rosemary Bonds and (ii)  the
   elimination  of $279 of actual amortization of debt issue costs  related  to
   the  Rosemary  Partnership's  project debt which  was  refinanced  with  the
   Rosemary Bonds.

(C)The  adjustment represents the net effect of (i) the inclusion of $7,156  of
   interest  expense  related to the Series A Bonds  at  an  interest  rate  of
   11  5/8%,  and  (ii)  the elimination of actual interest expense  of  $1,599
   related  to  the  Trust Company of the West ("TCW") indebtedness  which  was
   repaid with a portion of the proceeds from the Series A Bonds.

(D)The  adjustment represents the net effect of (i) the inclusion  of  $158  of
   amortization of debt issue costs related to the Series A Bonds and (ii)  the
   elimination  of  $50 of actual amortization of debt issue costs  related  to
   the  TCW  indebtedness which was repaid with a portion of the proceeds  from
   the Series A Bonds.

(E)The  adjustment  represents the reduction in depreciation expense  resulting
   from  the acquisition of Ford Credit's limited partnership interest  in  the
   Rosemary  Partnership. The acquisition was accounted for using the  purchase
   method  of  accounting. The excess of minority interest  over  the  purchase
   price   (approximately  $3,800)  was  allocated  to  plant  and   equipment.
   Depreciation  is recorded on a straight line basis and assumes  a  remaining
   useful life of 20 years.

(F)The  adjustment  represents the removal of minority interest resulting  from
   the  acquisition  of  Ford  Credit's limited  partnership  interest  in  the
   Rosemary Partnership.

(G)The  adjustment represents the interest income from reserve balances  at  an
   assumed average rate of 6.7%.

(H)The  adjustment represents interest cost on $155,200 par value of Old  Notes
   (issued  at a discount for proceeds of $145,025) at a yield of 14%,  reduced
   by  the  amount of such interest that is capitalized during construction  of
   the  Luannan  Facility,  assuming full construction  activity  commenced  on
   January  1,  1996.  The  amount of capitalized  interest  is  determined  by
   applying  the  interest rate to the weighted average balance of construction
   in progress during the period.

(I)The  adjustment  represents amortization of estimated debt  issue  costs  of
   $6,824  from  the  issuance of the Old Notes over  a  life  of  7  years  to
   maturity  of the Old Notes, reduced by the amount of such amortization  that
   is  capitalized during construction of the Luannan Facility. The  amount  of
   capitalized amortization is determined by applying the percentage  of  total
   interest  cost  which  is  capitalized  during  the  period  to  the   total
   amortization for the period.

(J)The  adjustment  represents the application of the  net  proceeds  from  the
   issuance  of the Old Notes (after payment of debt issue costs) and from  the
   capital  contributions by the County Partners in the Joint Ventures to  fund
   the  Capitalized Interest Fund and the Debt Service Reserve Fund and to make
   shareholder loans and equity contributions to the Joint Ventures.

(K)The  adjustment represents the debt issue costs estimated to be incurred  in
   connection with the issuance of the Old Notes.

(L)The  adjustment  represents the gross proceeds  from  issuance  of  the  Old
   Notes.

(M)The  adjustment represents the capital contributions by the County  Partners
   in the Joint Ventures.


                      SELECTED FINANCIAL DATA OF THE ISSUER

    The following table sets forth selected consolidated financial data of the
Issuer as of December 31, 1994, 1995 and 1996 and March 31, 1996 and 1997, and
for the period from inception (July 20, 1994) through December 31, 1994, the
years ended December 31, 1995 and 1996, the three months ended March 31, 1996
and 1997 and the period from inception through March 31, 1997. Although the
Issuer was formed on March 10, 1997, a subsidiary of the Issuer, formed on July
20, 1994, is considered the Issuer's predecessor. The information presented
below, which reflects the operations of the predecessor, has been derived from
the Issuer's financial statements. Because the Issuer has been and continues to
be in the development stage since formation, it has no operating revenues.
Because the Issuer has no fixed charges, presentation of the ratio of earnings
to fixed charges is not applicable. The data should be read in conjunction with
the Issuer's financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Dollar amounts are presented in thousands.
<TABLE>
<CAPTION>
                                                         Period From                                                     Period From
                                                          Inception         Year Ended           Three Months Ended      Inception 
                                                          through           December 31,                March 31,          through
                                                        December 31,    -------------------         -----------------      March 31,
                                                           1994         1995          1996          1996         1997       1997
                                                           ----         ----         ------         ----         ----      ------
<S>                                                        <C>          <C>          <C>            <C>          <C>       <C>   
STATEMENT OF OPERATIONS DATA                                                                           (Unaudited)       (Unaudited)
General and administrative expenses ..............         $203         $444         $1,654         $266         $555      $2,856
                                                           ----         ----         ------         ----         ----      ------
         Net loss ................................         $203         $444         $1,654         $266         $555      $2,856
                                                           ====         ====         ======         ====         ====      ======
<CAPTION>
                                                                               December 31,                         March 31,
                                                                      ---------------------------------       ---------------------
                                                                      1994         1995          1996          1996          1997
                                                                      -----       -------       -------       -------       -------
<S>                                                                   <C>         <C>           <C>           <C>           <C>    
BALANCE SHEET DATA                                                                                                 (Unaudited)
  Cash .........................................................      $ 101       $     6       $   506       $     6       $     6
  Development costs ............................................        428         1,059         3,292         1,550         6,614
                                                                      -----       -------       -------       -------       -------
         Total assets ..........................................      $ 529       $ 1,065       $ 3,798       $ 1,556       $ 6,620
                                                                      =====       =======       =======       =======       =======

  Advances from Panda International ............................      $ 732       $ 1,712       $ 6,099       $ 2,468       $ 9,476
  Shareholder's deficit ........................................       (203)         (647)       (2,301)         (912)       (2,856)
                                                                      -----       -------       -------       -------       -------
         Total liabilities and shareholder's deficit ...........      $ 529       $ 1,065       $ 3,798       $ 1,556       $ 6,620
                                                                      =====       =======       =======       =======       =======
</TABLE>

                     SELECTED FINANCIAL DATA OF THE COMPANY
                          (in thousands, except ratios)

    Presented below are selected consolidated financial data for the Company as
of and for each of the years in the five-year period ended December 31, 1996,
and as of and for the three months ended March 31, 1996 and 1997, which have
been derived from the Company's financial statements. The selected financial
data should be read in conjunction with the information contained under the
captions "Capitalization," "Management's Discussion and Analysis of Financial
Condition and Results of Operations of the Company" and the consolidated
financial statements of the Company, including the notes thereto, included
elsewhere herein.
<TABLE>
<CAPTION>
                                                                                                                THREE MONTHS ENDED
                                                                   YEAR ENDED DECEMBER 31,                           MARCH 31
                                             ------------------------------------------------------------    ---------------------- 
                                                1992        1993         1994        1995         1996         1996         1997
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
<S>                                                 <C>         <C>         <C>         <C>         <C>         <C>        <C>     
Revenue:                                                                                                     (Unaudited) (Unaudited)
Electric capacity and energy sales: ......   $  29,537    $  29,856    $  30,664   $  29,859    $  32,274    $   8,015    $  17,330
Steam and chilled water sales ............         624          618          650         473          502          122          130
Interest income ..........................         562          365          603         895        1,518          186          430
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Total revenue ...................      30,723       30,839       31,917      31,227       34,294        8,323       17,890

EXPENSES:
Plant operating expenses .................       7,534        7,676        8,940       9,348       12,050        2,442        8,261
Development and administrative expenses ..       1,608        2,434        1,779       2,550        5,187          803        2,395
Interest expense .........................      11,478       11,066       11,018      11,716       19,414        3,185       10,802
Depreciation .............................       4,177        4,282        4,208       4,210        5,532        1,053        2,949
Amortization-- Debt issuance costs .......         436          502          600         554          494          141          174
Amortization-- Partnership formation costs         533          533          533         533          533          133         --
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Total expenses ..................      25,766       26,493       27,078      28,911       43,210        7,757       24,581

Income (loss) before taxes and minority
     interest ............................       4,957        4,346        4,839       2,316       (8,916)         566       (6,691)
Minority interest ........................      (5,249)      (5,474)      (5,700)     (5,048)      (2,405)      (1,719)        --
Provision for income taxes ...............        --           --           --          --           --           --           --
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
Income (loss) before extraordinary items .        (292)      (1,128)        (861)     (2,732)     (11,321)      (1,153)      (6,691)

Extraordinary loss, net(1) ...............        --           --           --          --        (21,336)        --           --
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Net loss ........................   $    (292)   $  (1,128)   $    (861)  $  (2,732)   $ (32,657)   $  (1,153)   $  (6,691)
                                             =========    =========    =========   =========    =========    =========    =========

OTHER DATA:
EBITDA ...................................   $  21,581    $  20,729    $  21,198   $  19,329    $  17,057    $   5,078    $   7,234
Ratio of earnings to fixed charges(2) ....       1.42x        1.38x        1.32x          (2)          (2)          (2)          (2)
<CAPTION>
                                                                 DECEMBER 31,                                         MARCH 
                                             ------------------------------------------------------------    ---------------------- 
                                                1992        1993         1994        1995         1996         1996         1997
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
<S>                                                 <C>         <C>         <C>         <C>         <C>         <C>        <C>     
Balance Sheet Data:                                                                                          (Unaudited) (Unaudited)

Cash and other current assets ............   $  15,167    $  14,084    $  15,639   $  11,339    $  36,636    $  16,807    $  32,665
Power plant and equipment (net) ..........      96,529       93,815       96,136     220,145      268,725      242,466      269,532
Reserves and escrow deposits,
     and other assets ....................      15,778       15,650       15,477      15,471       40,119       15,320       40,079
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Total assets ....................   $ 127,474    $ 123,549    $ 127,252   $ 246,955    $ 345,470    $ 274,593    $ 342,276
                                             =========    =========    =========   =========    =========    =========    =========

Current liabilities ......................   $   9,735    $  11,252    $  12,531   $  18,457    $  19,667       22,823    $  13,939
Long-term debt (including capital lease
     obligation), less current portion ...     103,200       89,454      106,343     234,608      427,319      256,145      431,323
Minority interest ........................      33,346       34,479       35,588      36,836         --         38,233         --
Shareholder's deficit ....................     (18,807)     (20,636)     (27,210)    (42,946)    (101,516)     (42,608)    (102,986)
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Total liabilities and
            shareholder's deficit ........   $ 127,474    $ 123,549    $ 127,252   $ 246,955    $ 345,470    $ 274,593    $ 342,276
                                             =========    =========    =========   =========    =========    =========    =========
</TABLE>

Notes (in thousands):

(1) In 1996, there was an extraordinary loss from early extinguishment of debt
    of $21,336.

(2) For purposes of computing the ratio of earnings to fixed charges, earnings
    represent income (loss) before minority interest, taxes and extraordinary
    items plus fixed charges exclusive of capitalized interest. Fixed charges
    consist of interest expense, capitalized interest and amortization of debt
    issuance costs. Earnings were insufficient to cover fixed charges in 1995 by
    $3,477, in 1996 by $19,971 and in the three months ended March 31, 1996 and
    1997 by $2,271 and $6,691, respectively. In 1994, 1995 and 1996 and the
    three months ended March 31, 1996, fixed charges included capitalized
    interest of $803, $5,793, $11,055 and $2,837, respectively, related to the
    Brandywine Facility. This capitalized interest was funded by additional
    borrowings under the Brandywine construction loan facility.



                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE ISSUER
                                       
     The  Issuer's financial results of operations include no revenues and only
general  and  administrative expenses allocated from  Panda  International  for
certain  accounting, legal, insurance and consulting services.  These  expenses
increased in 1995 compared to the period in 1994 primarily due to twelve months
in  1995  versus  less than six months in 1994 and the increased administrative
assistance in 1995 for performing these services. In addition, the increase  in
these expenses for 1996 compared to 1995, and the increase for the three months
ended  March  31, 1997 over the same period in 1996, is primarily  due  to  the
increased administrative assistance consisting of legal and consulting services
performed to finalize certain agreements for the Luannan Facility.
     
     Panda  International  also incurred development costs  on  behalf  of  the
Issuer. These development costs have been capitalized and primarily consist  of
engineering, legal and other third-party costs directly related to the  Luannan
Facility.
     
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY
                                (in thousands)
                                       
  General
  
     The Company operates two completed electric power generation facilities in
the United States: the Rosemary Facility, which began commercial operations  in
December  1990 and is owned by an indirect subsidiary of the Company,  and  the
Brandywine Facility, which began commercial operations in October 1996  and  is
leased  under  a long-term lease by an indirect subsidiary of the Company.  The
Company  also owns an approximately 83% indirect equity interest in the Luannan
Facility  in  China, for which preliminary construction activity  commenced  in
December  1996  and  for which full construction activity  commenced  upon  the
issuance  of  the Old Notes. The historical operating results  of  the  Company
primarily represent the revenue and expenses of the Rosemary Facility.  Certain
development  expenses for the Rosemary Facility, the Brandywine  Facility,  the
Kathleen  Facility and the Luannan Facility have been included in the operating
results  of  the  Company  and  are  discussed  below  as  having  arisen  from
development activities of the Company. However, development expenses in respect
of Projects which may be transferred to the PIC Project Portfolio in the future
will not be included in the results of operations of the Company because future
development  activities  will  be undertaken by  Panda  International  and  its
affiliates.  Such  Projects, if any, will be transferred  to  the  PIC  Project
Portfolio  (at  Panda  International's  historical  cost)  only  upon  reaching
Financial  Closing  or achieving Commercial Operations and  meeting  the  other
conditions  for  transfer  to the PIC Project Portfolio  pursuant  to  the  PIC
Additional Projects Contract.
     
     The  consolidated  historical and pro forma financial  statements  of  the
Company  included in this Prospectus reflect the financial data of the entities
that  held  interests  in the Rosemary Facility, the Brandywine  Facility,  the
Kathleen  Facility  and the Luannan Facility during the periods  presented.  In
March   1997,  these  interests  were  transferred  to  the  Company  by  Panda
International  and  recorded  at  Panda International's  historical  cost.  The
Company was incorporated on March 7, 1997 and was not in existence during these
historical periods; however, the entities that currently own such interests are
indirect  subsidiaries  of  the  Company. Such entities  are  collectively  the
predecessor entities of the Company. Thus, references herein to historical  and
pro  forma financial data of the Company are for convenience of reference,  and
it  should be understood that all such references are to the historical and pro
forma information of the predecessor entities during the periods presented.
     
     See "Description of the Projects," "Description of Other Indebtedness" and
Appendix B, "The Electric Power Industry in the PRC and the United States"  for
a description of the Rosemary Facility, the Brandywine Facility and the Luannan
Facility   and   the  various  contracts,  regulatory  matters  and   financing
arrangements relating thereto.
     
  Results of Operations
  
     The  Company's  revenues from electric power generation are  derived  from
long-term contracts which include both a fixed capacity payment and a  variable
energy payment. The capacity payments, which are based upon the specified power
generating  capacity of a project, are designed to cover  fixed  costs  and  to
provide an acceptable return on equity. The energy payments, which are based on
actual electricity output, are designed to cover variable costs including  fuel
costs  and  variable operating expenses incurred in connection with electricity
output.  Accordingly,  the  impact of price  fluctuations  on  the  results  of
operations  is  generally  not material. The extent  to  which  a  facility  is
dispatched  (i.e., required to deliver electricity), and therefore  the  actual
electricity  output for a given period, are subject to the  discretion  of  the
power  purchaser,  with  certain limitations. The  capacity  payments  are  the
predominant source of revenue for the Company. The Company believes that it can
meet  its  liquidity  requirements solely from the  capacity  payments  in  the
unlikely  event that its facilities are not dispatched at all. See "--Liquidity
and Capital Resources."
     
  First Quarter 1997 compared to 1996
  
      The Company recorded a net loss of $6,691 in the first quarter of 1997 on
revenues of $17,890 compared to net income before minority interest of $566  on
revenues of $8,323 during the same period in 1996.  The increase in revenues in
the  1997  period was primarily caused by operations of the Brandywine Facility
(which  commenced  on  October 31, 1996), partially offset  by  a  decrease  in
revenues at the Rosemary Facility, and by increased interest income.  The  1997
period  reflects  operations  of both the Rosemary and  Brandywine  facilities,
whereas  the 1996 period includes only the Rosemary Facility. For the 1997  and
1996  periods,  capacity  revenues for the Rosemary Facility  were  $6,900  and
$7,418,  respectively,  reflecting  a  contractual  decrease  of  $518.  Energy
revenues for the Rosemary Facility for the 1997 and 1996 periods were $175  and
$597,  respectively.  The decrease in energy revenues for the Rosemary Facility
is  attributable to lower dispatch hours at that facility compared to the  1996
period.  During the first quarter of 1997, the Rosemary Facility was dispatched
42  hours  as compared to 135 hours in the 1996 period.  Capacity revenues  and
energy revenues from Potomac Electric Power Company for the Brandywine Facility
for  the  first  quarter  of  1997 were $5,035 and $2,546,  respectively.   The
Brandywine Facility was dispatched 777 hours during this period.  Additionally,
the  Brandywine Facility had energy revenues of $2,674 from the sale of natural
gas and fuel oil to other purchasers.  Plant operating expenses, which included
fuel  cost,  operation and maintenance expense, insurance and  property  taxes,
increased  to $8,261 (46% of revenues) in the 1997 period from $2,442  (29%  of
revenues) in 1996, primarily due to low margins obtained on the sale of natural
gas and fuel oil to other purchasers.

      Project  development  and administrative expenses  were  $2,395  (13%  of
revenues)  and  $803  (10%  of  revenues)  for  the  1997  and  1996   periods,
respectively.   The  increase in 1997 was primarily attributable  to  increased
development   activity  for  the  Luannan  Project,  additional  administrative
activities  related  to  the  commencement  of  commercial  operations  at  the
Brandywine  Facility and higher administrative costs required  to  support  the
increased size and complexity of the Company's operations.

      Interest  expense  increased to $10,802 (60% of revenues)   in  the  1997
period  from  $3,185 (38% of revenues) in 1996 as a result of the  increase  in
outstanding indebtedness from the issuance of $111.4 million original principal
amount  of  first  mortgage  bonds  for the Rosemary  Facility  (the  "Rosemary
Bonds"),   $105.5  million original principal amount of  pooled  project  bonds
("Series  A  Bonds"),  and  the  capital lease  financing  for  the  Brandywine
Facility.   The  impact of such new indebtedness was partially  offset  by  the
refinancing  of  the  taxable revenue bonds issued in  1989  for  the  Rosemary
Facility  and the repayment of other term loan financing on July 31, 1996  from
portions of the proceeds of the Rosemary Bonds and the Series A Bonds.

      Depreciation,  amortization  of  debt issue  costs  and  amortization  of
partnership  formation costs amounted to $3,122 (17% of revenues) in  the  1997
period  and  $1,327  (16%  of revenues) in 1996.  The  increase  was  primarily
attributable to depreciation for the Brandywine Facility in 1997.

     For the 1996 period, minority interest in net income was $1,719.  There is
no  minority interest in 1997 due to the Company's acquisition on July 31, 1996
of  the  minority  interest  holder's limited partnership  interest  in  Panda-
Rosemary.  As  a  result of this acquisition, the Company owns 100%  of  Panda-
Rosemary.

      As  a result of the various factors discussed above, the Company recorded
net losses of $6,691 and $1,153 for the 1997 and 1996 periods,  respectively.

  1996 compared to 1995
  
     The  Company  recorded  a  net loss before taxes,  minority  interest  and
extraordinary  item of $8,916 in 1996 on revenues of $34,294  compared  to  net
income  before taxes and minority interest of $2,316 on revenues of $31,227  in
1995.  The 10% increase in revenues was primarily caused by the commencement of
commercial  operations at the Brandywine Facility on October 31,  1996  and  by
increased  interest income.  For 1996 and 1995, capacity revenues were  $27,204
in  both  periods  and  energy revenues were $5,070 and  $2,655,  respectively.
Capacity  revenues  for  the  Brandywine Facility commenced  in  January  1997;
accordingly,  capacity revenues for 1996 and 1995 relate only to  the  Rosemary
Facility.  The increase in energy revenues is attributable to operations of the
Brandywine  Facility  for the last two months of 1996, partially  offset  by  a
decrease in energy revenues at the Rosemary Facility which resulted from  lower
dispatch  hours at that facility compared to 1995.  During 1996,  the  Rosemary
Facility was dispatched 635 hours as compared to 2,224 hours in 1995, resulting
in  a  decrease in energy revenues from that facility of $644.  (The number  of
dispatched  hours  in  1995  was unusually high, as  explained  below.)   Plant
operating  expenses,  which  included  fuel  cost,  operation  and  maintenance
expense, insurance and property taxes related to the Rosemary Facility (and the
Brandywine Facility commencing October 31, 1996), increased from $9,348 (30% of
revenues) in 1995 to $12,050 (35% of revenues) during the same period in  1996,
primarily  due  to  the  inclusion of the costs  of  operating  the  Brandywine
Facility  for  two months in 1996.  Because the Brandywine Facility  earned  no
capacity  revenues  during  its period of operation in  1996,  plant  operating
expenses  (and all other categories of expenses) were higher than normal  as  a
percentage  of  revenues.  Another significant cause  of  the  increased  plant
operating expenses was the insurance deductible and other non-covered costs  of
approximately $700 relating to hurricane damage sustained in September 1996  at
the  Rosemary Facility as discussed below.  Other factors contributing  to  the
increase  in  plant  operating  expenses  at  the  Rosemary  Facility  included
additional scheduled maintenance  costs and the fuel cost increases relating to
increased  operation  of  the  auxiliary boiler for  steam  and  chilled  water
production.
     
     Project  development  and  administrative  expenses  were  $2,550  (8%  of
revenues)  and  $5,187 (15% of revenues) for 1995 and 1996, respectively.   The
increase  in 1996 was primarily attributable to increased development  activity
on  the  Luannan Facility and the commencement of commercial operations at  the
Brandywine Facility on October 31, 1996.
     
     Interest  expense  increased from $11,716 (38% of  revenues)  in  1995  to
$19,414  (57%  of revenues) in 1996 as a result of the increase in  outstanding
indebtedness  under  the  TCW  term loan which  was  partially  offset  by  the
scheduled reduction in outstanding indebtedness under the taxable revenue bonds
issued  in  1989 for the Rosemary Facility, and as a result of the increase  in
outstanding indebtedness from the issuance of the Rosemary Bonds and the Series
A  Bonds  on July 31, 1996.  The impact of such new indebtedness was  partially
offset  by the refinancing of the taxable revenue bonds issued in 1989 for  the
Rosemary  Facility  and the repayment of the TCW term loan on  July  31,  1996.
Additionally, commencement of commercial operations at the Brandywine  Facility
resulted  in  the recognition of interest expense on the related debt  for  the
last  two  months  of 1996.  Prior to commercial operations,  interest  on  the
Brandywine debt was capitalized.
     
     Depreciation,  amortization  of  debt  issue  costs  and  amortization  of
partnership formation costs increased from $5,297 (17% of revenues) in 1995  to
$6,559  (19% of revenues) in 1996.  The increase was primarily attributable  to
the commencement of commercial operations at the Brandywine Facility on October
31, 1996.
     
     On  September  6,  1996, a transformer and two switches  at  the  Rosemary
Facility  sustained  damage  from a hurricane.  A  substitute  transformer  was
temporarily  installed  pending repair of the damaged  transformer,  which  was
substantially  completed  during  the  first  quarter  of  1997.   The  Company
estimates  the total cost to repair the Rosemary Facility (including substitute
transformer rental costs) at approximately $2,450, all of which is  covered  by
insurance except for deductible and certain non-covered items in the amount  of
approximately  $700.   The  impact on revenues was  not  material.   Management
believes  that  this  event  will not have a material  adverse  effect  on  the
Company's financial condition or results of operations.
     
     For  1996 and 1995, minority interest in net income was $2,405 and $5,048,
respectively.   The  decrease  in 1996 was due  to  lower  net  income  (before
minority interest and extraordinary item) in the Rosemary Partnership  and  the
acquisition  on  July  31,  1996  of  the minority  interest  holder's  limited
partnership interest as discussed below.
     
     In  connection with the issuance of the Rosemary Bonds and  the  Series  A
Bonds, the Company refinanced the taxable revenue bonds issued in 1989 for  the
Rosemary  Facility  and  repaid the TCW term loan.   The  Company  incurred  an
extraordinary loss of $21,336 on the early extinguishment of these obligations.
Additionally,  the  Company  acquired the minority  interest  holder's  limited
partnership  interest  in  the Rosemary Partnership for  a  purchase  price  of
approximately $34,256.  As a result of this acquisition, the Company owns  100%
of  the  Rosemary  Partnership.  The acquisition was accounted  for  using  the
purchase  method  of  accounting.  The excess of  minority  interest  over  the
purchase  price  (approximately  $3.8  million)  was  allocated  to  plant  and
equipment.  Additionally, the Company advanced approximately $34,779  to  Panda
International for project development and general corporate purposes.
     
     As  a  result of the various factors discussed above, the Company recorded
net losses of $32,657 and $2,732 for 1996 and 1995 respectively.
     
  1995 compared to 1994
  
     The  Company recorded income before taxes and minority interest of  $2,316
on  revenues  of $31,227 in 1995 compared to $4,839 on revenues of  $31,917  in
1994.  The  decrease  in  revenues was primarily  the  result  of  a  scheduled
contractual decrease in capacity payments of $1,526, which was partially offset
by  additional income generated due to an increase in the number of  hours  the
Rosemary  Facility was dispatched by VEPCO and an increase in interest  income.
The  Rosemary Facility was dispatched 2,224 hours in 1995 versus 764  hours  in
1994,  due primarily to forced outages at two VEPCO generating plants that  are
not  likely  to be repeated. For 1995 and 1994, capacity revenues were  $27,204
and  $28,730  and  energy  revenues were $2,655 and $1,934,  respectively.  For
approximately  1,200 of the dispatch hours in 1995, the Rosemary Facility  used
natural  gas  provided  directly by VEPCO under a special  fueling  arrangement
provided  for in the Rosemary Power Purchase Agreement. The Rosemary Facility's
margin  on  energy  sales  is lower when VEPCO supplies  natural  gas  for  the
Rosemary  Facility than when the Rosemary Facility is dispatched  under  normal
energy  pricing  terms. However, overall margins at the Rosemary  Facility  are
increased  in  such circumstances (relative to not operating  at  all)  by  the
ability  to  provide  steam and chilled water from the steam  turbine  offtake,
which reduces the operating costs of the auxiliary boilers.
     
     Plant  operating  expenses,  which  included  fuel  cost,  operations  and
maintenance  expense,  insurance and property taxes  related  to  the  Rosemary
Facility, were $9,348 (30% of revenues) in 1995 as compared to $8,940  (28%  of
revenues)  in 1994, primarily due to additional maintenance expenses  and  fuel
related  costs incurred due to the increase in the number of hours the Rosemary
Facility  was  dispatched  by  VEPCO. Project  development  and  administrative
expense  increased  from  $1,779 (6% of revenues) in  1994  to  $2,550  (8%  of
revenues) in 1995 primarily due to additional administrative expenses  relating
to  construction  of  the Brandywine Facility and development  of  the  Luannan
Facility.
     
     Interest expense was $11,716 (38% of revenues) in 1995 compared to $11,018
(35%  of revenues) in 1994. The increase in 1995 was attributable to additional
borrowings. Depreciation, amortization of debt issue costs and amortization  of
partnership  formation costs were stable and collectively amounted  to  17%  of
revenues in 1995 and 1994.
     
     In  1995, the Company recorded a net loss of $2,732 as compared to  a  net
loss  of  $861  in 1994. An allocation of $5,048 was made in 1995 for  minority
interest,  a decrease of $652 from 1994 as a result of the overall decrease  in
net income of the Rosemary Partnership.
     
  1994 compared to 1993
  
     The Company's 1994 income before taxes and minority interest was $4,839 on
revenues  of  $31,917, compared to $4,346 on revenues of $30,839 in  1993.  The
increase  in revenues was primarily due to increased energy sales in  1994,  as
compared  to  1993,  as  a  result of the Rosemary  Facility  being  dispatched
approximately  764 hours in 1994 compared to 324 hours in 1993.  For  1994  and
1993,  capacity  revenues  were $28,730 and $28,888 and  energy  revenues  were
$1,934  and $968, respectively. In addition, interest income increased slightly
in 1994 as short-term interest rates were higher than 1993 levels.
     
     Plant  operating  expenses,  which  included  fuel  cost,  operation   and
maintenance  expense,  insurance and property taxes  related  to  the  Rosemary
Facility,  increased to $8,940 (28% of revenues) in 1994 from  $7,676  (25%  of
revenues)  in 1993. The increase was primarily a result of increased  fuel  and
maintenance  costs related to the increase in the number of hours the  Rosemary
Facility  was dispatched by VEPCO and a $257 increase in tariff rates for  firm
transportation on the Transco pipeline through which gas is transported to  the
Rosemary Facility. The dispatch hours for 1994 were substantially greater  than
in  1993  due primarily to the second amendment to the Rosemary Power  Purchase
Agreement  entered into in 1993, under which the formula used to calculate  the
energy  purchase price was amended to more closely match the fuel and  variable
operation and maintenance costs of the Rosemary Facility. The amendment to  the
formula  resulted  in  lower  energy margins in the  spring,  summer  and  fall
periods,  when the Rosemary Facility primarily runs on natural gas, and  better
cost recovery during the winter period when it runs primarily on fuel oil.  The
reduction  in  the  energy margin during the summer months, when  most  of  the
dispatch  hours were incurred, caused the increase in run hours to have  little
overall impact on net income.
     
     Project development and administrative expenses decreased from $2,434  (8%
of  revenues) in 1993 to $1,779 (6% of revenues) in 1994. The higher  level  of
such  expenses  in  1993  was  primarily due to preliminary  development  costs
incurred in connection with the Brandywine Facility.
     
     Interest expense was $11,018 (35% of revenues) in 1994 compared to $11,066
(36%  of revenues) in 1993. Depreciation, amortization of debt issue costs  and
amortization  of  partnership  formation costs  were  stable  and  collectively
amounted to 17% of revenues in 1994 and 1993.
     
     The  Company recorded a net loss of $861 in 1994 as compared to a net loss
of  $1,128 in 1993. The allocation for minority interest in 1994 was $5,700, an
increase  of $226 from 1993 as the Rosemary Partnership's net income  increased
slightly.
     
  Liquidity and Capital Resources
  
     To  date,  the  Company  and  its subsidiaries  have  obtained  cash  from
operations  of  the  Rosemary Facility and the Brandywine Facility,  borrowings
under  non-recourse project debt of the Rosemary Partnership and the Brandywine
Partnership, and the proceeds from the sale of the Series A Bonds. The  Company
and  its  subsidiaries  utilized this cash to  refinance  and  acquire  a  100%
interest  in  the Rosemary Facility, fund development and construction  of  the
Brandywine  Facility,  service their debt obligations,  make  distributions  to
Panda  International to fund Project development efforts and  for  general  and
administrative expenses.
     
     The  principal future cash requirements of PIC will be the payment of  its
obligations  under  the PIC Notes, thus enabling the issuer  of  the  Series  A
Bonds, a subsidiary of PIC, to satisfy its obligations under the Series A Bonds
and any future series of PFC Bonds. Semi-annual principal and interest payments
on the PIC Note that was issued in connection with the issuance of the Series A
Bonds totaled $7.0 million on February 20, 1997 and are expected to total  $6.1
million  on  each  August 20 and February 20 through February 20,  1999,  after
which  time  scheduled  payments will increase as  more  significant  principal
amortization begins. The amount of principal payments generally increases  over
time. See "Description of Other Indebtedness--The PFC Bonds."
     
     The  principal future cash requirements of the Issuer will be the  payment
of  the Exchange Notes. The Issuer expects to receive income sufficient for  it
to  satisfy its obligations under the Exchange Notes from the repayment of  the
loan  of  the  net  proceeds  of the Exchange Notes  to  Pan-Western  and  from
dividends from PIC.
     
     Because substantially all of the Issuer's and the Company's operations are
conducted through their Project subsidiaries, the Issuer and the Company should
have   no  significant  direct  operating  or  administrative  expenses.  Panda
International  performs  certain accounting, legal,  insurance  and  consulting
services  for  the  Issuer  and the Company. The  cost  of  these  services  is
allocated to the Issuer and the Company through an intercompany charge.
     
     The  Company will rely almost exclusively on distributions from the Issuer
and  PIC  to meet its cash requirements. The ability of the Issuer and  PIC  to
make  such  distributions  will depend upon the financial  performance  of  the
Luannan Facility, the Rosemary Facility, the Brandywine Facility and any  other
Project  that may be added in the future to the PIC Project Portfolio and  will
be subject to a number of limitations on distributions contained in the Project-
level  debt  agreements,  the indenture relating  to  the  PFC  Bonds  and  the
Indentures.
     
     The  Issuer and the Company own an indirect equity interest in the Luannan
Facility, which has commenced construction. The Issuer expects that,  upon  the
successful  completion of the Luannan Facility, the funds  the  Issuer  derives
from  the repayment of the loan to Pan-Western will constitute the majority  of
the funds available to the Issuer to satisfy its obligations under the Exchange
Notes.
     
     The Company also owns indirect equity interests in two operating Projects,
the  Rosemary  Facility  and  the  Brandywine Facility.  The  majority  of  the
distributions  available  from  the Rosemary  Partnership  and  the  Brandywine
Partnership are required to be used to service the Rosemary Bonds, to pay  rent
with  respect to the lease financing of the Brandywine Project and  to  service
the  Series  A Bonds; any funds available after paying all of such  obligations
then  due  will  be required to be paid by PIC as distributions to  PEC,  which
will,  in  turn, be required to pay such amounts to the Company,  and  will  be
available  to  the  Company to pay its obligations on the  Exchange  Notes,  if
necessary.
     
  New Accounting Pronouncements
  
     In  March  1995, the Financial Accounting Standards Board issued Statement
of  Financial  Accounting Standards No. 121, "Accounting for the Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed of"  ("SFAS  121").
SFAS 121 is effective for financial statements for fiscal years beginning after
December 15, 1995 and requires the write-down to market value of certain  long-
lived  assets.  The Company and the Issuer adopted SFAS 121 in  1996  and  such
adoption did not have a material impact on their financial position or  results
of operations.
     
  Impact of Inflation
  
     Inflationary increases in the Issuer's and the Company's costs,  primarily
Project  development costs, energy costs and capital costs, may  be  offset  by
increases  in  revenue  as provided in the various power  purchase  agreements,
although  competition may limit the ability of the Issuer and its  subsidiaries
to  recover  fully  all  such  increases. The Issuer,  the  Company  and  their
affiliates  attempt,  where  possible, to  obtain  provisions  in  their  power
purchase  agreements whereby certain revenue components,  such  as  energy  and
operations  and  maintenance, may be adjusted with inflationary  increases.  In
management's view, inflation will not have a material effect on the Issuer's or
the Company's financial position over the long-term.
     
                              THE EXCHANGE OFFER

Purpose and Effects of the Exchange Offer

      The Old Notes were issued and sold by the Issuer on April 22, 1997 to the
Initial  Purchaser  pursuant to the Purchase Agreement.  The Initial  Purchaser
subsequently  placed  the  Old Notes with Qualified  Institutional  Buyers  and
institutional Accredited Investors in transactions exempt from the registration
requirements of the Securities Act.  As a condition of the Purchase  Agreement,
the Company, the Issuer and the Initial Purchaser entered into the Registration
Rights  Agreement, pursuant to which the Company and the Issuer agreed  (i)  to
file  with  the  Commission a registration statement under the  Securities  Act
relating to the Exchange Offer within 60 days after the Issue Date, (ii) to use
their best efforts to cause such registration statement to become effective  no
later  than 150 days after the Issue Date and (iii) upon effectiveness of  such
registration statement to commence the Exchange Offer and offer to the  holders
of  Old  Notes the opportunity to exchange their Old Notes for a like principal
amount  of Exchange Notes.  This Registration Statement is intended to  satisfy
the  foregoing obligations of the Company and the Issuer under the Registration
Rights  Agreement.  See "Description of the Exchange Notes, the Exchange  Notes
Guarantee, the Issuer Loan, the Shareholder Loans and the Collateral Documents-
-Old Notes Registration Rights."

      Following the consummation of the Exchange Offer, any holder of Old Notes
(other  than  one  not  permitted by law or any policy  of  the  Commission  to
participate  in  the  Exchange Offer) which has not  exchanged  its  Old  Notes
pursuant  to  the Exchange Offer will not have any further registration  rights
under  the Registration Rights Agreement and its Old Notes will continue to  be
subject  to  certain  restrictions on transfer.  See  "Termination  of  Certain
Rights"  and  "Transfer Restrictions on Old Notes" below and "Risk  Factors  --
Consequences of Failure to Exchange Old Notes."  Accordingly, the liquidity  of
the  market,  if  any,  for  any Old Notes which remain  outstanding  could  be
materially adversely affected.

     Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Issuer believes that Exchange Notes
issued  in exchange for Old Notes pursuant to the Exchange Offer may be offered
for resale, resold and otherwise transferred by any holders thereof (other than
any  such  holder  which is an Affiliate of the Company or the Issuer)  without
compliance  with  the registration and prospectus delivery  provisions  of  the
Securities Act, provided that such Exchange Notes are acquired in the  ordinary
course of such holders' business and such holders have no arrangements with any
person  to  participate in the distribution of such Exchange Notes.  To  comply
with  the securities laws of certain jurisdictions, if applicable, the Exchange
Notes  may not be offered or sold unless they have been registered or qualified
for   sale  in  such  jurisdictions  or  an  exemption  from  registration   or
qualification  is  available and the conditions  thereto  have  been  met.   In
addition,  each broker-dealer that received Exchange Notes for its own  account
in  exchange for Old Notes, where such Old Notes were acquired by such  broker-
dealer  as  a  result of market making activities or other trading  activities,
must  acknowledge  that  it will deliver a prospectus in  connection  with  any
resale  of  such Exchange Notes.  See "--Resales of Exchange Notes"  below  and
"Plan of Distribution."

Terms of the Exchange Offer

     The Issuer hereby offers, upon the terms and subject to the conditions set
forth  herein and in the accompanying Letter of Transmittal, to exchange $1,000
principal  amount  of  Exchange  Notes for  each  $1,000  principal  amount  of
outstanding  Old  Notes.   As  of  the date of  this  Prospectus,  $155,200,000
principal amount of the Old Notes is outstanding. The Exchange Notes will  bear
interest  from the date of their issuance.  Interest on the Old Notes  accepted
for exchange will accrue thereon to, but not including, the date of issuance of
the Exchange Notes and will be paid together with the first interest payment on
the Exchange Notes issued in exchange therefor.

     The form and terms of the Exchange Notes will be identical to the form and
terms  of  the  Old Notes, except that (i) the Exchange Notes  will  have  been
registered  under  the  Securities Act, and therefore, will  not  bear  legends
restricting their transfer pursuant to the Securities Act, and (ii) the holders
of  the Exchange Notes will not be entitled to certain rights of the holders of
Old  Notes under the Registration Rights Agreement, which will terminate as  to
Old  Notes tendered pursuant to the Exchange Offer upon the consummation of the
Exchange Offer.  Such rights will also terminate as to holders of Old Notes who
are  eligible to tender their Old Notes for exchange in the Exchange Offer  but
fail  to do so.  See "Termination of Certain Rights" below and "Description  of
the  Exchange  Notes, the Exchange Notes Guarantee, the Issuer  Loan,  the  the
Shareholder Loans and the Collateral Documents--Old Notes Registration Rights."
The  Exchange  Notes will evidence the same debt as the Old  Notes  which  they
replace and will be issued under, and be entitled to the same benefits  as  the
Old  Notes pursuant to, the Indenture.  See "Description of the Exchange Notes,
the  Exchange Notes Guarantee, the Issuer Loan, the Shareholder Loans  and  the
Collateral Documents".

      The  Exchange  Offer  will expire at 5:00 p.m. New  York  City  time,  on
________________,  unless extended in the Issuer's sole  discretion.   Tendered
Old  Notes  may be withdrawn at any time prior to the Expiration Date.   For  a
description of the Issuer's right to extend the period of time during which the
Exchange  Offer  is open, and to delay, terminate or amend the Exchange  Offer,
and  of tendering holders' withdrawal rights, see "Expiration Date; Extensions;
Termination; Amendments" and "Withdrawal of Tenders" below.

      The Issuer shall be deemed to have accepted validly tendered Old Notes in
the  Exchange Offer when, as and if the Issuer has given oral or written notice
thereof  to the Exchange Agent.  The Exchange Agent will act as agent  for  the
tendering holders of Old Notes for the purposes of receiving the Exchange Notes
from  the  Issuer.  The Exchange Notes will be delivered as soon as practicable
after acceptance of the Old Notes, which is expected to occur on the Expiration
Date.

      This  Prospectus,  together  with the Letter  of  Transmittal  and  other
relevant materials, will be mailed by the Issuer to record holders of Old Notes
and will be furnished to brokers, banks and similar persons whose names, or the
names  of  whose  nominees,  appear  on the lists  of  holders  for  subsequent
transmittal to beneficial owners of Old Notes.  Holders of Old Notes who tender
in the Exchange Offer will not be required to pay brokerage commissions or fees
or,  subject  to the instructions in the Letter of Transmittal, transfer  taxes
with respect to the exchange of Old Notes pursuant to the Exchange Offer.   The
Company  and  the Issuer will pay all charges and expenses, other than  certain
applicable taxes, in connection with the Exchange Offer.

      Although  the Issuer has no plan or intention to do so, it  reserves  the
right in its sole discretion to purchase or make offers for any Old Notes  that
remain  outstanding  subsequent  to the Expiration  Date,  and  to  the  extent
permitted  by  applicable  law,  purchase Old Notes  in  the  open  market,  in
privately  negotiated  transactions  or  otherwise.   The  terms  of  any  such
purchases or offers could differ from the terms of the Exchange Offer.

     Holders of Old Notes do not have any appraisal or dissenters' rights under
the  Companies  Law  (Revised)  of the Cayman  Islands  or  the  Exchange  Note
Indenture in connection with the Exchange Offer.

Expiration Date; Extensions; Termination; Amendments

      The  Exchange Offer expires on the Expiration Date.  The term "Expiration
Date"  means 5:00 p.m., New York City time, on ___________________, unless  the
Issuer  in  its  sole discretion extends the period during which  the  Exchange
Offer is open, in which event the term "Expiration Date" means the latest  time
and  date  on which the Exchange Offer, as so extended by the Issuer,  expires.
The Issuer reserves the right to extend the Exchange Offer at any time and from
time  to  time  prior  to  the Expiration Date.  The Issuer  shall  notify  the
Exchange  Agent  of any extension by oral or written notice and  shall  make  a
public announcement thereof prior to 5:00 p.m., New York City time, on the next
Business Day after the previously scheduled Expiration Date.  Such announcement
may  state  that  the Issuer is extending the Exchange Offer  for  a  specified
period  or  on a daily basis.  Without limiting the manner by which the  Issuer
may  choose  to  make  such public announcement thereof, the  Issuer  currently
intends  to  make such announcements, if any, by issuing a release to  the  Dow
Jones  News Service. During any extension of the Exchange Offer, all Old  Notes
previously tendered pursuant to the Exchange Offer will remain subject  to  the
Exchange Offer.

      The  Issuer reserves the right (i) to extend the Exchange Offer, (ii)  to
delay  accepting any tendered Old Notes, (iii) if any of the events  set  forth
below  under "Conditions of the Exchange Offer" shall have occurred  and  shall
not have been waived by the Issuer, terminate the Exchange Offer and not accept
any  Old  Notes, by giving oral or written notice of such delay,  extension  or
termination to the Exchange Agent, and (iv) to amend at any time, or from  time
to time, the terms of the Exchange Offer in any manner, whether before or after
any  tender  of  the Old Notes. Any amendment applicable to the Exchange  Offer
will  apply to all Old Notes tendered in the Exchange Offer, regardless of when
or  in  what  order  the  Old Notes were tendered.  Any  delay  in  acceptance,
extension, termination or amendment will be followed as promptly as practicable
by  public  announcement thereof in a manner set forth above.  If the  Exchange
Offer is amended (including by waiver of a condition to the Exchange Offer)  in
a  manner determined by the Issuer to constitute a material change, the  Issuer
will  promptly  disclose  such amendment in a manner reasonably  calculated  to
inform  the  holders of Old Notes of such amendment, and if the Exchange  Offer
would  otherwise expire during such period, the Issuer will extend the Exchange
Offer  for  a  period  which  the Issuer in its discretion  deems  appropriate,
depending  upon the significance of the amendment and the manner of  disclosure
to  the  holders of Old Notes. All of the conditions to the Exchange Offer  set
forth  below  under  the  caption "Conditions of the Exchange  Offer"  must  be
satisfied  or  waived  prior to the consummation of the  Exchange  Offer.   The
rights reserved by the Issuer in this paragraph are in addition to the Issuer's
rights set forth below under the caption  "Conditions of the Exchange Offer."

Conditions of the Exchange Offer

     Notwithstanding any other term of the Exchange Offer, the Issuer shall not
be required to accept for exchange, or exchange the Exchange Notes for, any Old
Notes,  and  may  terminate the Exchange Offer as provided  herein  before  the
acceptance of such Old Notes, if:

     (i)   any action or proceeding is instituted or threatened in any court or
           by  or  before any governmental agency with respect to the  Exchange
           Offer  which,  in  the sole judgment of the Issuer,  may  materially
           impair the ability of the Issuer to proceed with the Exchange  Offer
           in  accordance with the terms contained herein and in the Letter  of
           Transmittal  or materially impair the contemplated benefits  of  the
           Exchange  Offer  to the Issuer, or any material adverse  development
           has  occurred in any existing action or proceeding with  respect  to
           the Issuer or any of its subsidiaries or affiliates;
     
     (ii)  any  change, or any development involving a prospective  change,  in
           the  business  or  financial affairs of the Issuer  or  any  of  its
           subsidiaries has occurred which, in the sole judgment of the Issuer,
           may  materially impair the ability of the Issuer to proceed with the
           Exchange Offer or materially impair the contemplated benefits of the
           Exchange Offer to the Issuer;
     
     (iii) any  law,  statute,  rule  or regulation  is  proposed,  adopted  or
           enacted,  which, in the sole judgment of the Issuer, may  materially
           impair the ability of the Issuer to proceed with the Exchange  Offer
           or materially impair the contemplated benefits of the Exchange Offer
           to the Issuer;
     
     (iv)  any  governmental approval has not been obtained, which approval the
           Issuer  shall,  in  its  sole discretion,  deem  necessary  for  the
           consummation of the Exchange Offer as contemplated hereby;
     
     (v)   any  stop order shall be threatened or in effect with respect to the
           Registration Statement of which this Prospectus constitutes  a  part
           or  qualification of the Indenture under the Trust Indenture Act  of
           1939, as amended; or
     
     (vi)  the  Trustee  shall have objected in any respect to,  or  taken  any
           action  that  could, in the sole judgment of the  Issuer,  adversely
           affect  the consummation of the Exchange Offer, or shall have  taken
           any  action  that  challenges the validity or effectiveness  of  the
           procedures  used by the Issuer in making the Exchange Offer  or  the
           acceptance of Old Notes in exchange for Exchange Notes.

     The foregoing conditions to the Exchange Offer are for the sole benefit of
the  Issuer and may be asserted by the Issuer in its sole discretion regardless
of the circumstances giving rise to any such condition (including any action or
inaction  by  the Company or the Issuer) and may be waived by  the  Issuer,  in
whole or in part, at any time and from time to time in its sole discretion. All
of  the  foregoing  conditions  must  be  satisfied  or  waived  prior  to  the
consummation of the Exchange Offer.  The failure by the Issuer at any  time  to
exercise  any of the foregoing rights shall not be deemed a waiver of any  such
right  and  each  such  right shall be deemed an ongoing  right  which  may  be
asserted  at any time and from time to time.  Any determination by  the  Issuer
concerning  the  events  described  in  this  section  or  the  fulfillment  or
nonfulfillment of any conditions shall be final and binding upon all persons.

     The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered.

Procedures for Tendering

     Only a registered holder of the Old Notes may tender such Old Notes in the
Exchange Offer.  To tender in the Exchange Offer, a holder must, prior  to  the
Expiration Date, either (i) complete and sign the Letter of Transmittal  (or  a
facsimile  thereof), in accordance with the instructions contained  herein  and
therein,  and  deliver such Letter of Transmittal, together with any  signature
guarantees  and  any other documents required by the Letter of Transmittal,  to
the  Exchange  Agent at its address set forth on the back cover  page  of  this
Prospectus  and the tendered Old Notes must either be (a) physically  delivered
to  the Exchange Agent or (b) transferred pursuant to the procedures for  book-
entry  transfer described herein and a confirmation of such book-entry transfer
must  be  received by the Exchange Agent prior to the Expiration Date, or  (ii)
comply with the guaranteed delivery procedures set forth herein.  To be validly
tendered,  the  Old  Notes,  together  with  a  properly  completed  Letter  of
Transmittal  (or facsimile thereof), executed by the holder of record  thereof,
and any other documents required by the Letter of Transmittal, must be received
by  the Exchange Agent at the address set forth on the back cover page of  this
Prospectus  prior  to  5:00 p.m., New York City time, on the  Expiration  Date,
except  as  otherwise  provided  below under the caption  "Guaranteed  Delivery
Procedures."

      The  tender by a holder will constitute an agreement between such  holder
and  the Issuer in accordance with the terms and subject to the conditions  set
forth herein and in the Letter of Transmittal.

      THE METHOD OF DELIVERY OF THE OLD NOTES AND THE LETTER OF TRANSMITTAL AND
ALL  OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER.  INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN  OVERNIGHT OR HAND DELIVERY SERVICE.  IF DELIVERY IS TO BE MADE BY MAIL,  IT
IS  SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF  THE
EXPIRATION DATE.  NO LETTER OF TRANSMITTAL OR THE OLD NOTES SHOULD BE  SENT  TO
THE ISSUER OR THE COMPANY.

      Any  beneficial owner whose Old Notes are registered in  the  name  of  a
broker, dealer, commercial bank, trust company or other nominee and who  wishes
to  tender  should  contact the registered holder promptly  and  instruct  such
registered   holder  to  tender  on  such  beneficial  owner's  behalf.     See
"Instructions  to  Registered Holder from Beneficial Owner" included  with  the
Letter of Transmittal.

      Signatures on a Letter of Transmittal must be guaranteed unless  the  Old
Notes tendered pursuant thereto are (i) tendered by a registered holder of  the
Old   Notes   who  has  not  completed  the  box  entitled  "Special   Delivery
Instructions" on the Letter of Transmittal or (ii) tendered for the account  of
an Eligible Institution (as defined below).  In the event that signatures on  a
Letter of Transmittal are required to be guaranteed, such guarantee must be  by
a  firm  that  is a member of a registered national securities  exchange  or  a
member  of  the  National  Association of Securities  Dealers,  Inc.  or  by  a
commercial  bank  or  trust company having an office or  correspondent  in  the
United  States,  or  by  an  entity that is otherwise  an  "eligible  guarantor
institution"  within  the meaning of Rule 17Ad-15 under the  Exchange  Act  (an
"Eligible Institution").

      If  the  Letter  of  Transmittal is signed by a  person  other  than  the
registered  holder  of any Old Notes listed therein, such  Old  Notes  must  be
endorsed  by the registered holder or accompanied by a properly completed  bond
power  or  other  written instrument of transfer in form  satisfactory  to  the
Issuer  in  its  sole  discretion, signed by such  registered  holder  as  such
registered  holder's  name  appears  on such  Old  Notes.   If  the  Letter  of
Transmittal  is  signed by the registered holder and (a) the  entire  principal
amount of the holder's Old Notes is tendered or (b) untendered Old Notes are to
be issued to the registered holder, then the registered holder need not endorse
any  certificates for tendered Old Notes or provide a separate bond power.   In
any  other case, the registered holder must transmit a separate bond power with
the Letter of Transmittal.

     If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers  of
corporations  or others acting in a fiduciary or representative capacity,  such
persons  should  so indicate when signing, and proper evidence satisfactory  to
the Issuer of their authority to so act must be submitted.

      The  Exchange Agent will establish accounts with respect to the Old Notes
at  DTC  for  the purpose of the Exchange Offer, and any financial  institution
that  is a participant in DTC may make book-entry transfer of the Old Notes  by
causing  DTC  to transfer such Old Notes into the Exchange Agent's  account  at
DTC. Although delivery of Old Notes may be effected through book-entry transfer
in the Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof),  with  any  required  signature guarantees  and  any  other  required
documents,  must, in any case, be transmitted to and received by  the  Exchange
Agent  at  its address set forth on the back cover of this Prospectus prior  to
5:00  p.m.,  New  York City time, on the Expiration Date, except  as  otherwise
provided under the caption "Guaranteed Delivery Procedures" below. DELIVERY  OF
DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO  THE  EXCHANGE  AGENT.   NOTWITHSTANDING COMPLIANCE WITH  BOOK-ENTRY  TENDER
DELIVERY  PROCEDURES,  FAILURE TO DELIVER TO THE  EXCHANGE  AGENT  AN  EXECUTED
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS PRIOR TO 5:00 P.M.,  NEW
YORK CITY TIME, ON THE EXPIRATION DATE MAY RESULT IN THE TENDERED OLD BONDS NOT
BEING ACCEPTED FOR EXCHANGE.

      All  questions as to the validity, form, eligibility (including  time  of
receipt)  and acceptance of Old Notes tendered for exchange will be  determined
by  the  Issuer in its sole discretion, whose determination will be  final  and
binding.   The Issuer reserves the absolute right to reject any or all  tenders
that are not in proper form or the acceptance of which would, in the opinion of
the  Issuer  or counsel for the Issuer, be unlawful.  The Issuer also  reserves
the  right  to  waive certain of the conditions to the Exchange  Offer  or  any
irregularities  or  defects  in  the  tender  of  Old  Notes.    The   Issuer's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions  in the Letter of Transmittal) will be final and  binding  on  all
persons.  Unless waived, any irregularities in connection with tenders  of  Old
Notes  must  be cured within such time as the Issuer shall determine.   Neither
the Company, the Issuer, the Exchange Agent nor any other person shall be under
any duty to give notifications of defects or irregularities in such tenders  or
shall  incur any liability for failure to give such notification.   Tenders  of
Old  Notes will not be deemed to have been made until any defects with  respect
to such tenders have been cured or waived.

      By  tendering, each registered holder of Old Notes will represent to  the
Issuer  that, among other things, (i) the Exchange Notes to be acquired by  the
holder and any beneficial owner(s) of such Old Notes ("Beneficial Owner(s)") in
connection  with the Exchange Offer are being acquired by the holder  and  such
Beneficial  Owner(s) in the ordinary course of business of the holder  and  any
Beneficial Owner(s), (ii) the holder (other than a broker-dealer referred to in
the  last  sentence  of  this  paragraph) and each  Beneficial  Owner  are  not
participating and do not intend to participate in the distribution (within  the
meaning of the Securities Act) of the Exchange Notes, (iii) the holder and each
Beneficial  Owner  have  no arrangement or understanding  with  any  person  to
participate in the distribution (within the meaning of the Securities  Act)  of
the  Exchange Notes, (iv) the holder and each Beneficial Owner acknowledge  and
agree  that  any person participating in the Exchange Offer for the purpose  of
distributing  the  Exchange  Notes  must  comply  with  the  registration   and
prospectus  delivery requirements of the Securities Act in  connection  with  a
secondary resale transaction of the Exchange Notes acquired by such person  and
cannot  rely  on the position of the staff of the Commission set forth  in  no-
action  letters  that  are discussed herein under "Resale of  Exchange  Notes,"
below,  (v)  the holder and each Beneficial Owner understand that  a  secondary
resale  transaction  described in clause (iv) above should  be  covered  by  an
effective  registration  statement  containing  the  selling  security   holder
information required by Item 507 of Regulation S-K of the Commission  and  (vi)
neither  the holder nor any Beneficial Owner is an Affiliate of the Company  or
the  Issuer, or if it is an Affiliate, it will comply with the registration and
prospectus   delivery  requirements  of  the  Securities  Act  to  the   extent
applicable.  In addition, each broker-dealer that receives Exchange  Notes  for
its  own  account in exchange for Old Notes, where such Old Notes were acquired
by  such broker-dealer as a result of market making activities or other trading
activities,  must acknowledge that it will deliver a prospectus  in  connection
with  any  resale  of such Exchange Notes.  See "--Resales of  Exchange  Notes"
below and "Plan of Distribution."

      Unless  an  exemption applies under the applicable  law  and  regulations
concerning  "backup  withholding" of United  States  federal  income  tax,  the
Exchange  Agent  will be required to withhold, and will withhold,  31%  of  the
gross proceeds otherwise payable to a holder pursuant to the Exchange Offer  if
the holder does not provide its taxpayer identification number (social security
number or employer identification number, as applicable) and certify that  such
number  is  correct.  Each tendering holder should complete and sign  the  main
signature  form and the Substitute Form W-9 included as part of the  Letter  of
Transmittal,  so as to provide the information and certification  necessary  to
avoid  backup withholding, unless an applicable exemption exists and is  proved
in a manner satisfactory to the Issuer and the Exchange Agent.

Guaranteed Delivery Procedures

      If  a holder of Old Notes desires to tender such Old Notes and if the Old
Notes are not immediately available, or time will not permit such holder's  Old
Notes  or any other required documents to reach the Exchange Agent before  5:00
p.m., New York City time, on the Expiration Date, a tender for exchange may  be
effected if:

     (i)  the   tender  for  exchange  is  made  by  or  through  an   Eligible
          Institution;
     
     (ii) prior  to 5:00 p.m., New York City time, on the Expiration Date,  the
          Exchange  Agent  has  received  from  such  Eligible  Institution   a
          properly  completed  and duly executed Notice of Guaranteed  Delivery
          (by  facsimile transmission, mail or hand delivery) setting forth the
          name  and  address of the holder of the Old Notes and  the  principal
          amount  of  Old Notes tendered for exchange, stating that  tender  is
          being  made thereby and guaranteeing that, within three Business  Days
          after  the  Expiration Date, the duly executed Letter of  Transmittal
          (or  facsimile  thereof), properly completed  and  validly  executed,
          together  with  the  Old  Notes  in  proper  form  for  transfer  (or
          confirmation  of  book-entry transfer of  such  Old  Notes  into  the
          Exchange  Agent's account with DTC), and any other documents required
          by  the  Letter of Transmittal and the instructions thereto, will  be
          deposited by the Eligible Institution with the Exchange Agent; and
     
     (iii)such  properly  completed  and executed  Letter  of  Transmittal  (or
          facsimile  thereof), as well as the certificate(s)  representing  all
          tendered  Old  Notes in proper form for transfer (or confirmation  of
          book-entry  transfer  of  such Old Notes into  the  Exchange  Agent's
          account  with DTC) and all other documents required by the Letter  of
          Transmittal, are received by the Exchange Agent within five  Business
          Days after the Expiration Date.

      Upon request to the Exchange Agent, a Notice of Guaranteed Delivery  will
be  sent  to  holders  who  wish to tender their Old  Notes  according  to  the
guaranteed delivery procedures set forth above.

Acceptance of Old Notes for Exchange; Delivery of Exchange Notes
      Upon  the terms and subject to the conditions of the Exchange Offer,  the
Issuer  will  accept on the Expiration Date all Old Notes properly tendered  in
the  Exchange Offer and not withdrawn and will issue the Exchange Notes as soon
as  practicable after the acceptance of the Old Notes.  The Exchange Notes will
be issued in the form of a fully registered global bond which will be deposited
with,  or on behalf of, DTC and registered in the name of its nominee.  Holders
tendering  Old  Notes  represented by a certificate must provide  the  Exchange
Agent  with a DTC account number for delivery of the Exchange Notes  issued  in
exchange  therefor.  For purposes of the Exchange Offer, the  Issuer  shall  be
deemed  to have accepted properly tendered Old Notes when, as and if the Issuer
has  given oral or written notice thereof to the Exchange Agent.  The  Exchange
Agent  will act as agent for the tendering holders of Old Notes for the purpose
of  receiving the Exchange Notes from the Issuer and transmitting the  Exchange
Notes to each holder exchanging Old Notes.

      If  any  tendered Old Notes are not accepted for exchange because  of  an
invalid  tender, the occurrence of certain other events set forth  herein,  the
withdrawal of tendered Old Notes under circumstances permitting such withdrawal
as  described herein or otherwise, or if Old Notes are submitted for a  greater
principal  amount  than  the  holder thereof  desires  to  exchange,  any  such
unaccepted or non-exchanged Old Notes will be returned, without expense, to the
tendering  holder thereof (or, in the case of the Old Notes tendered  by  book-
entry  transfer, to an account maintained at DTC), as soon as practicable after
the expiration or termination of the Exchange Offer.

Withdrawal of Tenders

      Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.  Thereafter, such tenders are irrevocable. To withdraw a  tender  of  Old
Notes in the Exchange Offer, a written notice of withdrawal, delivered by hand,
mail  or  facsimile  transmission, must (i) be received by the  Exchange  Agent
prior  to 5:00 p.m., New York City time, on the Expiration Date at the  address
set  forth on the back cover hereof, (ii) specify the name of and be signed  by
the  registered  holder of such Old Notes in the same manner as the  applicable
Letter  of  Transmittal (including any required signature  guarantees)  as  set
forth  above  under "Procedures for Tendering," (iii) specify the name  of  the
person identified in the Letter of Transmittal as having tendered the Old Notes
to  be withdrawn and (iv) specify the aggregate principal amount represented by
such  withdrawn  Old Notes.  If Old Notes have been tendered  pursuant  to  the
procedures  for  book-entry  transfer  as  set  forth  herein,  any  notice  of
withdrawal must also specify the name and number of the account at  DTC  to  be
credited with the withdrawn Old Notes.  Withdrawals of tenders of Old Notes may
not  be  rescinded, and any Old Notes withdrawn will thereafter be  deemed  not
validly  tendered for purposes of the Exchange Offer; provided,  however,  that
withdrawn  Old Notes may be re-tendered by again complying with the  procedures
for  tendering Old Notes described herein at any time prior to 5:00  p.m.,  New
York City time, on the Expiration Date.

      All questions as to the validity, form and eligibility (including time of
receipt)  of  notices  of withdrawal will be determined  by  the  Issuer,  such
determination  to be final and binding.  None of the Company, the  Issuer,  the
Exchange  Agent or any other person will be under any duty to give notification
of  any  defects or irregularities in any notice of withdrawal of Old Notes  or
incur any liability for failure to give any such notification.

Lost or Missing Certificates

      If  a  holder  of Old Notes desires to tender Old Notes pursuant  to  the
Exchange  Offer,  but  such  Old Notes have been  mutilated,  lost,  stolen  or
destroyed,  such  holder should telephone the Trustee  at  (800)  735-7777  for
information  concerning  the procedures for obtaining replacement  certificates
for  such  Old  Notes, arranging for indemnification or any other  matter  that
requires handling by the Trustee.

Termination of Certain Rights

      Holders  of  Old Notes have certain rights under the Registration  Rights
Agreement  that will terminate as a result of the consummation of the  Exchange
Offer. The Exchange Offer shall be deemed to be "consummated" upon the issuance
and  delivery of Exchange Notes in exchange for Old Notes validly tendered  and
not  withdrawn  in  the  Exchange Offer in accordance with  the  terms  of  the
Registration  Rights  Agreement. Such rights will  terminate  for  all  holders
exchanging Old Notes in the Exchange Offer and all holders who are eligible  to
participate  in the Exchange Offer and fail to do so. See "Description  of  the
Exchange  Notes, the Exchange Notes Guarantee, the Issuer Loan, the Shareholder
Loans and the Collateral Documents--Old Notes Registration Rights."

The Exchange Agent

      The Exchange Agent for the Exchange Offer is Bankers Trust Company.   All
deliveries,  correspondence and questions sent or  presented  to  the  Exchange
Agent  relating  to  the  Exchange Offer should be directed  to  the  following
address or telephone number (which are also set forth on the back cover of this
Prospectus):

                          Facsimile Transmission:                
                               (615) 835-3701
                           Confirm by Telephone:
                               (615) 835-3572
                                                       By Overnight Courier
       By Mail:              By Hand Delivery:          or Certified Mail:
BT Services Tennessee,     Bankers Trust Company      BT Services Tennessee,
         Inc.                                                  Inc.
  Reorganization Unit     Corporate Trust & Agency   Corporate Trust & Agency
                                   Group                       Group
    P.O. Box 292737      Receipt & Delivery Window      Reorganization Unit
 Nashville, TN 37229-    123 Washington Street, 1st   648 Grassmere Park Road
         2737                      Floor
                             New York, NY 10006         Nashville, TN 37211
                                                                 
                           For Information Call:                 
                               (800) 735-7777                    

     Delivery to an address other than as set forth herein, or transmissions of
instructions  via a facsimile number other than the one set forth herein,  will
not constitute a valid delivery.

Fees and Expenses

      The  expenses of soliciting tenders will be borne by the Company and  the
Issuer.   The principal solicitation is being made by mail; however, additional
solicitation  may be made by facsimile, telephone or in person by officers  and
representatives of the Issuer and its affiliates. The Issuer has  not  retained
any  dealer-manager in connection with the Exchange Offer and will not make any
payments  to  brokers, dealers or others soliciting acceptance of the  Exchange
Offer.  The  Issuer,  however,  will  pay the  Exchange  Agent  reasonable  and
customary  fees  for its services and will reimburse it for reasonable  out-of-
pocket  expenses incurred in connection therewith. The expenses to be  incurred
in  connection  with  the Exchange Offer will be paid by  the  Issuer  and  the
Company and are estimated in the aggregate to be approximately $260,000.   Such
expenses  include  fees  and  expenses  of  the  Exchange  Agent  and  Trustee,
accounting  and  legal  fees and independent engineers' and  fuel  consultants'
fees.

     The Issuer will pay all transfer taxes, if any applicable, to the transfer
of Old Notes to it pursuant to the Exchange Offer.  If, however, a transfer tax
is  imposed  for any reason other than the transfer of Old Notes to the  Issuer
pursuant  to  the Exchange Offer (including, without limitation,  any  transfer
taxes  imposed  as  a result of the Exchange Notes or Old Notes  not  exchanged
being  delivered to, or issued in the name of, any person other than the record
holder,  or  certificates being tendered that are recorded in  the  name  of  a
person  other  than  the  person signing the Letter of Transmittal),  then  the
amount of any such transfer taxes (whether imposed on the registered holder  or
any  other  person) will be payable by the tendering holder.   If  satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted  with
the  Letter  of Transmittal, the amount of such transfer taxes will  be  billed
directly to such tending holder.

Accounting Treatment

      The  Exchange  Notes will be recorded at the carrying value  of  the  Old
Notes,  as  reflected in the Issuer's accounting records on  the  date  of  the
exchange.   Accordingly,  no  gain  or loss for  accounting  purposes  will  be
recognized.

Transfer Restrictions on Old Notes

      The  Old Notes that are not exchanged for Exchange Notes pursuant to  the
Exchange Offer will remain "restricted securities" (within the meaning  of  the
Securities Act).  Accordingly, prior to the date that is three years after  the
later  of the Issue Date and the last date on which the Issuer or any Affiliate
of  the Issuer was the owner thereof, such Old Notes may be resold only (i)  to
the  Issuer  (upon redemption thereof or otherwise), (ii) so long  as  the  Old
Notes  are  eligible for resale pursuant to Rule 144A, to  a  person  whom  the
seller  reasonably believes is a Qualified Institutional Buyer, purchasing  for
its  own account or for the account of a Qualified Institutional Buyer to  whom
notice  is  given that the resale, pledge or other transfer is  being  made  in
reliance  on Rule 144A, (iii) to an institutional Accredited Investor  that  is
purchasing  for  its own account or the account of an institutional  Accredited
Investor, (iv) in an offshore transaction in accordance with Regulation S under
the   Securities  Act,  (v)  pursuant  to  another  available  exemption   from
registration  under  the  Securities Act, or  (vi)  pursuant  to  an  effective
registration  statement  under the Securities  Act,  subject  in  each  of  the
foregoing cases to compliance with applicable state securities laws.

Resales of Exchange Notes

      With respect to resales of the Exchange Notes, based on an interpretation
by  the staff of the Commission set forth in no-action letters issued to  third
parties,  the Company believes that a holder (other than a person  that  is  an
Affiliate  of the Company, the Issuer or Panda Interholding) who exchanges  Old
Notes  for Exchange Notes will be allowed to resell the Exchange Notes acquired
in  the  Exchange  Offer to the public without further registration  under  the
Securities Act and without delivering to the purchasers of the Exchange Notes a
prospectus that satisfies the requirements of Section 10 thereof; provided that
(i)  the  Exchange Notes are acquired in the ordinary course  of  the  holder's
business, (ii) the holder (other than a broker-dealer referred to in  the  next
sentence)  is  not  participating and does not intend  to  participate  in  the
distribution  (within the meaning of the Securities Act) of the Exchange  Notes
and  (iii)  the holder has no arrangement or understanding with any  person  to
participate in the distribution (within the meaning of the Securities  Act)  of
the  Exchange  Notes.  In addition, each broker-dealer that  receives  Exchange
Notes for its own account in exchange for Old Notes, where such Old Notes  were
acquired by such broker-dealer as a result of market making activities or other
trading activities, must notify the Company and the Issuer that it has acquired
Exchange  Notes  for its own account (which notification must be  made  in  the
applicable location in the Letter of Transmittal) and must acknowledge that  it
will deliver a prospectus in connection with any resale of such Exchange Notes.
However,  if any holder acquires Exchange Notes in the Exchange Offer  for  the
purpose  of  distributing or participating in a distribution  of  the  Exchange
Notes,  such holder cannot rely on the position of the staff of the  Commission
enunciated in such no-action letters and must comply with the registration  and
prospectus  delivery requirements of the Securities Act in  connection  with  a
secondary  resale  transaction,  unless  an  exemption  from  registration   is
otherwise available. In addition, to comply with the securities laws of certain
jurisdictions,  if applicable, the Exchange Notes may not be  offered  or  sold
unless they have been registered or qualified for sale in such jurisdictions or
an exemption from registration or qualification is available and the conditions
thereto have been met.  See "Plan of Distribution."

               CERTAIN TAX CONSIDERATIONS OF THE EXCHANGE OFFER

United States Federal Income Taxation

      The following discussion is based upon current provisions of the Internal
Revenue  Code  of  1986, as amended, applicable Treasury regulations,  judicial
authority  and administrative rulings and practice.  There can be no  assurance
that  the Internal Revenue Service will not take a contrary view, and no ruling
from  the  Internal  Revenue Service has been or will be sought.   Legislative,
judicial  or administrative changes or interpretations may be forthcoming  that
could  alter  or modify the statements and conclusions set forth  herein.   Any
such  changes or interpretations may or may not be retroactive and could affect
the  tax  consequences to holders of the Old Notes.  Certain holders (including
insurance companies, tax-exempt organizations, financial institutions,  broker-
dealers, foreign corporations and persons who are not citizens or residents  of
the United States) may be subject to special rules not discussed below.

      The  exchange  of the Exchange Notes for the Old Notes  pursuant  to  the
Exchange Offer should not be treated as an "exchange" for United States federal
income  tax  purposes because the Exchange Notes should not  be  considered  to
differ  materially  in kind or extent from the Old Notes.  The  Exchange  Notes
received  by a holder should be treated as a continuation of the Old  Notes  in
the  hands of such holder.  As a result, there should be no federal income  tax
consequences  to holders as a result of the exchange of the Old Notes  for  the
Exchange  Notes pursuant to the Exchange Offer.  If, however, the  exchange  of
the  Old Notes for the Exchange Notes were treated as an "exchange" for federal
income  tax  purposes,  such exchange should constitute a recapitalization  for
federal income tax purposes.  Holders exchanging the Old Notes pursuant to such
recapitalization should not recognize any gain or loss upon the exchange.

     THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL  INFORMATION  ONLY AND IS NOT TAX ADVICE.  EACH  HOLDER  OF  OLD  BONDS
SHOULD  CONSULT  ITS  OWN  TAX  ADVISOR AS TO PARTICULAR  TAX  CONSEQUENCES  OF
HOLDING,  EXCHANGING  OR SELLING THE OLD BONDS, INCLUDING THE  APPLICATION  AND
EFFECT OF ANY FEDERAL, STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY CHANGES  IN
APPLICABLE TAX LAWS.

Certain Cayman Islands Tax Considerations

     On the basis of the current legislation in the Cayman Islands, there is no
income,  corporation,  profits, capital gains or other form  of  taxation  that
would be applicable to any holder of Old Notes who exchange such Old Notes  for
Exchange  Notes pursuant to the Exchange Offer (provided such holder  does  not
engage in trade in the Cayman Islands).

Certain PRC Taxation Considerations

      The Issuer has been advised by Cai, Zhang & Lan, PRC legal counsel to the
Issuer, that there is no liability on the part of a Non-PRC holder of Old Notes
who  exchanges such Old Notes for Exchange Notes pursuant to the Exchange Offer
for  any  income or withholding tax owing to the PRC, any provincial government
or any subdivision thereof.
     
                          DESCRIPTION OF THE PROJECTS
                                       
     The  following discussion provides certain summary information  concerning
the Luannan Facility, the Rosemary Facility and the Brandywine Facility.
     
The Luannan Facility

     The  Luannan  Facility will be comprised of two steam/electric  generating
units, each nominally rated at 50 MW but with nameplate capability of up to  60
MW  gross  output  under full condensing conditions. Two pulverized  coal-fired
boilers,  each  delivering  steam to drive a three stage  extraction/condensing
steam  turbine  electric  generating unit,  will  be  utilized.  Coal  will  be
delivered  by  truck  to the site of the Luannan Facility  from  nearby  mines.
Electric power generated by the Luannan Facility will be interconnected to  the
local  electricity grid network at 110 kV. In addition, steam will be extracted
from  the  steam turbines for distribution by pipeline to local industrial  and
commercial  users  and  also  used  to heat water  for  district  heating  use.
Electrostatic  precipitators will be provided down stream  of  the  boilers  to
remove  fly ash from the boiler flue gas. The fly ash will be mixed with  water
and  pumped  by  way  of  pipeline to an off-site dedicated  ponding  site  for
disposal.
     
  Sales of Power
  
     The Luannan Facility will sell power to North China Power Company pursuant
to the Luannan Power Purchase Agreement. North China Power Company functions as
the  commercial arm of North China Power while North China Power Administration
("NCPA")  functions  as the regulatory entity of the same  group.  North  China
Power, which reports directly to MOEP, owns and operates the North China  Power
Grid. The service area of North China Power encompasses four regions, including
the  Beijing/Tianjin/Tangshan area.  Beijing and Tianjin are among the  largest
and  most  economically developed cities in China.  The service area  of  North
China  Power  also includes Hebei Province, Shanxi Province and  western  Inner
Mongolia.  North  China Power owns most of the major power  plants  within  its
service  area and is reported to have had a total installed capacity of  25,140
MW  in  1995  and  to  have generated power of 126.7 TWh in  1995.  As  both  a
government  and a commercial entity, North China Power regulates,  manages  and
owns  the  power assets in its territory including generation and  distribution
facilities. The geographical extent of its service area makes North China Power
one  of the largest power operating entities in China. The financial statements
of North China Power included in its 1995 annual report (which were prepared in
accordance with Chinese accounting principles) indicated total assets of  North
China  Power  (excluding  assets in Inner Mongolia) of  RMB  70  billion  ($8.4
billion) as of December 31, 1995, and revenue of approximately RMB 27.2 billion
($3.3  billion) (excluding its revenue generated from Inner Mongolia)  for  the
year  then ended. North China Power also reported that it is ranked as  one  of
the top three government-owned enterprises (in terms of revenues) in China.
     
     The   Luannan  Power  Purchase  Agreement  is  a  20-year  agreement.  The
electricity  price  is established through a formula provided  in  the  Pricing
Document (which is separate from, but incorporated by reference in, the Luannan
Power  Purchase Agreement). According to the formula contained in  the  Pricing
Document,  the  power price will be comprised of fixed and variable  components
that may be adjusted, subject to the approval of the Pricing Approval Authority
to  reflect  changes  in coal costs, depreciation of plant  and  equipment  and
financing  expenses. Certain components of the power price calculation  may  be
adjusted  to  reflect  local  and  U.S. inflation  and  foreign  exchange  rate
fluctuation  in order to mitigate the Luannan Facility's exposure to  inflation
and  currency risks. Although it is anticipated that the Luannan Facility  will
apply annually for changes in rates, under the Luannan Power Purchase Agreement
it  has  the right to request a determination of a new power price whenever  it
determines  that  changes in the price components require a new  determination.
There  are  pass-through  provisions in the pricing formula  for  increases  or
decreases in the cost of coal against an index cost that is stipulated  in  the
Pricing  Document, and the pricing formula also has provisions for pass-through
or make-whole calculations relating to certain construction capital cost items.
The  tariff  is paid in Renminbi and is required to be paid every  30  days  by
North  China Power Company. See "Risk Factors--Considerations Relating  to  the
PRC--Government Regulation of Power Rates."
     
  Sales of Steam
  
     The  Issuer  and the Company believe that the Luannan Facility  will  sell
approximately 349,680 tons per year of steam for process and the equivalent  of
approximately  362,518 GJ/year of steam for heating to certain  Luannan  County
enterprises  and  local  industries under several Luannan Heat Supply Contracts.
The Issuer believes that the Luannan Facility  will  be  the  single  largest,
centralized heat supplier in Luannan County.
     
  Engineering, Procurement and Construction Contract
  
     Through competitive bidding, Harbin Power Engineering Company Limited (the
"Luannan EPC Contractor") has been selected as the engineering, procurement and
construction  contractor for the Luannan Facility. The Luannan  EPC  Contractor
has extensive engineering, procurement and construction experience in the power
industry  in  the PRC and other countries. Chinese-manufactured  equipment  and
materials and Chinese labor will be utilized to the maximum extent possible  in
order  to  lower  the  costs of the Luannan Facility  and  the  sale  price  of
electricity.
     
     The  Luannan  EPC Contract provides for a retainage of 10% of the  Luannan
EPC  Contract  price  until  the  completion of  punch  list  items  and  other
deficiencies  in  accordance with the Luannan EPC  Contract.  The  Luannan  EPC
Contract  also  provides for liquidated damages or termination  payments  in  a
maximum  amount of 35% of the original Luannan EPC Contract Price.  The  CHEXIM
Guarantee  is required under the Luannan EPC Contract and has been provided  by
CHEXIM in respect of the Luannan EPC Contractor's obligations under the Luannan
EPC  Contract  to pay liquidated damages or termination payments in  a  maximum
amount  of 35% of the original Luannan EPC Contract Price. In addition,  Harbin
Power Equipment Company, a PRC company ("Harbin Power"), the parent company  of
the  Luannan  EPC  Contractor, has provided the Luannan EPC Guarantee  for  the
benefit  of  two of the Joint Ventures guaranteeing the payment and performance
of the Luannan EPC Contractor under the Luannan EPC Contract.
     
     The  Luannan EPC Contractor is a wholly-owned subsidiary of Harbin  Power.
Harbin  Power,  a  PRC  company listed on the Hong  Kong  Stock  Exchange,  was
established  in  October 1994 through the restructuring of Harbin  Power  Plant
Equipment Group Corporation.  Harbin Power, together with its subsidiaries,  is
one  of  the largest manufacturers of power plant equipment in China. In  1995,
the  annual designed production capacity of the facilities constructed  by  the
Luannan  EPC  Contractor and its affiliates was 3,000 MW of thermal  power  and
1,000 MW of hydro power. Harbin Power and its subsidiaries also provide a range
of  engineering services for power stations, including turnkey construction  of
power  plants and the provision of engineering and technical advisory services.
Harbin Power's products have been exported to Pakistan, the Philippines, Canada
and other countries.
     
  Export-Import Bank of China
  
     CHEXIM  was  established  in  April 1994 by the  State  Council  with  the
sponsorship  of  the Ministry of Finance, the People's Bank of  China  and  the
Ministry of Foreign Trade and Economic Cooperation of the PRC ("MOFTEC") as one
of  the three policy banks in China. The principal business of CHEXIM includes,
under  the direction of the PRC government, providing export and import  credit
(including  sellers'  and buyers' credits) for the export  and  import  of  all
machinery  and  equipment,  electric power products  and  equipment,  providing
export  insurance,  export  guarantees and  export  and  import  insurance  and
undertaking  any  business approved and entrusted to it by relevant  government
authorities of the PRC. At the end of 1995, CHEXIM's owner's equity amounted to
approximately RMB 138.0 million. CHEXIM extended sellers' credit loans  of  RMB
5.6  billion  in 1995. Although CHEXIM has received from its inception  various
subsidies,  capital  infusions  and  other  forms  of  support,  including  the
adjustment  of  interest  rates charged on loans made  by  CHEXIM,  CHEXIM  has
attempted to implement systems to achieve financial independence. Such  systems
include  the  provision  of  bad loan reserves and the  charging  of  insurance
premiums on loans made. Senior unsecured debt of CHEXIM currently has a debt
rating of A3 by Moody's.
     
  Heat Network Construction
  
     Two of the Joint Ventures entered into a construction agreement (the "Heat
Network  Construction  Agreement")  on  June  20,  1996  under  which  Tangshan
Engineering  will build the heat and steam network of Luannan  Heat  and  Power
(the  "Network").  Under  this  agreement, the cost  for  construction  of  the
Network,  which  will  consist of 12.1 kilometers of hot water  pipeline,  8.78
kilometers  of  steam pipeline, heat exchange stations, heat control  equipment
and  civil  construction,  is approximately RMB 24.2  million  ($2.9  million),
subject to escalation by the Chinese State Statistic Bureau Price Index.
     
  Transmission Facilities Construction
  
     North  China  Power  Company  has entered into  the  Luannan  Transmission
Facilities  Construction  Agreement with one of  the  Joint  Ventures  for  the
design, construction, interconnection, operation and maintenance of the Luannan
Transmission  Facilities. One of the Joint Ventures has agreed to  provide  the
Luannan  Transmission Facilities Loan through a financial intermediary  in  the
PRC  to  finance  the construction of the Luannan Transmission Facilities.  The
amount  of  such  funds, which was specified at the U.S. dollar  equivalent  of
RMB 78.2 million (which as of April 4, 1997, would have been approximately $9.4
million),  will be adjusted to reflect inflation in the PRC from  December  31,
1994  to  the  date of issuance of the notice to North China Power  Company  to
proceed  with  preliminary design in order for such funds to be  sufficient  to
cover the construction cost of the Luannan Transmission Facilities. The Luannan
Transmission   Facilities  will  be  comprised  of  three   newly   constructed
substations, upgrades to both an existing substation and an existing  switching
station  and  approximately 43 kilometers of new 110 kV transmission  lines  to
interconnect the Luannan Facility to the Jing-Jin-Tang Grid. In accordance with
the  Luannan Transmission Facilities Construction Agreement, North China  Power
Company  has  guaranteed that it will complete the construction of the  Luannan
Transmission Facilities to receive the total electrical output of  the  Luannan
Facility within 18 months of receiving its notice to proceed.
     
  Operations and Maintenance
  
     Pursuant  to the Luannan O&M Contract, operations and maintenance services
for  the  Luannan  Facility  will be provided by the  Luannan  O&M  Contractor,
Duke/Fluor Daniel International Services. The Luannan O&M Contract provides for
a recovery of costs by the Luannan O&M Contractor plus incentive payments based
upon the performance of the Luannan Facility.  The Luannan O&M Contractor is  a
general  partnership  formed in 1994 by affiliates of Duke  Power  Company  and
Fluor  Corporation  for the purposes of providing services to  the  solid  fuel
power generation market. The Luannan O&M Contractor is actively engaged in  the
operation  and  maintenance  of electric generation facilities  throughout  the
world.  Pursuant to the Luannan O&M Contract, almost all of the personnel  will
be  trained  PRC technicians who will work under close supervision of  the  O&M
committees of the Joint Ventures and the Luannan O&M Contractor's managers.
     
  Coal Supply
  
     The  Issuer  expects  that  the Luannan Facility  will  use  approximately
450,000 metric tons of coal per year. The principal fuel supply for the Luannan
Facility  will come from the Qianjiaying Mine, which is owned and  operated  by
Kailuan  Coal and is located 30 kilometers from the Luannan Facility.   Kailuan
Coal,  a  state-owned coal mining company, has 5.0 billion metric tons of  coal
reserves in the Tangshan area and produces approximately 18 million metric tons
of  coal  per year. The Qianjiaying Mine produced 3.67 million metric  tons  of
coal  in  1996. Kailuan Coal has committed to supply up to 300,000 metric  tons
per  year  of  coal from the Qianjiaying Mine to the Luannan Facility  for  ten
years.  Two of the Joint Ventures have also entered into coal supply agreements
with  five  other  local  coal mines (collectively  with  Kailuan  Coal  Mining
Administration,  the  "Luannan Coal Suppliers") to secure up to an  additional
310,000 metric  tons of coal per year for ten years. The Issuer and the Joint
Ventures believe  that the foregoing fuel supply arrangements, at the end of
such  ten-year period, can be extended, renewed or replaced.
     
  Environmental Matters
  
     Similar  to  electric power generation facilities in other countries,  the
Luannan   Facility  is  generally  required  by  PRC  environmental  laws   and
regulations to comply with a number of regulations relating to the  health  and
safety of personnel and the public.  An environmental assessment study has been
conducted  by  Hebei Provincial Metallurgy and Energy Environmental  Protection
Research   Institute  in  compliance  with  Chinese  environmental   protection
standards.  Based on this study, the Joint Ventures believe that the  equipment
installed and technology employed in the Luannan Facility will be in compliance
with the relevant PRC environmental laws and regulations.
     
  Governmental Approvals
  
     Cai,  Zhang  & Lan, Chinese counsel to the Issuer and the Joint  Ventures,
has  advised  the  Company that all required governmental approvals  have  been
obtained  with  respect  to the formation of the Joint Ventures  based  on  the
opinion  of  its Chinese counsel and advice from the Hebei Provincial  Planning
Commission, the Commission of Foreign Trade and Economic Cooperation  of  Hebei
Province  and  its  Joint  Venture partners. See "Risk  Factors--Considerations
Relating to the PRC--Legal and Regulatory Considerations."
     
     The Issuer believes that all other governmental approvals required for the
construction  of  the Luannan Facility that can be obtained at  this  stage  of
development have been obtained based on the opinion of its Chinese counsel  and
advice from the Hebei Provincial Planning Commission, the Commission of Foreign
Trade  and  Economic  Cooperation  of Hebei  Province  and  its  Joint  Venture
partners.   A  construction permit will have to be obtained by the Luannan  EPC
Contractor prior to the commencement of full construction activity with respect
to  the  Luannan  Facility; however, the Issuer and the Joint Ventures  believe
that the issuance of such a permit will be a matter of procedure rather than  a
discretionary matter because the design criteria for the Luannan  Facility  has
already been approved.
     
  Litigation
  
     None  of  the  Joint Ventures is currently involved in any  litigation  or
legal  proceeding that could be expected to have a material adverse  impact  on
the Joint Ventures or their operations, or the Issuer or the Company.
     
  Insurance
  
     The  Joint  Ventures  will provide and maintain a comprehensive  insurance
program  designed  on a project-specific basis. The owner-controlled  insurance
program will provide coverages for both property and casualty risks inherent in
the  construction of a facility such as the Luannan Facility. The coverages and
their respective limits during the construction period will be:
     
     Comprehensive third-party liability insurance       $20.00 million
     
     Construction and erection "all risk property,"      
           including flood and earthquake                $90.00 million
     
     Delay in start-up/advance loss of profits           $38.25 million

Permanent  insurance coverage will be arranged in amounts and limits as  deemed
sufficient by the Independent Insurance Consultant for the Joint Ventures.  The
Joint  Ventures  will  be insured parties for third-party  liability,  property
damage  and  business  interruption  insurance,  and  the  trustees  under  the
Indentures  will  be  the  loss  payees for the property  damage  and  business
interruption insurance.

The Rosemary Facility

     The Rosemary Facility is a combined-cycle cogeneration facility located in
Roanoke  Rapids, North Carolina, with a total electric generating  capacity  of
approximately  180 MW. The Rosemary Facility uses natural gas  as  its  primary
fuel  input to produce electric energy for sale to VEPCO and to produce  useful
thermal  energy  in  the  form  of steam for sale to  WestPoint.  The  Rosemary
Facility uses No. 2 fuel oil as an alternate fuel in the event gas supplies  or
transportation   are  curtailed.  The  Rosemary  Facility  was   designed   and
constructed  by  Hawker  Siddeley and began commercial operations  in  December
1990.  The Rosemary Facility is certified as a Qualifying Facility under  PURPA
and  thus  is exempt from rate regulation as an electric utility under  federal
and  state  law, provided that it continues to meet the applicable requirements
of PURPA. See Appendix B, "United States Regulation--Federal Energy Regulation-
-PURPA."
     
     The Rosemary Facility is designed to be operated in a combined-cycle mode.
It  uses  natural  gas  or  fuel oil to power two General  Electric  combustion
turbine  generators, a GE Frame 6 and a GE Frame 7, each  fitted  with  a  heat
recovery  steam  generator ("HRSG"). The HRSGs use the  reject  heat  from  the
combustion  turbines  that might otherwise dissipate  to  produce  steam  which
drives  a  steam turbine generator. The combustion and steam turbines  generate
electric  energy  for  sale  to  VEPCO. When the  Rosemary  Facility  is  being
dispatched,  some of the steam produced by the HRSGs is sold to  WestPoint  and
some  is used in two absorption chillers to supply chilled water for WestPoint.
When  the facility is not being dispatched, two auxiliary boilers are available
to be used to produce steam for WestPoint and to direct steam to the absorption
chillers  to  supply chilled water for WestPoint. The design  of  the  Rosemary
Facility  permits  flexible  operation,  including  the  production   of   both
electricity  and  a  sufficient amount of steam to meet QF requirements,  using
either one or both of the combustion turbine generators.
     
     See  "Description  of  Other  Indebtedness--The  Rosemary  Bonds"  for   a
description of the financing agreements relating to the Rosemary Facility.
     
  Sale of Capacity and Electricity
  
     The  Rosemary  Partnership sells electric capacity  and  energy  to  VEPCO
pursuant  to  a  Power  Purchase and Operating Agreement (the  "Rosemary  Power
Purchase Agreement"). The Rosemary Power Purchase Agreement has an initial term
ending  December 26, 2015, and may be extended for periods of up to five  years
if the parties so agree.
     
     VEPCO  has the right to dispatch the Rosemary Facility (i.e., require  the
Rosemary  Facility  to  deliver electricity) on a daily  basis  within  certain
guidelines  and  the  design limits (which specify load  levels,  start-up  and
shutdown times and minimum run times consistent with prudent utility practice).
VEPCO  must dispatch all facilities obligated to deliver electricity  to  VEPCO
based upon economic factors and without regard to the facilities' ownership.
     
     The  Rosemary Power Purchase Agreement provides for two types of payments:
a  capacity  payment  and an energy payment. The capacity payment  is  a  fixed
charge  required  to  be paid regardless of whether the  Rosemary  Facility  is
dispatched,  subject  to  reductions under certain circumstances  as  described
below.  Energy  payments are calculated based on the actual  electrical  output
transmitted  to  VEPCO and are designed to compensate the Rosemary  Partnership
for its cost of fuel and its variable operations and maintenance expense.
     
     Monthly  capacity  payments  throughout the term  of  the  Rosemary  Power
Purchase  Agreement  are  calculated  by multiplying  the  Rosemary  Facility's
"Dependable  Capacity" by the following rates: $12.488 per kilowatt  per  month
through  December 1996; $11.654 per kilowatt per month through  December  1998;
$10.821  per kilowatt per month through December 2005; and $8.321 per  kilowatt
per  month  through December 2015. The Rosemary Facility's Dependable  Capacity
was  most recently determined to be 165 MW for the summer period and 198 MW for
the  winter period, which are the maximum Dependable Capacity levels for  which
capacity  payments  must be made under the Rosemary Power  Purchase  Agreement.
Dependable  Capacity is determined by semi-annual tests which may be  requested
by VEPCO.
     
     Capacity  payments  may  be  reduced if any of  the  following  events  or
circumstances occur:
     
     (i)   if  the Rosemary Facility fails to meet required dispatch levels
           within  a tolerance of 5%, the operating level (as adjusted  for
           ambient  weather conditions) does not exceed Dependable Capacity
           and  such  failure  is not the result of a forced  outage,  then
           VEPCO  has the right to decrease the capacity payment in respect
           of the then-current billing month by 10% per occurrence;
     
     (ii)  if,  as  a result of a performance test, the Rosemary Facility's
           Dependable  Capacity  is set at less than  90%  of  the  initial
           Dependable Capacity as set forth in the Rosemary Power  Purchase
           Agreement (150 MW for the first summer period and 180 MW for the
           first winter period), then the Rosemary Partnership is obligated
           to  pay VEPCO liquidated damages for the deficiency in an amount
           equal to the product of $21.60 per kilowatt, in 1987 dollars  as
           escalated  annually by the GNPIPD, multiplied by the  Dependable
           Capacity shortfall;
     
     (iii) if  a forced outage is designated by the Rosemary Partnership as
           having  resulted from an event of force majeure, then  beginning
           the  day  after the Rosemary Partnership makes such designation,
           capacity  payments are suspended and prorated  daily  until  the
           Rosemary Partnership notifies VEPCO that the condition of  force
           majeure has ended; and
     
     (iv)  if  the  number  of forced outage days in a given capacity  test
           period exceeds the number of permitted forced outage days,  then
           within  60  days after the end of the capacity test period,  the
           Rosemary  Partnership is obligated to reimburse VEPCO an  amount
           equal  to  4% of the capacity payments paid during the  capacity
           test  period  for  each  forced outage  day  in  excess  of  the
           permitted  number; the Rosemary Partnership is entitled  to  the
           greater  of 25 forced outage days per capacity test period  (the
           period  from  December 1 through November 30)  and  10%  of  the
           number  of days that the Rosemary Facility is dispatched  during
           such  period,  without any loss of capacity  payments  for  such
           period.
     
     During  the period December 1, 1995 through November 30, 1996, the  number
of  forced outage days was 16, including 13 forced outage days attributable  to
the  damage  caused by the hurricane in September 1996. From December  1,  1996
through March 26, 1997, the Rosemary Facility incurred no forced outage days.
     
     The Rosemary Partnership is required to maintain the Rosemary Facility  as
a QF. VEPCO may terminate the Rosemary Power Purchase Agreement within one year
after the loss of QF certification if the Rosemary Partnership has not obtained
all  necessary  governmental or regulatory approvals  for  the  Rosemary  Power
Purchase  Agreement to remain in effect and for electricity to continue  to  be
sold to VEPCO.
     
     The Rosemary Power Purchase Agreement also contains a provision known as a
"regulatory disallowance" provision, which requires the Rosemary Partnership to
repay or reduce any capacity charges in excess of $5.62 per kilowatt per month,
as  adjusted  by  the  GNPIPD from 1987 dollars, that  are  disallowed  by  any
regulatory authority from recovery by VEPCO in its rate base (except where such
disallowance  is due to VEPCO's failure to properly seek such recovery).  VEPCO
cannot  initiate  such a disallowance, and must appeal such a disallowance,  if
practicable. If such a disallowance were to occur prior to December  27,  2006,
beginning on such date up to 75% of the capacity payments could be withheld  by
VEPCO  to  make  up for any disallowance, plus interest, until  the  sooner  of
December  27,  2007 or the date on which such disallowance, plus interest,  was
recouped by VEPCO. If such disallowance, plus interest, were not fully recouped
by  December 27, 2007, the Rosemary Partnership would be obligated to  pay  the
remaining balance, plus interest, by January 24, 2008. If any disallowance were
to  occur  for  capacity  payments after December  27,  2006,  future  capacity
payments  would be reduced to the amount of the capacity payment unaffected  by
the  disallowance. In addition, the Rosemary Partnership would be  required  to
repay the amount of previously received capacity payments which are affected by
the  disallowance, plus interest, by the later of one year from the date of the
disallowance  or December 27, 2007. The amount upon which a possible  reduction
in,  or  repayment  of, capacity charges by the Rosemary Partnership  would  be
calculated  if a disallowance occurred was $7.24 per kilowatt per month  as  of
December  1995. Assuming a GNPIPD of 3.0% per year throughout the initial  term
of  the Rosemary Power Purchase Agreement, this amount would increase to $10.02
per  kilowatt  per  month in 2006 and $13.07 per kilowatt per  month  upon  the
expiration  of the initial term. The monthly capacity payments due  from  VEPCO
under  the Rosemary Power Purchase Agreement are calculated based on Dependable
Capacity  at  the  following  rates: $12.488 per  kilowatt  per  month  through
December  1996; $11.654 per kilowatt per month through December  1998;  $10.821
per kilowatt per month through December 2005; and $8.321 per kilowatt per month
through  December  2015. Thus, assuming a GNPIPD of 3.0%  per  year  from  1996
through 2015, the risk that the Rosemary Partnership may be required to  reduce
or  repay capacity charges under the "regulatory disallowance" provision  would
exist  through 2005. See Appendix B, "The Electric Power Industry in the United
States and United States Regulation--Federal Energy Regulation--PURPA."
     
  Steam and Chilled Water Sales
  
     The  Rosemary Partnership has been selling steam and chilled water to Bibb
for use in its textile manufacturing facility, located adjacent to the Rosemary
Facility,  pursuant  to a Cogeneration Energy Supply Agreement  (the  "Rosemary
Steam  Agreement").  The  Rosemary Steam Agreement has  an  initial  term  that
expires  on  December 26, 2015. On February 18, 1997, Bibb  announced  that  it
would  sell  the  textile facility to WestPoint. The closing of  the  sale  was
reported  in  the news media on February 21, 1997, but the Rosemary Partnership
has  not  received  formal  notice of such sale from  Bibb  or  WestPoint.  The
Rosemary  Steam Agreement cannot be assigned without the Rosemary Partnership's
consent. The Rosemary Partnership has continued to sell steam and chilled water
to  the  purchaser in substantially the same amounts as it sold  prior  to  the
announcement  of  the  sale. The following discussion  of  the  Rosemary  Steam
Agreement  and  the Rosemary Site Lease assumes that the sale  of  the  textile
facility  has  closed  and  that WestPoint is the purchasing  party  under  the
Rosemary Steam Agreement and the lessor under the Rosemary Site Lease.
     
     Although WestPoint is not required to purchase a minimum quantity of steam
or  chilled water, WestPoint has an irrevocable obligation to purchase  all  of
its  steam  and  chilled water requirements from the Rosemary Facility  to  the
extent  that  the  Rosemary Facility is able to supply such  requirements.  The
Rosemary  Steam Agreement requires that the Rosemary Facility have the capacity
to  produce an annual average of 65,000 pounds of steam per hour at 150 psi and
2,000  tons  of  45F  chilled  water for up  to  8,000  hours  per  year.  This
requirement  is  not  currently  met because  the  Rosemary  Facility's  actual
capacity  to  produce  chilled water does not exceed 1,600  tons  per  year  of
chilled  water. However, when Bibb was the purchasing party under the  Rosemary
Steam Agreement, because Bibb's chilled water requirements never exceeded 1,500
tons  per year and, in most cases, were approximately 1,200 tons per year,  the
Rosemary  Facility  never failed to satisfy Bibb's chilled water  requirements.
Furthermore,  the Rosemary Steam Agreement allows the Rosemary  Partnership  to
utilize,  at  its own expense, back-up electric chillers located at WestPoint's
textile  mill to supply chilled water to meet WestPoint's demands. Finally,  if
WestPoint's  requirements  were  to  exceed  the  Rosemary  Facility's  current
capacity  to produce chilled water, the Rosemary Partnership could  expand  the
capacity of its absorption chillers to reach the required level by purchasing a
new  chiller at a cost currently estimated to be between $700,000 and $800,000.
For  these  reasons,  the  Issuer does not believe that  the  current  capacity
limitations  of  the  absorption chillers will adversely  affect  the  Rosemary
Partnership's rights under the Rosemary Steam Agreement.  See "Risk Factors  --
U.S.  Industry  Conditions;  Restructuring Initiatives;  Utility  Responses  --
Maintaining Qualifying Facility Status."
     
  Site Lease
  
     The 4.83 acre site on which the Rosemary Facility is located is leased  to
the  Rosemary  Partnership by WestPoint pursuant to a Real Property  Lease  and
Easement Agreement (the "Rosemary Site Lease") in exchange for a nominal yearly
rental payment. The initial term of the Rosemary Site Lease expires on December
31,  2015. The payment of the Rosemary Bonds is secured by, among other things,
a  lien  on  the  Rosemary  Partnership's leasehold interest  in  the  Rosemary
Facility site. See "Description of Other Indebtedness--The Rosemary Bonds."
     
  Gas Supply and Fuel Management
  
     The Rosemary Partnership purchases certain quantities of natural gas on  a
firm  basis  from Natural Gas Clearinghouse ("NGC") pursuant to a Gas  Purchase
Contract  (the  "Rosemary  Gas  Supply Agreement").  The  Rosemary  Gas  Supply
Agreement is effective through November 30, 2005, and thereafter from month-to-
month  until terminated by either NGC or the Rosemary Partnership. The Rosemary
Indenture   provides  that  with  certain  limited  exceptions   the   Rosemary
Partnership will not be permitted to make distributions to its partners if  the
Rosemary Gas Supply Agreement is not extended or replaced on or before the  end
of  its  term.  See  "Description of Other Indebtedness--The  Rosemary  Bonds--
Partnership  Distributions." NGC has agreed to deliver natural gas  on  a  firm
basis  to the Rosemary Partnership, at pipeline points near the Gulf of  Mexico
or  (at the Rosemary Partnership's request and using the Rosemary Partnership's
firm  transportation arrangements) to the Rosemary Pipeline (as defined below),
up  to the total contract quantity under the Firm Gas Transportation Agreements
(as  defined below), which is currently the thermal equivalent of 3,075 Mcf  of
natural  gas  per  day. The firm natural gas supplied under  the  Rosemary  Gas
Supply Agreement enables the Rosemary Partnership to have adequate natural  gas
supplies  available to meet its estimate of WestPoint's requirements for  steam
and chilled water.
     
     The  price  paid by the Rosemary Partnership for gas delivered by  NGC  is
generally  equal  to an indexed price (based upon monthly market-price  indices
determined  by reference to the receipt points where NGC delivers  gas  to  the
Rosemary Partnership) plus $0.04 per MMBtu. If gas is required in daily volumes
that are greater than those included in monthly estimates delivered to NGC, the
price for the excess volume required is equal to NGC's actual cost incurred  in
acquiring  such excess plus $0.04 per MMBtu. If the Rosemary Partnership  fails
to purchase the amount included in monthly estimates delivered to NGC, and such
failure is not excused by force majeure, the Rosemary Partnership must pay NGC,
as  liquidated  damages  for such failure, $0.14 for  each  MMBtu  of  gas  not
purchased below the monthly estimates delivered.
     
     The  Rosemary Partnership receives certain fuel supply management services
from  NGC  pursuant to a Fuel Supply Management Agreement, (the "Rosemary  Fuel
Management  Agreement"). The Rosemary Fuel Management  Agreement  is  effective
through  the  expiration date of the Rosemary Gas Supply  Agreement,  which  is
November 30, 2005, unless extended.
     
     NGC's  responsibilities  under  the  Rosemary  Fuel  Management  Agreement
include  advising the Rosemary Partnership with respect to the  negotiation  of
natural  gas  and fuel oil purchase and transportation arrangements,  arranging
for  the  delivery  to  the  Rosemary Facility of  natural  gas  or  fuel  oil,
endeavoring  to  make  such arrangements on a "best cost" basis,  managing  the
communications  among  the  Rosemary Facility and  the  Rosemary  Partnership's
pipeline  transporters and natural gas and fuel oil suppliers and advising  and
assisting  the Rosemary Partnership with respect to fuel oil inventory  hedging
arrangements.
     
     The  Rosemary Partnership pays NGC a management fee based on  fuel  supply
arranged by NGC. The management fee is composed as follows: (i) $0.04 per MMBtu
of  natural gas purchased and transported to the Rosemary Facility pursuant  to
arrangements made by NGC; (ii) $0.03 per MMBtu of natural gas reserves owned by
the  Rosemary Partnership and transported to the Rosemary Facility pursuant  to
arrangements  made by NGC; (iii) $0.01 per MMBtu of natural gas purchased  from
North Carolina Natural Gas Corporation ("NCNG") and transported to the Rosemary
Facility pursuant to arrangements made by NGC; (iv) $0.002 per gallon  of  fuel
oil  purchased and delivered to the Rosemary Facility pursuant to  arrangements
made  by  NGC; and (v) $0.005 per MMBtu of natural gas and $0.05 per barrel  of
No.  2 fuel oil as a transaction fee for fuel hedging transactions executed  by
NGC as approved by the Rosemary Partnership. The Rosemary Partnership must also
reimburse NGC for the cost of any letter of credit NGC must provide to purchase
gas pursuant to the Rosemary Fuel Management Agreement. If in a given month NGC
arranges  for natural gas supplies at a delivered price less than the benchmark
delivered price for such month, the Rosemary Partnership pays NGC an additional
amount equal to 60% of the difference in such prices.
     
  Gas Transportation
  
     The  Rosemary Indenture provides that with certain limited exceptions  the
Rosemary  Partnership  will  not be permitted  to  make  distributions  to  its
partners if the Firm Gas Transportation Agreements are not extended or replaced
on  or  before the end of their terms. See "Description of Other Indebtedness--
The Rosemary Bonds--Partnership Distributions."
     
     The   Rosemary  Partnership  has  entered  into  firm  gas  transportation
contracts  with each of Texas Gas Transmission Corporation ("Texas  Gas")  (the
"Texas  Gas FT Agreement"), CNG Transmission Corporation ("CNG") (the  "CNG  FT
Agreement")  and  Transcontinental Gas Pipe Line Corporation  ("Transco")  (the
"Transco  FT Agreement") that enable the Rosemary Partnership to have delivered
to  the Rosemary Facility, on a firm basis, the thermal equivalent of 3,075 Mcf
of  gas per day from gas production areas near the Gulf of Mexico. Each of  the
Texas  Gas  FT  Agreement, the CNG FT Agreement and the  Transco  FT  Agreement
continue through October 31, 2006. Most of the critical terms and conditions of
the  services  provided  to the Rosemary Partnership  by  Texas  Gas,  CNG  and
Transco,  including  the  rates,  are found in the  respective  pipeline's  gas
tariff, each of which are subject to review, approval and modification  by  the
FERC.
     
     The  Rosemary Partnership also has the right to receive interruptible  gas
transportation service from Columbia Gas Transmission Company and Columbia Gulf
Transmission Company under the Columbia Gas IT Agreement and the Columbia  Gulf
IT  Agreement, respectively. Under the Columbia Gas IT Agreement, the  Rosemary
Partnership   may   request  up  to  36,000  Dth  per  day   of   interruptible
transportation  service  from  an interconnection  between  the  facilities  of
Columbia  Gas  and  Columbia Gulf near Leach, Kentucky  to  an  interconnection
between Columbia Gas's facilities and the Rosemary Pipeline. Under the Columbia
Gulf  IT  Agreement, the Rosemary Partnership may request up to 39,000 Dth  per
day  of  interruptible  transportation service from various  available  receipt
points  on  Columbia Gulf's system to an interconnection between the facilities
of  Columbia Gas and Columbia Gulf near Leach, Kentucky. The terms of both  the
Columbia Gas IT Agreement and the Columbia Gulf IT Agreement are month-to-month
until terminated by either party to the respective agreements.
     
     The  rates  and  most of the significant terms and conditions  of  service
under the Firm Gas Transportation Agreements, the Columbia Gas IT Agreement and
the  Columbia  Gulf  IT  Agreement are set forth in the  respective  pipeline's
effective  FERC  gas tariff. These rates, terms and conditions are  subject  to
review, approval and modification by FERC.
     
  Rosemary Pipeline
  
     The  Rosemary  Partnership owns, and NCNG operates and maintains  for  the
Rosemary Partnership, a pipeline which runs for 10.26 miles through portions of
Halifax and Northampton counties, North Carolina (the "Rosemary Pipeline"). The
Rosemary Pipeline is located under, over and upon properties owned, in  certain
instances, by private landowners and, in others, by the State of North Carolina
or  the City of Roanoke Rapids, pursuant to easement agreements or encroachment
agreements.
     
     The  Rosemary Partnership has entered into a Pipeline Operating  Agreement
with  NCNG  (the  "Pipeline Operating Agreement"), pursuant to which  NCNG  has
agreed  to  operate  the  Rosemary Pipeline and  provide  certain  natural  gas
balancing services for the Rosemary Partnership's gas supplies. The term of the
Pipeline  Operating Agreement continues until December 27,  2005,  and  may  be
extended  for  two additional periods of five years each upon the agreement  of
the parties.
     
     Several  of the easements and encroachment agreements, pursuant  to  which
the  Rosemary Partnership is granted the right to locate the Rosemary Pipeline,
contain provisions allowing the underlying interest owner to cause the Rosemary
Pipeline  to  be removed from its current location. Most of such easements  and
encroachment  agreements require the underlying interest owner  to  provide  an
alternate location for the pipeline, and in some cases the underlying  interest
owner  must  share  the  cost  of relocating the pipeline.  However,  two  such
easements allow the underlying interest owner to cause the Rosemary Pipeline to
be  removed, but do not require such owner to provide an alternate location  or
share the cost of relocating the pipeline. The Issuer does not expect that  the
Rosemary  Pipeline will be required to be removed pursuant to  these  easements
or,  if  it were required to be removed, that relocating the Rosemary  Pipeline
from these two easement tracts would significantly interfere with the supply of
natural  gas to the Rosemary Facility for an extended period of time or,  given
the   ability  of  the  Rosemary  Facility  to  operate  utilizing  fuel   oil,
significantly limit the availability of the Rosemary Facility for  dispatch  by
VEPCO. See "Risk Factors--Project Risks--Fuel Supply Risks."
     
  Fuel Oil
  
     The  Rosemary Facility was constructed with the capability to  operate  on
No.  2 fuel oil and is designed to change fuel sources from natural gas to fuel
oil  and  back without interrupting the generation of electricity. The Rosemary
Facility currently has on-site storage for approximately 2.0 million gallons of
fuel oil, a supply sufficient to operate the Rosemary Facility at full load for
approximately 168 hours. The Rosemary Partnership purchases fuel oil on a spot-
market basis.
     
  Operations and Maintenance
  
     The Rosemary Partnership purchases operations and maintenance services for
the  Rosemary Facility from Panda Global Services pursuant to an operations and
maintenance  agreement (the "Panda Global Rosemary O&M Agreement") under  which
Panda  Global Services will provide operations and maintenance services to  the
Rosemary  Facility  through December 31, 2003. The Panda  Global  Rosemary  O&M
Agreement provides for payment to Panda Global Services of a fixed monthly  fee
of  $130,000 per month during 1997, with annual adjustments based on changes in
the  consumer  price  index for subsequent years. In  addition,  the  agreement
includes bonus and penalty provisions.
     
     Panda  Global  Services  commenced performing operations  and  maintenance
services for the Rosemary Facility on January 1, 1997. Such services previously
were  performed  by University Technical Services, all of whose operations  and
maintenance  personnel at the Rosemary Facility remain as  employees  of  Panda
Global Services.
     
  Operating History
  
     The  following  table  contains a summary of certain levels  of  operating
performance achieved by the Rosemary Facility since the beginning of 1991:
                                       1991   1992   1993   1994   1995   1996
     Summer Dependable Capacity (MW)    161    161    165    165    165    165
     Winter Dependable Capacity (MW)    192    198    198    198    198    198
     Hours Under VEPCO Dispatch       1,174    377    324    764  2,224    635
     Electric    Energy   Production  129.0   44.8   31.9   76.7  234.9   64.5
     (GWH)
     Steam Production (MM Lbs)        330.8  377.9  429.9  364.8  291.2  294.6
     Chilled Water Production           N/A    4.0    3.7    4.1    4.1    3.3
      (MM Ton-hours)
     Forced Outage Days*                 12      1     16     12     18     16
________________________________

* Data  for forced outage days for 1991 through 1996 is for the 12-month period
  starting  on December 1 of the prior year and ending on November  30  of  the
  year indicated.

     The Rosemary Facility was dispatched for 1,174 hours in 1991. Dispatch was
reduced  to  377 hours in 1992 and 324 hours in 1993 due to several  new  coal-
fired,  non-utility generation plants becoming available for dispatch by VEPCO.
The increases in dispatch hours to 764 in 1994 and 2,224 in 1995 were partially
due  to  the  effect  of  the second amendment to the Rosemary  Power  Purchase
Agreement  entered into in 1993, under which the formula used to calculate  the
energy  payment  was  amended  to more closely  match  the  fuel  and  variable
operation and maintenance costs incurred by the Rosemary Partnership.
     
     During  1995,  the Rosemary Facility was dispatched for 2,224  hours.  The
significant increase in dispatch hours from 1994 to 1995 was primarily  due  to
the  fact that, during much of the 1995 summer months, two of VEPCO's gas-fired
plants  suffered forced outages that are not likely to be repeated  and,  under
the  terms  of  the  Rosemary Power Purchase Agreement, VEPCO  was  allowed  to
redirect  to  the  Rosemary  Facility the gas that would  otherwise  have  been
transported to these unavailable plants. For approximately 1,200 of  the  2,224
hours, the Rosemary Facility used natural gas provided directly by VEPCO  under
this  fueling  arrangement. The Rosemary Partnership's  profit  margin  on  the
energy  payment from VEPCO is lower for this type of dispatch compared  to  its
energy  margins  under  normal dispatch conditions  under  which  the  Rosemary
Partnership provides the fuel.
     
     During  1996, the Rosemary Facility was dispatched a total of  635  hours.
This  number reflects a more normal level of operation than the unusually  high
1995  number.  The  number  of  dispatch  hours  for  1996  also  reflects  the
unavailability  of  the  Rosemary Facility for 15  forced  outage  days  during
September  1996 due to hurricane damage and cooler-than-normal weather  in  the
VEPCO service territory during the summer of 1996.
     
  Recent Hurricane Damage Sustained
  
     On  September  6,  1996, a transformer and two switches  at  the  Rosemary
Facility  sustained  damage  from a hurricane.  A  substitute  transformer  was
temporarily  installed  pending repair of the damaged  transformer,  which  was
substantially completed during the first quarter of 1997. The Company estimates
the   total   cost  to  repair  the  Rosemary  Facility  (including  substitute
transformer  rental  costs) at approximately $2.45  million  all  of  which  is
covered by insurance except for deductible and certain non-covered items, which
the  Company currently estimates to be in the aggregate amount of approximately
$650,000  to  $725,000. The Company believes that this event will  not  have  a
material adverse effect on the financial condition or operating results of  the
Rosemary  Partnership  or  its  ability to make distributions  to  the  Company
through the PIC Entities and PIC.
     
  Cash Flow Participation
  
     NNW,  Inc.,  formerly known as Nova Northwest, Inc., an Oregon corporation
("NNW"),  has a cash flow participation (the "NNW Cash Flow Participation")  in
the  Rosemary  Partnership  arising out of a Credit,  Term  Loan  and  Security
Agreement (the "NNW Credit Agreement") entered into by PEC, PR Corp. and PRC II
(collectively, the "Rosemary Borrowers") and NNW in August 1993 under which NNW
made  a  loan  to the Rosemary Borrowers which has since been repaid.  The  NNW
Credit  Agreement provides that NNW, in addition to repayment of  debt,  is  to
receive a cash flow participation equal to 4.33% of certain distributions  from
the Rosemary Partnership to the Rosemary Borrowers.
     
     At the time the NNW Credit Agreement was entered into the aggregate equity
interest  of PR Corp. and PRC II in the Rosemary Partnership was 10%. Following
the  redemption  of a 90% limited partner interest in the Rosemary  Partnership
with  a  portion  of the proceeds of the Rosemary Offering  and  the  Series  A
Offering,  PR  Corp.  and  PRC II, collectively, now own  100%  of  the  equity
interest in the Rosemary Partnership.
     
     The NNW Credit Agreement states that the parties intend that any financial
restructuring of the Rosemary Facility shall not materially affect the NNW Cash
Flow  Participation,  positively or negatively. The NNW Credit  Agreement  also
provides that, in the case of any such financial restructuring, the calculation
of  the amount of distributions to be paid to NNW shall continue to be based on
the  scheduled principal and interest amounts of the then-existing indebtedness
of  the  Rosemary Partnership under the Second Amended and Restated  Letter  of
Credit  and  Reimbursement  Agreement dated as of January  6,  1992  among  the
Rosemary  Partnership, The Fuji Bank, Limited, and certain  other  banks  party
thereto  (the  "Reimbursement Agreement"). Accordingly, it is the  position  of
Panda  International  and  the  Company that the NNW  Cash  Flow  Participation
remained  the same following the closing of the offering of the Rosemary  Bonds
(as  if  the Reimbursement Agreement had remained in place with the  letter  of
credit and bonds relating thereto and as if the redemption of Ford Credit's 90%
limited  partner  interest  and the issuance of the Rosemary  Bonds  had  never
occurred).  Based on the position of Panda International and the  Company,  the
NNW Cash Flow Participation is equal to 0.433% of distributions to the Rosemary
Borrowers   and  would  increase  to  1.732%  after  2008  based  on  projected
distributions.  NNW  has disputed the position of Panda International  and  the
Company with respect to the redemption of the 90% limited partner interest. NNW
claims  that  it is entitled to receive 4.33% of distributions to the  Rosemary
Borrowers following redemption of the limited partner interest. PEC has,  as  a
result,  filed a petition against NNW to have the amount of the NNW  Cash  Flow
Partnership determined. See "Legal Proceedings--NNW, Inc. Proceeding."  Because
the  debt structure existing prior to the closing date of the issuance  of  the
Rosemary Bonds would have resulted in cash flow distributions during the  early
years after such date that are lower than the cash flow distribution under  the
new debt structure, an NNW Cash Flow Participation at the percentage claimed by
NNW,  if NNW were to prevail in this dispute, would not have a material adverse
impact  on  the  Company or its financial condition. If NNW  prevails  in  this
dispute  and  the  NNW  Cash  Flow Participation is not  converted  into  Panda
International common stock or cash (as described below), the reduction in total
cash  flows  to  be  received by PIC through 2012 would be  approximately  $2.0
million on a net present value basis and the reduction in annual cash flows  to
be  received by PIC would be (i) approximately $231,000 during 1997, decreasing
to  approximately $191,000 in 2004; (ii) in the range of approximately $451,000
to  $465,000  per  year during the years 2005 to 2008; and (iii)  approximately
$447,000  in 2009, declining thereafter to approximately $369,000 in 2012.  See
Appendix C, Consolidated Pro Forma Report.
     
 Independent Engineers' and Consultants' Reports
  
     The Rosemary Engineering Report and the Rosemary Fuel Consultant's Report,
and  the  following  summaries  thereof,  contain  forward-looking  statements,
including projections, that involve risks and uncertainties. Actual results may
differ  materially from those discussed in the forward-looking statements.  See
"Disclosure  Regarding Forward-Looking Statements" and "Risk  Factors--Reliance
upon Projections  and  Underlying  Assumptions  Contained   in   Engineers' and
Consultants' Reports."
     
     Rosemary  Engineering  Report. Burns & McDonnell has  prepared  a  report,
dated  April  11,  1997  and updated June 6, 1997 (the  "Rosemary  Engineering
Report"),  concerning certain technical, environmental and economic aspects  of
the Rosemary Facility. Burns & McDonnell provides a variety of professional and
technical  services  in  the  fields  of engineering,  architecture,  planning,
economics and environmental sciences. Burns & McDonnell's project work includes
studies,  design,  planning,  construction  and  construction  management   for
electric  power generation and transmission facilities, as well  as  for  waste
management,  water  treatment, airport and other transportation  infrastructure
facilities.  Burns  &  McDonnell has been involved with the  Rosemary  Facility
since  1989.  The Rosemary Engineering Report includes, among other  things,  a
review  and  assessment  of  the Rosemary Facility's  equipment  and  operating
condition,  a  review  of  its operating history and projections  of  revenues,
expenses  and debt service coverage for the Project during the period that  the
Rosemary  Bonds  are  scheduled to be outstanding (i.e., through  February  15,
2016).
     
     Burns  &  McDonnell has relied upon projections of the Rosemary Facility's
dispatch  profile and fuel costs over the term of the Rosemary  Power  Purchase
Agreement  prepared  by ICF. Based on ICF's experience in  undertaking  similar
analyses, Burns & McDonnell believes that the use of ICF's dispatch profile and
fuel   cost  projections  is  reasonable  for  the  purposes  of  the  Rosemary
Engineering  Report.  Burns  & McDonnell also has  relied  upon  certain  other
information  provided  to it by sources it believes to  be  reliable.  Burns  &
McDonnell  believes  that the use of such information  is  reasonable  for  the
purposes of the Rosemary Engineering Report.
     
     In  preparing  the  Rosemary Engineering Report, Burns  &  McDonnell  made
various  assumptions regarding the validity and performance of  contracts,  the
operation  and  maintenance of the Rosemary Facility and, the effectiveness  of
permits.  These assumptions and the other assumptions contained in the Rosemary
Engineering Report are inherently subject to significant uncertainties and,  if
actual  conditions differ from those assumed, actual results will  differ  from
those  projected,  perhaps  materially. Subject to the  studies,  analyses  and
investigations of the Rosemary Facility they performed and the assumptions made
in  the  Rosemary Engineering Report, Burns & McDonnell offered  the  following
conclusions:
     
     -    The  technology  incorporated in the Rosemary Facility  is  a  sound,
          proven   method  of  generating  electric  and  thermal  energy   and
          incorporates  commercially proven technology.  The design,  operation
          and  maintenance of the Rosemary Facility implemented by the Rosemary
          Partnership  and Panda Global Services were developed and  have  been
          implemented  in  accordance  with  good  engineering  practices   and
          generally   accepted   industry  practices  and   have   taken   into
          consideration   existing  and  proposed  environmental   and   permit
          requirements applicable to the Rosemary Facility.  Burns &  McDonnell
          knows  of  no significant technical problems relating to the Rosemary
          Facility that should be of concern to potential investors.
     
     -    The  Rosemary  Facility is in good condition  and  has  a  competent,
          conscientious  operation and maintenance staff that has  developed  a
          long-term  facility maintenance program that is consistent  with  the
          manufacturers'   recommendations  and  generally-accepted   practices
          within the electric power generation industry. The recent change from
          U-TECH  to Panda Global Services as the operator should not have  any
          effect  on  the  future operations and maintenance  of  the  Rosemary
          Facility because all the staff transferred to Panda Global Services.
     
     -    The  Rosemary  Facility will have an expected operating service  life
          well  beyond  the  term of the Rosemary Power Purchase  Agreement  if
          properly operated and maintained, consistent with current practices.
     
     -    The  Rosemary Partnership has obtained and maintained in  full  force
          and  effect the key environmental permits and approvals required from
          the  various  federal, state and local agencies  that  are  currently
          necessary to operate the Rosemary Facility.
     
     -    The  basis  for the Rosemary Partnership's estimates of the  cost  of
          operating  and  maintaining the Rosemary Facility is reasonable.  The
          expense projections prepared by the Rosemary Partnership and based on
          projected  levels  of dispatch appear adequate  to  account  for  the
          variable  operation  and  maintenance  expenses.  The  1997  budgeted
          allowance for overhauls of $276 per fired hour is appropriate.
     
     -    The  Rosemary  Facility's heat rate will average 9,100 Btu/kWh  (HHV)
          over  the  remaining  initial  term of the  Rosemary  Power  Purchase
          Agreement.
     
     -    Table I-1 of the Rosemary Engineering Report summarizes the projected
          revenues  and  expenditures and debt coverage ratios of the  Rosemary
          Facility  based  upon the amortization schedule for  the  outstanding
          Rosemary  Bonds  submitted  to  Burns &  McDonnell  by  the  Rosemary
          Partnership. Projected revenues from the sale of thermal  energy  and
          electricity  and  other income are adequate to pay annual  operations
          and maintenance expenses (including provision for major maintenance),
          fuel costs, and other operating expenses and provide a minimum annual
          debt  service coverage on the Rosemary Bonds of 1.37:1 and an average
          debt service coverage over the outstanding term of the Rosemary Bonds
          of 1.58:1.
     
     Rosemary  Fuel  Consultant's Report. Benjamin Schlesinger and  Associates,
Inc.  ("Schlesinger")  has  prepared a report, dated  September  20,  1996,  as
updated  on  April 11, 1997 and June 6, 1997 (as updated, the  "Rosemary  Fuel
Consultant's  Report"),  concerning the sufficiency  of  the  fuel  supply  and
transportation  arrangements  entered into by  the  Rosemary  Partnership  with
respect  to  the  Rosemary Facility. Schlesinger is a Bethesda,  Maryland-based
management  consulting  firm  that specializes in  the  natural  gas  industry,
including economic and regulatory analysis, market research, energy supply  and
demand  forecasting, gas rate development and related economic,  technical  and
environmental  analyses. The Rosemary Fuel Consultant's Report includes,  among
other  things,  a  review  and  assessment of  the  fuel  supply  and  delivery
arrangements  for the Rosemary Facility with respect to both  natural  gas  and
fuel oil, focusing on the appropriateness of the existing fuel arrangements and
the   historical  reliability  of  fuel  supplies  to  the  Rosemary  Facility.
Schlesinger  has  used and relied upon certain information provided  to  it  by
sources  it believes to be reliable. Schlesinger believes that the use of  such
information  is  reasonable for the purposes of the Rosemary Fuel  Consultant's
Report.  Schlesinger  also  believes that  the  assumptions  contained  in  the
Rosemary   Fuel  Consultant's  Report  are  reasonable,  but  assumptions   are
inherently  subject  to  significant uncertainties and,  if  actual  conditions
differ from those assumed, actual results will differ from those projected.
     
     Subject  to  the  information contained and the assumptions  made  in  the
Rosemary   Fuel   Consultant's  Report,  Schlesinger   offers   the   following
conclusions:
     
     -    The  projections  developed  by Burns &  McDonnell  in  the  Rosemary
          Engineering  Report employ reasonably conservative  assumptions  with
          respect to the Rosemary Partnership's fixed gas transportation  costs
          and  the  relationship  of the Rosemary Partnership's  variable  fuel
          costs   to  the  energy  price  under  the  Rosemary  Power  Purchase
          Agreement,  and  the Rosemary Engineering Report contains  reasonable
          assumptions concerning the revenue that the Rosemary Partnership  may
          receive  by reselling transportation capacity that is excess  to  the
          Rosemary   Facility's  average  daily  capacity  utilization   and/or
          reselling gas using its excess transportation capacity.
     
     -    The  Rosemary Facility's overall fuel supply plan remains  reasonable
          and appropriate given the Rosemary Facility's record of operation and
          its  energy  payment  structure. The Rosemary Partnership's  contract
          with  Natural Gas Clearinghouse ("NGC") for fuel management  services
          lies  at  the heart of the Rosemary Facility's fuel supply plan.  NGC
          sells  and  delivers  gas  on a firm basis to  satisfy  the  Rosemary
          Facility's  baseload fuel requirements to produce steam  and  chilled
          water  for sale to Bibb. Additionally, NGC buys and delivers gas  and
          low  sulfur  distillate fuel oil ("DFO") on a best efforts  basis  to
          satisfy  the  Rosemary  Facility's variable daily  fuel  requirements
          related to VEPCO's electric dispatch requests. The fuel plan includes
          direct  access to two interstate pipeline systems, monthly  balancing
          and  backup  gas sales service from NCNG, and sufficient on-site  DFO
          storage  and permit authorization to burn DFO whenever gas deliveries
          to  the Rosemary Facility are insufficient to satisfy its total  fuel
          requirements on a daily basis. Provided VEPCO continues  to  dispatch
          the  Rosemary Facility principally as a summer peaker, the additional
          fixed  costs required to increase the Rosemary Facility's gas  supply
          or  delivery reliability are not warranted from an economic  or  fuel
          reliability perspective.
     
     -    The  Rosemary  Facility's  energy  revenues  under  its  power  sales
          agreement  reflect  the  Rosemary Facility's fuel  plan.  During  the
          months  of January and February, when the Rosemary Facility  is  most
          likely  to  be  forced to burn DFO due to spot gas curtailments,  the
          energy  payments are based on delivered DFO prices, while during  the
          rest of the year the energy payments are based on the delivered price
          of  Gulf Coast spot gas in the summer months and Appalachia spot  gas
          in  the  winter  months.  While the Rosemary Facility's  actual  fuel
          consumed  for dispatch operations has generally followed the seasonal
          fuel  availability structure assumed in the energy payment mechanism,
          the  energy  payments and actual fuel costs are not directly  linked,
          i.e., the Rosemary Facility's energy payment margins are at some risk
          for  a  mismatch  between energy payments and fuel costs  to  produce
          electricity.   Specifically,  given   that   delivered   DFO   prices
          historically  have  exceeded  delivered  gas  prices,  the   Rosemary
          Facility  benefits if it is able to burn gas in January and February,
          but could experience reduced margins on its energy payments if forced
          to  burn DFO in lieu of spot gas to satisfy dispatch requests in  any
          other  month. This risk, however, is largely mitigated by a  start-up
          fee payable by VEPCO each time the Rosemary Facility is dispatched in
          November,  December  and  March, the months other  than  January  and
          February  during  which the Rosemary Facility is most  likely  to  be
          forced burn DFO. Although Schlesinger believes the existing fuel plan
          to  be  reasonable and appropriate, Schlesinger recommends  that  the
          Rosemary  Partnership  continue to monitor on  an  annual  basis  the
          Rosemary  Facility's actual and projected dispatch and  gas  and  DFO
          pricing for the months of November, December and March to assess  the
          need for modifications in the existing fuel plan.
     
     -    Although  the  Rosemary Facility buys firm gas  supply  and  delivery
          services to satisfy only its baseload fuel requirements, the Rosemary
          Facility  has  always  had  enough fuel to satisfy  VEPCO's  dispatch
          requests.  Moreover, from the start of commercial operations  through
          the  end  of 1995, the Rosemary Facility has been able to secure  gas
          sufficient  to  satisfy in excess of 90% of its total  dispatch  fuel
          requirements,  a  record  attributable to relatively  low  levels  of
          winter  dispatch as well as the flexibility of its gas  arrangements.
          Schlesinger  concludes  that  the Rosemary  Facility's  existing  gas
          supply and delivery arrangements provide an appropriate degree of gas
          reliability   for   an  electric  peaking  facility.   In   addition,
          Schlesinger concludes that the Rosemary Facility's two million gallon
          on-site  DFO storage capacity, ready access to oil terminals in  four
          nearby  locations, and operational DFO resupply procedures  with  NGC
          that have proven to be effective to provide an appropriate degree  of
          backup  DFO  supply reliability, i.e., no additional  DFO  supply  or
          delivery contracts are necessary. However, the Rosemary Facility  may
          not  be  able  to sustain a 90% gas reliability level in  the  future
          under  a scenario of significantly higher levels of dispatch  in  the
          months  of  November, December and March and the Rosemary Partnership
          should  continue  to monitor projected dispatch for these  months  as
          described   above.   Schlesinger  reviewed  the   fuel   supply   and
          transportation pricing projections used by Burns & McDonnell  in  the
          Rosemary  Engineering Report. Schlesinger concluded from  its  review
          that  the Rosemary Engineering Report employs reasonably conservative
          assumptions  for  the  costs of the Rosemary Facility's  various  gas
          supply  and  transportation services, i.e.,  based  on  Schlesinger's
          assessment  of  the  fuel contracts and the cost of  gas  supply  and
          transportation services, Schlesinger believes that fuel delivered  to
          the  Rosemary  Facility  is likely to cost less  than  the  estimates
          contained in the Rosemary Engineering Report.
     
     -    The Rosemary Facility's fuel supply and transportation contracts have
          original  terms of approximately 15 years and thus will  need  to  be
          extended  or  replaced.  The  Rosemary Facility  should  have  little
          difficulty extending the existing fuel arrangements or, if necessary,
          replacing   the   current  fuel  contracts  with  alternate   service
          arrangements  that  offer  comparable  price,  credit   support   and
          reliability   provisions.  Schlesinger  notes   that   the   Rosemary
          Engineering Report projects fuel costs through the year 2015  on  the
          basis  of  the  existing fuel contracts and, based on  the  foregoing
          conclusion, Schlesinger believes such projection to be reasonable.
     
     The Brandywine Facility
     
     The  Brandywine Facility is a combined-cycle cogeneration facility located
in  Brandywine,  Maryland  (near  Washington,  D.C.),  with  a  total  electric
generating capacity of 230 MW. The Brandywine Facility uses natural gas as  its
primary fuel input and No. 2 fuel oil as an alternative fuel in the event  that
gas  supplies  or  transportation are curtailed. The  Brandywine  Facility  was
constructed by Raytheon Engineers and Constructors, Inc. ("Raytheon"). Raytheon
has  met  its  performance  guarantees  and  the  requirements  for  commercial
operations  and  substantial  completion under the  Brandywine  EPC  Agreement.
Pursuant  to  a  power purchase agreement entered into in 1991 and  amended  in
1994, the Brandywine Partnership sells the capacity of, and energy produced by,
the  Brandywine Facility to Potomac Electric Power Company ("PEPCO"), a utility
that  serves  the  District of Columbia and parts of Maryland.  The  Brandywine
Facility  commenced commercial operations under the Brandywine  Power  Purchase
Agreement  on October 31, 1996. A merger of PEPCO and Baltimore Gas &  Electric
Company  ("BG&E"),  a  utility that serves other parts of  Maryland,  has  been
publicly  announced and is anticipated to close sometime in 1997. The  term  of
the Brandywine Power Purchase Agreement will expire on October 30, 2021.
     
     The  Brandywine Facility is currently leased by the Brandywine Partnership
pursuant  to the Brandywine Facility Lease. The initial term of the  Brandywine
Facility Lease is 20 years. At the end of the initial lease term, so long as no
default  or  event of default shall have occurred and be continuing  under  the
Brandywine  Facility Lease, the Brandywine Partnership may renew the Brandywine
Facility  Lease  for  two  consecutive  five-year  terms.  Alternatively,   the
Brandywine  Partnership  may purchase the Brandywine  Facility  at  fair  sales
market  value at the end of the initial lease term or any renewal term. If  the
Brandywine Partnership does not renew the Brandywine Facility Lease or purchase
the  Brandywine  Facility,  it  must surrender  possession  of  the  Brandywine
Facility.  See  "Description of Other Indebtedness--The Brandywine  Financing--
Brandywine Facility Lease."
     
     The  Brandywine Facility is certified as a Qualifying Facility under PURPA
and  thus  is exempt from rate regulation as an electric utility under  federal
and  state  law,  provided  that,  upon and during  commercial  operations,  it
continues  to meet the applicable requirements of PURPA. See Appendix  B,  "The
Electric  Power  Industry in the United States and United  States  Regulation--
Federal Energy Regulation--PURPA."
     
  Operations and Maintenance
  
     The  Brandywine Partnership purchases operations and maintenance  services
from  Ogden  Brandywine Operations, Inc. ("Ogden Brandywine"), a subsidiary  of
Ogden  Corporation,  pursuant to an Operation and  Maintenance  Agreement  (the
"Brandywine  O&M  Agreement"). The Brandywine O&M Agreement is effective  until
October  31, 1999, and may be extended thereafter by agreement of the  parties.
In exchange for such services, Ogden Brandywine is paid a fixed fee of $117,750
per month, with bonus and penalty provisions based on maintenance of dependable
capacity levels and availability of the Brandywine Facility for dispatch.
     
  Sale of Capacity, Electricity and Steam
  
     The  Brandywine  Partnership sells electric capacity and energy  to  PEPCO
pursuant to a Power Purchase Agreement (as amended by a first amendment ("First
Amendment") thereto, the "Brandywine Power Purchase Agreement"). The Brandywine
Power  Purchase Agreement has an initial term that expires in October 2021,  25
years from the commercial operations date, and may be extended by agreement  of
the parties. The Maryland Public Service Commission has approved the Brandywine
Power  Purchase  Agreement  (including the First Amendment).  The  District  of
Columbia Public Service Commission has issued orders indicating its approval of
the Brandywine Power Purchase Agreement as in the public interest and the First
Amendment as a reasonable modification thereof. The District of Columbia Public
Service  Commission also has made certain findings of fact and  conclusions  of
law  that were conditions precedent to the effectiveness of the First Amendment
according to its terms.
     
     PEPCO  has the right to dispatch the Brandywine Facility on a daily  basis
within  certain  guidelines and design limits. The design limits  specify  load
levels,  start-up  and  shutdown  times and  minimum  run  times,  specifically
adhering to Prudent Utility Practices. The guidelines require PEPCO to dispatch
all  facilities  obligated to deliver electricity to PEPCO  based  on  economic
factors  and  without  regard to the ownership of  such  facilities.  PEPCO  is
required to dispatch 99 MW of the Brandywine Facility's dependable capacity for
no  fewer than 60 hours per week (Monday through Friday). The remaining portion
of  the  Brandywine  Facility can be dispatched by PEPCO under  the  guidelines
described above.
     
     The  Brandywine  Power Purchase Agreement provides  for  two  payments:  a
capacity payment and an energy payment. The capacity payment is a fixed  charge
to be paid regardless of whether the Brandywine Facility is dispatched, subject
to  reduction  in  certain  circumstances  described  below.  Monthly  capacity
payments  throughout  the term of the Brandywine Power Purchase  Agreement  are
based  on the Brandywine Facility's dependable capacity, the capacity rate  and
other  factors.  Under the Brandywine Power Purchase Agreement, the  Brandywine
Facility  is  required to establish a dependable capacity of 230 MW  in  summer
ambient conditions (defined as 92 degrees F and 50% humidity). The dependable
capacity will be determined by semi-annual tests and PEPCO has the right to
require the Brandywine  Partnership  to revalidate the dependable  capacity.
The capacity rate, stated in $/kW/month, is a fixed schedule of payments for
each of the  25 years  of the initial term of the Brandywine Power Purchase 
Agreement,  ranging from  $13.74  in  1997 to $23.63 in 2014. The capacity 
payment  is  subject to specified  downward adjustments in contract years one,
two  and  four,  and  to specified  upward adjustments in the fifth and 11th
through the  25th  contract years.  Capacity  payments  will be reduced if the
Brandywine  Facility  cannot maintain  88% equivalent availability, and will be
increased if it exceeds 92% equivalent availability. Capacity payments may also
be decreased commencing in 2006  depending  on whether PEPCO's system peak load
exceeds  5,697  MW  during 1997, 1998 or 1999 or later. Calculation of capacity
payments pursuant to these provisions  of  the Brandywine Power Purchase
Agreement is  the  subject  of a dispute between the Brandywine Partnership and
PEPCO, as discussed below.
     
     The  energy payment is determined in accordance with a series of  formulas
that reflect specified heat rates, hours of synchronization and operation and a
combination  of  fixed and market prices for natural gas. The Brandywine  Power
Purchase  Agreement  provides  that  the energy  price  will  be  increased  to
compensate the Brandywine Partnership for its variable costs of fuel oil if the
gas  supply  is  interrupted.  In  such event, the  Brandywine  Power  Purchase
Agreement  specifies a base cost of oil, which is escalated at the annual  rate
of change according to an oil index described therein.
     
     The  Brandywine  Partnership has constructed a  seven-mile  long  electric
transmission  line  to  connect the Brandywine Facility  and  the  transmission
facilities  of PEPCO. Consolidated Rail Corporation entered into  an  agreement
with  the Brandywine Partnership to provide transmission line easements  for  a
portion  of  the  transmission  line.  The Brandywine  Partnership  transferred
ownership of the transmission line to PEPCO on October 30, 1996.
     
     The  Brandywine  Partnership sells steam to the Brandywine  Water  Company
pursuant to a Steam Sales Agreement dated March 30, 1995 (the "Brandywine Steam
Agreement"). Brandywine Water Company is an indirect wholly-owned subsidiary of
the  Company.  The production and sale of thermal energy allows the  Brandywine
Facility  to achieve QF status. The Brandywine Steam Agreement continues  until
October 31, 2021 and may be extended by agreement of the parties for additional
terms  of five years. Brandywine Water Company fully and unconditionally agrees
to  purchase all of the thermal energy produced by the Brandywine Facility  and
has  entered  into a contract with the United States Navy to sell it  distilled
water  for heating and other industrial uses in a naval facility. The  contract
is  for  a  one-year  term that commenced on October  1,  1996.  Prior  to  the
expiration of the term of the Navy contract, Brandywine Water Company will have
to  extend  the  contract or find one or more other customers to  purchase  the
distilled  water. If Brandywine Water Company is unable to extend its  contract
to  sell  distilled  water to the United States Navy or to  find  one  or  more
replacement  contracts for the sale of such water, there is no  assurance  that
the Brandywine Facility will be able to remain a Qualifying Facility. PEPCO may
terminate  the  Brandywine Power Purchase Agreement, and it may  be  a  default
under  the Brandywine Financing Documents, under certain circumstances  if  the
Brandywine  Facility  ceases  to  be a QF, unless  the  Brandywine  Partnership
receives  all  governmental  and  regulatory approvals  necessary  to  continue
operating the Brandywine Facility without QF certification. See "Risk Factors--
Maintaining Qualifying Facility Status."
     
  Disagreement With PEPCO Over Calculation of Capacity Payment
  
     In  late  August  1996,  the Brandywine Partnership  and  PEPCO  commenced
discussions  concerning  commercial operation requirements  of  the  Brandywine
Facility and conversion of the construction loan to long-term financing. During
these  discussions, two disagreements arose between the Brandywine  Partnership
and PEPCO as to how capacity payments should be calculated under the Brandywine
Power  Purchase Agreement. PEPCO and the Brandywine Partnership  are  presently
attempting to resolve these disagreements but there are no assurances that such
efforts will be successful.
     
     The  Brandywine Partnership and PEPCO disagree as to the date on which the
yield  to maturity on United States Treasury Bonds with a maturity of 12  years
("12-year  T-Bonds") should be determined under a provision in  the  Brandywine
Power Purchase Agreement that requires capacity payments to be reduced if  such
interest rate is less than 8%. Such provision states that the interest rate  of
12-year T-Bonds is to be determined, and adjustments to capacity payments made,
as  of  the  date  that  the  interest rate for  permanent  financing  for  the
Brandywine Facility is designated pursuant to an executed commitment  for  such
financing.  On  October  6,  1994, the Brandywine Partnership  entered  into  a
written commitment with GE Capital with respect to permanent financing for  the
Brandywine  Facility,  which commitment designated an interest  rate  for  such
financing.  Accordingly,  the Brandywine Partnership takes  the  position  that
October 6, 1994 should be the date used to determine the interest rate  of  12-
year  T-Bonds under the Brandywine Power Purchase Agreement. The interest  rate
for 12-year T-Bonds on such date was 7.94% per annum. PEPCO, on the other hand,
takes  the  position that since the interest rate designated in such commitment
was  a floating rate, the date to be used for determining the interest rate  of
12-year  T-Bonds  is  the  closing date of the  conversion  of  the  Brandywine
Construction  Loan Facility to long-term financing in the form of  a  leveraged
lease,  which occurred on December 30, 1996. The interest rate for  12-year  T-
Bonds on such date was 6.36%.
     
     To  the  extent  that PEPCO's position with respect to the PEPCO  interest
rate  disagreement  does not prevail, PEPCO claims that it  is  entitled  to  a
reduction in capacity payments under another provision of the Brandywine  Power
Purchase Agreement that requires PEPCO to share equally in any "refinancing  or
new  or  revised lease arrangements" savings. The Brandywine Partnership  takes
the position that all transactions to be entered into at or near closing of the
Brandywine   Financing  Conversion  were  provided  for  under  the  Brandywine
Financing Documents and do not constitute a refinancing or new or revised lease
arrangements. In the event that the capacity payments were reduced pursuant  to
this  provision, the reduction would be significantly less than  the  reduction
claimed by PEPCO in connection with the PEPCO interest rate disagreement.
     
     PEPCO and the Brandywine Partnership also disagree as to the determination
of  PEPCO's  system  peak  load which is the basis for reductions  in  capacity
payments  under the Brandywine Power Purchase Agreement. Under such  provision,
capacity payments are to be reduced, commencing in 2006, if PEPCO's system peak
load  does  not  exceed 5,697 MW prior to 1998, and are reduced  by  a  greater
amount  if PEPCO's system peak load does not exceed such amount prior to  1999.
PEPCO  and BG&E have announced their intention to merge during 1997 into a  new
entity  to be known as Constellation Energy Corporation ("Constellation"),  and
PEPCO  has  asked the Brandywine Partnership to agree that peak load under  the
Brandywine Power Purchase Agreement would be calculated on the basis of the pre-
merger  PEPCO  system and not the post-merger Constellation system.  Peak  load
based  on  the Constellation system would greatly exceed 5,679 MW during  1997.
However, PEPCO's position is that the parties intended to use the current PEPCO
system  in  calculating  peak  load and that the merger  with  BG&E  should  be
disregarded  for such purpose. The Brandywine Partnership disagrees  with  such
position.  The  Brandywine  Power  Purchase  Agreement  does  not  contain  any
provision  requiring adjustments due to mergers or reorganizations. It  is  the
Brandywine  Partnership's  position that Constellation,  as  the  successor  of
PEPCO,  would  be  substituted for PEPCO under the  Brandywine  Power  Purchase
Agreement and the Constellation system should be used to calculate peak load.
     
     The Brandywine Pro Forma and the Consolidated Pro Forma are prepared under
the  assumption  that PEPCO's system peak load (based on the  pre-merger  PEPCO
system)  exceeds 5,697 MW during 1999 or thereafter, and accordingly, there  is
the  maximum reduction in capacity payments under this provision. ICF  believes
that  such assumption represents the most conservative presentation and is  not
dependent  upon  the  outcome  of the current disagreement  between  Brandywine
Partnership  and  PEPCO  regarding the basis for the determination  of  PEPCO's
system  peak load. The Brandywine Pro Forma and the Consolidated Pro Forma  are
also  prepared  under  the assumption that the interest rate  to  be  used  for
purposes of the capacity payment adjustment is 6.36%, which represents  PEPCO's
position.  ICF  believes that this assumption represents the most  conservative
presentation   of   the   disagreement.  See  "Prospectus  Summary--Independent
Engineers'  and  Consultants' Reports--Consolidating  Financial  Analyst's  Pro
Forma   Report"  and  "--Independent  Engineers'  and  Consultants'   Reports--
Brandywine Pro Forma Report" below.
     
     Gas Supply and Fuel Management
     
     The  Brandywine Partnership purchases both firm and interruptible  natural
gas  supply from CDC pursuant to the Gas Sales Agreement, dated March 30, 1995,
between  the  Brandywine Partnership and CDC (the "Brandywine Gas  Agreement").
MCN  Corporation  ("MCN"),  the  parent  corporation  of  CDC,  has  fully  and
unconditionally guaranteed the payment and performance obligations of CDC under
the  Brandywine  Gas Agreement. The Brandywine Gas Agreement commenced  October
31,  1996 and continues until October 31, 2011, and thereafter is automatically
renewed for an additional two-year term unless terminated by either party  upon
nine months' written notice.
     
     CDC  is  obligated to sell and deliver to the Brandywine  Partnership,  at
receipt points along the pipeline system of Columbia Gas, up to 24,240 MMBtu of
gas  per  day  on  a firm basis and up to 24,240 MMBtu of gas  per  day  on  an
interruptible  basis. Gas delivered by CDC within the firm  basis  limit  falls
within  one  of  the  three  following  categories:  "Limited  Dispatch   Gas,"
"Scheduled  Dispatch  Gas"  or  "Dispatchable Gas"  (each  as  defined  in  the
Brandywine Gas Agreement).
     
     The  price for the gas delivered by CDC is dependent upon the category  of
the  gas  delivered. The price for Limited Dispatch Gas consists of  a  monthly
demand  charge, a commodity charge and a charge relating to costs  incurred  by
CDC  for  firm  transportation  CDC receives from  ANR  Pipeline  Company.  The
commodity charge escalates annually while the demand charge and the ANR-related
charge increase after the fifth year of the initial term of the Brandywine  Gas
Agreement. The price for Scheduled Dispatch Gas consists of a commodity  charge
based  on the monthly New York Mercantile Exchange settlement price for natural
gas  futures  contracts plus a margin which increases after year  five  of  the
Brandywine Gas Agreement. The price for Scheduled Dispatch Gas is capped  based
on three monthly natural gas price indices. The price for Dispatchable Gas is a
negotiated  price or, if a negotiated price cannot be reached, is  based  on  a
daily natural gas price index. In addition, the Brandywine Partnership receives
a  price credit from CDC for each MMBtu of gas delivered by CDC during a  month
not to exceed the demand charge for Limited Dispatch Gas.
     
     The  Brandywine  Partnership must annually take or pay for  no  less  than
2,299,500  MMBtu  (or 2,305,800 MMBtu during a leap year) of  Limited  Dispatch
Gas, which amount is reduced by 7,000 MMBtu for each day of regularly scheduled
outage at the Brandywine Facility. In addition, the Brandywine Partnership must
take or pay for a quantity of Scheduled Dispatch Gas each month that is no less
than  80% of the Scheduled Dispatch Gas that was scheduled for delivery  during
such  month.  If  the Brandywine Partnership pays for but  fails  to  take  the
minimum  quantities  of  Limited Dispatch Gas or Scheduled  Dispatch  Gas,  the
Brandywine  Partnership has the opportunity later to receive the quantities  of
gas paid for but not taken.
     
     The  Brandywine Partnership also purchases fuel management  services  from
CDC  pursuant  to  the  Fuel Supply Management Agreement between  CDC  and  the
Brandywine Partnership (the "Brandywine Fuel Management Agreement"). CDC's fuel
management  responsibilities  under the Brandywine  Fuel  Management  Agreement
include advising the Brandywine Partnership with respect to the negotiation  of
natural gas and fuel oil supply and transportation arrangements, arranging  for
the delivery to the Brandywine Facility of natural gas or fuel oil, endeavoring
to  make such arrangements on "best efforts" and "best competitive offer" basis
and   advising  the  Brandywine  Partnership  with  respect  to  fuel   hedging
arrangements. MCN Investment Corp. (an affiliate of MCN and CDC) has guaranteed
CDC's  payment and performance obligations under the Brandywine Fuel Management
Agreement.
     
  Gas Transportation
  
     The  Brandywine Partnership and Columbia Gas have entered into a Precedent
Agreement (the "Columbia Precedent Agreement"), pursuant to which Columbia  Gas
has  constructed  new  pipeline facilities to expand  its  existing  interstate
pipeline  and  provide the Brandywine Partnership with firm gas  transportation
service.  As  of  December  31,  1996, the Brandywine  Partnership  contributed
$6,772,590,  plus applicable tax gross-up, toward the construction of  Columbia
Gas' pipeline facilities.
     
     The  Brandywine Partnership purchases firm gas transportation service from
Columbia  Gas  pursuant to an Amended and Restated FTS Service  Agreement  (the
"Columbia  Gas  FT  Agreement"). Service under the Columbia  Gas  FT  Agreement
commenced on November 1, 1996 and continues until October 31, 2021, and year-to-
year thereafter unless terminated by either party upon six months' notice.
     
     The   Brandywine  Partnership  purchases  from  Cove  Point  LNG   Limited
Partnership  ("Cove Point") firm gas transportation service  to  transport  gas
delivered  by Columbia Gas to the facilities of Cove Point pursuant  to  a  FTS
Service  Agreement (the "Cove Point FT Agreement"). The Cove Point FT Agreement
continues  until  October  31, 2021. Cove Point is  obligated  to  provide  the
Brandywine Partnership with up to 24,000 Dth per day of firm gas transportation
service  from  an  interconnection between the facilities  of  Cove  Point  and
Columbia  Gas in Loudoun, Virginia to an interconnection between the facilities
of  Cove  Point  and  Washington Gas Light Company ("WGL") in  Charles  County,
Maryland. Cove Point provides the firm transportation service pursuant  to  the
Cove  Point  FT  Agreement, the Rate Schedule FTS and  the  general  terms  and
conditions  of  its  effective  FERC  gas  tariff.  In  addition  to  the  firm
transportation  agreements,  the  Brandywine  Partnership  has   entered   into
interruptible transportation agreements with Columbia Gas and Cove Point  under
which the Brandywine Partnership will receive 24,240 Dth per day and 30,000 Dth
per  day,  respectively, of interruptible transportation service on a month-to-
month basis.
     
     The  Brandywine  Partnership purchases from WGL  gas  transportation,  gas
sales  and  gas balancing service pursuant to a Gas Transportation  and  Supply
Agreement (the "WGL Agreement"). The WGL Agreement continues until October  31,
2021,  and  thereafter will continue year-to-year unless terminated  by  either
party  upon  six  months'  written notice. WGL  is  obligated  to  provide  the
Brandywine Partnership with firm transportation service, up to the quantity  of
gas  nominated for such service on a given day, from an interconnection between
the  facilities  of  Cove  Point and WGL in Charles  County,  Maryland  to  the
interconnection  between  the  WGL  facilities  and  the  Brandywine  Facility,
provided that WGL only must use its best efforts to deliver transportation  gas
to the Brandywine Facility when the pressure on the Cove Point pipeline is less
than  500  psig.  During the months of January, February and  December  of  any
calendar  year,  WGL  may,  under  certain  circumstances,  request  that   the
Brandywine  Partnership release to WGL for its system use  a  quantity  of  gas
purchased by the Brandywine Partnership under the Brandywine Gas Agreement  and
transported to the WGL system. Additionally, WGL sells and delivers gas to  the
Brandywine Facility on an as-available basis from November through March and on
a best efforts basis from April through October, at a price to be agreed by the
parties.
     
  Fuel Oil
  
     The Brandywine Facility was constructed with the capability to operate  on
No.  2 fuel oil and has the ability to change fuel sources from natural gas  to
fuel  oil  and  back  without interrupting the generation of  electricity.  The
Brandywine  Facility has on-site storage for approximately two million  gallons
of  fuel  oil, a supply sufficient to operate the Brandywine Facility  at  full
load for approximately six days.
     
  Construction Contract
  
     Pursuant to the Brandywine EPC Agreement, Raytheon agreed to construct the
Brandywine  Facility  (including the distilled water plant)  for  approximately
$122.0 million (including change orders). Because Raytheon provided a letter of
credit, initially equal to 10% of the contract price, no retainage is withheld.
The  amount  of  this  letter of credit was reduced as of the  commencement  of
commercial  operations  to 5% of the aggregate amount paid  by  the  Brandywine
Partnership to Raytheon through that date, and thereafter the letter of  credit
must  be maintained at a level which is twice the cost of completing punch list
items  remaining  at  final  acceptance of the  Brandywine  Facility.  Raytheon
Company,  a  Delaware corporation and the parent corporation of  Raytheon,  has
provided  a  guaranty covering all obligations of Raytheon under the Brandywine
EPC Agreement.
     
     A dispute exists between the Brandywine Partnership and Raytheon as to the
specific date on which commercial operations for purposes of the Brandywine EPC
Agreement  occurred  and  the amount of the early  completion  bonus  to  which
Raytheon  is  entitled.  In addition, the Brandywine Partnership  and  Raytheon
disagree  as to the number of force majeure days to which Raytheon is  entitled
as  a  result of a January 1996 snowstorm during which construction work  could
not  be  carried  on,  and as to the validity and number of owner-caused  delay
days.  Even  in  the  event that an agreement on the number  of  such  days  is
reached,  the Brandywine Partnership and Raytheon further disagree  as  to  the
affect, if any, such delays would have on the amount of the bonus payable under
the Brandywine EPC Agreement for early completion of the facility.
     
     Taking  into  account  all  of the foregoing  issues  with  Raytheon,  the
Brandywine  Partnership believes that the total amount in dispute  between  the
Brandywine  Partnership and Raytheon is less than $1.0 million. The  bonus  for
early  achievement  of  the  commercial operations  date  discussed  above,  if
ultimately  determined to be owed, would be payable over time and  funded  from
cash  flows  from the operation of the Brandywine Facility which may  otherwise
have been available for distributions.
     
  Independent Engineers' and Consultants' Reports
  
     The Brandywine Pro Forma Report, the Brandywine Engineering Report and the
Brandywine  Fuel  Consultant's  Report, and the  following  summaries  thereof,
contain  forward-looking statements, including projections, that involve  risks
and uncertainties. Actual results may differ materially from those discussed in
the  forward-looking statements. See "Risk Factors--Reliance  upon  Projections
and Underlying Assumptions Contained in Engineers' and Consultants' Reports."
     
     Brandywine  Pro Forma Report. ICF has prepared a report, dated  April  11,
1997 and updated June 6, 1997 (the "Brandywine Pro Forma Report"), presenting
its  independent pro forma operating projections (the "Brandywine  Pro  Forma")
for  the  Brandywine Facility. In developing its projections, ICF reviewed  the
Brandywine  Facility's fuel supply and transportation contracts, the Brandywine
Facility  Lease  and the Brandywine Power Purchase Agreement, as  well  as  the
Brandywine  Engineering  Report and the Brandywine  Fuel  Consultant's  Report.
Based  on  the  experience  of  Pacific Energy  Systems,  Inc.  and  C.C.  Pace
Resources,  Inc.  ("C.C. Pace") in undertaking similar analyses,  ICF  believes
that  the  use  of  the Brandywine Engineering Report and the  Brandywine  Fuel
Consultant's Report is reasonable for the purposes of the Brandywine Pro Forma.
In  preparing  the Brandywine Pro Forma, ICF used and relied on  certain  other
information  provided to it by sources it believes to be reliable, including  a
report  by  ICF providing its dispatch projections for the Brandywine Facility.
ICF believes that the use of such information is reasonable for the purposes of
the  Brandywine  Pro  Forma.  In preparing the Brandywine  Pro  Forma  and  the
conclusions  contained  therein,  ICF made  assumptions  with  respect  to  the
validity  and  performance of contracts, the operation and maintenance  of  the
Brandywine  Facility, the effectiveness of permits and the  maintenance  of  QF
status. Although ICF believes that the use of these assumptions and the  others
contained  in the Brandywine Pro Forma Report in developing the Brandywine  Pro
Forma   is  reasonable,  assumptions  are  inherently  subject  to  significant
uncertainties  and,  if  actual conditions differ from  those  assumed,  actual
results will differ from those projected.
     
     Subject  to  the  studies, analyses and investigations of  the  Brandywine
Facility  performed  by  ICF, and the assumptions made in  the  Brandywine  Pro
Forma, ICF offers the following conclusions:
     
     -    The  financial  projections in the Brandywine  Pro  Forma  provide  a
          reasonable  reflection of the Brandywine Facility's  expected  costs,
          revenues and cash flows.
     
     -    The  energy  and  capacity  revenue  calculations  contained  in  the
          Brandywine  Pro  Forma  are  appropriate  and  consistent  with   the
          Brandywine  Power  Purchase  Agreement.  Expectations  for   capacity
          payment adjustments under the Brandywine Power Purchase Agreement  in
          regard  to  the interest rate adjustment and the peak adjustment  are
          presented at the most conservative positions.
     
     -    Over  the 20-year initial term of the Brandywine Facility Lease,  the
          Brandywine  Facility's cash flow available for  lease  payments  will
          average  approximately $46.5 million per year, reflecting a range  of
          $18.1 million in 1998 to $58.9 million in 2020.
     
     -    The  estimated lease obligation coverage ratios (i.e., the  ratio  of
          earnings  before  income taxes to lease payments)  are  presented  in
          Table  ES-1  to the Brandywine Pro Forma Report. During  the  20-year
          term  of  the  Brandywine Facility Lease, the  Brandywine  Facility's
          lease coverage will range from 1.35:1 in 2012 to 1.75:1 in 2004, with
          an average coverage ratio of 1.59:1.
     
     Brandywine  Engineering Report. Pacific Energy Services, Inc. ("PES")  has
prepared  a  report, dated July 22, 1996, and updated April 11, 1997  and  June
6,  1997  (as  updated, the "Brandywine Engineering Report"), evaluating  the
design, construction and expected operation of the Brandywine Facility. PES has
provided  engineering services to approximately fifty power plants  within  the
last   seven  years.  Such  services  include  technical  review,  construction
monitoring, performance testing and certification and O&M audits. Approximately
one-half  of these plants utilize combined-cycle combustion turbine  technology
with  cogeneration, as does the Brandywine Facility. PES has been involved with
the  Brandywine  Facility  since it performed a due  diligence  review  for  GE
Capital   in   connection  with  the  closing  of  the  Brandywine   Facility's
construction  loan  in  April  1995  and  has  monitored  construction  of  the
Brandywine Facility since that date.
     
     PES's review and assessment is based, among other things, on due diligence
work  previously completed, construction monitoring of the Brandywine  Facility
and  a  review of significant project agreements. In providing its  conclusions
set  forth  in the Brandywine Engineering Report, PES made certain assumptions.
The  assumptions  are inherently subject to significant uncertainties  and,  if
actual  conditions differ from those assumed, actual results will  differ  from
those projected, perhaps materially.
     
     PES has independently reviewed the project engineering, cost, construction
schedule,  permits, contracts, O&M and performance estimates for  completeness,
risk,  variation from practices typical in the industry and the ability of  the
Brandywine   Facility  to  perform  as  intended.  PES  offers  the   following
conclusions:
     
     -    The Brandywine Facility is substantially complete, capable of meeting
          all  commercial  operating requirements under  the  Brandywine  Power
          Purchase  Agreement  and  the Brandywine  Steam  Agreement,  and  has
          received  or is expected to receive all necessary operating  permits.
          There is no reason to believe that any necessary operation permit not
          yet received will not be obtained.
     
     -    The  Brandywine  Facility meets or exceeds all guarantees  or  design
          conditions  based  on  the  information supplied  during  testing  by
          Raytheon, GE Power Systems, and others. Provided future operation and
          maintenance  are performed according to standard industry  practices,
          PES  can  find  no  technical constraints to prevent  the  Brandywine
          Facility  from being able to perform at a level consistent with  that
          anticipated in the Brandywine Pro Forma.
     
     Brandywine  Fuel  Consultant's Report. C.C. Pace has  prepared  a  report,
dated  July 2, 1996, and updated April 11, 1997 and June 6, 1997 (as updated,
the  "Brandywine Fuel Consultant's Report"), reviewing the sufficiency  of  the
fuel  supply and transportation arrangements for the Brandywine Facility.  C.C.
Pace  is an energy consulting firm based in Fairfax, Virginia, that specializes
in  analyzing fuel supply and transportation arrangements for independent power
projects.   The  Brandywine  Fuel  Consultant's  Report  reviews  whether   the
Brandywine   Partnership   has  contracted  for  adequate   fuel   supply   and
transportation  services  to meet its obligations under  the  Brandywine  Power
Purchase  Agreement and the relationship between the energy payments under  the
Brandywine Power Purchase Agreement and the fuel and transportation  costs  the
Brandywine Partnership is likely to incur.
     
     The  Brandywine Fuel Consultant's Report is based upon certain assumptions
regarding  the  availability and future pricing of fuel.  The  assumptions  are
inherently  subject  to  significant uncertainties and,  if  actual  conditions
differ from those assumed, actual results will differ from those projected.
     
     Subject  to  the  information contained and the assumptions  made  in  the
Brandywine   Fuel   Consultant's  Report,  C.C.  Pace  offers   the   following
conclusions:
     
     -    All  pipeline  construction has been completed and all  of  the  firm
          natural  gas  transportation contracts of the Brandywine  Partnership
          are in effect.
     
     -    The  Brandywine  Facility's Fuel Management Plan  is  sufficient,  if
          followed,  to assure that the Brandywine Facility will operate  in  a
          manner  to  meet  PEPCO  electric dispatch orders  while  maintaining
          compliance with all fuel supply contract and tariff obligations.
     
     -    PEPCO has approved the Brandywine Facility's Fuel Management Plan.
     
     -    The   Brandywine  Partnership  has  developed  sufficient  fuel   oil
          procurement  procedures  which are included in  the  Fuel  Management
          Plan.
     
     -    The  Brandywine Partnership should be able to meet all oil  needs  at
          the Brandywine Facility for the 1996-1997 winter heating season.
     
     -    CDC,  an experienced gas supplier with reserves sufficient to support
          the  fixed-price portion of the Brandywine Gas Agreement, is required
          annually  under  the  Brandywine Gas Agreement  to  ensure  that  its
          reserves  continue  to be adequate to meet that obligation,  and  has
          ongoing gas marketing operations more than sufficient to support  the
          remaining  contractual  obligations with the Brandywine  Partnership.
          MCN  also  has substantial assets backing its corporate  warranty  of
          CDC's gas supply obligations.
     
     -    The market-based pricing provided under the Brandywine Power Purchase
          Agreement  corresponds  to  the pricing at  which  gas  supplies  are
          generally  available,  and is similar to the  pricing  at  which  gas
          supplies are available from CDC.
     
     -    Gas  transportation arrangements are in place for firm transportation
          for  100% of the fuel supply requirements for Unit 1 for the term  of
          the Brandywine Power Purchase Agreement, subject to the obligation of
          the Brandywine Partnership under limited circumstances to release  to
          WGL  all of its firm gas supply.  The regulatory approvals for  these
          arrangements have been received.
     
     -    There   is  a  strong  linkage  between  changes  in  the  Brandywine
          Facility's expected variable fuel-related costs and revenues. Several
          potential  delinkages are mitigated by significant  initial  positive
          margins in energy payment components.
     
     -    The  gas  supply  and  transportation  operational  requirements  are
          flexible    enough   to   satisfy   electric   dispatch   operational
          requirements,  provided sound fuel management is employed.   CDC  and
          its  affiliates  have  fuel  management experience,  and  CDC's  fuel
          management  performance is backed by a corporate  warranty  from  MCN
          Investment Corp.
     
     -    The   backup  fuel  plan  provides  the  Brandywine  Partnership  the
          capability  to  meet dispatch requirements, assuming  firm  fuel  oil
          supply  and transportation contracts are in place before each heating
          season  and the Brandywine Facility's air permit allows use  of  fuel
          oil.
     
     -    The  pro forma modeling of the Brandywine Facility contained  in  the
          Brandywine  Pro Forma Report reflects the Brandywine Facility's  fuel
          supply  arrangements using the gas and oil price projections of  ICF.
          ICF  is  a  recognized  forecaster  of  gas  and  oil  prices.  As  a
          consequence of the expected dispatch of the Brandywine Facility  also
          projected  by  ICF,  such  pro  forma modeling  reflects  significant
          benefits   of  certain  pipeline  balancing  provisions   under   the
          assumption  that  these provisions will continue  over  the  term  of
          Brandywine  Power Purchase Agreement. These balancing provisions  are
          not   contractual  rights  and  there  is  no  guarantee  that  these
          provisions will continue over the entire pro forma modeling term.
     
Other Projects under Development by Panda International

     The  following  are  additional  Projects  that  Panda  International   is
developing  and  that could become eligible for transfer  to  the  PIC  Project
Portfolio  if  the  conditions for transfer set forth  in  the  PIC  Additional
Projects  Contract  are  satisfied.  Such  Projects,  if  not  required  to  be
transferred  to  the  PIC  Project Portfolio, may, at  the  election  of  Panda
International,  be  transferred  to  the  Issuer  or  the  Company  if  certain
conditions for transfer set forth in the Indentures are satisfied. There can be
no assurance that any Project under development will reach Financial Closing or
achieve Commercial Operations.
     
  The Panda of Nepal Facility
  
     An affiliate of Panda International has an ownership interest (expected to
be  75%  following  completion of financing) in a joint venture  with  a  major
hydroelectric engineering company and a local Nepalese party to build a  36  MW
hydroelectric facility on the upper Bhote Koshi River in Nepal. The  Government
of  Nepal  issued  a Certificate of Registration to the joint venture  in  June
1996.  A  power purchase agreement with the Nepal Electricity Authority ("NEA")
and  a project agreement with the Government of Nepal obligating the Government
of  Nepal  to  guarantee  NEA's payment obligations and provide  certain  other
support  and  incentives  were  signed in July  1996.  A  fixed  price  turnkey
engineering, procurement and construction contract for the project  was  signed
with  China Gezhouba Construction Group Corporation in October 1996 and amended
and  restated  in December 1996. Panda International has received a  commitment
letter  from  a multilateral agency to provide debt financing for this  Project
and is currently negotiating the documents governing such financing, as well as
seeking  additional  financing for this Project.  In order  to  assist  in  the
funding  of  this Project, Panda International is considering the  transfer  of
ownership  of the applicable affiliate to the Issuer if certain conditions  for
transfer  set forth in the Indentures are satisfied; however, there can  be  no
assurance that such action will occur.
     
  The Lapanga Facility
  
     In  August 1994, an affiliate of Panda International acquired from another
independent  power  developer a 90% interest in  a  Project  company  that  had
entered into a power purchase agreement with the Orissa State Electricity Board
for  a  proposed 500 MW coal-fired power project to be located in the State  of
Orissa,  India. Certain of the Central Governmental approvals for  the  Project
have  been  obtained.  Although Panda International  believes  that  the  power
purchase  agreement is valid and enforceable, the State of Orissa has  given  a
notice of cancellation of such agreement to Panda International, as well as  to
several  other  third parties with respect to their respective  power  purchase
agreements.  Panda International has objected to such notice and  is  presently
conducting  discussions with the government of the State of Orissa. Development
efforts have been delayed pending resolution of this dispute.
     
  The Kathleen Facility
  
     The  Kathleen  Facility  is planned to be a combined-cycle,  natural  gas-
fired, intermediate-load cogeneration facility to be located on a 7.5-acre site
owned  by  a  wholly-owned indirect subsidiary of the  Company  (the  "Kathleen
Partnership")  in  an  industrial  park near Lakeland,  Florida.  The  Kathleen
Partnership  entered  into  a  power  purchase  agreement  with  Florida  Power
Corporation ("Florida Power") in 1991.
     
     The  Kathleen  Partnership  and Florida Power are  engaged  in  litigation
before  state  and  federal forums in Florida over the  interpretation  of  the
Kathleen  power purchase agreement, including whether the size of the  Kathleen
Facility  as  designed by Panda International conforms with the power  purchase
agreement.  See "Legal Proceedings--Florida Power Proceedings." The outcome  of
this litigation will determine whether construction of the Kathleen Facility is
initiated  and  completed. Pursuant to arrangements with GE Capital  under  the
documents  relating to the financing of the Brandywine Facility,  the  entities
which  are partners of the Kathleen Partnership must remain as subsidiaries  of
PEC  but  will be required to be transferred to PIC, in which case the Kathleen
Facility would become part of the PIC Project Portfolio if, and within 180 days
after,  the  Kathleen  Facility reaches the earlier  of  Financial  Closing  or
Commercial Operations.
     
       FOREIGN EXCHANGE SYSTEM IN THE PRC AND EXCHANGE RATE INFORMATION
                                       
General

     The PRC imposes control over its foreign currency reserves in part through
direct  regulation of the conversion of Renminbi into foreign exchange  and  in
part  through restrictions on foreign imports. The SAFE, under the  supervision
of   the  PBOC,  is  responsible  for  matters  relating  to  foreign  exchange
administration and remittance of foreign exchange abroad. The Foreign  Exchange
Control  Regulations of the People's Republic of China, which  took  effect  on
April  1,  1996,  and  which replaced the interim foreign exchange  regulations
adopted in 1980, provide the basis for regulating foreign exchange transactions
in  China. Other rules, regulations and implementation measures have also  been
issued which further establish the legal framework for foreign exchange control
in China consistent with the PRC economic reform program.
     
     The  Administrative Regulations for the Settlement, Sale  and  Payment  of
Foreign  Exchange which took effect on July 1, 1996, allow FIEs  (such  as  the
Joint Ventures) to obtain their foreign exchange through transactions either at
the  Swap  Centers  or through the China Foreign Exchange Trading  Center  (the
"CFETC"),  an  inter-bank foreign exchange trading market.  Swap  Centers  were
first  established  pursuant to the Provisions of the  State  Council  for  the
Encouragement  of  Foreign Investment, promulgated in October  1986,  and  were
designed  to  provide  a  controlled setting  under  which  Renminbi  could  be
exchanged for foreign currencies at rates approaching market levels.  In  April
1994,  the  CFETC  was  created  in  Shanghai to  coordinate  foreign  exchange
transactions  nationwide among domestic enterprises according  to  standardized
rules  and to replace the two-tier exchange rate system that consisted  of  the
official  rate  and the swap center rates. The CFETC and the Swap  Centers  are
regulated by government policies and are administered by the SAFE. It has  been
indicated that Swap Centers will be unified with the CFETC in the future.
     
     Under  the new system, a distinction is made between current account items
such  as interest payments on foreign loans and profit distributions to foreign
parties  to a FIE and capital account items such as principal of foreign  loans
and   payment  under  guarantees.  Chinese  enterprises  (including  FIEs)  are
permitted  to  buy  foreign exchange from State-designated banks  for  interest
payments on foreign loans upon verification by SAFE of its authenticity and for
profit  distributions  on  presentation of  board  resolutions  regarding  such
distributions.  Purchase  of foreign exchange from State-designated  banks  for
repayment  of  principal of foreign loans requires (i) the  presentation  of  a
certificate of registration for foreign loans which can be obtained from  SAFE,
the  loan  contract  and  notice of repayment from the  creditor  and  (ii)  an
application  to  SAFE  for verification for such purchase. Chinese  authorities
have  termed  the  current  system as one that allows  free  convertibility  of
Renminbi for purposes of current account items.
     
Historical Exchange Rates

     During the nine-year period from 1985 through the end of 1993, there was a
gradual  but  significant devaluation of the Renminbi against the U.S.  dollar.
The  official Renminbi to U.S. dollar exchange rate changed from an average  of
RMB  3.20  to $1.00 in 1985, to RMB 5.81 to $1.00 at the end of 1993. Effective
January 1, 1994, a new unitary, managed floating-rate system was introduced  in
China.  As a result of the adoption of the new system, on January 1, 1994,  the
official exchange rate for Renminbi was revalued from approximately RMB 5.8  to
$1.00  to  approximately RMB 8.7 to $1.00. Since then, the  exchange  rate  has
remained relatively stable (see table below).
     
     Until December 31, 1993, the Noon Buying Rate (as defined in note 1 to the
table below) was closely related to the official rate, but varied significantly
from  the  rate  available  at Swap Centers. After January  1,  1994,  and  the
unification  of  the foreign currency exchange system, there  has  not  been  a
significant  difference  between  the Noon  Buying  Rate  and  the  PBOC  Rate.
Currently,  the PBOC sets and publishes daily a base exchange rate  (the  "PBOC
Rate")  with  reference primarily to the supply and demand of Renminbi  against
the  U.S.  dollar on the CFETC during the prior day. The PBOC also  takes  into
account  other  factors  such as the general conditions  in  the  international
foreign  exchange  markets.  Authorized banks and  financial  institutions  are
allowed  to  quote  buy and sell rates for Renminbi within  a  specified  range
around  the daily PBOC Rate. Currently, the PBOC allows Renminbi trading within
a  range of 0.25% above and below the daily PBOC Rate. As of April 4, 1997, the
Noon  Buying Rate was RMB 8.3268 to $1.00. As of April 4, 1997, the  PBOC  Rate
was RMB 8.2969 to $1.00.
     
     The  following  table  sets forth certain information concerning  exchange
rates between Renminbi and U.S. dollars for the periods indicated:
     
     
                                  Noon Buying Rate(1)
Period                 Period   Average(2)    High       Low
                        End
                              (expressed in RMB per $)
                                                         
1993                 5.8145     5.7776     5.8245     5.7076
1994                 8.6044     8.6402     8.7128     8.5999
1995                 8.3374     8.3685     8.4600     8.2916
1996                                                  
 First Quarter       8.3538     8.3407     8.3549     8.3292
 Second Quarter      8.3421     8.3437     8.3542     8.3403
 Third Quarter       8.3317     8.3363     8.3452     8.3330
 Fourth Quarter      8.3284     8.3293     8.3317     8.3267
     
__________________________
Source:   Federal Reserve Statistical Release, The Federal Reserve.
Notes:
(1)  The  Noon  Buying  Rate  is the Noon Buying Rate in  New  York  for  cable
     transfers payable in foreign currencies as certified for customs  purposes
     by the Federal Reserve Bank of New York.

(2)  Determined  by averaging the rates on the last business day of each  month
     during  the  years 1993 through 1995 and, with respect to each quarter  of
     1996,  by averaging the rates on each Friday of the quarter, or if  Friday
     was not a day upon which a rate was available, then the next preceding day
     upon which a rate was available.

Treatment of Domestic Enterprises and FIEs

     Historically,  purely domestic enterprises and FIEs (such as  Sino-foreign
joint   ventures   and  wholly  foreign-owned  companies)   were   subject   to
substantially  different  treatment with respect to foreign  exchange  matters.
Recently, many of these distinctions have been eliminated.
     
     In  general,  the  PRC  Foreign Exchange Control Regulations,  which  took
effect on April 1, 1996, require that domestic enterprises operating in the PRC
must  price  and  sell  their goods and services in the PRC  in  Renminbi.  Any
foreign  exchange  revenues  received by  such  enterprises  must  be  sold  to
authorized  foreign exchange banks in the PRC. Under the new  system,  domestic
enterprises and institutions are permitted to buy foreign exchange from  State-
designated   banks   at  designated  times  on  presentation   of   appropriate
documentation  establishing the existence of import contracts or payment  notes
from  overseas financial institutions. Such enterprises also are  permitted  to
purchase foreign exchange for the import of certain products subject to quotas,
import  permits  and  registration controls. FIEs are  permitted  to  apply  to
purchase  foreign  exchange  for  the  payment  of  dividends  that  have  been
authorized  as payable in foreign currency. Conversion and payment  are  to  be
effected on the basis of a written resolution on profit distribution passed  by
the  enterprise's board of directors and evidence that the enterprise has  paid
all required PRC taxes.
     
     On  June 20, 1996, the PBOC issued a notice allowing all FIEs to use  both
Swap  Centers  and  designated foreign exchange banks  to  convert  currencies.
Pursuant  to  this  notice, which took effect on July 1, 1996,  FIEs  may  open
foreign  exchange  accounts  for current as well as capital  transactions.  The
capital  transactions,  however, remain subject to SAFE registration  approval.
The  SAFE  has authority to establish ceilings on the total amount  of  foreign
currency   amount  that  a  FIE  may  maintain  in  its  account  for   current
transactions. Such ceilings are to be set by reference to the level of  foreign
capital actually invested in the enterprise and the foreign currency cash  flow
needs of the enterprise.
     
     If  foreign debts of FIEs are properly filed for record with the  SAFE  or
its  local  branches, and a Foreign Debt Registration Certificate is  obtained,
future  repayment  of  principal  and  interest  are  subject  to  verification
processing  by the SAFE or its local branches upon producing the  Foreign  Debt
Registration Certificate, the loan agreement and a lender's repayment notice. A
verification  paper  is  then issued for conversion  and  purchase  of  foreign
exchange  at  authorized banks or the FIE may use its own foreign  exchange  to
make  the  payment. For interest payments, once the SAFE has verified that  the
interest  payment transaction is legitimate, the FIE may use  its  own  foreign
exchange  or  may  purchase foreign exchange at authorized banks  to  make  the
payment.
     
      DESCRIPTION OF PRINCIPAL DOCUMENTS RELATING TO THE LUANNAN FACILITY
                                       
     The   following  is  a  description  of  selected  provisions  of  certain
agreements relating to the Luannan Facility and should not be considered to  be
a full statement of the terms and provisions of such agreements.
     
Power Purchase Agreement

     An  Electric  Energy  Purchase and Sales Agreement (the  "Energy  Purchase
Agreement")  and an Interconnection Agreement (the "Interconnection Agreement")
among  Tangshan Panda, Tangshan Pan-Western and North China Power Company  were
each  executed  in September 1995 and amended by a Supplemental  Agreement  for
Interconnection  Agreement and Electric Energy Purchase  and  Sales  Agreement,
dated  February 10, 1996 (the "Supplemental Agreement," collectively  with  the
Energy  Purchase  Agreement and Interconnection Agreement, the  "Luannan  Power
Purchase  Agreement"),  among Tangshan Panda, Tangshan  Pan-Western  and  North
China  Power  Company. Tangshan Panda and Tangshan Pan-Western are jointly  and
severally  liable  for the obligations of the seller under  the  Luannan  Power
Purchase  Agreement. The Luannan Power Purchase Agreement sets out  the  rights
and  obligations of Tangshan Panda, Tangshan Pan-Western and North China  Power
Company  relating  to,  among  other  things,  the  development,  construction,
operation  and  maintenance of the Luannan Facility; the setting of  production
output and energy purchase requirements; risk allocation in the event of  force
majeure and changes in the regulatory environment; events of default; rights of
termination  and the consequences thereof; assignment and transfer of  interest
thereunder; and dispute resolution.
     
     Term. The Luannan Power Purchase Agreement has a term of 20 years from the
Luannan Commercial Operation Date.
     
     Power Purchase. The Luannan Power Purchase Agreement divides each 24  hour
period  into three eight-hour (which are not required to be consecutive  hours)
delivery  periods, Peak Hours, Non-Peak Hours and Trough Hours.  Commencing  on
the  Luannan  Commercial Operation Date, subject to the  limitations  on  gross
generation  amount  during  Non--Peak Hours  and  Trough  Hours  listed  below,
Tangshan  Panda and Tangshan Pan-Western agree to sell, and North  China  Power
Company  agrees  to purchase and take, all electric energy delivered  to  North
China Power Company from the Luannan Facility. Tangshan Panda and Tangshan Pan-
Western may not sell any electric energy directly to third parties without  the
consent of North China Power Company. Unless otherwise requested by North China
Power  Company,  during Non-Peak Hours and Trough Hours, the  Luannan  Facility
will  not  operate beyond the gross generation amounts specified  below  on  an
average  basis  for  the entire eight-hour period (exceeding these  limitations
during  a  period is permitted as long as the overall average gross  generation
amount  during  the  eight-hour period does not exceed these  limitations).  No
limitation on gross generation amount produced by the Luannan Facility will  be
imposed  during Peak Hours and the amount set forth below for Peak Hours  is  a
minimum,  not a maximum, gross generation amount for the Luannan Facility.  The
gross  generation  amounts for different periods are  as  follows,  subject  to
adjustments agreed by both parties:
     
      As the first unit starts generation at the Luannan Commercial Operation
      Date:
      
         During Peak Hours (minimum)                      400,000 kWh
         During Non-Peak Hours (maximum)                  260,000 kWh
         During Trough Hours (maximum)                    240,000 kWh
                                   
          and  as the second unit starts generation at the Luannan Commercial
          Operation Date:
                                   
         During Peak Hours (minimum)                      800,000 kWh
         During Non-Peak Hours (maximum)                  520,000 kWh
         During Trough Hours (maximum)                    480,000 kWh
                                                          
     Peak  Hours, Non-Peak Hours and Trough Hours in a particular day  will  be
determined by the dispatch department of North China Power.
     
     Tangshan  Panda  and  Tangshan Pan-Western are required  to  negotiate  an
Interconnection  Dispatch Agreement (the "Interconnection Dispatch  Agreement")
with  the  Tangshan  Power Supply Bureau of North China Power  Company  shortly
prior  to  the Luannan Commercial Operation Date. This Interconnection Dispatch
Agreement is expected to set out the specific details as to the dispatch of the
Luannan  Facility  and will be a part of the Luannan Power Purchase  Agreement.
The  provisions  described above only set forth the basis for dispatch  of  the
Luannan  Facility.  The  Issuer  believes  that  the  Interconnection  Dispatch
Agreement  will  provide for the Luannan Facility to be  dispatched  at  levels
represented  by the maximums specified in the Luannan Power Purchase  Agreement
for  Non-Peak  Hours and Trough Hours, and the Luannan Engineering  Report  was
prepared on this basis. North China Power Company is required to take  all  net
electrical  output delivered by the Luannan Facility during Peak Hours  without
any   dispatch  limitations.  There  are,  however,  no  assurances  that   the
Interconnection Dispatch Agreement as finally negotiated will not make  changes
to  the  provisions  of the Luannan Power Purchase Agreement  described  herein
including dispatch rights and penalties relating thereto.
     
     North  China Power Company will not be required to pay Tangshan Panda  and
Tangshan  Pan-Western for any electric energy generated by the Luannan Facility
during  Non-Peak  Hours  and Trough Hours that exceeds  the  generation  amount
(based  on  the overall average gross generation amount during the  eight  hour
period)  dispatched  in  Non-Peak  Hours and  Trough  Hours,  respectively,  as
instructed by Tangshan Power Supply Bureau for such periods consistent with the
requirements  of  the Luannan Power Purchase Agreement and the  Interconnection
Dispatch Agreement.
     
     If  the  electric  energy load delivered during Trough Hours  exceeds  the
maximum  limitations  set forth above, Tangshan Panda and Tangshan  Pan-Western
will,  unless such additional electric energy is required by North China  Power
Company,  compensate  North China Power Company by  paying  North  China  Power
Company  a  peak  adjustment  compensation fee equivalent  to  five  times  the
applicable power price of the excess amount.
     
     If  the  Luannan Facility does not deliver, during Peak Hours, the minimum
quantity of electric energy stipulated in the Luannan Power Purchase Agreement,
Tangshan  Panda  and  Tangshan Pan-Western will compensate  North  China  Power
Company,  at  five times the applicable power price, for the shortfall  between
the  actual amount of electric energy produced and the required electric energy
production.  In addition, if North China Power Company's actions  or  inactions
cause  the  Luannan Facility to fail to deliver the required  electric  energy,
North China Power Company will pay to Tangshan Panda and Tangshan Pan-Western a
compensation  fee  to be calculated in accordance with the  following  formula:
(amount  of  required  power  to be delivered less actual  power  delivered)  x
applicable power price.
     
     Power  Tariff. The electricity price to be charged under the Luannan Power
Purchase Agreement is provided in the Pricing Document, which is separate from,
but  incorporated  by reference in, the Luannan Power Purchase  Agreement.  The
electricity  price  is  comprised of fixed and  variable  components  that  are
required  to  be adjusted according to an approved pricing formula  to  reflect
changes  in  the  capital and operating costs of the Luannan Facility.  Certain
components  of  the power price calculation may be adjusted to  reflect  either
Chinese  or U.S. inflation, based upon specified indices. Adjustments are  also
provided for foreign exchange rate fluctuation in order to mitigate the Luannan
Facility's exposure to currency risks. There are pass-through provisions in the
Pricing Document for increases or decreases in the cost of coal against a  coal
market  index set forth in the Pricing Document, and the Pricing Document  also
has  provisions for pass-through or make-whole calculations relating to certain
construction capital cost items. Under the Pricing Document, the Joint Ventures
have  the  right to request a determination of a new power price whenever  they
determine  that  changes in the price components require a  new  determination;
however, it is anticipated that they will generally apply annually for  changes
in rates. Although paid in Renminbi, certain components (foreign site managers'
salaries,  operating, maintenance, engineering and training  services,  certain
foreign  travel  expense  and insurance costs, certain financing  expenses  and
equipment  engineering services) of the tariffs are calculated in U.S.  dollars
as  a  result of the currency rate adjustments. Tariffs are required to be paid
every  30  days  by  North China Power Company. North China  Power  Company  is
obligated to pay by the 15th day of the calendar month following the month  for
which  such payment is being made. Any failure by either party to make payments
will  entitle the other party to receive accrued interest, to be paid with  the
next  scheduled payment. The interest rate applied for the delayed  payment  is
0.05% per day.
     
     The  Issuer  and  the Joint Ventures have no experience  in  applying  for
electricity   prices  determined  in  accordance  with  the   pricing   formula
incorporated  in  the  Pricing  Document. Use of  such  a  pricing  formula  to
establish  electricity  prices is a recent development  in  the  Chinese  power
industry.  Although the Issuer, based on discussions with the Pricing  Approval
Authority, believes that the pricing formula will be applied to permit recovery
of  all  Luannan  Facility  costs and anticipated  returns,  there  can  be  no
assurance  that  the  Joint Ventures will be able to  charge  rates  that  will
generate  sufficient  revenues  to  enable the  Joint  Ventures  to  repay  the
principal of and interest on the Shareholder Loans when and as due, or that any
application  for an increase in the power rate will be approved by the  Pricing
Approval  Authority. See "Risk Factors--Considerations Relating  to  the  PRC--
Governmental Regulation of Power Rules."
     
     Interconnection;  Transmission Service. Commencing on the  interconnection
date and continuing for the term of the Luannan Power Purchase Agreement, North
China Power Company's facilities will transmit electric energy delivered by the
Luannan Facility to the Jing-Jin-Tang Grid.
     
     Commercial  Operation of the Luannan Facility. In order to  establish  the
Luannan Commercial Operation Date, Tangshan Panda and Tangshan Pan-Western will
give  North China Power Company ten days' prior written notice of their initial
72-hour  test run of the Luannan Facility. To establish the Luannan  Commercial
Operation Date, the Luannan Facility must generate electric power at full  load
for  a continuous 72 hour period. North China Power Company, Tangshan Panda and
Tangshan   Pan-Western  will  sign  a  certificate  establishing  the   Luannan
Commercial Operation Date on the day that the relevant test or additional  test
of the Luannan Facility is successfully completed.
     
     After the Luannan Commercial Operation Date, the Luannan Facility will  be
normally  dispatched by North China Power Company so as to  allow  the  Luannan
Facility  to  operate in accordance with the Luannan Power Purchase  Agreement.
Concurrently,  North China Power Company agrees as follows:  (a)  the  dispatch
load curve will provide for Non-Peak Hours of operation that permit the Luannan
Facility  to  have a ramp period such that the maximum capacity of the  Luannan
Facility  may  be  generated during all Peak Hour periods and (b)  North  China
Power  Company will arrange frequency and voltage adjustments, but North  China
Power Company may not dispatch the Luannan Facility's reactive power beyond the
capabilities  of  the  Luannan Facility's equipment.  The  ramp  rates  of  the
dispatched  load curves of the Luannan Facility will not exceed the requirement
of the Jing-Jin-Tang Grid for generation units of the same type.
     
     Outages;  Maintenance  of  the  Luannan  Facility;  Annual  Overhaul.  The
cumulative annual overhaul outage for the Luannan Facility will not  exceed  55
days.  Outages will be calculated on an actual time elapsed basis. The schedule
for  such outages shall be set by North China Power Company in accordance  with
the  overall  outage  schedule for the Jing-Jin-Tang Grid.  If  the  cumulative
maintenance down time for each electric generating unit of the Luannan Facility
exceeds 55 days in any year, Tangshan Panda and Tangshan Pan-Western will pay a
compensation fee to North China Power Company calculated as follows: (amount of
required  power  to be delivered per day after deduction of an  internal  usage
amount) x (maintenance time exceeding 55 days) x power price.
     
     Responsibility  for  Breach of Contract. Failure  by  Tangshan  Panda  and
Tangshan Pan-Western to deliver the minimum amount of electric energy to  North
China  Power  Company  required by the Luannan Power  Purchase  Agreement  will
entitle North China Power Company to declare a breach of contract. If,  due  to
North China Power Company's fault, Tangshan Panda and Tangshan Pan-Western  are
not  able  to deliver power to North China Power Company as required under  the
Luannan Power Purchase Agreement, Tangshan Panda and Tangshan Pan-Western  will
have  the  right  to  declare a breach of contract.  The  defaulting  party  is
required  to  compensate the non-defaulting party for all of its actual  direct
losses caused by such breach of contract. A delayed payment for power delivered
will be construed as a breach of contract if such delay has lasted more than 15
days.  Late  payments  bear interest at the rate of 0.05%  per  day.  The  non-
defaulting party may elect to terminate the Luannan Power Purchase Agreement if
the defaulting party has neither taken action to cure 30 days after receipt  of
written  notice from the non-defaulting party of its declaration of  breach  of
contract  (which cure may take a longer period as long as it is  being  pursued
with diligence) nor made any required payments (excluding amounts in good faith
dispute).
     
     Force  Majeure.  Each party is excused from performance of its  respective
obligations (except for payment obligations existing prior to the occurrence of
the  force  majeure  event)  under  the Luannan  Power  Purchase  Agreement  if
performance  of  such obligations is adversely affected by an  event  of  force
majeure,  which  includes  any subsequent modifications  or  changes  of  laws,
regulations or rules made by the Central Government or any local government  or
their  agencies that directly or indirectly affects either party's  performance
of such obligations. Each party is generally obligated to take reasonable steps
to  restore  its ability to perform, to limit the damage caused  to  the  other
party  and, under certain circumstances, to negotiate and execute an  amendment
to  the Luannan Power Purchase Agreement. Each party may unilaterally terminate
the  Luannan  Power Purchase Agreement if a force majeure is  declared  by  the
other party and such party does not resume performance within 12 months of  the
date of such declaration.
     
     Termination. The parties may agree to terminate the Luannan Power Purchase
Agreement,  provided  such termination does not damage  the  PRC's  and  public
interests.  Furthermore, the Luannan Power Purchase Agreement may be terminated
by  North  China  Power  Company if, prior to the Luannan Commercial  Operation
Date,  Tangshan Panda and Tangshan Pan-Western cease development of the Luannan
Facility for 12 consecutive months.
     
     Governing Law and Dispute Resolution. The Luannan Power Purchase Agreement
is  to be construed and governed by PRC law. Disputes arising under the Luannan
Power  Purchase  Agreement  are to be attempted  to  be  resolved  by  friendly
consultation between Tangshan Panda, Tangshan Pan-Western and North China Power
Company  for  a  period  of 30 days. In the event that the  dispute  cannot  be
settled  by  mutual discussion within the 30 day period, the dispute  shall  be
settled  by  arbitration  to  be  conducted in Singapore  under  the  Rules  of
Conciliation  and  Arbitration of the ICC. Each party to the  arbitration  will
appoint an arbitrator with the International Court of Arbitration of the ICC to
appoint  a  third. The decision rendered by the arbitral body  will  be  final,
binding and unappealable. See "Risk Factors--Considerations Relating to the PRC-
-Uncertain Enforcement of Foreign Judgments."
     
     Waiver  of  Sovereign Immunity. Each party to the Luannan  Power  Purchase
Agreement  waives  any  rights to immunity it may  have  with  respect  to  its
obligations  arising  under the Luannan Power Purchase  Agreement  or  relating
thereto.
     
Engineering, Procurement and Construction Contract

     The  Engineering, Procurement and Construction Contract, among the Luannan
EPC  Contractor, Tangshan Panda and Tangshan Pan-Western, dated April 24, 1996,
as  amended,  provides  that the Luannan EPC Contractor  will  provide  design,
engineering, equipment and material procurement, support, construction,  start-
up,  performance  testing  and other services in  order  to  make  the  Luannan
Facility fully operational on a fixed price, turnkey basis.
     
     Basic   Obligations.  The  Luannan  EPC  Contractor  is  responsible   for
furnishing  all equipment, services and materials for engineering, procurement,
construction,  start-up and performance testing of the  Luannan  Facility.  The
Luannan  EPC Contractor is required to obtain the permits necessary to complete
its obligations and to conduct its activities in compliance with all applicable
approvals, laws and permits.
     
     Tangshan  Panda and Tangshan Pan-Western are responsible for, among  other
things,  providing the Luannan EPC Contractor with access to the  site  of  the
Luannan  Facility,  providing  any  additional  areas  of  land  necessary   to
accommodate  the Luannan EPC Contractor, and supplying fuel oil  and  coal  for
boiler fuel needed by the Luannan EPC Contractor to conduct performance testing
of   the  Luannan  Facility.  Tangshan  Panda  and  Tangshan  Pan-Western   are
responsible for obtaining all spare parts required for the normal operation  of
the Luannan Facility.
     
     Price and Payment; Security. As payment for the performance of all of  the
Luannan  EPC  Work,  the Luannan EPC Contractor's other obligations  under  the
Luannan EPC Contract, and all costs in connection therewith, Tangshan Panda and
Tangshan Pan-Western have agreed to pay a purchase price of approximately $63.6
million which includes a contingency of approximately $3.0 million. Starting at
September  16, 1996, the price is increased at the pro-rated rate of  0.5%  per
month  through  December 31, 1996. As of December 31, 1996,  the  price  as  so
increased  was approximately $64.7 million. In December 1996, the  Luannan  EPC
Contract was amended to provide for the issuance of a limited notice to proceed
so  that  site work was commenced (upon payment of $2.0 million). An additional
$1.0 million was paid to the Luannan EPC Contractor before March 1, 1997 and an
additional  $1.0  million  was paid before March 31,  1997.  The  price  as  so
escalated is referred to herein as the "Luannan EPC Contract Price."  The  full
notice  to proceed was given prior to May 1, 1997. No payment will be made  for
the  civil  and installation portion of the Luannan EPC Work until  the  actual
completion of such portion exceeds the 10% down payment as described below. The
Luannan  EPC  Contractor will be entitled to payments on  a  monthly  basis  in
accordance with a milestone payment schedule, provided that, in the case of the
civil  and installation portion of the Luannan EPC Work, payments will be  made
for  the  Luannan  EPC Work to be actually completed and, in the  case  of  the
equipment  portion  of  the Luannan EPC Work, payments will  be  made  for  the
percentage in such schedule of such equipment, and, provided further  that  the
Luannan  EPC Contractor's invoice has not been disputed by Tangshan  Panda  and
Tangshan Pan-Western. Tangshan Panda and Tangshan Pan-Western will make a  down
payment  in an amount of 10% of the Luannan EPC Contract Price at the  time  of
giving the notice to proceed. Tangshan Panda and Tangshan Pan-Western, however,
will  withhold  10%  of  such down payment and each progress  payment  made  in
accordance  with  the Luannan EPC Contract as retainage (the "Retainage").  The
Luannan EPC Contractor will provide Tangshan Panda and Tangshan Pan-Western  on
the  Luannan  Commercial  Operation Dates  of  the  first  and  second  plants,
respectively, with a letter of credit each in the amount of 2.5% of the Luannan
EPC  Contract  Price  to  cover  certain liabilities  arising  from  warranties
provided  under  the  Luannan  EPC Contract. A portion  of  Retainage  will  be
returned  by  Tangshan  Panda  and  Tangshan Pan-Western  to  the  Luannan  EPC
Contractor for the principal amount of such letters of credit. The remainder of
the  Retainage  will  be held until completion of punch list  items  and  other
deficiencies.
     
     Schedule.  The  Luannan  EPC Contractor is required  to  complete  certain
milestones  in  accordance  with  a construction  schedule  (the  "Construction
Schedule").  The  Construction Schedule contemplates that the Luannan  Facility
will be ready for commissioning 28 months following the issuance of a notice to
proceed  (the  "Guaranteed  Commercial Operation Date").  If  the  Luannan  EPC
Contractor  fails  to  accomplish a milestone by the time contemplated  in  the
Construction  Schedule  and  Tangshan Panda and  Tangshan  Pan-Western  deliver
written  notice of such failure to the Luannan EPC Contractor, the Luannan  EPC
Contractor  must either complete such milestone or provide Tangshan  Panda  and
Tangshan Pan-Western with a plan of recovery within 3 days after the receipt of
the notice setting forth how the Luannan EPC Contractor intends to achieve such
milestone within 15 days after the receipt of the notice. If the work necessary
to  achieve such milestone cannot be achieved within such 15 days despite  best
efforts  by  the Luannan EPC Contractor, its plan of recovery shall demonstrate
what special steps it will take to assure the earliest possible achievement  of
such milestone (not to exceed 90 days).
     
     If  commercial  operation of the Luannan Facility is not achieved  by  the
Guaranteed  Commercial Operation Date, subject to any extension  allowed  under
the  Luannan EPC Contract, the Luannan EPC Contractor shall pay Tangshan  Panda
and  Tangshan  Pan-Western  $50,000  per  day  for  each  subsequent  day  that
commercial operation is delayed after the Guaranteed Commercial Operation Date,
up  to  a maximum of $18.0 million. However, such penalties could well  not  be
sufficient  to  avoid  a default on the Exchange Notes.  See  "Risk  Factors  -
Project Risks."
     
     Early  Completion  Bonus.  If  the commercial  operation  of  the  Luannan
Facility  occurs  prior to the Guaranteed Commercial Operation  Date,  Tangshan
Panda  and  Tangshan Pan-Western shall pay the Luannan EPC Contractor,  $12,500
per  day as a bonus, for each day in the 15 day period preceding the Guaranteed
Commercial  Operation  Date  in which commercial  operation  is  achieved,  and
$24,900  per day for each day in the next preceding 15 days in which commercial
operation is achieved. No additional early completion bonus shall be  paid  for
early completion more than 30 days prior to the Guaranteed Commercial Operation
Date.
     
     Performance Guarantees. The Luannan EPC Contractor guarantees that (i) the
net  dependable  capacity ("Net Dependable Capacity") of the  Luannan  Facility
shall  be (as corrected to design condition) at least 102,000 kW; (ii) the  net
heat rate of the Luannan Facility operated at summer design conditions shall be
equal  to,  or less than 12,817 kJ/kWh (LHV); and (iii) the emission and  noise
levels  will meet the requirements of applicable laws and regulations.  In  the
event the Luannan EPC Contractor fails to meet any of the above guarantees,  it
is required to pay liquidated damages as follows:
     
     -    $700/kW below 102,000 kW Net Dependable Capacity;
     
     -    $5,000  for  each kJ/kWh in excess of the net heat rate guarantee  if
          such guaranteed heat rate is exceeded by more than 101%; and
     
     -    $700/kW  where  the  Luannan Facility must operate  at  levels  below
          102,000 kW to meet certain emission requirements.
     
     Liquidated  damages  for  schedule delays and performance  guarantees  are
limited to 35% of the Luannan EPC Contract Price.
     
     The Luannan EPC Contractor will also be paid bonuses for exceeding certain
performance  guarantees in an amount of:  (i) $550 per  kW  by  which  the  Net
Dependable Capacity of the Luannan Facility exceeds 102,000 kW (not  to  exceed
$1.0  million); and (ii) $1,165 per kJ/kWh by which the net heat  rate  of  the
Luannan  Facility is less than 99% of 12,817 kJ/kWh (LHV) (not to  exceed  $1.0
million).
     
     Adjustments   to  the  Luannan  EPC  Contract  Price  and/or  Construction
Schedule. Although the Luannan EPC Contractor has agreed to perform the Luannan
EPC Work for the Luannan EPC Contract Price in accordance with certain warranty
obligations, there may be circumstances in which the Luannan EPC Contractor  is
entitled  to an increase in the Luannan EPC Contract Price, or an extension  of
the  Construction Schedule. These circumstances include a change in  law  or  a
force  majeure  event  (as described below), changes in the  Luannan  EPC  Work
requested  by Tangshan Panda and Tangshan Pan-Western that have been agreed  to
by  the  Luannan  EPC  Contractor  or changes  requested  by  the  Luannan  EPC
Contractor  that have been approved by Tangshan Panda and Tangshan  Pan-Western
which, in all cases, would be subject to the change order process set forth  in
the  Luannan  EPC  Contract. In addition, the Luannan  EPC  Contractor  may  be
entitled  to  an equitable adjustment of the Luannan EPC Contract Price  and/or
the Construction Schedule in certain other circumstances, including a delay  or
failure by Tangshan Panda and Tangshan Pan-Western to perform their non-payment
obligations under the Luannan EPC Contract, suspension of Luannan EPC  Work  by
Tangshan Panda and Tangshan Pan-Western and events of force majeure.
     
     Testing. The Luannan EPC Contractor is required to provide Tangshan  Panda
and  Tangshan  Pan-Western  and any institution  providing  financing  for  the
construction of the Luannan Facility a detailed performance test procedure  for
review  and  acceptance  at  least  180 days before  the  expected  test  date.
Performance testing of the Luannan Facility will not begin until Tangshan Panda
and  Tangshan  Pan-Western  and any institution  providing  financing  for  the
construction  of  the Luannan Facility have accepted the test  procedures.  The
Luannan EPC Contractor must give 45 days' written notice prior to the start  of
the performance tests.
     
     Once  the  Luannan EPC Contractor has completed performance  testing  with
respect  to the first plant or both plants and the first plant or both  plants,
as  the  case  may  be, are capable of being operated safely, the  Luannan  EPC
Contractor may submit the performance testing reports together with  a  written
notice  of  commercial  operation, to Tangshan Panda and Tangshan  Pan-Western.
Within  15  business  days of the receipt of such notice,  Tangshan  Panda  and
Tangshan  Pan-Western will either confirm that the requirements for  commercial
operation have been met, or specify to the Luannan EPC Contractor the manner in
which  the requirements for commercial operation have not been met. The Luannan
EPC   Contractor  may  take  appropriate  corrective  action  and  repeat   the
performance  tests if it fails any part of the original test, unless  one  year
has passed since the Guaranteed Commercial Operation Date.
     
     Materials  and  Workmanship Warranty. The Luannan EPC Contractor  warrants
that  all  equipment and other items furnished under the Luannan  EPC  Contract
will  be  new  and  of good quality and will conform to the  kind  and  quality
specified  in the Luannan EPC Contract. The Luannan EPC Contractor is obligated
to  correct any Luannan EPC Work performed under the Luannan EPC Contract that,
at  any  time  for a period of one year after final acceptance of  the  Luannan
Facility  by  Tangshan Panda and Tangshan Pan-Western or, if applicable,  after
the  date of the repair, proves to be improper or defective with regard to  the
provisions of the Luannan EPC Contract in design, material or workmanship.
     
     Engineering  and  Design Warranty. The Luannan EPC  Contractor  guarantees
that  it  will  perform  all  construction surveying,  engineering  and  design
services as of the final acceptance of the Luannan Facility in accordance  with
sound  engineering practice and the requirements of the Luannan  EPC  Contract,
and  that the Luannan Facility will be free of all defects and deficiencies and
will  be  operational in compliance with the Luannan EPC Contract, the  Luannan
Power  Purchase Agreement and all applicable permits and laws. The Luannan  EPC
Contractor  will  obtain  from its subcontractors or  vendors,  guarantees  and
warranties  with respect to Luannan EPC Work performed and equipment  used  and
installed under the Luannan EPC Contract, which guarantees and warranties  will
equal  or exceed those provided by the Luannan EPC Contractor and will be  made
available  and  assignable  to Tangshan Panda and Tangshan  Pan-Western  for  a
period of at least one year after the Luannan Commercial Operation Date.
     
     Force  Majeure.  Any  party to the Luannan EPC Contract  is  excused  from
performance  of  its  obligations under the Luannan EPC Contract  for  a  force
majeure  event.  A force majeure event under the Luannan EPC Contract  includes
events,  conditions  or  circumstances beyond the reasonable  control  of,  and
without  the  fault  or  negligence of, the party affected,  that  despite  all
reasonable  efforts of the party affected to prevent it, cause a  material  and
adverse  delay  or disruption in the performance of the Luannan  EPC  Contract.
Examples  of  force majeure events are various natural disasters,  fires,  war,
civil  disturbances,  riots  and certain actions of  a  court  or  other  legal
authority.  Force  majeure events do not include failure or inability  to  make
payment or strikes or labor disputes of vendors and the subcontractors  of  the
Luannan EPC Contractor.
     
     Event  of  Default. The events of default applicable to  the  Luannan  EPC
Contractor  include, without limitation, failure to perform in accordance  with
the  Luannan  EPC  Contract,  breach of any of  the  Luannan  EPC  Contractor's
covenants, agreements, representations or warranties (if not remedied within 90
days,  of  notice  to  the Luannan EPC Contractor), and certain  insolvency  or
bankruptcy events relating to the Luannan EPC Contractor.
     
     The  Luannan  EPC  Contractor may terminate the Luannan  EPC  Contract  in
certain  instances  if  the  Luannan Facility is damaged  or  destroyed  during
construction, other than as a result of the Luannan EPC Contractor's actions or
failure  to act, and Tangshan Panda and Tangshan Pan-Western notify the Luannan
EPC Contractor that neither insurance proceeds nor any other adequate source of
funds will be made available for the repair or restoration of such damage.
     
     Indemnification.  The  Luannan  EPC Contractor  has  agreed  to  indemnify
Tangshan  Panda  and  Tangshan  Pan-Western for all  claims,  damages,  losses,
liabilities and expenses (including court costs and reasonable attorneys' fees)
indirectly  or directly arising out of, or resulting from, a negligent  act  or
omission  of  the  Luannan EPC Contractor, or any subcontractor  or  vendor  or
anyone directly or indirectly employed by any of them, or anyone for whose acts
any  of  them  may  be liable. The Luannan EPC Contractor has  also  agreed  to
indemnify  Tangshan  Panda  and Tangshan Pan-Western  for  certain  claims  and
expenses  arising  from allegations that the Luannan EPC  Contractor  infringed
upon  intellectual property rights in its performance of the EPC Work. Tangshan
Panda  and  Tangshan  Pan-Western have agreed  to  indemnify  the  Luannan  EPC
Contractor and its officers, directors, agents, servants and employees from any
claims,  suits,  damages and costs directly resulting from  the  negligence  or
willful  misconduct by Tangshan Panda and Tangshan Pan-Western that  materially
and  adversely  affect  the Luannan EPC Contract, with the  understanding  that
Tangshan Panda and Tangshan Pan-Western are entitled to control and direct  the
defense of any such claim or litigation.
     
     Governing  Law and Disputes. The Luannan EPC Contract is governed  by  the
laws of the PRC, exclusive of conflicts of laws provisions. Any dispute will be
initially settled through friendly consultation. If the parties do not reach an
amicable resolution within 30 days, either party may submit the dispute to  the
International  Court  of Arbitration of the ICC, as the  exclusive  forum,  for
binding  arbitration  to  be held in Singapore. For convenience  purposes,  the
parties  may mutually agree to hold arbitration in Beijing, China for  disputes
with  a  value  below $1.0 million. In each case the Rules of Conciliation  and
Arbitration  of  the  ICC  shall govern the proceedings.  See  "Risk  Factors--
Considerations   Relating  to  the  PRC--Uncertain   Enforcement   of   Foreign
Judgments."
     
     CHEXIM  Guarantee.  It is a requirement of the Luannan EPC  Contract  that
CHEXIM  shall provide Tangshan Panda and Tangshan Pan-Western with  the  CHEXIM
Guarantee in an amount equal to 35% of the Luannan EPC Contract Price prior  to
the  closing  of  the  Prior Offering. The amount of the  CHEXIM  Guarantee  is
approximately $22.7 million.  Tangshan Panda and Tangshan Pan-Western will have
the  unconditional  right  to draw upon the CHEXIM  Guarantee  for  payment  of
liquidated damages or termination payments under the Luannan EPC Contract.  The
CHEXIM  Guarantee shall be a continuing guarantee of payment remaining in  full
force  and  effect  until  six months after Tangshan Panda  and  Tangshan  Pan-
Western's acceptance of the Luannan Commercial Operation Date.
     
Heat Network Construction Agreement

     Tangshan  Pan-Sino and Tangshan Engineering entered into the Heat  Network
Construction  Agreement on June 20, 1996 under which Tangshan Engineering  will
build the Network. The cost for construction of the Network, which will consist
of  12.1  kilometers of hot water pipeline, 8.78 kilometers of steam  pipeline,
heat  exchange  stations,  heat control equipment and  civil  construction,  is
approximately  RMB  24.17  million  ($2.9 million).  The  cost  is  subject  to
escalation according to the Chinese State Statistic Bureau Price Index.
     
Transmission Facilities Construction Agreement

     The  Luannan Transmission Facilities Construction Agreement sets  out  the
rights  and  obligations of North China Power Company, as Luannan  Transmission
Facilities Contractor, and Tangshan Pan-Sino, relating to, among other  things,
price,   the  scope  of  work,  the  performance  guarantees  of  the   Luannan
Transmission  Facilities  Contractor and damages  and  remedies  in  connection
therewith.
     
     Scope   of  Work.  The  Luannan  Transmission  Facilities  Contractor   is
responsible for the construction of the Luannan Transmission Facilities.
     
     Total  Construction  Cost; Other Costs. Pursuant to  separate  contractual
arrangements, the Luannan Transmission Facilities Loan of RMB 78.2 million,  to
be adjusted for inflation from December 31, 1994 to the date of issuance of the
notice  to  proceed with preliminary design (the "Total Transmission Facilities
Construction  Cost"),  will  be  made  by  Tangshan  Pan-Sino  to  the  Luannan
Transmission  Facilities Contractor through a PRC financial institution,  China
Information  Trust  and  Investment Corp., for the  construction  cost  of  the
Luannan  Transmission  Facilities. As of March 10, 1997,  the  aggregate  Total
Transmission  Facilities Construction Cost was estimated  to  be  approximately
RMB  83.7  million  (approximately  $10.1  million).   The  Total  Transmission
Facilities  Construction Cost will cover the cost of  all  work  involved.  The
Renminbi amount of the Total Transmission Facilities Construction Cost will  be
converted into U.S. dollars on the date of the applicable loan advance  at  the
then-prevailing  exchange  rate as quoted by the SAFE.  If  North  China  Power
Company  is  not  able  to obtain approvals to borrow  and  repay  the  Luannan
Transmission  Facilities Loan in U.S. dollars, it has the right to  borrow  and
repay the loan in Renminbi, in which event the parties have agreed to negotiate
an  equitable  allocation of the exchange rate risk. The  Luannan  Transmission
Facilities  Loan will be made in accordance with the following  schedule:  10%,
50%  and 30% of the Total Transmission Facilities Construction Cost payable  on
the date Tangshan Pan-Sino gives the Luannan Transmission Facilities Contractor
the  notice  to proceed with preliminary design under the Luannan  Transmission
Facilities  Construction  Agreement  and  six  months  and  12  months   after,
respectively,  with  the  remainder payable  upon  completion  of  the  Luannan
Facility. The loan will bear interest at the actual rate of interest charged by
international lenders to Tangshan Pan-Sino (excluding fees), but not to  exceed
12%  simple  interest  per  annum. Principal and interest  on  all  outstanding
amounts of the Transmission Facilities Loan will be amortized over a period  of
ten  years in 20 equal consecutive semi-annual payments commencing on the first
to  occur  of  September 30th or March 31st immediately following  the  Luannan
Commercial  Operation Date. Any amounts not paid when due  shall  bear  default
interest  from the date due at a rate of 18% per annum until paid. Pursuant  to
the Luannan Transmission Facilities Construction Agreement, unless the scope of
work  changes  at  the request of Tangshan Pan-Sino, or the Total  Transmission
Facilities Construction Cost is adversely affected by an event of force majeure
provided thereunder, or a breach by Tangshan Pan-Sino of its obligations  under
the  Luannan  Transmission Facilities Construction Agreement, no adjustment  of
the   Total  Transmission  Facilities  Construction  Cost  shall  be  permitted
(excluding the index adjustment described above).
     
     Performance  Guarantees.  The Luannan Transmission  Facilities  Contractor
guarantees  that an adequate reverse supply of electric power  to  the  Luannan
Facility will be supplied to satisfy the needs of the general contractor of the
Luannan Facility for test--runs of the Luannan Facility, that the work involved
will  be completed in such a fashion that the Luannan Facility will be able  to
transmit  continuously and/or intermittently so as to meet the requirements  of
the  interconnecting system and that design, construction and  installation  of
the Luannan Transmission Facilities will be completed with new materials and in
a  good  and workmanlike manner in accordance with the standards for  the  same
category of transmission lines and substations adopted by North China Power.
     
     Ownership;  Maintenance.  The Luannan Transmission  Facilities  Contractor
will  own  the  Luannan  Transmission Facilities after the  completion  of  the
Luannan  Transmission  Facilities  and, accordingly,  perform  all  operations,
maintenance and repair of the Luannan Transmission Facilities during  the  term
of the Luannan Power Purchase Agreement
     
     Damages. If Tangshan Pan-Sino breaches the Luannan Transmission Facilities
Construction Agreement, the Luannan Transmission Facilities Contractor will  be
entitled  to  receive  appropriate schedule relief  required  because  of  such
breach,  and  to any increased costs in performing the work involved  resulting
from the breach.
     
     If the Luannan Transmission Facilities Contractor fails to meet any of its
guarantees  and  the default has not been cured for 60 days, Tangshan  Pan-Sino
may  assume  responsibility  for completing all or  any  portion  of  the  work
involved  at  the  Luannan Transmission Facilities Contractor's  expense,  with
payments of expenses by Tangshan Pan-Sino for such work to be treated as  loans
of  a  portion of the Total Transmission Facilities Construction  Cost  to  the
Luannan  Transmission Facilities Contractor. In the event  that  such  expenses
exceed  any  balance  not  yet  loaned  on the  Total  Transmission  Facilities
Construction Cost, the Luannan Transmission Facilities Contractor will promptly
pay or reimburse Tangshan Pan-Sino for such expenses.
     
     In  case  of  breach of contract, the breaching party shall be liable  for
damages for loss to the other party. There are, however, no assurances that any
damages  collected  due  to  a  breach by the Luannan  Transmission  Facilities
Contractor  would  be sufficient (or paid in time) to avoid a  default  on  the
Shareholder Loans and, in turn, on the Issuer Note, and to enable the Issuer to
avoid a default on the Exchange Notes. See "Risk Factors - Project Risks."
     
Coal Supply Agreements

     The  Issuer  expects  that  the Luannan Facility  will  use  approximately
450,000  metric  tons of coal per year.  The principal fuel  supplier  for  the
Luannan  Facility  is  the Qianjiaying Mine, which is  owned  and  operated  by
Kailuan  Coal,  a  state-owned coal mining company.  The  Qianjiaying  Mine  is
expected to supply up to 300,000 metric tons of coal per year.  Tangshan  Panda
and  Tangshan Pan-Western will also purchase coal from the other local  Luannan
Coal Suppliers to secure the remaining coal demand.
     
     Each Luannan Coal Supplier will supply coal to Tangshan Panda and Tangshan
Pan-Western pursuant to its respective coal supply agreement (each, a  "Luannan
Coal Supply Agreement" and collectively, the "Luannan Coal Supply Agreements").
The  term  of  each Luannan Coal Supply Agreement is 10 years  from  the  first
purchase of coal by Tangshan Panda and Tangshan Pan-Western. Each Luannan  Coal
Supply  Agreement  sets out the rights and obligations of  Tangshan  Panda  and
Tangshan  Pan-Western  and its respective Luannan Coal Supplier,  relating  to,
among  other things, the quantity and quality of the supply of coal to Tangshan
Panda and Tangshan Pan-Western, the purchase price and termination.
     
     Purchase  and Sales of Coal. Tangshan Panda and Tangshan Pan-Western  will
have  the right to purchase up to 300,000 and 310,000 metric tons per  year  of
coal  from,  respectively, Kailuan Coal and the other Luannan  Coal  Suppliers.
Each  Luannan Coal Supply Agreement sets forth the average quality of the  coal
to  be  delivered to meet the specifications for total moisture,  ash,  sulfur,
heat  value, coal size and fines. Tangshan Panda and Tangshan Pan-Western  will
be entitled to reject any coal supplied by any Luannan Coal Supplier which does
not meet the pre-agreed acceptable limits or contains foreign substances.
     
     Purchase  Price. The price of coal sold by Kailuan Coal will  be  adjusted
yearly  based on the average annual price in Renminbi per ton for coal sold  by
Kailuan  Coal  for the preceding year under similar terms and  conditions.  The
price  of  coal  sold by the other Luannan Coal Suppliers will be  the  average
monthly  price in Renminbi per ton of coal sold by the mines regulated  by  the
Tangshan  Municipal  Coal Industry Bureau under similar terms  and  conditions.
With  respect to the Luannan Coal Supply Agreement with Kailuan Coal,  Tangshan
Panda  and  Tangshan Pan-Western will provide Kailuan Coal with an estimate  of
its  coal  requirements.  In  emergency situations,  either  party  may  change
previously  determined  amounts upon at least 15  days'  notice.  The  annually
adjusted price and the supply schedule will be reflected in the supply contract
to  be  entered  into each year by the parties pursuant to  such  Luannan  Coal
Supply Agreement.
     
     Termination. Each Luannan Coal Supply Agreement may be terminated by  each
party  by notice to the other party if the other party materially breaches  its
obligations and such breach is not cured within 60 days of receipt of notice of
such breach. The Luannan Coal Supply Agreement between Tangshan Panda, Tangshan
Pan-Western  and  Kailuan Coal provides that Kailuan  Coal  may  terminate  the
Luannan  Coal  Supply  Agreement upon six months'  notice  if  national  energy
policies of the PRC change such that the rules governing the allocation of coal
restrict  its ability to make sales of coal under terms and conditions  similar
to those set forth in such Luannan Coal Supply Agreement.
     
Coal Transportation Agreement

     The coal will be transported to the Site pursuant to a coal transportation
agreement (the "Luannan Coal Transportation Agreement"), among Tangshan  Panda,
Tangshan Pan-Western and Luannan County State-Owned Transportation Company (the
"Carrier"), a PRC company owned and operated by Luannan County. The term of the
Luannan  Coal Transportation Agreement is 10 years from the date of  the  first
truck  delivery  by  the  Carrier to the Luannan  Facility.  The  Luannan  Coal
Transportation Agreement sets out the rights and obligations of Tangshan  Panda
and  Tangshan Pan-Western and the Carrier, relating to, among other things, the
services  and obligation of the Carrier and the payment obligations of Tangshan
Panda and Tangshan Pan-Western for such services.
     
     Transportation  of  Coal. The Carrier will transport  and  deliver  up  to
500,000 tons of coal per year from the Luannan Coal Suppliers to Tangshan Panda
and  Tangshan Pan-Western at the Luannan Facility. Unless a failure to  deliver
coal results from a force majeure or breach by Tangshan Panda and Tangshan Pan-
Western, the Carrier will deliver all required coal shipments to Tangshan Panda
and  Tangshan  Pan-Western within 24 hours of the required  scheduled  delivery
date.  If  the Carrier fails to deliver coal within the time required, Tangshan
Panda   and   Tangshan  Pan-Western  may  make  alternate  coal  transportation
arrangements,  and  the Carrier will be responsible for any  incremental  costs
incurred by Tangshan Panda and Tangshan Pan-Western for such arrangements.
     
     Price of Transportation. The price of transportation of coal shipped  from
the Qianjiaying Mine to the Site by the Carrier will be RMB 15 per ton, subject
to  annual  adjustment  based upon the market price  for  truck  transportation
effective for the following year. If the parties cannot agree upon the adjusted
price,  the  average price of four truck carriers in the Tangshan  region,  two
selected by each party, shall be used.
     
     Termination.  The Luannan Coal Transportation Agreement may be  terminated
by  either  party  thereto  by notice to the other party  if  the  other  party
materially breaches its obligations and such breach is not cured within 60 days
after receipt of notice of such breach.
     
Luannan Operations and Maintenance Agreement

     The  Joint  Ventures  and  the Luannan O&M Contractor,  Duke/Fluor  Daniel
International  Services,  have entered into the Amended  and  Restated  Luannan
Operations  and Maintenance Agreement (the "Luannan Operations and  Maintenance
Agreement")  dated as of March 6, 1997. The Luannan Operations and  Maintenance
Agreement   has  a  ten-year  term  and  provides,  among  other  things,   the
responsibilities  and obligations of the Joint Ventures  and  the  Luannan  O&M
Contractor,  including,  among  others, the scope  of  services,  compensation,
payments of bonuses/penalties, termination and indemnity.
     
     Scope  of Services. The Luannan O&M Contractor will provide the operation,
maintenance  and repair services necessary for the production and  delivery  of
electrical  energy by the Luannan Facility in accordance with the  requirements
of   the  Luannan  Power  Purchase  Agreement  including,  without  limitation,
developing  a  hiring  schedule, preparing a list of recommended  tools,  spare
parts  and  equipment,  providing maintenance and repair services  and  keeping
maintenance and operation records.
     
     The  responsibilities of the Luannan O&M Contractor prior to  the  Luannan
Commercial  Operation  Date  will include, without  limitation,  reviewing  and
consulting  with  the Joint Ventures regarding all plant design specifications,
assessing  the available local labor force, developing plans for  staffing  and
training  with  respect  to  local  labor, developing  operating  budgets,  and
procuring  tools, spare parts, chemicals and other materials. The  Luannan  O&M
Contractor  will  also provide operating personnel to assist  in  start-up  and
testing  of  the  Luannan Facility under the supervision  of  the  Luannan  EPC
Contractor.  After  the  Luannan Commercial Operation  Date,  the  Luannan  O&M
Contractor  will  have complete on-site responsibility for the  operations  and
maintenance  of  the  Luannan Facility. Among other  things,  the  Luannan  O&M
Contractor  will  (i) operate and maintain the Luannan Facility  in  accordance
with  prudent utility practices, and as required by the Luannan Power  Purchase
Agreement,  and  all  applicable laws, permits, approvals,  ordinances,  rules,
regulations   and   orders,   (ii)  provide  all  management,   administration,
supervision   and  staffing  functions,  (iii)  procure  materials,   supplies,
consumables  and outside services as per the approved budget and (iv)  maintain
the Luannan Facility in good repair.
     
     Service  to be Performed by Joint Ventures. Among other things, the  Joint
Ventures will monitor the operation of the Luannan Facility, provide office and
administrative  space,  provide  and pay for all  fuel  and  utilities,  obtain
necessary permits and licenses, except those issued in the name of the  Luannan
O&M  Contractor  or  those the Luannan O&M Contractor is  required  to  obtain,
provide  and  pay for all fuel required, and pay or reimburse the  Luannan  O&M
Contractor  for  all property or other taxes related to the  Luannan  Facility,
excluding income taxes of the Luannan O&M Contractor.
     
     Insurance.  The  Luannan O&M Contractor will carry and maintain  insurance
with  specified  minimums  including worker's  compensation  and  comprehensive
automobile liability insurance. The Joint Ventures will provide insurance  with
specified minimums to cover general liability, builder's risk exposure and  all
risk  property  insurance naming the Luannan O&M Contractor  as  an  additional
insured  and  providing a waiver of subrogation in favor  of  the  Luannan  O&M
Contractor  and  designated  subcontractors. The Joint  Ventures  will  provide
coverage with a specified minimum for themselves and the Luannan O&M Contractor
against claims for third party bodily injury and death and third party property
damage.
     
     Compensation. Prior to the Luannan Commercial Operation Date, the  Luannan
O&M  Contractor  will  be entitled to a fee of $250,000 per  annum  payable  in
monthly  installments and eligible for a start-up bonus of $500,000 based  upon
mutually agreed-upon criteria.
     
     After  the  Luannan  Commercial Operation  Date  occurs,  in  addition  to
reimbursements  for  the  cost of the operation of the  Luannan  Facility,  the
Luannan  O&M  Contractor  will receive an annual  operating  fee  of  $500,000,
payable in equal monthly installments, adjusted annually in accordance with the
U.S. Consumer Price Index.
     
     Bonuses/Penalties. The Luannan O&M Contractor's monthly installment of the
annual  operating  fee  after  the Luannan Commercial  Operation  Date  may  be
increased  or  decreased  on the basis of several criteria,  including  certain
criteria designed to measure performance as illustrated by the following chart:
     
PEAK HOURS
            BONUS                           PENALTY
$0.01 per kWh for amount of     $0.05 per kWh for amount of
daily energy production         daily energy production less
greater than 760,000 kWh of     than 800,000 kWh of gross
net energy production.          energy production.
                                
NON-PEAK HOURS
            BONUS                           PENALTY
$0.01 per kWh for amount of     $0.01 per kWh for amount of
daily energy production         daily energy production
greater than 504,000 kWh of     greater than 560,000 kWh gross
gross energy production up to   energy production.
a maximum of 16,000 kWh of
gross energy production.

TROUGH HOURS
            BONUS                           PENALTY
$0.01 per kWh for amount of     $0.05 per kWh for amount of
daily energy production above   daily energy production above
464,000 kWh gross energy        480,000 kWh of gross energy
production up to a maximum of   production.
16,000 kWh of gross energy
production.

     The  Luannan O&M Contractor's monthly installment of the annual  operating
fee will also be adjusted based on the Luannan Facility's monthly heat rate  as
follows:  for each month the Luannan Facility's average heat rate is less  than
base heat rate which is defined as an amount equal to 1.035 times the heat rate
(including  process steam) of the final project test conducted by  the  Luannan
EPC  Contractor  averaged  at  60 MW, 65 MW and  full  output  of  the  Luannan
Facility,  the Luannan O&M Contractor will receive an increase in  the  monthly
installment  of  the annual operation fee of $0.003/kWh times  the  net  energy
produced  for the month in kWh times the difference between the base heat  rate
and the actual heat rate in Btu/kWh the quantity divided by the base heat rate.
For  each  month that the Luannan Facility's average heat rate is greater  than
the base heat rate plus 400 Btu/kWh, the Luannan O&M Contractor will receive  a
decrease  in the monthly installment of the annual operation fee of  $0.003/kWh
times the net energy produced for the month in kWh times the difference between
the  actual  heat rate in Btu/kWh and the base heat rate plus 400  Btu/kWh  the
quantity divided by the base heat rate plus 400 Btu/kWh.
     
     Termination.  In addition to termination pursuant to the  default  of  the
Luannan  O&M  Contractor,  the Joint Ventures may terminate  the  contract  for
convenience  if the Luannan Power Purchase Agreement is terminated  or  if  the
Luannan  Facility is sold to a third party who intends to operate  the  Luannan
Facility. In the event of termination for convenience, in addition to  payments
of  all  outstanding costs, reasonable costs in support of the termination  and
reasonable  severance costs, the Joint Ventures will also pay the  Luannan  O&M
Contractor  $25,000  per month through the twenty-fourth  month  following  the
Luannan  Commercial Operation Date, $20,000 per month through the  forty-eighth
month  and  $15,000 per month from the forty-ninth month through  the  original
term of the Luannan Operations and Maintenance Agreement. Either party may also
terminate the Luannan Operations and Maintenance Agreement for cause, in  which
case no termination payment shall be made by the Joint Ventures.
     
     Liability  and Indemnity. Subject to certain specified insurance  coverage
limits,  the  Joint Ventures bear the risk of physical loss or  damage  to  the
Luannan  Facility.  The  Luannan  O&M Contractor  and  subcontractors  have  no
liability  for loss or damage to property or the Luannan Facility. The  Luannan
O&M  Contractor agrees to defend and indemnify the Joint Ventures, any  lenders
and  North  China  Power Company and their respective directors,  officers  and
employees against, and hold them harmless from any claims resulting from or  in
connection with Luannan O&M Contractor's performance, negligent performance, or
non-performance  of  its obligations hereunder except where  such  claims  were
caused by the sole negligence or willful misconduct of the Joint Ventures,  any
lenders  or  North China Power Company or any of their directors, officers  and
employees respectively.
     
     Subject to certain specified insurance coverage limits, the Joint Ventures
agree  to  defend and indemnify the Luannan O&M Contractor and  its  directors,
officers  and  employees against, and hold them harmless from  (i)  any  claims
resulting from or in connection with the Joint Ventures' performance, negligent
performance,  or non-performance of its obligations except where,  such  claims
were  caused  by the sole negligence or willful misconduct of the  Luannan  O&M
Contractor  and  its  directors, officers and employees, and  (ii)  any  claims
resulting  from  the  Luannan  O&M Contractor  acting  under  the  Luannan  EPC
Contractor's   supervision   and  direction,  the  Luannan   EPC   Contractor's
performance, negligent performance or non-performance of its obligations except
where  such claims are caused by the Luannan O&M Contractor and its directors',
officers'  and employees' failure to comply with directions of the Luannan  EPC
Contractor and/or the sole negligence or willful misconduct of the Luannan  O&M
Contractor and its directors, officers and employees.
     
     Ownership of and legal responsibility and liability for any and  all  pre-
existing contamination shall remain with the Joint Ventures.
     
     Force  Majeure.  Neither  party shall be responsible  or  liable  for,  or
subjected  to,  any  termination  of  the Luannan  Operations  and  Maintenance
Agreement  for,  or deemed in breach of the Luannan Operations and  Maintenance
Agreement  as  a result of, any delay or deficiency in the performance  of  its
obligations thereunder to the extent that such delay or deficiency  is  due  to
circumstances beyond its reasonable control. "Force Majeure Event"  is  defined
under  the Luannan Operations and Maintenance Agreement to mean any event  that
is  not  foreseeable  and for which the damages caused by  the  event  are  not
reasonably  preventable  by the party declaring force  majeure  and  cannot  be
overcome  such  that  it  adversely affects  one  party's  performance  of  its
obligations under the Luannan Operations and Maintenance Agreement,  including,
without  limitation, unusually severe weather conditions, any natural disasters
such  as  fire or earthquakes, any labor difficulty not involving employees  of
any  parties  thereto, war, inability to obtain fuel for the Luannan  Facility,
riots,  requirements,  actions or failures to act on the part  of  governmental
authorities  preventing performance, any modifications or  changes  in  law  or
regulations,  inability despite due diligence to obtain  required  licenses  or
approvals, and accident.
     
     Governing  Law/Disputes. The Luannan Operations and Maintenance  Agreement
is  governed  by  the  law  of the State of Texas, but any  unresolved  dispute
between  the  parties shall be settled by arbitration conducted  in  accordance
with  the  Commercial Rules of the American Arbitration Association in  Dallas,
Texas.
     
Engineering and Design Contract

     Tangshan  Panda  and Tangshan Pan-Western entered into an Engineering  and
Design  Contract  (the "Engineering and Design Contract"), dated  December  21,
1995,  with  Hebei  Electric  Power Survey and Design  Institute  (the  "Design
Institute"). The Design Institute has agreed to perform all surveys, design and
engineering  work  including the preliminary design and  construction  drawings
(collectively, the "Services") necessary for Tangshan Panda and  Tangshan  Pan-
Western to obtain permits and construct the Luannan Facility in accordance with
PRC codes and regulations, and with the project design criteria detailed in the
Engineering   and   Design  Contract  (the  "Project  Design  Criteria").   The
Engineering and Design Contract will be in effect until final acceptance of the
Luannan Facility by Tangshan Panda and Tangshan Pan-Western in accordance  with
the Luannan EPC Contract. Tangshan Panda and Tangshan Pan-Western have assigned
their  rights  and benefits in, and delegated all of their obligations  arising
under, the Engineering and Design Contract to the Luannan EPC Contractor.
     
     Design  Institute's Responsibilities. The Design Institute will accomplish
the preliminary design, construction drawings and their relevant government and
project  approvals in accordance with current design codes and  regulations  in
China  and in accordance with the Project Design Criteria. The Design Institute
will  also  be  responsible  for any modifications  required  by  the  relevant
government authorities after examination of the preliminary design. The  Design
Institute  will,  subject to the allocation decisions made by the  Luannan  EPC
Contractor, provide on-site personnel on a 24 person/month basis to support the
construction efforts during the construction stage of the Luannan Facility. The
Design  Institute  will be responsible for paying any PRC taxes  in  connection
with  the Services. The Design Institute guarantees that the preliminary design
and  construction drawings will meet the requirements contained in the  Project
Design  Criteria  and the Design Institute's feasibility study  (including  all
relevant  government authorities' comments and approvals),  with  such  changes
therein  as  Tangshan  Panda  and  Tangshan Pan-Western  and  the  Luannan  EPC
Contractor may approve, for the design of the Luannan Facility, including power
output and thermal output, heat rate and emissions limits from such plants.  If
there is any error or omission in the Services provided by the Design Institute
or  any  breach of guarantee described above, the Design Institute will perform
such  additional  Services and design work at its own expense,  on  request  of
Tangshan  Panda or Tangshan Pan-Western as may be deemed necessary  to  correct
such  error  or omission and the Design Institute will also be responsible  for
the relevant loss/damage of Tangshan Panda and Tangshan Pan-Western.
     
     Tangshan  Panda's  and Tangshan Pan-Western's Rights and Responsibilities.
Tangshan Panda and Tangshan Pan-Western will provide the Design Institute  with
relevant information necessary to prepare and complete the preliminary  design,
construction  drawings  and obtain relevant government approvals.  If  Tangshan
Panda  and Tangshan Pan-Western fail to provide the Design Institute  with  the
required information in a timely manner, they will be responsible for the  cost
of corrections to the preliminary design and the Luannan EPC Contractor will be
responsible  for  the  cost  of  corrections to the  construction  drawings  as
specified  under  the  Engineering  and Design  Contract.  Tangshan  Panda  and
Tangshan  Pan-Western  have the right to terminate the Engineering  and  Design
Contract in writing for any reason at any time.
     
     Payments. Tangshan Panda and Tangshan Pan-Western will pay to the  Luannan
EPC  Contractor or to the Design Institute (with credit under the  Luannan  EPC
Contract)  a lump sum price of RMB 7.0 million for the Services to be  provided
by  the Design Institute. Thirty percent of such lump sum price will be for the
preliminary design and the remainder for the construction drawings.
     
Contracts Between the Joint Ventures

     Upon  the  closing of the Prior Offering, Tangshan Pan-Sino has  commenced
action  to  acquire  the rights to use all Luannan Facility land,  the  Luannan
Facility buildings and certain off-site property and will enter into leases  to
permit the other Joint Ventures to use portions of such facilities.
     
     Upon  the  closing  of the Prior Offering, Tangshan Cayman  has  commenced
action  to  acquire water and land use rights and water wells. Tangshan  Cayman
has entered into contracts with Tangshan Panda and Tangshan Pan-Western to sell
them  heat,  steam  and  hot  water for use in their facilities.  In  addition,
Tangshan  Cayman  has entered into a contract to sell steam and  hot  water  to
Tangshan  Pan-Sino  for  further distribution to industrial  users  in  Luannan
County.
     
                                  MANAGEMENT
                                       
Director, Independent Director and Officers of the Issuer and the Company

     The number of members of the Board of Directors of each of the Issuer  and
the  Company has been set at two, but the number may be increased or  decreased
by  the Board of Directors or the stockholders. Directors of the Issuer and the
Company  are  elected annually and each elected director holds office  until  a
successor  is elected. Robert W. Carter and Brian G. Trueblood are the  current
directors  of  each of the Issuer and the Company. Neither the Issuer  nor  the
Company has any employees.
     
     The  Articles  of  Association  of  the  Issuer  and  the  Certificate  of
Incorporation  and  By-Laws of the Company provide  that  the  Issuer  and  the
Company  shall  always have an individual serving as an "Independent  Director"
who shall have the right to vote or consent only on, and whose affirmative vote
or consent shall be required with respect to, any decision by the Issuer or the
Company (as the case may be) or the Board of Directors of either of them to (i)
file  a  bankruptcy petition, make an assignment for the benefit of  creditors,
apply  for  the appointment of a custodian, receiver or trustee for it  or  its
property, consent to the filing of such proceeding or admit in writing  to  its
inability  to  pay  its debts generally as they become due; (ii)  commence  the
dissolution, liquidation, consolidation, merger or sale of all or substantially
all  of  its assets; (iii) amend the Articles of Association or Certificate  of
Incorporation and By-Laws (as the case may be) to broaden the purposes  of  the
Issuer  or  the Company and in other respects; or (iv) authorize the Issuer  or
the  Company  to  engage  in any activity other than those  set  forth  in  the
Articles  of  Association or Certificate of Incorporation and By-Laws  (as  the
case may be). The Articles of Association of the Issuer and the Certificate  of
Incorporation and By-Laws of the Company provide that the Independent  Director
shall be a person who is not and has not been, for the five years preceding his
election, (i) a direct or indirect legal or beneficial owner of the Company  or
its  affiliates  (or a member of the immediate family of such  owner),  (ii)  a
creditor,  supplier,  officer,  director,  promoter,  underwriter,  manager  or
contractor  of  the  Company  or any of its affiliates  (or  a  member  of  the
immediate  family  of any such officer or director) or (iii)  a  person  (or  a
member  of the immediate family of a person) employed by the Company or any  of
its  affiliates  or by any creditor, supplier, employee, stockholder,  officer,
director, promoter, underwriter, manager or contractor thereof. The Independent
Director  may, however, serve in such capacity for other subsidiaries of  Panda
International. In March 1997, Brian G. Trueblood was elected as the Independent
Director  of  the  Issuer and the Company. Mr. Trueblood  also  serves  as  the
Independent  Director  for PIC, Pan-Western and certain other  subsidiaries  of
Panda International.
     
     The following table sets forth the names and ages of the directors and the
executive officers of the Issuer and the Company and their positions  with  the
Issuer and the Company. Since the formation of the Issuer and the Company, each
executive  officer  of the Issuer and the Company has held the  same  office(s)
with  the  Issuer  and  the  Company  that  he  or  she  has  held  with  Panda
International,  and  each  other corporation that  is  currently  a  direct  or
indirect subsidiary of the Company.
          Name           Age          Position with the Issuer and the
                                                  Company
 Robert W. Carter         59   Director,  Chairman  of the  Board  and  Chief
                               Executive Officer
 Darol S. Lindloff        58   President
 Janice Carter            55   Executive   Vice  President,   Secretary   and
                               Treasurer
 William C. Nordlund      42   Executive Vice President, Finance
 James D. (Pete) Wright   43   Senior  Vice  President, Project  Finance  and
                               Acquisitions
 L. Stephen Rizzieri      41   Vice President and General Counsel
 Brian G. Trueblood       36   Independent Director
                               
     Robert  W.  Carter has been the Chairman of the Board and Chief  Executive
Officer  of Panda International since January 1995. Mr. Carter has held similar
chief executive positions with PEC and its subsidiaries since he founded PEC in
1982. Mr. Carter also is President of Robert Carter Oil & Gas, Inc. (an oil and
gas  exploration  company), which he founded in 1980. From 1978  to  1980,  Mr.
Carter  was  Vice  President  of oil and gas lease  sales  for  Reserve  Energy
Corporation (an oil and gas exploration company). From 1974 to 1978, he  served
as  a marketing consultant to Forward Products, Inc. (a petrochemical company).
Mr.  Carter  was Executive Vice President of Blasco Industries (a chemical  and
textile  manufacturer) from 1970 to 1974. He served as a  sales  representative
and  sales  manager  for Olin Mathieson Chemical Corporation (a  petrochemical,
pulp  and paper company) from 1965 to 1970. From 1960 to 1965, he was  a  sales
representative  for Inland, Mead Paper Company in Atlanta. Mr. Carter  attended
the University of Georgia.
     
     Darol  S.  Lindloff  was  appointed President of  Panda  International  in
February  1997.  Prior  thereto, he served as Senior  Vice  President,  Project
Development  of  Panda  International from January  1996.  He  served  as  Vice
President  of  Panda  International from January 1993 to January  1996  in  the
capacities of Business Development, Technical Director and Project Development.
Mr.  Lindloff  served  as  Marketing Manager for PEC from  October  1989  until
January  1993.  From December 1987 to October 1989, Mr. Lindloff established  a
regional  office  in Dallas for Southwest Research Institute  (a  research  and
development  company)  and served as Regional Director. From  January  1986  to
December   1987,  Mr.  Lindloff  worked  on  the  development  of  cogeneration
facilities  for Hawker Siddeley Power Engineering, Inc. (a British  engineering
company).  During 1984 and 1985, he worked in the development  of  cogeneration
facilities for Central & Southwest Corporation's subsidiary, C&SW Energy,  Inc.
(an energy company). Mr. Lindloff graduated from Southwestern University with a
Bachelor of Science degree in organic chemistry.
     
     Janice  Carter has been the Executive Vice President, Secretary, Treasurer
and a Director of Panda International since January 1995 and has served in such
capacities with PEC since its inception in 1982. From 1975 to 1980, Mrs. Carter
was  office  manager  of Reserve Energy Corporation. From 1969  to  1972,  Mrs.
Carter  worked  for  University Computing, and from 1962 to 1968  she  directed
administration for the engineering department of Otis Engineering,  a  division
of  Halliburton  International. Mrs. Carter also serves as Vice  President  and
Secretary/Treasurer of Robert Carter Oil & Gas, Inc. Mrs. Carter attended Texas
Tech University. Mrs. Carter is married to Robert W. Carter.
     
     William  C.  Nordlund has served as Executive Vice President,  Finance  of
Panda  International since February 1997. Prior thereto, he  served  as  Senior
Vice President and General Counsel of Panda International since August 1996, as
Vice  President and General Counsel of Panda International since  January  1995
and  of  PEC since January 1994. Mr. Nordlund was General Counsel of  PEC  from
April  1993  to January 1994. He was Senior Vice President and General  Counsel
from  August  1992  to April 1993 and Vice President and General  Counsel  from
September  1991  to August 1992 for The Oxford Energy Company, a  developer  of
independent  power facilities. From July 1990 to September 1991,  Mr.  Nordlund
was  an  attorney with Constellation Holdings, Inc., an affiliate of  Baltimore
Gas  & Electric Company which developed independent power facilities. Prior  to
July 1990, he was a partner in the law firm of Winston & Strawn in Chicago. Mr.
Nordlund earned a Bachelor of Arts degree from Vanderbilt University,  a  Juris
Doctor  degree from Duke University and a Master of Management degree from  the
J.L. Kellogg Graduate School of Business at Northwestern University.
     
     James  D.  (Pete)  Wright  has served as Senior  Vice  President,  Project
Finance  and  Acquisitions  of Panda International  since  August  1996.  Prior
thereto,  he  served  as Vice President and Chief Financial  Officer  of  Panda
International  since  January 1995 and of PEC since January  1994.  Mr.  Wright
served  as  Chief Financial Officer of PEC from February 1993 to January  1994.
Prior to joining PEC in February 1993, he served as Vice President of Banc  One
Capital Corporation (a merchant banking group) from May 1986 to December  1992.
Mr.  Wright  previously held the position of Vice President with the investment
banking  firms of Schneider, Bernet & Hickman, Inc. in Dallas and Wheat,  First
Securities, Inc. in Richmond, Virginia. Mr. Wright earned a Bachelor of Science
degree  from  Vanderbilt  University and a Master  of  Business  Administration
degree  from  the Colgate Darden Graduate School of Business Administration  of
the University of Virginia.
     
     L.  Stephen  Rizzieri has served as Vice President and General Counsel  of
Panda  International since February 1997. Prior thereto, he  served  as  Deputy
General   Counsel   since  April  1996.  From  1993  until  he   joined   Panda
International,  he  was  Assistant  General  Counsel  of  ENSERCH   Development
Corporation,   the   independent  power  development   affiliate   of   ENSERCH
Corporation. From 1985 to 1993, Mr. Rizzieri served in various capacities  with
Sunshine  Mining  Company  and  its  affiliated  companies,  most  recently  as
Assistant  General  Counsel and Secretary. From 1981  to  1985,  he  served  in
various  capacities with Woods Petroleum Corporation (which  was  purchased  by
Sunshine Mining Company in 1985) and its affiliates, most recently as President
of Woods Securities Corporation. In 1980, Mr. Rizzieri served as Deputy General
Counsel  -  Enforcement Division, Oklahoma Securities Commission. Mr.  Rizzieri
earned  a  Bachelor of Arts degree from the State University  of  New  York  at
Geneseo and a Juris Doctor degree from the University of Oklahoma.
     
     Brian  G. Trueblood became the Independent Director of the Issuer and  the
Company  in  March  1997.  He has served since February  1997,  and  also  from
September 1989 through August 1994, as a senior partner in the Dallas office of
Lucas Associates (an Atlanta-based executive search firm). From August 1994  to
February 1997, Mr. Trueblood served as Vice President of TNS Partners, Inc.  (a
Dallas-based retained executive search firm). Mr. Trueblood received a Bachelor
of  Science  degree  in  general engineering from the  United  States  Military
Academy. Mr. Trueblood also serves as the Independent Director of various other
subsidiaries of Panda International.
     
Executive and Board Compensation and Benefits

     No  cash or non-cash compensation has been paid or is proposed to be  paid
in  the current calendar year to any of the officers and directors listed under
"Management"  for their services to the Issuer and the Company.  Mr.  Trueblood
will  be paid $1,000 per year by each of the Issuer and the Company for serving
as an Independent Director thereof.
     
Stock Ownership of Panda International

     There  were  11,401,212  shares  of common stock  of  Panda  International
outstanding  at  March 31, 1997. Of this amount, 4,418,957 shares  (38.8%)  are
owned  by  Robert  and  Janice Carter and members of their  family  and  family
trusts.  W.M. Huffman and members of his family and family trusts and a  family
partnership  own 2,134,443 of the outstanding shares (18.7%). Other  directors,
officers  and  employees  of  Panda International  own  less  than  1%  of  the
outstanding  shares  of  common  stock. At  March  31,  1997:  (i)  there  were
outstanding  options  to  acquire 1,209,000 shares of  common  stock  of  Panda
International (options for 1,050,000 shares being fully vested and for  159,000
shares  vesting  over  a  six-year  period, held  by  directors,  officers  and
employees of Panda International, and of this amount options for 250,000 shares
are  held  by  Robert Carter and options for 25,000 shares  are  held  by  W.M.
Huffman);  (ii)  Trust Company of the West held warrants to purchase  1,004,000
shares  of common stock of Panda International; and (iii) NNW, Inc. held rights
to  acquire  up  to  approximately 181,500 shares  of  common  stock  of  Panda
International.  See  "Description of the Projects--The Rosemary  Facility--Cash
Flow Participation."
     
                               LEGAL PROCEEDINGS
                                       
     Neither  the  Issuer  nor  the  Company  is  a  party  to  any  legal
proceedings.  Affiliates  of  the  Issuer and  the  Company  are  claimants  or
defendants  in  various  legal proceedings which have arisen  in  the  ordinary
course  of  business. The Issuer and the Company believe such claims and  legal
actions,  individually or in the aggregate, will not have  a  material  adverse
effect on the business or financial condition of the Issuer or the Company.
     
NNW, Inc. Proceeding

     On  July 12, 1996, PEC filed an action against NNW captioned Panda  Energy
Corporation  v. NNW, Inc. f/k/a Nova Northwest Inc. (No. 96--07151-C),  in  the
District Court of Dallas County, Texas (68th Judicial District). PEC's petition
seeks  a  declaratory judgment that the NNW Cash Flow Participation remains  at
0.433% after the restructuring of the Rosemary Partnership interest pursuant to
the  terms  of the NNW Credit Agreement. Pursuant to the NNW Credit  Agreement,
NNW  received  a  cash  flow participation interest in distributions  from  the
Rosemary  Partnership  in  the  amount of  4.33%  of  PEC's  own  participation
interest.  At the time the NNW Credit Agreement was entered into, the aggregate
equity interest in the Rosemary Partnership held by PEC was 10%, making the NNW
Cash  Flow Participation equal to 0.433%. As a result of the redemption of Ford
Credit's 90% limited partner interest in the Rosemary Partnership in July 1996,
PEC owns an indirect 100% interest in the Rosemary Partnership.
     
     Pursuant  to the NNW Credit Agreement, the NNW Cash Flow Participation  is
not   to  be  affected  either  positively  or  negatively  by  "any  financial
restructuring." It is the opinion of Panda International, the  Issuer  and  the
Company   that  the  redemption  of  Ford  Credit's  limited  partner  interest
constituted a "financial restructuring" within the meaning of that term in  the
NNW  Credit  Agreement and that, as a result, the NNW Cash  Flow  Participation
remains  equal  to  0.433%  of total cash flow distributions  by  the  Rosemary
Partnership  (based  on  the current debt structure).  NNW  is  disputing  this
position and asserts that, upon the restructuring, it became entitled to  4.33%
of  PEC's distributions from the Rosemary Partnership. The declaratory judgment
petition seeks a determination that the NNW Cash Flow Participation is equal to
0.433%.  The  Issuer and the Company believe that a resolution of this  dispute
and  the  declaratory  judgment proceeding adverse to  PEC  would  not  have  a
material  adverse  effect on the business or operations of the  Issuer  or  the
Company.  See  "Description of the Projects--The Rosemary  Facility--Cash  Flow
Participation."
     
Heard Proceedings

     PEC  is a party to a lawsuit captioned Panda Energy Corporation, Plaintiff
v.  Heard Energy Corporation, CLF Energia Y Electricidad, S.A., Robert A. Wolf,
Armin Alexander Budzinsky, Edward R. Gwynn, Donald L. Kinney, Morgan Stanley  &
Co., Inc., Allstate Insurance Company, Allstate Life Insurance Company, Entergy
Corporation,  Entergy  Enterprises, Inc., Entergy Power,  Inc.,  Entergy  Power
Development  Corporation,  Anil Desai, Drs. IR.  Poerwanto  P.,  and  PT  Panca
Serodja  Pradhana,  Defendants,  (No. 94--0672-J),  District  Court  of  Dallas
County, Texas (191st Judicial District). PEC initiated this litigation in April
1994  and alleges that defendants Wolf, Gwynn and Kinney, former PEC employees,
formed  a  competing  company  (Heard Energy Corporation)  and  misappropriated
certain  of  PEC's international power project opportunities. PEC alleges  that
the  other defendants knowingly participated, collaborated and/or conspired  in
the  misappropriation.  PEC  alleges causes  of  action  for  misappropriation,
conspiracy,  fraud,  breach of contract, breach of  fiduciary  duty  and  legal
malpractice  against one or more of the defendants and alleges  damages  in  an
unspecified amount.
     
     Defendant  Morgan  Stanley  filed a counterclaim  on  September  14,  1995
against  PEC,  alleging that it had performed services for PEC pursuant  to  an
engagement  agreement relating to the Brandywine Project.  PEC  terminated  the
engagement  agreement on May 4, 1993. Morgan Stanley alleges that the  services
it  performed  prior to such termination included assisting  PEC  in  obtaining
certain  regulatory  approvals,  preparing a  draft  solicitation  booklet  and
identifying  potential project financing sources, including GE Capital.  Morgan
Stanley  further  alleges that PEC obtained financing  from  GE  Capital  after
Morgan  Stanley  was  terminated, and that Morgan  Stanley  is  entitled  to  a
"transaction fee," either pursuant to the engagement agreement or based on  the
value  of  the services it allegedly performed, in an amount of not  less  than
$4.3 million, plus attorneys' fees and interest.
     
     Defendants  Heard  Energy Corporation, Wolf, Gwynn, Kinney  and  Budzinsky
(the "Heard Defendants") also filed a counterclaim during November 1994 against
PEC  and  a third-party claim against Robert Carter and Janice Carter, alleging
that  PEC,  Robert Carter and Janice Carter negligently made misrepresentations
of  PEC's  lack  of  a  continued  interest in developing  international  power
projects.  The  Heard  Defendants allege that they would not  have  engaged  in
allegedly  competing  international power project transactions  but  for  these
misrepresentations  and  that  they  incurred  damages   in   the   amount   of
approximately  $5.0  million  as  a result of  these  misrepresentations,  such
damages  allegedly consisting of expenses incurred by Heard Energy Corporation,
certain  portions  of  which allegedly are guaranteed by the  individual  Heard
Defendants.  In  both  the counterclaim and the third-party  claim,  the  Heard
Defendants further allege that PEC, Robert Carter and Janice Carter violated  a
confidentiality  order  relating to certain documents  produced  by  the  Heard
Defendants  during  the  discovery  phase of this  action  by  misappropriating
confidential  information  in these documents for  the  purpose  of  gaining  a
competitive advantage over Heard Energy Corporation. The Heard Defendants  seek
$5.0  million  in damages as well as unspecified "exemplary" damages  based  on
this alleged violation. PEC believes that the Heard Defendants' discovery order
claim is not actionable as a claim for damages.
     
     On  March  15,  1996,  all  of the defendants filed  motions  for  summary
judgment,  and  PEC filed motions for summary judgment with respect  to  Morgan
Stanley's  counterclaim and the Heard Defendants' counterclaim and  third-party
claim.  By letter dated April 30, 1996, the court advised all counsel  that  it
intended to grant the defendants' motions for summary judgment, indicating that
PEC  could  not  show  legally sufficient evidence of damages  to  sustain  its
claims. This order was entered on June 19, 1996.
     
     PEC  has  appealed the court's ruling. In light of the court's ruling  and
pending  the  appeal,  Morgan Stanley and the Heard Defendants  have  dismissed
without  prejudice  their counterclaims and third-party  claims,  and  PEC  has
agreed that any applicable statutes of limitations or other time-based defenses
will be tolled during the pendency of the appeal.
     
     The  Issuer  and the Company have been informed by PEC that PEC  does  not
believe  that  either the Morgan Stanley counterclaim or the Heard  Defendants'
counterclaims  and  third-party claims will be refiled  unless  and  until  the
judgment dismissing PEC's claims against those parties is reversed and remanded
to  the  trial court by the appellate court. In any event, PEC does not believe
that  these counterclaims or third-party claims, if reasserted, have any merit,
nor does PEC believe that these claims, if eventually decided adversely to PEC,
would have a material adverse effect on the business or operations of PEC,  the
Issuer or the Company.
     
Brandywine Proceeding

     On  June  26, 1996, certain plaintiffs commenced a proceeding against  the
Brandywine  Partnership  and  one  of  its  contractors  (as  well   as   other
subcontractors) captioned Jeannine McConnell, McConnell Pool Service, Inc.  and
McConnell  Fuel  Oil,  Inc. v. Panda-Brandywine, L.P. and  Flippo  Construction
(Case  No.  CV 96--1344) in the Circuit Court for Charles County, Maryland.  In
this proceeding, plaintiffs allege that in connection with the construction  of
an effluent water pipeline, a contractor for the Brandywine Partnership, Flippo
Construction ("Flippo") (and its subcontractors) and the Brandywine Partnership
left  their  easement and inadvertently trespassed on to plaintiffs'  property.
While  on plaintiffs' property, Flippo (and its subcontractors) and the
Brandywine Partnership  allegedly  dug  a  deep and wide  hole  which  extended
onto the plaintiff's property to locate a buried pipe. Plaintiffs allege that
this trespass damaged the property, decreased its fair market value and 
resulted in loss of use thereof. Plaintiffs claim damages in numerous counts
that aggregate to $3.25 million in actual damages against each defendant plus
punitive damages aggregating $3.0 million against all defendants.
     
     The  Brandywine Partnership intends to vigorously contest this proceeding.
Panda International, the Issuer and the Company do not believe that the outcome
of  this  proceeding  will have any material adverse effect  on  the  financial
condition  of  the  Issuer, the Company or the Brandywine Partnership.  In  the
opinion  of  Panda  International, the Issuer and  the  Company,  the  contract
between  the  Brandywine Partnership and Flippo requires  Flippo  to  hold  the
Brandywine  Partnership harmless for any activities relating to the plaintiffs'
property.
     
Florida Power Proceedings

     In  January 1995, Florida Power commenced a proceeding before the  Florida
PSC  against the Kathleen Partnership captioned In re: Petition for Declaratory
Statement  Regarding  Eligibility  for  Standard  Offer  Contract  and  Payment
Thereunder  by  Florida Power Corporation, Case No. 950110-EI. Florida  Power's
petition  sought  a  declaratory statement that  the  Kathleen  Power  Purchase
Agreement  is not "available" to the Kathleen Partnership because the  Kathleen
Partnership's  proposed cogeneration facility allegedly is  not  in  compliance
with  the Florida PSC's rules (because it may be capable of exceeding 75 MW  in
electric generating capacity). Additionally, if the contract is "available"  to
the Kathleen Partnership, Florida Power sought a declaratory statement that  it
is  only  obligated to pay capacity payments under the power purchase agreement
relating  to the Kathleen Facility for a term of 20 years rather than  for  the
entire  30-year term of the power purchase agreement. The Kathleen  Partnership
filed a cross-petition seeking a declaratory statement that the milestone dates
in  the  power  purchase  agreement must be extended  due  to  Florida  Power's
improper  actions  and  as  a result of the delays in developing  the  Kathleen
Facility  caused by Florida Power's petition and the ensuing proceeding  before
the  Florida  PSC.  The  Kathleen Partnership filed a  motion  to  dismiss  the
proceeding  based on lack of jurisdiction, but that motion was  denied  by  the
Florida PSC. In February of 1996, the Florida PSC held a one-day hearing.
     
     On  May  20,  1996,  the  Florida PSC issued a decision  granting  Florida
Power's  petition,  and  holding  that the  power  purchase  agreement  is  not
available  to  the  Kathleen Facility as proposed because it  has  an  electric
generating capacity in excess of 75 MW and that Florida Power is only obligated
to  make capacity payments under the power purchase agreement for 20 years. The
Florida  PSC's  decision also granted the Kathleen Partnership's cross-petition
insofar as it grants the Kathleen Partnership an 18-month extension to meet the
construction commencement milestone date and an 18-month extension to meet  the
commercial operation milestone date. The Kathleen Partnership has appealed  the
Florida PSC's order to the Florida Supreme Court. The parties' briefs have been
filed  and  oral argument in the case took place in February 1997. The  parties
are presently awaiting the decision of the Florida Supreme Court.
     
     There  are  two actions related to this matter pending before the  Florida
Supreme  Court and the United States District Court for the Middle District  of
Florida.
     
                       DESCRIPTION OF OTHER INDEBTEDNESS
                                       
Series A Bonds

     On  July  31,  1996,  Panda Funding Corporation,  a  Delaware  corporation
("PFC"),  which  is an indirect wholly-owned subsidiary of the  Company  and  a
direct wholly-owned subsidiary of PIC, consummated the offering and sale  of  a
series  of  Pooled  Project  Bonds (the "Series  A  Bonds")  in  the  aggregate
principal amount of $105.5 million. The Series A Bonds were issued pursuant  to
an indenture (the "PFC Indenture") among PFC, PIC and Bankers Trust Company, as
trustee. The proceeds of the sale of the Series A Bonds were used (a)  to  fund
deposits  into certain reserve funds, (b) to redeem a limited partner  interest
in  the  Rosemary  Partnership formerly held by  a  third  party,  (c)  to  pay
transaction fees and expenses in connection with the offering of the  Series  A
Bonds and (d) to distribute approximately $61.2 million to Panda International,
of  which  approximately $26.4 million was used to prepay certain  indebtedness
and  the  balance of which Panda International has used and intends to use  for
the  development  of  Projects and general corporate purposes.   The  following
description  of the Series A Bonds and certain provisions of the PFC  Indenture
does  not  purport  to be complete and is subject to, and is qualified  in  its
entirety by reference to, the PFC Indenture, a copy of which is included as an
exhibit to this Registration Statement.
     
     PFC  may issue additional series of Pooled Project Bonds pursuant  to  the
PFC Indenture, as supplemented by a supplemental indenture specific to such new
series  of Pooled Project Bonds. Except for matters specific to each series  of
Pooled Project Bonds, including principal amount, interest rate, permitted uses
of  proceeds, payment frequency and amortization, each series of Pooled Project
Bonds will be governed by the same indenture provisions, and is secured by  the
same  collateral, as each other series of Pooled Project Bonds. In  particular,
(i)  each  new  series  of Pooled Project Bonds will be  subject  to  mandatory
redemption provisions comparable to the provisions applicable to the  Series  A
Bonds, (ii) each series of Pooled Project Bonds will rank on a parity with  the
Series  A Bonds, (iii) the payment of each series of Pooled Project Bonds  will
be  guaranteed by PIC pursuant to the PIC Guaranty, (iv) the security for  each
new  series  of  Pooled Project Bonds will consist of the same collateral  that
secures  the  Series A Bonds and the rights of the holders of  each  series  of
Pooled  Project Bonds, as well as any other secured party, with respect to  the
collateral are shared equally, and (v) each series of Pooled Project  Bonds  is
entitled  to all of the benefits of the PFC Indenture, including the protection
afforded by the covenants contained therein.
     
     Subject  to  certain  conditions, including those set forth  below,  Panda
International and its affiliates (including the Issuer) are required by the PIC
Additional  Projects  Contract to transfer to PIC, or to  certain  wholly-owned
direct subsidiaries thereof, their interests in each Project for which a  power
purchase  agreement  is  entered into prior to July 31,  2001,  and  which  has
reached  Financial Closing or achieved Commercial Operations prior to July  31,
2006.  Such additional transferred Projects will become part of the PIC Project
Portfolio  and  will  serve as additional collateral security  for  the  Pooled
Project  Bonds. Panda International and its affiliates are required to transfer
their interests in a Project to the PIC Project Portfolio only if the principal
amount  of  additional series of Pooled Project Bonds that can be issued  after
giving  effect  to  the inclusion of the Project in the PIC  Project  Portfolio
equals or exceeds the amount of "Anticipated Additional Debt." Interests  in  a
Project  will  not  be  transferred if the Project has  not  reached  Financial
Closing  or  achieved  Commercial  Operations.  Additionally,  except  for  the
Kathleen Project, which must be transferred to the PIC Project Portfolio if  it
reaches  Financial Closing, interests in a Project will not be transferred  if:
(i)  Panda  International does not own a controlling interest in  the  Project;
(ii)  the transfer would be prohibited under any Project-level financing, power
purchase or related agreement; or (iii) after giving effect to the issuance  of
the  additional series of Pooled Project Bonds in connection with the inclusion
of the Project in the PIC Project Portfolio (a) the rating of previously issued
Pooled  Project Bonds is not reaffirmed by at least two rating  agencies  at  a
rating equal to or higher than that in effect immediately prior to the issuance
of  such additional series or (b) the projected PIC Debt Service Coverage Ratio
or  the  projected  PIC  Consolidated Debt  Service  Coverage  Ratio  (if  then
applicable)  would  be  less than 1.7:1 or 1.25:1, respectively,  for  (1)  the
period  beginning with the date of determination through December  31  of  that
calendar year, (2) each period consisting of a calendar year thereafter through
the  calendar  year immediately prior to the calendar year in which  the  Final
Stated  Maturity occurs and (3) the period thereafter beginning with January  1
and  ending with such Final Stated Maturity (each such period, a "Future  Ratio
Determination  Period").  The PIC Additional Projects Contract  requires  Panda
International to use commercially reasonable efforts to cause each  Project  to
meet the conditions for transfer to the PIC Project Portfolio as of the date  a
Project  reaches Financial Closing or achieves Commercial Operations, whichever
occurs first, or within a 90-day period thereafter. If, however, the conditions
for  such a transfer cannot be satisfied using commercially reasonable efforts,
Panda  International will have no further obligation to PIC in respect of  such
Project  and  may  retain its interest in such Project  or  sell  it  to  third
parties. The Luannan Facility is not currently eligible for transfer to the PIC
Project Portfolio.
     
     "Anticipated Additional Debt," as that term is used in the PIC  Additional
Projects Contract, means the original principal amount of an additional  series
of  Pooled  Project Bonds proposed to be issued which is equal to  the  largest
principal amount of such series that will provide a projected PIC Debt  Service
Coverage Ratio and a projected PIC Consolidated Debt Service Coverage Ratio (if
then  applicable)  of  at least 1.7:1 and 1.25:1, respectively,  for  each  PIC
Future Ratio Determination Period, as confirmed by the "Consolidating Engineer"
(as  such  term is used in the PIC Additional Projects Contract), assuming,  in
respect of the additional series of Pooled Project Bonds proposed to be issued,
(i)  a maximum maturity and average life generally available in the marketplace
for  debt  of  a similar nature and (ii) a coupon rate then prevailing  in  the
market for debt of a similar nature, and taking into account (a) in the case of
the  PIC Debt Service Coverage Ratio, PIC Cash Available for Distribution  from
the  PIC  Project  Portfolio and (b) in the case of the PIC  Consolidated  Debt
Service  Coverage Ratio, PIC Cash Available from Operations (net of any reserve
requirements  at  both the Project and PIC debt levels) from  the  PIC  Project
Portfolio  (giving  effect, in each case, to the transfer to  the  PIC  Project
Portfolio  of any Project in respect of which such additional series of  Pooled
Project Bonds is proposed to be issued).
     
     Other  than  through the issuance of additional series of  Pooled  Project
Bonds  upon  the  addition of a Project to the PIC Project Portfolio,  the  PFC
Indenture  prohibits PFC from incurring additional debt or becoming  liable  in
connection with a guaranty. PIC and its direct subsidiaries are prohibited from
incurring debt and becoming liable in connection with guaranties other than (i)
in the case of PIC, its guaranty and notes issued in connection with the Pooled
Project  Bonds, (ii) in the case of PIC's direct subsidiaries, their guaranties
and  notes  issued  in  connection with the Pooled Project  Bonds  and  certain
subordinated debt payable to PIC or another direct subsidiary of PIC, and (iii)
in the case of Project Entities, Project debt and certain guaranties.
     
     In  accordance with a registration rights agreement that was entered  into
in  connection  with the Series A Offering, PFC, PIC and Interholding  filed  a
registration statement with the Securities and Exchange Commission with respect
to  the exchange of Series A--1 Bonds for the Series A Bonds. The terms of  the
Series  A  Bonds  and the Series A-1 Bonds are substantially identical,  except
that (i) the Series A-1 Bonds have been registered under the Securities Act and
(ii)  holders  of  the Series A-1 Bonds are not entitled to certain  rights  of
holders  of  the Series A Bonds under the registration rights agreement,  which
rights terminated upon the consummation of the exchange offer. Such rights also
terminated as  to holders  of Series A  Bonds who  are eligible to tender their
Series  A  Bonds  for exchange in the exchange offer and failed to do  so.  The
registration statement became effective on February 14, 1997, and an  offer  to
exchange  the  Series  A-1 Bonds for the Series A Bonds  commenced  thereafter.
Pursuant to such offer, Series A-1 Bonds were exchanged for Series A Bonds that
were  validly tendered through March 20, 1997. All outstanding Series  A  Bonds
were  tendered for exchange. All references in this Prospectus to the Series  A
Bonds shall include the Series A--1 Bonds issued in exchange for Series A Bonds
in such exchange offer.
     
     
     
  Interest and Principal Payments
  
     The Series A Bonds bear interest at the rate of 11 5/8% per year from July
31,  1996, or from the most recent interest payment date to which interest  has
been paid or provided for, payable semiannually on February 20 and August 20 of
each  year,  commencing February 20, 1997. Principal of the Series A  Bonds  is
payable in semiannual installments as follows:
                  Percentage of                   Percentage of
  Payment Date      Original        Payment Date    Original
                    Principal                       Principal
                 Amount Payable                  Amount Payable
  February 20,        0.2045%      February 20,       3.4687%
  1997                             2005
  August 20,          0.0000%      August 20,         3.5977%
  1997                             2005
  February 20,        0.0000%      February 20,       3.7820%
  1998                             2006
  August 20,          0.0000%      August 20,         2.8098%
  1998                             2006
  February 20,        0.0000%      February 20,       3.0076%
  1999                             2007
  August 20,          0.5933%      August 20,         4.8415%
  1999                             2007
  February 20,        0.6129%      February 20,       5.1145%
  2000                             2008
  August 20,          0.0000%      August 20,         5.0057%
  2000                             2008
  February 20,        0.0000%      February 20,       5.2949%
  2001                             2009
  August 20,          1.3753%      August 20,         5.5185%
  2001                             2009
  February 20,        1.4691%      February 20,       5.8300%
  2002                             2010
  August 20,          2.2184%      August 20,         5.7248%
  2002                             2010
  February 20,        2.3565%      February 20,       6.0590%
  2003                             2011
  August 20,          2.9328%      August 20,         6.4800%
  2003                             2011
  February 20,        3.1031%      February 20,       6.8808%
  2004                             2012
  August 20,          3.2796%      August 20,         8.4390%
  2004                             2012

  PIC Guaranty; Collateral
  
     All  obligations of PFC with respect to the Series A Bonds and any  future
additional  series  of  Pooled  Project Bonds  are  fully  and  unconditionally
guaranteed  by  PIC pursuant to the PIC Guaranty and guaranteed  in  a  limited
amount  by  the PIC U.S. Entity. The obligations of PFC pursuant to the  Pooled
Project  Bonds,  the  obligations  of PIC  under  the  PIC  Guaranty,  and  the
obligations of the PIC U.S. Entity under its guaranty are secured by (i)  liens
on  and  security interests in substantially all of the assets of PIC and  PFC,
(ii)  pledges of all of the capital stock of PIC, PFC, the U.S. PIC Entity  and
any  future U.S. PIC Entity and (iii) a pledge of 60% of the capital  stock  of
the  Non-U.S. PIC Entity and any future Non-U.S. PIC Entity. The rights of  the
holders  of  the  Series A Bonds and the rights of any holders  of  any  future
additional  series of Pooled Project Bonds with respect to the  Pooled  Project
Bond Collateral will be shared equally.
     
     The source of payment for the Series A Bonds and all additional series  of
Pooled  Project Bonds, if any, will be the payments by PIC to PFC of principal,
premium, if any, and interest due under PIC Notes and payments, if any, by  PIC
under  the  PIC  Guaranty and by the PIC U.S. Entity under  its  guaranty.  The
principal  source of payments under PIC Notes is distributions to  PIC  through
the  PIC Entities from the Project Entities that own Projects that are part  of
the  PIC  Project  Portfolio. Thus, the ability of PFC to  make  such  payments
depends  primarily  upon the performance of the Projects  in  the  PIC  Project
Portfolio and the ability of the Project Entities to make distributions to  the
PIC Entities and, ultimately, to PIC.
     
  Ranking
  
     The indebtedness evidenced by the Series A Bonds and any additional series
of Pooled Project Bonds constitute senior secured indebtedness of PFC. In order
for  PFC to receive payments from PIC on the PIC Notes, the Projects in the PIC
Project  Portfolio  must generate sufficient operating cash  flow  to  pay  all
operating  expenses,  debt  service and other reserve  requirements  and  other
payment obligations to lenders and other Project creditors. Therefore, although
PFC  and PIC have no secured indebtedness other than the Pooled Project  Bonds,
the  Exchange  Notes  are effectively subordinated to all  liabilities  of  the
Project  Entities  incurred  in respect of the  Projects  as  well  as  to  the
liabilities  of PFC and PIC in respect of the Pooled Project Bonds.  See  "Risk
Factors--Financial Risks--Substantial Leverage" and "--Effective  Subordination
of  Exchange  Notes  and  Exchange Notes Guarantee"  and  "Description  of  the
Exchange Notes, the Notes Guarantee, the Issuer Loan, the Shareholder Loans and
the Collateral Documents."
     
  Certain Covenants
  
     Limitations  on  Distributions.  Subject to  certain  limited  exceptions,
distributions may be made by PFC through to the guarantor only from, and to the
extent  of,  amounts  then  on  deposit in the distribution  funds  established
pursuant to the PFC Indenture (the "PFC Distribution Funds"). Amounts may  only
be  deposited  into  the PFC Distribution Funds upon the  satisfaction  of  the
following  conditions:   (i)  amounts deposited in  certain  funds  established
pursuant to the PFC Indenture shall be equal to or greater than the amount then
required  to be deposited therein, including the debt service and debt  service
reserve  funds  and (ii) no event or condition has occurred and  is  continuing
that  constitutes  a  default of an event of default under the  PFC  Indenture,
(iii)  PIC's debt service coverage ratio is equal to or greater than 1.4:1  for
the 12 months immediately preceding the month in which such distribution is  to
occur  and  (iv)  PIC's projected debt service coverage ratio is  equal  to  or
greater than 1.4:1 for the 12 months immediately succeeding the month in  which
such distribution is to occur.
     
     Certain  Other  Covenants.  The  PFC  Indenture  contains  numerous  other
affirmative  and negative covenants which restrict the activities  of  PFC  and
PIC, including, but not limited to, the following:
     
     (i)   a  prohibition against incurring debt (including guaranties of debt)
           except   as  described  above,  and  a  prohibition  against   other
           guaranties except certain permitted guaranties;
     
     (ii)  a prohibition against creating or suffering to exist liens on any of
           their respective properties other than certain permitted liens;
     
     (iii) a limitation on the permitted activities of PFC and PIC, including a
           restriction  against  conducting any business  other  than  business
           conducted in connection with the issuance of Pooled Project Bonds, a
           restriction  against the creation, acquisition or  purchase  of  any
           subsidiary other than PIC Entities or any indirect subsidiary  other
           than  the  Project  Entities and a restriction  against  merging  or
           consolidating with or into any person;
     
     (iv)  subject  to  certain  exceptions, a  covenant  to  maintain  certain
           minimum  levels  of  ownership of the Projects in  the  PIC  Project
           Portfolio;
     
     (v)   a  limitation on the ability of PIC and any PIC Entity to  incur  or
           refinance  Project-level debt, to enter into new project  agreements
           or  to  terminate, amend or modify certain project agreements unless
           certain tests are satisfied;
     
     (vi)  a  covenant to cause the Project Entities to distribute to  the  PIC
           Entities  and, ultimately, to PIC, all amounts that can  be  legally
           distributed without contravention of any Project agreement;
     
     (vii) a prohibition against selling, leasing or otherwise disposing of any
           direct or indirect interests in Projects with a fair-market value in
           excess  of $2.0 million in the aggregate in any one year subject  to
           certain exceptions; and
     
     (viii)covenants  regarding compliance with laws, governmental  regulations
           and  organizational  documents,  maintenance  of  existence  and  of
           governmental  approvals, pursuing rights to  compensation  upon  the
           occurrence  of  a casualty or condemnation, employee benefit  plans,
           affiliate transactions, payment of taxes, the preparation of various
           reports and other matters.
     
  Events of Default
  
     Events  of Default under the PFC Indenture include (i) the failure to  pay
or  cause  to be paid principal of, premium, if any, or interest on any  Pooled
Project  Bond,  (ii) any misrepresentation made by PFC or  PIC  under  the  PFC
Indenture  that has resulted in a material adverse change, (iii) the breach  by
Panda International, PIC, PFC or the PIC Entities of any covenant under the PFC
Indenture,   (iv)   certain   events  involving  the  bankruptcy,   insolvency,
dissolution, receivership or reorganization of PIC, PFC or any PIC Entity;  (v)
a  final  judgment  or judgments for the payment of money  in  excess  of  $2.0
million  against any of PIC, PFC or any PIC Entity; (vi) a default  on  certain
other  debt of PIC, PFC or any PIC Entity and (vii) the cessation of  liens  on
certain  collateral. Upon the occurrence of an event of default and  after  the
lapse  of  certain applicable cure periods, the trustee under the PFC Indenture
has  the  right, among other things, to accelerate the maturity of  the  Pooled
Project  Bonds and to direct a collateral agent to realize upon the  collateral
securing the payment of the Pooled Project Bonds and other secured obligations,
including the capital stock of PIC, PFC and the PIC Entities.
     
  The Funds
  
     The PFC Indenture established the following U.S. funds: (a) a debt service
fund,  (b) a capitalized interest fund, (c) a debt service reserve fund, (d)  a
company  expense  fund, (e) a distribution suspense fund,  (f)  a  distribution
fund, (g) a mandatory redemption account, and (h) an extraordinary distribution
account. The PFC Indenture also established the following international  funds:
(a) an international distribution suspense fund, (b) an international mandatory
redemption   account,  and  (c)  an  international  extraordinary  distribution
account. All distributions or other amounts received by PIC, any PIC entity  or
any  person on behalf of PIC or any PIC Entity from or in connection  with  the
Projects  that are in the PIC Project Portfolio, subject to certain exceptions,
are  deposited  in  a  locked account with the trustee  (or,  in  the  case  of
distributions  received from a PIC International Entity, in a  separate  locked
account  with  the  International Collateral Agent) under  the  PFC  Indenture.
Amounts in the locked account controlled by the trustee are distributed monthly
to  the  U.S.  funds in the order listed above. Amounts in the  locked  account
controlled by the International Collateral Agent are distributed monthly to the
international funds in the order listed above.
     
     Upon  the issuance of the Series A Bonds, PFC deposited approximately $6.4
million  into the U.S. debt service reserve fund, $0.3 million into the company
expense  fund  and $9.8 million into the capitalized interest fund  established
under the PFC Indenture. The balances in those funds as of March 31, 1997, were
$7.1 million, $0.3 million and $9.2 million, respectively.
     
     The  U.S. debt service reserve fund may be drawn upon to pay principal of,
premium,  if  any,  and  interest on the Series  A  Bonds  if  funds  otherwise
available for such payments are insufficient.
     
  Rating
  
     The  Series A Bonds were rated Ba3 by Moody's. and BB- by Duff  &  Phelps.
There is no assurance that such ratings will be maintained.
     
The Rosemary Bonds

     Concurrently with the closing of the offering of the Series A Bonds, Panda-
Rosemary Funding Corporation (the "Rosemary Issuer"), a wholly-owned subsidiary
of  the  Rosemary Partnership, consummated the offering and sale (the "Rosemary
Offering") of $111.4 million in aggregate principal amount of its 8 5/8%  First
Mortgage  Pooled  Project Bonds due 2016 (the "Rosemary Bonds").  The  Rosemary
Bonds were issued pursuant to an indenture (the "Rosemary Indenture") among the
Rosemary  Partnership, the Rosemary Issuer and Fleet National Bank, as trustee.
The  following description of the Rosemary Bonds and certain provisions of  the
Rosemary  Indenture does not purport to be complete and is subject to,  and  is
qualified in its entirety by reference to, the Rosemary Indenture.
     
  Interest and Principal Payments
  
     The  Rosemary  Bonds  bear interest at the rate of 8 5/8%  per  year  from
July  31, 1996, the date of original issuance, or from the most recent interest
payment date to which interest has been paid or provided for, payable quarterly
on  February  15,  May 15, August 15 and November 15, commencing  November  15,
1996.  Principal of the Rosemary Bonds is payable in quarterly installments  as
follows:
                      Percentage                                Percentage
                      of Original                              of Original
                       Principal                                Principal
   Payment Date     Amount Payable        Payment Date        Amount Payable
November 15, 1996   1.2356%            August 15, 2006      0.9632%
February 15, 1997   1.2356%            November 15, 2006    0.9632%
May 15, 1997        1.2344%            February 15, 2007    0.9632%
August 15, 1997     1.2344%            May 15, 2007         1.0081%
November 15, 1997   1.2344%            August 15, 2007      1.0081%
February 15, 1998   1.2344%            November 15, 2007    1.0081%
May 15, 1998        1.3291%            February 15, 2008    1.0081%
August 15, 1998     1.3291%            May 15, 2008         1.0558%
November 15, 1998   1.3291%            August 15, 2008      1.0558%
February 15, 1999   1.3291%            November 15, 2008    1.0558%
May 15, 1999        1.1429%            February 15, 2009    1.0558%
August 15, 1999     1.1429%            May 15, 2009         1.1039%
November 15, 1999   1.1429%            August 15, 2009      1.1039%
February 15, 2000   1.1429%            November 15, 2009    1.1039%
May 15, 2000         1.2282%           February 15, 2010    1.1039%
August 15, 2000     1.2282%            May 15, 2010         1.1541%
November 15, 2000   1.2282%            August 15, 2010      1.1541%
February 15, 2001    1.2282%           November 15, 2010    1.1541%
May 15, 2001        1.3196%            February 15, 2011    1.1541%
August 15, 2001      1.3196%           May 15, 2011         1.2168%
November 15, 2001    1.3196%           August 15, 2011      1.2168%
February 15, 2002    1.3196%           November 15, 2011    1.2168%
May 15, 2002        1.4124%            February 15, 2012    1.2168%
August 15, 2002     1.4124%            May 15, 2012         1.2772%
November 15, 2002   1.4124%            August 15, 2012      1.2772%
February 15, 2003   1.4124%            November 15, 2012    1.2772%
May 15, 2003        1.5119%            February 15, 2013    1.2772%
August 15, 2003     1.5119%            May 15, 2013         1.3359%
November 15, 2003   1.5119%            August 15, 2013      1.3359%
February 15, 2004   1.5119%            November 15, 2013    1.3359%
May 15, 2004        1.6192%            February 15, 2014    1.3359%
August 15, 2004     1.6192%            May 15, 2014         1.3888%
November 15, 2004   1.6192%            August 15, 2014      1.3888%
February 15, 2005   1.6192%            November 15, 2014    1.3888%
May 15, 2005        1.7273%            February 15, 2015    1.3888%
August 15, 2005     1.7273%            May 15, 2015         1.3534%
November 15, 2005   1.7273%            August 15, 2015      1.3534%
February 15, 2006   1.7273%            November 15, 2015    1.3534%
May 15, 2006        0.9632%            February 15, 2016    1.3534%
  
  Collateral
  
     All  obligations of the Rosemary Issuer with respect to the Rosemary Bonds
are  fully  and  unconditionally guaranteed by the  Rosemary  Partnership.  The
obligations of the Rosemary Partnership under the guaranty, as well as  certain
other  obligations,  are  secured by (i) liens on, and security  interests  in,
substantially  all  of  the assets of the Rosemary Partnership,  including  the
Rosemary  Facility,  (ii) pledges by each of PR Corp. and  PRC  II,  which  are
wholly-owned  indirect  subsidiaries  of  the  Company,  of  their   respective
interests  in the Rosemary Partnership and (iii) pledges of all of the  capital
stock of the Rosemary Issuer and each of PR Corp. and PRC II.
     
  Partnership Distributions
  
     Subject  to certain limited exceptions, distributions may be made  by  the
Rosemary  Partnership to its partners only from, and to the extent of,  amounts
then  on  deposit  in  the Rosemary Partnership distribution  fund  established
pursuant  to the Rosemary Indenture. Such distributions may only be  made  upon
the  satisfaction of the following conditions: (i) amounts deposited in certain
funds  established  pursuant to the Rosemary Indenture shall  be  equal  to  or
greater  than  the amount then required to be deposited therein, including  the
debt  service  and debt service reserve funds; (ii) no event or  condition  has
occurred  and is continuing that constitutes a default or an event  of  default
under  the Rosemary Indenture; and (iii) if there has been a loss of QF status,
the  Rosemary Facility has achieved a permitted alternative utility status.  In
addition,  except for certain limited exceptions, the Rosemary Partnership  may
not  make  distributions unless (i) the average of the  debt  service  coverage
ratios for the four quarterly payment periods on the Rosemary Bonds immediately
preceding the distribution date is at least 1.2:1 and (ii) after giving  effect
to  such  distributions,  the average of the projected  debt  service  coverage
ratios  for the current quarterly payment period and the next succeeding  three
quarterly   payment  periods  on  the  Rosemary  Bonds  is  at   least   1.2:1.
Notwithstanding  the  requirements of the immediately preceding  sentence,  the
Rosemary  Partnership  may make distributions to its partners  solely  for  the
purpose of enabling the partners to pay their income tax liabilities if a lower
debt  service coverage ratio (1.1:1) and projected debt service coverage  ratio
(1.1:1)  for  certain periods exist. Except for certain limited exceptions  set
forth in the Rosemary Indenture, the Rosemary Partnership will not be permitted
to  make  any distributions to its partners after November 30, 2005 unless  (i)
the  Rosemary  Gas Supply Agreement and the Firm Gas Transportation  Agreements
have  been extended on substantially the same terms to have a termination  date
no  earlier  than the longest stated maturity of the Rosemary Bonds,  (ii)  the
Rosemary  Gas  Supply Agreement and the Firm Gas Transportation Agreements,  if
not  so  extended on substantially the same terms, have been otherwise extended
to  have a termination date no earlier than the longest stated maturity of  the
Rosemary Bonds and the rating agencies confirm that the then current rating  of
the  Rosemary Bonds will not be reduced as a result of such extension or  (iii)
the  Rosemary Gas Supply Agreement and the Firm Gas Transportation  Agreements,
if not extended as described in clause (i) or (ii), are replaced with a new gas
supply  agreement  or  gas  transportation agreement  (or  with  respect  to  a
transportation agreement, a gas transportation plan), provided that the  effect
of the replacement agreement or plan would not reduce the average of the annual
projected  debt service coverage ratios for the remaining term of the  Rosemary
Bonds below 1.2:1 and the rating agencies confirm that the then current ratings
of the Rosemary Bonds will not be reduced as a result of such replacement.
     
  Certain Other Covenants
  
     The  Rosemary  Indenture contains numerous other affirmative and  negative
covenants which restrict the activities of the Rosemary Issuer and the Rosemary
Partnership, including, but not limited to, the following:
     
     (i)   prohibition  against incurring debt (including guaranties  of  debt)
           except   as  described  below,  and  a  prohibition  against   other
           guaranties except certain permitted guaranties;
     
     (ii)  a prohibition against creating or suffering to exist liens on any of
           their respective properties other than certain permitted liens;
     
     (iii) a prohibition against selling, leasing or otherwise disposing of any
           property  or  assets except worn-out equipment and certain  property
           with  a  fair  market  value not in excess of $3.0  million  in  the
           aggregate  in any one year and, with respect to any single  item  of
           property, a fair market value in excess of $1.0 million, and certain
           other exceptions;
     
     (iv)  a limitation on the Rosemary Partnership's ability to enter into new
           project  agreements or to terminate, amend or modify certain project
           agreements unless certain tests are satisfied;
     
     (v)   a  limitation  on  the ability of the Rosemary Partnership  and  the
           Rosemary Issuer to merge or consolidate with or into any person,  or
           acquire all or any substantial part of the assets or business of any
           person, or form subsidiaries; and
     
     (vi)  covenants   regarding   compliance  with   laws   and   governmental
           regulations,   maintenance   of  government   approvals,   affiliate
           transactions,  payment of taxes, the preparation of various  budgets
           and  reports,  the maintenance of specified insurance coverages  and
           other matters.
     
     The  debt that the Rosemary Issuer is permitted to incur is limited to the
Rosemary Bonds and certain other indebtedness ranking pari passu or subordinate
to  the  Rosemary  Bonds,  the proceeds of which are  loaned  to  the  Rosemary
Partnership. The debt permitted by the Rosemary Indenture to be incurred by the
Rosemary  Issuer  or the Rosemary Partnership includes: (i) purchase  money  or
capitalized  lease  obligations not exceeding $1.0  million  in  the  aggregate
outstanding  at  any time; (ii) trade accounts payable; (iii)  working  capital
loans  or  letter  of  credit reimbursement obligations if the  minimum  annual
projected  debt service coverage ratios for the remaining term of the  Rosemary
Bonds and the average of the annual projected debt service coverage ratios  for
the  remaining  term of the Rosemary Bonds equal or exceed  1.5:1  and  1.75:1,
respectively; (iv) debt incurred to finance enhancements to or modifications of
the  Rosemary  Facility if, after giving effect to such debt, the same  minimum
and average annual projected debt service coverage ratios are satisfied (or, if
the  enhancement is required to maintain QF status, each of such  debt  service
coverage  ratios described above is at least 1.2:1); (v) certain interest  rate
protection  agreements;  (vi) guaranties arising  in  the  ordinary  course  of
business  not  exceeding  $1.0  million in the  aggregate;  and  (vii)  various
indemnities  with  respect  to  mechanics  and  other  liens,  obligations   to
governmental authorities, surety bonds and guaranties, indemnities  or  similar
obligations provided under or required by a Rosemary Project agreement.
     
  Events of Default
  
     Events  of default under the Rosemary Indenture include: (i) a default  in
the  payment  of principal of, interest on or premium, if any, on any  Rosemary
Bonds;  (ii)  any  misrepresentation made by the Rosemary  Partnership  or  the
Rosemary  Issuer under the Rosemary Indenture which has resulted in a  material
adverse  change; (iii) the breach by the Rosemary Partnership or  the  Rosemary
Issuer  of  any  covenant under the Rosemary Indenture  or  related  collateral
documents; (iv) the bankruptcy or insolvency of the Rosemary Partnership or the
Rosemary Issuer; (v) a final judgment or judgments for the payment of money  in
excess  of $1.0 million rendered against either of the Rosemary Partnership  or
the Rosemary Issuer unless covered by indemnity or insurance; (vi) a default on
certain  other  debt of the Rosemary Partnership or the Rosemary Issuer;  (vii)
the  termination  or  expiration of certain Project  agreements  to  which  the
Rosemary  Partnership  is  a party (some of which are  currently  scheduled  to
expire  prior  to  the  maturity date of the Rosemary Bonds;  see  "Partnership
Distributions"  above);  (viii) the cessation of liens or  certain  collateral;
(ix)  a  modification of certain Project agreements which results in a material
adverse  change;  (x)  Panda  International shall  cease  to  own  directly  or
indirectly  51% of the capital stock of PR Corp. or PRC II; and (xi)  PR  Corp.
shall  withdraw  or be removed as general partner of the Rosemary  Partnership.
Upon  the  occurrence  of an event of default and after the  lapse  of  certain
applicable  cure  periods,  the trustee under the Rosemary  Indenture  has  the
right, among other things, to accelerate the maturity of the Rosemary Bonds and
to direct a collateral agent to foreclose the mortgage on the Rosemary Facility
and  otherwise  realize  upon  the collateral securing  the  repayment  of  the
Rosemary Bonds and other secured obligations, including the capital stock of PR
Corp.  and PRC II (through which the Company holds an indirect equity  interest
in the Rosemary Partnership).
     
  The Funds
  
     The  deposit  and disbursement agreement entered into simultaneously  with
the  Rosemary Indenture establishes the following funds: (a) a project  revenue
fund,  (b) an operating fund, (c) a debt service fund, (d) a property tax fund,
(e)  a debt service reserve fund, (f) an overhaul fund, (g) a pollution control
finance fund, (h) a restoration fund, (i) a partnership distribution fund,  and
(j)  an  additional permitted debt fund. All project revenues received  by  the
Rosemary Partnership and all revenue received by the Rosemary Issuer are to  be
deposited  into the project revenue fund. Amounts in the project  revenue  fund
are  used  to pay operating expenses related to the Rosemary Facility and  then
are  distributed  to  the  other funds established  pursuant  to  the  Rosemary
Indenture in the priority listed above.
     
     Upon  the  issuance  of  the  Rosemary  Bonds,  the  Rosemary  Partnership
deposited  approximately  $8.1  million into  the  debt  service  reserve  fund
established under the Rosemary Indenture. The balances that must be  maintained
in  the  debt  service  reserve fund generally decline over  the  life  of  the
Rosemary  Bonds. In addition, the Rosemary Partnership is required to  maintain
in  the debt service reserve fund an amount equal to the maximum amount of debt
service  due  in  respect of certain other debt permitted  under  the  Rosemary
Indenture for any six-month period during the succeeding three-year period. The
debt  service reserve fund may be drawn upon to pay principal of,  premium,  if
any,  and  interest on the Rosemary Bonds and certain debt permitted under  the
Rosemary  Indenture, to the extent of funds allocated within the  debt  service
reserve  fund  to  such  obligations, if funds  otherwise  available  for  such
payments are insufficient.
     
  Rating
  
     The  Rosemary Bonds were rated Baa3 by Moody's Investors Service, Inc. and
BBB-  by  Duff & Phelps Rating Co. Inc. There is no assurance that such ratings
will be maintained.
     
The Brandywine Financing

     The  Brandywine  Partnership, Panda Brandywine  Corporation,  the  general
partner of the Brandywine Partnership ("PBC"), and GE Capital entered into  the
Construction  Loan Agreement and Lease Commitment dated as of  March  30,  1995
(the  "Brandywine Loan Agreement"), pursuant to which GE Capital agreed, either
directly  or  indirectly through an owner trustee, to (i) provide  construction
financing for the Brandywine Facility, (ii) issue letters of credit as security
for  certain  obligations of the Brandywine Partnership  under  the  Brandywine
Power  Purchase Agreement, (iii) lease the Brandywine Facility site  from,  and
immediately  thereafter sublease the site to, the Brandywine Partnership,  (iv)
upon  substantial  completion of the construction of the  Brandywine  Facility,
purchase the Brandywine Facility from the Brandywine Partnership and lease  the
Brandywine  Facility back to the Brandywine Partnership and (v) upon completion
of  the  construction of the Brandywine Facility, make certain equity loans  to
the  Brandywine Partnership or its partners. The following description  of  the
Brandywine Loan Agreement and the other Brandywine Financing Documents does not
purport  to be complete and is subject to, and is qualified in its entirety  by
reference to, the Brandywine Financing Documents, including definitions therein
not contained in this Prospectus.
     
  Construction Loans
  
     Construction  of  the  Brandywine Facility is substantially  complete.  On
December  30, 1996, the Brandywine construction loan was converted to long-term
financing  in  the  form  of  a  leveraged  lease  (the  "Brandywine  Financing
Conversion").  In  connection  therewith, all  amounts  outstanding  under  the
Brandywine construction loan were repaid in full and the Brandywine Partnership
funded  the completion account described below with funds that will be used  to
complete construction of the Brandywine Facility.
     
  Long-Term Financing
  
     As to the Brandywine Financing Conversion, the Brandywine Partnership sold
the Brandywine Facility and leased the facility site to Fleet National Bank, as
owner  trustee  (the  "Brandywine  Owner Trustee"),  for  approximately  $217.5
million.  The Brandywine Owner Trustee financed the purchase of the  Brandywine
Facility  through  an equity investment of $45.5 million from  GE  Capital  and
loans  aggregating $172.0 million from loan participants. The Brandywine  Owner
Trustee  then  leased the Brandywine Facility and sub-leased the facility  site
back to the Brandywine Partnership.
     
     GE  Capital  has  committed to provide certain letters of credit  for  the
account  of the Brandywine Partnership and to make equity loans to the partners
of the Brandywine Partnership, as more fully described below. All of the assets
of  the  Brandywine  Partnership  and all of the  ownership  interests  in  the
Brandywine  Partnership, as well as certain other collateral,  are  pledged  to
secure  the  obligations of the Brandywine Partnership   under  the  Brandywine
Financing Documents.
     
  Brandywine Facility Lease
  
     The  Brandywine  Partnership  is a party to  a  Facility  Lease  with  the
Brandywine Owner Trustee (the "Brandywine Facility Lease") pursuant to which it
leases  the  Brandywine  Facility  from  the  Brandywine  Owner  Trustee.   The
Brandywine Facility Lease is a net lease and its initial term ends on  December
30,  2016. Basic rent is payable quarterly on January 31, April 30, July 31 and
October 31, commencing January 31, 1997, as follows:
     

       Quarterly                 
  Basic Rent Payment      Basic Rent ($)
         1                             0
              2-5              2,610,509
              6-9              2,602,976
             10-13             4,993,980
             14-17             5,165,114
             18-21             6,816,268
             22-25             6,984,563
             26-29             6,976,747
             30-33             6,864,048
             34-37             6,900,548
             38-41             7,047,103
             42-45             7,517,816
             46-49             7,632,159
             50-53             7,821,232
             54-57             8,303,090
             58-61             8,980,537
             62-65            10,109,363
             66-69            10,463,802
             70-73            10,684,854
             74-77            10,292,055
             78-80             9,429,196
                                       
                                       
     In  addition,  and  from time to time, the Brandywine  Owner  Trustee  may
require  the  Brandywine Partnership to pay, as supplemental rent, (i)  certain
agreed-upon  amounts  required  to  be paid to  the  Brandywine  Owner  Trustee
following  a specified event of loss or event of regulation, after  payment  of
which  the  Brandywine  Facility  Lease  would  terminate  and  the  Brandywine
Partnership  would receive title to the Brandywine Facility; (ii) amounts  owed
pursuant to certain tax change indemnity obligations; (iii) certain lender swap
breakage  costs arising as a result of an event of default, loss or regulation;
(iv)  interest on overdue rent payments; and (v) amounts owed as  a  result  of
certain   other  obligations  arising  pursuant  to  the  Brandywine  Financing
Documents. Basic rent may also be reduced if GE Capital elects to consummate  a
refinancing.
     
  Reserve Accounts
  
     In connection with the obligations of the Brandywine Partnership under the
Brandywine  Financing  Documents, various accounts  were  established  for  the
benefit of the Brandywine Owner Trustee, GE Capital and others.
     
     The  Brandywine  Partnership funded the operation and maintenance  reserve
account  in  the  amount  of $1.0 million. Until the balance  of  such  reserve
account  reaches  $5.0 million (which amount is adjusted  upward  annually  for
inflation after December 30, 2001), quarterly contributions of $125,000 in each
of  the  first eight calendar quarters and $375,000 for each of the next  eight
calendar quarters are made to this reserve account out of funds available  from
the  project  revenue account. Thereafter, contributions will be  made  out  of
funds  available  in the project revenue account as necessary to  maintain  the
required  balance. Subject to specified conditions, funds held in this  reserve
account will be used to replenish a drawing under an operations and maintenance
letter of credit to be issued.
     
     The  Brandywine Partnership funded the rent reserve account in the  amount
of  $2.4 million. The balance in the rent reserve account must be maintained at
the  greater  of (i) $2.4 million and (ii) the sum of the next two payments  of
basic rent.
     
     The Brandywine Partnership funded the warranty maintenance reserve account
in  the  amount  of $750,000. Subject to specified conditions,  funds  in  this
reserve  account  will  be  used  to  satisfy  warranty  obligations   to   the
manufacturer  of  the  Brandywine  Facility's  combustion  and  steam   turbine
generators.
     
     The  Brandywine Partnership funded the completion account upon the closing
of  the  Brandywine  Financing Conversion in the amount of  $5.3  million.  The
balance  in  the  account  as of March 31, 1997 is  $3.6  million.  Subject  to
specified conditions, funds held in the completion account will be used to  pay
costs  and expenses incurred in connection with the construction and completion
of the Brandywine Facility.
     
     If  the Brandywine Partnership receives a notice from PEPCO that PEPCO has
determined  that  the  Brandywine Partnership has failed  to  comply  with  its
obligation  under the Brandywine Power Purchase Agreement to  have  a  reliable
supply of fuel for the Brandywine Facility, then the Brandywine Partnership  is
required  to  establish and fund a special payment account  with  100%  of  the
excess,   if   any,  of  Brandywine  distributable  cash  flow  over   required
contributions to the rent reserve account until such notice is rescinded or the
fuel  default  is  cured. Subject to specified conditions, funds  held  in  the
special payment account will be used to cure the fuel default.
     
     In the event that funds in the project revenue account are insufficient to
pay  letter of credit fees and rent, and to make the required contributions  to
the  reserve  accounts, such payments and transfers may  be  made  out  of  the
partnership  security  account and distribution  reserve  account.  Subject  to
specified conditions, funds held in the partnership security account  may  from
time  to time be distributed to the partners of the Brandywine Partnership  and
funds  held  in  the  distribution reserve account may from  time  to  time  be
transferred to the project revenue account.
     
  Letters of Credit
  
     GE  Capital has issued and agreed to maintain certain outstanding stand-by
letters  of  credit and issue and maintain an additional letter  of  credit  as
required  for the account of the Brandywine Partnership in favor  of  PEPCO  to
secure  certain obligations of the Brandywine Partnership under the  Brandywine
Power  Purchase Agreement. The aggregate stated amount of all letters of credit
outstanding  at  any one time in connection with the Brandywine Facility  Lease
cannot  exceed  a  specified  aggregate amount, currently  $7.33  million.  The
Brandywine Partnership is required to reimburse GE Capital for any disbursement
under  any letter of credit on the day that GE Capital makes any payment  to  a
beneficiary  thereof.  If  the Brandywine Partnership  does  not  reimburse  GE
Capital  on  such day, it must pay interest on the amount not reimbursed  at  a
rate  per  annum equal to 2.5% plus a base rate of the higher of (i)  the  base
commercial  lending  rate  of Credit Suisse, New York  or  (ii)  the  overnight
federal funds rate plus 0.5%. The Brandywine Partnership is obligated to pay to
GE  Capital  an  issuance fee of 1.75% of the stated amount of each  letter  of
credit  upon initial issuance, a letter of credit fee of 1.5% per annum on  the
aggregate  stated amounts of all outstanding letters of credit and a commitment
fee  of  1.25%  per  annum  on  the unused balance  of  the  letter  of  credit
commitment.
     
  Partnership Distributions
  
     The  Brandywine Participation Agreement places limitations on the  ability
of the Brandywine Partnership to make distributions to its partners. Subject to
certain other conditions, the Brandywine Partnership may make distributions  to
its  partners only if: (i) all amounts then required to be deposited in certain
reserve  accounts, including the reserve accounts described  above,  have  been
deposited;  (ii)  all  rent payments then due to the Brandywine  Owner  Trustee
under  the  Brandywine  Facility Lease have been  paid;  (iii)  the  Brandywine
Facility meets an operating cash flow to basic rent ratio of 1.2:1; and (iv) at
the  time of such distribution, and after giving effect thereto, no default  or
event  of default has occurred and is continuing under the Brandywine Financing
Documents.
     
  Certain Other Covenants
  
     The  Brandywine  Financing Documents also contain certain affirmative  and
negative covenants which restrict the ability of the Brandywine Partnership and
PBC to take certain actions including, but not limited to, the following:
     
     (i)   a  requirement  that  the  Brandywine Partnership  pay  all  of  its
           indebtedness   and   obligations  under  the  Brandywine   Financing
           Documents  and  perform its obligations under  the  related  project
           documents;
     
     (ii)  a requirement that the Brandywine Partnership and PBC maintain their
           current respective form of organization, that PBC remain the general
           partner  of  the  Brandywine Partnership  and  that  the  Brandywine
           Facility be maintained as a QF;
     
     (iii) a  prohibition against mergers, sales of assets other than  electric
           power and steam, and certain acquisitions;
     
     (iv)  a  prohibition against indebtedness other than under the  Brandywine
           Financing Documents;
     
     (v)   a prohibition against amending certain contracts without the consent
           of a majority of the Brandywine Loan Participants and GE Capital;
     
     (vi)  a   prohibition  against  entering  into  leases  other  than  those
           specifically contemplated by the Brandywine Financing Documents; and
     
     (vii) a requirement (set forth in a stock pledge agreement entered into by
           Panda  Interholding)  that all subsidiaries  of  Panda  Interholding
           (either  existing  or  subsequently acquired or  formed)  which  are
           engaged in the financing, development, construction or operation  of
           independent  power projects or energy transmission projects  located
           in  the  United States (other than the Kathleen Partnership and  the
           partners  of  that  partnership) remain  as  subsidiaries  of  Panda
           Interholding;  provided,  that  the  Kathleen  Partnership  and  the
           partners thereof shall continue to be subsidiaries of PEC and  shall
           be  transferred  to  Panda Interholding within 180  days  after  the
           earlier  of  financial closing or the date of commercial  operations
           with  respect to such Project, and provided, further, that,  subject
           to  certain  restrictions in the Brandywine Participation Agreement,
           Panda  Interholding  may  sell all  or  any  of  the  stock  of  any
           subsidiary that is subject to this requirement to any person who  is
           not an affiliate of Panda Interholding.
     
  Events of Default
  
     The   Brandywine  Facility  Lease  contains  certain  events  of  default,
including  but not limited to: (i) default in the payment of any rental  amount
payable under the Brandywine Facility Lease; (ii) a misrepresentation contained
in  any document furnished by or on behalf of the Brandywine Partnership or any
partner;  (iii)  a  failure of the Brandywine Partnership or any  affiliate  to
perform  or  observe any covenants or obligations contained in  the  Brandywine
Financing Documents to which it is a party; (iv) a default in payment under any
indebtedness of the Brandywine Partnership or PBC or certain affiliates  or  in
the  observance  or performance of any covenant relating to such  indebtedness;
(v)  bankruptcy or insolvency of any party to or participant under any  of  the
Brandywine  Financing  Documents or other project  agreements  related  to  the
operation of the Brandywine Facility; (vi) a judgment or judgments in excess of
$150,000  being  rendered against the Brandywine Partnership, Brandywine  Water
Company  or  PBC and remaining in effect and unstayed for more  than  30  days;
(vii) if PEC and Panda Interholding shall cease to own, directly or indirectly,
51% of PBC and Panda Energy Delaware; and (viii) the Brandywine Facility ceases
to  be a QF. Upon an event of default under the Brandywine Financing Documents,
the Brandywine Owner Trustee may, in addition to other remedies, foreclose upon
or terminate the Brandywine Facility Lease.
     
  Collateral
  
     All  obligations  of  the  Brandywine  Partnership  under  the  Brandywine
Financing  Documents  to GE Capital and the Brandywine Owner  Trustee,  and  in
turn,  all  obligations of the Brandywine Owner Trustee to the Brandywine  Loan
Participants under the Brandywine Participation Agreement, are secured by (i) a
pledge  of, and a security interest in, substantially all of the assets of  the
Brandywine  Partnership, (ii) pledges by PBC and Panda Energy  Delaware,  which
are  indirect  wholly-owned subsidiaries of the Company,  of  their  respective
interests  in the Brandywine Partnership and (iii) pledges of all  the  capital
stock  of  PBC and Panda Energy Delaware, and all of the stock and all  of  the
assets   of  Brandywine  Water  Company,  which  is  an  indirect  wholly-owned
subsidiary of the Company that operates the distilled water facility serving as
the  steam  host  for  the  Brandywine Facility. In  addition,  the  Brandywine
Partnership  has  assigned  its  interest  in  the  Brandywine  Power  Purchase
Agreement  to  the Brandywine Owner Trustee, to take effect if  the  Brandywine
Facility Lease terminates.
     
                      DESCRIPTION OF THE EXCHANGE NOTES,
                         THE EXCHANGE NOTES GUARANTEE,
                  THE ISSUER LOAN, THE SHAREHOLDER LOANS AND
                           THE COLLATERAL DOCUMENTS
                                       
     The  Exchange Notes will be issued under an indenture (the "Exchange Notes
Indenture")  between  Panda Global Energy Company (the  "Issuer")  and  Bankers
Trust  Company,  as  trustee  (the  "Exchange  Notes  Trustee")  and  will   be
unconditionally guaranteed by Panda Global Holdings, Inc. (the "Company") as to
payment  of  principal,  premium,  if any, and interest  (including  Liquidated
Damages  and  Additional Amounts, if any), by a guarantee (the "Exchange  Notes
Guarantee")  issued  under an indenture (the "Company Indenture")  between  the
Company   and  Bankers  Trust  Company,  as  trustee  (the  "Company  Indenture
Trustee"). The Exchange Notes Indenture and the Company Indenture are  referred
to  together  herein as the "Indentures." The Exchange Notes  Trustee  and  the
Company  Indenture Trustee are referred to together herein as  the  "Trustees."
The  following  summaries of certain provisions of the Indentures,  the  Issuer
Loan   Agreement,  the  Shareholder  Loan  Agreements  and  certain  collateral
documents  do not purport to be complete and are subject to, and are  qualified
in their entirety by reference to, all of the provisions thereof, including the
definitions therein of certain terms.
     
General

     The  Exchange  Notes  will  be  issued only in  registered  form,  without
coupons,  in  denominations  of  $1,000  and  integral  multiples  of   $1,000.
Principal,  premium,  if  any, and interest (including Liquidated  Damages  and
Additional  Amounts,  if any) on the Exchange Notes will be  payable,  and  the
Exchange Notes will be transferable, at the corporate trust office or agency of
the  Exchange Notes Trustee. In addition, interest may be paid by wire transfer
or check mailed to the Person entitled thereto as shown on the register for the
Exchange  Notes,  provided that all payments with respect to Global  Notes  (as
defined)  and Certificated Securities (as defined), the Holders of  which  have
given wire transfer instructions to the Issuer, will be required to be made  by
wire  transfer of immediately available funds to the accounts specified by  the
Holders  thereof. The Exchange Notes will initially be represented  by  a 
Global Note (the "Global Note") and will be deposited with, or on behalf
of,  The Depository Trust Company (the "Depository") and registered in the name
of  a nominee of the Depository. Except as set forth in "--Book-Entry, Delivery
and  Form,"  owners of beneficial interests in such Global Note  will  not  be
entitled to have Exchange Notes registered in their names, will not receive  or
be  entitled to receive physical delivery of Exchange Notes in definitive  form
and  will  not  be considered the owners or Holders thereof under the  Exchange
Indenture.  See  "--Book-Entry, Delivery and Form." No service charge  will  be
made for any registration of transfer or exchange of the Exchange Notes, except
for  any  tax  or other governmental charge that may be imposed  in  connection
therewith.
     
     Any Old Notes that remain outstanding after the completion of the Exchange
Offer,  together  with the Registered Exchange Notes issued in connection  with
the  Exchange Offer, will be treated as a single class of securities under  the
Exchange Notes Indenture.
     
Ranking, Maturity, Interest and Principal of the Exchange Notes

     The  Exchange  Notes, as well as the Old Notes (i.e., the Existing  Notes)
will be senior obligations of the Issuer ranking senior in right of payment  to
all  subordinated  Indebtedness of the Issuer and pari  passu  with  all  other
Senior  Indebtedness of the Issuer. The Existing Notes will be secured  by  the
Exchange  Notes  Collateral. The aggregate principal amount of  Existing  Notes
will  total  $155,200,000.  Subject  to  the  satisfaction  of  the  applicable
covenants  by the Issuer and by the Company pursuant to the Company  Indenture,
additional  Senior Indebtedness may be issued by the Issuer from time  to  time
(whether  pursuant  to  the Exchange Notes Indenture  or  pursuant  to  another
indenture), which additional Senior Indebtedness will share equally and ratably
in  certain of the Exchange Notes Collateral. The Existing Notes will mature on
April 15, 2004. Notwithstanding the foregoing, the Issuer shall be obligated to
repay  the  Existing Notes by redeeming semi-annually on the dates and  in  the
amounts  indicated  in the following table, together with  accrued  and  unpaid
interest (including Liquidated Damages and Additional Amounts, if any):
     
                       Semi-annual                    Principal
                       Payment Date                 Amount Repaid
          October 15, 2000                             $1,650,000
          April 15, 2001                               $2,200,000
          October 15, 2001                             $2,200,000
          April 15, 2002                               $4,000,000
          October 15, 2002                             $4,000,000
          April 15, 2003                               $4,950,000
          October 15, 2003                             $4,950,000
    
    
In  accordance with the terms of the Exchange Notes Indenture, the Issuer shall
not  be  allowed  to  fulfill its obligation to repay  such  principal  amounts
through  the  purchase  of  Existing Notes and the  deposit  thereof  with  the
Exchange Notes Trustee.

     Cash  interest on the Existing Notes will accrue at a rate of 12-1/2%  per
annum and will be payable semi-annually in arrears on each April 15 and October
15,  commencing October 15, 1997 to the Holders of record of Existing Notes  at
the  close  of  business  on  April 1 and October 1, respectively,  immediately
preceding such interest payment date. Cash interest will accrue from  the  most
recent interest payment date to which interest has been paid or, if no interest
has been paid, from April 22, 1997. Interest will be computed on the basis of a
360-day  year  of  twelve 30-day months. Interest on overdue principal  and  on
overdue  installments of interest will accrue at the rate of interest borne  by
the Existing Notes.
     
     The  Existing  Notes will be effectively subordinated to all  Indebtedness
and  other  liabilities  and  commitments of all Subsidiaries  of  the  Issuer,
including,  without limitation, the Indebtedness of Pan-Western and  the  Joint
Ventures.  Any  right  of  the Issuer to receive assets  of  its  Subsidiaries,
including,  without  limitation, assets of Pan-Western  or  any  Joint  Venture
pursuant  to  the  terms of the Exchange Notes Collateral upon  liquidation  or
reorganization of any such entity (and the consequent right of the  Holders  of
the  Existing  Notes  to  participate  in those  assets)  will  be  effectively
subordinated  to the claims of that entity's creditors, except  to  the  extent
that  the  Issuer is itself recognized as a creditor of such entity,  in  which
case the claims of the Issuer would still be subordinate to any security in the
assets  of  its  Subsidiaries, including, without limitation,  assets  of  Pan-
Western  or any Joint Venture and any Indebtedness thereof senior to that  held
by  the  Issuer.  See  "Risk  Factors  - Additional  Indebtedness  -  Effective
Subordination of Exchange Notes and Exchange Notes Guarantee."
     
Exchange Notes Guarantee

     The  Company, under the terms of the Company Indenture, as primary obligor
and not merely as surety, will irrevocably, fully and unconditionally guarantee
on  a  senior  secured  basis the performance and punctual  payment  when  due,
whether at stated maturity, by acceleration or otherwise, of all obligations of
the  Issuer under the Exchange Notes Indenture and the Existing Notes,  whether
for  principal, premium, if any, and interest (including Liquidated Damages and
Additional  Amounts, if any), on the Existing Notes, expenses,  indemnification
or otherwise (all such obligations guaranteed by the Company referred to herein
as  the  "Exchange Notes Guarantee"). The Company has no material assets  other
than the Capital Stock of PEC and the Issuer, and, accordingly, its ability  to
perform  under the Existing Notes Guarantee will be dependent on the  financial
condition  and  results  of operation of PEC and the  Issuer.  Subject  to  the
satisfaction   of  the  applicable  conditions,  Indebtedness  and   additional
guarantees  pari passu with the Exchange Notes Guarantee may be issued  by  the
Company  from  time  to  time (whether pursuant to  the  Company  Indenture  or
pursuant  to  another  indenture),  which additional  Senior  Indebtedness  and
guarantees  may  share  equally and ratably in certain of  the  Exchange  Notes
Guarantee Collateral.
     
     The  Exchange  Notes  Guarantee is a continuing guarantee  and  shall  (a)
remain  in  full  force and effect until payment in full of  all  the  Existing
Notes,  (b)  be  binding upon the Company and its successors,  transferees  and
assigns  and  (c)  inure to the benefit of and be enforceable by  the  Exchange
Notes Trustee, the Holders and their successors, transferees and assigns.
     
     The  Exchange  Notes  Guarantee will be effectively  subordinated  to  all
Indebtedness and other liabilities and commitments of all Subsidiaries  of  the
Company,  including,  without limitation, the Indebtedness  of  PIC,  PFC,  the
Domestic  Projects, the Joint Ventures and any Permitted Project. Any right  of
the   Company  to  receive  assets  of  its  Subsidiaries,  including,  without
limitation,  assets of PIC, PFC, the Domestic Projects, the Joint  Ventures  or
any  Permitted  Project pursuant to the terms of the Exchange  Notes  Guarantee
Collateral  upon  liquidation or reorganization of any  such  entity  (and  the
consequent  right of the holders of the Exchange Notes Guarantee to participate
in  those  assets)  will  be effectively subordinated to  the  claims  of  that
entity's  creditors, except to the extent that the Company is itself recognized
as  a  creditor  of such entity, in which case the claims of the Company  would
still  be  subordinate  to  any  security in the assets  of  its  Subsidiaries,
including,  without limitation, assets of PIC, PFC, the Domestic Projects,  the
Joint Ventures or any Permitted Project and any Indebtedness thereof senior  to
that held by the Company.
     
Redemption

     Optional  Redemption  of  Exchange  Notes.  The  Exchange  Notes  will  be
redeemable   at  the  option  of  the  Issuer  (an  "Exchange  Notes   Optional
Redemption"), in whole or in part, at any time on or after April 15,  2002,  at
the redemption prices (expressed as a percentage of principal amount) set forth
below,  plus  accrued and unpaid interest, if any, to the redemption  date,  if
redeemed  during  the  12  month period beginning on  April  15  of  the  years
indicated below:
     
                       Redemption
           Year          Price
           2002         107.00%
           2003         103.50%
           2004         100.00%
                                   
     
     In  addition,  prior  to  April 15, 2000, the  Issuer  may  redeem  up  to
$51,733,000  of the aggregate outstanding issued principal amount  of  Existing
Notes  at  a  redemption price equal to 113.0% of the principal amount  of  the
Existing  Notes so redeemed, plus accrued and unpaid interest, if any,  to  the
redemption  date  with  the  Net Cash Proceeds of one  or  more  Public  Equity
Offerings by the Company, Panda International or any direct or indirect  parent
of  the  Company; provided that (i) the proceeds of such offering used for  the
purposes of the optional redemption are contributed as equity to the Issuer and
(ii)  at  least  $103,467,000  of the originally  issued  principal  amount  of
Existing Notes would remain outstanding immediately after giving effect to such
redemption  (any  such  redemption, an "Existing Notes Public  Equity  Offering
Redemption").
     
     Mandatory  Redemption.  Upon the occurrence of  certain  events  described
below,  the outstanding Existing Notes (together with, as provided in paragraph
(vi) below, any additional Senior Indebtedness of the Issuer outstanding at the
time  of  such  Mandatory Redemption) will be redeemed pro rata  (a  "Mandatory
Redemption"),  at a redemption price equal to 100% of the principal  amount  of
the  Existing Notes, together with accrued and unpaid interest, if any, to  the
redemption date:
     
     (i)   Upon  the  occurrence  of  a  Luannan Event  of  Loss  or  Luannan
           Expropriation  Event that is determined by the  Issuer  to  render
           the  Luannan  Facility  incapable of being  rebuilt,  repaired  or
           restored  so as to permit operation of the entire Luannan Facility
           on  a  commercially feasible basis, all Luannan Casualty  Proceeds
           and  all  Luannan  Expropriation Proceeds and  repayments  of  the
           Issuer  Loan  and  the  Shareholder  Loans  (resulting  from  such
           Luannan   Event  of  Loss  or  Luannan  Expropriation   Event   or
           otherwise)  will  be  applied pro rata to the  redemption  of  the
           Existing   Notes.  The  redemption  date  for  such  a   Mandatory
           Redemption may be any date during the 90-day period following  the
           date  of  the Issuer's determination that the Luannan Facility  is
           incapable  of  being  rebuilt, repaired or restored  (taking  into
           account the notice requirements set forth in the Indentures).
     
     (ii)  Upon  the  occurrence  of  a  Luannan Event  of  Loss  or  Luannan
           Expropriation Event that is determined by the Issuer to  render  a
           portion  of  the  Luannan  Facility incapable  of  being  rebuilt,
           repaired  or  restored, but permits the remaining portion  of  the
           Luannan  Facility  to be rebuilt, repaired or restored  so  as  to
           permit  operation of the remaining portion of the Luannan Facility
           on  a  commercially feasible basis (as confirmed  by  the  Luannan
           Facility Engineer pursuant to the Company Indentures), and if  the
           amount  of  the Luannan Casualty Proceeds or Luannan Expropriation
           Proceeds  and  repayments of the Issuer Loan and  the  Shareholder
           Loans  resulting  from  such Luannan  Event  of  Loss  or  Luannan
           Expropriation  Event  exceeds $500,000 (after  reduction  for  the
           total  cost  of  rebuilding, repairing or  restoring  the  Luannan
           Facility  in accordance with the Indentures), the total amount  of
           such  excess  proceeds will be applied pro rata to the  redemption
           of  the Existing Notes. The redemption date may be any date during
           the   90-day   period   following  the  date   of   the   Issuer's
           certification  to  the Trustees of completion of  the  rebuilding,
           repairing  or  restoration of the Luannan  Facility  (taking  into
           account the notice requirements set forth in the Indentures).
     
     (iii) Upon  the  occurrence  of a Luannan Event of  Loss  or  a  Luannan
           Expropriation  Event  for which the Luannan Casualty  Proceeds  or
           Luannan  Expropriation Proceeds and repayments of the Issuer  Loan
           and  the  Shareholder Loans exceed the aggregate principal  amount
           of  the  outstanding  Existing Notes, and any applicable  interest
           thereon,  the Issuer may, at its option, determine not to rebuild,
           repair  or restore the Luannan Facility. Upon such a determination
           by  the  Issuer, the outstanding Existing Notes will be  redeemed,
           in  whole,  but  not in part. The amount of the  Luannan  Casualty
           Proceeds or Luannan Expropriation Proceeds and repayments  of  the
           Issuer  Loan and the Shareholder Loans resulting from such Luannan
           Event  of  Loss or Luannan Expropriation Event will be applied  to
           the  redemption of the Existing Notes. The redemption date may  be
           any  date  during  the 90-day period following  the  date  of  the
           Issuer's  determination  not to rebuild,  repair  or  restore  the
           Luannan Facility (taking into account the notice requirements  set
           forth in the Indentures).
     
     (iv)  Upon  the payment of performance liquidated damage payments  under
           the  Luannan  EPC  Contract, the amount of performance  liquidated
           damages paid, which are required to be applied to payment  of  the
           Issuer  Loan and the Shareholder Loans, will be applied  pro  rata
           to  the redemption of the Existing Notes. The redemption date  may
           be  any  date  during  the 90-day period  following  the  date  of
           receipt  by  the Issuer of any such repayment of the  Issuer  Loan
           (taking  into  account the notice requirements set  forth  in  the
           Indentures).
     
     (v)   Upon  the  occurrence of a Domestic Project Event that results  in
           Domestic  Project  Event  Proceeds,  after  the  amounts  of  such
           proceeds   have  been  used  to  fulfill  any  and  all  mandatory
           redemption or mandatory repayment obligations pursuant to (a)  the
           PFC   Indenture  and  (b)  the  debt  instrument  or   instruments
           governing  the  project level financing of such Domestic  Project,
           any  and  all  excess proceeds shall be applied pro  rata  to  the
           redemption of the Existing Notes. The redemption date may  be  any
           date  during the 90-day period following the date of the  Issuer's
           receipt  of  such proceeds from the Company (taking  into  account
           the notice requirements set forth in the Indentures).
     
     (vi)  Upon  the occurrence of a Permitted Project Event that results  in
           Permitted  Project  Event  Proceeds, after  the  amounts  of  such
           proceeds   have  been  used  to  fulfill  any  and  all  mandatory
           redemption or mandatory repayment obligations pursuant to, as  the
           case  may  be,  the  PFC  Indenture  or  the  debt  instrument  or
           instruments  governing the project level financing (or  additional
           Senior  Indebtedness  issued  solely  to  finance  such  Permitted
           Project)  of  such Permitted Project, any and all excess  proceeds
           shall  be applied pro rata to the redemption of the Existing Notes
           and,  to  the extent that the instrument governing any  additional
           Senior  Indebtedness of the Company and the Issuer outstanding  at
           the   date  of  the  Mandatory  Redemption  so  requires,  to  the
           redemption  of such additional Senior Indebtedness. The redemption
           date  may be any date during the 90-day period following the  date
           of  the  Company's or the Issuer's receipt of such  proceeds  from
           such   Permitted   Project  (taking  into   account   the   notice
           requirements set forth in the Indentures).
     
     Redemption  at  Option of Holders. Upon the occurrence of  certain  events
described  below, the Issuer will be obligated to make an offer to  redeem  pro
rata  the  outstanding  Existing Notes (a "Mandatory Redemption  Offer")  at  a
redemption  price equal to 100% of the principal amount of the Existing  Notes,
together with accrued and unpaid interest, if any, to the redemption date:
     
     (i)   Upon  the  occurrence of an Approval Event of Default or a  County
           Partners Event of Default that has had or is reasonably likely  to
           have  a Material Adverse Effect, the Issuer shall be obligated  to
           make  a  Mandatory  Redemption Offer using any and  all  available
           monies to effect such Mandatory Redemption Offer (such amounts  to
           include,  but  not be limited to, (a) all amounts in  the  Company
           Funds,  (b)  all amounts in the Issuer Funds and (c)  all  amounts
           available to the Issuer or the Company through the enforcement  of
           the Collateral). The redemption date for such a redemption may  be
           any  date  during  the 90-day period following  the  date  of  the
           Approval Event of Default or the County Partners Event of  Default
           (taking  into  account the notice requirements set  forth  in  the
           Indentures).
     
     (ii)  If  the  Luannan  Facility Construction  Cost  is  less  than  the
           Projected  Luannan Facility Construction Cost,  after  using  such
           excess  funds  to fund any deficits in the Issuer  Funds,  if  any
           excess  funds  are remaining and the amount of such  excess  funds
           equals  or exceeds $1.0 million, the Issuer shall be obligated  to
           use  such excess funds to make a Mandatory Redemption Offer to the
           Holders  of  the Existing Notes. The redemption date  for  such  a
           redemption may be any date during the 90-day period following  the
           date  of  the  Issuer's final calculation of the Luannan  Facility
           Construction  Cost  (taking into account the  notice  requirements
           set forth in the Exchange Notes Indenture).
     
     Redemption  for Taxation Reasons. The Existing Notes may be  redeemed,  at
the  option of the Issuer or the Company, as the case may be, in whole but  not
in part, at any time upon giving not less than 30 nor more than 60 days' notice
to the Holders (which notice shall be irrevocable), at a redemption price equal
to  the principal amount thereof, together with accrued and unpaid interest and
premium,  if any, to the date fixed by the Issuer or the Company, as  the  case
may  be,  for  redemption (a "Tax Redemption Date") and all Additional  Amounts
(see "--Withholding Taxes " below), if any, then due and which will become  due
on  the Tax Redemption Date as a result of the redemption or otherwise, if  the
Issuer or the Company, as the case may be, determines that, as a result of  (i)
any  change  in,  or amendment to, the laws or treaties (or any regulations  or
rulings promulgated thereunder) of the Cayman Islands or the United States  (or
any  political  subdivision  or  taxing  authority  thereof)  which  change  or
amendment  becomes effective on or after the Closing Date, (ii) any  change  in
position  regarding the application, administration or interpretation  of  such
laws,  treaties, regulations or rulings (including a holding, judgment or order
by   a   court   of  competent  jurisdiction),  which  change  in  application,
administration  or  interpretation becomes effective on or  after  the  Closing
Date,  the  Issuer  or the Company, as the case may be,  is,  or  on  the  next
interest  payment  date would be, required to pay Additional Amounts,  and  the
Issuer  or  the  Company,  as  the case may be, determines  that  such  payment
obligation cannot be avoided by the Issuer or the Company, as the case may  be,
taking  reasonable measures. Notwithstanding the foregoing, no such  notice  of
redemption  shall be given earlier than 90 days prior to the earliest  date  on
which the Issuer or the Company, as the case may be, would be obligated to make
such  payment or withholding if a payment in respect of the Existing  Notes  or
the  Exchange Notes Guarantee, as the case may be, were then due. Prior to  the
publication  or,  where relevant, mailing of any notice of  redemption  of  the
Existing  Notes  pursuant to the foregoing, the Issuer or the Company,  as  the
case  may  be,  will  deliver  to the Trustees an  opinion  of  a  tax  counsel
reasonably  satisfactory to the Trustees to the effect that  the  circumstances
referred  to above exist. The Trustees shall accept such opinion as  sufficient
evidence  of the satisfaction of the conditions precedent described  above,  in
which event it shall be conclusive and binding on the Holders.
     
     Selection  and  Notice. In the event that less than all  of  the  Existing
Notes  are to be redeemed at any time pursuant to an Optional Redemption  or  a
Public  Equity  Offering  Redemption,  selection  of  the  Existing  Notes  for
redemption  will  be made by the Exchange Notes Trustee (i) in compliance  with
the  provisions  of  the Exchange Notes Indenture described  herein  under  "--
Redemption"  and  (ii)  in accordance with the requirements  of  the  principal
national  securities exchange, if any, on which any of the Existing  Notes  are
listed  or,  if  none  of  the Existing Notes are then  listed  on  a  national
securities exchange, on a pro rata basis; provided that no Existing Notes of  a
principal amount or principal amount at maturity, as the case may be, of $1,000
or  less  shall be redeemed in part and the Exchange Notes Trustee  shall  have
authority  to give full effect to this proviso. Notice of redemption  shall  be
mailed  by  first-class mail at least 30 days but not more than 60 days  before
the  redemption  date to each Holder of Existing Notes to be  redeemed  at  its
registered  address. If any Existing Note is to be redeemed in part  only,  the
notice of redemption that relates to such Existing Note shall state the portion
of  the  principal  amount thereof to be redeemed. A new  Existing  Note  in  a
principal amount equal to the unredeemed portion thereof will be issued in  the
name of the Holder thereof upon cancellation of the original Existing Note.  On
and  after the redemption date, interest will cease to accrue on Existing Notes
or  portions thereof called for redemption as long as the Issuer has  deposited
with  the  applicable paying agent for the Existing Notes on or  prior  to  the
relevant  redemption  date funds in satisfaction of the  applicable  redemption
price pursuant to the Exchange Notes Indenture.
     
Limitation on Liability

     The  Indentures  provide that no stockholder, officer or director  of  the
Company or any of its Subsidiaries will be personally liable for the payment of
principal,  premium,  if  any, or interest (including  Liquidated  Damages  and
Additional  Amounts,  if  any) on the Existing Notes  and  the  Exchange  Notes
Guarantee.
     
Change of Control

     In the event of a Change of Control (the date of such occurrence being the
"Change  of Control Date"), the Issuer shall notify the Holders of the Existing
Notes  in  writing of such occurrence and shall make an offer to purchase  (the
"Change  of Control Offer"), on a business day (the "Change of Control  Payment
Date")  not  later  than  60 days following the Change  of  Control  Date,  all
Existing  Notes  then  outstanding at a purchase price equal  to  101%  of  the
principal  amount thereof plus accrued and unpaid interest, if  any  (including
Liquidated  Damages and Additional Amounts, if any), to the Change  of  Control
Payment  Date (the "Change of Control Purchase Price"). Notice of a  Change  of
Control  Offer shall be mailed by the Issuer to the Holders not  less  than  30
days  nor  more  than 45 days before the Change of Control  Payment  Date.  The
Change  of  Control Offer is required to remain open for at least  20  business
days.
     
     There  can  be  no  assurance that the Issuer will  have  available  funds
sufficient  to fund the purchase of the Existing Notes, or, in the  event  that
the Issuer does not have available funds sufficient to fund the purchase of the
Existing  Notes,  that  the  Company will have available  sufficient  funds  to
perform on the Existing Notes Guarantee, upon a Change of Control. In the event
that  a  Change  of  Control occurs at a time when the  Issuer  does  not  have
available funds sufficient to pay the Change of Control Purchase Price for  all
of  the  Existing Notes delivered by the Noteholders (or the Company  does  not
have  available  sufficient funds to perform the Existing  Notes  Guarantee  in
connection  with  the payment of the Change of Control Purchase  Price  by  the
Issuer)  seeking to accept the Change of Control Offer, an Indentures Event  of
Default  will occur. The definition of Change of Control includes an  event  by
which  the  Company, Panda International, the Issuer or any direct of  indirect
parent of the Company sells, conveys, transfers or leases or otherwise disposes
of all or substantially all of the properties and assets of the Company and its
Subsidiaries, taken as a whole, subject to certain exceptions. There is  little
case  law interpreting the phrase "all or substantially all" in the context  of
an  indenture.  Because  there  is no precise established  definition  of  this
phrase, there may be uncertainty as to whether a Change of Control has occurred
as  a  result  of  any particular sale, conveyance, transfer,  lease  or  other
disposition of assets of the Company and its Subsidiaries. Any such uncertainty
may adversely affect the enforceability of the Change of Control provisions  of
the Exchange Note Indenture.
     
Description of the Exchange Notes Collateral

     The  Issuer's obligations under the Existing Notes (and, unless  otherwise
specifically stated, any additional Senior Indebtedness of the Issuer hereafter
outstanding)  are  secured  by  the  following,  all  of  which,  collectively,
constitutes the Exchange Notes Collateral:
     
  The Pledge Agreements
  
     The Issuer has executed a pledge agreement (the "Issuer Pledge Agreement")
in  favor  of  the  Exchange Notes Trustee providing for  the  pledge,  to  the
Exchange  Notes Trustee, of (i) at least 90% of the Capital Stock  of  Pan-Sino
and  (ii)  the  Issuer Note issued by Pan-Western. The Issuer Pledge  Agreement
also  provides that, (A) in the event that Pan-Sino is merged into Pan-Western,
the  Issuer will pledge at least 99% of the Capital Stock of Pan-Western to the
Exchange  Notes Trustee and (B) in the event that Pan-Sino is merged  into  the
Issuer, the Issuer will assume Pan-Sino's obligations under the Pan-Sino Pledge
Agreement.
     
     Pan-Sino has executed a pledge agreement (the "Pan-Sino Pledge Agreement")
in  favor  of  the  Exchange  Notes Trustee providing for the  pledge,  to  the
Exchange Notes Trustee, of at least 99% of the Capital Stock of Pan-Western.
     
     Pan-Western  has  executed  a pledge agreement  (the  "Pan-Western  Pledge
Agreement") in favor of the Exchange Notes Trustee providing for the pledge, to
the  Exchange Notes Trustee, of the Luannan Facility Notes (such notes  in  the
aggregate  amount  of $71.253 million) issued by the Joint Ventures.  The  Pan-
Western  Pledge  Agreement will provide that Pan-Western will  ensure  that  no
Person  other than the Exchange Notes Trustee shall effect a security  interest
in  its assets or the assets of the Joint Ventures. Furthermore, so long as the
Existing Notes are outstanding, Pan-Western has agreed not to permit the  Joint
Ventures  to  pledge their assets and Pan-Western will not  pledge  its  equity
interests in the Joint Ventures, except in favor of the Exchange Notes Trustee.
Notwithstanding the foregoing, neither Pan-Western nor the Joint Ventures shall
be  required  to take any action that might jeopardize the characterization  of
the Shareholder Loans as shareholder financing under PRC law or regulations.
     
     The   Company  has  executed  a  pledge  agreement  (the  "Company  Pledge
Agreement") in favor of the Exchange Notes Trustee providing for the pledge, to
the Exchange Notes Trustee, of 100% of the Capital Stock of the Issuer.
     
     Individually,  and in the aggregate, the pledges of the Capital  Stock  of
Pan-Western, Pan-Sino and the Issuer do not constitute a "substantial  portion"
(as  defined in Rule 3-10 of Regulation S-X promulgated under the  Securities
Act) of the collateral securing the Existing Notes.
     
  The Security Agreements
  
     The  Issuer  has  entered into a security agreement (the "Issuer  Security
Agreement") with the Exchange Notes Trustee granting to it, for the benefit  of
only  the  Holders of the Existing Notes, (i) a security interest  in  (a)  the
Capitalized Interest Fund, (b) the Luannan Facility Construction Fund, (c)  the
Debt  Service Fund, (d) the Debt Service Reserve Fund and (e) Luannan  Facility
Restoration  Fund  established  pursuant  to  the  Exchange  Notes   Indenture,
including  all  proceeds  thereon and all documents evidencing  all  funds  and
investments held therein and (ii) an assignment and security interest in all of
the Issuer's rights under the Issuer Loan Agreement.
     
     The  Issuer  Security  Agreement also provides for  the  granting  to  the
Exchange  Notes  Trustee, for the benefit of the Holders of the Existing  Notes
(and  any  additional Senior Indebtedness of the Issuer) an equal  and  ratable
security  interest  in (i) the Issuer Revenue Fund, (ii) the  Issuer  Operating
Fund and (iii) the Issuer Equity Distribution Fund established pursuant to  the
Exchange  Notes  Indenture, including all proceeds thereon  and  all  documents
evidencing all funds and investments held therein.
     
     Pan-Western  has  entered  into  a security  agreement  (the  "Pan-Western
Security Agreement") with the Exchange Notes Trustee granting and assigning  to
it a security interest in all (i) of the Pan-Western Funds established pursuant
to  the  Exchange  Notes  Indenture, including all  proceeds  thereon  and  all
documents  evidencing all funds and investments held therein and (ii)  of  Pan-
Western's  rights under the Shareholder Loan Agreements and the  Joint  Venture
Guarantees.
     
     Pan-Sino  has  entered into a security agreement (the  "Pan-Sino  Security
Agreement")  with  the Exchange Notes Trustee granting and assigning  to  it  a
security  interest in the Pan-Sino Fund established pursuant  to  the  Exchange
Notes  Indenture,  including all proceeds thereon and all documents  evidencing
such fund and investments held therein.
     
     The  Issuer  Pledge  Agreement, the Pan-Sino Pledge  Agreement,  the  Pan-
Western Pledge Agreement, certain sections of the Company Pledge Agreement, the
Issuer  Security Agreement, the Pan-Western Security Agreement and the Pan-Sino
Security  Agreement,  collectively, constitute the  Exchange  Notes  Collateral
Documents.
     
Description of the Exchange Notes Guarantee Collateral

     The  Company's obligations under the Exchange Notes Guarantee (and, unless
otherwise  specifically  stated,  any additional  Senior  Indebtedness  of  the
Company hereafter outstanding) will be secured by the following, all of  which,
collectively, constitutes the Exchange Notes Guarantee Collateral:
     
  The Pledge Agreements and the Security Agreement
  
     Panda   International  has  executed  a  pledge  agreement   (the   "Panda
International  Pledge  Agreement") in favor of the  Company  Indenture  Trustee
providing  for  the pledge, to the Company Indenture Trustee, of  100%  of  the
Capital Stock of the Company.
     
     Pursuant to the Company Pledge Agreement, the Company has pledged  to  the
Company Indenture Trustee 100% of the Capital Stock of PEC.
     
     Individually,  and in the aggregate, the pledges of the Capital  Stock  of
the  Company and PEC do not constitute a "substantial portion" (as  defined  in
Rule  3-10  of Regulation S-X promulgated under the Securities  Act)  of  the
collateral securing the Exchange Notes Guarantee.
     
     The  Company has entered into a security agreement (the "Company  Security
Agreement") with the Company Indenture Trustee granting to it, for the  benefit
of only the holders of the Exchange Notes Guarantee, (i) a security interest in
the  Notes Guarantee Service Fund and the Notes Guarantee Service Reserve  Fund
established  pursuant to the Company Indenture, including all proceeds  thereon
and all documents evidencing all funds and investments held therein and (ii) an
assignment  and  security  interest in all of the Company's  right,  title  and
interest in the U.S. Distribution Fund.
     
     The  Company  Security Agreement also provides for  the  granting  to  the
Company Indenture Trustee, for the benefit of the holders of the Exchange Notes
Guarantee (and any additional Senior Indebtedness of the Company) an equal  and
ratable  security  interest in (i) the Company Revenue Fund, (ii)  the  Company
Operating  Fund  and  (iii)  the Company Equity Distribution  Fund  established
pursuant  to  the  Company Indenture, including all proceeds  thereon  and  all
documents evidencing all funds and investments held therein.
     
     Pursuant to an agreement among PIC, PEC and the Company, dated as  of  the
Closing  Date (the "PEC Assignment and Pledge Agreement"), PIC has agreed  that
any  and  all  amounts that are deposited into the U.S. Distribution  Fund  (as
defined  in  the  PFC Indenture) shall be transferred in same day  funds  to  a
revenue  account designated by PEC (the "PEC Revenue Account").   PEC  and  the
Company  have  assigned to the Company Indenture Trustee all  of  their  right,
title  and  interest in and to the following: (i) PEC Revenue Account  and  all
amounts  on  deposit  therein  and  (ii) to  the  extent  available  after  the
fulfillment  of  any  and  all  mandatory redemption  and  mandatory  repayment
obligations, any and all excess Domestic Project Event Proceeds.
     
     The  Panda International Pledge Agreement, certain sections of the Company
Pledge  Agreement,  the Company Security Agreement and the PEC  Assignment  and
Pledge   Agreement,  collectively,  constitute  the  Exchange  Notes  Guarantee
Collateral Documents (the Exchange Notes Collateral Documents and the  Exchange
Notes   Guarantee   Collateral   Documents,   collectively,   the   "Collateral
Documents").
     
Description of Additional Collateral

     Permitted  Projects  may be financed pursuant to the  PFC  Indenture,  the
Company Indenture and the Exchange Notes Indenture. U.S. Permitted Projects may
be  constructed,  owned  or operated pursuant to the  PFC  Indenture  and  U.S.
Permitted Projects may be developed, constructed, owned or operated pursuant to
the Company Indenture. Non-U.S. Permitted Projects may be constructed, owned or
operated pursuant to the PFC Indenture and may be developed, constructed, owned
or  operated  pursuant to the Exchange Notes Indenture. In  practice,  Non-U.S.
Permitted  Projects are likely to be financed pursuant to the PFC Indenture  or
the  Exchange Notes Indenture if owning, constructing or operating a  Permitted
Project  pursuant to the terms of the Company Indenture would have adverse  tax
consequences to the Company and its Subsidiaries. The Indentures  and  the  PFC
Indenture provide for the pledging of or granting of a security interest in the
assets  of  Permitted Projects for the benefit of the Holders of  the  Existing
Notes  or  of  holders  of  Indebtedness of the Company  or  its  Subsidiaries.
Security  interests in the assets of the Permitted Projects will be granted  by
the Company or its relevant Subsidiary in the following manner:
     
     The  Issuer  Pledge Agreement provides that, in the event that a  Non-U.S.
Permitted Project is developed, constructed or owned pursuant to the provisions
of  the Exchange Notes Indenture, at the point that the Issuer has expended  in
excess  of $2.5 million in the furtherance of the development of such  Non-U.S.
Permitted Project, 100% of the Capital Stock of the Person that owns such  Non-
U.S.  Permitted Project will be pledged to the Exchange Notes Trustee  (or,  to
the  extent that a Non-U.S. Permitted Project is not Wholly Owned by the Issuer
or  its  Subsidiary,  the entire ownership interest in such Non-U.S.  Permitted
Project  held  by  the  Issuer or such Subsidiary or  group  of  Subsidiaries).
Notwithstanding  the requirement of the preceding sentence, the  Issuer  Pledge
Agreement provides that, (i) in the event that the financing arrangements  with
respect  to  a  Non-U.S. Permitted Project requires the pledge  of  a  Non-U.S.
Permitted  Project's Capital Stock to secure Non-Recourse Debt, upon  financial
closing, the Exchange Notes Trustee shall release such stock and allow for such
a  pledge and (ii) the Issuer shall not be required to pledge the Capital Stock
of a Subsidiary if (A) such a pledge is contrary to the law of the jurisdiction
of  domicile  of the relevant Subsidiary or (B) such a pledge is not  permitted
under  the  Project Documents of such Non-U.S. Permitted Project. In the  event
that  the Capital Stock of a Subsidiary that was not available for a pledge  to
the  Exchange  Notes Trustee pursuant to clauses (i) and (ii) of the  preceding
sentence  becomes available at a subsequent date, the Issuer shall be  required
to  pledge promptly the Capital Stock of such Subsidiary to the Exchange  Notes
Trustee. The Issuer Pledge Agreement also provides for the grant by the  Issuer
of  any and all right, title and interest of, to the extent available after the
fulfillment  of  any  and  all  mandatory redemption  and  mandatory  repayment
obligations,  any and all excess Non-U.S. Permitted Project Event  Proceeds  to
the Exchange Notes Trustee.
     
     The  Company  Pledge Agreement provides that, in the  event  that  a  U.S.
Permitted Project is developed, constructed or owned pursuant to the provisions
of  the Company Indenture, at the point that the Company has expended in excess
of  $2.5  million in the furtherance of the development of such U.S.  Permitted
Project,  100%  of  the Capital Stock of the Person that  owns  such  Permitted
Project  will  be pledged to the Company Indenture Trustee (or, to  the  extent
that  a Permitted Project is not Wholly Owned by the Company or its Subsidiary,
the  entire  ownership  interest in such U.S. Permitted  Project  held  by  the
Company  or such Subsidiary). Notwithstanding the requirement of the  preceding
sentence, the Company Pledge Agreement provides that (i) in the event that  the
financing  arrangements with respect to a U.S. Permitted  Project  require  the
pledge of a U.S. Permitted Project's Capital Stock to secure Non-Recourse Debt,
upon  financial closing, the Company Indenture Trustee shall release such stock
and  allow  for  such a pledge and (ii) the Company shall not  be  required  to
pledge  the  Capital Stock of a Subsidiary if such a pledge  is  not  permitted
under  the Project Documents of such U.S. Permitted Project. In the event  that
the  Capital Stock of a Subsidiary that was not available for a pledge  to  the
Company  Indenture Trustee pursuant to clauses (i) and (ii)  of  the  preceding
sentence  becomes available at a subsequent date, the Company shall be required
to  promptly  pledge  the  Capital  Stock of such  Subsidiary  to  the  Company
Indenture Trustee. The Company Pledge Agreement also provides for the grant  by
the  Company  of  any  and  all right, title and interest  of,  to  the  extent
available  after  the  fulfillment  of any and  all  mandatory  redemption  and
mandatory  repayment  obligations, any and all excess  U.S.  Permitted  Project
Event Proceeds to the Company Indenture Trustee.
     
     The  PEC  Assignment and Pledge Agreement provides that, (i) in the  event
that a U.S. Permitted Project is constructed, owned or operated pursuant to the
provisions  of the PFC Indenture, to the extent available after the fulfillment
of  any  and all mandatory redemption and mandatory repayment obligations,  any
and  all excess U.S. Permitted Project Event Proceeds shall be paid to PEC  for
payment  to the Company Indenture Trustee and (ii) in the event that a Non-U.S.
Permitted  Project is constructed, owned or operated pursuant to the provisions
of  the PFC Indenture, to the extent available after the fulfillment of any and
all  mandatory redemption and mandatory repayment obligations, that any and all
excess  Non-U.S.  Permitted Project Event Proceeds will  be  deposited  in  the
International Distribution Fund and will be subject to certain restrictions  on
distribution from such fund.
     
     Funds  that  are  created  in  connection  with  the  issuance  of  future
Indebtedness by any of PFC, PIC, the Company or the Issuer shall not be pledged
as  security for the Existing Notes or the Exchange Notes Guarantee but may  be
pledged as security for such future Indebtedness.
     
The Funds

  The Issuer Funds
  
     In  accordance  with  the  terms  and conditions  of  the  Exchange  Notes
Indenture, the Exchange Notes Trustee will establish and maintain the following
funds:  (i) the Issuer Revenue Fund, (ii) the Capitalized Interest Fund,  (iii)
the  Luannan  Facility Construction Fund, (iv) the Debt Service Fund,  (v)  the
Debt  Service Reserve Fund, (vi) the Issuer Operating Fund, (vii)  the  Luannan
Facility  Restoration Fund and (viii) the Issuer Equity Distribution Fund  (the
"Issuer  Funds"). The Issuer will have limited rights of withdrawal  under  the
Issuer  Funds  in  accordance with the terms and conditions set  forth  in  the
Exchange  Notes  Indenture. The Issuer Revenue Fund, the Issuer Operating  Fund
and  the Issuer Equity Distribution Fund will be for the use and benefit of the
holders of any and all securities or guarantees issued pursuant to the Exchange
Notes   Indenture.   The  Capitalized  Interest  Fund,  the  Luannan   Facility
Construction Fund, the Debt Service Fund, the Debt Service Reserve Fund and the
Luannan Facility Restoration Fund shall be for the exclusive use and benefit of
the Holders of the Existing Notes.
     
     Issuer  Revenue Fund. In accordance with the terms and conditions  of  the
Exchange  Notes Indenture, the Issuer will be required to deposit  all  of  the
following in the Issuer revenue fund (the "Issuer Revenue Fund"): (i)  any  and
all  revenues received by the Issuer from any source, (ii) any and  all  income
from  the  investment of monies in any of the Issuer Funds, (iii) any  and  all
proceeds  from the payment by Pan-Western of amounts due under the Issuer  Loan
and  any  and all other payments by Pan-Western to the Issuer and (iv)  in  the
event  that  a  Non-U.S. Permitted Project is developed, constructed  or  owned
pursuant  to  the provisions of the Exchange Notes Indenture, (A) any  and  all
revenues received by the Issuer from such Non-U.S. Permitted Project and (B) to
the  extent  available, any and all Non-U.S. Permitted Project Event  Proceeds.
Additionally, unless transferred to the Luannan Facility Restoration  Fund  for
the  rebuilding,  repair or restoration of the Luannan  Facility,  all  Luannan
Casualty Proceeds and Luannan Expropriation Proceeds will be deposited directly
into  the  Pan-Western Revenue Fund as a repayment of all or a portion  of  the
Shareholder Loans and then transferred to the Issuer Revenue Fund whereupon the
Issuer  will segregate such amounts from all other amounts held in  the  Issuer
Revenue Fund.
     
     Capitalized  Interest  Fund. Upon the closing of the  Prior  Offering  and
payment by the Issuer of the fees and expenses incurred in connection with  the
issuance  of  the  Old  Notes  and the Exchange  Notes  Guarantee,  the  Issuer
deposited  approximately $48.1 million into the capitalized interest fund  (the
"Capitalized  Interest  Fund") to be invested in Dollar Permitted  Investments.
Through  the  Capitalized Interest Expiration Date, interest  payments  on  the
Existing Notes shall be made from the Capitalized Interest Fund.
     
     Luannan Facility Construction Fund. After (i) the payment by the Issuer of
the fees and expenses incurred in connection with the issuance of the Old Notes
and  the  Exchange  Notes Guarantee, (ii) the deposit  by  the  Issuer  of  the
required funds into the Capitalized Interest Fund and (iii) the deposit by  the
Issuer  of  the required funds into the Debt Service Reserve Fund  (as  defined
below),  the balance of funds remaining from the proceeds of the Prior Offering
(estimated to be approximately $80.4 million) was deposited by the Issuer  into
the  Luannan  Facility  construction fund (the "Luannan  Facility  Construction
Fund")  and  such  amount (including interest income received from  Pan-Western
under the Issuer Loan and other amounts received from Pan-Western prior to  the
Luannan Commercial Operation Date) was used to make the Issuer Loan.
     
     Pursuant to the terms of the Exchange Notes Indenture and the Issuer  Loan
Agreement,  the principal amount of the Issuer Loan (and any and  all  interest
income thereon (and on any of the Issuer Funds) prior to the Luannan Commercial
Operation Date) will be advanced to Pan-Western in installments starting on the
Closing  Date  and  ending on the date on which the last Joint  Venture  has  a
payment  obligation relating to the construction of the Luannan  Facility  (the
"Funding  Period"). It is expected that during the Funding Period,  Pan-Western
will,  in  the aggregate, advance from the proceeds of the Issuer Loan  (i)  in
accordance  with the terms of the Shareholder Loan Agreements,  $71,253,000  to
make  the  installment payments of the Shareholder Loans to the Joint  Ventures
(during  the  Funding  Period, in the aggregate, Tangshan  Panda  will  receive
$17,880,000,  Tangshan  Pan-Western will receive $17,880,000,  Tangshan  Cayman
will  receive  $17,664,000 and Tangshan Pan-Sino will receive $17,829,000)  and
(ii)  in  accordance  with the Joint Venture Agreements,  $41,763,000  to  make
installment   payments   of   its   equity  contributions   (the   "JV   Equity
Contributions")  to each of the Joint Ventures (during the Funding  Period,  in
the  aggregate,  Tangshan Panda will receive $10,480,000, Tangshan  Pan-Western
will receive $10,480,000, Tangshan Cayman will receive $10,353,000 and Tangshan
Pan-Sino will receive $10,450,000).
     
     Upon  receipt  of  the JV Equity Contributions, each Joint  Venture  will,
prior  to  the disbursement of such monies to meet a Joint Venture  contractual
obligation,  effect  the registration in the PRC of such monies  as  registered
capital of the Joint Ventures.
     
     Monies  will  be  disbursed  from the Luannan Facility  Construction  Fund
(initially in the form of an installment of the Issuer Loan and upon receipt by
Pan-Western, either in the form of an installment of the Shareholder  Loans  or
as  an  installment of the JV Equity Contributions) to meet each of  the  Joint
Venture's payment obligations under the Luannan EPC Contract and to meet  other
contractual obligations of the Joint Ventures under any of the Luannan  Project
Documents  or  other Luannan Facility financing, construction  and  development
costs,  including  interest on the Shareholder Loans  during  construction.  In
addition,  upon  the  issuance  of  the  Old  Notes,  Pan-Western  provided  as
Shareholder  Loans  approximately  $5.74  million  from  the  Luannan  Facility
Construction  Fund to Tangshan Pan-Sino and Tangshan Cayman  which  utilized  a
portion  of  such funds for the purchase of water and land use rights,  certain
water wells and pipelines, respectively, from the County Partners. Amounts also
have  been  disbursed  from  the  Luannan  Facility  Construction  Fund  as   a
Shareholder  Loan  to  Tangshan Pan-Sino to finance  the  construction  of  the
Transmission Facilities.
     
     Amounts   will  be  disbursed  periodically  from  the  Luannan   Facility
Construction  Fund only upon the satisfaction of certain conditions  that  will
include,  but not be limited to, the receipt by the Exchange Notes  Trustee  of
the following documents:
     
     (i)   a  certificate  from  the  Issuer,  Pan-Western  and  the  Luannan
           Facility Engineer (delivered at least once a month whether or  not
           there is a disbursement pursuant to the Shareholder Loans) to  the
           effect  that:  (a)  undisbursed  funds  in  the  Luannan  Facility
           Construction  Fund (or other monies available to  the  Issuer,  to
           the  extent  that such monies have been segregated in a  dedicated
           account  and a security interest in such account has been  granted
           to  the Exchange Notes Trustee) together with any and all interest
           earned  on  the  Issuer  Funds  and  the  Pan-Western  Funds   are
           reasonably  expected  to equal or exceed the amount  necessary  to
           pay  all project costs in connection with final completion of  the
           Luannan   Facility;  and  (b)  the  Luannan  Facility   is   being
           constructed  in  accordance with the Approved Construction  Budget
           and  Schedule or, if applicable, an Approved Completion Plan (each
           such   certificate,  a  "Luannan  Facility  Construction  Schedule
           Certificate");
     
     (ii)  prior  to  disbursing more than $15.0 million  in  the  aggregate,
           receipt  by the Exchange Notes Trustee of a certificate  from  the
           Issuer  and Pan-Western certifying that the transfer of land  from
           the  County Partners to the relevant Joint Venture has taken place
           and  has  been legally recognized and recorded in accordance  with
           PRC law;
     
     (iii) a   current   construction   progress   report   and   requisition
           certificate  from  the Issuer and Pan-Western  specifying  project
           costs that are due and payable or that are reasonably expected  to
           be due and payable within the next 30 days; and
     
     (iv)  an  officer's certificate from the Issuer and Pan-Western  to  the
           effect  that:  (a) no Issuer Loan Agreement Event of  Default  has
           occurred  and  is  continuing; (b) no Shareholder  Loan  Agreement
           Event  of  Default  has occurred and is continuing;  and  (c)  the
           representations and warranties in the Shareholder Loan  Agreements
           are  true and correct in all material respects on the date thereof
           as  if  made  on such date, except as affected by the consummation
           of   the  transactions  contemplated  thereby  or  to  the  extent
           relating solely to an earlier date.
     
     At  any time, if (i) the Issuer and Pan-Western shall deliver an officer's
certificate  certifying that (a) there does not exist as of the  date  of  such
certificate  a  Shareholder Loan Agreement Event of Default,  (b)  all  amounts
required  to  be paid as of such date under the Luannan Project Documents  have
been  paid  and  (c) the amount in the Luannan Facility Construction  Fund  and
estimated  income  on all Issuer Funds and the Pan-Western  Funds  through  the
anticipated Luannan Commercial Operation Date exceed by an amount specified  in
such  certificate all reasonably foreseeable expenses (including an appropriate
contingency)  in connection with final completion of the Luannan Project  other
than  the  unreimbursed  development costs paid to third  parties  incurred  by
Affiliates of the Issuer in connection with the Luannan Facility and  (ii)  the
Luannan  Facility Engineer shall deliver a certificate to the  same  effect  as
clause  (c)  above,  the Exchange Notes Trustee shall transfer  to  the  Issuer
Equity  Distribution  Fund  the  lesser  of  (i)  such  excess  and  (ii)  such
unreimbursed third-party costs.
     
     Upon  completion  of the Luannan Facility, (i) the Issuer and  Pan-Western
shall  deliver  an  officer's  certificate  certifying  that  (a)  the  Luannan
Commercial Operation Date has occurred, (b) there does not exist as of the date
of  such  certificate a Shareholder Loan Agreement Event of  Default,  (c)  all
amounts required to be paid as of such date under the Luannan Project Documents
have  been  paid  and (d) an amount has been set aside in the  Completion  Sub-
Account  sufficient  to pay all reasonably foreseeable expenses  in  connection
with  final  completion of the Luannan Facility, and (ii) the Luannan  Facility
Engineer  shall  deliver a certificate certifying that the  Luannan  Commercial
Operation Date has occurred and that the amount available in the Completion Sub-
Account is sufficient to complete the Luannan Facility. If, upon the occurrence
of  the  events described in clauses (i) and (ii) in the immediately  preceding
sentence, excess funds remain in the Luannan Facility Construction Fund due  to
the  Luannan  Facility Construction Cost being less than the Projected  Luannan
Facility Construction Cost, the Issuer shall, first, fund any deficits  in  the
Issuer  Funds and second, if any excess funds are remaining and the  amount  of
such  excess  funds  equals or exceeds $1.0 million, be  obligated  to  make  a
Mandatory  Redemption  Offer as described above under "--Redemption--Redemption
at  Option  of  Holders."  In the event that there are excess  funds  following
completion  of such Mandatory Redemption Offer, such funds shall be transferred
to the Issuer Revenue Fund.
     
     Debt  Service Fund. Amounts deposited in the debt service fund (the  "Debt
Service Fund") shall be allocated among sub-funds of a Exchange Notes Principal
Account and an Exchange Notes Interest Account, which shall be established  for
the  Existing  Notes  based on the principal, premium,  if  any,  and  interest
(including  Liquidated Damages and Additional Amounts, if any) due and  payable
on the Existing Notes on the next principal or interest payment date falling on
or within six months following the relevant Monthly Date. Amounts on deposit in
such  sub-funds shall be used to pay principal, premium, if any,  and  interest
(including  Liquidated Damages and Additional Amounts, if any) due and  payable
(whether  at  the  stated  maturity, call for redemption,  by  acceleration  or
otherwise) on the Existing Notes. If monies in the Debt Service Fund exceed the
amount  of  money  required  by the Exchange Notes Indenture  to  be  deposited
therein, such excess shall be transferred to the Issuer Revenue Fund.
     
     Debt  Service Reserve Fund. On the Closing Date, the Issuer deposited $9.7
million in the debt service reserve fund (the "Debt Service Reserve Fund") as a
reserve for payments on the Existing Notes.
     
     After  the  Luannan  Commercial Operation Date, the Debt  Service  Reserve
Requirement will increase to (A) the aggregate principal, premium, if  any,  of
payments due on the Existing Notes on the next semi-annual payment date and (B)
the   aggregate  cash  interest  payments  (including  Liquidated  Damages  and
Additional  Amounts, if any) due on the Existing Notes on the next  semi-annual
payment date. Amounts on deposit in the Debt Service Reserve Fund shall be used
to  pay  the  principal,  premium,  if any, or interest  (including  Liquidated
Damages and Additional Amounts, if any) at any time due on the Existing  Notes,
and  to  the extent that amounts on deposit in the Issuer Revenue Fund and  the
Debt Service Fund are insufficient. In the event that the amount on deposit  in
the  Debt Service Reserve Fund exceeds the Debt Service Reserve Requirement  at
any time, the excess shall be transferred to the Issuer Revenue Fund.
     
     Issuer Operating Fund. Amounts deposited in the Issuer operating fund (the
"Issuer  Operating  Fund")  shall be used by the  Issuer  for  the  payment  of
expenses  in connection with the Administrative Services Agreement and  certain
other fees and expenses.
     
     Luannan  Facility  Restoration  Fund. All Luannan  Casualty  Proceeds  and
Luannan  Expropriation Proceeds, to the extent required by the  Exchange  Notes
Indenture  to  be  used for the payment of the costs of rebuilding,  repair  or
restoration of any damaged Joint Venture Facility shall be transferred  to  the
Luannan  Facility  restoration fund (the "Luannan Facility  Restoration  Fund")
from  the  Issuer  Revenue Fund. The Issuer may requisition  amounts  from  the
Luannan Facility Restoration Fund for rebuilding, repair and restoration  costs
in  accordance with the requisition procedures set forth in the Exchange  Notes
Indenture.  Following the completion of any rebuilding, repair  or  restoration
and  after giving effect to any retention in accordance with the Exchange Notes
Indenture  (after reimbursing the Issuer for any unreimbursed  amounts  it  has
expended in connection with the rebuilding, repair or restoration), if  amounts
remaining  in  the Luannan Facility Restoration Fund exceed $2.5 million,  such
amount  will be applied, in certain instances, first, to the redemption of  the
Issuer Loan and then to the pro rata redemption of the Existing Notes.
     
     Issuer  Equity  Distribution Fund. All amounts on deposit  in  the  Issuer
Revenue Fund after the transfer of monies therein to each of the other funds in
accordance with the Exchange Notes Indenture shall be transferred to the Issuer
equity  distribution  fund (the "Issuer Equity Distribution  Fund");  provided,
however, that (i) withdrawals from the Issuer Equity Distribution Fund may only
be  made in connection with payments to be made by the Issuer pursuant  to  the
Development  Services Agreement and (ii) the Issuer may only make distributions
to  its  shareholders if (A) the Company is in compliance with the requirements
of the Limitation on Restricted Payments covenant of the Indentures and (B) the
Luannan Commercial Operation Date has occurred.
     
     Issuer  Flow of Funds. The Exchange Notes Trustee will, on the eighth  day
of  each month after the Luannan Commercial Operation Date (or, if such date is
not  a  business  day,  the next following business day)  (a  "Monthly  Date"),
transfer or segregate money, to the extent then available in the Issuer Revenue
Fund and not segregated for any purpose, to the other funds as follows:
     
     (i)   to  the  Issuer Operating Fund, the amount estimated by the Issuer
           to  be  needed for the payment of expenses of the Issuer including
           expenses  in connection with the Administrative Services Agreement
           to be incurred during the next month;
     
     (ii)  to  the Exchange Notes Interest Account of the Debt Service  Fund,
           an  amount  equal  to the excess of (a) the sum of  cash  interest
           payments (including Liquidated Damages and Additional Amounts,  if
           any)  due and payable on all of the Existing Notes outstanding  on
           the  next  succeeding interest payment date falling on  or  within
           six  months  following such Monthly Date over (b) the amount  then
           on deposit in such Exchange Notes Interest Account;
     
     (iii) to  the Exchange Notes Principal Account of the Debt Service Fund,
           an  amount  equal to the excess of (a) the principal and  premium,
           if  any,  payments  next  due and payable on  the  Existing  Notes
           outstanding at the next succeeding principal payment date  falling
           on  or within six months following such Monthly Date over (b)  the
           amount then on deposit in such Exchange Notes Principal Account;
     
     (iv)  to  the  Debt Service Reserve Fund, the excess of the Debt Service
           Reserve  Requirement over the amount in the Debt  Service  Reserve
           Fund; and
     
     (v)   to  the  Issuer Equity Distribution Fund, any remainder; provided,
           however,  that (a) withdrawals from the Issuer Equity Distribution
           Fund  may only be made in connection with payments to be  made  by
           the  Issuer pursuant to the Development Services Agreement and (b)
           the  Issuer may only make distributions to its shareholders if (1)
           the  Company  is  in  compliance  with  the  requirements  of  the
           Limitation  on Restricted Payments covenant of the Indentures  and
           (2) the Luannan Commercial Operation Date has occurred.
     
  The Company Funds
  
     In  accordance with the terms and conditions of the Company Indenture, the
Company  Indenture  Trustee  will establish and maintain  the  following  funds
(separately defined hereinbelow): (i) the Company Revenue Fund, (ii) the  Notes
Guarantee  Service Fund, (iii) the Notes Guarantee Service Reserve  Fund,  (iv)
the  Company Operating Fund, (v) the Company Equity Distribution Fund and  (vi)
such  other funds, from time to time, as may be required pursuant to the  terms
of  the  Company Indenture (the "Company Funds"). The Company will have limited
rights  of withdrawal under the Company Funds in accordance with the terms  and
conditions set forth in the Company Indenture. The Company Funds will, with the
exception  of the Notes Guarantee Service Fund and the Notes Guarantee  Service
Reserve  Fund,  be  for  the use and benefit of the  holders  of  any  and  all
securities  or guarantees issued pursuant to the Company Indenture.  The  Notes
Guarantee  Service Fund and the Notes Guarantee Service Reserve Fund  shall  be
for  the  exclusive  use  and  benefit of the holders  of  the  Exchange  Notes
Guarantee.
     
     Company  Revenue  Fund.  All of the following will  be  deposited  in  the
Company revenue fund (the "Company Revenue Fund"): (i) revenues received by the
Company  from any source, (ii) income from the investment of monies in  any  of
the  Company Funds, (iii) all amounts on deposit in the U.S. Distribution  Fund
and  (iv)  in the event that a U.S. Permitted Project is constructed, owned  or
operated  pursuant  to  the  provisions of the PFC  Indenture  or  the  Company
Indenture, any and all available revenues from such U.S. Permitted Project  (in
the case of a U.S. Permitted Project pursuant to the PFC Indenture, such monies
will be required to flow through the U.S. Distribution Fund) and, to the extent
available,  any  and  all Domestic Project Event Proceeds  and  U.S.  Permitted
Project Event Proceeds.
     
     Company  Operating Fund.  Amounts deposited in the Company operating  fund
(the "Company Operating Fund") shall be used by the Company for the payment  of
expenses  in connection with the Administrative Services Agreement and  certain
other fees and expenses.
     
     Notes  Guarantee  Service Fund. To the extent that  there  are  sufficient
amounts  available in the Debt Service Fund  of the Issuer to make the payments
equal  to  the  principal, premium, if any, and interest (including  Liquidated
Damages  and Additional Amounts, if any) due and payable on the Existing  Notes
on  the  next  principal or interest payment date(s) falling on or  within  six
months  following  the  relevant  Monthly  Date,  the  Company  shall  have  no
obligation  to  deposit monies into the Existing Notes guarantee  service  fund
(the  "Notes  Guarantee Service Fund"). However, to the extent that  there  are
insufficient amounts available in the Debt Service Fund of the Issuer  to  make
the  payments equal to the principal, premium, if any, and interest  (including
Liquidated  Damages  and Additional Amounts, if any) due  and  payable  on  the
Existing Notes on the next principal or interest payment date(s) falling on  or
within  six months following the relevant Monthly Date,  the Company  shall  be
required  to  deposit monies into the Notes Guarantee Service Fund  until  such
time as the amounts on deposit in the Debt Service Fund and the Notes Guarantee
Service  Fund, in the aggregate, are equal to the principal, premium,  if  any,
and  interest (including Liquidated Damages and Additional Amounts, if any) due
and  payable  on  the Existing Notes on the next principal or interest  payment
date(s) falling on or within six months following the relevant Monthly Date.
     
     Amounts  deposited in the Notes Guarantee Service Fund shall be  allocated
among  sub-funds of a Existing Notes Guarantee principal account (the "Exchange
Notes  Guarantee  Principal  Account") and Existing  Notes  Guarantee  interest
account  (the  "Exchange  Notes Guarantee Interest  Account")  which  shall  be
established  for the Exchange Notes Guarantee based on the principal,  premium,
if  any, and interest (including Liquidated Damages and Additional Amounts,  if
any)  due  and payable on the Existing Notes on the next principal or  interest
payment  date(s) falling on or within six months following the relevant Monthly
Date  less  the amount on deposit in the Debt Service Fund. In the  event  that
amounts  on  deposit in the Debt Service Fund of the Issuer  are  insufficient,
amounts  on deposit in the sub-funds of the Notes Guarantee Service Fund  shall
be  used  to pay principal, premium, if any, and interest (including Liquidated
Damages and Additional Amounts, if any) due and payable (whether at the  stated
maturity,  call for redemption, by acceleration or otherwise) on  the  Existing
Notes.  If  at any time monies in the Notes Guarantee Service Fund  exceed  the
amount of money required by the Indentures to be deposited therein, such excess
shall be transferred to the Company Revenue Fund.
     
     Notes  Guarantee  Service  Reserve  Fund.  After  the  Luannan  Commercial
Operation  Date, in the event that the amounts on deposit in the  Debt  Service
Reserve  Fund  of the Issuer are not equal to or greater than the Debt  Service
Reserve Requirement, the Company shall be obligated to deposit monies into  the
Exchange  Notes  guarantee service reserve fund (the "Notes  Guarantee  Service
Reserve  Fund"),  until  such time as the sum of (i) the  monies  in  the  Debt
Service Reserve Fund of the Issuer and (ii) the monies on deposit in the  Notes
Guarantee  Service  Reserve  Fund equal, in the  aggregate,  the  Debt  Service
Reserve  Requirement. Amounts on deposit in the Notes Guarantee Service Reserve
Fund  shall  be  used  to  pay  the principal, premium,  if  any,  or  interest
(including  Liquidated  Damages and Additional Amounts,  if  any)  due  on  the
Existing  Notes, to the extent that the sum of the amounts on  deposit  in  the
Issuer  Revenue Fund, the Debt Service Fund, the Debt Service Reserve Fund  and
the Company Revenue Fund are insufficient. If at any time the amount on deposit
in  the  Notes Guarantee Service Reserve Fund exceeds the Debt Service  Reserve
Requirement, the excess shall be transferred to the Company Revenue Fund.
     
     Company  Equity Distribution Fund. All amounts on deposit in  the  Company
Revenue Fund after the transfer of monies therein to each of the other funds in
accordance  with  the  Indentures shall be transferred to  the  Company  equity
distribution fund (the "Company Equity Distribution Fund"); provided,  however,
that (A) withdrawals from the Company Equity Distribution Fund may only be made
in  connection  with  payments  to  be made by  the  Company  pursuant  to  the
Development  Services Agreement and (B) the Company may only make distributions
to  its  shareholders if (1) the Company is in compliance with the requirements
of  the Limitation on Restricted Payments covenant of the Company Indenture and
(2) the Luannan Commercial Operation Date has occurred.
     
     Company Flow of Funds. The Company Indenture Trustee will, on each Monthly
Date,  transfer or segregate money, to the extent then available in the Company
Revenue Fund and not segregated for any purpose, to the other funds as follows:
     
     (i)   to  the  Company  Operating  Fund, the  amount  estimated  by  the
           Company  to  be needed for the payment of expenses of the  Company
           including expenses in connection with the Administrative  Services
           Agreement to be incurred during the next month;
     
     (ii)  to  the  Exchange Notes Guarantee Interest Account  of  the  Notes
           Guarantee Service Fund, an amount equal to the excess (if any)  of
           (a)  the  sum  of  cash  interest payments  (including  Liquidated
           Damages and Additional Amounts, if any) due and payable on all  of
           the  Existing  Notes  outstanding on the next succeeding  interest
           payment  date  falling  on  or within six  months  following  such
           Monthly  Date over (b) the sum of (x) the amount then  on  deposit
           in  such  Exchange Notes Guarantee Interest Account  and  (y)  the
           amounts on deposit in the Exchange Notes Interest Account  of  the
           Debt Service Fund;
     
     (iii) to  the  Exchange Notes Guarantee Principal Account of  the  Notes
           Guarantee Service Fund, an amount equal to the excess (if any)  of
           (a)  the  principal  and premium, if any, payments  next  due  and
           payable  on  the Existing Notes outstanding at the next succeeding
           principal  payment date falling on or within six months  following
           such  Monthly  Date  over (b) the sum of (x) the  amount  then  on
           deposit  in  such Exchange Notes Guarantee Principal  Account  and
           (y)  the  amounts  on  deposit  in the  Exchange  Notes  Principal
           Account of the Debt Service Fund;
     
     (iv)  to  the Notes Guarantee Service Reserve Fund, the excess (if  any)
           of  the  Debt  Service  Reserve Requirement over  the  amounts  on
           deposit in the Debt Service Reserve Fund; and
     
     (v)   to  the Company Equity Distribution Fund, any remainder; provided,
           however,   that   (a)   withdrawals  from   the   Company   Equity
           Distribution Fund may only be made in connection with payments  to
           be  made  by  the  Company  pursuant to the  Development  Services
           Agreement and (b) the Company may only make distributions  to  its
           shareholders  if  (1)  the  Company  is  in  compliance  with  the
           requirements of the Limitation on Restricted Payments covenant  of
           the  Indentures and (2) the Luannan Commercial Operation Date  has
           occurred.
     
  The Pan-Western Funds
  
     In  accordance  with  the  terms  and conditions  of  the  Exchange  Notes
Indenture,  the Exchange Notes Trustee will establish and maintain outside  the
PRC the following funds: (i) the Pan-Western Revenue Fund, (ii) the Pan-Western
Operating  Fund and (iii) the Pan-Western Equity Distribution Fund  (the  "Pan-
Western  Funds"). Pan-Western will have limited rights of withdrawal under  the
Pan-Western  Funds in accordance with terms and conditions  set  forth  in  the
Exchange Notes Indenture.
     
     The  Pan-Western Revenue Fund. All of the following will be  deposited  in
the  Pan-Western  revenue fund (the "Pan-Western Revenue Fund"):  (i)  revenues
received  by  Pan-Western from any source, (ii) income from the  investment  of
monies  in the Pan-Western Funds, (iii) proceeds from the payment by the  Joint
Ventures  of  amounts  due  under the Shareholder  Loans,  (iv)  proceeds  from
payments  received  by  Pan-Western  on  its  business  interruption  insurance
policies  maintained  by  it  with  respect  to  the  Joint  Ventures  and  (v)
distributions from the Joint Ventures to Pan-Western.
     
     Pan-Western Operating Fund. Amounts deposited in the Pan-Western operating
fund  (the "Pan-Western Operating Fund") shall be used by Pan-Western  for  the
payment  of  expenses in connection with the Administrative Services  Agreement
and certain other fees and expenses.
     
     Pan-Western Equity Distribution Fund. Amounts deposited in the Pan-Western
equity distribution fund (the "Pan-Western Equity Distribution Fund") shall  be
allocated  among sub-funds consisting of a Pan-Sino distribution  account  (the
"Pan-Sino  Distribution  Account")  and a Chinamac  distribution  account  (the
"Chinamac  Distribution Account"). Pursuant to an agreement among  Pan-Western,
Pan-Sino   and  Chinamac  (the  "Pan-Western  Shareholders'  Agreement"),   the
shareholders  of  Pan-Western  have agreed  to  cause  Pan-Western  to  declare
distributions from the sub-funds immediately upon the availability of funds for
such purposes.
     
     Pan-Western  Flow  of  Funds. The Exchange Notes  Trustee  will,  on  each
Monthly Date after the Luannan Commercial Operation Date (or the next following
business day), transfer or segregate money, to the extent then available in the
Pan-Western Revenue Fund and not segregated for any purpose, to the other funds
as follows:
     
     (i)   to  the  Pan-Western Operating Fund, the amount estimated by  Pan-
           Western  to  be needed for the payment of expenses of  Pan-Western
           including  those  in  connection with the Administrative  Services
           Agreement to be incurred during the next month;
     
     (ii)  to  the  payment of interest due and payable with respect  to  the
           Issuer  Loan,  to the extent then due or to become due during  the
           next month;
     
     (iii) to  the  payment  of principal and premium, if any,  payable  with
           respect  to the Issuer Loan, to the extent then due or  to  become
           due during the next month;
     
     (iv)  until  such  time  as the Issuer Loan is repaid in  full,  to  the
           prepayment  of  principal, premium, if  any,  and  interest,  with
           respect  to  the Issuer Loan, to the extent amounts are  available
           to make such prepayments; and
     
     (v)   to the Pan-Western Equity Distribution Fund, any remainder.
     
  The Pan-Sino Fund and Flow of Funds
  
     In  accordance  with  the  terms  and conditions  in  the  Exchange  Notes
Indenture, the Exchange Notes Trustee will establish and maintain the  Pan-Sino
Fund  (the  "Pan-Sino Fund"). Pan-Sino will have limited rights  of  withdrawal
under  the Pan-Sino Fund in accordance with terms and conditions set  forth  in
the Exchange Notes Indenture.
     
     The Pan-Sino Fund. All distributions to Pan-Sino from Pan-Western will  be
deposited in the Pan-Sino Fund. Amounts deposited in the Pan-Sino Fund shall be
allocated  among sub-funds of a NDR distribution account (the "NDR Distribution
Account")   and  an  Issuer  distribution  account  (the  "Issuer  Distribution
Account") in accordance with the equity interests of NDR and the Issuer in Pan-
Sino.  Pursuant to an agreement among Pan-Sino, the Issuer and NDR  (the  "Pan-
Sino Shareholders' Agreement"), the shareholders of Pan-Sino have agreed (i) to
cause  Pan-Sino  to declare distributions immediately upon the availability  of
funds  for  such purposes, (ii) that monies on deposit in the NDR  Distribution
Account  shall  be deemed distributed by Pan-Sino to NDR and  (iii)  NDR  shall
pledge all monies in the NDR Distribution Account to the Exchange Notes Trustee
until  such  time  as the Exchange Notes Trustee shall release  such  funds  in
accordance with the provisions described below.
     
     Pan-Sino  Flow of Funds. The Exchange Notes Trustee will, on each  Monthly
Date  after  the  Luannan  Commercial Operation Date  (or  the  next  following
business day), transfer or segregate money, to the extent then available in the
Issuer  Distribution  Account  and  the NDR Distribution  Account.  Amounts  on
deposit  in the Issuer Distribution Account shall be transferred to the  Issuer
Revenue Fund. Amounts on deposit in the NDR Distribution Account shall only  be
released  to  NDR  when  and  if (i) the Company  is  in  compliance  with  the
requirements  of  the  Limitation  on  Restricted  Payments  covenant  of   the
Indentures and (ii) the Luannan Commercial Operation Date has occurred.
     
  Investment of Funds
  
     The  Exchange Notes Trustee or the Company Indenture Trustee, as the  case
may  be, shall invest, as directed by the Company or the Issuer, the monies  on
deposit  in the Company Funds, the Issuer Funds, the Pan-Western Funds and  the
Pan-Sino  Fund in Dollar Permitted Investments. The Exchange Notes Trustee  and
the  Company Indenture Trustee shall not be liable for any loss incurred  other
than  by  reason of its respective willful misconduct or gross negligence.  Any
income  or  gain  realized from Dollar Permitted Investments  with  respect  to
monies on deposit in any Company Fund, Pan-Sino Fund or Pan-Western Fund  shall
be  deposited, first, into the fund from which the monies invested came,  until
the  amount required to be held in such fund has been reached, and second, into
either  the  Company Revenue Fund (in the case of income earned  on  monies  on
deposit  in  a  Company Fund), the Issuer Revenue Fund (in the case  of  income
earned on monies on deposit in an Issuer Fund), or the Pan-Western Revenue Fund
(in  the  case  of  income earned on monies on deposit in a Pan-Western  Fund).
During  the  Funding Period, any and all interest income earned on  amounts  on
deposits  in  the  Issuer Funds shall be transferred to  the  Luannan  Facility
Construction Fund. Losses on Dollar Permitted Investments shall be  charged  to
the  applicable fund. Income or gain with respect to monies on deposit  in  the
Issuer  Funds  (other than the Luannan Facility Construction Fund  which  shall
remain  in the Luannan Facility Construction Fund) shall be deposited into  the
Issuer Revenue Fund.
     
Joint Venture China Accounts

     The  following  seven accounts will be established within China  for  each
Joint  Venture:  (i) Registered Capital Account (denominated in U.S.  dollars),
(ii)  Foreign  Debt Account (denominated in U.S. dollars), (iii)  Foreign  Debt
Repayment Account (denominated in U.S. dollars), (iv) Basic Settlement  Account
(denominated  in  U.S.  dollars),  (v)  RMB  Revenue  Account  (denominated  in
Renminbi), (vi) the Major Maintenance Reserve Account (denominated in Renminbi)
and  (vii)  RMB Checking Account (denominated in Renminbi) (the "Joint  Venture
China Accounts"). During construction of the Luannan Facility, the Foreign Debt
Accounts  and Registered Capital Accounts will receive funds from  the  Luannan
Facility Construction Fund. The funds will be registered with the SAFE as  debt
under  the  Shareholder  Loans or equity pursuant  to  the  JV  Company  Equity
Contributions and will be used to pay the contractual obligations of the  Joint
Ventures  under  the  Luannan EPC Contract and to pay  other  Luannan  Facility
financing,  construction  and  development costs,  including  interest  on  the
Shareholder   Loans  during  construction  through  the  Capitalized   Interest
Expiration  Date.  Payments  to be denominated in U.S.  dollars  will  be  paid
directly  from  the  Registered Capital Account or the  Foreign  Debt  Account.
Expenditures to be denominated in Renminbi will be converted into  Renminbi  as
required and transferred to the RMB Checking Accounts for disbursement.
     
     After the Luannan Commercial Operation Date, all revenues received by  the
Joint  Ventures from any source, including all proceeds from the sale of assets
of  the  Joint  Ventures,  shall  be deposited in  the  RMB  Revenue  Accounts.
Transfers  from  a RMB Revenue Account will first be made to the  RMB  Checking
Account,  for payment of the Joint Venture's operating expenses and  taxes,  if
any,  and then, after conversion to U.S. dollars, to the Foreign Debt Repayment
Account  in an amount equal to the next payment of interest and principal  then
due  under the Shareholder Loans and any additional reserves required  pursuant
to  the  Shareholder Loan Agreements. Each Joint Venture will also pay to  Pan-
Western  from  the  Foreign Debt Repayment Account an administrative  fee,  for
which Pan-Western will invoice the Joint Ventures based on its costs.
     
     Each  Joint  Venture  will  also establish  a  Major  Maintenance  Reserve
Account, denominated in Renminbi, and each Joint Venture has covenanted in  the
applicable  Shareholder  Loan  Agreement to deposit  in  its  respective  Major
Maintenance  Reserve  Account  an amount determined  by  the  Luannan  Facility
Engineer to constitute the Major Maintenance Reserve Requirement for such Joint
Venture Facility for such month. The Major Maintenance Reserve Requirement  for
each  Joint  Venture will be established periodically by the  Luannan  Facility
Engineer based on anticipated major maintenance requirements for the next  five
years  for  each Joint Venture Facility. Funds may only be withdrawn  from  the
Major  Maintenance  Reserve Account by a Joint Venture to  pay  for  the  major
maintenance costs of its respective Joint Venture Facility upon a certification
of  the Luannan Facility Engineer that after withdrawal of such funds for  such
purpose,  the  amounts  remaining  in  the Major  Maintenance  Reserve  Account
(including  anticipated future funding thereof) will be adequate  to  meet  the
anticipated  needs  of  the  applicable  Joint  Venture  Facility   for   major
maintenance for the next five years.
     
     The  remaining  amounts will be retained in the RMB Revenue Account  until
the  Joint Ventures are able to pay a dividend to its shareholders which, under
PRC  law, may only be made from net income as determined in accordance with PRC
generally  accepted  accounting principles. Pan-Western's  share  of  any  such
distribution will be transferred from the RMB Revenue Account (after conversion
to  U.S.  dollars) to the Basic Settlement Account, and then to the Pan-Western
Revenue  Fund  under the Exchange Notes Indenture. A pro rata  amount  will  be
distributed from the RMB Revenue Accounts directly to the County Partners.
     
Certain Covenants

  The Exchange Notes Indenture
  
     Set  forth  below  are certain covenants set forth in the  Exchange  Notes
Indenture.
     
     Ranking.  The Issuer will ensure that its obligations under each  Existing
Note  will  at  all  times  constitute  general,  direct,  unsubordinated   and
unconditional  obligations of the Issuer ranking at all  times  at  least  pari
passu  in  priority of payment, in right of security and in all other  respects
with the other Existing Notes and with all other unsubordinated Indebtedness of
the Issuer now or hereafter outstanding.
     
     Use  of  Proceeds. The gross proceeds from the sale of the Old Notes  were
used  by the Issuer: (i) to make a deposit in the Capitalized Interest Fund  in
the  approximate amount of $48.1 million; (ii) to make a deposit  in  the  Debt
Service  Reserve  Fund in the amount of $9.7 million; (iii) to pay  transaction
fees,  commissions and expenses incurred in connection with the Prior Offering,
estimated  to  be  approximately $6.8 million, which amount includes  fees  and
expenses of the Initial Purchaser pursuant to the agreement between the  Issuer
and  the  Initial  Purchaser (the "Purchase Agreement"); and  (iv)  to  make  a
deposit in the Luannan Facility Construction Fund estimated to be in the amount
of  $80.4  million. This amount has been used, and interest thereon  and  other
income expected to be received by the Issuer during construction will be  used,
by  the Issuer to make the Issuer Loan to Pan-Western. Pan-Western has used and
will  use  (in  the case of interest and other income expected to  be  received
during  construction) the proceeds of the Issuer Loan to make the JV Equity
Contributions and the Shareholder Loans to each of the four Joint Ventures. The
Joint  Ventures  will  use  the  proceeds of the JV  Equity  Contributions  and
Shareholder Loans, together with capital contributions from the County Partners
in the amount of $5.7 million, to develop and construct the Luannan Facility.
     
  The Company Indenture
  
  Set forth below are certain covenants set forth in the Company Indenture.
     
     Ranking.  The Company will ensure that its obligations under each Exchange
Notes  Guarantee  will at all times constitute general, direct,  unsubordinated
and unconditional obligations of the Company ranking at all times at least pari
passu  in  priority of payment, in right of security and in all other  respects
with  the  other  Exchange Notes guarantees and with all  other  unsubordinated
Indebtedness of the Company now or hereafter outstanding.
     
  The Indentures
  
     Set forth below are certain covenants set forth in the Indentures.
     
     Reporting.  The  Indentures provide that the Company and the  Issuer  will
furnish to the Trustees after the end of each fiscal year, a certificate  of  a
responsible  officer  of  the  Company, the Issuer,  Pan-Western  and  Pan-Sino
stating that a review of the activities of the Company, the Issuer, Pan-Western
and  Pan-Sino  during  the  preceding fiscal  year  has  been  made  under  the
supervision of such responsible officer and further stating that, to  the  best
of such person's knowledge, the Company and the Issuer during the previous year
has  kept,  observed,  performed and fulfilled  each  and  every  covenant  and
condition contained in the Indentures, the Exchange Notes Guarantee and in  the
Existing  Notes  and  that  such  person has no  reason  to  believe  that  any
Indentures Event of Default or any condition or event that with the  giving  of
notice  or  lapse  of  time or both would, unless cured or  waived,  become  an
Indentures  Event of Default, has occurred, or, if there has been a  breach  or
default in the fulfillment of any such obligation, specifying each such  breach
or default known to such person and the remedies, if any, being taken to remedy
such  situation and the Trustees will be fully protected in relying  upon  such
certificate.
     
     Insurance.  The  Indentures provide that the Company shall  maintain,  and
shall cause each of its Subsidiaries to maintain, insurance of the types and in
the  amounts that are customary and usual for a company in its respective  line
of  business.  Prior to the Closing Date, the Company retained  an  Independent
Insurance Consultant, who certified to the Trustees that such insurance met the
standard  of  the  preceding  sentence. Thereafter, the  Independent  Insurance
Consultant shall annually review the insurance coverages of the Company and its
Subsidiaries and certify that such coverages remain customary and usual.
     
     Limitation  on Investments. The Indentures provide that the Company  shall
not  make  and  shall not permit any of its Subsidiaries to make,  directly  or
indirectly,  any  Investments, except: (i) Investments by the  Company  or  any
Wholly Owned Subsidiary in or to any Wholly Owned Subsidiary and Investments or
loans in or to the Company or a Wholly Owned Subsidiary by any Subsidiary; (ii)
Investments  represented  by accounts receivable created  or  acquired  in  the
ordinary course of business; (iii) advances to employees in the ordinary course
of  business;  (iv) Investments under or pursuant to interest  rate  protection
agreements;  (v) Investments, not exceeding $5.0 million in the  aggregate,  in
joint ventures, partnerships or Persons that are not Wholly Owned Subsidiaries,
provided  that  such Investments are made solely for the purpose  of  acquiring
businesses  related  to  the  Company's  business;  (vi)  Restricted   Payments
permitted   by   the  covenant  "Limitation  on  Restricted  Payments";   (vii)
Investments  in  connection  with  any Permitted  Project  (including,  without
limitation, Investments in Permitted Projects which are not Wholly Owned by the
Company or one of its Subsidiaries); (viii) any loan from a Subsidiary  of  the
Company  to a Subsidiary of Panda International in an amount not in  excess  of
the  amount of Restricted Payments which the Company would be permitted to make
at the time of such loan; and (ix) Dollar Permitted Investments.
     
     Limitation  on  Restricted  Payments.  The  Indentures  provide  that  the
Company  shall  not  make,  and shall not permit any of  its  Subsidiaries  to,
directly or indirectly, make any Restricted Payment, unless:
     
          (a)  no  Indentures  Event of Default shall have  occurred  and  be
               continuing  at  the  time of or after giving  effect  to  such
               Restricted Payment;
          
          (b)  the  Luannan Facility Engineer has certified that the  Luannan
               Facility Commercial Operation Date has occurred;
          
          (c)  the  Debt  Service  Coverage Ratio  of  the  Company  for  the
               immediately  preceding four fiscal quarters (or,  if  date  of
               determination  is  within the preceding four  fiscal  quarters
               following  the  Luannan Commercial Operation  Date,  for  such
               shorter period) is greater than 1.4 to 1, as certified by  the
               Chief Financial Officer of the Company;
          
          (d)  the  projected Debt Service Coverage Ratio of the Company  for
               the  immediately  succeeding four fiscal quarters  is  greater
               than 1.4 to 1, as certified by the Chief Financial Officer  of
               the Company;
          
          (e)  the amount in the Debt Service Reserve Fund plus the amount in
               the Notes Guarantee Service Reserve Fund equals or exceeds the
               Debt Service Reserve Requirement; and
          
          (f)  immediately  after  giving effect to such Restricted  Payment,
               the  aggregate  of  all Restricted Payments declared  or  made
               after  the  date  on which the Existing Notes  are  originally
               issued  does  not exceed the sum of (1) 50% of  the  Company's
               Consolidated Net Income (or in the event such Consolidated Net
               Income shall be a deficit, minus 100% of such deficit if after
               the  28th  month  following the Closing Date or  50%  of  such
               deficit prior to such date) from the next fiscal quarter after
               the  Closing  Date,  plus (2) 100% of the aggregate  Net  Cash
               Proceeds  and  the Fair Market Value of marketable  securities
               received by the Company from the issue or sale, after the date
               on  which the Existing Notes are originally issued, of Capital
               Stock  (other than Disqualified Stock) of the Company  or  any
               Indebtedness  or  other securities of the Company  convertible
               into or exercisable for Capital Stock (other than Disqualified
               Stock)  of  the  Company  which  has  been  so  converted   or
               exercised,  as  the case may be. For purposes  of  determining
               under  clause  (2)  above the amount expended  for  Restricted
               Payments, cash distributed shall be valued at the face  amount
               thereof  and property other than cash shall be valued  at  its
               Fair Market Value.
          
     The  provisions of this covenant shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at such  date
of  declaration  such payment would comply with the provisions of  the  Company
Indentures,  (ii) the retirement of any shares of Capital Stock of the  Company
in  exchange  for,  or  out  of,  the Net Cash Proceeds  of  the  substantially
concurrent sale (other than to a Subsidiary of the Company) of other shares  of
Capital  Stock  of  the  Company  (other than Disqualified  Stock),  (iii)  the
redemption  or  retirement of Subordinated Indebtedness of the  Issuer  or  the
Company  in  exchange for, by conversion into, or out of the Net Cash  Proceeds
of,  a  substantially concurrent (x) sale or issuance of Capital Stock  of  the
Company  or (y) incurrence of Subordinated Indebtedness of the Issuer  that  is
contractually subordinated in right of payment to the Existing Notes,  that  is
permitted  to  be  incurred  in accordance with the  covenant  described  under
"Limitation  on  Indebtedness" below and that has the same or greater  Weighted
Average  Life  to Maturity as the Indebtedness being redeemed or retired,  (iv)
any payment made by the Company or a Subsidiary, directly or indirectly, to the
Issuer  in  order to enable the Issuer to pay principal, premium, if  any,  and
interest (including Liquidated Damages and Additional Amounts, if any)  on  the
Existing  Notes, (v) any payment made by the Company or a Subsidiary,  directly
or  indirectly,  to  enable  the issuer of any Permitted  Indebtedness  to  pay
principal, premium, if any, and interest thereon, (vi) any dividend made  by  a
Subsidiary of the Company to its parent and (vii) payments made pursuant to the
Administrative  Services Agreement and the Development Services  Agreement.  In
determining  the  amount of Restricted Payments permissible  under  clause  (f)
above,  amounts  expended pursuant to clause (i) of this  paragraph  and  loans
pursuant to clause (viii) of the covenant on "Limitation on Investments"  shall
be included as Restricted Payments.
     
     Limitation  on Transactions with Affiliates. The Indentures  provide  that
the  Company  shall not, and shall not permit any Subsidiary,  to  conduct  any
business  or enter into any transaction or series of related transactions  with
or  for  the  benefit of any of their respective Affiliates (each an "Affiliate
Transaction"), except in good faith and on terms that are no less favorable  to
the  Company or such Subsidiary, as the case may be, than those that could have
been  obtained  in  a comparable transaction on an arm's-length  basis  from  a
Person  not  an  Affiliate  of the Company or such  Subsidiary.  All  Affiliate
Transactions  (and  each  series of related Affiliate  Transactions  which  are
similar or part of a common plan) involving aggregate payments or other  market
value in excess of $500,000 shall be approved by the Board of Directors of  the
Company,  such approval to be evidenced by a Board Resolution stating that  the
Board  of  Directors  has determined that such transaction  complies  with  the
foregoing  provisions. If the Company or any Subsidiary of the  Company  enters
into  an  Affiliate Transaction (or a series of related Affiliate  Transactions
which  are  similar or part of a common plan) involving aggregate  payments  or
other  market value in excess of $1.0 million, the Company or such  Subsidiary,
as  the  case  may  be,  shall,  prior to the consummation  thereof,  obtain  a
favorable  opinion as to the fairness of such transaction or series of  related
transactions  to the Company or the relevant Subsidiary, as the  case  may  be,
from  a financial point of view, from an Independent Financial Advisor and file
the same with the Company Indenture Trustee. Notwithstanding the foregoing, the
restrictions  set  forth in this covenant shall not apply to  (i)  transactions
between  the  Company and any of its Wholly Owned Subsidiaries or among  Wholly
Owned  Subsidiaries of the Company, (ii) Restricted Payments permitted  by  the
Indentures,  (iii)  customary  directors'  fees,  indemnification  and  similar
arrangements,  consulting fees, employee salaries and bonuses  or  legal  fees,
(iv)  payments  made pursuant to the Administrative Services Agreement  or  the
Development Services Agreement, (v) transactions between the Company or any  of
its  Wholly Owned Subsidiaries and a Permitted Project and (vi) any transaction
which  would otherwise constitute an Affiliate Transaction but which  has  been
entered into prior to the Closing Date.
     
     Limitation  on Indebtedness. The Indentures provide that the  Company  and
its  Subsidiaries  will  not  create, incur, assume  or  suffer  to  exist  any
Indebtedness, whether current or funded, or any other liability, except for (i)
Indebtedness  evidenced by the Existing Notes, (ii) Indebtedness  evidenced  by
the  Exchange Notes Guarantee, (iii) Permitted Indebtedness, (iv) Joint Venture
Permitted  Indebtedness,  (v)  liabilities  of  the  Company  and  the   Issuer
representing fees, expenses and indemnities payable to the Trustees pursuant to
the   Indentures,  (vi)  Domestic  Project  Permitted  Indebtedness  and  (vii)
liabilities  of the Issuer representing fees, expenses and indemnities  payable
in  connection  with  the  issuance of Existing Notes and  the  Exchange  Notes
Guarantee  including, without limitation, such amounts payable to  the  Initial
Purchaser under the Purchase Agreement.
     
     "Permitted Indebtedness" means:
     
     (i)   any  and  all  Indebtedness of the Company  and  its  Subsidiaries
           outstanding as of the Closing Date;
     
     (ii)  Indebtedness of the Company which is owed to and held by a  Wholly
           Owned  Subsidiary  and Indebtedness of a Wholly  Owned  Subsidiary
           which  is  owed  to  and held by the Company  or  a  Wholly  Owned
           Subsidiary;  provided,  however, that any subsequent  issuance  or
           transfer  of  any Capital Stock which results in any  such  Wholly
           Owned  Subsidiary ceasing to be a Wholly Owned Subsidiary  or  any
           transfer  of  such Indebtedness (other than to the  Company  or  a
           Wholly  Owned  Subsidiary)  shall be  deemed,  in  each  case,  to
           constitute  the incurrence of such Indebtedness by the Company  or
           by a Wholly Owned Subsidiary, as the case may be;
     
     (iii) Non-Recourse  Debt  of a Subsidiary or group of Subsidiaries,  the
           proceeds  of  which are used to acquire, develop  or  construct  a
           Permitted Project by such Subsidiary or group of Subsidiaries;
     
     (iv)  Permitted  Refinancing Indebtedness in exchange for,  or  the  net
           proceeds  of which are used to extend, refinance, renew,  replace,
           or  refund,  Indebtedness that was permitted by the Indentures  to
           be incurred or was outstanding as of the Closing Date;
     
     (v)   any  additional  Indebtedness  incurred  by  the  Company  or  its
           Subsidiaries  provided  that the Chief Financial  Officer  of  the
           Company  certifies at the time of incurrence of such  Indebtedness
           that the following conditions have been met:
     
           (a)  no  Indentures Event of Default will occur and be  continuing
                after  giving  effect to the incurrence  of  such  additional
                Indebtedness;
           
           (b)  the   minimum  (or  lowest)  annual  projected  Debt  Service
                Coverage Ratio of the Company for the remaining term  of  the
                Exchange Notes will not be less than 1.4 to 1;
           
           (c)  the  minimum  (or lowest) annual projected Consolidated  Debt
                Service Coverage Ratio of the Company for the remaining  term
                of the Exchange Notes will not be less than 1.15 to 1;
           
           (d)  the  Rating Agencies shall have confirmed that there will  be
                no  rating downgrade with respect to the Exchange Notes after
                giving   effect   to  the  incurrence  of   such   additional
                Indebtedness;
           
           (e)  the  Debt Service Coverage Ratio of the Company shall be, for
                the  immediately preceding four fiscal quarters, greater than
                1.4 to 1;
           
           (f)  the  amount in the Debt Service Reserve Fund plus the  amount
                in  the Note Guarantee Service Reserve Fund equals or exceeds
                the Debt Service Reserve Requirement;
           
     (vi)  any  additional Indebtedness issued pursuant to one  or  more  PFC
           Indenture supplements, provided that, at the time of the  creation
           of  such  Indebtedness (other than the initial Series A Bonds  and
           any  series  of bonds issued solely in exchange for an  equivalent
           aggregate  principal  amount  of  outstanding  bonds  of   another
           series) the following conditions have been met:
     
           (a)  PIC  provides  an  officer's  certificate  at  the  time   of
                incurrence  of  such  Indebtedness to the  Company  Indenture
                Trustee  (supported by a certificate to the Company Indenture
                Trustee  from  the  Consolidating Financial Analyst)  stating
                that,   after   giving  effect  to  the  issuance   of   such
                Indebtedness  and the application of the proceeds  therefrom,
                the  projected  PIC  Debt  Service  Coverage  Ratio  and  the
                projected  PIC Consolidated Debt Service Coverage  Ratio  (if
                then  applicable) equal or exceed 1.7 to 1.0 and 1.25 to 1.0,
                respectively,  in  each  case  for  each  PIC  Future   Ratio
                Determination Period; and
           
           (b)  the   rating  of  the  outstanding  Indebtedness  in   effect
                immediately   prior  to  the  issuance  of  such   additional
                Indebtedness  is  reaffirmed by  the  Rating  Agencies  after
                giving   effect   to   the  issuance   of   such   additional
                Indebtedness, provided, further, that a reaffirmation of  the
                rating  of the outstanding Indebtedness shall not be required
                if  (1) neither PIC nor any or Subsidiary of the Company  has
                acquired (or is acquiring in connection with the issuance  of
                such  additional  Indebtedness), sold or  otherwise  disposed
                of,  since the last date upon which the Indebtedness  of  any
                series  were rated or a reaffirmation of rating was given  in
                respect  thereof, any amount of direct or indirect  interests
                in  one or more Permitted Projects with respect to which  the
                sum  of  (w)  the  aggregate  purchase  prices  of  all  such
                acquisitions and (x) the aggregate sales prices and  proceeds
                received in connection with any such disposition of all  such
                sales  or  other  dispositions, exceeds the  greater  of  (y)
                $50.0  million and (z) 25% of the aggregate principal  amount
                of  the  Indebtedness then outstanding and (2) the  aggregate
                principal  amount of additional Indebtedness to be issued  is
                less than the lesser of (x) $50.0 million and (y) 25% of  the
                aggregate   principal   amount  of  the   Indebtedness   then
                outstanding; and
               
     (vii) in  addition  to  the  Indebtedness referred  to  in  clauses  (i)
           through  (vi),  any  other Indebtedness of  the  Company  and  its
           Subsidiaries  that,  in  the  aggregate,  does  not  exceed  $10.0
           million.
          
     Limitation  on Liens.  The Indentures will provide that the Company  shall
not, and shall not permit any of its Subsidiaries to, create, incur, assume  or
suffer  to  exist any Lien of any kind upon any of its property or  assets  now
owned or hereafter acquired by it, except for:
     
           (a) Liens  existing  as of the Closing Date and disclosed  in  the
                Collateral  Documents on the Closing Date and  Liens  created
                by  the  Existing  Notes, the Exchange Notes  Indenture,  the
                Exchange  Notes  Guarantee,  the Company  Indenture  and  the
                Collateral Documents;
           
           (b) Permitted  Liens  on  property  and  assets  not  constituting
                Collateral;
           
           (c) Liens  to  secure the payment of all or a part of the purchase
                price  of assets or property acquired or constructed  in  the
                ordinary  course  of business after the  date  on  which  the
                Existing Notes are originally issued, provided that  (i)  the
                aggregate  principal amount of Indebtedness secured  by  such
                Liens  shall not exceed the Fair Market Value of  the  assets
                or  property so acquired or constructed, shall be limited  to
                the  asset or property at issue and shall not, in any  event,
                exceed  $2.5 million, (ii) the Indebtedness secured  by  such
                Liens  shall  have otherwise been permitted  to  be  incurred
                under  the Indentures and (iii) such Liens shall not encumber
                any  other  assets or property of the Company or any  of  its
                Subsidiaries  and  shall attach to such  assets  or  property
                within  60  days of the construction or acquisition  of  such
                assets or property;
           
           (d) Liens  on  the  assets  or property of  a  Subsidiary  of  the
                Company  at  the time such Subsidiary became a Subsidiary  of
                the  Company  and  not  incurred  as  a  result  of  (or   in
                connection  with  or  in  anticipation  of)  such  Subsidiary
                becoming a Subsidiary of the Company, provided such Liens  do
                not  extend to or cover any property or assets of the Company
                or  any  of  its  Subsidiaries (other than  the  property  or
                assets so acquired);
           
           (e) leases  and  subleases of real property of  (i)  any  Material
                Subsidiary (which leases and subleases are Non-Recourse  Debt
                other  than to the Material Subsidiary which leases and  uses
                such  asset),  which  do  not  interfere  with  the  ordinary
                conduct  of  the  business  of the  Company  or  any  of  its
                Material  Subsidiaries, and which are made on  customary  and
                usual  terms  applicable to similar properties  or  (ii)  any
                Subsidiary (which leases and subleases are Non-Recourse  Debt
                other  than  to  the Subsidiary which leases  and  uses  such
                asset) that is not a Material Subsidiary;
           
           (f) Liens  incurred  by a Subsidiary or group of  Subsidiaries  on
                its  or their assets to secure Non-Recourse Debt incurred  in
                conformity  with  the covenant "Limitation on  Indebtedness",
                provided   that  the  Lien  is  created,  provided   for   or
                contemplated  at the time of the initial incurrence  of  such
                Indebtedness  and does not extend to any assets  or  property
                of  the Company or any other Subsidiary (other than assets or
                property  directly related to the development,  construction,
                financing,  ownership or operation by a Subsidiary  or  group
                of Subsidiaries of a Permitted Project);
           
           (g) Liens,  not  existing as of the Closing Date, but required  or
                permitted  to  be  created at a later date  pursuant  to  the
                terms  of  the PFC Indenture, the Rosemary Indenture  or  the
                Brandywine Facility Lease; and
           
           (h) in  addition  to Liens permitted under clauses (a)-(g)  above,
                Liens  securing an aggregate of $5.0 million of  Indebtedness
                or other obligations.
          
     Limitation   on   Dividends  and  Other  Payment  Restrictions   Affecting
Subsidiaries. The Indentures provide that the Company shall not, and shall  not
permit  any  Subsidiary  of the Company to, directly or indirectly,  create  or
otherwise cause or suffer to exist or enter into any agreement with any  Person
that would cause, any consensual encumbrance or restriction of any kind on  the
ability  of  any  Subsidiary of the Company to (i) pay dividends,  in  cash  or
otherwise,  or make any other distributions on its Capital Stock or  any  other
interest or participation in, or measured by, its profits owned by, or pay  any
Indebtedness owed to, the Company or a Subsidiary of the Company, (ii) make any
loans  or  advances to the Company or any Subsidiary of the  Company  or  (iii)
transfer any of its properties or assets to the Company or to any Subsidiary of
the  Company,  except,  in  each  case, for such encumbrances  or  restrictions
existing  under or contemplated by or by reason of (a) restrictions imposed  by
applicable law, (b) customary non-assignment provisions of any contract or  any
lease  governing a leasehold interest of the Company or any Subsidiary thereof,
(c)  the  Existing Notes, the Exchange Notes Guarantee, the Indentures and  the
Collateral Documents, (d) any restrictions existing under agreements in  effect
on  the Closing Date, including, without limitation, restrictions under the PFC
Indenture,  the Rosemary Indenture and the Brandywine Facility Lease,  as  such
are  in  effect on the Closing Date, (e) any restrictions, with  respect  to  a
Subsidiary  of  the  Company  (and  only to such  Subsidiary)  that  is  not  a
Subsidiary  of the Company on the Closing Date, in existence at the  time  such
Person becomes a Subsidiary of the Company (but not created in contemplation of
such Person becoming a Subsidiary), (f) any encumbrance imposed pursuant to the
terms of Non-Recourse Debt incurred in conformity with the covenant "Limitation
on  Indebtedness" provided that such encumbrance in the written opinion of  the
Chief Financial Officer of the Company (1) is required in order to obtain  such
financing,  (2) is customary for such financings and (3) applies  only  to  the
assets  of  or revenues of the applicable Permitted Project and any  Subsidiary
whose  Capital Stock is pledged in connection with such financing or  which  is
established for the sole purpose of developing, owning, constructing, financing
or operating such Permitted Project and (g) any restrictions existing under any
agreement  that  refinances or replaces an agreement containing  a  restriction
permitted  by  clause  (a)  through (f), above; provided  that  the  terms  and
conditions  of any such restrictions are not materially less favorable  to  the
Holders  of  the Existing Notes than those under or pursuant to  the  agreement
being replaced or the agreement evidencing the Indebtedness refinanced. Nothing
contained in this covenant shall prevent the Company or any of its Subsidiaries
from entering into any encumbrance permitted under the covenant described under
"Limitation  on  Liens" above or restricting the sale or other  disposition  of
assets or property securing Indebtedness evidenced by such agreement so long as
the Company complies with the covenant described under "Disposition of Proceeds
of Asset Sales" below.
     
     Capital  Expenditures. The Indentures provide that the  Company  will  not
make,  or  permit  any  Subsidiary to make, any expenditure  (by  long-term  or
operating  lease or otherwise) for capital assets (both realty and  personalty)
except  for expenditures (i) contemplated by the Indentures (including, without
limitation,  expenditures with respect to the Luannan Facility), (ii)  required
or  permitted  by the PFC Indenture, the Rosemary Indenture or  the  Brandywine
Facility  Lease,  or (iii) subject  to  compliance  with   the   provisions  of
"Limitation on Investments,"  "Limitation on Indebtedness"  and "Limitation  on
Restricted   Payments,"  expenditures  in  connection  with  the   development,
construction or ownership of a Permitted Project.
     
     Permitted  Projects.  The Indentures provide that to  the  extent  that  a
project fulfills the requirements of the PIC Additional Projects Contract,  the
Company  and its Subsidiaries may develop, construct, own, operate and  finance
such  project  pursuant  to the requirements of the PFC  Indenture  subject  to
compliance with the terms of the Indentures. To the extent that a project  does
not  fulfill  the  requirements of the PIC Additional  Projects  Contract,  the
Company  and  its Subsidiaries agree that such project may only  be  developed,
constructed,  financed,  owned  and operated by  the  Company  or  one  of  its
Subsidiaries  pursuant to the requirements of the Indentures  and  the  Company
shall  (i) maintain at least a 50% (direct or indirect) ownership or equivalent
interest  in  each  project  or (ii)(a) at least a  25%  (direct  or  indirect)
ownership  or  equivalent interest in each project not meeting the requirements
of  clause  (i)  above and (b) a controlling influence over the management  and
policies with respect to each project, directly or indirectly, whether  through
the ownership of voting securities, by contract or otherwise, provided that  no
other  entity  has  greater control than the Company over  the  management  and
policies  of  such project (notwithstanding the foregoing, this covenant  shall
not prohibit the sale, lease, transfer or other disposition of all interests in
a  project,  or  a  reduction in the ownership or equivalent  interest  of,  or
control over, a project occurring (1) pursuant to the terms of a build-operate-
transfer  arrangement  at  least ten years after  the  entering  into  of  such
arrangement or (2) allowed pursuant to the other terms of the Indentures).
     
     Limitation  of Line of Business. The Indentures provide that  the  Company
shall  not  and  shall  not permit any Subsidiary to engage  in  any  business,
enterprise  or activity or enter into any material transaction other  than  the
development,   construction,  financing,  ownership  or  operation   of   power
generating facilities and any and all activities related thereto.
     
     Amendment  of  Articles of Association. The Indentures  provide  that  the
Company  shall not and shall not permit any Subsidiary to amend its  respective
articles  of  association in any manner that is reasonably  likely  to  have  a
Material Adverse Effect.
     
     Amendment  of Project Documents. The Indentures provide that  the  Company
shall not and shall not permit any Subsidiary to amend or terminate any Project
Document  if  such  amendment or termination is reasonably  likely  to  have  a
Material Adverse Effect.
     
     Protection  of Collateral by Company and its Subsidiaries. The  Indentures
provide that the Company and its Subsidiaries will, from time to time, take all
action  necessary  or advisable (including, without limitation,  executing  and
delivering   all   such  supplements  and  amendments,  financing   statements,
continuation   statements,   instruments  of  further   assurance   and   other
instruments),  to preserve and defend its title to the Collateral  against  the
claims of all persons and parties.
     
     Performance  of  Obligations by Company, Subsidiaries  and  Trustees.  The
Indentures  provide  that the Company and its Subsidiaries will,  respectively,
punctually perform and observe all of its respective obligations and agreements
contained  in  the  Collateral  Documents, and will,  in  accordance  with  the
Indentures,  the  Issuer  Loan Agreement and the Shareholder  Loan  Agreements,
diligently  pursue  its respective rights and remedies and cooperate  with  the
Trustees  and  the Noteholders in pursuing the same to the extent  such  rights
have been assigned by such Person to the Trustees, in each case for the benefit
of the Noteholders.
     
     Taxes.  The Indentures provide that the Company will cause the  Issuer  to
promptly  pay when due any present or future stamp, court or documentary  taxes
or  any other excise or property taxes, charges or similar levies that arise in
any  jurisdiction from the execution, delivery or registration of each Existing
Note  or  any  other  document or instrument referred  to  in  the  Indentures,
excluding (i) taxes imposed on or measured by the net income or capital of  any
Noteholder by any jurisdiction or any political subdivision or taxing authority
thereof  and  (ii)  any such taxes, charges or similar levies  imposed  by  any
jurisdiction  outside  of  the United States except those  resulting  from,  or
required  to be paid in connection with, the enforcement of such Existing  Note
or  any  other  such  document or instrument following the  occurrence  of  any
Indentures Event of Default.
     
     The Company will, and will cause each of its Subsidiaries to, pay prior to
delinquency,  all material taxes, assessments, and governmental  levies  except
such  as  are  being contested in good faith and by appropriate proceedings  or
where  the  failure  to effect such payment will not have  a  Material  Adverse
Effect.
     
     Financial Statements. The Indentures provide that so long as any  Existing
Notes  are  outstanding, the Company will furnish to the Trustees (i) unaudited
quarterly  reports containing consolidated financial statements of the  Company
and  its  Subsidiaries for each of the first three quarters of its fiscal  year
and (ii) audited annual reports containing consolidated financial statements of
the  Company and its Subsidiaries. Whether or not required by the Exchange  Act
or  the  rules  and regulations of the Commission thereunder, so  long  as  any
Existing Notes are outstanding, the Company will furnish to the Holders of  the
Existing  Notes all quarterly and annual financial information  that  would  be
required  to be contained in a filing with the Commission on Forms  10-Q,  10-K
and  8-K  if  the  Company  were  required to  file  such  Forms,  including  a
"Management's  Discussion and Analysis of Financial Condition  and  Results  of
Operations" and, with respect to the annual information only, a report  thereon
by  the  Company's independent public accountants. In addition, whether or  not
required  by  the Exchange Act or the rules and regulations of  the  Commission
thereunder,  the Company will file a copy of all such information  and  reports
with  the  Commission for public availability (unless the Commission  will  not
accept  such  a  filing) and make such information available to  investors  who
request  it in writing. In addition, the Company will agree, that, for so  long
as  any  Existing  Notes remain outstanding, the Company and  the  Issuer  will
furnish  to  the Holders and to securities analysts and prospective  investors,
upon  their request, the information required to be delivered pursuant to  Rule
144A(d)(4) under the Securities Act.
     
     Sale  and Leaseback Transactions. The Indentures provide that the  Company
will  not, and will not permit any of its Subsidiaries to, enter into any  sale
and  leaseback  transaction; provided that the Company or  any  Subsidiary  may
enter  into  a  sale  and  leaseback transaction if (i)  the  Company  or  such
Subsidiary  could  have (a) incurred Indebtedness in an  amount  equal  to  the
Attributable Debt relating to such sale and leaseback transaction  pursuant  to
the  covenant  "Limitation on Indebtedness" and (b) incurred a Lien  to  secure
such Indebtedness pursuant to the covenant "Limitation on Liens," (ii) the  Net
Cash Proceeds of such sale and leaseback transaction are at least equal to  the
Fair  Market  Value (as determined in good faith by the Board of Directors  and
set  forth  in  an  Officers' Certificate delivered to  the  Company  Indenture
Trustee)  of  the  property  that is the subject of  such  sale  and  leaseback
transaction  and  (iii)  the  transfer of assets in  such  sale  and  leaseback
transaction  is permitted by, and the proceeds of such transaction are  applied
in compliance with, the covenant "Disposition of Proceeds of Asset Sales."
     
     Delivery of Information and Reports under the Shareholder Loan Agreements.
The  Indentures  provide that the Issuer will deliver  to  the  Exchange  Notes
Trustee,  at  the  expense of the Issuer, promptly upon  receipt  thereof,  all
financial statements, reports, notices and certificates of the Joint Ventures.
     
     Disposition  of Proceeds of Asset Sales. The Indentures provide  that  the
Company  shall not, and shall not permit any of its Subsidiaries to,  make  any
Asset  Sale  unless (i) such Asset Sale is for Fair Market Value and  (ii)  the
proceeds  therefrom consist of at least 85% cash and/or Cash Equivalents  (100%
in  the  case of lease payments). Within 365 days after the receipt of any  Net
Cash  Proceeds from an Asset Sale, the Company, or its Subsidiary, as the  case
may  be,  may  apply such Net Cash Proceeds to an Investment, the making  of  a
capital  expenditure or the acquisition of other tangible assets. Any Net  Cash
Proceeds from Asset Sales that are not applied or invested as provided  in  the
preceding  sentence  of  this  paragraph will be deemed  to  constitute  Excess
Proceeds  and  the  Company, or its Subsidiary, as the case  may  be,  will  be
required to make an Asset Sale Redemption Offer.
     
     Merger, Consolidation, or Sale of Assets. The Indentures provide that  the
Company  and the Issuer shall not, in a single transaction or series of related
transactions, consolidate or merge with or into (whether or not the Company  or
the Issuer is the surviving corporation), or directly and/or indirectly through
its Subsidiaries sell, assign, transfer, lease, convey or otherwise dispose  of
all  or substantially all of the Company's or the Issuer's properties or assets
determined  on a consolidated basis for the Company and its Subsidiaries  taken
as  a whole in one or more related transactions, to another corporation, Person
or  entity unless (i) the Company or the Issuer is the surviving corporation or
the  entity  or  the  Person formed by or surviving any such  consolidation  or
merger  (if  other  than  the Company or the Issuer) or  to  which  such  sale,
assignment,  transfer, lease, conveyance or other disposition  will  have  been
made  is  a  corporation organized or existing under the  laws  of  the  United
States,  any  state  thereof or the District of Columbia; (ii)  the  entity  or
Person  formed by or surviving any such consolidation or merger (if other  than
the  Company  or  the  Issuer)  or the entity or Person  to  which  such  sale,
assignment,  transfer, lease, conveyance or other disposition  will  have  been
made  assumes  all  the  obligations of the Company or the  Issuer,  under  the
Existing Notes, the Exchange Notes Guarantee and the Indentures pursuant  to  a
supplemental indenture in a form reasonably satisfactory to the Trustees; (iii)
immediately after such transaction no Indentures Event of Default exists;  (iv)
the  Company  or the Issuer or the entity or Person formed by or surviving  any
such  consolidation or merger (if other than the Company or the Issuer), or  to
which  such  sale, assignment, transfer, lease, conveyance or other disposition
will have been made (A) will have Consolidated Net Worth immediately after  the
transaction equal to or greater than the Consolidated Net Worth of the  Company
immediately  preceding  the  transaction and (B) will,  at  the  time  of  such
transaction  and  after giving pro forma effect thereto as if such  transaction
had  occurred  at  the  beginning  of the applicable  four-quarter  period,  be
permitted  to  incur  at least $1.00 of additional Indebtedness;  and  (v)  the
Company  delivers to the Trustees an Officers' Certificate and  an  Opinion  of
Counsel  addressed  to  the  Trustees with respect to  the  foregoing  matters;
provided,  however, that the requirement set forth in clause (iv)  above  shall
not  apply  to a merger between the Company or the Issuer and any Wholly  Owned
Subsidiary or to any merger between Wholly Owned Subsidiaries.
     
  Indentures Events of Default
  
     The following events constitute Indentures Events of Default:
     
     (i)   failure  by the Issuer to pay the principal and premium,  if  any,
           on  any  Existing  Note  when the same becomes  due  and  payable,
           whether  by  scheduled  maturity  or  required  prepayment  or  by
           acceleration or otherwise;
     
     (ii)  failure  by  the Issuer to pay the interest (including  Liquidated
           Damages and Additional Amounts, if any) on any Existing Note  when
           the  same  becomes due and payable, whether by scheduled  maturity
           or  required prepayment or by acceleration or otherwise, for 15 or
           more days;
     
     (iii) non-payment  of any interest on, or any principal of,  the  Issuer
           Loan  by  Pan-Western  when  the same  becomes  due  and  payable,
           whether  by  scheduled  maturity  or  required  prepayment  or  by
           acceleration or otherwise, for 30 or more days;
     
     (iv)  failure  by the Company to pay any amount it is obligated  to  pay
           to  the  Noteholders pursuant to the terms of the  Exchange  Notes
           Guarantee,  when  the  same becomes due and  payable,  whether  by
           scheduled  maturity or required prepayment or by  acceleration  or
           otherwise;
     
     (v)   any  representation or warranty made by the Company or any of  its
           Subsidiaries  in, respectively, the Indentures,  the  Issuer  Loan
           Agreement   or   the   Shareholder   Loan   Agreements   or    any
           representation,   warranty  or  statement  in   any   certificate,
           financial  statement or other document furnished to  the  Trustees
           by  or  on behalf of the Company or any of its Subsidiaries  under
           the  Indentures, shall prove to have been untrue or misleading  in
           any  material respect as of the time made, confirmed or  furnished
           and  the  fact,  event  or circumstance that  gave  rise  to  such
           inaccuracy  has  had or is reasonably likely to  have  a  Material
           Adverse  Effect and the fact, event or circumstance shall continue
           to  be uncured for 30 or more days after the Company or any of its
           Subsidiaries acquires notice of such inaccuracy; provided that  if
           the  Company or any such Subsidiary commences efforts to cure such
           fact,  event  or  circumstance  within  such  30-day  period,  the
           Company  or any such Subsidiary may continue to effect  such  cure
           of  such  fact,  event or circumstance and such  misrepresentation
           shall  not  be  deemed  an  Indentures Event  of  Default  for  an
           additional  60 days so long as the Company or such Subsidiary,  as
           the case may be, is diligently pursuing such cure;
     
     (vi)  failure  by  the  Company or any of its Material  Subsidiaries  to
           perform  or  observe  its covenants contained  in  the  Indentures
           relating  to  maintenance of existence, prohibition on fundamental
           changes,  disposition  of  assets,  limitations  on  Indebtedness,
           limitations on Liens or distributions;
     
     (vii) failure  by  the  Company or any of its Material  Subsidiaries  to
           perform  or  observe any of the other covenants contained  in  the
           Indentures  or  in the Collateral Documents (other  than  failures
           described in paragraph (v) above) and such failure shall  continue
           uncured  for  30  or  more  days (including,  without  limitation,
           covenants  with  respect to insurance and  amendments  to  Luannan
           Project  Documents or nature of business); provided  that  if  the
           Company  or  such  Material Subsidiary commences efforts  to  cure
           such  default  within  such 30-day period,  the  Company  or  such
           Material  Subsidiary  may  continue to effect  such  cure  of  the
           default  and such default shall not be deemed an Indentures  Event
           of  Default  for an additional 60 days so long as the  Company  or
           such Subsidiary is diligently pursuing the cure;
     
     (viii)occurrence   of   certain   events   involving   the   bankruptcy,
           insolvency, receivership or reorganization of the Company  or  any
           of its Material Subsidiaries;
     
     (ix)  the  entry  of  one or more final and non-appealable  judgment  or
           judgments  for  the  payment of money in excess  of  $1.0  million
           (exclusive  of  judgment  amounts fully covered  by  insurance  or
           indemnity)   against   the  Company  or  any   of   its   Material
           Subsidiaries, which remains unpaid or unstayed for a period of  90
           or more consecutive days;
     
     (x)   any  Project  Document (except as otherwise  permitted  under  the
           Indentures)  shall terminate or cease to be valid and binding  and
           in  full force and effect, or any third party thereto denies  that
           it  has  any  liability  or  obligation  under  any  such  Project
           Document  and  such third party ceases performance thereunder,  or
           any  third  party  is  in  default  under  such  Project  Document
           (subject  to any applicable grace period), and in each  case  such
           cessation  or default has had or is reasonably likely  to  have  a
           Material Adverse Effect;
     
     (xi)  any  Luannan  Financing Agreement shall terminate or cease  to  be
           valid and binding and in full force and effect;
     
     (xii) with  respect to a Domestic Project, or to the extent  applicable,
           any  Permitted Project, the loss of QF Status, to the extent  that
           such  loss of QF Status has had or is reasonably likely to have  a
           Material Adverse Effect;
     
     (xiii)failure  of  any Joint Venture to perform or observe  any  of  its
           material covenants or obligations contained in any of the  Luannan
           Project Documents if such failure has had or is reasonably  likely
           to have a Material Adverse Effect;
     
     (xiv) the  occurrence of any event resulting in the payment of  Domestic
           Project  Event  Proceeds or Permitted Project Event Proceeds  that
           will  result,  in  the  opinion  of  the  Consolidating  Financial
           Analyst,  in  the  Company's failure to meet  the  following  Debt
           Service Coverage Ratios (after the application of such amounts  as
           are  required  to  be applied pursuant to any  and  all  mandatory
           redemption or repayment obligations): (1) the minimum (or  lowest)
           annual  projected  Company Debt Service  Coverage  Ratio  for  the
           remaining term of the Existing Notes will not be less than 1.4  to
           1  and  (2)  the minimum (or lowest) annual projected Consolidated
           Debt  Service  Coverage  Ratio  for  the  remaining  term  of  the
           Existing Notes will not be less than 1.15 to 1;
     
     (xv)  the  Luannan Facility Construction Schedule Certificate  shall  at
           any  time  contain a conclusion that the Luannan Facility  is  not
           being  constructed  in  accordance with the Approved  Construction
           Budget  and  Schedule  or, if applicable, an  Approved  Completion
           Plan;
     
     (xvi) any  of  the  Collateral Documents ceases to be effective  or  any
           lien  granted  therein  ceases to  be  a  perfected  lien  to  the
           Trustees  on  the collateral described therein with  the  priority
           purported to be created thereby; provided that the Company or  the
           Issuer,  as  the  case may be, shall have 15  days  to  cure  such
           cessation  or  to  furnish  to  the  Trustees  all  documents   or
           instruments required to cure such cessation; or
     
     (xvii)any  default  under the Issuer Loan Agreement and the  Shareholder
           Loan  Agreements that has had or is reasonably likely  to  have  a
           Material  Adverse Effect and any default under the PFC  Indenture,
           the  Rosemary  Indenture, the Brandywine Facility  Lease  and  any
           other  default under any other agreement or instrument  containing
           Indebtedness of at least $2.5 million of a Domestic Project  or  a
           Permitted  Project,  to  the  extent that  any  of  the  preceding
           defaults is not waived.
     
     The Indentures provide that upon the occurrence of an Indentures Event  of
Default  as  specified in paragraph (viii) above, all interest,  principal  and
premium, if any (including Liquidated Damages and Additional Amounts, if  any),
on  the  outstanding Existing Notes and Exchange Notes Guarantee  shall  become
automatically  due  and  payable. In the case of  other  Indentures  Events  of
Default,  each  of  the  Trustees shall declare  all  interest,  principal  and
premium, if any (including Liquidated Damages and Additional Amounts, if  any),
on  the outstanding Existing Notes to be immediately due and payable if Holders
of  at  least  25%  in  aggregate principal amount of the Existing  Notes  then
outstanding have notified the Issuer and the Exchange Notes Trustee in  writing
of the occurrence of an Indentures Event of Default.
     
Defeasance

     The  Company  and  the  Issuer  may at any time  terminate  all  of  their
obligations  with  respect  to the Existing Notes  ("defeasance"),  except  for
certain  obligations,  including those regarding any trust  established  for  a
defeasance and obligations to register the transfer or exchange of the Existing
Notes,  to replace mutilated, destroyed, lost or stolen Existing Notes  and  to
maintain agencies in respect of Existing Notes. The Company and the Issuer  may
at  any  time terminate their obligations under certain covenants set forth  in
the  Indentures, some of which are described under "--Certain Covenants" above,
and  any  omission  to  comply with such obligations shall  not  constitute  an
Indentures Event of Default with respect to the Existing Notes issued under the
Indentures  ("covenant defeasance"). In order to exercise either defeasance  or
covenant  defeasance, the Issuer must irrevocably deposit  in  trust,  for  the
benefit  of the Holders of the Existing Notes, with the Exchange Notes  Trustee
money or U.S. government obligations, or a combination thereof, in such amounts
as  will  be  sufficient to pay the principal, premium, if  any,  and  interest
(including  Liquidated Damages and Additional Amounts, if any) on the  Existing
Notes  to  redemption  or  maturity and comply with certain  other  conditions,
including the delivery of an opinion as to certain tax matters.
     
Satisfaction and Discharge

     The  Indentures will be discharged and will cease to be of further  effect
(except  as  to  surviving rights or registration of transfer  or  exchange  of
Existing  Notes) as to all outstanding Existing Notes when either (a) all  such
Existing Notes theretofore authenticated and delivered (except lost, stolen  or
destroyed  Existing Notes which have been replaced or paid and  Existing  Notes
for  whose  payment money has theretofore been deposited in trust or segregated
and  held  in  trust  by  the Issuer and thereafter repaid  to  the  Issuer  or
discharged  from such trust) have been delivered to the Exchange Notes  Trustee
for  cancellation; or (b)(i) all such Existing Notes not theretofore  delivered
to  the  Exchange Notes Trustee for cancellation have or will (upon the mailing
of  a  notice or notices deposited with such trustees together with irrevocable
instructions  to mail such notice or notices to Holders of the Existing  Notes)
become due and payable and the Issuer has irrevocably deposited or caused to be
deposited with the Exchange Notes Trustee as trust funds in the trust  for  the
purpose  an  amount  of  money  sufficient to  pay  and  discharge  the  entire
indebtedness  on  the  Existing Notes not theretofore  delivered  to  the  such
trustees for cancellation, for principal, premium, if any, and accrued interest
(including  Liquidated Damages and Additional Amounts, if any) to the  date  of
such  deposit;  (ii) the Company and the Issuer have paid all sums  payable  by
them  under  the  Indentures; and (iii) the Issuer  has  delivered  irrevocable
instructions to the Exchange Notes Trustee to apply the deposited money  toward
the  payment of the Existing Notes at maturity or the redemption date,  as  the
case may be. In addition, the Issuer must deliver an Officers' Certificate  and
an Opinion of Counsel stating that all conditions precedent to satisfaction and
discharge have been complied with.
     
Withholding Taxes

     All  payments made by the Issuer on the Existing Notes (whether or not  in
the  form  of  definitive Existing Notes) or payments made by the Company  with
respect  to  the  Exchange Notes Guarantee will be made without withholding  or
deduction  for,  or  on  account  of,  any present  or  future  taxes,  duties,
assessments or governmental charges of whatever nature (collectively,  "Taxes")
imposed  or levied by or on behalf of the Cayman Islands, the United States  or
any  political subdivision thereof or any authority having power to tax therein
(each a "Tax Authority"), unless the withholding or deduction of such Taxes  is
then  required by law. If any deduction or withholding for, or on  account  of,
any  Taxes of any Tax Authority, shall at any time be required on any  payments
for,  or  on  account of, any payments made by the Issuer with respect  to  the
Existing Notes, including payments of principal, redemption price, interest  or
premium,  or  payments made by the Company with respect to the  Exchange  Notes
Guarantee,  the  Issuer  or the Company, as the case  may  be,  will  pay  such
additional amounts (the "Additional Amounts") as may be necessary in order that
the  net  amounts received in respect of such payments by the  Holders  of  the
Existing  Notes or the Trustees, as the case may be, after such withholding  or
deduction,  equal  the  respective amounts which would have  been  received  in
respect  of  such  payments  in the absence of such withholding  or  deduction;
except that no such Additional Amounts will be payable with respect to:
     
     (i)   any  payments on an Existing Note held by or on behalf of a Holder
           or  beneficial  owner who is liable for such Taxes in  respect  of
           such  Existing  Note by reason of the Holder or  beneficial  owner
           having  some  connection with the Cayman  Islands  or  the  United
           States  (including being a citizen or resident or national of,  or
           carrying  on  a  business or maintaining a permanent establishment
           in,  or  being  physically present in, the Cayman Islands  or  the
           United  States)  other than by the mere holding of  such  Existing
           Note  or  enforcement  of  rights thereunder  or  the  receipt  of
           payments in respect thereof;
     
     (ii)  any  Taxes that are imposed or withheld where such withholding  or
           imposition  is  by  reason  of  the  failure  of  the  Holder   or
           beneficial  owner to comply with a request by the  Issuer  or  the
           Company,  as  the  case  may  be, to  satisfy  any  certification,
           identification or other reporting requirement which the Holder  or
           beneficial owner is legally able to satisfy and which is  required
           or  imposed  by  statute,  treaty, regulation,  or  administrative
           practices  of  the  taxing  jurisdiction  as  a  precondition   to
           exemption from all or part of such Taxes; or
     
     (iii) any  Existing  Note presented for payment (where  presentation  is
           required)  more than 30 days after the relevant payment  is  first
           made  available  for payment to the Holder except  to  the  extent
           that  the  Holder  would  have been entitled  to  such  Additional
           Amounts  on presenting such Existing Note for payment on the  last
           day of such period of 30 days.
     
     Such  Additional  Amounts  will  also not  be  payable  where,  had  the
beneficial  owner of the Existing Note been the Holder of the Existing  Note,
he would not have been entitled to payment of Additional Amounts by reason of
clauses (i) to (iii) inclusive above.
     
     Upon  request,  the  Issuer or the Company, as the  case  may  be,  will
provide   the  Trustees  with  documentation  satisfactory  to  the  Trustees
evidencing  the  payment of Additional Amounts. Copies of such  documentation
will be made available to the Holders upon request.
     
     The  Issuer  will pay any present or future stamp, court or  documentary
taxes, or any other excise or property taxes, charges or similar levies which
arise in any jurisdiction from the execution, delivery or registration of the
Existing  Notes or any other document or instrument referred to  therein,  or
the receipt of any payments with respect to the Existing Notes, excluding any
such taxes, charges or similar levies imposed by any jurisdiction outside  of
the Cayman Islands, the United States of America or any jurisdiction in which
a Paying Agent is located, other than those resulting from, or required to be
paid  in connection with, the enforcement of the Existing Notes or any  other
such  document or instrument following the occurrence of any Indentures Event
of Default with respect to the Existing Notes.
     
Amendments, Supplements and Waivers

     Supplemental Indentures Without Consent. The Company, the Issuer and the
Trustees  may  from time to time and at any time enter into an  indenture  or
indentures  supplemental to the Indentures for one or more of  the  following
purposes:
     
     (i)   to   convey,  transfer,  assign,  mortgage  or  pledge  to  the
           Trustees  as  security for the Existing Notes or  the  Exchange
           Notes Guarantee for any property or assets;
     
     (ii)  to  evidence  the  succession  of another  corporation  to  the
           Company  or  the  Issuer, or successive  successions,  and  the
           assumption  by  the  successor corporation  of  the  covenants,
           agreements  and  obligations  of the  Company  and  the  Issuer
           pursuant to the Indentures;
     
     (iii) to  add  to  the covenants of the Company and the  Issuer  such
           further  covenants, restrictions, conditions or  provisions  as
           the  Company  or  the  Issuer may, in the  written  opinion  of
           independent  legal counsel, consider to be for  the  protection
           of  the  Noteholders,  and  to  make  the  occurrence,  or  the
           occurrence   and  continuance,  of  a  default  in   any   such
           additional  covenant, restriction, condition  or  provision  an
           Indentures Event of Default permitting the enforcement  of  all
           or  any of the several remedies provided in the Indentures, the
           Existing  Notes  or in the Exchange Notes Guarantee  as  herein
           set  forth;  provided, that in respect of any  such  additional
           covenant,    restriction,   condition   or    provision    such
           supplemental indenture may provide for a particular  period  of
           grace  after  default (which period may be  shorter  or  longer
           than  that  allowed  in  the case of  other  defaults)  or  may
           provide  for  an immediate enforcement upon such an  Indentures
           Event  of  Default or may limit the remedies available  to  the
           Trustees upon such an Indentures Event of Default or may  limit
           the  right  of  the  Noteholders of  a  majority  in  aggregate
           principal  amount of the Existing Notes at the time outstanding
           to waive such an Indentures Event of Default;
     
     (iv)  to  cure  any  ambiguity or to cure, correct or supplement  any
           provision  contained  in  the Indentures,  the  Exchange  Notes
           Guarantee  or  in  the  Existing Notes or in  any  supplemental
           indenture that may be defective or inconsistent with any  other
           provision  contained  in  the Indentures,  the  Exchange  Notes
           Guarantee  or  in  the  Existing Notes or in  any  supplemental
           indenture;  or  to  make  such other provisions  in  regard  to
           matters   or  questions  arising  under  the  Indentures,   the
           Exchange  Notes  Guarantee, the Existing  Notes  or  under  any
           supplemental  indenture as the Company or the  Issuer  may,  in
           its  written  opinion, deem necessary or desirable  and  which,
           any  of  the  foregoing cases, shall not adversely  affect  the
           interests  of the Holders of Existing Notes and Exchange  Notes
           Guarantee in any material respect; and
     
     (v)   to evidence and provide for the acceptance of appointment of  a
           successor  Trustee  or Trustees with respect  to  the  Existing
           Notes or the Exchange Notes Guarantee.
     
     The  Trustees are authorized to join with the Company or the Issuer in the
execution of any such supplemental indenture or indentures, to make any further
appropriate  agreements and stipulations that may be therein contained  and  to
accept the conveyance, transfer, assignment, mortgage or pledge of any property
thereunder,  but  the Trustees shall not be obligated to enter  into  any  such
supplemental indenture that adversely affects the Trustees' own rights,  duties
or immunities under the Indentures or otherwise.
     
     Any supplemental indenture authorized by the provisions outlined above may
be executed without the consent of the Holders of any of the Existing Notes, or
the  holders of the Exchange Notes Guarantee, as the case may be, at  the  time
outstanding.
     
     Supplemental Indentures With Consent. With the consent of the  Holders  of
not  less  than 51% in the aggregate principal amount of each of  the  Existing
Notes  or the holders of the Exchange Notes Guarantee, as the case may be,  the
Company,  the  Issuer and the Trustees may from time to time and at  any  time,
enter  into an indenture or indentures supplemental to the Indentures  for  the
purpose  of  adding any provisions to or changing in any manner or  eliminating
any  of  the  provisions of, respectively, the Exchange  Notes  Indenture,  the
Company  Indenture  or  the Existing Notes, as the  case  may  be,  or  of  any
supplemental indenture or of modifying in any manner the rights of the  Holders
of  the Existing Notes (including, without limitation, a supplemental indenture
changing  the provisions of the Indentures with respect to Change of  Control),
as the case may be; provided, that no such supplemental indenture will, without
the  unanimous consent of the relevant Holders of all of the affected  Existing
Notes or holders of the affected Exchange Notes Guarantee, as the case may  be,
make  certain "fundamental" changes to the terms, including: (i) modify certain
of  the  provisions  of  the  Indentures or any  Collateral  Documents  or  the
provisions  relating to the waiver of defaults or the making of  modifications;
(ii)  a  change  in the stated maturity of the principal (or, if the  principal
thereof   is  payable  in  installments,  the  stated  maturity  of  any   such
installment)  of or the dates on which interest is payable in  respect  of  the
Existing Notes; (iii) a reduction in or cancellation of the principal amount of
or  interest on the Existing Notes or a change in the obligation of the  Issuer
to  pay Liquidated Damages or Additional Amounts; (iv) a change in the currency
of  payment  of principal, premium, if any, and interest (including  Liquidated
Damages  and Additional Amounts, if any) on the Existing Notes; (v) a reduction
in  the above-stated percentage of aggregate principal amount of Existing Notes
necessary to modify or amend the Indentures or the Existing Notes or reduce the
quorum  requirements or the percentages of votes required for the  adoption  of
any  action  at a meeting of Noteholders; (vi) any impairment of the  right  to
institute any proceedings for the enforcement of any payment on or with respect
to  any  Exchange Note; (vii) the release of all or any substantial portion  of
the  Collateral;  (viii)  except  to  the extent  expressly  permitted  by  the
Indentures or any of the Collateral Documents, permit the creation of any  lien
prior  to  the  lien of the Collateral Documents with respect  to  any  of  the
property  pledged under the Collateral Documents or terminate the lien  of  the
Collateral  Documents on any property pledged thereunder or deprive any  Holder
of the security afforded by the lien of the Collateral Documents; or (ix) alter
or modify the Exchange Notes Guarantee.
     
     Effect  of  Supplemental Indenture. Upon the execution of any supplemental
indenture pursuant to the provisions hereof, the Indentures, the Exchange Notes
Guarantee  and the Existing Notes shall be and shall be deemed to  be  modified
and  amended  in  accordance therewith and the respective  rights,  duties  and
immunities  under the Indentures of the Trustees, the Company, the  Issuer  and
the  Holders  of Existing Notes shall thereafter be determined,  exercised  and
enforced under the Indentures subject in all respects to such modifications and
amendments.
     
Regarding the Trustees

     Bankers  Trust Company will serve as the Exchange Notes Trustee under  the
Exchange Notes Indenture and will act as collateral agent with respect  to  the
Exchange Notes Collateral.
     
     Bankers  Trust  Company will serve as the Company Indenture Trustee  under
the  Company  Indenture and will act as collateral agent with  respect  to  the
Exchange Notes Guarantee Collateral.
     
     Except  during  the  continuance of an Indentures Event  of  Default,  the
Trustees  will perform only such duties as are specifically set  forth  in  the
Indentures.  During  the  existence  of an Indentures  Event  of  Default,  the
Trustees are required to exercise such of the rights and powers vested in  them
by the Indentures, and use the same degree of care and skill in their exercise,
as  a  prudent  person  would exercise or use under the  circumstances  in  the
conduct  of such person's own affairs. Subject to such provisions, the Trustees
will be under no obligation to exercise any of their rights or powers under the
Indentures at the request of any Holder of the Existing Notes or holder of  the
Exchange  Notes Guarantee, unless such Holder or holder shall have  offered  to
the  Trustees  security and indemnity satisfactory to them  against  any  loss,
liability or expense.
     
     The  Company and its Subsidiaries may from time to time borrow money from,
and  maintain  deposit accounts and conduct certain banking transactions  with,
the Trustees in the ordinary course of their business.
     
Old Notes Registration Rights

     The holders of Old Notes have certain rights under the Registration Rights
Agreement, dated April 22, 1997, by and among the Issuer, the Company  and  the
Initial  Purchaser,  certain  provisions of which  are  discussed  below.   The
following  summary  does  not  purport to be  complete  or  definitive  and  is
qualified in its entirety by reference to the Registration Rights Agreement,  a
copy  of which is attached as an exhibit to the Registration Statement of which
this Prospectus constitutes a part.
     
     The Registration Rights Agreement provides that the Issuer and the Company
(i)  will file an Exchange Offer Registration Statement with the Commission  on
or prior to 60 days after the Closing Date, (ii) will use their best efforts to
have  the  Exchange  Offer  Registration Statement declared  effective  by  the
Commission  on  or prior to 150 days after the Closing Date, (iii)  unless  the
Exchange  Offer would not be permitted by applicable law or Commission  policy,
the  Issuer and the Company will commence the Exchange Offer on or prior to ten
business days after the date on which the Exchange Offer Registration Statement
is  declared effective by the Commission, and use their best efforts  to  issue
Registered  Exchange Notes in exchange for all Old Notes validly  tendered  and
not properly withdrawn in the Exchange Offer, and (iv) if obligated to file the
Shelf  Registration Statement, the Issuer and the Company will file  the  Shelf
Registration  Statement with the Commission on or prior to 60 days  after  such
filing  obligation arises and use their respective best efforts  to  cause  the
Shelf  Registration Statement to be declared effective by the Commission on  or
prior to 150 days after such obligation arises; provided that if the Issuer and
the  Company  have not consummated the Exchange Offer within 180  days  of  the
Closing  Date, then the Issuer and the Company will file the Shelf Registration
Statement  with the Commission on or prior to the 181st day after  the  Closing
Date.  The  Issuer and the Company shall use their best efforts  to  keep  such
Shelf  Registration Statement continuously effective, supplemented and  amended
until  the  third anniversary of the Closing Date or such shorter  period  that
will  terminate  when  all  the Old Notes covered  by  the  Shelf  Registration
Statement  have been sold pursuant to the Shelf Registration Statement  or  are
eligible for sale pursuant to Rule 144(k) under the Securities Act. If (a)  the
Issuer and the Company fail to file any of the Registration Statements required
by  the Registration Rights Agreement on or before the date specified for  such
filing,  (b) any of such Registration Statements are not declared effective  by
the  Commission on or prior to the date specified above for such  effectiveness
(the  "Effectiveness  Target Date"), (c) the Issuer and  the  Company  fail  to
consummate  the  Exchange Offer within 30 business days  of  the  Effectiveness
Target  Date with respect to the Exchange Offer Registration Statement, or  (d)
the  Shelf  Registration Statement or the Exchange Offer Registration Statement
is  declared effective but thereafter, subject to certain exceptions, ceases to
be  effective  for  a period of five Business Days during periods  when  it  is
required to be effective or (e) at any time when the Prospectus is required  by
the  Securities Act to be delivered in connection with sales of Old Notes,  the
Issuer  and  the  Company  shall conclude, or the  Holders  of  a  majority  in
principal amount of the affected Old Notes shall reasonably conclude, based  on
advice  of their counsel, and shall give notice to the Issuer and the  Company,
that either (A) any event shall occur or fact exist as a result of which it  is
necessary  to  amend or supplement the Prospectus in order  that  it  will  not
include an untrue statement of a material fact or omit to state a material fact
necessary  in  order to make the statements made, in light of the circumstances
under  which  they were made, not misleading, or (B) it shall be  necessary  to
amend  or  supplement the Registration Statement or the Prospectus in order  to
comply  with  the  requirements of the Securities  Act  or  the  rules  of  the
Commission  thereunder, and in the case of clause (A) or (B), the  Registration
Statement   is   not  appropriately  amended  by  an  effective  post-effective
amendment,  or  the  Prospectus is not amended or  supplemented,  in  a  manner
reasonably  satisfactory to the Holders of Old Notes within five Business  Days
after  the Issuer and the Company shall so conclude or shall receive the above-
mentioned  notice  from Holders of Old Notes (each such event  referred  to  in
clauses  (a) through (e) above a "Registration Default"), then the  Issuer  (or
the  Company  pursuant  to the Exchange Notes Guarantee)  will  pay  liquidated
damages ("Liquidated Damages") to each Holder of Old Notes, with respect to the
first  90-day  period immediately following the occurrence of such Registration
Default in an amount equal to $.05 per week per $1,000 principal amount of  Old
Notes  held  by  such  Noteholder. The amount of the  Liquidated  Damages  will
increase  by  an additional $.05 per week per $1,000 principal  amount  of  Old
Notes  with  respect  to each subsequent 90-day period until  all  Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages of  $.50
per  week  per  $1,000  principal amount of Old Notes. All  accrued  Liquidated
Damages  will be paid by the Issuer and the Company to Global Note  Noteholders
by  wire transfer of immediately available funds or by federal funds check  and
to  Holders  of  Certificated  Notes  by mailing  checks  to  their  registered
addresses.  Following the cure of all Registration Defaults applicable  to  any
particular  Old Notes, the accrual of Liquidated Damages will cease.  Any  time
period for the taking of an action referred to in this paragraph will be tolled
for  such period if the Issuer or the Company is prohibited by law from  taking
the action in question during such period.
     
     Noteholders will be required to make certain representations to the Issuer
and the Company (as described in the Exchange Offer Registration Statement)  in
order  to  participate in the Exchange Offer and will be  required  to  deliver
information to be used in connection with the Shelf Registration Statement  and
to provide comments on the Shelf Registration Statement within the time periods
set  forth  in  the Registration Rights Agreement, in order to have  their  Old
Notes  included  in  the  Shelf Registration Statement  and  benefit  from  the
provisions regarding Liquidated Damages set forth above.
     
     The  foregoing  description  of the Registration  Rights  Agreement  is  a
summary only and does not purport to be complete. This summary is qualified  in
its  entirety  by  reference  to  all provisions  of  the  Registration  Rights
Agreement.
     
     A  Noteholder  who  sells  Old Notes pursuant to  the  Shelf  Registration
Statement  will generally be required to be named as a selling security  holder
in  the related prospectuses and to deliver a prospectus to purchasers, will be
subject  to certain of the civil liability provisions under the Securities  Act
in  connection  with  such sales and will be bound by  the  provisions  of  the
Registration  Rights  Agreement  which are  applicable  to  such  a  Noteholder
(including certain indemnification obligations).
     
Certain Definitions

     Set  forth  below  is  a  summary of certain defined  terms  used  in  the
Indentures.  Certain  additional defined terms are  contained  in  Appendix  A,
"Defined Terms." Reference is made to the Indentures for the full definition of
all such terms, as well as any other capitalized terms used herein for which no
definition is provided.
     
     "Affiliate"  means with respect to any specified Person  (other  than  the
County Partners which shall be deemed not to be an Affiliate), any other Person
which, directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For the purposes  of  this
definition, (i) "control" when used with respect to any Person means the  power
to  direct  the management and policies of such Person, directly or indirectly,
whether  through the ownership of voting securities, by contract or  otherwise,
and  the  terms "controlling", "controlled by" and "under common control  with"
have meanings correlative to the foregoing or (ii) beneficial ownership of  10%
or  more  of  the voting securities of a Person shall be deemed to be  control;
provided,  however,  that  an  otherwise  unaffiliated  Person  that  holds   a
beneficial  ownership of 10% or more of a project level entity or  entities  in
which the Company or a Subsidiary holds a greater beneficial ownership interest
shall not be considered an Affiliate of the Company solely by reason of holding
such interest in such project level entity or entities.
     
     "Approval  Event  of  Default" means, pursuant  to  the  Shareholder  Loan
Agreements, any governmental approvals or permits (whether central, provincial,
municipal, local or otherwise) necessary for (a) the establishment of  each  of
the Joint Ventures, (b) the ownership, construction, maintenance, financing  or
operation  of  each  of  the  Joint  Venture Facilities,  (c)  the  setting  or
adjustment of the electricity price for the Luannan Facility in accordance with
the  method of calculation set forth in the attachments to the Pricing Document
or (d) the conversion or transfer of any foreign currency shall not be obtained
if and when required, or shall be modified, revoked or canceled, or a notice of
violations  is  issued under any governmental authorization on grounds  of,  or
illegality of, the absence of any required authorization, or any proceeding  is
commenced  by  any governmental instrumentality for the purpose  of  modifying,
revoking or canceling any governmental authorization.
     
     "Approved  Completion Plan" means a plan (including budget  and  schedule)
prior  to  the  Luannan  Facility Commercial Operation Date  to  construct  and
complete the Luannan Facility following a determination by the Luannan Facility
Engineer  that  the  Luannan Facility will not achieve the  Luannan  Commercial
Operation  Date  within  28  months from the notice  to  proceed,  using  funds
available  to  the  Issuer (from funds then remaining in the  Luannan  Facility
Construction Fund, the Completion Sub-Account, Luannan EPC Contract  Liquidated
Damages  (as  defined  in  the Luannan EPC Contract),  Luannan  Event  of  Loss
Proceeds or Luannan Expropriation Proceeds or otherwise), which plan includes a
certificate by the Issuer (containing customary assumptions and qualifications)
together  with  a  confirmation  by the Luannan Facility  Engineer  (containing
customary  assumptions  and qualifications) that (i)  funds  available  to  the
Issuer  are reasonably expected to be sufficient to fund the costs of  reaching
the  Luannan  Commercial  Operation Date and (ii) after  reaching  the  Luannan
Commercial Operation Date, the Company's Debt Service Coverage Ratio  will  be,
for  the immediately preceding four fiscal quarters, (1) prior to the six month
anniversary of the Luannan Commercial Operation Date, greater than 1 to 1,  (2)
between the six month anniversary of the Luannan Commercial Operation Date  and
the  one  year  anniversary thereof, greater than 1.2 to 1 and (3)  thereafter,
greater than 1.4 to 1.
     
     "Approved Construction Budget and Schedule" means the construction  budget
and  schedule  prepared  by  the Issuer (containing customary  assumptions  and
qualifications) approved as reasonable by the Luannan Facility  Engineer  prior
to  the Closing Date, and as it thereafter may be amended by the Issuer if  (i)
such  amendment reflects a change order permitted under the Indentures or  (ii)
such  amendment reflects events of force majeure under the Luannan EPC Contract
(or  Approved  Completion Plan, if applicable), and the Issuer certifies  (with
customary assumptions and qualifications), with the Luannan Facility Engineer's
concurrence,  that such amendment is not reasonably likely to have  a  Material
Adverse  Effect, or (iii) such amendment reflects change orders not covered  in
the preceding clause (i); provided that the Luannan Facility Engineer certifies
(with  customary  assumptions and qualifications) that funds available  to  the
Issuer  (from  funds then remaining in the Luannan Facility Construction  Fund,
the Completion Sub-Account, Luannan EPC Contract Liquidated Damages (as defined
in  the  Luannan  EPC  Contract), Luannan Event of  Loss  Proceeds  or  Luannan
Expropriation  Proceeds or otherwise) are reasonably expected to be  sufficient
to fund the costs of reaching the Luannan Commercial Operation Date.
     
     "Asset  Sale"  means  any direct or indirect sale,  conveyance,  transfer,
lease  or  other disposition to any Person other than the Company or  a  Wholly
Owned  Subsidiary  of the Company, in one transaction or a  series  of  related
transactions,  of  any other property or asset (including, without  limitation,
any  contractual  or  other  right) of the Company or  any  Subsidiary  of  the
Company,  in each case, other than inventory in the ordinary course of business
(which  shall  include  the  sale of fuel, steam,  energy  and/or  chilled  and
distilled water) and other than such isolated transactions which do not  exceed
$250,000 individually.
     
     "Attributable Debt" in respect of a sale and leaseback transaction  means,
at  the  time  of determination, the present value (discounted at the  rate  of
interest  implicit in such transaction, determined in accordance with GAAP)  of
the  obligation of the lessee for net rental payments during the remaining term
of  the  lease  included in such sale and leaseback transaction (including  any
period  for  which such lease has been extended or may, at the  option  of  the
lessor, be extended).
     
     "Capital  Stock" means (i) in the case of a corporation, corporate  stock,
(ii)  in  the  case of an association or business entity, any and  all  shares,
interests, participations, rights or other equivalents (however designated)  of
corporate  stock,  (iii)  in the case of a partnership,  partnership  interests
(whether general or limited) and (iv) any other interest or participation  that
confers on a Person the right to receive a share of the profits and losses  of,
or distributions of assets of, the issuing Person.
     
     "Capitalized Interest Expiration Date" means October 15, 1999.
     
     "Capitalized  Interest  Fund"  shall  have  the  meaning  set   forth   in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder Loans and the Collateral DocumentsThe  FundsThe  Issuer
FundsCapitalized Interest Funds."
     
     "Capitalized  Lease" is defined to mean, as applied  to  any  Person,  any
lease  of  any  property of which the discounted present value  of  the  rental
obligations  of such Person as lessee, in conformity with GAAP, is required  to
be  capitalized  on  the balance sheet of such Person, and  "Capitalized  Lease
Obligation" means the rental obligations, as aforesaid, under such lease.
     
     "Cash  Available for Company Debt Service" means, for any period, the  sum
of  (i)  all  cash  distributions received by the Company (excluding  any  non-
recurring  receipts) plus (ii) all cash distributions received  by  the  Issuer
(excluding  any  non-recurring receipts) plus (iii) any and all other  revenues
received  by the Company and the Issuer (including all interest and fee  income
but  excluding  any non-recurring receipts) plus (iv) all other  cash  payments
received  by  the  Company and the Issuer in the ordinary  course  of  business
including  principal  payments  but excluding  items  which  are  non-recurring
receipts  less  (v)  all  cash operating costs of the Issuer  and  the  Company
including  trustee fees, Operating Lease Obligations and cash  taxes,  each  of
(i),  (ii),  (iii), (iv) and (v) determined on a cash basis in accordance  with
GAAP.
     
     "Cash Available for Consolidated Debt Service" means, for any period,  the
sum  of (i) all consolidated revenue (including all interest and fee income but
excluding  any  insurance proceeds, other than business interruption  proceeds,
and  other  similar  non-recurring receipts) less (ii)  all  consolidated  cash
operating expenses including trustee fees, Operating Lease Obligations  of  the
Company and its consolidated Subsidiaries and cash taxes (including withholding
taxes)  plus  (iii)  all  other cash proceeds received  by  the  Company  on  a
consolidated  basis  in the normal course of business (excluding  non-recurring
receipts  but  including  principal  on the  Luannan  Transmission  Loan)  plus
(iv)  withdrawals  of cash from any and all Subsidiary debt  service  reserves,
maintenance  reserve  funds  and any and all other  funds  which  restrict  the
payment  of  money  from  a Subsidiary to its parent (excluding  the  PFC  Debt
Service  Reserve,  the  U.S. Distribution Fund, the International  Distribution
Fund, and amounts distributable from the RMB Revenue Fund which were previously
not  distributable)  less (v) all additions of cash to any and  all  Subsidiary
debt  service reserves, maintenance reserve funds and any and all  other  funds
which  restrict the payment of money from a Subsidiary to its parent (excluding
the  PFC  Debt  Service Reserve, the U.S. Distribution Fund, the  International
Distribution Fund, and amounts which are not distributable from the RMB Revenue
Fund) less (vi) additional consolidated cash expenditures excluding payment  of
Net Debt Service, each of (i), (ii), (iii), (iv), (v) and (vi) determined on  a
cash basis in accordance with GAAP.
     
     "Cash  Available  for  Project Debt Service" means  (i)  the  sum  of  all
revenues  (including  interest  and  fee income  but  excluding  any  insurance
proceeds,  other  than  business  interruption insurance  proceeds,  and  other
similar non-recurring receipts) of such Domestic Project, Permitted Project  or
Joint Venture for such period minus (ii) the aggregate amount of Operating  and
Maintenance Costs of such Domestic Project, Permitted Project or Joint  Venture
for  such period plus (iii), in the case of the Luannan Facility, the principal
payments  on the Luannan Transmission Loan for such period (each of  (i),  (ii)
and (iii) as determined on a cash basis in accordance with GAAP).
     
     "Cash  Equivalents"  means, at any time (i) any evidence  of  Indebtedness
with a maturity of 180 days or less issued or directly and fully guaranteed  or
insured  by  the  United  States of America or any  agency  or  instrumentality
thereof  (provided  that  the full faith and credit of  the  United  States  of
America  is  pledged  in  support thereof); (ii)  certificates  of  deposit  or
acceptances  with  a maturity of 180 days or less of any financial  institution
that  is  a member of the Federal Reserve System, whose rating is AA or  higher
from  Standard & Poor's Ratings Service or Aa2 or higher from Moody's Investors
Service, Inc., having combined capital and surplus and undivided profits of not
less  than $500 million; (iii) commercial paper with a maturity of 180 days  or
less  issued  by  a corporation (except an Affiliate of the Company)  organized
under  the  laws of any state of the United States or the District of  Columbia
and having the highest rating obtainable from Standard & Poor's Ratings Service
or  Moody's Investors Service, Inc.; and (iv) repurchase obligations for a term
of not more than seven days for underlying securities of the types described in
clause  (i)  above  entered  into  with any  bank  meeting  the  qualifications
specified in clause (ii) above.
     
     "Certificated Notes" shall have the meaning set forth in "Description,  of
the  Exchange  Notes,  the  Exchange Notes  Guarantee,  the  Issuer  Loan,  the
Shareholder   Loans  and  the  Collateral  DocumentsBook-Entry,  Delivery   and
FormDepository Procedures."
     
     "Change  of  Control"  means  (i) the direct  or  indirect,  sale,  lease,
exchange  or  other transfer of all or substantially all of the assets  of  the
Company,  Panda International, the Issuer or any direct or indirect  parent  of
the  Company to any Person or entity or group of Persons or entities acting  in
concert  as  a partnership or other group (a "Group of Persons") other  than  a
Related Party, (ii) the replacement of a majority of the Board of Directors  of
the  Company, Panda International, the Issuer or any direct or indirect  parent
of  the Company, over a two-year period, from the directors who constituted the
Board  of  Directors of such Person at the beginning of such period,  and  such
replacement  shall  not have been approved by the Board of  Directors  of  such
Person  as  constituted at the beginning of such period  or  by  the  Board  of
Directors  of  Panda  International as constituted at  the  beginning  of  such
period,  (iii) a Person or Group of Persons (other than Panda International  or
any  Related  Party)  shall, as a result of a tender or  exchange  offer,  open
market purchases, privately negotiated purchases or otherwise, have become  the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange  Act)  of
securities  of  the Company, Panda International, the Issuer or any  direct  or
indirect  parent  of  the  Company representing a percentage  interest  in  the
combined voting power of the then outstanding securities of the Company,  Panda
International,  the  Issuer or any direct or indirect  parent  of  the  Company
greater  than  that held by such entities' shareholders as of the Closing  Date
and  greater  than 20% having the right to vote in the election  of  directors,
(iv)  the  Company,  directly or indirectly ceases to hold (a)  a  100%  equity
interest  in  the Domestic Projects, (b) a 100% equity interest in the  Issuer,
(c) a 90% equity interest in Pan-Sino or (d) the minimum required interest in a
Permitted  Project, (v) Pan-Sino ceases to hold a 99% equity interest  in  Pan-
Western  and (vi) Pan-Western ceases to hold a 85% equity interest in  each  of
the Joint Ventures.
     
     "Company Indenture" means the trust indenture governing the terms  of  the
issuance of, from time to time, bonds, notes, indentures, guarantees and, as of
the  Closing Date, the Exchange Notes Guarantee by the Company, dated as of the
Closing Date, between the Company and the Company Indenture Trustee.
     
     "Company Indenture Trustee" means Bankers Trust Company in its capacity as
trustee under the Company Indenture, and any successor thereto under the  terms
of the Company Indenture.
     
     "Company Net Debt Service" means Net Debt Service of the Company plus  Net
Debt Service of the Issuer.
     
     "Consolidated  Debt  Service Coverage Ratio" means,  as  of  the  date  of
determination, and, if the transaction giving rise to the need to  calculate  a
Consolidated  Debt Service Coverage Ratio is an incurrence of  Indebtedness  or
the  making of a Restricted Payment, calculated after giving effect  on  a  pro
forma  basis to such Indebtedness or Restricted Payment as if such Indebtedness
or  Restricted Payment had been incurred or made as of the first  day  of  such
period  and  the  discharge  of  any  other Indebtedness  repaid,  repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness  as
if  such  discharge had occurred on the first day of such period, the ratio  of
(i)  Cash  Available for Consolidated Debt Service divided by (ii) Consolidated
Net  Debt  Service;  provided,  however, with respect  to  the  calculation  of
projected  Consolidated  Debt  Service Coverage  Ratio,  the  remaining  unpaid
balance  of principal due on the Existing Notes at the Stated Maturity  of  the
Existing  Notes  ($131,250,000) shall be assumed to be  repaid  in  semi-annual
repayments as per the following schedule:
     
     
                  Semi-annual                 Principal
                  Payment Date              Amount Repaid
          April 15, 2004                     $ 6,000,000
          October 15, 2004                   $ 6,000,000
          April 15, 2005                     $ 7,250,000
          October 15, 2005                   $ 7,250,000
          April 15, 2006                     $ 5,350,000
          October 15, 2006                   $ 5,350,000
          April 15, 2007                     $ 4,600,000
          October 15, 2007                   $ 4,600,000
          April 15, 2008                     $ 7,450,000
          October 15, 2008                   $ 7,450,000
          April 15, 2009                     $ 7,250,000
          October 15, 2009                   $ 7,250,000
          April 15, 2010                     $ 5,650,000
          October 15, 2010                   $ 5,650,000
          April 15, 2011                     $ 5,350,000
          October 15, 2011                   $ 5,350,000
          April 15, 2012                     $16,750,000
          October 15, 2012                   $16,700,000;
     
     
provided further that the coupon rate on the Existing Notes repaid as  per  the
schedule  above  shall be the same coupon rate as that payable on  the  Closing
Date  on  the Existing Notes with interest expense due and payable on  a  semi-
annual  basis. In the event that the remaining unpaid balance of principal  due
on  the  Existing Notes at the Stated Maturity is less than $131,250,000,  then
the  amount of each semi-annual repayment shown above shall be deemed to  equal
the  amount  of the semi-annual repayment shown above multiplied by a  fraction
the  numerator of which is the actual remaining unpaid balance of principal due
on  the  Existing Notes at the Stated Maturity and the denominator of which  is
$131,250,000.

     "Consolidated Income Tax Expense" means, for any period, as applied to the
Company, the provision for local, state, federal or foreign income taxes  on  a
consolidated basis for such period determined in accordance with GAAP.
     
     "Consolidated Interest Expense" means, for any period, the sum of (a)  the
total  interest  expense of the Company and its consolidated  Subsidiaries  for
such   period  as  determined  in  accordance  with  GAAP,  including,  without
limitation,  (i)  amortization of debt issuance costs  and  of  original  issue
discount  on any Indebtedness and the interest portion of any deferred  payment
obligation,  calculated  in accordance with the effective  interest  method  of
accounting,  (ii)  accrued  interest, (iii)  noncash  interest  payments,  (iv)
commissions, discounts and other fees and charges owed with respect to  letters
of  credit and bankers' acceptance financing, (v) interest actually paid by the
Company  or  any such Subsidiary under any guarantee of Indebtedness  or  other
obligation of any other Person and (vi) net costs associated with interest rate
agreements (including amortization of discounts) and currency agreements,  plus
(b)  all  capitalized interest plus (c) dividends paid in respect of  preferred
stock  of the Company or any Subsidiary held by Persons other than the  Company
or a Wholly Owned Subsidiary.
     
     "Consolidated  Net  Debt  Service" means the sum  of  (i)(a)  Consolidated
Interest  Expense  less  (b) non-cash Consolidated Interest  Expense  less  (c)
scheduled  withdrawals from the Capitalized Interest Fund (if applicable)  less
(d)   scheduled  withdrawals  from  the  PFC  Capitalized  Interest  Fund   (if
applicable) plus (ii) all payments of scheduled and overdue principal  of,  and
premium,  if  any, on Indebtedness on a consolidated basis plus  (iii)  without
duplication,  all  rental payments in respect of Capitalized Lease  Obligations
paid,  accrued,  or  scheduled to be paid or accrued by  the  Company  and  its
consolidated Subsidiaries.
     
     "Consolidated  Net  Income"  means, for any  period,  as  applied  to  the
Company,  the  aggregate of the Net Income of the Company and its  Subsidiaries
for  such period, on a consolidated basis, determined in accordance with  GAAP;
provided,  however,  that  (i)  all extraordinary  gains  or  losses  shall  be
excluded; (ii) the Net Income of any Person in which the Company or any of  its
Subsidiaries has a joint interest with a third party (which interest  does  not
cause  the  net  income of such other Person to be consolidated  into  the  net
income  of the Company in accordance with GAAP) shall be included only  to  the
extent  of  the  amount of dividends or distributions paid,  in  cash,  to  the
Company  or  the  Subsidiary, (iii) the net income of  any  Subsidiary  of  the
Company  that  is subject to any restriction or limitation on  the  payment  of
dividends or the making of other distributions shall be excluded to the  extent
of  such restriction or limitation, (iv) the net income (or loss) of any Person
acquired in a pooling of interests transaction for any period prior to the date
of  such acquisition shall be excluded, (v) any net gain or loss resulting from
an  Asset  Sale  by the Company or any of its Subsidiaries other  than  in  the
ordinary course of business shall be excluded and (vi) the cumulative effect of
a change in accounting principles shall be excluded.
     
     "Consolidated Net Worth" means, with respect to any Person as of any date,
the  sum  of  (i)  the consolidated equity of the common stockholders  of  such
Person  and  its  consolidated Subsidiaries as  of  such  date  plus  (ii)  the
respective amounts reported on such Person's balance sheet as of such date with
respect  to any series of preferred stock (other than Disqualified Stock)  that
by  its terms is not entitled to the payment of dividends unless such dividends
may  be  declared and paid only out of net earnings in respect of the  year  of
such  declaration and payment, but only to the extent of any cash  received  by
such  Person  upon  issuance of such preferred stock, less  (x)  all  write-ups
(other  than write-ups resulting from foreign currency translations and  write-
ups  of tangible assets of a going concern business made within 12 months after
the  acquisition of such business) subsequent to the date of the Indentures  in
the  book  value of any asset owned by such Person or a consolidated Subsidiary
of  such  Person,  (y)  all  Investments as  of  such  date  in  unconsolidated
Subsidiaries  and in Persons that are not Subsidiaries (except, in  each  case,
Investments allowed pursuant to the covenant "Limitation on Investments"),  and
(z)  all unamortized debt discount and expense and unamortized deferred charges
as of such date, all of the foregoing determined in accordance with GAAP.
     
     "County  Partners Event of Default" means a failure by the County Partners
to make their required equity contributions to the Joint Ventures.
     
     "Debt Service Coverage Ratio" as of the date of determination, and, if the
transaction giving rise to the need to calculate Debt Service Coverage Ratio is
an incurrence of Indebtedness or the making of a Restricted Payment, calculated
after  giving  effect on a pro forma basis to such Indebtedness  or  Restricted
Payment as if such Indebtedness or Restricted Payment had been incurred or made
on  the  first  day of such period and the discharge of any other  Indebtedness
repaid, repurchased, defeased or otherwise discharged with the proceeds of such
new  Indebtedness as if such discharge had occurred on the first  day  of  such
period, means:
     
     (i)   with respect to the Company, the ratio of (A) Cash Available  for
           Company Debt Service divided by (B) Company Net Debt Service;
     
     (ii)  with respect to PIC and the issuance of Indebtedness pursuant  to
           the  PFC  Indenture,  the  ratio of (A) PIC  Cash  Available  for
           Distribution  during the relevant period to (B) PIC Debt  Service
           for such period; and
     
     (iii) with  respect  to a Domestic Project, a Permitted  Project  or  a
           Joint  Venture, the ratio of (A) Cash Available for Project  Debt
           Service  to  (B)  Net  Debt  Service of  such  Domestic  Project,
           Permitted Project or Joint Venture;
     
provided,  however, with respect to the calculation of projected  Debt  Service
Coverage  Ratio, the remaining unpaid balance of principal due on the  Existing
Notes  after the Stated Maturity of the Existing Notes shall be assumed  to  be
repaid  pursuant to the schedule and the proviso thereto as set  forth  in  the
definition of Consolidated Debt Service Coverage Ratio.

      "Debt  Service  Reserve  Fund"  shall  have  the  meaning  set  forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder Loans and the Collateral DocumentsThe  FundsThe  Issuer
FundsDebt Service Reserve Fund."

     "Debt  Service  Reserve  Requirement" means (i) the  aggregate  principal,
premium,  if any, of payments due on the Existing Notes on the next semi-annual
payment   date  and  (ii)  the  aggregate  cash  interest  payments  (including
Liquidated Damages and Additional Amounts, if any) due on the Existing Notes on
the next semi-annual payment date.
     
     "Disqualified Stock" means, with respect to any Person, any Capital  Stock
which,  by  its  terms  (or  by the terms of any  security  into  which  it  is
convertible  or  for which it is exchangeable), or upon the  happening  of  any
event,  matures  or  is  mandatorily redeemable, pursuant  to  a  sinking  fund
obligation  or otherwise, or is exchangeable for Indebtedness, or is redeemable
at  the  option of the holder thereof, in whole or in part, on or prior to  the
maturity date of the Existing Notes.
     
     "Dollar Permitted Investments" means any of the following securities:  (i)
direct  obligations of the Department of the Treasury of the United  States  of
America;  (ii)  obligations  of  any of the following  federal  agencies  which
obligations  represent full faith and credit of the United States  of  America,
including:  Export-Import Bank, Farmers Home Administration,  General  Services
Administration,  U.S.  Maritime Administration, Small Business  Administration,
Government  National Mortgage Associate (GNMA), U.S. Department  of  Housing  &
Urban  Development  (PHA's)  and Federal Housing Administration;  (iii)  bonds,
notes  or other evidences of indebtedness rated "AAA" by Standard & Poor's  and
"Aaa"  by  Moody's  issued by the Federal Home Loan Bank, the Federal  National
Mortgage  Association  or  the  Federal Home Loan  Mortgage  Corporation;  (iv)
commercial  paper  rated  in any one of the two highest  rating  categories  by
Moody's  or Standard & Poor's; (v) investment agreements with banks (foreign  &
domestic), broker/dealers, and other financial institutions rated at  the  time
of  bid  in  any  one  of the three highest rating categories  by  Moody's  and
Standard  & Poor's; (vi) repurchase agreements with banks (foreign & domestic),
broker/dealers, and other financial institutions rated at the time  of  bid  in
any  one  of  the  three highest rating categories by Moody's  and  Standard  &
Poor's,  provided: (1) collateral is limited to (i), (ii) and (iii) above,  (2)
the  margin  levels  for collateral must be maintained at  a  minimum  of  102%
including principal and interest, (3) the Trustees shall have a first perfected
security interest in the collateral, (4) the collateral will be delivered to  a
third party custodian, designated by the Company, acting for the benefit of the
Trustees  and all fees and expenses related to collateral custody will  be  the
responsibility  of the Company, (5) the collateral must have been  or  will  be
acquired  at the market price and marked to market weekly and collateral  level
shortfalls  cured  within  24 hours, (6) unlimited  right  of  substitution  of
collateral  is allowed provided that substitution collateral must be  permitted
collateral substituted at a current market price and substitution fees  of  the
custodian  shall  be  paid  by the Company; (vii) forward  purchase  agreements
delivering  securities outlined in (i) and (iv) above with banks  (foreign  and
domestic), broker/dealers, and other financial institutions maintaining a long-
term rating on the day of bid no lower than investment grade by both Standard &
Poor's  and  Moody's  (such rating may be at either the  parent  or  subsidiary
level).
     
     "Domestic  Project" means either the Rosemary Facility or  the  Brandywine
Facility.
     
     "Domestic  Project Event" means the occurrence of any of the following:  a
Rosemary Event of Eminent Domain, a Brandywine Event of Loss, a Rosemary  Event
of Loss or a Rosemary Title Event.
     
     "Domestic  Project Event Proceeds" means the sum of any  and  all  of  the
following: Rosemary Eminent Domain Proceeds, Brandywine Event of Loss Proceeds,
Rosemary Casualty Proceeds and Rosemary Title Insurance Proceeds.
     
     "Domestic  Project  Permitted Indebtedness"  means,  in  addition  to  any
Indebtedness outstanding as of the Closing Date, (i) working capital  debt  and
letter  of credit reimbursement obligations, provided that after giving  effect
to  such additional debt and obligations, (a) the minimum (or lowest) projected
Debt  Service Coverage Ratio of the Domestic Project for any calendar year will
not  be  less than 1.5 to 1 and (b) the average projected Debt Service Coverage
Ratio  of the Domestic Project for any calendar year will not be less than  1.7
to  1,  (ii)  purchase money or capital lease obligations incurred  to  finance
assets  of the Domestic Project that are readily replaceable personal  property
with  a  principal amount or capitalized portion not exceeding $1.0 million  in
the aggregate outstanding at any time, (iii) trade accounts payable (other than
for  borrowed money) due within 90 days arising, and accrued expenses incurred,
in  the  ordinary course of business of operating or maintaining  the  Domestic
Project.
     
     "Domestic  Projects"  means  the  Rosemary  Facility  and  the  Brandywine
Facility.
     
     "Excess  Proceeds" means any Net Cash Proceeds from Asset Sales  that  are
not  applied  or invested to an investment, the making of a capital expenditure
or  the  acquisition of other tangible assets. On the earlier of (i) the  366th
day  after  an  Asset Sale or (ii) such date as the Board of Directors  of  the
Company  determines not to apply the Net Cash Proceeds relating to  such  Asset
Sale in the manner set forth above (or the Company determines not to cause  its
Subsidiary  to apply the Net Cash Proceeds in such a manner), if the  aggregate
amount  of Excess Proceeds exceeds $1.0 million, the Company or its Subsidiary,
as the case may be, shall be subject to the following requirements:
     
    (1)  in  the event that the Company cannot then incur $1.00 of additional
          Permitted Indebtedness pursuant to clause (v) of the definition  of
          "Permitted  Indebtedness," the Company or its  Subsidiary  will  be
          required  to make an offer to purchase (the "Asset Sale  Redemption
          Offer")  from  all  Holders  of  Existing  Notes  and  holders   of
          additional  Senior Indebtedness, up to a maximum  principal  amount
          (expressed  as a multiple of $1,000) of Existing Notes and  holders
          of additional Senior Indebtedness equal to the Excess Proceeds at a
          purchase  price equal to 100% of the principal amount thereof  plus
          accrued  and  unpaid  interest (including  Liquidated  Damages  and
          Additional  Amounts,  if  any) thereon, if  any,  to  the  date  of
          purchase; in the event that there is additional Senior Indebtedness
          outstanding at the time of the Asset Sale Redemption Offer,  Excess
          Proceeds shall be allocated to each issuance of Senior Indebtedness
          in  accordance with the following formula: Excess Proceeds times  a
          fraction,  the  numerator of which is the principal amount  of  the
          Existing  and the denominator of which is the sum of the  principal
          amounts  of  all  Senior  Indebtedness which  is  subject  to  this
          requirement   or   a   similar  requirement   under   such   Senior
          Indebtedness's governing instrument; and
    
     (2)  in  the  event  that  the  Company can incur  $1.00  of  additional
          Permitted Indebtedness pursuant to clause (v) of the definition  of
          "Permitted  Indebtedness," the Company or its  Subsidiary  will  be
          required to make an Asset Sale Redemption Offer from all Holders of
          Existing Notes and holders of additional Senior Indebtedness, up to
          a  maximum principal amount (expressed as a multiple of $1,000)  of
          Existing Notes and holders of additional Senior Indebtedness  equal
          to the Excess Proceeds (Excess Proceeds for purposes of this clause
          (2)  is limited to that amount of the Net Cash Proceeds that equals
          the  principal amount of Indebtedness incurred by the Issuer or the
          Company  to acquire, develop, construct or finance the asset  being
          sold)  at  a  purchase price equal to 100% of the principal  amount
          thereof  plus  accrued  and unpaid interest  (including  Liquidated
          Damages  and  Additional Amounts, if any) thereon, if any,  to  the
          date  of  purchase;  in the event that there is  additional  Senior
          Indebtedness  outstanding at the time of the Asset Sale  Redemption
          Offer,  Excess  Proceeds shall be allocated  to  each  issuance  of
          Senior  Indebtedness  in  accordance with  the  following  formula:
          Excess  Proceeds times a fraction, the numerator of  which  is  the
          principal amount of the Existing Notes and the denominator of which
          is  the  sum  of  the principal amounts of all Senior  Indebtedness
          which is subject to this requirement or a similar requirement under
          such Senior Indebtedness's governing instrument.
     
     Upon  completion  of such Asset Sale Redemption Offer(s),  the  amount  of
Excess Proceeds shall be reset at zero. Whenever Net Cash Proceeds in excess of
$1.0 million from any Asset Sale are received by the Issuer or the Company,  as
the case may be, and such Net Cash Proceeds may, through the passage of time or
otherwise, be required to be applied to the purchase of Existing Notes pursuant
to  this covenant, the Issuer or the Company, as the case may be, shall deposit
such  Net Cash Proceeds with, respectively, the Exchange Notes Trustee  or  the
Company  Indenture Trustee, as trust monies subject to disposition as  provided
in  this covenant and such Net Cash Proceeds shall be set aside by the Exchange
Notes  Trustee  or  the Company Indenture Trustee pending  application  to  the
purchase  of  Existing Notes. At the direction of the Company,  such  Net  Cash
Proceeds shall be required to be invested by the Existing Notes Trustee or  the
Company Indenture Trustee in Dollar Permitted Investments. The Company  or  its
relevant  Subsidiary,  as  applicable, shall be entitled  to  any  interest  or
dividends accrued, earned or paid on such investments.
     
     "Exchange  Notes" shall mean the 12-1/2% Registered Senior  Secured  Notes
due 2004 of the Issuer.
     
     "Exchange  Notes  Collateral"  shall  have  the  meaning  set   forth   in
"Prospectus SummaryThe OfferingExchange Notes Collateral."
     
     "Exchange Notes Collateral Documents" shall have the meaning set forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder  Loans and the Collateral DocumentsDescription  of  the
Exchange Notes CollateralThe Security Agreements."
     
     "Exchange  Notes Guarantee" means the Exchange Notes Guarantee  issued  by
the Company under the terms of the Company Indenture.
     
     "Exchange Notes Guarantee Collateral" shall have the meaning set forth  in
"Prospectus SummaryThe Exchange OfferExchange Notes Guarantee Collateral."
     
     "Exchange Notes Guarantee Collateral Documents" shall have the meaning set
forth in "Description of the Exchange Notes, the Exchange Notes Guarantee,  the
Issuer  Loan, the Shareholder Loans and the Collateral DocumentsDescription  of
the  Exchange Notes Guarantee CollateralThe Pledge Agreements and the  Security
Agreement."
     
     "Exchange  Notes Indenture" means the trust indenture governing the  terms
of issuance of the Exchange Notes, dated as of the Closing Date, by and between
the Issuer and the Exchange Notes Trustee.
     
     "Exchange  Notes  Interest Account" shall have the meaning  set  forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder Loans and the Collateral DocumentsThe  FundsThe  Issuer
FundsDebt Service Fund."
     
     "Exchange Notes Optional Redemption" shall have the meaning set  forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder  Loans  and the Collateral  DocumentsRedemptionOptional
Redemption of Exchange Notes."
     
     "Exchange  Notes  Trustee"  means the trustee  under  the  Exchange  Notes
Indenture.
     
     "Fair  Market Value" or "fair value" means, with respect to any  asset  or
property,  the  price  which  could be negotiated  in  an  arm's-length  market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom  is  under undue pressure or compulsion to complete the transaction.  Fair
Market Value shall be determined by the Board of Directors acting in good faith
and  shall be evidenced by a Board Resolution delivered to the Trustees  except
that any determination of Fair Market Value made with respect to any parcel  of
real property shall be made by an independent appraiser.
     
     "GAAP"  means  generally accepted accounting principles set forth  in  the
opinions  and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements  of
the  Financial Accounting Standards Board or in such other statements  by  such
other  entity  as  may be approved by a significant segment of  the  accounting
profession  of the United States, which are applicable as of the  date  of  the
Indentures.
     
     "Income  Tax Expense" means, for any period, as applied to the  Person  in
question,  the provision for local, state, federal or foreign income taxes  for
such period determined in accordance with GAAP.
     
     "Indebtedness" means, with respect to any Person, without duplication, (i)
any  liability, contingent or otherwise, of such Person (A) for borrowed  money
(whether  or  not the recourse of the lender is to the whole of the  assets  of
such  Person or only to a portion thereof), (B) evidenced by a note,  debenture
or  similar  instrument  or  letters  of credit  (including  a  purchase  money
obligation)  or  (C) for the payment of money relating to a  capitalized  lease
obligation  or  other  obligation relating to the deferred  purchase  price  of
property; (ii) any obligation secured by a Lien to which the property or assets
of  such  Person  are subject, whether or not the obligations  secured  thereby
shall have been assumed by or shall otherwise be such Person's legal liability;
(iii)  the  maximum  fixed  repurchase  price  of  any  redeemable  or  putable
Disqualified  Stock; (iv) contractual obligations to repurchase goods  sold  or
distributed;  (v)  obligations  of a Person in  respect  of  interest  rate  or
currency  exchange agreements to the extent they appear on the  balance  sheet;
(vi)  any  and  all  deferrals,  renewals, extensions  and  refundings  of,  or
amendments,  modifications  or  supplements  to,  any  liability  of  the  kind
described in any of the preceding clauses (i) - (v); and (vii) any liability of
others  of  the  kind  described in clauses (i) - (vi)  which  the  Person  has
guaranteed or which is otherwise directly or indirectly its legal liability
     
     "Indentures" means the Company Indenture and the Exchange Notes Indenture.
     
     "Indentures  Events  of  Default" shall have  the  meaning  set  forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,    the    Shareholder   Loans   and   the   Collateral   DocumentsCertain
CovenantsIndentures Events of Default."
     
     "Independent  Financial Advisor" means an independent and  internationally
recognized  investment bank, accounting firm or engineering firm, as  the  case
may  be,  whose business regularly includes the rendering of valuation opinions
with  respect  to  the  assets at issue, chosen by the Company  and  reasonably
acceptable to the Company Indenture Trustee.
     
     "Interest  Expense"  means, for any period,  the  sum  of  (a)  the  total
interest  expense  of the Person in question for such period as  determined  in
accordance with GAAP, including, without limitation, (i) amortization  of  debt
issuance  costs  or  of  original issue discount on any  Indebtedness  and  the
interest  portion of any deferred payment obligation, calculated in  accordance
with  the  effective  interest  method of accounting,  (ii)  accrued  interest,
(iii) noncash interest payments, (iv) commissions, discounts and other fees and
charges  owed  with  respect  to  letters of  credit  and  bankers'  acceptance
financing,  (v)  interest actually paid by the Person  in  question  under  any
guarantee of Indebtedness or other obligation of any other Person and (vi)  net
costs  associated  with  interest rate agreements  (including  amortization  of
discounts)  and  currency  agreements,  plus  (b)  capitalized  interest   plus
(c)  dividends  paid in respect of preferred stock of the Person  in  question,
held by Persons other than the Person in question.
     
     "International Distribution Fund" means the fund described in  Article  IV
of  the  PFC  Indenture  and maintained in the name of  PIC  pursuant  to  such
Article, which such fund is entitled to distributions of monies from a Non-U.S.
Permitted Project to the extent that all obligations have been met by PFC,  PIC
and  the  PIC  International Entity (and any other PIC international  entities)
under the PFC Indenture.
     
     "Investments" means, with respect to any Person, all investments  by  such
Person  in  other  Persons (including Affiliates) in the  forms  of  direct  or
indirect  loans  (including guarantees of Indebtedness or  other  obligations),
advances  (other than advances to customers in the ordinary course of  business
that  are  recorded  as accounts receivable on the books  of  such  person)  or
capital  contributions  (excluding commission, travel, relocation  and  similar
advances  to  officers and employees made in the ordinary course of  business),
purchases  or  other  acquisitions for consideration of  Indebtedness,  Capital
Stock  or  other securities and all other items that are or would be classified
as investments on a balance sheet prepared in accordance with GAAP.
     
     "Issue Date" shall mean April 22, 1997.
     
     "Issuer  Loan"  means the outstanding indebtedness of Pan-Western  to  the
Issuer  incurred by Pan-Western to enable it to make the Shareholder Loans  and
to  make the JV Equity Contributions and funded by the Issuer with the proceeds
of the Old Notes.
     
     "Issuer Loan Agreement" means the Issuer Loan Agreement by and between the
Issuer and Pan-Western.
     
     "Issuer Note" means one or more promissory notes issued by Pan-Western  to
the Issuer evidencing its indebtedness to the Issuer.
     
     "Joint Venture Facility" means the portion of the Luannan Facility  to  be
constructed or acquired by each Joint Venture (collectively, the "Joint Venture
Facilities").
     
     "Joint  Venture  Guarantees"  means  collectively,  the  undertakings   by
Tangshan  Panda,  each  executed as of the 24th  day  of  September,  1996,  to
unconditionally  and irrevocably guarantee to Pan-Western  prompt  payment  and
performance by each of Tangshan Pan-Western, Tangshan Cayman and Tangshan  Pan-
Sino  of  their  individual obligations to Pan-Western  pursuant  to  any  debt
obligation  then or thereafter due and owing by any such party to  Pan-Western;
the  undertakings by Tangshan Pan-Western, each executed as of the 24th day  of
September,  1996, to unconditionally and irrevocably guarantee  to  Pan-Western
the  prompt payment and performance by each of Tangshan Panda, Tangshan  Cayman
and  Tangshan Pan-Sino of their individual obligations to Pan-Western  pursuant
to  any  debt obligation then or thereafter due and owing by any such party  to
Pan-Western; the undertakings by Tangshan Cayman, each executed as of the  24th
day  of  September, 1996, to unconditionally and irrevocably guarantee to  Pan-
Western  the prompt payment and performance by each of Tangshan Panda, Tangshan
Pan-Western  and  Tangshan  Pan-Sino of their individual  obligations  to  Pan-
Western pursuant to any debt obligation then or thereafter due and owing by any
such  party  to  Pan-Western; and the undertakings by Tangshan  Pan-Sino,  each
executed  as  of  the  24th  day  of September, 1996,  to  unconditionally  and
irrevocably guarantee to Pan-Western the prompt payment and performance by each
of Tangshan Panda, Tangshan Pan-Western and Tangshan Cayman of their individual
obligations  to Pan-Western pursuant to any debt obligation then or  thereafter
due and owing by any such party to Pan-Western.
     
     "Joint Venture Permitted Indebtedness" means (i) the Shareholder Loans and
any  additional  loans  from Pan-Western to the Joint  Ventures,  (ii)  working
capital  debt, provided that after giving effect to such additional  debt,  (a)
the  minimum (or lowest) projected Debt Service Coverage Ratio for any calendar
year  will not be less than 1.5 to 1 and (b) the average projected Debt Service
Coverage  Ratio for any calendar year will not be less than 1.7 to 1  (provided
that working capital debt shall at no time exceed $1.0 million), (iii) purchase
money  or  capital lease obligations incurred to finance assets  of  the  Joint
Ventures that are readily replaceable personal property with a principal amount
or  capitalized portion not exceeding $1.0 million in the aggregate outstanding
at  any  time, (iv) trade accounts payable (other than for borrowed money)  due
within  90 days arising, and accrued expenses incurred, in the ordinary  course
of  business  of  constructing,  operating or  maintaining  the  Joint  Venture
Facility  on customary terms, (v) interest or currency exchange rate protection
agreements, (vi) debt under the Joint Venture Guarantees of each Joint  Venture
and  any other guarantees of the obligations of the Joint Venture and (vii) any
debt to any other Joint Venture.
     
     "JV  Dollar Permitted Investments" means investments which are denominated
and  payable  in U.S. Dollars (a) with respect to funds in the China  Accounts,
deposits denominated in U.S. Dollars maintained at, or certificates of  deposit
insured, or obligations insured or guaranteed by, the Bank of China, The  China
Construction  Bank,  the Communication Bank, the China Farmers  Bank  or  China
International Trust and Investment Corporation, or any branch of  a  commercial
bank organized under the laws of the United States or any political subdivision
thereof  having  a  combined capital and surplus of at least $500  million  and
having long-term unsecured debt securities having a rating assigned by each  of
the  Rating Agencies equal to the highest rating assigned thereby to  long-term
unsecured  debt securities; and (b) with respect to any funds which  the  Joint
Venture  may  from  time to time be allowed to invest outside  of  the  PRC  in
accordance with PRC laws and regulations, in Dollar Permitted Investments.
     
     "JV Equity Contributions" shall mean the monies disbursed from the Luannan
Facility  Construction  Fund  pursuant to the terms  of  the  Issuer  Loan  and
contributed  by  Pan-Western,  pursuant to  the  terms  of  the  Joint  Venture
Agreements,  to each of the Joint Ventures as Pan-Western's equity contribution
to such Joint Venture.
     
     "JV  RMB  Permitted  Investments" means deposit accounts  denominated  and
payable  in  Renminbi to be maintained at, certificates of deposit  issued,  or
obligations issued or guaranteed by, one of the following policy or  commercial
banks  in  the  PRC:  (i) the Bank of China, (ii) the China Construction  Bank,
(iii)  the  Communication  Bank, (iv) the China Farmers  Bank,  (v)  the  China
International Trust and Investment Corporation, (vi) any foreign bank or branch
of  any  foreign bank authorized and licensed to conduct business in  the  PRC,
including without limitation, the establishment and maintenance of Renminbi and
foreign currency accounts and exchange functions having a combined capital  and
surplus of at least $500 million and having at least an investment grade rating
assigned  to  its  long-term unsecured debt securities by each  of  Standard  &
Poor's and Moody's.
     
     "Lien"  means  any  mortgage, lien (statutory or other), pledge,  security
interest,  encumbrance, claim, hypothecation, assignment for security,  deposit
arrangement  or  preference or other security agreement of any kind  or  nature
whatsoever.  For purposes of the Indentures, a Person shall be  deemed  to  own
subject  to a lien any property which it has acquired or holds subject  to  the
interest  of  a vendor or lessor under any conditional sale agreement,  capital
lease or other title retention agreement relating to such Person.
     
     "Luannan Casualty Proceeds" means all Insurance Proceeds or other  amounts
received  by  Pan-Western on account of any Luannan Event of  Loss  ("Insurance
Proceeds" means all amounts and proceeds (including instruments) in respect  of
the  proceeds  of  any casualty insurance policy covering any  portion  of  the
Luannan Facility (except proceeds of business interruption insurance)).
     
     "Luannan Commercial Operation Date" means that date by which both  of  the
following  have occurred: (i) the Luannan Facility Engineer has certified  that
the Luannan Facility has achieved commercial operations and (ii) the Commercial
Operation  Date,  as  such term is used in the Interconnection  Agreement,  has
occurred.
     
     "Luannan  Event of Loss" means an event which causes all or a  portion  of
the  Luannan Facility to be damaged, destroyed or rendered unfit for normal use
for any reason whatsoever, other than a Luannan Expropriation Event.
     
     "Luannan  Expropriation Event" means any compulsory transfer or taking  or
transfer under threat of compulsory transfer or taking of any material part  of
the  Luannan  Facility or any ownership interest or other rights in  the  Joint
Venture Companies by any governmental authority.
     
     "Luannan  Expropriation  Proceeds" means any  proceeds  received  by  Pan-
Western as a result of the occurrence of a Luannan Expropriation Event.
     
     "Luannan Facility Construction Cost" means the actual cost to complete the
construction  of  the  Luannan Facility as certified by  the  Luannan  Facility
Engineer  following  the Luannan Commercial Operation  Date  (and  which  total
includes amounts on deposit in the Completion Sub-Account).
     
     "Luannan  Facility Engineer" means Parsons Brinckerhoff, which  previously
served as the Joint Ventures' project engineer, and any successor thereto under
the terms of the Indentures.
     
     "Luannan  Facility Notes" means shall mean the promissory notes issued  by
the Joint Venture Companies to Pan-Western evidencing their indebtedness to Pan-
Western.
     
     "Luannan  Financing Agreements" means, collectively, the Shareholder  Loan
Agreements, the Joint Venture Guarantees, the Issuer Loan Agreement, the Issuer
Note and the Luannan Facility Notes.
     
     "Luannan  Project  Documents"  means,  collectively,  the  Luannan   Power
Purchase   Agreement,  the  Luannan  EPC  Contract,  the  Luannan  Transmission
Facilities  Construction  Agreement,  the Luannan  Operations  and  Maintenance
Agreement,  the Luannan Coal Supply Agreements, the Luannan Coal Transportation
Agreement,  the  Engineering  and Design Contract and  all  other  instruments,
agreements or other documents arising from or related to the Luannan  Facility,
but shall not include any Luannan Financing Agreement.
     
     "Major  Maintenance  Reserve Account" means the Major Maintenance  Reserve
Account established by each Joint Venture on the Closing Date pursuant  to  the
Shareholder Loan Agreements.
     
     "Major  Maintenance Reserve Requirement" means the amount required  to  be
transferred  to  the  Major Maintenance Reserve Account from  the  RMB  Revenue
Account pursuant to the Shareholder Loan Agreements.
     
     "Mandatory Redemption" shall have the meaning set forth in "Description of
the  Exchange  Notes,  the  Exchange Notes  Guarantee,  the  Issuer  Loan,  the
Shareholder   Loans   and   the  Collateral  Documents   Redemption   Mandatory
Redemption."
     
     "Material Adverse Effect" means a material adverse change in the financial
condition  with  respect to the party or entity in question  or  any  event  or
occurrence  which  could  reasonably be expected to  materially  and  adversely
affect:  (a)  the  operation  of  a  Domestic  Project;  (b)  the  development,
construction or operation of a Material Permitted Project; (c) the development,
construction  or  operation  of  the Luannan  Facility;  (d)  the  ability  of,
respectively, a Domestic Project, a Material Permitted Project or  the  Luannan
Facility to perform any of their material obligations under a Project Document;
(e)  the ability of the Issuer to make payments of principal, premium, if  any,
or  interest (including Liquidated Damages and Additional Amounts, if  any)  on
the  Existing Notes when due or (f) the ability of the Company to make payments
pursuant to the provisions of the Exchange Notes Guarantee.
     
     "Material  Subsidiary"  means  any  Subsidiary  which,  at  any  date   of
determination,  is  a  "Significant Subsidiary" (as that  term  is  defined  in
Regulation  S-X, as in effect on the Closing Date, issued under the  Securities
Act).
     
     "Net Cash Proceeds" means (a) in the case of any sale of Capital Stock  by
the  Company,  Panda  International or any direct or  indirect  parent  of  the
Company,  the  aggregate  net  cash proceeds received  by  the  Company,  Panda
International or any direct or indirect parent of the Company, after payment of
expenses,  commissions and the like incurred in connection  therewith,  whether
such  proceeds  are  in cash or in property (valued at the  Fair  Market  Value
thereof, as determined in good faith by the Board of Directors of such  Person,
at  the time of receipt); (b) in the case of any exchange, exercise, conversion
or  surrender  of  outstanding securities of any kind for  or  into  shares  of
Capital  Stock  of the Company, Panda International or any direct  or  indirect
parent  of the Company which is not Disqualified Stock, the net book  value  of
such  outstanding securities on the date of such exchange, exercise, conversion
or  surrender (plus any additional amount required to be paid by the holder  to
the  Company,  Panda  International or any direct or  indirect  parent  of  the
Company upon such exchange, exercise, conversion or surrender, less any and all
payments  made to the holders, e.g., on account of fractional shares  and  less
all  expenses  incurred by the Company, Panda International or  any  direct  or
indirect parent of the Company in connection therewith).
     
     "Net Debt Service" means the sum of (i) (a) Interest Expense less (b) non-
cash  Interest  Expense  less (c) scheduled withdrawals  from  the  Capitalized
Interest  Fund  (if  applicable) less (d) scheduled withdrawals  from  the  PFC
Capitalized  Interest Fund (if applicable) plus (ii) all payments of  scheduled
and   overdue  principal  of,  and  premium,  if  any,  on  Indebtedness   plus
(iii)  without duplication, all rental payments in respect of Capitalized Lease
Obligations paid, accrued, or scheduled to be paid or accrued.
     
     "Net  Income"  means, with respect to any Person for any period,  the  net
income (loss) of such Person determined in accordance with GAAP.
     
     "Non-PRC  Holders" means beneficial owners of the Existing Notes  who,  or
which,  are  not residents of the PRC for PRC tax purposes and do  not  conduct
business activities in the PRC.
     
     "Non-Recourse  Debt"  means Indebtedness of any  Subsidiary  or  group  of
Subsidiaries  that  is incurred to acquire, construct or  develop  a  Permitted
Project  or  group  of  Permitted Projects provided that such  Indebtedness  is
without recourse to the Company or any Material Subsidiary or to any assets  of
the  Company or any such Material Subsidiary other than such Permitted  Project
and the direct or indirect parent or parents that own such Permitted Project or
group  of Permitted Projects and the income from and proceeds of such Permitted
Project or group of Permitted Projects.
     
     "Non-U.S. Permitted Project" means a Permitted Project located outside the
United States.
     
     "Operating  and Maintenance Costs" means all amounts disbursed  by  or  on
behalf  of  the  Domestic  Project, Permitted Project  or  Joint  Ventures  for
operation,  maintenance,  repair,  or  improvement  of  the  Domestic  Project,
Permitted Project or Joint Ventures, including, without limitation, premiums on
insurance  policies, property, income and all other taxes to the  extent  paid,
and  payments  under the relevant operating and maintenance agreements,  leases
(including Operating Lease Obligations), royalty and other land use agreements,
and any other payments required under the Project Documents, each as determined
on a cash basis in accordance with GAAP.
     
     "Operating  Lease  Obligations" means any  obligation  of  the  Person  in
question incurred or assumed under or in connection with any lease of  real  or
personal  property  which,  in accordance with GAAP,  is  not  required  to  be
classified and accounted for as a capital lease.
     
     "Permitted  Liens" means, with respect to any Person, any Lien arising  by
reason of (a) any judgment, decree or order of any court, so long as such  Lien
is  being  contested  in good faith and is adequately bonded,  any  appropriate
legal  proceedings which may have been duly initiated for the  review  of  such
judgment, decree or order shall not have been finally terminated or the  period
within  which  such  proceedings may be initiated shall not have  expired;  (b)
taxes  not  yet  delinquent or which are being contested  in  good  faith;  (c)
security  for payment of workers' compensation or other insurance; (d) security
for the performance of tenders, contracts (other than contracts for the payment
of money) or leases; (e) deposits to secure public or statutory obligations, or
to  secure permitted contracts for the purchase or sale of any currency entered
into in the ordinary course of business; (f) Liens imposed by operation of  law
in   favor   of  carriers,  warehousemen,  landlords,  mechanics,  materialmen,
laborers,  employees or suppliers, incurred in the ordinary course of  business
for  sums which are not yet delinquent or are being contested in good faith  by
negotiations  or  by  appropriate  proceedings  which  suspend  the  collection
thereof; (g) security for surety or appeal bonds; and (h) easements, rights-of-
way,   zoning  and  similar  covenants  and  restrictions  and  other   similar
encumbrances  or title defects which, in the aggregate, are not substantial  in
amount, and which do not in any case materially detract from the value  of  the
property  subject thereto or materially interfere with the ordinary conduct  of
the business of the Company or any of its Subsidiaries.
     
     "Permitted  Project"  means  (i) any Project or  group  of  Projects  that
fulfills the requirements of the PIC Additional Projects Contract and which may
be  developed,  constructed or owned pursuant to the requirements  of  the  PFC
Indenture  and  subject to compliance with the terms of the Company  Indentures
and  (ii) to the extent that a project does not fulfill the requirements of the
PIC Additional Projects Contract, any project or group of projects that may  be
developed,  owned  and  operated by the Company  or  one  of  its  Subsidiaries
pursuant  to  the  requirements of the Indentures and  the  Company  shall  (a)
maintain  at least a 50% (direct or indirect) ownership or equivalent  interest
in  each  project  or (b)(x) at least a 25% (direct or indirect)  ownership  or
equivalent interest in each project not meeting the requirements of clause  (i)
above  and  (y)  a controlling influence over the management and policies  with
respect  to each project, directly or indirectly, whether through the ownership
of  voting securities, by contract or otherwise, provided that no other  entity
has  greater control than the Company over the management and policies of  such
project  (notwithstanding the foregoing, this covenant shall not  prohibit  the
sale, lease, transfer or other disposition of all interests in a Project, or  a
reduction  in  the  ownership or equivalent interest of,  or  control  over,  a
Project occurring pursuant to the terms of a build-operate-transfer arrangement
at least ten years after the entering into of such arrangement).
     
     "Permitted  Project  Document" means any and  all  documents  executed  in
connection  with the development, construction, ownership and  operation  of  a
Permitted Project.
     
     "Permitted  Project  Event" means, with respect to any Permitted  Project,
(i)  an  event which causes all or a portion of the facilities of  a  Permitted
Project  to  be  damaged, destroyed or rendered unfit for normal  use  for  any
reason  whatsoever, (ii) any event involving the compulsory transfer or  taking
or  transfer  under threat of compulsory taking of any material  part  of  such
Permitted  Project's assets or (iii) the existence of any defect  of  title  or
lien  or  encumbrance on the any material part of the property of  a  Permitted
Project  (provided that liens or covenants permitted by the covenant Limitation
on Liens shall be excluded from consideration) that entitles a Person to make a
claim  under  any  title insurance policy in existence  with  respect  to  such
property.
     
     "Permitted  Project Event Proceeds" means the sum of any and all  proceeds
payable upon occurrence of a Permitted Project Event.
     
     "Permitted  Project  Power Purchase Agreement" means  the  power  purchase
agreement of any Permitted Project.
     
     "Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are  used  to  extend,  refinance, renew, replace,  defease  or  refund,  other
Indebtedness of the Company or any of its Subsidiaries; provided that: (i)  the
principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal  amount  of  the  Indebtedness  so  extended,  refinanced,   renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in  connection therewith); (ii) such Permitted Refinancing Indebtedness  has  a
final  maturity date at least as late as the final maturity date of, and has  a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life  to  Maturity  of,  the Indebtedness being extended, refinanced,  renewed,
replaced,  defeased  or  refunded; (iii) if the  Indebtedness  being  extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment  to  the Existing Notes such Permitted Refinancing Indebtedness  has  a
final  maturity date later than the final maturity date of, and is subordinated
in  right  of payment to, the Existing Notes on terms at least as favorable  to
the Holders of Existing Notes as those contained in the documentation governing
the  Indebtedness  being extended, refinanced, renewed, replaced,  defeased  or
refunded; (iv) if the Indebtedness being refinanced is Non-Recourse Debt,  such
Permitted  Refinancing Indebtedness shall also be Non-Recourse  Debt;  and  (v)
such Indebtedness is incurred either by the Company or by the Subsidiary who is
the  obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
     
     "Person"  means  any individual, corporation, partnership, joint  venture,
association,  joint-stock company, trust, unincorporated organization,  limited
liability  company,  or  other  business entity  or  government  or  agency  or
political subdivision thereof (including any subdivision or ongoing business of
any  such  entity  or  substantially all of the  assets  of  any  such  entity,
subdivision or business).
     
     "PFC  Capitalized  Interest  Fund" means  the  capitalized  interest  fund
maintained pursuant to the PFC Indenture.
     
     "PIC  Cash  Available for Distribution" means Total  Cash  Flow  from  all
Domestic  Projects  and  Permitted Projects (owned,  constructed  or  developed
pursuant  to  the  PFC Indenture) on a consolidated basis  less  (i)  regularly
scheduled  payments of principal and interest on Domestic Project and Permitted
Projects  (owned,  constructed  or developed pursuant  to  the  PFC  Indenture)
project  level  Indebtedness,  (ii)  additions  to  reserves  required  by  the
instruments  providing  for project level Indebtedness,  (iii)  trustee's  fees
under the PFC Indenture and (iv) the NNW Cash Flow Participation (as defined in
the  PFC  Indenture)  plus  interest earned on reserves  required  by  the  PFC
Indenture  entered  into  by PIC, excluding, however,  extraordinary  financial
distributions and proceeds received as a result of mandatory redemption  events
(pursuant to the PFC Indenture), that at the time of determination is available
to  be  legally  distributed from the Domestic Projects and Permitted  Projects
(owned,  constructed or developed pursuant to the PFC Indenture) to PIC without
contravention of any agreement.
     
     "PIC  Cash  Available from Operations" means, for any period,  Total  Cash
Flow  from  all  Project  Entities  on  a  consolidated  basis  prior  to   all
Consolidated Debt Service, less (i) additions to reserves required  by  project
agreements, (ii) trustee's fees under the PFC Indenture plus interest earned on
reserves required by the documents relating to the Pooled Project Bonds entered
into  by  PIC,  and (iii) the NNW Cash Flow Participation, excluding,  however,
"Extraordinary  Financial Distributions" (as defined in the PFC Indenture)  and
proceeds  received as a result of "Mandatory Redemption Events" (as defined  in
the PFC Indenture).
     
     "PIC  Consolidated Debt Service" means for purposes of the PFC  Indenture,
for any period, PIC Debt Service plus scheduled principal and interest payments
on all Project Debt.
     
     "PIC  Consolidated Debt Service Coverage Ratio" means, as of any  date  of
determination, the ratio of (i) PIC Cash Available from Operations  during  the
relevant  period  to (ii) Consolidated Debt Service for such period;  provided,
however,  that at any time that PIC holds interests in more than four Projects,
then  the PIC Consolidated Debt Service Coverage Ratio shall not be applied  in
respect of any event or requirement.
     
     "PIC Debt Service" means, for any period, scheduled principal, premium, if
any, and interest (including liquidated damages and additional amounts, if any)
payments on any and all Indebtedness issued pursuant to the PFC Indenture.
     
     "PIC Debt Service Coverage Ratio" means for purposes of the PFC Indenture,
as  of  any  date  of  determination, the ratio of (i) PIC Cash  Available  for
Distribution  during  the relevant period to (ii) PIC  Debt  Service  for  such
period.
     
     "PIC  Future  Ratio  Determination  Period"  means,  as  of  the  date  of
determination, each of the following: (i) the period beginning with the date of
determination  through  December 31 of that calendar  year;  (ii)  each  period
consisting  of a calendar year thereafter through the calendar year immediately
prior  to the calendar year in which the Final Stated Maturity occurs and (iii)
the  period beginning with January 1 and ending with the Final Stated Maturity.
For  purposes of this definition, "Final Stated Maturity" means the last stated
maturity date of any Indebtedness outstanding under the PFC Indenture.
     
     "Power  Purchase  Agreements" means the Luannan Power Purchase  Agreement,
the  Brandywine Power Purchase Agreement, the Rosemary Power Purchase Agreement
and any Permitted Project Power Purchase Agreement.
     
     "Project Document" means, collectively, the Luannan Project Documents, the
Luannan  Financing Agreements,  the Brandywine Project Documents, the  Rosemary
Project  Documents,  the  Administrative Services  Agreement,  the  Development
Services Agreement, and any and all Permitted Project Documents.
     
     "Projected Luannan Facility Construction Cost" means $118.8 million.
     
     "Public  Equity Offering" means an underwritten public offering of Capital
Stock  (other  than Disqualified Stock) of the Company, Panda International  or
any  direct  or indirect parent of the Company made on a primary basis  by  the
Company,  Panda International or any direct or indirect parent of  the  Company
pursuant to a registration statement filed with and declared effective  by  the
Commission in accordance with the Securities Act or an underwritten offering of
Capital   Stock   (other  than  Disqualified  Stock)  of  the  Company,   Panda
International or any direct or indirect parent of the Company made on a primary
basis  by the Company, Panda International or any direct or indirect parent  of
the Company pursuant to Rule 144A under the Securities Act.
     
     "Related  Party" means any Affiliate of the Company of which the  Company,
Panda  International or any direct or indirect parent of the Company holds  51%
or a more of the voting securities of such Person.
     
     "Restricted  Payment" means any of the following: (i) the  declaration  or
payment  of  any  dividend or any other distribution on Capital  Stock  of  the
Company  or any Subsidiary of the Company or any payment made to the direct  or
indirect holders (in their capacities as such) of Capital Stock of the  Company
or  any  Subsidiary of the Company (other than (x) dividends  or  distributions
payable  solely in Capital Stock (other than Disqualified Stock) or in options,
warrants  or  other  rights to purchase Capital Stock (other than  Disqualified
Stock),  and  (y)  in  the case of Subsidiaries of the  Company,  dividends  or
distributions  payable to the Company or to a Subsidiary of the Company),  (ii)
the  purchase, redemption or other acquisition or retirement for value  of  any
Capital Stock of the Company or any of its Subsidiaries or (iii) the making  of
any  principal payment on, or the purchase, defeasance, repurchase,  redemption
or  other acquisition or retirement for value, prior to any scheduled maturity,
scheduled  repayment  or scheduled sinking fund payment,  of  any  Indebtedness
which  is  subordinated in right of payment to the Existing Notes  (other  than
Indebtedness acquired in anticipation of satisfying a sinking fund  obligation,
principal  installment or final maturity, in each case due within one  year  of
the date of acquisition).
     
     "Senior  Indebtedness" means, under the Indentures  and  with  respect  to
either  the  Company  or the Issuer, the principal of,  premium,  if  any,  and
interest (including interest accruing after the filing of a petition initiating
any  proceeding under any state, federal or foreign bankruptcy law  whether  or
not  allowable  as a claim in such proceeding and including Liquidated  Damages
and  Additional  Amounts,  if any) and all other monetary  obligations  on  any
Indebtedness  (other  than as otherwise provided in this  definition),  whether
outstanding on the Closing Date or thereafter created, incurred or assumed, and
whether at any time owing, actually or contingently, unless, in the case of any
particular  Indebtedness, the instrument creating or  evidencing  the  same  or
pursuant  to  which  the  same  is outstanding  expressly  provides  that  such
Indebtedness  shall  be subordinated or junior in right  of  payment  to  other
Indebtedness of such entity. Without limiting the generality of the  foregoing,
with  respect to the Issuer, "Senior Indebtedness" shall include the  principal
of, premium, if any, and interest (including interest accruing after the filing
of  a  petition initiating any proceedings under any state, federal or  foreign
bankruptcy  laws  whether or not allowable as a claim in  such  proceeding  and
including  Liquidated Damages and Additional Amounts, if any),  and  all  other
monetary obligations of every kind and nature of the Issuer from time  to  time
owed   to   the  Existing  Noteholders  under  the  Exchange  Notes  Indenture.
Notwithstanding the foregoing with respect to the Issuer, "Senior Indebtedness"
shall  not include (i) Indebtedness that is by its terms subordinate or  junior
in right of payment to any Indebtedness of the Issuer, (ii) Indebtedness which,
when  incurred,  is  without recourse to the Issuer, (iii)  any  liability  for
foreign, federal, state, local or other tax owed or owing by the Issuer to  the
extent such liability constitutes Indebtedness, (iv) Indebtedness of the Issuer
to a Wholly Owned Subsidiary and (vi) that portion of any Indebtedness which at
the time of issuance is issued in violation of the Indentures.
     
     "Shareholder Loan Agreement Permitted Liens" means (a) liens for any  tax,
assessment  or  other governmental charge not yet due, due but payable  without
penalty  or  being contested in good faith and by appropriate proceedings,  (b)
retentions  of  title in favor of materialmen, workers or repairmen,  or  other
like liens arising in the ordinary course of business or in connection with the
construction  of  the Luannan Facility, (c) liens arising out of  judgments  or
awards  so  long as an appeal or proceeding for review is being  prosecuted  in
good faith, (d) mineral rights the use and enjoyment of which do not materially
interfere with the use and enjoyment of the Joint Venture Facility, (e)  liens,
deposits  or  pledges to secure statutory obligations or performance  of  bids,
tenders, contracts (other than for the repayment of borrowed money) or  leases,
or  for  purposes of like general nature in the ordinary course  of  the  Joint
Venture's  business  and  affecting property with a  value  not  exceeding  the
equivalent of $250,000 at any one time, (f) involuntary liens (including a lien
of  an  attachment, judgment or execution) securing a charge or obligation,  on
any of the Joint Venture's property, real or personal, whether now or hereafter
owned  with a value not exceeding the equivalent of $250,000 at any  one  time,
(g)  rights  of any party pursuant to any Luannan Project Document,  (h)  liens
securing workers' compensation, unemployment insurance or other social security
or  pension obligations, (i) liens securing Indebtedness permitted pursuant  to
the  Shareholder  Loan  Agreement, (j) liens securing  the  purchase  price  of
property having an aggregate value not exceeding the equivalent of $1.0 million
at  any one time and (k) liens securing other obligations not constituting debt
none of which could reasonably be expected to have a Material Adverse Effect.
     
     "Shareholder  Loan Agreements" means, collectively, the  Shareholder  Loan
Agreement by and among each Joint Venture and Pan-Western.
     
     "Shareholder  Loans"  means  the outstanding  indebtedness  of  the  Joint
Ventures to Pan-Western incurred to finance the development and construction of
the  Luannan Facility and funded by Pan-Western with the proceeds of the Issuer
Loan.
     
     "Stated  Maturity" means, with respect to any security, the date specified
in  such security as the fixed date on which the final payment of principal  of
such  security  is  due  and  payable,  including  pursuant  to  any  mandatory
redemption  provision (but excluding any provision providing for the repurchase
of  such security at the option of the holder thereof upon the happening of any
contingency).
     
     "Subsidiary"  means,  with  respect to any Person,  (i)  any  corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence  of
any  contingency)  to vote in the election of directors, managers  or  trustees
thereof  is  at the time owned or controlled, directly or indirectly,  by  such
Person  or  one  or  more  of  the other Subsidiaries  of  that  Person  (or  a
combination thereof), (ii) any partnership (a) the sole general partner or  the
managing general partner of which is such Person or a Subsidiary of such Person
or  (b)  the  only general partners of which are such Person  or  one  or  more
Subsidiaries of such Person (or any combination thereof) and (iii)  any  Person
that  either is a Permitted Project or owns an interest in a Permitted  Project
(to the extent described in the second clauses (i) or (ii) of the definition of
Permitted Project).
     
     "Total  Cash Flow" means, as to any Person, the sum of the net  income  of
such  Person  for any period plus, to the extent deducted from net income,  all
non-cash  items,  including,  but not limited to, depreciation,  depletion  and
impairment,  amortization of intangibles and deferred taxes, in each  case  for
such  period  and determined as to such Person minus to the extent included  in
net income, all non-cash income, calculated in accordance with GAAP.
     
     "Trustees"  shall  mean the trustees under the Company Indenture  and  the
Exchange Notes Indenture.
     
     "U.S. Distribution Fund" means the fund described in Article IV of the PFC
Indenture  and  maintained in the name of PIC pursuant to such  Article,  which
such fund is entitled to distributions of monies from the Domestic Projects and
any  Permitted  Project located in the United States to  the  extent  that  all
obligations have been met by PFC and PIC under the PFC Indenture.
     
     "U.S.  Permitted  Project" means a Permitted Project  located  within  the
United States.
     
     "Weighted   Average  Life  to  Maturity"  means,  when  applied   to   any
Indebtedness at any date, the number of years obtained by dividing (i) the  sum
of  the  products obtained by multiplying (a) the amount of each then remaining
installment,  sinking  fund,  serial maturity or  other  required  payments  of
principal, including payment at final maturity, in respect thereof, by (b)  the
number  of  years  (calculated  to the nearest one-twelfth)  that  will  elapse
between  such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
     
     "Wholly Owned" by any Person means a Subsidiary of such Person all of  the
outstanding  Capital Stock or other ownership interests of  which  (other  than
directors' qualifying shares) shall at the time be owned by such Person  or  by
one or more Wholly Owned Subsidiaries of such Person.
     
Book-Entry, Delivery and Form

     The  Exchange  Notes initially will be represented by a single,  permanent
global  certificate in definitive, fully registered form (the  "Global  Note").
The Global Note will be deposited with, or on behalf of, DTC and registered  in
the  name of a nominee of DTC.  After the initial issuance of the Global  Note,
Exchange  Notes in certificated form will be issued in exchange for the  Global
Note only as set forth in the Exchange Note Indenture.
     
     Except  as set forth below, the Global Note may be transferred,  in  whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee.  Beneficial  interests in the Global Note may  not  be  exchanged  for
Existing  Notes  in  certificated  form except  in  the  limited  circumstances
described  below. See "--Exchange of Book-Entry Exchange Notes for Certificated
Exchange  Notes." In addition, transfer of beneficial interests in  the  Global
Note  will  be subject to the applicable rules and procedures of  DTC  and  its
direct  or  indirect  participants (including,  if  applicable,  those  of  the
Euroclear  System  ("Euroclear") and Cedel Bank,  S.A.  ("CEDEL")),  which  may
change  from time to time. The Existing Notes may be presented for registration
of transfer and exchange at the offices of the Registrar.
     
  Depository Procedures
  
     DTC  has  advised the Issuer that DTC is a limited-purpose  trust  company
created  to  hold securities for its participating organizations (collectively,
the  "Participants")  and  to  facilitate  the  clearance  and  settlement   of
transactions in those securities between Participants through electronic  book-
entry  changes  in  accounts  of  its Participants.  The  Participants  include
securities brokers and dealers (including the Initial Purchaser), banks,  trust
companies,  clearing  corporations and certain other organizations.  Access  to
DTC's  system  is  also  available to other entities such  as  banks,  brokers,
dealers  and  trust  companies  that clear  through  or  maintain  a  custodial
relationship  with a Participant, either directly or indirectly  (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect  Participants.  The  ownership  interest  and  transfer  of  ownership
interest of each actual purchaser of each security held by or on behalf of  DTC
are recorded on the records of the Participants and Indirect Participants.
     
     DTC has also advised the Issuer that pursuant to procedures established by
it,  (i)  upon  deposit  of the Global Note, DTC will credit  the  accounts  of
designated  Participants with portions of the principal amount  of  the  Global
Note and (ii) ownership of such interests in the Global Note will be shown  on,
and  the  transfer of ownership thereof will be effected only through,  records
maintained by DTC (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial interests
in the Global Note).
     
     The  laws  of  some  states  require that certain  persons  take  physical
delivery  in  definitive  form of securities that they own.  Consequently,  the
ability to transfer beneficial interests in the Global Note to such persons may
be  limited to that extent. Because DTC can act only on behalf of Participants,
which  in  turn act on behalf of Indirect Participants and certain  banks,  the
ability  of a person having beneficial interests in the Global Note  to  pledge
such  interests  to  persons or entities that do not  participate  in  the  DTC
system, or otherwise take actions in respect of such interests, may be affected
by  the  lack of a physical certificate evidencing such interests. For  certain
other  restrictions  on  the transferability of the  Exchange  Notes,  see  "--
Exchange of Book-Entry Exchange Notes for Certificated Exchange Notes."
     
     Except as described below, owners of interests in the Global Note will not
have  Exchange  Notes  registered in their names,  will  not  receive  physical
delivery of Exchange Notes in certificated form (the "Certificated Notes")  and
will  not  be  considered the registered owners or Holders  thereof  under  the
Indentures for any purpose.
     
     Exchange  Notes  originally purchased by or transferred to any  purchasers
who  elect  to take physical delivery of their certificates instead of  holding
their interest through the Global Note (collectively referred to herein as  the
"Non-Global Purchasers") will be issued in the form of Certificated Notes. Upon
the  transfer of any Certificated Note, such Certificated Note will, unless the
transferee  requests Certificated Notes or the Global Note has previously  been
exchanged in whole for Certificated Notes, be exchanged for an interest in  the
Global Note. Upon the transfer of an interest in the Global Note, such interest
will,  unless the transferee requests Certificated Notes, be represented by  an
interest in the Global Note.
     
     Payments  in  respect  of the principal, premium,  if  any,  and  interest
(including  Liquidated Damages and Additional Amounts, if any)  on  the  Global
Note  registered  in  the name of DTC or its nominee will  be  payable  by  the
Trustees  to DTC or its nominee in its capacity as the registered Holder  under
the  Indentures. Under the terms of the Indentures, the Issuer and the Trustees
will  treat the persons in whose names the Exchange Notes, including the Global
Note,  are  registered as the owners thereof for the purpose of receiving  such
payments  and for any and all other purposes whatsoever. Consequently,  neither
the  Issuer,  the Trustees nor any agent of the Issuer or the Trustees  has  or
will  have any responsibility or liability for (i) any aspect of DTC's  records
or  any Participant's or Indirect Participant's records relating to or payments
made  on account of beneficial ownership interests in the Global Note,  or  for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or   Indirect  Participant's  records  relating  to  the  beneficial  ownership
interests in the Global Note, or (ii) any other matter relating to the  actions
and practices of DTC or any of its Participants or Indirect Participants.
     
     DTC  has advised the Issuer that its current practice, upon receipt of any
payment  in  respect  of  securities  such as  the  Exchange  Notes  (including
principal and interest), is to credit the accounts of the relevant Participants
with  the  payment  on  the  payment date, in amounts  proportionate  to  their
respective holdings in principal amount of beneficial interests in the relevant
security  such as the Global Note as shown on the records of DTC.  Payments  by
the  Participants  and  the Indirect Participants to the beneficial  owners  of
Exchange  Notes  will  be  governed  by  standing  instructions  and  customary
practices  and  will  not be the responsibility of DTC,  the  Trustees  or  the
Issuer. Neither the Issuer nor the Trustees will be liable for any delay by DTC
or any of its Participants in identifying the beneficial owners of the Exchange
Notes,  and  the Issuer and the Trustees may conclusively rely on and  will  be
protected  in relying on instructions from DTC or its nominee as the registered
owner of the Exchange Notes for all purposes.
     
     Except for trades involving only Euroclear and CEDEL participants,  it  is
expected that interests in the Global Note will trade in DTC's Same--Day  Funds
Settlement System and secondary market trading activity in such interests  will
therefore  settle in immediately available funds, subject in all cases  to  the
rules and procedures of DTC and its participants.
     
     Transfers between Participants in DTC will be effected in accordance  with
DTC's  procedures,  and will be settled in same--day funds.  Transfers  between
participants  in  Euroclear and CEDEL will be effected in the ordinary  way  in
accordance with their respective rules and operating procedures.
     
     Subject  to  compliance with the transfer restrictions applicable  to  the
Exchange   Notes   described  herein,  cross--market  transfers   between   the
Participants  in DTC, on the one hand, and Euroclear or CEDEL participants,  on
the other hand, will be effected through DTC in accordance with DTC's rules  on
behalf of Euroclear or CEDEL, as the case may be, by its respective depositary;
however,  such cross--market transactions will require delivery of instructions
to  Euroclear or CEDEL, as the case may be, by the counterparty in such  system
in  accordance  with  the  rules  and procedures  and  within  the  established
deadlines (Brussels time) of such system.  Euroclear or CEDEL, as the case  may
be,  will,  if  the  transaction  meets its  settlement  requirements,  deliver
instructions  to  its  respective depositary to take  action  to  effect  final
settlement  on its behalf by delivering or receiving interests in the  relevant
Global  Note in DTC, and making or receiving payment in accordance with  normal
procedures  for  same--day  fund  settlement  applicable  to  DTC.    Euroclear
participants  and CEDEL participants may not deliver instructions  directly  to
the depositaries for Euroclear or CEDEL.
     
     Because of time zone differences, the securities account of a Euroclear or
CEDEL  participant purchasing an interest in the Global Note from a Participant
in  DTC  will  be  credited, and any such crediting will  be  reported  to  the
relevant  Euroclear  or  CEDEL participant, during  the  securities  settlement
processing  day  (which  must  be  a  business  day  for  Euroclear  or  CEDEL)
immediately  following the settlement date of DTC.  Cash received in  Euroclear
or  CEDEL as a result of sales of interests in the Global Note by or through  a
Euroclear  or  CEDEL participant to a Participant in DTC will be received  with
value  on  the  settlement date of DTC but will be available  in  the  relevant
Euroclear  or  CEDEL cash account only as of the business day for Euroclear  or
CEDEL following DTC's settlement date.
     
     DTC  has advised the Issuer that it will take any action permitted  to  be
taken  by  a  Holder of Exchange Notes only at the direction  of  one  or  more
Participants  to  whose  account with DTC interests  in  the  Global  Note  are
credited and only in respect of such portion of the aggregate principal  amount
of  the Exchange Notes as to which such Participant or Participants has or have
given such direction. However, if there is an Indentures Event of Default, with
respect  to  the Exchange Notes, DTC reserves the right to exchange the  Global
Note  for  Exchange Notes in certificated form, and to distribute such Exchange
Notes to its Participants.
     
     Although  DTC  has  agreed  to  the  foregoing  procedures  to  facilitate
transfers  of interests in the Global Note among participants in DTC, Euroclear
and  CEDEL,  they are under no obligation to perform or to continue to  perform
such  procedures, and such procedures may be discontinued at any time. None  of
the  Issuer, the Company, the Initial Purchaser or the Trustees will  have  any
responsibility  for  the  performance by DTC,  Euroclear  and  CEDEL  or  their
respective   participants  or  indirect  participants   of   their   respective
obligations under the rules and procedures governing their operations.
     
Exchange of Book-Entry Exchange Notes for Certificated Exchange Notes

     The  Global  Note  is  exchangeable  for  definitive  Exchange  Notes   in
registered  certificated form if (i) DTC (x) notifies the  Issuer  that  it  is
unwilling  or  unable  to continue as depositary for the Global  Note  and  the
Issuer  thereupon fails to appoint a successor depositary or (y) has ceased  to
be a clearing agency registered under the Exchange Act, (ii) the Issuer, at its
option,  notifies the Trustees in writing that it elects to cause the  issuance
of  the  Exchange Notes in certificated form or (iii) there shall have occurred
and  be continuing an Indentures Event of Default with respect to the Exchange.
In  addition,  beneficial interests in the Global Note  may  be  exchanged  for
Certificated  Notes upon request but only upon at least 20 days  prior  written
notice  given  to  the Trustees by or on behalf of DTC in accordance  with  its
customary  procedures. In all cases, Certificated Notes delivered  in  exchange
for  the Global Note or beneficial interests therein will be registered in  the
names,  and issued in any approved denominations, requested by or on behalf  of
the depositary (in accordance with its customary procedures).
     
                        The Shareholder Loan Agreements
                                       
     Each  Joint  Venture entered into a Shareholder Loan Agreement  with  Pan-
Western  on  September 24, 1996 and as amended on April 8, 1997 and  April  11,
1997,  pursuant  to which the Shareholder Loans will be made.  The  Issuer  may
cause Pan-Western and the Joint Ventures to further amend the Shareholder  Loan
Agreements  after the Closing Date in order to adjust the amortization  of  the
Shareholder  Loans to reflect the terms of the Exchange Notes. The  Shareholder
Loan Agreements provide, among other things, the rights and obligations of Pan-
Western  and  the  Joint  Ventures,  as  lender  and  borrowers,  respectively,
including,  without  limitation, principal and  interest  payments,  conditions
precedent, covenants, representations and warranties, events of default, breach
of  contract and remedies. The summary description below is equally  applicable
to each Shareholder Loan Agreement.
     
Payment of Principal and Interest

     The  Joint  Venture  will pay accrued interest until  the  first  interest
payment date following the Commercial Operation Date semiannually at a rate  of
13.75% per annum and thereafter monthly at a rate of 12.75% per annum.
     
Prepayments

     Voluntary Prepayments. The Shareholder Loans will not be prepayable by the
Joint Venture without the consent of Pan-Western.
     
     Mandatory Prepayments. If a Luannan Expropriation Event or a Luannan Event
of  Loss  shall  occur, as soon as reasonably practicable, but  no  later  than
fifteen  (15)  days  after  the date of receipt by the  Joint  Venture  of  any
proceeds  in  respect thereof, such Joint Venture shall make a reasonable  good
faith  determination  as  to  whether (i) the Joint  Venture  Facility  can  be
rebuilt,  repaired  or  restored  to permit operation  of  the  entire  Luannan
Facility  on  a  commercially feasible basis, and (ii)  the  proceeds  thereof,
together  with  any  other  amounts  that  are  available  to  commit  to  such
rebuilding,  repair or restoration, are sufficient to pay for such  rebuilding,
repair or restoration of the Joint Venture  Facility. The determination of such
Joint Venture shall be evidenced by a certificate filed with Pan-Western which,
in  the event such Joint Venture determines that the Joint Venture Facility can
be  rebuilt,  repaired or restored to permit operation of  the  entire  Luannan
Facility  or  a  portion thereof on a commercially feasible basis,  shall  also
certify  that  such proceeds, together with any other amounts that  such  Joint
Venture has available to commit to such rebuilding, repair or restoration,  are
sufficient to pay the costs thereof, and shall also set forth a reasonable good
faith estimate by such Joint Venture of such costs. If the amount of such costs
exceeds  $500,000, such certificate shall be accompanied by a Luannan  Facility
Engineer's  certificate, dated within five (5) days of the date  of  the  Joint
Venture's certificate, stating that, based upon reasonable investigation and  a
review  of  the  determination made by the Joint Venture, the Luannan  Facility
Engineer believes that the determination and the estimate of the total cost, if
any, set forth in the Joint Venture's certificate to be reasonable.
     
     In  the event that the Joint Venture determines not to rebuild, repair  or
restore  the  Joint  Venture  Facility, all of the  proceeds  of  such  Luannan
Expropriation Event or Luannan Event of Loss shall be applied promptly  to  the
prepayment of the Shareholder Loan by the Joint Venture.
     
     In  the event that the determination is made to rebuild, repair or restore
the  Joint  Venture Facility, all of the proceeds of such Luannan Expropriation
Event  or Luannan Event of Loss on deposit in the RMB Revenue Account shall  be
transferred to the RMB Checking Account and, together with the amounts (if any)
on  deposit in the Luannan Facility Construction Fund and such other amounts as
the  Joint  Venture  has available for such rebuilding, repair  or  restoration
(which also shall be deposited in the Luannan Facility Construction Fund  prior
to  any  disbursement for rebuilding, repair or restorations), used to pay  the
costs  of  such rebuilding, repair or restoration, and any excess  shall,  upon
completion  of such rebuilding, repair or restoration, be applied  promptly  to
the prepayment of the Shareholder Loan by the Joint Venture.
     
     In  addition to other amounts which shall be applied to the prepayment  of
the  Shareholder Loan as provided in the Shareholder Loan Agreement, the  Joint
Venture shall apply promptly following receipt, (i) all Net Cash Proceeds  from
the  sale or other disposition of all or any part of the assets or other rights
of  such  Joint  Venture, other than in the ordinary course  of  business  (and
permitted pursuant to the terms of the Luannan Financing Agreements)  having  a
value, individually in excess of $100,000 and in the aggregate in any year,  in
excess of $250,000, and (ii) performance liquidated damage payments which shall
have  been  made by the Luannan EPC Contractor to such Joint Venture under  the
Luannan EPC Contract.
     
Certain Covenants of the Joint Venture

     Repayment  of  Indebtedness.  The Joint  Venture  shall  repay  all  debt,
including without limitation, all sums due under the Shareholder Loan Agreement
and  the  other  Luannan  Financing  Agreements,  subject  to  any  limitations
contained in the Luannan Financing Agreements.
     
     Existence;  Conduct  of  Business. Except as otherwise  permitted  by  the
Shareholder  Loan Agreement, the Joint Venture shall maintain and preserve  its
existence  as  a  Sino-foreign joint venture with  limited  liability  and  all
rights,  privileges and franchises necessary or desirable in the normal conduct
of  its  business, and engage only in the business contemplated by the  Luannan
Financing Agreements and the Luannan Project Documents.
     
     Use  of  Funds. The Joint Venture will use the proceeds of the Shareholder
Loan  only  for deposit in the accounts that such Joint Venture has established
pursuant to the Shareholder Loan Agreement pending disbursement for payment  of
costs in connection with the Joint Venture Facility.
     
     Compliance  with Legal Requirements. The Joint Venture shall promptly  and
diligently  own, construct, maintain and operate its respective  Joint  Venture
Facility  in  compliance with all applicable legal requirements,  and  procure,
maintain  and comply with or cause to be procured, maintained or complied  with
all governmental approvals required for the ownership, construction, financing,
maintenance or operation of its respective Joint Venture Facility or  any  part
thereof at or before the time such governmental approvals become necessary  for
the  ownership, construction, financing, maintenance or operation of such Joint
Venture  Facility as contemplated by the Luannan Project Documents, and  except
that  the  Joint Venture may, at its expense and subject to certain conditions,
contest  by  appropriate proceedings conducted in good faith  the  validity  or
application of any such legal requirements.
     
     Operating  Budget. The Joint Venture shall, on or before  the  anticipated
Luannan  Commercial Operation Date, deliver to Pan-Western an annual  operating
budget,  certified  by the Luannan Facility Engineer and  in  advance  of  each
calendar  year  thereafter, the Joint Venture shall adopt and deliver  to  Pan-
Western an annual operating budget, certified by the Luannan Facility Engineer.
     
     Records  and  Financial  Statements.  The  Joint  Venture  shall  maintain
adequate  books, accounts and records with respect to itself and its respective
Joint  Venture Facility in compliance with the regulations of any  governmental
authority  having  jurisdiction thereof, and provide  Pan-Western  with,  among
other  things, (a) as soon as available and in any event within 135 days  after
the  close  of  each  fiscal year, audited financial statements  of  the  Joint
Venture  prepared  in  accordance with the PRC's generally accepted  accounting
principles  and  certified by Arthur Andersen & Co. or  such  other  comparable
independent  accounting  firm  selected by  Pan-Western  and  (b)  as  soon  as
available  and  in  any event within 90 days after the end  of  each  quarterly
accounting  period  of its fiscal year, unaudited financial statements  of  the
Joint Venture.
     
     Insurance.  The  Joint  Venture  shall maintain  adequate  insurance  with
respect  to its Joint Venture Facility based upon the advice of the Independent
Insurance Consultant.
     
     Progress  Report,  Project Report and Project Budget.  The  Joint  Venture
shall  deliver  to Pan-Western (i) within 30 days following  the  end  of  each
calendar quarter a quarterly status report describing in reasonable detail  the
progress  of the construction of its Joint Venture Facility, including  without
limitation, the cost incurred to the end of such quarter and an estimate of the
time and cost required for completion of its Joint Venture Facility; (ii) prior
to  the Luannan Commercial Operation Date, within 30 days following the end  of
each  calendar  quarter, an update of the budget for the  construction  of  its
Joint  Venture Facility, including but not limited to an explanation  or  other
reconciliation  of differences between such report and previous reports;  (iii)
from  and after the Luannan Commercial Operation Date, within 90 days following
the  end of each calendar year an annual summary operating report, which  shall
include,  unless otherwise agreed to by Pan-Western, a numerical and  narrative
assessment  of (a) compliance with the annual operating budget, (b) statistical
data  relating  to  the  Joint  Venture  Facility,  including  heat  rate,  net
electrical and scheduled and unscheduled outages, (c) fuel deliveries and  use,
(d)  major  maintenance activity, (e) casualty losses of  value  in  excess  of
$250,000 or the equivalent thereof in other currencies (whether or not  covered
by   insurance),  (f)  disputes  with  any  other  major  project  participant,
materialman, supplier or other person and any related claims against such Joint
Venture, (g) pricing information disclosed or made available pertaining to  the
supply  of  coal and (h) compliance with governmental approvals; and  (iv)  all
progress reports provided by the Luannan EPC Contractor pursuant to the Luannan
EPC Contract and all progress reports prepared under the Luannan Power Purchase
Agreement.
     
     Taxes;  Increased  Costs. The Joint Venture shall pay  and  discharge  all
taxes  and governmental charges or levies imposed on such Joint Venture or  its
Joint  Venture Facility. If any change of law subjects Pan-Western to any  tax,
duty  or other charge with respect to the Shareholder Loan or changes the basis
of  taxation of payments by the Joint Venture to Pan-Western on the Shareholder
Loan  (except for certain taxes or changes in the rate of taxation as set forth
in  the  Issuer  Loan Agreement) or imposes on Pan-Western any other  condition
directly  related to the Shareholder Loan thereby increasing the cost  to  Pan-
Western of making, issuing, creating, renewing, participating in or maintaining
the  Shareholder  Loan or to reduce any amount receivable by Pan-Western  under
the  Shareholder  Loan Agreement, then the Joint Venture  will  reimburse  Pan-
Western  for  such increased costs or compensate Pan-Western for  such  reduced
amounts.
     
     All  payments made by the Joint Venture shall be made free and  clear  of,
and  without  deduction or withholding for any income, stamp  or  other  taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, imposed  or
otherwise  (or in the alternative, the initial interest rate established  shall
include  such  charges in addition to the interest rate  on  the  Issuer  Loan)
levied   by  any  governmental  instrumentality,  subject  to  certain  limited
exceptions.
     
     Registration  of  Shareholder Loans; Other Foreign Exchange  Matters.  The
Joint   Venture   will  register  each  Shareholder  Loan  and  maintain   such
registration  with the Tangshan Municipal Bureau for Exchange  Control  or  any
successor entity.
     
     Loan Payment Reserve. The final drawing under the Shareholder Loan by  the
Joint Venture will be in an amount of $1.0 million which it will deposit in  an
account,  to  be  designated by Pan-Western, to be used as a  reserve  for  the
payment  of  any amounts owing pursuant to the Shareholder Loan or the  Luannan
Facility  Note  not paid when due; provided, however, to the  extent  that  the
Joint  Venture  is  obligated to make a performance  bonus  payment  under  the
Luannan  EPC Contract, then the amount on deposit in the preceding debt service
reserve  account  shall  be  reduced by the amount of  such  performance  bonus
payment.
     
     Notices.  The Joint Venture shall promptly provide to Pan-Western  written
notice  of (i) any Shareholder Loan Agreement Event of Default of which it  has
knowledge,  describing  any action being taken or proposed  to  be  taken  with
respect  to  its Joint Venture Facility and (ii) any termination  or  event  of
default or notice thereof under the Luannan Power Purchase Agreement.
     
     Luannan  Expropriation Event. The Joint Venture shall (i) promptly provide
Pan-Western with written notice of any Luannan Expropriation Event with respect
to  its  Joint  Venture  Facility, (ii) diligently pursue  all  its  rights  to
compensation, (iii) hold any Luannan Expropriation Proceeds received in respect
of  such  event  (after deducting all reasonable expenses  incurred  by  it  in
litigating, arbitrating, compromising, settling or consenting to the settlement
of  any  claims)  in  trust for the benefit of Pan-Western  and  (iv)  promptly
deposit  all  Luannan  Expropriation Proceeds in the RMB  Revenue  Account.  In
addition, the Joint Venture consents to the participation of Pan-Western in any
proceedings regarding a Luannan Expropriation Event.
     
     Limitation  on Indebtedness. The Joint Venture shall not create,  or  be
     liable for any debt, except:
     
     (i)   the Shareholder Loan and additional loans from Pan-Western;
     
     (ii)  working  capital debt; provided that after giving effect  to  such
           additional  debt,  (a)  the  minimum (or  lowest)  projected  Debt
           Service  Coverage  Ratio for any calendar year will  not  be  less
           than  1.5 to 1 and (b) the average projected Debt Service Coverage
           Ratio  for  any  calendar year will not be less  than  1.7  to  1;
           provided,  however, that working capital debt  shall  not  at  any
           time exceed $1.0 million;
     
     (iii) purchase  money or capital lease obligations incurred  to  finance
           assets  of the Joint Venture that are readily replaceable personal
           property  with  a  principal  amount or  capitalized  portion  not
           exceeding $1.0 million in the aggregate outstanding at any time;
     
     (iv)  trade  accounts payable (other than for borrowed money) due within
           90  days  arising, and accrued expenses incurred, in the  ordinary
           course  of business of constructing, operating or maintaining  its
           Joint Venture Facility on customary terms;
     
     (v)   interest or currency exchange rate protection agreements;
     
     (vi)  debt  under  the Joint Venture Guarantees and any other guarantees
           of the obligations of the Joint Ventures; and
     
     (vii) any   debt  to  any  other  Joint  Venture  ((i)  through   (vii),
           collectively "Joint Venture Permitted Indebtedness").
     
     Limitation on Liens. The Joint Venture shall not create or permit to exist
any  Lien other than Shareholder Loan Agreement Permitted Liens upon any assets
or  properties of the Joint Venture, including, without limitation,  the  Joint
Venture Facility.
     
     Nature  of  Business.  The Joint Venture shall not  amend  or  modify  its
Articles  of  Association without the prior written consent of Pan-Western  and
shall not engage in any business other than the ownership and operation of  its
Joint Venture Facility.
     
     Limitation  on  Sale or Lease of Facility Assets. The Joint Venture  shall
not  sell,  lease, assign, transfer or otherwise dispose of the  Joint  Venture
Facility or other assets except (i) in the ordinary course of business  to  the
extent  that  such  property  is worn out or no  longer  useful  or  usable  in
connection  with the operation of the Joint Venture Facility and such  property
is replaced by property having a fair market value equal to or greater than the
fair market value of the property being leased or transferred or such lease  or
transfer  is  required  to  comply  with law  or  to  obtain  or  maintain  any
governmental  approval, (ii) property with a fair market  value  of  less  than
$250,000 in any given year or $1.0 million in the aggregate since the  date  of
the Shareholder Loan Agreement, and (iii) the sale of electricity and steam  in
accordance with the Luannan Project Documents.
     
     Limitation on Merger, Consolidation, Liquidation, Dissolution.  The  Joint
Venture  shall  not merge or consolidate with or into any other  Person,  other
than  any of the other Joint Ventures or other Sino-foreign joint ventures with
no  material  liabilities and no material activities unrelated to  the  Luannan
Facility, or liquidate, wind up, dissolve, or otherwise transfer or dispose  of
all  or any substantial part of its property, assets or business, or change its
legal  form,  or purchase or otherwise acquire any assets of any Person  unless
such  purchase  or  acquisition  of  assets is  reasonably  necessary  for  the
operation of the Joint Venture Facility or in the ordinary course of business.
     
     Limitation  on Contingent Liabilities. The Joint Venture shall not  become
liable as a surety, guarantor, accommodation endorser or otherwise, for or upon
the  obligation of any other Person; provided, however, that the Joint  Venture
may guarantee or otherwise become liable in respect of any debt incurred by any
other  Person  (on its behalf) in connection with or relating to incurrence  of
debt expressly permitted as described above in the section entitled "Limitation
on Indebtedness"; and provided, further, however, that this shall not be deemed
to prohibit (i) the acquisition of goods, supplies or merchandise in the normal
course  of  business  on  normal  trade credit,  or  (ii)  the  endorsement  of
negotiable instruments received in the normal course of business; or (iii)  the
obligations  under  the  Shareholder  Loan  Agreement  and  the  Joint  Venture
Guarantee to which the Joint Venture is a party, or any other guarantee of  any
obligation  of  any other Joint Venture if such guarantee is required  for  the
development and construction of the Luannan Facility and is not contrary to any
legal requirement.
     
     Limitation on Loans, Advances or Investments. The Joint Venture shall  not
make  or  permit  to  remain outstanding any loans,  extensions  of  credit  or
advances  to or investments in (whether by acquisition of any stocks, notes  or
other securities or obligations) any Person except RMB Permitted Investments or
JV Dollar Permitted Investments or as expressly provided in the Luannan Project
Documents.
     
     Immunity. In any proceedings in China or elsewhere in connection with  any
of  the Luannan Financing Agreements to which the Joint Venture is a party, the
Joint  Venture  shall not claim for itself or any of its assets  immunity  from
suit, execution, attachment or other legal process.
     
     Limitations  on Distributions. The Joint Venture shall not  agree  to  any
restriction on its ability to pay dividends (excluding restrictions imposed  by
law).
     
     Limitation on Transactions With Affiliates. Except for the Luannan Project
Documents, the Joint Venture shall not directly or indirectly:  (i) enter  into
any  transaction with any Person (including any affiliate) other  than  in  the
ordinary  course of business and on terms not less favorable to those available
from  independent  third  parties  or (ii) establish  any  sole  and  exclusive
purchasing  or  sales agency, or enter into any transaction whereby  the  Joint
Venture  might receive less than the full commercial price (subject  to  normal
trade  discounts)  for  electricity or pay more than the commercial  price  for
products of others.
     
     Limitation  on Partnerships; Subsidiaries. Except as contemplated  by  the
Luannan  Project  Documents, the Joint Venture shall not become  a  general  or
limited  partner in any partnership or a joint venturer in any  joint  venture,
acquire  any  ownership interest in any other Person or enter into any  profit-
sharing  or  royalty agreement or other similar arrangement whereby  the  Joint
Venture's income or profits are, or might be, shared with any other Person,  or
enter  into any management contract or similar arrangement whereby its business
or  operations are managed by any other Person (other than any agreement  under
which  the  Joint Venture may provide operation and management,  consulting  or
other similar services) or form any subsidiary.
     
     Limitation  on Amendments. The Joint Venture shall not amend  any  of  the
Luannan Project Documents without the prior written consent of Pan-Western.
     
     Limitation  on  Assignment.  Without the prior  written  consent  of  Pan-
Western,  the Joint Venture shall not assign or otherwise transfer  its  rights
under  any  of  the  Luannan  Project Documents to  which  it  is  a  party  or
governmental approvals to which it is a party to any Person.
     
     Abandonment of Luannan Facility; Improper Use. The Joint Venture shall not
voluntarily cease or abandon the development, construction or operation of  the
Joint  Venture Facility or use, maintain, operate or occupy, or allow the  use,
maintenance, operation or occupancy of, any portion of the site of the  Luannan
Facility or facility for certain prohibited purposes.
     
Shareholder Loan Agreement Events of Default

     The  occurrence  of  any  of  the  following  events  shall  constitute  a
Shareholder  Loan  Agreement Event of Default pursuant to the Shareholder  Loan
Agreement:
     
     (i)   default  in  the  payment of principal of or any interest  on  the
           Shareholder Loan or other amount owed by the Joint Venture to Pan-
           Western within 15 banking days after such amounts are due;
     
     (ii)  any  representation or warranty confirmed or made in  any  Luannan
           Project  Documents by the Joint Venture or in any writing provided
           by   the   Joint  Venture  in  connection  with  the  transactions
           contemplated by the Shareholder Loan Agreement shall be  found  to
           have  been  incorrect when made or deemed to  be  made;  provided,
           however,  that  no  Shareholder Loan Agreement  Event  of  Default
           shall occur if within sixty (60) days after the date on which  the
           general  manager of the Joint Venture has actual notice that  such
           incorrect statement has occurred, the Joint Venture shall  deliver
           in  good faith, to Pan-Western an officer's certificate stating in
           reasonable   detail  that  either  (a)  the  Joint   Venture   has
           eliminated   any   adverse  effect  relating  to  such   incorrect
           statement  or  (b)  the  Joint Venture has taken  action  that  it
           reasonably believes will eliminate the adverse effect relating  to
           such incorrect statement within a reasonable specified time;
     
     (iii) failure  of  the  Joint  Venture to  perform  or  observe  certain
           affirmative   covenants  under  the  Shareholder  Loan   Agreement
           (including but not limited to, repayment of indebtedness  and  use
           of  funds)  and  such  defaults have not been remedied  after  the
           expiration of the applicable grace period, if any;
     
     (iv)  failure  of  the  Joint Venture to observe  any  of  the  negative
           covenants  under  the  Shareholder  Loan  Agreement  (other   than
           limitation  on  liens) and such defaults have  not  been  remedied
           prior to the expiration of any applicable cure or grace period;
     
     (v)   default by the Joint Venture or any other party under any  of  the
           Luannan  EPC Contract, the Luannan EPC Guarantee, the Transmission
           Facilities  Construction  Agreement, the  Luannan  Power  Purchase
           Agreement and the Financing Agreements to which the Joint  Venture
           is  a  party and such default shall continue unremedied after  the
           expiration of the applicable grace period, if any;
     
     (vi)  voluntary and involuntary bankruptcy or insolvency events  of  any
           Joint  Venture,  North  China  Power  Company,  the  Luannan   EPC
           Contractor  or  Harbin Power (if such involuntary  bankruptcy  has
           not   been   dismissed  within  60  days  from  the  bringing   of
           involuntary bankruptcy);
     
     (vii) entry  of a final judgment or judgments against the Joint  Venture
           in  the  aggregate amount of $1.0 million (exclusive  of  judgment
           amounts  fully covered by insurance where the insured has admitted
           liability)  subject  to  customary  payment,  dismissal  or   stay
           rights;  or  entry of a judgment in the form of an  injunction  or
           similar  form  of  relief requiring suspension or  abandonment  of
           construction  or operation of the Joint Venture Facility  of  such
           Joint  Venture on grounds of violation of a legal requirement  and
           failure  of  the Joint Venture to have such injunction  stayed  or
           discharged within 90 days;
     
     (viii)the   Joint  Venture  shall  default  for  a  period  beyond   any
           applicable grace period in the payment of any principal,  interest
           or  other  amount due under any agreement involving the  borrowing
           of  money  or  the  advance of credit and the  outstanding  amount
           payable  under  all  such agreements in the  aggregate  equals  or
           exceeds $250,000 in the aggregate;
     
     (ix)  any  of  the  Luannan  Project Documents,  the  Luannan  Financing
           Agreements  or  the  Luannan  EPC  Guarantee  shall  have   become
           invalid, illegal, or unenforceable;
     
     (x)   the  Joint Venture ceases to have the right to use the site of the
           Luannan  Facility  in  the  manner  contemplated  by  the  Luannan
           Project   Documents  (or  to  obtain  sufficient  water  for   its
           operations);
     
     (xi)  the   Joint  Venture  abandons  the  Joint  Venture  Facility   or
           otherwise  ceases  to pursue the operations of the  Joint  Venture
           Facility  in  accordance  with  standard  industry  practice,  or,
           except  as  otherwise permitted by the terms  of  the  Shareholder
           Loan  Agreement, the Joint Venture shall sell or otherwise dispose
           of its interests in the Joint Venture Facility;
     
     (xii) the  Luannan Commercial Operation Date shall not have occurred  by
           December 31, 1999;
     
     (xiii)any   governmental   approvals  or   permits   (whether   central,
           provincial, municipal, local or otherwise) necessary for  (a)  the
           establishment   of   the  Joint  Venture,   (b)   the   ownership,
           construction, maintenance, financing or operation of  the  Luannan
           Facility,  (c) the setting or adjustment of the electricity  price
           for  the  Luannan  Facility  in  accordance  with  the  method  of
           calculation  set forth in the attachments to the Pricing  Document
           or  (d)  the conversion or transfer of any foreign currency  shall
           not  be  obtained  if  and when required, or  shall  be  modified,
           revoked  or  canceled, or a notice of violations is  issued  under
           any  governmental  authorization on grounds of, or  illegality  of
           the  absence  of any required authorization, or any proceeding  is
           commenced  by any governmental instrumentality for the purpose  of
           modifying,  revoking  or canceling any governmental  authorization
           (an "Approval Event of Default");
     
     (xiv) any adverse change in PRC law; and
     
     (xv)  the  Joint Venture Facility is destroyed, or suffers an actual  or
           constructive total loss.
     
Description of Joint Venture Guarantees

     Each  of  the  Joint  Ventures entered into Joint  Venture  Guarantees  on
September  24, 1996 to unconditionally and irrevocably guarantee to Pan-Western
the prompt payment and performance by each of the other three Joint Ventures of
such  Joint  Venture's obligations to Pan-Western pursuant  to  its  respective
Shareholder Loan Agreement.
     
                           The Issuer Loan Agreement
                                       
     The  Issuer  has entered into the Issuer Loan Agreement with  Pan-Western,
dated  as of the Closing Date, pursuant to which the Issuer Loan will be  made.
The  Issuer  Loan  Agreement  provides, among  other  things,  the  rights  and
obligations   of   the  Issuer  and  Pan-Western,  as  lender   and   borrower,
respectively,  including, without limitation, principal and interest  payments,
conditions  precedent,  covenants, representations and  warranties,  events  of
default, breach of contract and remedies.
     
Payment of Principal and Interest

     Pan-Western  will pay to the Issuer accrued interest and  principal  on  a
monthly  basis  according to a schedule that will be designed,  ultimately,  to
provide  the Issuer sufficient funds for it to pay principal, premium, if  any,
and  interest when due on the Exchange Notes. The interest to be charged on the
Issuer  Loan will be established based on the interest rate applicable  to  the
Exchange Notes.
     
Prepayments

     Voluntary  Prepayments.  The Issuer Loan will not  be  repayable  by  Pan-
Western without the consent of the Issuer.
     
     Mandatory Prepayments. After payment of principal and interest and certain
operating  expenses,  the  Issuer Loan will require that  Pan-Western  use  all
available funds to prepay the Issuer Loan.
     
Certain Covenants of Pan-Western

     Repayment  of  Indebtedness. Pan-Western shall repay all  debt,  including
without limitation, all sums due under the Issuer Loan Agreement.
     
     Existence;  Conduct  of  Business. Except as otherwise  permitted  by  the
Indentures, Pan-Western shall maintain and preserve its existence as  a  Cayman
Islands exempted company with limited liability and all rights, privileges  and
franchises  necessary or desirable in the normal conduct of its  business,  and
engage  only  in  the  business  contemplated by the  Indentures,  the  Luannan
Financing Agreements and the Luannan Project Documents.
     
     Use of Funds. Pan-Western will use the proceeds of the Issuer Loan only to
make  (i)  the  Shareholder  Loans and (ii) the JV Equity  Contributions.  Pan-
Western  will  advance monies to the Joint Ventures (whether  in  the  form  of
installments of the Shareholder Loans or installments of the JV Company  Equity
Contributions) only in the manner contemplated by the Indentures and  described
above under "--The Funds--The Issuer Funds."
     
     Compliance  with  Legal  Requirements.  Pan-Western  shall  promptly   and
diligently  procure,  maintain  and  comply  with  or  cause  to  be  procured,
maintained  or complied with all governmental approvals required for  financing
of  the  Joint  Ventures  and  the transactions  contemplated  by  the  Luannan
Financing  Documents,  and except that Pan-Western  may,  at  its  expense  and
subject to certain conditions, contest by appropriate proceedings conducted  in
good faith the validity or application of any such legal requirements.
     
     Operating  Budget.  Pan-Western shall deliver  to  the  Issuer  an  annual
operating budget in advance of each calendar year.
     
     Records  and Financial Statements. Provisions with respect to records  and
financial  statements  substantially mirror those of the  comparable  provision
within  the  Shareholder  Loan Agreements. See above  "--The  Shareholder  Loan
Agreements--Records and Financial Statements."
     
     Progress Report, Project Report and Project Budget. Pan-Western,  as  soon
as  practicable upon the receipt thereof, shall forward to the Issuer  any  and
all progress reports, project reports and project budgets that it receives from
the Joint Ventures.
     
     Taxes; Increased Costs. Pan-Western shall pay and discharge all taxes  and
governmental charges or levies imposed on it. If any change of law subjects the
Issuer  to  any  tax, duty or other charge with respect to the Issuer  Loan  or
changes the basis of taxation of payments by Pan-Western to the Issuer  on  the
Issuer Loan (except for certain taxes or changes in the rate of taxation as set
forth  in the Indentures) or imposes on the Issuer any other condition directly
related to the Issuer Loan thereby increasing the cost to the Issuer of making,
issuing, creating, renewing, participating in or maintaining the Issuer Loan or
to  reduce any amount receivable by the Issuer under the Issuer Loan Agreement,
then  Pan-Western  will  reimburse  the Issuer  for  such  increased  costs  or
compensate the Issuer for such reduced amounts.
     
     All  payments  made by Pan-Western shall be made free and  clear  of,  and
without  deduction or withholding for any income, stamp or other taxes, levies,
imposts,  duties,  charges,  fees,  deductions  or  withholdings,  imposed   or
otherwise  (or in the alternative, the initial interest rate established  shall
include  such  charges in addition to the interest rate on the Exchange  Notes)
levied   by  any  governmental  instrumentality,  subject  to  certain  limited
exceptions.
     
     Notices. Provisions with respect to notices substantially mirror those  of
the  comparable provision within the Shareholder Loan Agreements. See above "--
The Shareholder Loan Agreements--Notices."
     
     Luannan Expropriation Event. Upon notice from a Joint Venture of a Luannan
Expropriation  Event,  Pan-Western  shall  endeavor  to  participate   in   any
proceedings  regarding such an event.  In the event that  Pan-Western  receives
payments  from  a Joint Venture with respect to a Luannan Expropriation  Event,
such proceeds shall be used to prepay the Issuer Loan.
     
     Limitation on Indebtedness. Pan-Western shall not create, or be liable for
any  Indebtedness, except the Issuer Loan and additional loans required by  law
from the Issuer.
     
     Limitation on Liens. Pan-Western shall not create or permit to  exist  any
lien other than as contemplated by the Indentures.
     
     Nature of Business. Pan-Western shall not amend or modify its Articles  of
Association  without  the consent of the Issuer and shall  not  engage  in  any
business other than owning its interest in the Joint Ventures.
     
     Limitation on Sale or Lease of Assets. Pan-Western shall not sell,  lease,
assign, transfer or otherwise dispose of its interests, equity or debt, in  the
Joint Ventures other than as contemplated by the Indentures.
     
     Limitation on Merger, Consolidation, Liquidation, Dissolution. Pan-Western
shall  not merge or consolidate with or into any other Person, other  than  the
Issuer or Pan-Sino.
     
     Limitation on Contingent Liabilities. Pan-Western shall not become  liable
as  a  surety, guarantor, accommodation endorser or otherwise, for or upon  the
obligation of any other Person.
     
     Limitation on Loans, Advances or Investments. Pan-Western shall  not  make
or  permit to remain outstanding any loans, extensions of credit or advances to
or  investments  in  (whether  by acquisition of  any  stock,  notes  or  other
securities  or  obligations) any Person except as  expressly  provided  in  the
Luannan Financing Documents, the Luannan Project Documents, or the Indentures.
     
     Limitations   on  Distributions.  Other  than  as  contemplated   by   the
Indentures,  Pan-Western shall not agree to any restriction on its  ability  to
pay dividends (excluding restrictions imposed by law).
     
     Limitations  on  Transactions  With Affiliates.  Except  for  the  Luannan
Financing  Documents and the Luannan Project Documents, Pan-Western  shall  not
directly  or  indirectly enter into any transaction with any Person  (including
any  affiliate) other than in the ordinary course of business and on terms  not
less favorable to those available from independent third parties.
     
     Limitation  on Partnerships; Subsidiaries. Except as contemplated  by  the
Luannan  Financing Documents, the Luannan Project Documents or the  Indentures,
Pan-Western shall not become a general or limited partner in any partnership or
a  joint venturer in any joint venture, acquire any ownership interest  in  any
other  Person  or enter into any profit-sharing or royalty agreement  or  other
similar  arrangement whereby Pan-Western's income or profits are, or might  be,
shared  with any other Person, or enter into any management contract or similar
arrangement whereby its business or operations are managed by any other Person.
     
     Limitation  on Amendments. Pan-Western shall not amend any of the  Luannan
Financing Documents or the Luannan Project Documents without the consent of the
Issuer.
     
     Limitation on Assignment. Without the prior written consent of the Issuer,
Pan-Western shall not assign or otherwise transfer its rights under any of  the
Luannan Financing Documents or Luannan Project Documents to which it is a party
or governmental approvals to which it is a party to any Person.
     
     Actions  with  Respect  to  the Joint Ventures.   All  matters  under  the
Shareholder  Loan  Agreements which require the consent  or  approval  of  Pan-
Western shall also require the written consent or approval of the Issuer.
     
Issuer Loan Agreement Events of Default

     The occurrence of any of the following events shall constitute an Issuer
Loan Agreement Event of Default:
     
     (i)   default  in  the  payment of principal of or any interest  on  the
           Issuer  Loan  or other amount owed by Pan-Western  to  the  Issuer
           within 15 banking days after such amounts are due;
     
     (ii)  any  representation or warranty confirmed or made in  any  Luannan
           Financing  Documents  or  the Luannan Project  Documents  by  Pan-
           Western  or  in any writing provided by Pan-Western in  connection
           with  the  transactions contemplated by the Issuer Loan  Agreement
           shall  be found to have been incorrect when made or deemed  to  be
           made;  provided, however, that no Issuer Loan Agreement  Event  of
           Default  shall occur if within sixty (60) days after the  date  on
           which  Pan-Western has actual notice that such incorrect statement
           has  occurred,  Pan-Western shall deliver in good  faith,  to  the
           Issuer an officer's certificate stating in reasonable detail  that
           either  (a) Pan-Western has eliminated any adverse effect relating
           to  such  incorrect statement or (b) Pan-Western has taken  action
           that  it  reasonably  believes will eliminate the  adverse  effect
           relating   to   such  incorrect  statement  within  a   reasonable
           specified time;
     
     (iii) failure  of  Pan-Western to perform or observe certain affirmative
           covenants  under  the  Issuer Loan Agreement  (including  but  not
           limited  to, repayment of indebtedness and use of funds) and  such
           defaults  have  not  been remedied after  the  expiration  of  the
           applicable grace period, if any;
     
     (iv)  failure  of  Pan-Western to observe any of the negative  covenants
           under  the Issuer Loan Agreement and such defaults have  not  been
           remedied  prior to the expiration of any applicable cure or  grace
           period;
     
     (v)   voluntary and involuntary bankruptcy or insolvency events of  Pan-
           Western;  subject  to  customary cure and replacement  rights  for
           involuntary bankruptcy;
     
     (vi)  entry of a final judgment or judgments against Pan-Western in  the
           aggregate  amount  of $1.0 million (exclusive of judgment  amounts
           fully   covered  by  insurance  where  the  insured  has  admitted
           liability)  subject  to  customary  payment,  dismissal  or   stay
           rights;
     
     (vii) Pan-Western  shall  default  for a period  beyond  any  applicable
           grace  period in the payment of any principal, interest  or  other
           amount  due under any agreement involving the borrowing  of  money
           or  the advance of credit and the outstanding amount payable under
           all  such  agreements in the aggregate equals or exceeds $500,000;
           and
     
     (viii)any Default under the Shareholder Loan Agreements.
     
                             PLAN OF DISTRIBUTION
                                       
      Each Broker-Dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in  connection  with  any resale  of  such  Exchange  Notes.   This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Broker-Dealer in connection with resales of Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired as result of market
making activities or other trading activities. The Company  and  the Issuer
have agreed to  make available for a period  of  up to 270  days  a prospectus
meeting the requirements of the Securities Act to any Broker-Dealer for use in
connection with any such resale so long as they notify the Issuer or the
Company in writingwithin 30 business days after the consummation of the
Exchange Offer that they have acquired Exchange Notes for their own account. A
broker-dealer that delivers such a prospectus to a purchaser in connection with
resales will be subject to certain of the civil liability provisions under the
Securities Act and will be bound  by  the provisions of the Registration Rights
Agreement (including certain indemnification  provisions).   In addition, until
_____________, 1997 (90 days from the date of this Prospectus),  all  dealers
effecting transactions in the Exchange Notes may be  required to deliver  a
prospectus. See "The Exchange Offer Procedures for Tendering."

      Each  holder  of  Old Notes who wishes to exchange  such  Old  Notes  for
Exchange  Notes  in  the  Exchange  Offer will  be  required  to  make  certain
representations, including representations that (i) any Exchange  Notes  to  be
received by it will be acquired in the ordinary course of its business (whether
or  not  it  is the registered holder of such Exchange Notes), (ii) it  has  no
arrangement  with  any  person to participate in the distribution  (within  the
meaning  of the Securities Act) of the Exchange Notes and (iii) it  is  not  an
Affiliate  of  the  Issuer or the Company, or if it is an  Affiliate,  it  will
comply  with  the  registration  and prospectus delivery  requirements  of  the
Securities Act to the extent applicable.

     Neither the Issuer nor the Company will receive any proceeds from any sale
of Exchange Notes by broker-dealers.  Exchange Notes received by broker-dealers
for  their own account pursuant to the Exchange Offer may be sold from time  to
time  in one or more transactions in the over-the-counter market, in negotiated
transactions,  through  the  writing of options on  the  Exchange  Notes  or  a
combination of such methods of resale, at market prices prevailing at the  time
of  resale, at prices related to such prevailing market prices or at negotiated
prices.  Any  such resale may be made directly to purchasers or to  or  through
brokers  or dealers who may receive compensation in the form of commissions  or
concessions  from  any  such broker-dealer and/or the purchasers  of  any  such
Exchange  Notes.   Any  broker-dealer that resells  Exchange  Notes  that  were
received  by  it  for its own account pursuant to the Exchange  Offer  and  any
broker or dealer that participates in a distribution of such Exchange Notes may
be  deemed to be an "underwriter" within the meaning of the Securities Act  and
any  profit  on  any  such  resale of Exchange Notes  and  any  commissions  or
concessions  received  by  any such persons may be deemed  to  be  underwriting
compensation under the Securities Act.  The Letter of Transmittal  states  that
by acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer  will  not  be  deemed to admit that it is an "underwriter"  within  the
meaning of the Securities Act.

      The Company and the Issuer have agreed to pay all expenses incidental  to
the  Exchange  Offer other than commissions and concessions of any  brokers  or
dealers and will indemnify holders of the Exchange Notes (including any brokers
or  dealers)  against  certain  liabilities, including  liabilities  under  the
Securities Act, as set forth in the Registration Rights Agreement.

                                  EXPERTS                          
Independent Accountants
                                       
      The  consolidated financial statements of the Issuer as of  December  31,
1995  and  1996  and  for  the period from inception (July  20,  1994)  through
December 31, 1994, for the years ended December 31, 1995 and 1996 and  for  the
period  from  inception  (July 20, 1994) through December  31,  1996,  and  the
consolidated  financial statements of the Company as of December 31,  1995  and
1996  and  for  each of the three years in the period ended December  31,  1996
included  in  this  Prospectus have been audited  by  Deloitte  &  Touche  LLP,
independent accounts, as stated in their reports appearing herein.  Deloitte  &
Touche   LLP  has  neither  examined  nor  compiled  the  prospectie  financial
information  appearing  in  the  Prospectus  and  the  Appendices  hereto  and,
accordingly,  does not express an opinion or any other form of  assurance  with
respect thereto.

                                               

Independent Engineers and Consultants
     
	Consolidated Pro Forma

     ICF Resources, Incorporated, a subsidiary of ICF Kaiser International, has
prepared  a  report entitled "Summary of the Consolidated Pro  Forma  of  Panda
Global  Holdings,  Inc.,"  dated April 11, 1997, updated June 6, 1997 (the  
"Consolidated  Pro  Forma Report"), included as Appendix C to this Prospectus. 
The Consolidated Pro Forma Report  is  included  herein in reliance upon such 
firm as experts in energy economics and financial analysis. The Consolidated 
Pro Forma Report should  be read  in its entirety by all prospective investors
for an understanding of  the reliance  placed by ICF on pro forma projections
prepared by Burns &  McDonnell and of the methods of calculating the debt 
coverage ratios projected therein.
     
	Luannan Facility

     Parsons  Brinckerhoff Energy Services, Inc. has prepared a report entitled
"Engineer's  Review  and  Report--2x50 MW Coal-Fired Power  Plant  at  Luannan,
China," dated April 11, 1997, and with an update report dated June 6, 1997  (as
updated,  the  "Luannan Engineering Report"), included as Appendix  D  to  this
Prospectus.  The Luannan Engineering Report is included herein in  reliance  on
such firm as experts in preparing engineering reports for similar projects. The
Luannan  Engineering Report should be read in its entirety by  all  prospective
investors for information with respect to the Luannan Facility and the  related
subjects discussed therein.
     
     Marston  &  Marston  has prepared a report entitled "Review  of  the  Coal
Supply   Arrangements   for  the  Luannan  Power  Project   of   Panda   Energy
International,  Inc.," dated April 11, 1997, and with an  update  report  dated
June 6, 1997 (as updated, the "Luannan Coal Consultant's Report"), included  as
Appendix E to this Prospectus. The Luannan Coal Consultant's Report is included
herein  in  reliance  on such firm as experts in analyzing the  coal  industry,
including  coal  supply and transportation arrangements for  independent  power
projects.  The Luannan Coal Consultant's Report should be read in its  entirety
by  all  prospective  investors for information with  respect  to  the  Luannan
Facility and the related subjects discussed therein.

	Rosemary Facility

     Burns   &   McDonnell  has  prepared  a  report  entitled  "Panda-Rosemary
Cogeneration  Project Condition Assessment Report," dated April 11,  1997,  and
with an update report dated June 6, 1997 (as updated, the "Rosemary Engineering
Report"). The Rosemary Engineering Report is summarized herein in reliance upon
such  firm as experts in preparing independent engineering reports for  similar
projects.  The  Rosemary  Engineering Report is filed  as  an  exhibit  to  the
Registration  Statement on Form S-1, filed with the Commission, of  which  this
Prospectus forms a part.
     
     Benjamin  Schlesinger and Associates, Inc. has prepared a report  entitled
"Assessment  of  Fuel Price, Supply and Delivery Risks for  the  Panda-Rosemary
Cogeneration Project," dated September 20, 1996, as updated on April  11,  1997
and   as  further  updated  June  6,  1997  (as  updated,  the  "Rosemary  Fuel
Consultant's  Report").  The Rosemary Fuel Consultant's  Report  is  summarized
herein  in  reliance upon such firm as experts in preparing  fuel  consultant's
reports for similar projects. The Rosemary Fuel Consultant's Report is filed as
an exhibit to the Registration Statement on Form S-1 filed with the Commission,
of which this Prospectus forms a part.
     
	Brandywine Facility

     ICF  Resources Incorporated, a subsidiary of ICF Kaiser International, has
prepared   a   report   entitled   "Independent  Panda-Brandywine   Pro   Forma
Projections,"  dated April 11, 1997, and with an update report  dated  June  6,
1997  (as updated, the "Brandywine Pro Forma Report"). The Brandywine Pro Forma
Report  is  summarized  herein in reliance on such firm as  experts  in  energy
economics and financial analysis. The Brandywine Pro Forma Report is  filed  as
an  exhibit  to  the  Registration  Statement  on  Form  S-1,  filed  with  the
Commission, of which this Prospectus forms a part.
     
     Pacific  Energy Systems, Inc. has prepared a report entitled  "Independent
Engineer's Report Panda-Brandywine Cogeneration Project," dated July 22,  1996,
as  updated on April 11, 1997, and as further updated June 6, 1997 (as updated,
the  "Brandywine  Engineering Report"). The Brandywine  Engineering  Report  is
summarized  herein in reliance on such firm as experts in preparing independent
engineering reports for similar projects. The Brandywine Engineering Report  is
filed  as an exhibit to the Registration Statement on Form S-1, filed with  the
Commission, of which this Prospectus forms a part.
     
     C.C.   Pace  Resources,  Inc.  has  prepared  a  report  entitled  "Panda-
Brandywine, L.P. Generating Facility Fuel Consultant's Report," dated  July  2,
1996,  as  updated on April 11, 1997, and as further updated June 6,  1997  (as
updated,  the  "Brandywine  Fuel Consultant's Report").   The  Brandywine  Fuel
Consultant's Report is summarized herein in reliance upon such firm as  experts
in  preparing  fuel consultant's reports for similar projects.  The  Brandywine
Fuel  Consultant's Report is filed as an exhibit to the Registration  Statement
on Form S-1, filed with the Commission, of which this Prospectus forms a part.
     
                                 LEGAL MATTERS
     
     The  validity of the issuance of the Exchange Notes is being  passed  upon
for  the Issuer, the Company and the Joint Ventures by Chadbourne & Parke  LLP.
Certain  legal matters with respect to PRC law are being passed  upon  for  the
Issuer,  the Company and the Joint Ventures by Cai, Zhang & Lan. Certain  legal
matters  with respect to the Cayman Islands law are being passed upon  for  the
Issuer and the Company by Maples & Calder.




                          INDEX TO FINANCIAL STATEMENTS

FINANCIAL STATEMENTS OF THE COMPANY:

Panda Global Holdings, Inc. and Subsidiaries Consolidated Financial Statements:

   Independent Accountants' Report .....................................    F-3

   Consolidated Balance Sheets as of December 31, 1995 and 1996 ........    F-4

   Consolidated Statements of Operations for the years ended
     December 31, 1994, 1995 and 1996 ..................................    F-5

   Consolidated Statements of Shareholder's Deficit for the years
     ended December 31, 1994, 1995 and 1996 ............................    F-6

   Consolidated Statements of Cash Flows for the years ended
     December 31, 1994, 1995 and 1996 ..................................    F-7

   Notes to Consolidated Financial Statements for the years ended
     December 31, 1994, 1995 and 1996 ..................................    F-8

Panda Global Holdings, Inc. and Subsidiaries Unaudited Condensed
Consolidated Financial Statements:

   Condensed Consolidated Balance Sheets as of December 31, 1996
     and March 31, 1997 ................................................    F-21

   Condensed Consolidated Statements of Operations for the three
     months ended March 31, 1996 and 1997 ..............................    F-22

   Condensed Consolidated Statements of Shareholder's Deficit for
     the three months ended March 31, 1997 .............................    F-23

   Condensed Consolidated Statements of Cash Flows for the three
     months ended March 31, 1996 and 1997 ..............................    F-24

   Notes to Condensed Consolidated Financial Statements for the
     three months ended March 31, 1996 and 1997 ........................    F-25

                                       F-1
<PAGE>
INDEX TO FINANCIAL STATEMENTS - CONTINUED

FINANCIAL STATEMENTS OF THE ISSUER:

Panda Global Energy Company and Subsidiaries Consolidated Financial Statements:

   Independent Accountants' Report ......................................   F-27

   Consolidated Balance Sheets as of December 31, 1995 and 1996  ........   F-28

   Consolidated Statements of Operations for the period from
     inception (July 20, 1994) through December 31, 1994, the
     years ended December 31, 1995 and 1996, and the period
     from inception through December 31, 1996 ...........................   F-29

   Consolidated Statements of Cash Flows for the period from
     inception (July 20, 1994) through December 31, 1994, the
     years ended December 31, 1995 and 1996, and the period
     from inception through December 31, 1996 ...........................   F-30

   Consolidated Statements of Shareholder's Deficit for the
     period from inception (July 20, 1994) through December
     31, 1994 and the years ended December 31, 1995 and 1996 ............   F-31

   Notes to Consolidated Financial Statements for the period
     from inception (July 20, 1994) through December 31, 1994,
     the years ended December 31, 1995 and 1996, and the
     period from inception through December 31, 1996 ....................   F-32

Panda Global Energy Company and Subsidiaries Unaudited
Condensed Consolidated Financial Statements:

   Condensed Consolidated Balance Sheets as of December 31,
     1996 and March 31, 1997 ............................................   F-34

   Condensed Consolidated Statements of Operations and
     Deficit Accumulated During the Development Stage for
     the three months ended March 31, 1996 and 1997 and
     for the period from inception (July 20, 1994) through
     March 31, 1997 .....................................................   F-35

   Condensed Consolidated Statements of Cash Flows for the
     three months ended March 31, 1996 and 1997 and for the
     period from inception (July 20, 1994) through March 31, 1997 .......   F-36

   Notes to Condensed Consolidated Financial Statements for
     the three months ended March 31, 1996 and 1997 and for
     the period from inception (July 20, 1994) through March 31, 1997 ...   F-37

                                       F-2
<PAGE>
                         INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors
of Panda Energy International, Inc.

We have audited the accompanying consolidated balance sheets of Panda Global
Holdings, Inc. and subsidiaries (the "Company") as of December 31, 1995 and
1996, and the related consolidated statements of operations, shareholder's
deficit and cash flows for each of the three years in the period ended December
31, 1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1995
and 1996, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Dallas, Texas
April 9, 1997

                                       F-3
<PAGE>
                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1995 AND 1996

                                     ASSETS
                                                     1995             1996
                                                 -------------    -------------
Current Assets:
   Cash and cash equivalents .................   $   1,166,385    $   1,335,086
   Restricted cash -- current ................       1,876,142       17,809,921
   Accounts receivable .......................       5,199,999        9,402,685
   Fuel oil, spare parts and supplies ........       3,084,168        7,913,777
   Other current assets ......................          12,664          164,905
                                                 -------------    -------------
      Total current assets ...................      11,339,358       36,626,374

Plant and equipment:
   Electric generating facilities ............     105,168,094      288,716,711
   Furniture and fixtures ....................          29,080          494,418
   Less accumulated depreciation .............     (21,008,036)     (26,539,539)
   Construction in progress ..................     132,604,494             --
   Development costs .........................       3,350,924        6,053,361
                                                 -------------    -------------
      Total plant and equipment, net .........     220,144,556      268,724,951

Restricted cash -- debt service
   reserves and escrow deposits ..............      10,947,948       32,548,366
Debt issuance costs, net of accumulated
   amortization of $3,169,285 and
   $165,015, respectively ....................       3,990,655        7,570,521
Partnership formation costs, net of
   accumulated amortization of $2,132,440
   and $2,665,540 respectively ...............         533,100             --
                                                 -------------    -------------
                                                 $ 246,955,617    $ 345,470,212
                                                 =============    =============

                     LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
   Accounts payable and accrued expenses:
      Construction costs .....................   $   5,597,818    $     660,167
      Interest and letter of credit fees .....       2,540,347        6,297,558
      Operating expenses and other ...........       1,219,061        6,991,796
   Current portion of long-term debt .........       9,100,000        5,717,623
                                                 -------------    -------------
      Total current liabilities ..............      18,457,226       19,667,144

Long term debt, less current portion .........     234,608,361      209,830,918
Capital lease obligation .....................            --        217,488,645
Minority interest ............................      36,835,666             --
Commitments and contingencies
   (Notes 2, 5 and 8) ........................            --               --
Shareholder's deficit:
   Common stock, par value $.01; 1,000
      shares authorized, issued and
      outstanding ............................              10               10
   Advances to parent ........................     (26,869,548)     (52,782,940)
   Accumulated deficit .......................     (16,076,098)     (48,733,565)
                                                 -------------    -------------
      Total shareholder's deficit ............     (42,945,636)    (101,516,495)
                                                 -------------    -------------
                                                 $ 246,955,617    $ 345,470,212
                                                 =============    =============

          See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>
                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
                                                       1994           1995           1996
                                                   ------------   ------------   ------------
<S>                                                <C>            <C>            <C>         
Revenue:
   Electric capacity and energy sales ...........  $ 30,664,096   $ 29,858,475   $ 32,273,736
   Steam and chilled water sales ................       650,575        473,040        502,757
   Interest income ..............................       602,783        895,268      1,518,006
                                                   ------------   ------------   ------------
                                                     31,917,454     31,226,783     34,294,499
                                                   ------------   ------------   ------------

Expenses:
   Plant operating expenses .....................     8,940,146      9,347,707     12,050,495
   Project development and administrative .......     1,779,349      2,550,376      5,187,348
   Interest expense and letter of credit fees ...    11,017,418     11,715,929     19,414,012
   Depreciation .................................     4,208,314      4,209,453      5,531,502
   Amortization of debt issuance costs ..........       600,382        554,311        493,799
   Amortization of partnership formation costs ..       533,116        533,116        533,100
                                                   ------------   ------------   ------------
                                                     27,078,725     28,910,892     43,210,256
                                                   ------------   ------------   ------------

Income (loss) before minority interest
  and extraordinary item ........................     4,838,729      2,315,891     (8,915,757)
Minority interest ...............................    (5,699,994)    (5,047,580)    (2,405,160)
                                                   ------------   ------------   ------------
Loss before extraordinary item ..................      (861,265)    (2,731,689)   (11,320,917)
Extraordinary item - loss on
  early extinguishment of debt ..................          --             --      (21,336,550)
                                                   ------------   ------------   ------------

Net loss ........................................  $   (861,265)  $ (2,731,689)  $(32,657,467)
                                                   ============   ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>
                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDER'S DEFICIT
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
                                                                       Total
                             Common     Advances     Accumulated    Shareholder's
                              Stock    to Parent       Deficit        Deficit
                            --------  ------------   ------------   -------------
<S>                         <C>       <C>            <C>            <C>           
Balance, January 1, 1994 .  $     10  $ (8,152,454)  $(12,483,144)  $ (20,635,588)
Advances to parent .......      --      (5,712,475)          --        (5,712,475)
Net loss .................      --            --         (861,265)       (861,265)
                            --------  ------------   ------------   ------------- 
Balance, December 31, 1994        10   (13,864,929)   (13,344,409)    (27,209,328)
Advances to parent .......      --     (13,004,619)          --       (13,004,619)
Net loss .................      --            --       (2,731,689)     (2,731,689)
                            --------  ------------   ------------   ------------- 
Balance, December 31, 1995        10   (26,869,548)   (16,076,098)    (42,945,636)
Advances to parent .......      --     (25,913,392)          --       (25,913,392)
Net loss .................      --            --      (32,657,467)    (32,657,467)
                            --------  ------------   ------------   ------------- 
Balance, December 31, 1996  $     10  $(52,782,940)  $(48,733,565)  $(101,516,495)
                            ========  ============   ============   =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>
                PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
                                                           1994            1995            1996
                                                       ------------   -------------   -------------
<S>                                                    <C>            <C>             <C>           
OPERATING ACTIVITIES:
   Net loss .........................................  $   (861,265)  $  (2,731,689)  $ (32,657,467)
   Adjustments to reconcile net loss to net cash
   provided by  operating activities:
      Loss on early extinguishment of debt ..........          --              --        21,336,550
      Minority interest .............................     5,699,994       5,047,580       2,405,160
      Depreciation ..................................     4,208,314       4,209,453       5,531,502
      Amortization of debt issuance costs ...........       600,382         554,311         493,799
      Amortization of partnership formation costs ...       533,116         533,116         533,100
      Amortization of loan discount and deferred
       interest .....................................          --           124,176         391,491
   Changes in assets and liabilities:
      Accounts receivable ...........................    (2,454,524)        460,319      (4,202,686)
      Fuel oil, spare parts and supplies ............       (33,698)        261,516      (4,829,609)
      Other current assets ..........................         6,646          26,484        (152,241)
      Accounts payable and accrued expenses .........      (114,382)        (81,728)      9,529,946
                                                       ------------   -------------   -------------
            Net cash provided by operating activities     7,584,583       8,403,538      (1,620,455)
                                                       ------------   -------------   -------------
INVESTING ACTIVITIES:
   Restricted cash-current ..........................     2,847,429         695,684     (15,933,779)
   Additions to plant and equipment .................    (5,045,085)   (124,109,566)    (62,881,838)
   Acquisition of minority interest .................          --              --       (34,256,423)
   Increase in restricted cash -- debt service
       reserves and escrow deposits .................      (457,538)       (747,655)    (21,600,418)
                                                       ------------   -------------   -------------
         Net cash used in investing activities ......    (2,655,194)   (124,161,537)   (134,672,458)
                                                       ------------   -------------   -------------
FINANCING ACTIVITIES:
   Distributions to minority interest owner .........    (4,590,354)     (3,800,279)     (1,152,113)
   Advances to parent ...............................    (6,954,287)    (13,004,619)    (25,913,392)
   Proceeds from long-term debt .....................    16,534,706     147,541,291     299,677,926
   Repayment of long-term debt ......................    (7,500,000)    (17,500,000)   (128,415,271)
   Debt issuance costs ..............................      (498,281)       (334,391)     (7,735,536)
                                                       ------------   -------------   -------------
         Net cash provided by (used in)
          financing activities ......................    (3,008,216)    112,902,002     136,461,614
                                                       ------------   -------------   -------------

Increase (decrease) in cash and cash equivalents ....     1,921,173      (2,855,997)        168,701

Cash and cash equivalents, beginning of period ......     2,101,209       4,022,382       1,166,385
                                                       ------------   -------------   -------------

Cash and cash equivalents, end of period ............  $  4,022,382   $   1,166,385   $   1,335,086
                                                       ============   =============   =============

SUPPLEMENTAL CASH FLOW INFORMATION:
   Interest paid, net of amounts capitalized ........  $ 10,855,819   $  11,799,297   $  15,656,801

NON CASH INVESTING AND FINANCING ACTIVITIES:
   Accrued construction costs .......................  $  1,489,412   $   5,597,818   $     660,167
   Interest cost ....................................          --           153,861         172,924
   Debt discount ....................................     1,241,812            --              --
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-7
<PAGE>
                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

1. ORGANIZATION AND BASIS OF PRESENTATION

      Panda Global Holdings, Inc. ("Panda Global", or collectively with its
subsidiaries the "Company"), a wholly owned subsidiary of Panda Energy
International, Inc. ("PEII"), was formed in March 1997 to hold the ownership
interests in four independent power projects which were formerly owned by other
wholly owned subsidiaries of PEII. The ownership interests were transferred to
the Company at PEII's historical cost. Because the transfers occurred between
entities under common control, the transactions have been accounted for in a
manner similar to a pooling of interests. Panda Global has two direct wholly
owned subsidiaries: Panda Energy Corporation ("PEC")( a Texas corporation) which
indirectly holds the Company's ownership interests in domestic projects, and
Panda Global Energy Company ("Global Cayman")(a Cayman Islands company), which
indirectly holds the Company's ownership interest in an international project
located in China.

      PEC, through its wholly owned subsidiary Panda Interfunding Corporation
("PIC") and PIC's wholly owned subsidiary Panda Interholding Corporation
("Interholding"), holds the Company's ownership interests in the Rosemary
project and the Brandywine project (see Note 5). The entities holding such
ownership interests include the following: Panda Rosemary Corporation ("PRC"), a
91% general partner in Panda-Rosemary, L.P. ("Panda-Rosemary"); PRC II
Corporation ("PRC II"), a 9% limited partner in Panda- Rosemary; Panda
Brandywine Corporation, a 50% general partner in Panda-Brandywine, L.P.
("Panda-Brandywine"); Panda Energy Corporation (a Delaware corporation), a 50%
limited partner in Panda-Brandywine; and Brandywine Water Company. The Company,
through its general and limited partnership interests, owns 100% of
Panda-Brandywine and, as of July 31, 1996, owns 100% of Panda-Rosemary. Prior to
July 31, 1996, the Company owned 10% of Panda-Rosemary (see Note 5). The
Rosemary and Brandywine projects are located in the United States. Other direct
or indirect wholly owned subsidiaries of PIC include Panda Funding Corporation
("PFC"), Panda-Rosemary Funding Corporation ("PRFC") and Panda Cayman
Interfunding Corporation ("PIC Cayman"), which have been formed to facilitate
the financing of the development and acquisition of independent power projects.

      Additionally, PEC holds the Company's 100% ownership interest in the
Kathleen project (see Note 5) through its wholly owned subsidiaries.

      Global Cayman (which collectively with its subsidiaries is a development
stage enterprise having no operating revenues) holds a 95.5% ownership interest
in Pan-Sino Energy Development Company LLC ("Pan-Sino")(a Cayman Islands
company), which in turn holds a 99% ownership interest in Pan-Western Energy
Corporation LLC ("Pan-Western")(a Cayman Islands company), which in turn owns an
approximately 88% interest in four joint venture companies (the "Joint Venture
Companies") organized under the laws of the People's Republic of China ("China")
to develop and construct an independent power project to be located in China
(see Note 5). The Joint Venture Companies are: Tangshan Panda Heat and Power
Company, Ltd. ("Tangshan Panda"), Tangshan Pan-Western Heat and Power Company,
Ltd. ("Tangshan Pan-Western"), Tangshan Cayman Heat and Power Company, Ltd.
("Tangshan Cayman") and Tangshan Pan-Sino Heat Company, Ltd. ("Tangshan
Pan-Sino").

	Collectively, PEC, Pan-Sino and Pan-Western are the predecessors 
of the Company.

      All material intercompany accounts and transactions have been eliminated
in consolidation.

2. SIGNIFICANT ACCOUNTING POLICIES

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

      CASH -- Included in cash and cash equivalents are highly liquid
investments with original maturities of three months or less.

      RESTRICTED CASH - CURRENT -- Restricted cash-current represents escrowed
cash which may be used to pay operating expenses and make debt payments and
distributions to partners pursuant to the trust indenture agreements.

                                      F-8
<PAGE>
      RESTRICTED CASH - DEBT SERVICE RESERVES AND ESCROW DEPOSITS -- Debt
service reserves and escrow deposits include cash held by the bank to pay debt
service and capital improvements pursuant to the trust indenture agreements, or
as collateral for performance guarantees for projects under development or
construction.

      FUEL OIL, SPARE PARTS AND SUPPLIES -- These items include fuel oil stored
on-site and various spare parts and supplies necessary for plant maintenance.
The items are valued at cost using the weighted average method, and are
expensed, as plant operating expenses, when used.

      PLANT AND EQUIPMENT -- Electric generating facility assets are recorded at
cost and depreciated using the straight-line method over the estimated useful
lives of the assets, generally twenty-five years. Depreciation of office
furniture, equipment, and leasehold improvements is provided using the
straight-line method over the estimated useful lives of the assets, generally
three to five years. Costs, including interest on funds borrowed to finance the
construction of facilities, related to projects under construction are
capitalized as construction in progress. Construction in progress balances are
transferred to electric generating facilities when the assets are ready for
their intended use. Capitalized interest was $803,254, $5,793,296 and
$11,055,172 during 1994, 1995 and 1996, respectively. Maintenance and repair
costs are charged to expense as incurred. Costs of developing new projects are
capitalized when the projects reach an advanced stage of development where the
execution of a power purchase agreement has occurred or is imminent. Such costs
include direct incremental amounts incurred for professional services, permits,
options, travel and other related costs. The continued capitalization is subject
to on-going risks related to successful completion, including legal, political,
siting, financing, construction, permitting and contract compliance. Development
costs are transferred to construction in progress when financing has been
obtained and construction activity has commenced, or are expensed at the time
the Company determines that a particular project will no longer be developed.
Other projects currently under development by PEII may be transferred to the
Company at PEII's historical cost when construction financing has been obtained
or when the completed projects have commenced commercial operations, subject to
certain limitations in the Company's indentures (see Note 6).

      DEBT ISSUANCE COSTS -- The costs related to the issuance of debt are
capitalized and amortized using the effective interest method over the term of
the related debt.

      PARTNERSHIP FORMATION COSTS -- The costs related to the formation of
Panda-Rosemary are capitalized and amortized over five years.

      ENVIRONMENTAL MATTERS -- The operations of the Company are subject to
federal, state and local laws and regulations relating to protection of the
environment. Although the Company believes that its operations are in compliance
with applicable environmental regulation, risks of additional costs and
liabilities are inherent in cogeneration operations, and there can be no
assurance that significant costs and liabilities will not be incurred by the
Company. Management is not aware of any contingent liabilities that currently
exist with respect to environmental matters.

      Environmental expenditures are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue generation, are expensed.
Liabilities are recorded if environmental assessments and/or remedial efforts
become probable, and the costs reasonably estimable.

      REVENUE RECOGNITION -- Revenue generated from the sale of electric
capacity and energy from the Rosemary and Brandywine projects is recognized
based on the amount billed under the power purchase agreements. The revenue
generated from the sale of electric capacity and energy from other projects will
be recognized based on the lesser of the amount billable under the power
purchase agreement or an amount determined by the annual kilowatts made
available multiplied by the estimated average revenue per kilowatt over the term
of the power purchase agreement. Revenue from the sale of steam and chilled
water is recognized based on the output delivered at rates specified under
contract terms.

      INCOME TAXES -- The Company records income taxes according to Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS 109)
which requires deferred tax liabilities or assets to be recognized for the
anticipated future tax effects of temporary differences that arise as a result
of the differences in the carrying amounts and the tax bases of assets and
liabilities. SFAS 109 also requires a valuation allowance for deferred tax
assets in certain circumstances.

      The Company is included in the consolidated federal income tax return of
PEII. PEII's policy is to allocate income tax expense or benefits to the Company
as if it filed a separate tax return.

                                      F-9
<PAGE>
      ALLOCATION OF ADMINISTRATIVE COSTS -- PEII performs certain accounting,
legal, insurance, and consulting services for the Company. These general and
administrative costs are generally allocated to the Company using the percentage
of time PEII personnel spent performing these services. The expenses allocated
were $1,003,353, $1,599,200 and $3,308,000 in 1994, 1995 and 1996, respectively,
and are included in project development and administrative expenses in the
statement of operations. Management believes the method used to allocate these
costs is reasonable.

      NEW ACCOUNTING PRONOUNCEMENTS -- In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" (SFAS 121). SFAS 121 is effective for financial statements for
fiscal years beginning after December 15, 1995 and requires the write-down of
certain long-lived assets if circumstances indicate that the carrying value of
those assets may not be recoverable. The Company adopted SFAS 121 in 1996 and
such adoption did not have a material impact on its financial position or
results of operations.

      INTEREST COST -- Total interest cost incurred, including capitalized
interest, was $11,820,672, $17,509,225 and $30,469,184 in 1994, 1995 and 1996,
respectively.

3.  ADVANCES TO PARENT

      Advances to parent represent cash advances to the parent, allocations of
general and administrative expenses from the parent, and the excess of
liabilities assumed over the assets contributed on projects owned by the parent
and contributed in connection with the formation of the Company.

      The advances to parent for the years ended December 31, 1994, 1995 and
1996 consist of the following:


       Balance, January 1, 1994 .........................  $  8,152,454
       Cash advanced to parent, net .....................     7,957,640
       Administrative  costs allocated from parent ......    (1,003,353)
       Debt discount allocated from parent ..............    (1,241,812)
                                                           ------------

       Balance, December 31, 1994 .......................    13,864,929
       Cash advanced to parent, net .....................    14,603,819
       Administrative  costs allocated from parent ......    (1,599,200)
                                                           ------------

       Balance, December 31, 1995 .......................    26,869,548
       Cash advanced to parent, net .....................    29,221,392
       Administrative costs allocated from parent .......    (3,308,000)
                                                           ------------

       Balance, December 31, 1996 .......................  $ 52,782,940
                                                           ============

      The average balance of advances to parent was $11,009,000, $20,367,000 and
$39,826,000 during 1994, 1995 and 1996, respectively.

4. FUEL OIL, SPARE PARTS AND SUPPLIES

      Fuel oil, spare parts and supplies are comprised of the following amounts:

                                                1995        1996
                                             ----------  ----------
             Fuel oil .....................  $1,182,310  $3,496,269
             Spare parts and supplies .....   1,901,858   4,417,508
                                             ----------  ----------
                       Total ..............  $3,084,168  $7,913,777
                                             ==========  ==========

                                      F-10
<PAGE>
5. POWER PROJECTS

      ROSEMARY PROJECT -- Effective May 5, 1989, PEII formed a wholly-owned
subsidiary, now a wholly-owned subsidiary of the Company, to develop, construct,
and operate the 180 megawatt gas-fired Rosemary cogeneration facility in Roanoke
Rapids, North Carolina ("Rosemary Project"). Construction on the Rosemary
Project began in September 1989, and commercial operation of the facility began
on December 27, 1990.

      The Rosemary Project produces both electricity and useful thermal energy
in the form of steam. Electric capacity and energy sales are based on the terms
of the power purchase agreement between Panda-Rosemary and Virginia Electric
Power Company ("VEPCO") dated January 24, 1989. The agreement requires
Panda-Rosemary to provide VEPCO with all the available capacity of the Rosemary
Project on an as-needed basis with VEPCO obligated to pay for the power
delivered and dependable capacity of the facility at a rate per kilowatt which
decreases in certain periods as defined by the agreement. The term of the
agreement is 25 years and it expires December 2015. A financial institution has
provided a letter of credit for approximately $5 million guaranteeing
Panda-Rosemary's performance under the power purchase agreement. Steam and
chilled water are sold to a third party under a separate agreement which also
has a term of 25 years and expires December 2015. The Rosemary Project is
managed by PRC, the general partner, and is operated by an unrelated third party
through 1996.

      On January 6, 1992, PRC contributed substantially all project assets and
liabilities and $216,553 in cash to Panda-Rosemary, in exchange for a 10%
combined general partnership and limited partnership interest. The assets and
liabilities were recorded at historical cost, resulting in $19,874,216 in
partners' deficit being contributed by PRC. An institutional investor
("Investor") contributed $30,948,987 in cash in exchange for a 90% limited
partnership interest. On July 31, 1996, the Company acquired the Investor's
limited partnership interest in Panda-Rosemary for a purchase price of
approximately $34.3 million. As a result of this acquisition, the Company owns
100% of Panda-Rosemary. The acquisition was accounted for using the purchase
method of accounting. The excess of minority interest over the purchase price
(approximately $3.8 million) was allocated to plant and equipment.

      Prior to July 31, 1996, the Investor received percentage allocations of
income, expense, and cash flow which would decline over time if certain rate of
return requirements were achieved. For the duration of the Investor's
participation in Panda-Rosemary, the allocation to the Investor remained at 90%.

      Prior to acquiring the Investor's 90% limited partnership interest on July
31, 1996, the Company controlled Panda-Rosemary through its one percent general
partner interest. As general partner, the Company has exclusive management
authority over the operations of Panda-Rosemary. Accordingly, Panda-Rosemary's
balance sheet as of December 31, 1995, and statements of operations and of cash
flows for the years ended December 31, 1994 and 1995 and for the period January
1, 1996 through July 31, 1996 (in addition to the post-acquisition period) have
been consolidated in the accompanying financial statements. The capital of the
Investor and Panda-Rosemary's net income allocated to the Investor are presented
as minority interest in the accompanying financial statements.

      BRANDYWINE PROJECT -- On August 9, 1991, Panda-Brandywine entered into a
power purchase agreement with Potomac Electric Power Company ("PEPCO") to build
a 230 megawatt gas-fired facility ("Brandywine Project"). The agreement requires
Panda-Brandywine to supply PEPCO with all available capacity from the facility
for the 25-year term of the agreement with a guaranteed dispatch level of at
least 60 hours per week for the first 15 years. The Brandywine Project, in
Brandywine, Maryland, constructed by Raytheon Engineers and Constructors, Inc.
under a fixed fee, turn-key contract was substantially completed and commenced
commercial operations in October, 1996. A construction loan commitment in the
amount of $215 million was provided by General Electric Capital Corporation
("GECC") in April, 1995. On December 30, 1996 the loan converted to a capital
lease with GECC in the amount of $217.5 million with a twenty year term and two
five year renewal options (see Note 6). GECC has provided letters of credit for
approximately $2.3 million guaranteeing Panda-Brandywine's performance under the
agreement. GECC has committed to increase the amount available under letters of
credit to a maximum of approximately $7.3 million under certain circumstances.

      KATHLEEN PROJECT -- In 1991, through a wholly-owned subsidiary, the
Company entered into a 30-year power purchase agreement with Florida Power
Corporation ("Florida Power") to build a 75 megawatt gas-fired facility near
Lakeland, Florida ("Kathleen Project"). The Company and Florida Power are
engaged in litigation before various state and federal forums in Florida over
the interpretation of the Kathleen power purchase agreement (see Note 8). Actual
construction of the Kathleen Project has not yet commenced and is subject to the
outcome of the related litigation and the successful completion of financing.

                                      F-11
<PAGE>
The Company has incurred development costs for the Kathleen Project of $2.8
million as of December 31, 1996, which are included in plant and equipment under
development costs in the accompanying balance sheet.

      LUANNAN PROJECT -- In 1994, PEII entered into a preliminary letter of
intent with a subsidiary of the North China Power Group Company ("NCPGC") for
the purchase and sale of electric energy from two 50 megawatt coal-fired
cogeneration plants to be located in Luannan County, Tangshan Municipality,
Hebei Province, China ("Luannan Project"). On September 22, 1995, Tangshan Panda
and Tangshan Pan-Western (see Note 1) entered into a Power Purchase Agreement
with NCPGC for the purchase and sale of electric energy from the Luannan
Project. Under the terms of the 20-year agreement, all electrical output of the
project will be sold to NCPGC. The steam and hot water generated by
Tangshan-Cayman's facility within the project will be sold to the domestic
Chinese industrial and commercial markets by Tangshan Pan-Sino. The Luannan
Project will be constructed pursuant to a fixed-price, turnkey contract with
Harbin Power Engineering Company Limited, subject to escalation under certain
circumstances. Preliminary construction activity commenced in December 1996.
Commencement of full construction activity is subject to the successful
completion of financing. The Company has incurred development costs for the
Luannan Project of $3.3 million as of December 31, 1996, which are included in
plant and equipment under development costs in the accompanying balance sheet.

      The Luannan Project is subject to political, regulatory and economic
uncertainties, risks of expropriation of property and cancellation or
modification of contract rights, foreign exchange restrictions, construction
risk, dependence on limited number of customers and other risks arising from
foreign governmental sovereignty.


6. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION

      Long-term debt and capital lease obligation of the Company as of December
31, 1995 and 1996 are summarized as follows:

                                                      1995             1996
                                                  -------------   -------------

Taxable Revenue Bonds for Rosemary Project .....  $  90,000,000   $        --
Construction Loan for Brandywine Project .......    134,735,719            --
Term Loan with TCW, net of discount ............     18,972,642            --
First Mortgage Bonds for Rosemary Project ......           --       110,023,541
Series A Bonds .................................           --       105,525,000
                                                  -------------   -------------
Total long-term debt ...........................    243,708,361     215,548,541
Less current portion ...........................     (9,100,000)     (5,717,623)
                                                  -------------   -------------
                                                  $ 234,608,361   $ 209,830,918
                                                  =============   =============

Capital lease obligation for Brandywine Project   $        --     $ 217,488,645

      TAXABLE REVENUE BONDS -- In October 1989, PRC obtained long-term financing
for the Rosemary Project in the form of $116 million of taxable revenue bonds
("Tax Bonds") issued by the Halifax Regional Economic Development Corporation
("Halifax"), a nonprofit corporation organized in North Carolina. In connection
with the issuance of first mortgage bonds for the Rosemary Project in July 1996
as discussed below, the Company refinanced the Tax Bonds and incurred a loss of
$13.3 million on the early extinguishment of that obligation. The Tax Bonds bore
interest at a fixed rate of 9.25% payable semiannually. Scheduled principal
payments began on October 1, 1991. Such principal and interest payments paid by
Panda-Rosemary to Halifax were used to make required payments on the Tax Bonds.

      The Tax Bonds were fully guaranteed by an irrevocable, direct-pay letter
of credit issued by The Fuji Bank, Limited, Houston Agency ("Fuji"). The letter
of credit had a term equal to the term of the Tax Bonds and included annual fees
of .9375% for years 1-5, 1.3125% for years 6-10, and 1.6875% thereafter.

      FIRST MORTGAGE BONDS -- In July 1996, Panda-Rosemary Funding Corporation
("PRFC"), a wholly-owned subsidiary of Panda-Rosemary, issued $111,400,000 of
first mortgage bonds ("Rosemary Bonds"). The Rosemary Bonds bear interest at a
fixed rate of 8-5/8% payable quarterly commencing November 15, 1996. Scheduled
principal payments are required quarterly commencing November 15, 1996, and will
continue through maturity on February 15, 2016. The Rosemary Bonds are subject

                                      F-12
<PAGE>
to mandatory redemption prior to maturity under certain conditions. The Rosemary
Bonds are unconditionally guaranteed by Panda-Rosemary but are non-recourse to
the Company, and are secured by substantially all of the assets of
Panda-Rosemary as well as all of the outstanding capital stock of PRC, PRC II
and PRFC. The indenture contains certain covenants, including limitations on
distributions, additional debt and certain other transactions.

      While amounts are outstanding under the Rosemary Bonds, all revenues of
Panda-Rosemary are paid to a collateral agent. Funds held by the collateral
agent are included in the accompanying consolidated balance sheets as restricted
cash-current. On a monthly basis, the collateral agent remits to Panda-Rosemary
remaining funds available after payment of all expenditures relating to the
Rosemary project, including debt service, provided that Panda-Rosemary is in
compliance with the debt covenants. Additionally, the collateral agent withholds
funds to meet future debt service, maintenance and pollution control
requirements, if required under the indenture. These amounts are included in the
accompanying consolidated balance sheets as restricted cash-current and
restricted cash-debt service reserves and escrow deposits.

      TERM LOAN -- On October 27, 1995, PEII obtained a term loan in the amount
of $20 million from Trust Company of the West ("TCW"). This loan amended and
restated the loan agreement dated November 8, 1994. In July 1996, in connection
with the offering of Series A Bonds as discussed below, a portion of the
proceeds was used to retire all of the term loan debt. The Company incurred a
loss of $8 million on the early extinguishment of this obligation. The loan bore
interest at a rate of 13.5%, payable at a rate of 11.0%. The 2.5% interest not
payable currently was added to the principal balance of the loan.

      Under the loan agreement, TCW also received 1,004,000 warrants to purchase
shares of PEII stock. A loan discount of $1,241,812 was created as a result of
allocating value to the warrants. The carrying value of the warrants is adjusted
annually to the redemption price. Such adjustment, which was allocated to the
Company from PEII until the debt was retired in July 1996, was $153,861 and
$172,924 in 1995 and 1996, respectively, and was recorded as interest expense in
the accompanying statement of operations.

      SERIES A BONDS -- In July 1996, Panda Funding Corporation ("PFC"), a
wholly-owned subsidiary of the Company, issued $105,525,000 of pooled project
bonds ("Series A Bonds"). The Series A Bonds bear interest at a fixed rate of
11-5/8% payable semiannually commencing February 20, 1997. Scheduled principal
payments are required semiannually commencing February 20, 1997 and will
continue through maturity on August 20, 2012. The Series A Bonds are subject to
mandatory redemption prior to maturity under certain conditions. The Series A
Bonds are fully and unconditionally guaranteed by PIC and are guaranteed on a
limited basis by Interholding up to a maximum amount specified by the guarantee
agreement which approximates $25.1 million at December 31, 1996. Additionally,
the Series A Bonds are secured by (i) all of the capital stock of PFC, PIC and
Interholding, (ii) 60% of the capital stock of PIC Cayman, (iii) PIC's interest
in distributions from Interholding, and (iv) certain other collateral. The
Series A Bonds are effectively subordinated to the obligations of PIC's
subsidiaries under project-level financing arrangements. The indenture contains
certain covenants, including limitations on distributions, additional debt and
certain other transactions.

      While amounts are outstanding under the Series A Bonds, all distributions
to PIC from Interholding and certain proceeds received from PIC Cayman will be
paid to a collateral agent. On a monthly basis, the collateral agent will remit
to PIC remaining funds available after satisfaction of PIC's debt service
obligations (including amounts withheld, if necessary, to meet future debt
service and reserve fund requirements as required by the indenture) provided
that PIC is in compliance with the debt covenants.

      In connection with the issuance of the Series A Bonds, the Company
advanced approximately $34.8 million to PEII for project development and general
corporate purposes.

      CONSTRUCTION LOAN AND CAPITAL LEASE -- On April 10, 1995, Panda-Brandywine
closed the initial funding of a $215 million construction loan commitment with
GECC. The construction loan bears an interest rate of the Eurodollar rate plus
2.5%. The construction loan provides for commitments under letters of credit
aggregating approximately $12.4 million of which approximately $5.4 million was
outstanding as of December 31, 1995. The letters of credit have terms up to the
terms of the lease, an annual fee of 1.50% on any amounts outstanding and 1.25%
on the unused commitment and are collateralized by the Brandywine Project.

      The Brandywine Project commenced commercial operations on October 31,
1996. The construction loan was converted to long-term non-recourse financing of
$217.5 million in the form of a capital lease on December 30, 1996. To effect

                                      F-13
<PAGE>
the lease financing, title to the Brandywine Project was transferred to a third
party trustee and leased back to Panda-Brandywine. The Brandywine facility lease
is a net lease with an initial term of 20 years and two five-year renewal
options. The documents governing the lease financing contain various affirmative
and negative covenants, including limitations on the ability of Panda-Brandywine
to make distributions to its partners. In connection with the capital lease
financing, GECC has provided letters of credit of approximately $2.3 million,
which may be increased to approximately $7.3 million under certain
circumstances. The letters of credit have an annual fee of 1.50% on any amounts
outstanding.

      The future minimum lease commitments under the capital lease for the
Brandywine Project are as follows:

            1997 ...................................  $   7,831,527
            1998 ...................................     10,419,439
            1999 ...................................     17,584,915
            2000 ...................................     20,489,320
            2001 ...................................     25,613,918
            Thereafter .............................    501,415,526
                                                      -------------
            Total minimum lease payments ...........    583,354,645
            Amounts representing interest ..........   (365,866,000)
                                                      -------------
            Present value of net minimum payments ..  $ 217,488,645
                                                      =============

      LONG-TERM DEBT MATURITIES -- The principal maturities of long-term
obligations, excluding the capital lease relating to the Brandywine Project, for
each of the five years succeeding December 31, 1996 and thereafter are as
follows:

                  1997 .........................  $  5,717,623
                  1998 .........................     5,816,974
                  1999 .........................     5,926,269
                  2000 .........................     6,024,598
                  2001 .........................     7,229,603
                  Thereafter ...................   184,833,474
                                                  ------------
                                                  $215,548,541
                                                  ============

7. INCOME TAXES

      A provision for income taxes for 1994, 1995 and 1996 has not been recorded
since operating losses were incurred for each year.

      The Company has approximately $45 million of net operating loss
carryforwards at December 31, 1996, the benefits of which will be available to
the Company when realized by PEII. The net operating loss carryforwards will
expire during the years 2007 to 2011. PEII may become subject to a limitation on
the amount of net operating loss carryforwards which may be used annually to
offset income should certain changes in its ownership occur in the future.
Should PEII become subject to such a limitation, the amount of tax benefits
available to the Company could be reduced.

      Deferred tax assets of approximately $4 million and $14 million as of
December 31, 1995 and 1996, respectively, consist primarily of interest in
partnerships and net operating losses and are offset by a valuation allowance.
The deferred tax asset for interest in partnerships relates to the difference
between the tax basis of the assets contributed to the partnership upon its
formation and the Company's financial reporting basis in those assets.

      SFAS No. 109 requires that a valuation allowance be recorded against tax
assets which are not likely to be realized. The Company's carryforwards expire
at specific future dates and utilization of certain carryforwards is limited to
specific amounts each year. However, due to the uncertain nature of their
ultimate realization based upon past performance and expiration dates, the
Company has established a full valuation allowance against these carryforward
benefits and will recognize the benefits only when reassessment demonstrates
that it is more likely than not that such benefits will be realized. Realization
is entirely dependent upon future earnings in specific tax jurisdictions. While
the need for this valuation allowance is subject to periodic review, if the
allowance is reduced, the tax benefits of the carryforwards will be recorded in
future operations as a reduction of the Company's income tax expense.

                                      F-14
<PAGE>
8. COMMITMENTS AND CONTINGENCIES

      In connection with a previous borrowing from Nova Northwest Inc. ("Nova"),
Nova received a cash flow participation interest in the distributions from the
Rosemary Project for the term of the Panda-Rosemary L.P. partnership agreement.
Such participation interest amounted to 4.33% of the Company's own participation
interest, which was 10% at the time the agreement was entered into. The Company
has filed an action with the District Court of Dallas County, Texas seeking a
declaratory judgment that Nova's cash flow participation is 0.433% of the
Company's 100% interest after the acquisition of the institutional investor's
90% limited partnership interest. Management believes that the resolution of
this dispute will not have a material effect on the financial position, results
of operations or cash flows of the Company. PEII and Nova each have the option
to convert the present value of cash flow participation, as defined by the
agreement, to PEII common stock at $6 a share.

      In 1995, Florida Power filed an action with the Florida Public Service
Commission ("Florida PSC") relating to the term of the power purchase agreement
for the Kathleen Project (see Note 5) and whether the Kathleen Project, as
designed, is eligible to execute the power purchase agreement pursuant to
Florida Power's bid solicitation and the Florida PSC's regulations. On May 20,
1996, the Florida PSC issued an order finding that: (1) the Kathleen Project, as
designed, did not comply with the power purchase agreement and the Florida PSC's
regulations; (2) the capacity payments under the power purchase agreement should
only extend for 20 years (as opposed to the 30 year stated term of the
agreement); and (3) the construction and commercial operation milestones should
be extended for an additional 18 months. The Company has appealed this ruling to
the Florida Supreme Court and will vigorously defend this action. Management
believes that the outcome of this litigation will not have a material effect on
the accompanying consolidated financial statements.

      In August 1996, Panda-Brandywine and PEPCO commenced discussions
concerning commercial operational requirements of the Brandywine Project and
conversion of the construction loan to long-term financing in the form of a
lease. During these discussions, disagreements arose between Panda-Brandywine
and PEPCO with respect to certain provisions of the Brandywine Power Purchase
Agreement, one of which relates to the determination of the interest rate that
is the basis for reduction in capacity payments thereunder (the "PEPCO Interest
Rate Dispute"). PEPCO and Panda-Brandywine are presently attempting to resolve
these disagreements but there are no assurances that such efforts will be
successful. If the PEPCO Interest Rate Dispute is determined adversely to
Panda-Brandywine, the capacity payments paid by PEPCO under the Brandywine Power
Purchase Agreement (which commence in January 1997) will be less than originally
anticipated, thereby adversely affecting the revenues realized by
Panda-Brandywine, and consequently, reducing the amount of funds that would be
available for distribution to the Company.

      Raytheon Engineers and Constructors, Inc. ("Raytheon") constructed the
Brandywine Project pursuant to a fixed-price, turnkey engineering, procurement
and construction contract (the "Brandywine EPC Agreement") with
Panda-Brandywine. Raytheon completed the construction and start-up of the
Brandywine Project and has met the requirements for commercial operations and
substantial completion under the Brandywine EPC Agreement, although the date on
which commercial operations were achieved and the entitlement of Raytheon to
certain early completion bonuses under the Brandywine EPC Agreement are the
subject of a dispute between Panda-Brandywine and Raytheon. The Company
estimates that the amount in dispute is less than $1 million and believes that
the resolution of this dispute will not have a material adverse effect upon the
financial position, results of operations or liquidity of the Company.

      The Company has entered into various long-term contracts for the purchase
and transportation of fuel subject to termination only in certain limited
circumstances. These contracts have remaining terms of 10 to 25 years. The
Company's minimum purchase commitment under these contracts is 2.3 million
British thermal units of gas annually from October 31, 1996 through October 31,
2011. In the aggregate, such commitments are not at prices in excess of the
current market.

      PEC is also involved in other legal and administrative proceedings in the
ordinary course of business. Management believes, based on the advice of
counsel, the amount of ultimate liability with respect to these matters will not
have a material affect on the financial position, results of operations or cash
flows of the Company.

9. RELATED PARTY TRANSACTIONS

      The Company purchases insurance coverage through an agency owned by a
major shareholder of PEII who is also a member of the board of directors of PEII
and a relative of PEII's chairman. The Company believes such coverage is on
terms that are no less favorable than reasonably available from unaffiliated
third parties. Total insurance purchases through this 

                                      F-15
<PAGE>
agency were $291,142, $298,728 and $754,388 for the years ended December 31,
1994, 1995 and 1996, respectively.

10. FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

      The estimated fair values of the Company's financial instruments as of
December 31, 1996 are as follows:

                                                 Carrying Value  Fair Value
                                                  ------------  ------------
   Long-term debt, including current portion ...  $215,548,541  $220,824,791
   Capital lease obligation ....................  $217,488,645  $217,488,645

       The Rosemary Bonds and the Series A Bonds have limited trading. The fair
value of these bonds is estimated based on an April 1997 third party quotation,
adjusted to reflect changes in the yield of government securities with similar
maturities since December 31, 1996. The fair value of the capital lease
obligation equals the carrying value of the obligation because the lease
financing transaction, which closed on December 30, 1996, reflects the Company's
incremental borrowing rate at year end.

      The Company is also a party to letters of credit. Historically, no claims
have been made against these financial instruments and management does not
expect any material losses to result from these off-balance-sheet instruments
because performance is not usually expected to be required. Therefore,
management is of the opinion that the fair value of these instruments is zero.

      The Company has various purchase commitments for gas supply and delivery
incident to the ordinary conduct of business. In the aggregate, such commitments
are not at prices in excess of the current market.

      The Company's electric capacity and energy sales are currently under two
power sales contracts with two customers. The failure of these customers to
fulfill their contractual obligations could have a substantial negative impact
on the Company's revenue. However, the Company does not anticipate
non-performance by the customers under these contracts.

11.  SUBSEQUENT EVENT

      In April 1997, Global Cayman issued $155.2 million original principal
amount of senior secured notes ("Senior Secured Notes") to finance the
development and construction of the Luannan Project. The Senior Secured Notes,
which were issued at a discount for gross proceeds of $145.0 million, bear
interest at a fixed rate of 12 1/2% payable semiannually commencing October 15,
1997. Scheduled principal payments are required semiannually commencing October
15, 2000 and will continue through maturity on April 15, 2004. The Senior
Secured Notes are subject to mandatory redemption prior to maturity under
certain conditions. The Senior Secured Notes are secured by (i) a pledge of 100%
of the capital stock of Global Cayman, 99% of the capital stock of Pan-Western
and at least 90% of the capital stock of Pan-Sino, and (ii) a security interest
in certain funds of Global Cayman and its subsidiaries established under the
indenture. Additionally, the Senior Secured Notes are fully and unconditionally
guaranteed by Panda Global, whose guarantee (the "Senior Secured Notes
Guarantee") is secured by (i) a pledge of 100% of the capital stock of Panda
Global and PEC and (ii) a security interest in certain funds of Panda Global
established under the indenture. The Senior Secured Notes Guarantee is
effectively subordinated to the obligations of PIC and its subsidiaries under
the Series A Bonds and project-level financing arrangements. The indenture
contains certain covenants, including limitations on distributions, additional
debt and certain other transactions. Individually, and in the aggregate, the
pledges of the capital stock of PEC, Pan-Western and Pan-Sino do not constitute
a "substantial portion" (as defined in Rule 3-10 of Regulation S-X promulgated 
under the Securities Act of 1933) of collateral for the Senior Secured Notes or
the Senior Secured Notes Guarantee.  Separate financial statements of such 
entities are not presented as they are not considered material. See Note 12 for
condensed consolidating financial information for the Company.

                                 F-16
<PAGE>
12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

      As discussed in Note 11, the Senior Secured Notes issued in April 1997 by
Global Cayman are fully and unconditionally guaranteed by Panda Global.
Condensed consolidating financial information for the Company as of December 31,
1995 and 1996 and for the years ended December 31, 1994, 1995 and 1996 is as
follows:

                     PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                         CONDENSED CONSOLIDATING BALANCE SHEET
                                   DECEMBER 31, 1995

<TABLE>
<CAPTION>
                                     ASSETS
                                                                             Non-
                                              Panda          Panda          Guar-                            Panda
                                              Global         Global         antor                            Global
                                            Energy Co.    Holdings, Inc.    Subsid-           Elimi-      Holdings, Inc.
                                             (Issuer)      (Guarantor)      iaries           nations      Consolidated
                                            -----------   -------------   -------------   -------------   -------------
<S>                                         <C>           <C>             <C>             <C>             <C>          
Current Assets:
   Cash and cash equivalents .............  $      --     $        --     $   1,166,385   $        --     $   1,166,385
   Restricted cash -- current ............         --              --         1,876,142            --         1,876,142
   Accounts receivable ...................         --              --         5,199,999            --         5,199,999
   Fuel oil, spare parts and supplies ....         --              --         3,084,168            --         3,084,168
   Other current assets ..................         --              --            12,664            --            12,664
                                            -----------   -------------   -------------   -------------   -------------
      Total current assets ...............         --              --        11,339,358            --        11,339,358

Plant and equipment:
   Electric generating facility ..........         --              --       105,168,094            --       105,168,094
   Furniture and fixtures ................         --              --            29,080            --            29,080
   Less accumulated depreciation .........         --              --       (21,008,036)           --       (21,008,036)
   Construction in progress ..............         --              --       132,604,494            --       132,604,494
   Development costs .....................         --              --         3,350,924            --         3,350,924
                                            -----------   -------------   -------------   -------------   -------------
      Total plant and equipment, net .....         --              --       220,144,556            --       220,144,556
Investment in and advances to subsidiaries    1,065,063            --              --        (1,065,063)           --
Restricted cash -- debt service reserves
   and escrow deposits ...................         --              --        10,947,948            --        10,947,948
Debt issuance costs ......................         --              --         3,990,655            --         3,990,655
Partnership formation costs, net .........         --              --           533,100            --           533,100
                                            -----------   -------------   -------------   -------------   -------------
                                            $ 1,065,063   $        --     $ 246,955,617   $  (1,065,063)  $ 246,955,617
                                            ===========   =============   =============   =============   =============

                     LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
   Accounts payable and accrued expenses:
      Construction costs .................  $      --     $        --     $   5,597,818   $        --     $   5,597,818
      Interest and letter of credit fees .         --              --         2,540,347            --         2,540,347
      Operating expenses and other .......         --              --         1,219,061            --         1,219,061
   Current portion of long-term debt .....         --              --         9,100,000            --         9,100,000
                                            -----------   -------------   -------------   -------------   -------------
      Total current liabilities ..........         --              --        18,457,226            --        18,457,226

Long term debt, less current portion .....         --              --       234,608,361            --       234,608,361
Investment in and advances from affiliates    1,712,061      42,945,636            --       (44,657,697)           --
Minority interest ........................         --              --        36,835,666            --        36,835,666
Shareholder's equity (deficit):
   Common stock, par value
        $.01; 1,000 shares authorized,
      issued and outstanding .............            2              10              10             (12)             10
   Advances to parent ....................         --       (26,869,548)    (26,869,548)     26,869,548     (26,869,548)
   Accumulated deficit ...................     (647,000)    (16,076,098)    (16,076,098)     16,723,098     (16,076,098)
      Total shareholder's equity (deficit)     (646,998)    (42,945,636)    (42,945,636)     43,592,634     (42,945,636)
                                            -----------   -------------   -------------   -------------   -------------
                                            $ 1,065,063   $        --     $ 246,955,617   $  (1,065,063)  $ 246,955,617
                                            ===========   =============   =============   =============   =============
</TABLE>

                                      F-17
<PAGE>
12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

                     PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                         CONDENSED CONSOLIDATING BALANCE SHEET
                                   DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                     ASSETS
                                                                              Non-
                                              Panda          Panda            Guar-                           Panda
                                              Global         Global           antor                          Global
                                            Energy Co.    Holdings, Inc.     Subsid-         Elimi-       Holdings, Inc.
                                             (Issuer)      (Guarantor)       iaries          nations      Consolidated
                                            -----------   -------------   -------------   -------------   -------------
<S>                                         <C>           <C>             <C>             <C>             <C>          
Current Assets:
   Cash and cash equivalents .............  $      --     $        --     $   1,335,086   $        --     $   1,335,086
   Restricted cash -- current ............         --              --        17,809,921            --        17,809,921
   Accounts and notes receivable .........         --              --         9,402,685            --         9,402,685
   Fuel oil, spare parts and supplies ....         --              --         7,913,777            --         7,913,777
   Other current assets ..................         --              --           164,905            --           164,905
                                            -----------   -------------   -------------   -------------   -------------
      Total current assets ...............         --              --        36,626,374            --        36,626,374
Plant and equipment:
   Electric generating facility ..........         --              --       288,716,711            --       288,716,711
   Furniture and fixtures ................         --              --           494,418            --           494,418
   Less accumulated depreciation .........         --              --       (26,539,539)           --       (26,539,539)
   Construction in progress ..............         --              --              --              --              --
   Development costs .....................         --              --         6,053,361            --         6,053,361
                                            -----------   -------------   -------------   -------------   -------------
      Total plant and equipment, net .....         --              --       268,724,951            --       268,724,951

Investment in and advances to subsidiaries    3,798,781            --              --        (3,798,781)           --
Restricted cash -- debt service reserves
   and escrow deposits ...................         --              --        32,548,366            --        32,548,366
Debt issuance costs ......................         --              --         7,570,521            --         7,570,521
Partnership formation costs, net .........         --              --              --              --              --
                                            -----------   -------------   -------------   -------------   -------------
                                            $ 3,798,781   $        --     $ 345,470,212   $  (3,798,781)  $ 345,470,212
                                            ===========   =============   =============   =============   =============

                     LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
   Accounts payable and accrued expenses:
      Construction costs .................  $      --     $        --     $     660,167   $        --     $     660,167
      Interest and letter of credit fees .         --              --         6,297,558            --         6,297,558
      Operating expenses and other .......         --              --         6,991,796            --         6,991,796
   Current portion of long-term debt .....         --              --         5,717,623            --         5,717,623
                                            -----------   -------------   -------------   -------------   -------------
      Total current liabilities ..........         --              --        19,667,144            --        19,667,144

Long term debt, less current portion .....         --              --       209,830,918            --       209,830,918
Capital lease obligation .................         --              --       217,488,645            --       217,488,645
Investment in and advances from affiliates    6,099,779     101,516,495            --      (107,616,274)           --
Minority interest ........................         --              --              --              --              --
Shareholder's equity (deficit):
   Common stock, par value
        $.01; 1,000 shares authorized,
        issued and outstanding ...........            2              10              10             (12)             10
   Advances (to) from parent .............         --       (52,782,940)    (52,782,940)     52,782,940     (52,782,940)
   Accumulated deficit ...................   (2,301,000)    (48,733,565)    (48,733,565)     51,034,565     (48,733,565)
      Total shareholder's equity(deficit)    (2,300,998)   (101,516,495)   (101,516,495)    103,817,493    (101,516,495)
                                            -----------   -------------   -------------   -------------   -------------
                                            $ 3,798,781   $        --     $ 345,470,212   $  (3,798,781)  $ 345,470,212
                                            ===========   =============   =============   =============   =============
</TABLE>

                                      F-18
<PAGE>
12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)


                     PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                         FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
                                                                                  Non-
                                                  Panda          Panda            Guar-                       Panda
                                                  Global         Global           antor                       Global
                                                 Energy Co.   Holdings, Inc.     Subsid-        Elimi-    Holdings, Inc.
                                                  (Issuer)     (Guarantor)       iaries        nations     Consolidated
                                                ------------   ------------   ------------   ------------  ------------
<S>                                             <C>            <C>            <C>            <C>           <C>         
Revenue:
   Electric capacity .........................  $       --     $       --     $ 30,664,096   $       --    $ 30,664,096
   Steam and chilled water sales .............          --             --          650,575           --         650,575
   Interest income ...........................          --             --          602,783           --         602,783
   Equity in loss of subsidiary ..............      (203,000)      (861,265)          --        1,064,265          --
                                                ------------   ------------   ------------   ------------  ------------
      Total revenue ..........................      (203,000)      (861,265)    31,917,454      1,064,265    31,917,454
Expenses:
   Plant operating expenses ..................          --             --        8,940,146           --       8,940,146
   Project development and administrative ....          --             --        1,779,349           --       1,779,349
   Interest expense and letter of credit fees           --             --       11,017,418           --      11,017,418
   Depreciation ..............................          --             --        4,208,314           --       4,208,314
   Amortization of debt issuance costs .......          --             --          600,382           --         600,382
   Amortization of partnership formation costs          --             --          533,116           --         533,116
                                                ------------   ------------   ------------   ------------  ------------
      Total expenses .........................          --             --       27,078,725           --      27,078,725
                                                ------------   ------------   ------------   ------------  ------------
Income (loss) before minority interest .......      (203,000)      (861,265)     4,838,729      1,064,265     4,838,729
Minority interest ............................          --             --       (5,699,994)          --      (5,699,994)
                                                ------------   ------------   ------------   ------------  ------------
   Net loss ..................................  $   (203,000)  $   (861,265)  $   (861,265)  $  1,064,265  $   (861,265)
                                                ============   ============   ============   ============  ============
</TABLE>

                      FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
                                                                                  Non-
                                                  Panda          Panda            Guar-                       Panda
                                                  Global         Global           antor                       Global
                                                 Energy Co.   Holdings, Inc.     Subsid-        Elimi-    Holdings, Inc.
                                                  (Issuer)     (Guarantor)       iaries        nations     Consolidated
                                                ------------   ------------   ------------   ------------  ------------
<S>                                             <C>            <C>            <C>            <C>           <C>         
Revenue:
   Electric capacity .........................  $       --     $       --     $ 29,858,475   $       --    $ 29,858,475
   Steam and chilled water sales .............          --             --          473,040           --         473,040
   Interest income ...........................          --             --          895,268           --         895,268
   Equity in loss of  subsidiary .............      (444,000)    (2,731,689)          --        3,175,689          --
                                                ------------   ------------   ------------   ------------  ------------
      Total revenue ..........................      (444,000)    (2,731,689)    31,226,783      3,175,689    31,226,783
                                                ------------   ------------   ------------   ------------  ------------
Expenses:
   Plant operating expenses ..................          --             --        9,347,707           --       9,347,707
   Project development and administrative ....          --             --        2,550,376           --       2,550,376
   Interest expense and letter of credit fees           --             --       11,715,929           --      11,715,929
   Depreciation ..............................          --             --        4,209,453           --       4,209,453
   Amortization of debt issuance costs .......          --             --          554,311           --         554,311
   Amortization of partnership formation costs          --             --          533,116           --         533,116
                                                ------------   ------------   ------------   ------------  ------------
      Total expenses .........................          --             --       28,910,892           --      28,910,892
                                                ------------   ------------   ------------   ------------  ------------
Income (loss) before minority interest .......      (444,000)    (2,731,689)     2,315,891      3,175,689     2,315,891
Minority interest ............................          --             --       (5,047,580)          --      (5,047,580)
                                                ------------   ------------   ------------   ------------  ------------
Net loss .....................................  $   (444,000)  $ (2,731,689)  $ (2,731,689)  $  3,175,689  $ (2,731,689)
                                                ============   ============   ============   ============  ============ 
</TABLE>

                                      F-19
<PAGE>
12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                                                                    Non-
                                                    Panda          Panda            Guar-                       Panda
                                                    Global         Global           antor                       Global
                                                   Energy Co.   Holdings, Inc.     Subsid-        Elimi-    Holdings, Inc.
                                                    (Issuer)     (Guarantor)       iaries        nations     Consolidated
                                                  ------------   ------------   ------------   ------------  ------------
<S>                                               <C>            <C>            <C>            <C>           <C>         
Revenue:
   Electric capacity ...........................  $       --    $       --     $ 32,273,736   $       --   $ 32,273,736
   Steam and chilled water sales ...............          --            --          502,757           --        502,757
   Interest income .............................          --            --        1,518,006           --      1,518,006
   Equity in loss of subsidiaries ..............    (1,654,000)  (32,657,467)          --       34,311,467         --
                                                  ------------  ------------   ------------   ------------ ------------ 
      Total revenue ............................    (1,654,000)  (32,657,467)    34,294,499     34,311,467   34,294,499

Expenses:
   Plant operating expenses ....................          --            --       12,050,495           --     12,050,495
   Project development and administrative ......          --            --        5,187,348           --      5,187,348
   Interest expense and letter of credit fees ..          --            --       19,414,012           --     19,414,012
   Depreciation ................................          --            --        5,531,502           --      5,531,502
   Amortization of debt issuance costs .........          --            --          493,799           --        493,799
   Amortization of partnership formation costs .          --            --          533,100           --        533,100
                                                  ------------  ------------   ------------   ------------ ------------ 
      Total expenses ...........................          --            --       43,210,256           --     43,210,256
                                                  ------------  ------------   ------------   ------------ ------------ 

Income (loss) before minority interest and
     extraordinary item ........................    (1,654,000)  (32,657,467)    (8,915,757)    34,311,467   (8,915,757)
Minority interest ..............................          --            --       (2,405,160)          --     (2,405,160)
                                                  ------------  ------------   ------------   ------------ ------------ 
Income (loss) before extraordinary item ........    (1,654,000)  (32,657,467)   (11,320,917)    34,311,467  (11,320,917)
Extraordinary item - loss on debt extinguishment          --            --      (21,336,550)          --    (21,336,550)
                                                  ------------  ------------   ------------   ------------ ------------ 
Net loss .......................................  $ (1,654,000) $(32,657,467)  $(32,657,467)  $ 34,311,467 $(32,657,467)
                                                  ============  ============   ============   ============ ============ 
</TABLE>

                                      F-20
<PAGE>
                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                                   (UNAUDITED)
                                                   DECEMBER 31      MARCH 31
                                                      1996            1997
                                                  -------------   -------------
Current assets:
   Cash and cash equivalents ...................  $   1,335,086   $   1,198,071
   Restricted cash -- current ..................     17,809,921      15,115,215
   Accounts receivable .........................      9,402,685       9,219,619
   Fuel oil, spare parts and supplies ..........      7,913,777       6,897,908
   Other current assets ........................        164,905         234,585
                                                  -------------   -------------
      Total current assets .....................     36,626,374      32,665,398

Plant and equipment:
   Electric generating facilities ..............    288,716,711     289,097,164
   Furniture and fixtures ......................        494,418         496,202
   Less: accumulated depreciation ..............    (26,539,539)    (29,488,416)
   Development costs ...........................      6,053,361       9,426,582
                                                  -------------   -------------
      Total plant and equipment, net ...........    268,724,951     269,531,532

Restricted cash - debt service reserves
  and escrow deposits ..........................     32,548,366      32,548,366
Debt issuance costs, net of accumulated
  amortization of $165,015 and $338,822,
  respectively .................................      7,570,521       7,530,770
                                                  -------------   -------------
                                                  $ 345,470,212   $ 342,276,066
                                                  =============   =============

                     LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
   Accounts payable and accrued expenses:
      Construction costs .......................  $     660,167   $        --
      Interest and letter of credit fees .......      6,297,558       2,505,216
      Operating expenses and other .............      6,991,796       5,931,986
   Current portion of long-term debt ...........      5,717,623       5,501,823
                                                  -------------   -------------
         Total current liabilities .............     19,667,144      13,939,025

Long-term debt, less current portion ...........    209,830,918     208,454,461
Capital lease obligation .......................    217,488,645     222,868,697
Commitments and contingencies  (Note 4)
Shareholder's deficit:
   Common stock, par value $.01; 1,000 shares
         authorized, issued and outstanding ....             10              10
   Advances to parent ..........................    (52,782,940)    (47,562,041)
   Accumulated deficit .........................    (48,733,565)    (55,424,086)
                                                  -------------   -------------
      Total shareholder's deficit ..............   (101,516,495)   (102,986,117)
                                                  -------------   -------------
                                                  $ 345,470,212   $ 342,276,066
                                                  =============   =============

        See accompanying notes to condensed consolidated financial statements 

                                      F-21
<PAGE>
                     PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
                                      (UNAUDITED)

                                                        1996           1997
                                                    ------------   ------------
Revenue:
   Electric capacity and energy sales ............  $  8,015,442   $ 17,329,693
   Steam and chilled water sales .................       121,548        130,582
   Interest income ...............................       185,672        429,727
                                                    ------------   ------------
                                                       8,322,662     17,890,002
                                                    ------------   ------------
Expenses:
   Plant operating expenses ......................     2,441,532      8,261,187
   Project development and administrative ........       803,433      2,395,022
   Interest expense and letter of credit fees ....     3,184,745     10,801,629
   Depreciation ..................................     1,053,220      2,948,878
   Amortization of debt issuance costs ...........       140,907        173,807
   Amortization of partnership formation costs ...       133,275           --
                                                    ------------   ------------
                                                       7,757,112     24,580,523
                                                    ------------   ------------
Income (loss) before minority interest ...........       565,550     (6,690,521)
Minority interest ................................    (1,718,948)          --
                                                    ------------   ------------
Net loss .........................................  $ (1,153,398)  $ (6,690,521)
                                                    ============   ============

     See accompanying notes to condensed consolidated financial statements.

                                      F-22
<PAGE>
                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

        CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT FOR THE
                        THREE MONTHS ENDED MARCH 31, 1997
                                   (UNAUDITED)

                                                                      TOTAL
                           COMMON   ADVANCES      ACCUMULATED     SHAREHOLDER'S
                           STOCK    TO PARENT       DEFICIT           DEFICIT
                            ---   ------------    ------------    -------------
Balance, January 1, 1997    $10   $(52,782,940)   $(48,733,565)   $(101,516,495)
Advances from parent ....    --      5,220,899            --          5,220,899
Net loss ................    --           --        (6,690,521)      (6,690,521)
                            ---   ------------    ------------    -------------
Balance, March 31, 1997 .   $10   $(47,562,041)   $(55,424,086)   $(102,986,117)
                            ===   ============    ============    =============

     See accompanying notes to condensed consolidated financial statements.

                                      F-23
<PAGE>
                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                      1996         1997
                                                                 ------------    -----------
<S>                                                              <C>             <C>         
Operating activities:
   Net loss ..................................................   $ (1,153,398)   $(6,690,521)
   Adjustments to reconcile net loss to net cash
     provided by operating activities:
      Minority interest ......................................      1,718,948           --
      Depreciation ...........................................      1,053,220      2,948,878
      Amortization of debt issuance costs ....................        140,907        173,807
      Amortization of partnership formation costs ............        133,275           --
      Amortization of loan discount and deferred interest ....         47,953      5,380,052
   Changes in assets and liabilities:
      Accounts receivable ....................................       (660,500)       183,066
      Fuel oil, spare parts and supplies .....................        281,634      1,015,869
      Other current assets ...................................        (47,151)       (69,680)
      Accounts payable and accrued expenses ..................      2,623,451     (4,852,153)
                                                                 ------------    -----------
      Net cash provided (used) by operating activities .......      4,138,339     (1,910,682)
                                                                 ------------    -----------
Investing activities:
   Restricted cash - current .................................     (4,843,722)     2,694,706
   Additions to property, plant and equipment ................    (21,631,804)    (4,415,625)
   Restricted cash - debt service reserves and escrow deposits         76,776           --
                                                                 ------------    -----------
      Net cash provided (used) by investing activities .......    (26,398,750)    (1,720,919)
                                                                 ------------    -----------
Financing activities:
   Distributions to minority interest owner ..................       (321,124)          --
   Advances from parent ......................................      1,490,607      5,220,899
   Proceeds from long-term debt ..............................     21,488,220           --
   Repayment of long-term debt ...............................           --       (1,592,257)
   Debt issuance costs .......................................       (199,498)      (134,056)
                                                                 ------------    -----------
      Net cash provided by financing activities ..............     22,458,205      3,494,586
                                                                 ------------    -----------

Increase (decrease) in cash and cash equivalents .............        197,794       (137,015)
Cash and cash equivalents, beginning of period ...............      1,166,385      1,335,086
                                                                 ------------    -----------
Cash and cash equivalents, end of period .....................   $  1,364,179    $ 1,198,071
                                                                 ============    ===========

NON-CASH OPERATING AND FINANCING ACTIVITIES:

Interest expense on capital lease obligation .................   $       --      $ 5,380,052
</TABLE>
        See accompanying notes to condensed consolidated financial statements.

                                      F-24
<PAGE>
                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997

1. ORGANIZATION AND BASIS OF PRESENTATION

      Panda Global Holdings, Inc. ("Panda Global", or collectively with its
subsidiaries the "Company"), a wholly owned subsidiary of Panda Energy
International, Inc. ("PEII"), was formed in March 1997 to hold the ownership
interests in four independent power projects which were formerly owned by other
wholly owned subsidiaries of PEII. The ownership interests were transferred to
the Company at PEII's historical cost. Because the transfers occurred between
entities under common control, the transactions have been accounted for in a
manner similar to a pooling of interests. The Company has two direct wholly
owned subsidiaries: Panda Energy Corporation ("PEC")( a Texas corporation) which
indirectly holds the Company's ownership interests in domestic projects, and
Panda Global Energy Company ("Global Cayman")(a Cayman Islands company) which
indirectly holds the Company's ownership interest in an international project
located in China.

      PEC, through its wholly owned subsidiary Panda Interfunding Corporation
("PIC") and PIC's wholly owned subsidiary Panda Interholding Corporation
("Interholding"), holds the Company's ownership interests in the Rosemary
project and the Brandywine project. The entities holding such ownership
interests include the following: Panda Rosemary Corporation ("PRC"), a 91%
general partner in Panda-Rosemary, L.P. ("Panda-Rosemary"); PRC II Corporation
("PRC II"), a 9% limited partner in Panda-Rosemary; Panda Brandywine
Corporation, a 50% general partner in Panda-Brandywine, L.P.
("Panda-Brandywine"); Panda Energy Corporation (a Delaware corporation), a 50%
limited partner in Panda-Brandywine; and Brandywine Water Company. The Company,
through its general and limited partnership interests, owns 100% of
Panda-Brandywine and, as of July 31, 1996, owns 100% of Panda-Rosemary. Prior to
July 31, 1996, the Company owned 10% of Panda-Rosemary. The Rosemary and
Brandywine projects are located in the United States. Other direct or indirect
wholly owned subsidiaries of PIC include Panda Funding Corporation ("PFC"),
Panda-Rosemary Funding Corporation ("PRFC") and Panda Cayman Interfunding
Corporation ("PIC Cayman"), which have been formed to facilitate the financing
of the development and acquisition of independent power projects.

      Additionally, PEC holds the Company's 100% ownership interest in the
Kathleen project through its wholly owned subsidiaries.

      Global Cayman (which collectively with its subsidiaries is a development
stage enterprise having no operating revenues) holds a 95.5% ownership interest
in Pan-Sino Energy Development Company LLC ("Pan-Sino")(a Cayman Islands
company), which in turn holds a 99% ownership interest in Pan-Western Energy
Corporation LLC ("Pan-Western")(a Cayman Islands company), which in turn owns an
approximately 88% interest in four joint venture companies (the "Joint Venture
Companies") organized under the laws of the People's Republic of China ("China")
to develop and construct an independent power project located in China. The
Joint Venture Companies, which currently have no material assets or operations,
are: Tangshan Panda Heat and Power Company, Ltd. ("Tangshan Panda"), Tangshan
Pan-Western Heat and Power Company, Ltd. ("Tangshan Pan-Western"), Tangshan
Cayman Heat and Power Company, Ltd. ("Tangshan Cayman") and Tangshan Pan-Sino
Heat Company, Ltd. ("Tangshan Pan-Sino").

	Collectively, PEC, Pan-Sino and Pan-Western are the predecessors of the
Company.

      All material intercompany accounts and transactions have been eliminated
in consolidation.

2. SIGNIFICANT ACCOUNTING POLICIES

      The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
and should be read in conjunction with the audited financial statements for the
year ended December 31, 1996. The accompanying unaudited condensed consolidated
financial statements for the three months ended March 31, 1996 and 1997 include
all adjustments, consisting of normal recurring accruals, which management
considers necessary for a fair presentation of the results for the interim
periods. The results of operations for the three months ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. The amounts presented in the balance sheet as of
December 31, 1996 were derived from the Company's audited consolidated financial
statements.

      ALLOCATION OF ADMINISTRATIVE COSTS -- PEII performs certain accounting,
legal, insurance, and consulting services for the 

                                      F-25
<PAGE>
Company. These general and administrative costs are generally allocated to the
Company using the percentage of time PEII personnel spent performing these
services. The expenses allocated were $532,000 and $1,110,000 for the three
months ended March 31, 1996 and 1997, respectively, and are included in project
development and administrative expenses in the statement of operations.
Management believes the method used to allocate these costs is reasonable.

3. POWER PROJECTS AND LONG-TERM DEBT

      The Company has incurred development costs on the Kathleen Project of $2.8
million as of December 31, 1996 and March 31, 1997. The Company has incurred
development costs on the Luannan Project of $3.3 million and $6.6 million as of
December 31, 1996 and March 31, 1997, respectively. Such costs are included in
plant and equipment under development costs in the accompanying balance sheets.

4. COMMITMENTS AND CONTINGENCIES

      In 1995, Florida Power filed an action with the Florida Public Service
Commission ("Florida PSC") relating to the term of the power purchase agreement
for the Kathleen Project and whether the Kathleen Project, as designed, is
eligible to execute the power purchase agreement pursuant to Florida Power's bid
solicitation and the Florida PSC's regulations. On May 20, 1996, the Florida PSC
issued an order finding that: (1) the Kathleen Project, as designed, did not
comply with the power purchase agreement and the Florida PSC's regulations; (2)
the capacity payments under the power purchase agreement should only extend for
20 years (as opposed to the 30 year stated term of the agreement); and (3) the
construction and commercial operation milestones should be extended for an
additional 18 months. The Company has appealed this ruling to the Florida
Supreme Court and will vigorously defend this action. Management believes that
the outcome of this litigation will not have a material effect on the
accompanying condensed consolidated financial statements.

      In August 1996, Panda-Brandywine and PEPCO commenced discussions
concerning commercial operational requirements of the Brandywine Project and
conversion of the construction loan to long-term financing in the form of a
lease. During these discussions, disagreements arose between Panda-Brandywine
and PEPCO with respect to certain provisions of the Brandywine Power Purchase
Agreement which relate to the determination of the interest rate that is the
basis for reduction in capacity payments thereunder (the "PEPCO Interest Rate
Dispute"). PEPCO and Panda-Brandywine are presently attempting to resolve these
disagreements but there are no assurances that such efforts will be successful.
If the PEPCO Interest Rate Dispute is determined adversely to Panda-Brandywine,
the capacity payments paid by PEPCO under the Brandywine Power Purchase
Agreement will be less than originally anticipated, thereby adversely affecting
the revenues realized by Panda-Brandywine, and consequently, reducing the amount
of funds that would be available for distribution to the Company.

      Raytheon Engineers and Constructors, Inc. ("Raytheon") constructed the
Brandywine Project pursuant to a fixed-price, turnkey engineering, procurement
and construction contract (the "Brandywine EPC Agreement") with
Panda-Brandywine. Raytheon completed the construction and start-up of the
Brandywine Project and has met the requirements for commercial operations and
substantial completion under the Brandywine EPC Agreement, although the date on
which commercial operations were achieved and the entitlement of Raytheon to
certain early completion bonuses under the Brandywine EPC Agreement are the
subject of a dispute between Panda-Brandywine and Raytheon. The Company
estimates that the amount in dispute is less than $1 million and believes that
the resolution of this dispute will not have a material adverse effect upon the
financial position, results of operations or liquidity of the Company.

5. SUBSEQUENT EVENT

      In April 1997, Global Cayman issued $155.2 million original principal
amount of senior secured notes ("Senior Secured Notes") to finance the
development and construction of the Luannan Project. The Senior Secured Notes,
which were issued at a discount for gross proceeds of $145.0 million, bear
interest at a fixed rate of 12 1/2% payable semiannually commencing October 15,
1997. Scheduled principal payments are required semiannually commencing October
15, 2000 and will continue through maturity on April 15, 2004. The Senior
Secured Notes are subject to mandatory redemption prior to maturity under
certain conditions. The Senior Secured Notes are secured by (i) a pledge of 100%
of the capital stock of Global Cayman, 99% of the capital stock of Pan-Western
and at least 90% of the capital stock of Pan-Sino, and (ii) a security interest
in certain funds of Global Cayman and its subsidiaries established under the
indenture. Additionally, the Senior Secured Notes are fully and unconditionally
guaranteed by Panda Global, whose guarantee (the "Senior Secured Notes
Guarantee") is secured by (i) a pledge of 100% of the capital stock of Panda
Global and PEC and (ii) a security interest in certain funds of Panda Global
established under the indenture. The Senior Secured Notes Guarantee is
effectively subordinated to the obligations of PIC and its subsidiaries under
the Series A Bonds and project-level financing arrangements. The indenture
contains certain covenants, including limitations on distributions, additional
debt and certain other transactions.  Individually, and in the aggregate, the
pledges of the capital stock of PEC, Pan-Western and Pan-Sino do not constitute
a "substantial portion" (as defined in Rule 3-10 of Regulation S-X promulgated 
under the Securities Act of 1933) of collateral for the Senior Secured Notes or
the Senior Secured Notes Guarantee.  Separate financial statements of such
entities are not presented as they are not considered material. 

                                      F-26
<PAGE>
                         INDEPENDENT ACCOUNTANTS' REPORT


To the Board of Directors
of Panda Energy International, Inc.

We have audited the accompanying consolidated balance sheets of Panda Global
Energy Company and subsidiaries (the "Company"), a development stage enterprise,
as of December 31, 1995 and 1996, and the related consolidated statements of
operations, cash flows and shareholder's deficit for the period from July 20,
1994 (date of inception) through December 31, 1994, the years ended December 31,
1995 and 1996 and the period from July 20, 1994 (date of inception) through
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1995
and 1996, and the results of their operations and their cash flows for the
period from July 20, 1994 (date of inception) through December 31, 1994, the
years ended December 31, 1995 and 1996, and the period from July 20, 1994 (date
of inception) through December 31, 1996, in conformity with generally accepted
accounting principles.


DELOITTE & TOUCHE LLP

Dallas, Texas
April 9, 1997

                                      F-27
<PAGE>
                  PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1995 and 1996

                                                         1995           1996
                                                    -----------    -----------
 ASSETS

 Cash and cash equivalents ......................   $     6,289    $   506,289

 Development costs ..............................     1,058,774      3,292,492
                                                    -----------    -----------
 Total assets ...................................   $ 1,065,063    $ 3,798,781
                                                    ===========    ===========
 LIABILITIES AND SHAREHOLDER'S DEFICIT

 Liabilities:
 Advances from parent ...........................   $ 1,712,061    $ 6,099,779
 Commitments and contingencies (Note 3) .........          --             --
 Shareholder's deficit:
 Common stock, par value $1:  50,000 shares
    authorized;  2 shares issued and outstanding              2              2
 Deficit accumulated during the development stage      (647,000)    (2,301,000)
                                                    -----------    -----------
    Total shareholder's deficit .................      (646,998)    (2,300,998)
                                                    -----------    -----------
 Total liabilities and shareholder's deficit ....   $ 1,065,063    $ 3,798,781
                                                    ===========    ===========

          See accompanying notes to consolidated financial statements.
                                      F-28(A)
<PAGE>
                  PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
    For the Period from Inception (July 20, 1994) Through December 31, 1994,
                   the Years Ended December 31, 1995 and 1996,
             and the Period from Inception Through December 31, 1996
<TABLE>
<CAPTION>
                                      Inception                                 Inception
                                      Through     Year Ended    Year Ended       Through
                                     December 31  December 31   December 31    December 31
                                        1994         1995           1996           1996
                                      ---------    ---------    -----------    -----------
<S>                                   <C>          <C>          <C>            <C>        
General and administrative expenses   $ 203,000    $ 444,000    $ 1,654,000    $ 2,301,000
                                      ---------    ---------    -----------    -----------
Net loss ..........................   $(203,000)   $(444,000)   $(1,654,000)   $(2,301,000)
                                      =========    =========    ===========    ===========
</TABLE>
See accompanying notes to consolidated financial statements.
                                      F-29(A)
<PAGE>
                  PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Period from Inception (July 20, 1994) Through December 31, 1994,
                   the Years Ended December 31, 1995 and 1996,
             and the Period from Inception Through December 31, 1996
<TABLE>
<CAPTION>
                                        Inception                                Inception
                                         Through    Year Ended    Year Ended      Through
                                        December 31 December 31   December 31    December 31
                                          1994         1995          1996           1996
                                        ---------    ---------    -----------    -----------
<S>                                     <C>          <C>          <C>            <C>         
 OPERATING ACTIVITIES:
 Net loss ...........................   $(203,000)   $(444,000)   $(1,654,000)   $(2,301,000)

 INVESTING ACTIVITIES:
 Development costs ..................    (428,486)    (630,288)    (2,233,718)    (3,292,492)

 FINANCING ACTIVITIES:
 Capital contribution from parent ...           2         --             --                2
 Advances from parent ...............     732,773      979,288      4,387,718      6,099,779
                                        ---------    ---------    -----------    -----------
 Cash provided by financing activities    732,775      979,288      4,387,718      6,099,781
                                        ---------    ---------    -----------    -----------
 Increase (decrease) in cash ........     101,289      (95,000)       500,000        506,289

 Cash, beginning of period ..........        --        101,289          6,289           --
                                        ---------    ---------    -----------    -----------
 Cash, end of period ................   $ 101,289    $   6,289    $   506,289    $   506,289
                                        =========    =========    ===========    ===========
</TABLE>
          See accompanying notes to consolidated financial statements.
                                      F-30(A)
<PAGE>
                  PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT
    For the Period from Inception (July 20, 1994) Through December 31, 1994
                 and the Years Ended December 31, 1995 and 1996


                                                                     Deficit
                                                                    Accumulated
                                                                    During the
                                           Number       Common      Development
                                         of Shares      Stock          Stage
                                         -----------  -----------   -----------
Issuance of common stock, July 20, 1994            2  $         2            

Net loss ..............................                             $  (203,000)
                                         -----------  -----------   -----------
Balance, December 31, 1994 ............            2            2      (203,000)
 
Net loss ..............................                                (444,000)
                                         -----------  -----------   -----------
Balance, December 31, 1995 ............            2            2      (647,000)

Net loss ..............................                              (1,654,000)
                                         -----------  -----------   -----------
Balance, December 31, 1996 ............            2  $         2   $(2,301,000)
                                         ===========  ===========   ===========

          See accompanying notes to consolidated financial statements.
                                      F-31(A)
<PAGE>

                  PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A DEVELOPMENT STAGE ENTERPRISE)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD
            FROM INCEPTION (JULY 20, 1994) THROUGH DECEMBER 31, 1994,
                   THE YEARS ENDED DECEMBER 31, 1995 AND 1996,
             AND THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1996

1.    ORGANIZATION AND BASIS OF PRESENTATION

      Panda Global Energy Company ("Global Cayman", or collectively with its
subsidiaries the "Company")(a Cayman Islands company) is a wholly owned
subsidiary of Panda Global Holdings, Inc. ("Panda Global"), which in turn is a
wholly owned subsidiary of Panda Energy International, Inc. ("PEII"). PEII is
engaged in the development, acquisition, ownership and operation of independent
power generation facilities and other energy-related projects worldwide. Global
Cayman was formed in March 1997 to hold PEII's indirect ownership interest in an
independent power project located in the People's Republic of China ("China").
The ownership interest was transferred to Global Cayman at PEII's historical
cost. Because the transfer occurred between entities under common control, the
transaction has been accounted for in a manner similar to a pooling of
interests.

      Global Cayman holds a 95.5% ownership interest in Pan-Sino Energy
Development Company LLC ("Pan-Sino")(a Cayman Islands company), which in turn
holds a 99% ownership interest in Pan-Western Energy Corporation LLC
("Pan-Western")(a Cayman Islands company), which in turn owns an approximately
88% interest in four joint venture companies (the "Joint Venture Companies")
organized under the laws of China to develop and construct two 50 megawatt
coal-fired cogeneration plants (the "Luannan Project") to be located in Luannan
County, Tangshan Municipality, Hebei Province, China. Pan-Sino and Pan-Western
were formed on July 20, 1994 and are the Company's predecessor. The Joint
Venture Companies are: Tangshan Panda Heat and Power Company, Ltd. ("Tangshan
Panda"), Tangshan Pan-Western Heat and Power Company, Ltd. ("Tangshan
Pan-Western"), Tangshan Cayman Heat and Power Company, Ltd. ("Tangshan Cayman")
and Tangshan Pan-Sino Heat Company, Ltd. ("Tangshan Pan-Sino").

      All material intercompany accounts and transactions have been eliminated
in consolidation.


2.    SIGNIFICANT ACCOUNTING POLICIES

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

      DEVELOPMENT STAGE ENTERPRISE -- The Company is in the development stage
and has no operating revenues. PEII has committed to provide the Company with
continued financial support until the Company obtains the financing necessary
for the continued development and construction of the Luannan Project.
Management is currently pursuing such financing and believes the Company can
obtain the necessary financing.

      CASH -- Included in cash and cash equivalents are highly liquid
investments with original maturities of three months or less.

      DEVELOPMENT COSTS -- Costs related to the development of the Luannan
Project have been capitalized. Such costs primarily consist of engineering,
legal and other costs directly related to the project. Such costs will be
depreciated using the straight-line method over the estimated useful lives of
the assets, generally twenty years. Depreciation will begin when the completed
facility is ready for its intended use.

                                      F-30
<PAGE>
      ALLOCATION OF ADMINISTRATIVE COSTS -- PEII performs certain accounting,
legal, insurance and consulting services for the Company. These general and
administrative costs are generally allocated to the Company using the percentage
of time PEII personnel spent performing these services. The expenses allocated
were $203,000, $444,000 and $1,654,000 in 1994, 1995 and 1996, respectively, and
are included in general and administrative expenses in the consolidated
statements of operations. Management believes the method used to allocate these
costs is reasonable.

      INCOME TAXES -- On the basis of the current legislation in the Cayman
Islands, there is no income, corporation, profits, capital gains or other form
of taxation that would be of application to Global Cayman or its subsidiaries
and, accordingly, there is no withholding tax. In addition, Pan-Western, as an
exempted company, has obtained from the Cayman Islands Government an undertaking
that should the current legislation change, no taxation will be imposed upon the
profits of Pan-Western or any shareholders in Pan-Western for a twenty year
period commencing August, 1994.

3.    LUANNAN PROJECT

      In 1994, PEII entered into a preliminary letter of intent with a
subsidiary of the North China Power Group Company ("NCPGC") for the purchase and
sale of electric energy from the Luannan Project. On September 22, 1995,
Tangshan Panda and Tangshan Pan-Western (see Note 1) entered into a Power
Purchase Agreement with NCPGC for the purchase and sale of electric energy from
the Luannan Project. Under the terms of the 20-year agreement, all electrical
output of the project will be sold to NCPGC. The steam and hot water generated
by Tangshan-Cayman's facility within the project will be sold to the domestic
Chinese industrial and commercial markets by Tangshan Pan-Sino. The Luannan
Project will be constructed pursuant to a fixed-price, turnkey contract with
Harbin Power Engineering Company Limited, subject to escalation under certain
circumstances. Preliminary construction activity commenced in December 1996.
Commencement of full construction activity is subject to the successful
completion of financing.

      The Luannan Project is subject to political, regulatory and economic
uncertainties, risks of expropriation of property and cancellation or
modification of contract rights, foreign exchange restrictions, construction
risk, dependence on limited number of customers and other risks arising from
foreign governmental sovereignty.

4.    ADVANCES FROM PARENT

      PEII has performed all project development and administrative activities
for the Company. The advances from parent reflect the net advances for such
costs incurred by PEII on the Company's behalf.

                                      F-31
<PAGE>
              PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                    (A Development Stage Enterprise)

                  CONDENSED CONSOLIDATED BALANCE SHEETS
                  December 31, 1996 and March 31, 1997

                                                                    (Unaudited)
                                                     December 31     March 31
                                                        1996           1997 
                                                     -----------    -----------
ASSETS

Cash and cash equivalents ........................   $   506,289    $     6,289

Development costs ................................     3,292,492      6,613,923
                                                     -----------    -----------
Total assets .....................................   $ 3,798,781    $ 6,620,212
                                                     ===========    ===========

LIABILITIES AND SHAREHOLDER'S DEFICIT

Liabilities:

Advances from parent .............................   $ 6,099,779    $ 9,476,210

Commitments and contingencies (Note 3) ...........          --             --

Shareholder's deficit:
Common stock, par value $1:  50,000 shares
   authorized;  2 shares issued and outstanding ..             2              2
Deficit accumulated during the development stage .    (2,301,000)    (2,856,000)
                                                     -----------    -----------
   Total shareholder's deficit ...................    (2,300,998)    (2,855,998)
                                                     -----------    -----------
Total liabilities and shareholder's deficit ......   $ 3,798,781    $ 6,620,212
                                                     ===========    ===========

     See accompanying notes to condensed consolidated financial statements.
                                      F-34(B)
<PAGE>
                  PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              AND DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
               For the Three Months Ended March 31, 1996 and 1997
              and Inception (July 20, 1994) Through March 31, 1997
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                        Inception
                                           Three Months Ended March 31   Through
                                            ------------------------     March 31
                                               1996          1997           1997
                                            ---------    -----------    -----------
<S>                                         <C>          <C>            <C>        
General and administrative expenses .....   $ 266,000    $   555,000    $ 2,856,000
                                            ---------    -----------    -----------
Net loss ................................    (266,000)      (555,000)    (2,856,000)

Deficit accumulated during the
   development stage, beginning of period    (647,000)    (2,301,000)          --
                                            ---------    -----------    -----------
Deficit accumulated during the
   development stage, end of period .....   $(913,000)   $(2,856,000)   $(2,856,000)
                                            =========    ===========    ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.
                                      F-35(B)
<PAGE>
                  PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the Three Months Ended March 31, 1996 and 1997
              and Inception (July 20, 1994) Through March 31, 1997
                                   (Unaudited)

                                          1996           1997           1997
                                        ---------    -----------    -----------
 OPERATING ACTIVITIES:

 Net loss ...........................   $(266,000)   $  (555,000)   $(2,856,000)

 INVESTING ACTIVITIES:

 Development costs ..................    (490,701)    (3,321,431)    (6,613,923)

 FINANCING ACTIVITIES:

 Capital contribution from parent ...        --             --                2
 Advances from parent ...............     756,701      3,376,431      9,476,210
                                        ---------    -----------    -----------
 Cash provided by financing activities    756,701      3,376,431      9,476,212
                                        ---------    -----------    -----------
 Increase (decrease) in cash ........        --         (500,000)         6,289

 Cash, beginning of period ..........       6,289        506,289           --
                                        ---------    -----------    -----------
 Cash, end of period ................   $   6,289    $     6,289    $     6,289
                                        =========    ===========    ===========

     See accompanying notes to condensed consolidated financial statements.
                                      F-36(B)
<PAGE>
                  PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A DEVELOPMENT STAGE ENTERPRISE)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 AND THE
          PERIOD FROM INCEPTION (JULY 20, 1994) THROUGH MARCH 31, 1997

1.    ORGANIZATION AND BASIS OF PRESENTATION

      Panda Global Energy Company ("Global Cayman", or collectively with its
subsidiaries the "Company")(a Cayman Islands company) is a wholly owned
subsidiary of Panda Global Holdings, Inc. ("Panda Global"), which in turn is a
wholly owned subsidiary of Panda Energy International, Inc. ("PEII"). PEII is
engaged in the development, acquisition, ownership and operation of independent
power generation facilities and other energy-related projects worldwide. Global
Cayman was formed in March 1997 to hold PEII's indirect ownership interest in an
independent power project located in the People's Republic of China ("China").
The ownership interest was transferred to Global Cayman at PEII's historical
cost. Because the transfer occurred between entities under common control, the
transaction has been accounted for in a manner similar to a pooling of
interests.

      Global Cayman holds a 95.5% ownership interest in Pan-Sino Energy
Development Company LLC ("Pan-Sino")(a Cayman Islands company), which in turn
holds a 99% ownership interest in Pan-Western Energy Corporation LLC
("Pan-Western")(a Cayman Islands company), which in turn owns an approximately
88% interest in four joint venture companies (the "Joint Venture Companies")
organized under the laws of China to develop and construct two 50 megawatt
coal-fired cogeneration plants (the "Luannan Project") located in Luannan
County, Tangshan Municipality, Hebei Province, China. Pan-Sino and Pan-Western
were formed on July 20,1994 and are the Company's predecessor. The Joint Venture
Companies, which currently have no material assets or operations, are: Tangshan
Panda Heat and Power Company, Ltd. ("Tangshan Panda"), Tangshan Pan-Western Heat
and Power Company, Ltd. ("Tangshan Pan-Western"), Tangshan Cayman Heat and Power
Company, Ltd. ("Tangshan Cayman") and Tangshan Pan-Sino Heat Company, Ltd.
("Tangshan Pan-Sino").

      All material intercompany accounts and transactions have been eliminated
in consolidation.

2.    SIGNIFICANT ACCOUNTING POLICIES

      The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
and should be read in conjunction with the audited consolidated financial
statements for the year ended December 31, 1996. The accompanying unaudited
financial statements for the three months ended March 31, 1996 and 1997 include
all adjustments, consisting of normal recurring accruals, which management
considers necessary for a fair presentation of the results of operations for the
interim periods. The results of operations for the three months ended March 31,
1997 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1997. The amounts presented in the balance sheet as of
December 31, 1996 were derived from the Company's audited financial statements.

      DEVELOPMENT STAGE ENTERPRISE -- The Company is in the development stage
and has no operating revenues. PEII has committed to provide the Company with
continued financial support until the Company obtains the financing necessary
for the continued development and construction of the Luannan Project. Such
financing was obtained in April 1997 (see Note 5).

      CASH -- Included in cash and cash equivalents are highly liquid
investments with original maturities of three months or less.

      DEVELOPMENT COSTS -- Costs related to the development of the Luannan
Project have been capitalized. Such costs primarily consist of engineering,
legal and other costs directly related to the project. Such costs will be
depreciated using the straight-line method over the estimated useful lives of
the assets, generally twenty years. Depreciation will begin when the completed
facility is ready for its intended use.

                                      F-33
<PAGE>
      ALLOCATION OF ADMINISTRATIVE COSTS -- PEII performs certain accounting,
legal, insurance and consulting services for the Company. These general and
administrative costs are generally allocated to the Company using the percentage
of time PEII spent performing these services. The expenses allocated were
$266,000 and $555,000 for the three months ended March 31, 1996 and 1997,
respectively, and are included in general and administrative expenses in the
consolidated statements of operations. Management believes the method used to
allocate these costs is reasonable.

      INCOME TAXES -- On the basis of the current legislation in the Cayman
Islands, there is no income, corporation, profits, capital gains or other form
of taxation that would be of application to Global Cayman or its subsidiaries
and, accordingly, there is no withholding tax. In addition, Pan-Western, as an
exempted company, has obtained from the Cayman Islands Government an undertaking
that should the current legislation change, no taxation will be imposed upon the
profits of Pan-Western or any shareholders in Pan-Western for a twenty year
period commencing August, 1994.

3.    LUANNAN PROJECT

      In 1994, PEII entered into a preliminary letter of intent with a
subsidiary of the North China Power Group Company ("NCPGC") for the purchase and
sale of electric energy from the Luannan Project. On September 22, 1995,
Tangshan Panda and Tangshan Pan-Western (see Note 1) entered into a Power
Purchase Agreement with NCPGC for the purchase and sale of electric energy from
the Luannan Project. Under the terms of the 20-year agreement, all electrical
output of the project will be sold to NCPGC. The steam and hot water generated
by Tangshan-Cayman's facility within the project will be sold to the domestic
Chinese industrial and commercial markets by Tangshan Pan-Sino. The Luannan
Project will be constructed pursuant to a fixed-price, turnkey contract with
Harbin Power Engineering Company Limited. Preliminary construction activity
commenced in December 1996. Full construction activity commenced after the
successful completion of financing in April 1997 (see Note 5).

      The Luannan Project is subject to political, regulatory and economic
uncertainties, risks of expropriation of property and cancellation or
modification of contract rights, foreign exchange restrictions, construction
risk, dependence on limited number of customers and other risks arising from
foreign governmental sovereignty.

4.    ADVANCES FROM PARENT

      PEII has performed all project development and administrative activities
for the Company. The advances from parent reflect the Company's liability for
such costs incurred by PEII on the Company's behalf. Such advances may be
partially reimbursed during the construction period of the Luannan Project.

5.    SUBSEQUENT EVENT

      In April 1997, Global Cayman issued $155.2 million original principal
amount of senior secured notes ("Senior Secured Notes") to finance the
development and construction of the Luannan Project. The Senior Secured Notes,
which were issued at a discount for gross proceeds of $145.0 million, bear
interest at a fixed rate of 12 1/2% payable semiannually commencing October 15,
1997. Scheduled principal payments are required semiannually commencing October
15, 2000 and will continue through maturity on April 15, 2004. The Senior
Secured Notes are subject to mandatory redemption prior to maturity under
certain conditions. The Senior Secured Notes are secured by (i) a pledge of 100%
of the capital stock of Global Cayman, 99% of the capital stock of Pan-Western
and at least 90% of the capital stock of Pan-Sino, and (ii) a security interest
in certain funds of Global Cayman and its subsidiaries established under the
indenture. Additionally, the Senior Secured Notes are fully and unconditionally
guaranteed by Panda Global, whose guarantee (the "Senior Secured Notes
Guarantee") is secured by (i) a pledge of 100% of the capital stock of Panda
Global and PEC and (ii) a security interest in certain funds of Panda Global
established under the indenture. The Senior Secured Notes Guarantee is
effectively subordinated to the obligations of PIC and its subsidiaries under
the Series A Bonds and project-level financing arrangements. The indenture
contains certain covenants, including limitations on distributions, additional
debt and certain other transactions.

                                      F-34





APPENDIX A

                 PART I - CERTAIN DEFINED TERMS

     Unless the context requires otherwise, any reference in this
Prospectus  to  any agreement shall mean such agreement  and  all
schedules,   exhibits   and  attachments  thereto   as   amended,
supplemented or otherwise modified and in effect as of  the  date
of this Offering Memorandum. All terms defined herein used in the
singular shall have the same meanings when used in the plural and
vice versa.

     Certain  terms defined below are summaries of terms  defined
in,  and  are defined more specifically in, the Project Documents
and  the  Indentures. Additional defined terms can  be  found  in
"Description of the Exchange Notes, the Exchange Note Guarantees,
the  Issuer  Loan,  the  Shareholder  Loans  and  the  Collateral
Documents." Such summaries do not purport to be complete and  are
subject to, and are qualified in their entirety by reference  to,
all   of  the  provisions  of  the  Project  Documents  and   the
Indentures.

     "1988  VEPCO  Solicitation" means the solicitation  of  bids
conducted  by  VEPCO  in 1988 for electricity generation  payment
rates from several non-utility generation plants.

     "1990  Clean  Air Act Amendments" means Public Law  101-549,
enacted  November 15, 1990, which amended the Clean Air  Act  (42
U.S.C.   7401  et seq.).  The 1990 Clean Air Act Amendments  have
been codified into the Clean Air Act.

     "Accredited Investors" has the meaning ascribed to such term
under  Rule  501(a)(1), (2), (3) or (7) of Regulation  D  of  the
Securities Act.

     "Additional  Amounts"  means  the  additional   amounts   as
described  in  "Description  of the Notes,  the  Guarantees,  the
Issuer  Loan, the Shareholder Loans and the Collateral Documents-
Withholding Taxes."

     "Administrative Services Agreement" means the administrative
services  agreement between Panda International and the  Company,
dated as of the Closing Date.

     "AFR" means the applicable federal rate set periodically  by
the IRS.

     "Anticipated  Additional Debt" means the original  principal
amount  of an additional series of Pooled Project Bonds  proposed
to  be  issued  by  PFC which is equal to the  largest  principal
amount  of  such  series that will provide a projected  PIC  Debt
Service  Coverage  Ratio and a projected  PIC  Consolidated  Debt
Service Coverage Ratio (if then applicable) of at least 1.7:1 and
1.25:1,  respectively,  for each PIC Future  Ratio  Determination
Period,  as  confirmed  in each case by a  certificate  from  the
Consolidating  Financial Analyst, assuming,  in  respect  of  the
additional series of Pooled Project Bonds proposed to be  issued:
(i)  a  maximum maturity and average life generally available  in
the  marketplace for debt of a similar nature and (ii)  a  coupon
rate  then prevailing in the market for debt of a similar nature,
and  taking into account (a) in the case of the PIC Debt  Service
Coverage  Ratio, PIC Cash Available for Distribution and  (b)  in
the case of the PIC Consolidated Debt Service Coverage Ratio, PIC
Cash  Available from Operations (net of any reserve  requirements
under Project-level debt and PIC-level debt) from the PIC Project
Portfolio  (giving effect, in each case, to the transfer  to  the
PIC  Project  Portfolio of any Project in respect of  which  such
additional  series  of Pooled Project Bonds  is  proposed  to  be
issued);  in  making  this analysis, the Consolidating  Financial
Analyst  is required to use generally accepted financial analysis
methods  and  generally follow the methods used to calculate  the
amount of the offering of the Series A Bonds.

     "BG&E"  means Baltimore Gas & Electric Company,  a  Maryland
corporation.

     "Bibb" means The Bibb Company, a Delaware corporation.
     
     "BOT"   means   foreign  investment  through  build-operate-
transfer,  a method that has been utilized in the PRC to  finance
the development of the PRC's electric power industry.

     "Brandywine  Effluent Agreement" means the Treated  Effluent
Water  Purchase Agreement dated as of September 13, 1994  between
the  Brandywine  Partnership  and  the  County  Commissioners  of
Charles  County,  Maryland,  together  with  the  Water  Easement
Maintenance Agreement, in the form (including all amendments  and
clarification letters relating thereto) delivered to  GE  Capital
and  Credit Suisse, New York branch, as amended, supplemented  or
otherwise modified from time to time in accordance with the terms
of such agreement and the Brandywine Participation Agreement.

     "Brandywine  Engineering Report" means the  report  entitled
"Panda-Brandywine  Cogeneration Project"  Independent  Engineer's
Report prepared by PES, dated July 22, 1996, as updated on  March
10,  1997,  evaluating  the  design,  construction  and  expected
operation of the Brandywine Facility.

     "Brandywine  EPC Agreement" means the Amended  and  Restated
Turnkey  Cogeneration Facility Agreement, dated as of  March  30,
1995, between Raytheon and the Brandywine Partnership.

     "Brandywine  Event  of  Loss  Proceeds"  means  proceeds  of
casualty  insurance or condemnation awards or the  like,  payable
with  respect  to  a Brandywine Event of Loss (net  of  costs  of
obtaining  such  proceeds or awards) to the extent  not  used  to
replace  or repair the Brandywine Facility and for other required
payments under the Brandywine Facility Lease.

     "Brandywine Event of Loss" means an Event of Loss as defined
in the Brandywine Participation Agreement.

     "Brandywine Facility" means the Brandywine Partnership's 230
MW  natural  gas-fired, combined-cycle cogeneration  facility  in
Brandywine, Prince George's County, Maryland.

     "Brandywine Facility Lease" means the Facility Lease,  dated
December 18, 1996, between Panda-Brandywine Partnership and Fleet
National  Bank,  as Owner Trustee, pursuant to which  the  Panda-
Brandywine Partnership leases the Brandywine Facility.

     "Brandywine Financing" means the transactions set out in the
Brandywine  Financing Documents and described  in  this  Offering
Memorandum  in  the  section  entitled  "Description   of   Other
Indebtedness-The Brandywine Financing."

     "Brandywine  Financing Conversion" means the conversion,  on
December 30, 1996, of the Brandywine construction loan to a long-
term   leveraged  lease  pursuant  to  the  Brandywine  Financing
Documents.

     "Brandywine   Financing  Documents"  means  the   Brandywine
Participation  Agreement,  the  Brandywine  Facility  Lease   and
certain other agreements relating to the Brandywine Financing.

     "Brandywine Fuel Consultant" means C.C. Pace.

     "Brandywine  Fuel  Consultant's  Report"  means  the  report
entitled
"Panda-Brandywine,  L.P.  Generating Facility  Fuel  Consultant's
Report" prepared by the Brandywine Fuel Consultant, dated July 2,
1996, as updated on March 10, 1997, analyzing the sufficiency  of
the   fuel  supply  and  transportation  arrangements   for   the
Brandywine Facility.

     "Brandywine Fuel Management Agreement" means the Fuel Supply
Management Agreement, dated March 30, 1995, between CDC  and  the
Brandywine Partnership.

     "Brandywine  Gas  Agreement" means the Gas Sales  Agreement,
dated  as  of  March 30, 1995, between the Brandywine Partnership
and CDC.

     "Brandywine  Loan  Agreement" means  the  Construction  Loan
Agreement and Lease Commitment, dated as of March 30, 1995, among
GE Capital, the Brandywine Partnership and PBC.

     "Brandywine   O&M   Agreement"  means   the   Operations   &
Maintenance  Agreement, dated November 21, 1994,  as  amended  on
December  7, 1994, between the Brandywine Partnership  and  Ogden
Brandywine.

     "Brandywine  Owner  Trustee" means Fleet National  Bank,  as
owner  trustee  in  connection with the lease of  the  Brandywine
Facility.

     "Brandywine Participation Agreement" means the Participation
Agreement,  dated as of December 18, 1996, among  the  Brandywine
Partnership,  PBC,  GE  Capital, Fleet National  Bank,  as  owner
trustee   and  security  agent,  First  Security  Bank,  National
Association,   as   indenture   trustee,   Credit   Suisse,    as
administrative agent, and the loan participants party thereto.

     "Brandywine  Partnership"  means Panda-Brandywine,  L.P.,  a
Delaware limited partnership.

     "Brandywine  Partnership Agreement" means the  Agreement  of
Limited Partnership of Panda-Brandywine, L.P., dated as of  March
25,  1991,  between  PEC  and  PBC as  amended,  supplemented  or
otherwise modified from time to time.

     "Brandywine  Power  Purchase  Agreement"  means  the   Power
Purchase  Agreement, dated August 9, 1991, as  amended  September
16, 1994, between the Brandywine Partnership and PEPCO.

     "Brandywine  Pro  Forma"  means  the  pro  forma   financial
projections prepared by ICF which are contained in the Brandywine
Pro Forma Report.

     "Brandywine  Pro  Forma Report" means  the  report  entitled
"Independent Panda-Brandywine Pro Forma Projections" prepared  by
ICF,  dated  April 11, 1997, and updated June 6, 1997, presenting
an independent assessment of the Brandywine Pro Forma.

     "Brandywine  Project  Documents"  means,  collectively,  the
Brandywine   Power   Purchase  Agreement,  the   Brandywine   EPC
Agreement,  the Brandywine O & M Agreement, the Brandywine  Steam
Agreement,  the  Brandywine Gas Agreement,  the  Raytheon  Parent
Guaranty,  the  Brandywine  Effluent  Agreement,  the  Brandywine
Partnership Agreement and each Additional Project Document.

     "Brandywine   Steam  Agreement"  means   the   Steam   Sales
Agreement, dated March 30, 1995, between Brandywine Water Company
and the Brandywine Partnership.

     "Brandywine Water Company" means Brandywine Water Company, a
Delaware corporation.

     "Burns  &  McDonnell"  means Burns &  McDonnell  Engineering
Company, Inc., a Missouri corporation.
     
     "Capitalized Interest Fund" shall have the meaning set forth
under  "Description  of the Exchange Notes,  the  Exchange  Notes
Guarantee,  the  Issuer  Loan,  the  Shareholder  Loans  and  the
Collateral DocumentsThe FundsCapitalized Interest Fund."

     "Carrier"  means  Luannan County State-Owned  Transportation
Company, a PRC company owned and operated by Luannan County.

     "Cautionary  Statements" means the  important  factors  that
could cause actual results to differ materially from the Issuer's
expectations  reflected  in  this Offering  Memorandum  that  are
disclosed  in  "Risk  Factors," in the assumptions  made  by  the
Independent  Engineers  and Consultants and  contained  in  their
reports and elsewhere in this Offering Memorandum.
     
     "C.C.  Pace"  means C.C. Pace Resources,  Inc.,  a  Virginia
corporation.
     
     "CDC"   means   Cogen   Development  Company,   a   Michigan
corporation.
"Central Government" means the Central Government of the PRC.

     "CEOZ  Notice"  means  the Notice to  Expand  the  Scope  of
Coastal  Economic Open Zone promulgated by the State  Council  of
the PRC on March 18, 1988.

     "CERCLA" means the United States Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.

     "CFETC" means the national interbank foreign exchange market
in  the  PRC,  also  known as the China Foreign Exchange  Trading
Center.

     "CHEXIM"  means the Export-Import Bank of China,  a  company
organized under the laws of the PRC.

     "CHEXIM  Guarantee" means the Guarantee dated July  9,  1996
provided  by  CHEXIM  as required pursuant  to  the  Luannan  EPC
Contract  in  respect  of the payment of liquidated  damages  and
termination payments up to a maximum amount of 35% of the Luannan
EPC Contract Price.

     "China" means the People's Republic of China.

     "Chinamac"  means Chinamac (Singapore) Pte Ltd, a  Singapore
corporation and a wholly-owned subsidiary of CMC.

     "Clean  Air Act" means the United States Federal  Clean  Air
Act, as amended.

     "Clean  Water  Act"  means the United States  Federal  Clean
Water Act, as amended.

     "Closing  Date" means the April 22, 1997, the date on  which
the Old Notes were issued and sold to the Initial Purchaser.

     "CMC"   means  China  National  Machinery  Import  &  Export
Corporation, a PRC corporation.

     "CNG"   means  CNG  Transmission  Corporation,  a   Delaware
corporation.

     "CNG  FT  Agreement" means the Services Agreement Applicable
to  Transportation  of Natural Gas Under Rate Schedule  FT  (X-74
Assignment),  dated as of August 20, 1996, between  CNG  and  the
Rosemary Partnership.

     "CNPC" China National Power Corporation.
     "Code"  means  the United States Internal  Revenue  Code  of
1986, as amended.

     "COFTEC" means, with respect to a province or county of  the
PRC, the Commission of Foreign Trade and Economic Cooperation  of
such province or county.

     "Collateral  Documents" means the Exchange Notes  Collateral
Documents and the Exchange Notes Guarantee Collateral Documents.
     
     "Columbia  Gas" means Columbia Gas Transmission Corporation,
a Delaware corporation.

     "Columbia  Gas FT Agreement" means the Amended and  Restated
FTS   Service  Agreement,  dated  March  23,  1995,  between  the
Brandywine Partnership and Columbia Gas.

     "Columbia Gas IT Agreement" means the Service Agreement  for
Service  Under  ITS  Rate Schedule, dated as of  April  4,  1991,
between  Columbia Gas and PR Corp., which agreement was  assigned
by  PR  Corp.  to,  and assumed by, the Rosemary  Partnership  on
January 6, 1992.

     "Columbia Gulf" means Columbia Gulf Transmission Company,  a
Delaware corporation.

     "Columbia  Gulf IT Agreement" means the ITS-1 Transportation
Service  Agreement, dated as of June 13, 1996,  between  Columbia
Gulf and the Rosemary Partnership.

     "Columbia   Precedent   Agreement"   means   the   Precedent
Agreement,  dated  as of February 25, 1994,  as  amended  by  the
Amending  Agreement, dated March 24, 1995, between the Brandywine
Partnership and Columbia Gas.

     "Commercial  Operations"  means, for  purposes  of  the  PIC
Additional Projects Contract, with respect to a Project, (i)  the
completion  of  construction and testing and the  functioning  of
such  Project  and  (ii) the satisfaction and  discharge  of  all
completion requirements of, and commencement of regular  capacity
or  reservation  payments under, the purchase, transportation  or
other off-take or use contracts for such Project.

     "Commission" means the Securities and Exchange Commission of
the United States.

     "Company"  means  Panda Global Holdings,  Inc.,  a  Delaware
corporation  and  the  owner  of 100%  of  the  Issuer,  and  its
successors pursuant to the terms of the Company Indentures.

     "Consolidated Pro Forma" means the summary consolidation  of
the  Rosemary Pro Forma, the Brandywine Pro Forma and the Luannan
Pro Forma.
     
     "Consolidated  Pro Forma Report" means the  report  entitled
"Summary  of the Consolidated Pro Forma of Panda Global Holdings,
Inc." prepared by ICF, dated April 11, 1997, and updated June  6,
1997, containing the Consolidated Pro Forma.

     "Consolidating  Financial  Analyst"  means   ICF,   or   its
successor  (any  such  successor shall  be  a  firm  of  national
reputation with expertise in engineering and financial analysis),
which  such party may rely, to the extent necessary for  purposes
of  performing its duties under the Indentures, on the reports of
the   Luannan   Facility   Engineer,  the   Brandywine   Facility
independent  engineer, the Rosemary Project independent  engineer
or other qualified consultants.

     "Constellation" means Constellation Energy Corporation.

     "Construction Schedule" means the construction schedule  set
forth in the Luannan EPC Contract.

     "Consultants"  means  the  Rosemary  Fuel  Consultant,   the
Brandywine  Fuel  Consultant, the Luannan  Coal  Consultant,  the
Consolidating  Financial  Analyst and the  Independent  Insurance
Consultant or their respective successors.

     "Consultants'  Reports"  means the  Consolidated  Pro  Forma
Report,  the  Rosemary Fuel Consultant's Report,  the  Brandywine
Fuel Consultant's Report, the Luannan Engineering Report and  the
Luannan Coal Consultant's Report.

     "County Partners" means Luannan Heat and Power, Luanhua  Co.
and  Luannan  Heat  Company, all of which are  business  entities
owned  or  related  to  the  Luannan  County  Government  or  its
subdivisions.

     "Cove  Point"  means Cove Point LNG Limited  Partnership,  a
Delaware limited partnership.

     "Cove  Point  FT Agreement" means that certain  FTS  Service
Agreement,   dated  March  30,  1995,  between   the   Brandywine
Partnership and Cove Point.
     
     "Debt Service Reserve Fund" shall have the meaning set forth
under  "Description  of the Exchange Notes,  the  Exchange  Notes
Guarantee,  the  Issuer  Loan,  the  Shareholder  Loans  and  the
Collateral DocumentsThe FundsDebt Service Reserve Fund."

     "Design  Institute" means Hebei Electric  Power  Survey  and
Design Institute.

     "Development  Services  Agreement"  means  the   development
services  agreement between Panda International and the  Company,
dated as of the Closing Date.

     "Dispatch  Centers"  means, collectively,  dispatch  centers
operated by the Power Bureaus.

     "Dispatch   Regulations"  means  the  Regulations   on   the
Administration of Electric Power Dispatch to Networks  and  Grids
of the PRC.

     "Duff & Phelps" means Duff & Phelps Credit Rating Co.

     "Energy  Policy Act" means the United States  Energy  Policy
Act of 1992.

     "Energy  Purchase  Agreement"  means  the  Electric   Energy
Purchase  and  Sales Agreement, dated September 22,  1995,  among
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western.

     "Engineering and Design Contract" means the Engineering  and
Design  Contract,  dated  December 21,  1995,  among  the  Design
Institute, Tangshan Panda and Tangshan Pan-Western.

     "Equity Joint Venture Law of the PRC" means the Law  of  the
People's  Republic of China on Joint Ventures Using  Chinese  and
Foreign  Investment,  adopted on July 1,  1979  by  the  National
People's Congress, as amended.

     "ERISA" means the Employee Retirement Income Security Act of
1974.

     "EWG"  means an Exempt Wholesale Generator under Section  32
of PUHCA.

     "Exchange  Act"  means  the  United  States  Securities  and
Exchange Act of 1934, as amended.

     "Exchange  Agent"  shall  mean  Bankers  Trust  Company   as
Exchange Agent for the Exchange Offer.
     
     "Exchange  Offer  Registration  Statement"  shall  have  the
meaning set forth in "Prospectus Summary--Prior Offering."
     
       "FERC"  means the Federal Energy Regulatory Commission  of
the United States.

     "FIEs" means foreign investment enterprises in the PRC.

     "Financial   Closing"   means   closing   of   the   initial
construction or long-term project financing of a Project.

     "Firm Gas Transportation Agreements" means (i) the Texas Gas
FT  Agreement, the CNG FT Agreement and the Transco FT Agreement,
as  they  may  exist  at any time, (ii) any  firm  transportation
agreement  that  replaces  any  such  agreement  pursuant  to   a
specified  conversion  election by the Rosemary  Partnership  and
(iii)  any  other  firm agreement having a  term  (including  all
renewal or extension periods) greater than one year entered  into
by  the  Rosemary Partnership to transport natural  gas  supplied
under the Rosemary Gas Supply Agreement.

     "First  Amendment" means the amendment dated  September  16,
1994, to the Brandywine Power Purchase Agreement.

     "Flippo"  means Flippo Construction, a District of  Columbia
corporation.

     "Florida  Power" means Florida Power Corporation, a  Florida
corporation.

     "Florida PSC" means the Florida Public Service Commission.

     "Force Majeure Event" has the meaning ascribed to such  term
under the Luannan Operations and Maintenance Agreement.

     "Ford  Credit" means Ford Motor Credit Company,  a  Delaware
corporation.

     "Foreign   Debt   Registration   Certificate"   means    the
certificate issued to FIEs by SAFE which evidences proper  filing
of foreign debts in the PRC.

     "FPA" means the United States Federal Power Act, as amended.

     "Funding  Period"  means, with respect to  the  Issuer  Loan
Agreement, the period of time beginning with the Closing Date and
ending  on  the  date when the last Joint Venture has  a  payment
obligation relating to the construction of the Luannan Facility.

     "GE  Capital" means General Electric Capital Corporation,  a
New York corporation.

     "GNPIPD"  means  the Gross National Product  Implicit  Price
Deflator.

     "Guaranteed  Commercial  Operation  Date"  means  28  months
following the issuance of the Notice to Proceed pursuant  to  the
Luannan EPC Contract.

     "Harbin  Power"  means  Harbin Power  Equipment  Company,  a
company organized under the laws of the PRC.

     "Heard  Defendants"  means  the  Heard  Energy  Corporation,
collectively   with  certain  individual  former  PEC   officers,
employees and advisors who are involved in litigation with PEC.

     "Heat Network Construction Agreement" means the Construction
Agreement  of  the Heat and Steam Network, dated June  20,  1996,
between Tangshan Pan-Sino and Tangshan Engineering.

     "HPPC" means the Hebei Provincial Planning Commission.

     "HRSG" means heat recovery steam generator.

     "ICC" means the International Chamber of Commerce.

     "ICF"   means  ICF  Resources,  Incorporated,   a   Delaware
corporation.

     "Independent Engineers" means Burns & McDonnell with respect
to  the  Rosemary Facility and PES with respect to the Brandywine
Facility, or their respective successors.

     "Independent   Engineers'  Reports"   means   the   Rosemary
Engineering Report and the Brandywine Engineering Report.

     "Independent  Insurance Consultant" means Sedgwick,  PLC,  a
corporation  incorporated in accordance  with  the  laws  of  the
United Kingdom, or its successor.
     
     "Initial Purchaser" shall mean Donaldson, Lufkin & Jenrette,
the initial purchaser of the Old Notes.

     "Interconnection     Agreement"    means     the     General
Interconnection  Agreement,  dated September  22,  1995,  between
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western, as supplemented by the Supplemental Agreement.

     "Interholding"  means  Panda  Interholding  Corporation,   a
Delaware corporation.

     "IRS" means the United States Internal Revenue Service.

     "Issuer" means Panda Global Energy Company, a Cayman Islands
exempted company.

     "Jing-Jin-Tang  Grid"  means North China  Power's  Beijing--
Tianjin--Tangshan   Regional  Power   Network,   to   which   the
electricity generated by the Luannan Facility will be transmitted
for distribution.

     "Joint  Venture Agreements" means, collectively,  the  joint
venture  contracts  in respect of Tangshan Panda,  Tangshan  Pan-
Western, Tangshan Cayman and Tangshan Pan-Sino.

     "Joint   Ventures"  means,  collectively,  Tangshan   Panda,
Tangshan Pan-Western, Tangshan Cayman and Tangshan Pan-Sino.

     "Kathleen  Facility" means the natural gas-fired,  combined-
cycle cogeneration facility to be located near Lakeland, Florida,
that is being developed by PEC.

     "Kathleen   Partnership"  means  Panda-Kathleen,   L.P.,   a
Delaware limited partnership.

     "Kailuan Coal" means Kailuan Coal Mining Administration, one
of the Luannan Coal Suppliers.

     "Liquidated Damages" means the amount payable as  liquidated
damages under the terms of the Registration Rights Agreements, as
described  in  "Description  of the Notes,  the  Guarantees,  the
Issuer Loan, the Shareholder Loans and the Collateral Documents."
     "Luanhua Co." means Tangshan Luanhua (Group) Co., a  company
organized under the laws of the PRC.

     "Luannan Coal Consultant" means Marston & Marston.

     "Luannan Coal Consultant's Report" means the report prepared
by  the  Luannan  Coal Consultant entitled "Review  of  the  Coal
Supply Arrangements for the Luannan Power Project of Panda Energy
International, Inc." dated March 10, 1997.

     "Luannan  Coal Suppliers" means, collectively, Kailuan  Coal
Mining Administration, Luannan County Coal Mine, Liu Guantun Coal
Mine,  Le  Ting County Coal Mine, Zunhua Coal Mine and  Chang  Li
County Coal Mine.

     "Luannan  Coal  Supply Agreements" means, collectively,  the
coal   supply  agreements  entered  into  among  Tangshan  Panda,
Tangshan Pan-Western and the Luannan Coal Suppliers.

     "Luannan  Coal  Transportation  Agreement"  means  the  coal
transportation agreement, dated March 6, 1996, among the Carrier,
Tangshan Panda and Tangshan Pan-Western.

     "Luannan County Government" means the government of  Luannan
County, Tangshan Municipality, Hebei Province, PRC.

     "Luannan  Engineering  Report"  means  the  report  entitled
"Engineer's  Review  and Report Panda Energy International,  Inc.
2x50  MW  Coal-Fired Power Plant at Luannan, China"  prepared  by
Parsons  Brinckerhoff,  dated  March  10,  1997,  evaluating  the
design,  construction  and  expected  operational  and  financial
performance of the Luannan Facility.

     "Luannan  EPC  Contract" means the Engineering,  Procurement
and  Construction Contract, dated as of April 24, 1996 among  the
Luannan  EPC Contractor, Tangshan Panda and Tangshan Pan-Western,
as  the  same  may from time to time be amended, supplemented  or
otherwise modified.

     "Luannan EPC Contract Price" means the price that the  Joint
Ventures  have agreed to pay to the Luannan EPC Contractor  under
the Luannan EPC Contract.

     "Luannan  EPC  Contractor"  means Harbin  Power  Engineering
Company  Limited, a company organized under the laws of the  PRC,
and a wholly-owned subsidiary of Harbin Power.
     
     "Luannan  EPC  Guarantee" means (i) the corporate  guarantee
provided  by Harbin Power for the benefit of Tangshan  Panda  and
Tangshan   Pan-Western,   guaranteeing   the   liabilities    and
obligations  of the Luannan EPC Contractor under the Luannan  EPC
Contract and (ii) the Guarantee, dated July 9, 1996, provided  by
CHEXIM  as  required  pursuant to the  Luannan  EPC  Contract  in
respect  of  the  payment of liquidated damages  and  termination
payments  up  to  a  maximum amount of 35%  of  the  Luannan  EPC
Contract Price.

     "Luannan   EPC   Work"   means  the   design,   engineering,
procurement,  construction, startup, and performance  testing  of
the Plant.

     "Luannan  Facility" means the Plant, the related  steam  and
hot  water generation and distribution facility and other related
facilities   to   be   located   in  Luannan   County,   Tangshan
Municipality, Hebei Province, China.

     "Luannan Heat and Power" means Luannan County Heat and Power
Plant, a company organized under the laws of the PRC.

     "Luannan  Heat  Company" means Luannan County Heat  Company,
Ltd., a company organized under the laws of the PRC.

     "Luannan  Heat  Supply  Contracts" means  the  contracts  to
supply  steam  and  hot  water  to  various  PRC  industrial  and
commercial  users  that have been assigned by  Luannan  Heat  and
Power to Tangshan Pan-Sino.

     "Luannan  Interconnection  Dispatch  Agreement"  means   the
agreement to be negotiated among Tangshan Power Supply Bureau  of
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western  shortly prior to the Luannan Commercial  Operation  Date
concerning  specific details as to the dispatch  of  the  Luannan
Facility.

     "Luannan    O&M   Contractor"   means   Duke/Fluor    Daniel
International  Services, a partnership whose  partners  are  Duke
Coal  Project  Services Pacific, Inc., a Nevada corporation,  and
Fluor Daniel Asia, Inc., a California corporation.

     "Luannan  Operations  and Maintenance Agreement"  means  the
Amended  and Restated Operation and Maintenance Agreement,  dated
as of March 6, 1997, among the Joint Ventures and the Luannan O&M
Contractor.

     "Luannan Power Purchase Agreement" means, collectively,  the
Energy  Purchase Agreement, the General Interconnection Agreement
and the Supplemental Agreement (and, after execution thereof, the
Interconnection Dispatch Agreement).

     "Luannan   Pro   Forma"  means  the  pro   forma   financial
projections prepared by Parsons Brinckerhoff and contained in the
Luannan Engineering Report.

     "Luannan   Transmission   Facilities"   means   three    new
substations, the upgrades of both an existing substation  and  an
existing  switching station and approximately 43  km  of  110  KV
transmission lines to interconnect the Plant to the Jing-Jin-Tang
Grid.

     "Luannan  Transmission  Facilities  Construction  Agreement"
means  the  Transmission Facilities Construction Agreement  among
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western,  dated February 10, 1996, as assigned by Tangshan  Panda
and Tangshan Pan-Western to Tangshan Pan-Sino on July 11, 1996.

     "Luannan  Transmission  Facilities Contractor"  means  North
China  Power  Company as the contractor pursuant to  the  Luannan
Transmission Facilities Construction Agreement.

     "Luannan  Transmission Facilities Loan" means the loan  made
by  Tangshan  Pan-Sino to the Transmission Facilities  Contractor
through a PRC financial intermediary for the construction cost of
the  Luannan  Transmission  Facilities,  in  the  amount  of  RMB
78,218,000, to be adjusted for inflation from December  31,  1994
to the date of issuance of the notice to proceed with preliminary
design and for accrued interest during the construction period.

     "Marston  &  Marston"  means  Marston  &  Marston,  Inc.,  a
Missouri corporation.

     "MCN" means MCN Corporation, a Michigan corporation.

     "MOEP" means the Ministry of Electric Power of the PRC.

     "MOFTEC"  means the Ministry of Foreign Trade  and  Economic
Cooperation of the PRC.

     "Moody's" means Moody's Investors Service, Inc.

     "NCNG"  means  North  Carolina Natural  Gas  Corporation,  a
Delaware corporation.

     "NCPA" means the North China Power Administration.

     "NCUC" means the North Carolina Utilities Commission.

     "NDR" means National Development and Research Corporation, a
Texas corporation.

     "NEA" means the Nepal Electricity Authority.

     "Network"  means the heat and steam network of Luannan  Heat
and  Power  which will consist of 12.1 kilometers  of  hot  water
pipeline,  8.78  kilometers  of  steam  pipeline,  heat  exchange
stations, heat control equipment and civil construction.

     "NGC"   means   Natural   Gas  Clearinghouse,   a   Colorado
partnership.

     "NNW"  means  NNW, Inc., formerly known as  Nova  Northwest,
Inc., an Oregon corporation.

     "NNW   Cash  Flow  Participation"  means  NNW's  cash   flow
participation  interest  in  distributions  from   the   Rosemary
Partnership.

     "NNW  Credit  Agreement" means the  Credit,  Term  Loan  and
Security  Agreement,  dated August 31,  1993,  among  PEC,  Panda
Rosemary Corporation, a Delaware corporation, PRC II and NNW.

     "Non-Global Purchasers" means foreign purchasers, Accredited
Investors  or QIBs who elect to take physical delivery  of  their
certificates instead of holding their interest through  a  Global
Note.

     "Non-payment  Default"  means any non-payment  default  with
respect  to any Designated Senior Indebtedness pursuant to  which
the maturity thereof may then be accelerated immediately.

     "Noon  Buying Rate" means the noon buying rate in  New  York
City  for cable transfers in foreign currencies as certified  for
customs purposes by the Federal Reserve Bank of New York.

     "North  China  Power"  means  North  China  Power  Group,  a
regional  grid  administrative agency  in  northern  China  whose
jurisdiction  covers  Beijing, Tianjin,  Hebei  Province,  Shanxi
Province and western Inner Mongolia.

     "North  China Power Company" means North China  Power  Group
Company,  a company organized under the laws of the PRC  and  the
business arm of North China Power.

     "Noteholders" or "Holders" means the persons in whose  names
Existing Notes are registered on the Registrars' books.

     "NPC"  means  the  National People's Congress,  the  highest
legislative body of the PRC.

     "NPDES"  means the National Pollutant Discharge  Elimination
System.

     "O&M" means operations and maintenance services.

     "Offering"  means the offering of the Old Notes pursuant  to
an offering memorandum dated April 11, 1997.

     "Ogden Brandywine" means Ogden Brandywine Operations,  Inc.,
a subsidiary of Ogden Power Corporation.

     "OID" means Original Issue Discount.

      "Old Notes" means the 12-1/2% Senior Secured Notes due 2004 of
the Issuer issued to the Initial Purchaser on April 22, 1997.

     "Pan-Sino" means Pan-Sino Energy Development Company LLC,  a
Cayman Islands exempted company.

     "Pan-Western"  means Pan-Western Energy Corporation  LLC,  a
Cayman Islands exempted company.

     "Panda  Global Rosemary O&M Agreement" means the  operations
and   maintenance  agreement  pursuant  to  which  the   Rosemary
Partnership purchases O&M services for the Rosemary Facility from
Panda Global Services.

     "Panda Global Services" means Panda Global Services, Inc., a
Delaware  corporation and an indirect wholly-owned subsidiary  of
Panda International.

     "Panda  International"  means  Panda  Energy  International,
Inc., a Texas corporation.
     
     "Parsons  Brinckerhoff"  means Parsons  Brinckerhoff  Energy
Services, Inc., a Delaware corporation.
     
     "PBC"   means  Panda  Brandywine  Corporation,  a   Delaware
corporation.

     "PBOC" means People's Bank of China.

     "PBOC Rate" means the official RMB-foreign currency exchange
rate determined by the People's Bank of China.

     "Peak  Hours"  means  one of the three  eight-hour  delivery
periods designated by the Luannan Power Purchase Agreement.

     "PEC" means Panda Energy Corporation, a Texas corporation.

     "PEPCO" means Potomac Electric Power Company, a District  of
Columbia and Virginia corporation.

     "PES"   means  Pacific  Energy  Services,  Inc.,  an  Oregon
corporation.

     "PFC"   means   Panda   Funding  Corporation,   a   Delaware
corporation  and  an  indirect  wholly-owned  subsidiary  of  the
Company.
     
     "PFC  Bonds" means any series of bonds issued under the  PFC
Indenture.

     "PFC  Indenture" means the Trust Indenture, dated as of July
31,  1996, among PFC, PIC and Bankers Trust Company, as  trustee,
providing  for  the  issuance from time to  time  of  the  Pooled
Project Bonds in one or more series.

     "PFC   Registration   Statement"  means   the   Registration
Statement on Form S-1, filed by PFC and certain of its affiliates
with the Commission which became effective on February 14, 1997.

     "PIC"  means  Panda  Interfunding  Corporation,  a  Delaware
corporation  and  an  indirect  wholly-owned  subsidiary  of  the
Company.

     "PIC  Additional  Projects Contract"  means  the  Additional
Projects  Contract,  dated  as of  July  31,  1996,  among  Panda
International, PEC and PIC.
     
     "PIC  Capitalized Interest Fund" shall mean  the  respective
capitalized interest fund established under the PFC Indenture.
     
     "PIC  Company  Expense Fund" shall mean the company  expense
fund established under the PFC Indenture.
     
     "PIC  Debt  Service Reserve Fund" shall mean the  respective
debt service reserve fund established under the PFC Indenture.


     "PIC   Entity"  or  "PIC  Entities"  means   one   or   more
corporations,   companies,   partnerships,   limited    liability
companies  or  other entities (i) that are not Project  Entities,
(ii)  100%  of  the voting capital stock or other  voting  equity
interests  of  which  are  owned  directly  by  PIC,  other  than
directors' qualifying shares mandated by applicable law and (iii)
through which PIC owns indirect interests in Project Entities.

     "PIC  Guaranty"  means  the unconditional  guaranty  of  the
Series  A Bonds and each other series of Pooled Project Bonds  by
PIC.

     "PIC   International  Entities"  means  PIC  Entities  that,
through  Project  Entities,  own  Projects  that  are  not   U.S.
Projects.

     "PIC  Notes" means any promissory note evidencing loans from
PFC  to PIC of the proceeds of the offering of the Series A Bonds
and each other series of Pooled Project Bonds.

     "PIC  Project  Portfolio" means the  portfolio  of  Projects
owned directly or indirectly by PIC.

     "PIC U.S. Entities" means PIC Entities that, through Project
Entities, own U.S. Projects.

     "Pipeline  Operating Agreement" means the Pipeline Operating
Agreement, dated as of February 14, 1990, among PEC, PR Corp. and
NCNG,  which agreement was assigned by PEC and PR Corp.  to,  and
assumed by, the Rosemary Partnership.

     "Plant"  means the 2x50 MW coal-fired cogeneration plant  to
be  constructed by the Joint Ventures in Luannan County, Tangshan
Municipality, Hebei Province, China.

     "Pooled  Project Bonds" means the Series A Bonds and certain
additional series of bonds issued pursuant to the PFC Indenture.

     "PORTAL"  means  the Private Offerings, Resale  and  Trading
Through Automatic Linkages market.

     "Power  Bureaus" means, collectively, all power  bureaus  of
each level of the administration of the PRC.

     "Power  Law"  means the Law of Electric Power  of  the  PRC,
effective as of April 1, 1996.

     "PR  Corp."  means  Panda-Rosemary Corporation,  a  Delaware
corporation.

     "PRC" means the People's Republic of China.

     "PRC II" means PRC II Corporation, a Delaware corporation.

     "Pricing  Approval  Authority" means the Tangshan  Municipal
Price Bureau.

     "Pricing  Document" means the document or documents  (issued
by  the  Pricing Approval Authority) determining  the  price  for
electric  energy  delivered,  retail  price  and  principles  for
adjustment.

     "Prior  Offering"   shall mean the  offering  of  Old  Notes
consummated on April 22, 1997.
     
     "Project" means a power generation facility or any  activity
relating thereto.

     "Project  Debt" means any indebtedness created, incurred  or
assumed  by  a  Project Entity or secured  by  the  assets  of  a
Project, including the Rosemary Bonds.

     "Project  Design  Criteria"  means  the  Chinese  codes  and
regulations,  and  the project design criteria  detailed  in  the
Engineering and Design Contract.

     "Project    Entity"   means   any   corporation,    company,
partnership,  limited liability company or other entity  that  is
(i) directly or indirectly owned by a PIC Entity and (ii) (a) the
direct or indirect owner of a Project or (b) obligated under or a
guarantor of Project Debt or that has granted a security interest
in  any of its assets (including Project cash flows), other  than
the  capital stock of any of its Subsidiaries (and any  dividends
or  other  distributions  on  such  capital  stock  and  proceeds
therefrom),  to  secure  the  payment  of  Project  Debt  or  the
performance of any Project agreement.

     "Prospectus" shall mean the prospectus forming a part of the
Registration Statement.
     
     "Provincial  Power Bureaus" means, collectively,  the  eight
independent  provincial  and  two  special  administrative  power
bureaus of the PRC.

     "Prudent  Utility  Practices" means the practices  generally
followed  by the electric utility industry, as changed from  time
to  time,  which  generally include,  but  are  not  limited  to,
engineering and operating considerations.

     "PUCs"  means state public utility commissions in the United
States.

     "PUHCA"  means  the  United States  Public  Utility  Holding
Company Act of 1935, as amended.

     "Purchase Agreement" shall mean the purchase agreement dated
April  11, 1997, whereby the Initial Purchaser agreed to purchase
the Old Notes.
     
     "PURPA"  means  the United States Public Utility  Regulatory
Policies Act of 1978, as amended.

     "QF" means Qualifying Facility.

     "QIB"  means qualified institutional buyer, as such term  is
defined under Rule 144A of the Securities Act.

     "Qualifying  Facility" or "QF Status" means either  a  small
power  production facility or a cogeneration facility   that  has
satisfied the definition of "qualifying facility" as set forth in
18  C.F.R.   292.101(b)(1) of the regulations  promulgated  under
PURPA.

     "Rating Agencies" means Standard & Poor's, Moody's, and Duff
&  Phelps.  "Reaffirmed  by the Rating  Agencies,"  or  words  to
similar  effect,  means  two  or  three  of  such  agencies  have
reaffirmed the rating of the Indebtedness at issue.

     "Raytheon" means Raytheon Engineers and Constructors, Inc.

     "Raytheon  Parent Guaranty" means the Parent Guaranty  dated
as of March 30, 1995 executed by Raytheon Company in favor of the
Brandywine Partnership.

     "RCRA"  means  the  United States Resource Conservation  and
Recovery Act of 1976.

     "Regional  Power  Groups"  means,  collectively,  the   five
interprovincial power groups of China.

     "Registration Rights Agreement" shall have the  meaning  set
forth in "Prospectus Summary--Prior Offering".
     
     "Registration Statement" shall have the meaning set forth in
"Available Information."
     
     "Reimbursement  Agreement"  means  the  Second  Amended  and
Restated  Letter of Credit and Reimbursement Agreement, dated  as
of  January  6,  1992, among the Rosemary Partnership,  The  Fuji
Bank,  Limited, and certain other banks party thereto, which  was
terminated in July 1996.

     "Renminbi"  or  "RMB"  means  Renminbi,  the  legal   tender
currency of China.

     "Retainage"  means  the withholding by  Tangshan  Panda  and
Tangshan Pan-Western of 10% of the Luannan EPC Contract Price.

     "Rosemary  Bonds" means the 8 5/8% First Mortgage Bonds  due
2016 of Panda-Rosemary Funding Corporation.

     "Rosemary    Borrowers"    means   Panda-Rosemary    Funding
Corporation, PR Corp. and PRC II.

     "Rosemary  Casualty  Proceeds" means  Casualty  Proceeds  as
defined in the Rosemary Indenture.

     "Rosemary  Eminent  Domain Proceeds"  means  Eminent  Domain
Proceeds as defined in the Rosemary Indenture.

     "Rosemary  Engineering  Report" means  the  report  entitled
"Panda-Rosemary Cogeneration Project Condition Assessment  Report
prepared by Burns & McDonnell, dated April 11, 1997, and  updated
June  6,  1997,  concerning certain technical, environmental  and
economic aspects of the  Rosemary Facility.

     "Rosemary Event of Eminent Domain" means an Event of Eminent
Domain as defined in the Rosemary Indenture.

     "Rosemary  Event of Loss" means an Event of Loss as  defined
in the Rosemary Indenture.

     "Rosemary  Facility"  means the 180  MW  natural  gas-fired,
combined-cycle cogeneration facility of the Rosemary  Partnership
located in Roanoke Rapids, North Carolina.

     "Rosemary  Fuel  Consultant" means Benjamin Schlesinger  and
Associates, Inc.

     "Rosemary  Fuel  Consultant's   Report"  means  the   report
entitled "Assessment of Fuel Price, Supply and Delivery Risks for
the Panda-Rosemary Cogeneration Project" prepared by the Rosemary
Fuel  Consultant, dated September 20, 1996, as updated  on  April
11, 1997, and June 6, 1997, analyzing the sufficiency of the fuel
supply and transportation arrangements for the Rosemary Facility.
     "Rosemary  Fuel Management Agreement" means the Fuel  Supply
Management  Agreement,  dated  October  10,  1990,  between   the
Rosemary Partnership and NGC, as amended.

     "Rosemary  Gas  Supply  Agreement" means  the  Gas  Purchase
Contract,  dated April 12, 1990, between the Rosemary Partnership
and NGC, as amended.

     "Rosemary Indenture" means the trust indenture governing the
terms of issuance from time to time of debt securities in one  or
more  series,  dated  as of July 31, 1996,  among  Panda-Rosemary
Funding  Corporation, the Rosemary Partnership and Fleet National
Bank, as trustee.

     "Rosemary  Issuer" means Panda-Rosemary Funding Corporation,
a Delaware corporation.

     "Rosemary  Offering"  means the  offering  of  the  Rosemary
Bonds.

     "Rosemary   Partnership"  means  Panda-Rosemary,   L.P.,   a
Delaware limited partnership.

     "Rosemary Pipeline" means the 10.26 mile gas pipeline  owned
by the Rosemary Partnership.

     "Rosemary Power Purchase Agreement" means the Power Purchase
and  Operating Agreement, dated January 24, 1989, as  amended  on
October  24,  1989,  and  July 30, 1993, between  VEPCO  and  the
Rosemary Partnership.

     "Rosemary   Pro   Forma"  means  the  pro  forma   financial
projections  prepared by Burns & McDonnell that are contained  in
the Rosemary Engineering Report.
     
     "Rosemary   Project   Document"  means,  collectively,   the
Rosemary  Power  Purchase Agreement, the Rosemary EPC  Agreement,
the  Rosemary  O&M Agreement, the Rosemary Steam  Agreement,  the
Rosemary  Fuel  Management Agreement,  the  Rosemary  Gas  Supply
Agreement, the Rosemary Site Lease and (as each of the  following
is defined in the Rosemary Indenture) and each Additional Project
Document.

     "Rosemary  Site  Lease" means the Real  Property  Lease  and
Easement Agreement, dated June 9, 1989, as amended on October  1,
1989,  and as further amended on January 31, 1990, and March  15,
1996, between the Rosemary Partnership and Bibb.

     "Rosemary  Steam  Agreement" means the  Cogeneration  Energy
Supply Agreement, dated January 12, 1989, by and between PEC  and
Bibb,  which contract was assigned by PEC to, and assumed by,  PR
Corp.,  as such contract was amended October 1, 1989, and as  the
same  was  further assigned by PR Corp. to, and assumed  by,  the
Rosemary Partnership on January 3, 1990.
     "Rosemary Title Event" means a Title Event as defined in the
Rosemary Indenture.

     "Rosemary  Title  Insurance Proceeds" means Title  Insurance
Proceeds as defined in the Rosemary Indenture.

     "SAFE" means the State Administration of Foreign Exchange of
the PRC.

     "SAIC"  means  the  State  Administration  of  Industry  and
Commerce of the PRC.

     "SCC"   means  the  State  Corporation  Commission  of   the
Commonwealth of Virginia, or any successor agency.

     "SEC"  means the Securities and Exchange Commission  of  the
United States.

     "Securities Act" means the United States Securities  Act  of
1933, as amended.

     "Series  A  Bonds" means the 11 5/8% Pooled  Project  Bonds,
Series A due 2012 of Panda Funding Corporation.

     "Series  A  Offering" means the offering  of  the  Series  A
Bonds.

     "Series  A-1 Bonds" means they 11-5/8% Pooled Project  Bond,
series  A-1 due 2012 of Panda Funding Corporation, exchanged  for
the Series A Bonds of Panda Funding Corporation.
     
     "Services" means the services to be performed by the  Design
Institute pursuant to the Engineering and Design Contract.

      "Shelf  Registration Statement" shall have the meaning  set
forth in "Prospectus Summary--Prior Offering."

     "SFV" means Straight Fixed-Variable transportation rates.

     "SP" means the State Power Corporation of China.

     "SPC" means the State Planning Commission of the PRC.

     "Standard & Poor's" means Standard & Poor's Ratings Service.

     "Superfund"    means   the   United   States   Comprehensive
Environmental Response, Compensation and Liability Act  of  1980,
as amended.

     "Supplemental  Agreement" means the  Supplemental  Agreement
for   General  Interconnection  Agreement  and  Electric   Energy
Purchase  and  Sales Agreement, dated February  10,  1996,  among
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western.

     "Swap  Centers"  means  the official foreign  exchange  swap
markets of the PRC.
     "Tangshan  Cayman" means Tangshan Cayman Heat &  Power  Co.,
Ltd., a Sino-foreign equity joint venture.

     "Tangshan  Engineering" means Tangshan Heat and  Engineering
Company, a company organized under the laws of the PRC.

     "Tangshan Pan-Sino" means Tangshan Pan-Sino Heat Co.,  Ltd.,
a Sino-foreign equity joint venture.

     "Tangshan Pan-Western" means Tangshan Pan-Western  Heat  and
Power Co., Ltd., a Sino-foreign equity joint venture.

     "Tangshan  Panda" means Tangshan Panda Heat and  Power  Co.,
Ltd., a Sino-foreign equity joint venture.

     "Taxes"   means   any  present  or  future  taxes,   duties,
assessments or governmental charges of whatever nature.

     "Texas Gas" means Texas Gas Transmission Corporation.

     "Texas  Gas  FT  Agreement"  means  the  Gas  Transportation
Agreement,  dated  August  1, 1996, between  Texas  Gas  and  the
Rosemary Partnership.

     "Total Transmission Facilities Construction Cost" means  the
U.S.  dollar  equivalent of RMB 78,218,000, to  be  adjusted  for
inflation from December 31, 1994, to the date of issuance of  the
notice  to  proceed with preliminary design in  relation  to  the
construction of the Luannan Transmission Facilities.

     "Transco"  means Transcontinental Gas Pipe Line Corporation,
a Delaware corporation.

     "Transco  FT  Agreement" means the Service Agreement,  dated
July  26,  1996,  effective as of August 20,  1996,  between  the
Rosemary Partnership and Transco.

     "Treasury" means the United States Department of Treasury.

     "Treasury  Regulations"  means  regulations  issued  by  the
United States Department of Treasury.

     "Trough  Hours"  means one of the three eight-hour  delivery
periods designated by the Luannan Power Purchase Agreement.

     "U.S.  dollars,"  "dollars,"  or  "$"  means  United  States
dollars, legal currency of the United States of America.

     "U.S.  Projects"  means  the  Projects  owned  by  PIC  U.S.
Entities  and  located  in the United States  and  certain  other
international  Projects  in respect of  which  deferral  of  U.S.
federal income taxes is not being sought.

     "United  States"  or  "U.S."  means  the  United  States  of
America.

     "United States Holder" or "U.S. Holder" means a holder of  a
Note  who  is  (i)  a citizen or resident of the  United  States,
(ii)  a  corporation,  partnership or  other  entity  created  or
organized  in  or  under the laws of the  United  States  or  any
political  subdivision thereof, (iii) an  estate  or  trust,  the
income  of  which  is  subject to United  States  federal  income
taxation  regardless  of its source or  (iv)  a  trust  which  is
subject  to  the supervision of a court within the United  States
and  the  control  of a United States fiduciary as  described  in
Section 7701(a)(30) of the Code.

     "VEPCO"  means  Virginia  Electric  and  Power  Company,   a
Virginia  public  service corporation (including  North  Carolina
Power).

     "WestPoint"  means  WestPoint  Stevens,  Inc.,  a   Delaware
corporation.

     "WGL"  means  Washington Gas Light Company,  a  District  of
Columbia corporation and a Virginia corporation.

     "WGL  Agreement"  means  the Gas Transportation  and  Supply
Agreement,  dated  November  10,  1994,  between  the  Brandywine
Partnership and WGL.

APPENDIX A

 PART II - CERTAIN TECHNICAL TERMS COMMONLY USED IN THE UTILITY
                            INDUSTRY
                                
Defined  below are certain technical terms commonly used  in  the
electric and gas utility industries.

     "Available"  means the status of a major piece of  equipment
which  is  capable of service, whether or not it is  actually  in
service.

     "Btu"  means  British  Thermal  Unit,  the  amount  of  heat
required  to  raise the temperature of 1 pound of  pure  water  1
degree F from 59 degrees F to 60 degrees F at a constant pressure
of 14.73 pounds per square inch absolute.

     "Capability"  means  the  maximum  load  which  an  electric
generating unit can carry under specific conditions for  a  given
period  of time, without exceeding approved limits of temperature
and stress.

     "Capacity"  means the load for which an electric  generating
unit is rated either by the user or by the manufacturer.

     "Cogeneration" means the simultaneous production of electric
energy  and  useful  thermal energy for  industrial,  commercial,
heating or cooling purposes.

     "Cogeneration  Facility"  means  a  facility  that  produces
electric  energy  and useful thermal energy used for  industrial,
commercial, heating or cooling purposes.

     "Dispatch"  means for purposes of this Offering  Memorandum,
dispatching  a plant means directing such plant to produce  power
under the appropriate power sales agreement.

     "GJ" means gigajoule; one billion Joules.

     "GWH" means gigawatt hour; one million kWh.

     "Installed  Capacity" means the full-load continuous  rating
of  a  generator, prime mover or other electrical equipment under
specified conditions as designated by the manufacturers.

     "kJ"  means  kilojoule; 1000 Joules and equals  .947817  Btu
(international).

     "kV" means kilovolt; 1,000 volts.

     "kW" means kilowatt; 1,000 watts.

     "kWh" means kilowatt-hour; the basic unit of electric energy
equal  to  one  kilowatt of power supplied to or  taken  from  an
electrical circuit steadily for one hour.

     "LHV" means lower heating value.

     "Load" means with respect to a power generating plant  or  a
generator,  the extent to which it is being used at a  particular
time.

     "Metric Ton" means 1,000 kilograms or 2204.6 pounds.

     "MM" means thousand.

     "MW" means megawatt; one million watts.

     "MWh" means megawatt hour; one thousand kWh.

     "Net  Dependable Capacity" means the tested or  demonstrated
output of the facility in kilowatts, measured at the output (high
voltage side) of the main transformers.

     "Outage"  means  an  interruption that  fully  or  partially
curtails   the   electric   generating   facility's   output   of
electricity.

     "Transmission  Line" means an electrical connection  between
two points on a power system for the purpose of transferring high
voltage  electrical  energy  between  the  points.  Generally,  a
transmission  line  consists of large wires  or  conductors  held
aloft by towers.

     "TW" means terawatt; one billion kW.

     "TWh"  means  terawatt-hour; one billion kWh.  One  thousand
GWh.  TWh  is  typically used as a measure of the  annual  energy
output of a region or country.

     "Watt"  means  the electric unit of real power  or  rate  of
doing  work. The unit of power in the international system  (SI),
expressed  as the Watt, is the power required to do work  at  the
rate of one Joule per second.



           THE ELECTRIC POWER INDUSTRY AND REGULATION
                           IN THE PRC
                             AND THE
                          UNITED STATES

The  information  in this Section has been derived  from  various
government    and   private   publications   and   obtained    in
communications with various PRC governmental agencies and has not
been  prepared  or independently verified by the Joint  Ventures,
the  Issuer, the Company or the Initial Purchaser or any of their
respective affiliates. Capitalized terms used in this Appendix  B
and  not  otherwise defined herein have the meanings assigned  in
the glossary included as Appendix A hereto.

General

Since  1978,  the  PRC  government has been implementing  market-
oriented  economic reforms in an effort to revitalize  the  PRC's
economy and improve its citizens' standard of living. The reforms
have  marked a shift from a more rigid, centrally-planned economy
to  a more mixed economy in which market forces play an increased
role   and   the  government  has  a  reduced  role.  State-owned
enterprises  still constitute the largest sector of the  economy,
but  implementation of the economic reforms  has  led  to,  among
other  things, the delegation to managers of enterprises of  more
decision-making  powers  and responsibilities  regarding  matters
such  as  production, marketing, use of funds and  employment  of
staff.  It has also led to the conversion of selected State-owned
enterprises into joint stock limited companies which issue shares
to  the public and private investors (including their employees);
the  gradual  reduction of PRC government control  over  producer
prices;  and the designation of certain coastal areas and  cities
as   special  economic  development  zones  with  greater   local
autonomy.  The  PRC  government  has  also  implemented  policies
designed  to attract foreign investment and technology.  The  PRC
government's  reforms  have  resulted  in  significant   economic
growth.   The   gross   domestic  product  of   China   increased
significantly during the period 1980 to 1995.

The China Power Market

At  the  end  of 1995, China had an aggregate installed  electric
power  generation  capacity of approximately 217,220  MW,  making
China's  electric power generation capacity the third largest  in
the  world.  In 1995, about 17,323 MW of installed  capacity  was
added.  China's  electric power industry  produced  approximately
1,007 TWh of electricity in 1995. This represents an addition  of
nearly 80 TWh from 1994, making China's electricity industry  one
of  the  fastest growing in the world. Despite its size,  China's
electric  power system is inadequate to meet current and expected
demand, and the consequent shortage is one of the major obstacles
to  economic growth in the PRC. In addition, as of October  1994,
approximately  120  million people did not  yet  have  access  to
electricity.

Developments in the PRC's Power Industry

Under  the  PRC's  Eighth Five-Year Plan (1991-1995),  increasing
demands  for  electricity resulted in the rapid increase  in  the
PRC's  total annual electricity generation. A total of 65,747  MW
of  electric power generating capacity was installed  during  the
four-year  period from 1992-1995, representing an average  annual
increase  of more than 16,000 MW. Notwithstanding such  increase,
the  PRC's  average  annual growth rate  for  installed  electric
generating  capacity between 1992 and 1995 (approximately  10.4%)
did  not  keep pace with the average annual growth  rate  of  the
PRC's  GDP. The following table sets forth figures for  installed
capacity, increases in installed capacity, electricity generation
and  percentage increases in electric power generation  in  China
for the years 1986 to 1995.
<TABLE>
<CAPTION>
                        Increase in                     
            Installed    Installed   Electricity  Increase in
             Capacity     Capacity    Generation  Electricity
   <C>      <C>           <C>           <C>          <C>
   Year        (MW)         (MW)        (TWh)         (%)
   1986      93,818.5      6,795.3      449.6        9.5
   1987     102,897.0      9,078.5      497.3       10.6
   1988     115,497.1     12,600.1      545.2        9.6
   1989     126,638.6     11,141.5      584.8        7.3
   1990     137,890.0     11,251.4      621.2        6.3
   1991     151,473.1     13,583.1      677.5        9.0
   1992     166,532.4     15,059.3      754.2       11.3
   1993     182,910.7     16,378.3      836.4       10.9
   1994     199,897.2     16,986.5      927.9       10.9
   1995     217,220.0     17,322.8    1,007.0        8.5
</TABLE>
(estimated)
    (1)
__________________

Source:   Ministry of Electric Power, Electric Power Industry  in
China (1995).
(1)  Based on various published statements from MOEP officials.

     Based  on statements by the Ministry of Electric Power  (the
"MOEP"), China will need an average of approximately 16,600 MW of
new  electric generating capacity annually through the year  2000
(or  an  aggregate  of approximately 83,000 MW  of  new  electric
generating  capacity in the Ninth Five-Year  Plan  period  ending
2000).  MOEP estimates that approximately $20 billion of overseas
investment  will  be  needed  to  reach  the  MOEP's  target   of
increasing installed capacity to 290,000 MW by 2000.

Electric Power and Other Regulation

     The  Joint  Ventures, North China Power  Company  and  North
China  Power are subject to governmental and electric power  grid
regulation   in  virtually  all  aspects  of  their   operations,
including  the  amount and timing of electricity  generation  and
dispatch,  the  setting  of  power  rates,  the  performance   of
scheduled  maintenance  and compliance with  power  grid  control
directives.   Moreover, the conversion of  the  revenues  of  the
Joint  Ventures  into  U.S. dollars is  subject  to  the  foreign
exchange regulations of the PRC, which are administered by  State
Administration of Foreign Exchange of the PRC (the  "SAFE").  See
"Risk  Factors  -  Considerations Relating to the  PRC-Government
Control of Currency Conversion and Exchange Rate Risks."

Regulation of the Electric Power Industry; General

     The PRC's electric power industry is regulated primarily  by
the  MOEP  in  conjunction with the SPC  and  other  governmental
agencies.  For foreign investments in electric power projects  in
the  PRC,  such  governmental agencies include  the  Ministry  of
Foreign Trade and Economic Cooperation of the PRC (the "MOFTEC"),
the  SPC,  the  SAFE, the State Administration  of  Industry  and
Commerce  of  the  PRC (the "SAIC") and certain  other  agencies.
Certain  functions of the MOEP are expected to be transferred  in
the  near  future to the State Power Corporation of China  ("SP")
which  was  formally  approved in  January  1997.   See  "Central
Governmental  Authorities - Ministry of  Electric  Power"  below.
The   regulatory   and  approval  authorities  of   the   Central
Governmental agencies are delegated to local provincial  or  city
governmental agencies performing similar functions if  the  total
amount  of such foreign-invested projects does not exceed certain
thresholds   (denominated   in   U.S.   dollars).    See    "Risk
Factors-Considerations Relating to the PRC-Legal  and  Regulatory
Considerations."

Central Governmental Authorities

     The  structure of the PRC political system is based  on  the
PRC  Constitution and is headed by the National People's Congress
("NPC"),  which is the highest legislative body,  and  the  State
Council,  which  is the highest executive body charged  with  the
implementation and administration of the laws and decisions  made
by  the  NPC.  In  addition, the SPC is in charge of  formulating
national  long-term, medium-term and annual economic plans  based
on the industrial policy of the PRC.

State Council

     The  State Council is responsible for the integration of all
activities   and  policies  of  its  component  commissions   and
ministries,  as  well as provincial and local governments.  Rules
and  regulations  of  the State Council and its  commissions  and
ministries preempt all legislation, rules or regulations  enacted
by  provincial and local governments. Thirty-eight ministries and
commissions,  the  General  Office  of  the  State  Council,  the
People's   Bank  of  China  (the  "PBOC"),  the  State   Auditing
Administration  and a number of other bureaus and administrations
are  currently  under the direct authority of the State  Council.
The agencies described below are the primary Central Governmental
agencies vested with authority to regulate foreign investment  in
the electric power industries in the PRC.

     In  1985, the State Council revised a number of its policies
with  the  intention  of fostering the rapid development  of  the
electric power industry, including (i) allowing local governments
to  invest  in  the development of power plants in  their  areas,
(ii) loaning funds to the local and provincial Power Bureaus  for
the   development  of  local  and  provincial  power  plants  and
(iii)   encouraging  the  utilization  of  foreign   capital   by
permitting   foreign   participation  in  the   development   and
management of power plants in China.

State Planning Commission

     The   SPC   is  responsible  for  coordinating  the  foreign
investment   plans   submitted   by   the   provincial   planning
departments, and formulating national long-term, medium-term  and
annual foreign investment plans based on the industrial policy of
the  PRC.  The SPC has authority to approve the project  proposal
and  the  feasibility  study  of foreign  investment  enterprises
("FIEs")  with  total  investment of over  $10  million,  or  $30
million  in certain cases, except that FIEs with total investment
of  over  $100 million must also obtain final approval  from  the
State  Council. The SPC is also responsible for coordinating  the
Renminbi   and   foreign   exchange  funds   required   for   the
construction, production and operation of FIEs.

Ministry of Electric Power

     As the ministry responsible for the electric power industry,
the  MOEP  is responsible for formulating development  strategies
and  policies  for  the  electric  power  industry  in  the  PRC,
including   investment,  technical,  and  major  production   and
consumption  policies. In addition to formulating electric  power
industry  planning  in  collaboration  with  the  SPC  and  other
governmental  agencies, the MOEP (i) coordinates the  development
of   the   electric   power   industry,   (ii)   supervises   the
implementation  of related national policies, decrees  and  plans
and  (iii)  provides services to electric power enterprises.  The
MOEP  shares certain of its administrative responsibilities  with
the  China Nuclear Industry Corporation and the Ministry of Water
Resources  with  respect  to  nuclear-powered  and  hydro-powered
electricity  generating facilities, respectively. In addition  to
these  regulatory and administrative functions, the MOEP is  also
in  charge  of  the  overall financial management  of  the  power
industry,  including  consolidating the  profits  and  taxes  and
approving  the  budgets  of  all  the  regional  power   entities
annually.  The  MOEP  owns China's State-owned  power  generating
assets  on  behalf  of  the  State, other  than  those  owned  by
companies  not  directly managed by the MOEP and  a  few  smaller
units directly owned by local governments.

     In  an  attempt  to separate the regulatory  and  commercial
functions  of the electric power industry, the PRC State  Council
formally  approved the establishment of the SP in  January  1997.
The SP is a state-owned legal entity with funds provided directly
by  the  State  Council.  It will serve as  the  PRC's  principal
investor  in  and/or operator of wholly or partially  state-owned
facilities  in  China.  It  will  also  be  responsible  for  the
operation  of  interregional  transmission  facilities  and   the
development of a national power grid. After the establishment  of
the  SP,  the  MOEP  will  continue to  exercise  the  regulatory
function  over the Chinese electricity industry, but  the  MOEP's
enterprise management function and its function to operate  state
assets  will  be  turned over to the SP. As part of  the  reform,
provincial  power  bureaus  will  also  need  to  transfer  their
regulatory functions to other departments of the local government
and  become subsidiaries of the SP. It has been reported that the
MOEP  itself  will also be dissolved and its regulatory  function
will  be  transferred  to  the  China  Electricity  Council.  The
organization and establishment work of the SP is expected  to  be
completed  before the end of June 1997. There can be no assurance
as to what impact this reform will have on the Luannan Facility.

Ministry of Foreign Trade and Economic Cooperation

     The  MOFTEC  controls  all  affairs  pertaining  to  foreign
economic  relations  and  trade  through  the  implementation  of
principles and policies of the medium and long-term foreign trade
development   plans.   Its   aim  is  to   foster   international
multilateral and bilateral economic and technological cooperation
by  utilizing  foreign  funds, organizing import  and  export  of
technology,  and generating construction projects  abroad.  On  a
national level, the main responsibility of the MOFTEC consists of
controlling  and  coordinating foreign trade  activities  in  the
provinces, autonomous regions and municipalities, as well  as  in
various  departments under the State Council. The MOFTEC has  the
authority to approve organizational documents of FIEs with  total
investments exceeding the $10 million or $30 million threshold.

State Administration of Industry and Commerce

     The  SAIC  is in charge of the registration of, and issuance
of  business licenses to, FIEs. It has the authority  to  conduct
annual   inspections  of  FIEs  to  ensure  that  their  business
activities  have  been  carried  out  in  accordance  with  their
approved business scope and the applicable laws and regulations.

State Administration of Foreign Exchange

     The  SAFE  is  responsible  for  administration  of  foreign
exchange   in   the   PRC.  It  formulates   and   oversees   the
implementation  of  foreign  exchange regulations  applicable  to
FIEs.  The  relevant  approval authorities consult  the  SAFE  in
respect of foreign exchange matters relating to FIEs. The SAFE is
also  responsible for administrating the Swap Centers and issuing
permits  to  FIEs for access to the Swap Centers as well  as  for
monitoring the interbank system.

Local Governments

     Administratively, the PRC is divided into 23 provinces, four
municipalities   with   provincial  level   authority   (Beijing,
Shanghai, Tianjin and Chongqing) and five autonomous regions.  At
the  local  level, administrative entities derive their authority
from, and are accountable to, the National People's Congresses at
the   provincial  and  municipal  levels.  Provincial  and  local
congresses  and  governments are permitted to enact  legislation,
rules  and  regulations designed for local  conditions,  provided
that such legislation does not contravene the Constitution or the
laws or regulations adopted by the Central Government of the PRC.

     The  local provincial and county equivalents of the  Central
Government   approval   authorities  discussed   above   play   a
corresponding  role  in  the approval  process  where  the  total
investment and other conditions of proposed FIEs fall within  the
prescribed  limits  of  delegated  approval  authority.  In  this
regard,  the  provincial  and  county  planning  departments  and
economic  departments have the authority to approve  the  project
proposal and the feasibility study and the provincial and  county
Commissions of Foreign Trade and Economic Cooperation ("COFTECs")
have  the  authority to approve the organizational  documents  of
FIEs.

Regional, Provincial and Local Power Bureaus

     The  MOEP  directly oversees the five interprovincial  power
groups  (the  "Regional Power Groups") and the eight  independent
provincial  and two special administrative region  power  bureaus
("Provincial Power Bureaus") in China. The Regional Power  Groups
(i)  manage their respective regional power grids, (ii)  dispatch
the  power  plants  connected to such grids  either  directly  or
indirectly through lower level power bureaus, and (iii) supervise
the  power  bureaus at lower administrative levels. The  Regional
Power  Groups  also  act through power companies  which  develop,
construct,  own and operate certain power plants and transmission
facilities within their respective territories. The key personnel
of  the  Regional Power Groups are appointed by the MOEP and  the
key  personnel of the Provincial Power Bureaus are  appointed  by
the provincial governments in consultation with the MOEP.
     
     A  similar structure exists for the Provincial Power Bureaus
under  the Regional Power Groups and the Provincial Power Bureaus
directly  managed  by  the  MOEP. Each  Provincial  Power  Bureau
manages its provincial power grid and dispatches the power plants
connected  to  such  grid to meet local demand.  Many  Provincial
Power  Bureaus  also  act through power companies  which  operate
certain  power plants and certain transmission facilities  within
their  respective provinces. Cities and counties  directly  under
the  administration  of  the provinces  may  have  power  bureaus
(together with the Regional Power Groups and the Provincial Power
Bureaus,   the   "Power  Bureaus")  which  perform,   under   the
administration  of the Power Bureau at the next higher  level  of
government,    similar   functions   within   their    respective
jurisdictions.

Investment in the Electric Power Industry

     The  Ninth Five-Year Plan contemplates that power generating
capacity  in the PRC nationwide will be increased on  average  by
16,600  MW annually, representing an annual increase of about  7%
in power generation. By the year 2000, the total power generating
capacity  nationwide  is expected to reach  290,000  MW  with  an
expected  annual power generation of 1,400 billion kWh. In  order
to  achieve these goals, it is estimated that 20% of the required
investment in the expansion of the power sector will have to come
from  abroad.  As  stated  above, prior  to  1985  virtually  all
investment in China's electric power industry was financed by the
Central  Government.  In 1985, the Central  Government  began  to
implement  a  policy  of using a variety of  ways  and  financing
methods  to develop the PRC's electric power industry,  including
foreign investment through independent power projects and  build-
operate-transfer ("BOT") approaches. To date, the  primary  means
of  foreign  investment in the PRC's electric power industry  has
been debt financing of State-owned plants with a small amount  of
equity investment in independent or BOT projects.

     With  appropriate  Central  Government  approvals,  Regional
Power  Groups  and  Provincial Power Bureaus  may  form  directly
managed  power companies, which may develop, construct,  own  and
operate power plants in their respective territories. North China
Power Company was formed by North China Power in 1993 to serve as
North  China  Power's business arm. At least  two-thirds  of  the
installed capacity in China at the end of 1995 was attributed  to
power  plants managed by the MOEP directly or indirectly  through
such  power  companies.  The remainder was  attributed  to  power
plants  owned and operated by the China Huaneng Group, the  State
Energy   Investment  Corporation,  the  China  Power   Investment
Corporation, local government investment institutions and,  to  a
much lesser extent, foreign investors.

Rate Setting Mechanisms

     Rates for electricity produced by power plants that the MOEP
directly  or indirectly manages are generally set by the  Central
Government, thus most electricity has historically been purchased
from  power  plants at such rates. For certain power plants  with
local government, China Huaneng Group or foreign investment, such
as   the  Luannan  Facility,  rates  are  set  on  the  basis  of
discussions between such power plants and the relevant provincial
pricing bureau.

     In  the  case of power plants managed by the MOEP, customers
purchase electricity from the Power Bureaus of each level of  the
administration  of  the PRC at rates determined  by  the  Central
Government, which vary according to the category and location  of
the   user.  The  rates  set  by  the  Central  Government   have
traditionally  been  maintained at a  low  level,  requiring  the
subsidization  of  the  electric power industry  by  the  Central
Government. One of the stated goals of the MOEP, which  has  also
been restated in the Power Law (as described below), is to reform
power pricing to be consistent with the development of the market
economy.  The  MOEP  has  commenced the trial  implementation  in
several  cities  of a time-sharing pricing policy  which  charges
consumers higher rates for peak load periods and lower rates  for
off-peak  load periods. North China Power has adopted  a  similar
program in its service area. Allowing the market to influence the
setting  of  power  rates is intended to provide  incentives  for
greater efficiency in energy production, reduction of energy  use
per  unit  of  industrial  output and promotion  of  conservation
technologies. See "Risk Factors - Considerations Relating to  the
PRC-Governmental Regulation of Power Rates."

Transmission and Dispatch

     The   main   system  for  the  dispatch,  transmission   and
distribution  of  electric power in China consists  of  the  five
interprovincial power grids managed by their respective  Regional
Power  Groups and the eight provincial and two autonomous  region
power  grids managed by the Provincial Power Bureaus.  The  table
below  shows the aggregate installed capacity of the power plants
connected  to  the grids managed by such Power  Bureaus  and  the
total electricity generated on those grids in 1994.
     

                                                          1994
                                           1994          Total
                                         Installed    Electricity
     Grid                                Capacity      Generation
                                           (MW)          (TWh)

East China Power Bureau                   31,673.2      164.358
Central China Power Bureau                27,602.2      132.041
North China Power Bureau                  27,146.4      140.087
Northeast Power Bureau                    26,534.4      124.531
Guangdong Provincial Bureau               19,009.7       73.916
Shandong Provincial Bureau                11,518.2       67.183
Northwest Power Bureau                    11,483.0       60.423
Sichuan Provincial Bureau                 10,095.3       47.328
Fujian Provincial Bureau                   4,960.3       21.605
Guangxi Provincial Bureau                  4,230.8       16.854
Yunnan Provincial Bureau                   4,082.9       16.939
Guizhou Provincial Bureau                  3,253.8       15.206
Xinjiang Autonomous Region Bureau          2,865.1       10.617
Hainan Provincial Bureau                   1,057.3       2.869
Tibet Autonomous Region Bureau               166.7       0.357
   (each a "Power Bureau")

Source:  Ministry of Electric Power, Electric Power  Industry  in
China (1995)

     China's   energy  sources,  such  as  coal   and   potential
hydroelectric resources, are principally located in the  western,
northern  and central inland provinces, but its high  electricity
consumption  regions  are  located in the  eastern  and  southern
coastal areas. As a result of plans to develop large power plants
in  areas  with  significant  energy sources,  the  expansion  of
China's   electricity  transmission  capabilities  is  of   major
importance.  China  plans to interconnect the North  China  Power
Grid with the Northeast Power Grid around 2000. In 2003, with the
expected  completion  of  the first phase  of  the  Three  Gorges
Project,  the  Central  China  Power  Grid  is  expected  to   be
interconnected on the east with the East China Power Grid and  on
the  west  with the Sichuan Power Grid. A unified national  power
grid is planned for completion sometime between 2010 and 2020.

     All electricity produced in China is dispatched by the Power
Bureaus,  except for that generated by units not connected  to  a
grid. The grids and the electric power dispatch to each grid  are
administered by dispatch centers ("Dispatch Centers") operated by
the  Power  Bureaus. Prior to November 1993, such electric  power
dispatch  had  been carried out pursuant to MOEP  guidelines.  In
order to achieve more efficient and rational dispatch of electric
power,  the  State Council issued, with effect from  November  1,
1993,  the  Regulations on the Administration of  Electric  Power
Dispatch to Networks and Grids (the "Dispatch Regulations").  The
Dispatch  Regulations  are  the first nationwide  regulations  in
China  governing  the  dispatch  of  electric  power.  Under  the
Dispatch Regulations, Dispatch Centers were established  at  each
of  five  levels:  the  National Dispatch  Center,  the  Dispatch
Centers of the Regional Power Groups, the Dispatch Centers of the
Provincial  Power  Bureaus, the Dispatch  Centers  of  the  Power
Bureaus  of  municipalities  under  provinces  and  the  Dispatch
Centers of the county Power Bureaus. Dispatch Centers are charged
with  setting  production  levels for the  various  power  plants
connected  to the grid. To effect this determination, each  power
plant receives on a daily basis from its local Dispatch Center an
expected  hour-by-hour  output schedule for  the  following  day,
based on expected demand, the weather and other factors.

     The  Dispatch Regulations provide that the Dispatch  Centers
must  dispatch  electric power according to, among other  things,
(i)  power supply agreements entered into between a Power  Bureau
and  certain large or primary electricity customers,  where  such
agreements  take into account the electric power  generation  and
consumption  plans formulated annually by the Central  Government
and  set  forth in the State Plan, (ii) agreements  entered  into
between  a  Dispatch Center and each power plant subject  to  its
dispatch, (iii) interconnection agreements between Power  Bureaus
and  (iv)  actual  conditions of the  grid,  including  equipment
capabilities and safety reserve margins.

Peak and Seasonal Demands

     The  demand for electric power in China goes through  fairly
predictable  daily  and other periodic cycles.  Peak  periods  of
power  use  are during the day, from approximately 8:00  a.m.  to
10:00  p.m., when industrial and commercial use is highest. Power
demand moderates from approximately 10:00 p.m. to 8:00 a.m. for a
number  of  reasons, including the fact that multiple shifts  are
not  routine in Chinese factories and that the residential demand
for   electricity  is  relatively  low.  Because  China   has   a
significant  shortage  of  electricity generating  capacity,  the
Dispatch  Centers restrict certain users' access  to  electricity
during  peak  periods of demand. As a result, the  peak  load  in
China  does not reflect the extent of the total demand for power.
China does, however, have enough generating capacity to meet  all
demand  during  off-peak periods. While power plants  operate  at
less  than  full capacity during off-peak periods, virtually  all
available  power  plants  operate at full  capacity  during  peak
periods, subject to grid-wide safety reserve margins.

     Because  the  combustion of coal provides  most  of  China's
space-heating  needs  and  because air conditioning  is  not  yet
prevalent  in most regions of China, seasonal variations  in  the
demand  for  electricity are less than in countries such  as  the
United States.

Electricity Sources

     The  table below sets forth for each of the years  1993  and
1994  the amount of electricity generated in the PRC by  type  of
power  plant in absolute terms, as well as a percentage of  total
gross production.
     
                             Actual
                             1993                1994
                              TWh        %        TWh        %
Thermal(1)                   685.9      83.0     747.0      80.5
Hydroelectric power                                     
(including pumped            150.6      17.0     166.8      18.0
 storage) (2)
Nuclear                                        14.1       1.5
  Total gross production     836.5     100.0     927.9     100.0
production

Source:  Ministry of Electric Power, Electric Power  Industry  in
China (1995)
(1)  Predominant fuel is coal; includes for 1993 an insignificant
amount of electricity generated by nuclear power plants.
(2)   Pumped storage facilities pump water into reservoirs  using
electricity  generated  during off-peak  periods.  The  water  is
released  to  generate  hydroelectric power  during  peak  demand
periods.

     China  is  the  world's  largest  producer  of  coal.  China
depended   on  the  consumption  of  coal  for  the   supply   of
approximately 75% of its primary energy needs in 1994,  a  higher
percentage than most developed countries. Coal is used  in  China
not   only  for  generation  of  electricity,  coking  and  other
industrial  applications, but is also widely used for residential
and  commercial cooking and heating. Because of China's extensive
domestic coal resources and its desire to minimize dependence  on
foreign sources for energy, it is expected that coal will  remain
the  main  energy source for electricity generation in China  for
the foreseeable future.

     A  small  portion of the coal and oil used in the generation
of  electricity  is  allocated to power  plants  by  the  Central
Government in accordance with the State Plan. Pursuant  to  price
reforms  introduced in the beginning of 1994, allocated  coal  is
generally  sold  at prices negotiated between  the  supplier  and
purchaser  subject  to  certain limitations  of  price  currently
imposed by the Central Government.

     Much of the coal used in the electric power industry must be
transported from relatively isolated inland coal mines by rail to
the coast for forwarding to the population and industrial centers
concentrated  in  China's coastal areas.  Railway  transportation
capability   is   generally  insufficient  to   satisfy   China's
industrial  and  commercial transportation needs.  As  a  result,
railway transportation is allocated by the Central Government  at
set prices.

PRC Electric Power Law

     Given  the  importance of the continued rapid  expansion  of
China's power industry, the NPC adopted the Law of Electric Power
on  December  28,  1995 (the "Power Law"). The Power  Law,  which
became effective on April 1, 1996, provides the legislative basis
for  the regulation of China's electric power sector. It contains
guidelines  in areas such as the generation, supply  and  use  of
electric power, pricing and tariffs and regulatory supervision.

     Under   the   Power  Law,  the  appropriate   administrative
department of the State Council is authorized within the scope of
its authority to supervise the electric power industry throughout
the  country, and relevant departments of the State  Council  are
authorized  within  the  scope of their respective  authority  to
supervise  the  electric power enterprises. While electric  power
development planning will be carried out according to  the  needs
of  the  national economy, the Power Law also provides that  each
administrative department of the local government at or above the
county  level will be responsible for the supervision and control
of the electric power industry within its administrative region.

     The  Power Law states that independent power companies shall
be  granted grid access upon their request, and provides that the
on-grid price of electricity shall be implemented on the basis of
"the same price for the same quality on the same grid." The Power
Law  lists  the  criteria to be applied in the  determination  of
tariffs   as   including  reasonable  compensation   for   costs,
reasonable  profits, inclusion of taxes in accordance  with  law,
firm  adherence to the principle of equitable sharing of burdens,
and promoting electric power construction. The law delineates the
approval  process  for on-grid tariffs and  makes  a  distinction
between the approvals required for regional/provincial level  and
independent  grids. Central Government approval is  required  for
tariffs  on  regional/provincial grids but no  such  approval  is
specifically  required  for  independent  grids.  The  Power  Law
reiterates  the  Central  Government's  position  that   entities
involved  in  the construction of power plants, power  generation
and  grid operation are autonomous and assume sole responsibility
for     their    own    profits    and    losses.    See    "Risk
Factors-Considerations  Relating  to  the  PRC   -   Governmental
Regulation of Power Rates."

     Because of its recent promulgation and in light of the  fact
that  the  related implementing regulations (including provisions
concerning appropriate tariff setting authorities) have  not  yet
been  published, there can be no assurance as to the  effect  the
Power  Law and its implementation rules will have on the  Luannan
Facility.

Joint Venture Formation Approval

     The formation of the Joint Ventures and the construction and
operation  of  the  Luannan  Facility  are  subject  to   various
governmental  approvals.  Under  PRC  law  and  regulations,  the
formation  of a Sino-foreign joint venture requires the  approval
of  certain governmental authorities in the province in which the
joint venture is located, and, if the total investment (including
equity contributions to the joint venture and expected borrowings
of  the joint venture) exceeds certain thresholds (denominated in
U.S.   dollars),  the  approval  of  certain  Central  Government
authorities  is  required.  Such  thresholds  vary  by  province,
municipality  and  special economic zone. In the  case  of  Hebei
Province,  where  the  Joint  Ventures  are  located,  provincial
governmental   authorities   have  authority   to   approve   the
establishment of any Sino-foreign joint venture entity the  total
investment  of  which does not exceed $30 million  in  accordance
with  a guideline issued in 1988 by the Central Government  which
is currently in effect.  The Hebei Provincial Planning Commission
(the   "HPPC")   and   Hebei  COFTEC,  the  provincial   approval
authorities for the development of power plants and the formation
of  Sino-foreign joint ventures, respectively, have advised  that
the  approval  of the formation of the Joint Ventures  is  within
their  approval authority because the total investment (including
equity  contributions and borrowings) of each  Joint  Venture  is
less then $30 million.

     The  Issuer  has been advised by Cai, Zhang &  Lan,  Chinese
counsel to the Issuer and the Joint Ventures, that, because  each
Joint  Venture is technically viable and operational  by  itself,
has  its own clearly defined business scope and purpose, and  has
followed proper procedures for all required approvals, each Joint
Venture  will be treated as a separate company, each  project  in
respect of which each Joint Venture has been established will  be
treated  as a separate project for approval purposes and  Central
Government approval is not required. Based on the opinion of  its
counsel  and  advice from the HPPC, Hebei COFTEC and  the  County
Partners,  the  Issuer  believes  that  all  required  government
approvals   to   form  the  Joint  Ventures  and   all   required
governmental  approvals that can be obtained to date  to  develop
the    Luannan   Facility   have   been   obtained.   See   "Risk
Factors-Considerations Relating to the PRC - Legal and Regulatory
Considerations."

               HEBEI PROVINCE, BEIJING AND TIANJIN

Economic Development

Hebei Province

     The  Luannan  Facility will be located  in  Luannan  County,
Tangshan City, Hebei Province, PRC. Luannan County is situated in
the  area  that  is  frequently referred to  as  Beijing-Tianjin-
Tangshan triangle, an important economic and political center  in
the  PRC.  Hebei Province is located on the North China  seaboard
and  has an area of 187,700 square kilometers. Its population  in
1995 was 64.3 million, representing approximately 3% of the total
population  of the PRC. Shijiazhuang, the provincial capital,  is
an  industrial  center and a rail-highway hub  approximately  270
kilometers  southwest of Beijing. Hebei Province is an  important
coal  producing province and is also adjacent to China's  largest
coal producing and exporting province, Shanxi. The major rail and
highway  routes  for transporting coal from Shanxi  Province  all
pass through Hebei Province.

     Hebei   Province  borders  Beijing  on  three   sides.   The
industrial  and economic growth of these two large urban  centers
has  positively  influenced the development  of  Hebei  Province.
Situated  in northeastern Hebei Province, along its 487-kilometer
coastline, is Qinhuangdao, China's largest and one of the world's
largest coal ports.

     In  1996,  foreign investment in Hebei rose 58.4%  to  reach
$1.24  billion, making Hebei the fastest growing  of  China's  17
coastal  provinces.   Exports amounted to $3.46  billion,  a  13%
increase  over 1995.  By 2000, exports are expected  to  rise  to
$6.5 billion.

Beijing

     Beijing has an area of 16,808 square kilometers and  at  the
end  of  1996  had  a  population of 12.6  million,  representing
approximately 1% of the total population of the PRC.  Beijing  is
composed of ten central districts and eight surrounding counties,
which  are  bordered by Hebei Province and Tianjin  Municipality.
Beijing is one of three municipalities supervised directly by the
Central  Government of the PRC, occupying the same administrative
level as a province, the others being Tianjin and Shanghai.

     Beijing   is  the  capital  of  the  PRC  and  the   Central
Government,   the  State  Council  and  various  ministries   and
commissions  are  located in the city. As  the  capital,  Beijing
enjoys   a   well-developed  infrastructure   with   respect   to
transportation,  finance, culture and education. Beijing's  urban
development is among the most advanced in China.

Beijing  has  developed a comprehensive industrial base,  leading
the  country  in  the  fields of electronics, organic  chemistry,
textiles,  metallurgy, machinery and construction of  educational
and  cultural facilities. The total GDP generated within  Beijing
in  1996  was  approximately RMB 160.7 billion,  representing  an
increase of 9.1% over 1995. In 1996, the total foreign investment
amounted to $2.26 billion, representing an increase of 14.1% over
1995.   The total value of exports was approximately $2.1 billion
in 1996.

Tianjin

     Tianjin has an area of 11,305 square kilometers and  at  the
end  of  1995  had  a  population of  9.4  million,  representing
approximately  0.8%  of  the total population  of  the  PRC.  The
municipality is bordered by Hebei Province, Beijing and the  sea.
Tianjin is one of three municipalities supervised directly by the
Central Government, occupying the same administrative level as  a
province, the others being Beijing and Shanghai.

     Tianjin   is  an  industrial  and  commercial  gateway   and
transportation hub of Northern China. Benefiting  from  a  153-km
long  coastline, the municipality is rich in oil and natural  gas
resources.  Tianjin's port, Xingang, is one of the  largest  man-
made  seaports in China and is a major trading port  in  Northern
China. The city has been designated the state center for research
into  and  production  of microcomputers  and  it  is  among  the
national leaders in production of chemicals and textiles.

     In   1996,  Tianjin's  total  GDP  was  RMB  110.2  billion,
representing an increase of approximately 14.3% over the previous
year.  Gross industrial output was approximately RMB 211 billion,
representing an increase of 22.7% over 1995, and total  value  of
exports was $4.05 billion.

Power Supply and Demand

     By  the  end of 1995, the installed capacity of North  China
Power  was  25,140 MW and the annual power generation  was  126.7
TWh.   The  Beijing-Tianjin-Tangshan Power Network had  installed
capacity  of  11,647  MW, of which 10, 964 MW  was  comprised  of
thermal  power and 683 MW was hydropower. Demand for  electricity
in Beijing, Tianjin and northern China is expected to grow by 10%
during  the Ninth Five-Year Plan (1996-2000).  In 1996, the  HPPC
indicated   that   Hebei  needed  to  increase  installed   power
generating capacity by more than 1,000 MW annually over the  next
five years.

Hebei Province

     Most  of Hebei Province's electricity is generated by  coal-
fired  power  plants.  Because of its  proximity  to  major  coal
fields,  Hebei Province's per unit cost of electricity generation
is  relatively low. The tables below show the major power  plants
in operation and under development in Hebei Province:

                     Facilities in Operation

                              Operational       Additional
     Plant                    Capacity (MW)     Planned
                                                Capacity (MW)
Douhe Power Plant             1,550             1,200
Zhangjiakou Power Plant       1,200             1,200
Xingtai Power Plant           1,290             1,255
Matou Power Plant             1,000             
Shang'an Power Plant            700               700
Xibaipo Power Plant             600               600
Qinhuangdao Power Plant       1,000               300
Weishui Power Plant             106             
   Total                      7,446             5,255
                                                

                  Facilities under Development

                              Projected         Projected
Plant                         Operational       Completion Date
                              Capacity (MW)
Zhanhewan Pumped Storage        1,000           2005
  Station
Sanhe Power Plant             600-700           2000
Hanfeng Power Plant               660           2001
   Total                      2,260 - 2,360     

Beijing

     The  fuel  sources and per unit generating costs  for  power
plants  serving Beijing are similar to those for Hebei  Province.
The  table  shows the major power plants in operation  and  under
development in Beijing.
                     Facilities in Operation
                                
                                 Operational      Additional
Plant                            Capacity (MW)    Planned
                                                  Capacity (MW)
Shiginhshan Cogeneration Plant   800              

                  Facilities under Development

                                 Projected        Projected
Plant                            Operational      Completion
                                 Capacity (MW)    Date
Shisanling Pumped Storage          800            1997
   Station
Gaobeidian Power Plant             660            1999
   Total                         1,460            

Tianjin

     The  fuel  sources and per unit generating costs  for  power
plants  serving Tianjin are similar to those for Hebei  Province.
The table shows the major power plants in operation in Tianjin.

                     Facilities in Operation

                              Operational       Additional
Plant                         Capacity (MW)     Planned
                                                Capacity (MW)
Dagang                        1,280             300
Junliangcheng                   950           
   Total                      2,230             300



        THE ELECTRIC POWER INDUSTRY IN THE UNITED STATES
                  AND UNITED STATES REGULATION

The Independent Power Industry in the United States

     The   United  States  independent  power  industry  expanded
rapidly  in  the  1980s  following the enactment  of  The  Public
Utility  Regulatory  Policies Act of  1978  ("PURPA").  Prior  to
PURPA,   the   demand  for  power  in  the  United   States   had
traditionally  been  met  by utilities  constructing  large-scale
electric   generating   plants   under   cost-of-service    based
regulation.  PURPA  removed most regulatory  constraints  on  the
production  and  sale  of electric energy by certain  non-utility
generators known as "Qualifying Facilities" or "QFs" and required
electric  utilities to buy electricity from QFs at the utilities'
avoided  costs, thereby encouraging companies other than electric
utilities   to  enter  the  electric  power  production   market.
Concurrently,  due  in  part to regulatory disallowance  of  many
large  utility  construction project costs, there was  a  general
decline  in  the  construction of generating plants  by  electric
utilities.  As a result, a significant market for electric  power
produced  by  independent power producers has  developed  in  the
United States since the enactment of PURPA.

     The  future market for independently produced power  in  the
United  States will be determined primarily by the need  for  new
electric  generation capacity. According to  the  North  American
Electricity  Reliability Council's 1995-2004  Electricity  Supply
and  Demand  Report, electric utilities forecast that  they  will
need approximately 78,000 MW of new generating capacity from 1995
through  2004. Many published forecasts reflect expectations  for
the continued growth of independent power producers. According to
RCG/Hagler Bailly, based on a review of the capacity of  the  top
125  U.S. electric utilities, it is probable that, from  1994  to
2003,  independent  power producers will supply  from  45-50%  of
total  electric generating capacity additions. In February  1993,
the Utility Data Institute projected that, of the total amount of
generating capacity projected to be added through the year  2000,
the  amount of new independent power capacity expected to  become
operational in the United States will be approximately 45,000 MW.
For  a  discussion  of the movement to restructure  the  electric
utility industry, see "Federal Energy Regulation" below.

     Natural   gas-fired   power  generation   has   become   the
predominant  power generation technology utilized  by  new  power
plants  in the United States, accounting for 60% or more  of  the
annual  increase in independent power generation capacity  during
each  of  the  last three years. Industry analysts  predict  that
natural  gas will continue to be the dominant fuel for new  power
generation  facilities in the United States for  the  foreseeable
future.   Natural   gas-fired  power  plants  offer   significant
advantages  over  other  power generation technologies,  such  as
coal, oil or nuclear energy, including favorable resource prices,
significant  environmental benefits,  the  availability  of  high
efficiency turbines and shorter construction periods.

     Project  subsidiaries of the Company located in  the  United
States are subject to complex and stringent energy, environmental
and other governmental laws and regulations at the federal, state
and  local  levels in connection with the development,  ownership
and  operation of its electricity generation facilities.  Federal
laws  and  regulations govern transactions by  electric  and  gas
utility companies, the types of fuel that may be utilized  by  an
electric  generating facility, the type of  energy  that  may  be
produced  by  such a facility and the ownership of the  facility.
State  utility regulatory commissions must approve the rates  and
terms  and conditions under which public utilities sell  electric
power  at  retail  and,  under  certain  circumstances,  purchase
electric   power  from  independent  producers.   Under   certain
circumstances    where   specific   exemptions   are    otherwise
unavailable, state utility regulatory commissions may have  broad
jurisdiction   over   non-utility   electric   power   generation
facilities.  Energy  producing projects  located  in  the  United
States  also  are subject to federal, state and  local  laws  and
administrative  regulations governing  the  emissions  and  other
substances produced, discharged or disposed of by a facility  and
the  geographical location, zoning, land use and operation  of  a
facility.  Applicable federal environmental laws  typically  have
state  and local enforcement and implementation provisions. These
environmental  laws  and  regulations generally  require  that  a
variety  of  permits and other approvals be obtained  before  the
commencement  of construction or operation of an energy-producing
facility  and  that the facility then operate in compliance  with
those permits and approvals.

Federal Energy Regulation

PURPA

     PURPA  and  the  regulations promulgated thereunder  provide
certain  rate and regulatory incentives to an electric generating
facility  that  is  a  qualifying  cogeneration  or  small  power
production  facility. The Rosemary Facility  and  the  Brandywine
Facility are QFs. If built, the Kathleen Facility also would be a
QF.  A  cogeneration  facility is a QF  if  it  (i)  sequentially
produces both electricity and useful thermal energy that is  used
for  industrial,  commercial, heating or cooling  purposes,  (ii)
meets certain energy efficiency and operating standards when  oil
or  natural  gas is used as a fuel source and (iii) is  not  more
than  50%-owned by an electric utility, electric utility  holding
company or an entity or person owned by either or any combination
thereof.

     Under PURPA and the regulations promulgated thereunder,  QFs
receive two primary benefits. First, most types of QFs are exempt
from most provisions of the Public Utility Holding Company Act of
1935,  as  amended  ("PUHCA"), and from most  provisions  of  the
Federal  Power  Act, as amended (the "FPA"), while  all  QFs  are
exempt  from certain state laws relating to organizational,  rate
and  financial regulation. Second, regulations promulgated by the
Federal  Energy  Regulatory Commission (the "FERC")  under  PURPA
require   that   (i)  electric  utilities  purchase   electricity
generated  by QFs, construction of which commenced  on  or  after
November  9,  1978, at a price based on the purchasing  utility's
full  "avoided  costs" and (ii) the utilities sell supplementary,
back-up, maintenance and interruptible power to the QFs on a just
and  reasonable  and non-discriminatory basis.  See  "PUHCA"  and
"FPA"  below.  PURPA  and the regulations promulgated  thereunder
define  "avoided costs" as the "incremental costs to an  electric
utility of electric energy or capacity or both which, but for the
purchase  from the qualifying facility or qualifying  facilities,
such  utility  would  generate itself or  purchase  from  another
source."  Utilities may also purchase power from  QFs  at  prices
other  than "avoided costs" pursuant to negotiations as  provided
by FERC regulations.

     The  FERC's  regulations  also provide  that  if  energy  or
capacity is provided pursuant to a legally enforceable obligation
over  a  specified term, avoided costs may be determined, at  the
option  of  the QF, either at the time the energy or capacity  is
delivered  or  as  calculated  at  the  time  the  obligation  is
incurred.  The FERC's regulations further provide  that,  in  the
case  of rates based on estimates of avoided costs over the  term
of  a contract, the rates do not violate the FERC's rates if  the
rates for such purchases differ from avoided costs at the time of
delivery.

     In  certain  instances, payments based  upon  avoided  costs
estimated  at the time a contract is entered into have proven  to
be  greater  than  a  utility's avoided  costs  at  the  time  of
delivery. Many utilities have attempted to minimize the disparity
by  implementing  strategies  designed  to  reduce  avoided  cost
payments  under  such  contracts to  levels  that  the  utilities
believe  will  be more competitive in a short-term marginal  cost
electric  energy  market. See "Industry Restructuring  Proposals"
below. Such strategies include attempts to renegotiate or buy out
power  purchase  contracts with QFs. Some utilities  have  sought
rigorously to enforce the terms of such contracts and to exercise
their  contractual  termination rights if the contracts  are  not
strictly  observed. In addition, some utilities have  engaged  in
litigation  and  regulatory action against QFs to  achieve  these
ends.
     
     The  FERC  has refused to disturb QF contract rates  on  two
operating projects where estimates of a utility's avoided  costs,
calculated  at  the time the contracts were signed,  were  higher
than  the  actual avoided costs at the time of delivery  and  the
contract rates were not challenged at the time the contracts were
signed  and were not the subject of an ongoing challenge  to  the
state's avoided cost determination. New York State Electric & Gas
Corporation,   71  FERC   61,027,  reconsideration   denied,   72
FERC  61,067 (1995). This decision is currently the subject of  a
petition for review in the United States Court of Appeals for the
D.C. Circuit.

     Relying  in part on the FERC's regulations, a federal  court
of appeals has held that once a state commission has approved (by
final  and  nonappealable  order) a QF  contract  rate  as  being
consistent  with  avoided costs, just, reasonable  and  prudently
incurred,  any  action  or  order  by  the  state  commission  to
reconsider  its  approval or deny the pass-through  of  the  QF's
charges  to the utility's retail customers under purported  state
authority  is preempted by PURPA. Freehold Cogeneration  Assocs.,
L.P.  v. Board of Regulatory Comm'rs of New Jersey,  44 F.3d 1178
(3rd  Cir.), cert. denied sub nom., Jersey Central Power &  Light
Co.  v.  Freehold  Cogeneration Assocs., L.P.,   116  S.  Ct.  68
(1995).

     In  Independent Energy Producers Assoc. v. California Public
Utilities Comm'n,  36 F.3d 848 (9th Cir. 1994), the U.S. Court of
Appeals  for the Ninth Circuit held that states are not preempted
by  PURPA from instituting a program that requires QFs to  submit
operating data, to purchasing utilities for monitoring compliance
with   QF   status  requirements,  as  long  as  the   monitoring
requirements  do not impose an undue burden on the QFs.  However,
the same court determined that states and utilities are preempted
by  federal law from taking action on their determination that  a
QF  is no longer in compliance with QF status requirements, other
than  requesting that the FERC revoke the facility's  QF  status,
either by filing a request for revocation or by filing a petition
for a declaratory order that the facility is no longer a QF.

     On  May  29,  1996,  VEPCO filed with the State  Corporation
Commission of the Commonwealth of Virginia ("SCC") a request  for
authorization to institute a formal QF status monitoring program.
The  request  states that the proposed monitoring  program  would
apply to all QFs that have entered into power purchase agreements
with VEPCO. Under the proposed program, QFs would submit to VEPCO
by  March  1  of  each  year certain operational  data  from  the
previous year. If VEPCO believes, on the basis of such data, that
a  QF does not comply with QF requirements, the request indicates
that  VEPCO would first inform the QF and, if the QF agreed  with
or  failed  to  respond to VEPCO's findings, VEPCO would  file  a
petition seeking a declaration from the FERC that such a facility
is not a QF.

     The   North  Carolina  Utilities  Commission  ("NCUC")   has
disallowed  the  pass-through to VEPCO's  North  Carolina  retail
rates of a portion of capacity payments VEPCO had been making  to
several non-utility generation plants. The capacity payment rates
for  the plants had been determined by an arbitrator and approved
by  the  SCC.  The NCUC found that bids from a 1988  solicitation
(the  "1988 VEPCO Solicitation") were available at the  time  the
contract  was  approved  and should have been  used,  instead  of
arbitration, to determine VEPCO's avoided costs. The  NCUC  ruled
that  rates in excess of the rates derived from bids received  in
the  1988 VEPCO Solicitation were therefore disallowed in VEPCO's
North  Carolina  retail rates. The North Carolina  Supreme  Court
upheld  the  NCUC's  decision, saying that the  NCUC  had  simply
disallowed  rates  above avoided costs. North Carolina  Utilities
Comm'n  v.  North Carolina Power,  338 N.C 412,  450  S.E.2d  896
(1994).  The United States Supreme Court declined to review  that
decision.

     While  the Rosemary Power Purchase Agreement with VEPCO  was
not  specifically approved by the SCC, the SCC  did  approve  the
1988  VEPCO  Solicitation that resulted  in  the  Rosemary  Power
Purchase  Agreement.  Although  the  NCUC  used  the  1988  VEPCO
Solicitation to determine the avoided costs in the North Carolina
decision discussed above, there can be no assurance that it would
not  disallow  the  pass-through of the Rosemary  Power  Purchase
Agreement rates, which arose from the 1988 VEPCO Solicitation. If
the  NCUC  were to disallow such pass-through, and if the  courts
were to allow the decision to stand, Panda International believes
that  any  such  disallowance would affect only that  portion  of
VEPCO's  rates allocated to its North Carolina retail  customers.
The Brandywine Power Purchase Agreement has been approved by both
the Maryland and District of Columbia Public Service Commissions.

     The  Company  and its affiliates endeavor to  develop  their
U.S.  Projects,  monitor  compliance by the  U.S.  Projects  with
applicable  regulations and choose their customers  in  a  manner
which  minimizes  the risks of losing their  QF  status.  Certain
factors necessary to maintain QF status are, however, subject  to
the  risk  of  events outside Panda International's control.  For
example,  loss  of  a thermal energy customer  or  failure  of  a
thermal  energy  customer  to take required  amounts  of  thermal
energy from a cogeneration facility that is a QF could cause  the
facility  to fail to satisfy the criteria required for QF  status
regarding  the  level of useful thermal energy output.  Upon  the
occurrence  of such an event, Panda International would  seek  to
replace  the thermal energy customer or find another use for  the
thermal  energy that meets PURPA's requirements, but no assurance
can be given that this would be possible.

     If one of the U.S. Projects in which Panda International has
an  interest should lose its status as a QF, the Project would no
longer be entitled to the exemptions from PUHCA and the FPA. This
could  subject the U.S. Project to rate regulation  as  a  public
utility  under  the FPA and state law and could result  in  Panda
International  inadvertently becoming a  public  utility  holding
company by owning more than 10% of the voting securities  of,  or
controlling,  a  facility that would no  longer  be  exempt  from
PUHCA.  This  could cause all of Panda International's  remaining
U.S.  Projects to lose their QF status, because QFs  may  not  be
controlled,  or  more than 50%-owned, by public  utility  holding
companies.  Loss  of  QF status may also trigger  defaults  under
covenants  to maintain QF status in the Projects' power  purchase
agreements,  steam sales agreements and financing agreements  and
result  in termination, penalties or acceleration of indebtedness
under  such  agreements. A facility may lose its QF status  on  a
retroactive or a prospective basis.

     If  a U.S. Project were to lose its QF status (because,  for
example,  it lost its steam customer), Panda International  could
attempt to avoid holding company status (and thereby protect  the
QF  status  of  its  other Projects) on a  prospective  basis  by
restructuring  its interests in the U.S. Project.  For  instance,
Panda  International  could change its  voting  interest  in  the
entity  owning the nonqualifying Project to nonvoting or  limited
partnership  interests  and  sell  the  voting  interest  to   an
individual or company which could tolerate the lack of  exemption
from  PUHCA,  or  by  otherwise restructuring  ownership  of  the
Project  so  as  not to become a holding company. These  actions,
however,  would require approval of the Securities  and  Exchange
Commission  (the "SEC") or a no-action letter from the  SEC,  and
would result in a loss of control over the nonqualifying Project,
could  result in a reduced financial interest therein  and  might
result  in a modification of Panda International's operation  and
maintenance  agreement  relating  to  such  Project.  A   reduced
financial interest could result in a gain or loss on the sale  of
the  interest  in  such  Project, the removal  of  the  affiliate
through   which   the  ownership  interest  is  held   from   the
consolidated  income  tax  group or  the  consolidated  financial
statements of Panda International, or a change in the results  of
operations  of  Panda  International. Loss  of  QF  status  on  a
retroactive  basis could lead to, among other things,  fines  and
penalties  being  levied  against  Panda  International  and  its
subsidiaries  and  claims by utilities  for  refund  of  payments
previously made.

     Under the Energy Policy Act of 1992 ("Energy Policy Act"), a
company  engaged  exclusively in the business  of  owning  and/or
operating  a facility used for the generation of electric  energy
exclusively for sale at wholesale may be exempted from  PUHCA  as
an  "exempt  wholesale generator." An exempt wholesale  generator
may  not  make retail sales of electricity. If a Project  can  be
qualified as an exempt wholesale generator ("EWG") under  Section
32  of  PUHCA  it will be exempt from PUHCA even if it  does  not
qualify  as  a  QF.  Therefore, if a QF in Panda  International's
Project Portfolio were to lose its QF status, Panda International
could  apply  to have the Project qualified as an  EWG.  However,
assuming this changed status would be permissible under the terms
of  the  applicable power purchase agreement, rate approval  from
FERC would be required. See "FPA" below. In addition, the Project
would  be  required to cease selling electricity  to  any  retail
customers (such as the thermal energy customer) and could  become
subject  to  state  regulation of sales of  thermal  energy.  See
"PUHCA" below.

PUHCA

     PUHCA  provides that any corporation, partnership  or  other
entity  or organized group that owns, controls or holds power  to
vote  10%  or  more  of the outstanding voting  securities  of  a
"public utility company" or a company that is a "holding company"
of a public utility company is subject to regulation under PUHCA,
unless  an exemption is established or an SEC order declaring  it
not  to  be  a  holding  company is granted.  Registered  holding
companies  under  PUHCA  are  required  to  limit  their  utility
operations  to a single integrated utility system and  to  divest
any other operations not functionally related to the operation of
the utility system. In addition, a public utility company that is
a  subsidiary  of  a registered holding company  under  PUHCA  is
subject  to  financial  and organizational regulation,  including
approval by the SEC of certain of its financing transactions.

     As  discussed above, most types of QFs are exempt from  most
of  the  provisions of PUHCA. A foreign utility company  is  also
exempt from most of the provisions of PUHCA if certain notice and
other requirements are satisfied.

FPA

     Under   the   FPA,   the  FERC  has  exclusive   rate-making
jurisdiction over wholesale sales of electricity and transmission
in interstate commerce. These rates may be determined on either a
cost-of-service  basis or a market-based approach.  If  a  QF  in
Panda  International's project portfolio  were  to  lose  its  QF
status,  the  rates  set forth in the applicable  power  purchase
agreement  would  have to be filed with the  FERC  and  would  be
subject to initial and potentially subsequent reviews by the FERC
under the FPA, which could result in reductions to the rates.

Industry Restructuring Proposals

     The   United   States  Congress  is  currently   considering
legislation to repeal PURPA entirely, or at least to  repeal  the
obligation  of  utilities to purchase from QFs. There  is  strong
Congressional  support for grandfathering contracts  of  existing
QFs if such legislation is passed, and also support for requiring
utilities  to  conduct  competitive  bidding  for  new   electric
generation if the PURPA purchase obligation is eliminated.

     The  FERC  and many state utility commissions are  currently
studying  a  number  of  proposals to  restructure  the  electric
utility industry in the United States to permit utility customers
to choose their utility supplier in a competitive electric energy
market.  The  FERC  has  recently issued a final  rule  requiring
utilities to offer wholesale customers and suppliers open  access
on  their  transmission  lines, on  a  basis  comparable  to  the
utilities'  own  use of the lines. Although the rule  (Order  No.
888)  may  be  appealed, many utilities have already filed  "open
access"  tariffs. The utilities contend that they should  recover
from   departing  customers  their  fixed  costs  that  will   be
"stranded" if their wholesale customers choose new electric power
suppliers.  These  stranded  costs  include  the  capacity  costs
utilities are required to pay under many QF contracts, which  the
utilities  view  as excessive when compared with  current  market
prices for capacity. Many utilities are therefore seeking ways to
lower   these   contract  prices  or  terminate   the   contracts
altogether, out of fear that their shareholders will have to bear
all or part of such "stranded" costs. Some utilities have engaged
in  litigation  against QFs to achieve these  ends.  See  "PURPA"
above.  The  FERC's rule allows full recovery of "legitimate  and
verifiable"  prudently incurred stranded costs at  the  wholesale
level.  However,  the FERC has jurisdiction  over  only  a  small
percentage  of  electric  rates,  and  there  is  likely  to   be
litigation  over whether wholesale stranded costs are "legitimate
and verifiable."

     In  addition to restructuring proposals being considered  by
regulatory  agencies, a number of bills have been  introduced  in
the  U.S. Congress to promote electric utility restructuring  and
deregulation of electric rates. These bills differ as to how  and
to what extent a utility's "stranded" or "transition" costs would
be  recoverable if current captive customers left  the  utility's
system. The existence of this legislation may increase the desire
of  utilities  to  renegotiate, buy out or attempt  to  terminate
existing  power  purchase agreements containing prices  that  the
utilities  believe  will  not  be  competitive  in  a  short-term
marginal  cost electric energy market. In addition,  if  electric
energy  prices  are deregulated, electric energy  producers  will
have to sell electric energy at competitive market prices.

State Regulations

     State   public  utility  commissions  ("PUCs")  have   broad
authority  to  regulate both the rates charged by  and  financial
activities  of electric utilities, and to promulgate  regulations
implementing PURPA. Since a power purchase agreement will  become
a  part of a utility's cost structure (and therefore generally is
reflected  in  its retail rates), power purchase agreements  from
independent  power  producers  are  potentially  subject  to  the
regulatory purview of PUCs, particularly the process by which the
utility has entered into the power purchase agreements. If a  PUC
has  approved  the process by which a utility secures  its  power
supply,  a  PUC generally will be inclined to allow a utility  to
"pass  through" the expenses associated with an independent power
contract  to the utility's retail customers. Moreover, a  federal
court  of  appeals has held in one instance that a  PUC  may  not
disallow the full reimbursement to a utility for the purchase  of
electricity  from  a QF once the PUC has approved  the  rates  as
consistent   with  the  requirements  of  PURPA.   See   Freehold
Cogeneration Assocs., L.P. v. Board of Regulatory Comm'rs of  New
Jersey,  44  F.3d 1178 (3rd Cir.), cert. denied sub nom.,  Jersey
Central  Power  and  Light Co. v. Freehold Cogeneration  Assocs.,
L.P.,  116  S.  Ct.  68  (1995). In  addition,  retail  sales  of
electricity  or  thermal energy by an independent power  producer
may be subject to PUC regulation, depending on state law.

     Independent power producers that are not QFs under PURPA are
considered to be public utilities in many states and are  subject
to  broad  regulation by PUCs ranging from the  requirement  that
certificates of public convenience and necessity be  obtained  to
regulation  of  organizational, accounting, financial  and  other
corporate matters. However, sales of electricity at wholesale are
subject to the exclusive regulatory jurisdiction of the FERC.  In
addition,  states  may assert jurisdiction over  the  siting  and
construction  of facilities, and over the issuance of  securities
and the sale or other transfer of assets by these facilities that
are not QFs.

     State  PUCs  also have jurisdiction over the  transportation
and  retail  sale of natural gas by local distribution companies.
Each state's regulatory laws are somewhat different; however, all
generally require a local distribution company to obtain approval
from  the  PUC to provide services and construct facilities.  The
rates  of  local  distribution companies are usually  subject  to
continuing oversight by the PUC.

     In   the   case  of  the  Rosemary  Facility,  the  Rosemary
Partnership is subject to a number of conditions imposed  by  the
NCUC  pursuant  to  a  Certificate  of  Public  Convenience   and
Necessity  (""CPCN""), including that the Rosemary  Facility  and
the  Rosemary Pipeline both be owned by the Rosemary Partnership,
that  the Rosemary Partnership not transport gas for or  sell  or
deliver  gas to any other entity, that all electricity  generated
at  the Rosemary Facility be sold to an electric utility and that
all thermal energy produced at the Rosemary Facility be sold only
to  the  textile mill to which steam and chilled water  from  the
Rosemary Facility are currently delivered.  On February 18, 1997,
The  Bibb  Company (""Bibb"") announced that it  would  sell  the
textile  mill  to  WestPoint Stevens, Inc. (""WestPoint"").   The
closing  of  the sale was reported in the news media on  February
21,  1997,  but the Rosemary Partnership has not received  formal
notice of such sale from Bibb or WestPoint.  If, in fact, Bibb is
no longer the owner of the textile mill, the Rosemary Partnership
is  obligated  to notify the NCUC and VEPCO and  the  NCUC  could
order  such  further proceedings as it deemed appropriate,  which
proceedings  could  result  in revocation  of  the  CPCN  or  the
imposition of other conditions. See "Risk Factors - U.S. Industry
Conditions;   Restructuring  Initiatives;  Utility  Responses   -
Maintaining Qualifying Facility Status" and "Description  of  the
Projects  -  The  Rosemary  Facility - Steam  and  Chilled  Water
Sales."

Natural Gas Regulation

     The  Company  has an indirect 100% interest in and  operates
two natural gas-fired cogeneration projects in the United States,
one of which is owned and one of which is under a long term lease
financing  arrangement. The cost of natural gas (other than  debt
costs)  is  ordinarily the largest expense of a  gas-fired  power
project  and  is critical to the project's economics.  The  risks
associated with using natural gas can include the need to arrange
transportation  of  the  gas  across great  distances,  including
obtaining  removal, export and import authority  if  the  gas  is
transported from Canada, the possibility of interruption  of  the
gas supply or transportation (depending on the quality of the gas
reserves purchased or dedicated to the Project, the financial and
operating strength of the gas supplier and whether firm  or  non-
firm  transportation  is purchased), and obligations  to  take  a
minimum quantity of gas or pay for it (take-or-pay obligations).

     Pursuant  to  the Natural Gas Act, the FERC has jurisdiction
over  the transportation and storage of natural gas in interstate
commerce.  With respect to most transactions that do not  involve
the construction of pipeline facilities, regulatory authorization
can  be  obtained on a self-implementing basis. However, pipeline
rates for such services are subject to continuing FERC oversight.
Order  No.  636, issued by the FERC in April 1992,  mandated  the
restructuring  of  interstate  natural  gas  pipeline  sales  and
transportation services. The restructuring required by  the  rule
includes (i) the separation ("unbundling") of a pipeline's  sales
and  transportation  services,  (ii)  the  implementation  of   a
straight  fixed-variable rate design methodology under which  all
of a pipeline's fixed costs are recovered through its reservation
charge,  (iii) the implementation of a capacity release mechanism
under  which holders of firm transportation capacity on pipelines
can  release that capacity for resale by the pipeline,  and  (iv)
the  opportunity for pipelines to recover 100% of their prudently
incurred  costs ("transition costs") associated with implementing
the  restructuring mandated by the rule. On July  16,  1996,  the
United  States  Court  of Appeals for the  District  of  Columbia
Circuit  issued an order following appeals of Order  No.  636  by
various  interested  parties (United  Distribution  Companies  v.
FERC,  No.  92-1485). The court approved most of Order  No.  636.
However,  the court remanded some issues to the FERC for  further
consideration.  The  remanded  issues  include:  (i)  the  FERC's
requirement that an existing firm transportation customer bid  up
to  a  20-year  term to retain its rights to firm  transportation
capacity at the end of its contract term; (ii) certain aspects of
the  FERC's  efforts to mitigate the economic effect of  Straight
Fixed-Variable   ("SFV")   transportation   rates   on    certain
transportation  customers; (iii) the  FERC's  limitation  on  the
obligation of the pipelines to provide "no-notice" transportation
service;  and  (iv) the FERC's determination that  pipelines  can
recover  100% of their prudently-incurred Gas Supply  Realignment
("GSR") costs from their transportation customers and can recover
10%  of  these  costs  from  their  interruptible  transportation
customers. The FERC's order on remand of these issues should  not
have an adverse effect on the gas transportation arrangements for
the U.S. Projects owned by Panda International.

Environmental Regulations

     The   development,  construction  and  operation  of   power
projects  in  the United States is subject to extensive  federal,
state  and  local laws and regulations adopted for the protection
of  the  environment  and  to regulate land  use.  The  laws  and
regulations  applicable to Panda International and  its  domestic
subsidiaries  primarily involve the discharge of  emissions  into
the  water  and  air and the use of water, but can  also  include
wetlands  preservation, endangered species,  waste  disposal  and
noise  regulations.  These  laws and regulations  in  many  cases
require  a  lengthy  and complex process of  obtaining  licenses,
permits and approvals from federal, state and local agencies.

     Noncompliance  with environmental laws and  regulations  can
result in the imposition of civil or criminal fines or penalties.
In some instances, environmental laws also may impose clean-up or
other  remedial  obligations  in  the  event  of  a  release   of
pollutants  or  contaminants into the environment. The  following
federal  laws  are among the more significant environmental  laws
that   may   apply  to  Panda  International  and  its   domestic
subsidiaries. In most cases, analogous state laws also exist that
may   impose   similar,  and  in  some  cases   more   stringent,
requirements   on   Panda   International   and   its    domestic
subsidiaries.

Clean Air Act

     The Federal Clean Air Act, as amended (the "Clean Air Act"),
provides for the regulation, largely through state implementation
of  federal requirements, of ambient air quality and emissions of
air  pollutants  from  certain  facilities  and  operations.   As
originally  enacted,  the  Clean  Air  Act  set  guidelines   for
emissions  standards for major pollutants (e.g.,  sulfur  dioxide
and  nitrogen  oxide) from new sources. The 1990  Clean  Air  Act
Amendments  tightened  regulations  on  emissions  from  existing
sources,  particularly previously exempted  older  power  plants.
Panda  International believes that the Rosemary Facility and  the
Brandywine  Facility  are in compliance with federal  performance
standards mandated for such plants under the Clean Air Act.

Clean Water Act

     The  Federal  Clean Water Act, as amended (the "Clean  Water
Act"),  also  provides for the regulation, largely through  state
implementation of federal requirements, of the quality of surface
waters and imposes limitations on discharges to those waters from
point  sources, including certain facilities and operations.  The
water quality standards established under the Clean Water Act are
used  as  the  basis for developing specific pollutant  discharge
limitations  from  point sources. The discharge  limitations  are
incorporated  into  permits called National  Pollutant  Discharge
Elimination   System   ("NPDES")  permits.  Panda   International
believes  that the Panda-Rosemary Facility is in compliance  with
the  federal and state requirements applicable through its  NPDES
wastewater  discharge  permit under the Clean  Water  Act.  Panda
International believes that the Brandywine Facility does not make
any discharges of wastewater for which the Brandywine Facility is
required  to  have  an  NPDES permit. The Clean  Water  Act  also
imposes  requirements with respect to the discharge of stormwater
runoff  from industrial sites. Those requirements are implemented
through  state  stormwater  discharge permits,  which  have  been
obtained  for the Rosemary Facility and the Brandywine  Facility.
Panda  International believes that the operation of the  Rosemary
Facility   and   the  Brandywine  Facility  complies   with   the
requirements  of  their stormwater discharge permits.  The  Clean
Water  Act  also  restricts  discharges  of  fill  materials   to
wetlands.  The Rosemary Facility obtained approval for discharges
in connection with its construction.

Resource Conservation and Recovery Act

     The  Resource Conservation and Recovery Act of 1976 ("RCRA")
regulates   the   generation,   treatment,   storage,   handling,
transportation and disposal of solid and hazardous  waste.  Panda
International  believes  that  it and  its  subsidiaries  are  in
material  compliance with solid and hazardous waste  requirements
under RCRA.

Comprehensive Environmental Response, Compensation, and Liability
Act

     The  Comprehensive Environmental Response, Compensation, and
Liability  Act  of  1980, as amended ("CERCLA"  or  "Superfund"),
requires  the remediation of sites from which there  has  been  a
release  or  threatened  release  of  hazardous  substances   and
authorizes the United States Environmental Protection  Agency  to
take  any necessary response action at Superfund sites, including
ordering  potentially responsible parties liable for the  release
to  take or pay for such actions. Potentially Responsible Parties
are  broadly  defined under CERCLA to include  past  and  present
owners  and  operators  of such sites,  as  well  as  generators,
arrangers and transporters of wastes sent to a site.
     

                                                  APPENDIX C
                              
                              


Summary of the
Consolidated Pro Forma of
Panda Global Holdings, Inc.




Prepared for:
Panda Energy International, Inc.


Prepared by:
ICF Resources Incorporated,
A Subsidiary of ICF Kaiser International


April 11, 1997


               
               
               This  report  was produced  by  ICF
          Resources    Incorporated    (ICF)    in
          accordance with an agreement with  Panda
          Energy International, Inc., who paid for
          its services in producing the report and
          this  report is subject to the terms  of
          that agreement.  This report is meant to
          be  read  as  a whole and in conjunction
          with  this disclaimer.  Any use of  this
          report  other  than as a  whole  and  in
          conjunction  with  this  disclaimer   is
          forbidden.   Any  use  of  this  report,
          other  than  as provided  for  in  ICF's
          agreement     with     Panda      Energy
          International,   is   forbidden.    This
          report may not be copied in whole or  in
          part  or  distributed to anyone  outside
          Panda Energy International without ICF's
          prior   express  and  specific   written
          permission.
               
               This  report  and  information  and
          statements herein are based in whole  or
          in  part  on  information obtained  from
          various    sources.    ICF   makes    no
          assurances  as  to the accuracy  of  any
          such   information  or  any  conclusions
          based    thereon.     ICF    bears    no
          responsibility  for the results  of  any
          actions  taken  on  the  basis  of  this
          Report.

                   CONSOLIDATED PRO FORMA

ICF  Resources,  Incorporated (ICF),  a  subsidiary  of  ICF
Kaiser   International,  was  retained   by   Panda   Energy
International  ("Panda") on behalf of its subsidiary,  Panda
Global   Holdings,  Inc.  (the  "Company"),  to   create   a
consolidated summary of the pro forma financial  projections
(the   "Consolidated  Pro  Forma")  for  the  Panda-Rosemary
cogeneration  project (the "Rosemary Project"),  the  Panda-
Brandywine  cogeneration project (the "Brandywine Project"),
and Pan-Western Energy Corporation LLC ("Pan-Western") which
includes   the   Panda-Luannan  cogeneration  project   (the
"Luannan  Project")  (collectively,  the  "Projects").    In
preparing the Consolidated Pro Forma, ICF has relied on  the
independent  reports described below by Burns  &  McDonnell,
the  independent engineer for the Rosemary Project,  by  ICF
and  Pacific  Energy Systems, Inc. ("PES"), the  independent
consultant and independent engineer, respectively,  for  the
Brandywine  Project  and  by  Parsons  Brinckerhoff   Energy
Systems,  Inc.  ("Parsons  Brinckerhoff"),  the  independent
engineer  for the Luannan Project.  The terms of  the  Panda
Funding   Corporation  ("PFC")  Series  A  Bonds  (including
principal and interest, amortization schedule, debt  service
reserve fund, capitalized interest, and coverage ratio)  are
represented in the pro forma in a manner that we  understand
to  be  consistent  with the terms of the  indenture.   This
report, provided for use in the offering memorandum for  the
offering  by  Panda  Global Energy  Company  of  its  Senior
Secured   Notes  due  2004  (the  "Senior  Secured  Notes"),
describes the Consolidated Pro Forma and explains how it was
derived.

Background

  The Rosemary Project

The  Rosemary  Project  is a 180 MW  gas-fired  cogeneration
project  operating  in Roanoke Rapids, North  Carolina.  The
Rosemary Project sells electricity to Virginia Electric  and
Power  Company  pursuant to a Power Purchase Agreement  that
expires on December 26, 2015.

Burns & McDonnell, the independent engineer for the Rosemary
Project   since  1989,  has  prepared  pro  forma  financial
projections (the "Rosemary Pro Forma"), which are  presented
in  Panda-Rosemary Cogeneration Project Condition Assessment
Report  dated  April  11,  1997  (as  so  supplemented,  the
"Rosemary  Engineering Report").  The  Rosemary  Engineering
Report contains the primary assumptions underlying, and  the
conclusions  drawn  from, the Rosemary Pro  Forma.  ICF  has
reviewed the Rosemary Engineering Report only to the  extent
necessary  to  incorporate the results of the  Rosemary  Pro
Forma  in  the  Consolidated Pro  Forma,  and  has  made  no
independent   investigation  of  the  conclusions   or   the
assumptions contained therein.

The Brandywine Project

The  Brandywine  Project is a 230 MW gas-fired  cogeneration
project  operating  in Brandywine, Maryland.   According  to
PES,  construction was substantially complete as of  October
31,   1996,   when  commencement  of  commercial  operations
occurred.   Since  the  commercial  operations   date,   the
Brandywine  Project  began selling  electricity  to  Potomac
Electric Power Company ("PEPCO") pursuant to a 25-year Power
Purchase Agreement whose initial term expires on October 30,
2021.

ICF  has  prepared pro forma financial projections  for  the
Brandywine   Project's  operations  (the   "Brandywine   Pro
Forma"), which are presented in Independent Panda-Brandywine
Pro  Forma Projections dated April 11, 1997 (the "Brandywine
Pro   Forma  Report").   As  discussed  more  fully  in  the
Brandywine Pro Forma Report in preparing the Brandywine  Pro
Forma,  ICF  relied, among other things, on the PES  report,
Independent Engineers' Report: Panda-Brandywine Cogeneration
Project  dated July 22, 1996, and supplemented by an  Update
Report  dated  April  11,  1997  (as  so  supplemented   the
"Brandywine Engineering Report"). A more complete discussion
of  the assumptions underlying the Brandywine Pro Forma  and
the   conclusions  drawn  therefrom  are  contained  in  the
Brandywine Pro Forma Report.

The  Brandywine  Pro  Forma Report  presents  two  potential
scenarios  regarding  the resolution of  disagreements  with
PEPCO   concerning  certain  adjustments   to   Brandywine's
capacity  payments.   The "Base Case"  represents  the  most
conservative assessment (i.e., the lowest capacity payments)
while the "Sensitivity Case" represents a reasonable "middle
ground" scenario regarding the ultimate resolution of  these
disagreements.(1)  A  more  complete   discussion   of   the
assumptions  underlying the Brandywine  Pro  Forma  and  the
conclusions drawn therefrom are contained in the  Brandywine
Pro Forma Report.

The Luannan Project

The  Luannan  Project  is  a 2x50 MW  pulverized  coal-fired
thermal  power  plant  being developed  in  Luannan  County,
Tangshan   Municipality,  Hebei  Province  in  the  People's
Republic of China (the "PRC"). It is comprised of four joint
venture  companies (the "JV Cos.") owned by Pan-Western  and
certain  affiliates of Luannan County. Limited  construction
of  the  plant began in December 1996, and full construction
will  commence  upon completion of this Panda Global  Energy
Company  offering.  Inasmuch  as  Parsons  Brinckerhoff  has
indicated  that the Luannan Project's 28-month  construction
timetable  is  reasonable and achievable,  it  should  begin
commercial  operations by August 1999. The  Luannan  Project
will sell power to the North China Power Group Company under
a 20-year Power Purchase Agreement.

Parsons  Brinckerhoff,  the  independent  engineer  for  the
Luannan   Project,   has  prepared   pro   forma   financial
projections  (the "Luannan Pro Forma"), which are  presented
in  Engineer's  Review and Report: 2x50 MW Coal-Fired  Power
Plant  at Luannan, China, dated April 11, 1997 (the "Luannan
Engineering  Report").(2)  The  Luannan  Engineering  Report
contains  the  primary  assumptions  underlying,   and   the
conclusions  drawn  from, the Luannan  Pro  Forma.  ICF  has
reviewed  the Luannan Engineering Report only to the  extent
necessary  to  incorporate the results of  the  Luannan  Pro
Forma  in  the  Consolidated Pro  Forma,  and  has  made  no
independent   investigation  of  the  conclusions   or   the
assumptions contained therein.

Results

The  attached table presents the Consolidated Pro Forma. The
information set forth in the table reflects the issuance  of
Senior  Secured  Notes  due 2004 in an  aggregate  principal
amount  of  $155.2  million at an  assumed  12  1/2  percent
interest rate.  The gross proceeds from the issuance of  the
Senior  Secured Notes are assumed to be approximately $145.0
million.

Revenues and operating expenses were taken from the Rosemary
Pro Forma, Brandywine Pro Forma (Base Case), and Luannan Pro
Forma  to  calculate  EBITDA  at  each  project  and  on   a
consolidated basis.  The consolidated EBITDA is adjusted  to
create  Cash  Available for Consolidated  Debt  Service,  by
accounting for interest income at the project-level as  well
as  at  the PFC/PIC and Company/Issuer levels, project-level
reserve  contributions,  and other adjustments.   The  other
adjustments  are  comprised of trustee fees associated  with
PFC  and the Issuer, other cash expenditures at the project-
level,  cash  principal receipts on the Luannan transmission
facilities  loan  and  PRC  income  and  withholding  taxes.
Trustee  fees  for  PFC are based on estimates  provided  by
Bankers Trust Company, the PFC trustee.  Interest income  is
based  on an estimated 4.5 percent interest factor on annual
reserve  balances.  Interest income on the PFC debt  service
reserve is assumed to be monetized in 1997 with net proceeds
of approximately $4 million.  In 1997, the Company/Issuer is
projected  to  have  Cash Available  for  Consolidated  Debt
Service   of  approximately  $39.3  million.   This   figure
averages approximately $79.5 million between 1997 and 2007.

Cash  Available  for  Consolidated Debt Service  is  further
adjusted  to create Cash Available for Company Debt Service,
by  accounting for debt service at the Projects and for  the
PFC Series A Bonds, contributions to PFC/PIC-level reserves,
distributions  to minority interests and others.   In  1997,
the  Company/Issuer is projected to have Cash Available  for
Company  Debt  Service of approximately $5.7 million.   This
figure averages approximately $24.9 million between 1997 and
2007.

The  Consolidated Pro Forma also presents "Consolidated Cash
and Restricted Cash" balances including capitalized interest
funds  as  well  as debt service reserves at  the  Projects,
PFC/PIC and at the Company/Issuer levels. "Consolidated Long-
Term  Debt"  is  also presented as described in  footnote  9
attached to the Consolidated Pro Forma.

The  Consolidated  Pro Forma also provides  a  Company  Debt
Service  Coverage  Ratio  defined  as  the  ratio  of   Cash
Available  for Company Debt Service to Issuer Net Cash  Debt
Service.  The  Company Debt Service Coverage Ratio  averages
1.30x  between 2000 and 2007 with a maximum of 1.37x  and  a
minimum of 1.27x.

Please refer to the footnotes to the Consolidated Pro  Forma
included   herewith  for  a  discussion  of  certain   other
variables that may affect the Company Debt Service  Coverage
Ratio.


                              Respectfully Submitted,

                              /s/ ICF Resources Incorporated

_______________________________
(1) The names of the two scenarios are not meant to imply any
    independent  assessment  by  ICF  regarding  the   ultimate
    resolution of Panda's disagreements with PEPCO.
(2) As  indicated  in  the  Luannan Engineering  Report,  the
    Luannan Pro Forma uses an exchange rate of US$ 1.00  =  RMB 8.50.




            PANDA GLOBAL CONSOLIDATED CASH FLOW STATEMENT ($ in 000s)
<TABLE>
<CAPTION>
                                                                  PROJECTED FYE DECEMBER 31, 
                                                          -------------------------------------------
                                                            1997        1998       1999        2000     
                                                          -------     -------    --------    --------
<S>                                                       <C>         <C>        <C>         <C>
CAPACITY REVENUE
Rosemary                                                  $25,382     $25,382    $ 23,568    $ 23,568   
Brandywine                                                 21,932      21,420      37,940      38,759   
                                                          -------     -------    --------    --------
   Total Capacity Revenue                                  47,314      46,802      61,508      62,327   
AS A % OF TOTAL REVENUE                                      63.4%       60.2%       54.3%       42.8%  

ENERGY & OTHER REVENUE(1)
Rosemary                                                    3,850       5,768       7,734      10,010   
Brandywine                                                 23,495      25,141      26,057      27,092   
Luannan                                                         0           0      18,038      46,110   
                                                          -------     -------    --------    --------
   TOTAL REVENUE                                           74,659      77,712     113,337     145,540

OPERATING EXPENSES
Rosemary                                                    9,680      11,185      12,860      14,808   
Brandywine                                                 27,433      28,831      29,655      30,493   
Luannan (2)                                                     0           0       7,082      18,478   
                                                          -------     -------    --------    --------
   TOTAL OPERATING EXPENSES                                37,113      40,016      49,597      63,779   

EBITDA
Rosemary                                                   19,552      19,965      18,442      18,770   
Brandywine                                                 17,994      17,731      34,342      35,359   
Luannan                                                         0           0      10,956      27,632   
                                                          -------     -------    --------    --------
   TOTAL EBITDA                                            37,546      37,696      63,740      81,761   

Plus: Interest Income                                       8,175         988       1,738       3,509   
Less: Additions to Project Reserves                        (4,299)     (4,470)     (5,690)     (5,431)  
Less: Other Adjustments (3)                                (2,102)        (76)       (224)       (401)
                                                          -------     -------    --------    --------
   CASH AVAILABLE FOR CONSOLIDATED DEBT SERVICE            39,321      34,139      59,564      79,437

PROJECT & PFC DEBT SERVICE
Rosemary (4)                                               14,693      14,627      13,314      13,242
Brandywine (5)                                             10,442      10,412      19,976      20,660
PFC (6)                                                    12,242      12,242      13,479      12,094
Less: PFC Capitalized Interest Fund Draw                   (2,421)     (6,689)          0        (107)
                                                          -------     -------    --------    --------
   TOTAL PROJECT & PFC NET DEBT SERVICE                    34,956      30,593      46,768      45,890

Less: PFC/PIC Reserve Additions                             1,358      (3,311)     (2,100)       (475)
Less: Luannan & NNW Minority Interests and Others (7)         (26)        (14)     (1,202)     (4,216)
                                                          -------     -------    --------    --------
   CASH AVAILABLE FOR COMPANY DEBT SERVICE                  5,697         221       9,494      28,856

SENIOR SECURED NOTES NET DEBT SERVICE
Interest Payment                                            9,323      19,400      19,400      19,400
Less: Issuer Capitalized Interest Fund Draw                (9,323)    (19,400)    (19,400)          0
Principal Payment (8)                                           0           0           0       1,650
                                                          -------     -------    --------    --------
     TOTAL ISSUER NET CASH DEBT SERVICE                         0           0           0      21,050

BALANCE SHEET DATA:
Consolidated Cash and Restricted Cash                     $81,207     $60,635    $ 55,795    $ 68,601
Consolidated Long-Term Debt (9)                           584,812     592,266     590,749     588,305


CREDIT STATISTICS
                                                          -------     -------    --------    --------
Company Debt Service Coverage Ratio (10)                      (11)        (11)        (11)       1.37x
                                                          -------     -------    --------    --------
</TABLE>
<TABLE>
<CAPTION>
                                                                  PROJECTED FYE DECEMBER 31,
                                                          -------------------------------------------
                                                            2001       2002         2003       2004
                                                          -------     -------    --------    --------
<S>                                                      <C>         <C>         <C>         <C>
CAPACITY REVENUE
Rosemary                                                 $ 23,568    $ 23,568    $ 23,568    $ 23,568
Brandywine                                                 48,960      49,739      50,358      50,387
                                                          -------     -------    --------    --------
   Total Capacity Revenue                                  72,528      73,307      73,926      73,955
AS A % OF TOTAL REVENUE                                      44.0%       42.7%       42.3%       41.7%

ENERGY & OTHER REVENUE (1)
Rosemary                                                   12,462      13,872      15,692      17,793
Brandywine                                                 30,647      33,340      31,954      30,419
Luannan                                                    49,040      51,266      53,372      55,230
                                                          -------     -------    --------    --------
   TOTAL REVENUE                                          164,677     171,785     174,944     177,397

OPERATING EXPENSES
Rosemary                                                   16,861      18,122      19,667      21,526
Brandywine                                                 32,806      35,124      34,357      33,554
Luannan (2)                                                20,103      21,883      23,834      24,878
                                                          -------     -------    --------    --------
   TOTAL OPERATING EXPENSES                                69,769      75,129      77,858      79,958

EBITDA
Rosemary                                                   19,169      19,318      19,593      19,835
Brandywine                                                 46,802      47,955      47,955      47,252
Luannan                                                    28,937      29,384      29,538      30,352
                                                          -------     -------    --------    --------
   TOTAL EBITDA                                            94,908      96,656      97,086      97,439

Plus: Interest Income                                       3,958       4,334       4,720       4,992
Less: Additions to Project Reserves                        (6,209)     (3,708)     (3,850)     (3,160)
Less: Other Adjustments (3)                                (1,275)     (1,232)     (1,157)     (2,538)
                                                          -------     -------    --------    --------
   CASH AVAILABLE FOR CONSOLIDATED DEBT SERVICE            91,382      96,050      96,798      96,733

PROJECT & PFC DEBT SERVICE
Rosemary (4)                                               13,164      13,057      12,943      12,825
Brandywine (5)                                             27,265      27,939      27,907      27,456
PFC (6)                                                    15,011      16,437      17,374      17,364
Less: PFC Capitalized Interest Fund Draw                        0           0           0           0
                                                          -------     -------    --------    --------
   TOTAL PROJECT & PFC NET DEBT SERVICE                    55,441      57,433      58,224      57,645

Less: PFC/PIC Reserve Additions                            (2,216)     (1,184)       (459)         84
Less: Luannan & NNW Minority Interests and Others (7)      (3,842)     (3,733)     (3,266)     (2,739)
                                                          -------     -------    --------    --------
   CASH AVAILABLE FOR COMPANY DEBT SERVICE                 29,883      33,702      34,849      36,434

SENIOR SECURED NOTES NET DEBT SERVICE
Interest Payment                                           19,056      18,394      17,334      16,031
Less: Issuer Capitalized Interest Fund Draw                     0           0           0           0
Principal Payment (8)                                       4,400       8,000       9,900      12,000
                                                          -------     -------    --------    --------
     TOTAL ISSUER NET CASH DEBT SERVICE                    23,456      26,394      27,234      28,031

BALANCE SHEET DATA:
Consolidated Cash and Restricted Cash                    $ 81,381    $ 92,120    $101,603    $110,839
Consolidated Long-Term Debt (9)                           573,343     551,661     525,814     495,781

CREDIT STATISTICS
                                                          -------     -------    --------    --------
Company Debt Service Coverage Ratio (10)                     1.27x       1.28x       1.28x       1.30x
                                                          -------     -------    --------    --------
</TABLE>
<TABLE>
<CAPTION>
                                                            PROJECTED FYE DECEMBER 31,
                                                          -------------------------------
                                                            2005         2006       2007
                                                          -------     -------    --------
<S>                                                      <C>         <C>        <C>
CAPACITY REVENUE
Rosemary                                                 $ 23,568    $ 18,123    $ 18,123
Brandywine                                                 50,253      50,543      52,639
                                                          -------     -------    --------
   Total Capacity Revenue                                  73,821      68,666      70,762
AS A % OF TOTAL REVENUE                                      40.0%       37.6%       37.9%

ENERGY & OTHER REVENUE (1)
Rosemary                                                   20,571      20,283      20,004
Brandywine                                                 33,464      35,545      35,763
Luannan                                                    56,472      58,074      60,060
                                                          -------     -------    --------
   TOTAL REVENUE                                          184,328     182,568     186,590

OPERATING EXPENSES
Rosemary                                                   23,907      23,964      23,985
Brandywine                                                 36,288      37,984      38,592
Luannan (2)                                                25,970      27,113      28,309
                                                          -------     -------    --------
   TOTAL OPERATING EXPENSES                                86,165      89,061      90,886

EBITDA
Rosemary                                                   20,232      14,442      14,142
Brandywine                                                 47,429      48,105      49,811
Luannan                                                    30,502      30,961      31,751
                                                          -------     -------    --------
   TOTAL EBITDA                                            98,163      93,507      95,704

Plus: Interest Income                                       5,302       5,602       6,032
Less: Additions to Project Reserves                        (5,166)     (6,035)     (4,135)
Less: Other Adjustments (3)                                (2,480)     (2,457)     (2,469)
                                                          -------     -------    --------
   CASH AVAILABLE FOR CONSOLIDATED DEBT SERVICE            95,818      90,618      95,132

PROJECT & PFC DEBT SERVICE
Rosemary (4)                                               12,669       8,710       8,534
Brandywine (5)                                             27,602      28,188      30,071
PFC (6)                                                    17,183      14,677      18,206
Less: PFC Capitalized Interest Fund Draw                        0           0           0
                                                          -------     -------    --------
   TOTAL PROJECT & PFC NET DEBT SERVICE                    57,454      51,576      56,811

Less: PFC/PIC Reserve Additions                             1,387      (7,087)     (5,531)
Less: Luannan & NNW Minority Interests and Others (7)      (2,106)     (1,406)     (5,829)
                                                          -------     -------    --------
   CASH AVAILABLE FOR COMPANY DEBT SERVICE                 37,646      30,550      26,961

SENIOR SECURED NOTES NET DEBT SERVICE
Interest Payment                                           14,453      12,759      11,469
Less: Issuer Capitalized Interest Fund Draw                     0           0           0
Principal Payment (8)                                      14,500      10,700       9,200
                                                          -------     -------    --------
     TOTAL ISSUER NET CASH DEBT SERVICE                    28,953      23,459      20,669

BALANCE SHEET DATA:
Consolidated Cash and Restricted Cash                    $117,544    $130,822   $145,679
Consolidated Long-Term Debt (9)                           460,547     433,032    399,857

CREDIT STATISTICS
                                                          -------     -------    --------
Company Debt Service Coverage Ratio (10)                    1.30x       1.30x       1.30x
                                                          -------     -------    --------
</TABLE>

FOOTNOTES
---------------
(1)   Other Revenue is comprised of revenue generated from the sale of steam,
      chilled and hot water and firm transportation capacity release at
      Brandywine.

(2)   For the purposes of consolidation, Operating Expenses at Luannan exclude
      management fees payable to the Issuer.

(3)   Other Adjustments include PIC and Issuer trustee fees, certain capital
      expenditures at Rosemary and Brandywine, Luannan transmission facilities
      loan principal payments and PRC income and withholding taxes.

(4)   Represents debt service for the year ended February 15 in the year
      immediately following the year presented per the PFC indenture.

(5)   Represents debt service for the year ended January 31 in the year
      immediately following the year presented per the PFC indenture.

(6)   Represents debt service for the year ended February 20 in the year
      immediately following the year presented per the PFC indenture.

(7)   Other is comprised of undistributable cash flow in excess of net income at
      Luannan.

(8)   Assumes outstanding balance of the Senior Secured Notes is refinanced in
      2004 at an equivalent coupon rate and repaid over nine years.

(9)   Consolidated long-term debt includes Rosemary First Mortgage Bonds,
      Brandywine GECC Lease, PFC Pooled Project Bonds-Series, and the Senior
      Secured Notes.

(10)  Company Debt Service Coverage Ratio = Cash Available for Company Debt
      Service / Total Issuer Net Cash Debt Service.

(11)  Effectively 1.0x Company Debt Service Coverage Ratio since Issuer
      Capitalized Interest Fund Draw equals Interest Payment on the Senior
      Secured Notes.





                     [ICF Kaiser Letterhead]
                                
                                
                                
                                
                                
                                
                      Officer's Certificate
                                
                                
      I, Theodore Breton,  of  ICF Resources Incorporated,  DO
HEREBY CERTIFY that:

      Since  April 11, 1997, to our knowledge, no event affecting
our  reports  entitled  "Independent Panda-Brandywine  Pro  Forma
Projections,"   dated  April  11,  1997  and  "Summary   of   the
Consolidated  Pro  Forma of Panda Global  Holdings,  Inc."  dated
April  11, 1997 (the "Pro Forma Reports") or the matters referred
to  therein has occurred which makes untrue or incorrect  in  any
material  respect,  as  the  date  hereof,  any  information   or
statement contained in the Pro Forma Reports or in the Prospectus
relating  to  the  offering of 12-1/2% Registered  Senior Secured
Notes  due 2004 by Panda Global Energy Company (the "Prospectus")
under   the  captions  "Summary  -  Independent  Engineers'   and
Consultants'  Reports  -  Consolidating Financial  Analyst's  Pro
Forma  Report,"  "Description  of the  Projects  -  The  Rosemary
Facility  -  Independent  Engineers' and Consultants'  Reports  -
Rosemary Engineering Report," "Description of the Projects -  The
Brandywine Facility - Disagreement with PEPCO Over Calculation of
Capacity  Payment," "Description of the Projects - The Brandywine
Facility  -  Independent  Engineers' and Consultants'  Reports  -
Brandywine Pro Forma Report," "Description of the Projects -  The
Brandywine  Facility  - Independent Engineers'  and  Consultants'
Reports  -  Brandywine  Fuel Consultants'  Report,"  "Independent
Engineers   and  Consultants  -  Consolidated  Pro   Forma"   and
"Independent Engineers and Consultants - Brandywine Facility"  in
the Prospectus.

          WITNESS my hand this 6th day of June 1997.



                              By:     /s/ Theodore R. Breton
                              Name:   Theodore R. Breton
                              Title:  Vice President




                                                       Appendix D
                                                                 
                                
                                
                  Engineer's Review and Report
                Panda Energy International, Inc.
                                
                                
                                
                                
                                
                                
                                
                                
                       2X50 MW Coal-Fired
                     Power Plant at Luannan,
                              China
                                
                                
                                
                                
                                
                                
                                
                         April 11, 1997
                                
                                
                                
                                
                                
                                
                                
                                
           PARSONS BRINCKERHOFF ENERGY SERVICES, INC.

0.0    EXECUTIVE SUMMARY                                        1
1.0    PROJECT DESCRIPTION AND OVERVIEW                         4
1.1    PARTICIPATING PARTIES                                    4
1.2    PROJECT DESCRIPTION                                      4
2.0    SITE CONDITIONS                                          4
2.1    GENERAL DESCRIPTION                                      4
2.2    FUEL TRANSPORTATION                                      5
2.3    WATER RESOURCE                                           5
2.4    HYDROMETEOROLOGY                                         6
2.4.1  METEOROLOGICAL CONDITIONS                                6
2.4.2  THE EFFECT OF WATER FLOOD ON THE PLANT SITE              7
2.5    REGIONAL GEOLOGICAL OVERVIEW                             7
2.5.1  NATURAL GEOLOGY                                          7
2.5.2  TOPOGRAPHY                                               7
2.5.3  REGIONAL GEOLOGICAL STRUCTURES                           7
2.5.4  STRATIGRAPHY                                             8
2.5.5  FAULT STRUCTURES AND EARTHQUAKE                          8
2.5.6  PLANT SITE 2 GEOTECHNICAL CONDITIONS                     9
2.5.7  GROUND WATER                                             9
2.5.8  DESIGN CONSIDERATIONS                                    9
2.5.9  SITE SEISMICITY AND RELATED DESIGN CONSIDERATIONS       10
2.6    ASH STORAGE SITES                                       10
2.7    ASSESSMENT OF SITE SUITABILITY                          11
3.0    DESCRIPTION OF FACILITY DESIGN                          11
3.1    MECHANICAL EQUIPMENT AND SYSTEMS                        12
3.1.1  STEAM TURBINE GENERATOR                                 12
3.1.2  BOILER / FIRING CYCLE                                   12
3.1.3  MAIN STEAM SYSTEM                                       14
3.1.4  EXTRACTION STEAM SYSTEM                                 14
3.1.5  AUXILIARY STEAM SYSTEM                                  15
3.1.6  CONDENSATE AND FEEDWATER SYSTEMS                        15
3.1.7  COOLING WATER SYSTEM                                    15
3.1.8  FIRE PROTECTION SYSTEM                                  16
3.1.9  COAL HANDLING SYSTEM                                    17
3.2    CIVIL/STRUCTURAL SYSTEM                                 17
3.2.1  CIVIL DESIGN                                            18
3.2.2  STRUCTURAL DESIGN                                       18
3.2.3  ARCHITECTURAL DESIGN                                    18
3.3    ELECTRICAL AND CONTROL SYSTEMS                          18
3.3.1  STEP-UP TRANSFORMERS                                    19
3.3.2  PLANT SWITCHYARD                                        19
3.3.3  UTILITY INTERCONNECTION                                 19
3.3.4  OFF-SITE TRANSMISSION LINES                             20
3.3.5  OFF-SITE SUBSTATIONS                                    20
3.3.6  AUXILIARY/START-UP POWER                                20
3.3.7  REVENUE METERING                                        20
3.3.8  CONTROL SYSTEMS                                         22
3.3.9  DISPATCH/SCADA/COMMUNICATIONS                           23
3.4    WATER SUPPLY AND DISPOSAL                               23
3.4.1  WATER WELLS FOR THE POWER PLANT                         23
3.4.2  WASTE WATER DISCHARGE                                   24
3.4.3  STORM DRAINAGE                                          24
3.4.4  MAKE-UP WATER                                           24
3.5    ASH HANDLING SYSTEM                                     25
3.5.1  FLY ASH SYSTEM                                          25
3.5.2  BOTTOM ASH SYSTEM                                       25
3.6    ASSESSMENT OF FACILITY DESIGN                           25
4.0    ASSESSMENT OF EXPECTED PERFORMANCE                      26
4.1    START-UP AND COMMISSION                                 27
5.0    ASSESSMENT OF DESIGN TO SIMILAR PLANTS                  27
6.0    ASSESSMENT OF ABILITY OF PLANT TO MEET CONTRACTUAL
       REQUIREMENTS                                            27
6.1    ELECTRICAL REQUIREMENTS                                 27
6.2    STEAM REQUIREMENTS                                      28
7.0    ASSESSMENT OF ECONOMIC LIFE OF THE PLANT                29
8.0    DESCRIPTION OF ENVIRONMENTAL ISSUES                     29
8.1    PROJECT ENVIRONMENTAL STANDARDS                         30
8.1.1  ENVIRONMENTAL QUALITY STANDARDS:                        30
8.1.2  EFFLUENT AND EMISSION STANDARDS:                        30
8.2    ASSESSMENT OF ENVIRONMENTAL IMPACT                      30
9.0    GOVERNMENT APPROVALS AND BUSINESS AGREEMENTS            32
9.1    GENERAL DESCRIPTION                                     32
9.2    GOVERNMENT APPROVALS                                    32
9.3    BUSINESS AGREEMENTS                                     35
9.4    ASSESSMENT OF SUPPORT DOCUMENTS                         36
10.0   PROJECT SCHEDULE                                        36
11.0   REVIEW OF EPC CONTRACTOR AND AGREEMENT                  36
11.1   ASSESSMENT OF MANPOWER AND STAFFING                     36
11.2   EVALUATION OF THE  EPC CONTRACTOR'S EXPERIENCE          37
11.3   EVALUATION OF EPC CONTRACT TERMS                        37
12.0   FINANCIAL PERFORMANCE ASSESSMENT                        38
12.1   LEVEL OF POWER PRODUCTION                               39
12.1.1 POWER PURCHASE AGREEMENT                                39
12.1.2 HEAT SALE AGREEMENT AND ASSUMPTIONS                     42
12.2   POWER TARIFFS                                           43
12.2.1 PLANNED WHOLESALE ELECTRIC ENERGY PRICE                 43
12.2.2 FUTURE PRICE ADJUSTMENTS AND "PASSTHROUGH" PROVISIONS   46
12.2.3 HEAT SALE PRICE AGREEMENT                               47
12.2.4 INTERCONNECTION AND LOAN AGREEMENTS                     47
12.3   REVIEW OF PROJECT COSTS                                 48
12.4   REVIEW OF OPERATING EXPENSES                            51
12.5   REVIEW OF RESERVE REQUIREMENTS                          51
12.5.1 EQUIPMENT MAINTENANCE & OVERHAUL RESERVE                51
12.5.2 DEBT SERVICE RESERVE                                    53
12.5.3 WELFARE RESERVE FOR CHINESE EMPLOYEES                   53
12.5.4 OTHER CHINESE RESERVE REQUIREMENTS                      53
12.6   THE FINANCIAL PLAN                                      53
12.6.1 ESTIMATED SOURCES AND USES OF FUNDS                     53
12.6.2 SHAREHOLDER LOAN ASSUMPTIONS                            54
12.6.3 REPAYMENT OF PAN-WESTERN SHAREHOLDER LOANS              54
12.7   CONSOLIDATED OPERATING RESULTS -- BASE CASE             54
12.7.1 OPERATING REVENUES                                      55
12.7.2 OPERATING EXPENSES                                      56
12.7.3 DEPRECIATION AND TAXES                                  56
12.7.4 DISCUSSION OF DEBT COVERAGE RATIOS                      57
12.7.5 DISTRIBUTION TO PAN-WESTERN EQUITY ACCOUNT              57
12.8   SUMMARY OF SENSITIVITY ANALYSIS                         58
12.9   INDIVIDUAL JOINT VENTURE COMPANIES OPERATING RESULTS
       -- BASE CASE                                            58


0.0  EXECUTIVE SUMMARY

Panda   Energy   International,  Inc.   has   requested   Parsons
Brinckerhoff  Energy  Services, Inc., to  provide  an  Engineer's
Report for certain of its affiliated companies (the "JV Cos."  or
"Owner") involved in the development, construction, ownership and
operation  of  the Luannan Thermal Power Plant (the "Plant")  and
Steam Distribution System to be located near Tangshan City, China
(the  "Project").  This report, to be included  in  the  Offering
Circular prepared for the offering by Panda Global Energy Company
of  its  Senior  Secured  Notes due 2004,  offers  the  following
opinions  concerning the adequacy of the technical, environmental
and economic aspects of the project:

The  design  of the Plant is based on current, proven  technology
and  is  in  conformance with engineering practice  and  industry
standards  in  the People's Republic of China.  Specifically  the
proposed  Plant will be similar in design to other thermal  power
plants  designed  by  the Hebei Electric Power  Design  Institute
which are presently operating in China.

The  construction  schedule is reasonable  and  achievable.   The
Engineering, Procurement and Construction (EPC) Contractor should
be  able  to meet the agreed construction schedule and  pass  all
performance tests as stipulated within 28 months.  This  schedule
has been found comparable to similar projects in China.

The  EPC  Contractor is an established and reputable construction
company  with  both  international  and  domestic  experience  in
manufacturing   and  installing  equipment  for   similar   power
generation   projects.   The  Contractor's  boiler  manufacturing
facility  performs  quality control  to  ISO  standards  and  has
achieved   ASME   certification.   The   Contractor's   list   of
achievements include 16 coal fired power plants in China  plus  5
international power plant installations completed on  a  turn-key
basis.

The budgeted costs of $118.8 million to develop and construct the
Luannan  Facility are reasonable and represent  a  realistic  and
attainable  project cost.  Most project costs are denominated  in
US  dollars, however, for steam and heat network, land and  water
use  rights, and transmission line which are denominated in  RMB,
an exchange rate of US $1 = RMB 8.30 was used.

The  EPC  Contract price which includes a contingency  amount  of
approximately   5%   and  the  general  contingency   amount   of
approximately  4%  (exclusive  of any  Contractor's  contingency)
contained  in the Project Budget should provide sufficient  funds
to complete the Project.

Based upon the proposed equipment and design criteria, the design
lives of the main components of the Plant are sufficient for  the
intended  modes of operation of the Project and should  meet  the
expected   Plant  performance  criteria.   With  proper   design,
careful,  periodic maintenance and operation of the Plant  within
design  parameters, a useful life of 20 years  should  be  easily
achievable.

Based  on the review of the various Government Approvals, the  JV
Cos.  have  obtained the key approvals required from the  various
governmental agencies which are required to commence construction
of  the  plant.  They have also identified the necessary  permits
that  will be required in due course during the construction  and
operation.  There is no reason to believe that those licenses and
consents not yet received will not be granted.

Based  on the review of the various Business Agreements and their
amendments,  the  major contracts including  the  Power  Purchase
Agreement,  EPC  Contract, Operation and  Maintenance  Agreement,
Transmission  Line  EPC Contract and Coal Supply  Agreements  are
technically reasonable and are consistent with each other and the
assumptions used in the financial analysis.

The  technical performance requirements, performance testing  and
obligations  of  the parties identified in the EPC  Contract  are
reasonable  and achievable.  The EPC contract has  the  necessary
protective terms and conditions and is comparable to other  turn-
key  projects in the United States.  The EPC contracts  in  China
are  more  rigorous  than in US on government  approvals,  design
stages,  and guarantee issues and less stringent on environmental
issues.

This  assessment has concluded that, from an environmental  point
of  view,  the  Plant is feasible and is capable of  meeting  the
relevant   emissions  and  discharge  limits  required   by   the
applicable Chinese Standards if all environmental protection  and
control   measures  recommended  by  the  Environmental   Impacts
Assessment (EIA) are implemented.

The ash handling system uses appropriate environmental protection
measures  and the ash disposal plan is reasonable and  achievable
based  on  the expected quality of the coal and its expected  ash
content  as summarized in the Marston & Marston Coal Consultant's
Report.  The EIA indicates the effluent quality will comply  with
the national environmental standard.

The  Operation and Maintenance Contractor (Operator) selected for
the  Project  is Duke/Fluor Daniel.  Duke/Fluor Daniel,  a  joint
venture  between  Duke Power and Fluor Daniel, has  domestic  and
international experience with coal-fired power plants and has the
necessary experience and capability to fulfill the O&M Agreement.
The  O&M  Agreement  contains incentives  and  penalties  in  the
Contract  Price  Adjustment  clause  which  should  provide   the
Operator  reasonable  initiative toward achieving  excellence  in
plant   operational  performance.   Requirements  for  developing
operations  plans  are  contained in  Section  2.10  of  the  O&M
Agreement.  The Owner has review and approval authority  for  all
operations plans developed by the O&M Contractor.

The  Project  can be expected to operate commercially  throughout
the  term  of  the Power Purchase Agreement.  There  is  a  large
number  of coal-fired plants currently in operation in the United
States that have been in service for well over 30 years.

The  Plant  is  capable of meeting the required  performance  and
availability  levels while operating in the modes agreed  in  the
Power  Purchase Agreement.  The design of the Plant and  the  Net
Dependable  Capacity performance guaranteed by the EPC Contractor
of  102  MW  insures  that the contractual amount  in  the  Power
Purchase Agreement can be met and exceeded during the Peak hours.
Maximum Plant output of 106 MW will further exceed the stipulated
amount.   The  actual performance and availability of  the  Plant
will  depend on the successful operation and maintenance  of  the
facility throughout the Plant's life.

The projected dispatch targets for the Plant, as specified by the
Power Purchase Agreement, are achievable and consistent with  the
design criteria and equipment for the Plant.

The  projected  O&M  costs  and capital  expenditures  for  major
maintenance  are  reasonable and representative  of  the  planned
operations  of  the  Project.  The Owner and  Operator  have  the
responsibility   for   establishing  the   full   time   manpower
requirements of the Facility.

Under  the  Power  Purchase Agreement, North  China  Power  Group
Company (NCPGC) is obligated to purchase electricity for a period
of  20  years  beginning on the Commercial Operation  Date.   The
useful  life  of  the  Project will extend  beyond  this  20-year
period.

On  the basis of the financial analyses presented in Chapter  12,
we  are  of  the  opinion that, in the base case,  the  projected
operating  revenues  are adequate to pay the projected  operating
and  maintenance  expenses,  pay the  local  and  federal  taxes,
provide a minimum of 2.02 and average of 2.19 annual debt service
coverage  for  the  Pan-Western  Shareholder  Loans  during   the
repayment period of 10 years, and provide equity distribution  to
Pan-Western  throughout the 20 year term of  the  Power  Purchase
Agreement.   For  the  financial  analysis  and  projections   an
exchange rate assumption of US $1 = RMB 8.50 was used.

Five  sensitivity  cases were developed  to  test  the  Project's
performance under operating assumptions different from  the  base
case.   As  shown in Section 12.8, the selected changes  did  not
yield  debt coverage ratios significantly different from that  in
the base case.

1.0  PROJECT DESCRIPTION AND OVERVIEW

1.1  PARTICIPATING PARTIES

     Certain  affiliated entities owned indirectly by Panda  Energy
     International, Inc. are developing a 2X50 MW pulverized  coal- 
     fired  thermal  power plant in Luannan County, Tangshan  City,
     Hebei  Province  in  the  People's  Republic  of  China.   The
     Project,  commonly  known as the "Panda  Luannan  Project"  is
     comprised  of joint venture companies between the  Pan-Western
     Energy  Corp., LLC. ("Pan-Western"), a Cayman Islands  Company
     and certain affiliates of Luannan County.
   
     Pan-Western  will issue the Shareholder Loans and make  equity
     contributions  to  the JV Cos. for financing the  construction
     of the project.
   
     The  Pan-Sino  Energy Development Corporation,  an  indirectly
     owned  subsidiary of Panda, owns 99% of Pan-Western.  ChinaMac
     (Singapore),  PTE.  Ltd. owns 1% of Pan-Western.   Pan-Western
     owns  88%  of  the JV Cos. and the remaining 12% ownership  of
     the joint venture is held by affiliates of Luannan County.
     
     The  Central Government of the People's Republic of China owns
     the  Qianjiaying Coal Mine from which the majority of the coal
     for  the  power plant will be supplied.  The balance  of  coal
     supply  will  be  from five County owned mines.   The  Central
     Government controls the North China Power Group Company  which
     will  purchase  the  plant  electrical  output.   The  Central
     Government  indirectly  controls  the  Tangshan  Price  Bureau
     which  sets  the  local  tariffs  and  costs  for  other   key
     commodities.
   

1.2  PROJECT DESCRIPTION

     The  Project  is in Luannan County which is part  of  Tangshan
     City  in  Hebei  Province.  The site is approximately  210  km
     northeast  of Beijing and only 100 km from the port cities  of
     Tianjin  and  Quinhuandao.  The county  has  a  population  of
     550,000  and  Tangshan  City  has  6.7  million.   The  region
     requires  power  to  meet  the current  demand.   Considerable
     growth  of  this  demand  is anticipated  as  is  the  overall
     economic development in the region.

2.0  SITE CONDITIONS

2.1  GENERAL DESCRIPTION

     The  Plant  site  (number  2, as  designated  in  the  Plant
     Feasibility  Study),  which was selected  for  the  proposed
     project, is on the north side of Bensi Road, approximately 1
     km  west  of  the  village of Gujiaying in  Luannan  County.
     Luannan County is in the southeast part of Tangshan City  in
     northeastern  Hebei Province.  Luannan County  has  a  total
     area of 1270 sq km and a population of 550,000.  The terrain
     in this area is coastal plains flanked with low mountains in
     the north.
     
     The plant site was chosen from four proposed locations.  The
     selection   criteria   considered   engineering,    geology,
     hydrometeorology,  and  transmission   access.    The   site
     selection was made in a review meeting on February 10,  1993
     with the Engineering Consulting Institute - Hebei Province.
     
     Other advantages of this site include good access to heating
     networks  and  the highest ground elevation among  the  four
     proposed  sites.   The  Plant  is  above  the  flood  plain.
     According to residents, the town of Bengchen near  the  site
     has never been flooded.
     
     The  Plant  area  will  occupy nonirrigated  farmland  which
     presently produces peanuts, corn, sesame, etc.  The yield of
     crops from this site is lower than the surrounding irrigated
     land.
     
     There    are   no   village-owned   enterprises,    military
     installations,  places  of  historic  interest   or   scenic
     features in the area which would be negatively affected by a
     power plant.

2.2  FUEL TRANSPORTATION

     The  fuel  (coal) will be transported from the Kailuan  Coal
     Administration and local County owned mines to the Plant  by
     trucks.   A  1.5 km access road connects the  Plant  to  the
     outer  ring road of the town.  The Tangshan-Luannan  highway
     is  approximately 2 km north of the Plant site and  connects
     with  the outer ring road of the town.  The plant is located
     approximately  30 km from the Qianjiaying  coal  mines.  The
     coal will be delivered to the site where the weight will  be
     checked, a quality sample will be taken and then it will  be
     unloaded.

2.3  WATER RESOURCE

     The  Plant  uses  a  natural  draft  cooling  tower  with  a
     recirculating  cooling water system.  The water  requirement
     including   circulating  water,  boiler  make-up,   district
     heating  network make-up and domestic water is approximately
     980  m3/h.   The local water resource administration  office
     has  approved  the  pumping of water from nine  local  water
     wells  to  the  Plant.  Seven wells will furnish  the  water
     required with 2 wells on stand-by.
     
     The  Feasibility  Study contains the test results  of  eight
     samples of the groundwater from the wells and indicates  the
     water is potable and suitable for industrial purposes.

2.4  HYDROMETEOROLOGY
     
     2.4.1     Meteorological Conditions
     Luannan  County  is  2.5  to 35 m above  sea  level  with  a
     declination from north to south.  The land is rather  smooth
     and  is traversed by four rivers running from north to south
     into the Bohai Sea.
     
     The County is located in the warm temperature zone with semi-
     moist to monsoon climate.
     
     The main meteorological data are as follows:
     (1)  Annual mean atmospheric temperature 10.7 degrees C,
          (51 degrees F)
     (2)  Extreme max. atmospheric temperature 38.6 degrees C,
          (101 degrees F)
     (3)  Extreme min. atmospheric temperature -21.7 degrees C, (-7
          degrees F)
     (4)  Average temperature of the coldest month -10.9 degrees C,
          (12 degrees F)
     (5)  Annual mean rainfall 653.3 mm, (25.7 in)
     (6)  Annual average evaporate capacity 1752.0 mm, (68.9 in)
     (7)  Annual maximum rainfall 978.8 mm, (38.5 in)
     (8)  Daily maximum rainfall 236.5 mm, (9.3 in)
     (9)  Maximum hourly rainfall 69.7 mm, (2.7 in)
     (10)      Maximum wind speed 19 m/s, (42.5 mph)
     (11)      Annual average wind speed 2.7 m/s, (6.0 mph)
     (12)      Annual average relative humidity 65%
     (13)      Maximum depth of frozen ground 77 cm, (30.3 in)
     (14)      Maximum thickness of accumulated snow 23 cm, (9.1 in)
     2.4.2     The Effect of Water Flood on the Plant Site

          The  general elevation of the Plant is 17 m.  The  rain
          records   of   Luannan  County  and   a    survey   and
          investigation  of the site indicate the proposed  plant
          area  has never flooded.  From an analysis of the water
          flows  in  the  area  and  calculations  of  the   mean
          rainfall,  it is concluded that the site  will  not  be
          affected by a one hundred year flood.  Results  of  the
          analysis   and   calculations  are  detailed   in   the
          Feasibility   Study   on   Thermal   Power   Plant    -
          Hydrometerology Report.
          

2.5  REGIONAL GEOLOGICAL OVERVIEW

     2.5.1     Natural Geology

          Luannan  County is located in the east  part  of  Hebei
          province  about 43 km southeast of Tangshan City.   The
          county  has  eight naturally formed rivers; Xiaoqinghe,
          Yihe   (Xinluanhe),   Beihe,  Munute,   Xiaochinlunghe,
          Suanlunghe,  Xiaozanmenhe  and  Yaoijiahe.    Each   is
          seasonal.   The  rainy  season is concentrated  between
          June and September, producing about 82.7% of the annual
          precipitation.   The  yearly average  precipitation  is
          653.3  mm (25.7 in).  The annual temperature is -21.70C
          (-70F)  minimum,  38.60C  (1010F)  maximum  and  10.70C
          (510F) average.
     
     2.5.2     Topography

          Luannan  County  is situated at the  southern  foot  of
          Yansan  Mountain.  Two area rivers form a 3.5 km  wide,
          Class  1  terrace running north to south.  The  terrace
          elevation  is 13 - 18 m with the toe of the terrace  at
          about 3 m.  The flood plane is at elevation 10 m.   The
          terrain generally slopes down from north toward south.
     
     2.5.3     Regional Geological Structures

          The  Plant  site is located at the south rim of  Yansan
          Mountain  fold  zone  at  the  southeast  part  of  the
          Tangshan   subsidence  block.   It   is   adjoined   by
          Sanhaiguan  upheaval block on the east side and  Leting
          subsidence  block  on  the south.   The  great  Ninghe-
          Changli fault is located about 3 km south of the  plant
          site  and  14  km  east  is the Luanxian-Leting  Fault.
          These  faults form the demarcation lines for the  three
          subsidence blocks.
          
     2.5.4     Stratigraphy

          According to "Hebei Province Luannan County Master Plan
          Geotechnical  Investigation Report," the crust  of  the
          Luannan  area  had been in rising and  upheaval  states
          ever  since  Precambrian era.  Due  to  weathering  and
          erosions,  the area is void of Paleozoic  and  Mesozoic
          alluvial deposits.  A tertiary strata was deposited  on
          the Precambrian gneiss beginning at the end of Mesozoic
          era  and through the early Neozoic era as the crust  in
          the area subsided. The tertiary stratum now consists of
          cemented fluvial/lucustine deposits, uncemented gravel,
          mudstone,  and  sandstone,  etc.   The  depth  of   the
          tertiary  stratum is about 150-250 m.   The  Quaternary
          stratum  consists mainly of diluvial deposits,  fluvial
          deposits  and  lacustrine sediments.  The thickness  of
          these deposits are about 350 m.
     
     2.5.5     Fault Structures and Earthquake

          According  to  a geoseismic evaluation  report  by  the
          State  Seismic  Bureau  for a  220  kV  electric  power
          substation located 1.5 km south of Luannan county town,
          the  Ninthe-Changli rift is a large  scale,  deep  cut,
          hidden  fault running NEE.  The total length  is  about
          120 km.  The fault plane tilts toward the southeast  at
          35  to  650.   The tilt angle is steep  at  the  higher
          elevations  on  the  plane and  flatter  at  the  lower
          elevations.  The faults had been formed in Mesozoic era
          and  were  dormant for a period during  Cretaceous  and
          early  Tertiary era.  It became active again the middle
          of  Oligocene. Historically, earthquakes occurred  only
          at  the  east  and  south sections  of  this  fault;  a
          Magnitude 4 in 1567 and Magnitude 5 in 1805.
     
          Recently, there have been small shocks scattered  along
          this  fault line.  After a Magnitude 7.8 earthquake  in
          the  Tangshan  area,  it  is believed  that  long  term
          cumulated stresses in the area have been relieved.   An
          earthquake of more than Magnitude 6 it is not  believed
          likely  over  the  next  50 years.   According  to  the
          "Seismic  (Damage) Intensity Map of China (1990),"  the
          baseline seismic intensity at Luannan area is level  7.
          This level is based on the Chinese scale which is a  12
          degree system.
          
          Section 4.2.4.2.4 of the Scope of Work contained in the
          EPC  Contract describes the design criteria to meet the
          requirements  of UBC Seismic Zone 4.   Zone  4  is  the
          highest  Zone in the US and is based on the logarithmic
          Richter Scale which has a high rating of 8.0 and  over.
          Zone 4 covers areas where major damage potential exists
          from earthquakes, i.e., California.
          
          According  to the report prepared by Sedgwick Insurance
          and  Risk  Management Consultants (China)  Limited  and
          Sedgwick   Construction  Asia  Limited,  the  insurance
          provider,   there  is  adequate  earthquake   insurance
          available  and this insurance will be provided  at  the
          time of construction.
     
     2.5.6     Plant Site 2 Geotechnical Conditions

          The  Gujiaying  Plant Site, Plant Site  2,  is  located
          about  2.5 km west of Luannan County seat, at the  west
          side  of Gujiaying town and at the north side of  Benxi
          Highway.   The site is on a Class 1 Terrace  of  Luanhe
          River.   The Plant area is flanked with a sand dune  on
          the north, Benxi Highway on the south and farming roads
          to  the east and west.  The site is essentially flat at
          elevations between 16.4 and 16.7 m.  It has the highest
          elevations in the vicinity of the county seat.
     
          During  the  7.8 Magnitude earthquake in  the  Tangshan
          area  in  1978, the area south of Plant Site 2 suffered
          some  blowouts  of  sand and/or  water.   No  trace  of
          liquefaction  was  observed at the  ground  surface  of
          Plant  Site 2.  Each of the other sites exhibited  more
          severe effects of the quake.
     
          In  summary, the Plant Site 2 at Gujiaying, situated at
          about   3  km  north  of  Ninghe-Changli  fault  offers
          relatively  stable  ground for plant  structures.   The
          plant  site  is acceptable from an engineering  geology
          point  of  view.   The  soil  is  slightly  soft.   The
          subsurface  soil allows a bearing capacity  of  120-140
          kPa.
          
     2.5.7     Ground Water

          The groundwater table was placed at 1.95 - 5.2 m depth,
          at  elevation 11.78 to 15.03 m, with a relatively steep
          gradient.  The water table is high in the south and low
          in   the  north.   This  gradient  is  in  the  reverse
          direction  of  ground water flow in this general  area.
          The  anomaly  is  explained by the  proximity  of  rice
          paddies  southeast  and west of the  plant  site.   The
          ground   has   high   permeability  allowing   seasonal
          irrigation  water  to influence the local  water  table
          levels.  Sample analysis indicates HCO3-Ca type  water,
          with  a  PH value of 7.68.  This type of water  has  no
          corrosive effect on concrete.
     
     2.5.8     Design Considerations

          The  number  of  soil samples and standard  penetration
          tests   were  limited.   The  soil  bearing  capacities
          derived from laboratory tests varied significantly from
          those  of the standard penetration tests.  Construction
          experience   in   the  area  indicates   soil   bearing
          capacities  which  also differ from test  results.   An
          evaluation of the specific conditions at the  placement
          site   of   an   individual  structure   is   required.
          Appropriate bearing capacities can then be employed  in
          establishing  the structure design.  Section  4.2.3  of
          the   Scope   of  Work  document  describes   the   EPC
          Contractor's   responsibilities  for   performing   the
          necessary  on-site  subsurface investigations  and  for
          supplying all the geotechnical information required  in
          the design of the Plant.
     
     2.5.9     Site Seismicity and Related Design Considerations

          The  site is located in a Design Intensity 7 zone.   In
          the plant area, the soils include loose to medium dense
          sand   stratum,  loose  to  medium  dense  medium  sand
          stratum, and plastic to liquid plastic silt stratum  to
          a depth of 0 to 15 m.  Bed rock is at a depth of 500 to
          600  m.   The soil is classified Type III, Intermediary
          Soft Soil.
     
          In   some  Plant  areas,  some  soil  strata  have  the
          potential   for   liquefaction  of  medium   grade   to
          insignificant   grade  during  an  earthquake.    Field
          investigation found no trace of liquefaction  at  Plant
          Site  2  resulting from the Tangshan  earthquake.   The
          Preliminary   Design   Document   states    that    the
          liquefaction phenomena does not appear at each layer of
          the  stratum  in  the  Plant site when  the  earthquake
          seismic intensity magnitude is 7.

2.6  ASH STORAGE SITES
     
     Two  sites  were  investigated  and  compared  for  possible
     selection as ash storage yards for the thermal power plants.
     One   site  is  located  at  Dupingtuo  and  the  other   at
     Xinzhuangzi.  Each site has a planned capacity for 20  years
     of  ash  storage.   There are no major  facilities  such  as
     roads, water wells or communications lines to be removed  in
     either of the two available ash storage sites.
     
     The Dupingtuo Ash Yard was selected as the best location for
     storage of ash from the plant.  This site is located on  the
     north  side of Bengsi Road, about 4.3 km away from the  site
     and  the  site  permit  has  been received.   The  following
     considerations contributed to the selection:
     
       - The  terrain  of the Dupingtuo site is smooth  and  open
          with a ground level of about 17 m.
       - As  farmland,  this  site  is less  productive  in  crop
          yields than Xinzhuangzi.
       - The  Xinzhuangzi  site is located on the  Ninghe-Changli
          rift   zone   making  it  less  unfavorable   for   the
          construction of dams.
       - The   local  Water  Conservancy  Bureau  indicates   the
          Xinzhuangzi site elevation is below the ten year  flood
          level,  whereas the Dupingtuo site will not be affected
          by flooding.
       - The  ash  slurry route from the Dupingtuo  site  to  the
          Plant  is  preferable to the route from the Xinzhuangzi
          site.
       - Cities  near  the  Xinzhuangzi Ash  Yard  will  be  more
          negatively impacted in the winter and spring by  flying
          ash than the Cities near the Dupingtuo site.

2.7  ASSESSMENT OF SITE SUITABILITY
          
     Given the general area which will receive electric power for
     the  grid and steam for district heating, Plant Site  2  was
     selected as the best site from four considered.  The site is
     relatively   level;  above  flood  elevation;  will   occupy
     nonirrigated farmland with lower crop yield than surrounding
     irrigated  land;  and  there are  no  features  of  historic
     interest  or  scenic  beauty in  the  area  which  would  be
     negatively impacted by the Project.
     
     Roads  for the transportation of coal from nearby mines  are
     relatively  good. A minimum amount of road construction  for
     highway access will be required.
     
     There is adequate water to operate the plant from nine local
     water wells.
     
     Although  the  site  is located in an area  which  has  been
     affected  by  earthquakes, it is generally agreed  that  the
     earth stresses have been released and a plant designed for a
     7 degree tumbler will be suitable.  The soil in the area has
     good bearing capacity.  For these reasons, the plant site is
     acceptable from an engineering point of view.

3.0  DESCRIPTION OF FACILITY DESIGN

     The  EPC  Contractor  will design,  construct,  and  provide
     Project equipment in accordance with the requirements in the
     Scope  of  Work  of  the EPC contract.  The  Scope  of  Work
     defines  the conceptual design and prescribes the  technical
     requirements  for  the  Project.  The conceptual  design  is
     based  on a Feasibility Study on Luannan Thermal Power Plant
     of Tangshan Panda Heat and Power Co., Ltd. by Hebei Electric
     Power Design Institute (HDI), dated October 1994.
     
     The  electrical output from the Project is determined by the
     plant capability and the General Interconnect Agreement with
     its  Supplements.   The  Plant design  will  be  capable  of
     producing 106 MW net of the 47 metric tons per hour of steam
     extraction.
     
     The steam output from the Project is determined by the plant
     capability and contractual arrangements.
     
     The Project is expected to be implemented in accordance with
     the   protection   guidelines  and   requirements   of   the
     Environmental  Impact  Report  as  Approved  by  the   Hebei
     Provincial Environmental Protection Bureau dated 7/5/95.
     
     Based  upon the proposed equipment and design criteria,  the
     Project  should  meet  expected plant  performance  criteria
     contained   in  the  EPC  Contract  and  comply   with   the
     contractual agreements for steam and electric energy.
     

3.1  MECHANICAL EQUIPMENT AND SYSTEMS

     3.1.1     Steam Turbine Generator

          Each of the two identical steam turbine generators is a
          condensing extraction unit nominally rated at 50 MW  at
          3000  RPM  capable of producing 60 MW gross under  full
          condensing conditions.  The steam turbine consists of a
          high   pressure  and  a  low  pressure   casing.    The
          extraction steam from the high pressure casing is  used
          for industrial steam processes while exhaust steam from
          the  low  pressure casing is piped to a heat  exchanger
          that   generates   hot  water  for  district   heating.
          Extraction points from both the high pressure  and  the
          low  pressure  casings are provided for condensate  and
          feedwater heating.
          
     3.1.2     Boiler / Firing Cycle

          Each unit boiler uses a balanced draft design with  two
          forced draft (FD) fans and two induced draft (ID) fans.
          The  boiler  is  a natural circulating drum  type,  dry
          bottom, with economizer, air heater, and superheater.
          
          The  boiler is rated for 255 metric tons/hr steam  flow
          at   Maximum  Continuous  Rating  (MCR)  with  a   coal
          consumption of 39.14 metric tons/hr based on the worst-
          case   coal   as   supplied  from  the   Kailuan   Coal
          Administration's   Qianjiaying   Mine,   and   a   coal
          consumption of 40 metric tons/hr based on coal supplied
          from  typical county owned mines.  Parsons Brinckerhoff
          has  reviewed the coal contracts and determined, of the
          six  contracts, coal from the Qianjiaying Mine has  the
          lowest    heat   value   specification   i.e.,    4,600
          kilocalories   per   kilogram,   average   and    4,300
          kilocalories per kilogram, minimum.  Marston & Marston,
          the  Coal Consultant has estimated the coal quality  to
          range  from  4,600 to 4,700 kilocalories  per  kilogram
          with  an ash content of 34-35% which should be adequate
          to provide the expected performance of the Plant.
          
          Steam sootblowers are provided on each boiler to remove
          soot and slag deposits that accumulate on heat transfer
          surfaces.
          
          Pulverized coal is the main fuel.  The boilers  utilize
          an  indirect firing system.  A pulverized coal  storage
          silo  is provided for each unit.  Two ball mills,  each
          having  a  pulverizing capacity of 22.5 metric  tons/hr
          with   worst-case  coal  (i.e.  1.15  capacity  reserve
          factor), are provided for each unit.   Ball mill design
          capacity is based on operating each boiler at MCR  with
          worst-case coal and includes sufficient margin for coal
          quality  transient conditions.  Each ball  mill  has  a
          dedicated  coal bunker that receives raw  crushed  coal
          from  a belt conveyor.  A coal feeder delivers the coal
          from  the bunker to the ball mill.  Pre-heated  air  is
          supplied  to the ball mill where the coal is  partially
          dried and pulverized.  The heated air also conveys  the
          coal   into  a  pulverized  coal  separator  to  remove
          oversize coal particles.  The pulverized coal  is  then
          passed through a cyclone separator and transferred into
          the  pulverized  coal  storage  silo.   Air  with  some
          entrapped  coal particles is removed from  the  cyclone
          separator with the aid of mill exhausters (2 per  unit)
          and  delivered  to the burners.  A fan  and  dedicated,
          pulverized   coal  feeder  transfers  and  meters   the
          pulverized coal from the coal storage silo to the  coal
          burners in the boiler units.  A screw conveyor is  used
          to  transfer pulverized coal from one unit's pulverized
          coal  silo to the other.  This allows the operation  of
          both boilers utilizing any three of the four mills.
          
          The burner arrangement on the boilers is a tangentially
          fired  design with two coal burners at each  corner  of
          each  boiler  unit.  An oil ignition  fueled  by  light
          diesel  oil  (stored on site) serves  as  the  ignition
          source for each coal burner.
          
          Combustion  air is supplied by the FD fans.   Air  from
          these fans passes through a regenerative type air  pre-
          heater  and then is distributed to the windbox, to  the
          burners and to the pulverizers.  An air pre-heater  by-
          pass is provided to admit tempering air for temperature
          control.   Gaseous  combustion products  are  extracted
          from the boiler units by the ID fans.
          
          Electrostatic precipitators are provided downstream  of
          the  air  pre-heater to remove fly ash from the  boiler
          flue  gas.   The  fly ash is collected in  hoppers  for
          further handling and disposal, which is consistent with
          current Chinese environmental standards.
          
     3.1.3     Main Steam System

          The  main  steam  system  conveys  the  high  pressure,
          superheated steam from the boiler steam outlet  to  the
          turbine stop valve.
          
          A  steam  dump  system is provided for diverting  steam
          around   the   steam  turbine  to  the   condenser   to
          effectively enable the plant to operate at  the  trough
          period load.  The steam dump system capacity will be 15
          %-  30%  of the steam turbine generator (STG) flow  and
          will   be   designed   consistent   with   the   boiler
          manufacturer's boiler turndown capabilities.
          
     3.1.4     Extraction Steam System

          The  extraction steam system consists of six stages  of
          condensate/feedwater  heating.   The  first  two   high
          pressure  (HP) stages receive steam from high  pressure
          extraction points located on the STG HP casing to  heat
          feedwater  in the high pressure feedwater  heaters.   A
          third stage, which comes from the crossover between the
          HP   and  low  pressure  (LP)  steam  turbine  casings,
          supplies  steam for industrial use and also  feeds  the
          deaerator.  The fourth and sixth stages supply steam to
          the condensate (low pressure feedwater) heaters and the
          gland  steam condenser.  The fifth stage supplies steam
          to  the  district heating system and also feeds one  of
          the three low pressure heaters.  All low pressure steam
          extraction  points are located on the LP steam  turbine
          casing.
          
     3.1.5     Auxiliary Steam System

          The  auxiliary steam system consists of one  oil  fired
          auxiliary  boiler  capable  of  satisfying  the   steam
          demands for cold start-up of one unit using oil  stored
          on-site.
          
     3.1.6     Condensate and Feedwater Systems

          Steam  exhausted  from the turbine into  the  condenser
          becomes  condensate.  Two condensate pumps are provided
          to  pump  the condensate from the condenser hotwell  to
          the  low pressure feedwater heaters and the deaerators.
          The  feedwater heaters are of the vertical design.  The
          condensate passes first through a gland steam condenser
          and  then through the three LP heaters.  From the third
          LP  heater, the condensate enters the deaerating heater
          where dissolved oxygen and other gases are removed from
          the  condensate.  The condensate is then collected  and
          stored  in  the  deaerator storage tank  as  the  water
          supply  for  the  boiler feed pumps.  Extraction  steam
          condensate  from the two LP heaters near the  deaerator
          is  pumped  into  the  condensate  stream  and  to  the
          deaerators.   The  remaining LP heater  and  the  gland
          steam  condenser  are drained into the  condenser.   An
          emergency  drain  is provided on each feedwater  heater
          and  is activated on heater high level for routing flow
          back  to the condenser to provide protection from water
          induction to the turbine.
          
          The boiler feed pumps transfer water to the boiler drum
          via  an economizer.  Water leaving the boiler feedwater
          pumps flows through two high pressure feedwater heaters
          to  preheat  the feedwater.  The feedwater then  passes
          through  the economizer where it is heated by the  flue
          gas leaving the furnace.  After leaving the economizer,
          the  feedwater  enters the steam drum.   High  pressure
          feedwater   heater  extraction  steam   condensate   is
          cascaded (drained) to the deaerator or in emergency, is
          routed to the condenser.
          
     3.1.7     Cooling Water System

          A  circulating  water  system  common  to  both  units,
          provides  cooling  water to the  condensers  and  other
          auxiliary equipment.  There are four circulating  water
          pumps  receiving suction from a common header  tied  to
          the  discharge of the cooling tower.  A single, natural
          draft  cooling tower provides sufficient  heat  removal
          capacity to serve both units.  The discharge piping  of
          the circulating water pumps is cross tied to serve both
          units  and  has a common return header to  the  cooling
          tower.  Each pump has a motor operated butterfly  valve
          on the discharge line.
          
          An  auxiliary cooling water system is also provided  to
          satisfy plant auxiliary cooling water requirements  for
          generators,  coolers,  pump  and  motor  bearings,  air
          compressors,  etc.   Two  booster  pumps   supply   the
          auxiliary cooling water requirements by taking  suction
          from the circulating water system.
          
     3.1.8     Fire Protection System

          The  Preliminary Design documents describe  the  design
          philosophy of, "fire prevention first and the combining
          of prevention with fire fighting".
          
          Luannan  County town is 2.5 km from the proposed  plant
          site.   Since  this distance requires  less  than  five
          minutes  driving  time, the Luannan Fire  Brigade  will
          provide  personnel and equipment for fire  fighting  at
          the Plant site.  A fire engine with water tank will  be
          provided to the Luannan Fire Brigade by the project.
          
          A  fire fighting water system will be installed at  the
          Plant site which will include a 800 mwater storage tank
          and two fire pumps.  One fire pump is for operation and
          the  other is standby.  The tank also provides  potable
          water  for  human  consumption.   An  additional  water
          storage  tank  is to be installed on top  of  the  main
          power building.  Start-up of the fire pump, controls  a
          valve  on  the  roof  tank inlet  to  ensure  flow  and
          pressure  during  fire fighting.   Maximum  fire  water
          consumption   is   234  m/hr.   Maximum   pressure   is
          calculated at 702 kPa.
          
          Automatic   COfire  extinguishing   systems   will   be
          installed  in the switchgear room and other  identified
          electrical  locations.  Additionally, all buildings  in
          the   Power   Plant   will  be   equipped   with   fire
          extinguishers according to applicable codes.
          
          As  described in the scope of work document for the EPC
          contractor,  an  underground fire water  pipeline  will
          loop   around  the  power  block  and  feed  the  plant
          hydrants, building sprinklers and water deluge systems.
          Automatic water spray systems will be installed in  the
          coal  corridors, in the vicinity of the oil tanks, main
          oil  pipes  in  the  main power  building  and  at  the
          transformers.
          
          The  design  of the fire protection system will  be  in
          accordance  with Chinese local and national  codes  and
          standards, and, where applicable, the Uniform Fire Code
          and  NFPA 850, Recommended Practice for Fire Protection
          for Fossil Fueled Steam and Combustion Turbine Electric
          Generating Plants.
          
          Fire  monitoring, detection and alarm systems  will  be
          furnished  in  the  control rooms,  cable  flat,  cable
          shaft,   battery  room,  relay  room,  and  other   key
          locations  to  provide for early warning and  personnel
          safety.   The  fire  safety  control  system  will   be
          monitored  in  the electrical control room.   Automatic
          protection  systems will operate after confirmation  of
          the alarm by the operator.
          
     3.1.9     Coal Handling System

          Raw  coal is delivered by truck to the Plant.  The coal
          is  weighed  at the plant by a dynamic truck  scale  to
          determine  the  amount  of coal being  delivered.   The
          trucks  unload  the coal in the coal unloading  trough.
          The  trough  is located along both sides  of  the  coal
          stock  yard  and is the same length as the stock  yard.
          Two  gantry cranes with five ton buckets are  installed
          on  rails  above the coal stock yard and coal unloading
          troughs.  The dual gantry cranes are acceptable from an
          engineering  standpoint and typical of the design  used
          for  Chinese coal-fired power plants of this size.  Two
          bulldozers and a truck loader will serve as backup coal
          feeding equipment to the gantry cranes during emergency
          conditions.  The stock yard is divided into  two  equal
          areas.   Coal  unloaded in the troughs is delivered  by
          the  gantry crane onto a belt conveyor which transports
          the  coal  to  the transfer house where it  is  crushed
          before  being delivered to the raw coal storage bunkers
          via  belt  conveyors or stacked by the gantry crane  in
          the coal stock yard.
          
          A  twin  belt conveyor system, each rated at 100  %  of
          Plant  requirement, transports the coal to the  crusher
          house.   The  coal  passes  through  coal  screens  and
          crushers  (depending  on size), a  series  of  magnetic
          separators,  and is directly fed into the coal  bunkers
          on each boiler.  A coal feeder at the discharge of each
          coal   bunker   feeds  coal  to   a   ball   mill   for
          pulverization.
          
          The  coal  handling  equipment and  systems  should  be
          adequate  to  provide for efficient plant production  ,
          even using the worst-case coal described above.
          
3.2  CIVIL/STRUCTURAL SYSTEM
     
     Plant designs addressing Civil, Structural and Architectural
     requirements  are  to  be  consistent  with  the  applicable
     Chinese  Standards for Coal Fired Power Plants.  The general
     layout   of  the  plant  follows  a  design  philosophy   of
     functional groupings.  There are three general groupings  of
     buildings,  structures  and  equipment.   The  first   group
     includes the high voltage switchyard area, main transformers
     and  the  control building.  The second group  includes  the
     turbine  buildings, boilers, draft fans,  precipitators  and
     chimney.   The  third group includes the  coal  storage  and
     supply systems.
     
     3.2.1     Civil Design

          The design incorporates considerations for the type  of
          soils encountered at the Plant site. Where key building
          foundations  are  to be placed, the sub-soils  will  be
          extensively reworked and/or replaced with suitable base
          material.   Site  grading allows for  proper  drainage.
          Roadways  are included in the design to provide  access
          to   equipment   and  buildings  for  maintenance   and
          operation.
     
     3.2.2     Structural Design

          Designs  for  Plant  structures and buildings  includes
          considerations  for basic structure loading,  equipment
          access and earthquake stresses.  General specifications
          for  concrete steel and masonry are included  for  each
          major  construction or structure type.   The  materials
          have   been  chosen  consistent  with  their   intended
          application.    Corrosion   resistant   materials   are
          specified where appropriate.
          
     3.2.3     Architectural Design

          Building architecture is generally consistent with  the
          intended  functions.  The designs include  features  to
          maximize  natural  lighting,  facilitate  the  flow  of
          operations  personnel  and  provide  fire  barriers  to
          improve  personnel  safety.  Additional  considerations
          have been given to building surface finishes to improve
          the  building  aesthetics.   Ceramic  tile,  brick  and
          terrazzo finishes are specified for select Plant areas.
     
3.3  ELECTRICAL AND CONTROL SYSTEMS

     The  Plant electrical and control systems conceptual  design
     is  consistent with present Chinese power plant design.  Off
     site  transmission, substation, protection and communication
     systems  are  described  in the Feasibility  Study  and  are
     provided  through the loan agreement between the  NCPGC  and
     Tangshan  Panda Heat and Power Co., Ltd. and  Tangshan  Pan-
     Western Heat and Power Co., Ltd. dated 2/10/1996.
     
     3.3.1     Step-Up Transformers

          The electrical plant will consist of two nominal 50  MW
          generators (60 MW maximum output) capable of  producing
          a minimum of 51 MW net power to the electrical grid.  A
          75   MVA  rated  Generator  Step-Up  Transformer   will
          increase the output from each generator from 10.5 kV to
          110 kV for connection to the high voltage switchyard.
          
    3.3.2     Plant Switchyard

          The  high voltage switchyard electrical equipment  will
          include   110  kV  rated  SF-6  gas  insulated  circuit
          breakers,  current  and potential transformers,  manual
          air  break  switches,  surge  arresters,  metering  and
          protection  equipment.  As dictated by the North  China
          Power Administration, a double bus arrangement will  be
          used in the switchyard to connect the generators to the
          transmission lines exiting the plant.
          
          Each generator/step-up transformer will be connected to
          a  bus  in  the switchyard by a single, 110 kV  circuit
          breaker.   In normal operation, this scheme is adequate
          to supply all of the output from the plant to the grid.
          However,  a failure of a generator breaker will  create
          an  outage  for  the  associated  generator  until  the
          problem is corrected or the breaker is replaced.   This
          contingency  will have an impact on plant availability.
          To  mitigate  the  effects from such  contingency,  the
          initial  spare  parts  purchase  should  include   this
          equipment in order that it will be readily available on
          site.
          
     3.3.3     Utility Interconnection

          Arrangements  have  been  made  with  NCPGC   for   the
          construction  of  required  facilities  to   adequately
          interconnect the Plant with the utility grid.  Approval
          Notice Document-Huabeidianshe [1995] No. 65, dated July
          13, 1995 and Approval Comments Document Huabeidianjishe
          [1995]  No.  75,  dated August 24, 1995  describes  the
          size,  location and other requirements of the  proposed
          interconnection  facilities at the plant  site.   These
          documents also provide for the construction of a new  5
          km  double circuit 110 kV transmission line which  will
          connect the proposed plant with a new substation to  be
          constructed at Ningtuo.
          
     3.3.4     Off-Site Transmission Lines

          Arrangements have been made with NCPGC for construction
          of  additional off-site transmission lines required  to
          adequately  deliver  power  from  the  Plant  to   area
          substations.   Approval  Notice  Document-Huabeidianshe
          [1995]  No.  65,  dated  July  13,  1995  and  Approval
          Comments Document Huabeidianjishe [1995] No. 75,  dated
          August  24,  1995 provide for NCPGC to construct  three
          additional  double  circuit 110 kV  transmission  lines
          necessary to tie in various substations.  From Ningtuo,
          18  km  of 110 kV transmission line will be constructed
          to  the  new  Changing substation,  12  km  of  110  kV
          transmission  line  will  be  constructed  to  the  new
          Sijezhuang  substation and 8 km of 110 kV  transmission
          line  will be constructed to the existing 2  x  110  kV
          Bengcheng switching station.
          
     3.3.5     Off-Site Substations

          Adequate arrangements have been made with NCPGC for the
          construction of new off-site substations and increasing
          the  capacity of existing substations.  Approval Notice
          Document-Huabeidianshe [1995] No. 65,  dated  July  13,
          1995  and  Approval  Comments Document  Huabeidianjishe
          [1995]  No.  75,  dated August 24,  1995  describe  the
          necessary off-site substation improvements.  Three  new
          2  x 40 MVA substations will be constructed at Ningtuo,
          Changning and Sijezhuang.  Modifications will  be  made
          to  existing Yangling substation and Bencheng switching
          station.   Additionally, changes to  the  communication
          systems  at the Bengcheng switching station and  system
          dispatch   center  and  system  protection  and   relay
          requirements are also described in these documents.
          
     3.3.6     Auxiliary/Start-Up Power

          Each  generator  will  have  an  auxiliary  transformer
          connected to the output terminals which will adequately
          supply   plant  electrical  service.   Each   auxiliary
          transformer  is  capable  of supplying  the  electrical
          needs  of  the entire Plant.  Additional redundancy  to
          the  Plant electrical service is achieved by a start-up
          transformer served from the high voltage switchyard.
          
     3.3.7     Revenue Metering

          Revenue    metering   located   at   the    point    of
          Interconnection  between  the  power  plants  and   the
          utility grid will measure electrical energy provided to
          the  grid.   Readings from these meters  will  also  be
          transmitted  to  the dispatch office  of  the  Tangshan
          Power   Supply  Bureau  of  the  Grid.    Testing   and
          calibration  of  the  revenue  meters  will  be  by   a
          qualified inspection agency approved by both the  Owner
          and the NCPGC.
          
     3.3.8     Control Systems

          A  Distributed  Control  System (DCS)  manufactured  by
          Siemens  and  imported  into  China  for  assembly  and
          delivery  will  provide integrated modulating  control,
          sequential  control  and  data acquisition  from  plant
          systems.  The DCS system design includes provisions for
          1500 Input/Output (I/O) and 300 spare I/O points, for a
          total of 1800 points.
          
          The following functions are included in the DCS:
          
               Data Acquisition System (DAS)
               Furnace Safety Supervisory System (FSSS)
               Continuous Control System (CCS)
               Sequence of Events Recording (SOE)
               Interlock Protection System
          
          The  Boiler  Controls  and the Turbine  Controls  being
          furnished  will  be upgraded from the standard  Chinese
          design  to interface with the DCS and accommodate  data
          transmission to the DCS.
          
          The  Coal Handling System as well as the Bottom and Fly
          Ash  Handling  Systems will be controlled locally  with
          Programmable  Logic Controllers (PLC's) and  interfaced
          with the DCS system.
          
          The  Demineralizer System and the Sampling and Chemical
          Injection  System  will  be  controlled  locally.   The
          systems will interface with the DCS for monitoring.
          
          To  accommodate operating personnel trained in  Chinese
          plants  of similar design, control for both units  will
          be  performed  using a two control  room  scheme.   The
          Steam  Turbine and Boiler Controls will be  located  in
          one  control  room  and  the Generator  and  Switchyard
          controls in another control room.
          
          The  following  DCS equipment will be  located  in  the
          Steam Turbine and Boiler Controls room:
          
               One operator's station (with 2 CRTs and 1 printer)
               per boiler.
               One  operator's station (with 1 CRT and 1 printer)
               per turbine.
               One  operator's station (with 1 CRT and 1 printer)
               for balance of plant.
          
          The  following  DCS equipment will be  located  in  the
          Generator and Switchyard Controls room:
      
               One  operator's station (with 1 CRT  and  printer)
               for the electrical system.
               
          These  systems and configurations have been used before
          at  plants of similar size and technology and should be
          adequate for Plant control.
          
    3.3.9Dispatch/SCADA/Communications

          The  output electrical power from the proposed Plant(s)
          will   be  dispatched  by  the  Tangshan  Power  Supply
          Bureau's Dispatch Department according to the terms and
          conditions  contained in Article Two  of  the  Electric
          Energy  Purchase  and Sales Agreement, dated  September
          22, 1995.
          
          The  SCADA of the operating utility will interface with
          the plant DCS for monitoring, controlling and obtaining
          data.
          
          Telecommunications will be achieved  through  redundant
          paths   using  microwave,  fiberoptic  and  hard   wire
          systems.  A power line carrier used primarily for relay
          applications  is also available for other communication
          needs.  These systems should be more than adequate  for
          Plant communications.

3.4  WATER SUPPLY AND DISPOSAL

     3.4.1     Water Wells for the Power Plant

          The  Plant  water requirement is 980 m3/h (4,508  gpm).
          The  water  source for plant water use is  from  ground
          water.  There are seven production wells nearby with  a
          total capacity of 993 m3/ hr (4,568 gpm) and two backup
          wells  which increase the total water capacity to 1,263
          m/   hr   (5,810  gpm),  which  is  adequate  for   the
          requirements  of  the  Plant.  The  wells  are  located
          approximately  two  miles west  of  the  Plant  in  the
          Quaternary aquifer.
          
          The  Quaternary aquifer is a medium water-rich  aquifer
          and  contains  four  sets  of water-bearing  strata  as
          follows.
          
          a) At  0  - 25 m deep, with a yield of about 3 to 5  t/h
             (13.8-23.0 gpm) water.
          
          b) At   25 - 160 m deep, with a yield of about 20-30 t/h
             (92.0-138.0 gpm) water.
          
          c) At  160 - 250 m deep, with a yield of about 10-20 t/h
             (46.0-92.0 gpm) water.
          
          d) At  250 - 350 m deep, with a yield of about 5-10  t/h
             (23.0-46.0 gpm) water.
          
          The aquifers are fed by the side slopes of the mountain
          to  the  north and seepage from various other  sources.
          The hydraulic gradient of the ground water is about 5%.
          
          The  Hydraulic Bureau of Luannan County stated that the
          water  from  shallow upper aquifers  are  reserved  for
          irrigation.
          
     3.4.2     Waste Water Discharge

          Waste  water discharges from the Plant include:  Boiler
          room and steam turbine room discharge, coal wash water,
          domestic  waste water and ash yard discharge.  Domestic
          waste water will be treated and discharged according to
          national standards.  Production waste water will be re-
          used  as practical for flush water for the ash and coal
          handling   systems.    The   proposed   design   should
          adequately handle the waste water discharge anticipated
          from a plant of this size.
          
          Processing of the Plant waste water is detailed in  the
          Hebei  Environmental Protection Bureau Approval on  the
          Environmental Impact Report.
          
     3.4.3     Storm Drainage

          In accordance with the Environmental Impacts Assessment
          Report   prepared  by  Hebei  Environmental  Protection
          Research  Institute; a dry climate exists in the  Plant
          area  and rainfall from minor or medium rainfall events
          will  be  evaporated.  Only severe and extreme rainfall
          events will result in significant runoff.
          
          Surface water for the Plant will drain into the  Little
          Qinglong River.
          
     3.4.4     Make-up Water

          Ground  water from local water wells will serve  as  an
          adequate  source for boiler make-up water.  Water  from
          the  wells  flows into raw water storage tanks  in  the
          water  treatment  area and is pumped to  a  dual  train
          mixed  bed  demineralizer  system.   The  demineralizer
          water  treating system supplies the make-up water needs
          for both units.  After being treated and demineralized,
          the  make-up  water is pumped to the boiler  deaerating
          water  heater.   At  the deaerator, the  make-up  water
          supplements the feedwater supply to the boiler to make-
          up  for  steam losses (such as those caused  by  boiler
          blowdown).
          
3.5  ASH HANDLING SYSTEM

     3.5.1     Fly Ash System

          The  fly ash disposal system to be furnished is  a  wet
          ash   disposal  system.   Fly  ash  collected  in   the
          electrostatic precipitator hoppers is discharged into a
          sealed  mixing drum at the bottom of each hopper.   Two
          low  pressure water pumps supply the water  for  mixing
          with  the fly ash in the six precipitator hopper mixing
          drums.   The  slurry  created in the  mixing  drums  is
          pumped  to  an  ash slurry sump.  One  slurry  sump  is
          provided  to  serve both units 1 and 2  at  the  plant.
          Three  sets of two ash slurry pumps (total  of  6)  are
          provided to pump the ash slurry to the retention  pond.
          Normally  only  one set of pumps is operating  and  the
          other two sets are in stand-by mode.  One ash retention
          pond  will be constructed to handle the ash slurry from
          both units.
          
     3.5.2     Bottom Ash System

          The  bottom  ash system to be furnished is  a  wet  ash
          disposal system.  Bottom ash is removed from the bottom
          ash  hopper by a scraper chain conveyor and transported
          into  a  crusher.  The crusher reduces the size of  the
          ash and a high pressure hydroejector transports the ash
          slurry to the ash slurry sump.  The bottom ash is mixed
          with  the fly ash in the slurry sump and pumped to  the
          ash  retention pond.  The proposed ash handling systems
          should  be capable of adequately disposing of  the  ash
          from  the  Plant based on the 34-35% ash  content  coal
          from  the  mines as described in the Marston &  Marston
          Coal Report.
          

3.6  ASSESSMENT OF FACILITY DESIGN

     The  design criteria contained in the Scope of Work  of  the
     EPC  contract  with its addendum define  a  plant  which  is
     specified  to be consistent with Chinese National Codes  and
     Standards.  The Preliminary Design is complete and  approved
     by  the North China Power Administration.  The detail design
     will be completed under the EPC contract.
     

4.0  ASSESSMENT OF EXPECTED PERFORMANCE

     It  is anticipated that the steam turbine-generator will  be
     sized  and  designed by the Chinese in accordance  with  the
     performance  requirements specified in the EPC contract  and
     in   accordance   with  Chinese  design  standards.    These
     standards,  typically,  have been  adopted  from  relatively
     early Russian or other east-European nation's standards  and
     guidelines  under  some  kind of a license  agreement.   The
     prevailing  practice was to design steam  turbine-generators
     (STG)  with  margins which in today's conditions,  would  be
     considered  substantial.  A typical STG  would  be  able  to
     operate on a continuous basis, at a steam flow (valves  wide
     open - VWO - condition) up to 5-10 percent greater than  the
     rated   flow   (i.e.  flow  required  to   meet   guaranteed
     performance) and at a steam pressure up to 10 percent higher
     than the rated pressure.  These parameters would lead to  an
     increase  in  the STG power output up to 10-15 percent  over
     the  guaranteed output.  It has been customary to  size  the
     generator  and  its auxiliaries to match the  steam  turbine
     maximum output.

     There  are other operating conditions which if changed,  can
     lead to increases in steam turbine output.  For example,  if
     the extraction steam flow to the district heat exchangers is
     assumed shut off, the steam turbine output will increase and
     additional electric power can be generated up to the maximum
     continuous rating of the generator (60 MW gross).  A similar
     situation  will  result when feedwater/condensate  heater(s)
     are  taken  out of service and the corresponding extractions
     are  shut-off.  If such operating conditions are assumed  to
     occur coincidentally, further increase to the STG electrical
     power  generating  capability is likely with  the  generator
     rating being the limiting factor.

     The  Net Dependable Capacity performance guaranteed  by  the
     EPC  Contractor for this plant is 102 MW (51 MW each  unit).
     Given  the  possible design and operating  combinations  and
     approaches  described above, and with the equipment  ratings
     described  in  the Preliminary Design documents,  the  gross
     electric power producing capability should achieve the 58-60
     MW  maximum  output  stipulated.  The pro forma  projections
     reflect  a  net maximum output of 106 MW which is achievable
     and a reasonable basis for the 20-year operating period.

     The  guaranteed  heat  rate at design conditions  is  12,156
     BTU/kWh  (LHV)  which should be achievable under  full  load
     output conditions.  The pro forma projections have assumed a
     higher  levelized heat rate of 13,402 BTU/kWh (HHV), (12,764
     BTU/kWh  (LHV))  which factors in the off  peak  and  trough
     period  load  factors and 2-1/2% degradation of  the  plant.
     This  heat  rate should be achievable with proper operations
     and maintenance of the facility.
     
     Articles  11, 12, 13 and 14 of the EPC contract contain  the
     required warranties and guarantees.


4.1  START-UP AND COMMISSION

     Section  3.0  of  the  Scope of Work  in  the  EPC  contract
     contains  the performance and testing requirements  for  the
     plant.   Plant Acceptance Testing is specified for 72  hours
     for  verifying  Net Dependable Capacity,  Heat  Rate,  Plant
     Emissions  and  Noise.   Plant Reliability  and  Operational
     Testing   is   specified  for  240   hours   for   verifying
     Availability, Ramp Rates, Startup Rates and Dispatch Level.
     
     Additionally,  Article 10 of the EPC contract describes  the
     EPC  contractor's  responsibilities for performance  testing
     and final acceptance.


5.0  ASSESSMENT OF DESIGN TO SIMILAR PLANTS

     The proposed Luannan Thermal Power Plant will be similar  in
     design,  construction and operation to other plants designed
     by the Hebei Electric Power Design Institute.  Specifically,
     Parson  Brinckerhoff visited and inspected  for  design  and
     construction purposes, two coal fired power plants in  China
     which  were designed by HDI.  One is currently operating  at
     Hepo   using  two  50  MW  units  and  the  other  is  under
     construction at Hengshui with two 300 MW units.
     
     HDI  has completed the preliminary design for the Plant  and
     will  work for the EPC Contractor in the completion  of  the
     detail  design  for this project.  Parsons Brinckerhoff  has
     reviewed  the  preliminary  design  and  determined  it   is
     adequate  and reasonable.  In addition, Parsons Brinckerhoff
     will  review  the detail design and monitor construction  of
     the Plant.

6.0  ASSESSMENT   OF   ABILITY  OF  PLANT  TO  MEET   CONTRACTUAL
     REQUIREMENTS

6.1  ELECTRICAL REQUIREMENTS

     The  nameplate rating of each generator is 50  MW,  however,
     during  peak  periods generator output can be  increased  as
     described  in  Section 4.0.  With 4 MW  of  plant  auxiliary
     loads,  the  51  MW  described in  the  Scope  of  Work  and
     guaranteed  by the EPC Contractor will be available  at  the
     grid interconnection.  The revenue generated by the sale  of
     this  electrical energy may be estimated using the  contract
     purchase levels to estimate the total kWh to be purchased on
     a yearly basis.
     
     With  a  gross  production of 58 MW and a 8.5  %  load  loss
     factor  (4.93 MW auxiliary load), 53.07 MW remain  for  sale
     during the 8 hour peak period.
     
     Additionally,  29.74  MW  (65%  of  the  50  MW  contractual
     agreement less 8.5% of load loss factor) for 8 hours  during
     the  non-peak  period,  and 27.45  MW  (60%  of  the  50  MW
     contractual agreement less 8.5% of load loss factor)  for  8
     hours  during  the  trough period  are  available  for  sale
     (reference  Article  2.1 of the Power  Purchase  Agreement).
     The   following   table   provides  Parsons   Brinckerhoff's
     reasonable  estimate  of  output during  each  daily  period
     taking into account the steam requirements:
     
       53.07 MW x 8 hours =     424,560 kWh - Peak period
       29.74 MW x 8 hours =     237,904 kWh - Non-peak period
       27.45 MW x 8 hours =     219,600 kWh - Trough period
       Total daily kWh          882,064 kWh
       882,064 kWh x 310 days/year = 273,439,840 kWh / year
     
     Assuming  $.0603  / kWh, the total annual revenue  from  the
     first  50 MW unit will be $16,488,422.  The second unit,  to
     be  brought on line simultaneously, will double the  revenue
     to $32,976,844 annually.
     
     The operation of the Plant must obey the dispatch control of
     the  electrical  grid  and conform to  the  peak  regulation
     dispatch practice of the grid as stipulated in Article Three
     of the General Interconnection Agreement.  Using the utility
     grid demand profile of the Beijing-Tianjin-Tangshan Regional
     Grid dated September 4, 1995 and a trapezoidal approximation
     of  the  demand  curve, the daily demand may  be  estimated.
     Calculations  with this methodology and 310 days/year  yield
     an  annual unit production of 318,254,992 kWh/year.  If  the
     Plant is dispatched in accordance with the electrical demand
     curve,   the   projected  total  annual  revenue   will   be
     $38,381,552.


6.2  STEAM REQUIREMENTS
     
     The  Project will sell thermal energy as steam and hot water
     to   the  Luannan  County  and  local  industrial  users  as
     specified in the Feasibility Study and the approval  of  the
     Preliminary  Design.   The Project will  initially  sell  47
     metric tons/hour (approximately 184,000 million kilocalories
     per  year)  of steam to the local industries.  Additionally,
     the  project  will  sell 36 metric tons/hour  (approximately
     100,000  million  kilocalories per year) of  steam  for  the
     production  of  hot  water to the County  for  its  schools,
     hospitals  and other facilities.  Both steam and  hot  water
     have  been  properly reflected in the pro forma  projections
     and  the  Plant is capable of producing these quantities  of
     steam  and hot water when at the maximum expected output  of
     106  MW.   The  JV  Partner, Luannan County, has  negotiated
     steam  contracts or agreements with each of  the  individual
     factories.  The JV Cos. will directly bill all steam users.
     
47  metric  tons/hour  X 7440 hours/year  =  349,680  metric tons/year
36  metric  tons/hour  X 3650 hours/year  =  131,400  metric tons/year
                               Total      =  481,080  metric tons/year
     
     Assuming a 1995 price of $5.39/metric ton for the industrial
     steam  heat  load  and  $4.99/metric ton  for  the  district
     heating load, the total annual revenue will be $2,540,461.
     

7.0  ASSESSMENT OF ECONOMIC LIFE OF THE PLANT

     Substantially all Government approvals have been granted for
     the 20-year joint venture Project, therefore the useful life
     of  the  plant  is considered to be 20 years.   With  proper
     design, careful, periodic maintenance and operation  of  the
     plant  within design parameters, a useful life of  20  years
     should  be  easily achievable.  For comparison, there  is  a
     large number of coal-fired plants currently in operation  in
     the United States that have been in service for well over 30
     years.

     To  achieve maximum useful life, it is essential to have  in
     place  by the time the plant is commissioned, a well-defined
     maintenance and operating plan including a comprehensive set
     of  operating  procedures.  Careful  record-keeping  of  all
     outages  whether  planned or unplanned,  outage  causes  and
     corrective actions should be an integral requirement of  the
     plant  operating  procedures to be performed  by  Duke/Fluor
     Daniel.   Audits  of  plant  operations  by  an  independent
     auditor should be considered.


8.0  DESCRIPTION OF ENVIRONMENTAL ISSUES

     In  1992,  the  Provincial Government authorized  the  Hebei
     Provincial  Metallurgy  &  Energy  Environmental  Protection
     Research  Institute  (EEPRI)  to  conduct  an  environmental
     impact  assessment of the proposed Luannan Power  Plant.  In
     June  1993,  the  Hebei Environmental Protection  Department
     (HEPD) gathered experts to evaluate and subsequently approve
     the  Luannan  Thermal  Electric  Power  Plant  Environmental
     Impact Assessment Report.  The original Environmental Report
     was amended in May 1995 to address environmental changes  in
     recent  years  and the expansion of the facility.   The  255
     page  Environmental  Report evaluated  air,  surface  water,
     ground  water, waste water and noise according to  standards
     approved  by  the Hebei Environmental Protection  Department
     and  the  Tangshan City Environmental Protection  Department
     (TCEPD).

8.1  PROJECT ENVIRONMENTAL STANDARDS

     The  approved  environmental standards which  apply  to  the
     Project are as follows:
     8.1.1     Environmental Quality Standards:

          Environmental Air:  Code BG3095-82 (air quality), Class
          II standard.
          Surface   water:   GB3838-88  (surface  water  quality)
          Category V standard.
          Surface  water:   GB5084-92 (irrigation water  quality)
          Category II standard.
          Ground water:  GB/T14848-93 (ground water quality).
          Noise:   GB12348-90  (industrial and  commercial  noise
          standard) Category IV standard.
          
     8.1.2     Effluent and Emission Standards:

          Air  emission--GB13223-91  (coal-fired  electric  power
          plant air emission standard).
          Waste   water   effluent--GB8978-88   (combined   sewer
          discharge standard) Class II standard.
          Plant  noise--GB12348-90,  (industrial  and  commercial
          noise standard) Category IV standard.
          
          Parsons  Brinckerhoff believes the Project can  achieve
          each of these standards.
          
8.2  ASSESSMENT OF ENVIRONMENTAL IMPACT
     
     The   Environmental  Site  Assessment  as  reported  in  the
     Environmental Impact Assessment Report appears to have  been
     conducted  in  a  manner consistent with industry  standards
     using  comparable  industry protocols for  similar  studies.
     The Environmental Report was prepared with the assistance of
     HEPD,   TCEPD,   Luannan  County  Environmental   Protection
     Department,  Hebei Electric Power Design Institute  and  the
     Luannan  County Thermal Electric Power Planning  Commission.
     Although   we   have  not  performed  an  independent   site
     assessment, we are of the opinion that the conclusions which
     EEPRI  reached were supported by the data and reports  which
     we reviewed.
     
     From  the  view point of environmental protection, the  site
     plan  fully  considers  the needs of  the  employees'  daily
     activities  and  working  conditions,  centralizes  the  air
     emission  sources,  and  provides proper  design  for  noise
     consideration.   The  site  plan  also  isolates   potential
     problems.  For example, the entrance for material is located
     at  the  northeast corner of the site, and the coal pile  is
     located   north  of  the  site,  therefore,   avoiding   the
     prevailing  wind  effects,  and minimizing  noise  and  dust
     impacts  on the project area.  The cooling tower is  located
     at  the  eastern part of the site and is connected to  other
     work  areas with a sky-walk, therefore minimizing the  water
     and  noise  impacts  on  the  employees  and  their  working
     environment.  The boiler room is located at the western part
     of the site; this arrangement provides a convenient location
     for steam emission and minimizes the steam noise impacts.
     
     Additionally,  the engineering analysis indicates  that  the
     plant  environmental protection facilities and the  effluent
     quality  complies  with  the  national  standards  for  air,
     surface   water,  ground  water,  noise,  and  waste   water
     effluent.   These  standards were  listed  earlier  in  this
     section.
     
     Data  from the Environmental Impacts Assessment Report (EIA)
     prepared   by   Hebei  Provincial  Metallurgy   and   Energy
     Environmental Protection Research Institute and calculations
     prepared  by Panda Energy International, Inc., indicate  air
     emissions will be below the limits set by the World Bank for
     sulfur  dioxide  and slightly above the limits  for  nitrous
     oxide and particulate emissions.
     
     Particulate  emissions  from the facility  will  exceed  the
     World  Bank  Guidelines because of limitations on guaranteed
     efficiency of Chinese electrostatic precipitator technology.
     However, these guidelines are not applicable to this project
     and   emissions  calculations  in  the  Preliminary   Design
     Documents are below the requirements of Chinese Standards.
     
     Neither  the  Preliminary  Design  Documents  nor  the   EIA
     stipulate  a requirement for nitrous oxide emission  control
     in  China.  Calculations for nitrous oxide emissions may  be
     updated when burner design is completed.
     
     The  planned facility will replace 91 coal-fired boilers  in
     the  area.  The majority of these 91 boilers do not have any
     ash  removal  facilities and they have short stacks.   Those
     having  ash  removal  facilities  are  equipped  with   low-
     efficiency  precipitators.  These 91 boilers are  the  major
     pollutant  contributors to the area.  Due to the closure  of
     these  91 coal fired boilers, the net impact to the area  is
     very  positive.  The ground level particulate  concentration
     is  reduced below Chinese standards and close to  the  World
     Bank Guidelines.
     
     In  summary, the Plant will enhance electrical service, help
     relieve  the  deficient  supply and  will  promote  economic
     development  for the area.  Centralizing thermal  production
     and  winter heating will also improve the air quality in the
     area.
     
     This  assessment has concluded that, from the  environmental
     point  of  view,  the  plant  is  feasible  and  will   meet
     applicable Chinese Standards if all environmental protection
     and control measures recommended by the EIA are implemented.
     
9.0  GOVERNMENT APPROVALS AND BUSINESS AGREEMENTS

9.1  GENERAL DESCRIPTION
     
     The  Project  has been under consideration for a  number  of
     years.   As  the Project has developed, Business  Agreements
     have been made and Government Approvals have been obtained.
     
9.2  GOVERNMENT APPROVALS
     
     A  list  of Government Approvals for the Project design  and
     construction are as follows:
     
     - Project  Proposal  Approvals (#682, #683  and  #684  dated
       9/26/94  and  #470  dated  5/29/96)  by  Hebei  Provincial
       Planning Commission.
     
     - Project  Feasibility Study Approvals (#144, #145 and  #146
       dated  2/28/95 and #471 dated 5/29/96) by Hebei Provincial
       Planning Commission.
     
     - Project  Feasibility Study Approval (#10) by  North  China
       Power  Administration of the Ministry  of  Electric  Power
       (2/16/95).
     
     - Project  Heat Network Feasibility Study Approval (#57)  by
       Tangshan Municipal Planning Commission (4/11/95).
     
     - Environmental  Impact Approval (#150) by Hebei  Provincial
       Environmental  Protection Bureau (7/5/95).   Environmental
       Impact  Approval  Supplements: An Official  Reply  to  the
       "Report  on  Environmental Impact Assessment  for  Luannan
       Thermal  Power Plant (2nd edition)" by Hebei Environmental
       Protection  Bureau,  J.  H. G. H. (1996)  No.  318,  dated
       September 9, 1996.
     
     - Interconnection  Design  Approval  (#65)  by  North  China
       Power  Administration of the Ministry  of  Electric  Power
       (7/13/95).
     
     - Water  Usage  (#11)  by  Tangshan  Municipal  Water  Usage
       Bureau (8/13/94).
     
     - Joint  Venture  Approvals  (#253  and  #254)  by  Tangshan
       Municipal   Bureau   for  Foreign   Trade   and   Economic
       Cooperation  (9/20/95).  Certificate of  Foreign  Invested
       Enterprise  of  Tangshan Panda Heat and  Power  Co.,  Ltd.
       (No.   0153758)   and  Certificate  of  Foreign   Invested
       Enterprise  of  Tangshan Pan-Western Heat and  Power  Co.,
       Ltd.   (No.   0153759)  issued  by  the  Hebei  Provincial
       People's Government under Approvals (#078 and #079)  dated
       (9/20/95).
     
     - Joint  Venture  Approvals (#123)  dated  5/14/96  for  the
       Tangshan Cayman Heat and Power Co., Ltd. and (#134)  dated
       6/7/96 for the Tangshan Pan-Sino Heat Co., Ltd. issued  by
       Tangshan  Municipal Bureau for Foreign Trade and  Economic
       Relations.  Certificate of Foreign Invested Enterprise  of
       Tangshan  Cayman  Heat and Power Co., Ltd.  (No.  0255737,
       approval  #040 dated 5/14/96) and Certificate  of  Foreign
       Invested  Enterprise of Tangshan Pan-Sino Heat  Co.,  Ltd.
       (No. 0255740, approval # 044 dated 6/07/96) issued by  the
       Hebei Provincial People's Government.
     
     - Public  "Right-Of-Way  and  Road  Usage"  (Transportation)
       Approvals by the Luannan County Bureau of Transportation:
     
         Coal Transportation Approval (8/18/94)
         Ash Transportation Approval (1/10/95)
     
     - Steam  Price  Approval  by  Luannan  County  Price  Bureau
       (8/13/94).
     
     - Approvals  (#5)  by  the  Tangshan  Office  of  the  Hebei
       Provincial Construction and Planning Commission  (6/23/95)
       for  Land Sites, Transportation and Roads, Water usage and
       Electricity Usage.
     
     - Business  License  of  the Tangshan Pan-Western  Heat  and
       Power  Co.,  Ltd.  (Reg. No. 000512) and Business  License
       of  Tangshan  Panda  Heat and Power Co.,  Ltd.  (Reg.  No.
       000511)  issued by the  State Administration  of  Industry
       and  Commerce  (9/22/95).  Business  License  of  Tangshan
       Cayman  Heat  and  Power Co., Ltd. (Reg. No.  000665)  and
       Business  License  of  Tangshan Pan-Sino  Heat  Co.,  Ltd.
       (Reg.  No.  000666) issued by the State Administration  of
       Industry and Commerce (6/13/96).

9.3  BUSINESS AGREEMENTS

      Following  is  a  list of the Business Agreements  for  the
Project:

     - Joint Venture Contracts (9/3/94 and 9/4/94).
     
     - Joint   Venture  Articles  of  Association   (9/3/94   and
       9/4/94).
     
     - General  Interconnection Agreement with North China  Power
       Group Co. (9/22/95).
     
     - Supplemental   Agreement   for   General   Interconnection
       Agreement   and   Electric  Energy  Purchase   and   Sales
       Agreement with North China Power Group Company (2/10/96).
     
     - Construction   Agreement   attachment   to   the   General
       Interconnection Agreement (2/10/96).
     
     - Loan  Agreement with the North China Power  Group  Company
       to   finance   the   construction  of   the   transmission
       facilities  through a financial intermediary  in  the  PRC
       (2/10/96).
     
     - Power   Price  and  Pass-Thru  Price  Adjustment   Formula
       Approval  by  Tangshan  Municipal  Price  Control   Bureau
       (10/18/95).
     
     - Coal  Supply  Allocation Commitment from  the  Qianjiaying
       Coal  Mine  (11/94)  and  Confirmation  of  Commitment  by
       Kailuan  Mining  Administration of the  Ministry  of  Coal
       Industry (3/7/95).
     
     - Coal Supply Agreements:
     
       - with  Kailuan  Coal  Mining Administration  for  300,000
          tons/year (2/3/96)
       - with  Luannan  County  Coal Mine  for  70,000  tons/year
          (2/2/96)
       - with   Liu   Guantun  Coal  Mine  for  70,000  tons/year
          (2/2/96)
       - with  Le  Ting  County  Coal Mine for  60,000  tons/year
          (2/2/96)
       - with Zunhua Coal Mine for 60,000 tons/year (2/2/96)
       - with  Chang  Li  County Coal Mine for  50,000  tons/year
          (2/2/96)
     
     - Coal Transportation Agreement (3/6/96).
     
     - Agreement  on  Land  Contribution  with  Luannan  Partners
       (9/7/94).
     
     - Agreement  to Expand Power Plant with Luannan Partners  by
       Additional  50  MW (9/7/94).  This agreement  expands  the
       Plant capacity from the original 50 MW to the present  100
       MW.
     
     - Operation  and Maintenance Agreement between JV  Cos.  and
       Duke/Fluor Daniel International Services, Inc. (6/26/96).
     
     - Engineering,  Procurement and Construction (EPC)  Contract
       (4/24/96)  and Amendment No. 1 (7/5/96), No. 2  (9/14/96),
       and No. 3 (12/17/96).
     
9.4  ASSESSMENT OF SUPPORT DOCUMENTS

     Based on our review of the various Government Approvals  and
     Business Agreements, we are of the opinion that the JV  Cos.
     have  obtained the key governmental approvals required  from
     the  various  governmental agencies which are  necessary  to
     construct and operate the Project.
     
     We  are not aware of any technical circumstances that  would
     prevent the issuance of the remaining approvals.
     
10.0 PROJECT SCHEDULE

     The  construction schedule is 28 months and is suitable  for
     similar projects in China.  The governing factor is the lead
     time  required  for  major  equipment  manufacturing.    The
     critical  path is the main turbine building, which  must  be
     finished  before  the delivery of the major equipment  which
     will  be  installed in the turbine building.  Based  on  our
     review  of  the  Project Schedule and the  EPC  Contractor's
     experience, the 28 month schedule should be achievable.

11.0 REVIEW OF EPC CONTRACTOR AND AGREEMENT

11.1 ASSESSMENT OF MANPOWER AND STAFFING

     The  EPC  Contractor shall submit a detail manpower plan  as
     specified  in  Section 5.0 of the Scope  of  Work  document.
     However,   the   staffing  information  required   for   the
     construction  of  the plant is not available  from  the  EPC
     Contractor  as  this time.  The EPC Contract  specifies  the
     Contractor's responsibilities and warranties with respect to
     vendors  and subcontractors.  Since civil work  is  a  major
     portion of the contract, Harbin will identify and owner will
     approve   the   Civil   Contractor  and  other   Substantial
     Contractors  prior to starting the project as  described  in
     Article  2  of EPC Contract.  Parsons Brinckerhoff  believes
     the  staffing of the project by the EPC Contractor  will  be
     adequately provided.

     Article  3  of  the EPC Contract describes  the  Contractors
     responsibilities  for engineering and  construction  of  the
     project.  China has a large supply of general labor.  Harbin
     is  expected  to employ unskilled labor from within  Luannan
     County,  however, the skilled labors (welders, electricians,
     etc.), for the most part, will have to be provided by Harbin
     or  their  subcontractors.   The skilled  labor  requirement
     should  be  available  within  the  Tianjin-Tangshan-Beijing
     triangle.

11.2 EVALUATION OF THE  EPC CONTRACTOR'S EXPERIENCE

     HPE  is  a well known Chinese power contractor and has  both
     international  and domestic experience in manufacturing  and
     installing equipment for similar power generation  projects.
     HPE's technical brochure includes 16 coal fired power plants
     in  its list of Chinese achievements.  HPE has supplied main
     or  all equipment and provided technical services for  these
     plants.   Of  these 16, Pingwei, Zhujiang,  Tieling,  Mawan,
     Shuangyashan,  Diaquing  and Dengfeng  power  stations  were
     completed  as  turnkey  projects.   Additionally,  HPE   has
     completed  international power plant installations on a turn-
     key  basis  in Pakistan at Guddu, Jamshoro and Kotri;  Angat
     Hydraulic, Philippines; and Hiep Phuoc, Viet Nam.

     The  No. 2 Hebei Power Construction Company (2HPCC) has been
     selected by HPE to be the construction subcontractor for the
     Luannan  Thermal  Power  Plant.   2HPCC  has  completed  the
     construction  of  No. 1 unit at the 1200 MW  Hengshui  Power
     Plant  in  December, 1995.  This first unit,  300  MW  coal-
     fired,  was  completed in 24 months.   In  addition  to  the
     facilities visited at Hepo and Hengshui, 2HPCC has completed
     power plants and cogeneration plants at 8 other locations in
     China during the last 10 years.

     Portions  of the project will be subcontracted out to  local
     contractors.  Owner has given the EPC Contractor  a  Limited
     Notice   to   Proceed  and  has  allocated   the   necessary
     expenditures  to cover this preliminary work.   Given  HPE's
     track record, We believe they have the ability to follow the
     Chinese  construction  standards  and  enough  capacity  and
     manpower  to complete the project as the EPC contractor  and
     meet  the performance and schedule requirements of  the  EPC
     Contract.

11.3 EVALUATION OF EPC CONTRACT TERMS

     The  Liquidated Damages (L.D.s) are capped  at  35%  of  the
     contract price plus 10% retention.  The total of 45% is  the
     largest  known percentage from a Chinese contractor compared
     to  the  customary 10% total.  The terms in the  irrevocable
     bank guarantee (letter of credit) are strong enough to cover
     the interest and penalty risk of Owner.

     In  addition, a performance bond in the form of  the  Parent
     Guarantee  will be issued by the parent corporation  of  the
     EPC Contractor.  The terms in the guarantee are suitable  to
     replace the bid security with given assumptions that (1) the
     parent company has enough assets, (2) the Chinese government
     will  allow  such a flow of money when due, and (3)  Changes
     are regulated and managed.

     The contract has the necessary clauses and is comparable  to
     the other turnkey projects in the US.  The EPC contracts  in
     China  are  more  rigorous than in the US on the  government
     approvals,  design stages, and guarantee  issues,  and  less
     rigorous  on  environmental issues.   With  the  arbitration
     location  outside of China for disputes over $1,000,000  US,
     the  risks  of Owner are limited.  The China factor  becomes
     important when the laws and regulations change and there  is
     no contract clause to effectively protect the Owner.

     Parsons  Brinckerhoff believes the EPC Contract has adequate
     protection for the Owner in terms of L.D.s, Parent Guarantee
     and other requirements.

12.0 FINANCIAL PERFORMANCE ASSESSMENT

     We  have  reviewed the financial assumptions and projections
     with   respect  to  the  Plant's  performance  and  revenue-
     generating  capability  and the operating,  maintenance  and
     capital  costs  of the Project.  This chapter  contains  the
     financial   analysis  based  on  such  assumptions   and   a
     discussion of their reasonableness.

     The  Project will be composed of four separate joint venture
     companies.   Each  has its distinct scope  of  business  and
     asset  ownership  of  the Project.   However  the  financial
     performance  of  the Project is presented as a  consolidated
     entity,  since  the payment and performance  obligations  of
     each  joint  venture  company under their  shareholder  loan
     agreement  will  be  cross-guaranteed  by  the  other  joint
     venture  companies.  This chapter will include a section  on
     the  operating  results of each of the  four  joint  venture
     companies.

     Among  the  many  assumptions  that  are  critical  to   the
     financial  viability of the Project are the level  of  power
     production,   power   tariffs,  capital   costs,   operating
     expenses, maintenance costs, reserve requirements,  and  tax
     rates.  On the basis of such assumptions, we have prepared a
     pro  forma statement to forecast the operating revenues  and
     expenses,  net  income, and cash flow of the Project  on  an
     annual basis throughout the contract period.
     This chapter includes the following sections:

          - level of power production
          - power tariffs
          - review of project costs
          - review of operating expenses
          - review of reserve requirements
          - the financing plan
          - consolidated operating results -- base case
          - summary of sensitivity analysis
          - individual joint venture companies operating  results
            -- base case
     
12.1 LEVEL OF POWER PRODUCTION
     
     The  financial analysis is based on the assumption that  the
     NCPGC  will  purchase  electricity and  the  Luannan  County
     customers  will  purchase thermal  energy  produced  by  the
     Plant.   The contractual terms of power purchase  and  sales
     agreement  are  thus used as the basis of  power  production
     projections in the analysis.

          12.1.1    Power Purchase Agreement

          We   reviewed   the  Power  Purchase  Agreement   dated
          September 1995.  The Agreement provides for the sale of
          electric energy generated by the Plant for the contract
          period  of 20 years.  The key provisions as defined  in
          the  Agreement  are summarized as follows,  which  then
          become  important assumptions used in projecting  power
          output from the Plant:
          
          - The   Power   Purchase   Agreement   establishes    a
            commercial  operation period  of  20  years  for  the
            Plant.   The  Joint Venture Companies are responsible
            for  the  operation  and  maintenance  of  the  Plant
            during the contract period.
          
          - Starting   on  the  Commercial  Operation  Date   and
            throughout   the   20-year  term,  subject   to   the
            limitations  on  the  gross  generation  levels,  the
            Joint  Venture  Companies agree to  sell,  and  NCPGC
            agrees  to  purchase  and take, all  electric  energy
            delivered  to  NCPGC  from  the  Plant.   The   gross
            generation levels in different time periods,  subject
            to  adjustments agreed by both parties, are presented
            in  Table  12.1.  We believe that the Plant operating
            assumptions  presented in Table 12.1  are  reasonable
            and  that  the  Project will be capable of  achieving
            these  parameters throughout the 20-year term of  the
            Power Purchase Agreement.
          
          - The  Joint  Venture Companies will be  paid  for  the
            delivered  electric  energy at or  over  the  minimum
            output  level during the Peak Hours at the applicable
            energy  price.   NCPGC is required  to  purchase  the
            electricity  output  below  the  maximum  levels   as
            specified  in  Table  12.1 during  the  Non-Peak  and
            Trough hours.
          
          - The  Agreement  specifies that the cumulative  annual
            overhaul  outage for the Plant, including the  forced
            outages,  will not exceed 55 days.  Outages  will  be
            calculated  on an actual time elapsed basis.   During
            the 55 days, the Joint Venture Companies will not  be
            penalized  for  the  failure to  produce  or  deliver
            electric  energy.   As a result  of  this  agreement,
            this  financial analysis assumes that the Plant  will
            run  310  days  each  year to  generate  and  deliver
            electricity  to  NCPGC.  It is reasonable  to  expect
            the  Project will be capable of meeting this 310  day
            requirement throughout the 20-year term of the  Power
            Purchase Agreement.

           Table 12.1     Plant Operating Assumptions
<TABLE>
<CAPTION>
                         PEAK HOUR   NON-PEAK    TROUGH      TOTAL
                                     HOUR        HOUR
        <S>              <C>         <C>         <C>         <C>
                                                              
        Contractual      minimum     maximum     maximum     1,800,000
        Gross            800,000     520,000     480,000  
        Generation           kWh         kWh         kWh       kWh
        Limit/Day
        
        Plant Gross          116MW       100MW       100MW       --
        Output
        Capacity
                                                             
        Percent Load         100%         65%         60%         --
                                                             
        Load Loss            8.5%        8.5%        8.5%        --
        Factor
                                                             
        Net Output       106,140       59,475     54,900      220,516
        (kW)
                                                             
        Average                8            8          8           24
        Hours/Day
                                                             
        Net Output/Day   849,120      475,800    439,200      1,764,120
        (kWh)            (above       (below      (below
                         contrac-     contrac-   contrac-
                         tual          tual      tual
                         minumum)     maximum)   maximum) 

        Annual Running       310          310        310            310
        Days
                                                             
        Annual Net       263,227      147,498    136,152        546,877
        Output             MWh          MWh         MWh          MWh*
                                                             
        Steam Output          47           47         47        349,680
                         tons/hour   tons/hour   tons/hour     tons/year
                             310          310        310
                         days/year   days/year   days/year
                                                             
        Heat Output           36           36         36        131,400 
                         tons/hour   tons/hour   tons/hour     tons/year
                               5            5          5
                         months/       months/   months/
                           year         year      year
</TABLE>
                                                             
        *:  Equivalent to 100 MW for 5,469 hours.

          This   Report  contains  a  separate  review   of   the
          operational capacity of the Plant in Chapter  6,  which
          verifies the Joint Venture Companies' ability  to  meet
          the  terms  of the Power Purchase Agreement to  produce
          and deliver power as scheduled.

          Based  on the contractual commitments set forth in  the
          Power  Purchase Agreement and the technical  assessment
          of   the  Plant's  operating  performance,  the   Plant
          Operating Assumptions presented in Table 12.1 are  used
          to calculate the annual electricity power output, which
          remains   constant  throughout  the  20-year   contract
          period.
          
          12.1.2    Heat Sale Agreement and Assumptions

          The Joint Venture Companies will sell thermal energy of
          industrial  steam and district heat to  Luannan  County
          and other local industries.
          
          A Steam Heat Supply Agreement for hot water consumption
          was  signed in October 1996 by the Luannan County  Heat
          Company and the Joint Venture Companies.  The Agreement
          specified that the County Heat Company will purchase  a
          minimum  of  362,518   gigajoules per  year,  or  about
          131,400  tons  of hot water per year,  from  the  Joint
          Venture   Companies  for  consumption  by   the   local
          residents.
          
          Table  12.2  lists the steam customers who have  signed
          individual  heat  supply  agreements  with  the   Joint
          Venture  Companies  and specified  their  requests  for
          steam consumption levels:

         Table 12.2     List of Thermal Energy Customers

             Name of Customer        Use in Summer   Use in Winter
                                     (metric tons /  (metric tons /
                                     hour)           hour)
                                                          
          1  Tangshan Shanfeng              6             0
             Fodder Co.
          2  Paper Board Factory  of       28            30
             Yiteng Paper Co.
          3  County Textile Mill            4             5
          4  County   Canned    Food        4             5
             Factory
          5  County  Asbestos   Tile        7             8
             Factory
          6  Seal Fodder Factory            6             0
             Total  Steam  Requested    55 tons        48 tons
             Per Hour:

          The Plant's design heat energy output, according to the
          "Feasibility Study on Luannan Thermal Power  Plant"  by
          Hebei  Electric  Power Design Institute  dated  October
          1994, is an average of 47 tons of steam and 36 tons  of
          district heat per hour.  The design steam output of  47
          tons  per  hour would be less than the requested  total
          amount   specified  in  the  heat  supply   agreements.
          However,  the  Joint  Venture  Companies  will  not  be
          obligated  according  to  the agreements  in  place  to
          provide  the  full amount of requested thermal  energy.
          There  are  no punitive damage provisions in  the  heat
          sale  agreement if and when the Joint Venture Companies
          deliver thermal energy below the requested amount.
          
          It  is  therefore reasonable to assume in the financial
          analysis that the Plant will provide as much as 47 tons
          per  hour of steam for 310 days per year, and  36  tons
          per hour of heat for 5 months of winter each year.   At
          this  level  of steam and heat production, the  Project
          should  be able to produce the 106 MW of output  during
          peak  hours.  The financial analysis also assumes  that
          this  level  of thermal energy production  will  remain
          constant throughout the contract period.

12.2 POWER TARIFFS

          12.2.1    Planned Wholesale Electric Energy Price

          The  electricity prices used in the financial  analysis
          are based on the Planned Wholesale Power Price that was
          proposed by the Joint Venture Companies for the Project
          financial  evaluation purposes and  agreed  to  by  the
          Tangshan  Municipal Price Bureau (the Pricing  Approval
          Authority),   as   specified  in  the  Power   Purchase
          Agreement. The Pricing Approval Authority also accepted
          the  Joint Venture Companies' proposed pricing formulae
          to  adjust  the Planned Wholesale Power  Price  in  the
          future  to  reflect  changes  in  the  cost  adjustment
          factors in order to mitigate the Project's exposure  to
          inflation and currency risks.

          Based on the estimated production cost, plus tax and  a
          profit  margin  that  is set by the Chinese  government
          regulations  on joint-venture developments,  the  Joint
          Venture Companies estimated the Planned Wholesale Power
          Price  in  1995  cost  by  using  the  following   cost
          categories:

     Table 12.3     Cost Components for Wholesale Power Price

A.   Unit Generation Cost
     --   Direct Material Costs (including depreciation on
          plant and equipment)
     --   Direct Labor Costs
     --   Management Costs
     --   Administrative Costs

B.   Financial  Expenses, including long term debt interest  and
     working capital interest

C.   Unit  Reserves, including equipment maintenance &  overhaul,
     welfare reserve for Chinese employees

D.   Unit  Taxes, including central and local taxes, real  estate
     tax, and stamp tax

E.   Unit  Profit  (Tax-affected), including  return  on  equity,
     profit deferral & recovery, interest on profit deferral, and
     income taxes on profit.

          The estimated pre-VAT Planned Wholesale Price of 0.5126
          yuan  (6.0  US  cents1) per kWh in 1995 cost  was  then
          increased  to 0.5997 yuan (7.1 US cents1)  per  kWh  to
          include  the  17  percent VAT.  Based  on  the  pre-VAT
          price,  the  financial  analysis projects  the  Initial
          Wholesale  Price for 1999 by using the  following  cost
          adjustment   assumptions   in   the   complex   pricing
          adjustment  formulae accepted by the  Pricing  Approval
          Authority:
          
          - Coal  Escalation  Assumption:   10%  annual  increase
            from  1995 to 2003, 4% annual increase from  2004  to
            2018.
          
          - Chinese  Consumer Price Index Assumption:   10%  from
            1995  to 2003, 6% from 2004 to 2008, 4% from 2009  to
            2018.
          
          - US$  Exchange  Rate Assumption (US  dollar  to  RMB):
            1:8.5 from 1995 to 2018, which was consistently  used
            throughout the projections.
          
          - US  Inflation  Adjustment  Assumption:   3.0%  annual
            increase from 1995 to 2018.
          
          - Total Investment Cost Adjustment, which represents  a
            one-time   adjustment  factor  for   the   difference
            between  the estimated total investment cost of  $105
            million  as  agreed  in the Power Purchase  Agreement
            and  $119 million as the final project cost presented
            in the Offering Circular.

          Other cost adjustment factors include profit deferral /
          recovery  adjustment and interest  on  profit  deferral
          adjustment.  These two adjustment methods were proposed
          by  the  Joint Venture Companies and agreed to  by  the
          Pricing   Approval  Authority  in  the  Power  Purchase
          Agreement  in order to stabilize power price throughout
          the  contract  period.  The pre-VAT  Initial  Wholesale
          Price,  based on the above cost adjustment assumptions,
          is  projected to be 0.6320 yuan (or 7.4 US cents1)  per
          kilowatt  hour  in 1999, the first year  of  commercial
          operation.

          In  this  analysis, the projected pre-VAT  energy  sale
          prices  are compared with other power tariffs in  China
          that were made available to the Engineer.  The existing
          research,    without   giving   detailed   information,
          indicates  that electricity tariffs in China  had  been
          set  artificially  low by the central,  provincial  and
          local governments2,3, as illustrated in Table 12.4:

   Table 12.4     China's Electricity Prices in International
                            Context4

      (US cents/kWh at current exchange rates, 1994 - 1995)
               New Plant           3.5 cents per kilowatt hour
               Beijing                            3.3 - 6.4
               Shanghai                                 5.0
               Guangdong IPPs                     7.5 - 9.0
               Average China                            2.6
               Average OECD Countries                   8.1
               Luannan 1995 Wholesale Price             6.0
               Luannan Projected 1999 Initial Price     7.4

          Although  the Project's pre-VAT energy prices  (6.0  US
          cents  in  1995 and  7.4 US cents in 1999)  are  higher
          than most other rates currently reported for plants  in
          China,  it  is  lower  than  that  reported  for   some
          Independent  Power  Plants (IPPs, or  foreign  invested
          power projects) in Guangdong Province in southern China
          and   certainly  lower  than  that  of  the   developed
          countries  in the Organization for Economic Cooperation
          and Development.

          Similarly high rates have been reported even within the
          North  China  Power Grid.  As an innovative  method  to
          regulate  power consumption, time-of-use  tariffs  were
          employed  in Hebei Province, within which the Plant  is
          located.   According to the 1995 James  Dorian  report,
          the  highest  rate  charged  during  peak  times  since
          November   1994  was  6.4  cents  per  kilowatt   hour.
          Meanwhile,  tariff  controls have been  eliminated  for
          electricity  sales  by power plants  that  are  foreign
          built  or financed to attract foreign investment.   The
          independent author concluded that the potentially large
          private  investments will only occur  with  electricity
          prices  being  at  least double the present  levels  of
          about  3 US cents per kWh.  James Dorian also quoted  a
          Taiwan  publication in estimating the economic cost  to
          the  power  consumers of about 17  cents  per  kWh  for
          shortages  throughout China on average, which  is  more
          than  double the Plant's Initial Planned Price  of  7.4
          cents for 1999.  The Project's electricity sale prices,
          increasing from 7.4 US cents per kilowatt hour in 1999,
          to  11.1 in 2009 and 12.4 in 2018 should not be  viewed
          as  unreasonable  and unacceptable in  the  context  of
          chronic  power shortage in China, particularly  in  the
          rapidly developing region of Beijing-Tianjin-Tangshan.

          12.2.2    Future Price Adjustments and "Passthrough"
                    Provisions

          During the contract period, the Joint Venture Companies
          are authorized by the Power Purchase Agreement to apply
          for  price  adjustments  for approval  by  the  Pricing
          Approving Authority.  The Joint Venture Companies  will
          propose  cost adjustments based on the price adjustment
          formulae to provide for parity of the escalation of the
          operating  expenses to the revenues.  This  contractual
          arrangement  ensures a "passthrough" of  the  potential
          cost  escalation  to the energy purchasers.   In  other
          words,  the energy price will go up or down,  depending
          on the changes in the various cost items in the future.
          For  example, if the Chinese Consumer Price Index (CPI)
          goes  up,  the energy price will go up by the  weighted
          adjustments  of  the  CPI  factor  applicable  to   the
          construction capital costs and the Chinese  O&M  costs,
          thus  the  energy  sale revenues will be  increased  to
          offset cost increases based on the Chinese CPI.
          
          Thirty days prior to the Commercial Operation Date, the
          Joint  Venture  Companies will  apply  for  an  Initial
          Wholesale  Price to be adjusted from the  1995  Planned
          Wholesale  Price.  The Pricing Approval Authority  will
          review  the  application for accuracy in the employment
          of the price adjustment formulae.  Upon approval by the
          Authority  before  the Commercial Operation  Date,  the
          Initial  Wholesale  Price will become  the  "Price  for
          Electric Power Delivered".  All future price adjustment
          applications will be processed in the same manner.

          12.2.3    Heat Sale Price Agreement

          The  Pricing  Approval  Authority  reviewed  the  Joint
          Venture Companies application for heat sale price,  and
          agreed  to set the base heat sale price as 15 yuan  per
          gigajoules,  equivalent  to $5.39  per  metric  ton  of
          industrial  steam and $4.99 per metric ton of  district
          heat in 1995 cost.  The Price Bureau requests the Joint
          Venture Companies to obtain the approval of the  actual
          heat  sale  price  prior  to the commercial  operation.
          Because there is no complex pricing formulae set up for
          heat  sale  as that for electricity power  price,  this
          financial analysis conservatively adjusts the base heat
          sale prices by 50 percent of the projected Chinese  CPI
          annual changes.
          
          12.2.4    Interconnection and Loan Agreements

          The  NCPGC  and the Joint Venture Companies signed  the
          General Interconnection Agreement on September 22, 1995
          in  which both parties agreed to interconnect the Plant
          to  the  Beijing-Tianjin-Tangshan Regional  Grid.   The
          Loan  Agreement  of February 10, 1996 as  amended  sets
          forth the terms under which the Joint Venture Companies
          will  lend  through  the required intermediate  lending
          institutes to the NCPGC 83,693,260 yuans (equivalent to
          $10.1 million) for the construction of the Transmission
          Line  which  includes  the designated  inflation  costs
          specified  in  the Loan Agreement.  In addition,  NCPGC
          will  be  required  to pay the Joint Venture  Companies
          approximately  $2.1  million for  capitalized  interest
          which will be added to the principal of the loan during
          the  construction period.  The NCPGC is obliged by  the
          contractual  terms to annually repay the Joint  Venture
          Companies the loan principal and accrued interest  over
          the  period  of  10  years in mortgage  style.   It  is
          therefore  reasonable to assume that the Joint  Venture
          Companies  will  receive  the  principal  and  interest
          payments immediately following the Commercial Operation
          Date  of  the  Plant.  The Loan Agreement requires  the
          repayment  to  be made in US Dollars.  This  pro  forma
          analysis conservatively assumes loan repayments will be
          made  from RMB revenues, which will be converted to  US
          dollars,  and  thus  may be subject  to  convertibility
          limitations and RMB devaluation risks, because  of  the
          existing regulatory limitations on NCPGC to repay loans
          in  US  Dollars.  A sensitivity test of RMB devaluation
          is presented in Section 12.8.

12.3 REVIEW OF PROJECT COSTS

     The  project  costs  listed  in  Table  12.5  address  major
     categories of expected costs to implement the Project.   The
     costs  associated  with each category are  reasonable.   The
     total  budgeted amount represents a realistic and attainable
     project  cost  as  provided  in  Table  12.5.   Remarks  and
     explanations are additionally provided.
              Table 12.5     Project Cost Estimates
_________________________________________________________________

                EPC Contract Allocation:

                Thermal System                    $22,483,000
                Coal Handling System                 $924,000
                Ash Handling System                $2,449,000
                Water Treatment System             $1,528,000
                Feedwater System                   $3,390,000
                Electrical System                  $5,239,000
                I&C Systems                        $2,893,000
                Service Water System                 $155,000
                Auxiliary Plant Systems            $1,156,000
                Equipment Structures &            $11,087,000
                Buildings
                Site Infrastructure &              $4,185,000
                Civil Work
                Miscellaneous Buildings            $1,654,000
             Subtotal   for  Systems   and        $57,143,000
             Equipment
             Start-up & Testing                      $960,000
             Engineering & Design                    $840,000
             Construction Support                  $1,681,000
             EPC Costs Escalation                  $1,113,450
             EPC Contingency                       $3,001,830
             EPC    Contract    Allocation        $64,739,280
             Total(1)
                                                             
             Transmission Project: (2)            $10,083,525
             Steam & Heat Network: (3)             $2,912,048
             Builders Risk Insurance                 $819,000
             Total Construction Costs             $78,553,855
             Land Use Rights: (4)                  $5,378,715
             Water Use Rights: (4)                   $361,446
             Engineering Costs:                    $1,950,000
             Interest  During Construction        $13,330,000
             (5)
             Financing & Legal Costs:              $4,350,865
             Project Management Costs:             $3,700,000
             Fuel,  Spare  Parts  &  Other         $2,750,000
             Equip. (6):
             Debt Service Reserve                  $4,000,000
             Project Contingency: (7)              $4,380,120
                                                             
             Project Total:                      $118,755,000

          Most project costs listed above are US dollar
          denominated, however, for steam and heat network, land
          and water use rights, and transmission line which are
          denominated in RMB, an exchange rate of US $1 = RMB
          8.30 was used.
________________________________________________________________

Notes:

(1)  EPC  Contract Allocation:  Based on PB experience with other
     projects in China, the allocation is reasonable.  The  turn-
     key  contract  scope  will be completed  with  Harbin  Power
     Engineering   Co.  LTD  at  approximately   $64.7   million,
     including  an  escalation of $1.1 million per  EPC  Contract
     Amendment No. 3, and a contingency of $3.0 million.
     
(2)  Transmission    Project:    Funds    are    allocated    for
     interconnection with the North China Power Grid as a loan to
     the  North  China  Power Group Company.   The  quantity  was
     established and requested by the NCPGC and indicated in  the
     Loan Agreement by NCPGC.

(3)  Process Steam and Heat Network:  Funds are allocated  for  a
     steam and hot water system to provide process steam and  hot
     water  to  local industrial and a residential heating  loop.
     The cost quoted was established by the municipality.
     
(4)  Land  and Water Use Rights:  Land and water well use  rights
     payments  will  be  made to area agencies for  property  and
     rights of way.  Property rights must be  for the plant,  ash
     pond, ash slurry pipeline and associated service roads.  The
     prices  have been negotiated with and agreed to by the  area
     officials.

(5)  Interest during construction for Shareholder Loans is  based
     on an average interest rate of 12% per year.

(6)  The  total  of  $2,750,000 for Fuel,  Spare  Parts  &  other
     Equipment is within the anticipated range of allocations for
     other projects similar in size and technology.

(7)  The  Joint  Venture  Companies  allocated  $4.4  million  as
     project  contingency.  The total contingency of $7.4 million
     including   the  $3.0  million  EPC  Contract   construction
     contingency,  equivalent to 6.2% of total project  cost,  is
     adequate  based  on market uncertainties in material  costs,
     labor,   and  equipment  availability  as  well   as   other
     fluctuating  cost  factors  inherent  in  China's  expanding
     economy.

We  have  reviewed both construction draw-down schedule  and  the
milestone activity provided in the EPC Contract and believe  that
both are reasonable and achievable.

12.4 REVIEW OF OPERATING EXPENSES

A  comparison was made between the annual fuel and operation  and
maintenance  cost of the proposed plant and the same expenditures
for  similar US plants.  This comparison is based on 1995 dollars
and  was  made to review the projected production expenses.   The
average of five years production costs as recorded by the Utility
Data   Institute   for   twelve  coal-fired   power   plants   of
approximately  120 MW size in the US are used in  the  comparison
below:

                  PRODUCTION COST COMPARISON

  Description    Luannan       Average of     High/Low of
                 Thermal       US Plants      US Plants
                 Power Plant

  O&M Cost       12.20         11.94          25.16/4.24
  $/Net MWhr
  Fuel Cost      12.20         18.39          25.57/8.30
  $/Net MWhr



12.5 REVIEW OF RESERVE REQUIREMENTS

     This section describes the various reserve requirements  and
     assesses the adequacy of the reserve estimates made  by  the
     Joint Venture Companies.

     12.5.1    Equipment Maintenance & Overhaul Reserve

          An   estimated   overhaul  cost  of  $1,000,000/turbine
          provided by Siemens for a similar international project
          was used in this estimate.  Additionally, "Combustion",
          a   periodical  by  Combustion  Engineering,  Inc.,   a
          division  of  ABB,  lists  $8.75/kW  to  $13.00/kW   as
          industry standards used for determining system  reserve
          margin.   An  average of $10.875/kW was used  for  this
          estimate  giving  a reserve margin of $1,087,500.   The
          methodology  used to determine the reserve  figure  and
          the  allocated cost appears reasonable and  justifiable
          for this project.
          
          To  maintain  the  productive capacity and  operational
          efficiency of the Plant during the 20-year period,  the
          overhaul  reserve will begin to be funded in the  first
          year of operation and be fully funded with $3.0 million
          in  the  fourth year of operation.  Expenses  to  cover
          major  overhaul  activities  will  be  drawn  from  the
          reserve, towards which additional deposits will be made
          to  maintain the $3.0 million fund each year  which  is
          reflected in the pro forma projection.

          12.5.2    Debt Service Reserve

          The  off-shore debt service reserve will be funded with
          $4 million before the Commercial Operation Date as part
          of  the  total  project  cost.   The  reserve  will  be
          credited  towards equity accounts at  the  end  of  the
          Shareholder Loans' 10-year term.

          12.5.3    Welfare Reserve for Chinese Employees

          A  deposit of 10 percent of the total annual wages  for
          Chinese employees is funded in the welfare reserve each
          year,  as  required by the Chinese Joint  Venture  law.
          For the 500 Chinese workers employed at the Plant, this
          reserve  would have about $157,700 by end of  2000  and
          $5.8 million at the end of the contract period.

          12.5.4    Other Chinese Reserve Requirements

          The Chinese Joint Venture law requires two other after-
          tax  reserves  to  be  set  up  by  the  Joint  Venture
          Companies:  the General Reserve Fund and the Enterprise
          Expansion  Fund.  Each reserve is funded  at  the  sole
          discretion  of the JV Cos.' Board of Directors  and  is
          expected to be funded with approximately 50,000 RMB per
          year.   Each reserve would have about $5,900 by end  of
          2000 and $118,000 at the end of the contract period.

12.6 THE FINANCIAL PLAN

          12.6.1    Estimated Sources and Uses of Funds

          The  Joint  Venture Companies projected  the  uses  and
          sources  of  funds for the development of the  Project.
          The  sources  for  the  project total  cost  of  $118.8
          million   would   be   $47.5   million   from    equity
          contributions  and  $71.3 million of Shareholder  Loans
          from  Pan-Western.   The equity  contributions  by  the
          Luannan County would largely be in the form of land and
          sites  required for the Project development.  The total
          construction  costs  of  $78.6  million  would  be  the
          largest user of the funds.  The interest payment during
          construction  is $13.3 million.  Table 12.6  summarizes
          the estimated sources and uses of funds as proposed  in
          the Financial Plan.
          
       __________________________________________________________
<TABLE>
<CAPTION>                                
            Table 12.6     SOURCES AND USES OF FUNDS
                     (1996 US$ in thousands)

                                           Funds         Percentage of   
                                                        Sources or Uses
             <S>                           <C>                <C>                                                  
             Sources                                                     
             Sponsor Equity                $  47,502          40.0%      
             Contributions
             --  Panda Contribution           41,762          35.2       
             --  Luannan County                5,740           4.8       
             Contribution
             Pan-Western Shareholder          71,253          60.0       
             Loan Proceeds
                                                                         
             Total Sources of Funds         $118,755         100.0%      
                                                                         
                                                                         
             Uses                                                        
             Construction Costs              $78,555           66.2%      
             -- Harbin EPC Contract           64,739           54.6       
             -- Transmission Line             10,084            8.5       
             Project Loan
             -- Steam & Heat Network           2,912            2.4       
             -- Builder's Risk Insurance         819            0.7       
             Land & Well Costs                 5,740            4.8       
             Engineering Costs                 1,950            1.6       
             Interest During                  13,330           11.2       
             Construction
             Financing & Legal Costs           4,351            3.7       
             Project Management Costs          3,700            3.1       
             Fuel,  Spare Parts &  Other       2,750            2.3       
                Equip.
             Reserves & Contingency            8,380            7.1       
                                                                         
             Total Uses of Funds            $118,755          100.0%      
</TABLE>
          Most project costs listed above are US dollar
     denominated, however, for steam and heat network, land and
     water use rights, and transmission line which are
     denominated in RMB, an exchange rate of US $1 = RMB 8.30 was
     used.
   ___________________________________________________________
                                
          12.6.2    Shareholder Loan Assumptions

          The  Pan-Western  Shareholder Loans, $71.3  million  in
          total,  were  amortized by a variable  method  in  this
          financial  analysis.  The loan is  amortized  over  the
          debt  term  of 10 year at the annual interest  rate  of
          13.89%.  The total principal and interest payment  each
          year is approximately $13.5 million.  Other assumptions
          used in the Financial Plan include:
          
          - Debtors
            JV1 - Tangshan Panda Heat and Power Co., Ltd.
            JV2 - Tangshan Pan-Western Heat and Power Co., Ltd.
            JV3 - Tangshan Cayman Heat and Power Co., Ltd.
            JV4 - Tangshan Pan-Sino Heat Co., Ltd.
          - Aggregate Principal Amount
            $71,253,000, payable semi-annually
          - Interest Rate
            13.89% per annum
          - Maturity
            2009
          
          12.6.3    Repayment of Pan-Western Shareholder Loans

          The repayment of the $71.3 million Shareholder Loans is
          the obligation of the four joint venture companies that
          make  up the Project.  The four joint venture companies
          are  required, under their shareholder loan agreements,
          to  distribute  their  cash  flow  available  for  debt
          service  to  the repayment of the annual principal  and
          interest payment of approximately $13.5 million.
          
12.7 CONSOLIDATED OPERATING RESULTS -- BASE CASE
     
     We  have  reviewed  the  estimates and  projections  of  the
     operating  capabilities  of  the  Plant,  the  estimates  of
     capital  and operating costs for the Project, the  estimated
     debt  service  requirements, and the estimated  depreciation
     and  taxes  payable by the  JV Cos.  On the  basis  of  such
     data, we have compiled a pro forma summary table (Exhibit 12-
     1) to project the consolidated operating results of the four
     joint venture companies as in the base case.  The results of
     sensitivity  analysis will be summarized  and  presented  in
     Section 12.8.  An exchange rate of US $1 = RMB 8.50 was used
     consistently throughout the projections.
     
          12.7.1    Operating Revenues

          The  annual  electric energy output is  assumed  to  be
          546,877 MWh, which is conservatively assumed to  remain
          constant  throughout the contract period.   We  believe
          this   output  is  achievable  and  that  there  is   a
          possibility  that the annual output might  exceed  this
          level, since the Plant can sell more power to the NCPGC
          to  meet high demand during the peak period without any
          penalty,  and  the Joint Venture Companies  expect  the
          Plant  to  incur  less than 55 days of overhaul  outage
          each year.  The pre-VAT unit sale price of 7.4 US cents
          per  kilowatt hour in 1999 gradually increases to  11.1
          cents  per kilowatt hour in 2009 and to 12.4  cents  in
          2018.   The  annual electric energy revenue thus  grows
          from  $42.9 million in 2000, to $60.7 million in  2009,
          and to $67.7 million in 2018.
          
          The  heat energy operating revenue is determined by the
          amount  of steam and heat to be delivered by the  Plant
          to the local thermal energy users.  Based on the design
          capacity  of  the Plant as presented in the Feasibility
          Study by the Hebei Electric Power Design Institute (see
          Section     12.1.2),    this     financial     analysis
          conservatively assumes that the annual output would  be
          about  350,000  metric  tons of  industrial  steam  and
          131,400 metric tons of district heat.  We believe these
          output  levels  are  reasonable based  on  the  assumed
          annual electric energy output assumptions listed above.
          Both  output levels also conservatively remain constant
          throughout the operating period.  At the sale prices of
          $6.55  per ton for steam and $6.07 per ton for district
          heat  in  1999, the total annual thermal energy revenue
          is  estimated at $3.2 million in 2000, $4.4 million  in
          2009, and $5.3 million in 2018.
          
          The  operating  revenues also include the  transmission
          loan  interest payments from the NCPGC at an  estimated
          interest  rate  of 12.0% per year. The  total  interest
          payment  from  the transmission loan over its  ten-year
          term is about  $9.4 million.
          
          The  on-shore  reserves are conservatively  assumed  to
          earn  interest  revenues at a reinvestment  rate  of  5
          percent  per  annum.   The  on-shore  interest  earning
          accounts include the overhaul reserve, Chinese Employee
          Welfare   Reserve,  Chinese  General  Reserve,  Chinese
          Enterprise  Reserve,  and  the  un-distributable   cash
          account.   The  total interest earnings  from  on-shore
          reserves is about $20.9 million.
          
          The  total operating revenue estimated for the contract
          period is about $1,265 million.
          
          12.7.2    Operating Expenses

          The   operating  expenses  assumed  for   the   Plant's
          operation  include  the costs to  deliver  coal,  water
          costs   for  both  water  usage  and  water  treatment,
          supplies    and   spare   parts,   utilities,    labor,
          administration costs, and real estate and stamp  taxes.
          The  cost  categories  are affected  by  the  projected
          annual  increases  in Chinese CPI and  coal  escalation
          factors  from  1999  to  2019 as presented  in  Section
          12.2.1.   Exhibit  12-1  shows that  the  annual  total
          operating expenses will be about $19.4 million in 2000,
          $31.8  million in 2009, and $44.7 million in 2018.   In
          each  year, 50 percent or more of the annual  operating
          cost is required to purchase and deliver the coal.  The
          next   biggest  item  of  expense  is  the  labor   and
          management  cost.   We believe these operating  expense
          assumptions are reasonable.
          
          The total operating expenses estimated for the contract
          period is about $642.0 million.
          
          12.7.3    Depreciation and Taxes

          As  estimated  by  the  Joint  Venture  Companies,  the
          depreciable  basis for the Project  is  90%  of  $102.7
          million  of  equipment, buildings and depreciable  land
          (built-upon  land that is allowed for  depreciation  by
          Chinese laws),  accounting for approximately 86% of the
          total project cost.  Book depreciation is straight-line
          method over the 20-year period, with an assumption that
          buildings and land will depreciate on a 20-year  basis,
          and  the  equipment will depreciate  on  a  twelve-year
          basis.   The annual depreciation, a deductible  expense
          for  tax  purposes, is approximately $7 million  to  $8
          million from 2000 to 2011, $5 million in 2012,  and  $2
          million   to  $1  million  from  2013  to  2018.    The
          depreciation  schedule and taxes payable to  the  local
          and  federal government as reflected in the  pro  forma
          was  estimated by the Joint Venture Companies based  on
          the  advice  of  their  Chinese  accounting  and  legal
          counsels.  The advisors had provided a separate  report
          to  the Joint Venture Companies on current Chinese laws
          and  regulations  applicable to a Sino-foreign  venture
          such as the Project.

          12.7.4    Discussion of Debt Coverage Ratios

          To  calculate  the  Pan-Western Shareholder  Loan  debt
          service  coverage  ratios, Exhibit  12-1  presents  the
          income  statement  and  cash  flow  statement  for  the
          Project  during  the payment period of the  Shareholder
          Loans.   The net income after tax will fund the Chinese
          Employee  Welfare Reserve, the Chinese General Reserve,
          and  the  Chinese  Enterprise  Expansion  Reserve,   as
          required  by  the  Chinese  Joint  Venture  law.   This
          financial  analysis also assumes that NCPGC  will  meet
          the   requirements  of  the  Interconnection  and  Loan
          Agreements  and pay to the Joint Venture Companies  the
          annual  principal payments on the Transmission  Project
          Loan.    The  total after-tax cash flow  available  for
          debt  service increases from $28.7 million in  2000  to
          $30.3 million in 2008.
          
          On  the basis of our financial analyses of the proposed
          Project  and the assumptions set forth in this  Report,
          we  are  of  the  opinion that, in the base  case,  the
          projected  operating revenues are adequate to  pay  the
          projected  operating and maintenance  expenses  and  to
          provide  an average of 2.19 and minimum of 2.02  after-
          tax  annual  debt service coverage for the  Shareholder
          Loans  during the payment period.  The lowest  coverage
          ratio  of  2.02 occurs in the first year  of  repayment
          period.

          12.7.5    Distribution to Pan-Western Equity Account

          After  the  payments of debt services and  funding  for
          overhaul   reserve,   the   Joint   Venture   Companies
          calculated   the  un-distributable  cash  flow,   which
          reflects   the  difference  between  Net  Distributable
          Earnings  and Net Cash Flow, plus interest and  reserve
          income from the off-shore debt service reserve account.
          The  remaining cash flow after adjustment for  the  un-
          distributable  cash flow is cash flow distributable  to
          equity  accounts.  As shown in Exhibit 12-1, cash  flow
          to Pan-Western equity account totals $321.6 million for
          the contract period.
          

12.8 SUMMARY OF SENSITIVITY ANALYSIS

     Five  sensitivity  cases  were run  in  order  to  test  the
     viability   of  the  Project  under  operating   assumptions
     different  from  the base case.  Case I  assumes  the  Plant
     would  generate  102 MW, instead of 106 MW  of  net  output.
     Case  II assumes an annual devaluation of 5 percent for  RMB
     throughout the contract period.  Case III assumes  a  higher
     annual Chinese CPI change rates, and Case IV assumes a lower
     Chinese  CPI  change rates throughout the  contract  period.
     Case  V  assumes a higher coal escalation factor  throughout
     the  contract  period.   As shown in  the  following  table,
     changes in the selected operating assumptions did not  yield
     minimum  and  average  debt  coverage  ratios  significantly
     different from that in the base case.




SUMMARY OF SENSITIVITY ANALYSIS
                                               Minimum Debt  Average Debt
                                                 Coverage      Coverage
Base Case                                          2.02          2.19

Case I    102 MW net output                        1.98          2.15
          (base case:  106 MW)
Case II   RMB devaluation = 5 percent / year       2.01          2.20
          (base case:  0 percent)
Case III  Higher Chinese CPI change per year:      2.12          2.64
          20% from 1995 to 2018
Case IV   Lower  Chinese CPI change per year:      1.95          2.02
          0% from 1995 to 2018
Case V    Coal  escalation factors:  20% from      2.02          2.19
          1995 to 2018




12.9 INDIVIDUAL JOINT VENTURE COMPANIES OPERATING RESULTS -- BASE CASE

     For   information  purposes  this  section  highlights   the
     business  make-up and operating results of  the  four  joint
     venture  companies.  It should be noted that the assumptions
     and   the  consolidated  pro  forma  presented  in  previous
     sections should be regarded as the best financial indicators
     for   the  Project  as  a  whole,  since  the  payment   and
     performance obligations of each joint venture company  under
     their shareholder loan agreement will be cross-guaranteed by
     the other joint venture companies.

     The joint venture companies' share of the Project's scope of
     business  and asset ownership is reflected in the  following
     chart:

       Scope of Business                 Assets

 JV1  Unit 1 thermal system ,            -- Boiler, precipitator & other
      manufacturing and sale of          ancillary equipment.  Steam
      electricity, sale of its           turbine, generator, transformer
      products & services at a           & switch gear, control system,
      profit, 1 x 50 MW.                 coal handling system.
                                         
 JV2  Unit 2 thermal system ,            -- Boiler, precipitator & other
      manufacturing and sale of          ancillary, equipment.  Steam
      electricity, sale of its           turbine, generator, transformer
      products & services at a           & switch gear, control system,
      profit, 1 x 50 MW.                 coal handling system.
                                         
 JV3  Manufacture & sell hot water       -- Water wells & water supply
      and steam to local heat            system, water storage systems,
      network.  Construction,            water treatment systems,
      management and operation of a      steam/water handling &
      water supply system and steam      condensing system, cooling
      and heat production facility.      towers, commercial steam
      Sale of its products & services    production system.
      at a profit.
      
 JV4  Distribution & sale of hot         -- Local steam and hot water
      water & steam to industrial &      distribution system, land,
      commercial markets.                social buildings, investment,
      Construction, management &         offsite ash-disposal land and
      operation of local steam and       ash slurry pipeline.
      hot water network.  Sale of its
      products and services at a
      profit.

     Each individual joint venture company's cash flow and income
     statements are presented in Exhibits 12-2 to 12-5.  JV1  and
     JV2 in total collect 100% of electricity sales revenue.  JV3
     collects  50%  of  thermal energy sales revenue,  while  JV4
     receives  50%  of  thermal energy revenue and  100%  of  the
     transmission  line loan repayment from NCPGC.  Each  company
     also  received 25% of the interest earnings on the  on-shore
     reserves.

     The   four  companies  are  responsible  for  the  operating
     expenses  that  correspond to their share of business  scope
     and  assets.   Each company distributes net cash  available,
     after  paying  all applicable expenses and  taxes,  for  the
     repayment  of  the  senior debt.   After  the  debt  service
     payment the remaining cash will become available for  equity
     accounts.

_______________________________
1    Based on an exchange rate of US $1 = 8.50 RMB.
2    "Energy in China", James P. Dorian, Financial Times Energy
     Publishing, 1995.
3    "Financing China's Electricity", JS Adams, AMCD (Publishers)
     Ltd., England, 1996
4    "Financing China's Electricity", JS Adams, AMCD (Publishers)
     Ltd., England, 1996

1  EXHIBIT 12-1
<TABLE>
<CAPTION>
2  CONSOLIDATED INCOME/
3  CASH FLOW STATEMENTS                                 1            2            3            4            5            6
4  -- BASE CASE                      UNITS           1999         2000         2001         2002         2003         2004
5                                              (5 months)
<S>                                 <C>       <C>          <C>          <C>          <C>          <C>          <C>
6  PERFORMANCE
7  Net Electrical Output            kw hrs/y  227,865,500  546,877,200  546,877,200  546,877,200  546,877,200  546,877,200
8  Net Steam Production             tons/yr       145,700      349,680      349,680      349,680      349,680      349,680
9  Net Hot Water Production         tons/yr        54,750      131,400      131,400      131,400      131,400      131,400
10
11 PRICING
12 Pre-VAT Electric Energy Price    US$/kw h        0.074        0.078        0.083        0.087        0.091        0.094
13 Steam Price                      US$/ton         6.552        6.879        7.223        7.584        7.963        8.202
14 Hot Water Price                  US$/ton         6.065        6.369        6.687        7.021        7.373        7.594
15
16 REVENUES
17 Electric Energy Revenue                     16,751,240   42,867,885   45,635,533   47,691,675   49,618,451   51,363,730
18 Steam Revenue                                  954,565    2,405,504    2,525,779    2,652,068    2,784,671    2,868,212
19 Hot Water Revenue                              332,079      836,840      878,682      922,616      968,747      997,809
20 T-Line Interest Payments from NCPGC            609,444    1,427,937    1,340,421    1,242,403    1,132,622    1,009,668
21 Interest Income (On-shore Reserves)                  0       92,694      262,613      410,447      570,687      652,861
22         TOTAL OPERATING REVENUES   US $     18,647,329   47,630,860   50,643,028   52,919,209   55,075,178   56,892,280
23
24 OPERATING EXPENSES
25 Coal Delivered                               3,978,244   10,502,565   11,552,822   12,708,104   13,978,914   14,538,071
26 Water Usage                                    139,831      369,154      406,069      446,676      491,344      520,824
27 Supplies, Spare Parts, Consumable              610,042    1,610,510    1,771,561    1,948,717    2,143,589    2,272,204
28 Utilities                                      129,185      341,049      375,154      412,670      453,936      481,173
29 Project Management Fees & Expenses             351,722      869,456      895,539      922,405      950,078      978,580
30 Other Labor & Management Costs               1,170,747    2,993,804    3,193,306    3,409,763    3,644,779    3,816,692
31 Administrative Costs                           993,056    2,514,639    2,655,863    2,807,901    2,971,738    3,098,415
32 Real Estate Tax                                 53,992      129,580      129,580      129,580      129,580      129,580
33 Stamp Tax                                        6,605       16,984       18,178       19,192       20,205       20,930
34         TOTAL OPERATING EXPENSES   US $      7,433,423   19,347,740   20,998,072   22,805,009   24,784,163   25,856,470
35
36 INCOME STATEMENT
37 EBITDA                                      11,213,905   28,283,120   29,644,956   30,114,200   30,291,015   31,035,810
38 - Depreciation                               3,013,732    7,256,393    7,312,643    7,345,456    7,376,706    7,449,417
39 - Interest on Shareholder Loan               4,123,438    9,552,356    8,982,045    8,334,616    7,599,642    6,765,283
40 EBT (PRE-TAX INCOME)                         4,076,736   11,474,371   13,350,267   14,434,127   15,314,667   16,821,110
41 - Local Income Taxes (Luannan)                       0            0        7,287        9,697       12,352      266,706
42 - Federal Income Taxes (China)                  25,451       99,978    1,110,573    1,228,020    1,333,873    2,667,060
43 NET INCOME                                   4,051,285   11,374,393   12,232,407   13,196,410   13,968,442   13,887,344
44 - Employee Welfare Res. (on-shore)              59,355      156,698      172,368      189,605      208,565      221,079
45 - General Reserve (on-shore)                     2,451        5,882        5,882        5,882        5,882        5,882
46 - E'prise Exp. Reserve (on-shore)                2,451        5,882        5,882        5,882        5,882        5,882
47       NET DISTRIBUTABLE EARNINGS   US $      3,987,028   11,205,930   12,048,275   12,995,041   13,748,112   13,654,501
48
49 CASH FLOW STATEMENT
50 Net Distributable Earnings                   3,987,028   11,205,930   12,048,275   12,995,041   13,748,112   13,654,501
51 + Depreciation                               3,013,732    7,256,393    7,312,643    7,345,456    7,376,706    7,449,417
52 + Interest on Shareholder Loan               4,123,438    9,552,356    8,982,045    8,334,616    7,599,642    6,765,283
53 + T-Line Principal Payments from NCPGC         289,406      729,302      816,818      914,836    1,024,617    1,147,571
54 NET CASH AVAILABLE FOR SHAREHOLDER LOAN     11,413,603   28,743,981   29,159,781   29,589,949   29,749,076   29,016,771
55 - Interest on Shareholder Loan               4,123,438    9,552,356    8,982,045    8,334,616    7,599,642    6,765,283
56 - Principal of Shareholder Loan              1,513,522    3,976,085    4,513,736    5,124,088    5,816,974    6,603,550
57 CASH FLOW AFTER SHAREHOLDER LOAN             5,776,643   15,215,540   15,664,000   16,131,245   16,332,461   15,647,939
58 +/- Debt Service Reserve (Off-Shore)                 0            0            0            0            0            0
59 +/- Overhaul Reserve (on-shore)             (1,087,500)  (1,165,800)  (1,249,738)    (996,962)  (1,000,000)    (926,768)
60                    NET CASH FLOW             4,689,143   14,049,740   14,414,263   15,134,283   15,332,461   14,721,170
61        UNDISTRIBUTABLE CASH FLOW              (702,115)  (2,843,810)  (2,365,988)  (2,139,242)  (1,584,348)  (1,066,670)
62         PAN-WESTERN DISTRIBUTION   US $      3,505,234    9,851,801   10,592,356   11,424,715   12,086,785   12,004,485
63      LUANNAN COUNTY DISTRIBUTION   US $        481,794    1,354,129    1,455,918    1,570,326    1,661,327    1,650,015
64
65 AFTER-TAX SHAREHOLDER LOAN COVERAGE
66 Debt service Coverage Ratio (DSCR)                2.02         2.12         2.16         2.20         2.22         2.17
67 Minimum DSCR                      2.02
68 Average DSCR                      2.19
<PAGE>
1  EXHIBIT 12-1 (Continued)
2  CONSOLIDATED INCOME/
3  CASH FLOW STATEMENTS                                  7             8             9            10           11           12
4  -- BASE CASE                      UNITS            2005          2006          2007          2008         2009         2010
5
6  PERFORMANCE
7  Net Electrical Output            kw hrs/y   546,877,200   546,877,200   546,877,200   546,877,200  546,877,200  546,877,200
8  Net Steam Production             tons/yr        349,680       349,680       349,680       349,680      349,680      349,680
9  Net Hot Water Production         tons/yr        131,400       131,400       131,400       131,400      131,400      131,400
10
11 PRICING
12 Pre-VAT Electric Energy Price    US$/kw h         0.096         0.099         0.102         0.106        0.111        0.114
13 Steam Price                      US$/ton          8.448         8.702         8.963         9.232        9.416        9.605
14 Hot Water Price                  US$/ton          7.821         8.056         8.298         8.547        8.718        8.892
15
16 REVENUES
17 Electric Energy Revenue                      52,490,315    53,972,291    55,835,920    57,978,501   60,732,794   62,118,770
18 Steam Revenue                                 2,954,258     3,042,886     3,134,172     3,228,197    3,292,761    3,358,617
19 Hot Water Revenue                             1,027,744     1,058,576     1,090,333     1,123,043    1,145,504    1,168,414
20 T-Line Interest Payments from NCPGC             871,960       717,726       544,985       351,514      134,827            0
21 Interest Income (On-shore Reserves)             708,593       726,564       702,898       831,817      762,081      797,495
22         TOTAL OPERATING REVENUES   US $      58,052,869    59,518,043    61,308,309    63,513,072   66,067,968   67,443,296
23
24 OPERATING EXPENSES
25 Coal Delivered                               15,119,594    15,724,378    16,353,353    17,007,487   17,687,786   18,395,298
26 Water Usage                                     552,074       585,198       620,310       657,529      683,830      711,183
27 Supplies, Spare Parts, Consumable             2,408,536     2,553,049     2,706,231     2,868,605    2,983,350    3,102,684
28 Utilities                                       510,043       540,646       573,084       607,469      631,768      657,039
29 Project Management Fees & Expenses            1,007,937     1,038,175     1,069,321     1,101,400    1,134,442    1,168,476
30 Other Labor & Management Costs                3,997,517     4,187,745     4,387,899     4,598,529    4,764,395    4,936,354
31 Administrative Costs                          3,231,145     3,370,243     3,516,043     3,668,900    3,795,706    3,926,986
32 Real Estate Tax                                 129,580       129,580       129,580       129,580      129,580      129,580
33 Stamp Tax                                        21,478        22,139        22,924        23,801       24,858       25,512
34         TOTAL OPERATING EXPENSES   US $      26,977,904    28,151,153    29,378,746    30,663,300   31,835,715   33,053,111
35
36 INCOME STATEMENT
37 EBITDA                                       31,074,966    31,366,890    31,929,563    32,849,772   34,232,253   34,390,184
38 - Depreciation                                7,521,010     7,597,012     7,676,663     7,724,401    7,760,137    7,847,617
39 - Interest on Shareholder Loan                5,818,101     4,742,840     3,522,181     2,136,463      572,814            0
40 EBT (PRE-TAX INCOME)                         17,735,855    19,027,038    20,730,719    22,988,907   25,899,302   26,542,567
41 - Local Income Taxes (Luannan)                  282,583       304,204       332,133       369,316      776,979      796,277
42 - Federal Income Taxes (China)                2,825,826     3,042,039     3,321,328     3,693,165    4,156,112    4,257,354
43 NET INCOME                                   14,627,446    15,680,795    17,077,258    18,926,426   20,966,211   21,488,936
44 - Employee Welfare Res. (on-shore)              234,344       248,404       263,309       279,107      290,272      301,882
45 - General Reserve (on-shore)                      5,882         5,882         5,882         5,882        5,882        5,882
46 - E'prise Exp. Reserve (on-shore)                 5,882         5,882         5,882         5,882        5,882        5,882
47       NET DISTRIBUTABLE EARNINGS   US $      14,381,338    15,420,625    16,802,184    18,635,554   20,664,175   21,175,289
48
49 CASH FLOW STATEMENT
50 Net Distributable Earnings                   14,381,338    15,420,625    16,802,184    18,635,554   20,664,175   21,175,289
51 + Depreciation                                7,521,010     7,597,012     7,676,663     7,724,401    7,760,137    7,847,617
52 + Interest on Shareholder Loan                5,818,101     4,742,840     3,522,181     2,136,463      572,814            0
53 + T-Line Principal Payments from NCPGC        1,285,279     1,439,513     1,612,254     1,805,725    1,123,562            0
54 NET CASH AVAILABLE FOR SHAREHOLDER LOAN      29,005,728    29,199,990    29,613,283    30,302,143   17,570,401   29,022,906
55 - Interest on Shareholder Loan                5,818,101     4,742,840     3,522,181     2,136,463      572,814            0
56 - Principal of Shareholder Loan               7,496,490     8,510,173     9,660,929    10,967,290    7,070,163            0
57 CASH FLOW AFTER SHAREHOLDER LOAN             15,691,137    15,946,978    16,430,172    17,198,390    9,927,424   29,022,906
58 +/- Debt Service Reserve (Off-Shore)                  0             0     4,000,000             0            0            0
59 +/- Overhaul Reserve (on-shore)                (993,495)   (1,041,183)   (1,091,160)           (0)  (1,143,536)  (1,198,425)
60                    NET CASH FLOW             14,697,642    14,905,794    19,339,012    17,198,390    8,783,888   27,824,481
61        UNDISTRIBUTABLE CASH FLOW               (316,304)      514,831    (2,536,828)    1,437,164     (670,000)  (6,649,192)
62         PAN-WESTERN DISTRIBUTION   US $      12,643,491    13,557,191    14,771,802    16,383,626   18,167,108   18,616,458
63      LUANNAN COUNTY DISTRIBUTION   US $       1,737,847     1,863,435     2,030,383     2,251,928    2,497,067    2,558,830
64
65 AFTER-TAX SHAREHOLDER LOAN COVERAGE
66 Debt service Coverage Ratio (DSCR)                 2.18          2.20          2.25          2.31         2.30
67 Minimum DSCR                      2.02
68 Average DSCR                      2.19
<PAGE>
1  EXHIBIT 12-1 (Continued)
2  CONSOLIDATED INCOME/
3  CASH FLOW STATEMENTS                                 13           14           15           16           17           18
4  -- BASE CASE                      UNITS            2011         2012         2013         2014         2015         2016
5
6  PERFORMANCE
7  Net Electrical Output            kw hrs/y   546,877,200  546,877,200  546,877,200  546,877,200  546,877,200  546,877,200
8  Net Steam Production             tons/yr        349,680      349,680      349,680      349,680      349,680      349,680
9  Net Hot Water Production         tons/yr        131,400      131,400      131,400      131,400      131,400      131,400
10
11 PRICING
12 Pre-VAT Electric Energy Price    US$/kw h         0.108        0.111        0.113        0.116        0.118        0.121
13 Steam Price                      US$/ton          9.797        9.993       10.193       10.397       10.605       10.817
14 Hot Water Price                  US$/ton          9.070        9.251        9.436        9.625        9.818       10.014
15
16 REVENUES
17 Electric Energy Revenue                      59,024,783   60,526,304   61,982,143   63,394,575   64,765,964   66,098,766
18 Steam Revenue                                 3,425,789    3,494,305    3,564,191    3,635,475    3,708,184    3,782,348
19 Hot Water Revenue                             1,191,782    1,215,618    1,239,930    1,264,729    1,290,024    1,315,824
20 T-Line Interest Payments from NCPGC                   0            0            0            0            0            0
21 Interest Income (On-shore Reserves)           1,131,786    1,467,767    1,673,718    1,695,550    1,786,134    1,807,558
22         TOTAL OPERATING REVENUES   US $      64,774,140   66,703,993   68,459,982   69,990,329   71,550,305   73,004,496
23
24 OPERATING EXPENSES
25 Coal Delivered                               19,131,110   19,896,354   20,692,208   21,519,896   22,380,692   23,275,920
26 Water Usage                                     739,631      769,216      799,984      831,984      865,263      899,874
27 Supplies, Spare Parts, Consumable             3,226,791    3,355,863    3,490,097    3,629,701    3,774,889    3,925,885
28 Utilities                                       683,320      710,653      739,079      768,643      799,388      831,364
29 Project Management Fees & Expenses            1,203,530    1,239,636    1,276,825    1,315,130    1,354,583    1,395,221
30 Other Labor & Management Costs                5,114,633    5,299,468    5,491,104    5,689,794    5,895,804    6,109,407
31 Administrative Costs                          4,062,900    4,203,617    4,349,308    4,500,153    4,656,337    4,818,055
32 Real Estate Tax                                 129,580      129,580      129,580      129,580      129,580      129,580
33 Stamp Tax                                        24,832       25,540       26,244       26,944       27,643       28,342
34         TOTAL OPERATING EXPENSES   US $      34,316,327   35,629,926   36,994,428   38,411,825   39,884,181   41,413,647
35
36 INCOME STATEMENT
37 EBITDA                                       30,457,813   31,074,068   31,465,554   31,578,505   31,666,124   31,590,849
38 - Depreciation                                7,939,297    5,383,615    1,747,421    1,773,584    1,785,975    1,819,575
39 - Interest on Shareholder Loan                        0            0            0            0            0            0
40 EBT (PRE-TAX INCOME)                         22,518,517   25,690,453   29,718,133   29,804,921   29,880,149   29,771,274
41 - Local Income Taxes (Luannan)                  675,555      770,714      891,544      894,148      896,404      893,138
42 - Federal Income Taxes (China)                3,668,418    4,194,684    4,859,044    4,875,943    4,893,891    4,881,361
43 NET INCOME                                   18,174,543   20,725,055   23,967,545   24,034,830   24,089,853   23,996,775
44 - Employee Welfare Res. (on-shore)              313,958      326,516      339,577      353,160      367,286      381,978
45 - General Reserve (on-shore)                      5,882        5,882        5,882        5,882        5,882        5,882
46 - E'prise Exp. Reserve (on-shore)                 5,882        5,882        5,882        5,882        5,882        5,882
47       NET DISTRIBUTABLE EARNINGS   US $      17,848,820   20,386,774   23,616,204   23,669,906   23,710,802   23,603,033
48
49 CASH FLOW STATEMENT
50 Net Distributable Earnings                   17,848,820   20,386,774   23,616,204   23,669,906   23,710,802   23,603,033
51 + Depreciation                                7,939,297    5,383,615    1,747,421    1,773,584    1,785,975    1,819,575
52 + Interest on Shareholder Loan                        0            0            0            0            0            0
53 + T-Line Principal Payments from NCPGC                0            0            0            0            0            0
54 NET CASH AVAILABLE FOR SHAREHOLDER LOAN      25,788,117   25,770,389   25,363,625   25,443,490   25,496,778   25,422,608
55 - Interest on Shareholder Loan                        0            0            0            0            0            0
56 - Principal of Shareholder Loan                       0            0            0            0            0            0
57 CASH FLOW AFTER SHAREHOLDER LOAN             25,788,117   25,770,389   25,363,625   25,443,490   25,496,778   25,422,608
58 +/- Debt Service Reserve (Off-Shore)                  0            0            0            0            0            0
59 +/- Overhaul Reserve (on-shore)              (1,255,950)  (1,301,164)  (1,348,006)          (0)  (1,396,534)  (1,446,809)
60                    NET CASH FLOW             24,532,167   24,469,225   24,015,619   25,443,490   24,100,244   23,975,798
61        UNDISTRIBUTABLE CASH FLOW             (6,683,347)  (4,082,451)    (399,415)  (1,773,584)    (389,441)    (372,766)
62         PAN-WESTERN DISTRIBUTION   US $      15,691,962   17,923,228   20,762,412   20,809,625   20,845,580   20,750,833
63      LUANNAN COUNTY DISTRIBUTION   US $       2,156,859    2,463,546    2,853,791    2,860,281    2,865,223    2,852,200
64
65 AFTER-TAX SHAREHOLDER LOAN COVERAGE
66 Debt service Coverage Ratio (DSCR)
67 Minimum DSCR                      2.02
68 Average DSCR                      2.19
<PAGE>
1  EXHIBIT 12-1 (Continued)
2  CONSOLIDATED INCOME/
3  CASH FLOW STATEMENTS                                 19           20           21
4  -- BASE CASE                      UNITS            2017         2018         2019          Total
5                                                                         (7 months)
6  PERFORMANCE
7  Net Electrical Output            kw hrs/y   546,877,200  546,877,200  319,011,700 10,937,544,000
8  Net Steam Production             tons/yr        349,680      349,680      203,980      6,993,600
9  Net Hot Water Production         tons/yr        131,400      131,400       76,650      2,628,000
10
11 PRICING
12 Pre-VAT Electric Energy Price    US$/kw h         0.122        0.124        0.124            n/a
13 Steam Price                      US$/ton         11.033       11.254       11.254            n/a
14 Hot Water Price                  US$/ton         10.214       10.418       10.418            n/a
15
16 REVENUES
17 Electric Energy Revenue                      66,870,713   67,713,091   39,499,303  1,146,932,749
18 Steam Revenue                                 3,857,995    3,935,155    2,295,507     64,900,636
19 Hot Water Revenue                             1,342,140    1,368,983      798,574     22,577,991
20 T-Line Interest Payments from NCPGC                   0            0            0      9,383,509
21 Interest Income (On-shore Reserves)           1,828,201    1,849,776    1,092,460     20,851,700
22         TOTAL OPERATING REVENUES   US $      73,899,050   74,867,004   43,685,843  1,264,646,585
23
24 OPERATING EXPENSES
25 Coal Delivered                               24,206,957   25,175,235   14,685,554    358,510,541
26 Water Usage                                     935,869      973,303      590,471     13,589,617
27 Supplies, Spare Parts, Consumable             4,082,920    4,246,237    2,576,050     59,287,510
28 Utilities                                       864,618      899,203      545,517     12,555,002
29 Project Management Fees & Expenses            1,437,078    1,480,190      889,347     23,079,070
30 Other Labor & Management Costs                6,330,887    6,560,539    3,923,382     95,516,551
31 Administrative Costs                          4,985,506    5,158,896    3,067,171     76,352,576
32 Real Estate Tax                                 129,580      129,580       75,588      2,591,599
33 Stamp Tax                                        28,883       29,458       17,184        477,877
34         TOTAL OPERATING EXPENSES   US $      43,002,297   44,652,641   26,370,264    641,960,343
35
36 INCOME STATEMENT
37 EBITDA                                       30,896,753   30,214,364   17,315,579    622,686,242
38 - Depreciation                                1,889,167    1,970,734    1,149,595    111,340,150
39 - Interest on Shareholder Loan                        0            0            0     62,149,779
40 EBT (PRE-TAX INCOME)                         29,007,585   28,243,630   16,165,985    449,196,313
41 - Local Income Taxes (Luannan)                  870,228      847,309      484,980     10,381,553
42 - Federal Income Taxes (China)                4,770,111    4,658,709    2,424,898     66,987,838
43 NET INCOME                                   23,367,246   22,737,612   13,256,107    371,826,922
44 - Employee Welfare Res. (on-shore)              397,257      413,147      250,642      5,768,509
45 - General Reserve (on-shore)                      5,882        5,882        3,431        117,647
46 - E'prise Exp. Reserve (on-shore)                 5,882        5,882        3,431        117,647
47       NET DISTRIBUTABLE EARNINGS   US $      22,958,225   22,312,701   12,998,602    365,823,119
48
49 CASH FLOW STATEMENT
50 Net Distributable Earnings                   22,958,225   22,312,701   12,998,602    365,823,119
51 + Depreciation                                1,889,167    1,970,734    1,149,595    111,340,150
52 + Interest on Shareholder Loan                        0            0            0     62,149,779
53 + T-Line Principal Payments from NCPGC                0            0            0     12,188,882
54 NET CASH AVAILABLE FOR SHAREHOLDER LOAN      24,847,392   24,283,434   14,148,197    538,951,644
55 - Interest on Shareholder Loan                        0            0            0     62,149,779
56 - Principal of Shareholder Loan                       0            0            0     71,253,000
57 CASH FLOW AFTER SHAREHOLDER LOAN             24,847,392   24,283,434   14,148,197    405,548,865
58 +/- Debt Service Reserve (Off-Shore)                  0            0            0      4,000,000
59 +/- Overhaul Reserve (on-shore)              (1,498,894)   1,447,145            0    (18,694,780)
60                    NET CASH FLOW             23,348,498   25,730,580   14,148,197    390,854,085
61        UNDISTRIBUTABLE CASH FLOW               (390,273)  (3,417,879)  (1,149,595)   (37,581,253)
62         PAN-WESTERN DISTRIBUTION   US $      20,183,944   19,616,425   11,427,846    321,616,907
63      LUANNAN COUNTY DISTRIBUTION   US $       2,774,281    2,696,276    1,570,756     44,206,212
64
65 AFTER-TAX SHAREHOLDER LOAN COVERAGE
66 Debt service Coverage Ratio (DSCR)                                                           n/a
67 Minimum DSCR                      2.02
68 Average DSCR                      2.19
</TABLE>

1  EXHIBIT 12-2
<TABLE>
<CAPTION>
2  JV1 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                         1            2            3            4            5            6  
4                                       % OF          1999         2000         2001         2002         2003         2004  
5                                       TOTAL    (5 months)                                                                  
<S>                                      <C>     <C>         <C>          <C>          <C>          <C>          <C>         
6  REVENUES                       
7   Electric Energy Revenue              50%     8,375,620   21,433,943   22,817,766   23,845,837   24,809,225   25,681,865  
8   Steam Revenue                         0%             0            0            0            0            0            0  
9   Hot Water Revenue                     0%             0            0            0            0            0            0  
10  T-Line Interest Payments              0%             0            0            0            0            0            0  
11  Interest Income on On-Shore Reserve  25%             0       23,173       65,653      102,612      142,672      163,215  
12            TOTAL OPERATING REVENUES           8,375,620   21,457,116   22,883,420   23,948,449   24,951,897   25,845,080  
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     1,989,122    5,251,283    5,776,411    6,354,052    6,989,457    7,269,035  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable    33%       203,347      536,837      590,520      649,572      714,530      757,401  
18  Utilities                            45%        58,133      153,472      168,819      185,701      204,271      216,528  
19  Project Management Fees              30%       105,516      260,837      268,662      276,722      285,023      293,574  
20  Other Labor & Management             30%       371,009      950,374    1,015,448    1,086,131    1,162,956    1,218,701  
21  Administrative Costs                 30%       297,917      754,392      796,759      842,370      891,521      929,525  
22  Real Estate and Stamp Taxes          40%        24,239       58,626       59,103       59,509       59,914       60,204  
23            TOTAL OPERATING EXPENSES           3,049,284    7,965,819    8,675,722    9,454,057   10,307,672   10,744,968  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (754,653)  (1,777,426)  (1,723,315)  (1,658,588)  (1,584,472)  (1,504,289) 
27  Water Usage Payment (to JV 3)                 (565,270)  (1,452,849)  (1,557,487)  (1,671,369)  (1,795,384)  (1,884,071) 
28  Site Lease Payment (to JV 4)                  (111,111)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667) 
29                               TOTAL          (1,431,034)  (3,496,941)  (3,547,468)  (3,596,624)  (3,646,522)  (3,655,027) 
30 
31 INCOME STATEMENT
32  EBITDA                                       3,895,302    9,994,356   10,660,230   10,897,768   10,997,703   11,445,085  
33  - Depreciation                       33%       994,531    2,394,610    2,413,172    2,424,000    2,434,313    2,458,308  
34  - Interest on S/H Loan                       1,034,722    2,397,038    2,253,926    2,091,462    1,907,030    1,697,658  
35  EBT (Pre-tax Income)                         1,866,048    5,202,708    5,993,132    6,382,306    6,656,360    7,289,119  
36  - Local Income Taxes (Luannan)                       0            0            0            0            0      109,337  
37  - Federal Income Taxes (China)                       0            0      449,485      478,673      499,227    1,093,368  
38  Net Income                                   1,866,048    5,202,708    5,543,647    5,903,633    6,157,133    6,086,415  
39  - Employee Welfare Res. (on-shore)   40%        23,742       62,679       68,947       75,842       83,426       88,432  
40  - General Reserve (on-shore)         40%           980        2,353        2,353        2,353        2,353        2,353  
41  - E'prise Exp. Reserve (on-shore)    40%           980        2,353        2,353        2,353        2,353        2,353  
42          NET DISTRIBUTABLE EARNINGS           1,840,346    5,135,323    5,469,994    5,823,085    6,069,001    5,993,277  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,840,346    5,135,323    5,469,994    5,823,085    6,069,001    5,993,277  
46  + Depreciation                       33%       994,531    2,394,610    2,413,172    2,424,000    2,434,313    2,458,308  
47  + Interest on S/H Loan                       1,034,722    2,397,038    2,253,926    2,091,462    1,907,030    1,697,658  
48  + T-Line Principal Payments           0%             0            0            0            0            0            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          3,869,599    9,926,971   10,137,092   10,338,548   10,410,344   10,149,243  
50  - Interest on S/H Loan                      (1,034,722)  (2,397,038)  (2,253,926)  (2,091,462)  (1,907,030)  (1,697,658) 
51  - Principal of S/H Loan                       (379,798)    (997,746)  (1,132,662)  (1,285,822)  (1,459,693)  (1,657,074) 
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)      33%      (362,500)    (388,600)    (416,579)    (332,321)    (333,333)    (308,923) 
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0  
55  +/- Undistributable Cash Flow                 (252,233)  (1,008,264)    (863,931)    (805,857)    (641,287)    (492,311) 
56            PAN-WESTERN DISTRIBUTION   US$     1,617,957    4,514,769    4,808,997    5,119,421    5,335,621    5,269,047  
57         LUANNAN COUNTY DISTRIBUTION   US$       222,388      620,555      660,996      703,664      733,381      724,230  
<PAGE>
1  EXHIBIT 12-2 (Continued)
2  JV1 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                         7            8            9           10           11           12  
4                                       % OF          2005         2006         2007         2008         2009         2010  
5                                       TOTAL                                                                                
6  REVENUES
7   Electric Energy Revenue              50%    26,245,158   26,986,145   27,917,960   28,989,250   30,366,397   31,059,385  
8   Steam Revenue                         0%             0            0            0            0            0            0  
9   Hot Water Revenue                     0%             0            0            0            0            0            0  
10  T-Line Interest Payments              0%             0            0            0            0            0            0  
11  Interest Income on On-Shore Reserve  25%       177,148      181,641      175,725      207,954      190,520      199,374  
12            TOTAL OPERATING REVENUES          26,422,306   27,167,787   28,093,685   29,197,204   30,556,918   31,258,759  
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     7,559,797    7,862,189    8,176,676    8,503,743    8,843,893    9,197,649  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable    33%       802,845      851,016      902,077      956,202      994,450    1,034,228  
18  Utilities                            45%       229,519      243,291      257,888      273,361      284,296      295,667  
19  Project Management Fees              30%       302,381      311,453      320,796      330,420      340,333      350,543  
20  Other Labor & Management             30%     1,277,370    1,339,125    1,404,139    1,472,594    1,526,076    1,581,534  
21  Administrative Costs                 30%       969,343    1,011,073    1,054,813    1,100,670    1,138,712    1,178,096  
22  Real Estate and Stamp Taxes          40%        60,423       60,688       61,002       61,352       61,775       62,037  
23            TOTAL OPERATING EXPENSES          11,201,679   11,678,834   12,177,392   12,698,343   13,189,534   13,699,753  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)            (1,412,101)  (1,306,887)  (1,186,742)  (1,045,815)    (884,866)    (833,809) 
27  Water Usage Payment (to JV 3)               (1,977,509)  (2,075,965)  (2,179,722)  (2,289,081)  (2,373,288)  (2,460,644) 
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667) 
29                               TOTAL          (3,656,277)  (3,649,519)  (3,633,131)  (3,601,563)  (3,524,821)  (3,561,120) 
30 
31 INCOME STATEMENT
32  EBITDA                                      11,564,350   11,839,434   12,283,163   12,897,299   13,842,562   13,997,886  
33  - Depreciation                       33%     2,481,933    2,507,014    2,533,299    2,549,052    2,560,845    2,589,714  
34  - Interest on S/H Loan                       1,459,976    1,190,153      883,845      536,117      143,740            0  
35  EBT (Pre-tax Income)                         7,622,441    8,142,267    8,866,019    9,812,129   11,137,977   11,408,172  
36  - Local Income Taxes (Luannan)                 114,337      122,134      132,990      147,182      334,139      342,245  
37  - Federal Income Taxes (China)               1,143,366    1,221,340    1,329,903    1,471,819    1,670,697    1,711,226  
38  Net Income                                   6,364,738    6,798,793    7,403,126    8,193,128    9,133,141    9,354,701  
39  - Employee Welfare Res. (on-shore)   40%        93,738       99,362      105,323      111,643      116,109      120,753  
40  - General Reserve (on-shore)         40%         2,353        2,353        2,353        2,353        2,353        2,353  
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        2,353        2,353        2,353        2,353  
42          NET DISTRIBUTABLE EARNINGS           6,266,295    6,694,725    7,293,097    8,076,779    9,012,327    9,229,243  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   6,266,295    6,694,725    7,293,097    8,076,779    9,012,327    9,229,243  
46  + Depreciation                       33%     2,481,933    2,507,014    2,533,299    2,549,052    2,560,845    2,589,714  
47  + Interest on S/H Loan                       1,459,976    1,190,153      883,845      536,117      143,740            0  
48  + T-Line Principal Payments           0%             0            0            0            0            0            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,208,204   10,391,892   10,710,240   11,161,949   11,716,912   11,818,956  
50  - Interest on S/H Loan                      (1,459,976)  (1,190,153)    (883,845)    (536,117)    (143,740)          (0) 
51  - Principal of S/H Loan                     (1,881,145)  (2,135,516)  (2,424,283)  (2,752,097)  (1,774,164)           0  
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)      33%      (331,165)    (347,061)    (363,720)          (0)    (381,179)    (399,475) 
54  +/- Debt Service Reserve (off-shore) 25%             0            0    1,000,000            0            0            0  
55  +/- Undistributable Cash Flow                 (269,623)     (24,437)    (745,296)     203,044     (405,502)  (2,190,239) 
56            PAN-WESTERN DISTRIBUTION   US$     5,509,073    5,885,732    6,411,796    7,100,778    7,923,274    8,113,977  
57         LUANNAN COUNTY DISTRIBUTION   US$       757,222      808,993      881,301      976,001    1,089,053    1,115,265  
<PAGE>
1  EXHIBIT 12-2 (Continued)
2  JV1 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                        13           14           15           16           17           18 
4                                       % OF          2011         2012         2013         2014         2015         2016 
5                                       TOTAL                                                                               
6  REVENUES
7   Electric Energy Revenue              50%    29,512,392   30,263,152   30,991,072   31,697,288   32,382,982   33,049,383 
8   Steam Revenue                         0%             0            0            0            0            0            0 
9   Hot Water Revenue                     0%             0            0            0            0            0            0 
10  T-Line Interest Payments              0%             0            0            0            0            0            0 
11  Interest Income on On-Shore Reserve  25%       282,946      366,942      418,430      423,888      446,533      451,890 
12            TOTAL OPERATING REVENUES          29,795,338   30,630,094   31,409,501   32,121,175   32,829,515   33,501,273 
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     9,565,555    9,948,177   10,346,104   10,759,948   11,190,346   11,637,960 
16  Water Usage                           0%             0            0            0            0            0            0 
17  Supplies, Spare Parts, Consumable    33%     1,075,597    1,118,621    1,163,366    1,209,900    1,258,296    1,308,628 
18  Utilities                            45%       307,494      319,794      332,586      345,889      359,725      374,114 
19  Project Management Fees              30%       361,059      371,891      383,047      394,539      406,375      418,566 
20  Other Labor & Management             30%     1,639,043    1,698,679    1,760,523    1,824,658    1,891,170    1,960,148 
21  Administrative Costs                 30%     1,218,870    1,261,085    1,304,792    1,350,046    1,396,901    1,445,417 
22  Real Estate and Stamp Taxes          40%        61,765       62,048       62,329       62,610       62,889       63,169 
23            TOTAL OPERATING EXPENSES          14,229,382   14,780,294   15,352,748   15,947,590   16,565,703   17,208,001 
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (843,550)    (572,009)    (185,663)    (188,443)    (189,760)    (193,330)
27  Water Usage Payment (to JV 3)               (2,551,266)  (2,645,278)  (2,742,811)  (2,843,996)  (2,948,972)  (3,057,884)
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667)
29                               TOTAL          (3,661,483)  (3,483,954)  (3,195,141)  (3,299,106)  (3,405,399)  (3,517,881)
30 
31 INCOME STATEMENT
32  EBITDA                                      11,904,473   12,365,845   12,861,613   12,874,479   12,858,414   12,775,390 
33  - Depreciation                       33%     2,619,968    1,776,593      576,649      585,283      589,372      600,460 
34  - Interest on S/H Loan                               0            0            0            0            0            0 
35  EBT (Pre-tax Income)                         9,284,505   10,589,252   12,284,964   12,289,197   12,269,042   12,174,930 
36  - Local Income Taxes (Luannan)                 278,535      317,678      368,549      368,676      368,071      365,248 
37  - Federal Income Taxes (China)               1,392,676    1,588,388    1,842,745    1,843,380    1,840,356    1,826,240 
38  Net Income                                   7,613,294    8,683,187   10,073,670   10,077,141   10,060,614    9,983,443 
39  - Employee Welfare Res. (on-shore)   40%       125,583      130,606      135,831      141,264      146,914      152,791 
40  - General Reserve (on-shore)         40%         2,353        2,353        2,353        2,353        2,353        2,353 
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        2,353        2,353        2,353        2,353 
42          NET DISTRIBUTABLE EARNINGS           7,483,005    8,547,874    9,933,134    9,931,172    9,908,994    9,825,946 
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   7,483,005    8,547,874    9,933,134    9,931,172    9,908,994    9,825,946 
46  + Depreciation                       33%     2,619,968    1,776,593      576,649      585,283      589,372      600,460 
47  + Interest on S/H Loan                               0            0            0            0            0            0 
48  + T-Line Principal Payments           0%             0            0            0            0            0            0 
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,102,973   10,324,467   10,509,783   10,516,454   10,498,366   10,426,406 
50  - Interest on S/H Loan                              (0)          (0)          (0)          (0)          (0)          (0)
51  - Principal of S/H Loan                              0            0            0            0            0            0 
52  ADJUSTMENTS                                                                                                             
53  +/- Overhaul Reserve (on-shore)      33%      (418,650)    (433,721)    (449,335)          (0)    (465,511)    (482,270)
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0 
55  +/- Undistributable Cash Flow               (2,201,318)  (1,342,872)    (127,314)    (585,283)    (123,861)    (118,190)
56            PAN-WESTERN DISTRIBUTION   US$     6,578,756    7,514,946    8,732,810    8,731,085    8,711,587    8,638,575 
57         LUANNAN COUNTY DISTRIBUTION   US$       904,249    1,032,929    1,200,324    1,200,087    1,197,407    1,187,371 
<PAGE>
1  EXHIBIT 12-2 (Continued)
2  JV1 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                        19           20           21
4                                       % OF          2017         2018         2019           TOTAL
5                                       TOTAL                              (7 months)
6  REVENUES
7   Electric Energy Revenue              50%    33,435,357   33,856,545   19,749,652      573,466,374
8   Steam Revenue                         0%             0            0            0                0
9   Hot Water Revenue                     0%             0            0            0                0
10  T-Line Interest Payments              0%             0            0            0                0
11  Interest Income on On-Shore Reserve  25%       457,050      462,444      273,115        5,212,925
12            TOTAL OPERATING REVENUES          33,892,407   34,318,989   20,022,767      578,679,299
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%    12,103,478   12,587,618    7,342,777      179,255,271
16  Water Usage                           0%             0            0            0                0
17  Supplies, Spare Parts, Consumable    33%     1,360,973    1,415,412      858,683       19,762,503
18  Utilities                            45%       389,078      404,641      245,482        5,649,751
19  Project Management Fees              30%       431,123      444,057      266,804        6,923,721
20  Other Labor & Management             30%     2,031,685    2,105,877    1,260,562       30,577,802
21  Administrative Costs                 30%     1,495,652    1,547,669      920,151       22,905,773
22  Real Estate and Stamp Taxes          40%        63,385       63,615       37,109        1,227,790
23            TOTAL OPERATING EXPENSES          17,875,375   18,568,889   10,931,569      266,302,610
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (200,724)    (209,390)    (122,144)     (18,377,978)
27  Water Usage Payment (to JV 3)               (3,170,882)  (3,288,119)  (1,975,612)     (47,507,458)
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (155,556)      (5,333,333)
29                               TOTAL          (3,638,273)  (3,764,177)  (2,253,312)     (71,218,769)
30 
31 INCOME STATEMENT
32  EBITDA                                      12,378,759   11,985,923    6,837,885      241,157,920
33  - Depreciation                       33%       623,425      650,342      379,366       36,742,250
34  - Interest on S/H Loan                               0            0            0       15,595,667
35  EBT (Pre-tax Income)                        11,755,334   11,335,581    6,458,519      188,820,004
36  - Local Income Taxes (Luannan)                 352,660      340,067      193,756        4,255,604
37  - Federal Income Taxes (China)               1,763,300    1,700,337      968,778       25,835,302
38  Net Income                                   9,639,374    9,295,177    5,295,986      158,729,098
39  - Employee Welfare Res. (on-shore)   40%       158,903      165,259      100,257        2,307,403
40  - General Reserve (on-shore)         40%         2,353        2,353        1,373           47,059
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        1,373           47,059
42          NET DISTRIBUTABLE EARNINGS           9,475,765    9,125,212    5,192,984      156,327,576
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   9,475,765    9,125,212    5,192,984      156,327,576
46  + Depreciation                       33%       623,425      650,342      379,366       36,742,250
47  + Interest on S/H Loan                               0            0            0       15,595,667
48  + T-Line Principal Payments           0%             0            0            0                0
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,099,191    9,775,554    5,572,350      208,665,493
50  - Interest on S/H Loan                              (0)          (0)          (0)     (15,595,667)
51  - Principal of S/H Loan                              0            0            0      (17,880,000)
52  ADJUSTMENTS                                                                                     0
53  +/- Overhaul Reserve (on-shore)      33%      (499,631)     482,382            0       (6,231,593)
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0        1,000,000
55  +/- Undistributable Cash Flow                 (123,794)  (1,132,724)    (379,366)     (13,630,656)
56            PAN-WESTERN DISTRIBUTION   US$     8,330,710    8,022,518    4,565,461   $  137,436,890
57         LUANNAN COUNTY DISTRIBUTION   US$     1,145,055    1,102,694      627,522   $   18,890,687
</TABLE>

1  EXHIBIT 12-3
<TABLE>
<CAPTION>
2  JV2 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                         1            2            3            4            5            6   
4                                       % of          1999         2000         2001         2002         2003         2004   
5                                       Total    (5 months)                                                                   
<S>                                      <C>     <C>         <C>          <C>          <C>          <C>          <C>          
6  REVENUES
7   Electric Energy Revenue              50%     8,375,620   21,433,943   22,817,766   23,845,837   24,809,225   25,681,865   
8   Steam Revenue                         0%             0            0            0            0            0            0   
9   Hot Water Revenue                     0%             0            0            0            0            0            0   
10  T-Line Interest Payments              0%             0            0            0            0            0            0   
11  Interest Income on On-Shore Reserve  25%             0       23,173       65,653      102,612      142,672      163,215   
12            TOTAL OPERATING REVENUES           8,375,620   21,457,116   22,883,420   23,948,449   24,951,897   25,845,080   
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     1,989,122    5,251,283    5,776,411    6,354,052    6,989,457    7,269,035   
16  Water Usage                           0%             0            0            0            0            0            0   
17  Supplies, Spare Parts, Consumable    33%       203,347      536,837      590,520      649,572      714,530      757,401   
18  Utilities                            45%        58,133      153,472      168,819      185,701      204,271      216,528   
19  Project Management Fees              30%       105,516      260,837      268,662      276,722      285,023      293,574   
20  Other Labor & Management             30%       371,009      950,374    1,015,448    1,086,131    1,162,956    1,218,701   
21  Administrative Costs                 30%       297,917      754,392      796,759      842,370      891,521      929,525   
22  Real Estate and Stamp Taxes          40%        24,239       58,626       59,103       59,509       59,914       60,204   
23            TOTAL OPERATING EXPENSES           3,049,284    7,965,819    8,675,722    9,454,057   10,307,672   10,744,968   
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (754,653)  (1,777,426)  (1,723,315)  (1,658,588)  (1,584,472)  (1,504,289)  
27  Water Usage Payment (to JV 3)                 (565,270)  (1,452,849)  (1,557,487)  (1,671,369)  (1,795,384)  (1,884,071)  
28  Site Lease Payment (to JV 4)                  (111,111)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667)  
29                               TOTAL          (1,431,034)  (3,496,941)  (3,547,468)  (3,596,624)  (3,646,522)  (3,655,027)  
30 
31 INCOME STATEMENT
32  EBITDA                                       3,895,302    9,994,356   10,660,230   10,897,768   10,997,703   11,445,085   
33  - Depreciation                       33%       994,531    2,394,610    2,413,172    2,424,000    2,434,313    2,458,308   
34  - Interest on S/H Loan                       1,034,722    2,397,038    2,253,926    2,091,462    1,907,030    1,697,658   
35  EBT (Pre-tax Income)                         1,866,048    5,202,708    5,993,132    6,382,306    6,656,360    7,289,119   
36  - Local Income Taxes (Luannan)                       0            0            0            0            0      109,337   
37  - Federal Income Taxes (China)                       0            0      449,485      478,673      499,227    1,093,368   
38  Net Income                                   1,866,048    5,202,708    5,543,647    5,903,633    6,157,133    6,086,415   
39  - Employee Welfare Res. (on-shore)   40%        23,742       62,679       68,947       75,842       83,426       88,432   
40  - General Reserve (on-shore)         40%           980        2,353        2,353        2,353        2,353        2,353   
41  - E'prise Exp. Reserve (on-shore)    40%           980        2,353        2,353        2,353        2,353        2,353   
42          NET DISTRIBUTABLE EARNINGS           1,840,346    5,135,323    5,469,994    5,823,085    6,069,001    5,993,277   
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,840,346    5,135,323    5,469,994    5,823,085    6,069,001    5,993,277   
46  + Depreciation                       33%       994,531    2,394,610    2,413,172    2,424,000    2,434,313    2,458,308   
47  + Interest on S/H Loan                       1,034,722    2,397,038    2,253,926    2,091,462    1,907,030    1,697,658   
48  + T-Line Principal Payments           0%             0            0            0            0            0            0   
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          3,869,599    9,926,971   10,137,092   10,338,548   10,410,344   10,149,243   
50  - Interest on S/H Loan                      (1,034,722)  (2,397,038)  (2,253,926)  (2,091,462)  (1,907,030)  (1,697,658)  
51  - Principal of S/H Loan                       (379,798)    (997,746)  (1,132,662)  (1,285,822)  (1,459,693)  (1,657,074)  
52  ADJUSTMENTS                                                                                                               
53  +/- Overhaul Reserve (on-shore)      33%      (362,500)    (388,600)    (416,579)    (332,321)    (333,333)    (308,923)  
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0   
55  +/- Undistributable Cash Flow                 (252,233)  (1,008,264)    (863,931)    (805,857)    (641,287)    (492,311)  
56            PAN-WESTERN DISTRIBUTION   US$     1,617,957    4,514,769    4,808,997    5,119,421    5,335,621    5,269,047   
57         LUANNAN COUNTY DISTRIBUTION   US$       222,388      620,555      660,996      703,664      733,381      724,230   
<PAGE>
1  EXHIBIT 12-3 (Continued)
2  JV2 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                         7            8            9           10           11           12  
4                                       % of          2005         2006         2007         2008         2009         2010  
5                                       Total                                                                                
6  REVENUES
7   Electric Energy Revenue              50%    26,245,158   26,986,145   27,917,960   28,989,250   30,366,397   31,059,385  
8   Steam Revenue                         0%             0            0            0            0            0            0  
9   Hot Water Revenue                     0%             0            0            0            0            0            0  
10  T-Line Interest Payments              0%             0            0            0            0            0            0  
11  Interest Income on On-Shore Reserve  25%       177,148      181,641      175,725      207,954      190,520      199,374  
12            TOTAL OPERATING REVENUES          26,422,306   27,167,787   28,093,685   29,197,204   30,556,918   31,258,759  
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     7,559,797    7,862,189    8,176,676    8,503,743    8,843,893    9,197,649  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable    33%       802,845      851,016      902,077      956,202      994,450    1,034,228  
18  Utilities                            45%       229,519      243,291      257,888      273,361      284,296      295,667  
19  Project Management Fees              30%       302,381      311,453      320,796      330,420      340,333      350,543  
20  Other Labor & Management             30%     1,277,370    1,339,125    1,404,139    1,472,594    1,526,076    1,581,534  
21  Administrative Costs                 30%       969,343    1,011,073    1,054,813    1,100,670    1,138,712    1,178,096  
22  Real Estate and Stamp Taxes          40%        60,423       60,688       61,002       61,352       61,775       62,037  
23            TOTAL OPERATING EXPENSES          11,201,679   11,678,834   12,177,392   12,698,343   13,189,534   13,699,753  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)            (1,412,101)  (1,306,887)  (1,186,742)  (1,045,815)    (884,866)    (833,809) 
27  Water Usage Payment (to JV 3)               (1,977,509)  (2,075,965)  (2,179,722)  (2,289,081)  (2,373,288)  (2,460,644) 
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667) 
29                               TOTAL          (3,656,277)  (3,649,519)  (3,633,131)  (3,601,563)  (3,524,821)  (3,561,120) 
30 
31 INCOME STATEMENT
32  EBITDA                                      11,564,350   11,839,434   12,283,163   12,897,299   13,842,562   13,997,886  
33  - Depreciation                       33%     2,481,933    2,507,014    2,533,299    2,549,052    2,560,845    2,589,714  
34  - Interest on S/H Loan                       1,459,976    1,190,153      883,845      536,117      143,740            0  
35  EBT (Pre-tax Income)                         7,622,441    8,142,267    8,866,019    9,812,129   11,137,977   11,408,172  
36  - Local Income Taxes (Luannan)                 114,337      122,134      132,990      147,182      334,139      342,245  
37  - Federal Income Taxes (China)               1,143,366    1,221,340    1,329,903    1,471,819    1,670,697    1,711,226  
38  Net Income                                   6,364,738    6,798,793    7,403,126    8,193,128    9,133,141    9,354,701  
39  - Employee Welfare Res. (on-shore)   40%        93,738       99,362      105,323      111,643      116,109      120,753  
40  - General Reserve (on-shore)         40%         2,353        2,353        2,353        2,353        2,353        2,353  
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        2,353        2,353        2,353        2,353  
42          NET DISTRIBUTABLE EARNINGS           6,266,295    6,694,725    7,293,097    8,076,779    9,012,327    9,229,243  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   6,266,295    6,694,725    7,293,097    8,076,779    9,012,327    9,229,243  
46  + Depreciation                       33%     2,481,933    2,507,014    2,533,299    2,549,052    2,560,845    2,589,714  
47  + Interest on S/H Loan                       1,459,976    1,190,153      883,845      536,117      143,740            0  
48  + T-Line Principal Payments           0%             0            0            0            0            0            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,208,204   10,391,892   10,710,240   11,161,949   11,716,912   11,818,956  
50  - Interest on S/H Loan                      (1,459,976)  (1,190,153)    (883,845)    (536,117)    (143,740)          (0) 
51  - Principal of S/H Loan                     (1,881,145)  (2,135,516)  (2,424,283)  (2,752,097)  (1,774,164)           0  
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)      33%      (331,165)    (347,061)    (363,720)          (0)    (381,179)    (399,475) 
54  +/- Debt Service Reserve (off-shore) 25%             0            0    1,000,000            0            0            0  
55  +/- Undistributable Cash Flow                 (269,623)     (24,437)    (745,296)     203,044     (405,502)  (2,190,239) 
56            PAN-WESTERN DISTRIBUTION   US$     5,509,073    5,885,732    6,411,796    7,100,778    7,923,274    8,113,977  
57         LUANNAN COUNTY DISTRIBUTION   US$       757,222      808,993      881,301      976,001    1,089,053    1,115,265  
<PAGE>
1  EXHIBIT 12-3 (Continued)
2  JV2 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                        13           14           15           16           17           18  
4                                       % of          2011         2012         2013         2014         2015         2016  
5                                       Total                                                                                
6  REVENUES
7   Electric Energy Revenue              50%    29,512,392   30,263,152   30,991,072   31,697,288   32,382,982   33,049,383  
8   Steam Revenue                         0%             0            0            0            0            0            0  
9   Hot Water Revenue                     0%             0            0            0            0            0            0  
10  T-Line Interest Payments              0%             0            0            0            0            0            0  
11  Interest Income on On-Shore Reserve  25%       282,946      366,942      418,430      423,888      446,533      451,890  
12            TOTAL OPERATING REVENUES          29,795,338   30,630,094   31,409,501   32,121,175   32,829,515   33,501,273  
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     9,565,555    9,948,177   10,346,104   10,759,948   11,190,346   11,637,960  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable    33%     1,075,597    1,118,621    1,163,366    1,209,900    1,258,296    1,308,628  
18  Utilities                            45%       307,494      319,794      332,586      345,889      359,725      374,114  
19  Project Management Fees              30%       361,059      371,891      383,047      394,539      406,375      418,566  
20  Other Labor & Management             30%     1,639,043    1,698,679    1,760,523    1,824,658    1,891,170    1,960,148  
21  Administrative Costs                 30%     1,218,870    1,261,085    1,304,792    1,350,046    1,396,901    1,445,417  
22  Real Estate and Stamp Taxes          40%        61,765       62,048       62,329       62,610       62,889       63,169  
23            TOTAL OPERATING EXPENSES          14,229,382   14,780,294   15,352,748   15,947,590   16,565,703   17,208,001  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (843,550)    (572,009)    (185,663)    (188,443)    (189,760)    (193,330) 
27  Water Usage Payment (to JV 3)               (2,551,266)  (2,645,278)  (2,742,811)  (2,843,996)  (2,948,972)  (3,057,884) 
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667) 
29                               TOTAL          (3,661,483)  (3,483,954)  (3,195,141)  (3,299,106)  (3,405,399)  (3,517,881) 
30 
31 INCOME STATEMENT
32  EBITDA                                      11,904,473   12,365,845   12,861,613   12,874,479   12,858,414   12,775,390  
33  - Depreciation                       33%     2,619,968    1,776,593      576,649      585,283      589,372      600,460  
34  - Interest on S/H Loan                               0            0            0            0            0            0  
35  EBT (Pre-tax Income)                         9,284,505   10,589,252   12,284,964   12,289,197   12,269,042   12,174,930  
36  - Local Income Taxes (Luannan)                 278,535      317,678      368,549      368,676      368,071      365,248  
37  - Federal Income Taxes (China)               1,392,676    1,588,388    1,842,745    1,843,380    1,840,356    1,826,240  
38  Net Income                                   7,613,294    8,683,187   10,073,670   10,077,141   10,060,614    9,983,443  
39  - Employee Welfare Res. (on-shore)   40%       125,583      130,606      135,831      141,264      146,914      152,791  
40  - General Reserve (on-shore)         40%         2,353        2,353        2,353        2,353        2,353        2,353  
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        2,353        2,353        2,353        2,353  
42          NET DISTRIBUTABLE EARNINGS           7,483,005    8,547,874    9,933,134    9,931,172    9,908,994    9,825,946  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   7,483,005    8,547,874    9,933,134    9,931,172    9,908,994    9,825,946  
46  + Depreciation                       33%     2,619,968    1,776,593      576,649      585,283      589,372      600,460  
47  + Interest on S/H Loan                               0            0            0            0            0            0  
48  + T-Line Principal Payments           0%             0            0            0            0            0            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,102,973   10,324,467   10,509,783   10,516,454   10,498,366   10,426,406  
50  - Interest on S/H Loan                              (0)          (0)          (0)          (0)          (0)          (0) 
51  - Principal of S/H Loan                              0            0            0            0            0            0  
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)      33%      (418,650)    (433,721)    (449,335)          (0)    (465,511)    (482,270) 
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0  
55  +/- Undistributable Cash Flow               (2,201,318)  (1,342,872)    (127,314)    (585,283)    (123,861)    (118,190) 
56            PAN-WESTERN DISTRIBUTION   US$     6,578,756    7,514,946    8,732,810    8,731,085    8,711,587    8,638,575  
57         LUANNAN COUNTY DISTRIBUTION   US$       904,249    1,032,929    1,200,324    1,200,087    1,197,407    1,187,371  
<PAGE>
1  EXHIBIT 12-3 (Continued)
2  JV2 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                        19           20           21
4                                       % of          2017         2018         2019            Total
5                                       Total                              (7 months)
6  REVENUES
7   Electric Energy Revenue              50%    33,435,357   33,856,545   19,749,652      573,466,374
8   Steam Revenue                         0%             0            0            0                0
9   Hot Water Revenue                     0%             0            0            0                0
10  T-Line Interest Payments              0%             0            0            0                0
11  Interest Income on On-Shore Reserve  25%       457,050      462,444      273,115        5,212,925
12            TOTAL OPERATING REVENUES          33,892,407   34,318,989   20,022,767      578,679,299
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%    12,103,478   12,587,618    7,342,777      179,255,271
16  Water Usage                           0%             0            0            0                0
17  Supplies, Spare Parts, Consumable    33%     1,360,973    1,415,412      858,683       19,762,503
18  Utilities                            45%       389,078      404,641      245,482        5,649,751
19  Project Management Fees              30%       431,123      444,057      266,804        6,923,721
20  Other Labor & Management             30%     2,031,685    2,105,877    1,260,562       30,577,802
21  Administrative Costs                 30%     1,495,652    1,547,669      920,151       22,905,773
22  Real Estate and Stamp Taxes          40%        63,385       63,615       37,109        1,227,790
23            TOTAL OPERATING EXPENSES          17,875,375   18,568,889   10,931,569      266,302,610
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (200,724)    (209,390)    (122,144)     (18,377,978)
27  Water Usage Payment (to JV 3)               (3,170,882)  (3,288,119)  (1,975,612)     (47,507,458)
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (155,556)      (5,333,333)
29                               TOTAL          (3,638,273)  (3,764,177)  (2,253,312)     (71,218,769)
30 
31 INCOME STATEMENT
32  EBITDA                                      12,378,759   11,985,923    6,837,885      241,157,920
33  - Depreciation                       33%       623,425      650,342      379,366       36,742,250
34  - Interest on S/H Loan                               0            0            0       15,595,667
35  EBT (Pre-tax Income)                        11,755,334   11,335,581    6,458,519      188,820,004
36  - Local Income Taxes (Luannan)                 352,660      340,067      193,756        4,255,604
37  - Federal Income Taxes (China)               1,763,300    1,700,337      968,778       25,835,302
38  Net Income                                   9,639,374    9,295,177    5,295,986      158,729,098
39  - Employee Welfare Res. (on-shore)   40%       158,903      165,259      100,257        2,307,403
40  - General Reserve (on-shore)         40%         2,353        2,353        1,373           47,059
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        1,373           47,059
42          NET DISTRIBUTABLE EARNINGS           9,475,765    9,125,212    5,192,984      156,327,576
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   9,475,765    9,125,212    5,192,984      156,327,576
46  + Depreciation                       33%       623,425      650,342      379,366       36,742,250
47  + Interest on S/H Loan                               0            0            0       15,595,667
48  + T-Line Principal Payments           0%             0            0            0                0
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,099,191    9,775,554    5,572,350      208,665,493
50  - Interest on S/H Loan                              (0)          (0)          (0)     (15,595,667)
51  - Principal of S/H Loan                              0            0            0      (17,880,000)
52  ADJUSTMENTS                                                                                     0
53  +/- Overhaul Reserve (on-shore)      33%      (499,631)     482,382            0       (6,231,593)
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0        1,000,000
55  +/- Undistributable Cash Flow                 (123,794)  (1,132,724)    (379,366)     (13,630,656)
56            PAN-WESTERN DISTRIBUTION   US$     8,330,710    8,022,518    4,565,461   $  137,436,890
57         LUANNAN COUNTY DISTRIBUTION   US$     1,145,055    1,102,694      627,522   $   18,890,687
</TABLE>

1  EXHIBIT 12-4
<TABLE>
<CAPTION>
2  JV3 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                         1            2            3            4            5            6    
4                                       % OF          1999         2000         2001         2002         2003         2004    
5                                       TOTAL    (5 months)                                                                    
<S>                                       <C>            <C>          <C>          <C>          <C>          <C>          <C>  
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0    
8   Steam Revenue                        50%       477,283    1,202,752    1,262,890    1,326,034    1,392,336    1,434,106    
9   Hot Water Revenue                    50%       166,040      418,420      439,341      461,308      484,373      498,905    
10  T-Line Interest Payments              0%             0            0            0            0            0            0    
11  Interest Income on On-Shore Reserves 25%             0       23,173       65,653      102,612      142,672      163,215    
12            TOTAL OPERATING REVENUES             643,322    1,644,345    1,767,884    1,889,954    2,019,381    2,096,226    
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0    
16  Water Usage                         100%       139,831      369,154      406,069      446,676      491,344      520,824    
17  Supplies, Spare Parts, Consumable    33%       203,347      536,837      590,520      649,572      714,530      757,401    
18  Utilities                            10%        12,919       34,105       37,515       41,267       45,394       48,117    
19  Project Management Fees              30%       105,516      260,837      268,662      276,722      285,023      293,574    
20  Other Labor & Management             30%       371,009      950,374    1,015,448    1,086,131    1,162,956    1,218,701    
21  Administrative Costs                 30%       297,917      754,392      796,759      842,370      891,521      929,525    
22  Real Estate and Stamp Taxes          10%         6,060       14,656       14,776       14,877       14,979       15,051    
23            TOTAL OPERATING EXPENSES           1,136,599    2,920,354    3,129,749    3,357,615    3,605,746    3,783,193    
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue (from JV 1 & 2)       1,509,307    3,554,852    3,446,629    3,317,176    3,168,943    3,008,578    
27  Water Usage Revenue (from JV 1 & 2)          1,130,539    2,905,698    3,114,973    3,342,738    3,590,767    3,768,142    
28  Site Lease Payment (to JV 4)                  (111,111)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667)   
29                               TOTAL           2,528,735    6,193,883    6,294,936    6,393,247    6,493,044    6,510,054    
30 
31 INCOME STATEMENT
32  EBITDA                                       2,035,458    4,917,874    4,933,071    4,925,586    4,906,679    4,823,086    
33  - Depreciation                       25%       753,433    1,814,098    1,828,161    1,836,364    1,844,176    1,862,354    
34  - Interest on S/H Loan                       1,022,222    2,368,080    2,226,697    2,066,196    1,883,992    1,677,150    
35  EBT (Pre-tax Income)                           259,803      735,695      878,213    1,023,026    1,178,510    1,283,582    
36  - Local Income Taxes (Luannan)                       0            0            0            0            0       19,254    
37  - Federal Income Taxes (China)                       0            0       65,866       76,727       88,388      192,537    
38  Net Income                                     259,803      735,695      812,347      946,299    1,090,122    1,071,791    
39  - Employee Welfare Res. (on-shore)   10%         5,936       15,670       17,237       18,960       20,857       22,108    
40  - General Reserve (on-shore)         10%           245          588          588          588          588          588    
41  - E'prise Exp. Reserve (on-shore)    10%           245          588          588          588          588          588    
42          NET DISTRIBUTABLE EARNINGS             253,377      718,849      793,933      926,162    1,068,089    1,048,507    
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                     253,377      718,849      793,933      926,162    1,068,089    1,048,507    
46  + Depreciation                       25%       753,433    1,814,098    1,828,161    1,836,364    1,844,176    1,862,354    
47  + Interest on S/H Loan                       1,022,222    2,368,080    2,226,697    2,066,196    1,883,992    1,677,150    
48  + T-Line Principal Payments           0%             0            0            0            0            0            0    
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          2,029,033    4,901,028    4,848,791    4,828,722    4,796,257    4,588,011    
50  - Interest on S/H Loan                      (1,022,222)  (2,368,080)  (2,226,697)  (2,066,196)  (1,883,992)  (1,677,150)  
51  - Principal of S/H Loan                       (375,210)    (985,693)  (1,118,979)  (1,270,289)  (1,442,059)  (1,637,055)  
52  ADJUSTMENTS                                                                                                                
53  +/- Overhaul Reserve (on-shore)      33%      (362,500)    (388,600)    (416,579)    (332,321)    (333,333)    (308,923)   
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0    
55  +/- Undistributable Cash Flow                  (15,723)    (439,806)    (292,602)    (233,754)     (68,784)      83,624    
56            PAN-WESTERN DISTRIBUTION   US$       222,759      631,983      697,994      814,244      939,021      921,805   
57         LUANNAN COUNTY DISTRIBUTION   US$        30,618       86,866       95,939      111,918      129,068      126,702   
<PAGE>
1  EXHIBIT 12-4 (Continued)
2  JV3 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                         7            8            9           10           11           12    
4                                       % OF          2005         2006         2007         2008         2009         2010    
5                                       TOTAL                                                                                  
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0    
8   Steam Revenue                        50%     1,477,129    1,521,443    1,567,086    1,614,099    1,646,381    1,679,308    
9   Hot Water Revenue                    50%       513,872      529,288      545,167      561,522      572,752      584,207    
10  T-Line Interest Payments              0%             0            0            0            0            0            0    
11  Interest Income on On-Shore Reserves 25%       177,148      181,641      175,725      207,954      190,520      199,374    
12            TOTAL OPERATING REVENUES           2,168,149    2,232,372    2,287,977    2,383,574    2,409,653    2,462,889    
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0    
16  Water Usage                         100%       552,074      585,198      620,310      657,529      683,830      711,183    
17  Supplies, Spare Parts, Consumable    33%       802,845      851,016      902,077      956,202      994,450    1,034,228    
18  Utilities                            10%        51,004       54,065       57,308       60,747       63,177       65,704    
19  Project Management Fees              30%       302,381      311,453      320,796      330,420      340,333      350,543    
20  Other Labor & Management             30%     1,277,370    1,339,125    1,404,139    1,472,594    1,526,076    1,581,534    
21  Administrative Costs                 30%       969,343    1,011,073    1,054,813    1,100,670    1,138,712    1,178,096    
22  Real Estate and Stamp Taxes          10%        15,106       15,172       15,250       15,338       15,444       15,509    
23            TOTAL OPERATING EXPENSES           3,970,124    4,167,102    4,374,695    4,593,500    4,762,021    4,936,796    
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue (from JV 1 & 2)       2,824,202    2,613,774    2,373,483    2,091,630    1,769,732    1,667,619    
27  Water Usage Revenue (from JV 1 & 2)          3,955,018    4,151,930    4,359,444    4,578,162    4,746,577    4,921,287    
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667)   
29                               TOTAL           6,512,553    6,499,037    6,466,261    6,403,125    6,249,642    6,322,239    
30 
31 INCOME STATEMENT
32  EBITDA                                       4,710,579    4,564,307    4,379,543    4,193,199    3,897,275    3,848,332    
33  - Depreciation                       25%     1,880,253    1,899,253    1,919,166    1,931,100    1,940,034    1,961,904    
34  - Interest on S/H Loan                       1,442,338    1,175,775      873,168      529,641      142,004            0    
35  EBT (Pre-tax Income)                         1,387,988    1,489,279    1,587,210    1,732,458    1,815,237    1,886,427    
36  - Local Income Taxes (Luannan)                  20,820       22,339       23,808       25,987       54,457       56,593    
37  - Federal Income Taxes (China)                 208,198      223,392      238,082      259,869      272,286      282,964    
38  Net Income                                   1,158,970    1,243,548    1,325,320    1,446,603    1,488,494    1,546,870    
39  - Employee Welfare Res. (on-shore)   10%        23,434       24,840       26,331       27,911       29,027       30,188    
40  - General Reserve (on-shore)         10%           588          588          588          588          588          588    
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          588          588          588          588    
42          NET DISTRIBUTABLE EARNINGS           1,134,359    1,217,531    1,297,813    1,417,516    1,458,291    1,515,506    
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,134,359    1,217,531    1,297,813    1,417,516    1,458,291    1,515,506    
46  + Depreciation                       25%     1,880,253    1,899,253    1,919,166    1,931,100    1,940,034    1,961,904    
47  + Interest on S/H Loan                       1,442,338    1,175,775      873,168      529,641      142,004            0    
48  + T-Line Principal Payments           0%             0            0            0            0            0            0    
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          4,456,950    4,292,560    4,090,146    3,878,257    3,540,328    3,477,410    
50  - Interest on S/H Loan                      (1,442,338)  (1,175,775)    (873,168)    (529,641)    (142,004)          (0)   
51  - Principal of S/H Loan                     (1,858,420)  (2,109,717)  (2,394,996)  (2,718,850)  (1,752,731)           0    
52  ADJUSTMENTS                                                                                                                
53  +/- Overhaul Reserve (on-shore)      33%      (331,165)    (347,061)    (363,720)          (0)    (381,179)    (399,475)   
54  +/- Debt Service Reserve (off-shore) 25%             0            0    1,000,000            0            0            0    
55  +/- Undistributable Cash Flow                  309,333      557,525     (160,450)     787,750      193,876   (1,562,429)  
56            PAN-WESTERN DISTRIBUTION   US$       997,283    1,070,404    1,140,985    1,246,222    1,282,070    1,332,371   
57         LUANNAN COUNTY DISTRIBUTION   US$       137,076      147,127      156,828      171,293      176,220      183,134   
<PAGE>
1  Exhibit 12-4 (Continued)
2  JV3 Income and Cash Flow Statements
3   -- Base Case                                        13           14          15           16           17           18
4                                       % OF          2011         2012        2013         2014         2015         2016
5                                       TOTAL
6  REVENUES
7   Electric Energy Revenue               0%             0            0           0            0            0            0
8   Steam Revenue                        50%     1,712,894    1,747,152   1,782,095    1,817,737    1,854,092    1,891,174
9   Hot Water Revenue                    50%       595,891      607,809     619,965      632,364      645,012      657,912
10  T-Line Interest Payments              0%             0            0           0            0            0            0
11  Interest Income on On-Shore Reserves 25%       282,946      366,942     418,430      423,888      446,533      451,890
12            TOTAL OPERATING REVENUES           2,591,732    2,721,903   2,820,490    2,873,989    2,945,637    3,000,975
13
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0           0            0            0            0
16  Water Usage                         100%       739,631      769,216     799,984      831,984      865,263      899,874
17  Supplies, Spare Parts, Consumable    33%     1,075,597    1,118,621   1,163,366    1,209,900    1,258,296    1,308,628
18  Utilities                            10%        68,332       71,065      73,908       76,864       79,939       83,136
19  Project Management Fees              30%       361,059      371,891     383,047      394,539      406,375      418,566
20  Other Labor & Management             30%     1,639,043    1,698,679   1,760,523    1,824,658    1,891,170    1,960,148
21  Administrative Costs                 30%     1,218,870    1,261,085   1,304,792    1,350,046    1,396,901    1,445,417
22  Real Estate and Stamp Taxes          10%        15,441       15,512      15,582       15,652       15,722       15,792
23            TOTAL OPERATING EXPENSES           5,117,972    5,306,069   5,501,203    5,703,644    5,913,667    6,131,561
24
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue (from JV 1 & 2)       1,687,101    1,144,018     371,327      376,887      379,520      386,660
27  Water Usage Revenue (from JV 1 & 2)          5,102,531    5,290,557   5,485,621    5,687,991    5,897,945    6,115,769
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)   (266,667)    (266,667)    (266,667)    (266,667)
29                               Total           6,522,965    6,167,908   5,590,281    5,798,211    6,010,798    6,235,762
30
31 INCOME STATEMENT
32  EBITDA                                       3,996,725    3,583,743   2,909,568    2,968,557    3,042,768    3,105,176
33  - Depreciation                       25%     1,984,824    1,345,904     436,855      443,396      446,494      454,894
34  - Interest on S/H Loan                               0            0           0            0            0            0
35  EBT (Pre-tax Income)                         2,011,901    2,237,839   2,472,713    2,525,161    2,596,274    2,650,282
36  - Local Income Taxes (Luannan)                  60,357       67,135      74,181       75,755       77,888       79,508
37  - Federal Income Taxes (China)                 301,785      335,676     370,907      378,774      389,441      397,542
38  Net Income                                   1,649,758    1,835,028   2,027,624    2,070,632    2,128,945    2,173,232
39  - Employee Welfare Res. (on-shore)   10%        31,396       32,652      33,958       35,316       36,729       38,198
40  - General Reserve (on-shore)         10%           588          588         588          588          588          588
41  - E'prise Exp. Reserve (on-shore)    10%           588          588         588          588          588          588
42          NET DISTRIBUTABLE EARNINGS           1,617,186    1,801,200   1,992,490    2,034,139    2,091,040    2,133,857
43
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,617,186    1,801,200   1,992,490    2,034,139    2,091,040    2,133,857
46  + Depreciation                       25%     1,984,824    1,345,904     436,855      443,396      446,494      454,894
47  + Interest on S/H Loan                               0            0           0            0            0            0
48  + T-Line Principal Payments           0%             0            0           0            0            0            0
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          3,602,010    3,147,103   2,429,346    2,477,535    2,537,534    2,588,751
50  - Interest on S/H Loan                              (0)          (0)         (0)          (0)          (0)          (0)
51  - Principal of S/H Loan                              0            0           0            0            0            0
52  ADJUSTMENTS
53  +/- Overhaul Reserve (on-shore)      33%      (418,650)    (433,721)   (449,335)          (0)    (465,511)    (482,270)
54  +/- Debt Service Reserve (off-shore) 25%             0            0           0            0            0            0
55  +/- Undistributable Cash Flow               (1,566,174)    (912,182)     12,480     (443,396)      19,017       27,376
56            PAN-WESTERN DISTRIBUTION   US$     1,421,765    1,583,542   1,751,717    1,788,333    1,838,358    1,876,001
57         LUANNAN COUNTY DISTRIBUTION   US$       195,421      217,658     240,773      245,806      252,682      257,856
<PAGE>
1  EXHIBIT 12-4 (Continued)
2  JV3 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                        19           20           21
4                                       % OF          2017         2018         2019            TOTAL
5                                       TOTAL                              (7 months)
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0                0
8   Steam Revenue                        50%     1,928,997    1,967,577    1,147,753       32,450,318
9   Hot Water Revenue                    50%       671,070      684,492      399,287       11,288,996
10  T-Line Interest Payments              0%             0            0            0                0
11  Interest Income on On-Shore Reserves 25%       457,050      462,444      273,115        5,212,925
12            TOTAL OPERATING REVENUES           3,057,118    3,114,513    1,820,155       48,952,239
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0                0
16  Water Usage                         100%       935,869      973,303      590,471       13,589,617
17  Supplies, Spare Parts, Consumable    33%     1,360,973    1,415,412      858,683       19,762,503
18  Utilities                            10%        86,462       89,920       54,552        1,255,500
19  Project Management Fees              30%       431,123      444,057      266,804        6,923,721
20  Other Labor & Management             30%     2,031,685    2,105,877    1,260,562       30,577,802
21  Administrative Costs                 30%     1,495,652    1,547,669      920,151       22,905,773
22  Real Estate and Stamp Taxes          10%        15,846       15,904        9,277          306,948
23            TOTAL OPERATING EXPENSES           6,357,610    6,592,143    3,960,501       95,321,863
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue (from JV 1 & 2)         401,448      418,781      244,289       36,755,955
27  Water Usage Revenue (from JV 1 & 2)          6,341,764    6,576,239    3,951,224       95,014,916
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (155,556)      (5,333,333)
29                               TOTAL           6,476,545    6,728,353    4,039,957      126,437,538
30 
31 INCOME STATEMENT
32  EBITDA                                       3,176,053    3,250,723    1,899,611       80,067,913
33  - Depreciation                       25%       472,292      492,683      287,399       27,835,038
34  - Interest on S/H Loan                               0            0            0       15,407,263
35  EBT (Pre-tax Income)                         2,703,761    2,758,040    1,612,213       36,825,613
36  - Local Income Taxes (Luannan)                  81,113       82,741       48,366          870,303
37  - Federal Income Taxes (China)                 405,564      413,706      241,832        5,143,536
38  Net Income                                   2,217,084    2,261,593    1,322,014       30,811,774
39  - Employee Welfare Res. (on-shore)   10%        39,726       41,315       25,064          576,851
40  - General Reserve (on-shore)         10%           588          588          343           11,765
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          343           11,765
42          NET DISTRIBUTABLE EARNINGS           2,176,182    2,219,102    1,296,264       30,211,393
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   2,176,182    2,219,102    1,296,264       30,211,393
46  + Depreciation                       25%       472,292      492,683      287,399       27,835,038
47  + Interest on S/H Loan                               0            0            0       15,407,263
48  + T-Line Principal Payments           0%             0            0            0                0
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          2,648,474    2,711,785    1,583,663       73,453,694
50  - Interest on S/H Loan                              (0)          (0)          (0)     (15,407,263)
51  - Principal of S/H Loan                              0            0            0      (17,664,000)
52  ADJUSTMENTS                                                                                     0
53  +/- Overhaul Reserve (on-shore)      33%      (499,631)     482,382            0       (6,231,593)
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0        1,000,000
55  +/- Undistributable Cash Flow                   27,340     (975,065)    (287,399)      (4,939,444)
56            PAN-WESTERN DISTRIBUTION   US$     1,913,211    1,950,944    1,139,623   $   26,560,636
57         LUANNAN COUNTY DISTRIBUTION   US$       262,971      268,157      156,641   $    3,650,757
</TABLE>

1  EXHIBIT 12-5
<TABLE>
<CAPTION>
2  JV4 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                         1            2            3            4            5            6   
4                                       % OF          1999         2000         2001         2002         2003         2004   
5                                       TOTAL    (5 months)                                                                   
<S>                                     <C>      <C>          <C>          <C>          <C>          <C>          <C>         
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0   
8   Steam Revenue                        50%       477,283    1,202,752    1,262,890    1,326,034    1,392,336    1,434,106   
9   Hot Water Revenue                    50%       166,040      418,420      439,341      461,308      484,373      498,905   
10  T-Line Interest Payments            100%       609,444    1,427,937    1,340,421    1,242,403    1,132,622    1,009,668   
11  Interest Income on On-Shore Reserves 25%             0       23,173       65,653      102,612      142,672      163,215   
12            TOTAL OPERATING REVENUES           1,252,766    3,072,283    3,108,305    3,132,357    3,152,003    3,105,894   
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0   
16  Water Usage                           0%             0            0            0            0            0            0   
17  Supplies, Spare Parts, Consumable     0%             0            0            0            0            0            0   
18  Utilities                             0%             0            0            0            0            0            0   
19  Project Management Fees              10%        35,172       86,946       89,554       92,241       95,008       97,858   
20  Other Labor & Management             10%        57,719      142,682      146,963      151,372      155,913      160,590   
21  Administrative Costs                 10%        99,306      251,464      265,586      280,790      297,174      309,842   
22  Real Estate and Stamp Taxes          10%         6,060       14,656       14,776       14,877       14,979       15,051   
23            TOTAL OPERATING EXPENSES             198,257      495,748      516,879      539,280      563,073      583,341   
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue                               0            0            0            0            0            0   
27  Water Usage Revenue                                  0            0            0            0            0            0   
28  Site Lease Payment (from JV 1, 2, & 3)         333,333      800,000      800,000      800,000      800,000      800,000   
29                               TOTAL             333,333      800,000      800,000      800,000      800,000      800,000   
30 
31 INCOME STATEMENT
32  EBITDA                                       1,387,843    3,376,534    3,391,426    3,393,077    3,388,930    3,322,553   
33  - Depreciation                        9%       271,236      653,075      658,138      661,091      663,904      670,448   
34  - Interest on S/H Loan                       1,031,771    2,390,200    2,247,497    2,085,496    1,901,590    1,692,816   
35  EBT (Pre-tax Income)                            84,836      333,259      485,792      646,490      823,437      959,290   
36  - Local Income Taxes (Luannan)                       0            0        7,287        9,697       12,352       28,779   
37  - Federal Income Taxes (China)                  25,451       99,978      145,737      193,947      247,031      287,787   
38  Net Income                                      59,385      233,281      332,767      442,845      564,054      642,724   
39  - Employee Welfare Res. (on-shore)   10%         5,936       15,670       17,237       18,960       20,857       22,108   
40  - General Reserve (on-shore)         10%           245          588          588          588          588          588   
41  - E'prise Exp. Reserve (on-shore)    10%           245          588          588          588          588          588   
42          NET DISTRIBUTABLE EARNINGS              52,960      216,435      314,354      422,708      542,021      619,440   
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                      52,960      216,435      314,354      422,708      542,021      619,440   
46  + Depreciation                        9%       271,236      653,075      658,138      661,091      663,904      670,448   
47  + Interest on S/H Loan                       1,031,771    2,390,200    2,247,497    2,085,496    1,901,590    1,692,816   
48  + T-Line Principal Payments         100%       289,406      729,302      816,818      914,836    1,024,617    1,147,571   
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          1,645,372    3,989,013    4,036,807    4,084,132    4,132,132    4,130,274   
50  - Interest on S/H Loan                      (1,031,771)  (2,390,200)  (2,247,497)  (2,085,496)  (1,901,590)  (1,692,816)  
51  - Principal of S/H Loan                       (378,715)    (994,900)  (1,129,432)  (1,282,155)  (1,455,529)  (1,652,347)  
52  ADJUSTMENTS                                                                                                               
53  +/- Overhaul Reserve (on-shore)       0%             0            0            0            0            0            0   
54  +/- Debt Service Reserve (off-shore  25%             0            0            0            0            0            0   
55  +/- Undistributable Cash Flow                 (181,926)    (387,477)    (345,524)    (293,773)    (232,991)    (165,671)  
56            PAN-WESTERN DISTRIBUTION   US$        46,560      190,281      276,367      371,628      476,523      544,586   
57         LUANNAN COUNTY DISTRIBUTION   US$         6,400       26,154       37,987       51,080       65,498       74,853   
<PAGE>
1  EXHIBIT 12-5 (Continued)
2  JV4 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                         7            8            9           10           11           12  
4                                       % OF          2005         2006         2007         2008         2009         2010  
5                                       TOTAL                                                                                
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0  
8   Steam Revenue                        50%     1,477,129    1,521,443    1,567,086    1,614,099    1,646,381    1,679,308  
9   Hot Water Revenue                    50%       513,872      529,288      545,167      561,522      572,752      584,207  
10  T-Line Interest Payments            100%       871,960      717,726      544,985      351,514      134,827            0  
11  Interest Income on On-Shore Reserves 25%       177,148      181,641      175,725      207,954      190,520      199,374  
12            TOTAL OPERATING REVENUES           3,040,109    2,950,098    2,832,962    2,735,089    2,544,480    2,462,889  
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable     0%             0            0            0            0            0            0  
18  Utilities                             0%             0            0            0            0            0            0  
19  Project Management Fees              10%       100,794      103,818      106,932      110,140      113,444      116,848  
20  Other Labor & Management             10%       165,408      170,370      175,481      180,746      186,168      191,753  
21  Administrative Costs                 10%       323,114      337,024      351,604      366,890      379,571      392,699  
22  Real Estate and Stamp Taxes          10%        15,106       15,172       15,250       15,338       15,444       15,509  
23            TOTAL OPERATING EXPENSES             604,422      626,384      649,268      673,114      694,627      716,808  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue                               0            0            0            0            0            0  
27  Water Usage Revenue                                  0            0            0            0            0            0  
28  Site Lease Payment (from JV 1, 2, & 3)         800,000      800,000      800,000      800,000      800,000      800,000  
29                               TOTAL             800,000      800,000      800,000      800,000      800,000      800,000  
30 
31 INCOME STATEMENT
32  EBITDA                                       3,235,687    3,123,714    2,983,694    2,861,975    2,649,854    2,546,081  
33  - Depreciation                        9%       676,891      683,731      690,900      695,196      698,412      706,286  
34  - Interest on S/H Loan                       1,455,811    1,186,758      881,324      534,588      143,330            0  
35  EBT (Pre-tax Income)                         1,102,985    1,253,225    1,411,471    1,632,191    1,808,111    1,839,795  
36  - Local Income Taxes (Luannan)                  33,090       37,597       42,344       48,966       54,243       55,194  
37  - Federal Income Taxes (China)                 330,895      375,968      423,441      489,657      542,433      551,939  
38  Net Income                                     739,000      839,661      945,685    1,093,568    1,211,435    1,232,663  
39  - Employee Welfare Res. (on-shore)   10%        23,434       24,840       26,331       27,911       29,027       30,188  
40  - General Reserve (on-shore)         10%           588          588          588          588          588          588  
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          588          588          588          588  
42          NET DISTRIBUTABLE EARNINGS             714,389      813,644      918,178    1,064,481    1,181,231    1,201,298  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                     714,389      813,644      918,178    1,064,481    1,181,231    1,201,298  
46  + Depreciation                        9%       676,891      683,731      690,900      695,196      698,412      706,286  
47  + Interest on S/H Loan                       1,455,811    1,186,758      881,324      534,588      143,330            0  
48  + T-Line Principal Payments         100%     1,285,279    1,439,513    1,612,254    1,805,725    1,123,562            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          4,132,370    4,123,646    4,102,656    4,099,990    3,146,535    1,907,584  
50  - Interest on S/H Loan                      (1,455,811)  (1,186,758)    (881,324)    (534,588)    (143,330)          (0) 
51  - Principal of S/H Loan                     (1,875,780)  (2,129,424)  (2,417,368)  (2,744,247)  (1,769,104)           0  
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)       0%             0            0            0            0            0            0  
54  +/- Debt Service Reserve (off-shore) 25%             0            0    1,000,000            0            0            0  
55  +/- Undistributable Cash Flow                  (86,391)       6,181     (885,786)     243,326      (52,871)    (706,286) 
56            PAN-WESTERN DISTRIBUTION   US$       628,062      715,323      807,225      935,848    1,038,491    1,056,133  
57         LUANNAN COUNTY DISTRIBUTION   US$        86,327       98,321      110,953      128,632      142,740      145,165  
<PAGE>
1  EXHIBIT 12-5 (Continued)
2  JV4 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                        13           14            15           16           17           18  
4                                       % OF          2011         2012          2013         2014         2015         2016  
5                                       TOTAL                                                                                 
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0   
8   Steam Revenue                        50%     1,712,894    1,747,152    1,782,095    1,817,737    1,854,092    1,891,174   
9   Hot Water Revenue                    50%       595,891      607,809      619,965      632,364      645,012      657,912   
10  T-Line Interest Payments            100%             0            0            0            0            0            0   
11  Interest Income on On-Shore Reserves 25%       282,946      366,942      418,430      423,888      446,533      451,890   
12            TOTAL OPERATING REVENUES           2,591,732    2,721,903    2,820,490    2,873,989    2,945,637    3,000,975   
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0   
16  Water Usage                           0%             0            0            0            0            0            0   
17  Supplies, Spare Parts, Consumable     0%             0            0            0            0            0            0   
18  Utilities                             0%             0            0            0            0            0            0   
19  Project Management Fees              10%       120,353      123,964      127,682      131,513      135,458      139,522   
20  Other Labor & Management             10%       197,506      203,431      209,534      215,820      222,294      228,963   
21  Administrative Costs                 10%       406,290      420,362      434,931      450,015      465,634      481,806   
22  Real Estate and Stamp Taxes          10%        15,441       15,512       15,582       15,652       15,722       15,792   
23            TOTAL OPERATING EXPENSES             739,590      763,268      787,729      813,000      839,109      866,083   
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue                               0            0            0            0            0            0   
27  Water Usage Revenue                                  0            0            0            0            0            0   
28  Site Lease Payment (from JV 1, 2, & 3)         800,000      800,000      800,000      800,000      800,000      800,000   
29                               TOTAL             800,000      800,000      800,000      800,000      800,000      800,000   
30 
31 INCOME STATEMENT
32  EBITDA                                       2,652,142    2,758,635    2,832,761    2,860,989    2,906,528    2,934,892   
33  - Depreciation                        9%       714,537      484,525      157,268      159,623      160,738      163,762   
34  - Interest on S/H Loan                               0            0            0            0            0            0   
35  EBT (Pre-tax Income)                         1,937,606    2,274,110    2,675,493    2,701,366    2,745,791    2,771,131   
36  - Local Income Taxes (Luannan)                  58,128       68,223       80,265       81,041       82,374       83,134   
37  - Federal Income Taxes (China)                 581,282      682,233      802,648      810,410      823,737      831,339   
38  Net Income                                   1,298,196    1,523,653    1,792,580    1,809,916    1,839,680    1,856,658   
39  - Employee Welfare Res. (on-shore)   10%        31,396       32,652       33,958       35,316       36,729       38,198   
40  - General Reserve (on-shore)         10%           588          588          588          588          588          588   
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          588          588          588          588   
42          NET DISTRIBUTABLE EARNINGS           1,265,623    1,489,825    1,757,446    1,773,423    1,801,775    1,817,283   
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,265,623    1,489,825    1,757,446    1,773,423    1,801,775    1,817,283   
46  + Depreciation                        9%       714,537      484,525      157,268      159,623      160,738      163,762   
47  + Interest on S/H Loan                               0            0            0            0            0            0   
48  + T-Line Principal Payments         100%             0            0            0            0            0            0   
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          1,980,160    1,974,351    1,914,714    1,933,046    1,962,512    1,981,045   
50  - Interest on S/H Loan                              (0)          (0)          (0)          (0)          (0)          (0)  
51  - Principal of S/H Loan                              0            0            0            0            0            0   
52  ADJUSTMENTS                                                                                                               
53  +/- Overhaul Reserve (on-shore)       0%             0            0            0            0            0            0   
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0   
55  +/- Undistributable Cash Flow                 (714,537)    (484,525)    (157,268)    (159,623)    (160,738)    (163,762)  
56            PAN-WESTERN DISTRIBUTION   US$     1,112,685    1,309,794    1,545,076    1,559,122    1,584,047    1,597,682   
57         LUANNAN COUNTY DISTRIBUTION   US$       152,938      180,031      212,370      214,301      217,727      219,601   
<PAGE>
1  EXHIBIT 12-5 (Continued)
2  JV4 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                        19           20           21
4                                       % OF          2017         2018         2019           Total
5                                       TOTAL                              (7 months)
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0                0
8   Steam Revenue                        50%     1,928,997    1,967,577    1,147,753       32,450,318
9   Hot Water Revenue                    50%       671,070      684,492      399,287       11,288,996
10  T-Line Interest Payments            100%             0            0            0        9,383,509
11  Interest Income on On-Shore Reserves 25%       457,050      462,444      273,115        5,212,925
12            TOTAL OPERATING REVENUES           3,057,118    3,114,513    1,820,155       58,335,748
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0                0
16  Water Usage                           0%             0            0            0                0
17  Supplies, Spare Parts, Consumable     0%             0            0            0                0
18  Utilities                             0%             0            0            0                0
19  Project Management Fees              10%       143,708      148,019       88,935        2,307,907
20  Other Labor & Management             10%       235,832      242,907      141,696        3,783,146
21  Administrative Costs                 10%       498,551      515,890      306,717        7,635,258
22  Real Estate and Stamp Taxes          10%        15,846       15,904        9,277          306,948
23            TOTAL OPERATING EXPENSES             893,937      922,719      546,625       14,033,259
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue                               0            0            0                0
27  Water Usage Revenue                                  0            0            0                0
28  Site Lease Payment (from JV 1, 2, & 3)         800,000      800,000      466,667       16,000,000
29                               TOTAL             800,000      800,000      466,667       16,000,000
30 
31 INCOME STATEMENT
32  EBITDA                                       2,963,181    2,991,794    1,740,197       60,302,489
33  - Depreciation                        9%       170,025      177,366      103,464       10,020,614
34  - Interest on S/H Loan                               0            0            0       15,551,182
35  EBT (Pre-tax Income)                         2,793,156    2,814,427    1,636,734       34,730,693
36  - Local Income Taxes (Luannan)                  83,795       84,433       49,102        1,000,042
37  - Federal Income Taxes (China)                 837,947      844,328      245,510       10,173,698
38  Net Income                                   1,871,415    1,885,666    1,342,121       23,556,953
39  - Employee Welfare Res. (on-shore)   10%        39,726       41,315       25,064          576,851
40  - General Reserve (on-shore)         10%           588          588          343           11,765
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          343           11,765
42          NET DISTRIBUTABLE EARNINGS           1,830,513    1,843,175    1,316,371       22,956,573
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,830,513    1,843,175    1,316,371       22,956,573
46  + Depreciation                        9%       170,025      177,366      103,464       10,020,614
47  + Interest on S/H Loan                               0            0            0       15,551,182
48  + T-Line Principal Payments         100%             0            0            0       12,188,882
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          2,000,538    2,020,541    1,419,834       60,717,251
50  - Interest on S/H Loan                              (0)          (0)          (0)     (15,551,182)
51  - Principal of S/H Loan                              0            0            0      (17,829,000)
52  ADJUSTMENTS                                                                                     0
53  +/- Overhaul Reserve (on-shore)       0%             0            0            0                0
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0        1,000,000
55  +/- Undistributable Cash Flow                 (170,025)    (177,366)    (103,464)      (5,380,496)
56            PAN-WESTERN DISTRIBUTION   US$     1,609,313    1,620,445    1,157,300   $   20,182,491
57         LUANNAN COUNTY DISTRIBUTION   US$       221,200      222,730      159,071   $    2,774,081
</TABLE>





       [PARSONS BRINCKERHOFF ENERGY SERVICES, INC. LETTERHEAD]
                                
                                
                                
                                
                                
           PARSONS BRINCKERHOFF ENERGY SERVICES, INC.
                                
                      Officer's Certificate
                                
                                
      I, R. J. Bednarz, of Parsons Brinckerhoff Energy Services, Inc.
DO HEREBY CERTIFY that:

     Since April 11, 1997, no event affecting our report entitled
"2x50  MW  Coal-Fired Power Plant at Luannan, China" dated  April
11,  1997  (the "Engineer's Report") or the matters  referred  to
therein has occurred (i) which makes untrue or incorrect  in  any
material  respect,  as  the  date  hereof,  any  information   or
statement contained in the Engineer's Report or in the Prospectus
relating to  the  offering of 12-1/2% Registered  Senior  Secured
Notes  due 2004 by Panda Global Energy Company (the "Prospectus")
under   the  captions  "Summary  -  Independent  Engineers'   and
Consultants'  Reports  -  Consolidating Financial  Analyst's  Pro
Forma  Report," Summary - Independent Engineers' and Consultants'
Reports  - Luannan Engineering Report," and Independent Engineers
and  Consultants  - Luannan Facility" in the Prospectus  or  (ii)
which  is not reflected in the Prospectus but should be reflected
therein in order to make the statements and information contained
in  the Engineer's Report or in the Prospectus under the captions
set  forth  above, in the light of the circumstances under  which
they were made, not misleading.

              WITNESS  my hand this 6th day  of June 1997.



                              By:     /s/
                              Name:
                              Title:


                                




                           APPENDIX E





                          REVIEW OF THE
                    COAL SUPPLY ARRANGEMENTS
                               FOR
                    THE LUANNAN POWER PROJECT
                               OF
                PANDA ENERGY INTERNATIONAL, INC.
                                
                                
                                
                                
                                
                         April 11, 1997
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
This  copy  of  our  report was prepared  for  inclusion  in  the
Offering Circular relating to the offering by Panda Global Energy
Company of its Senior Secured Notes due 2004 and does not include
the listed appendices.  (See Table of Contents).




REVIEW OF THE COAL SUPPLY ARRANGEMENTS FOR
THE LUANNAN POWER PROJECT OF PANDA ENERGY INTERNATIONAL, INC.



PREFACE

The  data  contained in this report is based primarily on  verbal
communication  which was translated from Chinese to  English  and
vice  versa.  The only hard data Marston saw was in the  form  of
Preliminary  Feasibility Studies for the two new shaft  and  mine
areas  to  be  constructed and one mine plan showing the  initial
development work and drill hole locations.  Other data  given  to
Marston  regarding  coal  quality is contained  in  the  attached
appendices.

The  Observations  and  Conclusions given  here  are  drawn  from
discussions with people in responsible positions, as set  out  in
the following list.

1.Luannan County Government Vice Magistrate  Li He
2.Tangshan Municipal Coal Mine Industry Bureau, Manager Han Wen Xu
3.Kailuan Coal Mine Administration, Deputy Director Yang Zhong
4.Qianjiaying Coal Mine, Chief Engineer  Zhang Pu Tian
5.Linguantun Coal Mine, Chief Engineer  Yao Yaoguang
6.LeTing Coal Mine, Vice Manager  Xu Zi Li Engineer Tao Zhi Hong
7.Chang Li Coal Mine, Manager  Zhang Zuo Xiang
8.Luannan Coal Mine, Manager  Du Yang Fang Engineer  Gao Guo Bao
9.Zunhua Coal Mine, Vice Manager  Liu Qing Hua
  
We  were  accompanied by Mr. Xue Shu Xing and Mr. Zhao  (former
Luannan  Mine  Manager)  who provided general  information  and
comments on operations in the Tangshan area.
                                
                                
                                
                        TABLE OF CONTENTS


                                                 PAGE
1.0  SUMMARY AND CONCLUSIONS                       1-1

2.0  BACKGROUND                                    2-1

3.0  BASIC DATA PROVIDED BY PANDA                  3-1

4.0  COAL PRODUCTION AND RESERVES                  4-1

5.0  COAL QUALITY                                  5-1

6.0  COAL TRANSPORT                                6-1

7.0  PANDA FUEL SUPPLY STRATEGY                    7-1

This  copy  of  the  report does not incorporate  the  appendices
listed below which include the Field Notes taken by Larry Pituley
during  his  China  Site Visit (Appendix 1) and  copies  of  Data
provided  by Panda Energy International, Inc. which is listed  in
Section 3.0 of this report (Appendix 2).

APPENDICES
APPENDIX 1 - Field Notes
APPENDIX 2 - Data Provided by Panda Energy International, Inc.



                  1.0  SUMMARY AND CONCLUSIONS

Following are Marston's observations and conclusions with  regard
to coal reserves, coal quality and reliability of coal supply and
coal transportation in the Tangshan Region of Hebei Province, The
Peoples  Republic  of China, as a fuel supply  for  the  proposed
Luannan  power plant.  This report has been prepared for  use  in
the  Offering  Circular relating to the offering by Panda  Global
Energy  Company  of  its Senior Secured Notes  due  2004.   These
conclusions are subject to the limitations and constraints  under
which  this  review was conducted and should be judged  and  used
accordingly:

Overall Conclusion

Although  this  project can not be assessed by the usual  Western
standards  because  the  data to do such  an  assessment  is  not
readily  available,  it  is reasonable to  believe  that  a  coal
resource  of the appropriate quality is available, at  a  locally
competitive  price  in  sufficient quantity  to  operate  Panda's
proposed   Luannan   Power   plant  successfully,   taking   into
consideration  the local environment.  The fuel supply  strategy,
coal supply agreements and the coal transportation agreement  are
appropriate  for  the conditions and situation as  it  exists  in
China.   Given  that  cost of the fuel supply is  a  pass-through
arrangement  in the Power Purchase Agreement, the  risk  exposure
for  the  project will be minimal in terms of the delivered  fuel
price.

Reserves

Marston believes that the remaining coal reserves in the Tangshan
coal field are adequate to provide a long-term supply even though
the area has been mined for more than 100 years. The reserves may
be  overstated but at 7.6 billion tonnes even a 50%  error  would
still  leave ample reserves for the  20 year time frame Panda  is
concerned  about.  The  expectation with reserves,  in  Marstons'
opinion,  is  that  in 20 years the remaining  reserves  will  be
deeper  and  more  expensive to mine, rather  than  be  in  short
supply.

The  Chinese  government does not permit the  disclosure  of  the
methods  for  calculating coal reserves. Even if the methods  and
standards  were made known, the provinces and local coal  regions
do  not necessarily conform to the central government's standards
and  regulations.  Disclosure that the local agencies have  their
own  standards  would  not be politically  astute.  The  Cultural
Revolution (1966 to 1976) destroyed a lot of the old records  and
discouraged constructive work.  Records kept during the  Cultural
Revolution were poor to non-existent.

By  Western  standards, Chinese mine operators do  not  have  the
funds  to do extensive drilling and geologic assessment  in  most
cases.   The local attitude is that the coal seams in the  region
are  fairly consistent and the general geologic structure, though
complex, is well known and understood.

The  two  mines  sinking new shafts have had feasibility  studies
done  by  the  Provincial Capital Coal Mine  Institute.  The  two
studies  had  different formats but they appeared  to  be  fairly
detailed.

The  large  tonnage  Kailuan  mines are  mining  in  deeper  coal
reserves. They are generally  600-meters or greater in depth.  At
those  depths,  only  limited drilling is  done  to  confirm  the
presence  of coal seams.  This is evidenced by the plans observed
for  the  development of one of the smaller  mines.  The  smaller
mines  are  working shallower structures or have re-entered  old,
large-scale mines to clean up the leavings.  Some of the  smaller
mines  are now going after some coal which is in excess  of   600
meters in depth.

Quality

Marston believes Panda has a good understanding of what the  coal
quality  range  is  going to be for the coals  delivered  to  the
Luannan power plant from the mines in the Tangshan Region.  It is
important to design the power plant stockpile and feed system  to
cope  with  the  quality variability and to  establish  operating
procedures for managing the expected variability. Panda is  aware
of these needs and has initiated control systems to handle it. It
is  not  realistic  to expect the system in the Tangshan  Region,
which is producing 21 million tonnes per year,  to change because
of a single customer  using 450,000 tonnes per year.

Coal  product quality will vary. One hundred and seventeen  years
of mining coal in this area has taught the operators that a given
coal seam within a geologic structure is usually very consistent.
However,   the  amount  of  out  of  seam  dilution   will   vary
significantly. In recent times, China has had a shortage of  coal
for  domestic  consumption  and as a result,  the  political  and
economic system has dictated that "if it's black, bring it to the
surface  and use it". Therefore, the material coming out  of  the
mines typically is high in ash and is used in its raw state.

The mine managers quite openly admit that they mix bone coal with
higher  grade coal (>5000 kcal/kg) since this product  will  sell
and is acceptable in the marketplace.  From what Marston observed
of  coal  loaded in trucks, it is quite soft, friable  and  fine-
grained.  This type of coal would be difficult to upgrade without
a  wash plant.  There has been no financial incentive to the mine
operators  to separate the higher grade (lower ash)  seams  since
the  state  doesn't pay any premium for better quality,  and  the
newly  instituted  free  market has not matured  enough  for  the
consumers  to pay a premium for better quality.  As  the  Chinese
get  more international exposure, and experience revenue benefits
from quality control, there will be changes, but over a period of
time.

In  summary,  it is reasonable to expect that a coal supply  with
4,600 to 4,700 kilocalories per kilogram and 33-34% ash, will  be
available  from  the  Tangshan coal field for  the  life  of  the
facility.

Reliability Of Supply

The  whole  Luannan/Tangshan district needs power to satisfy  its
industrial  ambitions.   The Luannan County  government,  who  is
Panda's partner in the venture, is development oriented and  will
make sure that the plant has the required coal supply even if  it
has to come from mines other than the contracted ones.  This,  in
Marston's  opinion gives more comfort to the reliability  of  the
supply  issue than long-term western style contracts,  which  are
new to the Chinese coal industry.

Indications  are that free market prices are increasing  as  more
and  more  free-market  coal  is being  sold.   Since  the  Power
Purchase  Agreement  for  electricity sales  has  a  pass-through
arrangement  on  the  fuel supply cost and the  local  political-
management system will help control fuel-supply costs,  then  the
risk to the power plant investors should be minimal.

Transportation

Panda  has  executed a Coal Transportation agreement  at  locally
competitive  rates.  There appears to be a reasonable  amount  of
competition  in  the  trucking  business  and  plenty  of   local
entrepreneurs  willing  to  bid on this  type  of  business.  The
condition  of  the roads could be an issue as far  as  rates  are
concerned, but they are not severe enough to present  a  risk  to
the deliverability of the coal.  Parts of the road system do need
repair  work, and with more heavy traffic this situation will  be
aggravated.

On Site Management

Another plus is Panda's on site manager, Mr. John Zamlen, who has
operated coal fired power plants for five years.  He has  a  good
understanding  of local conditions and is rapidly establishing  a
good  relationship  with the Chinese people involved.   In  China
this is very important.

                         2.0  BACKGROUND

In  late 1994, Panda Energy International, Inc. ("Panda")  formed
joint  ventures  in  China  and entered  into  a  Power  Purchase
Agreement with the North China Power Grid to supply 100 megawatts
of  power to be generated by a new 100 MW power plant (2 X 50  MW
units) to be built in Luannan County, Hebei Province.

Panda  has  the  Luannan County Government as a partner  in  it's
joint  venture companies, Tangshan Panda Heat and Power  Company,
Ltd. and Pan-Western Heat and Power Company Ltd.  The North China
Power  Group Co. is the electricity transmission agency  for  the
northern part of China.

Hebei province is the province which surrounds the municipalities
of  Beijing and Tianjin.  It reaches to the east coast  of  China
and  is the center of a growing industrial region.  Tangshan City
is  located about 180 kilometers by road to the east of  Beijing.
The  town of Luannan, which is the seat of Luannan County and the
site of the proposed power plant is about 40 kilometers southeast
of  Tangshan City.  The Tangshan City location has access to port
cities in the area.  See Figure 1.

Tangshan  City is in the center of the Tangshan coal basin  which
has  been  the  source  of  energy  and  raw  materials  for  its
industrial  base.   The predecessor of the  Kailuan  Coal  Mining
Administration  was  established in 1878 and  currently  produces
about  18  million  tonnes  of coal per  year.   The  region  was
occupied  by the Japanese during World War II, during which  time
the  Japanese expanded the coal mining operations and shipped the
coal to Japan.

Given  the  proximity  of these coal fields to  Panda's  proposed
power plant at Luannan, coal produced in the Tangshan region  was
selected by Panda to be the most advantageous source of fuel  for
the power plant.

 	 		       [FIGURE 1
			PROJECT LOCATION MAP]


In  January  of  1997  Panda  engaged  Marston  &  Marston,  Inc.
("Marston")  to  provide  such consulting  services,  as  may  be
requested  by  Panda,  for Panda's proposed  power  plant  to  be
constructed in Luannan County and other power projects using coal
as  a  fuel.  The initial assignment was to visit the coal  mines
contracted  to supply the proposed power plant and to assess  the
local  conditions pertaining to transporting the coal  by  trucks
from the mines to the power plant.   These contracts were entered
into  by Panda as the result of a study done in the December 1995
-  January  1996  time  frame  by Anderson  &  Schwab,  Inc.  and
specifically  Robert E. Golkosky (now with Marston).   This  most
recent site visit by L.J. Pituley of Marston & Marston, Inc. took
place from January 22, through January 29, 1997.

Marston  was  also  requested to prepare this summary  report  as
outlined  in  Panda's  memo of January  21,  1997  to  Robert  E.
Golkosky of Marston.
                                
                3.0  BASIC DATA PROVIDED BY PANDA
                                
In  preparing  this  report, Marston  relied,  in  part,  on  the
following data and material provided by Panda:

-  A  report prepared by Robert E. Golkosky of Anderson & Schwab,
   Inc.  (now with Marston) dated March 29, 1996 including copies
   of Coal Supply Agreements with 6 mines.

-  A  memo  titled  "Clarification from Tangshan  Municipal  Coal
   Industry  Bureau",  signed by Han Wan-xu,  Tangshan  Municipal
   Coal  Industry  Bureau  and dated February  10,  1996.   Under
   official seal.

-  A  memo  from  the  Kailuan Coal Mining Administration  titled
   "Clarification  of  Coal Reserves and  Production  of  Kailuan
   Coal  Mining  Administration"  dated  March  7,  1996.   Under
   official seal.

-  A   certified  translation  of  a  signed  copy  of  the  Coal
   Transportation  Agreement between Luannan  County  State-Owned
   Transportation  Company owned and operated by  Luannan  County
   and  Tangshan Panda Heat and Power Co. Ltd. And Tangshan  Pan-
   Western Heat and Power Co. Ltd.

-  A  letter  from John R. Zamlen General Manager of  Pan-Western
   Energy  Corp.  on  Tangshan Panda  Heat  and  Power  Co.  Ltd.
   Letterhead  to  Mr.  Zhao Xiucheng, General  Manager,  Luannan
   County Heat and Power Plant.

-  Analytical results and discussion of the above mentioned  spot
   sample  by  the Harbin Power System Engineering  and  Research
   Institute  dated  December 9, 1996 and an English  translation
   dated January 16, 1997.

-  Daily  Qianjiaying Mine heating values of coal produced during
   the months of October and November 1995.

-  Luannan  Thermal  Power Plant, a General  Discussion  on  Coal
   Supply,  Quality  Control  and  Management  prepared  by  J.R.
   Zamlen dated October 9, 1996.

An information packet on the Kailuan mining area produced by  the
Kailuan Coal Mining Administration.

                4.0  COAL PRODUCTION AND RESERVES

General

China as a country reportedly produces in the order of 1.2 to 1.3
billion tonnes of raw coal per year.  Only a small percentage  of
the  total is upgraded by washing or by coal processing  for  the
internal  coking  operations and for export.   Thermal  coal  for
domestic  consumption is not upgraded beyond screening  and  hand
picking of waste rock off the product conveyor belts.

Coal  transportation  in  China is mainly  by  railroad  and  the
railroad  system is inadequate to deliver coal from the producing
regions  to  the  consuming industrial areas  in  the  quantities
required.   While China exports a small amount of coal  from  the
northern  producing areas it also imports coal  to  the  southern
industrial areas.  Locally, truck transportation is used.

The  Tangshan  coal  field  covers an area  of  some  670  square
kilometers  and  contains some 7.6 billion tonnes  of  geological
reserves down to a depth of 1000 meters (3281 feet).  See  Figure
2.   The field consists of three basins, two of which Kaiping and
Chi  Zhoushan  are  being commercially exploited  and  the  third
smaller  block  Jiyu  is  not  yet developed.   It  lies  to  the
southeast of the two larger structures.

The  coal  field  is  all  of the same geological  formation  but
erosion  has  removed  some  of the  anticlinal  structures  thus
creating  the separate basins.  Within the basins the  structures
range  from gently dipping monoclines to steeply dipping  (nearly
vertical) and faulted complex structures.  The general strike  of
the anticlines and synclines is NE - SW.

While  the  seams lens out in places and thicken in other  places
there  are consistently six mineable seams over a large  part  of
the  area.   A  coal  seam that is 0.7 meters thick  or  more  is
considered to be mineable.

Differing  underground mining methods are used to cope  with  the
geologic  structures  present in the  area,  however  an  overall
mining coal recovery at 50% of the geologic reserve is based on a
long  history of mining in the area.  Longwall mining  operations
report 80 to 90% coal recovery from panels.

By  token  of the same long history, the Chinese have found  that
the  coal  quality,  when  all  seams  are  blended  together  is
relatively consistent.  In the mining process not all  seams  are
always  mined  in  the same proportion and  this  leads  to  some
substantial swings in the ash content of the coal on a day to day
basis.

Projections  for  future  coal quality  based  on  limited  drill
results  and  on the historic quality of the coal that  has  been
produced.  Some blending takes place to eliminate very  low  heat
content coal by blending it with the higher heat content coal.

Annual  production  from the Tangshan coal field  is  21  million
tonnes.   Six  million tonnes is clean coal and is  utilized  for
coking, gas production and export.  Note that the main rail  line
from  Datong,  and  Beijing  to  the  coal  port  of  Qinhuangdao
straddles the Tangshan coal field.  Wash plant reject and the raw
coal  is  used  for thermal power generation in  North  and  East
China.

Locally coal is distributed by truck and trailer units of varying
sizes up to about 15 tonnes in combined capacity.

           				[FIGURE 2
			MAP OF TANGSHAN BASIN COAL MINE LOCATIONS]


Kailuan Coal Mining Administration

This  Administration,  owned by the Central Government,  operates
ten  major mines in the Tangshan coal field and produces some  18
million  tonnes  of  coal  per year.   The  Kailuan  Coal  Mining
Administration  has under its control approximately  72%  of  the
total  7.6  billion  tonnes of geological  coal  reserve  in  the
Tangshan  coal  fields, or 5.0 billion tonnes.  See  Appendix  2.
Reserves are re-estimated on an annual basis.

The Qianjiaying Coal Mine is one of the larger Kailuan mines with
1995  production  of 3.34 million tonnes and 1996  production  of
3.67  million tonnes of 4700 kilo calories/kilogram, heat content
and  34 to 35% ash coal.  This mine has six longwall faces.  Five
of  these faces are equipped with mechanical shearers and one  is
semi-mechanical.   The mine has available to it  nine  mechanical
shearers and one more is on order.  The mining operation  is  600
meters  below  sea  level and does not have  any  serious  water,
temperature   or   roof  control  problems  according   to   mine
management.   The  mine operates seven days  per  week  with  two
production shifts and one maintenance shift.  The mine only shuts
down  for 3 days every December for equipment checking and  major
maintenance.

All  the  coal produced at the Qianjiaying mine goes for  thermal
power  generation  with as much as one third  of  the  production
being  sold on the free market.  Up to 300,000 tonnes  per  year,
some 70% of the total annual requirement for the proposed Luannan
power plant is contracted to be supplied by this mine.

Tangshan Municipal Coal Industry Bureau

The  Tangshan  Municipal Coal Industry Bureau controls  some  546
million tonnes of mineable coal reserves.  See Appendix 2.   This
organization  consists of more than 180 individual mines  ranging
in  annual  individual production up to 80,000 tonnes  per  year.
These  mines  are  locally owned and not  owned  by  the  Central
Government.  One new mine under development will have  production
capability of up to 300,000 tonnes per year while another mine is
to  sink  a  second  shaft  which will  increase  its  production
capability  to 210,000 tonnes per year.  These mines  operate  in
the  shallower  leavings  of former larger  scale  mines  and  in
structurally complex areas.  These mines generally operate in the
50  to  300  meter  depth range but the larger proposed  mine  is
planning  to mine coal down to 660 meters.  The current  combined
annual  production  of these mines is some 4 million  tonnes  per
year of a variable coal quality product.

These smaller mines utilize a variety of mining methods but  most
are labor intensive.  Some of these mines can increase production
fairly  quickly  but  others can not as  they  are  producing  at
capacity.   Of the five mines that have contracts with Panda  two
are  expanding their capacity, two can increase their  production
and one is at its production limit.  All these mines say that the
Panda  power  plant  will  have first  priority  for  their  coal
production.

The  five  mines  visited by Marston in this jurisdiction  stated
that they do not have any water, methane or roof control problems
nor geological structural problems.

The  present  combined production capacity of the five  mines  is
400,000  tonnes annually.  When the two new shafts are  completed
by  late 1998 or early 1999 the combined production capacity will
be  750,000  tonnes per year.  A number of these operations  have
other  producing  mines of similar coal quality that  they  could
call on in case of unforseen problems at the contracted mines.

These mines jointly will be able to provide the 150,000 tonnes or
more  if required annually, for the Panda power plant in addition
to  the  300,000 tonnes contracted for from Kailuan's Qianjiaying
Mine.

                        5.0  COAL QUALITY

As  indicated earlier in the report mine forecasts of future coal
quality  are  based  on  limited drill hole  information  and  on
historic records of coal quality.  The Qianjiaying mine is mining
the  continuation of known seams and carries a small risk of  any
radical  quality  change.  Moreover, the five smaller  mines  are
mining  the  edges  of  seams  that have  been  mined  before  or
structurally difficult areas in the proximity of previously mined
areas  and  should  not  encounter any great  quality  surprises.
There  will  be  day to day variations because of  variations  in
seams  being  mined but the long term average  (month  to  month)
should not change more than 5% up or down from the committed heat
content of the As Received coal supply.

On a mine by mine basis the situation is as follows:

Qianjiaying Mine:  The 1995 heat content was 4,500 kiloCal/kg and
the  1996 heat content was 4,700 kiloCal/kg at a 34% to  35%  ash
level.   Mine  management expressed the opinion that to  increase
the  heat  content  to  4,750 kiloCal/kg  in  1997  is  not  very
realistic.   It is most probable that the mine will  be  able  to
meet its long term commitment to Panda to supply 4,600 kiloCal/kg
coal at a 35% to 36% ash level on an As Received basis.

Tangshan Liu Guantun Mine:  From the analysis given for each seam
in  the  new  mine feasibility study the seam ash content  varies
from  18%  to  23.7% on an As Received basis.  If  one  takes  an
average  ash  level of 22% and 7% total moisture  then  the  heat
content  of 5,595 kiloCal/kg is possible on an all seams  blended
basis.   How  much dilution or in seam rock will be added  during
the  mining  process is unknown although the  mine  staff  insist
dilution  is  less  than 1%.  In summary it is  likely  that  the
contract  heat content of 4,900 kiloCal/kg and 30%  ash  will  be
achieved or even exceeded.

LeTing County Coal Mine:  The current mine production produces  a
heat  content of 4,600 kiloCal/kg and 38% ash however  coal  from
the  new  shaft area mine is expected to be some 5,400 kiloCal/kg
at  28.9% ash on an As Received basis.  This seems to be  a  high
ash  level for 7.59 meters of coal with an ash level of  17%  and
1.6  meters  of  31% ash, as stated in a preliminary  feasibility
study.   One  can only assume that in-seam partings and  dilution
make  up  the extra ash content in the proposed product  quality.
In any event the contract heat content of 4,900 kiloCal/kg should
be readily achievable.

Chang  Li  County  Coal Mine:  The heat content  of  the  current
production  was  given  as  ranging  between  4,000   and   4,500
kiloCal/kg and 34 to 40% ash on an As Received basis.  The owners
have  two  other  mines  one of which  produces  4,500  to  4,700
kiloCal/kg  coal and the third mine has the same coal quality  as
the first mine.

This  mine may not be able to meet the average quality  of  4,900
kiloCal/kg  and  will have some difficulty in staying  above  the
minimum  4,400  kiloCal/kg.   It  is  likely  to  be  the   least
consistent coal supplier.

Luannan  County Coal Mine:  The quality of the coal  produced  in
the last two years has an ash content variation of 26% to 36% and
averages  on a partially air dried basis about 31% ash and  5,000
kiloCal/kg  heat  content.  This mine, with  careful  management,
should be a good coal supplier for the power plant as it can meet
the contract specification.

Zunhau  Coal Mine:  The coal quality was stated as being  25%  to
26%  ash  and  4,500  to 5,000 kiloCal/kg.  This  appears  to  be
inconsistent with the reported quality of all the other mines  in
the area.  With a 25% to 26% ash level the heat content should be
over  5,000.   The  mine should fall into the heat  content  zone
between 4,400 and 4,900 kiloCal/kg as specified in the contract.

In  summary,  it is reasonable to expect that a coal supply  with
4,600 to 4,700 kiloCal/kg and 33% to 34% ash, for the power plant
will  be  available from the Tangshan coal field for the life  of
the facility.

Other Coal Analyses

Moisture:  The total moisture ranges between 6% and 10% depending
on  precipitation  and  length of time  in  the  stockpile.   The
inherent moisture varies from 0.6% to more than 2% but on average
for freshly mined coal is less than 1.0%.

Sulphur:   As  a generalization the thinner seams  (less  than  1
meter)  have a higher sulfur content consequently the  impact  on
the  blended  coal  is  minimized.  The  sulphur  values  in  the
analysis  we  have  had access to range from  0.3%  to  4.53%  in
individual  seams.   An average sulphur content  of  1.25%  is  a
reasonable  number for a long term coal supply.  Mines  producing
from a number of thin coal seams should be monitored very closely
to make sure they do not exceed the sulphur specification.

Volatiles:   The volatile content on a dry ash free basis  is  in
excess  of 30%.  On an air dried basis the volatiles vary from  a
low  of  20%  to values in the 38% range.  It is not possible  to
establish a volatile value for 33% to 35% ash coal from the  data
we have available to us.

Sodium Oxide:  As a percentage of the ash the value is less  than
one  percent  and  quite frequently less than  one  half  of  one
percent.

Chlorine:   From the limited information available  the  chlorine
content is low with a range of 0.035% to 0.10%.  This is based on
one set of average analyses for a mine with 7 seams.

                       6.0  COAL TRANSPORT

Since the power plant is located near the Tangshan coal field  it
is  reasonable to haul the coal from the mines to the plant  with
trucks.

There  appears to be a good supply of coal hauling trucks in  the
area  with  ownership ranging from individuals to small companies
and the local County government.

The shortest coal haul from the Qianjiaying mine is approximately
28 kilometers, which is also the largest tonnage, and the longest
haul  distance,  approximately 48 kilometers is from  the  LeTing
mine.

The  road system in the area is reasonable and most of the  roads
are paved.

A  coal  trucking contract has been negotiated and executed  with
Luannan  County State - owned Transportation Company.   A  normal
cost  of trucking in the area as of January 1997 is 0.3 RMB  Yuan
(approximately  $0.036  US)  per tonne  kilometer  but  bad  road
conditions in some areas have pushed the price up to 0.35 to  0.4
RMB   Yuan   per  tonne  kilometer.   The  trucking  company   is
responsible for any coal loss.  The time of Marston's  visit  was
also the high demand season for coal in this area.

                 7.0  PANDA FUEL SUPPLY STRATEGY

Panda  developed a fuel supply strategy that focuses on providing
a  stable,  long-term  coal supply consisting  of  the  following
elements.

Utilize  coal  from  the Tangshan coal field  which  has  a  long
history of producing good quality coal and has coal reserves that
will continue to be exploited for many years into the future.  In
other words a stable long-term coal supply.

The close proximity of the coal field to the proposed power plant
site  allows  Panda  to  take advantage  of  the  local  trucking
opportunity and eliminates the risk of transporting by  railroad,
a system that is overloaded and not dependable.

An  assessment was made of the mines in the area and the decision
was  made to negotiate a long-term supply contract with  a  major
State  owned  and  operated mine (1996  production  3.67  million
tonnes) for up to 70% of the power plants fuel requirement.   For
the  other 30% of the fuel requirement Panda negotiated contracts
with five independent mines, some of which operate more than  one
mine.  Panda has built into the contracts the opportunity to pick
and  choose  the  better  quality coal being  produced  from  the
individual mines at any given time.

The  price  of  the  coal is to be determined  annually  for  the
Kailuan  contract  and  monthly for the  Tangshan  Coal  Industry
Bureau  Mines, based on the prevailing market price, for a  given
quality of coal, in the Tangshan area.

Specific conditions of the coal supply contracts are as follows:

A.   Kailuan Coal Administration Mine Contract

The  Buyer has the right to determine the tonnage to be purchased
up  to  300,000 annual tonnes.  Buyer and Seller agree  that  the
primary  mine  to supply coal for Panda is the Qianjiaying  Mine.
The   Seller   also  represents  that  sufficient  reserves   and
production  capability  exist  within  the  Kailuan  Coal  Mining
Administration.

      The  Buyer  is to provide to the Seller annual and  monthly
tonnage requirements in approximately equal monthly amounts.

      Buyer  and  Seller  will meet every  November  to  mutually
determine   the  market  price,  shipping  schedule   and   other
conditions  for  a coal supply contract for the  following  year.
Effective  with  the first purchase of coal, the Agreement  shall
continue for a term of ten years.

       Coal  quality  specifications  with  Average  Quality  and
Acceptable  Limits  are  spelled out  for  Total  Moisture,  Ash,
Sulphur,  Heat  Value Top Size and Fines for  acceptance  by  the
buyer.   The  Seller  will  sample the  coal  and  have  analysis
performed and the Buyer can dispute the analysis if a significant
difference exists.  A third party independent analysis  shall  be
binding.   Buyer  has  the  right  to  reject  and  suspend  coal
deliveries  that  do not meet specifications.  Weight  is  to  be
determined  by Sellers certified scales.  Market price  shall  be
the  average annual price in RMB Yuan per Kilo calorie  for  coal
sold by the Seller for the following year under similar terms and
conditions.

      Payments  by the Buyer are to be made within 5 to  15  days
after  the end of each month.  The agreement is governed  by  the
laws  of  the  Peoples  Republic  of  China.   Either  party  can
terminate  the  agreement if the other party materially  breaches
the contract and does not cure the breach within 60 days.  Lender
Approval,  Peoples  Republic  of  China  National  Energy  Policy
changes  and  certain  Force  Majuere clauses  for  circumstances
beyond the reasonable control of either party are included.

B.   Tangshan Coal Industry Bureau Mine Contracts

      Buyer  has the right to buy up to a set tonnage  from  each
mine  for  a  period of ten years at market prices.   Buyer  will
notify  Seller  prior  to the first day  of  each  month  of  the
requirements for the following month.

       Coal  Quality  Specifications  with  Average  Quality  and
Acceptable  Limits  are  spelled out  for  total  Moisture,  Ash,
Sulphur,  Heat Value, Coal Size and Fines for acceptance  by  the
Buyer.

      Buyer and Seller will analyze coal samples collected at the
Buyer's  facilities.   In case of dispute  an  independent  third
party  analysis will be binding.  Buyer can reject  coal  outside
the  Acceptable  Limits and the Supplier shall  replace  it  with
acceptable quality.  Weight of the coal sold and purchased  shall
be  determined by certified scales maintained by the  Seller.   A
dispute mechanism is in place.

      Market Price shall be the average monthly price in RMB Yuan
per  tonne  for  coal  sold by mines regulated  by  the  Tangshan
Municipal   Coal   Industry  Bureau  under  similar   terms   and
conditions.   The Market Price is based on heating value  and  if
the quality shipped varies significantly from the average Quality
specification the Buyer and Seller will discuss the  reasons  for
the variation.

      Payment  shall  be made by the Buyer including  adjustments
within  15  days  of each month end.  Buyer will  pay  an  annual
Reservation Fee of between 400,000 RMB Yuan and 560,000 RMB  Yuan
per  year which shall be applied against coal purchased over  the
Current  year.  The Buyer is not committed to any minimum monthly
take.

      The  Agreement  is  governed by the  laws  of  the  Peoples
Republic  of China.  Either party can terminate the agreement  if
the  other  party  breaches the contract and does  not  cure  the
breach within 60 days.  Buyer upon notice to Seller can terminate
the  agreement  due to non-approval by the Lenders.   Notices  or
other communications shall be in writing.

C.   Coal Transportation Agreement

      The  agreement  is  with  the  Luannan  County  State-Owned
Transportation  Company ("Carrier") owned  and  operated  by  the
Luannan  County is for 10 years from the date of the first  truck
deliveries for up to 500,000 tonnes per year.  Buyer will provide
monthly delivery schedules which can be adjusted weekly.  Failure
to  deliver  by  the Carrier allows the Buyer to  make  alternate
arrangements  and  incremental costs shall  be  to  the  Carriers
account.   The  Buyer is reimbursable by the Carrier  for  weight
differences  greater than four tenths of one percent between  the
Suppliers' and Buyers' scales.

      The  first year of coal deliveries shall be at 15 RMB  Yuan
per  tonne  and  the  price  will then  be  negotiated  annually.
Payments to Carrier shall be within 15 days after each month end.

       The  Carrier  represents  that  it  owns  and  operates  a
sufficient   number  of  trucks  to  supply  the   Buyer's   coal
requirements.  If necessary the Carrier will supplement its truck
fleet.  The Carrier is responsible for all licenses, permits  and
for meeting all government obligations.

     The Agreement is subject to the laws of the Peoples Republic
of China.  Either party may terminate the agreement under certain
conditions.  Subject to the Buyer obtaining its Lender's approval
the agreement can be canceled.  Notices are to be in writing.

The  fuel  supply strategy, coal supply agreements and  the  coal
transportation  agreement are appropriate for the conditions  and
situation  as it exists in China.  Given that cost  of  the  fuel
supply  is  a  pass-through arrangement  in  the  Power  Purchase
Agreement,  the risk exposure for the project will be minimal  in
terms of the delivered fuel price.

Future Central Government actions cannot be definitively forecast
but  current indications are that power supply development is  an
important factor in the country's development plan.





                 [Marston & Marston Letterhead]
                                
                                
                                
                                
                     MARSTON & MARSTON, INC.
                                
                      Officer's Certificate
                                
                                
      I, Richard Marston, of Marston & Marston, Inc., DO HEREBY
CERTIFY that:

     Since April 11, 1997, no event affecting our report entitled
"Review  of  the Coal Supply Arrangements for the  Luannan  Power
Project of Panda Energy International" dated April 11, 1997  (the
"Fuel  Consultant's Report") or the matters referred  to  therein
has  occurred (i) which makes untrue or incorrect in any material
respect,  as  the  date  hereof,  any  information  or  statement
contained  in the Fuel Consultant's Reports or in the  Prospectus
relating  to  the  offering of 12-1/2% Registered  Senior  Secured
Notes  due 2004 by Panda Global Energy Company (the "Prospectus")
under  the  captions  ""Summary  -  Independent  Engineer's   and
Consultant's Reports - Luannan Engineering Reports,"  "Summary  -
Independent  Engineers' and Consultants' Reports -  Luannan  Coal
Consultant's Report," and "Independent Engineers and  Consultants
-  Luannan  Facility"  or  (ii) which is  not  reflected  in  the
Prospectus but should be reflected therein in order to  make  the
statements  and  information contained in the  Fuel  Consultant's
Report  or in the Prospectus under the captions set forth  above,
in the light of the circumstances under which they were made, not
misleading.

           WITNESS  my hand this 6th day  of June 1997.



                              By:     /s/ Richard R. Marston
                              Name:   Richard R. Marston, P.E.
                              Title:  Vice President & General Counsel



                                                              APPENDIX G

                     OWNERSHIP STRUCTURE OF THE ISSUER, THE COMPANY,
                  PANDA INTERNATIONAL AND CERTAIN OF THEIR SUBSIDIARIES


                                         PANDA ENERGY
                                      INTERNATIONAL, INC.
                                     ("PANDA INTERNATIONAL")

                                   PANDA GLOBAL
           	        ____________  HOLDINGS, INC.    _______________
                    |  100%     (THE "COMPANY")              100% |
               Panda Energy                                 Panda Global
         			   Corporation					                             Energy Company
              	  (Texas)	                         			       (the "Issuer")
                 ("PEC")                               		        	|
              				  |						                                	      |
           Panda Interfunding					                            Pan-Sino
 		            Corporation			                        	    Energy Development
        		 	     ("PIC")                                    Company, LLC*
              				  |                       					            ("Pan-Sino")
         ___________|_____________  					                         |
         |  100%                 | 100%				                       |
 Panda Interholding        Panda Funding			               Pan-Western Energy
    Corporation             Corporation 	 		              Corporation LLC**
 ("Interholding")            ("PFC")                   				("Pan-Western")
		   |                      						|
     |_____________________________|____________________          |
     | 100%        | 100%       |  100%     | 100%     | 100%	   	|
  Panda-        PRC II        Panda       Panda    Brandywine		   |
 Rosemary    Corporation   Brandywine    Energy      Water			     |
Corporation   ("PRC II")  Corporation     Corp.     Company		    	|
("PR Corp.")  	    	        ("PBC")    (Delaware)                 |
     |	            |		         |		          |	                    |
_____|_____________|____   ____|____________|___                  |
Panda-Rosemary, L.P.***    Panda-Brandywine, L.P.                 |
   (the "Rosemary		          (the "Brandywine                     |	    
   Partnership")               Partnership")                      |
          |								                                               |
          |			                     _______________________________|____
 _________|____________					       |           |          |           |
 Panda-Rosemary Funding				 87.92% |    87.92% |   87.92% |    87.92% |
      Corporation								       Tangshan   Tangshan   Tangshan    Tangshan
("the "Rosemary Issuer")         Panda       Pan-      Cayman     Pan-Sino
                               (a "Joint  (a "Joint   (a "Joint  (a "Joint
                               Venture")  Venture")   Venture")   Venture")
                                   |           |           |          |
                            12.08% |    12.08% |    12.08% |   12.08% |
                                   |___________|___________|__________|        
                                               |           |
                                         Luannan County Partners
                                         (the "County Partners")

        *     The  remaining 4.5% equity interest in Pan-Sino  is
        owned  by  NDR.  This equity interest can increase  to  a
        maximum of 10%.
        **    The remaining 1% equity interest in Pan-Western  is
        owned by Chinamac.
        ***   NNW,  Inc. holds a cash flow participation  in  the
        distributions  from the Rosemary Partnership  (which  the
        Issuer  believes is 0.433% and would increase  to  1.732%
        after   2008  based  on  projected  distributions).   See
        "Description  of the Projects-The Rosemary  Facility-Cash
        Flow  Participation"  and  "Legal  Proceedings-NNW,  Inc.
        Proceeding."
        


                                                              
No  dealer, salesman or other person has                      
been    authorized    to    give     any                      
information    or    to     make     any                $155,200,000
representations  not contained  in  this                      
Prospectus,  and,  if  given  or   made,                      
such   information  or   representations                 [ L O G O ]
must  not be relied upon as having  been                      
authorized   by  the  Company   or   the                      
Issuer.   This  does not  constitute  an                      
offer  to sell, or a solicitation of  an              OFFER TO EXCHANGE
offer  to  buy,  the securities  offered                      
hereby  in  any jurisdiction  where,  or  12-1/2% Registered Senior Secured 
to  any  person to whom, it is  unlawful              Notes due 2004
to  make  such  offer  or  solicitation.   which have been registered under the
The  delivery of this Prospectus at  any               Securities Act
time  and  any sale made hereunder  does         for any and all outstanding
not    imply    that   the   information  12-1/2% Senior Secured Notes due 2004
contained  herein is correct as  of  any                     of
time subsequent to the date hereof.              PANDA GLOBAL ENERGY COMPANY
                                           Fully and Unconditionally Guaranteed
Enforcement of Civil Liabilities    i            By PANDA GLOBAL HOLDINGS, INC.
Defined Terms                       i                         
Available Information               i                         
Disclosure Regarding                                          
 Forward-Looking Statements         ii                   PROSPECTUS
Prospectus Summary                   1                        
Risk Factors                        21                        
Business of The Issuer, The Company,                          
 Panda International and Their                     The Exchange Agent is:
 Subsidiaries                       42              BANKERS TRUST COMPANY
Use of Proceeds                     45                        
Capitalization                      46             Facsimile Transmission:
Unaudited Pro Forma Consolidated                       (615) 835-3701
 Financial Data of the Company      47              Confirm by Telephone:
Selected Financial Data of the                         (615) 835-3572
  Issuer                            51                        
Selected Financial Data of the          By Overnight Courier or Certified Mail:
 Company                            52           BT Services Tennessee, Inc.
Management's Discussion  and                   Corporate Trust & Agency Group
 Analysis of Financial Condition                     Reorganization Unit
 and Results of Operations of the                  648 Grassmere Park Road
 Issuer                             53              Nashville, TN  37211
Management's Discussion and                                   
 Analysis of Financial Condition                      By Hand Delivery:
 and Results of Operations of the                   Bankers Trust Company
 Company                            53         Corporate Trust & Agency Group
The Exchange Offer                  58            Receipt & Delivery Window
Certain Tax Considerations of the             123 Washington Street, 1st Floor
 Exchange Offer                     66               New York, NY 10006
Description of the Projects         68                        
Foreign Exchange System in the PRC                        By Mail:
 and Exchange Rate                               BT Services Tennessee, Inc.
  Information                       91               Reorganization Unit
Description of Principal Documents                    P. O. Box 292737
 Relating to the Luannan Facility   93            Nashville, TN  37229-2737
Management                         107                        
Legal Proceedings                  109                        
Description of Other Indebtedness  112                        
Description of the Exchange                        _________________, 1997
 Notes, the Exchange Notes
 Guarantee, the Issuer Loan, the
 Shareholder Loans and the
 Collateral Documents              125 
Plan of Distribution               187
Experts                            188
Legal Matters                      189
Index to Financial Statements      F-1
Certain Defined Terms              A-1
The Electric Power Industry and
 Regulation in the PRC and the United
 States                            B-1
Consolidated Pro Forma Report      C-1
Luannan Engineering Report         D-1
Luannan Coal Consultant's Report   E-1
Ownership Structure of the Issuer,
 the Company,Panda International
 and Certain of Their Subsidiaries G-1

Until _________, 1997 (90 days after the
date  of  this Prospectus), all  dealers
effecting    transactions     in     the
securities  offered hereby,  whether  or
not      participating      in      this
distribution,   may   be   required   to
deliver   a  Prospectus.  This  delivery
requirement  is  in  addition   to   the
obligations  to  dealers  to  deliver  a
Prospectus  when acting as  underwriters
with    respect    to    their    unsold
allotments or subscriptions.

                  
                  

                  


                                   PART II
                                      
                   INFORMATION NOT REQUIRED IN PROSPECTUS
                                      
Item 13.  Other Expenses of Issuance and Distribution

    The  following  is a statement of estimated expenses to be  incurred  in
connection with the offering of the 12-1/2%  Registered Senior Secured Notes
due  2004 of Panda Global Energy Company  (the "Registrant") covered by this
Registration  Statement, all of which will be paid  by  the  Registrant  and
Panda Global Holdings, Inc. (a "Co-Registrant"):

Securities and Exchange Commission Registration Fee        $ 43,947
Accounting Fees and Expenses                                 30,000
Legal Fees and Expenses                                      60,000
Exchange Agent and Trustee Fees and Expenses                 15,000
Independent Engineers' Fees and Expenses                     25,000
Fuel Consultants' Fees and Expenses                          15,000
Miscellaneous                                                11,053
                                                           --------
   Total                                                   $200,000
                                                           ========

Item 14.  Indemnification of Directors and Officers.

      The Certificate of Incorporation of the Co-Registrant provides that to
the  fullest  extent  permitted by the Delaware General Corporation  Law,  a
director thereof shall not be liable to such corporation or its stockholders
for  monetary damages for breach of fiduciary duty as a director.   The  Co-
Registrant's  Bylaws  provide  for mandatory  indemnification  to  directors
(including independent directors) and officers of the corporation, except to
the  extent prohibited by law, if such person acted in good faith and  in  a
manner  such person reasonably believed to be in or not opposed to the  best
interest  of  the  corporation and, with respect to any criminal  action  or
proceeding,  had  no  reasonable cause to believe his  or  her  conduct  was
unlawful.  No person shall be indemnified in respect of any claim or  matter
as  to  which such person has been adjudged to be liable to the corporation,
unless otherwise adjudged by the court.

   The Articles of Association of the Registrant provide that the directors,
any  independent director, the officers and any trustee for the  time  being
acting  in  relation to any of the affairs of the company and  their  heirs,
executors, administrators and personal representatives respectively shall be
indemnified  out  of  the  assets of the Registrant  from  and  against  all
actions,  proceedings, costs, charges, losses, damages  and  expenses  which
they  or any of them shall or may incur or sustain by reason of any act done
or  omitted  in  or  about the execution of their duty in  their  respective
offices or trusts except such (if any) as they shall incur or sustain by  or
through  their  own  willful neglect or default  respectively  and  no  such
director,  independent director, officer or trustee shall be answerable  for
the  acts, receipts, neglects or defaults of any other director, officer  or
trustee or for joining in any receipt for the sake of conformity or for  the
solvency  or honesty of any banker or other persons with whom any monies  or
effects  belonging  to the Registrant may be lodged or  deposited  for  safe
custody  or for any insufficiency of any security upon which any  monies  of
the  Registrant may be invested or for any other loss or damage due  to  any
such cause as aforesaid or which may happen in or about the execution of his
office or trust unless the same shall happen through the willful neglect  or
default of such director, independent director, officer or trustee.

Item 15.  Recent Sales of Unregistered Securities

    Information regarding the securities sold by the Registrant and the  Co-
Registrant  during the last three years is set forth below.   None  of  such
securities have been registered under the Securities Act of 1933, as amended
(the "Securities Act").
Common Stock

   On March 10, 1997, the Registrant issued one (1) common share (U.S. $1.00
par value) to Mr. Anthony B. Travers, a Cayman Islands resident, and one (1)
common  share (U.S. $1.00 par value) to Ms. Sophia Dilbert, a Cayman Islands
resident,  for  the consideration of $10 each. Exemption from United  States
registration  of  such common shares is claimed under Section  4(2)  of  the
Securities Act and because such transactions were performed entirely in  the
Cayman Islands.

   On March 10, 1997, the Co-Registrant issued 1,000 shares of common stock,
$.01  par  value, to Panda Energy International, Inc., a Texas  corporation,
for the consideration of $1,000.  Exemption from registration of such shares
of common stock is claimed under Section 4(2) of the Securities Act.

Senior Secured Notes and Guarantee

   On April 22, 1997, the Registrant issued and sold for cash, at 93.444% of
aggregate  principal  amount,  to Donaldson, Lufkin  &  Jenrette  Securities
Corporation, $155,200,000 aggregate principal amount of its 12-1/2%  Senior
Secured  Notes  due  2004 (the "Old Notes").  Donaldson, Lufkin  &  Jenrette
Securities  Corporation  subsequently  sold  the  Old  Notes  to   qualified
institutional buyers and institutional accredited investors. The  Old  Notes
are fully and unconditionally guaranteed by Panda Global Holdings, Inc., the
Co-Registrant.   The  Registrant  paid total  commissions  and  underwriting
discounts  equal  to  $4,359,753 to Donaldson, Lufkin & Jenrette  Securities
Corporation  in  connection  with  such  transaction.  Exemption  from   the
registration  of  the Old Notes and the guarantee thereof is  claimed  under
Section  4(2)  of  the  Securities  Act, and  Rule  144A  and  Regulation  S
promulgated thereunder.

Item 16.  Exhibits and Financial Statement Schedules

(a)  Exhibits:

Exhibit
Number    Exhibit Description

3.01      Memorandum of Association of Panda Global Energy Company. (2)

3.02      Articles of Association of Panda Global Energy Company. (2)

3.03      Certificate of Incorporation of Panda Global Holdings, Inc. (2)

3.04      Bylaws of Panda Global Holdings, Inc. (2)

4.01      Trust   Indenture  dated  July  31,  1996,  among  Panda   Funding
          Corporation,  Panda  Interfunding Corporation  and  Bankers  Trust
          Company, as Trustee. (1)

4.02      First  Supplemental Indenture to Trust Indenture, dated  July  31,
          1996,   among   Panda  Funding  Corporation,  Panda   Interfunding
          Corporation and Bankers Trust Company, as Trustee. (1)

4.03      Second Supplemental Indenture to Trust Indenture, dated January 6,
          1997,   among   Panda  Funding  Corporation,  Panda   Interfunding
          Corporation and Bankers Trust Company, as Trustee. (1)

4.04      Form  of 11-5/8% Pooled Project Bonds, Series A due 2012 of  Panda
          Funding Corporation. (1)

4.05      Form of 11-5/8% Pooled Project Bonds, Series A-1 due 2012 of Panda
          Funding Corporation. (1)

4.06      Registration  Rights Agreement, dated July 31, 1996,  among  Panda
          Funding  Corporation, Panda Interfunding Corporation and Jefferies
          & Company Inc. (1)

4.07      Collateral  Agency  Agreement, dated July 31,  1996,  among  Panda
          Interfunding  Corporation, Panda Funding Corporation  and  Bankers
          Trust   Company,   as   Trustee   and   Collateral   Agent.    (1)
          
4.08      Subrogation and Contribution Agreement, dated July 31, 1996, among
          Panda  Interfunding  Corporation, Panda  Funding  Corporation  and
          Panda Interholding Corporation and each PIC U.S. Entity that is  a
          signatory thereto. (1)

4.09      Guaranty Agreement (PIC U.S. Entity Subsidiaries), dated July  31,
          1996  by Panda Interholding Corporation in favor of Bankers  Trust
          Company,  as  Collateral  Agent for the  benefit  of  the  Secured
          Parties. (1)

4.10      Trust Indenture, dated April 22, 1997, between Panda Global Energy
          Company and Bankers Trust Company, as Trustee. (2)

4.11      First  Supplemental Indenture between Panda Global Energy  Company
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

4.12      Trust  Indenture,  dated  April 22,  1997,  between  Panda  Global
          Holdings, Inc. and Bankers Trust Company, as Trustee. (2)

4.13      First  Supplemental Indenture between Panda Global Holdings,  Inc.
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

4.14      Registration  Rights Agreement among Panda Global Energy  Company,
          Panda  Global  Holdings,  Inc. and Donaldson,  Lufkin  &  Jenrette
          Securities Corporation, dated April 22, 1997. (2)

4.15      Form  of  12-1/2%  Senior Secured Notes due 2004 of  Panda  Global
          Energy Company. (2)

4.16      Form  of 12-1/2% Registered Senior Secured Note due 2004 of  Panda
          Global Energy Company. (2)

5.00      Legal  Opinion  of  Chadbourne  &  Parke  LLP,  counsel  for   the
          Registrant and Co-Registrant. (3)

10.01     PIC  Loan  Agreement, dated July 31, 1996, between  Panda  Funding
          Corporation,  as  Lender, and Panda Interfunding  Corporation,  as
          Borrower. (1)

10.02     Loan  Agreement,  dated July 31, 1996, between Panda  Interfunding
          Corporation, as Lender, and Panda Cayman Interfunding Company,  as
          Borrower. (1)

10.03     Promissory Note issued by Panda Interfunding Corporation  on  July
          31,  1996  to Panda Funding Corporation in the original  principal
          amount  of  $105,525,000, endorsed to Bankers  Trust  Company,  as
          Collateral Agent. (1)

10.04     Security   Agreement,   dated  July  31,   1996,   between   Panda
          Interfunding Corporation and Bankers Trust Company, as  Collateral
          Agent. (1)

10.05     Security  Agreement,  dated July 31, 1996, between  Panda  Funding
          Corporation and Bankers Trust Company, as Collateral Agent. (1)

10.06     Security  Agreement,  dated July 31, 1996,  between  Panda  Cayman
          Interfunding   Company,   as  Debtor,   and   Panda   Interfunding
          Corporation, as Secured Party. (1)

10.07     Stock  Pledge  Agreement (Panda Interfunding  Corporation  Stock),
          dated  July 31, 1996, between Panda Energy Corporation and Bankers
          Trust Company, as Collateral Agent. (1)

10.08     Stock  Pledge Agreement (Panda Funding Corporation and PIC  Entity
          Stock),   dated   July   31,  1996,  between  Panda   Interfunding
          Corporation and Bankers Trust Company, as Collateral Agent. (1)

10.09     Trust Indenture, dated July 31, 1996, among Panda-Rosemary Funding
          Corporation,  Panda-Rosemary, L.P. and  Fleet  National  Bank,  as
          Trustee. (1)

10.10     First  Supplemental Indenture to Trust Indenture, dated  July  31,
          1996,  among  Panda-Rosemary Funding Corporation,  Panda-Rosemary,
          L.P. and Fleet National Bank, as Trustee. (1)

10.11     Form  of  8-5/8%  First Mortgage Bonds due 2016 of  Panda-Rosemary
          Funding Corporation. (1)

10.12     Deposit  and  Disbursement Agreement, dated July 31,  1996,  among
          Panda-Rosemary  Funding Corporation, Panda-Rosemary,  L.P.,  Fleet
          National  Bank, as Collateral Agent, and Fleet National  Bank,  as
          Depositary Agent. (1)

10.13     Collateral  Agency  and Intercreditor Agreement,  dated  July  31,
          1996,  among  Panda Rosemary Funding Corporation,  Panda-Rosemary,
          L.P.,  The L/C Issuer, The Trustee Under The Trust Indenture,  The
          Depositary  Agent,  The  Collateral Agent and  The  Other  Secured
          Parties, all as named therein. (1)

10.14     Deed  of  Trust and Security Agreement, dated July  31,  1996,  by
          Panda-Rosemary, L.P., Grantor, Ross J. Smyth, Trustee,  and  Fleet
          National Bank, as Collateral Agent, the Beneficiary. (1)

10.15     Security  Agreement, dated July 31, 1996, by Panda-Rosemary,  L.P.
          to Fleet National Bank, as Collateral Agent. (1)

10.16     Security Agreement, dated July 31, 1996, by Panda-Rosemary Funding
          Corporation to Fleet National Bank, as Collateral Agent. (1)

10.17     General  Partner  Pledge and Security Agreement,  dated  July  31,
          1996,  by  Panda-Rosemary Corporation to Fleet National  Bank,  as
          Collateral Agent. (1)

10.18     Limited  Partner  Pledge and Security Agreement,  dated  July  31,
          1996,  by PRC II Corporation to Fleet National Bank, as Collateral
          Agent. (1)

10.19     Stock Pledge and Security Agreement, dated July 31, 1996, by Panda
          Interholding  Corporation to Fleet National  Bank,  as  Collateral
          Agent. (1)

10.20     Stock Pledge and Security Agreement, dated July 31, 1996, by Panda-
          Rosemary, L.P. to Fleet National Bank, as Collateral Agent. (1)

10.21     Partnership Guaranty, dated July 31, 1996, by Panda-Rosemary, L.P.
          in favor of Fleet National Bank, as Trustee. (1)

10.22     Reimbursement  Agreement,  dated July  31,  1996,  between  Panda-
          Rosemary,  L.P., Panda-Rosemary Funding Corporation and Bayerische
          Vereinsbank AG, New York Branch. (1)

10.23     Irrevocable  Direct  Pay  Letter of Credit  issued  by  Bayerische
          Vereinsbank AG. (1)

10.24     Construction Loan Agreement and Lease Commitment, dated March  30,
          1996,  between Panda-Brandywine, L.P. and General Electric Capital
          Corporation. (1)

10.24.1   Participation  Agreement, dated December 18,  1996,  among  Panda-
          Brandywine,  L.P., Panda Brandywine Corporation, General  Electric
          Capital  Corporation,  Fleet National Bank, First  Security  Bank,
          National Association, and  Credit Suisse. (1)

10.24.2   Letter of Credit Reimbursement Agreement, dated December 18, 1996,
          among  Panda-Brandywine,  L.P., Panda Brandywine  Corporation  and
          General Electric Capital Corporation. (1)

10.24.3   Equity  Loan Facility Letter Agreement, dated December  18,  1996,
          among  Panda Brandywine Corporation, Panda Energy Corporation  and
          General Electric Capital Corporation. (1)

10.25     Bill  of  Sale and Severance Agreement, dated December  30,  1996,
          between  Panda-Brandywine,  L.P., as Seller,  and  Fleet  National
          Bank, Owner Trustee, as Buyer. (1)

10.26     Facility  Lease, dated December 18, 1996, between  Fleet  National
          Bank, as Owner Trustee, and Panda-Brandywine, L.P. (1)

10.27     Steam  Lease,  dated  as  of  December 18,  1996,  between  Panda-
          Brandywine, L.P. and Brandywine Water Company. (1)

10.28     Amended  and  Restated Security Deposit Agreement, dated  December
          18,   1996,   among   Panda-Brandywine,  L.P.,  Panda   Brandywine
          Corporation, General Electric Capital Corporation, Fleet  National
          Bank, Credit Suisse and First Security Bank, National Association.
          (1)

10.29     Amended  and Restated Deed of Trust and Security Agreement,  dated
          December  18,  1996, by Panda-Brandywine, L.P.  to  Chicago  Title
          Insurance Company, Trustee for the benefit of Fleet National Bank,
          as Security Agent, Beneficiary. (1)

10.30     Amended  and  Restated  Steam  Lessee  Security  Agreement,  dated
          December  18, 1996, by Brandywine Water Company in favor of  Fleet
          National Bank, as Security Agent. (1)

10.31     Amended and Restated Security Agreement, dated December 18,  1996,
          by  Panda-Brandywine,  L.P. in favor of Fleet  National  Bank,  as
          Security Agent. (1)

10.32     Amended  and  Restated Trust Agreement, dated December  18,  1996,
          between   General   Electric   Capital   Corporation,   as   Owner
          Participant, and Fleet National Bank, as Owner Trustee. (1)

10.33     Amended  and  Restated  General Partner  Pledge  Agreement,  dated
          December  18,  1996,  by  Panda Brandywine  Corporation  to  Fleet
          National Bank, as Security Agent. (1)

10.34     Amended  and  Restated  Limited Partner  Pledge  Agreement,  dated
          December  18, 1996,  by Panda Energy Corporation to Fleet National
          Bank, as Security Agent. (1)

10.35     Amended  and  Restated Stock Pledge Agreement, dated December  18,
          1996, by Panda Interholding Corporation to Fleet National Bank, as
          Security Agent. (1)

10.36     Assumption  Agreement and Release, dated July 31, 1996,  by  Panda
          Interholding  Corporation  in favor of  General  Electric  Capital
          Corporation and Fleet National Bank. (1)

10.37     Power  Purchase and Operating Agreement, dated January  24,  1989,
          between  Panda Energy Corporation and Virginia Electric and  Power
          Company. (1)

10.38     Amendment  No. 1 to Power Purchase and Operating Agreement,  dated
          October  24,  1989, between Panda Energy Corporation and  Virginia
          Electric and Power Company. (1)

10.39     Amendment  No. 2 to Power Purchase and Operating Agreement,  dated
          July  30, 1993, between Panda-Rosemary, L.P. and Virginia Electric
          and Power Company. (1)

10.40     Fuel  Supply Management Agreement, dated October 10, 1990, between
          Panda-Rosemary Corporation and Natural Gas Clearinghouse. (1)

10.41     Amendment  No. 1 to Fuel Supply Management Agreement, dated  March
          5,  1991,  between  Panda-Rosemary  Corporation  and  Natural  Gas
          Clearinghouse. (1)

10.42     Gas  Purchase  Contract,  dated April  12,  1990,  between  Panda-
          Rosemary Corporation and Natural Gas Clearinghouse. (1)

10.43     Amendment   of   Gas  Purchase  Contract  between   Panda-Rosemary
          Corporation and Natural Gas Clearinghouse. (1)

10.44     Pipeline  Operating Agreement, dated February  14,  1990,  between
          Panda  Energy  Corporation, Panda-Rosemary Corporation  and  North
          Carolina Natural Gas Corporation. (1)

10.45     Amendment  No.  1 to Pipeline Operating Agreement,  dated  May  7,
          1990, between Panda Energy Corporation, Panda-Rosemary Corporation
          and North Carolina Natural Gas Corporation. (1)

10.46     Assignment  Agreement, dated June 15, 1990, between  Panda  Energy
          Corporation and Panda-Rosemary Corporation. (1)

10.47     Amendment  No.  2 to Pipeline Operating Agreement, dated  November
          19,   1991,   among   Panda  Energy  Corporation,   Panda-Rosemary
          Corporation and North Carolina Natural Gas Corporation. (1)

10.48     Real  Property Lease and Easement Agreement, dated June  9,  1989,
          between The Bibb Company and Panda-Rosemary Corporation. (1)

10.49     First  Amendment  to  Real Property Lease and Easement  Agreement,
          dated October 1, 1989, between The Bibb Company and Panda-Rosemary
          Corporation. (1)

10.50     Second  Amendment  to Real Property Lease and Easement  Agreement,
          dated  January  31,  1990,  between The Bibb  Company  and  Panda-
          Rosemary Corporation. (1)

10.51     Leasehold  and Real Property Assignment and Assumption  Agreement,
          dated  January  6,  1992, between Panda-Rosemary  Corporation  and
          Panda-Rosemary, L.P. (1)

10.52     Third  Amendment  to  Real Property Lease and Easement  Agreement,
          dated March 15, 1996, between The Bibb Company and Panda-Rosemary,
          L.P. (1)

10.53     Cogeneration  Energy  Supply Agreement, dated  January  12,  1989,
          between Panda Energy Corporation and The Bibb Company. (1)

10.54     First  Amendment  to Cogeneration Energy Supply  Agreement,  dated
          October  1, 1989, between Panda Energy Corporation, Panda-Rosemary
          Corporation and The Bibb Company. (1)

10.55     Service  Agreement, dated July 26, 1996, between  Transcontinental
          Gas Pipe Line Corporation and Panda-Rosemary, L.P. (1)

10.55.1   Form of Amendment to Service Agreement, effective January 1, 1997,
          between  Transcontinental  Gas Pipe Line  Corporation  and  Panda-
          Rosemary, L.P. (1)

10.56     Service  Agreement  Applicable to Transportation  of  Natural  Gas
          Under  Rate  Schedule  FT,  dated August  20,  1996,  between  CNG
          Transmission Corporation and Panda-Rosemary, L.P. (1)

10.57     Gas  Transportation Agreement, dated August 1, 1996, between Texas
          Gas Transmission Corporation and Panda-Rosemary, L.P. (1)

10.58     Assignment  and Assumption Agreement, dated May 15, 1989,  between
          Panda Energy Corporation and Panda-Rosemary Corporation. (1)

10.59     Bill  of  Sale  and  Assignment  and Assumption  Agreement,  dated
          January  6,  1992, between Panda-Rosemary Corporation  and  Panda-
          Rosemary, L.P. (1)

10.60     Assignment  and  Assumption  Agreement,  dated  January  6,  1992,
          between  Panda Energy Corporation and Panda-Rosemary  Corporation.
          (1)

10.61     Power  Purchase  Agreement, dated August 9, 1991,  between  Panda-
          Brandywine, L.P. and Potomac Electric Power Company. (1)

10.62     First  Amendment to Power Purchase Agreement, dated September  16,
          1994,  between  Panda-Brandywine, L.P. and Potomac Electric  Power
          Company. (1)

10.62.1   Present Assignment of Power Purchase Agreement, dated December 18,
          1996,  by Panda-Brandywine, L.P. to Fleet National Bank, as  Owner
          Trustee,  for the benefit of General Electric Capital Corporation,
          as Owner Participant. (1)

10.62.2   Amended  and  Restated Consent and Agreement, dated  December  30,
          1996,  among  Potomac  Electric Power  Company,  Panda-Brandywine,
          L.P.,  Fleet  National Bank, as Security Agent and Owner  Trustee,
          General Electric Capital Corporation, as the issuer of the Letters
          of   Credit,   the   Interest  Hedging  Counterparty   and   Owner
          Participant,  First  Security  Bank,   National  Association,   as
          Indenture Trustee, and Credit Suisse, as Administrative Agent. (1)

10.63     Amended  and  Restated  Turnkey Cogeneration  Facility  Agreement,
          dated  March 30, 1995, between Panda-Brandywine, L.P. and Raytheon
          Engineers & Constructors, Inc. (1)

10.64     Raytheon  Parent  Guaranty, dated May 18, 1994,  between  Raytheon
          Company and Panda-Brandywine, L.P. (1)

10.65     Steam  Sales  Agreement,  dated March  30,  1995,  between  Panda-
          Brandywine, L.P. and Brandywine Water Company. (1)

10.66     Gas   Sales  Agreement,  dated  March  30,  1995,  between   Cogen
          Development Company and Panda Brandywine, L.P. (1)

10.67     Precedent Agreement, dated February 25, 1994, between Columbia Gas
          Transmission  Corporation and Panda-Brandywine, L.P. (1)

10.68     Amending  Agreement,  dated March 24, 1995, between  Columbia  Gas
          Transmission Corporation and Panda-Brandywine, L.P. (1)

10.69     Amended and Restated FTS Service Agreement, dated March 23,  1995,
          between   Columbia   Gas  Transmission  Corporation   and   Panda-
          Brandywine, L.P. (1)

10.70     FTS  Service  Agreement, dated of as March 30, 1995, between  Cove
          Point LNG Limited Partnership and Panda-Brandywine, L.P. (1)

10.71     Gas  Transportation and Supply Agreement, dated November 10, 1994,
          between  Panda-Brandywine, L.P. and Washington Gas Light  Company.
          (1)

10.72     Amended  and Restated Site Lease, dated December 18, 1996, between
          Panda-Brandywine, L.P. and Fleet National Bank, as Owner  Trustee.
          (1)

10.73     Amended  and  Restated  Site Sublease, dated  December  18,  1996,
          between  Fleet  National Bank,  Owner Trustee, as  Sublessor,  and
          Panda-Brandywine, L.P., as Sublessee. (1)

10.74     Purchase  Agreement,  dated July 26, 1996, between  Panda  Funding
          Corporation and Jefferies & Company, Inc. (1)

10.75     Additional  Projects Contract, dated July 31,  1996,  among  Panda
          Energy  International, Inc., Panda Energy Corporation,  and  Panda
          Interfunding Corporation. (1)

10.76     Non-Petition   Agreement,  dated  July  31,  1996,   among   Panda
          Interfunding  Corporation, Panda Interholding Corporation,  Panda-
          Rosemary  Corporation, PRC II Corporation, Panda-Rosemary  Funding
          Corporation and Panda-Rosemary, L.P. (1)

10.77     Non-Petition  Agreement, dated July 31, 1996, among Panda  Funding
          Corporation,  Panda  Interholding Corporation, Panda  Interfunding
          Corporation and Panda (Cayman) Interfunding Company. (1)

10.78     Joint  Venture  Contract for Tangshan Panda Heat  and  Power  Co.,
          Ltd., dated September 4, 1994, between Luannan County Heat & Power
          Plant and Pan-Western Energy Corp., LLC, as amended July 19,  1996
          and November 18, 1996, respectively. (2)

10.79     Joint  Venture  Contract for Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd., dated September 3, 1994, between Tangshan Luanhua  Co.
          (Group)  and  Pan-Western Energy Corp., LLC, as amended  July  19,
          1996 and November 18, 1996, respectively. (2)

10.80     Joint  Venture  Contract for Tangshan Cayman Heat and  Power  Co.,
          Ltd.,  dated  May 11, 1996, between Luannan County  Heat  &  Power
          Plant and Pan-Western Energy Corp., LLC, as amended July 19,  1996
          and November 18, 1996, respectively. (2)

10.81     Joint Venture Contract for Tangshan Pan-Sino Heat Co., Ltd., dated
          May  28, 1996, between Luannan County Heat Company and Pan-Western
          Energy Corp., LLC, as amended July 19, 1996 and November 18, 1996,
          respectively. (2)

10.82     Coal  Supply Agreement between Tangshan Panda Heat and Power  Co.,
          Ltd.  and  Kailuan Coal Mining Administration, dated  February  3,
          1996. (2)

10.83     General Interconnection Agreement between North China Power  Group
          Company, Tangshan Panda Heat and Power Co., Ltd. and Tangshan Pan-
          Western Heat and Power Co., Ltd., dated September 22, 1995. (2)

10.84     Electric  Energy Purchase and Sales Agreement between North  China
          Power  Group Company, Tangshan Panda Heat and Power Co., Ltd.  and
          Tangshan Pan-Western Heat and Power Co., Ltd., dated September 22,
          1995. (2)

10.85     Supplemental  Agreement for General Interconnection  and  Electric
          Energy  Purchase  and Sales Agreement Between  North  China  Power
          Group  Company,  Tangshan  Panda Heat  and  Power  Co.,  Ltd.  and
          Tangshan  Pan-Western Heat and Power Co., Ltd. dated February  10,
          1996. (2)

10.86     Construction  Agreement between North China Power  Group  Company,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan  Pan-Western
          Heat and Power Co., Ltd., dated February 10, 1996. (2)

10.87     Loan  Agreement between North China Power Group Company,  Tangshan
          Panda  Heat and Power Co., Ltd. and Tangshan Pan-Western Heat  and
          Power  Co.,  Ltd.,  dated February 10, 1996, as amended  June  18,
          1996. (2)

10.88     Agency Contract for Entrusted Loan between China Information Trust
          and  Investment  Corporation, Tangshan Panda Heat and  Power  Co.,
          Ltd.  and Tangshan Pan-Western Heat and Power Co. Ltd., dated June
          18, 1996, as amended July 17, 1996. (2) (4)

10.89     Transfer  of  Loan Agreement among Tangshan Panda Heat  and  Power
          Co.,  Ltd.,  Tangshan  Pan-Western Heat and Power  Co.,  Ltd.  and
          Tangshan Pan-Sino Heat Co., Ltd. (2)

10.90     Engineering, Procurement and Construction Contract among  Tangshan
          Panda  Heat  and  Power Co., Ltd., Tangshan Pan-Western  Heat  and
          Power  Co.,  Ltd.  and Harbin Power Engineering  Company  Limited,
          dated April 24, 1996, as amended July 4, 1996, September 14,  1996
          and December 17, 1996, respectively. (2) (4)

10.91     Engineering and Design Contract among Hebei Electric Power  Survey
          and  Design Institute, Tangshan Panda Heat and Power Company, Ltd.
          and  Tangshan  Pan-Western  Heat and Power  Company,  Ltd.,  dated
          December 21, 1995, as amended June 21, 1996. (2)

10.92     Guaranty by China Harbin Power Equipment Group Company, dated July
          16, 1996. (2)

10.93     Performance  Guarantee by The Export-Import Bank of  China,  dated
          January 3, 1997. (2)

10.94     Amended  and Restated Operation and Maintenance Agreement  between
          Tangshan  Heat and Power Co., Ltd., Tangshan Pan-Western Heat  and
          Power  Co.,  Ltd.,  Tangshan  Cayman Heat  and  Power  Co.,  Ltd.,
          Tangshan   Pan-Sino   Heat  Co.,  Ltd.   and   Duke/Fluor   Daniel
          International Services, dated March 6, 1997. (2) (4)

10.95     Construction Agreement of Heat and Steam Network between  Tangshan
          Pan-Sino Heat Co., Ltd. and Tangshan Heat and Engineering Company,
          dated June 20, 1996. (2)

10.96     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Panda Heat and  Power
          Co., Ltd., April 1, 1997 (2) (4)

10.97     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Pan-Western Heat  and
          Power Co., Ltd., April 1, 1997 (2) (4)

10.98     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Cayman Heat and Power
          Co., Ltd., April 1, 1997 (2) (4)

10.99     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western  Energy  Corporation, LLC and Tangshan Pan-Sino  Heat  and
          Power Co., Ltd., April 1, 1997 (2) (4)

10.100    Water,  Heat,  Steam  and  Hot Water Supply  and  Usage  Agreement
          between Tangshan Cayman Heat and Power Company, Ltd., and Tangshan
          Panda Heat and Power Company, Ltd., dated October 3, 1996. (2) (4)

10.101    Water,  Heat,  Steam  and  Hot Water Supply  and  Usage  Agreement
          between  Tangshan Cayman Heat and Power Company, Ltd. and Tangshan
          Pan-Western Heat and Power  Company, Ltd., dated October 3,  1996.
          (2) (4)

10.102    Steam  for  Process  and  Heating Water  Sales  Agreement  between
          Tangshan  Cayman Heat and Power Company, Ltd., and  Tangshan  Pan-
          Sino Heat Company, Ltd., dated October 16, 1996. (2)

10.103    Articles of Association of Tangshan Panda Heat and Power Co., Ltd.
          between  Luannan County Heat & Power Plant and Pan-Western  Energy
          Corp., LLC dated September 4, 1994. (2)

10.104    Articles  of Association for Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd.,  between Tangshan Luanhua Co. (Group)  and Pan-Western
          Energy Corp., LLC, dated September 3, 1994. (2)

10.105    Articles  of Association for Tangshan Cayman Heat and  Power  Co.,
          Ltd.,  between  Luannan County Heat & Power Plant and  Pan-Western
          Energy Corp., LLC, dated May 11, 1996. (2)

10.106    Articles  of  Association for Tangshan Pan-Sino  Heat  Co.,  Ltd.,
          between Luannan County Heat Company and Pan-Western Energy  Corp.,
          LLC, dated May 28, 1996. (2)

10.107    Application  Regarding Power Price among Tangshan Panda  Heat  and
          Power  Co.,  Ltd., Tangshan Pan-Western Heat and Power Co.,  Ltd.,
          and  Tangshan  Municipal Price Bureau dated October 17,  1995,  as
          amended October 18, 1995 and May 8, 1996, respectively. (2) (4)

10.108    Administrative   Services   Agreement   between    Panda    Energy
          International,  Inc. and Panda Global Holdings, Inc.  dated  April
          22, 1997. (2)

10.109    Development Services Agreement between Panda Energy International,
          Inc. and Panda Global Holdings, Inc. dated April 22, 1997. (2)

10.110    Form  of  Purchase  Agreement among Donaldson, Lufkin  &  Jenrette
          Securities Corporation, Panda Global Energy Company, Panda  Global
          Holdings,  Inc. and Panda Energy International, Inc., dated  April
          11, 1997. (2)

10.111    Form  of Issuer Loan Agreement between Panda Global Energy Company
          and Pan-Western Energy Corporation, LLC, dated April 22, 1997. (2)

10.112    Form  of Issuer Note of Pan-Western Energy Corporation, LLC, dated
          April 22, 1997. (2)

10.113    Registered   Capital  Contribution  and  Agency  Agreement   among
          Tangshan  Panda Heat and Power Company, Ltd., Tangshan Pan-Western
          Heat  and  Power  Company, Ltd., Tangshan Cayman  Heat  and  Power
          Company,  Ltd.,  Tangshan  Pan-Sino Heat  Company,  Ltd.,  Luannan
          County Heat and Power Plant, Tangshan Luanhua (Group) Co., Luannan
          County Heat Company and Pan-Western Energy Corporation, LLC, dated
          March 26, 1997. (2)

10.114    Form  of  Account Agreement among Panda Interfunding  Corporation,
          Panda  Energy Corporation and Panda Global Holdings,  Inc.,  dated
          April 22, 1997. (2)

10.115    Form  of Pledge Agreement between Panda Global Energy Company  and
          Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.116    Form  of  Pledge  Agreement  between Pan-Sino  Energy  Development
          Company,  LLC and Bankers Trust Company, as Trustee,  dated  April
          22, 1997. (2)

10.117    Form  of  Pledge Agreement between Pan-Western Energy Corporation,
          LLC  and Bankers Trust Company, as Trustee, dated April 22,  1997.
          (2)

10.118    Form  of Pledge Agreement between Panda Global Holdings, Inc.  and
          Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.119    Form  of  Cash  Collateral Agreement between Panda  Global  Energy
          Company  and  Bankers Trust Company, as Trustee, dated  April  22,
          1997. (2)

10.120    Form  of  Cash  Collateral  Agreement between  Pan-Western  Energy
          Corporation,  LLC  and Bankers Trust Company,  as  Trustee,  dated
          April 22, 1997. (2)

10.121    Form   of  Cash  Collateral  Agreement  between  Pan-Sino   Energy
          Development  Company, LLC and Bankers Trust Company,  as  Trustee,
          dated April 22, 1997. (2)

10.122    Form  of Pledge Agreement between Panda Energy International, Inc.
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.123    Form  of  Cash Collateral Agreement between Panda Global Holdings,
          Inc.  and Bankers Trust Company, as Trustee, dated April 22, 1997.
          (2)

10.124    Form of Cash Collateral Agreement Between Panda Energy Corporation
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.125    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan Cayman  Heat
          and Power Co., Ltd., dated September 24, 1996. (2)

10.126    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan  Pan-Western
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.127    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Panda Heat and Power Co., Ltd. and Tangshan Pan-Sino Heat
          Co., Ltd., dated September 24, 1996. (2)

10.128    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Western Heat and Power Co., Ltd. and  Tangshan  Pan-
          Sino Heat Co., Ltd., dated September 24, 1996. (2)

10.129    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Western Heat and Power Co., Ltd. and Tangshan  Panda
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.130    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Pan-Western Heat and Power Co., Ltd. and Tangshan  Cayman
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.131    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman Heat and Power Co., Ltd. and Tangshan Panda  Heat
          and Power Co., Ltd., dated September 24, 1996. (2)

10.132    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman  Heat and Power Co., Ltd. and  Tangshan  Pan-Sino
          Heat Co. Ltd., dated September 24, 1996. (2)

10.133    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman Heat and Power Co., Ltd. and Tangshan Pan-Western
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.134    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Sino  Heat Co., Ltd. and Tangshan  Cayman  Heat  and
          Power Co., Ltd., dated September 24, 1996. (2)

10.135    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Pan-Sino Heat Co., Ltd. and Tangshan Pan-Western Heat and
          Power Co., Ltd., dated September 24, 1996. (2)

10.136    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Sino  Heat Co., Ltd.  and Tangshan  Panda  Heat  and
          Power Co., Ltd., dated September 24, 1996. (2)

12.00     Computation of Ratio of Earnings to Fixed Charges. (2)

21.00     Subsidiaries of Registrant and Co-Registrant. (2)

23.01     Consent of Deloitte & Touche LLP. (2)

23.02     Consent  of  Chadbourne  &  Parke LLP (contained  in  their  Legal
          Opinion filed as Exhibit 5.00). (3)

23.03     Consent of ICF Resources, Incorporated. (2)

23.04     Consent of Burns & McDonnell Engineering Company, Inc. (2)

23.05     Consent of Benjamin Schlesinger and Associates, Inc. (2)

23.06     Consent of Pacific Energy Systems, Inc. (2)

23.07     Consent of C.C. Pace Resources, Inc. (2)

23.08     Consent of Parsons Brinckerhoff Energy Services, Inc. (2)

23.09     Consent of Marston & Marston, Inc. (2)

23.10     Consent of Maples & Calder. (2)

23.11     Consent of Cai, Zhang & Lan. (2)

24.00     Powers of Attorney (contained in the signature pages in Part II of
          this Registration Statement). (2)

25.00     Statement  of Eligibility of Trustee under Indenture on Form  T-1.
          (2)

27.00     Financial Data Schedule. (2)

99.01     Form of Transmittal Letter. (3)

99.02     Form of Notice of Guaranteed Delivery. (3)

99.03     Independent  Engineer's  Report of Burns &  McDonnell  Engineering
          Company, Inc., dated April 11, 1997, as updated June 6, 1997. (2)

99.04     Independent  Fuel Consultant's Report of Benjamin Schlesinger  and
          Associates, Inc., dated September 20, 1996, as updated April 11, 1997
          and June 6, 1997, respectively. (2)

99.05     Independent  Engineer's Report of Pacific  Energy  Systems,  Inc.,
          dated  July 22, 1996, as updated April 11, 1997 and June 6,  1997,
          respectively. (2)

99.06     Independent Fuel Consultant's Report of C.C. Pace Resources, Inc.,
          dated  July 2, 1996, as updated April 11, 1997 and June  6,  1997,
          respectively. (2)

99.07     Independent  Engineer's  Report  of  ICF  Resources  Incorporated,
          dated April 11, 1997, as updated June 6, 1997, respectively. (2)

________________________

(1)  Previously  filed as an exhibit to the Registration Statement  on  Form
     S-1  (Registration  No. 333-19445) of Panda Funding Corporation,  Panda
     Interfunding    Corporation   and   Panda   Interholding    Corporation
     (affiliates  of  the  Registrant and Co-Registrant),  and  incorporated
     herein by reference.
(2)  Filed herewith.
(3)  To be filed by amendment.
(4)  The   Registrant   and  the  Co-Registrant  have  sought   confidential
     treatment for certain information identified in these exhibits.

     (b)  Financial Statement Schedules:     None.

Item 17.  Undertakings

     (a)  The   undersigned  Registrant  and  each  Co-Registrant  hereby
undertake:
       
             (1)  To  file, during any period in which offers or  sales  are
          being  made,  a  post-effective  amendment  to  this  Registration
          Statement:
       
              (i)   to  include any prospectus required by Section  10(a)(3)
                    of the Securities Act of 1933;
              
              (ii)  to  reflect  in  the  prospectus  any  facts  or  events
                    arising  after  the effective date of  the  Registration
                    Statement  (or the most recent post-effective  amendment
                    thereof)   which,  individually  or  in  the  aggregate,
                    represent  a  fundamental change in the information  set
                    forth in the Registration Statement; and
              
              (iii) to  include any material information with respect to the
                    plan   of  distribution  previously  disclosed  in   the
                    Registration Statement.

              (2)  That, for the purpose of determining any liability  under
          the  Securities  Act  of 1933, each such post-effective  amendment
          shall be deemed to be a new Registration Statement relating to the
          securities offered therein, and the offering of such securities at
          that  time  shall be deemed to be the initial bona  fide  offering
          thereof.
              
              (3) To  remove  from registration by means of a  post-effective
          amendment  any  of  the securities being registered  which  remain
          unsold at the termination of the offering.
              
      (b)  The undersigned Registrant and the Co-Registrant hereby undertake
that,   insofar  as  indemnification  for  liabilities  arising  under   the
Securities  Act  of  1933  may  be permitted  to  directors,  officers,  and
controlling persons of the Registrant and the Co-Registrant pursuant to  the
foregoing  provisions,  or otherwise, the Registrant and  the  Co-Registrant
have been advised that in the opinion of the Commission such indemnification
is  against  public  policy  as expressed in  the  Securities  Act  and  is,
therefore,  unenforceable.  In the event that a  claim  for  indemnification
against such liabilities (other than the payment by the Registrant or the Co-
Registrant  of  expenses  incurred  or  paid  by  a  director,  officer   or
controlling person of the Registrant or the Co-Registrant, as the  case  may
be, in the successful defense of any action, suit or proceeding) is asserted
by  such  director,  officer or controlling person in  connection  with  the
securities  being  registered, the Registrant and  the  Co-Registrant  will,
unless  in  the  opinion  of  its counsel the matter  has  been  settled  by
controlling  precedent,  submit to a court of appropriate  jurisdiction  the
question  whether  such indemnification by it is against  public  policy  as
expressed  in  the  Securities  Act  and  will  be  governed  by  the  final
adjudication of such issue.
                                      
                                      
                                 SIGNATURES


    Pursuant to the requirements of the Securities Act of 1933, as  amended,
Panda Global Energy Company has duly caused this Registration  Statement
on Form S-1 to be  signed on its behalf by the undersigned,  thereunto  duly
authorized, in the City of Dallas, State of Texas on June 11, 1997.


                                   PANDA GLOBAL ENERGY COMPANY
                                   (Registrant)



                                   By:  /s/ Robert W. Carter
                                        Robert W. Carter, Chairman of the
                                        Board, Chief Executive Officer and
                                        Director

                              POWER OF ATTORNEY

      Each  person  whose signature appears below constitutes  and  appoints
Robert  W. Carter as his or her true and lawful attorney-in-fact and  agent,
with  full powers of substitution and resubstitution, for him or her and  in
his or her name, place and stead, in any and all capacities, to sign any  or
all  amendments  (including post-effective amendments to  this  Registration
Statement  and  to  file  the  same, with all  exhibits  thereto  and  other
documents  in  connection  therewith,  with  the  Securities  and   Exchange
Commission,  granting unto said attorney-in-fact and agent, full  power  and
authority  to  do  and  perform each and every act and thing  requisite  and
necessary to be done in and about the premises, as fully to all intents  and
purposes  and he or she might do in person, hereby ratifying and  confirming
all  that said attorney-in fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Act of 1933, as  amended,
this  Registration Statement on Form S-1 has been signed  by  the  following
persons in the capacities indicated on the dates indicated.


          Signature                  Title                          Date



                            Chairman of the Board, Chief
/s/ Robert W. Carter       Executive Officer and Director    June 11, 1997
    Robert W. Carter       (Principal Executive Officer)


                              Executive Vice President
/s/ Janice Carter             Secretary and Treasurer        June 11, 1997
    Janice Carter             (Principal Financial and
                                Accounting Officer)
                                      
                                      
                                      
                                 SIGNATURES


    Pursuant to the requirements of the Securities Act of 1933, as  amended,
Panda Global Holdings, Inc. has duly caused this Registration Statement
on Form S-1 to be  signed on its behalf by the undersigned,  thereunto  duly
authorized, in the City of Dallas, State of Texas on June 11, 1997.


                                   PANDA GLOBAL HOLDINGS, INC.
                                   (Co-Registrant)



                                   By:  /s/ Robert W. Carter
                                        Robert W. Carter, Chairman of the
                                        Board ,Chief Executive Officer and
                                        Director

                              POWER OF ATTORNEY

      Each  person  whose signature appears below constitutes  and  appoints
Robert  W. Carter as his or her true and lawful attorney-in-fact and  agent,
with  full powers of substitution and resubstitution, for him or her and  in
his or her name, place and stead, in any and all capacities, to sign any  or
all  amendments  (including post-effective amendments to  this  Registration
Statement  and  to  file  the  same, with all  exhibits  thereto  and  other
documents  in  connection  therewith,  with  the  Securities  and   Exchange
Commission,  granting unto said attorney-in-fact and agent, full  power  and
authority  to  do  and  perform each and every act and thing  requisite  and
necessary to be done in and about the premises, as fully to all intents  and
purposes  and he or she might do in person, hereby ratifying and  confirming
all  that said attorney-in fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Act of 1933, as  amended,
this  Registration Statement on Form S-1 has been signed  by  the  following
persons in the capacities indicated on the dates indicated.


          Signature                  Title                          Date

                            Chairman of the Board, Chief
/s/ Robert W. Carter       Executive Officer and Director    June 11, 1997
    Robert W. Carter       (Principal Executive Officer)


                              Executive Vice President
/s/ Janice Carter             Secretary and Treasurer        June 11, 1997
    Janice Carter            (Principal Financial and
                                Accounting Officer)




                             INDEX TO EXHIBITS

Exhibit
Number    Exhibit Description

3.01      Memorandum of Association of Panda Global Energy Company. (2)

3.02      Articles of Association of Panda Global Energy Company. (2)

3.03      Certificate of Incorporation of Panda Global Holdings, Inc. (2)

3.04      Bylaws of Panda Global Holdings, Inc. (2)

4.01      Trust   Indenture  dated  July  31,  1996,  among  Panda   Funding
          Corporation,  Panda  Interfunding Corporation  and  Bankers  Trust
          Company, as Trustee. (1)

4.02      First  Supplemental Indenture to Trust Indenture, dated  July  31,
          1996,   among   Panda  Funding  Corporation,  Panda   Interfunding
          Corporation and Bankers Trust Company, as Trustee. (1)

4.03      Second Supplemental Indenture to Trust Indenture, dated January 6,
          1997,   among   Panda  Funding  Corporation,  Panda   Interfunding
          Corporation and Bankers Trust Company, as Trustee. (1)

4.04      Form  of 11-5/8% Pooled Project Bonds, Series A due 2012 of  Panda
          Funding Corporation. (1)

4.05      Form of 11-5/8% Pooled Project Bonds, Series A-1 due 2012 of Panda
          Funding Corporation. (1)

4.06      Registration  Rights Agreement, dated July 31, 1996,  among  Panda
          Funding  Corporation, Panda Interfunding Corporation and Jefferies
          & Company Inc. (1)

4.07      Collateral  Agency  Agreement, dated July 31,  1996,  among  Panda
          Interfunding  Corporation, Panda Funding Corporation  and  Bankers
          Trust   Company,   as   Trustee   and   Collateral   Agent.    (1)
          
4.08      Subrogation and Contribution Agreement, dated July 31, 1996, among
          Panda  Interfunding  Corporation, Panda  Funding  Corporation  and
          Panda Interholding Corporation and each PIC U.S. Entity that is  a
          signatory thereto. (1)

4.09      Guaranty Agreement (PIC U.S. Entity Subsidiaries), dated July  31,
          1996  by Panda Interholding Corporation in favor of Bankers  Trust
          Company,  as  Collateral  Agent for the  benefit  of  the  Secured
          Parties. (1)

4.10      Trust Indenture, dated April 22, 1997, between Panda Global Energy
          Company and Bankers Trust Company, as Trustee. (2)

4.11      First  Supplemental Indenture between Panda Global Energy  Company
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

4.12      Trust  Indenture,  dated  April 22,  1997,  between  Panda  Global
          Holdings, Inc. and Bankers Trust Company, as Trustee. (2)

4.13      First  Supplemental Indenture between Panda Global Holdings,  Inc.
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

4.14      Registration  Rights Agreement among Panda Global Energy  Company,
          Panda  Global  Holdings,  Inc. and Donaldson,  Lufkin  &  Jenrette
          Securities Corporation, dated April 22, 1997. (2)

4.15      Form  of  12-1/2%  Senior Secured Notes due 2004 of  Panda  Global
          Energy Company. (2)

4.16      Form  of 12-1/2% Registered Senior Secured Note due 2004 of  Panda
          Global Energy Company. (2)

5.00      Legal  Opinion  of  Chadbourne  &  Parke  LLP,  counsel  for   the
          Registrant and Co-Registrant. (3)

10.01     PIC  Loan  Agreement, dated July 31, 1996, between  Panda  Funding
          Corporation,  as  Lender, and Panda Interfunding  Corporation,  as
          Borrower. (1)

10.02     Loan  Agreement,  dated July 31, 1996, between Panda  Interfunding
          Corporation, as Lender, and Panda Cayman Interfunding Company,  as
          Borrower. (1)

10.03     Promissory Note issued by Panda Interfunding Corporation  on  July
          31,  1996  to Panda Funding Corporation in the original  principal
          amount  of  $105,525,000, endorsed to Bankers  Trust  Company,  as
          Collateral Agent. (1)

10.04     Security   Agreement,   dated  July  31,   1996,   between   Panda
          Interfunding Corporation and Bankers Trust Company, as  Collateral
          Agent. (1)

10.05     Security  Agreement,  dated July 31, 1996, between  Panda  Funding
          Corporation and Bankers Trust Company, as Collateral Agent. (1)

10.06     Security  Agreement,  dated July 31, 1996,  between  Panda  Cayman
          Interfunding   Company,   as  Debtor,   and   Panda   Interfunding
          Corporation, as Secured Party. (1)

10.07     Stock  Pledge  Agreement (Panda Interfunding  Corporation  Stock),
          dated  July 31, 1996, between Panda Energy Corporation and Bankers
          Trust Company, as Collateral Agent. (1)

10.08     Stock  Pledge Agreement (Panda Funding Corporation and PIC  Entity
          Stock),   dated   July   31,  1996,  between  Panda   Interfunding
          Corporation and Bankers Trust Company, as Collateral Agent. (1)

10.09     Trust Indenture, dated July 31, 1996, among Panda-Rosemary Funding
          Corporation,  Panda-Rosemary, L.P. and  Fleet  National  Bank,  as
          Trustee. (1)

10.10     First  Supplemental Indenture to Trust Indenture, dated  July  31,
          1996,  among  Panda-Rosemary Funding Corporation,  Panda-Rosemary,
          L.P. and Fleet National Bank, as Trustee. (1)

10.11     Form  of  8-5/8%  First Mortgage Bonds due 2016 of  Panda-Rosemary
          Funding Corporation. (1)

10.12     Deposit  and  Disbursement Agreement, dated July 31,  1996,  among
          Panda-Rosemary  Funding Corporation, Panda-Rosemary,  L.P.,  Fleet
          National  Bank, as Collateral Agent, and Fleet National  Bank,  as
          Depositary Agent. (1)

10.13     Collateral  Agency  and Intercreditor Agreement,  dated  July  31,
          1996,  among  Panda Rosemary Funding Corporation,  Panda-Rosemary,
          L.P.,  The L/C Issuer, The Trustee Under The Trust Indenture,  The
          Depositary  Agent,  The  Collateral Agent and  The  Other  Secured
          Parties, all as named therein. (1)

10.14     Deed  of  Trust and Security Agreement, dated July  31,  1996,  by
          Panda-Rosemary, L.P., Grantor, Ross J. Smyth, Trustee,  and  Fleet
          National Bank, as Collateral Agent, the Beneficiary. (1)

10.15     Security  Agreement, dated July 31, 1996, by Panda-Rosemary,  L.P.
          to Fleet National Bank, as Collateral Agent. (1)

10.16     Security Agreement, dated July 31, 1996, by Panda-Rosemary Funding
          Corporation to Fleet National Bank, as Collateral Agent. (1)

10.17     General  Partner  Pledge and Security Agreement,  dated  July  31,
          1996,  by  Panda-Rosemary Corporation to Fleet National  Bank,  as
          Collateral Agent. (1)

10.18     Limited  Partner  Pledge and Security Agreement,  dated  July  31,
          1996,  by PRC II Corporation to Fleet National Bank, as Collateral
          Agent. (1)

10.19     Stock Pledge and Security Agreement, dated July 31, 1996, by Panda
          Interholding  Corporation to Fleet National  Bank,  as  Collateral
          Agent. (1)

10.20     Stock Pledge and Security Agreement, dated July 31, 1996, by Panda-
          Rosemary, L.P. to Fleet National Bank, as Collateral Agent. (1)

10.21     Partnership Guaranty, dated July 31, 1996, by Panda-Rosemary, L.P.
          in favor of Fleet National Bank, as Trustee. (1)

10.22     Reimbursement  Agreement,  dated July  31,  1996,  between  Panda-
          Rosemary,  L.P., Panda-Rosemary Funding Corporation and Bayerische
          Vereinsbank AG, New York Branch. (1)

10.23     Irrevocable  Direct  Pay  Letter of Credit  issued  by  Bayerische
          Vereinsbank AG. (1)

10.24     Construction Loan Agreement and Lease Commitment, dated March  30,
          1996,  between Panda-Brandywine, L.P. and General Electric Capital
          Corporation. (1)

10.24.1   Participation  Agreement, dated December 18,  1996,  among  Panda-
          Brandywine,  L.P., Panda Brandywine Corporation, General  Electric
          Capital  Corporation,  Fleet National Bank, First  Security  Bank,
          National Association, and  Credit Suisse. (1)

10.24.2   Letter of Credit Reimbursement Agreement, dated December 18, 1996,
          among  Panda-Brandywine,  L.P., Panda Brandywine  Corporation  and
          General Electric Capital Corporation. (1)

10.24.3   Equity  Loan Facility Letter Agreement, dated December  18,  1996,
          among  Panda Brandywine Corporation, Panda Energy Corporation  and
          General Electric Capital Corporation. (1)

10.25     Bill  of  Sale and Severance Agreement, dated December  30,  1996,
          between  Panda-Brandywine,  L.P., as Seller,  and  Fleet  National
          Bank, Owner Trustee, as Buyer. (1)

10.26     Facility  Lease, dated December 18, 1996, between  Fleet  National
          Bank, as Owner Trustee, and Panda-Brandywine, L.P. (1)

10.27     Steam  Lease,  dated  as  of  December 18,  1996,  between  Panda-
          Brandywine, L.P. and Brandywine Water Company. (1)

10.28     Amended  and  Restated Security Deposit Agreement, dated  December
          18,   1996,   among   Panda-Brandywine,  L.P.,  Panda   Brandywine
          Corporation, General Electric Capital Corporation, Fleet  National
          Bank, Credit Suisse and First Security Bank, National Association.
          (1)

10.29     Amended  and Restated Deed of Trust and Security Agreement,  dated
          December  18,  1996, by Panda-Brandywine, L.P.  to  Chicago  Title
          Insurance Company, Trustee for the benefit of Fleet National Bank,
          as Security Agent, Beneficiary. (1)

10.30     Amended  and  Restated  Steam  Lessee  Security  Agreement,  dated
          December  18, 1996, by Brandywine Water Company in favor of  Fleet
          National Bank, as Security Agent. (1)

10.31     Amended and Restated Security Agreement, dated December 18,  1996,
          by  Panda-Brandywine,  L.P. in favor of Fleet  National  Bank,  as
          Security Agent. (1)

10.32     Amended  and  Restated Trust Agreement, dated December  18,  1996,
          between   General   Electric   Capital   Corporation,   as   Owner
          Participant, and Fleet National Bank, as Owner Trustee. (1)

10.33     Amended  and  Restated  General Partner  Pledge  Agreement,  dated
          December  18,  1996,  by  Panda Brandywine  Corporation  to  Fleet
          National Bank, as Security Agent. (1)

10.34     Amended  and  Restated  Limited Partner  Pledge  Agreement,  dated
          December  18, 1996,  by Panda Energy Corporation to Fleet National
          Bank, as Security Agent. (1)

10.35     Amended  and  Restated Stock Pledge Agreement, dated December  18,
          1996, by Panda Interholding Corporation to Fleet National Bank, as
          Security Agent. (1)

10.36     Assumption  Agreement and Release, dated July 31, 1996,  by  Panda
          Interholding  Corporation  in favor of  General  Electric  Capital
          Corporation and Fleet National Bank. (1)

10.37     Power  Purchase and Operating Agreement, dated January  24,  1989,
          between  Panda Energy Corporation and Virginia Electric and  Power
          Company. (1)

10.38     Amendment  No. 1 to Power Purchase and Operating Agreement,  dated
          October  24,  1989, between Panda Energy Corporation and  Virginia
          Electric and Power Company. (1)

10.39     Amendment  No. 2 to Power Purchase and Operating Agreement,  dated
          July  30, 1993, between Panda-Rosemary, L.P. and Virginia Electric
          and Power Company. (1)

10.40     Fuel  Supply Management Agreement, dated October 10, 1990, between
          Panda-Rosemary Corporation and Natural Gas Clearinghouse. (1)

10.41     Amendment  No. 1 to Fuel Supply Management Agreement, dated  March
          5,  1991,  between  Panda-Rosemary  Corporation  and  Natural  Gas
          Clearinghouse. (1)

10.42     Gas  Purchase  Contract,  dated April  12,  1990,  between  Panda-
          Rosemary Corporation and Natural Gas Clearinghouse. (1)

10.43     Amendment   of   Gas  Purchase  Contract  between   Panda-Rosemary
          Corporation and Natural Gas Clearinghouse. (1)

10.44     Pipeline  Operating Agreement, dated February  14,  1990,  between
          Panda  Energy  Corporation, Panda-Rosemary Corporation  and  North
          Carolina Natural Gas Corporation. (1)

10.45     Amendment  No.  1 to Pipeline Operating Agreement,  dated  May  7,
          1990, between Panda Energy Corporation, Panda-Rosemary Corporation
          and North Carolina Natural Gas Corporation. (1)

10.46     Assignment  Agreement, dated June 15, 1990, between  Panda  Energy
          Corporation and Panda-Rosemary Corporation. (1)

10.47     Amendment  No.  2 to Pipeline Operating Agreement, dated  November
          19,   1991,   among   Panda  Energy  Corporation,   Panda-Rosemary
          Corporation and North Carolina Natural Gas Corporation. (1)

10.48     Real  Property Lease and Easement Agreement, dated June  9,  1989,
          between The Bibb Company and Panda-Rosemary Corporation. (1)

10.49     First  Amendment  to  Real Property Lease and Easement  Agreement,
          dated October 1, 1989, between The Bibb Company and Panda-Rosemary
          Corporation. (1)

10.50     Second  Amendment  to Real Property Lease and Easement  Agreement,
          dated  January  31,  1990,  between The Bibb  Company  and  Panda-
          Rosemary Corporation. (1)

10.51     Leasehold  and Real Property Assignment and Assumption  Agreement,
          dated  January  6,  1992, between Panda-Rosemary  Corporation  and
          Panda-Rosemary, L.P. (1)

10.52     Third  Amendment  to  Real Property Lease and Easement  Agreement,
          dated March 15, 1996, between The Bibb Company and Panda-Rosemary,
          L.P. (1)

10.53     Cogeneration  Energy  Supply Agreement, dated  January  12,  1989,
          between Panda Energy Corporation and The Bibb Company. (1)

10.54     First  Amendment  to Cogeneration Energy Supply  Agreement,  dated
          October  1, 1989, between Panda Energy Corporation, Panda-Rosemary
          Corporation and The Bibb Company. (1)

10.55     Service  Agreement, dated July 26, 1996, between  Transcontinental
          Gas Pipe Line Corporation and Panda-Rosemary, L.P. (1)

10.55.1   Form of Amendment to Service Agreement, effective January 1, 1997,
          between  Transcontinental  Gas Pipe Line  Corporation  and  Panda-
          Rosemary, L.P. (1)

10.56     Service  Agreement  Applicable to Transportation  of  Natural  Gas
          Under  Rate  Schedule  FT,  dated August  20,  1996,  between  CNG
          Transmission Corporation and Panda-Rosemary, L.P. (1)

10.57     Gas  Transportation Agreement, dated August 1, 1996, between Texas
          Gas Transmission Corporation and Panda-Rosemary, L.P. (1)

10.58     Assignment  and Assumption Agreement, dated May 15, 1989,  between
          Panda Energy Corporation and Panda-Rosemary Corporation. (1)

10.59     Bill  of  Sale  and  Assignment  and Assumption  Agreement,  dated
          January  6,  1992, between Panda-Rosemary Corporation  and  Panda-
          Rosemary, L.P. (1)

10.60     Assignment  and  Assumption  Agreement,  dated  January  6,  1992,
          between  Panda Energy Corporation and Panda-Rosemary  Corporation.
          (1)

10.61     Power  Purchase  Agreement, dated August 9, 1991,  between  Panda-
          Brandywine, L.P. and Potomac Electric Power Company. (1)

10.62     First  Amendment to Power Purchase Agreement, dated September  16,
          1994,  between  Panda-Brandywine, L.P. and Potomac Electric  Power
          Company. (1)

10.62.1   Present Assignment of Power Purchase Agreement, dated December 18,
          1996,  by Panda-Brandywine, L.P. to Fleet National Bank, as  Owner
          Trustee,  for the benefit of General Electric Capital Corporation,
          as Owner Participant. (1)

10.62.2   Amended  and  Restated Consent and Agreement, dated  December  30,
          1996,  among  Potomac  Electric Power  Company,  Panda-Brandywine,
          L.P.,  Fleet  National Bank, as Security Agent and Owner  Trustee,
          General Electric Capital Corporation, as the issuer of the Letters
          of   Credit,   the   Interest  Hedging  Counterparty   and   Owner
          Participant,  First  Security  Bank,   National  Association,   as
          Indenture Trustee, and Credit Suisse, as Administrative Agent. (1)

10.63     Amended  and  Restated  Turnkey Cogeneration  Facility  Agreement,
          dated  March 30, 1995, between Panda-Brandywine, L.P. and Raytheon
          Engineers & Constructors, Inc. (1)

10.64     Raytheon  Parent  Guaranty, dated May 18, 1994,  between  Raytheon
          Company and Panda-Brandywine, L.P. (1)

10.65     Steam  Sales  Agreement,  dated March  30,  1995,  between  Panda-
          Brandywine, L.P. and Brandywine Water Company. (1)

10.66     Gas   Sales  Agreement,  dated  March  30,  1995,  between   Cogen
          Development Company and Panda Brandywine, L.P. (1)

10.67     Precedent Agreement, dated February 25, 1994, between Columbia Gas
          Transmission  Corporation and Panda-Brandywine, L.P. (1)

10.68     Amending  Agreement,  dated March 24, 1995, between  Columbia  Gas
          Transmission Corporation and Panda-Brandywine, L.P. (1)

10.69     Amended and Restated FTS Service Agreement, dated March 23,  1995,
          between   Columbia   Gas  Transmission  Corporation   and   Panda-
          Brandywine, L.P. (1)

10.70     FTS  Service  Agreement, dated of as March 30, 1995, between  Cove
          Point LNG Limited Partnership and Panda-Brandywine, L.P. (1)

10.71     Gas  Transportation and Supply Agreement, dated November 10, 1994,
          between  Panda-Brandywine, L.P. and Washington Gas Light  Company.
          (1)

10.72     Amended  and Restated Site Lease, dated December 18, 1996, between
          Panda-Brandywine, L.P. and Fleet National Bank, as Owner  Trustee.
          (1)

10.73     Amended  and  Restated  Site Sublease, dated  December  18,  1996,
          between  Fleet  National Bank,  Owner Trustee, as  Sublessor,  and
          Panda-Brandywine, L.P., as Sublessee. (1)

10.74     Purchase  Agreement,  dated July 26, 1996, between  Panda  Funding
          Corporation and Jefferies & Company, Inc. (1)

10.75     Additional  Projects Contract, dated July 31,  1996,  among  Panda
          Energy  International, Inc., Panda Energy Corporation,  and  Panda
          Interfunding Corporation. (1)

10.76     Non-Petition   Agreement,  dated  July  31,  1996,   among   Panda
          Interfunding  Corporation, Panda Interholding Corporation,  Panda-
          Rosemary  Corporation, PRC II Corporation, Panda-Rosemary  Funding
          Corporation and Panda-Rosemary, L.P. (1)

10.77     Non-Petition  Agreement, dated July 31, 1996, among Panda  Funding
          Corporation,  Panda  Interholding Corporation, Panda  Interfunding
          Corporation and Panda (Cayman) Interfunding Company. (1)

10.78     Joint  Venture  Contract for Tangshan Panda Heat  and  Power  Co.,
          Ltd., dated September 4, 1994, between Luannan County Heat & Power
          Plant and Pan-Western Energy Corp., LLC, as amended July 19,  1996
          and November 18, 1996, respectively. (2)

10.79     Joint  Venture  Contract for Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd., dated September 3, 1994, between Tangshan Luanhua  Co.
          (Group)  and  Pan-Western Energy Corp., LLC, as amended  July  19,
          1996 and November 18, 1996, respectively. (2)

10.80     Joint  Venture  Contract for Tangshan Cayman Heat and  Power  Co.,
          Ltd.,  dated  May 11, 1996, between Luannan County  Heat  &  Power
          Plant and Pan-Western Energy Corp., LLC, as amended July 19,  1996
          and November 18, 1996, respectively. (2)

10.81     Joint Venture Contract for Tangshan Pan-Sino Heat Co., Ltd., dated
          May  28, 1996, between Luannan County Heat Company and Pan-Western
          Energy Corp., LLC, as amended July 19, 1996 and November 18, 1996,
          respectively. (2)

10.82     Coal  Supply Agreement between Tangshan Panda Heat and Power  Co.,
          Ltd.  and  Kailuan Coal Mining Administration, dated  February  3,
          1996. (2)

10.83     General Interconnection Agreement between North China Power  Group
          Company, Tangshan Panda Heat and Power Co., Ltd. and Tangshan Pan-
          Western Heat and Power Co., Ltd., dated September 22, 1995. (2)

10.84     Electric  Energy Purchase and Sales Agreement between North  China
          Power  Group Company, Tangshan Panda Heat and Power Co., Ltd.  and
          Tangshan Pan-Western Heat and Power Co., Ltd., dated September 22,
          1995. (2)

10.85     Supplemental  Agreement for General Interconnection  and  Electric
          Energy  Purchase  and Sales Agreement Between  North  China  Power
          Group  Company,  Tangshan  Panda Heat  and  Power  Co.,  Ltd.  and
          Tangshan  Pan-Western Heat and Power Co., Ltd. dated February  10,
          1996. (2)

10.86     Construction  Agreement between North China Power  Group  Company,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan  Pan-Western
          Heat and Power Co., Ltd., dated February 10, 1996. (2)

10.87     Loan  Agreement between North China Power Group Company,  Tangshan
          Panda  Heat and Power Co., Ltd. and Tangshan Pan-Western Heat  and
          Power  Co.,  Ltd.,  dated February 10, 1996, as amended  June  18,
          1996. (2)

10.88     Agency Contract for Entrusted Loan between China Information Trust
          and  Investment  Corporation, Tangshan Panda Heat and  Power  Co.,
          Ltd.  and Tangshan Pan-Western Heat and Power Co. Ltd., dated June
          18, 1996, as amended July 17, 1996. (2) (4)

10.89     Transfer  of  Loan Agreement among Tangshan Panda Heat  and  Power
          Co.,  Ltd.,  Tangshan  Pan-Western Heat and Power  Co.,  Ltd.  and
          Tangshan Pan-Sino Heat Co., Ltd. (2)

10.90     Engineering, Procurement and Construction Contract among  Tangshan
          Panda  Heat  and  Power Co., Ltd., Tangshan Pan-Western  Heat  and
          Power  Co.,  Ltd.  and Harbin Power Engineering  Company  Limited,
          dated April 24, 1996, as amended July 4, 1996, September 14,  1996
          and December 17, 1996, respectively. (2) (4)

10.91     Engineering and Design Contract among Hebei Electric Power  Survey
          and  Design Institute, Tangshan Panda Heat and Power Company, Ltd.
          and  Tangshan  Pan-Western  Heat and Power  Company,  Ltd.,  dated
          December 21, 1995, as amended June 21, 1996. (2)

10.92     Guaranty by China Harbin Power Equipment Group Company, dated July
          16, 1996. (2)

10.93     Performance  Guarantee by The Export-Import Bank of  China,  dated
          January 3, 1997. (2)

10.94     Amended  and Restated Operation and Maintenance Agreement  between
          Tangshan  Heat and Power Co., Ltd., Tangshan Pan-Western Heat  and
          Power  Co.,  Ltd.,  Tangshan  Cayman Heat  and  Power  Co.,  Ltd.,
          Tangshan   Pan-Sino   Heat  Co.,  Ltd.   and   Duke/Fluor   Daniel
          International Services, dated March 6, 1997. (2) (4)

10.95     Construction Agreement of Heat and Steam Network between  Tangshan
          Pan-Sino Heat Co., Ltd. and Tangshan Heat and Engineering Company,
          dated June 20, 1996. (2)

10.96     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Panda Heat and  Power
          Co., Ltd., April 1, 1997 (2) (4)

10.97     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Pan-Western Heat  and
          Power Co., Ltd., April 1, 1997 (2) (4)

10.98     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Cayman Heat and Power
          Co., Ltd., April 1, 1997 (2) (4)

10.99     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western  Energy  Corporation, LLC and Tangshan Pan-Sino  Heat  and
          Power Co., Ltd., April 1, 1997 (2) (4)

10.100    Water,  Heat,  Steam  and  Hot Water Supply  and  Usage  Agreement
          between Tangshan Cayman Heat and Power Company, Ltd., and Tangshan
          Panda Heat and Power Company, Ltd., dated October 3, 1996. (2) (4)

10.101    Water,  Heat,  Steam  and  Hot Water Supply  and  Usage  Agreement
          between  Tangshan Cayman Heat and Power Company, Ltd. and Tangshan
          Pan-Western Heat and Power  Company, Ltd., dated October 3,  1996.
          (2) (4)

10.102    Steam  for  Process  and  Heating Water  Sales  Agreement  between
          Tangshan  Cayman Heat and Power Company, Ltd., and  Tangshan  Pan-
          Sino Heat Company, Ltd., dated October 16, 1996. (2)

10.103    Articles of Association of Tangshan Panda Heat and Power Co., Ltd.
          between  Luannan County Heat & Power Plant and Pan-Western  Energy
          Corp., LLC dated September 4, 1994. (2)

10.104    Articles  of Association for Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd.,  between Tangshan Luanhua Co. (Group)  and Pan-Western
          Energy Corp., LLC, dated September 3, 1994. (2)

10.105    Articles  of Association for Tangshan Cayman Heat and  Power  Co.,
          Ltd.,  between  Luannan County Heat & Power Plant and  Pan-Western
          Energy Corp., LLC, dated May 11, 1996. (2)

10.106    Articles  of  Association for Tangshan Pan-Sino  Heat  Co.,  Ltd.,
          between Luannan County Heat Company and Pan-Western Energy  Corp.,
          LLC, dated May 28, 1996. (2)

10.107    Application  Regarding Power Price among Tangshan Panda  Heat  and
          Power  Co.,  Ltd., Tangshan Pan-Western Heat and Power Co.,  Ltd.,
          and  Tangshan  Municipal Price Bureau dated October 17,  1995,  as
          amended October 18, 1995 and May 8, 1996, respectively. (2) (4)

10.108    Administrative   Services   Agreement   between    Panda    Energy
          International,  Inc. and Panda Global Holdings, Inc.  dated  April
          22, 1997. (2)

10.109    Development Services Agreement between Panda Energy International,
          Inc. and Panda Global Holdings, Inc. dated April 22, 1997. (2)

10.110    Form  of  Purchase  Agreement among Donaldson, Lufkin  &  Jenrette
          Securities Corporation, Panda Global Energy Company, Panda  Global
          Holdings,  Inc. and Panda Energy International, Inc., dated  April
          11, 1997. (2)

10.111    Form  of Issuer Loan Agreement between Panda Global Energy Company
          and Pan-Western Energy Corporation, LLC, dated April 22, 1997. (2)

10.112    Form  of Issuer Note of Pan-Western Energy Corporation, LLC, dated
          April 22, 1997. (2)

10.113    Registered   Capital  Contribution  and  Agency  Agreement   among
          Tangshan  Panda Heat and Power Company, Ltd., Tangshan Pan-Western
          Heat  and  Power  Company, Ltd., Tangshan Cayman  Heat  and  Power
          Company,  Ltd.,  Tangshan  Pan-Sino Heat  Company,  Ltd.,  Luannan
          County Heat and Power Plant, Tangshan Luanhua (Group) Co., Luannan
          County Heat Company and Pan-Western Energy Corporation, LLC, dated
          March 26, 1997. (2)

10.114    Form  of  Account Agreement among Panda Interfunding  Corporation,
          Panda  Energy Corporation and Panda Global Holdings,  Inc.,  dated
          April 22, 1997. (2)

10.115    Form  of Pledge Agreement between Panda Global Energy Company  and
          Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.116    Form  of  Pledge  Agreement  between Pan-Sino  Energy  Development
          Company,  LLC and Bankers Trust Company, as Trustee,  dated  April
          22, 1997. (2)

10.117    Form  of  Pledge Agreement between Pan-Western Energy Corporation,
          LLC  and Bankers Trust Company, as Trustee, dated April 22,  1997.
          (2)

10.118    Form  of Pledge Agreement between Panda Global Holdings, Inc.  and
          Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.119    Form  of  Cash  Collateral Agreement between Panda  Global  Energy
          Company  and  Bankers Trust Company, as Trustee, dated  April  22,
          1997. (2)

10.120    Form  of  Cash  Collateral  Agreement between  Pan-Western  Energy
          Corporation,  LLC  and Bankers Trust Company,  as  Trustee,  dated
          April 22, 1997. (2)

10.121    Form   of  Cash  Collateral  Agreement  between  Pan-Sino   Energy
          Development  Company, LLC and Bankers Trust Company,  as  Trustee,
          dated April 22, 1997. (2)

10.122    Form  of Pledge Agreement between Panda Energy International, Inc.
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.123    Form  of  Cash Collateral Agreement between Panda Global Holdings,
          Inc.  and Bankers Trust Company, as Trustee, dated April 22, 1997.
          (2)

10.124    Form of Cash Collateral Agreement Between Panda Energy Corporation
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.125    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan Cayman  Heat
          and Power Co., Ltd., dated September 24, 1996. (2)

10.126    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan  Pan-Western
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.127    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Panda Heat and Power Co., Ltd. and Tangshan Pan-Sino Heat
          Co., Ltd., dated September 24, 1996. (2)

10.128    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Western Heat and Power Co., Ltd. and  Tangshan  Pan-
          Sino Heat Co., Ltd., dated September 24, 1996. (2)

10.129    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Western Heat and Power Co., Ltd. and Tangshan  Panda
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.130    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Pan-Western Heat and Power Co., Ltd. and Tangshan  Cayman
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.131    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman Heat and Power Co., Ltd. and Tangshan Panda  Heat
          and Power Co., Ltd., dated September 24, 1996. (2)

10.132    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman  Heat and Power Co., Ltd. and  Tangshan  Pan-Sino
          Heat Co. Ltd., dated September 24, 1996. (2)

10.133    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman Heat and Power Co., Ltd. and Tangshan Pan-Western
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.134    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Sino  Heat Co., Ltd. and Tangshan  Cayman  Heat  and
          Power Co., Ltd., dated September 24, 1996. (2)

10.135    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Pan-Sino Heat Co., Ltd. and Tangshan Pan-Western Heat and
          Power Co., Ltd., dated September 24, 1996. (2)

10.136    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Sino  Heat Co., Ltd.  and Tangshan  Panda  Heat  and
          Power Co., Ltd., dated September 24, 1996. (2)

12.00     Computation of Ratio of Earnings to Fixed Charges. (2)

21.00     Subsidiaries of Registrant and Co-Registrant. (2)

23.01     Consent of Deloitte & Touche LLP. (2)

23.02     Consent  of  Chadbourne  &  Parke LLP (contained  in  their  Legal
          Opinion filed as Exhibit 5.00). (3)

23.03     Consent of ICF Resources, Incorporated. (2)

23.04     Consent of Burns & McDonnell Engineering Company, Inc. (2)

23.05     Consent of Benjamin Schlesinger and Associates, Inc. (2)

23.06     Consent of Pacific Energy Systems, Inc. (2)

23.07     Consent of C.C. Pace Resources, Inc. (2)

23.08     Consent of Parsons Brinckerhoff Energy Services, Inc. (2)

23.09     Consent of Marston & Marston, Inc. (2)

23.10     Consent of Maples & Calder. (2)

23.11     Consent of Cai, Zhang & Lan. (2)

24.00     Powers of Attorney (contained in the signature pages in Part II of
          this Registration Statement). (2)

25.00     Statement  of Eligibility of Trustee under Indenture on Form  T-1.
          (2)

27.00     Financial Data Schedule. (2)

99.01     Form of Transmittal Letter. (3)

99.02     Form of Notice of Guaranteed Delivery. (3)

99.03     Independent  Engineer's  Report of Burns &  McDonnell  Engineering
          Company, Inc., dated April 11, 1997, as updated June 6, 1997. (2)

99.04     Independent  Fuel Consultant's Report of Benjamin Schlesinger  and
          Associates, Inc., dated September 20, 1996, as updated April 11, 1997
          and June 6, 1997, respectively. (2)

99.05     Independent  Engineer's Report of Pacific  Energy  Systems,  Inc.,
          dated  July 22, 1996, as updated April 11, 1997 and June 6,  1997,
          respectively. (2)

99.06     Independent Fuel Consultant's Report of C.C. Pace Resources, Inc.,
          dated  July 2, 1996, as updated April 11, 1997 and June  6,  1997,
          respectively. (2)

99.07     Independent  Engineer's  Report  of  ICF  Resources  Incorporated,
          dated April 11, 1997, as updated June 6, 1997, respectively. (2)

________________________

(1)  Previously  filed as an exhibit to the Registration Statement  on  Form
     S-1  (Registration  No. 333-19445) of Panda Funding Corporation,  Panda
     Interfunding    Corporation   and   Panda   Interholding    Corporation
     (affiliates  of  the  Registrant and Co-Registrant),  and  incorporated
     herein by reference.
(2)  Filed herewith.
(3)  To be filed by amendment.
(4)  The   Registrant   and  the  Co-Registrant  have  sought   confidential
     treatment for certain information identified in these exhibits.
[{"type": "S-1", "sequence": "1", "secsgml_size_bytes": 1657173}]
[{"company-data": {"conformed-name": "PANDA GLOBAL ENERGY CO", "cik": "0001038503", "assigned-sic": "", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-29005", "film-number": "97622700"}, "business-address": {"street1": "4100 SPRING VALLEY RD STE 1001", "city": "DALLAS", "state": "TX", "zip": "75244", "phone": "2149807159"}, "mail-address": {"street1": "4100 SPRING VALEY RD STE 1001", "city": "DALLAS", "state": "TX", "zip": "75244"}}, {"company-data": {"conformed-name": "PANDA GLOBAL HOLDINGS INC", "cik": "0001038504", "assigned-sic": "", "irs-number": "752697755", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-29005-01", "film-number": "97622701"}, "business-address": {"street1": "4100 SPRING VALLEY RD STE 1001", "city": "DALLAS", "state": "TX", "zip": "75244", "phone": "2149807159"}, "mail-address": {"street1": "4100 SPRING VALLEY RD STE 1001", "city": "DALLAS", "state": "TX", "zip": "75244"}}]
As Filed with the Securities and Exchange Commission on June 11, 1997
                                                 Registration No. 333-
                                                                  333-
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                       
                                   FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                                       
                          Panda Global Energy Company
            (Exact name of Registrant as specified in its charter)
    Cayman Islands                    4900                   Not Applicable
(State or other                (Primary Standard             (I.R.S. Employer
Jurisdication of           Industrial Classification        Identification No.)
incorporation or                 Code Number
organization)             
                                       
                          Panda Global Holdings, Inc.
                                       
     (Exact name of Co-Registrant (Guarantor) as specified in its charter)
      Delaware                       4900                     75-2697755
(State or other                (Primary Standard             (I.R.S. Employer
Jurisdication of           Industrial Classification        Identification No.)
incorporation or                 Code Number)
organization)                                       

      L. Stephen Rizzieri                         L. Stephen Rizzieri
Vice President and General Counsel       Vice President and General Counsel
  Panda Global Energy Company                   Panda Global Holdings, Inc.
4100 Spring Valley Road, Suite 1001      4100 Spring Valley Road, Suite 1001
      Dallas, Texas  75244                        Dallas, Texas  75244
         (972) 980-7159                              (972) 980-7159

(Name, address, including zip code,      (Name, address, including zip code, 
and telephone, including area code,      and telephone, including area code
of registrant's principal executive      of guarantor's principal executive
  offices and agent for service)           offices and agent for service)
                                       
       Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement
                                       
                               
  If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. ___

  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ___

  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ___

  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  ___

                                       
                            CALCULATION OF REGISTRATION FEE
                                       Proposed      Proposed         
Title of Each Class of   Amount to     Maximum       Maximum     Amount of
   Securities to be         be         Offering     Aggregate   Registration
      Registered        Registered      Price        Offering       Fee
                                       Per Unit       Price
  12-1/2% Registered                                                   
 Senior Secured Notes  $155,200,000    93.444%     $145,025,088   $43,947
       due 2004

  The Registrant and the Co-Registrant hereby amend this Registration Statement
on such date or dates as may be necessary to delay its effective date until the
Registrant  and  the  Co-Registrant  shall  file  a  further  amendment   which
specifically  states that this Registration Statement shall  thereafter  become
effective  in  accordance with Section 8(a) of the Securities Act  of  1933  or
until  the  Registration Statement shall become effective on such date  as  the
Commission, acting pursuant to said Section 8(a), may determine.

                          PANDA GLOBAL ENERGY COMPANY
                          PANDA GLOBAL HOLDINGS, INC.
                             Cross Reference Sheet
                                       
                                       
  1. Forepart of the Registration
     Statement and Outside Front Cover
     Page of Prospectus                 Outside Front Cover Page of Prospectus;
                                        Facing Pages

  2. Inside Front and Outside Back
     Cover Pages of Prospectus          Inside  Front  and Outside  Back  Cover
                                        Pages of Prospectus

  3. Summary Information, Risk Factors
     and Ratio of Earnings to Fixed
     Charges                            Prospectus   Summary;   Risk   Factors;
                                        Unaudited   Consolidated   Pro    Forma
                                        Financial Data of the Company; Selected
                                        Financial Data of the Issuer;  Selected
                                        Financial Data of the Company

  4. Use  of  Proceeds                  Use  of Proceeds

  5. Determination of Offering Price    *

  6. Dilution                           *

  7. Selling Security Holders           *

  8. Plan  of  Distribution             Outside Front Cover Page of Prospectus;
                                        Prospectus Summary; The Exchange Offer;
                                        Plan of Distribution

  9. Description of Securities to be
     Registered                         Prospectus Summary; Description of  the
                                        Exchange  Notes,  the  Exchange   Notes
                                        Guarantee,   the   Issuer   Loan,   the
                                        Shareholder  Loans and  the  Collateral
                                        Documents

 10. Interests of Named Experts and
     Counsel                            Legal Matters; Experts

 11. Information with Respect to the
     Registrant and the Co-Registrant   Outside Front Cover Page of Prospectus;
                                        Available    Information;    Prospectus
                                        Summary; Risk Factors; Business of  the
                                        Issuer,     the     Company,      Panda
                                        International  and Their  Subsidiaries;
                                        Use    of   Proceeds;   Capitalization;
                                        Unaudited   Consolidated   Pro    Forma
                                        Financial Data of the Company; Selected
                                        Financial Data of the Issuer;  Selected
                                        Financial   Data   of   the    Company;
                                        Management's Discussion and Analysis of
                                        Financial  Condition  and  Results   of
                                        Operations  of the Issuer; Management's
                                        Discussion  and Analysis  of  Financial
                                        Condition and Results of Operations  of
                                        the   Company;   The  Exchange   Offer;
                                        Certain  Tax  Considerations   of   the
                                        Exchange  Offer;  Description  of   the
                                        Projects;       Management;       Legal
                                        Proceedings;   Description   of   Other
                                        Indebtedness;   Description   of    the
                                        Exchange  Notes,  the  Exchange   Notes
                                        Guarantee,   the   Issuer   Loan,   the
                                        Shareholder  Loans and  the  Collateral
                                        Documents; Plan of Distribution;  Legal
                                        Matters;  Experts; Index  to  Financial
                                        Statements; Certain Defined Terms;  The
                                        Electric  Power Industry and Regulation
                                        in  the  PRC  and  the  United  States;
                                        Consolidated Pro Forma Report;  Luannan
                                        Engineering   Report;   Luannan    Coal
                                        Consultant's     Report;      Ownership
                                        Structure  of the Issuer, the  Company,
                                        Panda  International  and  Certain   of
                                        Their Subsidiaries.

 12. Disclosure of Commission Position
     on Indemnification for Securities
     Act Liabilities                    *

*     Not applicable

                      SUBJECT TO COMPLETION, JUNE 11,1997

PROSPECTUS
                              OFFER TO EXCHANGE
               12-1/2% Registered Senior Secured Notes due 2004
              which have been registered under the Securities Act
                          for any and all outstanding
                    12-1/2% Senior  Secured Notes due 2004              [LOGO]
                                      of
                          PANDA GLOBAL ENERGY COMPANY
                    Fully and Unconditionally Guaranteed by
                          PANDA GLOBAL HOLDINGS, INC.
                                       
       THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
                      ON        , 1997, UNLESS EXTENDED.
      Panda  Global Energy Company, a Cayman Islands company (the "Issuer"),  a
subsidiary  of  Panda  Global  Holdings,  Inc.,  a  Delaware  corporation  (the
"Company"),  hereby  offers, upon the terms and subject to the  conditions  set
forth  in  this  Prospectus and in the accompanying Letter of Transmittal  (the
"Letter  of  Transmittal," which together with this Prospectus  constitute  the
"Exchange Offer"), to exchange up to $155,200,000 in aggregate principal amount
of  its  12-1/2%   Registered Senior Secured Notes,  due  2004  (the  "Exchange
Notes")  for  a  like  principal amount of its issued and  outstanding  12-1/2%
Senior Secured Notes, due 2004 (the "Old Notes") that were issued and sold in a
transaction  exempt  from registration under the Securities  Act  of  1933,  as
amended  (the  "Securities  Act").   The  terms  of  the  Exchange  Notes   are
substantially identical to the terms of the Old Notes, except that the Exchange
Notes  (i)  have been registered under the Securities Act, and (ii) holders  of
the Exchange Notes will not be entitled to certain rights of holders of the Old
Notes under the Registration Rights Agreement (as defined herein), which rights
will  terminate upon the consummation of the Exchange Offer.  Such rights  will
also terminate as to holders of Old Notes who are eligible to tender their  Old
Notes  for exchange in the Exchange Offer and fail to do so.  See "The Exchange
Offer -- Termination of Certain Rights."  The Exchange Notes will evidence  the
same debt as the Old Notes which they replace and will be issued under, and  be
entitled to the benefits of, the indenture governing the Old Notes dated  April
22,  1997 (the "Exchange Notes Indenture").  As of the date of this Prospectus,
$155,200,000  principal amount of Old Notes is outstanding. The Old  Notes  and
the  Exchange  Notes  are  sometimes referred to  herein  collectively  as  the
"Existing Notes."

      The  Exchange Notes will bear interest from the date of issuance, at  the
rate  per  annum set forth above, payable semiannually in cash  in  arrears  on
April 15 and October 15 of each year, commencing October 15, 1997.  Interest on
the  Old Notes accepted for exchange will accrue thereon to, but not including,
the  date of issuance of the Exchange Notes and will be paid together with  the
first interest payment on the Exchange Notes issued in exchange therefor.   The
principal  of  the  Exchange Notes is payable semiannually in  installments  as
described  herein, commencing October 15, 2000. The Exchange Notes will  mature
on April 15, 2004, and will be redeemable at the option of the Issuer, in whole
or  in  part, at any time on or after April 15, 2002, at the redemption  prices
set  forth herein, plus accrued and unpaid interest to the redemption date.  In
addition,  the  Issuer  is  required to redeem  the  Exchange  Notes  upon  the
occurrence of certain events as set forth herein.  Payment of principal of, and
premium,   if   any,  and  interest  on  the  Exchange  Notes  is   fully   and
unconditionally  guaranteed  by  the  Company  (the  "Company  Guaranty").  See
"Prospectus  Summary  --  Terms of the Exchange Notes  --  The  Exchange  Notes
Guarantee.  See  "Description  of  the  Exchange  Notes,  the  Exchange   Notes
Guarantee,   the  Issuer  Loan,  the  Shareholder  Loans  and  the   Collateral
Documents."

     Subject to the terms and conditions of the Exchange Offer, the Issuer will
accept  for  exchange any and all Old Notes validly tendered and not  withdrawn
prior  to 5:00 p.m., New York City time, on             , 1997, unless extended
by  the  Issuer in its sole discretion (the "Expiration Date"). Tenders of  Old
Notes  may be withdrawn at any time prior to the Expiration Date.  The Exchange
Offer  is  not conditioned upon any minimum aggregate principal amount  of  Old
Notes being tendered or accepted for exchange.  However, the Exchange Offer  is
subject to certain customary conditions.  The Old Notes may be tendered only in
integral  multiples of $1,000.  See "The Exchange Offer --  Conditions  of  the
Exchange Offer."

     Prior to the consummation of  the Exchange Offer, there has been no public
market  for  the Exchange Notes.  The Issuer does not intend to apply  for  the
listing  of  the Exchange Notes on any securities exchange or to seek  approval
for  quotation  through any automated quotation system, and  no  active  public
market  for  the  Exchange Notes is currently anticipated.   There  can  be  no
assurance that an active public market for the Exchange Notes will develop.

                                          (continued on next page)

  See "Risk Factors" beginning on page 21 for a discussion of certain matters
    that should be considered in connection with the Exchange Offer and an
               investment in the Exchange Notes offered hereby.
                                       
 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
          EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
         HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
            UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.   ANY
             REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
                                       
                The date of this Prospectus is          , 1997.
                                       
      (cover page continued)
      
           The Old Notes were originally issued and sold on April 22, 1997 in a
      transaction not registered under the Securities Act in reliance upon  the
      exemptions provided in Section 4(2) of the Securities Act, and Rule  144A
      ("Rule  144A")  and  Regulation S promulgated under the  Securities  Act.
      Accordingly, the Old Notes may not be offered or sold, except pursuant to
      an  exemption  from, or in a transaction not subject to, the registration
      requirements   of  the  Securities  Act.  Based  upon   their   view   of
      interpretations provided to third parties by the staff of the  Securities
      and  Exchange Commission (the "Commission"), the Issuer and  the  Company
      believe that the Exchange Notes issued pursuant to the Exchange Offer may
      be  offered  for  resale,  resold and otherwise  transferred  by  holders
      thereof (other than any holder which (i) is an "affiliate" of the Company
      or  the  Issuer  within  the meaning of Rule 405  promulgated  under  the
      Securities  Act (an "Affiliate"), (ii) is a broker-dealer which  acquired
      Old  Notes  directly  from the Issuer, or (iii) is a broker-dealer  which
      acquired  Old  Notes  as  a  result of market  making  or  other  trading
      activities) without registration under the Securities Act, provided  that
      such  Exchange Notes are acquired in the ordinary course of such holders'
      business and such holders are not engaged in, and do not intend to engage
      in,  and  have  no  arrangement  or  understanding  with  any  person  to
      participate in, a distribution of such Exchange Notes. Each broker-dealer
      that receives Exchange Notes for its own account pursuant to the Exchange
      Offer  must  notify  the  Company and the Issuer  that  it  has  acquired
      Exchange Notes for its own account (which notification must be made  in
      the  applicable location in the Letter of Transmittal that is  delivered
      by  such  broker-dealer along with such broker-dealer's Old  Notes to be
      exchanged pursuant  to  the  terms  of  the  Exchange  Offer),  and  must
      acknowledge  that  it  will deliver a prospectus in connection  with  any
      resale of such Exchange Notes.  The Letter of Transmittal states that  by
      so acknowledging and by delivering a prospectus, a broker-dealer will not
      be  deemed to admit that it is an "underwriter" within the meaning of the
      Securities  Act.  This Prospectus, as it may be amended  or  supplemented
      from  time  to  time, may be used by a broker-dealer in  connection  with
      resales  of  Exchange Notes received for its own account in exchange  for
      Old  Notes where such Old Notes were acquired by such broker-dealer as  a
      result  of  market  making  activities or other trading  activities.  The
      Company and the Issuer have agreed to make available for a period  of  up
      to  two hundred and seventy (270) consecutive days after consummation  of
      the   Exchange  Offer  a  prospectus  meeting  the  requirements  of  the
      Securities Act to any such broker-dealer for use in connection  with  any
      such  resale,  subject  to  certain  conditions in the Registration Rights
      Agreement.   A  broker-dealer  that  delivers  such  a  prospectus  to  a
      purchaser  in connection with such resales will be subject to certain  of
      the civil liability provisions under the Securities Act and will be bound
      by the provisions of the Registration Rights Agreement (including certain
      indemnification  provisions).  Any holder who  tenders  in  the  Exchange
      Offer  for the purpose of participating in a distribution of the Exchange
      Notes,  and  any other holder that cannot rely upon such interpretations,
      must comply with the registration and prospectus delivery requirements of
      the Securities Act in connection with a secondary resale transaction.  In
      addition, to comply with the securities laws of certain jurisdictions, if
      applicable,  the  Exchange Notes may not be offered or sold  unless  they
      have  been registered or qualified for sale in such jurisdictions  or  an
      exemption  from  registration  or  qualification  is  available  and  the
      conditions thereto have been met.
      
            The  Exchange Notes issued pursuant to the Exchange Offer  will  be
      issued  in  the  form  of a fully registered global bond  which  will  be
      deposited with, or on behalf of, The Depository Trust Company ("DTC") and
      registered in the name of its nominee.  Beneficial interest in the global
      bond  representing  the Exchange Notes will be shown  on,  and  transfers
      thereof will be effected only through, records maintained by DTC and  its
      participants.   After the initial issuance of such global bond,  Exchange
      Notes in certificated form will be issued in exchange for the global bond
      only  as set forth in the Exchange Notes Indenture.  See "Description  of
      the  Exchange Notes, the Exchange Notes Guarantee, the Issuer  Loan,  the
      Shareholder  Loans and the Collateral Documents -- Book  Entry;  Delivery
      and Form."
      
            NO  PERSON  HAS  BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION  AS  TO
      WHETHER ANY HOLDER OF OLD NOTES SHOULD TENDER OLD NOTES PURSUANT  TO  THE
      EXCHANGE OFFER.  NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
      TO   MAKE  ANY  REPRESENTATIONS,  OTHER  THAN  THOSE  CONTAINED  IN  THIS
      PROSPECTUS  OR  IN  THE LETTER OF TRANSMITTAL. IF  GIVEN  OR  MADE,  SUCH
      RECOMMENDATIONS, INFORMATION OR REPRESENTATIONS MUST NOT BE  RELIED  UPON
      AS  HAVING  BEEN  AUTHORIZED BY THE ISSUER OR THE  COMPANY.  NEITHER  THE
      DELIVERY  OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES HEREUNDER
      SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION
      CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE  HEREOF
      OR  THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN  OR
      IN  THE AFFAIRS OF THE ISSUER OR THE COMPANY SINCE THE DATE HEREOF.  THIS
      PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION  OF  AN
      OFFER  TO  BUY ANY SECURITIES OTHER THAN THE SECURITIES COVERED  BY  THIS
      PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION  OF
      AN  OFFER TO BUY ANY SUCH SECURITIES BY ANY PERSON IN ANY JURISDICTION IN
      WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

                       ENFORCEMENT OF CIVIL LIABILITIES
                                       
      The  Issuer is an exempted company organized under the laws of the Cayman
Islands.  Substantially all of the assets of the Issuer are located outside  of
the  United States.  As a result, it may be difficult for investors  to  effect
service  of  process  upon the Issuer within the United States  or  to  enforce
against  the  Issuer  in  a U.S. court judgments obtained  in  U.  S.   courts,
including  judgments  predicated upon the civil  liability  provisions  of  the
federal securities laws of the United States ("Federal Securities Laws").   The
Issuer  has designated CT Corporation System in New York City as its agent  for
service of process in the United States with respect to the Exchange Notes (and
the  Old  Notes)  and  the  indentures relating  to  the  Exchange  Notes  (the
"Indentures")  and the Collateral Documents (as defined below)  in  any  United
States or New York State court located in the Borough of Manhattan, the City of
New  York  and  the  State of New York, and the Issuer  has  submitted  to  the
jurisdiction of such courts in connection with such matters.

      The  Issuer has been advised by its legal counsel in the Cayman  Islands,
Maples & Calder, that a final judgment for the payment of money rendered by any
federal or state court in the United States based upon civil liability, whether
or  not predicated solely upon the Federal Securities Laws, will be enforced in
the  Cayman Islands without any re-examination on its merits, provided that (i)
enforcement of such judgment conforms to general principles of equity and  (ii)
the  performance of any obligation thereunder is not fraudulent or contrary  to
public policy.

                                 DEFINED TERMS
                                       
     Unless  otherwise  specified, all references in this Prospectus  to  "U.S.
dollars," "dollars" or "$" are to United States dollars, and all references  to
"Renminbi" or "RMB" are to Renminbi, which is the legal tender currency of  the
People's Republic of China.
     
     Unless  otherwise specified, translation of amounts from Renminbi to  U.S.
dollars  for the convenience of the reader has been made in this Prospectus  at
the noon buying rate in New York City for cable transfers in foreign currencies
as  certified for customs purposes by the Federal Reserve Bank of New York (the
"Noon  Buying  Rate") on April 4, 1997 of $1.00 = RMB 8.3268. No representation
is  made that the Renminbi amounts could have been, or could be, converted into
U.S.  dollars  at  that  rate  or  at  any  other  rate.  See  "Risk  Factors--
Considerations  Relating to the PRC--Government Control of Currency  Conversion
and  Exchange Rate Risks" and "Foreign Exchange System in the PRC and  Exchange
Rate Information."
     
     All  capitalized  terms used in this Prospectus and not otherwise  defined
herein  have  the  meanings assigned in the glossary  included  as  Appendix  A
hereto, or in "Description of the Exchange Notes, the Exchange Notes Guarantee,
the  Issuer Loan, the Shareholder Loans and the Collateral Documents -- Certain
Definitions."  See also "Certain Technical Terms Commonly Used in  the  Utility
Industry" set forth in Part II of the Appendix A hereto.
     
                             AVAILABLE INFORMATION
                                       
      The  Company and the Issuer have filed with the Commission a Registration
Statement  on Form S-1 (the "Registration Statement") under the Securities  Act
with  respect  to  the Exchange Notes offered hereby and the Company  Guaranty.
This  Prospectus constitutes a part of the Registration Statement and does  not
contain all of the information set forth in the Registration Statement  or  the
exhibits  thereto, certain parts of which have been omitted in accordance  with
the   rules  and  regulations  of  the  Commission.   For  further  information
pertaining  to  the  Company, the Issuer, the Exchange Notes  and  the  Company
Guaranty,  reference  is  made  to the Registration  Statement,  including  the
exhibits thereto.  Statements made in this Prospectus concerning the provisions
of  any documents to which reference is made are not necessarily complete  and,
in  the  case  of  documents filed as exhibits to the  Registration  Statement,
reference  is  made to the copy of the documents so filed for a  more  complete
description  of  the matter involved, and each such statement shall  be  deemed
qualified in its entirety by such reference.

      As  a result of this offering, the Company and the Issuer will be subject
to  periodic  reporting and other informational requirements of the  Securities
Exchange  Act  of  1934,  as amended (the "Exchange  Act").   The  Registration
Statement  and the exhibits thereto, as well as the periodic reports and  other
information  filed  by the Company and the Issuer with the Commission,  may  be
inspected  and  copied  at  the public reference  facility  maintained  by  the
Commission  at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,  Washington,
D.C.  20549,  and  at the regional offices of the Commission located  at  Seven
World  Trade Center, Suite 1300, New York, New York 10048 and Citicorp  Center,
500  West Madison Street, Suite 1400, Chicago, Illinois 60661.  Copies of  such
material  may  also be obtained at prescribed rates from the  Public  Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.

      The  Company's and the Issuer's obligations to file periodic reports with
the  Commission pursuant to the Exchange Act may be suspended if  the  Exchange
Notes  are  held  of record by fewer than 300 holders at the beginning  of  any
fiscal  year of the Company or the Issuer, respectively, other than the  fiscal
year  in which the Registration Statement becomes effective.  Pursuant  to  the
Indentures, the Company has agreed that the Company will furnish to the Trustees
copies of annual, quarterly and current reports that it would be required to 
file under the Exchange Act whether or not it is subject to such reporting
requirements. In addition, subject to the limitations set forth in  the 
Indentures, upon the written request of a holder  of  Old  Notes,  the Issuer
or the Company will provide without charge to such holder or prospective
investor,  a  copy of such information as is required by Rule  144A  to enable
resales  of Old Notes to be made pursuant to Rule 144A.  Any such request will
be subject to the confidentiality provisions set forth below. Written requests
for such information should be addressed to Panda Global Energy Company, or 
Panda Global Holdings, Inc., c/o Panda Energy International, Inc., 
4100 Spring Valley Road, Suite 1001, Dallas, Texas 75244, Attention:
General Counsel.

      By requesting additional information relating to the offering of Exchange
Notes  at  a  time when neither the Company nor the Issuer is  subject  to  the
reporting requirements of Section 13 or 15(d) of the Exchange Act, each  holder
and  prospective investor agrees to keep confidential the various documents and
all  written information which from time to time have been or will be disclosed
to  it  concerning the Issuer, the Company or any of their affiliates which  is
not  publicly available, and agrees not to disclose any portion of the same  to
any  person  other than to its own consultants, except as may  be  required  by
applicable law or in a legal proceeding involving the Company or the Issuer.

     
                DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
                                       
     This  Prospectus includes "forward-looking statements" within the  meaning
of  Section 27A of the Securities Act and Section 21E of the Exchange Act.  All
statements  other  than  statements  of  historical  fact  included   in   this
Prospectus,  including,  without  limitation,  statements  regarding  financial
position,   projects  under  development,  construction   or   other   budgets,
information  contained  in  the  Independent Engineers'  and  the  Consultants'
Reports  and  plans  and objectives for future operations, are  forward-looking
statements.  Although the Issuer and the Company believe that the  expectations
reflected in such forward-looking statements are reasonable, they can  give  no
assurance  that  such expectations will prove to have been  correct.  Important
factors  that could cause actual results to differ materially from the Issuer's
and  the  Company's expectations ("Cautionary Statements") are disclosed  under
"Risk  Factors,"  in  the  assumptions made by the  Independent  Engineers  and
Consultants  and contained in their reports, and elsewhere in this  Prospectus.
All  subsequent written and oral forward-looking statements attributable to the
Issuer,  the Company or persons acting on their behalf are expressly  qualified
in their entirety by the Cautionary Statements.
     
     In  providing  its conclusions set forth in the Independent Engineers'  or
Consultants'  Reports,  each Independent Engineer or  Consultant  made  certain
assumptions. Although the author of each report believes that the use of  these
assumptions in its report is reasonable, assumptions are inherently subject  to
significant uncertainties and, if actual conditions differ from those  assumed,
actual   results   will  differ  from  those  projected,  perhaps   materially.
Accordingly,  the  conclusions  and projections contained  in  the  Independent
Engineers'  and  Consultants' Reports may not be indicative of  future  events.
Therefore,  no  representations are made, nor  should  any  be  inferred,  with
respect  to  the  likely existence of any particular future  set  of  facts  or
circumstances.  If  actual  results are less  favorable  than  the  conclusions
presented  in  the  Independent Engineers' or Consultants' Reports  or  if  the
assumptions  used  in  formulating  the  conclusions  presented  prove  to   be
incorrect,  the  ability of a direct or indirect Subsidiary of  the  Issuer  to
repay  its  indebtedness to the Issuer and to make distributions to its  equity
holders  and  thus  ultimately  to the Issuer, the  Issuer's  ability  to  make
payments  of  interest and principal on the Exchange Notes when  due,  and  the
Company's  ability to meet its obligations under the Exchange Notes  Guarantee,
may  be  materially  and  adversely affected. See "Risk Factors--Reliance  upon
Projections  and  Underlying Assumptions Contained in Independent  Consultants'
Reports."
     
*****************************************************************************

Neither  the  Issuer,  the Company nor any of their representatives  makes  any
recommendation  to any holder of Old Notes as to whether to tender  or  refrain
from  tendering Old Notes pursuant to the Exchange Offer.  Neither the  Issuer,
the  Company nor any of their representatives makes any representation  to  any
offeree  of  the  Exchange Notes offered hereby regarding the legality  of  any
investment  by  such offeree or purchaser under applicable legal investment  or
similar  laws.   Each holder of Old Notes should consult with his  or  her  own
advisors  as  to  legal,  tax,  business,  financial  and  related  aspects  of
participation in the Exchange Offer and must make his or her own decision  with
respect to the Exchange Offer.

                              PROSPECTUS SUMMARY
                                       
     The  following summary is qualified in its entirety by, and should be read
in  conjunction  with, the more detailed information and the Issuer's  and  the
Company's  financial data, including the notes thereto, appearing elsewhere  in
this Prospectus. All references to the Company which pertain to events prior to
March  7,  1997  relate  solely  to  the business  and  operations  of  certain
subsidiaries of Panda Energy International, Inc., which are now subsidiaries of
the  Company. See "Business of the Issuer, the Company, Panda International and
Their Subsidiaries--The Issuer, the Company and Panda International." Investors
should carefully consider the information set forth under "Risk Factors"  prior
to  making  any  decision to invest in the Exchange Notes. For  definitions  of
certain  terms  used herein, see the glossary included as Appendix  A  to  this
Prospectus,  and  "Description  of  the  Exchange  Notes,  the  Exchange  Notes
Guarantee, the Issuer Loan, the Shareholder Loans on the Collateral Documents -
- Certain Definitions."
     
                          The Issuer and the Company
                                       
     Panda Global Energy Company (the "Issuer") is a wholly-owned subsidiary of
Panda  Global  Holdings, Inc. (the "Company"). The Company  is  an  independent
power  company  principally engaged in the development, acquisition,  ownership
and  operation  of power generation facilities and activities  related  thereto
("Projects") in the United States and internationally. The Company's  principal
business  strategy is to use its and its affiliates' experience  to  profitably
develop, construct, finance and manage Projects to provide low-cost electricity
and  electric  generating capacity particularly, in the case  of  international
Projects,  in  areas of the world where demand for power exceeds  supply  by  a
significant  factor.  The Company believes there is and  will  continue  to  be
significant demand for new generating capacity worldwide and that much of  this
new  capacity  will  be provided by independent power developers  such  as  the
Company   and   its  affiliates,  due  to  their  low  costs  and   development
capabilities.
     
     The  Company's  current  portfolio of Projects is comprised  of  (i)  100%
indirect  ownership of a 180 megawatt ("MW") natural gas-fired,  combined-cycle
cogeneration facility located in Roanoke Rapids, North Carolina (the  "Rosemary
Facility") which commenced commercial operations in December 1990 and (ii) 100%
indirect ownership of the lessee under a long-term leveraged lease of a 230  MW
natural  gas-fired, combined-cycle cogeneration facility located in Brandywine,
Maryland,  near  Washington, D.C. (the "Brandywine Facility")  which  commenced
commercial  operations  in  October  1996.  The  Company  indirectly  owns   an
approximately 83% ownership interest in a 2x50 MW coal-fired cogeneration power
plant  together with a steam and hot water generation and distribution facility
and  other  related facilities under construction in Luannan  County,  Tangshan
Municipality,  Hebei  Province, People's Republic of China  (collectively,  the
"Luannan  Facility").  Preliminary construction work on  the  Luannan  Facility
commenced in December 1996, and full construction activity commenced  upon  the
closing  of  the  offering  of  the Old Notes on April  22,  1997  (the  "Prior
Offering"). The Company is also actively developing several other domestic  and
international  Projects which may be added to its portfolio of  Projects.   See
"Risk Factors -- Additional Indebtedness -- Effective Subordination of Exchange
Notes and Exchange Notes Guarantee."
     
                             The Luannan Facility
                                       
     The  Luannan  Facility will be comprised of two coal-fired  steam/electric
generating  units, each nominally rated at 50 MW but with nameplate  capability
of  up  to 60 MW gross output under full condensing conditions. Electric  power
generated by the Luannan Facility will be interconnected to the Beijing-Tianjin-
Tangshan Regional Power Network (the "Jing-Jin-Tang Grid") serving the Beijing-
Tianjin-Tangshan region, where the economy has witnessed significant growth  in
recent years. In addition, steam will be extracted from the steam turbines  for
distribution by pipeline to local commercial and industrial users and used  for
local  heating.  Coal will be delivered by truck to the Luannan  Facility  from
nearby mines.
     
     All  electrical output of the Luannan Facility will be sold pursuant to  a
20-year  power  purchase agreement (the "Luannan Power Purchase Agreement")  to
North China Power Group Company ("North China Power Company"), the business arm
of the North China Power Group ("North China Power"). Certain components of the
power  price are subject to contractual adjustment to reflect changes  in  coal
costs, local inflation, U.S. inflation, and foreign exchange rate fluctuations.
North China Power is one of the five interprovincial power groups in China  and
is subject to the supervision of the Ministry of Electric Power of the PRC (the
"MOEP").  North China Power's service area includes Beijing and Tianjin,  which
are  among the largest and most economically developed cities in China, as well
as  Hebei  Province, Shanxi Province and western Inner Mongolia. The  financial
statements of North China Power included in its 1995 annual report (prepared in
accordance with Chinese accounting principles) indicate total assets (excluding
assets in Inner Mongolia) of RMB 70.0 billion ($8.4 billion) as of December 31,
1995,  and  revenue of approximately RMB 27.2 billion ($3.3 billion) (excluding
revenue  generated  from  Inner  Mongolia) for 1995.  North  China  Power  also
reported that it was ranked as one of the top three government-owned industrial
enterprises (in terms of revenues) in China in 1995.
     
     Preliminary  construction  work  on  the  Luannan  Facility  commenced  in
December  1996,  and  the Issuer and the Company believe  that  the  commercial
operation  date of the Luannan Facility will occur by August 1999. The  Luannan
Facility is being constructed pursuant to a fixed-price, turnkey contract  (the
"Luannan  EPC  Contract") with Harbin Power Engineering  Company  Limited  (the
"Luannan  EPC  Contractor").  The  Luannan EPC  Contractor  is  a  wholly-owned
subsidiary  of  Harbin Power Equipment Company, Ltd. ("Harbin  Power"),  which,
with  its  subsidiaries,  is one of the largest manufacturers  of  power  plant
equipment  in  China  and  is  listed on the  Hong  Kong  Stock  Exchange.  The
obligations of the Luannan EPC Contractor will be subject to a retainage of 10%
of  the  Luannan  EPC Contract price. Liquidated damages, if any,  are  payable
under  the  Luannan  EPC Contract up to a maximum of 35%  of  the  Luannan  EPC
Contract price and are guaranteed by the Export-Import Bank of China ("CHEXIM")
in  this  amount (the "CHEXIM Guarantee").  Senior unsecured debt of CHEXIM  is
rated  A3  by  Moody's Investors Service, Inc. ("Moody's").  Harbin  Power  has
guaranteed  the  payment  and  performance  obligations  of  the  Luannan   EPC
Contractor  (the  "Luannan  EPC Guarantee"). The  Luannan  EPC  Contractor  has
significant experience, having constructed eight 50 MW cogeneration  facilities
in  China  of  similar  design to the Luannan Facility and numerous  additional
50  MW non-cogeneration units. In 1995, the annual designed production capacity
of  the facilities constructed by the Luannan EPC Contractor and its affiliates
was 3,000 MW of thermal power and 1,000 MW of hydro power.
     
     Operations  and  maintenance services for the  Luannan  Facility  will  be
provided  by  Duke/Fluor  Daniel  International  Services  (the  "Luannan   O&M
Contractor").  The Luannan O&M Contractor is actively engaged in the  operation
and maintenance of electric generation facilities throughout the world.
     
     The  Issuer  believes  that the Luannan Facility  will  use  approximately
450,000  metric  tons  of coal per year.  The principal  fuel  supply  for  the
Luannan  Facility  will  come from the Qianjiaying Mine,  which  is  owned  and
operated  by Kailuan Coal Mining Administration ("Kailuan Coal"), a state-owned
mining  company,  and is located 30 kilometers from the Luannan  Facility.  The
Qianjiaying  Mine produced approximately 3.67 million metric tons  of  coal  in
1996.  Kailuan Coal has contractually committed to supply up to 300,000  metric
tons per year of coal from the Qianjiaying Mine to the Luannan Facility for ten
years.  The Luannan Facility has also entered into coal supply agreements  with
five  other local coal mines (collectively with Kailuan Coal, the "Luannan Coal
Suppliers") to secure up to an additional 310,000 metric tons per year of  coal
for  ten  years.   The  Luannan Coal Suppliers are  all  located  within  a  50
kilometer  radius  of the location of the Luannan Facility, thereby  minimizing
transportation costs. The coal will be transported by truck from the  mines  to
the Luannan Facility.
     
     Transmission facilities will be constructed, owned and operated  by  North
China  Power  Company and will connect the Luannan Facility with the  Jing-Jin-
Tang  Grid  (the  "Luannan Transmission Facilities"). The Luannan  Transmission
Facilities  will be comprised of three newly constructed substations,  upgrades
to   an  existing  substation  and  switching  station,  and  approximately  43
kilometers  of  new  110  kV  transmission lines to  interconnect  the  Luannan
Facility to the Jing-Jin-Tang Grid. North China Power Company has guaranteed it
will  complete  the  construction  of the Luannan  Transmission  Facilities  to
receive the total electrical output of the Luannan Facility within 18 months of
receiving notice to proceed.
     
Ownership and Financing

     The  Luannan  Facility will be owned and operated by four separate  equity
joint  venture companies (each singularly, a "Joint Venture," and collectively,
the  "Joint  Ventures"). The Company owns an approximately 83% indirect  equity
interest  in each of the Joint Ventures; entities owned by Luannan County  (the
"County  Partners")  own  an approximate 12% interest  in  each  of  the  Joint
Ventures  with  the  remaining  5%  being owned  indirectly  by  the  Company's
strategic  partners.   The  Company  believes  that  all  government  approvals
required  to  date to form the Joint Ventures and develop the Luannan  Facility
have  been obtained based on the opinion of its Chinese counsel and advice from
the  Hebei Provincial Planning Commission, the Commission of Foreign Trade  and
Economic  Cooperation  of Hebei Province and the County Partners.  The  Luannan
Engineering  Report (as defined below) concludes that there  is  no  reason  to
believe  that other approvals required for construction of the Luannan Facility
will not be granted.
     
     The  Issuer and the Company believe the total cost of the Luannan Facility
will  be  approximately  $118.8 million, of which (i) $71.3  million  has  been
funded from the proceeds of the offering of Old Notes consummated on April  22,
1997  (plus  interest  thereon and other income expected to  be  earned  during
construction)  in  the  form of loans to the Joint Ventures  (the  "Shareholder
Loans"),  (ii)  $41.8  million also has been funded from the  proceeds  of  the
offering of Old Notes consummated on April 22, 1997 (plus interest thereon  and
other  income expected to be earned during construction) in the form of  equity
contributions  to  the  Joint  Ventures (the "JV  Equity  Contributions"),  and
(iii) $5.7 million has been funded by the County Partners in the form of equity
contributions to the Joint Ventures from the same amounts paid to such partners
by  the  Joint Ventures to acquire certain water and land use rights and  water
wells from them.

     The Old Notes were rated B2 by Moody's and B by Duff & Phelps Credit 
Rating Co. ("Duff & Phelps").  There can be no assurance that these ratings
will be maintained.
     
                             The Rosemary Facility
                                       
     The  Rosemary  Facility  is a 180 MW combined-cycle cogeneration  facility
located in Roanoke Rapids, North Carolina, which is indirectly wholly-owned  by
the  Company. The Rosemary Facility, in operation since 1990, uses natural  gas
as  its  primary fuel to produce electricity and thermal energy in the form  of
steam.  The  electric capacity of and electric energy produced by the  Rosemary
Facility  are  sold  to Virginia Electric and Power Company ("VEPCO")  under  a
power  purchase  agreement with 18 years remaining.  Steam  and  chilled  water
produced  by the Rosemary Facility are sold to a textile mill adjacent  to  the
Rosemary  Facility under a contract with 18 years remaining. A  partnership  of
wholly-owned subsidiaries of the Company which owns the Rosemary Facility  (the
"Rosemary   Partnership")  has  entered  into  agreements  with   Natural   Gas
Clearinghouse  for  natural  gas  supply and  fuel  management  services,  with
Transcontinental Gas Pipe Line Corporation, Texas Gas Transmission  Corporation
and  CNG Transmission Corporation for firm and interruptible transportation  of
natural  gas and with certain other parties to provide pipeline operation,  gas
balancing  and  interruptible transportation services. Panda  Global  Services,
Inc.,  an indirect wholly-owned subsidiary of Panda Energy International,  Inc.
("Panda  International") provides operations and maintenance  services  to  the
Rosemary Facility.
     
     In  July 1996, Panda-Rosemary Funding Corporation, a wholly-owned Delaware
special purpose finance subsidiary of the Rosemary Partnership, consummated the
offering and sale of $111.4 million in aggregate principal amount of its 8 5/8%
First  Mortgage Bonds due 2016 (the "Rosemary Bonds"). The Rosemary Bonds  were
rated  Baa3  by Moody's and BBB- by Duff & Phelps.  See   "Risk  Factors  --
Additional  Indebtedness   --   Effective Subordination of Exchange Notes and
Exchange Notes Guarantee".
     
                            The Brandywine Facility
                                       
     The  Brandywine Facility is a 230 MW combined-cycle cogeneration  facility
located  at Brandywine, Maryland, near Washington, D.C. The Brandywine Facility
is  leased by an indirect wholly-owned subsidiary of the Company pursuant to  a
lease  which expires in December 2016 with General Electric Capital Corporation
("GE  Capital"). The Brandywine Facility utilizes natural gas  as  its  primary
fuel  to  produce  electricity and thermal energy in the  form  of  steam.  The
electric  capacity  of and electric energy produced by the Brandywine  Facility
are  sold  to  Potomac  Electric Power Company pursuant  to  a  power  purchase
agreement (the "Brandywine Power Purchase Agreement") which expires in  October
2021. Thermal energy produced by the Brandywine Facility is sold to a distilled
water  production facility owned by an indirect wholly-owned subsidiary of  the
Company.  The Brandywine Facility purchases firm and interruptible natural  gas
supplies  from  Cogen  Development  Company,  which  are  transported  to   the
Brandywine  Facility  on  either  a  firm or interruptible  basis  through  the
interstate  pipeline  facilities of Columbia Gas Transmission  Corporation  and
Cove Point LNG Limited Partnership and the local gas distribution facilities of
Washington Gas Light Company. The Brandywine Facility has contracted with Ogden
Brandywine  Operations,  Inc., a subsidiary of Ogden  Corporation,  to  provide
operations  and  maintenance  services to the Brandywine  Facility.  See  "Risk
Factors -- Additional Indebtedness -- Effective Subordination of Exchange Notes
and Exchange Notes Guarantee".
     
                        Panda Interfunding Corporation
                                       
     The  Rosemary  Facility and the Brandywine Facility  are  each  indirectly
owned  by  Panda Interfunding Corporation, a Delaware corporation  ("PIC"),  an
indirect  wholly-owned subsidiary of the Company. In July 1996, a  wholly-owned
subsidiary of PIC, Panda Funding Corporation ("PFC"), issued $105.5 million  in
bonds (the "Series A Bonds") which were rated Ba3 by Moody's and BB- by Duff  &
Phelps. The Series A Bonds are fully and unconditionally guaranteed by PIC.
     
                              Additional Projects
                                       
     In  the  future,  Panda  International and its affiliates  (including  the
Company) may develop additional Projects. Subject to certain conditions,  Panda
International  and its affiliates (including the Company) will be  required  to
transfer  to  PIC their interests in certain additional Projects, if  any,  for
which  a  power purchase agreement is entered into prior to July 31,  2001  and
which  reach Financial Closing or achieve Commercial Operations (as such  terms
are  defined in the PIC Additional Projects Contract) prior to July  31,  2006.
Additional  Projects, if any, which are not required to be transferred  to  PIC
may, at the option of Panda International and its affiliates, be transferred to
the  Issuer or the Company, provided that, if additional indebtedness is to  be
incurred  by  the Issuer or the Company in connection with any such  additional
Project so transferred, certain conditions are satisfied.  See "Risk Factors --
Additional Indebtedness -- Addition of Projects to PIC Portfolio" and "-- Risk
Factors -- Additional Indebtedness -- Addition of Projects to the Issuer or the
Company."
     
Effective Subordination of Exchange Notes and Exchange Notes Guarantee;
Collateral
     
     The  Exchange Notes and the Exchange Notes Guarantee will be the exclusive
obligations of the Issuer and the Company, respectively, and not of the Project
Entities which own or operate the Rosemary Facility or the Brandywine Facility,
the  Joint Ventures or any other affiliate of the Issuer. The Project  Entities
and  the Joint Ventures are highly leveraged and their debt agreements restrict
their ability to pay dividends, make distributions or otherwise transfer funds,
through  intermediate  entities,  to  the Company.  The  restrictions  in  such
agreements   generally  require  that,  prior  to  the  payment  of  dividends,
distributions  or  other  transfers, Project Entities and  the  Joint  Ventures
provide  for  the  payment of other obligations, including operating  expenses,
debt  service and the funding of reserves. The Project Entities and  the  Joint
Ventures are separate and distinct legal entities and have no obligation to pay
any  amounts due pursuant to the Exchange Notes or to make any funds  available
therefor,  whether by dividends, loans or other payments, and do not  guarantee
the  payment  of the Exchange Notes. Thus, payments on the Exchange  Notes  are
effectively  subordinated  to the payment of all  obligations  of  the  Project
Entities  and the Joint Ventures. In addition, the Company's right  to  receive
any assets of the Project Entities or the Joint Ventures upon their liquidation
or  reorganization  will be effectively subordinated  to  the  claims  of  such
Project  Entities' or Joint Ventures' creditors (including trade creditors  and
holders of other debt issued by such Project Entity). As of March 31, 1997, the
Project  Entities  had approximately $338.6 million of indebtedness  and  other
liabilities  (including  payments on the long-term  lease  for  the  Brandywine
Facility), which is effectively senior to obligations of the Company under  the
Exchange  Notes  Guarantee.  See  "Risk Factors  --  Additional  Indebtedness",
"Description  of  Other Indebtedness--The Rosemary Bonds" and  "Description  of
Other Indebtedness--The Brandywine Financing".
     
     Similarly, the Company is highly leveraged as a result of the issuance  of
the Series A Bonds by PFC (an indirect wholly-owned subsidiary of the Company),
which are collateralized in part by all of the issued and outstanding shares of
PIC  (also  an  indirect  wholly-owned subsidiary  of  the  Company).  The  PFC
Indenture restricts the ability of PIC to pay dividends, make distributions  or
otherwise transfer funds, through PEC, to the Company. PIC and PFC are separate
and  distinct  legal  entities and have no obligation to pay  any  amounts  due
pursuant to the Exchange Notes or to make any funds available therefor, whether
by  dividends,  loans or other payments, and do not guarantee  payment  of  the
Exchange  Notes.  Thus,  payments on the Exchange Notes  are  also  effectively
subordinated  to  the  payment of all obligations  of  PFC.  In  addition,  the
Company's  right  to  receive  any  assets  of  PIC  upon  its  liquidation  or
reorganization  will  be  effectively  subordinated  to  the  claims  of  PFC's
creditors (including holders of the Series A Bonds). As of March 31, 1997,  PFC
had  approximately $106.6 million of indebtedness and other liabilities,  which
is  effectively  senior to the obligations of the Company  under  the  Exchange
Notes Guarantee. See "Risk Factors -- Additional Indebtedness" and "Description
of Other Indebtedness--The PFC Bonds."
     
     The  Exchange Notes are fully and unconditionally guaranteed by the Company
("Exchange Notes Guarantee").  The Exchange Notes Guarantee is secured by
pledges, or grants of security interests (i)  by  Panda International of 100%
of the Capital Stock of  the Company;  (ii) by the Company of 100% Capital
Stock of PEC; and (iii)  by  the  Company,  of  and in its  interest  in 
accounts, established in  the  Company's name with the  Company  Indenture
Trustee, into which certain distributions related to the Luannan Facility  are
(or  will be) deposited.  The Exchange  Notes  are secured  by pledges, or
grants of security interests (i) by the Issuer  of  at  least 90% of the
Capital Stock of  Pan-Sino; (ii) the Issuer Note issued by Pan-Western; (iii)
in the event that Pan-Sino is merged into Pan-Western, the Issuer will pledge
at least 99%  of  the  Capital Stock of Pan-Western to the Senior Secured
Notes  Trustee; (v) in the event that Pan-Sino is  merged into the Issuer,
the Issuer will assume Pan-Sino's obligations  under the Pan-Sino 
Pledge Agreement; (v) by Pan-Western of the Luannan Facility  Notes issued by
the Joint Ventures; and (vi) by the Company of 100%  of  the  Capital  Stock
of the Issuer. Individually,  and in the aggregate, the pledges of  the 
Capital Stock of each of PEC, Pan-Sino and  Pan-Western do not constitute a
"substantial portion" (as defined in Rule 3-10 of Regulation S-X promulgated
under the Securities Act) of the  collateral securing the Exchange Notes and
the  Exchange Notes  Guarantee. Separate financial statements of each  of
the PEC, Pan-Sino and Pan-Western  are not  presented in  this Prospectus
because the Company and the Issuer believe that such disclosure is not
material to a prospective purchaser of the Exchange Notes.

      Investors  should consider carefully all the information set forth  under
"Risk Factors" prior to making any decision to invest in the Exchange Notes.

     The  following chart details, in summary form, the corporate structure  of
Panda  International and its subsidiaries. See Appendix G, "Ownership Structure
of   the  Issuer,  the  Company,  Panda  International  and  Certain  of  Their
Subsidiaries."
    
		[Panda International Organizational Subsidiary Chart here]
                                       
     
     Notes:      Intermediate   entities  with  no  significant   assets   or
         liabilities have been excluded from the above chart except  for  the
         entity mentioned in note (1).
     
      (1)      Panda  Funding Corporation ("PFC"), a wholly-owned  subsidiary
         of  Panda  Interfunding Corporation ("PIC"), is the  issuer  of  the
         Series  A Bonds. See "Description of Other Indebtedness --  The  PFC
         Bonds."
                                PRIOR OFFERING

      On  April  22,  1997  (the "Issue Date"), the Issuer issued  $155,200,000
aggregate  principal  amount  of its Old Notes in  a  private  placement  under
Section  4(2) of the Securities Act and Rule 144A and Regulation S  promulgated
thereunder  (the  "Prior  Offering").  The Old Notes were  sold  to  Donaldson,
Lufkin & Jenrette. (the "Initial Purchaser") pursuant to the Purchase Agreement
and  were  placed by the Initial Purchaser with Qualified Institutional  Buyers
and  institutional Accredited Investors (as defined in Section 501(a) (1), (2),
(3)  or  (7)  under  the Securities Act).  Pursuant to the Registration  Rights
Agreement  entered  into  between  the Company,  the  Issuer  and  the  Initial
Purchaser  in  connection with the Prior Offering, the Issuer and  the  Company
agreed  to file a shelf registration statement covering the Old Notes (a "Shelf
Registration Statement") or to effect a registered exchange offer for  the  Old
Notes  pursuant  to  which the holders of the Old Notes would  be  offered  the
opportunity  to  exchange their Old Notes for registered Exchange  Notes.   The
Registration  Rights  Agreement  provides  that  if  such  an  exchange   offer
registration statement (an "Exchange Offer Registration Statement") or a  Shelf
Registration  Statement is not declared effective within  150  days  after  the
Issue  Date, the Issuer and the Company, jointly and severally, shall be liable
to  pay  liquidated damages, during the first 90-day period commencing  on  the
151st  day  following the Issue Date in an amount equal to $.05  per  week  per
$1,000  principal amount of Exchange Notes, with such amount increasing  by  an
additional $.05 per week per $1,000 principal amount of Exchange Notes for each
subsequent 90-day period, up to a maximum of $.50 per week per $1,000 principal
amount  of  Old Notes. The Registration Statement with respect to the  Exchange
Offer  was  declared effective by the Commission on           ,  1997,  thereby
avoiding the aforementioned Liquidated Damages.
                                       

                              THE EXCHANGE OFFER
                                       
      The  Issuer is making the following Exchange Offer to holders of  all  Old
Notes presently outstanding:

The Exchange Offer              For  each $1,000 principal amount of Old  Notes
                          tendered, a holder will be entitled to receive $1,000
                          principal amount of Exchange Notes. As of the date of
                          this Prospectus, $155,200,000 principal amount of Old
                          Notes  is  outstanding.  The terms  of  the  Exchange
                          Notes are substantially identical to the terms of the
                          Old  Notes, except that the Exchange Notes  (i)  will
                          have  been registered under the Securities  Act,  and
                          (ii)  holders  of  the Exchange  Notes  will  not  be
                          entitled  to  certain rights of holders  of  the  Old
                          Notes  under the Registration Rights Agreement, which
                          rights  will terminate upon the consummation  of  the
                          Exchange  Offer.  Such rights will also terminate  as
                          to  holders of Old Notes who are eligible  to  tender
                          their  Old  Notes for exchange in the Exchange  Offer
                          and  fail  to  do  so.  See "The  Exchange  Offer  --
                          Termination  of  Certain Rights" and "Description  of
                          the Exchange Notes, the Exchange Notes Guarantee, the
                          Issuer Loan, the Shareholder Loans and the Collateral
                          Documents - Old Notes Registration Rights."

Expiration Date                The Exchange Offer will expire at 5:00 p.m., New
                          York City time, on            , 1997, unless extended
                          in  the  Issuer's sole discretion.  See "The Exchange
                          Offer  --  Expiration Date; Extensions;  Termination;
                          Amendments."

Withdrawal of Tenders           Tenders  of Old Notes may be withdrawn  at  any
                          time  prior to the Expiration Date.  Thereafter, such
                          tenders are irrevocable.  See "The Exchange Offer  --
                          Withdrawal of Tenders."

Interest on the Exchange
  Notes and Accrued
  Interest on the Old
  Notes                         The Exchange Notes will bear interest from  the
                          date  of  their issuance.  Interest on the Old  Notes
                          accepted for exchange will accrue thereon to, but not
                          including, the date of issuance of the Exchange Notes
                          and  will  be  paid together with the first  interest
                          payment  on  the  Exchange Notes issued  in  exchange
                          therefor.

Conditions of the
  Exchange Offer                 The  Exchange  Offer  is  subject  to  certain
                          customary  conditions, which may  be  waived  by  the
                          Issuer.  The  Exchange Offer is not conditioned  upon
                          any  minimum aggregate principal amount of Old  Notes
                          being  tendered or accepted for exchange.  Old  Notes
                          may be tendered only in integral multiples of $1,000.
                          See "The Exchange Offer -- Conditions of the Exchange
                          Offer."

Procedures for Tendering
  Old Notes                     Each holder of Old Notes wishing to accept  the
                          Exchange  Offer  must, prior to the Expiration  Date,
                          either   (i)   complete  and  sign  the   Letter   of
                          Transmittal,  in  accordance  with  the  instructions
                          contained herein and therein, and deliver such Letter
                          of   Transmittal,   together   with   any   signature
                          guarantees  and any other documents required  by  the
                          Letter  of Transmittal, to the Exchange Agent at  its
                          address  set  forth on the back cover  page  of  this
                          Prospectus and the tendered Old Notes must either  be
                          (a) physically delivered to the Exchange Agent or (b)
                          transferred pursuant to the procedures for book-entry
                          transfer described herein and a confirmation of  such
                          book-entry transfer must be received by the  Exchange
                          Agent  prior  to the Expiration Date, or (ii)  comply
                          with  the  guaranteed delivery procedures  set  forth
                          herein.  By executing the Letter of Transmittal, each
                          holder   will  represent  that  the  Exchange   Notes
                          acquired  pursuant to the Exchange  Offer  are  being
                          acquired  in the ordinary course of business  of  the
                          person receiving such Exchange Notes (whether or  not
                          such person is the registered holder of such Exchange
                          Notes),  that  neither the holder  of  such  Exchange
                          Notes  nor  any such other person has an  arrangement
                          with  any  person to participate in the  distribution
                          (within  the  meaning of the Exchange  Act)  of  such
                          Exchange  Notes and that neither the holder  of  such
                          Exchange  Notes  or  any  such  other  person  is  an
                          Affiliate of the Issuer or the Company, or if  it  is
                          an  Affiliate,  it will comply with the  registration
                          and   prospectus   delivery   requirements   of   the
                          Securities  Act to the extent applicable.   See  "The
                          Exchange Offer -- Procedures for Tendering."

Special Procedures for
  Beneficial Owners              Any  beneficial  owner  whose  Old  Notes  are
                          registered   in   the  name  of  a  broker,   dealer,
                          commercial  bank, trust company or other nominee  and
                          who  wishes to tender Old Notes in the Exchange Offer
                          should  contact such registered holder  promptly  and
                          instruct  such  registered holder to tender  on  such
                          beneficial owner's behalf.  See "The Exchange Offer -
                          - Procedures for Tendering."

Guaranteed Delivery
  Procedures                    Holders  of Old Notes who wish to tender  their
                          Old  Notes  and  whose Old Notes are not  immediately
                          available or who cannot deliver their Old Notes,  the
                          Letter of Transmittal or any other documents required
                          by  the  Letter of Transmittal to the Exchange  Agent
                          prior  to  the Expiration Date, may tender their  Old
                          Notes according to the guaranteed delivery procedures
                          set  forth  in  "The  Exchange  Offer  --  Guaranteed
                          Delivery Procedures."

Acceptance of  the Old
  Notes and Delivery of
  the Exchange Notes           Upon satisfaction or waiver of the conditions of
                          the  Exchange  Offer,  the  Issuer  will  accept  for
                          exchange  any  and all Old Notes which  are  properly
                          tendered  and  not withdrawn prior to the  Expiration
                          Date.   The  Exchange Notes issued  pursuant  to  the
                          Exchange  Offer  will be delivered  on  the  earliest
                          practicable date following the Expiration Date.   See
                          "The  Exchange Offer -- Acceptance of Old  Notes  for
                          Exchange; Delivery of Exchange Notes."
Certain Federal Income
  Tax Considerations            For  discussion of certain federal  income  tax
                          consequences  of the exchange of the Old  Notes,  see
                          "Certain  Income Tax Considerations of  the  Exchange
                          Offer."

Effect on Holders who
  Retain Old Notes             Holders of the Old Notes who do not tender their
                          Old Notes in the Exchange Offer will continue to hold
                          such Old Notes and will be entitled to all the rights
                          and  benefits, and will be subject to all limitations
                          applicable   thereto,  under   the   Exchange   Notes
                          Indenture.   All  Old  Notes  not  exchanged  in  the
                          Exchange  Offer  will continue to be subject  to  the
                          restrictions  on transfer provided  for  in  the  Old
                          Notes  and  the  Exchange Notes  Indenture.   To  the
                          extent  that  Old Notes are tendered and accepted  in
                          the  Exchange Offer, the trading market, if any,  for
                          the  Old  Notes  not so tendered could  be  adversely
                          affected.   See  "Risk  Factors  --  Consequences  of
                          Failure to Exchange Old Notes."

Rights of Dissenting
  Holders			  Holders of Old Notes do not have any appraisal rights.
				  See "The Exchange Offer - Terms of the Exchange Offer."

Exchange Agent                  Bankers Trust Company.  See "The Exchange Offer
                          -- The Exchange Agent."

                          Terms of the Exchange Notes
                                       
The  Exchange Offer applies to $155,200,000 aggregate principal amount  of  Old
Notes.  The form and terms of the Exchange Notes are substantially identical to
the  terms  of  the  Old Notes, except that the Exchange Notes  (i)  have  been
registered  under  the  Securities Act, and therefore, will  not  bear  legends
restricting their transfer pursuant to the Securities Act, and (ii) holders  of
the Exchange Notes will not be entitled to certain rights of holders of the Old
Notes under the Registration Rights Agreement, which rights will terminate upon
the consummation of the Exchange Offer.  Such rights will also terminate as  to
holders of Old Notes who are eligible to tender their Old Notes for exchange in
the  Exchange  Offer and fail to do so.  See "Exchange Offer -- Termination  of
Certain  Rights."  The Exchange Notes will evidence the same debt  as  the  Old
Notes  which  they  replace and will be issued under, and be  entitled  to  the
benefits of, the Exchange Notes Indenture.

Issuer                    Panda Global Energy Company, a Cayman
                          Islands company (the "Issuer").
                          
Guarantor                 Panda   Global  Holdings,   Inc.,   a
                          Delaware corporation (the "Company").
                          
Securities Offered        $155,200,000   aggregate    principal
                          amount  of 12-1/2% Registered  Senior
                          Secured Notes due 2004 (the "Exchange
                          Notes").
                          
Maturity Date             April 15, 2004.
                          
Interest Rate             Cash  interest on the Exchange  Notes
                          will    accrue   at   a    rate    of
                          12-1/2% per annum and will be payable
                          semi-annually  in  arrears  on   each
                          April  15  and October 15, commencing
                          October 15, 1997.
                          
Repayment of Principal    Commencing  on October 15,  2000  and
                          through  the payment date of  October
                          15,  2003,  15.4%  of  the  aggregate
                          outstanding principal amount  of  the
                          Exchange    Notes    (assuming    all
                          outstanding  Old Notes  are  tendered
                          and accepted for exchange pursuant to
                          the  Exchange Offer) will  be  repaid
                          semi-annually on the dates and in the
                          amounts  indicated in the  table  set
                          forth below under "Description of the
                          Exchange  Notes, the  Exchange  Notes
                          Guarantee,  the  Issuer   Loan,   the
                          Shareholder Loans and the  Collateral
                          Documents--Ranking,         Maturity,
                          Interest   and   Principal   of   the
                          Exchange Notes."
                          
Ranking                   The  Exchange  Notes will  be  senior
                          obligations  of  the  Issuer  ranking
                          senior  in  right of payment  to  all
                          subordinated  Indebtedness   of   the
                          Issuer and pari passu with all  other
                          Senior Indebtedness of the Issuer.
                          
Exchange Notes            The Exchange Notes will be secured by
  Collateral              the Exchange Notes Collateral (herein
                          so   called).   The  Exchange   Notes
                          Collateral consists of  pledges and a
                          security  interest in certain  assets
                          of  the  Issuer and its Subsidiaries,
                          including, a pledge of (i)  at  least
                          90% of the Capital Stock of Pan-Sino,
                          (ii) 99% of the Capital Stock of Pan-
                          Western,  (iii) the Issuer  Note,
                          (iv)  the Luannan Facility Notes  and
                          the  granting of a security  interest
                          in  certain  funds of the Issuer  and
                          its  Subsidiaries maintained  by  the
                          Exchange Notes Trustee and (v)100% of 
                          the Capital Stock of the Issuer. 
                          
The Exchange Notes        The  Company, as primary obligor  and
 Guarantee                not    merely    as   surety,    will
                          irrevocably,        fully         and
                          unconditionally guarantee on a senior
                          secured  basis  the  performance  and
                          punctual payment when due, whether at
                          stated  maturity, by acceleration  or
                          otherwise, of all obligations of  the
                          Issuer   under  the  Exchange   Notes
                          Indenture  and  the  Exchange  Notes,
                          whether  for  principal, premium,  if
                          any,    and    interest    (including
                          Liquidated   Damages  and  Additional
                          Amounts,  if  any), on  the  Exchange
                          Notes,  expenses, indemnification  or
                          otherwise.
                          
The Exchange Notes        The  Company's obligations under  the
   Guarantee Collateral   Exchange  Notes  Guarantee  will   be
                          secured   by   the   Exchange   Notes
                          Guarantee   Collateral   (herein   so
                          called). The Exchange Notes Guarantee
                          Collateral  consists of a  pledge  of
                          100%  of  the  Capital Stock  of  the
                          Company and of pledges and a security
                          interest  in  certain assets  of  the
                          Company    and    its   Subsidiaries,
                          including:  (i) a pledge of  100%  of
                          the   Capital  Stock  of  PEC,  which
                          indirectly  owns  (a)  100%  of   the
                          Rosemary Facility and (b) 100% of the
                          lessee  under  a long-term  leveraged
                          lease of the Brandywine Facility, and
                          (ii)   the  granting  of  a  security
                          interest  in  certain  funds  of  the
                          Company established and maintained by
                          the Company Indenture Trustee.
                          
Optional Redemption       The Exchange Notes will be redeemable
                          at the option of the Issuer, in whole
                          or in part, at any time on or after
                          April  15,  2002, at  the  redemption
                          prices   set   forth   below    under
                          "Description  of the Exchange  Notes,
                          the  Exchange  Notes  Guarantee,  the
                          Issuer  Loan,  the Shareholder  Loans
                          and    the   Collateral   Documents--
                          Redemption."  In addition,  prior  to
                          April 15, 2000, the Issuer may redeem
                          up  to  $51,733,000 of the originally
                          issued  principal amount of  Existing
                          Notes  at  the redemption  price  set
                          forth   under  "Description  of   the
                          Exchange  Notes, the  Exchange  Notes
                          Guarantee,  the  Issuer   Loan,   the
                          Shareholder Loans and the  Collateral
                          Documents--Redemption" with  the  Net
                          Cash  Proceeds of one or more  Public
                          Equity   Offerings  by  the  Company,
                          Panda International or any direct  or
                          indirect   parent  of  the   Company;
                          provided  that  (i) the  proceeds  of
                          such  offering used for the  purposes
                          of   the   optional  redemption   are
                          contributed as equity to  the  Issuer
                          and (ii) at least $103,467,000 of the
                          aggregate    outstanding    principal
                          amount of Existing Notes would remain
                          outstanding immediately after  giving
                          effect to such redemption.
                          
Mandatory Redemption      Upon the occurrence of certain events
                          of loss or expropriation with respect
                          to  the  Luannan  Facility  described
                          below, the outstanding Existing Notes
                          (together with, under certain limited
                          circumstances, any additional  Senior
                          Indebtedness    of     the     Issuer
                          outstanding  at  the  time)  will  be
                          redeemed  pro rata, at the redemption
                          prices   set   forth   below    under
                          "Description  of the Exchange  Notes,
                          the  Exchange  Notes  Guarantee,  the
                          Issuer  Loan,  the Shareholder  Loans
                          and    the   Collateral   Documents--
                          Redemption."
                          
Redemption at Option of   Upon   the   occurrence  of   certain
  Holders                 Indentures Events of Default relating
                          to   Shareholder   Loan   events   of
                          default,  or if the Luannan  Facility
                          Construction  Cost is less  than  the
                          Projected      Luannan       Facility
                          Construction Cost by more  than  $1.0
                          million, the Issuer will be obligated
                          to make an offer to redeem pro rata a
                          portion  of the outstanding  Exchange
                          Notes  (assuming all outstanding  Old
                          Notes  are tendered and accepted  for
                          exchange  pursuant  to  the  Exchange
                          Offer)  with certain amounts  at  the
                          redemption  prices  set  forth  below
                          under  "Description of  the  Exchange
                          Notes,  the Exchange Notes Guarantee,
                          the   Issuer  Loan,  the  Shareholder
                          Loans  and the Collateral Documents--
                          Redemption," and "Description of  the
                          Exchange  Notes, the  Exchange  Notes
                          Guarantee,  the  Issuer   Loan,   the
                          Shareholder Loans and the  Collateral
                          Documents  --  Certain  Covenants  --
                          Indentures Events of Default.."
                          
Change of Control         Upon a Change of Control, holders  of
                          the  Exchange  Notes  will  have  the
                          right   to  require  the  Issuer   to
                          repurchase their Exchange  Notes,  in
                          whole  or  in  part, at the  purchase
                          price    set   forth   below    under
                          "Description  of the Exchange  Notes,
                          the  Exchange  Notes  Guarantee,  the
                          Issuer  Loan,  the Shareholder  Loans
                          and  the Collateral Documents--Change
                          of Control."
                          
Asset Sale Proceeds       The  Company and the Issuer  will  be
                          obligated  in  certain circumstances,
                          to  use  a  portion of the  net  cash
                          proceeds  of certain sales  or  other
                          dispositions  of  assets,   to   make
                          offers to purchase Exchange Notes  in
                          the  amounts  and at  the  redemption
                          prices   set   forth   below    under
                          "Description  of the Exchange  Notes,
                          the  Exchange  Notes  Guarantee,  the
                          Issuer  Loan,  the Shareholder  Loans
                          and the Collateral Documents--Certain
                          Covenants--Disposition of Proceeds of
                          Asset Sales."
                          
Principal Covenants       The  Indentures, with respect to  the
                          Company  and  its Subsidiaries,  will
                          contain      certain      restrictive
                          covenants,     including,     without
                          limitation,   (i)   limitations    on
                          investments, loans and advances, (ii)
                          limitations  on dividends  and  other
                          payments,   (iii)   limitations    on
                          transactions  with  Affiliates,  (iv)
                          limitations       on       additional
                          indebtedness,   (v)  limitations   on
                          liens, (vi) limitations on agreements
                          restricting      payments,      (vii)
                          limitations  on capital expenditures,
                          (viii)   limitations   on   line   of
                          business  and Permitted Projects  and
                          (ix)   limitations   on   sale    and
                          leaseback  transactions. In addition,
                          the Indentures will limit the ability
                          of   Company   and  the   Issuer   to
                          consolidate,  merge or  sell  all  or
                          substantially all of their assets.
                          
Certain Accounts          In accordance with the Exchange Notes
                          Indenture,  certain funds,  including
                          the Capitalized Interest Fund and the
                          Debt  Service Reserve Fund,  will  be
                          established.  The  Issuer  will  have
                          limited  rights  of withdrawal  under
                          the  above  funds in accordance  with
                          terms and conditions set forth in the
                          Exchange Notes  Indenture.
                          
Capitalized Interest      Upon   the  Issue  Date,  the  Issuer
  Fund                    deposited approximately $48.1 million
                          into  the Capitalized Interest  Fund.
                          Through   the  Capitalized   Interest
                          Expiration  Date (October 15,  1999),
                          interest  payments  on  the  Exchange
                          Notes  will  be  provided  from   the
                          Capitalized Interest Fund.
                          
Debt Service Reserve      Upon   the  Issue  Date,  the  Issuer
  Fund                    deposited  $9.7 million in  the  Debt
                          Service Reserve Fund as a reserve for
                          payments on the Exchange Notes.
                          
Transfer of Exchange      Based    upon    their    view     of
  Notes                   interpretations  provided  to   third
                          parties   by   the   staff   of   the
                          Commission,   the  Issuer   and   the
                          Company  believe  that  the  Exchange
                          Notes issued pursuant to the Exchange
                          Offer  may  be  offered  for  resale,
                          resold  and otherwise transferred  by
                          holders   thereof  (other  than   any
                          holder  which is (i) an Affiliate  of
                          the  Company, or the Issuer,  (ii)  a
                          broker-dealer who acquired Old  Notes
                          directly from the Issuer or  (iii)  a
                          broker-dealer who acquired Old  Notes
                          as a result of market making or other
                          trading      activities)      without
                          registration  under  the   Securities
                          Act,   provided  that  such  Exchange
                          Notes  are  acquired in the  ordinary
                          course of such holders' business  and
                          such holders are not engaged in,  and
                          do  not intend to engage in, and have
                          no  arrangement or understanding with
                          any  person  to  participate  in,   a
                          distribution (within the  meaning  of
                          the  Securities Act) of such Exchange
                          Notes.    Each   broker-dealer    who
                          receives Exchange Notes for  its  own
                          account   pursuant  to  the  Exchange
                          Offer must notify the Company and the
                          Issuer  that it has acquired Exchange
                          Notes  for  its  own  account  (which
                          notification  must  be  made  in  the
                          applicable location in the Letter  of
                          Transmittal that is delivered by such
                          broker-dealer along with such broker-
                          dealer's  Old  Notes to  be exchanged
                          pursuant to the Exchange Offer),  and
                          must acknowledge that it will deliver
                          a  prospectus in connection with  any
                          resale  of such Exchange Notes.   The
                          Letter of Transmittal states that  by
                          so acknowledging and by delivering  a
                          prospectus, a broker-dealer will  not
                          be  deemed  to admit that  it  is  an
                          "underwriter" within the  meaning  of
                          the Securities Act.  This Prospectus,
                          as  it may be amended or supplemented
                          from  time to time, may be used by  a
                          broker-dealer   in  connection   with
                          resales of Exchange Notes received in
                          exchange for Old Notes where such Old
                          Notes  were acquired by such  broker-
                          dealer  as a result of market  making
                          activities    or    other     trading
                          activities.   The  Company  and   the
                          Issuer  have agreed, for a period  of
                          270   consecutive  days   after   the
                          consummation  of the Exchange  Offer,
                          to   make   available  a   prospectus
                          meeting  the  requirements   of   the
                          Securities  Act to any  such  broker-
                          dealer for use in connection with any
                          such resale so long as they notify the
                          Issuer in writing within 30 business
                          days after the consummation of the
                          Exchange Offer that they have acquired 
				  Exchange Notes for their own account.
                          A broker-dealer  that  delivers  such
                          a  prospectus  to   a  purchaser  in
                          connection with such  resales will be
                          subject to certain of the  civil 
                          liability provisions under the 
                          Securities Act and will be bound
                          by the provisions of the Registration
                          Rights  Agreement (including  certain
                          indemnification   provisions).    Any
                          holder  who  tenders in the  Exchange
                          Offer    for    the    purpose     of
                          participating  in a  distribution  of
                          the  Exchange  Notes  and  any  other
                          holder  that  cannot rely  upon  such
                          interpretations, must comply with the
                          registration and prospectus  delivery
                          requirements of the Securities Act in
                          connection  with  a secondary  resale
                          transaction.  In addition, to  comply
                          with  the securities laws of  certain
                          jurisdictions,  if  applicable,   the
                          Exchange Notes may not be offered  or
                          sold unless they have been registered
                          or   qualified  for  sale   in   such
                          jurisdictions  or an  exemption  from
                          registration  or   qualification   is
                          available and the conditions  thereto
                          have  been  met.  See  "The  Exchange
                          Offer  -- Purpose and Effects of  the
                          Exchange   Offer"   and   "Plan    of
                          Distribution"
                          
Registration Rights       The  Exchange  Offer is  intended  to
                          satisfy  certain  rights  under   the
                          Registration Rights Agreement,  which
                          rights     terminate     upon     the
                          consummation  of the Exchange  Offer.
                          Therefore,  the holders  of  Exchange
                          Notes   are  not  entitled   to   any
                          exchange or registration rights  with
                          respect  to the Exchange  Notes.   In
                          addition,    such    exchange     and
                          registration rights will terminate as
                          to  holders  of  Old  Notes  who  are
                          eligible  to tender their  Old  Notes
                          for  exchange  in the Exchange  Offer
                          and fail to do so.  See "The Exchange
                          Offer   --  Termination  of   Certain
                          Rights"  and  "Description   of   the
                          Exchange  Notes, the  Exchange  Notes
                          Guarantee,  the  Issuer   Loan,   the
                          Shareholder Loans and the  Collateral
                          Documents  --  Old Notes Registration
                          Rights."
                          
Use of Proceeds           There will be no cash proceeds to the
                          Issuer   or  the  Company  from   the
                          exchange  of Exchange Notes  for  Old
                          Notes pursuant to the Exchange Offer.
                                       
                                 Risk Factors

     Investment in the Exchange Notes involves substantial risks. See "Risk
Factors."
     
     
  SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA OF THE COMPANY

    Presented below is summary historical consolidated financial data for the
Company as of and for each of the years in the three-year period ended December
31, 1996 and as of and for the three months ended March 31, 1996 and 1997, which
have been derived from the Company's financial statements. Also presented is
unaudited pro forma consolidated financial data as of March 31, 1997, for the
year ended December 31, 1996 and for the three months ended March 31, 1997. The
unaudited pro forma financial data give effect to (i) the issuance of $111.4
million in aggregate principal amount of the Rosemary Bonds and the application
of the net proceeds thereof to refinance Rosemary Partnership project debt and
to fund a portion of the acquisition of Ford Motor Credit Company's ("Ford
Credit") limited partner interest in the Rosemary Partnership and (ii) the
issuance of the Series A Bonds and the application of the net proceeds thereof
(a) to fund a capitalized interest fund, a debt service reserve fund and a
company expense fund relating to the Series A Bonds, (b) to fund the remaining
portion of the acquisition of Ford Credit's limited partner interest in the
Rosemary Partnership and (c) to make a distribution to the Company's parent.
These transactions are reflected in the historical balance sheet data as of
December 31, 1996 and March 31, 1997. The unaudited pro forma statement of
operations data reflect such adjustments as if the transactions had occurred as
of January 1, 1996. Additionally, the unaudited pro forma financial data give
effect to the issuance of $155.2 million par value of Old Notes (issued at a
discount for proceeds of $145.0 million) and the application of the proceeds
thereof to fund the Capitalized Interest Fund and the Debt Service Reserve Fund
established with respect to the Old Notes, to make shareholder loans and equity
contributions to the Joint Ventures and to pay the transaction fees, commissions
and expenses incurred in connection with the Prior Offering. The unaudited pro
forma balance sheet data reflect such adjustments as if the transactions
occurred as of March 31, 1997. The unaudited pro forma statement of operations
data reflect such adjustments as if the transactions had occurred as of January
1, 1996. As required by the Securities and Exchange Commission, the unaudited
pro forma statement of operations data do not reflect the extraordinary loss on
early extinguishment of debt. Such extraordinary loss is reflected in the
historical statement of operations data for the year ended December 31, 1996.
The unaudited pro forma financial data do not purport to be indicative of the
results of operations which would actually have occurred if the transactions
described had occurred as presented in such statements or which may be obtained
in the future. The information in this table should be read in conjunction with
the information contained under the captions "Capitalization," "Unaudited Pro
Forma Consolidated Financial Data of the Company" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations of the Company"
and with the consolidated financial statements of the Company, including the
notes thereto, included elsewhere herein. Dollar amounts are presented in
thousands.
YEAR ENDED DECEMBER 31,                   THREE MONTHS ENDED MARCH 31
                                                    --------------------------------------------    --------------------------------
                                                                                       Pro Forma                          Pro Forma 
                                                      1994        1995       1996         1996        1996       1997        1997
                                                    --------    --------    --------    --------    -------    --------    --------
                                                                                      (Unaudited) (Unaudited) (Unaudited)(Unaudited)
Electric capacity and energy sales ..............   $ 30,664    $ 29,859    $ 32,274    $ 32,274    $ 8,015    $ 17,330    $ 17,330
Steam and chilled water sales ...................        650         473         502         502        122         130         130
Interest income .................................        603         895       1,518       8,882        186         430       1,652
                                                    --------    --------    --------    --------    -------    --------    --------
     Total revenue ..............................     31,917      31,227      34,294      41,658      8,323      17,890      19,112

Plant operating expenses ........................      8,940       9,348      12,050      12,050      2,442       8,261       8,261
Development and administrative expenses .........      1,779       2,550       5,187       5,187        803       2,395       2,395
Interest expense ................................     11,018      11,716      19,414      43,492      3,185      10,802      14,427
Depreciation ....................................      4,208       4,210       5,532       5,421      1,053       2,949       2,949
Amortization - Debt issuance costs ..............        600         554         494       1,287        141         174         347
Amortization - Partnership formation costs ......        533         533         533         533        133        --          --
                                                    --------    --------    --------    --------    -------    --------    --------
     Total expenses .............................     27,078      28,911      43,210      67,970      7,757      24,581      28,379
Income (loss) before minority interest ..........      4,839       2,316      (8,916)    (26,312)       566      (6,691)     (9,267)
Minority interest ...............................     (5,700)     (5,048)     (2,405)       --       (1,719)       --          --
                                                    --------    --------    --------    --------    -------    --------    --------
Net loss before extraordinary item ..............       (861)     (2,732)    (11,321)   $(26,312)    (1,153)     (6,691)   $ (9,267)
														    ======== 				   ========
Extraordinary loss on early
 extinguishment of debt .........................       --          --       (21,336)                  --	       --
                                                    --------    --------    --------    		    -------    --------    
     Net loss ...................................   $   (861)   $ (2,732)   $(32,657)               $(1,153)   $(6,691)		
                                                    ========    ========    ========    		    =======    ========    
EBITDA ..........................................   $ 21,198    $ 19,329    $ 17,057    $ 24,421    $ 5,078    $  7,234    $  8,456
DECEMBER 31,                        MARCH 31
                                                     ------------------------------   ------------------------------   
                                                                                                            Pro Forma 
                                                      1994        1995       1996       1996       1997       1997
                                                     --------   --------   --------   --------   --------   --------
                                                                                    (Unaudited) (Unaudited)(Unaudited)
Cash and other current assets ....................   $ 15,639   $ 11,339   $ 36,626   $ 16,807   $ 32,665   $ 32,665
Power plant and equipment (net) ..................     96,136    220,145    268,725    242,466    269,532    269,532
Reserves and escrow deposits, and other
assets ...........................................     15,477     15,471     40,119     15,320     40,079    190,844
                                                     --------   --------   --------   --------   --------   --------
     Total assets ................................   $127,252   $246,955   $345,470   $274,593   $342,276   $493,041
                                                     ========   ========   ========   ========   ========   ========
Current liabilities ..............................   $ 12,531   $ 18,457   $ 19,667   $ 22,823   $ 13,939   $ 13,939
Long-term debt (including capital
     lease obligation)  less current portion .....    106,343    234,608    427,319    256,145    431,323    576,348
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF THE ISSUER

    The following table sets forth summary consolidated financial data of the
Issuer as of December 31, 1994, 1995 and 1996 and for the period from inception
(July 20, 1994) through December 31, 1994 and the years ended December 31, 1995
and 1996, and as of and for the three months ended March 31, 1996 and 1997.
Although the Issuer was formed on March 10, 1997, a subsidiary of the Issuer,
formed on July 20, 1994, is considered the Issuer's predecessor. The information
presented below, which reflects the operations of the predecessor, has been
derived from the Issuer's financial statements. Because the Issuer has been and
continues to be in the development stage since formation, it has no operating
revenues. The data should be read in conjunction with the Issuer's financial
statements, including the notes thereto, appearing elsewhere in this Prospectus.
See "Capitalization," "Unaudited Consolidated Pro Forma Financial Data of the
Company," "Selected Financial Data of the Issuer" and "Selected Financial Data
of the Company." Dollar amounts are presented in thousands.
Period From
                                                                    Inception         Year Ended               Three Months Ended
                                                                    through          December 31,                   March 31,
                                                                    December 31,  ---------------------       ---------------------
                                                                      1994         1995          1996          1996           1997
                                                                      -----       -------       -------       -------       -------
STATEMENT OF OPERATIONS DATA                                                                                      (Unaudited)
General and administrative expenses ............................      $ 203       $   444       $ 1,654       $   266       $   555
                                                                      -----       -------       -------       -------       -------
         Net loss ..............................................      $ 203       $   444       $ 1,654       $   266       $   555
                                                                      =====       =======       =======       =======       =======
December 31,                         March 31,    
                                                                      ---------------------------------       ---------------------
                                                                      1994         1995          1996          1996          1997
                                                                      -----       -------       -------       -------       -------
BALANCE SHEET DATA                                                                                                 (Unaudited)
  Cash .........................................................      $ 101       $     6       $   506       $     6       $     6
  Development costs ............................................        428         1,059         3,292         1,550         6,614
                                                                      -----       -------       -------       -------       -------
         Total assets ..........................................      $ 529       $ 1,065       $ 3,798       $ 1,556       $ 6,620
                                                                      =====       =======       =======       =======       =======
  Advances from Panda International ............................      $ 732       $ 1,712       $ 6,099       $ 2,468       $ 9,476
  Shareholder's deficit ........................................       (203)         (647)       (2,301)         (912)       (2,856)
                                                                      -----       -------       -------       -------       -------
         Total liabilities and shareholder's deficit ...........      $ 529       $ 1,065       $ 3,798       $ 1,556       $ 6,620
                                                                      =====       =======       =======       =======       =======
Independent Engineers' and Consultants' Reports

     The  Independent Engineers' and Consultants' Reports, and the  summaries
thereof,  contained  in  this Prospectus contain forward-looking  statements,
including  projections, that involve risks and uncertainties. Actual  results
may differ materially from those discussed in the forward-looking statements.
In  providing  its  conclusions set forth in the  Independent  Engineers'  or
Consultants'  Reports, each Independent Engineer or Consultant  made  certain
assumptions (which are fully set forth in the text of each report).  Although
the  author of each Report believes that the use of these assumptions in  its
report  is  reasonable,  assumptions are inherently  subject  to  significant
uncertainties  and,  if actual conditions differ from those  assumed,  actual
results  will  differ from those projected, perhaps materially.  Accordingly,
the  conclusions and projections contained in the Independent Engineers'  and
Consultants'  Reports may not be indicative of future events.  Therefore,  no
representations  are made, nor should any be inferred, with  respect  to  the
likely  existence of any particular future set of facts or circumstances.  If
actual  results  are  less favorable than the conclusions  presented  in  the
Independent Engineers' or Consultants' Reports or if the assumptions used  in
formulating  the  conclusions presented prove to be incorrect,  the  Issuer's
ability  to  make  payments  on the Exchange Notes,  may  be  materially  and
adversely affected. Engineers' and Consultants' Reports not attached as 
appendices to this Prospectus are exhibits to the Registration Statement of 
which this Prospectus forms a part.  All such reports should be read carefully
in conjunction with the summaries thereof in this Prospectus. See "Disclosure
Regarding Forward-Looking Statements" and "Risk  Factors  --  Reliance  upon
Projections  and  Underlying  Assumptions Contained in Engineers' and
Consultants' Reports."
     
     Any  projections  of  future  operations and  economic  results  thereof
contained  in  the Independent Engineers' and Consultants' Reports  have  not
been  prepared in accordance with published guidelines of the Securities  and
Exchange  Commission, the American Institute of Certified Public Accountants,
any   regulatory  or  professional  agency  or  body  or  generally  accepted
accounting principles. Deloitte & Touche LLP, the Issuer's and the  Company's
independent  accountants, has neither examined nor compiled  the  projections
and,  accordingly, does not express an opinion or any other form of assurance
with  respect  thereto.  See  "Risk Factors--Reliance  upon  Projections  and
Underlying Assumptions Contained in Engineers' and Consultants' Reports."
     
Consolidating Financial Analyst's Pro Forma Report

     ICF  Resources, Incorporated ("ICF") has prepared a report, dated  April
11,  1997, and updated June 6, 1997 (as updated, the "Consolidated Pro
Forma  Report"),  that  contains a summary consolidation  of  the  pro  forma
financial  projections  (the  "Consolidated  Pro  Forma")  for  the   Luannan
Facility, the Rosemary Facility and the Brandywine Facility contained in  the
Luannan  Engineering  Report  (as defined below),  the  Rosemary  Engineering
Report  and the Brandywine Pro Forma Report, respectively, each of  which  is
summarized  herein. The Consolidated Pro Forma Report is attached  hereto  as
Appendix C and should be read in its entirety by all prospective investors.
     
     In  preparing  the Consolidated Pro Forma, ICF relied on the  pro  forma
financial   projections  (the  "Luannan  Pro  Forma")  prepared  by   Parsons
Brinckerhoff  Energy  Services,  Inc.  ("Parsons  Brinckerhoff"),  which  are
contained  in  the  Luannan  Engineering  Report,  the  pro  forma  financial
projections  (the  "Rosemary  Pro  Forma")  prepared  by  Burns  &  McDonnell
Engineering Company, Inc. ("Burns & McDonnell"), which are contained  in  the
Rosemary  Engineering  Report, and the pro forma financial  projections  (the
"Brandywine  Pro  Forma")  prepared  by  ICF,  which  are  contained  in  the
Brandywine Pro Forma Report.
     
     The  Consolidated  Pro Forma Report presents the "Company  Debt  Service
Coverage Ratio," which reflects the relationship between the total cash  flow
available  for  Company  debt  service (i.e.,  cash  flow  from  the  Luannan
Facility,  the  Rosemary Facility and the Brandywine  Facility  after  paying
Project-level operating expenses, rent and debt service and debt  service  on
the  Series  A  Bonds (and the Series A-1 Bonds exchanged  therefor),  making
additions to reserves required for Project-level financings and the Series  A
Bonds,  providing  distributions to third-party equity  interest-holders  and
providing  for  certain Company-level items) and Company debt service  (i.e.,
the  cash  debt  service  on  the Exchange Notes net  of  releases  from  the
Capitalized Interest Fund).

Consolidated Summary Projected Consolidated Financial Data
(Projections relating to the Luannan Facility are based on an exchange rate of
RMB 8.5 = $1.00)
1997      1998       1999     2000      2001      2002      2003     2004      2005      2006     2007
                                                                  (in thousands)
Operations Data:                                                                                                                 
Capacity Revenue:                                                                                                                
Rosemary                $25,382   $25,382    $23,568  $23,568   $23,568   $23,568   $23,568  $23,568   $23,568   $18,123  $18,123
  Brandywine             21,932    21,420     37,940   38,759    48,960    49,739    50,358   50,387    50,253    50,543   52,639
                        -------   -------    -------  -------   -------   -------   -------  -------   -------   -------  -------
    Total Capacity       47,314    46,802     61,508   62,327    72,528    73,307    73,926   73,955    73,821    68,666   70,762
    Revenue
                                                                                                                                 
Energy & Other Revenue:                                                                                                          
  Rosemary                3,850     5,768      7,734   10,010    12,462    13,872    15,692   17,793    20,571    20,283   20,004
  Brandywine             23,495    25,141     26,057   27,092    30,647    33,340    31,954   30,419    33,464    35,545   35,763
  Luannan                     -         -     18,038   46,110    49,040    51,266    53,372   55,230    56,472    58,074   60,060
                        -------   -------    -------  -------   -------   -------   -------  -------   -------   -------  -------
    Total Revenue        74,659    77,712    113,337  145,540   164,677   171,785   174,944  177,397   184,328   182,568  186,590
                                                                                                                                 
EBITDA:                                                                                                                          
  Rosemary               19,552    19,965     18,442   18,770    19,169    19,318    19,593   19,835    20,232    14,442   14,142
  Brandywine             17,994    17,731     34,342   35,359    46,802    47,955    47,955   47,252    47,429    48,105   49,811
  Luannan                     -         -     10,956   27,632    28,937    29,384    29,538   30,352    30,502    30,961   31,751
                        -------   -------    -------  -------   -------   -------   -------  -------   -------   -------  -------
    Total EBITDA         37,546    37,696     63,740   81,761    94,908    96,656    97,086   97,439    98,163    93,507   95,704
                                                                                                                                 
Cash Available for                                                                                                               
Consolidated Debt        39,321    34,139     59,564   79,437    91,382    96,050    96,798   96,733    95,818    90,618   95,132
  Service
                                                                                                                                 
Project & PFC Net Debt   34,956    30,593     46,768   45,890    55,441    57,433    58,224   57,645    57,454    51,576   56,811
Service
                                                                                                                                 
Cash Available for                                                                                                               
Company Debt              5,697       221      9,494   28,856    29,883    33,702    34,849   36,434    37,646    30,550   26,961
  Service
                                                                                                                                 
Senior Secured Notes                                                                                                             
  Cash Interest Payment   9,323    19,400     19,400   19,400    19,056    18,394    17,334   16,031    14,453    12,759   11,469
  Principal Payment (1)       -         -          -    1,650     4,400     8,000     9,900   12,000    14,500    10,700    9,200
  Less:  Capitalized    (9,323)   (19,400)   (19,400)        -         -         -         -        -         -         -        -
                        -------   -------    -------  -------   -------   -------   -------  -------   -------   -------  -------
Interest Fund Release
   Senior Secured Notes                                                                                                          
   Net Debt Service           -         -          -   21,050    23,456    26,394    27,234   28,031    28,953    23,459   20,669
                                                                                                                                 
Balance Sheet Data:                                                                                                              
 Consolidated Cash and  
  Restricted Cash       $81,207   $60,635    $55,795  $68,601   $81,381   $92,120  $101,603 $110,839  $117,544  $130,822 $145,679
 Consolidated Long-     584,812   592,266    590,749  588,305   573,343   551,661   525,814  495,781   460,547   433,032  399,857
  Term Debt (2)
                                                                                                                                 
Key Credit Statistics:                                                                                                           
  Company Debt Service      (3)       (3)        (3)    1.37x     1.27x     1.28x     1.28x    1.30x     1.30x     1.30x    1.30x
  Coverage Ratio
Notes:

(1)    Assumes outstanding balance of Senior Secured Notes is refinanced in
       2004 at an equivalent coupon rate and repaid over nine years.
(2)    Consolidated long-term debt includes Rosemary Bonds, Brandywine Facility
       Lease, Series A Bonds and Senior Secured Notes.
(3)    Effectively 1.0x Company Debt Service Coverage Ratio since Capitalized
       Interest Fund Release equals Cash Interest Payment on Senior Secured 
       Notes.

 Luannan Engineering Report
 
     Parsons    Brinckerhoff    Energy   Services,    Inc.    ("Parsons
 Brinckerhoff") has prepared a report, dated April 11, 1997, and updated
 June  6, 1997,  evaluating the  technical,  environmental and economic
 aspects  of the  Luannan Facility  (the "Luannan Engineering Report").
 The Luannan  Engineering Report  is  attached hereto as Appendix D and
 should  be  read  in  its  entirety  by   all  prospective  investors.
 Parsons Brinckerhoff has reviewed the engineering,  cost, construction
 schedule, approvals, contracts  and  financial  performance  estimates
 for  completion, technological risk, variations from practices typical
 in the industry and the  ability of the Luannan Facility to perform as
 intended.  Its principal conclusions include the following:
     
 -    The  design  of  the thermal power plant of the Luannan  Facility
      (the  "Plant") is based on current, proven technology and  is  in
      conformance  with engineering practice and industry standards  in
      the  People's Republic of China. Specifically, the proposed Plant
      will  be similar in design to other thermal power plants designed
      by  Hebei  Electric  Power Design Institute which  are  presently
      operating in China.
 
 -    The  construction  schedule  is reasonable  and  achievable.  The
      Luannan  EPC  Contractor  should  be  able  to  meet  the  agreed
      construction   schedule  and  pass  all  performance   tests   as
      stipulated  within  28  months.  This  schedule  has  been  found
      comparable to similar projects in China.
 
 -    The  Luannan  EPC  Contractor  is an  established  and  reputable
      construction   company  with  both  international  and   domestic
      experience in manufacturing and installing equipment for  similar
      power  generation  projects. The Luannan EPC Contractor's  boiler
      manufacturing facility performs quality control to ISO  standards
      and has achieved ASME certification. The Luannan EPC Contractor's
      list of achievements includes 16 coal fired power plants in China
      plus five international power plant installations completed on  a
      turnkey basis.
 
 -    The budgeted costs of $118.8 million to develop and construct the
      Luannan  Facility are reasonable and represent  a  realistic  and
      attainable  project cost. Most project costs are  denominated  in
      U.S. dollars; however, for steam and heat network, land and water
      use  rights, and transmission line, which are denominated in RMB,
      an exchange rate of RMB 8.30 to $1.00 was used.
 
 -    Based upon the proposed equipment and design criteria, the design
      lives of the main components of the Plant are sufficient for  the
      intended  modes of operation of the Luannan Facility  and  should
      meet the expected Plant performance criteria. With proper design,
      careful,  periodic maintenance and operation of the Plant  within
      design  parameters, a useful life of 20 years  should  be  easily
      achievable.
 
 -    Based  on  the  review of the various government  approvals,  the
      Joint Ventures have obtained the key approvals required from  the
      various  governmental  agencies which are  required  to  commence
      construction  of  the  Plant.  They  have  also  identified   the
      necessary permits that will be required in due course during  the
      construction  and operation. There is no reason to  believe  that
      those licenses and consents not yet received will not be granted.
 
 -    Based  on the review of the various business agreements and their
      amendments,  the  major contracts, including  the  Luannan  Power
      Purchase  Agreement, the Luannan EPC Contract,  the  Luannan  O&M
      Contract,   the  Luannan  Transmission  Facilities   Construction
      Agreement and the Luannan Coal Supply Agreements, are technically
      reasonable and are consistent with each other and the assumptions
      used in the financial analysis.
 
 -    The  technical performance requirements, performance testing  and
      obligations of the parties identified in the Luannan EPC Contract
      are  reasonable and achievable. The Luannan EPC Contract has  the
      necessary  protective terms and conditions and is  comparable  to
      other  turnkey  projects in the United States. EPC  contracts  in
      China are more rigorous than in the U.S. on government approvals,
      design  stages,  and  guarantee  issues  and  less  stringent  on
      environmental issues.
 
 -    This  assessment has concluded that, from an environmental  point
      of  view,  the  Plant is feasible and is capable of  meeting  the
      relevant   emissions  and  discharge  limits  required   by   the
      applicable Chinese standards if all environmental protection  and
      control   measures  recommended  by  the  Environmental   Impacts
      Assessment ("EIA") are implemented.
 
 -    The ash handling system uses appropriate environmental protection
      measures  and the ash disposal plan is reasonable and  achievable
      based  on  the expected quality of the coal and its expected  ash
      content  as  summarized in the Luannan Coal Consultant's  Report.
      The  EIA  indicates  the effluent quality will  comply  with  the
      national environmental standard.
 
 -    The operation and maintenance contractor selected for the Luannan
      Facility is Duke/Fluor Daniel. Duke/Fluor Daniel, a joint venture
      between   Duke   Power  and  Fluor  Daniel,  has   domestic   and
      international experience with coal-fired power plants and has the
      necessary  experience and capability to fulfill the  Luannan  O&M
      Contract.   The  Luannan  O&M Contract  contains  incentives  and
      penalties  in  the contract price adjustment clause which  should
      provide  the Luannan O&M Contractor reasonable initiative  toward
      achieving    excellence   in   Plant   operational   performance.
      Requirements  for  developing operations plans are  contained  in
      Section 2.10 of the Luannan O&M Contract. The Joint Ventures have
      review  and approval authority for all operations plans developed
      by the Luannan O&M Contractor.
 
 -    The  Luannan  Facility  can be expected to  operate  commercially
      throughout  the  term  of the Luannan Power  Purchase  Agreement.
      There  is  a  large  number  of coal-fired  plants  currently  in
      operation in the United States that have been in service for well
      over 30 years.
 
 -    The  Plant  is  capable of meeting the required  performance  and
      availability  levels while operating in the modes agreed  in  the
      Luannan Power Purchase Agreement. The design of the Plant and the
      net dependable capacity performance guaranteed by the Luannan EPC
      Contractor of 102 MW insures that the contractual amount  in  the
      Luannan  Power Purchase Agreement can be met and exceeded  during
      the  peak  hours.  Maximum Plant output of 106  MW  will  further
      exceed   the  stipulated  amount.  The  actual  performance   and
      availability of the Plant will depend on the successful operation
      and maintenance of the facility throughout the Plant's life.
 
 -    The projected dispatch targets for the Plant, as specified by the
      Luannan  Power Purchase Agreement, are achievable and  consistent
      with the design criteria and equipment for the Plant.
 
 -    The  projected  O&M  costs  and capital  expenditures  for  major
      maintenance  are  reasonable and representative  of  the  planned
      operations  of the Luannan Facility. The Joint Ventures  and  the
      Luannan  O&M  Contractor have the responsibility for establishing
      the full-time manpower requirements of the Luannan Facility.
 
 -    Under  the  Luannan Power Purchase Agreement, North  China  Power
      Company is obligated to purchase electricity for a period  of  20
      years beginning on the commercial operation date. The useful life
      of the Luannan Facility will extend beyond this 20-year period.
 
 -    On the basis of the financial analyses presented in Chapter 12 of
      the  Luannan Engineering Report, Parsons Brinckerhoff is  of  the
      opinion  that, in the base case (as described in Section 12.7  of
      the Luannan Engineering Report), the projected operating revenues
      are  adequate  to  pay  the projected operating  and  maintenance
      expenses,  pay the local and federal taxes, provide a minimum  of
      2.02  and  average of 2.19 annual debt service coverage  for  the
      Shareholder  Loans during the repayment period of 10  years,  and
      provide  equity distributions to Pan-Western throughout  the  20-
      year  term  of  the  Luannan Power Purchase  Agreement.  For  the
      financial analysis and projections an exchange rate assumption of
      $1.00=RMB 8.50 was used.
 
 -    Five  sensitivity  cases  were  developed  to  test  the  Luannan
      Facility's performance under operating assumptions different from
      the   base  case.  As  shown  in  Section  12.8  of  the  Luannan
      Engineering  Report,  the selected changes  did  not  yield  debt
      coverage  ratios significantly different from that  in  the  base
      case.
 
 Luannan Coal Consultant's Report
 
     Marston  &  Marston,  Inc.  (the "Luannan  Coal  Consultant")  has
 prepared  a  report  dated  April  11, 1997, and updated June 6, 1997, 
 reviewing the availability of coal and arrangements for the transportation
 of coal to the  Luannan Facility  (the "Luannan Coal Consultant's Report").
 The  Luannan  Coal Consultant's  Report is attached hereto as Appendix E
 and  should  be read  in  its  entirety by all prospective investors.
 Subject  to  the information  contained and the assumptions made in  the
 Luannan  Coal Consultant's Report, the Luannan Coal Consultant offers the
 following conclusion:
     
 -    Although  the Luannan Facility can not be assessed by  the  usual
      Western  standards because the data to do such an  assessment  is
      not  readily available, it is reasonable to believe that  a  coal
      resource  of the appropriate quality is available, at  a  locally
      competitive  price in sufficient quantity to operate the  Luannan
      Facility  successfully,  taking  into  consideration  the   local
      environment.   The  fuel supply strategy, coal supply  agreements
      and  the  coal transportation agreement are appropriate  for  the
      conditions and situation as it exists in China.  Given that  cost
      of  the  fuel supply is a pass-through arrangement in the Luannan
      Power  Purchase  Agreement, the risk  exposure  for  the  Luannan
      Facility will be minimal in terms of the delivered fuel price.
                                       
                                 RISK FACTORS
                                       
      In addition to the other information contained in this Prospectus, before
tendering Old Notes for the Exchange Notes offered hereby, holders of Old Notes
should  consider carefully the following factors as well as the  other  matters
described   in  this  Prospectus.   The  terms  of  the  Exchange   Notes   are
substantially  identical to the terms of the Old Notes, and the Exchange  Notes
will  evidence the same debt as the Old Notes which they replace.  Accordingly,
the  following factors may be generally applicable to the Old Notes as well  as
to the Exchange Notes.

Consequences of Failure to Exchange Old Notes

      Holders  of  Old Notes who do not exchange their Old Notes  for  Exchange
Notes  pursuant  to  the Exchange Offer will continue  to  be  subject  to  the
restrictions on transfer of such Old Notes as described in the legend  thereon,
as  a consequence of the issuance of the Old Notes pursuant to exemptions from,
or  in  transactions  not  subject  to, the registration  requirements  of  the
Securities Act and applicable state securities laws.  In general, the Old Notes
may  not  be  offered  or sold unless registered under the Securities  Act  and
applicable  state  securities  laws, or pursuant  to  an  exemption  therefrom.
Except under certain limited circumstances contained in the Registration Rights
Agreement,  the  Issuer does not intend to register the  Old  Notes  under  the
Securities  Act.   Upon consummation of the Exchange Offer, certain  rights  of
holders of Old Notes who are eligible to tender their Old Notes for exchange in
the  Exchange Offer and fail to do so will terminate.  To the extent Old  Notes
are  tendered and accepted in the Exchange Offer, the trading market,  if  any,
for  the  Old  Notes  not so tendered could be adversely  affected.   See  "The
Exchange  Offer  --  Termination of Certain Rights"  and  "Description  of  the
Exchange  Notes, the Exchange Notes Guarantee, the Issuer Loan, the Shareholder
Loans and the Collateral Documents -- Old Notes Registration Rights."

Financial Risks

  Substantial Leverage
  
     The Issuer, the Company and their subsidiaries are and will continue to be
highly leveraged. As of March 31, 1997, the Company's total consolidated  long-
term indebtedness (including capital lease obligation) was $431.3 million,  its
total   consolidated   assets  were  $342.3  million   and   its   consolidated
shareholder's  deficit  was $103.0 million. As of such  date,  on  a  pro-forma
consolidated  basis, after giving effect to the issuance of the Old  Notes  and
the  application  of  the proceeds therefrom, the Company's total  consolidated
long-term  indebtedness would have been $576.3 million, its total  consolidated
assets  would  have  been  $493.0  million and its  consolidated  shareholder's
deficit   would   have   been  $103.0  million.  The  Company's   Project-level
indebtedness  related to the Rosemary Facility and the Brandywine  Facility  is
collateralized by the assets of the underlying Projects (including, in the case
of the Brandywine Facility, obligations relating to the long-term lease) and  a
pledge  of  the  equity  interests in the entities which  own  or  lease  those
facilities  (such entities, together with other entities which are directly  or
indirectly  owned  by  PIC  and which directly or  indirectly  own  a  Project,
collectively referred to as "Project Entities" and individually as  a  "Project
Entity"). If a lender were to foreclose on a Project's assets (or, in the  case
of  the Brandywine Facility, if the lessor were to terminate the lease),  there
can  be  no  assurance  that the related Project Entities  would  maintain  any
interest in the Project or receive any compensation upon a sale of the  related
assets. In addition, the Series A Bonds are collateralized, among other things,
by  the  stock of intermediate entities which, directly or indirectly, own  the
Project  Entities  that  own  the  Rosemary Facility  and  the  lessee  of  the
Brandywine Facility. If a lender were to foreclose on its security interest  in
the  equity interests of a Project Entity or one of the intermediate  entities,
or  if  a lessor were to terminate a lease, the value of the Company's interest
in  the  affected Project could be effectively eliminated. In addition  to  the
foreclosure  and  lease  termination  risk,  high  leverage  and  the  lack  of
unencumbered collateral could adversely affect the ability of a Project Entity,
and  the  Company,  to obtain additional financing in the  future  for  working
capital,  capital  expenditures or other purposes.  Such  adverse  consequences
could  materially and adversely affect the financial performance of the  Issuer
and  its  ability  to make payments of interest and principal on  the  Exchange
Notes  when  due  and  the ability of the Company to make  payments  under  the
Exchange  Notes Guarantee when due. See "Capitalization," "Unaudited Pro  Forma
Consolidated Financial Data" and "Description of Other Indebtedness."
     
  Dependence on Distributions
  
     The  ability of the Issuer to make payments on the Exchange Notes and  the
ability of the Company to make payments under the Exchange Notes Guarantee will
depend  almost entirely upon the financial performance of the Luannan Facility,
when  constructed and operational, as well as the financial performance of  the
two  Projects  owned  or leased by indirect wholly-owned  subsidiaries  of  the
Company  that  are  currently  in  operation, the  Rosemary  Facility  and  the
Brandywine Facility, and the ability of the intermediate entities that  own  or
lease such Projects to make distributions to the Issuer or the Company, as  the
case  may  be. The failure of a Project to perform as expected or the inability
of one or more of the intermediate entities to make distributions to the Issuer
or the Company, as the case may be, could have a material and adverse effect on
the ability of the Issuer to make payments on the Exchange Notes or the ability
of  the  Company  to perform under the Exchange Notes Guarantee,  respectively.
Each  of  the  Projects  is  subject to a number of  financial,  operating  and
regulatory  risks  that could materially and adversely affect its  performance,
and  the  ability of the intermediate entities to make distributions is subject
to  a  number of contractual and legal restrictions. For example, under Chinese
law,  dividends  may be paid by the Joint Ventures only from  after-tax  income
(determined  according to Chinese accounting principles) and generally  may  be
paid only on an annual basis unless approval for more frequent distributions is
granted.  See "--Considerations Relating to the PRC--Substantial Dependence  on
Debt Service from Joint Ventures; Restrictions on Payment of Dividends" below.
     
     Distributions which the Company may receive with respect to  the  Rosemary
Facility  and the Brandywine Facility would not be sufficient by themselves  to
enable  the  Company, through payments under the Exchange Notes  Guarantee,  to
provide sufficient funds to satisfy the Issuer's payment obligations under  the
Exchange Notes. Therefore, unless the Luannan Facility is completed during  the
time  period currently anticipated by the Issuer, the ability of the Issuer  to
meet  its payment obligations under the Exchange Notes would be materially  and
adversely affected.
     
  Refinancing
  
     A  substantial  percentage  (84.6%) of the  original  aggregate  principal
amount  of  the Exchange Notes will be due and payable on April 15, 2004  in  a
lump  sum.   In order to be able to pay such amount when due, the  Issuer  will
have  to obtain funds to make such payment from additional borrowings or  other
sources.  There can be no assurance that the Issuer will be able to obtain such
funds  in amounts sufficient to pay such principal amount when due and on terms
and  conditions that are satisfactory to the Issuer.  See "Description  of  the
Exchange  Notes, the Exchange Notes Guarantee, the Issuer Loan, the Shareholder
Loans  and  the Collateral Documents--Ranking, Maturity, Interest and Principal
of the Exchange Notes."
     
  Rights of Minority Shareholder in Indirect Subsidiary of Issuer
  
     Pursuant  to  (i)  the  articles  of  association  of  Pan-Western  Energy
Corporation LLC, a Cayman Islands exempted company ("Pan-Western"), an indirect
subsidiary  of the Issuer which owns an approximately 88% interest in  each  of
the Joint Ventures, and (ii) a shareholders agreement among Pan-Western and its
two  shareholders, Pan-Sino Energy Development Company LLC,  a  Cayman  Islands
exempted  company ("Pan-Sino"), and Chinamac (Singapore) Pte Ltd,  a  Singapore
company  ("Chinamac"), which is an affiliate of CMC (as described  below),  the
unanimous  consent of both Pan-Sino and Chinamac is required for the taking  of
various  actions  by  Pan-Western,  including  any  merger,  consolidation   or
dissolution  involving  Pan-Western,  any  sale,  lease,  transfer   or   other
disposition of all or a substantial part of Pan-Western's assets, any amendment
to  the  Pan-Western  charter  documents,  any  modification  of  the  transfer
restrictions  on Pan-Western shares and the declaration of dividends.  Pan-Sino
is  a  95.5%-owned subsidiary of the Issuer which, in turn, owns a 99% interest
in  Pan-Western. Chinamac owns a 1% interest in Pan-Western.   The  Issuer  has
requested that Chinamac agree to waive its rights to require unanimous  consent
for  the taking of any of the foregoing actions in the event of a default under
the Issuer Loan.  While Chinamac has indicated its preliminary agreement to the
Issuer's request, there can be no assurance that Chinamac ultimately will  give
its  consent  to waive such rights. In the event that Chinamac does  not  waive
such  rights,  if  the  Exchange Notes Trustee were to  foreclose  on  the  99%
interest in Pan-Western which is pledged as part of the collateral for Exchange
Notes, the Exchange Notes Trustee, or any purchaser of the pledged interest  in
Pan-Western  pursuant to a foreclosure sale, would be unable  to  take  various
actions that are subject to unanimous consent rights, including the sale of all
or  a  substantial part of Pan-Western's assets and the payment  of  dividends,
without  the consent of Chinamac.  See "--Considerations Relating to the  PRC--
Legal  and Regulatory Considerations" and "Business of the Issuer, the Company,
Panda  International and Their Subsidiaries--The Issuer, the Company and  Panda
International."
     
Additional Indebtedness

     The  Indentures permit the Issuer and its Subsidiaries to incur additional
indebtedness  under  certain circumstances. The Company Indenture  permits  the
Company  and  its  Subsidiaries  also to incur  additional  indebtedness  under
certain  circumstances. Additionally, the loan agreements pursuant to  which  a
portion  of  the proceeds of the Prior Offering will be loaned by  the  Issuer,
through  an  intermediate entity, to the Joint Ventures (the "Shareholder  Loan
Agreements")  permit the Joint Ventures to incur additional indebtedness  under
certain  circumstances. The Rosemary Indenture contains  provisions  permitting
the  Rosemary  Partnership  to  incur  additional  indebtedness  under  certain
circumstances.  In  addition,  PFC may issue  additional  bonds  under  certain
circumstances as permitted under the PFC Indenture. The issuance of  additional
indebtedness  by  the  Issuer, the Company, the Joint  Ventures,  the  Rosemary
Partnership,  PFC  or any other subsidiary of the Issuer or the  Company  would
create  additional potential claims against the issuers of such  debt  and  the
assets which secure such debt, including interests in the Luannan Facility, the
Rosemary  Facility and the Brandywine Facility, as the case may be,  and  could
result  in  a reduction in the cash available for distribution by the  entities
that  own interests in such Projects upstream, thus reducing the cash available
to  make payments on the Exchange Notes and the cash available to make payments
under the Exchange Notes Guarantee. See "Description of the Exchange Notes, the
Exchange  Notes  Guarantee,  the Issuer Loan, the  Shareholder  Loans  and  the
Collateral Documents--Certain Covenants--Limitations on Debt," "Description  of
Other Indebtedness--The PFC Bonds," and "Description of Other Indebtedness--The
Rosemary Bonds."
     
  Effective Subordination of Exchange Notes and Exchange Notes Guarantee
  
     The  Exchange Notes and the Exchange Notes Guarantee will be the exclusive
obligations of the Issuer and the Company, respectively, and not of the Project
Entities which own or operate the Rosemary Facility or the Brandywine Facility,
the  Joint Ventures or any other affiliate of the Issuer. The Project  Entities
and  the Joint Ventures are highly leveraged and their debt agreements restrict
their ability to pay dividends, make distributions or otherwise transfer funds,
through  intermediate  entities,  to  the Company.  The  restrictions  in  such
agreements   generally  require  that,  prior  to  the  payment  of  dividends,
distributions  or  other  transfers, Project Entities and  the  Joint  Ventures
provide  for  the  payment of other obligations, including operating  expenses,
debt  service and the funding of reserves. The Project Entities and  the  Joint
Ventures are separate and distinct legal entities and have no obligation to pay
any  amounts due pursuant to the Exchange Notes or to make any funds  available
therefor,  whether by dividends, loans or other payments, and do not  guarantee
the  payment  of the Exchange Notes. Thus, payments on the Exchange  Notes  are
effectively  subordinated  to the payment of all  obligations  of  the  Project
Entities  and the Joint Ventures. In addition, the Company's right  to  receive
any assets of the Project Entities or the Joint Ventures upon their liquidation
or  reorganization  will be effectively subordinated  to  the  claims  of  such
Project  Entities' or Joint Ventures' creditors (including trade creditors  and
holders of other debt issued by such Project Entity). As of March 31, 1997, the
Project  Entities  had approximately $338.6 million of indebtedness  and  other
liabilities  (including  payments on the long-term  lease  for  the  Brandywine
Facility), which is effectively senior to obligations of the Company under  the
Exchange  Notes Guarantee. See "Description of Other Indebtedness--The Rosemary
Bonds" and "Description of Other Indebtedness--The Brandywine Financing."
     
     Similarly, the Company is highly leveraged as a result of the issuance  of
the  Series  A  Bonds by PFC, which are collateralized in part by  all  of  the
issued  and outstanding shares of PIC. The PFC Indenture restricts the  ability
of  PIC  to  pay  dividends,  make distributions or otherwise  transfer  funds,
through  PEC,  to  the  Company. PIC and PFC are separate  and  distinct  legal
entities and have no obligation to pay any amounts due pursuant to the Exchange
Notes  or to make any funds available therefor, whether by dividends, loans  or
other  payments,  and  do not guarantee payment of the  Exchange  Notes.  Thus,
payments on the Exchange Notes are also effectively subordinated to the payment
of  all  obligations of PFC. In addition, the Company's right  to  receive  any
assets  of  PIC  upon  its liquidation or reorganization  will  be  effectively
subordinated to the claims of PFC's creditors (including holders of the  Series
A  Bonds).  As  of  March  31, 1997, PFC had approximately  $106.6  million  of
indebtedness  and  other  liabilities,  which  is  effectively  senior  to  the
obligations of the Company under the Exchange Notes Guarantee. See "Description
of Other Indebtedness--The PFC Bonds."
     
  Default on Project-level Debt; Enforcement of Rights
  
     If a Project Entity fails to generate cash flows sufficient to service its
debt,  such Project Entity could default on its indebtedness or the payment  of
its lease obligations or breach a related covenant. If a Project Entity were to
default in the payment of any such obligation or in the performance of any such
covenant, the obligees thereunder would be permitted to accelerate the maturity
of   such   indebtedness  or  terminate  such  lease,  which  could   terminate
distributions to the Company from such Project Entity and adversely affect  the
ability  of the Company to perform under the Exchange Notes Guarantee. In  such
circumstances,  Holders of the Exchange Notes may be forced to  accelerate  the
maturity  of  the Exchange Notes to protect their interests at a time  when  it
would  not  otherwise have been in their interests to do so. Furthermore,  such
defaults  could  delay  or  preclude payments on the Exchange  Notes.  See  "--
Financial   Risks--Substantial  Leverage"  and  "--Financial   Risks--Effective
Subordination  of  Exchange  Notes"  above  and  "Management's  Discussion  and
Analysis of Financial Condition and Results of Operations of the Company."
     
  Addition of Projects to PIC Project Portfolio
  
     Pursuant to the PIC Additional Projects Contract, additional Projects,  if
any, developed by Panda International or its affiliates will be transferred  to
the PIC Project Portfolio if certain conditions are satisfied, and it is likely
that  additional series of Pooled Project Bonds will be issued  under  the  PFC
Indenture  to  finance  debt  or equity investments  in  such  Projects,  which
additional series will rank pari passu with the currently outstanding Series  A
Bonds. If the Rosemary Facility or the Brandywine Facility (which already  have
been transferred to the PIC Project Portfolio), or additional Projects, if any,
to  be transferred to the PIC Project Portfolio in the future do not perform up
to  expectations, their inclusion in the PIC Project Portfolio could weaken the
overall  performance  of the PIC Project Portfolio and  reduce  the  cash  flow
available from PIC to the Company, thereby impairing the ability of the Company
to perform under the Exchange Notes Guarantee. While it is the Company's belief
that  diversification  of  the  PIC Project Portfolio  will  reduce  the  risks
associated with poor performance by any one Project or a small portion  of  the
PIC  Project Portfolio, there can be no assurance that this will be  the  case.
See "Description of Other Indebtedness--The PFC Bonds."
     
  Addition of Projects to the Issuer or the Company
  
     Additional  Projects,  if  any, developed by Panda  International  or  its
affiliates  which  are not eligible for transfer to the PIC  Project  Portfolio
may,  at  the election of Panda International or its affiliates, be transferred
to  the Issuer or the Company, provided that, if additional indebtedness is  to
be  issued  by  the Issuer or the Company with respect to any  such  additional
Project, certain conditions are satisfied. If any such Projects transferred  in
the  future  to  the Issuer or the Company do not perform up  to  expectations,
their  inclusion in the Issuer or the Company, as the case may be, could weaken
the  overall  performance  of  the  Issuer or the  Company,  thereby  adversely
affecting the ability of the Issuer to make payments on the Exchange  Notes  or
impairing  the  ability  of  the Company to perform under  the  Exchange  Notes
Guarantee.
     
Repurchase of Exchange Notes Upon a Change of Control

     Upon  the  occurrence  of  a Change of Control, if  certain  minimum  debt
service  coverage ratios are not maintained, the Issuer must offer to  purchase
all  of the Exchange Notes outstanding at a purchase price equal to 101% of the
principal  amount thereof plus accrued and unpaid interest, if  any  (including
Liquidated  Damages and Additional Amounts, if any) to the  date  of  purchase.
There  can be no assurance that the Issuer will have available funds sufficient
to  fund  the purchase of the Exchange Notes upon a Change of Control.  In  the
event  a  Change  of  Control occurs at a time when the Issuer  does  not  have
available  funds sufficient to pay for all of the Exchange Notes  delivered  by
Holders  seeking to accept the Issuer's repurchase offer, an event  of  default
would  occur under the Indentures. The definition of Change of Control includes
an  event  by which all or substantially all of the assets of the Company,  the
Issuer  or  Panda  International  are  sold,  leased,  exchanged  or  otherwise
transferred.  There is little case law interpreting "all or substantially  all"
in  the  context  of  an  indenture. Because there is  no  precise  established
definition of this phrase, there may be uncertainty as to whether a  Change  of
Control  has  occurred as a result of any particular sale, lease,  exchange  or
transfer  of the assets by the Company, the Issuer or Panda International.  Any
such uncertainty may adversely affect the enforceability of the Change of
Control provisions of the Exchange Notes Indenture.  See "Description  of the
Exchange Notes, the Exchange Notes Guarantee,  the  Issuer Loan, the Shareholder
Loans and the Collateral Documents--Change of Control."
     
Reliance  upon  Projections and Contained in  Engineers'
and Consultants' Reports

     Included  as  Appendices  D  and E hereto are  reports  of  engineers  and
consultants  concerning  the  Luannan Facility. Summaries  of  the  reports  of
engineers  and consultants concerning the Rosemary Facility and the  Brandywine
Facility  are contained herein. See "Description of the Projects--The  Rosemary
Facility--Independent Engineers' and Consultants' Reports" and "Description  of
the  Projects--The Brandywine Facility--Independent Engineers' and Consultants'
Reports."   Included  as Appendix C is the Consolidated  Pro  Forma  Report,  a
summary  consolidation of the projections contained in the Rosemary Engineering
Report, the Brandywine Pro Forma Report and the Luannan Engineering Report. The
terms  of  the  Exchange  Notes  have been  structured  on  the  basis  of  the
prospective financial information contained in such reports. For the purpose of
preparing  the  information  contained in such reports,  of  necessity  certain
assumptions  have  been  made with respect to general business,  financial  and
economic  conditions, the prices that will be paid for the electric  generating
capacity  of  and  the  electric energy produced by the Luannan  Facility,  the
Rosemary Facility and the Brandywine Facility, the costs of obtaining fuel  for
such  facilities, the number of hours that the facilities will  be  dispatched,
the cost to complete, and anticipated completion date of, the Luannan Facility,
and  other  matters and contingencies that are not within the  control  of  the
Issuer, the Company or their affiliates and the outcomes of which are difficult
to  predict. The engineers' and consultants' reports contain discussions of the
assumptions  used  in preparing the projections and potential investors  should
review the reports carefully.
     
     Projections  are inherently inaccurate and actual results  are  likely  to
vary  from such projections, sometimes materially. Accordingly, the assumptions
made and the projections prepared by such engineering and consulting firms  are
not necessarily indicative of future performance. No representation is made  or
intended,  nor should any be inferred, with respect to the likely existence  of
any  particular  set  of  facts or circumstances. If actual  results  are  less
favorable  than those projected, or if the assumptions used in formulating  the
projections contained in such reports prove to be incorrect, the ability of the
Issuer to make payments on the Exchange Notes and the ability of the Company to
meet its obligations under the Exchange Notes Guarantee could be materially and
adversely affected.
     
     All  projections  of  future operations and the economic  results  thereof
included  in  the  engineers' and consultants' reports have been  reviewed  and
accepted  by the Issuer on the basis of present knowledge and assumptions  that
the  Issuer believes to be reasonable. These projections have not been prepared
in  accordance  with  published  guidelines  of  the  Securities  and  Exchange
Commission,  the  American  Institute  of  Certified  Public  Accountants,  any
regulatory  or  professional  agency or body or generally  accepted  accounting
principles.  Deloitte & Touche LLP, the Issuer's independent  accountants,  has
neither  examined  nor  compiled any projections  and,  accordingly,  does  not
express  an opinion or any other form of assurance with respect thereto.  After
the  issuance  of  the  Exchange Notes, no engineer or  other  consultant  will
provide  the Holders of the Exchange Notes with revised projections  or  report
any  difference  between  the  projections and  the  actual  operating  results
achieved by the Projects.
     
Project Risks

  Construction Risk
  
     The  construction of any Project, including the Luannan Facility, involves
many  risks,  including  shortages  of  equipment,  material  and  labor,  work
stoppages,  labor  disputes,  weather  interferences,  unforeseen  engineering,
environmental  and  geological problems and unanticipated cost  increases.  For
example,  Tangshan  City, approximately 45 kilometers from  where  the  Luannan
Facility will be located, experienced an earthquake with a force of 7.8 on  the
Richter  scale in July 1976. Any of these events or other unanticipated  events
could  give  rise  to delays or cost overruns. Difficulties  in  obtaining  any
requisite licenses or permits could adversely affect the design or increase the
cost  of a Project, or delay or prevent the completion of construction  or  the
commencement of commercial operations of a Project. Construction-related  risks
can be mitigated through fixed-price "turnkey" construction contracts; however,
there can be no assurance that a contractor will honor its commitments or  have
the financial resources to satisfy its obligations under any liquidated damages
provisions,  or  that any affected Project would continue  to  operate  at  its
design  specifications after the expiration of the contractors'  and  equipment
suppliers'  warranties. There is also a risk that construction delays  will  be
caused  by  events, such as events of force majeure, not covered by  liquidated
damages  or  insurance. See "--Financial Risks--Default on Project-level  Debt;
Enforcement of Rights" above.
     
     While preliminary construction work on the Luannan Facility has commenced,
full   construction  activity  with  respect  to  the  Luannan   Facility   and
construction  of  the Luannan Transmission Facilities has  not  yet  commenced.
Construction  of  the Luannan Facility and the Luannan Transmission  Facilities
could  be delayed or could experience significant cost overruns as a result  of
one  or  more  of the risks described in the previous paragraph.  None  of  the
Issuer,  the  Company, Panda International or the Luannan County Government  is
obligated  to  provide any additional funding to cover any cost overrun.  North
China  Power  Company  is not obligated to begin making payments  for  electric
energy  deliveries under the Luannan Power Purchase Agreement until the Luannan
Facility  is  considered to be in commercial operation  for  purposes  of  such
agreement.  There  can  be  no assurance that any  cost  overrun  or  delay  in
achieving  commercial  operation for purposes of  the  Luannan  Power  Purchase
Agreement  will not have a material adverse effect on the Joint  Ventures  and,
therefore,  on  the  Issuer and its ability to meet  its  obligations  to  make
payments  of  principal and interest on the Exchange Notes when  due.  See  "--
Considerations Relating to the PRC--Legal and Regulatory Considerations" below.
In  the event of certain delays in completion of the Luannan Facility which are
not excused by force majeure or in the event that the Luannan Facility fails to
meet  the  guaranteed performance levels under the Luannan  EPC  Contract,  the
Luannan EPC Contractor is obligated under the terms of the Luannan EPC Contract
to  pay  liquidated  damages to the Joint Ventures and the Joint  Ventures  are
entitled to subtract the amount of such damages from the 10% retainage  of  the
Luannan  EPC  Contract  Price  and to collect  damage  payments  under  certain
guarantees. Liquidated damages, however, are limited to 35% of the Luannan  EPC
Contract Price. There is no assurance that the amount of such damages  will  be
sufficient  to  pay all costs of the Joint Ventures resulting  from  the  event
giving  rise  to  such  damages. See "Description of the Projects--The  Luannan
Facility--Engineering, Procurement and Construction Contract" and  "Description
of   Principal   Documents   Relating  to  the  Luannan  Facility--Engineering,
Procurement and Construction Contract--Price and Payment; Security."  If  North
China  Power  Company fails to complete the Luannan Transmission Facilities  in
time  to  receive electric power from the Luannan Facility, North  China  Power
Company  is liable to the Joint Ventures for any resulting loss or damage,  but
any  recoveries  (to the extent, if any, awarded and collected)  might  not  be
sufficient  to  compensate  the  Joint  Ventures  for  all  losses,   including
consequential  damages. See "--Considerations Relating to  the  PRC--Legal  and
Regulatory Considerations" below.
     
  Start-up Risks
  
     The  commencement  of  commercial operations of the  Luannan  Facility  or
another  newly  constructed  Project involves many  risks,  including  start-up
problems,  the  breakdown or failure of equipment or processes and  performance
below  expected  levels  of  output  or  efficiency.  Generally,  insurance  is
maintained  to protect against certain of these risks, warranties are  obtained
relating  to  the  construction  of  a Project  and  the  equipment  associated
therewith,  and construction contractors and equipment suppliers are  obligated
to  meet  certain performance levels. Such insurance, warranties or performance
guaranties,  however, may not be adequate to cover lost revenues  or  increased
expenses.  As a result, a Project may be unable to fund principal and  interest
payments  under  its financing obligations. A default under  such  a  financing
obligation  could  result  in  the Issuer or the Company  losing  its  indirect
ownership interest in a Project. In addition, power purchase agreements,  which
are  typically entered into with a utility early in the development phase of  a
Project,  often enable the utility to terminate such agreement,  or  to  retain
security  posted by the developer as liquidated damages, if a Project fails  to
commence commercial operations, to attain certain operating levels by specified
dates  or  to make certain specified payments. If such a termination  right  is
exercised,  a  Project may not produce revenues, the default  provisions  in  a
financing agreement would likely be triggered (rendering the Project-level debt
immediately due and payable) and the Project would likely be rendered insolvent
as a result. See "--Financial Risks--Default on Project-Level Debt; Enforcement
of Rights" above.
     
  Operating Risks
  
     The   operation  of  power  generation  facilities  involves  many  risks,
including  the breakdown or failure of power generation equipment, transmission
lines,  pipelines  or  other equipment or processes, the  inability  to  obtain
adequate  fuel  supplies and performance below expected  levels  of  output  or
efficiency  (whether  due  to  misuse,  unexpected  degradation  or  design  or
manufacturing  defects),  failure to keep on hand adequate  supplies  of  spare
parts,  operation  error, labor disputes, catastrophic events  such  as  fires,
floods,  earthquakes and other similar events and the need to comply  with  the
directions  of  the  relevant government authority  or  utility.  Although  the
Rosemary Facility, the Brandywine Facility and the Luannan Facility contain  or
will  contain  certain redundancies and back-up mechanisms,  there  can  be  no
assurance  that  any such breakdown or failure would not prevent  the  affected
facility  from performing under applicable power and steam purchase agreements.
The  Rosemary  Power  Purchase  Agreement and  the  Brandywine  Power  Purchase
Agreement  provide  for a reduction in capacity payments in  the  event  of  an
outage  or  unavailability. North China Power Company will only be required  to
pay  for electric energy actually generated by the Luannan Facility and has  no
obligation  to  pay for capacity or any electric energy not  generated  by  the
Luannan  Facility even if due to an event of force majeure declared  by  either
party  under  the  Luannan Power Purchase Agreement or to  increase  subsequent
purchases  from the Luannan Facility once an event of force majeure  no  longer
exists  in  order  to  make  up  for  electricity  not  purchased  during   the
continuation of such event of force majeure. Moreover, during peak  hours,  the
Luannan  Facility  may  be subject to penalties if certain  minimum  generation
requirements are not met. See "Description of Principal Documents  Relating  to
the  Luannan Facility--Power Purchase Agreement." The occurrence or continuance
of  any of the events described above could increase the cost of operating  the
Rosemary Facility, the Brandywine Facility or the Luannan Facility, reduce  the
payments due from the purchaser under the relevant power purchase agreement  or
otherwise adversely affect the financial condition of any of such Projects.
     
     Although  insurance  is  maintained to protect against  certain  of  these
operating  risks, the proceeds of such insurance may not be adequate  to  cover
lost  revenues  or  increased expenses and, as a result, the  Project  Entities
owning  or  operating such Project might be unable to service the Project-level
obligations.  A  default under such Project-level obligations  by  the  Project
Entities could result in the Company losing its indirect ownership or leasehold
interest  in such Project. See "--Additional Indebtedness--Default on  Project-
Level  Debt; Enforcement of Rights" above. Furthermore, in the event of a major
casualty  or  loss  involving a Project, casualty insurance  proceeds,  to  the
extent  not  applied to repair such Project, would be applied first to  satisfy
Project-level  obligations,  and  it  is unlikely  (unless  such  Project-level
obligations are less than the maximum insurance proceeds payable) that any such
insurance proceeds would be available for mandatory redemption of the  Exchange
Notes.
     
     The  Luannan  Facility  does  not have an  operating  history.  The  Joint
Ventures and the Brandywine Partnership have, respectively, obtained warranties
in limited amounts and for limited periods relating to the Luannan Facility and
its  major  equipment  from the Luannan EPC Contractor and  suppliers  of  such
equipment and relating to the Brandywine Facility and its major equipment  from
Raytheon  and  suppliers of such equipment. However, there can be no  assurance
that  any  of  such  warranties  will  be sufficient  or  effective  under  all
circumstances  or  that the issuer of the warranty will have  adequate  capital
resources  to  meet  its  warranty obligations.  In  addition,  the  warranties
generally are limited to an obligation to repair or replace defective equipment
and do not cover revenues lost while the equipment is out of service.
     
  Dispatchability Risk
  
     The  power  purchase  agreements for the Projects may provide  substantial
leeway  to  the  power purchaser in determining when, and  to  what  extent,  a
facility  is  dispatched.  For example, the Rosemary Power  Purchase  Agreement
provides  VEPCO  the  contractual right to schedule the Rosemary  Facility  for
dispatch  on a daily basis at full capacity, partial capacity or off-line.  The
Rosemary Facility has been used by VEPCO primarily as a peaking plant and, as a
result, the number of hours for which the facility has been dispatched and  the
quantity of electricity produced by the facility have fluctuated throughout the
facility's   operating  history.  Similarly,  the  Brandywine  Power   Purchase
Agreement  permits  PEPCO  to  dispatch at its sole  discretion  a  substantial
portion   of  the  Brandywine  Facility's  capacity.  While  availability-based
capacity  payments and other fixed payments under the power purchase agreements
relating to the Rosemary Facility and the Brandywine Facility are unaffected by
levels of dispatch, revenues would be adversely affected (due to a reduction in
energy  payments  thereunder) if these facilities  were  dispatched  at  levels
materially  below the recent operating experience, in the case of the  Rosemary
Facility, or the anticipated level, in the case of the Brandywine Facility. See
"Description  of  the  Projects--The Rosemary Facility--Sale  of  Capacity  and
Electricity" and "Description of the Projects--The Brandywine Facility--Sale of
Capacity, Electricity and Steam."
     
     Under  the Luannan Power Purchase Agreement, North China Power Company  is
required  to  purchase  and take all net electrical  output  delivered  by  the
Luannan  Facility during specified peak hours without any dispatch limitations.
The  levels  of  dispatch during other hours (and thus the  revenues  that  the
Luannan Facility will receive for electric energy generated during such  hours)
are specified in the Luannan Power Purchase Agreement and the related technical
details (i.e., ramp rates, seasonal adjustments, etc.) will be set forth in  an
Interconnection  Dispatch Agreement to be negotiated with  the  Tangshan  Power
Supply  Bureau  of  North China Power Company shortly prior to  the  commercial
operation  date under the Luannan Power Purchase Agreement. Those  negotiations
may  result in changes to the dispatch rights under the Luannan Power  Purchase
Agreement, and the levels of dispatch that were assumed in connection with  the
preparation  of the Luannan Engineering Report. There can be no assurance  that
the  Interconnection Dispatch Agreement as finally negotiated will  not  change
the  provisions  of  the Luannan Power Purchase Agreement,  including  dispatch
rights and penalties relating thereto. See "Summary--Independent Engineers' and
Consultants' Reports--Luannan Engineering Report," "Description of the Projects-
-The  Luannan Facility--Sales of Power" and "Description of Principal Documents
Relating  to  the Luannan Facility--Power Purchase Agreement"  and  Appendix  D
hereto.
     
  Dependence on, or Lack of, Fixed Payments
  
     The  Rosemary  Facility  and  the Brandywine  Facility  are  dependent  on
capacity  payments  due  from  VEPCO  and  PEPCO,  respectively,  under   their
respective  power purchase agreements to meet their fixed obligations.  In  the
case  of  the Rosemary Facility, capacity payments are payable by VEPCO whether
or not the facility is dispatched, provided that the facility satisfies certain
seasonal  capacity tests which may be required by VEPCO in its sole  discretion
and meets certain minimum availability standards. If these minimum availability
standards  are  not met, then capacity payments otherwise due to  the  Rosemary
Partnership  are subject to rebate or reduction and, in certain  circumstances,
the  Rosemary Partnership may be required to pay liquidated damages  to  VEPCO.
See  "Description of the Projects--The Rosemary Facility--Sale of Capacity  and
Electricity."  In  the case of the Brandywine Facility, capacity  payments  are
payable  by PEPCO whether or not the facility is dispatched, provided that  the
capacity  payments  will  be  reduced  if  the  facility  cannot  maintain  88%
equivalent availability and may be reduced starting in 2006 depending  on  when
and  whether  PEPCO's system peak load exceeds 5,697 MW during  1997,  1998  or
1999.  See  "Description  of  the Projects--The  Brandywine  Facility--Sale  of
Capacity, Electricity and Steam."
     
     Unlike  the  Rosemary  Power Purchase Agreement and the  Brandywine  Power
Purchase Agreement, the Luannan Power Purchase Agreement does not require North
China  Power Company to make any fixed capacity payments. Instead, the  Luannan
Power Purchase Agreement provides that North China Power Company shall purchase
all  electricity generated by the Luannan Facility and delivered  at  specified
levels  during  specified  periods. If, after  taking  into  account  permitted
outages, the Luannan Facility does not deliver a specified minimum quantity  of
electric energy during peak hours, certain of the Joint Ventures will  have  to
compensate  North  China  Power  Company and,  in  certain  events,  after  the
expiration of applicable cure periods, North China Power Company may  terminate
the  Luannan  Power  Purchase Agreement. See "Description of the  Projects--The
Luannan  Facility--Sales  of  Power" and "Description  of  Principal  Documents
Relating to the Luannan Facility--Power Purchase Agreement."
     
  Fuel Related Pricing
  
     Payments related to electric energy purchases by VEPCO and PEPCO under the
Rosemary  Power Purchase Agreement and the Brandywine Power Purchase Agreement,
respectively,  generally adjust upon the same or substantially equivalent  fuel
indices  or  pricing mechanisms that govern adjustments to the  base  commodity
charges  for natural gas under, respectively, the Rosemary Gas Supply Agreement
and  the Brandywine Gas Agreement. Nevertheless, the Rosemary Facility and  the
Brandywine  Facility  are  subject  to the  risk  that  the  fuel  compensation
components of electric energy prices paid under their respective power purchase
agreements  and  their  respective actual fuel costs may  differ.  Accordingly,
increases  in fuel supply costs which are not matched by increases in  electric
energy  prices  could have an adverse effect on the performance  of  these  two
Projects.  See  "Description  of the Projects--The Rosemary  Facility--Sale  of
Capacity  and  Electricity" and "--Gas Supply and Fuel Management"  and  "--The
Brandywine Facility--Sale of Capacity, Electricity and Steam" and "--Gas Supply
and Fuel Management."
     
     The  Luannan Facility will obtain the coal required for its operation from
the  Luannan Coal Suppliers. The price paid by the Joint Ventures for such coal
will  be  determined  periodically on the basis of  market  prices,  which  are
currently  subject  to  partial government control and supervision.  While  the
Luannan Power Purchase Agreement provides for electricity prices based  on  the
recovery of the Joint Ventures' cost of obtaining coal, changing conditions  in
the  coal market could result in a substantial increase in the price the  Joint
Ventures are required to pay for such coal. There can be no assurance that  the
electricity tariffs will fully reflect any such increased coal prices. The Coal
Supply Agreement with Kailuan Coal does not contain any provision governing the
resolution of a dispute between the parties with respect to the price of  coal.
See  "Description  of  the  Projects--The Luannan  Facility--Coal  Supply"  and
"Description  of  Principal  Documents Relating to the  Luannan  Facility--Coal
Supply Agreements."
     
  Regulatory Disallowance
  
     The  Rosemary  Power  Purchase Agreement contains  a  clause  known  as  a
"regulatory  disallowance" provision, which requires the Rosemary  Facility  to
repay  to  VEPCO or reduce any capacity charges in excess of $5.62 per kilowatt
per  month  (as adjusted by the Gross National Product Implicit Price  Deflator
("GNPIPD")  from 1987 dollars) that are disallowed by any regulatory  authority
from recovery by VEPCO in its rate base (except where such disallowance is  due
to  VEPCO's  failure  to  seek recovery or comply with procedural  requirements
governing  recovery of such costs). VEPCO cannot initiate such  a  disallowance
and  must appeal such a disallowance, if practicable. If a disallowance occurs,
the  cash  flow  of the Rosemary Partnership could be materially and  adversely
affected and, consequently, the Company's ability to meet its obligations under
the  Exchange  Notes Guarantee could be materially and adversely affected.  See
"Description  of  the  Projects--The Rosemary Facility--Sale  of  Capacity  and
Electricity." See also Appendix B, "The Electric Power Industry in  the  United
States and United States Regulation."
     
  Fuel Supply Risks
  
     The  Rosemary  Partnership has contracted for  most  of  its  natural  gas
supplies  and  transportation services on an interruptible  basis  because  the
Rosemary  Partnership has assumed that the Rosemary Facility will be dispatched
by  VEPCO  as  a peaking plant, with the bulk of the facility's dispatch  hours
occurring  during the summer months when operational experience  suggests  that
gas  typically  will be available for purchase. The Brandywine Partnership  has
similarly  contracted for approximately one-half of its natural gas supply  and
transportation  on  an  interruptible  basis.  Interruptible  gas  supply   and
transportation  arrangements are subject to interruption or curtailment  during
periods of peak demand for gas. Although independent consultants have found the
fuel  supply  and  delivery  arrangements for the  Rosemary  Facility  and  the
Brandywine   Facility  to  be  reasonable,  if  a  power  purchaser   were   to
significantly increase its dispatch of a facility, unless the facility were  to
arrange for additional firm supply and transportation of natural gas or were to
use alternate fuel, the risk of potential curtailment in natural gas supply and
transportation,  and  thus that a facility would be unavailable  for  dispatch,
would  be  increased. See "--Dispatchability Risk" above, "Description  of  the
Projects--The  Rosemary  Facility--Gas Supply and Fuel Management"  and  "--Gas
Transportation,"  "--The Brandywine Facility--Gas Supply and  Fuel  Management"
and "--Gas Transportation."
     
     If  natural gas supply or transportation is not available to the  Rosemary
Facility  or the Brandywine Facility, each such facility can operate  utilizing
No.  2  fuel  oil. The Rosemary Facility has the capacity to store two  million
gallons  of fuel oil on site, which is enough fuel oil to operate the  facility
at  full  load  for  approximately 168 hours. As a  result  of  current  market
conditions, the Rosemary Partnership purchases its fuel oil supply  on  a  spot
market  basis.  The  Brandywine Facility has on-site storage  for  two  million
gallons  of fuel oil, which is enough fuel oil to operate the facility at  full
load for approximately six days. Under its fuel management plan, the Brandywine
Partnership  will  endeavor  to enter into fuel oil supply  and  transportation
agreements  by  October 10 of each year that will provide  it  with  access  to
adequate  fuel  oil  supplies  for  the immediately  succeeding  winter  season
(November  through March). Future changes in market conditions or  governmental
policy,  however,  could adversely affect the ability of a facility  to  obtain
economical fuel oil supply when needed and, consequently, adversely affect  the
availability of the facility for dispatch. See "--Dispatchability Risk"  above,
"Description  of  the  Projects--The Rosemary Facility--Fuel  Oil"  and  "--The
Brandywine Facility--Fuel Oil."
     
     The  Rosemary  Partnership  owns a 10.26 mile pipeline  which  is  located
under,  over  and upon properties owned by private and governmental  landowners
pursuant to easements and encroachment agreements. Several of the easements and
encroachment  agreements  contain provisions allowing the  underlying  interest
owner  to cause the pipeline to be removed from its current location.  Most  of
such  easements  and  encroachment agreements require the  underlying  interest
owner to provide an alternate location for the pipeline, and in some cases  the
underlying  interest  owner  must share the cost of  relocating  the  pipeline.
However,  two such easements allow the underlying interest owner to  cause  the
pipeline  to be removed, but do not require such owner to provide an  alternate
location  or  share the cost of relocating the pipeline. The  Issuer  does  not
expect  that  the  pipeline will be required to be removed  pursuant  to  these
easements  or, if it were required to be removed, that relocating the  pipeline
from these two easement tracts would significantly interfere with the supply of
natural  gas  to the Rosemary Partnership. However, there can be  no  assurance
that  the Rosemary Partnership could relocate the pipeline, if required  to  do
so,  without  incurring significant expenses or, if the pipeline could  not  be
relocated,  that  the  Rosemary Partnership could  make  arrangements  for  the
delivery of a supply of fuel which would be adequate to assure the availability
of  the  Rosemary  Facility  for dispatch by VEPCO.  See  "Description  of  the
Projects--The Rosemary Facility--Rosemary Pipeline."
     
     The  Rosemary  Gas  Supply  Agreement and  the  Rosemary  Fuel  Management
Agreement  expire on November 30, 2005. The firm transportation  contracts  the
Rosemary  Partnership  has  entered into with Transcontinental  Gas  Pipe  Line
Corporation ("Transco"), Texas Gas Transmission Corporation ("Texas  Gas")  and
CNG  Transmission Corporation ("CNG") expire on November 1, 2006. Certain other
contracts  providing for interruptible transmission services for  the  Rosemary
Facility  are  on  a month-to-month basis. There can be no assurance  that  the
terms  of  any of such contracts can be extended or, if they expire,  that  the
Rosemary Partnership will be able to enter into replacement contracts  or  fuel
transportation  arrangements  on  terms  no  less  favorable  to  the  Rosemary
Partnership  than  those contained in the current agreements.  The  failure  to
extend such terms or to enter into replacement contracts or fuel transportation
arrangements  is  an  event  of  default  under  the  Rosemary  Indenture.  See
"Description  of  the  Projects--The Rosemary  Facility--Gas  Supply  and  Fuel
Management," "--The Rosemary Facility--Gas Transportation" and "Description  of
Other Indebtedness--The Rosemary Financing."
     
     The  Luannan  Coal  Supply Agreement among two of the Joint  Ventures  and
Kailuan Coal, which is expected to supply up to 300,000 metric tons per year of
the  projected  450,000 metric ton annual coal demand of the Luannan  Facility,
provides  that Kailuan Coal may terminate the agreement if the national  energy
policies of the PRC change such that the rules governing the allocation of coal
restrict  its ability to make sales of coal under terms and conditions  similar
to  those set forth in such agreement. While the Luannan Facility is located in
a region of the PRC that has numerous coal mines, in the event that the Luannan
Coal Supply Agreement with Kailuan Coal is terminated under such circumstances,
there  can be no assurance that the Joint Ventures would be able to enter  into
one or more replacement agreements on satisfactory terms.
     
     Moreover,  the prices to be paid by the Joint Ventures for coal  from  the
various   coal  suppliers,  including  Kailuan  Coal,  are  to  be   determined
periodically  on the basis of prevailing prices, which are currently  partially
subject to government control and supervision. While the Luannan Power Purchase
Agreement  provides for electricity prices based on the recovery of  the  Joint
Ventures' cost of obtaining coal, changing conditions in the coal market  could
result  in a substantial increase in the prices the Joint Ventures are required
to  pay for such coal. There can be no assurance that electricity tariffs would
always fully reflect any such increased coal prices.
     
  Dependence on Third Parties and Concentration of Customers
  
     The nature of the Projects is such that each facility generally relies  on
one  power  purchase  agreement  with a single electric  utility  customer  for
substantially all, if not all, of such facility's revenues over the life of the
Project. Furthermore, each power generation facility may depend on a single  or
limited  number of entities to purchase thermal energy, to supply or  transport
natural  gas  or  coal to such facility or to supply other goods  and  services
which  constitute  the  principal  inputs to such  facility's  operations.  Any
material breach by any of these parties of its obligations under its respective
agreement  with  a  facility,  or any event or  circumstance  that  reduces  or
suspends  the payment obligation of the other party to an agreement or  affects
such  party's  ability or willingness to meet its obligations, could  adversely
affect  the Issuer's ability to make payments of interest and principal on  the
Exchange Notes when due or the Company's ability to meet its obligations  under
the  Exchange  Notes Guarantee, as the case may be. The other parties  to  each
Project  agreement  have  the  right  to  terminate  or  withhold  payments  or
performance  under  such agreements upon the occurrence of  certain  events  of
default specified therein, which include the failure of any Project Entity that
is  a party to such agreement to materially perform its obligations thereunder.
Additionally, if a party to a Project agreement were to undergo bankruptcy, the
trustee  in  the  bankruptcy proceeding could disaffirm such  agreement.  If  a
Project  agreement were terminated due to nonperformance by a  Project  Entity,
disaffirmation in a bankruptcy proceeding or for any other reason, there can be
no  assurance that the Project Entity would be able to enter into a  substitute
agreement  having  terms  and  conditions  substantially  equivalent  to  those
contained in such terminated agreement.
     
     In  the case of the Luannan Facility, the primary source of revenues  will
be  payments  for  electricity by North China Power Company under  the  Luannan
Power  Purchase Agreement and by the local industrial and commercial  customers
under  the contracts to supply steam and hot water (collectively, the  "Luannan
Heat  Supply  Contracts"). In addition, one of the Joint Ventures will  receive
revenues  from  the  sale of heat, steam and hot water  from  the  other  Joint
Ventures,  and  another Joint Venture will receive revenues from  the  sale  of
heat,  steam and hot water, principal and interest payments paid by North China
Power  Company on funds lent to it for construction of the Luannan Transmission
Facilities,  and, as currently contemplated by the Joint Ventures, land  rental
usage  fees  from  the other Joint Ventures. Accordingly, the  Joint  Ventures'
operations  and their ability to pay interest and principal on the  Shareholder
Loans  and  to  have  sufficient earnings to pay dividends could  be  adversely
affected  by  any  occurrence or circumstance that reduces or suspends  payment
obligations  of  North  China  Power Company  under  the  Luannan  Transmission
Facilities Loan or the Luannan Power Purchase Agreement or interrupts purchases
of  steam  and  hot water under the Luannan Heat Supply Contracts  and  certain
other contracts relating to the sale of heat and steam among the Joint Ventures
including one or more of the events described under "Operating Risks" above, or
otherwise  affects  such  purchasers' ability  or  willingness  to  meet  their
obligations  under the Luannan Power Purchase Agreement and  the  Luannan  Heat
Supply  Contracts,  respectively. In addition, a breach by  North  China  Power
Company  or such steam or hot water purchasers of their obligations  under  the
Luannan  Power  Purchase Agreement or the Luannan Heat Supply Contracts,  could
also  adversely affect the Joint Ventures' ability to pay the Shareholder Loans
and  have sufficient earnings to pay dividends. North China Power Company's  or
such steam or hot water purchasers' ability to meet their obligations under the
Luannan  Power  Purchase  Agreement  or  the  Luannan  Heat  Supply  Contracts,
respectively, will be dependent on their financial condition generally.
     
Considerations Relating to the PRC

  Political and Economic Considerations
  
     The  Luannan Facility is located in the People's Republic of China and  is
subject  to  significant  political, economic  and  social  uncertainties.  The
economy of the PRC has historically been a planned economy subject to five-year
and  annual  plans  adopted  by Central Government authorities.  Although  most
production  assets in the PRC are still owned ultimately by the  government  of
the  PRC, the level of direct control the government of the PRC exercises  over
the  economy is being gradually relaxed. Since 1978, the government of the  PRC
has generally pursued policies that have encouraged economic reform and foreign
investment. In October 1992, the 14th Congress of the Communist Party of  China
declared  that  the  PRC would adopt a "socialist market economy"  in  which  a
market-oriented  economy would be allowed to develop while the  PRC  government
would  continue  to  set  economic  targets and  guide  growth  through  macro-
regulations. The concept of a socialist market economy was incorporated in  the
PRC's  Constitution in March 1993 and reaffirmed in the PRC's  Ninth  Five-Year
Economic  and Social Development Plan adopted in early 1996. The PRC government
has,  however, implemented various policies from time to time to  restrain  the
rate  of  economic  growth, control inflation and otherwise  regulate  economic
expansion.  There can be no assurance that the PRC government will continue  to
pursue  a  policy of economic reform, especially in the event of  a  change  in
leadership  or unforeseen circumstances causing social or political disruption.
Further  austerity  measures and credit restrictions  or  social  or  political
disruptions  may  adversely  affect the business and  prospects  of  the  Joint
Ventures and their ability to perform their respective contractual obligations,
including  the ability of the Joint Ventures to make payments of principal  and
interest  on  the  Shareholder  Loans  and  their  ability  to  pay  dividends.
Impairment  of the Joint Ventures' ability to make payments on the  Shareholder
Loans  or  to  distribute dividends could materially and adversely  affect  the
ability of the Issuer to meets its obligations to pay interest and principal on
the Exchange Notes when due.
     
     In recent years, the PRC economy has experienced periods of rapid economic
expansion.  This  growth has also been accompanied by rising  inflation,  which
reached  an  annual rate of 21.7% in 1994. The PRC government  has  implemented
policies  from  time to time to restrain the rate of such economic  growth  and
control inflation in order to achieve coordinated economic development. In July
1993,  the  Central  Government began implementation of a number  of  austerity
measures  to  control economic growth and curb inflation, including  increasing
interest rates on bank loans and deposits and postponing certain planned  price
reforms. While inflation has since moderated, to a rate of 6.1% in 1996,  there
can  be  no  assurance that such austerity measures will continue or  that,  if
continued,  they  will  not result in future severe  dislocations  in  the  PRC
economy. Although certain components of the power rate calculation are required
to  be  adjusted  annually, subject to the approval  of  the  Pricing  Approval
Authority  (as  hereinafter defined), to reflect local inflation  in  order  to
mitigate the Luannan Facility's exposure to inflation risks, during periods  of
high inflation governmental authorities could seek to restrain price increases.
High  inflation thus could inhibit governmental approval of increases in  power
rates.
     
     The  Luannan  Facility  is  also exposed to  political  considerations  in
respect  of  its  majority ownership by foreign investment  enterprises  of  an
important  resource in the economy of the region. Pursuant to the Equity  Joint
Venture  Law  of  the  PRC, joint venture enterprises generally  shall  not  be
subject  to nationalization or expropriation. The Equity Joint Venture  Law  of
the  PRC,  however,  provides  that  under certain  circumstances  involving  a
national  emergency,  in order to meet public interest  requirements,  the  PRC
government may expropriate a joint venture enterprise in accordance with  legal
procedures, but appropriate compensation must be paid.
     
  Governmental Control of Currency Conversion and Exchange Rate Risks
  
     Each  Joint Venture will receive all its revenues, and expects to pay  the
major  portion of its operating costs, in Renminbi ("RMB"). The Joint Ventures,
however, must convert a significant portion of their revenues into U.S. dollars
for  the payment of amounts due under the Shareholder Loans, off-shore expenses
(if any), and distributions to Pan-Western. Recent foreign exchange regulations
of  the  PRC,  which  took  effect on July 1, 1996,  allow  foreign  investment
enterprises  ("FIEs")  (such as the Joint Ventures)  to  obtain  their  foreign
exchange  directly from authorized banks and financial institutions which  have
been  given  access by the People's Bank of China (the "PBOC") to the  national
interbank  foreign exchange market, the China Foreign Exchange  Trading  Center
("CFETC").  FIEs  may  also continue to obtain foreign exchange  from  official
foreign exchange adjustment centers ("Swap Centers") under the new regulations.
Although the new foreign exchange regulations enable the Joint Ventures to have
access  to  the  national  foreign exchange markets (either  through  the  Swap
Centers  or  through the CFETC), any remittance of foreign currency  funds  for
repayments of principal and interest on external borrowings of FIEs is  subject
to verification by the State Administration of Foreign Exchange of the PRC (the
"SAFE").  No assurance can be given that an adequate amount of foreign currency
will  be  available  in the Swap Centers or the CFETC at all  times  in  future
periods  or  that SAFE will verify such repayments in a timely manner.  In  the
event  of shortages of foreign currencies, the Joint Ventures may be unable  to
convert  sufficient  Renminbi into foreign currencies to enable  them  to  make
sufficient  U.S.  dollar-denominated payments  and  dividend  distributions  to
enable  Pan-Western to meet its payment obligations with respect to the  Issuer
Note  (as  defined  below).  See "Business of the Issuer,  The  Company,  Panda
International and Their Subsidiaries--The Joint Ventures" and "Foreign Exchange
System in the PRC and Exchange Rate Information."
     
     Although  certain  components  of the power  rate  calculation,  including
certain  financing expenses, are subject to adjustments intended,  among  other
things,  to  mitigate the Luannan Facility's exposure to currency risks,  there
can  be no assurance that the relevant government agency will approve any  such
adjustments,  and  significant  exchange rate fluctuations  during  the  period
between  adjustments may adversely affect the Joint Ventures' ability  to  make
U.S.  dollar payments to Pan-Western with respect to interest and principal  on
the  Shareholder  Loans  and  dividend distributions  in  an  aggregate  amount
sufficient  to enable Pan-Western to meet its payment obligations with  respect
to  the Issuer Note. Although North China Power Company is obligated to use its
best  efforts  to  obtain required approvals to repay the Luannan  Transmission
Facilities Loan in U.S. dollars, there can be no assurance that it will be able
to  obtain such approvals. If such approvals are not obtained, the parties have
agreed  to  permit  North China Power Company to borrow and repay  the  Luannan
Transmission Facilities Loan in Renminbi, in which case the parties have agreed
to  negotiate  an  arrangement  for an equitable  allocation  of  any  currency
exchange  costs  related  to repayments of the Luannan Transmission  Facilities
Loan.  However,  there can be no assurance that any such negotiations  will  be
satisfactorily concluded. Thus, the Joint Ventures may bear all or a portion of
the currency exchange risk on the Luannan Transmission Facilities Loan.
     
     There was a significant devaluation of the Renminbi on January 1, 1994  in
connection  with  the  replacement of the official exchange  rate  with  a  new
managed  floating  rate foreign exchange system. Since then, the  Renminbi  has
from  time  to time appreciated against the U.S. dollar. A devaluation  of  the
Renminbi  against the U.S. dollar after the commercial operation date  for  the
Luannan Facility may adversely affect the ability of the Joint Ventures to make
payments  to  Pan-Western sufficient for Pan-Western to satisfy its obligations
with  respect to the Issuer Note, as more revenues would be needed by the Joint
Ventures  to  meet  their  payment  obligations  under  the  Shareholder   Loan
Agreements and pay dividends and the Joint Ventures may not be able to increase
power  rates  sufficiently  to offset such effects.  See  also  "--Governmental
Regulation of Power Rates" below.
     
  Legal and Regulatory Considerations
  
     The  Joint Ventures have been formed to undertake separate aspects of  the
Luannan  Facility. Under PRC law and regulations, the development  of  a  power
plant  and  the formation of a Sino-foreign joint venture require approvals  of
certain  governmental authorities in the province in which the power plant  and
the  joint  venture are located and, if the total investment (including  equity
contributions  to  the  joint  venture and expected  borrowings  of  the  joint
venture) exceeds certain thresholds (denominated in U.S. dollars), the approval
of  certain Central Government authorities is required. Such thresholds vary by
province,  municipality  and  special economic  zone.  In  the  case  of  Hebei
Province,  where  the  Joint  Ventures  are  located,  provincial  governmental
authorities have authority to approve the development of a power plant and  the
establishment of any Sino-foreign joint venture entity the total investment  in
which  does  not exceed $30.0 million, pursuant to a guideline  issued  by  the
Central  Government  in  1988. HPPC and Hebei COFTEC, the  provincial  approval
authorities for the development of power plants and the establishment of  Sino-
foreign  joint  ventures, respectively, have advised that the approval  of  the
formation  of the Joint Ventures is within their respective approval  authority
limits  because  the  total  investment  (including  equity  contributions  and
borrowings)  of each Joint Venture is less than $30.0 million. As a  result  of
this  $30.0  million  approval limitation, a cost overrun  might  result  in  a
requirement  for  one  or  more  of  the  Joint  Ventures  to  seek  additional
governmental  approvals,  including possibly  Central  Governmental  approvals.
There is no assurance that any such additional approvals, if required, could be
obtained.
     
     Chinese   law  governing  the  appropriate  approval  levels  for  foreign
investment in power plants is not fully developed and there can be no assurance
that  Central  Government authorities will agree with  the  foregoing  position
concerning  the appropriate approval authority for the formation of  the  Joint
Ventures  and  the  Luannan  Facility. Recently,  the  Central  Government  has
reiterated  its  policy  against dividing large  projects  into  several  small
projects  in order to keep within provincial approval limits. There can  be  no
assurance  that  the Central Government authorities will not  characterize  the
Luannan Facility as one project requiring Central Government approval. Projects
and joint ventures using foreign investment not approved in accordance with the
limits of authority set forth by the Central Government are null and void.  Any
approvals or licenses issued in reliance on a project or joint venture approval
which  is  null  and  void (as well as any contracts signed  by  such  a  joint
venture)  would  not  be legally effective, and approvals  or  licenses  to  be
obtained  in  the future with respect to such a project or joint venture  would
not  be  processed.  Furthermore,  although authority  for  specific  approvals
generally is vested in particular government organizations, as discussed above,
the   approval  process  typically  involves  consultation  with  all  relevant
government  organizations, whose opinions are solicited before an  approval  is
issued.  Therefore,  additional  government  departments  or  their  provincial
counterparts may also have opportunities to intervene in the approval process.
     
     The  Issuer has been advised by Cai, Zhang & Lan, Chinese counsel  to  the
Issuer, Pan-Western and the Joint Ventures, that, because each Joint Venture is
technically  viable  and  operational by itself, has its  own  clearly  defined
business scope and purpose, and has followed proper procedures for all required
approvals,  each  Joint  Venture will be treated as a  separate  company,  each
project  in  respect of which each Joint Venture has been established  will  be
treated  as  a  separate project for approval purposes and  Central  Government
approval  is  not  required. Based on the opinion of its  Chinese  counsel  and
advice  from  HPPC, Hebei COFTEC and the County Partners, the  Issuer  believes
that  all government approvals required to date to form the Joint Ventures  and
develop the Luannan Facility have been obtained.
     
     Additional  governmental  approvals will  be  required  to  commence  full
construction activity upon the giving of notice to proceed, during  the  course
of construction and upon the commencement of operation of the Luannan Facility.
The  Company believes that such approvals will be obtained; however, there  can
be  no  assurances  that such approvals will be obtained in  a  timely  manner.
Potential  delay or inability to complete construction of the Luannan  Facility
and   operate  the  Luannan  Facility  when  constructed  could  adversely  and
materially  affect  the  ability of the Issuer to  meet  required  payments  of
principal and interest on the Exchange Notes.
     
     Each  of  the Joint Ventures holds a business license from the SAIC  which
expires  on  June  30, 1997.  In the opinion of Cai, Zhang  &  Lan,  the  Joint
Ventures' respective business licenses were properly issued by the SAIC and are
currently valid. Cai, Zhang & Lan have advised the Issuer that certain  capital
contributions   required  to  be  made  to  the  Joint   Ventures   under   PRC
administrative regulations were not made in a timely manner and, as  a  result,
the  SAIC  has administrative discretion to revoke the Joint Ventures' business
licenses.  While the Issuer and the Joint Ventures believe it is unlikely  that
the  SAIC  would  act to revoke the Joint Ventures' business licenses  on  this
basis  prior to the expiration of the term of the business licenses, there  can
be  no  assurances  in this regard. The required capital contributions  to  the
Joint  Ventures  were made with a portion of the proceeds  of  the  Old  Notes.
Following  the  making  of  such  requisite capital  contributions,  the  Joint
Ventures  believes that the business licenses will be renewed for substantially
longer terms.
     
     Each  of  the Joint Ventures has guaranteed the obligations of  the  other
Joint  Ventures with respect to their Shareholder Loans pursuant to  the  Joint
Venture  Guarantees.  Cai, Zhang & Lan has advised the Issuer  that  each  such
Joint  Venture  Guarantee is a valid and enforceable obligation of  the  maker;
however,  the  inapplicability  of  a  regulation  of  a  central  governmental
authority  requiring approval of certain guarantees of off-shore financings  is
not   free  from  doubt.  If  this  regulation  were  deemed  applicable,   the
enforceability  of  the Joint Venture Guarantees would be subject  to  question
unless such approval was obtained. The Joint Venture Guarantees are payable  in
Renminbi. See "--Governmental Control of Currency Conversion and Exchange  Rate
Risks."
     
     In  an attempt to separate the regulatory and commercial functions of  the
electric   power  industry,  the  PRC  State  Council  formally  approved   the
establishment  of the State Power Corporation of China ("SP") in January  1997.
The  SP is a state-owned legal entity with funds provided directly by the State
Council.  It  will serve as the PRC's principal investor in and/or operator  of
wholly or partially state-owned power-related assets in China. It will also  be
responsible for the operation of interregional transmission facilities and  the
development  of a national power grid. After the establishment of the  SP,  the
MOEP  will  continue  to  exercise the regulatory  function  over  the  Chinese
electricity  industry, but the MOEP's enterprise management  function  and  its
function to operate state assets will be turned over to the SP. As part of  the
reform,  provincial power bureaus will also need to transfer  their  regulatory
functions  to other departments of the local government and become subsidiaries
of the SP. It has been reported that the MOEP itself will also be dissolved and
its  regulatory function will be transferred to the China Electricity  Council,
the  SPC and the State Economic and Trade Commission. There can be no assurance
as to what impact this reform will have on the Luannan Facility.
     
     As  the  PRC legal system continues to develop, changes to existing  laws,
regulations and policies (or in the application thereof), the adoption  of  new
laws  and  the pre-emption of local regulations by national laws may  adversely
affect the Joint Ventures. Although the PRC government has introduced new  laws
and  regulations  since January 1, 1994 to modernize its  securities,  tax  and
secured  lending  systems, China does not yet possess a comprehensive  body  of
business law. Furthermore, experience in the enforcement of contractual  rights
by  foreign  parties  through  legal or arbitration  proceedings  in  China  is
developing.  The  Joint Ventures' activities in China are by  law  subject,  in
certain  cases, to administrative review and approval by various  national  and
local  agencies  of  the  PRC government. While the Issuer  believes  that  all
necessary approvals have been obtained for the entering into and performance of
the  Luannan  Project Documents (including the mechanism in a pricing  document
(the  "Pricing Document" which is separate from, but incorporated by  reference
in,  the  Luannan Power Purchase Agreement) for setting the power sales  tariff
from time to time), such contracts are as yet untested in the PRC legal system.
Although  the  Issuer  believes  that  the  support  of  the  Hebei  Provincial
Government, Hebei COFTEC, North China Power, the Luannan County Government  and
China National Machinery Import & Export Corporation, a state-owned PRC trading
company ("CMC") which, through an affiliate, owns a 1% interest in Pan-Western,
will   benefit  the  operations  of  the  Joint  Ventures  in  connection  with
administrative review and the receipt of any approvals which may be required in
the  future,  there can be no assurance that such approvals will be forthcoming
when necessary or desirable.
     
  Governmental Regulation of Power Rates
  
     Similar  to  electric  power  companies  in  other  countries,  the  Joint
Ventures,  North  China  Power Company and North China  Power  are  subject  to
governmental  and electric power grid regulation in virtually  all  aspects  of
their operations, including the amount and timing of electricity generation and
dispatch, the setting of power rates, performance of scheduled maintenance  and
compliance  with power grid control directives. Rates for electricity  produced
by  power  plants wholly-owned by the MOEP are set by the MOEP and the relevant
price department of the State Planning Commission ("SPC"), and most electricity
has  historically been purchased at such rates. Power rates for power  utilized
within a specific region and produced by power plants not owned by the MOEP are
set  on  the  basis  of discussions between the power plants and  the  relevant
provincial  price  bureau.  In  the case of the  Luannan  Facility,  the  Hebei
Provincial  Price Bureau has delegated its authority to the Tangshan  Municipal
Price  Bureau  (the  "Pricing  Approval  Authority").  The  delegation  letter,
however,  makes  it  clear that the Hebei Provincial  Bureau  can  revoke  such
delegation  at any time if it is necessary for the consistency of  the  state's
electric tariff policy.
     
     Project  electricity prices will be based on factors such as covering  the
Joint Ventures' construction, operating and financing costs and providing for a
rate  of  return  on  investment in the Joint Ventures  based  on  availability
factors  and specific hours of operation. Certain components of the power  rate
calculation  are  subject  to  annual adjustment  to  reflect  local  and  U.S.
inflation and foreign exchange rate fluctuations. The electricity price  to  be
paid  under  the  Luannan Power Purchase Agreement is provided in  the  Pricing
Document,  which,  except for the pricing formula, has  been  approved  by  the
Pricing  Approval Authority. The formula provided in the Pricing Document  sets
forth the basis for future pricing adjustments and has been acknowledged by the
Pricing Approval Authority. However, such an acknowledgment does not constitute
a  guarantee  or promise by the Pricing Approval Authority to approve  a  price
application  calculated in accordance with the formula, and  there  can  be  no
assurance  that  future  price applications by any Joint  Venture  will  be  so
approved.
     
     The  power  price  formula acknowledged by the Pricing Approval  Authority
provides for adjustment of the annual depreciation amount according to  changes
in  a  Chinese  price  index.  The  Joint  Ventures  believe  that  the  annual
depreciation amount should be adjusted according to changes in the U.S. dollar-
Renminbi  exchange  rate.  Since  the  Luannan  Power  Purchase  Agreement  was
executed,  the  Chinese price index has changed by a greater  amount  than  the
change  in  the exchange rates, resulting in an electric price slightly  higher
than  would  have  been  the case if depreciation were  adjusted  according  to
changes  in  those  exchange rates. However, a significant devaluation  of  the
Renminbi  against the U.S. dollar (unless offset by inflation in  China)  could
result in a lower electric price (in U.S. dollar terms) unless the power  price
formula  is  modified so that depreciation is adjusted according to changes  in
these exchange rates. The Joint Ventures have requested such a modification  of
the power price formula and believe it will be implemented.
     
     Although the Joint Ventures have the right to request a determination of a
new  power  rate  whenever they determine that changes in the price  components
require  a  new  determination,  and it is anticipated  that  they  will  apply
annually  for  changes  in such rates, the actual prices  for  electricity  are
subject  to the approval of the Pricing Approval Authority. Neither the  Issuer
nor  the Joint Ventures have any experience in applying for electricity  prices
determined  in accordance with the pricing formula incorporated in the  Pricing
Document.  Use of such a pricing formula to establish electricity prices  is  a
recent development in the Chinese power industry. Although the Issuer, based on
discussions  with  the Pricing Approval Authority, believes  that  the  pricing
formula  will be applied to permit recovery of all Luannan Facility  costs  and
anticipated returns, there can be no assurance that the Joint Ventures will  be
able to charge rates that will generate sufficient revenues to enable the Joint
Ventures  to  meet their obligations to pay principal of and  interest  on  the
Shareholder Loans when due and make distributions to Pan-Western sufficient  in
the aggregate to enable Pan-Western to satisfy its obligations with respect  to
the  Issuer  Note  and to make distributions to the Issuer which  are  in  turn
sufficient for the Issuer to pay interest and principal on the Exchange  Notes,
when  due,  or that any application for an increase in the power rate  will  be
approved by the Pricing Approval Authority.
     
     The  Law of Electric Power (the "Power Law") of the PRC, which was adopted
by  the NPC in late 1995 and which took effect on April 1, 1996, provides  that
the  proper approval authority for certain tariffs relating to inter-provincial
grids (such as the Jing-Jin-Tang Grid) is the relevant price department of  the
SPC. No implementing regulations under this provision have been adopted. It  is
therefore  not possible to predict the extent, if any, to which the  ministries
or  bureaus of the Central Government, such as MOEP or the SPC, might  seek  to
assert authority over pricing approvals relating to the Luannan Facility.   The
Issuer has been advised by Cai, Zhang & Lan, Chinese counsel to the Issuer, Pan-
Western  and the Joint Ventures, that the Pricing Document, which was  approved
by  the  Pricing Approval Authority on October 18, 1995, continues to be  valid
because it was obtained prior to the effectiveness of the Power Law and  should
be  binding  on any future regulator.  However, there can be no assurance  that
Central Government authorities will not take a different position.
     
  Limited Information
  
     There  can be no assurance as to the reliability of the sources from which
information  contained in this Prospectus concerning the PRC,  Hebei  Province,
Beijing,  Tianjin and Tangshan municipalities, North China Power,  North  China
Power  Company and the other Chinese parties described herein has  been  taken.
Official  statistics in the PRC may also be produced on a basis different  from
that  used  in  other,  more  developed countries.  Due  to  doubts  about  the
reliability of available official and public information, the data relating  to
the PRC contained in this Prospectus may be inaccurate and may not be reliable.
     
  Uncertain Enforcement of Foreign Judgments
  
     Experience   with  respect  to  the  implementation,  interpretation   and
enforcement of business law in the PRC is limited. More specifically, there has
been  only  a limited number of situations in which a foreign party has  sought
judicial  enforcement of contracts against a Chinese entity in a PRC  court  or
through   arbitration  proceedings  in  China.  In  addition,  the  means   for
enforcement of monetary judgments in the PRC are not fully developed and may be
affected  by a predilection to favor Chinese entities in disputes with  foreign
parties.  The  Joint  Venture Agreements in respect of the Joint  Ventures  are
governed  by  PRC law and the parties thereto have submitted to arbitration  in
China.  Other  Luannan Project Documents (including the Luannan Power  Purchase
Agreement and the Luannan EPC Contract but excluding the Luannan Operations and
Maintenance Agreement) are also governed by PRC law. The parties to the Luannan
EPC Contract may agree to submit disputes thereunder to arbitration in China if
the  amount  of a dispute does not exceed $1.0 million; either party  also  may
submit a dispute to the International Court of Arbitration of the International
Chamber  of  Commerce ("ICC") for binding arbitration to be held in  Singapore.
The  Luannan  Power  Purchase Agreement similarly provides  that  disputes  not
resolved  by  mutual  discussion shall be settled  by  binding  arbitration  in
Singapore  before  the International Court of Arbitration of  the  ICC.  It  is
unclear  whether an arbitration award resulting from an arbitration  proceeding
between two Chinese legal persons conducted outside of China is enforceable  in
China. Consequently, there can be no assurance that the Joint Ventures would be
able  to  obtain  effective enforcement in a timely  manner  of  the  principal
Luannan  Project Documents against any Chinese party or that Pan-Western  would
be  able to obtain enforcement, in a timely manner, of the obligations  of  the
Joint  Ventures  under the Shareholder Loan Agreements or the  undertakings  by
each  Joint  Venture to fully and unconditionally and irrevocably guarantee  to
Pan-Western the prompt payment and performance by each other Joint  Venture  of
their individual obligations to Pan-Western pursuant to any debt obligation now
or hereafter due.
     
  Substantial Dependence on Debt Service from Joint Ventures; Restrictions on
  Payment of Dividends
  
     The  ability  of  the Issuer to make payments on the Exchange  Notes  will
depend  substantially upon the financial performance of the Joint Ventures  and
the ability of the Joint Ventures to make principal and interest payments under
the  Shareholder  Loans through bank accounts maintained  in  the  PRC  and  to
distribute dividends.
     
     Under  Chinese  law, the Joint Ventures may pay a dividend only  from  net
income after taxes. Dividend distributions to equity joint venture partners are
limited  to  the  net  income of the joint venture as determined  according  to
Chinese accounting principles. Accordingly, the Joint Ventures may be precluded
from  paying  a dividend to Pan-Western in a fiscal year even though  they  may
generate  cash  flow in that year, or have accumulated a surplus sufficient  to
make  such  a  payment. Generally, distributions are determined  on  an  annual
basis;  however, special permission may be granted for quarterly  distributions
(with   appropriate  retention  for  applicable  withholding)  with  an  annual
reconciliation  of actual amounts available for such distributions.  The  Joint
Ventures  intend to request approval to make quarterly distributions;  however,
there  is  no assurance that such approval will be granted. Even if an approval
is  granted,  it  may  be limited to a particular amount  and  may  not  permit
subsequent  quarterly  dividends without additional  approvals.  If  the  Joint
Ventures are unable to pay dividends because of the absence of net income after
taxes  or  if  the payment of dividends is restricted by the annual limitation,
the  ability  of  the  Issuer to obtain the revenues that it  requires  to  pay
interest and principal on the Exchange Notes when due may be impaired. See  "--
Considerations Relating to the PRC--Governmental Control of Currency Conversion
and Exchange Rate Risks" above.
     
     The  PRC  levies a withholding tax on payments of interest in  respect  of
foreign   exchange  loans,  including  bonds  and  notes,   made   to   foreign
corporations; this withholding tax will apply to the payment of interest by the
Joint  Ventures  to Pan-Western on the Shareholder Loans. The current  rate  of
such  withholding tax is 20% of the gross amount of the interest. However,  the
withholding  tax charged on interest paid by the Joint Ventures to  Pan-Western
on   the  Shareholder  Loans  will  be  10%  pursuant  to  certain  provisional
regulations intended to encourage foreign investments in coastal economic  open
zones in the PRC. Due to the nature of these provisional regulations, there can
be  no  assurance  that the reduction in the rate of the withholding  tax  will
continue through the term of the Shareholder Loans. A change in the rate of the
withholding tax to 20% would decrease the net amount of funds to be received by
Pan-Western from the Joint Ventures in repayment of the Shareholder  Loans  and
could  have  a  material adverse effect on the ability of  the  Issuer  to  pay
interest  and  principal on the Exchange Notes when due. See "Business  of  the
Issuer,  The  Company, Panda International and Their Subsidiaries--The  Issuer,
the Company and Panda International."
     
  Amendment of Shareholder Loan Agreements
  
     The Issuer and the Joint Ventures intend that the terms of the Shareholder
Loan  Agreements  between Pan-Western and the Joint Ventures  will  be  amended
after  the  closing of the Prior Offering to modify the interest rate  and  the
principal  amortization schedule.  The Issuer and the Joint Ventures intend  to
file such amendments with the Tangshan branch of SAFE. The Issuer and the Joint
Ventures  believe that such amendments should be accepted for filing  by  SAFE.
However,  there  can  be  no assurances that SAFE will accept  for  filing  the
amendments  to  the  Shareholder  Loan Agreements,  and  the  Shareholder  Loan
Agreements  may  not  be  amended without such filing. If  amendments  are  not
accepted  for  filing,  the interest rate and principal  amortization  schedule
would remain as in the existing Shareholder Loan Agreements and the ability  of
the  Issuer  to  obtain  the  revenues that it requires  to  pay  interest  and
principal on the Exchange Notes when due may be impaired.
     
U.S. Industry Conditions; Restructuring Initiatives; Utility Responses

     The  Federal  Energy  Regulatory Commission (the "FERC")  and  many  state
utility  commissions, including the Virginia State Corporation Commission  (the
"SCC"),  are  currently  studying  a number of  proposals  to  restructure  the
electric  utility industry in the United States to permit utility customers  to
choose  their supplier in a competitive electric energy market. In  April  1996
the  FERC  issued a rule requiring utilities to offer wholesale  customers  and
suppliers open access on their transmission lines on a basis that is comparable
to  the  utilities' own use of the lines. In addition, a number of  bills  have
been  introduced  in  the  United States Congress to promote  electric  utility
restructuring and deregulation of electric rates.
     
     Many  utilities fear that current captive customers may leave their system
to  procure  electricity  from  other electric power  suppliers  and  that  the
utilities  may  thereafter be unable to recover their fixed  costs  from  their
remaining  customers. These potential "stranded" or "transition" costs  include
the  cost  of maintaining electric generating capacity under many QF contracts.
The  restructuring  proposals  being  considered  by  regulatory  agencies  and
Congress  differ  as  to  how,  and to what extent,  utilities'  "stranded"  or
"transition" costs would be recoverable if current captive customers leave  the
utilities' systems. To minimize the risk that "stranded" or "transition"  costs
may  not be recovered by utilities if such restructuring proposals are enacted,
many   utilities  have  implemented  certain  cost  control  strategies.   Such
strategies include attempts to renegotiate, buy out or terminate existing power
purchase  agreements  containing prices that  utilities  believe  will  not  be
competitive in a short-term marginal cost electric energy market. In  addition,
some  utilities have sought to rigorously enforce the terms of such  agreements
and  to  exercise  their  contractual termination  rights  if  the  agreements'
provisions are not strictly observed. Some utilities have engaged in litigation
against Qualifying Facilities to achieve these ends.
     
     On  November 12, 1996, the SCC issued an order that would require VEPCO to
file  a  report  on  its efforts to renegotiate its contracts with  non-utility
generators, which includes the Rosemary Facility. Such report must be filed  on
or before June 1, 1997 and quarterly thereafter. VEPCO has not yet responded to
that  order but previously has filed comments with the SCC indicating  that  it
will  aggressively pursue initiatives to restructure contracts with  Qualifying
Facilities  to minimize its costs. VEPCO has filed a request with the  SCC  for
permission  to  institute a formal QF monitoring program  under  which  certain
facilities  (including  the Rosemary Facility) would  be  required  to  furnish
certain  operational  data  to VEPCO on an annual  basis.  Under  the  proposed
monitoring program, if VEPCO believed, based on data provided by a facility and
any  additional  information,  that  a facility  no  longer  satisfied  the  QF
criteria,  VEPCO  could  institute proceedings with the  FERC  to  revoke  such
facility's QF status. On October 10, 1996, the SCC staff, pursuant to the SCC's
directive, filed a legal memorandum with the SCC discussing VEPCO's proposal in
which the staff argued that the SCC has the legal authority to implement  a  QF
monitoring  program.  On  December 18, 1996,  the  SCC  staff  filed  a  report
recommending that the SCC adopt a QF monitoring program for all QFs that have a
power purchase agreement with VEPCO. The program would direct VEPCO to collect,
audit  and analyze calendar year operating information, including actual annual
operating  results and a copy of meter calibration results, to be submitted  by
all such QFs by May 1 of the following year. VEPCO would report annually to the
SCC the results of its compliance evaluation. On December 30, 1996, VEPCO filed
a  response  in  support  of  the Staff Report. See  "--Maintaining  Qualifying
Facility Status" below.
     
     VEPCO  has been involved in several proceedings with parties with whom  it
has  entered  into power purchase agreements, including several  in  which  the
interpretation  of  the power purchase agreements is being  disputed.  Although
there  is currently no dispute between the Rosemary Partnership and VEPCO,  the
Rosemary  Partnership anticipates that VEPCO will closely monitor the  Rosemary
Partnership's  compliance  with  the  Rosemary  Power  Purchase  Agreement  and
vigorously  enforce  its  rights thereunder. Because the  capacity  and  energy
payments  that the Rosemary Partnership receives from VEPCO under the  Rosemary
Power  Purchase Agreement constitute major sources of revenue for the  Rosemary
Partnership, a termination of the Rosemary Power Purchase Agreement  would,  in
the  absence  of another source of funds, terminate the Rosemary  Partnership's
ability  to  service its Project-level debt and to make distributions,  through
intermediate entities, to the Company. Such termination could adversely  affect
the  ability  of  the Company to meet its obligations under the Exchange  Notes
Guarantee.  See Appendix B, "The Electric Power Industry in the  United  States
and United States Regulation--Federal Energy Regulation."
     
  Maintaining Qualifying Facility Status
  
     PURPA  and  the  regulations  promulgated  thereunder  provide  Qualifying
Facilities  such  as  the  Rosemary Facility and the Brandywine  Facility  with
certain exemptions from federal and state legislation and regulation, including
regulation  of  rates  at  which electricity can be sold.  For  a  cogeneration
facility  to maintain QF status, no more than 50% of the facility may be  owned
by an electric utility, electric utility holding company or combination thereof
and the facility must produce both electricity and a related quantity of useful
thermal energy and satisfy certain operational and efficiency criteria. If  for
any  reason  a  Domestic Project failed to maintain its status as a  Qualifying
Facility,  or  if there were a change in law or regulation that eliminated  the
Project's status as a Qualifying Facility (or exemption from regulation granted
to   Qualifying  Facilities),  the  Project  would  be  subject  to  additional
regulation  and  the  revenues of the Rosemary Partnership and  the  Brandywine
Partnership could be materially and adversely affected. For discussions of  the
steam  sales arrangements that permit the Rosemary Facility and the  Brandywine
Facility  to  maintain their QF status, see "Description of  the  Projects--The
Rosemary  Facility--Steam  and Chilled Water Sales"  and  "Description  of  the
Projects--The Brandywine Facility--Sale of Capacity, Electricity and Steam."
     
     On  February 18, 1997, The Bibb Company ("Bibb") announced that  it  would
sell  the textile mill that purchases steam and chilled water from the Rosemary
Facility to WestPoint Stevens, Inc. ("WestPoint"). The closing of the sale  was
reported  in  the news media on February 21, 1997, but the Rosemary Partnership
has  not  received  formal  notice of such sale from  Bibb  or  WestPoint.  The
contract pursuant to which the Rosemary Partnership has been selling steam  and
chilled  water  to Bibb cannot be assigned by Bibb without the consent  of  the
Rosemary Partnership. The Rosemary Partnership has continued to sell steam  and
chilled  water to the purchaser in substantially the same amounts  as  it  sold
prior to the announcement of the sale. While the Issuer expects that Bibb  will
seek  to  assign the contract to WestPoint, there can be no assurance  that  it
will  do  so. Additionally, if WestPoint were to fail to purchase and  use  the
minimum  quantity of steam necessary for the Rosemary Facility to  satisfy  the
Qualifying  Facility criteria, the Rosemary Facility could continue to  satisfy
the Qualifying Facility criteria if a distilled water facility or other thermal
operation  were  installed  at the Rosemary Facility.  The  Rosemary  Indenture
permits the borrowing of funds to make such enhancements or improvements to the
facility  which  are  necessary to maintain the facility's Qualifying  Facility
status. There can be no assurance, however, that the Rosemary Partnership would
have  or be able to obtain the funds necessary to install such a facility.  See
"Description  of the Projects--The Rosemary Facility--Steam and  Chilled  Water
Sales"  and  Appendix B, "The Electric Power Industry in the United States  and
United States Regulation--State Regulations."
     
Environmental and Other Matters

     In operating any Project, the owner is generally required to comply with a
number  of  statutes  and  regulations relating to the  safety  and  health  of
personnel  and  the public, including the identification, generation,  storage,
handling, transportation, disposal, recordkeeping, labeling, reporting  of  and
emergency  response  in  connection  with  hazardous  and  toxic  materials  or
substances  associated with the facility, limits on noise  emissions  from  the
facility,  safety and health standards, practices and procedures applicable  to
construction  and  operation  of  the  facility  and  environmental  protection
requirements  including standards and limitations relating to the discharge  of
air  and  water pollutants and disposal of solid waste. Failure to comply  with
any  of  such statutes and regulations could have adverse effects on a Project,
including the imposition of criminal or civil liability by regulatory  agencies
or  as  a result of litigation by private parties, imposition of clean-up fines
or  liens  and  the  mandatory expenditure of funds to bring the  Project  into
compliance.
     
     Pursuant  to  the  various  financing, lease, construction,  easement  and
encroachment  agreements, and as is common practice in  the  independent  power
industry,  the  Rosemary  Partnership  and  the  Brandywine  Partnership   have
indemnified third parties against the consequences of each Project's storage or
emission  of hazardous and toxic materials. While the Issuer believes that  the
Rosemary  Facility's and the Brandywine Facility's use of natural  gas  as  the
primary  fuel source provides comparative environmental advantages  over  other
fossil fuel-fired power production technologies, there can be no assurance that
environmental  laws and regulations, whether now existing  or  adopted  in  the
future,  will  not impose significant constraints and increased costs  on  such
facilities'  operations.  The 1990 Amendments to  the  Federal  Clean  Air  Act
require  the  State of North Carolina, the State of Maryland  and  the  federal
government,  at various times, to take regulatory actions that may  affect  the
Domestic Projects. There can be no assurance that each Domestic Project will or
can  satisfy all requirements that may result from actions in response  to  the
1990  Amendments  to the Federal Clean Air Act. See Appendix B,  "The  Electric
Power Industry in the United States and United States Regulation--Environmental
Regulation."
     
     With  respect to the Luannan Facility, the Joint Ventures are  subject  to
the environmental protection laws and regulations of the PRC and the government
of Hebei Province, which currently impose base-level discharge fees for various
polluting substances and graduated schedules of fees for the discharge of waste
substances in excess of applicable standards, require the payment of fines  for
violations of laws, regulations or decrees and provide for the possible closure
of any facility which fails to comply with orders requiring it to cease or cure
certain  activities  causing environmental damage. The Joint  Ventures  believe
that the planned environmental protection systems and facilities of the Luannan
Facility  will  be  in  compliance  with  applicable  environmental  protection
requirements. However, there can be no assurance that the Central Government or
the  government  of  Hebei Province will not impose new,  stricter  regulations
which  would  require  additional  expenditures  by  the  Joint  Ventures   for
environmental protection or compliance.
     
Certain Other Regulatory Risks Relating to Projects in the United States

  Regulatory Approvals
  
     Projects  in  the  United  States  are subject  to  stringent  energy  and
environmental regulation by federal, state and local authorities. Power  plants
in  the  United States are required to comply with numerous federal, state  and
local  statutory  and  regulatory requirements and the  Domestic  Projects  are
required to obtain and maintain in effect numerous approvals relating to energy
and  environmental  laws. There can be no assurance that  existing  regulations
will  not  be  revised, that new laws and regulations will not  be  adopted  or
become  applicable to the Projects or that the Company's business and financial
condition will not be materially and adversely affected by such future  changes
in  laws  and  regulations  (including the possible  loss  of  exemptions  from
regulations). See Appendix B, "The Electric Power Industry in the United States
and United States Regulation."
     
  Gas Transportation Regulation
  
     The various gas transportation agreements for the Projects contemplate the
use  of interstate natural gas pipelines and services. These gas transportation
arrangements,  including  pipeline  facilities  and  the  rates   charged   for
transportation  services,  are  subject to the jurisdiction  of  the  FERC.  In
exercising  such jurisdiction, the FERC maintains or may maintain authority  to
modify  aspects  of  the  rates,  terms and  conditions  that  govern  the  gas
transportation services provided. It is possible that such a modification could
materially  increase the gas transportation costs of each Domestic Project.  In
addition,  certain  provisions  of the gas transportation  agreements  and  the
approved tariffs allow the transporter to terminate, suspend performance  under
or  reduce  the  amount  of  gas transported upon  the  occurrence  of  certain
conditions, such as the taking of an adverse action by a regulatory  authority,
if  the  transporter, in its judgment, deems it necessary to make modifications
or  repairs  to its pipeline facilities or upon the occurrence of an  event  of
force  majeure.  Any  failure  by a transporter to provide  gas  transportation
services  could  have a material adverse effect on a Project's operations.  See
"Description of the Projects--The Rosemary Facility--Gas Transportation" and "-
-The  Brandywine  Facility--Gas Transportation."  See  also  Appendix  B,  "The
Electric  Power  Industry in the United States and United  States  Regulation--
Natural Gas Regulation."
     
  Permitting Risk
  
     Each Project Entity is responsible for obtaining various permits and other
regulatory  approvals required for the operation of its facility. Some  of  the
permits  and  other approvals that are obtained for a particular  facility  may
contain  certain continuing conditions, including the obligation  to  renew  or
extend  the permit or approval by a certain date. Failure to satisfy  any  such
condition  could  prevent the operation of the Project or result  in  fines  or
other additional costs. The Issuer believes that the U.S. Projects developed by
Panda  International have been or will be designed and constructed in order  to
substantially  comply,  insofar  as can be reasonably  controlled,  with  their
respective  permit  and  approval conditions. All material  permits  and  other
regulatory  approvals currently required to operate the Rosemary  Facility  and
the Brandywine Facility have been obtained. If future levels of dispatch of the
Rosemary  Facility  exceed  the levels allowed under  the  facility's  existing
operating  permits  (which  is  projected to be  the  case;  see  the  Rosemary
Engineering  Report),  additional equipment designed to control  air  emissions
would  have  to  be installed in order for the facility to maintain  compliance
with  such  permits.  While  the Rosemary Partnership  has  set  aside  certain
reserves  which it believes are sufficient to fund the cost of such  equipment,
there  can  be no assurance that such reserves will be sufficient  to  pay  the
actual  cost of such equipment if and when required to be installed. There  can
be  no  assurance that in the future the U.S. Projects will operate within  the
limits  established  by  current  or future permits  or  other  approvals.  Any
particular  Project could be adversely affected if regulatory  changes  or  new
permit conditions were implemented which impose more comprehensive or stringent
requirements  resulting in increased compliance costs or which  reduce  certain
benefits expected by the Company.
     
Absence of Market for the Exchange Notes

     The Exchange Notes are being offered to the holders of the Old Notes.  The
Old  Notes  were offered and sold in April 1997 to a small number of  investors
and  are  eligible  for trading in the Private Offerings,  Resale  and  Trading
through Automatic Linkages ("PORTAL") Market, although an active trading market
for the Old Notes has not developed to date.
     
     There  is currently no established market for the Exchange Notes  and  the
Exchange  Notes  will not be eligible for trading in the  PORTAL  Market.   The
Issuer  does  not  intend to list the Exchange Notes or  the  Old  Notes  on  a
securities exchange or seek approval for quotation through any automated dealer
quotation  system.  There can be no assurance that a market  for  the  Exchange
Notes  will  develop or as to the ability of holders of the Exchange  Notes  to
sell  their Exchange Notes or the price at which such holders would be able  to
sell  their  Exchange  Notes.   If a market for the  Exchange  Notes  does  not
develop,  purchasers may be unable to resell the Exchange Notes for an extended
period  of  time,  if at all.  Consequently, a purchaser may  not  be  able  to
liquidate  the  investment readily, and the Exchange Notes may not  be  readily
accepted as collateral for loans.  If a market for the Exchange Notes  were  to
develop,  the Exchange Notes could trade at prices that may be lower  than  the
initial market values or at a discount from their face amount depending on many
factors,   including  prevailing  interest  rates,  the  markets  for   similar
securities,  and the financial performance of the Issuer and its  subsidiaries.
The  liquidity  of,  and trading market for, the Exchange  Notes  also  may  be
adversely affected by general declines in the market for similar securities and
other  factors  that  are  independent of the  financial  performance  of,  and
prospects for, the Issuer.
     
Control by Principal Stockholders

     The  Issuer  is a wholly-owned indirect subsidiary of Panda International.
Robert  and  Janice  Carter, members of their family and Carter  family  trusts
collectively own approximately 38.8% of the outstanding shares of common  stock
of  Panda  International.  In addition, W. M. Huffman (who is  related  to  Mr.
Carter  by marriage), members of Mr. Huffman's family and Huffman family trusts
and  partnerships own approximately 18.5% of the outstanding shares  of  common
stock  of Panda International.  By virtue of their ownership share, the Carters
are  in  a  position  to  influence  the  management  and  direction  of  Panda
International and, through Panda International, its subsidiaries, including the
Issuer  and the Company.  Moreover, the Carters and Huffmans, if they  were  to
act  together  in voting their shares, could control the vote for  election  of
directors,   and   consequently  the  management  and   direction,   of   Panda
International and its subsidiaries, including the Issuer and the Company.   See
"Management -- Stock Ownership of Panda International."
     
BUSINESS OF THE ISSUER, THE COMPANY, PANDA INTERNATIONAL AND THEIR SUBSIDIARIES
                                       
The Issuer, the Company and Panda International

     The  Issuer is a wholly-owned subsidiary of the Company, organized in  the
Cayman  Islands on March 10, 1997. The Company is a wholly-owned subsidiary  of
Panda International, organized in Delaware on March 7, 1997. Each of the Issuer
and  the  Company has been organized for the purposes of (i) investing  in  and
holding  direct and indirect interests in entities engaged in the  development,
construction,  ownership,  operation  and  management  of  electric  generating
facilities, sources of fuel, pipelines and other infrastructure projects,  (ii)
the  marketing  of  electric power, thermal energy  and  fuel,  and  (iii)  the
financing  of  any  of  the above, including the entering into  of  indentures,
contracts  and  other agreements entered into in connection with  the  purposes
described in clauses (i) and (ii) above.
     
     The   Company   and  its  affiliates  are  engaged  in  the   development,
acquisition, construction, ownership and operation of electric power generation
facilities  in  the United States and internationally. Panda International  was
formed  as part of a corporate transaction that took place in October  1995  in
which  all  of  the  capital stock of PEC was exchanged  for  shares  of  Panda
International,  with  the result that PEC became a wholly-owned  subsidiary  of
Panda  International. Upon the formation of the Company, PEC became  a  wholly-
owned subsidiary of the Company. PEC was organized in 1982 by Robert and Janice
Carter, who are the Chairman of the Board and Chief Executive Officer, and  the
Executive  Vice  President,  Treasurer and Secretary,  respectively,  of  Panda
International and the Company. See "Management."
     
     The  principal business strategy of the Company and its affiliates  is  to
use  their  experience  in  developing, constructing,  financing  and  managing
electric  power  generation  facilities to  provide  low-cost  electricity  and
electric  generating capacity. The Company and its affiliates expect to  expand
their presence in the electric power industry by implementing this strategy  in
the  United  States and certain other countries. The Company and its affiliates
have  placed  into  commercial operation facilities  with  electric  generating
capacity of approximately 410 MW, each of which is owned or leased under a long-
term  lease.  In  addition,  Panda International has  executed  power  purchase
agreements relating to four potential Projects (including the Luannan Facility,
in  which  the  Issuer indirectly owns approximately an 83%  interest)  with  a
combined electric generating capacity of approximately 750 MW. See "Description
of the Projects." The Company and its affiliates generally hold their interests
in  Projects  that  are  being developed outside of the United  States  through
intermediate entities (such as the Issuer, Pan-Sino and Pan-Western)  organized
in tax-favorable jurisdictions (such as the Cayman Islands), which in turn hold
interests  in  entities (such as the Joint Ventures) organized in  the  country
where  the  Projects will be located (such as China and as proposed in  Nepal).
U.S.  Projects  are  generally held in limited partnerships  with  general  and
limited   partners  organized  as  Delaware  corporations  that  are   indirect
subsidiaries of the Company. For descriptions of the independent power industry
in the United States and the PRC, see Appendix B hereto. See also "Risk Factors-
-Project Risks" and "Description of the Projects."
     
     With   77   employees,  Panda  International  has  assembled  a  team   of
professionals  with expertise in business development, marketing,  engineering,
design,  construction management, fuel supply, transportation and  exploration,
equipment  procurement,  utility  practices,  contract  management,  regulatory
policy   and  procedures,  project  operation  and  maintenance,  environmental
matters, law and finance and accounting. The Company believes that this  team's
scope  of  expertise  allows  it to compete effectively  for  cogeneration  and
private power development and acquisition opportunities.
     
     The   Company  is  continually  engaged  in  the  evaluation  of   various
opportunities for the development and acquisition of additional electric  power
generation facilities, both in the United States and internationally. China  is
a  strategic target market for the Company and its affiliates as they  continue
to  expand into international power generation. The Company's strategy in China
is  fostered through its business alliance with CMC. The Company considers  its
relationship  with CMC to be an important factor in its dealings with  agencies
of the central, provincial and local governments in the PRC.
     
     The  ownership  structure  of  Panda  International  and  certain  of  its
subsidiaries is shown in Appendix G.
     
      There  were  11,401,212  shares of Common Stock  of  Panda  International
outstanding at March 31, 1997. Of this amount, 4,418,957  shares (38.8%)  are
owned  by  Robert  and  Janice Carter and members of their  family  and  family
trusts.  See  "Management." W.M. Huffman and members of his family  and  family
trusts  and  a  family  partnership own 2,134,443  of  the  outstanding  shares
(18.7%).  Other  directors, officers and employees of Panda  International  own
less  than  1% of the outstanding shares of Common Stock. At March 31,  1997:
(i)  there were outstanding options to acquire 1,209,000 shares of Common Stock
of Panda International (options for 1,050,000 shares being fully vested and for
159,000 shares vesting over a six-year period) held by directors, officers  and
employees of Panda International, and of this amount options for 250,000 shares
are  held  by  Robert Carter and options for 25,000 shares  are  held  by  W.M.
Huffman;  (ii)  Trust Company of the West held warrants to  purchase  1,004,000
shares  of Common Stock of Panda International; and (iii) NNW, Inc. held rights
to  acquire  up  to 181,500 shares of Common Stock of Panda International.  See
"Description  of  the  Projects --  The Panda-Rosemary Facility  --  Cash  Flow
Participation."

The  principal executive offices of the Issuer,  Panda International and the 
Company are located  at  4100 Spring  Valley Road, Suite 1001, Dallas, Texas 
75244. The telephone  number  at such offices is (972) 980-7159.
     
     The Issuer owns 95.5% of the issued and outstanding stock of Pan-Sino. The
remaining  interest in Pan-Sino is owned by National Development  and  Research
Corporation, a Texas corporation ("NDR"). Pursuant to a shareholder  agreement,
NDR's ownership interest in Pan-Sino can increase from 4.5% to a maximum of 10%
(and  the Issuer's equity interest therein can thereby be reduced to 90%) as  a
result of the collective efforts of NDR, Panda International and its affiliates
to develop and achieve financial closing of additional Projects in the PRC. Any
such  change  in  the  equity interest held by the  Issuer  in  Pan-Sino  would
correspondingly  affect the cash-flow interest of the Issuer in  Pan-Sino  with
respect  to  the payment of dividends by Pan-Sino. The right of the  Issuer  to
receive interest payments with respect to the Issuer Note would not be affected
by  a  reduction in the Issuer's equity interest in Pan-Sino, however,  because
the  Issuer Note represents direct obligations of Pan-Western to the Issuer and
has priority in right of payment to equity distributions.
     
     Pan-Sino  owns  a  99% equity interest in Pan-Western.  The  remaining  1%
interest in Pan-Western is owned by Chinamac. Pan-Western owns an 87.92% equity
interest in each of four equity joint venture companies (individually, a "Joint
Venture"  and collectively, the "Joint Ventures") organized under the  laws  of
the  People's Republic of China (the "PRC" or "China"): Tangshan Panda Heat and
Power  Co.,  Ltd. ("Tangshan Panda"), Tangshan Pan-Western Heat and Power  Co.,
Ltd.   ("Tangshan  Pan-Western"),  Tangshan  Cayman  Heat  &  Power  Co.,  Ltd.
("Tangshan Cayman") and Tangshan Pan-Sino Heat Co., Ltd. ("Tangshan Pan-Sino").
Luannan  County  Heat  and  Power Plant ("Luannan Heat  and  Power"),  Tangshan
Luanhua  (Group) Co. ("Luanhua Co.") and Luannan County Heat Company  ("Luannan
Heat  Company")  own the remaining interests in Tangshan Panda,  Tangshan  Pan-
Western  and Tangshan Pan-Sino, respectively. Each of Luannan  Heat  and  Power
and Luanhua Co. owns a 6.04% equity interest in Tangshan Cayman.
     
The Joint Ventures

     The  Joint Ventures have been formed to undertake separate aspects of  the
Luannan Facility. Each Joint Venture has a total investment of less than  $30.0
million. Under Chinese law, a Sino-foreign joint venture in Hebei province with
a  total investment of less than $30.0 million does not require approval of the
Central  Government.  The Issuer has been advised by its Chinese  counsel  that
each  Joint Venture will be treated as a separate project for approval purposes
and  that Central Government approval is not required. Chinese law with respect
to  the  appropriate  approval  levels for  foreign-invested  power  plants  is
developing  and  there can be no assurance that Central Government  authorities
will  not seek to assert jurisdiction over some aspect of the Luannan Facility.
The  Issuer, based on the opinion of its counsel and advice from Hebei  COFTEC,
believes that all required government approvals to form the Joint Ventures  and
develop   the  Luannan  Facility  have  been  obtained.   See  "Risk  Factors--
Considerations Relating to the PRC--Legal and Regulatory Considerations."
     
     Tangshan  Panda  and  Tangshan Pan-Western will each  construct,  own  and
operate  a 50 MW coal-fired cogeneration power unit. Tangshan Cayman  will  own
water  rights, water wells, pipelines, production facilities and certain  steam
production  facilities from which it will sell heat, steam  and  hot  water  to
Tangshan Panda and Tangshan Pan-Western. In addition, Tangshan Cayman will sell
steam  and  hot water to Tangshan Pan-Sino on a wholesale basis. Tangshan  Pan-
Sino  will  engage in retail distribution of steam and hot water to  commercial
and  industrial  users and will own the land use rights, the  Luannan  Facility
buildings  and certain off-site property, the majority of which will be  leased
to  the  other Joint Ventures. In addition, Tangshan Pan-Sino will make certain
loans   in  connection  with  the  construction  of  the  Luannan  Transmission
Facilities.
     
     The  proceeds from the sale of the Old Notes, less amounts to be deposited
in  the Capitalized Interest Fund and the Debt Service Reserve Fund established
with  respect  to  the Old Notes and net of transaction fees,  commissions  and
expenses incurred in connection with the Prior Offering, plus interest earnings
to  be  received by the Issuer, will be loaned by the Issuer to Pan-Western  by
means  of  one  or more loans, each evidenced by a promissory  note  from  Pan-
Western  to the Issuer (collectively, the "Issuer Note"). Pan-Western will  use
such  amount to make Shareholder Loans in the aggregate amount of $71.3 million
and  JV  Equity Contributions in the aggregate amount of $41.8 million  to  the
Joint Ventures. The Joint Ventures will also receive equity contributions  from
the  County Partners in the aggregate amount of $5.7 million, which corresponds
to  the amount to be paid to the County Partners from the proceeds of the Prior
Offering for water and land use rights (including previously constructed wells)
with  respect  to property on which the Luannan Facility will be situated.  The
funds  from the Shareholder Loans and the JV Equity Contributions will be  used
by  the  Joint  Ventures  to finance the development and  construction  of  the
Luannan Facility. Through the Capitalized Interest Expiration Date, interest on
the  Exchange Notes will be provided from the Capitalized Interest Fund  funded
by  the Issuer from a portion of the proceeds of the Prior Offering. After  the
Capitalized  Interest  Expiration  Date,  pursuant  to  the  Shareholder   Loan
Agreements, the Joint Ventures will be required to make principal and  interest
payments  on the Shareholder Loans to Pan-Western. Pan-Western will be required
to  make principal and interest payments on the Issuer Note and the Issuer,  in
turn,  will be required to make principal and interest payments on the Exchange
Notes.  Immediately upon receiving each payment from the Joint  Ventures,  Pan-
Western will pay the full amount of such payment to the Issuer. The Issuer Note
represents a direct obligation of Pan-Western to the Issuer and has priority in
right  of  payment  to equity distributions. Any dividends paid  by  the  Joint
Ventures  will  be  payable  87.92% to Pan-Western and  12.08%  to  the  County
Partners in accordance with their respective equity ownership interests in  the
Joint  Ventures. Any dividends paid by Pan-Western will be payable 99% to  Pan-
Sino  and  1% to Chinamac in accordance with their respective equity  ownership
interests in Pan-Western. Any dividends paid by Pan-Sino will be payable  95.5%
to  the  Issuer  and  4.5%  to NDR in accordance with their  respective  equity
ownership  interests in Pan-Sino, which percentages are subject  to  change  as
described above, subject to limitations on payment of dividends as provided  in
the  Indentures.  See  "Risk  Factors--Considerations  Relating  to  the  PRC--
Substantial  Dependence  on Debt Service from Joint Ventures;  Restrictions  on
Payment  of  Dividends" and "Description of the Exchange Notes, the Guarantors,
the  Issuer  Loan,  the Shareholder Loans and the Collateral Documents--Certain
Covenants--Limitation on Restricted Payments."
     
PEC, PIC, PIC Entities and Project Entities

     In  addition to its ownership interest in the Issuer, the Company owns all
of  the  issued and outstanding stock of PEC which, in turn, owns  all  of  the
issued  and  outstanding  stock of Panda Interfunding Corporation,  a  Delaware
corporation  ("PIC") and 100% of the entities that own the  Kathleen  Facility,
which  is  currently  in development and the subject of litigation  in  various
state and federal forums. The outcome of such litigation will determine whether
construction  of  the  Kathleen  Facility  is  initiated  and  completed.   See
"Description  of  the  Projects--Other  Projects  Under  Development  by  Panda
International--The Kathleen Facility." Pursuant to arrangements with GE Capital
under  the  Brandywine  Financing Documents,  the  Kathleen  Facility  will  be
required  to  be  transferred  to the PIC Project  Portfolio  if  the  Kathleen
Facility  reaches  Financial  Closing  or  Commercial  Operations.  See  "Legal
Proceedings--Heard Proceedings."
     
     PIC has direct wholly-owned subsidiaries ("PIC Entities"), including Panda
Interholding  Corporation, a Delaware corporation ("Interholding").  Under  the
terms of the indenture executed in connection with the issuance of the Series A
Bonds  (the  "PFC  Indenture"), PIC Entities, with certain  exceptions,  cannot
incur  debt, become liable in connection with guaranties or enter into  Project
Agreements, and are subject to certain other restrictions, all for the  purpose
of  assuring that the PIC Entities' primary purpose is to hold Project Entities
and  receive, and distribute to PIC, distributions from Project Entities. Other
PIC Entities may be established in the future and each will be directly wholly-
owned by PIC. Project Entities, on the other hand, are those entities that  are
owned  by PIC Entities and directly or indirectly own Projects or are obligated
under  Project  agreements.  Under the terms  of  the  PFC  Indenture,  Project
Entities are permitted to incur Project Debt, become liable in connection  with
guaranties  created,  required or expressly permitted to  exist  under  Project
agreements and enter into and amend project agreements, in each case subject to
certain restrictions.
     
Administrative and Development Services

     Panda   International   provides   various  administrative,   construction
management  and  operations and maintenance services to  the  Company  and  its
subsidiaries pursuant to an Administrative Services Agreement, which covers the
provision  of such services to the Rosemary, Brandywine and Luannan  Facilities
and  to  future  Projects once they reach Financial Closing, and a  Development
Services Agreement, which covers the provision of such services to Projects  in
the development stage prior to Financial Closing. Such services are invoiced at
Panda  International's  reasonable cost, including a reasonable  allocation  of
related  overhead expenses.  Each agreement was entered into in April 1997  and
has  a  term  which  expires on March 31, 2007. Under the Development  Services
Agreement, Panda International has the right to receive reimbursement  for  its
prior expenditures in connection with development of the Luannan Facility,  its
proposed  hydroelectric project in Nepal and other Projects in development,  to
the  extent of funds available in the Issuer Equity Distribution Fund,  subject
to  certain limitations. See "Description of the Projects--The Panda  of  Nepal
Facility"   and  "Description  of  the  Exchange  Notes,  the  Exchange   Notes
Guarantee, the Issuer Loan, the Shareholder Loans and the Collateral Documents-
-The Funds--The Issuer Funds."
     
                                USE OF PROCEEDS
                                       
     There will be no cash proceeds to the Issuer or the Company resulting from
the Exchange Offer.
     
     The  proceeds from the sale of the Prior Offering were used by the Issuer:
(i)  to  make  a  deposit in the Capitalized Interest Fund in  the  approximate
amount  of  $48.1  million; (ii) to make a deposit in the Debt Service  Reserve
Fund  in the amount of $9.7 million; (iii) to pay transaction fees, commissions
and  expenses  incurred in connection with the Prior Offering estimated  to  be
approximately $6.8 million; and (iv) to make a deposit in the Luannan  Facility
Construction Fund estimated to be in the amount of $80.4 million.  This  amount
has been used, and interest thereon and other income expected to be received by
the  Issuer during construction, will be used, by the Issuer to make the Issuer
Loan to Pan-Western. Pan-Western has used and will use (in the case of interest
and  other income expected to be received during construction) the proceeds  of
the  Issuer Loan to make the JV Equity Contributions and the Shareholder  Loans
to each of the four Joint Ventures. The Joint Ventures will use the proceeds of
the  JV  Equity  Contributions  and Shareholder Loans,  together  with  capital
contributions  from  the  County Partners in the amount  of  $5.7  million,  to
develop and construct the Luannan Facility.

                                 CAPITALIZATION

    The following table sets forth the capitalization of the Issuer and its
consolidated subsidiaries as of march 31, 1997, as adjusted to give pro forma
effect to the issuance of the Old Notes and the application of the estimated net
proceeds therefrom as described in "use of proceeds."

                                                           March 31, 1997
                                                       -------------------------
                                                           (in thousands)
                                                        ACTUAL       AS ADJUSTED
                                                       -------        ---------
Advances from Panda International ..............       $ 9,476        $   9,476

Long-term debt:
         Old Notes due 2004 ....................          --            145,025

Minority interest (1) ..........................          --              5,740

Shareholder's deficit ..........................        (2,856)          (2,856)
                                                       -------        ---------
         Total capitalization ..................       $ 6,620        $ 157,385
                                                       =======        =========

                  The following table sets forth the capitalization of the
Company and its consolidated subsidiaries as of March 31, 1997, as adjusted to
give pro forma effect to the issuance of the Old Notes and the application of
the estimated net proceeds therefrom as described in "Use of Proceeds".

                                                               March 31, 1997
                                                         -----------------------
                                                              (in thousands)
Short-term debt and current portion of long-term debt:    ACTUAL     AS ADJUSTED
                                                         ---------    ---------
         Current portion of Rosemary Bonds due 2016 ..   $   5,502    $   5,502

Long-term debt:
  Old Notes due 2004 .................................        --        145,025
  Series A Bonds due 2012 ............................     105,309      105,309
  Brandywine capital lease obligation ................     222,869      222,869
  Rosemary Bonds due 2016, less current portion ......     103,145      103,145
                                                         ---------    ---------
  Total long-term debt, including capital lease
    obligation .......................................     431,323      576,348

Minority interest (1) ................................        --          5,740

Shareholder's deficit ................................    (102,986)    (102,986)
                                                         ---------    ---------
  Total capitalization ...............................   $ 333,839    $ 484,604
                                                         =========    =========

------------------
NOTE:
(1) MINORITY INTEREST REFLECTS CAPITAL CONTRIBUTIONS BY THE COUNTY PARTNERS TO
    THE JOINT VENTURES.

        UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF THE COMPANY
                                       
     The  following unaudited pro forma consolidated financial data are derived
from  the historical consolidated financial statements of the Company set forth
elsewhere  herein.  The unaudited pro forma consolidated  financial  data  give
effect  to the issuance of $111.4 million in aggregate principal amount of  the
Rosemary Bonds and the application of the net proceeds thereof to refinance the
Rosemary Partnership's project debt and to fund a portion of the acquisition of
Ford  Credit's  limited  partner  interest  in  the  Rosemary  Partnership.  In
addition,  the unaudited pro forma consolidated financial data give  effect  to
the  issuance of $105.5 million in aggregate principal amount of the  Series  A
Bonds and the application of the net proceeds thereof to (a) fund the PIC  Debt
Service  Reserve  Fund, the PIC Capitalized Interest Fund and the  PIC  Company
Expense  Fund,  (b)  to fund the remaining portion of the acquisition  of  Ford
Credit's limited partner interest in the Rosemary Partnership and (c) to make a
distribution  to the Company's parent. As a result of the acquisition  of  Ford
Credit's  limited  partner  interest, the Company owns  100%  of  the  Rosemary
Partnership  and  accordingly, the acquisition  was  accounted  for  using  the
purchase method of accounting. The excess of minority interest over the  amount
paid   to  Ford  Credit  was  allocated  to  plant  and  equipment.  The  above
transactions, which occurred on July 31, 1996, are reflected in the  historical
consolidated  balance sheets of the Company as of December 31, 1996  and  March
31, 1997. The unaudited pro forma consolidated statement of operations data for
the  year  ended  December  31,  1996  reflect  such  adjustments  as  if  such
transactions had occurred as of January 1, 1996.
     
     Additionally,  the  unaudited pro forma consolidated financial  data  give
effect  to the issuance of $155.2 million par value of Old Notes (issued  at  a
discount  for  proceeds  of  $145.0 million) in  the  Prior  Offering  and  the
application of the proceeds thereof to fund the Capitalized Interest  Fund  and
the  Debt  Service Reserve Fund established with respect to the Old  Notes,  to
make  shareholder loans and equity contributions to the Joint Ventures  and  to
pay  the transaction fees, commissions and expenses incurred in connection with
the  Prior  Offering. The unaudited pro forma consolidated balance  sheet  data
reflect such adjustments as if the transactions occurred as of March 31,  1997.
The  unaudited pro forma consolidated statement of operations data reflect such
adjustments as if such transactions had occurred as of January 1, 1996.
     
     As  required  by  the  Securities and Exchange Commission,  the  unaudited
  pro  forma consolidated statement  of operations  data  do  not  reflect  the
extraordinary loss on early extinguishment of debt. Such extraordinary loss  is
reflected in the historical consolidated statement of operations of the Company
for  the year ended December 31, 1996 presented elsewhere herein. The unaudited
pro forma consolidated financial data should be read in conjunction  with  the
notes  thereto  and  the historical consolidated financial  statements  of  the
Company, and the notes thereto, included elsewhere herein.
     
     The  unaudited pro forma consolidated financial data do not purport to  be
indicative  of the results of operations which would actually have occurred  if
the  transactions  described had occurred as presented in  such  statements  or
which may be obtained in the future.

                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                                 (IN THOUSANDS)
ROSEMARY        PIC           PRIOR            PRO
                                                      HISTORICAL   OFFERING      OFFERING       OFFERING         FORMA
                                                       --------    -------       --------       --------       --------
Revenue:
Electric capacity and energy sales .................   $ 32,274    $  --         $   --         $   --         $ 32,274
Steam and chilled water sales ......................        502       --             --             --              502
Interest income ....................................      1,518       --             --            7,364(G)       8,882
                                                       --------    -------       --------       --------       --------
                  Total revenue ....................     34,294       --             --            7,364         41,658

EXPENSES:
Plant operating expenses ...........................     12,050       --             --             --           12,050
Development and administrative expenses ............      5,187       --             --             --            5,187
Interest expense ...................................     19,414        749(A)       5,557 (C)     17,772(H)      43,492
Depreciation .......................................      5,532       --             (111)(E)       --            5,421
Amortization - Debt issuance costs .................        494       (164)(B)        108 (D)        849(I)       1,287
Amortization - Partnership formation costs .........        533       --             --             --              533
                                                       --------    -------       --------       --------       --------
                  Total expenses ...................     43,210        585          5,554         18,621         67,970
                                                       --------    -------       --------       --------       --------
Loss before minority interest ......................     (8,916)      (585)        (5,554)       (11,257)       (26,312)
Minority interest ..................................     (2,405)      --            2,405 (F)       --             --
                                                       --------    -------       --------       --------       --------
                  Net loss before extraordinary item   $(11,321)   $  (585)      $ (3,149)      $(11,257)      $(26,312)
                                                       ========    =======       ========       ========       ========
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.

                   PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                    FOR THE THREE MONTHS ENDED MARCH 31, 1997
                                 (IN THOUSANDS)
PRIOR
                                            HISTORICAL   OFFERING      PRO FORMA
                                            --------     -------       ---------
REVENUE:

Electric capacity and energy sales .......   $ 17,330    $  --         $ 17,330
Steam and chilled water sales ............        130       --              130
Interest income ..........................        430      1,222(G)       1,652
                                             --------    -------       --------
              Total revenue ..............     17,890      1,222         19,112

EXPENSES:
Plant operating expenses .................      8,261       --            8,261
Development and administrative expenses ..      2,395       --            2,395
Interest expense .........................     10,802      3,625(H)      14,427
Depreciation .............................      2,949       --            2,949
Amortization - Debt issuance costs .......        174        173(I)         347
Amortization - Partnership formation costs       --         --             --
                                             --------    -------       --------
              Total expenses .............     24,581      3,798         28,379
                                             --------    -------       --------
Net loss .................................   $ (6,691)   $(2,576)      $ (9,267)
                                             ========    =======       ========
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.

                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1997
                                 (in thousands)

                                     ASSETS
Prior                   Pro
                                                                               Historical           Offering                Forma
                                                                               ---------            --------              ---------
Current assets:
           Cash and cash equivalents ...............................           $   1,198            $   --                $   1,198
           Restricted cash--current ................................              15,115                --                   15,115
           Accounts receivable .....................................               9,220                --                    9,220
           Fuel oil, spare parts and supplies ......................               6,898                --                    6,898
           Other current assets ....................................                 234                --                      234
                                                                               ---------            --------              ---------
                  Total current assets .............................              32,665                --                   32,665

Plant and equipment:
           Electric generating facilities ..........................             289,097                --                  289,097
           Furniture and fixtures ..................................                 496                --                      496
           Less: accumulated depreciation ..........................             (29,488)               --                  (29,488)
           Development costs .......................................               9,427                --                    9,427
                                                                               ---------            --------              ---------
                  Total plant and equipment, net ...................             269,532                --                  269,532

Debt service reserves and escrow deposits ..........................              32,548             143,941(J)             176,489
Debt issuance costs, net ...........................................               7,531               6,824(K)              14,355
                                                                               ---------            --------              ---------
                  Total assets .....................................           $ 342,276            $150,765              $ 493,041
                                                                               =========            ========              =========
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
           Accounts payable and accrued expenses:
              Construction costs ......................................        $     --             $   --               $    --
              Interest and letter of credit fees ......................             2,505               --                   2,505
              Operating expenses and other ............................             5,932               --                   5,932
           Current portion of long-term debt ..........................             5,502               --                   5,502
                                                                               ----------           --------             ---------
                  Total current liabilities ...........................            13,939               --                  13,939

Long-term debt, less current portion ..................................           208,454            145,025(L)            353,479
Capital lease obligation ..............................................           222,869               --                 222,869
Minority interest .....................................................              --                5,740(M)              5,740
Commitments and contingencies .........................................              --                 --                    --
Shareholder's deficit .................................................          (102,986)              --                (102,986)
                                                                                ---------           --------             ---------
                  Total liabilities and
                       shareholder's deficit ..........................         $ 342,276           $150,765             $ 493,041
                                                                                =========           ========             =========
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.

                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                (in thousands)
                                       
(A)The  adjustment represents the net effect of (i) the inclusion of $5,605  of
   interest  expense  related to the Rosemary Bonds at an interest  rate  of  8
   5/8%  and (ii) the elimination of actual interest expense of $4,856  related
   to  the  Rosemary Partnership's project debt which was refinanced  with  the
   Rosemary Bonds.

(B)The  adjustment represents the net effect of (i) the inclusion  of  $115  of
   amortization of debt issue costs related to the Rosemary Bonds and (ii)  the
   elimination  of $279 of actual amortization of debt issue costs  related  to
   the  Rosemary  Partnership's  project debt which  was  refinanced  with  the
   Rosemary Bonds.

(C)The  adjustment represents the net effect of (i) the inclusion of $7,156  of
   interest  expense  related to the Series A Bonds  at  an  interest  rate  of
   11  5/8%,  and  (ii)  the elimination of actual interest expense  of  $1,599
   related  to  the  Trust Company of the West ("TCW") indebtedness  which  was
   repaid with a portion of the proceeds from the Series A Bonds.

(D)The  adjustment represents the net effect of (i) the inclusion  of  $158  of
   amortization of debt issue costs related to the Series A Bonds and (ii)  the
   elimination  of  $50 of actual amortization of debt issue costs  related  to
   the  TCW  indebtedness which was repaid with a portion of the proceeds  from
   the Series A Bonds.

(E)The  adjustment  represents the reduction in depreciation expense  resulting
   from  the acquisition of Ford Credit's limited partnership interest  in  the
   Rosemary  Partnership. The acquisition was accounted for using the  purchase
   method  of  accounting. The excess of minority interest  over  the  purchase
   price   (approximately  $3,800)  was  allocated  to  plant  and   equipment.
   Depreciation  is recorded on a straight line basis and assumes  a  remaining
   useful life of 20 years.

(F)The  adjustment  represents the removal of minority interest resulting  from
   the  acquisition  of  Ford  Credit's limited  partnership  interest  in  the
   Rosemary Partnership.

(G)The  adjustment represents the interest income from reserve balances  at  an
   assumed average rate of 6.7%.

(H)The  adjustment represents interest cost on $155,200 par value of Old  Notes
   (issued  at a discount for proceeds of $145,025) at a yield of 14%,  reduced
   by  the  amount of such interest that is capitalized during construction  of
   the  Luannan  Facility,  assuming full construction  activity  commenced  on
   January  1,  1996.  The  amount of capitalized  interest  is  determined  by
   applying  the  interest rate to the weighted average balance of construction
   in progress during the period.

(I)The  adjustment  represents amortization of estimated debt  issue  costs  of
   $6,824  from  the  issuance of the Old Notes over  a  life  of  7  years  to
   maturity  of the Old Notes, reduced by the amount of such amortization  that
   is  capitalized during construction of the Luannan Facility. The  amount  of
   capitalized amortization is determined by applying the percentage  of  total
   interest  cost  which  is  capitalized  during  the  period  to  the   total
   amortization for the period.

(J)The  adjustment  represents the application of the  net  proceeds  from  the
   issuance  of the Old Notes (after payment of debt issue costs) and from  the
   capital  contributions by the County Partners in the Joint Ventures to  fund
   the  Capitalized Interest Fund and the Debt Service Reserve Fund and to make
   shareholder loans and equity contributions to the Joint Ventures.

(K)The  adjustment represents the debt issue costs estimated to be incurred  in
   connection with the issuance of the Old Notes.

(L)The  adjustment  represents the gross proceeds  from  issuance  of  the  Old
   Notes.

(M)The  adjustment represents the capital contributions by the County  Partners
   in the Joint Ventures.

                      SELECTED FINANCIAL DATA OF THE ISSUER

    The following table sets forth selected consolidated financial data of the
Issuer as of December 31, 1994, 1995 and 1996 and March 31, 1996 and 1997, and
for the period from inception (July 20, 1994) through December 31, 1994, the
years ended December 31, 1995 and 1996, the three months ended March 31, 1996
and 1997 and the period from inception through March 31, 1997. Although the
Issuer was formed on March 10, 1997, a subsidiary of the Issuer, formed on July
20, 1994, is considered the Issuer's predecessor. The information presented
below, which reflects the operations of the predecessor, has been derived from
the Issuer's financial statements. Because the Issuer has been and continues to
be in the development stage since formation, it has no operating revenues.
Because the Issuer has no fixed charges, presentation of the ratio of earnings
to fixed charges is not applicable. The data should be read in conjunction with
the Issuer's financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Dollar amounts are presented in thousands.
Period From                                                     Period From
                                                          Inception         Year Ended           Three Months Ended      Inception 
                                                          through           December 31,                March 31,          through
                                                        December 31,    -------------------         -----------------      March 31,
                                                           1994         1995          1996          1996         1997       1997
                                                           ----         ----         ------         ----         ----      ------
STATEMENT OF OPERATIONS DATA                                                                           (Unaudited)       (Unaudited)
General and administrative expenses ..............         $203         $444         $1,654         $266         $555      $2,856
                                                           ----         ----         ------         ----         ----      ------
         Net loss ................................         $203         $444         $1,654         $266         $555      $2,856
                                                           ====         ====         ======         ====         ====      ======
December 31,                         March 31,
                                                                      ---------------------------------       ---------------------
                                                                      1994         1995          1996          1996          1997
                                                                      -----       -------       -------       -------       -------
BALANCE SHEET DATA                                                                                                 (Unaudited)
  Cash .........................................................      $ 101       $     6       $   506       $     6       $     6
  Development costs ............................................        428         1,059         3,292         1,550         6,614
                                                                      -----       -------       -------       -------       -------
         Total assets ..........................................      $ 529       $ 1,065       $ 3,798       $ 1,556       $ 6,620
                                                                      =====       =======       =======       =======       =======

  Advances from Panda International ............................      $ 732       $ 1,712       $ 6,099       $ 2,468       $ 9,476
  Shareholder's deficit ........................................       (203)         (647)       (2,301)         (912)       (2,856)
                                                                      -----       -------       -------       -------       -------
         Total liabilities and shareholder's deficit ...........      $ 529       $ 1,065       $ 3,798       $ 1,556       $ 6,620
                                                                      =====       =======       =======       =======       =======
SELECTED FINANCIAL DATA OF THE COMPANY
                          (in thousands, except ratios)

    Presented below are selected consolidated financial data for the Company as
of and for each of the years in the five-year period ended December 31, 1996,
and as of and for the three months ended March 31, 1996 and 1997, which have
been derived from the Company's financial statements. The selected financial
data should be read in conjunction with the information contained under the
captions "Capitalization," "Management's Discussion and Analysis of Financial
Condition and Results of Operations of the Company" and the consolidated
financial statements of the Company, including the notes thereto, included
elsewhere herein.
THREE MONTHS ENDED
                                                                   YEAR ENDED DECEMBER 31,                           MARCH 31
                                             ------------------------------------------------------------    ---------------------- 
                                                1992        1993         1994        1995         1996         1996         1997
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
Revenue:                                                                                                     (Unaudited) (Unaudited)
Electric capacity and energy sales: ......   $  29,537    $  29,856    $  30,664   $  29,859    $  32,274    $   8,015    $  17,330
Steam and chilled water sales ............         624          618          650         473          502          122          130
Interest income ..........................         562          365          603         895        1,518          186          430
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Total revenue ...................      30,723       30,839       31,917      31,227       34,294        8,323       17,890

EXPENSES:
Plant operating expenses .................       7,534        7,676        8,940       9,348       12,050        2,442        8,261
Development and administrative expenses ..       1,608        2,434        1,779       2,550        5,187          803        2,395
Interest expense .........................      11,478       11,066       11,018      11,716       19,414        3,185       10,802
Depreciation .............................       4,177        4,282        4,208       4,210        5,532        1,053        2,949
Amortization-- Debt issuance costs .......         436          502          600         554          494          141          174
Amortization-- Partnership formation costs         533          533          533         533          533          133         --
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Total expenses ..................      25,766       26,493       27,078      28,911       43,210        7,757       24,581

Income (loss) before taxes and minority
     interest ............................       4,957        4,346        4,839       2,316       (8,916)         566       (6,691)
Minority interest ........................      (5,249)      (5,474)      (5,700)     (5,048)      (2,405)      (1,719)        --
Provision for income taxes ...............        --           --           --          --           --           --           --
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
Income (loss) before extraordinary items .        (292)      (1,128)        (861)     (2,732)     (11,321)      (1,153)      (6,691)

Extraordinary loss, net(1) ...............        --           --           --          --        (21,336)        --           --
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Net loss ........................   $    (292)   $  (1,128)   $    (861)  $  (2,732)   $ (32,657)   $  (1,153)   $  (6,691)
                                             =========    =========    =========   =========    =========    =========    =========

OTHER DATA:
EBITDA ...................................   $  21,581    $  20,729    $  21,198   $  19,329    $  17,057    $   5,078    $   7,234
Ratio of earnings to fixed charges(2) ....       1.42x        1.38x        1.32x          (2)          (2)          (2)          (2)
DECEMBER 31,                                         MARCH 
                                             ------------------------------------------------------------    ---------------------- 
                                                1992        1993         1994        1995         1996         1996         1997
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
Balance Sheet Data:                                                                                          (Unaudited) (Unaudited)

Cash and other current assets ............   $  15,167    $  14,084    $  15,639   $  11,339    $  36,636    $  16,807    $  32,665
Power plant and equipment (net) ..........      96,529       93,815       96,136     220,145      268,725      242,466      269,532
Reserves and escrow deposits,
     and other assets ....................      15,778       15,650       15,477      15,471       40,119       15,320       40,079
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Total assets ....................   $ 127,474    $ 123,549    $ 127,252   $ 246,955    $ 345,470    $ 274,593    $ 342,276
                                             =========    =========    =========   =========    =========    =========    =========

Current liabilities ......................   $   9,735    $  11,252    $  12,531   $  18,457    $  19,667       22,823    $  13,939
Long-term debt (including capital lease
     obligation), less current portion ...     103,200       89,454      106,343     234,608      427,319      256,145      431,323
Minority interest ........................      33,346       34,479       35,588      36,836         --         38,233         --
Shareholder's deficit ....................     (18,807)     (20,636)     (27,210)    (42,946)    (101,516)     (42,608)    (102,986)
                                             ---------    ---------    ---------   ---------    ---------    ---------    ---------
         Total liabilities and
            shareholder's deficit ........   $ 127,474    $ 123,549    $ 127,252   $ 246,955    $ 345,470    $ 274,593    $ 342,276
                                             =========    =========    =========   =========    =========    =========    =========
Notes (in thousands):

(1) In 1996, there was an extraordinary loss from early extinguishment of debt
    of $21,336.

(2) For purposes of computing the ratio of earnings to fixed charges, earnings
    represent income (loss) before minority interest, taxes and extraordinary
    items plus fixed charges exclusive of capitalized interest. Fixed charges
    consist of interest expense, capitalized interest and amortization of debt
    issuance costs. Earnings were insufficient to cover fixed charges in 1995 by
    $3,477, in 1996 by $19,971 and in the three months ended March 31, 1996 and
    1997 by $2,271 and $6,691, respectively. In 1994, 1995 and 1996 and the
    three months ended March 31, 1996, fixed charges included capitalized
    interest of $803, $5,793, $11,055 and $2,837, respectively, related to the
    Brandywine Facility. This capitalized interest was funded by additional
    borrowings under the Brandywine construction loan facility.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE ISSUER
                                       
     The  Issuer's financial results of operations include no revenues and only
general  and  administrative expenses allocated from  Panda  International  for
certain  accounting, legal, insurance and consulting services.  These  expenses
increased in 1995 compared to the period in 1994 primarily due to twelve months
in  1995  versus  less than six months in 1994 and the increased administrative
assistance in 1995 for performing these services. In addition, the increase  in
these expenses for 1996 compared to 1995, and the increase for the three months
ended  March  31, 1997 over the same period in 1996, is primarily  due  to  the
increased administrative assistance consisting of legal and consulting services
performed to finalize certain agreements for the Luannan Facility.
     
     Panda  International  also incurred development costs  on  behalf  of  the
Issuer. These development costs have been capitalized and primarily consist  of
engineering, legal and other third-party costs directly related to the  Luannan
Facility.
     
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY
                                (in thousands)
                                       
  General
  
     The Company operates two completed electric power generation facilities in
the United States: the Rosemary Facility, which began commercial operations  in
December  1990 and is owned by an indirect subsidiary of the Company,  and  the
Brandywine Facility, which began commercial operations in October 1996  and  is
leased  under  a long-term lease by an indirect subsidiary of the Company.  The
Company  also owns an approximately 83% indirect equity interest in the Luannan
Facility  in  China, for which preliminary construction activity  commenced  in
December  1996  and  for which full construction activity  commenced  upon  the
issuance  of  the Old Notes. The historical operating results  of  the  Company
primarily represent the revenue and expenses of the Rosemary Facility.  Certain
development  expenses for the Rosemary Facility, the Brandywine  Facility,  the
Kathleen  Facility and the Luannan Facility have been included in the operating
results  of  the  Company  and  are  discussed  below  as  having  arisen  from
development activities of the Company. However, development expenses in respect
of Projects which may be transferred to the PIC Project Portfolio in the future
will not be included in the results of operations of the Company because future
development  activities  will  be undertaken by  Panda  International  and  its
affiliates.  Such  Projects, if any, will be transferred  to  the  PIC  Project
Portfolio  (at  Panda  International's  historical  cost)  only  upon  reaching
Financial  Closing  or achieving Commercial Operations and  meeting  the  other
conditions  for  transfer  to the PIC Project Portfolio  pursuant  to  the  PIC
Additional Projects Contract.
     
     The  consolidated  historical and pro forma financial  statements  of  the
Company  included in this Prospectus reflect the financial data of the entities
that  held  interests  in the Rosemary Facility, the Brandywine  Facility,  the
Kathleen  Facility  and the Luannan Facility during the periods  presented.  In
March   1997,  these  interests  were  transferred  to  the  Company  by  Panda
International  and  recorded  at  Panda International's  historical  cost.  The
Company was incorporated on March 7, 1997 and was not in existence during these
historical periods; however, the entities that currently own such interests are
indirect  subsidiaries  of  the  Company. Such entities  are  collectively  the
predecessor entities of the Company. Thus, references herein to historical  and
pro  forma financial data of the Company are for convenience of reference,  and
it  should be understood that all such references are to the historical and pro
forma information of the predecessor entities during the periods presented.
     
     See "Description of the Projects," "Description of Other Indebtedness" and
Appendix B, "The Electric Power Industry in the PRC and the United States"  for
a description of the Rosemary Facility, the Brandywine Facility and the Luannan
Facility   and   the  various  contracts,  regulatory  matters  and   financing
arrangements relating thereto.
     
  Results of Operations
  
     The  Company's  revenues from electric power generation are  derived  from
long-term contracts which include both a fixed capacity payment and a  variable
energy payment. The capacity payments, which are based upon the specified power
generating  capacity of a project, are designed to cover  fixed  costs  and  to
provide an acceptable return on equity. The energy payments, which are based on
actual electricity output, are designed to cover variable costs including  fuel
costs  and  variable operating expenses incurred in connection with electricity
output.  Accordingly,  the  impact of price  fluctuations  on  the  results  of
operations  is  generally  not material. The extent  to  which  a  facility  is
dispatched  (i.e., required to deliver electricity), and therefore  the  actual
electricity  output for a given period, are subject to the  discretion  of  the
power  purchaser,  with  certain limitations. The  capacity  payments  are  the
predominant source of revenue for the Company. The Company believes that it can
meet  its  liquidity  requirements solely from the  capacity  payments  in  the
unlikely  event that its facilities are not dispatched at all. See "--Liquidity
and Capital Resources."
     
  First Quarter 1997 compared to 1996
  
      The Company recorded a net loss of $6,691 in the first quarter of 1997 on
revenues of $17,890 compared to net income before minority interest of $566  on
revenues of $8,323 during the same period in 1996.  The increase in revenues in
the  1997  period was primarily caused by operations of the Brandywine Facility
(which  commenced  on  October 31, 1996), partially offset  by  a  decrease  in
revenues at the Rosemary Facility, and by increased interest income.  The  1997
period  reflects  operations  of both the Rosemary and  Brandywine  facilities,
whereas  the 1996 period includes only the Rosemary Facility. For the 1997  and
1996  periods,  capacity  revenues for the Rosemary Facility  were  $6,900  and
$7,418,  respectively,  reflecting  a  contractual  decrease  of  $518.  Energy
revenues for the Rosemary Facility for the 1997 and 1996 periods were $175  and
$597,  respectively.  The decrease in energy revenues for the Rosemary Facility
is  attributable to lower dispatch hours at that facility compared to the  1996
period.  During the first quarter of 1997, the Rosemary Facility was dispatched
42  hours  as compared to 135 hours in the 1996 period.  Capacity revenues  and
energy revenues from Potomac Electric Power Company for the Brandywine Facility
for  the  first  quarter  of  1997 were $5,035 and $2,546,  respectively.   The
Brandywine Facility was dispatched 777 hours during this period.  Additionally,
the  Brandywine Facility had energy revenues of $2,674 from the sale of natural
gas and fuel oil to other purchasers.  Plant operating expenses, which included
fuel  cost,  operation and maintenance expense, insurance and  property  taxes,
increased  to $8,261 (46% of revenues) in the 1997 period from $2,442  (29%  of
revenues) in 1996, primarily due to low margins obtained on the sale of natural
gas and fuel oil to other purchasers.

      Project  development  and administrative expenses  were  $2,395  (13%  of
revenues)  and  $803  (10%  of  revenues)  for  the  1997  and  1996   periods,
respectively.   The  increase in 1997 was primarily attributable  to  increased
development   activity  for  the  Luannan  Project,  additional  administrative
activities  related  to  the  commencement  of  commercial  operations  at  the
Brandywine  Facility and higher administrative costs required  to  support  the
increased size and complexity of the Company's operations.

      Interest  expense  increased to $10,802 (60% of revenues)   in  the  1997
period  from  $3,185 (38% of revenues) in 1996 as a result of the  increase  in
outstanding indebtedness from the issuance of $111.4 million original principal
amount  of  first  mortgage  bonds  for the Rosemary  Facility  (the  "Rosemary
Bonds"),   $105.5  million original principal amount of  pooled  project  bonds
("Series  A  Bonds"),  and  the  capital lease  financing  for  the  Brandywine
Facility.   The  impact of such new indebtedness was partially  offset  by  the
refinancing  of  the  taxable revenue bonds issued in  1989  for  the  Rosemary
Facility  and the repayment of other term loan financing on July 31, 1996  from
portions of the proceeds of the Rosemary Bonds and the Series A Bonds.

      Depreciation,  amortization  of  debt issue  costs  and  amortization  of
partnership  formation costs amounted to $3,122 (17% of revenues) in  the  1997
period  and  $1,327  (16%  of revenues) in 1996.  The  increase  was  primarily
attributable to depreciation for the Brandywine Facility in 1997.

     For the 1996 period, minority interest in net income was $1,719.  There is
no  minority interest in 1997 due to the Company's acquisition on July 31, 1996
of  the  minority  interest  holder's limited partnership  interest  in  Panda-
Rosemary.  As  a  result of this acquisition, the Company owns 100%  of  Panda-
Rosemary.

      As  a result of the various factors discussed above, the Company recorded
net losses of $6,691 and $1,153 for the 1997 and 1996 periods,  respectively.

  1996 compared to 1995
  
     The  Company  recorded  a  net loss before taxes,  minority  interest  and
extraordinary  item of $8,916 in 1996 on revenues of $34,294  compared  to  net
income  before taxes and minority interest of $2,316 on revenues of $31,227  in
1995.  The 10% increase in revenues was primarily caused by the commencement of
commercial  operations at the Brandywine Facility on October 31,  1996  and  by
increased  interest income.  For 1996 and 1995, capacity revenues were  $27,204
in  both  periods  and  energy revenues were $5,070 and  $2,655,  respectively.
Capacity  revenues  for  the  Brandywine Facility commenced  in  January  1997;
accordingly,  capacity revenues for 1996 and 1995 relate only to  the  Rosemary
Facility.  The increase in energy revenues is attributable to operations of the
Brandywine  Facility  for the last two months of 1996, partially  offset  by  a
decrease in energy revenues at the Rosemary Facility which resulted from  lower
dispatch  hours at that facility compared to 1995.  During 1996,  the  Rosemary
Facility was dispatched 635 hours as compared to 2,224 hours in 1995, resulting
in  a  decrease in energy revenues from that facility of $644.  (The number  of
dispatched  hours  in  1995  was unusually high, as  explained  below.)   Plant
operating  expenses,  which  included  fuel  cost,  operation  and  maintenance
expense, insurance and property taxes related to the Rosemary Facility (and the
Brandywine Facility commencing October 31, 1996), increased from $9,348 (30% of
revenues) in 1995 to $12,050 (35% of revenues) during the same period in  1996,
primarily  due  to  the  inclusion of the costs  of  operating  the  Brandywine
Facility  for  two months in 1996.  Because the Brandywine Facility  earned  no
capacity  revenues  during  its period of operation in  1996,  plant  operating
expenses  (and all other categories of expenses) were higher than normal  as  a
percentage  of  revenues.  Another significant cause  of  the  increased  plant
operating expenses was the insurance deductible and other non-covered costs  of
approximately $700 relating to hurricane damage sustained in September 1996  at
the  Rosemary Facility as discussed below.  Other factors contributing  to  the
increase  in  plant  operating  expenses  at  the  Rosemary  Facility  included
additional scheduled maintenance  costs and the fuel cost increases relating to
increased  operation  of  the  auxiliary boiler for  steam  and  chilled  water
production.
     
     Project  development  and  administrative  expenses  were  $2,550  (8%  of
revenues)  and  $5,187 (15% of revenues) for 1995 and 1996, respectively.   The
increase  in 1996 was primarily attributable to increased development  activity
on  the  Luannan Facility and the commencement of commercial operations at  the
Brandywine Facility on October 31, 1996.
     
     Interest  expense  increased from $11,716 (38% of  revenues)  in  1995  to
$19,414  (57%  of revenues) in 1996 as a result of the increase in  outstanding
indebtedness  under  the  TCW  term loan which  was  partially  offset  by  the
scheduled reduction in outstanding indebtedness under the taxable revenue bonds
issued  in  1989 for the Rosemary Facility, and as a result of the increase  in
outstanding indebtedness from the issuance of the Rosemary Bonds and the Series
A  Bonds  on July 31, 1996.  The impact of such new indebtedness was  partially
offset  by the refinancing of the taxable revenue bonds issued in 1989 for  the
Rosemary  Facility  and the repayment of the TCW term loan on  July  31,  1996.
Additionally, commencement of commercial operations at the Brandywine  Facility
resulted  in  the recognition of interest expense on the related debt  for  the
last  two  months  of 1996.  Prior to commercial operations,  interest  on  the
Brandywine debt was capitalized.
     
     Depreciation,  amortization  of  debt  issue  costs  and  amortization  of
partnership formation costs increased from $5,297 (17% of revenues) in 1995  to
$6,559  (19% of revenues) in 1996.  The increase was primarily attributable  to
the commencement of commercial operations at the Brandywine Facility on October
31, 1996.
     
     On  September  6,  1996, a transformer and two switches  at  the  Rosemary
Facility  sustained  damage  from a hurricane.  A  substitute  transformer  was
temporarily  installed  pending repair of the damaged  transformer,  which  was
substantially  completed  during  the  first  quarter  of  1997.   The  Company
estimates  the total cost to repair the Rosemary Facility (including substitute
transformer rental costs) at approximately $2,450, all of which is  covered  by
insurance except for deductible and certain non-covered items in the amount  of
approximately  $700.   The  impact on revenues was  not  material.   Management
believes  that  this  event  will not have a material  adverse  effect  on  the
Company's financial condition or results of operations.
     
     For  1996 and 1995, minority interest in net income was $2,405 and $5,048,
respectively.   The  decrease  in 1996 was due  to  lower  net  income  (before
minority interest and extraordinary item) in the Rosemary Partnership  and  the
acquisition  on  July  31,  1996  of  the minority  interest  holder's  limited
partnership interest as discussed below.
     
     In  connection with the issuance of the Rosemary Bonds and  the  Series  A
Bonds, the Company refinanced the taxable revenue bonds issued in 1989 for  the
Rosemary  Facility  and  repaid the TCW term loan.   The  Company  incurred  an
extraordinary loss of $21,336 on the early extinguishment of these obligations.
Additionally,  the  Company  acquired the minority  interest  holder's  limited
partnership  interest  in  the Rosemary Partnership for  a  purchase  price  of
approximately $34,256.  As a result of this acquisition, the Company owns  100%
of  the  Rosemary  Partnership.  The acquisition was accounted  for  using  the
purchase  method  of  accounting.  The excess of  minority  interest  over  the
purchase  price  (approximately  $3.8  million)  was  allocated  to  plant  and
equipment.  Additionally, the Company advanced approximately $34,779  to  Panda
International for project development and general corporate purposes.
     
     As  a  result of the various factors discussed above, the Company recorded
net losses of $32,657 and $2,732 for 1996 and 1995 respectively.
     
  1995 compared to 1994
  
     The  Company recorded income before taxes and minority interest of  $2,316
on  revenues  of $31,227 in 1995 compared to $4,839 on revenues of  $31,917  in
1994.  The  decrease  in  revenues was primarily  the  result  of  a  scheduled
contractual decrease in capacity payments of $1,526, which was partially offset
by  additional income generated due to an increase in the number of  hours  the
Rosemary  Facility was dispatched by VEPCO and an increase in interest  income.
The  Rosemary Facility was dispatched 2,224 hours in 1995 versus 764  hours  in
1994,  due primarily to forced outages at two VEPCO generating plants that  are
not  likely  to be repeated. For 1995 and 1994, capacity revenues were  $27,204
and  $28,730  and  energy  revenues were $2,655 and $1,934,  respectively.  For
approximately  1,200 of the dispatch hours in 1995, the Rosemary Facility  used
natural  gas  provided  directly by VEPCO under a special  fueling  arrangement
provided  for in the Rosemary Power Purchase Agreement. The Rosemary Facility's
margin  on  energy  sales  is lower when VEPCO supplies  natural  gas  for  the
Rosemary  Facility than when the Rosemary Facility is dispatched  under  normal
energy  pricing  terms. However, overall margins at the Rosemary  Facility  are
increased  in  such circumstances (relative to not operating  at  all)  by  the
ability  to  provide  steam and chilled water from the steam  turbine  offtake,
which reduces the operating costs of the auxiliary boilers.
     
     Plant  operating  expenses,  which  included  fuel  cost,  operations  and
maintenance  expense,  insurance and property taxes  related  to  the  Rosemary
Facility, were $9,348 (30% of revenues) in 1995 as compared to $8,940  (28%  of
revenues)  in 1994, primarily due to additional maintenance expenses  and  fuel
related  costs incurred due to the increase in the number of hours the Rosemary
Facility  was  dispatched  by  VEPCO. Project  development  and  administrative
expense  increased  from  $1,779 (6% of revenues) in  1994  to  $2,550  (8%  of
revenues) in 1995 primarily due to additional administrative expenses  relating
to  construction  of  the Brandywine Facility and development  of  the  Luannan
Facility.
     
     Interest expense was $11,716 (38% of revenues) in 1995 compared to $11,018
(35%  of revenues) in 1994. The increase in 1995 was attributable to additional
borrowings. Depreciation, amortization of debt issue costs and amortization  of
partnership  formation costs were stable and collectively amounted  to  17%  of
revenues in 1995 and 1994.
     
     In  1995, the Company recorded a net loss of $2,732 as compared to  a  net
loss  of  $861  in 1994. An allocation of $5,048 was made in 1995 for  minority
interest,  a decrease of $652 from 1994 as a result of the overall decrease  in
net income of the Rosemary Partnership.
     
  1994 compared to 1993
  
     The Company's 1994 income before taxes and minority interest was $4,839 on
revenues  of  $31,917, compared to $4,346 on revenues of $30,839 in  1993.  The
increase  in revenues was primarily due to increased energy sales in  1994,  as
compared  to  1993,  as  a  result of the Rosemary  Facility  being  dispatched
approximately  764 hours in 1994 compared to 324 hours in 1993.  For  1994  and
1993,  capacity  revenues  were $28,730 and $28,888 and  energy  revenues  were
$1,934  and $968, respectively. In addition, interest income increased slightly
in 1994 as short-term interest rates were higher than 1993 levels.
     
     Plant  operating  expenses,  which  included  fuel  cost,  operation   and
maintenance  expense,  insurance and property taxes  related  to  the  Rosemary
Facility,  increased to $8,940 (28% of revenues) in 1994 from  $7,676  (25%  of
revenues)  in 1993. The increase was primarily a result of increased  fuel  and
maintenance  costs related to the increase in the number of hours the  Rosemary
Facility  was dispatched by VEPCO and a $257 increase in tariff rates for  firm
transportation on the Transco pipeline through which gas is transported to  the
Rosemary Facility. The dispatch hours for 1994 were substantially greater  than
in  1993  due primarily to the second amendment to the Rosemary Power  Purchase
Agreement  entered into in 1993, under which the formula used to calculate  the
energy  purchase price was amended to more closely match the fuel and  variable
operation and maintenance costs of the Rosemary Facility. The amendment to  the
formula  resulted  in  lower  energy margins in the  spring,  summer  and  fall
periods,  when the Rosemary Facility primarily runs on natural gas, and  better
cost recovery during the winter period when it runs primarily on fuel oil.  The
reduction  in  the  energy margin during the summer months, when  most  of  the
dispatch  hours were incurred, caused the increase in run hours to have  little
overall impact on net income.
     
     Project development and administrative expenses decreased from $2,434  (8%
of  revenues) in 1993 to $1,779 (6% of revenues) in 1994. The higher  level  of
such  expenses  in  1993  was  primarily due to preliminary  development  costs
incurred in connection with the Brandywine Facility.
     
     Interest expense was $11,018 (35% of revenues) in 1994 compared to $11,066
(36%  of revenues) in 1993. Depreciation, amortization of debt issue costs  and
amortization  of  partnership  formation costs  were  stable  and  collectively
amounted to 17% of revenues in 1994 and 1993.
     
     The  Company recorded a net loss of $861 in 1994 as compared to a net loss
of  $1,128 in 1993. The allocation for minority interest in 1994 was $5,700, an
increase  of $226 from 1993 as the Rosemary Partnership's net income  increased
slightly.
     
  Liquidity and Capital Resources
  
     To  date,  the  Company  and  its subsidiaries  have  obtained  cash  from
operations  of  the  Rosemary Facility and the Brandywine Facility,  borrowings
under  non-recourse project debt of the Rosemary Partnership and the Brandywine
Partnership, and the proceeds from the sale of the Series A Bonds. The  Company
and  its  subsidiaries  utilized this cash to  refinance  and  acquire  a  100%
interest  in  the Rosemary Facility, fund development and construction  of  the
Brandywine  Facility,  service their debt obligations,  make  distributions  to
Panda  International to fund Project development efforts and  for  general  and
administrative expenses.
     
     The  principal future cash requirements of PIC will be the payment of  its
obligations  under  the PIC Notes, thus enabling the issuer  of  the  Series  A
Bonds, a subsidiary of PIC, to satisfy its obligations under the Series A Bonds
and any future series of PFC Bonds. Semi-annual principal and interest payments
on the PIC Note that was issued in connection with the issuance of the Series A
Bonds totaled $7.0 million on February 20, 1997 and are expected to total  $6.1
million  on  each  August 20 and February 20 through February 20,  1999,  after
which  time  scheduled  payments will increase as  more  significant  principal
amortization begins. The amount of principal payments generally increases  over
time. See "Description of Other Indebtedness--The PFC Bonds."
     
     The  principal future cash requirements of the Issuer will be the  payment
of  the Exchange Notes. The Issuer expects to receive income sufficient for  it
to  satisfy its obligations under the Exchange Notes from the repayment of  the
loan  of  the  net  proceeds  of the Exchange Notes  to  Pan-Western  and  from
dividends from PIC.
     
     Because substantially all of the Issuer's and the Company's operations are
conducted through their Project subsidiaries, the Issuer and the Company should
have   no  significant  direct  operating  or  administrative  expenses.  Panda
International  performs  certain accounting, legal,  insurance  and  consulting
services  for  the  Issuer  and the Company. The  cost  of  these  services  is
allocated to the Issuer and the Company through an intercompany charge.
     
     The  Company will rely almost exclusively on distributions from the Issuer
and  PIC  to meet its cash requirements. The ability of the Issuer and  PIC  to
make  such  distributions  will depend upon the financial  performance  of  the
Luannan Facility, the Rosemary Facility, the Brandywine Facility and any  other
Project  that may be added in the future to the PIC Project Portfolio and  will
be subject to a number of limitations on distributions contained in the Project-
level  debt  agreements,  the indenture relating  to  the  PFC  Bonds  and  the
Indentures.
     
     The  Issuer and the Company own an indirect equity interest in the Luannan
Facility, which has commenced construction. The Issuer expects that,  upon  the
successful  completion of the Luannan Facility, the funds  the  Issuer  derives
from  the repayment of the loan to Pan-Western will constitute the majority  of
the funds available to the Issuer to satisfy its obligations under the Exchange
Notes.
     
     The Company also owns indirect equity interests in two operating Projects,
the  Rosemary  Facility  and  the  Brandywine Facility.  The  majority  of  the
distributions  available  from  the Rosemary  Partnership  and  the  Brandywine
Partnership are required to be used to service the Rosemary Bonds, to pay  rent
with  respect to the lease financing of the Brandywine Project and  to  service
the  Series  A Bonds; any funds available after paying all of such  obligations
then  due  will  be required to be paid by PIC as distributions to  PEC,  which
will,  in  turn, be required to pay such amounts to the Company,  and  will  be
available  to  the  Company to pay its obligations on the  Exchange  Notes,  if
necessary.
     
  New Accounting Pronouncements
  
     In  March  1995, the Financial Accounting Standards Board issued Statement
of  Financial  Accounting Standards No. 121, "Accounting for the Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed of"  ("SFAS  121").
SFAS 121 is effective for financial statements for fiscal years beginning after
December 15, 1995 and requires the write-down to market value of certain  long-
lived  assets.  The Company and the Issuer adopted SFAS 121 in  1996  and  such
adoption did not have a material impact on their financial position or  results
of operations.
     
  Impact of Inflation
  
     Inflationary increases in the Issuer's and the Company's costs,  primarily
Project  development costs, energy costs and capital costs, may  be  offset  by
increases  in  revenue  as provided in the various power  purchase  agreements,
although  competition may limit the ability of the Issuer and its  subsidiaries
to  recover  fully  all  such  increases. The Issuer,  the  Company  and  their
affiliates  attempt,  where  possible, to  obtain  provisions  in  their  power
purchase  agreements whereby certain revenue components,  such  as  energy  and
operations  and  maintenance, may be adjusted with inflationary  increases.  In
management's view, inflation will not have a material effect on the Issuer's or
the Company's financial position over the long-term.
     
                              THE EXCHANGE OFFER

Purpose and Effects of the Exchange Offer

      The Old Notes were issued and sold by the Issuer on April 22, 1997 to the
Initial  Purchaser  pursuant to the Purchase Agreement.  The Initial  Purchaser
subsequently  placed  the  Old Notes with Qualified  Institutional  Buyers  and
institutional Accredited Investors in transactions exempt from the registration
requirements of the Securities Act.  As a condition of the Purchase  Agreement,
the Company, the Issuer and the Initial Purchaser entered into the Registration
Rights  Agreement, pursuant to which the Company and the Issuer agreed  (i)  to
file  with  the  Commission a registration statement under the  Securities  Act
relating to the Exchange Offer within 60 days after the Issue Date, (ii) to use
their best efforts to cause such registration statement to become effective  no
later  than 150 days after the Issue Date and (iii) upon effectiveness of  such
registration statement to commence the Exchange Offer and offer to the  holders
of  Old  Notes the opportunity to exchange their Old Notes for a like principal
amount  of Exchange Notes.  This Registration Statement is intended to  satisfy
the  foregoing obligations of the Company and the Issuer under the Registration
Rights  Agreement.  See "Description of the Exchange Notes, the Exchange  Notes
Guarantee, the Issuer Loan, the Shareholder Loans and the Collateral Documents-
-Old Notes Registration Rights."

      Following the consummation of the Exchange Offer, any holder of Old Notes
(other  than  one  not  permitted by law or any policy  of  the  Commission  to
participate  in  the  Exchange Offer) which has not  exchanged  its  Old  Notes
pursuant  to  the Exchange Offer will not have any further registration  rights
under  the Registration Rights Agreement and its Old Notes will continue to  be
subject  to  certain  restrictions on transfer.  See  "Termination  of  Certain
Rights"  and  "Transfer Restrictions on Old Notes" below and "Risk  Factors  --
Consequences of Failure to Exchange Old Notes."  Accordingly, the liquidity  of
the  market,  if  any,  for  any Old Notes which remain  outstanding  could  be
materially adversely affected.

     Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Issuer believes that Exchange Notes
issued  in exchange for Old Notes pursuant to the Exchange Offer may be offered
for resale, resold and otherwise transferred by any holders thereof (other than
any  such  holder  which is an Affiliate of the Company or the Issuer)  without
compliance  with  the registration and prospectus delivery  provisions  of  the
Securities Act, provided that such Exchange Notes are acquired in the  ordinary
course of such holders' business and such holders have no arrangements with any
person  to  participate in the distribution of such Exchange Notes.  To  comply
with  the securities laws of certain jurisdictions, if applicable, the Exchange
Notes  may not be offered or sold unless they have been registered or qualified
for   sale  in  such  jurisdictions  or  an  exemption  from  registration   or
qualification  is  available and the conditions  thereto  have  been  met.   In
addition,  each broker-dealer that received Exchange Notes for its own  account
in  exchange for Old Notes, where such Old Notes were acquired by such  broker-
dealer  as  a  result of market making activities or other trading  activities,
must  acknowledge  that  it will deliver a prospectus in  connection  with  any
resale  of  such Exchange Notes.  See "--Resales of Exchange Notes"  below  and
"Plan of Distribution."

Terms of the Exchange Offer

     The Issuer hereby offers, upon the terms and subject to the conditions set
forth  herein and in the accompanying Letter of Transmittal, to exchange $1,000
principal  amount  of  Exchange  Notes for  each  $1,000  principal  amount  of
outstanding  Old  Notes.   As  of  the date of  this  Prospectus,  $155,200,000
principal amount of the Old Notes is outstanding. The Exchange Notes will  bear
interest  from the date of their issuance.  Interest on the Old Notes  accepted
for exchange will accrue thereon to, but not including, the date of issuance of
the Exchange Notes and will be paid together with the first interest payment on
the Exchange Notes issued in exchange therefor.

     The form and terms of the Exchange Notes will be identical to the form and
terms  of  the  Old Notes, except that (i) the Exchange Notes  will  have  been
registered  under  the  Securities Act, and therefore, will  not  bear  legends
restricting their transfer pursuant to the Securities Act, and (ii) the holders
of  the Exchange Notes will not be entitled to certain rights of the holders of
Old  Notes under the Registration Rights Agreement, which will terminate as  to
Old  Notes tendered pursuant to the Exchange Offer upon the consummation of the
Exchange Offer.  Such rights will also terminate as to holders of Old Notes who
are  eligible to tender their Old Notes for exchange in the Exchange Offer  but
fail  to do so.  See "Termination of Certain Rights" below and "Description  of
the  Exchange  Notes, the Exchange Notes Guarantee, the Issuer  Loan,  the  the
Shareholder Loans and the Collateral Documents--Old Notes Registration Rights."
The  Exchange  Notes will evidence the same debt as the Old  Notes  which  they
replace and will be issued under, and be entitled to the same benefits  as  the
Old  Notes pursuant to, the Indenture.  See "Description of the Exchange Notes,
the  Exchange Notes Guarantee, the Issuer Loan, the Shareholder Loans  and  the
Collateral Documents".

      The  Exchange  Offer  will expire at 5:00 p.m. New  York  City  time,  on
________________,  unless extended in the Issuer's sole  discretion.   Tendered
Old  Notes  may be withdrawn at any time prior to the Expiration Date.   For  a
description of the Issuer's right to extend the period of time during which the
Exchange  Offer  is open, and to delay, terminate or amend the Exchange  Offer,
and  of tendering holders' withdrawal rights, see "Expiration Date; Extensions;
Termination; Amendments" and "Withdrawal of Tenders" below.

      The Issuer shall be deemed to have accepted validly tendered Old Notes in
the  Exchange Offer when, as and if the Issuer has given oral or written notice
thereof  to the Exchange Agent.  The Exchange Agent will act as agent  for  the
tendering holders of Old Notes for the purposes of receiving the Exchange Notes
from  the  Issuer.  The Exchange Notes will be delivered as soon as practicable
after acceptance of the Old Notes, which is expected to occur on the Expiration
Date.

      This  Prospectus,  together  with the Letter  of  Transmittal  and  other
relevant materials, will be mailed by the Issuer to record holders of Old Notes
and will be furnished to brokers, banks and similar persons whose names, or the
names  of  whose  nominees,  appear  on the lists  of  holders  for  subsequent
transmittal to beneficial owners of Old Notes.  Holders of Old Notes who tender
in the Exchange Offer will not be required to pay brokerage commissions or fees
or,  subject  to the instructions in the Letter of Transmittal, transfer  taxes
with respect to the exchange of Old Notes pursuant to the Exchange Offer.   The
Company  and  the Issuer will pay all charges and expenses, other than  certain
applicable taxes, in connection with the Exchange Offer.

      Although  the Issuer has no plan or intention to do so, it  reserves  the
right in its sole discretion to purchase or make offers for any Old Notes  that
remain  outstanding  subsequent  to the Expiration  Date,  and  to  the  extent
permitted  by  applicable  law,  purchase Old Notes  in  the  open  market,  in
privately  negotiated  transactions  or  otherwise.   The  terms  of  any  such
purchases or offers could differ from the terms of the Exchange Offer.

     Holders of Old Notes do not have any appraisal or dissenters' rights under
the  Companies  Law  (Revised)  of the Cayman  Islands  or  the  Exchange  Note
Indenture in connection with the Exchange Offer.

Expiration Date; Extensions; Termination; Amendments

      The  Exchange Offer expires on the Expiration Date.  The term "Expiration
Date"  means 5:00 p.m., New York City time, on ___________________, unless  the
Issuer  in  its  sole discretion extends the period during which  the  Exchange
Offer is open, in which event the term "Expiration Date" means the latest  time
and  date  on which the Exchange Offer, as so extended by the Issuer,  expires.
The Issuer reserves the right to extend the Exchange Offer at any time and from
time  to  time  prior  to  the Expiration Date.  The Issuer  shall  notify  the
Exchange  Agent  of any extension by oral or written notice and  shall  make  a
public announcement thereof prior to 5:00 p.m., New York City time, on the next
Business Day after the previously scheduled Expiration Date.  Such announcement
may  state  that  the Issuer is extending the Exchange Offer  for  a  specified
period  or  on a daily basis.  Without limiting the manner by which the  Issuer
may  choose  to  make  such public announcement thereof, the  Issuer  currently
intends  to  make such announcements, if any, by issuing a release to  the  Dow
Jones  News Service. During any extension of the Exchange Offer, all Old  Notes
previously tendered pursuant to the Exchange Offer will remain subject  to  the
Exchange Offer.

      The  Issuer reserves the right (i) to extend the Exchange Offer, (ii)  to
delay  accepting any tendered Old Notes, (iii) if any of the events  set  forth
below  under "Conditions of the Exchange Offer" shall have occurred  and  shall
not have been waived by the Issuer, terminate the Exchange Offer and not accept
any  Old  Notes, by giving oral or written notice of such delay,  extension  or
termination to the Exchange Agent, and (iv) to amend at any time, or from  time
to time, the terms of the Exchange Offer in any manner, whether before or after
any  tender  of  the Old Notes. Any amendment applicable to the Exchange  Offer
will  apply to all Old Notes tendered in the Exchange Offer, regardless of when
or  in  what  order  the  Old Notes were tendered.  Any  delay  in  acceptance,
extension, termination or amendment will be followed as promptly as practicable
by  public  announcement thereof in a manner set forth above.  If the  Exchange
Offer is amended (including by waiver of a condition to the Exchange Offer)  in
a  manner determined by the Issuer to constitute a material change, the  Issuer
will  promptly  disclose  such amendment in a manner reasonably  calculated  to
inform  the  holders of Old Notes of such amendment, and if the Exchange  Offer
would  otherwise expire during such period, the Issuer will extend the Exchange
Offer  for  a  period  which  the Issuer in its discretion  deems  appropriate,
depending  upon the significance of the amendment and the manner of  disclosure
to  the  holders of Old Notes. All of the conditions to the Exchange Offer  set
forth  below  under  the  caption "Conditions of the Exchange  Offer"  must  be
satisfied  or  waived  prior to the consummation of the  Exchange  Offer.   The
rights reserved by the Issuer in this paragraph are in addition to the Issuer's
rights set forth below under the caption  "Conditions of the Exchange Offer."

Conditions of the Exchange Offer

     Notwithstanding any other term of the Exchange Offer, the Issuer shall not
be required to accept for exchange, or exchange the Exchange Notes for, any Old
Notes,  and  may  terminate the Exchange Offer as provided  herein  before  the
acceptance of such Old Notes, if:

     (i)   any action or proceeding is instituted or threatened in any court or
           by  or  before any governmental agency with respect to the  Exchange
           Offer  which,  in  the sole judgment of the Issuer,  may  materially
           impair the ability of the Issuer to proceed with the Exchange  Offer
           in  accordance with the terms contained herein and in the Letter  of
           Transmittal  or materially impair the contemplated benefits  of  the
           Exchange  Offer  to the Issuer, or any material adverse  development
           has  occurred in any existing action or proceeding with  respect  to
           the Issuer or any of its subsidiaries or affiliates;
     
     (ii)  any  change, or any development involving a prospective  change,  in
           the  business  or  financial affairs of the Issuer  or  any  of  its
           subsidiaries has occurred which, in the sole judgment of the Issuer,
           may  materially impair the ability of the Issuer to proceed with the
           Exchange Offer or materially impair the contemplated benefits of the
           Exchange Offer to the Issuer;
     
     (iii) any  law,  statute,  rule  or regulation  is  proposed,  adopted  or
           enacted,  which, in the sole judgment of the Issuer, may  materially
           impair the ability of the Issuer to proceed with the Exchange  Offer
           or materially impair the contemplated benefits of the Exchange Offer
           to the Issuer;
     
     (iv)  any  governmental approval has not been obtained, which approval the
           Issuer  shall,  in  its  sole discretion,  deem  necessary  for  the
           consummation of the Exchange Offer as contemplated hereby;
     
     (v)   any  stop order shall be threatened or in effect with respect to the
           Registration Statement of which this Prospectus constitutes  a  part
           or  qualification of the Indenture under the Trust Indenture Act  of
           1939, as amended; or
     
     (vi)  the  Trustee  shall have objected in any respect to,  or  taken  any
           action  that  could, in the sole judgment of the  Issuer,  adversely
           affect  the consummation of the Exchange Offer, or shall have  taken
           any  action  that  challenges the validity or effectiveness  of  the
           procedures  used by the Issuer in making the Exchange Offer  or  the
           acceptance of Old Notes in exchange for Exchange Notes.

     The foregoing conditions to the Exchange Offer are for the sole benefit of
the  Issuer and may be asserted by the Issuer in its sole discretion regardless
of the circumstances giving rise to any such condition (including any action or
inaction  by  the Company or the Issuer) and may be waived by  the  Issuer,  in
whole or in part, at any time and from time to time in its sole discretion. All
of  the  foregoing  conditions  must  be  satisfied  or  waived  prior  to  the
consummation of the Exchange Offer.  The failure by the Issuer at any  time  to
exercise  any of the foregoing rights shall not be deemed a waiver of any  such
right  and  each  such  right shall be deemed an ongoing  right  which  may  be
asserted  at any time and from time to time.  Any determination by  the  Issuer
concerning  the  events  described  in  this  section  or  the  fulfillment  or
nonfulfillment of any conditions shall be final and binding upon all persons.

     The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered.

Procedures for Tendering

     Only a registered holder of the Old Notes may tender such Old Notes in the
Exchange Offer.  To tender in the Exchange Offer, a holder must, prior  to  the
Expiration Date, either (i) complete and sign the Letter of Transmittal  (or  a
facsimile  thereof), in accordance with the instructions contained  herein  and
therein,  and  deliver such Letter of Transmittal, together with any  signature
guarantees  and  any other documents required by the Letter of Transmittal,  to
the  Exchange  Agent at its address set forth on the back cover  page  of  this
Prospectus  and the tendered Old Notes must either be (a) physically  delivered
to  the Exchange Agent or (b) transferred pursuant to the procedures for  book-
entry  transfer described herein and a confirmation of such book-entry transfer
must  be  received by the Exchange Agent prior to the Expiration Date, or  (ii)
comply with the guaranteed delivery procedures set forth herein.  To be validly
tendered,  the  Old  Notes,  together  with  a  properly  completed  Letter  of
Transmittal  (or facsimile thereof), executed by the holder of record  thereof,
and any other documents required by the Letter of Transmittal, must be received
by  the Exchange Agent at the address set forth on the back cover page of  this
Prospectus  prior  to  5:00 p.m., New York City time, on the  Expiration  Date,
except  as  otherwise  provided  below under the caption  "Guaranteed  Delivery
Procedures."

      The  tender by a holder will constitute an agreement between such  holder
and  the Issuer in accordance with the terms and subject to the conditions  set
forth herein and in the Letter of Transmittal.

      THE METHOD OF DELIVERY OF THE OLD NOTES AND THE LETTER OF TRANSMITTAL AND
ALL  OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER.  INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN  OVERNIGHT OR HAND DELIVERY SERVICE.  IF DELIVERY IS TO BE MADE BY MAIL,  IT
IS  SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF  THE
EXPIRATION DATE.  NO LETTER OF TRANSMITTAL OR THE OLD NOTES SHOULD BE  SENT  TO
THE ISSUER OR THE COMPANY.

      Any  beneficial owner whose Old Notes are registered in  the  name  of  a
broker, dealer, commercial bank, trust company or other nominee and who  wishes
to  tender  should  contact the registered holder promptly  and  instruct  such
registered   holder  to  tender  on  such  beneficial  owner's  behalf.     See
"Instructions  to  Registered Holder from Beneficial Owner" included  with  the
Letter of Transmittal.

      Signatures on a Letter of Transmittal must be guaranteed unless  the  Old
Notes tendered pursuant thereto are (i) tendered by a registered holder of  the
Old   Notes   who  has  not  completed  the  box  entitled  "Special   Delivery
Instructions" on the Letter of Transmittal or (ii) tendered for the account  of
an Eligible Institution (as defined below).  In the event that signatures on  a
Letter of Transmittal are required to be guaranteed, such guarantee must be  by
a  firm  that  is a member of a registered national securities  exchange  or  a
member  of  the  National  Association of Securities  Dealers,  Inc.  or  by  a
commercial  bank  or  trust company having an office or  correspondent  in  the
United  States,  or  by  an  entity that is otherwise  an  "eligible  guarantor
institution"  within  the meaning of Rule 17Ad-15 under the  Exchange  Act  (an
"Eligible Institution").

      If  the  Letter  of  Transmittal is signed by a  person  other  than  the
registered  holder  of any Old Notes listed therein, such  Old  Notes  must  be
endorsed  by the registered holder or accompanied by a properly completed  bond
power  or  other  written instrument of transfer in form  satisfactory  to  the
Issuer  in  its  sole  discretion, signed by such  registered  holder  as  such
registered  holder's  name  appears  on such  Old  Notes.   If  the  Letter  of
Transmittal  is  signed by the registered holder and (a) the  entire  principal
amount of the holder's Old Notes is tendered or (b) untendered Old Notes are to
be issued to the registered holder, then the registered holder need not endorse
any  certificates for tendered Old Notes or provide a separate bond power.   In
any  other case, the registered holder must transmit a separate bond power with
the Letter of Transmittal.

     If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers  of
corporations  or others acting in a fiduciary or representative capacity,  such
persons  should  so indicate when signing, and proper evidence satisfactory  to
the Issuer of their authority to so act must be submitted.

      The  Exchange Agent will establish accounts with respect to the Old Notes
at  DTC  for  the purpose of the Exchange Offer, and any financial  institution
that  is a participant in DTC may make book-entry transfer of the Old Notes  by
causing  DTC  to transfer such Old Notes into the Exchange Agent's  account  at
DTC. Although delivery of Old Notes may be effected through book-entry transfer
in the Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof),  with  any  required  signature guarantees  and  any  other  required
documents,  must, in any case, be transmitted to and received by  the  Exchange
Agent  at  its address set forth on the back cover of this Prospectus prior  to
5:00  p.m.,  New  York City time, on the Expiration Date, except  as  otherwise
provided under the caption "Guaranteed Delivery Procedures" below. DELIVERY  OF
DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO  THE  EXCHANGE  AGENT.   NOTWITHSTANDING COMPLIANCE WITH  BOOK-ENTRY  TENDER
DELIVERY  PROCEDURES,  FAILURE TO DELIVER TO THE  EXCHANGE  AGENT  AN  EXECUTED
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS PRIOR TO 5:00 P.M.,  NEW
YORK CITY TIME, ON THE EXPIRATION DATE MAY RESULT IN THE TENDERED OLD BONDS NOT
BEING ACCEPTED FOR EXCHANGE.

      All  questions as to the validity, form, eligibility (including  time  of
receipt)  and acceptance of Old Notes tendered for exchange will be  determined
by  the  Issuer in its sole discretion, whose determination will be  final  and
binding.   The Issuer reserves the absolute right to reject any or all  tenders
that are not in proper form or the acceptance of which would, in the opinion of
the  Issuer  or counsel for the Issuer, be unlawful.  The Issuer also  reserves
the  right  to  waive certain of the conditions to the Exchange  Offer  or  any
irregularities  or  defects  in  the  tender  of  Old  Notes.    The   Issuer's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions  in the Letter of Transmittal) will be final and  binding  on  all
persons.  Unless waived, any irregularities in connection with tenders  of  Old
Notes  must  be cured within such time as the Issuer shall determine.   Neither
the Company, the Issuer, the Exchange Agent nor any other person shall be under
any duty to give notifications of defects or irregularities in such tenders  or
shall  incur any liability for failure to give such notification.   Tenders  of
Old  Notes will not be deemed to have been made until any defects with  respect
to such tenders have been cured or waived.

      By  tendering, each registered holder of Old Notes will represent to  the
Issuer  that, among other things, (i) the Exchange Notes to be acquired by  the
holder and any beneficial owner(s) of such Old Notes ("Beneficial Owner(s)") in
connection  with the Exchange Offer are being acquired by the holder  and  such
Beneficial  Owner(s) in the ordinary course of business of the holder  and  any
Beneficial Owner(s), (ii) the holder (other than a broker-dealer referred to in
the  last  sentence  of  this  paragraph) and each  Beneficial  Owner  are  not
participating and do not intend to participate in the distribution (within  the
meaning of the Securities Act) of the Exchange Notes, (iii) the holder and each
Beneficial  Owner  have  no arrangement or understanding  with  any  person  to
participate in the distribution (within the meaning of the Securities  Act)  of
the  Exchange Notes, (iv) the holder and each Beneficial Owner acknowledge  and
agree  that  any person participating in the Exchange Offer for the purpose  of
distributing  the  Exchange  Notes  must  comply  with  the  registration   and
prospectus  delivery requirements of the Securities Act in  connection  with  a
secondary resale transaction of the Exchange Notes acquired by such person  and
cannot  rely  on the position of the staff of the Commission set forth  in  no-
action  letters  that  are discussed herein under "Resale of  Exchange  Notes,"
below,  (v)  the holder and each Beneficial Owner understand that  a  secondary
resale  transaction  described in clause (iv) above should  be  covered  by  an
effective  registration  statement  containing  the  selling  security   holder
information required by Item 507 of Regulation S-K of the Commission  and  (vi)
neither  the holder nor any Beneficial Owner is an Affiliate of the Company  or
the  Issuer, or if it is an Affiliate, it will comply with the registration and
prospectus   delivery  requirements  of  the  Securities  Act  to  the   extent
applicable.  In addition, each broker-dealer that receives Exchange  Notes  for
its  own  account in exchange for Old Notes, where such Old Notes were acquired
by  such broker-dealer as a result of market making activities or other trading
activities,  must acknowledge that it will deliver a prospectus  in  connection
with  any  resale  of such Exchange Notes.  See "--Resales of  Exchange  Notes"
below and "Plan of Distribution."

      Unless  an  exemption applies under the applicable  law  and  regulations
concerning  "backup  withholding" of United  States  federal  income  tax,  the
Exchange  Agent  will be required to withhold, and will withhold,  31%  of  the
gross proceeds otherwise payable to a holder pursuant to the Exchange Offer  if
the holder does not provide its taxpayer identification number (social security
number or employer identification number, as applicable) and certify that  such
number  is  correct.  Each tendering holder should complete and sign  the  main
signature  form and the Substitute Form W-9 included as part of the  Letter  of
Transmittal,  so as to provide the information and certification  necessary  to
avoid  backup withholding, unless an applicable exemption exists and is  proved
in a manner satisfactory to the Issuer and the Exchange Agent.

Guaranteed Delivery Procedures

      If  a holder of Old Notes desires to tender such Old Notes and if the Old
Notes are not immediately available, or time will not permit such holder's  Old
Notes  or any other required documents to reach the Exchange Agent before  5:00
p.m., New York City time, on the Expiration Date, a tender for exchange may  be
effected if:

     (i)  the   tender  for  exchange  is  made  by  or  through  an   Eligible
          Institution;
     
     (ii) prior  to 5:00 p.m., New York City time, on the Expiration Date,  the
          Exchange  Agent  has  received  from  such  Eligible  Institution   a
          properly  completed  and duly executed Notice of Guaranteed  Delivery
          (by  facsimile transmission, mail or hand delivery) setting forth the
          name  and  address of the holder of the Old Notes and  the  principal
          amount  of  Old Notes tendered for exchange, stating that  tender  is
          being  made thereby and guaranteeing that, within three Business  Days
          after  the  Expiration Date, the duly executed Letter of  Transmittal
          (or  facsimile  thereof), properly completed  and  validly  executed,
          together  with  the  Old  Notes  in  proper  form  for  transfer  (or
          confirmation  of  book-entry transfer of  such  Old  Notes  into  the
          Exchange  Agent's account with DTC), and any other documents required
          by  the  Letter of Transmittal and the instructions thereto, will  be
          deposited by the Eligible Institution with the Exchange Agent; and
     
     (iii)such  properly  completed  and executed  Letter  of  Transmittal  (or
          facsimile  thereof), as well as the certificate(s)  representing  all
          tendered  Old  Notes in proper form for transfer (or confirmation  of
          book-entry  transfer  of  such Old Notes into  the  Exchange  Agent's
          account  with DTC) and all other documents required by the Letter  of
          Transmittal, are received by the Exchange Agent within five  Business
          Days after the Expiration Date.

      Upon request to the Exchange Agent, a Notice of Guaranteed Delivery  will
be  sent  to  holders  who  wish to tender their Old  Notes  according  to  the
guaranteed delivery procedures set forth above.

Acceptance of Old Notes for Exchange; Delivery of Exchange Notes
      Upon  the terms and subject to the conditions of the Exchange Offer,  the
Issuer  will  accept on the Expiration Date all Old Notes properly tendered  in
the  Exchange Offer and not withdrawn and will issue the Exchange Notes as soon
as  practicable after the acceptance of the Old Notes.  The Exchange Notes will
be issued in the form of a fully registered global bond which will be deposited
with,  or on behalf of, DTC and registered in the name of its nominee.  Holders
tendering  Old  Notes  represented by a certificate must provide  the  Exchange
Agent  with a DTC account number for delivery of the Exchange Notes  issued  in
exchange  therefor.  For purposes of the Exchange Offer, the  Issuer  shall  be
deemed  to have accepted properly tendered Old Notes when, as and if the Issuer
has  given oral or written notice thereof to the Exchange Agent.  The  Exchange
Agent  will act as agent for the tendering holders of Old Notes for the purpose
of  receiving the Exchange Notes from the Issuer and transmitting the  Exchange
Notes to each holder exchanging Old Notes.

      If  any  tendered Old Notes are not accepted for exchange because  of  an
invalid  tender, the occurrence of certain other events set forth  herein,  the
withdrawal of tendered Old Notes under circumstances permitting such withdrawal
as  described herein or otherwise, or if Old Notes are submitted for a  greater
principal  amount  than  the  holder thereof  desires  to  exchange,  any  such
unaccepted or non-exchanged Old Notes will be returned, without expense, to the
tendering  holder thereof (or, in the case of the Old Notes tendered  by  book-
entry  transfer, to an account maintained at DTC), as soon as practicable after
the expiration or termination of the Exchange Offer.

Withdrawal of Tenders

      Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.  Thereafter, such tenders are irrevocable. To withdraw a  tender  of  Old
Notes in the Exchange Offer, a written notice of withdrawal, delivered by hand,
mail  or  facsimile  transmission, must (i) be received by the  Exchange  Agent
prior  to 5:00 p.m., New York City time, on the Expiration Date at the  address
set  forth on the back cover hereof, (ii) specify the name of and be signed  by
the  registered  holder of such Old Notes in the same manner as the  applicable
Letter  of  Transmittal (including any required signature  guarantees)  as  set
forth  above  under "Procedures for Tendering," (iii) specify the name  of  the
person identified in the Letter of Transmittal as having tendered the Old Notes
to  be withdrawn and (iv) specify the aggregate principal amount represented by
such  withdrawn  Old Notes.  If Old Notes have been tendered  pursuant  to  the
procedures  for  book-entry  transfer  as  set  forth  herein,  any  notice  of
withdrawal must also specify the name and number of the account at  DTC  to  be
credited with the withdrawn Old Notes.  Withdrawals of tenders of Old Notes may
not  be  rescinded, and any Old Notes withdrawn will thereafter be  deemed  not
validly  tendered for purposes of the Exchange Offer; provided,  however,  that
withdrawn  Old Notes may be re-tendered by again complying with the  procedures
for  tendering Old Notes described herein at any time prior to 5:00  p.m.,  New
York City time, on the Expiration Date.

      All questions as to the validity, form and eligibility (including time of
receipt)  of  notices  of withdrawal will be determined  by  the  Issuer,  such
determination  to be final and binding.  None of the Company, the  Issuer,  the
Exchange  Agent or any other person will be under any duty to give notification
of  any  defects or irregularities in any notice of withdrawal of Old Notes  or
incur any liability for failure to give any such notification.

Lost or Missing Certificates

      If  a  holder  of Old Notes desires to tender Old Notes pursuant  to  the
Exchange  Offer,  but  such  Old Notes have been  mutilated,  lost,  stolen  or
destroyed,  such  holder should telephone the Trustee  at  (800)  735-7777  for
information  concerning  the procedures for obtaining replacement  certificates
for  such  Old  Notes, arranging for indemnification or any other  matter  that
requires handling by the Trustee.

Termination of Certain Rights

      Holders  of  Old Notes have certain rights under the Registration  Rights
Agreement  that will terminate as a result of the consummation of the  Exchange
Offer. The Exchange Offer shall be deemed to be "consummated" upon the issuance
and  delivery of Exchange Notes in exchange for Old Notes validly tendered  and
not  withdrawn  in  the  Exchange Offer in accordance with  the  terms  of  the
Registration  Rights  Agreement. Such rights will  terminate  for  all  holders
exchanging Old Notes in the Exchange Offer and all holders who are eligible  to
participate  in the Exchange Offer and fail to do so. See "Description  of  the
Exchange  Notes, the Exchange Notes Guarantee, the Issuer Loan, the Shareholder
Loans and the Collateral Documents--Old Notes Registration Rights."

The Exchange Agent

      The Exchange Agent for the Exchange Offer is Bankers Trust Company.   All
deliveries,  correspondence and questions sent or  presented  to  the  Exchange
Agent  relating  to  the  Exchange Offer should be directed  to  the  following
address or telephone number (which are also set forth on the back cover of this
Prospectus):

                          Facsimile Transmission:                
                               (615) 835-3701
                           Confirm by Telephone:
                               (615) 835-3572
                                                       By Overnight Courier
       By Mail:              By Hand Delivery:          or Certified Mail:
BT Services Tennessee,     Bankers Trust Company      BT Services Tennessee,
         Inc.                                                  Inc.
  Reorganization Unit     Corporate Trust & Agency   Corporate Trust & Agency
                                   Group                       Group
    P.O. Box 292737      Receipt & Delivery Window      Reorganization Unit
 Nashville, TN 37229-    123 Washington Street, 1st   648 Grassmere Park Road
         2737                      Floor
                             New York, NY 10006         Nashville, TN 37211
                                                                 
                           For Information Call:                 
                               (800) 735-7777                    

     Delivery to an address other than as set forth herein, or transmissions of
instructions  via a facsimile number other than the one set forth herein,  will
not constitute a valid delivery.

Fees and Expenses

      The  expenses of soliciting tenders will be borne by the Company and  the
Issuer.   The principal solicitation is being made by mail; however, additional
solicitation  may be made by facsimile, telephone or in person by officers  and
representatives of the Issuer and its affiliates. The Issuer has  not  retained
any  dealer-manager in connection with the Exchange Offer and will not make any
payments  to  brokers, dealers or others soliciting acceptance of the  Exchange
Offer.  The  Issuer,  however,  will  pay the  Exchange  Agent  reasonable  and
customary  fees  for its services and will reimburse it for reasonable  out-of-
pocket  expenses incurred in connection therewith. The expenses to be  incurred
in  connection  with  the Exchange Offer will be paid by  the  Issuer  and  the
Company and are estimated in the aggregate to be approximately $260,000.   Such
expenses  include  fees  and  expenses  of  the  Exchange  Agent  and  Trustee,
accounting  and  legal  fees and independent engineers' and  fuel  consultants'
fees.

     The Issuer will pay all transfer taxes, if any applicable, to the transfer
of Old Notes to it pursuant to the Exchange Offer.  If, however, a transfer tax
is  imposed  for any reason other than the transfer of Old Notes to the  Issuer
pursuant  to  the Exchange Offer (including, without limitation,  any  transfer
taxes  imposed  as  a result of the Exchange Notes or Old Notes  not  exchanged
being  delivered to, or issued in the name of, any person other than the record
holder,  or  certificates being tendered that are recorded in  the  name  of  a
person  other  than  the  person signing the Letter of Transmittal),  then  the
amount of any such transfer taxes (whether imposed on the registered holder  or
any  other  person) will be payable by the tendering holder.   If  satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted  with
the  Letter  of Transmittal, the amount of such transfer taxes will  be  billed
directly to such tending holder.

Accounting Treatment

      The  Exchange  Notes will be recorded at the carrying value  of  the  Old
Notes,  as  reflected in the Issuer's accounting records on  the  date  of  the
exchange.   Accordingly,  no  gain  or loss for  accounting  purposes  will  be
recognized.

Transfer Restrictions on Old Notes

      The  Old Notes that are not exchanged for Exchange Notes pursuant to  the
Exchange Offer will remain "restricted securities" (within the meaning  of  the
Securities Act).  Accordingly, prior to the date that is three years after  the
later  of the Issue Date and the last date on which the Issuer or any Affiliate
of  the Issuer was the owner thereof, such Old Notes may be resold only (i)  to
the  Issuer  (upon redemption thereof or otherwise), (ii) so long  as  the  Old
Notes  are  eligible for resale pursuant to Rule 144A, to  a  person  whom  the
seller  reasonably believes is a Qualified Institutional Buyer, purchasing  for
its  own account or for the account of a Qualified Institutional Buyer to  whom
notice  is  given that the resale, pledge or other transfer is  being  made  in
reliance  on Rule 144A, (iii) to an institutional Accredited Investor  that  is
purchasing  for  its own account or the account of an institutional  Accredited
Investor, (iv) in an offshore transaction in accordance with Regulation S under
the   Securities  Act,  (v)  pursuant  to  another  available  exemption   from
registration  under  the  Securities Act, or  (vi)  pursuant  to  an  effective
registration  statement  under the Securities  Act,  subject  in  each  of  the
foregoing cases to compliance with applicable state securities laws.

Resales of Exchange Notes

      With respect to resales of the Exchange Notes, based on an interpretation
by  the staff of the Commission set forth in no-action letters issued to  third
parties,  the Company believes that a holder (other than a person  that  is  an
Affiliate  of the Company, the Issuer or Panda Interholding) who exchanges  Old
Notes  for Exchange Notes will be allowed to resell the Exchange Notes acquired
in  the  Exchange  Offer to the public without further registration  under  the
Securities Act and without delivering to the purchasers of the Exchange Notes a
prospectus that satisfies the requirements of Section 10 thereof; provided that
(i)  the  Exchange Notes are acquired in the ordinary course  of  the  holder's
business, (ii) the holder (other than a broker-dealer referred to in  the  next
sentence)  is  not  participating and does not intend  to  participate  in  the
distribution  (within the meaning of the Securities Act) of the Exchange  Notes
and  (iii)  the holder has no arrangement or understanding with any  person  to
participate in the distribution (within the meaning of the Securities  Act)  of
the  Exchange  Notes.  In addition, each broker-dealer that  receives  Exchange
Notes for its own account in exchange for Old Notes, where such Old Notes  were
acquired by such broker-dealer as a result of market making activities or other
trading activities, must notify the Company and the Issuer that it has acquired
Exchange  Notes  for its own account (which notification must be  made  in  the
applicable location in the Letter of Transmittal) and must acknowledge that  it
will deliver a prospectus in connection with any resale of such Exchange Notes.
However,  if any holder acquires Exchange Notes in the Exchange Offer  for  the
purpose  of  distributing or participating in a distribution  of  the  Exchange
Notes,  such holder cannot rely on the position of the staff of the  Commission
enunciated in such no-action letters and must comply with the registration  and
prospectus  delivery requirements of the Securities Act in  connection  with  a
secondary  resale  transaction,  unless  an  exemption  from  registration   is
otherwise available. In addition, to comply with the securities laws of certain
jurisdictions,  if applicable, the Exchange Notes may not be  offered  or  sold
unless they have been registered or qualified for sale in such jurisdictions or
an exemption from registration or qualification is available and the conditions
thereto have been met.  See "Plan of Distribution."

               CERTAIN TAX CONSIDERATIONS OF THE EXCHANGE OFFER

United States Federal Income Taxation

      The following discussion is based upon current provisions of the Internal
Revenue  Code  of  1986, as amended, applicable Treasury regulations,  judicial
authority  and administrative rulings and practice.  There can be no  assurance
that  the Internal Revenue Service will not take a contrary view, and no ruling
from  the  Internal  Revenue Service has been or will be sought.   Legislative,
judicial  or administrative changes or interpretations may be forthcoming  that
could  alter  or modify the statements and conclusions set forth  herein.   Any
such  changes or interpretations may or may not be retroactive and could affect
the  tax  consequences to holders of the Old Notes.  Certain holders (including
insurance companies, tax-exempt organizations, financial institutions,  broker-
dealers, foreign corporations and persons who are not citizens or residents  of
the United States) may be subject to special rules not discussed below.

      The  exchange  of the Exchange Notes for the Old Notes  pursuant  to  the
Exchange Offer should not be treated as an "exchange" for United States federal
income  tax  purposes because the Exchange Notes should not  be  considered  to
differ  materially  in kind or extent from the Old Notes.  The  Exchange  Notes
received  by a holder should be treated as a continuation of the Old  Notes  in
the  hands of such holder.  As a result, there should be no federal income  tax
consequences  to holders as a result of the exchange of the Old Notes  for  the
Exchange  Notes pursuant to the Exchange Offer.  If, however, the  exchange  of
the  Old Notes for the Exchange Notes were treated as an "exchange" for federal
income  tax  purposes,  such exchange should constitute a recapitalization  for
federal income tax purposes.  Holders exchanging the Old Notes pursuant to such
recapitalization should not recognize any gain or loss upon the exchange.

     THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL  INFORMATION  ONLY AND IS NOT TAX ADVICE.  EACH  HOLDER  OF  OLD  BONDS
SHOULD  CONSULT  ITS  OWN  TAX  ADVISOR AS TO PARTICULAR  TAX  CONSEQUENCES  OF
HOLDING,  EXCHANGING  OR SELLING THE OLD BONDS, INCLUDING THE  APPLICATION  AND
EFFECT OF ANY FEDERAL, STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY CHANGES  IN
APPLICABLE TAX LAWS.

Certain Cayman Islands Tax Considerations

     On the basis of the current legislation in the Cayman Islands, there is no
income,  corporation,  profits, capital gains or other form  of  taxation  that
would be applicable to any holder of Old Notes who exchange such Old Notes  for
Exchange  Notes pursuant to the Exchange Offer (provided such holder  does  not
engage in trade in the Cayman Islands).

Certain PRC Taxation Considerations

      The Issuer has been advised by Cai, Zhang & Lan, PRC legal counsel to the
Issuer, that there is no liability on the part of a Non-PRC holder of Old Notes
who  exchanges such Old Notes for Exchange Notes pursuant to the Exchange Offer
for  any  income or withholding tax owing to the PRC, any provincial government
or any subdivision thereof.
     
                          DESCRIPTION OF THE PROJECTS
                                       
     The  following discussion provides certain summary information  concerning
the Luannan Facility, the Rosemary Facility and the Brandywine Facility.
     
The Luannan Facility

     The  Luannan  Facility will be comprised of two steam/electric  generating
units, each nominally rated at 50 MW but with nameplate capability of up to  60
MW  gross  output  under full condensing conditions. Two pulverized  coal-fired
boilers,  each  delivering  steam to drive a three stage  extraction/condensing
steam  turbine  electric  generating unit,  will  be  utilized.  Coal  will  be
delivered  by  truck  to the site of the Luannan Facility  from  nearby  mines.
Electric power generated by the Luannan Facility will be interconnected to  the
local  electricity grid network at 110 kV. In addition, steam will be extracted
from  the  steam turbines for distribution by pipeline to local industrial  and
commercial  users  and  also  used  to heat water  for  district  heating  use.
Electrostatic  precipitators will be provided down stream  of  the  boilers  to
remove  fly ash from the boiler flue gas. The fly ash will be mixed with  water
and  pumped  by  way  of  pipeline to an off-site dedicated  ponding  site  for
disposal.
     
  Sales of Power
  
     The Luannan Facility will sell power to North China Power Company pursuant
to the Luannan Power Purchase Agreement. North China Power Company functions as
the  commercial arm of North China Power while North China Power Administration
("NCPA")  functions  as the regulatory entity of the same  group.  North  China
Power, which reports directly to MOEP, owns and operates the North China  Power
Grid. The service area of North China Power encompasses four regions, including
the  Beijing/Tianjin/Tangshan area.  Beijing and Tianjin are among the  largest
and  most  economically developed cities in China.  The service area  of  North
China  Power  also includes Hebei Province, Shanxi Province and  western  Inner
Mongolia.  North  China Power owns most of the major power  plants  within  its
service  area and is reported to have had a total installed capacity of  25,140
MW  in  1995  and  to  have generated power of 126.7 TWh in  1995.  As  both  a
government  and a commercial entity, North China Power regulates,  manages  and
owns  the  power assets in its territory including generation and  distribution
facilities. The geographical extent of its service area makes North China Power
one  of the largest power operating entities in China. The financial statements
of North China Power included in its 1995 annual report (which were prepared in
accordance with Chinese accounting principles) indicated total assets of  North
China  Power  (excluding  assets in Inner Mongolia) of  RMB  70  billion  ($8.4
billion) as of December 31, 1995, and revenue of approximately RMB 27.2 billion
($3.3  billion) (excluding its revenue generated from Inner Mongolia)  for  the
year  then ended. North China Power also reported that it is ranked as  one  of
the top three government-owned enterprises (in terms of revenues) in China.
     
     The   Luannan  Power  Purchase  Agreement  is  a  20-year  agreement.  The
electricity  price  is established through a formula provided  in  the  Pricing
Document (which is separate from, but incorporated by reference in, the Luannan
Power  Purchase Agreement). According to the formula contained in  the  Pricing
Document,  the  power price will be comprised of fixed and variable  components
that may be adjusted, subject to the approval of the Pricing Approval Authority
to  reflect  changes  in coal costs, depreciation of plant  and  equipment  and
financing  expenses. Certain components of the power price calculation  may  be
adjusted  to  reflect  local  and  U.S. inflation  and  foreign  exchange  rate
fluctuation  in order to mitigate the Luannan Facility's exposure to  inflation
and  currency risks. Although it is anticipated that the Luannan Facility  will
apply annually for changes in rates, under the Luannan Power Purchase Agreement
it  has  the right to request a determination of a new power price whenever  it
determines  that  changes in the price components require a new  determination.
There  are  pass-through  provisions in the pricing formula  for  increases  or
decreases in the cost of coal against an index cost that is stipulated  in  the
Pricing  Document, and the pricing formula also has provisions for pass-through
or make-whole calculations relating to certain construction capital cost items.
The  tariff  is paid in Renminbi and is required to be paid every  30  days  by
North  China Power Company. See "Risk Factors--Considerations Relating  to  the
PRC--Government Regulation of Power Rates."
     
  Sales of Steam
  
     The  Issuer  and the Company believe that the Luannan Facility  will  sell
approximately 349,680 tons per year of steam for process and the equivalent  of
approximately  362,518 GJ/year of steam for heating to certain  Luannan  County
enterprises  and  local  industries under several Luannan Heat Supply Contracts.
The Issuer believes that the Luannan Facility  will  be  the  single  largest,
centralized heat supplier in Luannan County.
     
  Engineering, Procurement and Construction Contract
  
     Through competitive bidding, Harbin Power Engineering Company Limited (the
"Luannan EPC Contractor") has been selected as the engineering, procurement and
construction  contractor for the Luannan Facility. The Luannan  EPC  Contractor
has extensive engineering, procurement and construction experience in the power
industry  in  the PRC and other countries. Chinese-manufactured  equipment  and
materials and Chinese labor will be utilized to the maximum extent possible  in
order  to  lower  the  costs of the Luannan Facility  and  the  sale  price  of
electricity.
     
     The  Luannan  EPC Contract provides for a retainage of 10% of the  Luannan
EPC  Contract  price  until  the  completion of  punch  list  items  and  other
deficiencies  in  accordance with the Luannan EPC  Contract.  The  Luannan  EPC
Contract  also  provides for liquidated damages or termination  payments  in  a
maximum  amount of 35% of the original Luannan EPC Contract Price.  The  CHEXIM
Guarantee  is required under the Luannan EPC Contract and has been provided  by
CHEXIM in respect of the Luannan EPC Contractor's obligations under the Luannan
EPC  Contract  to pay liquidated damages or termination payments in  a  maximum
amount  of 35% of the original Luannan EPC Contract Price. In addition,  Harbin
Power Equipment Company, a PRC company ("Harbin Power"), the parent company  of
the  Luannan  EPC  Contractor, has provided the Luannan EPC Guarantee  for  the
benefit  of  two of the Joint Ventures guaranteeing the payment and performance
of the Luannan EPC Contractor under the Luannan EPC Contract.
     
     The  Luannan EPC Contractor is a wholly-owned subsidiary of Harbin  Power.
Harbin  Power,  a  PRC  company listed on the Hong  Kong  Stock  Exchange,  was
established  in  October 1994 through the restructuring of Harbin  Power  Plant
Equipment Group Corporation.  Harbin Power, together with its subsidiaries,  is
one  of  the largest manufacturers of power plant equipment in China. In  1995,
the  annual designed production capacity of the facilities constructed  by  the
Luannan  EPC  Contractor and its affiliates was 3,000 MW of thermal  power  and
1,000 MW of hydro power. Harbin Power and its subsidiaries also provide a range
of  engineering services for power stations, including turnkey construction  of
power  plants and the provision of engineering and technical advisory services.
Harbin Power's products have been exported to Pakistan, the Philippines, Canada
and other countries.
     
  Export-Import Bank of China
  
     CHEXIM  was  established  in  April 1994 by the  State  Council  with  the
sponsorship  of  the Ministry of Finance, the People's Bank of  China  and  the
Ministry of Foreign Trade and Economic Cooperation of the PRC ("MOFTEC") as one
of  the three policy banks in China. The principal business of CHEXIM includes,
under  the direction of the PRC government, providing export and import  credit
(including  sellers'  and buyers' credits) for the export  and  import  of  all
machinery  and  equipment,  electric power products  and  equipment,  providing
export  insurance,  export  guarantees and  export  and  import  insurance  and
undertaking  any  business approved and entrusted to it by relevant  government
authorities of the PRC. At the end of 1995, CHEXIM's owner's equity amounted to
approximately RMB 138.0 million. CHEXIM extended sellers' credit loans  of  RMB
5.6  billion  in 1995. Although CHEXIM has received from its inception  various
subsidies,  capital  infusions  and  other  forms  of  support,  including  the
adjustment  of  interest  rates charged on loans made  by  CHEXIM,  CHEXIM  has
attempted to implement systems to achieve financial independence. Such  systems
include  the  provision  of  bad loan reserves and the  charging  of  insurance
premiums on loans made. Senior unsecured debt of CHEXIM currently has a debt
rating of A3 by Moody's.
     
  Heat Network Construction
  
     Two of the Joint Ventures entered into a construction agreement (the "Heat
Network  Construction  Agreement")  on  June  20,  1996  under  which  Tangshan
Engineering  will build the heat and steam network of Luannan  Heat  and  Power
(the  "Network").  Under  this  agreement, the cost  for  construction  of  the
Network,  which  will  consist of 12.1 kilometers of hot water  pipeline,  8.78
kilometers  of  steam pipeline, heat exchange stations, heat control  equipment
and  civil  construction,  is approximately RMB 24.2  million  ($2.9  million),
subject to escalation by the Chinese State Statistic Bureau Price Index.
     
  Transmission Facilities Construction
  
     North  China  Power  Company  has entered into  the  Luannan  Transmission
Facilities  Construction  Agreement with one of  the  Joint  Ventures  for  the
design, construction, interconnection, operation and maintenance of the Luannan
Transmission  Facilities. One of the Joint Ventures has agreed to  provide  the
Luannan  Transmission Facilities Loan through a financial intermediary  in  the
PRC  to  finance  the construction of the Luannan Transmission Facilities.  The
amount  of  such  funds, which was specified at the U.S. dollar  equivalent  of
RMB 78.2 million (which as of April 4, 1997, would have been approximately $9.4
million),  will be adjusted to reflect inflation in the PRC from  December  31,
1994  to  the  date of issuance of the notice to North China Power  Company  to
proceed  with  preliminary design in order for such funds to be  sufficient  to
cover the construction cost of the Luannan Transmission Facilities. The Luannan
Transmission   Facilities  will  be  comprised  of  three   newly   constructed
substations, upgrades to both an existing substation and an existing  switching
station  and  approximately 43 kilometers of new 110 kV transmission  lines  to
interconnect the Luannan Facility to the Jing-Jin-Tang Grid. In accordance with
the  Luannan Transmission Facilities Construction Agreement, North China  Power
Company  has  guaranteed that it will complete the construction of the  Luannan
Transmission Facilities to receive the total electrical output of  the  Luannan
Facility within 18 months of receiving its notice to proceed.
     
  Operations and Maintenance
  
     Pursuant  to the Luannan O&M Contract, operations and maintenance services
for  the  Luannan  Facility  will be provided by the  Luannan  O&M  Contractor,
Duke/Fluor Daniel International Services. The Luannan O&M Contract provides for
a recovery of costs by the Luannan O&M Contractor plus incentive payments based
upon the performance of the Luannan Facility.  The Luannan O&M Contractor is  a
general  partnership  formed in 1994 by affiliates of Duke  Power  Company  and
Fluor  Corporation  for the purposes of providing services to  the  solid  fuel
power generation market. The Luannan O&M Contractor is actively engaged in  the
operation  and  maintenance  of electric generation facilities  throughout  the
world.  Pursuant to the Luannan O&M Contract, almost all of the personnel  will
be  trained  PRC technicians who will work under close supervision of  the  O&M
committees of the Joint Ventures and the Luannan O&M Contractor's managers.
     
  Coal Supply
  
     The  Issuer  expects  that  the Luannan Facility  will  use  approximately
450,000 metric tons of coal per year. The principal fuel supply for the Luannan
Facility  will come from the Qianjiaying Mine, which is owned and  operated  by
Kailuan  Coal and is located 30 kilometers from the Luannan Facility.   Kailuan
Coal,  a  state-owned coal mining company, has 5.0 billion metric tons of  coal
reserves in the Tangshan area and produces approximately 18 million metric tons
of  coal  per year. The Qianjiaying Mine produced 3.67 million metric  tons  of
coal  in  1996. Kailuan Coal has committed to supply up to 300,000 metric  tons
per  year  of  coal from the Qianjiaying Mine to the Luannan Facility  for  ten
years.  Two of the Joint Ventures have also entered into coal supply agreements
with  five  other  local  coal mines (collectively  with  Kailuan  Coal  Mining
Administration,  the  "Luannan Coal Suppliers") to secure up to an  additional
310,000 metric  tons of coal per year for ten years. The Issuer and the Joint
Ventures believe  that the foregoing fuel supply arrangements, at the end of
such  ten-year period, can be extended, renewed or replaced.
     
  Environmental Matters
  
     Similar  to  electric power generation facilities in other countries,  the
Luannan   Facility  is  generally  required  by  PRC  environmental  laws   and
regulations to comply with a number of regulations relating to the  health  and
safety of personnel and the public.  An environmental assessment study has been
conducted  by  Hebei Provincial Metallurgy and Energy Environmental  Protection
Research   Institute  in  compliance  with  Chinese  environmental   protection
standards.  Based on this study, the Joint Ventures believe that the  equipment
installed and technology employed in the Luannan Facility will be in compliance
with the relevant PRC environmental laws and regulations.
     
  Governmental Approvals
  
     Cai,  Zhang  & Lan, Chinese counsel to the Issuer and the Joint  Ventures,
has  advised  the  Company that all required governmental approvals  have  been
obtained  with  respect  to the formation of the Joint Ventures  based  on  the
opinion  of  its Chinese counsel and advice from the Hebei Provincial  Planning
Commission, the Commission of Foreign Trade and Economic Cooperation  of  Hebei
Province  and  its  Joint  Venture partners. See "Risk  Factors--Considerations
Relating to the PRC--Legal and Regulatory Considerations."
     
     The Issuer believes that all other governmental approvals required for the
construction  of  the Luannan Facility that can be obtained at  this  stage  of
development have been obtained based on the opinion of its Chinese counsel  and
advice from the Hebei Provincial Planning Commission, the Commission of Foreign
Trade  and  Economic  Cooperation  of Hebei  Province  and  its  Joint  Venture
partners.   A  construction permit will have to be obtained by the Luannan  EPC
Contractor prior to the commencement of full construction activity with respect
to  the  Luannan  Facility; however, the Issuer and the Joint Ventures  believe
that the issuance of such a permit will be a matter of procedure rather than  a
discretionary matter because the design criteria for the Luannan  Facility  has
already been approved.
     
  Litigation
  
     None  of  the  Joint Ventures is currently involved in any  litigation  or
legal  proceeding that could be expected to have a material adverse  impact  on
the Joint Ventures or their operations, or the Issuer or the Company.
     
  Insurance
  
     The  Joint  Ventures  will provide and maintain a comprehensive  insurance
program  designed  on a project-specific basis. The owner-controlled  insurance
program will provide coverages for both property and casualty risks inherent in
the  construction of a facility such as the Luannan Facility. The coverages and
their respective limits during the construction period will be:
     
     Comprehensive third-party liability insurance       $20.00 million
     
     Construction and erection "all risk property,"      
           including flood and earthquake                $90.00 million
     
     Delay in start-up/advance loss of profits           $38.25 million

Permanent  insurance coverage will be arranged in amounts and limits as  deemed
sufficient by the Independent Insurance Consultant for the Joint Ventures.  The
Joint  Ventures  will  be insured parties for third-party  liability,  property
damage  and  business  interruption  insurance,  and  the  trustees  under  the
Indentures  will  be  the  loss  payees for the property  damage  and  business
interruption insurance.

The Rosemary Facility

     The Rosemary Facility is a combined-cycle cogeneration facility located in
Roanoke  Rapids, North Carolina, with a total electric generating  capacity  of
approximately  180 MW. The Rosemary Facility uses natural gas  as  its  primary
fuel  input to produce electric energy for sale to VEPCO and to produce  useful
thermal  energy  in  the  form  of steam for sale to  WestPoint.  The  Rosemary
Facility uses No. 2 fuel oil as an alternate fuel in the event gas supplies  or
transportation   are  curtailed.  The  Rosemary  Facility  was   designed   and
constructed  by  Hawker  Siddeley and began commercial operations  in  December
1990.  The Rosemary Facility is certified as a Qualifying Facility under  PURPA
and  thus  is exempt from rate regulation as an electric utility under  federal
and  state  law, provided that it continues to meet the applicable requirements
of PURPA. See Appendix B, "United States Regulation--Federal Energy Regulation-
-PURPA."
     
     The Rosemary Facility is designed to be operated in a combined-cycle mode.
It  uses  natural  gas  or  fuel oil to power two General  Electric  combustion
turbine  generators, a GE Frame 6 and a GE Frame 7, each  fitted  with  a  heat
recovery  steam  generator ("HRSG"). The HRSGs use the  reject  heat  from  the
combustion  turbines  that might otherwise dissipate  to  produce  steam  which
drives  a  steam turbine generator. The combustion and steam turbines  generate
electric  energy  for  sale  to  VEPCO. When the  Rosemary  Facility  is  being
dispatched,  some of the steam produced by the HRSGs is sold to  WestPoint  and
some  is used in two absorption chillers to supply chilled water for WestPoint.
When  the facility is not being dispatched, two auxiliary boilers are available
to be used to produce steam for WestPoint and to direct steam to the absorption
chillers  to  supply chilled water for WestPoint. The design  of  the  Rosemary
Facility  permits  flexible  operation,  including  the  production   of   both
electricity  and  a  sufficient amount of steam to meet QF requirements,  using
either one or both of the combustion turbine generators.
     
     See  "Description  of  Other  Indebtedness--The  Rosemary  Bonds"  for   a
description of the financing agreements relating to the Rosemary Facility.
     
  Sale of Capacity and Electricity
  
     The  Rosemary  Partnership sells electric capacity  and  energy  to  VEPCO
pursuant  to  a  Power  Purchase and Operating Agreement (the  "Rosemary  Power
Purchase Agreement"). The Rosemary Power Purchase Agreement has an initial term
ending  December 26, 2015, and may be extended for periods of up to five  years
if the parties so agree.
     
     VEPCO  has the right to dispatch the Rosemary Facility (i.e., require  the
Rosemary  Facility  to  deliver electricity) on a daily  basis  within  certain
guidelines  and  the  design limits (which specify load  levels,  start-up  and
shutdown times and minimum run times consistent with prudent utility practice).
VEPCO  must dispatch all facilities obligated to deliver electricity  to  VEPCO
based upon economic factors and without regard to the facilities' ownership.
     
     The  Rosemary Power Purchase Agreement provides for two types of payments:
a  capacity  payment  and an energy payment. The capacity payment  is  a  fixed
charge  required  to  be paid regardless of whether the  Rosemary  Facility  is
dispatched,  subject  to  reductions under certain circumstances  as  described
below.  Energy  payments are calculated based on the actual  electrical  output
transmitted  to  VEPCO and are designed to compensate the Rosemary  Partnership
for its cost of fuel and its variable operations and maintenance expense.
     
     Monthly  capacity  payments  throughout the term  of  the  Rosemary  Power
Purchase  Agreement  are  calculated  by multiplying  the  Rosemary  Facility's
"Dependable  Capacity" by the following rates: $12.488 per kilowatt  per  month
through  December 1996; $11.654 per kilowatt per month through  December  1998;
$10.821  per kilowatt per month through December 2005; and $8.321 per  kilowatt
per  month  through December 2015. The Rosemary Facility's Dependable  Capacity
was  most recently determined to be 165 MW for the summer period and 198 MW for
the  winter period, which are the maximum Dependable Capacity levels for  which
capacity  payments  must be made under the Rosemary Power  Purchase  Agreement.
Dependable  Capacity is determined by semi-annual tests which may be  requested
by VEPCO.
     
     Capacity  payments  may  be  reduced if any of  the  following  events  or
circumstances occur:
     
     (i)   if  the Rosemary Facility fails to meet required dispatch levels
           within  a tolerance of 5%, the operating level (as adjusted  for
           ambient  weather conditions) does not exceed Dependable Capacity
           and  such  failure  is not the result of a forced  outage,  then
           VEPCO  has the right to decrease the capacity payment in respect
           of the then-current billing month by 10% per occurrence;
     
     (ii)  if,  as  a result of a performance test, the Rosemary Facility's
           Dependable  Capacity  is set at less than  90%  of  the  initial
           Dependable Capacity as set forth in the Rosemary Power  Purchase
           Agreement (150 MW for the first summer period and 180 MW for the
           first winter period), then the Rosemary Partnership is obligated
           to  pay VEPCO liquidated damages for the deficiency in an amount
           equal to the product of $21.60 per kilowatt, in 1987 dollars  as
           escalated  annually by the GNPIPD, multiplied by the  Dependable
           Capacity shortfall;
     
     (iii) if  a forced outage is designated by the Rosemary Partnership as
           having  resulted from an event of force majeure, then  beginning
           the  day  after the Rosemary Partnership makes such designation,
           capacity  payments are suspended and prorated  daily  until  the
           Rosemary Partnership notifies VEPCO that the condition of  force
           majeure has ended; and
     
     (iv)  if  the  number  of forced outage days in a given capacity  test
           period exceeds the number of permitted forced outage days,  then
           within  60  days after the end of the capacity test period,  the
           Rosemary  Partnership is obligated to reimburse VEPCO an  amount
           equal  to  4% of the capacity payments paid during the  capacity
           test  period  for  each  forced outage  day  in  excess  of  the
           permitted  number; the Rosemary Partnership is entitled  to  the
           greater  of 25 forced outage days per capacity test period  (the
           period  from  December 1 through November 30)  and  10%  of  the
           number  of days that the Rosemary Facility is dispatched  during
           such  period,  without any loss of capacity  payments  for  such
           period.
     
     During  the period December 1, 1995 through November 30, 1996, the  number
of  forced outage days was 16, including 13 forced outage days attributable  to
the  damage  caused by the hurricane in September 1996. From December  1,  1996
through March 26, 1997, the Rosemary Facility incurred no forced outage days.
     
     The Rosemary Partnership is required to maintain the Rosemary Facility  as
a QF. VEPCO may terminate the Rosemary Power Purchase Agreement within one year
after the loss of QF certification if the Rosemary Partnership has not obtained
all  necessary  governmental or regulatory approvals  for  the  Rosemary  Power
Purchase  Agreement to remain in effect and for electricity to continue  to  be
sold to VEPCO.
     
     The Rosemary Power Purchase Agreement also contains a provision known as a
"regulatory disallowance" provision, which requires the Rosemary Partnership to
repay or reduce any capacity charges in excess of $5.62 per kilowatt per month,
as  adjusted  by  the  GNPIPD from 1987 dollars, that  are  disallowed  by  any
regulatory authority from recovery by VEPCO in its rate base (except where such
disallowance  is due to VEPCO's failure to properly seek such recovery).  VEPCO
cannot  initiate  such a disallowance, and must appeal such a disallowance,  if
practicable. If such a disallowance were to occur prior to December  27,  2006,
beginning on such date up to 75% of the capacity payments could be withheld  by
VEPCO  to  make  up for any disallowance, plus interest, until  the  sooner  of
December  27,  2007 or the date on which such disallowance, plus interest,  was
recouped by VEPCO. If such disallowance, plus interest, were not fully recouped
by  December 27, 2007, the Rosemary Partnership would be obligated to  pay  the
remaining balance, plus interest, by January 24, 2008. If any disallowance were
to  occur  for  capacity  payments after December  27,  2006,  future  capacity
payments  would be reduced to the amount of the capacity payment unaffected  by
the  disallowance. In addition, the Rosemary Partnership would be  required  to
repay the amount of previously received capacity payments which are affected by
the  disallowance, plus interest, by the later of one year from the date of the
disallowance  or December 27, 2007. The amount upon which a possible  reduction
in,  or  repayment  of, capacity charges by the Rosemary Partnership  would  be
calculated  if a disallowance occurred was $7.24 per kilowatt per month  as  of
December  1995. Assuming a GNPIPD of 3.0% per year throughout the initial  term
of  the Rosemary Power Purchase Agreement, this amount would increase to $10.02
per  kilowatt  per  month in 2006 and $13.07 per kilowatt per  month  upon  the
expiration  of the initial term. The monthly capacity payments due  from  VEPCO
under  the Rosemary Power Purchase Agreement are calculated based on Dependable
Capacity  at  the  following  rates: $12.488 per  kilowatt  per  month  through
December  1996; $11.654 per kilowatt per month through December  1998;  $10.821
per kilowatt per month through December 2005; and $8.321 per kilowatt per month
through  December  2015. Thus, assuming a GNPIPD of 3.0%  per  year  from  1996
through 2015, the risk that the Rosemary Partnership may be required to  reduce
or  repay capacity charges under the "regulatory disallowance" provision  would
exist  through 2005. See Appendix B, "The Electric Power Industry in the United
States and United States Regulation--Federal Energy Regulation--PURPA."
     
  Steam and Chilled Water Sales
  
     The  Rosemary Partnership has been selling steam and chilled water to Bibb
for use in its textile manufacturing facility, located adjacent to the Rosemary
Facility,  pursuant  to a Cogeneration Energy Supply Agreement  (the  "Rosemary
Steam  Agreement").  The  Rosemary Steam Agreement has  an  initial  term  that
expires  on  December 26, 2015. On February 18, 1997, Bibb  announced  that  it
would  sell  the  textile facility to WestPoint. The closing of  the  sale  was
reported  in  the news media on February 21, 1997, but the Rosemary Partnership
has  not  received  formal  notice of such sale from  Bibb  or  WestPoint.  The
Rosemary  Steam Agreement cannot be assigned without the Rosemary Partnership's
consent. The Rosemary Partnership has continued to sell steam and chilled water
to  the  purchaser in substantially the same amounts as it sold  prior  to  the
announcement  of  the  sale. The following discussion  of  the  Rosemary  Steam
Agreement  and  the Rosemary Site Lease assumes that the sale  of  the  textile
facility  has  closed  and  that WestPoint is the purchasing  party  under  the
Rosemary Steam Agreement and the lessor under the Rosemary Site Lease.
     
     Although WestPoint is not required to purchase a minimum quantity of steam
or  chilled water, WestPoint has an irrevocable obligation to purchase  all  of
its  steam  and  chilled water requirements from the Rosemary Facility  to  the
extent  that  the  Rosemary Facility is able to supply such  requirements.  The
Rosemary  Steam Agreement requires that the Rosemary Facility have the capacity
to  produce an annual average of 65,000 pounds of steam per hour at 150 psi and
2,000  tons  of  45F  chilled  water for up  to  8,000  hours  per  year.  This
requirement  is  not  currently  met because  the  Rosemary  Facility's  actual
capacity  to  produce  chilled water does not exceed 1,600  tons  per  year  of
chilled  water. However, when Bibb was the purchasing party under the  Rosemary
Steam Agreement, because Bibb's chilled water requirements never exceeded 1,500
tons  per year and, in most cases, were approximately 1,200 tons per year,  the
Rosemary  Facility  never failed to satisfy Bibb's chilled water  requirements.
Furthermore,  the Rosemary Steam Agreement allows the Rosemary  Partnership  to
utilize,  at  its own expense, back-up electric chillers located at WestPoint's
textile  mill to supply chilled water to meet WestPoint's demands. Finally,  if
WestPoint's  requirements  were  to  exceed  the  Rosemary  Facility's  current
capacity  to produce chilled water, the Rosemary Partnership could  expand  the
capacity of its absorption chillers to reach the required level by purchasing a
new  chiller at a cost currently estimated to be between $700,000 and $800,000.
For  these  reasons,  the  Issuer does not believe that  the  current  capacity
limitations  of  the  absorption chillers will adversely  affect  the  Rosemary
Partnership's rights under the Rosemary Steam Agreement.  See "Risk Factors  --
U.S.  Industry  Conditions;  Restructuring Initiatives;  Utility  Responses  --
Maintaining Qualifying Facility Status."
     
  Site Lease
  
     The 4.83 acre site on which the Rosemary Facility is located is leased  to
the  Rosemary  Partnership by WestPoint pursuant to a Real Property  Lease  and
Easement Agreement (the "Rosemary Site Lease") in exchange for a nominal yearly
rental payment. The initial term of the Rosemary Site Lease expires on December
31,  2015. The payment of the Rosemary Bonds is secured by, among other things,
a  lien  on  the  Rosemary  Partnership's leasehold interest  in  the  Rosemary
Facility site. See "Description of Other Indebtedness--The Rosemary Bonds."
     
  Gas Supply and Fuel Management
  
     The Rosemary Partnership purchases certain quantities of natural gas on  a
firm  basis  from Natural Gas Clearinghouse ("NGC") pursuant to a Gas  Purchase
Contract  (the  "Rosemary  Gas  Supply Agreement").  The  Rosemary  Gas  Supply
Agreement is effective through November 30, 2005, and thereafter from month-to-
month  until terminated by either NGC or the Rosemary Partnership. The Rosemary
Indenture   provides  that  with  certain  limited  exceptions   the   Rosemary
Partnership will not be permitted to make distributions to its partners if  the
Rosemary Gas Supply Agreement is not extended or replaced on or before the  end
of  its  term.  See  "Description of Other Indebtedness--The  Rosemary  Bonds--
Partnership  Distributions." NGC has agreed to deliver natural gas  on  a  firm
basis  to the Rosemary Partnership, at pipeline points near the Gulf of  Mexico
or  (at the Rosemary Partnership's request and using the Rosemary Partnership's
firm  transportation arrangements) to the Rosemary Pipeline (as defined below),
up  to the total contract quantity under the Firm Gas Transportation Agreements
(as  defined below), which is currently the thermal equivalent of 3,075 Mcf  of
natural  gas  per  day. The firm natural gas supplied under  the  Rosemary  Gas
Supply Agreement enables the Rosemary Partnership to have adequate natural  gas
supplies  available to meet its estimate of WestPoint's requirements for  steam
and chilled water.
     
     The  price  paid by the Rosemary Partnership for gas delivered by  NGC  is
generally  equal  to an indexed price (based upon monthly market-price  indices
determined  by reference to the receipt points where NGC delivers  gas  to  the
Rosemary Partnership) plus $0.04 per MMBtu. If gas is required in daily volumes
that are greater than those included in monthly estimates delivered to NGC, the
price for the excess volume required is equal to NGC's actual cost incurred  in
acquiring  such excess plus $0.04 per MMBtu. If the Rosemary Partnership  fails
to purchase the amount included in monthly estimates delivered to NGC, and such
failure is not excused by force majeure, the Rosemary Partnership must pay NGC,
as  liquidated  damages  for such failure, $0.14 for  each  MMBtu  of  gas  not
purchased below the monthly estimates delivered.
     
     The  Rosemary Partnership receives certain fuel supply management services
from  NGC  pursuant to a Fuel Supply Management Agreement, (the "Rosemary  Fuel
Management  Agreement"). The Rosemary Fuel Management  Agreement  is  effective
through  the  expiration date of the Rosemary Gas Supply  Agreement,  which  is
November 30, 2005, unless extended.
     
     NGC's  responsibilities  under  the  Rosemary  Fuel  Management  Agreement
include  advising the Rosemary Partnership with respect to the  negotiation  of
natural  gas  and fuel oil purchase and transportation arrangements,  arranging
for  the  delivery  to  the  Rosemary Facility of  natural  gas  or  fuel  oil,
endeavoring  to  make  such arrangements on a "best cost" basis,  managing  the
communications  among  the  Rosemary Facility and  the  Rosemary  Partnership's
pipeline  transporters and natural gas and fuel oil suppliers and advising  and
assisting  the Rosemary Partnership with respect to fuel oil inventory  hedging
arrangements.
     
     The  Rosemary Partnership pays NGC a management fee based on  fuel  supply
arranged by NGC. The management fee is composed as follows: (i) $0.04 per MMBtu
of  natural gas purchased and transported to the Rosemary Facility pursuant  to
arrangements made by NGC; (ii) $0.03 per MMBtu of natural gas reserves owned by
the  Rosemary Partnership and transported to the Rosemary Facility pursuant  to
arrangements  made by NGC; (iii) $0.01 per MMBtu of natural gas purchased  from
North Carolina Natural Gas Corporation ("NCNG") and transported to the Rosemary
Facility pursuant to arrangements made by NGC; (iv) $0.002 per gallon  of  fuel
oil  purchased and delivered to the Rosemary Facility pursuant to  arrangements
made  by  NGC; and (v) $0.005 per MMBtu of natural gas and $0.05 per barrel  of
No.  2 fuel oil as a transaction fee for fuel hedging transactions executed  by
NGC as approved by the Rosemary Partnership. The Rosemary Partnership must also
reimburse NGC for the cost of any letter of credit NGC must provide to purchase
gas pursuant to the Rosemary Fuel Management Agreement. If in a given month NGC
arranges  for natural gas supplies at a delivered price less than the benchmark
delivered price for such month, the Rosemary Partnership pays NGC an additional
amount equal to 60% of the difference in such prices.
     
  Gas Transportation
  
     The  Rosemary Indenture provides that with certain limited exceptions  the
Rosemary  Partnership  will  not be permitted  to  make  distributions  to  its
partners if the Firm Gas Transportation Agreements are not extended or replaced
on  or  before the end of their terms. See "Description of Other Indebtedness--
The Rosemary Bonds--Partnership Distributions."
     
     The   Rosemary  Partnership  has  entered  into  firm  gas  transportation
contracts  with each of Texas Gas Transmission Corporation ("Texas  Gas")  (the
"Texas  Gas FT Agreement"), CNG Transmission Corporation ("CNG") (the  "CNG  FT
Agreement")  and  Transcontinental Gas Pipe Line Corporation  ("Transco")  (the
"Transco  FT Agreement") that enable the Rosemary Partnership to have delivered
to  the Rosemary Facility, on a firm basis, the thermal equivalent of 3,075 Mcf
of  gas per day from gas production areas near the Gulf of Mexico. Each of  the
Texas  Gas  FT  Agreement, the CNG FT Agreement and the  Transco  FT  Agreement
continue through October 31, 2006. Most of the critical terms and conditions of
the  services  provided  to the Rosemary Partnership  by  Texas  Gas,  CNG  and
Transco,  including  the  rates,  are found in the  respective  pipeline's  gas
tariff, each of which are subject to review, approval and modification  by  the
FERC.
     
     The  Rosemary Partnership also has the right to receive interruptible  gas
transportation service from Columbia Gas Transmission Company and Columbia Gulf
Transmission Company under the Columbia Gas IT Agreement and the Columbia  Gulf
IT  Agreement, respectively. Under the Columbia Gas IT Agreement, the  Rosemary
Partnership   may   request  up  to  36,000  Dth  per  day   of   interruptible
transportation  service  from  an interconnection  between  the  facilities  of
Columbia  Gas  and  Columbia Gulf near Leach, Kentucky  to  an  interconnection
between Columbia Gas's facilities and the Rosemary Pipeline. Under the Columbia
Gulf  IT  Agreement, the Rosemary Partnership may request up to 39,000 Dth  per
day  of  interruptible  transportation service from various  available  receipt
points  on  Columbia Gulf's system to an interconnection between the facilities
of  Columbia Gas and Columbia Gulf near Leach, Kentucky. The terms of both  the
Columbia Gas IT Agreement and the Columbia Gulf IT Agreement are month-to-month
until terminated by either party to the respective agreements.
     
     The  rates  and  most of the significant terms and conditions  of  service
under the Firm Gas Transportation Agreements, the Columbia Gas IT Agreement and
the  Columbia  Gulf  IT  Agreement are set forth in the  respective  pipeline's
effective  FERC  gas tariff. These rates, terms and conditions are  subject  to
review, approval and modification by FERC.
     
  Rosemary Pipeline
  
     The  Rosemary  Partnership owns, and NCNG operates and maintains  for  the
Rosemary Partnership, a pipeline which runs for 10.26 miles through portions of
Halifax and Northampton counties, North Carolina (the "Rosemary Pipeline"). The
Rosemary Pipeline is located under, over and upon properties owned, in  certain
instances, by private landowners and, in others, by the State of North Carolina
or  the City of Roanoke Rapids, pursuant to easement agreements or encroachment
agreements.
     
     The  Rosemary Partnership has entered into a Pipeline Operating  Agreement
with  NCNG  (the  "Pipeline Operating Agreement"), pursuant to which  NCNG  has
agreed  to  operate  the  Rosemary Pipeline and  provide  certain  natural  gas
balancing services for the Rosemary Partnership's gas supplies. The term of the
Pipeline  Operating Agreement continues until December 27,  2005,  and  may  be
extended  for  two additional periods of five years each upon the agreement  of
the parties.
     
     Several  of the easements and encroachment agreements, pursuant  to  which
the  Rosemary Partnership is granted the right to locate the Rosemary Pipeline,
contain provisions allowing the underlying interest owner to cause the Rosemary
Pipeline  to  be removed from its current location. Most of such easements  and
encroachment  agreements require the underlying interest owner  to  provide  an
alternate location for the pipeline, and in some cases the underlying  interest
owner  must  share  the  cost  of relocating the pipeline.  However,  two  such
easements allow the underlying interest owner to cause the Rosemary Pipeline to
be  removed, but do not require such owner to provide an alternate location  or
share the cost of relocating the pipeline. The Issuer does not expect that  the
Rosemary  Pipeline will be required to be removed pursuant to  these  easements
or,  if  it were required to be removed, that relocating the Rosemary  Pipeline
from these two easement tracts would significantly interfere with the supply of
natural  gas to the Rosemary Facility for an extended period of time or,  given
the   ability  of  the  Rosemary  Facility  to  operate  utilizing  fuel   oil,
significantly limit the availability of the Rosemary Facility for  dispatch  by
VEPCO. See "Risk Factors--Project Risks--Fuel Supply Risks."
     
  Fuel Oil
  
     The  Rosemary Facility was constructed with the capability to  operate  on
No.  2 fuel oil and is designed to change fuel sources from natural gas to fuel
oil  and  back without interrupting the generation of electricity. The Rosemary
Facility currently has on-site storage for approximately 2.0 million gallons of
fuel oil, a supply sufficient to operate the Rosemary Facility at full load for
approximately 168 hours. The Rosemary Partnership purchases fuel oil on a spot-
market basis.
     
  Operations and Maintenance
  
     The Rosemary Partnership purchases operations and maintenance services for
the  Rosemary Facility from Panda Global Services pursuant to an operations and
maintenance  agreement (the "Panda Global Rosemary O&M Agreement") under  which
Panda  Global Services will provide operations and maintenance services to  the
Rosemary  Facility  through December 31, 2003. The Panda  Global  Rosemary  O&M
Agreement provides for payment to Panda Global Services of a fixed monthly  fee
of  $130,000 per month during 1997, with annual adjustments based on changes in
the  consumer  price  index for subsequent years. In  addition,  the  agreement
includes bonus and penalty provisions.
     
     Panda  Global  Services  commenced performing operations  and  maintenance
services for the Rosemary Facility on January 1, 1997. Such services previously
were  performed  by University Technical Services, all of whose operations  and
maintenance  personnel at the Rosemary Facility remain as  employees  of  Panda
Global Services.
     
  Operating History
  
     The  following  table  contains a summary of certain levels  of  operating
performance achieved by the Rosemary Facility since the beginning of 1991:
                                       1991   1992   1993   1994   1995   1996
     Summer Dependable Capacity (MW)    161    161    165    165    165    165
     Winter Dependable Capacity (MW)    192    198    198    198    198    198
     Hours Under VEPCO Dispatch       1,174    377    324    764  2,224    635
     Electric    Energy   Production  129.0   44.8   31.9   76.7  234.9   64.5
     (GWH)
     Steam Production (MM Lbs)        330.8  377.9  429.9  364.8  291.2  294.6
     Chilled Water Production           N/A    4.0    3.7    4.1    4.1    3.3
      (MM Ton-hours)
     Forced Outage Days*                 12      1     16     12     18     16
________________________________

* Data  for forced outage days for 1991 through 1996 is for the 12-month period
  starting  on December 1 of the prior year and ending on November  30  of  the
  year indicated.

     The Rosemary Facility was dispatched for 1,174 hours in 1991. Dispatch was
reduced  to  377 hours in 1992 and 324 hours in 1993 due to several  new  coal-
fired,  non-utility generation plants becoming available for dispatch by VEPCO.
The increases in dispatch hours to 764 in 1994 and 2,224 in 1995 were partially
due  to  the  effect  of  the second amendment to the Rosemary  Power  Purchase
Agreement  entered into in 1993, under which the formula used to calculate  the
energy  payment  was  amended  to more closely  match  the  fuel  and  variable
operation and maintenance costs incurred by the Rosemary Partnership.
     
     During  1995,  the Rosemary Facility was dispatched for 2,224  hours.  The
significant increase in dispatch hours from 1994 to 1995 was primarily  due  to
the  fact that, during much of the 1995 summer months, two of VEPCO's gas-fired
plants  suffered forced outages that are not likely to be repeated  and,  under
the  terms  of  the  Rosemary Power Purchase Agreement, VEPCO  was  allowed  to
redirect  to  the  Rosemary  Facility the gas that would  otherwise  have  been
transported to these unavailable plants. For approximately 1,200 of  the  2,224
hours, the Rosemary Facility used natural gas provided directly by VEPCO  under
this  fueling  arrangement. The Rosemary Partnership's  profit  margin  on  the
energy  payment from VEPCO is lower for this type of dispatch compared  to  its
energy  margins  under  normal dispatch conditions  under  which  the  Rosemary
Partnership provides the fuel.
     
     During  1996, the Rosemary Facility was dispatched a total of  635  hours.
This  number reflects a more normal level of operation than the unusually  high
1995  number.  The  number  of  dispatch  hours  for  1996  also  reflects  the
unavailability  of  the  Rosemary Facility for 15  forced  outage  days  during
September  1996 due to hurricane damage and cooler-than-normal weather  in  the
VEPCO service territory during the summer of 1996.
     
  Recent Hurricane Damage Sustained
  
     On  September  6,  1996, a transformer and two switches  at  the  Rosemary
Facility  sustained  damage  from a hurricane.  A  substitute  transformer  was
temporarily  installed  pending repair of the damaged  transformer,  which  was
substantially completed during the first quarter of 1997. The Company estimates
the   total   cost  to  repair  the  Rosemary  Facility  (including  substitute
transformer  rental  costs) at approximately $2.45  million  all  of  which  is
covered by insurance except for deductible and certain non-covered items, which
the  Company currently estimates to be in the aggregate amount of approximately
$650,000  to  $725,000. The Company believes that this event will  not  have  a
material adverse effect on the financial condition or operating results of  the
Rosemary  Partnership  or  its  ability to make distributions  to  the  Company
through the PIC Entities and PIC.
     
  Cash Flow Participation
  
     NNW,  Inc.,  formerly known as Nova Northwest, Inc., an Oregon corporation
("NNW"),  has a cash flow participation (the "NNW Cash Flow Participation")  in
the  Rosemary  Partnership  arising out of a Credit,  Term  Loan  and  Security
Agreement (the "NNW Credit Agreement") entered into by PEC, PR Corp. and PRC II
(collectively, the "Rosemary Borrowers") and NNW in August 1993 under which NNW
made  a  loan  to the Rosemary Borrowers which has since been repaid.  The  NNW
Credit  Agreement provides that NNW, in addition to repayment of  debt,  is  to
receive a cash flow participation equal to 4.33% of certain distributions  from
the Rosemary Partnership to the Rosemary Borrowers.
     
     At the time the NNW Credit Agreement was entered into the aggregate equity
interest  of PR Corp. and PRC II in the Rosemary Partnership was 10%. Following
the  redemption  of a 90% limited partner interest in the Rosemary  Partnership
with  a  portion  of the proceeds of the Rosemary Offering  and  the  Series  A
Offering,  PR  Corp.  and  PRC II, collectively, now own  100%  of  the  equity
interest in the Rosemary Partnership.
     
     The NNW Credit Agreement states that the parties intend that any financial
restructuring of the Rosemary Facility shall not materially affect the NNW Cash
Flow  Participation,  positively or negatively. The NNW Credit  Agreement  also
provides that, in the case of any such financial restructuring, the calculation
of  the amount of distributions to be paid to NNW shall continue to be based on
the  scheduled principal and interest amounts of the then-existing indebtedness
of  the  Rosemary Partnership under the Second Amended and Restated  Letter  of
Credit  and  Reimbursement  Agreement dated as of January  6,  1992  among  the
Rosemary  Partnership, The Fuji Bank, Limited, and certain  other  banks  party
thereto  (the  "Reimbursement Agreement"). Accordingly, it is the  position  of
Panda  International  and  the  Company that the NNW  Cash  Flow  Participation
remained  the same following the closing of the offering of the Rosemary  Bonds
(as  if  the Reimbursement Agreement had remained in place with the  letter  of
credit and bonds relating thereto and as if the redemption of Ford Credit's 90%
limited  partner  interest  and the issuance of the Rosemary  Bonds  had  never
occurred).  Based on the position of Panda International and the  Company,  the
NNW Cash Flow Participation is equal to 0.433% of distributions to the Rosemary
Borrowers   and  would  increase  to  1.732%  after  2008  based  on  projected
distributions.  NNW  has disputed the position of Panda International  and  the
Company with respect to the redemption of the 90% limited partner interest. NNW
claims  that  it is entitled to receive 4.33% of distributions to the  Rosemary
Borrowers following redemption of the limited partner interest. PEC has,  as  a
result,  filed a petition against NNW to have the amount of the NNW  Cash  Flow
Partnership determined. See "Legal Proceedings--NNW, Inc. Proceeding."  Because
the  debt structure existing prior to the closing date of the issuance  of  the
Rosemary Bonds would have resulted in cash flow distributions during the  early
years after such date that are lower than the cash flow distribution under  the
new debt structure, an NNW Cash Flow Participation at the percentage claimed by
NNW,  if NNW were to prevail in this dispute, would not have a material adverse
impact  on  the  Company or its financial condition. If NNW  prevails  in  this
dispute  and  the  NNW  Cash  Flow Participation is not  converted  into  Panda
International common stock or cash (as described below), the reduction in total
cash  flows  to  be  received by PIC through 2012 would be  approximately  $2.0
million on a net present value basis and the reduction in annual cash flows  to
be  received by PIC would be (i) approximately $231,000 during 1997, decreasing
to  approximately $191,000 in 2004; (ii) in the range of approximately $451,000
to  $465,000  per  year during the years 2005 to 2008; and (iii)  approximately
$447,000  in 2009, declining thereafter to approximately $369,000 in 2012.  See
Appendix C, Consolidated Pro Forma Report.
     
 Independent Engineers' and Consultants' Reports
  
     The Rosemary Engineering Report and the Rosemary Fuel Consultant's Report,
and  the  following  summaries  thereof,  contain  forward-looking  statements,
including projections, that involve risks and uncertainties. Actual results may
differ  materially from those discussed in the forward-looking statements.  See
"Disclosure  Regarding Forward-Looking Statements" and "Risk  Factors--Reliance
upon Projections  and  Underlying  Assumptions  Contained   in   Engineers' and
Consultants' Reports."
     
     Rosemary  Engineering  Report. Burns & McDonnell has  prepared  a  report,
dated  April  11,  1997  and updated June 6, 1997 (the  "Rosemary  Engineering
Report"),  concerning certain technical, environmental and economic aspects  of
the Rosemary Facility. Burns & McDonnell provides a variety of professional and
technical  services  in  the  fields  of engineering,  architecture,  planning,
economics and environmental sciences. Burns & McDonnell's project work includes
studies,  design,  planning,  construction  and  construction  management   for
electric  power generation and transmission facilities, as well  as  for  waste
management,  water  treatment, airport and other transportation  infrastructure
facilities.  Burns  &  McDonnell has been involved with the  Rosemary  Facility
since  1989.  The Rosemary Engineering Report includes, among other  things,  a
review  and  assessment  of  the Rosemary Facility's  equipment  and  operating
condition,  a  review  of  its operating history and projections  of  revenues,
expenses  and debt service coverage for the Project during the period that  the
Rosemary  Bonds  are  scheduled to be outstanding (i.e., through  February  15,
2016).
     
     Burns  &  McDonnell has relied upon projections of the Rosemary Facility's
dispatch  profile and fuel costs over the term of the Rosemary  Power  Purchase
Agreement  prepared  by ICF. Based on ICF's experience in  undertaking  similar
analyses, Burns & McDonnell believes that the use of ICF's dispatch profile and
fuel   cost  projections  is  reasonable  for  the  purposes  of  the  Rosemary
Engineering  Report.  Burns  & McDonnell also has  relied  upon  certain  other
information  provided  to it by sources it believes to  be  reliable.  Burns  &
McDonnell  believes  that the use of such information  is  reasonable  for  the
purposes of the Rosemary Engineering Report.
     
     In  preparing  the  Rosemary Engineering Report, Burns  &  McDonnell  made
various  assumptions regarding the validity and performance of  contracts,  the
operation  and  maintenance of the Rosemary Facility and, the effectiveness  of
permits.  These assumptions and the other assumptions contained in the Rosemary
Engineering Report are inherently subject to significant uncertainties and,  if
actual  conditions differ from those assumed, actual results will  differ  from
those  projected,  perhaps  materially. Subject to the  studies,  analyses  and
investigations of the Rosemary Facility they performed and the assumptions made
in  the  Rosemary Engineering Report, Burns & McDonnell offered  the  following
conclusions:
     
     -    The  technology  incorporated in the Rosemary Facility  is  a  sound,
          proven   method  of  generating  electric  and  thermal  energy   and
          incorporates  commercially proven technology.  The design,  operation
          and  maintenance of the Rosemary Facility implemented by the Rosemary
          Partnership  and Panda Global Services were developed and  have  been
          implemented  in  accordance  with  good  engineering  practices   and
          generally   accepted   industry  practices  and   have   taken   into
          consideration   existing  and  proposed  environmental   and   permit
          requirements applicable to the Rosemary Facility.  Burns &  McDonnell
          knows  of  no significant technical problems relating to the Rosemary
          Facility that should be of concern to potential investors.
     
     -    The  Rosemary  Facility is in good condition  and  has  a  competent,
          conscientious  operation and maintenance staff that has  developed  a
          long-term  facility maintenance program that is consistent  with  the
          manufacturers'   recommendations  and  generally-accepted   practices
          within the electric power generation industry. The recent change from
          U-TECH  to Panda Global Services as the operator should not have  any
          effect  on  the  future operations and maintenance  of  the  Rosemary
          Facility because all the staff transferred to Panda Global Services.
     
     -    The  Rosemary  Facility will have an expected operating service  life
          well  beyond  the  term of the Rosemary Power Purchase  Agreement  if
          properly operated and maintained, consistent with current practices.
     
     -    The  Rosemary Partnership has obtained and maintained in  full  force
          and  effect the key environmental permits and approvals required from
          the  various  federal, state and local agencies  that  are  currently
          necessary to operate the Rosemary Facility.
     
     -    The  basis  for the Rosemary Partnership's estimates of the  cost  of
          operating  and  maintaining the Rosemary Facility is reasonable.  The
          expense projections prepared by the Rosemary Partnership and based on
          projected  levels  of dispatch appear adequate  to  account  for  the
          variable  operation  and  maintenance  expenses.  The  1997  budgeted
          allowance for overhauls of $276 per fired hour is appropriate.
     
     -    The  Rosemary  Facility's heat rate will average 9,100 Btu/kWh  (HHV)
          over  the  remaining  initial  term of the  Rosemary  Power  Purchase
          Agreement.
     
     -    Table I-1 of the Rosemary Engineering Report summarizes the projected
          revenues  and  expenditures and debt coverage ratios of the  Rosemary
          Facility  based  upon the amortization schedule for  the  outstanding
          Rosemary  Bonds  submitted  to  Burns &  McDonnell  by  the  Rosemary
          Partnership. Projected revenues from the sale of thermal  energy  and
          electricity  and  other income are adequate to pay annual  operations
          and maintenance expenses (including provision for major maintenance),
          fuel costs, and other operating expenses and provide a minimum annual
          debt  service coverage on the Rosemary Bonds of 1.37:1 and an average
          debt service coverage over the outstanding term of the Rosemary Bonds
          of 1.58:1.
     
     Rosemary  Fuel  Consultant's Report. Benjamin Schlesinger and  Associates,
Inc.  ("Schlesinger")  has  prepared a report, dated  September  20,  1996,  as
updated  on  April 11, 1997 and June 6, 1997 (as updated, the  "Rosemary  Fuel
Consultant's  Report"),  concerning the sufficiency  of  the  fuel  supply  and
transportation  arrangements  entered into by  the  Rosemary  Partnership  with
respect  to  the  Rosemary Facility. Schlesinger is a Bethesda,  Maryland-based
management  consulting  firm  that specializes in  the  natural  gas  industry,
including economic and regulatory analysis, market research, energy supply  and
demand  forecasting, gas rate development and related economic,  technical  and
environmental  analyses. The Rosemary Fuel Consultant's Report includes,  among
other  things,  a  review  and  assessment of  the  fuel  supply  and  delivery
arrangements  for the Rosemary Facility with respect to both  natural  gas  and
fuel oil, focusing on the appropriateness of the existing fuel arrangements and
the   historical  reliability  of  fuel  supplies  to  the  Rosemary  Facility.
Schlesinger  has  used and relied upon certain information provided  to  it  by
sources  it believes to be reliable. Schlesinger believes that the use of  such
information  is  reasonable for the purposes of the Rosemary Fuel  Consultant's
Report.  Schlesinger  also  believes that  the  assumptions  contained  in  the
Rosemary   Fuel  Consultant's  Report  are  reasonable,  but  assumptions   are
inherently  subject  to  significant uncertainties and,  if  actual  conditions
differ from those assumed, actual results will differ from those projected.
     
     Subject  to  the  information contained and the assumptions  made  in  the
Rosemary   Fuel   Consultant's  Report,  Schlesinger   offers   the   following
conclusions:
     
     -    The  projections  developed  by Burns &  McDonnell  in  the  Rosemary
          Engineering  Report employ reasonably conservative  assumptions  with
          respect to the Rosemary Partnership's fixed gas transportation  costs
          and  the  relationship  of the Rosemary Partnership's  variable  fuel
          costs   to  the  energy  price  under  the  Rosemary  Power  Purchase
          Agreement,  and  the Rosemary Engineering Report contains  reasonable
          assumptions concerning the revenue that the Rosemary Partnership  may
          receive  by reselling transportation capacity that is excess  to  the
          Rosemary   Facility's  average  daily  capacity  utilization   and/or
          reselling gas using its excess transportation capacity.
     
     -    The  Rosemary Facility's overall fuel supply plan remains  reasonable
          and appropriate given the Rosemary Facility's record of operation and
          its  energy  payment  structure. The Rosemary Partnership's  contract
          with  Natural Gas Clearinghouse ("NGC") for fuel management  services
          lies  at  the heart of the Rosemary Facility's fuel supply plan.  NGC
          sells  and  delivers  gas  on a firm basis to  satisfy  the  Rosemary
          Facility's  baseload fuel requirements to produce steam  and  chilled
          water  for sale to Bibb. Additionally, NGC buys and delivers gas  and
          low  sulfur  distillate fuel oil ("DFO") on a best efforts  basis  to
          satisfy  the  Rosemary  Facility's variable daily  fuel  requirements
          related to VEPCO's electric dispatch requests. The fuel plan includes
          direct  access to two interstate pipeline systems, monthly  balancing
          and  backup  gas sales service from NCNG, and sufficient on-site  DFO
          storage  and permit authorization to burn DFO whenever gas deliveries
          to  the Rosemary Facility are insufficient to satisfy its total  fuel
          requirements on a daily basis. Provided VEPCO continues  to  dispatch
          the  Rosemary Facility principally as a summer peaker, the additional
          fixed  costs required to increase the Rosemary Facility's gas  supply
          or  delivery reliability are not warranted from an economic  or  fuel
          reliability perspective.
     
     -    The  Rosemary  Facility's  energy  revenues  under  its  power  sales
          agreement  reflect  the  Rosemary Facility's fuel  plan.  During  the
          months  of January and February, when the Rosemary Facility  is  most
          likely  to  be  forced to burn DFO due to spot gas curtailments,  the
          energy  payments are based on delivered DFO prices, while during  the
          rest of the year the energy payments are based on the delivered price
          of  Gulf Coast spot gas in the summer months and Appalachia spot  gas
          in  the  winter  months.  While the Rosemary Facility's  actual  fuel
          consumed  for dispatch operations has generally followed the seasonal
          fuel  availability structure assumed in the energy payment mechanism,
          the  energy  payments and actual fuel costs are not directly  linked,
          i.e., the Rosemary Facility's energy payment margins are at some risk
          for  a  mismatch  between energy payments and fuel costs  to  produce
          electricity.   Specifically,  given   that   delivered   DFO   prices
          historically  have  exceeded  delivered  gas  prices,  the   Rosemary
          Facility  benefits if it is able to burn gas in January and February,
          but could experience reduced margins on its energy payments if forced
          to  burn DFO in lieu of spot gas to satisfy dispatch requests in  any
          other  month. This risk, however, is largely mitigated by a  start-up
          fee payable by VEPCO each time the Rosemary Facility is dispatched in
          November,  December  and  March, the months other  than  January  and
          February  during  which the Rosemary Facility is most  likely  to  be
          forced burn DFO. Although Schlesinger believes the existing fuel plan
          to  be  reasonable and appropriate, Schlesinger recommends  that  the
          Rosemary  Partnership  continue to monitor on  an  annual  basis  the
          Rosemary  Facility's actual and projected dispatch and  gas  and  DFO
          pricing for the months of November, December and March to assess  the
          need for modifications in the existing fuel plan.
     
     -    Although  the  Rosemary Facility buys firm gas  supply  and  delivery
          services to satisfy only its baseload fuel requirements, the Rosemary
          Facility  has  always  had  enough fuel to satisfy  VEPCO's  dispatch
          requests.  Moreover, from the start of commercial operations  through
          the  end  of 1995, the Rosemary Facility has been able to secure  gas
          sufficient  to  satisfy in excess of 90% of its total  dispatch  fuel
          requirements,  a  record  attributable to relatively  low  levels  of
          winter  dispatch as well as the flexibility of its gas  arrangements.
          Schlesinger  concludes  that  the Rosemary  Facility's  existing  gas
          supply and delivery arrangements provide an appropriate degree of gas
          reliability   for   an  electric  peaking  facility.   In   addition,
          Schlesinger concludes that the Rosemary Facility's two million gallon
          on-site  DFO storage capacity, ready access to oil terminals in  four
          nearby  locations, and operational DFO resupply procedures  with  NGC
          that have proven to be effective to provide an appropriate degree  of
          backup  DFO  supply reliability, i.e., no additional  DFO  supply  or
          delivery contracts are necessary. However, the Rosemary Facility  may
          not  be  able  to sustain a 90% gas reliability level in  the  future
          under  a scenario of significantly higher levels of dispatch  in  the
          months  of  November, December and March and the Rosemary Partnership
          should  continue  to monitor projected dispatch for these  months  as
          described   above.   Schlesinger  reviewed  the   fuel   supply   and
          transportation pricing projections used by Burns & McDonnell  in  the
          Rosemary  Engineering Report. Schlesinger concluded from  its  review
          that  the Rosemary Engineering Report employs reasonably conservative
          assumptions  for  the  costs of the Rosemary Facility's  various  gas
          supply  and  transportation services, i.e.,  based  on  Schlesinger's
          assessment  of  the  fuel contracts and the cost of  gas  supply  and
          transportation services, Schlesinger believes that fuel delivered  to
          the  Rosemary  Facility  is likely to cost less  than  the  estimates
          contained in the Rosemary Engineering Report.
     
     -    The Rosemary Facility's fuel supply and transportation contracts have
          original  terms of approximately 15 years and thus will  need  to  be
          extended  or  replaced.  The  Rosemary Facility  should  have  little
          difficulty extending the existing fuel arrangements or, if necessary,
          replacing   the   current  fuel  contracts  with  alternate   service
          arrangements  that  offer  comparable  price,  credit   support   and
          reliability   provisions.  Schlesinger  notes   that   the   Rosemary
          Engineering Report projects fuel costs through the year 2015  on  the
          basis  of  the  existing fuel contracts and, based on  the  foregoing
          conclusion, Schlesinger believes such projection to be reasonable.
     
     The Brandywine Facility
     
     The  Brandywine Facility is a combined-cycle cogeneration facility located
in  Brandywine,  Maryland  (near  Washington,  D.C.),  with  a  total  electric
generating capacity of 230 MW. The Brandywine Facility uses natural gas as  its
primary fuel input and No. 2 fuel oil as an alternative fuel in the event  that
gas  supplies  or  transportation are curtailed. The  Brandywine  Facility  was
constructed by Raytheon Engineers and Constructors, Inc. ("Raytheon"). Raytheon
has  met  its  performance  guarantees  and  the  requirements  for  commercial
operations  and  substantial  completion under the  Brandywine  EPC  Agreement.
Pursuant  to  a  power purchase agreement entered into in 1991 and  amended  in
1994, the Brandywine Partnership sells the capacity of, and energy produced by,
the  Brandywine Facility to Potomac Electric Power Company ("PEPCO"), a utility
that  serves  the  District of Columbia and parts of Maryland.  The  Brandywine
Facility  commenced commercial operations under the Brandywine  Power  Purchase
Agreement  on October 31, 1996. A merger of PEPCO and Baltimore Gas &  Electric
Company  ("BG&E"),  a  utility that serves other parts of  Maryland,  has  been
publicly  announced and is anticipated to close sometime in 1997. The  term  of
the Brandywine Power Purchase Agreement will expire on October 30, 2021.
     
     The  Brandywine Facility is currently leased by the Brandywine Partnership
pursuant  to the Brandywine Facility Lease. The initial term of the  Brandywine
Facility Lease is 20 years. At the end of the initial lease term, so long as no
default  or  event of default shall have occurred and be continuing  under  the
Brandywine  Facility Lease, the Brandywine Partnership may renew the Brandywine
Facility  Lease  for  two  consecutive  five-year  terms.  Alternatively,   the
Brandywine  Partnership  may purchase the Brandywine  Facility  at  fair  sales
market  value at the end of the initial lease term or any renewal term. If  the
Brandywine Partnership does not renew the Brandywine Facility Lease or purchase
the  Brandywine  Facility,  it  must surrender  possession  of  the  Brandywine
Facility.  See  "Description of Other Indebtedness--The Brandywine  Financing--
Brandywine Facility Lease."
     
     The  Brandywine Facility is certified as a Qualifying Facility under PURPA
and  thus  is exempt from rate regulation as an electric utility under  federal
and  state  law,  provided  that,  upon and during  commercial  operations,  it
continues  to meet the applicable requirements of PURPA. See Appendix  B,  "The
Electric  Power  Industry in the United States and United  States  Regulation--
Federal Energy Regulation--PURPA."
     
  Operations and Maintenance
  
     The  Brandywine Partnership purchases operations and maintenance  services
from  Ogden  Brandywine Operations, Inc. ("Ogden Brandywine"), a subsidiary  of
Ogden  Corporation,  pursuant to an Operation and  Maintenance  Agreement  (the
"Brandywine  O&M  Agreement"). The Brandywine O&M Agreement is effective  until
October  31, 1999, and may be extended thereafter by agreement of the  parties.
In exchange for such services, Ogden Brandywine is paid a fixed fee of $117,750
per month, with bonus and penalty provisions based on maintenance of dependable
capacity levels and availability of the Brandywine Facility for dispatch.
     
  Sale of Capacity, Electricity and Steam
  
     The  Brandywine  Partnership sells electric capacity and energy  to  PEPCO
pursuant to a Power Purchase Agreement (as amended by a first amendment ("First
Amendment") thereto, the "Brandywine Power Purchase Agreement"). The Brandywine
Power  Purchase Agreement has an initial term that expires in October 2021,  25
years from the commercial operations date, and may be extended by agreement  of
the parties. The Maryland Public Service Commission has approved the Brandywine
Power  Purchase  Agreement  (including the First Amendment).  The  District  of
Columbia Public Service Commission has issued orders indicating its approval of
the Brandywine Power Purchase Agreement as in the public interest and the First
Amendment as a reasonable modification thereof. The District of Columbia Public
Service  Commission also has made certain findings of fact and  conclusions  of
law  that were conditions precedent to the effectiveness of the First Amendment
according to its terms.
     
     PEPCO  has the right to dispatch the Brandywine Facility on a daily  basis
within  certain  guidelines and design limits. The design limits  specify  load
levels,  start-up  and  shutdown  times and  minimum  run  times,  specifically
adhering to Prudent Utility Practices. The guidelines require PEPCO to dispatch
all  facilities  obligated to deliver electricity to PEPCO  based  on  economic
factors  and  without  regard to the ownership of  such  facilities.  PEPCO  is
required to dispatch 99 MW of the Brandywine Facility's dependable capacity for
no  fewer than 60 hours per week (Monday through Friday). The remaining portion
of  the  Brandywine  Facility can be dispatched by PEPCO under  the  guidelines
described above.
     
     The  Brandywine  Power Purchase Agreement provides  for  two  payments:  a
capacity payment and an energy payment. The capacity payment is a fixed  charge
to be paid regardless of whether the Brandywine Facility is dispatched, subject
to  reduction  in  certain  circumstances  described  below.  Monthly  capacity
payments  throughout  the term of the Brandywine Power Purchase  Agreement  are
based  on the Brandywine Facility's dependable capacity, the capacity rate  and
other  factors.  Under the Brandywine Power Purchase Agreement, the  Brandywine
Facility  is  required to establish a dependable capacity of 230 MW  in  summer
ambient conditions (defined as 92 degrees F and 50% humidity). The dependable
capacity will be determined by semi-annual tests and PEPCO has the right to
require the Brandywine  Partnership  to revalidate the dependable  capacity.
The capacity rate, stated in $/kW/month, is a fixed schedule of payments for
each of the  25 years  of the initial term of the Brandywine Power Purchase 
Agreement,  ranging from  $13.74  in  1997 to $23.63 in 2014. The capacity 
payment  is  subject to specified  downward adjustments in contract years one,
two  and  four,  and  to specified  upward adjustments in the fifth and 11th
through the  25th  contract years.  Capacity  payments  will be reduced if the
Brandywine  Facility  cannot maintain  88% equivalent availability, and will be
increased if it exceeds 92% equivalent availability. Capacity payments may also
be decreased commencing in 2006  depending  on whether PEPCO's system peak load
exceeds  5,697  MW  during 1997, 1998 or 1999 or later. Calculation of capacity
payments pursuant to these provisions  of  the Brandywine Power Purchase
Agreement is  the  subject  of a dispute between the Brandywine Partnership and
PEPCO, as discussed below.
     
     The  energy payment is determined in accordance with a series of  formulas
that reflect specified heat rates, hours of synchronization and operation and a
combination  of  fixed and market prices for natural gas. The Brandywine  Power
Purchase  Agreement  provides  that  the energy  price  will  be  increased  to
compensate the Brandywine Partnership for its variable costs of fuel oil if the
gas  supply  is  interrupted.  In  such event, the  Brandywine  Power  Purchase
Agreement  specifies a base cost of oil, which is escalated at the annual  rate
of change according to an oil index described therein.
     
     The  Brandywine  Partnership has constructed a  seven-mile  long  electric
transmission  line  to  connect the Brandywine Facility  and  the  transmission
facilities  of PEPCO. Consolidated Rail Corporation entered into  an  agreement
with  the Brandywine Partnership to provide transmission line easements  for  a
portion  of  the  transmission  line.  The Brandywine  Partnership  transferred
ownership of the transmission line to PEPCO on October 30, 1996.
     
     The  Brandywine  Partnership sells steam to the Brandywine  Water  Company
pursuant to a Steam Sales Agreement dated March 30, 1995 (the "Brandywine Steam
Agreement"). Brandywine Water Company is an indirect wholly-owned subsidiary of
the  Company.  The production and sale of thermal energy allows the  Brandywine
Facility  to achieve QF status. The Brandywine Steam Agreement continues  until
October 31, 2021 and may be extended by agreement of the parties for additional
terms  of five years. Brandywine Water Company fully and unconditionally agrees
to  purchase all of the thermal energy produced by the Brandywine Facility  and
has  entered  into a contract with the United States Navy to sell it  distilled
water  for heating and other industrial uses in a naval facility. The  contract
is  for  a  one-year  term that commenced on October  1,  1996.  Prior  to  the
expiration of the term of the Navy contract, Brandywine Water Company will have
to  extend  the  contract or find one or more other customers to  purchase  the
distilled  water. If Brandywine Water Company is unable to extend its  contract
to  sell  distilled  water to the United States Navy or to  find  one  or  more
replacement  contracts for the sale of such water, there is no  assurance  that
the Brandywine Facility will be able to remain a Qualifying Facility. PEPCO may
terminate  the  Brandywine Power Purchase Agreement, and it may  be  a  default
under  the Brandywine Financing Documents, under certain circumstances  if  the
Brandywine  Facility  ceases  to  be a QF, unless  the  Brandywine  Partnership
receives  all  governmental  and  regulatory approvals  necessary  to  continue
operating the Brandywine Facility without QF certification. See "Risk Factors--
Maintaining Qualifying Facility Status."
     
  Disagreement With PEPCO Over Calculation of Capacity Payment
  
     In  late  August  1996,  the Brandywine Partnership  and  PEPCO  commenced
discussions  concerning  commercial operation requirements  of  the  Brandywine
Facility and conversion of the construction loan to long-term financing. During
these  discussions, two disagreements arose between the Brandywine  Partnership
and PEPCO as to how capacity payments should be calculated under the Brandywine
Power  Purchase Agreement. PEPCO and the Brandywine Partnership  are  presently
attempting to resolve these disagreements but there are no assurances that such
efforts will be successful.
     
     The  Brandywine Partnership and PEPCO disagree as to the date on which the
yield  to maturity on United States Treasury Bonds with a maturity of 12  years
("12-year  T-Bonds") should be determined under a provision in  the  Brandywine
Power Purchase Agreement that requires capacity payments to be reduced if  such
interest rate is less than 8%. Such provision states that the interest rate  of
12-year T-Bonds is to be determined, and adjustments to capacity payments made,
as  of  the  date  that  the  interest rate for  permanent  financing  for  the
Brandywine Facility is designated pursuant to an executed commitment  for  such
financing.  On  October  6,  1994, the Brandywine Partnership  entered  into  a
written commitment with GE Capital with respect to permanent financing for  the
Brandywine  Facility,  which commitment designated an interest  rate  for  such
financing.  Accordingly,  the Brandywine Partnership takes  the  position  that
October 6, 1994 should be the date used to determine the interest rate  of  12-
year  T-Bonds under the Brandywine Power Purchase Agreement. The interest  rate
for 12-year T-Bonds on such date was 7.94% per annum. PEPCO, on the other hand,
takes  the  position that since the interest rate designated in such commitment
was  a floating rate, the date to be used for determining the interest rate  of
12-year  T-Bonds  is  the  closing date of the  conversion  of  the  Brandywine
Construction  Loan Facility to long-term financing in the form of  a  leveraged
lease,  which occurred on December 30, 1996. The interest rate for  12-year  T-
Bonds on such date was 6.36%.
     
     To  the  extent  that PEPCO's position with respect to the PEPCO  interest
rate  disagreement  does not prevail, PEPCO claims that it  is  entitled  to  a
reduction in capacity payments under another provision of the Brandywine  Power
Purchase Agreement that requires PEPCO to share equally in any "refinancing  or
new  or  revised lease arrangements" savings. The Brandywine Partnership  takes
the position that all transactions to be entered into at or near closing of the
Brandywine   Financing  Conversion  were  provided  for  under  the  Brandywine
Financing Documents and do not constitute a refinancing or new or revised lease
arrangements. In the event that the capacity payments were reduced pursuant  to
this  provision, the reduction would be significantly less than  the  reduction
claimed by PEPCO in connection with the PEPCO interest rate disagreement.
     
     PEPCO and the Brandywine Partnership also disagree as to the determination
of  PEPCO's  system  peak  load which is the basis for reductions  in  capacity
payments  under the Brandywine Power Purchase Agreement. Under such  provision,
capacity payments are to be reduced, commencing in 2006, if PEPCO's system peak
load  does  not  exceed 5,697 MW prior to 1998, and are reduced  by  a  greater
amount  if PEPCO's system peak load does not exceed such amount prior to  1999.
PEPCO  and BG&E have announced their intention to merge during 1997 into a  new
entity  to be known as Constellation Energy Corporation ("Constellation"),  and
PEPCO  has  asked the Brandywine Partnership to agree that peak load under  the
Brandywine Power Purchase Agreement would be calculated on the basis of the pre-
merger  PEPCO  system and not the post-merger Constellation system.  Peak  load
based  on  the Constellation system would greatly exceed 5,679 MW during  1997.
However, PEPCO's position is that the parties intended to use the current PEPCO
system  in  calculating  peak  load and that the merger  with  BG&E  should  be
disregarded  for such purpose. The Brandywine Partnership disagrees  with  such
position.  The  Brandywine  Power  Purchase  Agreement  does  not  contain  any
provision  requiring adjustments due to mergers or reorganizations. It  is  the
Brandywine  Partnership's  position that Constellation,  as  the  successor  of
PEPCO,  would  be  substituted for PEPCO under the  Brandywine  Power  Purchase
Agreement and the Constellation system should be used to calculate peak load.
     
     The Brandywine Pro Forma and the Consolidated Pro Forma are prepared under
the  assumption  that PEPCO's system peak load (based on the  pre-merger  PEPCO
system)  exceeds 5,697 MW during 1999 or thereafter, and accordingly, there  is
the  maximum reduction in capacity payments under this provision. ICF  believes
that  such assumption represents the most conservative presentation and is  not
dependent  upon  the  outcome  of the current disagreement  between  Brandywine
Partnership  and  PEPCO  regarding the basis for the determination  of  PEPCO's
system  peak load. The Brandywine Pro Forma and the Consolidated Pro Forma  are
also  prepared  under  the assumption that the interest rate  to  be  used  for
purposes of the capacity payment adjustment is 6.36%, which represents  PEPCO's
position.  ICF  believes that this assumption represents the most  conservative
presentation   of   the   disagreement.  See  "Prospectus  Summary--Independent
Engineers'  and  Consultants' Reports--Consolidating  Financial  Analyst's  Pro
Forma   Report"  and  "--Independent  Engineers'  and  Consultants'   Reports--
Brandywine Pro Forma Report" below.
     
     Gas Supply and Fuel Management
     
     The  Brandywine Partnership purchases both firm and interruptible  natural
gas  supply from CDC pursuant to the Gas Sales Agreement, dated March 30, 1995,
between  the  Brandywine Partnership and CDC (the "Brandywine Gas  Agreement").
MCN  Corporation  ("MCN"),  the  parent  corporation  of  CDC,  has  fully  and
unconditionally guaranteed the payment and performance obligations of CDC under
the  Brandywine  Gas Agreement. The Brandywine Gas Agreement commenced  October
31,  1996 and continues until October 31, 2011, and thereafter is automatically
renewed for an additional two-year term unless terminated by either party  upon
nine months' written notice.
     
     CDC  is  obligated to sell and deliver to the Brandywine  Partnership,  at
receipt points along the pipeline system of Columbia Gas, up to 24,240 MMBtu of
gas  per  day  on  a firm basis and up to 24,240 MMBtu of gas  per  day  on  an
interruptible  basis. Gas delivered by CDC within the firm  basis  limit  falls
within  one  of  the  three  following  categories:  "Limited  Dispatch   Gas,"
"Scheduled  Dispatch  Gas"  or  "Dispatchable Gas"  (each  as  defined  in  the
Brandywine Gas Agreement).
     
     The  price for the gas delivered by CDC is dependent upon the category  of
the  gas  delivered. The price for Limited Dispatch Gas consists of  a  monthly
demand  charge, a commodity charge and a charge relating to costs  incurred  by
CDC  for  firm  transportation  CDC receives from  ANR  Pipeline  Company.  The
commodity charge escalates annually while the demand charge and the ANR-related
charge increase after the fifth year of the initial term of the Brandywine  Gas
Agreement. The price for Scheduled Dispatch Gas consists of a commodity  charge
based  on the monthly New York Mercantile Exchange settlement price for natural
gas  futures  contracts plus a margin which increases after year  five  of  the
Brandywine Gas Agreement. The price for Scheduled Dispatch Gas is capped  based
on three monthly natural gas price indices. The price for Dispatchable Gas is a
negotiated  price or, if a negotiated price cannot be reached, is  based  on  a
daily natural gas price index. In addition, the Brandywine Partnership receives
a  price credit from CDC for each MMBtu of gas delivered by CDC during a  month
not to exceed the demand charge for Limited Dispatch Gas.
     
     The  Brandywine  Partnership must annually take or pay for  no  less  than
2,299,500  MMBtu  (or 2,305,800 MMBtu during a leap year) of  Limited  Dispatch
Gas, which amount is reduced by 7,000 MMBtu for each day of regularly scheduled
outage at the Brandywine Facility. In addition, the Brandywine Partnership must
take or pay for a quantity of Scheduled Dispatch Gas each month that is no less
than  80% of the Scheduled Dispatch Gas that was scheduled for delivery  during
such  month.  If  the Brandywine Partnership pays for but  fails  to  take  the
minimum  quantities  of  Limited Dispatch Gas or Scheduled  Dispatch  Gas,  the
Brandywine  Partnership has the opportunity later to receive the quantities  of
gas paid for but not taken.
     
     The  Brandywine Partnership also purchases fuel management  services  from
CDC  pursuant  to  the  Fuel Supply Management Agreement between  CDC  and  the
Brandywine Partnership (the "Brandywine Fuel Management Agreement"). CDC's fuel
management  responsibilities  under the Brandywine  Fuel  Management  Agreement
include advising the Brandywine Partnership with respect to the negotiation  of
natural gas and fuel oil supply and transportation arrangements, arranging  for
the delivery to the Brandywine Facility of natural gas or fuel oil, endeavoring
to  make such arrangements on "best efforts" and "best competitive offer" basis
and   advising  the  Brandywine  Partnership  with  respect  to  fuel   hedging
arrangements. MCN Investment Corp. (an affiliate of MCN and CDC) has guaranteed
CDC's  payment and performance obligations under the Brandywine Fuel Management
Agreement.
     
  Gas Transportation
  
     The  Brandywine Partnership and Columbia Gas have entered into a Precedent
Agreement (the "Columbia Precedent Agreement"), pursuant to which Columbia  Gas
has  constructed  new  pipeline facilities to expand  its  existing  interstate
pipeline  and  provide the Brandywine Partnership with firm gas  transportation
service.  As  of  December  31,  1996, the Brandywine  Partnership  contributed
$6,772,590,  plus applicable tax gross-up, toward the construction of  Columbia
Gas' pipeline facilities.
     
     The  Brandywine Partnership purchases firm gas transportation service from
Columbia  Gas  pursuant to an Amended and Restated FTS Service  Agreement  (the
"Columbia  Gas  FT  Agreement"). Service under the Columbia  Gas  FT  Agreement
commenced on November 1, 1996 and continues until October 31, 2021, and year-to-
year thereafter unless terminated by either party upon six months' notice.
     
     The   Brandywine  Partnership  purchases  from  Cove  Point  LNG   Limited
Partnership  ("Cove Point") firm gas transportation service  to  transport  gas
delivered  by Columbia Gas to the facilities of Cove Point pursuant  to  a  FTS
Service  Agreement (the "Cove Point FT Agreement"). The Cove Point FT Agreement
continues  until  October  31, 2021. Cove Point is  obligated  to  provide  the
Brandywine Partnership with up to 24,000 Dth per day of firm gas transportation
service  from  an  interconnection between the facilities  of  Cove  Point  and
Columbia  Gas in Loudoun, Virginia to an interconnection between the facilities
of  Cove  Point  and  Washington Gas Light Company ("WGL") in  Charles  County,
Maryland. Cove Point provides the firm transportation service pursuant  to  the
Cove  Point  FT  Agreement, the Rate Schedule FTS and  the  general  terms  and
conditions  of  its  effective  FERC  gas  tariff.  In  addition  to  the  firm
transportation  agreements,  the  Brandywine  Partnership  has   entered   into
interruptible transportation agreements with Columbia Gas and Cove Point  under
which the Brandywine Partnership will receive 24,240 Dth per day and 30,000 Dth
per  day,  respectively, of interruptible transportation service on a month-to-
month basis.
     
     The  Brandywine  Partnership purchases from WGL  gas  transportation,  gas
sales  and  gas balancing service pursuant to a Gas Transportation  and  Supply
Agreement (the "WGL Agreement"). The WGL Agreement continues until October  31,
2021,  and  thereafter will continue year-to-year unless terminated  by  either
party  upon  six  months'  written notice. WGL  is  obligated  to  provide  the
Brandywine Partnership with firm transportation service, up to the quantity  of
gas  nominated for such service on a given day, from an interconnection between
the  facilities  of  Cove  Point and WGL in Charles  County,  Maryland  to  the
interconnection  between  the  WGL  facilities  and  the  Brandywine  Facility,
provided that WGL only must use its best efforts to deliver transportation  gas
to the Brandywine Facility when the pressure on the Cove Point pipeline is less
than  500  psig.  During the months of January, February and  December  of  any
calendar  year,  WGL  may,  under  certain  circumstances,  request  that   the
Brandywine  Partnership release to WGL for its system use  a  quantity  of  gas
purchased by the Brandywine Partnership under the Brandywine Gas Agreement  and
transported to the WGL system. Additionally, WGL sells and delivers gas to  the
Brandywine Facility on an as-available basis from November through March and on
a best efforts basis from April through October, at a price to be agreed by the
parties.
     
  Fuel Oil
  
     The Brandywine Facility was constructed with the capability to operate  on
No.  2 fuel oil and has the ability to change fuel sources from natural gas  to
fuel  oil  and  back  without interrupting the generation of  electricity.  The
Brandywine  Facility has on-site storage for approximately two million  gallons
of  fuel  oil, a supply sufficient to operate the Brandywine Facility  at  full
load for approximately six days.
     
  Construction Contract
  
     Pursuant to the Brandywine EPC Agreement, Raytheon agreed to construct the
Brandywine  Facility  (including the distilled water plant)  for  approximately
$122.0 million (including change orders). Because Raytheon provided a letter of
credit, initially equal to 10% of the contract price, no retainage is withheld.
The  amount  of  this  letter of credit was reduced as of the  commencement  of
commercial  operations  to 5% of the aggregate amount paid  by  the  Brandywine
Partnership to Raytheon through that date, and thereafter the letter of  credit
must  be maintained at a level which is twice the cost of completing punch list
items  remaining  at  final  acceptance of the  Brandywine  Facility.  Raytheon
Company,  a  Delaware corporation and the parent corporation of  Raytheon,  has
provided  a  guaranty covering all obligations of Raytheon under the Brandywine
EPC Agreement.
     
     A dispute exists between the Brandywine Partnership and Raytheon as to the
specific date on which commercial operations for purposes of the Brandywine EPC
Agreement  occurred  and  the amount of the early  completion  bonus  to  which
Raytheon  is  entitled.  In addition, the Brandywine Partnership  and  Raytheon
disagree  as to the number of force majeure days to which Raytheon is  entitled
as  a  result of a January 1996 snowstorm during which construction work  could
not  be  carried  on,  and as to the validity and number of owner-caused  delay
days.  Even  in  the  event that an agreement on the number  of  such  days  is
reached,  the Brandywine Partnership and Raytheon further disagree  as  to  the
affect, if any, such delays would have on the amount of the bonus payable under
the Brandywine EPC Agreement for early completion of the facility.
     
     Taking  into  account  all  of the foregoing  issues  with  Raytheon,  the
Brandywine  Partnership believes that the total amount in dispute  between  the
Brandywine  Partnership and Raytheon is less than $1.0 million. The  bonus  for
early  achievement  of  the  commercial operations  date  discussed  above,  if
ultimately  determined to be owed, would be payable over time and  funded  from
cash  flows  from the operation of the Brandywine Facility which may  otherwise
have been available for distributions.
     
  Independent Engineers' and Consultants' Reports
  
     The Brandywine Pro Forma Report, the Brandywine Engineering Report and the
Brandywine  Fuel  Consultant's  Report, and the  following  summaries  thereof,
contain  forward-looking statements, including projections, that involve  risks
and uncertainties. Actual results may differ materially from those discussed in
the  forward-looking statements. See "Risk Factors--Reliance  upon  Projections
and Underlying Assumptions Contained in Engineers' and Consultants' Reports."
     
     Brandywine  Pro Forma Report. ICF has prepared a report, dated  April  11,
1997 and updated June 6, 1997 (the "Brandywine Pro Forma Report"), presenting
its  independent pro forma operating projections (the "Brandywine  Pro  Forma")
for  the  Brandywine Facility. In developing its projections, ICF reviewed  the
Brandywine  Facility's fuel supply and transportation contracts, the Brandywine
Facility  Lease  and the Brandywine Power Purchase Agreement, as  well  as  the
Brandywine  Engineering  Report and the Brandywine  Fuel  Consultant's  Report.
Based  on  the  experience  of  Pacific Energy  Systems,  Inc.  and  C.C.  Pace
Resources,  Inc.  ("C.C. Pace") in undertaking similar analyses,  ICF  believes
that  the  use  of  the Brandywine Engineering Report and the  Brandywine  Fuel
Consultant's Report is reasonable for the purposes of the Brandywine Pro Forma.
In  preparing  the Brandywine Pro Forma, ICF used and relied on  certain  other
information  provided to it by sources it believes to be reliable, including  a
report  by  ICF providing its dispatch projections for the Brandywine Facility.
ICF believes that the use of such information is reasonable for the purposes of
the  Brandywine  Pro  Forma.  In preparing the Brandywine  Pro  Forma  and  the
conclusions  contained  therein,  ICF made  assumptions  with  respect  to  the
validity  and  performance of contracts, the operation and maintenance  of  the
Brandywine  Facility, the effectiveness of permits and the  maintenance  of  QF
status. Although ICF believes that the use of these assumptions and the  others
contained  in the Brandywine Pro Forma Report in developing the Brandywine  Pro
Forma   is  reasonable,  assumptions  are  inherently  subject  to  significant
uncertainties  and,  if  actual conditions differ from  those  assumed,  actual
results will differ from those projected.
     
     Subject  to  the  studies, analyses and investigations of  the  Brandywine
Facility  performed  by  ICF, and the assumptions made in  the  Brandywine  Pro
Forma, ICF offers the following conclusions:
     
     -    The  financial  projections in the Brandywine  Pro  Forma  provide  a
          reasonable  reflection of the Brandywine Facility's  expected  costs,
          revenues and cash flows.
     
     -    The  energy  and  capacity  revenue  calculations  contained  in  the
          Brandywine  Pro  Forma  are  appropriate  and  consistent  with   the
          Brandywine  Power  Purchase  Agreement.  Expectations  for   capacity
          payment adjustments under the Brandywine Power Purchase Agreement  in
          regard  to  the interest rate adjustment and the peak adjustment  are
          presented at the most conservative positions.
     
     -    Over  the 20-year initial term of the Brandywine Facility Lease,  the
          Brandywine  Facility's cash flow available for  lease  payments  will
          average  approximately $46.5 million per year, reflecting a range  of
          $18.1 million in 1998 to $58.9 million in 2020.
     
     -    The  estimated lease obligation coverage ratios (i.e., the  ratio  of
          earnings  before  income taxes to lease payments)  are  presented  in
          Table  ES-1  to the Brandywine Pro Forma Report. During  the  20-year
          term  of  the  Brandywine Facility Lease, the  Brandywine  Facility's
          lease coverage will range from 1.35:1 in 2012 to 1.75:1 in 2004, with
          an average coverage ratio of 1.59:1.
     
     Brandywine  Engineering Report. Pacific Energy Services, Inc. ("PES")  has
prepared  a  report, dated July 22, 1996, and updated April 11, 1997  and  June
6,  1997  (as  updated, the "Brandywine Engineering Report"), evaluating  the
design, construction and expected operation of the Brandywine Facility. PES has
provided  engineering services to approximately fifty power plants  within  the
last   seven  years.  Such  services  include  technical  review,  construction
monitoring, performance testing and certification and O&M audits. Approximately
one-half  of these plants utilize combined-cycle combustion turbine  technology
with  cogeneration, as does the Brandywine Facility. PES has been involved with
the  Brandywine  Facility  since it performed a due  diligence  review  for  GE
Capital   in   connection  with  the  closing  of  the  Brandywine   Facility's
construction  loan  in  April  1995  and  has  monitored  construction  of  the
Brandywine Facility since that date.
     
     PES's review and assessment is based, among other things, on due diligence
work  previously completed, construction monitoring of the Brandywine  Facility
and  a  review of significant project agreements. In providing its  conclusions
set  forth  in the Brandywine Engineering Report, PES made certain assumptions.
The  assumptions  are inherently subject to significant uncertainties  and,  if
actual  conditions differ from those assumed, actual results will  differ  from
those projected, perhaps materially.
     
     PES has independently reviewed the project engineering, cost, construction
schedule,  permits, contracts, O&M and performance estimates for  completeness,
risk,  variation from practices typical in the industry and the ability of  the
Brandywine   Facility  to  perform  as  intended.  PES  offers  the   following
conclusions:
     
     -    The Brandywine Facility is substantially complete, capable of meeting
          all  commercial  operating requirements under  the  Brandywine  Power
          Purchase  Agreement  and  the Brandywine  Steam  Agreement,  and  has
          received  or is expected to receive all necessary operating  permits.
          There is no reason to believe that any necessary operation permit not
          yet received will not be obtained.
     
     -    The  Brandywine  Facility meets or exceeds all guarantees  or  design
          conditions  based  on  the  information supplied  during  testing  by
          Raytheon, GE Power Systems, and others. Provided future operation and
          maintenance  are performed according to standard industry  practices,
          PES  can  find  no  technical constraints to prevent  the  Brandywine
          Facility  from being able to perform at a level consistent with  that
          anticipated in the Brandywine Pro Forma.
     
     Brandywine  Fuel  Consultant's Report. C.C. Pace has  prepared  a  report,
dated  July 2, 1996, and updated April 11, 1997 and June 6, 1997 (as updated,
the  "Brandywine Fuel Consultant's Report"), reviewing the sufficiency  of  the
fuel  supply and transportation arrangements for the Brandywine Facility.  C.C.
Pace  is an energy consulting firm based in Fairfax, Virginia, that specializes
in  analyzing fuel supply and transportation arrangements for independent power
projects.   The  Brandywine  Fuel  Consultant's  Report  reviews  whether   the
Brandywine   Partnership   has  contracted  for  adequate   fuel   supply   and
transportation  services  to meet its obligations under  the  Brandywine  Power
Purchase  Agreement and the relationship between the energy payments under  the
Brandywine Power Purchase Agreement and the fuel and transportation  costs  the
Brandywine Partnership is likely to incur.
     
     The  Brandywine Fuel Consultant's Report is based upon certain assumptions
regarding  the  availability and future pricing of fuel.  The  assumptions  are
inherently  subject  to  significant uncertainties and,  if  actual  conditions
differ from those assumed, actual results will differ from those projected.
     
     Subject  to  the  information contained and the assumptions  made  in  the
Brandywine   Fuel   Consultant's  Report,  C.C.  Pace  offers   the   following
conclusions:
     
     -    All  pipeline  construction has been completed and all  of  the  firm
          natural  gas  transportation contracts of the Brandywine  Partnership
          are in effect.
     
     -    The  Brandywine  Facility's Fuel Management Plan  is  sufficient,  if
          followed,  to assure that the Brandywine Facility will operate  in  a
          manner  to  meet  PEPCO  electric dispatch orders  while  maintaining
          compliance with all fuel supply contract and tariff obligations.
     
     -    PEPCO has approved the Brandywine Facility's Fuel Management Plan.
     
     -    The   Brandywine  Partnership  has  developed  sufficient  fuel   oil
          procurement  procedures  which are included in  the  Fuel  Management
          Plan.
     
     -    The  Brandywine Partnership should be able to meet all oil  needs  at
          the Brandywine Facility for the 1996-1997 winter heating season.
     
     -    CDC,  an experienced gas supplier with reserves sufficient to support
          the  fixed-price portion of the Brandywine Gas Agreement, is required
          annually  under  the  Brandywine Gas Agreement  to  ensure  that  its
          reserves  continue  to be adequate to meet that obligation,  and  has
          ongoing gas marketing operations more than sufficient to support  the
          remaining  contractual  obligations with the Brandywine  Partnership.
          MCN  also  has substantial assets backing its corporate  warranty  of
          CDC's gas supply obligations.
     
     -    The market-based pricing provided under the Brandywine Power Purchase
          Agreement  corresponds  to  the pricing at  which  gas  supplies  are
          generally  available,  and is similar to the  pricing  at  which  gas
          supplies are available from CDC.
     
     -    Gas  transportation arrangements are in place for firm transportation
          for  100% of the fuel supply requirements for Unit 1 for the term  of
          the Brandywine Power Purchase Agreement, subject to the obligation of
          the Brandywine Partnership under limited circumstances to release  to
          WGL  all of its firm gas supply.  The regulatory approvals for  these
          arrangements have been received.
     
     -    There   is  a  strong  linkage  between  changes  in  the  Brandywine
          Facility's expected variable fuel-related costs and revenues. Several
          potential  delinkages are mitigated by significant  initial  positive
          margins in energy payment components.
     
     -    The  gas  supply  and  transportation  operational  requirements  are
          flexible    enough   to   satisfy   electric   dispatch   operational
          requirements,  provided sound fuel management is employed.   CDC  and
          its  affiliates  have  fuel  management experience,  and  CDC's  fuel
          management  performance is backed by a corporate  warranty  from  MCN
          Investment Corp.
     
     -    The   backup  fuel  plan  provides  the  Brandywine  Partnership  the
          capability  to  meet dispatch requirements, assuming  firm  fuel  oil
          supply  and transportation contracts are in place before each heating
          season  and the Brandywine Facility's air permit allows use  of  fuel
          oil.
     
     -    The  pro forma modeling of the Brandywine Facility contained  in  the
          Brandywine  Pro Forma Report reflects the Brandywine Facility's  fuel
          supply  arrangements using the gas and oil price projections of  ICF.
          ICF  is  a  recognized  forecaster  of  gas  and  oil  prices.  As  a
          consequence of the expected dispatch of the Brandywine Facility  also
          projected  by  ICF,  such  pro  forma modeling  reflects  significant
          benefits   of  certain  pipeline  balancing  provisions   under   the
          assumption  that  these provisions will continue  over  the  term  of
          Brandywine  Power Purchase Agreement. These balancing provisions  are
          not   contractual  rights  and  there  is  no  guarantee  that  these
          provisions will continue over the entire pro forma modeling term.
     
Other Projects under Development by Panda International

     The  following  are  additional  Projects  that  Panda  International   is
developing  and  that could become eligible for transfer  to  the  PIC  Project
Portfolio  if  the  conditions for transfer set forth  in  the  PIC  Additional
Projects  Contract  are  satisfied.  Such  Projects,  if  not  required  to  be
transferred  to  the  PIC  Project Portfolio, may, at  the  election  of  Panda
International,  be  transferred  to  the  Issuer  or  the  Company  if  certain
conditions for transfer set forth in the Indentures are satisfied. There can be
no assurance that any Project under development will reach Financial Closing or
achieve Commercial Operations.
     
  The Panda of Nepal Facility
  
     An affiliate of Panda International has an ownership interest (expected to
be  75%  following  completion of financing) in a joint venture  with  a  major
hydroelectric engineering company and a local Nepalese party to build a  36  MW
hydroelectric facility on the upper Bhote Koshi River in Nepal. The  Government
of  Nepal  issued  a Certificate of Registration to the joint venture  in  June
1996.  A  power purchase agreement with the Nepal Electricity Authority ("NEA")
and  a project agreement with the Government of Nepal obligating the Government
of  Nepal  to  guarantee  NEA's payment obligations and provide  certain  other
support  and  incentives  were  signed in July  1996.  A  fixed  price  turnkey
engineering, procurement and construction contract for the project  was  signed
with  China Gezhouba Construction Group Corporation in October 1996 and amended
and  restated  in December 1996. Panda International has received a  commitment
letter  from  a multilateral agency to provide debt financing for this  Project
and is currently negotiating the documents governing such financing, as well as
seeking  additional  financing for this Project.  In order  to  assist  in  the
funding  of  this Project, Panda International is considering the  transfer  of
ownership  of the applicable affiliate to the Issuer if certain conditions  for
transfer  set forth in the Indentures are satisfied; however, there can  be  no
assurance that such action will occur.
     
  The Lapanga Facility
  
     In  August 1994, an affiliate of Panda International acquired from another
independent  power  developer a 90% interest in  a  Project  company  that  had
entered into a power purchase agreement with the Orissa State Electricity Board
for  a  proposed 500 MW coal-fired power project to be located in the State  of
Orissa,  India. Certain of the Central Governmental approvals for  the  Project
have  been  obtained.  Although Panda International  believes  that  the  power
purchase  agreement is valid and enforceable, the State of Orissa has  given  a
notice of cancellation of such agreement to Panda International, as well as  to
several  other  third parties with respect to their respective  power  purchase
agreements.  Panda International has objected to such notice and  is  presently
conducting  discussions with the government of the State of Orissa. Development
efforts have been delayed pending resolution of this dispute.
     
  The Kathleen Facility
  
     The  Kathleen  Facility  is planned to be a combined-cycle,  natural  gas-
fired, intermediate-load cogeneration facility to be located on a 7.5-acre site
owned  by  a  wholly-owned indirect subsidiary of the  Company  (the  "Kathleen
Partnership")  in  an  industrial  park near Lakeland,  Florida.  The  Kathleen
Partnership  entered  into  a  power  purchase  agreement  with  Florida  Power
Corporation ("Florida Power") in 1991.
     
     The  Kathleen  Partnership  and Florida Power are  engaged  in  litigation
before  state  and  federal forums in Florida over the  interpretation  of  the
Kathleen  power purchase agreement, including whether the size of the  Kathleen
Facility  as  designed by Panda International conforms with the power  purchase
agreement.  See "Legal Proceedings--Florida Power Proceedings." The outcome  of
this litigation will determine whether construction of the Kathleen Facility is
initiated  and  completed. Pursuant to arrangements with GE Capital  under  the
documents  relating to the financing of the Brandywine Facility,  the  entities
which  are partners of the Kathleen Partnership must remain as subsidiaries  of
PEC  but  will be required to be transferred to PIC, in which case the Kathleen
Facility would become part of the PIC Project Portfolio if, and within 180 days
after,  the  Kathleen  Facility reaches the earlier  of  Financial  Closing  or
Commercial Operations.
     
       FOREIGN EXCHANGE SYSTEM IN THE PRC AND EXCHANGE RATE INFORMATION
                                       
General

     The PRC imposes control over its foreign currency reserves in part through
direct  regulation of the conversion of Renminbi into foreign exchange  and  in
part  through restrictions on foreign imports. The SAFE, under the  supervision
of   the  PBOC,  is  responsible  for  matters  relating  to  foreign  exchange
administration and remittance of foreign exchange abroad. The Foreign  Exchange
Control  Regulations of the People's Republic of China, which  took  effect  on
April  1,  1996,  and  which replaced the interim foreign exchange  regulations
adopted in 1980, provide the basis for regulating foreign exchange transactions
in  China. Other rules, regulations and implementation measures have also  been
issued which further establish the legal framework for foreign exchange control
in China consistent with the PRC economic reform program.
     
     The  Administrative Regulations for the Settlement, Sale  and  Payment  of
Foreign  Exchange which took effect on July 1, 1996, allow FIEs  (such  as  the
Joint Ventures) to obtain their foreign exchange through transactions either at
the  Swap  Centers  or through the China Foreign Exchange Trading  Center  (the
"CFETC"),  an  inter-bank foreign exchange trading market.  Swap  Centers  were
first  established  pursuant to the Provisions of the  State  Council  for  the
Encouragement  of  Foreign Investment, promulgated in October  1986,  and  were
designed  to  provide  a  controlled setting  under  which  Renminbi  could  be
exchanged for foreign currencies at rates approaching market levels.  In  April
1994,  the  CFETC  was  created  in  Shanghai to  coordinate  foreign  exchange
transactions  nationwide among domestic enterprises according  to  standardized
rules  and to replace the two-tier exchange rate system that consisted  of  the
official  rate  and the swap center rates. The CFETC and the Swap  Centers  are
regulated by government policies and are administered by the SAFE. It has  been
indicated that Swap Centers will be unified with the CFETC in the future.
     
     Under  the new system, a distinction is made between current account items
such  as interest payments on foreign loans and profit distributions to foreign
parties  to a FIE and capital account items such as principal of foreign  loans
and   payment  under  guarantees.  Chinese  enterprises  (including  FIEs)  are
permitted  to  buy  foreign exchange from State-designated banks  for  interest
payments on foreign loans upon verification by SAFE of its authenticity and for
profit  distributions  on  presentation of  board  resolutions  regarding  such
distributions.  Purchase  of foreign exchange from State-designated  banks  for
repayment  of  principal of foreign loans requires (i) the  presentation  of  a
certificate of registration for foreign loans which can be obtained from  SAFE,
the  loan  contract  and  notice of repayment from the  creditor  and  (ii)  an
application  to  SAFE  for verification for such purchase. Chinese  authorities
have  termed  the  current  system as one that allows  free  convertibility  of
Renminbi for purposes of current account items.
     
Historical Exchange Rates

     During the nine-year period from 1985 through the end of 1993, there was a
gradual  but  significant devaluation of the Renminbi against the U.S.  dollar.
The  official Renminbi to U.S. dollar exchange rate changed from an average  of
RMB  3.20  to $1.00 in 1985, to RMB 5.81 to $1.00 at the end of 1993. Effective
January 1, 1994, a new unitary, managed floating-rate system was introduced  in
China.  As a result of the adoption of the new system, on January 1, 1994,  the
official exchange rate for Renminbi was revalued from approximately RMB 5.8  to
$1.00  to  approximately RMB 8.7 to $1.00. Since then, the  exchange  rate  has
remained relatively stable (see table below).
     
     Until December 31, 1993, the Noon Buying Rate (as defined in note 1 to the
table below) was closely related to the official rate, but varied significantly
from  the  rate  available  at Swap Centers. After January  1,  1994,  and  the
unification  of  the foreign currency exchange system, there  has  not  been  a
significant  difference  between  the Noon  Buying  Rate  and  the  PBOC  Rate.
Currently,  the PBOC sets and publishes daily a base exchange rate  (the  "PBOC
Rate")  with  reference primarily to the supply and demand of Renminbi  against
the  U.S.  dollar on the CFETC during the prior day. The PBOC also  takes  into
account  other  factors  such as the general conditions  in  the  international
foreign  exchange  markets.  Authorized banks and  financial  institutions  are
allowed  to  quote  buy and sell rates for Renminbi within  a  specified  range
around  the daily PBOC Rate. Currently, the PBOC allows Renminbi trading within
a  range of 0.25% above and below the daily PBOC Rate. As of April 4, 1997, the
Noon  Buying Rate was RMB 8.3268 to $1.00. As of April 4, 1997, the  PBOC  Rate
was RMB 8.2969 to $1.00.
     
     The  following  table  sets forth certain information concerning  exchange
rates between Renminbi and U.S. dollars for the periods indicated:
     
     
                                  Noon Buying Rate(1)
Period                 Period   Average(2)    High       Low
                        End
                              (expressed in RMB per $)
                                                         
1993                 5.8145     5.7776     5.8245     5.7076
1994                 8.6044     8.6402     8.7128     8.5999
1995                 8.3374     8.3685     8.4600     8.2916
1996                                                  
 First Quarter       8.3538     8.3407     8.3549     8.3292
 Second Quarter      8.3421     8.3437     8.3542     8.3403
 Third Quarter       8.3317     8.3363     8.3452     8.3330
 Fourth Quarter      8.3284     8.3293     8.3317     8.3267
     
__________________________
Source:   Federal Reserve Statistical Release, The Federal Reserve.
Notes:
(1)  The  Noon  Buying  Rate  is the Noon Buying Rate in  New  York  for  cable
     transfers payable in foreign currencies as certified for customs  purposes
     by the Federal Reserve Bank of New York.

(2)  Determined  by averaging the rates on the last business day of each  month
     during  the  years 1993 through 1995 and, with respect to each quarter  of
     1996,  by averaging the rates on each Friday of the quarter, or if  Friday
     was not a day upon which a rate was available, then the next preceding day
     upon which a rate was available.

Treatment of Domestic Enterprises and FIEs

     Historically,  purely domestic enterprises and FIEs (such as  Sino-foreign
joint   ventures   and  wholly  foreign-owned  companies)   were   subject   to
substantially  different  treatment with respect to foreign  exchange  matters.
Recently, many of these distinctions have been eliminated.
     
     In  general,  the  PRC  Foreign Exchange Control Regulations,  which  took
effect on April 1, 1996, require that domestic enterprises operating in the PRC
must  price  and  sell  their goods and services in the PRC  in  Renminbi.  Any
foreign  exchange  revenues  received by  such  enterprises  must  be  sold  to
authorized  foreign exchange banks in the PRC. Under the new  system,  domestic
enterprises and institutions are permitted to buy foreign exchange from  State-
designated   banks   at  designated  times  on  presentation   of   appropriate
documentation  establishing the existence of import contracts or payment  notes
from  overseas financial institutions. Such enterprises also are  permitted  to
purchase foreign exchange for the import of certain products subject to quotas,
import  permits  and  registration controls. FIEs are  permitted  to  apply  to
purchase  foreign  exchange  for  the  payment  of  dividends  that  have  been
authorized  as payable in foreign currency. Conversion and payment  are  to  be
effected on the basis of a written resolution on profit distribution passed  by
the  enterprise's board of directors and evidence that the enterprise has  paid
all required PRC taxes.
     
     On  June 20, 1996, the PBOC issued a notice allowing all FIEs to use  both
Swap  Centers  and  designated foreign exchange banks  to  convert  currencies.
Pursuant  to  this  notice, which took effect on July 1, 1996,  FIEs  may  open
foreign  exchange  accounts  for current as well as capital  transactions.  The
capital  transactions,  however, remain subject to SAFE registration  approval.
The  SAFE  has authority to establish ceilings on the total amount  of  foreign
currency   amount  that  a  FIE  may  maintain  in  its  account  for   current
transactions. Such ceilings are to be set by reference to the level of  foreign
capital actually invested in the enterprise and the foreign currency cash  flow
needs of the enterprise.
     
     If  foreign debts of FIEs are properly filed for record with the  SAFE  or
its  local  branches, and a Foreign Debt Registration Certificate is  obtained,
future  repayment  of  principal  and  interest  are  subject  to  verification
processing  by the SAFE or its local branches upon producing the  Foreign  Debt
Registration Certificate, the loan agreement and a lender's repayment notice. A
verification  paper  is  then issued for conversion  and  purchase  of  foreign
exchange  at  authorized banks or the FIE may use its own foreign  exchange  to
make  the  payment. For interest payments, once the SAFE has verified that  the
interest  payment transaction is legitimate, the FIE may use  its  own  foreign
exchange  or  may  purchase foreign exchange at authorized banks  to  make  the
payment.
     
      DESCRIPTION OF PRINCIPAL DOCUMENTS RELATING TO THE LUANNAN FACILITY
                                       
     The   following  is  a  description  of  selected  provisions  of  certain
agreements relating to the Luannan Facility and should not be considered to  be
a full statement of the terms and provisions of such agreements.
     
Power Purchase Agreement

     An  Electric  Energy  Purchase and Sales Agreement (the  "Energy  Purchase
Agreement")  and an Interconnection Agreement (the "Interconnection Agreement")
among  Tangshan Panda, Tangshan Pan-Western and North China Power Company  were
each  executed  in September 1995 and amended by a Supplemental  Agreement  for
Interconnection  Agreement and Electric Energy Purchase  and  Sales  Agreement,
dated  February 10, 1996 (the "Supplemental Agreement," collectively  with  the
Energy  Purchase  Agreement and Interconnection Agreement, the  "Luannan  Power
Purchase  Agreement"),  among Tangshan Panda, Tangshan  Pan-Western  and  North
China  Power  Company. Tangshan Panda and Tangshan Pan-Western are jointly  and
severally  liable  for the obligations of the seller under  the  Luannan  Power
Purchase  Agreement. The Luannan Power Purchase Agreement sets out  the  rights
and  obligations of Tangshan Panda, Tangshan Pan-Western and North China  Power
Company  relating  to,  among  other  things,  the  development,  construction,
operation  and  maintenance of the Luannan Facility; the setting of  production
output and energy purchase requirements; risk allocation in the event of  force
majeure and changes in the regulatory environment; events of default; rights of
termination  and the consequences thereof; assignment and transfer of  interest
thereunder; and dispute resolution.
     
     Term. The Luannan Power Purchase Agreement has a term of 20 years from the
Luannan Commercial Operation Date.
     
     Power Purchase. The Luannan Power Purchase Agreement divides each 24  hour
period  into three eight-hour (which are not required to be consecutive  hours)
delivery  periods, Peak Hours, Non-Peak Hours and Trough Hours.  Commencing  on
the  Luannan  Commercial Operation Date, subject to the  limitations  on  gross
generation  amount  during  Non--Peak Hours  and  Trough  Hours  listed  below,
Tangshan  Panda and Tangshan Pan-Western agree to sell, and North  China  Power
Company  agrees  to purchase and take, all electric energy delivered  to  North
China Power Company from the Luannan Facility. Tangshan Panda and Tangshan Pan-
Western may not sell any electric energy directly to third parties without  the
consent of North China Power Company. Unless otherwise requested by North China
Power  Company,  during Non-Peak Hours and Trough Hours, the  Luannan  Facility
will  not  operate beyond the gross generation amounts specified  below  on  an
average  basis  for  the entire eight-hour period (exceeding these  limitations
during  a  period is permitted as long as the overall average gross  generation
amount  during  the  eight-hour period does not exceed these  limitations).  No
limitation on gross generation amount produced by the Luannan Facility will  be
imposed  during Peak Hours and the amount set forth below for Peak Hours  is  a
minimum,  not a maximum, gross generation amount for the Luannan Facility.  The
gross  generation  amounts for different periods are  as  follows,  subject  to
adjustments agreed by both parties:
     
      As the first unit starts generation at the Luannan Commercial Operation
      Date:
      
         During Peak Hours (minimum)                      400,000 kWh
         During Non-Peak Hours (maximum)                  260,000 kWh
         During Trough Hours (maximum)                    240,000 kWh
                                   
          and  as the second unit starts generation at the Luannan Commercial
          Operation Date:
                                   
         During Peak Hours (minimum)                      800,000 kWh
         During Non-Peak Hours (maximum)                  520,000 kWh
         During Trough Hours (maximum)                    480,000 kWh
                                                          
     Peak  Hours, Non-Peak Hours and Trough Hours in a particular day  will  be
determined by the dispatch department of North China Power.
     
     Tangshan  Panda  and  Tangshan Pan-Western are required  to  negotiate  an
Interconnection  Dispatch Agreement (the "Interconnection Dispatch  Agreement")
with  the  Tangshan  Power Supply Bureau of North China Power  Company  shortly
prior  to  the Luannan Commercial Operation Date. This Interconnection Dispatch
Agreement is expected to set out the specific details as to the dispatch of the
Luannan  Facility  and will be a part of the Luannan Power Purchase  Agreement.
The  provisions  described above only set forth the basis for dispatch  of  the
Luannan  Facility.  The  Issuer  believes  that  the  Interconnection  Dispatch
Agreement  will  provide for the Luannan Facility to be  dispatched  at  levels
represented  by the maximums specified in the Luannan Power Purchase  Agreement
for  Non-Peak  Hours and Trough Hours, and the Luannan Engineering  Report  was
prepared on this basis. North China Power Company is required to take  all  net
electrical  output delivered by the Luannan Facility during Peak Hours  without
any   dispatch  limitations.  There  are,  however,  no  assurances  that   the
Interconnection Dispatch Agreement as finally negotiated will not make  changes
to  the  provisions  of the Luannan Power Purchase Agreement  described  herein
including dispatch rights and penalties relating thereto.
     
     North  China Power Company will not be required to pay Tangshan Panda  and
Tangshan  Pan-Western for any electric energy generated by the Luannan Facility
during  Non-Peak  Hours  and Trough Hours that exceeds  the  generation  amount
(based  on  the overall average gross generation amount during the  eight  hour
period)  dispatched  in  Non-Peak  Hours and  Trough  Hours,  respectively,  as
instructed by Tangshan Power Supply Bureau for such periods consistent with the
requirements  of  the Luannan Power Purchase Agreement and the  Interconnection
Dispatch Agreement.
     
     If  the  electric  energy load delivered during Trough Hours  exceeds  the
maximum  limitations  set forth above, Tangshan Panda and Tangshan  Pan-Western
will,  unless such additional electric energy is required by North China  Power
Company,  compensate  North China Power Company by  paying  North  China  Power
Company  a  peak  adjustment  compensation fee equivalent  to  five  times  the
applicable power price of the excess amount.
     
     If  the  Luannan Facility does not deliver, during Peak Hours, the minimum
quantity of electric energy stipulated in the Luannan Power Purchase Agreement,
Tangshan  Panda  and  Tangshan Pan-Western will compensate  North  China  Power
Company,  at  five times the applicable power price, for the shortfall  between
the  actual amount of electric energy produced and the required electric energy
production.  In addition, if North China Power Company's actions  or  inactions
cause  the  Luannan Facility to fail to deliver the required  electric  energy,
North China Power Company will pay to Tangshan Panda and Tangshan Pan-Western a
compensation  fee  to be calculated in accordance with the  following  formula:
(amount  of  required  power  to be delivered less actual  power  delivered)  x
applicable power price.
     
     Power  Tariff. The electricity price to be charged under the Luannan Power
Purchase Agreement is provided in the Pricing Document, which is separate from,
but  incorporated  by reference in, the Luannan Power Purchase  Agreement.  The
electricity  price  is  comprised of fixed and  variable  components  that  are
required  to  be adjusted according to an approved pricing formula  to  reflect
changes  in  the  capital and operating costs of the Luannan Facility.  Certain
components  of  the power price calculation may be adjusted to  reflect  either
Chinese  or U.S. inflation, based upon specified indices. Adjustments are  also
provided for foreign exchange rate fluctuation in order to mitigate the Luannan
Facility's exposure to currency risks. There are pass-through provisions in the
Pricing Document for increases or decreases in the cost of coal against a  coal
market  index set forth in the Pricing Document, and the Pricing Document  also
has  provisions for pass-through or make-whole calculations relating to certain
construction capital cost items. Under the Pricing Document, the Joint Ventures
have  the  right to request a determination of a new power price whenever  they
determine  that  changes in the price components require a  new  determination;
however, it is anticipated that they will generally apply annually for  changes
in rates. Although paid in Renminbi, certain components (foreign site managers'
salaries,  operating, maintenance, engineering and training  services,  certain
foreign  travel  expense  and insurance costs, certain financing  expenses  and
equipment  engineering services) of the tariffs are calculated in U.S.  dollars
as  a  result of the currency rate adjustments. Tariffs are required to be paid
every  30  days  by  North China Power Company. North China  Power  Company  is
obligated to pay by the 15th day of the calendar month following the month  for
which  such payment is being made. Any failure by either party to make payments
will  entitle the other party to receive accrued interest, to be paid with  the
next  scheduled payment. The interest rate applied for the delayed  payment  is
0.05% per day.
     
     The  Issuer  and  the Joint Ventures have no experience  in  applying  for
electricity   prices  determined  in  accordance  with  the   pricing   formula
incorporated  in  the  Pricing  Document. Use of  such  a  pricing  formula  to
establish  electricity  prices is a recent development  in  the  Chinese  power
industry.  Although the Issuer, based on discussions with the Pricing  Approval
Authority, believes that the pricing formula will be applied to permit recovery
of  all  Luannan  Facility  costs and anticipated  returns,  there  can  be  no
assurance  that  the  Joint Ventures will be able to  charge  rates  that  will
generate  sufficient  revenues  to  enable the  Joint  Ventures  to  repay  the
principal of and interest on the Shareholder Loans when and as due, or that any
application  for an increase in the power rate will be approved by the  Pricing
Approval  Authority. See "Risk Factors--Considerations Relating  to  the  PRC--
Governmental Regulation of Power Rules."
     
     Interconnection;  Transmission Service. Commencing on the  interconnection
date and continuing for the term of the Luannan Power Purchase Agreement, North
China Power Company's facilities will transmit electric energy delivered by the
Luannan Facility to the Jing-Jin-Tang Grid.
     
     Commercial  Operation of the Luannan Facility. In order to  establish  the
Luannan Commercial Operation Date, Tangshan Panda and Tangshan Pan-Western will
give  North China Power Company ten days' prior written notice of their initial
72-hour  test run of the Luannan Facility. To establish the Luannan  Commercial
Operation Date, the Luannan Facility must generate electric power at full  load
for  a continuous 72 hour period. North China Power Company, Tangshan Panda and
Tangshan   Pan-Western  will  sign  a  certificate  establishing  the   Luannan
Commercial Operation Date on the day that the relevant test or additional  test
of the Luannan Facility is successfully completed.
     
     After the Luannan Commercial Operation Date, the Luannan Facility will  be
normally  dispatched by North China Power Company so as to  allow  the  Luannan
Facility  to  operate in accordance with the Luannan Power Purchase  Agreement.
Concurrently,  North China Power Company agrees as follows:  (a)  the  dispatch
load curve will provide for Non-Peak Hours of operation that permit the Luannan
Facility  to  have a ramp period such that the maximum capacity of the  Luannan
Facility  may  be  generated during all Peak Hour periods and (b)  North  China
Power  Company will arrange frequency and voltage adjustments, but North  China
Power Company may not dispatch the Luannan Facility's reactive power beyond the
capabilities  of  the  Luannan Facility's equipment.  The  ramp  rates  of  the
dispatched  load curves of the Luannan Facility will not exceed the requirement
of the Jing-Jin-Tang Grid for generation units of the same type.
     
     Outages;  Maintenance  of  the  Luannan  Facility;  Annual  Overhaul.  The
cumulative annual overhaul outage for the Luannan Facility will not  exceed  55
days.  Outages will be calculated on an actual time elapsed basis. The schedule
for  such outages shall be set by North China Power Company in accordance  with
the  overall  outage  schedule for the Jing-Jin-Tang Grid.  If  the  cumulative
maintenance down time for each electric generating unit of the Luannan Facility
exceeds 55 days in any year, Tangshan Panda and Tangshan Pan-Western will pay a
compensation fee to North China Power Company calculated as follows: (amount of
required  power  to be delivered per day after deduction of an  internal  usage
amount) x (maintenance time exceeding 55 days) x power price.
     
     Responsibility  for  Breach of Contract. Failure  by  Tangshan  Panda  and
Tangshan Pan-Western to deliver the minimum amount of electric energy to  North
China  Power  Company  required by the Luannan Power  Purchase  Agreement  will
entitle North China Power Company to declare a breach of contract. If,  due  to
North China Power Company's fault, Tangshan Panda and Tangshan Pan-Western  are
not  able  to deliver power to North China Power Company as required under  the
Luannan Power Purchase Agreement, Tangshan Panda and Tangshan Pan-Western  will
have  the  right  to  declare a breach of contract.  The  defaulting  party  is
required  to  compensate the non-defaulting party for all of its actual  direct
losses caused by such breach of contract. A delayed payment for power delivered
will be construed as a breach of contract if such delay has lasted more than 15
days.  Late  payments  bear interest at the rate of 0.05%  per  day.  The  non-
defaulting party may elect to terminate the Luannan Power Purchase Agreement if
the defaulting party has neither taken action to cure 30 days after receipt  of
written  notice from the non-defaulting party of its declaration of  breach  of
contract  (which cure may take a longer period as long as it is  being  pursued
with diligence) nor made any required payments (excluding amounts in good faith
dispute).
     
     Force  Majeure.  Each party is excused from performance of its  respective
obligations (except for payment obligations existing prior to the occurrence of
the  force  majeure  event)  under  the Luannan  Power  Purchase  Agreement  if
performance  of  such obligations is adversely affected by an  event  of  force
majeure,  which  includes  any subsequent modifications  or  changes  of  laws,
regulations or rules made by the Central Government or any local government  or
their  agencies that directly or indirectly affects either party's  performance
of such obligations. Each party is generally obligated to take reasonable steps
to  restore  its ability to perform, to limit the damage caused  to  the  other
party  and, under certain circumstances, to negotiate and execute an  amendment
to  the Luannan Power Purchase Agreement. Each party may unilaterally terminate
the  Luannan  Power Purchase Agreement if a force majeure is  declared  by  the
other party and such party does not resume performance within 12 months of  the
date of such declaration.
     
     Termination. The parties may agree to terminate the Luannan Power Purchase
Agreement,  provided  such termination does not damage  the  PRC's  and  public
interests.  Furthermore, the Luannan Power Purchase Agreement may be terminated
by  North  China  Power  Company if, prior to the Luannan Commercial  Operation
Date,  Tangshan Panda and Tangshan Pan-Western cease development of the Luannan
Facility for 12 consecutive months.
     
     Governing Law and Dispute Resolution. The Luannan Power Purchase Agreement
is  to be construed and governed by PRC law. Disputes arising under the Luannan
Power  Purchase  Agreement  are to be attempted  to  be  resolved  by  friendly
consultation between Tangshan Panda, Tangshan Pan-Western and North China Power
Company  for  a  period  of 30 days. In the event that the  dispute  cannot  be
settled  by  mutual discussion within the 30 day period, the dispute  shall  be
settled  by  arbitration  to  be  conducted in Singapore  under  the  Rules  of
Conciliation  and  Arbitration of the ICC. Each party to the  arbitration  will
appoint an arbitrator with the International Court of Arbitration of the ICC to
appoint  a  third. The decision rendered by the arbitral body  will  be  final,
binding and unappealable. See "Risk Factors--Considerations Relating to the PRC-
-Uncertain Enforcement of Foreign Judgments."
     
     Waiver  of  Sovereign Immunity. Each party to the Luannan  Power  Purchase
Agreement  waives  any  rights to immunity it may  have  with  respect  to  its
obligations  arising  under the Luannan Power Purchase  Agreement  or  relating
thereto.
     
Engineering, Procurement and Construction Contract

     The  Engineering, Procurement and Construction Contract, among the Luannan
EPC  Contractor, Tangshan Panda and Tangshan Pan-Western, dated April 24, 1996,
as  amended,  provides  that the Luannan EPC Contractor  will  provide  design,
engineering, equipment and material procurement, support, construction,  start-
up,  performance  testing  and other services in  order  to  make  the  Luannan
Facility fully operational on a fixed price, turnkey basis.
     
     Basic   Obligations.  The  Luannan  EPC  Contractor  is  responsible   for
furnishing  all equipment, services and materials for engineering, procurement,
construction,  start-up and performance testing of the  Luannan  Facility.  The
Luannan  EPC Contractor is required to obtain the permits necessary to complete
its obligations and to conduct its activities in compliance with all applicable
approvals, laws and permits.
     
     Tangshan  Panda and Tangshan Pan-Western are responsible for, among  other
things,  providing the Luannan EPC Contractor with access to the  site  of  the
Luannan  Facility,  providing  any  additional  areas  of  land  necessary   to
accommodate  the Luannan EPC Contractor, and supplying fuel oil  and  coal  for
boiler fuel needed by the Luannan EPC Contractor to conduct performance testing
of   the  Luannan  Facility.  Tangshan  Panda  and  Tangshan  Pan-Western   are
responsible for obtaining all spare parts required for the normal operation  of
the Luannan Facility.
     
     Price and Payment; Security. As payment for the performance of all of  the
Luannan  EPC  Work,  the Luannan EPC Contractor's other obligations  under  the
Luannan EPC Contract, and all costs in connection therewith, Tangshan Panda and
Tangshan Pan-Western have agreed to pay a purchase price of approximately $63.6
million which includes a contingency of approximately $3.0 million. Starting at
September  16, 1996, the price is increased at the pro-rated rate of  0.5%  per
month  through  December 31, 1996. As of December 31, 1996,  the  price  as  so
increased  was approximately $64.7 million. In December 1996, the  Luannan  EPC
Contract was amended to provide for the issuance of a limited notice to proceed
so  that  site work was commenced (upon payment of $2.0 million). An additional
$1.0 million was paid to the Luannan EPC Contractor before March 1, 1997 and an
additional  $1.0  million  was paid before March 31,  1997.  The  price  as  so
escalated is referred to herein as the "Luannan EPC Contract Price."  The  full
notice  to proceed was given prior to May 1, 1997. No payment will be made  for
the  civil  and installation portion of the Luannan EPC Work until  the  actual
completion of such portion exceeds the 10% down payment as described below. The
Luannan  EPC  Contractor will be entitled to payments on  a  monthly  basis  in
accordance with a milestone payment schedule, provided that, in the case of the
civil  and installation portion of the Luannan EPC Work, payments will be  made
for  the  Luannan  EPC Work to be actually completed and, in the  case  of  the
equipment  portion  of  the Luannan EPC Work, payments will  be  made  for  the
percentage in such schedule of such equipment, and, provided further  that  the
Luannan  EPC Contractor's invoice has not been disputed by Tangshan  Panda  and
Tangshan Pan-Western. Tangshan Panda and Tangshan Pan-Western will make a  down
payment  in an amount of 10% of the Luannan EPC Contract Price at the  time  of
giving the notice to proceed. Tangshan Panda and Tangshan Pan-Western, however,
will  withhold  10%  of  such down payment and each progress  payment  made  in
accordance  with  the Luannan EPC Contract as retainage (the "Retainage").  The
Luannan EPC Contractor will provide Tangshan Panda and Tangshan Pan-Western  on
the  Luannan  Commercial  Operation Dates  of  the  first  and  second  plants,
respectively, with a letter of credit each in the amount of 2.5% of the Luannan
EPC  Contract  Price  to  cover  certain liabilities  arising  from  warranties
provided  under  the  Luannan  EPC Contract. A portion  of  Retainage  will  be
returned  by  Tangshan  Panda  and  Tangshan Pan-Western  to  the  Luannan  EPC
Contractor for the principal amount of such letters of credit. The remainder of
the  Retainage  will  be held until completion of punch list  items  and  other
deficiencies.
     
     Schedule.  The  Luannan  EPC Contractor is required  to  complete  certain
milestones  in  accordance  with  a construction  schedule  (the  "Construction
Schedule").  The  Construction Schedule contemplates that the Luannan  Facility
will be ready for commissioning 28 months following the issuance of a notice to
proceed  (the  "Guaranteed  Commercial Operation Date").  If  the  Luannan  EPC
Contractor  fails  to  accomplish a milestone by the time contemplated  in  the
Construction  Schedule  and  Tangshan Panda and  Tangshan  Pan-Western  deliver
written  notice of such failure to the Luannan EPC Contractor, the Luannan  EPC
Contractor  must either complete such milestone or provide Tangshan  Panda  and
Tangshan Pan-Western with a plan of recovery within 3 days after the receipt of
the notice setting forth how the Luannan EPC Contractor intends to achieve such
milestone within 15 days after the receipt of the notice. If the work necessary
to  achieve such milestone cannot be achieved within such 15 days despite  best
efforts  by  the Luannan EPC Contractor, its plan of recovery shall demonstrate
what special steps it will take to assure the earliest possible achievement  of
such milestone (not to exceed 90 days).
     
     If  commercial  operation of the Luannan Facility is not achieved  by  the
Guaranteed  Commercial Operation Date, subject to any extension  allowed  under
the  Luannan EPC Contract, the Luannan EPC Contractor shall pay Tangshan  Panda
and  Tangshan  Pan-Western  $50,000  per  day  for  each  subsequent  day  that
commercial operation is delayed after the Guaranteed Commercial Operation Date,
up  to  a maximum of $18.0 million. However, such penalties could well  not  be
sufficient  to  avoid  a default on the Exchange Notes.  See  "Risk  Factors  -
Project Risks."
     
     Early  Completion  Bonus.  If  the commercial  operation  of  the  Luannan
Facility  occurs  prior to the Guaranteed Commercial Operation  Date,  Tangshan
Panda  and  Tangshan Pan-Western shall pay the Luannan EPC Contractor,  $12,500
per  day as a bonus, for each day in the 15 day period preceding the Guaranteed
Commercial  Operation  Date  in which commercial  operation  is  achieved,  and
$24,900  per day for each day in the next preceding 15 days in which commercial
operation is achieved. No additional early completion bonus shall be  paid  for
early completion more than 30 days prior to the Guaranteed Commercial Operation
Date.
     
     Performance Guarantees. The Luannan EPC Contractor guarantees that (i) the
net  dependable  capacity ("Net Dependable Capacity") of the  Luannan  Facility
shall  be (as corrected to design condition) at least 102,000 kW; (ii) the  net
heat rate of the Luannan Facility operated at summer design conditions shall be
equal  to,  or less than 12,817 kJ/kWh (LHV); and (iii) the emission and  noise
levels  will meet the requirements of applicable laws and regulations.  In  the
event the Luannan EPC Contractor fails to meet any of the above guarantees,  it
is required to pay liquidated damages as follows:
     
     -    $700/kW below 102,000 kW Net Dependable Capacity;
     
     -    $5,000  for  each kJ/kWh in excess of the net heat rate guarantee  if
          such guaranteed heat rate is exceeded by more than 101%; and
     
     -    $700/kW  where  the  Luannan Facility must operate  at  levels  below
          102,000 kW to meet certain emission requirements.
     
     Liquidated  damages  for  schedule delays and performance  guarantees  are
limited to 35% of the Luannan EPC Contract Price.
     
     The Luannan EPC Contractor will also be paid bonuses for exceeding certain
performance  guarantees in an amount of:  (i) $550 per  kW  by  which  the  Net
Dependable Capacity of the Luannan Facility exceeds 102,000 kW (not  to  exceed
$1.0  million); and (ii) $1,165 per kJ/kWh by which the net heat  rate  of  the
Luannan  Facility is less than 99% of 12,817 kJ/kWh (LHV) (not to  exceed  $1.0
million).
     
     Adjustments   to  the  Luannan  EPC  Contract  Price  and/or  Construction
Schedule. Although the Luannan EPC Contractor has agreed to perform the Luannan
EPC Work for the Luannan EPC Contract Price in accordance with certain warranty
obligations, there may be circumstances in which the Luannan EPC Contractor  is
entitled  to an increase in the Luannan EPC Contract Price, or an extension  of
the  Construction Schedule. These circumstances include a change in  law  or  a
force  majeure  event  (as described below), changes in the  Luannan  EPC  Work
requested  by Tangshan Panda and Tangshan Pan-Western that have been agreed  to
by  the  Luannan  EPC  Contractor  or changes  requested  by  the  Luannan  EPC
Contractor  that have been approved by Tangshan Panda and Tangshan  Pan-Western
which, in all cases, would be subject to the change order process set forth  in
the  Luannan  EPC  Contract. In addition, the Luannan  EPC  Contractor  may  be
entitled  to  an equitable adjustment of the Luannan EPC Contract Price  and/or
the Construction Schedule in certain other circumstances, including a delay  or
failure by Tangshan Panda and Tangshan Pan-Western to perform their non-payment
obligations under the Luannan EPC Contract, suspension of Luannan EPC  Work  by
Tangshan Panda and Tangshan Pan-Western and events of force majeure.
     
     Testing. The Luannan EPC Contractor is required to provide Tangshan  Panda
and  Tangshan  Pan-Western  and any institution  providing  financing  for  the
construction of the Luannan Facility a detailed performance test procedure  for
review  and  acceptance  at  least  180 days before  the  expected  test  date.
Performance testing of the Luannan Facility will not begin until Tangshan Panda
and  Tangshan  Pan-Western  and any institution  providing  financing  for  the
construction  of  the Luannan Facility have accepted the test  procedures.  The
Luannan EPC Contractor must give 45 days' written notice prior to the start  of
the performance tests.
     
     Once  the  Luannan EPC Contractor has completed performance  testing  with
respect  to the first plant or both plants and the first plant or both  plants,
as  the  case  may  be, are capable of being operated safely, the  Luannan  EPC
Contractor may submit the performance testing reports together with  a  written
notice  of  commercial  operation, to Tangshan Panda and Tangshan  Pan-Western.
Within  15  business  days of the receipt of such notice,  Tangshan  Panda  and
Tangshan  Pan-Western will either confirm that the requirements for  commercial
operation have been met, or specify to the Luannan EPC Contractor the manner in
which  the requirements for commercial operation have not been met. The Luannan
EPC   Contractor  may  take  appropriate  corrective  action  and  repeat   the
performance  tests if it fails any part of the original test, unless  one  year
has passed since the Guaranteed Commercial Operation Date.
     
     Materials  and  Workmanship Warranty. The Luannan EPC Contractor  warrants
that  all  equipment and other items furnished under the Luannan  EPC  Contract
will  be  new  and  of good quality and will conform to the  kind  and  quality
specified  in the Luannan EPC Contract. The Luannan EPC Contractor is obligated
to  correct any Luannan EPC Work performed under the Luannan EPC Contract that,
at  any  time  for a period of one year after final acceptance of  the  Luannan
Facility  by  Tangshan Panda and Tangshan Pan-Western or, if applicable,  after
the  date of the repair, proves to be improper or defective with regard to  the
provisions of the Luannan EPC Contract in design, material or workmanship.
     
     Engineering  and  Design Warranty. The Luannan EPC  Contractor  guarantees
that  it  will  perform  all  construction surveying,  engineering  and  design
services as of the final acceptance of the Luannan Facility in accordance  with
sound  engineering practice and the requirements of the Luannan  EPC  Contract,
and  that the Luannan Facility will be free of all defects and deficiencies and
will  be  operational in compliance with the Luannan EPC Contract, the  Luannan
Power  Purchase Agreement and all applicable permits and laws. The Luannan  EPC
Contractor  will  obtain  from its subcontractors or  vendors,  guarantees  and
warranties  with respect to Luannan EPC Work performed and equipment  used  and
installed under the Luannan EPC Contract, which guarantees and warranties  will
equal  or exceed those provided by the Luannan EPC Contractor and will be  made
available  and  assignable  to Tangshan Panda and Tangshan  Pan-Western  for  a
period of at least one year after the Luannan Commercial Operation Date.
     
     Force  Majeure.  Any  party to the Luannan EPC Contract  is  excused  from
performance  of  its  obligations under the Luannan EPC Contract  for  a  force
majeure  event.  A force majeure event under the Luannan EPC Contract  includes
events,  conditions  or  circumstances beyond the reasonable  control  of,  and
without  the  fault  or  negligence of, the party affected,  that  despite  all
reasonable  efforts of the party affected to prevent it, cause a  material  and
adverse  delay  or disruption in the performance of the Luannan  EPC  Contract.
Examples  of  force majeure events are various natural disasters,  fires,  war,
civil  disturbances,  riots  and certain actions of  a  court  or  other  legal
authority.  Force  majeure events do not include failure or inability  to  make
payment or strikes or labor disputes of vendors and the subcontractors  of  the
Luannan EPC Contractor.
     
     Event  of  Default. The events of default applicable to  the  Luannan  EPC
Contractor  include, without limitation, failure to perform in accordance  with
the  Luannan  EPC  Contract,  breach of any of  the  Luannan  EPC  Contractor's
covenants, agreements, representations or warranties (if not remedied within 90
days,  of  notice  to  the Luannan EPC Contractor), and certain  insolvency  or
bankruptcy events relating to the Luannan EPC Contractor.
     
     The  Luannan  EPC  Contractor may terminate the Luannan  EPC  Contract  in
certain  instances  if  the  Luannan Facility is damaged  or  destroyed  during
construction, other than as a result of the Luannan EPC Contractor's actions or
failure  to act, and Tangshan Panda and Tangshan Pan-Western notify the Luannan
EPC Contractor that neither insurance proceeds nor any other adequate source of
funds will be made available for the repair or restoration of such damage.
     
     Indemnification.  The  Luannan  EPC Contractor  has  agreed  to  indemnify
Tangshan  Panda  and  Tangshan  Pan-Western for all  claims,  damages,  losses,
liabilities and expenses (including court costs and reasonable attorneys' fees)
indirectly  or directly arising out of, or resulting from, a negligent  act  or
omission  of  the  Luannan EPC Contractor, or any subcontractor  or  vendor  or
anyone directly or indirectly employed by any of them, or anyone for whose acts
any  of  them  may  be liable. The Luannan EPC Contractor has  also  agreed  to
indemnify  Tangshan  Panda  and Tangshan Pan-Western  for  certain  claims  and
expenses  arising  from allegations that the Luannan EPC  Contractor  infringed
upon  intellectual property rights in its performance of the EPC Work. Tangshan
Panda  and  Tangshan  Pan-Western have agreed  to  indemnify  the  Luannan  EPC
Contractor and its officers, directors, agents, servants and employees from any
claims,  suits,  damages and costs directly resulting from  the  negligence  or
willful  misconduct by Tangshan Panda and Tangshan Pan-Western that  materially
and  adversely  affect  the Luannan EPC Contract, with the  understanding  that
Tangshan Panda and Tangshan Pan-Western are entitled to control and direct  the
defense of any such claim or litigation.
     
     Governing  Law and Disputes. The Luannan EPC Contract is governed  by  the
laws of the PRC, exclusive of conflicts of laws provisions. Any dispute will be
initially settled through friendly consultation. If the parties do not reach an
amicable resolution within 30 days, either party may submit the dispute to  the
International  Court  of Arbitration of the ICC, as the  exclusive  forum,  for
binding  arbitration  to  be held in Singapore. For convenience  purposes,  the
parties  may mutually agree to hold arbitration in Beijing, China for  disputes
with  a  value  below $1.0 million. In each case the Rules of Conciliation  and
Arbitration  of  the  ICC  shall govern the proceedings.  See  "Risk  Factors--
Considerations   Relating  to  the  PRC--Uncertain   Enforcement   of   Foreign
Judgments."
     
     CHEXIM  Guarantee.  It is a requirement of the Luannan EPC  Contract  that
CHEXIM  shall provide Tangshan Panda and Tangshan Pan-Western with  the  CHEXIM
Guarantee in an amount equal to 35% of the Luannan EPC Contract Price prior  to
the  closing  of  the  Prior Offering. The amount of the  CHEXIM  Guarantee  is
approximately $22.7 million.  Tangshan Panda and Tangshan Pan-Western will have
the  unconditional  right  to draw upon the CHEXIM  Guarantee  for  payment  of
liquidated damages or termination payments under the Luannan EPC Contract.  The
CHEXIM  Guarantee shall be a continuing guarantee of payment remaining in  full
force  and  effect  until  six months after Tangshan Panda  and  Tangshan  Pan-
Western's acceptance of the Luannan Commercial Operation Date.
     
Heat Network Construction Agreement

     Tangshan  Pan-Sino and Tangshan Engineering entered into the Heat  Network
Construction  Agreement on June 20, 1996 under which Tangshan Engineering  will
build the Network. The cost for construction of the Network, which will consist
of  12.1  kilometers of hot water pipeline, 8.78 kilometers of steam  pipeline,
heat  exchange  stations,  heat control equipment and  civil  construction,  is
approximately  RMB  24.17  million  ($2.9 million).  The  cost  is  subject  to
escalation according to the Chinese State Statistic Bureau Price Index.
     
Transmission Facilities Construction Agreement

     The  Luannan Transmission Facilities Construction Agreement sets  out  the
rights  and  obligations of North China Power Company, as Luannan  Transmission
Facilities Contractor, and Tangshan Pan-Sino, relating to, among other  things,
price,   the  scope  of  work,  the  performance  guarantees  of  the   Luannan
Transmission  Facilities  Contractor and damages  and  remedies  in  connection
therewith.
     
     Scope   of  Work.  The  Luannan  Transmission  Facilities  Contractor   is
responsible for the construction of the Luannan Transmission Facilities.
     
     Total  Construction  Cost; Other Costs. Pursuant to  separate  contractual
arrangements, the Luannan Transmission Facilities Loan of RMB 78.2 million,  to
be adjusted for inflation from December 31, 1994 to the date of issuance of the
notice  to  proceed with preliminary design (the "Total Transmission Facilities
Construction  Cost"),  will  be  made  by  Tangshan  Pan-Sino  to  the  Luannan
Transmission  Facilities Contractor through a PRC financial institution,  China
Information  Trust  and  Investment Corp., for the  construction  cost  of  the
Luannan  Transmission  Facilities. As of March 10, 1997,  the  aggregate  Total
Transmission  Facilities Construction Cost was estimated  to  be  approximately
RMB  83.7  million  (approximately  $10.1  million).   The  Total  Transmission
Facilities  Construction Cost will cover the cost of  all  work  involved.  The
Renminbi amount of the Total Transmission Facilities Construction Cost will  be
converted into U.S. dollars on the date of the applicable loan advance  at  the
then-prevailing  exchange  rate as quoted by the SAFE.  If  North  China  Power
Company  is  not  able  to obtain approvals to borrow  and  repay  the  Luannan
Transmission  Facilities Loan in U.S. dollars, it has the right to  borrow  and
repay the loan in Renminbi, in which event the parties have agreed to negotiate
an  equitable  allocation of the exchange rate risk. The  Luannan  Transmission
Facilities  Loan will be made in accordance with the following  schedule:  10%,
50%  and 30% of the Total Transmission Facilities Construction Cost payable  on
the date Tangshan Pan-Sino gives the Luannan Transmission Facilities Contractor
the  notice  to proceed with preliminary design under the Luannan  Transmission
Facilities  Construction  Agreement  and  six  months  and  12  months   after,
respectively,  with  the  remainder payable  upon  completion  of  the  Luannan
Facility. The loan will bear interest at the actual rate of interest charged by
international lenders to Tangshan Pan-Sino (excluding fees), but not to  exceed
12%  simple  interest  per  annum. Principal and interest  on  all  outstanding
amounts of the Transmission Facilities Loan will be amortized over a period  of
ten  years in 20 equal consecutive semi-annual payments commencing on the first
to  occur  of  September 30th or March 31st immediately following  the  Luannan
Commercial  Operation Date. Any amounts not paid when due  shall  bear  default
interest  from the date due at a rate of 18% per annum until paid. Pursuant  to
the Luannan Transmission Facilities Construction Agreement, unless the scope of
work  changes  at  the request of Tangshan Pan-Sino, or the Total  Transmission
Facilities Construction Cost is adversely affected by an event of force majeure
provided thereunder, or a breach by Tangshan Pan-Sino of its obligations  under
the  Luannan  Transmission Facilities Construction Agreement, no adjustment  of
the   Total  Transmission  Facilities  Construction  Cost  shall  be  permitted
(excluding the index adjustment described above).
     
     Performance  Guarantees.  The Luannan Transmission  Facilities  Contractor
guarantees  that an adequate reverse supply of electric power  to  the  Luannan
Facility will be supplied to satisfy the needs of the general contractor of the
Luannan Facility for test--runs of the Luannan Facility, that the work involved
will  be completed in such a fashion that the Luannan Facility will be able  to
transmit  continuously and/or intermittently so as to meet the requirements  of
the  interconnecting system and that design, construction and  installation  of
the Luannan Transmission Facilities will be completed with new materials and in
a  good  and workmanlike manner in accordance with the standards for  the  same
category of transmission lines and substations adopted by North China Power.
     
     Ownership;  Maintenance.  The Luannan Transmission  Facilities  Contractor
will  own  the  Luannan  Transmission Facilities after the  completion  of  the
Luannan  Transmission  Facilities  and, accordingly,  perform  all  operations,
maintenance and repair of the Luannan Transmission Facilities during  the  term
of the Luannan Power Purchase Agreement
     
     Damages. If Tangshan Pan-Sino breaches the Luannan Transmission Facilities
Construction Agreement, the Luannan Transmission Facilities Contractor will  be
entitled  to  receive  appropriate schedule relief  required  because  of  such
breach,  and  to any increased costs in performing the work involved  resulting
from the breach.
     
     If the Luannan Transmission Facilities Contractor fails to meet any of its
guarantees  and  the default has not been cured for 60 days, Tangshan  Pan-Sino
may  assume  responsibility  for completing all or  any  portion  of  the  work
involved  at  the  Luannan Transmission Facilities Contractor's  expense,  with
payments of expenses by Tangshan Pan-Sino for such work to be treated as  loans
of  a  portion of the Total Transmission Facilities Construction  Cost  to  the
Luannan  Transmission Facilities Contractor. In the event  that  such  expenses
exceed  any  balance  not  yet  loaned  on the  Total  Transmission  Facilities
Construction Cost, the Luannan Transmission Facilities Contractor will promptly
pay or reimburse Tangshan Pan-Sino for such expenses.
     
     In  case  of  breach of contract, the breaching party shall be liable  for
damages for loss to the other party. There are, however, no assurances that any
damages  collected  due  to  a  breach by the Luannan  Transmission  Facilities
Contractor  would  be sufficient (or paid in time) to avoid a  default  on  the
Shareholder Loans and, in turn, on the Issuer Note, and to enable the Issuer to
avoid a default on the Exchange Notes. See "Risk Factors - Project Risks."
     
Coal Supply Agreements

     The  Issuer  expects  that  the Luannan Facility  will  use  approximately
450,000  metric  tons of coal per year.  The principal fuel  supplier  for  the
Luannan  Facility  is  the Qianjiaying Mine, which is  owned  and  operated  by
Kailuan  Coal,  a  state-owned coal mining company.  The  Qianjiaying  Mine  is
expected to supply up to 300,000 metric tons of coal per year.  Tangshan  Panda
and  Tangshan Pan-Western will also purchase coal from the other local  Luannan
Coal Suppliers to secure the remaining coal demand.
     
     Each Luannan Coal Supplier will supply coal to Tangshan Panda and Tangshan
Pan-Western pursuant to its respective coal supply agreement (each, a  "Luannan
Coal Supply Agreement" and collectively, the "Luannan Coal Supply Agreements").
The  term  of  each Luannan Coal Supply Agreement is 10 years  from  the  first
purchase of coal by Tangshan Panda and Tangshan Pan-Western. Each Luannan  Coal
Supply  Agreement  sets out the rights and obligations of  Tangshan  Panda  and
Tangshan  Pan-Western  and its respective Luannan Coal Supplier,  relating  to,
among  other things, the quantity and quality of the supply of coal to Tangshan
Panda and Tangshan Pan-Western, the purchase price and termination.
     
     Purchase  and Sales of Coal. Tangshan Panda and Tangshan Pan-Western  will
have  the right to purchase up to 300,000 and 310,000 metric tons per  year  of
coal  from,  respectively, Kailuan Coal and the other Luannan  Coal  Suppliers.
Each  Luannan Coal Supply Agreement sets forth the average quality of the  coal
to  be  delivered to meet the specifications for total moisture,  ash,  sulfur,
heat  value, coal size and fines. Tangshan Panda and Tangshan Pan-Western  will
be entitled to reject any coal supplied by any Luannan Coal Supplier which does
not meet the pre-agreed acceptable limits or contains foreign substances.
     
     Purchase  Price. The price of coal sold by Kailuan Coal will  be  adjusted
yearly  based on the average annual price in Renminbi per ton for coal sold  by
Kailuan  Coal  for the preceding year under similar terms and  conditions.  The
price  of  coal  sold by the other Luannan Coal Suppliers will be  the  average
monthly  price in Renminbi per ton of coal sold by the mines regulated  by  the
Tangshan  Municipal  Coal Industry Bureau under similar terms  and  conditions.
With  respect to the Luannan Coal Supply Agreement with Kailuan Coal,  Tangshan
Panda  and  Tangshan Pan-Western will provide Kailuan Coal with an estimate  of
its  coal  requirements.  In  emergency situations,  either  party  may  change
previously  determined  amounts upon at least 15  days'  notice.  The  annually
adjusted price and the supply schedule will be reflected in the supply contract
to  be  entered  into each year by the parties pursuant to  such  Luannan  Coal
Supply Agreement.
     
     Termination. Each Luannan Coal Supply Agreement may be terminated by  each
party  by notice to the other party if the other party materially breaches  its
obligations and such breach is not cured within 60 days of receipt of notice of
such breach. The Luannan Coal Supply Agreement between Tangshan Panda, Tangshan
Pan-Western  and  Kailuan Coal provides that Kailuan  Coal  may  terminate  the
Luannan  Coal  Supply  Agreement upon six months'  notice  if  national  energy
policies of the PRC change such that the rules governing the allocation of coal
restrict  its ability to make sales of coal under terms and conditions  similar
to those set forth in such Luannan Coal Supply Agreement.
     
Coal Transportation Agreement

     The coal will be transported to the Site pursuant to a coal transportation
agreement (the "Luannan Coal Transportation Agreement"), among Tangshan  Panda,
Tangshan Pan-Western and Luannan County State-Owned Transportation Company (the
"Carrier"), a PRC company owned and operated by Luannan County. The term of the
Luannan  Coal Transportation Agreement is 10 years from the date of  the  first
truck  delivery  by  the  Carrier to the Luannan  Facility.  The  Luannan  Coal
Transportation Agreement sets out the rights and obligations of Tangshan  Panda
and  Tangshan Pan-Western and the Carrier, relating to, among other things, the
services  and obligation of the Carrier and the payment obligations of Tangshan
Panda and Tangshan Pan-Western for such services.
     
     Transportation  of  Coal. The Carrier will transport  and  deliver  up  to
500,000 tons of coal per year from the Luannan Coal Suppliers to Tangshan Panda
and  Tangshan Pan-Western at the Luannan Facility. Unless a failure to  deliver
coal results from a force majeure or breach by Tangshan Panda and Tangshan Pan-
Western, the Carrier will deliver all required coal shipments to Tangshan Panda
and  Tangshan  Pan-Western within 24 hours of the required  scheduled  delivery
date.  If  the Carrier fails to deliver coal within the time required, Tangshan
Panda   and   Tangshan  Pan-Western  may  make  alternate  coal  transportation
arrangements,  and  the Carrier will be responsible for any  incremental  costs
incurred by Tangshan Panda and Tangshan Pan-Western for such arrangements.
     
     Price of Transportation. The price of transportation of coal shipped  from
the Qianjiaying Mine to the Site by the Carrier will be RMB 15 per ton, subject
to  annual  adjustment  based upon the market price  for  truck  transportation
effective for the following year. If the parties cannot agree upon the adjusted
price,  the  average price of four truck carriers in the Tangshan  region,  two
selected by each party, shall be used.
     
     Termination.  The Luannan Coal Transportation Agreement may be  terminated
by  either  party  thereto  by notice to the other party  if  the  other  party
materially breaches its obligations and such breach is not cured within 60 days
after receipt of notice of such breach.
     
Luannan Operations and Maintenance Agreement

     The  Joint  Ventures  and  the Luannan O&M Contractor,  Duke/Fluor  Daniel
International  Services,  have entered into the Amended  and  Restated  Luannan
Operations  and Maintenance Agreement (the "Luannan Operations and  Maintenance
Agreement")  dated as of March 6, 1997. The Luannan Operations and  Maintenance
Agreement   has  a  ten-year  term  and  provides,  among  other  things,   the
responsibilities  and obligations of the Joint Ventures  and  the  Luannan  O&M
Contractor,  including,  among  others, the scope  of  services,  compensation,
payments of bonuses/penalties, termination and indemnity.
     
     Scope  of Services. The Luannan O&M Contractor will provide the operation,
maintenance  and repair services necessary for the production and  delivery  of
electrical  energy by the Luannan Facility in accordance with the  requirements
of   the  Luannan  Power  Purchase  Agreement  including,  without  limitation,
developing  a  hiring  schedule, preparing a list of recommended  tools,  spare
parts  and  equipment,  providing maintenance and repair services  and  keeping
maintenance and operation records.
     
     The  responsibilities of the Luannan O&M Contractor prior to  the  Luannan
Commercial  Operation  Date  will include, without  limitation,  reviewing  and
consulting  with  the Joint Ventures regarding all plant design specifications,
assessing  the available local labor force, developing plans for  staffing  and
training  with  respect  to  local  labor, developing  operating  budgets,  and
procuring  tools, spare parts, chemicals and other materials. The  Luannan  O&M
Contractor  will  also provide operating personnel to assist  in  start-up  and
testing  of  the  Luannan Facility under the supervision  of  the  Luannan  EPC
Contractor.  After  the  Luannan Commercial Operation  Date,  the  Luannan  O&M
Contractor  will  have complete on-site responsibility for the  operations  and
maintenance  of  the  Luannan Facility. Among other  things,  the  Luannan  O&M
Contractor  will  (i) operate and maintain the Luannan Facility  in  accordance
with  prudent utility practices, and as required by the Luannan Power  Purchase
Agreement,  and  all  applicable laws, permits, approvals,  ordinances,  rules,
regulations   and   orders,   (ii)  provide  all  management,   administration,
supervision   and  staffing  functions,  (iii)  procure  materials,   supplies,
consumables  and outside services as per the approved budget and (iv)  maintain
the Luannan Facility in good repair.
     
     Service  to be Performed by Joint Ventures. Among other things, the  Joint
Ventures will monitor the operation of the Luannan Facility, provide office and
administrative  space,  provide  and pay for all  fuel  and  utilities,  obtain
necessary permits and licenses, except those issued in the name of the  Luannan
O&M  Contractor  or  those the Luannan O&M Contractor is  required  to  obtain,
provide  and  pay for all fuel required, and pay or reimburse the  Luannan  O&M
Contractor  for  all property or other taxes related to the  Luannan  Facility,
excluding income taxes of the Luannan O&M Contractor.
     
     Insurance.  The  Luannan O&M Contractor will carry and maintain  insurance
with  specified  minimums  including worker's  compensation  and  comprehensive
automobile liability insurance. The Joint Ventures will provide insurance  with
specified minimums to cover general liability, builder's risk exposure and  all
risk  property  insurance naming the Luannan O&M Contractor  as  an  additional
insured  and  providing a waiver of subrogation in favor  of  the  Luannan  O&M
Contractor  and  designated  subcontractors. The Joint  Ventures  will  provide
coverage with a specified minimum for themselves and the Luannan O&M Contractor
against claims for third party bodily injury and death and third party property
damage.
     
     Compensation. Prior to the Luannan Commercial Operation Date, the  Luannan
O&M  Contractor  will  be entitled to a fee of $250,000 per  annum  payable  in
monthly  installments and eligible for a start-up bonus of $500,000 based  upon
mutually agreed-upon criteria.
     
     After  the  Luannan  Commercial Operation  Date  occurs,  in  addition  to
reimbursements  for  the  cost of the operation of the  Luannan  Facility,  the
Luannan  O&M  Contractor  will receive an annual  operating  fee  of  $500,000,
payable in equal monthly installments, adjusted annually in accordance with the
U.S. Consumer Price Index.
     
     Bonuses/Penalties. The Luannan O&M Contractor's monthly installment of the
annual  operating  fee  after  the Luannan Commercial  Operation  Date  may  be
increased  or  decreased  on the basis of several criteria,  including  certain
criteria designed to measure performance as illustrated by the following chart:
     
PEAK HOURS
            BONUS                           PENALTY
$0.01 per kWh for amount of     $0.05 per kWh for amount of
daily energy production         daily energy production less
greater than 760,000 kWh of     than 800,000 kWh of gross
net energy production.          energy production.
                                
NON-PEAK HOURS
            BONUS                           PENALTY
$0.01 per kWh for amount of     $0.01 per kWh for amount of
daily energy production         daily energy production
greater than 504,000 kWh of     greater than 560,000 kWh gross
gross energy production up to   energy production.
a maximum of 16,000 kWh of
gross energy production.

TROUGH HOURS
            BONUS                           PENALTY
$0.01 per kWh for amount of     $0.05 per kWh for amount of
daily energy production above   daily energy production above
464,000 kWh gross energy        480,000 kWh of gross energy
production up to a maximum of   production.
16,000 kWh of gross energy
production.

     The  Luannan O&M Contractor's monthly installment of the annual  operating
fee will also be adjusted based on the Luannan Facility's monthly heat rate  as
follows:  for each month the Luannan Facility's average heat rate is less  than
base heat rate which is defined as an amount equal to 1.035 times the heat rate
(including  process steam) of the final project test conducted by  the  Luannan
EPC  Contractor  averaged  at  60 MW, 65 MW and  full  output  of  the  Luannan
Facility,  the Luannan O&M Contractor will receive an increase in  the  monthly
installment  of  the annual operation fee of $0.003/kWh times  the  net  energy
produced  for the month in kWh times the difference between the base heat  rate
and the actual heat rate in Btu/kWh the quantity divided by the base heat rate.
For  each  month that the Luannan Facility's average heat rate is greater  than
the base heat rate plus 400 Btu/kWh, the Luannan O&M Contractor will receive  a
decrease  in the monthly installment of the annual operation fee of  $0.003/kWh
times the net energy produced for the month in kWh times the difference between
the  actual  heat rate in Btu/kWh and the base heat rate plus 400  Btu/kWh  the
quantity divided by the base heat rate plus 400 Btu/kWh.
     
     Termination.  In addition to termination pursuant to the  default  of  the
Luannan  O&M  Contractor,  the Joint Ventures may terminate  the  contract  for
convenience  if the Luannan Power Purchase Agreement is terminated  or  if  the
Luannan  Facility is sold to a third party who intends to operate  the  Luannan
Facility. In the event of termination for convenience, in addition to  payments
of  all  outstanding costs, reasonable costs in support of the termination  and
reasonable  severance costs, the Joint Ventures will also pay the  Luannan  O&M
Contractor  $25,000  per month through the twenty-fourth  month  following  the
Luannan  Commercial Operation Date, $20,000 per month through the  forty-eighth
month  and  $15,000 per month from the forty-ninth month through  the  original
term of the Luannan Operations and Maintenance Agreement. Either party may also
terminate the Luannan Operations and Maintenance Agreement for cause, in  which
case no termination payment shall be made by the Joint Ventures.
     
     Liability  and Indemnity. Subject to certain specified insurance  coverage
limits,  the  Joint Ventures bear the risk of physical loss or  damage  to  the
Luannan  Facility.  The  Luannan  O&M Contractor  and  subcontractors  have  no
liability  for loss or damage to property or the Luannan Facility. The  Luannan
O&M  Contractor agrees to defend and indemnify the Joint Ventures, any  lenders
and  North  China  Power Company and their respective directors,  officers  and
employees against, and hold them harmless from any claims resulting from or  in
connection with Luannan O&M Contractor's performance, negligent performance, or
non-performance  of  its obligations hereunder except where  such  claims  were
caused by the sole negligence or willful misconduct of the Joint Ventures,  any
lenders  or  North China Power Company or any of their directors, officers  and
employees respectively.
     
     Subject to certain specified insurance coverage limits, the Joint Ventures
agree  to  defend and indemnify the Luannan O&M Contractor and  its  directors,
officers  and  employees against, and hold them harmless from  (i)  any  claims
resulting from or in connection with the Joint Ventures' performance, negligent
performance,  or non-performance of its obligations except where,  such  claims
were  caused  by the sole negligence or willful misconduct of the  Luannan  O&M
Contractor  and  its  directors, officers and employees, and  (ii)  any  claims
resulting  from  the  Luannan  O&M Contractor  acting  under  the  Luannan  EPC
Contractor's   supervision   and  direction,  the  Luannan   EPC   Contractor's
performance, negligent performance or non-performance of its obligations except
where  such claims are caused by the Luannan O&M Contractor and its directors',
officers'  and employees' failure to comply with directions of the Luannan  EPC
Contractor and/or the sole negligence or willful misconduct of the Luannan  O&M
Contractor and its directors, officers and employees.
     
     Ownership of and legal responsibility and liability for any and  all  pre-
existing contamination shall remain with the Joint Ventures.
     
     Force  Majeure.  Neither  party shall be responsible  or  liable  for,  or
subjected  to,  any  termination  of  the Luannan  Operations  and  Maintenance
Agreement  for,  or deemed in breach of the Luannan Operations and  Maintenance
Agreement  as  a result of, any delay or deficiency in the performance  of  its
obligations thereunder to the extent that such delay or deficiency  is  due  to
circumstances beyond its reasonable control. "Force Majeure Event"  is  defined
under  the Luannan Operations and Maintenance Agreement to mean any event  that
is  not  foreseeable  and for which the damages caused by  the  event  are  not
reasonably  preventable  by the party declaring force  majeure  and  cannot  be
overcome  such  that  it  adversely affects  one  party's  performance  of  its
obligations under the Luannan Operations and Maintenance Agreement,  including,
without  limitation, unusually severe weather conditions, any natural disasters
such  as  fire or earthquakes, any labor difficulty not involving employees  of
any  parties  thereto, war, inability to obtain fuel for the Luannan  Facility,
riots,  requirements,  actions or failures to act on the part  of  governmental
authorities  preventing performance, any modifications or  changes  in  law  or
regulations,  inability despite due diligence to obtain  required  licenses  or
approvals, and accident.
     
     Governing  Law/Disputes. The Luannan Operations and Maintenance  Agreement
is  governed  by  the  law  of the State of Texas, but any  unresolved  dispute
between  the  parties shall be settled by arbitration conducted  in  accordance
with  the  Commercial Rules of the American Arbitration Association in  Dallas,
Texas.
     
Engineering and Design Contract

     Tangshan  Panda  and Tangshan Pan-Western entered into an Engineering  and
Design  Contract  (the "Engineering and Design Contract"), dated  December  21,
1995,  with  Hebei  Electric  Power Survey and Design  Institute  (the  "Design
Institute"). The Design Institute has agreed to perform all surveys, design and
engineering  work  including the preliminary design and  construction  drawings
(collectively, the "Services") necessary for Tangshan Panda and  Tangshan  Pan-
Western to obtain permits and construct the Luannan Facility in accordance with
PRC codes and regulations, and with the project design criteria detailed in the
Engineering   and   Design  Contract  (the  "Project  Design  Criteria").   The
Engineering and Design Contract will be in effect until final acceptance of the
Luannan Facility by Tangshan Panda and Tangshan Pan-Western in accordance  with
the Luannan EPC Contract. Tangshan Panda and Tangshan Pan-Western have assigned
their  rights  and benefits in, and delegated all of their obligations  arising
under, the Engineering and Design Contract to the Luannan EPC Contractor.
     
     Design  Institute's Responsibilities. The Design Institute will accomplish
the preliminary design, construction drawings and their relevant government and
project  approvals in accordance with current design codes and  regulations  in
China  and in accordance with the Project Design Criteria. The Design Institute
will  also  be  responsible  for any modifications  required  by  the  relevant
government authorities after examination of the preliminary design. The  Design
Institute  will,  subject to the allocation decisions made by the  Luannan  EPC
Contractor, provide on-site personnel on a 24 person/month basis to support the
construction efforts during the construction stage of the Luannan Facility. The
Design  Institute  will be responsible for paying any PRC taxes  in  connection
with  the Services. The Design Institute guarantees that the preliminary design
and  construction drawings will meet the requirements contained in the  Project
Design  Criteria  and the Design Institute's feasibility study  (including  all
relevant  government authorities' comments and approvals),  with  such  changes
therein  as  Tangshan  Panda  and  Tangshan Pan-Western  and  the  Luannan  EPC
Contractor may approve, for the design of the Luannan Facility, including power
output and thermal output, heat rate and emissions limits from such plants.  If
there is any error or omission in the Services provided by the Design Institute
or  any  breach of guarantee described above, the Design Institute will perform
such  additional  Services and design work at its own expense,  on  request  of
Tangshan  Panda or Tangshan Pan-Western as may be deemed necessary  to  correct
such  error  or omission and the Design Institute will also be responsible  for
the relevant loss/damage of Tangshan Panda and Tangshan Pan-Western.
     
     Tangshan  Panda's  and Tangshan Pan-Western's Rights and Responsibilities.
Tangshan Panda and Tangshan Pan-Western will provide the Design Institute  with
relevant information necessary to prepare and complete the preliminary  design,
construction  drawings  and obtain relevant government approvals.  If  Tangshan
Panda  and Tangshan Pan-Western fail to provide the Design Institute  with  the
required information in a timely manner, they will be responsible for the  cost
of corrections to the preliminary design and the Luannan EPC Contractor will be
responsible  for  the  cost  of  corrections to the  construction  drawings  as
specified  under  the  Engineering  and Design  Contract.  Tangshan  Panda  and
Tangshan  Pan-Western  have the right to terminate the Engineering  and  Design
Contract in writing for any reason at any time.
     
     Payments. Tangshan Panda and Tangshan Pan-Western will pay to the  Luannan
EPC  Contractor or to the Design Institute (with credit under the  Luannan  EPC
Contract)  a lump sum price of RMB 7.0 million for the Services to be  provided
by  the Design Institute. Thirty percent of such lump sum price will be for the
preliminary design and the remainder for the construction drawings.
     
Contracts Between the Joint Ventures

     Upon  the  closing of the Prior Offering, Tangshan Pan-Sino has  commenced
action  to  acquire  the rights to use all Luannan Facility land,  the  Luannan
Facility buildings and certain off-site property and will enter into leases  to
permit the other Joint Ventures to use portions of such facilities.
     
     Upon  the  closing  of the Prior Offering, Tangshan Cayman  has  commenced
action  to  acquire water and land use rights and water wells. Tangshan  Cayman
has entered into contracts with Tangshan Panda and Tangshan Pan-Western to sell
them  heat,  steam  and  hot  water for use in their facilities.  In  addition,
Tangshan  Cayman  has entered into a contract to sell steam and  hot  water  to
Tangshan  Pan-Sino  for  further distribution to industrial  users  in  Luannan
County.
     
                                  MANAGEMENT
                                       
Director, Independent Director and Officers of the Issuer and the Company

     The number of members of the Board of Directors of each of the Issuer  and
the  Company has been set at two, but the number may be increased or  decreased
by  the Board of Directors or the stockholders. Directors of the Issuer and the
Company  are  elected annually and each elected director holds office  until  a
successor  is elected. Robert W. Carter and Brian G. Trueblood are the  current
directors  of  each of the Issuer and the Company. Neither the Issuer  nor  the
Company has any employees.
     
     The  Articles  of  Association  of  the  Issuer  and  the  Certificate  of
Incorporation  and  By-Laws of the Company provide  that  the  Issuer  and  the
Company  shall  always have an individual serving as an "Independent  Director"
who shall have the right to vote or consent only on, and whose affirmative vote
or consent shall be required with respect to, any decision by the Issuer or the
Company (as the case may be) or the Board of Directors of either of them to (i)
file  a  bankruptcy petition, make an assignment for the benefit of  creditors,
apply  for  the appointment of a custodian, receiver or trustee for it  or  its
property, consent to the filing of such proceeding or admit in writing  to  its
inability  to  pay  its debts generally as they become due; (ii)  commence  the
dissolution, liquidation, consolidation, merger or sale of all or substantially
all  of  its assets; (iii) amend the Articles of Association or Certificate  of
Incorporation and By-Laws (as the case may be) to broaden the purposes  of  the
Issuer  or  the Company and in other respects; or (iv) authorize the Issuer  or
the  Company  to  engage  in any activity other than those  set  forth  in  the
Articles  of  Association or Certificate of Incorporation and By-Laws  (as  the
case may be). The Articles of Association of the Issuer and the Certificate  of
Incorporation and By-Laws of the Company provide that the Independent  Director
shall be a person who is not and has not been, for the five years preceding his
election, (i) a direct or indirect legal or beneficial owner of the Company  or
its  affiliates  (or a member of the immediate family of such  owner),  (ii)  a
creditor,  supplier,  officer,  director,  promoter,  underwriter,  manager  or
contractor  of  the  Company  or any of its affiliates  (or  a  member  of  the
immediate  family  of any such officer or director) or (iii)  a  person  (or  a
member  of the immediate family of a person) employed by the Company or any  of
its  affiliates  or by any creditor, supplier, employee, stockholder,  officer,
director, promoter, underwriter, manager or contractor thereof. The Independent
Director  may, however, serve in such capacity for other subsidiaries of  Panda
International. In March 1997, Brian G. Trueblood was elected as the Independent
Director  of  the  Issuer and the Company. Mr. Trueblood  also  serves  as  the
Independent  Director  for PIC, Pan-Western and certain other  subsidiaries  of
Panda International.
     
     The following table sets forth the names and ages of the directors and the
executive officers of the Issuer and the Company and their positions  with  the
Issuer and the Company. Since the formation of the Issuer and the Company, each
executive  officer  of the Issuer and the Company has held the  same  office(s)
with  the  Issuer  and  the  Company  that  he  or  she  has  held  with  Panda
International,  and  each  other corporation that  is  currently  a  direct  or
indirect subsidiary of the Company.
          Name           Age          Position with the Issuer and the
                                                  Company
 Robert W. Carter         59   Director,  Chairman  of the  Board  and  Chief
                               Executive Officer
 Darol S. Lindloff        58   President
 Janice Carter            55   Executive   Vice  President,   Secretary   and
                               Treasurer
 William C. Nordlund      42   Executive Vice President, Finance
 James D. (Pete) Wright   43   Senior  Vice  President, Project  Finance  and
                               Acquisitions
 L. Stephen Rizzieri      41   Vice President and General Counsel
 Brian G. Trueblood       36   Independent Director
                               
     Robert  W.  Carter has been the Chairman of the Board and Chief  Executive
Officer  of Panda International since January 1995. Mr. Carter has held similar
chief executive positions with PEC and its subsidiaries since he founded PEC in
1982. Mr. Carter also is President of Robert Carter Oil & Gas, Inc. (an oil and
gas  exploration  company), which he founded in 1980. From 1978  to  1980,  Mr.
Carter  was  Vice  President  of oil and gas lease  sales  for  Reserve  Energy
Corporation (an oil and gas exploration company). From 1974 to 1978, he  served
as  a marketing consultant to Forward Products, Inc. (a petrochemical company).
Mr.  Carter  was Executive Vice President of Blasco Industries (a chemical  and
textile  manufacturer) from 1970 to 1974. He served as a  sales  representative
and  sales  manager  for Olin Mathieson Chemical Corporation (a  petrochemical,
pulp  and paper company) from 1965 to 1970. From 1960 to 1965, he was  a  sales
representative  for Inland, Mead Paper Company in Atlanta. Mr. Carter  attended
the University of Georgia.
     
     Darol  S.  Lindloff  was  appointed President of  Panda  International  in
February  1997.  Prior  thereto, he served as Senior  Vice  President,  Project
Development  of  Panda  International from January  1996.  He  served  as  Vice
President  of  Panda  International from January 1993 to January  1996  in  the
capacities of Business Development, Technical Director and Project Development.
Mr.  Lindloff  served  as  Marketing Manager for PEC from  October  1989  until
January  1993.  From December 1987 to October 1989, Mr. Lindloff established  a
regional  office  in Dallas for Southwest Research Institute  (a  research  and
development  company)  and served as Regional Director. From  January  1986  to
December   1987,  Mr.  Lindloff  worked  on  the  development  of  cogeneration
facilities  for Hawker Siddeley Power Engineering, Inc. (a British  engineering
company).  During 1984 and 1985, he worked in the development  of  cogeneration
facilities for Central & Southwest Corporation's subsidiary, C&SW Energy,  Inc.
(an energy company). Mr. Lindloff graduated from Southwestern University with a
Bachelor of Science degree in organic chemistry.
     
     Janice  Carter has been the Executive Vice President, Secretary, Treasurer
and a Director of Panda International since January 1995 and has served in such
capacities with PEC since its inception in 1982. From 1975 to 1980, Mrs. Carter
was  office  manager  of Reserve Energy Corporation. From 1969  to  1972,  Mrs.
Carter  worked  for  University Computing, and from 1962 to 1968  she  directed
administration for the engineering department of Otis Engineering,  a  division
of  Halliburton  International. Mrs. Carter also serves as Vice  President  and
Secretary/Treasurer of Robert Carter Oil & Gas, Inc. Mrs. Carter attended Texas
Tech University. Mrs. Carter is married to Robert W. Carter.
     
     William  C.  Nordlund has served as Executive Vice President,  Finance  of
Panda  International since February 1997. Prior thereto, he  served  as  Senior
Vice President and General Counsel of Panda International since August 1996, as
Vice  President and General Counsel of Panda International since  January  1995
and  of  PEC since January 1994. Mr. Nordlund was General Counsel of  PEC  from
April  1993  to January 1994. He was Senior Vice President and General  Counsel
from  August  1992  to April 1993 and Vice President and General  Counsel  from
September  1991  to August 1992 for The Oxford Energy Company, a  developer  of
independent  power facilities. From July 1990 to September 1991,  Mr.  Nordlund
was  an  attorney with Constellation Holdings, Inc., an affiliate of  Baltimore
Gas  & Electric Company which developed independent power facilities. Prior  to
July 1990, he was a partner in the law firm of Winston & Strawn in Chicago. Mr.
Nordlund earned a Bachelor of Arts degree from Vanderbilt University,  a  Juris
Doctor  degree from Duke University and a Master of Management degree from  the
J.L. Kellogg Graduate School of Business at Northwestern University.
     
     James  D.  (Pete)  Wright  has served as Senior  Vice  President,  Project
Finance  and  Acquisitions  of Panda International  since  August  1996.  Prior
thereto,  he  served  as Vice President and Chief Financial  Officer  of  Panda
International  since  January 1995 and of PEC since January  1994.  Mr.  Wright
served  as  Chief Financial Officer of PEC from February 1993 to January  1994.
Prior to joining PEC in February 1993, he served as Vice President of Banc  One
Capital Corporation (a merchant banking group) from May 1986 to December  1992.
Mr.  Wright  previously held the position of Vice President with the investment
banking  firms of Schneider, Bernet & Hickman, Inc. in Dallas and Wheat,  First
Securities, Inc. in Richmond, Virginia. Mr. Wright earned a Bachelor of Science
degree  from  Vanderbilt  University and a Master  of  Business  Administration
degree  from  the Colgate Darden Graduate School of Business Administration  of
the University of Virginia.
     
     L.  Stephen  Rizzieri has served as Vice President and General Counsel  of
Panda  International since February 1997. Prior thereto, he  served  as  Deputy
General   Counsel   since  April  1996.  From  1993  until  he   joined   Panda
International,  he  was  Assistant  General  Counsel  of  ENSERCH   Development
Corporation,   the   independent  power  development   affiliate   of   ENSERCH
Corporation. From 1985 to 1993, Mr. Rizzieri served in various capacities  with
Sunshine  Mining  Company  and  its  affiliated  companies,  most  recently  as
Assistant  General  Counsel and Secretary. From 1981  to  1985,  he  served  in
various  capacities with Woods Petroleum Corporation (which  was  purchased  by
Sunshine Mining Company in 1985) and its affiliates, most recently as President
of Woods Securities Corporation. In 1980, Mr. Rizzieri served as Deputy General
Counsel  -  Enforcement Division, Oklahoma Securities Commission. Mr.  Rizzieri
earned  a  Bachelor of Arts degree from the State University  of  New  York  at
Geneseo and a Juris Doctor degree from the University of Oklahoma.
     
     Brian  G. Trueblood became the Independent Director of the Issuer and  the
Company  in  March  1997.  He has served since February  1997,  and  also  from
September 1989 through August 1994, as a senior partner in the Dallas office of
Lucas Associates (an Atlanta-based executive search firm). From August 1994  to
February 1997, Mr. Trueblood served as Vice President of TNS Partners, Inc.  (a
Dallas-based retained executive search firm). Mr. Trueblood received a Bachelor
of  Science  degree  in  general engineering from the  United  States  Military
Academy. Mr. Trueblood also serves as the Independent Director of various other
subsidiaries of Panda International.
     
Executive and Board Compensation and Benefits

     No  cash or non-cash compensation has been paid or is proposed to be  paid
in  the current calendar year to any of the officers and directors listed under
"Management"  for their services to the Issuer and the Company.  Mr.  Trueblood
will  be paid $1,000 per year by each of the Issuer and the Company for serving
as an Independent Director thereof.
     
Stock Ownership of Panda International

     There  were  11,401,212  shares  of common stock  of  Panda  International
outstanding  at  March 31, 1997. Of this amount, 4,418,957 shares  (38.8%)  are
owned  by  Robert  and  Janice Carter and members of their  family  and  family
trusts.  W.M. Huffman and members of his family and family trusts and a  family
partnership  own 2,134,443 of the outstanding shares (18.7%). Other  directors,
officers  and  employees  of  Panda International  own  less  than  1%  of  the
outstanding  shares  of  common  stock. At  March  31,  1997:  (i)  there  were
outstanding  options  to  acquire 1,209,000 shares of  common  stock  of  Panda
International (options for 1,050,000 shares being fully vested and for  159,000
shares  vesting  over  a  six-year  period, held  by  directors,  officers  and
employees of Panda International, and of this amount options for 250,000 shares
are  held  by  Robert Carter and options for 25,000 shares  are  held  by  W.M.
Huffman);  (ii)  Trust Company of the West held warrants to purchase  1,004,000
shares  of common stock of Panda International; and (iii) NNW, Inc. held rights
to  acquire  up  to  approximately 181,500 shares  of  common  stock  of  Panda
International.  See  "Description of the Projects--The Rosemary  Facility--Cash
Flow Participation."
     
                               LEGAL PROCEEDINGS
                                       
     Neither  the  Issuer  nor  the  Company  is  a  party  to  any  legal
proceedings.  Affiliates  of  the  Issuer and  the  Company  are  claimants  or
defendants  in  various  legal proceedings which have arisen  in  the  ordinary
course  of  business. The Issuer and the Company believe such claims and  legal
actions,  individually or in the aggregate, will not have  a  material  adverse
effect on the business or financial condition of the Issuer or the Company.
     
NNW, Inc. Proceeding

     On  July 12, 1996, PEC filed an action against NNW captioned Panda  Energy
Corporation  v. NNW, Inc. f/k/a Nova Northwest Inc. (No. 96--07151-C),  in  the
District Court of Dallas County, Texas (68th Judicial District). PEC's petition
seeks  a  declaratory judgment that the NNW Cash Flow Participation remains  at
0.433% after the restructuring of the Rosemary Partnership interest pursuant to
the  terms  of the NNW Credit Agreement. Pursuant to the NNW Credit  Agreement,
NNW  received  a  cash  flow participation interest in distributions  from  the
Rosemary  Partnership  in  the  amount of  4.33%  of  PEC's  own  participation
interest.  At the time the NNW Credit Agreement was entered into, the aggregate
equity interest in the Rosemary Partnership held by PEC was 10%, making the NNW
Cash  Flow Participation equal to 0.433%. As a result of the redemption of Ford
Credit's 90% limited partner interest in the Rosemary Partnership in July 1996,
PEC owns an indirect 100% interest in the Rosemary Partnership.
     
     Pursuant  to the NNW Credit Agreement, the NNW Cash Flow Participation  is
not   to  be  affected  either  positively  or  negatively  by  "any  financial
restructuring." It is the opinion of Panda International, the  Issuer  and  the
Company   that  the  redemption  of  Ford  Credit's  limited  partner  interest
constituted a "financial restructuring" within the meaning of that term in  the
NNW  Credit  Agreement and that, as a result, the NNW Cash  Flow  Participation
remains  equal  to  0.433%  of total cash flow distributions  by  the  Rosemary
Partnership  (based  on  the current debt structure).  NNW  is  disputing  this
position and asserts that, upon the restructuring, it became entitled to  4.33%
of  PEC's distributions from the Rosemary Partnership. The declaratory judgment
petition seeks a determination that the NNW Cash Flow Participation is equal to
0.433%.  The  Issuer and the Company believe that a resolution of this  dispute
and  the  declaratory  judgment proceeding adverse to  PEC  would  not  have  a
material  adverse  effect on the business or operations of the  Issuer  or  the
Company.  See  "Description of the Projects--The Rosemary  Facility--Cash  Flow
Participation."
     
Heard Proceedings

     PEC  is a party to a lawsuit captioned Panda Energy Corporation, Plaintiff
v.  Heard Energy Corporation, CLF Energia Y Electricidad, S.A., Robert A. Wolf,
Armin Alexander Budzinsky, Edward R. Gwynn, Donald L. Kinney, Morgan Stanley  &
Co., Inc., Allstate Insurance Company, Allstate Life Insurance Company, Entergy
Corporation,  Entergy  Enterprises, Inc., Entergy Power,  Inc.,  Entergy  Power
Development  Corporation,  Anil Desai, Drs. IR.  Poerwanto  P.,  and  PT  Panca
Serodja  Pradhana,  Defendants,  (No. 94--0672-J),  District  Court  of  Dallas
County, Texas (191st Judicial District). PEC initiated this litigation in April
1994  and alleges that defendants Wolf, Gwynn and Kinney, former PEC employees,
formed  a  competing  company  (Heard Energy Corporation)  and  misappropriated
certain  of  PEC's international power project opportunities. PEC alleges  that
the  other defendants knowingly participated, collaborated and/or conspired  in
the  misappropriation.  PEC  alleges causes  of  action  for  misappropriation,
conspiracy,  fraud,  breach of contract, breach of  fiduciary  duty  and  legal
malpractice  against one or more of the defendants and alleges  damages  in  an
unspecified amount.
     
     Defendant  Morgan  Stanley  filed a counterclaim  on  September  14,  1995
against  PEC,  alleging that it had performed services for PEC pursuant  to  an
engagement  agreement relating to the Brandywine Project.  PEC  terminated  the
engagement  agreement on May 4, 1993. Morgan Stanley alleges that the  services
it  performed  prior to such termination included assisting  PEC  in  obtaining
certain  regulatory  approvals,  preparing a  draft  solicitation  booklet  and
identifying  potential project financing sources, including GE Capital.  Morgan
Stanley  further  alleges that PEC obtained financing  from  GE  Capital  after
Morgan  Stanley  was  terminated, and that Morgan  Stanley  is  entitled  to  a
"transaction fee," either pursuant to the engagement agreement or based on  the
value  of  the services it allegedly performed, in an amount of not  less  than
$4.3 million, plus attorneys' fees and interest.
     
     Defendants  Heard  Energy Corporation, Wolf, Gwynn, Kinney  and  Budzinsky
(the "Heard Defendants") also filed a counterclaim during November 1994 against
PEC  and  a third-party claim against Robert Carter and Janice Carter, alleging
that  PEC,  Robert Carter and Janice Carter negligently made misrepresentations
of  PEC's  lack  of  a  continued  interest in developing  international  power
projects.  The  Heard  Defendants allege that they would not  have  engaged  in
allegedly  competing  international power project transactions  but  for  these
misrepresentations  and  that  they  incurred  damages   in   the   amount   of
approximately  $5.0  million  as  a result of  these  misrepresentations,  such
damages  allegedly consisting of expenses incurred by Heard Energy Corporation,
certain  portions  of  which allegedly are guaranteed by the  individual  Heard
Defendants.  In  both  the counterclaim and the third-party  claim,  the  Heard
Defendants further allege that PEC, Robert Carter and Janice Carter violated  a
confidentiality  order  relating to certain documents  produced  by  the  Heard
Defendants  during  the  discovery  phase of this  action  by  misappropriating
confidential  information  in these documents for  the  purpose  of  gaining  a
competitive advantage over Heard Energy Corporation. The Heard Defendants  seek
$5.0  million  in damages as well as unspecified "exemplary" damages  based  on
this alleged violation. PEC believes that the Heard Defendants' discovery order
claim is not actionable as a claim for damages.
     
     On  March  15,  1996,  all  of the defendants filed  motions  for  summary
judgment,  and  PEC filed motions for summary judgment with respect  to  Morgan
Stanley's  counterclaim and the Heard Defendants' counterclaim and  third-party
claim.  By letter dated April 30, 1996, the court advised all counsel  that  it
intended to grant the defendants' motions for summary judgment, indicating that
PEC  could  not  show  legally sufficient evidence of damages  to  sustain  its
claims. This order was entered on June 19, 1996.
     
     PEC  has  appealed the court's ruling. In light of the court's ruling  and
pending  the  appeal,  Morgan Stanley and the Heard Defendants  have  dismissed
without  prejudice  their counterclaims and third-party  claims,  and  PEC  has
agreed that any applicable statutes of limitations or other time-based defenses
will be tolled during the pendency of the appeal.
     
     The  Issuer  and the Company have been informed by PEC that PEC  does  not
believe  that  either the Morgan Stanley counterclaim or the Heard  Defendants'
counterclaims  and  third-party claims will be refiled  unless  and  until  the
judgment dismissing PEC's claims against those parties is reversed and remanded
to  the  trial court by the appellate court. In any event, PEC does not believe
that  these counterclaims or third-party claims, if reasserted, have any merit,
nor does PEC believe that these claims, if eventually decided adversely to PEC,
would have a material adverse effect on the business or operations of PEC,  the
Issuer or the Company.
     
Brandywine Proceeding

     On  June  26, 1996, certain plaintiffs commenced a proceeding against  the
Brandywine  Partnership  and  one  of  its  contractors  (as  well   as   other
subcontractors) captioned Jeannine McConnell, McConnell Pool Service, Inc.  and
McConnell  Fuel  Oil,  Inc. v. Panda-Brandywine, L.P. and  Flippo  Construction
(Case  No.  CV 96--1344) in the Circuit Court for Charles County, Maryland.  In
this proceeding, plaintiffs allege that in connection with the construction  of
an effluent water pipeline, a contractor for the Brandywine Partnership, Flippo
Construction ("Flippo") (and its subcontractors) and the Brandywine Partnership
left  their  easement and inadvertently trespassed on to plaintiffs'  property.
While  on plaintiffs' property, Flippo (and its subcontractors) and the
Brandywine Partnership  allegedly  dug  a  deep and wide  hole  which  extended
onto the plaintiff's property to locate a buried pipe. Plaintiffs allege that
this trespass damaged the property, decreased its fair market value and 
resulted in loss of use thereof. Plaintiffs claim damages in numerous counts
that aggregate to $3.25 million in actual damages against each defendant plus
punitive damages aggregating $3.0 million against all defendants.
     
     The  Brandywine Partnership intends to vigorously contest this proceeding.
Panda International, the Issuer and the Company do not believe that the outcome
of  this  proceeding  will have any material adverse effect  on  the  financial
condition  of  the  Issuer, the Company or the Brandywine Partnership.  In  the
opinion  of  Panda  International, the Issuer and  the  Company,  the  contract
between  the  Brandywine Partnership and Flippo requires  Flippo  to  hold  the
Brandywine  Partnership harmless for any activities relating to the plaintiffs'
property.
     
Florida Power Proceedings

     In  January 1995, Florida Power commenced a proceeding before the  Florida
PSC  against the Kathleen Partnership captioned In re: Petition for Declaratory
Statement  Regarding  Eligibility  for  Standard  Offer  Contract  and  Payment
Thereunder  by  Florida Power Corporation, Case No. 950110-EI. Florida  Power's
petition  sought  a  declaratory statement that  the  Kathleen  Power  Purchase
Agreement  is not "available" to the Kathleen Partnership because the  Kathleen
Partnership's  proposed cogeneration facility allegedly is  not  in  compliance
with  the Florida PSC's rules (because it may be capable of exceeding 75 MW  in
electric generating capacity). Additionally, if the contract is "available"  to
the Kathleen Partnership, Florida Power sought a declaratory statement that  it
is  only  obligated to pay capacity payments under the power purchase agreement
relating  to the Kathleen Facility for a term of 20 years rather than  for  the
entire  30-year term of the power purchase agreement. The Kathleen  Partnership
filed a cross-petition seeking a declaratory statement that the milestone dates
in  the  power  purchase  agreement must be extended  due  to  Florida  Power's
improper  actions  and  as  a result of the delays in developing  the  Kathleen
Facility  caused by Florida Power's petition and the ensuing proceeding  before
the  Florida  PSC.  The  Kathleen Partnership filed a  motion  to  dismiss  the
proceeding  based on lack of jurisdiction, but that motion was  denied  by  the
Florida PSC. In February of 1996, the Florida PSC held a one-day hearing.
     
     On  May  20,  1996,  the  Florida PSC issued a decision  granting  Florida
Power's  petition,  and  holding  that the  power  purchase  agreement  is  not
available  to  the  Kathleen Facility as proposed because it  has  an  electric
generating capacity in excess of 75 MW and that Florida Power is only obligated
to  make capacity payments under the power purchase agreement for 20 years. The
Florida  PSC's  decision also granted the Kathleen Partnership's cross-petition
insofar as it grants the Kathleen Partnership an 18-month extension to meet the
construction commencement milestone date and an 18-month extension to meet  the
commercial operation milestone date. The Kathleen Partnership has appealed  the
Florida PSC's order to the Florida Supreme Court. The parties' briefs have been
filed  and  oral argument in the case took place in February 1997. The  parties
are presently awaiting the decision of the Florida Supreme Court.
     
     There  are  two actions related to this matter pending before the  Florida
Supreme  Court and the United States District Court for the Middle District  of
Florida.
     
                       DESCRIPTION OF OTHER INDEBTEDNESS
                                       
Series A Bonds

     On  July  31,  1996,  Panda Funding Corporation,  a  Delaware  corporation
("PFC"),  which  is an indirect wholly-owned subsidiary of the  Company  and  a
direct wholly-owned subsidiary of PIC, consummated the offering and sale  of  a
series  of  Pooled  Project  Bonds (the "Series  A  Bonds")  in  the  aggregate
principal amount of $105.5 million. The Series A Bonds were issued pursuant  to
an indenture (the "PFC Indenture") among PFC, PIC and Bankers Trust Company, as
trustee. The proceeds of the sale of the Series A Bonds were used (a)  to  fund
deposits  into certain reserve funds, (b) to redeem a limited partner  interest
in  the  Rosemary  Partnership formerly held by  a  third  party,  (c)  to  pay
transaction fees and expenses in connection with the offering of the  Series  A
Bonds and (d) to distribute approximately $61.2 million to Panda International,
of  which  approximately $26.4 million was used to prepay certain  indebtedness
and  the  balance of which Panda International has used and intends to use  for
the  development  of  Projects and general corporate purposes.   The  following
description  of the Series A Bonds and certain provisions of the PFC  Indenture
does  not  purport  to be complete and is subject to, and is qualified  in  its
entirety by reference to, the PFC Indenture, a copy of which is included as an
exhibit to this Registration Statement.
     
     PFC  may issue additional series of Pooled Project Bonds pursuant  to  the
PFC Indenture, as supplemented by a supplemental indenture specific to such new
series  of Pooled Project Bonds. Except for matters specific to each series  of
Pooled Project Bonds, including principal amount, interest rate, permitted uses
of  proceeds, payment frequency and amortization, each series of Pooled Project
Bonds will be governed by the same indenture provisions, and is secured by  the
same  collateral, as each other series of Pooled Project Bonds. In  particular,
(i)  each  new  series  of Pooled Project Bonds will be  subject  to  mandatory
redemption provisions comparable to the provisions applicable to the  Series  A
Bonds, (ii) each series of Pooled Project Bonds will rank on a parity with  the
Series  A Bonds, (iii) the payment of each series of Pooled Project Bonds  will
be  guaranteed by PIC pursuant to the PIC Guaranty, (iv) the security for  each
new  series  of  Pooled Project Bonds will consist of the same collateral  that
secures  the  Series A Bonds and the rights of the holders of  each  series  of
Pooled  Project Bonds, as well as any other secured party, with respect to  the
collateral are shared equally, and (v) each series of Pooled Project  Bonds  is
entitled  to all of the benefits of the PFC Indenture, including the protection
afforded by the covenants contained therein.
     
     Subject  to  certain  conditions, including those set forth  below,  Panda
International and its affiliates (including the Issuer) are required by the PIC
Additional  Projects  Contract to transfer to PIC, or to  certain  wholly-owned
direct subsidiaries thereof, their interests in each Project for which a  power
purchase  agreement  is  entered into prior to July 31,  2001,  and  which  has
reached  Financial Closing or achieved Commercial Operations prior to July  31,
2006.  Such additional transferred Projects will become part of the PIC Project
Portfolio  and  will  serve as additional collateral security  for  the  Pooled
Project  Bonds. Panda International and its affiliates are required to transfer
their interests in a Project to the PIC Project Portfolio only if the principal
amount  of  additional series of Pooled Project Bonds that can be issued  after
giving  effect  to  the inclusion of the Project in the PIC  Project  Portfolio
equals or exceeds the amount of "Anticipated Additional Debt." Interests  in  a
Project  will  not  be  transferred if the Project has  not  reached  Financial
Closing  or  achieved  Commercial  Operations.  Additionally,  except  for  the
Kathleen Project, which must be transferred to the PIC Project Portfolio if  it
reaches  Financial Closing, interests in a Project will not be transferred  if:
(i)  Panda  International does not own a controlling interest in  the  Project;
(ii)  the transfer would be prohibited under any Project-level financing, power
purchase or related agreement; or (iii) after giving effect to the issuance  of
the  additional series of Pooled Project Bonds in connection with the inclusion
of the Project in the PIC Project Portfolio (a) the rating of previously issued
Pooled  Project Bonds is not reaffirmed by at least two rating  agencies  at  a
rating equal to or higher than that in effect immediately prior to the issuance
of  such additional series or (b) the projected PIC Debt Service Coverage Ratio
or  the  projected  PIC  Consolidated Debt  Service  Coverage  Ratio  (if  then
applicable)  would  be  less than 1.7:1 or 1.25:1, respectively,  for  (1)  the
period  beginning with the date of determination through December  31  of  that
calendar year, (2) each period consisting of a calendar year thereafter through
the  calendar  year immediately prior to the calendar year in which  the  Final
Stated  Maturity occurs and (3) the period thereafter beginning with January  1
and  ending with such Final Stated Maturity (each such period, a "Future  Ratio
Determination  Period").  The PIC Additional Projects Contract  requires  Panda
International to use commercially reasonable efforts to cause each  Project  to
meet the conditions for transfer to the PIC Project Portfolio as of the date  a
Project  reaches Financial Closing or achieves Commercial Operations, whichever
occurs first, or within a 90-day period thereafter. If, however, the conditions
for  such a transfer cannot be satisfied using commercially reasonable efforts,
Panda  International will have no further obligation to PIC in respect of  such
Project  and  may  retain its interest in such Project  or  sell  it  to  third
parties. The Luannan Facility is not currently eligible for transfer to the PIC
Project Portfolio.
     
     "Anticipated Additional Debt," as that term is used in the PIC  Additional
Projects Contract, means the original principal amount of an additional  series
of  Pooled  Project Bonds proposed to be issued which is equal to  the  largest
principal amount of such series that will provide a projected PIC Debt  Service
Coverage Ratio and a projected PIC Consolidated Debt Service Coverage Ratio (if
then  applicable)  of  at least 1.7:1 and 1.25:1, respectively,  for  each  PIC
Future Ratio Determination Period, as confirmed by the "Consolidating Engineer"
(as  such  term is used in the PIC Additional Projects Contract), assuming,  in
respect of the additional series of Pooled Project Bonds proposed to be issued,
(i)  a maximum maturity and average life generally available in the marketplace
for  debt  of  a similar nature and (ii) a coupon rate then prevailing  in  the
market for debt of a similar nature, and taking into account (a) in the case of
the  PIC Debt Service Coverage Ratio, PIC Cash Available for Distribution  from
the  PIC  Project  Portfolio and (b) in the case of the PIC  Consolidated  Debt
Service  Coverage Ratio, PIC Cash Available from Operations (net of any reserve
requirements  at  both the Project and PIC debt levels) from  the  PIC  Project
Portfolio  (giving  effect, in each case, to the transfer to  the  PIC  Project
Portfolio  of any Project in respect of which such additional series of  Pooled
Project Bonds is proposed to be issued).
     
     Other  than  through the issuance of additional series of  Pooled  Project
Bonds  upon  the  addition of a Project to the PIC Project Portfolio,  the  PFC
Indenture  prohibits PFC from incurring additional debt or becoming  liable  in
connection with a guaranty. PIC and its direct subsidiaries are prohibited from
incurring debt and becoming liable in connection with guaranties other than (i)
in the case of PIC, its guaranty and notes issued in connection with the Pooled
Project  Bonds, (ii) in the case of PIC's direct subsidiaries, their guaranties
and  notes  issued  in  connection with the Pooled Project  Bonds  and  certain
subordinated debt payable to PIC or another direct subsidiary of PIC, and (iii)
in the case of Project Entities, Project debt and certain guaranties.
     
     In  accordance with a registration rights agreement that was entered  into
in  connection  with the Series A Offering, PFC, PIC and Interholding  filed  a
registration statement with the Securities and Exchange Commission with respect
to  the exchange of Series A--1 Bonds for the Series A Bonds. The terms of  the
Series  A  Bonds  and the Series A-1 Bonds are substantially identical,  except
that (i) the Series A-1 Bonds have been registered under the Securities Act and
(ii)  holders  of  the Series A-1 Bonds are not entitled to certain  rights  of
holders  of  the Series A Bonds under the registration rights agreement,  which
rights terminated upon the consummation of the exchange offer. Such rights also
terminated as  to holders  of Series A  Bonds who  are eligible to tender their
Series  A  Bonds  for exchange in the exchange offer and failed to do  so.  The
registration statement became effective on February 14, 1997, and an  offer  to
exchange  the  Series  A-1 Bonds for the Series A Bonds  commenced  thereafter.
Pursuant to such offer, Series A-1 Bonds were exchanged for Series A Bonds that
were  validly tendered through March 20, 1997. All outstanding Series  A  Bonds
were  tendered for exchange. All references in this Prospectus to the Series  A
Bonds shall include the Series A--1 Bonds issued in exchange for Series A Bonds
in such exchange offer.
     
     
     
  Interest and Principal Payments
  
     The Series A Bonds bear interest at the rate of 11 5/8% per year from July
31,  1996, or from the most recent interest payment date to which interest  has
been paid or provided for, payable semiannually on February 20 and August 20 of
each  year,  commencing February 20, 1997. Principal of the Series A  Bonds  is
payable in semiannual installments as follows:
                  Percentage of                   Percentage of
  Payment Date      Original        Payment Date    Original
                    Principal                       Principal
                 Amount Payable                  Amount Payable
  February 20,        0.2045%      February 20,       3.4687%
  1997                             2005
  August 20,          0.0000%      August 20,         3.5977%
  1997                             2005
  February 20,        0.0000%      February 20,       3.7820%
  1998                             2006
  August 20,          0.0000%      August 20,         2.8098%
  1998                             2006
  February 20,        0.0000%      February 20,       3.0076%
  1999                             2007
  August 20,          0.5933%      August 20,         4.8415%
  1999                             2007
  February 20,        0.6129%      February 20,       5.1145%
  2000                             2008
  August 20,          0.0000%      August 20,         5.0057%
  2000                             2008
  February 20,        0.0000%      February 20,       5.2949%
  2001                             2009
  August 20,          1.3753%      August 20,         5.5185%
  2001                             2009
  February 20,        1.4691%      February 20,       5.8300%
  2002                             2010
  August 20,          2.2184%      August 20,         5.7248%
  2002                             2010
  February 20,        2.3565%      February 20,       6.0590%
  2003                             2011
  August 20,          2.9328%      August 20,         6.4800%
  2003                             2011
  February 20,        3.1031%      February 20,       6.8808%
  2004                             2012
  August 20,          3.2796%      August 20,         8.4390%
  2004                             2012

  PIC Guaranty; Collateral
  
     All  obligations of PFC with respect to the Series A Bonds and any  future
additional  series  of  Pooled  Project Bonds  are  fully  and  unconditionally
guaranteed  by  PIC pursuant to the PIC Guaranty and guaranteed  in  a  limited
amount  by  the PIC U.S. Entity. The obligations of PFC pursuant to the  Pooled
Project  Bonds,  the  obligations  of PIC  under  the  PIC  Guaranty,  and  the
obligations of the PIC U.S. Entity under its guaranty are secured by (i)  liens
on  and  security interests in substantially all of the assets of PIC and  PFC,
(ii)  pledges of all of the capital stock of PIC, PFC, the U.S. PIC Entity  and
any  future U.S. PIC Entity and (iii) a pledge of 60% of the capital  stock  of
the  Non-U.S. PIC Entity and any future Non-U.S. PIC Entity. The rights of  the
holders  of  the  Series A Bonds and the rights of any holders  of  any  future
additional  series of Pooled Project Bonds with respect to the  Pooled  Project
Bond Collateral will be shared equally.
     
     The source of payment for the Series A Bonds and all additional series  of
Pooled  Project Bonds, if any, will be the payments by PIC to PFC of principal,
premium, if any, and interest due under PIC Notes and payments, if any, by  PIC
under  the  PIC  Guaranty and by the PIC U.S. Entity under  its  guaranty.  The
principal  source of payments under PIC Notes is distributions to  PIC  through
the  PIC Entities from the Project Entities that own Projects that are part  of
the  PIC  Project  Portfolio. Thus, the ability of PFC to  make  such  payments
depends  primarily  upon the performance of the Projects  in  the  PIC  Project
Portfolio and the ability of the Project Entities to make distributions to  the
PIC Entities and, ultimately, to PIC.
     
  Ranking
  
     The indebtedness evidenced by the Series A Bonds and any additional series
of Pooled Project Bonds constitute senior secured indebtedness of PFC. In order
for  PFC to receive payments from PIC on the PIC Notes, the Projects in the PIC
Project  Portfolio  must generate sufficient operating cash  flow  to  pay  all
operating  expenses,  debt  service and other reserve  requirements  and  other
payment obligations to lenders and other Project creditors. Therefore, although
PFC  and PIC have no secured indebtedness other than the Pooled Project  Bonds,
the  Exchange  Notes  are effectively subordinated to all  liabilities  of  the
Project  Entities  incurred  in respect of the  Projects  as  well  as  to  the
liabilities  of PFC and PIC in respect of the Pooled Project Bonds.  See  "Risk
Factors--Financial Risks--Substantial Leverage" and "--Effective  Subordination
of  Exchange  Notes  and  Exchange Notes Guarantee"  and  "Description  of  the
Exchange Notes, the Notes Guarantee, the Issuer Loan, the Shareholder Loans and
the Collateral Documents."
     
  Certain Covenants
  
     Limitations  on  Distributions.  Subject to  certain  limited  exceptions,
distributions may be made by PFC through to the guarantor only from, and to the
extent  of,  amounts  then  on  deposit in the distribution  funds  established
pursuant to the PFC Indenture (the "PFC Distribution Funds"). Amounts may  only
be  deposited  into  the PFC Distribution Funds upon the  satisfaction  of  the
following  conditions:   (i)  amounts deposited in  certain  funds  established
pursuant to the PFC Indenture shall be equal to or greater than the amount then
required  to be deposited therein, including the debt service and debt  service
reserve  funds  and (ii) no event or condition has occurred and  is  continuing
that  constitutes  a  default of an event of default under the  PFC  Indenture,
(iii)  PIC's debt service coverage ratio is equal to or greater than 1.4:1  for
the 12 months immediately preceding the month in which such distribution is  to
occur  and  (iv)  PIC's projected debt service coverage ratio is  equal  to  or
greater than 1.4:1 for the 12 months immediately succeeding the month in  which
such distribution is to occur.
     
     Certain  Other  Covenants.  The  PFC  Indenture  contains  numerous  other
affirmative  and negative covenants which restrict the activities  of  PFC  and
PIC, including, but not limited to, the following:
     
     (i)   a  prohibition against incurring debt (including guaranties of debt)
           except   as  described  above,  and  a  prohibition  against   other
           guaranties except certain permitted guaranties;
     
     (ii)  a prohibition against creating or suffering to exist liens on any of
           their respective properties other than certain permitted liens;
     
     (iii) a limitation on the permitted activities of PFC and PIC, including a
           restriction  against  conducting any business  other  than  business
           conducted in connection with the issuance of Pooled Project Bonds, a
           restriction  against the creation, acquisition or  purchase  of  any
           subsidiary other than PIC Entities or any indirect subsidiary  other
           than  the  Project  Entities and a restriction  against  merging  or
           consolidating with or into any person;
     
     (iv)  subject  to  certain  exceptions, a  covenant  to  maintain  certain
           minimum  levels  of  ownership of the Projects in  the  PIC  Project
           Portfolio;
     
     (v)   a  limitation on the ability of PIC and any PIC Entity to  incur  or
           refinance  Project-level debt, to enter into new project  agreements
           or  to  terminate, amend or modify certain project agreements unless
           certain tests are satisfied;
     
     (vi)  a  covenant to cause the Project Entities to distribute to  the  PIC
           Entities  and, ultimately, to PIC, all amounts that can  be  legally
           distributed without contravention of any Project agreement;
     
     (vii) a prohibition against selling, leasing or otherwise disposing of any
           direct or indirect interests in Projects with a fair-market value in
           excess  of $2.0 million in the aggregate in any one year subject  to
           certain exceptions; and
     
     (viii)covenants  regarding compliance with laws, governmental  regulations
           and  organizational  documents,  maintenance  of  existence  and  of
           governmental  approvals, pursuing rights to  compensation  upon  the
           occurrence  of  a casualty or condemnation, employee benefit  plans,
           affiliate transactions, payment of taxes, the preparation of various
           reports and other matters.
     
  Events of Default
  
     Events  of Default under the PFC Indenture include (i) the failure to  pay
or  cause  to be paid principal of, premium, if any, or interest on any  Pooled
Project  Bond,  (ii) any misrepresentation made by PFC or  PIC  under  the  PFC
Indenture  that has resulted in a material adverse change, (iii) the breach  by
Panda International, PIC, PFC or the PIC Entities of any covenant under the PFC
Indenture,   (iv)   certain   events  involving  the  bankruptcy,   insolvency,
dissolution, receivership or reorganization of PIC, PFC or any PIC Entity;  (v)
a  final  judgment  or judgments for the payment of money  in  excess  of  $2.0
million  against any of PIC, PFC or any PIC Entity; (vi) a default  on  certain
other  debt of PIC, PFC or any PIC Entity and (vii) the cessation of  liens  on
certain  collateral. Upon the occurrence of an event of default and  after  the
lapse  of  certain applicable cure periods, the trustee under the PFC Indenture
has  the  right, among other things, to accelerate the maturity of  the  Pooled
Project  Bonds and to direct a collateral agent to realize upon the  collateral
securing the payment of the Pooled Project Bonds and other secured obligations,
including the capital stock of PIC, PFC and the PIC Entities.
     
  The Funds
  
     The PFC Indenture established the following U.S. funds: (a) a debt service
fund,  (b) a capitalized interest fund, (c) a debt service reserve fund, (d)  a
company  expense  fund, (e) a distribution suspense fund,  (f)  a  distribution
fund, (g) a mandatory redemption account, and (h) an extraordinary distribution
account. The PFC Indenture also established the following international  funds:
(a) an international distribution suspense fund, (b) an international mandatory
redemption   account,  and  (c)  an  international  extraordinary  distribution
account. All distributions or other amounts received by PIC, any PIC entity  or
any  person on behalf of PIC or any PIC Entity from or in connection  with  the
Projects  that are in the PIC Project Portfolio, subject to certain exceptions,
are  deposited  in  a  locked account with the trustee  (or,  in  the  case  of
distributions  received from a PIC International Entity, in a  separate  locked
account  with  the  International Collateral Agent) under  the  PFC  Indenture.
Amounts in the locked account controlled by the trustee are distributed monthly
to  the  U.S.  funds in the order listed above. Amounts in the  locked  account
controlled by the International Collateral Agent are distributed monthly to the
international funds in the order listed above.
     
     Upon  the issuance of the Series A Bonds, PFC deposited approximately $6.4
million  into the U.S. debt service reserve fund, $0.3 million into the company
expense  fund  and $9.8 million into the capitalized interest fund  established
under the PFC Indenture. The balances in those funds as of March 31, 1997, were
$7.1 million, $0.3 million and $9.2 million, respectively.
     
     The  U.S. debt service reserve fund may be drawn upon to pay principal of,
premium,  if  any,  and  interest on the Series  A  Bonds  if  funds  otherwise
available for such payments are insufficient.
     
  Rating
  
     The  Series A Bonds were rated Ba3 by Moody's. and BB- by Duff  &  Phelps.
There is no assurance that such ratings will be maintained.
     
The Rosemary Bonds

     Concurrently with the closing of the offering of the Series A Bonds, Panda-
Rosemary Funding Corporation (the "Rosemary Issuer"), a wholly-owned subsidiary
of  the  Rosemary Partnership, consummated the offering and sale (the "Rosemary
Offering") of $111.4 million in aggregate principal amount of its 8 5/8%  First
Mortgage  Pooled  Project Bonds due 2016 (the "Rosemary Bonds").  The  Rosemary
Bonds were issued pursuant to an indenture (the "Rosemary Indenture") among the
Rosemary  Partnership, the Rosemary Issuer and Fleet National Bank, as trustee.
The  following description of the Rosemary Bonds and certain provisions of  the
Rosemary  Indenture does not purport to be complete and is subject to,  and  is
qualified in its entirety by reference to, the Rosemary Indenture.
     
  Interest and Principal Payments
  
     The  Rosemary  Bonds  bear interest at the rate of 8 5/8%  per  year  from
July  31, 1996, the date of original issuance, or from the most recent interest
payment date to which interest has been paid or provided for, payable quarterly
on  February  15,  May 15, August 15 and November 15, commencing  November  15,
1996.  Principal of the Rosemary Bonds is payable in quarterly installments  as
follows:
                      Percentage                                Percentage
                      of Original                              of Original
                       Principal                                Principal
   Payment Date     Amount Payable        Payment Date        Amount Payable
November 15, 1996   1.2356%            August 15, 2006      0.9632%
February 15, 1997   1.2356%            November 15, 2006    0.9632%
May 15, 1997        1.2344%            February 15, 2007    0.9632%
August 15, 1997     1.2344%            May 15, 2007         1.0081%
November 15, 1997   1.2344%            August 15, 2007      1.0081%
February 15, 1998   1.2344%            November 15, 2007    1.0081%
May 15, 1998        1.3291%            February 15, 2008    1.0081%
August 15, 1998     1.3291%            May 15, 2008         1.0558%
November 15, 1998   1.3291%            August 15, 2008      1.0558%
February 15, 1999   1.3291%            November 15, 2008    1.0558%
May 15, 1999        1.1429%            February 15, 2009    1.0558%
August 15, 1999     1.1429%            May 15, 2009         1.1039%
November 15, 1999   1.1429%            August 15, 2009      1.1039%
February 15, 2000   1.1429%            November 15, 2009    1.1039%
May 15, 2000         1.2282%           February 15, 2010    1.1039%
August 15, 2000     1.2282%            May 15, 2010         1.1541%
November 15, 2000   1.2282%            August 15, 2010      1.1541%
February 15, 2001    1.2282%           November 15, 2010    1.1541%
May 15, 2001        1.3196%            February 15, 2011    1.1541%
August 15, 2001      1.3196%           May 15, 2011         1.2168%
November 15, 2001    1.3196%           August 15, 2011      1.2168%
February 15, 2002    1.3196%           November 15, 2011    1.2168%
May 15, 2002        1.4124%            February 15, 2012    1.2168%
August 15, 2002     1.4124%            May 15, 2012         1.2772%
November 15, 2002   1.4124%            August 15, 2012      1.2772%
February 15, 2003   1.4124%            November 15, 2012    1.2772%
May 15, 2003        1.5119%            February 15, 2013    1.2772%
August 15, 2003     1.5119%            May 15, 2013         1.3359%
November 15, 2003   1.5119%            August 15, 2013      1.3359%
February 15, 2004   1.5119%            November 15, 2013    1.3359%
May 15, 2004        1.6192%            February 15, 2014    1.3359%
August 15, 2004     1.6192%            May 15, 2014         1.3888%
November 15, 2004   1.6192%            August 15, 2014      1.3888%
February 15, 2005   1.6192%            November 15, 2014    1.3888%
May 15, 2005        1.7273%            February 15, 2015    1.3888%
August 15, 2005     1.7273%            May 15, 2015         1.3534%
November 15, 2005   1.7273%            August 15, 2015      1.3534%
February 15, 2006   1.7273%            November 15, 2015    1.3534%
May 15, 2006        0.9632%            February 15, 2016    1.3534%
  
  Collateral
  
     All  obligations of the Rosemary Issuer with respect to the Rosemary Bonds
are  fully  and  unconditionally guaranteed by the  Rosemary  Partnership.  The
obligations of the Rosemary Partnership under the guaranty, as well as  certain
other  obligations,  are  secured by (i) liens on, and security  interests  in,
substantially  all  of  the assets of the Rosemary Partnership,  including  the
Rosemary  Facility,  (ii) pledges by each of PR Corp. and  PRC  II,  which  are
wholly-owned  indirect  subsidiaries  of  the  Company,  of  their   respective
interests  in the Rosemary Partnership and (iii) pledges of all of the  capital
stock of the Rosemary Issuer and each of PR Corp. and PRC II.
     
  Partnership Distributions
  
     Subject  to certain limited exceptions, distributions may be made  by  the
Rosemary  Partnership to its partners only from, and to the extent of,  amounts
then  on  deposit  in  the Rosemary Partnership distribution  fund  established
pursuant  to the Rosemary Indenture. Such distributions may only be  made  upon
the  satisfaction of the following conditions: (i) amounts deposited in certain
funds  established  pursuant to the Rosemary Indenture shall  be  equal  to  or
greater  than  the amount then required to be deposited therein, including  the
debt  service  and debt service reserve funds; (ii) no event or  condition  has
occurred  and is continuing that constitutes a default or an event  of  default
under  the Rosemary Indenture; and (iii) if there has been a loss of QF status,
the  Rosemary Facility has achieved a permitted alternative utility status.  In
addition,  except for certain limited exceptions, the Rosemary Partnership  may
not  make  distributions unless (i) the average of the  debt  service  coverage
ratios for the four quarterly payment periods on the Rosemary Bonds immediately
preceding the distribution date is at least 1.2:1 and (ii) after giving  effect
to  such  distributions,  the average of the projected  debt  service  coverage
ratios  for the current quarterly payment period and the next succeeding  three
quarterly   payment  periods  on  the  Rosemary  Bonds  is  at   least   1.2:1.
Notwithstanding  the  requirements of the immediately preceding  sentence,  the
Rosemary  Partnership  may make distributions to its partners  solely  for  the
purpose of enabling the partners to pay their income tax liabilities if a lower
debt  service coverage ratio (1.1:1) and projected debt service coverage  ratio
(1.1:1)  for  certain periods exist. Except for certain limited exceptions  set
forth in the Rosemary Indenture, the Rosemary Partnership will not be permitted
to  make  any distributions to its partners after November 30, 2005 unless  (i)
the  Rosemary  Gas Supply Agreement and the Firm Gas Transportation  Agreements
have  been extended on substantially the same terms to have a termination  date
no  earlier  than the longest stated maturity of the Rosemary Bonds,  (ii)  the
Rosemary  Gas  Supply Agreement and the Firm Gas Transportation Agreements,  if
not  so  extended on substantially the same terms, have been otherwise extended
to  have a termination date no earlier than the longest stated maturity of  the
Rosemary Bonds and the rating agencies confirm that the then current rating  of
the  Rosemary Bonds will not be reduced as a result of such extension or  (iii)
the  Rosemary Gas Supply Agreement and the Firm Gas Transportation  Agreements,
if not extended as described in clause (i) or (ii), are replaced with a new gas
supply  agreement  or  gas  transportation agreement  (or  with  respect  to  a
transportation agreement, a gas transportation plan), provided that the  effect
of the replacement agreement or plan would not reduce the average of the annual
projected  debt service coverage ratios for the remaining term of the  Rosemary
Bonds below 1.2:1 and the rating agencies confirm that the then current ratings
of the Rosemary Bonds will not be reduced as a result of such replacement.
     
  Certain Other Covenants
  
     The  Rosemary  Indenture contains numerous other affirmative and  negative
covenants which restrict the activities of the Rosemary Issuer and the Rosemary
Partnership, including, but not limited to, the following:
     
     (i)   prohibition  against incurring debt (including guaranties  of  debt)
           except   as  described  below,  and  a  prohibition  against   other
           guaranties except certain permitted guaranties;
     
     (ii)  a prohibition against creating or suffering to exist liens on any of
           their respective properties other than certain permitted liens;
     
     (iii) a prohibition against selling, leasing or otherwise disposing of any
           property  or  assets except worn-out equipment and certain  property
           with  a  fair  market  value not in excess of $3.0  million  in  the
           aggregate  in any one year and, with respect to any single  item  of
           property, a fair market value in excess of $1.0 million, and certain
           other exceptions;
     
     (iv)  a limitation on the Rosemary Partnership's ability to enter into new
           project  agreements or to terminate, amend or modify certain project
           agreements unless certain tests are satisfied;
     
     (v)   a  limitation  on  the ability of the Rosemary Partnership  and  the
           Rosemary Issuer to merge or consolidate with or into any person,  or
           acquire all or any substantial part of the assets or business of any
           person, or form subsidiaries; and
     
     (vi)  covenants   regarding   compliance  with   laws   and   governmental
           regulations,   maintenance   of  government   approvals,   affiliate
           transactions,  payment of taxes, the preparation of various  budgets
           and  reports,  the maintenance of specified insurance coverages  and
           other matters.
     
     The  debt that the Rosemary Issuer is permitted to incur is limited to the
Rosemary Bonds and certain other indebtedness ranking pari passu or subordinate
to  the  Rosemary  Bonds,  the proceeds of which are  loaned  to  the  Rosemary
Partnership. The debt permitted by the Rosemary Indenture to be incurred by the
Rosemary  Issuer  or the Rosemary Partnership includes: (i) purchase  money  or
capitalized  lease  obligations not exceeding $1.0  million  in  the  aggregate
outstanding  at  any time; (ii) trade accounts payable; (iii)  working  capital
loans  or  letter  of  credit reimbursement obligations if the  minimum  annual
projected  debt service coverage ratios for the remaining term of the  Rosemary
Bonds and the average of the annual projected debt service coverage ratios  for
the  remaining  term of the Rosemary Bonds equal or exceed  1.5:1  and  1.75:1,
respectively; (iv) debt incurred to finance enhancements to or modifications of
the  Rosemary  Facility if, after giving effect to such debt, the same  minimum
and average annual projected debt service coverage ratios are satisfied (or, if
the  enhancement is required to maintain QF status, each of such  debt  service
coverage  ratios described above is at least 1.2:1); (v) certain interest  rate
protection  agreements;  (vi) guaranties arising  in  the  ordinary  course  of
business  not  exceeding  $1.0  million in the  aggregate;  and  (vii)  various
indemnities  with  respect  to  mechanics  and  other  liens,  obligations   to
governmental authorities, surety bonds and guaranties, indemnities  or  similar
obligations provided under or required by a Rosemary Project agreement.
     
  Events of Default
  
     Events  of default under the Rosemary Indenture include: (i) a default  in
the  payment  of principal of, interest on or premium, if any, on any  Rosemary
Bonds;  (ii)  any  misrepresentation made by the Rosemary  Partnership  or  the
Rosemary  Issuer under the Rosemary Indenture which has resulted in a  material
adverse  change; (iii) the breach by the Rosemary Partnership or  the  Rosemary
Issuer  of  any  covenant under the Rosemary Indenture  or  related  collateral
documents; (iv) the bankruptcy or insolvency of the Rosemary Partnership or the
Rosemary Issuer; (v) a final judgment or judgments for the payment of money  in
excess  of $1.0 million rendered against either of the Rosemary Partnership  or
the Rosemary Issuer unless covered by indemnity or insurance; (vi) a default on
certain  other  debt of the Rosemary Partnership or the Rosemary Issuer;  (vii)
the  termination  or  expiration of certain Project  agreements  to  which  the
Rosemary  Partnership  is  a party (some of which are  currently  scheduled  to
expire  prior  to  the  maturity date of the Rosemary Bonds;  see  "Partnership
Distributions"  above);  (viii) the cessation of liens or  certain  collateral;
(ix)  a  modification of certain Project agreements which results in a material
adverse  change;  (x)  Panda  International shall  cease  to  own  directly  or
indirectly  51% of the capital stock of PR Corp. or PRC II; and (xi)  PR  Corp.
shall  withdraw  or be removed as general partner of the Rosemary  Partnership.
Upon  the  occurrence  of an event of default and after the  lapse  of  certain
applicable  cure  periods,  the trustee under the Rosemary  Indenture  has  the
right, among other things, to accelerate the maturity of the Rosemary Bonds and
to direct a collateral agent to foreclose the mortgage on the Rosemary Facility
and  otherwise  realize  upon  the collateral securing  the  repayment  of  the
Rosemary Bonds and other secured obligations, including the capital stock of PR
Corp.  and PRC II (through which the Company holds an indirect equity  interest
in the Rosemary Partnership).
     
  The Funds
  
     The  deposit  and disbursement agreement entered into simultaneously  with
the  Rosemary Indenture establishes the following funds: (a) a project  revenue
fund,  (b) an operating fund, (c) a debt service fund, (d) a property tax fund,
(e)  a debt service reserve fund, (f) an overhaul fund, (g) a pollution control
finance fund, (h) a restoration fund, (i) a partnership distribution fund,  and
(j)  an  additional permitted debt fund. All project revenues received  by  the
Rosemary Partnership and all revenue received by the Rosemary Issuer are to  be
deposited  into the project revenue fund. Amounts in the project  revenue  fund
are  used  to pay operating expenses related to the Rosemary Facility and  then
are  distributed  to  the  other funds established  pursuant  to  the  Rosemary
Indenture in the priority listed above.
     
     Upon  the  issuance  of  the  Rosemary  Bonds,  the  Rosemary  Partnership
deposited  approximately  $8.1  million into  the  debt  service  reserve  fund
established under the Rosemary Indenture. The balances that must be  maintained
in  the  debt  service  reserve fund generally decline over  the  life  of  the
Rosemary  Bonds. In addition, the Rosemary Partnership is required to  maintain
in  the debt service reserve fund an amount equal to the maximum amount of debt
service  due  in  respect of certain other debt permitted  under  the  Rosemary
Indenture for any six-month period during the succeeding three-year period. The
debt  service reserve fund may be drawn upon to pay principal of,  premium,  if
any,  and  interest on the Rosemary Bonds and certain debt permitted under  the
Rosemary  Indenture, to the extent of funds allocated within the  debt  service
reserve  fund  to  such  obligations, if funds  otherwise  available  for  such
payments are insufficient.
     
  Rating
  
     The  Rosemary Bonds were rated Baa3 by Moody's Investors Service, Inc. and
BBB-  by  Duff & Phelps Rating Co. Inc. There is no assurance that such ratings
will be maintained.
     
The Brandywine Financing

     The  Brandywine  Partnership, Panda Brandywine  Corporation,  the  general
partner of the Brandywine Partnership ("PBC"), and GE Capital entered into  the
Construction  Loan Agreement and Lease Commitment dated as of  March  30,  1995
(the  "Brandywine Loan Agreement"), pursuant to which GE Capital agreed, either
directly  or  indirectly through an owner trustee, to (i) provide  construction
financing for the Brandywine Facility, (ii) issue letters of credit as security
for  certain  obligations of the Brandywine Partnership  under  the  Brandywine
Power  Purchase Agreement, (iii) lease the Brandywine Facility site  from,  and
immediately  thereafter sublease the site to, the Brandywine Partnership,  (iv)
upon  substantial  completion of the construction of the  Brandywine  Facility,
purchase the Brandywine Facility from the Brandywine Partnership and lease  the
Brandywine  Facility back to the Brandywine Partnership and (v) upon completion
of  the  construction of the Brandywine Facility, make certain equity loans  to
the  Brandywine Partnership or its partners. The following description  of  the
Brandywine Loan Agreement and the other Brandywine Financing Documents does not
purport  to be complete and is subject to, and is qualified in its entirety  by
reference to, the Brandywine Financing Documents, including definitions therein
not contained in this Prospectus.
     
  Construction Loans
  
     Construction  of  the  Brandywine Facility is substantially  complete.  On
December  30, 1996, the Brandywine construction loan was converted to long-term
financing  in  the  form  of  a  leveraged  lease  (the  "Brandywine  Financing
Conversion").  In  connection  therewith, all  amounts  outstanding  under  the
Brandywine construction loan were repaid in full and the Brandywine Partnership
funded  the completion account described below with funds that will be used  to
complete construction of the Brandywine Facility.
     
  Long-Term Financing
  
     As to the Brandywine Financing Conversion, the Brandywine Partnership sold
the Brandywine Facility and leased the facility site to Fleet National Bank, as
owner  trustee  (the  "Brandywine  Owner Trustee"),  for  approximately  $217.5
million.  The Brandywine Owner Trustee financed the purchase of the  Brandywine
Facility  through  an equity investment of $45.5 million from  GE  Capital  and
loans  aggregating $172.0 million from loan participants. The Brandywine  Owner
Trustee  then  leased the Brandywine Facility and sub-leased the facility  site
back to the Brandywine Partnership.
     
     GE  Capital  has  committed to provide certain letters of credit  for  the
account  of the Brandywine Partnership and to make equity loans to the partners
of the Brandywine Partnership, as more fully described below. All of the assets
of  the  Brandywine  Partnership  and all of the  ownership  interests  in  the
Brandywine  Partnership, as well as certain other collateral,  are  pledged  to
secure  the  obligations of the Brandywine Partnership   under  the  Brandywine
Financing Documents.
     
  Brandywine Facility Lease
  
     The  Brandywine  Partnership  is a party to  a  Facility  Lease  with  the
Brandywine Owner Trustee (the "Brandywine Facility Lease") pursuant to which it
leases  the  Brandywine  Facility  from  the  Brandywine  Owner  Trustee.   The
Brandywine Facility Lease is a net lease and its initial term ends on  December
30,  2016. Basic rent is payable quarterly on January 31, April 30, July 31 and
October 31, commencing January 31, 1997, as follows:
     

       Quarterly                 
  Basic Rent Payment      Basic Rent ($)
         1                             0
              2-5              2,610,509
              6-9              2,602,976
             10-13             4,993,980
             14-17             5,165,114
             18-21             6,816,268
             22-25             6,984,563
             26-29             6,976,747
             30-33             6,864,048
             34-37             6,900,548
             38-41             7,047,103
             42-45             7,517,816
             46-49             7,632,159
             50-53             7,821,232
             54-57             8,303,090
             58-61             8,980,537
             62-65            10,109,363
             66-69            10,463,802
             70-73            10,684,854
             74-77            10,292,055
             78-80             9,429,196
                                       
                                       
     In  addition,  and  from time to time, the Brandywine  Owner  Trustee  may
require  the  Brandywine Partnership to pay, as supplemental rent, (i)  certain
agreed-upon  amounts  required  to  be paid to  the  Brandywine  Owner  Trustee
following  a specified event of loss or event of regulation, after  payment  of
which  the  Brandywine  Facility  Lease  would  terminate  and  the  Brandywine
Partnership  would receive title to the Brandywine Facility; (ii) amounts  owed
pursuant to certain tax change indemnity obligations; (iii) certain lender swap
breakage  costs arising as a result of an event of default, loss or regulation;
(iv)  interest on overdue rent payments; and (v) amounts owed as  a  result  of
certain   other  obligations  arising  pursuant  to  the  Brandywine  Financing
Documents. Basic rent may also be reduced if GE Capital elects to consummate  a
refinancing.
     
  Reserve Accounts
  
     In connection with the obligations of the Brandywine Partnership under the
Brandywine  Financing  Documents, various accounts  were  established  for  the
benefit of the Brandywine Owner Trustee, GE Capital and others.
     
     The  Brandywine  Partnership funded the operation and maintenance  reserve
account  in  the  amount  of $1.0 million. Until the balance  of  such  reserve
account  reaches  $5.0 million (which amount is adjusted  upward  annually  for
inflation after December 30, 2001), quarterly contributions of $125,000 in each
of  the  first eight calendar quarters and $375,000 for each of the next  eight
calendar quarters are made to this reserve account out of funds available  from
the  project  revenue account. Thereafter, contributions will be  made  out  of
funds  available  in the project revenue account as necessary to  maintain  the
required  balance. Subject to specified conditions, funds held in this  reserve
account will be used to replenish a drawing under an operations and maintenance
letter of credit to be issued.
     
     The  Brandywine Partnership funded the rent reserve account in the  amount
of  $2.4 million. The balance in the rent reserve account must be maintained at
the  greater  of (i) $2.4 million and (ii) the sum of the next two payments  of
basic rent.
     
     The Brandywine Partnership funded the warranty maintenance reserve account
in  the  amount  of $750,000. Subject to specified conditions,  funds  in  this
reserve  account  will  be  used  to  satisfy  warranty  obligations   to   the
manufacturer  of  the  Brandywine  Facility's  combustion  and  steam   turbine
generators.
     
     The  Brandywine Partnership funded the completion account upon the closing
of  the  Brandywine  Financing Conversion in the amount of  $5.3  million.  The
balance  in  the  account  as of March 31, 1997 is  $3.6  million.  Subject  to
specified conditions, funds held in the completion account will be used to  pay
costs  and expenses incurred in connection with the construction and completion
of the Brandywine Facility.
     
     If  the Brandywine Partnership receives a notice from PEPCO that PEPCO has
determined  that  the  Brandywine Partnership has failed  to  comply  with  its
obligation  under the Brandywine Power Purchase Agreement to  have  a  reliable
supply of fuel for the Brandywine Facility, then the Brandywine Partnership  is
required  to  establish and fund a special payment account  with  100%  of  the
excess,   if   any,  of  Brandywine  distributable  cash  flow  over   required
contributions to the rent reserve account until such notice is rescinded or the
fuel  default  is  cured. Subject to specified conditions, funds  held  in  the
special payment account will be used to cure the fuel default.
     
     In the event that funds in the project revenue account are insufficient to
pay  letter of credit fees and rent, and to make the required contributions  to
the  reserve  accounts, such payments and transfers may  be  made  out  of  the
partnership  security  account and distribution  reserve  account.  Subject  to
specified conditions, funds held in the partnership security account  may  from
time  to time be distributed to the partners of the Brandywine Partnership  and
funds  held  in  the  distribution reserve account may from  time  to  time  be
transferred to the project revenue account.
     
  Letters of Credit
  
     GE  Capital has issued and agreed to maintain certain outstanding stand-by
letters  of  credit and issue and maintain an additional letter  of  credit  as
required  for the account of the Brandywine Partnership in favor  of  PEPCO  to
secure  certain obligations of the Brandywine Partnership under the  Brandywine
Power  Purchase Agreement. The aggregate stated amount of all letters of credit
outstanding  at  any one time in connection with the Brandywine Facility  Lease
cannot  exceed  a  specified  aggregate amount, currently  $7.33  million.  The
Brandywine Partnership is required to reimburse GE Capital for any disbursement
under  any letter of credit on the day that GE Capital makes any payment  to  a
beneficiary  thereof.  If  the Brandywine Partnership  does  not  reimburse  GE
Capital  on  such day, it must pay interest on the amount not reimbursed  at  a
rate  per  annum equal to 2.5% plus a base rate of the higher of (i)  the  base
commercial  lending  rate  of Credit Suisse, New York  or  (ii)  the  overnight
federal funds rate plus 0.5%. The Brandywine Partnership is obligated to pay to
GE  Capital  an  issuance fee of 1.75% of the stated amount of each  letter  of
credit  upon initial issuance, a letter of credit fee of 1.5% per annum on  the
aggregate  stated amounts of all outstanding letters of credit and a commitment
fee  of  1.25%  per  annum  on  the unused balance  of  the  letter  of  credit
commitment.
     
  Partnership Distributions
  
     The  Brandywine Participation Agreement places limitations on the  ability
of the Brandywine Partnership to make distributions to its partners. Subject to
certain other conditions, the Brandywine Partnership may make distributions  to
its  partners only if: (i) all amounts then required to be deposited in certain
reserve  accounts, including the reserve accounts described  above,  have  been
deposited;  (ii)  all  rent payments then due to the Brandywine  Owner  Trustee
under  the  Brandywine  Facility Lease have been  paid;  (iii)  the  Brandywine
Facility meets an operating cash flow to basic rent ratio of 1.2:1; and (iv) at
the  time of such distribution, and after giving effect thereto, no default  or
event  of default has occurred and is continuing under the Brandywine Financing
Documents.
     
  Certain Other Covenants
  
     The  Brandywine  Financing Documents also contain certain affirmative  and
negative covenants which restrict the ability of the Brandywine Partnership and
PBC to take certain actions including, but not limited to, the following:
     
     (i)   a  requirement  that  the  Brandywine Partnership  pay  all  of  its
           indebtedness   and   obligations  under  the  Brandywine   Financing
           Documents  and  perform its obligations under  the  related  project
           documents;
     
     (ii)  a requirement that the Brandywine Partnership and PBC maintain their
           current respective form of organization, that PBC remain the general
           partner  of  the  Brandywine Partnership  and  that  the  Brandywine
           Facility be maintained as a QF;
     
     (iii) a  prohibition against mergers, sales of assets other than  electric
           power and steam, and certain acquisitions;
     
     (iv)  a  prohibition against indebtedness other than under the  Brandywine
           Financing Documents;
     
     (v)   a prohibition against amending certain contracts without the consent
           of a majority of the Brandywine Loan Participants and GE Capital;
     
     (vi)  a   prohibition  against  entering  into  leases  other  than  those
           specifically contemplated by the Brandywine Financing Documents; and
     
     (vii) a requirement (set forth in a stock pledge agreement entered into by
           Panda  Interholding)  that all subsidiaries  of  Panda  Interholding
           (either  existing  or  subsequently acquired or  formed)  which  are
           engaged in the financing, development, construction or operation  of
           independent  power projects or energy transmission projects  located
           in  the  United States (other than the Kathleen Partnership and  the
           partners  of  that  partnership) remain  as  subsidiaries  of  Panda
           Interholding;  provided,  that  the  Kathleen  Partnership  and  the
           partners thereof shall continue to be subsidiaries of PEC and  shall
           be  transferred  to  Panda Interholding within 180  days  after  the
           earlier  of  financial closing or the date of commercial  operations
           with  respect to such Project, and provided, further, that,  subject
           to  certain  restrictions in the Brandywine Participation Agreement,
           Panda  Interholding  may  sell all  or  any  of  the  stock  of  any
           subsidiary that is subject to this requirement to any person who  is
           not an affiliate of Panda Interholding.
     
  Events of Default
  
     The   Brandywine  Facility  Lease  contains  certain  events  of  default,
including  but not limited to: (i) default in the payment of any rental  amount
payable under the Brandywine Facility Lease; (ii) a misrepresentation contained
in  any document furnished by or on behalf of the Brandywine Partnership or any
partner;  (iii)  a  failure of the Brandywine Partnership or any  affiliate  to
perform  or  observe any covenants or obligations contained in  the  Brandywine
Financing Documents to which it is a party; (iv) a default in payment under any
indebtedness of the Brandywine Partnership or PBC or certain affiliates  or  in
the  observance  or performance of any covenant relating to such  indebtedness;
(v)  bankruptcy or insolvency of any party to or participant under any  of  the
Brandywine  Financing  Documents or other project  agreements  related  to  the
operation of the Brandywine Facility; (vi) a judgment or judgments in excess of
$150,000  being  rendered against the Brandywine Partnership, Brandywine  Water
Company  or  PBC and remaining in effect and unstayed for more  than  30  days;
(vii) if PEC and Panda Interholding shall cease to own, directly or indirectly,
51% of PBC and Panda Energy Delaware; and (viii) the Brandywine Facility ceases
to  be a QF. Upon an event of default under the Brandywine Financing Documents,
the Brandywine Owner Trustee may, in addition to other remedies, foreclose upon
or terminate the Brandywine Facility Lease.
     
  Collateral
  
     All  obligations  of  the  Brandywine  Partnership  under  the  Brandywine
Financing  Documents  to GE Capital and the Brandywine Owner  Trustee,  and  in
turn,  all  obligations of the Brandywine Owner Trustee to the Brandywine  Loan
Participants under the Brandywine Participation Agreement, are secured by (i) a
pledge  of, and a security interest in, substantially all of the assets of  the
Brandywine  Partnership, (ii) pledges by PBC and Panda Energy  Delaware,  which
are  indirect  wholly-owned subsidiaries of the Company,  of  their  respective
interests  in the Brandywine Partnership and (iii) pledges of all  the  capital
stock  of  PBC and Panda Energy Delaware, and all of the stock and all  of  the
assets   of  Brandywine  Water  Company,  which  is  an  indirect  wholly-owned
subsidiary of the Company that operates the distilled water facility serving as
the  steam  host  for  the  Brandywine Facility. In  addition,  the  Brandywine
Partnership  has  assigned  its  interest  in  the  Brandywine  Power  Purchase
Agreement  to  the Brandywine Owner Trustee, to take effect if  the  Brandywine
Facility Lease terminates.
     
                      DESCRIPTION OF THE EXCHANGE NOTES,
                         THE EXCHANGE NOTES GUARANTEE,
                  THE ISSUER LOAN, THE SHAREHOLDER LOANS AND
                           THE COLLATERAL DOCUMENTS
                                       
     The  Exchange Notes will be issued under an indenture (the "Exchange Notes
Indenture")  between  Panda Global Energy Company (the  "Issuer")  and  Bankers
Trust  Company,  as  trustee  (the  "Exchange  Notes  Trustee")  and  will   be
unconditionally guaranteed by Panda Global Holdings, Inc. (the "Company") as to
payment  of  principal,  premium,  if any, and interest  (including  Liquidated
Damages  and  Additional Amounts, if any), by a guarantee (the "Exchange  Notes
Guarantee")  issued  under an indenture (the "Company Indenture")  between  the
Company   and  Bankers  Trust  Company,  as  trustee  (the  "Company  Indenture
Trustee"). The Exchange Notes Indenture and the Company Indenture are  referred
to  together  herein as the "Indentures." The Exchange Notes  Trustee  and  the
Company  Indenture Trustee are referred to together herein as  the  "Trustees."
The  following  summaries of certain provisions of the Indentures,  the  Issuer
Loan   Agreement,  the  Shareholder  Loan  Agreements  and  certain  collateral
documents  do not purport to be complete and are subject to, and are  qualified
in their entirety by reference to, all of the provisions thereof, including the
definitions therein of certain terms.
     
General

     The  Exchange  Notes  will  be  issued only in  registered  form,  without
coupons,  in  denominations  of  $1,000  and  integral  multiples  of   $1,000.
Principal,  premium,  if  any, and interest (including Liquidated  Damages  and
Additional  Amounts,  if any) on the Exchange Notes will be  payable,  and  the
Exchange Notes will be transferable, at the corporate trust office or agency of
the  Exchange Notes Trustee. In addition, interest may be paid by wire transfer
or check mailed to the Person entitled thereto as shown on the register for the
Exchange  Notes,  provided that all payments with respect to Global  Notes  (as
defined)  and Certificated Securities (as defined), the Holders of  which  have
given wire transfer instructions to the Issuer, will be required to be made  by
wire  transfer of immediately available funds to the accounts specified by  the
Holders  thereof. The Exchange Notes will initially be represented  by  a 
Global Note (the "Global Note") and will be deposited with, or on behalf
of,  The Depository Trust Company (the "Depository") and registered in the name
of  a nominee of the Depository. Except as set forth in "--Book-Entry, Delivery
and  Form,"  owners of beneficial interests in such Global Note  will  not  be
entitled to have Exchange Notes registered in their names, will not receive  or
be  entitled to receive physical delivery of Exchange Notes in definitive  form
and  will  not  be considered the owners or Holders thereof under the  Exchange
Indenture.  See  "--Book-Entry, Delivery and Form." No service charge  will  be
made for any registration of transfer or exchange of the Exchange Notes, except
for  any  tax  or other governmental charge that may be imposed  in  connection
therewith.
     
     Any Old Notes that remain outstanding after the completion of the Exchange
Offer,  together  with the Registered Exchange Notes issued in connection  with
the  Exchange Offer, will be treated as a single class of securities under  the
Exchange Notes Indenture.
     
Ranking, Maturity, Interest and Principal of the Exchange Notes

     The  Exchange  Notes, as well as the Old Notes (i.e., the Existing  Notes)
will be senior obligations of the Issuer ranking senior in right of payment  to
all  subordinated  Indebtedness of the Issuer and pari  passu  with  all  other
Senior  Indebtedness of the Issuer. The Existing Notes will be secured  by  the
Exchange  Notes  Collateral. The aggregate principal amount of  Existing  Notes
will  total  $155,200,000.  Subject  to  the  satisfaction  of  the  applicable
covenants  by the Issuer and by the Company pursuant to the Company  Indenture,
additional  Senior Indebtedness may be issued by the Issuer from time  to  time
(whether  pursuant  to  the Exchange Notes Indenture  or  pursuant  to  another
indenture), which additional Senior Indebtedness will share equally and ratably
in  certain of the Exchange Notes Collateral. The Existing Notes will mature on
April 15, 2004. Notwithstanding the foregoing, the Issuer shall be obligated to
repay  the  Existing Notes by redeeming semi-annually on the dates and  in  the
amounts  indicated  in the following table, together with  accrued  and  unpaid
interest (including Liquidated Damages and Additional Amounts, if any):
     
                       Semi-annual                    Principal
                       Payment Date                 Amount Repaid
          October 15, 2000                             $1,650,000
          April 15, 2001                               $2,200,000
          October 15, 2001                             $2,200,000
          April 15, 2002                               $4,000,000
          October 15, 2002                             $4,000,000
          April 15, 2003                               $4,950,000
          October 15, 2003                             $4,950,000
    
    
In  accordance with the terms of the Exchange Notes Indenture, the Issuer shall
not  be  allowed  to  fulfill its obligation to repay  such  principal  amounts
through  the  purchase  of  Existing Notes and the  deposit  thereof  with  the
Exchange Notes Trustee.

     Cash  interest on the Existing Notes will accrue at a rate of 12-1/2%  per
annum and will be payable semi-annually in arrears on each April 15 and October
15,  commencing October 15, 1997 to the Holders of record of Existing Notes  at
the  close  of  business  on  April 1 and October 1, respectively,  immediately
preceding such interest payment date. Cash interest will accrue from  the  most
recent interest payment date to which interest has been paid or, if no interest
has been paid, from April 22, 1997. Interest will be computed on the basis of a
360-day  year  of  twelve 30-day months. Interest on overdue principal  and  on
overdue  installments of interest will accrue at the rate of interest borne  by
the Existing Notes.
     
     The  Existing  Notes will be effectively subordinated to all  Indebtedness
and  other  liabilities  and  commitments of all Subsidiaries  of  the  Issuer,
including,  without limitation, the Indebtedness of Pan-Western and  the  Joint
Ventures.  Any  right  of  the Issuer to receive assets  of  its  Subsidiaries,
including,  without  limitation, assets of Pan-Western  or  any  Joint  Venture
pursuant  to  the  terms of the Exchange Notes Collateral upon  liquidation  or
reorganization of any such entity (and the consequent right of the  Holders  of
the  Existing  Notes  to  participate  in those  assets)  will  be  effectively
subordinated  to the claims of that entity's creditors, except  to  the  extent
that  the  Issuer is itself recognized as a creditor of such entity,  in  which
case the claims of the Issuer would still be subordinate to any security in the
assets  of  its  Subsidiaries, including, without limitation,  assets  of  Pan-
Western  or any Joint Venture and any Indebtedness thereof senior to that  held
by  the  Issuer.  See  "Risk  Factors  - Additional  Indebtedness  -  Effective
Subordination of Exchange Notes and Exchange Notes Guarantee."
     
Exchange Notes Guarantee

     The  Company, under the terms of the Company Indenture, as primary obligor
and not merely as surety, will irrevocably, fully and unconditionally guarantee
on  a  senior  secured  basis the performance and punctual  payment  when  due,
whether at stated maturity, by acceleration or otherwise, of all obligations of
the  Issuer under the Exchange Notes Indenture and the Existing Notes,  whether
for  principal, premium, if any, and interest (including Liquidated Damages and
Additional  Amounts, if any), on the Existing Notes, expenses,  indemnification
or otherwise (all such obligations guaranteed by the Company referred to herein
as  the  "Exchange Notes Guarantee"). The Company has no material assets  other
than the Capital Stock of PEC and the Issuer, and, accordingly, its ability  to
perform  under the Existing Notes Guarantee will be dependent on the  financial
condition  and  results  of operation of PEC and the  Issuer.  Subject  to  the
satisfaction   of  the  applicable  conditions,  Indebtedness  and   additional
guarantees  pari passu with the Exchange Notes Guarantee may be issued  by  the
Company  from  time  to  time (whether pursuant to  the  Company  Indenture  or
pursuant  to  another  indenture),  which additional  Senior  Indebtedness  and
guarantees  may  share  equally and ratably in certain of  the  Exchange  Notes
Guarantee Collateral.
     
     The  Exchange  Notes  Guarantee is a continuing guarantee  and  shall  (a)
remain  in  full  force and effect until payment in full of  all  the  Existing
Notes,  (b)  be  binding upon the Company and its successors,  transferees  and
assigns  and  (c)  inure to the benefit of and be enforceable by  the  Exchange
Notes Trustee, the Holders and their successors, transferees and assigns.
     
     The  Exchange  Notes  Guarantee will be effectively  subordinated  to  all
Indebtedness and other liabilities and commitments of all Subsidiaries  of  the
Company,  including,  without limitation, the Indebtedness  of  PIC,  PFC,  the
Domestic  Projects, the Joint Ventures and any Permitted Project. Any right  of
the   Company  to  receive  assets  of  its  Subsidiaries,  including,  without
limitation,  assets of PIC, PFC, the Domestic Projects, the Joint  Ventures  or
any  Permitted  Project pursuant to the terms of the Exchange  Notes  Guarantee
Collateral  upon  liquidation or reorganization of any  such  entity  (and  the
consequent  right of the holders of the Exchange Notes Guarantee to participate
in  those  assets)  will  be effectively subordinated to  the  claims  of  that
entity's  creditors, except to the extent that the Company is itself recognized
as  a  creditor  of such entity, in which case the claims of the Company  would
still  be  subordinate  to  any  security in the assets  of  its  Subsidiaries,
including,  without limitation, assets of PIC, PFC, the Domestic Projects,  the
Joint Ventures or any Permitted Project and any Indebtedness thereof senior  to
that held by the Company.
     
Redemption

     Optional  Redemption  of  Exchange  Notes.  The  Exchange  Notes  will  be
redeemable   at  the  option  of  the  Issuer  (an  "Exchange  Notes   Optional
Redemption"), in whole or in part, at any time on or after April 15,  2002,  at
the redemption prices (expressed as a percentage of principal amount) set forth
below,  plus  accrued and unpaid interest, if any, to the redemption  date,  if
redeemed  during  the  12  month period beginning on  April  15  of  the  years
indicated below:
     
                       Redemption
           Year          Price
           2002         107.00%
           2003         103.50%
           2004         100.00%
                                   
     
     In  addition,  prior  to  April 15, 2000, the  Issuer  may  redeem  up  to
$51,733,000  of the aggregate outstanding issued principal amount  of  Existing
Notes  at  a  redemption price equal to 113.0% of the principal amount  of  the
Existing  Notes so redeemed, plus accrued and unpaid interest, if any,  to  the
redemption  date  with  the  Net Cash Proceeds of one  or  more  Public  Equity
Offerings by the Company, Panda International or any direct or indirect  parent
of  the  Company; provided that (i) the proceeds of such offering used for  the
purposes of the optional redemption are contributed as equity to the Issuer and
(ii)  at  least  $103,467,000  of the originally  issued  principal  amount  of
Existing Notes would remain outstanding immediately after giving effect to such
redemption  (any  such  redemption, an "Existing Notes Public  Equity  Offering
Redemption").
     
     Mandatory  Redemption.  Upon the occurrence of  certain  events  described
below,  the outstanding Existing Notes (together with, as provided in paragraph
(vi) below, any additional Senior Indebtedness of the Issuer outstanding at the
time  of  such  Mandatory Redemption) will be redeemed pro rata  (a  "Mandatory
Redemption"),  at a redemption price equal to 100% of the principal  amount  of
the  Existing Notes, together with accrued and unpaid interest, if any, to  the
redemption date:
     
     (i)   Upon  the  occurrence  of  a  Luannan Event  of  Loss  or  Luannan
           Expropriation  Event that is determined by the  Issuer  to  render
           the  Luannan  Facility  incapable of being  rebuilt,  repaired  or
           restored  so as to permit operation of the entire Luannan Facility
           on  a  commercially feasible basis, all Luannan Casualty  Proceeds
           and  all  Luannan  Expropriation Proceeds and  repayments  of  the
           Issuer  Loan  and  the  Shareholder  Loans  (resulting  from  such
           Luannan   Event  of  Loss  or  Luannan  Expropriation   Event   or
           otherwise)  will  be  applied pro rata to the  redemption  of  the
           Existing   Notes.  The  redemption  date  for  such  a   Mandatory
           Redemption may be any date during the 90-day period following  the
           date  of  the Issuer's determination that the Luannan Facility  is
           incapable  of  being  rebuilt, repaired or restored  (taking  into
           account the notice requirements set forth in the Indentures).
     
     (ii)  Upon  the  occurrence  of  a  Luannan Event  of  Loss  or  Luannan
           Expropriation Event that is determined by the Issuer to  render  a
           portion  of  the  Luannan  Facility incapable  of  being  rebuilt,
           repaired  or  restored, but permits the remaining portion  of  the
           Luannan  Facility  to be rebuilt, repaired or restored  so  as  to
           permit  operation of the remaining portion of the Luannan Facility
           on  a  commercially feasible basis (as confirmed  by  the  Luannan
           Facility Engineer pursuant to the Company Indentures), and if  the
           amount  of  the Luannan Casualty Proceeds or Luannan Expropriation
           Proceeds  and  repayments of the Issuer Loan and  the  Shareholder
           Loans  resulting  from  such Luannan  Event  of  Loss  or  Luannan
           Expropriation  Event  exceeds $500,000 (after  reduction  for  the
           total  cost  of  rebuilding, repairing or  restoring  the  Luannan
           Facility  in accordance with the Indentures), the total amount  of
           such  excess  proceeds will be applied pro rata to the  redemption
           of  the Existing Notes. The redemption date may be any date during
           the   90-day   period   following  the  date   of   the   Issuer's
           certification  to  the Trustees of completion of  the  rebuilding,
           repairing  or  restoration of the Luannan  Facility  (taking  into
           account the notice requirements set forth in the Indentures).
     
     (iii) Upon  the  occurrence  of a Luannan Event of  Loss  or  a  Luannan
           Expropriation  Event  for which the Luannan Casualty  Proceeds  or
           Luannan  Expropriation Proceeds and repayments of the Issuer  Loan
           and  the  Shareholder Loans exceed the aggregate principal  amount
           of  the  outstanding  Existing Notes, and any applicable  interest
           thereon,  the Issuer may, at its option, determine not to rebuild,
           repair  or restore the Luannan Facility. Upon such a determination
           by  the  Issuer, the outstanding Existing Notes will be  redeemed,
           in  whole,  but  not in part. The amount of the  Luannan  Casualty
           Proceeds or Luannan Expropriation Proceeds and repayments  of  the
           Issuer  Loan and the Shareholder Loans resulting from such Luannan
           Event  of  Loss or Luannan Expropriation Event will be applied  to
           the  redemption of the Existing Notes. The redemption date may  be
           any  date  during  the 90-day period following  the  date  of  the
           Issuer's  determination  not to rebuild,  repair  or  restore  the
           Luannan Facility (taking into account the notice requirements  set
           forth in the Indentures).
     
     (iv)  Upon  the payment of performance liquidated damage payments  under
           the  Luannan  EPC  Contract, the amount of performance  liquidated
           damages paid, which are required to be applied to payment  of  the
           Issuer  Loan and the Shareholder Loans, will be applied  pro  rata
           to  the redemption of the Existing Notes. The redemption date  may
           be  any  date  during  the 90-day period  following  the  date  of
           receipt  by  the Issuer of any such repayment of the  Issuer  Loan
           (taking  into  account the notice requirements set  forth  in  the
           Indentures).
     
     (v)   Upon  the  occurrence of a Domestic Project Event that results  in
           Domestic  Project  Event  Proceeds,  after  the  amounts  of  such
           proceeds   have  been  used  to  fulfill  any  and  all  mandatory
           redemption or mandatory repayment obligations pursuant to (a)  the
           PFC   Indenture  and  (b)  the  debt  instrument  or   instruments
           governing  the  project level financing of such Domestic  Project,
           any  and  all  excess proceeds shall be applied pro  rata  to  the
           redemption of the Existing Notes. The redemption date may  be  any
           date  during the 90-day period following the date of the  Issuer's
           receipt  of  such proceeds from the Company (taking  into  account
           the notice requirements set forth in the Indentures).
     
     (vi)  Upon  the occurrence of a Permitted Project Event that results  in
           Permitted  Project  Event  Proceeds, after  the  amounts  of  such
           proceeds   have  been  used  to  fulfill  any  and  all  mandatory
           redemption or mandatory repayment obligations pursuant to, as  the
           case  may  be,  the  PFC  Indenture  or  the  debt  instrument  or
           instruments  governing the project level financing (or  additional
           Senior  Indebtedness  issued  solely  to  finance  such  Permitted
           Project)  of  such Permitted Project, any and all excess  proceeds
           shall  be applied pro rata to the redemption of the Existing Notes
           and,  to  the extent that the instrument governing any  additional
           Senior  Indebtedness of the Company and the Issuer outstanding  at
           the   date  of  the  Mandatory  Redemption  so  requires,  to  the
           redemption  of such additional Senior Indebtedness. The redemption
           date  may be any date during the 90-day period following the  date
           of  the  Company's or the Issuer's receipt of such  proceeds  from
           such   Permitted   Project  (taking  into   account   the   notice
           requirements set forth in the Indentures).
     
     Redemption  at  Option of Holders. Upon the occurrence of  certain  events
described  below, the Issuer will be obligated to make an offer to  redeem  pro
rata  the  outstanding  Existing Notes (a "Mandatory Redemption  Offer")  at  a
redemption  price equal to 100% of the principal amount of the Existing  Notes,
together with accrued and unpaid interest, if any, to the redemption date:
     
     (i)   Upon  the  occurrence of an Approval Event of Default or a  County
           Partners Event of Default that has had or is reasonably likely  to
           have  a Material Adverse Effect, the Issuer shall be obligated  to
           make  a  Mandatory  Redemption Offer using any and  all  available
           monies to effect such Mandatory Redemption Offer (such amounts  to
           include,  but  not be limited to, (a) all amounts in  the  Company
           Funds,  (b)  all amounts in the Issuer Funds and (c)  all  amounts
           available to the Issuer or the Company through the enforcement  of
           the Collateral). The redemption date for such a redemption may  be
           any  date  during  the 90-day period following  the  date  of  the
           Approval Event of Default or the County Partners Event of  Default
           (taking  into  account the notice requirements set  forth  in  the
           Indentures).
     
     (ii)  If  the  Luannan  Facility Construction  Cost  is  less  than  the
           Projected  Luannan Facility Construction Cost,  after  using  such
           excess  funds  to fund any deficits in the Issuer  Funds,  if  any
           excess  funds  are remaining and the amount of such  excess  funds
           equals  or exceeds $1.0 million, the Issuer shall be obligated  to
           use  such excess funds to make a Mandatory Redemption Offer to the
           Holders  of  the Existing Notes. The redemption date  for  such  a
           redemption may be any date during the 90-day period following  the
           date  of  the  Issuer's final calculation of the Luannan  Facility
           Construction  Cost  (taking into account the  notice  requirements
           set forth in the Exchange Notes Indenture).
     
     Redemption  for Taxation Reasons. The Existing Notes may be  redeemed,  at
the  option of the Issuer or the Company, as the case may be, in whole but  not
in part, at any time upon giving not less than 30 nor more than 60 days' notice
to the Holders (which notice shall be irrevocable), at a redemption price equal
to  the principal amount thereof, together with accrued and unpaid interest and
premium,  if any, to the date fixed by the Issuer or the Company, as  the  case
may  be,  for  redemption (a "Tax Redemption Date") and all Additional  Amounts
(see "--Withholding Taxes " below), if any, then due and which will become  due
on  the Tax Redemption Date as a result of the redemption or otherwise, if  the
Issuer or the Company, as the case may be, determines that, as a result of  (i)
any  change  in,  or amendment to, the laws or treaties (or any regulations  or
rulings promulgated thereunder) of the Cayman Islands or the United States  (or
any  political  subdivision  or  taxing  authority  thereof)  which  change  or
amendment  becomes effective on or after the Closing Date, (ii) any  change  in
position  regarding the application, administration or interpretation  of  such
laws,  treaties, regulations or rulings (including a holding, judgment or order
by   a   court   of  competent  jurisdiction),  which  change  in  application,
administration  or  interpretation becomes effective on or  after  the  Closing
Date,  the  Issuer  or the Company, as the case may be,  is,  or  on  the  next
interest  payment  date would be, required to pay Additional Amounts,  and  the
Issuer  or  the  Company,  as  the case may be, determines  that  such  payment
obligation cannot be avoided by the Issuer or the Company, as the case may  be,
taking  reasonable measures. Notwithstanding the foregoing, no such  notice  of
redemption  shall be given earlier than 90 days prior to the earliest  date  on
which the Issuer or the Company, as the case may be, would be obligated to make
such  payment or withholding if a payment in respect of the Existing  Notes  or
the  Exchange Notes Guarantee, as the case may be, were then due. Prior to  the
publication  or,  where relevant, mailing of any notice of  redemption  of  the
Existing  Notes  pursuant to the foregoing, the Issuer or the Company,  as  the
case  may  be,  will  deliver  to the Trustees an  opinion  of  a  tax  counsel
reasonably  satisfactory to the Trustees to the effect that  the  circumstances
referred  to above exist. The Trustees shall accept such opinion as  sufficient
evidence  of the satisfaction of the conditions precedent described  above,  in
which event it shall be conclusive and binding on the Holders.
     
     Selection  and  Notice. In the event that less than all  of  the  Existing
Notes  are to be redeemed at any time pursuant to an Optional Redemption  or  a
Public  Equity  Offering  Redemption,  selection  of  the  Existing  Notes  for
redemption  will  be made by the Exchange Notes Trustee (i) in compliance  with
the  provisions  of  the Exchange Notes Indenture described  herein  under  "--
Redemption"  and  (ii)  in accordance with the requirements  of  the  principal
national  securities exchange, if any, on which any of the Existing  Notes  are
listed  or,  if  none  of  the Existing Notes are then  listed  on  a  national
securities exchange, on a pro rata basis; provided that no Existing Notes of  a
principal amount or principal amount at maturity, as the case may be, of $1,000
or  less  shall be redeemed in part and the Exchange Notes Trustee  shall  have
authority  to give full effect to this proviso. Notice of redemption  shall  be
mailed  by  first-class mail at least 30 days but not more than 60 days  before
the  redemption  date to each Holder of Existing Notes to be  redeemed  at  its
registered  address. If any Existing Note is to be redeemed in part  only,  the
notice of redemption that relates to such Existing Note shall state the portion
of  the  principal  amount thereof to be redeemed. A new  Existing  Note  in  a
principal amount equal to the unredeemed portion thereof will be issued in  the
name of the Holder thereof upon cancellation of the original Existing Note.  On
and  after the redemption date, interest will cease to accrue on Existing Notes
or  portions thereof called for redemption as long as the Issuer has  deposited
with  the  applicable paying agent for the Existing Notes on or  prior  to  the
relevant  redemption  date funds in satisfaction of the  applicable  redemption
price pursuant to the Exchange Notes Indenture.
     
Limitation on Liability

     The  Indentures  provide that no stockholder, officer or director  of  the
Company or any of its Subsidiaries will be personally liable for the payment of
principal,  premium,  if  any, or interest (including  Liquidated  Damages  and
Additional  Amounts,  if  any) on the Existing Notes  and  the  Exchange  Notes
Guarantee.
     
Change of Control

     In the event of a Change of Control (the date of such occurrence being the
"Change  of Control Date"), the Issuer shall notify the Holders of the Existing
Notes  in  writing of such occurrence and shall make an offer to purchase  (the
"Change  of Control Offer"), on a business day (the "Change of Control  Payment
Date")  not  later  than  60 days following the Change  of  Control  Date,  all
Existing  Notes  then  outstanding at a purchase price equal  to  101%  of  the
principal  amount thereof plus accrued and unpaid interest, if  any  (including
Liquidated  Damages and Additional Amounts, if any), to the Change  of  Control
Payment  Date (the "Change of Control Purchase Price"). Notice of a  Change  of
Control  Offer shall be mailed by the Issuer to the Holders not  less  than  30
days  nor  more  than 45 days before the Change of Control  Payment  Date.  The
Change  of  Control Offer is required to remain open for at least  20  business
days.
     
     There  can  be  no  assurance that the Issuer will  have  available  funds
sufficient  to fund the purchase of the Existing Notes, or, in the  event  that
the Issuer does not have available funds sufficient to fund the purchase of the
Existing  Notes,  that  the  Company will have available  sufficient  funds  to
perform on the Existing Notes Guarantee, upon a Change of Control. In the event
that  a  Change  of  Control occurs at a time when the  Issuer  does  not  have
available funds sufficient to pay the Change of Control Purchase Price for  all
of  the  Existing Notes delivered by the Noteholders (or the Company  does  not
have  available  sufficient funds to perform the Existing  Notes  Guarantee  in
connection  with  the payment of the Change of Control Purchase  Price  by  the
Issuer)  seeking to accept the Change of Control Offer, an Indentures Event  of
Default  will occur. The definition of Change of Control includes an  event  by
which  the  Company, Panda International, the Issuer or any direct of  indirect
parent of the Company sells, conveys, transfers or leases or otherwise disposes
of all or substantially all of the properties and assets of the Company and its
Subsidiaries, taken as a whole, subject to certain exceptions. There is  little
case  law interpreting the phrase "all or substantially all" in the context  of
an  indenture.  Because  there  is no precise established  definition  of  this
phrase, there may be uncertainty as to whether a Change of Control has occurred
as  a  result  of  any particular sale, conveyance, transfer,  lease  or  other
disposition of assets of the Company and its Subsidiaries. Any such uncertainty
may adversely affect the enforceability of the Change of Control provisions  of
the Exchange Note Indenture.
     
Description of the Exchange Notes Collateral

     The  Issuer's obligations under the Existing Notes (and, unless  otherwise
specifically stated, any additional Senior Indebtedness of the Issuer hereafter
outstanding)  are  secured  by  the  following,  all  of  which,  collectively,
constitutes the Exchange Notes Collateral:
     
  The Pledge Agreements
  
     The Issuer has executed a pledge agreement (the "Issuer Pledge Agreement")
in  favor  of  the  Exchange Notes Trustee providing for  the  pledge,  to  the
Exchange  Notes Trustee, of (i) at least 90% of the Capital Stock  of  Pan-Sino
and  (ii)  the  Issuer Note issued by Pan-Western. The Issuer Pledge  Agreement
also  provides that, (A) in the event that Pan-Sino is merged into Pan-Western,
the  Issuer will pledge at least 99% of the Capital Stock of Pan-Western to the
Exchange  Notes Trustee and (B) in the event that Pan-Sino is merged  into  the
Issuer, the Issuer will assume Pan-Sino's obligations under the Pan-Sino Pledge
Agreement.
     
     Pan-Sino has executed a pledge agreement (the "Pan-Sino Pledge Agreement")
in  favor  of  the  Exchange  Notes Trustee providing for the  pledge,  to  the
Exchange Notes Trustee, of at least 99% of the Capital Stock of Pan-Western.
     
     Pan-Western  has  executed  a pledge agreement  (the  "Pan-Western  Pledge
Agreement") in favor of the Exchange Notes Trustee providing for the pledge, to
the  Exchange Notes Trustee, of the Luannan Facility Notes (such notes  in  the
aggregate  amount  of $71.253 million) issued by the Joint Ventures.  The  Pan-
Western  Pledge  Agreement will provide that Pan-Western will  ensure  that  no
Person  other than the Exchange Notes Trustee shall effect a security  interest
in  its assets or the assets of the Joint Ventures. Furthermore, so long as the
Existing Notes are outstanding, Pan-Western has agreed not to permit the  Joint
Ventures  to  pledge their assets and Pan-Western will not  pledge  its  equity
interests in the Joint Ventures, except in favor of the Exchange Notes Trustee.
Notwithstanding the foregoing, neither Pan-Western nor the Joint Ventures shall
be  required  to take any action that might jeopardize the characterization  of
the Shareholder Loans as shareholder financing under PRC law or regulations.
     
     The   Company  has  executed  a  pledge  agreement  (the  "Company  Pledge
Agreement") in favor of the Exchange Notes Trustee providing for the pledge, to
the Exchange Notes Trustee, of 100% of the Capital Stock of the Issuer.
     
     Individually,  and in the aggregate, the pledges of the Capital  Stock  of
Pan-Western, Pan-Sino and the Issuer do not constitute a "substantial  portion"
(as  defined in Rule 3-10 of Regulation S-X promulgated under the  Securities
Act) of the collateral securing the Existing Notes.
     
  The Security Agreements
  
     The  Issuer  has  entered into a security agreement (the "Issuer  Security
Agreement") with the Exchange Notes Trustee granting to it, for the benefit  of
only  the  Holders of the Existing Notes, (i) a security interest  in  (a)  the
Capitalized Interest Fund, (b) the Luannan Facility Construction Fund, (c)  the
Debt  Service Fund, (d) the Debt Service Reserve Fund and (e) Luannan  Facility
Restoration  Fund  established  pursuant  to  the  Exchange  Notes   Indenture,
including  all  proceeds  thereon and all documents evidencing  all  funds  and
investments held therein and (ii) an assignment and security interest in all of
the Issuer's rights under the Issuer Loan Agreement.
     
     The  Issuer  Security  Agreement also provides for  the  granting  to  the
Exchange  Notes  Trustee, for the benefit of the Holders of the Existing  Notes
(and  any  additional Senior Indebtedness of the Issuer) an equal  and  ratable
security  interest  in (i) the Issuer Revenue Fund, (ii) the  Issuer  Operating
Fund and (iii) the Issuer Equity Distribution Fund established pursuant to  the
Exchange  Notes  Indenture, including all proceeds thereon  and  all  documents
evidencing all funds and investments held therein.
     
     Pan-Western  has  entered  into  a security  agreement  (the  "Pan-Western
Security Agreement") with the Exchange Notes Trustee granting and assigning  to
it a security interest in all (i) of the Pan-Western Funds established pursuant
to  the  Exchange  Notes  Indenture, including all  proceeds  thereon  and  all
documents  evidencing all funds and investments held therein and (ii)  of  Pan-
Western's  rights under the Shareholder Loan Agreements and the  Joint  Venture
Guarantees.
     
     Pan-Sino  has  entered into a security agreement (the  "Pan-Sino  Security
Agreement")  with  the Exchange Notes Trustee granting and assigning  to  it  a
security  interest in the Pan-Sino Fund established pursuant  to  the  Exchange
Notes  Indenture,  including all proceeds thereon and all documents  evidencing
such fund and investments held therein.
     
     The  Issuer  Pledge  Agreement, the Pan-Sino Pledge  Agreement,  the  Pan-
Western Pledge Agreement, certain sections of the Company Pledge Agreement, the
Issuer  Security Agreement, the Pan-Western Security Agreement and the Pan-Sino
Security  Agreement,  collectively, constitute the  Exchange  Notes  Collateral
Documents.
     
Description of the Exchange Notes Guarantee Collateral

     The  Company's obligations under the Exchange Notes Guarantee (and, unless
otherwise  specifically  stated,  any additional  Senior  Indebtedness  of  the
Company hereafter outstanding) will be secured by the following, all of  which,
collectively, constitutes the Exchange Notes Guarantee Collateral:
     
  The Pledge Agreements and the Security Agreement
  
     Panda   International  has  executed  a  pledge  agreement   (the   "Panda
International  Pledge  Agreement") in favor of the  Company  Indenture  Trustee
providing  for  the pledge, to the Company Indenture Trustee, of  100%  of  the
Capital Stock of the Company.
     
     Pursuant to the Company Pledge Agreement, the Company has pledged  to  the
Company Indenture Trustee 100% of the Capital Stock of PEC.
     
     Individually,  and in the aggregate, the pledges of the Capital  Stock  of
the  Company and PEC do not constitute a "substantial portion" (as  defined  in
Rule  3-10  of Regulation S-X promulgated under the Securities  Act)  of  the
collateral securing the Exchange Notes Guarantee.
     
     The  Company has entered into a security agreement (the "Company  Security
Agreement") with the Company Indenture Trustee granting to it, for the  benefit
of only the holders of the Exchange Notes Guarantee, (i) a security interest in
the  Notes Guarantee Service Fund and the Notes Guarantee Service Reserve  Fund
established  pursuant to the Company Indenture, including all proceeds  thereon
and all documents evidencing all funds and investments held therein and (ii) an
assignment  and  security  interest in all of the Company's  right,  title  and
interest in the U.S. Distribution Fund.
     
     The  Company  Security Agreement also provides for  the  granting  to  the
Company Indenture Trustee, for the benefit of the holders of the Exchange Notes
Guarantee (and any additional Senior Indebtedness of the Company) an equal  and
ratable  security  interest in (i) the Company Revenue Fund, (ii)  the  Company
Operating  Fund  and  (iii)  the Company Equity Distribution  Fund  established
pursuant  to  the  Company Indenture, including all proceeds  thereon  and  all
documents evidencing all funds and investments held therein.
     
     Pursuant to an agreement among PIC, PEC and the Company, dated as  of  the
Closing  Date (the "PEC Assignment and Pledge Agreement"), PIC has agreed  that
any  and  all  amounts that are deposited into the U.S. Distribution  Fund  (as
defined  in  the  PFC Indenture) shall be transferred in same day  funds  to  a
revenue  account designated by PEC (the "PEC Revenue Account").   PEC  and  the
Company  have  assigned to the Company Indenture Trustee all  of  their  right,
title  and  interest in and to the following: (i) PEC Revenue Account  and  all
amounts  on  deposit  therein  and  (ii) to  the  extent  available  after  the
fulfillment  of  any  and  all  mandatory redemption  and  mandatory  repayment
obligations, any and all excess Domestic Project Event Proceeds.
     
     The  Panda International Pledge Agreement, certain sections of the Company
Pledge  Agreement,  the Company Security Agreement and the PEC  Assignment  and
Pledge   Agreement,  collectively,  constitute  the  Exchange  Notes  Guarantee
Collateral Documents (the Exchange Notes Collateral Documents and the  Exchange
Notes   Guarantee   Collateral   Documents,   collectively,   the   "Collateral
Documents").
     
Description of Additional Collateral

     Permitted  Projects  may be financed pursuant to the  PFC  Indenture,  the
Company Indenture and the Exchange Notes Indenture. U.S. Permitted Projects may
be  constructed,  owned  or operated pursuant to the  PFC  Indenture  and  U.S.
Permitted Projects may be developed, constructed, owned or operated pursuant to
the Company Indenture. Non-U.S. Permitted Projects may be constructed, owned or
operated pursuant to the PFC Indenture and may be developed, constructed, owned
or  operated  pursuant to the Exchange Notes Indenture. In  practice,  Non-U.S.
Permitted  Projects are likely to be financed pursuant to the PFC Indenture  or
the  Exchange Notes Indenture if owning, constructing or operating a  Permitted
Project  pursuant to the terms of the Company Indenture would have adverse  tax
consequences to the Company and its Subsidiaries. The Indentures  and  the  PFC
Indenture provide for the pledging of or granting of a security interest in the
assets  of  Permitted Projects for the benefit of the Holders of  the  Existing
Notes  or  of  holders  of  Indebtedness of the Company  or  its  Subsidiaries.
Security  interests in the assets of the Permitted Projects will be granted  by
the Company or its relevant Subsidiary in the following manner:
     
     The  Issuer  Pledge Agreement provides that, in the event that a  Non-U.S.
Permitted Project is developed, constructed or owned pursuant to the provisions
of  the Exchange Notes Indenture, at the point that the Issuer has expended  in
excess  of $2.5 million in the furtherance of the development of such  Non-U.S.
Permitted Project, 100% of the Capital Stock of the Person that owns such  Non-
U.S.  Permitted Project will be pledged to the Exchange Notes Trustee  (or,  to
the  extent that a Non-U.S. Permitted Project is not Wholly Owned by the Issuer
or  its  Subsidiary,  the entire ownership interest in such Non-U.S.  Permitted
Project  held  by  the  Issuer or such Subsidiary or  group  of  Subsidiaries).
Notwithstanding  the requirement of the preceding sentence, the  Issuer  Pledge
Agreement provides that, (i) in the event that the financing arrangements  with
respect  to  a  Non-U.S. Permitted Project requires the pledge  of  a  Non-U.S.
Permitted  Project's Capital Stock to secure Non-Recourse Debt, upon  financial
closing, the Exchange Notes Trustee shall release such stock and allow for such
a  pledge and (ii) the Issuer shall not be required to pledge the Capital Stock
of a Subsidiary if (A) such a pledge is contrary to the law of the jurisdiction
of  domicile  of the relevant Subsidiary or (B) such a pledge is not  permitted
under  the  Project Documents of such Non-U.S. Permitted Project. In the  event
that  the Capital Stock of a Subsidiary that was not available for a pledge  to
the  Exchange  Notes Trustee pursuant to clauses (i) and (ii) of the  preceding
sentence  becomes available at a subsequent date, the Issuer shall be  required
to  pledge promptly the Capital Stock of such Subsidiary to the Exchange  Notes
Trustee. The Issuer Pledge Agreement also provides for the grant by the  Issuer
of  any and all right, title and interest of, to the extent available after the
fulfillment  of  any  and  all  mandatory redemption  and  mandatory  repayment
obligations,  any and all excess Non-U.S. Permitted Project Event  Proceeds  to
the Exchange Notes Trustee.
     
     The  Company  Pledge Agreement provides that, in the  event  that  a  U.S.
Permitted Project is developed, constructed or owned pursuant to the provisions
of  the Company Indenture, at the point that the Company has expended in excess
of  $2.5  million in the furtherance of the development of such U.S.  Permitted
Project,  100%  of  the Capital Stock of the Person that  owns  such  Permitted
Project  will  be pledged to the Company Indenture Trustee (or, to  the  extent
that  a Permitted Project is not Wholly Owned by the Company or its Subsidiary,
the  entire  ownership  interest in such U.S. Permitted  Project  held  by  the
Company  or such Subsidiary). Notwithstanding the requirement of the  preceding
sentence, the Company Pledge Agreement provides that (i) in the event that  the
financing  arrangements with respect to a U.S. Permitted  Project  require  the
pledge of a U.S. Permitted Project's Capital Stock to secure Non-Recourse Debt,
upon  financial closing, the Company Indenture Trustee shall release such stock
and  allow  for  such a pledge and (ii) the Company shall not  be  required  to
pledge  the  Capital Stock of a Subsidiary if such a pledge  is  not  permitted
under  the Project Documents of such U.S. Permitted Project. In the event  that
the  Capital Stock of a Subsidiary that was not available for a pledge  to  the
Company  Indenture Trustee pursuant to clauses (i) and (ii)  of  the  preceding
sentence  becomes available at a subsequent date, the Company shall be required
to  promptly  pledge  the  Capital  Stock of such  Subsidiary  to  the  Company
Indenture Trustee. The Company Pledge Agreement also provides for the grant  by
the  Company  of  any  and  all right, title and interest  of,  to  the  extent
available  after  the  fulfillment  of any and  all  mandatory  redemption  and
mandatory  repayment  obligations, any and all excess  U.S.  Permitted  Project
Event Proceeds to the Company Indenture Trustee.
     
     The  PEC  Assignment and Pledge Agreement provides that, (i) in the  event
that a U.S. Permitted Project is constructed, owned or operated pursuant to the
provisions  of the PFC Indenture, to the extent available after the fulfillment
of  any  and all mandatory redemption and mandatory repayment obligations,  any
and  all excess U.S. Permitted Project Event Proceeds shall be paid to PEC  for
payment  to the Company Indenture Trustee and (ii) in the event that a Non-U.S.
Permitted  Project is constructed, owned or operated pursuant to the provisions
of  the PFC Indenture, to the extent available after the fulfillment of any and
all  mandatory redemption and mandatory repayment obligations, that any and all
excess  Non-U.S.  Permitted Project Event Proceeds will  be  deposited  in  the
International Distribution Fund and will be subject to certain restrictions  on
distribution from such fund.
     
     Funds  that  are  created  in  connection  with  the  issuance  of  future
Indebtedness by any of PFC, PIC, the Company or the Issuer shall not be pledged
as  security for the Existing Notes or the Exchange Notes Guarantee but may  be
pledged as security for such future Indebtedness.
     
The Funds

  The Issuer Funds
  
     In  accordance  with  the  terms  and conditions  of  the  Exchange  Notes
Indenture, the Exchange Notes Trustee will establish and maintain the following
funds:  (i) the Issuer Revenue Fund, (ii) the Capitalized Interest Fund,  (iii)
the  Luannan  Facility Construction Fund, (iv) the Debt Service Fund,  (v)  the
Debt  Service Reserve Fund, (vi) the Issuer Operating Fund, (vii)  the  Luannan
Facility  Restoration Fund and (viii) the Issuer Equity Distribution Fund  (the
"Issuer  Funds"). The Issuer will have limited rights of withdrawal  under  the
Issuer  Funds  in  accordance with the terms and conditions set  forth  in  the
Exchange  Notes  Indenture. The Issuer Revenue Fund, the Issuer Operating  Fund
and  the Issuer Equity Distribution Fund will be for the use and benefit of the
holders of any and all securities or guarantees issued pursuant to the Exchange
Notes   Indenture.   The  Capitalized  Interest  Fund,  the  Luannan   Facility
Construction Fund, the Debt Service Fund, the Debt Service Reserve Fund and the
Luannan Facility Restoration Fund shall be for the exclusive use and benefit of
the Holders of the Existing Notes.
     
     Issuer  Revenue Fund. In accordance with the terms and conditions  of  the
Exchange  Notes Indenture, the Issuer will be required to deposit  all  of  the
following in the Issuer revenue fund (the "Issuer Revenue Fund"): (i)  any  and
all  revenues received by the Issuer from any source, (ii) any and  all  income
from  the  investment of monies in any of the Issuer Funds, (iii) any  and  all
proceeds  from the payment by Pan-Western of amounts due under the Issuer  Loan
and  any  and all other payments by Pan-Western to the Issuer and (iv)  in  the
event  that  a  Non-U.S. Permitted Project is developed, constructed  or  owned
pursuant  to  the provisions of the Exchange Notes Indenture, (A) any  and  all
revenues received by the Issuer from such Non-U.S. Permitted Project and (B) to
the  extent  available, any and all Non-U.S. Permitted Project Event  Proceeds.
Additionally, unless transferred to the Luannan Facility Restoration  Fund  for
the  rebuilding,  repair or restoration of the Luannan  Facility,  all  Luannan
Casualty Proceeds and Luannan Expropriation Proceeds will be deposited directly
into  the  Pan-Western Revenue Fund as a repayment of all or a portion  of  the
Shareholder Loans and then transferred to the Issuer Revenue Fund whereupon the
Issuer  will segregate such amounts from all other amounts held in  the  Issuer
Revenue Fund.
     
     Capitalized  Interest  Fund. Upon the closing of the  Prior  Offering  and
payment by the Issuer of the fees and expenses incurred in connection with  the
issuance  of  the  Old  Notes  and the Exchange  Notes  Guarantee,  the  Issuer
deposited  approximately $48.1 million into the capitalized interest fund  (the
"Capitalized  Interest  Fund") to be invested in Dollar Permitted  Investments.
Through  the  Capitalized Interest Expiration Date, interest  payments  on  the
Existing Notes shall be made from the Capitalized Interest Fund.
     
     Luannan Facility Construction Fund. After (i) the payment by the Issuer of
the fees and expenses incurred in connection with the issuance of the Old Notes
and  the  Exchange  Notes Guarantee, (ii) the deposit  by  the  Issuer  of  the
required funds into the Capitalized Interest Fund and (iii) the deposit by  the
Issuer  of  the required funds into the Debt Service Reserve Fund  (as  defined
below),  the balance of funds remaining from the proceeds of the Prior Offering
(estimated to be approximately $80.4 million) was deposited by the Issuer  into
the  Luannan  Facility  construction fund (the "Luannan  Facility  Construction
Fund")  and  such  amount (including interest income received from  Pan-Western
under the Issuer Loan and other amounts received from Pan-Western prior to  the
Luannan Commercial Operation Date) was used to make the Issuer Loan.
     
     Pursuant to the terms of the Exchange Notes Indenture and the Issuer  Loan
Agreement,  the principal amount of the Issuer Loan (and any and  all  interest
income thereon (and on any of the Issuer Funds) prior to the Luannan Commercial
Operation Date) will be advanced to Pan-Western in installments starting on the
Closing  Date  and  ending on the date on which the last Joint  Venture  has  a
payment  obligation relating to the construction of the Luannan  Facility  (the
"Funding  Period"). It is expected that during the Funding Period,  Pan-Western
will,  in  the aggregate, advance from the proceeds of the Issuer Loan  (i)  in
accordance  with the terms of the Shareholder Loan Agreements,  $71,253,000  to
make  the  installment payments of the Shareholder Loans to the Joint  Ventures
(during  the  Funding  Period, in the aggregate, Tangshan  Panda  will  receive
$17,880,000,  Tangshan  Pan-Western will receive $17,880,000,  Tangshan  Cayman
will  receive  $17,664,000 and Tangshan Pan-Sino will receive $17,829,000)  and
(ii)  in  accordance  with the Joint Venture Agreements,  $41,763,000  to  make
installment   payments   of   its   equity  contributions   (the   "JV   Equity
Contributions")  to each of the Joint Ventures (during the Funding  Period,  in
the  aggregate,  Tangshan Panda will receive $10,480,000, Tangshan  Pan-Western
will receive $10,480,000, Tangshan Cayman will receive $10,353,000 and Tangshan
Pan-Sino will receive $10,450,000).
     
     Upon  receipt  of  the JV Equity Contributions, each Joint  Venture  will,
prior  to  the disbursement of such monies to meet a Joint Venture  contractual
obligation,  effect  the registration in the PRC of such monies  as  registered
capital of the Joint Ventures.
     
     Monies  will  be  disbursed  from the Luannan Facility  Construction  Fund
(initially in the form of an installment of the Issuer Loan and upon receipt by
Pan-Western, either in the form of an installment of the Shareholder  Loans  or
as  an  installment of the JV Equity Contributions) to meet each of  the  Joint
Venture's payment obligations under the Luannan EPC Contract and to meet  other
contractual obligations of the Joint Ventures under any of the Luannan  Project
Documents  or  other Luannan Facility financing, construction  and  development
costs,  including  interest on the Shareholder Loans  during  construction.  In
addition,  upon  the  issuance  of  the  Old  Notes,  Pan-Western  provided  as
Shareholder  Loans  approximately  $5.74  million  from  the  Luannan  Facility
Construction  Fund to Tangshan Pan-Sino and Tangshan Cayman  which  utilized  a
portion  of  such funds for the purchase of water and land use rights,  certain
water wells and pipelines, respectively, from the County Partners. Amounts also
have  been  disbursed  from  the  Luannan  Facility  Construction  Fund  as   a
Shareholder  Loan  to  Tangshan Pan-Sino to finance  the  construction  of  the
Transmission Facilities.
     
     Amounts   will  be  disbursed  periodically  from  the  Luannan   Facility
Construction  Fund only upon the satisfaction of certain conditions  that  will
include,  but not be limited to, the receipt by the Exchange Notes  Trustee  of
the following documents:
     
     (i)   a  certificate  from  the  Issuer,  Pan-Western  and  the  Luannan
           Facility Engineer (delivered at least once a month whether or  not
           there is a disbursement pursuant to the Shareholder Loans) to  the
           effect  that:  (a)  undisbursed  funds  in  the  Luannan  Facility
           Construction  Fund (or other monies available to  the  Issuer,  to
           the  extent  that such monies have been segregated in a  dedicated
           account  and a security interest in such account has been  granted
           to  the Exchange Notes Trustee) together with any and all interest
           earned  on  the  Issuer  Funds  and  the  Pan-Western  Funds   are
           reasonably  expected  to equal or exceed the amount  necessary  to
           pay  all project costs in connection with final completion of  the
           Luannan   Facility;  and  (b)  the  Luannan  Facility   is   being
           constructed  in  accordance with the Approved Construction  Budget
           and  Schedule or, if applicable, an Approved Completion Plan (each
           such   certificate,  a  "Luannan  Facility  Construction  Schedule
           Certificate");
     
     (ii)  prior  to  disbursing more than $15.0 million  in  the  aggregate,
           receipt  by the Exchange Notes Trustee of a certificate  from  the
           Issuer  and Pan-Western certifying that the transfer of land  from
           the  County Partners to the relevant Joint Venture has taken place
           and  has  been legally recognized and recorded in accordance  with
           PRC law;
     
     (iii) a   current   construction   progress   report   and   requisition
           certificate  from  the Issuer and Pan-Western  specifying  project
           costs that are due and payable or that are reasonably expected  to
           be due and payable within the next 30 days; and
     
     (iv)  an  officer's certificate from the Issuer and Pan-Western  to  the
           effect  that:  (a) no Issuer Loan Agreement Event of  Default  has
           occurred  and  is  continuing; (b) no Shareholder  Loan  Agreement
           Event  of  Default  has occurred and is continuing;  and  (c)  the
           representations and warranties in the Shareholder Loan  Agreements
           are  true and correct in all material respects on the date thereof
           as  if  made  on such date, except as affected by the consummation
           of   the  transactions  contemplated  thereby  or  to  the  extent
           relating solely to an earlier date.
     
     At  any time, if (i) the Issuer and Pan-Western shall deliver an officer's
certificate  certifying that (a) there does not exist as of the  date  of  such
certificate  a  Shareholder Loan Agreement Event of Default,  (b)  all  amounts
required  to  be paid as of such date under the Luannan Project Documents  have
been  paid  and  (c) the amount in the Luannan Facility Construction  Fund  and
estimated  income  on all Issuer Funds and the Pan-Western  Funds  through  the
anticipated Luannan Commercial Operation Date exceed by an amount specified  in
such  certificate all reasonably foreseeable expenses (including an appropriate
contingency)  in connection with final completion of the Luannan Project  other
than  the  unreimbursed  development costs paid to third  parties  incurred  by
Affiliates of the Issuer in connection with the Luannan Facility and  (ii)  the
Luannan  Facility Engineer shall deliver a certificate to the  same  effect  as
clause  (c)  above,  the Exchange Notes Trustee shall transfer  to  the  Issuer
Equity  Distribution  Fund  the  lesser  of  (i)  such  excess  and  (ii)  such
unreimbursed third-party costs.
     
     Upon  completion  of the Luannan Facility, (i) the Issuer and  Pan-Western
shall  deliver  an  officer's  certificate  certifying  that  (a)  the  Luannan
Commercial Operation Date has occurred, (b) there does not exist as of the date
of  such  certificate a Shareholder Loan Agreement Event of  Default,  (c)  all
amounts required to be paid as of such date under the Luannan Project Documents
have  been  paid  and (d) an amount has been set aside in the  Completion  Sub-
Account  sufficient  to pay all reasonably foreseeable expenses  in  connection
with  final  completion of the Luannan Facility, and (ii) the Luannan  Facility
Engineer  shall  deliver a certificate certifying that the  Luannan  Commercial
Operation Date has occurred and that the amount available in the Completion Sub-
Account is sufficient to complete the Luannan Facility. If, upon the occurrence
of  the  events described in clauses (i) and (ii) in the immediately  preceding
sentence, excess funds remain in the Luannan Facility Construction Fund due  to
the  Luannan  Facility Construction Cost being less than the Projected  Luannan
Facility Construction Cost, the Issuer shall, first, fund any deficits  in  the
Issuer  Funds and second, if any excess funds are remaining and the  amount  of
such  excess  funds  equals or exceeds $1.0 million, be  obligated  to  make  a
Mandatory  Redemption  Offer as described above under "--Redemption--Redemption
at  Option  of  Holders."  In the event that there are excess  funds  following
completion  of such Mandatory Redemption Offer, such funds shall be transferred
to the Issuer Revenue Fund.
     
     Debt  Service Fund. Amounts deposited in the debt service fund (the  "Debt
Service Fund") shall be allocated among sub-funds of a Exchange Notes Principal
Account and an Exchange Notes Interest Account, which shall be established  for
the  Existing  Notes  based on the principal, premium,  if  any,  and  interest
(including  Liquidated Damages and Additional Amounts, if any) due and  payable
on the Existing Notes on the next principal or interest payment date falling on
or within six months following the relevant Monthly Date. Amounts on deposit in
such  sub-funds shall be used to pay principal, premium, if any,  and  interest
(including  Liquidated Damages and Additional Amounts, if any) due and  payable
(whether  at  the  stated  maturity, call for redemption,  by  acceleration  or
otherwise) on the Existing Notes. If monies in the Debt Service Fund exceed the
amount  of  money  required  by the Exchange Notes Indenture  to  be  deposited
therein, such excess shall be transferred to the Issuer Revenue Fund.
     
     Debt  Service Reserve Fund. On the Closing Date, the Issuer deposited $9.7
million in the debt service reserve fund (the "Debt Service Reserve Fund") as a
reserve for payments on the Existing Notes.
     
     After  the  Luannan  Commercial Operation Date, the Debt  Service  Reserve
Requirement will increase to (A) the aggregate principal, premium, if  any,  of
payments due on the Existing Notes on the next semi-annual payment date and (B)
the   aggregate  cash  interest  payments  (including  Liquidated  Damages  and
Additional  Amounts, if any) due on the Existing Notes on the next  semi-annual
payment date. Amounts on deposit in the Debt Service Reserve Fund shall be used
to  pay  the  principal,  premium,  if any, or interest  (including  Liquidated
Damages and Additional Amounts, if any) at any time due on the Existing  Notes,
and  to  the extent that amounts on deposit in the Issuer Revenue Fund and  the
Debt Service Fund are insufficient. In the event that the amount on deposit  in
the  Debt Service Reserve Fund exceeds the Debt Service Reserve Requirement  at
any time, the excess shall be transferred to the Issuer Revenue Fund.
     
     Issuer Operating Fund. Amounts deposited in the Issuer operating fund (the
"Issuer  Operating  Fund")  shall be used by the  Issuer  for  the  payment  of
expenses  in connection with the Administrative Services Agreement and  certain
other fees and expenses.
     
     Luannan  Facility  Restoration  Fund. All Luannan  Casualty  Proceeds  and
Luannan  Expropriation Proceeds, to the extent required by the  Exchange  Notes
Indenture  to  be  used for the payment of the costs of rebuilding,  repair  or
restoration of any damaged Joint Venture Facility shall be transferred  to  the
Luannan  Facility  restoration fund (the "Luannan Facility  Restoration  Fund")
from  the  Issuer  Revenue Fund. The Issuer may requisition  amounts  from  the
Luannan Facility Restoration Fund for rebuilding, repair and restoration  costs
in  accordance with the requisition procedures set forth in the Exchange  Notes
Indenture.  Following the completion of any rebuilding, repair  or  restoration
and  after giving effect to any retention in accordance with the Exchange Notes
Indenture  (after reimbursing the Issuer for any unreimbursed  amounts  it  has
expended in connection with the rebuilding, repair or restoration), if  amounts
remaining  in  the Luannan Facility Restoration Fund exceed $2.5 million,  such
amount  will be applied, in certain instances, first, to the redemption of  the
Issuer Loan and then to the pro rata redemption of the Existing Notes.
     
     Issuer  Equity  Distribution Fund. All amounts on deposit  in  the  Issuer
Revenue Fund after the transfer of monies therein to each of the other funds in
accordance with the Exchange Notes Indenture shall be transferred to the Issuer
equity  distribution  fund (the "Issuer Equity Distribution  Fund");  provided,
however, that (i) withdrawals from the Issuer Equity Distribution Fund may only
be  made in connection with payments to be made by the Issuer pursuant  to  the
Development  Services Agreement and (ii) the Issuer may only make distributions
to  its  shareholders if (A) the Company is in compliance with the requirements
of the Limitation on Restricted Payments covenant of the Indentures and (B) the
Luannan Commercial Operation Date has occurred.
     
     Issuer  Flow of Funds. The Exchange Notes Trustee will, on the eighth  day
of  each month after the Luannan Commercial Operation Date (or, if such date is
not  a  business  day,  the next following business day)  (a  "Monthly  Date"),
transfer or segregate money, to the extent then available in the Issuer Revenue
Fund and not segregated for any purpose, to the other funds as follows:
     
     (i)   to  the  Issuer Operating Fund, the amount estimated by the Issuer
           to  be  needed for the payment of expenses of the Issuer including
           expenses  in connection with the Administrative Services Agreement
           to be incurred during the next month;
     
     (ii)  to  the Exchange Notes Interest Account of the Debt Service  Fund,
           an  amount  equal  to the excess of (a) the sum of  cash  interest
           payments (including Liquidated Damages and Additional Amounts,  if
           any)  due and payable on all of the Existing Notes outstanding  on
           the  next  succeeding interest payment date falling on  or  within
           six  months  following such Monthly Date over (b) the amount  then
           on deposit in such Exchange Notes Interest Account;
     
     (iii) to  the Exchange Notes Principal Account of the Debt Service Fund,
           an  amount  equal to the excess of (a) the principal and  premium,
           if  any,  payments  next  due and payable on  the  Existing  Notes
           outstanding at the next succeeding principal payment date  falling
           on  or within six months following such Monthly Date over (b)  the
           amount then on deposit in such Exchange Notes Principal Account;
     
     (iv)  to  the  Debt Service Reserve Fund, the excess of the Debt Service
           Reserve  Requirement over the amount in the Debt  Service  Reserve
           Fund; and
     
     (v)   to  the  Issuer Equity Distribution Fund, any remainder; provided,
           however,  that (a) withdrawals from the Issuer Equity Distribution
           Fund  may only be made in connection with payments to be  made  by
           the  Issuer pursuant to the Development Services Agreement and (b)
           the  Issuer may only make distributions to its shareholders if (1)
           the  Company  is  in  compliance  with  the  requirements  of  the
           Limitation  on Restricted Payments covenant of the Indentures  and
           (2) the Luannan Commercial Operation Date has occurred.
     
  The Company Funds
  
     In  accordance with the terms and conditions of the Company Indenture, the
Company  Indenture  Trustee  will establish and maintain  the  following  funds
(separately defined hereinbelow): (i) the Company Revenue Fund, (ii) the  Notes
Guarantee  Service Fund, (iii) the Notes Guarantee Service Reserve  Fund,  (iv)
the  Company Operating Fund, (v) the Company Equity Distribution Fund and  (vi)
such  other funds, from time to time, as may be required pursuant to the  terms
of  the  Company Indenture (the "Company Funds"). The Company will have limited
rights  of withdrawal under the Company Funds in accordance with the terms  and
conditions set forth in the Company Indenture. The Company Funds will, with the
exception  of the Notes Guarantee Service Fund and the Notes Guarantee  Service
Reserve  Fund,  be  for  the use and benefit of the  holders  of  any  and  all
securities  or guarantees issued pursuant to the Company Indenture.  The  Notes
Guarantee  Service Fund and the Notes Guarantee Service Reserve Fund  shall  be
for  the  exclusive  use  and  benefit of the holders  of  the  Exchange  Notes
Guarantee.
     
     Company  Revenue  Fund.  All of the following will  be  deposited  in  the
Company revenue fund (the "Company Revenue Fund"): (i) revenues received by the
Company  from any source, (ii) income from the investment of monies in  any  of
the  Company Funds, (iii) all amounts on deposit in the U.S. Distribution  Fund
and  (iv)  in the event that a U.S. Permitted Project is constructed, owned  or
operated  pursuant  to  the  provisions of the PFC  Indenture  or  the  Company
Indenture, any and all available revenues from such U.S. Permitted Project  (in
the case of a U.S. Permitted Project pursuant to the PFC Indenture, such monies
will be required to flow through the U.S. Distribution Fund) and, to the extent
available,  any  and  all Domestic Project Event Proceeds  and  U.S.  Permitted
Project Event Proceeds.
     
     Company  Operating Fund.  Amounts deposited in the Company operating  fund
(the "Company Operating Fund") shall be used by the Company for the payment  of
expenses  in connection with the Administrative Services Agreement and  certain
other fees and expenses.
     
     Notes  Guarantee  Service Fund. To the extent that  there  are  sufficient
amounts  available in the Debt Service Fund  of the Issuer to make the payments
equal  to  the  principal, premium, if any, and interest (including  Liquidated
Damages  and Additional Amounts, if any) due and payable on the Existing  Notes
on  the  next  principal or interest payment date(s) falling on or  within  six
months  following  the  relevant  Monthly  Date,  the  Company  shall  have  no
obligation  to  deposit monies into the Existing Notes guarantee  service  fund
(the  "Notes  Guarantee Service Fund"). However, to the extent that  there  are
insufficient amounts available in the Debt Service Fund of the Issuer  to  make
the  payments equal to the principal, premium, if any, and interest  (including
Liquidated  Damages  and Additional Amounts, if any) due  and  payable  on  the
Existing Notes on the next principal or interest payment date(s) falling on  or
within  six months following the relevant Monthly Date,  the Company  shall  be
required  to  deposit monies into the Notes Guarantee Service Fund  until  such
time as the amounts on deposit in the Debt Service Fund and the Notes Guarantee
Service  Fund, in the aggregate, are equal to the principal, premium,  if  any,
and  interest (including Liquidated Damages and Additional Amounts, if any) due
and  payable  on  the Existing Notes on the next principal or interest  payment
date(s) falling on or within six months following the relevant Monthly Date.
     
     Amounts  deposited in the Notes Guarantee Service Fund shall be  allocated
among  sub-funds of a Existing Notes Guarantee principal account (the "Exchange
Notes  Guarantee  Principal  Account") and Existing  Notes  Guarantee  interest
account  (the  "Exchange  Notes Guarantee Interest  Account")  which  shall  be
established  for the Exchange Notes Guarantee based on the principal,  premium,
if  any, and interest (including Liquidated Damages and Additional Amounts,  if
any)  due  and payable on the Existing Notes on the next principal or  interest
payment  date(s) falling on or within six months following the relevant Monthly
Date  less  the amount on deposit in the Debt Service Fund. In the  event  that
amounts  on  deposit in the Debt Service Fund of the Issuer  are  insufficient,
amounts  on deposit in the sub-funds of the Notes Guarantee Service Fund  shall
be  used  to pay principal, premium, if any, and interest (including Liquidated
Damages and Additional Amounts, if any) due and payable (whether at the  stated
maturity,  call for redemption, by acceleration or otherwise) on  the  Existing
Notes.  If  at any time monies in the Notes Guarantee Service Fund  exceed  the
amount of money required by the Indentures to be deposited therein, such excess
shall be transferred to the Company Revenue Fund.
     
     Notes  Guarantee  Service  Reserve  Fund.  After  the  Luannan  Commercial
Operation  Date, in the event that the amounts on deposit in the  Debt  Service
Reserve  Fund  of the Issuer are not equal to or greater than the Debt  Service
Reserve Requirement, the Company shall be obligated to deposit monies into  the
Exchange  Notes  guarantee service reserve fund (the "Notes  Guarantee  Service
Reserve  Fund"),  until  such time as the sum of (i) the  monies  in  the  Debt
Service Reserve Fund of the Issuer and (ii) the monies on deposit in the  Notes
Guarantee  Service  Reserve  Fund equal, in the  aggregate,  the  Debt  Service
Reserve  Requirement. Amounts on deposit in the Notes Guarantee Service Reserve
Fund  shall  be  used  to  pay  the principal, premium,  if  any,  or  interest
(including  Liquidated  Damages and Additional Amounts,  if  any)  due  on  the
Existing  Notes, to the extent that the sum of the amounts on  deposit  in  the
Issuer  Revenue Fund, the Debt Service Fund, the Debt Service Reserve Fund  and
the Company Revenue Fund are insufficient. If at any time the amount on deposit
in  the  Notes Guarantee Service Reserve Fund exceeds the Debt Service  Reserve
Requirement, the excess shall be transferred to the Company Revenue Fund.
     
     Company  Equity Distribution Fund. All amounts on deposit in  the  Company
Revenue Fund after the transfer of monies therein to each of the other funds in
accordance  with  the  Indentures shall be transferred to  the  Company  equity
distribution fund (the "Company Equity Distribution Fund"); provided,  however,
that (A) withdrawals from the Company Equity Distribution Fund may only be made
in  connection  with  payments  to  be made by  the  Company  pursuant  to  the
Development  Services Agreement and (B) the Company may only make distributions
to  its  shareholders if (1) the Company is in compliance with the requirements
of  the Limitation on Restricted Payments covenant of the Company Indenture and
(2) the Luannan Commercial Operation Date has occurred.
     
     Company Flow of Funds. The Company Indenture Trustee will, on each Monthly
Date,  transfer or segregate money, to the extent then available in the Company
Revenue Fund and not segregated for any purpose, to the other funds as follows:
     
     (i)   to  the  Company  Operating  Fund, the  amount  estimated  by  the
           Company  to  be needed for the payment of expenses of the  Company
           including expenses in connection with the Administrative  Services
           Agreement to be incurred during the next month;
     
     (ii)  to  the  Exchange Notes Guarantee Interest Account  of  the  Notes
           Guarantee Service Fund, an amount equal to the excess (if any)  of
           (a)  the  sum  of  cash  interest payments  (including  Liquidated
           Damages and Additional Amounts, if any) due and payable on all  of
           the  Existing  Notes  outstanding on the next succeeding  interest
           payment  date  falling  on  or within six  months  following  such
           Monthly  Date over (b) the sum of (x) the amount then  on  deposit
           in  such  Exchange Notes Guarantee Interest Account  and  (y)  the
           amounts on deposit in the Exchange Notes Interest Account  of  the
           Debt Service Fund;
     
     (iii) to  the  Exchange Notes Guarantee Principal Account of  the  Notes
           Guarantee Service Fund, an amount equal to the excess (if any)  of
           (a)  the  principal  and premium, if any, payments  next  due  and
           payable  on  the Existing Notes outstanding at the next succeeding
           principal  payment date falling on or within six months  following
           such  Monthly  Date  over (b) the sum of (x) the  amount  then  on
           deposit  in  such Exchange Notes Guarantee Principal  Account  and
           (y)  the  amounts  on  deposit  in the  Exchange  Notes  Principal
           Account of the Debt Service Fund;
     
     (iv)  to  the Notes Guarantee Service Reserve Fund, the excess (if  any)
           of  the  Debt  Service  Reserve Requirement over  the  amounts  on
           deposit in the Debt Service Reserve Fund; and
     
     (v)   to  the Company Equity Distribution Fund, any remainder; provided,
           however,   that   (a)   withdrawals  from   the   Company   Equity
           Distribution Fund may only be made in connection with payments  to
           be  made  by  the  Company  pursuant to the  Development  Services
           Agreement and (b) the Company may only make distributions  to  its
           shareholders  if  (1)  the  Company  is  in  compliance  with  the
           requirements of the Limitation on Restricted Payments covenant  of
           the  Indentures and (2) the Luannan Commercial Operation Date  has
           occurred.
     
  The Pan-Western Funds
  
     In  accordance  with  the  terms  and conditions  of  the  Exchange  Notes
Indenture,  the Exchange Notes Trustee will establish and maintain outside  the
PRC the following funds: (i) the Pan-Western Revenue Fund, (ii) the Pan-Western
Operating  Fund and (iii) the Pan-Western Equity Distribution Fund  (the  "Pan-
Western  Funds"). Pan-Western will have limited rights of withdrawal under  the
Pan-Western  Funds in accordance with terms and conditions  set  forth  in  the
Exchange Notes Indenture.
     
     The  Pan-Western Revenue Fund. All of the following will be  deposited  in
the  Pan-Western  revenue fund (the "Pan-Western Revenue Fund"):  (i)  revenues
received  by  Pan-Western from any source, (ii) income from the  investment  of
monies  in the Pan-Western Funds, (iii) proceeds from the payment by the  Joint
Ventures  of  amounts  due  under the Shareholder  Loans,  (iv)  proceeds  from
payments  received  by  Pan-Western  on  its  business  interruption  insurance
policies  maintained  by  it  with  respect  to  the  Joint  Ventures  and  (v)
distributions from the Joint Ventures to Pan-Western.
     
     Pan-Western Operating Fund. Amounts deposited in the Pan-Western operating
fund  (the "Pan-Western Operating Fund") shall be used by Pan-Western  for  the
payment  of  expenses in connection with the Administrative Services  Agreement
and certain other fees and expenses.
     
     Pan-Western Equity Distribution Fund. Amounts deposited in the Pan-Western
equity distribution fund (the "Pan-Western Equity Distribution Fund") shall  be
allocated  among sub-funds consisting of a Pan-Sino distribution  account  (the
"Pan-Sino  Distribution  Account")  and a Chinamac  distribution  account  (the
"Chinamac  Distribution Account"). Pursuant to an agreement among  Pan-Western,
Pan-Sino   and  Chinamac  (the  "Pan-Western  Shareholders'  Agreement"),   the
shareholders  of  Pan-Western  have agreed  to  cause  Pan-Western  to  declare
distributions from the sub-funds immediately upon the availability of funds for
such purposes.
     
     Pan-Western  Flow  of  Funds. The Exchange Notes  Trustee  will,  on  each
Monthly Date after the Luannan Commercial Operation Date (or the next following
business day), transfer or segregate money, to the extent then available in the
Pan-Western Revenue Fund and not segregated for any purpose, to the other funds
as follows:
     
     (i)   to  the  Pan-Western Operating Fund, the amount estimated by  Pan-
           Western  to  be needed for the payment of expenses of  Pan-Western
           including  those  in  connection with the Administrative  Services
           Agreement to be incurred during the next month;
     
     (ii)  to  the  payment of interest due and payable with respect  to  the
           Issuer  Loan,  to the extent then due or to become due during  the
           next month;
     
     (iii) to  the  payment  of principal and premium, if any,  payable  with
           respect  to the Issuer Loan, to the extent then due or  to  become
           due during the next month;
     
     (iv)  until  such  time  as the Issuer Loan is repaid in  full,  to  the
           prepayment  of  principal, premium, if  any,  and  interest,  with
           respect  to  the Issuer Loan, to the extent amounts are  available
           to make such prepayments; and
     
     (v)   to the Pan-Western Equity Distribution Fund, any remainder.
     
  The Pan-Sino Fund and Flow of Funds
  
     In  accordance  with  the  terms  and conditions  in  the  Exchange  Notes
Indenture, the Exchange Notes Trustee will establish and maintain the  Pan-Sino
Fund  (the  "Pan-Sino Fund"). Pan-Sino will have limited rights  of  withdrawal
under  the Pan-Sino Fund in accordance with terms and conditions set  forth  in
the Exchange Notes Indenture.
     
     The Pan-Sino Fund. All distributions to Pan-Sino from Pan-Western will  be
deposited in the Pan-Sino Fund. Amounts deposited in the Pan-Sino Fund shall be
allocated  among sub-funds of a NDR distribution account (the "NDR Distribution
Account")   and  an  Issuer  distribution  account  (the  "Issuer  Distribution
Account") in accordance with the equity interests of NDR and the Issuer in Pan-
Sino.  Pursuant to an agreement among Pan-Sino, the Issuer and NDR  (the  "Pan-
Sino Shareholders' Agreement"), the shareholders of Pan-Sino have agreed (i) to
cause  Pan-Sino  to declare distributions immediately upon the availability  of
funds  for  such purposes, (ii) that monies on deposit in the NDR  Distribution
Account  shall  be deemed distributed by Pan-Sino to NDR and  (iii)  NDR  shall
pledge all monies in the NDR Distribution Account to the Exchange Notes Trustee
until  such  time  as the Exchange Notes Trustee shall release  such  funds  in
accordance with the provisions described below.
     
     Pan-Sino  Flow of Funds. The Exchange Notes Trustee will, on each  Monthly
Date  after  the  Luannan  Commercial Operation Date  (or  the  next  following
business day), transfer or segregate money, to the extent then available in the
Issuer  Distribution  Account  and  the NDR Distribution  Account.  Amounts  on
deposit  in the Issuer Distribution Account shall be transferred to the  Issuer
Revenue Fund. Amounts on deposit in the NDR Distribution Account shall only  be
released  to  NDR  when  and  if (i) the Company  is  in  compliance  with  the
requirements  of  the  Limitation  on  Restricted  Payments  covenant  of   the
Indentures and (ii) the Luannan Commercial Operation Date has occurred.
     
  Investment of Funds
  
     The  Exchange Notes Trustee or the Company Indenture Trustee, as the  case
may  be, shall invest, as directed by the Company or the Issuer, the monies  on
deposit  in the Company Funds, the Issuer Funds, the Pan-Western Funds and  the
Pan-Sino  Fund in Dollar Permitted Investments. The Exchange Notes Trustee  and
the  Company Indenture Trustee shall not be liable for any loss incurred  other
than  by  reason of its respective willful misconduct or gross negligence.  Any
income  or  gain  realized from Dollar Permitted Investments  with  respect  to
monies on deposit in any Company Fund, Pan-Sino Fund or Pan-Western Fund  shall
be  deposited, first, into the fund from which the monies invested came,  until
the  amount required to be held in such fund has been reached, and second, into
either  the  Company Revenue Fund (in the case of income earned  on  monies  on
deposit  in  a  Company Fund), the Issuer Revenue Fund (in the case  of  income
earned on monies on deposit in an Issuer Fund), or the Pan-Western Revenue Fund
(in  the  case  of  income earned on monies on deposit in a Pan-Western  Fund).
During  the  Funding Period, any and all interest income earned on  amounts  on
deposits  in  the  Issuer Funds shall be transferred to  the  Luannan  Facility
Construction Fund. Losses on Dollar Permitted Investments shall be  charged  to
the  applicable fund. Income or gain with respect to monies on deposit  in  the
Issuer  Funds  (other than the Luannan Facility Construction Fund  which  shall
remain  in the Luannan Facility Construction Fund) shall be deposited into  the
Issuer Revenue Fund.
     
Joint Venture China Accounts

     The  following  seven accounts will be established within China  for  each
Joint  Venture:  (i) Registered Capital Account (denominated in U.S.  dollars),
(ii)  Foreign  Debt Account (denominated in U.S. dollars), (iii)  Foreign  Debt
Repayment Account (denominated in U.S. dollars), (iv) Basic Settlement  Account
(denominated  in  U.S.  dollars),  (v)  RMB  Revenue  Account  (denominated  in
Renminbi), (vi) the Major Maintenance Reserve Account (denominated in Renminbi)
and  (vii)  RMB Checking Account (denominated in Renminbi) (the "Joint  Venture
China Accounts"). During construction of the Luannan Facility, the Foreign Debt
Accounts  and Registered Capital Accounts will receive funds from  the  Luannan
Facility Construction Fund. The funds will be registered with the SAFE as  debt
under  the  Shareholder  Loans or equity pursuant  to  the  JV  Company  Equity
Contributions and will be used to pay the contractual obligations of the  Joint
Ventures  under  the  Luannan EPC Contract and to pay  other  Luannan  Facility
financing,  construction  and  development costs,  including  interest  on  the
Shareholder   Loans  during  construction  through  the  Capitalized   Interest
Expiration  Date.  Payments  to be denominated in U.S.  dollars  will  be  paid
directly  from  the  Registered Capital Account or the  Foreign  Debt  Account.
Expenditures to be denominated in Renminbi will be converted into  Renminbi  as
required and transferred to the RMB Checking Accounts for disbursement.
     
     After the Luannan Commercial Operation Date, all revenues received by  the
Joint  Ventures from any source, including all proceeds from the sale of assets
of  the  Joint  Ventures,  shall  be deposited in  the  RMB  Revenue  Accounts.
Transfers  from  a RMB Revenue Account will first be made to the  RMB  Checking
Account,  for payment of the Joint Venture's operating expenses and  taxes,  if
any,  and then, after conversion to U.S. dollars, to the Foreign Debt Repayment
Account  in an amount equal to the next payment of interest and principal  then
due  under the Shareholder Loans and any additional reserves required  pursuant
to  the  Shareholder Loan Agreements. Each Joint Venture will also pay to  Pan-
Western  from  the  Foreign Debt Repayment Account an administrative  fee,  for
which Pan-Western will invoice the Joint Ventures based on its costs.
     
     Each  Joint  Venture  will  also establish  a  Major  Maintenance  Reserve
Account, denominated in Renminbi, and each Joint Venture has covenanted in  the
applicable  Shareholder  Loan  Agreement to deposit  in  its  respective  Major
Maintenance  Reserve  Account  an amount determined  by  the  Luannan  Facility
Engineer to constitute the Major Maintenance Reserve Requirement for such Joint
Venture Facility for such month. The Major Maintenance Reserve Requirement  for
each  Joint  Venture will be established periodically by the  Luannan  Facility
Engineer based on anticipated major maintenance requirements for the next  five
years  for  each Joint Venture Facility. Funds may only be withdrawn  from  the
Major  Maintenance  Reserve Account by a Joint Venture to  pay  for  the  major
maintenance costs of its respective Joint Venture Facility upon a certification
of  the Luannan Facility Engineer that after withdrawal of such funds for  such
purpose,  the  amounts  remaining  in  the Major  Maintenance  Reserve  Account
(including  anticipated future funding thereof) will be adequate  to  meet  the
anticipated  needs  of  the  applicable  Joint  Venture  Facility   for   major
maintenance for the next five years.
     
     The  remaining  amounts will be retained in the RMB Revenue Account  until
the  Joint Ventures are able to pay a dividend to its shareholders which, under
PRC  law, may only be made from net income as determined in accordance with PRC
generally  accepted  accounting principles. Pan-Western's  share  of  any  such
distribution will be transferred from the RMB Revenue Account (after conversion
to  U.S.  dollars) to the Basic Settlement Account, and then to the Pan-Western
Revenue  Fund  under the Exchange Notes Indenture. A pro rata  amount  will  be
distributed from the RMB Revenue Accounts directly to the County Partners.
     
Certain Covenants

  The Exchange Notes Indenture
  
     Set  forth  below  are certain covenants set forth in the  Exchange  Notes
Indenture.
     
     Ranking.  The Issuer will ensure that its obligations under each  Existing
Note  will  at  all  times  constitute  general,  direct,  unsubordinated   and
unconditional  obligations of the Issuer ranking at all  times  at  least  pari
passu  in  priority of payment, in right of security and in all other  respects
with the other Existing Notes and with all other unsubordinated Indebtedness of
the Issuer now or hereafter outstanding.
     
     Use  of  Proceeds. The gross proceeds from the sale of the Old Notes  were
used  by the Issuer: (i) to make a deposit in the Capitalized Interest Fund  in
the  approximate amount of $48.1 million; (ii) to make a deposit  in  the  Debt
Service  Reserve  Fund in the amount of $9.7 million; (iii) to pay  transaction
fees,  commissions and expenses incurred in connection with the Prior Offering,
estimated  to  be  approximately $6.8 million, which amount includes  fees  and
expenses of the Initial Purchaser pursuant to the agreement between the  Issuer
and  the  Initial  Purchaser (the "Purchase Agreement"); and  (iv)  to  make  a
deposit in the Luannan Facility Construction Fund estimated to be in the amount
of  $80.4  million. This amount has been used, and interest thereon  and  other
income expected to be received by the Issuer during construction will be  used,
by  the Issuer to make the Issuer Loan to Pan-Western. Pan-Western has used and
will  use  (in  the case of interest and other income expected to  be  received
during  construction) the proceeds of the Issuer Loan to make the JV Equity
Contributions and the Shareholder Loans to each of the four Joint Ventures. The
Joint  Ventures  will  use  the  proceeds of the JV  Equity  Contributions  and
Shareholder Loans, together with capital contributions from the County Partners
in the amount of $5.7 million, to develop and construct the Luannan Facility.
     
  The Company Indenture
  
  Set forth below are certain covenants set forth in the Company Indenture.
     
     Ranking.  The Company will ensure that its obligations under each Exchange
Notes  Guarantee  will at all times constitute general, direct,  unsubordinated
and unconditional obligations of the Company ranking at all times at least pari
passu  in  priority of payment, in right of security and in all other  respects
with  the  other  Exchange Notes guarantees and with all  other  unsubordinated
Indebtedness of the Company now or hereafter outstanding.
     
  The Indentures
  
     Set forth below are certain covenants set forth in the Indentures.
     
     Reporting.  The  Indentures provide that the Company and the  Issuer  will
furnish to the Trustees after the end of each fiscal year, a certificate  of  a
responsible  officer  of  the  Company, the Issuer,  Pan-Western  and  Pan-Sino
stating that a review of the activities of the Company, the Issuer, Pan-Western
and  Pan-Sino  during  the  preceding fiscal  year  has  been  made  under  the
supervision of such responsible officer and further stating that, to  the  best
of such person's knowledge, the Company and the Issuer during the previous year
has  kept,  observed,  performed and fulfilled  each  and  every  covenant  and
condition contained in the Indentures, the Exchange Notes Guarantee and in  the
Existing  Notes  and  that  such  person has no  reason  to  believe  that  any
Indentures Event of Default or any condition or event that with the  giving  of
notice  or  lapse  of  time or both would, unless cured or  waived,  become  an
Indentures  Event of Default, has occurred, or, if there has been a  breach  or
default in the fulfillment of any such obligation, specifying each such  breach
or default known to such person and the remedies, if any, being taken to remedy
such  situation and the Trustees will be fully protected in relying  upon  such
certificate.
     
     Insurance.  The  Indentures provide that the Company shall  maintain,  and
shall cause each of its Subsidiaries to maintain, insurance of the types and in
the  amounts that are customary and usual for a company in its respective  line
of  business.  Prior to the Closing Date, the Company retained  an  Independent
Insurance Consultant, who certified to the Trustees that such insurance met the
standard  of  the  preceding  sentence. Thereafter, the  Independent  Insurance
Consultant shall annually review the insurance coverages of the Company and its
Subsidiaries and certify that such coverages remain customary and usual.
     
     Limitation  on Investments. The Indentures provide that the Company  shall
not  make  and  shall not permit any of its Subsidiaries to make,  directly  or
indirectly,  any  Investments, except: (i) Investments by the  Company  or  any
Wholly Owned Subsidiary in or to any Wholly Owned Subsidiary and Investments or
loans in or to the Company or a Wholly Owned Subsidiary by any Subsidiary; (ii)
Investments  represented  by accounts receivable created  or  acquired  in  the
ordinary course of business; (iii) advances to employees in the ordinary course
of  business;  (iv) Investments under or pursuant to interest  rate  protection
agreements;  (v) Investments, not exceeding $5.0 million in the  aggregate,  in
joint ventures, partnerships or Persons that are not Wholly Owned Subsidiaries,
provided  that  such Investments are made solely for the purpose  of  acquiring
businesses  related  to  the  Company's  business;  (vi)  Restricted   Payments
permitted   by   the  covenant  "Limitation  on  Restricted  Payments";   (vii)
Investments  in  connection  with  any Permitted  Project  (including,  without
limitation, Investments in Permitted Projects which are not Wholly Owned by the
Company or one of its Subsidiaries); (viii) any loan from a Subsidiary  of  the
Company  to a Subsidiary of Panda International in an amount not in  excess  of
the  amount of Restricted Payments which the Company would be permitted to make
at the time of such loan; and (ix) Dollar Permitted Investments.
     
     Limitation  on  Restricted  Payments.  The  Indentures  provide  that  the
Company  shall  not  make,  and shall not permit any of  its  Subsidiaries  to,
directly or indirectly, make any Restricted Payment, unless:
     
          (a)  no  Indentures  Event of Default shall have  occurred  and  be
               continuing  at  the  time of or after giving  effect  to  such
               Restricted Payment;
          
          (b)  the  Luannan Facility Engineer has certified that the  Luannan
               Facility Commercial Operation Date has occurred;
          
          (c)  the  Debt  Service  Coverage Ratio  of  the  Company  for  the
               immediately  preceding four fiscal quarters (or,  if  date  of
               determination  is  within the preceding four  fiscal  quarters
               following  the  Luannan Commercial Operation  Date,  for  such
               shorter period) is greater than 1.4 to 1, as certified by  the
               Chief Financial Officer of the Company;
          
          (d)  the  projected Debt Service Coverage Ratio of the Company  for
               the  immediately  succeeding four fiscal quarters  is  greater
               than 1.4 to 1, as certified by the Chief Financial Officer  of
               the Company;
          
          (e)  the amount in the Debt Service Reserve Fund plus the amount in
               the Notes Guarantee Service Reserve Fund equals or exceeds the
               Debt Service Reserve Requirement; and
          
          (f)  immediately  after  giving effect to such Restricted  Payment,
               the  aggregate  of  all Restricted Payments declared  or  made
               after  the  date  on which the Existing Notes  are  originally
               issued  does  not exceed the sum of (1) 50% of  the  Company's
               Consolidated Net Income (or in the event such Consolidated Net
               Income shall be a deficit, minus 100% of such deficit if after
               the  28th  month  following the Closing Date or  50%  of  such
               deficit prior to such date) from the next fiscal quarter after
               the  Closing  Date,  plus (2) 100% of the aggregate  Net  Cash
               Proceeds  and  the Fair Market Value of marketable  securities
               received by the Company from the issue or sale, after the date
               on  which the Existing Notes are originally issued, of Capital
               Stock  (other than Disqualified Stock) of the Company  or  any
               Indebtedness  or  other securities of the Company  convertible
               into or exercisable for Capital Stock (other than Disqualified
               Stock)  of  the  Company  which  has  been  so  converted   or
               exercised,  as  the case may be. For purposes  of  determining
               under  clause  (2)  above the amount expended  for  Restricted
               Payments, cash distributed shall be valued at the face  amount
               thereof  and property other than cash shall be valued  at  its
               Fair Market Value.
          
     The  provisions of this covenant shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at such  date
of  declaration  such payment would comply with the provisions of  the  Company
Indentures,  (ii) the retirement of any shares of Capital Stock of the  Company
in  exchange  for,  or  out  of,  the Net Cash Proceeds  of  the  substantially
concurrent sale (other than to a Subsidiary of the Company) of other shares  of
Capital  Stock  of  the  Company  (other than Disqualified  Stock),  (iii)  the
redemption  or  retirement of Subordinated Indebtedness of the  Issuer  or  the
Company  in  exchange for, by conversion into, or out of the Net Cash  Proceeds
of,  a  substantially concurrent (x) sale or issuance of Capital Stock  of  the
Company  or (y) incurrence of Subordinated Indebtedness of the Issuer  that  is
contractually subordinated in right of payment to the Existing Notes,  that  is
permitted  to  be  incurred  in accordance with the  covenant  described  under
"Limitation  on  Indebtedness" below and that has the same or greater  Weighted
Average  Life  to Maturity as the Indebtedness being redeemed or retired,  (iv)
any payment made by the Company or a Subsidiary, directly or indirectly, to the
Issuer  in  order to enable the Issuer to pay principal, premium, if  any,  and
interest (including Liquidated Damages and Additional Amounts, if any)  on  the
Existing  Notes, (v) any payment made by the Company or a Subsidiary,  directly
or  indirectly,  to  enable  the issuer of any Permitted  Indebtedness  to  pay
principal, premium, if any, and interest thereon, (vi) any dividend made  by  a
Subsidiary of the Company to its parent and (vii) payments made pursuant to the
Administrative  Services Agreement and the Development Services  Agreement.  In
determining  the  amount of Restricted Payments permissible  under  clause  (f)
above,  amounts  expended pursuant to clause (i) of this  paragraph  and  loans
pursuant to clause (viii) of the covenant on "Limitation on Investments"  shall
be included as Restricted Payments.
     
     Limitation  on Transactions with Affiliates. The Indentures  provide  that
the  Company  shall not, and shall not permit any Subsidiary,  to  conduct  any
business  or enter into any transaction or series of related transactions  with
or  for  the  benefit of any of their respective Affiliates (each an "Affiliate
Transaction"), except in good faith and on terms that are no less favorable  to
the  Company or such Subsidiary, as the case may be, than those that could have
been  obtained  in  a comparable transaction on an arm's-length  basis  from  a
Person  not  an  Affiliate  of the Company or such  Subsidiary.  All  Affiliate
Transactions  (and  each  series of related Affiliate  Transactions  which  are
similar or part of a common plan) involving aggregate payments or other  market
value in excess of $500,000 shall be approved by the Board of Directors of  the
Company,  such approval to be evidenced by a Board Resolution stating that  the
Board  of  Directors  has determined that such transaction  complies  with  the
foregoing  provisions. If the Company or any Subsidiary of the  Company  enters
into  an  Affiliate Transaction (or a series of related Affiliate  Transactions
which  are  similar or part of a common plan) involving aggregate  payments  or
other  market value in excess of $1.0 million, the Company or such  Subsidiary,
as  the  case  may  be,  shall,  prior to the consummation  thereof,  obtain  a
favorable  opinion as to the fairness of such transaction or series of  related
transactions  to the Company or the relevant Subsidiary, as the  case  may  be,
from  a financial point of view, from an Independent Financial Advisor and file
the same with the Company Indenture Trustee. Notwithstanding the foregoing, the
restrictions  set  forth in this covenant shall not apply to  (i)  transactions
between  the  Company and any of its Wholly Owned Subsidiaries or among  Wholly
Owned  Subsidiaries of the Company, (ii) Restricted Payments permitted  by  the
Indentures,  (iii)  customary  directors'  fees,  indemnification  and  similar
arrangements,  consulting fees, employee salaries and bonuses  or  legal  fees,
(iv)  payments  made pursuant to the Administrative Services Agreement  or  the
Development Services Agreement, (v) transactions between the Company or any  of
its  Wholly Owned Subsidiaries and a Permitted Project and (vi) any transaction
which  would otherwise constitute an Affiliate Transaction but which  has  been
entered into prior to the Closing Date.
     
     Limitation  on Indebtedness. The Indentures provide that the  Company  and
its  Subsidiaries  will  not  create, incur, assume  or  suffer  to  exist  any
Indebtedness, whether current or funded, or any other liability, except for (i)
Indebtedness  evidenced by the Existing Notes, (ii) Indebtedness  evidenced  by
the  Exchange Notes Guarantee, (iii) Permitted Indebtedness, (iv) Joint Venture
Permitted  Indebtedness,  (v)  liabilities  of  the  Company  and  the   Issuer
representing fees, expenses and indemnities payable to the Trustees pursuant to
the   Indentures,  (vi)  Domestic  Project  Permitted  Indebtedness  and  (vii)
liabilities  of the Issuer representing fees, expenses and indemnities  payable
in  connection  with  the  issuance of Existing Notes and  the  Exchange  Notes
Guarantee  including, without limitation, such amounts payable to  the  Initial
Purchaser under the Purchase Agreement.
     
     "Permitted Indebtedness" means:
     
     (i)   any  and  all  Indebtedness of the Company  and  its  Subsidiaries
           outstanding as of the Closing Date;
     
     (ii)  Indebtedness of the Company which is owed to and held by a  Wholly
           Owned  Subsidiary  and Indebtedness of a Wholly  Owned  Subsidiary
           which  is  owed  to  and held by the Company  or  a  Wholly  Owned
           Subsidiary;  provided,  however, that any subsequent  issuance  or
           transfer  of  any Capital Stock which results in any  such  Wholly
           Owned  Subsidiary ceasing to be a Wholly Owned Subsidiary  or  any
           transfer  of  such Indebtedness (other than to the  Company  or  a
           Wholly  Owned  Subsidiary)  shall be  deemed,  in  each  case,  to
           constitute  the incurrence of such Indebtedness by the Company  or
           by a Wholly Owned Subsidiary, as the case may be;
     
     (iii) Non-Recourse  Debt  of a Subsidiary or group of Subsidiaries,  the
           proceeds  of  which are used to acquire, develop  or  construct  a
           Permitted Project by such Subsidiary or group of Subsidiaries;
     
     (iv)  Permitted  Refinancing Indebtedness in exchange for,  or  the  net
           proceeds  of which are used to extend, refinance, renew,  replace,
           or  refund,  Indebtedness that was permitted by the Indentures  to
           be incurred or was outstanding as of the Closing Date;
     
     (v)   any  additional  Indebtedness  incurred  by  the  Company  or  its
           Subsidiaries  provided  that the Chief Financial  Officer  of  the
           Company  certifies at the time of incurrence of such  Indebtedness
           that the following conditions have been met:
     
           (a)  no  Indentures Event of Default will occur and be  continuing
                after  giving  effect to the incurrence  of  such  additional
                Indebtedness;
           
           (b)  the   minimum  (or  lowest)  annual  projected  Debt  Service
                Coverage Ratio of the Company for the remaining term  of  the
                Exchange Notes will not be less than 1.4 to 1;
           
           (c)  the  minimum  (or lowest) annual projected Consolidated  Debt
                Service Coverage Ratio of the Company for the remaining  term
                of the Exchange Notes will not be less than 1.15 to 1;
           
           (d)  the  Rating Agencies shall have confirmed that there will  be
                no  rating downgrade with respect to the Exchange Notes after
                giving   effect   to  the  incurrence  of   such   additional
                Indebtedness;
           
           (e)  the  Debt Service Coverage Ratio of the Company shall be, for
                the  immediately preceding four fiscal quarters, greater than
                1.4 to 1;
           
           (f)  the  amount in the Debt Service Reserve Fund plus the  amount
                in  the Note Guarantee Service Reserve Fund equals or exceeds
                the Debt Service Reserve Requirement;
           
     (vi)  any  additional Indebtedness issued pursuant to one  or  more  PFC
           Indenture supplements, provided that, at the time of the  creation
           of  such  Indebtedness (other than the initial Series A Bonds  and
           any  series  of bonds issued solely in exchange for an  equivalent
           aggregate  principal  amount  of  outstanding  bonds  of   another
           series) the following conditions have been met:
     
           (a)  PIC  provides  an  officer's  certificate  at  the  time   of
                incurrence  of  such  Indebtedness to the  Company  Indenture
                Trustee  (supported by a certificate to the Company Indenture
                Trustee  from  the  Consolidating Financial Analyst)  stating
                that,   after   giving  effect  to  the  issuance   of   such
                Indebtedness  and the application of the proceeds  therefrom,
                the  projected  PIC  Debt  Service  Coverage  Ratio  and  the
                projected  PIC Consolidated Debt Service Coverage  Ratio  (if
                then  applicable) equal or exceed 1.7 to 1.0 and 1.25 to 1.0,
                respectively,  in  each  case  for  each  PIC  Future   Ratio
                Determination Period; and
           
           (b)  the   rating  of  the  outstanding  Indebtedness  in   effect
                immediately   prior  to  the  issuance  of  such   additional
                Indebtedness  is  reaffirmed by  the  Rating  Agencies  after
                giving   effect   to   the  issuance   of   such   additional
                Indebtedness, provided, further, that a reaffirmation of  the
                rating  of the outstanding Indebtedness shall not be required
                if  (1) neither PIC nor any or Subsidiary of the Company  has
                acquired (or is acquiring in connection with the issuance  of
                such  additional  Indebtedness), sold or  otherwise  disposed
                of,  since the last date upon which the Indebtedness  of  any
                series  were rated or a reaffirmation of rating was given  in
                respect  thereof, any amount of direct or indirect  interests
                in  one or more Permitted Projects with respect to which  the
                sum  of  (w)  the  aggregate  purchase  prices  of  all  such
                acquisitions and (x) the aggregate sales prices and  proceeds
                received in connection with any such disposition of all  such
                sales  or  other  dispositions, exceeds the  greater  of  (y)
                $50.0  million and (z) 25% of the aggregate principal  amount
                of  the  Indebtedness then outstanding and (2) the  aggregate
                principal  amount of additional Indebtedness to be issued  is
                less than the lesser of (x) $50.0 million and (y) 25% of  the
                aggregate   principal   amount  of  the   Indebtedness   then
                outstanding; and
               
     (vii) in  addition  to  the  Indebtedness referred  to  in  clauses  (i)
           through  (vi),  any  other Indebtedness of  the  Company  and  its
           Subsidiaries  that,  in  the  aggregate,  does  not  exceed  $10.0
           million.
          
     Limitation  on Liens.  The Indentures will provide that the Company  shall
not, and shall not permit any of its Subsidiaries to, create, incur, assume  or
suffer  to  exist any Lien of any kind upon any of its property or  assets  now
owned or hereafter acquired by it, except for:
     
           (a) Liens  existing  as of the Closing Date and disclosed  in  the
                Collateral  Documents on the Closing Date and  Liens  created
                by  the  Existing  Notes, the Exchange Notes  Indenture,  the
                Exchange  Notes  Guarantee,  the Company  Indenture  and  the
                Collateral Documents;
           
           (b) Permitted  Liens  on  property  and  assets  not  constituting
                Collateral;
           
           (c) Liens  to  secure the payment of all or a part of the purchase
                price  of assets or property acquired or constructed  in  the
                ordinary  course  of business after the  date  on  which  the
                Existing Notes are originally issued, provided that  (i)  the
                aggregate  principal amount of Indebtedness secured  by  such
                Liens  shall not exceed the Fair Market Value of  the  assets
                or  property so acquired or constructed, shall be limited  to
                the  asset or property at issue and shall not, in any  event,
                exceed  $2.5 million, (ii) the Indebtedness secured  by  such
                Liens  shall  have otherwise been permitted  to  be  incurred
                under  the Indentures and (iii) such Liens shall not encumber
                any  other  assets or property of the Company or any  of  its
                Subsidiaries  and  shall attach to such  assets  or  property
                within  60  days of the construction or acquisition  of  such
                assets or property;
           
           (d) Liens  on  the  assets  or property of  a  Subsidiary  of  the
                Company  at  the time such Subsidiary became a Subsidiary  of
                the  Company  and  not  incurred  as  a  result  of  (or   in
                connection  with  or  in  anticipation  of)  such  Subsidiary
                becoming a Subsidiary of the Company, provided such Liens  do
                not  extend to or cover any property or assets of the Company
                or  any  of  its  Subsidiaries (other than  the  property  or
                assets so acquired);
           
           (e) leases  and  subleases of real property of  (i)  any  Material
                Subsidiary (which leases and subleases are Non-Recourse  Debt
                other  than to the Material Subsidiary which leases and  uses
                such  asset),  which  do  not  interfere  with  the  ordinary
                conduct  of  the  business  of the  Company  or  any  of  its
                Material  Subsidiaries, and which are made on  customary  and
                usual  terms  applicable to similar properties  or  (ii)  any
                Subsidiary (which leases and subleases are Non-Recourse  Debt
                other  than  to  the Subsidiary which leases  and  uses  such
                asset) that is not a Material Subsidiary;
           
           (f) Liens  incurred  by a Subsidiary or group of  Subsidiaries  on
                its  or their assets to secure Non-Recourse Debt incurred  in
                conformity  with  the covenant "Limitation on  Indebtedness",
                provided   that  the  Lien  is  created,  provided   for   or
                contemplated  at the time of the initial incurrence  of  such
                Indebtedness  and does not extend to any assets  or  property
                of  the Company or any other Subsidiary (other than assets or
                property  directly related to the development,  construction,
                financing,  ownership or operation by a Subsidiary  or  group
                of Subsidiaries of a Permitted Project);
           
           (g) Liens,  not  existing as of the Closing Date, but required  or
                permitted  to  be  created at a later date  pursuant  to  the
                terms  of  the PFC Indenture, the Rosemary Indenture  or  the
                Brandywine Facility Lease; and
           
           (h) in  addition  to Liens permitted under clauses (a)-(g)  above,
                Liens  securing an aggregate of $5.0 million of  Indebtedness
                or other obligations.
          
     Limitation   on   Dividends  and  Other  Payment  Restrictions   Affecting
Subsidiaries. The Indentures provide that the Company shall not, and shall  not
permit  any  Subsidiary  of the Company to, directly or indirectly,  create  or
otherwise cause or suffer to exist or enter into any agreement with any  Person
that would cause, any consensual encumbrance or restriction of any kind on  the
ability  of  any  Subsidiary of the Company to (i) pay dividends,  in  cash  or
otherwise,  or make any other distributions on its Capital Stock or  any  other
interest or participation in, or measured by, its profits owned by, or pay  any
Indebtedness owed to, the Company or a Subsidiary of the Company, (ii) make any
loans  or  advances to the Company or any Subsidiary of the  Company  or  (iii)
transfer any of its properties or assets to the Company or to any Subsidiary of
the  Company,  except,  in  each  case, for such encumbrances  or  restrictions
existing  under or contemplated by or by reason of (a) restrictions imposed  by
applicable law, (b) customary non-assignment provisions of any contract or  any
lease  governing a leasehold interest of the Company or any Subsidiary thereof,
(c)  the  Existing Notes, the Exchange Notes Guarantee, the Indentures and  the
Collateral Documents, (d) any restrictions existing under agreements in  effect
on  the Closing Date, including, without limitation, restrictions under the PFC
Indenture,  the Rosemary Indenture and the Brandywine Facility Lease,  as  such
are  in  effect on the Closing Date, (e) any restrictions, with  respect  to  a
Subsidiary  of  the  Company  (and  only to such  Subsidiary)  that  is  not  a
Subsidiary  of the Company on the Closing Date, in existence at the  time  such
Person becomes a Subsidiary of the Company (but not created in contemplation of
such Person becoming a Subsidiary), (f) any encumbrance imposed pursuant to the
terms of Non-Recourse Debt incurred in conformity with the covenant "Limitation
on  Indebtedness" provided that such encumbrance in the written opinion of  the
Chief Financial Officer of the Company (1) is required in order to obtain  such
financing,  (2) is customary for such financings and (3) applies  only  to  the
assets  of  or revenues of the applicable Permitted Project and any  Subsidiary
whose  Capital Stock is pledged in connection with such financing or  which  is
established for the sole purpose of developing, owning, constructing, financing
or operating such Permitted Project and (g) any restrictions existing under any
agreement  that  refinances or replaces an agreement containing  a  restriction
permitted  by  clause  (a)  through (f), above; provided  that  the  terms  and
conditions  of any such restrictions are not materially less favorable  to  the
Holders  of  the Existing Notes than those under or pursuant to  the  agreement
being replaced or the agreement evidencing the Indebtedness refinanced. Nothing
contained in this covenant shall prevent the Company or any of its Subsidiaries
from entering into any encumbrance permitted under the covenant described under
"Limitation  on  Liens" above or restricting the sale or other  disposition  of
assets or property securing Indebtedness evidenced by such agreement so long as
the Company complies with the covenant described under "Disposition of Proceeds
of Asset Sales" below.
     
     Capital  Expenditures. The Indentures provide that the  Company  will  not
make,  or  permit  any  Subsidiary to make, any expenditure  (by  long-term  or
operating  lease or otherwise) for capital assets (both realty and  personalty)
except  for expenditures (i) contemplated by the Indentures (including, without
limitation,  expenditures with respect to the Luannan Facility), (ii)  required
or  permitted  by the PFC Indenture, the Rosemary Indenture or  the  Brandywine
Facility  Lease,  or (iii) subject  to  compliance  with   the   provisions  of
"Limitation on Investments,"  "Limitation on Indebtedness"  and "Limitation  on
Restricted   Payments,"  expenditures  in  connection  with  the   development,
construction or ownership of a Permitted Project.
     
     Permitted  Projects.  The Indentures provide that to  the  extent  that  a
project fulfills the requirements of the PIC Additional Projects Contract,  the
Company  and its Subsidiaries may develop, construct, own, operate and  finance
such  project  pursuant  to the requirements of the PFC  Indenture  subject  to
compliance with the terms of the Indentures. To the extent that a project  does
not  fulfill  the  requirements of the PIC Additional  Projects  Contract,  the
Company  and  its Subsidiaries agree that such project may only  be  developed,
constructed,  financed,  owned  and operated by  the  Company  or  one  of  its
Subsidiaries  pursuant to the requirements of the Indentures  and  the  Company
shall  (i) maintain at least a 50% (direct or indirect) ownership or equivalent
interest  in  each  project  or (ii)(a) at least a  25%  (direct  or  indirect)
ownership  or  equivalent interest in each project not meeting the requirements
of  clause  (i)  above and (b) a controlling influence over the management  and
policies with respect to each project, directly or indirectly, whether  through
the ownership of voting securities, by contract or otherwise, provided that  no
other  entity  has  greater control than the Company over  the  management  and
policies  of  such project (notwithstanding the foregoing, this covenant  shall
not prohibit the sale, lease, transfer or other disposition of all interests in
a  project,  or  a  reduction in the ownership or equivalent  interest  of,  or
control over, a project occurring (1) pursuant to the terms of a build-operate-
transfer  arrangement  at  least ten years after  the  entering  into  of  such
arrangement or (2) allowed pursuant to the other terms of the Indentures).
     
     Limitation  of Line of Business. The Indentures provide that  the  Company
shall  not  and  shall  not permit any Subsidiary to engage  in  any  business,
enterprise  or activity or enter into any material transaction other  than  the
development,   construction,  financing,  ownership  or  operation   of   power
generating facilities and any and all activities related thereto.
     
     Amendment  of  Articles of Association. The Indentures  provide  that  the
Company  shall not and shall not permit any Subsidiary to amend its  respective
articles  of  association in any manner that is reasonably  likely  to  have  a
Material Adverse Effect.
     
     Amendment  of Project Documents. The Indentures provide that  the  Company
shall not and shall not permit any Subsidiary to amend or terminate any Project
Document  if  such  amendment or termination is reasonably  likely  to  have  a
Material Adverse Effect.
     
     Protection  of Collateral by Company and its Subsidiaries. The  Indentures
provide that the Company and its Subsidiaries will, from time to time, take all
action  necessary  or advisable (including, without limitation,  executing  and
delivering   all   such  supplements  and  amendments,  financing   statements,
continuation   statements,   instruments  of  further   assurance   and   other
instruments),  to preserve and defend its title to the Collateral  against  the
claims of all persons and parties.
     
     Performance  of  Obligations by Company, Subsidiaries  and  Trustees.  The
Indentures  provide  that the Company and its Subsidiaries will,  respectively,
punctually perform and observe all of its respective obligations and agreements
contained  in  the  Collateral  Documents, and will,  in  accordance  with  the
Indentures,  the  Issuer  Loan Agreement and the Shareholder  Loan  Agreements,
diligently  pursue  its respective rights and remedies and cooperate  with  the
Trustees  and  the Noteholders in pursuing the same to the extent  such  rights
have been assigned by such Person to the Trustees, in each case for the benefit
of the Noteholders.
     
     Taxes.  The Indentures provide that the Company will cause the  Issuer  to
promptly  pay when due any present or future stamp, court or documentary  taxes
or  any other excise or property taxes, charges or similar levies that arise in
any  jurisdiction from the execution, delivery or registration of each Existing
Note  or  any  other  document or instrument referred  to  in  the  Indentures,
excluding (i) taxes imposed on or measured by the net income or capital of  any
Noteholder by any jurisdiction or any political subdivision or taxing authority
thereof  and  (ii)  any such taxes, charges or similar levies  imposed  by  any
jurisdiction  outside  of  the United States except those  resulting  from,  or
required  to be paid in connection with, the enforcement of such Existing  Note
or  any  other  such  document or instrument following the  occurrence  of  any
Indentures Event of Default.
     
     The Company will, and will cause each of its Subsidiaries to, pay prior to
delinquency,  all material taxes, assessments, and governmental  levies  except
such  as  are  being contested in good faith and by appropriate proceedings  or
where  the  failure  to effect such payment will not have  a  Material  Adverse
Effect.
     
     Financial Statements. The Indentures provide that so long as any  Existing
Notes  are  outstanding, the Company will furnish to the Trustees (i) unaudited
quarterly  reports containing consolidated financial statements of the  Company
and  its  Subsidiaries for each of the first three quarters of its fiscal  year
and (ii) audited annual reports containing consolidated financial statements of
the  Company and its Subsidiaries. Whether or not required by the Exchange  Act
or  the  rules  and regulations of the Commission thereunder, so  long  as  any
Existing Notes are outstanding, the Company will furnish to the Holders of  the
Existing  Notes all quarterly and annual financial information  that  would  be
required  to be contained in a filing with the Commission on Forms  10-Q,  10-K
and  8-K  if  the  Company  were  required to  file  such  Forms,  including  a
"Management's  Discussion and Analysis of Financial Condition  and  Results  of
Operations" and, with respect to the annual information only, a report  thereon
by  the  Company's independent public accountants. In addition, whether or  not
required  by  the Exchange Act or the rules and regulations of  the  Commission
thereunder,  the Company will file a copy of all such information  and  reports
with  the  Commission for public availability (unless the Commission  will  not
accept  such  a  filing) and make such information available to  investors  who
request  it in writing. In addition, the Company will agree, that, for so  long
as  any  Existing  Notes remain outstanding, the Company and  the  Issuer  will
furnish  to  the Holders and to securities analysts and prospective  investors,
upon  their request, the information required to be delivered pursuant to  Rule
144A(d)(4) under the Securities Act.
     
     Sale  and Leaseback Transactions. The Indentures provide that the  Company
will  not, and will not permit any of its Subsidiaries to, enter into any  sale
and  leaseback  transaction; provided that the Company or  any  Subsidiary  may
enter  into  a  sale  and  leaseback transaction if (i)  the  Company  or  such
Subsidiary  could  have (a) incurred Indebtedness in an  amount  equal  to  the
Attributable Debt relating to such sale and leaseback transaction  pursuant  to
the  covenant  "Limitation on Indebtedness" and (b) incurred a Lien  to  secure
such Indebtedness pursuant to the covenant "Limitation on Liens," (ii) the  Net
Cash Proceeds of such sale and leaseback transaction are at least equal to  the
Fair  Market  Value (as determined in good faith by the Board of Directors  and
set  forth  in  an  Officers' Certificate delivered to  the  Company  Indenture
Trustee)  of  the  property  that is the subject of  such  sale  and  leaseback
transaction  and  (iii)  the  transfer of assets in  such  sale  and  leaseback
transaction  is permitted by, and the proceeds of such transaction are  applied
in compliance with, the covenant "Disposition of Proceeds of Asset Sales."
     
     Delivery of Information and Reports under the Shareholder Loan Agreements.
The  Indentures  provide that the Issuer will deliver  to  the  Exchange  Notes
Trustee,  at  the  expense of the Issuer, promptly upon  receipt  thereof,  all
financial statements, reports, notices and certificates of the Joint Ventures.
     
     Disposition  of Proceeds of Asset Sales. The Indentures provide  that  the
Company  shall not, and shall not permit any of its Subsidiaries to,  make  any
Asset  Sale  unless (i) such Asset Sale is for Fair Market Value and  (ii)  the
proceeds  therefrom consist of at least 85% cash and/or Cash Equivalents  (100%
in  the  case of lease payments). Within 365 days after the receipt of any  Net
Cash  Proceeds from an Asset Sale, the Company, or its Subsidiary, as the  case
may  be,  may  apply such Net Cash Proceeds to an Investment, the making  of  a
capital  expenditure or the acquisition of other tangible assets. Any Net  Cash
Proceeds from Asset Sales that are not applied or invested as provided  in  the
preceding  sentence  of  this  paragraph will be deemed  to  constitute  Excess
Proceeds  and  the  Company, or its Subsidiary, as the case  may  be,  will  be
required to make an Asset Sale Redemption Offer.
     
     Merger, Consolidation, or Sale of Assets. The Indentures provide that  the
Company  and the Issuer shall not, in a single transaction or series of related
transactions, consolidate or merge with or into (whether or not the Company  or
the Issuer is the surviving corporation), or directly and/or indirectly through
its Subsidiaries sell, assign, transfer, lease, convey or otherwise dispose  of
all  or substantially all of the Company's or the Issuer's properties or assets
determined  on a consolidated basis for the Company and its Subsidiaries  taken
as  a whole in one or more related transactions, to another corporation, Person
or  entity unless (i) the Company or the Issuer is the surviving corporation or
the  entity  or  the  Person formed by or surviving any such  consolidation  or
merger  (if  other  than  the Company or the Issuer) or  to  which  such  sale,
assignment,  transfer, lease, conveyance or other disposition  will  have  been
made  is  a  corporation organized or existing under the  laws  of  the  United
States,  any  state  thereof or the District of Columbia; (ii)  the  entity  or
Person  formed by or surviving any such consolidation or merger (if other  than
the  Company  or  the  Issuer)  or the entity or Person  to  which  such  sale,
assignment,  transfer, lease, conveyance or other disposition  will  have  been
made  assumes  all  the  obligations of the Company or the  Issuer,  under  the
Existing Notes, the Exchange Notes Guarantee and the Indentures pursuant  to  a
supplemental indenture in a form reasonably satisfactory to the Trustees; (iii)
immediately after such transaction no Indentures Event of Default exists;  (iv)
the  Company  or the Issuer or the entity or Person formed by or surviving  any
such  consolidation or merger (if other than the Company or the Issuer), or  to
which  such  sale, assignment, transfer, lease, conveyance or other disposition
will have been made (A) will have Consolidated Net Worth immediately after  the
transaction equal to or greater than the Consolidated Net Worth of the  Company
immediately  preceding  the  transaction and (B) will,  at  the  time  of  such
transaction  and  after giving pro forma effect thereto as if such  transaction
had  occurred  at  the  beginning  of the applicable  four-quarter  period,  be
permitted  to  incur  at least $1.00 of additional Indebtedness;  and  (v)  the
Company  delivers to the Trustees an Officers' Certificate and  an  Opinion  of
Counsel  addressed  to  the  Trustees with respect to  the  foregoing  matters;
provided,  however, that the requirement set forth in clause (iv)  above  shall
not  apply  to a merger between the Company or the Issuer and any Wholly  Owned
Subsidiary or to any merger between Wholly Owned Subsidiaries.
     
  Indentures Events of Default
  
     The following events constitute Indentures Events of Default:
     
     (i)   failure  by the Issuer to pay the principal and premium,  if  any,
           on  any  Existing  Note  when the same becomes  due  and  payable,
           whether  by  scheduled  maturity  or  required  prepayment  or  by
           acceleration or otherwise;
     
     (ii)  failure  by  the Issuer to pay the interest (including  Liquidated
           Damages and Additional Amounts, if any) on any Existing Note  when
           the  same  becomes due and payable, whether by scheduled  maturity
           or  required prepayment or by acceleration or otherwise, for 15 or
           more days;
     
     (iii) non-payment  of any interest on, or any principal of,  the  Issuer
           Loan  by  Pan-Western  when  the same  becomes  due  and  payable,
           whether  by  scheduled  maturity  or  required  prepayment  or  by
           acceleration or otherwise, for 30 or more days;
     
     (iv)  failure  by the Company to pay any amount it is obligated  to  pay
           to  the  Noteholders pursuant to the terms of the  Exchange  Notes
           Guarantee,  when  the  same becomes due and  payable,  whether  by
           scheduled  maturity or required prepayment or by  acceleration  or
           otherwise;
     
     (v)   any  representation or warranty made by the Company or any of  its
           Subsidiaries  in, respectively, the Indentures,  the  Issuer  Loan
           Agreement   or   the   Shareholder   Loan   Agreements   or    any
           representation,   warranty  or  statement  in   any   certificate,
           financial  statement or other document furnished to  the  Trustees
           by  or  on behalf of the Company or any of its Subsidiaries  under
           the  Indentures, shall prove to have been untrue or misleading  in
           any  material respect as of the time made, confirmed or  furnished
           and  the  fact,  event  or circumstance that  gave  rise  to  such
           inaccuracy  has  had or is reasonably likely to  have  a  Material
           Adverse  Effect and the fact, event or circumstance shall continue
           to  be uncured for 30 or more days after the Company or any of its
           Subsidiaries acquires notice of such inaccuracy; provided that  if
           the  Company or any such Subsidiary commences efforts to cure such
           fact,  event  or  circumstance  within  such  30-day  period,  the
           Company  or any such Subsidiary may continue to effect  such  cure
           of  such  fact,  event or circumstance and such  misrepresentation
           shall  not  be  deemed  an  Indentures Event  of  Default  for  an
           additional  60 days so long as the Company or such Subsidiary,  as
           the case may be, is diligently pursuing such cure;
     
     (vi)  failure  by  the  Company or any of its Material  Subsidiaries  to
           perform  or  observe  its covenants contained  in  the  Indentures
           relating  to  maintenance of existence, prohibition on fundamental
           changes,  disposition  of  assets,  limitations  on  Indebtedness,
           limitations on Liens or distributions;
     
     (vii) failure  by  the  Company or any of its Material  Subsidiaries  to
           perform  or  observe any of the other covenants contained  in  the
           Indentures  or  in the Collateral Documents (other  than  failures
           described in paragraph (v) above) and such failure shall  continue
           uncured  for  30  or  more  days (including,  without  limitation,
           covenants  with  respect to insurance and  amendments  to  Luannan
           Project  Documents or nature of business); provided  that  if  the
           Company  or  such  Material Subsidiary commences efforts  to  cure
           such  default  within  such 30-day period,  the  Company  or  such
           Material  Subsidiary  may  continue to effect  such  cure  of  the
           default  and such default shall not be deemed an Indentures  Event
           of  Default  for an additional 60 days so long as the  Company  or
           such Subsidiary is diligently pursuing the cure;
     
     (viii)occurrence   of   certain   events   involving   the   bankruptcy,
           insolvency, receivership or reorganization of the Company  or  any
           of its Material Subsidiaries;
     
     (ix)  the  entry  of  one or more final and non-appealable  judgment  or
           judgments  for  the  payment of money in excess  of  $1.0  million
           (exclusive  of  judgment  amounts fully covered  by  insurance  or
           indemnity)   against   the  Company  or  any   of   its   Material
           Subsidiaries, which remains unpaid or unstayed for a period of  90
           or more consecutive days;
     
     (x)   any  Project  Document (except as otherwise  permitted  under  the
           Indentures)  shall terminate or cease to be valid and binding  and
           in  full force and effect, or any third party thereto denies  that
           it  has  any  liability  or  obligation  under  any  such  Project
           Document  and  such third party ceases performance thereunder,  or
           any  third  party  is  in  default  under  such  Project  Document
           (subject  to any applicable grace period), and in each  case  such
           cessation  or default has had or is reasonably likely  to  have  a
           Material Adverse Effect;
     
     (xi)  any  Luannan  Financing Agreement shall terminate or cease  to  be
           valid and binding and in full force and effect;
     
     (xii) with  respect to a Domestic Project, or to the extent  applicable,
           any  Permitted Project, the loss of QF Status, to the extent  that
           such  loss of QF Status has had or is reasonably likely to have  a
           Material Adverse Effect;
     
     (xiii)failure  of  any Joint Venture to perform or observe  any  of  its
           material covenants or obligations contained in any of the  Luannan
           Project Documents if such failure has had or is reasonably  likely
           to have a Material Adverse Effect;
     
     (xiv) the  occurrence of any event resulting in the payment of  Domestic
           Project  Event  Proceeds or Permitted Project Event Proceeds  that
           will  result,  in  the  opinion  of  the  Consolidating  Financial
           Analyst,  in  the  Company's failure to meet  the  following  Debt
           Service Coverage Ratios (after the application of such amounts  as
           are  required  to  be applied pursuant to any  and  all  mandatory
           redemption or repayment obligations): (1) the minimum (or  lowest)
           annual  projected  Company Debt Service  Coverage  Ratio  for  the
           remaining term of the Existing Notes will not be less than 1.4  to
           1  and  (2)  the minimum (or lowest) annual projected Consolidated
           Debt  Service  Coverage  Ratio  for  the  remaining  term  of  the
           Existing Notes will not be less than 1.15 to 1;
     
     (xv)  the  Luannan Facility Construction Schedule Certificate  shall  at
           any  time  contain a conclusion that the Luannan Facility  is  not
           being  constructed  in  accordance with the Approved  Construction
           Budget  and  Schedule  or, if applicable, an  Approved  Completion
           Plan;
     
     (xvi) any  of  the  Collateral Documents ceases to be effective  or  any
           lien  granted  therein  ceases to  be  a  perfected  lien  to  the
           Trustees  on  the collateral described therein with  the  priority
           purported to be created thereby; provided that the Company or  the
           Issuer,  as  the  case may be, shall have 15  days  to  cure  such
           cessation  or  to  furnish  to  the  Trustees  all  documents   or
           instruments required to cure such cessation; or
     
     (xvii)any  default  under the Issuer Loan Agreement and the  Shareholder
           Loan  Agreements that has had or is reasonably likely  to  have  a
           Material  Adverse Effect and any default under the PFC  Indenture,
           the  Rosemary  Indenture, the Brandywine Facility  Lease  and  any
           other  default under any other agreement or instrument  containing
           Indebtedness of at least $2.5 million of a Domestic Project  or  a
           Permitted  Project,  to  the  extent that  any  of  the  preceding
           defaults is not waived.
     
     The Indentures provide that upon the occurrence of an Indentures Event  of
Default  as  specified in paragraph (viii) above, all interest,  principal  and
premium, if any (including Liquidated Damages and Additional Amounts, if  any),
on  the  outstanding Existing Notes and Exchange Notes Guarantee  shall  become
automatically  due  and  payable. In the case of  other  Indentures  Events  of
Default,  each  of  the  Trustees shall declare  all  interest,  principal  and
premium, if any (including Liquidated Damages and Additional Amounts, if  any),
on  the outstanding Existing Notes to be immediately due and payable if Holders
of  at  least  25%  in  aggregate principal amount of the Existing  Notes  then
outstanding have notified the Issuer and the Exchange Notes Trustee in  writing
of the occurrence of an Indentures Event of Default.
     
Defeasance

     The  Company  and  the  Issuer  may at any time  terminate  all  of  their
obligations  with  respect  to the Existing Notes  ("defeasance"),  except  for
certain  obligations,  including those regarding any trust  established  for  a
defeasance and obligations to register the transfer or exchange of the Existing
Notes,  to replace mutilated, destroyed, lost or stolen Existing Notes  and  to
maintain agencies in respect of Existing Notes. The Company and the Issuer  may
at  any  time terminate their obligations under certain covenants set forth  in
the  Indentures, some of which are described under "--Certain Covenants" above,
and  any  omission  to  comply with such obligations shall  not  constitute  an
Indentures Event of Default with respect to the Existing Notes issued under the
Indentures  ("covenant defeasance"). In order to exercise either defeasance  or
covenant  defeasance, the Issuer must irrevocably deposit  in  trust,  for  the
benefit  of the Holders of the Existing Notes, with the Exchange Notes  Trustee
money or U.S. government obligations, or a combination thereof, in such amounts
as  will  be  sufficient to pay the principal, premium, if  any,  and  interest
(including  Liquidated Damages and Additional Amounts, if any) on the  Existing
Notes  to  redemption  or  maturity and comply with certain  other  conditions,
including the delivery of an opinion as to certain tax matters.
     
Satisfaction and Discharge

     The  Indentures will be discharged and will cease to be of further  effect
(except  as  to  surviving rights or registration of transfer  or  exchange  of
Existing  Notes) as to all outstanding Existing Notes when either (a) all  such
Existing Notes theretofore authenticated and delivered (except lost, stolen  or
destroyed  Existing Notes which have been replaced or paid and  Existing  Notes
for  whose  payment money has theretofore been deposited in trust or segregated
and  held  in  trust  by  the Issuer and thereafter repaid  to  the  Issuer  or
discharged  from such trust) have been delivered to the Exchange Notes  Trustee
for  cancellation; or (b)(i) all such Existing Notes not theretofore  delivered
to  the  Exchange Notes Trustee for cancellation have or will (upon the mailing
of  a  notice or notices deposited with such trustees together with irrevocable
instructions  to mail such notice or notices to Holders of the Existing  Notes)
become due and payable and the Issuer has irrevocably deposited or caused to be
deposited with the Exchange Notes Trustee as trust funds in the trust  for  the
purpose  an  amount  of  money  sufficient to  pay  and  discharge  the  entire
indebtedness  on  the  Existing Notes not theretofore  delivered  to  the  such
trustees for cancellation, for principal, premium, if any, and accrued interest
(including  Liquidated Damages and Additional Amounts, if any) to the  date  of
such  deposit;  (ii) the Company and the Issuer have paid all sums  payable  by
them  under  the  Indentures; and (iii) the Issuer  has  delivered  irrevocable
instructions to the Exchange Notes Trustee to apply the deposited money  toward
the  payment of the Existing Notes at maturity or the redemption date,  as  the
case may be. In addition, the Issuer must deliver an Officers' Certificate  and
an Opinion of Counsel stating that all conditions precedent to satisfaction and
discharge have been complied with.
     
Withholding Taxes

     All  payments made by the Issuer on the Existing Notes (whether or not  in
the  form  of  definitive Existing Notes) or payments made by the Company  with
respect  to  the  Exchange Notes Guarantee will be made without withholding  or
deduction  for,  or  on  account  of,  any present  or  future  taxes,  duties,
assessments or governmental charges of whatever nature (collectively,  "Taxes")
imposed  or levied by or on behalf of the Cayman Islands, the United States  or
any  political subdivision thereof or any authority having power to tax therein
(each a "Tax Authority"), unless the withholding or deduction of such Taxes  is
then  required by law. If any deduction or withholding for, or on  account  of,
any  Taxes of any Tax Authority, shall at any time be required on any  payments
for,  or  on  account of, any payments made by the Issuer with respect  to  the
Existing Notes, including payments of principal, redemption price, interest  or
premium,  or  payments made by the Company with respect to the  Exchange  Notes
Guarantee,  the  Issuer  or the Company, as the case  may  be,  will  pay  such
additional amounts (the "Additional Amounts") as may be necessary in order that
the  net  amounts received in respect of such payments by the  Holders  of  the
Existing  Notes or the Trustees, as the case may be, after such withholding  or
deduction,  equal  the  respective amounts which would have  been  received  in
respect  of  such  payments  in the absence of such withholding  or  deduction;
except that no such Additional Amounts will be payable with respect to:
     
     (i)   any  payments on an Existing Note held by or on behalf of a Holder
           or  beneficial  owner who is liable for such Taxes in  respect  of
           such  Existing  Note by reason of the Holder or  beneficial  owner
           having  some  connection with the Cayman  Islands  or  the  United
           States  (including being a citizen or resident or national of,  or
           carrying  on  a  business or maintaining a permanent establishment
           in,  or  being  physically present in, the Cayman Islands  or  the
           United  States)  other than by the mere holding of  such  Existing
           Note  or  enforcement  of  rights thereunder  or  the  receipt  of
           payments in respect thereof;
     
     (ii)  any  Taxes that are imposed or withheld where such withholding  or
           imposition  is  by  reason  of  the  failure  of  the  Holder   or
           beneficial  owner to comply with a request by the  Issuer  or  the
           Company,  as  the  case  may  be, to  satisfy  any  certification,
           identification or other reporting requirement which the Holder  or
           beneficial owner is legally able to satisfy and which is  required
           or  imposed  by  statute,  treaty, regulation,  or  administrative
           practices  of  the  taxing  jurisdiction  as  a  precondition   to
           exemption from all or part of such Taxes; or
     
     (iii) any  Existing  Note presented for payment (where  presentation  is
           required)  more than 30 days after the relevant payment  is  first
           made  available  for payment to the Holder except  to  the  extent
           that  the  Holder  would  have been entitled  to  such  Additional
           Amounts  on presenting such Existing Note for payment on the  last
           day of such period of 30 days.
     
     Such  Additional  Amounts  will  also not  be  payable  where,  had  the
beneficial  owner of the Existing Note been the Holder of the Existing  Note,
he would not have been entitled to payment of Additional Amounts by reason of
clauses (i) to (iii) inclusive above.
     
     Upon  request,  the  Issuer or the Company, as the  case  may  be,  will
provide   the  Trustees  with  documentation  satisfactory  to  the  Trustees
evidencing  the  payment of Additional Amounts. Copies of such  documentation
will be made available to the Holders upon request.
     
     The  Issuer  will pay any present or future stamp, court or  documentary
taxes, or any other excise or property taxes, charges or similar levies which
arise in any jurisdiction from the execution, delivery or registration of the
Existing  Notes or any other document or instrument referred to  therein,  or
the receipt of any payments with respect to the Existing Notes, excluding any
such taxes, charges or similar levies imposed by any jurisdiction outside  of
the Cayman Islands, the United States of America or any jurisdiction in which
a Paying Agent is located, other than those resulting from, or required to be
paid  in connection with, the enforcement of the Existing Notes or any  other
such  document or instrument following the occurrence of any Indentures Event
of Default with respect to the Existing Notes.
     
Amendments, Supplements and Waivers

     Supplemental Indentures Without Consent. The Company, the Issuer and the
Trustees  may  from time to time and at any time enter into an  indenture  or
indentures  supplemental to the Indentures for one or more of  the  following
purposes:
     
     (i)   to   convey,  transfer,  assign,  mortgage  or  pledge  to  the
           Trustees  as  security for the Existing Notes or  the  Exchange
           Notes Guarantee for any property or assets;
     
     (ii)  to  evidence  the  succession  of another  corporation  to  the
           Company  or  the  Issuer, or successive  successions,  and  the
           assumption  by  the  successor corporation  of  the  covenants,
           agreements  and  obligations  of the  Company  and  the  Issuer
           pursuant to the Indentures;
     
     (iii) to  add  to  the covenants of the Company and the  Issuer  such
           further  covenants, restrictions, conditions or  provisions  as
           the  Company  or  the  Issuer may, in the  written  opinion  of
           independent  legal counsel, consider to be for  the  protection
           of  the  Noteholders,  and  to  make  the  occurrence,  or  the
           occurrence   and  continuance,  of  a  default  in   any   such
           additional  covenant, restriction, condition  or  provision  an
           Indentures Event of Default permitting the enforcement  of  all
           or  any of the several remedies provided in the Indentures, the
           Existing  Notes  or in the Exchange Notes Guarantee  as  herein
           set  forth;  provided, that in respect of any  such  additional
           covenant,    restriction,   condition   or    provision    such
           supplemental indenture may provide for a particular  period  of
           grace  after  default (which period may be  shorter  or  longer
           than  that  allowed  in  the case of  other  defaults)  or  may
           provide  for  an immediate enforcement upon such an  Indentures
           Event  of  Default or may limit the remedies available  to  the
           Trustees upon such an Indentures Event of Default or may  limit
           the  right  of  the  Noteholders of  a  majority  in  aggregate
           principal  amount of the Existing Notes at the time outstanding
           to waive such an Indentures Event of Default;
     
     (iv)  to  cure  any  ambiguity or to cure, correct or supplement  any
           provision  contained  in  the Indentures,  the  Exchange  Notes
           Guarantee  or  in  the  Existing Notes or in  any  supplemental
           indenture that may be defective or inconsistent with any  other
           provision  contained  in  the Indentures,  the  Exchange  Notes
           Guarantee  or  in  the  Existing Notes or in  any  supplemental
           indenture;  or  to  make  such other provisions  in  regard  to
           matters   or  questions  arising  under  the  Indentures,   the
           Exchange  Notes  Guarantee, the Existing  Notes  or  under  any
           supplemental  indenture as the Company or the  Issuer  may,  in
           its  written  opinion, deem necessary or desirable  and  which,
           any  of  the  foregoing cases, shall not adversely  affect  the
           interests  of the Holders of Existing Notes and Exchange  Notes
           Guarantee in any material respect; and
     
     (v)   to evidence and provide for the acceptance of appointment of  a
           successor  Trustee  or Trustees with respect  to  the  Existing
           Notes or the Exchange Notes Guarantee.
     
     The  Trustees are authorized to join with the Company or the Issuer in the
execution of any such supplemental indenture or indentures, to make any further
appropriate  agreements and stipulations that may be therein contained  and  to
accept the conveyance, transfer, assignment, mortgage or pledge of any property
thereunder,  but  the Trustees shall not be obligated to enter  into  any  such
supplemental indenture that adversely affects the Trustees' own rights,  duties
or immunities under the Indentures or otherwise.
     
     Any supplemental indenture authorized by the provisions outlined above may
be executed without the consent of the Holders of any of the Existing Notes, or
the  holders of the Exchange Notes Guarantee, as the case may be, at  the  time
outstanding.
     
     Supplemental Indentures With Consent. With the consent of the  Holders  of
not  less  than 51% in the aggregate principal amount of each of  the  Existing
Notes  or the holders of the Exchange Notes Guarantee, as the case may be,  the
Company,  the  Issuer and the Trustees may from time to time and at  any  time,
enter  into an indenture or indentures supplemental to the Indentures  for  the
purpose  of  adding any provisions to or changing in any manner or  eliminating
any  of  the  provisions of, respectively, the Exchange  Notes  Indenture,  the
Company  Indenture  or  the Existing Notes, as the  case  may  be,  or  of  any
supplemental indenture or of modifying in any manner the rights of the  Holders
of  the Existing Notes (including, without limitation, a supplemental indenture
changing  the provisions of the Indentures with respect to Change of  Control),
as the case may be; provided, that no such supplemental indenture will, without
the  unanimous consent of the relevant Holders of all of the affected  Existing
Notes or holders of the affected Exchange Notes Guarantee, as the case may  be,
make  certain "fundamental" changes to the terms, including: (i) modify certain
of  the  provisions  of  the  Indentures or any  Collateral  Documents  or  the
provisions  relating to the waiver of defaults or the making of  modifications;
(ii)  a  change  in the stated maturity of the principal (or, if the  principal
thereof   is  payable  in  installments,  the  stated  maturity  of  any   such
installment)  of or the dates on which interest is payable in  respect  of  the
Existing Notes; (iii) a reduction in or cancellation of the principal amount of
or  interest on the Existing Notes or a change in the obligation of the  Issuer
to  pay Liquidated Damages or Additional Amounts; (iv) a change in the currency
of  payment  of principal, premium, if any, and interest (including  Liquidated
Damages  and Additional Amounts, if any) on the Existing Notes; (v) a reduction
in  the above-stated percentage of aggregate principal amount of Existing Notes
necessary to modify or amend the Indentures or the Existing Notes or reduce the
quorum  requirements or the percentages of votes required for the  adoption  of
any  action  at a meeting of Noteholders; (vi) any impairment of the  right  to
institute any proceedings for the enforcement of any payment on or with respect
to  any  Exchange Note; (vii) the release of all or any substantial portion  of
the  Collateral;  (viii)  except  to  the extent  expressly  permitted  by  the
Indentures or any of the Collateral Documents, permit the creation of any  lien
prior  to  the  lien of the Collateral Documents with respect  to  any  of  the
property  pledged under the Collateral Documents or terminate the lien  of  the
Collateral  Documents on any property pledged thereunder or deprive any  Holder
of the security afforded by the lien of the Collateral Documents; or (ix) alter
or modify the Exchange Notes Guarantee.
     
     Effect  of  Supplemental Indenture. Upon the execution of any supplemental
indenture pursuant to the provisions hereof, the Indentures, the Exchange Notes
Guarantee  and the Existing Notes shall be and shall be deemed to  be  modified
and  amended  in  accordance therewith and the respective  rights,  duties  and
immunities  under the Indentures of the Trustees, the Company, the  Issuer  and
the  Holders  of Existing Notes shall thereafter be determined,  exercised  and
enforced under the Indentures subject in all respects to such modifications and
amendments.
     
Regarding the Trustees

     Bankers  Trust Company will serve as the Exchange Notes Trustee under  the
Exchange Notes Indenture and will act as collateral agent with respect  to  the
Exchange Notes Collateral.
     
     Bankers  Trust  Company will serve as the Company Indenture Trustee  under
the  Company  Indenture and will act as collateral agent with  respect  to  the
Exchange Notes Guarantee Collateral.
     
     Except  during  the  continuance of an Indentures Event  of  Default,  the
Trustees  will perform only such duties as are specifically set  forth  in  the
Indentures.  During  the  existence  of an Indentures  Event  of  Default,  the
Trustees are required to exercise such of the rights and powers vested in  them
by the Indentures, and use the same degree of care and skill in their exercise,
as  a  prudent  person  would exercise or use under the  circumstances  in  the
conduct  of such person's own affairs. Subject to such provisions, the Trustees
will be under no obligation to exercise any of their rights or powers under the
Indentures at the request of any Holder of the Existing Notes or holder of  the
Exchange  Notes Guarantee, unless such Holder or holder shall have  offered  to
the  Trustees  security and indemnity satisfactory to them  against  any  loss,
liability or expense.
     
     The  Company and its Subsidiaries may from time to time borrow money from,
and  maintain  deposit accounts and conduct certain banking transactions  with,
the Trustees in the ordinary course of their business.
     
Old Notes Registration Rights

     The holders of Old Notes have certain rights under the Registration Rights
Agreement, dated April 22, 1997, by and among the Issuer, the Company  and  the
Initial  Purchaser,  certain  provisions of which  are  discussed  below.   The
following  summary  does  not  purport to be  complete  or  definitive  and  is
qualified in its entirety by reference to the Registration Rights Agreement,  a
copy  of which is attached as an exhibit to the Registration Statement of which
this Prospectus constitutes a part.
     
     The Registration Rights Agreement provides that the Issuer and the Company
(i)  will file an Exchange Offer Registration Statement with the Commission  on
or prior to 60 days after the Closing Date, (ii) will use their best efforts to
have  the  Exchange  Offer  Registration Statement declared  effective  by  the
Commission  on  or prior to 150 days after the Closing Date, (iii)  unless  the
Exchange  Offer would not be permitted by applicable law or Commission  policy,
the  Issuer and the Company will commence the Exchange Offer on or prior to ten
business days after the date on which the Exchange Offer Registration Statement
is  declared effective by the Commission, and use their best efforts  to  issue
Registered  Exchange Notes in exchange for all Old Notes validly  tendered  and
not properly withdrawn in the Exchange Offer, and (iv) if obligated to file the
Shelf  Registration Statement, the Issuer and the Company will file  the  Shelf
Registration  Statement with the Commission on or prior to 60 days  after  such
filing  obligation arises and use their respective best efforts  to  cause  the
Shelf  Registration Statement to be declared effective by the Commission on  or
prior to 150 days after such obligation arises; provided that if the Issuer and
the  Company  have not consummated the Exchange Offer within 180  days  of  the
Closing  Date, then the Issuer and the Company will file the Shelf Registration
Statement  with the Commission on or prior to the 181st day after  the  Closing
Date.  The  Issuer and the Company shall use their best efforts  to  keep  such
Shelf  Registration Statement continuously effective, supplemented and  amended
until  the  third anniversary of the Closing Date or such shorter  period  that
will  terminate  when  all  the Old Notes covered  by  the  Shelf  Registration
Statement  have been sold pursuant to the Shelf Registration Statement  or  are
eligible for sale pursuant to Rule 144(k) under the Securities Act. If (a)  the
Issuer and the Company fail to file any of the Registration Statements required
by  the Registration Rights Agreement on or before the date specified for  such
filing,  (b) any of such Registration Statements are not declared effective  by
the  Commission on or prior to the date specified above for such  effectiveness
(the  "Effectiveness  Target Date"), (c) the Issuer and  the  Company  fail  to
consummate  the  Exchange Offer within 30 business days  of  the  Effectiveness
Target  Date with respect to the Exchange Offer Registration Statement, or  (d)
the  Shelf  Registration Statement or the Exchange Offer Registration Statement
is  declared effective but thereafter, subject to certain exceptions, ceases to
be  effective  for  a period of five Business Days during periods  when  it  is
required to be effective or (e) at any time when the Prospectus is required  by
the  Securities Act to be delivered in connection with sales of Old Notes,  the
Issuer  and  the  Company  shall conclude, or the  Holders  of  a  majority  in
principal amount of the affected Old Notes shall reasonably conclude, based  on
advice  of their counsel, and shall give notice to the Issuer and the  Company,
that either (A) any event shall occur or fact exist as a result of which it  is
necessary  to  amend or supplement the Prospectus in order  that  it  will  not
include an untrue statement of a material fact or omit to state a material fact
necessary  in  order to make the statements made, in light of the circumstances
under  which  they were made, not misleading, or (B) it shall be  necessary  to
amend  or  supplement the Registration Statement or the Prospectus in order  to
comply  with  the  requirements of the Securities  Act  or  the  rules  of  the
Commission  thereunder, and in the case of clause (A) or (B), the  Registration
Statement   is   not  appropriately  amended  by  an  effective  post-effective
amendment,  or  the  Prospectus is not amended or  supplemented,  in  a  manner
reasonably  satisfactory to the Holders of Old Notes within five Business  Days
after  the Issuer and the Company shall so conclude or shall receive the above-
mentioned  notice  from Holders of Old Notes (each such event  referred  to  in
clauses  (a) through (e) above a "Registration Default"), then the  Issuer  (or
the  Company  pursuant  to the Exchange Notes Guarantee)  will  pay  liquidated
damages ("Liquidated Damages") to each Holder of Old Notes, with respect to the
first  90-day  period immediately following the occurrence of such Registration
Default in an amount equal to $.05 per week per $1,000 principal amount of  Old
Notes  held  by  such  Noteholder. The amount of the  Liquidated  Damages  will
increase  by  an additional $.05 per week per $1,000 principal  amount  of  Old
Notes  with  respect  to each subsequent 90-day period until  all  Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages of  $.50
per  week  per  $1,000  principal amount of Old Notes. All  accrued  Liquidated
Damages  will be paid by the Issuer and the Company to Global Note  Noteholders
by  wire transfer of immediately available funds or by federal funds check  and
to  Holders  of  Certificated  Notes  by mailing  checks  to  their  registered
addresses.  Following the cure of all Registration Defaults applicable  to  any
particular  Old Notes, the accrual of Liquidated Damages will cease.  Any  time
period for the taking of an action referred to in this paragraph will be tolled
for  such period if the Issuer or the Company is prohibited by law from  taking
the action in question during such period.
     
     Noteholders will be required to make certain representations to the Issuer
and the Company (as described in the Exchange Offer Registration Statement)  in
order  to  participate in the Exchange Offer and will be  required  to  deliver
information to be used in connection with the Shelf Registration Statement  and
to provide comments on the Shelf Registration Statement within the time periods
set  forth  in  the Registration Rights Agreement, in order to have  their  Old
Notes  included  in  the  Shelf Registration Statement  and  benefit  from  the
provisions regarding Liquidated Damages set forth above.
     
     The  foregoing  description  of the Registration  Rights  Agreement  is  a
summary only and does not purport to be complete. This summary is qualified  in
its  entirety  by  reference  to  all provisions  of  the  Registration  Rights
Agreement.
     
     A  Noteholder  who  sells  Old Notes pursuant to  the  Shelf  Registration
Statement  will generally be required to be named as a selling security  holder
in  the related prospectuses and to deliver a prospectus to purchasers, will be
subject  to certain of the civil liability provisions under the Securities  Act
in  connection  with  such sales and will be bound by  the  provisions  of  the
Registration  Rights  Agreement  which are  applicable  to  such  a  Noteholder
(including certain indemnification obligations).
     
Certain Definitions

     Set  forth  below  is  a  summary of certain defined  terms  used  in  the
Indentures.  Certain  additional defined terms are  contained  in  Appendix  A,
"Defined Terms." Reference is made to the Indentures for the full definition of
all such terms, as well as any other capitalized terms used herein for which no
definition is provided.
     
     "Affiliate"  means with respect to any specified Person  (other  than  the
County Partners which shall be deemed not to be an Affiliate), any other Person
which, directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For the purposes  of  this
definition, (i) "control" when used with respect to any Person means the  power
to  direct  the management and policies of such Person, directly or indirectly,
whether  through the ownership of voting securities, by contract or  otherwise,
and  the  terms "controlling", "controlled by" and "under common control  with"
have meanings correlative to the foregoing or (ii) beneficial ownership of  10%
or  more  of  the voting securities of a Person shall be deemed to be  control;
provided,  however,  that  an  otherwise  unaffiliated  Person  that  holds   a
beneficial  ownership of 10% or more of a project level entity or  entities  in
which the Company or a Subsidiary holds a greater beneficial ownership interest
shall not be considered an Affiliate of the Company solely by reason of holding
such interest in such project level entity or entities.
     
     "Approval  Event  of  Default" means, pursuant  to  the  Shareholder  Loan
Agreements, any governmental approvals or permits (whether central, provincial,
municipal, local or otherwise) necessary for (a) the establishment of  each  of
the Joint Ventures, (b) the ownership, construction, maintenance, financing  or
operation  of  each  of  the  Joint  Venture Facilities,  (c)  the  setting  or
adjustment of the electricity price for the Luannan Facility in accordance with
the  method of calculation set forth in the attachments to the Pricing Document
or (d) the conversion or transfer of any foreign currency shall not be obtained
if and when required, or shall be modified, revoked or canceled, or a notice of
violations  is  issued under any governmental authorization on grounds  of,  or
illegality of, the absence of any required authorization, or any proceeding  is
commenced  by  any governmental instrumentality for the purpose  of  modifying,
revoking or canceling any governmental authorization.
     
     "Approved  Completion Plan" means a plan (including budget  and  schedule)
prior  to  the  Luannan  Facility Commercial Operation Date  to  construct  and
complete the Luannan Facility following a determination by the Luannan Facility
Engineer  that  the  Luannan Facility will not achieve the  Luannan  Commercial
Operation  Date  within  28  months from the notice  to  proceed,  using  funds
available  to  the  Issuer (from funds then remaining in the  Luannan  Facility
Construction Fund, the Completion Sub-Account, Luannan EPC Contract  Liquidated
Damages  (as  defined  in  the Luannan EPC Contract),  Luannan  Event  of  Loss
Proceeds or Luannan Expropriation Proceeds or otherwise), which plan includes a
certificate by the Issuer (containing customary assumptions and qualifications)
together  with  a  confirmation  by the Luannan Facility  Engineer  (containing
customary  assumptions  and qualifications) that (i)  funds  available  to  the
Issuer  are reasonably expected to be sufficient to fund the costs of  reaching
the  Luannan  Commercial  Operation Date and (ii) after  reaching  the  Luannan
Commercial Operation Date, the Company's Debt Service Coverage Ratio  will  be,
for  the immediately preceding four fiscal quarters, (1) prior to the six month
anniversary of the Luannan Commercial Operation Date, greater than 1 to 1,  (2)
between the six month anniversary of the Luannan Commercial Operation Date  and
the  one  year  anniversary thereof, greater than 1.2 to 1 and (3)  thereafter,
greater than 1.4 to 1.
     
     "Approved Construction Budget and Schedule" means the construction  budget
and  schedule  prepared  by  the Issuer (containing customary  assumptions  and
qualifications) approved as reasonable by the Luannan Facility  Engineer  prior
to  the Closing Date, and as it thereafter may be amended by the Issuer if  (i)
such  amendment reflects a change order permitted under the Indentures or  (ii)
such  amendment reflects events of force majeure under the Luannan EPC Contract
(or  Approved  Completion Plan, if applicable), and the Issuer certifies  (with
customary assumptions and qualifications), with the Luannan Facility Engineer's
concurrence,  that such amendment is not reasonably likely to have  a  Material
Adverse  Effect, or (iii) such amendment reflects change orders not covered  in
the preceding clause (i); provided that the Luannan Facility Engineer certifies
(with  customary  assumptions and qualifications) that funds available  to  the
Issuer  (from  funds then remaining in the Luannan Facility Construction  Fund,
the Completion Sub-Account, Luannan EPC Contract Liquidated Damages (as defined
in  the  Luannan  EPC  Contract), Luannan Event of  Loss  Proceeds  or  Luannan
Expropriation  Proceeds or otherwise) are reasonably expected to be  sufficient
to fund the costs of reaching the Luannan Commercial Operation Date.
     
     "Asset  Sale"  means  any direct or indirect sale,  conveyance,  transfer,
lease  or  other disposition to any Person other than the Company or  a  Wholly
Owned  Subsidiary  of the Company, in one transaction or a  series  of  related
transactions,  of  any other property or asset (including, without  limitation,
any  contractual  or  other  right) of the Company or  any  Subsidiary  of  the
Company,  in each case, other than inventory in the ordinary course of business
(which  shall  include  the  sale of fuel, steam,  energy  and/or  chilled  and
distilled water) and other than such isolated transactions which do not  exceed
$250,000 individually.
     
     "Attributable Debt" in respect of a sale and leaseback transaction  means,
at  the  time  of determination, the present value (discounted at the  rate  of
interest  implicit in such transaction, determined in accordance with GAAP)  of
the  obligation of the lessee for net rental payments during the remaining term
of  the  lease  included in such sale and leaseback transaction (including  any
period  for  which such lease has been extended or may, at the  option  of  the
lessor, be extended).
     
     "Capital  Stock" means (i) in the case of a corporation, corporate  stock,
(ii)  in  the  case of an association or business entity, any and  all  shares,
interests, participations, rights or other equivalents (however designated)  of
corporate  stock,  (iii)  in the case of a partnership,  partnership  interests
(whether general or limited) and (iv) any other interest or participation  that
confers on a Person the right to receive a share of the profits and losses  of,
or distributions of assets of, the issuing Person.
     
     "Capitalized Interest Expiration Date" means October 15, 1999.
     
     "Capitalized  Interest  Fund"  shall  have  the  meaning  set   forth   in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder Loans and the Collateral DocumentsThe  FundsThe  Issuer
FundsCapitalized Interest Funds."
     
     "Capitalized  Lease" is defined to mean, as applied  to  any  Person,  any
lease  of  any  property of which the discounted present value  of  the  rental
obligations  of such Person as lessee, in conformity with GAAP, is required  to
be  capitalized  on  the balance sheet of such Person, and  "Capitalized  Lease
Obligation" means the rental obligations, as aforesaid, under such lease.
     
     "Cash  Available for Company Debt Service" means, for any period, the  sum
of  (i)  all  cash  distributions received by the Company (excluding  any  non-
recurring  receipts) plus (ii) all cash distributions received  by  the  Issuer
(excluding  any  non-recurring receipts) plus (iii) any and all other  revenues
received  by the Company and the Issuer (including all interest and fee  income
but  excluding  any non-recurring receipts) plus (iv) all other  cash  payments
received  by  the  Company and the Issuer in the ordinary  course  of  business
including  principal  payments  but excluding  items  which  are  non-recurring
receipts  less  (v)  all  cash operating costs of the Issuer  and  the  Company
including  trustee fees, Operating Lease Obligations and cash  taxes,  each  of
(i),  (ii),  (iii), (iv) and (v) determined on a cash basis in accordance  with
GAAP.
     
     "Cash Available for Consolidated Debt Service" means, for any period,  the
sum  of (i) all consolidated revenue (including all interest and fee income but
excluding  any  insurance proceeds, other than business interruption  proceeds,
and  other  similar  non-recurring receipts) less (ii)  all  consolidated  cash
operating expenses including trustee fees, Operating Lease Obligations  of  the
Company and its consolidated Subsidiaries and cash taxes (including withholding
taxes)  plus  (iii)  all  other cash proceeds received  by  the  Company  on  a
consolidated  basis  in the normal course of business (excluding  non-recurring
receipts  but  including  principal  on the  Luannan  Transmission  Loan)  plus
(iv)  withdrawals  of cash from any and all Subsidiary debt  service  reserves,
maintenance  reserve  funds  and any and all other  funds  which  restrict  the
payment  of  money  from  a Subsidiary to its parent (excluding  the  PFC  Debt
Service  Reserve,  the  U.S. Distribution Fund, the International  Distribution
Fund, and amounts distributable from the RMB Revenue Fund which were previously
not  distributable)  less (v) all additions of cash to any and  all  Subsidiary
debt  service reserves, maintenance reserve funds and any and all  other  funds
which  restrict the payment of money from a Subsidiary to its parent (excluding
the  PFC  Debt  Service Reserve, the U.S. Distribution Fund, the  International
Distribution Fund, and amounts which are not distributable from the RMB Revenue
Fund) less (vi) additional consolidated cash expenditures excluding payment  of
Net Debt Service, each of (i), (ii), (iii), (iv), (v) and (vi) determined on  a
cash basis in accordance with GAAP.
     
     "Cash  Available  for  Project Debt Service" means  (i)  the  sum  of  all
revenues  (including  interest  and  fee income  but  excluding  any  insurance
proceeds,  other  than  business  interruption insurance  proceeds,  and  other
similar non-recurring receipts) of such Domestic Project, Permitted Project  or
Joint Venture for such period minus (ii) the aggregate amount of Operating  and
Maintenance Costs of such Domestic Project, Permitted Project or Joint  Venture
for  such period plus (iii), in the case of the Luannan Facility, the principal
payments  on the Luannan Transmission Loan for such period (each of  (i),  (ii)
and (iii) as determined on a cash basis in accordance with GAAP).
     
     "Cash  Equivalents"  means, at any time (i) any evidence  of  Indebtedness
with a maturity of 180 days or less issued or directly and fully guaranteed  or
insured  by  the  United  States of America or any  agency  or  instrumentality
thereof  (provided  that  the full faith and credit of  the  United  States  of
America  is  pledged  in  support thereof); (ii)  certificates  of  deposit  or
acceptances  with  a maturity of 180 days or less of any financial  institution
that  is  a member of the Federal Reserve System, whose rating is AA or  higher
from  Standard & Poor's Ratings Service or Aa2 or higher from Moody's Investors
Service, Inc., having combined capital and surplus and undivided profits of not
less  than $500 million; (iii) commercial paper with a maturity of 180 days  or
less  issued  by  a corporation (except an Affiliate of the Company)  organized
under  the  laws of any state of the United States or the District of  Columbia
and having the highest rating obtainable from Standard & Poor's Ratings Service
or  Moody's Investors Service, Inc.; and (iv) repurchase obligations for a term
of not more than seven days for underlying securities of the types described in
clause  (i)  above  entered  into  with any  bank  meeting  the  qualifications
specified in clause (ii) above.
     
     "Certificated Notes" shall have the meaning set forth in "Description,  of
the  Exchange  Notes,  the  Exchange Notes  Guarantee,  the  Issuer  Loan,  the
Shareholder   Loans  and  the  Collateral  DocumentsBook-Entry,  Delivery   and
FormDepository Procedures."
     
     "Change  of  Control"  means  (i) the direct  or  indirect,  sale,  lease,
exchange  or  other transfer of all or substantially all of the assets  of  the
Company,  Panda International, the Issuer or any direct or indirect  parent  of
the  Company to any Person or entity or group of Persons or entities acting  in
concert  as  a partnership or other group (a "Group of Persons") other  than  a
Related Party, (ii) the replacement of a majority of the Board of Directors  of
the  Company, Panda International, the Issuer or any direct or indirect  parent
of  the Company, over a two-year period, from the directors who constituted the
Board  of  Directors of such Person at the beginning of such period,  and  such
replacement  shall  not have been approved by the Board of  Directors  of  such
Person  as  constituted at the beginning of such period  or  by  the  Board  of
Directors  of  Panda  International as constituted at  the  beginning  of  such
period,  (iii) a Person or Group of Persons (other than Panda International  or
any  Related  Party)  shall, as a result of a tender or  exchange  offer,  open
market purchases, privately negotiated purchases or otherwise, have become  the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange  Act)  of
securities  of  the Company, Panda International, the Issuer or any  direct  or
indirect  parent  of  the  Company representing a percentage  interest  in  the
combined voting power of the then outstanding securities of the Company,  Panda
International,  the  Issuer or any direct or indirect  parent  of  the  Company
greater  than  that held by such entities' shareholders as of the Closing  Date
and  greater  than 20% having the right to vote in the election  of  directors,
(iv)  the  Company,  directly or indirectly ceases to hold (a)  a  100%  equity
interest  in  the Domestic Projects, (b) a 100% equity interest in the  Issuer,
(c) a 90% equity interest in Pan-Sino or (d) the minimum required interest in a
Permitted  Project, (v) Pan-Sino ceases to hold a 99% equity interest  in  Pan-
Western  and (vi) Pan-Western ceases to hold a 85% equity interest in  each  of
the Joint Ventures.
     
     "Company Indenture" means the trust indenture governing the terms  of  the
issuance of, from time to time, bonds, notes, indentures, guarantees and, as of
the  Closing Date, the Exchange Notes Guarantee by the Company, dated as of the
Closing Date, between the Company and the Company Indenture Trustee.
     
     "Company Indenture Trustee" means Bankers Trust Company in its capacity as
trustee under the Company Indenture, and any successor thereto under the  terms
of the Company Indenture.
     
     "Company Net Debt Service" means Net Debt Service of the Company plus  Net
Debt Service of the Issuer.
     
     "Consolidated  Debt  Service Coverage Ratio" means,  as  of  the  date  of
determination, and, if the transaction giving rise to the need to  calculate  a
Consolidated  Debt Service Coverage Ratio is an incurrence of  Indebtedness  or
the  making of a Restricted Payment, calculated after giving effect  on  a  pro
forma  basis to such Indebtedness or Restricted Payment as if such Indebtedness
or  Restricted Payment had been incurred or made as of the first  day  of  such
period  and  the  discharge  of  any  other Indebtedness  repaid,  repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness  as
if  such  discharge had occurred on the first day of such period, the ratio  of
(i)  Cash  Available for Consolidated Debt Service divided by (ii) Consolidated
Net  Debt  Service;  provided,  however, with respect  to  the  calculation  of
projected  Consolidated  Debt  Service Coverage  Ratio,  the  remaining  unpaid
balance  of principal due on the Existing Notes at the Stated Maturity  of  the
Existing  Notes  ($131,250,000) shall be assumed to be  repaid  in  semi-annual
repayments as per the following schedule:
     
     
                  Semi-annual                 Principal
                  Payment Date              Amount Repaid
          April 15, 2004                     $ 6,000,000
          October 15, 2004                   $ 6,000,000
          April 15, 2005                     $ 7,250,000
          October 15, 2005                   $ 7,250,000
          April 15, 2006                     $ 5,350,000
          October 15, 2006                   $ 5,350,000
          April 15, 2007                     $ 4,600,000
          October 15, 2007                   $ 4,600,000
          April 15, 2008                     $ 7,450,000
          October 15, 2008                   $ 7,450,000
          April 15, 2009                     $ 7,250,000
          October 15, 2009                   $ 7,250,000
          April 15, 2010                     $ 5,650,000
          October 15, 2010                   $ 5,650,000
          April 15, 2011                     $ 5,350,000
          October 15, 2011                   $ 5,350,000
          April 15, 2012                     $16,750,000
          October 15, 2012                   $16,700,000;
     
     
provided further that the coupon rate on the Existing Notes repaid as  per  the
schedule  above  shall be the same coupon rate as that payable on  the  Closing
Date  on  the Existing Notes with interest expense due and payable on  a  semi-
annual  basis. In the event that the remaining unpaid balance of principal  due
on  the  Existing Notes at the Stated Maturity is less than $131,250,000,  then
the  amount of each semi-annual repayment shown above shall be deemed to  equal
the  amount  of the semi-annual repayment shown above multiplied by a  fraction
the  numerator of which is the actual remaining unpaid balance of principal due
on  the  Existing Notes at the Stated Maturity and the denominator of which  is
$131,250,000.

     "Consolidated Income Tax Expense" means, for any period, as applied to the
Company, the provision for local, state, federal or foreign income taxes  on  a
consolidated basis for such period determined in accordance with GAAP.
     
     "Consolidated Interest Expense" means, for any period, the sum of (a)  the
total  interest  expense of the Company and its consolidated  Subsidiaries  for
such   period  as  determined  in  accordance  with  GAAP,  including,  without
limitation,  (i)  amortization of debt issuance costs  and  of  original  issue
discount  on any Indebtedness and the interest portion of any deferred  payment
obligation,  calculated  in accordance with the effective  interest  method  of
accounting,  (ii)  accrued  interest, (iii)  noncash  interest  payments,  (iv)
commissions, discounts and other fees and charges owed with respect to  letters
of  credit and bankers' acceptance financing, (v) interest actually paid by the
Company  or  any such Subsidiary under any guarantee of Indebtedness  or  other
obligation of any other Person and (vi) net costs associated with interest rate
agreements (including amortization of discounts) and currency agreements,  plus
(b)  all  capitalized interest plus (c) dividends paid in respect of  preferred
stock  of the Company or any Subsidiary held by Persons other than the  Company
or a Wholly Owned Subsidiary.
     
     "Consolidated  Net  Debt  Service" means the sum  of  (i)(a)  Consolidated
Interest  Expense  less  (b) non-cash Consolidated Interest  Expense  less  (c)
scheduled  withdrawals from the Capitalized Interest Fund (if applicable)  less
(d)   scheduled  withdrawals  from  the  PFC  Capitalized  Interest  Fund   (if
applicable) plus (ii) all payments of scheduled and overdue principal  of,  and
premium,  if  any, on Indebtedness on a consolidated basis plus  (iii)  without
duplication,  all  rental payments in respect of Capitalized Lease  Obligations
paid,  accrued,  or  scheduled to be paid or accrued by  the  Company  and  its
consolidated Subsidiaries.
     
     "Consolidated  Net  Income"  means, for any  period,  as  applied  to  the
Company,  the  aggregate of the Net Income of the Company and its  Subsidiaries
for  such period, on a consolidated basis, determined in accordance with  GAAP;
provided,  however,  that  (i)  all extraordinary  gains  or  losses  shall  be
excluded; (ii) the Net Income of any Person in which the Company or any of  its
Subsidiaries has a joint interest with a third party (which interest  does  not
cause  the  net  income of such other Person to be consolidated  into  the  net
income  of the Company in accordance with GAAP) shall be included only  to  the
extent  of  the  amount of dividends or distributions paid,  in  cash,  to  the
Company  or  the  Subsidiary, (iii) the net income of  any  Subsidiary  of  the
Company  that  is subject to any restriction or limitation on  the  payment  of
dividends or the making of other distributions shall be excluded to the  extent
of  such restriction or limitation, (iv) the net income (or loss) of any Person
acquired in a pooling of interests transaction for any period prior to the date
of  such acquisition shall be excluded, (v) any net gain or loss resulting from
an  Asset  Sale  by the Company or any of its Subsidiaries other  than  in  the
ordinary course of business shall be excluded and (vi) the cumulative effect of
a change in accounting principles shall be excluded.
     
     "Consolidated Net Worth" means, with respect to any Person as of any date,
the  sum  of  (i)  the consolidated equity of the common stockholders  of  such
Person  and  its  consolidated Subsidiaries as  of  such  date  plus  (ii)  the
respective amounts reported on such Person's balance sheet as of such date with
respect  to any series of preferred stock (other than Disqualified Stock)  that
by  its terms is not entitled to the payment of dividends unless such dividends
may  be  declared and paid only out of net earnings in respect of the  year  of
such  declaration and payment, but only to the extent of any cash  received  by
such  Person  upon  issuance of such preferred stock, less  (x)  all  write-ups
(other  than write-ups resulting from foreign currency translations and  write-
ups  of tangible assets of a going concern business made within 12 months after
the  acquisition of such business) subsequent to the date of the Indentures  in
the  book  value of any asset owned by such Person or a consolidated Subsidiary
of  such  Person,  (y)  all  Investments as  of  such  date  in  unconsolidated
Subsidiaries  and in Persons that are not Subsidiaries (except, in  each  case,
Investments allowed pursuant to the covenant "Limitation on Investments"),  and
(z)  all unamortized debt discount and expense and unamortized deferred charges
as of such date, all of the foregoing determined in accordance with GAAP.
     
     "County  Partners Event of Default" means a failure by the County Partners
to make their required equity contributions to the Joint Ventures.
     
     "Debt Service Coverage Ratio" as of the date of determination, and, if the
transaction giving rise to the need to calculate Debt Service Coverage Ratio is
an incurrence of Indebtedness or the making of a Restricted Payment, calculated
after  giving  effect on a pro forma basis to such Indebtedness  or  Restricted
Payment as if such Indebtedness or Restricted Payment had been incurred or made
on  the  first  day of such period and the discharge of any other  Indebtedness
repaid, repurchased, defeased or otherwise discharged with the proceeds of such
new  Indebtedness as if such discharge had occurred on the first  day  of  such
period, means:
     
     (i)   with respect to the Company, the ratio of (A) Cash Available  for
           Company Debt Service divided by (B) Company Net Debt Service;
     
     (ii)  with respect to PIC and the issuance of Indebtedness pursuant  to
           the  PFC  Indenture,  the  ratio of (A) PIC  Cash  Available  for
           Distribution  during the relevant period to (B) PIC Debt  Service
           for such period; and
     
     (iii) with  respect  to a Domestic Project, a Permitted  Project  or  a
           Joint  Venture, the ratio of (A) Cash Available for Project  Debt
           Service  to  (B)  Net  Debt  Service of  such  Domestic  Project,
           Permitted Project or Joint Venture;
     
provided,  however, with respect to the calculation of projected  Debt  Service
Coverage  Ratio, the remaining unpaid balance of principal due on the  Existing
Notes  after the Stated Maturity of the Existing Notes shall be assumed  to  be
repaid  pursuant to the schedule and the proviso thereto as set  forth  in  the
definition of Consolidated Debt Service Coverage Ratio.

      "Debt  Service  Reserve  Fund"  shall  have  the  meaning  set  forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder Loans and the Collateral DocumentsThe  FundsThe  Issuer
FundsDebt Service Reserve Fund."

     "Debt  Service  Reserve  Requirement" means (i) the  aggregate  principal,
premium,  if any, of payments due on the Existing Notes on the next semi-annual
payment   date  and  (ii)  the  aggregate  cash  interest  payments  (including
Liquidated Damages and Additional Amounts, if any) due on the Existing Notes on
the next semi-annual payment date.
     
     "Disqualified Stock" means, with respect to any Person, any Capital  Stock
which,  by  its  terms  (or  by the terms of any  security  into  which  it  is
convertible  or  for which it is exchangeable), or upon the  happening  of  any
event,  matures  or  is  mandatorily redeemable, pursuant  to  a  sinking  fund
obligation  or otherwise, or is exchangeable for Indebtedness, or is redeemable
at  the  option of the holder thereof, in whole or in part, on or prior to  the
maturity date of the Existing Notes.
     
     "Dollar Permitted Investments" means any of the following securities:  (i)
direct  obligations of the Department of the Treasury of the United  States  of
America;  (ii)  obligations  of  any of the following  federal  agencies  which
obligations  represent full faith and credit of the United States  of  America,
including:  Export-Import Bank, Farmers Home Administration,  General  Services
Administration,  U.S.  Maritime Administration, Small Business  Administration,
Government  National Mortgage Associate (GNMA), U.S. Department  of  Housing  &
Urban  Development  (PHA's)  and Federal Housing Administration;  (iii)  bonds,
notes  or other evidences of indebtedness rated "AAA" by Standard & Poor's  and
"Aaa"  by  Moody's  issued by the Federal Home Loan Bank, the Federal  National
Mortgage  Association  or  the  Federal Home Loan  Mortgage  Corporation;  (iv)
commercial  paper  rated  in any one of the two highest  rating  categories  by
Moody's  or Standard & Poor's; (v) investment agreements with banks (foreign  &
domestic), broker/dealers, and other financial institutions rated at  the  time
of  bid  in  any  one  of the three highest rating categories  by  Moody's  and
Standard  & Poor's; (vi) repurchase agreements with banks (foreign & domestic),
broker/dealers, and other financial institutions rated at the time  of  bid  in
any  one  of  the  three highest rating categories by Moody's  and  Standard  &
Poor's,  provided: (1) collateral is limited to (i), (ii) and (iii) above,  (2)
the  margin  levels  for collateral must be maintained at  a  minimum  of  102%
including principal and interest, (3) the Trustees shall have a first perfected
security interest in the collateral, (4) the collateral will be delivered to  a
third party custodian, designated by the Company, acting for the benefit of the
Trustees  and all fees and expenses related to collateral custody will  be  the
responsibility  of the Company, (5) the collateral must have been  or  will  be
acquired  at the market price and marked to market weekly and collateral  level
shortfalls  cured  within  24 hours, (6) unlimited  right  of  substitution  of
collateral  is allowed provided that substitution collateral must be  permitted
collateral substituted at a current market price and substitution fees  of  the
custodian  shall  be  paid  by the Company; (vii) forward  purchase  agreements
delivering  securities outlined in (i) and (iv) above with banks  (foreign  and
domestic), broker/dealers, and other financial institutions maintaining a long-
term rating on the day of bid no lower than investment grade by both Standard &
Poor's  and  Moody's  (such rating may be at either the  parent  or  subsidiary
level).
     
     "Domestic  Project" means either the Rosemary Facility or  the  Brandywine
Facility.
     
     "Domestic  Project Event" means the occurrence of any of the following:  a
Rosemary Event of Eminent Domain, a Brandywine Event of Loss, a Rosemary  Event
of Loss or a Rosemary Title Event.
     
     "Domestic  Project Event Proceeds" means the sum of any  and  all  of  the
following: Rosemary Eminent Domain Proceeds, Brandywine Event of Loss Proceeds,
Rosemary Casualty Proceeds and Rosemary Title Insurance Proceeds.
     
     "Domestic  Project  Permitted Indebtedness"  means,  in  addition  to  any
Indebtedness outstanding as of the Closing Date, (i) working capital  debt  and
letter  of credit reimbursement obligations, provided that after giving  effect
to  such additional debt and obligations, (a) the minimum (or lowest) projected
Debt  Service Coverage Ratio of the Domestic Project for any calendar year will
not  be  less than 1.5 to 1 and (b) the average projected Debt Service Coverage
Ratio  of the Domestic Project for any calendar year will not be less than  1.7
to  1,  (ii)  purchase money or capital lease obligations incurred  to  finance
assets  of the Domestic Project that are readily replaceable personal  property
with  a  principal amount or capitalized portion not exceeding $1.0 million  in
the aggregate outstanding at any time, (iii) trade accounts payable (other than
for  borrowed money) due within 90 days arising, and accrued expenses incurred,
in  the  ordinary course of business of operating or maintaining  the  Domestic
Project.
     
     "Domestic  Projects"  means  the  Rosemary  Facility  and  the  Brandywine
Facility.
     
     "Excess  Proceeds" means any Net Cash Proceeds from Asset Sales  that  are
not  applied  or invested to an investment, the making of a capital expenditure
or  the  acquisition of other tangible assets. On the earlier of (i) the  366th
day  after  an  Asset Sale or (ii) such date as the Board of Directors  of  the
Company  determines not to apply the Net Cash Proceeds relating to  such  Asset
Sale in the manner set forth above (or the Company determines not to cause  its
Subsidiary  to apply the Net Cash Proceeds in such a manner), if the  aggregate
amount  of Excess Proceeds exceeds $1.0 million, the Company or its Subsidiary,
as the case may be, shall be subject to the following requirements:
     
    (1)  in  the event that the Company cannot then incur $1.00 of additional
          Permitted Indebtedness pursuant to clause (v) of the definition  of
          "Permitted  Indebtedness," the Company or its  Subsidiary  will  be
          required  to make an offer to purchase (the "Asset Sale  Redemption
          Offer")  from  all  Holders  of  Existing  Notes  and  holders   of
          additional  Senior Indebtedness, up to a maximum  principal  amount
          (expressed  as a multiple of $1,000) of Existing Notes and  holders
          of additional Senior Indebtedness equal to the Excess Proceeds at a
          purchase  price equal to 100% of the principal amount thereof  plus
          accrued  and  unpaid  interest (including  Liquidated  Damages  and
          Additional  Amounts,  if  any) thereon, if  any,  to  the  date  of
          purchase; in the event that there is additional Senior Indebtedness
          outstanding at the time of the Asset Sale Redemption Offer,  Excess
          Proceeds shall be allocated to each issuance of Senior Indebtedness
          in  accordance with the following formula: Excess Proceeds times  a
          fraction,  the  numerator of which is the principal amount  of  the
          Existing  and the denominator of which is the sum of the  principal
          amounts  of  all  Senior  Indebtedness which  is  subject  to  this
          requirement   or   a   similar  requirement   under   such   Senior
          Indebtedness's governing instrument; and
    
     (2)  in  the  event  that  the  Company can incur  $1.00  of  additional
          Permitted Indebtedness pursuant to clause (v) of the definition  of
          "Permitted  Indebtedness," the Company or its  Subsidiary  will  be
          required to make an Asset Sale Redemption Offer from all Holders of
          Existing Notes and holders of additional Senior Indebtedness, up to
          a  maximum principal amount (expressed as a multiple of $1,000)  of
          Existing Notes and holders of additional Senior Indebtedness  equal
          to the Excess Proceeds (Excess Proceeds for purposes of this clause
          (2)  is limited to that amount of the Net Cash Proceeds that equals
          the  principal amount of Indebtedness incurred by the Issuer or the
          Company  to acquire, develop, construct or finance the asset  being
          sold)  at  a  purchase price equal to 100% of the principal  amount
          thereof  plus  accrued  and unpaid interest  (including  Liquidated
          Damages  and  Additional Amounts, if any) thereon, if any,  to  the
          date  of  purchase;  in the event that there is  additional  Senior
          Indebtedness  outstanding at the time of the Asset Sale  Redemption
          Offer,  Excess  Proceeds shall be allocated  to  each  issuance  of
          Senior  Indebtedness  in  accordance with  the  following  formula:
          Excess  Proceeds times a fraction, the numerator of  which  is  the
          principal amount of the Existing Notes and the denominator of which
          is  the  sum  of  the principal amounts of all Senior  Indebtedness
          which is subject to this requirement or a similar requirement under
          such Senior Indebtedness's governing instrument.
     
     Upon  completion  of such Asset Sale Redemption Offer(s),  the  amount  of
Excess Proceeds shall be reset at zero. Whenever Net Cash Proceeds in excess of
$1.0 million from any Asset Sale are received by the Issuer or the Company,  as
the case may be, and such Net Cash Proceeds may, through the passage of time or
otherwise, be required to be applied to the purchase of Existing Notes pursuant
to  this covenant, the Issuer or the Company, as the case may be, shall deposit
such  Net Cash Proceeds with, respectively, the Exchange Notes Trustee  or  the
Company  Indenture Trustee, as trust monies subject to disposition as  provided
in  this covenant and such Net Cash Proceeds shall be set aside by the Exchange
Notes  Trustee  or  the Company Indenture Trustee pending  application  to  the
purchase  of  Existing Notes. At the direction of the Company,  such  Net  Cash
Proceeds shall be required to be invested by the Existing Notes Trustee or  the
Company Indenture Trustee in Dollar Permitted Investments. The Company  or  its
relevant  Subsidiary,  as  applicable, shall be entitled  to  any  interest  or
dividends accrued, earned or paid on such investments.
     
     "Exchange  Notes" shall mean the 12-1/2% Registered Senior  Secured  Notes
due 2004 of the Issuer.
     
     "Exchange  Notes  Collateral"  shall  have  the  meaning  set   forth   in
"Prospectus SummaryThe OfferingExchange Notes Collateral."
     
     "Exchange Notes Collateral Documents" shall have the meaning set forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder  Loans and the Collateral DocumentsDescription  of  the
Exchange Notes CollateralThe Security Agreements."
     
     "Exchange  Notes Guarantee" means the Exchange Notes Guarantee  issued  by
the Company under the terms of the Company Indenture.
     
     "Exchange Notes Guarantee Collateral" shall have the meaning set forth  in
"Prospectus SummaryThe Exchange OfferExchange Notes Guarantee Collateral."
     
     "Exchange Notes Guarantee Collateral Documents" shall have the meaning set
forth in "Description of the Exchange Notes, the Exchange Notes Guarantee,  the
Issuer  Loan, the Shareholder Loans and the Collateral DocumentsDescription  of
the  Exchange Notes Guarantee CollateralThe Pledge Agreements and the  Security
Agreement."
     
     "Exchange  Notes Indenture" means the trust indenture governing the  terms
of issuance of the Exchange Notes, dated as of the Closing Date, by and between
the Issuer and the Exchange Notes Trustee.
     
     "Exchange  Notes  Interest Account" shall have the meaning  set  forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder Loans and the Collateral DocumentsThe  FundsThe  Issuer
FundsDebt Service Fund."
     
     "Exchange Notes Optional Redemption" shall have the meaning set  forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,  the  Shareholder  Loans  and the Collateral  DocumentsRedemptionOptional
Redemption of Exchange Notes."
     
     "Exchange  Notes  Trustee"  means the trustee  under  the  Exchange  Notes
Indenture.
     
     "Fair  Market Value" or "fair value" means, with respect to any  asset  or
property,  the  price  which  could be negotiated  in  an  arm's-length  market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom  is  under undue pressure or compulsion to complete the transaction.  Fair
Market Value shall be determined by the Board of Directors acting in good faith
and  shall be evidenced by a Board Resolution delivered to the Trustees  except
that any determination of Fair Market Value made with respect to any parcel  of
real property shall be made by an independent appraiser.
     
     "GAAP"  means  generally accepted accounting principles set forth  in  the
opinions  and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements  of
the  Financial Accounting Standards Board or in such other statements  by  such
other  entity  as  may be approved by a significant segment of  the  accounting
profession  of the United States, which are applicable as of the  date  of  the
Indentures.
     
     "Income  Tax Expense" means, for any period, as applied to the  Person  in
question,  the provision for local, state, federal or foreign income taxes  for
such period determined in accordance with GAAP.
     
     "Indebtedness" means, with respect to any Person, without duplication, (i)
any  liability, contingent or otherwise, of such Person (A) for borrowed  money
(whether  or  not the recourse of the lender is to the whole of the  assets  of
such  Person or only to a portion thereof), (B) evidenced by a note,  debenture
or  similar  instrument  or  letters  of credit  (including  a  purchase  money
obligation)  or  (C) for the payment of money relating to a  capitalized  lease
obligation  or  other  obligation relating to the deferred  purchase  price  of
property; (ii) any obligation secured by a Lien to which the property or assets
of  such  Person  are subject, whether or not the obligations  secured  thereby
shall have been assumed by or shall otherwise be such Person's legal liability;
(iii)  the  maximum  fixed  repurchase  price  of  any  redeemable  or  putable
Disqualified  Stock; (iv) contractual obligations to repurchase goods  sold  or
distributed;  (v)  obligations  of a Person in  respect  of  interest  rate  or
currency  exchange agreements to the extent they appear on the  balance  sheet;
(vi)  any  and  all  deferrals,  renewals, extensions  and  refundings  of,  or
amendments,  modifications  or  supplements  to,  any  liability  of  the  kind
described in any of the preceding clauses (i) - (v); and (vii) any liability of
others  of  the  kind  described in clauses (i) - (vi)  which  the  Person  has
guaranteed or which is otherwise directly or indirectly its legal liability
     
     "Indentures" means the Company Indenture and the Exchange Notes Indenture.
     
     "Indentures  Events  of  Default" shall have  the  meaning  set  forth  in
"Description  of the Exchange Notes, the Exchange Notes Guarantee,  the  Issuer
Loan,    the    Shareholder   Loans   and   the   Collateral   DocumentsCertain
CovenantsIndentures Events of Default."
     
     "Independent  Financial Advisor" means an independent and  internationally
recognized  investment bank, accounting firm or engineering firm, as  the  case
may  be,  whose business regularly includes the rendering of valuation opinions
with  respect  to  the  assets at issue, chosen by the Company  and  reasonably
acceptable to the Company Indenture Trustee.
     
     "Interest  Expense"  means, for any period,  the  sum  of  (a)  the  total
interest  expense  of the Person in question for such period as  determined  in
accordance with GAAP, including, without limitation, (i) amortization  of  debt
issuance  costs  or  of  original issue discount on any  Indebtedness  and  the
interest  portion of any deferred payment obligation, calculated in  accordance
with  the  effective  interest  method of accounting,  (ii)  accrued  interest,
(iii) noncash interest payments, (iv) commissions, discounts and other fees and
charges  owed  with  respect  to  letters of  credit  and  bankers'  acceptance
financing,  (v)  interest actually paid by the Person  in  question  under  any
guarantee of Indebtedness or other obligation of any other Person and (vi)  net
costs  associated  with  interest rate agreements  (including  amortization  of
discounts)  and  currency  agreements,  plus  (b)  capitalized  interest   plus
(c)  dividends  paid in respect of preferred stock of the Person  in  question,
held by Persons other than the Person in question.
     
     "International Distribution Fund" means the fund described in  Article  IV
of  the  PFC  Indenture  and maintained in the name of  PIC  pursuant  to  such
Article, which such fund is entitled to distributions of monies from a Non-U.S.
Permitted Project to the extent that all obligations have been met by PFC,  PIC
and  the  PIC  International Entity (and any other PIC international  entities)
under the PFC Indenture.
     
     "Investments" means, with respect to any Person, all investments  by  such
Person  in  other  Persons (including Affiliates) in the  forms  of  direct  or
indirect  loans  (including guarantees of Indebtedness or  other  obligations),
advances  (other than advances to customers in the ordinary course of  business
that  are  recorded  as accounts receivable on the books  of  such  person)  or
capital  contributions  (excluding commission, travel, relocation  and  similar
advances  to  officers and employees made in the ordinary course of  business),
purchases  or  other  acquisitions for consideration of  Indebtedness,  Capital
Stock  or  other securities and all other items that are or would be classified
as investments on a balance sheet prepared in accordance with GAAP.
     
     "Issue Date" shall mean April 22, 1997.
     
     "Issuer  Loan"  means the outstanding indebtedness of Pan-Western  to  the
Issuer  incurred by Pan-Western to enable it to make the Shareholder Loans  and
to  make the JV Equity Contributions and funded by the Issuer with the proceeds
of the Old Notes.
     
     "Issuer Loan Agreement" means the Issuer Loan Agreement by and between the
Issuer and Pan-Western.
     
     "Issuer Note" means one or more promissory notes issued by Pan-Western  to
the Issuer evidencing its indebtedness to the Issuer.
     
     "Joint Venture Facility" means the portion of the Luannan Facility  to  be
constructed or acquired by each Joint Venture (collectively, the "Joint Venture
Facilities").
     
     "Joint  Venture  Guarantees"  means  collectively,  the  undertakings   by
Tangshan  Panda,  each  executed as of the 24th  day  of  September,  1996,  to
unconditionally  and irrevocably guarantee to Pan-Western  prompt  payment  and
performance by each of Tangshan Pan-Western, Tangshan Cayman and Tangshan  Pan-
Sino  of  their  individual obligations to Pan-Western  pursuant  to  any  debt
obligation  then or thereafter due and owing by any such party to  Pan-Western;
the  undertakings by Tangshan Pan-Western, each executed as of the 24th day  of
September,  1996, to unconditionally and irrevocably guarantee  to  Pan-Western
the  prompt payment and performance by each of Tangshan Panda, Tangshan  Cayman
and  Tangshan Pan-Sino of their individual obligations to Pan-Western  pursuant
to  any  debt obligation then or thereafter due and owing by any such party  to
Pan-Western; the undertakings by Tangshan Cayman, each executed as of the  24th
day  of  September, 1996, to unconditionally and irrevocably guarantee to  Pan-
Western  the prompt payment and performance by each of Tangshan Panda, Tangshan
Pan-Western  and  Tangshan  Pan-Sino of their individual  obligations  to  Pan-
Western pursuant to any debt obligation then or thereafter due and owing by any
such  party  to  Pan-Western; and the undertakings by Tangshan  Pan-Sino,  each
executed  as  of  the  24th  day  of September, 1996,  to  unconditionally  and
irrevocably guarantee to Pan-Western the prompt payment and performance by each
of Tangshan Panda, Tangshan Pan-Western and Tangshan Cayman of their individual
obligations  to Pan-Western pursuant to any debt obligation then or  thereafter
due and owing by any such party to Pan-Western.
     
     "Joint Venture Permitted Indebtedness" means (i) the Shareholder Loans and
any  additional  loans  from Pan-Western to the Joint  Ventures,  (ii)  working
capital  debt, provided that after giving effect to such additional  debt,  (a)
the  minimum (or lowest) projected Debt Service Coverage Ratio for any calendar
year  will not be less than 1.5 to 1 and (b) the average projected Debt Service
Coverage  Ratio for any calendar year will not be less than 1.7 to 1  (provided
that working capital debt shall at no time exceed $1.0 million), (iii) purchase
money  or  capital lease obligations incurred to finance assets  of  the  Joint
Ventures that are readily replaceable personal property with a principal amount
or  capitalized portion not exceeding $1.0 million in the aggregate outstanding
at  any  time, (iv) trade accounts payable (other than for borrowed money)  due
within  90 days arising, and accrued expenses incurred, in the ordinary  course
of  business  of  constructing,  operating or  maintaining  the  Joint  Venture
Facility  on customary terms, (v) interest or currency exchange rate protection
agreements, (vi) debt under the Joint Venture Guarantees of each Joint  Venture
and  any other guarantees of the obligations of the Joint Venture and (vii) any
debt to any other Joint Venture.
     
     "JV  Dollar Permitted Investments" means investments which are denominated
and  payable  in U.S. Dollars (a) with respect to funds in the China  Accounts,
deposits denominated in U.S. Dollars maintained at, or certificates of  deposit
insured, or obligations insured or guaranteed by, the Bank of China, The  China
Construction  Bank,  the Communication Bank, the China Farmers  Bank  or  China
International Trust and Investment Corporation, or any branch of  a  commercial
bank organized under the laws of the United States or any political subdivision
thereof  having  a  combined capital and surplus of at least $500  million  and
having long-term unsecured debt securities having a rating assigned by each  of
the  Rating Agencies equal to the highest rating assigned thereby to  long-term
unsecured  debt securities; and (b) with respect to any funds which  the  Joint
Venture  may  from  time to time be allowed to invest outside  of  the  PRC  in
accordance with PRC laws and regulations, in Dollar Permitted Investments.
     
     "JV Equity Contributions" shall mean the monies disbursed from the Luannan
Facility  Construction  Fund  pursuant to the terms  of  the  Issuer  Loan  and
contributed  by  Pan-Western,  pursuant to  the  terms  of  the  Joint  Venture
Agreements,  to each of the Joint Ventures as Pan-Western's equity contribution
to such Joint Venture.
     
     "JV  RMB  Permitted  Investments" means deposit accounts  denominated  and
payable  in  Renminbi to be maintained at, certificates of deposit  issued,  or
obligations issued or guaranteed by, one of the following policy or  commercial
banks  in  the  PRC:  (i) the Bank of China, (ii) the China Construction  Bank,
(iii)  the  Communication  Bank, (iv) the China Farmers  Bank,  (v)  the  China
International Trust and Investment Corporation, (vi) any foreign bank or branch
of  any  foreign bank authorized and licensed to conduct business in  the  PRC,
including without limitation, the establishment and maintenance of Renminbi and
foreign currency accounts and exchange functions having a combined capital  and
surplus of at least $500 million and having at least an investment grade rating
assigned  to  its  long-term unsecured debt securities by each  of  Standard  &
Poor's and Moody's.
     
     "Lien"  means  any  mortgage, lien (statutory or other), pledge,  security
interest,  encumbrance, claim, hypothecation, assignment for security,  deposit
arrangement  or  preference or other security agreement of any kind  or  nature
whatsoever.  For purposes of the Indentures, a Person shall be  deemed  to  own
subject  to a lien any property which it has acquired or holds subject  to  the
interest  of  a vendor or lessor under any conditional sale agreement,  capital
lease or other title retention agreement relating to such Person.
     
     "Luannan Casualty Proceeds" means all Insurance Proceeds or other  amounts
received  by  Pan-Western on account of any Luannan Event of  Loss  ("Insurance
Proceeds" means all amounts and proceeds (including instruments) in respect  of
the  proceeds  of  any casualty insurance policy covering any  portion  of  the
Luannan Facility (except proceeds of business interruption insurance)).
     
     "Luannan Commercial Operation Date" means that date by which both  of  the
following  have occurred: (i) the Luannan Facility Engineer has certified  that
the Luannan Facility has achieved commercial operations and (ii) the Commercial
Operation  Date,  as  such term is used in the Interconnection  Agreement,  has
occurred.
     
     "Luannan  Event of Loss" means an event which causes all or a  portion  of
the  Luannan Facility to be damaged, destroyed or rendered unfit for normal use
for any reason whatsoever, other than a Luannan Expropriation Event.
     
     "Luannan  Expropriation Event" means any compulsory transfer or taking  or
transfer under threat of compulsory transfer or taking of any material part  of
the  Luannan  Facility or any ownership interest or other rights in  the  Joint
Venture Companies by any governmental authority.
     
     "Luannan  Expropriation  Proceeds" means any  proceeds  received  by  Pan-
Western as a result of the occurrence of a Luannan Expropriation Event.
     
     "Luannan Facility Construction Cost" means the actual cost to complete the
construction  of  the  Luannan Facility as certified by  the  Luannan  Facility
Engineer  following  the Luannan Commercial Operation  Date  (and  which  total
includes amounts on deposit in the Completion Sub-Account).
     
     "Luannan  Facility Engineer" means Parsons Brinckerhoff, which  previously
served as the Joint Ventures' project engineer, and any successor thereto under
the terms of the Indentures.
     
     "Luannan  Facility Notes" means shall mean the promissory notes issued  by
the Joint Venture Companies to Pan-Western evidencing their indebtedness to Pan-
Western.
     
     "Luannan  Financing Agreements" means, collectively, the Shareholder  Loan
Agreements, the Joint Venture Guarantees, the Issuer Loan Agreement, the Issuer
Note and the Luannan Facility Notes.
     
     "Luannan  Project  Documents"  means,  collectively,  the  Luannan   Power
Purchase   Agreement,  the  Luannan  EPC  Contract,  the  Luannan  Transmission
Facilities  Construction  Agreement,  the Luannan  Operations  and  Maintenance
Agreement,  the Luannan Coal Supply Agreements, the Luannan Coal Transportation
Agreement,  the  Engineering  and Design Contract and  all  other  instruments,
agreements or other documents arising from or related to the Luannan  Facility,
but shall not include any Luannan Financing Agreement.
     
     "Major  Maintenance  Reserve Account" means the Major Maintenance  Reserve
Account established by each Joint Venture on the Closing Date pursuant  to  the
Shareholder Loan Agreements.
     
     "Major  Maintenance Reserve Requirement" means the amount required  to  be
transferred  to  the  Major Maintenance Reserve Account from  the  RMB  Revenue
Account pursuant to the Shareholder Loan Agreements.
     
     "Mandatory Redemption" shall have the meaning set forth in "Description of
the  Exchange  Notes,  the  Exchange Notes  Guarantee,  the  Issuer  Loan,  the
Shareholder   Loans   and   the  Collateral  Documents   Redemption   Mandatory
Redemption."
     
     "Material Adverse Effect" means a material adverse change in the financial
condition  with  respect to the party or entity in question  or  any  event  or
occurrence  which  could  reasonably be expected to  materially  and  adversely
affect:  (a)  the  operation  of  a  Domestic  Project;  (b)  the  development,
construction or operation of a Material Permitted Project; (c) the development,
construction  or  operation  of  the Luannan  Facility;  (d)  the  ability  of,
respectively, a Domestic Project, a Material Permitted Project or  the  Luannan
Facility to perform any of their material obligations under a Project Document;
(e)  the ability of the Issuer to make payments of principal, premium, if  any,
or  interest (including Liquidated Damages and Additional Amounts, if  any)  on
the  Existing Notes when due or (f) the ability of the Company to make payments
pursuant to the provisions of the Exchange Notes Guarantee.
     
     "Material  Subsidiary"  means  any  Subsidiary  which,  at  any  date   of
determination,  is  a  "Significant Subsidiary" (as that  term  is  defined  in
Regulation  S-X, as in effect on the Closing Date, issued under the  Securities
Act).
     
     "Net Cash Proceeds" means (a) in the case of any sale of Capital Stock  by
the  Company,  Panda  International or any direct or  indirect  parent  of  the
Company,  the  aggregate  net  cash proceeds received  by  the  Company,  Panda
International or any direct or indirect parent of the Company, after payment of
expenses,  commissions and the like incurred in connection  therewith,  whether
such  proceeds  are  in cash or in property (valued at the  Fair  Market  Value
thereof, as determined in good faith by the Board of Directors of such  Person,
at  the time of receipt); (b) in the case of any exchange, exercise, conversion
or  surrender  of  outstanding securities of any kind for  or  into  shares  of
Capital  Stock  of the Company, Panda International or any direct  or  indirect
parent  of the Company which is not Disqualified Stock, the net book  value  of
such  outstanding securities on the date of such exchange, exercise, conversion
or  surrender (plus any additional amount required to be paid by the holder  to
the  Company,  Panda  International or any direct or  indirect  parent  of  the
Company upon such exchange, exercise, conversion or surrender, less any and all
payments  made to the holders, e.g., on account of fractional shares  and  less
all  expenses  incurred by the Company, Panda International or  any  direct  or
indirect parent of the Company in connection therewith).
     
     "Net Debt Service" means the sum of (i) (a) Interest Expense less (b) non-
cash  Interest  Expense  less (c) scheduled withdrawals  from  the  Capitalized
Interest  Fund  (if  applicable) less (d) scheduled withdrawals  from  the  PFC
Capitalized  Interest Fund (if applicable) plus (ii) all payments of  scheduled
and   overdue  principal  of,  and  premium,  if  any,  on  Indebtedness   plus
(iii)  without duplication, all rental payments in respect of Capitalized Lease
Obligations paid, accrued, or scheduled to be paid or accrued.
     
     "Net  Income"  means, with respect to any Person for any period,  the  net
income (loss) of such Person determined in accordance with GAAP.
     
     "Non-PRC  Holders" means beneficial owners of the Existing Notes  who,  or
which,  are  not residents of the PRC for PRC tax purposes and do  not  conduct
business activities in the PRC.
     
     "Non-Recourse  Debt"  means Indebtedness of any  Subsidiary  or  group  of
Subsidiaries  that  is incurred to acquire, construct or  develop  a  Permitted
Project  or  group  of  Permitted Projects provided that such  Indebtedness  is
without recourse to the Company or any Material Subsidiary or to any assets  of
the  Company or any such Material Subsidiary other than such Permitted  Project
and the direct or indirect parent or parents that own such Permitted Project or
group  of Permitted Projects and the income from and proceeds of such Permitted
Project or group of Permitted Projects.
     
     "Non-U.S. Permitted Project" means a Permitted Project located outside the
United States.
     
     "Operating  and Maintenance Costs" means all amounts disbursed  by  or  on
behalf  of  the  Domestic  Project, Permitted Project  or  Joint  Ventures  for
operation,  maintenance,  repair,  or  improvement  of  the  Domestic  Project,
Permitted Project or Joint Ventures, including, without limitation, premiums on
insurance  policies, property, income and all other taxes to the  extent  paid,
and  payments  under the relevant operating and maintenance agreements,  leases
(including Operating Lease Obligations), royalty and other land use agreements,
and any other payments required under the Project Documents, each as determined
on a cash basis in accordance with GAAP.
     
     "Operating  Lease  Obligations" means any  obligation  of  the  Person  in
question incurred or assumed under or in connection with any lease of  real  or
personal  property  which,  in accordance with GAAP,  is  not  required  to  be
classified and accounted for as a capital lease.
     
     "Permitted  Liens" means, with respect to any Person, any Lien arising  by
reason of (a) any judgment, decree or order of any court, so long as such  Lien
is  being  contested  in good faith and is adequately bonded,  any  appropriate
legal  proceedings which may have been duly initiated for the  review  of  such
judgment, decree or order shall not have been finally terminated or the  period
within  which  such  proceedings may be initiated shall not have  expired;  (b)
taxes  not  yet  delinquent or which are being contested  in  good  faith;  (c)
security  for payment of workers' compensation or other insurance; (d) security
for the performance of tenders, contracts (other than contracts for the payment
of money) or leases; (e) deposits to secure public or statutory obligations, or
to  secure permitted contracts for the purchase or sale of any currency entered
into in the ordinary course of business; (f) Liens imposed by operation of  law
in   favor   of  carriers,  warehousemen,  landlords,  mechanics,  materialmen,
laborers,  employees or suppliers, incurred in the ordinary course of  business
for  sums which are not yet delinquent or are being contested in good faith  by
negotiations  or  by  appropriate  proceedings  which  suspend  the  collection
thereof; (g) security for surety or appeal bonds; and (h) easements, rights-of-
way,   zoning  and  similar  covenants  and  restrictions  and  other   similar
encumbrances  or title defects which, in the aggregate, are not substantial  in
amount, and which do not in any case materially detract from the value  of  the
property  subject thereto or materially interfere with the ordinary conduct  of
the business of the Company or any of its Subsidiaries.
     
     "Permitted  Project"  means  (i) any Project or  group  of  Projects  that
fulfills the requirements of the PIC Additional Projects Contract and which may
be  developed,  constructed or owned pursuant to the requirements  of  the  PFC
Indenture  and  subject to compliance with the terms of the Company  Indentures
and  (ii) to the extent that a project does not fulfill the requirements of the
PIC Additional Projects Contract, any project or group of projects that may  be
developed,  owned  and  operated by the Company  or  one  of  its  Subsidiaries
pursuant  to  the  requirements of the Indentures and  the  Company  shall  (a)
maintain  at least a 50% (direct or indirect) ownership or equivalent  interest
in  each  project  or (b)(x) at least a 25% (direct or indirect)  ownership  or
equivalent interest in each project not meeting the requirements of clause  (i)
above  and  (y)  a controlling influence over the management and policies  with
respect  to each project, directly or indirectly, whether through the ownership
of  voting securities, by contract or otherwise, provided that no other  entity
has  greater control than the Company over the management and policies of  such
project  (notwithstanding the foregoing, this covenant shall not  prohibit  the
sale, lease, transfer or other disposition of all interests in a Project, or  a
reduction  in  the  ownership or equivalent interest of,  or  control  over,  a
Project occurring pursuant to the terms of a build-operate-transfer arrangement
at least ten years after the entering into of such arrangement).
     
     "Permitted  Project  Document" means any and  all  documents  executed  in
connection  with the development, construction, ownership and  operation  of  a
Permitted Project.
     
     "Permitted  Project  Event" means, with respect to any Permitted  Project,
(i)  an  event which causes all or a portion of the facilities of  a  Permitted
Project  to  be  damaged, destroyed or rendered unfit for normal  use  for  any
reason  whatsoever, (ii) any event involving the compulsory transfer or  taking
or  transfer  under threat of compulsory taking of any material  part  of  such
Permitted  Project's assets or (iii) the existence of any defect  of  title  or
lien  or  encumbrance on the any material part of the property of  a  Permitted
Project  (provided that liens or covenants permitted by the covenant Limitation
on Liens shall be excluded from consideration) that entitles a Person to make a
claim  under  any  title insurance policy in existence  with  respect  to  such
property.
     
     "Permitted  Project Event Proceeds" means the sum of any and all  proceeds
payable upon occurrence of a Permitted Project Event.
     
     "Permitted  Project  Power Purchase Agreement" means  the  power  purchase
agreement of any Permitted Project.
     
     "Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are  used  to  extend,  refinance, renew, replace,  defease  or  refund,  other
Indebtedness of the Company or any of its Subsidiaries; provided that: (i)  the
principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal  amount  of  the  Indebtedness  so  extended,  refinanced,   renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in  connection therewith); (ii) such Permitted Refinancing Indebtedness  has  a
final  maturity date at least as late as the final maturity date of, and has  a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life  to  Maturity  of,  the Indebtedness being extended, refinanced,  renewed,
replaced,  defeased  or  refunded; (iii) if the  Indebtedness  being  extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment  to  the Existing Notes such Permitted Refinancing Indebtedness  has  a
final  maturity date later than the final maturity date of, and is subordinated
in  right  of payment to, the Existing Notes on terms at least as favorable  to
the Holders of Existing Notes as those contained in the documentation governing
the  Indebtedness  being extended, refinanced, renewed, replaced,  defeased  or
refunded; (iv) if the Indebtedness being refinanced is Non-Recourse Debt,  such
Permitted  Refinancing Indebtedness shall also be Non-Recourse  Debt;  and  (v)
such Indebtedness is incurred either by the Company or by the Subsidiary who is
the  obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
     
     "Person"  means  any individual, corporation, partnership, joint  venture,
association,  joint-stock company, trust, unincorporated organization,  limited
liability  company,  or  other  business entity  or  government  or  agency  or
political subdivision thereof (including any subdivision or ongoing business of
any  such  entity  or  substantially all of the  assets  of  any  such  entity,
subdivision or business).
     
     "PFC  Capitalized  Interest  Fund" means  the  capitalized  interest  fund
maintained pursuant to the PFC Indenture.
     
     "PIC  Cash  Available for Distribution" means Total  Cash  Flow  from  all
Domestic  Projects  and  Permitted Projects (owned,  constructed  or  developed
pursuant  to  the  PFC Indenture) on a consolidated basis  less  (i)  regularly
scheduled  payments of principal and interest on Domestic Project and Permitted
Projects  (owned,  constructed  or developed pursuant  to  the  PFC  Indenture)
project  level  Indebtedness,  (ii)  additions  to  reserves  required  by  the
instruments  providing  for project level Indebtedness,  (iii)  trustee's  fees
under the PFC Indenture and (iv) the NNW Cash Flow Participation (as defined in
the  PFC  Indenture)  plus  interest earned on reserves  required  by  the  PFC
Indenture  entered  into  by PIC, excluding, however,  extraordinary  financial
distributions and proceeds received as a result of mandatory redemption  events
(pursuant to the PFC Indenture), that at the time of determination is available
to  be  legally  distributed from the Domestic Projects and Permitted  Projects
(owned,  constructed or developed pursuant to the PFC Indenture) to PIC without
contravention of any agreement.
     
     "PIC  Cash  Available from Operations" means, for any period,  Total  Cash
Flow  from  all  Project  Entities  on  a  consolidated  basis  prior  to   all
Consolidated Debt Service, less (i) additions to reserves required  by  project
agreements, (ii) trustee's fees under the PFC Indenture plus interest earned on
reserves required by the documents relating to the Pooled Project Bonds entered
into  by  PIC,  and (iii) the NNW Cash Flow Participation, excluding,  however,
"Extraordinary  Financial Distributions" (as defined in the PFC Indenture)  and
proceeds  received as a result of "Mandatory Redemption Events" (as defined  in
the PFC Indenture).
     
     "PIC  Consolidated Debt Service" means for purposes of the PFC  Indenture,
for any period, PIC Debt Service plus scheduled principal and interest payments
on all Project Debt.
     
     "PIC  Consolidated Debt Service Coverage Ratio" means, as of any  date  of
determination, the ratio of (i) PIC Cash Available from Operations  during  the
relevant  period  to (ii) Consolidated Debt Service for such period;  provided,
however,  that at any time that PIC holds interests in more than four Projects,
then  the PIC Consolidated Debt Service Coverage Ratio shall not be applied  in
respect of any event or requirement.
     
     "PIC Debt Service" means, for any period, scheduled principal, premium, if
any, and interest (including liquidated damages and additional amounts, if any)
payments on any and all Indebtedness issued pursuant to the PFC Indenture.
     
     "PIC Debt Service Coverage Ratio" means for purposes of the PFC Indenture,
as  of  any  date  of  determination, the ratio of (i) PIC Cash  Available  for
Distribution  during  the relevant period to (ii) PIC  Debt  Service  for  such
period.
     
     "PIC  Future  Ratio  Determination  Period"  means,  as  of  the  date  of
determination, each of the following: (i) the period beginning with the date of
determination  through  December 31 of that calendar  year;  (ii)  each  period
consisting  of a calendar year thereafter through the calendar year immediately
prior  to the calendar year in which the Final Stated Maturity occurs and (iii)
the  period beginning with January 1 and ending with the Final Stated Maturity.
For  purposes of this definition, "Final Stated Maturity" means the last stated
maturity date of any Indebtedness outstanding under the PFC Indenture.
     
     "Power  Purchase  Agreements" means the Luannan Power Purchase  Agreement,
the  Brandywine Power Purchase Agreement, the Rosemary Power Purchase Agreement
and any Permitted Project Power Purchase Agreement.
     
     "Project Document" means, collectively, the Luannan Project Documents, the
Luannan  Financing Agreements,  the Brandywine Project Documents, the  Rosemary
Project  Documents,  the  Administrative Services  Agreement,  the  Development
Services Agreement, and any and all Permitted Project Documents.
     
     "Projected Luannan Facility Construction Cost" means $118.8 million.
     
     "Public  Equity Offering" means an underwritten public offering of Capital
Stock  (other  than Disqualified Stock) of the Company, Panda International  or
any  direct  or indirect parent of the Company made on a primary basis  by  the
Company,  Panda International or any direct or indirect parent of  the  Company
pursuant to a registration statement filed with and declared effective  by  the
Commission in accordance with the Securities Act or an underwritten offering of
Capital   Stock   (other  than  Disqualified  Stock)  of  the  Company,   Panda
International or any direct or indirect parent of the Company made on a primary
basis  by the Company, Panda International or any direct or indirect parent  of
the Company pursuant to Rule 144A under the Securities Act.
     
     "Related  Party" means any Affiliate of the Company of which the  Company,
Panda  International or any direct or indirect parent of the Company holds  51%
or a more of the voting securities of such Person.
     
     "Restricted  Payment" means any of the following: (i) the  declaration  or
payment  of  any  dividend or any other distribution on Capital  Stock  of  the
Company  or any Subsidiary of the Company or any payment made to the direct  or
indirect holders (in their capacities as such) of Capital Stock of the  Company
or  any  Subsidiary of the Company (other than (x) dividends  or  distributions
payable  solely in Capital Stock (other than Disqualified Stock) or in options,
warrants  or  other  rights to purchase Capital Stock (other than  Disqualified
Stock),  and  (y)  in  the case of Subsidiaries of the  Company,  dividends  or
distributions  payable to the Company or to a Subsidiary of the Company),  (ii)
the  purchase, redemption or other acquisition or retirement for value  of  any
Capital Stock of the Company or any of its Subsidiaries or (iii) the making  of
any  principal payment on, or the purchase, defeasance, repurchase,  redemption
or  other acquisition or retirement for value, prior to any scheduled maturity,
scheduled  repayment  or scheduled sinking fund payment,  of  any  Indebtedness
which  is  subordinated in right of payment to the Existing Notes  (other  than
Indebtedness acquired in anticipation of satisfying a sinking fund  obligation,
principal  installment or final maturity, in each case due within one  year  of
the date of acquisition).
     
     "Senior  Indebtedness" means, under the Indentures  and  with  respect  to
either  the  Company  or the Issuer, the principal of,  premium,  if  any,  and
interest (including interest accruing after the filing of a petition initiating
any  proceeding under any state, federal or foreign bankruptcy law  whether  or
not  allowable  as a claim in such proceeding and including Liquidated  Damages
and  Additional  Amounts,  if any) and all other monetary  obligations  on  any
Indebtedness  (other  than as otherwise provided in this  definition),  whether
outstanding on the Closing Date or thereafter created, incurred or assumed, and
whether at any time owing, actually or contingently, unless, in the case of any
particular  Indebtedness, the instrument creating or  evidencing  the  same  or
pursuant  to  which  the  same  is outstanding  expressly  provides  that  such
Indebtedness  shall  be subordinated or junior in right  of  payment  to  other
Indebtedness of such entity. Without limiting the generality of the  foregoing,
with  respect to the Issuer, "Senior Indebtedness" shall include the  principal
of, premium, if any, and interest (including interest accruing after the filing
of  a  petition initiating any proceedings under any state, federal or  foreign
bankruptcy  laws  whether or not allowable as a claim in  such  proceeding  and
including  Liquidated Damages and Additional Amounts, if any),  and  all  other
monetary obligations of every kind and nature of the Issuer from time  to  time
owed   to   the  Existing  Noteholders  under  the  Exchange  Notes  Indenture.
Notwithstanding the foregoing with respect to the Issuer, "Senior Indebtedness"
shall  not include (i) Indebtedness that is by its terms subordinate or  junior
in right of payment to any Indebtedness of the Issuer, (ii) Indebtedness which,
when  incurred,  is  without recourse to the Issuer, (iii)  any  liability  for
foreign, federal, state, local or other tax owed or owing by the Issuer to  the
extent such liability constitutes Indebtedness, (iv) Indebtedness of the Issuer
to a Wholly Owned Subsidiary and (vi) that portion of any Indebtedness which at
the time of issuance is issued in violation of the Indentures.
     
     "Shareholder Loan Agreement Permitted Liens" means (a) liens for any  tax,
assessment  or  other governmental charge not yet due, due but payable  without
penalty  or  being contested in good faith and by appropriate proceedings,  (b)
retentions  of  title in favor of materialmen, workers or repairmen,  or  other
like liens arising in the ordinary course of business or in connection with the
construction  of  the Luannan Facility, (c) liens arising out of  judgments  or
awards  so  long as an appeal or proceeding for review is being  prosecuted  in
good faith, (d) mineral rights the use and enjoyment of which do not materially
interfere with the use and enjoyment of the Joint Venture Facility, (e)  liens,
deposits  or  pledges to secure statutory obligations or performance  of  bids,
tenders, contracts (other than for the repayment of borrowed money) or  leases,
or  for  purposes of like general nature in the ordinary course  of  the  Joint
Venture's  business  and  affecting property with a  value  not  exceeding  the
equivalent of $250,000 at any one time, (f) involuntary liens (including a lien
of  an  attachment, judgment or execution) securing a charge or obligation,  on
any of the Joint Venture's property, real or personal, whether now or hereafter
owned  with a value not exceeding the equivalent of $250,000 at any  one  time,
(g)  rights  of any party pursuant to any Luannan Project Document,  (h)  liens
securing workers' compensation, unemployment insurance or other social security
or  pension obligations, (i) liens securing Indebtedness permitted pursuant  to
the  Shareholder  Loan  Agreement, (j) liens securing  the  purchase  price  of
property having an aggregate value not exceeding the equivalent of $1.0 million
at  any one time and (k) liens securing other obligations not constituting debt
none of which could reasonably be expected to have a Material Adverse Effect.
     
     "Shareholder  Loan Agreements" means, collectively, the  Shareholder  Loan
Agreement by and among each Joint Venture and Pan-Western.
     
     "Shareholder  Loans"  means  the outstanding  indebtedness  of  the  Joint
Ventures to Pan-Western incurred to finance the development and construction of
the  Luannan Facility and funded by Pan-Western with the proceeds of the Issuer
Loan.
     
     "Stated  Maturity" means, with respect to any security, the date specified
in  such security as the fixed date on which the final payment of principal  of
such  security  is  due  and  payable,  including  pursuant  to  any  mandatory
redemption  provision (but excluding any provision providing for the repurchase
of  such security at the option of the holder thereof upon the happening of any
contingency).
     
     "Subsidiary"  means,  with  respect to any Person,  (i)  any  corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence  of
any  contingency)  to vote in the election of directors, managers  or  trustees
thereof  is  at the time owned or controlled, directly or indirectly,  by  such
Person  or  one  or  more  of  the other Subsidiaries  of  that  Person  (or  a
combination thereof), (ii) any partnership (a) the sole general partner or  the
managing general partner of which is such Person or a Subsidiary of such Person
or  (b)  the  only general partners of which are such Person  or  one  or  more
Subsidiaries of such Person (or any combination thereof) and (iii)  any  Person
that  either is a Permitted Project or owns an interest in a Permitted  Project
(to the extent described in the second clauses (i) or (ii) of the definition of
Permitted Project).
     
     "Total  Cash Flow" means, as to any Person, the sum of the net  income  of
such  Person  for any period plus, to the extent deducted from net income,  all
non-cash  items,  including,  but not limited to, depreciation,  depletion  and
impairment,  amortization of intangibles and deferred taxes, in each  case  for
such  period  and determined as to such Person minus to the extent included  in
net income, all non-cash income, calculated in accordance with GAAP.
     
     "Trustees"  shall  mean the trustees under the Company Indenture  and  the
Exchange Notes Indenture.
     
     "U.S. Distribution Fund" means the fund described in Article IV of the PFC
Indenture  and  maintained in the name of PIC pursuant to such  Article,  which
such fund is entitled to distributions of monies from the Domestic Projects and
any  Permitted  Project located in the United States to  the  extent  that  all
obligations have been met by PFC and PIC under the PFC Indenture.
     
     "U.S.  Permitted  Project" means a Permitted Project  located  within  the
United States.
     
     "Weighted   Average  Life  to  Maturity"  means,  when  applied   to   any
Indebtedness at any date, the number of years obtained by dividing (i) the  sum
of  the  products obtained by multiplying (a) the amount of each then remaining
installment,  sinking  fund,  serial maturity or  other  required  payments  of
principal, including payment at final maturity, in respect thereof, by (b)  the
number  of  years  (calculated  to the nearest one-twelfth)  that  will  elapse
between  such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
     
     "Wholly Owned" by any Person means a Subsidiary of such Person all of  the
outstanding  Capital Stock or other ownership interests of  which  (other  than
directors' qualifying shares) shall at the time be owned by such Person  or  by
one or more Wholly Owned Subsidiaries of such Person.
     
Book-Entry, Delivery and Form

     The  Exchange  Notes initially will be represented by a single,  permanent
global  certificate in definitive, fully registered form (the  "Global  Note").
The Global Note will be deposited with, or on behalf of, DTC and registered  in
the  name of a nominee of DTC.  After the initial issuance of the Global  Note,
Exchange  Notes in certificated form will be issued in exchange for the  Global
Note only as set forth in the Exchange Note Indenture.
     
     Except  as set forth below, the Global Note may be transferred,  in  whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee.  Beneficial  interests in the Global Note may  not  be  exchanged  for
Existing  Notes  in  certificated  form except  in  the  limited  circumstances
described  below. See "--Exchange of Book-Entry Exchange Notes for Certificated
Exchange  Notes." In addition, transfer of beneficial interests in  the  Global
Note  will  be subject to the applicable rules and procedures of  DTC  and  its
direct  or  indirect  participants (including,  if  applicable,  those  of  the
Euroclear  System  ("Euroclear") and Cedel Bank,  S.A.  ("CEDEL")),  which  may
change  from time to time. The Existing Notes may be presented for registration
of transfer and exchange at the offices of the Registrar.
     
  Depository Procedures
  
     DTC  has  advised the Issuer that DTC is a limited-purpose  trust  company
created  to  hold securities for its participating organizations (collectively,
the  "Participants")  and  to  facilitate  the  clearance  and  settlement   of
transactions in those securities between Participants through electronic  book-
entry  changes  in  accounts  of  its Participants.  The  Participants  include
securities brokers and dealers (including the Initial Purchaser), banks,  trust
companies,  clearing  corporations and certain other organizations.  Access  to
DTC's  system  is  also  available to other entities such  as  banks,  brokers,
dealers  and  trust  companies  that clear  through  or  maintain  a  custodial
relationship  with a Participant, either directly or indirectly  (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect  Participants.  The  ownership  interest  and  transfer  of  ownership
interest of each actual purchaser of each security held by or on behalf of  DTC
are recorded on the records of the Participants and Indirect Participants.
     
     DTC has also advised the Issuer that pursuant to procedures established by
it,  (i)  upon  deposit  of the Global Note, DTC will credit  the  accounts  of
designated  Participants with portions of the principal amount  of  the  Global
Note and (ii) ownership of such interests in the Global Note will be shown  on,
and  the  transfer of ownership thereof will be effected only through,  records
maintained by DTC (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial interests
in the Global Note).
     
     The  laws  of  some  states  require that certain  persons  take  physical
delivery  in  definitive  form of securities that they own.  Consequently,  the
ability to transfer beneficial interests in the Global Note to such persons may
be  limited to that extent. Because DTC can act only on behalf of Participants,
which  in  turn act on behalf of Indirect Participants and certain  banks,  the
ability  of a person having beneficial interests in the Global Note  to  pledge
such  interests  to  persons or entities that do not  participate  in  the  DTC
system, or otherwise take actions in respect of such interests, may be affected
by  the  lack of a physical certificate evidencing such interests. For  certain
other  restrictions  on  the transferability of the  Exchange  Notes,  see  "--
Exchange of Book-Entry Exchange Notes for Certificated Exchange Notes."
     
     Except as described below, owners of interests in the Global Note will not
have  Exchange  Notes  registered in their names,  will  not  receive  physical
delivery of Exchange Notes in certificated form (the "Certificated Notes")  and
will  not  be  considered the registered owners or Holders  thereof  under  the
Indentures for any purpose.
     
     Exchange  Notes  originally purchased by or transferred to any  purchasers
who  elect  to take physical delivery of their certificates instead of  holding
their interest through the Global Note (collectively referred to herein as  the
"Non-Global Purchasers") will be issued in the form of Certificated Notes. Upon
the  transfer of any Certificated Note, such Certificated Note will, unless the
transferee  requests Certificated Notes or the Global Note has previously  been
exchanged in whole for Certificated Notes, be exchanged for an interest in  the
Global Note. Upon the transfer of an interest in the Global Note, such interest
will,  unless the transferee requests Certificated Notes, be represented by  an
interest in the Global Note.
     
     Payments  in  respect  of the principal, premium,  if  any,  and  interest
(including  Liquidated Damages and Additional Amounts, if any)  on  the  Global
Note  registered  in  the name of DTC or its nominee will  be  payable  by  the
Trustees  to DTC or its nominee in its capacity as the registered Holder  under
the  Indentures. Under the terms of the Indentures, the Issuer and the Trustees
will  treat the persons in whose names the Exchange Notes, including the Global
Note,  are  registered as the owners thereof for the purpose of receiving  such
payments  and for any and all other purposes whatsoever. Consequently,  neither
the  Issuer,  the Trustees nor any agent of the Issuer or the Trustees  has  or
will  have any responsibility or liability for (i) any aspect of DTC's  records
or  any Participant's or Indirect Participant's records relating to or payments
made  on account of beneficial ownership interests in the Global Note,  or  for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or   Indirect  Participant's  records  relating  to  the  beneficial  ownership
interests in the Global Note, or (ii) any other matter relating to the  actions
and practices of DTC or any of its Participants or Indirect Participants.
     
     DTC  has advised the Issuer that its current practice, upon receipt of any
payment  in  respect  of  securities  such as  the  Exchange  Notes  (including
principal and interest), is to credit the accounts of the relevant Participants
with  the  payment  on  the  payment date, in amounts  proportionate  to  their
respective holdings in principal amount of beneficial interests in the relevant
security  such as the Global Note as shown on the records of DTC.  Payments  by
the  Participants  and  the Indirect Participants to the beneficial  owners  of
Exchange  Notes  will  be  governed  by  standing  instructions  and  customary
practices  and  will  not be the responsibility of DTC,  the  Trustees  or  the
Issuer. Neither the Issuer nor the Trustees will be liable for any delay by DTC
or any of its Participants in identifying the beneficial owners of the Exchange
Notes,  and  the Issuer and the Trustees may conclusively rely on and  will  be
protected  in relying on instructions from DTC or its nominee as the registered
owner of the Exchange Notes for all purposes.
     
     Except for trades involving only Euroclear and CEDEL participants,  it  is
expected that interests in the Global Note will trade in DTC's Same--Day  Funds
Settlement System and secondary market trading activity in such interests  will
therefore  settle in immediately available funds, subject in all cases  to  the
rules and procedures of DTC and its participants.
     
     Transfers between Participants in DTC will be effected in accordance  with
DTC's  procedures,  and will be settled in same--day funds.  Transfers  between
participants  in  Euroclear and CEDEL will be effected in the ordinary  way  in
accordance with their respective rules and operating procedures.
     
     Subject  to  compliance with the transfer restrictions applicable  to  the
Exchange   Notes   described  herein,  cross--market  transfers   between   the
Participants  in DTC, on the one hand, and Euroclear or CEDEL participants,  on
the other hand, will be effected through DTC in accordance with DTC's rules  on
behalf of Euroclear or CEDEL, as the case may be, by its respective depositary;
however,  such cross--market transactions will require delivery of instructions
to  Euroclear or CEDEL, as the case may be, by the counterparty in such  system
in  accordance  with  the  rules  and procedures  and  within  the  established
deadlines (Brussels time) of such system.  Euroclear or CEDEL, as the case  may
be,  will,  if  the  transaction  meets its  settlement  requirements,  deliver
instructions  to  its  respective depositary to take  action  to  effect  final
settlement  on its behalf by delivering or receiving interests in the  relevant
Global  Note in DTC, and making or receiving payment in accordance with  normal
procedures  for  same--day  fund  settlement  applicable  to  DTC.    Euroclear
participants  and CEDEL participants may not deliver instructions  directly  to
the depositaries for Euroclear or CEDEL.
     
     Because of time zone differences, the securities account of a Euroclear or
CEDEL  participant purchasing an interest in the Global Note from a Participant
in  DTC  will  be  credited, and any such crediting will  be  reported  to  the
relevant  Euroclear  or  CEDEL participant, during  the  securities  settlement
processing  day  (which  must  be  a  business  day  for  Euroclear  or  CEDEL)
immediately  following the settlement date of DTC.  Cash received in  Euroclear
or  CEDEL as a result of sales of interests in the Global Note by or through  a
Euroclear  or  CEDEL participant to a Participant in DTC will be received  with
value  on  the  settlement date of DTC but will be available  in  the  relevant
Euroclear  or  CEDEL cash account only as of the business day for Euroclear  or
CEDEL following DTC's settlement date.
     
     DTC  has advised the Issuer that it will take any action permitted  to  be
taken  by  a  Holder of Exchange Notes only at the direction  of  one  or  more
Participants  to  whose  account with DTC interests  in  the  Global  Note  are
credited and only in respect of such portion of the aggregate principal  amount
of  the Exchange Notes as to which such Participant or Participants has or have
given such direction. However, if there is an Indentures Event of Default, with
respect  to  the Exchange Notes, DTC reserves the right to exchange the  Global
Note  for  Exchange Notes in certificated form, and to distribute such Exchange
Notes to its Participants.
     
     Although  DTC  has  agreed  to  the  foregoing  procedures  to  facilitate
transfers  of interests in the Global Note among participants in DTC, Euroclear
and  CEDEL,  they are under no obligation to perform or to continue to  perform
such  procedures, and such procedures may be discontinued at any time. None  of
the  Issuer, the Company, the Initial Purchaser or the Trustees will  have  any
responsibility  for  the  performance by DTC,  Euroclear  and  CEDEL  or  their
respective   participants  or  indirect  participants   of   their   respective
obligations under the rules and procedures governing their operations.
     
Exchange of Book-Entry Exchange Notes for Certificated Exchange Notes

     The  Global  Note  is  exchangeable  for  definitive  Exchange  Notes   in
registered  certificated form if (i) DTC (x) notifies the  Issuer  that  it  is
unwilling  or  unable  to continue as depositary for the Global  Note  and  the
Issuer  thereupon fails to appoint a successor depositary or (y) has ceased  to
be a clearing agency registered under the Exchange Act, (ii) the Issuer, at its
option,  notifies the Trustees in writing that it elects to cause the  issuance
of  the  Exchange Notes in certificated form or (iii) there shall have occurred
and  be continuing an Indentures Event of Default with respect to the Exchange.
In  addition,  beneficial interests in the Global Note  may  be  exchanged  for
Certificated  Notes upon request but only upon at least 20 days  prior  written
notice  given  to  the Trustees by or on behalf of DTC in accordance  with  its
customary  procedures. In all cases, Certificated Notes delivered  in  exchange
for  the Global Note or beneficial interests therein will be registered in  the
names,  and issued in any approved denominations, requested by or on behalf  of
the depositary (in accordance with its customary procedures).
     
                        The Shareholder Loan Agreements
                                       
     Each  Joint  Venture entered into a Shareholder Loan Agreement  with  Pan-
Western  on  September 24, 1996 and as amended on April 8, 1997 and  April  11,
1997,  pursuant  to which the Shareholder Loans will be made.  The  Issuer  may
cause Pan-Western and the Joint Ventures to further amend the Shareholder  Loan
Agreements  after the Closing Date in order to adjust the amortization  of  the
Shareholder  Loans to reflect the terms of the Exchange Notes. The  Shareholder
Loan Agreements provide, among other things, the rights and obligations of Pan-
Western  and  the  Joint  Ventures,  as  lender  and  borrowers,  respectively,
including,  without  limitation, principal and  interest  payments,  conditions
precedent, covenants, representations and warranties, events of default, breach
of  contract and remedies. The summary description below is equally  applicable
to each Shareholder Loan Agreement.
     
Payment of Principal and Interest

     The  Joint  Venture  will pay accrued interest until  the  first  interest
payment date following the Commercial Operation Date semiannually at a rate  of
13.75% per annum and thereafter monthly at a rate of 12.75% per annum.
     
Prepayments

     Voluntary Prepayments. The Shareholder Loans will not be prepayable by the
Joint Venture without the consent of Pan-Western.
     
     Mandatory Prepayments. If a Luannan Expropriation Event or a Luannan Event
of  Loss  shall  occur, as soon as reasonably practicable, but  no  later  than
fifteen  (15)  days  after  the date of receipt by the  Joint  Venture  of  any
proceeds  in  respect thereof, such Joint Venture shall make a reasonable  good
faith  determination  as  to  whether (i) the Joint  Venture  Facility  can  be
rebuilt,  repaired  or  restored  to permit operation  of  the  entire  Luannan
Facility  on  a  commercially feasible basis, and (ii)  the  proceeds  thereof,
together  with  any  other  amounts  that  are  available  to  commit  to  such
rebuilding,  repair or restoration, are sufficient to pay for such  rebuilding,
repair or restoration of the Joint Venture  Facility. The determination of such
Joint Venture shall be evidenced by a certificate filed with Pan-Western which,
in  the event such Joint Venture determines that the Joint Venture Facility can
be  rebuilt,  repaired or restored to permit operation of  the  entire  Luannan
Facility  or  a  portion thereof on a commercially feasible basis,  shall  also
certify  that  such proceeds, together with any other amounts that  such  Joint
Venture has available to commit to such rebuilding, repair or restoration,  are
sufficient to pay the costs thereof, and shall also set forth a reasonable good
faith estimate by such Joint Venture of such costs. If the amount of such costs
exceeds  $500,000, such certificate shall be accompanied by a Luannan  Facility
Engineer's  certificate, dated within five (5) days of the date  of  the  Joint
Venture's certificate, stating that, based upon reasonable investigation and  a
review  of  the  determination made by the Joint Venture, the Luannan  Facility
Engineer believes that the determination and the estimate of the total cost, if
any, set forth in the Joint Venture's certificate to be reasonable.
     
     In  the event that the Joint Venture determines not to rebuild, repair  or
restore  the  Joint  Venture  Facility, all of the  proceeds  of  such  Luannan
Expropriation Event or Luannan Event of Loss shall be applied promptly  to  the
prepayment of the Shareholder Loan by the Joint Venture.
     
     In  the event that the determination is made to rebuild, repair or restore
the  Joint  Venture Facility, all of the proceeds of such Luannan Expropriation
Event  or Luannan Event of Loss on deposit in the RMB Revenue Account shall  be
transferred to the RMB Checking Account and, together with the amounts (if any)
on  deposit in the Luannan Facility Construction Fund and such other amounts as
the  Joint  Venture  has available for such rebuilding, repair  or  restoration
(which also shall be deposited in the Luannan Facility Construction Fund  prior
to  any  disbursement for rebuilding, repair or restorations), used to pay  the
costs  of  such rebuilding, repair or restoration, and any excess  shall,  upon
completion  of such rebuilding, repair or restoration, be applied  promptly  to
the prepayment of the Shareholder Loan by the Joint Venture.
     
     In  addition to other amounts which shall be applied to the prepayment  of
the  Shareholder Loan as provided in the Shareholder Loan Agreement, the  Joint
Venture shall apply promptly following receipt, (i) all Net Cash Proceeds  from
the  sale or other disposition of all or any part of the assets or other rights
of  such  Joint  Venture, other than in the ordinary course  of  business  (and
permitted pursuant to the terms of the Luannan Financing Agreements)  having  a
value, individually in excess of $100,000 and in the aggregate in any year,  in
excess of $250,000, and (ii) performance liquidated damage payments which shall
have  been  made by the Luannan EPC Contractor to such Joint Venture under  the
Luannan EPC Contract.
     
Certain Covenants of the Joint Venture

     Repayment  of  Indebtedness.  The Joint  Venture  shall  repay  all  debt,
including without limitation, all sums due under the Shareholder Loan Agreement
and  the  other  Luannan  Financing  Agreements,  subject  to  any  limitations
contained in the Luannan Financing Agreements.
     
     Existence;  Conduct  of  Business. Except as otherwise  permitted  by  the
Shareholder  Loan Agreement, the Joint Venture shall maintain and preserve  its
existence  as  a  Sino-foreign joint venture with  limited  liability  and  all
rights,  privileges and franchises necessary or desirable in the normal conduct
of  its  business, and engage only in the business contemplated by the  Luannan
Financing Agreements and the Luannan Project Documents.
     
     Use  of  Funds. The Joint Venture will use the proceeds of the Shareholder
Loan  only  for deposit in the accounts that such Joint Venture has established
pursuant to the Shareholder Loan Agreement pending disbursement for payment  of
costs in connection with the Joint Venture Facility.
     
     Compliance  with Legal Requirements. The Joint Venture shall promptly  and
diligently  own, construct, maintain and operate its respective  Joint  Venture
Facility  in  compliance with all applicable legal requirements,  and  procure,
maintain  and comply with or cause to be procured, maintained or complied  with
all governmental approvals required for the ownership, construction, financing,
maintenance or operation of its respective Joint Venture Facility or  any  part
thereof at or before the time such governmental approvals become necessary  for
the  ownership, construction, financing, maintenance or operation of such Joint
Venture  Facility as contemplated by the Luannan Project Documents, and  except
that  the  Joint Venture may, at its expense and subject to certain conditions,
contest  by  appropriate proceedings conducted in good faith  the  validity  or
application of any such legal requirements.
     
     Operating  Budget. The Joint Venture shall, on or before  the  anticipated
Luannan  Commercial Operation Date, deliver to Pan-Western an annual  operating
budget,  certified  by the Luannan Facility Engineer and  in  advance  of  each
calendar  year  thereafter, the Joint Venture shall adopt and deliver  to  Pan-
Western an annual operating budget, certified by the Luannan Facility Engineer.
     
     Records  and  Financial  Statements.  The  Joint  Venture  shall  maintain
adequate  books, accounts and records with respect to itself and its respective
Joint  Venture Facility in compliance with the regulations of any  governmental
authority  having  jurisdiction thereof, and provide  Pan-Western  with,  among
other  things, (a) as soon as available and in any event within 135 days  after
the  close  of  each  fiscal year, audited financial statements  of  the  Joint
Venture  prepared  in  accordance with the PRC's generally accepted  accounting
principles  and  certified by Arthur Andersen & Co. or  such  other  comparable
independent  accounting  firm  selected by  Pan-Western  and  (b)  as  soon  as
available  and  in  any event within 90 days after the end  of  each  quarterly
accounting  period  of its fiscal year, unaudited financial statements  of  the
Joint Venture.
     
     Insurance.  The  Joint  Venture  shall maintain  adequate  insurance  with
respect  to its Joint Venture Facility based upon the advice of the Independent
Insurance Consultant.
     
     Progress  Report,  Project Report and Project Budget.  The  Joint  Venture
shall  deliver  to Pan-Western (i) within 30 days following  the  end  of  each
calendar quarter a quarterly status report describing in reasonable detail  the
progress  of the construction of its Joint Venture Facility, including  without
limitation, the cost incurred to the end of such quarter and an estimate of the
time and cost required for completion of its Joint Venture Facility; (ii) prior
to  the Luannan Commercial Operation Date, within 30 days following the end  of
each  calendar  quarter, an update of the budget for the  construction  of  its
Joint  Venture Facility, including but not limited to an explanation  or  other
reconciliation  of differences between such report and previous reports;  (iii)
from  and after the Luannan Commercial Operation Date, within 90 days following
the  end of each calendar year an annual summary operating report, which  shall
include,  unless otherwise agreed to by Pan-Western, a numerical and  narrative
assessment  of (a) compliance with the annual operating budget, (b) statistical
data  relating  to  the  Joint  Venture  Facility,  including  heat  rate,  net
electrical and scheduled and unscheduled outages, (c) fuel deliveries and  use,
(d)  major  maintenance activity, (e) casualty losses of  value  in  excess  of
$250,000 or the equivalent thereof in other currencies (whether or not  covered
by   insurance),  (f)  disputes  with  any  other  major  project  participant,
materialman, supplier or other person and any related claims against such Joint
Venture, (g) pricing information disclosed or made available pertaining to  the
supply  of  coal and (h) compliance with governmental approvals; and  (iv)  all
progress reports provided by the Luannan EPC Contractor pursuant to the Luannan
EPC Contract and all progress reports prepared under the Luannan Power Purchase
Agreement.
     
     Taxes;  Increased  Costs. The Joint Venture shall pay  and  discharge  all
taxes  and governmental charges or levies imposed on such Joint Venture or  its
Joint  Venture Facility. If any change of law subjects Pan-Western to any  tax,
duty  or other charge with respect to the Shareholder Loan or changes the basis
of  taxation of payments by the Joint Venture to Pan-Western on the Shareholder
Loan  (except for certain taxes or changes in the rate of taxation as set forth
in  the  Issuer  Loan Agreement) or imposes on Pan-Western any other  condition
directly  related to the Shareholder Loan thereby increasing the cost  to  Pan-
Western of making, issuing, creating, renewing, participating in or maintaining
the  Shareholder  Loan or to reduce any amount receivable by Pan-Western  under
the  Shareholder  Loan Agreement, then the Joint Venture  will  reimburse  Pan-
Western  for  such increased costs or compensate Pan-Western for  such  reduced
amounts.
     
     All  payments made by the Joint Venture shall be made free and  clear  of,
and  without  deduction or withholding for any income, stamp  or  other  taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, imposed  or
otherwise  (or in the alternative, the initial interest rate established  shall
include  such  charges in addition to the interest rate  on  the  Issuer  Loan)
levied   by  any  governmental  instrumentality,  subject  to  certain  limited
exceptions.
     
     Registration  of  Shareholder Loans; Other Foreign Exchange  Matters.  The
Joint   Venture   will  register  each  Shareholder  Loan  and  maintain   such
registration  with the Tangshan Municipal Bureau for Exchange  Control  or  any
successor entity.
     
     Loan Payment Reserve. The final drawing under the Shareholder Loan by  the
Joint Venture will be in an amount of $1.0 million which it will deposit in  an
account,  to  be  designated by Pan-Western, to be used as a  reserve  for  the
payment  of  any amounts owing pursuant to the Shareholder Loan or the  Luannan
Facility  Note  not paid when due; provided, however, to the  extent  that  the
Joint  Venture  is  obligated to make a performance  bonus  payment  under  the
Luannan  EPC Contract, then the amount on deposit in the preceding debt service
reserve  account  shall  be  reduced by the amount of  such  performance  bonus
payment.
     
     Notices.  The Joint Venture shall promptly provide to Pan-Western  written
notice  of (i) any Shareholder Loan Agreement Event of Default of which it  has
knowledge,  describing  any action being taken or proposed  to  be  taken  with
respect  to  its Joint Venture Facility and (ii) any termination  or  event  of
default or notice thereof under the Luannan Power Purchase Agreement.
     
     Luannan  Expropriation Event. The Joint Venture shall (i) promptly provide
Pan-Western with written notice of any Luannan Expropriation Event with respect
to  its  Joint  Venture  Facility, (ii) diligently pursue  all  its  rights  to
compensation, (iii) hold any Luannan Expropriation Proceeds received in respect
of  such  event  (after deducting all reasonable expenses  incurred  by  it  in
litigating, arbitrating, compromising, settling or consenting to the settlement
of  any  claims)  in  trust for the benefit of Pan-Western  and  (iv)  promptly
deposit  all  Luannan  Expropriation Proceeds in the RMB  Revenue  Account.  In
addition, the Joint Venture consents to the participation of Pan-Western in any
proceedings regarding a Luannan Expropriation Event.
     
     Limitation  on Indebtedness. The Joint Venture shall not create,  or  be
     liable for any debt, except:
     
     (i)   the Shareholder Loan and additional loans from Pan-Western;
     
     (ii)  working  capital debt; provided that after giving effect  to  such
           additional  debt,  (a)  the  minimum (or  lowest)  projected  Debt
           Service  Coverage  Ratio for any calendar year will  not  be  less
           than  1.5 to 1 and (b) the average projected Debt Service Coverage
           Ratio  for  any  calendar year will not be less  than  1.7  to  1;
           provided,  however, that working capital debt  shall  not  at  any
           time exceed $1.0 million;
     
     (iii) purchase  money or capital lease obligations incurred  to  finance
           assets  of the Joint Venture that are readily replaceable personal
           property  with  a  principal  amount or  capitalized  portion  not
           exceeding $1.0 million in the aggregate outstanding at any time;
     
     (iv)  trade  accounts payable (other than for borrowed money) due within
           90  days  arising, and accrued expenses incurred, in the  ordinary
           course  of business of constructing, operating or maintaining  its
           Joint Venture Facility on customary terms;
     
     (v)   interest or currency exchange rate protection agreements;
     
     (vi)  debt  under  the Joint Venture Guarantees and any other guarantees
           of the obligations of the Joint Ventures; and
     
     (vii) any   debt  to  any  other  Joint  Venture  ((i)  through   (vii),
           collectively "Joint Venture Permitted Indebtedness").
     
     Limitation on Liens. The Joint Venture shall not create or permit to exist
any  Lien other than Shareholder Loan Agreement Permitted Liens upon any assets
or  properties of the Joint Venture, including, without limitation,  the  Joint
Venture Facility.
     
     Nature  of  Business.  The Joint Venture shall not  amend  or  modify  its
Articles  of  Association without the prior written consent of Pan-Western  and
shall not engage in any business other than the ownership and operation of  its
Joint Venture Facility.
     
     Limitation  on  Sale or Lease of Facility Assets. The Joint Venture  shall
not  sell,  lease, assign, transfer or otherwise dispose of the  Joint  Venture
Facility or other assets except (i) in the ordinary course of business  to  the
extent  that  such  property  is worn out or no  longer  useful  or  usable  in
connection  with the operation of the Joint Venture Facility and such  property
is replaced by property having a fair market value equal to or greater than the
fair market value of the property being leased or transferred or such lease  or
transfer  is  required  to  comply  with law  or  to  obtain  or  maintain  any
governmental  approval, (ii) property with a fair market  value  of  less  than
$250,000 in any given year or $1.0 million in the aggregate since the  date  of
the Shareholder Loan Agreement, and (iii) the sale of electricity and steam  in
accordance with the Luannan Project Documents.
     
     Limitation on Merger, Consolidation, Liquidation, Dissolution.  The  Joint
Venture  shall  not merge or consolidate with or into any other  Person,  other
than  any of the other Joint Ventures or other Sino-foreign joint ventures with
no  material  liabilities and no material activities unrelated to  the  Luannan
Facility, or liquidate, wind up, dissolve, or otherwise transfer or dispose  of
all  or any substantial part of its property, assets or business, or change its
legal  form,  or purchase or otherwise acquire any assets of any Person  unless
such  purchase  or  acquisition  of  assets is  reasonably  necessary  for  the
operation of the Joint Venture Facility or in the ordinary course of business.
     
     Limitation  on Contingent Liabilities. The Joint Venture shall not  become
liable as a surety, guarantor, accommodation endorser or otherwise, for or upon
the  obligation of any other Person; provided, however, that the Joint  Venture
may guarantee or otherwise become liable in respect of any debt incurred by any
other  Person  (on its behalf) in connection with or relating to incurrence  of
debt expressly permitted as described above in the section entitled "Limitation
on Indebtedness"; and provided, further, however, that this shall not be deemed
to prohibit (i) the acquisition of goods, supplies or merchandise in the normal
course  of  business  on  normal  trade credit,  or  (ii)  the  endorsement  of
negotiable instruments received in the normal course of business; or (iii)  the
obligations  under  the  Shareholder  Loan  Agreement  and  the  Joint  Venture
Guarantee to which the Joint Venture is a party, or any other guarantee of  any
obligation  of  any other Joint Venture if such guarantee is required  for  the
development and construction of the Luannan Facility and is not contrary to any
legal requirement.
     
     Limitation on Loans, Advances or Investments. The Joint Venture shall  not
make  or  permit  to  remain outstanding any loans,  extensions  of  credit  or
advances  to or investments in (whether by acquisition of any stocks, notes  or
other securities or obligations) any Person except RMB Permitted Investments or
JV Dollar Permitted Investments or as expressly provided in the Luannan Project
Documents.
     
     Immunity. In any proceedings in China or elsewhere in connection with  any
of  the Luannan Financing Agreements to which the Joint Venture is a party, the
Joint  Venture  shall not claim for itself or any of its assets  immunity  from
suit, execution, attachment or other legal process.
     
     Limitations  on Distributions. The Joint Venture shall not  agree  to  any
restriction on its ability to pay dividends (excluding restrictions imposed  by
law).
     
     Limitation on Transactions With Affiliates. Except for the Luannan Project
Documents, the Joint Venture shall not directly or indirectly:  (i) enter  into
any  transaction with any Person (including any affiliate) other  than  in  the
ordinary  course of business and on terms not less favorable to those available
from  independent  third  parties  or (ii) establish  any  sole  and  exclusive
purchasing  or  sales agency, or enter into any transaction whereby  the  Joint
Venture  might receive less than the full commercial price (subject  to  normal
trade  discounts)  for  electricity or pay more than the commercial  price  for
products of others.
     
     Limitation  on Partnerships; Subsidiaries. Except as contemplated  by  the
Luannan  Project  Documents, the Joint Venture shall not become  a  general  or
limited  partner in any partnership or a joint venturer in any  joint  venture,
acquire  any  ownership interest in any other Person or enter into any  profit-
sharing  or  royalty agreement or other similar arrangement whereby  the  Joint
Venture's income or profits are, or might be, shared with any other Person,  or
enter  into any management contract or similar arrangement whereby its business
or  operations are managed by any other Person (other than any agreement  under
which  the  Joint Venture may provide operation and management,  consulting  or
other similar services) or form any subsidiary.
     
     Limitation  on Amendments. The Joint Venture shall not amend  any  of  the
Luannan Project Documents without the prior written consent of Pan-Western.
     
     Limitation  on  Assignment.  Without the prior  written  consent  of  Pan-
Western,  the Joint Venture shall not assign or otherwise transfer  its  rights
under  any  of  the  Luannan  Project Documents to  which  it  is  a  party  or
governmental approvals to which it is a party to any Person.
     
     Abandonment of Luannan Facility; Improper Use. The Joint Venture shall not
voluntarily cease or abandon the development, construction or operation of  the
Joint  Venture Facility or use, maintain, operate or occupy, or allow the  use,
maintenance, operation or occupancy of, any portion of the site of the  Luannan
Facility or facility for certain prohibited purposes.
     
Shareholder Loan Agreement Events of Default

     The  occurrence  of  any  of  the  following  events  shall  constitute  a
Shareholder  Loan  Agreement Event of Default pursuant to the Shareholder  Loan
Agreement:
     
     (i)   default  in  the  payment of principal of or any interest  on  the
           Shareholder Loan or other amount owed by the Joint Venture to Pan-
           Western within 15 banking days after such amounts are due;
     
     (ii)  any  representation or warranty confirmed or made in  any  Luannan
           Project  Documents by the Joint Venture or in any writing provided
           by   the   Joint  Venture  in  connection  with  the  transactions
           contemplated by the Shareholder Loan Agreement shall be  found  to
           have  been  incorrect when made or deemed to  be  made;  provided,
           however,  that  no  Shareholder Loan Agreement  Event  of  Default
           shall occur if within sixty (60) days after the date on which  the
           general  manager of the Joint Venture has actual notice that  such
           incorrect statement has occurred, the Joint Venture shall  deliver
           in  good faith, to Pan-Western an officer's certificate stating in
           reasonable   detail  that  either  (a)  the  Joint   Venture   has
           eliminated   any   adverse  effect  relating  to  such   incorrect
           statement  or  (b)  the  Joint Venture has taken  action  that  it
           reasonably believes will eliminate the adverse effect relating  to
           such incorrect statement within a reasonable specified time;
     
     (iii) failure  of  the  Joint  Venture to  perform  or  observe  certain
           affirmative   covenants  under  the  Shareholder  Loan   Agreement
           (including but not limited to, repayment of indebtedness  and  use
           of  funds)  and  such  defaults have not been remedied  after  the
           expiration of the applicable grace period, if any;
     
     (iv)  failure  of  the  Joint Venture to observe  any  of  the  negative
           covenants  under  the  Shareholder  Loan  Agreement  (other   than
           limitation  on  liens) and such defaults have  not  been  remedied
           prior to the expiration of any applicable cure or grace period;
     
     (v)   default by the Joint Venture or any other party under any  of  the
           Luannan  EPC Contract, the Luannan EPC Guarantee, the Transmission
           Facilities  Construction  Agreement, the  Luannan  Power  Purchase
           Agreement and the Financing Agreements to which the Joint  Venture
           is  a  party and such default shall continue unremedied after  the
           expiration of the applicable grace period, if any;
     
     (vi)  voluntary and involuntary bankruptcy or insolvency events  of  any
           Joint  Venture,  North  China  Power  Company,  the  Luannan   EPC
           Contractor  or  Harbin Power (if such involuntary  bankruptcy  has
           not   been   dismissed  within  60  days  from  the  bringing   of
           involuntary bankruptcy);
     
     (vii) entry  of a final judgment or judgments against the Joint  Venture
           in  the  aggregate amount of $1.0 million (exclusive  of  judgment
           amounts  fully covered by insurance where the insured has admitted
           liability)  subject  to  customary  payment,  dismissal  or   stay
           rights;  or  entry of a judgment in the form of an  injunction  or
           similar  form  of  relief requiring suspension or  abandonment  of
           construction  or operation of the Joint Venture Facility  of  such
           Joint  Venture on grounds of violation of a legal requirement  and
           failure  of  the Joint Venture to have such injunction  stayed  or
           discharged within 90 days;
     
     (viii)the   Joint  Venture  shall  default  for  a  period  beyond   any
           applicable grace period in the payment of any principal,  interest
           or  other  amount due under any agreement involving the  borrowing
           of  money  or  the  advance of credit and the  outstanding  amount
           payable  under  all  such agreements in the  aggregate  equals  or
           exceeds $250,000 in the aggregate;
     
     (ix)  any  of  the  Luannan  Project Documents,  the  Luannan  Financing
           Agreements  or  the  Luannan  EPC  Guarantee  shall  have   become
           invalid, illegal, or unenforceable;
     
     (x)   the  Joint Venture ceases to have the right to use the site of the
           Luannan  Facility  in  the  manner  contemplated  by  the  Luannan
           Project   Documents  (or  to  obtain  sufficient  water  for   its
           operations);
     
     (xi)  the   Joint  Venture  abandons  the  Joint  Venture  Facility   or
           otherwise  ceases  to pursue the operations of the  Joint  Venture
           Facility  in  accordance  with  standard  industry  practice,  or,
           except  as  otherwise permitted by the terms  of  the  Shareholder
           Loan  Agreement, the Joint Venture shall sell or otherwise dispose
           of its interests in the Joint Venture Facility;
     
     (xii) the  Luannan Commercial Operation Date shall not have occurred  by
           December 31, 1999;
     
     (xiii)any   governmental   approvals  or   permits   (whether   central,
           provincial, municipal, local or otherwise) necessary for  (a)  the
           establishment   of   the  Joint  Venture,   (b)   the   ownership,
           construction, maintenance, financing or operation of  the  Luannan
           Facility,  (c) the setting or adjustment of the electricity  price
           for  the  Luannan  Facility  in  accordance  with  the  method  of
           calculation  set forth in the attachments to the Pricing  Document
           or  (d)  the conversion or transfer of any foreign currency  shall
           not  be  obtained  if  and when required, or  shall  be  modified,
           revoked  or  canceled, or a notice of violations is  issued  under
           any  governmental  authorization on grounds of, or  illegality  of
           the  absence  of any required authorization, or any proceeding  is
           commenced  by any governmental instrumentality for the purpose  of
           modifying,  revoking  or canceling any governmental  authorization
           (an "Approval Event of Default");
     
     (xiv) any adverse change in PRC law; and
     
     (xv)  the  Joint Venture Facility is destroyed, or suffers an actual  or
           constructive total loss.
     
Description of Joint Venture Guarantees

     Each  of  the  Joint  Ventures entered into Joint  Venture  Guarantees  on
September  24, 1996 to unconditionally and irrevocably guarantee to Pan-Western
the prompt payment and performance by each of the other three Joint Ventures of
such  Joint  Venture's obligations to Pan-Western pursuant  to  its  respective
Shareholder Loan Agreement.
     
                           The Issuer Loan Agreement
                                       
     The  Issuer  has entered into the Issuer Loan Agreement with  Pan-Western,
dated  as of the Closing Date, pursuant to which the Issuer Loan will be  made.
The  Issuer  Loan  Agreement  provides, among  other  things,  the  rights  and
obligations   of   the  Issuer  and  Pan-Western,  as  lender   and   borrower,
respectively,  including, without limitation, principal and interest  payments,
conditions  precedent,  covenants, representations and  warranties,  events  of
default, breach of contract and remedies.
     
Payment of Principal and Interest

     Pan-Western  will pay to the Issuer accrued interest and  principal  on  a
monthly  basis  according to a schedule that will be designed,  ultimately,  to
provide  the Issuer sufficient funds for it to pay principal, premium, if  any,
and  interest when due on the Exchange Notes. The interest to be charged on the
Issuer  Loan will be established based on the interest rate applicable  to  the
Exchange Notes.
     
Prepayments

     Voluntary  Prepayments.  The Issuer Loan will not  be  repayable  by  Pan-
Western without the consent of the Issuer.
     
     Mandatory Prepayments. After payment of principal and interest and certain
operating  expenses,  the  Issuer Loan will require that  Pan-Western  use  all
available funds to prepay the Issuer Loan.
     
Certain Covenants of Pan-Western

     Repayment  of  Indebtedness. Pan-Western shall repay all  debt,  including
without limitation, all sums due under the Issuer Loan Agreement.
     
     Existence;  Conduct  of  Business. Except as otherwise  permitted  by  the
Indentures, Pan-Western shall maintain and preserve its existence as  a  Cayman
Islands exempted company with limited liability and all rights, privileges  and
franchises  necessary or desirable in the normal conduct of its  business,  and
engage  only  in  the  business  contemplated by the  Indentures,  the  Luannan
Financing Agreements and the Luannan Project Documents.
     
     Use of Funds. Pan-Western will use the proceeds of the Issuer Loan only to
make  (i)  the  Shareholder  Loans and (ii) the JV Equity  Contributions.  Pan-
Western  will  advance monies to the Joint Ventures (whether  in  the  form  of
installments of the Shareholder Loans or installments of the JV Company  Equity
Contributions) only in the manner contemplated by the Indentures and  described
above under "--The Funds--The Issuer Funds."
     
     Compliance  with  Legal  Requirements.  Pan-Western  shall  promptly   and
diligently  procure,  maintain  and  comply  with  or  cause  to  be  procured,
maintained  or complied with all governmental approvals required for  financing
of  the  Joint  Ventures  and  the transactions  contemplated  by  the  Luannan
Financing  Documents,  and except that Pan-Western  may,  at  its  expense  and
subject to certain conditions, contest by appropriate proceedings conducted  in
good faith the validity or application of any such legal requirements.
     
     Operating  Budget.  Pan-Western shall deliver  to  the  Issuer  an  annual
operating budget in advance of each calendar year.
     
     Records  and Financial Statements. Provisions with respect to records  and
financial  statements  substantially mirror those of the  comparable  provision
within  the  Shareholder  Loan Agreements. See above  "--The  Shareholder  Loan
Agreements--Records and Financial Statements."
     
     Progress Report, Project Report and Project Budget. Pan-Western,  as  soon
as  practicable upon the receipt thereof, shall forward to the Issuer  any  and
all progress reports, project reports and project budgets that it receives from
the Joint Ventures.
     
     Taxes; Increased Costs. Pan-Western shall pay and discharge all taxes  and
governmental charges or levies imposed on it. If any change of law subjects the
Issuer  to  any  tax, duty or other charge with respect to the Issuer  Loan  or
changes the basis of taxation of payments by Pan-Western to the Issuer  on  the
Issuer Loan (except for certain taxes or changes in the rate of taxation as set
forth  in the Indentures) or imposes on the Issuer any other condition directly
related to the Issuer Loan thereby increasing the cost to the Issuer of making,
issuing, creating, renewing, participating in or maintaining the Issuer Loan or
to  reduce any amount receivable by the Issuer under the Issuer Loan Agreement,
then  Pan-Western  will  reimburse  the Issuer  for  such  increased  costs  or
compensate the Issuer for such reduced amounts.
     
     All  payments  made by Pan-Western shall be made free and  clear  of,  and
without  deduction or withholding for any income, stamp or other taxes, levies,
imposts,  duties,  charges,  fees,  deductions  or  withholdings,  imposed   or
otherwise  (or in the alternative, the initial interest rate established  shall
include  such  charges in addition to the interest rate on the Exchange  Notes)
levied   by  any  governmental  instrumentality,  subject  to  certain  limited
exceptions.
     
     Notices. Provisions with respect to notices substantially mirror those  of
the  comparable provision within the Shareholder Loan Agreements. See above "--
The Shareholder Loan Agreements--Notices."
     
     Luannan Expropriation Event. Upon notice from a Joint Venture of a Luannan
Expropriation  Event,  Pan-Western  shall  endeavor  to  participate   in   any
proceedings  regarding such an event.  In the event that  Pan-Western  receives
payments  from  a Joint Venture with respect to a Luannan Expropriation  Event,
such proceeds shall be used to prepay the Issuer Loan.
     
     Limitation on Indebtedness. Pan-Western shall not create, or be liable for
any  Indebtedness, except the Issuer Loan and additional loans required by  law
from the Issuer.
     
     Limitation on Liens. Pan-Western shall not create or permit to  exist  any
lien other than as contemplated by the Indentures.
     
     Nature of Business. Pan-Western shall not amend or modify its Articles  of
Association  without  the consent of the Issuer and shall  not  engage  in  any
business other than owning its interest in the Joint Ventures.
     
     Limitation on Sale or Lease of Assets. Pan-Western shall not sell,  lease,
assign, transfer or otherwise dispose of its interests, equity or debt, in  the
Joint Ventures other than as contemplated by the Indentures.
     
     Limitation on Merger, Consolidation, Liquidation, Dissolution. Pan-Western
shall  not merge or consolidate with or into any other Person, other  than  the
Issuer or Pan-Sino.
     
     Limitation on Contingent Liabilities. Pan-Western shall not become  liable
as  a  surety, guarantor, accommodation endorser or otherwise, for or upon  the
obligation of any other Person.
     
     Limitation on Loans, Advances or Investments. Pan-Western shall  not  make
or  permit to remain outstanding any loans, extensions of credit or advances to
or  investments  in  (whether  by acquisition of  any  stock,  notes  or  other
securities  or  obligations) any Person except as  expressly  provided  in  the
Luannan Financing Documents, the Luannan Project Documents, or the Indentures.
     
     Limitations   on  Distributions.  Other  than  as  contemplated   by   the
Indentures,  Pan-Western shall not agree to any restriction on its  ability  to
pay dividends (excluding restrictions imposed by law).
     
     Limitations  on  Transactions  With Affiliates.  Except  for  the  Luannan
Financing  Documents and the Luannan Project Documents, Pan-Western  shall  not
directly  or  indirectly enter into any transaction with any Person  (including
any  affiliate) other than in the ordinary course of business and on terms  not
less favorable to those available from independent third parties.
     
     Limitation  on Partnerships; Subsidiaries. Except as contemplated  by  the
Luannan  Financing Documents, the Luannan Project Documents or the  Indentures,
Pan-Western shall not become a general or limited partner in any partnership or
a  joint venturer in any joint venture, acquire any ownership interest  in  any
other  Person  or enter into any profit-sharing or royalty agreement  or  other
similar  arrangement whereby Pan-Western's income or profits are, or might  be,
shared  with any other Person, or enter into any management contract or similar
arrangement whereby its business or operations are managed by any other Person.
     
     Limitation  on Amendments. Pan-Western shall not amend any of the  Luannan
Financing Documents or the Luannan Project Documents without the consent of the
Issuer.
     
     Limitation on Assignment. Without the prior written consent of the Issuer,
Pan-Western shall not assign or otherwise transfer its rights under any of  the
Luannan Financing Documents or Luannan Project Documents to which it is a party
or governmental approvals to which it is a party to any Person.
     
     Actions  with  Respect  to  the Joint Ventures.   All  matters  under  the
Shareholder  Loan  Agreements which require the consent  or  approval  of  Pan-
Western shall also require the written consent or approval of the Issuer.
     
Issuer Loan Agreement Events of Default

     The occurrence of any of the following events shall constitute an Issuer
Loan Agreement Event of Default:
     
     (i)   default  in  the  payment of principal of or any interest  on  the
           Issuer  Loan  or other amount owed by Pan-Western  to  the  Issuer
           within 15 banking days after such amounts are due;
     
     (ii)  any  representation or warranty confirmed or made in  any  Luannan
           Financing  Documents  or  the Luannan Project  Documents  by  Pan-
           Western  or  in any writing provided by Pan-Western in  connection
           with  the  transactions contemplated by the Issuer Loan  Agreement
           shall  be found to have been incorrect when made or deemed  to  be
           made;  provided, however, that no Issuer Loan Agreement  Event  of
           Default  shall occur if within sixty (60) days after the  date  on
           which  Pan-Western has actual notice that such incorrect statement
           has  occurred,  Pan-Western shall deliver in good  faith,  to  the
           Issuer an officer's certificate stating in reasonable detail  that
           either  (a) Pan-Western has eliminated any adverse effect relating
           to  such  incorrect statement or (b) Pan-Western has taken  action
           that  it  reasonably  believes will eliminate the  adverse  effect
           relating   to   such  incorrect  statement  within  a   reasonable
           specified time;
     
     (iii) failure  of  Pan-Western to perform or observe certain affirmative
           covenants  under  the  Issuer Loan Agreement  (including  but  not
           limited  to, repayment of indebtedness and use of funds) and  such
           defaults  have  not  been remedied after  the  expiration  of  the
           applicable grace period, if any;
     
     (iv)  failure  of  Pan-Western to observe any of the negative  covenants
           under  the Issuer Loan Agreement and such defaults have  not  been
           remedied  prior to the expiration of any applicable cure or  grace
           period;
     
     (v)   voluntary and involuntary bankruptcy or insolvency events of  Pan-
           Western;  subject  to  customary cure and replacement  rights  for
           involuntary bankruptcy;
     
     (vi)  entry of a final judgment or judgments against Pan-Western in  the
           aggregate  amount  of $1.0 million (exclusive of judgment  amounts
           fully   covered  by  insurance  where  the  insured  has  admitted
           liability)  subject  to  customary  payment,  dismissal  or   stay
           rights;
     
     (vii) Pan-Western  shall  default  for a period  beyond  any  applicable
           grace  period in the payment of any principal, interest  or  other
           amount  due under any agreement involving the borrowing  of  money
           or  the advance of credit and the outstanding amount payable under
           all  such  agreements in the aggregate equals or exceeds $500,000;
           and
     
     (viii)any Default under the Shareholder Loan Agreements.
     
                             PLAN OF DISTRIBUTION
                                       
      Each Broker-Dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in  connection  with  any resale  of  such  Exchange  Notes.   This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Broker-Dealer in connection with resales of Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired as result of market
making activities or other trading activities. The Company  and  the Issuer
have agreed to  make available for a period  of  up to 270  days  a prospectus
meeting the requirements of the Securities Act to any Broker-Dealer for use in
connection with any such resale so long as they notify the Issuer or the
Company in writingwithin 30 business days after the consummation of the
Exchange Offer that they have acquired Exchange Notes for their own account. A
broker-dealer that delivers such a prospectus to a purchaser in connection with
resales will be subject to certain of the civil liability provisions under the
Securities Act and will be bound  by  the provisions of the Registration Rights
Agreement (including certain indemnification  provisions).   In addition, until
_____________, 1997 (90 days from the date of this Prospectus),  all  dealers
effecting transactions in the Exchange Notes may be  required to deliver  a
prospectus. See "The Exchange Offer Procedures for Tendering."

      Each  holder  of  Old Notes who wishes to exchange  such  Old  Notes  for
Exchange  Notes  in  the  Exchange  Offer will  be  required  to  make  certain
representations, including representations that (i) any Exchange  Notes  to  be
received by it will be acquired in the ordinary course of its business (whether
or  not  it  is the registered holder of such Exchange Notes), (ii) it  has  no
arrangement  with  any  person to participate in the distribution  (within  the
meaning  of the Securities Act) of the Exchange Notes and (iii) it  is  not  an
Affiliate  of  the  Issuer or the Company, or if it is an  Affiliate,  it  will
comply  with  the  registration  and prospectus delivery  requirements  of  the
Securities Act to the extent applicable.

     Neither the Issuer nor the Company will receive any proceeds from any sale
of Exchange Notes by broker-dealers.  Exchange Notes received by broker-dealers
for  their own account pursuant to the Exchange Offer may be sold from time  to
time  in one or more transactions in the over-the-counter market, in negotiated
transactions,  through  the  writing of options on  the  Exchange  Notes  or  a
combination of such methods of resale, at market prices prevailing at the  time
of  resale, at prices related to such prevailing market prices or at negotiated
prices.  Any  such resale may be made directly to purchasers or to  or  through
brokers  or dealers who may receive compensation in the form of commissions  or
concessions  from  any  such broker-dealer and/or the purchasers  of  any  such
Exchange  Notes.   Any  broker-dealer that resells  Exchange  Notes  that  were
received  by  it  for its own account pursuant to the Exchange  Offer  and  any
broker or dealer that participates in a distribution of such Exchange Notes may
be  deemed to be an "underwriter" within the meaning of the Securities Act  and
any  profit  on  any  such  resale of Exchange Notes  and  any  commissions  or
concessions  received  by  any such persons may be deemed  to  be  underwriting
compensation under the Securities Act.  The Letter of Transmittal  states  that
by acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer  will  not  be  deemed to admit that it is an "underwriter"  within  the
meaning of the Securities Act.

      The Company and the Issuer have agreed to pay all expenses incidental  to
the  Exchange  Offer other than commissions and concessions of any  brokers  or
dealers and will indemnify holders of the Exchange Notes (including any brokers
or  dealers)  against  certain  liabilities, including  liabilities  under  the
Securities Act, as set forth in the Registration Rights Agreement.

                                  EXPERTS                          
Independent Accountants
                                       
      The  consolidated financial statements of the Issuer as of  December  31,
1995  and  1996  and  for  the period from inception (July  20,  1994)  through
December 31, 1994, for the years ended December 31, 1995 and 1996 and  for  the
period  from  inception  (July 20, 1994) through December  31,  1996,  and  the
consolidated  financial statements of the Company as of December 31,  1995  and
1996  and  for  each of the three years in the period ended December  31,  1996
included  in  this  Prospectus have been audited  by  Deloitte  &  Touche  LLP,
independent accounts, as stated in their reports appearing herein.  Deloitte  &
Touche   LLP  has  neither  examined  nor  compiled  the  prospectie  financial
information  appearing  in  the  Prospectus  and  the  Appendices  hereto  and,
accordingly,  does not express an opinion or any other form of  assurance  with
respect thereto.

                                               

Independent Engineers and Consultants
     
	Consolidated Pro Forma

     ICF Resources, Incorporated, a subsidiary of ICF Kaiser International, has
prepared  a  report entitled "Summary of the Consolidated Pro  Forma  of  Panda
Global  Holdings,  Inc.,"  dated April 11, 1997, updated June 6, 1997 (the  
"Consolidated  Pro  Forma Report"), included as Appendix C to this Prospectus. 
The Consolidated Pro Forma Report  is  included  herein in reliance upon such 
firm as experts in energy economics and financial analysis. The Consolidated 
Pro Forma Report should  be read  in its entirety by all prospective investors
for an understanding of  the reliance  placed by ICF on pro forma projections
prepared by Burns &  McDonnell and of the methods of calculating the debt 
coverage ratios projected therein.
     
	Luannan Facility

     Parsons  Brinckerhoff Energy Services, Inc. has prepared a report entitled
"Engineer's  Review  and  Report--2x50 MW Coal-Fired Power  Plant  at  Luannan,
China," dated April 11, 1997, and with an update report dated June 6, 1997  (as
updated,  the  "Luannan Engineering Report"), included as Appendix  D  to  this
Prospectus.  The Luannan Engineering Report is included herein in  reliance  on
such firm as experts in preparing engineering reports for similar projects. The
Luannan  Engineering Report should be read in its entirety by  all  prospective
investors for information with respect to the Luannan Facility and the  related
subjects discussed therein.
     
     Marston  &  Marston  has prepared a report entitled "Review  of  the  Coal
Supply   Arrangements   for  the  Luannan  Power  Project   of   Panda   Energy
International,  Inc.," dated April 11, 1997, and with an  update  report  dated
June 6, 1997 (as updated, the "Luannan Coal Consultant's Report"), included  as
Appendix E to this Prospectus. The Luannan Coal Consultant's Report is included
herein  in  reliance  on such firm as experts in analyzing the  coal  industry,
including  coal  supply and transportation arrangements for  independent  power
projects.  The Luannan Coal Consultant's Report should be read in its  entirety
by  all  prospective  investors for information with  respect  to  the  Luannan
Facility and the related subjects discussed therein.

	Rosemary Facility

     Burns   &   McDonnell  has  prepared  a  report  entitled  "Panda-Rosemary
Cogeneration  Project Condition Assessment Report," dated April 11,  1997,  and
with an update report dated June 6, 1997 (as updated, the "Rosemary Engineering
Report"). The Rosemary Engineering Report is summarized herein in reliance upon
such  firm as experts in preparing independent engineering reports for  similar
projects.  The  Rosemary  Engineering Report is filed  as  an  exhibit  to  the
Registration  Statement on Form S-1, filed with the Commission, of  which  this
Prospectus forms a part.
     
     Benjamin  Schlesinger and Associates, Inc. has prepared a report  entitled
"Assessment  of  Fuel Price, Supply and Delivery Risks for  the  Panda-Rosemary
Cogeneration Project," dated September 20, 1996, as updated on April  11,  1997
and   as  further  updated  June  6,  1997  (as  updated,  the  "Rosemary  Fuel
Consultant's  Report").  The Rosemary Fuel Consultant's  Report  is  summarized
herein  in  reliance upon such firm as experts in preparing  fuel  consultant's
reports for similar projects. The Rosemary Fuel Consultant's Report is filed as
an exhibit to the Registration Statement on Form S-1 filed with the Commission,
of which this Prospectus forms a part.
     
	Brandywine Facility

     ICF  Resources Incorporated, a subsidiary of ICF Kaiser International, has
prepared   a   report   entitled   "Independent  Panda-Brandywine   Pro   Forma
Projections,"  dated April 11, 1997, and with an update report  dated  June  6,
1997  (as updated, the "Brandywine Pro Forma Report"). The Brandywine Pro Forma
Report  is  summarized  herein in reliance on such firm as  experts  in  energy
economics and financial analysis. The Brandywine Pro Forma Report is  filed  as
an  exhibit  to  the  Registration  Statement  on  Form  S-1,  filed  with  the
Commission, of which this Prospectus forms a part.
     
     Pacific  Energy Systems, Inc. has prepared a report entitled  "Independent
Engineer's Report Panda-Brandywine Cogeneration Project," dated July 22,  1996,
as  updated on April 11, 1997, and as further updated June 6, 1997 (as updated,
the  "Brandywine  Engineering Report"). The Brandywine  Engineering  Report  is
summarized  herein in reliance on such firm as experts in preparing independent
engineering reports for similar projects. The Brandywine Engineering Report  is
filed  as an exhibit to the Registration Statement on Form S-1, filed with  the
Commission, of which this Prospectus forms a part.
     
     C.C.   Pace  Resources,  Inc.  has  prepared  a  report  entitled  "Panda-
Brandywine, L.P. Generating Facility Fuel Consultant's Report," dated  July  2,
1996,  as  updated on April 11, 1997, and as further updated June 6,  1997  (as
updated,  the  "Brandywine  Fuel Consultant's Report").   The  Brandywine  Fuel
Consultant's Report is summarized herein in reliance upon such firm as  experts
in  preparing  fuel consultant's reports for similar projects.  The  Brandywine
Fuel  Consultant's Report is filed as an exhibit to the Registration  Statement
on Form S-1, filed with the Commission, of which this Prospectus forms a part.
     
                                 LEGAL MATTERS
     
     The  validity of the issuance of the Exchange Notes is being  passed  upon
for  the Issuer, the Company and the Joint Ventures by Chadbourne & Parke  LLP.
Certain  legal matters with respect to PRC law are being passed  upon  for  the
Issuer,  the Company and the Joint Ventures by Cai, Zhang & Lan. Certain  legal
matters  with respect to the Cayman Islands law are being passed upon  for  the
Issuer and the Company by Maples & Calder.

                          INDEX TO FINANCIAL STATEMENTS

FINANCIAL STATEMENTS OF THE COMPANY:

Panda Global Holdings, Inc. and Subsidiaries Consolidated Financial Statements:

   Independent Accountants' Report .....................................    F-3

   Consolidated Balance Sheets as of December 31, 1995 and 1996 ........    F-4

   Consolidated Statements of Operations for the years ended
     December 31, 1994, 1995 and 1996 ..................................    F-5

   Consolidated Statements of Shareholder's Deficit for the years
     ended December 31, 1994, 1995 and 1996 ............................    F-6

   Consolidated Statements of Cash Flows for the years ended
     December 31, 1994, 1995 and 1996 ..................................    F-7

   Notes to Consolidated Financial Statements for the years ended
     December 31, 1994, 1995 and 1996 ..................................    F-8

Panda Global Holdings, Inc. and Subsidiaries Unaudited Condensed
Consolidated Financial Statements:

   Condensed Consolidated Balance Sheets as of December 31, 1996
     and March 31, 1997 ................................................    F-21

   Condensed Consolidated Statements of Operations for the three
     months ended March 31, 1996 and 1997 ..............................    F-22

   Condensed Consolidated Statements of Shareholder's Deficit for
     the three months ended March 31, 1997 .............................    F-23

   Condensed Consolidated Statements of Cash Flows for the three
     months ended March 31, 1996 and 1997 ..............................    F-24

   Notes to Condensed Consolidated Financial Statements for the
     three months ended March 31, 1996 and 1997 ........................    F-25

                                       F-1
INDEX TO FINANCIAL STATEMENTS - CONTINUED

FINANCIAL STATEMENTS OF THE ISSUER:

Panda Global Energy Company and Subsidiaries Consolidated Financial Statements:

   Independent Accountants' Report ......................................   F-27

   Consolidated Balance Sheets as of December 31, 1995 and 1996  ........   F-28

   Consolidated Statements of Operations for the period from
     inception (July 20, 1994) through December 31, 1994, the
     years ended December 31, 1995 and 1996, and the period
     from inception through December 31, 1996 ...........................   F-29

   Consolidated Statements of Cash Flows for the period from
     inception (July 20, 1994) through December 31, 1994, the
     years ended December 31, 1995 and 1996, and the period
     from inception through December 31, 1996 ...........................   F-30

   Consolidated Statements of Shareholder's Deficit for the
     period from inception (July 20, 1994) through December
     31, 1994 and the years ended December 31, 1995 and 1996 ............   F-31

   Notes to Consolidated Financial Statements for the period
     from inception (July 20, 1994) through December 31, 1994,
     the years ended December 31, 1995 and 1996, and the
     period from inception through December 31, 1996 ....................   F-32

Panda Global Energy Company and Subsidiaries Unaudited
Condensed Consolidated Financial Statements:

   Condensed Consolidated Balance Sheets as of December 31,
     1996 and March 31, 1997 ............................................   F-34

   Condensed Consolidated Statements of Operations and
     Deficit Accumulated During the Development Stage for
     the three months ended March 31, 1996 and 1997 and
     for the period from inception (July 20, 1994) through
     March 31, 1997 .....................................................   F-35

   Condensed Consolidated Statements of Cash Flows for the
     three months ended March 31, 1996 and 1997 and for the
     period from inception (July 20, 1994) through March 31, 1997 .......   F-36

   Notes to Condensed Consolidated Financial Statements for
     the three months ended March 31, 1996 and 1997 and for
     the period from inception (July 20, 1994) through March 31, 1997 ...   F-37

                                       F-2
INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors
of Panda Energy International, Inc.

We have audited the accompanying consolidated balance sheets of Panda Global
Holdings, Inc. and subsidiaries (the "Company") as of December 31, 1995 and
1996, and the related consolidated statements of operations, shareholder's
deficit and cash flows for each of the three years in the period ended December
31, 1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1995
and 1996, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Dallas, Texas
April 9, 1997

                                       F-3
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1995 AND 1996

                                     ASSETS
                                                     1995             1996
                                                 -------------    -------------
Current Assets:
   Cash and cash equivalents .................   $   1,166,385    $   1,335,086
   Restricted cash -- current ................       1,876,142       17,809,921
   Accounts receivable .......................       5,199,999        9,402,685
   Fuel oil, spare parts and supplies ........       3,084,168        7,913,777
   Other current assets ......................          12,664          164,905
                                                 -------------    -------------
      Total current assets ...................      11,339,358       36,626,374

Plant and equipment:
   Electric generating facilities ............     105,168,094      288,716,711
   Furniture and fixtures ....................          29,080          494,418
   Less accumulated depreciation .............     (21,008,036)     (26,539,539)
   Construction in progress ..................     132,604,494             --
   Development costs .........................       3,350,924        6,053,361
                                                 -------------    -------------
      Total plant and equipment, net .........     220,144,556      268,724,951

Restricted cash -- debt service
   reserves and escrow deposits ..............      10,947,948       32,548,366
Debt issuance costs, net of accumulated
   amortization of $3,169,285 and
   $165,015, respectively ....................       3,990,655        7,570,521
Partnership formation costs, net of
   accumulated amortization of $2,132,440
   and $2,665,540 respectively ...............         533,100             --
                                                 -------------    -------------
                                                 $ 246,955,617    $ 345,470,212
                                                 =============    =============

                     LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
   Accounts payable and accrued expenses:
      Construction costs .....................   $   5,597,818    $     660,167
      Interest and letter of credit fees .....       2,540,347        6,297,558
      Operating expenses and other ...........       1,219,061        6,991,796
   Current portion of long-term debt .........       9,100,000        5,717,623
                                                 -------------    -------------
      Total current liabilities ..............      18,457,226       19,667,144

Long term debt, less current portion .........     234,608,361      209,830,918
Capital lease obligation .....................            --        217,488,645
Minority interest ............................      36,835,666             --
Commitments and contingencies
   (Notes 2, 5 and 8) ........................            --               --
Shareholder's deficit:
   Common stock, par value $.01; 1,000
      shares authorized, issued and
      outstanding ............................              10               10
   Advances to parent ........................     (26,869,548)     (52,782,940)
   Accumulated deficit .......................     (16,076,098)     (48,733,565)
                                                 -------------    -------------
      Total shareholder's deficit ............     (42,945,636)    (101,516,495)
                                                 -------------    -------------
                                                 $ 246,955,617    $ 345,470,212
                                                 =============    =============

          See accompanying notes to consolidated financial statements.

                                       F-4
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1994           1995           1996
                                                   ------------   ------------   ------------
Revenue:
   Electric capacity and energy sales ...........  $ 30,664,096   $ 29,858,475   $ 32,273,736
   Steam and chilled water sales ................       650,575        473,040        502,757
   Interest income ..............................       602,783        895,268      1,518,006
                                                   ------------   ------------   ------------
                                                     31,917,454     31,226,783     34,294,499
                                                   ------------   ------------   ------------

Expenses:
   Plant operating expenses .....................     8,940,146      9,347,707     12,050,495
   Project development and administrative .......     1,779,349      2,550,376      5,187,348
   Interest expense and letter of credit fees ...    11,017,418     11,715,929     19,414,012
   Depreciation .................................     4,208,314      4,209,453      5,531,502
   Amortization of debt issuance costs ..........       600,382        554,311        493,799
   Amortization of partnership formation costs ..       533,116        533,116        533,100
                                                   ------------   ------------   ------------
                                                     27,078,725     28,910,892     43,210,256
                                                   ------------   ------------   ------------

Income (loss) before minority interest
  and extraordinary item ........................     4,838,729      2,315,891     (8,915,757)
Minority interest ...............................    (5,699,994)    (5,047,580)    (2,405,160)
                                                   ------------   ------------   ------------
Loss before extraordinary item ..................      (861,265)    (2,731,689)   (11,320,917)
Extraordinary item - loss on
  early extinguishment of debt ..................          --             --      (21,336,550)
                                                   ------------   ------------   ------------

Net loss ........................................  $   (861,265)  $ (2,731,689)  $(32,657,467)
                                                   ============   ============   ============
See accompanying notes to consolidated financial statements.

                                       F-5
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDER'S DEFICIT
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
Total
                             Common     Advances     Accumulated    Shareholder's
                              Stock    to Parent       Deficit        Deficit
                            --------  ------------   ------------   -------------
Balance, January 1, 1994 .  $     10  $ (8,152,454)  $(12,483,144)  $ (20,635,588)
Advances to parent .......      --      (5,712,475)          --        (5,712,475)
Net loss .................      --            --         (861,265)       (861,265)
                            --------  ------------   ------------   ------------- 
Balance, December 31, 1994        10   (13,864,929)   (13,344,409)    (27,209,328)
Advances to parent .......      --     (13,004,619)          --       (13,004,619)
Net loss .................      --            --       (2,731,689)     (2,731,689)
                            --------  ------------   ------------   ------------- 
Balance, December 31, 1995        10   (26,869,548)   (16,076,098)    (42,945,636)
Advances to parent .......      --     (25,913,392)          --       (25,913,392)
Net loss .................      --            --      (32,657,467)    (32,657,467)
                            --------  ------------   ------------   ------------- 
Balance, December 31, 1996  $     10  $(52,782,940)  $(48,733,565)  $(101,516,495)
                            ========  ============   ============   =============
See accompanying notes to consolidated financial statements.

                                       F-6
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1994            1995            1996
                                                       ------------   -------------   -------------
OPERATING ACTIVITIES:
   Net loss .........................................  $   (861,265)  $  (2,731,689)  $ (32,657,467)
   Adjustments to reconcile net loss to net cash
   provided by  operating activities:
      Loss on early extinguishment of debt ..........          --              --        21,336,550
      Minority interest .............................     5,699,994       5,047,580       2,405,160
      Depreciation ..................................     4,208,314       4,209,453       5,531,502
      Amortization of debt issuance costs ...........       600,382         554,311         493,799
      Amortization of partnership formation costs ...       533,116         533,116         533,100
      Amortization of loan discount and deferred
       interest .....................................          --           124,176         391,491
   Changes in assets and liabilities:
      Accounts receivable ...........................    (2,454,524)        460,319      (4,202,686)
      Fuel oil, spare parts and supplies ............       (33,698)        261,516      (4,829,609)
      Other current assets ..........................         6,646          26,484        (152,241)
      Accounts payable and accrued expenses .........      (114,382)        (81,728)      9,529,946
                                                       ------------   -------------   -------------
            Net cash provided by operating activities     7,584,583       8,403,538      (1,620,455)
                                                       ------------   -------------   -------------
INVESTING ACTIVITIES:
   Restricted cash-current ..........................     2,847,429         695,684     (15,933,779)
   Additions to plant and equipment .................    (5,045,085)   (124,109,566)    (62,881,838)
   Acquisition of minority interest .................          --              --       (34,256,423)
   Increase in restricted cash -- debt service
       reserves and escrow deposits .................      (457,538)       (747,655)    (21,600,418)
                                                       ------------   -------------   -------------
         Net cash used in investing activities ......    (2,655,194)   (124,161,537)   (134,672,458)
                                                       ------------   -------------   -------------
FINANCING ACTIVITIES:
   Distributions to minority interest owner .........    (4,590,354)     (3,800,279)     (1,152,113)
   Advances to parent ...............................    (6,954,287)    (13,004,619)    (25,913,392)
   Proceeds from long-term debt .....................    16,534,706     147,541,291     299,677,926
   Repayment of long-term debt ......................    (7,500,000)    (17,500,000)   (128,415,271)
   Debt issuance costs ..............................      (498,281)       (334,391)     (7,735,536)
                                                       ------------   -------------   -------------
         Net cash provided by (used in)
          financing activities ......................    (3,008,216)    112,902,002     136,461,614
                                                       ------------   -------------   -------------

Increase (decrease) in cash and cash equivalents ....     1,921,173      (2,855,997)        168,701

Cash and cash equivalents, beginning of period ......     2,101,209       4,022,382       1,166,385
                                                       ------------   -------------   -------------

Cash and cash equivalents, end of period ............  $  4,022,382   $   1,166,385   $   1,335,086
                                                       ============   =============   =============

SUPPLEMENTAL CASH FLOW INFORMATION:
   Interest paid, net of amounts capitalized ........  $ 10,855,819   $  11,799,297   $  15,656,801

NON CASH INVESTING AND FINANCING ACTIVITIES:
   Accrued construction costs .......................  $  1,489,412   $   5,597,818   $     660,167
   Interest cost ....................................          --           153,861         172,924
   Debt discount ....................................     1,241,812            --              --
See accompanying notes to consolidated financial statements.

                                       F-7
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

1. ORGANIZATION AND BASIS OF PRESENTATION

      Panda Global Holdings, Inc. ("Panda Global", or collectively with its
subsidiaries the "Company"), a wholly owned subsidiary of Panda Energy
International, Inc. ("PEII"), was formed in March 1997 to hold the ownership
interests in four independent power projects which were formerly owned by other
wholly owned subsidiaries of PEII. The ownership interests were transferred to
the Company at PEII's historical cost. Because the transfers occurred between
entities under common control, the transactions have been accounted for in a
manner similar to a pooling of interests. Panda Global has two direct wholly
owned subsidiaries: Panda Energy Corporation ("PEC")( a Texas corporation) which
indirectly holds the Company's ownership interests in domestic projects, and
Panda Global Energy Company ("Global Cayman")(a Cayman Islands company), which
indirectly holds the Company's ownership interest in an international project
located in China.

      PEC, through its wholly owned subsidiary Panda Interfunding Corporation
("PIC") and PIC's wholly owned subsidiary Panda Interholding Corporation
("Interholding"), holds the Company's ownership interests in the Rosemary
project and the Brandywine project (see Note 5). The entities holding such
ownership interests include the following: Panda Rosemary Corporation ("PRC"), a
91% general partner in Panda-Rosemary, L.P. ("Panda-Rosemary"); PRC II
Corporation ("PRC II"), a 9% limited partner in Panda- Rosemary; Panda
Brandywine Corporation, a 50% general partner in Panda-Brandywine, L.P.
("Panda-Brandywine"); Panda Energy Corporation (a Delaware corporation), a 50%
limited partner in Panda-Brandywine; and Brandywine Water Company. The Company,
through its general and limited partnership interests, owns 100% of
Panda-Brandywine and, as of July 31, 1996, owns 100% of Panda-Rosemary. Prior to
July 31, 1996, the Company owned 10% of Panda-Rosemary (see Note 5). The
Rosemary and Brandywine projects are located in the United States. Other direct
or indirect wholly owned subsidiaries of PIC include Panda Funding Corporation
("PFC"), Panda-Rosemary Funding Corporation ("PRFC") and Panda Cayman
Interfunding Corporation ("PIC Cayman"), which have been formed to facilitate
the financing of the development and acquisition of independent power projects.

      Additionally, PEC holds the Company's 100% ownership interest in the
Kathleen project (see Note 5) through its wholly owned subsidiaries.

      Global Cayman (which collectively with its subsidiaries is a development
stage enterprise having no operating revenues) holds a 95.5% ownership interest
in Pan-Sino Energy Development Company LLC ("Pan-Sino")(a Cayman Islands
company), which in turn holds a 99% ownership interest in Pan-Western Energy
Corporation LLC ("Pan-Western")(a Cayman Islands company), which in turn owns an
approximately 88% interest in four joint venture companies (the "Joint Venture
Companies") organized under the laws of the People's Republic of China ("China")
to develop and construct an independent power project to be located in China
(see Note 5). The Joint Venture Companies are: Tangshan Panda Heat and Power
Company, Ltd. ("Tangshan Panda"), Tangshan Pan-Western Heat and Power Company,
Ltd. ("Tangshan Pan-Western"), Tangshan Cayman Heat and Power Company, Ltd.
("Tangshan Cayman") and Tangshan Pan-Sino Heat Company, Ltd. ("Tangshan
Pan-Sino").

	Collectively, PEC, Pan-Sino and Pan-Western are the predecessors 
of the Company.

      All material intercompany accounts and transactions have been eliminated
in consolidation.

2. SIGNIFICANT ACCOUNTING POLICIES

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

      CASH -- Included in cash and cash equivalents are highly liquid
investments with original maturities of three months or less.

      RESTRICTED CASH - CURRENT -- Restricted cash-current represents escrowed
cash which may be used to pay operating expenses and make debt payments and
distributions to partners pursuant to the trust indenture agreements.

                                      F-8
RESTRICTED CASH - DEBT SERVICE RESERVES AND ESCROW DEPOSITS -- Debt
service reserves and escrow deposits include cash held by the bank to pay debt
service and capital improvements pursuant to the trust indenture agreements, or
as collateral for performance guarantees for projects under development or
construction.

      FUEL OIL, SPARE PARTS AND SUPPLIES -- These items include fuel oil stored
on-site and various spare parts and supplies necessary for plant maintenance.
The items are valued at cost using the weighted average method, and are
expensed, as plant operating expenses, when used.

      PLANT AND EQUIPMENT -- Electric generating facility assets are recorded at
cost and depreciated using the straight-line method over the estimated useful
lives of the assets, generally twenty-five years. Depreciation of office
furniture, equipment, and leasehold improvements is provided using the
straight-line method over the estimated useful lives of the assets, generally
three to five years. Costs, including interest on funds borrowed to finance the
construction of facilities, related to projects under construction are
capitalized as construction in progress. Construction in progress balances are
transferred to electric generating facilities when the assets are ready for
their intended use. Capitalized interest was $803,254, $5,793,296 and
$11,055,172 during 1994, 1995 and 1996, respectively. Maintenance and repair
costs are charged to expense as incurred. Costs of developing new projects are
capitalized when the projects reach an advanced stage of development where the
execution of a power purchase agreement has occurred or is imminent. Such costs
include direct incremental amounts incurred for professional services, permits,
options, travel and other related costs. The continued capitalization is subject
to on-going risks related to successful completion, including legal, political,
siting, financing, construction, permitting and contract compliance. Development
costs are transferred to construction in progress when financing has been
obtained and construction activity has commenced, or are expensed at the time
the Company determines that a particular project will no longer be developed.
Other projects currently under development by PEII may be transferred to the
Company at PEII's historical cost when construction financing has been obtained
or when the completed projects have commenced commercial operations, subject to
certain limitations in the Company's indentures (see Note 6).

      DEBT ISSUANCE COSTS -- The costs related to the issuance of debt are
capitalized and amortized using the effective interest method over the term of
the related debt.

      PARTNERSHIP FORMATION COSTS -- The costs related to the formation of
Panda-Rosemary are capitalized and amortized over five years.

      ENVIRONMENTAL MATTERS -- The operations of the Company are subject to
federal, state and local laws and regulations relating to protection of the
environment. Although the Company believes that its operations are in compliance
with applicable environmental regulation, risks of additional costs and
liabilities are inherent in cogeneration operations, and there can be no
assurance that significant costs and liabilities will not be incurred by the
Company. Management is not aware of any contingent liabilities that currently
exist with respect to environmental matters.

      Environmental expenditures are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue generation, are expensed.
Liabilities are recorded if environmental assessments and/or remedial efforts
become probable, and the costs reasonably estimable.

      REVENUE RECOGNITION -- Revenue generated from the sale of electric
capacity and energy from the Rosemary and Brandywine projects is recognized
based on the amount billed under the power purchase agreements. The revenue
generated from the sale of electric capacity and energy from other projects will
be recognized based on the lesser of the amount billable under the power
purchase agreement or an amount determined by the annual kilowatts made
available multiplied by the estimated average revenue per kilowatt over the term
of the power purchase agreement. Revenue from the sale of steam and chilled
water is recognized based on the output delivered at rates specified under
contract terms.

      INCOME TAXES -- The Company records income taxes according to Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS 109)
which requires deferred tax liabilities or assets to be recognized for the
anticipated future tax effects of temporary differences that arise as a result
of the differences in the carrying amounts and the tax bases of assets and
liabilities. SFAS 109 also requires a valuation allowance for deferred tax
assets in certain circumstances.

      The Company is included in the consolidated federal income tax return of
PEII. PEII's policy is to allocate income tax expense or benefits to the Company
as if it filed a separate tax return.

                                      F-9
ALLOCATION OF ADMINISTRATIVE COSTS -- PEII performs certain accounting,
legal, insurance, and consulting services for the Company. These general and
administrative costs are generally allocated to the Company using the percentage
of time PEII personnel spent performing these services. The expenses allocated
were $1,003,353, $1,599,200 and $3,308,000 in 1994, 1995 and 1996, respectively,
and are included in project development and administrative expenses in the
statement of operations. Management believes the method used to allocate these
costs is reasonable.

      NEW ACCOUNTING PRONOUNCEMENTS -- In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" (SFAS 121). SFAS 121 is effective for financial statements for
fiscal years beginning after December 15, 1995 and requires the write-down of
certain long-lived assets if circumstances indicate that the carrying value of
those assets may not be recoverable. The Company adopted SFAS 121 in 1996 and
such adoption did not have a material impact on its financial position or
results of operations.

      INTEREST COST -- Total interest cost incurred, including capitalized
interest, was $11,820,672, $17,509,225 and $30,469,184 in 1994, 1995 and 1996,
respectively.

3.  ADVANCES TO PARENT

      Advances to parent represent cash advances to the parent, allocations of
general and administrative expenses from the parent, and the excess of
liabilities assumed over the assets contributed on projects owned by the parent
and contributed in connection with the formation of the Company.

      The advances to parent for the years ended December 31, 1994, 1995 and
1996 consist of the following:

       Balance, January 1, 1994 .........................  $  8,152,454
       Cash advanced to parent, net .....................     7,957,640
       Administrative  costs allocated from parent ......    (1,003,353)
       Debt discount allocated from parent ..............    (1,241,812)
                                                           ------------

       Balance, December 31, 1994 .......................    13,864,929
       Cash advanced to parent, net .....................    14,603,819
       Administrative  costs allocated from parent ......    (1,599,200)
                                                           ------------

       Balance, December 31, 1995 .......................    26,869,548
       Cash advanced to parent, net .....................    29,221,392
       Administrative costs allocated from parent .......    (3,308,000)
                                                           ------------

       Balance, December 31, 1996 .......................  $ 52,782,940
                                                           ============

      The average balance of advances to parent was $11,009,000, $20,367,000 and
$39,826,000 during 1994, 1995 and 1996, respectively.

4. FUEL OIL, SPARE PARTS AND SUPPLIES

      Fuel oil, spare parts and supplies are comprised of the following amounts:

                                                1995        1996
                                             ----------  ----------
             Fuel oil .....................  $1,182,310  $3,496,269
             Spare parts and supplies .....   1,901,858   4,417,508
                                             ----------  ----------
                       Total ..............  $3,084,168  $7,913,777
                                             ==========  ==========

                                      F-10
5. POWER PROJECTS

      ROSEMARY PROJECT -- Effective May 5, 1989, PEII formed a wholly-owned
subsidiary, now a wholly-owned subsidiary of the Company, to develop, construct,
and operate the 180 megawatt gas-fired Rosemary cogeneration facility in Roanoke
Rapids, North Carolina ("Rosemary Project"). Construction on the Rosemary
Project began in September 1989, and commercial operation of the facility began
on December 27, 1990.

      The Rosemary Project produces both electricity and useful thermal energy
in the form of steam. Electric capacity and energy sales are based on the terms
of the power purchase agreement between Panda-Rosemary and Virginia Electric
Power Company ("VEPCO") dated January 24, 1989. The agreement requires
Panda-Rosemary to provide VEPCO with all the available capacity of the Rosemary
Project on an as-needed basis with VEPCO obligated to pay for the power
delivered and dependable capacity of the facility at a rate per kilowatt which
decreases in certain periods as defined by the agreement. The term of the
agreement is 25 years and it expires December 2015. A financial institution has
provided a letter of credit for approximately $5 million guaranteeing
Panda-Rosemary's performance under the power purchase agreement. Steam and
chilled water are sold to a third party under a separate agreement which also
has a term of 25 years and expires December 2015. The Rosemary Project is
managed by PRC, the general partner, and is operated by an unrelated third party
through 1996.

      On January 6, 1992, PRC contributed substantially all project assets and
liabilities and $216,553 in cash to Panda-Rosemary, in exchange for a 10%
combined general partnership and limited partnership interest. The assets and
liabilities were recorded at historical cost, resulting in $19,874,216 in
partners' deficit being contributed by PRC. An institutional investor
("Investor") contributed $30,948,987 in cash in exchange for a 90% limited
partnership interest. On July 31, 1996, the Company acquired the Investor's
limited partnership interest in Panda-Rosemary for a purchase price of
approximately $34.3 million. As a result of this acquisition, the Company owns
100% of Panda-Rosemary. The acquisition was accounted for using the purchase
method of accounting. The excess of minority interest over the purchase price
(approximately $3.8 million) was allocated to plant and equipment.

      Prior to July 31, 1996, the Investor received percentage allocations of
income, expense, and cash flow which would decline over time if certain rate of
return requirements were achieved. For the duration of the Investor's
participation in Panda-Rosemary, the allocation to the Investor remained at 90%.

      Prior to acquiring the Investor's 90% limited partnership interest on July
31, 1996, the Company controlled Panda-Rosemary through its one percent general
partner interest. As general partner, the Company has exclusive management
authority over the operations of Panda-Rosemary. Accordingly, Panda-Rosemary's
balance sheet as of December 31, 1995, and statements of operations and of cash
flows for the years ended December 31, 1994 and 1995 and for the period January
1, 1996 through July 31, 1996 (in addition to the post-acquisition period) have
been consolidated in the accompanying financial statements. The capital of the
Investor and Panda-Rosemary's net income allocated to the Investor are presented
as minority interest in the accompanying financial statements.

      BRANDYWINE PROJECT -- On August 9, 1991, Panda-Brandywine entered into a
power purchase agreement with Potomac Electric Power Company ("PEPCO") to build
a 230 megawatt gas-fired facility ("Brandywine Project"). The agreement requires
Panda-Brandywine to supply PEPCO with all available capacity from the facility
for the 25-year term of the agreement with a guaranteed dispatch level of at
least 60 hours per week for the first 15 years. The Brandywine Project, in
Brandywine, Maryland, constructed by Raytheon Engineers and Constructors, Inc.
under a fixed fee, turn-key contract was substantially completed and commenced
commercial operations in October, 1996. A construction loan commitment in the
amount of $215 million was provided by General Electric Capital Corporation
("GECC") in April, 1995. On December 30, 1996 the loan converted to a capital
lease with GECC in the amount of $217.5 million with a twenty year term and two
five year renewal options (see Note 6). GECC has provided letters of credit for
approximately $2.3 million guaranteeing Panda-Brandywine's performance under the
agreement. GECC has committed to increase the amount available under letters of
credit to a maximum of approximately $7.3 million under certain circumstances.

      KATHLEEN PROJECT -- In 1991, through a wholly-owned subsidiary, the
Company entered into a 30-year power purchase agreement with Florida Power
Corporation ("Florida Power") to build a 75 megawatt gas-fired facility near
Lakeland, Florida ("Kathleen Project"). The Company and Florida Power are
engaged in litigation before various state and federal forums in Florida over
the interpretation of the Kathleen power purchase agreement (see Note 8). Actual
construction of the Kathleen Project has not yet commenced and is subject to the
outcome of the related litigation and the successful completion of financing.

                                      F-11
The Company has incurred development costs for the Kathleen Project of $2.8
million as of December 31, 1996, which are included in plant and equipment under
development costs in the accompanying balance sheet.

      LUANNAN PROJECT -- In 1994, PEII entered into a preliminary letter of
intent with a subsidiary of the North China Power Group Company ("NCPGC") for
the purchase and sale of electric energy from two 50 megawatt coal-fired
cogeneration plants to be located in Luannan County, Tangshan Municipality,
Hebei Province, China ("Luannan Project"). On September 22, 1995, Tangshan Panda
and Tangshan Pan-Western (see Note 1) entered into a Power Purchase Agreement
with NCPGC for the purchase and sale of electric energy from the Luannan
Project. Under the terms of the 20-year agreement, all electrical output of the
project will be sold to NCPGC. The steam and hot water generated by
Tangshan-Cayman's facility within the project will be sold to the domestic
Chinese industrial and commercial markets by Tangshan Pan-Sino. The Luannan
Project will be constructed pursuant to a fixed-price, turnkey contract with
Harbin Power Engineering Company Limited, subject to escalation under certain
circumstances. Preliminary construction activity commenced in December 1996.
Commencement of full construction activity is subject to the successful
completion of financing. The Company has incurred development costs for the
Luannan Project of $3.3 million as of December 31, 1996, which are included in
plant and equipment under development costs in the accompanying balance sheet.

      The Luannan Project is subject to political, regulatory and economic
uncertainties, risks of expropriation of property and cancellation or
modification of contract rights, foreign exchange restrictions, construction
risk, dependence on limited number of customers and other risks arising from
foreign governmental sovereignty.

6. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION

      Long-term debt and capital lease obligation of the Company as of December
31, 1995 and 1996 are summarized as follows:

                                                      1995             1996
                                                  -------------   -------------

Taxable Revenue Bonds for Rosemary Project .....  $  90,000,000   $        --
Construction Loan for Brandywine Project .......    134,735,719            --
Term Loan with TCW, net of discount ............     18,972,642            --
First Mortgage Bonds for Rosemary Project ......           --       110,023,541
Series A Bonds .................................           --       105,525,000
                                                  -------------   -------------
Total long-term debt ...........................    243,708,361     215,548,541
Less current portion ...........................     (9,100,000)     (5,717,623)
                                                  -------------   -------------
                                                  $ 234,608,361   $ 209,830,918
                                                  =============   =============

Capital lease obligation for Brandywine Project   $        --     $ 217,488,645

      TAXABLE REVENUE BONDS -- In October 1989, PRC obtained long-term financing
for the Rosemary Project in the form of $116 million of taxable revenue bonds
("Tax Bonds") issued by the Halifax Regional Economic Development Corporation
("Halifax"), a nonprofit corporation organized in North Carolina. In connection
with the issuance of first mortgage bonds for the Rosemary Project in July 1996
as discussed below, the Company refinanced the Tax Bonds and incurred a loss of
$13.3 million on the early extinguishment of that obligation. The Tax Bonds bore
interest at a fixed rate of 9.25% payable semiannually. Scheduled principal
payments began on October 1, 1991. Such principal and interest payments paid by
Panda-Rosemary to Halifax were used to make required payments on the Tax Bonds.

      The Tax Bonds were fully guaranteed by an irrevocable, direct-pay letter
of credit issued by The Fuji Bank, Limited, Houston Agency ("Fuji"). The letter
of credit had a term equal to the term of the Tax Bonds and included annual fees
of .9375% for years 1-5, 1.3125% for years 6-10, and 1.6875% thereafter.

      FIRST MORTGAGE BONDS -- In July 1996, Panda-Rosemary Funding Corporation
("PRFC"), a wholly-owned subsidiary of Panda-Rosemary, issued $111,400,000 of
first mortgage bonds ("Rosemary Bonds"). The Rosemary Bonds bear interest at a
fixed rate of 8-5/8% payable quarterly commencing November 15, 1996. Scheduled
principal payments are required quarterly commencing November 15, 1996, and will
continue through maturity on February 15, 2016. The Rosemary Bonds are subject

                                      F-12
to mandatory redemption prior to maturity under certain conditions. The Rosemary
Bonds are unconditionally guaranteed by Panda-Rosemary but are non-recourse to
the Company, and are secured by substantially all of the assets of
Panda-Rosemary as well as all of the outstanding capital stock of PRC, PRC II
and PRFC. The indenture contains certain covenants, including limitations on
distributions, additional debt and certain other transactions.

      While amounts are outstanding under the Rosemary Bonds, all revenues of
Panda-Rosemary are paid to a collateral agent. Funds held by the collateral
agent are included in the accompanying consolidated balance sheets as restricted
cash-current. On a monthly basis, the collateral agent remits to Panda-Rosemary
remaining funds available after payment of all expenditures relating to the
Rosemary project, including debt service, provided that Panda-Rosemary is in
compliance with the debt covenants. Additionally, the collateral agent withholds
funds to meet future debt service, maintenance and pollution control
requirements, if required under the indenture. These amounts are included in the
accompanying consolidated balance sheets as restricted cash-current and
restricted cash-debt service reserves and escrow deposits.

      TERM LOAN -- On October 27, 1995, PEII obtained a term loan in the amount
of $20 million from Trust Company of the West ("TCW"). This loan amended and
restated the loan agreement dated November 8, 1994. In July 1996, in connection
with the offering of Series A Bonds as discussed below, a portion of the
proceeds was used to retire all of the term loan debt. The Company incurred a
loss of $8 million on the early extinguishment of this obligation. The loan bore
interest at a rate of 13.5%, payable at a rate of 11.0%. The 2.5% interest not
payable currently was added to the principal balance of the loan.

      Under the loan agreement, TCW also received 1,004,000 warrants to purchase
shares of PEII stock. A loan discount of $1,241,812 was created as a result of
allocating value to the warrants. The carrying value of the warrants is adjusted
annually to the redemption price. Such adjustment, which was allocated to the
Company from PEII until the debt was retired in July 1996, was $153,861 and
$172,924 in 1995 and 1996, respectively, and was recorded as interest expense in
the accompanying statement of operations.

      SERIES A BONDS -- In July 1996, Panda Funding Corporation ("PFC"), a
wholly-owned subsidiary of the Company, issued $105,525,000 of pooled project
bonds ("Series A Bonds"). The Series A Bonds bear interest at a fixed rate of
11-5/8% payable semiannually commencing February 20, 1997. Scheduled principal
payments are required semiannually commencing February 20, 1997 and will
continue through maturity on August 20, 2012. The Series A Bonds are subject to
mandatory redemption prior to maturity under certain conditions. The Series A
Bonds are fully and unconditionally guaranteed by PIC and are guaranteed on a
limited basis by Interholding up to a maximum amount specified by the guarantee
agreement which approximates $25.1 million at December 31, 1996. Additionally,
the Series A Bonds are secured by (i) all of the capital stock of PFC, PIC and
Interholding, (ii) 60% of the capital stock of PIC Cayman, (iii) PIC's interest
in distributions from Interholding, and (iv) certain other collateral. The
Series A Bonds are effectively subordinated to the obligations of PIC's
subsidiaries under project-level financing arrangements. The indenture contains
certain covenants, including limitations on distributions, additional debt and
certain other transactions.

      While amounts are outstanding under the Series A Bonds, all distributions
to PIC from Interholding and certain proceeds received from PIC Cayman will be
paid to a collateral agent. On a monthly basis, the collateral agent will remit
to PIC remaining funds available after satisfaction of PIC's debt service
obligations (including amounts withheld, if necessary, to meet future debt
service and reserve fund requirements as required by the indenture) provided
that PIC is in compliance with the debt covenants.

      In connection with the issuance of the Series A Bonds, the Company
advanced approximately $34.8 million to PEII for project development and general
corporate purposes.

      CONSTRUCTION LOAN AND CAPITAL LEASE -- On April 10, 1995, Panda-Brandywine
closed the initial funding of a $215 million construction loan commitment with
GECC. The construction loan bears an interest rate of the Eurodollar rate plus
2.5%. The construction loan provides for commitments under letters of credit
aggregating approximately $12.4 million of which approximately $5.4 million was
outstanding as of December 31, 1995. The letters of credit have terms up to the
terms of the lease, an annual fee of 1.50% on any amounts outstanding and 1.25%
on the unused commitment and are collateralized by the Brandywine Project.

      The Brandywine Project commenced commercial operations on October 31,
1996. The construction loan was converted to long-term non-recourse financing of
$217.5 million in the form of a capital lease on December 30, 1996. To effect

                                      F-13
the lease financing, title to the Brandywine Project was transferred to a third
party trustee and leased back to Panda-Brandywine. The Brandywine facility lease
is a net lease with an initial term of 20 years and two five-year renewal
options. The documents governing the lease financing contain various affirmative
and negative covenants, including limitations on the ability of Panda-Brandywine
to make distributions to its partners. In connection with the capital lease
financing, GECC has provided letters of credit of approximately $2.3 million,
which may be increased to approximately $7.3 million under certain
circumstances. The letters of credit have an annual fee of 1.50% on any amounts
outstanding.

      The future minimum lease commitments under the capital lease for the
Brandywine Project are as follows:

            1997 ...................................  $   7,831,527
            1998 ...................................     10,419,439
            1999 ...................................     17,584,915
            2000 ...................................     20,489,320
            2001 ...................................     25,613,918
            Thereafter .............................    501,415,526
                                                      -------------
            Total minimum lease payments ...........    583,354,645
            Amounts representing interest ..........   (365,866,000)
                                                      -------------
            Present value of net minimum payments ..  $ 217,488,645
                                                      =============

      LONG-TERM DEBT MATURITIES -- The principal maturities of long-term
obligations, excluding the capital lease relating to the Brandywine Project, for
each of the five years succeeding December 31, 1996 and thereafter are as
follows:

                  1997 .........................  $  5,717,623
                  1998 .........................     5,816,974
                  1999 .........................     5,926,269
                  2000 .........................     6,024,598
                  2001 .........................     7,229,603
                  Thereafter ...................   184,833,474
                                                  ------------
                                                  $215,548,541
                                                  ============

7. INCOME TAXES

      A provision for income taxes for 1994, 1995 and 1996 has not been recorded
since operating losses were incurred for each year.

      The Company has approximately $45 million of net operating loss
carryforwards at December 31, 1996, the benefits of which will be available to
the Company when realized by PEII. The net operating loss carryforwards will
expire during the years 2007 to 2011. PEII may become subject to a limitation on
the amount of net operating loss carryforwards which may be used annually to
offset income should certain changes in its ownership occur in the future.
Should PEII become subject to such a limitation, the amount of tax benefits
available to the Company could be reduced.

      Deferred tax assets of approximately $4 million and $14 million as of
December 31, 1995 and 1996, respectively, consist primarily of interest in
partnerships and net operating losses and are offset by a valuation allowance.
The deferred tax asset for interest in partnerships relates to the difference
between the tax basis of the assets contributed to the partnership upon its
formation and the Company's financial reporting basis in those assets.

      SFAS No. 109 requires that a valuation allowance be recorded against tax
assets which are not likely to be realized. The Company's carryforwards expire
at specific future dates and utilization of certain carryforwards is limited to
specific amounts each year. However, due to the uncertain nature of their
ultimate realization based upon past performance and expiration dates, the
Company has established a full valuation allowance against these carryforward
benefits and will recognize the benefits only when reassessment demonstrates
that it is more likely than not that such benefits will be realized. Realization
is entirely dependent upon future earnings in specific tax jurisdictions. While
the need for this valuation allowance is subject to periodic review, if the
allowance is reduced, the tax benefits of the carryforwards will be recorded in
future operations as a reduction of the Company's income tax expense.

                                      F-14
8. COMMITMENTS AND CONTINGENCIES

      In connection with a previous borrowing from Nova Northwest Inc. ("Nova"),
Nova received a cash flow participation interest in the distributions from the
Rosemary Project for the term of the Panda-Rosemary L.P. partnership agreement.
Such participation interest amounted to 4.33% of the Company's own participation
interest, which was 10% at the time the agreement was entered into. The Company
has filed an action with the District Court of Dallas County, Texas seeking a
declaratory judgment that Nova's cash flow participation is 0.433% of the
Company's 100% interest after the acquisition of the institutional investor's
90% limited partnership interest. Management believes that the resolution of
this dispute will not have a material effect on the financial position, results
of operations or cash flows of the Company. PEII and Nova each have the option
to convert the present value of cash flow participation, as defined by the
agreement, to PEII common stock at $6 a share.

      In 1995, Florida Power filed an action with the Florida Public Service
Commission ("Florida PSC") relating to the term of the power purchase agreement
for the Kathleen Project (see Note 5) and whether the Kathleen Project, as
designed, is eligible to execute the power purchase agreement pursuant to
Florida Power's bid solicitation and the Florida PSC's regulations. On May 20,
1996, the Florida PSC issued an order finding that: (1) the Kathleen Project, as
designed, did not comply with the power purchase agreement and the Florida PSC's
regulations; (2) the capacity payments under the power purchase agreement should
only extend for 20 years (as opposed to the 30 year stated term of the
agreement); and (3) the construction and commercial operation milestones should
be extended for an additional 18 months. The Company has appealed this ruling to
the Florida Supreme Court and will vigorously defend this action. Management
believes that the outcome of this litigation will not have a material effect on
the accompanying consolidated financial statements.

      In August 1996, Panda-Brandywine and PEPCO commenced discussions
concerning commercial operational requirements of the Brandywine Project and
conversion of the construction loan to long-term financing in the form of a
lease. During these discussions, disagreements arose between Panda-Brandywine
and PEPCO with respect to certain provisions of the Brandywine Power Purchase
Agreement, one of which relates to the determination of the interest rate that
is the basis for reduction in capacity payments thereunder (the "PEPCO Interest
Rate Dispute"). PEPCO and Panda-Brandywine are presently attempting to resolve
these disagreements but there are no assurances that such efforts will be
successful. If the PEPCO Interest Rate Dispute is determined adversely to
Panda-Brandywine, the capacity payments paid by PEPCO under the Brandywine Power
Purchase Agreement (which commence in January 1997) will be less than originally
anticipated, thereby adversely affecting the revenues realized by
Panda-Brandywine, and consequently, reducing the amount of funds that would be
available for distribution to the Company.

      Raytheon Engineers and Constructors, Inc. ("Raytheon") constructed the
Brandywine Project pursuant to a fixed-price, turnkey engineering, procurement
and construction contract (the "Brandywine EPC Agreement") with
Panda-Brandywine. Raytheon completed the construction and start-up of the
Brandywine Project and has met the requirements for commercial operations and
substantial completion under the Brandywine EPC Agreement, although the date on
which commercial operations were achieved and the entitlement of Raytheon to
certain early completion bonuses under the Brandywine EPC Agreement are the
subject of a dispute between Panda-Brandywine and Raytheon. The Company
estimates that the amount in dispute is less than $1 million and believes that
the resolution of this dispute will not have a material adverse effect upon the
financial position, results of operations or liquidity of the Company.

      The Company has entered into various long-term contracts for the purchase
and transportation of fuel subject to termination only in certain limited
circumstances. These contracts have remaining terms of 10 to 25 years. The
Company's minimum purchase commitment under these contracts is 2.3 million
British thermal units of gas annually from October 31, 1996 through October 31,
2011. In the aggregate, such commitments are not at prices in excess of the
current market.

      PEC is also involved in other legal and administrative proceedings in the
ordinary course of business. Management believes, based on the advice of
counsel, the amount of ultimate liability with respect to these matters will not
have a material affect on the financial position, results of operations or cash
flows of the Company.

9. RELATED PARTY TRANSACTIONS

      The Company purchases insurance coverage through an agency owned by a
major shareholder of PEII who is also a member of the board of directors of PEII
and a relative of PEII's chairman. The Company believes such coverage is on
terms that are no less favorable than reasonably available from unaffiliated
third parties. Total insurance purchases through this 

                                      F-15
agency were $291,142, $298,728 and $754,388 for the years ended December 31,
1994, 1995 and 1996, respectively.

10. FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

      The estimated fair values of the Company's financial instruments as of
December 31, 1996 are as follows:

                                                 Carrying Value  Fair Value
                                                  ------------  ------------
   Long-term debt, including current portion ...  $215,548,541  $220,824,791
   Capital lease obligation ....................  $217,488,645  $217,488,645

       The Rosemary Bonds and the Series A Bonds have limited trading. The fair
value of these bonds is estimated based on an April 1997 third party quotation,
adjusted to reflect changes in the yield of government securities with similar
maturities since December 31, 1996. The fair value of the capital lease
obligation equals the carrying value of the obligation because the lease
financing transaction, which closed on December 30, 1996, reflects the Company's
incremental borrowing rate at year end.

      The Company is also a party to letters of credit. Historically, no claims
have been made against these financial instruments and management does not
expect any material losses to result from these off-balance-sheet instruments
because performance is not usually expected to be required. Therefore,
management is of the opinion that the fair value of these instruments is zero.

      The Company has various purchase commitments for gas supply and delivery
incident to the ordinary conduct of business. In the aggregate, such commitments
are not at prices in excess of the current market.

      The Company's electric capacity and energy sales are currently under two
power sales contracts with two customers. The failure of these customers to
fulfill their contractual obligations could have a substantial negative impact
on the Company's revenue. However, the Company does not anticipate
non-performance by the customers under these contracts.

11.  SUBSEQUENT EVENT

      In April 1997, Global Cayman issued $155.2 million original principal
amount of senior secured notes ("Senior Secured Notes") to finance the
development and construction of the Luannan Project. The Senior Secured Notes,
which were issued at a discount for gross proceeds of $145.0 million, bear
interest at a fixed rate of 12 1/2% payable semiannually commencing October 15,
1997. Scheduled principal payments are required semiannually commencing October
15, 2000 and will continue through maturity on April 15, 2004. The Senior
Secured Notes are subject to mandatory redemption prior to maturity under
certain conditions. The Senior Secured Notes are secured by (i) a pledge of 100%
of the capital stock of Global Cayman, 99% of the capital stock of Pan-Western
and at least 90% of the capital stock of Pan-Sino, and (ii) a security interest
in certain funds of Global Cayman and its subsidiaries established under the
indenture. Additionally, the Senior Secured Notes are fully and unconditionally
guaranteed by Panda Global, whose guarantee (the "Senior Secured Notes
Guarantee") is secured by (i) a pledge of 100% of the capital stock of Panda
Global and PEC and (ii) a security interest in certain funds of Panda Global
established under the indenture. The Senior Secured Notes Guarantee is
effectively subordinated to the obligations of PIC and its subsidiaries under
the Series A Bonds and project-level financing arrangements. The indenture
contains certain covenants, including limitations on distributions, additional
debt and certain other transactions. Individually, and in the aggregate, the
pledges of the capital stock of PEC, Pan-Western and Pan-Sino do not constitute
a "substantial portion" (as defined in Rule 3-10 of Regulation S-X promulgated 
under the Securities Act of 1933) of collateral for the Senior Secured Notes or
the Senior Secured Notes Guarantee.  Separate financial statements of such 
entities are not presented as they are not considered material. See Note 12 for
condensed consolidating financial information for the Company.

                                 F-16
12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

      As discussed in Note 11, the Senior Secured Notes issued in April 1997 by
Global Cayman are fully and unconditionally guaranteed by Panda Global.
Condensed consolidating financial information for the Company as of December 31,
1995 and 1996 and for the years ended December 31, 1994, 1995 and 1996 is as
follows:

                     PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                         CONDENSED CONSOLIDATING BALANCE SHEET
                                   DECEMBER 31, 1995
ASSETS
                                                                             Non-
                                              Panda          Panda          Guar-                            Panda
                                              Global         Global         antor                            Global
                                            Energy Co.    Holdings, Inc.    Subsid-           Elimi-      Holdings, Inc.
                                             (Issuer)      (Guarantor)      iaries           nations      Consolidated
                                            -----------   -------------   -------------   -------------   -------------
Current Assets:
   Cash and cash equivalents .............  $      --     $        --     $   1,166,385   $        --     $   1,166,385
   Restricted cash -- current ............         --              --         1,876,142            --         1,876,142
   Accounts receivable ...................         --              --         5,199,999            --         5,199,999
   Fuel oil, spare parts and supplies ....         --              --         3,084,168            --         3,084,168
   Other current assets ..................         --              --            12,664            --            12,664
                                            -----------   -------------   -------------   -------------   -------------
      Total current assets ...............         --              --        11,339,358            --        11,339,358

Plant and equipment:
   Electric generating facility ..........         --              --       105,168,094            --       105,168,094
   Furniture and fixtures ................         --              --            29,080            --            29,080
   Less accumulated depreciation .........         --              --       (21,008,036)           --       (21,008,036)
   Construction in progress ..............         --              --       132,604,494            --       132,604,494
   Development costs .....................         --              --         3,350,924            --         3,350,924
                                            -----------   -------------   -------------   -------------   -------------
      Total plant and equipment, net .....         --              --       220,144,556            --       220,144,556
Investment in and advances to subsidiaries    1,065,063            --              --        (1,065,063)           --
Restricted cash -- debt service reserves
   and escrow deposits ...................         --              --        10,947,948            --        10,947,948
Debt issuance costs ......................         --              --         3,990,655            --         3,990,655
Partnership formation costs, net .........         --              --           533,100            --           533,100
                                            -----------   -------------   -------------   -------------   -------------
                                            $ 1,065,063   $        --     $ 246,955,617   $  (1,065,063)  $ 246,955,617
                                            ===========   =============   =============   =============   =============

                     LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
   Accounts payable and accrued expenses:
      Construction costs .................  $      --     $        --     $   5,597,818   $        --     $   5,597,818
      Interest and letter of credit fees .         --              --         2,540,347            --         2,540,347
      Operating expenses and other .......         --              --         1,219,061            --         1,219,061
   Current portion of long-term debt .....         --              --         9,100,000            --         9,100,000
                                            -----------   -------------   -------------   -------------   -------------
      Total current liabilities ..........         --              --        18,457,226            --        18,457,226

Long term debt, less current portion .....         --              --       234,608,361            --       234,608,361
Investment in and advances from affiliates    1,712,061      42,945,636            --       (44,657,697)           --
Minority interest ........................         --              --        36,835,666            --        36,835,666
Shareholder's equity (deficit):
   Common stock, par value
        $.01; 1,000 shares authorized,
      issued and outstanding .............            2              10              10             (12)             10
   Advances to parent ....................         --       (26,869,548)    (26,869,548)     26,869,548     (26,869,548)
   Accumulated deficit ...................     (647,000)    (16,076,098)    (16,076,098)     16,723,098     (16,076,098)
      Total shareholder's equity (deficit)     (646,998)    (42,945,636)    (42,945,636)     43,592,634     (42,945,636)
                                            -----------   -------------   -------------   -------------   -------------
                                            $ 1,065,063   $        --     $ 246,955,617   $  (1,065,063)  $ 246,955,617
                                            ===========   =============   =============   =============   =============
F-17
12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

                     PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                         CONDENSED CONSOLIDATING BALANCE SHEET
                                   DECEMBER 31, 1996
ASSETS
                                                                              Non-
                                              Panda          Panda            Guar-                           Panda
                                              Global         Global           antor                          Global
                                            Energy Co.    Holdings, Inc.     Subsid-         Elimi-       Holdings, Inc.
                                             (Issuer)      (Guarantor)       iaries          nations      Consolidated
                                            -----------   -------------   -------------   -------------   -------------
Current Assets:
   Cash and cash equivalents .............  $      --     $        --     $   1,335,086   $        --     $   1,335,086
   Restricted cash -- current ............         --              --        17,809,921            --        17,809,921
   Accounts and notes receivable .........         --              --         9,402,685            --         9,402,685
   Fuel oil, spare parts and supplies ....         --              --         7,913,777            --         7,913,777
   Other current assets ..................         --              --           164,905            --           164,905
                                            -----------   -------------   -------------   -------------   -------------
      Total current assets ...............         --              --        36,626,374            --        36,626,374
Plant and equipment:
   Electric generating facility ..........         --              --       288,716,711            --       288,716,711
   Furniture and fixtures ................         --              --           494,418            --           494,418
   Less accumulated depreciation .........         --              --       (26,539,539)           --       (26,539,539)
   Construction in progress ..............         --              --              --              --              --
   Development costs .....................         --              --         6,053,361            --         6,053,361
                                            -----------   -------------   -------------   -------------   -------------
      Total plant and equipment, net .....         --              --       268,724,951            --       268,724,951

Investment in and advances to subsidiaries    3,798,781            --              --        (3,798,781)           --
Restricted cash -- debt service reserves
   and escrow deposits ...................         --              --        32,548,366            --        32,548,366
Debt issuance costs ......................         --              --         7,570,521            --         7,570,521
Partnership formation costs, net .........         --              --              --              --              --
                                            -----------   -------------   -------------   -------------   -------------
                                            $ 3,798,781   $        --     $ 345,470,212   $  (3,798,781)  $ 345,470,212
                                            ===========   =============   =============   =============   =============

                     LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
   Accounts payable and accrued expenses:
      Construction costs .................  $      --     $        --     $     660,167   $        --     $     660,167
      Interest and letter of credit fees .         --              --         6,297,558            --         6,297,558
      Operating expenses and other .......         --              --         6,991,796            --         6,991,796
   Current portion of long-term debt .....         --              --         5,717,623            --         5,717,623
                                            -----------   -------------   -------------   -------------   -------------
      Total current liabilities ..........         --              --        19,667,144            --        19,667,144

Long term debt, less current portion .....         --              --       209,830,918            --       209,830,918
Capital lease obligation .................         --              --       217,488,645            --       217,488,645
Investment in and advances from affiliates    6,099,779     101,516,495            --      (107,616,274)           --
Minority interest ........................         --              --              --              --              --
Shareholder's equity (deficit):
   Common stock, par value
        $.01; 1,000 shares authorized,
        issued and outstanding ...........            2              10              10             (12)             10
   Advances (to) from parent .............         --       (52,782,940)    (52,782,940)     52,782,940     (52,782,940)
   Accumulated deficit ...................   (2,301,000)    (48,733,565)    (48,733,565)     51,034,565     (48,733,565)
      Total shareholder's equity(deficit)    (2,300,998)   (101,516,495)   (101,516,495)    103,817,493    (101,516,495)
                                            -----------   -------------   -------------   -------------   -------------
                                            $ 3,798,781   $        --     $ 345,470,212   $  (3,798,781)  $ 345,470,212
                                            ===========   =============   =============   =============   =============
F-18
12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

                     PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                         FOR THE YEAR ENDED DECEMBER 31, 1994
Non-
                                                  Panda          Panda            Guar-                       Panda
                                                  Global         Global           antor                       Global
                                                 Energy Co.   Holdings, Inc.     Subsid-        Elimi-    Holdings, Inc.
                                                  (Issuer)     (Guarantor)       iaries        nations     Consolidated
                                                ------------   ------------   ------------   ------------  ------------
Revenue:
   Electric capacity .........................  $       --     $       --     $ 30,664,096   $       --    $ 30,664,096
   Steam and chilled water sales .............          --             --          650,575           --         650,575
   Interest income ...........................          --             --          602,783           --         602,783
   Equity in loss of subsidiary ..............      (203,000)      (861,265)          --        1,064,265          --
                                                ------------   ------------   ------------   ------------  ------------
      Total revenue ..........................      (203,000)      (861,265)    31,917,454      1,064,265    31,917,454
Expenses:
   Plant operating expenses ..................          --             --        8,940,146           --       8,940,146
   Project development and administrative ....          --             --        1,779,349           --       1,779,349
   Interest expense and letter of credit fees           --             --       11,017,418           --      11,017,418
   Depreciation ..............................          --             --        4,208,314           --       4,208,314
   Amortization of debt issuance costs .......          --             --          600,382           --         600,382
   Amortization of partnership formation costs          --             --          533,116           --         533,116
                                                ------------   ------------   ------------   ------------  ------------
      Total expenses .........................          --             --       27,078,725           --      27,078,725
                                                ------------   ------------   ------------   ------------  ------------
Income (loss) before minority interest .......      (203,000)      (861,265)     4,838,729      1,064,265     4,838,729
Minority interest ............................          --             --       (5,699,994)          --      (5,699,994)
                                                ------------   ------------   ------------   ------------  ------------
   Net loss ..................................  $   (203,000)  $   (861,265)  $   (861,265)  $  1,064,265  $   (861,265)
                                                ============   ============   ============   ============  ============
FOR THE YEAR ENDED DECEMBER 31, 1995
Non-
                                                  Panda          Panda            Guar-                       Panda
                                                  Global         Global           antor                       Global
                                                 Energy Co.   Holdings, Inc.     Subsid-        Elimi-    Holdings, Inc.
                                                  (Issuer)     (Guarantor)       iaries        nations     Consolidated
                                                ------------   ------------   ------------   ------------  ------------
Revenue:
   Electric capacity .........................  $       --     $       --     $ 29,858,475   $       --    $ 29,858,475
   Steam and chilled water sales .............          --             --          473,040           --         473,040
   Interest income ...........................          --             --          895,268           --         895,268
   Equity in loss of  subsidiary .............      (444,000)    (2,731,689)          --        3,175,689          --
                                                ------------   ------------   ------------   ------------  ------------
      Total revenue ..........................      (444,000)    (2,731,689)    31,226,783      3,175,689    31,226,783
                                                ------------   ------------   ------------   ------------  ------------
Expenses:
   Plant operating expenses ..................          --             --        9,347,707           --       9,347,707
   Project development and administrative ....          --             --        2,550,376           --       2,550,376
   Interest expense and letter of credit fees           --             --       11,715,929           --      11,715,929
   Depreciation ..............................          --             --        4,209,453           --       4,209,453
   Amortization of debt issuance costs .......          --             --          554,311           --         554,311
   Amortization of partnership formation costs          --             --          533,116           --         533,116
                                                ------------   ------------   ------------   ------------  ------------
      Total expenses .........................          --             --       28,910,892           --      28,910,892
                                                ------------   ------------   ------------   ------------  ------------
Income (loss) before minority interest .......      (444,000)    (2,731,689)     2,315,891      3,175,689     2,315,891
Minority interest ............................          --             --       (5,047,580)          --      (5,047,580)
                                                ------------   ------------   ------------   ------------  ------------
Net loss .....................................  $   (444,000)  $ (2,731,689)  $ (2,731,689)  $  3,175,689  $ (2,731,689)
                                                ============   ============   ============   ============  ============
F-19
12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

                  PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1996
Non-
                                                    Panda          Panda            Guar-                       Panda
                                                    Global         Global           antor                       Global
                                                   Energy Co.   Holdings, Inc.     Subsid-        Elimi-    Holdings, Inc.
                                                    (Issuer)     (Guarantor)       iaries        nations     Consolidated
                                                  ------------   ------------   ------------   ------------  ------------
Revenue:
   Electric capacity ...........................  $       --    $       --     $ 32,273,736   $       --   $ 32,273,736
   Steam and chilled water sales ...............          --            --          502,757           --        502,757
   Interest income .............................          --            --        1,518,006           --      1,518,006
   Equity in loss of subsidiaries ..............    (1,654,000)  (32,657,467)          --       34,311,467         --
                                                  ------------  ------------   ------------   ------------ ------------ 
      Total revenue ............................    (1,654,000)  (32,657,467)    34,294,499     34,311,467   34,294,499

Expenses:
   Plant operating expenses ....................          --            --       12,050,495           --     12,050,495
   Project development and administrative ......          --            --        5,187,348           --      5,187,348
   Interest expense and letter of credit fees ..          --            --       19,414,012           --     19,414,012
   Depreciation ................................          --            --        5,531,502           --      5,531,502
   Amortization of debt issuance costs .........          --            --          493,799           --        493,799
   Amortization of partnership formation costs .          --            --          533,100           --        533,100
                                                  ------------  ------------   ------------   ------------ ------------ 
      Total expenses ...........................          --            --       43,210,256           --     43,210,256
                                                  ------------  ------------   ------------   ------------ ------------ 

Income (loss) before minority interest and
     extraordinary item ........................    (1,654,000)  (32,657,467)    (8,915,757)    34,311,467   (8,915,757)
Minority interest ..............................          --            --       (2,405,160)          --     (2,405,160)
                                                  ------------  ------------   ------------   ------------ ------------ 
Income (loss) before extraordinary item ........    (1,654,000)  (32,657,467)   (11,320,917)    34,311,467  (11,320,917)
Extraordinary item - loss on debt extinguishment          --            --      (21,336,550)          --    (21,336,550)
                                                  ------------  ------------   ------------   ------------ ------------ 
Net loss .......................................  $ (1,654,000) $(32,657,467)  $(32,657,467)  $ 34,311,467 $(32,657,467)
                                                  ============  ============   ============   ============ ============
F-20
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                                   (UNAUDITED)
                                                   DECEMBER 31      MARCH 31
                                                      1996            1997
                                                  -------------   -------------
Current assets:
   Cash and cash equivalents ...................  $   1,335,086   $   1,198,071
   Restricted cash -- current ..................     17,809,921      15,115,215
   Accounts receivable .........................      9,402,685       9,219,619
   Fuel oil, spare parts and supplies ..........      7,913,777       6,897,908
   Other current assets ........................        164,905         234,585
                                                  -------------   -------------
      Total current assets .....................     36,626,374      32,665,398

Plant and equipment:
   Electric generating facilities ..............    288,716,711     289,097,164
   Furniture and fixtures ......................        494,418         496,202
   Less: accumulated depreciation ..............    (26,539,539)    (29,488,416)
   Development costs ...........................      6,053,361       9,426,582
                                                  -------------   -------------
      Total plant and equipment, net ...........    268,724,951     269,531,532

Restricted cash - debt service reserves
  and escrow deposits ..........................     32,548,366      32,548,366
Debt issuance costs, net of accumulated
  amortization of $165,015 and $338,822,
  respectively .................................      7,570,521       7,530,770
                                                  -------------   -------------
                                                  $ 345,470,212   $ 342,276,066
                                                  =============   =============

                     LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
   Accounts payable and accrued expenses:
      Construction costs .......................  $     660,167   $        --
      Interest and letter of credit fees .......      6,297,558       2,505,216
      Operating expenses and other .............      6,991,796       5,931,986
   Current portion of long-term debt ...........      5,717,623       5,501,823
                                                  -------------   -------------
         Total current liabilities .............     19,667,144      13,939,025

Long-term debt, less current portion ...........    209,830,918     208,454,461
Capital lease obligation .......................    217,488,645     222,868,697
Commitments and contingencies  (Note 4)
Shareholder's deficit:
   Common stock, par value $.01; 1,000 shares
         authorized, issued and outstanding ....             10              10
   Advances to parent ..........................    (52,782,940)    (47,562,041)
   Accumulated deficit .........................    (48,733,565)    (55,424,086)
                                                  -------------   -------------
      Total shareholder's deficit ..............   (101,516,495)   (102,986,117)
                                                  -------------   -------------
                                                  $ 345,470,212   $ 342,276,066
                                                  =============   =============

        See accompanying notes to condensed consolidated financial statements 

                                      F-21
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
                                      (UNAUDITED)

                                                        1996           1997
                                                    ------------   ------------
Revenue:
   Electric capacity and energy sales ............  $  8,015,442   $ 17,329,693
   Steam and chilled water sales .................       121,548        130,582
   Interest income ...............................       185,672        429,727
                                                    ------------   ------------
                                                       8,322,662     17,890,002
                                                    ------------   ------------
Expenses:
   Plant operating expenses ......................     2,441,532      8,261,187
   Project development and administrative ........       803,433      2,395,022
   Interest expense and letter of credit fees ....     3,184,745     10,801,629
   Depreciation ..................................     1,053,220      2,948,878
   Amortization of debt issuance costs ...........       140,907        173,807
   Amortization of partnership formation costs ...       133,275           --
                                                    ------------   ------------
                                                       7,757,112     24,580,523
                                                    ------------   ------------
Income (loss) before minority interest ...........       565,550     (6,690,521)
Minority interest ................................    (1,718,948)          --
                                                    ------------   ------------
Net loss .........................................  $ (1,153,398)  $ (6,690,521)
                                                    ============   ============

     See accompanying notes to condensed consolidated financial statements.

                                      F-22
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

        CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT FOR THE
                        THREE MONTHS ENDED MARCH 31, 1997
                                   (UNAUDITED)

                                                                      TOTAL
                           COMMON   ADVANCES      ACCUMULATED     SHAREHOLDER'S
                           STOCK    TO PARENT       DEFICIT           DEFICIT
                            ---   ------------    ------------    -------------
Balance, January 1, 1997    $10   $(52,782,940)   $(48,733,565)   $(101,516,495)
Advances from parent ....    --      5,220,899            --          5,220,899
Net loss ................    --           --        (6,690,521)      (6,690,521)
                            ---   ------------    ------------    -------------
Balance, March 31, 1997 .   $10   $(47,562,041)   $(55,424,086)   $(102,986,117)
                            ===   ============    ============    =============

     See accompanying notes to condensed consolidated financial statements.

                                      F-23
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
                                   (UNAUDITED)
1996         1997
                                                                 ------------    -----------
Operating activities:
   Net loss ..................................................   $ (1,153,398)   $(6,690,521)
   Adjustments to reconcile net loss to net cash
     provided by operating activities:
      Minority interest ......................................      1,718,948           --
      Depreciation ...........................................      1,053,220      2,948,878
      Amortization of debt issuance costs ....................        140,907        173,807
      Amortization of partnership formation costs ............        133,275           --
      Amortization of loan discount and deferred interest ....         47,953      5,380,052
   Changes in assets and liabilities:
      Accounts receivable ....................................       (660,500)       183,066
      Fuel oil, spare parts and supplies .....................        281,634      1,015,869
      Other current assets ...................................        (47,151)       (69,680)
      Accounts payable and accrued expenses ..................      2,623,451     (4,852,153)
                                                                 ------------    -----------
      Net cash provided (used) by operating activities .......      4,138,339     (1,910,682)
                                                                 ------------    -----------
Investing activities:
   Restricted cash - current .................................     (4,843,722)     2,694,706
   Additions to property, plant and equipment ................    (21,631,804)    (4,415,625)
   Restricted cash - debt service reserves and escrow deposits         76,776           --
                                                                 ------------    -----------
      Net cash provided (used) by investing activities .......    (26,398,750)    (1,720,919)
                                                                 ------------    -----------
Financing activities:
   Distributions to minority interest owner ..................       (321,124)          --
   Advances from parent ......................................      1,490,607      5,220,899
   Proceeds from long-term debt ..............................     21,488,220           --
   Repayment of long-term debt ...............................           --       (1,592,257)
   Debt issuance costs .......................................       (199,498)      (134,056)
                                                                 ------------    -----------
      Net cash provided by financing activities ..............     22,458,205      3,494,586
                                                                 ------------    -----------

Increase (decrease) in cash and cash equivalents .............        197,794       (137,015)
Cash and cash equivalents, beginning of period ...............      1,166,385      1,335,086
                                                                 ------------    -----------
Cash and cash equivalents, end of period .....................   $  1,364,179    $ 1,198,071
                                                                 ============    ===========

NON-CASH OPERATING AND FINANCING ACTIVITIES:

Interest expense on capital lease obligation .................   $       --      $ 5,380,052
See accompanying notes to condensed consolidated financial statements.

                                      F-24
PANDA GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997

1. ORGANIZATION AND BASIS OF PRESENTATION

      Panda Global Holdings, Inc. ("Panda Global", or collectively with its
subsidiaries the "Company"), a wholly owned subsidiary of Panda Energy
International, Inc. ("PEII"), was formed in March 1997 to hold the ownership
interests in four independent power projects which were formerly owned by other
wholly owned subsidiaries of PEII. The ownership interests were transferred to
the Company at PEII's historical cost. Because the transfers occurred between
entities under common control, the transactions have been accounted for in a
manner similar to a pooling of interests. The Company has two direct wholly
owned subsidiaries: Panda Energy Corporation ("PEC")( a Texas corporation) which
indirectly holds the Company's ownership interests in domestic projects, and
Panda Global Energy Company ("Global Cayman")(a Cayman Islands company) which
indirectly holds the Company's ownership interest in an international project
located in China.

      PEC, through its wholly owned subsidiary Panda Interfunding Corporation
("PIC") and PIC's wholly owned subsidiary Panda Interholding Corporation
("Interholding"), holds the Company's ownership interests in the Rosemary
project and the Brandywine project. The entities holding such ownership
interests include the following: Panda Rosemary Corporation ("PRC"), a 91%
general partner in Panda-Rosemary, L.P. ("Panda-Rosemary"); PRC II Corporation
("PRC II"), a 9% limited partner in Panda-Rosemary; Panda Brandywine
Corporation, a 50% general partner in Panda-Brandywine, L.P.
("Panda-Brandywine"); Panda Energy Corporation (a Delaware corporation), a 50%
limited partner in Panda-Brandywine; and Brandywine Water Company. The Company,
through its general and limited partnership interests, owns 100% of
Panda-Brandywine and, as of July 31, 1996, owns 100% of Panda-Rosemary. Prior to
July 31, 1996, the Company owned 10% of Panda-Rosemary. The Rosemary and
Brandywine projects are located in the United States. Other direct or indirect
wholly owned subsidiaries of PIC include Panda Funding Corporation ("PFC"),
Panda-Rosemary Funding Corporation ("PRFC") and Panda Cayman Interfunding
Corporation ("PIC Cayman"), which have been formed to facilitate the financing
of the development and acquisition of independent power projects.

      Additionally, PEC holds the Company's 100% ownership interest in the
Kathleen project through its wholly owned subsidiaries.

      Global Cayman (which collectively with its subsidiaries is a development
stage enterprise having no operating revenues) holds a 95.5% ownership interest
in Pan-Sino Energy Development Company LLC ("Pan-Sino")(a Cayman Islands
company), which in turn holds a 99% ownership interest in Pan-Western Energy
Corporation LLC ("Pan-Western")(a Cayman Islands company), which in turn owns an
approximately 88% interest in four joint venture companies (the "Joint Venture
Companies") organized under the laws of the People's Republic of China ("China")
to develop and construct an independent power project located in China. The
Joint Venture Companies, which currently have no material assets or operations,
are: Tangshan Panda Heat and Power Company, Ltd. ("Tangshan Panda"), Tangshan
Pan-Western Heat and Power Company, Ltd. ("Tangshan Pan-Western"), Tangshan
Cayman Heat and Power Company, Ltd. ("Tangshan Cayman") and Tangshan Pan-Sino
Heat Company, Ltd. ("Tangshan Pan-Sino").

	Collectively, PEC, Pan-Sino and Pan-Western are the predecessors of the
Company.

      All material intercompany accounts and transactions have been eliminated
in consolidation.

2. SIGNIFICANT ACCOUNTING POLICIES

      The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
and should be read in conjunction with the audited financial statements for the
year ended December 31, 1996. The accompanying unaudited condensed consolidated
financial statements for the three months ended March 31, 1996 and 1997 include
all adjustments, consisting of normal recurring accruals, which management
considers necessary for a fair presentation of the results for the interim
periods. The results of operations for the three months ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. The amounts presented in the balance sheet as of
December 31, 1996 were derived from the Company's audited consolidated financial
statements.

      ALLOCATION OF ADMINISTRATIVE COSTS -- PEII performs certain accounting,
legal, insurance, and consulting services for the 

                                      F-25
Company. These general and administrative costs are generally allocated to the
Company using the percentage of time PEII personnel spent performing these
services. The expenses allocated were $532,000 and $1,110,000 for the three
months ended March 31, 1996 and 1997, respectively, and are included in project
development and administrative expenses in the statement of operations.
Management believes the method used to allocate these costs is reasonable.

3. POWER PROJECTS AND LONG-TERM DEBT

      The Company has incurred development costs on the Kathleen Project of $2.8
million as of December 31, 1996 and March 31, 1997. The Company has incurred
development costs on the Luannan Project of $3.3 million and $6.6 million as of
December 31, 1996 and March 31, 1997, respectively. Such costs are included in
plant and equipment under development costs in the accompanying balance sheets.

4. COMMITMENTS AND CONTINGENCIES

      In 1995, Florida Power filed an action with the Florida Public Service
Commission ("Florida PSC") relating to the term of the power purchase agreement
for the Kathleen Project and whether the Kathleen Project, as designed, is
eligible to execute the power purchase agreement pursuant to Florida Power's bid
solicitation and the Florida PSC's regulations. On May 20, 1996, the Florida PSC
issued an order finding that: (1) the Kathleen Project, as designed, did not
comply with the power purchase agreement and the Florida PSC's regulations; (2)
the capacity payments under the power purchase agreement should only extend for
20 years (as opposed to the 30 year stated term of the agreement); and (3) the
construction and commercial operation milestones should be extended for an
additional 18 months. The Company has appealed this ruling to the Florida
Supreme Court and will vigorously defend this action. Management believes that
the outcome of this litigation will not have a material effect on the
accompanying condensed consolidated financial statements.

      In August 1996, Panda-Brandywine and PEPCO commenced discussions
concerning commercial operational requirements of the Brandywine Project and
conversion of the construction loan to long-term financing in the form of a
lease. During these discussions, disagreements arose between Panda-Brandywine
and PEPCO with respect to certain provisions of the Brandywine Power Purchase
Agreement which relate to the determination of the interest rate that is the
basis for reduction in capacity payments thereunder (the "PEPCO Interest Rate
Dispute"). PEPCO and Panda-Brandywine are presently attempting to resolve these
disagreements but there are no assurances that such efforts will be successful.
If the PEPCO Interest Rate Dispute is determined adversely to Panda-Brandywine,
the capacity payments paid by PEPCO under the Brandywine Power Purchase
Agreement will be less than originally anticipated, thereby adversely affecting
the revenues realized by Panda-Brandywine, and consequently, reducing the amount
of funds that would be available for distribution to the Company.

      Raytheon Engineers and Constructors, Inc. ("Raytheon") constructed the
Brandywine Project pursuant to a fixed-price, turnkey engineering, procurement
and construction contract (the "Brandywine EPC Agreement") with
Panda-Brandywine. Raytheon completed the construction and start-up of the
Brandywine Project and has met the requirements for commercial operations and
substantial completion under the Brandywine EPC Agreement, although the date on
which commercial operations were achieved and the entitlement of Raytheon to
certain early completion bonuses under the Brandywine EPC Agreement are the
subject of a dispute between Panda-Brandywine and Raytheon. The Company
estimates that the amount in dispute is less than $1 million and believes that
the resolution of this dispute will not have a material adverse effect upon the
financial position, results of operations or liquidity of the Company.

5. SUBSEQUENT EVENT

      In April 1997, Global Cayman issued $155.2 million original principal
amount of senior secured notes ("Senior Secured Notes") to finance the
development and construction of the Luannan Project. The Senior Secured Notes,
which were issued at a discount for gross proceeds of $145.0 million, bear
interest at a fixed rate of 12 1/2% payable semiannually commencing October 15,
1997. Scheduled principal payments are required semiannually commencing October
15, 2000 and will continue through maturity on April 15, 2004. The Senior
Secured Notes are subject to mandatory redemption prior to maturity under
certain conditions. The Senior Secured Notes are secured by (i) a pledge of 100%
of the capital stock of Global Cayman, 99% of the capital stock of Pan-Western
and at least 90% of the capital stock of Pan-Sino, and (ii) a security interest
in certain funds of Global Cayman and its subsidiaries established under the
indenture. Additionally, the Senior Secured Notes are fully and unconditionally
guaranteed by Panda Global, whose guarantee (the "Senior Secured Notes
Guarantee") is secured by (i) a pledge of 100% of the capital stock of Panda
Global and PEC and (ii) a security interest in certain funds of Panda Global
established under the indenture. The Senior Secured Notes Guarantee is
effectively subordinated to the obligations of PIC and its subsidiaries under
the Series A Bonds and project-level financing arrangements. The indenture
contains certain covenants, including limitations on distributions, additional
debt and certain other transactions.  Individually, and in the aggregate, the
pledges of the capital stock of PEC, Pan-Western and Pan-Sino do not constitute
a "substantial portion" (as defined in Rule 3-10 of Regulation S-X promulgated 
under the Securities Act of 1933) of collateral for the Senior Secured Notes or
the Senior Secured Notes Guarantee.  Separate financial statements of such
entities are not presented as they are not considered material. 

                                      F-26
INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors
of Panda Energy International, Inc.

We have audited the accompanying consolidated balance sheets of Panda Global
Energy Company and subsidiaries (the "Company"), a development stage enterprise,
as of December 31, 1995 and 1996, and the related consolidated statements of
operations, cash flows and shareholder's deficit for the period from July 20,
1994 (date of inception) through December 31, 1994, the years ended December 31,
1995 and 1996 and the period from July 20, 1994 (date of inception) through
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1995
and 1996, and the results of their operations and their cash flows for the
period from July 20, 1994 (date of inception) through December 31, 1994, the
years ended December 31, 1995 and 1996, and the period from July 20, 1994 (date
of inception) through December 31, 1996, in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

Dallas, Texas
April 9, 1997

                                      F-27
PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1995 and 1996

                                                         1995           1996
                                                    -----------    -----------
 ASSETS

 Cash and cash equivalents ......................   $     6,289    $   506,289

 Development costs ..............................     1,058,774      3,292,492
                                                    -----------    -----------
 Total assets ...................................   $ 1,065,063    $ 3,798,781
                                                    ===========    ===========
 LIABILITIES AND SHAREHOLDER'S DEFICIT

 Liabilities:
 Advances from parent ...........................   $ 1,712,061    $ 6,099,779
 Commitments and contingencies (Note 3) .........          --             --
 Shareholder's deficit:
 Common stock, par value $1:  50,000 shares
    authorized;  2 shares issued and outstanding              2              2
 Deficit accumulated during the development stage      (647,000)    (2,301,000)
                                                    -----------    -----------
    Total shareholder's deficit .................      (646,998)    (2,300,998)
                                                    -----------    -----------
 Total liabilities and shareholder's deficit ....   $ 1,065,063    $ 3,798,781
                                                    ===========    ===========

          See accompanying notes to consolidated financial statements.
                                      F-28(A)
PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
    For the Period from Inception (July 20, 1994) Through December 31, 1994,
                   the Years Ended December 31, 1995 and 1996,
             and the Period from Inception Through December 31, 1996
Inception                                 Inception
                                      Through     Year Ended    Year Ended       Through
                                     December 31  December 31   December 31    December 31
                                        1994         1995           1996           1996
                                      ---------    ---------    -----------    -----------
General and administrative expenses   $ 203,000    $ 444,000    $ 1,654,000    $ 2,301,000
                                      ---------    ---------    -----------    -----------
Net loss ..........................   $(203,000)   $(444,000)   $(1,654,000)   $(2,301,000)
                                      =========    =========    ===========    ===========
See accompanying notes to consolidated financial statements.
                                      F-29(A)
PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Period from Inception (July 20, 1994) Through December 31, 1994,
                   the Years Ended December 31, 1995 and 1996,
             and the Period from Inception Through December 31, 1996
Inception                                Inception
                                         Through    Year Ended    Year Ended      Through
                                        December 31 December 31   December 31    December 31
                                          1994         1995          1996           1996
                                        ---------    ---------    -----------    -----------
OPERATING ACTIVITIES:
 Net loss ...........................   $(203,000)   $(444,000)   $(1,654,000)   $(2,301,000)

 INVESTING ACTIVITIES:
 Development costs ..................    (428,486)    (630,288)    (2,233,718)    (3,292,492)

 FINANCING ACTIVITIES:
 Capital contribution from parent ...           2         --             --                2
 Advances from parent ...............     732,773      979,288      4,387,718      6,099,779
                                        ---------    ---------    -----------    -----------
 Cash provided by financing activities    732,775      979,288      4,387,718      6,099,781
                                        ---------    ---------    -----------    -----------
 Increase (decrease) in cash ........     101,289      (95,000)       500,000        506,289

 Cash, beginning of period ..........        --        101,289          6,289           --
                                        ---------    ---------    -----------    -----------
 Cash, end of period ................   $ 101,289    $   6,289    $   506,289    $   506,289
                                        =========    =========    ===========    ===========
See accompanying notes to consolidated financial statements.
                                      F-30(A)
PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT
    For the Period from Inception (July 20, 1994) Through December 31, 1994
                 and the Years Ended December 31, 1995 and 1996

                                                                     Deficit
                                                                    Accumulated
                                                                    During the
                                           Number       Common      Development
                                         of Shares      Stock          Stage
                                         -----------  -----------   -----------
Issuance of common stock, July 20, 1994            2  $         2            

Net loss ..............................                             $  (203,000)
                                         -----------  -----------   -----------
Balance, December 31, 1994 ............            2            2      (203,000)
 
Net loss ..............................                                (444,000)
                                         -----------  -----------   -----------
Balance, December 31, 1995 ............            2            2      (647,000)

Net loss ..............................                              (1,654,000)
                                         -----------  -----------   -----------
Balance, December 31, 1996 ............            2  $         2   $(2,301,000)
                                         ===========  ===========   ===========

          See accompanying notes to consolidated financial statements.
                                      F-31(A)
PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A DEVELOPMENT STAGE ENTERPRISE)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD
            FROM INCEPTION (JULY 20, 1994) THROUGH DECEMBER 31, 1994,
                   THE YEARS ENDED DECEMBER 31, 1995 AND 1996,
             AND THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1996

1.    ORGANIZATION AND BASIS OF PRESENTATION

      Panda Global Energy Company ("Global Cayman", or collectively with its
subsidiaries the "Company")(a Cayman Islands company) is a wholly owned
subsidiary of Panda Global Holdings, Inc. ("Panda Global"), which in turn is a
wholly owned subsidiary of Panda Energy International, Inc. ("PEII"). PEII is
engaged in the development, acquisition, ownership and operation of independent
power generation facilities and other energy-related projects worldwide. Global
Cayman was formed in March 1997 to hold PEII's indirect ownership interest in an
independent power project located in the People's Republic of China ("China").
The ownership interest was transferred to Global Cayman at PEII's historical
cost. Because the transfer occurred between entities under common control, the
transaction has been accounted for in a manner similar to a pooling of
interests.

      Global Cayman holds a 95.5% ownership interest in Pan-Sino Energy
Development Company LLC ("Pan-Sino")(a Cayman Islands company), which in turn
holds a 99% ownership interest in Pan-Western Energy Corporation LLC
("Pan-Western")(a Cayman Islands company), which in turn owns an approximately
88% interest in four joint venture companies (the "Joint Venture Companies")
organized under the laws of China to develop and construct two 50 megawatt
coal-fired cogeneration plants (the "Luannan Project") to be located in Luannan
County, Tangshan Municipality, Hebei Province, China. Pan-Sino and Pan-Western
were formed on July 20, 1994 and are the Company's predecessor. The Joint
Venture Companies are: Tangshan Panda Heat and Power Company, Ltd. ("Tangshan
Panda"), Tangshan Pan-Western Heat and Power Company, Ltd. ("Tangshan
Pan-Western"), Tangshan Cayman Heat and Power Company, Ltd. ("Tangshan Cayman")
and Tangshan Pan-Sino Heat Company, Ltd. ("Tangshan Pan-Sino").

      All material intercompany accounts and transactions have been eliminated
in consolidation.

2.    SIGNIFICANT ACCOUNTING POLICIES

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

      DEVELOPMENT STAGE ENTERPRISE -- The Company is in the development stage
and has no operating revenues. PEII has committed to provide the Company with
continued financial support until the Company obtains the financing necessary
for the continued development and construction of the Luannan Project.
Management is currently pursuing such financing and believes the Company can
obtain the necessary financing.

      CASH -- Included in cash and cash equivalents are highly liquid
investments with original maturities of three months or less.

      DEVELOPMENT COSTS -- Costs related to the development of the Luannan
Project have been capitalized. Such costs primarily consist of engineering,
legal and other costs directly related to the project. Such costs will be
depreciated using the straight-line method over the estimated useful lives of
the assets, generally twenty years. Depreciation will begin when the completed
facility is ready for its intended use.

                                      F-30
ALLOCATION OF ADMINISTRATIVE COSTS -- PEII performs certain accounting,
legal, insurance and consulting services for the Company. These general and
administrative costs are generally allocated to the Company using the percentage
of time PEII personnel spent performing these services. The expenses allocated
were $203,000, $444,000 and $1,654,000 in 1994, 1995 and 1996, respectively, and
are included in general and administrative expenses in the consolidated
statements of operations. Management believes the method used to allocate these
costs is reasonable.

      INCOME TAXES -- On the basis of the current legislation in the Cayman
Islands, there is no income, corporation, profits, capital gains or other form
of taxation that would be of application to Global Cayman or its subsidiaries
and, accordingly, there is no withholding tax. In addition, Pan-Western, as an
exempted company, has obtained from the Cayman Islands Government an undertaking
that should the current legislation change, no taxation will be imposed upon the
profits of Pan-Western or any shareholders in Pan-Western for a twenty year
period commencing August, 1994.

3.    LUANNAN PROJECT

      In 1994, PEII entered into a preliminary letter of intent with a
subsidiary of the North China Power Group Company ("NCPGC") for the purchase and
sale of electric energy from the Luannan Project. On September 22, 1995,
Tangshan Panda and Tangshan Pan-Western (see Note 1) entered into a Power
Purchase Agreement with NCPGC for the purchase and sale of electric energy from
the Luannan Project. Under the terms of the 20-year agreement, all electrical
output of the project will be sold to NCPGC. The steam and hot water generated
by Tangshan-Cayman's facility within the project will be sold to the domestic
Chinese industrial and commercial markets by Tangshan Pan-Sino. The Luannan
Project will be constructed pursuant to a fixed-price, turnkey contract with
Harbin Power Engineering Company Limited, subject to escalation under certain
circumstances. Preliminary construction activity commenced in December 1996.
Commencement of full construction activity is subject to the successful
completion of financing.

      The Luannan Project is subject to political, regulatory and economic
uncertainties, risks of expropriation of property and cancellation or
modification of contract rights, foreign exchange restrictions, construction
risk, dependence on limited number of customers and other risks arising from
foreign governmental sovereignty.

4.    ADVANCES FROM PARENT

      PEII has performed all project development and administrative activities
for the Company. The advances from parent reflect the net advances for such
costs incurred by PEII on the Company's behalf.

                                      F-31
PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                    (A Development Stage Enterprise)

                  CONDENSED CONSOLIDATED BALANCE SHEETS
                  December 31, 1996 and March 31, 1997

                                                                    (Unaudited)
                                                     December 31     March 31
                                                        1996           1997 
                                                     -----------    -----------
ASSETS

Cash and cash equivalents ........................   $   506,289    $     6,289

Development costs ................................     3,292,492      6,613,923
                                                     -----------    -----------
Total assets .....................................   $ 3,798,781    $ 6,620,212
                                                     ===========    ===========

LIABILITIES AND SHAREHOLDER'S DEFICIT

Liabilities:

Advances from parent .............................   $ 6,099,779    $ 9,476,210

Commitments and contingencies (Note 3) ...........          --             --

Shareholder's deficit:
Common stock, par value $1:  50,000 shares
   authorized;  2 shares issued and outstanding ..             2              2
Deficit accumulated during the development stage .    (2,301,000)    (2,856,000)
                                                     -----------    -----------
   Total shareholder's deficit ...................    (2,300,998)    (2,855,998)
                                                     -----------    -----------
Total liabilities and shareholder's deficit ......   $ 3,798,781    $ 6,620,212
                                                     ===========    ===========

     See accompanying notes to condensed consolidated financial statements.
                                      F-34(B)
PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              AND DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
               For the Three Months Ended March 31, 1996 and 1997
              and Inception (July 20, 1994) Through March 31, 1997
                                   (Unaudited)
Inception
                                           Three Months Ended March 31   Through
                                            ------------------------     March 31
                                               1996          1997           1997
                                            ---------    -----------    -----------
General and administrative expenses .....   $ 266,000    $   555,000    $ 2,856,000
                                            ---------    -----------    -----------
Net loss ................................    (266,000)      (555,000)    (2,856,000)

Deficit accumulated during the
   development stage, beginning of period    (647,000)    (2,301,000)          --
                                            ---------    -----------    -----------
Deficit accumulated during the
   development stage, end of period .....   $(913,000)   $(2,856,000)   $(2,856,000)
                                            =========    ===========    ===========
See accompanying notes to condensed consolidated financial statements.
                                      F-35(B)
PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the Three Months Ended March 31, 1996 and 1997
              and Inception (July 20, 1994) Through March 31, 1997
                                   (Unaudited)

                                          1996           1997           1997
                                        ---------    -----------    -----------
 OPERATING ACTIVITIES:

 Net loss ...........................   $(266,000)   $  (555,000)   $(2,856,000)

 INVESTING ACTIVITIES:

 Development costs ..................    (490,701)    (3,321,431)    (6,613,923)

 FINANCING ACTIVITIES:

 Capital contribution from parent ...        --             --                2
 Advances from parent ...............     756,701      3,376,431      9,476,210
                                        ---------    -----------    -----------
 Cash provided by financing activities    756,701      3,376,431      9,476,212
                                        ---------    -----------    -----------
 Increase (decrease) in cash ........        --         (500,000)         6,289

 Cash, beginning of period ..........       6,289        506,289           --
                                        ---------    -----------    -----------
 Cash, end of period ................   $   6,289    $     6,289    $     6,289
                                        =========    ===========    ===========

     See accompanying notes to condensed consolidated financial statements.
                                      F-36(B)
PANDA GLOBAL ENERGY COMPANY AND SUBSIDIARIES
                        (A DEVELOPMENT STAGE ENTERPRISE)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 AND THE
          PERIOD FROM INCEPTION (JULY 20, 1994) THROUGH MARCH 31, 1997

1.    ORGANIZATION AND BASIS OF PRESENTATION

      Panda Global Energy Company ("Global Cayman", or collectively with its
subsidiaries the "Company")(a Cayman Islands company) is a wholly owned
subsidiary of Panda Global Holdings, Inc. ("Panda Global"), which in turn is a
wholly owned subsidiary of Panda Energy International, Inc. ("PEII"). PEII is
engaged in the development, acquisition, ownership and operation of independent
power generation facilities and other energy-related projects worldwide. Global
Cayman was formed in March 1997 to hold PEII's indirect ownership interest in an
independent power project located in the People's Republic of China ("China").
The ownership interest was transferred to Global Cayman at PEII's historical
cost. Because the transfer occurred between entities under common control, the
transaction has been accounted for in a manner similar to a pooling of
interests.

      Global Cayman holds a 95.5% ownership interest in Pan-Sino Energy
Development Company LLC ("Pan-Sino")(a Cayman Islands company), which in turn
holds a 99% ownership interest in Pan-Western Energy Corporation LLC
("Pan-Western")(a Cayman Islands company), which in turn owns an approximately
88% interest in four joint venture companies (the "Joint Venture Companies")
organized under the laws of China to develop and construct two 50 megawatt
coal-fired cogeneration plants (the "Luannan Project") located in Luannan
County, Tangshan Municipality, Hebei Province, China. Pan-Sino and Pan-Western
were formed on July 20,1994 and are the Company's predecessor. The Joint Venture
Companies, which currently have no material assets or operations, are: Tangshan
Panda Heat and Power Company, Ltd. ("Tangshan Panda"), Tangshan Pan-Western Heat
and Power Company, Ltd. ("Tangshan Pan-Western"), Tangshan Cayman Heat and Power
Company, Ltd. ("Tangshan Cayman") and Tangshan Pan-Sino Heat Company, Ltd.
("Tangshan Pan-Sino").

      All material intercompany accounts and transactions have been eliminated
in consolidation.

2.    SIGNIFICANT ACCOUNTING POLICIES

      The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
and should be read in conjunction with the audited consolidated financial
statements for the year ended December 31, 1996. The accompanying unaudited
financial statements for the three months ended March 31, 1996 and 1997 include
all adjustments, consisting of normal recurring accruals, which management
considers necessary for a fair presentation of the results of operations for the
interim periods. The results of operations for the three months ended March 31,
1997 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1997. The amounts presented in the balance sheet as of
December 31, 1996 were derived from the Company's audited financial statements.

      DEVELOPMENT STAGE ENTERPRISE -- The Company is in the development stage
and has no operating revenues. PEII has committed to provide the Company with
continued financial support until the Company obtains the financing necessary
for the continued development and construction of the Luannan Project. Such
financing was obtained in April 1997 (see Note 5).

      CASH -- Included in cash and cash equivalents are highly liquid
investments with original maturities of three months or less.

      DEVELOPMENT COSTS -- Costs related to the development of the Luannan
Project have been capitalized. Such costs primarily consist of engineering,
legal and other costs directly related to the project. Such costs will be
depreciated using the straight-line method over the estimated useful lives of
the assets, generally twenty years. Depreciation will begin when the completed
facility is ready for its intended use.

                                      F-33
ALLOCATION OF ADMINISTRATIVE COSTS -- PEII performs certain accounting,
legal, insurance and consulting services for the Company. These general and
administrative costs are generally allocated to the Company using the percentage
of time PEII spent performing these services. The expenses allocated were
$266,000 and $555,000 for the three months ended March 31, 1996 and 1997,
respectively, and are included in general and administrative expenses in the
consolidated statements of operations. Management believes the method used to
allocate these costs is reasonable.

      INCOME TAXES -- On the basis of the current legislation in the Cayman
Islands, there is no income, corporation, profits, capital gains or other form
of taxation that would be of application to Global Cayman or its subsidiaries
and, accordingly, there is no withholding tax. In addition, Pan-Western, as an
exempted company, has obtained from the Cayman Islands Government an undertaking
that should the current legislation change, no taxation will be imposed upon the
profits of Pan-Western or any shareholders in Pan-Western for a twenty year
period commencing August, 1994.

3.    LUANNAN PROJECT

      In 1994, PEII entered into a preliminary letter of intent with a
subsidiary of the North China Power Group Company ("NCPGC") for the purchase and
sale of electric energy from the Luannan Project. On September 22, 1995,
Tangshan Panda and Tangshan Pan-Western (see Note 1) entered into a Power
Purchase Agreement with NCPGC for the purchase and sale of electric energy from
the Luannan Project. Under the terms of the 20-year agreement, all electrical
output of the project will be sold to NCPGC. The steam and hot water generated
by Tangshan-Cayman's facility within the project will be sold to the domestic
Chinese industrial and commercial markets by Tangshan Pan-Sino. The Luannan
Project will be constructed pursuant to a fixed-price, turnkey contract with
Harbin Power Engineering Company Limited. Preliminary construction activity
commenced in December 1996. Full construction activity commenced after the
successful completion of financing in April 1997 (see Note 5).

      The Luannan Project is subject to political, regulatory and economic
uncertainties, risks of expropriation of property and cancellation or
modification of contract rights, foreign exchange restrictions, construction
risk, dependence on limited number of customers and other risks arising from
foreign governmental sovereignty.

4.    ADVANCES FROM PARENT

      PEII has performed all project development and administrative activities
for the Company. The advances from parent reflect the Company's liability for
such costs incurred by PEII on the Company's behalf. Such advances may be
partially reimbursed during the construction period of the Luannan Project.

5.    SUBSEQUENT EVENT

      In April 1997, Global Cayman issued $155.2 million original principal
amount of senior secured notes ("Senior Secured Notes") to finance the
development and construction of the Luannan Project. The Senior Secured Notes,
which were issued at a discount for gross proceeds of $145.0 million, bear
interest at a fixed rate of 12 1/2% payable semiannually commencing October 15,
1997. Scheduled principal payments are required semiannually commencing October
15, 2000 and will continue through maturity on April 15, 2004. The Senior
Secured Notes are subject to mandatory redemption prior to maturity under
certain conditions. The Senior Secured Notes are secured by (i) a pledge of 100%
of the capital stock of Global Cayman, 99% of the capital stock of Pan-Western
and at least 90% of the capital stock of Pan-Sino, and (ii) a security interest
in certain funds of Global Cayman and its subsidiaries established under the
indenture. Additionally, the Senior Secured Notes are fully and unconditionally
guaranteed by Panda Global, whose guarantee (the "Senior Secured Notes
Guarantee") is secured by (i) a pledge of 100% of the capital stock of Panda
Global and PEC and (ii) a security interest in certain funds of Panda Global
established under the indenture. The Senior Secured Notes Guarantee is
effectively subordinated to the obligations of PIC and its subsidiaries under
the Series A Bonds and project-level financing arrangements. The indenture
contains certain covenants, including limitations on distributions, additional
debt and certain other transactions.

                                      F-34

APPENDIX A

                 PART I - CERTAIN DEFINED TERMS

     Unless the context requires otherwise, any reference in this
Prospectus  to  any agreement shall mean such agreement  and  all
schedules,   exhibits   and  attachments  thereto   as   amended,
supplemented or otherwise modified and in effect as of  the  date
of this Offering Memorandum. All terms defined herein used in the
singular shall have the same meanings when used in the plural and
vice versa.

     Certain  terms defined below are summaries of terms  defined
in,  and  are defined more specifically in, the Project Documents
and  the  Indentures. Additional defined terms can  be  found  in
"Description of the Exchange Notes, the Exchange Note Guarantees,
the  Issuer  Loan,  the  Shareholder  Loans  and  the  Collateral
Documents." Such summaries do not purport to be complete and  are
subject to, and are qualified in their entirety by reference  to,
all   of  the  provisions  of  the  Project  Documents  and   the
Indentures.

     "1988  VEPCO  Solicitation" means the solicitation  of  bids
conducted  by  VEPCO  in 1988 for electricity generation  payment
rates from several non-utility generation plants.

     "1990  Clean  Air Act Amendments" means Public Law  101-549,
enacted  November 15, 1990, which amended the Clean Air  Act  (42
U.S.C.   7401  et seq.).  The 1990 Clean Air Act Amendments  have
been codified into the Clean Air Act.

     "Accredited Investors" has the meaning ascribed to such term
under  Rule  501(a)(1), (2), (3) or (7) of Regulation  D  of  the
Securities Act.

     "Additional  Amounts"  means  the  additional   amounts   as
described  in  "Description  of the Notes,  the  Guarantees,  the
Issuer  Loan, the Shareholder Loans and the Collateral Documents-
Withholding Taxes."

     "Administrative Services Agreement" means the administrative
services  agreement between Panda International and the  Company,
dated as of the Closing Date.

     "AFR" means the applicable federal rate set periodically  by
the IRS.

     "Anticipated  Additional Debt" means the original  principal
amount  of an additional series of Pooled Project Bonds  proposed
to  be  issued  by  PFC which is equal to the  largest  principal
amount  of  such  series that will provide a projected  PIC  Debt
Service  Coverage  Ratio and a projected  PIC  Consolidated  Debt
Service Coverage Ratio (if then applicable) of at least 1.7:1 and
1.25:1,  respectively,  for each PIC Future  Ratio  Determination
Period,  as  confirmed  in each case by a  certificate  from  the
Consolidating  Financial Analyst, assuming,  in  respect  of  the
additional series of Pooled Project Bonds proposed to be  issued:
(i)  a  maximum maturity and average life generally available  in
the  marketplace for debt of a similar nature and (ii)  a  coupon
rate  then prevailing in the market for debt of a similar nature,
and  taking into account (a) in the case of the PIC Debt  Service
Coverage  Ratio, PIC Cash Available for Distribution and  (b)  in
the case of the PIC Consolidated Debt Service Coverage Ratio, PIC
Cash  Available from Operations (net of any reserve  requirements
under Project-level debt and PIC-level debt) from the PIC Project
Portfolio  (giving effect, in each case, to the transfer  to  the
PIC  Project  Portfolio of any Project in respect of  which  such
additional  series  of Pooled Project Bonds  is  proposed  to  be
issued);  in  making  this analysis, the Consolidating  Financial
Analyst  is required to use generally accepted financial analysis
methods  and  generally follow the methods used to calculate  the
amount of the offering of the Series A Bonds.

     "BG&E"  means Baltimore Gas & Electric Company,  a  Maryland
corporation.

     "Bibb" means The Bibb Company, a Delaware corporation.
     
     "BOT"   means   foreign  investment  through  build-operate-
transfer,  a method that has been utilized in the PRC to  finance
the development of the PRC's electric power industry.

     "Brandywine  Effluent Agreement" means the Treated  Effluent
Water  Purchase Agreement dated as of September 13, 1994  between
the  Brandywine  Partnership  and  the  County  Commissioners  of
Charles  County,  Maryland,  together  with  the  Water  Easement
Maintenance Agreement, in the form (including all amendments  and
clarification letters relating thereto) delivered to  GE  Capital
and  Credit Suisse, New York branch, as amended, supplemented  or
otherwise modified from time to time in accordance with the terms
of such agreement and the Brandywine Participation Agreement.

     "Brandywine  Engineering Report" means the  report  entitled
"Panda-Brandywine  Cogeneration Project"  Independent  Engineer's
Report prepared by PES, dated July 22, 1996, as updated on  March
10,  1997,  evaluating  the  design,  construction  and  expected
operation of the Brandywine Facility.

     "Brandywine  EPC Agreement" means the Amended  and  Restated
Turnkey  Cogeneration Facility Agreement, dated as of  March  30,
1995, between Raytheon and the Brandywine Partnership.

     "Brandywine  Event  of  Loss  Proceeds"  means  proceeds  of
casualty  insurance or condemnation awards or the  like,  payable
with  respect  to  a Brandywine Event of Loss (net  of  costs  of
obtaining  such  proceeds or awards) to the extent  not  used  to
replace  or repair the Brandywine Facility and for other required
payments under the Brandywine Facility Lease.

     "Brandywine Event of Loss" means an Event of Loss as defined
in the Brandywine Participation Agreement.

     "Brandywine Facility" means the Brandywine Partnership's 230
MW  natural  gas-fired, combined-cycle cogeneration  facility  in
Brandywine, Prince George's County, Maryland.

     "Brandywine Facility Lease" means the Facility Lease,  dated
December 18, 1996, between Panda-Brandywine Partnership and Fleet
National  Bank,  as Owner Trustee, pursuant to which  the  Panda-
Brandywine Partnership leases the Brandywine Facility.

     "Brandywine Financing" means the transactions set out in the
Brandywine  Financing Documents and described  in  this  Offering
Memorandum  in  the  section  entitled  "Description   of   Other
Indebtedness-The Brandywine Financing."

     "Brandywine  Financing Conversion" means the conversion,  on
December 30, 1996, of the Brandywine construction loan to a long-
term   leveraged  lease  pursuant  to  the  Brandywine  Financing
Documents.

     "Brandywine   Financing  Documents"  means  the   Brandywine
Participation  Agreement,  the  Brandywine  Facility  Lease   and
certain other agreements relating to the Brandywine Financing.

     "Brandywine Fuel Consultant" means C.C. Pace.

     "Brandywine  Fuel  Consultant's  Report"  means  the  report
entitled
"Panda-Brandywine,  L.P.  Generating Facility  Fuel  Consultant's
Report" prepared by the Brandywine Fuel Consultant, dated July 2,
1996, as updated on March 10, 1997, analyzing the sufficiency  of
the   fuel  supply  and  transportation  arrangements   for   the
Brandywine Facility.

     "Brandywine Fuel Management Agreement" means the Fuel Supply
Management Agreement, dated March 30, 1995, between CDC  and  the
Brandywine Partnership.

     "Brandywine  Gas  Agreement" means the Gas Sales  Agreement,
dated  as  of  March 30, 1995, between the Brandywine Partnership
and CDC.

     "Brandywine  Loan  Agreement" means  the  Construction  Loan
Agreement and Lease Commitment, dated as of March 30, 1995, among
GE Capital, the Brandywine Partnership and PBC.

     "Brandywine   O&M   Agreement"  means   the   Operations   &
Maintenance  Agreement, dated November 21, 1994,  as  amended  on
December  7, 1994, between the Brandywine Partnership  and  Ogden
Brandywine.

     "Brandywine  Owner  Trustee" means Fleet National  Bank,  as
owner  trustee  in  connection with the lease of  the  Brandywine
Facility.

     "Brandywine Participation Agreement" means the Participation
Agreement,  dated as of December 18, 1996, among  the  Brandywine
Partnership,  PBC,  GE  Capital, Fleet National  Bank,  as  owner
trustee   and  security  agent,  First  Security  Bank,  National
Association,   as   indenture   trustee,   Credit   Suisse,    as
administrative agent, and the loan participants party thereto.

     "Brandywine  Partnership"  means Panda-Brandywine,  L.P.,  a
Delaware limited partnership.

     "Brandywine  Partnership Agreement" means the  Agreement  of
Limited Partnership of Panda-Brandywine, L.P., dated as of  March
25,  1991,  between  PEC  and  PBC as  amended,  supplemented  or
otherwise modified from time to time.

     "Brandywine  Power  Purchase  Agreement"  means  the   Power
Purchase  Agreement, dated August 9, 1991, as  amended  September
16, 1994, between the Brandywine Partnership and PEPCO.

     "Brandywine  Pro  Forma"  means  the  pro  forma   financial
projections prepared by ICF which are contained in the Brandywine
Pro Forma Report.

     "Brandywine  Pro  Forma Report" means  the  report  entitled
"Independent Panda-Brandywine Pro Forma Projections" prepared  by
ICF,  dated  April 11, 1997, and updated June 6, 1997, presenting
an independent assessment of the Brandywine Pro Forma.

     "Brandywine  Project  Documents"  means,  collectively,  the
Brandywine   Power   Purchase  Agreement,  the   Brandywine   EPC
Agreement,  the Brandywine O & M Agreement, the Brandywine  Steam
Agreement,  the  Brandywine Gas Agreement,  the  Raytheon  Parent
Guaranty,  the  Brandywine  Effluent  Agreement,  the  Brandywine
Partnership Agreement and each Additional Project Document.

     "Brandywine   Steam  Agreement"  means   the   Steam   Sales
Agreement, dated March 30, 1995, between Brandywine Water Company
and the Brandywine Partnership.

     "Brandywine Water Company" means Brandywine Water Company, a
Delaware corporation.

     "Burns  &  McDonnell"  means Burns &  McDonnell  Engineering
Company, Inc., a Missouri corporation.
     
     "Capitalized Interest Fund" shall have the meaning set forth
under  "Description  of the Exchange Notes,  the  Exchange  Notes
Guarantee,  the  Issuer  Loan,  the  Shareholder  Loans  and  the
Collateral DocumentsThe FundsCapitalized Interest Fund."

     "Carrier"  means  Luannan County State-Owned  Transportation
Company, a PRC company owned and operated by Luannan County.

     "Cautionary  Statements" means the  important  factors  that
could cause actual results to differ materially from the Issuer's
expectations  reflected  in  this Offering  Memorandum  that  are
disclosed  in  "Risk  Factors," in the assumptions  made  by  the
Independent  Engineers  and Consultants and  contained  in  their
reports and elsewhere in this Offering Memorandum.
     
     "C.C.  Pace"  means C.C. Pace Resources,  Inc.,  a  Virginia
corporation.
     
     "CDC"   means   Cogen   Development  Company,   a   Michigan
corporation.
"Central Government" means the Central Government of the PRC.

     "CEOZ  Notice"  means  the Notice to  Expand  the  Scope  of
Coastal  Economic Open Zone promulgated by the State  Council  of
the PRC on March 18, 1988.

     "CERCLA" means the United States Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.

     "CFETC" means the national interbank foreign exchange market
in  the  PRC,  also  known as the China Foreign Exchange  Trading
Center.

     "CHEXIM"  means the Export-Import Bank of China,  a  company
organized under the laws of the PRC.

     "CHEXIM  Guarantee" means the Guarantee dated July  9,  1996
provided  by  CHEXIM  as required pursuant  to  the  Luannan  EPC
Contract  in  respect  of the payment of liquidated  damages  and
termination payments up to a maximum amount of 35% of the Luannan
EPC Contract Price.

     "China" means the People's Republic of China.

     "Chinamac"  means Chinamac (Singapore) Pte Ltd, a  Singapore
corporation and a wholly-owned subsidiary of CMC.

     "Clean  Air Act" means the United States Federal  Clean  Air
Act, as amended.

     "Clean  Water  Act"  means the United States  Federal  Clean
Water Act, as amended.

     "Closing  Date" means the April 22, 1997, the date on  which
the Old Notes were issued and sold to the Initial Purchaser.

     "CMC"   means  China  National  Machinery  Import  &  Export
Corporation, a PRC corporation.

     "CNG"   means  CNG  Transmission  Corporation,  a   Delaware
corporation.

     "CNG  FT  Agreement" means the Services Agreement Applicable
to  Transportation  of Natural Gas Under Rate Schedule  FT  (X-74
Assignment),  dated as of August 20, 1996, between  CNG  and  the
Rosemary Partnership.

     "CNPC" China National Power Corporation.
     "Code"  means  the United States Internal  Revenue  Code  of
1986, as amended.

     "COFTEC" means, with respect to a province or county of  the
PRC, the Commission of Foreign Trade and Economic Cooperation  of
such province or county.

     "Collateral  Documents" means the Exchange Notes  Collateral
Documents and the Exchange Notes Guarantee Collateral Documents.
     
     "Columbia  Gas" means Columbia Gas Transmission Corporation,
a Delaware corporation.

     "Columbia  Gas FT Agreement" means the Amended and  Restated
FTS   Service  Agreement,  dated  March  23,  1995,  between  the
Brandywine Partnership and Columbia Gas.

     "Columbia Gas IT Agreement" means the Service Agreement  for
Service  Under  ITS  Rate Schedule, dated as of  April  4,  1991,
between  Columbia Gas and PR Corp., which agreement was  assigned
by  PR  Corp.  to,  and assumed by, the Rosemary  Partnership  on
January 6, 1992.

     "Columbia Gulf" means Columbia Gulf Transmission Company,  a
Delaware corporation.

     "Columbia  Gulf IT Agreement" means the ITS-1 Transportation
Service  Agreement, dated as of June 13, 1996,  between  Columbia
Gulf and the Rosemary Partnership.

     "Columbia   Precedent   Agreement"   means   the   Precedent
Agreement,  dated  as of February 25, 1994,  as  amended  by  the
Amending  Agreement, dated March 24, 1995, between the Brandywine
Partnership and Columbia Gas.

     "Commercial  Operations"  means, for  purposes  of  the  PIC
Additional Projects Contract, with respect to a Project, (i)  the
completion  of  construction and testing and the  functioning  of
such  Project  and  (ii) the satisfaction and  discharge  of  all
completion requirements of, and commencement of regular  capacity
or  reservation  payments under, the purchase, transportation  or
other off-take or use contracts for such Project.

     "Commission" means the Securities and Exchange Commission of
the United States.

     "Company"  means  Panda Global Holdings,  Inc.,  a  Delaware
corporation  and  the  owner  of 100%  of  the  Issuer,  and  its
successors pursuant to the terms of the Company Indentures.

     "Consolidated Pro Forma" means the summary consolidation  of
the  Rosemary Pro Forma, the Brandywine Pro Forma and the Luannan
Pro Forma.
     
     "Consolidated  Pro Forma Report" means the  report  entitled
"Summary  of the Consolidated Pro Forma of Panda Global Holdings,
Inc." prepared by ICF, dated April 11, 1997, and updated June  6,
1997, containing the Consolidated Pro Forma.

     "Consolidating  Financial  Analyst"  means   ICF,   or   its
successor  (any  such  successor shall  be  a  firm  of  national
reputation with expertise in engineering and financial analysis),
which  such party may rely, to the extent necessary for  purposes
of  performing its duties under the Indentures, on the reports of
the   Luannan   Facility   Engineer,  the   Brandywine   Facility
independent  engineer, the Rosemary Project independent  engineer
or other qualified consultants.

     "Constellation" means Constellation Energy Corporation.

     "Construction Schedule" means the construction schedule  set
forth in the Luannan EPC Contract.

     "Consultants"  means  the  Rosemary  Fuel  Consultant,   the
Brandywine  Fuel  Consultant, the Luannan  Coal  Consultant,  the
Consolidating  Financial  Analyst and the  Independent  Insurance
Consultant or their respective successors.

     "Consultants'  Reports"  means the  Consolidated  Pro  Forma
Report,  the  Rosemary Fuel Consultant's Report,  the  Brandywine
Fuel Consultant's Report, the Luannan Engineering Report and  the
Luannan Coal Consultant's Report.

     "County Partners" means Luannan Heat and Power, Luanhua  Co.
and  Luannan  Heat  Company, all of which are  business  entities
owned  or  related  to  the  Luannan  County  Government  or  its
subdivisions.

     "Cove  Point"  means Cove Point LNG Limited  Partnership,  a
Delaware limited partnership.

     "Cove  Point  FT Agreement" means that certain  FTS  Service
Agreement,   dated  March  30,  1995,  between   the   Brandywine
Partnership and Cove Point.
     
     "Debt Service Reserve Fund" shall have the meaning set forth
under  "Description  of the Exchange Notes,  the  Exchange  Notes
Guarantee,  the  Issuer  Loan,  the  Shareholder  Loans  and  the
Collateral DocumentsThe FundsDebt Service Reserve Fund."

     "Design  Institute" means Hebei Electric  Power  Survey  and
Design Institute.

     "Development  Services  Agreement"  means  the   development
services  agreement between Panda International and the  Company,
dated as of the Closing Date.

     "Dispatch  Centers"  means, collectively,  dispatch  centers
operated by the Power Bureaus.

     "Dispatch   Regulations"  means  the  Regulations   on   the
Administration of Electric Power Dispatch to Networks  and  Grids
of the PRC.

     "Duff & Phelps" means Duff & Phelps Credit Rating Co.

     "Energy  Policy Act" means the United States  Energy  Policy
Act of 1992.

     "Energy  Purchase  Agreement"  means  the  Electric   Energy
Purchase  and  Sales Agreement, dated September 22,  1995,  among
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western.

     "Engineering and Design Contract" means the Engineering  and
Design  Contract,  dated  December 21,  1995,  among  the  Design
Institute, Tangshan Panda and Tangshan Pan-Western.

     "Equity Joint Venture Law of the PRC" means the Law  of  the
People's  Republic of China on Joint Ventures Using  Chinese  and
Foreign  Investment,  adopted on July 1,  1979  by  the  National
People's Congress, as amended.

     "ERISA" means the Employee Retirement Income Security Act of
1974.

     "EWG"  means an Exempt Wholesale Generator under Section  32
of PUHCA.

     "Exchange  Act"  means  the  United  States  Securities  and
Exchange Act of 1934, as amended.

     "Exchange  Agent"  shall  mean  Bankers  Trust  Company   as
Exchange Agent for the Exchange Offer.
     
     "Exchange  Offer  Registration  Statement"  shall  have  the
meaning set forth in "Prospectus Summary--Prior Offering."
     
       "FERC"  means the Federal Energy Regulatory Commission  of
the United States.

     "FIEs" means foreign investment enterprises in the PRC.

     "Financial   Closing"   means   closing   of   the   initial
construction or long-term project financing of a Project.

     "Firm Gas Transportation Agreements" means (i) the Texas Gas
FT  Agreement, the CNG FT Agreement and the Transco FT Agreement,
as  they  may  exist  at any time, (ii) any  firm  transportation
agreement  that  replaces  any  such  agreement  pursuant  to   a
specified  conversion  election by the Rosemary  Partnership  and
(iii)  any  other  firm agreement having a  term  (including  all
renewal or extension periods) greater than one year entered  into
by  the  Rosemary Partnership to transport natural  gas  supplied
under the Rosemary Gas Supply Agreement.

     "First  Amendment" means the amendment dated  September  16,
1994, to the Brandywine Power Purchase Agreement.

     "Flippo"  means Flippo Construction, a District of  Columbia
corporation.

     "Florida  Power" means Florida Power Corporation, a  Florida
corporation.

     "Florida PSC" means the Florida Public Service Commission.

     "Force Majeure Event" has the meaning ascribed to such  term
under the Luannan Operations and Maintenance Agreement.

     "Ford  Credit" means Ford Motor Credit Company,  a  Delaware
corporation.

     "Foreign   Debt   Registration   Certificate"   means    the
certificate issued to FIEs by SAFE which evidences proper  filing
of foreign debts in the PRC.

     "FPA" means the United States Federal Power Act, as amended.

     "Funding  Period"  means, with respect to  the  Issuer  Loan
Agreement, the period of time beginning with the Closing Date and
ending  on  the  date when the last Joint Venture has  a  payment
obligation relating to the construction of the Luannan Facility.

     "GE  Capital" means General Electric Capital Corporation,  a
New York corporation.

     "GNPIPD"  means  the Gross National Product  Implicit  Price
Deflator.

     "Guaranteed  Commercial  Operation  Date"  means  28  months
following the issuance of the Notice to Proceed pursuant  to  the
Luannan EPC Contract.

     "Harbin  Power"  means  Harbin Power  Equipment  Company,  a
company organized under the laws of the PRC.

     "Heard  Defendants"  means  the  Heard  Energy  Corporation,
collectively   with  certain  individual  former  PEC   officers,
employees and advisors who are involved in litigation with PEC.

     "Heat Network Construction Agreement" means the Construction
Agreement  of  the Heat and Steam Network, dated June  20,  1996,
between Tangshan Pan-Sino and Tangshan Engineering.

     "HPPC" means the Hebei Provincial Planning Commission.

     "HRSG" means heat recovery steam generator.

     "ICC" means the International Chamber of Commerce.

     "ICF"   means  ICF  Resources,  Incorporated,   a   Delaware
corporation.

     "Independent Engineers" means Burns & McDonnell with respect
to  the  Rosemary Facility and PES with respect to the Brandywine
Facility, or their respective successors.

     "Independent   Engineers'  Reports"   means   the   Rosemary
Engineering Report and the Brandywine Engineering Report.

     "Independent  Insurance Consultant" means Sedgwick,  PLC,  a
corporation  incorporated in accordance  with  the  laws  of  the
United Kingdom, or its successor.
     
     "Initial Purchaser" shall mean Donaldson, Lufkin & Jenrette,
the initial purchaser of the Old Notes.

     "Interconnection     Agreement"    means     the     General
Interconnection  Agreement,  dated September  22,  1995,  between
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western, as supplemented by the Supplemental Agreement.

     "Interholding"  means  Panda  Interholding  Corporation,   a
Delaware corporation.

     "IRS" means the United States Internal Revenue Service.

     "Issuer" means Panda Global Energy Company, a Cayman Islands
exempted company.

     "Jing-Jin-Tang  Grid"  means North China  Power's  Beijing--
Tianjin--Tangshan   Regional  Power   Network,   to   which   the
electricity generated by the Luannan Facility will be transmitted
for distribution.

     "Joint  Venture Agreements" means, collectively,  the  joint
venture  contracts  in respect of Tangshan Panda,  Tangshan  Pan-
Western, Tangshan Cayman and Tangshan Pan-Sino.

     "Joint   Ventures"  means,  collectively,  Tangshan   Panda,
Tangshan Pan-Western, Tangshan Cayman and Tangshan Pan-Sino.

     "Kathleen  Facility" means the natural gas-fired,  combined-
cycle cogeneration facility to be located near Lakeland, Florida,
that is being developed by PEC.

     "Kathleen   Partnership"  means  Panda-Kathleen,   L.P.,   a
Delaware limited partnership.

     "Kailuan Coal" means Kailuan Coal Mining Administration, one
of the Luannan Coal Suppliers.

     "Liquidated Damages" means the amount payable as  liquidated
damages under the terms of the Registration Rights Agreements, as
described  in  "Description  of the Notes,  the  Guarantees,  the
Issuer Loan, the Shareholder Loans and the Collateral Documents."
     "Luanhua Co." means Tangshan Luanhua (Group) Co., a  company
organized under the laws of the PRC.

     "Luannan Coal Consultant" means Marston & Marston.

     "Luannan Coal Consultant's Report" means the report prepared
by  the  Luannan  Coal Consultant entitled "Review  of  the  Coal
Supply Arrangements for the Luannan Power Project of Panda Energy
International, Inc." dated March 10, 1997.

     "Luannan  Coal Suppliers" means, collectively, Kailuan  Coal
Mining Administration, Luannan County Coal Mine, Liu Guantun Coal
Mine,  Le  Ting County Coal Mine, Zunhua Coal Mine and  Chang  Li
County Coal Mine.

     "Luannan  Coal  Supply Agreements" means, collectively,  the
coal   supply  agreements  entered  into  among  Tangshan  Panda,
Tangshan Pan-Western and the Luannan Coal Suppliers.

     "Luannan  Coal  Transportation  Agreement"  means  the  coal
transportation agreement, dated March 6, 1996, among the Carrier,
Tangshan Panda and Tangshan Pan-Western.

     "Luannan County Government" means the government of  Luannan
County, Tangshan Municipality, Hebei Province, PRC.

     "Luannan  Engineering  Report"  means  the  report  entitled
"Engineer's  Review  and Report Panda Energy International,  Inc.
2x50  MW  Coal-Fired Power Plant at Luannan, China"  prepared  by
Parsons  Brinckerhoff,  dated  March  10,  1997,  evaluating  the
design,  construction  and  expected  operational  and  financial
performance of the Luannan Facility.

     "Luannan  EPC  Contract" means the Engineering,  Procurement
and  Construction Contract, dated as of April 24, 1996 among  the
Luannan  EPC Contractor, Tangshan Panda and Tangshan Pan-Western,
as  the  same  may from time to time be amended, supplemented  or
otherwise modified.

     "Luannan EPC Contract Price" means the price that the  Joint
Ventures  have agreed to pay to the Luannan EPC Contractor  under
the Luannan EPC Contract.

     "Luannan  EPC  Contractor"  means Harbin  Power  Engineering
Company  Limited, a company organized under the laws of the  PRC,
and a wholly-owned subsidiary of Harbin Power.
     
     "Luannan  EPC  Guarantee" means (i) the corporate  guarantee
provided  by Harbin Power for the benefit of Tangshan  Panda  and
Tangshan   Pan-Western,   guaranteeing   the   liabilities    and
obligations  of the Luannan EPC Contractor under the Luannan  EPC
Contract and (ii) the Guarantee, dated July 9, 1996, provided  by
CHEXIM  as  required  pursuant to the  Luannan  EPC  Contract  in
respect  of  the  payment of liquidated damages  and  termination
payments  up  to  a  maximum amount of 35%  of  the  Luannan  EPC
Contract Price.

     "Luannan   EPC   Work"   means  the   design,   engineering,
procurement,  construction, startup, and performance  testing  of
the Plant.

     "Luannan  Facility" means the Plant, the related  steam  and
hot  water generation and distribution facility and other related
facilities   to   be   located   in  Luannan   County,   Tangshan
Municipality, Hebei Province, China.

     "Luannan Heat and Power" means Luannan County Heat and Power
Plant, a company organized under the laws of the PRC.

     "Luannan  Heat  Company" means Luannan County Heat  Company,
Ltd., a company organized under the laws of the PRC.

     "Luannan  Heat  Supply  Contracts" means  the  contracts  to
supply  steam  and  hot  water  to  various  PRC  industrial  and
commercial  users  that have been assigned by  Luannan  Heat  and
Power to Tangshan Pan-Sino.

     "Luannan  Interconnection  Dispatch  Agreement"  means   the
agreement to be negotiated among Tangshan Power Supply Bureau  of
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western  shortly prior to the Luannan Commercial  Operation  Date
concerning  specific details as to the dispatch  of  the  Luannan
Facility.

     "Luannan    O&M   Contractor"   means   Duke/Fluor    Daniel
International  Services, a partnership whose  partners  are  Duke
Coal  Project  Services Pacific, Inc., a Nevada corporation,  and
Fluor Daniel Asia, Inc., a California corporation.

     "Luannan  Operations  and Maintenance Agreement"  means  the
Amended  and Restated Operation and Maintenance Agreement,  dated
as of March 6, 1997, among the Joint Ventures and the Luannan O&M
Contractor.

     "Luannan Power Purchase Agreement" means, collectively,  the
Energy  Purchase Agreement, the General Interconnection Agreement
and the Supplemental Agreement (and, after execution thereof, the
Interconnection Dispatch Agreement).

     "Luannan   Pro   Forma"  means  the  pro   forma   financial
projections prepared by Parsons Brinckerhoff and contained in the
Luannan Engineering Report.

     "Luannan   Transmission   Facilities"   means   three    new
substations, the upgrades of both an existing substation  and  an
existing  switching station and approximately 43  km  of  110  KV
transmission lines to interconnect the Plant to the Jing-Jin-Tang
Grid.

     "Luannan  Transmission  Facilities  Construction  Agreement"
means  the  Transmission Facilities Construction Agreement  among
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western,  dated February 10, 1996, as assigned by Tangshan  Panda
and Tangshan Pan-Western to Tangshan Pan-Sino on July 11, 1996.

     "Luannan  Transmission  Facilities Contractor"  means  North
China  Power  Company as the contractor pursuant to  the  Luannan
Transmission Facilities Construction Agreement.

     "Luannan  Transmission Facilities Loan" means the loan  made
by  Tangshan  Pan-Sino to the Transmission Facilities  Contractor
through a PRC financial intermediary for the construction cost of
the  Luannan  Transmission  Facilities,  in  the  amount  of  RMB
78,218,000, to be adjusted for inflation from December  31,  1994
to the date of issuance of the notice to proceed with preliminary
design and for accrued interest during the construction period.

     "Marston  &  Marston"  means  Marston  &  Marston,  Inc.,  a
Missouri corporation.

     "MCN" means MCN Corporation, a Michigan corporation.

     "MOEP" means the Ministry of Electric Power of the PRC.

     "MOFTEC"  means the Ministry of Foreign Trade  and  Economic
Cooperation of the PRC.

     "Moody's" means Moody's Investors Service, Inc.

     "NCNG"  means  North  Carolina Natural  Gas  Corporation,  a
Delaware corporation.

     "NCPA" means the North China Power Administration.

     "NCUC" means the North Carolina Utilities Commission.

     "NDR" means National Development and Research Corporation, a
Texas corporation.

     "NEA" means the Nepal Electricity Authority.

     "Network"  means the heat and steam network of Luannan  Heat
and  Power  which will consist of 12.1 kilometers  of  hot  water
pipeline,  8.78  kilometers  of  steam  pipeline,  heat  exchange
stations, heat control equipment and civil construction.

     "NGC"   means   Natural   Gas  Clearinghouse,   a   Colorado
partnership.

     "NNW"  means  NNW, Inc., formerly known as  Nova  Northwest,
Inc., an Oregon corporation.

     "NNW   Cash  Flow  Participation"  means  NNW's  cash   flow
participation  interest  in  distributions  from   the   Rosemary
Partnership.

     "NNW  Credit  Agreement" means the  Credit,  Term  Loan  and
Security  Agreement,  dated August 31,  1993,  among  PEC,  Panda
Rosemary Corporation, a Delaware corporation, PRC II and NNW.

     "Non-Global Purchasers" means foreign purchasers, Accredited
Investors  or QIBs who elect to take physical delivery  of  their
certificates instead of holding their interest through  a  Global
Note.

     "Non-payment  Default"  means any non-payment  default  with
respect  to any Designated Senior Indebtedness pursuant to  which
the maturity thereof may then be accelerated immediately.

     "Noon  Buying Rate" means the noon buying rate in  New  York
City  for cable transfers in foreign currencies as certified  for
customs purposes by the Federal Reserve Bank of New York.

     "North  China  Power"  means  North  China  Power  Group,  a
regional  grid  administrative agency  in  northern  China  whose
jurisdiction  covers  Beijing, Tianjin,  Hebei  Province,  Shanxi
Province and western Inner Mongolia.

     "North  China Power Company" means North China  Power  Group
Company,  a company organized under the laws of the PRC  and  the
business arm of North China Power.

     "Noteholders" or "Holders" means the persons in whose  names
Existing Notes are registered on the Registrars' books.

     "NPC"  means  the  National People's Congress,  the  highest
legislative body of the PRC.

     "NPDES"  means the National Pollutant Discharge  Elimination
System.

     "O&M" means operations and maintenance services.

     "Offering"  means the offering of the Old Notes pursuant  to
an offering memorandum dated April 11, 1997.

     "Ogden Brandywine" means Ogden Brandywine Operations,  Inc.,
a subsidiary of Ogden Power Corporation.

     "OID" means Original Issue Discount.

      "Old Notes" means the 12-1/2% Senior Secured Notes due 2004 of
the Issuer issued to the Initial Purchaser on April 22, 1997.

     "Pan-Sino" means Pan-Sino Energy Development Company LLC,  a
Cayman Islands exempted company.

     "Pan-Western"  means Pan-Western Energy Corporation  LLC,  a
Cayman Islands exempted company.

     "Panda  Global Rosemary O&M Agreement" means the  operations
and   maintenance  agreement  pursuant  to  which  the   Rosemary
Partnership purchases O&M services for the Rosemary Facility from
Panda Global Services.

     "Panda Global Services" means Panda Global Services, Inc., a
Delaware  corporation and an indirect wholly-owned subsidiary  of
Panda International.

     "Panda  International"  means  Panda  Energy  International,
Inc., a Texas corporation.
     
     "Parsons  Brinckerhoff"  means Parsons  Brinckerhoff  Energy
Services, Inc., a Delaware corporation.
     
     "PBC"   means  Panda  Brandywine  Corporation,  a   Delaware
corporation.

     "PBOC" means People's Bank of China.

     "PBOC Rate" means the official RMB-foreign currency exchange
rate determined by the People's Bank of China.

     "Peak  Hours"  means  one of the three  eight-hour  delivery
periods designated by the Luannan Power Purchase Agreement.

     "PEC" means Panda Energy Corporation, a Texas corporation.

     "PEPCO" means Potomac Electric Power Company, a District  of
Columbia and Virginia corporation.

     "PES"   means  Pacific  Energy  Services,  Inc.,  an  Oregon
corporation.

     "PFC"   means   Panda   Funding  Corporation,   a   Delaware
corporation  and  an  indirect  wholly-owned  subsidiary  of  the
Company.
     
     "PFC  Bonds" means any series of bonds issued under the  PFC
Indenture.

     "PFC  Indenture" means the Trust Indenture, dated as of July
31,  1996, among PFC, PIC and Bankers Trust Company, as  trustee,
providing  for  the  issuance from time to  time  of  the  Pooled
Project Bonds in one or more series.

     "PFC   Registration   Statement"  means   the   Registration
Statement on Form S-1, filed by PFC and certain of its affiliates
with the Commission which became effective on February 14, 1997.

     "PIC"  means  Panda  Interfunding  Corporation,  a  Delaware
corporation  and  an  indirect  wholly-owned  subsidiary  of  the
Company.

     "PIC  Additional  Projects Contract"  means  the  Additional
Projects  Contract,  dated  as of  July  31,  1996,  among  Panda
International, PEC and PIC.
     
     "PIC  Capitalized Interest Fund" shall mean  the  respective
capitalized interest fund established under the PFC Indenture.
     
     "PIC  Company  Expense Fund" shall mean the company  expense
fund established under the PFC Indenture.
     
     "PIC  Debt  Service Reserve Fund" shall mean the  respective
debt service reserve fund established under the PFC Indenture.

     "PIC   Entity"  or  "PIC  Entities"  means   one   or   more
corporations,   companies,   partnerships,   limited    liability
companies  or  other entities (i) that are not Project  Entities,
(ii)  100%  of  the voting capital stock or other  voting  equity
interests  of  which  are  owned  directly  by  PIC,  other  than
directors' qualifying shares mandated by applicable law and (iii)
through which PIC owns indirect interests in Project Entities.

     "PIC  Guaranty"  means  the unconditional  guaranty  of  the
Series  A Bonds and each other series of Pooled Project Bonds  by
PIC.

     "PIC   International  Entities"  means  PIC  Entities  that,
through  Project  Entities,  own  Projects  that  are  not   U.S.
Projects.

     "PIC  Notes" means any promissory note evidencing loans from
PFC  to PIC of the proceeds of the offering of the Series A Bonds
and each other series of Pooled Project Bonds.

     "PIC  Project  Portfolio" means the  portfolio  of  Projects
owned directly or indirectly by PIC.

     "PIC U.S. Entities" means PIC Entities that, through Project
Entities, own U.S. Projects.

     "Pipeline  Operating Agreement" means the Pipeline Operating
Agreement, dated as of February 14, 1990, among PEC, PR Corp. and
NCNG,  which agreement was assigned by PEC and PR Corp.  to,  and
assumed by, the Rosemary Partnership.

     "Plant"  means the 2x50 MW coal-fired cogeneration plant  to
be  constructed by the Joint Ventures in Luannan County, Tangshan
Municipality, Hebei Province, China.

     "Pooled  Project Bonds" means the Series A Bonds and certain
additional series of bonds issued pursuant to the PFC Indenture.

     "PORTAL"  means  the Private Offerings, Resale  and  Trading
Through Automatic Linkages market.

     "Power  Bureaus" means, collectively, all power  bureaus  of
each level of the administration of the PRC.

     "Power  Law"  means the Law of Electric Power  of  the  PRC,
effective as of April 1, 1996.

     "PR  Corp."  means  Panda-Rosemary Corporation,  a  Delaware
corporation.

     "PRC" means the People's Republic of China.

     "PRC II" means PRC II Corporation, a Delaware corporation.

     "Pricing  Approval  Authority" means the Tangshan  Municipal
Price Bureau.

     "Pricing  Document" means the document or documents  (issued
by  the  Pricing Approval Authority) determining  the  price  for
electric  energy  delivered,  retail  price  and  principles  for
adjustment.

     "Prior  Offering"   shall mean the  offering  of  Old  Notes
consummated on April 22, 1997.
     
     "Project" means a power generation facility or any  activity
relating thereto.

     "Project  Debt" means any indebtedness created, incurred  or
assumed  by  a  Project Entity or secured  by  the  assets  of  a
Project, including the Rosemary Bonds.

     "Project  Design  Criteria"  means  the  Chinese  codes  and
regulations,  and  the project design criteria  detailed  in  the
Engineering and Design Contract.

     "Project    Entity"   means   any   corporation,    company,
partnership,  limited liability company or other entity  that  is
(i) directly or indirectly owned by a PIC Entity and (ii) (a) the
direct or indirect owner of a Project or (b) obligated under or a
guarantor of Project Debt or that has granted a security interest
in  any of its assets (including Project cash flows), other  than
the  capital stock of any of its Subsidiaries (and any  dividends
or  other  distributions  on  such  capital  stock  and  proceeds
therefrom),  to  secure  the  payment  of  Project  Debt  or  the
performance of any Project agreement.

     "Prospectus" shall mean the prospectus forming a part of the
Registration Statement.
     
     "Provincial  Power Bureaus" means, collectively,  the  eight
independent  provincial  and  two  special  administrative  power
bureaus of the PRC.

     "Prudent  Utility  Practices" means the practices  generally
followed  by the electric utility industry, as changed from  time
to  time,  which  generally include,  but  are  not  limited  to,
engineering and operating considerations.

     "PUCs"  means state public utility commissions in the United
States.

     "PUHCA"  means  the  United States  Public  Utility  Holding
Company Act of 1935, as amended.

     "Purchase Agreement" shall mean the purchase agreement dated
April  11, 1997, whereby the Initial Purchaser agreed to purchase
the Old Notes.
     
     "PURPA"  means  the United States Public Utility  Regulatory
Policies Act of 1978, as amended.

     "QF" means Qualifying Facility.

     "QIB"  means qualified institutional buyer, as such term  is
defined under Rule 144A of the Securities Act.

     "Qualifying  Facility" or "QF Status" means either  a  small
power  production facility or a cogeneration facility   that  has
satisfied the definition of "qualifying facility" as set forth in
18  C.F.R.   292.101(b)(1) of the regulations  promulgated  under
PURPA.

     "Rating Agencies" means Standard & Poor's, Moody's, and Duff
&  Phelps.  "Reaffirmed  by the Rating  Agencies,"  or  words  to
similar  effect,  means  two  or  three  of  such  agencies  have
reaffirmed the rating of the Indebtedness at issue.

     "Raytheon" means Raytheon Engineers and Constructors, Inc.

     "Raytheon  Parent Guaranty" means the Parent Guaranty  dated
as of March 30, 1995 executed by Raytheon Company in favor of the
Brandywine Partnership.

     "RCRA"  means  the  United States Resource Conservation  and
Recovery Act of 1976.

     "Regional  Power  Groups"  means,  collectively,  the   five
interprovincial power groups of China.

     "Registration Rights Agreement" shall have the  meaning  set
forth in "Prospectus Summary--Prior Offering".
     
     "Registration Statement" shall have the meaning set forth in
"Available Information."
     
     "Reimbursement  Agreement"  means  the  Second  Amended  and
Restated  Letter of Credit and Reimbursement Agreement, dated  as
of  January  6,  1992, among the Rosemary Partnership,  The  Fuji
Bank,  Limited, and certain other banks party thereto, which  was
terminated in July 1996.

     "Renminbi"  or  "RMB"  means  Renminbi,  the  legal   tender
currency of China.

     "Retainage"  means  the withholding by  Tangshan  Panda  and
Tangshan Pan-Western of 10% of the Luannan EPC Contract Price.

     "Rosemary  Bonds" means the 8 5/8% First Mortgage Bonds  due
2016 of Panda-Rosemary Funding Corporation.

     "Rosemary    Borrowers"    means   Panda-Rosemary    Funding
Corporation, PR Corp. and PRC II.

     "Rosemary  Casualty  Proceeds" means  Casualty  Proceeds  as
defined in the Rosemary Indenture.

     "Rosemary  Eminent  Domain Proceeds"  means  Eminent  Domain
Proceeds as defined in the Rosemary Indenture.

     "Rosemary  Engineering  Report" means  the  report  entitled
"Panda-Rosemary Cogeneration Project Condition Assessment  Report
prepared by Burns & McDonnell, dated April 11, 1997, and  updated
June  6,  1997,  concerning certain technical, environmental  and
economic aspects of the  Rosemary Facility.

     "Rosemary Event of Eminent Domain" means an Event of Eminent
Domain as defined in the Rosemary Indenture.

     "Rosemary  Event of Loss" means an Event of Loss as  defined
in the Rosemary Indenture.

     "Rosemary  Facility"  means the 180  MW  natural  gas-fired,
combined-cycle cogeneration facility of the Rosemary  Partnership
located in Roanoke Rapids, North Carolina.

     "Rosemary  Fuel  Consultant" means Benjamin Schlesinger  and
Associates, Inc.

     "Rosemary  Fuel  Consultant's   Report"  means  the   report
entitled "Assessment of Fuel Price, Supply and Delivery Risks for
the Panda-Rosemary Cogeneration Project" prepared by the Rosemary
Fuel  Consultant, dated September 20, 1996, as updated  on  April
11, 1997, and June 6, 1997, analyzing the sufficiency of the fuel
supply and transportation arrangements for the Rosemary Facility.
     "Rosemary  Fuel Management Agreement" means the Fuel  Supply
Management  Agreement,  dated  October  10,  1990,  between   the
Rosemary Partnership and NGC, as amended.

     "Rosemary  Gas  Supply  Agreement" means  the  Gas  Purchase
Contract,  dated April 12, 1990, between the Rosemary Partnership
and NGC, as amended.

     "Rosemary Indenture" means the trust indenture governing the
terms of issuance from time to time of debt securities in one  or
more  series,  dated  as of July 31, 1996,  among  Panda-Rosemary
Funding  Corporation, the Rosemary Partnership and Fleet National
Bank, as trustee.

     "Rosemary  Issuer" means Panda-Rosemary Funding Corporation,
a Delaware corporation.

     "Rosemary  Offering"  means the  offering  of  the  Rosemary
Bonds.

     "Rosemary   Partnership"  means  Panda-Rosemary,   L.P.,   a
Delaware limited partnership.

     "Rosemary Pipeline" means the 10.26 mile gas pipeline  owned
by the Rosemary Partnership.

     "Rosemary Power Purchase Agreement" means the Power Purchase
and  Operating Agreement, dated January 24, 1989, as  amended  on
October  24,  1989,  and  July 30, 1993, between  VEPCO  and  the
Rosemary Partnership.

     "Rosemary   Pro   Forma"  means  the  pro  forma   financial
projections  prepared by Burns & McDonnell that are contained  in
the Rosemary Engineering Report.
     
     "Rosemary   Project   Document"  means,  collectively,   the
Rosemary  Power  Purchase Agreement, the Rosemary EPC  Agreement,
the  Rosemary  O&M Agreement, the Rosemary Steam  Agreement,  the
Rosemary  Fuel  Management Agreement,  the  Rosemary  Gas  Supply
Agreement, the Rosemary Site Lease and (as each of the  following
is defined in the Rosemary Indenture) and each Additional Project
Document.

     "Rosemary  Site  Lease" means the Real  Property  Lease  and
Easement Agreement, dated June 9, 1989, as amended on October  1,
1989,  and as further amended on January 31, 1990, and March  15,
1996, between the Rosemary Partnership and Bibb.

     "Rosemary  Steam  Agreement" means the  Cogeneration  Energy
Supply Agreement, dated January 12, 1989, by and between PEC  and
Bibb,  which contract was assigned by PEC to, and assumed by,  PR
Corp.,  as such contract was amended October 1, 1989, and as  the
same  was  further assigned by PR Corp. to, and assumed  by,  the
Rosemary Partnership on January 3, 1990.
     "Rosemary Title Event" means a Title Event as defined in the
Rosemary Indenture.

     "Rosemary  Title  Insurance Proceeds" means Title  Insurance
Proceeds as defined in the Rosemary Indenture.

     "SAFE" means the State Administration of Foreign Exchange of
the PRC.

     "SAIC"  means  the  State  Administration  of  Industry  and
Commerce of the PRC.

     "SCC"   means  the  State  Corporation  Commission  of   the
Commonwealth of Virginia, or any successor agency.

     "SEC"  means the Securities and Exchange Commission  of  the
United States.

     "Securities Act" means the United States Securities  Act  of
1933, as amended.

     "Series  A  Bonds" means the 11 5/8% Pooled  Project  Bonds,
Series A due 2012 of Panda Funding Corporation.

     "Series  A  Offering" means the offering  of  the  Series  A
Bonds.

     "Series  A-1 Bonds" means they 11-5/8% Pooled Project  Bond,
series  A-1 due 2012 of Panda Funding Corporation, exchanged  for
the Series A Bonds of Panda Funding Corporation.
     
     "Services" means the services to be performed by the  Design
Institute pursuant to the Engineering and Design Contract.

      "Shelf  Registration Statement" shall have the meaning  set
forth in "Prospectus Summary--Prior Offering."

     "SFV" means Straight Fixed-Variable transportation rates.

     "SP" means the State Power Corporation of China.

     "SPC" means the State Planning Commission of the PRC.

     "Standard & Poor's" means Standard & Poor's Ratings Service.

     "Superfund"    means   the   United   States   Comprehensive
Environmental Response, Compensation and Liability Act  of  1980,
as amended.

     "Supplemental  Agreement" means the  Supplemental  Agreement
for   General  Interconnection  Agreement  and  Electric   Energy
Purchase  and  Sales Agreement, dated February  10,  1996,  among
North  China  Power  Company, Tangshan Panda  and  Tangshan  Pan-
Western.

     "Swap  Centers"  means  the official foreign  exchange  swap
markets of the PRC.
     "Tangshan  Cayman" means Tangshan Cayman Heat &  Power  Co.,
Ltd., a Sino-foreign equity joint venture.

     "Tangshan  Engineering" means Tangshan Heat and  Engineering
Company, a company organized under the laws of the PRC.

     "Tangshan Pan-Sino" means Tangshan Pan-Sino Heat Co.,  Ltd.,
a Sino-foreign equity joint venture.

     "Tangshan Pan-Western" means Tangshan Pan-Western  Heat  and
Power Co., Ltd., a Sino-foreign equity joint venture.

     "Tangshan  Panda" means Tangshan Panda Heat and  Power  Co.,
Ltd., a Sino-foreign equity joint venture.

     "Taxes"   means   any  present  or  future  taxes,   duties,
assessments or governmental charges of whatever nature.

     "Texas Gas" means Texas Gas Transmission Corporation.

     "Texas  Gas  FT  Agreement"  means  the  Gas  Transportation
Agreement,  dated  August  1, 1996, between  Texas  Gas  and  the
Rosemary Partnership.

     "Total Transmission Facilities Construction Cost" means  the
U.S.  dollar  equivalent of RMB 78,218,000, to  be  adjusted  for
inflation from December 31, 1994, to the date of issuance of  the
notice  to  proceed with preliminary design in  relation  to  the
construction of the Luannan Transmission Facilities.

     "Transco"  means Transcontinental Gas Pipe Line Corporation,
a Delaware corporation.

     "Transco  FT  Agreement" means the Service Agreement,  dated
July  26,  1996,  effective as of August 20,  1996,  between  the
Rosemary Partnership and Transco.

     "Treasury" means the United States Department of Treasury.

     "Treasury  Regulations"  means  regulations  issued  by  the
United States Department of Treasury.

     "Trough  Hours"  means one of the three eight-hour  delivery
periods designated by the Luannan Power Purchase Agreement.

     "U.S.  dollars,"  "dollars,"  or  "$"  means  United  States
dollars, legal currency of the United States of America.

     "U.S.  Projects"  means  the  Projects  owned  by  PIC  U.S.
Entities  and  located  in the United States  and  certain  other
international  Projects  in respect of  which  deferral  of  U.S.
federal income taxes is not being sought.

     "United  States"  or  "U.S."  means  the  United  States  of
America.

     "United States Holder" or "U.S. Holder" means a holder of  a
Note  who  is  (i)  a citizen or resident of the  United  States,
(ii)  a  corporation,  partnership or  other  entity  created  or
organized  in  or  under the laws of the  United  States  or  any
political  subdivision thereof, (iii) an  estate  or  trust,  the
income  of  which  is  subject to United  States  federal  income
taxation  regardless  of its source or  (iv)  a  trust  which  is
subject  to  the supervision of a court within the United  States
and  the  control  of a United States fiduciary as  described  in
Section 7701(a)(30) of the Code.

     "VEPCO"  means  Virginia  Electric  and  Power  Company,   a
Virginia  public  service corporation (including  North  Carolina
Power).

     "WestPoint"  means  WestPoint  Stevens,  Inc.,  a   Delaware
corporation.

     "WGL"  means  Washington Gas Light Company,  a  District  of
Columbia corporation and a Virginia corporation.

     "WGL  Agreement"  means  the Gas Transportation  and  Supply
Agreement,  dated  November  10,  1994,  between  the  Brandywine
Partnership and WGL.

APPENDIX A

 PART II - CERTAIN TECHNICAL TERMS COMMONLY USED IN THE UTILITY
                            INDUSTRY
                                
Defined  below are certain technical terms commonly used  in  the
electric and gas utility industries.

     "Available"  means the status of a major piece of  equipment
which  is  capable of service, whether or not it is  actually  in
service.

     "Btu"  means  British  Thermal  Unit,  the  amount  of  heat
required  to  raise the temperature of 1 pound of  pure  water  1
degree F from 59 degrees F to 60 degrees F at a constant pressure
of 14.73 pounds per square inch absolute.

     "Capability"  means  the  maximum  load  which  an  electric
generating unit can carry under specific conditions for  a  given
period  of time, without exceeding approved limits of temperature
and stress.

     "Capacity"  means the load for which an electric  generating
unit is rated either by the user or by the manufacturer.

     "Cogeneration" means the simultaneous production of electric
energy  and  useful  thermal energy for  industrial,  commercial,
heating or cooling purposes.

     "Cogeneration  Facility"  means  a  facility  that  produces
electric  energy  and useful thermal energy used for  industrial,
commercial, heating or cooling purposes.

     "Dispatch"  means for purposes of this Offering  Memorandum,
dispatching  a plant means directing such plant to produce  power
under the appropriate power sales agreement.

     "GJ" means gigajoule; one billion Joules.

     "GWH" means gigawatt hour; one million kWh.

     "Installed  Capacity" means the full-load continuous  rating
of  a  generator, prime mover or other electrical equipment under
specified conditions as designated by the manufacturers.

     "kJ"  means  kilojoule; 1000 Joules and equals  .947817  Btu
(international).

     "kV" means kilovolt; 1,000 volts.

     "kW" means kilowatt; 1,000 watts.

     "kWh" means kilowatt-hour; the basic unit of electric energy
equal  to  one  kilowatt of power supplied to or  taken  from  an
electrical circuit steadily for one hour.

     "LHV" means lower heating value.

     "Load" means with respect to a power generating plant  or  a
generator,  the extent to which it is being used at a  particular
time.

     "Metric Ton" means 1,000 kilograms or 2204.6 pounds.

     "MM" means thousand.

     "MW" means megawatt; one million watts.

     "MWh" means megawatt hour; one thousand kWh.

     "Net  Dependable Capacity" means the tested or  demonstrated
output of the facility in kilowatts, measured at the output (high
voltage side) of the main transformers.

     "Outage"  means  an  interruption that  fully  or  partially
curtails   the   electric   generating   facility's   output   of
electricity.

     "Transmission  Line" means an electrical connection  between
two points on a power system for the purpose of transferring high
voltage  electrical  energy  between  the  points.  Generally,  a
transmission  line  consists of large wires  or  conductors  held
aloft by towers.

     "TW" means terawatt; one billion kW.

     "TWh"  means  terawatt-hour; one billion kWh.  One  thousand
GWh.  TWh  is  typically used as a measure of the  annual  energy
output of a region or country.

     "Watt"  means  the electric unit of real power  or  rate  of
doing  work. The unit of power in the international system  (SI),
expressed  as the Watt, is the power required to do work  at  the
rate of one Joule per second.

           THE ELECTRIC POWER INDUSTRY AND REGULATION
                           IN THE PRC
                             AND THE
                          UNITED STATES

The  information  in this Section has been derived  from  various
government    and   private   publications   and   obtained    in
communications with various PRC governmental agencies and has not
been  prepared  or independently verified by the Joint  Ventures,
the  Issuer, the Company or the Initial Purchaser or any of their
respective affiliates. Capitalized terms used in this Appendix  B
and  not  otherwise defined herein have the meanings assigned  in
the glossary included as Appendix A hereto.

General

Since  1978,  the  PRC  government has been implementing  market-
oriented  economic reforms in an effort to revitalize  the  PRC's
economy and improve its citizens' standard of living. The reforms
have  marked a shift from a more rigid, centrally-planned economy
to  a more mixed economy in which market forces play an increased
role   and   the  government  has  a  reduced  role.  State-owned
enterprises  still constitute the largest sector of the  economy,
but  implementation of the economic reforms  has  led  to,  among
other  things, the delegation to managers of enterprises of  more
decision-making  powers  and responsibilities  regarding  matters
such  as  production, marketing, use of funds and  employment  of
staff.  It has also led to the conversion of selected State-owned
enterprises into joint stock limited companies which issue shares
to  the public and private investors (including their employees);
the  gradual  reduction of PRC government control  over  producer
prices;  and the designation of certain coastal areas and  cities
as   special  economic  development  zones  with  greater   local
autonomy.  The  PRC  government  has  also  implemented  policies
designed  to attract foreign investment and technology.  The  PRC
government's  reforms  have  resulted  in  significant   economic
growth.   The   gross   domestic  product  of   China   increased
significantly during the period 1980 to 1995.

The China Power Market

At  the  end  of 1995, China had an aggregate installed  electric
power  generation  capacity of approximately 217,220  MW,  making
China's  electric power generation capacity the third largest  in
the  world.  In 1995, about 17,323 MW of installed  capacity  was
added.  China's  electric power industry  produced  approximately
1,007 TWh of electricity in 1995. This represents an addition  of
nearly 80 TWh from 1994, making China's electricity industry  one
of  the  fastest growing in the world. Despite its size,  China's
electric  power system is inadequate to meet current and expected
demand, and the consequent shortage is one of the major obstacles
to  economic growth in the PRC. In addition, as of October  1994,
approximately  120  million people did not  yet  have  access  to
electricity.

Developments in the PRC's Power Industry

Under  the  PRC's  Eighth Five-Year Plan (1991-1995),  increasing
demands  for  electricity resulted in the rapid increase  in  the
PRC's  total annual electricity generation. A total of 65,747  MW
of  electric power generating capacity was installed  during  the
four-year  period from 1992-1995, representing an average  annual
increase  of more than 16,000 MW. Notwithstanding such  increase,
the  PRC's  average  annual growth rate  for  installed  electric
generating  capacity between 1992 and 1995 (approximately  10.4%)
did  not  keep pace with the average annual growth  rate  of  the
PRC's  GDP. The following table sets forth figures for  installed
capacity, increases in installed capacity, electricity generation
and  percentage increases in electric power generation  in  China
for the years 1986 to 1995.
Increase in                     
            Installed    Installed   Electricity  Increase in
             Capacity     Capacity    Generation  Electricity
Year        (MW)         (MW)        (TWh)         (%)
   1986      93,818.5      6,795.3      449.6        9.5
   1987     102,897.0      9,078.5      497.3       10.6
   1988     115,497.1     12,600.1      545.2        9.6
   1989     126,638.6     11,141.5      584.8        7.3
   1990     137,890.0     11,251.4      621.2        6.3
   1991     151,473.1     13,583.1      677.5        9.0
   1992     166,532.4     15,059.3      754.2       11.3
   1993     182,910.7     16,378.3      836.4       10.9
   1994     199,897.2     16,986.5      927.9       10.9
   1995     217,220.0     17,322.8    1,007.0        8.5
(estimated)
    (1)
__________________

Source:   Ministry of Electric Power, Electric Power Industry  in
China (1995).
(1)  Based on various published statements from MOEP officials.

     Based  on statements by the Ministry of Electric Power  (the
"MOEP"), China will need an average of approximately 16,600 MW of
new  electric generating capacity annually through the year  2000
(or  an  aggregate  of approximately 83,000 MW  of  new  electric
generating  capacity in the Ninth Five-Year  Plan  period  ending
2000).  MOEP estimates that approximately $20 billion of overseas
investment  will  be  needed  to  reach  the  MOEP's  target   of
increasing installed capacity to 290,000 MW by 2000.

Electric Power and Other Regulation

     The  Joint  Ventures, North China Power  Company  and  North
China  Power are subject to governmental and electric power  grid
regulation   in  virtually  all  aspects  of  their   operations,
including  the  amount and timing of electricity  generation  and
dispatch,  the  setting  of  power  rates,  the  performance   of
scheduled  maintenance  and compliance with  power  grid  control
directives.   Moreover, the conversion of  the  revenues  of  the
Joint  Ventures  into  U.S. dollars is  subject  to  the  foreign
exchange regulations of the PRC, which are administered by  State
Administration of Foreign Exchange of the PRC (the  "SAFE").  See
"Risk  Factors  -  Considerations Relating to the  PRC-Government
Control of Currency Conversion and Exchange Rate Risks."

Regulation of the Electric Power Industry; General

     The PRC's electric power industry is regulated primarily  by
the  MOEP  in  conjunction with the SPC  and  other  governmental
agencies.  For foreign investments in electric power projects  in
the  PRC,  such  governmental agencies include  the  Ministry  of
Foreign Trade and Economic Cooperation of the PRC (the "MOFTEC"),
the  SPC,  the  SAFE, the State Administration  of  Industry  and
Commerce  of  the  PRC (the "SAIC") and certain  other  agencies.
Certain  functions of the MOEP are expected to be transferred  in
the  near  future to the State Power Corporation of China  ("SP")
which  was  formally  approved in  January  1997.   See  "Central
Governmental  Authorities - Ministry of  Electric  Power"  below.
The   regulatory   and  approval  authorities  of   the   Central
Governmental agencies are delegated to local provincial  or  city
governmental agencies performing similar functions if  the  total
amount  of such foreign-invested projects does not exceed certain
thresholds   (denominated   in   U.S.   dollars).    See    "Risk
Factors-Considerations Relating to the PRC-Legal  and  Regulatory
Considerations."

Central Governmental Authorities

     The  structure of the PRC political system is based  on  the
PRC  Constitution and is headed by the National People's Congress
("NPC"),  which is the highest legislative body,  and  the  State
Council,  which  is the highest executive body charged  with  the
implementation and administration of the laws and decisions  made
by  the  NPC.  In  addition, the SPC is in charge of  formulating
national  long-term, medium-term and annual economic plans  based
on the industrial policy of the PRC.

State Council

     The  State Council is responsible for the integration of all
activities   and  policies  of  its  component  commissions   and
ministries,  as  well as provincial and local governments.  Rules
and  regulations  of  the State Council and its  commissions  and
ministries preempt all legislation, rules or regulations  enacted
by  provincial and local governments. Thirty-eight ministries and
commissions,  the  General  Office  of  the  State  Council,  the
People's   Bank  of  China  (the  "PBOC"),  the  State   Auditing
Administration  and a number of other bureaus and administrations
are  currently  under the direct authority of the State  Council.
The agencies described below are the primary Central Governmental
agencies vested with authority to regulate foreign investment  in
the electric power industries in the PRC.

     In  1985, the State Council revised a number of its policies
with  the  intention  of fostering the rapid development  of  the
electric power industry, including (i) allowing local governments
to  invest  in  the development of power plants in  their  areas,
(ii) loaning funds to the local and provincial Power Bureaus  for
the   development  of  local  and  provincial  power  plants  and
(iii)   encouraging  the  utilization  of  foreign   capital   by
permitting   foreign   participation  in  the   development   and
management of power plants in China.

State Planning Commission

     The   SPC   is  responsible  for  coordinating  the  foreign
investment   plans   submitted   by   the   provincial   planning
departments, and formulating national long-term, medium-term  and
annual foreign investment plans based on the industrial policy of
the  PRC.  The SPC has authority to approve the project  proposal
and  the  feasibility  study  of foreign  investment  enterprises
("FIEs")  with  total  investment of over  $10  million,  or  $30
million  in certain cases, except that FIEs with total investment
of  over  $100 million must also obtain final approval  from  the
State  Council. The SPC is also responsible for coordinating  the
Renminbi   and   foreign   exchange  funds   required   for   the
construction, production and operation of FIEs.

Ministry of Electric Power

     As the ministry responsible for the electric power industry,
the  MOEP  is responsible for formulating development  strategies
and  policies  for  the  electric  power  industry  in  the  PRC,
including   investment,  technical,  and  major  production   and
consumption  policies. In addition to formulating electric  power
industry  planning  in  collaboration  with  the  SPC  and  other
governmental  agencies, the MOEP (i) coordinates the  development
of   the   electric   power   industry,   (ii)   supervises   the
implementation  of related national policies, decrees  and  plans
and  (iii)  provides services to electric power enterprises.  The
MOEP  shares certain of its administrative responsibilities  with
the  China Nuclear Industry Corporation and the Ministry of Water
Resources  with  respect  to  nuclear-powered  and  hydro-powered
electricity  generating facilities, respectively. In addition  to
these  regulatory and administrative functions, the MOEP is  also
in  charge  of  the  overall financial management  of  the  power
industry,  including  consolidating the  profits  and  taxes  and
approving  the  budgets  of  all  the  regional  power   entities
annually.  The  MOEP  owns China's State-owned  power  generating
assets  on  behalf  of  the  State, other  than  those  owned  by
companies  not  directly managed by the MOEP and  a  few  smaller
units directly owned by local governments.

     In  an  attempt  to separate the regulatory  and  commercial
functions  of the electric power industry, the PRC State  Council
formally  approved the establishment of the SP in  January  1997.
The SP is a state-owned legal entity with funds provided directly
by  the  State  Council.  It will serve as  the  PRC's  principal
investor  in  and/or operator of wholly or partially  state-owned
facilities  in  China.  It  will  also  be  responsible  for  the
operation  of  interregional  transmission  facilities  and   the
development of a national power grid. After the establishment  of
the  SP,  the  MOEP  will  continue to  exercise  the  regulatory
function  over the Chinese electricity industry, but  the  MOEP's
enterprise management function and its function to operate  state
assets  will  be  turned over to the SP. As part of  the  reform,
provincial  power  bureaus  will  also  need  to  transfer  their
regulatory functions to other departments of the local government
and  become subsidiaries of the SP. It has been reported that the
MOEP  itself  will also be dissolved and its regulatory  function
will  be  transferred  to  the  China  Electricity  Council.  The
organization and establishment work of the SP is expected  to  be
completed  before the end of June 1997. There can be no assurance
as to what impact this reform will have on the Luannan Facility.

Ministry of Foreign Trade and Economic Cooperation

     The  MOFTEC  controls  all  affairs  pertaining  to  foreign
economic  relations  and  trade  through  the  implementation  of
principles and policies of the medium and long-term foreign trade
development   plans.   Its   aim  is  to   foster   international
multilateral and bilateral economic and technological cooperation
by  utilizing  foreign  funds, organizing import  and  export  of
technology,  and generating construction projects  abroad.  On  a
national level, the main responsibility of the MOFTEC consists of
controlling  and  coordinating foreign trade  activities  in  the
provinces, autonomous regions and municipalities, as well  as  in
various  departments under the State Council. The MOFTEC has  the
authority to approve organizational documents of FIEs with  total
investments exceeding the $10 million or $30 million threshold.

State Administration of Industry and Commerce

     The  SAIC  is in charge of the registration of, and issuance
of  business licenses to, FIEs. It has the authority  to  conduct
annual   inspections  of  FIEs  to  ensure  that  their  business
activities  have  been  carried  out  in  accordance  with  their
approved business scope and the applicable laws and regulations.

State Administration of Foreign Exchange

     The  SAFE  is  responsible  for  administration  of  foreign
exchange   in   the   PRC.  It  formulates   and   oversees   the
implementation  of  foreign  exchange regulations  applicable  to
FIEs.  The  relevant  approval authorities consult  the  SAFE  in
respect of foreign exchange matters relating to FIEs. The SAFE is
also  responsible for administrating the Swap Centers and issuing
permits  to  FIEs for access to the Swap Centers as well  as  for
monitoring the interbank system.

Local Governments

     Administratively, the PRC is divided into 23 provinces, four
municipalities   with   provincial  level   authority   (Beijing,
Shanghai, Tianjin and Chongqing) and five autonomous regions.  At
the  local  level, administrative entities derive their authority
from, and are accountable to, the National People's Congresses at
the   provincial  and  municipal  levels.  Provincial  and  local
congresses  and  governments are permitted to enact  legislation,
rules  and  regulations designed for local  conditions,  provided
that such legislation does not contravene the Constitution or the
laws or regulations adopted by the Central Government of the PRC.

     The  local provincial and county equivalents of the  Central
Government   approval   authorities  discussed   above   play   a
corresponding  role  in  the approval  process  where  the  total
investment and other conditions of proposed FIEs fall within  the
prescribed  limits  of  delegated  approval  authority.  In  this
regard,  the  provincial  and  county  planning  departments  and
economic  departments have the authority to approve  the  project
proposal and the feasibility study and the provincial and  county
Commissions of Foreign Trade and Economic Cooperation ("COFTECs")
have  the  authority to approve the organizational  documents  of
FIEs.

Regional, Provincial and Local Power Bureaus

     The  MOEP  directly oversees the five interprovincial  power
groups  (the  "Regional Power Groups") and the eight  independent
provincial  and two special administrative region  power  bureaus
("Provincial Power Bureaus") in China. The Regional Power  Groups
(i)  manage their respective regional power grids, (ii)  dispatch
the  power  plants  connected to such grids  either  directly  or
indirectly through lower level power bureaus, and (iii) supervise
the  power  bureaus at lower administrative levels. The  Regional
Power  Groups  also  act through power companies  which  develop,
construct,  own and operate certain power plants and transmission
facilities within their respective territories. The key personnel
of  the  Regional Power Groups are appointed by the MOEP and  the
key  personnel of the Provincial Power Bureaus are  appointed  by
the provincial governments in consultation with the MOEP.
     
     A  similar structure exists for the Provincial Power Bureaus
under  the Regional Power Groups and the Provincial Power Bureaus
directly  managed  by  the  MOEP. Each  Provincial  Power  Bureau
manages its provincial power grid and dispatches the power plants
connected  to  such  grid to meet local demand.  Many  Provincial
Power  Bureaus  also  act through power companies  which  operate
certain  power plants and certain transmission facilities  within
their  respective provinces. Cities and counties  directly  under
the  administration  of  the provinces  may  have  power  bureaus
(together with the Regional Power Groups and the Provincial Power
Bureaus,   the   "Power  Bureaus")  which  perform,   under   the
administration  of the Power Bureau at the next higher  level  of
government,    similar   functions   within   their    respective
jurisdictions.

Investment in the Electric Power Industry

     The  Ninth Five-Year Plan contemplates that power generating
capacity  in the PRC nationwide will be increased on  average  by
16,600  MW annually, representing an annual increase of about  7%
in power generation. By the year 2000, the total power generating
capacity  nationwide  is expected to reach  290,000  MW  with  an
expected  annual power generation of 1,400 billion kWh. In  order
to  achieve these goals, it is estimated that 20% of the required
investment in the expansion of the power sector will have to come
from  abroad.  As  stated  above, prior  to  1985  virtually  all
investment in China's electric power industry was financed by the
Central  Government.  In 1985, the Central  Government  began  to
implement  a  policy  of using a variety of  ways  and  financing
methods  to develop the PRC's electric power industry,  including
foreign investment through independent power projects and  build-
operate-transfer ("BOT") approaches. To date, the  primary  means
of  foreign  investment in the PRC's electric power industry  has
been debt financing of State-owned plants with a small amount  of
equity investment in independent or BOT projects.

     With  appropriate  Central  Government  approvals,  Regional
Power  Groups  and  Provincial Power Bureaus  may  form  directly
managed  power companies, which may develop, construct,  own  and
operate power plants in their respective territories. North China
Power Company was formed by North China Power in 1993 to serve as
North  China  Power's business arm. At least  two-thirds  of  the
installed capacity in China at the end of 1995 was attributed  to
power  plants managed by the MOEP directly or indirectly  through
such  power  companies.  The remainder was  attributed  to  power
plants  owned and operated by the China Huaneng Group, the  State
Energy   Investment  Corporation,  the  China  Power   Investment
Corporation, local government investment institutions and,  to  a
much lesser extent, foreign investors.

Rate Setting Mechanisms

     Rates for electricity produced by power plants that the MOEP
directly  or indirectly manages are generally set by the  Central
Government, thus most electricity has historically been purchased
from  power  plants at such rates. For certain power plants  with
local government, China Huaneng Group or foreign investment, such
as   the  Luannan  Facility,  rates  are  set  on  the  basis  of
discussions between such power plants and the relevant provincial
pricing bureau.

     In  the  case of power plants managed by the MOEP, customers
purchase electricity from the Power Bureaus of each level of  the
administration  of  the PRC at rates determined  by  the  Central
Government, which vary according to the category and location  of
the   user.  The  rates  set  by  the  Central  Government   have
traditionally  been  maintained at a  low  level,  requiring  the
subsidization  of  the  electric power industry  by  the  Central
Government. One of the stated goals of the MOEP, which  has  also
been restated in the Power Law (as described below), is to reform
power pricing to be consistent with the development of the market
economy.  The  MOEP  has  commenced the trial  implementation  in
several  cities  of a time-sharing pricing policy  which  charges
consumers higher rates for peak load periods and lower rates  for
off-peak  load periods. North China Power has adopted  a  similar
program in its service area. Allowing the market to influence the
setting  of  power  rates is intended to provide  incentives  for
greater efficiency in energy production, reduction of energy  use
per  unit  of  industrial  output and promotion  of  conservation
technologies. See "Risk Factors - Considerations Relating to  the
PRC-Governmental Regulation of Power Rates."

Transmission and Dispatch

     The   main   system  for  the  dispatch,  transmission   and
distribution  of  electric power in China consists  of  the  five
interprovincial power grids managed by their respective  Regional
Power  Groups and the eight provincial and two autonomous  region
power  grids managed by the Provincial Power Bureaus.  The  table
below  shows the aggregate installed capacity of the power plants
connected  to  the grids managed by such Power  Bureaus  and  the
total electricity generated on those grids in 1994.
     

                                                          1994
                                           1994          Total
                                         Installed    Electricity
     Grid                                Capacity      Generation
                                           (MW)          (TWh)

East China Power Bureau                   31,673.2      164.358
Central China Power Bureau                27,602.2      132.041
North China Power Bureau                  27,146.4      140.087
Northeast Power Bureau                    26,534.4      124.531
Guangdong Provincial Bureau               19,009.7       73.916
Shandong Provincial Bureau                11,518.2       67.183
Northwest Power Bureau                    11,483.0       60.423
Sichuan Provincial Bureau                 10,095.3       47.328
Fujian Provincial Bureau                   4,960.3       21.605
Guangxi Provincial Bureau                  4,230.8       16.854
Yunnan Provincial Bureau                   4,082.9       16.939
Guizhou Provincial Bureau                  3,253.8       15.206
Xinjiang Autonomous Region Bureau          2,865.1       10.617
Hainan Provincial Bureau                   1,057.3       2.869
Tibet Autonomous Region Bureau               166.7       0.357
   (each a "Power Bureau")

Source:  Ministry of Electric Power, Electric Power  Industry  in
China (1995)

     China's   energy  sources,  such  as  coal   and   potential
hydroelectric resources, are principally located in the  western,
northern  and central inland provinces, but its high  electricity
consumption  regions  are  located in the  eastern  and  southern
coastal areas. As a result of plans to develop large power plants
in  areas  with  significant  energy sources,  the  expansion  of
China's   electricity  transmission  capabilities  is  of   major
importance.  China  plans to interconnect the North  China  Power
Grid with the Northeast Power Grid around 2000. In 2003, with the
expected  completion  of  the first phase  of  the  Three  Gorges
Project,  the  Central  China  Power  Grid  is  expected  to   be
interconnected on the east with the East China Power Grid and  on
the  west  with the Sichuan Power Grid. A unified national  power
grid is planned for completion sometime between 2010 and 2020.

     All electricity produced in China is dispatched by the Power
Bureaus,  except for that generated by units not connected  to  a
grid. The grids and the electric power dispatch to each grid  are
administered by dispatch centers ("Dispatch Centers") operated by
the  Power  Bureaus. Prior to November 1993, such electric  power
dispatch  had  been carried out pursuant to MOEP  guidelines.  In
order to achieve more efficient and rational dispatch of electric
power,  the  State Council issued, with effect from  November  1,
1993,  the  Regulations on the Administration of  Electric  Power
Dispatch to Networks and Grids (the "Dispatch Regulations").  The
Dispatch  Regulations  are  the first nationwide  regulations  in
China  governing  the  dispatch  of  electric  power.  Under  the
Dispatch Regulations, Dispatch Centers were established  at  each
of  five  levels:  the  National Dispatch  Center,  the  Dispatch
Centers of the Regional Power Groups, the Dispatch Centers of the
Provincial  Power  Bureaus, the Dispatch  Centers  of  the  Power
Bureaus  of  municipalities  under  provinces  and  the  Dispatch
Centers of the county Power Bureaus. Dispatch Centers are charged
with  setting  production  levels for the  various  power  plants
connected  to the grid. To effect this determination, each  power
plant receives on a daily basis from its local Dispatch Center an
expected  hour-by-hour  output schedule for  the  following  day,
based on expected demand, the weather and other factors.

     The  Dispatch Regulations provide that the Dispatch  Centers
must  dispatch  electric power according to, among other  things,
(i)  power supply agreements entered into between a Power  Bureau
and  certain large or primary electricity customers,  where  such
agreements  take into account the electric power  generation  and
consumption  plans formulated annually by the Central  Government
and  set  forth in the State Plan, (ii) agreements  entered  into
between  a  Dispatch Center and each power plant subject  to  its
dispatch, (iii) interconnection agreements between Power  Bureaus
and  (iv)  actual  conditions of the  grid,  including  equipment
capabilities and safety reserve margins.

Peak and Seasonal Demands

     The  demand for electric power in China goes through  fairly
predictable  daily  and other periodic cycles.  Peak  periods  of
power  use  are during the day, from approximately 8:00  a.m.  to
10:00  p.m., when industrial and commercial use is highest. Power
demand moderates from approximately 10:00 p.m. to 8:00 a.m. for a
number  of  reasons, including the fact that multiple shifts  are
not  routine in Chinese factories and that the residential demand
for   electricity  is  relatively  low.  Because  China   has   a
significant  shortage  of  electricity generating  capacity,  the
Dispatch  Centers restrict certain users' access  to  electricity
during  peak  periods of demand. As a result, the  peak  load  in
China  does not reflect the extent of the total demand for power.
China does, however, have enough generating capacity to meet  all
demand  during  off-peak periods. While power plants  operate  at
less  than  full capacity during off-peak periods, virtually  all
available  power  plants  operate at full  capacity  during  peak
periods, subject to grid-wide safety reserve margins.

     Because  the  combustion of coal provides  most  of  China's
space-heating  needs  and  because air conditioning  is  not  yet
prevalent  in most regions of China, seasonal variations  in  the
demand  for  electricity are less than in countries such  as  the
United States.

Electricity Sources

     The  table below sets forth for each of the years  1993  and
1994  the amount of electricity generated in the PRC by  type  of
power  plant in absolute terms, as well as a percentage of  total
gross production.
     
                             Actual
                             1993                1994
                              TWh        %        TWh        %
Thermal(1)                   685.9      83.0     747.0      80.5
Hydroelectric power                                     
(including pumped            150.6      17.0     166.8      18.0
 storage) (2)
Nuclear                                        14.1       1.5
  Total gross production     836.5     100.0     927.9     100.0
production

Source:  Ministry of Electric Power, Electric Power  Industry  in
China (1995)
(1)  Predominant fuel is coal; includes for 1993 an insignificant
amount of electricity generated by nuclear power plants.
(2)   Pumped storage facilities pump water into reservoirs  using
electricity  generated  during off-peak  periods.  The  water  is
released  to  generate  hydroelectric power  during  peak  demand
periods.

     China  is  the  world's  largest  producer  of  coal.  China
depended   on  the  consumption  of  coal  for  the   supply   of
approximately 75% of its primary energy needs in 1994,  a  higher
percentage than most developed countries. Coal is used  in  China
not   only  for  generation  of  electricity,  coking  and  other
industrial  applications, but is also widely used for residential
and  commercial cooking and heating. Because of China's extensive
domestic coal resources and its desire to minimize dependence  on
foreign sources for energy, it is expected that coal will  remain
the  main  energy source for electricity generation in China  for
the foreseeable future.

     A  small  portion of the coal and oil used in the generation
of  electricity  is  allocated to power  plants  by  the  Central
Government in accordance with the State Plan. Pursuant  to  price
reforms  introduced in the beginning of 1994, allocated  coal  is
generally  sold  at prices negotiated between  the  supplier  and
purchaser  subject  to  certain limitations  of  price  currently
imposed by the Central Government.

     Much of the coal used in the electric power industry must be
transported from relatively isolated inland coal mines by rail to
the coast for forwarding to the population and industrial centers
concentrated  in  China's coastal areas.  Railway  transportation
capability   is   generally  insufficient  to   satisfy   China's
industrial  and  commercial transportation needs.  As  a  result,
railway transportation is allocated by the Central Government  at
set prices.

PRC Electric Power Law

     Given  the  importance of the continued rapid  expansion  of
China's power industry, the NPC adopted the Law of Electric Power
on  December  28,  1995 (the "Power Law"). The Power  Law,  which
became effective on April 1, 1996, provides the legislative basis
for  the regulation of China's electric power sector. It contains
guidelines  in areas such as the generation, supply  and  use  of
electric power, pricing and tariffs and regulatory supervision.

     Under   the   Power  Law,  the  appropriate   administrative
department of the State Council is authorized within the scope of
its authority to supervise the electric power industry throughout
the  country, and relevant departments of the State  Council  are
authorized  within  the  scope of their respective  authority  to
supervise  the  electric power enterprises. While electric  power
development planning will be carried out according to  the  needs
of  the  national economy, the Power Law also provides that  each
administrative department of the local government at or above the
county  level will be responsible for the supervision and control
of the electric power industry within its administrative region.

     The  Power Law states that independent power companies shall
be  granted grid access upon their request, and provides that the
on-grid price of electricity shall be implemented on the basis of
"the same price for the same quality on the same grid." The Power
Law  lists  the  criteria to be applied in the  determination  of
tariffs   as   including  reasonable  compensation   for   costs,
reasonable  profits, inclusion of taxes in accordance  with  law,
firm  adherence to the principle of equitable sharing of burdens,
and promoting electric power construction. The law delineates the
approval  process  for on-grid tariffs and  makes  a  distinction
between the approvals required for regional/provincial level  and
independent  grids. Central Government approval is  required  for
tariffs  on  regional/provincial grids but no  such  approval  is
specifically  required  for  independent  grids.  The  Power  Law
reiterates  the  Central  Government's  position  that   entities
involved  in  the construction of power plants, power  generation
and  grid operation are autonomous and assume sole responsibility
for     their    own    profits    and    losses.    See    "Risk
Factors-Considerations  Relating  to  the  PRC   -   Governmental
Regulation of Power Rates."

     Because of its recent promulgation and in light of the  fact
that  the  related implementing regulations (including provisions
concerning appropriate tariff setting authorities) have  not  yet
been  published, there can be no assurance as to the  effect  the
Power  Law and its implementation rules will have on the  Luannan
Facility.

Joint Venture Formation Approval

     The formation of the Joint Ventures and the construction and
operation  of  the  Luannan  Facility  are  subject  to   various
governmental  approvals.  Under  PRC  law  and  regulations,  the
formation  of a Sino-foreign joint venture requires the  approval
of  certain governmental authorities in the province in which the
joint venture is located, and, if the total investment (including
equity contributions to the joint venture and expected borrowings
of  the joint venture) exceeds certain thresholds (denominated in
U.S.   dollars),  the  approval  of  certain  Central  Government
authorities  is  required.  Such  thresholds  vary  by  province,
municipality  and  special economic zone. In the  case  of  Hebei
Province,  where  the  Joint  Ventures  are  located,  provincial
governmental   authorities   have  authority   to   approve   the
establishment of any Sino-foreign joint venture entity the  total
investment  of  which does not exceed $30 million  in  accordance
with  a guideline issued in 1988 by the Central Government  which
is currently in effect.  The Hebei Provincial Planning Commission
(the   "HPPC")   and   Hebei  COFTEC,  the  provincial   approval
authorities for the development of power plants and the formation
of  Sino-foreign joint ventures, respectively, have advised  that
the  approval  of the formation of the Joint Ventures  is  within
their  approval authority because the total investment (including
equity  contributions and borrowings) of each  Joint  Venture  is
less then $30 million.

     The  Issuer  has been advised by Cai, Zhang &  Lan,  Chinese
counsel to the Issuer and the Joint Ventures, that, because  each
Joint  Venture is technically viable and operational  by  itself,
has  its own clearly defined business scope and purpose, and  has
followed proper procedures for all required approvals, each Joint
Venture  will be treated as a separate company, each  project  in
respect of which each Joint Venture has been established will  be
treated  as a separate project for approval purposes and  Central
Government approval is not required. Based on the opinion of  its
counsel  and  advice from the HPPC, Hebei COFTEC and  the  County
Partners,  the  Issuer  believes  that  all  required  government
approvals   to   form  the  Joint  Ventures  and   all   required
governmental  approvals that can be obtained to date  to  develop
the    Luannan   Facility   have   been   obtained.   See   "Risk
Factors-Considerations Relating to the PRC - Legal and Regulatory
Considerations."

               HEBEI PROVINCE, BEIJING AND TIANJIN

Economic Development

Hebei Province

     The  Luannan  Facility will be located  in  Luannan  County,
Tangshan City, Hebei Province, PRC. Luannan County is situated in
the  area  that  is  frequently referred to  as  Beijing-Tianjin-
Tangshan triangle, an important economic and political center  in
the  PRC.  Hebei Province is located on the North China  seaboard
and  has an area of 187,700 square kilometers. Its population  in
1995 was 64.3 million, representing approximately 3% of the total
population  of the PRC. Shijiazhuang, the provincial capital,  is
an  industrial  center and a rail-highway hub  approximately  270
kilometers  southwest of Beijing. Hebei Province is an  important
coal  producing province and is also adjacent to China's  largest
coal producing and exporting province, Shanxi. The major rail and
highway  routes  for transporting coal from Shanxi  Province  all
pass through Hebei Province.

     Hebei   Province  borders  Beijing  on  three   sides.   The
industrial  and economic growth of these two large urban  centers
has  positively  influenced the development  of  Hebei  Province.
Situated  in northeastern Hebei Province, along its 487-kilometer
coastline, is Qinhuangdao, China's largest and one of the world's
largest coal ports.

     In  1996,  foreign investment in Hebei rose 58.4%  to  reach
$1.24  billion, making Hebei the fastest growing  of  China's  17
coastal  provinces.   Exports amounted to $3.46  billion,  a  13%
increase  over 1995.  By 2000, exports are expected  to  rise  to
$6.5 billion.

Beijing

     Beijing has an area of 16,808 square kilometers and  at  the
end  of  1996  had  a  population of 12.6  million,  representing
approximately 1% of the total population of the PRC.  Beijing  is
composed of ten central districts and eight surrounding counties,
which  are  bordered by Hebei Province and Tianjin  Municipality.
Beijing is one of three municipalities supervised directly by the
Central  Government of the PRC, occupying the same administrative
level as a province, the others being Tianjin and Shanghai.

     Beijing   is  the  capital  of  the  PRC  and  the   Central
Government,   the  State  Council  and  various  ministries   and
commissions  are  located in the city. As  the  capital,  Beijing
enjoys   a   well-developed  infrastructure   with   respect   to
transportation,  finance, culture and education. Beijing's  urban
development is among the most advanced in China.

Beijing  has  developed a comprehensive industrial base,  leading
the  country  in  the  fields of electronics, organic  chemistry,
textiles,  metallurgy, machinery and construction of  educational
and  cultural facilities. The total GDP generated within  Beijing
in  1996  was  approximately RMB 160.7 billion,  representing  an
increase of 9.1% over 1995. In 1996, the total foreign investment
amounted to $2.26 billion, representing an increase of 14.1% over
1995.   The total value of exports was approximately $2.1 billion
in 1996.

Tianjin

     Tianjin has an area of 11,305 square kilometers and  at  the
end  of  1995  had  a  population of  9.4  million,  representing
approximately  0.8%  of  the total population  of  the  PRC.  The
municipality is bordered by Hebei Province, Beijing and the  sea.
Tianjin is one of three municipalities supervised directly by the
Central Government, occupying the same administrative level as  a
province, the others being Beijing and Shanghai.

     Tianjin   is  an  industrial  and  commercial  gateway   and
transportation hub of Northern China. Benefiting  from  a  153-km
long  coastline, the municipality is rich in oil and natural  gas
resources.  Tianjin's port, Xingang, is one of the  largest  man-
made  seaports in China and is a major trading port  in  Northern
China. The city has been designated the state center for research
into  and  production  of microcomputers  and  it  is  among  the
national leaders in production of chemicals and textiles.

     In   1996,  Tianjin's  total  GDP  was  RMB  110.2  billion,
representing an increase of approximately 14.3% over the previous
year.  Gross industrial output was approximately RMB 211 billion,
representing an increase of 22.7% over 1995, and total  value  of
exports was $4.05 billion.

Power Supply and Demand

     By  the  end of 1995, the installed capacity of North  China
Power  was  25,140 MW and the annual power generation  was  126.7
TWh.   The  Beijing-Tianjin-Tangshan Power Network had  installed
capacity  of  11,647  MW, of which 10, 964 MW  was  comprised  of
thermal  power and 683 MW was hydropower. Demand for  electricity
in Beijing, Tianjin and northern China is expected to grow by 10%
during  the Ninth Five-Year Plan (1996-2000).  In 1996, the  HPPC
indicated   that   Hebei  needed  to  increase  installed   power
generating capacity by more than 1,000 MW annually over the  next
five years.

Hebei Province

     Most  of Hebei Province's electricity is generated by  coal-
fired  power  plants.  Because of its  proximity  to  major  coal
fields,  Hebei Province's per unit cost of electricity generation
is  relatively low. The tables below show the major power  plants
in operation and under development in Hebei Province:

                     Facilities in Operation

                              Operational       Additional
     Plant                    Capacity (MW)     Planned
                                                Capacity (MW)
Douhe Power Plant             1,550             1,200
Zhangjiakou Power Plant       1,200             1,200
Xingtai Power Plant           1,290             1,255
Matou Power Plant             1,000             
Shang'an Power Plant            700               700
Xibaipo Power Plant             600               600
Qinhuangdao Power Plant       1,000               300
Weishui Power Plant             106             
   Total                      7,446             5,255
                                                

                  Facilities under Development

                              Projected         Projected
Plant                         Operational       Completion Date
                              Capacity (MW)
Zhanhewan Pumped Storage        1,000           2005
  Station
Sanhe Power Plant             600-700           2000
Hanfeng Power Plant               660           2001
   Total                      2,260 - 2,360     

Beijing

     The  fuel  sources and per unit generating costs  for  power
plants  serving Beijing are similar to those for Hebei  Province.
The  table  shows the major power plants in operation  and  under
development in Beijing.
                     Facilities in Operation
                                
                                 Operational      Additional
Plant                            Capacity (MW)    Planned
                                                  Capacity (MW)
Shiginhshan Cogeneration Plant   800              

                  Facilities under Development

                                 Projected        Projected
Plant                            Operational      Completion
                                 Capacity (MW)    Date
Shisanling Pumped Storage          800            1997
   Station
Gaobeidian Power Plant             660            1999
   Total                         1,460            

Tianjin

     The  fuel  sources and per unit generating costs  for  power
plants  serving Tianjin are similar to those for Hebei  Province.
The table shows the major power plants in operation in Tianjin.

                     Facilities in Operation

                              Operational       Additional
Plant                         Capacity (MW)     Planned
                                                Capacity (MW)
Dagang                        1,280             300
Junliangcheng                   950           
   Total                      2,230             300

        THE ELECTRIC POWER INDUSTRY IN THE UNITED STATES
                  AND UNITED STATES REGULATION

The Independent Power Industry in the United States

     The   United  States  independent  power  industry  expanded
rapidly  in  the  1980s  following the enactment  of  The  Public
Utility  Regulatory  Policies Act of  1978  ("PURPA").  Prior  to
PURPA,   the   demand  for  power  in  the  United   States   had
traditionally  been  met  by utilities  constructing  large-scale
electric   generating   plants   under   cost-of-service    based
regulation.  PURPA  removed most regulatory  constraints  on  the
production  and  sale  of electric energy by certain  non-utility
generators known as "Qualifying Facilities" or "QFs" and required
electric  utilities to buy electricity from QFs at the utilities'
avoided  costs, thereby encouraging companies other than electric
utilities   to  enter  the  electric  power  production   market.
Concurrently,  due  in  part to regulatory disallowance  of  many
large  utility  construction project costs, there was  a  general
decline  in  the  construction of generating plants  by  electric
utilities.  As a result, a significant market for electric  power
produced  by  independent power producers has  developed  in  the
United States since the enactment of PURPA.

     The  future market for independently produced power  in  the
United  States will be determined primarily by the need  for  new
electric  generation capacity. According to  the  North  American
Electricity  Reliability Council's 1995-2004  Electricity  Supply
and  Demand  Report, electric utilities forecast that  they  will
need approximately 78,000 MW of new generating capacity from 1995
through  2004. Many published forecasts reflect expectations  for
the continued growth of independent power producers. According to
RCG/Hagler Bailly, based on a review of the capacity of  the  top
125  U.S. electric utilities, it is probable that, from  1994  to
2003,  independent  power producers will supply  from  45-50%  of
total  electric generating capacity additions. In February  1993,
the Utility Data Institute projected that, of the total amount of
generating capacity projected to be added through the year  2000,
the  amount of new independent power capacity expected to  become
operational in the United States will be approximately 45,000 MW.
For  a  discussion  of the movement to restructure  the  electric
utility industry, see "Federal Energy Regulation" below.

     Natural   gas-fired   power  generation   has   become   the
predominant  power generation technology utilized  by  new  power
plants  in the United States, accounting for 60% or more  of  the
annual  increase in independent power generation capacity  during
each  of  the  last three years. Industry analysts  predict  that
natural  gas will continue to be the dominant fuel for new  power
generation  facilities in the United States for  the  foreseeable
future.   Natural   gas-fired  power  plants  offer   significant
advantages  over  other  power generation technologies,  such  as
coal, oil or nuclear energy, including favorable resource prices,
significant  environmental benefits,  the  availability  of  high
efficiency turbines and shorter construction periods.

     Project  subsidiaries of the Company located in  the  United
States are subject to complex and stringent energy, environmental
and other governmental laws and regulations at the federal, state
and  local  levels in connection with the development,  ownership
and  operation of its electricity generation facilities.  Federal
laws  and  regulations govern transactions by  electric  and  gas
utility companies, the types of fuel that may be utilized  by  an
electric  generating facility, the type of  energy  that  may  be
produced  by  such a facility and the ownership of the  facility.
State  utility regulatory commissions must approve the rates  and
terms  and conditions under which public utilities sell  electric
power  at  retail  and,  under  certain  circumstances,  purchase
electric   power  from  independent  producers.   Under   certain
circumstances    where   specific   exemptions   are    otherwise
unavailable, state utility regulatory commissions may have  broad
jurisdiction   over   non-utility   electric   power   generation
facilities.  Energy  producing projects  located  in  the  United
States  also  are subject to federal, state and  local  laws  and
administrative  regulations governing  the  emissions  and  other
substances produced, discharged or disposed of by a facility  and
the  geographical location, zoning, land use and operation  of  a
facility.  Applicable federal environmental laws  typically  have
state  and local enforcement and implementation provisions. These
environmental  laws  and  regulations generally  require  that  a
variety  of  permits and other approvals be obtained  before  the
commencement  of construction or operation of an energy-producing
facility  and  that the facility then operate in compliance  with
those permits and approvals.

Federal Energy Regulation

PURPA

     PURPA  and  the  regulations promulgated thereunder  provide
certain  rate and regulatory incentives to an electric generating
facility  that  is  a  qualifying  cogeneration  or  small  power
production  facility. The Rosemary Facility  and  the  Brandywine
Facility are QFs. If built, the Kathleen Facility also would be a
QF.  A  cogeneration  facility is a QF  if  it  (i)  sequentially
produces both electricity and useful thermal energy that is  used
for  industrial,  commercial, heating or cooling  purposes,  (ii)
meets certain energy efficiency and operating standards when  oil
or  natural  gas is used as a fuel source and (iii) is  not  more
than  50%-owned by an electric utility, electric utility  holding
company or an entity or person owned by either or any combination
thereof.

     Under PURPA and the regulations promulgated thereunder,  QFs
receive two primary benefits. First, most types of QFs are exempt
from most provisions of the Public Utility Holding Company Act of
1935,  as  amended  ("PUHCA"), and from most  provisions  of  the
Federal  Power  Act, as amended (the "FPA"), while  all  QFs  are
exempt  from certain state laws relating to organizational,  rate
and  financial regulation. Second, regulations promulgated by the
Federal  Energy  Regulatory Commission (the "FERC")  under  PURPA
require   that   (i)  electric  utilities  purchase   electricity
generated  by QFs, construction of which commenced  on  or  after
November  9,  1978, at a price based on the purchasing  utility's
full  "avoided  costs" and (ii) the utilities sell supplementary,
back-up, maintenance and interruptible power to the QFs on a just
and  reasonable  and non-discriminatory basis.  See  "PUHCA"  and
"FPA"  below.  PURPA  and the regulations promulgated  thereunder
define  "avoided costs" as the "incremental costs to an  electric
utility of electric energy or capacity or both which, but for the
purchase  from the qualifying facility or qualifying  facilities,
such  utility  would  generate itself or  purchase  from  another
source."  Utilities may also purchase power from  QFs  at  prices
other  than "avoided costs" pursuant to negotiations as  provided
by FERC regulations.

     The  FERC's  regulations  also provide  that  if  energy  or
capacity is provided pursuant to a legally enforceable obligation
over  a  specified term, avoided costs may be determined, at  the
option  of  the QF, either at the time the energy or capacity  is
delivered  or  as  calculated  at  the  time  the  obligation  is
incurred.  The FERC's regulations further provide  that,  in  the
case  of rates based on estimates of avoided costs over the  term
of  a contract, the rates do not violate the FERC's rates if  the
rates for such purchases differ from avoided costs at the time of
delivery.

     In  certain  instances, payments based  upon  avoided  costs
estimated  at the time a contract is entered into have proven  to
be  greater  than  a  utility's avoided  costs  at  the  time  of
delivery. Many utilities have attempted to minimize the disparity
by  implementing  strategies  designed  to  reduce  avoided  cost
payments  under  such  contracts to  levels  that  the  utilities
believe  will  be more competitive in a short-term marginal  cost
electric  energy  market. See "Industry Restructuring  Proposals"
below. Such strategies include attempts to renegotiate or buy out
power  purchase  contracts with QFs. Some utilities  have  sought
rigorously to enforce the terms of such contracts and to exercise
their  contractual  termination rights if the contracts  are  not
strictly  observed. In addition, some utilities have  engaged  in
litigation  and  regulatory action against QFs to  achieve  these
ends.
     
     The  FERC  has refused to disturb QF contract rates  on  two
operating projects where estimates of a utility's avoided  costs,
calculated  at  the time the contracts were signed,  were  higher
than  the  actual avoided costs at the time of delivery  and  the
contract rates were not challenged at the time the contracts were
signed  and were not the subject of an ongoing challenge  to  the
state's avoided cost determination. New York State Electric & Gas
Corporation,   71  FERC   61,027,  reconsideration   denied,   72
FERC  61,067 (1995). This decision is currently the subject of  a
petition for review in the United States Court of Appeals for the
D.C. Circuit.

     Relying  in part on the FERC's regulations, a federal  court
of appeals has held that once a state commission has approved (by
final  and  nonappealable  order) a QF  contract  rate  as  being
consistent  with  avoided costs, just, reasonable  and  prudently
incurred,  any  action  or  order  by  the  state  commission  to
reconsider  its  approval or deny the pass-through  of  the  QF's
charges  to the utility's retail customers under purported  state
authority  is preempted by PURPA. Freehold Cogeneration  Assocs.,
L.P.  v. Board of Regulatory Comm'rs of New Jersey,  44 F.3d 1178
(3rd  Cir.), cert. denied sub nom., Jersey Central Power &  Light
Co.  v.  Freehold  Cogeneration Assocs., L.P.,   116  S.  Ct.  68
(1995).

     In  Independent Energy Producers Assoc. v. California Public
Utilities Comm'n,  36 F.3d 848 (9th Cir. 1994), the U.S. Court of
Appeals  for the Ninth Circuit held that states are not preempted
by  PURPA from instituting a program that requires QFs to  submit
operating data, to purchasing utilities for monitoring compliance
with   QF   status  requirements,  as  long  as  the   monitoring
requirements  do not impose an undue burden on the QFs.  However,
the same court determined that states and utilities are preempted
by  federal law from taking action on their determination that  a
QF  is no longer in compliance with QF status requirements, other
than  requesting that the FERC revoke the facility's  QF  status,
either by filing a request for revocation or by filing a petition
for a declaratory order that the facility is no longer a QF.

     On  May  29,  1996,  VEPCO filed with the State  Corporation
Commission of the Commonwealth of Virginia ("SCC") a request  for
authorization to institute a formal QF status monitoring program.
The  request  states that the proposed monitoring  program  would
apply to all QFs that have entered into power purchase agreements
with VEPCO. Under the proposed program, QFs would submit to VEPCO
by  March  1  of  each  year certain operational  data  from  the
previous year. If VEPCO believes, on the basis of such data, that
a  QF does not comply with QF requirements, the request indicates
that  VEPCO would first inform the QF and, if the QF agreed  with
or  failed  to  respond to VEPCO's findings, VEPCO would  file  a
petition seeking a declaration from the FERC that such a facility
is not a QF.

     The   North  Carolina  Utilities  Commission  ("NCUC")   has
disallowed  the  pass-through to VEPCO's  North  Carolina  retail
rates of a portion of capacity payments VEPCO had been making  to
several non-utility generation plants. The capacity payment rates
for  the plants had been determined by an arbitrator and approved
by  the  SCC.  The NCUC found that bids from a 1988  solicitation
(the  "1988 VEPCO Solicitation") were available at the  time  the
contract  was  approved  and should have been  used,  instead  of
arbitration, to determine VEPCO's avoided costs. The  NCUC  ruled
that  rates in excess of the rates derived from bids received  in
the  1988 VEPCO Solicitation were therefore disallowed in VEPCO's
North  Carolina  retail rates. The North Carolina  Supreme  Court
upheld  the  NCUC's  decision, saying that the  NCUC  had  simply
disallowed  rates  above avoided costs. North Carolina  Utilities
Comm'n  v.  North Carolina Power,  338 N.C 412,  450  S.E.2d  896
(1994).  The United States Supreme Court declined to review  that
decision.

     While  the Rosemary Power Purchase Agreement with VEPCO  was
not  specifically approved by the SCC, the SCC  did  approve  the
1988  VEPCO  Solicitation that resulted  in  the  Rosemary  Power
Purchase  Agreement.  Although  the  NCUC  used  the  1988  VEPCO
Solicitation to determine the avoided costs in the North Carolina
decision discussed above, there can be no assurance that it would
not  disallow  the  pass-through of the Rosemary  Power  Purchase
Agreement rates, which arose from the 1988 VEPCO Solicitation. If
the  NCUC  were to disallow such pass-through, and if the  courts
were to allow the decision to stand, Panda International believes
that  any  such  disallowance would affect only that  portion  of
VEPCO's  rates allocated to its North Carolina retail  customers.
The Brandywine Power Purchase Agreement has been approved by both
the Maryland and District of Columbia Public Service Commissions.

     The  Company  and its affiliates endeavor to  develop  their
U.S.  Projects,  monitor  compliance by the  U.S.  Projects  with
applicable  regulations and choose their customers  in  a  manner
which  minimizes  the risks of losing their  QF  status.  Certain
factors necessary to maintain QF status are, however, subject  to
the  risk  of  events outside Panda International's control.  For
example,  loss  of  a thermal energy customer  or  failure  of  a
thermal  energy  customer  to take required  amounts  of  thermal
energy from a cogeneration facility that is a QF could cause  the
facility  to fail to satisfy the criteria required for QF  status
regarding  the  level of useful thermal energy output.  Upon  the
occurrence  of such an event, Panda International would  seek  to
replace  the thermal energy customer or find another use for  the
thermal  energy that meets PURPA's requirements, but no assurance
can be given that this would be possible.

     If one of the U.S. Projects in which Panda International has
an  interest should lose its status as a QF, the Project would no
longer be entitled to the exemptions from PUHCA and the FPA. This
could  subject the U.S. Project to rate regulation  as  a  public
utility  under  the FPA and state law and could result  in  Panda
International  inadvertently becoming a  public  utility  holding
company by owning more than 10% of the voting securities  of,  or
controlling,  a  facility that would no  longer  be  exempt  from
PUHCA.  This  could cause all of Panda International's  remaining
U.S.  Projects to lose their QF status, because QFs  may  not  be
controlled,  or  more than 50%-owned, by public  utility  holding
companies.  Loss  of  QF status may also trigger  defaults  under
covenants  to maintain QF status in the Projects' power  purchase
agreements,  steam sales agreements and financing agreements  and
result  in termination, penalties or acceleration of indebtedness
under  such  agreements. A facility may lose its QF status  on  a
retroactive or a prospective basis.

     If  a U.S. Project were to lose its QF status (because,  for
example,  it lost its steam customer), Panda International  could
attempt to avoid holding company status (and thereby protect  the
QF  status  of  its  other Projects) on a  prospective  basis  by
restructuring  its interests in the U.S. Project.  For  instance,
Panda  International  could change its  voting  interest  in  the
entity  owning the nonqualifying Project to nonvoting or  limited
partnership  interests  and  sell  the  voting  interest  to   an
individual or company which could tolerate the lack of  exemption
from  PUHCA,  or  by  otherwise restructuring  ownership  of  the
Project  so  as  not to become a holding company. These  actions,
however,  would require approval of the Securities  and  Exchange
Commission  (the "SEC") or a no-action letter from the  SEC,  and
would result in a loss of control over the nonqualifying Project,
could  result in a reduced financial interest therein  and  might
result  in a modification of Panda International's operation  and
maintenance  agreement  relating  to  such  Project.  A   reduced
financial interest could result in a gain or loss on the sale  of
the  interest  in  such  Project, the removal  of  the  affiliate
through   which   the  ownership  interest  is  held   from   the
consolidated  income  tax  group or  the  consolidated  financial
statements of Panda International, or a change in the results  of
operations  of  Panda  International. Loss  of  QF  status  on  a
retroactive  basis could lead to, among other things,  fines  and
penalties  being  levied  against  Panda  International  and  its
subsidiaries  and  claims by utilities  for  refund  of  payments
previously made.

     Under the Energy Policy Act of 1992 ("Energy Policy Act"), a
company  engaged  exclusively in the business  of  owning  and/or
operating  a facility used for the generation of electric  energy
exclusively for sale at wholesale may be exempted from  PUHCA  as
an  "exempt  wholesale generator." An exempt wholesale  generator
may  not  make retail sales of electricity. If a Project  can  be
qualified as an exempt wholesale generator ("EWG") under  Section
32  of  PUHCA  it will be exempt from PUHCA even if it  does  not
qualify  as  a  QF.  Therefore, if a QF in Panda  International's
Project Portfolio were to lose its QF status, Panda International
could  apply  to have the Project qualified as an  EWG.  However,
assuming this changed status would be permissible under the terms
of  the  applicable power purchase agreement, rate approval  from
FERC would be required. See "FPA" below. In addition, the Project
would  be  required to cease selling electricity  to  any  retail
customers (such as the thermal energy customer) and could  become
subject  to  state  regulation of sales of  thermal  energy.  See
"PUHCA" below.

PUHCA

     PUHCA  provides that any corporation, partnership  or  other
entity  or organized group that owns, controls or holds power  to
vote  10%  or  more  of the outstanding voting  securities  of  a
"public utility company" or a company that is a "holding company"
of a public utility company is subject to regulation under PUHCA,
unless  an exemption is established or an SEC order declaring  it
not  to  be  a  holding  company is granted.  Registered  holding
companies  under  PUHCA  are  required  to  limit  their  utility
operations  to a single integrated utility system and  to  divest
any other operations not functionally related to the operation of
the utility system. In addition, a public utility company that is
a  subsidiary  of  a registered holding company  under  PUHCA  is
subject  to  financial  and organizational regulation,  including
approval by the SEC of certain of its financing transactions.

     As  discussed above, most types of QFs are exempt from  most
of  the  provisions of PUHCA. A foreign utility company  is  also
exempt from most of the provisions of PUHCA if certain notice and
other requirements are satisfied.

FPA

     Under   the   FPA,   the  FERC  has  exclusive   rate-making
jurisdiction over wholesale sales of electricity and transmission
in interstate commerce. These rates may be determined on either a
cost-of-service  basis or a market-based approach.  If  a  QF  in
Panda  International's project portfolio  were  to  lose  its  QF
status,  the  rates  set forth in the applicable  power  purchase
agreement  would  have to be filed with the  FERC  and  would  be
subject to initial and potentially subsequent reviews by the FERC
under the FPA, which could result in reductions to the rates.

Industry Restructuring Proposals

     The   United   States  Congress  is  currently   considering
legislation to repeal PURPA entirely, or at least to  repeal  the
obligation  of  utilities to purchase from QFs. There  is  strong
Congressional  support for grandfathering contracts  of  existing
QFs if such legislation is passed, and also support for requiring
utilities  to  conduct  competitive  bidding  for  new   electric
generation if the PURPA purchase obligation is eliminated.

     The  FERC  and many state utility commissions are  currently
studying  a  number  of  proposals to  restructure  the  electric
utility industry in the United States to permit utility customers
to choose their utility supplier in a competitive electric energy
market.  The  FERC  has  recently issued a final  rule  requiring
utilities to offer wholesale customers and suppliers open  access
on  their  transmission  lines, on  a  basis  comparable  to  the
utilities'  own  use of the lines. Although the rule  (Order  No.
888)  may  be  appealed, many utilities have already filed  "open
access"  tariffs. The utilities contend that they should  recover
from   departing  customers  their  fixed  costs  that  will   be
"stranded" if their wholesale customers choose new electric power
suppliers.  These  stranded  costs  include  the  capacity  costs
utilities are required to pay under many QF contracts, which  the
utilities  view  as excessive when compared with  current  market
prices for capacity. Many utilities are therefore seeking ways to
lower   these   contract  prices  or  terminate   the   contracts
altogether, out of fear that their shareholders will have to bear
all or part of such "stranded" costs. Some utilities have engaged
in  litigation  against QFs to achieve these  ends.  See  "PURPA"
above.  The  FERC's rule allows full recovery of "legitimate  and
verifiable"  prudently incurred stranded costs at  the  wholesale
level.  However,  the FERC has jurisdiction  over  only  a  small
percentage  of  electric  rates,  and  there  is  likely  to   be
litigation  over whether wholesale stranded costs are "legitimate
and verifiable."

     In  addition to restructuring proposals being considered  by
regulatory  agencies, a number of bills have been  introduced  in
the  U.S. Congress to promote electric utility restructuring  and
deregulation of electric rates. These bills differ as to how  and
to what extent a utility's "stranded" or "transition" costs would
be  recoverable if current captive customers left  the  utility's
system. The existence of this legislation may increase the desire
of  utilities  to  renegotiate, buy out or attempt  to  terminate
existing  power  purchase agreements containing prices  that  the
utilities  believe  will  not  be  competitive  in  a  short-term
marginal  cost electric energy market. In addition,  if  electric
energy  prices  are deregulated, electric energy  producers  will
have to sell electric energy at competitive market prices.

State Regulations

     State   public  utility  commissions  ("PUCs")  have   broad
authority  to  regulate both the rates charged by  and  financial
activities  of electric utilities, and to promulgate  regulations
implementing PURPA. Since a power purchase agreement will  become
a  part of a utility's cost structure (and therefore generally is
reflected  in  its retail rates), power purchase agreements  from
independent  power  producers  are  potentially  subject  to  the
regulatory purview of PUCs, particularly the process by which the
utility has entered into the power purchase agreements. If a  PUC
has  approved  the process by which a utility secures  its  power
supply,  a  PUC generally will be inclined to allow a utility  to
"pass  through" the expenses associated with an independent power
contract  to the utility's retail customers. Moreover, a  federal
court  of  appeals has held in one instance that a  PUC  may  not
disallow the full reimbursement to a utility for the purchase  of
electricity  from  a QF once the PUC has approved  the  rates  as
consistent   with  the  requirements  of  PURPA.   See   Freehold
Cogeneration Assocs., L.P. v. Board of Regulatory Comm'rs of  New
Jersey,  44  F.3d 1178 (3rd Cir.), cert. denied sub nom.,  Jersey
Central  Power  and  Light Co. v. Freehold Cogeneration  Assocs.,
L.P.,  116  S.  Ct.  68  (1995). In  addition,  retail  sales  of
electricity  or  thermal energy by an independent power  producer
may be subject to PUC regulation, depending on state law.

     Independent power producers that are not QFs under PURPA are
considered to be public utilities in many states and are  subject
to  broad  regulation by PUCs ranging from the  requirement  that
certificates of public convenience and necessity be  obtained  to
regulation  of  organizational, accounting, financial  and  other
corporate matters. However, sales of electricity at wholesale are
subject to the exclusive regulatory jurisdiction of the FERC.  In
addition,  states  may assert jurisdiction over  the  siting  and
construction  of facilities, and over the issuance of  securities
and the sale or other transfer of assets by these facilities that
are not QFs.

     State  PUCs  also have jurisdiction over the  transportation
and  retail  sale of natural gas by local distribution companies.
Each state's regulatory laws are somewhat different; however, all
generally require a local distribution company to obtain approval
from  the  PUC to provide services and construct facilities.  The
rates  of  local  distribution companies are usually  subject  to
continuing oversight by the PUC.

     In   the   case  of  the  Rosemary  Facility,  the  Rosemary
Partnership is subject to a number of conditions imposed  by  the
NCUC  pursuant  to  a  Certificate  of  Public  Convenience   and
Necessity  (""CPCN""), including that the Rosemary  Facility  and
the  Rosemary Pipeline both be owned by the Rosemary Partnership,
that  the Rosemary Partnership not transport gas for or  sell  or
deliver  gas to any other entity, that all electricity  generated
at  the Rosemary Facility be sold to an electric utility and that
all thermal energy produced at the Rosemary Facility be sold only
to  the  textile mill to which steam and chilled water  from  the
Rosemary Facility are currently delivered.  On February 18, 1997,
The  Bibb  Company (""Bibb"") announced that it  would  sell  the
textile  mill  to  WestPoint Stevens, Inc. (""WestPoint"").   The
closing  of  the sale was reported in the news media on  February
21,  1997,  but the Rosemary Partnership has not received  formal
notice of such sale from Bibb or WestPoint.  If, in fact, Bibb is
no longer the owner of the textile mill, the Rosemary Partnership
is  obligated  to notify the NCUC and VEPCO and  the  NCUC  could
order  such  further proceedings as it deemed appropriate,  which
proceedings  could  result  in revocation  of  the  CPCN  or  the
imposition of other conditions. See "Risk Factors - U.S. Industry
Conditions;   Restructuring  Initiatives;  Utility  Responses   -
Maintaining Qualifying Facility Status" and "Description  of  the
Projects  -  The  Rosemary  Facility - Steam  and  Chilled  Water
Sales."

Natural Gas Regulation

     The  Company  has an indirect 100% interest in and  operates
two natural gas-fired cogeneration projects in the United States,
one of which is owned and one of which is under a long term lease
financing  arrangement. The cost of natural gas (other than  debt
costs)  is  ordinarily the largest expense of a  gas-fired  power
project  and  is critical to the project's economics.  The  risks
associated with using natural gas can include the need to arrange
transportation  of  the  gas  across great  distances,  including
obtaining  removal, export and import authority  if  the  gas  is
transported from Canada, the possibility of interruption  of  the
gas supply or transportation (depending on the quality of the gas
reserves purchased or dedicated to the Project, the financial and
operating strength of the gas supplier and whether firm  or  non-
firm  transportation  is purchased), and obligations  to  take  a
minimum quantity of gas or pay for it (take-or-pay obligations).

     Pursuant  to  the Natural Gas Act, the FERC has jurisdiction
over  the transportation and storage of natural gas in interstate
commerce.  With respect to most transactions that do not  involve
the construction of pipeline facilities, regulatory authorization
can  be  obtained on a self-implementing basis. However, pipeline
rates for such services are subject to continuing FERC oversight.
Order  No.  636, issued by the FERC in April 1992,  mandated  the
restructuring  of  interstate  natural  gas  pipeline  sales  and
transportation services. The restructuring required by  the  rule
includes (i) the separation ("unbundling") of a pipeline's  sales
and  transportation  services,  (ii)  the  implementation  of   a
straight  fixed-variable rate design methodology under which  all
of a pipeline's fixed costs are recovered through its reservation
charge,  (iii) the implementation of a capacity release mechanism
under  which holders of firm transportation capacity on pipelines
can  release that capacity for resale by the pipeline,  and  (iv)
the  opportunity for pipelines to recover 100% of their prudently
incurred  costs ("transition costs") associated with implementing
the  restructuring mandated by the rule. On July  16,  1996,  the
United  States  Court  of Appeals for the  District  of  Columbia
Circuit  issued an order following appeals of Order  No.  636  by
various  interested  parties (United  Distribution  Companies  v.
FERC,  No.  92-1485). The court approved most of Order  No.  636.
However,  the court remanded some issues to the FERC for  further
consideration.  The  remanded  issues  include:  (i)  the  FERC's
requirement that an existing firm transportation customer bid  up
to  a  20-year  term to retain its rights to firm  transportation
capacity at the end of its contract term; (ii) certain aspects of
the  FERC's  efforts to mitigate the economic effect of  Straight
Fixed-Variable   ("SFV")   transportation   rates   on    certain
transportation  customers; (iii) the  FERC's  limitation  on  the
obligation of the pipelines to provide "no-notice" transportation
service;  and  (iv) the FERC's determination that  pipelines  can
recover  100% of their prudently-incurred Gas Supply  Realignment
("GSR") costs from their transportation customers and can recover
10%  of  these  costs  from  their  interruptible  transportation
customers. The FERC's order on remand of these issues should  not
have an adverse effect on the gas transportation arrangements for
the U.S. Projects owned by Panda International.

Environmental Regulations

     The   development,  construction  and  operation  of   power
projects  in  the United States is subject to extensive  federal,
state  and  local laws and regulations adopted for the protection
of  the  environment  and  to regulate land  use.  The  laws  and
regulations  applicable to Panda International and  its  domestic
subsidiaries  primarily involve the discharge of  emissions  into
the  water  and  air and the use of water, but can  also  include
wetlands  preservation, endangered species,  waste  disposal  and
noise  regulations.  These  laws and regulations  in  many  cases
require  a  lengthy  and complex process of  obtaining  licenses,
permits and approvals from federal, state and local agencies.

     Noncompliance  with environmental laws and  regulations  can
result in the imposition of civil or criminal fines or penalties.
In some instances, environmental laws also may impose clean-up or
other  remedial  obligations  in  the  event  of  a  release   of
pollutants  or  contaminants into the environment. The  following
federal  laws  are among the more significant environmental  laws
that   may   apply  to  Panda  International  and  its   domestic
subsidiaries. In most cases, analogous state laws also exist that
may   impose   similar,  and  in  some  cases   more   stringent,
requirements   on   Panda   International   and   its    domestic
subsidiaries.

Clean Air Act

     The Federal Clean Air Act, as amended (the "Clean Air Act"),
provides for the regulation, largely through state implementation
of  federal requirements, of ambient air quality and emissions of
air  pollutants  from  certain  facilities  and  operations.   As
originally  enacted,  the  Clean  Air  Act  set  guidelines   for
emissions  standards for major pollutants (e.g.,  sulfur  dioxide
and  nitrogen  oxide) from new sources. The 1990  Clean  Air  Act
Amendments  tightened  regulations  on  emissions  from  existing
sources,  particularly previously exempted  older  power  plants.
Panda  International believes that the Rosemary Facility and  the
Brandywine  Facility  are in compliance with federal  performance
standards mandated for such plants under the Clean Air Act.

Clean Water Act

     The  Federal  Clean Water Act, as amended (the "Clean  Water
Act"),  also  provides for the regulation, largely through  state
implementation of federal requirements, of the quality of surface
waters and imposes limitations on discharges to those waters from
point  sources, including certain facilities and operations.  The
water quality standards established under the Clean Water Act are
used  as  the  basis for developing specific pollutant  discharge
limitations  from  point sources. The discharge  limitations  are
incorporated  into  permits called National  Pollutant  Discharge
Elimination   System   ("NPDES")  permits.  Panda   International
believes  that the Panda-Rosemary Facility is in compliance  with
the  federal and state requirements applicable through its  NPDES
wastewater  discharge  permit under the Clean  Water  Act.  Panda
International believes that the Brandywine Facility does not make
any discharges of wastewater for which the Brandywine Facility is
required  to  have  an  NPDES permit. The Clean  Water  Act  also
imposes  requirements with respect to the discharge of stormwater
runoff  from industrial sites. Those requirements are implemented
through  state  stormwater  discharge permits,  which  have  been
obtained  for the Rosemary Facility and the Brandywine  Facility.
Panda  International believes that the operation of the  Rosemary
Facility   and   the  Brandywine  Facility  complies   with   the
requirements  of  their stormwater discharge permits.  The  Clean
Water  Act  also  restricts  discharges  of  fill  materials   to
wetlands.  The Rosemary Facility obtained approval for discharges
in connection with its construction.

Resource Conservation and Recovery Act

     The  Resource Conservation and Recovery Act of 1976 ("RCRA")
regulates   the   generation,   treatment,   storage,   handling,
transportation and disposal of solid and hazardous  waste.  Panda
International  believes  that  it and  its  subsidiaries  are  in
material  compliance with solid and hazardous waste  requirements
under RCRA.

Comprehensive Environmental Response, Compensation, and Liability
Act

     The  Comprehensive Environmental Response, Compensation, and
Liability  Act  of  1980, as amended ("CERCLA"  or  "Superfund"),
requires  the remediation of sites from which there  has  been  a
release  or  threatened  release  of  hazardous  substances   and
authorizes the United States Environmental Protection  Agency  to
take  any necessary response action at Superfund sites, including
ordering  potentially responsible parties liable for the  release
to  take or pay for such actions. Potentially Responsible Parties
are  broadly  defined under CERCLA to include  past  and  present
owners  and  operators  of such sites,  as  well  as  generators,
arrangers and transporters of wastes sent to a site.
     

                                                  APPENDIX C
                              
                              

Summary of the
Consolidated Pro Forma of
Panda Global Holdings, Inc.

Prepared for:
Panda Energy International, Inc.

Prepared by:
ICF Resources Incorporated,
A Subsidiary of ICF Kaiser International

April 11, 1997

               
               
               This  report  was produced  by  ICF
          Resources    Incorporated    (ICF)    in
          accordance with an agreement with  Panda
          Energy International, Inc., who paid for
          its services in producing the report and
          this  report is subject to the terms  of
          that agreement.  This report is meant to
          be  read  as  a whole and in conjunction
          with  this disclaimer.  Any use of  this
          report  other  than as a  whole  and  in
          conjunction  with  this  disclaimer   is
          forbidden.   Any  use  of  this  report,
          other  than  as provided  for  in  ICF's
          agreement     with     Panda      Energy
          International,   is   forbidden.    This
          report may not be copied in whole or  in
          part  or  distributed to anyone  outside
          Panda Energy International without ICF's
          prior   express  and  specific   written
          permission.
               
               This  report  and  information  and
          statements herein are based in whole  or
          in  part  on  information obtained  from
          various    sources.    ICF   makes    no
          assurances  as  to the accuracy  of  any
          such   information  or  any  conclusions
          based    thereon.     ICF    bears    no
          responsibility  for the results  of  any
          actions  taken  on  the  basis  of  this
          Report.

                   CONSOLIDATED PRO FORMA

ICF  Resources,  Incorporated (ICF),  a  subsidiary  of  ICF
Kaiser   International,  was  retained   by   Panda   Energy
International  ("Panda") on behalf of its subsidiary,  Panda
Global   Holdings,  Inc.  (the  "Company"),  to   create   a
consolidated summary of the pro forma financial  projections
(the   "Consolidated  Pro  Forma")  for  the  Panda-Rosemary
cogeneration  project (the "Rosemary Project"),  the  Panda-
Brandywine  cogeneration project (the "Brandywine Project"),
and Pan-Western Energy Corporation LLC ("Pan-Western") which
includes   the   Panda-Luannan  cogeneration  project   (the
"Luannan  Project")  (collectively,  the  "Projects").    In
preparing the Consolidated Pro Forma, ICF has relied on  the
independent  reports described below by Burns  &  McDonnell,
the  independent engineer for the Rosemary Project,  by  ICF
and  Pacific  Energy Systems, Inc. ("PES"), the  independent
consultant and independent engineer, respectively,  for  the
Brandywine  Project  and  by  Parsons  Brinckerhoff   Energy
Systems,  Inc.  ("Parsons  Brinckerhoff"),  the  independent
engineer  for the Luannan Project.  The terms of  the  Panda
Funding   Corporation  ("PFC")  Series  A  Bonds  (including
principal and interest, amortization schedule, debt  service
reserve fund, capitalized interest, and coverage ratio)  are
represented in the pro forma in a manner that we  understand
to  be  consistent  with the terms of the  indenture.   This
report, provided for use in the offering memorandum for  the
offering  by  Panda  Global Energy  Company  of  its  Senior
Secured   Notes  due  2004  (the  "Senior  Secured  Notes"),
describes the Consolidated Pro Forma and explains how it was
derived.

Background

  The Rosemary Project

The  Rosemary  Project  is a 180 MW  gas-fired  cogeneration
project  operating  in Roanoke Rapids, North  Carolina.  The
Rosemary Project sells electricity to Virginia Electric  and
Power  Company  pursuant to a Power Purchase Agreement  that
expires on December 26, 2015.

Burns & McDonnell, the independent engineer for the Rosemary
Project   since  1989,  has  prepared  pro  forma  financial
projections (the "Rosemary Pro Forma"), which are  presented
in  Panda-Rosemary Cogeneration Project Condition Assessment
Report  dated  April  11,  1997  (as  so  supplemented,  the
"Rosemary  Engineering Report").  The  Rosemary  Engineering
Report contains the primary assumptions underlying, and  the
conclusions  drawn  from, the Rosemary Pro  Forma.  ICF  has
reviewed the Rosemary Engineering Report only to the  extent
necessary  to  incorporate the results of the  Rosemary  Pro
Forma  in  the  Consolidated Pro  Forma,  and  has  made  no
independent   investigation  of  the  conclusions   or   the
assumptions contained therein.

The Brandywine Project

The  Brandywine  Project is a 230 MW gas-fired  cogeneration
project  operating  in Brandywine, Maryland.   According  to
PES,  construction was substantially complete as of  October
31,   1996,   when  commencement  of  commercial  operations
occurred.   Since  the  commercial  operations   date,   the
Brandywine  Project  began selling  electricity  to  Potomac
Electric Power Company ("PEPCO") pursuant to a 25-year Power
Purchase Agreement whose initial term expires on October 30,
2021.

ICF  has  prepared pro forma financial projections  for  the
Brandywine   Project's  operations  (the   "Brandywine   Pro
Forma"), which are presented in Independent Panda-Brandywine
Pro  Forma Projections dated April 11, 1997 (the "Brandywine
Pro   Forma  Report").   As  discussed  more  fully  in  the
Brandywine Pro Forma Report in preparing the Brandywine  Pro
Forma,  ICF  relied, among other things, on the PES  report,
Independent Engineers' Report: Panda-Brandywine Cogeneration
Project  dated July 22, 1996, and supplemented by an  Update
Report  dated  April  11,  1997  (as  so  supplemented   the
"Brandywine Engineering Report"). A more complete discussion
of  the assumptions underlying the Brandywine Pro Forma  and
the   conclusions  drawn  therefrom  are  contained  in  the
Brandywine Pro Forma Report.

The  Brandywine  Pro  Forma Report  presents  two  potential
scenarios  regarding  the resolution of  disagreements  with
PEPCO   concerning  certain  adjustments   to   Brandywine's
capacity  payments.   The "Base Case"  represents  the  most
conservative assessment (i.e., the lowest capacity payments)
while the "Sensitivity Case" represents a reasonable "middle
ground" scenario regarding the ultimate resolution of  these
disagreements.(1)  A  more  complete   discussion   of   the
assumptions  underlying the Brandywine  Pro  Forma  and  the
conclusions drawn therefrom are contained in the  Brandywine
Pro Forma Report.

The Luannan Project

The  Luannan  Project  is  a 2x50 MW  pulverized  coal-fired
thermal  power  plant  being developed  in  Luannan  County,
Tangshan   Municipality,  Hebei  Province  in  the  People's
Republic of China (the "PRC"). It is comprised of four joint
venture  companies (the "JV Cos.") owned by Pan-Western  and
certain  affiliates of Luannan County. Limited  construction
of  the  plant began in December 1996, and full construction
will  commence  upon completion of this Panda Global  Energy
Company  offering.  Inasmuch  as  Parsons  Brinckerhoff  has
indicated  that the Luannan Project's 28-month  construction
timetable  is  reasonable and achievable,  it  should  begin
commercial  operations by August 1999. The  Luannan  Project
will sell power to the North China Power Group Company under
a 20-year Power Purchase Agreement.

Parsons  Brinckerhoff,  the  independent  engineer  for  the
Luannan   Project,   has  prepared   pro   forma   financial
projections  (the "Luannan Pro Forma"), which are  presented
in  Engineer's  Review and Report: 2x50 MW Coal-Fired  Power
Plant  at Luannan, China, dated April 11, 1997 (the "Luannan
Engineering  Report").(2)  The  Luannan  Engineering  Report
contains  the  primary  assumptions  underlying,   and   the
conclusions  drawn  from, the Luannan  Pro  Forma.  ICF  has
reviewed  the Luannan Engineering Report only to the  extent
necessary  to  incorporate the results of  the  Luannan  Pro
Forma  in  the  Consolidated Pro  Forma,  and  has  made  no
independent   investigation  of  the  conclusions   or   the
assumptions contained therein.

Results

The  attached table presents the Consolidated Pro Forma. The
information set forth in the table reflects the issuance  of
Senior  Secured  Notes  due 2004 in an  aggregate  principal
amount  of  $155.2  million at an  assumed  12  1/2  percent
interest rate.  The gross proceeds from the issuance of  the
Senior  Secured Notes are assumed to be approximately $145.0
million.

Revenues and operating expenses were taken from the Rosemary
Pro Forma, Brandywine Pro Forma (Base Case), and Luannan Pro
Forma  to  calculate  EBITDA  at  each  project  and  on   a
consolidated basis.  The consolidated EBITDA is adjusted  to
create  Cash  Available for Consolidated  Debt  Service,  by
accounting for interest income at the project-level as  well
as  at  the PFC/PIC and Company/Issuer levels, project-level
reserve  contributions,  and other adjustments.   The  other
adjustments  are  comprised of trustee fees associated  with
PFC  and the Issuer, other cash expenditures at the project-
level,  cash  principal receipts on the Luannan transmission
facilities  loan  and  PRC  income  and  withholding  taxes.
Trustee  fees  for  PFC are based on estimates  provided  by
Bankers Trust Company, the PFC trustee.  Interest income  is
based  on an estimated 4.5 percent interest factor on annual
reserve  balances.  Interest income on the PFC debt  service
reserve is assumed to be monetized in 1997 with net proceeds
of approximately $4 million.  In 1997, the Company/Issuer is
projected  to  have  Cash Available  for  Consolidated  Debt
Service   of  approximately  $39.3  million.   This   figure
averages approximately $79.5 million between 1997 and 2007.

Cash  Available  for  Consolidated Debt Service  is  further
adjusted  to create Cash Available for Company Debt Service,
by  accounting for debt service at the Projects and for  the
PFC Series A Bonds, contributions to PFC/PIC-level reserves,
distributions  to minority interests and others.   In  1997,
the  Company/Issuer is projected to have Cash Available  for
Company  Debt  Service of approximately $5.7 million.   This
figure averages approximately $24.9 million between 1997 and
2007.

The  Consolidated Pro Forma also presents "Consolidated Cash
and Restricted Cash" balances including capitalized interest
funds  as  well  as debt service reserves at  the  Projects,
PFC/PIC and at the Company/Issuer levels. "Consolidated Long-
Term  Debt"  is  also presented as described in  footnote  9
attached to the Consolidated Pro Forma.

The  Consolidated  Pro Forma also provides  a  Company  Debt
Service  Coverage  Ratio  defined  as  the  ratio  of   Cash
Available  for Company Debt Service to Issuer Net Cash  Debt
Service.  The  Company Debt Service Coverage Ratio  averages
1.30x  between 2000 and 2007 with a maximum of 1.37x  and  a
minimum of 1.27x.

Please refer to the footnotes to the Consolidated Pro  Forma
included   herewith  for  a  discussion  of  certain   other
variables that may affect the Company Debt Service  Coverage
Ratio.

                              Respectfully Submitted,

                              /s/ ICF Resources Incorporated

_______________________________
(1) The names of the two scenarios are not meant to imply any
    independent  assessment  by  ICF  regarding  the   ultimate
    resolution of Panda's disagreements with PEPCO.
(2) As  indicated  in  the  Luannan Engineering  Report,  the
    Luannan Pro Forma uses an exchange rate of US$ 1.00  =  RMB 8.50.

            PANDA GLOBAL CONSOLIDATED CASH FLOW STATEMENT ($ in 000s)
PROJECTED FYE DECEMBER 31, 
                                                          -------------------------------------------
                                                            1997        1998       1999        2000     
                                                          -------     -------    --------    --------
CAPACITY REVENUE
Rosemary                                                  $25,382     $25,382    $ 23,568    $ 23,568   
Brandywine                                                 21,932      21,420      37,940      38,759   
                                                          -------     -------    --------    --------
   Total Capacity Revenue                                  47,314      46,802      61,508      62,327   
AS A % OF TOTAL REVENUE                                      63.4%       60.2%       54.3%       42.8%  

ENERGY & OTHER REVENUE(1)
Rosemary                                                    3,850       5,768       7,734      10,010   
Brandywine                                                 23,495      25,141      26,057      27,092   
Luannan                                                         0           0      18,038      46,110   
                                                          -------     -------    --------    --------
   TOTAL REVENUE                                           74,659      77,712     113,337     145,540

OPERATING EXPENSES
Rosemary                                                    9,680      11,185      12,860      14,808   
Brandywine                                                 27,433      28,831      29,655      30,493   
Luannan (2)                                                     0           0       7,082      18,478   
                                                          -------     -------    --------    --------
   TOTAL OPERATING EXPENSES                                37,113      40,016      49,597      63,779   

EBITDA
Rosemary                                                   19,552      19,965      18,442      18,770   
Brandywine                                                 17,994      17,731      34,342      35,359   
Luannan                                                         0           0      10,956      27,632   
                                                          -------     -------    --------    --------
   TOTAL EBITDA                                            37,546      37,696      63,740      81,761   

Plus: Interest Income                                       8,175         988       1,738       3,509   
Less: Additions to Project Reserves                        (4,299)     (4,470)     (5,690)     (5,431)  
Less: Other Adjustments (3)                                (2,102)        (76)       (224)       (401)
                                                          -------     -------    --------    --------
   CASH AVAILABLE FOR CONSOLIDATED DEBT SERVICE            39,321      34,139      59,564      79,437

PROJECT & PFC DEBT SERVICE
Rosemary (4)                                               14,693      14,627      13,314      13,242
Brandywine (5)                                             10,442      10,412      19,976      20,660
PFC (6)                                                    12,242      12,242      13,479      12,094
Less: PFC Capitalized Interest Fund Draw                   (2,421)     (6,689)          0        (107)
                                                          -------     -------    --------    --------
   TOTAL PROJECT & PFC NET DEBT SERVICE                    34,956      30,593      46,768      45,890

Less: PFC/PIC Reserve Additions                             1,358      (3,311)     (2,100)       (475)
Less: Luannan & NNW Minority Interests and Others (7)         (26)        (14)     (1,202)     (4,216)
                                                          -------     -------    --------    --------
   CASH AVAILABLE FOR COMPANY DEBT SERVICE                  5,697         221       9,494      28,856

SENIOR SECURED NOTES NET DEBT SERVICE
Interest Payment                                            9,323      19,400      19,400      19,400
Less: Issuer Capitalized Interest Fund Draw                (9,323)    (19,400)    (19,400)          0
Principal Payment (8)                                           0           0           0       1,650
                                                          -------     -------    --------    --------
     TOTAL ISSUER NET CASH DEBT SERVICE                         0           0           0      21,050

BALANCE SHEET DATA:
Consolidated Cash and Restricted Cash                     $81,207     $60,635    $ 55,795    $ 68,601
Consolidated Long-Term Debt (9)                           584,812     592,266     590,749     588,305

CREDIT STATISTICS
                                                          -------     -------    --------    --------
Company Debt Service Coverage Ratio (10)                      (11)        (11)        (11)       1.37x
                                                          -------     -------    --------    --------
PROJECTED FYE DECEMBER 31,
                                                          -------------------------------------------
                                                            2001       2002         2003       2004
                                                          -------     -------    --------    --------
CAPACITY REVENUE
Rosemary                                                 $ 23,568    $ 23,568    $ 23,568    $ 23,568
Brandywine                                                 48,960      49,739      50,358      50,387
                                                          -------     -------    --------    --------
   Total Capacity Revenue                                  72,528      73,307      73,926      73,955
AS A % OF TOTAL REVENUE                                      44.0%       42.7%       42.3%       41.7%

ENERGY & OTHER REVENUE (1)
Rosemary                                                   12,462      13,872      15,692      17,793
Brandywine                                                 30,647      33,340      31,954      30,419
Luannan                                                    49,040      51,266      53,372      55,230
                                                          -------     -------    --------    --------
   TOTAL REVENUE                                          164,677     171,785     174,944     177,397

OPERATING EXPENSES
Rosemary                                                   16,861      18,122      19,667      21,526
Brandywine                                                 32,806      35,124      34,357      33,554
Luannan (2)                                                20,103      21,883      23,834      24,878
                                                          -------     -------    --------    --------
   TOTAL OPERATING EXPENSES                                69,769      75,129      77,858      79,958

EBITDA
Rosemary                                                   19,169      19,318      19,593      19,835
Brandywine                                                 46,802      47,955      47,955      47,252
Luannan                                                    28,937      29,384      29,538      30,352
                                                          -------     -------    --------    --------
   TOTAL EBITDA                                            94,908      96,656      97,086      97,439

Plus: Interest Income                                       3,958       4,334       4,720       4,992
Less: Additions to Project Reserves                        (6,209)     (3,708)     (3,850)     (3,160)
Less: Other Adjustments (3)                                (1,275)     (1,232)     (1,157)     (2,538)
                                                          -------     -------    --------    --------
   CASH AVAILABLE FOR CONSOLIDATED DEBT SERVICE            91,382      96,050      96,798      96,733

PROJECT & PFC DEBT SERVICE
Rosemary (4)                                               13,164      13,057      12,943      12,825
Brandywine (5)                                             27,265      27,939      27,907      27,456
PFC (6)                                                    15,011      16,437      17,374      17,364
Less: PFC Capitalized Interest Fund Draw                        0           0           0           0
                                                          -------     -------    --------    --------
   TOTAL PROJECT & PFC NET DEBT SERVICE                    55,441      57,433      58,224      57,645

Less: PFC/PIC Reserve Additions                            (2,216)     (1,184)       (459)         84
Less: Luannan & NNW Minority Interests and Others (7)      (3,842)     (3,733)     (3,266)     (2,739)
                                                          -------     -------    --------    --------
   CASH AVAILABLE FOR COMPANY DEBT SERVICE                 29,883      33,702      34,849      36,434

SENIOR SECURED NOTES NET DEBT SERVICE
Interest Payment                                           19,056      18,394      17,334      16,031
Less: Issuer Capitalized Interest Fund Draw                     0           0           0           0
Principal Payment (8)                                       4,400       8,000       9,900      12,000
                                                          -------     -------    --------    --------
     TOTAL ISSUER NET CASH DEBT SERVICE                    23,456      26,394      27,234      28,031

BALANCE SHEET DATA:
Consolidated Cash and Restricted Cash                    $ 81,381    $ 92,120    $101,603    $110,839
Consolidated Long-Term Debt (9)                           573,343     551,661     525,814     495,781

CREDIT STATISTICS
                                                          -------     -------    --------    --------
Company Debt Service Coverage Ratio (10)                     1.27x       1.28x       1.28x       1.30x
                                                          -------     -------    --------    --------
PROJECTED FYE DECEMBER 31,
                                                          -------------------------------
                                                            2005         2006       2007
                                                          -------     -------    --------
CAPACITY REVENUE
Rosemary                                                 $ 23,568    $ 18,123    $ 18,123
Brandywine                                                 50,253      50,543      52,639
                                                          -------     -------    --------
   Total Capacity Revenue                                  73,821      68,666      70,762
AS A % OF TOTAL REVENUE                                      40.0%       37.6%       37.9%

ENERGY & OTHER REVENUE (1)
Rosemary                                                   20,571      20,283      20,004
Brandywine                                                 33,464      35,545      35,763
Luannan                                                    56,472      58,074      60,060
                                                          -------     -------    --------
   TOTAL REVENUE                                          184,328     182,568     186,590

OPERATING EXPENSES
Rosemary                                                   23,907      23,964      23,985
Brandywine                                                 36,288      37,984      38,592
Luannan (2)                                                25,970      27,113      28,309
                                                          -------     -------    --------
   TOTAL OPERATING EXPENSES                                86,165      89,061      90,886

EBITDA
Rosemary                                                   20,232      14,442      14,142
Brandywine                                                 47,429      48,105      49,811
Luannan                                                    30,502      30,961      31,751
                                                          -------     -------    --------
   TOTAL EBITDA                                            98,163      93,507      95,704

Plus: Interest Income                                       5,302       5,602       6,032
Less: Additions to Project Reserves                        (5,166)     (6,035)     (4,135)
Less: Other Adjustments (3)                                (2,480)     (2,457)     (2,469)
                                                          -------     -------    --------
   CASH AVAILABLE FOR CONSOLIDATED DEBT SERVICE            95,818      90,618      95,132

PROJECT & PFC DEBT SERVICE
Rosemary (4)                                               12,669       8,710       8,534
Brandywine (5)                                             27,602      28,188      30,071
PFC (6)                                                    17,183      14,677      18,206
Less: PFC Capitalized Interest Fund Draw                        0           0           0
                                                          -------     -------    --------
   TOTAL PROJECT & PFC NET DEBT SERVICE                    57,454      51,576      56,811

Less: PFC/PIC Reserve Additions                             1,387      (7,087)     (5,531)
Less: Luannan & NNW Minority Interests and Others (7)      (2,106)     (1,406)     (5,829)
                                                          -------     -------    --------
   CASH AVAILABLE FOR COMPANY DEBT SERVICE                 37,646      30,550      26,961

SENIOR SECURED NOTES NET DEBT SERVICE
Interest Payment                                           14,453      12,759      11,469
Less: Issuer Capitalized Interest Fund Draw                     0           0           0
Principal Payment (8)                                      14,500      10,700       9,200
                                                          -------     -------    --------
     TOTAL ISSUER NET CASH DEBT SERVICE                    28,953      23,459      20,669

BALANCE SHEET DATA:
Consolidated Cash and Restricted Cash                    $117,544    $130,822   $145,679
Consolidated Long-Term Debt (9)                           460,547     433,032    399,857

CREDIT STATISTICS
                                                          -------     -------    --------
Company Debt Service Coverage Ratio (10)                    1.30x       1.30x       1.30x
                                                          -------     -------    --------
FOOTNOTES
---------------
(1)   Other Revenue is comprised of revenue generated from the sale of steam,
      chilled and hot water and firm transportation capacity release at
      Brandywine.

(2)   For the purposes of consolidation, Operating Expenses at Luannan exclude
      management fees payable to the Issuer.

(3)   Other Adjustments include PIC and Issuer trustee fees, certain capital
      expenditures at Rosemary and Brandywine, Luannan transmission facilities
      loan principal payments and PRC income and withholding taxes.

(4)   Represents debt service for the year ended February 15 in the year
      immediately following the year presented per the PFC indenture.

(5)   Represents debt service for the year ended January 31 in the year
      immediately following the year presented per the PFC indenture.

(6)   Represents debt service for the year ended February 20 in the year
      immediately following the year presented per the PFC indenture.

(7)   Other is comprised of undistributable cash flow in excess of net income at
      Luannan.

(8)   Assumes outstanding balance of the Senior Secured Notes is refinanced in
      2004 at an equivalent coupon rate and repaid over nine years.

(9)   Consolidated long-term debt includes Rosemary First Mortgage Bonds,
      Brandywine GECC Lease, PFC Pooled Project Bonds-Series, and the Senior
      Secured Notes.

(10)  Company Debt Service Coverage Ratio = Cash Available for Company Debt
      Service / Total Issuer Net Cash Debt Service.

(11)  Effectively 1.0x Company Debt Service Coverage Ratio since Issuer
      Capitalized Interest Fund Draw equals Interest Payment on the Senior
      Secured Notes.

                     [ICF Kaiser Letterhead]
                                
                                
                                
                                
                                
                                
                      Officer's Certificate
                                
                                
      I, Theodore Breton,  of  ICF Resources Incorporated,  DO
HEREBY CERTIFY that:

      Since  April 11, 1997, to our knowledge, no event affecting
our  reports  entitled  "Independent Panda-Brandywine  Pro  Forma
Projections,"   dated  April  11,  1997  and  "Summary   of   the
Consolidated  Pro  Forma of Panda Global  Holdings,  Inc."  dated
April  11, 1997 (the "Pro Forma Reports") or the matters referred
to  therein has occurred which makes untrue or incorrect  in  any
material  respect,  as  the  date  hereof,  any  information   or
statement contained in the Pro Forma Reports or in the Prospectus
relating  to  the  offering of 12-1/2% Registered  Senior Secured
Notes  due 2004 by Panda Global Energy Company (the "Prospectus")
under   the  captions  "Summary  -  Independent  Engineers'   and
Consultants'  Reports  -  Consolidating Financial  Analyst's  Pro
Forma  Report,"  "Description  of the  Projects  -  The  Rosemary
Facility  -  Independent  Engineers' and Consultants'  Reports  -
Rosemary Engineering Report," "Description of the Projects -  The
Brandywine Facility - Disagreement with PEPCO Over Calculation of
Capacity  Payment," "Description of the Projects - The Brandywine
Facility  -  Independent  Engineers' and Consultants'  Reports  -
Brandywine Pro Forma Report," "Description of the Projects -  The
Brandywine  Facility  - Independent Engineers'  and  Consultants'
Reports  -  Brandywine  Fuel Consultants'  Report,"  "Independent
Engineers   and  Consultants  -  Consolidated  Pro   Forma"   and
"Independent Engineers and Consultants - Brandywine Facility"  in
the Prospectus.

          WITNESS my hand this 6th day of June 1997.

                              By:     /s/ Theodore R. Breton
                              Name:   Theodore R. Breton
                              Title:  Vice President

                                                       Appendix D
                                                                 
                                
                                
                  Engineer's Review and Report
                Panda Energy International, Inc.
                                
                                
                                
                                
                                
                                
                                
                                
                       2X50 MW Coal-Fired
                     Power Plant at Luannan,
                              China
                                
                                
                                
                                
                                
                                
                                
                         April 11, 1997
                                
                                
                                
                                
                                
                                
                                
                                
           PARSONS BRINCKERHOFF ENERGY SERVICES, INC.

0.0    EXECUTIVE SUMMARY                                        1
1.0    PROJECT DESCRIPTION AND OVERVIEW                         4
1.1    PARTICIPATING PARTIES                                    4
1.2    PROJECT DESCRIPTION                                      4
2.0    SITE CONDITIONS                                          4
2.1    GENERAL DESCRIPTION                                      4
2.2    FUEL TRANSPORTATION                                      5
2.3    WATER RESOURCE                                           5
2.4    HYDROMETEOROLOGY                                         6
2.4.1  METEOROLOGICAL CONDITIONS                                6
2.4.2  THE EFFECT OF WATER FLOOD ON THE PLANT SITE              7
2.5    REGIONAL GEOLOGICAL OVERVIEW                             7
2.5.1  NATURAL GEOLOGY                                          7
2.5.2  TOPOGRAPHY                                               7
2.5.3  REGIONAL GEOLOGICAL STRUCTURES                           7
2.5.4  STRATIGRAPHY                                             8
2.5.5  FAULT STRUCTURES AND EARTHQUAKE                          8
2.5.6  PLANT SITE 2 GEOTECHNICAL CONDITIONS                     9
2.5.7  GROUND WATER                                             9
2.5.8  DESIGN CONSIDERATIONS                                    9
2.5.9  SITE SEISMICITY AND RELATED DESIGN CONSIDERATIONS       10
2.6    ASH STORAGE SITES                                       10
2.7    ASSESSMENT OF SITE SUITABILITY                          11
3.0    DESCRIPTION OF FACILITY DESIGN                          11
3.1    MECHANICAL EQUIPMENT AND SYSTEMS                        12
3.1.1  STEAM TURBINE GENERATOR                                 12
3.1.2  BOILER / FIRING CYCLE                                   12
3.1.3  MAIN STEAM SYSTEM                                       14
3.1.4  EXTRACTION STEAM SYSTEM                                 14
3.1.5  AUXILIARY STEAM SYSTEM                                  15
3.1.6  CONDENSATE AND FEEDWATER SYSTEMS                        15
3.1.7  COOLING WATER SYSTEM                                    15
3.1.8  FIRE PROTECTION SYSTEM                                  16
3.1.9  COAL HANDLING SYSTEM                                    17
3.2    CIVIL/STRUCTURAL SYSTEM                                 17
3.2.1  CIVIL DESIGN                                            18
3.2.2  STRUCTURAL DESIGN                                       18
3.2.3  ARCHITECTURAL DESIGN                                    18
3.3    ELECTRICAL AND CONTROL SYSTEMS                          18
3.3.1  STEP-UP TRANSFORMERS                                    19
3.3.2  PLANT SWITCHYARD                                        19
3.3.3  UTILITY INTERCONNECTION                                 19
3.3.4  OFF-SITE TRANSMISSION LINES                             20
3.3.5  OFF-SITE SUBSTATIONS                                    20
3.3.6  AUXILIARY/START-UP POWER                                20
3.3.7  REVENUE METERING                                        20
3.3.8  CONTROL SYSTEMS                                         22
3.3.9  DISPATCH/SCADA/COMMUNICATIONS                           23
3.4    WATER SUPPLY AND DISPOSAL                               23
3.4.1  WATER WELLS FOR THE POWER PLANT                         23
3.4.2  WASTE WATER DISCHARGE                                   24
3.4.3  STORM DRAINAGE                                          24
3.4.4  MAKE-UP WATER                                           24
3.5    ASH HANDLING SYSTEM                                     25
3.5.1  FLY ASH SYSTEM                                          25
3.5.2  BOTTOM ASH SYSTEM                                       25
3.6    ASSESSMENT OF FACILITY DESIGN                           25
4.0    ASSESSMENT OF EXPECTED PERFORMANCE                      26
4.1    START-UP AND COMMISSION                                 27
5.0    ASSESSMENT OF DESIGN TO SIMILAR PLANTS                  27
6.0    ASSESSMENT OF ABILITY OF PLANT TO MEET CONTRACTUAL
       REQUIREMENTS                                            27
6.1    ELECTRICAL REQUIREMENTS                                 27
6.2    STEAM REQUIREMENTS                                      28
7.0    ASSESSMENT OF ECONOMIC LIFE OF THE PLANT                29
8.0    DESCRIPTION OF ENVIRONMENTAL ISSUES                     29
8.1    PROJECT ENVIRONMENTAL STANDARDS                         30
8.1.1  ENVIRONMENTAL QUALITY STANDARDS:                        30
8.1.2  EFFLUENT AND EMISSION STANDARDS:                        30
8.2    ASSESSMENT OF ENVIRONMENTAL IMPACT                      30
9.0    GOVERNMENT APPROVALS AND BUSINESS AGREEMENTS            32
9.1    GENERAL DESCRIPTION                                     32
9.2    GOVERNMENT APPROVALS                                    32
9.3    BUSINESS AGREEMENTS                                     35
9.4    ASSESSMENT OF SUPPORT DOCUMENTS                         36
10.0   PROJECT SCHEDULE                                        36
11.0   REVIEW OF EPC CONTRACTOR AND AGREEMENT                  36
11.1   ASSESSMENT OF MANPOWER AND STAFFING                     36
11.2   EVALUATION OF THE  EPC CONTRACTOR'S EXPERIENCE          37
11.3   EVALUATION OF EPC CONTRACT TERMS                        37
12.0   FINANCIAL PERFORMANCE ASSESSMENT                        38
12.1   LEVEL OF POWER PRODUCTION                               39
12.1.1 POWER PURCHASE AGREEMENT                                39
12.1.2 HEAT SALE AGREEMENT AND ASSUMPTIONS                     42
12.2   POWER TARIFFS                                           43
12.2.1 PLANNED WHOLESALE ELECTRIC ENERGY PRICE                 43
12.2.2 FUTURE PRICE ADJUSTMENTS AND "PASSTHROUGH" PROVISIONS   46
12.2.3 HEAT SALE PRICE AGREEMENT                               47
12.2.4 INTERCONNECTION AND LOAN AGREEMENTS                     47
12.3   REVIEW OF PROJECT COSTS                                 48
12.4   REVIEW OF OPERATING EXPENSES                            51
12.5   REVIEW OF RESERVE REQUIREMENTS                          51
12.5.1 EQUIPMENT MAINTENANCE & OVERHAUL RESERVE                51
12.5.2 DEBT SERVICE RESERVE                                    53
12.5.3 WELFARE RESERVE FOR CHINESE EMPLOYEES                   53
12.5.4 OTHER CHINESE RESERVE REQUIREMENTS                      53
12.6   THE FINANCIAL PLAN                                      53
12.6.1 ESTIMATED SOURCES AND USES OF FUNDS                     53
12.6.2 SHAREHOLDER LOAN ASSUMPTIONS                            54
12.6.3 REPAYMENT OF PAN-WESTERN SHAREHOLDER LOANS              54
12.7   CONSOLIDATED OPERATING RESULTS -- BASE CASE             54
12.7.1 OPERATING REVENUES                                      55
12.7.2 OPERATING EXPENSES                                      56
12.7.3 DEPRECIATION AND TAXES                                  56
12.7.4 DISCUSSION OF DEBT COVERAGE RATIOS                      57
12.7.5 DISTRIBUTION TO PAN-WESTERN EQUITY ACCOUNT              57
12.8   SUMMARY OF SENSITIVITY ANALYSIS                         58
12.9   INDIVIDUAL JOINT VENTURE COMPANIES OPERATING RESULTS
       -- BASE CASE                                            58

0.0  EXECUTIVE SUMMARY

Panda   Energy   International,  Inc.   has   requested   Parsons
Brinckerhoff  Energy  Services, Inc., to  provide  an  Engineer's
Report for certain of its affiliated companies (the "JV Cos."  or
"Owner") involved in the development, construction, ownership and
operation  of  the Luannan Thermal Power Plant (the "Plant")  and
Steam Distribution System to be located near Tangshan City, China
(the  "Project").  This report, to be included  in  the  Offering
Circular prepared for the offering by Panda Global Energy Company
of  its  Senior  Secured  Notes due 2004,  offers  the  following
opinions  concerning the adequacy of the technical, environmental
and economic aspects of the project:

The  design  of the Plant is based on current, proven  technology
and  is  in  conformance with engineering practice  and  industry
standards  in  the People's Republic of China.  Specifically  the
proposed  Plant will be similar in design to other thermal  power
plants  designed  by  the Hebei Electric Power  Design  Institute
which are presently operating in China.

The  construction  schedule is reasonable  and  achievable.   The
Engineering, Procurement and Construction (EPC) Contractor should
be  able  to meet the agreed construction schedule and  pass  all
performance tests as stipulated within 28 months.  This  schedule
has been found comparable to similar projects in China.

The  EPC  Contractor is an established and reputable construction
company  with  both  international  and  domestic  experience  in
manufacturing   and  installing  equipment  for   similar   power
generation   projects.   The  Contractor's  boiler  manufacturing
facility  performs  quality control  to  ISO  standards  and  has
achieved   ASME   certification.   The   Contractor's   list   of
achievements include 16 coal fired power plants in China  plus  5
international power plant installations completed on  a  turn-key
basis.

The budgeted costs of $118.8 million to develop and construct the
Luannan  Facility are reasonable and represent  a  realistic  and
attainable  project cost.  Most project costs are denominated  in
US  dollars, however, for steam and heat network, land and  water
use  rights, and transmission line which are denominated in  RMB,
an exchange rate of US $1 = RMB 8.30 was used.

The  EPC  Contract price which includes a contingency  amount  of
approximately   5%   and  the  general  contingency   amount   of
approximately  4%  (exclusive  of any  Contractor's  contingency)
contained  in the Project Budget should provide sufficient  funds
to complete the Project.

Based upon the proposed equipment and design criteria, the design
lives of the main components of the Plant are sufficient for  the
intended  modes of operation of the Project and should  meet  the
expected   Plant  performance  criteria.   With  proper   design,
careful,  periodic maintenance and operation of the Plant  within
design  parameters, a useful life of 20 years  should  be  easily
achievable.

Based  on the review of the various Government Approvals, the  JV
Cos.  have  obtained the key approvals required from the  various
governmental agencies which are required to commence construction
of  the  plant.  They have also identified the necessary  permits
that  will be required in due course during the construction  and
operation.  There is no reason to believe that those licenses and
consents not yet received will not be granted.

Based  on the review of the various Business Agreements and their
amendments,  the  major contracts including  the  Power  Purchase
Agreement,  EPC  Contract, Operation and  Maintenance  Agreement,
Transmission  Line  EPC Contract and Coal Supply  Agreements  are
technically reasonable and are consistent with each other and the
assumptions used in the financial analysis.

The  technical performance requirements, performance testing  and
obligations  of  the parties identified in the EPC  Contract  are
reasonable  and achievable.  The EPC contract has  the  necessary
protective terms and conditions and is comparable to other  turn-
key  projects in the United States.  The EPC contracts  in  China
are  more  rigorous  than in US on government  approvals,  design
stages,  and guarantee issues and less stringent on environmental
issues.

This  assessment has concluded that, from an environmental  point
of  view,  the  Plant is feasible and is capable of  meeting  the
relevant   emissions  and  discharge  limits  required   by   the
applicable Chinese Standards if all environmental protection  and
control   measures  recommended  by  the  Environmental   Impacts
Assessment (EIA) are implemented.

The ash handling system uses appropriate environmental protection
measures  and the ash disposal plan is reasonable and  achievable
based  on  the expected quality of the coal and its expected  ash
content  as summarized in the Marston & Marston Coal Consultant's
Report.  The EIA indicates the effluent quality will comply  with
the national environmental standard.

The  Operation and Maintenance Contractor (Operator) selected for
the  Project  is Duke/Fluor Daniel.  Duke/Fluor Daniel,  a  joint
venture  between  Duke Power and Fluor Daniel, has  domestic  and
international experience with coal-fired power plants and has the
necessary experience and capability to fulfill the O&M Agreement.
The  O&M  Agreement  contains incentives  and  penalties  in  the
Contract  Price  Adjustment  clause  which  should  provide   the
Operator  reasonable  initiative toward achieving  excellence  in
plant   operational  performance.   Requirements  for  developing
operations  plans  are  contained in  Section  2.10  of  the  O&M
Agreement.  The Owner has review and approval authority  for  all
operations plans developed by the O&M Contractor.

The  Project  can be expected to operate commercially  throughout
the  term  of  the Power Purchase Agreement.  There  is  a  large
number  of coal-fired plants currently in operation in the United
States that have been in service for well over 30 years.

The  Plant  is  capable of meeting the required  performance  and
availability  levels while operating in the modes agreed  in  the
Power  Purchase Agreement.  The design of the Plant and  the  Net
Dependable  Capacity performance guaranteed by the EPC Contractor
of  102  MW  insures  that the contractual amount  in  the  Power
Purchase Agreement can be met and exceeded during the Peak hours.
Maximum Plant output of 106 MW will further exceed the stipulated
amount.   The  actual performance and availability of  the  Plant
will  depend on the successful operation and maintenance  of  the
facility throughout the Plant's life.

The projected dispatch targets for the Plant, as specified by the
Power Purchase Agreement, are achievable and consistent with  the
design criteria and equipment for the Plant.

The  projected  O&M  costs  and capital  expenditures  for  major
maintenance  are  reasonable and representative  of  the  planned
operations  of  the  Project.  The Owner and  Operator  have  the
responsibility   for   establishing  the   full   time   manpower
requirements of the Facility.

Under  the  Power  Purchase Agreement, North  China  Power  Group
Company (NCPGC) is obligated to purchase electricity for a period
of  20  years  beginning on the Commercial Operation  Date.   The
useful  life  of  the  Project will extend  beyond  this  20-year
period.

On  the basis of the financial analyses presented in Chapter  12,
we  are  of  the  opinion that, in the base case,  the  projected
operating  revenues  are adequate to pay the projected  operating
and  maintenance  expenses,  pay the  local  and  federal  taxes,
provide a minimum of 2.02 and average of 2.19 annual debt service
coverage  for  the  Pan-Western  Shareholder  Loans  during   the
repayment period of 10 years, and provide equity distribution  to
Pan-Western  throughout the 20 year term of  the  Power  Purchase
Agreement.   For  the  financial  analysis  and  projections   an
exchange rate assumption of US $1 = RMB 8.50 was used.

Five  sensitivity  cases were developed  to  test  the  Project's
performance under operating assumptions different from  the  base
case.   As  shown in Section 12.8, the selected changes  did  not
yield  debt coverage ratios significantly different from that  in
the base case.

1.0  PROJECT DESCRIPTION AND OVERVIEW

1.1  PARTICIPATING PARTIES

     Certain  affiliated entities owned indirectly by Panda  Energy
     International, Inc. are developing a 2X50 MW pulverized  coal- 
     fired  thermal  power plant in Luannan County, Tangshan  City,
     Hebei  Province  in  the  People's  Republic  of  China.   The
     Project,  commonly  known as the "Panda  Luannan  Project"  is
     comprised  of joint venture companies between the  Pan-Western
     Energy  Corp., LLC. ("Pan-Western"), a Cayman Islands  Company
     and certain affiliates of Luannan County.
   
     Pan-Western  will issue the Shareholder Loans and make  equity
     contributions  to  the JV Cos. for financing the  construction
     of the project.
   
     The  Pan-Sino  Energy Development Corporation,  an  indirectly
     owned  subsidiary of Panda, owns 99% of Pan-Western.  ChinaMac
     (Singapore),  PTE.  Ltd. owns 1% of Pan-Western.   Pan-Western
     owns  88%  of  the JV Cos. and the remaining 12% ownership  of
     the joint venture is held by affiliates of Luannan County.
     
     The  Central Government of the People's Republic of China owns
     the  Qianjiaying Coal Mine from which the majority of the coal
     for  the  power plant will be supplied.  The balance  of  coal
     supply  will  be  from five County owned mines.   The  Central
     Government controls the North China Power Group Company  which
     will  purchase  the  plant  electrical  output.   The  Central
     Government  indirectly  controls  the  Tangshan  Price  Bureau
     which  sets  the  local  tariffs  and  costs  for  other   key
     commodities.
   

1.2  PROJECT DESCRIPTION

     The  Project  is in Luannan County which is part  of  Tangshan
     City  in  Hebei  Province.  The site is approximately  210  km
     northeast  of Beijing and only 100 km from the port cities  of
     Tianjin  and  Quinhuandao.  The county  has  a  population  of
     550,000  and  Tangshan  City  has  6.7  million.   The  region
     requires  power  to  meet  the current  demand.   Considerable
     growth  of  this  demand  is anticipated  as  is  the  overall
     economic development in the region.

2.0  SITE CONDITIONS

2.1  GENERAL DESCRIPTION

     The  Plant  site  (number  2, as  designated  in  the  Plant
     Feasibility  Study),  which was selected  for  the  proposed
     project, is on the north side of Bensi Road, approximately 1
     km  west  of  the  village of Gujiaying in  Luannan  County.
     Luannan County is in the southeast part of Tangshan City  in
     northeastern  Hebei Province.  Luannan County  has  a  total
     area of 1270 sq km and a population of 550,000.  The terrain
     in this area is coastal plains flanked with low mountains in
     the north.
     
     The plant site was chosen from four proposed locations.  The
     selection   criteria   considered   engineering,    geology,
     hydrometeorology,  and  transmission   access.    The   site
     selection was made in a review meeting on February 10,  1993
     with the Engineering Consulting Institute - Hebei Province.
     
     Other advantages of this site include good access to heating
     networks  and  the highest ground elevation among  the  four
     proposed  sites.   The  Plant  is  above  the  flood  plain.
     According to residents, the town of Bengchen near  the  site
     has never been flooded.
     
     The  Plant  area  will  occupy nonirrigated  farmland  which
     presently produces peanuts, corn, sesame, etc.  The yield of
     crops from this site is lower than the surrounding irrigated
     land.
     
     There    are   no   village-owned   enterprises,    military
     installations,  places  of  historic  interest   or   scenic
     features in the area which would be negatively affected by a
     power plant.

2.2  FUEL TRANSPORTATION

     The  fuel  (coal) will be transported from the Kailuan  Coal
     Administration and local County owned mines to the Plant  by
     trucks.   A  1.5 km access road connects the  Plant  to  the
     outer  ring road of the town.  The Tangshan-Luannan  highway
     is  approximately 2 km north of the Plant site and  connects
     with  the outer ring road of the town.  The plant is located
     approximately  30 km from the Qianjiaying  coal  mines.  The
     coal will be delivered to the site where the weight will  be
     checked, a quality sample will be taken and then it will  be
     unloaded.

2.3  WATER RESOURCE

     The  Plant  uses  a  natural  draft  cooling  tower  with  a
     recirculating  cooling water system.  The water  requirement
     including   circulating  water,  boiler  make-up,   district
     heating  network make-up and domestic water is approximately
     980  m3/h.   The local water resource administration  office
     has  approved  the  pumping of water from nine  local  water
     wells  to  the  Plant.  Seven wells will furnish  the  water
     required with 2 wells on stand-by.
     
     The  Feasibility  Study contains the test results  of  eight
     samples of the groundwater from the wells and indicates  the
     water is potable and suitable for industrial purposes.

2.4  HYDROMETEOROLOGY
     
     2.4.1     Meteorological Conditions
     Luannan  County  is  2.5  to 35 m above  sea  level  with  a
     declination from north to south.  The land is rather  smooth
     and  is traversed by four rivers running from north to south
     into the Bohai Sea.
     
     The County is located in the warm temperature zone with semi-
     moist to monsoon climate.
     
     The main meteorological data are as follows:
     (1)  Annual mean atmospheric temperature 10.7 degrees C,
          (51 degrees F)
     (2)  Extreme max. atmospheric temperature 38.6 degrees C,
          (101 degrees F)
     (3)  Extreme min. atmospheric temperature -21.7 degrees C, (-7
          degrees F)
     (4)  Average temperature of the coldest month -10.9 degrees C,
          (12 degrees F)
     (5)  Annual mean rainfall 653.3 mm, (25.7 in)
     (6)  Annual average evaporate capacity 1752.0 mm, (68.9 in)
     (7)  Annual maximum rainfall 978.8 mm, (38.5 in)
     (8)  Daily maximum rainfall 236.5 mm, (9.3 in)
     (9)  Maximum hourly rainfall 69.7 mm, (2.7 in)
     (10)      Maximum wind speed 19 m/s, (42.5 mph)
     (11)      Annual average wind speed 2.7 m/s, (6.0 mph)
     (12)      Annual average relative humidity 65%
     (13)      Maximum depth of frozen ground 77 cm, (30.3 in)
     (14)      Maximum thickness of accumulated snow 23 cm, (9.1 in)
     2.4.2     The Effect of Water Flood on the Plant Site

          The  general elevation of the Plant is 17 m.  The  rain
          records   of   Luannan  County  and   a    survey   and
          investigation  of the site indicate the proposed  plant
          area  has never flooded.  From an analysis of the water
          flows  in  the  area  and  calculations  of  the   mean
          rainfall,  it is concluded that the site  will  not  be
          affected by a one hundred year flood.  Results  of  the
          analysis   and   calculations  are  detailed   in   the
          Feasibility   Study   on   Thermal   Power   Plant    -
          Hydrometerology Report.
          

2.5  REGIONAL GEOLOGICAL OVERVIEW

     2.5.1     Natural Geology

          Luannan  County is located in the east  part  of  Hebei
          province  about 43 km southeast of Tangshan City.   The
          county  has  eight naturally formed rivers; Xiaoqinghe,
          Yihe   (Xinluanhe),   Beihe,  Munute,   Xiaochinlunghe,
          Suanlunghe,  Xiaozanmenhe  and  Yaoijiahe.    Each   is
          seasonal.   The  rainy  season is concentrated  between
          June and September, producing about 82.7% of the annual
          precipitation.   The  yearly average  precipitation  is
          653.3  mm (25.7 in).  The annual temperature is -21.70C
          (-70F)  minimum,  38.60C  (1010F)  maximum  and  10.70C
          (510F) average.
     
     2.5.2     Topography

          Luannan  County  is situated at the  southern  foot  of
          Yansan  Mountain.  Two area rivers form a 3.5 km  wide,
          Class  1  terrace running north to south.  The  terrace
          elevation  is 13 - 18 m with the toe of the terrace  at
          about 3 m.  The flood plane is at elevation 10 m.   The
          terrain generally slopes down from north toward south.
     
     2.5.3     Regional Geological Structures

          The  Plant  site is located at the south rim of  Yansan
          Mountain  fold  zone  at  the  southeast  part  of  the
          Tangshan   subsidence  block.   It   is   adjoined   by
          Sanhaiguan  upheaval block on the east side and  Leting
          subsidence  block  on  the south.   The  great  Ninghe-
          Changli fault is located about 3 km south of the  plant
          site  and  14  km  east  is the Luanxian-Leting  Fault.
          These  faults form the demarcation lines for the  three
          subsidence blocks.
          
     2.5.4     Stratigraphy

          According to "Hebei Province Luannan County Master Plan
          Geotechnical  Investigation Report," the crust  of  the
          Luannan  area  had been in rising and  upheaval  states
          ever  since  Precambrian era.  Due  to  weathering  and
          erosions,  the area is void of Paleozoic  and  Mesozoic
          alluvial deposits.  A tertiary strata was deposited  on
          the Precambrian gneiss beginning at the end of Mesozoic
          era  and through the early Neozoic era as the crust  in
          the area subsided. The tertiary stratum now consists of
          cemented fluvial/lucustine deposits, uncemented gravel,
          mudstone,  and  sandstone,  etc.   The  depth  of   the
          tertiary  stratum is about 150-250 m.   The  Quaternary
          stratum  consists mainly of diluvial deposits,  fluvial
          deposits  and  lacustrine sediments.  The thickness  of
          these deposits are about 350 m.
     
     2.5.5     Fault Structures and Earthquake

          According  to  a geoseismic evaluation  report  by  the
          State  Seismic  Bureau  for a  220  kV  electric  power
          substation located 1.5 km south of Luannan county town,
          the  Ninthe-Changli rift is a large  scale,  deep  cut,
          hidden  fault running NEE.  The total length  is  about
          120 km.  The fault plane tilts toward the southeast  at
          35  to  650.   The tilt angle is steep  at  the  higher
          elevations  on  the  plane and  flatter  at  the  lower
          elevations.  The faults had been formed in Mesozoic era
          and  were  dormant for a period during  Cretaceous  and
          early  Tertiary era.  It became active again the middle
          of  Oligocene. Historically, earthquakes occurred  only
          at  the  east  and  south sections  of  this  fault;  a
          Magnitude 4 in 1567 and Magnitude 5 in 1805.
     
          Recently, there have been small shocks scattered  along
          this  fault line.  After a Magnitude 7.8 earthquake  in
          the  Tangshan  area,  it  is believed  that  long  term
          cumulated stresses in the area have been relieved.   An
          earthquake of more than Magnitude 6 it is not  believed
          likely  over  the  next  50 years.   According  to  the
          "Seismic  (Damage) Intensity Map of China (1990),"  the
          baseline seismic intensity at Luannan area is level  7.
          This level is based on the Chinese scale which is a  12
          degree system.
          
          Section 4.2.4.2.4 of the Scope of Work contained in the
          EPC  Contract describes the design criteria to meet the
          requirements  of UBC Seismic Zone 4.   Zone  4  is  the
          highest  Zone in the US and is based on the logarithmic
          Richter Scale which has a high rating of 8.0 and  over.
          Zone 4 covers areas where major damage potential exists
          from earthquakes, i.e., California.
          
          According  to the report prepared by Sedgwick Insurance
          and  Risk  Management Consultants (China)  Limited  and
          Sedgwick   Construction  Asia  Limited,  the  insurance
          provider,   there  is  adequate  earthquake   insurance
          available  and this insurance will be provided  at  the
          time of construction.
     
     2.5.6     Plant Site 2 Geotechnical Conditions

          The  Gujiaying  Plant Site, Plant Site  2,  is  located
          about  2.5 km west of Luannan County seat, at the  west
          side  of Gujiaying town and at the north side of  Benxi
          Highway.   The site is on a Class 1 Terrace  of  Luanhe
          River.   The Plant area is flanked with a sand dune  on
          the north, Benxi Highway on the south and farming roads
          to  the east and west.  The site is essentially flat at
          elevations between 16.4 and 16.7 m.  It has the highest
          elevations in the vicinity of the county seat.
     
          During  the  7.8 Magnitude earthquake in  the  Tangshan
          area  in  1978, the area south of Plant Site 2 suffered
          some  blowouts  of  sand and/or  water.   No  trace  of
          liquefaction  was  observed at the  ground  surface  of
          Plant  Site 2.  Each of the other sites exhibited  more
          severe effects of the quake.
     
          In  summary, the Plant Site 2 at Gujiaying, situated at
          about   3  km  north  of  Ninghe-Changli  fault  offers
          relatively  stable  ground for plant  structures.   The
          plant  site  is acceptable from an engineering  geology
          point  of  view.   The  soil  is  slightly  soft.   The
          subsurface  soil allows a bearing capacity  of  120-140
          kPa.
          
     2.5.7     Ground Water

          The groundwater table was placed at 1.95 - 5.2 m depth,
          at  elevation 11.78 to 15.03 m, with a relatively steep
          gradient.  The water table is high in the south and low
          in   the  north.   This  gradient  is  in  the  reverse
          direction  of  ground water flow in this general  area.
          The  anomaly  is  explained by the  proximity  of  rice
          paddies  southeast  and west of the  plant  site.   The
          ground   has   high   permeability  allowing   seasonal
          irrigation  water  to influence the local  water  table
          levels.  Sample analysis indicates HCO3-Ca type  water,
          with  a  PH value of 7.68.  This type of water  has  no
          corrosive effect on concrete.
     
     2.5.8     Design Considerations

          The  number  of  soil samples and standard  penetration
          tests   were  limited.   The  soil  bearing  capacities
          derived from laboratory tests varied significantly from
          those  of the standard penetration tests.  Construction
          experience   in   the  area  indicates   soil   bearing
          capacities  which  also differ from test  results.   An
          evaluation of the specific conditions at the  placement
          site   of   an   individual  structure   is   required.
          Appropriate bearing capacities can then be employed  in
          establishing  the structure design.  Section  4.2.3  of
          the   Scope   of  Work  document  describes   the   EPC
          Contractor's   responsibilities  for   performing   the
          necessary  on-site  subsurface investigations  and  for
          supplying all the geotechnical information required  in
          the design of the Plant.
     
     2.5.9     Site Seismicity and Related Design Considerations

          The  site is located in a Design Intensity 7 zone.   In
          the plant area, the soils include loose to medium dense
          sand   stratum,  loose  to  medium  dense  medium  sand
          stratum, and plastic to liquid plastic silt stratum  to
          a depth of 0 to 15 m.  Bed rock is at a depth of 500 to
          600  m.   The soil is classified Type III, Intermediary
          Soft Soil.
     
          In   some  Plant  areas,  some  soil  strata  have  the
          potential   for   liquefaction  of  medium   grade   to
          insignificant   grade  during  an  earthquake.    Field
          investigation found no trace of liquefaction  at  Plant
          Site  2  resulting from the Tangshan  earthquake.   The
          Preliminary   Design   Document   states    that    the
          liquefaction phenomena does not appear at each layer of
          the  stratum  in  the  Plant site when  the  earthquake
          seismic intensity magnitude is 7.

2.6  ASH STORAGE SITES
     
     Two  sites  were  investigated  and  compared  for  possible
     selection as ash storage yards for the thermal power plants.
     One   site  is  located  at  Dupingtuo  and  the  other   at
     Xinzhuangzi.  Each site has a planned capacity for 20  years
     of  ash  storage.   There are no major  facilities  such  as
     roads, water wells or communications lines to be removed  in
     either of the two available ash storage sites.
     
     The Dupingtuo Ash Yard was selected as the best location for
     storage of ash from the plant.  This site is located on  the
     north  side of Bengsi Road, about 4.3 km away from the  site
     and  the  site  permit  has  been received.   The  following
     considerations contributed to the selection:
     
       - The  terrain  of the Dupingtuo site is smooth  and  open
          with a ground level of about 17 m.
       - As  farmland,  this  site  is less  productive  in  crop
          yields than Xinzhuangzi.
       - The  Xinzhuangzi  site is located on the  Ninghe-Changli
          rift   zone   making  it  less  unfavorable   for   the
          construction of dams.
       - The   local  Water  Conservancy  Bureau  indicates   the
          Xinzhuangzi site elevation is below the ten year  flood
          level,  whereas the Dupingtuo site will not be affected
          by flooding.
       - The  ash  slurry route from the Dupingtuo  site  to  the
          Plant  is  preferable to the route from the Xinzhuangzi
          site.
       - Cities  near  the  Xinzhuangzi Ash  Yard  will  be  more
          negatively impacted in the winter and spring by  flying
          ash than the Cities near the Dupingtuo site.

2.7  ASSESSMENT OF SITE SUITABILITY
          
     Given the general area which will receive electric power for
     the  grid and steam for district heating, Plant Site  2  was
     selected as the best site from four considered.  The site is
     relatively   level;  above  flood  elevation;  will   occupy
     nonirrigated farmland with lower crop yield than surrounding
     irrigated  land;  and  there are  no  features  of  historic
     interest  or  scenic  beauty in  the  area  which  would  be
     negatively impacted by the Project.
     
     Roads  for the transportation of coal from nearby mines  are
     relatively  good. A minimum amount of road construction  for
     highway access will be required.
     
     There is adequate water to operate the plant from nine local
     water wells.
     
     Although  the  site  is located in an area  which  has  been
     affected  by  earthquakes, it is generally agreed  that  the
     earth stresses have been released and a plant designed for a
     7 degree tumbler will be suitable.  The soil in the area has
     good bearing capacity.  For these reasons, the plant site is
     acceptable from an engineering point of view.

3.0  DESCRIPTION OF FACILITY DESIGN

     The  EPC  Contractor  will design,  construct,  and  provide
     Project equipment in accordance with the requirements in the
     Scope  of  Work  of  the EPC contract.  The  Scope  of  Work
     defines  the conceptual design and prescribes the  technical
     requirements  for  the  Project.  The conceptual  design  is
     based  on a Feasibility Study on Luannan Thermal Power Plant
     of Tangshan Panda Heat and Power Co., Ltd. by Hebei Electric
     Power Design Institute (HDI), dated October 1994.
     
     The  electrical output from the Project is determined by the
     plant capability and the General Interconnect Agreement with
     its  Supplements.   The  Plant design  will  be  capable  of
     producing 106 MW net of the 47 metric tons per hour of steam
     extraction.
     
     The steam output from the Project is determined by the plant
     capability and contractual arrangements.
     
     The Project is expected to be implemented in accordance with
     the   protection   guidelines  and   requirements   of   the
     Environmental  Impact  Report  as  Approved  by  the   Hebei
     Provincial Environmental Protection Bureau dated 7/5/95.
     
     Based  upon the proposed equipment and design criteria,  the
     Project  should  meet  expected plant  performance  criteria
     contained   in  the  EPC  Contract  and  comply   with   the
     contractual agreements for steam and electric energy.
     

3.1  MECHANICAL EQUIPMENT AND SYSTEMS

     3.1.1     Steam Turbine Generator

          Each of the two identical steam turbine generators is a
          condensing extraction unit nominally rated at 50 MW  at
          3000  RPM  capable of producing 60 MW gross under  full
          condensing conditions.  The steam turbine consists of a
          high   pressure  and  a  low  pressure   casing.    The
          extraction steam from the high pressure casing is  used
          for industrial steam processes while exhaust steam from
          the  low  pressure casing is piped to a heat  exchanger
          that   generates   hot  water  for  district   heating.
          Extraction points from both the high pressure  and  the
          low  pressure  casings are provided for condensate  and
          feedwater heating.
          
     3.1.2     Boiler / Firing Cycle

          Each unit boiler uses a balanced draft design with  two
          forced draft (FD) fans and two induced draft (ID) fans.
          The  boiler  is  a natural circulating drum  type,  dry
          bottom, with economizer, air heater, and superheater.
          
          The  boiler is rated for 255 metric tons/hr steam  flow
          at   Maximum  Continuous  Rating  (MCR)  with  a   coal
          consumption of 39.14 metric tons/hr based on the worst-
          case   coal   as   supplied  from  the   Kailuan   Coal
          Administration's   Qianjiaying   Mine,   and   a   coal
          consumption of 40 metric tons/hr based on coal supplied
          from  typical county owned mines.  Parsons Brinckerhoff
          has  reviewed the coal contracts and determined, of the
          six  contracts, coal from the Qianjiaying Mine has  the
          lowest    heat   value   specification   i.e.,    4,600
          kilocalories   per   kilogram,   average   and    4,300
          kilocalories per kilogram, minimum.  Marston & Marston,
          the  Coal Consultant has estimated the coal quality  to
          range  from  4,600 to 4,700 kilocalories  per  kilogram
          with  an ash content of 34-35% which should be adequate
          to provide the expected performance of the Plant.
          
          Steam sootblowers are provided on each boiler to remove
          soot and slag deposits that accumulate on heat transfer
          surfaces.
          
          Pulverized coal is the main fuel.  The boilers  utilize
          an  indirect firing system.  A pulverized coal  storage
          silo  is provided for each unit.  Two ball mills,  each
          having  a  pulverizing capacity of 22.5 metric  tons/hr
          with   worst-case  coal  (i.e.  1.15  capacity  reserve
          factor), are provided for each unit.   Ball mill design
          capacity is based on operating each boiler at MCR  with
          worst-case coal and includes sufficient margin for coal
          quality  transient conditions.  Each ball  mill  has  a
          dedicated  coal bunker that receives raw  crushed  coal
          from  a belt conveyor.  A coal feeder delivers the coal
          from  the bunker to the ball mill.  Pre-heated  air  is
          supplied  to the ball mill where the coal is  partially
          dried and pulverized.  The heated air also conveys  the
          coal   into  a  pulverized  coal  separator  to  remove
          oversize coal particles.  The pulverized coal  is  then
          passed through a cyclone separator and transferred into
          the  pulverized  coal  storage  silo.   Air  with  some
          entrapped  coal particles is removed from  the  cyclone
          separator with the aid of mill exhausters (2 per  unit)
          and  delivered  to the burners.  A fan  and  dedicated,
          pulverized   coal  feeder  transfers  and  meters   the
          pulverized coal from the coal storage silo to the  coal
          burners in the boiler units.  A screw conveyor is  used
          to  transfer pulverized coal from one unit's pulverized
          coal  silo to the other.  This allows the operation  of
          both boilers utilizing any three of the four mills.
          
          The burner arrangement on the boilers is a tangentially
          fired  design with two coal burners at each  corner  of
          each  boiler  unit.  An oil ignition  fueled  by  light
          diesel  oil  (stored on site) serves  as  the  ignition
          source for each coal burner.
          
          Combustion  air is supplied by the FD fans.   Air  from
          these fans passes through a regenerative type air  pre-
          heater  and then is distributed to the windbox, to  the
          burners and to the pulverizers.  An air pre-heater  by-
          pass is provided to admit tempering air for temperature
          control.   Gaseous  combustion products  are  extracted
          from the boiler units by the ID fans.
          
          Electrostatic precipitators are provided downstream  of
          the  air  pre-heater to remove fly ash from the  boiler
          flue  gas.   The  fly ash is collected in  hoppers  for
          further handling and disposal, which is consistent with
          current Chinese environmental standards.
          
     3.1.3     Main Steam System

          The  main  steam  system  conveys  the  high  pressure,
          superheated steam from the boiler steam outlet  to  the
          turbine stop valve.
          
          A  steam  dump  system is provided for diverting  steam
          around   the   steam  turbine  to  the   condenser   to
          effectively enable the plant to operate at  the  trough
          period load.  The steam dump system capacity will be 15
          %-  30%  of the steam turbine generator (STG) flow  and
          will   be   designed   consistent   with   the   boiler
          manufacturer's boiler turndown capabilities.
          
     3.1.4     Extraction Steam System

          The  extraction steam system consists of six stages  of
          condensate/feedwater  heating.   The  first  two   high
          pressure  (HP) stages receive steam from high  pressure
          extraction points located on the STG HP casing to  heat
          feedwater  in the high pressure feedwater  heaters.   A
          third stage, which comes from the crossover between the
          HP   and  low  pressure  (LP)  steam  turbine  casings,
          supplies  steam for industrial use and also  feeds  the
          deaerator.  The fourth and sixth stages supply steam to
          the condensate (low pressure feedwater) heaters and the
          gland  steam condenser.  The fifth stage supplies steam
          to  the  district heating system and also feeds one  of
          the three low pressure heaters.  All low pressure steam
          extraction  points are located on the LP steam  turbine
          casing.
          
     3.1.5     Auxiliary Steam System

          The  auxiliary steam system consists of one  oil  fired
          auxiliary  boiler  capable  of  satisfying  the   steam
          demands for cold start-up of one unit using oil  stored
          on-site.
          
     3.1.6     Condensate and Feedwater Systems

          Steam  exhausted  from the turbine into  the  condenser
          becomes  condensate.  Two condensate pumps are provided
          to  pump  the condensate from the condenser hotwell  to
          the  low pressure feedwater heaters and the deaerators.
          The  feedwater heaters are of the vertical design.  The
          condensate passes first through a gland steam condenser
          and  then through the three LP heaters.  From the third
          LP  heater, the condensate enters the deaerating heater
          where dissolved oxygen and other gases are removed from
          the  condensate.  The condensate is then collected  and
          stored  in  the  deaerator storage tank  as  the  water
          supply  for  the  boiler feed pumps.  Extraction  steam
          condensate  from the two LP heaters near the  deaerator
          is  pumped  into  the  condensate  stream  and  to  the
          deaerators.   The  remaining LP heater  and  the  gland
          steam  condenser  are drained into the  condenser.   An
          emergency  drain  is provided on each feedwater  heater
          and  is activated on heater high level for routing flow
          back  to the condenser to provide protection from water
          induction to the turbine.
          
          The boiler feed pumps transfer water to the boiler drum
          via  an economizer.  Water leaving the boiler feedwater
          pumps flows through two high pressure feedwater heaters
          to  preheat  the feedwater.  The feedwater then  passes
          through  the economizer where it is heated by the  flue
          gas leaving the furnace.  After leaving the economizer,
          the  feedwater  enters the steam drum.   High  pressure
          feedwater   heater  extraction  steam   condensate   is
          cascaded (drained) to the deaerator or in emergency, is
          routed to the condenser.
          
     3.1.7     Cooling Water System

          A  circulating  water  system  common  to  both  units,
          provides  cooling  water to the  condensers  and  other
          auxiliary equipment.  There are four circulating  water
          pumps  receiving suction from a common header  tied  to
          the  discharge of the cooling tower.  A single, natural
          draft  cooling tower provides sufficient  heat  removal
          capacity to serve both units.  The discharge piping  of
          the circulating water pumps is cross tied to serve both
          units  and  has a common return header to  the  cooling
          tower.  Each pump has a motor operated butterfly  valve
          on the discharge line.
          
          An  auxiliary cooling water system is also provided  to
          satisfy plant auxiliary cooling water requirements  for
          generators,  coolers,  pump  and  motor  bearings,  air
          compressors,  etc.   Two  booster  pumps   supply   the
          auxiliary cooling water requirements by taking  suction
          from the circulating water system.
          
     3.1.8     Fire Protection System

          The  Preliminary Design documents describe  the  design
          philosophy of, "fire prevention first and the combining
          of prevention with fire fighting".
          
          Luannan  County town is 2.5 km from the proposed  plant
          site.   Since  this distance requires  less  than  five
          minutes  driving  time, the Luannan Fire  Brigade  will
          provide  personnel and equipment for fire  fighting  at
          the Plant site.  A fire engine with water tank will  be
          provided to the Luannan Fire Brigade by the project.
          
          A  fire fighting water system will be installed at  the
          Plant site which will include a 800 mwater storage tank
          and two fire pumps.  One fire pump is for operation and
          the  other is standby.  The tank also provides  potable
          water  for  human  consumption.   An  additional  water
          storage  tank  is to be installed on top  of  the  main
          power building.  Start-up of the fire pump, controls  a
          valve  on  the  roof  tank inlet  to  ensure  flow  and
          pressure  during  fire fighting.   Maximum  fire  water
          consumption   is   234  m/hr.   Maximum   pressure   is
          calculated at 702 kPa.
          
          Automatic   COfire  extinguishing   systems   will   be
          installed  in the switchgear room and other  identified
          electrical  locations.  Additionally, all buildings  in
          the   Power   Plant   will  be   equipped   with   fire
          extinguishers according to applicable codes.
          
          As  described in the scope of work document for the EPC
          contractor,  an  underground fire water  pipeline  will
          loop   around  the  power  block  and  feed  the  plant
          hydrants, building sprinklers and water deluge systems.
          Automatic water spray systems will be installed in  the
          coal  corridors, in the vicinity of the oil tanks, main
          oil  pipes  in  the  main power  building  and  at  the
          transformers.
          
          The  design  of the fire protection system will  be  in
          accordance  with Chinese local and national  codes  and
          standards, and, where applicable, the Uniform Fire Code
          and  NFPA 850, Recommended Practice for Fire Protection
          for Fossil Fueled Steam and Combustion Turbine Electric
          Generating Plants.
          
          Fire  monitoring, detection and alarm systems  will  be
          furnished  in  the  control rooms,  cable  flat,  cable
          shaft,   battery  room,  relay  room,  and  other   key
          locations  to  provide for early warning and  personnel
          safety.   The  fire  safety  control  system  will   be
          monitored  in  the electrical control room.   Automatic
          protection  systems will operate after confirmation  of
          the alarm by the operator.
          
     3.1.9     Coal Handling System

          Raw  coal is delivered by truck to the Plant.  The coal
          is  weighed  at the plant by a dynamic truck  scale  to
          determine  the  amount  of coal being  delivered.   The
          trucks  unload  the coal in the coal unloading  trough.
          The  trough  is located along both sides  of  the  coal
          stock  yard  and is the same length as the stock  yard.
          Two  gantry cranes with five ton buckets are  installed
          on  rails  above the coal stock yard and coal unloading
          troughs.  The dual gantry cranes are acceptable from an
          engineering  standpoint and typical of the design  used
          for  Chinese coal-fired power plants of this size.  Two
          bulldozers and a truck loader will serve as backup coal
          feeding equipment to the gantry cranes during emergency
          conditions.  The stock yard is divided into  two  equal
          areas.   Coal  unloaded in the troughs is delivered  by
          the  gantry crane onto a belt conveyor which transports
          the  coal  to  the transfer house where it  is  crushed
          before  being delivered to the raw coal storage bunkers
          via  belt  conveyors or stacked by the gantry crane  in
          the coal stock yard.
          
          A  twin  belt conveyor system, each rated at 100  %  of
          Plant  requirement, transports the coal to the  crusher
          house.   The  coal  passes  through  coal  screens  and
          crushers  (depending  on size), a  series  of  magnetic
          separators,  and is directly fed into the coal  bunkers
          on each boiler.  A coal feeder at the discharge of each
          coal   bunker   feeds  coal  to   a   ball   mill   for
          pulverization.
          
          The  coal  handling  equipment and  systems  should  be
          adequate  to  provide for efficient plant production  ,
          even using the worst-case coal described above.
          
3.2  CIVIL/STRUCTURAL SYSTEM
     
     Plant designs addressing Civil, Structural and Architectural
     requirements  are  to  be  consistent  with  the  applicable
     Chinese  Standards for Coal Fired Power Plants.  The general
     layout   of  the  plant  follows  a  design  philosophy   of
     functional groupings.  There are three general groupings  of
     buildings,  structures  and  equipment.   The  first   group
     includes the high voltage switchyard area, main transformers
     and  the  control building.  The second group  includes  the
     turbine  buildings, boilers, draft fans,  precipitators  and
     chimney.   The  third group includes the  coal  storage  and
     supply systems.
     
     3.2.1     Civil Design

          The design incorporates considerations for the type  of
          soils encountered at the Plant site. Where key building
          foundations  are  to be placed, the sub-soils  will  be
          extensively reworked and/or replaced with suitable base
          material.   Site  grading allows for  proper  drainage.
          Roadways  are included in the design to provide  access
          to   equipment   and  buildings  for  maintenance   and
          operation.
     
     3.2.2     Structural Design

          Designs  for  Plant  structures and buildings  includes
          considerations  for basic structure loading,  equipment
          access and earthquake stresses.  General specifications
          for  concrete steel and masonry are included  for  each
          major  construction or structure type.   The  materials
          have   been  chosen  consistent  with  their   intended
          application.    Corrosion   resistant   materials   are
          specified where appropriate.
          
     3.2.3     Architectural Design

          Building architecture is generally consistent with  the
          intended  functions.  The designs include  features  to
          maximize  natural  lighting,  facilitate  the  flow  of
          operations  personnel  and  provide  fire  barriers  to
          improve  personnel  safety.  Additional  considerations
          have been given to building surface finishes to improve
          the  building  aesthetics.   Ceramic  tile,  brick  and
          terrazzo finishes are specified for select Plant areas.
     
3.3  ELECTRICAL AND CONTROL SYSTEMS

     The  Plant electrical and control systems conceptual  design
     is  consistent with present Chinese power plant design.  Off
     site  transmission, substation, protection and communication
     systems  are  described  in the Feasibility  Study  and  are
     provided  through the loan agreement between the  NCPGC  and
     Tangshan  Panda Heat and Power Co., Ltd. and  Tangshan  Pan-
     Western Heat and Power Co., Ltd. dated 2/10/1996.
     
     3.3.1     Step-Up Transformers

          The electrical plant will consist of two nominal 50  MW
          generators (60 MW maximum output) capable of  producing
          a minimum of 51 MW net power to the electrical grid.  A
          75   MVA  rated  Generator  Step-Up  Transformer   will
          increase the output from each generator from 10.5 kV to
          110 kV for connection to the high voltage switchyard.
          
    3.3.2     Plant Switchyard

          The  high voltage switchyard electrical equipment  will
          include   110  kV  rated  SF-6  gas  insulated  circuit
          breakers,  current  and potential transformers,  manual
          air  break  switches,  surge  arresters,  metering  and
          protection  equipment.  As dictated by the North  China
          Power Administration, a double bus arrangement will  be
          used in the switchyard to connect the generators to the
          transmission lines exiting the plant.
          
          Each generator/step-up transformer will be connected to
          a  bus  in  the switchyard by a single, 110 kV  circuit
          breaker.   In normal operation, this scheme is adequate
          to supply all of the output from the plant to the grid.
          However,  a failure of a generator breaker will  create
          an  outage  for  the  associated  generator  until  the
          problem is corrected or the breaker is replaced.   This
          contingency  will have an impact on plant availability.
          To  mitigate  the  effects from such  contingency,  the
          initial  spare  parts  purchase  should  include   this
          equipment in order that it will be readily available on
          site.
          
     3.3.3     Utility Interconnection

          Arrangements  have  been  made  with  NCPGC   for   the
          construction  of  required  facilities  to   adequately
          interconnect the Plant with the utility grid.  Approval
          Notice Document-Huabeidianshe [1995] No. 65, dated July
          13, 1995 and Approval Comments Document Huabeidianjishe
          [1995]  No.  75,  dated August 24, 1995  describes  the
          size,  location and other requirements of the  proposed
          interconnection  facilities at the plant  site.   These
          documents also provide for the construction of a new  5
          km  double circuit 110 kV transmission line which  will
          connect the proposed plant with a new substation to  be
          constructed at Ningtuo.
          
     3.3.4     Off-Site Transmission Lines

          Arrangements have been made with NCPGC for construction
          of  additional off-site transmission lines required  to
          adequately  deliver  power  from  the  Plant  to   area
          substations.   Approval  Notice  Document-Huabeidianshe
          [1995]  No.  65,  dated  July  13,  1995  and  Approval
          Comments Document Huabeidianjishe [1995] No. 75,  dated
          August  24,  1995 provide for NCPGC to construct  three
          additional  double  circuit 110 kV  transmission  lines
          necessary to tie in various substations.  From Ningtuo,
          18  km  of 110 kV transmission line will be constructed
          to  the  new  Changing substation,  12  km  of  110  kV
          transmission  line  will  be  constructed  to  the  new
          Sijezhuang  substation and 8 km of 110 kV  transmission
          line  will be constructed to the existing 2  x  110  kV
          Bengcheng switching station.
          
     3.3.5     Off-Site Substations

          Adequate arrangements have been made with NCPGC for the
          construction of new off-site substations and increasing
          the  capacity of existing substations.  Approval Notice
          Document-Huabeidianshe [1995] No. 65,  dated  July  13,
          1995  and  Approval  Comments Document  Huabeidianjishe
          [1995]  No.  75,  dated August 24,  1995  describe  the
          necessary off-site substation improvements.  Three  new
          2  x 40 MVA substations will be constructed at Ningtuo,
          Changning and Sijezhuang.  Modifications will  be  made
          to  existing Yangling substation and Bencheng switching
          station.   Additionally, changes to  the  communication
          systems  at the Bengcheng switching station and  system
          dispatch   center  and  system  protection  and   relay
          requirements are also described in these documents.
          
     3.3.6     Auxiliary/Start-Up Power

          Each  generator  will  have  an  auxiliary  transformer
          connected to the output terminals which will adequately
          supply   plant  electrical  service.   Each   auxiliary
          transformer  is  capable  of supplying  the  electrical
          needs  of  the entire Plant.  Additional redundancy  to
          the  Plant electrical service is achieved by a start-up
          transformer served from the high voltage switchyard.
          
     3.3.7     Revenue Metering

          Revenue    metering   located   at   the    point    of
          Interconnection  between  the  power  plants  and   the
          utility grid will measure electrical energy provided to
          the  grid.   Readings from these meters  will  also  be
          transmitted  to  the dispatch office  of  the  Tangshan
          Power   Supply  Bureau  of  the  Grid.    Testing   and
          calibration  of  the  revenue  meters  will  be  by   a
          qualified inspection agency approved by both the  Owner
          and the NCPGC.
          
     3.3.8     Control Systems

          A  Distributed  Control  System (DCS)  manufactured  by
          Siemens  and  imported  into  China  for  assembly  and
          delivery  will  provide integrated modulating  control,
          sequential  control  and  data acquisition  from  plant
          systems.  The DCS system design includes provisions for
          1500 Input/Output (I/O) and 300 spare I/O points, for a
          total of 1800 points.
          
          The following functions are included in the DCS:
          
               Data Acquisition System (DAS)
               Furnace Safety Supervisory System (FSSS)
               Continuous Control System (CCS)
               Sequence of Events Recording (SOE)
               Interlock Protection System
          
          The  Boiler  Controls  and the Turbine  Controls  being
          furnished  will  be upgraded from the standard  Chinese
          design  to interface with the DCS and accommodate  data
          transmission to the DCS.
          
          The  Coal Handling System as well as the Bottom and Fly
          Ash  Handling  Systems will be controlled locally  with
          Programmable  Logic Controllers (PLC's) and  interfaced
          with the DCS system.
          
          The  Demineralizer System and the Sampling and Chemical
          Injection  System  will  be  controlled  locally.   The
          systems will interface with the DCS for monitoring.
          
          To  accommodate operating personnel trained in  Chinese
          plants  of similar design, control for both units  will
          be  performed  using a two control  room  scheme.   The
          Steam  Turbine and Boiler Controls will be  located  in
          one  control  room  and  the Generator  and  Switchyard
          controls in another control room.
          
          The  following  DCS equipment will be  located  in  the
          Steam Turbine and Boiler Controls room:
          
               One operator's station (with 2 CRTs and 1 printer)
               per boiler.
               One  operator's station (with 1 CRT and 1 printer)
               per turbine.
               One  operator's station (with 1 CRT and 1 printer)
               for balance of plant.
          
          The  following  DCS equipment will be  located  in  the
          Generator and Switchyard Controls room:
      
               One  operator's station (with 1 CRT  and  printer)
               for the electrical system.
               
          These  systems and configurations have been used before
          at  plants of similar size and technology and should be
          adequate for Plant control.
          
    3.3.9Dispatch/SCADA/Communications

          The  output electrical power from the proposed Plant(s)
          will   be  dispatched  by  the  Tangshan  Power  Supply
          Bureau's Dispatch Department according to the terms and
          conditions  contained in Article Two  of  the  Electric
          Energy  Purchase  and Sales Agreement, dated  September
          22, 1995.
          
          The  SCADA of the operating utility will interface with
          the plant DCS for monitoring, controlling and obtaining
          data.
          
          Telecommunications will be achieved  through  redundant
          paths   using  microwave,  fiberoptic  and  hard   wire
          systems.  A power line carrier used primarily for relay
          applications  is also available for other communication
          needs.  These systems should be more than adequate  for
          Plant communications.

3.4  WATER SUPPLY AND DISPOSAL

     3.4.1     Water Wells for the Power Plant

          The  Plant  water requirement is 980 m3/h (4,508  gpm).
          The  water  source for plant water use is  from  ground
          water.  There are seven production wells nearby with  a
          total capacity of 993 m3/ hr (4,568 gpm) and two backup
          wells  which increase the total water capacity to 1,263
          m/   hr   (5,810  gpm),  which  is  adequate  for   the
          requirements  of  the  Plant.  The  wells  are  located
          approximately  two  miles west  of  the  Plant  in  the
          Quaternary aquifer.
          
          The  Quaternary aquifer is a medium water-rich  aquifer
          and  contains  four  sets  of water-bearing  strata  as
          follows.
          
          a) At  0  - 25 m deep, with a yield of about 3 to 5  t/h
             (13.8-23.0 gpm) water.
          
          b) At   25 - 160 m deep, with a yield of about 20-30 t/h
             (92.0-138.0 gpm) water.
          
          c) At  160 - 250 m deep, with a yield of about 10-20 t/h
             (46.0-92.0 gpm) water.
          
          d) At  250 - 350 m deep, with a yield of about 5-10  t/h
             (23.0-46.0 gpm) water.
          
          The aquifers are fed by the side slopes of the mountain
          to  the  north and seepage from various other  sources.
          The hydraulic gradient of the ground water is about 5%.
          
          The  Hydraulic Bureau of Luannan County stated that the
          water  from  shallow upper aquifers  are  reserved  for
          irrigation.
          
     3.4.2     Waste Water Discharge

          Waste  water discharges from the Plant include:  Boiler
          room and steam turbine room discharge, coal wash water,
          domestic  waste water and ash yard discharge.  Domestic
          waste water will be treated and discharged according to
          national standards.  Production waste water will be re-
          used  as practical for flush water for the ash and coal
          handling   systems.    The   proposed   design   should
          adequately handle the waste water discharge anticipated
          from a plant of this size.
          
          Processing of the Plant waste water is detailed in  the
          Hebei  Environmental Protection Bureau Approval on  the
          Environmental Impact Report.
          
     3.4.3     Storm Drainage

          In accordance with the Environmental Impacts Assessment
          Report   prepared  by  Hebei  Environmental  Protection
          Research  Institute; a dry climate exists in the  Plant
          area  and rainfall from minor or medium rainfall events
          will  be  evaporated.  Only severe and extreme rainfall
          events will result in significant runoff.
          
          Surface water for the Plant will drain into the  Little
          Qinglong River.
          
     3.4.4     Make-up Water

          Ground  water from local water wells will serve  as  an
          adequate  source for boiler make-up water.  Water  from
          the  wells  flows into raw water storage tanks  in  the
          water  treatment  area and is pumped to  a  dual  train
          mixed  bed  demineralizer  system.   The  demineralizer
          water  treating system supplies the make-up water needs
          for both units.  After being treated and demineralized,
          the  make-up  water is pumped to the boiler  deaerating
          water  heater.   At  the deaerator, the  make-up  water
          supplements the feedwater supply to the boiler to make-
          up  for  steam losses (such as those caused  by  boiler
          blowdown).
          
3.5  ASH HANDLING SYSTEM

     3.5.1     Fly Ash System

          The  fly ash disposal system to be furnished is  a  wet
          ash   disposal  system.   Fly  ash  collected  in   the
          electrostatic precipitator hoppers is discharged into a
          sealed  mixing drum at the bottom of each hopper.   Two
          low  pressure water pumps supply the water  for  mixing
          with  the fly ash in the six precipitator hopper mixing
          drums.   The  slurry  created in the  mixing  drums  is
          pumped  to  an  ash slurry sump.  One  slurry  sump  is
          provided  to  serve both units 1 and 2  at  the  plant.
          Three  sets of two ash slurry pumps (total  of  6)  are
          provided to pump the ash slurry to the retention  pond.
          Normally  only  one set of pumps is operating  and  the
          other two sets are in stand-by mode.  One ash retention
          pond  will be constructed to handle the ash slurry from
          both units.
          
     3.5.2     Bottom Ash System

          The  bottom  ash system to be furnished is  a  wet  ash
          disposal system.  Bottom ash is removed from the bottom
          ash  hopper by a scraper chain conveyor and transported
          into  a  crusher.  The crusher reduces the size of  the
          ash and a high pressure hydroejector transports the ash
          slurry to the ash slurry sump.  The bottom ash is mixed
          with  the fly ash in the slurry sump and pumped to  the
          ash  retention pond.  The proposed ash handling systems
          should  be capable of adequately disposing of  the  ash
          from  the  Plant based on the 34-35% ash  content  coal
          from  the  mines as described in the Marston &  Marston
          Coal Report.
          

3.6  ASSESSMENT OF FACILITY DESIGN

     The  design criteria contained in the Scope of Work  of  the
     EPC  contract  with its addendum define  a  plant  which  is
     specified  to be consistent with Chinese National Codes  and
     Standards.  The Preliminary Design is complete and  approved
     by  the North China Power Administration.  The detail design
     will be completed under the EPC contract.
     

4.0  ASSESSMENT OF EXPECTED PERFORMANCE

     It  is anticipated that the steam turbine-generator will  be
     sized  and  designed by the Chinese in accordance  with  the
     performance  requirements specified in the EPC contract  and
     in   accordance   with  Chinese  design  standards.    These
     standards,  typically,  have been  adopted  from  relatively
     early Russian or other east-European nation's standards  and
     guidelines  under  some  kind of a license  agreement.   The
     prevailing  practice was to design steam  turbine-generators
     (STG)  with  margins which in today's conditions,  would  be
     considered  substantial.  A typical STG  would  be  able  to
     operate on a continuous basis, at a steam flow (valves  wide
     open - VWO - condition) up to 5-10 percent greater than  the
     rated   flow   (i.e.  flow  required  to   meet   guaranteed
     performance) and at a steam pressure up to 10 percent higher
     than the rated pressure.  These parameters would lead to  an
     increase  in  the STG power output up to 10-15 percent  over
     the  guaranteed output.  It has been customary to  size  the
     generator  and  its auxiliaries to match the  steam  turbine
     maximum output.

     There  are other operating conditions which if changed,  can
     lead to increases in steam turbine output.  For example,  if
     the extraction steam flow to the district heat exchangers is
     assumed shut off, the steam turbine output will increase and
     additional electric power can be generated up to the maximum
     continuous rating of the generator (60 MW gross).  A similar
     situation  will  result when feedwater/condensate  heater(s)
     are  taken  out of service and the corresponding extractions
     are  shut-off.  If such operating conditions are assumed  to
     occur coincidentally, further increase to the STG electrical
     power  generating  capability is likely with  the  generator
     rating being the limiting factor.

     The  Net Dependable Capacity performance guaranteed  by  the
     EPC  Contractor for this plant is 102 MW (51 MW each  unit).
     Given  the  possible design and operating  combinations  and
     approaches  described above, and with the equipment  ratings
     described  in  the Preliminary Design documents,  the  gross
     electric power producing capability should achieve the 58-60
     MW  maximum  output  stipulated.  The pro forma  projections
     reflect  a  net maximum output of 106 MW which is achievable
     and a reasonable basis for the 20-year operating period.

     The  guaranteed  heat  rate at design conditions  is  12,156
     BTU/kWh  (LHV)  which should be achievable under  full  load
     output conditions.  The pro forma projections have assumed a
     higher  levelized heat rate of 13,402 BTU/kWh (HHV), (12,764
     BTU/kWh  (LHV))  which factors in the off  peak  and  trough
     period  load  factors and 2-1/2% degradation of  the  plant.
     This  heat  rate should be achievable with proper operations
     and maintenance of the facility.
     
     Articles  11, 12, 13 and 14 of the EPC contract contain  the
     required warranties and guarantees.

4.1  START-UP AND COMMISSION

     Section  3.0  of  the  Scope of Work  in  the  EPC  contract
     contains  the performance and testing requirements  for  the
     plant.   Plant Acceptance Testing is specified for 72  hours
     for  verifying  Net Dependable Capacity,  Heat  Rate,  Plant
     Emissions  and  Noise.   Plant Reliability  and  Operational
     Testing   is   specified  for  240   hours   for   verifying
     Availability, Ramp Rates, Startup Rates and Dispatch Level.
     
     Additionally,  Article 10 of the EPC contract describes  the
     EPC  contractor's  responsibilities for performance  testing
     and final acceptance.

5.0  ASSESSMENT OF DESIGN TO SIMILAR PLANTS

     The proposed Luannan Thermal Power Plant will be similar  in
     design,  construction and operation to other plants designed
     by the Hebei Electric Power Design Institute.  Specifically,
     Parson  Brinckerhoff visited and inspected  for  design  and
     construction purposes, two coal fired power plants in  China
     which  were designed by HDI.  One is currently operating  at
     Hepo   using  two  50  MW  units  and  the  other  is  under
     construction at Hengshui with two 300 MW units.
     
     HDI  has completed the preliminary design for the Plant  and
     will  work for the EPC Contractor in the completion  of  the
     detail  design  for this project.  Parsons Brinckerhoff  has
     reviewed  the  preliminary  design  and  determined  it   is
     adequate  and reasonable.  In addition, Parsons Brinckerhoff
     will  review  the detail design and monitor construction  of
     the Plant.

6.0  ASSESSMENT   OF   ABILITY  OF  PLANT  TO  MEET   CONTRACTUAL
     REQUIREMENTS

6.1  ELECTRICAL REQUIREMENTS

     The  nameplate rating of each generator is 50  MW,  however,
     during  peak  periods generator output can be  increased  as
     described  in  Section 4.0.  With 4 MW  of  plant  auxiliary
     loads,  the  51  MW  described in  the  Scope  of  Work  and
     guaranteed  by the EPC Contractor will be available  at  the
     grid interconnection.  The revenue generated by the sale  of
     this  electrical energy may be estimated using the  contract
     purchase levels to estimate the total kWh to be purchased on
     a yearly basis.
     
     With  a  gross  production of 58 MW and a 8.5  %  load  loss
     factor  (4.93 MW auxiliary load), 53.07 MW remain  for  sale
     during the 8 hour peak period.
     
     Additionally,  29.74  MW  (65%  of  the  50  MW  contractual
     agreement less 8.5% of load loss factor) for 8 hours  during
     the  non-peak  period,  and 27.45  MW  (60%  of  the  50  MW
     contractual agreement less 8.5% of load loss factor)  for  8
     hours  during  the  trough period  are  available  for  sale
     (reference  Article  2.1 of the Power  Purchase  Agreement).
     The   following   table   provides  Parsons   Brinckerhoff's
     reasonable  estimate  of  output during  each  daily  period
     taking into account the steam requirements:
     
       53.07 MW x 8 hours =     424,560 kWh - Peak period
       29.74 MW x 8 hours =     237,904 kWh - Non-peak period
       27.45 MW x 8 hours =     219,600 kWh - Trough period
       Total daily kWh          882,064 kWh
       882,064 kWh x 310 days/year = 273,439,840 kWh / year
     
     Assuming  $.0603  / kWh, the total annual revenue  from  the
     first  50 MW unit will be $16,488,422.  The second unit,  to
     be  brought on line simultaneously, will double the  revenue
     to $32,976,844 annually.
     
     The operation of the Plant must obey the dispatch control of
     the  electrical  grid  and conform to  the  peak  regulation
     dispatch practice of the grid as stipulated in Article Three
     of the General Interconnection Agreement.  Using the utility
     grid demand profile of the Beijing-Tianjin-Tangshan Regional
     Grid dated September 4, 1995 and a trapezoidal approximation
     of  the  demand  curve, the daily demand may  be  estimated.
     Calculations  with this methodology and 310 days/year  yield
     an  annual unit production of 318,254,992 kWh/year.  If  the
     Plant is dispatched in accordance with the electrical demand
     curve,   the   projected  total  annual  revenue   will   be
     $38,381,552.

6.2  STEAM REQUIREMENTS
     
     The  Project will sell thermal energy as steam and hot water
     to   the  Luannan  County  and  local  industrial  users  as
     specified in the Feasibility Study and the approval  of  the
     Preliminary  Design.   The Project will  initially  sell  47
     metric tons/hour (approximately 184,000 million kilocalories
     per  year)  of steam to the local industries.  Additionally,
     the  project  will  sell 36 metric tons/hour  (approximately
     100,000  million  kilocalories per year) of  steam  for  the
     production  of  hot  water to the County  for  its  schools,
     hospitals  and other facilities.  Both steam and  hot  water
     have  been  properly reflected in the pro forma  projections
     and  the  Plant is capable of producing these quantities  of
     steam  and hot water when at the maximum expected output  of
     106  MW.   The  JV  Partner, Luannan County, has  negotiated
     steam  contracts or agreements with each of  the  individual
     factories.  The JV Cos. will directly bill all steam users.
     
47  metric  tons/hour  X 7440 hours/year  =  349,680  metric tons/year
36  metric  tons/hour  X 3650 hours/year  =  131,400  metric tons/year
                               Total      =  481,080  metric tons/year
     
     Assuming a 1995 price of $5.39/metric ton for the industrial
     steam  heat  load  and  $4.99/metric ton  for  the  district
     heating load, the total annual revenue will be $2,540,461.
     

7.0  ASSESSMENT OF ECONOMIC LIFE OF THE PLANT

     Substantially all Government approvals have been granted for
     the 20-year joint venture Project, therefore the useful life
     of  the  plant  is considered to be 20 years.   With  proper
     design, careful, periodic maintenance and operation  of  the
     plant  within design parameters, a useful life of  20  years
     should  be  easily achievable.  For comparison, there  is  a
     large number of coal-fired plants currently in operation  in
     the United States that have been in service for well over 30
     years.

     To  achieve maximum useful life, it is essential to have  in
     place  by the time the plant is commissioned, a well-defined
     maintenance and operating plan including a comprehensive set
     of  operating  procedures.  Careful  record-keeping  of  all
     outages  whether  planned or unplanned,  outage  causes  and
     corrective actions should be an integral requirement of  the
     plant  operating  procedures to be performed  by  Duke/Fluor
     Daniel.   Audits  of  plant  operations  by  an  independent
     auditor should be considered.

8.0  DESCRIPTION OF ENVIRONMENTAL ISSUES

     In  1992,  the  Provincial Government authorized  the  Hebei
     Provincial  Metallurgy  &  Energy  Environmental  Protection
     Research  Institute  (EEPRI)  to  conduct  an  environmental
     impact  assessment of the proposed Luannan Power  Plant.  In
     June  1993,  the  Hebei Environmental Protection  Department
     (HEPD) gathered experts to evaluate and subsequently approve
     the  Luannan  Thermal  Electric  Power  Plant  Environmental
     Impact Assessment Report.  The original Environmental Report
     was amended in May 1995 to address environmental changes  in
     recent  years  and the expansion of the facility.   The  255
     page  Environmental  Report evaluated  air,  surface  water,
     ground  water, waste water and noise according to  standards
     approved  by  the Hebei Environmental Protection  Department
     and  the  Tangshan City Environmental Protection  Department
     (TCEPD).

8.1  PROJECT ENVIRONMENTAL STANDARDS

     The  approved  environmental standards which  apply  to  the
     Project are as follows:
     8.1.1     Environmental Quality Standards:

          Environmental Air:  Code BG3095-82 (air quality), Class
          II standard.
          Surface   water:   GB3838-88  (surface  water  quality)
          Category V standard.
          Surface  water:   GB5084-92 (irrigation water  quality)
          Category II standard.
          Ground water:  GB/T14848-93 (ground water quality).
          Noise:   GB12348-90  (industrial and  commercial  noise
          standard) Category IV standard.
          
     8.1.2     Effluent and Emission Standards:

          Air  emission--GB13223-91  (coal-fired  electric  power
          plant air emission standard).
          Waste   water   effluent--GB8978-88   (combined   sewer
          discharge standard) Class II standard.
          Plant  noise--GB12348-90,  (industrial  and  commercial
          noise standard) Category IV standard.
          
          Parsons  Brinckerhoff believes the Project can  achieve
          each of these standards.
          
8.2  ASSESSMENT OF ENVIRONMENTAL IMPACT
     
     The   Environmental  Site  Assessment  as  reported  in  the
     Environmental Impact Assessment Report appears to have  been
     conducted  in  a  manner consistent with industry  standards
     using  comparable  industry protocols for  similar  studies.
     The Environmental Report was prepared with the assistance of
     HEPD,   TCEPD,   Luannan  County  Environmental   Protection
     Department,  Hebei Electric Power Design Institute  and  the
     Luannan  County Thermal Electric Power Planning  Commission.
     Although   we   have  not  performed  an  independent   site
     assessment, we are of the opinion that the conclusions which
     EEPRI  reached were supported by the data and reports  which
     we reviewed.
     
     From  the  view point of environmental protection, the  site
     plan  fully  considers  the needs of  the  employees'  daily
     activities  and  working  conditions,  centralizes  the  air
     emission  sources,  and  provides proper  design  for  noise
     consideration.   The  site  plan  also  isolates   potential
     problems.  For example, the entrance for material is located
     at  the  northeast corner of the site, and the coal pile  is
     located   north  of  the  site,  therefore,   avoiding   the
     prevailing  wind  effects,  and minimizing  noise  and  dust
     impacts  on the project area.  The cooling tower is  located
     at  the  eastern part of the site and is connected to  other
     work  areas with a sky-walk, therefore minimizing the  water
     and  noise  impacts  on  the  employees  and  their  working
     environment.  The boiler room is located at the western part
     of the site; this arrangement provides a convenient location
     for steam emission and minimizes the steam noise impacts.
     
     Additionally,  the engineering analysis indicates  that  the
     plant  environmental protection facilities and the  effluent
     quality  complies  with  the  national  standards  for  air,
     surface   water,  ground  water,  noise,  and  waste   water
     effluent.   These  standards were  listed  earlier  in  this
     section.
     
     Data  from the Environmental Impacts Assessment Report (EIA)
     prepared   by   Hebei  Provincial  Metallurgy   and   Energy
     Environmental Protection Research Institute and calculations
     prepared  by Panda Energy International, Inc., indicate  air
     emissions will be below the limits set by the World Bank for
     sulfur  dioxide  and slightly above the limits  for  nitrous
     oxide and particulate emissions.
     
     Particulate  emissions  from the facility  will  exceed  the
     World  Bank  Guidelines because of limitations on guaranteed
     efficiency of Chinese electrostatic precipitator technology.
     However, these guidelines are not applicable to this project
     and   emissions  calculations  in  the  Preliminary   Design
     Documents are below the requirements of Chinese Standards.
     
     Neither  the  Preliminary  Design  Documents  nor  the   EIA
     stipulate  a requirement for nitrous oxide emission  control
     in  China.  Calculations for nitrous oxide emissions may  be
     updated when burner design is completed.
     
     The  planned facility will replace 91 coal-fired boilers  in
     the  area.  The majority of these 91 boilers do not have any
     ash  removal  facilities and they have short stacks.   Those
     having  ash  removal  facilities  are  equipped  with   low-
     efficiency  precipitators.  These 91 boilers are  the  major
     pollutant  contributors to the area.  Due to the closure  of
     these  91 coal fired boilers, the net impact to the area  is
     very  positive.  The ground level particulate  concentration
     is  reduced below Chinese standards and close to  the  World
     Bank Guidelines.
     
     In  summary, the Plant will enhance electrical service, help
     relieve  the  deficient  supply and  will  promote  economic
     development  for the area.  Centralizing thermal  production
     and  winter heating will also improve the air quality in the
     area.
     
     This  assessment has concluded that, from the  environmental
     point  of  view,  the  plant  is  feasible  and  will   meet
     applicable Chinese Standards if all environmental protection
     and control measures recommended by the EIA are implemented.
     
9.0  GOVERNMENT APPROVALS AND BUSINESS AGREEMENTS

9.1  GENERAL DESCRIPTION
     
     The  Project  has been under consideration for a  number  of
     years.   As  the Project has developed, Business  Agreements
     have been made and Government Approvals have been obtained.
     
9.2  GOVERNMENT APPROVALS
     
     A  list  of Government Approvals for the Project design  and
     construction are as follows:
     
     - Project  Proposal  Approvals (#682, #683  and  #684  dated
       9/26/94  and  #470  dated  5/29/96)  by  Hebei  Provincial
       Planning Commission.
     
     - Project  Feasibility Study Approvals (#144, #145 and  #146
       dated  2/28/95 and #471 dated 5/29/96) by Hebei Provincial
       Planning Commission.
     
     - Project  Feasibility Study Approval (#10) by  North  China
       Power  Administration of the Ministry  of  Electric  Power
       (2/16/95).
     
     - Project  Heat Network Feasibility Study Approval (#57)  by
       Tangshan Municipal Planning Commission (4/11/95).
     
     - Environmental  Impact Approval (#150) by Hebei  Provincial
       Environmental  Protection Bureau (7/5/95).   Environmental
       Impact  Approval  Supplements: An Official  Reply  to  the
       "Report  on  Environmental Impact Assessment  for  Luannan
       Thermal  Power Plant (2nd edition)" by Hebei Environmental
       Protection  Bureau,  J.  H. G. H. (1996)  No.  318,  dated
       September 9, 1996.
     
     - Interconnection  Design  Approval  (#65)  by  North  China
       Power  Administration of the Ministry  of  Electric  Power
       (7/13/95).
     
     - Water  Usage  (#11)  by  Tangshan  Municipal  Water  Usage
       Bureau (8/13/94).
     
     - Joint  Venture  Approvals  (#253  and  #254)  by  Tangshan
       Municipal   Bureau   for  Foreign   Trade   and   Economic
       Cooperation  (9/20/95).  Certificate of  Foreign  Invested
       Enterprise  of  Tangshan Panda Heat and  Power  Co.,  Ltd.
       (No.   0153758)   and  Certificate  of  Foreign   Invested
       Enterprise  of  Tangshan Pan-Western Heat and  Power  Co.,
       Ltd.   (No.   0153759)  issued  by  the  Hebei  Provincial
       People's Government under Approvals (#078 and #079)  dated
       (9/20/95).
     
     - Joint  Venture  Approvals (#123)  dated  5/14/96  for  the
       Tangshan Cayman Heat and Power Co., Ltd. and (#134)  dated
       6/7/96 for the Tangshan Pan-Sino Heat Co., Ltd. issued  by
       Tangshan  Municipal Bureau for Foreign Trade and  Economic
       Relations.  Certificate of Foreign Invested Enterprise  of
       Tangshan  Cayman  Heat and Power Co., Ltd.  (No.  0255737,
       approval  #040 dated 5/14/96) and Certificate  of  Foreign
       Invested  Enterprise of Tangshan Pan-Sino Heat  Co.,  Ltd.
       (No. 0255740, approval # 044 dated 6/07/96) issued by  the
       Hebei Provincial People's Government.
     
     - Public  "Right-Of-Way  and  Road  Usage"  (Transportation)
       Approvals by the Luannan County Bureau of Transportation:
     
         Coal Transportation Approval (8/18/94)
         Ash Transportation Approval (1/10/95)
     
     - Steam  Price  Approval  by  Luannan  County  Price  Bureau
       (8/13/94).
     
     - Approvals  (#5)  by  the  Tangshan  Office  of  the  Hebei
       Provincial Construction and Planning Commission  (6/23/95)
       for  Land Sites, Transportation and Roads, Water usage and
       Electricity Usage.
     
     - Business  License  of  the Tangshan Pan-Western  Heat  and
       Power  Co.,  Ltd.  (Reg. No. 000512) and Business  License
       of  Tangshan  Panda  Heat and Power Co.,  Ltd.  (Reg.  No.
       000511)  issued by the  State Administration  of  Industry
       and  Commerce  (9/22/95).  Business  License  of  Tangshan
       Cayman  Heat  and  Power Co., Ltd. (Reg. No.  000665)  and
       Business  License  of  Tangshan Pan-Sino  Heat  Co.,  Ltd.
       (Reg.  No.  000666) issued by the State Administration  of
       Industry and Commerce (6/13/96).

9.3  BUSINESS AGREEMENTS

      Following  is  a  list of the Business Agreements  for  the
Project:

     - Joint Venture Contracts (9/3/94 and 9/4/94).
     
     - Joint   Venture  Articles  of  Association   (9/3/94   and
       9/4/94).
     
     - General  Interconnection Agreement with North China  Power
       Group Co. (9/22/95).
     
     - Supplemental   Agreement   for   General   Interconnection
       Agreement   and   Electric  Energy  Purchase   and   Sales
       Agreement with North China Power Group Company (2/10/96).
     
     - Construction   Agreement   attachment   to   the   General
       Interconnection Agreement (2/10/96).
     
     - Loan  Agreement with the North China Power  Group  Company
       to   finance   the   construction  of   the   transmission
       facilities  through a financial intermediary  in  the  PRC
       (2/10/96).
     
     - Power   Price  and  Pass-Thru  Price  Adjustment   Formula
       Approval  by  Tangshan  Municipal  Price  Control   Bureau
       (10/18/95).
     
     - Coal  Supply  Allocation Commitment from  the  Qianjiaying
       Coal  Mine  (11/94)  and  Confirmation  of  Commitment  by
       Kailuan  Mining  Administration of the  Ministry  of  Coal
       Industry (3/7/95).
     
     - Coal Supply Agreements:
     
       - with  Kailuan  Coal  Mining Administration  for  300,000
          tons/year (2/3/96)
       - with  Luannan  County  Coal Mine  for  70,000  tons/year
          (2/2/96)
       - with   Liu   Guantun  Coal  Mine  for  70,000  tons/year
          (2/2/96)
       - with  Le  Ting  County  Coal Mine for  60,000  tons/year
          (2/2/96)
       - with Zunhua Coal Mine for 60,000 tons/year (2/2/96)
       - with  Chang  Li  County Coal Mine for  50,000  tons/year
          (2/2/96)
     
     - Coal Transportation Agreement (3/6/96).
     
     - Agreement  on  Land  Contribution  with  Luannan  Partners
       (9/7/94).
     
     - Agreement  to Expand Power Plant with Luannan Partners  by
       Additional  50  MW (9/7/94).  This agreement  expands  the
       Plant capacity from the original 50 MW to the present  100
       MW.
     
     - Operation  and Maintenance Agreement between JV  Cos.  and
       Duke/Fluor Daniel International Services, Inc. (6/26/96).
     
     - Engineering,  Procurement and Construction (EPC)  Contract
       (4/24/96)  and Amendment No. 1 (7/5/96), No. 2  (9/14/96),
       and No. 3 (12/17/96).
     
9.4  ASSESSMENT OF SUPPORT DOCUMENTS

     Based on our review of the various Government Approvals  and
     Business Agreements, we are of the opinion that the JV  Cos.
     have  obtained the key governmental approvals required  from
     the  various  governmental agencies which are  necessary  to
     construct and operate the Project.
     
     We  are not aware of any technical circumstances that  would
     prevent the issuance of the remaining approvals.
     
10.0 PROJECT SCHEDULE

     The  construction schedule is 28 months and is suitable  for
     similar projects in China.  The governing factor is the lead
     time  required  for  major  equipment  manufacturing.    The
     critical  path is the main turbine building, which  must  be
     finished  before  the delivery of the major equipment  which
     will  be  installed in the turbine building.  Based  on  our
     review  of  the  Project Schedule and the  EPC  Contractor's
     experience, the 28 month schedule should be achievable.

11.0 REVIEW OF EPC CONTRACTOR AND AGREEMENT

11.1 ASSESSMENT OF MANPOWER AND STAFFING

     The  EPC  Contractor shall submit a detail manpower plan  as
     specified  in  Section 5.0 of the Scope  of  Work  document.
     However,   the   staffing  information  required   for   the
     construction  of  the plant is not available  from  the  EPC
     Contractor  as  this time.  The EPC Contract  specifies  the
     Contractor's responsibilities and warranties with respect to
     vendors  and subcontractors.  Since civil work  is  a  major
     portion of the contract, Harbin will identify and owner will
     approve   the   Civil   Contractor  and  other   Substantial
     Contractors  prior to starting the project as  described  in
     Article  2  of EPC Contract.  Parsons Brinckerhoff  believes
     the  staffing of the project by the EPC Contractor  will  be
     adequately provided.

     Article  3  of  the EPC Contract describes  the  Contractors
     responsibilities  for engineering and  construction  of  the
     project.  China has a large supply of general labor.  Harbin
     is  expected  to employ unskilled labor from within  Luannan
     County,  however, the skilled labors (welders, electricians,
     etc.), for the most part, will have to be provided by Harbin
     or  their  subcontractors.   The skilled  labor  requirement
     should  be  available  within  the  Tianjin-Tangshan-Beijing
     triangle.

11.2 EVALUATION OF THE  EPC CONTRACTOR'S EXPERIENCE

     HPE  is  a well known Chinese power contractor and has  both
     international  and domestic experience in manufacturing  and
     installing equipment for similar power generation  projects.
     HPE's technical brochure includes 16 coal fired power plants
     in  its list of Chinese achievements.  HPE has supplied main
     or  all equipment and provided technical services for  these
     plants.   Of  these 16, Pingwei, Zhujiang,  Tieling,  Mawan,
     Shuangyashan,  Diaquing  and Dengfeng  power  stations  were
     completed  as  turnkey  projects.   Additionally,  HPE   has
     completed  international power plant installations on a turn-
     key  basis  in Pakistan at Guddu, Jamshoro and Kotri;  Angat
     Hydraulic, Philippines; and Hiep Phuoc, Viet Nam.

     The  No. 2 Hebei Power Construction Company (2HPCC) has been
     selected by HPE to be the construction subcontractor for the
     Luannan  Thermal  Power  Plant.   2HPCC  has  completed  the
     construction  of  No. 1 unit at the 1200 MW  Hengshui  Power
     Plant  in  December, 1995.  This first unit,  300  MW  coal-
     fired,  was  completed in 24 months.   In  addition  to  the
     facilities visited at Hepo and Hengshui, 2HPCC has completed
     power plants and cogeneration plants at 8 other locations in
     China during the last 10 years.

     Portions  of the project will be subcontracted out to  local
     contractors.  Owner has given the EPC Contractor  a  Limited
     Notice   to   Proceed  and  has  allocated   the   necessary
     expenditures  to cover this preliminary work.   Given  HPE's
     track record, We believe they have the ability to follow the
     Chinese  construction  standards  and  enough  capacity  and
     manpower  to complete the project as the EPC contractor  and
     meet  the performance and schedule requirements of  the  EPC
     Contract.

11.3 EVALUATION OF EPC CONTRACT TERMS

     The  Liquidated Damages (L.D.s) are capped  at  35%  of  the
     contract price plus 10% retention.  The total of 45% is  the
     largest  known percentage from a Chinese contractor compared
     to  the  customary 10% total.  The terms in the  irrevocable
     bank guarantee (letter of credit) are strong enough to cover
     the interest and penalty risk of Owner.

     In  addition, a performance bond in the form of  the  Parent
     Guarantee  will be issued by the parent corporation  of  the
     EPC Contractor.  The terms in the guarantee are suitable  to
     replace the bid security with given assumptions that (1) the
     parent company has enough assets, (2) the Chinese government
     will  allow  such a flow of money when due, and (3)  Changes
     are regulated and managed.

     The contract has the necessary clauses and is comparable  to
     the other turnkey projects in the US.  The EPC contracts  in
     China  are  more  rigorous than in the US on the  government
     approvals,  design stages, and guarantee  issues,  and  less
     rigorous  on  environmental issues.   With  the  arbitration
     location  outside of China for disputes over $1,000,000  US,
     the  risks  of Owner are limited.  The China factor  becomes
     important when the laws and regulations change and there  is
     no contract clause to effectively protect the Owner.

     Parsons  Brinckerhoff believes the EPC Contract has adequate
     protection for the Owner in terms of L.D.s, Parent Guarantee
     and other requirements.

12.0 FINANCIAL PERFORMANCE ASSESSMENT

     We  have  reviewed the financial assumptions and projections
     with   respect  to  the  Plant's  performance  and  revenue-
     generating  capability  and the operating,  maintenance  and
     capital  costs  of the Project.  This chapter  contains  the
     financial   analysis  based  on  such  assumptions   and   a
     discussion of their reasonableness.

     The  Project will be composed of four separate joint venture
     companies.   Each  has its distinct scope  of  business  and
     asset  ownership  of  the Project.   However  the  financial
     performance  of  the Project is presented as a  consolidated
     entity,  since  the payment and performance  obligations  of
     each  joint  venture  company under their  shareholder  loan
     agreement  will  be  cross-guaranteed  by  the  other  joint
     venture  companies.  This chapter will include a section  on
     the  operating  results of each of the  four  joint  venture
     companies.

     Among  the  many  assumptions  that  are  critical  to   the
     financial  viability of the Project are the level  of  power
     production,   power   tariffs,  capital   costs,   operating
     expenses, maintenance costs, reserve requirements,  and  tax
     rates.  On the basis of such assumptions, we have prepared a
     pro  forma statement to forecast the operating revenues  and
     expenses,  net  income, and cash flow of the Project  on  an
     annual basis throughout the contract period.
     This chapter includes the following sections:

          - level of power production
          - power tariffs
          - review of project costs
          - review of operating expenses
          - review of reserve requirements
          - the financing plan
          - consolidated operating results -- base case
          - summary of sensitivity analysis
          - individual joint venture companies operating  results
            -- base case
     
12.1 LEVEL OF POWER PRODUCTION
     
     The  financial analysis is based on the assumption that  the
     NCPGC  will  purchase  electricity and  the  Luannan  County
     customers  will  purchase thermal  energy  produced  by  the
     Plant.   The contractual terms of power purchase  and  sales
     agreement  are  thus used as the basis of  power  production
     projections in the analysis.

          12.1.1    Power Purchase Agreement

          We   reviewed   the  Power  Purchase  Agreement   dated
          September 1995.  The Agreement provides for the sale of
          electric energy generated by the Plant for the contract
          period  of 20 years.  The key provisions as defined  in
          the  Agreement  are summarized as follows,  which  then
          become  important assumptions used in projecting  power
          output from the Plant:
          
          - The   Power   Purchase   Agreement   establishes    a
            commercial  operation period  of  20  years  for  the
            Plant.   The  Joint Venture Companies are responsible
            for  the  operation  and  maintenance  of  the  Plant
            during the contract period.
          
          - Starting   on  the  Commercial  Operation  Date   and
            throughout   the   20-year  term,  subject   to   the
            limitations  on  the  gross  generation  levels,  the
            Joint  Venture  Companies agree to  sell,  and  NCPGC
            agrees  to  purchase  and take, all  electric  energy
            delivered  to  NCPGC  from  the  Plant.   The   gross
            generation levels in different time periods,  subject
            to  adjustments agreed by both parties, are presented
            in  Table  12.1.  We believe that the Plant operating
            assumptions  presented in Table 12.1  are  reasonable
            and  that  the  Project will be capable of  achieving
            these  parameters throughout the 20-year term of  the
            Power Purchase Agreement.
          
          - The  Joint  Venture Companies will be  paid  for  the
            delivered  electric  energy at or  over  the  minimum
            output  level during the Peak Hours at the applicable
            energy  price.   NCPGC is required  to  purchase  the
            electricity  output  below  the  maximum  levels   as
            specified  in  Table  12.1 during  the  Non-Peak  and
            Trough hours.
          
          - The  Agreement  specifies that the cumulative  annual
            overhaul  outage for the Plant, including the  forced
            outages,  will not exceed 55 days.  Outages  will  be
            calculated  on an actual time elapsed basis.   During
            the 55 days, the Joint Venture Companies will not  be
            penalized  for  the  failure to  produce  or  deliver
            electric  energy.   As a result  of  this  agreement,
            this  financial analysis assumes that the Plant  will
            run  310  days  each  year to  generate  and  deliver
            electricity  to  NCPGC.  It is reasonable  to  expect
            the  Project will be capable of meeting this 310  day
            requirement throughout the 20-year term of the  Power
            Purchase Agreement.

           Table 12.1     Plant Operating Assumptions
PEAK HOUR   NON-PEAK    TROUGH      TOTAL
                                     HOUR        HOUR
Contractual      minimum     maximum     maximum     1,800,000
        Gross            800,000     520,000     480,000  
        Generation           kWh         kWh         kWh       kWh
        Limit/Day
        
        Plant Gross          116MW       100MW       100MW       --
        Output
        Capacity
                                                             
        Percent Load         100%         65%         60%         --
                                                             
        Load Loss            8.5%        8.5%        8.5%        --
        Factor
                                                             
        Net Output       106,140       59,475     54,900      220,516
        (kW)
                                                             
        Average                8            8          8           24
        Hours/Day
                                                             
        Net Output/Day   849,120      475,800    439,200      1,764,120
        (kWh)            (above       (below      (below
                         contrac-     contrac-   contrac-
                         tual          tual      tual
                         minumum)     maximum)   maximum) 

        Annual Running       310          310        310            310
        Days
                                                             
        Annual Net       263,227      147,498    136,152        546,877
        Output             MWh          MWh         MWh          MWh*
                                                             
        Steam Output          47           47         47        349,680
                         tons/hour   tons/hour   tons/hour     tons/year
                             310          310        310
                         days/year   days/year   days/year
                                                             
        Heat Output           36           36         36        131,400 
                         tons/hour   tons/hour   tons/hour     tons/year
                               5            5          5
                         months/       months/   months/
                           year         year      year
*:  Equivalent to 100 MW for 5,469 hours.

          This   Report  contains  a  separate  review   of   the
          operational capacity of the Plant in Chapter  6,  which
          verifies the Joint Venture Companies' ability  to  meet
          the  terms  of the Power Purchase Agreement to  produce
          and deliver power as scheduled.

          Based  on the contractual commitments set forth in  the
          Power  Purchase Agreement and the technical  assessment
          of   the  Plant's  operating  performance,  the   Plant
          Operating Assumptions presented in Table 12.1 are  used
          to calculate the annual electricity power output, which
          remains   constant  throughout  the  20-year   contract
          period.
          
          12.1.2    Heat Sale Agreement and Assumptions

          The Joint Venture Companies will sell thermal energy of
          industrial  steam and district heat to  Luannan  County
          and other local industries.
          
          A Steam Heat Supply Agreement for hot water consumption
          was  signed in October 1996 by the Luannan County  Heat
          Company and the Joint Venture Companies.  The Agreement
          specified that the County Heat Company will purchase  a
          minimum  of  362,518   gigajoules per  year,  or  about
          131,400  tons  of hot water per year,  from  the  Joint
          Venture   Companies  for  consumption  by   the   local
          residents.
          
          Table  12.2  lists the steam customers who have  signed
          individual  heat  supply  agreements  with  the   Joint
          Venture  Companies  and specified  their  requests  for
          steam consumption levels:

         Table 12.2     List of Thermal Energy Customers

             Name of Customer        Use in Summer   Use in Winter
                                     (metric tons /  (metric tons /
                                     hour)           hour)
                                                          
          1  Tangshan Shanfeng              6             0
             Fodder Co.
          2  Paper Board Factory  of       28            30
             Yiteng Paper Co.
          3  County Textile Mill            4             5
          4  County   Canned    Food        4             5
             Factory
          5  County  Asbestos   Tile        7             8
             Factory
          6  Seal Fodder Factory            6             0
             Total  Steam  Requested    55 tons        48 tons
             Per Hour:

          The Plant's design heat energy output, according to the
          "Feasibility Study on Luannan Thermal Power  Plant"  by
          Hebei  Electric  Power Design Institute  dated  October
          1994, is an average of 47 tons of steam and 36 tons  of
          district heat per hour.  The design steam output of  47
          tons  per  hour would be less than the requested  total
          amount   specified  in  the  heat  supply   agreements.
          However,  the  Joint  Venture  Companies  will  not  be
          obligated  according  to  the agreements  in  place  to
          provide  the  full amount of requested thermal  energy.
          There  are  no punitive damage provisions in  the  heat
          sale  agreement if and when the Joint Venture Companies
          deliver thermal energy below the requested amount.
          
          It  is  therefore reasonable to assume in the financial
          analysis that the Plant will provide as much as 47 tons
          per  hour of steam for 310 days per year, and  36  tons
          per hour of heat for 5 months of winter each year.   At
          this  level  of steam and heat production, the  Project
          should  be able to produce the 106 MW of output  during
          peak  hours.  The financial analysis also assumes  that
          this  level  of thermal energy production  will  remain
          constant throughout the contract period.

12.2 POWER TARIFFS

          12.2.1    Planned Wholesale Electric Energy Price

          The  electricity prices used in the financial  analysis
          are based on the Planned Wholesale Power Price that was
          proposed by the Joint Venture Companies for the Project
          financial  evaluation purposes and  agreed  to  by  the
          Tangshan  Municipal Price Bureau (the Pricing  Approval
          Authority),   as   specified  in  the  Power   Purchase
          Agreement. The Pricing Approval Authority also accepted
          the  Joint Venture Companies' proposed pricing formulae
          to  adjust  the Planned Wholesale Power  Price  in  the
          future  to  reflect  changes  in  the  cost  adjustment
          factors in order to mitigate the Project's exposure  to
          inflation and currency risks.

          Based on the estimated production cost, plus tax and  a
          profit  margin  that  is set by the Chinese  government
          regulations  on joint-venture developments,  the  Joint
          Venture Companies estimated the Planned Wholesale Power
          Price  in  1995  cost  by  using  the  following   cost
          categories:

     Table 12.3     Cost Components for Wholesale Power Price

A.   Unit Generation Cost
     --   Direct Material Costs (including depreciation on
          plant and equipment)
     --   Direct Labor Costs
     --   Management Costs
     --   Administrative Costs

B.   Financial  Expenses, including long term debt interest  and
     working capital interest

C.   Unit  Reserves, including equipment maintenance &  overhaul,
     welfare reserve for Chinese employees

D.   Unit  Taxes, including central and local taxes, real  estate
     tax, and stamp tax

E.   Unit  Profit  (Tax-affected), including  return  on  equity,
     profit deferral & recovery, interest on profit deferral, and
     income taxes on profit.

          The estimated pre-VAT Planned Wholesale Price of 0.5126
          yuan  (6.0  US  cents1) per kWh in 1995 cost  was  then
          increased  to 0.5997 yuan (7.1 US cents1)  per  kWh  to
          include  the  17  percent VAT.  Based  on  the  pre-VAT
          price,  the  financial  analysis projects  the  Initial
          Wholesale  Price for 1999 by using the  following  cost
          adjustment   assumptions   in   the   complex   pricing
          adjustment  formulae accepted by the  Pricing  Approval
          Authority:
          
          - Coal  Escalation  Assumption:   10%  annual  increase
            from  1995 to 2003, 4% annual increase from  2004  to
            2018.
          
          - Chinese  Consumer Price Index Assumption:   10%  from
            1995  to 2003, 6% from 2004 to 2008, 4% from 2009  to
            2018.
          
          - US$  Exchange  Rate Assumption (US  dollar  to  RMB):
            1:8.5 from 1995 to 2018, which was consistently  used
            throughout the projections.
          
          - US  Inflation  Adjustment  Assumption:   3.0%  annual
            increase from 1995 to 2018.
          
          - Total Investment Cost Adjustment, which represents  a
            one-time   adjustment  factor  for   the   difference
            between  the estimated total investment cost of  $105
            million  as  agreed  in the Power Purchase  Agreement
            and  $119 million as the final project cost presented
            in the Offering Circular.

          Other cost adjustment factors include profit deferral /
          recovery  adjustment and interest  on  profit  deferral
          adjustment.  These two adjustment methods were proposed
          by  the  Joint Venture Companies and agreed to  by  the
          Pricing   Approval  Authority  in  the  Power  Purchase
          Agreement  in order to stabilize power price throughout
          the  contract  period.  The pre-VAT  Initial  Wholesale
          Price,  based on the above cost adjustment assumptions,
          is  projected to be 0.6320 yuan (or 7.4 US cents1)  per
          kilowatt  hour  in 1999, the first year  of  commercial
          operation.

          In  this  analysis, the projected pre-VAT  energy  sale
          prices  are compared with other power tariffs in  China
          that were made available to the Engineer.  The existing
          research,    without   giving   detailed   information,
          indicates  that electricity tariffs in China  had  been
          set  artificially  low by the central,  provincial  and
          local governments2,3, as illustrated in Table 12.4:

   Table 12.4     China's Electricity Prices in International
                            Context4

      (US cents/kWh at current exchange rates, 1994 - 1995)
               New Plant           3.5 cents per kilowatt hour
               Beijing                            3.3 - 6.4
               Shanghai                                 5.0
               Guangdong IPPs                     7.5 - 9.0
               Average China                            2.6
               Average OECD Countries                   8.1
               Luannan 1995 Wholesale Price             6.0
               Luannan Projected 1999 Initial Price     7.4

          Although  the Project's pre-VAT energy prices  (6.0  US
          cents  in  1995 and  7.4 US cents in 1999)  are  higher
          than most other rates currently reported for plants  in
          China,  it  is  lower  than  that  reported  for   some
          Independent  Power  Plants (IPPs, or  foreign  invested
          power projects) in Guangdong Province in southern China
          and   certainly  lower  than  that  of  the   developed
          countries  in the Organization for Economic Cooperation
          and Development.

          Similarly high rates have been reported even within the
          North  China  Power Grid.  As an innovative  method  to
          regulate  power consumption, time-of-use  tariffs  were
          employed  in Hebei Province, within which the Plant  is
          located.   According to the 1995 James  Dorian  report,
          the  highest  rate  charged  during  peak  times  since
          November   1994  was  6.4  cents  per  kilowatt   hour.
          Meanwhile,  tariff  controls have been  eliminated  for
          electricity  sales  by power plants  that  are  foreign
          built  or financed to attract foreign investment.   The
          independent author concluded that the potentially large
          private  investments will only occur  with  electricity
          prices  being  at  least double the present  levels  of
          about  3 US cents per kWh.  James Dorian also quoted  a
          Taiwan  publication in estimating the economic cost  to
          the  power  consumers of about 17  cents  per  kWh  for
          shortages  throughout China on average, which  is  more
          than  double the Plant's Initial Planned Price  of  7.4
          cents for 1999.  The Project's electricity sale prices,
          increasing from 7.4 US cents per kilowatt hour in 1999,
          to  11.1 in 2009 and 12.4 in 2018 should not be  viewed
          as  unreasonable  and unacceptable in  the  context  of
          chronic  power shortage in China, particularly  in  the
          rapidly developing region of Beijing-Tianjin-Tangshan.

          12.2.2    Future Price Adjustments and "Passthrough"
                    Provisions

          During the contract period, the Joint Venture Companies
          are authorized by the Power Purchase Agreement to apply
          for  price  adjustments  for approval  by  the  Pricing
          Approving Authority.  The Joint Venture Companies  will
          propose  cost adjustments based on the price adjustment
          formulae to provide for parity of the escalation of the
          operating  expenses to the revenues.  This  contractual
          arrangement  ensures a "passthrough" of  the  potential
          cost  escalation  to the energy purchasers.   In  other
          words,  the energy price will go up or down,  depending
          on the changes in the various cost items in the future.
          For  example, if the Chinese Consumer Price Index (CPI)
          goes  up,  the energy price will go up by the  weighted
          adjustments  of  the  CPI  factor  applicable  to   the
          construction capital costs and the Chinese  O&M  costs,
          thus  the  energy  sale revenues will be  increased  to
          offset cost increases based on the Chinese CPI.
          
          Thirty days prior to the Commercial Operation Date, the
          Joint  Venture  Companies will  apply  for  an  Initial
          Wholesale  Price to be adjusted from the  1995  Planned
          Wholesale  Price.  The Pricing Approval Authority  will
          review  the  application for accuracy in the employment
          of the price adjustment formulae.  Upon approval by the
          Authority  before  the Commercial Operation  Date,  the
          Initial  Wholesale  Price will become  the  "Price  for
          Electric Power Delivered".  All future price adjustment
          applications will be processed in the same manner.

          12.2.3    Heat Sale Price Agreement

          The  Pricing  Approval  Authority  reviewed  the  Joint
          Venture Companies application for heat sale price,  and
          agreed  to set the base heat sale price as 15 yuan  per
          gigajoules,  equivalent  to $5.39  per  metric  ton  of
          industrial  steam and $4.99 per metric ton of  district
          heat in 1995 cost.  The Price Bureau requests the Joint
          Venture Companies to obtain the approval of the  actual
          heat  sale  price  prior  to the commercial  operation.
          Because there is no complex pricing formulae set up for
          heat  sale  as that for electricity power  price,  this
          financial analysis conservatively adjusts the base heat
          sale prices by 50 percent of the projected Chinese  CPI
          annual changes.
          
          12.2.4    Interconnection and Loan Agreements

          The  NCPGC  and the Joint Venture Companies signed  the
          General Interconnection Agreement on September 22, 1995
          in  which both parties agreed to interconnect the Plant
          to  the  Beijing-Tianjin-Tangshan Regional  Grid.   The
          Loan  Agreement  of February 10, 1996 as  amended  sets
          forth the terms under which the Joint Venture Companies
          will  lend  through  the required intermediate  lending
          institutes to the NCPGC 83,693,260 yuans (equivalent to
          $10.1 million) for the construction of the Transmission
          Line  which  includes  the designated  inflation  costs
          specified  in  the Loan Agreement.  In addition,  NCPGC
          will  be  required  to pay the Joint Venture  Companies
          approximately  $2.1  million for  capitalized  interest
          which will be added to the principal of the loan during
          the  construction period.  The NCPGC is obliged by  the
          contractual  terms to annually repay the Joint  Venture
          Companies the loan principal and accrued interest  over
          the  period  of  10  years in mortgage  style.   It  is
          therefore  reasonable to assume that the Joint  Venture
          Companies  will  receive  the  principal  and  interest
          payments immediately following the Commercial Operation
          Date  of  the  Plant.  The Loan Agreement requires  the
          repayment  to  be made in US Dollars.  This  pro  forma
          analysis conservatively assumes loan repayments will be
          made  from RMB revenues, which will be converted to  US
          dollars,  and  thus  may be subject  to  convertibility
          limitations and RMB devaluation risks, because  of  the
          existing regulatory limitations on NCPGC to repay loans
          in  US  Dollars.  A sensitivity test of RMB devaluation
          is presented in Section 12.8.

12.3 REVIEW OF PROJECT COSTS

     The  project  costs  listed  in  Table  12.5  address  major
     categories of expected costs to implement the Project.   The
     costs  associated  with each category are  reasonable.   The
     total  budgeted amount represents a realistic and attainable
     project  cost  as  provided  in  Table  12.5.   Remarks  and
     explanations are additionally provided.
              Table 12.5     Project Cost Estimates
_________________________________________________________________

                EPC Contract Allocation:

                Thermal System                    $22,483,000
                Coal Handling System                 $924,000
                Ash Handling System                $2,449,000
                Water Treatment System             $1,528,000
                Feedwater System                   $3,390,000
                Electrical System                  $5,239,000
                I&C Systems                        $2,893,000
                Service Water System                 $155,000
                Auxiliary Plant Systems            $1,156,000
                Equipment Structures &            $11,087,000
                Buildings
                Site Infrastructure &              $4,185,000
                Civil Work
                Miscellaneous Buildings            $1,654,000
             Subtotal   for  Systems   and        $57,143,000
             Equipment
             Start-up & Testing                      $960,000
             Engineering & Design                    $840,000
             Construction Support                  $1,681,000
             EPC Costs Escalation                  $1,113,450
             EPC Contingency                       $3,001,830
             EPC    Contract    Allocation        $64,739,280
             Total(1)
                                                             
             Transmission Project: (2)            $10,083,525
             Steam & Heat Network: (3)             $2,912,048
             Builders Risk Insurance                 $819,000
             Total Construction Costs             $78,553,855
             Land Use Rights: (4)                  $5,378,715
             Water Use Rights: (4)                   $361,446
             Engineering Costs:                    $1,950,000
             Interest  During Construction        $13,330,000
             (5)
             Financing & Legal Costs:              $4,350,865
             Project Management Costs:             $3,700,000
             Fuel,  Spare  Parts  &  Other         $2,750,000
             Equip. (6):
             Debt Service Reserve                  $4,000,000
             Project Contingency: (7)              $4,380,120
                                                             
             Project Total:                      $118,755,000

          Most project costs listed above are US dollar
          denominated, however, for steam and heat network, land
          and water use rights, and transmission line which are
          denominated in RMB, an exchange rate of US $1 = RMB
          8.30 was used.
________________________________________________________________

Notes:

(1)  EPC  Contract Allocation:  Based on PB experience with other
     projects in China, the allocation is reasonable.  The  turn-
     key  contract  scope  will be completed  with  Harbin  Power
     Engineering   Co.  LTD  at  approximately   $64.7   million,
     including  an  escalation of $1.1 million per  EPC  Contract
     Amendment No. 3, and a contingency of $3.0 million.
     
(2)  Transmission    Project:    Funds    are    allocated    for
     interconnection with the North China Power Grid as a loan to
     the  North  China  Power Group Company.   The  quantity  was
     established and requested by the NCPGC and indicated in  the
     Loan Agreement by NCPGC.

(3)  Process Steam and Heat Network:  Funds are allocated  for  a
     steam and hot water system to provide process steam and  hot
     water  to  local industrial and a residential heating  loop.
     The cost quoted was established by the municipality.
     
(4)  Land  and Water Use Rights:  Land and water well use  rights
     payments  will  be  made to area agencies for  property  and
     rights of way.  Property rights must be  for the plant,  ash
     pond, ash slurry pipeline and associated service roads.  The
     prices  have been negotiated with and agreed to by the  area
     officials.

(5)  Interest during construction for Shareholder Loans is  based
     on an average interest rate of 12% per year.

(6)  The  total  of  $2,750,000 for Fuel,  Spare  Parts  &  other
     Equipment is within the anticipated range of allocations for
     other projects similar in size and technology.

(7)  The  Joint  Venture  Companies  allocated  $4.4  million  as
     project  contingency.  The total contingency of $7.4 million
     including   the  $3.0  million  EPC  Contract   construction
     contingency,  equivalent to 6.2% of total project  cost,  is
     adequate  based  on market uncertainties in material  costs,
     labor,   and  equipment  availability  as  well   as   other
     fluctuating  cost  factors  inherent  in  China's  expanding
     economy.

We  have  reviewed both construction draw-down schedule  and  the
milestone activity provided in the EPC Contract and believe  that
both are reasonable and achievable.

12.4 REVIEW OF OPERATING EXPENSES

A  comparison was made between the annual fuel and operation  and
maintenance  cost of the proposed plant and the same expenditures
for  similar US plants.  This comparison is based on 1995 dollars
and  was  made to review the projected production expenses.   The
average of five years production costs as recorded by the Utility
Data   Institute   for   twelve  coal-fired   power   plants   of
approximately  120 MW size in the US are used in  the  comparison
below:

                  PRODUCTION COST COMPARISON

  Description    Luannan       Average of     High/Low of
                 Thermal       US Plants      US Plants
                 Power Plant

  O&M Cost       12.20         11.94          25.16/4.24
  $/Net MWhr
  Fuel Cost      12.20         18.39          25.57/8.30
  $/Net MWhr

12.5 REVIEW OF RESERVE REQUIREMENTS

     This section describes the various reserve requirements  and
     assesses the adequacy of the reserve estimates made  by  the
     Joint Venture Companies.

     12.5.1    Equipment Maintenance & Overhaul Reserve

          An   estimated   overhaul  cost  of  $1,000,000/turbine
          provided by Siemens for a similar international project
          was used in this estimate.  Additionally, "Combustion",
          a   periodical  by  Combustion  Engineering,  Inc.,   a
          division  of  ABB,  lists  $8.75/kW  to  $13.00/kW   as
          industry standards used for determining system  reserve
          margin.   An  average of $10.875/kW was used  for  this
          estimate  giving  a reserve margin of $1,087,500.   The
          methodology  used to determine the reserve  figure  and
          the  allocated cost appears reasonable and  justifiable
          for this project.
          
          To  maintain  the  productive capacity and  operational
          efficiency of the Plant during the 20-year period,  the
          overhaul  reserve will begin to be funded in the  first
          year of operation and be fully funded with $3.0 million
          in  the  fourth year of operation.  Expenses  to  cover
          major  overhaul  activities  will  be  drawn  from  the
          reserve, towards which additional deposits will be made
          to  maintain the $3.0 million fund each year  which  is
          reflected in the pro forma projection.

          12.5.2    Debt Service Reserve

          The  off-shore debt service reserve will be funded with
          $4 million before the Commercial Operation Date as part
          of  the  total  project  cost.   The  reserve  will  be
          credited  towards equity accounts at  the  end  of  the
          Shareholder Loans' 10-year term.

          12.5.3    Welfare Reserve for Chinese Employees

          A  deposit of 10 percent of the total annual wages  for
          Chinese employees is funded in the welfare reserve each
          year,  as  required by the Chinese Joint  Venture  law.
          For the 500 Chinese workers employed at the Plant, this
          reserve  would have about $157,700 by end of  2000  and
          $5.8 million at the end of the contract period.

          12.5.4    Other Chinese Reserve Requirements

          The Chinese Joint Venture law requires two other after-
          tax  reserves  to  be  set  up  by  the  Joint  Venture
          Companies:  the General Reserve Fund and the Enterprise
          Expansion  Fund.  Each reserve is funded  at  the  sole
          discretion  of the JV Cos.' Board of Directors  and  is
          expected to be funded with approximately 50,000 RMB per
          year.   Each reserve would have about $5,900 by end  of
          2000 and $118,000 at the end of the contract period.

12.6 THE FINANCIAL PLAN

          12.6.1    Estimated Sources and Uses of Funds

          The  Joint  Venture Companies projected  the  uses  and
          sources  of  funds for the development of the  Project.
          The  sources  for  the  project total  cost  of  $118.8
          million   would   be   $47.5   million   from    equity
          contributions  and  $71.3 million of Shareholder  Loans
          from  Pan-Western.   The equity  contributions  by  the
          Luannan County would largely be in the form of land and
          sites  required for the Project development.  The total
          construction  costs  of  $78.6  million  would  be  the
          largest user of the funds.  The interest payment during
          construction  is $13.3 million.  Table 12.6  summarizes
          the estimated sources and uses of funds as proposed  in
          the Financial Plan.
          
       __________________________________________________________
Table 12.6     SOURCES AND USES OF FUNDS
                     (1996 US$ in thousands)

                                           Funds         Percentage of   
                                                        Sources or Uses
Sources                                                     
             Sponsor Equity                $  47,502          40.0%      
             Contributions
             --  Panda Contribution           41,762          35.2       
             --  Luannan County                5,740           4.8       
             Contribution
             Pan-Western Shareholder          71,253          60.0       
             Loan Proceeds
                                                                         
             Total Sources of Funds         $118,755         100.0%      
                                                                         
                                                                         
             Uses                                                        
             Construction Costs              $78,555           66.2%      
             -- Harbin EPC Contract           64,739           54.6       
             -- Transmission Line             10,084            8.5       
             Project Loan
             -- Steam & Heat Network           2,912            2.4       
             -- Builder's Risk Insurance         819            0.7       
             Land & Well Costs                 5,740            4.8       
             Engineering Costs                 1,950            1.6       
             Interest During                  13,330           11.2       
             Construction
             Financing & Legal Costs           4,351            3.7       
             Project Management Costs          3,700            3.1       
             Fuel,  Spare Parts &  Other       2,750            2.3       
                Equip.
             Reserves & Contingency            8,380            7.1       
                                                                         
             Total Uses of Funds            $118,755          100.0%
Most project costs listed above are US dollar
     denominated, however, for steam and heat network, land and
     water use rights, and transmission line which are
     denominated in RMB, an exchange rate of US $1 = RMB 8.30 was
     used.
   ___________________________________________________________
                                
          12.6.2    Shareholder Loan Assumptions

          The  Pan-Western  Shareholder Loans, $71.3  million  in
          total,  were  amortized by a variable  method  in  this
          financial  analysis.  The loan is  amortized  over  the
          debt  term  of 10 year at the annual interest  rate  of
          13.89%.  The total principal and interest payment  each
          year is approximately $13.5 million.  Other assumptions
          used in the Financial Plan include:
          
          - Debtors
            JV1 - Tangshan Panda Heat and Power Co., Ltd.
            JV2 - Tangshan Pan-Western Heat and Power Co., Ltd.
            JV3 - Tangshan Cayman Heat and Power Co., Ltd.
            JV4 - Tangshan Pan-Sino Heat Co., Ltd.
          - Aggregate Principal Amount
            $71,253,000, payable semi-annually
          - Interest Rate
            13.89% per annum
          - Maturity
            2009
          
          12.6.3    Repayment of Pan-Western Shareholder Loans

          The repayment of the $71.3 million Shareholder Loans is
          the obligation of the four joint venture companies that
          make  up the Project.  The four joint venture companies
          are  required, under their shareholder loan agreements,
          to  distribute  their  cash  flow  available  for  debt
          service  to  the repayment of the annual principal  and
          interest payment of approximately $13.5 million.
          
12.7 CONSOLIDATED OPERATING RESULTS -- BASE CASE
     
     We  have  reviewed  the  estimates and  projections  of  the
     operating  capabilities  of  the  Plant,  the  estimates  of
     capital  and operating costs for the Project, the  estimated
     debt  service  requirements, and the estimated  depreciation
     and  taxes  payable by the  JV Cos.  On the  basis  of  such
     data, we have compiled a pro forma summary table (Exhibit 12-
     1) to project the consolidated operating results of the four
     joint venture companies as in the base case.  The results of
     sensitivity  analysis will be summarized  and  presented  in
     Section 12.8.  An exchange rate of US $1 = RMB 8.50 was used
     consistently throughout the projections.
     
          12.7.1    Operating Revenues

          The  annual  electric energy output is  assumed  to  be
          546,877 MWh, which is conservatively assumed to  remain
          constant  throughout the contract period.   We  believe
          this   output  is  achievable  and  that  there  is   a
          possibility  that the annual output might  exceed  this
          level, since the Plant can sell more power to the NCPGC
          to  meet high demand during the peak period without any
          penalty,  and  the Joint Venture Companies  expect  the
          Plant  to  incur  less than 55 days of overhaul  outage
          each year.  The pre-VAT unit sale price of 7.4 US cents
          per  kilowatt hour in 1999 gradually increases to  11.1
          cents  per kilowatt hour in 2009 and to 12.4  cents  in
          2018.   The  annual electric energy revenue thus  grows
          from  $42.9 million in 2000, to $60.7 million in  2009,
          and to $67.7 million in 2018.
          
          The  heat energy operating revenue is determined by the
          amount  of steam and heat to be delivered by the  Plant
          to the local thermal energy users.  Based on the design
          capacity  of  the Plant as presented in the Feasibility
          Study by the Hebei Electric Power Design Institute (see
          Section     12.1.2),    this     financial     analysis
          conservatively assumes that the annual output would  be
          about  350,000  metric  tons of  industrial  steam  and
          131,400 metric tons of district heat.  We believe these
          output  levels  are  reasonable based  on  the  assumed
          annual electric energy output assumptions listed above.
          Both  output levels also conservatively remain constant
          throughout the operating period.  At the sale prices of
          $6.55  per ton for steam and $6.07 per ton for district
          heat  in  1999, the total annual thermal energy revenue
          is  estimated at $3.2 million in 2000, $4.4 million  in
          2009, and $5.3 million in 2018.
          
          The  operating  revenues also include the  transmission
          loan  interest payments from the NCPGC at an  estimated
          interest  rate  of 12.0% per year. The  total  interest
          payment  from  the transmission loan over its  ten-year
          term is about  $9.4 million.
          
          The  on-shore  reserves are conservatively  assumed  to
          earn  interest  revenues at a reinvestment  rate  of  5
          percent  per  annum.   The  on-shore  interest  earning
          accounts include the overhaul reserve, Chinese Employee
          Welfare   Reserve,  Chinese  General  Reserve,  Chinese
          Enterprise  Reserve,  and  the  un-distributable   cash
          account.   The  total interest earnings  from  on-shore
          reserves is about $20.9 million.
          
          The  total operating revenue estimated for the contract
          period is about $1,265 million.
          
          12.7.2    Operating Expenses

          The   operating  expenses  assumed  for   the   Plant's
          operation  include  the costs to  deliver  coal,  water
          costs   for  both  water  usage  and  water  treatment,
          supplies    and   spare   parts,   utilities,    labor,
          administration costs, and real estate and stamp  taxes.
          The  cost  categories  are affected  by  the  projected
          annual  increases  in Chinese CPI and  coal  escalation
          factors  from  1999  to  2019 as presented  in  Section
          12.2.1.   Exhibit  12-1  shows that  the  annual  total
          operating expenses will be about $19.4 million in 2000,
          $31.8  million in 2009, and $44.7 million in 2018.   In
          each  year, 50 percent or more of the annual  operating
          cost is required to purchase and deliver the coal.  The
          next   biggest  item  of  expense  is  the  labor   and
          management  cost.   We believe these operating  expense
          assumptions are reasonable.
          
          The total operating expenses estimated for the contract
          period is about $642.0 million.
          
          12.7.3    Depreciation and Taxes

          As  estimated  by  the  Joint  Venture  Companies,  the
          depreciable  basis for the Project  is  90%  of  $102.7
          million  of  equipment, buildings and depreciable  land
          (built-upon  land that is allowed for  depreciation  by
          Chinese laws),  accounting for approximately 86% of the
          total project cost.  Book depreciation is straight-line
          method over the 20-year period, with an assumption that
          buildings and land will depreciate on a 20-year  basis,
          and  the  equipment will depreciate  on  a  twelve-year
          basis.   The annual depreciation, a deductible  expense
          for  tax  purposes, is approximately $7 million  to  $8
          million from 2000 to 2011, $5 million in 2012,  and  $2
          million   to  $1  million  from  2013  to  2018.    The
          depreciation  schedule and taxes payable to  the  local
          and  federal government as reflected in the  pro  forma
          was  estimated by the Joint Venture Companies based  on
          the  advice  of  their  Chinese  accounting  and  legal
          counsels.  The advisors had provided a separate  report
          to  the Joint Venture Companies on current Chinese laws
          and  regulations  applicable to a Sino-foreign  venture
          such as the Project.

          12.7.4    Discussion of Debt Coverage Ratios

          To  calculate  the  Pan-Western Shareholder  Loan  debt
          service  coverage  ratios, Exhibit  12-1  presents  the
          income  statement  and  cash  flow  statement  for  the
          Project  during  the payment period of the  Shareholder
          Loans.   The net income after tax will fund the Chinese
          Employee  Welfare Reserve, the Chinese General Reserve,
          and  the  Chinese  Enterprise  Expansion  Reserve,   as
          required  by  the  Chinese  Joint  Venture  law.   This
          financial  analysis also assumes that NCPGC  will  meet
          the   requirements  of  the  Interconnection  and  Loan
          Agreements  and pay to the Joint Venture Companies  the
          annual  principal payments on the Transmission  Project
          Loan.    The  total after-tax cash flow  available  for
          debt  service increases from $28.7 million in  2000  to
          $30.3 million in 2008.
          
          On  the basis of our financial analyses of the proposed
          Project  and the assumptions set forth in this  Report,
          we  are  of  the  opinion that, in the base  case,  the
          projected  operating revenues are adequate to  pay  the
          projected  operating and maintenance  expenses  and  to
          provide  an average of 2.19 and minimum of 2.02  after-
          tax  annual  debt service coverage for the  Shareholder
          Loans  during the payment period.  The lowest  coverage
          ratio  of  2.02 occurs in the first year  of  repayment
          period.

          12.7.5    Distribution to Pan-Western Equity Account

          After  the  payments of debt services and  funding  for
          overhaul   reserve,   the   Joint   Venture   Companies
          calculated   the  un-distributable  cash  flow,   which
          reflects   the  difference  between  Net  Distributable
          Earnings  and Net Cash Flow, plus interest and  reserve
          income from the off-shore debt service reserve account.
          The  remaining cash flow after adjustment for  the  un-
          distributable  cash flow is cash flow distributable  to
          equity  accounts.  As shown in Exhibit 12-1, cash  flow
          to Pan-Western equity account totals $321.6 million for
          the contract period.
          

12.8 SUMMARY OF SENSITIVITY ANALYSIS

     Five  sensitivity  cases  were run  in  order  to  test  the
     viability   of  the  Project  under  operating   assumptions
     different  from  the base case.  Case I  assumes  the  Plant
     would  generate  102 MW, instead of 106 MW  of  net  output.
     Case  II assumes an annual devaluation of 5 percent for  RMB
     throughout the contract period.  Case III assumes  a  higher
     annual Chinese CPI change rates, and Case IV assumes a lower
     Chinese  CPI  change rates throughout the  contract  period.
     Case  V  assumes a higher coal escalation factor  throughout
     the  contract  period.   As shown in  the  following  table,
     changes in the selected operating assumptions did not  yield
     minimum  and  average  debt  coverage  ratios  significantly
     different from that in the base case.

SUMMARY OF SENSITIVITY ANALYSIS
                                               Minimum Debt  Average Debt
                                                 Coverage      Coverage
Base Case                                          2.02          2.19

Case I    102 MW net output                        1.98          2.15
          (base case:  106 MW)
Case II   RMB devaluation = 5 percent / year       2.01          2.20
          (base case:  0 percent)
Case III  Higher Chinese CPI change per year:      2.12          2.64
          20% from 1995 to 2018
Case IV   Lower  Chinese CPI change per year:      1.95          2.02
          0% from 1995 to 2018
Case V    Coal  escalation factors:  20% from      2.02          2.19
          1995 to 2018

12.9 INDIVIDUAL JOINT VENTURE COMPANIES OPERATING RESULTS -- BASE CASE

     For   information  purposes  this  section  highlights   the
     business  make-up and operating results of  the  four  joint
     venture  companies.  It should be noted that the assumptions
     and   the  consolidated  pro  forma  presented  in  previous
     sections should be regarded as the best financial indicators
     for   the  Project  as  a  whole,  since  the  payment   and
     performance obligations of each joint venture company  under
     their shareholder loan agreement will be cross-guaranteed by
     the other joint venture companies.

     The joint venture companies' share of the Project's scope of
     business  and asset ownership is reflected in the  following
     chart:

       Scope of Business                 Assets

 JV1  Unit 1 thermal system ,            -- Boiler, precipitator & other
      manufacturing and sale of          ancillary equipment.  Steam
      electricity, sale of its           turbine, generator, transformer
      products & services at a           & switch gear, control system,
      profit, 1 x 50 MW.                 coal handling system.
                                         
 JV2  Unit 2 thermal system ,            -- Boiler, precipitator & other
      manufacturing and sale of          ancillary, equipment.  Steam
      electricity, sale of its           turbine, generator, transformer
      products & services at a           & switch gear, control system,
      profit, 1 x 50 MW.                 coal handling system.
                                         
 JV3  Manufacture & sell hot water       -- Water wells & water supply
      and steam to local heat            system, water storage systems,
      network.  Construction,            water treatment systems,
      management and operation of a      steam/water handling &
      water supply system and steam      condensing system, cooling
      and heat production facility.      towers, commercial steam
      Sale of its products & services    production system.
      at a profit.
      
 JV4  Distribution & sale of hot         -- Local steam and hot water
      water & steam to industrial &      distribution system, land,
      commercial markets.                social buildings, investment,
      Construction, management &         offsite ash-disposal land and
      operation of local steam and       ash slurry pipeline.
      hot water network.  Sale of its
      products and services at a
      profit.

     Each individual joint venture company's cash flow and income
     statements are presented in Exhibits 12-2 to 12-5.  JV1  and
     JV2 in total collect 100% of electricity sales revenue.  JV3
     collects  50%  of  thermal energy sales revenue,  while  JV4
     receives  50%  of  thermal energy revenue and  100%  of  the
     transmission  line loan repayment from NCPGC.  Each  company
     also  received 25% of the interest earnings on the  on-shore
     reserves.

     The   four  companies  are  responsible  for  the  operating
     expenses  that  correspond to their share of business  scope
     and  assets.   Each company distributes net cash  available,
     after  paying  all applicable expenses and  taxes,  for  the
     repayment  of  the  senior debt.   After  the  debt  service
     payment the remaining cash will become available for  equity
     accounts.

_______________________________
1    Based on an exchange rate of US $1 = 8.50 RMB.
2    "Energy in China", James P. Dorian, Financial Times Energy
     Publishing, 1995.
3    "Financing China's Electricity", JS Adams, AMCD (Publishers)
     Ltd., England, 1996
4    "Financing China's Electricity", JS Adams, AMCD (Publishers)
     Ltd., England, 1996

1  EXHIBIT 12-1
2  CONSOLIDATED INCOME/
3  CASH FLOW STATEMENTS                                 1            2            3            4            5            6
4  -- BASE CASE                      UNITS           1999         2000         2001         2002         2003         2004
5                                              (5 months)
6  PERFORMANCE
7  Net Electrical Output            kw hrs/y  227,865,500  546,877,200  546,877,200  546,877,200  546,877,200  546,877,200
8  Net Steam Production             tons/yr       145,700      349,680      349,680      349,680      349,680      349,680
9  Net Hot Water Production         tons/yr        54,750      131,400      131,400      131,400      131,400      131,400
10
11 PRICING
12 Pre-VAT Electric Energy Price    US$/kw h        0.074        0.078        0.083        0.087        0.091        0.094
13 Steam Price                      US$/ton         6.552        6.879        7.223        7.584        7.963        8.202
14 Hot Water Price                  US$/ton         6.065        6.369        6.687        7.021        7.373        7.594
15
16 REVENUES
17 Electric Energy Revenue                     16,751,240   42,867,885   45,635,533   47,691,675   49,618,451   51,363,730
18 Steam Revenue                                  954,565    2,405,504    2,525,779    2,652,068    2,784,671    2,868,212
19 Hot Water Revenue                              332,079      836,840      878,682      922,616      968,747      997,809
20 T-Line Interest Payments from NCPGC            609,444    1,427,937    1,340,421    1,242,403    1,132,622    1,009,668
21 Interest Income (On-shore Reserves)                  0       92,694      262,613      410,447      570,687      652,861
22         TOTAL OPERATING REVENUES   US $     18,647,329   47,630,860   50,643,028   52,919,209   55,075,178   56,892,280
23
24 OPERATING EXPENSES
25 Coal Delivered                               3,978,244   10,502,565   11,552,822   12,708,104   13,978,914   14,538,071
26 Water Usage                                    139,831      369,154      406,069      446,676      491,344      520,824
27 Supplies, Spare Parts, Consumable              610,042    1,610,510    1,771,561    1,948,717    2,143,589    2,272,204
28 Utilities                                      129,185      341,049      375,154      412,670      453,936      481,173
29 Project Management Fees & Expenses             351,722      869,456      895,539      922,405      950,078      978,580
30 Other Labor & Management Costs               1,170,747    2,993,804    3,193,306    3,409,763    3,644,779    3,816,692
31 Administrative Costs                           993,056    2,514,639    2,655,863    2,807,901    2,971,738    3,098,415
32 Real Estate Tax                                 53,992      129,580      129,580      129,580      129,580      129,580
33 Stamp Tax                                        6,605       16,984       18,178       19,192       20,205       20,930
34         TOTAL OPERATING EXPENSES   US $      7,433,423   19,347,740   20,998,072   22,805,009   24,784,163   25,856,470
35
36 INCOME STATEMENT
37 EBITDA                                      11,213,905   28,283,120   29,644,956   30,114,200   30,291,015   31,035,810
38 - Depreciation                               3,013,732    7,256,393    7,312,643    7,345,456    7,376,706    7,449,417
39 - Interest on Shareholder Loan               4,123,438    9,552,356    8,982,045    8,334,616    7,599,642    6,765,283
40 EBT (PRE-TAX INCOME)                         4,076,736   11,474,371   13,350,267   14,434,127   15,314,667   16,821,110
41 - Local Income Taxes (Luannan)                       0            0        7,287        9,697       12,352      266,706
42 - Federal Income Taxes (China)                  25,451       99,978    1,110,573    1,228,020    1,333,873    2,667,060
43 NET INCOME                                   4,051,285   11,374,393   12,232,407   13,196,410   13,968,442   13,887,344
44 - Employee Welfare Res. (on-shore)              59,355      156,698      172,368      189,605      208,565      221,079
45 - General Reserve (on-shore)                     2,451        5,882        5,882        5,882        5,882        5,882
46 - E'prise Exp. Reserve (on-shore)                2,451        5,882        5,882        5,882        5,882        5,882
47       NET DISTRIBUTABLE EARNINGS   US $      3,987,028   11,205,930   12,048,275   12,995,041   13,748,112   13,654,501
48
49 CASH FLOW STATEMENT
50 Net Distributable Earnings                   3,987,028   11,205,930   12,048,275   12,995,041   13,748,112   13,654,501
51 + Depreciation                               3,013,732    7,256,393    7,312,643    7,345,456    7,376,706    7,449,417
52 + Interest on Shareholder Loan               4,123,438    9,552,356    8,982,045    8,334,616    7,599,642    6,765,283
53 + T-Line Principal Payments from NCPGC         289,406      729,302      816,818      914,836    1,024,617    1,147,571
54 NET CASH AVAILABLE FOR SHAREHOLDER LOAN     11,413,603   28,743,981   29,159,781   29,589,949   29,749,076   29,016,771
55 - Interest on Shareholder Loan               4,123,438    9,552,356    8,982,045    8,334,616    7,599,642    6,765,283
56 - Principal of Shareholder Loan              1,513,522    3,976,085    4,513,736    5,124,088    5,816,974    6,603,550
57 CASH FLOW AFTER SHAREHOLDER LOAN             5,776,643   15,215,540   15,664,000   16,131,245   16,332,461   15,647,939
58 +/- Debt Service Reserve (Off-Shore)                 0            0            0            0            0            0
59 +/- Overhaul Reserve (on-shore)             (1,087,500)  (1,165,800)  (1,249,738)    (996,962)  (1,000,000)    (926,768)
60                    NET CASH FLOW             4,689,143   14,049,740   14,414,263   15,134,283   15,332,461   14,721,170
61        UNDISTRIBUTABLE CASH FLOW              (702,115)  (2,843,810)  (2,365,988)  (2,139,242)  (1,584,348)  (1,066,670)
62         PAN-WESTERN DISTRIBUTION   US $      3,505,234    9,851,801   10,592,356   11,424,715   12,086,785   12,004,485
63      LUANNAN COUNTY DISTRIBUTION   US $        481,794    1,354,129    1,455,918    1,570,326    1,661,327    1,650,015
64
65 AFTER-TAX SHAREHOLDER LOAN COVERAGE
66 Debt service Coverage Ratio (DSCR)                2.02         2.12         2.16         2.20         2.22         2.17
67 Minimum DSCR                      2.02
68 Average DSCR                      2.19
1  EXHIBIT 12-1 (Continued)
2  CONSOLIDATED INCOME/
3  CASH FLOW STATEMENTS                                  7             8             9            10           11           12
4  -- BASE CASE                      UNITS            2005          2006          2007          2008         2009         2010
5
6  PERFORMANCE
7  Net Electrical Output            kw hrs/y   546,877,200   546,877,200   546,877,200   546,877,200  546,877,200  546,877,200
8  Net Steam Production             tons/yr        349,680       349,680       349,680       349,680      349,680      349,680
9  Net Hot Water Production         tons/yr        131,400       131,400       131,400       131,400      131,400      131,400
10
11 PRICING
12 Pre-VAT Electric Energy Price    US$/kw h         0.096         0.099         0.102         0.106        0.111        0.114
13 Steam Price                      US$/ton          8.448         8.702         8.963         9.232        9.416        9.605
14 Hot Water Price                  US$/ton          7.821         8.056         8.298         8.547        8.718        8.892
15
16 REVENUES
17 Electric Energy Revenue                      52,490,315    53,972,291    55,835,920    57,978,501   60,732,794   62,118,770
18 Steam Revenue                                 2,954,258     3,042,886     3,134,172     3,228,197    3,292,761    3,358,617
19 Hot Water Revenue                             1,027,744     1,058,576     1,090,333     1,123,043    1,145,504    1,168,414
20 T-Line Interest Payments from NCPGC             871,960       717,726       544,985       351,514      134,827            0
21 Interest Income (On-shore Reserves)             708,593       726,564       702,898       831,817      762,081      797,495
22         TOTAL OPERATING REVENUES   US $      58,052,869    59,518,043    61,308,309    63,513,072   66,067,968   67,443,296
23
24 OPERATING EXPENSES
25 Coal Delivered                               15,119,594    15,724,378    16,353,353    17,007,487   17,687,786   18,395,298
26 Water Usage                                     552,074       585,198       620,310       657,529      683,830      711,183
27 Supplies, Spare Parts, Consumable             2,408,536     2,553,049     2,706,231     2,868,605    2,983,350    3,102,684
28 Utilities                                       510,043       540,646       573,084       607,469      631,768      657,039
29 Project Management Fees & Expenses            1,007,937     1,038,175     1,069,321     1,101,400    1,134,442    1,168,476
30 Other Labor & Management Costs                3,997,517     4,187,745     4,387,899     4,598,529    4,764,395    4,936,354
31 Administrative Costs                          3,231,145     3,370,243     3,516,043     3,668,900    3,795,706    3,926,986
32 Real Estate Tax                                 129,580       129,580       129,580       129,580      129,580      129,580
33 Stamp Tax                                        21,478        22,139        22,924        23,801       24,858       25,512
34         TOTAL OPERATING EXPENSES   US $      26,977,904    28,151,153    29,378,746    30,663,300   31,835,715   33,053,111
35
36 INCOME STATEMENT
37 EBITDA                                       31,074,966    31,366,890    31,929,563    32,849,772   34,232,253   34,390,184
38 - Depreciation                                7,521,010     7,597,012     7,676,663     7,724,401    7,760,137    7,847,617
39 - Interest on Shareholder Loan                5,818,101     4,742,840     3,522,181     2,136,463      572,814            0
40 EBT (PRE-TAX INCOME)                         17,735,855    19,027,038    20,730,719    22,988,907   25,899,302   26,542,567
41 - Local Income Taxes (Luannan)                  282,583       304,204       332,133       369,316      776,979      796,277
42 - Federal Income Taxes (China)                2,825,826     3,042,039     3,321,328     3,693,165    4,156,112    4,257,354
43 NET INCOME                                   14,627,446    15,680,795    17,077,258    18,926,426   20,966,211   21,488,936
44 - Employee Welfare Res. (on-shore)              234,344       248,404       263,309       279,107      290,272      301,882
45 - General Reserve (on-shore)                      5,882         5,882         5,882         5,882        5,882        5,882
46 - E'prise Exp. Reserve (on-shore)                 5,882         5,882         5,882         5,882        5,882        5,882
47       NET DISTRIBUTABLE EARNINGS   US $      14,381,338    15,420,625    16,802,184    18,635,554   20,664,175   21,175,289
48
49 CASH FLOW STATEMENT
50 Net Distributable Earnings                   14,381,338    15,420,625    16,802,184    18,635,554   20,664,175   21,175,289
51 + Depreciation                                7,521,010     7,597,012     7,676,663     7,724,401    7,760,137    7,847,617
52 + Interest on Shareholder Loan                5,818,101     4,742,840     3,522,181     2,136,463      572,814            0
53 + T-Line Principal Payments from NCPGC        1,285,279     1,439,513     1,612,254     1,805,725    1,123,562            0
54 NET CASH AVAILABLE FOR SHAREHOLDER LOAN      29,005,728    29,199,990    29,613,283    30,302,143   17,570,401   29,022,906
55 - Interest on Shareholder Loan                5,818,101     4,742,840     3,522,181     2,136,463      572,814            0
56 - Principal of Shareholder Loan               7,496,490     8,510,173     9,660,929    10,967,290    7,070,163            0
57 CASH FLOW AFTER SHAREHOLDER LOAN             15,691,137    15,946,978    16,430,172    17,198,390    9,927,424   29,022,906
58 +/- Debt Service Reserve (Off-Shore)                  0             0     4,000,000             0            0            0
59 +/- Overhaul Reserve (on-shore)                (993,495)   (1,041,183)   (1,091,160)           (0)  (1,143,536)  (1,198,425)
60                    NET CASH FLOW             14,697,642    14,905,794    19,339,012    17,198,390    8,783,888   27,824,481
61        UNDISTRIBUTABLE CASH FLOW               (316,304)      514,831    (2,536,828)    1,437,164     (670,000)  (6,649,192)
62         PAN-WESTERN DISTRIBUTION   US $      12,643,491    13,557,191    14,771,802    16,383,626   18,167,108   18,616,458
63      LUANNAN COUNTY DISTRIBUTION   US $       1,737,847     1,863,435     2,030,383     2,251,928    2,497,067    2,558,830
64
65 AFTER-TAX SHAREHOLDER LOAN COVERAGE
66 Debt service Coverage Ratio (DSCR)                 2.18          2.20          2.25          2.31         2.30
67 Minimum DSCR                      2.02
68 Average DSCR                      2.19
1  EXHIBIT 12-1 (Continued)
2  CONSOLIDATED INCOME/
3  CASH FLOW STATEMENTS                                 13           14           15           16           17           18
4  -- BASE CASE                      UNITS            2011         2012         2013         2014         2015         2016
5
6  PERFORMANCE
7  Net Electrical Output            kw hrs/y   546,877,200  546,877,200  546,877,200  546,877,200  546,877,200  546,877,200
8  Net Steam Production             tons/yr        349,680      349,680      349,680      349,680      349,680      349,680
9  Net Hot Water Production         tons/yr        131,400      131,400      131,400      131,400      131,400      131,400
10
11 PRICING
12 Pre-VAT Electric Energy Price    US$/kw h         0.108        0.111        0.113        0.116        0.118        0.121
13 Steam Price                      US$/ton          9.797        9.993       10.193       10.397       10.605       10.817
14 Hot Water Price                  US$/ton          9.070        9.251        9.436        9.625        9.818       10.014
15
16 REVENUES
17 Electric Energy Revenue                      59,024,783   60,526,304   61,982,143   63,394,575   64,765,964   66,098,766
18 Steam Revenue                                 3,425,789    3,494,305    3,564,191    3,635,475    3,708,184    3,782,348
19 Hot Water Revenue                             1,191,782    1,215,618    1,239,930    1,264,729    1,290,024    1,315,824
20 T-Line Interest Payments from NCPGC                   0            0            0            0            0            0
21 Interest Income (On-shore Reserves)           1,131,786    1,467,767    1,673,718    1,695,550    1,786,134    1,807,558
22         TOTAL OPERATING REVENUES   US $      64,774,140   66,703,993   68,459,982   69,990,329   71,550,305   73,004,496
23
24 OPERATING EXPENSES
25 Coal Delivered                               19,131,110   19,896,354   20,692,208   21,519,896   22,380,692   23,275,920
26 Water Usage                                     739,631      769,216      799,984      831,984      865,263      899,874
27 Supplies, Spare Parts, Consumable             3,226,791    3,355,863    3,490,097    3,629,701    3,774,889    3,925,885
28 Utilities                                       683,320      710,653      739,079      768,643      799,388      831,364
29 Project Management Fees & Expenses            1,203,530    1,239,636    1,276,825    1,315,130    1,354,583    1,395,221
30 Other Labor & Management Costs                5,114,633    5,299,468    5,491,104    5,689,794    5,895,804    6,109,407
31 Administrative Costs                          4,062,900    4,203,617    4,349,308    4,500,153    4,656,337    4,818,055
32 Real Estate Tax                                 129,580      129,580      129,580      129,580      129,580      129,580
33 Stamp Tax                                        24,832       25,540       26,244       26,944       27,643       28,342
34         TOTAL OPERATING EXPENSES   US $      34,316,327   35,629,926   36,994,428   38,411,825   39,884,181   41,413,647
35
36 INCOME STATEMENT
37 EBITDA                                       30,457,813   31,074,068   31,465,554   31,578,505   31,666,124   31,590,849
38 - Depreciation                                7,939,297    5,383,615    1,747,421    1,773,584    1,785,975    1,819,575
39 - Interest on Shareholder Loan                        0            0            0            0            0            0
40 EBT (PRE-TAX INCOME)                         22,518,517   25,690,453   29,718,133   29,804,921   29,880,149   29,771,274
41 - Local Income Taxes (Luannan)                  675,555      770,714      891,544      894,148      896,404      893,138
42 - Federal Income Taxes (China)                3,668,418    4,194,684    4,859,044    4,875,943    4,893,891    4,881,361
43 NET INCOME                                   18,174,543   20,725,055   23,967,545   24,034,830   24,089,853   23,996,775
44 - Employee Welfare Res. (on-shore)              313,958      326,516      339,577      353,160      367,286      381,978
45 - General Reserve (on-shore)                      5,882        5,882        5,882        5,882        5,882        5,882
46 - E'prise Exp. Reserve (on-shore)                 5,882        5,882        5,882        5,882        5,882        5,882
47       NET DISTRIBUTABLE EARNINGS   US $      17,848,820   20,386,774   23,616,204   23,669,906   23,710,802   23,603,033
48
49 CASH FLOW STATEMENT
50 Net Distributable Earnings                   17,848,820   20,386,774   23,616,204   23,669,906   23,710,802   23,603,033
51 + Depreciation                                7,939,297    5,383,615    1,747,421    1,773,584    1,785,975    1,819,575
52 + Interest on Shareholder Loan                        0            0            0            0            0            0
53 + T-Line Principal Payments from NCPGC                0            0            0            0            0            0
54 NET CASH AVAILABLE FOR SHAREHOLDER LOAN      25,788,117   25,770,389   25,363,625   25,443,490   25,496,778   25,422,608
55 - Interest on Shareholder Loan                        0            0            0            0            0            0
56 - Principal of Shareholder Loan                       0            0            0            0            0            0
57 CASH FLOW AFTER SHAREHOLDER LOAN             25,788,117   25,770,389   25,363,625   25,443,490   25,496,778   25,422,608
58 +/- Debt Service Reserve (Off-Shore)                  0            0            0            0            0            0
59 +/- Overhaul Reserve (on-shore)              (1,255,950)  (1,301,164)  (1,348,006)          (0)  (1,396,534)  (1,446,809)
60                    NET CASH FLOW             24,532,167   24,469,225   24,015,619   25,443,490   24,100,244   23,975,798
61        UNDISTRIBUTABLE CASH FLOW             (6,683,347)  (4,082,451)    (399,415)  (1,773,584)    (389,441)    (372,766)
62         PAN-WESTERN DISTRIBUTION   US $      15,691,962   17,923,228   20,762,412   20,809,625   20,845,580   20,750,833
63      LUANNAN COUNTY DISTRIBUTION   US $       2,156,859    2,463,546    2,853,791    2,860,281    2,865,223    2,852,200
64
65 AFTER-TAX SHAREHOLDER LOAN COVERAGE
66 Debt service Coverage Ratio (DSCR)
67 Minimum DSCR                      2.02
68 Average DSCR                      2.19
1  EXHIBIT 12-1 (Continued)
2  CONSOLIDATED INCOME/
3  CASH FLOW STATEMENTS                                 19           20           21
4  -- BASE CASE                      UNITS            2017         2018         2019          Total
5                                                                         (7 months)
6  PERFORMANCE
7  Net Electrical Output            kw hrs/y   546,877,200  546,877,200  319,011,700 10,937,544,000
8  Net Steam Production             tons/yr        349,680      349,680      203,980      6,993,600
9  Net Hot Water Production         tons/yr        131,400      131,400       76,650      2,628,000
10
11 PRICING
12 Pre-VAT Electric Energy Price    US$/kw h         0.122        0.124        0.124            n/a
13 Steam Price                      US$/ton         11.033       11.254       11.254            n/a
14 Hot Water Price                  US$/ton         10.214       10.418       10.418            n/a
15
16 REVENUES
17 Electric Energy Revenue                      66,870,713   67,713,091   39,499,303  1,146,932,749
18 Steam Revenue                                 3,857,995    3,935,155    2,295,507     64,900,636
19 Hot Water Revenue                             1,342,140    1,368,983      798,574     22,577,991
20 T-Line Interest Payments from NCPGC                   0            0            0      9,383,509
21 Interest Income (On-shore Reserves)           1,828,201    1,849,776    1,092,460     20,851,700
22         TOTAL OPERATING REVENUES   US $      73,899,050   74,867,004   43,685,843  1,264,646,585
23
24 OPERATING EXPENSES
25 Coal Delivered                               24,206,957   25,175,235   14,685,554    358,510,541
26 Water Usage                                     935,869      973,303      590,471     13,589,617
27 Supplies, Spare Parts, Consumable             4,082,920    4,246,237    2,576,050     59,287,510
28 Utilities                                       864,618      899,203      545,517     12,555,002
29 Project Management Fees & Expenses            1,437,078    1,480,190      889,347     23,079,070
30 Other Labor & Management Costs                6,330,887    6,560,539    3,923,382     95,516,551
31 Administrative Costs                          4,985,506    5,158,896    3,067,171     76,352,576
32 Real Estate Tax                                 129,580      129,580       75,588      2,591,599
33 Stamp Tax                                        28,883       29,458       17,184        477,877
34         TOTAL OPERATING EXPENSES   US $      43,002,297   44,652,641   26,370,264    641,960,343
35
36 INCOME STATEMENT
37 EBITDA                                       30,896,753   30,214,364   17,315,579    622,686,242
38 - Depreciation                                1,889,167    1,970,734    1,149,595    111,340,150
39 - Interest on Shareholder Loan                        0            0            0     62,149,779
40 EBT (PRE-TAX INCOME)                         29,007,585   28,243,630   16,165,985    449,196,313
41 - Local Income Taxes (Luannan)                  870,228      847,309      484,980     10,381,553
42 - Federal Income Taxes (China)                4,770,111    4,658,709    2,424,898     66,987,838
43 NET INCOME                                   23,367,246   22,737,612   13,256,107    371,826,922
44 - Employee Welfare Res. (on-shore)              397,257      413,147      250,642      5,768,509
45 - General Reserve (on-shore)                      5,882        5,882        3,431        117,647
46 - E'prise Exp. Reserve (on-shore)                 5,882        5,882        3,431        117,647
47       NET DISTRIBUTABLE EARNINGS   US $      22,958,225   22,312,701   12,998,602    365,823,119
48
49 CASH FLOW STATEMENT
50 Net Distributable Earnings                   22,958,225   22,312,701   12,998,602    365,823,119
51 + Depreciation                                1,889,167    1,970,734    1,149,595    111,340,150
52 + Interest on Shareholder Loan                        0            0            0     62,149,779
53 + T-Line Principal Payments from NCPGC                0            0            0     12,188,882
54 NET CASH AVAILABLE FOR SHAREHOLDER LOAN      24,847,392   24,283,434   14,148,197    538,951,644
55 - Interest on Shareholder Loan                        0            0            0     62,149,779
56 - Principal of Shareholder Loan                       0            0            0     71,253,000
57 CASH FLOW AFTER SHAREHOLDER LOAN             24,847,392   24,283,434   14,148,197    405,548,865
58 +/- Debt Service Reserve (Off-Shore)                  0            0            0      4,000,000
59 +/- Overhaul Reserve (on-shore)              (1,498,894)   1,447,145            0    (18,694,780)
60                    NET CASH FLOW             23,348,498   25,730,580   14,148,197    390,854,085
61        UNDISTRIBUTABLE CASH FLOW               (390,273)  (3,417,879)  (1,149,595)   (37,581,253)
62         PAN-WESTERN DISTRIBUTION   US $      20,183,944   19,616,425   11,427,846    321,616,907
63      LUANNAN COUNTY DISTRIBUTION   US $       2,774,281    2,696,276    1,570,756     44,206,212
64
65 AFTER-TAX SHAREHOLDER LOAN COVERAGE
66 Debt service Coverage Ratio (DSCR)                                                           n/a
67 Minimum DSCR                      2.02
68 Average DSCR                      2.19
1  EXHIBIT 12-2
2  JV1 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                         1            2            3            4            5            6  
4                                       % OF          1999         2000         2001         2002         2003         2004  
5                                       TOTAL    (5 months)
6  REVENUES                       
7   Electric Energy Revenue              50%     8,375,620   21,433,943   22,817,766   23,845,837   24,809,225   25,681,865  
8   Steam Revenue                         0%             0            0            0            0            0            0  
9   Hot Water Revenue                     0%             0            0            0            0            0            0  
10  T-Line Interest Payments              0%             0            0            0            0            0            0  
11  Interest Income on On-Shore Reserve  25%             0       23,173       65,653      102,612      142,672      163,215  
12            TOTAL OPERATING REVENUES           8,375,620   21,457,116   22,883,420   23,948,449   24,951,897   25,845,080  
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     1,989,122    5,251,283    5,776,411    6,354,052    6,989,457    7,269,035  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable    33%       203,347      536,837      590,520      649,572      714,530      757,401  
18  Utilities                            45%        58,133      153,472      168,819      185,701      204,271      216,528  
19  Project Management Fees              30%       105,516      260,837      268,662      276,722      285,023      293,574  
20  Other Labor & Management             30%       371,009      950,374    1,015,448    1,086,131    1,162,956    1,218,701  
21  Administrative Costs                 30%       297,917      754,392      796,759      842,370      891,521      929,525  
22  Real Estate and Stamp Taxes          40%        24,239       58,626       59,103       59,509       59,914       60,204  
23            TOTAL OPERATING EXPENSES           3,049,284    7,965,819    8,675,722    9,454,057   10,307,672   10,744,968  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (754,653)  (1,777,426)  (1,723,315)  (1,658,588)  (1,584,472)  (1,504,289) 
27  Water Usage Payment (to JV 3)                 (565,270)  (1,452,849)  (1,557,487)  (1,671,369)  (1,795,384)  (1,884,071) 
28  Site Lease Payment (to JV 4)                  (111,111)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667) 
29                               TOTAL          (1,431,034)  (3,496,941)  (3,547,468)  (3,596,624)  (3,646,522)  (3,655,027) 
30 
31 INCOME STATEMENT
32  EBITDA                                       3,895,302    9,994,356   10,660,230   10,897,768   10,997,703   11,445,085  
33  - Depreciation                       33%       994,531    2,394,610    2,413,172    2,424,000    2,434,313    2,458,308  
34  - Interest on S/H Loan                       1,034,722    2,397,038    2,253,926    2,091,462    1,907,030    1,697,658  
35  EBT (Pre-tax Income)                         1,866,048    5,202,708    5,993,132    6,382,306    6,656,360    7,289,119  
36  - Local Income Taxes (Luannan)                       0            0            0            0            0      109,337  
37  - Federal Income Taxes (China)                       0            0      449,485      478,673      499,227    1,093,368  
38  Net Income                                   1,866,048    5,202,708    5,543,647    5,903,633    6,157,133    6,086,415  
39  - Employee Welfare Res. (on-shore)   40%        23,742       62,679       68,947       75,842       83,426       88,432  
40  - General Reserve (on-shore)         40%           980        2,353        2,353        2,353        2,353        2,353  
41  - E'prise Exp. Reserve (on-shore)    40%           980        2,353        2,353        2,353        2,353        2,353  
42          NET DISTRIBUTABLE EARNINGS           1,840,346    5,135,323    5,469,994    5,823,085    6,069,001    5,993,277  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,840,346    5,135,323    5,469,994    5,823,085    6,069,001    5,993,277  
46  + Depreciation                       33%       994,531    2,394,610    2,413,172    2,424,000    2,434,313    2,458,308  
47  + Interest on S/H Loan                       1,034,722    2,397,038    2,253,926    2,091,462    1,907,030    1,697,658  
48  + T-Line Principal Payments           0%             0            0            0            0            0            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          3,869,599    9,926,971   10,137,092   10,338,548   10,410,344   10,149,243  
50  - Interest on S/H Loan                      (1,034,722)  (2,397,038)  (2,253,926)  (2,091,462)  (1,907,030)  (1,697,658) 
51  - Principal of S/H Loan                       (379,798)    (997,746)  (1,132,662)  (1,285,822)  (1,459,693)  (1,657,074) 
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)      33%      (362,500)    (388,600)    (416,579)    (332,321)    (333,333)    (308,923) 
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0  
55  +/- Undistributable Cash Flow                 (252,233)  (1,008,264)    (863,931)    (805,857)    (641,287)    (492,311) 
56            PAN-WESTERN DISTRIBUTION   US$     1,617,957    4,514,769    4,808,997    5,119,421    5,335,621    5,269,047  
57         LUANNAN COUNTY DISTRIBUTION   US$       222,388      620,555      660,996      703,664      733,381      724,230
1  EXHIBIT 12-2 (Continued)
2  JV1 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                         7            8            9           10           11           12  
4                                       % OF          2005         2006         2007         2008         2009         2010  
5                                       TOTAL                                                                                
6  REVENUES
7   Electric Energy Revenue              50%    26,245,158   26,986,145   27,917,960   28,989,250   30,366,397   31,059,385  
8   Steam Revenue                         0%             0            0            0            0            0            0  
9   Hot Water Revenue                     0%             0            0            0            0            0            0  
10  T-Line Interest Payments              0%             0            0            0            0            0            0  
11  Interest Income on On-Shore Reserve  25%       177,148      181,641      175,725      207,954      190,520      199,374  
12            TOTAL OPERATING REVENUES          26,422,306   27,167,787   28,093,685   29,197,204   30,556,918   31,258,759  
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     7,559,797    7,862,189    8,176,676    8,503,743    8,843,893    9,197,649  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable    33%       802,845      851,016      902,077      956,202      994,450    1,034,228  
18  Utilities                            45%       229,519      243,291      257,888      273,361      284,296      295,667  
19  Project Management Fees              30%       302,381      311,453      320,796      330,420      340,333      350,543  
20  Other Labor & Management             30%     1,277,370    1,339,125    1,404,139    1,472,594    1,526,076    1,581,534  
21  Administrative Costs                 30%       969,343    1,011,073    1,054,813    1,100,670    1,138,712    1,178,096  
22  Real Estate and Stamp Taxes          40%        60,423       60,688       61,002       61,352       61,775       62,037  
23            TOTAL OPERATING EXPENSES          11,201,679   11,678,834   12,177,392   12,698,343   13,189,534   13,699,753  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)            (1,412,101)  (1,306,887)  (1,186,742)  (1,045,815)    (884,866)    (833,809) 
27  Water Usage Payment (to JV 3)               (1,977,509)  (2,075,965)  (2,179,722)  (2,289,081)  (2,373,288)  (2,460,644) 
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667) 
29                               TOTAL          (3,656,277)  (3,649,519)  (3,633,131)  (3,601,563)  (3,524,821)  (3,561,120) 
30 
31 INCOME STATEMENT
32  EBITDA                                      11,564,350   11,839,434   12,283,163   12,897,299   13,842,562   13,997,886  
33  - Depreciation                       33%     2,481,933    2,507,014    2,533,299    2,549,052    2,560,845    2,589,714  
34  - Interest on S/H Loan                       1,459,976    1,190,153      883,845      536,117      143,740            0  
35  EBT (Pre-tax Income)                         7,622,441    8,142,267    8,866,019    9,812,129   11,137,977   11,408,172  
36  - Local Income Taxes (Luannan)                 114,337      122,134      132,990      147,182      334,139      342,245  
37  - Federal Income Taxes (China)               1,143,366    1,221,340    1,329,903    1,471,819    1,670,697    1,711,226  
38  Net Income                                   6,364,738    6,798,793    7,403,126    8,193,128    9,133,141    9,354,701  
39  - Employee Welfare Res. (on-shore)   40%        93,738       99,362      105,323      111,643      116,109      120,753  
40  - General Reserve (on-shore)         40%         2,353        2,353        2,353        2,353        2,353        2,353  
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        2,353        2,353        2,353        2,353  
42          NET DISTRIBUTABLE EARNINGS           6,266,295    6,694,725    7,293,097    8,076,779    9,012,327    9,229,243  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   6,266,295    6,694,725    7,293,097    8,076,779    9,012,327    9,229,243  
46  + Depreciation                       33%     2,481,933    2,507,014    2,533,299    2,549,052    2,560,845    2,589,714  
47  + Interest on S/H Loan                       1,459,976    1,190,153      883,845      536,117      143,740            0  
48  + T-Line Principal Payments           0%             0            0            0            0            0            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,208,204   10,391,892   10,710,240   11,161,949   11,716,912   11,818,956  
50  - Interest on S/H Loan                      (1,459,976)  (1,190,153)    (883,845)    (536,117)    (143,740)          (0) 
51  - Principal of S/H Loan                     (1,881,145)  (2,135,516)  (2,424,283)  (2,752,097)  (1,774,164)           0  
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)      33%      (331,165)    (347,061)    (363,720)          (0)    (381,179)    (399,475) 
54  +/- Debt Service Reserve (off-shore) 25%             0            0    1,000,000            0            0            0  
55  +/- Undistributable Cash Flow                 (269,623)     (24,437)    (745,296)     203,044     (405,502)  (2,190,239) 
56            PAN-WESTERN DISTRIBUTION   US$     5,509,073    5,885,732    6,411,796    7,100,778    7,923,274    8,113,977  
57         LUANNAN COUNTY DISTRIBUTION   US$       757,222      808,993      881,301      976,001    1,089,053    1,115,265
1  EXHIBIT 12-2 (Continued)
2  JV1 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                        13           14           15           16           17           18 
4                                       % OF          2011         2012         2013         2014         2015         2016 
5                                       TOTAL                                                                               
6  REVENUES
7   Electric Energy Revenue              50%    29,512,392   30,263,152   30,991,072   31,697,288   32,382,982   33,049,383 
8   Steam Revenue                         0%             0            0            0            0            0            0 
9   Hot Water Revenue                     0%             0            0            0            0            0            0 
10  T-Line Interest Payments              0%             0            0            0            0            0            0 
11  Interest Income on On-Shore Reserve  25%       282,946      366,942      418,430      423,888      446,533      451,890 
12            TOTAL OPERATING REVENUES          29,795,338   30,630,094   31,409,501   32,121,175   32,829,515   33,501,273 
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     9,565,555    9,948,177   10,346,104   10,759,948   11,190,346   11,637,960 
16  Water Usage                           0%             0            0            0            0            0            0 
17  Supplies, Spare Parts, Consumable    33%     1,075,597    1,118,621    1,163,366    1,209,900    1,258,296    1,308,628 
18  Utilities                            45%       307,494      319,794      332,586      345,889      359,725      374,114 
19  Project Management Fees              30%       361,059      371,891      383,047      394,539      406,375      418,566 
20  Other Labor & Management             30%     1,639,043    1,698,679    1,760,523    1,824,658    1,891,170    1,960,148 
21  Administrative Costs                 30%     1,218,870    1,261,085    1,304,792    1,350,046    1,396,901    1,445,417 
22  Real Estate and Stamp Taxes          40%        61,765       62,048       62,329       62,610       62,889       63,169 
23            TOTAL OPERATING EXPENSES          14,229,382   14,780,294   15,352,748   15,947,590   16,565,703   17,208,001 
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (843,550)    (572,009)    (185,663)    (188,443)    (189,760)    (193,330)
27  Water Usage Payment (to JV 3)               (2,551,266)  (2,645,278)  (2,742,811)  (2,843,996)  (2,948,972)  (3,057,884)
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667)
29                               TOTAL          (3,661,483)  (3,483,954)  (3,195,141)  (3,299,106)  (3,405,399)  (3,517,881)
30 
31 INCOME STATEMENT
32  EBITDA                                      11,904,473   12,365,845   12,861,613   12,874,479   12,858,414   12,775,390 
33  - Depreciation                       33%     2,619,968    1,776,593      576,649      585,283      589,372      600,460 
34  - Interest on S/H Loan                               0            0            0            0            0            0 
35  EBT (Pre-tax Income)                         9,284,505   10,589,252   12,284,964   12,289,197   12,269,042   12,174,930 
36  - Local Income Taxes (Luannan)                 278,535      317,678      368,549      368,676      368,071      365,248 
37  - Federal Income Taxes (China)               1,392,676    1,588,388    1,842,745    1,843,380    1,840,356    1,826,240 
38  Net Income                                   7,613,294    8,683,187   10,073,670   10,077,141   10,060,614    9,983,443 
39  - Employee Welfare Res. (on-shore)   40%       125,583      130,606      135,831      141,264      146,914      152,791 
40  - General Reserve (on-shore)         40%         2,353        2,353        2,353        2,353        2,353        2,353 
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        2,353        2,353        2,353        2,353 
42          NET DISTRIBUTABLE EARNINGS           7,483,005    8,547,874    9,933,134    9,931,172    9,908,994    9,825,946 
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   7,483,005    8,547,874    9,933,134    9,931,172    9,908,994    9,825,946 
46  + Depreciation                       33%     2,619,968    1,776,593      576,649      585,283      589,372      600,460 
47  + Interest on S/H Loan                               0            0            0            0            0            0 
48  + T-Line Principal Payments           0%             0            0            0            0            0            0 
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,102,973   10,324,467   10,509,783   10,516,454   10,498,366   10,426,406 
50  - Interest on S/H Loan                              (0)          (0)          (0)          (0)          (0)          (0)
51  - Principal of S/H Loan                              0            0            0            0            0            0 
52  ADJUSTMENTS                                                                                                             
53  +/- Overhaul Reserve (on-shore)      33%      (418,650)    (433,721)    (449,335)          (0)    (465,511)    (482,270)
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0 
55  +/- Undistributable Cash Flow               (2,201,318)  (1,342,872)    (127,314)    (585,283)    (123,861)    (118,190)
56            PAN-WESTERN DISTRIBUTION   US$     6,578,756    7,514,946    8,732,810    8,731,085    8,711,587    8,638,575 
57         LUANNAN COUNTY DISTRIBUTION   US$       904,249    1,032,929    1,200,324    1,200,087    1,197,407    1,187,371
1  EXHIBIT 12-2 (Continued)
2  JV1 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                        19           20           21
4                                       % OF          2017         2018         2019           TOTAL
5                                       TOTAL                              (7 months)
6  REVENUES
7   Electric Energy Revenue              50%    33,435,357   33,856,545   19,749,652      573,466,374
8   Steam Revenue                         0%             0            0            0                0
9   Hot Water Revenue                     0%             0            0            0                0
10  T-Line Interest Payments              0%             0            0            0                0
11  Interest Income on On-Shore Reserve  25%       457,050      462,444      273,115        5,212,925
12            TOTAL OPERATING REVENUES          33,892,407   34,318,989   20,022,767      578,679,299
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%    12,103,478   12,587,618    7,342,777      179,255,271
16  Water Usage                           0%             0            0            0                0
17  Supplies, Spare Parts, Consumable    33%     1,360,973    1,415,412      858,683       19,762,503
18  Utilities                            45%       389,078      404,641      245,482        5,649,751
19  Project Management Fees              30%       431,123      444,057      266,804        6,923,721
20  Other Labor & Management             30%     2,031,685    2,105,877    1,260,562       30,577,802
21  Administrative Costs                 30%     1,495,652    1,547,669      920,151       22,905,773
22  Real Estate and Stamp Taxes          40%        63,385       63,615       37,109        1,227,790
23            TOTAL OPERATING EXPENSES          17,875,375   18,568,889   10,931,569      266,302,610
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (200,724)    (209,390)    (122,144)     (18,377,978)
27  Water Usage Payment (to JV 3)               (3,170,882)  (3,288,119)  (1,975,612)     (47,507,458)
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (155,556)      (5,333,333)
29                               TOTAL          (3,638,273)  (3,764,177)  (2,253,312)     (71,218,769)
30 
31 INCOME STATEMENT
32  EBITDA                                      12,378,759   11,985,923    6,837,885      241,157,920
33  - Depreciation                       33%       623,425      650,342      379,366       36,742,250
34  - Interest on S/H Loan                               0            0            0       15,595,667
35  EBT (Pre-tax Income)                        11,755,334   11,335,581    6,458,519      188,820,004
36  - Local Income Taxes (Luannan)                 352,660      340,067      193,756        4,255,604
37  - Federal Income Taxes (China)               1,763,300    1,700,337      968,778       25,835,302
38  Net Income                                   9,639,374    9,295,177    5,295,986      158,729,098
39  - Employee Welfare Res. (on-shore)   40%       158,903      165,259      100,257        2,307,403
40  - General Reserve (on-shore)         40%         2,353        2,353        1,373           47,059
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        1,373           47,059
42          NET DISTRIBUTABLE EARNINGS           9,475,765    9,125,212    5,192,984      156,327,576
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   9,475,765    9,125,212    5,192,984      156,327,576
46  + Depreciation                       33%       623,425      650,342      379,366       36,742,250
47  + Interest on S/H Loan                               0            0            0       15,595,667
48  + T-Line Principal Payments           0%             0            0            0                0
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,099,191    9,775,554    5,572,350      208,665,493
50  - Interest on S/H Loan                              (0)          (0)          (0)     (15,595,667)
51  - Principal of S/H Loan                              0            0            0      (17,880,000)
52  ADJUSTMENTS                                                                                     0
53  +/- Overhaul Reserve (on-shore)      33%      (499,631)     482,382            0       (6,231,593)
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0        1,000,000
55  +/- Undistributable Cash Flow                 (123,794)  (1,132,724)    (379,366)     (13,630,656)
56            PAN-WESTERN DISTRIBUTION   US$     8,330,710    8,022,518    4,565,461   $  137,436,890
57         LUANNAN COUNTY DISTRIBUTION   US$     1,145,055    1,102,694      627,522   $   18,890,687
1  EXHIBIT 12-3
2  JV2 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                         1            2            3            4            5            6   
4                                       % of          1999         2000         2001         2002         2003         2004   
5                                       Total    (5 months)
6  REVENUES
7   Electric Energy Revenue              50%     8,375,620   21,433,943   22,817,766   23,845,837   24,809,225   25,681,865   
8   Steam Revenue                         0%             0            0            0            0            0            0   
9   Hot Water Revenue                     0%             0            0            0            0            0            0   
10  T-Line Interest Payments              0%             0            0            0            0            0            0   
11  Interest Income on On-Shore Reserve  25%             0       23,173       65,653      102,612      142,672      163,215   
12            TOTAL OPERATING REVENUES           8,375,620   21,457,116   22,883,420   23,948,449   24,951,897   25,845,080   
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     1,989,122    5,251,283    5,776,411    6,354,052    6,989,457    7,269,035   
16  Water Usage                           0%             0            0            0            0            0            0   
17  Supplies, Spare Parts, Consumable    33%       203,347      536,837      590,520      649,572      714,530      757,401   
18  Utilities                            45%        58,133      153,472      168,819      185,701      204,271      216,528   
19  Project Management Fees              30%       105,516      260,837      268,662      276,722      285,023      293,574   
20  Other Labor & Management             30%       371,009      950,374    1,015,448    1,086,131    1,162,956    1,218,701   
21  Administrative Costs                 30%       297,917      754,392      796,759      842,370      891,521      929,525   
22  Real Estate and Stamp Taxes          40%        24,239       58,626       59,103       59,509       59,914       60,204   
23            TOTAL OPERATING EXPENSES           3,049,284    7,965,819    8,675,722    9,454,057   10,307,672   10,744,968   
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (754,653)  (1,777,426)  (1,723,315)  (1,658,588)  (1,584,472)  (1,504,289)  
27  Water Usage Payment (to JV 3)                 (565,270)  (1,452,849)  (1,557,487)  (1,671,369)  (1,795,384)  (1,884,071)  
28  Site Lease Payment (to JV 4)                  (111,111)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667)  
29                               TOTAL          (1,431,034)  (3,496,941)  (3,547,468)  (3,596,624)  (3,646,522)  (3,655,027)  
30 
31 INCOME STATEMENT
32  EBITDA                                       3,895,302    9,994,356   10,660,230   10,897,768   10,997,703   11,445,085   
33  - Depreciation                       33%       994,531    2,394,610    2,413,172    2,424,000    2,434,313    2,458,308   
34  - Interest on S/H Loan                       1,034,722    2,397,038    2,253,926    2,091,462    1,907,030    1,697,658   
35  EBT (Pre-tax Income)                         1,866,048    5,202,708    5,993,132    6,382,306    6,656,360    7,289,119   
36  - Local Income Taxes (Luannan)                       0            0            0            0            0      109,337   
37  - Federal Income Taxes (China)                       0            0      449,485      478,673      499,227    1,093,368   
38  Net Income                                   1,866,048    5,202,708    5,543,647    5,903,633    6,157,133    6,086,415   
39  - Employee Welfare Res. (on-shore)   40%        23,742       62,679       68,947       75,842       83,426       88,432   
40  - General Reserve (on-shore)         40%           980        2,353        2,353        2,353        2,353        2,353   
41  - E'prise Exp. Reserve (on-shore)    40%           980        2,353        2,353        2,353        2,353        2,353   
42          NET DISTRIBUTABLE EARNINGS           1,840,346    5,135,323    5,469,994    5,823,085    6,069,001    5,993,277   
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,840,346    5,135,323    5,469,994    5,823,085    6,069,001    5,993,277   
46  + Depreciation                       33%       994,531    2,394,610    2,413,172    2,424,000    2,434,313    2,458,308   
47  + Interest on S/H Loan                       1,034,722    2,397,038    2,253,926    2,091,462    1,907,030    1,697,658   
48  + T-Line Principal Payments           0%             0            0            0            0            0            0   
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          3,869,599    9,926,971   10,137,092   10,338,548   10,410,344   10,149,243   
50  - Interest on S/H Loan                      (1,034,722)  (2,397,038)  (2,253,926)  (2,091,462)  (1,907,030)  (1,697,658)  
51  - Principal of S/H Loan                       (379,798)    (997,746)  (1,132,662)  (1,285,822)  (1,459,693)  (1,657,074)  
52  ADJUSTMENTS                                                                                                               
53  +/- Overhaul Reserve (on-shore)      33%      (362,500)    (388,600)    (416,579)    (332,321)    (333,333)    (308,923)  
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0   
55  +/- Undistributable Cash Flow                 (252,233)  (1,008,264)    (863,931)    (805,857)    (641,287)    (492,311)  
56            PAN-WESTERN DISTRIBUTION   US$     1,617,957    4,514,769    4,808,997    5,119,421    5,335,621    5,269,047   
57         LUANNAN COUNTY DISTRIBUTION   US$       222,388      620,555      660,996      703,664      733,381      724,230
1  EXHIBIT 12-3 (Continued)
2  JV2 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                         7            8            9           10           11           12  
4                                       % of          2005         2006         2007         2008         2009         2010  
5                                       Total                                                                                
6  REVENUES
7   Electric Energy Revenue              50%    26,245,158   26,986,145   27,917,960   28,989,250   30,366,397   31,059,385  
8   Steam Revenue                         0%             0            0            0            0            0            0  
9   Hot Water Revenue                     0%             0            0            0            0            0            0  
10  T-Line Interest Payments              0%             0            0            0            0            0            0  
11  Interest Income on On-Shore Reserve  25%       177,148      181,641      175,725      207,954      190,520      199,374  
12            TOTAL OPERATING REVENUES          26,422,306   27,167,787   28,093,685   29,197,204   30,556,918   31,258,759  
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     7,559,797    7,862,189    8,176,676    8,503,743    8,843,893    9,197,649  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable    33%       802,845      851,016      902,077      956,202      994,450    1,034,228  
18  Utilities                            45%       229,519      243,291      257,888      273,361      284,296      295,667  
19  Project Management Fees              30%       302,381      311,453      320,796      330,420      340,333      350,543  
20  Other Labor & Management             30%     1,277,370    1,339,125    1,404,139    1,472,594    1,526,076    1,581,534  
21  Administrative Costs                 30%       969,343    1,011,073    1,054,813    1,100,670    1,138,712    1,178,096  
22  Real Estate and Stamp Taxes          40%        60,423       60,688       61,002       61,352       61,775       62,037  
23            TOTAL OPERATING EXPENSES          11,201,679   11,678,834   12,177,392   12,698,343   13,189,534   13,699,753  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)            (1,412,101)  (1,306,887)  (1,186,742)  (1,045,815)    (884,866)    (833,809) 
27  Water Usage Payment (to JV 3)               (1,977,509)  (2,075,965)  (2,179,722)  (2,289,081)  (2,373,288)  (2,460,644) 
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667) 
29                               TOTAL          (3,656,277)  (3,649,519)  (3,633,131)  (3,601,563)  (3,524,821)  (3,561,120) 
30 
31 INCOME STATEMENT
32  EBITDA                                      11,564,350   11,839,434   12,283,163   12,897,299   13,842,562   13,997,886  
33  - Depreciation                       33%     2,481,933    2,507,014    2,533,299    2,549,052    2,560,845    2,589,714  
34  - Interest on S/H Loan                       1,459,976    1,190,153      883,845      536,117      143,740            0  
35  EBT (Pre-tax Income)                         7,622,441    8,142,267    8,866,019    9,812,129   11,137,977   11,408,172  
36  - Local Income Taxes (Luannan)                 114,337      122,134      132,990      147,182      334,139      342,245  
37  - Federal Income Taxes (China)               1,143,366    1,221,340    1,329,903    1,471,819    1,670,697    1,711,226  
38  Net Income                                   6,364,738    6,798,793    7,403,126    8,193,128    9,133,141    9,354,701  
39  - Employee Welfare Res. (on-shore)   40%        93,738       99,362      105,323      111,643      116,109      120,753  
40  - General Reserve (on-shore)         40%         2,353        2,353        2,353        2,353        2,353        2,353  
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        2,353        2,353        2,353        2,353  
42          NET DISTRIBUTABLE EARNINGS           6,266,295    6,694,725    7,293,097    8,076,779    9,012,327    9,229,243  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   6,266,295    6,694,725    7,293,097    8,076,779    9,012,327    9,229,243  
46  + Depreciation                       33%     2,481,933    2,507,014    2,533,299    2,549,052    2,560,845    2,589,714  
47  + Interest on S/H Loan                       1,459,976    1,190,153      883,845      536,117      143,740            0  
48  + T-Line Principal Payments           0%             0            0            0            0            0            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,208,204   10,391,892   10,710,240   11,161,949   11,716,912   11,818,956  
50  - Interest on S/H Loan                      (1,459,976)  (1,190,153)    (883,845)    (536,117)    (143,740)          (0) 
51  - Principal of S/H Loan                     (1,881,145)  (2,135,516)  (2,424,283)  (2,752,097)  (1,774,164)           0  
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)      33%      (331,165)    (347,061)    (363,720)          (0)    (381,179)    (399,475) 
54  +/- Debt Service Reserve (off-shore) 25%             0            0    1,000,000            0            0            0  
55  +/- Undistributable Cash Flow                 (269,623)     (24,437)    (745,296)     203,044     (405,502)  (2,190,239) 
56            PAN-WESTERN DISTRIBUTION   US$     5,509,073    5,885,732    6,411,796    7,100,778    7,923,274    8,113,977  
57         LUANNAN COUNTY DISTRIBUTION   US$       757,222      808,993      881,301      976,001    1,089,053    1,115,265
1  EXHIBIT 12-3 (Continued)
2  JV2 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                        13           14           15           16           17           18  
4                                       % of          2011         2012         2013         2014         2015         2016  
5                                       Total                                                                                
6  REVENUES
7   Electric Energy Revenue              50%    29,512,392   30,263,152   30,991,072   31,697,288   32,382,982   33,049,383  
8   Steam Revenue                         0%             0            0            0            0            0            0  
9   Hot Water Revenue                     0%             0            0            0            0            0            0  
10  T-Line Interest Payments              0%             0            0            0            0            0            0  
11  Interest Income on On-Shore Reserve  25%       282,946      366,942      418,430      423,888      446,533      451,890  
12            TOTAL OPERATING REVENUES          29,795,338   30,630,094   31,409,501   32,121,175   32,829,515   33,501,273  
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%     9,565,555    9,948,177   10,346,104   10,759,948   11,190,346   11,637,960  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable    33%     1,075,597    1,118,621    1,163,366    1,209,900    1,258,296    1,308,628  
18  Utilities                            45%       307,494      319,794      332,586      345,889      359,725      374,114  
19  Project Management Fees              30%       361,059      371,891      383,047      394,539      406,375      418,566  
20  Other Labor & Management             30%     1,639,043    1,698,679    1,760,523    1,824,658    1,891,170    1,960,148  
21  Administrative Costs                 30%     1,218,870    1,261,085    1,304,792    1,350,046    1,396,901    1,445,417  
22  Real Estate and Stamp Taxes          40%        61,765       62,048       62,329       62,610       62,889       63,169  
23            TOTAL OPERATING EXPENSES          14,229,382   14,780,294   15,352,748   15,947,590   16,565,703   17,208,001  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (843,550)    (572,009)    (185,663)    (188,443)    (189,760)    (193,330) 
27  Water Usage Payment (to JV 3)               (2,551,266)  (2,645,278)  (2,742,811)  (2,843,996)  (2,948,972)  (3,057,884) 
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667) 
29                               TOTAL          (3,661,483)  (3,483,954)  (3,195,141)  (3,299,106)  (3,405,399)  (3,517,881) 
30 
31 INCOME STATEMENT
32  EBITDA                                      11,904,473   12,365,845   12,861,613   12,874,479   12,858,414   12,775,390  
33  - Depreciation                       33%     2,619,968    1,776,593      576,649      585,283      589,372      600,460  
34  - Interest on S/H Loan                               0            0            0            0            0            0  
35  EBT (Pre-tax Income)                         9,284,505   10,589,252   12,284,964   12,289,197   12,269,042   12,174,930  
36  - Local Income Taxes (Luannan)                 278,535      317,678      368,549      368,676      368,071      365,248  
37  - Federal Income Taxes (China)               1,392,676    1,588,388    1,842,745    1,843,380    1,840,356    1,826,240  
38  Net Income                                   7,613,294    8,683,187   10,073,670   10,077,141   10,060,614    9,983,443  
39  - Employee Welfare Res. (on-shore)   40%       125,583      130,606      135,831      141,264      146,914      152,791  
40  - General Reserve (on-shore)         40%         2,353        2,353        2,353        2,353        2,353        2,353  
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        2,353        2,353        2,353        2,353  
42          NET DISTRIBUTABLE EARNINGS           7,483,005    8,547,874    9,933,134    9,931,172    9,908,994    9,825,946  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   7,483,005    8,547,874    9,933,134    9,931,172    9,908,994    9,825,946  
46  + Depreciation                       33%     2,619,968    1,776,593      576,649      585,283      589,372      600,460  
47  + Interest on S/H Loan                               0            0            0            0            0            0  
48  + T-Line Principal Payments           0%             0            0            0            0            0            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,102,973   10,324,467   10,509,783   10,516,454   10,498,366   10,426,406  
50  - Interest on S/H Loan                              (0)          (0)          (0)          (0)          (0)          (0) 
51  - Principal of S/H Loan                              0            0            0            0            0            0  
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)      33%      (418,650)    (433,721)    (449,335)          (0)    (465,511)    (482,270) 
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0  
55  +/- Undistributable Cash Flow               (2,201,318)  (1,342,872)    (127,314)    (585,283)    (123,861)    (118,190) 
56            PAN-WESTERN DISTRIBUTION   US$     6,578,756    7,514,946    8,732,810    8,731,085    8,711,587    8,638,575  
57         LUANNAN COUNTY DISTRIBUTION   US$       904,249    1,032,929    1,200,324    1,200,087    1,197,407    1,187,371
1  EXHIBIT 12-3 (Continued)
2  JV2 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                        19           20           21
4                                       % of          2017         2018         2019            Total
5                                       Total                              (7 months)
6  REVENUES
7   Electric Energy Revenue              50%    33,435,357   33,856,545   19,749,652      573,466,374
8   Steam Revenue                         0%             0            0            0                0
9   Hot Water Revenue                     0%             0            0            0                0
10  T-Line Interest Payments              0%             0            0            0                0
11  Interest Income on On-Shore Reserve  25%       457,050      462,444      273,115        5,212,925
12            TOTAL OPERATING REVENUES          33,892,407   34,318,989   20,022,767      578,679,299
13 
14 OPERATING EXPENSES
15  Coal Delivered                       50%    12,103,478   12,587,618    7,342,777      179,255,271
16  Water Usage                           0%             0            0            0                0
17  Supplies, Spare Parts, Consumable    33%     1,360,973    1,415,412      858,683       19,762,503
18  Utilities                            45%       389,078      404,641      245,482        5,649,751
19  Project Management Fees              30%       431,123      444,057      266,804        6,923,721
20  Other Labor & Management             30%     2,031,685    2,105,877    1,260,562       30,577,802
21  Administrative Costs                 30%     1,495,652    1,547,669      920,151       22,905,773
22  Real Estate and Stamp Taxes          40%        63,385       63,615       37,109        1,227,790
23            TOTAL OPERATING EXPENSES          17,875,375   18,568,889   10,931,569      266,302,610
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Payment (to JV 3)              (200,724)    (209,390)    (122,144)     (18,377,978)
27  Water Usage Payment (to JV 3)               (3,170,882)  (3,288,119)  (1,975,612)     (47,507,458)
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (155,556)      (5,333,333)
29                               TOTAL          (3,638,273)  (3,764,177)  (2,253,312)     (71,218,769)
30 
31 INCOME STATEMENT
32  EBITDA                                      12,378,759   11,985,923    6,837,885      241,157,920
33  - Depreciation                       33%       623,425      650,342      379,366       36,742,250
34  - Interest on S/H Loan                               0            0            0       15,595,667
35  EBT (Pre-tax Income)                        11,755,334   11,335,581    6,458,519      188,820,004
36  - Local Income Taxes (Luannan)                 352,660      340,067      193,756        4,255,604
37  - Federal Income Taxes (China)               1,763,300    1,700,337      968,778       25,835,302
38  Net Income                                   9,639,374    9,295,177    5,295,986      158,729,098
39  - Employee Welfare Res. (on-shore)   40%       158,903      165,259      100,257        2,307,403
40  - General Reserve (on-shore)         40%         2,353        2,353        1,373           47,059
41  - E'prise Exp. Reserve (on-shore)    40%         2,353        2,353        1,373           47,059
42          NET DISTRIBUTABLE EARNINGS           9,475,765    9,125,212    5,192,984      156,327,576
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   9,475,765    9,125,212    5,192,984      156,327,576
46  + Depreciation                       33%       623,425      650,342      379,366       36,742,250
47  + Interest on S/H Loan                               0            0            0       15,595,667
48  + T-Line Principal Payments           0%             0            0            0                0
49  CASH AVAILABLE FOR SHAREHOLDER LOAN         10,099,191    9,775,554    5,572,350      208,665,493
50  - Interest on S/H Loan                              (0)          (0)          (0)     (15,595,667)
51  - Principal of S/H Loan                              0            0            0      (17,880,000)
52  ADJUSTMENTS                                                                                     0
53  +/- Overhaul Reserve (on-shore)      33%      (499,631)     482,382            0       (6,231,593)
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0        1,000,000
55  +/- Undistributable Cash Flow                 (123,794)  (1,132,724)    (379,366)     (13,630,656)
56            PAN-WESTERN DISTRIBUTION   US$     8,330,710    8,022,518    4,565,461   $  137,436,890
57         LUANNAN COUNTY DISTRIBUTION   US$     1,145,055    1,102,694      627,522   $   18,890,687
1  EXHIBIT 12-4
2  JV3 INCOME AND CASH FLOW STATEMENTS
3   -- BASE CASE                                         1            2            3            4            5            6    
4                                       % OF          1999         2000         2001         2002         2003         2004    
5                                       TOTAL    (5 months)
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0    
8   Steam Revenue                        50%       477,283    1,202,752    1,262,890    1,326,034    1,392,336    1,434,106    
9   Hot Water Revenue                    50%       166,040      418,420      439,341      461,308      484,373      498,905    
10  T-Line Interest Payments              0%             0            0            0            0            0            0    
11  Interest Income on On-Shore Reserves 25%             0       23,173       65,653      102,612      142,672      163,215    
12            TOTAL OPERATING REVENUES             643,322    1,644,345    1,767,884    1,889,954    2,019,381    2,096,226    
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0    
16  Water Usage                         100%       139,831      369,154      406,069      446,676      491,344      520,824    
17  Supplies, Spare Parts, Consumable    33%       203,347      536,837      590,520      649,572      714,530      757,401    
18  Utilities                            10%        12,919       34,105       37,515       41,267       45,394       48,117    
19  Project Management Fees              30%       105,516      260,837      268,662      276,722      285,023      293,574    
20  Other Labor & Management             30%       371,009      950,374    1,015,448    1,086,131    1,162,956    1,218,701    
21  Administrative Costs                 30%       297,917      754,392      796,759      842,370      891,521      929,525    
22  Real Estate and Stamp Taxes          10%         6,060       14,656       14,776       14,877       14,979       15,051    
23            TOTAL OPERATING EXPENSES           1,136,599    2,920,354    3,129,749    3,357,615    3,605,746    3,783,193    
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue (from JV 1 & 2)       1,509,307    3,554,852    3,446,629    3,317,176    3,168,943    3,008,578    
27  Water Usage Revenue (from JV 1 & 2)          1,130,539    2,905,698    3,114,973    3,342,738    3,590,767    3,768,142    
28  Site Lease Payment (to JV 4)                  (111,111)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667)   
29                               TOTAL           2,528,735    6,193,883    6,294,936    6,393,247    6,493,044    6,510,054    
30 
31 INCOME STATEMENT
32  EBITDA                                       2,035,458    4,917,874    4,933,071    4,925,586    4,906,679    4,823,086    
33  - Depreciation                       25%       753,433    1,814,098    1,828,161    1,836,364    1,844,176    1,862,354    
34  - Interest on S/H Loan                       1,022,222    2,368,080    2,226,697    2,066,196    1,883,992    1,677,150    
35  EBT (Pre-tax Income)                           259,803      735,695      878,213    1,023,026    1,178,510    1,283,582    
36  - Local Income Taxes (Luannan)                       0            0            0            0            0       19,254    
37  - Federal Income Taxes (China)                       0            0       65,866       76,727       88,388      192,537    
38  Net Income                                     259,803      735,695      812,347      946,299    1,090,122    1,071,791    
39  - Employee Welfare Res. (on-shore)   10%         5,936       15,670       17,237       18,960       20,857       22,108    
40  - General Reserve (on-shore)         10%           245          588          588          588          588          588    
41  - E'prise Exp. Reserve (on-shore)    10%           245          588          588          588          588          588    
42          NET DISTRIBUTABLE EARNINGS             253,377      718,849      793,933      926,162    1,068,089    1,048,507    
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                     253,377      718,849      793,933      926,162    1,068,089    1,048,507    
46  + Depreciation                       25%       753,433    1,814,098    1,828,161    1,836,364    1,844,176    1,862,354    
47  + Interest on S/H Loan                       1,022,222    2,368,080    2,226,697    2,066,196    1,883,992    1,677,150    
48  + T-Line Principal Payments           0%             0            0            0            0            0            0    
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          2,029,033    4,901,028    4,848,791    4,828,722    4,796,257    4,588,011    
50  - Interest on S/H Loan                      (1,022,222)  (2,368,080)  (2,226,697)  (2,066,196)  (1,883,992)  (1,677,150)  
51  - Principal of S/H Loan                       (375,210)    (985,693)  (1,118,979)  (1,270,289)  (1,442,059)  (1,637,055)  
52  ADJUSTMENTS                                                                                                                
53  +/- Overhaul Reserve (on-shore)      33%      (362,500)    (388,600)    (416,579)    (332,321)    (333,333)    (308,923)   
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0    
55  +/- Undistributable Cash Flow                  (15,723)    (439,806)    (292,602)    (233,754)     (68,784)      83,624    
56            PAN-WESTERN DISTRIBUTION   US$       222,759      631,983      697,994      814,244      939,021      921,805   
57         LUANNAN COUNTY DISTRIBUTION   US$        30,618       86,866       95,939      111,918      129,068      126,702
1  EXHIBIT 12-4 (Continued)
2  JV3 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                         7            8            9           10           11           12    
4                                       % OF          2005         2006         2007         2008         2009         2010    
5                                       TOTAL                                                                                  
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0    
8   Steam Revenue                        50%     1,477,129    1,521,443    1,567,086    1,614,099    1,646,381    1,679,308    
9   Hot Water Revenue                    50%       513,872      529,288      545,167      561,522      572,752      584,207    
10  T-Line Interest Payments              0%             0            0            0            0            0            0    
11  Interest Income on On-Shore Reserves 25%       177,148      181,641      175,725      207,954      190,520      199,374    
12            TOTAL OPERATING REVENUES           2,168,149    2,232,372    2,287,977    2,383,574    2,409,653    2,462,889    
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0    
16  Water Usage                         100%       552,074      585,198      620,310      657,529      683,830      711,183    
17  Supplies, Spare Parts, Consumable    33%       802,845      851,016      902,077      956,202      994,450    1,034,228    
18  Utilities                            10%        51,004       54,065       57,308       60,747       63,177       65,704    
19  Project Management Fees              30%       302,381      311,453      320,796      330,420      340,333      350,543    
20  Other Labor & Management             30%     1,277,370    1,339,125    1,404,139    1,472,594    1,526,076    1,581,534    
21  Administrative Costs                 30%       969,343    1,011,073    1,054,813    1,100,670    1,138,712    1,178,096    
22  Real Estate and Stamp Taxes          10%        15,106       15,172       15,250       15,338       15,444       15,509    
23            TOTAL OPERATING EXPENSES           3,970,124    4,167,102    4,374,695    4,593,500    4,762,021    4,936,796    
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue (from JV 1 & 2)       2,824,202    2,613,774    2,373,483    2,091,630    1,769,732    1,667,619    
27  Water Usage Revenue (from JV 1 & 2)          3,955,018    4,151,930    4,359,444    4,578,162    4,746,577    4,921,287    
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (266,667)    (266,667)    (266,667)    (266,667)   
29                               TOTAL           6,512,553    6,499,037    6,466,261    6,403,125    6,249,642    6,322,239    
30 
31 INCOME STATEMENT
32  EBITDA                                       4,710,579    4,564,307    4,379,543    4,193,199    3,897,275    3,848,332    
33  - Depreciation                       25%     1,880,253    1,899,253    1,919,166    1,931,100    1,940,034    1,961,904    
34  - Interest on S/H Loan                       1,442,338    1,175,775      873,168      529,641      142,004            0    
35  EBT (Pre-tax Income)                         1,387,988    1,489,279    1,587,210    1,732,458    1,815,237    1,886,427    
36  - Local Income Taxes (Luannan)                  20,820       22,339       23,808       25,987       54,457       56,593    
37  - Federal Income Taxes (China)                 208,198      223,392      238,082      259,869      272,286      282,964    
38  Net Income                                   1,158,970    1,243,548    1,325,320    1,446,603    1,488,494    1,546,870    
39  - Employee Welfare Res. (on-shore)   10%        23,434       24,840       26,331       27,911       29,027       30,188    
40  - General Reserve (on-shore)         10%           588          588          588          588          588          588    
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          588          588          588          588    
42          NET DISTRIBUTABLE EARNINGS           1,134,359    1,217,531    1,297,813    1,417,516    1,458,291    1,515,506    
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,134,359    1,217,531    1,297,813    1,417,516    1,458,291    1,515,506    
46  + Depreciation                       25%     1,880,253    1,899,253    1,919,166    1,931,100    1,940,034    1,961,904    
47  + Interest on S/H Loan                       1,442,338    1,175,775      873,168      529,641      142,004            0    
48  + T-Line Principal Payments           0%             0            0            0            0            0            0    
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          4,456,950    4,292,560    4,090,146    3,878,257    3,540,328    3,477,410    
50  - Interest on S/H Loan                      (1,442,338)  (1,175,775)    (873,168)    (529,641)    (142,004)          (0)   
51  - Principal of S/H Loan                     (1,858,420)  (2,109,717)  (2,394,996)  (2,718,850)  (1,752,731)           0    
52  ADJUSTMENTS                                                                                                                
53  +/- Overhaul Reserve (on-shore)      33%      (331,165)    (347,061)    (363,720)          (0)    (381,179)    (399,475)   
54  +/- Debt Service Reserve (off-shore) 25%             0            0    1,000,000            0            0            0    
55  +/- Undistributable Cash Flow                  309,333      557,525     (160,450)     787,750      193,876   (1,562,429)  
56            PAN-WESTERN DISTRIBUTION   US$       997,283    1,070,404    1,140,985    1,246,222    1,282,070    1,332,371   
57         LUANNAN COUNTY DISTRIBUTION   US$       137,076      147,127      156,828      171,293      176,220      183,134
1  Exhibit 12-4 (Continued)
2  JV3 Income and Cash Flow Statements
3   -- Base Case                                        13           14          15           16           17           18
4                                       % OF          2011         2012        2013         2014         2015         2016
5                                       TOTAL
6  REVENUES
7   Electric Energy Revenue               0%             0            0           0            0            0            0
8   Steam Revenue                        50%     1,712,894    1,747,152   1,782,095    1,817,737    1,854,092    1,891,174
9   Hot Water Revenue                    50%       595,891      607,809     619,965      632,364      645,012      657,912
10  T-Line Interest Payments              0%             0            0           0            0            0            0
11  Interest Income on On-Shore Reserves 25%       282,946      366,942     418,430      423,888      446,533      451,890
12            TOTAL OPERATING REVENUES           2,591,732    2,721,903   2,820,490    2,873,989    2,945,637    3,000,975
13
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0           0            0            0            0
16  Water Usage                         100%       739,631      769,216     799,984      831,984      865,263      899,874
17  Supplies, Spare Parts, Consumable    33%     1,075,597    1,118,621   1,163,366    1,209,900    1,258,296    1,308,628
18  Utilities                            10%        68,332       71,065      73,908       76,864       79,939       83,136
19  Project Management Fees              30%       361,059      371,891     383,047      394,539      406,375      418,566
20  Other Labor & Management             30%     1,639,043    1,698,679   1,760,523    1,824,658    1,891,170    1,960,148
21  Administrative Costs                 30%     1,218,870    1,261,085   1,304,792    1,350,046    1,396,901    1,445,417
22  Real Estate and Stamp Taxes          10%        15,441       15,512      15,582       15,652       15,722       15,792
23            TOTAL OPERATING EXPENSES           5,117,972    5,306,069   5,501,203    5,703,644    5,913,667    6,131,561
24
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue (from JV 1 & 2)       1,687,101    1,144,018     371,327      376,887      379,520      386,660
27  Water Usage Revenue (from JV 1 & 2)          5,102,531    5,290,557   5,485,621    5,687,991    5,897,945    6,115,769
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)   (266,667)    (266,667)    (266,667)    (266,667)
29                               Total           6,522,965    6,167,908   5,590,281    5,798,211    6,010,798    6,235,762
30
31 INCOME STATEMENT
32  EBITDA                                       3,996,725    3,583,743   2,909,568    2,968,557    3,042,768    3,105,176
33  - Depreciation                       25%     1,984,824    1,345,904     436,855      443,396      446,494      454,894
34  - Interest on S/H Loan                               0            0           0            0            0            0
35  EBT (Pre-tax Income)                         2,011,901    2,237,839   2,472,713    2,525,161    2,596,274    2,650,282
36  - Local Income Taxes (Luannan)                  60,357       67,135      74,181       75,755       77,888       79,508
37  - Federal Income Taxes (China)                 301,785      335,676     370,907      378,774      389,441      397,542
38  Net Income                                   1,649,758    1,835,028   2,027,624    2,070,632    2,128,945    2,173,232
39  - Employee Welfare Res. (on-shore)   10%        31,396       32,652      33,958       35,316       36,729       38,198
40  - General Reserve (on-shore)         10%           588          588         588          588          588          588
41  - E'prise Exp. Reserve (on-shore)    10%           588          588         588          588          588          588
42          NET DISTRIBUTABLE EARNINGS           1,617,186    1,801,200   1,992,490    2,034,139    2,091,040    2,133,857
43
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,617,186    1,801,200   1,992,490    2,034,139    2,091,040    2,133,857
46  + Depreciation                       25%     1,984,824    1,345,904     436,855      443,396      446,494      454,894
47  + Interest on S/H Loan                               0            0           0            0            0            0
48  + T-Line Principal Payments           0%             0            0           0            0            0            0
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          3,602,010    3,147,103   2,429,346    2,477,535    2,537,534    2,588,751
50  - Interest on S/H Loan                              (0)          (0)         (0)          (0)          (0)          (0)
51  - Principal of S/H Loan                              0            0           0            0            0            0
52  ADJUSTMENTS
53  +/- Overhaul Reserve (on-shore)      33%      (418,650)    (433,721)   (449,335)          (0)    (465,511)    (482,270)
54  +/- Debt Service Reserve (off-shore) 25%             0            0           0            0            0            0
55  +/- Undistributable Cash Flow               (1,566,174)    (912,182)     12,480     (443,396)      19,017       27,376
56            PAN-WESTERN DISTRIBUTION   US$     1,421,765    1,583,542   1,751,717    1,788,333    1,838,358    1,876,001
57         LUANNAN COUNTY DISTRIBUTION   US$       195,421      217,658     240,773      245,806      252,682      257,856
1  EXHIBIT 12-4 (Continued)
2  JV3 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                        19           20           21
4                                       % OF          2017         2018         2019            TOTAL
5                                       TOTAL                              (7 months)
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0                0
8   Steam Revenue                        50%     1,928,997    1,967,577    1,147,753       32,450,318
9   Hot Water Revenue                    50%       671,070      684,492      399,287       11,288,996
10  T-Line Interest Payments              0%             0            0            0                0
11  Interest Income on On-Shore Reserves 25%       457,050      462,444      273,115        5,212,925
12            TOTAL OPERATING REVENUES           3,057,118    3,114,513    1,820,155       48,952,239
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0                0
16  Water Usage                         100%       935,869      973,303      590,471       13,589,617
17  Supplies, Spare Parts, Consumable    33%     1,360,973    1,415,412      858,683       19,762,503
18  Utilities                            10%        86,462       89,920       54,552        1,255,500
19  Project Management Fees              30%       431,123      444,057      266,804        6,923,721
20  Other Labor & Management             30%     2,031,685    2,105,877    1,260,562       30,577,802
21  Administrative Costs                 30%     1,495,652    1,547,669      920,151       22,905,773
22  Real Estate and Stamp Taxes          10%        15,846       15,904        9,277          306,948
23            TOTAL OPERATING EXPENSES           6,357,610    6,592,143    3,960,501       95,321,863
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue (from JV 1 & 2)         401,448      418,781      244,289       36,755,955
27  Water Usage Revenue (from JV 1 & 2)          6,341,764    6,576,239    3,951,224       95,014,916
28  Site Lease Payment (to JV 4)                  (266,667)    (266,667)    (155,556)      (5,333,333)
29                               TOTAL           6,476,545    6,728,353    4,039,957      126,437,538
30 
31 INCOME STATEMENT
32  EBITDA                                       3,176,053    3,250,723    1,899,611       80,067,913
33  - Depreciation                       25%       472,292      492,683      287,399       27,835,038
34  - Interest on S/H Loan                               0            0            0       15,407,263
35  EBT (Pre-tax Income)                         2,703,761    2,758,040    1,612,213       36,825,613
36  - Local Income Taxes (Luannan)                  81,113       82,741       48,366          870,303
37  - Federal Income Taxes (China)                 405,564      413,706      241,832        5,143,536
38  Net Income                                   2,217,084    2,261,593    1,322,014       30,811,774
39  - Employee Welfare Res. (on-shore)   10%        39,726       41,315       25,064          576,851
40  - General Reserve (on-shore)         10%           588          588          343           11,765
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          343           11,765
42          NET DISTRIBUTABLE EARNINGS           2,176,182    2,219,102    1,296,264       30,211,393
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   2,176,182    2,219,102    1,296,264       30,211,393
46  + Depreciation                       25%       472,292      492,683      287,399       27,835,038
47  + Interest on S/H Loan                               0            0            0       15,407,263
48  + T-Line Principal Payments           0%             0            0            0                0
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          2,648,474    2,711,785    1,583,663       73,453,694
50  - Interest on S/H Loan                              (0)          (0)          (0)     (15,407,263)
51  - Principal of S/H Loan                              0            0            0      (17,664,000)
52  ADJUSTMENTS                                                                                     0
53  +/- Overhaul Reserve (on-shore)      33%      (499,631)     482,382            0       (6,231,593)
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0        1,000,000
55  +/- Undistributable Cash Flow                   27,340     (975,065)    (287,399)      (4,939,444)
56            PAN-WESTERN DISTRIBUTION   US$     1,913,211    1,950,944    1,139,623   $   26,560,636
57         LUANNAN COUNTY DISTRIBUTION   US$       262,971      268,157      156,641   $    3,650,757
1  EXHIBIT 12-5
2  JV4 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                         1            2            3            4            5            6   
4                                       % OF          1999         2000         2001         2002         2003         2004   
5                                       TOTAL    (5 months)
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0   
8   Steam Revenue                        50%       477,283    1,202,752    1,262,890    1,326,034    1,392,336    1,434,106   
9   Hot Water Revenue                    50%       166,040      418,420      439,341      461,308      484,373      498,905   
10  T-Line Interest Payments            100%       609,444    1,427,937    1,340,421    1,242,403    1,132,622    1,009,668   
11  Interest Income on On-Shore Reserves 25%             0       23,173       65,653      102,612      142,672      163,215   
12            TOTAL OPERATING REVENUES           1,252,766    3,072,283    3,108,305    3,132,357    3,152,003    3,105,894   
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0   
16  Water Usage                           0%             0            0            0            0            0            0   
17  Supplies, Spare Parts, Consumable     0%             0            0            0            0            0            0   
18  Utilities                             0%             0            0            0            0            0            0   
19  Project Management Fees              10%        35,172       86,946       89,554       92,241       95,008       97,858   
20  Other Labor & Management             10%        57,719      142,682      146,963      151,372      155,913      160,590   
21  Administrative Costs                 10%        99,306      251,464      265,586      280,790      297,174      309,842   
22  Real Estate and Stamp Taxes          10%         6,060       14,656       14,776       14,877       14,979       15,051   
23            TOTAL OPERATING EXPENSES             198,257      495,748      516,879      539,280      563,073      583,341   
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue                               0            0            0            0            0            0   
27  Water Usage Revenue                                  0            0            0            0            0            0   
28  Site Lease Payment (from JV 1, 2, & 3)         333,333      800,000      800,000      800,000      800,000      800,000   
29                               TOTAL             333,333      800,000      800,000      800,000      800,000      800,000   
30 
31 INCOME STATEMENT
32  EBITDA                                       1,387,843    3,376,534    3,391,426    3,393,077    3,388,930    3,322,553   
33  - Depreciation                        9%       271,236      653,075      658,138      661,091      663,904      670,448   
34  - Interest on S/H Loan                       1,031,771    2,390,200    2,247,497    2,085,496    1,901,590    1,692,816   
35  EBT (Pre-tax Income)                            84,836      333,259      485,792      646,490      823,437      959,290   
36  - Local Income Taxes (Luannan)                       0            0        7,287        9,697       12,352       28,779   
37  - Federal Income Taxes (China)                  25,451       99,978      145,737      193,947      247,031      287,787   
38  Net Income                                      59,385      233,281      332,767      442,845      564,054      642,724   
39  - Employee Welfare Res. (on-shore)   10%         5,936       15,670       17,237       18,960       20,857       22,108   
40  - General Reserve (on-shore)         10%           245          588          588          588          588          588   
41  - E'prise Exp. Reserve (on-shore)    10%           245          588          588          588          588          588   
42          NET DISTRIBUTABLE EARNINGS              52,960      216,435      314,354      422,708      542,021      619,440   
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                      52,960      216,435      314,354      422,708      542,021      619,440   
46  + Depreciation                        9%       271,236      653,075      658,138      661,091      663,904      670,448   
47  + Interest on S/H Loan                       1,031,771    2,390,200    2,247,497    2,085,496    1,901,590    1,692,816   
48  + T-Line Principal Payments         100%       289,406      729,302      816,818      914,836    1,024,617    1,147,571   
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          1,645,372    3,989,013    4,036,807    4,084,132    4,132,132    4,130,274   
50  - Interest on S/H Loan                      (1,031,771)  (2,390,200)  (2,247,497)  (2,085,496)  (1,901,590)  (1,692,816)  
51  - Principal of S/H Loan                       (378,715)    (994,900)  (1,129,432)  (1,282,155)  (1,455,529)  (1,652,347)  
52  ADJUSTMENTS                                                                                                               
53  +/- Overhaul Reserve (on-shore)       0%             0            0            0            0            0            0   
54  +/- Debt Service Reserve (off-shore  25%             0            0            0            0            0            0   
55  +/- Undistributable Cash Flow                 (181,926)    (387,477)    (345,524)    (293,773)    (232,991)    (165,671)  
56            PAN-WESTERN DISTRIBUTION   US$        46,560      190,281      276,367      371,628      476,523      544,586   
57         LUANNAN COUNTY DISTRIBUTION   US$         6,400       26,154       37,987       51,080       65,498       74,853
1  EXHIBIT 12-5 (Continued)
2  JV4 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                         7            8            9           10           11           12  
4                                       % OF          2005         2006         2007         2008         2009         2010  
5                                       TOTAL                                                                                
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0  
8   Steam Revenue                        50%     1,477,129    1,521,443    1,567,086    1,614,099    1,646,381    1,679,308  
9   Hot Water Revenue                    50%       513,872      529,288      545,167      561,522      572,752      584,207  
10  T-Line Interest Payments            100%       871,960      717,726      544,985      351,514      134,827            0  
11  Interest Income on On-Shore Reserves 25%       177,148      181,641      175,725      207,954      190,520      199,374  
12            TOTAL OPERATING REVENUES           3,040,109    2,950,098    2,832,962    2,735,089    2,544,480    2,462,889  
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0  
16  Water Usage                           0%             0            0            0            0            0            0  
17  Supplies, Spare Parts, Consumable     0%             0            0            0            0            0            0  
18  Utilities                             0%             0            0            0            0            0            0  
19  Project Management Fees              10%       100,794      103,818      106,932      110,140      113,444      116,848  
20  Other Labor & Management             10%       165,408      170,370      175,481      180,746      186,168      191,753  
21  Administrative Costs                 10%       323,114      337,024      351,604      366,890      379,571      392,699  
22  Real Estate and Stamp Taxes          10%        15,106       15,172       15,250       15,338       15,444       15,509  
23            TOTAL OPERATING EXPENSES             604,422      626,384      649,268      673,114      694,627      716,808  
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue                               0            0            0            0            0            0  
27  Water Usage Revenue                                  0            0            0            0            0            0  
28  Site Lease Payment (from JV 1, 2, & 3)         800,000      800,000      800,000      800,000      800,000      800,000  
29                               TOTAL             800,000      800,000      800,000      800,000      800,000      800,000  
30 
31 INCOME STATEMENT
32  EBITDA                                       3,235,687    3,123,714    2,983,694    2,861,975    2,649,854    2,546,081  
33  - Depreciation                        9%       676,891      683,731      690,900      695,196      698,412      706,286  
34  - Interest on S/H Loan                       1,455,811    1,186,758      881,324      534,588      143,330            0  
35  EBT (Pre-tax Income)                         1,102,985    1,253,225    1,411,471    1,632,191    1,808,111    1,839,795  
36  - Local Income Taxes (Luannan)                  33,090       37,597       42,344       48,966       54,243       55,194  
37  - Federal Income Taxes (China)                 330,895      375,968      423,441      489,657      542,433      551,939  
38  Net Income                                     739,000      839,661      945,685    1,093,568    1,211,435    1,232,663  
39  - Employee Welfare Res. (on-shore)   10%        23,434       24,840       26,331       27,911       29,027       30,188  
40  - General Reserve (on-shore)         10%           588          588          588          588          588          588  
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          588          588          588          588  
42          NET DISTRIBUTABLE EARNINGS             714,389      813,644      918,178    1,064,481    1,181,231    1,201,298  
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                     714,389      813,644      918,178    1,064,481    1,181,231    1,201,298  
46  + Depreciation                        9%       676,891      683,731      690,900      695,196      698,412      706,286  
47  + Interest on S/H Loan                       1,455,811    1,186,758      881,324      534,588      143,330            0  
48  + T-Line Principal Payments         100%     1,285,279    1,439,513    1,612,254    1,805,725    1,123,562            0  
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          4,132,370    4,123,646    4,102,656    4,099,990    3,146,535    1,907,584  
50  - Interest on S/H Loan                      (1,455,811)  (1,186,758)    (881,324)    (534,588)    (143,330)          (0) 
51  - Principal of S/H Loan                     (1,875,780)  (2,129,424)  (2,417,368)  (2,744,247)  (1,769,104)           0  
52  ADJUSTMENTS                                                                                                              
53  +/- Overhaul Reserve (on-shore)       0%             0            0            0            0            0            0  
54  +/- Debt Service Reserve (off-shore) 25%             0            0    1,000,000            0            0            0  
55  +/- Undistributable Cash Flow                  (86,391)       6,181     (885,786)     243,326      (52,871)    (706,286) 
56            PAN-WESTERN DISTRIBUTION   US$       628,062      715,323      807,225      935,848    1,038,491    1,056,133  
57         LUANNAN COUNTY DISTRIBUTION   US$        86,327       98,321      110,953      128,632      142,740      145,165
1  EXHIBIT 12-5 (Continued)
2  JV4 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                        13           14            15           16           17           18  
4                                       % OF          2011         2012          2013         2014         2015         2016  
5                                       TOTAL                                                                                 
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0            0            0            0   
8   Steam Revenue                        50%     1,712,894    1,747,152    1,782,095    1,817,737    1,854,092    1,891,174   
9   Hot Water Revenue                    50%       595,891      607,809      619,965      632,364      645,012      657,912   
10  T-Line Interest Payments            100%             0            0            0            0            0            0   
11  Interest Income on On-Shore Reserves 25%       282,946      366,942      418,430      423,888      446,533      451,890   
12            TOTAL OPERATING REVENUES           2,591,732    2,721,903    2,820,490    2,873,989    2,945,637    3,000,975   
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0            0            0            0   
16  Water Usage                           0%             0            0            0            0            0            0   
17  Supplies, Spare Parts, Consumable     0%             0            0            0            0            0            0   
18  Utilities                             0%             0            0            0            0            0            0   
19  Project Management Fees              10%       120,353      123,964      127,682      131,513      135,458      139,522   
20  Other Labor & Management             10%       197,506      203,431      209,534      215,820      222,294      228,963   
21  Administrative Costs                 10%       406,290      420,362      434,931      450,015      465,634      481,806   
22  Real Estate and Stamp Taxes          10%        15,441       15,512       15,582       15,652       15,722       15,792   
23            TOTAL OPERATING EXPENSES             739,590      763,268      787,729      813,000      839,109      866,083   
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue                               0            0            0            0            0            0   
27  Water Usage Revenue                                  0            0            0            0            0            0   
28  Site Lease Payment (from JV 1, 2, & 3)         800,000      800,000      800,000      800,000      800,000      800,000   
29                               TOTAL             800,000      800,000      800,000      800,000      800,000      800,000   
30 
31 INCOME STATEMENT
32  EBITDA                                       2,652,142    2,758,635    2,832,761    2,860,989    2,906,528    2,934,892   
33  - Depreciation                        9%       714,537      484,525      157,268      159,623      160,738      163,762   
34  - Interest on S/H Loan                               0            0            0            0            0            0   
35  EBT (Pre-tax Income)                         1,937,606    2,274,110    2,675,493    2,701,366    2,745,791    2,771,131   
36  - Local Income Taxes (Luannan)                  58,128       68,223       80,265       81,041       82,374       83,134   
37  - Federal Income Taxes (China)                 581,282      682,233      802,648      810,410      823,737      831,339   
38  Net Income                                   1,298,196    1,523,653    1,792,580    1,809,916    1,839,680    1,856,658   
39  - Employee Welfare Res. (on-shore)   10%        31,396       32,652       33,958       35,316       36,729       38,198   
40  - General Reserve (on-shore)         10%           588          588          588          588          588          588   
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          588          588          588          588   
42          NET DISTRIBUTABLE EARNINGS           1,265,623    1,489,825    1,757,446    1,773,423    1,801,775    1,817,283   
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,265,623    1,489,825    1,757,446    1,773,423    1,801,775    1,817,283   
46  + Depreciation                        9%       714,537      484,525      157,268      159,623      160,738      163,762   
47  + Interest on S/H Loan                               0            0            0            0            0            0   
48  + T-Line Principal Payments         100%             0            0            0            0            0            0   
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          1,980,160    1,974,351    1,914,714    1,933,046    1,962,512    1,981,045   
50  - Interest on S/H Loan                              (0)          (0)          (0)          (0)          (0)          (0)  
51  - Principal of S/H Loan                              0            0            0            0            0            0   
52  ADJUSTMENTS                                                                                                               
53  +/- Overhaul Reserve (on-shore)       0%             0            0            0            0            0            0   
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0            0            0            0   
55  +/- Undistributable Cash Flow                 (714,537)    (484,525)    (157,268)    (159,623)    (160,738)    (163,762)  
56            PAN-WESTERN DISTRIBUTION   US$     1,112,685    1,309,794    1,545,076    1,559,122    1,584,047    1,597,682   
57         LUANNAN COUNTY DISTRIBUTION   US$       152,938      180,031      212,370      214,301      217,727      219,601
1  EXHIBIT 12-5 (Continued)
2  JV4 INCOME AND CASH FLOW STATEMENTS
3  -- BASE CASE                                        19           20           21
4                                       % OF          2017         2018         2019           Total
5                                       TOTAL                              (7 months)
6  REVENUES
7   Electric Energy Revenue               0%             0            0            0                0
8   Steam Revenue                        50%     1,928,997    1,967,577    1,147,753       32,450,318
9   Hot Water Revenue                    50%       671,070      684,492      399,287       11,288,996
10  T-Line Interest Payments            100%             0            0            0        9,383,509
11  Interest Income on On-Shore Reserves 25%       457,050      462,444      273,115        5,212,925
12            TOTAL OPERATING REVENUES           3,057,118    3,114,513    1,820,155       58,335,748
13 
14 OPERATING EXPENSES
15  Coal Delivered                        0%             0            0            0                0
16  Water Usage                           0%             0            0            0                0
17  Supplies, Spare Parts, Consumable     0%             0            0            0                0
18  Utilities                             0%             0            0            0                0
19  Project Management Fees              10%       143,708      148,019       88,935        2,307,907
20  Other Labor & Management             10%       235,832      242,907      141,696        3,783,146
21  Administrative Costs                 10%       498,551      515,890      306,717        7,635,258
22  Real Estate and Stamp Taxes          10%        15,846       15,904        9,277          306,948
23            TOTAL OPERATING EXPENSES             893,937      922,719      546,625       14,033,259
24 
25 INTERCOMPANY EXPENSES/REVENUES
26  Water Capacity Revenue                               0            0            0                0
27  Water Usage Revenue                                  0            0            0                0
28  Site Lease Payment (from JV 1, 2, & 3)         800,000      800,000      466,667       16,000,000
29                               TOTAL             800,000      800,000      466,667       16,000,000
30 
31 INCOME STATEMENT
32  EBITDA                                       2,963,181    2,991,794    1,740,197       60,302,489
33  - Depreciation                        9%       170,025      177,366      103,464       10,020,614
34  - Interest on S/H Loan                               0            0            0       15,551,182
35  EBT (Pre-tax Income)                         2,793,156    2,814,427    1,636,734       34,730,693
36  - Local Income Taxes (Luannan)                  83,795       84,433       49,102        1,000,042
37  - Federal Income Taxes (China)                 837,947      844,328      245,510       10,173,698
38  Net Income                                   1,871,415    1,885,666    1,342,121       23,556,953
39  - Employee Welfare Res. (on-shore)   10%        39,726       41,315       25,064          576,851
40  - General Reserve (on-shore)         10%           588          588          343           11,765
41  - E'prise Exp. Reserve (on-shore)    10%           588          588          343           11,765
42          NET DISTRIBUTABLE EARNINGS           1,830,513    1,843,175    1,316,371       22,956,573
43 
44 CASH FLOW STATEMENT
45  Net Distributable Earnings                   1,830,513    1,843,175    1,316,371       22,956,573
46  + Depreciation                        9%       170,025      177,366      103,464       10,020,614
47  + Interest on S/H Loan                               0            0            0       15,551,182
48  + T-Line Principal Payments         100%             0            0            0       12,188,882
49  CASH AVAILABLE FOR SHAREHOLDER LOAN          2,000,538    2,020,541    1,419,834       60,717,251
50  - Interest on S/H Loan                              (0)          (0)          (0)     (15,551,182)
51  - Principal of S/H Loan                              0            0            0      (17,829,000)
52  ADJUSTMENTS                                                                                     0
53  +/- Overhaul Reserve (on-shore)       0%             0            0            0                0
54  +/- Debt Service Reserve (off-shore) 25%             0            0            0        1,000,000
55  +/- Undistributable Cash Flow                 (170,025)    (177,366)    (103,464)      (5,380,496)
56            PAN-WESTERN DISTRIBUTION   US$     1,609,313    1,620,445    1,157,300   $   20,182,491
57         LUANNAN COUNTY DISTRIBUTION   US$       221,200      222,730      159,071   $    2,774,081
[PARSONS BRINCKERHOFF ENERGY SERVICES, INC. LETTERHEAD]
                                
                                
                                
                                
                                
           PARSONS BRINCKERHOFF ENERGY SERVICES, INC.
                                
                      Officer's Certificate
                                
                                
      I, R. J. Bednarz, of Parsons Brinckerhoff Energy Services, Inc.
DO HEREBY CERTIFY that:

     Since April 11, 1997, no event affecting our report entitled
"2x50  MW  Coal-Fired Power Plant at Luannan, China" dated  April
11,  1997  (the "Engineer's Report") or the matters  referred  to
therein has occurred (i) which makes untrue or incorrect  in  any
material  respect,  as  the  date  hereof,  any  information   or
statement contained in the Engineer's Report or in the Prospectus
relating to  the  offering of 12-1/2% Registered  Senior  Secured
Notes  due 2004 by Panda Global Energy Company (the "Prospectus")
under   the  captions  "Summary  -  Independent  Engineers'   and
Consultants'  Reports  -  Consolidating Financial  Analyst's  Pro
Forma  Report," Summary - Independent Engineers' and Consultants'
Reports  - Luannan Engineering Report," and Independent Engineers
and  Consultants  - Luannan Facility" in the Prospectus  or  (ii)
which  is not reflected in the Prospectus but should be reflected
therein in order to make the statements and information contained
in  the Engineer's Report or in the Prospectus under the captions
set  forth  above, in the light of the circumstances under  which
they were made, not misleading.

              WITNESS  my hand this 6th day  of June 1997.

                              By:     /s/
                              Name:
                              Title:

                                

                           APPENDIX E

                          REVIEW OF THE
                    COAL SUPPLY ARRANGEMENTS
                               FOR
                    THE LUANNAN POWER PROJECT
                               OF
                PANDA ENERGY INTERNATIONAL, INC.
                                
                                
                                
                                
                                
                         April 11, 1997
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
This  copy  of  our  report was prepared  for  inclusion  in  the
Offering Circular relating to the offering by Panda Global Energy
Company of its Senior Secured Notes due 2004 and does not include
the listed appendices.  (See Table of Contents).

REVIEW OF THE COAL SUPPLY ARRANGEMENTS FOR
THE LUANNAN POWER PROJECT OF PANDA ENERGY INTERNATIONAL, INC.

PREFACE

The  data  contained in this report is based primarily on  verbal
communication  which was translated from Chinese to  English  and
vice  versa.  The only hard data Marston saw was in the  form  of
Preliminary  Feasibility Studies for the two new shaft  and  mine
areas  to  be  constructed and one mine plan showing the  initial
development work and drill hole locations.  Other data  given  to
Marston  regarding  coal  quality is contained  in  the  attached
appendices.

The  Observations  and  Conclusions given  here  are  drawn  from
discussions with people in responsible positions, as set  out  in
the following list.

1.Luannan County Government Vice Magistrate  Li He
2.Tangshan Municipal Coal Mine Industry Bureau, Manager Han Wen Xu
3.Kailuan Coal Mine Administration, Deputy Director Yang Zhong
4.Qianjiaying Coal Mine, Chief Engineer  Zhang Pu Tian
5.Linguantun Coal Mine, Chief Engineer  Yao Yaoguang
6.LeTing Coal Mine, Vice Manager  Xu Zi Li Engineer Tao Zhi Hong
7.Chang Li Coal Mine, Manager  Zhang Zuo Xiang
8.Luannan Coal Mine, Manager  Du Yang Fang Engineer  Gao Guo Bao
9.Zunhua Coal Mine, Vice Manager  Liu Qing Hua
  
We  were  accompanied by Mr. Xue Shu Xing and Mr. Zhao  (former
Luannan  Mine  Manager)  who provided general  information  and
comments on operations in the Tangshan area.
                                
                                
                                
                        TABLE OF CONTENTS

                                                 PAGE
1.0  SUMMARY AND CONCLUSIONS                       1-1

2.0  BACKGROUND                                    2-1

3.0  BASIC DATA PROVIDED BY PANDA                  3-1

4.0  COAL PRODUCTION AND RESERVES                  4-1

5.0  COAL QUALITY                                  5-1

6.0  COAL TRANSPORT                                6-1

7.0  PANDA FUEL SUPPLY STRATEGY                    7-1

This  copy  of  the  report does not incorporate  the  appendices
listed below which include the Field Notes taken by Larry Pituley
during  his  China  Site Visit (Appendix 1) and  copies  of  Data
provided  by Panda Energy International, Inc. which is listed  in
Section 3.0 of this report (Appendix 2).

APPENDICES
APPENDIX 1 - Field Notes
APPENDIX 2 - Data Provided by Panda Energy International, Inc.

                  1.0  SUMMARY AND CONCLUSIONS

Following are Marston's observations and conclusions with  regard
to coal reserves, coal quality and reliability of coal supply and
coal transportation in the Tangshan Region of Hebei Province, The
Peoples  Republic  of China, as a fuel supply  for  the  proposed
Luannan  power plant.  This report has been prepared for  use  in
the  Offering  Circular relating to the offering by Panda  Global
Energy  Company  of  its Senior Secured Notes  due  2004.   These
conclusions are subject to the limitations and constraints  under
which  this  review was conducted and should be judged  and  used
accordingly:

Overall Conclusion

Although  this  project can not be assessed by the usual  Western
standards  because  the  data to do such  an  assessment  is  not
readily  available,  it  is reasonable to  believe  that  a  coal
resource  of the appropriate quality is available, at  a  locally
competitive  price  in  sufficient quantity  to  operate  Panda's
proposed   Luannan   Power   plant  successfully,   taking   into
consideration  the local environment.  The fuel supply  strategy,
coal supply agreements and the coal transportation agreement  are
appropriate  for  the conditions and situation as  it  exists  in
China.   Given  that  cost of the fuel supply is  a  pass-through
arrangement  in the Power Purchase Agreement, the  risk  exposure
for  the  project will be minimal in terms of the delivered  fuel
price.

Reserves

Marston believes that the remaining coal reserves in the Tangshan
coal field are adequate to provide a long-term supply even though
the area has been mined for more than 100 years. The reserves may
be  overstated but at 7.6 billion tonnes even a 50%  error  would
still  leave ample reserves for the  20 year time frame Panda  is
concerned  about.  The  expectation with reserves,  in  Marstons'
opinion,  is  that  in 20 years the remaining  reserves  will  be
deeper  and  more  expensive to mine, rather  than  be  in  short
supply.

The  Chinese  government does not permit the  disclosure  of  the
methods  for  calculating coal reserves. Even if the methods  and
standards  were made known, the provinces and local coal  regions
do  not necessarily conform to the central government's standards
and  regulations.  Disclosure that the local agencies have  their
own  standards  would  not be politically  astute.  The  Cultural
Revolution (1966 to 1976) destroyed a lot of the old records  and
discouraged constructive work.  Records kept during the  Cultural
Revolution were poor to non-existent.

By  Western  standards, Chinese mine operators do  not  have  the
funds  to do extensive drilling and geologic assessment  in  most
cases.   The local attitude is that the coal seams in the  region
are  fairly consistent and the general geologic structure, though
complex, is well known and understood.

The  two  mines  sinking new shafts have had feasibility  studies
done  by  the  Provincial Capital Coal Mine  Institute.  The  two
studies  had  different formats but they appeared  to  be  fairly
detailed.

The  large  tonnage  Kailuan  mines are  mining  in  deeper  coal
reserves. They are generally  600-meters or greater in depth.  At
those  depths,  only  limited drilling is  done  to  confirm  the
presence  of coal seams.  This is evidenced by the plans observed
for  the  development of one of the smaller  mines.  The  smaller
mines  are  working shallower structures or have re-entered  old,
large-scale mines to clean up the leavings.  Some of the  smaller
mines  are now going after some coal which is in excess  of   600
meters in depth.

Quality

Marston believes Panda has a good understanding of what the  coal
quality  range  is  going to be for the coals  delivered  to  the
Luannan power plant from the mines in the Tangshan Region.  It is
important to design the power plant stockpile and feed system  to
cope  with  the  quality variability and to  establish  operating
procedures for managing the expected variability. Panda is  aware
of these needs and has initiated control systems to handle it. It
is  not  realistic  to expect the system in the Tangshan  Region,
which is producing 21 million tonnes per year,  to change because
of a single customer  using 450,000 tonnes per year.

Coal  product quality will vary. One hundred and seventeen  years
of mining coal in this area has taught the operators that a given
coal seam within a geologic structure is usually very consistent.
However,   the  amount  of  out  of  seam  dilution   will   vary
significantly. In recent times, China has had a shortage of  coal
for  domestic  consumption  and as a result,  the  political  and
economic system has dictated that "if it's black, bring it to the
surface  and use it". Therefore, the material coming out  of  the
mines typically is high in ash and is used in its raw state.

The mine managers quite openly admit that they mix bone coal with
higher  grade coal (>5000 kcal/kg) since this product  will  sell
and is acceptable in the marketplace.  From what Marston observed
of  coal  loaded in trucks, it is quite soft, friable  and  fine-
grained.  This type of coal would be difficult to upgrade without
a  wash plant.  There has been no financial incentive to the mine
operators  to separate the higher grade (lower ash)  seams  since
the  state  doesn't pay any premium for better quality,  and  the
newly  instituted  free  market has not matured  enough  for  the
consumers  to pay a premium for better quality.  As  the  Chinese
get  more international exposure, and experience revenue benefits
from quality control, there will be changes, but over a period of
time.

In  summary,  it is reasonable to expect that a coal supply  with
4,600 to 4,700 kilocalories per kilogram and 33-34% ash, will  be
available  from  the  Tangshan coal field for  the  life  of  the
facility.

Reliability Of Supply

The  whole  Luannan/Tangshan district needs power to satisfy  its
industrial  ambitions.   The Luannan County  government,  who  is
Panda's partner in the venture, is development oriented and  will
make sure that the plant has the required coal supply even if  it
has to come from mines other than the contracted ones.  This,  in
Marston's  opinion gives more comfort to the reliability  of  the
supply  issue than long-term western style contracts,  which  are
new to the Chinese coal industry.

Indications  are that free market prices are increasing  as  more
and  more  free-market  coal  is being  sold.   Since  the  Power
Purchase  Agreement  for  electricity sales  has  a  pass-through
arrangement  on  the  fuel supply cost and the  local  political-
management system will help control fuel-supply costs,  then  the
risk to the power plant investors should be minimal.

Transportation

Panda  has  executed a Coal Transportation agreement  at  locally
competitive  rates.  There appears to be a reasonable  amount  of
competition  in  the  trucking  business  and  plenty  of   local
entrepreneurs  willing  to  bid on this  type  of  business.  The
condition  of  the roads could be an issue as far  as  rates  are
concerned, but they are not severe enough to present  a  risk  to
the deliverability of the coal.  Parts of the road system do need
repair  work, and with more heavy traffic this situation will  be
aggravated.

On Site Management

Another plus is Panda's on site manager, Mr. John Zamlen, who has
operated coal fired power plants for five years.  He has  a  good
understanding  of local conditions and is rapidly establishing  a
good  relationship  with the Chinese people involved.   In  China
this is very important.

                         2.0  BACKGROUND

In  late 1994, Panda Energy International, Inc. ("Panda")  formed
joint  ventures  in  China  and entered  into  a  Power  Purchase
Agreement with the North China Power Grid to supply 100 megawatts
of  power to be generated by a new 100 MW power plant (2 X 50  MW
units) to be built in Luannan County, Hebei Province.

Panda  has  the  Luannan County Government as a partner  in  it's
joint  venture companies, Tangshan Panda Heat and Power  Company,
Ltd. and Pan-Western Heat and Power Company Ltd.  The North China
Power  Group Co. is the electricity transmission agency  for  the
northern part of China.

Hebei province is the province which surrounds the municipalities
of  Beijing and Tianjin.  It reaches to the east coast  of  China
and  is the center of a growing industrial region.  Tangshan City
is  located about 180 kilometers by road to the east of  Beijing.
The  town of Luannan, which is the seat of Luannan County and the
site of the proposed power plant is about 40 kilometers southeast
of  Tangshan City.  The Tangshan City location has access to port
cities in the area.  See Figure 1.

Tangshan  City is in the center of the Tangshan coal basin  which
has  been  the  source  of  energy  and  raw  materials  for  its
industrial  base.   The predecessor of the  Kailuan  Coal  Mining
Administration  was  established in 1878 and  currently  produces
about  18  million  tonnes  of coal per  year.   The  region  was
occupied  by the Japanese during World War II, during which  time
the  Japanese expanded the coal mining operations and shipped the
coal to Japan.

Given  the  proximity  of these coal fields to  Panda's  proposed
power plant at Luannan, coal produced in the Tangshan region  was
selected by Panda to be the most advantageous source of fuel  for
the power plant.

 	 		       [FIGURE 1
			PROJECT LOCATION MAP]

In  January  of  1997  Panda  engaged  Marston  &  Marston,  Inc.
("Marston")  to  provide  such consulting  services,  as  may  be
requested  by  Panda,  for Panda's proposed  power  plant  to  be
constructed in Luannan County and other power projects using coal
as  a  fuel.  The initial assignment was to visit the coal  mines
contracted  to supply the proposed power plant and to assess  the
local  conditions pertaining to transporting the coal  by  trucks
from the mines to the power plant.   These contracts were entered
into  by Panda as the result of a study done in the December 1995
-  January  1996  time  frame  by Anderson  &  Schwab,  Inc.  and
specifically  Robert E. Golkosky (now with Marston).   This  most
recent site visit by L.J. Pituley of Marston & Marston, Inc. took
place from January 22, through January 29, 1997.

Marston  was  also  requested to prepare this summary  report  as
outlined  in  Panda's  memo of January  21,  1997  to  Robert  E.
Golkosky of Marston.
                                
                3.0  BASIC DATA PROVIDED BY PANDA
                                
In  preparing  this  report, Marston  relied,  in  part,  on  the
following data and material provided by Panda:

-  A  report prepared by Robert E. Golkosky of Anderson & Schwab,
   Inc.  (now with Marston) dated March 29, 1996 including copies
   of Coal Supply Agreements with 6 mines.

-  A  memo  titled  "Clarification from Tangshan  Municipal  Coal
   Industry  Bureau",  signed by Han Wan-xu,  Tangshan  Municipal
   Coal  Industry  Bureau  and dated February  10,  1996.   Under
   official seal.

-  A  memo  from  the  Kailuan Coal Mining Administration  titled
   "Clarification  of  Coal Reserves and  Production  of  Kailuan
   Coal  Mining  Administration"  dated  March  7,  1996.   Under
   official seal.

-  A   certified  translation  of  a  signed  copy  of  the  Coal
   Transportation  Agreement between Luannan  County  State-Owned
   Transportation  Company owned and operated by  Luannan  County
   and  Tangshan Panda Heat and Power Co. Ltd. And Tangshan  Pan-
   Western Heat and Power Co. Ltd.

-  A  letter  from John R. Zamlen General Manager of  Pan-Western
   Energy  Corp.  on  Tangshan Panda  Heat  and  Power  Co.  Ltd.
   Letterhead  to  Mr.  Zhao Xiucheng, General  Manager,  Luannan
   County Heat and Power Plant.

-  Analytical results and discussion of the above mentioned  spot
   sample  by  the Harbin Power System Engineering  and  Research
   Institute  dated  December 9, 1996 and an English  translation
   dated January 16, 1997.

-  Daily  Qianjiaying Mine heating values of coal produced during
   the months of October and November 1995.

-  Luannan  Thermal  Power Plant, a General  Discussion  on  Coal
   Supply,  Quality  Control  and  Management  prepared  by  J.R.
   Zamlen dated October 9, 1996.

An information packet on the Kailuan mining area produced by  the
Kailuan Coal Mining Administration.

                4.0  COAL PRODUCTION AND RESERVES

General

China as a country reportedly produces in the order of 1.2 to 1.3
billion tonnes of raw coal per year.  Only a small percentage  of
the  total is upgraded by washing or by coal processing  for  the
internal  coking  operations and for export.   Thermal  coal  for
domestic  consumption is not upgraded beyond screening  and  hand
picking of waste rock off the product conveyor belts.

Coal  transportation  in  China is mainly  by  railroad  and  the
railroad  system is inadequate to deliver coal from the producing
regions  to  the  consuming industrial areas  in  the  quantities
required.   While China exports a small amount of coal  from  the
northern  producing areas it also imports coal  to  the  southern
industrial areas.  Locally, truck transportation is used.

The  Tangshan  coal  field  covers an area  of  some  670  square
kilometers  and  contains some 7.6 billion tonnes  of  geological
reserves down to a depth of 1000 meters (3281 feet).  See  Figure
2.   The field consists of three basins, two of which Kaiping and
Chi  Zhoushan  are  being commercially exploited  and  the  third
smaller  block  Jiyu  is  not  yet developed.   It  lies  to  the
southeast of the two larger structures.

The  coal  field  is  all  of the same geological  formation  but
erosion  has  removed  some  of the  anticlinal  structures  thus
creating  the separate basins.  Within the basins the  structures
range  from gently dipping monoclines to steeply dipping  (nearly
vertical) and faulted complex structures.  The general strike  of
the anticlines and synclines is NE - SW.

While  the  seams lens out in places and thicken in other  places
there  are consistently six mineable seams over a large  part  of
the  area.   A  coal  seam that is 0.7 meters thick  or  more  is
considered to be mineable.

Differing  underground mining methods are used to cope  with  the
geologic  structures  present in the  area,  however  an  overall
mining coal recovery at 50% of the geologic reserve is based on a
long  history of mining in the area.  Longwall mining  operations
report 80 to 90% coal recovery from panels.

By  token  of the same long history, the Chinese have found  that
the  coal  quality,  when  all  seams  are  blended  together  is
relatively consistent.  In the mining process not all  seams  are
always  mined  in  the same proportion and  this  leads  to  some
substantial swings in the ash content of the coal on a day to day
basis.

Projections  for  future  coal quality  based  on  limited  drill
results  and  on the historic quality of the coal that  has  been
produced.  Some blending takes place to eliminate very  low  heat
content coal by blending it with the higher heat content coal.

Annual  production  from the Tangshan coal field  is  21  million
tonnes.   Six  million tonnes is clean coal and is  utilized  for
coking, gas production and export.  Note that the main rail  line
from  Datong,  and  Beijing  to  the  coal  port  of  Qinhuangdao
straddles the Tangshan coal field.  Wash plant reject and the raw
coal  is  used  for thermal power generation in  North  and  East
China.

Locally coal is distributed by truck and trailer units of varying
sizes up to about 15 tonnes in combined capacity.

           				[FIGURE 2
			MAP OF TANGSHAN BASIN COAL MINE LOCATIONS]

Kailuan Coal Mining Administration

This  Administration,  owned by the Central Government,  operates
ten  major mines in the Tangshan coal field and produces some  18
million  tonnes  of  coal  per year.   The  Kailuan  Coal  Mining
Administration  has under its control approximately  72%  of  the
total  7.6  billion  tonnes of geological  coal  reserve  in  the
Tangshan  coal  fields, or 5.0 billion tonnes.  See  Appendix  2.
Reserves are re-estimated on an annual basis.

The Qianjiaying Coal Mine is one of the larger Kailuan mines with
1995  production  of 3.34 million tonnes and 1996  production  of
3.67  million tonnes of 4700 kilo calories/kilogram, heat content
and  34 to 35% ash coal.  This mine has six longwall faces.  Five
of  these faces are equipped with mechanical shearers and one  is
semi-mechanical.   The mine has available to it  nine  mechanical
shearers and one more is on order.  The mining operation  is  600
meters  below  sea  level and does not have  any  serious  water,
temperature   or   roof  control  problems  according   to   mine
management.   The  mine operates seven days  per  week  with  two
production shifts and one maintenance shift.  The mine only shuts
down  for 3 days every December for equipment checking and  major
maintenance.

All  the  coal produced at the Qianjiaying mine goes for  thermal
power  generation  with as much as one third  of  the  production
being  sold on the free market.  Up to 300,000 tonnes  per  year,
some 70% of the total annual requirement for the proposed Luannan
power plant is contracted to be supplied by this mine.

Tangshan Municipal Coal Industry Bureau

The  Tangshan  Municipal Coal Industry Bureau controls  some  546
million tonnes of mineable coal reserves.  See Appendix 2.   This
organization  consists of more than 180 individual mines  ranging
in  annual  individual production up to 80,000 tonnes  per  year.
These  mines  are  locally owned and not  owned  by  the  Central
Government.  One new mine under development will have  production
capability of up to 300,000 tonnes per year while another mine is
to  sink  a  second  shaft  which will  increase  its  production
capability  to 210,000 tonnes per year.  These mines  operate  in
the  shallower  leavings  of former larger  scale  mines  and  in
structurally complex areas.  These mines generally operate in the
50  to  300  meter  depth range but the larger proposed  mine  is
planning  to mine coal down to 660 meters.  The current  combined
annual  production  of these mines is some 4 million  tonnes  per
year of a variable coal quality product.

These smaller mines utilize a variety of mining methods but  most
are labor intensive.  Some of these mines can increase production
fairly  quickly  but  others can not as  they  are  producing  at
capacity.   Of the five mines that have contracts with Panda  two
are  expanding their capacity, two can increase their  production
and one is at its production limit.  All these mines say that the
Panda  power  plant  will  have first  priority  for  their  coal
production.

The  five  mines  visited by Marston in this jurisdiction  stated
that they do not have any water, methane or roof control problems
nor geological structural problems.

The  present  combined production capacity of the five  mines  is
400,000  tonnes annually.  When the two new shafts are  completed
by  late 1998 or early 1999 the combined production capacity will
be  750,000  tonnes per year.  A number of these operations  have
other  producing  mines of similar coal quality that  they  could
call on in case of unforseen problems at the contracted mines.

These mines jointly will be able to provide the 150,000 tonnes or
more  if required annually, for the Panda power plant in addition
to  the  300,000 tonnes contracted for from Kailuan's Qianjiaying
Mine.

                        5.0  COAL QUALITY

As  indicated earlier in the report mine forecasts of future coal
quality  are  based  on  limited drill hole  information  and  on
historic records of coal quality.  The Qianjiaying mine is mining
the  continuation of known seams and carries a small risk of  any
radical  quality  change.  Moreover, the five smaller  mines  are
mining  the  edges  of  seams  that have  been  mined  before  or
structurally difficult areas in the proximity of previously mined
areas  and  should  not  encounter any great  quality  surprises.
There  will  be  day to day variations because of  variations  in
seams  being  mined but the long term average  (month  to  month)
should not change more than 5% up or down from the committed heat
content of the As Received coal supply.

On a mine by mine basis the situation is as follows:

Qianjiaying Mine:  The 1995 heat content was 4,500 kiloCal/kg and
the  1996 heat content was 4,700 kiloCal/kg at a 34% to  35%  ash
level.   Mine  management expressed the opinion that to  increase
the  heat  content  to  4,750 kiloCal/kg  in  1997  is  not  very
realistic.   It is most probable that the mine will  be  able  to
meet its long term commitment to Panda to supply 4,600 kiloCal/kg
coal at a 35% to 36% ash level on an As Received basis.

Tangshan Liu Guantun Mine:  From the analysis given for each seam
in  the  new  mine feasibility study the seam ash content  varies
from  18%  to  23.7% on an As Received basis.  If  one  takes  an
average  ash  level of 22% and 7% total moisture  then  the  heat
content  of 5,595 kiloCal/kg is possible on an all seams  blended
basis.   How  much dilution or in seam rock will be added  during
the  mining  process is unknown although the  mine  staff  insist
dilution  is  less  than 1%.  In summary it is  likely  that  the
contract  heat content of 4,900 kiloCal/kg and 30%  ash  will  be
achieved or even exceeded.

LeTing County Coal Mine:  The current mine production produces  a
heat  content of 4,600 kiloCal/kg and 38% ash however  coal  from
the  new  shaft area mine is expected to be some 5,400 kiloCal/kg
at  28.9% ash on an As Received basis.  This seems to be  a  high
ash  level for 7.59 meters of coal with an ash level of  17%  and
1.6  meters  of  31% ash, as stated in a preliminary  feasibility
study.   One  can only assume that in-seam partings and  dilution
make  up  the extra ash content in the proposed product  quality.
In any event the contract heat content of 4,900 kiloCal/kg should
be readily achievable.

Chang  Li  County  Coal Mine:  The heat content  of  the  current
production  was  given  as  ranging  between  4,000   and   4,500
kiloCal/kg and 34 to 40% ash on an As Received basis.  The owners
have  two  other  mines  one of which  produces  4,500  to  4,700
kiloCal/kg  coal and the third mine has the same coal quality  as
the first mine.

This  mine may not be able to meet the average quality  of  4,900
kiloCal/kg  and  will have some difficulty in staying  above  the
minimum  4,400  kiloCal/kg.   It  is  likely  to  be  the   least
consistent coal supplier.

Luannan  County Coal Mine:  The quality of the coal  produced  in
the last two years has an ash content variation of 26% to 36% and
averages  on a partially air dried basis about 31% ash and  5,000
kiloCal/kg  heat  content.  This mine, with  careful  management,
should be a good coal supplier for the power plant as it can meet
the contract specification.

Zunhau  Coal Mine:  The coal quality was stated as being  25%  to
26%  ash  and  4,500  to 5,000 kiloCal/kg.  This  appears  to  be
inconsistent with the reported quality of all the other mines  in
the area.  With a 25% to 26% ash level the heat content should be
over  5,000.   The  mine should fall into the heat  content  zone
between 4,400 and 4,900 kiloCal/kg as specified in the contract.

In  summary,  it is reasonable to expect that a coal supply  with
4,600 to 4,700 kiloCal/kg and 33% to 34% ash, for the power plant
will  be  available from the Tangshan coal field for the life  of
the facility.

Other Coal Analyses

Moisture:  The total moisture ranges between 6% and 10% depending
on  precipitation  and  length of time  in  the  stockpile.   The
inherent moisture varies from 0.6% to more than 2% but on average
for freshly mined coal is less than 1.0%.

Sulphur:   As  a generalization the thinner seams  (less  than  1
meter)  have a higher sulfur content consequently the  impact  on
the  blended  coal  is  minimized.  The  sulphur  values  in  the
analysis  we  have  had access to range from  0.3%  to  4.53%  in
individual  seams.   An average sulphur content  of  1.25%  is  a
reasonable  number for a long term coal supply.  Mines  producing
from a number of thin coal seams should be monitored very closely
to make sure they do not exceed the sulphur specification.

Volatiles:   The volatile content on a dry ash free basis  is  in
excess  of 30%.  On an air dried basis the volatiles vary from  a
low  of  20%  to values in the 38% range.  It is not possible  to
establish a volatile value for 33% to 35% ash coal from the  data
we have available to us.

Sodium Oxide:  As a percentage of the ash the value is less  than
one  percent  and  quite frequently less than  one  half  of  one
percent.

Chlorine:   From the limited information available  the  chlorine
content is low with a range of 0.035% to 0.10%.  This is based on
one set of average analyses for a mine with 7 seams.

                       6.0  COAL TRANSPORT

Since the power plant is located near the Tangshan coal field  it
is  reasonable to haul the coal from the mines to the plant  with
trucks.

There  appears to be a good supply of coal hauling trucks in  the
area  with  ownership ranging from individuals to small companies
and the local County government.

The shortest coal haul from the Qianjiaying mine is approximately
28 kilometers, which is also the largest tonnage, and the longest
haul  distance,  approximately 48 kilometers is from  the  LeTing
mine.

The  road system in the area is reasonable and most of the  roads
are paved.

A  coal  trucking contract has been negotiated and executed  with
Luannan  County State - owned Transportation Company.   A  normal
cost  of trucking in the area as of January 1997 is 0.3 RMB  Yuan
(approximately  $0.036  US)  per tonne  kilometer  but  bad  road
conditions in some areas have pushed the price up to 0.35 to  0.4
RMB   Yuan   per  tonne  kilometer.   The  trucking  company   is
responsible for any coal loss.  The time of Marston's  visit  was
also the high demand season for coal in this area.

                 7.0  PANDA FUEL SUPPLY STRATEGY

Panda  developed a fuel supply strategy that focuses on providing
a  stable,  long-term  coal supply consisting  of  the  following
elements.

Utilize  coal  from  the Tangshan coal field  which  has  a  long
history of producing good quality coal and has coal reserves that
will continue to be exploited for many years into the future.  In
other words a stable long-term coal supply.

The close proximity of the coal field to the proposed power plant
site  allows  Panda  to  take advantage  of  the  local  trucking
opportunity and eliminates the risk of transporting by  railroad,
a system that is overloaded and not dependable.

An  assessment was made of the mines in the area and the decision
was  made to negotiate a long-term supply contract with  a  major
State  owned  and  operated mine (1996  production  3.67  million
tonnes) for up to 70% of the power plants fuel requirement.   For
the  other 30% of the fuel requirement Panda negotiated contracts
with five independent mines, some of which operate more than  one
mine.  Panda has built into the contracts the opportunity to pick
and  choose  the  better  quality coal being  produced  from  the
individual mines at any given time.

The  price  of  the  coal is to be determined  annually  for  the
Kailuan  contract  and  monthly for the  Tangshan  Coal  Industry
Bureau  Mines, based on the prevailing market price, for a  given
quality of coal, in the Tangshan area.

Specific conditions of the coal supply contracts are as follows:

A.   Kailuan Coal Administration Mine Contract

The  Buyer has the right to determine the tonnage to be purchased
up  to  300,000 annual tonnes.  Buyer and Seller agree  that  the
primary  mine  to supply coal for Panda is the Qianjiaying  Mine.
The   Seller   also  represents  that  sufficient  reserves   and
production  capability  exist  within  the  Kailuan  Coal  Mining
Administration.

      The  Buyer  is to provide to the Seller annual and  monthly
tonnage requirements in approximately equal monthly amounts.

      Buyer  and  Seller  will meet every  November  to  mutually
determine   the  market  price,  shipping  schedule   and   other
conditions  for  a coal supply contract for the  following  year.
Effective  with  the first purchase of coal, the Agreement  shall
continue for a term of ten years.

       Coal  quality  specifications  with  Average  Quality  and
Acceptable  Limits  are  spelled out  for  Total  Moisture,  Ash,
Sulphur,  Heat  Value Top Size and Fines for  acceptance  by  the
buyer.   The  Seller  will  sample the  coal  and  have  analysis
performed and the Buyer can dispute the analysis if a significant
difference exists.  A third party independent analysis  shall  be
binding.   Buyer  has  the  right  to  reject  and  suspend  coal
deliveries  that  do not meet specifications.  Weight  is  to  be
determined  by Sellers certified scales.  Market price  shall  be
the  average annual price in RMB Yuan per Kilo calorie  for  coal
sold by the Seller for the following year under similar terms and
conditions.

      Payments  by the Buyer are to be made within 5 to  15  days
after  the end of each month.  The agreement is governed  by  the
laws  of  the  Peoples  Republic  of  China.   Either  party  can
terminate  the  agreement if the other party materially  breaches
the contract and does not cure the breach within 60 days.  Lender
Approval,  Peoples  Republic  of  China  National  Energy  Policy
changes  and  certain  Force  Majuere clauses  for  circumstances
beyond the reasonable control of either party are included.

B.   Tangshan Coal Industry Bureau Mine Contracts

      Buyer  has the right to buy up to a set tonnage  from  each
mine  for  a  period of ten years at market prices.   Buyer  will
notify  Seller  prior  to the first day  of  each  month  of  the
requirements for the following month.

       Coal  Quality  Specifications  with  Average  Quality  and
Acceptable  Limits  are  spelled out  for  total  Moisture,  Ash,
Sulphur,  Heat Value, Coal Size and Fines for acceptance  by  the
Buyer.

      Buyer and Seller will analyze coal samples collected at the
Buyer's  facilities.   In case of dispute  an  independent  third
party  analysis will be binding.  Buyer can reject  coal  outside
the  Acceptable  Limits and the Supplier shall  replace  it  with
acceptable quality.  Weight of the coal sold and purchased  shall
be  determined by certified scales maintained by the  Seller.   A
dispute mechanism is in place.

      Market Price shall be the average monthly price in RMB Yuan
per  tonne  for  coal  sold by mines regulated  by  the  Tangshan
Municipal   Coal   Industry  Bureau  under  similar   terms   and
conditions.   The Market Price is based on heating value  and  if
the quality shipped varies significantly from the average Quality
specification the Buyer and Seller will discuss the  reasons  for
the variation.

      Payment  shall  be made by the Buyer including  adjustments
within  15  days  of each month end.  Buyer will  pay  an  annual
Reservation Fee of between 400,000 RMB Yuan and 560,000 RMB  Yuan
per  year which shall be applied against coal purchased over  the
Current  year.  The Buyer is not committed to any minimum monthly
take.

      The  Agreement  is  governed by the  laws  of  the  Peoples
Republic  of China.  Either party can terminate the agreement  if
the  other  party  breaches the contract and does  not  cure  the
breach within 60 days.  Buyer upon notice to Seller can terminate
the  agreement  due to non-approval by the Lenders.   Notices  or
other communications shall be in writing.

C.   Coal Transportation Agreement

      The  agreement  is  with  the  Luannan  County  State-Owned
Transportation  Company ("Carrier") owned  and  operated  by  the
Luannan  County is for 10 years from the date of the first  truck
deliveries for up to 500,000 tonnes per year.  Buyer will provide
monthly delivery schedules which can be adjusted weekly.  Failure
to  deliver  by  the Carrier allows the Buyer to  make  alternate
arrangements  and  incremental costs shall  be  to  the  Carriers
account.   The  Buyer is reimbursable by the Carrier  for  weight
differences  greater than four tenths of one percent between  the
Suppliers' and Buyers' scales.

      The  first year of coal deliveries shall be at 15 RMB  Yuan
per  tonne  and  the  price  will then  be  negotiated  annually.
Payments to Carrier shall be within 15 days after each month end.

       The  Carrier  represents  that  it  owns  and  operates  a
sufficient   number  of  trucks  to  supply  the   Buyer's   coal
requirements.  If necessary the Carrier will supplement its truck
fleet.  The Carrier is responsible for all licenses, permits  and
for meeting all government obligations.

     The Agreement is subject to the laws of the Peoples Republic
of China.  Either party may terminate the agreement under certain
conditions.  Subject to the Buyer obtaining its Lender's approval
the agreement can be canceled.  Notices are to be in writing.

The  fuel  supply strategy, coal supply agreements and  the  coal
transportation  agreement are appropriate for the conditions  and
situation  as it exists in China.  Given that cost  of  the  fuel
supply  is  a  pass-through arrangement  in  the  Power  Purchase
Agreement,  the risk exposure for the project will be minimal  in
terms of the delivered fuel price.

Future Central Government actions cannot be definitively forecast
but  current indications are that power supply development is  an
important factor in the country's development plan.

                 [Marston & Marston Letterhead]
                                
                                
                                
                                
                     MARSTON & MARSTON, INC.
                                
                      Officer's Certificate
                                
                                
      I, Richard Marston, of Marston & Marston, Inc., DO HEREBY
CERTIFY that:

     Since April 11, 1997, no event affecting our report entitled
"Review  of  the Coal Supply Arrangements for the  Luannan  Power
Project of Panda Energy International" dated April 11, 1997  (the
"Fuel  Consultant's Report") or the matters referred  to  therein
has  occurred (i) which makes untrue or incorrect in any material
respect,  as  the  date  hereof,  any  information  or  statement
contained  in the Fuel Consultant's Reports or in the  Prospectus
relating  to  the  offering of 12-1/2% Registered  Senior  Secured
Notes  due 2004 by Panda Global Energy Company (the "Prospectus")
under  the  captions  ""Summary  -  Independent  Engineer's   and
Consultant's Reports - Luannan Engineering Reports,"  "Summary  -
Independent  Engineers' and Consultants' Reports -  Luannan  Coal
Consultant's Report," and "Independent Engineers and  Consultants
-  Luannan  Facility"  or  (ii) which is  not  reflected  in  the
Prospectus but should be reflected therein in order to  make  the
statements  and  information contained in the  Fuel  Consultant's
Report  or in the Prospectus under the captions set forth  above,
in the light of the circumstances under which they were made, not
misleading.

           WITNESS  my hand this 6th day  of June 1997.

                              By:     /s/ Richard R. Marston
                              Name:   Richard R. Marston, P.E.
                              Title:  Vice President & General Counsel

                                                              APPENDIX G

                     OWNERSHIP STRUCTURE OF THE ISSUER, THE COMPANY,
                  PANDA INTERNATIONAL AND CERTAIN OF THEIR SUBSIDIARIES

                                         PANDA ENERGY
                                      INTERNATIONAL, INC.
                                     ("PANDA INTERNATIONAL")

                                   PANDA GLOBAL
           	        ____________  HOLDINGS, INC.    _______________
                    |  100%     (THE "COMPANY")              100% |
               Panda Energy                                 Panda Global
         			   Corporation					                             Energy Company
              	  (Texas)	                         			       (the "Issuer")
                 ("PEC")                               		        	|
              				  |						                                	      |
           Panda Interfunding					                            Pan-Sino
 		            Corporation			                        	    Energy Development
        		 	     ("PIC")                                    Company, LLC*
              				  |                       					            ("Pan-Sino")
         ___________|_____________  					                         |
         |  100%                 | 100%				                       |
 Panda Interholding        Panda Funding			               Pan-Western Energy
    Corporation             Corporation 	 		              Corporation LLC**
 ("Interholding")            ("PFC")                   				("Pan-Western")
		   |                      						|
     |_____________________________|____________________          |
     | 100%        | 100%       |  100%     | 100%     | 100%	   	|
  Panda-        PRC II        Panda       Panda    Brandywine		   |
 Rosemary    Corporation   Brandywine    Energy      Water			     |
Corporation   ("PRC II")  Corporation     Corp.     Company		    	|
("PR Corp.")  	    	        ("PBC")    (Delaware)                 |
     |	            |		         |		          |	                    |
_____|_____________|____   ____|____________|___                  |
Panda-Rosemary, L.P.***    Panda-Brandywine, L.P.                 |
   (the "Rosemary		          (the "Brandywine                     |	    
   Partnership")               Partnership")                      |
          |								                                               |
          |			                     _______________________________|____
 _________|____________					       |           |          |           |
 Panda-Rosemary Funding				 87.92% |    87.92% |   87.92% |    87.92% |
      Corporation								       Tangshan   Tangshan   Tangshan    Tangshan
("the "Rosemary Issuer")         Panda       Pan-      Cayman     Pan-Sino
                               (a "Joint  (a "Joint   (a "Joint  (a "Joint
                               Venture")  Venture")   Venture")   Venture")
                                   |           |           |          |
                            12.08% |    12.08% |    12.08% |   12.08% |
                                   |___________|___________|__________|        
                                               |           |
                                         Luannan County Partners
                                         (the "County Partners")

        *     The  remaining 4.5% equity interest in Pan-Sino  is
        owned  by  NDR.  This equity interest can increase  to  a
        maximum of 10%.
        **    The remaining 1% equity interest in Pan-Western  is
        owned by Chinamac.
        ***   NNW,  Inc. holds a cash flow participation  in  the
        distributions  from the Rosemary Partnership  (which  the
        Issuer  believes is 0.433% and would increase  to  1.732%
        after   2008  based  on  projected  distributions).   See
        "Description  of the Projects-The Rosemary  Facility-Cash
        Flow  Participation"  and  "Legal  Proceedings-NNW,  Inc.
        Proceeding."
        

                                                              
No  dealer, salesman or other person has                      
been    authorized    to    give     any                      
information    or    to     make     any                $155,200,000
representations  not contained  in  this                      
Prospectus,  and,  if  given  or   made,                      
such   information  or   representations                 [ L O G O ]
must  not be relied upon as having  been                      
authorized   by  the  Company   or   the                      
Issuer.   This  does not  constitute  an                      
offer  to sell, or a solicitation of  an              OFFER TO EXCHANGE
offer  to  buy,  the securities  offered                      
hereby  in  any jurisdiction  where,  or  12-1/2% Registered Senior Secured 
to  any  person to whom, it is  unlawful              Notes due 2004
to  make  such  offer  or  solicitation.   which have been registered under the
The  delivery of this Prospectus at  any               Securities Act
time  and  any sale made hereunder  does         for any and all outstanding
not    imply    that   the   information  12-1/2% Senior Secured Notes due 2004
contained  herein is correct as  of  any                     of
time subsequent to the date hereof.              PANDA GLOBAL ENERGY COMPANY
                                           Fully and Unconditionally Guaranteed
Enforcement of Civil Liabilities    i            By PANDA GLOBAL HOLDINGS, INC.
Defined Terms                       i                         
Available Information               i                         
Disclosure Regarding                                          
 Forward-Looking Statements         ii                   PROSPECTUS
Prospectus Summary                   1                        
Risk Factors                        21                        
Business of The Issuer, The Company,                          
 Panda International and Their                     The Exchange Agent is:
 Subsidiaries                       42              BANKERS TRUST COMPANY
Use of Proceeds                     45                        
Capitalization                      46             Facsimile Transmission:
Unaudited Pro Forma Consolidated                       (615) 835-3701
 Financial Data of the Company      47              Confirm by Telephone:
Selected Financial Data of the                         (615) 835-3572
  Issuer                            51                        
Selected Financial Data of the          By Overnight Courier or Certified Mail:
 Company                            52           BT Services Tennessee, Inc.
Management's Discussion  and                   Corporate Trust & Agency Group
 Analysis of Financial Condition                     Reorganization Unit
 and Results of Operations of the                  648 Grassmere Park Road
 Issuer                             53              Nashville, TN  37211
Management's Discussion and                                   
 Analysis of Financial Condition                      By Hand Delivery:
 and Results of Operations of the                   Bankers Trust Company
 Company                            53         Corporate Trust & Agency Group
The Exchange Offer                  58            Receipt & Delivery Window
Certain Tax Considerations of the             123 Washington Street, 1st Floor
 Exchange Offer                     66               New York, NY 10006
Description of the Projects         68                        
Foreign Exchange System in the PRC                        By Mail:
 and Exchange Rate                               BT Services Tennessee, Inc.
  Information                       91               Reorganization Unit
Description of Principal Documents                    P. O. Box 292737
 Relating to the Luannan Facility   93            Nashville, TN  37229-2737
Management                         107                        
Legal Proceedings                  109                        
Description of Other Indebtedness  112                        
Description of the Exchange                        _________________, 1997
 Notes, the Exchange Notes
 Guarantee, the Issuer Loan, the
 Shareholder Loans and the
 Collateral Documents              125 
Plan of Distribution               187
Experts                            188
Legal Matters                      189
Index to Financial Statements      F-1
Certain Defined Terms              A-1
The Electric Power Industry and
 Regulation in the PRC and the United
 States                            B-1
Consolidated Pro Forma Report      C-1
Luannan Engineering Report         D-1
Luannan Coal Consultant's Report   E-1
Ownership Structure of the Issuer,
 the Company,Panda International
 and Certain of Their Subsidiaries G-1

Until _________, 1997 (90 days after the
date  of  this Prospectus), all  dealers
effecting    transactions     in     the
securities  offered hereby,  whether  or
not      participating      in      this
distribution,   may   be   required   to
deliver   a  Prospectus.  This  delivery
requirement  is  in  addition   to   the
obligations  to  dealers  to  deliver  a
Prospectus  when acting as  underwriters
with    respect    to    their    unsold
allotments or subscriptions.

                  
                  

                  

                                   PART II
                                      
                   INFORMATION NOT REQUIRED IN PROSPECTUS
                                      
Item 13.  Other Expenses of Issuance and Distribution

    The  following  is a statement of estimated expenses to be  incurred  in
connection with the offering of the 12-1/2%  Registered Senior Secured Notes
due  2004 of Panda Global Energy Company  (the "Registrant") covered by this
Registration  Statement, all of which will be paid  by  the  Registrant  and
Panda Global Holdings, Inc. (a "Co-Registrant"):

Securities and Exchange Commission Registration Fee        $ 43,947
Accounting Fees and Expenses                                 30,000
Legal Fees and Expenses                                      60,000
Exchange Agent and Trustee Fees and Expenses                 15,000
Independent Engineers' Fees and Expenses                     25,000
Fuel Consultants' Fees and Expenses                          15,000
Miscellaneous                                                11,053
                                                           --------
   Total                                                   $200,000
                                                           ========

Item 14.  Indemnification of Directors and Officers.

      The Certificate of Incorporation of the Co-Registrant provides that to
the  fullest  extent  permitted by the Delaware General Corporation  Law,  a
director thereof shall not be liable to such corporation or its stockholders
for  monetary damages for breach of fiduciary duty as a director.   The  Co-
Registrant's  Bylaws  provide  for mandatory  indemnification  to  directors
(including independent directors) and officers of the corporation, except to
the  extent prohibited by law, if such person acted in good faith and  in  a
manner  such person reasonably believed to be in or not opposed to the  best
interest  of  the  corporation and, with respect to any criminal  action  or
proceeding,  had  no  reasonable cause to believe his  or  her  conduct  was
unlawful.  No person shall be indemnified in respect of any claim or  matter
as  to  which such person has been adjudged to be liable to the corporation,
unless otherwise adjudged by the court.

   The Articles of Association of the Registrant provide that the directors,
any  independent director, the officers and any trustee for the  time  being
acting  in  relation to any of the affairs of the company and  their  heirs,
executors, administrators and personal representatives respectively shall be
indemnified  out  of  the  assets of the Registrant  from  and  against  all
actions,  proceedings, costs, charges, losses, damages  and  expenses  which
they  or any of them shall or may incur or sustain by reason of any act done
or  omitted  in  or  about the execution of their duty in  their  respective
offices or trusts except such (if any) as they shall incur or sustain by  or
through  their  own  willful neglect or default  respectively  and  no  such
director,  independent director, officer or trustee shall be answerable  for
the  acts, receipts, neglects or defaults of any other director, officer  or
trustee or for joining in any receipt for the sake of conformity or for  the
solvency  or honesty of any banker or other persons with whom any monies  or
effects  belonging  to the Registrant may be lodged or  deposited  for  safe
custody  or for any insufficiency of any security upon which any  monies  of
the  Registrant may be invested or for any other loss or damage due  to  any
such cause as aforesaid or which may happen in or about the execution of his
office or trust unless the same shall happen through the willful neglect  or
default of such director, independent director, officer or trustee.

Item 15.  Recent Sales of Unregistered Securities

    Information regarding the securities sold by the Registrant and the  Co-
Registrant  during the last three years is set forth below.   None  of  such
securities have been registered under the Securities Act of 1933, as amended
(the "Securities Act").
Common Stock

   On March 10, 1997, the Registrant issued one (1) common share (U.S. $1.00
par value) to Mr. Anthony B. Travers, a Cayman Islands resident, and one (1)
common  share (U.S. $1.00 par value) to Ms. Sophia Dilbert, a Cayman Islands
resident,  for  the consideration of $10 each. Exemption from United  States
registration  of  such common shares is claimed under Section  4(2)  of  the
Securities Act and because such transactions were performed entirely in  the
Cayman Islands.

   On March 10, 1997, the Co-Registrant issued 1,000 shares of common stock,
$.01  par  value, to Panda Energy International, Inc., a Texas  corporation,
for the consideration of $1,000.  Exemption from registration of such shares
of common stock is claimed under Section 4(2) of the Securities Act.

Senior Secured Notes and Guarantee

   On April 22, 1997, the Registrant issued and sold for cash, at 93.444% of
aggregate  principal  amount,  to Donaldson, Lufkin  &  Jenrette  Securities
Corporation, $155,200,000 aggregate principal amount of its 12-1/2%  Senior
Secured  Notes  due  2004 (the "Old Notes").  Donaldson, Lufkin  &  Jenrette
Securities  Corporation  subsequently  sold  the  Old  Notes  to   qualified
institutional buyers and institutional accredited investors. The  Old  Notes
are fully and unconditionally guaranteed by Panda Global Holdings, Inc., the
Co-Registrant.   The  Registrant  paid total  commissions  and  underwriting
discounts  equal  to  $4,359,753 to Donaldson, Lufkin & Jenrette  Securities
Corporation  in  connection  with  such  transaction.  Exemption  from   the
registration  of  the Old Notes and the guarantee thereof is  claimed  under
Section  4(2)  of  the  Securities  Act, and  Rule  144A  and  Regulation  S
promulgated thereunder.

Item 16.  Exhibits and Financial Statement Schedules

(a)  Exhibits:

Exhibit
Number    Exhibit Description

3.01      Memorandum of Association of Panda Global Energy Company. (2)

3.02      Articles of Association of Panda Global Energy Company. (2)

3.03      Certificate of Incorporation of Panda Global Holdings, Inc. (2)

3.04      Bylaws of Panda Global Holdings, Inc. (2)

4.01      Trust   Indenture  dated  July  31,  1996,  among  Panda   Funding
          Corporation,  Panda  Interfunding Corporation  and  Bankers  Trust
          Company, as Trustee. (1)

4.02      First  Supplemental Indenture to Trust Indenture, dated  July  31,
          1996,   among   Panda  Funding  Corporation,  Panda   Interfunding
          Corporation and Bankers Trust Company, as Trustee. (1)

4.03      Second Supplemental Indenture to Trust Indenture, dated January 6,
          1997,   among   Panda  Funding  Corporation,  Panda   Interfunding
          Corporation and Bankers Trust Company, as Trustee. (1)

4.04      Form  of 11-5/8% Pooled Project Bonds, Series A due 2012 of  Panda
          Funding Corporation. (1)

4.05      Form of 11-5/8% Pooled Project Bonds, Series A-1 due 2012 of Panda
          Funding Corporation. (1)

4.06      Registration  Rights Agreement, dated July 31, 1996,  among  Panda
          Funding  Corporation, Panda Interfunding Corporation and Jefferies
          & Company Inc. (1)

4.07      Collateral  Agency  Agreement, dated July 31,  1996,  among  Panda
          Interfunding  Corporation, Panda Funding Corporation  and  Bankers
          Trust   Company,   as   Trustee   and   Collateral   Agent.    (1)
          
4.08      Subrogation and Contribution Agreement, dated July 31, 1996, among
          Panda  Interfunding  Corporation, Panda  Funding  Corporation  and
          Panda Interholding Corporation and each PIC U.S. Entity that is  a
          signatory thereto. (1)

4.09      Guaranty Agreement (PIC U.S. Entity Subsidiaries), dated July  31,
          1996  by Panda Interholding Corporation in favor of Bankers  Trust
          Company,  as  Collateral  Agent for the  benefit  of  the  Secured
          Parties. (1)

4.10      Trust Indenture, dated April 22, 1997, between Panda Global Energy
          Company and Bankers Trust Company, as Trustee. (2)

4.11      First  Supplemental Indenture between Panda Global Energy  Company
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

4.12      Trust  Indenture,  dated  April 22,  1997,  between  Panda  Global
          Holdings, Inc. and Bankers Trust Company, as Trustee. (2)

4.13      First  Supplemental Indenture between Panda Global Holdings,  Inc.
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

4.14      Registration  Rights Agreement among Panda Global Energy  Company,
          Panda  Global  Holdings,  Inc. and Donaldson,  Lufkin  &  Jenrette
          Securities Corporation, dated April 22, 1997. (2)

4.15      Form  of  12-1/2%  Senior Secured Notes due 2004 of  Panda  Global
          Energy Company. (2)

4.16      Form  of 12-1/2% Registered Senior Secured Note due 2004 of  Panda
          Global Energy Company. (2)

5.00      Legal  Opinion  of  Chadbourne  &  Parke  LLP,  counsel  for   the
          Registrant and Co-Registrant. (3)

10.01     PIC  Loan  Agreement, dated July 31, 1996, between  Panda  Funding
          Corporation,  as  Lender, and Panda Interfunding  Corporation,  as
          Borrower. (1)

10.02     Loan  Agreement,  dated July 31, 1996, between Panda  Interfunding
          Corporation, as Lender, and Panda Cayman Interfunding Company,  as
          Borrower. (1)

10.03     Promissory Note issued by Panda Interfunding Corporation  on  July
          31,  1996  to Panda Funding Corporation in the original  principal
          amount  of  $105,525,000, endorsed to Bankers  Trust  Company,  as
          Collateral Agent. (1)

10.04     Security   Agreement,   dated  July  31,   1996,   between   Panda
          Interfunding Corporation and Bankers Trust Company, as  Collateral
          Agent. (1)

10.05     Security  Agreement,  dated July 31, 1996, between  Panda  Funding
          Corporation and Bankers Trust Company, as Collateral Agent. (1)

10.06     Security  Agreement,  dated July 31, 1996,  between  Panda  Cayman
          Interfunding   Company,   as  Debtor,   and   Panda   Interfunding
          Corporation, as Secured Party. (1)

10.07     Stock  Pledge  Agreement (Panda Interfunding  Corporation  Stock),
          dated  July 31, 1996, between Panda Energy Corporation and Bankers
          Trust Company, as Collateral Agent. (1)

10.08     Stock  Pledge Agreement (Panda Funding Corporation and PIC  Entity
          Stock),   dated   July   31,  1996,  between  Panda   Interfunding
          Corporation and Bankers Trust Company, as Collateral Agent. (1)

10.09     Trust Indenture, dated July 31, 1996, among Panda-Rosemary Funding
          Corporation,  Panda-Rosemary, L.P. and  Fleet  National  Bank,  as
          Trustee. (1)

10.10     First  Supplemental Indenture to Trust Indenture, dated  July  31,
          1996,  among  Panda-Rosemary Funding Corporation,  Panda-Rosemary,
          L.P. and Fleet National Bank, as Trustee. (1)

10.11     Form  of  8-5/8%  First Mortgage Bonds due 2016 of  Panda-Rosemary
          Funding Corporation. (1)

10.12     Deposit  and  Disbursement Agreement, dated July 31,  1996,  among
          Panda-Rosemary  Funding Corporation, Panda-Rosemary,  L.P.,  Fleet
          National  Bank, as Collateral Agent, and Fleet National  Bank,  as
          Depositary Agent. (1)

10.13     Collateral  Agency  and Intercreditor Agreement,  dated  July  31,
          1996,  among  Panda Rosemary Funding Corporation,  Panda-Rosemary,
          L.P.,  The L/C Issuer, The Trustee Under The Trust Indenture,  The
          Depositary  Agent,  The  Collateral Agent and  The  Other  Secured
          Parties, all as named therein. (1)

10.14     Deed  of  Trust and Security Agreement, dated July  31,  1996,  by
          Panda-Rosemary, L.P., Grantor, Ross J. Smyth, Trustee,  and  Fleet
          National Bank, as Collateral Agent, the Beneficiary. (1)

10.15     Security  Agreement, dated July 31, 1996, by Panda-Rosemary,  L.P.
          to Fleet National Bank, as Collateral Agent. (1)

10.16     Security Agreement, dated July 31, 1996, by Panda-Rosemary Funding
          Corporation to Fleet National Bank, as Collateral Agent. (1)

10.17     General  Partner  Pledge and Security Agreement,  dated  July  31,
          1996,  by  Panda-Rosemary Corporation to Fleet National  Bank,  as
          Collateral Agent. (1)

10.18     Limited  Partner  Pledge and Security Agreement,  dated  July  31,
          1996,  by PRC II Corporation to Fleet National Bank, as Collateral
          Agent. (1)

10.19     Stock Pledge and Security Agreement, dated July 31, 1996, by Panda
          Interholding  Corporation to Fleet National  Bank,  as  Collateral
          Agent. (1)

10.20     Stock Pledge and Security Agreement, dated July 31, 1996, by Panda-
          Rosemary, L.P. to Fleet National Bank, as Collateral Agent. (1)

10.21     Partnership Guaranty, dated July 31, 1996, by Panda-Rosemary, L.P.
          in favor of Fleet National Bank, as Trustee. (1)

10.22     Reimbursement  Agreement,  dated July  31,  1996,  between  Panda-
          Rosemary,  L.P., Panda-Rosemary Funding Corporation and Bayerische
          Vereinsbank AG, New York Branch. (1)

10.23     Irrevocable  Direct  Pay  Letter of Credit  issued  by  Bayerische
          Vereinsbank AG. (1)

10.24     Construction Loan Agreement and Lease Commitment, dated March  30,
          1996,  between Panda-Brandywine, L.P. and General Electric Capital
          Corporation. (1)

10.24.1   Participation  Agreement, dated December 18,  1996,  among  Panda-
          Brandywine,  L.P., Panda Brandywine Corporation, General  Electric
          Capital  Corporation,  Fleet National Bank, First  Security  Bank,
          National Association, and  Credit Suisse. (1)

10.24.2   Letter of Credit Reimbursement Agreement, dated December 18, 1996,
          among  Panda-Brandywine,  L.P., Panda Brandywine  Corporation  and
          General Electric Capital Corporation. (1)

10.24.3   Equity  Loan Facility Letter Agreement, dated December  18,  1996,
          among  Panda Brandywine Corporation, Panda Energy Corporation  and
          General Electric Capital Corporation. (1)

10.25     Bill  of  Sale and Severance Agreement, dated December  30,  1996,
          between  Panda-Brandywine,  L.P., as Seller,  and  Fleet  National
          Bank, Owner Trustee, as Buyer. (1)

10.26     Facility  Lease, dated December 18, 1996, between  Fleet  National
          Bank, as Owner Trustee, and Panda-Brandywine, L.P. (1)

10.27     Steam  Lease,  dated  as  of  December 18,  1996,  between  Panda-
          Brandywine, L.P. and Brandywine Water Company. (1)

10.28     Amended  and  Restated Security Deposit Agreement, dated  December
          18,   1996,   among   Panda-Brandywine,  L.P.,  Panda   Brandywine
          Corporation, General Electric Capital Corporation, Fleet  National
          Bank, Credit Suisse and First Security Bank, National Association.
          (1)

10.29     Amended  and Restated Deed of Trust and Security Agreement,  dated
          December  18,  1996, by Panda-Brandywine, L.P.  to  Chicago  Title
          Insurance Company, Trustee for the benefit of Fleet National Bank,
          as Security Agent, Beneficiary. (1)

10.30     Amended  and  Restated  Steam  Lessee  Security  Agreement,  dated
          December  18, 1996, by Brandywine Water Company in favor of  Fleet
          National Bank, as Security Agent. (1)

10.31     Amended and Restated Security Agreement, dated December 18,  1996,
          by  Panda-Brandywine,  L.P. in favor of Fleet  National  Bank,  as
          Security Agent. (1)

10.32     Amended  and  Restated Trust Agreement, dated December  18,  1996,
          between   General   Electric   Capital   Corporation,   as   Owner
          Participant, and Fleet National Bank, as Owner Trustee. (1)

10.33     Amended  and  Restated  General Partner  Pledge  Agreement,  dated
          December  18,  1996,  by  Panda Brandywine  Corporation  to  Fleet
          National Bank, as Security Agent. (1)

10.34     Amended  and  Restated  Limited Partner  Pledge  Agreement,  dated
          December  18, 1996,  by Panda Energy Corporation to Fleet National
          Bank, as Security Agent. (1)

10.35     Amended  and  Restated Stock Pledge Agreement, dated December  18,
          1996, by Panda Interholding Corporation to Fleet National Bank, as
          Security Agent. (1)

10.36     Assumption  Agreement and Release, dated July 31, 1996,  by  Panda
          Interholding  Corporation  in favor of  General  Electric  Capital
          Corporation and Fleet National Bank. (1)

10.37     Power  Purchase and Operating Agreement, dated January  24,  1989,
          between  Panda Energy Corporation and Virginia Electric and  Power
          Company. (1)

10.38     Amendment  No. 1 to Power Purchase and Operating Agreement,  dated
          October  24,  1989, between Panda Energy Corporation and  Virginia
          Electric and Power Company. (1)

10.39     Amendment  No. 2 to Power Purchase and Operating Agreement,  dated
          July  30, 1993, between Panda-Rosemary, L.P. and Virginia Electric
          and Power Company. (1)

10.40     Fuel  Supply Management Agreement, dated October 10, 1990, between
          Panda-Rosemary Corporation and Natural Gas Clearinghouse. (1)

10.41     Amendment  No. 1 to Fuel Supply Management Agreement, dated  March
          5,  1991,  between  Panda-Rosemary  Corporation  and  Natural  Gas
          Clearinghouse. (1)

10.42     Gas  Purchase  Contract,  dated April  12,  1990,  between  Panda-
          Rosemary Corporation and Natural Gas Clearinghouse. (1)

10.43     Amendment   of   Gas  Purchase  Contract  between   Panda-Rosemary
          Corporation and Natural Gas Clearinghouse. (1)

10.44     Pipeline  Operating Agreement, dated February  14,  1990,  between
          Panda  Energy  Corporation, Panda-Rosemary Corporation  and  North
          Carolina Natural Gas Corporation. (1)

10.45     Amendment  No.  1 to Pipeline Operating Agreement,  dated  May  7,
          1990, between Panda Energy Corporation, Panda-Rosemary Corporation
          and North Carolina Natural Gas Corporation. (1)

10.46     Assignment  Agreement, dated June 15, 1990, between  Panda  Energy
          Corporation and Panda-Rosemary Corporation. (1)

10.47     Amendment  No.  2 to Pipeline Operating Agreement, dated  November
          19,   1991,   among   Panda  Energy  Corporation,   Panda-Rosemary
          Corporation and North Carolina Natural Gas Corporation. (1)

10.48     Real  Property Lease and Easement Agreement, dated June  9,  1989,
          between The Bibb Company and Panda-Rosemary Corporation. (1)

10.49     First  Amendment  to  Real Property Lease and Easement  Agreement,
          dated October 1, 1989, between The Bibb Company and Panda-Rosemary
          Corporation. (1)

10.50     Second  Amendment  to Real Property Lease and Easement  Agreement,
          dated  January  31,  1990,  between The Bibb  Company  and  Panda-
          Rosemary Corporation. (1)

10.51     Leasehold  and Real Property Assignment and Assumption  Agreement,
          dated  January  6,  1992, between Panda-Rosemary  Corporation  and
          Panda-Rosemary, L.P. (1)

10.52     Third  Amendment  to  Real Property Lease and Easement  Agreement,
          dated March 15, 1996, between The Bibb Company and Panda-Rosemary,
          L.P. (1)

10.53     Cogeneration  Energy  Supply Agreement, dated  January  12,  1989,
          between Panda Energy Corporation and The Bibb Company. (1)

10.54     First  Amendment  to Cogeneration Energy Supply  Agreement,  dated
          October  1, 1989, between Panda Energy Corporation, Panda-Rosemary
          Corporation and The Bibb Company. (1)

10.55     Service  Agreement, dated July 26, 1996, between  Transcontinental
          Gas Pipe Line Corporation and Panda-Rosemary, L.P. (1)

10.55.1   Form of Amendment to Service Agreement, effective January 1, 1997,
          between  Transcontinental  Gas Pipe Line  Corporation  and  Panda-
          Rosemary, L.P. (1)

10.56     Service  Agreement  Applicable to Transportation  of  Natural  Gas
          Under  Rate  Schedule  FT,  dated August  20,  1996,  between  CNG
          Transmission Corporation and Panda-Rosemary, L.P. (1)

10.57     Gas  Transportation Agreement, dated August 1, 1996, between Texas
          Gas Transmission Corporation and Panda-Rosemary, L.P. (1)

10.58     Assignment  and Assumption Agreement, dated May 15, 1989,  between
          Panda Energy Corporation and Panda-Rosemary Corporation. (1)

10.59     Bill  of  Sale  and  Assignment  and Assumption  Agreement,  dated
          January  6,  1992, between Panda-Rosemary Corporation  and  Panda-
          Rosemary, L.P. (1)

10.60     Assignment  and  Assumption  Agreement,  dated  January  6,  1992,
          between  Panda Energy Corporation and Panda-Rosemary  Corporation.
          (1)

10.61     Power  Purchase  Agreement, dated August 9, 1991,  between  Panda-
          Brandywine, L.P. and Potomac Electric Power Company. (1)

10.62     First  Amendment to Power Purchase Agreement, dated September  16,
          1994,  between  Panda-Brandywine, L.P. and Potomac Electric  Power
          Company. (1)

10.62.1   Present Assignment of Power Purchase Agreement, dated December 18,
          1996,  by Panda-Brandywine, L.P. to Fleet National Bank, as  Owner
          Trustee,  for the benefit of General Electric Capital Corporation,
          as Owner Participant. (1)

10.62.2   Amended  and  Restated Consent and Agreement, dated  December  30,
          1996,  among  Potomac  Electric Power  Company,  Panda-Brandywine,
          L.P.,  Fleet  National Bank, as Security Agent and Owner  Trustee,
          General Electric Capital Corporation, as the issuer of the Letters
          of   Credit,   the   Interest  Hedging  Counterparty   and   Owner
          Participant,  First  Security  Bank,   National  Association,   as
          Indenture Trustee, and Credit Suisse, as Administrative Agent. (1)

10.63     Amended  and  Restated  Turnkey Cogeneration  Facility  Agreement,
          dated  March 30, 1995, between Panda-Brandywine, L.P. and Raytheon
          Engineers & Constructors, Inc. (1)

10.64     Raytheon  Parent  Guaranty, dated May 18, 1994,  between  Raytheon
          Company and Panda-Brandywine, L.P. (1)

10.65     Steam  Sales  Agreement,  dated March  30,  1995,  between  Panda-
          Brandywine, L.P. and Brandywine Water Company. (1)

10.66     Gas   Sales  Agreement,  dated  March  30,  1995,  between   Cogen
          Development Company and Panda Brandywine, L.P. (1)

10.67     Precedent Agreement, dated February 25, 1994, between Columbia Gas
          Transmission  Corporation and Panda-Brandywine, L.P. (1)

10.68     Amending  Agreement,  dated March 24, 1995, between  Columbia  Gas
          Transmission Corporation and Panda-Brandywine, L.P. (1)

10.69     Amended and Restated FTS Service Agreement, dated March 23,  1995,
          between   Columbia   Gas  Transmission  Corporation   and   Panda-
          Brandywine, L.P. (1)

10.70     FTS  Service  Agreement, dated of as March 30, 1995, between  Cove
          Point LNG Limited Partnership and Panda-Brandywine, L.P. (1)

10.71     Gas  Transportation and Supply Agreement, dated November 10, 1994,
          between  Panda-Brandywine, L.P. and Washington Gas Light  Company.
          (1)

10.72     Amended  and Restated Site Lease, dated December 18, 1996, between
          Panda-Brandywine, L.P. and Fleet National Bank, as Owner  Trustee.
          (1)

10.73     Amended  and  Restated  Site Sublease, dated  December  18,  1996,
          between  Fleet  National Bank,  Owner Trustee, as  Sublessor,  and
          Panda-Brandywine, L.P., as Sublessee. (1)

10.74     Purchase  Agreement,  dated July 26, 1996, between  Panda  Funding
          Corporation and Jefferies & Company, Inc. (1)

10.75     Additional  Projects Contract, dated July 31,  1996,  among  Panda
          Energy  International, Inc., Panda Energy Corporation,  and  Panda
          Interfunding Corporation. (1)

10.76     Non-Petition   Agreement,  dated  July  31,  1996,   among   Panda
          Interfunding  Corporation, Panda Interholding Corporation,  Panda-
          Rosemary  Corporation, PRC II Corporation, Panda-Rosemary  Funding
          Corporation and Panda-Rosemary, L.P. (1)

10.77     Non-Petition  Agreement, dated July 31, 1996, among Panda  Funding
          Corporation,  Panda  Interholding Corporation, Panda  Interfunding
          Corporation and Panda (Cayman) Interfunding Company. (1)

10.78     Joint  Venture  Contract for Tangshan Panda Heat  and  Power  Co.,
          Ltd., dated September 4, 1994, between Luannan County Heat & Power
          Plant and Pan-Western Energy Corp., LLC, as amended July 19,  1996
          and November 18, 1996, respectively. (2)

10.79     Joint  Venture  Contract for Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd., dated September 3, 1994, between Tangshan Luanhua  Co.
          (Group)  and  Pan-Western Energy Corp., LLC, as amended  July  19,
          1996 and November 18, 1996, respectively. (2)

10.80     Joint  Venture  Contract for Tangshan Cayman Heat and  Power  Co.,
          Ltd.,  dated  May 11, 1996, between Luannan County  Heat  &  Power
          Plant and Pan-Western Energy Corp., LLC, as amended July 19,  1996
          and November 18, 1996, respectively. (2)

10.81     Joint Venture Contract for Tangshan Pan-Sino Heat Co., Ltd., dated
          May  28, 1996, between Luannan County Heat Company and Pan-Western
          Energy Corp., LLC, as amended July 19, 1996 and November 18, 1996,
          respectively. (2)

10.82     Coal  Supply Agreement between Tangshan Panda Heat and Power  Co.,
          Ltd.  and  Kailuan Coal Mining Administration, dated  February  3,
          1996. (2)

10.83     General Interconnection Agreement between North China Power  Group
          Company, Tangshan Panda Heat and Power Co., Ltd. and Tangshan Pan-
          Western Heat and Power Co., Ltd., dated September 22, 1995. (2)

10.84     Electric  Energy Purchase and Sales Agreement between North  China
          Power  Group Company, Tangshan Panda Heat and Power Co., Ltd.  and
          Tangshan Pan-Western Heat and Power Co., Ltd., dated September 22,
          1995. (2)

10.85     Supplemental  Agreement for General Interconnection  and  Electric
          Energy  Purchase  and Sales Agreement Between  North  China  Power
          Group  Company,  Tangshan  Panda Heat  and  Power  Co.,  Ltd.  and
          Tangshan  Pan-Western Heat and Power Co., Ltd. dated February  10,
          1996. (2)

10.86     Construction  Agreement between North China Power  Group  Company,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan  Pan-Western
          Heat and Power Co., Ltd., dated February 10, 1996. (2)

10.87     Loan  Agreement between North China Power Group Company,  Tangshan
          Panda  Heat and Power Co., Ltd. and Tangshan Pan-Western Heat  and
          Power  Co.,  Ltd.,  dated February 10, 1996, as amended  June  18,
          1996. (2)

10.88     Agency Contract for Entrusted Loan between China Information Trust
          and  Investment  Corporation, Tangshan Panda Heat and  Power  Co.,
          Ltd.  and Tangshan Pan-Western Heat and Power Co. Ltd., dated June
          18, 1996, as amended July 17, 1996. (2) (4)

10.89     Transfer  of  Loan Agreement among Tangshan Panda Heat  and  Power
          Co.,  Ltd.,  Tangshan  Pan-Western Heat and Power  Co.,  Ltd.  and
          Tangshan Pan-Sino Heat Co., Ltd. (2)

10.90     Engineering, Procurement and Construction Contract among  Tangshan
          Panda  Heat  and  Power Co., Ltd., Tangshan Pan-Western  Heat  and
          Power  Co.,  Ltd.  and Harbin Power Engineering  Company  Limited,
          dated April 24, 1996, as amended July 4, 1996, September 14,  1996
          and December 17, 1996, respectively. (2) (4)

10.91     Engineering and Design Contract among Hebei Electric Power  Survey
          and  Design Institute, Tangshan Panda Heat and Power Company, Ltd.
          and  Tangshan  Pan-Western  Heat and Power  Company,  Ltd.,  dated
          December 21, 1995, as amended June 21, 1996. (2)

10.92     Guaranty by China Harbin Power Equipment Group Company, dated July
          16, 1996. (2)

10.93     Performance  Guarantee by The Export-Import Bank of  China,  dated
          January 3, 1997. (2)

10.94     Amended  and Restated Operation and Maintenance Agreement  between
          Tangshan  Heat and Power Co., Ltd., Tangshan Pan-Western Heat  and
          Power  Co.,  Ltd.,  Tangshan  Cayman Heat  and  Power  Co.,  Ltd.,
          Tangshan   Pan-Sino   Heat  Co.,  Ltd.   and   Duke/Fluor   Daniel
          International Services, dated March 6, 1997. (2) (4)

10.95     Construction Agreement of Heat and Steam Network between  Tangshan
          Pan-Sino Heat Co., Ltd. and Tangshan Heat and Engineering Company,
          dated June 20, 1996. (2)

10.96     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Panda Heat and  Power
          Co., Ltd., April 1, 1997 (2) (4)

10.97     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Pan-Western Heat  and
          Power Co., Ltd., April 1, 1997 (2) (4)

10.98     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Cayman Heat and Power
          Co., Ltd., April 1, 1997 (2) (4)

10.99     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western  Energy  Corporation, LLC and Tangshan Pan-Sino  Heat  and
          Power Co., Ltd., April 1, 1997 (2) (4)

10.100    Water,  Heat,  Steam  and  Hot Water Supply  and  Usage  Agreement
          between Tangshan Cayman Heat and Power Company, Ltd., and Tangshan
          Panda Heat and Power Company, Ltd., dated October 3, 1996. (2) (4)

10.101    Water,  Heat,  Steam  and  Hot Water Supply  and  Usage  Agreement
          between  Tangshan Cayman Heat and Power Company, Ltd. and Tangshan
          Pan-Western Heat and Power  Company, Ltd., dated October 3,  1996.
          (2) (4)

10.102    Steam  for  Process  and  Heating Water  Sales  Agreement  between
          Tangshan  Cayman Heat and Power Company, Ltd., and  Tangshan  Pan-
          Sino Heat Company, Ltd., dated October 16, 1996. (2)

10.103    Articles of Association of Tangshan Panda Heat and Power Co., Ltd.
          between  Luannan County Heat & Power Plant and Pan-Western  Energy
          Corp., LLC dated September 4, 1994. (2)

10.104    Articles  of Association for Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd.,  between Tangshan Luanhua Co. (Group)  and Pan-Western
          Energy Corp., LLC, dated September 3, 1994. (2)

10.105    Articles  of Association for Tangshan Cayman Heat and  Power  Co.,
          Ltd.,  between  Luannan County Heat & Power Plant and  Pan-Western
          Energy Corp., LLC, dated May 11, 1996. (2)

10.106    Articles  of  Association for Tangshan Pan-Sino  Heat  Co.,  Ltd.,
          between Luannan County Heat Company and Pan-Western Energy  Corp.,
          LLC, dated May 28, 1996. (2)

10.107    Application  Regarding Power Price among Tangshan Panda  Heat  and
          Power  Co.,  Ltd., Tangshan Pan-Western Heat and Power Co.,  Ltd.,
          and  Tangshan  Municipal Price Bureau dated October 17,  1995,  as
          amended October 18, 1995 and May 8, 1996, respectively. (2) (4)

10.108    Administrative   Services   Agreement   between    Panda    Energy
          International,  Inc. and Panda Global Holdings, Inc.  dated  April
          22, 1997. (2)

10.109    Development Services Agreement between Panda Energy International,
          Inc. and Panda Global Holdings, Inc. dated April 22, 1997. (2)

10.110    Form  of  Purchase  Agreement among Donaldson, Lufkin  &  Jenrette
          Securities Corporation, Panda Global Energy Company, Panda  Global
          Holdings,  Inc. and Panda Energy International, Inc., dated  April
          11, 1997. (2)

10.111    Form  of Issuer Loan Agreement between Panda Global Energy Company
          and Pan-Western Energy Corporation, LLC, dated April 22, 1997. (2)

10.112    Form  of Issuer Note of Pan-Western Energy Corporation, LLC, dated
          April 22, 1997. (2)

10.113    Registered   Capital  Contribution  and  Agency  Agreement   among
          Tangshan  Panda Heat and Power Company, Ltd., Tangshan Pan-Western
          Heat  and  Power  Company, Ltd., Tangshan Cayman  Heat  and  Power
          Company,  Ltd.,  Tangshan  Pan-Sino Heat  Company,  Ltd.,  Luannan
          County Heat and Power Plant, Tangshan Luanhua (Group) Co., Luannan
          County Heat Company and Pan-Western Energy Corporation, LLC, dated
          March 26, 1997. (2)

10.114    Form  of  Account Agreement among Panda Interfunding  Corporation,
          Panda  Energy Corporation and Panda Global Holdings,  Inc.,  dated
          April 22, 1997. (2)

10.115    Form  of Pledge Agreement between Panda Global Energy Company  and
          Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.116    Form  of  Pledge  Agreement  between Pan-Sino  Energy  Development
          Company,  LLC and Bankers Trust Company, as Trustee,  dated  April
          22, 1997. (2)

10.117    Form  of  Pledge Agreement between Pan-Western Energy Corporation,
          LLC  and Bankers Trust Company, as Trustee, dated April 22,  1997.
          (2)

10.118    Form  of Pledge Agreement between Panda Global Holdings, Inc.  and
          Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.119    Form  of  Cash  Collateral Agreement between Panda  Global  Energy
          Company  and  Bankers Trust Company, as Trustee, dated  April  22,
          1997. (2)

10.120    Form  of  Cash  Collateral  Agreement between  Pan-Western  Energy
          Corporation,  LLC  and Bankers Trust Company,  as  Trustee,  dated
          April 22, 1997. (2)

10.121    Form   of  Cash  Collateral  Agreement  between  Pan-Sino   Energy
          Development  Company, LLC and Bankers Trust Company,  as  Trustee,
          dated April 22, 1997. (2)

10.122    Form  of Pledge Agreement between Panda Energy International, Inc.
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.123    Form  of  Cash Collateral Agreement between Panda Global Holdings,
          Inc.  and Bankers Trust Company, as Trustee, dated April 22, 1997.
          (2)

10.124    Form of Cash Collateral Agreement Between Panda Energy Corporation
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.125    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan Cayman  Heat
          and Power Co., Ltd., dated September 24, 1996. (2)

10.126    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan  Pan-Western
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.127    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Panda Heat and Power Co., Ltd. and Tangshan Pan-Sino Heat
          Co., Ltd., dated September 24, 1996. (2)

10.128    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Western Heat and Power Co., Ltd. and  Tangshan  Pan-
          Sino Heat Co., Ltd., dated September 24, 1996. (2)

10.129    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Western Heat and Power Co., Ltd. and Tangshan  Panda
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.130    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Pan-Western Heat and Power Co., Ltd. and Tangshan  Cayman
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.131    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman Heat and Power Co., Ltd. and Tangshan Panda  Heat
          and Power Co., Ltd., dated September 24, 1996. (2)

10.132    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman  Heat and Power Co., Ltd. and  Tangshan  Pan-Sino
          Heat Co. Ltd., dated September 24, 1996. (2)

10.133    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman Heat and Power Co., Ltd. and Tangshan Pan-Western
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.134    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Sino  Heat Co., Ltd. and Tangshan  Cayman  Heat  and
          Power Co., Ltd., dated September 24, 1996. (2)

10.135    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Pan-Sino Heat Co., Ltd. and Tangshan Pan-Western Heat and
          Power Co., Ltd., dated September 24, 1996. (2)

10.136    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Sino  Heat Co., Ltd.  and Tangshan  Panda  Heat  and
          Power Co., Ltd., dated September 24, 1996. (2)

12.00     Computation of Ratio of Earnings to Fixed Charges. (2)

21.00     Subsidiaries of Registrant and Co-Registrant. (2)

23.01     Consent of Deloitte & Touche LLP. (2)

23.02     Consent  of  Chadbourne  &  Parke LLP (contained  in  their  Legal
          Opinion filed as Exhibit 5.00). (3)

23.03     Consent of ICF Resources, Incorporated. (2)

23.04     Consent of Burns & McDonnell Engineering Company, Inc. (2)

23.05     Consent of Benjamin Schlesinger and Associates, Inc. (2)

23.06     Consent of Pacific Energy Systems, Inc. (2)

23.07     Consent of C.C. Pace Resources, Inc. (2)

23.08     Consent of Parsons Brinckerhoff Energy Services, Inc. (2)

23.09     Consent of Marston & Marston, Inc. (2)

23.10     Consent of Maples & Calder. (2)

23.11     Consent of Cai, Zhang & Lan. (2)

24.00     Powers of Attorney (contained in the signature pages in Part II of
          this Registration Statement). (2)

25.00     Statement  of Eligibility of Trustee under Indenture on Form  T-1.
          (2)

27.00     Financial Data Schedule. (2)

99.01     Form of Transmittal Letter. (3)

99.02     Form of Notice of Guaranteed Delivery. (3)

99.03     Independent  Engineer's  Report of Burns &  McDonnell  Engineering
          Company, Inc., dated April 11, 1997, as updated June 6, 1997. (2)

99.04     Independent  Fuel Consultant's Report of Benjamin Schlesinger  and
          Associates, Inc., dated September 20, 1996, as updated April 11, 1997
          and June 6, 1997, respectively. (2)

99.05     Independent  Engineer's Report of Pacific  Energy  Systems,  Inc.,
          dated  July 22, 1996, as updated April 11, 1997 and June 6,  1997,
          respectively. (2)

99.06     Independent Fuel Consultant's Report of C.C. Pace Resources, Inc.,
          dated  July 2, 1996, as updated April 11, 1997 and June  6,  1997,
          respectively. (2)

99.07     Independent  Engineer's  Report  of  ICF  Resources  Incorporated,
          dated April 11, 1997, as updated June 6, 1997, respectively. (2)

________________________

(1)  Previously  filed as an exhibit to the Registration Statement  on  Form
     S-1  (Registration  No. 333-19445) of Panda Funding Corporation,  Panda
     Interfunding    Corporation   and   Panda   Interholding    Corporation
     (affiliates  of  the  Registrant and Co-Registrant),  and  incorporated
     herein by reference.
(2)  Filed herewith.
(3)  To be filed by amendment.
(4)  The   Registrant   and  the  Co-Registrant  have  sought   confidential
     treatment for certain information identified in these exhibits.

     (b)  Financial Statement Schedules:     None.

Item 17.  Undertakings

     (a)  The   undersigned  Registrant  and  each  Co-Registrant  hereby
undertake:
       
             (1)  To  file, during any period in which offers or  sales  are
          being  made,  a  post-effective  amendment  to  this  Registration
          Statement:
       
              (i)   to  include any prospectus required by Section  10(a)(3)
                    of the Securities Act of 1933;
              
              (ii)  to  reflect  in  the  prospectus  any  facts  or  events
                    arising  after  the effective date of  the  Registration
                    Statement  (or the most recent post-effective  amendment
                    thereof)   which,  individually  or  in  the  aggregate,
                    represent  a  fundamental change in the information  set
                    forth in the Registration Statement; and
              
              (iii) to  include any material information with respect to the
                    plan   of  distribution  previously  disclosed  in   the
                    Registration Statement.

              (2)  That, for the purpose of determining any liability  under
          the  Securities  Act  of 1933, each such post-effective  amendment
          shall be deemed to be a new Registration Statement relating to the
          securities offered therein, and the offering of such securities at
          that  time  shall be deemed to be the initial bona  fide  offering
          thereof.
              
              (3) To  remove  from registration by means of a  post-effective
          amendment  any  of  the securities being registered  which  remain
          unsold at the termination of the offering.
              
      (b)  The undersigned Registrant and the Co-Registrant hereby undertake
that,   insofar  as  indemnification  for  liabilities  arising  under   the
Securities  Act  of  1933  may  be permitted  to  directors,  officers,  and
controlling persons of the Registrant and the Co-Registrant pursuant to  the
foregoing  provisions,  or otherwise, the Registrant and  the  Co-Registrant
have been advised that in the opinion of the Commission such indemnification
is  against  public  policy  as expressed in  the  Securities  Act  and  is,
therefore,  unenforceable.  In the event that a  claim  for  indemnification
against such liabilities (other than the payment by the Registrant or the Co-
Registrant  of  expenses  incurred  or  paid  by  a  director,  officer   or
controlling person of the Registrant or the Co-Registrant, as the  case  may
be, in the successful defense of any action, suit or proceeding) is asserted
by  such  director,  officer or controlling person in  connection  with  the
securities  being  registered, the Registrant and  the  Co-Registrant  will,
unless  in  the  opinion  of  its counsel the matter  has  been  settled  by
controlling  precedent,  submit to a court of appropriate  jurisdiction  the
question  whether  such indemnification by it is against  public  policy  as
expressed  in  the  Securities  Act  and  will  be  governed  by  the  final
adjudication of such issue.
                                      
                                      
                                 SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, as  amended,
Panda Global Energy Company has duly caused this Registration  Statement
on Form S-1 to be  signed on its behalf by the undersigned,  thereunto  duly
authorized, in the City of Dallas, State of Texas on June 11, 1997.

                                   PANDA GLOBAL ENERGY COMPANY
                                   (Registrant)

                                   By:  /s/ Robert W. Carter
                                        Robert W. Carter, Chairman of the
                                        Board, Chief Executive Officer and
                                        Director

                              POWER OF ATTORNEY

      Each  person  whose signature appears below constitutes  and  appoints
Robert  W. Carter as his or her true and lawful attorney-in-fact and  agent,
with  full powers of substitution and resubstitution, for him or her and  in
his or her name, place and stead, in any and all capacities, to sign any  or
all  amendments  (including post-effective amendments to  this  Registration
Statement  and  to  file  the  same, with all  exhibits  thereto  and  other
documents  in  connection  therewith,  with  the  Securities  and   Exchange
Commission,  granting unto said attorney-in-fact and agent, full  power  and
authority  to  do  and  perform each and every act and thing  requisite  and
necessary to be done in and about the premises, as fully to all intents  and
purposes  and he or she might do in person, hereby ratifying and  confirming
all  that said attorney-in fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Act of 1933, as  amended,
this  Registration Statement on Form S-1 has been signed  by  the  following
persons in the capacities indicated on the dates indicated.

          Signature                  Title                          Date

                            Chairman of the Board, Chief
/s/ Robert W. Carter       Executive Officer and Director    June 11, 1997
    Robert W. Carter       (Principal Executive Officer)

                              Executive Vice President
/s/ Janice Carter             Secretary and Treasurer        June 11, 1997
    Janice Carter             (Principal Financial and
                                Accounting Officer)
                                      
                                      
                                      
                                 SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, as  amended,
Panda Global Holdings, Inc. has duly caused this Registration Statement
on Form S-1 to be  signed on its behalf by the undersigned,  thereunto  duly
authorized, in the City of Dallas, State of Texas on June 11, 1997.

                                   PANDA GLOBAL HOLDINGS, INC.
                                   (Co-Registrant)

                                   By:  /s/ Robert W. Carter
                                        Robert W. Carter, Chairman of the
                                        Board ,Chief Executive Officer and
                                        Director

                              POWER OF ATTORNEY

      Each  person  whose signature appears below constitutes  and  appoints
Robert  W. Carter as his or her true and lawful attorney-in-fact and  agent,
with  full powers of substitution and resubstitution, for him or her and  in
his or her name, place and stead, in any and all capacities, to sign any  or
all  amendments  (including post-effective amendments to  this  Registration
Statement  and  to  file  the  same, with all  exhibits  thereto  and  other
documents  in  connection  therewith,  with  the  Securities  and   Exchange
Commission,  granting unto said attorney-in-fact and agent, full  power  and
authority  to  do  and  perform each and every act and thing  requisite  and
necessary to be done in and about the premises, as fully to all intents  and
purposes  and he or she might do in person, hereby ratifying and  confirming
all  that said attorney-in fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Act of 1933, as  amended,
this  Registration Statement on Form S-1 has been signed  by  the  following
persons in the capacities indicated on the dates indicated.

          Signature                  Title                          Date

                            Chairman of the Board, Chief
/s/ Robert W. Carter       Executive Officer and Director    June 11, 1997
    Robert W. Carter       (Principal Executive Officer)

                              Executive Vice President
/s/ Janice Carter             Secretary and Treasurer        June 11, 1997
    Janice Carter            (Principal Financial and
                                Accounting Officer)

                             INDEX TO EXHIBITS

Exhibit
Number    Exhibit Description

3.01      Memorandum of Association of Panda Global Energy Company. (2)

3.02      Articles of Association of Panda Global Energy Company. (2)

3.03      Certificate of Incorporation of Panda Global Holdings, Inc. (2)

3.04      Bylaws of Panda Global Holdings, Inc. (2)

4.01      Trust   Indenture  dated  July  31,  1996,  among  Panda   Funding
          Corporation,  Panda  Interfunding Corporation  and  Bankers  Trust
          Company, as Trustee. (1)

4.02      First  Supplemental Indenture to Trust Indenture, dated  July  31,
          1996,   among   Panda  Funding  Corporation,  Panda   Interfunding
          Corporation and Bankers Trust Company, as Trustee. (1)

4.03      Second Supplemental Indenture to Trust Indenture, dated January 6,
          1997,   among   Panda  Funding  Corporation,  Panda   Interfunding
          Corporation and Bankers Trust Company, as Trustee. (1)

4.04      Form  of 11-5/8% Pooled Project Bonds, Series A due 2012 of  Panda
          Funding Corporation. (1)

4.05      Form of 11-5/8% Pooled Project Bonds, Series A-1 due 2012 of Panda
          Funding Corporation. (1)

4.06      Registration  Rights Agreement, dated July 31, 1996,  among  Panda
          Funding  Corporation, Panda Interfunding Corporation and Jefferies
          & Company Inc. (1)

4.07      Collateral  Agency  Agreement, dated July 31,  1996,  among  Panda
          Interfunding  Corporation, Panda Funding Corporation  and  Bankers
          Trust   Company,   as   Trustee   and   Collateral   Agent.    (1)
          
4.08      Subrogation and Contribution Agreement, dated July 31, 1996, among
          Panda  Interfunding  Corporation, Panda  Funding  Corporation  and
          Panda Interholding Corporation and each PIC U.S. Entity that is  a
          signatory thereto. (1)

4.09      Guaranty Agreement (PIC U.S. Entity Subsidiaries), dated July  31,
          1996  by Panda Interholding Corporation in favor of Bankers  Trust
          Company,  as  Collateral  Agent for the  benefit  of  the  Secured
          Parties. (1)

4.10      Trust Indenture, dated April 22, 1997, between Panda Global Energy
          Company and Bankers Trust Company, as Trustee. (2)

4.11      First  Supplemental Indenture between Panda Global Energy  Company
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

4.12      Trust  Indenture,  dated  April 22,  1997,  between  Panda  Global
          Holdings, Inc. and Bankers Trust Company, as Trustee. (2)

4.13      First  Supplemental Indenture between Panda Global Holdings,  Inc.
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

4.14      Registration  Rights Agreement among Panda Global Energy  Company,
          Panda  Global  Holdings,  Inc. and Donaldson,  Lufkin  &  Jenrette
          Securities Corporation, dated April 22, 1997. (2)

4.15      Form  of  12-1/2%  Senior Secured Notes due 2004 of  Panda  Global
          Energy Company. (2)

4.16      Form  of 12-1/2% Registered Senior Secured Note due 2004 of  Panda
          Global Energy Company. (2)

5.00      Legal  Opinion  of  Chadbourne  &  Parke  LLP,  counsel  for   the
          Registrant and Co-Registrant. (3)

10.01     PIC  Loan  Agreement, dated July 31, 1996, between  Panda  Funding
          Corporation,  as  Lender, and Panda Interfunding  Corporation,  as
          Borrower. (1)

10.02     Loan  Agreement,  dated July 31, 1996, between Panda  Interfunding
          Corporation, as Lender, and Panda Cayman Interfunding Company,  as
          Borrower. (1)

10.03     Promissory Note issued by Panda Interfunding Corporation  on  July
          31,  1996  to Panda Funding Corporation in the original  principal
          amount  of  $105,525,000, endorsed to Bankers  Trust  Company,  as
          Collateral Agent. (1)

10.04     Security   Agreement,   dated  July  31,   1996,   between   Panda
          Interfunding Corporation and Bankers Trust Company, as  Collateral
          Agent. (1)

10.05     Security  Agreement,  dated July 31, 1996, between  Panda  Funding
          Corporation and Bankers Trust Company, as Collateral Agent. (1)

10.06     Security  Agreement,  dated July 31, 1996,  between  Panda  Cayman
          Interfunding   Company,   as  Debtor,   and   Panda   Interfunding
          Corporation, as Secured Party. (1)

10.07     Stock  Pledge  Agreement (Panda Interfunding  Corporation  Stock),
          dated  July 31, 1996, between Panda Energy Corporation and Bankers
          Trust Company, as Collateral Agent. (1)

10.08     Stock  Pledge Agreement (Panda Funding Corporation and PIC  Entity
          Stock),   dated   July   31,  1996,  between  Panda   Interfunding
          Corporation and Bankers Trust Company, as Collateral Agent. (1)

10.09     Trust Indenture, dated July 31, 1996, among Panda-Rosemary Funding
          Corporation,  Panda-Rosemary, L.P. and  Fleet  National  Bank,  as
          Trustee. (1)

10.10     First  Supplemental Indenture to Trust Indenture, dated  July  31,
          1996,  among  Panda-Rosemary Funding Corporation,  Panda-Rosemary,
          L.P. and Fleet National Bank, as Trustee. (1)

10.11     Form  of  8-5/8%  First Mortgage Bonds due 2016 of  Panda-Rosemary
          Funding Corporation. (1)

10.12     Deposit  and  Disbursement Agreement, dated July 31,  1996,  among
          Panda-Rosemary  Funding Corporation, Panda-Rosemary,  L.P.,  Fleet
          National  Bank, as Collateral Agent, and Fleet National  Bank,  as
          Depositary Agent. (1)

10.13     Collateral  Agency  and Intercreditor Agreement,  dated  July  31,
          1996,  among  Panda Rosemary Funding Corporation,  Panda-Rosemary,
          L.P.,  The L/C Issuer, The Trustee Under The Trust Indenture,  The
          Depositary  Agent,  The  Collateral Agent and  The  Other  Secured
          Parties, all as named therein. (1)

10.14     Deed  of  Trust and Security Agreement, dated July  31,  1996,  by
          Panda-Rosemary, L.P., Grantor, Ross J. Smyth, Trustee,  and  Fleet
          National Bank, as Collateral Agent, the Beneficiary. (1)

10.15     Security  Agreement, dated July 31, 1996, by Panda-Rosemary,  L.P.
          to Fleet National Bank, as Collateral Agent. (1)

10.16     Security Agreement, dated July 31, 1996, by Panda-Rosemary Funding
          Corporation to Fleet National Bank, as Collateral Agent. (1)

10.17     General  Partner  Pledge and Security Agreement,  dated  July  31,
          1996,  by  Panda-Rosemary Corporation to Fleet National  Bank,  as
          Collateral Agent. (1)

10.18     Limited  Partner  Pledge and Security Agreement,  dated  July  31,
          1996,  by PRC II Corporation to Fleet National Bank, as Collateral
          Agent. (1)

10.19     Stock Pledge and Security Agreement, dated July 31, 1996, by Panda
          Interholding  Corporation to Fleet National  Bank,  as  Collateral
          Agent. (1)

10.20     Stock Pledge and Security Agreement, dated July 31, 1996, by Panda-
          Rosemary, L.P. to Fleet National Bank, as Collateral Agent. (1)

10.21     Partnership Guaranty, dated July 31, 1996, by Panda-Rosemary, L.P.
          in favor of Fleet National Bank, as Trustee. (1)

10.22     Reimbursement  Agreement,  dated July  31,  1996,  between  Panda-
          Rosemary,  L.P., Panda-Rosemary Funding Corporation and Bayerische
          Vereinsbank AG, New York Branch. (1)

10.23     Irrevocable  Direct  Pay  Letter of Credit  issued  by  Bayerische
          Vereinsbank AG. (1)

10.24     Construction Loan Agreement and Lease Commitment, dated March  30,
          1996,  between Panda-Brandywine, L.P. and General Electric Capital
          Corporation. (1)

10.24.1   Participation  Agreement, dated December 18,  1996,  among  Panda-
          Brandywine,  L.P., Panda Brandywine Corporation, General  Electric
          Capital  Corporation,  Fleet National Bank, First  Security  Bank,
          National Association, and  Credit Suisse. (1)

10.24.2   Letter of Credit Reimbursement Agreement, dated December 18, 1996,
          among  Panda-Brandywine,  L.P., Panda Brandywine  Corporation  and
          General Electric Capital Corporation. (1)

10.24.3   Equity  Loan Facility Letter Agreement, dated December  18,  1996,
          among  Panda Brandywine Corporation, Panda Energy Corporation  and
          General Electric Capital Corporation. (1)

10.25     Bill  of  Sale and Severance Agreement, dated December  30,  1996,
          between  Panda-Brandywine,  L.P., as Seller,  and  Fleet  National
          Bank, Owner Trustee, as Buyer. (1)

10.26     Facility  Lease, dated December 18, 1996, between  Fleet  National
          Bank, as Owner Trustee, and Panda-Brandywine, L.P. (1)

10.27     Steam  Lease,  dated  as  of  December 18,  1996,  between  Panda-
          Brandywine, L.P. and Brandywine Water Company. (1)

10.28     Amended  and  Restated Security Deposit Agreement, dated  December
          18,   1996,   among   Panda-Brandywine,  L.P.,  Panda   Brandywine
          Corporation, General Electric Capital Corporation, Fleet  National
          Bank, Credit Suisse and First Security Bank, National Association.
          (1)

10.29     Amended  and Restated Deed of Trust and Security Agreement,  dated
          December  18,  1996, by Panda-Brandywine, L.P.  to  Chicago  Title
          Insurance Company, Trustee for the benefit of Fleet National Bank,
          as Security Agent, Beneficiary. (1)

10.30     Amended  and  Restated  Steam  Lessee  Security  Agreement,  dated
          December  18, 1996, by Brandywine Water Company in favor of  Fleet
          National Bank, as Security Agent. (1)

10.31     Amended and Restated Security Agreement, dated December 18,  1996,
          by  Panda-Brandywine,  L.P. in favor of Fleet  National  Bank,  as
          Security Agent. (1)

10.32     Amended  and  Restated Trust Agreement, dated December  18,  1996,
          between   General   Electric   Capital   Corporation,   as   Owner
          Participant, and Fleet National Bank, as Owner Trustee. (1)

10.33     Amended  and  Restated  General Partner  Pledge  Agreement,  dated
          December  18,  1996,  by  Panda Brandywine  Corporation  to  Fleet
          National Bank, as Security Agent. (1)

10.34     Amended  and  Restated  Limited Partner  Pledge  Agreement,  dated
          December  18, 1996,  by Panda Energy Corporation to Fleet National
          Bank, as Security Agent. (1)

10.35     Amended  and  Restated Stock Pledge Agreement, dated December  18,
          1996, by Panda Interholding Corporation to Fleet National Bank, as
          Security Agent. (1)

10.36     Assumption  Agreement and Release, dated July 31, 1996,  by  Panda
          Interholding  Corporation  in favor of  General  Electric  Capital
          Corporation and Fleet National Bank. (1)

10.37     Power  Purchase and Operating Agreement, dated January  24,  1989,
          between  Panda Energy Corporation and Virginia Electric and  Power
          Company. (1)

10.38     Amendment  No. 1 to Power Purchase and Operating Agreement,  dated
          October  24,  1989, between Panda Energy Corporation and  Virginia
          Electric and Power Company. (1)

10.39     Amendment  No. 2 to Power Purchase and Operating Agreement,  dated
          July  30, 1993, between Panda-Rosemary, L.P. and Virginia Electric
          and Power Company. (1)

10.40     Fuel  Supply Management Agreement, dated October 10, 1990, between
          Panda-Rosemary Corporation and Natural Gas Clearinghouse. (1)

10.41     Amendment  No. 1 to Fuel Supply Management Agreement, dated  March
          5,  1991,  between  Panda-Rosemary  Corporation  and  Natural  Gas
          Clearinghouse. (1)

10.42     Gas  Purchase  Contract,  dated April  12,  1990,  between  Panda-
          Rosemary Corporation and Natural Gas Clearinghouse. (1)

10.43     Amendment   of   Gas  Purchase  Contract  between   Panda-Rosemary
          Corporation and Natural Gas Clearinghouse. (1)

10.44     Pipeline  Operating Agreement, dated February  14,  1990,  between
          Panda  Energy  Corporation, Panda-Rosemary Corporation  and  North
          Carolina Natural Gas Corporation. (1)

10.45     Amendment  No.  1 to Pipeline Operating Agreement,  dated  May  7,
          1990, between Panda Energy Corporation, Panda-Rosemary Corporation
          and North Carolina Natural Gas Corporation. (1)

10.46     Assignment  Agreement, dated June 15, 1990, between  Panda  Energy
          Corporation and Panda-Rosemary Corporation. (1)

10.47     Amendment  No.  2 to Pipeline Operating Agreement, dated  November
          19,   1991,   among   Panda  Energy  Corporation,   Panda-Rosemary
          Corporation and North Carolina Natural Gas Corporation. (1)

10.48     Real  Property Lease and Easement Agreement, dated June  9,  1989,
          between The Bibb Company and Panda-Rosemary Corporation. (1)

10.49     First  Amendment  to  Real Property Lease and Easement  Agreement,
          dated October 1, 1989, between The Bibb Company and Panda-Rosemary
          Corporation. (1)

10.50     Second  Amendment  to Real Property Lease and Easement  Agreement,
          dated  January  31,  1990,  between The Bibb  Company  and  Panda-
          Rosemary Corporation. (1)

10.51     Leasehold  and Real Property Assignment and Assumption  Agreement,
          dated  January  6,  1992, between Panda-Rosemary  Corporation  and
          Panda-Rosemary, L.P. (1)

10.52     Third  Amendment  to  Real Property Lease and Easement  Agreement,
          dated March 15, 1996, between The Bibb Company and Panda-Rosemary,
          L.P. (1)

10.53     Cogeneration  Energy  Supply Agreement, dated  January  12,  1989,
          between Panda Energy Corporation and The Bibb Company. (1)

10.54     First  Amendment  to Cogeneration Energy Supply  Agreement,  dated
          October  1, 1989, between Panda Energy Corporation, Panda-Rosemary
          Corporation and The Bibb Company. (1)

10.55     Service  Agreement, dated July 26, 1996, between  Transcontinental
          Gas Pipe Line Corporation and Panda-Rosemary, L.P. (1)

10.55.1   Form of Amendment to Service Agreement, effective January 1, 1997,
          between  Transcontinental  Gas Pipe Line  Corporation  and  Panda-
          Rosemary, L.P. (1)

10.56     Service  Agreement  Applicable to Transportation  of  Natural  Gas
          Under  Rate  Schedule  FT,  dated August  20,  1996,  between  CNG
          Transmission Corporation and Panda-Rosemary, L.P. (1)

10.57     Gas  Transportation Agreement, dated August 1, 1996, between Texas
          Gas Transmission Corporation and Panda-Rosemary, L.P. (1)

10.58     Assignment  and Assumption Agreement, dated May 15, 1989,  between
          Panda Energy Corporation and Panda-Rosemary Corporation. (1)

10.59     Bill  of  Sale  and  Assignment  and Assumption  Agreement,  dated
          January  6,  1992, between Panda-Rosemary Corporation  and  Panda-
          Rosemary, L.P. (1)

10.60     Assignment  and  Assumption  Agreement,  dated  January  6,  1992,
          between  Panda Energy Corporation and Panda-Rosemary  Corporation.
          (1)

10.61     Power  Purchase  Agreement, dated August 9, 1991,  between  Panda-
          Brandywine, L.P. and Potomac Electric Power Company. (1)

10.62     First  Amendment to Power Purchase Agreement, dated September  16,
          1994,  between  Panda-Brandywine, L.P. and Potomac Electric  Power
          Company. (1)

10.62.1   Present Assignment of Power Purchase Agreement, dated December 18,
          1996,  by Panda-Brandywine, L.P. to Fleet National Bank, as  Owner
          Trustee,  for the benefit of General Electric Capital Corporation,
          as Owner Participant. (1)

10.62.2   Amended  and  Restated Consent and Agreement, dated  December  30,
          1996,  among  Potomac  Electric Power  Company,  Panda-Brandywine,
          L.P.,  Fleet  National Bank, as Security Agent and Owner  Trustee,
          General Electric Capital Corporation, as the issuer of the Letters
          of   Credit,   the   Interest  Hedging  Counterparty   and   Owner
          Participant,  First  Security  Bank,   National  Association,   as
          Indenture Trustee, and Credit Suisse, as Administrative Agent. (1)

10.63     Amended  and  Restated  Turnkey Cogeneration  Facility  Agreement,
          dated  March 30, 1995, between Panda-Brandywine, L.P. and Raytheon
          Engineers & Constructors, Inc. (1)

10.64     Raytheon  Parent  Guaranty, dated May 18, 1994,  between  Raytheon
          Company and Panda-Brandywine, L.P. (1)

10.65     Steam  Sales  Agreement,  dated March  30,  1995,  between  Panda-
          Brandywine, L.P. and Brandywine Water Company. (1)

10.66     Gas   Sales  Agreement,  dated  March  30,  1995,  between   Cogen
          Development Company and Panda Brandywine, L.P. (1)

10.67     Precedent Agreement, dated February 25, 1994, between Columbia Gas
          Transmission  Corporation and Panda-Brandywine, L.P. (1)

10.68     Amending  Agreement,  dated March 24, 1995, between  Columbia  Gas
          Transmission Corporation and Panda-Brandywine, L.P. (1)

10.69     Amended and Restated FTS Service Agreement, dated March 23,  1995,
          between   Columbia   Gas  Transmission  Corporation   and   Panda-
          Brandywine, L.P. (1)

10.70     FTS  Service  Agreement, dated of as March 30, 1995, between  Cove
          Point LNG Limited Partnership and Panda-Brandywine, L.P. (1)

10.71     Gas  Transportation and Supply Agreement, dated November 10, 1994,
          between  Panda-Brandywine, L.P. and Washington Gas Light  Company.
          (1)

10.72     Amended  and Restated Site Lease, dated December 18, 1996, between
          Panda-Brandywine, L.P. and Fleet National Bank, as Owner  Trustee.
          (1)

10.73     Amended  and  Restated  Site Sublease, dated  December  18,  1996,
          between  Fleet  National Bank,  Owner Trustee, as  Sublessor,  and
          Panda-Brandywine, L.P., as Sublessee. (1)

10.74     Purchase  Agreement,  dated July 26, 1996, between  Panda  Funding
          Corporation and Jefferies & Company, Inc. (1)

10.75     Additional  Projects Contract, dated July 31,  1996,  among  Panda
          Energy  International, Inc., Panda Energy Corporation,  and  Panda
          Interfunding Corporation. (1)

10.76     Non-Petition   Agreement,  dated  July  31,  1996,   among   Panda
          Interfunding  Corporation, Panda Interholding Corporation,  Panda-
          Rosemary  Corporation, PRC II Corporation, Panda-Rosemary  Funding
          Corporation and Panda-Rosemary, L.P. (1)

10.77     Non-Petition  Agreement, dated July 31, 1996, among Panda  Funding
          Corporation,  Panda  Interholding Corporation, Panda  Interfunding
          Corporation and Panda (Cayman) Interfunding Company. (1)

10.78     Joint  Venture  Contract for Tangshan Panda Heat  and  Power  Co.,
          Ltd., dated September 4, 1994, between Luannan County Heat & Power
          Plant and Pan-Western Energy Corp., LLC, as amended July 19,  1996
          and November 18, 1996, respectively. (2)

10.79     Joint  Venture  Contract for Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd., dated September 3, 1994, between Tangshan Luanhua  Co.
          (Group)  and  Pan-Western Energy Corp., LLC, as amended  July  19,
          1996 and November 18, 1996, respectively. (2)

10.80     Joint  Venture  Contract for Tangshan Cayman Heat and  Power  Co.,
          Ltd.,  dated  May 11, 1996, between Luannan County  Heat  &  Power
          Plant and Pan-Western Energy Corp., LLC, as amended July 19,  1996
          and November 18, 1996, respectively. (2)

10.81     Joint Venture Contract for Tangshan Pan-Sino Heat Co., Ltd., dated
          May  28, 1996, between Luannan County Heat Company and Pan-Western
          Energy Corp., LLC, as amended July 19, 1996 and November 18, 1996,
          respectively. (2)

10.82     Coal  Supply Agreement between Tangshan Panda Heat and Power  Co.,
          Ltd.  and  Kailuan Coal Mining Administration, dated  February  3,
          1996. (2)

10.83     General Interconnection Agreement between North China Power  Group
          Company, Tangshan Panda Heat and Power Co., Ltd. and Tangshan Pan-
          Western Heat and Power Co., Ltd., dated September 22, 1995. (2)

10.84     Electric  Energy Purchase and Sales Agreement between North  China
          Power  Group Company, Tangshan Panda Heat and Power Co., Ltd.  and
          Tangshan Pan-Western Heat and Power Co., Ltd., dated September 22,
          1995. (2)

10.85     Supplemental  Agreement for General Interconnection  and  Electric
          Energy  Purchase  and Sales Agreement Between  North  China  Power
          Group  Company,  Tangshan  Panda Heat  and  Power  Co.,  Ltd.  and
          Tangshan  Pan-Western Heat and Power Co., Ltd. dated February  10,
          1996. (2)

10.86     Construction  Agreement between North China Power  Group  Company,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan  Pan-Western
          Heat and Power Co., Ltd., dated February 10, 1996. (2)

10.87     Loan  Agreement between North China Power Group Company,  Tangshan
          Panda  Heat and Power Co., Ltd. and Tangshan Pan-Western Heat  and
          Power  Co.,  Ltd.,  dated February 10, 1996, as amended  June  18,
          1996. (2)

10.88     Agency Contract for Entrusted Loan between China Information Trust
          and  Investment  Corporation, Tangshan Panda Heat and  Power  Co.,
          Ltd.  and Tangshan Pan-Western Heat and Power Co. Ltd., dated June
          18, 1996, as amended July 17, 1996. (2) (4)

10.89     Transfer  of  Loan Agreement among Tangshan Panda Heat  and  Power
          Co.,  Ltd.,  Tangshan  Pan-Western Heat and Power  Co.,  Ltd.  and
          Tangshan Pan-Sino Heat Co., Ltd. (2)

10.90     Engineering, Procurement and Construction Contract among  Tangshan
          Panda  Heat  and  Power Co., Ltd., Tangshan Pan-Western  Heat  and
          Power  Co.,  Ltd.  and Harbin Power Engineering  Company  Limited,
          dated April 24, 1996, as amended July 4, 1996, September 14,  1996
          and December 17, 1996, respectively. (2) (4)

10.91     Engineering and Design Contract among Hebei Electric Power  Survey
          and  Design Institute, Tangshan Panda Heat and Power Company, Ltd.
          and  Tangshan  Pan-Western  Heat and Power  Company,  Ltd.,  dated
          December 21, 1995, as amended June 21, 1996. (2)

10.92     Guaranty by China Harbin Power Equipment Group Company, dated July
          16, 1996. (2)

10.93     Performance  Guarantee by The Export-Import Bank of  China,  dated
          January 3, 1997. (2)

10.94     Amended  and Restated Operation and Maintenance Agreement  between
          Tangshan  Heat and Power Co., Ltd., Tangshan Pan-Western Heat  and
          Power  Co.,  Ltd.,  Tangshan  Cayman Heat  and  Power  Co.,  Ltd.,
          Tangshan   Pan-Sino   Heat  Co.,  Ltd.   and   Duke/Fluor   Daniel
          International Services, dated March 6, 1997. (2) (4)

10.95     Construction Agreement of Heat and Steam Network between  Tangshan
          Pan-Sino Heat Co., Ltd. and Tangshan Heat and Engineering Company,
          dated June 20, 1996. (2)

10.96     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Panda Heat and  Power
          Co., Ltd., April 1, 1997 (2) (4)

10.97     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Pan-Western Heat  and
          Power Co., Ltd., April 1, 1997 (2) (4)

10.98     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western Energy Corporation, LLC and Tangshan Cayman Heat and Power
          Co., Ltd., April 1, 1997 (2) (4)

10.99     Amended  and  Restated  Shareholder Loan  Agreement  between  Pan-
          Western  Energy  Corporation, LLC and Tangshan Pan-Sino  Heat  and
          Power Co., Ltd., April 1, 1997 (2) (4)

10.100    Water,  Heat,  Steam  and  Hot Water Supply  and  Usage  Agreement
          between Tangshan Cayman Heat and Power Company, Ltd., and Tangshan
          Panda Heat and Power Company, Ltd., dated October 3, 1996. (2) (4)

10.101    Water,  Heat,  Steam  and  Hot Water Supply  and  Usage  Agreement
          between  Tangshan Cayman Heat and Power Company, Ltd. and Tangshan
          Pan-Western Heat and Power  Company, Ltd., dated October 3,  1996.
          (2) (4)

10.102    Steam  for  Process  and  Heating Water  Sales  Agreement  between
          Tangshan  Cayman Heat and Power Company, Ltd., and  Tangshan  Pan-
          Sino Heat Company, Ltd., dated October 16, 1996. (2)

10.103    Articles of Association of Tangshan Panda Heat and Power Co., Ltd.
          between  Luannan County Heat & Power Plant and Pan-Western  Energy
          Corp., LLC dated September 4, 1994. (2)

10.104    Articles  of Association for Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd.,  between Tangshan Luanhua Co. (Group)  and Pan-Western
          Energy Corp., LLC, dated September 3, 1994. (2)

10.105    Articles  of Association for Tangshan Cayman Heat and  Power  Co.,
          Ltd.,  between  Luannan County Heat & Power Plant and  Pan-Western
          Energy Corp., LLC, dated May 11, 1996. (2)

10.106    Articles  of  Association for Tangshan Pan-Sino  Heat  Co.,  Ltd.,
          between Luannan County Heat Company and Pan-Western Energy  Corp.,
          LLC, dated May 28, 1996. (2)

10.107    Application  Regarding Power Price among Tangshan Panda  Heat  and
          Power  Co.,  Ltd., Tangshan Pan-Western Heat and Power Co.,  Ltd.,
          and  Tangshan  Municipal Price Bureau dated October 17,  1995,  as
          amended October 18, 1995 and May 8, 1996, respectively. (2) (4)

10.108    Administrative   Services   Agreement   between    Panda    Energy
          International,  Inc. and Panda Global Holdings, Inc.  dated  April
          22, 1997. (2)

10.109    Development Services Agreement between Panda Energy International,
          Inc. and Panda Global Holdings, Inc. dated April 22, 1997. (2)

10.110    Form  of  Purchase  Agreement among Donaldson, Lufkin  &  Jenrette
          Securities Corporation, Panda Global Energy Company, Panda  Global
          Holdings,  Inc. and Panda Energy International, Inc., dated  April
          11, 1997. (2)

10.111    Form  of Issuer Loan Agreement between Panda Global Energy Company
          and Pan-Western Energy Corporation, LLC, dated April 22, 1997. (2)

10.112    Form  of Issuer Note of Pan-Western Energy Corporation, LLC, dated
          April 22, 1997. (2)

10.113    Registered   Capital  Contribution  and  Agency  Agreement   among
          Tangshan  Panda Heat and Power Company, Ltd., Tangshan Pan-Western
          Heat  and  Power  Company, Ltd., Tangshan Cayman  Heat  and  Power
          Company,  Ltd.,  Tangshan  Pan-Sino Heat  Company,  Ltd.,  Luannan
          County Heat and Power Plant, Tangshan Luanhua (Group) Co., Luannan
          County Heat Company and Pan-Western Energy Corporation, LLC, dated
          March 26, 1997. (2)

10.114    Form  of  Account Agreement among Panda Interfunding  Corporation,
          Panda  Energy Corporation and Panda Global Holdings,  Inc.,  dated
          April 22, 1997. (2)

10.115    Form  of Pledge Agreement between Panda Global Energy Company  and
          Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.116    Form  of  Pledge  Agreement  between Pan-Sino  Energy  Development
          Company,  LLC and Bankers Trust Company, as Trustee,  dated  April
          22, 1997. (2)

10.117    Form  of  Pledge Agreement between Pan-Western Energy Corporation,
          LLC  and Bankers Trust Company, as Trustee, dated April 22,  1997.
          (2)

10.118    Form  of Pledge Agreement between Panda Global Holdings, Inc.  and
          Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.119    Form  of  Cash  Collateral Agreement between Panda  Global  Energy
          Company  and  Bankers Trust Company, as Trustee, dated  April  22,
          1997. (2)

10.120    Form  of  Cash  Collateral  Agreement between  Pan-Western  Energy
          Corporation,  LLC  and Bankers Trust Company,  as  Trustee,  dated
          April 22, 1997. (2)

10.121    Form   of  Cash  Collateral  Agreement  between  Pan-Sino   Energy
          Development  Company, LLC and Bankers Trust Company,  as  Trustee,
          dated April 22, 1997. (2)

10.122    Form  of Pledge Agreement between Panda Energy International, Inc.
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.123    Form  of  Cash Collateral Agreement between Panda Global Holdings,
          Inc.  and Bankers Trust Company, as Trustee, dated April 22, 1997.
          (2)

10.124    Form of Cash Collateral Agreement Between Panda Energy Corporation
          and Bankers Trust Company, as Trustee, dated April 22, 1997. (2)

10.125    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan Cayman  Heat
          and Power Co., Ltd., dated September 24, 1996. (2)

10.126    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Panda Heat and Power Co., Ltd. and Tangshan  Pan-Western
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.127    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Panda Heat and Power Co., Ltd. and Tangshan Pan-Sino Heat
          Co., Ltd., dated September 24, 1996. (2)

10.128    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Western Heat and Power Co., Ltd. and  Tangshan  Pan-
          Sino Heat Co., Ltd., dated September 24, 1996. (2)

10.129    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Western Heat and Power Co., Ltd. and Tangshan  Panda
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.130    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Pan-Western Heat and Power Co., Ltd. and Tangshan  Cayman
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.131    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman Heat and Power Co., Ltd. and Tangshan Panda  Heat
          and Power Co., Ltd., dated September 24, 1996. (2)

10.132    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman  Heat and Power Co., Ltd. and  Tangshan  Pan-Sino
          Heat Co. Ltd., dated September 24, 1996. (2)

10.133    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Cayman Heat and Power Co., Ltd. and Tangshan Pan-Western
          Heat and Power Co., Ltd., dated September 24, 1996. (2)

10.134    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Sino  Heat Co., Ltd. and Tangshan  Cayman  Heat  and
          Power Co., Ltd., dated September 24, 1996. (2)

10.135    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan Pan-Sino Heat Co., Ltd. and Tangshan Pan-Western Heat and
          Power Co., Ltd., dated September 24, 1996. (2)

10.136    Form  of  Guarantee  between Pan-Western Energy Corporation,  LLC,
          Tangshan  Pan-Sino  Heat Co., Ltd.  and Tangshan  Panda  Heat  and
          Power Co., Ltd., dated September 24, 1996. (2)

12.00     Computation of Ratio of Earnings to Fixed Charges. (2)

21.00     Subsidiaries of Registrant and Co-Registrant. (2)

23.01     Consent of Deloitte & Touche LLP. (2)

23.02     Consent  of  Chadbourne  &  Parke LLP (contained  in  their  Legal
          Opinion filed as Exhibit 5.00). (3)

23.03     Consent of ICF Resources, Incorporated. (2)

23.04     Consent of Burns & McDonnell Engineering Company, Inc. (2)

23.05     Consent of Benjamin Schlesinger and Associates, Inc. (2)

23.06     Consent of Pacific Energy Systems, Inc. (2)

23.07     Consent of C.C. Pace Resources, Inc. (2)

23.08     Consent of Parsons Brinckerhoff Energy Services, Inc. (2)

23.09     Consent of Marston & Marston, Inc. (2)

23.10     Consent of Maples & Calder. (2)

23.11     Consent of Cai, Zhang & Lan. (2)

24.00     Powers of Attorney (contained in the signature pages in Part II of
          this Registration Statement). (2)

25.00     Statement  of Eligibility of Trustee under Indenture on Form  T-1.
          (2)

27.00     Financial Data Schedule. (2)

99.01     Form of Transmittal Letter. (3)

99.02     Form of Notice of Guaranteed Delivery. (3)

99.03     Independent  Engineer's  Report of Burns &  McDonnell  Engineering
          Company, Inc., dated April 11, 1997, as updated June 6, 1997. (2)

99.04     Independent  Fuel Consultant's Report of Benjamin Schlesinger  and
          Associates, Inc., dated September 20, 1996, as updated April 11, 1997
          and June 6, 1997, respectively. (2)

99.05     Independent  Engineer's Report of Pacific  Energy  Systems,  Inc.,
          dated  July 22, 1996, as updated April 11, 1997 and June 6,  1997,
          respectively. (2)

99.06     Independent Fuel Consultant's Report of C.C. Pace Resources, Inc.,
          dated  July 2, 1996, as updated April 11, 1997 and June  6,  1997,
          respectively. (2)

99.07     Independent  Engineer's  Report  of  ICF  Resources  Incorporated,
          dated April 11, 1997, as updated June 6, 1997, respectively. (2)

________________________

(1)  Previously  filed as an exhibit to the Registration Statement  on  Form
     S-1  (Registration  No. 333-19445) of Panda Funding Corporation,  Panda
     Interfunding    Corporation   and   Panda   Interholding    Corporation
     (affiliates  of  the  Registrant and Co-Registrant),  and  incorporated
     herein by reference.
(2)  Filed herewith.
(3)  To be filed by amendment.
(4)  The   Registrant   and  the  Co-Registrant  have  sought   confidential
     treatment for certain information identified in these exhibits.