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                                                              HECO Exhibit 10.12


                        INTER-ISLAND INDUSTRIAL FUEL OIL
                          AND DIESEL FUEL OIL CONTRACT

     This Contract is made and entered into this 5th day of December, 1995, by
and between BHP PETROLEUM AMERICAS REFINING INC., a Hawaii corporation,
(hereinafter called "SELLER"), and HAWAIIAN ELECTRIC COMPANY, INC., and its
wholly-owned subsidiaries Maui Electric Company, Ltd. and Hawaii Electric Light
Company, Inc., Hawaii corporations, (hereinafter collectively called "BUYER").

     NOW, THEREFORE, the parties agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

SECTION 1.1

     Except where otherwise indicated, the following definitions shall apply
throughout this Contract:

     1.   "Fuel Oil" means Industrial Fuel Oil No. 6 in accordance with Article
          IV and Exhibit A.

     2.   "Diesel" means Diesel Fuel Oil No. 2 in accordance with Article IV and
          Exhibit B.

     3.   "Product" means both Fuel Oil and Diesel.

     4.   "HECO" means Hawaiian Electric Company, Inc.

     5.   "HELCO" means Hawaii Electric Light Company, Inc.
<PAGE>
 
     6.   "MECO" means Maui Electric Company, Ltd.

     7.   "gallon" means a United States gallon of 231 cubic inches at 60
          degrees Fahrenheit.

     8.   "barrel" or "Bbl" means 42 United States gallons at 60 degrees
          Fahrenheit.

     9.   "SELLER's Loading Pier" means Piers 5 or 6 located at the Barbers
          Point Harbor, Oahu, Hawaii, and connected by pipeline to SELLER's
          Refinery at Barber's Point, Oahu, Hawaii.

     10.  "SELLER's SPM" means SELLER's offshore Single Point Mooring at Barbers
          Point, Oahu, Hawaii.

     11.  "LIBOR" means the simple average of London Inter-Bank Offered Rates
          for one month as published in the Wall Street Journal during past due
          period.

SECTION 1.2

     As to any purchase of Product by MECO, the term "BUYER" shall exclude
HELCO, and as to any purchase of product by HELCO, the term "BUYER" shall
exclude MECO.  Furthermore, for purposes of this Contract (excluding any
payments due from, and liabilities and indemnities attributable to, a BUYER) the
term "BUYER" shall be deemed to mean MECO or HELCO, as applicable, and its
authorized agent(s) for this purpose, unless otherwise specified or clearly
inappropriate in the context.

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                                   ARTICLE II
                                      TERM

     The term of this Contract shall be from January 1, 1996 through December
31, 1997 (the "Original Term") and shall continue thereafter for additional
successive 12-month periods (the "Additional Terms") beginning January 1, 1998,
unless BUYER or SELLER gives written notice of termination at least seventy-five
(75) days prior to the expiration of any previous term, including the Original
Term.

                                  ARTICLE III
                                    QUANTITY

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                                   ARTICLE IV
                                    QUALITY

     The quality of the Fuel Oil and Diesel shall be as set forth in the
attached Exhibits A and B, respectively.

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                                   ARTICLE V
                                     PRICE

SECTION 5.1

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SECTION 5.2

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SECTION 5.3

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SECTION 5.4

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SECTION 5.5

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                                   ARTICLE VI
                                    PAYMENT

SECTION 6.1

     Invoices shall be prepared by SELLER and dated after a Delivery has been
completed.  A copy of the invoice will be sent to BUYER by facsimile.  SELLER
will transmit an original of the invoice to the BUYER on the same date by mail
to the addresses set forth in Section 6.2.  Original invoices shall be
accompanied by full documentation, acceptable to the BUYER, including quality
certificates, quantity documentation, and price calculation.

     Payment shall be made by BUYER within fifteen (15) calendar days from date
of SELLER's invoice by bank wire transfer of immediately available funds to:

                               Citibank, New York
                                ABA # 021000089
                      BHP Petroleum Americas Refining Inc.
                                Account #4064332

     If SELLER's final laboratory result for gross heat content is unavailable
or if said laboratory result is disputed by BUYER pursuant to Article VIII,
SELLER may issue a provisional invoice calculated on the basis of the Diesel and
Fuel Oil heat-content standards pursuant to Article V.  BUYER shall make payment
for such provisional invoice in accordance with the instructions of this Section
6.1.  If an invoice incorporating an item other than a heat rate adjustment
which is disputed has been sent to BUYER, then BUYER shall make payment in
accordance with the instructions in this Section 6.1 for such invoice items or
that portion of the invoiced Delivery which is not disputed by BUYER and in
which case BUYER shall make such adjustment to taxes and other value-dependent
items as are reasonable under the circumstances.

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<PAGE>
 
The provisional invoice or invoice incorporating items in dispute shall be
adjusted in accordance with the terms of Article V by subsequent invoicing or by
issuing a credit or debit with respect to the original invoice within 7 business
days of receipt of the independent laboratory determination pursuant to Article
VIII or other resolution of the issue in dispute.  BUYER shall make payment for
such subsequent invoices or debits in accordance with the instructions in this
Section 6.1.  BUYER shall have the option to apply such credit against payments
to be made subsequent to the receipt of the credit, or if such payments are not
expected to be made within 15 calendar days, BUYER shall be able to receive said
credit in immediately available funds within 3 business days of SELLER's receipt
of BUYER's written instructions.

     At SELLER's option and election, interest will accrue on all amounts not
paid within 15 days of the date of the invoice at the then existing LIBOR.

SECTION 6.2

     Invoices which have been prepared in accordance with Section 6.1 shall be
sent to the respective BUYER at the following address:

     MECO  -   Maui Electric Company, Ltd.
               P. O. Box 398
               Kahului, Hawaii  96732
               Attention:  Production Department

     HELCO -   Hawaii Electric Light Co., Inc.
               P. O. Box 1027
               Hilo, Hawaii  96720
               Attention:  Purchasing Division

Certificates of quality and quantity, reports of the independent petroleum
inspector and other documents having to do with the quantity, quality, loading
of Product onto BUYER's nominated

                                       9
<PAGE>
 
vessel or otherwise with the Product sold and purchased hereunder if directed to
BUYER's agent, are to be sent in accordance with the provisions of Section 15.2
of this Contract.

                                  ARTICLE VII
                       DELIVERIES, TITLE AND RISK OF LOSS

SECTION 7.1

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SECTION 7.2

     Prior to the 20th day of each month, BUYER shall give SELLER a forecast of
liftings of Diesel and Fuel Oil for each of the next two months.  BUYER shall be
responsible for scheduling dock space at SELLER's Loading Pier for the barge
with the State Harbors Division, and provide SELLER 48 hour notice of the
proposed loading time.  BUYER shall also provide 24 hours notice to SELLER
during SELLER's regular business hours Monday through Friday (excluding
holidays) of the final quantity to be loaded, subject to a +10% loading
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tolerance; provided, however, that in the event of a loading on Monday, or on
Tuesday, if Monday is a holiday, BUYER shall provide SELLER notice of the final
quantity to be loaded, subject to a +10% loading tolerance, by 12 noon the
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previous Friday, or by 12 noon the previous Thursday if Friday is a holiday.
The final quantity notice must also be within 5,000 barrels of the 20th day
forecast volumes.

SECTION 7.3

     BUYER's nominated barge shall comply with all applicable federal, state and
local laws, rules and regulations, and SELLER's vessel acceptance standards,
such as that portion of the "BHP Transport Petroleum Tanker Inspection
Checklist" as may be applicable to unmanned petroleum tank barges, and shall be
fit in every way to receive and carry Product.  SELLER shall

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<PAGE>
 
provide BUYER its Operations Manual, other safety and operations procedures and
vessel acceptance standards, and any amendments thereto, during the term of this
Contract.  While at SELLER's Loading Pier, BUYER's nominated barge shall operate
in compliance with SELLER's Operations Manual as approved by the U.S. Coast
Guard.  In addition, a minimum of two qualified tankermen shall be provided by
BUYER's barge during all loading operations at SELLER's Loading Pier or Third-
Party Pier.

     BUYER's nominated barge shall vacate SELLER's Loading Pier or Third-Party
Pier as soon as loading is completed, except if such delay is caused by any
event or acts beyond the reasonable control of BUYER, including but not limited
to acts of God, fire, governmental acts or labor disturbances.

     Dues and other charges on the barge (whether or not such dues or charges
are based on the quantity of Product loaded or on the freight and without regard
from whom such dues or charges are withheld) shall be paid by BUYER.  Any taxes
on freight shall be borne by BUYER.  BUYER shall be responsible for any State
fee imposed for use of SELLER's Loading Pier or Third-Party Pier in the nature
of wharfage or pipeline toll.  BUYER shall employ and also be responsible for
costs of any support vessels, pilots, mooring masters, or line handlers supplied
by SELLER or otherwise required at SELLER's Loading Pier, SPM, or Third-Party
Pier, all of which shall become borrowed servants of BUYER.

     Neither SELLER, nor any of its associated or affiliated companies, nor any
of the employees, servants, representatives and agents of any of the foregoing,
shall be responsible for any losses, damages, delays or liabilities resulting
from any negligence, incompetence or

                                       12
<PAGE>
 
incapacity of any pilot, line handler, mooring master required at SELLER's
Loading Pier, SPM or Third-Party Pier or employed by BUYER or otherwise
assisting BUYER at the express authorization of BUYER or BUYER's agent or the
personnel of any tug(s) or other support vessels or arising from any
unseaworthiness or any insufficiency of any tug or other support vessel employed
by BUYER or otherwise assisting BUYER at the express authorization of BUYER or
BUYER's agent and BUYER agrees to indemnify and hold SELLER harmless from and
against any and all such losses, damages, delays or liabilities.

     At SELLER's Loading Pier or Third-Party Pier, laytime shall commence six
hours after Notice of Readiness is tendered or three hours after BUYER's
nominated barge is all secure at pier, whichever shall first occur.  Allowable
laytime shall be 14 hours; provided, however, that in the event that a part
cargo or part cargoes belonging to a third party or third parties is/are loaded
onto BUYER's nominated barge, allowable laytime shall be prorated and BUYER's
allowable laytime shall be calculated on the basis of the ratio of the bill of
lading volume of BUYER's cargo to the total bill of lading volume of the entire
cargo loaded onto BUYER's nominated barge or vessel.  Laytime shall cease when
the hoses are disconnected; however, in the event part cargoes are loaded for
BUYER and a third party or parties,  BUYER's laytime shall commence as provided
above if BUYER's cargo is loaded first, or shall commence upon commencement of
loading of BUYER's cargo if BUYER's cargo is not the first to be loaded, and
shall cease upon completion of loading of BUYER's cargo.  Laytime is allotted
and calculated using the barge currently named NOHO HELE (having approximately a
56,000 Bbl capacity).  In the event that BUYER's nominated tank vessel is other
than the NOHO HELE, laytime shall be the capacity of

                                       13
<PAGE>
 
the substitute tank vessel divided by 4,000 Bbl per hour; e.g., a 40,000 Bbl 
barge shall have an allocable laytime of 10 hours.

     Demurrage shall be payable at a rate equal to BUYER'S actual cost of tug 
and tow per hour for each hour used and prorated for each portion of an hour 
used in excess of allowable laytime. In the event the condition of Buyer's 
nominated barge renders it incapable of receiving cargo at the minimum delivery 
rate, such that the time spent loading BUYER's nominated barge (all cargoes) is 
in excess of nineteen (19) hours, SELLER shall have the right to suspend loading
operations and order BUYER's nominated barge to vacate SELLER's Loading Pier or 
Third-Party Pier. SELLER shall not be liable for demurrage to the extent that
allowed laytime is exceeded due to the condition of BUYER's nominated barge or
tug, or is due to events or acts beyond SELLER's reasonable control.

SECTION 7.4

     While it is the intention of the parties to make deliveries of Product at
SELLER's Loading Pier or Third-Party Pier, subject to mutual agreement,
deliveries may be made at SELLER's SPM. In addition to those provisions of this
Article VII not specific to SELLER's Loading Pier or Third-Party Pier, the
following additional provisions will also apply to these SPM deliveries.

     SELLER agrees to make best, reasonable effort to deliver Fuel Oil into the
BUYER's nominated barge at a temperature above 110 deg. F.  BUYER's nominated
barge shall operate in compliance with SELLER's Operations Manual approved by
the U.S. Coast Guard and shall also comply with SELLER's current requirements
for loading at its SPM as amended from time to time.  SELLER may refuse to berth
or load BUYER's nominated barge at SELLER's SPM for

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<PAGE>
 
failure to comply with SELLER's Operations Manual or requirements as aforesaid
and shall not be liable for any resulting delays or expenses of BUYER.

     An accepted delivery day shall be determined in respect of each SPM loading
pursuant to the provisions of this section.  BUYER shall provide SELLER a
proposed 3-day delivery window upon no less than seven (7) days' notice from the
first proposed delivery day.  The notice shall also specify the amount of the
Product to be delivered, subject to a variation of plus or minus ten (10)
percent at BUYER's option.  The delivery window shall be narrowed to two (2)
days upon no less than three (3) days' notice from the first proposed delivery
day and one (1) day upon no less than two (2) days' notice from the first
proposed delivery day.  A final 24 hour accepted delivery day will be set by
mutual agreement upon receipt of the two (2) day notice.  SELLER may reject the
final proposed delivery day upon providing BUYER 24 hours notice, with an
alternate delivery day being set within one (1) day of BUYER's proposed delivery
day.  Notices may be given by telex, facsimile, radio or telephone.

     When BUYER's nominated barge is ready to load, the master of the barge's
tug shall provide SELLER notice of readiness (NOR), and laytime shall commence
six (6) running hours after receipt of the NOR, or upon the barge's arrival in
berth (all fast), whichever first occurs.  SELLER shall be allowed 24 hours
laytime for loading the entire cargo requested in the seven (7) days' notice.

     BUYER's nominated barge shall vacate the SPM as soon as loading is
completed.  BUYER shall be responsible for any actual loss or damage incurred by
SELLER as a direct result of the failure of BUYER's nominated barge to promptly
vacate the SPM except if such delay is

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<PAGE>
 
caused by any event or acts beyond the reasonable control of BUYER, including
but not limited to acts of God, fire, governmental acts or labor disturbances.
In no event shall either party be responsible for prospective profits, or
consequential damages allegedly caused by or based upon failure of BUYER's
nominated barge to promptly vacate the SPM.

SECTION 7.5

     When an escape or discharge of oil or any polluting substance occurs in
connection with or is caused by BUYER's nominated barge or its tow, or occurs
from or is caused by loading operations, BUYER or its agents shall promptly take
whatever measures are necessary or reasonable to prevent or mitigate
environmental damage, without regard to whether or not said escape or discharge
was caused by a negligent act or omission of BUYER's nominated barge or SELLER
or BUYER or others.  Failing such action by BUYER or its agents, SELLER, upon
notice to BUYER and on BUYER's behalf, may promptly take whatever measures are
reasonably necessary to prevent or mitigate pollution damage.  Each party shall
keep the other advised of the nature and results of the measures taken, and if
time permits, the nature of the measures intended to be taken.  Each party shall
provide notice to the other pursuant to Section 15.2 or as otherwise  provided
in writing from time to time during the term of this Contract.  The cost of all
such measures taken shall be borne by BUYER except to the extent such escape or
discharge was caused or contributed to by SELLER, and prompt reimbursement shall
be made as appropriate; provided, however, that should BUYER or its agents give
notice to SELLER to discontinue said measures (and to the extent government
authorities allow SELLER to discontinue said measures) the continuance of
SELLER's actions will no longer be deemed to

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have been taken pursuant to the provisions of this clause.  Notwithstanding any
other provision in this Contract, the foregoing provisions shall be applicable
only between BUYER and SELLER and shall not affect, as between BUYER and SELLER,
any liability of BUYER to any third parties, including the State of Hawaii and
the U.S. Government, if BUYER shall have such liability.

     Should SELLER incur any liability under Chapter 128D of the Hawaii Revised
Statutes as a result of a spill from BUYER's nominated barge during transport,
BUYER shall indemnify and hold SELLER harmless to the extent not caused by
SELLER's negligence.

     BUYER warrants that any vessel used to load Product purchased from SELLER
shall have in place Primary and Excess full Form Protection and Indemnity
insurance including cover for Oil Pollution Clean-Up Liability and Liability for
Oil Pollution Damage with a policy limit of $700,000,000, or the maximum
available, as reflected by the coverage carried by other vessels calling at
SELLER's SPM.

                                 ARTICLE VIII
                       MEASUREMENT, SAMPLING AND TESTING

SECTION 8.1

     A mutually agreed upon independent petroleum inspector (Independent
Inspector) shall attend every Product Delivery.  A Delivery is defined as
beginning with the initiation of pumping of each of Diesel or Fuel Oil from
SELLER's refinery tank or nominated issuing tank to BUYER's nominated vessel and
ending with the subsequent cessation of continuous pumping of Diesel or

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Fuel Oil in such amount as is determined by the Independent Inspector's
Certificate of Quantity.  Reasonable charges rendered by the Independent
Inspector shall be borne equally by BUYER and SELLER.

SECTION 8.2

     Quantity determination will be made by the Independent Inspector gauging
SELLER's Product shore tanks before and after delivery.  BUYER may verify
SELLER's tank strapping tables at BUYER's election and sole expense.

     All measurements shall be made on the basis of net standard volumes in
barrels corrected to 60 degrees Fahrenheit using the applicable ASTM-IP volume
correction factor tables and should state whether such volumes are measured in
air or in vacuum, with conversion in accordance with the most recent ASTM-IP
Petroleum Measurement Tables (IP200) issued at the date of loading and otherwise
by manual measurements such as ASTM-IP, Chapter 17 Procedures.

     The Independent Inspector shall (1) prepare and sign a certificate stating
the quantity of the load, such certificate to utilize ASTM-IP standards,
including measurement of sediment and water and API specific gravity, (2)
furnish BUYER and SELLER each with a copy of such certificate; and (3) cable or
advise by facsimile the quantity loaded to BUYER and SELLER.  The data in the
inspector's certificate of quantity prepared as provided herein shall, absent
fraud or errors and omissions, be binding and conclusive upon both parties, and
shall be used for verification of the invoice and Bill of Lading.

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<PAGE>
 
SECTION 8.3

     Unless otherwise specifically provided herein, quality and heat content
determination shall be based upon composite samples drawn from SELLER's issuing
tanks and pipeline in accordance with ASTM sampling procedures in such a manner
as to be representative of each individual Delivery of Fuel Oil and Diesel,
respectively.  If a Delivery of Diesel or Fuel Oil is from more than one issuing
tank, the specifications of the total Delivery of Diesel or Fuel Oil shall be
determined on a volumetric weighted average basis.

     The Independent Inspector shall draw (a) composite samples of diesel and
fuel oil retain ("Retain Samples") prior to the loading of BUYER's nominated
barge, if such diesel and fuel oil retain is accessible to standard sampling
equipment, and (b) barge tank composite samples ("Barge Tank Samples") at the
completion of loading the Diesel and at the completion of loading the Fuel Oil
onto BUYER's nominated barge, in such a manner as to be representative of the
total volume of diesel and fuel oil retain and of each individual Delivery,
respectively.  The samples described in subsections (a) and (b) herein shall be
divided into a minimum of three (3) parts:

     1.  One part shall be retained by SELLER's laboratory for a period of three
(3) months.

     2.  One part shall be provided to BUYER for the purpose of verifying
SELLER's determinations.

     3.  At least one part shall be sealed and provided to BUYER, or to the
Independent Inspector, to be retained.

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     SELLER agrees to provide BUYER a copy of SELLER's laboratory analyses of
the issuing tank and pipeline samples showing API gravity, sulfur content, flash
point and sediment and water content prior to commencing Delivery.  SELLER shall
provide BUYER the complete Certificate of Quality of the Diesel and the Fuel Oil
no later than two working days after the completion of the Delivery.  BUYER
shall have the right to perform laboratory analyses in order to verify the
results of SELLER's laboratory analyses.

     If SELLER or BUYER has reason to believe that the quality or quantity of
Product stated for a specific Delivery is incorrect, including a dispute as to
the test results of BUYER's samples and SELLER's shore tank and pipeline
samples, then that party shall within thirty (30) days after the later of the
date of the complete Certificate of Quality or the date of the final
determination of gross heat content, present the other party with documents
supporting such determination and the parties will confer, in good faith, on the
causes for the discrepancy and shall proceed to correct such causes and adjust
the quality and quantity, if justified, for the Delivery in question.  In the
event of an unresolvable difference between SELLER and BUYER, BUYER's sealed
Barge Tank Samples, and also BUYER's sealed Retain Samples if relevant in the
opinion of the Independent Inspector, shall be provided to an independent
laboratory for a final determination, which shall be binding on the parties.
SELLER and BUYER shall share equally the cost for such independent laboratory
determination.

     In the event of any quality problems occurring, both SELLER and BUYER shall
attempt to minimize the impact of any such quality problems.  If efforts to
resolve the quality problem fail, BUYER may return off-specification loaded
Product to the SELLER's Barbers Point

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refinery, in which case SELLER shall replace the off-specification Product by
delivering an equal volume of Product into BUYER's nominated barge in a timely
manner.

     All reasonable costs and expenses, including testing, transportation, 
re-refining, and handling costs incurred in returning and replacing off-
specification Product shall be paid by the responsible party, as determined by
the independent laboratory test results and any other applicable evidence.  In
no event shall either party be responsible for prospective profits, or
consequential damages allegedly caused by or based upon any quality problem with
the Product.

                                  ARTICLE IX
                                 RENEGOTIATION

     It is understood and agreed that both parties entered into this Contract in
reliance on governmental laws, rules, decrees, orders, regulations, and
interpretations or implementation thereof in effect on the date of execution of
this Contract or any subsequent amendments hereto, to the extent that they
directly or indirectly affect the Product sold or purchased hereunder.  If at
any time any of the said laws, rules, regulations, implementations or
interpretations thereof are changed or if new laws, rules, regulations or new
interpretations and implementations thereof become effective, and such change or
new laws, rules, regulations, interpretations or implementations thereof have a
significant adverse economic effect upon either party such that performance of
this Contract would be inequitable or cause substantial financial hardship to
the affected party, then the affected party shall have the option to call for
renegotiation of the price of the Product or any other provision of this
Contract the performance of which by the affected

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party would be inequitable or cause substantial financial hardship.  Such option
shall be exercised by the affected party at any time after such a change or new
law, rule, regulation, interpretation or implementation thereof is effective, by
giving written notice to the other party of the call to renegotiate.  Within ten
(10) calendar days after the date of such notice, the parties shall enter into
negotiations and in the event that the parties do not agree upon a new price for
the Product or other provision satisfactory to both parties within forty (40)
calendar days after the date of such notice, the affected party shall have the
right to terminate this Contract effective thirty (30) days after giving notice
of termination to the other party.  Said notice of termination shall be given
within thirty (30) days immediately following the forty (40) day negotiation
period.  Until a mutually satisfactory new price for the Product or other
provision has been agreed upon, or until this Contract is terminated as provided
herein, the price for the Product or other provision which was in effect when
the request for renegotiation was made shall continue in full force and effect.

                                   ARTICLE X
                                 FORCE MAJEURE

SECTION 10.1

     Force Majeure.  As used in this contract, an event or act of "force
majeure" is defined as follows:  acts of God, wars, riots, strikes, labor
disputes, lockouts, blockades, insurrections, inability to secure materials or
labor by reason of allocations promulgated by governmental

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agencies, epidemics, landslides, lightning, earthquakes, fires, floods, tidal
waves, volcanic eruptions, explosions, or any other causes not within the
control of the affected party.

SECTION 10.2

     Obligations Suspended.  BUYER's obligation to purchase or receive Product,
or SELLER's obligation to sell or deliver Product, shall be suspended to the
extent performance is prevented by an event or act of force majeure for any
period in which such event or act exists as to the party claiming force majeure;
and so long as such party is exercising its good faith efforts to overcome such
force majeure event.  However, nothing in this Article excuses BUYER from its
obligation to make payments of money due SELLER for Product already delivered to
BUYER.

SECTION 10.3

     Notice of Force Majeure.  The party claiming force majeure agrees to give
the other party prompt written notice of an act or event of force majeure.  The
party claiming force majeure shall use due diligence to cure any act or event of
force majeure, and shall give the other party prompt notice after the act or
event of force majeure has terminated.  This Article shall not require any party
to settle or compromise any strike or labor dispute.

SECTION 10.4

     No Make-Up Requirement.  After the act or event of force majeure has
terminated, SELLER shall not be obligated to sell and deliver and BUYER shall
not be obligated to purchase and receive the undelivered quantity of Product
which normally would have been sold and delivered during the period of force
majeure.

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                                  ARTICLE XI
                         PRICE AND ALLOCATION CONTROLS

SECTION 11.1

     Regulatory Price Suspension.  If SELLER is precluded by statute, or by
regulation, rule, interpretation or order implementing such statute from
obtaining any increase in Product Price, as determined pursuant to this
Contract, the increase shall be suspended until said law, regulation, rule,
interpretation or order permits the increase in whole or in part.  In the event
the law, regulation, rule, interpretation or order is terminated or is later
modified to permit the increase, in whole or in part, the Product Price shall be
increased for deliveries of the Product made thereafter to the level permitted
under this Contract without further action by the parties.

SECTION 11.2

     Government Regulations.  If the delivery or supply of Product pursuant to
this Contract conflicts with or is limited or prohibited by any federal, state
or local regulations, then to the extent of such conflict, limitation or
prohibition, SELLER shall have no obligation to deliver or supply BUYER with the
Product under this Contract and BUYER shall have no obligation to purchase or
receive the Product under this Contract.  BUYER, in BUYER's discretion, may
elect to complete and file any and all required Federal or state regulatory
forms to permit, facilitate, or enable the supply of Product to BUYER under this
Contract.  SELLER shall fully cooperate with BUYER in the completion and filing
of the foregoing forms.  If purchase and receipt of Product pursuant to this
contract conflicts with or is limited or prohibited by any

                                       24
<PAGE>
 
Federal, State, or local regulations, then to the extent of such conflict,
limitation, or prohibition, BUYER shall have no obligation to purchase and
receive the Product under this Contract.

                                  ARTICLE XII
                                  ASSIGNMENT

     This Contract shall not be assigned by either party without prior written
consent of the other party, and any assignment without such written consent
shall be void; provided, however, HECO, HELCO, and MECO may assign their
interests in this Contract to the Trustee under their respective First Mortgage
Indentures.

                                 ARTICLE XIII
                                APPLICABLE LAW

     This Contract shall be deemed to be a Contract made under and shall be
governed by and construed in accordance with the laws of the State of Hawaii.
The parties hereby consent to the personal jurisdiction of the federal and state
courts in the State of Hawaii.

                                  ARTICLE XIV
                     PUBLIC UTILITIES COMMISSION APPROVAL

     This Contract is required to be filed with the Hawaii Public Utilities
Commission for approval.  If in proceedings initiated as a result of the filing
of this Contract, the Public Utilities Commission disapproves or fails to
authorize the recovery of fuel costs incurred under this

                                       25
<PAGE>
 
Contract through the BUYER's Energy Cost Adjustment Clause, BUYER may terminate
this Contract at any time within ninety (90) days of disapproval by giving sixty
(60) days written notice to the SELLER.

                                  ARTICLE XV
                    ENTIRE AGREEMENT, WAIVER AND ILLEGALITY

SECTION 15.1

     This Contract incorporates the entire agreement between the parties with
reference to the subject matter and cancels and supersedes as of the date of
execution hereof all prior oral or written understandings, or agreements,
between the parties with respect to the subject matter and may only be modified
by written instrument executed by duly authorized representatives of the
parties.  There are no other agreements which constitute any part of the
consideration for, or any condition to, either party's compliance with its
obligations under this Contract.  Failure to insist upon strict performance of
any provision shall not constitute a waiver of the right to require such
performance, nor shall a waiver in one case constitute a waiver with respect to
a later breach, whether of a similar nature or otherwise.  If any term or
provision of this Contract is held by any Court to be illegal or unenforceable,
the remaining terms, provisions, rights and obligations shall not be affected.
The headings or captions are for  convenience  only  and  have  no  force  or
effect  on legal meaning in the construction or enforcement of the Contract.
Time shall be of the essence in this Contract.

                                       26
<PAGE>
 
SECTION 15.2

     Except as otherwise expressly provided herein, all notices shall be given
in writing, by letter, telegram, or telex to the following addresses, or such
other addresses as the parties may designate by notice, and shall be deemed
given upon receipt.

     SELLER:  Vice President - Marketing
              BHP Petroleum Americas Refining Inc.
              733 Bishop Street
              Honolulu, Hawaii  96813
              Facsimile:  (808) 547-3796

     BUYER:  Hawaiian Electric Company, Inc.
             P.O. Box 2750
             Honolulu, Hawaii  96840
             Attn:  Manager, Power Supply Services Department
             Facsimile:  (808) 543-7788

The Manager, Power Supply Services Department, for Hawaiian Electric Company,
Inc. shall be responsible for forwarding notices to the other parties to this
Contract.

                                       27
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
thereby, have caused this Contract to be executed in duplicate originals by
their duly authorized officers.

HAWAIIAN ELECTRIC                         BHP PETROLEUM AMERICAS
 COMPANY, INC.                             REFINING INC.


By  /s/ Edward Y. Hirata                  By  /s/ Faye W. Kurren
    Its Vice President                        Its Vice President
        Regulatory Affairs                                   SELLER


By  /s/ Molly M. Egged
    Its Secretary

HAWAII ELECTRIC LIGHT
 COMPANY, INC.


By  /s/ Edward Y. Hirata
    Its Vice President


By  /s/ Molly M. Egged
    Its Secretary

                         BUYER

MAUI ELECTRIC COMPANY, LTD.


By  /s/ Edward Y. Hirata
    Its Vice President


By  /s/ Molly M. Egged
    Its Secretary

                         BUYER

                                       28
<PAGE>
 
                                   EXHIBIT A
                   NO. 6 INDUSTRIAL FUEL OIL  SPECIFICATIONS
<TABLE>
<CAPTION>
 
Specification -  Test Item           Measurement Unit    Limits        ASTM Method
<S>                                  <C>                 <C>           <C> 
GRAVITY @ 60 DEGREES F.                Degrees API       6.5 Min.        D-1298,
                                                                         D-4052-86
 
FLASH POINT                            Degrees F.        150 Min.        D-93
 
 
VISCOSITY                              SSF At 77 DF      - - -          D-445,
                                                                        D-2161
 
VISCOSITY                              SSF At 122 DF     179 Min.       D-445,
                                                         226 Max.       D-2161
 
POUR POINT                             Degrees F.         55 Max.       D-97
 
SULFUR                                 Percent, Weight  2.00 Max.       D-1552,
                                                                        D-2622,
                                                                        D-4294
 
SEDIMENT & WATER                       Percent, Volume   0.5 Max.       D-1796
 
HEAT VALUE, GROSS                      MM BTU/BBL        6.2 million    D-240
                                                         Min.
 
LOADING TEMPERATURE                    Degrees F.        110 Min.       n/a          
                                                         150 Max.  
</TABLE> 

                                       29
<PAGE>
 
<TABLE>
<CAPTION>
                                   EXHIBIT B
                             DIESEL SPECIFICATIONS
 
Specification -  Test Item           Measurement Unit     Limits      ASTM Method
<S>                                  <C>                 <C>          <C> 
GRAVITY @ 60 DEGREES F.                Degrees API       30.0 Min.      D-1298,
                                                                        D-4052-86
 
SPECIFIC GRAVITY 60/60 DEGREES F.      n/a              .8762 Min.      D-1298,
                                                                        D-4052-86
 
VISCOSITY                              SSU At 100 DF     32.6 Min.      D-445,
                                                         40.1 Max.      D-2161
 
FLASH POINT,  PM                       Degrees F.         150 Min.      D-93
 
POUR POINT                             Degrees F.          35 Max.      D-97
 
ASH                                    PPM, Wt.           100 Max.      D-482
 
CETANE INDEX                            n/a                40 Min.      D-4737
 
CARBON RESIDUE,
10% RESIDUUM                           %, Wt.             .35 Max.      D-524
 
SEDIMENT & WATER                     Percent, Volume     0.05 Max.      D-1796
 
SULFUR                               Percent, Weight     0.40 Max.      D-1552,
                                                                        D-2622,
                                                                        D-4294
 
DISTILLATION,
90% RECOVERED                        Degrees F.          540 - 650      D-86
 
SODIUM+POTASSIUM                     PPM, Wt.             0.5 Max.      D-3605
 
NITROGEN                             PPM, Wt.             Report        D-4629
 
* HEAT VALUE, GROSS                  MM BTU/BBL            5.86         D-240,
                                                                        D-4868
</TABLE>
* Typical Value

                                       30
<PAGE>
 
                                   EXHIBIT C

                   No. 6 FUEL OIL EXAMPLE PRICE CALCULATION

          * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - *
          This portion is confidential; therefore, it has been omitted and
                     filed separately with the Commission.
          * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - *

                                       31
<PAGE>
 
          * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - *
          This portion is confidential; therefore, it has been omitted and
          filed separately with the Commission.
          * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - *


EXPLANATION OF TAXES:
Taxes in the Fuel Oil price currently in effect include Superfund Tax of $0.097
per barrel and the Hawaii Environmental Response Tax of $0.050 per barrel. Also,
Hawaii State General Excise Tax of 4.167% will be paid on all components of the
Fuel Oil price, except the Hawaii Environmental Response Tax.

                                       32
<PAGE>
 
                                   EXHIBIT D

                       DIESEL EXAMPLE PRICE CALCULATION

                Illustrative Price Calculation for August, 1995

          * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - *
          This portion is confidential; therefore, it has been omitted and
          filed separately with the Commission.
          * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - *

                                       33
<PAGE>
 
          * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - *
          This portion is confidential; therefore, it has been omitted and
          filed separately with the Commission.
          * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - * - *

                                       34
<PAGE>
 
EXPLANATION OF TAXES:
Taxes in the Diesel price currently in effect include Superfund Tax of $0.097
per barrel ($0.0023 per gallon), the Hawaii Environmental Response Tax of $0.050
per barrel ($0.0012 per gallon) and the Hawaii Liquid Fuel Tax of $0.01 per
gallon. Also, the Hawaii State General Excise Tax of 4.167% will be paid on all
components of the Diesel price, except the Hawaii Environmental Response Tax and
the Hawaii Liquid Fuel Tax.

                                       35