CONTRACT
Date: January 31st 1999

Parties:

The  Partners  of ZAHES  LTD,  incorporated  and acting in  compliance  with the
Georgian  legilsation  (hereinafter "the Company"),  jointly holding 100% of the
total outstanding equity of the Company, which partners are hereinafter referred
to as "the  Georgian  Partners",  represented  by the  director  of the  Company
Teimuraz Chkheidze;

IDM Foreign Power, incorporated and acting in compliance with the legislation of
the British Virgin Islands, (hereinafter "IDM"), represented by the director Sam
de Lapa,

hereinafter jointly referred to as "the Parties",

1.   Subject of the Contract

1.1  IDM invests in the Company from the view of  rehabilitation  and upgrade of
     the hydroelectric  power station ZAHES  (hereinafter "the Station") and the
     Georgian Parnters assign, convey,  transfer to IDM 80% (eighty per cent) of
     the total outstanding  equity of the Company on fully diluted basis against
     the above mentioned investment.

2.   Obligations of the Parties

2.1  The  Parties   undertake   the   obligation  to  ensure  by  joint  efforts
     prolongation  of the existing  lease  contract of the Station dd. March 23,
     1993.

2.2  The parties are obliged to utilize the above-mentioned  investment strictly
     in compliance with the purpose of investment.

2.3  The  parties  agree  to  act  jointly   towards   collecting  the  existing
     receivables  of the Company  amounting  to GEL 3.5  million  approximately,
     which will be reinvested into the Company.

2.4  The Georgian  Partners  undertake to assign to IDM 80% (eighty per cent) of
     the total outstanding equity of the Company and register such assignment in
     compliance with the Georgian legislation.

2.5  IDM  undertakes  to invest into the  Company up to the total  amount of USD
     9000000 (nine million) gradually:

     2.5.1 Within 45 days from the date of registration of the named  assignment
of the share of equity to  invest up to the  amount of USD 75000  (seventy  five
thousand)  for  rehabilitation  of the 6th unit  (15 MW)  subject  to  technical
examination approved by IDM.

     2.5.2 To invest the amount of up to USD 1000000 (one million) for repair of
derivation canal in compliance with the technical  examination to be approved by
IDM by July 1st 1999.

     2.5.3 The total  investment in the amount up to USD 9000000 (nine  million)
for  rehabilitation and upgrade of the Station will be carried out in compliance
with the  technical  examination  data to be  approved by IDM and subject to the
extention of the current Lease term for a 25 year period.

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     2.5.4 In the event the Lease term is extended for an additional 5 year term
only,  IDM shall  invest up to  US$1000000  (one  million)  subject to technical
examination to be approved by IDM.

     2.5.5 Within the current  Lease term IDM shall invest up to US$200000  (two
hundred  thousand) in the general  rehabilitation of Zages Power Station subject
to technical examination to be approved by IDM.

     2.5.6 IDM hereby guaranties that all technically  approved decisions by IDM
will be financially sufficient to execute such decisions.

     2.5.7  IDM  shall  have the  rights  to  establish  its own  representation
separated from ZAHES LTD. Such  representation  shall have the rights to control
all financial  and economic  matters  regarding  Zages and other matters via the
existing ZAHES LTD bank account. IDM shall have the sole right as majority owner
to  control  such  representation.  All  income to be  derived  from the sell of
electricity or otherwise shall be controlled by such representation.

3.   Rights of the Parties

3.1  The Parties agree that the managerial group of the organizational structure
     of the Company  (ZAHES LTD) is  represented by and limited to the following
     persons:  Teimuraz  Chkheidze  (Director),  Togo  Khabelshvili  (1st Deputy
     Director - Chief  Engineer),  Revaz Lomtadze  (Deputy Director in Aggregate
     Repair Sphere),  Tariel Matiashvili (Deputy Director in Hydro Technical and
     Construction Sphere), Archil Kipiani (Deputy Director in Legal and Economic
     Spheres),  and the said managerial  group will remain unchanged and none of
     this above  mentioned  group will be  dismissed or  transferred  to another
     position,  no changes will be introduced to their job functions and rights,
     neither any  position of a  managerial  level higher then of members of the
     above-mentioned  group  of  persons  will be  introduced  to the  personnel
     structure of the company  (ZAHES LTD), nor any other position will be added
     to the  structure  of the  said  managerial  group  without  being  adopted
     unanimously by all partners of the Company  (ZAHES LTD),  despite any other
     organization  structure  or  personnel  structure  changes  different  from
     above-mentioned  changes or alternations  as long that the  above-mentioned
     personnel  will oblige to all  decisions  made by the majority  Partners or
     their  representatives  on the meeting.  

3.2  All other  decisions  different  from the  issues  mentioned  in 3.1 of the
     present  contract  are binding  and  enforceable  upon the  director of the
     Company and his deputies  providing  that such  decisions do not contradict
     the Georgian  legislation  and/or the  interests of the Company.  Otherwise
     they will lose their immunity. In case the decision is not enforced despite
     the  consent  of  the  director  and  his  deputies,  due to  objective  or
     subjective  reasons  independent from the director and his deputies,  their
     immunity will be kept unchanged.

3.3  Personnel's  salary and wage  payment can be changed only with the approval
     by the director of the Company (Teimuraz Chkheidze).

4.   Responsibilities of the Parties

4.1  The  Georgian  Partners  agree to  reimburse  the  expenses  born by IDM in
     connection  to  preparation  of the present  contract in case the  Georgian
     Partners fail to perform their obligations  provided by or arising from the
     present contract.
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4.2  IDM  agrees,  in case it fails to perform  its  obligations  provided by or
     arising from the present contract,  to unconditionally  and on a free basis
     return 80% (eighty per cent) of the total outstanding equity of the Company
     to the Georgian  Partners and  reimburse the loss caused by such failure to
     the Georgian Partners and the Company.

5.  Term of the Contract

5.1  The contract is signed for an indeterminate term.

5.2  The contract enters into force from the moment it is signed by the Parties.

6.   Cessation of the Contract

6.1  The contract can be ceased by a mutual agreement of the parties.

7.   Force Majeure

7.1  For the purpose of this  contract,  Force  Majeure and Force  Majeure Event
     means in  relation to any Party any event or  circumstance  which is beyond
     the  reasonable  control of such  Party  which,  despite  the  exercise  of
     reasonable diligence by such Party cannot be prevented,  avoided or removed
     and which  results in or causes the failure of that Party to perform any of
     its obligations under this contract including but not limited to:

     7.1.1 war, blockade, mobilization, requisition or embargo;

     7.1.2rebellion,  revolution,  insurrection,  other military acts,  unsurped
          power or civil war;

     7.1.3 riot, civil commotion or sabotage;

     7.1.4 act of public enemies or terrorists;

     7.1.5 lighting,  fire, explosion,  storm, wind, flying debris, flood, tidal
wave, earthquake, tempest or other natural disasters and other acts of God.

7.2  either Party shall be excused from  performance  and shall not be construed
     to be in default in respect of their obligations under this contract for so
     long as their failure to perform such  obligations  is due to Force Majeure
     Event.

7.3  In the event of Force  Majeure,  the Party  affected by such event shall as
     soon as  reasonably  practicable  notify the other  Party of such event and
     provide  suitable  evidence of the occurrence of such event and an estimate
     of its duration and affect and both Parties shall:

     7.3.1 make all reasonable efforts to prevent and to reduce to a minimum and
mitigate the effect of any delay occasioned by a Force Majeure Event;

     7.3.2 use all reasonable efforts to ensure resumption of normal performance
of this  contract  after the  termination  of any Force  Majeure Event and shall
perform their obligations to the maximum extent practicable between the Parties;

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     7.3.3  Take all  reasonable  measures  to  reduce  the  losses of the Party
occasioned by a Force Majeure Event.

8.   Dispute Resolution

8.1  If any dispute or difference  between any of the Parties arises in relation
     to this contract and/or the transactions  contemplated by it (including any
     question   regarding   such   transaction(s),    existence,   validity   or
     termination),  the Party  seeking  resolution of the dispute shall give the
     Party  alleged to be in breach  and/or  against  whom  relief is sought,  a
     notice  and in the  notice  shall  give  sufficient  details  to allow  the
     recipient to understand the substance of the dispute and the relief sought.

8.2  The  authorized  person of the  Parties of the  dispute or their  appointed
     representatives  shall within 30 calendar  days after the date on which the
     notice is deemed to be have been delivered,  meet together and negotiate in
     good  faith  in  order  to  try to  resolve  the  dispute  as  quickly  and
     economically as possible.

8.3  If the Parties have not resolved the dispute  within 30 calendar days after
     this  meeting or within  such  longer  period as the Parties to the dispute
     agree in writing,  the dispute shall be resolved by  arbitration  under the
     Rules of the ICSID  (International Court for the Settlement of Disputes) in
     force at the time of the referral.

8.4  The seat of the arbitration  shall be in London and the arbitration will be
     carried out and conducted in London, England.

9.   Miscellaneous

9.1  From the moment of signing the  present  contract  all various  agreements,
     contracts and correspondence between the Parties become void.

10.  Addresses of the Parties

Georgian Partners: 1 Cascade Str., Mtskheta, Georgia

IDM:Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, British Virgin Islands.

Signatures:

From Georgian Partners side:

 /s/
Teimuraz Chkheidze

From IDM side:

 /s/
Sam De Lapa