Exhibit 10.8




                ENGINEERING, PROCUREMENT, AND
                    CONSTRUCTION CONTRACT






                           BETWEEN


         CE CASECNAN WATER AND ENERGY COMPANY, INC.,
                           Owner,


                             AND


   CP CASECNAN-CONSORTIUM, a limited liability consortium
         with external activities under Italian law,
                         Contractor

EXHIBITS

A    Statement of the Work
B    Applicable Permits
C    Progress Payment Schedule
D    Acceptance and Performance Tests
E    Milestone Schedule
F    Critical Path Schedule
G    Change in the Work Form
H    Form of Progress Report
I    Insurance Coverages
J    Spare Parts to Be Provided by Contractor
K    Warranty Procedures
L    Form of Contractor Lien Waiver
L-1  Form of Final Contractor Lien Waiver
M    Form of Subcontractor and Vendor Lien Waiver
M-1  Form of Final Subcontractor and Vendor Lien Waiver
N    Form of Contractor's Invoice
O    Form of Assignment Clause for Subcontracts
P    Turbine Guarantee
Q    Project Performance Guarantee
Q-1  Project Performance Output at 250M Gross Head
R    Description of the Site
S    Environmental Compliance Certificate
T    NPC Interface Conditions
U    Major Existing Site Assets
V    Electro-Mechanical Subcontract
W    Electro-Mechanical Specification
X    Form of Demand Bank Security
Y    Form of Retention Security

          THIS  ENGINEERING, PROCUREMENT,  AND  CONSTRUCTION
CONTRACT  (the "Contract") is made and entered  into  as  of
this  7th day of May, 1997, by and between CE CASECNAN WATER
AND   ENERGY   COMPANY,   INC.,  a  Philippine   corporation
(hereinafter "Owner"), and CP CASECNAN, a limited  liability
consortium  with  external  activities  under  Italian   law
(the  "Contractor").  Each entity is sometimes  individually
referred  to  herein  as  a "Party" and  both  entities  are
sometimes collectively referred to herein as the "Parties".

                     W I T N E S S E T H

          A.   Owner desires to develop, finance, construct,
own, and operate a combined irrigation and power generation
project to be located on the island of Luzon, Republic of
the Philippines, commonly known as the Casecnan Multipurpose
Project.

          B.    A  portion of the work on such  project  has
been performed by Hanbo Engineering & Construction Co., Ltd.
and  Hanbo  Corporation (collectively, "Hanbo") pursuant  to
that   certain  Engineering,  Procurement  and  Construction
Contract,  dated  October 10, 1995  (the  "Hanbo  Contract")
between Owner and Hanbo.

          C.    Owner  desires  Contractor  to  provide  all
engineering,  procurement,  and construction  services  with
respect  to such project, and Contractor desires to  provide
such  services,  all  in  accordance  with  the  terms   and
conditions set forth in this Contract.

          NOW, THEREFORE, in consideration of the sums to be
paid  to  Contractor  by  Owner and  of  the  covenants  and
agreements set forth herein, the Parties agree as follows:

          1.   DEFINITIONS AND RULES OF INTERPRETATION

          1.1   As  used  herein, the following terms  shall
have the indicated definitions:

          "Applicable  Laws":  All laws (including  building
codes),    treaties,    ordinances,   judgments,    decrees,
injunctions, writs, orders, and stipulations of  any  court,
arbitrator,   or  governmental  agency  or   authority   and
statutes,  rules,  regulations, orders, and  interpretations
thereof of any national, municipal, regional, environmental,
or   other   governmental  body,  instrumentality,   agency,
authority, court, or other body, in each case to the  extent
the  same  has  jurisdiction over Contractor, the  Site,  or
performance of the Work.

          "Applicable Permits": Those permits identified  in
Exhibit   B,   together  with  all  other   valid   waivers,
exemptions,  variances, franchises, permits, authorizations,
approvals,  licenses,  or similar  orders  of  or  from  any
national,  municipal,  regional,  environmental,  or   other
governmental   body,  instrumentality,  agency,   authority,
court,  or other body, in each case to the extent  the  same
has  jurisdiction over Contractor, the Site, or  performance
of the Work.

          "Authorities": The Government of the  Republic  of
the   Philippines,  all  provincial,  regional,  local,  and
municipal  government bodies thereunder, and  all  political
subdivisions,   agencies,  and  instrumentalities   of   the
foregoing.

           "Balance  of  Scope": The Work  to  be  performed
hereunder  other  than  the Work included  in  the  Electro-
Mechanical Scope.

           "Balance of Scope Contract Price Component":  The
portion  of the overall Contract Price attributable  to  the
Work  included  in  the  Balance of Scope.   Initially,  the
Balance   of   Scope   Contract   Price   Component   equals
US$205,350,000.  Increases to the Contract Price  shall  act
to  increase the Balance of Scope Contract Price  Component,
except to the extent such increase in the Contract Price  is
attributable to the Electro-Mechanical Scope (in which  case
such  increase  shall act to increase the Electro-Mechanical
Scope Contract Price Component).

            "Balance  of  Scope  Liquidated  Damages":   All
amounts  (other than Electro-Mechanical Liquidated  Damages)
payable to Owner pursuant to Article 14 of this Contract.

           "Balance of Scope Payments":  All amounts  (other
than  Electro-Mechanical Payments) payable by Contractor  to
or for the benefit of Owner under this Contract.

          "Business  Day": A Day, other than a  Saturday  or
Sunday  or  Holiday, on which banks are generally  open  for
business in Manila and New York City.

          "Buy  Down Amount": The amount payable as  damages
pursuant  to Section 14.2 for the failure of the Project  to
achieve the Project Performance Guarantee.

          "Change   in   Law":   The  enactment,   adoption,
promulgation, modification, or repeal after the date of this
Contract of any Applicable Law or the modification after the
date   of  this  Contract  of  any  Applicable  Permit  that
establishes  requirements adversely  affecting  Contractor's
costs  or schedule for performing the Work, provided that  a
change in national or any other income tax law or any  other
law  imposing  a tax, duty, levy, impost, fee,  royalty,  or
charge  for which Contractor is responsible hereunder  shall
not be a Change in Law pursuant to this Contract.

          "Change  in  the Work": A change in  the  Work  as
defined in Section 15.1.

           "CMC":  Cooperativa Muratori & Cementisti-C.M.C.-
di Ravenna s.r.l.

           "CMC\Pizzarotti Corporate Guaranty":   The  joint
and  several guaranty to be issued by CMC and Pizzarotti  in
favor  of Owner, in form and substance mutually satisfactory
to  CMC,  Pizzarotti,  Owner  and  the  Financing  Entities,
guarantying  Contractor's obligations  under  this  Contract
with  respect to the Balance of Scope (including all Balance
of Scope Payments).

          "CMC\Pizzarotti Demand Bank Security":  The demand
bank guaranty, in substantially the form of Exhibit X, to be
issued  to  Owner  by  a  bank satisfactory  to  Owner,  and
otherwise  in  form and substance mutually  satisfactory  to
Contractor,  Owner  and the Financing Entities,  guarantying
Contractor's  obligations under  this  Contract  and  in  an
amount  equal to 35% of the Balance of Scope Contract  Price
Component.

          "Consulting Engineer": The consulting engineer (or
engineers)   selected  and  designated  by   the   Financing
Entities.

          "Contract":  This  Engineering,  Procurement,  and
Construction Contract, including all exhibits hereto, as the
same may be modified, amended, or supplemented from time  to
time in accordance with Section 37.5.

          "Contract  Price": The fixed amount for performing
the  Work  that  is payable to Contractor as  set  forth  in
Section 6.1 hereof.

          "Contractor":  CP Casecnan-Consortium,  a  limited
liability consortium with external activities under  Italian
law.

          "Contractor's Invoice": An invoice from Contractor
to  Owner in accordance with Section 7.1(a) and in the  form
of Exhibit N hereto.

          "Contractor's  Permits": Those permits  identified
on  Part  II  of  Exhibit B, together with all  other  valid
waivers,   exemptions,   variances,   franchises,   permits,
authorizations, approvals, licenses, or similar orders of or
from  any  national, municipal, regional, environmental,  or
other governmental body, instrumentality, agency, authority,
court,  or other body, in each case to the extent  the  same
has  jurisdiction over Contractor, the Site, or  performance
of  the  Work; provided, however, that Contractor's  Permits
shall not include Owner's Permits.

          "Critical  Path Item(s)": The items identified  as
critical  path items on the Critical Path Schedule  prepared
by Contractor.

          "Critical Path Schedule": A critical path schedule
prepared  by  Contractor and meeting  the  requirements  set
forth  in  Exhibit  F  describing  the  estimated  time   of
completion of Critical Path Items for completion of the Work
by Contractor.

          "Day"  or  "day": A calendar day, unless otherwise
specified.

           "Dollar"  or "$":  Dollars in lawful currency  of
the United States.

            "Electro-Mechanical  Liquidated  Damages":   All
amounts  payable  to Owner pursuant to Article  14  of  this
Contract  and which arise within or are due to Work required
to be performed under the Electro-Mechanical Scope.

            "Electro-Mechanical  Payments":    All   amounts
payable  by Contractor to or for the benefit of Owner  under
this  Contract  and which arise within or are  due  to  Work
required to be performed under the Electro-Mechanical  Scope
(including Electro-Mechanical Liquidated Damages  and  other
damages  payable hereunder in connection with  the  Electro-
Mechanical Scope).

            "Electro-Mechanical  Scope":   All  work  to  be
performed under the Electro-Mechanical Subcontract.

             "Electro-Mechanical   Scope   Contract    Price
Component":   The  portion  of the  overall  Contract  Price
attributable  to the Work included in the Electro-Mechanical
Scope.   Initially,  the Electro-Mechanical  Scope  Contract
Price  Component  equals US$34,650,000.   Increases  to  the
Contract  Price shall act to increase the Electro-Mechanical
Contract Price Component, except to the extent such increase
in  the  Contract Price is attributable to  the  Balance  of
Scope (in which case such increase shall act to increase the
Balance of Scope Contract Price Component).

              "Electro-Mechanical    Specification":     The
specification  for  the  Electro-Mechanical   Scope,   which
specification  is  attached as Exhibit W  to  this  Contract
(subject  to  such further modification thereto  as  may  be
mutually  agreed  upon in writing by Owner,  Contractor  and
Electro-Mechanical Subcontractor).

          "Electro-Mechanical Subcontract":  The subcontract
with  the  Electro-Mechanical Subcontractor, to  be  entered
into  by  Contractor pursuant to Section 8.4.  Upon entering
into  of  such Electro-Mechanical Subcontract, such Electro-
Mechanical  Subcontract  shall  be  incorporated  herein  as
Exhibit V.

                  "Electro-Mechanical        Subcontractor":
Sulzer/Siemens, as Subcontractor with responsibility for the
Electro-Mechanical  Scope  or any replacement  Subcontractor
with  responsibility for the Electro-Mechanical Scope, which
Electro-Mechanical Subcontractor has been approved by Owner;
provided, however, that Sulzer/Siemens shall not be  removed
as  the  Electro-Mechanical  Subcontractor,  nor  shall  any
replacement  Electro-Mechanical Subcontractor be designated,
in either case without the prior written consent of Owner.

          "Environmental   Compliance   Certificate":    The
Environmental  Compliance  Certificate  attached   to   this
Contract as Exhibit S.

            "Existing Site Assets": The assets identified in
Exhibit  U or otherwise available to Contractor at the  Site
on the Notice to Proceed Date.

            "Final  Acceptance": Satisfaction or  waiver  by
Owner of all of the conditions set forth in Section 13.5.

          "Final  Acceptance Date": The date on which  Final
Acceptance of the Project occurs.

          "Financial  Closing":   The  date  on  which   the
Financing Entities made the first disbursement to Owner from
the  construction  loan for the Project, which  occurred  in
November 1995.

          "Financing Entities": The holders of, the agent(s)
or  trustee(s) representing the holders of, or the financial
institutions or other Person or Persons providing  a  letter
or  letters  of credit or other guarantees or  insurance  in
support  of,  any debt or equity financing for the  Project,
but  excluding  equity  funds of Owner  or  shareholders  of
Owner.

          "Force  Majeure": The events of Force Majeure  set
forth in Section 22.1.

          "Guaranteed Substantial Completion Date":  Subject
to   any  extensions  specifically  provided  for  in   this
Contract, the date that is thirty-six (36) months after  the
Notice to Proceed Date.

          "Hanbo-Related Event":  Any event or  circumstance
materially  and adversely affecting Contractor's prosecution
of  the Work (including by interfering with Contractor's use
and quiet enjoyment of the Major Existing Site Assets) which
event  or  circumstance  is (i) unrelated  to  the  physical
condition  of  such  Major Existing  Site  Assets  and  (ii)
directly  related to Hanbo or any successor in  interest  to
Hanbo or to Hanbo's prior involvement in the Project.

          "kW": Electrical output expressed in kilowatts.

          "kWh": Kilowatt hours.

          "Labor  Payment  Bond": A payment  bond  or  bonds
guaranteeing  the  full cost of labor  under  this  Contract
(including  labor  to  be  provided by  Subcontractors)  and
otherwise  meeting  the terms and conditions  set  forth  in
Section 4.1(ad) hereof.

          "LIBOR":  The London inter-bank offered  rate  for
six-month United States dollar deposits, as published in The
Financial Times.

          "Major   Existing   Site   Assets":   The   assets
identified in Exhibit U, as such Exhibit U may be agreed  to
by Owner and Contractor pursuant to Section 8.4.

          "Materials  Warranty": The warranty of  Contractor
under Section 17.2.

          "Mechanical Completion": Satisfaction  of  all  of
the conditions set forth in Section 12.2.

          "Milestone Schedule": The milestone schedule to be
prepared  by  Contractor and approved by Owner  pursuant  to
Section  8.4  hereof  and, upon such approval,  incorporated
herein  as  Exhibit  E  describing  the  estimated  time  of
completion of project milestones for completion of the  Work
by Contractor.

          "NIA":  The National Irrigation Administration  of
the  Republic of the Philippines and any other authority  of
the  Republic  of the Philippines appointed or assigned  the
rights as the Republic's Project sponsor.

          "Notice"  or  "notice":  A  written  communication
between  the Parties required or permitted by this  Contract
and conforming to the requirements of Article 33.

          "Notice of Final Acceptance": A Notice from  Owner
to  Contractor in accordance with Section 13.5(i)  that  the
Project has satisfied the requirements for Final Acceptance.

          "Notice of Substantial Completion": A Notice  from
Owner to Contractor in accordance with Section 13.4 that the
Project  has  satisfied  the  requirements  for  Substantial
Completion.

          "Notice to Proceed": A written Notice signed by  a
duly  authorized  officer of Owner to  Contractor  directing
Contractor  to  commence and complete all  Work  under  this
Contract.

          "Notice  to  Proceed Date": The Notice to  Proceed
Date set forth in Section 8.1, which shall not be later than
June 30, 1997.

          "NPC":  The  National  Power  Corporation  of  the
Republic of the Philippines.

          "Operating  Consumables":  Chemicals,  lubricants,
filters,  lamps, light bulbs, and other consumable equipment
and materials necessary for the operation and maintenance of
the Project.

          "Operating  Personnel":  The  operating  personnel
hired by Owner to operate and maintain the Project.

            "Owner":  CE Casecnan Water and Energy  Company,
Inc., a Philippine corporation.

          "Owner's  Engineer": Knight Pi?sold Ltd. or  other
engineer (or engineers) selected and designated by Owner.

          "Owner's  Permits":  Those Permits  identified  on
Part I of Exhibit B.

          "Performance Guarantees": The Project  Performance
Guarantee and the Reliability Guarantee.

           "Performance  Security":  Collectively,  (i)  the
CMC\Pizzarotti Corporate Guaranty, (ii) the Sulzer Corporate
Guaranty,  (iii)  the Siemens Corporate Guaranty,  (iv)  the
CMC\Pizzarotti Demand Bank Security, (v) the  Sulzer  Demand
Bank Security and (vi) the Siemens Demand Bank Security.

          "Person":  Any  individual, corporation,  company,
voluntary     association,     partnership,     incorporated
organization, or government (or any agency, instrumentality,
or political subdivision thereof).

          "Pizzarotti":  Impresa Pizzarotti & C. Spa.

            "Point  of  Interconnection": The point  at  the
electrical interconnection facilities with NPC's Luzon  grid
at  the Project's switchyard where the transfer and metering
of  electrical energy delivered from the Project to NPC take
place.

          "Progress Payment Schedule": The Progress  Payment
Schedule  attached  as Exhibit C setting forth  payments  to
Contractor for completion of various elements of the Work.

          "Project":  The in-stream dam/diversion structures
in  the Casecnan and Denip rivers, a tunnel from Casecnan to
the  Pantabangan  Reservoir,  an  underground  hydroelectric
powerhouse and surface switchyard near the discharge end  of
the  tunnel,  and  a tailwaters discharge  tunnel  into  the
Pantabangan  Reservoir, together with ancillary  facilities,
to  be  designed, engineered, and constructed by  Contractor
for  Owner  consistent  with all the  requirements  of  this
Contract, as more fully described in Exhibit A and Exhibit W
(subject to changes to said Exhibit W as contemplated by the
definition of Electro-Mechanical Specification; and provided
that, in the event of any inconsistency between the terms of
Exhibit  A  and  Exhibit W, the terms  of  Exhibit  A  shall
govern).

          "Project  Manager": The Project Manager designated
by Contractor pursuant to Section 4.1(w).

          "Project  Performance Guarantee":  The  guaranteed
output of the Project at various water flows as set forth on
Exhibit Q.

          "Project  Performance Test":  The  Project  output
test described in Exhibit D.

          "Project   Reliability":  The  percentage   of   a
specified  time  period that the Project  is  available  and
capable   of  operating  over  its  full  range  of   design
conditions.

          "Project     Representative":     The      Project
Representative  designated  by  Owner  pursuant  to  Section
3.1(a).

          "Project Warranties": The warranties of Contractor
under Section 17.1.

          "Protective   Apparatus":   The   equipment    and
apparatus  installed by Contractor, NIA, or NPC  to  protect
NPC's  facilities from damage in the event of a  malfunction
of or accident at the Project.

          "Punchlist":  A  list, prepared by Contractor,  of
administrative items or other items of work, the omission of
which  would  not  adversely affect the  safe  start-up  and
testing  or commercial operation of the Project, which  list
must  be  reasonably satisfactory to the Consulting Engineer
and  Owner,  and  delivered  to Owner  pursuant  to  Section
13.3(f);  provided, however, notwithstanding the  foregoing,
the  Punchlist  shall include Taan Weir Work  which  is  not
complete at the time of preparation of the Punchlist.

          "Reliability Guarantee": A Project availability of
ninety-six  percent  (96%) during  a  continuous  ninety-day
period and fulfillment of the Reliability Test in Exhibit D.
Availability is defined as the number of hours  the  Project
is  capable of being operated, regardless of whether or  not
it is in fact being operated, divided by the total number of
hours during the ninety-day period.

          "Reliability Test": The reliability test described
in Exhibit D.

          "Retainage":  The amount referred  to  in  Section
7.1(d).

          "Retention Security":  Cash or demand instruments,
issued by a bank or banks located outside of the Philippines
and  substantially in the form of Exhibit  Y  and  otherwise
satisfactory  in  form  and  substance  to  Owner  and   the
Financing  Entities, and posted and available  to  be  drawn
upon from and after the Notice to Proceed Date in lieu of  a
cash retainage.

          "Siemens":  Siemens Aktiengesellschaft

           "Siemens Corporate Guaranty":  The guaranty to be
issued  by  Siemens in favor of Owner, in form and substance
mutually  satisfactory to Siemens, Owner and  the  Financing
Entities,  guarantying Contractor's obligations  under  this
Contract  with  respect  to  the  Electro-Mechanical   Scope
(including the Electro-Mechanical Payments).

           "Siemens Demand Bank Security":  The demand  bank
guaranty  in  substantially the form of  Exhibit  X,  to  be
issued  to  Owner  by  a  bank satisfactory  to  Owner,  and
otherwise  in  form and substance satisfactory  to  Siemens,
Owner   and   the   Financing  Entities,   guarantying   (i)
Contractor's obligations under this Contract with respect to
the   Electro-Mechanical  Scope  (including   all   Electro-
Mechanical  Payments)  and (ii) a  portion  of  Contractor's
obligations under this Contract with respect to the  Balance
of  Scope,  and  in an amount equal to 10% of  the  Electro-
Mechanical Scope Contract Price Component.

          "Site":  The site for the Project generally  shown
on Exhibit R.

          "Subcontractor": Any Person performing the Work on
behalf  of Contractor or any of such Person's subcontractors
performing   the   Work  in  furtherance   of   Contractor's
obligations under this Contract, including Sulzer/Siemens as
to the Electro-Mechanical Scope.

          "Substantial Completion": Satisfaction  or  waiver
of  all  of  the  conditions  set  forth  in  Section  13.3;
provided,  however, except for purposes of  Section  19.1(g)
hereof,  Substantial Completion shall be determined  without
regard to the status, at the time, of the Taan Weir Work.

          "Substantial Completion Date": The date  on  which
Substantial Completion of the Project occurs.

          "Sulzer":  De Pretto-Escher Wyss.

           "Sulzer Corporate Guaranty": The guaranty  to  be
issued  by Sulzer Corp. in favor of Owner, in the  form  and
substance  mutually satisfactory to Sulzer Corp., Owner  and
the Financing Entities, guarantying Contractor's obligations
under  this  Contract with respect to the Electro-Mechanical
Scope (including the Electro-Mechanical Payments).

           "Sulzer  Demand Bank Security":  The demand  bank
guaranty,  in  substantially the form of Exhibit  X,  to  be
issued  to  Owner  by  a  bank satisfactory  to  Owner,  and
otherwise  in  form and substance, satisfactory  to  Sulzer,
Owner   and   the   Financing  Entities,   guarantying   (i)
Contractor's obligations under this Contract with respect to
the   Electro-Mechanical  Scope  (including   all   Electro-
Mechanical  Payments)  and (ii) a  portion  of  Contractor's
obligations under this Contract with respect to the  Balance
of  Scope,  and  in an amount equal to 10% of  the  Electro-
Mechanical Scope Contract Price Components.

            "Sulzer\Siemens":   Sulzer  and  Siemens  acting
jointly    and    severally   as   the    Electro-Mechanical
Subcontractor.

           "Taan  Weir  Work":  That portion  of   the  Work
relating to the diversion weir and intake structure  in  the
Taan River and the Taan\Casecnan interconnection tunnel.

          "Turbine Guarantee": The turbine guarantee as  set
forth in Exhibit P.

          "Unforeseen Underground Condition":  An  unusually
severe condition related to the underground site conditions,
which  was  not anticipated by the Contractor and would  not
have  been reasonably foreseeable in a project such  as  the
Project, encountered by the Contractor during the course  of
the  prosecution of the Work, which is confirmed as such  in
writing by an independent technical consultant to be  agreed
upon  by Owner and Contractor prior to the Notice to Proceed
Date   (or   such  other  independent  technical  consultant
mutually agreed to in writing by Owner and Contractor).

          "Vendor(s)":   Persons  that   supply   machinery,
equipment,  or  materials to Contractor or any Subcontractor
in  connection  with the performance of  the  Work  and  the
construction of the Project.

          "Warranty  Periods": The periods  of  duration  of
Contractor's  Project Warranties and Materials  Warranty  as
set forth in Sections 17.1(a) and (b) and 17.2 and as deemed
extended  with  respect  to  any given  item  of  equipment,
material,  or  device by any rewarranty period specified  by
Section 17.3.

          "Withheld  Amount": Has the meaning given  thereto
in Section 7.1(e).

          "Work":     All    obligations,    duties,     and
responsibilities  assigned to or  undertaken  by  Contractor
under this Contract with respect to the Project, housing for
the  construction  work  force, workshops,  and  warehouses,
including   all   engineering   and   design,   procurement,
manufacturing,  construction  and  erection,   installation,
training,  start-up (including calibration, inspection,  and
start-up   operation),  and  testing.  Where  this  Contract
describes  a  portion  of the Work in general,  but  not  in
complete detail, the Parties acknowledge and agree that  the
Work   includes   any  incidental  work  that   within   the
engineering  industry  and  the  construction  industry   is
customarily included in projects of the type contemplated by
this   Contract.   Without  limiting  the  foregoing,   Work
consists of the work related to the Electro-Mechanical Scope
and the Balance of Scope.

          1.2.  Terms defined in a given number,  tense,  or
form  shall have the corresponding meaning when used in this
Contract with initial capitals in another number, tense,  or
form.  Except  as  otherwise expressly noted,  reference  to
specific  Sections, subsections, and exhibits are references
to  such  provisions  of or attachments  to  this  Contract.
References  containing  terms  such  as  "hereof",  "herein"
"hereto", "hereinafter",  and other terms of like import are
not  limited  in  applicability to  the  specific  provision
within which such references are set forth but instead refer
to this Contract taken as a whole. "Includes" or "including"
shall  not be deemed limited by the specific enumeration  of
items, but shall be deemed without limitation.

          1.3.  If there is an express conflict between  the
provisions  of  this  Contract and any exhibit  hereto,  the
terms  of  this  Contract  shall take  precedence  over  the
conflicting provisions of the exhibit.

          2.   INTERACTION WITH NIA AND NPC

          2.1.  Without  limiting  Contractor's  obligations
under  this  Contract, Owner recognizes that  there  may  be
contact  in  the field between NIA and/or NPC and Contractor
and   hereby   authorizes  Contractor  to  communicate   and
coordinate    directly   with   NIA's   and   NPC's    field
representatives subject to the limitations of  this  Article
2.

          2.2.  Contractor shall provide to Owner (i) copies
of  all  written  communications sent by Contractor  or  its
affiliates  to  or received by Contractor or its  affiliates
from NIA and/or NPC relating to the Project, such copies  to
be  provided promptly after being sent or received,  as  the
case  may  be, (ii) reasonable prior notice of all  proposed
meetings, whether face-to-face or otherwise, with NIA and/or
NPC  (other  than routine day-to-day communications  at  the
Site) relating to the Project, and (iii) an opportunity  for
Owner's  site  representative  to  be  present  at  and   to
participate  in any such meetings; provided,  however,  that
Owner  shall  have no obligation to attend or to participate
in  any  such meetings. Contractor shall provide Owner  with
written   minutes  of  all  material  verbal  communications
respecting  the  Project between Contractor and  NIA  and/or
NPC.  Neither NPC nor NIA shall have any authority to modify
this  Contract  or  otherwise bind or  obligate  Owner,  and
Contractor shall not have the authority to bind or  obligate
Owner.

          3.   RESPONSIBILITIES OF OWNER

          3.1. Owner shall, at Owner's cost and expense:

          (a)    Designate   (by  a  Notice   delivered   to
Contractor)  a Project Representative, who shall  act  as  a
single  point of contact for Contractor with respect to  the
prosecution of the Work (but who shall not be authorized  to
execute or make any amendments to, or provide waivers under,
this Contract), and the Owner's Engineer it has selected for
itself and the Consulting Engineer selected by the Financing
Entities.

          (b)   Commencing  four  (4) months  prior  to  the
anticipated  Substantial Completion Date (as  determined  by
Owner  based  on the circumstances existing at the  time  of
determination),  provide a reasonably sufficient  number  of
Operating  Personnel for training by Contractor as  provided
pursuant  to  Section  4.1(u) and  for  testing,  start  up,
operation, commissioning, and maintenance of the Project.

          (c)  Provide such ministerial assistance, such  as
executing applications, as Contractor may reasonably request
in  connection  with  obtaining  any  Contractor's  Permits.
Contractor shall indemnify, defend, and hold harmless  Owner
from  and  against any and all claims, damages, losses,  and
expenses (including attorney's fees and expenses) that Owner
may incur as a result of executing any such applications  at
Contractor's request.

          (d)   Except  to the extent assessed  for  reasons
attributable  to  action or inaction of Contractor,  or  any
Subcontractor, Vendor, or other party acting  or  purporting
to  act  as  Contractor's agent, and subject to Contractor's
compliance  with  Section 4.1(k), and provided  Owner  shall
have  title  thereto  in  accordance  with  Section  18.2(c)
hereof, Owner shall be responsible for any Philippine import
duties  and  value added taxes assessed upon any  machinery,
equipment,  and  spare  parts to be  incorporated  into  the
Project and being imported by Contractor from outside of the
Philippines  pursuant  to  this Contract.  Owner  agrees  to
cooperate   reasonably  with  Contractor  to  minimize   the
assessment of Philippine value-added taxes and import duties
on  any  machinery, equipment, materials,  supplies,  tools,
spare  parts,  and other items being provided by  Contractor
under this Contract, including taking all steps necessary to
ensure  compliance with the requirements of  any  applicable
exemptions  from  such Philippine import duties  and  value-
added taxes. The responsibility of Owner hereunder for  such
Philippine  import duties and value-added  taxes  shall  not
otherwise limit Contractor's responsibilities to perform the
Work and its obligations as described herein, including  the
importation  of  all machinery, equipment, materials,  spare
parts,  supplies, tools, and other items furnished to  Owner
under  this  Contract  or otherwise  necessary  to  develop,
construct,  start  up, test, commission,  and  complete  the
Project and all ancillary facilities and to process all such
machinery,  equipment,  materials,  spare  parts,  supplies,
tools,  and  other  items  through customs.  To  the  extent
necessary to ensure compliance with the requirements of  any
applicable exemptions from such Philippine import duties and
value-added taxes, Owner hereby grants Contractor the  right
to  act  as Owner's agent, including executing documents  on
Owner's   behalf,   for   purposes  of   accomplishing   the
importation  of  the above-mentioned items for  the  Project
into  the  Philippines and the processing of such machinery,
equipment,  spare  parts, materials,  supplies,  tools,  and
other items through customs. Contractor's authority to  take
action  on  behalf  of Owner under this  Section  3.1(d)  is
strictly  limited  to the execution of  such  documents  and
forms  as  are necessary to accomplish such importation  and
the clearance of such items through customs, and in no event
shall Contractor have the right to take any action on behalf
of  Owner that would commit Owner to any obligation or cause
Owner  to  incur  any liability, except to the  extent  such
obligation or liability is included in the Work or otherwise
within  the  express scope of Contractor's  responsibilities
under this Contract. Contractor shall indemnify, defend, and
hold  harmless  Owner from and against any and  all  claims,
damages, losses, and expenses (including attorneys' fees and
expenses)  that  Owner may incur as a result  of  Contractor
acting as Owner's agent or otherwise taking action on behalf
of  Owner under this Section 3.1(d) and that would not  have
been incurred by a reasonably prudent person properly acting
within  the  scope  of the agency granted pursuant  to  this
Section 3.1(d).

          (e)  Obtain all Owner's Permits.

          (f)  Consistent with the terms of Owner's property
rights   as  granted  to  it  by  NIA  or  other  applicable
Authorities,  provide  the Site  and  assure  the  right  to
ingress  and egress to and from the Site for Contractor  for
performance of the Work; provided, however, that  Contractor
shall coordinate with Owner regarding initial entry onto the
Site and contact with the local residents on the Site.

          (g)   Make available on the Notice to Proceed Date
the  Existing Site Assets on an as-is basis.  OWNER DOES NOT
MAKE ANY OTHER EXPRESS WARRANTIES OR REPRESENTATIONS, OR ANY
IMPLIED  WARRANTIES OR REPRESENTATIONS, OF ANY KIND WHATEVER
RELATING  TO  THE  EXISTING  SITE  ASSETS,  OR  ANY   DESIGN
MATERIALS OR OTHER EQUIPMENT OR MATERIALS TO BE SUPPLIED  BY
OWNER  OR  OTHERWISE  AVAILABLE AT THE SITE,  INCLUDING  ANY
IMPLIED  WARRANTY  OF  MERCHANTABILITY  OR  FITNESS  FOR   A
PARTICULAR  PURPOSE.  Owner hereby expressly  disclaims  any
warranty or representation, either express or implied, as to
(i) the Owner's title to any of the Existing Site Assets  or
any  design materials or other equipment or materials to  be
supplied  by  Owner or otherwise available at the  Site,  or
rights  to use any thereof, (ii) Contractor's right  to  the
quiet   enjoyment  thereof,  or  (iii)  any   other   matter
whatsoever.

          4.   RESPONSIBILITIES OF CONTRACTOR

          4.1. In order for Contractor to complete the Work,
Contractor shall:

          (a)  Furnish, be responsible for, and pay the cost
of  all  of  the Work, on a turnkey basis, including  labor,
materials,  tools,  equipment and supervision  necessary  to
engineer,  deliver,  receive,  off-load,  store,  construct,
inspect,  start-up,  commission  and  test  the  Project  in
accordance  with the provisions of this Contract,  including
all   site  work,  footings,  foundations,  tunnel   boring,
construction materials, equipment, and auxiliaries.

          (b)    Provide   all   communication   facilities,
electricity and sanitary facilities to be used by Contractor
and Subcontractors through Substantial Completion.

          (c)    Maintain  at  the  Site  a  qualified   and
competent organization with adequate capacity and numbers of
construction   and   start-up  personnel,   equipment,   and
facilities  to  execute  the  Work  in  a  safe,  efficient,
environmentally sound, and professional manner at a rate  of
progress in accordance with the Milestone Schedule  and  the
Critical Path Schedule.

          (d)   Provide  a  permanent  on-site  construction
manager  and staff to supervise and coordinate the  Work  of
Contractor, Subcontractors and Vendors on the Site.

          (e)  Obtain all Contractor's Permits.

          (f)   Perform all inspection, expediting,  quality
surveillance,   and   other  like  services   required   for
performance of the Work, including inspecting all  materials
and  equipment that comprise the Project that are to be used
in the performance of the Work.

          (g)   Maintain  the  Site clear of  debris,  waste
material, and rubbish.

          (h)   Provide a price allocation schedule for  the
Work and other information reasonably necessary for Owner to
maintain  segregated accounts for its tax records and  fixed
asset records.

          (i)   In  the event of a claim under this Contract
involving an amount in excess of US$10,000, grant  to  Owner
audit  rights  with  respect to all  relevant  documentation
pertaining to such claim.

          (j)    Provide   all  necessary   and   reasonably
appropriate safeguards at the Site for the protection of the
Work,  the  Project,  and  all persons  and  other  property
related  thereto,  including  lights  and  barriers,   guard
service, controlled access, and other measures developed  or
required  pursuant  to  Exhibit A  or  otherwise  reasonably
required  to  prevent vandalism, theft, and  danger  to  the
Project  and  personnel.   It is  expressly  understood  and
acknowledged  that Contractor is responsible  for  all  Site
security  from  and  after  the  Notice  to  Proceed   Date,
notwithstanding any steps related to security that may  have
been  or  may in the future be undertaken by Owner,  Owner's
obligation  with  respect  to  the  Site  being  limited  to
granting  rights of ingress and egress to the overall  Site,
as described in Section 3.1(f).

          (k)    Arrange  for  complete  handling   of   all
materials,  supplies,  tools, spare  parts,  equipment,  and
construction  equipment,  including inspection,  expediting,
shipping,  loading, unloading, customs clearance, receiving,
storage, and claims.

          (l)  Provide all temporary construction materials,
equipment,  supplies, construction utilities and facilities,
special   tools,   and  commissioning  supplies   reasonably
necessary  or appropriate for, and replace any  spare  parts
used    during   the   construction,   start-up,    testing,
commissioning, and operation and maintenance of the  Project
until achievement of Substantial Completion. By delivery  of
a  Notice  to Owner prior to the disposition of such  items,
Contractor  shall  give  Owner the option  to  purchase  any
surplus construction materials and supplies remaining on the
Site   on  the  Substantial  Completion  Date  (other   than
materials   and   supplies  necessary   to   achieve   Final
Acceptance)  at  a  price  not exceeding  Contractor's  cost
therefor. Owner shall exercise such right, if it so  elects,
within thirty (30) days after receipt of such Notice.

          (m)   Provide all Operating Consumables  necessary
or  appropriate  for  the construction,  start-up,  testing,
commissioning,  operation  and maintenance  of  the  Project
until achievement of Substantial Completion.

          (n)   Comply  in all respects with all  Applicable
Laws  and  Applicable Permits relating to the  Project,  the
Site, and the performance of the Work, and perform the  Work
so that, upon Substantial Completion, the Project meets, and
will  be  capable of being operated in compliance  with  all
requirements of, Applicable Laws and Applicable  Permits  as
then  in  effect  and using methods and equipment  that  are
accepted  as  prudent  electrical,  mechanical,  and   civil
engineering  practice. Contractor shall be  responsible  for
all  damages, fines, and penalties that may arise (including
those  that Owner pays or becomes liable to pay) because  of
non-compliance with such requirements to the extent  due  to
acts  or  omissions  of Contractor or any  Subcontractor  or
Vendor, other than any damages, fines, and penalties to  the
extent  due  to  the  acts or omissions of  Owner  or  third
parties  other  than Subcontractors and Vendors,  and  shall
assume  responsibility for any costs and liabilities arising
from any adverse environmental damage or health impacts that
may   be   caused  by  Contractor's  negligence  or  willful
misconduct  in  constructing or  failing  to  construct  the
Project or performing or failing to perform the Work.

          (o)   Take  appropriate  action  in  response   to
Owner's  requests  to replace any of Contractor's  personnel
performing  the  Work whom Owner reasonably believes  to  be
creating   a  risk  of  either  non-achievement   of   Final
Acceptance  or  material non-performance  by  Contractor  in
accordance with this Contract.

          (p)   Use  effective  quality assurance  programs,
acceptable  to Owner, in performing the Work. Within  thirty
(30) days after the Notice to Proceed Date, Contractor shall
provide  to  Owner a Notice describing such programs  to  be
used  by  Contractor in the performance of the  Work.  Owner
shall have the right to promptly review and comment on  such
programs  as  described  in Contractor's  Notice  hereunder;
provided,  however,  that  Contractor  shall  remain  solely
responsible for performing the Work in accordance with  this
Contract. If Owner fails to comment within ten (10) Business
Days after receipt of such Notice, Owner shall be deemed  to
have accepted such programs.

          (q)    Use  only  the  entrance(s)  to  the   Site
specified  by Owner for ingress and egress of all personnel,
equipment, vehicles, and materials.

          (r)   On  or  before October 31, 1997,  prepare  a
draft of the NPC Interface Criteria in the form of Exhibit T
with  all  information completed for review and approval  by
Owner,  NIA,  and  NPC. All parties shall work  together  to
complete  and  finalize  the NPC Interface  Criteria  on  or
before  December 31, 1997, and the final NPC Criteria  shall
be   attached  to  this  Contract  as  Exhibit  T  and   the
requirements thereof incorporated into Exhibit A. Contractor
shall interconnect the Project with the facilities of NPC in
accordance with the interconnection requirements  agreed  to
in  Exhibit  T.  Without limiting the foregoing,  Contractor
shall   also   be  responsible  for  installing,   but   not
purchasing, the metering and telemetering equipment provided
by NPC and/or NIA.

          (s)   Prior to Final Acceptance, (i) provide  such
assistance  as is reasonably requested by Owner  in  dealing
with   NPC,  NIA,  other  governmental  entities,  and   the
Financing  Entities in any and all matters relating  to  the
Work   (including   any  interconnection   facilities)   and
(ii)  cooperate to the extent necessary to enable  Owner  to
perform  its  obligations under Owner's agreement  with  the
Financing Entities that are related to the Work.

          (t)   Provide  all operating data and  preliminary
and   final  as-built  drawings  necessary  to  safely   and
efficiently test, operate, and maintain the Project.

          (u)   Commencing  on the date  that  is  four  (4)
months prior to the anticipated Substantial Completion  Date
(as  determined by Owner based on the circumstances existing
at  the  time  of  determination), provide training  of  the
designated Operating Personnel in the requirements  for  the
operation  and  maintenance of  the  Project  and  all  sub-
systems.  The training program shall consist of two  phases:
(i)  classroom  phase  and (ii) start-up/testing/operational
phase. The classroom phase will consist of at least two  (2)
consecutive  weeks  of instruction in  the  Project  design,
capabilities, component operation, and procedures  and  will
include   a  program  for  certifying  Operating  Personnel,
including  classroom  training for the Operating  Personnel,
conduct of tests sufficient to allow Contractor to accept or
reject individuals for employment during the testing (making
the  results available to Owner), start-up and commissioning
program,  and  use  of that program as on-the-job  training.
Until   Substantial  Completion,  the  Operating   Personnel
provided  by  Owner  pursuant to Section 3.1(b)  shall  work
under   the   management,  supervision,  and  direction   of
Contractor; provided, however, that such Operating Personnel
shall   not   be  deemed  employees  or  Subcontractors   of
Contractor. Contractor will design such training program and
submit it to Owner by no later than the date that is six (6)
months prior to the anticipated Substantial Completion Date.
Owner  will  review, comment on, and approve  or  disapprove
such  program in writing within forty-five (45)  days  after
such  submission  by  Contractor. If  Owner  conditions  its
approval  on reasonable changes in the program submitted  by
Contractor,  Contractor  will  effect  such  changes  at  no
additional cost to Owner and resubmit the program  to  Owner
within  ten  (10)  days after receipt  from  Owner  of  such
conditional  approval. Owner will have ten (10)  days  after
such  resubmission  to review, comment on,  and  approve  or
disapprove  the  program  resubmitted  by  Contractor.  Such
procedure  shall continue with the same ten  (10)  day  time
periods  until  a  program is approved by  Owner;  provided,
however,  that  if the Parties cannot reach agreement  after
the  third submittal by Contractor, the differences  of  the
Parties  shall be resolved in accordance with the  expedited
payment dispute procedures provided in Section 36. If  Owner
fails  to  respond  within  any of  the  applicable  periods
specified above, Owner shall be deemed to have approved  the
latest such program submitted by Contractor.

          (v)   Coordinate  with Owner with respect  to  and
provide  advance copies to Owner for review of the  text  of
any announcement or publication that includes any non-public
information  concerning the Work prior to the  dissemination
thereof   to  the  public  or  to  any  Person  other   than
Subcontractors, Vendors, lenders, or advisors of  Contractor
who  agree  to keep such information confidential; provided,
however,  that  Contractor may disseminate or  release  such
information  in response to requirements of governmental  or
other regulatory authorities, including NIA. Notwithstanding
the foregoing, the parties agree that Contractor may include
in  its  sale  or other promotional literature  and  provide
prospective customers, investors, lenders, and other Persons
with   information  specifying  (i)  Contractor's  role   in
constructing the Project, (ii) the capacity of the  Project,
and (iii) those types of Contractor's equipment and products
being  used  in the Project, provided that Contractor  shall
deliver copies of all such literature to Owner promptly upon
distribution thereof.

          (w)  Designate an English-speaking Project Manager
acceptable  to  Owner who will have full responsibility  for
the prosecution of the Work (but who shall not be authorized
to  execute  or  make any amendments to, or provide  waivers
under,  this  Contract) and will act as a  single  point  of
contact  in  all  matters  on  behalf  of  Contractor.   Any
replacement of the Project Manager shall be subject  to  the
prior written consent of Owner. If Owner fails to respond to
a  request  for consent within five (5) Business Days  after
Contractor's  request,  Owner  shall  be  deemed   to   have
consented to the proposed individual.

          (x)   Provide  such data, reports, certifications,
opinions of counsel, and other documents, up to a maximum of
ten  (10) copies each, or assistance related to the Work  or
this  Contract  as  may  be  reasonably  requested  by   the
Financing  Entities  with respect to the  financing  of  the
Project;  provided,  however, that  the  provision  of  this
information  shall  not  in any manner  modify  Contractor's
rights  or  obligations under any other  provision  of  this
Contract.

          (y)   Provide,  at  or near the contractor's  main
Project  office, office space for Owner's sole use including
a private secure meeting room suitable for and furnished for
use  by 10 people, four (4) office spaces, electricity,  air
conditioning, office furniture suitable for four (4) persons
(consisting  of  four (4) desks, a reference/drawing  table,
four  (4)  lockable four (4) drawer file cabinets, four  (4)
desk  chairs,  six  (6)  side chairs, two  telephones,  and,
subject  to  availability from the local telephone  company,
two   (2)  telephone  lines  (toll  calls  are  for  Owner's
account)),  and  the use of Contractor's  copying  machines,
drinking water, sanitary facilities, and secretarial service
(not to exceed one (1) secretary) to be used by Owner at the
Site.

          (z)    Assign   to   the   Site   English-speaking
personnel.  Any interpreters required shall be  provided  by
Contractor  at its expense. If design work for any  part  of
the  Work  is  performed in non-English-speaking  countries,
English-speaking interpreter(s) acceptable to Owner shall be
made available by Contractor at Contractor's cost during all
telephone  conversations and meetings  involving  Owner  and
such non-English-speaking persons performing the Work.

          (aa)  Within thirty (30) days after the Notice  to
Proceed Date, Contractor shall provide Owner with a Critical
Path  Schedule meeting the requirements set forth in Exhibit
F. Thereafter, Contractor shall advise Owner of any proposed
Critical  Path  Schedule changes of more than  fifteen  (15)
days  and  promptly  provide Owner with  any  revisions  and
reasons therefor. In connection therewith, Contractor  shall
employ  a project management system able to provide schedule
monitoring and analysis which shall include a comparison  of
the Critical Path Schedule with the actual progress for each
time  period  with  all variances noted.  Schedule  analysis
shall  include  a  determination  of  the  impact  of   such
variance, if material, on the Critical Path Schedule and any
action  necessary  to  correct the variance.  Utilizing  the
critical path method, Contractor shall continually be  aware
of  factors  that  are  delaying or  that  could  delay  the
Milestone   Schedule   and  shall  take   remedial   actions
reasonably  within  its  control to  eliminate  or  minimize
schedule   delays   including,   without   limitation,   the
assignment  of additional personnel and/or other  resources.
During construction, the Contractor will update its critical
path  method  network to reflect the current status  of  the
Work.  At  a  minimum,  the updates will  be  performed  and
provided to the Owner on a monthly basis.

          (ab) Following the Notice to Proceed, prepare  and
submit  to Owner within ten (10) days after the end of  each
calendar  month  and  as  part of the  Contractor's  Invoice
submitted  pursuant  to  Section  7.1,  a  written   monthly
progress  report in form and content generally in accordance
with  Exhibit  H.  In addition, Contractor shall  keep,  and
furnish to Owner at Owner's request, such information as may
be  reasonably  necessary  to determine  that  the  Work  is
progressing  according to schedule and for  the  purpose  of
confirming   that  progress  payments  are  due   hereunder.
Contractor also shall keep daily logs at the Site and  shall
provide  to  Owner  copies  of  weekly  reports  of   actual
construction progress as compared with scheduled progress.

          (ac)  Provide Owner with copies of all notices  to
and   other  written  communications  with  Authorities  and
insurance companies with respect to accidents that occur  at
the  Site,  and  thereafter  provide  such  written  reports
relating thereto as may be reasonably requested by Owner.

          (ad)  Obtain  a  Labor Payment Bond  in  favor  of
Contractor  and  Owner  from  each  Subcontractor   directly
contracting with Contractor carrying on any construction  or
other  Work  in the Philippines in a sum equivalent  to  the
cost  of  labor for such Work and take care not to pay  such
Subcontractor  the  final  payment  such  Subcontractor   is
entitled to receive until such Subcontractor has shown  that
it  first  paid the wages of the laborers employed  in  said
work,  by means of an affidavit made and subscribed by  said
Subcontractor  before  a  notary  public  or  other   office
authorized by law to administer oaths.

          (ae)   On  a  bi-weekly  basis  after  Substantial
Completion, revise and update the Punchlist and schedule and
budget  therefor  as initially prepared in  accordance  with
Section 13.3(f).

          (af) Take all steps required under Applicable  Law
and   provide  such  ministerial  assistance  as  Owner  may
reasonably request such that Owner may utilize input  value-
added tax credits in an amount equal to the aggregate value-
added tax paid by Owner to Contractor for performance of the
Work. Contractor shall also provide such evidence of payment
by  Contractor to the Philippine Bureau of Internal  Revenue
of such value-added tax as Owner may reasonably request.

          (ag)  Exclusively  use  metric  (S.I.)  units   of
measurement in the design process and in all specifications,
drawings,  and  other  documents, with  the  exception  that
documents required under the terms of a purchase order to be
submitted by Vendors may be in English units if that is  the
common measurement system used by the Vendor.

          (ah)  Schedule  and conduct periodic  meetings  at
Contractor's  office before mobilization  and  at  the  Site
after  mobilization with Owner for the purpose of  reviewing
the  progress  of  the Work and adherence to  the  Milestone
Schedule  and  the Critical Path Schedule. The frequency  of
such  meetings shall be established and modified, from  time
to time, by mutual agreement of Owner and Contractor.

          (ai) Deliver the spare parts identified on Exhibit
J  so that they arrive in the Philippines at least three (3)
months prior to the anticipated Substantial Completion  Date
(as  determined by Owner based on the circumstances existing
at the time of the determination).

          5.   COVENANTS, WARRANTIES AND REPRESENTATIONS

          5.1.   Contractor   covenants,   represents,   and
warrants to Owner that:

          (a)   It  is  a limited liability consortium  with
external  activities, duly organized, validly existing,  and
in   good  standing  under  the  laws  of  Italy  (as   more
particularly  described  in Article  2612  et  seq.  of  the
Italian  Civil Code), and has, or will have by the  date  it
commences performance hereunder, full power to engage in the
business  it presently conducts and contemplates conducting,
and  is  and will be duly licensed or qualified and in  good
standing under the laws of the Philippines and in each other
jurisdiction  wherein the nature of the business  transacted
by  it  makes such licensing or qualification necessary  and
where  the failure to be licensed or qualified would have  a
material  adverse  effect  on its  ability  to  perform  its
obligations  hereunder.  It will at  all  times  during  the
performance  of  the  Work maintain its  status  as  a  "VAT
registered  Person" in accordance with Section  107  of  the
National  Internal Revenue Code of the Philippines and  will
comply with all Applicable Laws related thereto.

          (b)   It  has  the  required  authority,  ability,
skills, and capacity to perform, and shall perform, the Work
in   a  manner  consistent  with  prudent  utility  practice
utilizing  sound engineering principles, project  management
procedures, and supervisory procedures.

          (c)   This  Contract  has  been  duly  authorized,
executed,  and  delivered by Contractor and constitutes  the
legal,   valid,   and  binding  obligation  of   Contractor,
enforceable against Contractor in accordance with its terms.

          (d)   The execution, delivery, and performance  by
Contractor  of  this Contract will not violate  or  conflict
with  (i) any Applicable Laws, (ii) any covenant, agreement,
or  understanding to which it is a party or by which  it  or
any  of  its  properties or assets is bound or affected,  or
(iii) its organizational documents.

          (e)    It  is  satisfied  with  and  accepts   all
conditions relating to (i) subject to Section 8.4, access to
the  Site,  (ii)  subject  to Section  15.1(d)  hereof,  the
availability  of  equipment (including, subject  to  Section
8.4,  the  Existing  Site Assets and  all  other  materials,
equipment  and  other property located at the  Site  on  the
Notice   to   Proceed  Date),  (iii)  the  availability   of
electricity and water (other than the availability of  water
for  diversion  to  the Project), (iv) the  availability  of
adequate  means  of communication, and (v)  similar  matters
that  may impact upon the performance by Contractor  of  the
Work.

          (f)   No  authorization, approval,  exemption,  or
consent  by  any  governmental or public body  or  authority
(other   than   the  Applicable  Permits)  is  required   in
connection with the authorization, execution, delivery,  and
performance of this Contract by Contractor. The Contractor's
Permits either have been obtained by Contractor and  are  in
full force and effect on the date hereof or will be obtained
by  Contractor and will be in full force and  effect  on  or
prior  to  the  date  on  which  they  are  required,  under
Applicable  Law,  to be in full force and effect  so  as  to
permit  Contractor  to commence and prosecute  the  Work  to
completion in accordance with the Milestone Schedule and the
Critical Path Schedule.

          (g)  There are no actions, suits, proceedings,  or
investigations   pending  or,  to  Contractor's   knowledge,
threatened against it at law or in equity before  any  court
(Philippine  or  otherwise) or before  any  federal,  state,
municipal,  or  other  governmental department,  commission,
board, agency, or instrumentality (whether or not covered by
insurance)  that  individually or  in  the  aggregate  could
result  in  any  materially adverse effect on the  business,
properties,  or  assets  or  the  condition,  financial   or
otherwise, of Contractor or in any impairment of its ability
to  perform its obligations under this Contract. It  has  no
knowledge  of any violation or default with respect  to  any
order,  writ,  injunction, or decree of  any  court  or  any
federal, state, municipal, or other governmental department,
commission,  board,  agency,  or  instrumentality  that  may
result  in  any  such  materially  adverse  effect  or  such
impairment.

          (h)   It owns or has the right to use all patents,
trademarks, service marks, tradenames, copyrights, licenses,
franchises,  and  permits  necessary  to  perform  the  Work
without conflict with the rights of others.

          (i)   The  Project  can  and  shall  be  built  in
conformity with Applicable Laws and Applicable Permits.

          (j)   It and its representatives have not made any
payment  or given anything of value, and (ii) it  will  not,
and it will direct its employees, agents, and Subcontractors
directly contracting with Contractor, and their employees or
agents  to not, make any payment or give anything of  value,
in  either  case  to any government official (including  any
officer or employee of any government department, agency, or
instrumentality) to influence his, her, or its  decision  or
to  gain  any  other advantage for Owner  or  Contractor  in
connection with the Work to be performed hereunder. None  of
Contractor, its Subcontractors or Vendors, or any  of  their
employees  or agents shall take any action that in  any  way
violates the United States Foreign Corrupt Practices Act  or
any  similar  applicable law. Contractor  shall  immediately
notify  Owner of any violation of this covenant (or  of  the
direction  described in the immediately preceding  sentence)
and  shall indemnify and hold Owner harmless for all losses,
expenses,  damages,  and liabilities  arising  out  of  such
violation.

          (k)  Intentionally omitted.

             (l)   It   acknowledges  that   this   Contract
constitutes  a  fixed price obligation to engineer,  design,
procure, construct, and test a turnkey Project, complete  in
every detail, within the time and for the purpose designated
herein by Owner. References to the obligations of Contractor
under  this  Contract as being "turnkey" and performing  the
Work on a "turnkey basis" means that Contractor is obligated
to  supply all of the materials and equipment and to  supply
and  perform all of the Work, in each case as may reasonably
be  required,  necessary,  or appropriate  (whether  or  not
specifically  set forth in this Contract)  to  complete  the
Work  such  that the Project satisfies the applicable  terms
and  conditions  set  forth in this Contract,  all  for  the
Contract Price.

          5.2. Owner covenants, represents, and warrants  to
Contractor that:

          (a)   It  is a corporation duly organized, validly
existing,  and  in  good  standing under  the  laws  of  the
Republic of the Philippines, has full power to engage in the
business  it presently conducts and contemplates conducting,
and  is  and will be duly licensed or qualified and in  good
standing  in  each jurisdiction wherein the  nature  of  the
business   transacted  by  it  makes   such   licensing   or
qualification necessary and where the failure to be licensed
or  qualified  would have a material adverse effect  on  its
ability to perform its obligations hereunder.

          (b)   This  Contract  has  been  duly  authorized,
executed, and delivered by Owner and constitutes the  legal,
valid,  and binding obligation of Owner, enforceable against
Owner in accordance with its terms.

          (c)   The execution, delivery, and performance  by
Owner  of  this  Contract will not  conflict  with  (i)  any
Applicable   Laws,   (ii)   any  covenant,   agreement,   or
understanding to which it is a party or by which it  or  any
of  its properties or assets is bound or affected, or  (iii)
its Certificate of Incorporation or By-laws.

          (d)   No  authorization, approval,  exemption,  or
consent  by  any governmental or public body  or  authority,
except   such  authorizations,  approvals,  exemptions,   or
consents  as have been obtained or will, in Owner's opinion,
be  obtained in the ordinary course of business, is required
in  connection with the execution, delivery, and performance
of this Contract by Owner.

          (e)    There  are  no  material  actions,   suits,
proceedings, or investigations pending or, to its knowledge,
threatened against it at law or in equity before any  United
States  or  Philippine  court or before  any  United  States
federal, state, municipal, or other governmental department,
commission,  board, agency, or instrumentality  (whether  or
not covered by insurance) or before any Philippine national,
regional,   municipal,  or  other  governmental  department,
commission,  board, agency, or instrumentality  (whether  or
not  covered  by  insurance) that  individually  or  in  the
aggregate  could result in any materially adverse effect  on
the  business,  properties,  or  assets  or  the  condition,
financial or otherwise, of Owner or in any impairment of its
ability  to perform its obligations under this Contract.  It
has no knowledge of any violation or default with respect to
any  order,  writ, injunction, or any decree of  any  United
States  or  Philippine court or any United  States  federal,
state,   municipal,   or   other  governmental   department,
commission,  board,  agency,  or  instrumentality   or   any
Philippine  national, regional, local, or other governmental
department,  commission, board, agency,  or  instrumentality
that  may  result in any such materially adverse  effect  or
such impairment.

          (f)    It  will  not,  and  it  will  direct   its
employees,  agents, and subcontractors, and their  employees
and  agents  to  not, make any payment or give  anything  of
value  to any government official (including any officer  or
employee   of   any   government  department,   agency,   or
instrumentality) to influence his, her, or its  decision  or
to  gain  any  other advantage for Owner  or  Contractor  in
connection with the Work to be performed hereunder.  Neither
Owner  nor  any  of its employees or agents shall  take  any
action  that  violates  the United  States  Foreign  Corrupt
Practices  Act  or any similar applicable law.  Owner  shall
immediately  notify  Contractor of  any  violation  of  this
covenant  (or of the direction described in the  immediately
preceding  sentence) and shall indemnify and hold Contractor
harmless  for all losses, expenses, damages, and liabilities
arising out of such violation.

          5.3. Contractor further covenants, represents, and
warrants to Owner that:

          (a)   It recognizes, understands, and acknowledges
that  Owner  is  providing  no  representation  or  warranty
regarding,  and  specifically disclaims  any  responsibility
for,  the  usefulness, accuracy, completeness, validity,  or
propriety   of   any  or  all  reports,  data,   inferences,
conclusions,  and other information provided by,  or  to  be
provided   by,  Owner,  NPC,  or  NIA.  Contractor   further
represents  and  warrants that it is not relying  on  Owner,
NPC,   or   NIA   for  any  information,  data,  inferences,
conclusions, or other information as respects  the  Work  at
the Site and surrounding areas.

          (b)  It is familiar with the physical requirements
of  the  Work  and has inspected and examined the  Site  and
surrounding  locations to the extent it deems  necessary  in
accordance   with   prudent  engineering  and   construction
practices   for  performing  its  obligations   under   this
Contract. Contractor further represents and warrants that it
is  satisfied with and accepts all conditions that exist  at
the  Site  or  that may exist at the Site or in  surrounding
areas during the period of construction, in any case whether
seen  or  unseen,  discovered or  undiscovered,  unknown  or
unusual,  including climatic, hydrological (other  than  the
availability  of  water  for  diversion  to  the   Project),
geologic,  seismic,  and all other conditions  at  the  Site
(natural or otherwise), the form and nature of the Site  and
the  soil and subsoil, rock, and subsurface conditions,  and
the  nature  of  the material (natural or otherwise)  to  be
excavated. No information that Owner, NPC, or NIA may, as  a
convenience, have previously provided or may in  the  future
provide  to  Contractor shall affect this representation  of
Contractor.

          Notwithstanding  the  foregoing,   if   Contractor
encounters what it considers to be an Unforeseen Underground
Condition,  the Contractor shall be entitled to  request  in
writing  to Owner an extension of the Guaranteed Substantial
Completion  Date for a period of time necessary  to  address
such  Unforeseen Underground Condition, but in no event more
than  ninety  (90)  days  for  all  such  requests  in   the
aggregate.  Owner shall promptly forward any such request to
the  independent  technical consultant  (referenced  in  the
definition  of "Unforeseen Underground Condition").   Within
60  days  of  receipt of any such request, such  independent
technical consultant, applying reasonable, prudent and sound
engineering judgment, shall advise Contractor and  Owner  in
writing as to whether such request has been granted and  the
number  of  days that the Guaranteed Substantial  Completion
Date has been extended, if any.

          (c)  Other than as the result of the occurrence of
an  unusually severe event of the type described in  Section
22.1  (and  subject to the immediately preceding paragraph),
which shall in no event include a pre-existing condition  at
the Site or in surrounding areas, it acknowledges and agrees
that it will not be entitled to, and shall not request,  any
Change  in  the Work or claim the occurrence  of  any  Force
Majeure event with respect to any of the conditions, or  any
change in any conditions, as set forth in this Section 5.3.

          6.   COST OF WORK

          6.1.  As  full  compensation for the  Work,  Owner
shall   pay   to   Contractor  a  fixed  price   amount   of
US$240,000,000  (the  "Contract  Price"),  plus  Philippines
value  added taxes invoiced in accordance with Section  6.2.
The  Contract Price shall be changed only by Changes in  the
Work  approved in accordance with Section 15.  The  Contract
Price  shall be paid in accordance with Section 7.  Payments
made   by   Owner   directly   to   the   Electro-Mechanical
Subcontractor  shall  be  deemed to constitute  payments  to
Contractor of the Contract Price.

          6.2.  The Contract Price includes payment for  (i)
all  costs  of  equipment, materials,  labor,  and  services
relating  to  Contractor's performance  of  its  obligations
under this Contract and the Work (including any intellectual
property  rights licensed under this Contract, expressly  or
by    implication)   provided   by   Contractor   or    such
Subcontractors  or  Vendors, (ii) all  Philippine  national,
regional,  and local taxes effective or enacted  as  of  the
date  of  execution of this Contract or thereafter, each  as
imposed  on  Contractor or its Subcontractors or Vendors  or
the Work, (iii) subject to the last sentence of this Section
6.2,  all  other  taxes, duties, levies, imposts,  fees,  or
charges  of  any  kind  (whether  in  the  Republic  of  the
Philippines or elsewhere) arising out of Contractor's or any
such  Subcontractor's or Vendor's performance of  the  Work,
including  any increases thereof that may occur  during  the
term of this Contract, and (iv) subject to the last sentence
of  this  Section  6.2, any duties, levies,  imposts,  fees,
charges,  and  royalties  imposed  on  Contractor   or   its
Subcontractors  or  Vendors  with  respect   to   any   such
equipment, materials, labor, or services provided under this
Contract.  The  taxes  covered hereby include  occupational,
excise,   unemployment,   ownership,   value-added,    gross
receipts,  and income taxes and any and all other taxes  and
duties  on  any item or service that is part  of  the  Work,
whether  such tax is normally included in the price of  such
item  or  service or is normally stated separately,  all  of
which    shall   be   for   the   account   of   Contractor.
Notwithstanding the foregoing, (a) Contractor shall  not  be
liable  for,  and the Contract Price shall not include,  (i)
any real estate taxes or other ad valorem or ownership taxes
on  the  Site or the Project, or (ii) any Philippine  value-
added  tax  or Philippine import duties for which  Owner  is
responsible pursuant to Section 3.1(d), and (b) Owner  shall
pay  to  Contractor, in addition to the Contract Price,  any
amount  in respect of Philippine value-added taxes  on  that
portion  of  the  Work performed from time to  time  in  the
Philippines  and  which is of a nature that  is  subject  to
value-added tax in the Philippines; provided that Contractor
shall  use  its  best efforts to minimize the imposition  of
Philippine value-added tax on the cost of the Work.

          7.   TERMS OF PAYMENT

          7.1.  Payments  to  Contractor shall  be  made  as
follows:

          (a)  Within two (2) Business Days after the Notice
to  Proceed Date, Owner shall pay (i) Contractor the  amount
shown as payable directly to the Contractor on Exhibit C and
(ii)  Electro-Mechanical Subcontractor the amount  shown  as
payable  directly  to  Electro-Mechanical  Subcontractor  on
Exhibit  C,  in  each case as the first payment.  Contractor
agrees   to   utilize,   and  to  cause   Electro-Mechanical
Subcontractor to utilize, the proceeds of such first payment
solely  to  pay  costs  relating to  their  respective  Work
hereunder.   Contractor agrees to maintain the  proceeds  of
such  first  payment in a segregated bank  account,  and  to
provide  to  Owner, upon the written request of  Owner  from
time to time, an accounting of the use of such proceeds, and
the   balances  then  on  deposit  in  such  bank   account.
Thereafter, on or about the tenth (10th) day of  each  month
after  receipt  of  the Notice to Proceed, Contractor  shall
submit  a  Contractor's Invoice in the form of  Exhibit  N-1
(with  such  additional information  as  may  be  prescribed
pursuant  to  Section 108 of the National  Internal  Revenue
Code  of  the Philippines and Applicable Law such that  each
Contractor's  invoice,  as required under  and  pursuant  to
Philippines law, qualifies as a "VAT Invoice") to Owner  for
the  Work  performed  thereunder  in  the  then  immediately
preceding  month;  provided, however, that Contractor  shall
have the option to submit separate Contractor's Invoices for
work  performed in the Republic of the Philippines and  Work
performed  outside of the Republic of the Philippines.  Such
Contractor's  Invoice  shall  describe  the  completion   of
project  milestones  as described in  the  Progress  Payment
Schedule, the related progress payments that are then due as
of  the end of the immediately preceding calendar month, and
any  other amounts then payable by Owner to Contractor under
Section  3.1  or 15 and, without limiting Owner's  right  to
dispute  any  amounts requested for payment,  shall  include
documentary  evidence of the completion  of  each  milestone
described in such Contractor's Invoice sufficient for  Owner
to  verify that such milestone has been completed, it  being
understood  and  agreed by Contractor that any  Contractor's
Invoice  that  is  inaccurate or incomplete  or  that  lacks
detail, specificity, or supporting documentation required by
this  Article 7 shall not, to the extent of such deficiency,
constitute  a  valid  request for payment.  Each  respective
monthly  portion  of the Contract Price  set  forth  on  the
Progress Payment Schedule shall be due and payable  only  to
the extent it is supported by individual payment milestones.
If  any  or  all of such milestones have not been satisfied,
Contractor shall only be paid with respect to the milestones
that were completed during such month, it being acknowledged
and  understood that no payment shall be made for  partially
completed  milestones or for Work still subject  to  Owner's
review  in  accordance with Section 11.3.  With  respect  to
milestones  set forth on the Progress Payment Schedule  that
are  not  completed on a timely basis, Contractor  shall  be
paid  the  portion of the Contract Price applicable  thereto
following  completion of such milestones,  and  no  interest
shall  be payable with respect to payment of such delinquent
Work.  Notwithstanding the foregoing, Contractor shall  have
the  right  to  accelerate completion of  and  be  paid  for
milestones  actually completed which are set  forth  on  the
Progress  Payment  Schedule without  revising  the  Progress
Payment  Schedule;  provided, however,  that  the  aggregate
amount  of  the Contract Price paid for any month shall  not
result  in  exceeding the cumulative amount of the  Contract
Price payable up to and including such month pursuant to the
Progress Payment Schedule.

          (b)    Accompanying  each  Contractor's   Invoice,
Contractor  shall submit (i) a conditional lien waiver  from
Contractor, in the form attached as Exhibit L, for all  Work
for  which  payment  is sought in such invoice  and  (ii)  a
conditional  lien waiver from each Subcontractor  or  Vendor
(including the Electro-Mechanical Subcontractor) contracting
directly  with  Contractor where the applicable  subcontract
price  or  purchase  order  value  exceeds  US$150,000,   in
substantially the form attached as Exhibit M, for  all  Work
for  which such Subcontractors and Vendors seek payment,  in
each  case  for which lien waivers have not been  previously
submitted to Owner.

          (c)   Without  limiting Owner's rights  of  review
under  Section 9.1 and Article 11, within twenty  (20)  days
after  receipt  by Owner of a Contractor's Invoice  and  all
accompanying  documentation required by  subsection  (b)  of
this Section 7.1, Owner and the Financing Entities shall, in
consultation  with  their respective  Consulting  Engineers,
(i) determine whether the Work covered thereby has been done
as  described by Contractor; (ii) determine whether the Work
performed  conforms with the requirements of this  Contract;
(iii)  determine whether the Contractor's Invoice  has  been
properly submitted; and (iv) determine and notify Contractor
(and  the  Electro-Mechanical Subcontractor with respect  to
invoiced   amounts   on  behalf  of  the  Electro-Mechanical
Subcontractor)  concerning any invoiced amount  that  is  in
dispute  and  the  basis for such dispute.  Owner  will  pay
Contractor, within thirty (30) days after receipt  by  Owner
of Contractor's Invoice, all amounts then payable and not in
dispute;  provided, however, that Owner may  offset  against
such  payment any amount then due from Contractor  to  Owner
pursuant  to  Section 14.1 or 14.2; provided, further,  that
proper  items  included in Contractor's  Invoice  specifying
payments  to be made to the Electro-Mechanical Subcontractor
shall  be  paid directly to Electro-Mechanical Subcontractor
by   Owner,  with  such  direct  payments  being  deemed  to
constitute  payments of the Contract Price  as  though  paid
directly  to Contractor. Failure by Owner to pay any  amount
in  dispute  and  identified pursuant to clause  (iv)  above
until  resolution of such dispute pursuant to Section 7.1(h)
shall  not  alleviate, diminish, or modify  in  any  respect
Contractor's  obligations  to perform  hereunder,  including
Contractor's  obligation  to meet the  Scheduled  Completion
Date.  Upon receipt of payment from Owner, Contractor  shall
promptly   pay   each  Subcontractor  and  Vendor   directly
contracting  with  Contractor  the  amount  to  which   said
Subcontractor or Vendor is entitled under its agreement with
Contractor with respect to the Work covered by such  payment
by  Owner  (other than the Electro-Mechanical Subcontractor,
who  shall  receive payment directly from Owner). Contractor
shall,  by  an appropriate agreement with each Subcontractor
and  Vendor directly contracting with Contractor  where  the
applicable subcontract price or purchase order value exceeds
US$150,000,  contractually require each  such  Subcontractor
and  Vendor  to  make  payments to  its  Subcontractors  and
Vendors in a similar manner.

          (d)   Prior to the payment of each invoice  (other
than the invoice in respect of the payment made pursuant  to
Section 7.1(e)), Contractor shall confirm that the Retention
Security shall have been increased in accordance with its or
their  respective terms in an aggregate amount equal to  ten
percent  (10%)  of  such  payment  and  shall  instruct  the
issuer(s) of the Retention Security to so deliver  a  Notice
to  Owner  of  such  increase, such that at  all  times  the
aggregate  amount available to be drawn under the  Retention
Security equals ten percent (10%) of the aggregate amount of
all  payments  made to Contractor (including  payments  made
directly  to the Electro-Mechanical Subcontractor)  pursuant
to  Section  7.1(c)  (the "Retainage").   If  Contractor  so
elects in writing, 10% of each invoice may be withheld  from
each  payment  to  Contractor  pursuant  to  customary  cash
retention  provisions and otherwise as agreed to in  writing
by  Contractor  and Owner.  Any such cash retention  amounts
shall  be  held  and  released in a manner  consistent  with
Section 7.1(e).

          (e)   Upon  Substantial Completion of the Project,
Contractor shall submit an invoice for any remaining amounts
due  to  Contractor (including with respect to the  Electro-
Mechanical Scope, less an amount equal to 200% of the  value
of  the  items remaining on the Punchlist delivered pursuant
to  Section  13.3(f) (the "Withheld Amount").  In  addition,
Owner  shall,  in  response thereto,  release  or  otherwise
accept  a  reduction of the Retention Security by an  amount
equal  to  the lesser of (i) 90% thereof or (ii)  an  amount
such  that,  upon reduction of such Retention Security,  the
sum  of  the unpaid Contract Price plus the remaining amount
of  such Retention Security equals 200% of the value of  the
items remaining on the Punchlist.  If Owner is holding  more
than  one  instrument  of Retention  Security,  Owner  shall
allocate such release or reduction as instructed in  writing
by  Contractor (or, if not so instructed, pro rata among all
instruments of Retention Security).

          (f)   Upon  the  delivery of the Notice  of  Final
Acceptance  in  accordance with Section  13.5,  Owner  shall
promptly  surrender  to Contractor the  Retention  Security.
Upon  the  issuance  of the Notice of  Final  Acceptance  by
Owner,  Contractor may submit an invoice  for  the  Withheld
Amount,  such  invoice to be accompanied by  executed  final
conditional lien waiver forms from Contractor, in  the  form
attached as Exhibit L-1, for all Work performed pursuant  to
this   Contract  and  from  each  Subcontractor  and  Vendor
contracting directly with Contractor (including the Electro-
Mechanical   Subcontractor),  substantially  in   the   form
attached  as  Exhibit  M-1,  for  all  Work  performed   and
materials  furnished  by each such Subcontractor  or  Vendor
pursuant  to an executed subcontract or purchase order  with
Contractor  where  the  applicable  subcontract   price   or
purchase order value exceeds US$150,000, as the case may be.
Such invoice shall be paid by Owner in the form of (i) final
release of the Retention Security and/or (ii) cash.

          (g)      Contractor's     or    Electro-Mechanical
Subcontractor's  acceptance of  any  payment  shall  not  be
deemed  to constitute a waiver of amounts that are  then  in
dispute.

          (h)    Contractor  and  Owner  shall   use   their
reasonable  efforts  to  resolve  all  disputed  amounts  as
expeditiously as possible in accordance with the  provisions
of Section 36.

          (i)   All payments to be made to Contractor  under
this  Contract  shall be paid in United States  Dollars  and
shall be wire transferred in immediately available funds  on
the  date due or, if such date is not a banking day  in  the
United States, on the immediately succeeding banking day  to
such account as may be designated by Contractor (or, in  the
case  of  payments to be made hereunder directly to Electro-
Mechanical  Subcontractor, as may be designated by  Electro-
Mechanical  Subcontractor) from time to time  by  Notice  to
Owner in accordance with Section 33.

          (j)   Contractor  hereby acknowledges  that  Owner
will  be  required  to  withhold one percent  (1%)  of  each
payment  to  be made to Contractor hereunder to  the  extent
required under Applicable Law and remit such amount  to  the
Philippine  Bureau  of Internal Revenue in  accordance  with
Section  51  of the National Internal Revenue  Code  of  the
Philippines, as amended and Revenue Regulations No. 6-85, as
amended.  Contractor  acknowledges that  no  amount  payable
hereunder shall be increased as a result of such withholding
or  any other withholding required under Applicable Law, and
all  payments  hereunder  shall be  made  net  of  any  such
amounts.

          8.   COMMENCEMENT AND PROSECUTION OF THE WORK

          8.1.  The  date on which Owner provides Contractor
with  a  Notice  to Proceed shall be the Notice  to  Proceed
Date.  On  the  Notice  to  Proceed Date,  Contractor  shall
commence  and  shall thereafter diligently pursue  the  Work
assigning to it a priority that should reasonably permit the
attainment  of  Substantial  Completion  on  or  before  the
Guaranteed  Substantial  Completion Date.  Contractor  shall
proceed with the performance of the Work in accordance  with
the Milestone Schedule.

          8.2. If a Notice to Proceed has not been issued by
June  30,  1997,  either  party  shall  have  the  right  to
terminate  this  Contract upon notice to  the  other  (which
right  shall  terminate upon the issuance of the  Notice  to
Proceed),  in  which  event neither  party  shall  have  any
further  rights  or obligations hereunder (other  than  such
rights  and obligations that by their express terms  survive
the expiration or earlier termination of this Contract).

          8.3.  Contractor  shall  prosecute  the  Work   in
accordance  with the Critical Path Schedule.  If  Contractor
fails,  other than by reasons not attributable to Contractor
to stay within sixty (60) days of the schedule for achieving
Substantial   Completion  on  or   before   the   Guaranteed
Substantial Completion Date (as determined from the Critical
Path Schedule), Contractor shall, within ten (10) days after
Contractor becomes aware of such delay, submit for  approval
by  Owner  and the Consulting Engineer, a written plan  (the
"Plan")   to   complete  all  necessary  Work   to   achieve
Substantial Completion not later than sixty (60) days  after
the  Guaranteed  Substantial Completion  Date,  including  a
revised  Critical Path Schedule.  Owner and  the  Consulting
Engineer  shall provide Contractor within fifteen (15)  days
after receipt of the Plan written approval or disapproval of
the  Plan,  the  approval  thereof not  to  be  unreasonably
withheld.   If Owner or the Consulting Engineer  disapproves
all  or  any  portion of the Plan, Owner or  the  Consulting
Engineer,  as the case may be, shall approve those  portions
of the Plan that are acceptable and provide modifications to
those  portions  of  the  Plan that have  been  disapproved.
Contractor  shall  then resubmit a revised  Plan  addressing
such  modifications as shall have been provided by Owner  or
the Consulting Engineer, as the case may be, within five (5)
additional  days  and,  upon  approval  by  Owner  and   the
Consulting  Engineer, promptly proceed with such  additional
Work  as may be required under the Plan.  Approval by  Owner
and the Consulting Engineer of a Plan shall not be deemed in
any way to have relieved Contractor of its obligations under
this Contract relating to the failure to achieve Substantial
Completion by the Guaranteed Substantial Completion Date, be
a  basis for an increase in the Contract Price, or limit the
rights of Owner under Section 14.1.

          8.4  (a)  On or prior to May 12, 1997:

           (i)   Owner  and Contractor shall  have  mutually
agreed  upon Exhibits C, E, I, J, P, U and W, and the  final
text  of  each of such Exhibits shall have been incorporated
herein.  [COMPLETE AND INSERTED]

             (ii)    Contractor    and    Electro-Mechanical
Subcontractor  each shall have executed  and  delivered  the
Electro-Mechanical  Subcontract,  which  shall   have   been
incorporated herein as Exhibit V.  [COMPLETE AND INSERTED]

          (iii)     Owner, Contractor and Electro-Mechanical
Subcontractor  shall  have agreed upon  the  final  text  of
Article 23.  [COMPLETE AND INSERTED]

           (iv)  Owner,  Contractor  and  Electro-Mechanical
Subcontractor shall have agreed on the final  form  of  each
item  of  Performance  Security, and Contractor  shall  have
provided  Owner  with  evidence reasonably  satisfactory  to
Owner  of the commitment, by each issuer of such Performance
Security, to so issue such Performance Security on or  prior
to  the then anticipated date for issuance of the Notice  to
Proceed.  [FORM IS COMPLETE AND INSERTED]

            (v)   Owner  shall  deliver  a  Notice  granting
Contractor access to the Site.

           (vi)  Within  10 days of the date  on  which  the
Notice referred to in paragraph (a)(v) above is received  by
Contractor, (A) Contractor shall have delivered a Notice  to
Owner  indicating Contractor's approval of the condition  of
the  Major  Existing  Site Assets,  or  a  Notice  to  Owner
identifying  any  such Major Existing Site Assets  that,  in
Contractor's opinion, is no longer located at the Site or is
not  capable,  in  all  material respects  and  taking  into
account (x) the used nature of such equipment, (y) usual and
customary maintenance and tune-up of all such equipment, and
(z)  the  required  reconfiguration  of  the  tunnel  boring
machine,  of  being utilized for the functional purpose  for
which  it  is designed and describing in detail the problems
with  such  equipment causing it to not be capable  of  such
operation,  and (B) Contractor and Owner shall  have  agreed
upon appropriate and mutually satisfactory modifications  to
this Contract, if any, to address such problems.

      (b)   If all of the foregoing events have not occurred
on or prior to the relevant date specified above (subject to
extension   in   the  sole  discretion  of  Owner),   either
Contractor  or Owner shall have the right to terminate  this
Contract  by  Notice to the other party,  whereupon  neither
party  shall  have  any liability to the  other  or  to  the
Electro-Mechanical Subcontractor.

          9.   SUBCONTRACTORS

          9.1.  Within thirty (30) days after the Notice  to
Proceed Date, Contractor shall provide Owner with a list  of
potential Subcontractors and Vendors, other than the Electro-
Mechanical Subcontractor, that would be directly contracting
with Contractor for all material components and services  in
connection  with  the  Work, broken down  by  component  and
service.  Within thirty (30) Business Days after receipt  of
such  list,  Owner shall have the right to advise Contractor
of  any  such  potential  suppliers  to  which  it  objects,
together  with  the reasons for objection. Contractor  shall
remove  from the list any potential supplier to which  Owner
objects  (other  than the Electro-Mechanical Subcontractor).
If  Owner  fails to respond within such thirty (30)  working
day  period,  Owner shall be deemed not to have objected  to
any   potential  Subcontractor  or  Vendor  on   the   list.
Contractor   shall   have  the  right   to   add   potential
Subcontractors  and  Vendors to  the  list  subject  to  the
procedures  set  forth above; provided,  however,  that  the
review  period  for Owner shall be reduced to  fifteen  (15)
Business Days after physical construction of the Project has
commenced.  No  Subcontractor  or  Vendor  (other  than  the
Electro-Mechanical Subcontractor) for any material component
or  service  in  connection with the Work  covered  by  this
Section  9.1  shall  be  engaged  by  Contractor  prior   to
completion  of the review process set forth in this  Section
9.1.

          9.2.   Neither   the  review  by  Owner   of   any
Subcontractor or Vendor under Section 9.1 nor  the  approval
by  Owner of the Electro-Mechanical Subcontractor shall  (i)
constitute any approval of the Work undertaken by  any  such
Person, (ii) cause Owner to have any responsibility for  the
actions, the Work, or payment of such Person or to be deemed
to  be  in  an employer-employee relationship with any  such
Subcontractor  or  Vendor,  or  (iii)  in  any  way  relieve
Contractor  of  its  responsibilities and obligations  under
this Contract. Notwithstanding anything in Article 7 to  the
contrary,  in no event shall Contractor submit or  Owner  be
obligated  to  review  any  invoice  with  respect  to  work
performed  by  any Subcontractor or Vendor (other  than  the
Electro-Mechanical Subcontractor) prior to the expiration of
the review period provided in Section 9.1.

          9.3.  No subcontract or purchase order shall  bind
or  purport to bind Owner, but each subcontract and purchase
order  entered into by Contractor with respect to  the  Work
where  the  applicable subcontract price or  purchase  order
value  exceeds US$150,000 shall contain a provision  in  the
form of Exhibit O permitting its assignment to Owner or  the
Financing  Entities upon Owner's written  request  following
default  by Contractor or termination or expiration of  this
Contract.

          9.4. Contractor shall furnish such information and
access  relative to its Subcontractors and Vendors as  Owner
may reasonably request.

          10.  LABOR RELATIONS

          10.1.       Subject   to   Section   4.1(o),   and
notwithstanding  the provisions of Section 10.2,  Contractor
shall preserve its rights to exercise and shall exercise its
management  rights in performing the Work.  Such  management
rights shall include the rights to hire, discharge, promote,
and  transfer  employees; to select and  remove  foremen  or
other  persons at other levels of supervision; to  establish
and   enforce   reasonable  standards  of   production;   to
introduce,  to  the extent feasible, labor saving  equipment
and   materials;  to  determine  the  number  of   craftsmen
necessary  to  perform  a  task, job,  or  project;  and  to
establish,  maintain,  and  enforce  rules  and  regulations
conducive to efficient and productive operations.

          10.2.      Contractor  shall  use  its  reasonable
efforts  to  minimize  the  risk of  labor  related  delays.
Contractor shall promptly take any and all reasonable  steps
that  may be available in connection with the resolution  of
violations  of  collective bargaining agreements  and  labor
jurisdictional disputes, including the filing of appropriate
processes  with  any court or administrative  agency  having
jurisdiction  to settle, enjoin, or award damages  resulting
from violations of collective bargaining agreements or labor
jurisdictional disputes.

          10.3.      Contractor shall advise Owner promptly,
in  writing,  of any actual or threatened labor  dispute  of
which  Contractor has knowledge that might materially affect
the  performance of the Work by Contractor or by any of  its
Subcontractors.

          11.  INSPECTION; EFFECT OF REVIEW AND COMMENT

          11.1.      (a)  Owner  shall  have  the  right  to
inspect   any   item   of   equipment,   material,   design,
engineering,   service,  or  workmanship  to   be   provided
hereunder, and Contractor shall submit for review  by  Owner
all  design criteria, system descriptions, plans,  drawings,
calculations,  technical specifications,  quality  assurance
reports,  and  other  documents  relating  to  the  Work  as
required  by  this  Contract, and, to the extent  reasonably
feasible, arrange for inspection of equipment or material at
the  point of fabrication if requested by Owner. Owner shall
be  responsible  for  the costs of its personnel  and  their
transportation with respect to such inspections.

          (b)   Regardless of whether payment has been  made
therefor,  Owner shall have the right to reject any  portion
of  the  Work  that does not conform to this Contract.  Upon
such  rejection, Contractor shall promptly  remedy,  at  its
sole cost and expense, any Work that does not conform to the
requirements of this Contract that is identified by Owner as
giving rise to such rejection.

          11.2.      Contractor understands that  Owner  and
the  Financing Entities and their respective representatives
have the right to observe and inspect the Work, any item  of
equipment (including equipment under fabrication), material,
design,  engineering, service, or workmanship to be provided
hereunder  and  to  observe all tests of the  Work  and  the
Project.  Upon  reasonable Notice to  Contractor  by  Owner,
Contractor  shall allow Owner, NPC, NIA, and  the  Financing
Entities  and  their  respective representatives  reasonable
access  to  the Work (including equipment under fabrication)
and the Project. Owner and the Financing Entities also shall
be  entitled  to  Contractor's technical details  pertaining
thereto  as  reasonably requested by either  Owner,  or  the
Financing  Entities,  or  their respective  representatives.
Contractor shall incorporate such inspection rights  in  all
equipment  purchase orders and subcontracts.  To  facilitate
such observations and inspections, Contractor shall maintain
at  the  Site a complete set of all plans and specifications
and a current Critical Path Schedule and Milestone Schedule.

          11.3.      Contractor shall submit for  review  to
Owner (which shall have the right to make them available  to
NIA  and  NPC)  copies of all drawings, plans, calculations,
operating and maintenance instructions, and, in general, all
material  documents  relating to the Project  in  accordance
with  the  requirements of Article 3 of  Exhibit  A.  Within
thirty  (30)  days  after receipt of any such  document  for
Level  1  or Level 2 (each as defined in Exhibit A)  review,
Owner  shall  have the right to describe any  flaws  in  the
design  identified  in such document. Failure  by  Owner  to
describe any flaws within such time period shall be deemed a
waiver   of   Owner's   rights  to  describe   such   flaws.
Notwithstanding anything in Article 7 to the contrary, in no
event shall Contractor submit any Contractor's Invoice  with
respect  to  work performed pursuant to any  such  documents
prior  to  the expiration of the review period set forth  in
this  Section 11.3. In no event shall Contractor  issue  any
purchase   orders   based  on  any  such  drawings,   plans,
calculations,  operating  and maintenance  instructions,  or
other  material  documents until  Owner  has  completed  its
review.

          11.4.      If  Owner identifies any flaws  in  the
design  with  respect to any document submitted  for  review
(which  shall include any flaws identified by NIA  or  NPC),
Contractor  shall  incorporate changes into  such  documents
addressing and remedying the flaws and resubmit the same  to
Owner,  and such incorporation of changes to address Owner's
comments  shall not be considered a Change in the  Work.  No
document subject to this Section 11.4 shall be released  for
use  in connection with the Work prior to completion of  the
review process set forth in Section 11.3.

          11.5.      Inspection, review, or comment by Owner
with  respect  to any subcontract or purchase order  or  any
plans, specifications, drawings, shop drawings, samples, and
other documents, or any other work or services performed  by
Contractor or any Subcontractor or Vendor, is solely at  the
discretion  of  Owner and shall not in  any  way  affect  or
reduce  Contractor's  obligations to complete  the  Work  in
accordance with the provisions of this Contract or be deemed
to be a warranty or acceptance by Owner with respect to such
Work.

          12.  MECHANICAL COMPLETION OF THE WORK

          12.1.     Contractor shall (i) provide for Owner's
review  and acceptance detailed test procedures and  a  test
schedule  in accordance with the requirements of  Exhibit  D
not  less  than one hundred fifty (150) days  prior  to  the
start  of testing, which procedures must be agreed  upon  by
Contractor  and  Owner at least ninety  days  prior  to  the
commencement   of   testing,  with  the   schedule   clearly
indicating  when  in the test schedule the  Contractor  will
require  electrical connection for output to the  NPC  Luzon
grid;  and  (ii) provide Owner, NIA, and NPC not  less  than
twenty  (20) days prior Notice of all testing of  protective
apparatus   and   of   the   proposed   date   for   initial
synchronization  of the Project with NPC's grid.  Contractor
shall  keep the Project Representative continuously apprised
of  the  specified  schedule and  changes  thereto  for  the
commencement and performance of such activities.

          12.2.      Contractor shall provide written Notice
to  Owner  and  the Financing Entities' Consulting  Engineer
that  Contractor  deems Mechanical Completion  of  the  Work
(other  than  the  Taan  Weir Work) to  have  occurred  when
(i)  Contractor has completed all such Work except painting,
final clean-up, final grading, and any portion of such  Work
not  affecting the operability or safety or the  mechanical,
electrical, or structural integrity of the Project; (ii) the
Project  is  mechanically,  electrically,  and  structurally
constructed  in  accordance with the  requirements  of  this
Contract, including completion of those tests identified  in
Exhibit  D  as  "Tests Required for Mechanical  Completion";
(iii)  the  Project may be operated without  damage  to  the
facilities of NPC or any other property on or off the  Site,
and  without injury to any Person; (iv) the Project is ready
for initial operation, adjustment, performance, and testing;
and  (v)  the  Performance Test procedures shall  have  been
approved  in accordance with Section 16.1.  If not  included
in the foregoing Notice to Owner, Contractor shall provide a
similar  Notice to Owner promptly upon mechanical completion
of the subject matter of the Taan Weir Work.

          12.3.     Within twenty (20) days after receipt of
any Notice pursuant to Section 12.2 hereof, Owner shall have
the right to advise Contractor in writing of any defects  or
deficiencies  in  the  installed equipment,  materials,  and
workmanship    that   deviate   from   the   drawings    and
specifications approved by Owner pursuant to  this  Contract
and  that could adversely affect the operability or  safety,
or  the mechanical, electrical, or structural integrity,  of
the  Project. Contractor shall then perform, at Contractor's
sole  cost  and expense, corrective measures to remove  such
defects  or  deficiencies and shall again notify  Owner,  in
accordance   with  Section  12.2  hereof,  when   Mechanical
Completion  of the Work has occurred. Within five  (5)  days
after  receipt of each subsequent notification, Owner  shall
have  the  right  to advise Contractor, in writing,  of  any
additional or remaining defects or deficiencies that must be
corrected   by  Contractor  as  a  condition  to  Mechanical
Completion   of  such  Work.  Any  disputes  regarding   the
existence  or  correction  of any such  alleged  defects  or
deficiencies shall be resolved pursuant to Section 16.2.

          12.4.     Mechanical Completion shall be deemed to
have occurred when Contractor has corrected all defects  and
deficiencies identified in the subject Work (other than  the
Taan  Weir  Work)  by Owner pursuant to  the  provisions  of
Section 12.3 and Owner has noted such corrections in writing
or  the engineering firm identified pursuant to Section 16.2
determines that no such defects or deficiencies exist. Owner
shall  be deemed to have given such notice unless Owner  has
identified in writing any additional or remaining defects or
deficiencies  within  the  applicable  period  specified  in
Section 12.3.

               13.    SUBSTANTIAL   COMPLETION   AND   FINAL
               ACCEPTANCE OF THE PROJECT

          13.1.      (a) Contractor shall perform  all  Work
necessary  for the conduct of the Project Performance  Test,
shall   start-up  the  Project  and  conduct   the   Project
Performance  Test,  and  shall  satisfy  all  of  its  other
obligations  under this Contract to ensure that the  Project
has  been  completed  and  that  all  components  have  been
properly adjusted and tested.

          (b)   Contractor  and Owner shall  agree  on  test
schedules  for  the  Project taking into  consideration  the
operational  requirements of NIA and NPC.  Contractor  shall
give  Owner and NIA written notice at least ninety (90) days
before  it  anticipates conducting the  Project  Performance
Test. When Contractor establishes the scheduled dates(s) for
the  tests required pursuant to this Contract, it shall give
Owner  at  least  twenty  (20) days' prior  notice  thereof.
Contractor    shall   keep   the   Project    Representative
continuously apprised of the specified schedule, and changes
therein,  for  the commencement and performance  of  Project
Performance  Test, and shall give the Project Representative
at  least eight (8) days' prior notice of the re-performance
of  the Project Performance Test. A Project Performance Test
conducted without the required notice to Owner and NIA shall
not be valid for the purposes of this Contract.

          (c)  The representatives of NIA and NPC shall have
the  right  to  be  present during  any  test  performed  by
Contractor under this Section 13.

          13.2.      At  any time during and promptly  after
completion  (whether  or  not  successful)  of  the  Project
Performance  Test under Section 13.1 (or any  re-performance
of  such  test under this Section 13.2), Owner shall  advise
Contractor  and Contractor shall advise Owner in writing  of
any  Work  that does not conform to this Contract  that  was
discovered   during   the  Project  Performance   Test.   If
Contractor  is  notified  of  or  discovers  any  such  non-
conforming Work, Contractor shall, at Contractor's sole cost
and  expense, correct such Work and promptly provide  Notice
to  Owner in writing that such corrective measures have been
completed. Any dispute regarding the existence or correction
of  any  such non-conforming Work shall be resolved pursuant
to Section 16.2.

          13.3.      The  following are conditions precedent
to Substantial Completion:

          (a)  All liquidated delay damages due pursuant  to
Section 14.1 have been paid.

          (b)    Contractor   has  completed   the   Project
Performance  Test  and  the  other  tests  provided  for  in
Exhibit  D  (other  than the Reliability  Test)  and  either
(i)  the  Project shall have achieved 100%  of  the  Project
Performance  Guarantee  or (ii) all  Buy  Down  Amounts  due
pursuant to Section 14.2 shall have been paid and all of the
other requirements set forth in Section 14.2 shall have been
satisfied, as applicable.

          (c)  Owner has received copies of all Contractor's
Permits  required to be obtained by Contractor  pursuant  to
Section 4.1(e).

          (d)    Owner  has  received  all  submissions   in
accordance  with the provisions of Exhibit A, including  all
operations,  maintenance, and spare parts lists and  manuals
and  all  instruction books necessary to operate the Project
in  a  safe, efficient, and reliable manner and has received
five  (5)  copies  of preliminary as-built drawings  of  the
Project,  one (1) Mylar reproducible copy thereof,  and,  if
the  drawings are electronically prepared, one (1)  copy  of
the  computer  data files as prepared by  Contractor  for  a
software program available to Owner.

          (e)  Contractor has certified by a Notice to Owner
that all training of Operating Personnel is complete.

          (f)   A  Punchlist and a schedule and  budget  for
completion  of the Punchlist items, in each case  reasonably
satisfactory to Owner and the Consulting Engineer, has  been
developed by Contractor and delivered to Owner, and all Work
other  than  those items shown on the Punchlist  shall  have
been completed.

          (g)   All spare parts described on Exhibit J  have
been received by Owner at the Site.

          13.4.      When  Contractor believes that  it  has
satisfied the provisions of Section 13.3(a) through (f),  it
shall   deliver   to  Owner  and  the  Financing   Entities'
Consulting Engineer a Notice of Substantial Completion. Such
Notice  shall contain a report of results of the Performance
Tests  and  the  Work  completed with sufficient  detail  to
enable Owner and the Financing Entities' Consulting Engineer
to   determine  whether  Substantial  Completion  has   been
achieved. The Substantial Completion Date shall be the  date
on  which the conditions of Section 13.3 were satisfied  or,
in  the  sole  discretion of Owner, waived.  Promptly  after
Substantial Completion has been achieved as provided  above,
Owner  shall issue a Notice of Substantial Completion  dated
to reflect the Substantial Completion Date.

          13.5.      Final Acceptance of the Work  shall  be
deemed  to  have occurred only if all of the following  have
occurred:

          (a)    Substantial   Completion   and   successful
completion   of  the  Reliability  Test  demonstrating   the
Project's  ability to achieve the Reliability Guarantee  and
successful completion of the Taan Weir Work.

          (b)   Owner  has received all drawings  (including
five (5) copies of final as-built drawings of the Work,  one
(1)  Mylar  reproducible copy thereof, and, if the  drawings
are  electronically prepared, one (1) copy of  the  computer
data  files as prepared by Contractor for a software program
available  to  Owner),  specifications,  calculations,  test
data,   performance   data  (including  turbine   efficiency
curves),   equipment  descriptions,  equipment  and   system
installation instruction manuals, integrated and coordinated
operation  and  maintenance manuals,  training  aids,  spare
parts  lists,  and  other  technical  information  each   as
required   hereunder  for  Owner  to  start   up,   operate,
commission, and maintain the Project.

          (c)   All  tools  and  spare  parts  purchased  by
Contractor to replace those used by Contractor during start-
up  have been purchased for delivery to Owner free and clear
of liens.

          (d)     All   Contractor's   and   Subcontractors'
personnel,  supplies, equipment, waste  materials,  rubbish,
and  temporary facilities have been removed from  the  Site,
and  any  permanent facilities used by Contractor have  been
restored to like new condition.

          (e)    Owner  has  received  from  Contractor  all
information  requested  by Owner and  required  for  Owner's
final  fixed  asset records with respect to the  Project  in
accordance with Section 4.1(h).

          (f)    Contractor  has  delivered   to   Owner   a
certification   identifying  all   outstanding   claims   of
Contractor under this Contract with documentation sufficient
to support such claims.

          (g)   Contractor  has assigned or  provided  Owner
with  all  warranties or guarantees that Contractor received
from  Subcontractors or Vendors to the extent Contractor  is
obligated to do so pursuant to Section 17.5.

          (h)   Contractor has delivered a conditional final
lien  waiver  in  accordance with  Section  7.1(f)  and  has
delivered such other documents and certificates as Owner has
reasonably   requested  to  insure   compliance   with   all
applicable labor laws and regulations of the Republic of the
Philippines..

          (i)  Owner has delivered to Contractor a Notice of
Final  Acceptance evidencing that, to the  best  of  Owner's
knowledge,  the Punchlist items have been completed  to  the
reasonable  satisfaction of Owner and  all  of  Contractor's
other construction obligations under this Contract have been
satisfied  in  full, which Notice of Final Acceptance  Owner
shall deliver as soon as possible, and in no event more than
ten  (10)  days after satisfaction in full by Contractor  of
all  of its obligations under the provisions of Section 13.5
(a)  through (h). If Owner fails to notify Contractor of any
alleged  non-satisfaction of Contractor's obligations  under
Sections 13.5(a) through (h) within ten (10) days after  the
date  Contractor  gives  Notice  to  Owner  that  Contractor
believes it has satisfied the provisions of Section  13.5(a)
through  (h),  Contractor shall be deemed to have  satisfied
such  conditions;  provided, however,  that  failure  to  so
notify  Contractor  shall not void the Plant  Warranties  or
Materials Warranty.

          14.  DELAY DAMAGES AND BUY DOWN AMOUNTS

          14.1.      Contractor  understands  that  if   the
Substantial Completion Date does not occur on or before  the
Guaranteed  Substantial Completion Date, Owner  will  suffer
substantial  damages,  including  additional  interest   and
financing charges on funds obtained by Owner to finance  the
Work,  reduction of the return on Owner's equity  investment
in  the Project, and other operating and construction  costs
and   charges.   Therefore,  Contractor   agrees   that   if
Substantial  Completion is not achieved  by  the  Guaranteed
Substantial  Completion Date (unless and to the extent  such
failure  is  due to Owner's breach of its obligations  under
this  Contract  or, without duplication, the  occurrence  of
Force  Majeure),  Contractor shall pay to  Owner  liquidated
damages in the amount of US$25,000 per day for each  day  by
which the Substantial Completion Date is delayed beyond  the
Guaranteed Substantial Completion Date for the first  ninety
(90)  days of such delay, US$45,000 per day for each day  of
delay  beyond  such ninetieth (90th) day but  prior  to  the
180th  day after the Guaranteed Substantial Completion Date,
and  US$65,000  per  day for each day of  delay  thereafter;
provided,  however,  in  no  event shall  Electro-Mechanical
Liquidated  Damages payable under this Section  14.1  exceed
such  amount  thereof as would accrue over a period  of  365
days.

          14.2.     (a) If the Project Performance Guarantee
shall not have been fully satisfied on or before the date on
which  Contractor desires to declare Substantial  Completion
pursuant  to  Section 13.4, as determined  pursuant  to  the
Project Performance Test conducted pursuant to Section  16.1
(whether by virtue of the results of the Project Performance
Test  or  failure to perform the Project Performance  Test),
Contractor  shall, as a condition to Substantial Completion,
pay  to  Owner a one time Buy Down Amount equal to  US$2,878
per  kW  for each kW that the net Project performance output
shall have been below the Project Performance Guarantee,  as
demonstrated  during the conduct of the Project  Performance
Test  and calculated in accordance with the method set forth
on Exhibits Q and Q-1.

          (b)   Subject  to Section 35.3 but notwithstanding
anything   else  to  the  contrary  contained   herein,   if
Contractor is in default under Section 19.1(g) and Owner has
elected  to  terminate this Contract, Contractor  shall,  in
addition  to  any  other  remedies to  which  Owner  may  be
entitled,  pay  a  Buy  Down Amount computed  based  on  the
Project  Performance Test most recently completed  prior  to
termination or, if the Project Performance Test has not been
completed prior to termination, the Project Performance Test
completed  after  termination  (no  Buy  Down  Amount  being
payable hereunder unless based on such a Project Performance
Test).

          14.3.      Any  amount Contractor is obligated  to
pay  to  Owner under Section 14.1 or 14.2 shall be  due  and
payable thirty (30) days after receipt of a request therefor
from Owner. If Contractor is obligated to pay any amount  to
Owner  pursuant to Section 14.1 or 14.2 and such  amount  is
not  paid  within the time period referred to  above,  Owner
shall  have the right to offset any such amount against  any
amount then or thereafter due from Owner to Contractor under
this  Contract  and  to  exercise  its  rights  against  any
security  provided by or for the benefit  of  Contractor  in
such order as Owner may elect in its sole discretion.

          14.4  The amounts payable under Sections 14.1  and
14.2,  as  limited  by Article 35, and  the  other  remedies
provided  for in Section 14.3 shall be Owner's sole remedies
for delays in achieving Substantial Completion by Contractor
and  for  failure  of  the Project to meet  the  Performance
Guarantees  during  the  Performance Tests.  Contractor  and
Owner agree that Owner's actual damages in the event of such
delays   and  failures  would  be  extremely  difficult   or
impracticable  to  determine and  that,  after  negotiation,
Owner and Contractor have agreed that the liquidated damages
set  forth  in  Sections  14.1 and  14.2  are  a  reasonable
estimate  of the damages that Owner would incur as a  result
of such delays or failures.

           14.5  Contractor shall be entitled  to  an  early
completion bonus in an amount equal to US$50,000 per day for
each  day  prior  to the date that is 36  months  after  the
Notice to Proceed Date that the Substantial Completion  Date
shall  have occurred.  Such early completion bonus shall  be
paid  by Owner within thirty (30) days after the Substantial
Completion Date.

          15.  CHANGES IN THE WORK

          15.1.      A  Change in the Work may  result  only
from any of the following:

          (a)   Changes  in the Work required  by  Owner  in
writing in accordance with Section 15.2;

          (b)  The occurrence of an event of Force Majeure;

          (c)  A Change in Law; or

          (d)   The  occurrence  of  a  Hanbo-Related  Event
(provided  Contractor has provided prompt written notice  to
Owner  of  the  occurrence thereof and has taken  reasonable
steps  to mitigate the adverse effects of such Hanbo-Related
Event).

          15.2.      (a) Owner shall have the right to  make
changes  in  the  Work,  within the general  scope  thereof,
whether   such   changes  are  modifications,   alterations,
additions, or deletions, in accordance with this Article 15.
All  such  changes  shall be made in  accordance  with  this
Article 15 and shall be considered, for all purposes of this
Agreement, as part of the Work.

          (b)    Notwithstanding   the   foregoing,   unless
Contractor and Owner shall have agreed upon a "Change in the
Work" form in accordance with the provisions of Section 15.4
hereof,  Contractor shall have no obligation to  perform  or
comply  with  any  modification,  alteration,  addition,  or
deletion  by  Owner  to  the Work after  execution  of  this
Contract  that  (i)  conflicts  with  this  Contract,   (ii)
accelerates  the Milestone Schedule, (iii)  may  affect  the
performance of the Project under the Performance Guarantees,
or (iv) may increase the costs of the Contractor.

          15.3.     Upon the occurrence of a Change in  Law,
an  event  of  Force Majeure or the occurrence of  a  Hanbo-
Related  Event, Contractor may request a Change in the  Work
under which (i) the Critical Path Schedule and the Milestone
Schedule  (and  each date referenced therein, including  the
Guaranteed Substantial Completion Date) shall be extended as
set  forth in the Change in the Work form accepted by Owner,
(ii) the Contract Price shall be increased by the amount  of
the increased costs, if any, set forth in the "Change in the
Work" form so accepted by Owner, and (iii) the Work shall be
modified  to  reflect additions, deletions, or substitutions
to  the  Work previously approved by Owner, as set forth  in
the "Change in the Work" form so accepted by Owner.

          15.4.      If Contractor is notified of or becomes
aware of a Change in the Work required by Owner pursuant  to
Section 15.1 or as the result of the occurrence of an  event
of  Force  Majeure, a Change in Law or the occurrence  of  a
Hanbo-Related   Event,  Contractor   shall,   as   soon   as
practicable after notification or becoming aware of such  an
event, prepare a detailed estimate of the increase, if  any,
in  the  cost and time required to complete the Work on  the
"Change  in  the Work" form attached as Exhibit G,  together
with  an explanation of the basis therefor, and shall inform
Owner  whether and to what extent, in Contractor's  opinion,
there  should  be a change in the Work, the Contract  Price,
the  Milestone Schedule, the Critical Path Schedule, or  the
Progress Payment Schedule. Contractor shall not charge Owner
for  the  costs  of  making such estimates  in  response  to
reasonable requests therefor.

          15.5  (a)  If Contractor and Owner reach agreement
on  the  matters  listed in the "Change in  the  Work"  form
submitted by Contractor, Contractor shall execute such  form
in  accordance  with  Section 37.5,  and  Owner  shall  sign
"Accepted  by Owner" on such form and execute such  form  in
accordance  with  Section 37.5, as amended  to  reflect  the
agreement  of  the  Parties. For  any  Change  in  the  Work
resulting  in  additional  costs to  Contractor,  Contractor
agrees  that any changes shall be performed on the basis  of
reimbursement  of its direct costs (without  overhead)  less
savings or costs not incurred due to such change, plus,  for
profit  and  overhead, a fee of ten percent  (10%)  of  such
costs, but expressly waives any other compensation therefor.

          (b)   If  a Change in the Work involves a decrease
in the Work or in the use of less labor resulting in reduced
labor  costs, there shall be a lump-sum deduction  from  the
Contract Price, which deduction will be based on the  amount
that  Contractor  has in its budget for the  Work  involved,
inclusive  of direct and indirect costs, overhead,  margins,
contingencies, fees, and profit.

          (c)   If  there is a dispute between  the  Parties
about  a  request for a Change in the Work by  either  Party
under  this  Section 15, such dispute shall be  resolved  in
accordance  with the expedited dispute resolution procedures
set   forth  in  Section  36  for  payment  disputes,   and,
notwithstanding  any provision of this  Section  15  to  the
contrary,  the  arbitrators  shall  decide  the  appropriate
Contract Price change, schedule change, and related matters,
if  any, such decision shall be treated as a Change  in  the
Work, and this Contract shall be deemed to have been amended
to reflect such terms.

          (d)   If necessary and specified on the Change  in
the  Work  form  accepted by Owner  or  as  decided  by  the
arbitrators, Owner shall promptly adjust the Contract  Price
and  the Milestone Schedule, the Critical Path Schedule, the
Progress  Payment  Schedule  and  any  other  Exhibits   and
schedules  requiring  adjustment  to  reflect  the  accepted
Change in the Work. IN NO EVENT SHALL CONTRACTOR BE ENTITLED
TO  UNDERTAKE OR BE OBLIGATED TO UNDERTAKE A CHANGE  IN  THE
WORK UNTIL CONTRACTOR HAS RECEIVED A CHANGE IN THE WORK FORM
SUBMITTED BY CONTRACTOR AND ACCEPTED BY OWNER OR DECIDED  BY
THE  ARBITRATORS, AND, IN THE ABSENCE OF SUCH SIGNED  CHANGE
IN  THE  WORK FORM, IF CONTRACTOR UNDERTAKES ANY CHANGES  IN
THE  WORK,  IT SHALL MAKE ANY SUCH CHANGES AT ITS SOLE  RISK
AND  EXPENSE  AND  SHALL  NOT BE  ENTITLED  TO  ANY  PAYMENT
HEREUNDER FOR UNDERTAKING SUCH CHANGES.

          15.6.      Contractor shall not suspend  the  Work
pending resolution of any proposed Change in the Work unless
directed by Owner in writing in accordance with Section 21.

          16.  PERFORMANCE GUARANTEES AND TESTS

          16.1.      Contractor shall perform all  tests  of
the Project in accordance with the provisions of Exhibit  D.
Contractor  shall  provide  Owner  with  proposed  test  and
commissioning  procedures, standards,  protective  settings,
and the testing and commissioning program to be followed  by
Contractor not less than one hundred fifty (150) days  prior
to the date on which Contractor anticipates the commencement
of   the  Performance  Tests.  Contractor  and  Owner  shall
cooperate  reasonably to reach agreement on  such  test  and
commissioning  procedures, standards,  protective  settings,
and  test  and  commissioning  program  to  be  followed  by
Contractor not less than ninety (90) days prior to the  date
on  which  Contractor anticipates commencing the Performance
Tests.

          16.2.      Upon completion of any test, Contractor
and Owner shall jointly issue a certificate that testing has
been  done  on  the  Project and  that  the  agreed  testing
procedures  have been followed. If there is a difference  of
opinion   about  any  test  results  or  the  existence   or
correction of any defects or deficiencies claimed  by  Owner
pursuant to Section 12.2 or 13.2 that cannot be resolved  by
the Parties within seven (7) days, the controversy shall  be
resolved  by a reputable engineering firm. The Parties  will
cooperate in jointly deciding on such engineering  firm  not
later  than six (6) months prior to the anticipated date  of
Mechanical  Completion.  As  to any  difference  of  opinion
between Contractor and Owner, each Party shall bear its  own
costs  in  connection with such procedure  and  shall  share
equally any costs of the engineering firm. Any determination
of  such  engineering firm shall be non-binding, and  either
Party shall have the right following such a determination to
avail itself of its rights under Article 36.

          16.3.      Any  revenues generated by the  Project
during  the performance of any tests or otherwise  shall  be
paid to and for the benefit of Owner.

          17.  WARRANTIES CONCERNING THE WORK

          17.1.     Contractor warrants and guarantees  with
respect   to   the   Project  (the  "Project   Warranties"),
commencing on the Substantial Completion Date, as follows:

          (a)    The   Work  performed  hereunder  and   all
equipment,  materials,  supplies,  tools,  and  other  items
provided  in  connection therewith shall  meet  all  of  the
requirements  set  forth  in this Contract.  Owner's  rights
under  this Section 17.1(a) shall expire two (2) years  from
the  date of successful completion of the Reliability  Test,
except  for the Turbine Guarantee as set forth in Exhibit  P
which shall expire on the date set forth therein; except  in
each case with respect to any matters for which a claim  has
been made during such period; and

          (b)    The   Work  performed  hereunder  and   all
equipment,  materials,  supplies,  tools,  and  other  items
provided  in  connection therewith shall  be  of  a  quality
consistent  with prudent utility practice and the prevailing
industry  standards, and free from defects and  deficiencies
in   design,   engineering,  materials,  construction,   and
workmanship. Owner's rights under this Section 17.1(b) shall
expire  two (2) years from the date of successful completion
of the Reliability Test, except for the Turbine Guarantee as
set  forth in Exhibit P which shall expire on the  date  set
forth  therein,  except in each case  with  respect  to  any
matters for which a claim has been made during such period.

          17.2.      Contractor  further warrants  that  all
materials,  equipment,  tools,  supplies,  and  other  items
furnished  by Contractor and any Subcontractors and  Vendors
hereunder shall be new and of good and suitable quality when
installed  (the "Materials Warranty"). Owner's rights  under
this  Section 17.2 shall expire two (2) years from the  date
of successful completion of the Reliability Test, except for
the  Turbine Guarantee as set forth in Exhibit P which shall
expire  on  the date set forth therein, except in each  case
with  respect to any matters for which a claim has been made
during such period.

          17.3.      If  any warranty claim is made pursuant
to   this   Article   17  and  any  Work  is   re-performed,
Contractor's  Project Warranties and its Materials  Warranty
shall apply to any such re-performed Work and shall last  as
to  the  re-performed  Work  until  the  later  of  (a)  the
expiration of the relevant original Warranty Period and  (b)
six (6) months after completion of any re-performed Work. In
no  event shall Contractor's warranty for re-performed  Work
extend  longer  than  six  (6)  months  after  the  original
expiration  date  of  the Project Warranties  and  Materials
Warranty  set  forth in Sections 17.1 and 17.2. Contractor's
Project Warranties and its Materials Warranty (including re-
warranties  under this Section 17.3) shall be assignable  to
the  Financing  Entities  without  additional  approval   by
Contractor.

          17.4.      The  Project Warranties  and  Materials
Warranty set forth in Sections 17.1 and 17.2 shall not apply
to:

          (a)    Damage  to  materials,  equipment,   tools,
supplies, and other items furnished for the Project  to  the
extent such damage is caused by:

          (i)   Owner's failure to operate and maintain such
equipment,  materials, tools, supplies, and other  items  in
accordance  with  the  recommendations  set  forth  in   the
Project's operations and maintenance manual;

          (ii)   Owner's   operation  of   such   equipment,
materials,  tools, supplies, and other items  in  excess  of
operating specifications for such equipment as set forth  in
the Project's operations and maintenance manual;

          (iii)      The  use  of  spare  parts  and  normal
consumables in the repair or maintenance of such  equipment,
materials, tools, supplies, and other items that are not  in
accordance with specifications and recommendations set forth
in the Project's operations and maintenance manual;

          (iv)  Any  changes or modifications made  to  such
equipment,  materials, tools, supplies, and other  items  by
any Person other than a representative of Contractor without
having  obtained Contractor's express written consent  prior
to such changes or modifications; or

          (v)   An  event  of Force Majeure (which  excludes
warranty failure hereunder)).

          Notwithstanding  the foregoing, damage  caused  by
Operating  Personnel while operating under the direction  of
Contractor shall be the responsibility of Contractor.

          (b)   Normal  consumables or  items  that  require
replacement  due  to normal wear and tear or  casualty  loss
(other than a warranty failure).

          17.5.      Without  in  any  way  derogating  from
Contractor's  own  representations and  warranties  and  its
Performance  Guarantees with respect to  all  of  the  Work,
Contractor shall:

          (a)   Obtain  a Turbine Guarantee in the  form  of
Exhibit  P  from  the  turbine  vendor  effective  from  the
Substantial  Completion  Date and  otherwise  on  terms  and
conditions acceptable to Owner, and,

          (b)   Use  reasonable efforts to obtain  from  all
Subcontractors and Vendors any representations,  warranties,
guarantees,  and obligations offered by such  Subcontractors
and  Vendors at no additional cost with respect  to  design,
materials,  workmanship,  equipment,  tools,  supplies,  and
other items furnished by such Subcontractors and Vendors.

          All  representations, warranties, guarantees,  and
obligations of such Subcontractors and Vendors shall, at the
request  and  direction of Owner, and  without  recourse  to
Contractor,  be  assigned to Owner or any  Financing  Entity
upon  default by Contractor or termination or expiration  of
this Contract; provided, however, that, notwithstanding such
assignment,  Contractor shall be entitled  to  enforce  each
such  representation,  warranty, guarantee,  and  obligation
through  the  end of the Warranty periods. Contractor  shall
deliver  to Owner promptly following execution thereof  duly
executed   copies   of   all   contracts   containing   such
representations, warranties, guarantees, and obligations.

          17.6.     Commencing on the expiration of each  of
the respective Project Warranties and Materials Warranty, or
such  later date as is provided in Section 17.3 with respect
to   re-performed  Work,  Owner  shall  be  responsible  for
enforcing  all  representations, warranties, and  guarantees
from   Subcontractors  and  Vendors,  and  Contractor  shall
provide  reasonable assistance to Owner, on  a  reimbursable
basis,  in  enforcing such representations, warranties,  and
guarantees,  when and as reasonably requested by  Owner.  In
addition,  prior to the expiration of each of the respective
Project  Warranties and Materials Warranty,  or  such  later
date  as  is  provided in Section 17.3 with respect  to  re-
performed Work, Owner, at its option and upon prior  written
Notice  to Contractor, may enforce any such warranty against
any  Subcontractor  or Vendor if (i) Owner  determines  that
Contractor  has  not  enforced  such  warranty  against  the
Subcontractor or Vendor in a timely and diligent  manner  or
performed the warranty work itself, or (ii) Contractor is in
default pursuant to Article 19 and the cure period for  such
default has expired.

          17.7.       (a)   Owner   shall  promptly   notify
Contractor in writing upon discovery of any failure  of  any
of  the  Work  to  satisfy  the Project  Warranties  or  the
Materials  Warranty during the applicable Warranty  Periods.
In  the  event  of  any such failure under circumstances  in
which  there is an immediate need as defined in  Exhibit  K,
then Owner shall perform such warranty work for Contractor's
account  in  accordance  with the procedures  set  forth  on
Exhibit  K;  provided, however, that the failure  to  comply
with  such  procedures shall not void the Project Warranties
or  the  Materials Warranty. In all other cases,  Contractor
shall, at its own cost and expense (except to the extent  of
insurance   proceeds  actually  received),  re-perform   any
necessary  engineering  and  purchasing  relating  to   such
equipment,  material, labor, and shipping, as  well  as  the
cost  of  removing  any defect and the cost  of  replacement
thereof,  including any damage to the surrounding  Work,  as
shall  be  necessary to cause the Work and  the  Project  to
conform  to  the  Project Warranties or Materials  Warranty.
Within five (5) days after receipt by Contractor of a notice
from  Owner  specifying a failure of  any  of  the  Work  to
satisfy  Contractor's Project Warranties  or  the  Materials
Warranty and requesting Contractor to correct the violation,
Contractor  and  Owner shall mutually  agree  when  and  how
Contractor  shall remedy said violation. If Contractor  does
not  use its best efforts to proceed to complete said remedy
within  the time agreed to, or should Contractor  and  Owner
fail  to  reach such an agreement within such five  (5)  day
period,  Owner  shall  have the right  to  perform  or  have
performed   by  third  parties  the  necessary   remedy   in
accordance  with  the  procedures set forth  in  Exhibit  K;
provided,  however,  that the failure to  comply  with  such
procedures  shall  not void the Project  Warranties  or  the
Materials Warranty, and the costs as established pursuant to
Exhibit K shall be borne by Contractor.

          (b)   Notwithstanding  the  foregoing,  Contractor
shall have the right to request Owner to perform all or  any
portion  of  Contractor's obligations with  respect  to  any
warranty  claim, and, if Owner determines that  it  has  the
capability and expertise to perform such obligations,  Owner
shall  perform such obligations for Contractor's account  in
accordance  with  the  procedures set forth  in  Exhibit  K;
provided,  however,  that the failure to  comply  with  such
procedures  shall  not void the Project  Warranties  or  the
Materials Warranty.

          17.8.      In  connection with the performance  by
Contractor  of  any warranty work, Owner  shall  supply  all
normal  Operating Consumables. In addition, Owner shall,  to
the  extent the same would not materially interfere with the
operations of the Project not affected by the warranty work,
allow  Contractor  the use of any special  rigging,  cranes,
heavy  equipment,  the  workshop  and  workshop  tools,  and
equipment located at the Site.

          17.9.      EXCEPT  FOR THE EXPRESS WARRANTIES  AND
REPRESENTATIONS SET FORTH IN THIS CONTRACT, CONTRACTOR  DOES
NOT MAKE ANY OTHER EXPRESS WARRANTIES OR REPRESENTATIONS, OR
ANY  IMPLIED  WARRANTIES  OR REPRESENTATIONS,  OF  ANY  KIND
WHATEVER  RELATING TO THIS CONTRACT, THE  WORK,  OR  DESIGN,
EQUIPMENT,  OR MATERIALS TO BE SUPPLIED BY CONTRACTOR  UNDER
THIS  CONTRACT  OR  TO  THE PROJECT, INCLUDING  ANY  IMPLIED
WARRANTY  OF  MERCHANTABILITY OR FITNESS  FOR  A  PARTICULAR
PURPOSE.

          18.  EQUIPMENT IMPORTATION; TITLE

          18.1.     Contractor, at its own cost and expense,
shall make all arrangements, including the processing of all
documentation, necessary for Owner to apply for Certificates
of  Authority from the Board of Investments of the  Republic
of  the  Philippines  to  import into  the  Philippines  the
capital  equipment to be incorporated into the  Project  and
any  other  equipment,  materials,  spare  parts,  supplies,
tools,  and  other items necessary to perform the  Work  and
shall   coordinate  with  the  applicable   Authorities   in
achieving  clearance  of Philippine  customs  for  all  such
equipment,  materials,  spare parts,  supplies,  tools,  and
other  items  and, to the extent available under  Philippine
law,  achieving such importation duty- and tax-free.  Except
to  the  extent  attributable solely to  non-performance  by
Owner  of  its obligations under Section 3.1(d) in a  timely
fashion,  in  no  event shall Owner be responsible  for  any
delays  in  customs  clearance or any  resulting  delays  in
performance of the Work.

          18.2.     (a) Contractor warrants good title, free
and clear of all liens, claims, charges, security interests,
and  encumbrances  whatsoever, to all equipment,  materials,
spare  parts, supplies, tools, and other items furnished  by
it  or any of its Subcontractors or Vendors that become part
of  the  Project  or that are to be used for the  operation,
maintenance, or repair thereof.

          (b)  Title to all domestically obtained equipment,
materials,  spare parts, supplies, tools,  and  other  items
shall  pass  to Owner, free and clear of all liens,  claims,
charges,  security  interests, and encumbrances  whatsoever,
upon   the   earlier   of  payment  in  full   therefor   or
incorporation into the Project.

          (c)   Title  to  all  equipment, materials,  spare
parts,  supplies, tools, and other items imported  into  the
Philippines  shall  pass to Owner, free  and  clear  of  all
liens, claims, charges, security interests, and encumbrances
whatsoever, when delivered over the ship's rail at the named
port of shipment.

          (d)   The transfer of title shall in no way affect
Owner's  rights as set forth in any other provision of  this
Contract.  Contractor shall have care, custody, and  control
of  all  equipment, materials, spare parts, supplies, tools,
and  other  items  (including  equipment,  materials,  spare
parts,  supplies, tools, and other items imported  into  the
Philippines)  and  exercise due care  with  respect  thereto
until the earlier of the Substantial Completion Date and the
termination of this Contract.

          18.3.      For  the purpose of protecting  Owner's
interest in all equipment, materials, spare parts, supplies,
tools,  and  other  items with respect to  which  title  has
passed to Owner pursuant to Section 18.2 but that remain  in
possession of another party, Contractor shall take or  cause
to  be  taken  all  steps necessary under the  laws  of  the
appropriate jurisdiction(s) to protect Owner's title and  to
protect  Owner against claims by other parties with  respect
thereto.

          18.4.      On  the  Substantial  Completion  Date,
Owner  shall  take complete possession and  control  of  the
Project  and  assume responsibility for the daily  operation
and  maintenance of the Project. Contractor's access to  and
continued presence at the Site thereafter shall be  for  the
sole  purpose  of  achieving Final  Acceptance  pursuant  to
Section  13.5  and completing its obligations under  Section
17.

          19.  DEFAULT

          19.1.      Contractor  shall  be  immediately   in
default  of  its obligations pursuant to this Contract  upon
the occurrence of any one or more events of default below:

          (a)   Contractor becomes insolvent, generally does
not  pay its debts as they become due, admits in writing its
inability to pay its debts, or makes an assignment  for  the
benefit   of   creditors,   or   insolvency,   receivership,
reorganization, or bankruptcy proceedings are  commenced  by
Contractor;

          (b)  Insolvency, receivership, reorganization,  or
bankruptcy proceedings are commenced against Contractor  and
such  proceeding shall remain undismissed or unstayed for  a
period of thirty (30) days;

          (c)   Any  representation  or  warranty  made   by
Contractor  herein was false or materially  misleading  when
made and Contractor fails to remedy such false or misleading
representation or warranty, and to make Owner whole for  any
consequences   thereof,  within  thirty  (30)   days   after
Contractor  receives  a  Notice  from  Owner  with   respect
thereto;

          (d)  Contractor assigns or transfers this Contract
or  any  right  or  interest  herein,  except  as  expressly
permitted under Article 30;

          (e)   Contractor fails to maintain  any  insurance
coverages required of it in accordance with Article 23;

          (f)  Contractor fails to perform or observe in any
respect  any  provision of this Contract providing  for  the
payment of money to Owner or any other material provision of
this  Contract not otherwise addressed in this Section 19.1,
and such failure continues for five (5) days in the case  of
such  a payment obligation and thirty (30) days in the  case
of  any  other  obligation, in each  case  after  Contractor
receives a Notice from Owner with respect thereto;

          (g)   The  Substantial Completion Date (including,
for purposes of this Section 19.1(g), Substantial Completion
of  the  Taan Weir Work) has not occurred on or  before  the
date  that  is  365  days  after the Guaranteed  Substantial
Completion  Date, as such date may be extended  pursuant  to
Article  15,  or, following approval of a Plan  pursuant  to
Section  8.3, Contractor fails, other than for  reasons  not
attributable to Contractor, to meet the schedule  set  forth
in  the  Plan (as determined from the revised Critical  Path
Schedule established by the Plan); or

          (h)   Contractor  suspends or abandons  the  Work.
Suspension  for the purposes of this Section  19.1(h)  shall
mean  that  Contractor  has  not accomplished  any  progress
toward  any  of the field related payment milestones  for  a
period  of  sixty  (60) or more days.  Abandonment  for  the
purposes  of this Section 19.1(h) shall mean that Contractor
has  substantially  reduced  personnel  or  removed  further
required  equipment from the Site such that, in the  opinion
of an experienced construction manager, Contractor would not
be  capable  of  maintaining  progress  in  accordance  with
Contractor's Critical Path Schedule.

          19.2.     If Contractor is in default pursuant  to
Section 19.1, Owner or its assignee shall have the following
rights  and  remedies, in addition to any other  rights  and
remedies  that  may be available to Owner, or its  assignee,
under this Contract, and Contractor shall have the following
obligations:

          (a)   Owner, without prejudice to any of its other
rights or remedies, may terminate this Contract forthwith by
delivery of a written Notice of termination to Contractor;

          (b)   If  requested  by  Owner,  Contractor  shall
withdraw  from  the  Site, shall assign  to  Owner  (without
recourse to Contractor) such of Contractor's subcontracts as
Owner  may request, and shall deliver and make available  to
Owner all proprietary information, patents, and licenses  of
Contractor  related  to  the Work  reasonably  necessary  to
permit  Owner  to  complete or cause the completion  of  the
Work,  and  in  connection therewith  Contractor  authorizes
Owner  and  its agents to use such information in completing
the Work, shall remove such materials, equipment, tools, and
instruments  used  by  and  any debris  or  waste  materials
generated  by Contractor in the performance of the  Work  as
Owner  may direct, and Owner may take possession of  any  or
all  designs,  drawings, and Site facilities  of  Contractor
related to the Work necessary for completion of the Work;

          (c)   Owner,  without incurring any  liability  to
Contractor, shall have the right (either with or without the
use   of  Contractor's  materials,  equipment,  tools,   and
instruments) to have the Work finished whether by  enforcing
any  security given by or for the benefit of Contractor  for
its  performance under this Contract or otherwise, in  which
case  Owner shall have the right to take possession  of  and
use  all  equipment,  materials, tools, and  instruments  of
Contractor  necessary  for  completion  of  the  Work,   and
Contractor shall have no right to remove such items from the
Site until such completion;

          (d)   Owner  may  seek equitable relief  to  cause
Contractor  to take action or to refrain from taking  action
pursuant to this Contract, or to make restitution of amounts
improperly received under this Contract;

          (e)  Owner may, but is not obligated to, make such
payments or perform such obligations as are required to cure
Contractor's default and offset the cost of such payment  or
performance  against payments otherwise  due  to  Contractor
under this Contract; and

          (f)  Owner may seek damages as provided in Section
19.3,  including  proceeding  against  any  bond,  guaranty,
letter  of  credit, or other security given by  or  for  the
benefit  of  Contractor  for  its  performance  under   this
Contract.

          19.3.      In the event of a default by Contractor
under  Section  19.1, and subject to Article 35,  Contractor
shall  be liable to Owner for any and all actual damages  to
Owner as a result of such default, it being understood that,
to  the extent that the actual costs of completing the Work,
including   compensation   for   obtaining   a   replacement
contractor or for obtaining additional professional services
required  as  a consequence of Contractor's default,  exceed
those  costs that would have been payable to Contractor  but
for  Contractor's default, Contractor shall be obligated  to
pay the difference to Owner. In addition, in the event of  a
default  by  Contractor under Section 19.1, Owner  shall  be
entitled to withhold further payments to Contractor for  the
Work  performed prior to termination of this Contract  until
Owner  determines the liability of Contractor, if any, under
this  Section 19.3. Upon determination of the total cost  of
the  Work, Owner shall notify Contractor in writing  of  the
amount,  if  any, that Contractor shall pay Owner  or  Owner
shall pay Contractor.

          19.4.     Owner shall be immediately in default of
its   obligations  pursuant  to  this  Contract   upon   the
occurrence of any one or more events of default below:

          (a)   Owner becomes insolvent, generally does  not
pay  its  debts  as they become due, admits in  writing  its
inability to pay its debts, or makes an assignment  for  the
benefit   of   creditors,   or   insolvency,   receivership,
reorganization, or bankruptcy proceedings are  commenced  by
Owner;

          (b)  Insolvency, receivership, reorganization,  or
bankruptcy proceedings are commenced against Owner and  such
proceedings remain undismissed or unstayed for a  period  of
thirty (30) days;

          (c)   Any representation or warranty made by Owner
herein  was  false or materially misleading  when  made  and
Owner   fails   to   remedy   such   false   or   misleading
representation or warranty, and to make Contractor whole for
any  consequences  thereof, within thirty  (30)  days  after
Owner  receives  a Notice from the Contractor  with  respect
thereto;

          (d)   Owner assigns or transfers this Contract  or
any  right or interest herein, except as expressly permitted
under Article 29 hereof; or

          (e)   Owner  fails to perform or  observe  in  any
respect  any  provision of this Contract providing  for  the
payment  of  money  to  Contractor  or  any  other  material
provision of this Contract not otherwise addressed  in  this
Section  19.4, and such failure continues for five (5)  days
in  the  case  of such a payment obligation and thirty  (30)
days in the case of any other obligation, in each case after
Owner   receives  a  Notice  from  Contractor  with  respect
thereto.

          19.5.      If  Owner  is  in default  pursuant  to
Section  19.4, and subject to Section 19.6 and  Article  35,
Contractor  shall have all rights and remedies that  may  be
available  under  law  against Owner with  respect  to  this
Contract, including the right to suspend performance of  the
Work or to terminate this Contract.

          19.6.      Contractor's  sole  recourse  for   any
damages  or liabilities due to Contractor by Owner  pursuant
to  this  Contract shall be limited to the assets  of  Owner
(which include the Project) without recourse individually or
collectively to the assets of the shareholders of Owner.

          20.  EARLY TERMINATION

          20.1.      Owner,  in  its sole discretion,  shall
have  the  right to terminate this Contract for  convenience
and  without  cause  by  giving  Notice  of  termination  to
Contractor, which termination shall be effective as  of  the
date of receipt.

          20.2.      If the Contract is terminated by  Owner
pursuant  to  Section  20.1,  Contractor  shall  receive  as
compensation  for  the Work performed and expenses  incurred
through  the date of termination an amount equal to the  sum
of  (i)  the unpaid price for the Work performed as of  such
termination calculated by multiplying the percentage of  the
relevant Work completed by the applicable milestone  payment
set  forth  in  the  Progress  Payment  Schedule,  (ii)  the
reasonable  cost  of demobilization incurred  by  Contractor
(including   reasonable   demobilization   costs   paid   by
Contractor to its Subcontractors and Vendors), and (iii) all
reasonable cancellation charges incurred by Contractor as  a
result  of such termination.  Notwithstanding the foregoing,
if  this Contract is terminated prior to the date the Notice
to Proceed is given, Contractor shall not be entitled to any
compensation upon termination.

          21.  SUSPENSION

          21.1.      If  at any time (i) Owner, in its  sole
discretion,  elects to suspend performance of the  Work  for
reasons  related  to  the safe and  proper  conduct  of  the
Project  and the construction thereof, or (ii) the Financing
Entities  shall have ceased to disburse funds or shall  have
given  notice  of their intent to do so, Owner  may  suspend
performance of the Work by giving Notice to Contractor. Such
suspension  shall continue for the period specified  in  the
suspension  Notice. The Contract Price shall be adjusted  as
provided in subsections (i), (ii), (iii), and (iv)  of  this
Section  21.1 to reflect any additional increased  costs  of
Contractor   resulting   from  any   such   suspension,   as
demonstrated    by   Contractor   to   Owner's    reasonable
satisfaction. No adjustment shall be made to the extent that
performance  is suspended, delayed, or interrupted  for  any
cause due to Contractor's negligence, willful misconduct, or
noncompliance with the terms of this Contract. At  any  time
after  the  effective  date  of the  suspension,  Owner  may
require Contractor to resume performance of the Work on five
(5) days' Notice. If, at the end of the specified suspension
period, Owner has not requested a resumption of the Work  or
has   not  notified  Contractor  of  any  extension  of  the
suspension  period (but in no event beyond 365 days  in  the
aggregate  for all such suspensions, other than  suspensions
for  any  reason  due  to Contractor's  negligence,  willful
misconduct,  or  noncompliance  with  the  terms   of   this
Contract)  at Contractor's option the Work shall  be  deemed
terminated  as  of the commencement date of  the  suspension
period, and Owner shall promptly pay Contractor for the Work
performed  pursuant  to Section 20.2. In  addition,  in  the
event  of  any  such suspension, Owner shall pay  Contractor
within  thirty  (30)  days  after  receipt  of  Contractor's
invoice  for  those  costs incurred  during  the  suspension
period  that are documented by Contractor to the  reasonable
satisfaction  of  Owner, to the extent attributable  to  the
suspension, and that are:

          (i)    For  the  purpose  of  safeguarding  and/or
storing  the  Work  and the materials and equipment  at  the
point of fabrication, in transit, or at the Site;

          (ii)  For  personnel, Subcontractors, Vendors,  or
rented equipment, the payments for which, with Owner's prior
written  concurrence,  are continued during  the  suspension
period;

          (iii)      For  reasonable costs of demobilization
and remobilization; or

          (iv)   For   rescheduling  the   Work   (including
penalties  or  additional  payments  to  Subcontractors  and
Vendors for the same).

          21.2.     In the case of any suspension under this
Section  21,  other  than from a cause due  to  Contractor's
negligence,  willful misconduct, or noncompliance  with  the
terms   of   this   Contract,  the  Guaranteed   Substantial
Completion Date shall be extended by a period equal  to  the
suspension   period,   plus   a   reasonable   period    for
demobilization and remobilization approved by Owner, and the
Critical  Path  Schedule, the Milestone  Schedule,  and  the
Progress  Payment Schedule shall be adjusted to account  for
same.

          21.3.        All   claims   by   Contractor    for
compensation under this Article 21 must be made within sixty
(60) days after the suspension period has ended and the Work
has been either terminated or resumed. Failure of Contractor
to  make  such claim within said period shall  be  deemed  a
waiver by Contractor of any such claims.

          22.  FORCE MAJEURE

          22.1.      No failure or omission to carry out  or
observe any of the terms, provisions, or conditions of  this
Contract  shall give rise to any claim by any Party  against
any  other  Party hereto, or be deemed to  be  a  breach  or
default of this Contract if the same shall be caused  by  or
arise   out  of  any  war,  declared  or  not,  hostilities,
belligerence, blockade, revolution, insurrection,  riot,  or
public  disorder; expropriation, requisition,  confiscation,
or  nationalization;  export or import restrictions  by  any
Authorities;  closing of harbors, docks,  canals,  or  other
assistances to or adjuncts of the shipping or navigation  of
or  within  any  place;  rationing  or  allocation,  whether
imposed  by law, decree, or regulation, or by compliance  of
industry  at  the  insistence of any Authorities;  unusually
severe  fire, flood, earthquake, volcano, tide, tidal  wave,
or  perils  of  the sea; unusually severe storms  and  other
weather  conditions,  including  typhoons,  lightning,   and
drought;  accidents of navigation or breakdown or injury  of
vessels,  accidents  to  harbors, docks,  canals,  or  other
assistances  to  or adjuncts of the shipping or  navigation;
epidemic  or quarantine; strikes or combination of  workmen,
lockouts,  or other labor disturbances; or any other  event,
matter, or thing, wherever occurring, that is not within the
reasonable  control of the Party affected thereby,  each  of
the foregoing events, matters, or things being called "Force
Majeure" in this Contract.  Force Majeure shall in no  event
include  a  pre-existing condition at the  Site  or  in  the
surrounding areas.

          22.2.     If either Party's ability to perform its
obligations under this Contract is affected by an  event  of
Force  Majeure  described above, such Party  shall  promptly
(but  in  any  event  within forty-eight (48)  hours),  upon
learning of such event and ascertaining that it will  affect
its  performance hereunder, give written Notice to the other
Party  stating  the  nature of the  event,  its  anticipated
duration  and  effect upon the performance of  such  Party's
obligations, and any action being taken to avoid or minimize
its  effect.  The  burden of proof shall  be  on  the  Party
claiming Force Majeure pursuant to this Section 22.2.

          22.3.     The suspension of performance due to  an
event  of Force Majeure shall be of no greater scope and  no
longer  duration  than is required by  the  event  of  Force
Majeure. The excused Party shall use its reasonable  efforts
to  continue  to  perform its obligations hereunder  and  to
remedy its inability to perform. When the affected Party  is
able  to  resume  performance of its obligation  under  this
Contract,  that  Party shall give the  other  Party  written
Notice to that effect.

          22.4.      No  obligations of  either  Party  that
arose  before  the occurrence of an event of  Force  Majeure
causing the suspension of performance shall be excused as  a
result of such occurrence. The obligation to pay money in  a
timely  manner for obligations and liabilities that  matured
prior  to the occurrence of an event of Force Majeure  shall
not be subject to the Force Majeure provisions.

          22.5.      If,  within a reasonable time  after  a
Force  Majeure  occurrence  that has  caused  Contractor  to
suspend  or  delay  performance of the Work,  action  to  be
undertaken  at the expense of Owner has been identified  and
recommended to Contractor, and Contractor has failed  within
five (5) days after receipt of Notice thereof from Owner  to
take such action as Contractor could lawfully and reasonably
initiate  to  remove  or relieve either  the  Force  Majeure
occurrence or its direct or indirect effects, Owner may,  in
its  sole discretion and after written Notice to Contractor,
initiate  such  reasonable measures as will be  designed  to
remove  or  relieve  such Force Majeure  occurrence  or  its
direct or indirect effects and thereafter require Contractor
to  resume full or partial performance of the Work.  To  the
extent Contractor's failure to take such measures results in
expense  in  addition  to  what Owner  would  have  paid  to
Contractor  (whether as part of the original Contract  Price
or  as  additional compensation to the extent the  requested
measures constituted an Owner requested change in the  scope
of  Contractor's Work) had Contractor taken  such  measures,
such additional expense shall be for Contractor's account.

          22.6.      Damages  or  injuries  to  persons   or
properties  resulting from a Force Majeure event during  the
performance of the obligations provided for in the  Contract
shall  not  relieve the Contractor of the responsibility  to
bear   the  cost  of  the  damage  or  injuries  caused   by
Contractor's  negligence or misconduct to  the  extent  such
costs  are not covered by the insurance described in Article
23.

          22.7.      Contractor's  sole  remedies  for   the
occurrence  of  an  event  of  Force  Majeure  shall  be  an
extension   of   the  Milestone  Schedule,   including   the
Guaranteed Substantial Completion Date, pursuant to  Article
15.

          23.  INSURANCE

          23.1.     (a) Contractor shall procure or cause to
be  procured at its own expense and maintain or cause to  be
maintained in full force and effect at all times during  the
period commencing at such times as required by Owner and the
Financing  Entities through the expiration of  the  Warranty
Periods all insurance coverages specified in Exhibit I.  All
insurance coverage shall be in accordance with the indicated
limits identified in Exhibit I, using companies, if required
under  Applicable  Law, authorized to  do  business  in  the
Republic  of  the  Philippines, and in accordance  with  the
terms of this Article 23.

          (b)   Owner  shall maintain, at such Owner's  cost
and  expense, such insurance coverages with respect  to  the
Project as are normally and customarily carried by owners of
projects  similar  to the Project and  as  required  by  the
Financing  Entities,  including (i)  contractor's  all  risk
insurance  naming  Contractor as an additional  insured  and
covering  loss  or  damage  to  the  Project  works   during
construction  and  testing periods,  which  insurance  shall
include a third-party liability section with a minimum limit
of  US$10,000,000  and  having a deductible  amount  of  not
greater than US$500,000, (ii) ocean freight insurance naming
Contractor  as  an additional insured and covering  loss  or
damage  to the equipment to be incorporated into the Project
and construction equipment during ocean transit to the Site,
and   (iii)  insurance  against  all  loss  or  damage  from
whatsoever   cause  arising  in  respect   of   construction
equipment,  if  any, financed from project  sources  brought
onto  or destined for the Site for use in execution  of  the
Work,  to the full replacement value of such equipment.  All
insurance  coverages  maintained  by  Owner  shall  be  with
companies authorized to do business in the Republic  of  the
Philippines to the extent required by Applicable Law and, to
the  extent  of  the  Contractor's interest  in  the  assets
covered  thereby,  shall name Contractor  as  an  additional
insured.   The  insurance  coverages  maintained  by   Owner
pursuant to clauses 23.1(b)(i), (ii) and (iii) shall, to the
extent  permitted under Applicable Law and to the extent  of
claims  payable  with  respect  to  actions  of  Contractor,
provide   for   a  waiver  of  subrogation  rights   against
Contractor   and  its  assigns,  subsidiaries,   affiliates,
employees,  insurers and underwriters, and of any  right  of
the  insurers  to any set-off or counterclaim or  any  other
deduction, whether by attachment or otherwise, in respect of
any  liability  of any such person insured  under  any  such
policy.   Owner  shall provide to Contractor copies  of  all
policies, endorsements and other instruments required to  be
maintained under this Section 23.1(b) to the extent relating
to risks of or coverages afforded Contractor, showing terms,
conditions  and effectiveness of such policies, endorsements
and   other  instruments.   Owner  shall  reasonably  assist
Contractor  in  submitting and processing Contractor  claims
thereunder.

          23.2.     To the extent permitted under Applicable
Law,  all policies shall provide for a waiver of subrogation
rights  against Owner and the Financing Entities, and  their
assigns, subsidiaries, affiliates, employees, insurers,  and
underwriters, and of any right of the insurers to  any  set-
off  or  counterclaim  or any other  deduction,  whether  by
attachment or otherwise, in respect of any liability of  any
such  person  insured  under  any  such  policy.  Contractor
releases, assigns, and waives any and all rights of recovery
against  Owner, NIA, the Financing Entities, and  all  their
affiliates,  subsidiaries, employees, successors,  permitted
assigns,  insurers,  and underwriters  that  Contractor  may
otherwise have or acquire in or from or in any way connected
with any loss covered by policies of insurance maintained or
required  to  be maintained by Contractor pursuant  to  this
Contract  or because of deductible clauses in or  inadequacy
of limits of any such policies of insurance.

          23.3.        Evidence   of   insurance    required
hereunder,  in  the form required to be delivered  by  Owner
pursuant to the Financing Entities' loan documentation,  but
in  any  event  in the form of certificates of insurance  or
copies  of  the  forms of policies and,  where  appropriate,
endorsements (showing, where necessary, Owner, NIA, and  the
Financing   Entities  as  additional  insureds,   as   their
interests  may  appear) certified by Contractor's  insurance
brokers,  shall be furnished by Contractor when required  to
be  delivered  by Owner pursuant to the Financing  Entities'
loan  documentation, but in any event no later than the date
on  which  coverage is required to be in effect pursuant  to
Section  23.1.  Copies of the actual insurance  policies  or
other  evidence of insurance coverage reasonably  acceptable
to Owner shall be provided to Owner within the time required
by the Financing Entities after the coverage effective date.
Such  policies of insurance shall be subject to  review  and
approval  by Owner, which approval shall not be unreasonably
withheld,  and  shall,  at  a minimum,  but  to  the  extent
permitted  under Applicable Law,  provide a severability  of
interests or cross-liability clause; provided, however, that
the  insurance  shall  be  primary  and  not  excess  to  or
contributing with any insurance or self-insurance maintained
by  Owner,  NIA, and the Financing Entities  and  contain  a
provision  that the policies may not be canceled or  changed
except  (i) as provided in Exhibit I or (ii) if not  therein
provided,  without  sixty (60) days'  or,  in  the  case  of
nonpayment  of premium, ten (10) days' prior written  Notice
given  by  certified mail to Owner, NIA, and  the  Financing
Entities.  Not  later than the one-year anniversary  of  the
date  of delivery of the policies of insurance hereunder  or
the expiration date of the policy if for a term of more than
one  year,  and not later than each one-year anniversary  or
policy  renewal  date thereafter, Contractor  shall  deliver
copies  of  the  renewal  insurance  policies  certified  as
aforesaid.  All  property policies required hereunder  shall
provide  for  the assignment by Contractor of any  insurance
proceeds  paid  thereunder to Owner, NIA, and the  Financing
Entities as their interests may appear.

          23.4.      All amounts of insurance coverage under
this  Contract specified in Exhibit I are required minimums.
Contractor  shall be solely responsible for determining  the
appropriate  amount  of  insurance.  The  required   minimum
amounts  of  insurance  shall  not  operate  as  limits   on
recoveries available under this Contract.

          23.5.      If  at  any  time the insurance  to  be
provided  by Contractor hereunder shall be reduced or  cease
to be maintained, then (without limiting the rights of Owner
hereunder in respect of any default that arises as a  result
of  such  failure)  Owner  may at its  option  maintain  the
insurance  required hereby, and, in such event, but  subject
to  Section  23.6, Owner may withhold the cost of  insurance
premiums  expended for such insurance from any  payments  to
Contractor.

          23.6.      With respect to any insurance coverages
described  in Exhibit I that are expressly subject  to  this
Section  23.6,  if such insurance (including the  limits  or
deductibles  thereof)  is  not  available  and  commercially
feasible in the commercial insurance market, Owner shall not
unreasonably   withhold   its  agreement   to   waive   such
requirement to the extent the maintenance thereof is not  so
available;  provided,  however, that  (i)  Contractor  shall
first  request  any  such waiver in writing,  which  request
shall  be  accompanied by a written report  prepared  by  an
independent   insurance  adviser  of   recognized   national
standing  and  acceptable  to  Owner  certifying  that  such
insurance  is  not  reasonably  available  and  commercially
feasible in the commercial insurance market for projects  of
similar type and electrical generating capacity (and, in any
case   where  the  required  amount  is  not  so  available,
certifying  as  to the maximum amount that is so  available)
and  explaining  in  detail the basis for such  conclusions,
such  insurance adviser and the form and substance  of  such
reports  to  be acceptable to Owner; (ii) at any time  after
the  granting  of  any such waiver, Owner may  request,  and
Contractor shall furnish to Owner within fifteen  (15)  days
after such request, supplemental reports acceptable to Owner
from  such  insurance adviser updating its prior report  and
reaffirming such conclusion; (iii) any such waiver shall  be
effective  only  so  long  as such insurance  shall  not  be
available   and  commercially  feasible  in  the  commercial
insurance  market, it being understood that the  failure  of
Contractor  to  timely  furnish any  requested  supplemental
report shall be presumptive evidence that such waiver is  no
longer  effective because such condition no  longer  exists;
and  (iv) it shall not be unreasonable for Owner to withhold
its  agreement to waive any such requirement to  the  extent
the Financing Entities have not waived any such requirement.
The  failure  at any time to satisfy the conditions  to  any
waiver  of  an  insurance  requirement  set  forth  in   the
provision to the preceding sentence shall not impair  or  be
construed  as  a relinquishment of Contractor's  ability  to
obtain a waiver of an insurance requirement pursuant to  the
preceding  sentence at any other time upon  satisfaction  of
such conditions.

          23.7.      Contractor shall require such liability
insurance  of  its Subcontractors contracting directly  with
Contractor and performing services at the Site as  shall  be
reasonable  and  in accordance with Philippine  construction
industry  practices in relation to the work or  other  items
being provided by each such Subcontractor.

          24.  LOSS OR DAMAGE

          24.1.      Owner  shall bear the risk of  physical
loss or destruction of or damage to the Work (including  all
materials, equipment, tools, supplies, and other items  that
are  purchased  for permanent installation  in  or  for  use
during construction of the Project) commencing from the time
Owner acquired title thereto pursuant to Article 18.

          24.2.     Contractor shall be responsible for  the
safe delivery to the Site of all materials, equipment, spare
parts,  tools, supplies, and other items to the Site related
to the Work.

          24.3.      Except for uninsured losses  (including
deductible  amounts)  caused by the  negligence  or  willful
misconduct  of Contractor, Contractor's total liability  for
loss  or  damage  to  the  Work  shall  be  limited  to  the
recoveries  from Owner provided insurance, if  any.  In  the
event  any  insurance  is  provided by  Owner,  Contractor's
liability for property damage up to the amount of the above-
referenced  deductibles shall accrue in  full  before  Owner
shall become liable for any such property damage.

          25.  INDEMNIFICATION

          25.1.     Owner shall defend, indemnify, and  hold
harmless Contractor, its Subcontractors and Vendors, and all
their  respective  employees, affiliates, agents,  officers,
partners,  and  directors from and against all  third  party
claims,  damages, losses, and expenses (including reasonable
attorneys'  fees and expenses) that arise out of  or  result
from, but only to the extent of, the negligent, reckless, or
tortious  acts or omissions (including strict liability)  of
Owner  or  anyone directly or indirectly employed  by  Owner
(other than Contractor, any affiliate of Contractor, or  any
Subcontractor or Vendor).

          25.2.     Contractor shall defend, indemnify,  and
hold  harmless  Owner and the Financing Entities  and  their
respective    employees,   agents,   partners,   affiliates,
shareholders,  directors, officers, and  assigns,  from  and
against  all  third  party  claims,  damages,  losses,   and
expenses (including reasonable attorneys' fees and expenses)
that directly or indirectly:

          (a)   Arise out of or result from, but only to the
extent   of,  (i)  any  negligent,  reckless,  or  otherwise
tortious act or omission (including strict liability) during
the  performance of the Work, or any curative  action  under
any   warranty  following  performance  of  the   Work,   of
Contractor  or  any affiliate thereof, any Subcontractor  or
Vendor, or anyone directly or indirectly employed by any  of
them, or anyone for whose acts such Person may be liable, or
(ii) any claims asserted against or losses incurred by Owner
or  any  of the Financing Entities or such employee,  agent,
partner,  affiliate,  shareholder,  director,  officer,   or
assign  as  a  result  of employer's liability  or  worker's
compensation claims filed by any employees of Contractor  or
any of its Subcontractors or Vendors; or

          (b)   Arise  out of or result from the failure  of
Contractor  to comply with Applicable Laws or the conditions
or provisions of Applicable Permits.

          25.3.     Contractor shall defend, indemnify,  and
hold  Owner  and the Financing Entities and their respective
employees,   agents,  partners,  affiliates,   shareholders,
directors,  officers, and assigns harmless from and  against
all  claims by any governmental or taxing authority claiming
taxes  based  on gross receipts or on income of  Contractor,
any  of  its  Subcontractors or Vendors,  or  any  of  their
respective  agents or employees with respect to any  payment
for  the  Work made to or earned by Contractor, any  of  its
Subcontractors or Vendors, or any of their respective agents
or employees under this Contract

          25.4.     Nothing contained in this Contract shall
obligate  either  Party to indemnify or  hold  harmless  the
other  Party  or any of their respective employees,  agents,
partners, affiliates, shareholders, directors, officers, and
assigns  from  any  claims to the extent of  the  negligent,
reckless, or otherwise tortious conduct of the Party seeking
indemnification. It is the intent of the Parties that, where
negligence   is   determined  to  have  been   contributory,
principles  of comparative negligence will apply,  and  each
Party shall bear the proportionate cost of any loss, damage,
expense,   and   liability  attributable  to  that   Party's
negligence.

          25.5.      An indemnitee under this Article 25  or
any   other  indemnification  provision  set  forth  in  the
Contract  shall,  within ten (10) Business  Days  after  the
receipt of notice of the commencement of any legal action or
of  any  claims against such indemnitee in respect of  which
indemnification will be sought, notify the indemnitor with a
Notice  thereof.  Failure  of the indemnitor  to  give  such
Notice  will reduce the liability of the indemnitor  by  the
amount  of  damages  attributable  to  the  failure  of  the
indemnitee  to give such Notice to the indemnitor,  but  the
failure  so to notify shall not relieve the indemnitor  from
any  liability that it may have to such indemnitee otherwise
than  under  the  indemnity  agreements  contained  in  this
Article 25. In case any such claim or legal action shall  be
made  or  brought against an indemnitee and such  indemnitee
shall notify the indemnitor thereof, the indemnitor may,  or
if so requested by such indemnitee shall, assume the defense
thereof,  without  any reservation of rights.  After  notice
from  the  indemnitor to such indemnitee of an  election  to
assume the defense thereof and approval by the indemnitee of
counsel selected by the indemnitor, the indemnitor will  not
be  liable to such indemnitee under this Article 25 for  any
legal  fees  or  expenses  subsequently  incurred  by   such
indemnitee  in  connection  with  the  defense  thereof.  No
indemnitee shall settle any indemnified claim over which the
indemnitor has not been afforded the opportunity  to  assume
the   defense   without  the  indemnitor's   approval.   The
indemnitor  shall control the settlement of all claims  over
which  it  has assumed the defense; provided, however,  that
the  indemnitor  shall  not  conclude  any  settlement  that
requires  any  action  or forbearance  from  action  by  the
indemnitee  or  any  of  its affiliates  without  the  prior
approval  of  the indemnitee. The indemnitee  shall  provide
reasonable assistance to the indemnitor, at the indemnitor's
expense,  in connection with such legal action or claim.  If
the  indemnitor  assumes the defense of any  such  claim  or
legal  action, any indemnitee shall have the right to employ
separate   counsel  in  such  claim  or  legal  action   and
participate therein, and the reasonable fees and expenses of
such  counsel  shall be at the expense of  such  indemnitee,
except  that such fees and expenses shall be for the account
of  the indemnitor if (i) the employment of such counsel has
been specifically authorized by the indemnitor, or (ii)  the
named  parties  to  such  action  (including  any  impleaded
parties) include both such indemnitee and the indemnitor and
representation of such indemnitee and the indemnitor by  the
same  counsel  would,  in  the  reasonable  opinion  of  the
indemnitee,  be inappropriate under applicable standards  of
professional conduct due to actual or potential  conflicting
interests  between  them. Notwithstanding  anything  to  the
contrary in this Section 25.5, the indemnitee shall have the
right,  at  its  expense, to retain counsel to  monitor  and
consult  with  indemnitor's counsel in connection  with  any
such legal action or claim.

               26.     PATENT   INFRINGEMENT    AND    OTHER
               INDEMNIFICATION RIGHTS

          26.1.     Contractor shall defend, indemnify,  and
hold  harmless  Owner and the Financing Entities  and  their
respective  employees,  partners,  directors,  officers  and
assigns  against  all loss, damage, and  expense  (including
reasonable  attorneys' fees and expenses) arising  from  any
claim or legal action for unauthorized disclosure or use  of
any  trade  secrets, or of patent, copyright,  or  trademark
infringement arising from Contractor's performance (or  that
of  its  affiliates, Subcontractors, or Vendors) under  this
Contract or otherwise asserted against Owner that either (a)
concerns any equipment, materials, supplies, or other  items
provided  by  Contractor,  any of  its  affiliates,  or  any
Subcontractor or Vendor under this Contract;  (b)  is  based
upon  or  arises  out  of the performance  of  the  Work  by
Contractor,  any of its affiliates, or any Subcontractor  or
Vendor,  including the use of any tools or other  implements
of construction by Contractor, any of its affiliates, or any
Subcontractor or Vendor; or (c) is based upon or arises  out
of  the design or construction of any item or unit specified
by  Contractor under this Contract or the operation  of  any
item   or   unit   according  to  directions   embodied   in
Contractor's final process design, or any revision  thereof,
prepared or approved by Contractor.

          26.2.      If such claim or legal action for  such
infringement results in a suit against Owner, the provisions
of Section 25.5 shall apply.

          26.3.     If Owner is enjoined from completion  of
the Project or any part thereof, or from the use, operation,
or enjoyment of the Project or any part thereof, as a result
of  such  claim  or  legal action or  any  litigation  based
thereon,  Contractor shall promptly use its best efforts  to
have such injunction removed at no cost to Owner.

          26.4.       Owner's  acceptance  of   Contractor's
engineering  design  or proposed or supplied  materials  and
equipment  shall not be construed to relieve  Contractor  of
any obligation hereunder.

          27.  TREATMENT OF PROPRIETARY INFORMATION

          27.1.      (a)  Any information disclosed  by  one
Party  (the  "transferor") to the other  Party,  and/or  its
agents, employees, or affiliates (the "transferee") incident
to  the  performance of the Work pursuant to  this  Contract
that is designated in writing as proprietary is disclosed in
confidence,  and the transferee shall restrict  its  use  of
such  information solely to uses related to the  Project  or
performance of this Contract. Neither the transferee nor any
consultant  or  other  person to whom  any  confidential  or
proprietary information is provided in connection  with  the
Project  or  performance of this Contract shall  publish  or
otherwise  disclose such information to others or  use  such
information  for  any purpose except as  expressly  provided
above  without  the  written  approval  of  the  transferor;
provided, however, that nothing herein shall limit  (i)  the
right   of   Owner  to  provide  any  information  regarding
Contractor, any Subcontractor, any Vendor, this Contract, or
the  Work  to any Financing Entity (or advisors retained  on
their  behalf)  or  their successors and assigns,  (ii)  the
right  of  either  Party to supply such information  to  any
governmental authority having jurisdiction and  asserting  a
right to such information, or as may be required by law,  or
(iii) the right of Owner to reproduce as many copies of  any
specifications,  drawings, or other  documents  provided  to
Owner  as  Owner in its sole discretion considers  necessary
for  the furtherance of the Work, regardless of any notices,
legends, or disclaimers on such specifications, drawings, or
other documents.

          (b)    Notwithstanding  the  designation  of   any
information as proprietary by a transferor, such information
shall  not be deemed proprietary or confidential if  it  (i)
was  furnished by such Party prior to the execution of  this
Contract   without  restrictions,  (ii)  becomes   knowledge
available  within the public domain, (iii)  is  received  by
either  Party  from  a third party without  restriction  and
without  breach  of  this Contract, or (iv)  is  or  becomes
generally available to, or is independently known to or  has
been  or  is  developed  by, either  Party  or  any  of  its
affiliates  other than solely as a result of any  disclosure
of   proprietary  information  by  the  transferor  to   the
transferee.

          27.2.      Contractor and Owner  agree  to  comply
with   United   States   Department   of   Commerce   Export
Administration regulations regarding the export  to  foreign
countries  of technical data or information or  any  product
based  thereon  and  shall not knowingly ship  or  otherwise
communicate  or allow to be shipped or communicated,  either
directly  or  indirectly, any technical data information  or
any product based thereon in connection with the Work to any
country   to   which  such  shipment  or  communication   is
prohibited   by  said  regulations,  unless  prior   written
authorization  is  obtained  from  the  office   of   Export
Administration, United States Department of Commerce, either
directly or through Owner.

          28.  INVENTIONS AND LICENSES

          28.1.      Contractor  shall  grant  to  Owner  an
irrevocable, nonexclusive, royalty-free license for  use  in
connection  with  the  operation,  maintenance,  repair,  or
alteration  of  the Project, with respect to  any  invention
related  thereto  based wholly or in  material  part  on  or
derived from proprietary information received from Owner and
conceived  or  first reduced to practice by Contractor,  its
employees, or agents during the course of the Work.

          28.2.      Contractor further agrees to grant  and
hereby  grants  to Owner, for use solely in connection  with
the  Project,  an  irrevocable,  royalty-free,  nonexclusive
license  under all patents and other proprietary information
of  Contractor related to the Work now or hereafter owned or
controlled by Contractor to the extent reasonably  necessary
for the operation, maintenance, repair, or alteration of the
Project   or   any  unit  or  component  thereof   designed,
specified, or constructed by Contractor under this Contract.
No other license in such patents and proprietary information
is granted pursuant to this Contract.

          29.  ASSIGNMENT BY OWNER

          29.1.     Without the prior consent of Contractor,
Owner  may,  upon reasonable advance written notice,  assign
all  or  part  of  its right, title, and  interest  in  this
Contract to any Financing Entity. Any Financing Entity  may,
in  connection with any default under any financing document
related  to  the Project, assign any rights assigned  to  it
hereunder  to any Person. In addition, Owner may assign  all
or  part  of its right, title, and interest in this Contract
to  any  other  Person  with the prior written  approval  of
Contractor,   which  approval  shall  not  be   unreasonably
withheld.  Contractor agrees that, upon receipt  of  written
notice  of  such assignment, it shall deliver all documents,
data,  Notices,  and  other communications  required  to  be
delivered  to Owner hereunder to the Financing  Entities  at
such  address  as  they  shall designate  to  Contractor  in
writing.

          30.  ASSIGNMENT BY CONTRACTOR

          30.1.      It  is expressly understood  that  this
Contract is personal to Contractor and that Contractor shall
have  no  right, power, or authority to assign  or  delegate
this Contract or any portion thereof, either voluntarily  or
involuntarily,   or   by  operation  of  law.   Contractor's
attempted  assignment  or delegation  of  any  of  its  Work
hereunder shall be null and void and shall be ineffective to
relieve  Contractor  of  its  responsibility  for  the  Work
assigned or delegated.

          31.  INDEPENDENT CONTRACTOR

          31.1.     Contractor is an independent contractor,
and   nothing   contained  herein  shall  be  construed   as
constituting any relationship with Owner other than that  of
owner  and  independent  contractor,  or  as  creating   any
relationship   whatsoever  between  Owner  and  Contractor's
employees. Neither Contractor nor any of its employees is or
shall be deemed to be an employee of Owner.

          31.2.      Subject  to Sections  4.1(o)  and  9.1,
Contractor has sole authority and responsibility to  employ,
discharge,    and    otherwise   control   its    employees,
Subcontractors, and Vendors.

          32.  CLAIMS

          32.1.      Contractor  shall  indemnify  and  hold
harmless Owner and the Financing Entities (collectively, the
"Lien Indemnitees") and defend each of them from and against
any and all loss, costs, damages, and expense arising out of
any and all claims for payment, whether or not reduced to  a
lien, filed by Contractor or any Subcontractors, Vendors, or
other  Persons performing any portion of the Work for  which
Contractor  has  received full payment under this  Contract,
including  reasonable attorneys' fees and expenses  incurred
by  any  Lien  Indemnitee in discharging any such  liens  or
similar  encumbrances. If Contractor shall fail to discharge
promptly any such lien or claim filed against the Project or
any  interest  therein,  upon any materials,  equipment,  or
structures  encompassed therein, or upon the  premises  upon
which  they are located, any Lien Indemnitee may  so  notify
Contractor in writing, and Contractor shall then satisfy  or
defend  any  such  liens or claims. If Contractor  does  not
promptly  satisfy  such  liens or  claims,  give  such  Lien
Indemnitee  reasons  in writing satisfactory  to  such  Lien
Indemnitee  for  not causing the release of  such  liens  or
paying  such  claims, or contest such  liens  or  claims  in
accordance with the provisions of the last sentence of  this
Section  32.1, any Lien Indemnitee shall have the right,  at
its  option,  after written notification to  Contractor,  to
cause  the release of, pay, or settle such liens or  claims,
and  Owner at its sole option may (i) require Contractor  to
pay,  within five (5) days after request by Owner,  or  (ii)
offset  against  any Retainage or other amounts  due  or  to
become due to Contractor (in which case Owner shall,  if  it
is  not  the  applicable Lien Indemnitee, pay  such  amounts
directly   to  the  Lien  Indemnitee  causing  the  release,
payment,  or settlement of such liens or claims)  all  costs
and  expenses incurred by the Lien Indemnitee in causing the
release  of,  paying,  or settling  such  liens  or  claims,
including  administrative costs, attorneys' fees, and  other
expenses.  Contractor shall have the right  to  contest  any
such  lien, provided it first provides to Owner  a  bond  or
other assurances of payment reasonably satisfactory to Owner
in  the  amount  of  such  lien and in  form  and  substance
reasonably satisfactory to Owner.

          33.  NOTICES AND COMMUNICATIONS

          33.1.      Any  Notice pursuant to the  terms  and
conditions  of  this Contract shall be in  writing  and  (i)
delivered  personally, (ii) sent by certified  mail,  return
receipt requested, (iii) sent by a recognized overnight mail
or courier service, with delivery receipt requested, or (iv)
sent  by  confirmed facsimile transmission  with  telephonic
confirmation, to the following addresses:

          If to CP      Casecnan-Consortium
Contractor:             via Trieste 76
                        48100 Ravenna Italy
                        Facsimile: 011-39-544-428186
                        Attention: Mr. Angelo Frattini

          If to Owner:  CE Casecnan Water and Energy
                        Company, Inc.
                        c/o California Energy
                        International, Ltd.
                        24th Floor, 6750 Ayala Avenue
                        Makati, Metro Manila,
                        Philippines
                        Facsimile: 632-892-5825
                        Attention: Donald M. O'Shei, Jr.

          With  a copy  California Energy Company, Inc.
to:                     302 South 36th Street, Suite 400
                        Omaha, NE 68131
                        Facsimile: 1-402-231-1678
                        Attention: Vice President,
                        Construction

          And  with  a  Attention: General Counsel
copy  of  any  notices  Facsimile: 1-402-231-1658
relating to a  dispute
to:

          33.2.     Notices shall be effective when received
by the other Party.

          33.3.      Any  technical or other  communications
pertaining to the Work shall be with the Parties' designated
representative. Each Party shall notify the other in writing
of  the  name  of such representatives. The Project  Manager
shall  be  satisfactory to Owner, the Project Representative
shall  be  satisfactory to Contractor, and each  shall  have
knowledge  of  the Work and be available at  all  reasonable
times for consultation. Each Party's representative shall be
authorized  on  behalf  of  such Party  to  administer  this
Contract, agree upon procedures for coordinating the efforts
of  Owner and Contractor, and, when appropriate, to  furnish
information  to or receive information from the other  party
in matters concerning the Work.

          34.  CONDITIONS PRECEDENT

          34.1.     All rights, obligations, and liabilities
of the Parties hereunder shall be subject to:

          (i)  the termination of the Hanbo Contract;

          (ii)       the  approval of this Contract  by  the
Board of Directors of Owner; and

          (iii)     the written approval of this Contract by
the Consulting Engineer.

               35.  SECURITY FOR PERFORMANCE; LIMITATIONS OF
               LIABILITY AND REMEDIES

          35.1.      Except for the damages and  obligations
specified  under Sections 14.1 and 14.2, and notwithstanding
anything  else  in  this Contract to the  contrary,  neither
Party shall be liable to the other for any consequential  or
special  damages (including lost profits, lost  revenue,  or
loss  of  use  of  the Project) arising from  a  failure  to
perform  any  obligation under this Contract,  whether  such
liability arises in contract, tort (including negligence  or
strict liability), or otherwise.

          35.2.     (a) Contractor's obligations under  this
Contract shall be secured by the Performance Security.

          (b)    Simultaneously   with   the   delivery   to
Contractor  of  the  Notice  to  Proceed,  Contractor  shall
deliver  to  Owner  each item constituting  the  Performance
Security.

          (c)  The Performance Security to be provided by  a
bank  or banks shall be from a bank or banks located outside
of  the  Philippines  and  satisfactory  to  Owner  and  the
Financing  Entities.  Without limiting  the  foregoing,  the
Performance  Security  shall have  an  expiration  date  not
earlier  than the date on which the Performance Security  is
to  be released according to the terms of this Contract  or,
if earlier, the Performance Security shall provide Owner the
right  to  draw the full amount of the Performance  Security
within  thirty  (30) days before the stated expiration  date
unless the Performance Security is extended for a period  of
time and upon such conditions as are acceptable to Owner.

          (d)   Upon the earlier to occur of (i) the payment
in  full  of  all amounts payable by Contractor pursuant  to
Sections 14.1 and 14.2 of this Contract and (ii) Substantial
Completion, Owner shall release the Performance Security.

          35.3.      (a)   In  no  event shall  Contractor's
liability  pursuant  to this Contract,  whether  arising  in
contract,  tort (including negligence or strict  liability),
warranty, or otherwise, be greater in the aggregate than  an
amount  equal to one hundred percent (100%) of the  Contract
Price  (as  the  same  may increase from  time  to  time  in
accordance  with the terms of this Contract), provided  that
nothing  contained  in this Section 35.3  or  in  any  other
provision  of  this  Contract shall be  construed  to  limit
Contractor's obligations (i) with respect to Section  5.1(j)
of  the  Contract or (ii) with respect to any fraud  on  the
part of Contractor.

           (b)   Notwithstanding the provisions  of  Section
35.3(a)  (except for the proviso thereto), (i) in  no  event
shall the actual amount payable by or collectable from or on
behalf  of  Contractor either directly or  pursuant  to  the
CMC\Pizzarotti  Corporate Guaranty  and  the  CMC\Pizzarotti
Demand  Bank Security exceed, in the aggregate, the  Balance
of  Scope  Contract Price Component, (ii) in no event  shall
the  actual  amount payable by or collectable on account  of
obligations within the Electro-Mechanical Scope from  or  on
behalf  of   Contractor either directly or pursuant  to  the
Performance Security exceed, in the aggregate, the  Electro-
Mechanical Scope Contract Price Component, (iii) in no event
shall   the  actual  amount  collectable  under  the  Sulzer
Corporate  Guaranty, the Sulzer Demand  Bank  Security,  the
Siemens  Corporate  Guaranty and  the  Siemens  Demand  Bank
Security  exceed,  in the aggregate, the  Electro-Mechanical
Scope  Contract Price Component, and (iv) the actual  amount
collectable under the Sulzer Corporate Guaranty, the  Sulzer
Demand Bank Security, the Siemens Corporate Guaranty and the
Siemens  Demand  Bank  Security on  account  of  obligations
within  the Balance of Scope shall not exceed twenty percent
(20%)   of  the  Electro-Mechanical  Scope  Contract   Price
Component.   Subject  to  the foregoing  limitations,  Owner
shall  be  entitled  to  draw on  any  item  of  Performance
Security  irrespective  of  whether  drawn  on  account   of
obligations   within   the   Electro-Mechanical   Scope   or
obligations within the Balance of Scope.

          (c)    Notwithstanding  anything  herein  to   the
contrary, no (i) liabilities of Contractor to Owner  covered
by insurance carried by Contractor pursuant to Article 21 of
this  Contract  or  by  Owner (except  deductibles  paid  by
Contractor)  or  (ii) amounts paid by Contractor  to  or  on
behalf of Owner in respect of third party claims arising out
of the negligence or willful misconduct of Contractor (other
than claims of the Financing Entities) shall be included  in
Contractor's aggregate liability for purposes of determining
the   limit  on  Contractor's  liability  pursuant  to  this
Contract.  The  cost  of  warranty  work  performed  by  any
Subcontractor at such Subcontractor's expense and  the  cost
of  any  warranty  work  paid for by  any  Subcontractor  or
recovered  by  Contractor from any  Subcontractor  shall  be
included  in  Contractor's aggregate liability  pursuant  to
this Contract.

           (d)   Contractor acknowledges that Owner will  be
collaterally assigning each item of Performance Security  to
the  Financing Entities.  In addition and subject to Section
29.1, such Performance Security shall be assignable by Owner
to  any  successor-in-interest to Owner with respect to  the
Project.   Subject  to  the  terms  of  this  Contract,  the
Financing Entities and any such successors-in-interest shall
be  entitled to draw on the Performance Security  as  though
such  Financing Entities or successors-in-interest were  the
Owner hereunder.

           (e)   Owner  shall only draw on  the  Performance
Security   and   on  the  Retention  Security   to   satisfy
Contractor's  obligations hereunder.  Each demand  by  Owner
under  the Performance Security shall be accompanied  by  an
acknowledgment  signature by the Financing Entities.   Owner
acknowledges   that   Contractor  will   be   assigning   to
Sulzer\Siemens  Contractor's right to enforce  this  Section
35.3(e)  with  respect  to  draws on  the  Sulzer  Corporate
Guaranty, the Siemens Corporate Guaranty, the Sulzer  Demand
Bank Security and the Siemens Demand Bank Security.

           (f)  Owner agrees to endeavor to (i) with respect
to  the collection of Balance of Scope Payments, make demand
on  the  CMC\Pizzarotti Demand Bank Security  before  making
such  a  demand  on the Sulzer Demand Bank Security  or  the
Siemens  Demand Bank Security and (ii) with respect  to  the
collection  of Electro-Mechanical Payments, make  demand  on
the  Sulzer Demand Bank Security and the Siemens Demand Bank
Security  before making such a demand on the  CMC\Pizzarotti
Demand  Bank  Security; provided that  Owner  shall  not  be
deemed  in  breach of this obligation where  Owner  in  good
faith believes that payment under any such security may  not
be timely available.

          35.4.     The remedies available to Contractor  or
Owner  in connection with this Contract, whether arising  in
contract,   in   tort   (including  negligence   or   strict
liability),  in warranty, or otherwise shall be  exclusively
those  expressly  set  forth  in  this  Contract.  Releases,
indemnities, or limitations on liability expressed  in  this
Contract  shall apply in accordance with the terms  of  this
Contract,    notwithstanding   other    legal    bases    of
responsibility such as negligence, strict liability,  fault,
or  breach  of  contract of the party indemnified  or  whose
liability  is  released  or limited.  Without  limiting  the
foregoing,  Owner  shall have no right to proceed  with  the
remedies  specified elsewhere in this Contract with  respect
to  a  claim  under the Materials Warranty  or  the  Project
Warranties  unless  Contractor has  failed  to  perform  its
obligations  with  respect  to such  claim  as  provided  in
Section 17.

          36.  DISPUTES

          36.1.      Any disputes arising pursuant  to  this
Contract  that  cannot be resolved between  Owner's  Project
Representative  and  Contractor's  Project  Manager   within
fourteen  (14)  days  or, in the case of  payment  disputes,
three  (3)  days after receipt by each thereof of Notice  of
such  dispute  (specifically referencing this Section  36.1)
shall  be  referred,  by Notice signed  by  Owner's  Project
Representative  and  Contractor's Project  Manager,  to  the
executive officers of the Parties designated in Section 37.5
as  their designated representatives (which shall not be the
Owner's  Project Representative or the Contractor's  Project
Manager) for resolution. If the Parties, negotiating in good
faith, fail to reach an agreement within a reasonable period
of  time, not exceeding thirty (30) days or, in the case  of
payment  disputes, ten (10) days after such  referral,  then
Owner and Contractor shall enter into binding arbitration as
set forth in Sections 36.2 through 36.5.

          36.2.      All disputes arising pursuant  to  this
Contract that are not settled pursuant to Section 36.1 shall
be  decided  by binding arbitration in accordance  with  the
rules  of the International Chamber of Commerce (the  "ICC")
then   pertaining,   unless  the  Parties   mutually   agree
otherwise.  The  Parties hereto agree that,  notwithstanding
such   rules  of  the  ICC,  the  arbitrators  in  any  such
arbitration  shall  apply  the governing  law  specified  in
Article  37  of this Contract and, where the  ICC  does  not
otherwise  provide  procedural rules, the  procedural  rules
provided  for  by  such  governing law.  This  agreement  to
arbitrate  shall  be  specifically  enforceable.  Any  award
rendered by the arbitrators shall be final, and judgment may
be  entered upon it in accordance with applicable law in any
court having jurisdiction thereof.

          36.3.      Notice  of  the demand for  arbitration
shall  be  filed with the other Party and with the ICC.  Any
demand  for arbitration shall be made within the time beyond
which  legal  or equitable proceedings based on such  claim,
dispute,  or  controversy would be barred by the  applicable
statute of limitations.

          36.4.      Each  Party  shall have  the  right  to
designate an arbitrator of its choice, who need not be  from
the  ICC's  panel  of arbitrators but who (i)  shall  be  an
expert  in  the construction and power generation field  and
(ii)  shall not be employed by or otherwise affiliated  with
such Party. Such designation shall be made by Notice to  the
other Party and to the ICC within ten (10) Business Days or,
in  the  case  of payment disputes, five (5)  Business  Days
following   the   giving  of  Notice  of  the   demand   for
arbitration. The arbitrators designated by the Parties shall
designate a third arbitrator, who shall have a background in
legal  and  judicial matters, within ten business (10)  days
or,  in the case of payment disputes, five (5) Business Days
after  the  date  of  the designation of  the  last  of  the
arbitrators  to  be  designated  by  the  Parties,  and  the
arbitration  shall be decided by the three  arbitrators.  If
the  two  arbitrators  cannot  or  do  not  select  a  third
independent arbitrator within such period, either Party  may
apply  to  the ICC for the purpose of appointing any  person
listed   with  the  Association  as  the  third  independent
arbitrator.

          36.5.      The  Parties  shall  proceed  with  the
arbitration expeditiously and shall conclude all proceedings
thereunder, including any hearing, in order that a  decision
may be rendered within 120 days or, in the case of a payment
dispute, forty-five (45) days after the filing of the demand
for  arbitration by the filing Party. Each Party shall  bear
its   own  expenses  in  connection  with  any  arbitration,
including reasonable attorneys' fees, and all joint expenses
of  any arbitration shall be apportioned in the award of the
arbitrators  based  upon  the  respective  merits   of   the
positions   of   the  Parties.  Unless  the  Parties   agree
otherwise, the arbitration of all disputes shall be held  in
Singapore  and  shall  be conducted solely  in  the  English
language.

          36.6.      Unless  otherwise  agreed  in  writing,
Contractor  shall diligently carry on the  Work  during  the
pendency of any disputes or arbitration proceedings so  long
as  all  undisputed amounts payable to Contractor  hereunder
have  been  paid.  If  it  shall be  determined,  either  by
agreement  of the Parties or through arbitration,  that  any
payment  of  the Contract Price or other amount  payable  to
Contractor hereunder shall have been unduly paid by Owner to
Contractor, Contractor shall promptly refund the  amount  of
such  excess payment together with interest thereon  at  the
lesser  of  LIBOR  in effect from time to  time  plus  three
percent  (3%)  per annum and the highest rate  permitted  by
Applicable  Law,  from the day following the  date  of  such
payment until the date of full refund to Owner. If it  shall
be determined, either by agreement of the Parties or through
arbitration, that any payment of the Contract Price or other
amount  payable  to  Contractor hereunder  shall  have  been
unduly  withheld by Owner, Owner shall pay or  cause  to  be
paid  to Contractor within thirty (30) days after the  final
arbitration  decision is made such withheld amount  together
with  interest thereon at the lesser of the LIBOR in  effect
from time to time plus three percent (3%) per annum and  the
highest  rate  permitted by Applicable  Law,  from  the  day
following  the  date on which such payment is determined  to
have  been unduly withheld (as so determined) until the date
of payment in full to Contractor.

          36.7.     Notwithstanding anything to the contrary
set  forth in this Article 36, if any arbitration proceeding
is  initiated between NIA and Owner, the subject  matter  of
which  relates to any of Contractor's rights or  obligations
under  this  Contract, then subject to NIA's consent,  Owner
shall have the right to require Contractor to participate in
and  become  a party to any such arbitration, regardless  of
whether  dispute resolution proceedings have been  initiated
between  Contractor and Owner with respect to  such  subject
matter.  In  such  event, the dispute resolution  procedures
specified in Sections 36.2 and 36.3 and the second and third
sentences  of Section 36.5 shall apply and Contractor  shall
accept  the arbitrators chosen for the arbitration by  Owner
and NIA.

          37.  MISCELLANEOUS

          37.1.      The  invalidity or unenforceability  of
any  portion or provision of this Contract shall in  no  way
affect  the validity or enforceability of any other  portion
or provision hereof. Any invalid or unenforceable portion or
provision shall be deemed severed from this Contract and the
balance  of the Contract shall be construed and enforced  as
if   the   Contract   did  not  contain  such   invalid   or
unenforceable portion or provision. If any such provision of
this  Contract  is  so declared invalid, the  Parties  shall
promptly negotiate in good faith new provisions to eliminate
such  invalidity  and to restore this Contract  as  near  as
possible to its original intent and effect.

          37.2.      This Contract shall be governed by  the
internal  laws  of the State of New York, United  States  of
America.

          37.3.      The provisions of Articles 5,  17,  18,
25,  26, 27, 28, 32, 35, 36, and 37 and Sections 14.2(b) and
23.2 shall survive the termination (whether by completion of
the Work or otherwise) of this Contract.

          37.4.      This  Contract constitutes  the  entire
agreement  between the Parties with respect to  the  matters
dealt  with  herein,  and  there  are  no  oral  or  written
understandings, representations, or commitments of any kind,
express  or  implied,  that  are  not  expressly  set  forth
therein.

          37.5.       No   oral  or  written  amendment   or
modification  of this Contract (including a  Change  in  the
Work  form accepted under Article 15) by any officer, agent,
or  employee of Contractor or Owner, either before or  after
execution of this Contract, shall be of any force or  effect
unless  such amendment or modification is in writing and  is
signed  by  an executive officer of the Party  to  be  bound
thereby. Owner hereby initially designates Donald M. O'Shei,
Jr.,  and Contractor hereby initially designates Mr.  Angelo
Frattini for such purpose.

          37.6.      Either Party's waiver of any breach  or
failure  to enforce any of the terms, covenants, conditions,
or  other provisions of this Contract at any time shall  not
in  any  way  affect, limit, modify, or waive  that  Party's
right thereafter to enforce or compel strict compliance with
every  term, covenant, condition, or other provision hereof,
any   course   of   dealing   or   custom   of   the   trade
notwithstanding. All waivers must be in writing  and  signed
on  behalf  of  Owner  and  Contractor  by  the  individuals
identified in Section 37.5.

          37.7.      Except as otherwise expressly  provided
herein,  time  is of the essence of each provision  of  this
Contract.

          37.8.     Overdue payment obligations of the Owner
and  the  Contractor hereunder shall bear interest from  the
date  due  until the date paid at a rate per annum equal  to
the  lesser  of (i) LIBOR in effect from time to  time  plus
three  percent (3%), and (ii) the highest rate permitted  by
Applicable Law.

          37.9.      The headings contained herein  are  not
part  of  this  Contract  and are included  solely  for  the
convenience of the Parties.

          37.10.     The  provisions of  this  Contract  are
intended  for  the sole benefit of Owner and Contractor  and
there  are  no third party beneficiaries hereof, except  the
Financing  Entities  where expressly  provided,  other  than
assignees contemplated by the terms herein. Without limiting
the  foregoing,  neither  NPC  nor  NIA  is  a  third  party
beneficiary  of  this  Agreement and shall  have  no  direct
rights hereunder against either Party.

          37.11.     The  language of this Contract  is  the
English  language,  which shall be the  ruling  language  in
which the Contract shall be construed and interpreted.   All
correspondence,   drawings,  design  data,   test   reports,
notices, certificates, specifications, and other information
shall be entirely in the English language.

          37.12.     Owner contemplates obtaining  financing
for  the  Project consisting of one or more construction  or
permanent  loans, to be secured by all or a portion  of  the
Project  and its rights under this Agreement. In  connection
therewith  and  the  assignment to  the  Financing  Entities
contemplated by Section 29.1, Contractor shall agree to  and
execute  any amendments and modifications hereto  reasonably
requested by the Financing Entities, and shall also promptly
execute  or  consent  to  other  documents  to  the   extent
reasonably  required  by the Financing Entities,  and  shall
cause to be delivered customary legal opinions of counsel to
Contractor.   Without  limiting  the  foregoing,  Contractor
shall enter into such arrangements as Owner or the Financing
Entities  may  reasonably request to  ensure  the  continued
availability of the Contractor's equipment at the  Site  and
the  right  to  use  the equipment (whether  by  Contractor,
Owner,  or Owner's nominees) in the prosecution of the  Work
as   contemplated  by  this  Contract  until  the  Work   is
completed,  including the granting of security interests  in
such  equipment or entering into lease/leaseback or  similar
arrangements, and shall keep such equipment free  and  clear
of  any  liens or encumbrances that could materially  affect
Contractor's,  Owner's,  or Owner's  nominee's  rights  with
respect   to  such  equipment.   Contractor  shall   respond
promptly   to   requests  for  information   regarding   the
qualifications, experience, past performance  and  financial
condition  of  Contractor and other  matters  pertaining  to
Contractor's obligations hereunder.

          IN WITNESS WHEREOF, the Parties hereto have caused
this Construction Contract to be executed as of the date and
the year first above written.

                    Owner:     CE CASECNAN WATER AND  ENERGY
                    COMPANY, INC., a Philippine corporation

          By:       /s/ David L. Sokol
          Name:          David L. Sokol
          Title:         Chairman

          By:       /s/ Donald M. O'Shei, Jr.
          Name:          Donald M. O'Shei, Jr.
          Title:         President

          Contractor:    CP CASECNAN-CONSORTIUM
                    a limited liability consortium with
                    external activities under Italian law

          By:       /s/ Angelo Frattini
          Name:          Angelo Frattini
          Title:         President and Legal Representative