SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549

                               FORM 10-K


[x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

          For the fiscal year ended December 31, 1997.

                                  OR

[   ]  TRANSITION  REPORT  PURSUANT TO  SECTION  13  OR  15(d)  OF  THE
       SECURITIES ACT OF 1934

          For the transition period from          to            .

                  Commission file number 333-29005-01

                      PANDA GLOBAL HOLDINGS, INC.

        (Exact name of registrant as specified in its charter)


           Delaware                               75-2697755
(State or other jurisdiction of                 (IRS employer
incorporation or organization)              Identification Number)

       4100 Spring Valley Road, Suite 1001, Dallas, Texas  75244
     (Address of principal executive offices, including zip code)

                            (972) 980-7159
         (Registrant's telephone number, including area code)

   Securities Registered Pursuant to Section 12(b) of the Act:  None

  Securities Registered Pursuant to Section 12 (g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports
required  to be filed by Section 13 or 15(d) of the Securities Exchange
Act  of 1934 during the preceding 12 months (or for such shorter period
that  the  registrant was required to file such reports), and  (2)  has
been subject to such filing requirements for the past 90 days.
Yes   x                                            No  ___

Indicate  by check mark if disclosure of delinquent filers pursuant  to
Item  405  of Regulation S-K is not contained herein, and will  not  be
contained,  to the best of registrant's knowledge, in definitive  proxy
or information statements incorporated by reference in Park III of this
Form 10-K or any amendment to this Form 10-K [x].

Aggregate  market value of voting stock held by non-affiliates  of  the
registrant  is  not reflected herein because all voting  stock  of  the
registrant is owned by an affiliate thereof.

As  of March 25, 1998, the registrant had 1,000 shares of Common Stock,
$.01 par value, issued and outstanding.

                  Documents Incorporated by Reference
                                 None



                        TABLE OF CONTENTS

                             PART I
                                                             Page

Item 1.  Business                                               1

Item 2.  Properties                                            22

Item 3.  Legal Proceedings                                     22

Item 4.  Submission of Matters to a Vote of Security Holders   25

                             PART II

Item 5.  Market for Registrant's Common Equity
         and Related Shareholder Matters                       25

Item 6.  Selected Financial Data                               26

Item 7.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations         27

Item 8.  Financial Statements and Supplementary Data          F-1

Item 9.  Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosure                31

                            PART III

Item 10. Directors and Executive Officers of the Registrant    31

Item 11. Executive Compensation                                33

Item 12. Security Ownership of Certain Beneficial
         Owners and Management                                 33

Item 13. Certain Relationships and Related Transactions        34

                             PART IV

Item 14. Exhibits, Financial Statement Schedules,
         and Reports on Form 8-K.                              34

         DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

     This  Annual  Report on Form 10-K includes  "forward-looking
statements"  within the meaning of Section 27A of the  Securities
Act  of  1933 and Section 21E of the Securities Exchange  Act  of
1934.  All  statements other than statements of  historical  fact
included  in this Annual Report on Form 10-K, including,  without
limitation,  statements  regarding financial  position,  projects
under  evaluation or development, construction or  other  budgets
and  plans  and  objectives for future operations,  are  forward-
looking  statements.  Although  the  Company  believes  that  the
expectations  reflected  in such forward-looking  statements  are
reasonable, it can give no assurance that such expectations  will
prove  to  have been correct. Important factors that could  cause
actual   results   to  differ  materially  from   the   Company's
expectations  ("Cautionary Statements")  include  the  impact  of
geopolitical  occurrences world-wide; the  results  of  financing
efforts;  risks under contracts and swap agreements;  changes  in
laws  and  regulations; unforeseen engineering and mechanical  or
technological  difficulties; and other  risks  described  in  the
registrant's  filings from time to time with the  Securities  and
Exchange  Commission.  All subsequent written and  oral  forward-
looking statements attributable to the Company or persons  acting
on  its  behalf are expressly qualified in their entirety by  the
Cautionary Statements.

Item 1.   Business.

General

     Panda  Global  Holdings, Inc. (the "Company") is  a  wholly-
owned  subsidiary of Panda Energy International, Inc., a Delaware
corporation, ("PEII"), and was organized in Delaware on March  7,
1997.  The Company has been organized for the purposes of working
with  PEII  and  its affiliates in (i) investing in  and  holding
direct  and  indirect  interests  in  entities  engaged  in   the
development, construction, ownership, operation and management of
electric  generating facilities, sources of fuel,  pipelines  and
other  infrastructure  projects, (ii) the marketing  of  electric
power, thermal energy and fuel, and (iii) the financing of any of
the  above, including the entering into of indentures,  contracts
and other agreements entered into in connection with the purposes
described in clauses (i) and (ii) above.

     On  April  22,  1997,  a subsidiary of  the  Company  (Panda
Global  Energy  Company, a Cayman Islands  company)  completed  a
$155,200,000 offering of 12 1/2% Senior Secured Notes due  2004  and
is  using  the net proceeds therefrom to finance the construction
of an electric power plant facility in Luannan County, China.  In
late  December 1997, other subsidiaries of the Company  completed
an approximately $98 million financing for the construction of an
electric power plant facility in Nepal.

     The  principal executive offices of the Company are  located
at  4100 Spring Valley Road, Suite 1001, Dallas, Texas 75244. The
telephone number at such offices is (972) 980-7159.

     The Company operates in only one industry segment:  electric
power  generation.  Financial information regarding the Company's
industry  segment,  its domestic operations,  and  regarding  the
Company's capitalized costs for the construction of plants  which
will  constitute foreign operations upon completion, is set forth
in the financial statements hereto.

Strategy

     The  Company and its affiliates primarily are engaged in the
domestic     and    international    development,    acquisition,
construction,   ownership  and  operation   of   electric   power
generation facilities.

     The  principal  business strategy of  the  Company  and  its
affiliates  is to use their experience in evaluating, developing,
constructing,  financing and managing electric  power  generation
facilities   to   provide  low-cost  electricity   and   electric
generating capacity.  In addition, the Company believes that  the
global trend of electricity market restructuring has created  new
business opportunities for businesses like the Company.  There is
a  trend  away  from government-owned electricity systems  toward
deregulated, competitive market structures, in both domestic  and
international markets.  Many countries have rewritten their  laws
and regulations to allow foreign investment and private ownership
of  electricity generation, transmission or distribution systems.
Some  countries have been or are in the process of  "privatizing"
their  electricity systems by selling all or part of such systems
to  private  investors.  As a result, the Company  believes  that
there  is  demand  for  both  new and more  efficiently  operated
electric generating capacity in many regions around the world.

     The  Company  and its affiliates therefore are  continuously
engaged  in  the evaluation of opportunities for the  development
and acquisition of additional domestic and international electric
power  generation facilities.  For example, the Company  and  its
affiliates  currently are evaluating the development  of  various
merchant plant facilities in the United States.  Such facilities,
if  developed  and  constructed, could  take  advantage  of  cost
effective construction and new technology, as well as an  ability
to sell power into markets with growing demand and aging supplies
of  energy.   Also, the People's Republic of China  (the  "PRC"),
Nepal,  Brazil  and  Central  America are  current  international
strategic target markets for the Company and its affiliates.

     Substantial risks exist to the successful completion of  any
domestic  or  international projects under development  or  being
considered for acquisition, including, as the case may be,  those
relating   to  political  risk,  exchange  rate  risk,   currency
inconvertibility,  financing,  governmental  approvals,   siting,
construction  and permitting, as well as possible termination  of
any  applicable power sales agreement as a result of the  failure
to  meet  certain construction milestones.  No assurance  can  be
given  that  any  projects being evaluated or  developed  by  the
Company  or any of its affiliates will be completed. Further,  no
assurance  can be given that any projects developed  by  PEII  or
other  affiliates  of  the Company would be  contributed  to  the
Company's portfolio of projects, depending on the application  of
various agreements among PEII and certain of its affiliates.

     The  major changes currently taking place in the independent
power   producer  industry  are  necessitating  changes  in   the
financing  capabilities  of  companies  such  as  PEII  (and  its
affiliates), particularly in respect to the financing  of  larger
size  projects  and  merchant plants.  In this  regard,  PEII  is
looking to reduce its costs of funds, find new sources of  equity
capital  and  increase  its financing flexibility.   Accordingly,
PEII  has commenced a strategic initiative whereby it is  seeking
potential  strategic  partners  to  help  address  these  issues.
Donaldson,  Lufkin  &  Jenrette Securities Corporation  has  been
engaged  by  PEII  to  assist PEII in this search  for  strategic
partners. However, there can be no assurance that any transaction
with  strategic partners will ever take place, or, in  the  event
any  such  transaction  does take place,  as  to  the  nature  or
structure thereof.

Plants in Operation

  The Panda-Rosemary Facility

      General.  The Panda-Rosemary Facility (herein so called) is
a combined-cycle cogeneration facility located in Roanoke Rapids,
North  Carolina,  with  a total electric generating  capacity  of
approximately  180  megawatts. A cogeneration  facility  produces
electric energy and forms of useful thermal energy (such as  heat
or  steam),  used for industrial, commercial, heating or  cooling
purposes through the sequential use of one or more energy inputs.
A properly designed and constructed cogeneration facility is able
to  convert  the  energy contained in the input  fuel  source  to
useful energy outputs more efficiently than plants employing what
was,  historically,  conventional utility  electrical  generation
technology. The Panda-Rosemary Facility uses natural gas  as  its
primary  fuel  input  to  produce electric  energy  for  sale  to
Virginia  Electric Power Company ("VEPCO") and to produce  useful
thermal energy in the form of steam and chilled water for sale to
The   Bibb  Company  ("Bibb")  pursuant  to  the  Rosemary  Steam
Agreement  (herein  so  called).   On  February  18,  1997,  Bibb
announced  that it would sell the textile facility  to  WestPoint
Stevens,  Inc.  ("WestPoint").   The  closing  of  the  sale  was
reported  in  the news media on February 21, 1997.  The  Rosemary
Steam  Agreement  cannot be assigned without  the  Panda-Rosemary
Partnership's consent, which has not been given as  of  the  date
hereof.  While there has been no resolution to this matter as  of
the  date  hereof, it is assumed that (for purposes of discussion
herein only) the sale of the textile facility has closed and that
WestPoint  is  the  purchasing party  under  the  Rosemary  Steam
Agreement  and  lessor  under the Rosemary  Site  Lease  (defined
below).   The  Panda-Rosemary Partnership has continued  to  sell
steam  and  chilled  water to the purchaser in substantially  the
same amounts as it sold prior to the announcement of the sale.

      The  Panda-Rosemary Facility uses No.  2  fuel  oil  as  an
alternate  fuel  in the event gas supplies or transportation  are
curtailed.   The   Panda-Rosemary  Facility  was   designed   and
constructed by Hawker Siddeley Power Engineering.

      The Panda-Rosemary Facility began commercial operations  in
December  1990.  The Panda-Rosemary Facility is  certified  as  a
Qualifying Facility ("QF") under PURPA (defined below)  and  thus
is  exempt  from  rate  regulation as an electric  utility  under
federal  and  state law, provided that it continues to  meet  the
applicable requirements of the Public Utility Regulatory Policies
Act of 1978 ("PURPA").

      The Panda-Rosemary Facility is designed to be operated in a
combined-cycle mode. It uses natural gas or fuel oil to power two
General Electric combustion turbine generators, a GE Frame 6  and
a  GE  Frame 7, each fitted with a heat recovery steam  generator
("HRSG").  The  HRSGs  use the reject heat  from  the  combustion
turbines  that might otherwise dissipate to produce  steam  which
drives  a  steam  turbine  generator. The  combustion  and  steam
turbines  generate electric energy for sale to  VEPCO.  When  the
Panda-Rosemary Facility is being dispatched, some  of  the  steam
produced  by  the  HRSGs is sold pursuant to the  Rosemary  Steam
Agreement  and some is used in two absorption chillers to  supply
chilled  water. The combustion turbines use natural gas as  their
primary  fuel  and can use No. 2 fuel oil as an  alternate  fuel.
When  the facility is not being dispatched, two auxiliary boilers
are  available to be used to produce steam for direct use and  to
produce chilled water for use by the purchaser under the Rosemary
Steam  Agreement.   The  design  of the  Panda-Rosemary  Facility
permits  flexible  operation, including the  production  of  both
electricity and a sufficient amount of thermal energy to meet  QF
requirements, using either one or both of the combustion  turbine
generators.

     Sale   of  Capacity  and  Electricity.   The  Panda-Rosemary
Partnership  (herein  so  called) is  an  indirect  wholly  owned
subsidiary of the Company which owns the Panda-Rosemary Facility.
It  sells  electric capacity and energy to VEPCO  pursuant  to  a
Power  Purchase  and  Operating Agreement  (the  "Rosemary  Power
Purchase  Agreement"). The Rosemary Power Purchase Agreement  has
an initial term ending December 26, 2015, and may be extended for
periods of up to five years if the parties so agree.

      VEPCO has the right to dispatch the Panda-Rosemary Facility
(i.e.,    require   the   Panda-Rosemary  Facility   to   deliver
electricity)  on  a  daily basis within  certain  guidelines  and
design  limits (which specify load levels, start-up and  shutdown
times  and  minimum  run times consistent  with  prudent  utility
practice).

     The Rosemary Power Purchase Agreement provides for two types
of  payments:  a  capacity payment and  an  energy  payment.  The
capacity payment is a fixed charge required to be paid regardless
of  whether the Panda-Rosemary Facility is dispatched, subject to
reductions  under  certain  circumstances  as  described   below.
Energy  payments  are calculated based on the  actual  electrical
output  transmitted to VEPCO and are designed to  compensate  the
Panda-Rosemary Partnership for its cost of fuel and its  variable
operations and maintenance expense.

      Monthly  capacity  payments  throughout  the  term  of  the
Rosemary  Power Purchase Agreement are calculated by  multiplying
the   Panda-Rosemary  Facility's  "Dependable  Capacity"  by  the
following rates: $11.654 per kilowatt per month through  December
1998;  $10.821 per kilowatt per month through December 2005;  and
$8.321  per kilowatt per month through December 2015. The  Panda-
Rosemary   Facility's  Dependable  Capacity  is   currently   165
megawatts for the summer period and 198 megawatts for the  winter
period,  which  are  the maximum Dependable Capacity  levels  for
which  capacity  payments must be made under the  Rosemary  Power
Purchase  Agreement. Dependable Capacity is determined  by  semi-
annual  tests which may be requested by VEPCO.  Capacity payments
may be reduced  in certain circumstances.

       Energy  payments  are  calculated  based  on  the   actual
electrical  output  transmitted to  VEPCO  and  are  designed  to
compensate  the Panda-Rosemary Partnership for its cost  of  fuel
and its variable operations and maintenance expense.

      The Panda-Rosemary Partnership is required to maintain  the
Panda-Rosemary Facility as a QF. VEPCO may terminate the Rosemary
Power  Purchase Agreement within one year after the  loss  of  QF
certification if the Panda-Rosemary Partnership has not  obtained
all  necessary  governmental  or  regulatory  approvals  for  the
Rosemary  Power  Purchase Agreement to remain in effect  and  for
electricity to continue to be sold to VEPCO.

     Steam   and   Chilled   Water  Sales.   The   Panda-Rosemary
Partnership sells steam and chilled water for use in its  textile
manufacturing  facility, located adjacent to  the  Panda-Rosemary
Facility,  pursuant  the Rosemary Steam Agreement.  The  Rosemary
Steam Agreement has an initial term that expires on December  26,
2015. Upon expiration of the initial term, the purchaser has  the
option to (i) negotiate a 10-year extension of the Rosemary Steam
Agreement, (ii) purchase the Panda-Rosemary Facility with VEPCO's
consent  or  (iii) terminate the Rosemary Steam  Agreement.   The
purchaser is obligated to pay $1.00 per 1,000 pounds of steam for
the  first 45,000 pounds of steam delivered in an hour and  $2.50
per  1,000 pounds of steam for any additional quantities of steam
delivered  in  an hour.  The purchaser is obligated  to  pay  the
following fixed prices for chilled water: $0.035/ton/hour through
December 27, 2000; $0.04/ton/hour thereafter through December 27,
2005;  $0.045/ton/hour thereafter through December 27, 2010;  and
$0.05/ton/hour thereafter through December 27, 2015.

     Site  Lease.  The 4.83 acre site on which the Panda-Rosemary
Facility  is  located is leased to the Panda-Rosemary Partnership
pursuant  to  a  Real Property Lease and Easement Agreement  (the
"Rosemary  Site Lease") in exchange for a nominal  yearly  rental
payment.  The initial term of the Rosemary Site Lease expires  on
December 31, 2015 and is automatically extended on the same terms
and  conditions for 10 years if the Rosemary Steam  Agreement  is
extended  for an additional 10-year period. At the Panda-Rosemary
Partnership's option, the initial term of the Rosemary Site Lease
may  also be extended on the same terms and conditions for a  10-
year term if the Panda-Rosemary Partnership gives the lessor  two
years' notice prior to December 31, 2015 and for an additional 10-
year term if the Panda-Rosemary Partnership gives the lessor  two
years'  notice prior to December 31, 2025, regardless of  whether
the Rosemary Steam Agreement is extended or terminated.

     Gas   Supply   and   Fuel  Management.   The  Panda-Rosemary
Partnership purchases certain quantities of natural gas on a firm
basis  from Natural Gas Clearinghouse ("NGC") pursuant to  a  Gas
Purchase  Contract  (the  "Rosemary Gas Supply  Agreement").  The
Rosemary  Gas Supply Agreement is effective through November  30,
2005,  and  thereafter from month-to-month  until  terminated  by
either NGC or the Panda-Rosemary Partnership.  NGC has agreed  to
deliver  natural  gas  on  a  firm basis  to  the  Panda-Rosemary
Partnership,  at pipeline points near the Gulf of Mexico  or  (at
the  Panda-Rosemary Partnership's request and  using  the  Panda-
Rosemary Partnership's firm transportation arrangements)  to  the
Panda-Rosemary Pipeline, up to the total contract quantity  under
the  Firm Gas Transportation Agreements (as defined below), which
is  currently  the  thermal equivalent of 3,075  Mcf  (one  "Mcf"
constitutes  one thousand cubic feet of natural gas)  of  natural
gas per day. The firm natural gas supplied under the Rosemary Gas
Supply  Agreement enables the Panda-Rosemary Partnership to  have
adequate  natural gas supplies available to meet its estimate  of
the  requirements for steam and chilled water under the  Rosemary
Steam Agreement.

     The price paid by the Panda-Rosemary Partnership for natural
gas  delivered  by  NGC is generally equal to  an  indexed  price
(based  upon monthly market-price indices determined by reference
to  the  receipt  points where NGC delivers  gas  to  the  Panda-
Rosemary   Partnership)  plus  $0.04  per  MMBtu   (one   "MMBtu"
constitutes one million British thermal units). If natural gas is
required in daily volumes that are greater than those included in
monthly  estimates  delivered to NGC, the price  for  the  excess
volume  required  is  equal  to NGC's  actual  cost  incurred  in
acquiring such excess plus $0.04 per MMBtu. If the Panda-Rosemary
Partnership  fails  to purchase the amount  included  in  monthly
estimates  delivered to NGC, and such failure is not  excused  by
force  majeure, the Panda-Rosemary Partnership must pay  NGC,  as
liquidated  damages for such failure, $0.14  for  each  MMBtu  of
natural gas not purchased below the monthly estimates delivered.

     Gas Transportation.  The Panda-Rosemary Partnership receives
firm  transportation service that provides for  delivery  to  the
Panda-Rosemary Pipeline of up to the thermal equivalent of  3,075
Mcf of natural gas per day.

      The  rates and most of the significant terms and conditions
of  service  under these firm gas transportation agreements,  are
set  forth in the respective pipeline's effective Federal  Energy
Regulatory  Commission ("FERC") gas tariff.  These  rates,  terms
and  conditions are subject to review, approval and  modification
by FERC.

      Panda-Rosemary  Pipeline.   The Panda-Rosemary  Partnership
owns,   and  North  Carolina  Natural  Gas  Corporation  ("NCNG")
operates  and  maintains for the Panda-Rosemary Partnership,  the
Panda-Rosemary Pipeline (herein so called), which runs for  10.26
miles through portions of Halifax and Northampton Counties, North
Carolina. The Panda-Rosemary Pipeline is located under, over  and
upon   properties  owned,  in  certain  instances,   by   private
landowners and, in others, by the State of North Carolina or  the
City  of  Roanoke  Rapids,  pursuant to  easement  agreements  or
encroachment  agreements. The Panda-Rosemary Pipeline  terminates
on  a  1.26-acre  parcel  in Pleasant Hill Township,  Northampton
County,  North  Carolina, which is owned  by  the  Panda-Rosemary
Partnership.   The   meter  stations  and   certain   appurtenant
facilities   interconnecting  the  Panda-Rosemary  Pipeline   and
certain  interstate  pipeline  facilities  are  located  on  this
parcel.

      The  Panda-Rosemary Partnership has entered into a Pipeline
Operating   Agreement   with   NCNG  (the   "Pipeline   Operating
Agreement"),  pursuant to which NCNG has agreed  to  operate  the
Panda-Rosemary Pipeline and provide certain natural gas balancing
services  for the Panda-Rosemary Partnership's gas supplies.  The
term of the Pipeline Operating Agreement continues until December
27,  2005, and may be extended for two additional periods of five
years each upon the agreement of the parties.

      Fuel Oil.  The Panda-Rosemary Facility was constructed with
the  capability to operate on No. 2 fuel oil and is  designed  to
change fuel sources from natural gas to fuel oil and back without
interrupting  the  generation of electricity. The  Panda-Rosemary
Facility  currently  has on-site storage  for  approximately  2.0
million  gallons of fuel oil, a supply sufficient to operate  the
Panda-Rosemary Facility at full load for approximately 168 hours.
The  Panda-Rosemary Partnership purchases fuel  oil  on  a  spot-
market  basis. Since the fuel oil suppliers either own their  own
trucks  or have contracts with local trucking firms for  regional
truck  delivery and the purchase price includes delivery  to  the
Panda-Rosemary Facility, the Panda-Rosemary Partnership does  not
independently arrange trucking service from the terminals to  the
Panda-Rosemary Facility.

      Operations and Maintenance.  The Panda-Rosemary Partnership
purchases  operations  and maintenance services  for  the  Panda-
Rosemary Facility from Panda Global Services, Inc. pursuant to an
Operation   and   Maintenance  Agreement   (the   "Rosemary   O&M
Agreement")  which  expires  on December  31,  2003.   Under  the
Rosemary  O&M Agreement,  Panda Global Services, Inc.  is  to  be
paid  a  fixed  monthly fee of approximately $140,000  per  month
during  1998,  with annual adjustments based on  changes  in  the
consumer  price  index  for subsequent years.  In  addition,  the
agreement  includes  bonus  and  penalty  provisions   based   on
maintenance  of dependable capacity levels, availability  of  the
Panda-Rosemary  Facility  for dispatch  and  the  achievement  of
certain  safety  and  training goals established  by  the  Panda-
Rosemary Partnership.

  The Panda-Brandywine Facility

      General.  The Panda-Brandywine Facility (herein so  called)
is  a combined-cycle cogeneration facility located in Brandywine,
Maryland   (near   Washington,  D.C.),  with  a  total   electric
generating  capacity  of  230  megawatts.   The  Panda-Brandywine
Facility  uses natural gas as its primary fuel input  and  No.  2
fuel oil as an alternative fuel in the event that gas supplies or
transportation are curtailed. The Panda-Brandywine  Facility  was
constructed   by   Raytheon  Engineers  and  Constructors,   Inc.
("Raytheon")  pursuant  to  the  Amended  and  Restated   Turnkey
Cogeneration  Facility  Agreement  between  the  Panda-Brandywine
Partnership   and  Raytheon  (the  "Brandywine  EPC  Agreement").
Raytheon  has met its performance guarantees and the requirements
for  commercial operations and substantial completion  under  the
Brandywine  EPC  Agreement although the date on which  commercial
operations  was achieved is the subject of a dispute between  the
Panda-Brandywine  Partnership (herein  so  called),  an  indirect
wholly  owned  subsidiary of the Company which  owns  the  Panda-
Brandywine   Facility,  and  Raytheon.   The  Company   currently
believes  that the total amount in dispute is approximately  $1.0
million.   Such amount, if owed, would be payable over  time  and
from  cash  flows  from the operation of the Brandywine  Facility
which  may  otherwise  have  been  available  for  distributions.
Pursuant  to  a  power purchase agreement (the "Brandywine  Power
Purchase  Agreement") entered into in 1991 and amended  in  1994,
the  Panda-Brandywine  Partnership sells  the  capacity  of,  and
energy  produced  by,  the Panda-Brandywine Facility  to  Potomac
Electric  Power  Company  ("PEPCO"), a utility  that  serves  the
District of Columbia and parts of Maryland.  The Panda-Brandywine
Facility  commenced  commercial operations under  the  Brandywine
Power  Purchase Agreement on October 31, 1996.  The term  of  the
Brandywine  Power Purchase Agreement will expire on  October  30,
2021.

     The  Panda-Brandywine Facility is currently  leased  by  the
Panda-Brandywine Partnership pursuant to the Brandywine  Facility
Lease  (herein  so called).  The initial term of  the  Brandywine
Facility Lease is 20 years. At the end of the initial lease term,
so long as no default or event of default shall have occurred and
be  continuing  under the Brandywine Facility Lease,  the  Panda-
Brandywine  Partnership may renew the Brandywine  Facility  Lease
for  two consecutive five-year terms.  Alternatively, the  Panda-
Brandywine Partnership may purchase the Panda-Brandywine Facility
at  fair sales market value at the end of the initial lease  term
or any renewal term. If the Panda-Brandywine Partnership does not
renew  the  Brandywine  Facility Lease  or  purchase  the  Panda-
Brandywine  Facility, it must surrender possession of the  Panda-
Brandywine Facility.

      The  Panda-Brandywine Facility is certified as a  QF  under
PURPA  and  thus  is exempt from rate regulation as  an  electric
utility  under  federal and state law, provided  that,  upon  and
during commercial operations, it continues to meet the applicable
requirements of PURPA.

        Operations   and   Maintenance.    The   Panda-Brandywine
Partnership  purchases operations and maintenance  services  from
Ogden  Brandywine Operations, Inc. ("Ogden Brandywine")  pursuant
to  an  Operation and Maintenance Agreement (the "Brandywine  O&M
Agreement").  The  Brandywine O&M Agreement  is  effective  until
October 31, 1999, and may be extended thereafter by agreement  of
the parties.

      Sale  of  Capacity,  Electricity  and  Steam.   The  Panda-
Brandywine  Partnership  sells electric capacity  and  energy  to
PEPCO  pursuant  to the Brandywine Power Purchase Agreement.  The
Brandywine  Power  Purchase Agreement has an  initial  term  that
expires  in October 2021, 25 years from the commercial operations
date, and may be extended by agreement of the parties.

      The  Brandywine Power Purchase Agreement provides  for  two
payments: a capacity payment and an energy payment. The  capacity
payment  is  a fixed charge to be paid regardless of whether  the
Panda-Brandywine Facility is dispatched, subject to reduction  in
certain  circumstances. Monthly capacity payments throughout  the
term of the Brandywine Power Purchase Agreement are based on  the
Panda-Brandywine  Facility's dependable  capacity,  the  capacity
rate and other factors. The capacity rate is a fixed schedule  of
payments  for  each of the 25 years of the initial  term  of  the
Brandywine  Power Purchase Agreement, ranging (in kilowatt  hours
per  month)  from  $13.74 in 1997 to $23.63 in 2014,  subject  to
various  adjustments,  and also subject to certain  modifications
thereto, as described in "Dispute With PEPCO Over Calculation  of
Capacity Payments" below.

     The energy payment is determined in accordance with a series
of   formulas  that  reflect  specified  heat  rates,  hours   of
synchronization  and  operation and a combination  of  fixed  and
market  prices  for  natural gas. The Brandywine  Power  Purchase
Agreement  provides that the energy price will  be  increased  to
compensate  the  Panda-Brandywine Partnership  for  its  variable
costs  of  fuel  oil  if the gas supply is interrupted.  In  such
event,  the Brandywine Power Purchase Agreement specifies a  base
cost  of  oil,  which is escalated at the annual rate  of  change
according to an oil index described therein.

      The  Panda-Brandywine Partnership has constructed a  seven-
mile  long  electric  transmission line  to  connect  the  Panda-
Brandywine  Facility  and the transmission facilities  of  PEPCO.
Consolidated Rail Corporation entered into an agreement with  the
Panda-Brandywine   partnership  to  provide   transmission   line
easements  for  a portion of the transmission line.   The  Panda-
Brandywine  Partnership transferred ownership of the transmission
line to PEPCO on October 30, 1996.

     The   Panda-Brandywine  Partnership  sells  steam   to   the
Brandywine  Water  Company pursuant to a  Steam  Sales  Agreement
dated   March   30,  1995  (the  "Brandywine  Steam  Agreement").
Brandywine  Water  Company, which is  an  indirect  wholly  owned
subsidiary  of the Company, uses the steam to generate  distilled
water  which is sold locally. This production and sale of thermal
energy allows the Panda-Brandywine Facility to achieve QF status.
The  Brandywine Steam Agreement continues until October 31,  2021
and  may  be  extended by agreement of the parties for additional
terms of five years.

     Gas  Supply  and  Fuel  Maintenance.   The  Panda-Brandywine
Partnership  purchases  both firm and interruptible  natural  gas
supply from Cogen Development Company ("CDC") pursuant to the Gas
Sales  Agreement,  dated  March  30,  1995,  between  the  Panda-
Brandywine  Partnership and CDC (the "Brandywine Gas Agreement").
MCN   Corporation,   the   parent   corporation   of   CDC,   has
unconditionally   guaranteed   the   payment   and    performance
obligations  of  CDC  under  the Brandywine  Gas  Agreement.  The
Brandywine Gas Agreement commenced October 31, 1996 and continues
until  October 31, 2011, and thereafter is automatically  renewed
for an additional two-year term unless terminated by either party
upon nine months' written notice.

     CDC is obligated to sell and deliver to the Panda-Brandywine
Partnership,  at  receipt points along  the  pipeline  system  of
Columbia Gas, up to 24,240 MMBtu of natural gas per day on a firm
basis  and  up to 24,240 MMBtu of gas per day on an interruptible
basis.  Gas  delivered by CDC within the firm basis  limit  falls
within  one of the three following categories: "Limited  Dispatch
Gas,"  "Scheduled Dispatch Gas" or "Dispatchable  Gas"  (each  as
defined in the Brandywine Gas Agreement).

      The  price  for  the natural gas delivered  by  CDC  varies
dependent upon the category of the natural gas delivered.

     Gas   Transportation.   The   Panda-Brandywine   Partnership
purchases  firm natural gas transportation service from  Columbia
Gas  Transmission  Corporation ("Columbia Gas")  pursuant  to  an
Amended and Restated FTS Service Agreement (the "Columbia Gas  FT
Agreement").   Service  under  the  Columbia  Gas  FT   Agreement
commenced  on  November 1, 1996 and continues until  October  31,
2021,  and  year-to-year thereafter unless terminated  by  either
party upon six months' notice.

      Columbia  Gas  is obligated to provide the Panda-Brandywine
Partnership with up to 24,240 Dekatherms ("Dth") per day of  firm
natural  gas  transportation service from a  receipt  point  near
Monclova,  Ohio to an interconnection between the  facilities  of
Columbia  Gas  and  Cove  Point LNG  Limited  Partnership  ("Cove
Point")  in  Loudoun County, Virginia. Columbia Gas provides  the
firm transportation service pursuant to the terms of the Columbia
Gas  FT  Agreement  rate  schedule  and  the  general  terms  and
conditions of Columbia Gas's effective FERC natural gas tariff.

      The  Panda-Brandywine Partnership purchases from Cove Point
firm natural gas transportation service to transport natural  gas
delivered  by  Columbia  Gas  to the  facilities  of  Cove  Point
pursuant  to  a  FTS  Service  Agreement  (the  "Cove  Point   FT
Agreement"). The Cove Point FT Agreement continues until  October
31, 2021.

      Cove  Point  is  obligated to provide the  Panda-Brandywine
Partnership  with  up to 24,000 Dth per day of firm  natural  gas
transportation  service  from  an  interconnection  between   the
facilities of Cove Point and Columbia Gas in Loudoun, Virginia to
an  interconnection  between the facilities  of  Cove  Point  and
Washington Gas Light Company ("WGL") in Charles County, Maryland.
Cove  Point provides the firm transportation service pursuant  to
the Cove Point FT Agreement, and the general terms and conditions
of its effective FERC natural gas tariff.

      The Panda-Brandywine Partnership purchases from WGL natural
gas  transportation, natural gas sales and natural gas  balancing
services  pursuant to a Gas Transportation and  Supply  Agreement
(the   "WGL  Agreement").  The  WGL  Agreement  continues   until
October  31,  2021,  and  thereafter will  continue  year-to-year
unless  terminated  by  either party  upon  six  months'  written
notice.

     WGL is obligated to provide the Panda-Brandywine Partnership
with  firm transportation service, up to the quantity of  natural
gas  nominated  for  such  service  on  a  given  day,  from   an
interconnection between the facilities of Cove Point and  WGL  in
Charles  County, Maryland to the interconnection between the  WGL
facilities and the Panda-Brandywine Facility, provided  that  WGL
only  must use its best efforts to deliver transportation natural
gas  to  the Panda-Brandywine Facility when the pressure  on  the
Cove  Point pipeline is less than 500 psig. During the months  of
January,  February and December of any calendar  year,  WGL  may,
under  certain  circumstances, request that the  Panda-Brandywine
Partnership  release  to WGL for its system  use  a  quantity  of
natural  gas purchased by the Panda-Brandywine Partnership  under
the Brandywine Gas Agreement and transported to the WGL system.

     Fuel  Oil.   The  Panda-Brandywine Facility was  constructed
with  the  capability to operate on No. 2 fuel oil  and  has  the
ability  to change fuel sources from natural gas to fuel oil  and
back  without  interrupting the generation  of  electricity.  The
Panda-Brandywine  Facility has on-site storage for  approximately
two  million gallons of fuel oil, a supply sufficient to  operate
the  Panda-Brandywine Facility at full load for approximately six
days.  In accordance with the fuel management plan for the Panda-
Brandywine   Facility,  which  the  Panda-Brandywine  Partnership
developed with the assistance of its fuel manager (CDC) and which
was  approved  by  PEPCO, the Panda-Brandywine  Partnership  will
endeavor  to  enter  into  fuel  oil  supply  and  transportation
contracts  by October 10 of each year that will have  a  duration
through   the  immediately  succeeding  winter  season  (November
through March).

     The  Panda-Brandywine Partnership has entered into  a  Sales
Agreement  with  Northridge Petroleum Corporation  ("Northridge")
and  a  related  Storage Agreement with Stratus  Terminals,  Inc.
pursuant to which the Panda-Brandywine Partnership purchased  and
maintains one million gallons of No. 2 fuel oil in storage  tanks
located near Baltimore, Maryland.  The respective terms of  these
Agreements  commenced November 1, 1997 and  terminate  March  31,
1998.   The Panda-Brandywine Partnership has access to the stored
fuel  oil  at  all  times.  Upon request of the  Panda-Brandywine
Partnership,  Northridge will use its best efforts  to  replenish
any fuel oil removed from the storage tank at market-based prices
plus  additional storage charges.  If Northridge is not  able  to
purchase  the requested fuel oil within a specified time  period,
the  Panda-Brandywine Partnership may purchase such fuel oil from
another supplier.

      The  Panda-Brandywine Partnership has also entered into  an
agreement (the "Hardesty Transportation Agreement") with Hardesty
&  Son,  Inc. ("Hardesty") pursuant to which the Panda-Brandywine
Partnership has rights to firm transportation of a minimum of  20
truckloads  of  fuel  oil per day during the months  of  December
through  February and ten truckloads of fuel oil per  day  during
the months of March through November.  Hardesty will use its best
efforts to provide additional transportation upon the request  of
the  Panda-Brandywine  Partnership.  If  Hardesty  is  unable  to
provide such additional transportation when requested, the Panda-
Brandywine  Partnership  may use other means  of  delivery.   The
Hardesty Transportation Agreement continues until October 1, 1998
and  will automatically be renewed for successive one-year  terms
unless terminated by either party.

      Water.  The Panda-Brandywine Partnership has entered into a
25-year Treated Effluent Water Purchase Agreement ("Water  Supply
Agreement")  with  the County Commissioners  of  Charles  County,
Maryland to purchase up to 2.7 million gallons per day of treated
effluent from a local sewage treatment plant. Treated effluent is
a  byproduct of the sewage treatment process and is used  as  the
primary  cooling water source for the Panda-Brandywine Facility's
cooling  towers.  The  treated effluent is transported  from  the
sewage  treatment  plant to the Panda-Brandywine  Facility  by  a
buried  transmission pipeline that has the capacity to supply  up
to 3.0 million gallons per day.

      Dispute  With PEPCO Over Calculation of Capacity  Payments.
In  late August 1996, the Panda-Brandywine Partnership and  PEPCO
commenced    discussions    concerning    commercial    operation
requirements  of the Panda-Brandywine Facility and conversion  of
the  construction  loan  to long-term  financing.   During  these
discussions, two disagreements arose between the Panda-Brandywine
Partnership  and  PEPCO  as to how capacity  payments  should  be
calculated under the Brandywine Power Purchase Agreement.

     The  Panda-Brandywine Partnership has  reached  a  tentative
agreement  with  PEPCO  to  make  certain  modifications  to  the
Brandywine Power Purchase Agreement, which modifications  resolve
various  outstanding issues as to the method  of  calculation  of
capacity payments thereunder.

     The   first   significant  outstanding  issue   involved   a
disagreement between the Panda-Brandywine Partnership  and  PEPCO
as  to  the date on which the yield to maturity on United  States
Treasury  Bonds  with a maturity of 12 years ("12-year  T-Bonds")
should  be  determined under a provision in the Brandywine  Power
Purchase Agreement that requires capacity payments to be  reduced
if such interest rate is less than 8%. Such provision states that
the  interest  rate of 12-year T-Bonds is to be  determined,  and
adjustments  to capacity payments made, as of the date  that  the
interest  rate  for permanent financing for the  Panda-Brandywine
Facility  is  designated pursuant to an executed  commitment  for
such   financing.   On  October  6,  1994,  the  Panda-Brandywine
Partnership  entered  into  a  written  commitment  with  General
Electric  Capital  Corporation ("GE  Capital")  with  respect  to
permanent  financing  for  the Panda-Brandywine  Facility,  which
commitment  designated  an  interest  rate  for  such  financing.
Accordingly,  the Panda-Brandywine Partnership took the  position
that  October  6, 1994 should be the date used to  determine  the
interest  rate  of  12-year T-Bonds under  the  Brandywine  Power
Purchase Agreement. The interest rate for 12-year T-Bonds on such
date  was  7.94%  per annum. PEPCO, on the other hand,  took  the
position  that  since  the  interest  rate  designated  in   such
commitment  was  a  floating  rate,  the  date  to  be  used  for
determining the interest rate of 12-year T-Bonds was the  closing
date  of  the  conversion  of  the Brandywine  construction  loan
facility to long-term financing in the form of a leveraged lease,
which  occurred on December 18, 1996. The interest rate  for  12-
year T-Bonds on such date was 6.36%.

     The   second   significant  outstanding  issue  involved   a
disagreement  between PEPCO and the Panda-Brandywine  Partnership
as to the determination of PEPCO's system peak load, which is the
basis  for  certain  reductions in capacity  payments  under  the
Brandywine   Power  Purchase  Agreement.  Under  such  provision,
capacity  payments  are  to be reduced, commencing  in  2006,  if
PEPCO's system peak load does not exceed 5,697 megawatts prior to
1998, and are reduced by a greater amount if PEPCO's system  peak
load  does  not  exceed  such amount prior  to  1999.  PEPCO  and
Baltimore  Gas  &  Electric Company ("BG&E") had announced  their
intention to merge during 1997 into a new entity to be  known  as
Constellation Energy Corporation ("Constellation"), and PEPCO had
asked  the  Panda-Brandywine Partnership to agree that peak  load
under the Brandywine Power Purchase Agreement would be calculated
on  the  basis of the pre-merger PEPCO system and not  the  post-
merger Constellation system. Peak load based on the Constellation
system  would have greatly exceeded 5,679 megawatts during  1997.
However,  PEPCO's position was that the parties intended  to  use
the  then existing PEPCO system in calculating peak load and that
the  merger with BG&E should be disregarded for such purpose. The
Panda-Brandywine  Partnership disagreed with such  position.  The
Brandywine   Power  Purchase  Agreement  does  not  contain   any
provision    requiring   adjustments   due    to    mergers    or
reorganizations.   It  was  the  Panda-Brandywine   Partnership's
position that Constellation, as the successor of PEPCO, would  be
substituted  for  PEPCO  under  the  Brandywine  Power   Purchase
Agreement and the Constellation system would be used to calculate
peak  load.   It  is  the Panda-Brandywine Partnership's  current
understanding that the proposed merger between PEPCO and BG&E has
been terminated.

     Under  the  agreement, the first issue discussed  above  was
resolved  by adjusting the schedule for capacity payments  to  be
made  by  PEPCO   to the Panda-Brandywine Partnership  under  the
Brandywine  Power  Purchase Agreement such  that  the  amount  of
capacity payments to be made during the first ten years following
the  commencement  of commercial operations  (which  occurred  on
October  31,  1996) will be increased and the amount of  capacity
payments to be made during the last fifteen years of the term  of
the Brandywine Power Purchase Agreement (which expires on October
30,  2021)  will be reduced.  The agreement provides  that  PEPCO
will  pay to the Panda-Brandywine Partnership within two business
days following the effective date of the settlement (as discussed
below)   approximately   $3.8  million,  which   represents   the
difference between the previously scheduled capacity payments and
the  capacity payments due under the agreement for the first nine
months of 1997.

      The  second  issue  discussed above  was  resolved  by  the
tentative  agreement  of  both parties  to  base  the  peak  load
adjustment on PEPCO's peak load.

       In   return  for  the  resolution  of  the  aforementioned
significant  issues,  PEPCO has agreed that the  Panda-Brandywine
Partnership may acquire the exclusive right to broker (as defined
by  FERC) capacity from the Panda-Brandywine Facility for resale,
up to certain specified amounts and for specified periods.  PEPCO
will  sell  the  capacity  pursuant to  its  power  sales  tariff
currently on file with the FERC.  The amount of released capacity
to  be  made  available  for brokering  to  the  Panda-Brandywine
Partnership is 130 megawatts for the period January -  May  1998,
200  megawatts  for  the period June 1998 -  May  1999,  and  100
megawatts  for  the  period  June  1999-May  2000.   The   Panda-
Brandywine  Partnership  will pay PEPCO $1.25/kilowatt/month  for
the capacity released.

      In  addition,  PEPCO has agreed to release  to  the  Panda-
Brandywine Partnership on a periodic basis through the year  2002
the rights to sell energy for resale, which energy may or may not
be  from  the  capacity released described above.  Such  releases
will  be  based  upon  PEPCO's  projections  of  future  facility
operations required to serve PEPCO's needs.  Sales of energy  not
related  to released capacity will be subject to the availability
of  the  Panda-Brandywine Facility.  Sales of energy outside  the
Pennsylvania-New Jersey-Maryland Interconnection ("PJM Pool") not
related to released capacity will be on an interruptible basis in
accordance with PJM Pool rules and requirements.

      In  connection  with sales of released energy,  the  Panda-
Brandywine Partnership may function as a power marketer or  power
broker  (in  either  case, as defined by FERC).   If  the  Panda-
Brandywine Partnership elects to function as a power marketer, it
must become a member of the PJM Pool.  In either case, the Panda-
Brandywine  Partnership will be required to obtain all  necessary
authorizations  and  approvals to engage  in  such  transactions,
including any authorizations and approvals required by FERC.   If
the  Panda-Brandywine Partnership functions as a power  marketer,
it  will be required to pay PEPCO a base fee equal to two percent
of  the  Panda-Brandywine Partnership's gross revenues from  each
sale  of  released  energy, subject to  an  additional  incentive
payment  of  up  to 50% of the base fee based on  the  timing  of
releases by PEPCO of blocks of energy available for resale by the
Panda-Brandywine Partnership.

      If  the  Panda-Brandywine Partnership functions as a  power
broker,  it will be required to pay PEPCO a base fee, subject  to
the  incentive adjustment as described above, plus an  additional
fee of one percent of the gross revenues from each sale.  The PJM
Pool, not PEPCO, will supply transmission service.  The agreement
also  provides that PEPCO will enter into good faith negotiations
with  the  Panda-Brandywine Partnership prior to the end  of  the
year  2002  with respect to energy releases after 2002,  although
neither  party  is  obligated to enter into  any  such  agreement
unless it is to their mutual economic benefit.

       The  agreement  further  provides  that  for  purposes  of
determining  PEPCO's  system peak load which  is  the  basis  for
reductions  in  capacity  payments  under  the  Brandywine  Power
Purchase  Agreement following any merger or other combination  of
PEPCO  with another utility, the actual peak load experienced  by
the  portion  of  the  merged or combined company's  system  that
constituted  the PEPCO system prior to such merger or combination
shall be used.

      The  agreement  further provides that the  Panda-Brandywine
Partnership will enter into good faith negotiations with PEPCO on
a buyout or buydown of the Brandywine Power Purchase Agreement in
a manner that maximizes and equitably shares the benefits of such
transaction  between  the  parties,  although  neither  party  is
obligated to enter into any buyout or buydown agreement unless it
is to their mutual economic benefit.

      The effectiveness of the agreement with PEPCO is subject to
the consent of the financing parties, including GE Capital, under
the  long-term  financing arrangements for  the  Panda-Brandywine
Facility.   In this regard, the Panda-Brandywine Partnership  has
commenced  discussions with GE Capital and  the  other  financing
parties  concerning such consents, and has executed an  agreement
in principle with GE Capital.  Among other things, this agreement
in principle provides for (i) the re-allocation of lease payments
from  the Panda-Brandywine Partnership to GE Capital in order  to
match the revised capacity payments schedule with PEPCO, (ii) the
reimbursement  to GE Capital by the Panda-Brandywine  Partnership
of  certain fees, and (iii) certain technical amendments  to  the
applicable financing documents.  The closing of the agreement  in
principle  is  subject to several conditions, including  but  not
limited to written consents from all other financing parties  and
other  applicable  parties, receipt of legal opinions  concerning
the  tax and regulatory consequences of the transaction, and  the
preparation  of definitive legal documentation of the transaction
to the satisfaction of all parties involved.

      To  the  Company's  knowledge, no regulatory  consents  are
required in order for the agreement between PEPCO and the  Panda-
Brandywine Partnership to take effect.  There can be no assurance
that  the  requisite  consents  from  GE  Capital  or  the  other
applicable  financing  parties  can  be  obtained  or  that   the
agreement with PEPCO will ever become effective.

Plants Under Construction

  The Luannan Facility

     General.    The   Luannan  Facility  (herein   so   called),
approximately  83%  of  which is owned by  the  Company  and  its
affiliates,  is located in Luannan County, Tangshan Municipality,
Hebei   Province,  People's  Republic  of  China.   It   achieved
financial   closing  in  April  1997  and  is   currently   under
construction (currently expected to reach commercial operation in
August   1999)  and  will  be  comprised  of  two  steam/electric
generating units, each nominally rated at 50 megawatts  but  with
nameplate capability of up to 60 megawatt gross output under full
condensing  conditions. Two pulverized coal-fired  boilers,  each
delivering  steam  to  drive a three stage  extraction/condensing
steam   turbine  electric  generating  unit,  will  be  utilized.
Electric  power  generated  by  the  Luannan  Facility  will   be
interconnected  to  the local electricity  grid  network  at  110
kilovolts.  In addition, steam will be extracted from  the  steam
turbines  for  distribution by pipeline to local  industrial  and
commercial users and also used to heat water for district heating
use.   The  site of the Luannan Facility is leased from  the  PRC
pursuant  to  a land use rights agreement with an agency  of  the
PRC.

     Sales  of  Power.  The Luannan Facility will sell  power  to
North  China Power Company pursuant to the Luannan Power Purchase
Agreement  (herein  so  called). The North  China  Power  Company
functions  as the commercial arm of the North China Power  Group.
The  North  China  Power  Group, which reports  directly  to  the
Ministry  of  Electric Power ("MOEP"), operates the  North  China
Power   Grid.  The  service  area  of  North  China  Power  Group
encompasses  four regions, including the Beijing/Tianjin/Tangshan
area.   Beijing  and  Tianjin  are among  the  largest  and  most
economically  developed cities in the PRC.  The service  area  of
North  China  Power  Group also includes Hebei  Province,  Shanxi
Province and western Inner Mongolia.  The North China Power Group
owns  most of the major power plants within its service area  and
is   reported   to  have  had  a  total  installed  capacity   of
approximately  25,140 megawatts  in 1995 and  to  have  generated
power  of approximately 126.7 billion kilowatt hours in 1995.  As
both  a government and a commercial entity, the North China Power
Group  regulates,  manages  and owns  the  power  assets  in  its
territory  including generation and distribution facilities.  The
geographical extent of its service area makes North  China  Power
Group one of the largest power operating entities in the PRC.

     The Luannan Power Purchase Agreement is a 20-year agreement.
The  electricity price is established through a formula  provided
in  the  applicable Pricing Document (herein so called) which  is
separate  from,  but incorporated by reference  in,  the  Luannan
Power Purchase Agreement.  According to the formula contained  in
the  Pricing Document, the power price is comprised of fixed  and
variable components that may be adjusted, subject to the approval
of the Tangshan Municipal Price Bureau to reflect changes in coal
costs,   depreciation  of  plant  and  equipment  and   financing
expenses.  Certain components of the power price calculation  may
be  adjusted  to  reflect local and U.S.  inflation  and  foreign
exchange  rate  fluctuation  in order  to  mitigate  the  Luannan
Facility's exposure to inflation and currency risks. Although  it
is  anticipated that the Luannan Facility will apply annually for
changes  in rates, under the Luannan Power Purchase Agreement  it
has  the  right to request a determination of a new  power  price
whenever  it  determines  that changes in  the  price  components
require a new determination. There are pass-through provisions in
the  pricing  formula for increases or decreases in the  cost  of
coal  against  an index cost that is stipulated  in  the  Pricing
Document,  and the pricing formula also has provisions for  pass-
through   or   make-whole  calculations   relating   to   certain
construction capital cost items. The tariff is paid  in  Renminbi
(the  currency  of the PRC) and is required to be paid  every  30
days by the North China Power Company.

      Sales  of Steam.  The Company currently believes  that  the
Luannan Facility will sell approximately 349,680 tons per year of
steam  for  process  and the equivalent of approximately  362,518
gigajoules  per  year  of steam for heating  to  certain  Luannan
County  enterprises and local industries.  The Company  currently
believes  that  the Luannan Facility will be the single  largest,
centralized heat supplier in Luannan County.

     Engineering, Procurement and Construction Contract.  Through
competitive  bidding,  Harbin Power Engineering  Company  Limited
(the   "Luannan  EPC  Contractor")  has  been  selected  as   the
engineering,  procurement  and construction  contractor  for  the
Luannan  Facility.  The  Luannan  EPC  Contractor  has  extensive
engineering, procurement and construction experience in the power
industry  in  the  PRC  and other countries. Chinese-manufactured
equipment  and materials and Chinese labor are being utilized  to
the  maximum extent possible in order to lower the costs  of  the
Luannan Facility and the sale price of electricity.

     The  Luannan EPC Contractor is a wholly-owned subsidiary  of
Harbin  Power Equipment Company.  Harbin Power Equipment Company,
a  PRC  company  listed  on  the Hong Kong  Stock  Exchange,  was
established in October 1994 through the restructuring  of  Harbin
Power  Plant Equipment Group Corporation.  Harbin Power Equipment
Company  and its subsidiaries also provide a range of engineering
services  for  power stations, including turnkey construction  of
power  plants  and  the  provision of engineering  and  technical
advisory  services.  Harbin Power Equipment  Company's   products
have been exported to Pakistan, the Philippines, Canada and other
countries.

       Operations  and  Maintenance.   Pursuant  to  the  Luannan
Operations  & Maintenance Contract (the "Luannan O&M  Contract"),
operations and maintenance services for the Luannan Facility will
be   provided   by   Duke/Fluor  Daniel  International   Services
("Duke/Fluor").  The Luannan O&M Contract provides for a recovery
of  costs  by Duke/Fluor plus incentive payments based  upon  the
performance  of the Luannan Facility.  Duke/Fluor  is  a  general
partnership  formed in 1994 by affiliates of Duke  Power  Company
and  Fluor Corporation for the purposes of providing services  to
the  solid  fuel power generation market. Duke/Fluor is  actively
engaged  in  the operation and maintenance of electric generation
facilities  throughout the world.  Pursuant to  the  Luannan  O&M
Contract,  almost  all  of  the personnel  will  be  trained  PRC
technicians who will work under close supervision of the  Luannan
O&M Contractor's managers.

     Coal Supply. The Company currently believes that the Luannan
Facility  will use approximately 450,000 metric tons of coal  per
year.  The  principal fuel supply for the Luannan  Facility  will
come  from  the Qianjiaying Mine, which is owned and operated  by
Kailuan  Coal  and  is  located 30 kilometers  from  the  Luannan
Facility.   Kailuan Coal, a state-owned coal mining company,  has
approximately  5.0 billion metric tons of coal  reserves  in  the
Tangshan  area and produces approximately 18 million metric  tons
of  coal  per  year. The Qianjiaying Mine produced  approximately
3.67  million  metric  tons of coal in  1996.  Kailuan  Coal  has
committed  to supply up to 300,000 metric tons per year  of  coal
from  the Qianjiaying Mine to the Luannan Facility for ten years.
The  remaining coal requirements for the Luanna Facility will  be
supplied by other mines in the region.

  The Nepal Facility

     General.   The Nepal Facility (herein so called) is  located
on  the  upper Bhote Koshi River in Nepal. It achieved  financial
closing  during December 1997 and is currently under construction
(currently expected to reach commercial operation in April 2000).
It  will be comprised of a 36 megawatt hydroelectric facility  on
the upper Bhote Koshi River.  The Nepal Facility will be a run-of-
the-river  power  plant; thus it will not have a  large  dam  and
reservoir,  but  rather, a small diversion  structure,  and  will
produce  electricity in accordance with the river flow.  It  will
be  located  approximately 110 kilometers from Kathmandu,  Nepal.
The switchyard and a separate 48 kilometer transmission line that
will transmit the power generated by the Nepal Facility to a sub-
station   in  Bhaktapur,  Nepal  will  be  built  by  the   Nepal
Electricity Authority (the "NEA"), the state owned utility.  Cash
flow  attributable to the approximately 75% interest in the Nepal
Facility  of  the  Company  (including its  affiliates)  and  its
investment partner will be allocated 85% to such partner and  15%
to  the  Company  (including its affiliates) until  such  partner
achieves  a  20% internal rate of return, and 90% to the  Company
(including its affiliates) and 10% to such partner thereafter.

     Sales  of Power.  The Nepal Facility will sell power to  the
NEA  pursuant  to the Nepal Power Purchase Agreement  (herein  so
called), which is a 25-year agreement.  At the end of the 25-year
term of the NEA Power Purchase Agreement, 50% of the ownership of
the  Nepal Facility will be transferred to the NEA for a  nominal
sum.  Payment under the Nepal Power Purchase Agreement will equal
the product of a tariff rate of U.S. $0.060 per kilowatt hour  in
1995 prices escalated by 3% per annum for the first 15 years, and
indexed thereafter to the U.S. Consumer Price Index rate and  the
total  monthly electrical output delivered by the Nepal  Facility
subject to monthly deemed generation levels.

     The NEA will have the ability to dispatch the Nepal Facility
at  its  discretion.  However should the NEA dispatch  the  Nepal
Facility below the monthly deemed generation level, the NEA  will
remain  obligated to pay for the deemed generation.   During  the
dry months of the year (mid-November to mid-May), the NEA has the
option  to  purchase  all electric power produced  by  the  Nepal
Facility even if it exceeds the deemed generation level.  The NEA
will  not  be  required to purchase electrical output  above  the
deemed generation levels during the wet months of the year  (mid-
November  to  mid-May).  Payments under the Nepal Power  Purchase
Agreement  will  be  denominated in  U.S.  dollars  and  paid  in
Nepalese rupees.

     Engineering,  Procurement  and Construction  Contract.   The
engineering, procurement and construction contract for the  Nepal
Facility  is  with China Gezhouba Construction Group  Corporation
for  Water  Resources and Hydropower ("China  Gezhouba").   China
Gezhouba  is  one of the largest construction firms in  the  PRC,
with  extensive  experience  in the  construction  of  hydropower
plants.   In addition, China Gezhouba has engaged Harbin Electric
Machinery Works ("Harbin"), based in  Harbin China, to supply the
turbine  generators for the Nepal Facility.  Harbin has  supplied
hydro  units to a large number of hydroelectric plants in several
countries in Asia, Europe, the Middle East and the United States.

     Operations  and  Maintenance.  Pursuant  to  the  applicable
operations and maintenance agreement, Harza  Engineering  Company
International,   L.P.  ("Harza")  will  provide  operations   and
maintenance  services for the Nepal Facility.  The term  of  this
agreement  is  for five years of commercial operation,  renewable
for additional five year periods.  Harza has extensive experience
in  the  planning, design, construction, and operation  of  power
plants throughout the world.

     The  Site.  The Bhote Koshi River is a perennial stream  fed
by glaciers, snow melt and monsoons.  The river drains an area of
2,132 square km, mostly in the PRC.  The mean annual flow at  the
proposed site was 66.4 cubic meters per second  m3/s between 1965
and   1992.    The  Nepal  Facility  will  be  located   in   the
Sindhupalchok  zone  of  central Nepal, close  to  the  PRC-Nepal
border.   The  Bhote Koshi River rises to an elevation  of  5,800
meters  at  Tang Pu, Tibet, PRC and flows south with  a  drop  of
4,300 meters before reaching the project site.  At the site,  the
river's slope is about 10 percent.  The land at the site for  the
Nepal  Facility  is owned by the project company  formed  by  the
Company  and its partners, and is subject to a mortgage  lien  as
part of the financing for the Nepal Facility.

Competition

      The business of developing electric generating power plants
is intensely competitive.  The Company and its affiliates compete
both  domestically  and  internationally with  other  independent
power producers, including affiliates of utilities.

     Development  of  new  power generation projects  in  foreign
markets is difficult and expensive, and many competitors in these
foreign  markets have significantly larger capital resources  and
greater local market expertise than the Company. In addition, due
to  increased competition in the United States, there has been an
increasing number of entrants into these foreign markets.

      In  the  United  States, over the past  decade,  developing
electric generating power plants has become a progressively  more
difficult,  expensive and competitive process. In  recent  years,
more  of  such transactions have been awarded through competitive
bidding. Increased competition also has lowered profit margins of
successful projects in the United States.

Regulatory Matters

  Regulation of the Electric Power Industry in the United States

     Projects  of  the Company located in the United  States  are
subject to complex and stringent energy, environmental and  other
governmental laws and regulations at the federal, state and local
levels   in  connection  with  the  development,  ownership   and
operation of its electricity generation facilities. Federal  laws
and  regulations govern transactions by electric and gas  utility
companies, the types of fuel that may be utilized by an  electric
generating  facility, the type of energy that may be produced  by
such  a facility and the ownership of the facility. State utility
regulatory  commissions  must approve the  rates  and  terms  and
conditions  under which public utilities sell electric  power  at
retail and, under certain circumstances, purchase electric  power
from  independent  producers. Under certain  circumstances  where
specific  exemptions  are  otherwise unavailable,  state  utility
regulatory  commissions  may have broad  jurisdiction  over  non-
utility  electric  power generation facilities. Energy  producing
projects  located  in  the  United States  also  are  subject  to
federal,  state  and  local  laws and administrative  regulations
governing the emissions and other substances produced, discharged
or  disposed  of  by  a  facility and the geographical  location,
zoning,  land use and operation of a facility. Applicable federal
environmental laws typically have state and local enforcement and
implementation   provisions.   These   environmental   laws   and
regulations generally require that a variety of permits and other
approvals be obtained before the commencement of construction  or
operation  of an energy-producing facility and that the  facility
then operate in compliance with those permits and approvals.

  Federal and State Energy Regulation

     PURPA.  PURPA  and  the  regulations promulgated  thereunder
provide  certain rate and regulatory incentives  to  an  electric
generating  facility that is a qualifying cogeneration  or  small
power production facility (a "QF" or "Qualifying Facility").  The
Panda-Rosemary  Facility  and the Panda-Brandywine  Facility  are
QFs.   A  cogeneration  facility is a QF if it  (i)  sequentially
produces both electricity and useful thermal energy that is  used
for  industrial,  commercial, heating or cooling  purposes,  (ii)
meets certain energy efficiency and operating standards when  oil
or  natural  gas is used as a fuel source and (iii) is  not  more
than  50%-owned by an electric utility, electric utility  holding
company or an entity or person owned by either or any combination
thereof.

     Under PURPA and the regulations promulgated thereunder,  QFs
receive two primary benefits. First, most types of QFs are exempt
from most provisions of the Public Utility Holding Company Act of
1935,  as  amended  ("PUHCA"), and from most  provisions  of  the
Federal  Power  Act, as amended (the "FPA"), while  all  QFs  are
exempt  from certain state laws relating to organizational,  rate
and  financial regulation. Second, regulations promulgated by the
FERC  under  PURPA  require that (i) electric utilities  purchase
electricity generated by QFs, construction of which commenced  on
or  after  November 9, 1978, at a price based on  the  purchasing
utility's  full  "avoided  costs" and  (ii)  the  utilities  sell
supplementary,  back-up, maintenance and interruptible  power  to
the  QFs  on a just and reasonable and non-discriminatory  basis.
PURPA  and the regulations promulgated thereunder define "avoided
costs"  as  the  "incremental costs to  an  electric  utility  of
electric  energy or capacity or both which, but for the  purchase
from  the  qualifying  facility or  qualifying  facilities,  such
utility  would generate itself or purchase from another  source."
Utilities  may also purchase power from QFs at prices other  than
"avoided  costs"  pursuant to negotiations as  provided  by  FERC
regulations.  Any merchant plant, if developed and constructed by
the Company in the United States, probably would not qualify as a
QF, but nonetheless probably would be exempt from most provisions
of  PUHCA by virtue of being an "exempt wholesale generator"  "or
"EWG" (described hereinbelow).

     The  FERC's  regulations  also provide  that  if  energy  or
capacity is provided pursuant to a legally enforceable obligation
over  a  specified term, avoided costs may be determined, at  the
option  of  the QF, either at the time the energy or capacity  is
delivered  or  as  calculated  at  the  time  the  obligation  is
incurred.  The FERC's regulations further provide  that,  in  the
case  of rates based on estimates of avoided costs over the  term
of  a contract, the rates do not violate the FERC's rates if  the
rates for such purchases differ from avoided costs at the time of
delivery.

     In  certain  instances, payments based  upon  avoided  costs
estimated  at the time a contract is entered into have proven  to
be  greater  than  a  utility's avoided  costs  at  the  time  of
delivery. Many utilities have attempted to minimize the disparity
by  implementing  strategies  designed  to  reduce  avoided  cost
payments  under  such  contracts to  levels  that  the  utilities
believe  will  be more competitive in a short-term marginal  cost
electric  energy  market.  Such strategies  include  attempts  to
renegotiate  or buy out power purchase contracts with  QFs.  Some
utilities  have sought rigorously to enforce the  terms  of  such
contracts and to exercise their contractual termination rights if
the  contracts  are  not  strictly observed.  In  addition,  some
utilities  have  engaged  in  litigation  and  regulatory  action
against QFs to achieve these ends.

     The  FERC  has refused to disturb QF contract rates  on  two
operating projects where estimates of a utility's avoided  costs,
calculated  at  the time the contracts were signed,  were  higher
than  the  actual avoided costs at the time of delivery  and  the
contract rates were not challenged at the time the contracts were
signed  and were not the subject of an ongoing challenge  to  the
state's avoided cost determination. New York State Electric & Gas
Corporation,   71  FERC   61,027,  reconsideration   denied,   72
FERC  61,067 (1995). This decision is currently the subject of  a
complaint  filed  in  the United States District  Court  for  the
Northern District of New York.

     Relying  in part on the FERC's regulations, a federal  court
of appeals has held that once a state commission has approved (by
final  and  nonappealable  order) a QF  contract  rate  as  being
consistent  with  avoided costs, just, reasonable  and  prudently
incurred,  any  action  or  order  by  the  state  commission  to
reconsider  its  approval or deny the pass-through  of  the  QF's
charges  to the utility's retail customers under purported  state
authority  is preempted by PURPA. Freehold Cogeneration  Assocs.,
L.P.  v. Board of Regulatory Comm'rs of New Jersey,  44 F.3d 1178
(3rd  Cir.), cert. denied sub nom., Jersey Central Power &  Light
Co.  v.  Freehold  Cogeneration Assocs., L.P.,   116  S.  Ct.  68
(1995).

     In  Independent Energy Producers Assoc. v. California Public
Utilities Comm'n,  36 F.3d 848 (9th Cir. 1994), the U.S. Court of
Appeals  for the Ninth Circuit held that states are not preempted
by  PURPA from instituting a program that requires QFs to  submit
operating data, to purchasing utilities for monitoring compliance
with   QF   status  requirements,  as  long  as  the   monitoring
requirements  do not impose an undue burden on the QFs.  However,
the same court determined that states and utilities are preempted
by  federal law from taking action on their determination that  a
QF  is no longer in compliance with QF status requirements, other
than  requesting that the FERC revoke the facility's  QF  status,
either by filing a request for revocation or by filing a petition
for a declaratory order that the facility is no longer a QF.

     On  May  29,  1996,  VEPCO filed with the State  Corporation
Commission of the Commonwealth of Virginia ("SCC") a request  for
authorization to institute a formal QF status monitoring program.
On  June  13,  1997, the SSC issued an order authorizing  such  a
monitoring program.  The order states that the monitoring program
would  apply  to  all QFs that have entered into  power  purchase
agreements  with  VEPCO. Under the program, QFs  must  submit  to
VEPCO  by  July 1 of each year certain operational data from  the
previous  year  and  indicate significant changes  from  previous
years.   VEPCO must report to the SSC by October 1 of  each  year
the  results of VEPCO's QF compliance evaluation.  VEPCO may seek
a  declaration from the FERC that a QF does not qualify under the
FERC rules.

     The   North  Carolina  Utilities  Commission  ("NCUC")   has
disallowed  the  pass-through to VEPCO's  North  Carolina  retail
rates of a portion of capacity payments VEPCO had been making  to
several non-utility generation plants. The capacity payment rates
for  the plants had been determined by an arbitrator and approved
by  the  SCC.  The NCUC found that bids from a 1988  solicitation
(the  "1988 VEPCO Solicitation") were available at the  time  the
contract  was  approved  and should have been  used,  instead  of
arbitration, to determine VEPCO's avoided costs. The  NCUC  ruled
that  rates in excess of the rates derived from bids received  in
the  1988 VEPCO Solicitation were therefore disallowed in VEPCO's
North  Carolina  retail rates. The North Carolina  Supreme  Court
upheld  the  NCUC's  decision, saying that the  NCUC  had  simply
disallowed  rates  above avoided costs. North Carolina  Utilities
Comm'n  v.  North Carolina Power,  338 N.C 412,  450  S.E.2d  896
(1994).  The United States Supreme Court declined to review  that
decision.

     While  the Rosemary Power Purchase Agreement with VEPCO  was
not  specifically approved by the SCC, the SCC  did  approve  the
1988  VEPCO  Solicitation that resulted  in  the  Rosemary  Power
Purchase  Agreement.  Although  the  NCUC  used  the  1988  VEPCO
Solicitation to determine the avoided costs in the North Carolina
decision discussed above, there can be no assurance that it would
not  disallow  the  pass-through of the Rosemary  Power  Purchase
Agreement rates, which arose from the 1988 VEPCO Solicitation. If
the  NCUC  were to disallow such pass-through, and if the  courts
were  to  allow the decision to stand, the Company believes  that
any  such disallowance would affect only that portion of  VEPCO's
rates  allocated  to  its North Carolina  retail  customers.  The
Brandywine Power Purchase Agreement has been approved by both the
Maryland and District of Columbia Public Service Commissions.

     The  Company endeavors to develop its U.S. projects, monitor
compliance  by the U.S. projects with applicable regulations  and
choose  its  customers in a manner which minimizes the  risks  of
losing QF status. Certain factors necessary to maintain QF status
are, however, subject to the risk of events outside the Company's
control.  For  example,  loss  of a thermal  energy  customer  or
failure of a thermal energy customer to take required amounts  of
thermal  energy from a cogeneration facility that is a  QF  could
cause  the facility to fail to satisfy the criteria required  for
QF  status  regarding the level of useful thermal energy  output.
Upon  the occurrence of such an event, the Company would seek  to
replace  the thermal energy customer or find another use for  the
thermal  energy that meets PURPA's requirements, but no assurance
can be given that this would be possible.

     If  one of the U.S. projects which is a QF and in which  the
Company  has  an interest should lose its status as  a  QF,  such
project would no longer be entitled to the exemptions from  PUHCA
and  the  FPA.  This  could  subject the  U.S.  project  to  rate
regulation  as a public utility under the FPA and state  law  and
could  result  in  the  Company  or  certain  of  its  affiliates
inadvertently becoming a public utility holding company by owning
more  than  10%  of the voting securities of, or  controlling,  a
facility  that would no longer be exempt from PUHCA.  This  could
cause all of the Company's remaining U.S. projects which are  QFs
to  lose  their QF status, because QFs may not be controlled,  or
more than 50%-owned, by public utility holding companies. Loss of
QF status could also trigger defaults under covenants to maintain
QF   status   in  the  Company's  U.S.  project  power   purchase
agreements,  steam sales agreements and financing agreements  and
result  in termination, penalties or acceleration of indebtedness
under  such  agreements. A facility may lose its QF status  on  a
retroactive or a prospective basis.

     If  a  U.S. project which is a QF were to lose its QF status
(because,  for example, it lost its steam customer), the  Company
and  its affiliates could attempt to avoid holding company status
(and thereby protect the QF status of its other QF projects) on a
prospective  basis  by restructuring its interests  in  the  U.S.
project.  For  instance,  the Company  could  change  its  voting
interest  in  the  entity  owning the  nonqualifying  project  to
nonvoting  or limited partnership interests and sell  the  voting
interest  to  an individual or company which could  tolerate  the
lack  of  exemption  from  PUHCA, or by  otherwise  restructuring
ownership  of the project so as not to become a holding  company.
These  actions, however, would require approval of the Securities
and  Exchange Commission (the "SEC") or a no-action  letter  from
the  SEC,  and  would  result  in a  loss  of  control  over  the
nonqualifying  project,  could  result  in  a  reduced  financial
interest  therein  and  might result in  a  modification  of  the
operation and maintenance agreement relating to such project.   A
reduced financial interest could result in a gain or loss on  the
sale  of  the  interest  in  such project,  the  removal  of  the
affiliate through which the ownership interest is held  from  the
consolidated  income  tax  group or  the  consolidated  financial
statements of the Company and its affiliates, or a change in  the
results of operations of the Company and its affiliates. Loss  of
QF  status  on  a  retroactive basis could lead to,  among  other
things, fines and penalties being levied against the Company  and
its  affiliates, and its subsidiaries and claims by utilities for
refund of payments previously made.

     Under the Energy Policy Act of 1992 ("Energy Policy Act"), a
company  engaged  exclusively in the business  of  owning  and/or
operating  a facility used for the generation of electric  energy
exclusively for sale at wholesale may be exempted from  PUHCA  as
an  "exempt  wholesale generator" or "EWG." An  exempt  wholesale
generator may not make retail sales of electricity in the U.S. If
a project can be qualified as an EWG under Section 32 of PUHCA it
will  be exempt from PUHCA even if it does not qualify as  a  QF.
Therefore,  if  a QF in the Company's project portfolio  were  to
lose  its QF status, the Company could apply to have the  project
qualified as an EWG. However, assuming this changed status  would
be  permissible under the terms of the applicable power  purchase
agreement,  rate  approval  from  FERC  would  be  required.   In
addition,  the  project  would  be  required  to  cease   selling
electricity  to any retail customers (such as the thermal  energy
customer) and could become subject to state regulation  of  sales
of thermal energy.

     PUHCA.  PUHCA provides that any corporation, partnership  or
other  entity  or  organized group that owns, controls  or  holds
power to vote 10% or more of the outstanding voting securities of
a  "public  utility  company" or a company  that  is  a  "holding
company"  of  a  public utility company is subject to  regulation
under  PUHCA, unless an exemption is established or an SEC  order
declaring  it not to be a holding company is granted.  Registered
holding companies under PUHCA are required to limit their utility
operations  to a single integrated utility system and  to  divest
any other operations not functionally related to the operation of
the utility system. In addition, a public utility company that is
a  subsidiary  of  a registered holding company  under  PUHCA  is
subject  to  financial  and organizational regulation,  including
approval by the SEC of certain of its financing transactions.

     As  discussed above, most types of QFs are exempt from  most
of  the  provisions of PUHCA. A foreign utility company  is  also
exempt from most of the provisions of PUHCA if certain notice and
other requirements are satisfied.

     FPA.   Under  the  FPA,  the FERC has exclusive  rate-making
jurisdiction over wholesale sales of electricity and transmission
in interstate commerce. These rates may be determined on either a
cost-of-service basis or a market-based approach. If a QF in  the
Company's project portfolio were to lose its QF status, the rates
set  forth in the applicable power purchase agreement would  have
to  be  filed  with the FERC and would be subject to initial  and
potentially subsequent reviews by the FERC under the  FPA,  which
could result in reductions to the rates.

     Industry   Restructuring  Proposals.   The   United   States
Congress  is  currently considering legislation to  repeal  PURPA
entirely,  or  at least to repeal the obligation of utilities  to
purchase  from  QFs.  There is strong Congressional  support  for
grandfathering  contracts of existing QFs if such legislation  is
passed,  and  also  support for requiring  utilities  to  conduct
competitive  bidding  for new electric generation  if  the  PURPA
purchase obligation is eliminated.

     The  FERC  and many state utility commissions are  currently
studying  a  number  of  proposals to  restructure  the  electric
utility industry in the United States to permit utility customers
to choose their utility supplier in a competitive electric energy
market.  The FERC has issued a final rule requiring utilities  to
offer  wholesale  customers and suppliers open  access  on  their
transmission  lines, on a basis comparable to the utilities'  own
use  of the lines. Although the rule (Order No. 888) is currently
the  subject of a petition for review in the Unites States  Court
of  Appeals  for  the D.C. Circuit, many utilities  have  already
filed  "open  access" tariffs. The utilities  contend  that  they
should  recover from departing customers their fixed  costs  that
will  be  "stranded"  if  their wholesale  customers  choose  new
electric  power  suppliers.  These  stranded  costs  include  the
capacity  costs  utilities are required  to  pay  under  many  QF
contracts,  which the utilities view as excessive  when  compared
with  current  market  prices for capacity.  Many  utilities  are
therefore  seeking  ways  to  lower  these  contract  prices   or
terminate  the  contracts altogether,  out  of  fear  that  their
shareholders  will  have to bear all or part of  such  "stranded"
costs.  Some utilities have engaged in litigation against QFs  to
achieve  these  ends.  The FERC's rule allows  full  recovery  of
"legitimate and verifiable" prudently incurred stranded costs  at
the wholesale level. However, the FERC has jurisdiction over only
a  small percentage of electric rates, and there is likely to  be
litigation  over whether wholesale stranded costs are "legitimate
and verifiable."

     In  addition to restructuring proposals being considered  by
regulatory  agencies, a number of bills have been  introduced  in
the  U.S. Congress to promote electric utility restructuring  and
deregulation of electric rates. These bills differ as to how  and
to what extent a utility's "stranded" or "transition" costs would
be  recoverable if current captive customers left  the  utility's
system. The existence of this legislation may increase the desire
of  utilities  to  renegotiate, buy out or attempt  to  terminate
existing  power  purchase agreements containing prices  that  the
utilities  believe  will  not  be  competitive  in  a  short-term
marginal  cost electric energy market. In addition,  if  electric
energy  prices  are deregulated, electric energy  producers  will
have  to  sell electric energy at competitive market prices.   In
Virginia, a restructuring bill has passed the two houses of state
legislature,  and has been sent to the governor, whose  signature
is required for such bill to become law

     State   Regulations.    State  public  utility   commissions
("PUCs") have broad authority to regulate both the rates  charged
by  and  financial  activities  of  electric  utilities,  and  to
promulgate regulations implementing PURPA. Since a power purchase
agreement  will become a part of a utility's cost structure  (and
therefore  generally  is reflected in its  retail  rates),  power
purchase   agreements  from  independent  power   producers   are
potentially   subject  to  the  regulatory   purview   of   PUCs,
particularly  the process by which the utility has  entered  into
the  power purchase agreements. If a PUC has approved the process
by which a utility secures its power supply, a PUC generally will
be  inclined  to allow a utility to "pass through"  the  expenses
associated  with an independent power contract to  the  utility's
retail  customers. Moreover, a federal court of appeals has  held
in   one   instance  that  a  PUC  may  not  disallow  the   full
reimbursement to a utility for the purchase of electricity from a
QF  once  the PUC has approved the rates as consistent  with  the
requirements of PURPA. See Freehold Cogeneration Assocs., L.P. v.
Board  of  Regulatory Comm'rs of New Jersey, 44  F.3d  1178  (3rd
Cir.), cert. denied sub nom., Jersey Central Power and Light  Co.
v.  Freehold Cogeneration Assocs., L.P., 116 S. Ct. 68 (1995). In
addition,  retail sales of electricity or thermal  energy  by  an
independent  power  producer may be subject  to  PUC  regulation,
depending on state law.

     Independent power producers that are not QFs under PURPA are
considered to be public utilities in many states and are  subject
to  broad  regulation by PUCs ranging from the  requirement  that
certificates of public convenience and necessity be  obtained  to
regulation  of  organizational, accounting, financial  and  other
corporate matters. However, sales of electricity at wholesale (as
are  currently  contemplated  by the Company  regarding  merchant
plants  which  it might develop in the U.S.) are subject  to  the
exclusive  regulatory  jurisdiction of  the  FERC.  In  addition,
states  may  assert jurisdiction over the siting and construction
of  such facilities, and over the issuance of securities and  the
sale or other transfer of assets by these facilities that are not
QFs.

     State  PUCs  also have jurisdiction over the  transportation
and  retail  sale of natural gas by local distribution companies.
Each state's regulatory laws are somewhat different; however, all
generally require a local distribution company to obtain approval
from  the  PUC to provide services and construct facilities.  The
rates  of  local  distribution companies are usually  subject  to
continuing oversight by the PUC.

     In  the  case  of  the Panda-Rosemary Facility,  the  Panda-
Rosemary Partnership is subject to a number of conditions imposed
by the North Carolina Utilities Commission ("NCUC") pursuant to a
Certificate   of  Public  Convenience  and  Necessity   ("CPCN"),
including  that  the  Panda-Rosemary Facility  and  the  Rosemary
Pipeline  both  be owned by the Panda-Rosemary Partnership,  that
the  Panda-Rosemary Partnership not transport gas for or sell  or
deliver  gas to any other entity, that all electricity  generated
at the Panda-Rosemary Facility be sold to an electric utility and
that  all  thermal energy produced at the Panda-Rosemary Facility
be sold only to the textile mill to which steam and chilled water
from  the  Panda-Rosemary Facility are currently  delivered.   On
February  18, 1997, The Bibb Company ("Bibb") announced  that  it
would   sell   the  textile  mill  to  WestPoint  Stevens,   Inc.
("WestPoint").  The closing of the sale was reported in the  news
media  on February 21, 1997.  If, in fact, Bibb is no longer  the
owner  of  the  textile mill, the Panda-Rosemary  Partnership  is
obligated  to notify the NCUC and VEPCO and the NCUC could  order
such   further  proceedings  as  it  deemed  appropriate,   which
proceedings  could  result  in revocation  of  the  CPCN  or  the
imposition of other conditions.

     Natural  Gas  Regulation.  The Company has an indirect  100%
interest  in  and  operates  two natural  gas-fired  cogeneration
projects in the United States, one of which is owned and  one  of
which is under a long term lease financing arrangement. The  cost
of  natural gas (other than debt costs) is ordinarily the largest
expense  of  a  gas-fired power project and is  critical  to  the
project's economics. The risks associated with using natural  gas
can  include the need to arrange transportation of the gas across
great  distances, including obtaining removal, export and  import
authority  if the gas is transported from Canada, the possibility
of  interruption  of  the  natural gas supply  or  transportation
(depending  on the quality of the natural gas reserves  purchased
or dedicated to the project, the financial and operating strength
of  the  gas supplier and whether firm or non-firm transportation
is  purchased), and obligations to take a minimum quantity of gas
or pay for it (take-or-pay obligations).

     Pursuant  to  the Natural Gas Act, the FERC has jurisdiction
over  the transportation and storage of natural gas in interstate
commerce.  With respect to most transactions that do not  involve
the construction of pipeline facilities, regulatory authorization
can  be  obtained on a self-implementing basis. However, pipeline
rates for such services are subject to continuing FERC oversight.
Order  No.  636, issued by the FERC in April 1992,  mandated  the
restructuring  of  interstate  natural  gas  pipeline  sales  and
transportation services. The restructuring required by  the  rule
includes (i) the separation ("unbundling") of a pipeline's  sales
and  transportation  services,  (ii)  the  implementation  of   a
straight  fixed-variable rate design methodology under which  all
of a pipeline's fixed costs are recovered through its reservation
charge,  (iii) the implementation of a capacity release mechanism
under  which holders of firm transportation capacity on pipelines
can  release that capacity for resale by the pipeline,  and  (iv)
the  opportunity for pipelines to recover 100% of their prudently
incurred  costs ("transition costs") associated with implementing
the restructuring mandated by the rule.

     Environmental  Regulations.  The  development,  construction
and  operation of power projects in the United States is  subject
to  extensive  federal,  state and  local  laws  and  regulations
adopted  for  the protection of the environment and  to  regulate
land use. The laws and regulations applicable to the Company  and
its  subsidiaries  primarily involve the discharge  of  emissions
into the water and air and the use of water, but can also include
wetlands  preservation, endangered species,  waste  disposal  and
noise  regulations.  These  laws and regulations  in  many  cases
require  a  lengthy  and complex process of  obtaining  licenses,
permits and approvals from federal, state and local agencies.

     Noncompliance  with environmental laws and  regulations  can
result in the imposition of civil or criminal fines or penalties.
In some instances, environmental laws also may impose clean-up or
other  remedial  obligations  in  the  event  of  a  release   of
pollutants  or  contaminants into the environment. The  following
federal  laws  are among the more significant environmental  laws
that  may apply to the Company and its domestic subsidiaries.  In
most  cases,  analogous  state laws also exist  that  may  impose
similar,  and in some cases more stringent, requirements  on  the
Company and its subsidiaries.

     Clean  Air Act.  The Federal Clean Air Act, as amended  (the
"Clean  Air  Act"), provides for the regulation, largely  through
state  implementation  of federal requirements,  of  ambient  air
quality  and emissions of air pollutants from certain  facilities
and  operations.  As originally enacted, the Clean  Air  Act  set
guidelines  for  emissions standards for major pollutants  (e.g.,
sulfur  dioxide  and nitrogen oxide) from new sources.  The  1990
Clean Air Act Amendments tightened regulations on emissions  from
existing  sources, particularly previously exempted  older  power
plants.

     Clean  Water Act.  The Federal Clean Water Act,  as  amended
(the  "Clean  Water  Act"),  also provides  for  the  regulation,
largely through state implementation of federal requirements,  of
the  quality  of  surface  waters  and  imposes  limitations   on
discharges to those waters from point sources, including  certain
facilities   and   operations.  The   water   quality   standards
established under the Clean Water Act are used as the  basis  for
developing  specific pollutant discharge limitations  from  point
sources. The discharge limitations are incorporated into  permits
called  National Pollutant Discharge Elimination System ("NPDES")
permits.  The  Clean  Water  Act also imposes  requirements  with
respect  to  the  discharge of stormwater runoff from  industrial
sites.   Those   requirements  are  implemented   through   state
stormwater discharge permits. The Clean Water Act also  restricts
discharges of fill materials to wetlands.

     Resource   Conservation  and  Recovery  Act.   The  Resource
Conservation  and  Recovery Act of 1976  ("RCRA")  regulates  the
generation,  treatment,  storage,  handling,  transportation  and
disposal of solid and hazardous waste.

     Comprehensive  Environmental  Response,  Compensation,   and
Liability   Act.    The  Comprehensive  Environmental   Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"  or
"Superfund"), requires the remediation of sites from which  there
has  been a release or threatened release of hazardous substances
and  authorizes the United States Environmental Protection Agency
to  take  any  necessary  response  action  at  Superfund  sites,
including ordering potentially responsible parties liable for the
release  to take or pay for such actions. Potentially Responsible
Parties  are  broadly defined under CERCLA to  include  past  and
present   owners  and  operators  of  such  sites,  as  well   as
generators, arrangers and transporters of wastes sent to a site.

  Regulation of the Electric Power Industry in the PRC

      General.   The PRC's electric power industry  is  regulated
primarily by the State Economic and Trade Commission ("SETC")  as
successor   to  the  Ministry  of  Electric  Power  ("MOEP")   in
conjunction with the State Planning Commission ("SPC") and  other
governmental agencies.  For foreign investments in electric power
projects  in  the  PRC,  such governmental agencies  include  the
Ministry  of Foreign Trade and Economic Cooperation  of  the  PRC
(the  "MOFTEC"),  the  SPC, the State Administration  of  Foreign
Exchange  ("SAFE"),  the  State Administration  of  Industry  and
Commerce  of  the  PRC (the "SAIC") and certain  other  agencies.
Certain  functions  formerly exercised  by  the  MOEP  have  been
transferred to the State Power Corporation of China ("SP")  which
was  formally approved in January 1997.  Pursuant to  resolutions
of the Ninth National People's Congress introduced in March 1998,
the  governmental  functions of the  MEOP  have  been  officially
transferred  to  the SETC and MOEP has been dissolved.   National
grid  management,  ownership of state-funded electric  generating
assets and development planning responsibilities will remain with
the SP.  The reorganization will be accomplished over a period of
time.   The  regulatory and approval authorities of  the  Central
Government  (herein  so called) agencies are delegated  to  local
provincial  or  city  governmental  agencies  performing  similar
functions  if the total amount of such foreign-invested  projects
does not exceed certain thresholds (denominated in U.S. dollars),
although  recent regulations promulgated by the MOEP (before  its
replacement  by SETC) would base approval authority  on  a  power
project's  unit  size.   However,  it  is  unclear  whether   the
provincial planning commissions and the SPC are bound by  or,  if
not, will follow these regulations.

     State  Economic  and Trade Commission.  As the  governmental
department responsible for the electric power industry, the  SETC
has  assumed responsibility previously exercised by the MOEP  and
is   responsible  for   formulating  development  strategies  and
policies  for  the electric power industry in the PRC,  including
investment,  technical,  and  major  production  and  consumption
policies.   In  addition to formulating electric  power  industry
planning  in  collaboration with the SPC and  other  governmental
agencies,  the  SETC  (i)  coordinates  the  development  of  the
electric  power  industry, (ii) supervises the implementation  of
related  national policies, decrees and plans and (iii)  provides
services to electric power enterprises.  The SETC shares  certain
of  its  administrative responsibilities with the  China  Nuclear
Industry  Corporation  and the Ministry of Water  Resources  with
respect   to   nuclear-powered  and   hydro-powered   electricity
generating  facilities,  respectively.   In  addition  to   these
regulatory and administrative functions, the SP is also in charge
of  the  overall  financial management  of  the  power  industry,
including  consolidating the profits and taxes and approving  the
budgets of all the regional power entities annually

      In  an  attempt  to separate the regulatory and  commercial
functions  of the electric power industry, the PRC State  Council
formally  approved the establishment of the SP in  January  1997.
The SP is a state-owned legal entity with funds provided directly
by  the  State Council (a body of the central government  of  the
PRC).  The  SP serves as the PRC's principal investor  in  and/or
operator  of  wholly or partially state-owned facilities  in  the
PRC.    It  also  is  responsible  for  the  operation   of   the
interregional  transmission facilities and the development  of  a
national power grid.  After the establishment of the SP, the MOEP
continued (and the SETC now continues) to exercise the regulatory
function  over  Chinese  electricity  industry,  but  the  MOEP's
enterprise management function and its function to operate  state
assets  were  turned  over to the SP.  As  part  of  the  reform,
provincial   power  bureaus  have  transferred  their  regulatory
functions to other departments of the local government  and  have
become subsidiaries of the SP.

     State  Administration  of Foreign  Exchange.   The  SAFE  is
responsible  for administration of foreign exchange in  the  PRC.
It formulates and oversees the implementation of foreign exchange
regulations   applicable   to  foreign   investment   enterprises
("FIEs").  The relevant approval authorities consult the SAFE  in
respect  of foreign exchange matters relating to FIEs.  The  SAFE
is  also  responsible  for administrating the  swap  centers  and
issuing permits to FIEs for access to the swap centers as well as
for monitoring the interbank system.

     Regional,  Provincial  and Local Power  Bureaus.   The  SETC
directly  oversees  the five interprovincial  power  groups  (the
"Regional Power Groups") and the eight independent provincial and
two  special  administrative  region power  bureaus  ("Provincial
Power Bureaus") in the PRC.  The Regional Power Groups (i) manage
their  respective regional power grids, (ii) dispatch  the  power
plants  connected  to  such grids either directly  or  indirectly
through lower level  power bureaus, and (iii) supervise the power
bureaus  at  lower  administrative levels.   The  Regional  Power
Groups also act through power companies which develop, construct,
own  and operate certain power plants and transmission facilities
within  their respective territories.  The key personnel  of  the
Regional  Power  Groups are appointed by the  SETC  and  the  key
personnel  of the Provincial Power Bureaus are appointed  by  the
provincial governments in consultation with the SETC.

      A similar structure exists for the Provincial Power Bureaus
under  the Regional Power Groups and the Provincial Power Bureaus
directly managed by the SP.  Each Provincial Power Bureau manages
its  provincial  power  grid  and  dispatches  the  power  plants
connected  to  such grid to meet local demand.   Many  Provincial
Power  Bureaus  also  act through power companies  which  operate
certain  power plants and certain transmission facilities  within
their  respective provinces.  Cities and counties directly  under
the  administration  of  the provinces  may  have  power  bureaus
(together with the Regional Power Groups and the Provincial Power
Bureaus,   the   "Power  Bureaus")  which  perform,   under   the
administration  of the Power Bureau at the next higher  level  of
government,    similar   functions   within   their    respective
jurisdictions.

     PRC  Electric  Power  Law.   Given  the  importance  of  the
continued  rapid  expansion  of the  PRC's  power  industry,  the
National  People's Congress adopted the Law of Electric Power  on
December 28, 1995 (the "Power Law").  The Power Law, which became
effective  on April 1, 1996, provides the legislative  basis  for
the  regulation  of China's electric power sector.   It  contains
guidelines  in areas such as the generation, supply  and  use  of
electric power, pricing and tariffs and regulatory supervision.

       Under   the  Power  Law,  the  appropriate  administrative
department of the State Council is authorized within the scope of
its authority to supervise the electric power industry throughout
the  country, and relevant departments of the State  Council  are
authorized  within  the  scope of their respective  authority  to
supervise  the electric power enterprises.  While electric  power
development planning will be carried out according to  the  needs
of  the  national economy, the Power Law also provides that  each
administrative department of the local government at or above the
county  level will be responsible for the supervision and control
of the electric power industry within its administrative region.

      The Power Law states that independent power companies shall
be  granted grid access upon their request, and provides that the
on-grid price of electricity shall be implemented on the basis of
"the  same  price for the same quality on  the same  grid."   The
Power  Law  lists the criteria to be applied in the determination
of  tariffs  as  including  reasonable  compensation  for  costs,
reasonable  profits, inclusion of taxes in accordance  with  law,
firm  adherence to the principle of equitable sharing of burdens,
and  promoting electric power constructions.  The law  delineates
the  approval process for on-grid tariffs and makes a distinction
between the approvals required for regional/provincial grids  but
such  approval  is  specifically required for independent  grids.
The  Power  Law reiterates the position of the Central Government
of  the  PRC that entities involved in the construction of  power
plants,  power  generation and grid operation are autonomous  and
assume sole responsibility for their own profits and loses.

     Rate Setting Mechanisms.  Rates for electricity produced  by
power  plants  that  the  SP directly or indirectly  manages  are
generally  set  by the Central Government, thus most  electricity
has  historically been purchased from power plants at such rates.
For  certain  power plants with local government,  China  Huaneng
Group  or foreign investment, such as the Luannan Facility, rates
are set on the basis of discussions between such power plants and
the relevant provincial pricing bureau.

     In  the  case  of power plants managed by the SP,  customers
purchase electricity from the Power Bureaus of each level of  the
administration  of  the PRC at rates determined  by  the  Central
Government  of the PRC, which vary according to the category  and
location  of  the  user. The rates set by the Central  Government
have traditionally been maintained at a low level, requiring  the
subsidization  of  the  electric power industry  by  the  Central
Government.  One  of  the  stated goals  of  the  Power  Law  (as
described above) is to reform power pricing to be consistent with
the  development of the market economy. Trial implementation  has
commenced  in  several  cities of a time-sharing  pricing  policy
which  charges consumers higher rates for peak load  periods  and
lower  rates  for  off-peak load periods. North China  Power  has
adopted  a  similar  program in its service  area.  Allowing  the
market  to  influence the setting of power rates is  intended  to
provide  incentives for greater efficiency in energy  production,
reduction  of  energy  use  per unit  of  industrial  output  and
promotion of conservation technologies.

     Transmission  and  Dispatch.   The  main  system   for   the
dispatch, transmission and distribution of electric power in  the
PRC  consists of the five interprovincial power grids managed  by
their  respective Regional Power Groups and the eight  provincial
and  two  autonomous region power grids managed by the Provincial
Power Bureaus.

     The  PRC's  energy  sources,  such  as  coal  and  potential
hydroelectric resources, are principally located in the  western,
northern  and central inland provinces, but its high  electricity
consumption  regions  are  located in the  eastern  and  southern
coastal areas. As a result of plans to develop large power plants
in  areas  with  significant  energy sources,  the  expansion  of
China's   electricity  transmission  capabilities  is  of   major
importance.  The PRC plans to interconnect the North China  Power
Grid with the Northeast Power Grid around 2000. In 2003, with the
expected  completion  of  the first phase  of  the  Three  Gorges
project,  the  Central  China  Power  Grid  is  expected  to   be
interconnected on the east with the East China Power Grid and  on
the  west  with the Sichuan Power Grid. A unified national  power
grid is planned for completion sometime between 2010 and 2020.

     All  electricity  produced in the PRC is dispatched  by  the
Power  Bureaus, except for that generated by units not  connected
to a grid. The grids and the electric power dispatch to each grid
are   administered  by  dispatch  centers  ("Dispatch   Centers")
operated  by  the  Power Bureaus. Prior to  November  1993,  such
electric  power  dispatch had been carried out pursuant  to  MOEP
guidelines.  In  order  to achieve more  efficient  and  rational
dispatch of electric power, the State Council issued, with effect
from  November 1, 1993, the Regulations on the Administration  of
Electric  Power  Dispatch to Networks and  Grids  (the  "Dispatch
Regulations"). The Dispatch Regulations are the first  nationwide
regulations in the PRC governing the dispatch of electric  power.
Under the Dispatch Regulations, Dispatch Centers were established
at  each  of  five  levels:  the National  Dispatch  Center,  the
Dispatch  Centers  of  the Regional Power  Groups,  the  Dispatch
Centers of the Provincial Power Bureaus, the Dispatch Centers  of
the  Power  Bureaus  of municipalities under  provinces  and  the
Dispatch  Centers  of the county Power Bureaus. Dispatch  Centers
are  charged with setting production levels for the various power
plants connected to the grid. To effect this determination,  each
power  plant  receives on a daily basis from its  local  Dispatch
Center an expected hour-by-hour output schedule for the following
day, based on expected demand, the weather and other factors.

     The  Dispatch Regulations provide that the Dispatch  Centers
must  dispatch  electric power according to, among other  things,
(i)  power supply agreements entered into between a Power  Bureau
and  certain large or primary electricity customers,  where  such
agreements  take into account the electric power  generation  and
consumption  plans formulated annually by the Central  Government
and  set  forth in the State Plan, (ii) agreements  entered  into
between  a  Dispatch Center and each power plant subject  to  its
dispatch, (iii) interconnection agreements between Power  Bureaus
and  (iv)  actual  conditions of the  grid,  including  equipment
capabilities and safety reserve margins.

  Regulation of Electric Power Industry in Nepal

     General.  The regulatory framework for private sector  power
generation in Nepal primarily is based on legislation enacted  by
its  Parliament in 1992 and 1993.  The legislation  provides  for
the  licensing of private parties to construct, own, and  operate
hydroelectric power projects for a time period of up to 50 years.
Projects  that are more than 50% owned by foreign companies  will
be   automatically  transferred,  without  compensation,  to  His
Majesty's  Government of Nepal ("HMGN"), after the expiration  of
the license.

     Nepal's  electric power industry is primarily  regulated  by
the  Ministry of Water Resources ("MOWR") in conjunction with the
NEA.   NEA  was established in 1985 as a commercial  entity  with
responsibilities for generation, transmission and distribution of
electricity throughout Nepal.  Decisions regarding the  operation
and management of the NEA were made, historically, without taking
into account considerations such as efficiency and profitability.
However,   NEA's  overall  operating  performance  and  financial
position  recently have improved following tariff  increases  and
technical  assistance  from  various multinational  institutions,
including the World Bank.

     Tariff  rates are subject to regulation.  In August 1994,  a
newly   implemented  Tariff  Fixation  Committee  ("TFC"),  which
includes  representatives from HMGN and consumers  and  which  is
responsible  for  setting electricity tariffs in accordance  with
certain financial covenants, became operational.

      The  Ministry of Water Resources has the authority to issue
licenses  for  plant construction, water rights  and  to  provide
financial guarantees.  All hydroelectric projects with a capacity
of  greater  than 1,000 kilowatts require a license.  Within  the
Ministry,   the   Hydroelectricity  Development   Unit   of   the
Electricity  Development Center (the "EDC") promotes the  private
sector's participation in the industry, approves projects with  a
capacity  of  more than 1,000 killowatts, and provides  necessary
assistance to the private sector in the startup and operation  of
projects.   The  EDC also may arrange for economic incentives  to
private participants, including tax concessions and assistance in
importing   goods,   obtaining  land  and   obtaining   necessary
government authorizations.

      Transmission  System.   The transmission  system  in  Nepal
consists   of   33  kilovolt,  66  kilovolt  and   132   kilovolt
transmission  lines.   The 132 kilovolt, single-circuited  1,178-
mile  Integrated  Nepal  Electric Power System  is  Nepal's  most
extensive  transmission  mechanism, and is  connected  to  India.
Nepal also has a 33 kilovolt, single-circuit system that measures
1,216  kilometers; a 66 kilovolt, single-circuit  system  of  179
kilometers;   a   66  kilovolt  double-circuit  system   of   153
kilometers;  and  a  132 kilovolt, double-circuit  system  of  27
kilometers.  Under the applicable project agreements, the NEA has
the  responsibility of building a 48 kilometer transmission  line
connecting the Nepal Facility to an NEA substation.

     Foreign  Exchange.   The  Ministry of  Finance  has  primary
responsibility for the regulation of foreign exchange  in  Nepal.
Nepal  increased its foreign exchange reserves from approximately
US$  270  million  in  the early 1980s to approximately  US$  600
million  in  1996.  The Nepalese rupee exchange  rate  is  pegged
against  the  Indian rupee - a reflection of the high  degree  of
integration between the two economies.

  Foreign Environmental Regulations

      General.   The Company and its subsidiaries have  ownership
interests  in  power plants under construction  in  the  PRC  and
Nepal.  Each  of these countries and the localities therein  have
separate  laws and regulations governing the siting,  permitting,
ownership  and power sales from the Company's plants. These  laws
and regulations are often quite different than those in effect in
the United States.

       Based   on  current  trends,  the  Company  expects   that
environmental and land use regulations affecting its plants under
construction  outside the U.S. will likely become more  stringent
over  time.   This  appears  to be  due  in  part  to  a  greater
participation   by   local  citizenry  in  the   monitoring   and
enforcement   of   environmental  laws,  better  enforcement   of
applicable environmental laws by the regulatory agencies, and the
adoption  of  more sophisticated environmental requirements.   If
foreign environmental and land use regulations were to change  in
the  future,  the  Company may be required  to  make  significant
capital or other expenditures in order to comply.  There  can  be
no assurance that the Company would be able to recover all or any
increased   costs  from  its  customers  or  that  its  business,
financial  condition  or  results  of  operations  would  not  be
materially  and adversely affected by future changes  in  foreign
environmental and land use regulations.

     PRC  Environmental  Regulations.  The  Luannan  Facility  is
subject  to various PRC environmental laws and regulations  which
are  administered by both Central Government of the PRC and local
government environmental protection bureaus.  Approval or  review
by  the relevant environmental protection bureaus is required  at
each  of  the  project proposal, feasibility  study,  design  and
commissioning  stages of a project.  Filing of  an  environmental
impact  statement  or,  in  some cases, an  environmental  impact
assessment outline is required before the planning commission for
the  same level of government can issue its approval.  The filing
must   demonstrate  that  the  project  conforms  to   applicable
environmental  standards.  Approvals and permits  generally  have
been  issued  for  projects  utilizing modern  pollution  control
technology.  Pollution sources are also required to report  their
pollution  discharges in terms of types and amounts of pollutants
discharged  into  the  water and air,  and  to  secure  discharge
permits  for their wastewater discharges, airborne emissions  and
solid   waste  shipments  to  ensure  compliance  with   relevant
emissions standards.

     The  PRC's  environmental  laws  and  regulations  establish
standards for the discharge of emissions into the air and  water.
The  rules set forth schedules of base-level discharge  fees  for
various polluting substances and specify that, if such levels are
exceeded, the polluting entity will be required to pay an  excess
discharge  fee  to the local government.  The local environmental
rules  do  not  make it a violation to exceed these  limits,  but
rather  set  forth  a set of graduated scale  of  fees  that  are
required for each incremental unit of excess discharge.  Up to  a
certain level, as the discharge levels increase, the fee per unit
also  increases.   Above a certain limit, local  governments  may
issue  orders to cease or reduce such discharge levels which,  if
not  complied with, will after three years from the date  of  the
order,  result in an annual increase of 5% in the pollution  fees
assessed.   Where pollution is causing environmental damage,  the
local  governments  also  have  the  authority  to  issue  orders
requiring  the  polluting entities to cure the problem  within  a
certain period of time.

     MOEP   previously   established  technical   standards   for
environmental  monitoring  and  exercises  certain   disciplinary
functions  with regard to environmental compliance in  connection
with   the   construction   and  operation   of   power   plants.
Environmental  protection equipment is required to  be  designed,
installed   and   commissioned  in  tandem   with   the   design,
construction and commissioning of the generator or plant.  Before
commencing operations, each plant or generator must be tested and
qualified   with  regard  to  emissions  levels   and   abatement
equipment.

     Nepal  Environmental  Regulations   The  Nepal  Facility  is
subject  to certain environmental laws and regulations which  are
administered  by  HMGN.   For example, the  Environmental  Impact
Assessment  Guidelines for the Forestry Sector, 1995, applies  to
the Company's construction efforts in Nepal.  Among other things,
an  independent  environmental  impact  assessment  was  required
pursuant  thereto,  as well as other ongoing compliance  actions.
In addition, the Nepal Facility is subject to the Water Resources
Act,  which  establishes certain pollution tolerance  limits  for
water resources as well as quality standards for various uses  of
water resources.  As part of the financing of the Nepal Facility,
the  Company  is required to comply with World Bank environmental
standards.

Employees

      At  December 31, 1997, the Company and its subsidiaries had
no employees.

      Robert  W. Carter is Chairman of the Board, Chief Executive
Officer  and  also  a director of the Company. Janice  Carter  is
Executive Vice President, Secretary and Treasurer of the Company,
and  is  married  to  Robert  W. Carter.   Otherwise,  no  family
relationships exist among the directors and executive officers of
the Company.

     All  executive officers of the Company are elected  annually
by  the  Board  of  Directors of the Company  to  serve  in  such
capacities until their successors are duly elected and qualified.

Item 2.   Properties.

      The information regarding the properties of the Company  is
set  forth  under  Item 1.  Business above and in  the  Notes  to
Consolidated  Financial Statements included in  Part  II  hereof.
The  Company's  principal office, located at 4100 Spring  Valley,
Suite  1001, Dallas, Texas  75244, is leased by PEII, which lease
expires May 2001.

Item 3.   Legal Proceedings.

     The  Company  is  not  a  party to  any  legal  proceedings.
However, affiliates of the Company are claimants or defendants in
various  legal  proceedings which have  arisen  in  the  ordinary
course  of business.  The Company believes such claims and  legal
actions,  individually  or  in the aggregate,  will  not  have  a
material  adverse effect on the business, financial condition  of
results of operations of the Company and its subsidiaries,  taken
as a whole.

NNW, Inc. Proceeding

     On  July 12, 1996, Panda Energy Corporation, a subsidiary of
the  Company  ("PEC"), filed an action against NNW, Inc.  ("NNW")
captioned  Panda  Energy  Corporation v.  NNW,  Inc.  f/k/a  Nova
Northwest Inc. (No. 96-07151-C), in the District Court of  Dallas
County,  Texas (68th Judicial District). PEC's petition sought  a
declaratory  judgment  that  the NNW's  cash  flow  participation
rights in PEC's credit agreement with NNW remain at 0.433%  after
the  restructuring  of  the Panda-Rosemary  Partnership  interest
pursuant  to  the terms of such credit agreement  with  NNW.  The
parties  settled  this dispute in December  1997  pursuant  to  a
settlement agreement and mutual release of claims, the  terms  of
which  are  maintained as confidential pursuant to the provisions
of  such agreement.  PEC does not believe that the terms of  this
settlement  agreement and mutual release of claims  will  have  a
material  adverse effect on the business, financial condition  or
results  of  operations of PEC and its subsidiaries, taken  as  a
whole, or the Company and its subsidiaries, taken as a whole.

Heard Proceedings

     PEC   is  a  party  to  a  lawsuit  captioned  Panda  Energy
Corporation, Plaintiff v. Heard Energy Corporation, CLF Energia Y
Electricidad,  S.A.,  Robert A. Wolf, Armin Alexander  Budzinsky,
Edward  R.  Gwynn, Donald L. Kinney, Morgan Stanley & Co.,  Inc.,
Allstate  Insurance  Company, Allstate  Life  Insurance  Company,
Entergy  Corporation, Entergy Enterprises, Inc.,  Entergy  Power,
Inc., Entergy Power Development Corporation, Anil Desai, Drs. IR.
Poerwanto  P.,  and PT Panca Serodja Pradhana,  Defendants,  (No.
94-0672-J),  District  Court  of  Dallas  County,  Texas   (191st
Judicial  District). PEC initiated this litigation in April  1994
and  alleges that defendants Wolf, Gwynn and Kinney,  former  PEC
employees,  formed a competing company (Heard Energy Corporation)
and  misappropriated certain of PEC's international power project
opportunities.  PEC  alleges that the other defendants  knowingly
participated,    collaborated    and/or    conspired    in    the
misappropriation.   PEC   alleges   causes    of    action    for
misappropriation, conspiracy, fraud, breach of  contract,  breach
of  fiduciary duty and legal malpractice against one or  more  of
the defendants and alleges damages in an unspecified amount.

     Defendant  Morgan Stanley filed a counterclaim on  September
14, 1995 against PEC, alleging that it had performed services for
PEC   pursuant  to  an  engagement  agreement  relating  to   the
Brandywine  Project. PEC terminated the engagement  agreement  on
May  4,  1993.  Morgan  Stanley  alleges  that  the  services  it
performed  prior  to such termination included assisting  PEC  in
obtaining  certain  regulatory  approvals,  preparing   a   draft
solicitation booklet and identifying potential project  financing
sources,  including  GE Capital. Morgan Stanley  further  alleges
that  PEC obtained financing from GE Capital after Morgan Stanley
was  terminated,  and  that  Morgan  Stanley  is  entitled  to  a
"transaction fee," either pursuant to the engagement agreement or
based on the value of the services it allegedly performed, in  an
amount  of not less than $4.3 million, plus attorneys'  fees  and
interest.

     Defendants Heard Energy Corporation, Wolf, Gwynn, Kinney and
Budzinsky  (the  "Heard Defendants") also  filed  a  counterclaim
during  November 1994 against PEC and a third-party claim against
Robert Carter and Janice Carter, alleging that PEC, Robert Carter
and  Janice Carter negligently made misrepresentations  of  PEC's
lack  of  a continued interest in developing international  power
projects.  The Heard Defendants allege that they would  not  have
engaged   in  allegedly  competing  international  power  project
transactions  but  for  these misrepresentations  and  that  they
incurred damages in the amount of approximately $5.0 million as a
result   of  these  misrepresentations,  such  damages  allegedly
consisting  of  expenses  incurred by Heard  Energy  Corporation,
certain  portions  of  which  allegedly  are  guaranteed  by  the
individual  Heard  Defendants. In both the counterclaim  and  the
third-party claim, the Heard Defendants further allege that  PEC,
Robert Carter and Janice Carter violated a confidentiality  order
relating  to  certain documents produced by the Heard  Defendants
during  the  discovery phase of this action  by  misappropriating
confidential  information in these documents for the  purpose  of
gaining  a  competitive advantage over Heard Energy  Corporation.
The  Heard  Defendants seek $5.0 million in damages  as  well  as
unspecified "exemplary" damages based on this alleged  violation.
PEC believes that the Heard Defendants' discovery order claim  is
not actionable as a claim for damages.

     On  March 15, 1996, all of the defendants filed motions  for
summary judgment, and PEC filed motions for summary judgment with
respect   to   Morgan  Stanley's  counterclaim  and   the   Heard
Defendants'  counterclaim and third-party claim. By letter  dated
April 30, 1996, the court advised all counsel that it intended to
grant  the  defendants' motions for summary judgment,  indicating
that PEC could not show legally sufficient evidence of damages to
sustain its claims. This order was entered on June 19, 1996.

     PEC has appealed the court's ruling. In light of the court's
ruling  and  pending  the appeal, Morgan Stanley  and  the  Heard
Defendants  have dismissed without prejudice their  counterclaims
and  third-party claims, and PEC has agreed that  any  applicable
statutes  of  limitations or other time-based  defenses  will  be
tolled during the pendency of the appeal.

     The  Company  has  been informed by PEC that  PEC  does  not
believe that either the Morgan Stanley counterclaim or the  Heard
Defendants' counterclaims and third-party claims will be  refiled
unless  and  until the judgment dismissing PEC's  claims  against
those parties is reversed and remanded to the trial court by  the
appellate  court. In any event, PEC does not believe  that  these
counterclaims  or  third-party claims, if  reasserted,  have  any
merit,  nor  does  PEC believe that these claims,  if  eventually
decided adversely to PEC, would have a material adverse effect on
the business, financial condition or results of operations of PEC
and  its  subsidiaries, taken as a whole, or the Company and  its
subsidiaries, taken as a whole.

Brandywine Proceeding

     On  June 26, 1996, certain plaintiffs commenced a proceeding
against   the  Panda-Brandywine  Partnership  and  one   of   its
contractors (as well as other subcontractors) captioned  Jeannine
McConnell, McConnell Pool Service, Inc. and McConnell  Fuel  Oil,
Inc. v. Panda-Brandywine, L.P. and Flippo Construction (Case  No.
CV 96-1344) in the Circuit Court for Charles County, Maryland. In
this  proceeding, plaintiffs allege that in connection  with  the
construction of an effluent water pipeline, a contractor for  the
Panda-Brandywine Partnership, Flippo Construction ("Flippo") (and
its  subcontractors)  and the Panda-Brandywine  Partnership  left
their  easement  and inadvertently trespassed on  to  plaintiffs'
property.  While  on  plaintiffs'  property,  Flippo   (and   its
subcontractors)  and  the Panda-Brandywine Partnership  allegedly
dug  a  deep  and  wide hole which extended onto the  plaintiff's
property  to  locate a buried pipe. Plaintiffs allege  that  this
trespass  damaged the property, decreased its fair  market  value
and resulted in loss of use thereof. Plaintiffs claim damages  in
numerous counts that aggregate to $3.25 million in actual damages
against  each  defendant plus punitive damages  aggregating  $3.0
million against all defendants.

     The   Panda-Brandywine  Partnership  intends  to  vigorously
contest  this proceeding. The Company does not believe  that  the
outcome of this proceeding will have any material adverse  effect
on  the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, or the Panda-
Brandywine  Partnership. In the opinion of  the  Panda-Brandywine
Partnership  and  the Company, the contract  between  the  Panda-
Brandywine  Partnership and Flippo requires Flippo  to  hold  the
Panda-Brandywine Partnership harmless for any activities relating
to the plaintiffs' property.

Florida Power Proceedings

     In  January  1995,  Florida  Power  Corporation,  a  Florida
corporation ("Florida Power"), commenced a proceeding before  the
Florida  Public  Service Commission ("Florida PSC")  against  the
Kathleen  Partnership, an affiliate of the Company, captioned  In
re:  Petition for Declaratory Statement Regarding Eligibility for
Standard  Offer Contract and Payment Thereunder by Florida  Power
Corporation, Case No. 950110-EI. Florida Power's petition  sought
a  declaratory statement that a power purchase agreement  between
Panda-Kathleen, L.P., an affiliate of the Company (the  "Kathleen
Partnership") and Florida Power, is not available to the Kathleen
Partnership   because   the   Kathleen   Partnership's   proposed
cogeneration  facility allegedly is not in  compliance  with  the
Florida PSC's rules (because it may be capable of exceeding 75 MW
in  electric generating capacity). Additionally, if the  contract
is  "available" to the Kathleen Partnership, Florida Power sought
a declaratory statement that it is only obligated to pay capacity
payments  under  the  power purchase agreement  relating  to  the
Kathleen  Facility  for a term of 20 years rather  than  for  the
entire 30-year term of the power purchase agreement. The Kathleen
Partnership   filed  a  cross-petition  seeking   a   declaratory
statement  that  the  milestone  dates  in  the  power   purchase
agreement  must  be  extended  due to  Florida  Power's  improper
actions  and as a result of the delays in developing the Kathleen
Facility  caused  by  Florida Power's petition  and  the  ensuing
proceeding before the Florida PSC. The Kathleen Partnership filed
a motion to dismiss the proceeding based on lack of jurisdiction,
but  that  motion was denied by the Florida PSC. In  February  of
1996, the Florida PSC held a one-day hearing.

     On  May 20, 1996, the Florida PSC issued a decision granting
Florida  Power's  petition, and holding that the  power  purchase
agreement  is not available to the Kathleen Facility as  proposed
because it has an electric generating capacity in excess of 75 MW
and  that  Florida  Power  is  only obligated  to  make  capacity
payments  under the power purchase agreement for  20  years.  The
Florida  PSC's  decision also granted the Kathleen  Partnership's
cross-petition  insofar as it grants the Kathleen Partnership  an
18-month   extension   to  meet  the  construction   commencement
milestone  date and an 18-month extension to meet the  commercial
operation  milestone date. The Kathleen Partnership has  appealed
the  Florida  PSC's order to the Florida Supreme  Court  and  the
Florida   Supreme  Court  upheld  the  decision.   The   Kathleen
Partnership filed a Writ of Certiorari with the Supreme Court  of
the United States regarding this matter in February, 1998.

     There  are two actions related to this matter pending before
the  Florida  Supreme Court and the United States District  Court
for the Middle District of Florida.  The Company does not believe
that an adverse result in this case would have a material adverse
effect  on  the  business,  financial  condition  or  results  of
operations of the Company and its subsidiaries, taken as a whole,
or the Company and its subsidiaries, taken as a whole.
National Development and Research Corporation Proceeding

      On  October  14,  1997,  Panda Global  Energy  Company,  an
affiliate of the Company ("PGE"), commenced a proceeding  in  the
District   Court  of  Dallas  County,  101st  Judicial   District
captioned Panda Global Energy Company v. National Development and
Research  Corporation  and Robert E. Tang,  Case  No.  97-9315-E.
PGE's  petition sought a declaratory judgment for the termination
of  various  agreements between PGE and National Development  and
Research  Corporation ("NDR") regarding the development of  power
projects  in the PRC.  On December 9, 1997 NDR filed  a  counter-
claim  against  PGE  and Robert W. Carter asserting  that,  among
other things, such agreements are still in effect and that NDR is
entitled   to  certain  payments  thereunder.   This   proceeding
currently  is  in  the  discovery stage.  The  Company  does  not
believe  that an adverse result in this proceeding would  have  a
material  adverse effect on the business, financial condition  or
results  of  operations of PGE and its subsidiaries, taken  as  a
whole, or the Company and its subsidiaries, taken as a whole.

Item 4.   Submission of Matters to a Vote of Security Holders.

      No  matters  were  submitted to a vote of security  holders
during  the  fourth  quarter of the Company's fiscal  year  ended
December 31, 1997.

                             PART II

Item 5.   Market for the Registrant's Common Stock and Related
Security Holder Matters.

There  is  no established market for the Company's Common  Stock,
$.01  par value, all of which is owned by PEII.  The Company  has
not  paid cash dividends on shares of its capital stock since its
inception. The indenture governing the Company's Guarantee of the
12 1/2% Senior Secured Notes due 2004 of Panda Global Energy Company
imposes  certain restrictions on the Company's ability to declare
or  pay cash dividends to PEII and make certain distributions  on
its capital stock.  See "Management's Discussion and Analysis  of
Financial  Condition and Results of Operations  -  Liquidity  and
Capital Resources."

     Item 6.   Selected Financial Data.

                     SELECTED FINANCIAL DATA
                  (in thousands, except ratios)
     Presented below are selected consolidated financial data for
the  Company  as  of and for each of the years in  the  five-year
period ended December 31, 1997, which have been derived from  the
Company's  financial  statements.  The  selected  financial  data
should  be  read  in  conjunction with the information  contained
under  the  caption  "Management's  Discussion  and  Analysis  of
Financial   Condition   and  Results  of  Operations"   and   the
consolidated  financial statements of the Company, including  the
notes thereto, included elsewhere herein.

<TABLE>
<CAPTION>
                                           Year Ended December 31,
                             1993        1994        1995           1996        1997
   <S>                      <C>         <C>         <C>          <C>         <C>
 Revenue:
 Electric capacity and      $ 29,856    $ 30,664    $ 29,859     $ 32,274    $ 65,005
 energy sales:
 Steam and chilled water         618         650         473          502         624
 sales
 Interest income                 365         603         895        1,518       8,050
                            --------    --------    --------     --------    --------
 Total revenue                30,839      31,917      31,227       34,294      73,679

 Expenses:
 Plant operating               7,676       8,940       9,348       12,050      26,245
 expenses
 Development and               2,434       1,779       2,550        5,187      11,580
 administrative expenses
 Interest expense             11,066      11,018      11,716       19,414      55,329
 Depreciation                  4,282       4,208       4,210        5,532      11,575
 Amortization - Debt             502         600         554          494       1,418
 issuance costs
 Amortization -                  533         533         533          533           -
 Partnership formation
 costs
                            --------    --------    --------     --------    --------
   Total expenses             26,493      27,078      28,911       43,210     106,147
                            ========    ========    ========     ========    ========
 Income (loss) before
 taxes and minority            4,346       4,839       2,316      (8,916)    (32,468)
  interest
 Minority interest           (5,474)     (5,700)     (5,048)      (2,405)           -
 Provision for income             -           -           -            -           -
 taxes
                           --------    --------    --------     --------    --------
Income (loss) before        (1,128)       (861)     (2,732)     (11,321)    (32,468)
 extraordinary items
 Extraordinary loss,             -           -           -      (21,336)          -
 net(1)
                           --------    --------    --------     --------    --------
  Net loss                 $(1,128)      $(861)    $(2,732)    $(32,657)   $(32,468)
                           ========    ========    ========     ========    ========
 Other Data:
 Ratio of earnings to       1.38x       1.32x         (2)          (2)         (2)
 fixed charges(2)

 <CAPTION>                                         December 31,
                               1993       1994     1995            1996        1997
<S>                        <C>         <C>         <C>          <C>        <C>
 Balance Sheet Data:
 Cash and other current
 assets                     $14,084     $15,639     $11,339      $36,626    $112,067
 Power plant and
 equipment (net)             93,815      96,136     220,145      268,725     293,008
 Reserves and escrow
 deposits, and other
 assets                      15,650      15,477      15,471       40,119      86,807
                           --------    --------    --------     --------    --------
  Total assets             $123,549    $127,252    $246,955     $345,470    $491,882
                           ========    ========    ========     ========    ========

 Current liabilities        $11,252     $12,531     $18,457      $19,667     $25,994
 Deferred revenue                --          --          --           --      13,140
 Long-term debt
 (including capital lease
 obligation), less
 current portion             98,454     106,343     234,608      427,319     580,947
 Minority interest           34,479      35,588      36,836            -       5,741
 Shareholder's deficit     (20,636)    (27,210)    (42,946)    (101,516)   (133,940)
                           --------    --------    --------     --------    --------
 Total liabilities and
 shareholder's deficit     $123,549    $127,252    $246,955     $345,470    $491,882
                           ========    ========    ========     ========    ========

</TABLE>

Notes (in thousands):
(1)   In  1996,  there  was  an  extraordinary  loss  from  early
  extinguishment of debt of $21,336.
(2)   For  purposes of computing the ratio of earnings  to  fixed
charges,   earnings  represent  income  (loss)  before   minority
interest,  taxes  and  extraordinary  items  plus  fixed  charges
exclusive  of  capitalized  interest. Fixed  charges  consist  of
interest expense, capitalized interest and amortization  of  debt
issuance costs. Earnings were insufficient to cover fixed charges
in  1995 by $3,477, in 1996 by $19,971 and in 1997 by $34,525. In
1994,  1995,  1996  and 1997, fixed charges included  capitalized
interest of $803, $5,793, $11,055 and $2,057, respectively.

Item 7.   Management's Discussion and Analysis of Financial
Condition and Results of Operations.

Management's Discussion and Analysis of Financial Condition and
Results of Operations

     (Dollar amounts are in thousands unless otherwise noted)

General

      The  Company  owns 100% equity interests in  two  completed
electric  power generation facilities in the United  States:  the
Rosemary  Facility, which began commercial operations in December
1990,   and  the  Brandywine  Facility,  which  began  commercial
operations in October 1996.  Prior to July 31, 1996, the  Company
owned  a  10%  equity  interest in the  Rosemary  Facility.   The
Company also owns an approximately 83% indirect interest  in  the
Luannan  Project  in  China, for which  preliminary  construction
activity   commenced  in  December  1996  and  full  construction
activity   commenced  following  the  successful  completion   of
financing  in  April  1997.  Additionally, the  Company  owns  an
indirect  equity  interest in the Nepal  Project,  financing  for
which was completed in December 1997.

Results of Operations

      The  Company's revenues from electric power generation  are
derived  from  long-term contracts which  include  both  a  fixed
capacity  payment  and a variable energy payment.   The  capacity
payments,  which  are based upon the specified  power  generating
capacity of a project, are designed to cover fixed costs  and  to
provide  an  acceptable return on equity.  The  energy  payments,
which  are  based on actual electricity output, are  designed  to
cover  variable costs including fuel costs and variable operating
expenses   incurred   in  connection  with  electricity   output.
Accordingly, the impact of price fluctuations on the  results  of
operations  is  generally not material.  The extent  to  which  a
facility  is  dispatched (i.e., required to deliver electricity),
and  therefore the actual electricity output for a given  period,
are  subject  to  the  discretion of the  power  purchaser,  with
certain  limitations.  The capacity payments are the  predominant
source  of  revenue  for  the  Company.   The  Company  currently
believes that it can meet its liquidity requirements solely  from
the  capacity payments in the unlikely event that its  facilities
are not dispatched at all.  See "Liquidity and Capital Resources.

     1997 compared to 1996


      The  Company  incurred a net loss of  $32,468  in  1997  on
revenues  of  $73,679  compared to net loss before  extraordinary
item of $11,321 on revenues of $34,294 during 1996.  The increase
in  revenues  in 1997 was primarily caused by operations  of  the
Brandywine  Facility (which commenced operations on  October  31,
1996)  and  by increased interest income, partially offset  by  a
decrease  in revenues at the Rosemary Facility. The 1997  results
include   operations   of  both  the  Rosemary   and   Brandywine
facilities,  whereas the 1996 results include operations  of  the
Rosemary Facility for a full year and the Brandywine Facility for
the  final  two  months  of  1996. For 1997  and  1996,  capacity
revenues  for  the  Rosemary Facility were $25,361  and  $27,204,
respectively, reflecting a contractual decrease of $1,843. Energy
revenues for the Rosemary Facility for 1997 and 1996  were $2,355
and  $2,011,  respectively.  The increase in energy revenues  for
the Rosemary Facility is attributable to higher dispatch hours at
that  facility  compared  to  1996.  During  1997,  the  Rosemary
Facility  was  dispatched 743 hours as compared to 636  hours  in
1996.    Capacity  revenues  and  energy  revenues  from  Potomac
Electric Power Company ("PEPCO") for the Brandywine Facility  for
1997  were  $21,612  and $11,905, respectively.   The  Brandywine
Facility  was  dispatched  3,552  hours  during  1997.   Capacity
revenues  for  the Brandywine Facility for 1997 were  lower  than
originally anticipated due to a disagreement with PEPCO over  the
calculation of the capacity payments.  As discussed in Note 9  to
the consolidated financial statements, the Company and PEPCO have
reached  a  tentative  agreement  under  which  PEPCO  will   pay
approximately  $3.8  million to the Company for  the  retroactive
effect  of higher capacity payments for the first nine months  of
1997.   In  October  1997,  PEPCO  commenced  increased  capacity
payments  to  the  Company  under  the  terms  of  the  tentative
agreement.   The  agreement is subject  to  the  consent  of  the
financing parties.  Additionally, the Company had energy revenues
of  $3,771  from the sale of natural gas and fuel  oil  to  other
purchasers in the 1997.  Plant operating expenses, which included
fuel  cost,  operation  and maintenance  expense,  insurance  and
property taxes, increased to $26,245 (36% of revenues)  in   1997
from  $12,050  (35%  of  revenues)  in  1996,  primarily  due  to
commencement of operations at the Brandywine Facility  and  lower
margins obtained on the sale of natural gas and fuel oil to other
purchasers.   Additionally,  the 1996  plant  operating  expenses
included  approximately  $700 for the  insurance  deductible  and
other non-covered costs relating to hurricane damage sustained in
September 1996 at the Rosemary Facility.

     Project development and administrative expenses were $11,580
(16% of revenues) and $5,187 (15% of revenues) for 1997 and 1996,
respectively.  The increase in 1997 was primarily attributable to
additional  administrative activities related to the commencement
of  commercial operations at the Brandywine Facility  and  higher
administrative costs required to support the increased  size  and
complexity of the Company's operations.

      Interest expense increased to $55,329 (75% of revenues)  in
1997   from $19,414 (57% of revenues) in 1996 as a result of  the
increase in outstanding indebtedness from the issuance of  $111.4
million original principal amount of first mortgage bonds for the
Rosemary   Facility  (the  "Rosemary  Bonds"),   $105.5   million
original  principal  amount of pooled project  bonds  ("Series  A
Bonds"),  the capital lease financing for the Brandywine Facility
and  $145.0 million discounted principal amount of Senior Secured
Notes  issued  in  April  1997 for the Luannan  Facility.     The
impact  of  such  new indebtedness was partially  offset  by  the
refinancing of the taxable revenue bonds issued in 1989  for  the
Rosemary  Facility and the repayment of other term loan financing
on  July  31, 1996 from portions of the proceeds of the  Rosemary
Bonds and the Series A Bonds.

       Depreciation,  amortization  of  debt  issue   costs   and
amortization of partnership formation costs amounted  to  $12,993
(18%  of revenues) in  1997 and $6,559 (19% of revenues) in 1996.
The  increase was primarily attributable to depreciation for  the
Brandywine Facility in 1997.

     For 1996, minority interest in net income was $2,405.  There
is  no minority interest in 1997 due to the Company's acquisition
on  July  31,  1996  of  the minority interest  holder's  limited
partnership  interest in Panda-Rosemary.  As  a  result  of  this
acquisition, the Company owns 100% of Panda-Rosemary.

      For  1996,  the Company incurred an extraordinary  loss  on
early  extinguishment  of debt of $21,336  as  a  result  of  the
refinancing of the taxable revenue bonds issued in 1989  for  the
Rosemary  Facility and the repayment of other term loan financing
on  July  31, 1996 from portions of the proceeds of the  Rosemary
Bonds and the Series A Bonds.

      As  a  result of the various factors discussed  above,  the
Company  incurred net losses of $32,468 and $32,657 for 1997  and
1996,  respectively.

     1996 compared to 1995

     The Company incurred a net loss before extraordinary item of
$11,321 in 1996 on revenues of $34,294, compared to a net loss of
$2,732  on  revenues  of $31,227 in 1995.  The  10%  increase  in
revenues  was primarily caused by the commencement of  commercial
operations at the Brandywine Facility on October 31, 1996 and  by
increased interest income.  For 1996 and 1995, capacity  revenues
were $27,204 in both periods and energy revenues were $5,070  and
$2,655,  respectively.   Capacity  revenues  for  the  Brandywine
Facility   commenced  in  January  1997;  accordingly,   capacity
revenues  for 1996 and 1995 relate only to the Rosemary Facility.
The increase in energy revenues is attributable to operations  of
the  Brandywine  Facility  for  the  last  two  months  of  1996,
partially offset by a decrease in energy revenues at the Rosemary
Facility  which  resulted  from  lower  dispatch  hours  at  that
facility  compared  to 1995.  During 1996, the Rosemary  Facility
was  dispatched  635 hours as compared to 2,224  hours  in  1995,
resulting in a decrease in energy revenues from that facility  of
$644.   (The  number  of dispatched hours in 1995  was  unusually
high,  as  explained  below.)  Plant  operating  expenses,  which
included  fuel cost, operation and maintenance expense, insurance
and  property  taxes related to the Rosemary  Facility  (and  the
Brandywine Facility commencing October 31, 1996), increased  from
$9,348  (30%  of revenues) in 1995 to $12,050 (35%  of  revenues)
during the same period in 1996, primarily due to the inclusion of
the costs of operating the Brandywine Facility for two months  in
1996.    Because  the  Brandywine  Facility  earned  no  capacity
revenues  during its period of operation in 1996, plant operating
expenses (and all other categories of expenses) were higher  than
normal as a percentage of revenues.  Another significant cause of
the   increased  plant  operating  expenses  was  the   insurance
deductible  and  other  non-covered costs of  approximately  $700
relating to hurricane damage sustained in September 1996  at  the
Rosemary Facility as discussed below.  Other factors contributing
to  the  increase  in plant operating expenses  at  the  Rosemary
Facility included additional scheduled maintenance  costs and the
fuel  cost  increases  relating to  increased  operation  of  the
auxiliary boiler for steam and chilled water production.

     Project development and administrative expenses were  $2,550
(8%  of revenues) and $5,187 (15% of revenues) for 1995 and 1996,
respectively.  The increase in 1996 was primarily attributable to
increased  development activity on the Luannan Facility  and  the
commencement of commercial operations at the Brandywine  Facility
on October 31, 1996.

     Interest expense increased from $11,716 (38% of revenues) in
1995  to  $19,414 (57% of revenues) in 1996 as a  result  of  the
increase in outstanding indebtedness under a term loan which  was
partially  offset  by  the  scheduled  reduction  in  outstanding
indebtedness under the taxable revenue bonds issued in  1989  for
the  Rosemary  Facility,  and as a  result  of  the  increase  in
outstanding indebtedness from the issuance of the Rosemary  Bonds
and  the Series A Bonds on July 31, 1996.  The impact of such new
indebtedness  was  partially offset by  the  refinancing  of  the
taxable  revenue  bonds issued in 1989 for the Rosemary  Facility
and the repayment of a term loan on July 31, 1996.  Additionally,
commencement of commercial operations at the Brandywine  Facility
resulted  in  the recognition of interest expense on the  related
debt  for  the  last  two months of 1996.   Prior  to  commercial
operations, interest on the Brandywine debt was capitalized.

     Depreciation,   amortization  of  debt   issue   costs   and
amortization of partnership formation costs increased from $5,297
(17%  of  revenues) in 1995 to $6,559 (19% of revenues) in  1996.
The  increase  was primarily attributable to the commencement  of
commercial  operations at the Brandywine Facility on October  31,
1996.

     On  September 6, 1996, a transformer and two switches at the
Rosemary   Facility  sustained  damage  from  a   hurricane.    A
substitute  transformer was temporarily installed pending  repair
of  the  damaged  transformer, which was substantially  completed
during  the  first  quarter of 1997.  The Company  estimated  the
total  cost to repair the Rosemary Facility (including substitute
transformer rental costs) at approximately $2,450, all  of  which
was  covered by insurance except for deductible and certain  non-
covered  items in the amount of approximately $700.   This  event
did not have a material adverse effect on the Company's financial
condition or results of operations.

     For  1996  and  1995, minority interest in  net  income  was
$2,405 and $5,048, respectively.  The decrease in 1996 was due to
lower  net  income  (before minority interest  and  extraordinary
item) in the Rosemary Partnership and the acquisition on July 31,
1996  of  the  minority  interest  holder's  limited  partnership
interest as discussed below.

     In  connection with the issuance of the Rosemary  Bonds  and
the  Series  A Bonds, the Company refinanced the taxable  revenue
bonds issued in 1989 for the Rosemary Facility and repaid a  term
loan.   The Company incurred an extraordinary loss of $21,336  on
the early extinguishment of these obligations.  Additionally, the
Company   acquired   the  minority  interest   holder's   limited
partnership interest in the Rosemary Partnership for  a  purchase
price of approximately $34,256.  As a result of this acquisition,
the   Company  owns  100%  of  the  Rosemary  Partnership.    The
acquisition  was  accounted  for using  the  purchase  method  of
accounting.   The excess of minority interest over  the  purchase
price  (approximately $3.8 million) was allocated  to  plant  and
equipment.   Additionally,  the  Company  advanced  approximately
$34,779  to  Panda  International  for  project  development  and
general corporate purposes.

     As  a  result  of the various factors discussed  above,  the
Company  incurred net losses of $32,657 and $2,732 for  1996  and
1995 respectively.

       1995 compared to 1994

     The  Company  incurred a net loss of $2,732 on  revenues  of
$31,227 in 1995 compared to $861 on revenues of $31,917 in  1994.
The  decrease in revenues was primarily the result of a scheduled
contractual  decrease in capacity payments of $1,526,  which  was
partially  offset  by  additional  income  generated  due  to  an
increase  in  the  number  of  hours the  Rosemary  Facility  was
dispatched  by  VEPCO  and an increase in  interest  income.  The
Rosemary  Facility was dispatched 2,224 hours in 1995 versus  764
hours  in  1994,  due primarily to forced outages  at  two  VEPCO
generating  plants that are not likely to be repeated.  For  1995
and  1994, capacity revenues were $27,204 and $28,730 and  energy
revenues  were $2,655 and $1,934, respectively. For approximately
1,200  of the dispatch hours in 1995, the Rosemary Facility  used
natural  gas  provided directly by VEPCO under a special  fueling
arrangement   provided  for  in  the  Rosemary   Power   Purchase
Agreement.  The  Rosemary Facility's margin on  energy  sales  is
lower  when VEPCO supplies natural gas for the Rosemary  Facility
than when the Rosemary Facility is dispatched under normal energy
pricing  terms. However, overall margins at the Rosemary Facility
are increased in such circumstances (relative to not operating at
all)  by the ability to provide steam and chilled water from  the
steam  turbine offtake, which reduces the operating costs of  the
auxiliary boilers.

     Plant   operating  expenses,  which  included   fuel   cost,
operations and maintenance expense, insurance and property  taxes
related  to the Rosemary Facility, were $9,348 (30% of  revenues)
in  1995  as  compared  to  $8,940 (28%  of  revenues)  in  1994,
primarily due to additional maintenance expenses and fuel related
costs  incurred due to the increase in the number  of  hours  the
Rosemary  Facility  was dispatched by VEPCO. Project  development
and administrative expense increased from $1,779 (6% of revenues)
in  1994  to  $2,550 (8% of revenues) in 1995  primarily  due  to
additional  administrative expenses relating to  construction  of
the Brandywine Facility and development of the Luannan Facility.

     Interest  expense  was  $11,716 (38% of  revenues)  in  1995
compared  to  $11,018 (35% of revenues) in 1994. The increase  in
1995  was  attributable  to additional borrowings.  Depreciation,
amortization of debt issue costs and amortization of  partnership
formation costs were stable and collectively amounted to  17%  of
revenues in 1995 and 1994.

     In  1995,  the  Company incurred a net  loss  of  $2,732  as
compared  to a net loss of $861 in 1994. An allocation of  $5,048
was  made in 1995 for minority interest, a decrease of $652  from
1994  as  a result of the overall decrease in net income  of  the
Rosemary Partnership.

Liquidity and Capital Resources

      In  1997, the Company obtained cash from operations of  the
Rosemary  Facility  and  the  Brandywine  Facility.  The  Company
utilized  this  cash  to  service  its  debt  obligations,   make
distributions to its parent to fund project development  efforts,
and  for  general and administrative expenses. The  Company  also
issued $145.0 million discounted principal amount of 12.5% Senior
Secured Notes in April 1997, the proceeds of which are restricted
to use in the construction of the Luannan Project.

      In  1996, the Company obtained cash from operations of  the
Rosemary Facility, issuance of the Rosemary Bonds and the  Series
A  bonds, and borrowings under non-recourse project debt for  the
Brandywine Facility.  The Company utilized this cash to refinance
existing   debt,  fund  development  and  construction   of   the
Brandywine   Facility,   service  its  debt   obligations,   make
distributions to its parent to fund project development  efforts,
and  for general and administrative expenses.  Additionally,  the
Company   purchased  the  minority  interest  holder's  remaining
limited partnership interest in Panda-Rosemary.

      The  principal future cash requirement  of the Company will
be payment of its debt service obligations. The Company will rely
almost  exclusively  on distributions from  Panda  Global  Energy
Company  and  Panda Interfunding Corporation  to  meet  its  cash
requirements.    Those  entities  in  turn   will   rely   almost
exclusively  on distributions from the project entities  to  meet
their  cash requirements.  The project entities' ability to  make
such distributions will depend upon the financial performance  of
the  Rosemary  Facility,  the Brandywine  Facility,  the  Luannan
Facility  and the Nepal Facility and will be subject to a  number
of  limitations  on distributions contained in the  project-level
debt  agreements.  The Company currently believes  that  it  will
have  sufficient  liquidity from the  cash  flows  available  for
distribution  from  the project entities, together  with  amounts
held in debt service reserves and other restricted cash reserves,
to  satisfy  its  obligations.   The  Company's  restricted  cash
balances  are available only for specific uses as stated  in  the
indentures, such as payment of debt service obligations,  project
construction  and  overhaul, and are not  available  for  general
corporate purposes.

      The  project  entities are dependent on  capacity  payments
under  their respective power purchase agreements to  meet  their
fixed  obligations,  including  payment  of  project-level   debt
service,  and  to  make distributions to the  Company.   Capacity
payments  can be adversely affected by a major equipment failure,
resulting  in  a facility being unavailable for dispatch  for  an
extended  period of time.  Capacity payments can also be  subject
to  reduction  pursuant  to regulatory  disallowance  and,  under
contractual  provisions,  as  a  result  of  events  outside  the
Company's  control.  In 1999 and 2006, the capacity payments  for
the  Rosemary Facility are scheduled to decrease by approximately
$1.8 million (7.1%) and $5.4 million (23.1%), respectively, based
on the facility's current capacity rating.  The Company currently
believes  it  will  be able to continue to meet  its  obligations
during the periods such reductions are applicable.

      Each  of  the  electric energy purchasers under  the  power
purchase  agreements for the Rosemary Facility and the Brandywine
Facility  has  a contractual right to schedule the  facility  for
dispatch  largely at the purchaser's discretion.  Thus,  revenues
from  energy  payments will vary depending  on  the  hours  these
facilities  are  dispatched  by  such  purchasers.   The  Company
currently  believes  that it can meet its liquidity  requirements
solely  from  the  capacity payments in the unlikely  event  that
these facilities are not dispatched at all.

Impact of Inflation

      Inflationary  increases in the Company's  costs,  primarily
project  development costs, energy costs, and capital costs,  may
be  offset  by  increases in revenue as provided in  the  various
purchase agreements, although competition may limit the Company's
ability  to  fully  recover  all  such  increases.   The  Company
attempts,  where  possible, to obtain  provisions  in  its  power
purchase agreements whereby certain revenue components,  such  as
energy payments, may be adjusted with inflationary increases. The
Company  currently  believes  that  inflation  will  not  have  a
material  adverse  effect  on the Company's  financial  position,
results of operations or cash flows in the foreseeable future.

Year 2000 Matters

     The Year 2000 Issue is the result of computer programs being
written  using  two  digits  rather  than  four  to  define   the
applicable  year.  Any of the  Company's computer  programs  that
have time-sensitive software may recognize a  date using "00"  as
the year 1900 rather than the year 2000. This could result in   a
system   failure   or  miscalculations  causing  disruptions   of
operations,  including, among other things, a temporary inability
to  process  transactions,  send invoices, or engage  in  similar
normal business activities.

     In   1998,  the  Company  initiated  a  review  of  existing
accounting  software to determine the impact  of  the  Year  2000
Issue.   Although  such  review is still in  process,  management
estimates   that  the Year 2000 Issue will not  pose  significant
operational  problems  for  its   computer  systems.  All   costs
associated with this conversion, which are not anticipated to  be
material, are  being expensed as incurred.

Item 8.   Financial Statements and Supplementary Data.

      The  Financial  Statements  and  Supplementary  Data  filed
herewith begin on page F-1 hereof.

Item  9.    Changes  in  and Disagreements  with  Accountants  on
Accounting and Financial Disclosure.

None

                            PART III

Item 10.  Directors and Executive Officers of the Registrant.

     The  number of members of the Board of Directors of  Company
has been set at two, but the number may be increased or decreased
by  the Board of Directors or the stockholders. Directors of  the
Company  are  elected  annually and each elected  director  holds
office  until a successor is elected. Robert W. Carter and  Brian
G.  Trueblood are the current directors of and the Company.   All
executive  officers of the Company are elected  annually  by  the
Board  of  Directors of the Company to serve in  such  capacities
until their respective successors are duly elected and qualified.

     The  Certificate  of Incorporation of the  Company  provides
that  the Company shall always have an individual serving  as  an
"Independent  Director"  who shall have  the  right  to  vote  or
consent only on, and whose affirmative vote or consent  shall be
required with respect to, any decision by the Company or the Board
of Directors of the Company to  (i) file a  bankruptcy  petition,
make an assignment for  the  benefit  of creditors, apply for the
appointment of a custodian, receiver  or trustee  for  it or its
property, consent to the filing  of  such proceeding or admit in
writing to its inability to pay its  debts generally  as  they
become due; (ii) commence  the  dissolution, liquidation,
consolidation, merger or sale of all or substantially  all of its
assets; (iii) amend the Certificate of Incorporation to broaden
the purposes of the Company and in other respects; (iv) authorize
the Company to engage in  any  activity other  than  those set
forth in the Certificate of Incorporation; or (v) authorize any
subsidiary with an Independent Director to take any action set
forth in (i) through (iv). The Certificate of  Incorporation of
the Company provides that  the  Independent Director shall be a
person who is not and has not been, for the five years preceding
his election, (i) a direct or indirect legal or beneficial owner
of the Company or its affiliates (or a member of  the  immediate
family  of  such  owner),  (ii)  a  creditor, supplier,  officer,
director, promoter, underwriter, manager or contractor of the
Company or any of its affiliates (or  a  member of the immediate
family of any such officer or director) or (iii) a person (or a
member of the immediate family  of  a  person) employed  by  the
Company or any of its  affiliates or by any creditor,  supplier,
employee, stockholder, officer, director, promoter, underwriter,
manager  or  contractor  thereof.  The Independent Director may,
however, serve in  such  capacity  for other affiliates  of  the
Company.  In  March  1998, Brian G. Trueblood was elected as the
Independent Director of the Company.

     The  following table sets forth the names and  ages  of  the
directors  and  the executive officers of the Company  and  their
positions with the Company. Since the formation of  the  Company,
each executive officer of the Company has held the same office(s)
with  the  Company  that  he  or she has  held  with  each  other
corporation that is currently affiliated with the Company.

          Name          Age  Position with the Issuer and the
                                          Company

 Robert W. Carter        59  Director,  Chairman of the  Board
                             and Chief Executive Officer
 Darol S. Lindloff       59  President
 Janice Carter           55  Executive     Vice     President,
                             Secretary and Treasurer
 William C. Nordlund     43  Executive     Vice     President,
                             Finance
 Ralph T. Killian        51  Executive   Vice  President   and
                             Operations Manager
 Steven W. Crain         47  Senior  Vice President,  Business
                             Development
 Ted C. Hollon           47  Senior  Vice  President,  Project
                             Development
 L. Stephen Rizzieri     42  Senior    Vice   President    and
                             General Counsel
 Brian G. Trueblood      36  Independent Director

     Robert  W.  Carter has been the Chairman of  the  Board  and
Chief  Executive  Officer of PEII, an affiliate of  the  Company,
since  January 1995. Mr. Carter has held similar chief  executive
positions  with  PEC, also an affiliate of the Company,  and  its
subsidiaries  since he founded PEC in 1982.  Mr. Carter  also  is
President  of  Robert  Carter Oil & Gas, Inc.  (an  oil  and  gas
exploration  company), which he founded in  1980.  From  1978  to
1980,  Mr.  Carter was Vice President of oil and gas lease  sales
for  Reserve  Energy  Corporation (an  oil  and  gas  exploration
company).  From 1974 to 1978, he served as a marketing consultant
to  Forward Products, Inc. (a petrochemical company). Mr.  Carter
was Executive Vice President of Blasco Industries (a chemical and
textile  manufacturer) from 1970 to 1974. He served  as  a  sales
representative  and  sales manager for  Olin  Mathieson  Chemical
Corporation (a petrochemical, pulp and paper company)  from  1965
to  1970.  From  1960 to 1965, he was a sales representative  for
Inland,  Mead  Paper Company in Atlanta. Mr. Carter attended  the
University of Georgia.  Mr. Carter is married to Janice Carter.

     Darol  S.  Lindloff  was  appointed  President  of  PEII  in
February 1997. Prior thereto, he served as Senior Vice President,
project Development of PEII from January 1996. He served as  Vice
President  of  PEII  from January 1993 to  January  1996  in  the
capacities  of  Business  Development,  Technical  Director   and
project Development. Mr. Lindloff served as Marketing Manager for
PEC  from October 1989 until January 1993. From December 1987  to
October  1989,  Mr.  Lindloff established a  regional  office  in
Dallas   for   Southwest  Research  Institute  (a  research   and
development  company)  and  served  as  Regional  Director.  From
January  1986  to  December  1987, Mr.  Lindloff  worked  on  the
development of cogeneration facilities for Hawker Siddeley  Power
Engineering,  Inc. (a British engineering company).  During  1984
and 1985, he worked in the development of cogeneration facilities
for  Central  & Southwest Corporation's subsidiary, C&SW  Energy,
Inc.   (an   energy   company).  Mr.  Lindloff   graduated   from
Southwestern  University with a Bachelor  of  Science  degree  in
organic chemistry.

     Janice   Carter  has  been  the  Executive  Vice  President,
Secretary, Treasurer and a Director PEII since January  1995  and
has  served  in such capacities with PEC since its  inception  in
1982.  From  1975  to  1980, Mrs. Carter was  office  manager  of
Reserve Energy Corporation. From 1969 to 1972, Mrs. Carter worked
for  University  Computing, and from 1962 to  1968  she  directed
administration   for   the   engineering   department   of   Otis
Engineering, a division of Halliburton International. Mrs. Carter
also  serves as Vice President and Secretary/Treasurer of  Robert
Carter   Oil  &  Gas,  Inc.  Mrs.  Carter  attended  Texas   Tech
University. Mrs. Carter is married to Robert W. Carter.

     William  C. Nordlund has served as Executive Vice President,
Finance of PEII since February 1997. Prior thereto, he served  as
Senior  Vice  President and General Counsel of PEII since  August
1996, as Vice President and General Counsel of PEII since January
1995  and  of  PEC since January 1994. Mr. Nordlund  was  General
Counsel  of  PEC from April 1993 to January 1994. He  was  Senior
Vice President and General Counsel from August 1992 to April 1993
and  Vice  President and General Counsel from September  1991  to
August  1992  for  The  Oxford Energy  Company,  a  developer  of
independent  power facilities. From July 1990 to September  1991,
Mr.  Nordlund was an attorney with Constellation Holdings,  Inc.,
an  affiliate of Baltimore Gas & Electric Company which developed
independent  power  facilities. Prior to  July  1990,  he  was  a
partner  in  the  law firm of Winston & Strawn  in  Chicago.  Mr.
Nordlund  earned  a  Bachelor  of  Arts  degree  from  Vanderbilt
University,  a  Juris Doctor degree from Duke  University  and  a
Master of Management degree from the J.L. Kellogg Graduate School
of Business at Northwestern University.

     Ralph  T.  Killian served as Senior Vice President  of  PEII
since  May  1994,  and  has  been Executive  Vice  President  and
Operations  Manager  since March 1998.  Mr. Killian  has  overall
responsibility for asset management which includes  operations  &
maintenance,   fuel,  procurement  and  management,   and   power
marketing  for  facilities.   Mr.  Killian  also  leads  a  group
responsible  for  development of PEII's merchant  plants  in  the
United States.  Between November 1989 and April 1994, Mr. Killian
served as Vice President of Natural Resources for PEC.  From 1988
to   1989,  he  was  Senior  Vice  President  of  Texas   Eastern
Corporation  (an  energy company).  From 1969 to  1988,  he  held
various   natural   gas  marketing  and  engineering   management
positions  with  Amoco Corporation (an energy company)  including
Regional  Natural  Gas  Marketing Manager  for  Amoco  Production
Company's  Denver  region.   Mr.  Killian  graduated   from   the
University  of  Florida  with a Bachelor  of  Science  degree  in
chemical engineering.

     Steven  W.  Crain  has  served  as  Senior  Vice  President,
Business  Development  of PEII since February  1997.   Mr.  Crain
joined  Panda in 1996, originally serving as Director of Business
Development for the Asian sub-continent.  Prior to joining Panda,
Mr.  Crain  served  for over 18 years in various  capacities  for
Eagleton  Engineering  Company, an engineering  and  construction
management  firm  specializing in  oil  and  gas  processing  and
transportation.   Mr.  Crain  served  as  a  Vice  President  for
Business  Development and member of the Board of  Directors  from
1987  and 1995.  He also served as the resident Managing Director
of the Eagleton Saudi Arabia office for six years.   From 1974 to
1977,  Mr.  Crain  served as a Design Engineer for  Stearns-Roger
(now  Raytheon)  where he was involved in  the  design  of  coal-
burning  power  plants.  Mr. Crain earned a Bachelor  of  Science
Degree in Electrical Engineering from Rice University, and  is  a
registered professional engineer.

     Ted  C.  Hollon has served as Senior Vice President, Project
Development  of  PEII since August 1997.  Prior  to  his  current
position,  he served as Vice President of Construction  for  PEII
since  March 1995.  Mr. Hollon served as project manager for  the
Company's 230 megawatt Panda-Brandywine Facility from March  1993
until  March 1995.  Mr. Hollon previously held various  positions
with several prominent international engineering and construction
companies  such  as Brown & Root International and  CSR  Serrine.
Mr.  Hollon  has  over  25  years of  international  construction
experience.   He earned a Bachelor of Science degree  from  Texas
A&M University.

     L.  Stephen  Rizzieri served as Vice President  and  General
Counsel  of  PEII  since February 1997 and has been  Senior  Vice
President  and General Counsel since March 1998.  Prior  thereto,
he  served as Deputy General Counsel since April 1996. From  1993
until he joined PEII, he was Assistant General Counsel of ENSERCH
Development   Corporation,  the  independent  power   development
affiliate of ENSERCH Corporation. From 1985 to 1993, Mr. Rizzieri
served in various capacities with Sunshine Mining Company and its
affiliated companies, most recently as Assistant General  Counsel
and Secretary. From 1981 to 1985, he served in various capacities
with Woods Petroleum Corporation (which was purchased by Sunshine
Mining  Company  in 1985) and its affiliates,  most  recently  as
President of Woods Securities Corporation. In 1980, Mr.  Rizzieri
served as Deputy General Counsel - Enforcement Division, Oklahoma
Securities  Commission. Mr. Rizzieri earned a  Bachelor  of  Arts
degree  from  the State University of New York at Geneseo  and  a
Juris Doctor degree from the University of Oklahoma.

     Brian  G. Trueblood became the Independent Director  of  the
Company  in  March 1997. He has served since February  1997,  and
also from September 1989 through August 1994, as a senior partner
in  the  Dallas  office  of  Lucas Associates  (an  Atlanta-based
executive  search firm). From August 1994 to February  1997,  Mr.
Trueblood  served  as  Vice President of TNS  Partners,  Inc.  (a
Dallas-based  retained  executive  search  firm).  Mr.  Trueblood
received a Bachelor of Science degree in general engineering from
the United States Military Academy. Mr. Trueblood also serves  as
the Independent Director of various other subsidiaries of PEII.

Item 11.  Executive Compensation and Benefits

     No  cash,  stock options or other non-cash compensation  has
been paid or is proposed to be paid in the current calendar year,
or  in the last completed fiscal year, to any of the officers and
directors  listed under "Management" for their  services  to  the
Company. Mr. Trueblood is currently paid $1,000 annually  by  the
Company for serving as an Independent Director thereof.

Item  12.   Security Ownership of Certain Beneficial  Owners  and
Management

      PEII  owned  beneficially, at March 25, 1998,  one  hundred
percent  (100%)  of  the  issued and outstanding  shares  of  the
Company's  common  stock,  $.01 par  value,  which  is  the  only
security  entitled  to  vote for the election  of  the  Company's
directors.  No director or officer of the Company owns any shares
of any class of the Company's equity securities.

Item 13.  Certain Relationships and Related Transactions

      Since the date of incorporation of the Company, there  have
been  no  transactions, and there currently are not any  proposed
transactions,  or series of similar transactions,  to  which  the
Company  (or any of it's subsidiaries) was or is to be party,  in
which the amount involved exceeds $60,000 and in which a director
or  executive  officer of the Company, has a  material  interest.
Additionally, there are no business relationships that  currently
exist  or  have  existed since the date of incorporation  of  the
Company, involving the Company, on the one hand, and any director
of  the Company (or an affiliate thereof), on the other hand.  No
director or executive officer of the Company has been indebted to
the Company, since the date of incorporation of the Company.

Item 14.  Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.

     (a)  The  following documents are filed as a  part  of  this
          Annual Report on Form 10-K:

     1.   Consolidated Financial Statements.

      See  Index to Financial Statements and Financial  Statement
Schedules on page F-1 hereof.

     2.   Consolidated Financial Statement Schedules.

      See  Index to Financial Statements and Financial  Statement
Schedules on page F-1 hereof.

      Schedules other than those listed on the accompanying Index
to  Financial  Statements and Financial Statement  Schedules  are
omitted  for  the reason that they are either not  required,  not
applicable  or  the  required information   is  included  in  the
consolidated financial statements or notes thereto.

     3.   Exhibits.

Exhibit
Number    Exhibit Description

3.01      Certificate of Incorporation of Panda Global Holdings,
          Inc. (2)

3.02      Bylaws of Panda Global Holdings, Inc. (2)

4.01      Trust Indenture, dated April 22, 1997, between Panda
          Global Energy Company and Bankers Trust Company as
          Trustee, (2)

4.02      First Supplemental Indenture between Panda Global
          Energy Company and Bankers Trust Company, as Trustee,
          dated April 22, 1997. (2)

4.03      Registration Rights Agreement among Panda Global Energy
          Company,  Panda  Global Holdings, Inc.  and  Donaldson,
          Lufkin  & Jenrette Securities Corporation, dated  April
          22, 1997.  (2)

4.04      Form  of 12-1/2% Senior Secured Notes due 2004 of Panda
          Global Energy Company. (2)

4.05      Form of 12-1/2% Registered Senior Secured Note due 2004
          of Panda Global Energy Company. (2)

4.06      Trust  Indenture, dated April 22, 1997,  between  Panda
          Global  Holdings,  Inc. and Bankers Trust  Company,  as
          Trustee. (2)

4.07      First  Supplemental Indenture, dated  April  22,  1997,
          between  Panda Global Holdings, Inc. and Bankers  Trust
          Company, as Trustee. (2)

4.08      Trust  Indenture  dated  July  31,  1996,  among  Panda
          Funding Corporation, Panda Interfunding Corporation and
          Bankers Trust Company, as Trustee. (1)

4.09      First  Supplemental Indenture to Trust Indenture, dated
          July  31, 1996, among Panda Funding Corporation,  Panda
          Interfunding Corporation and Bankers Trust Company,  as
          Trustee. (1)

4.10      Second Supplemental Indenture to Trust Indenture, dated
          January 6, 1997, among Panda Funding Corporation, Panda
          Interfunding Corporation and Bankers Trust Company,  as
          Trustee. (1)

4.11      Form of 11-5/8% Pooled Project Bonds, Series A due 2012
          of Panda Funding Corporation. (1)

4.12      Form  of  11-5/8% Pooled Project Bonds, Series A-1  due
          2012 of Panda Funding Corporation. (1)

4.13      Registration  Rights Agreement, dated  July  31,  1996,
          among  Panda  Funding Corporation,  Panda  Interfunding
          Corporation and Jefferies & Company Inc. (1)

4.14      Collateral Agency Agreement, dated July 31, 1996, among
          Panda    Interfunding   Corporation,   Panda    Funding
          Corporation  and Bankers Trust Company, as Trustee  and
          Collateral Agent. (1)

4.15      Subrogation and Contribution Agreement, dated July  31,
          1996,   among  Panda  Interfunding  Corporation,  Panda
          Funding  Corporation and Panda Interholding Corporation
          and  each  PIC U.S. Entity that is a signatory thereto.
          (1)

4.16      Guaranty  Agreement  (PIC  U.S.  Entity  Subsidiaries),
          dated  July  31, 1996 by Panda Interholding Corporation
          in  favor of Bankers Trust Company, as Collateral Agent
          for the benefit of the Secured Parties. (1)

10.01     PIC  Loan Agreement, dated July 31, 1996, between Panda
          Funding  Corporation, as Lender, and Panda Interfunding
          Corporation, as Borrower. (1)

10.02     Loan  Agreement,  dated July 31,  1996,  between  Panda
          Interfunding  Corporation, as Lender, and Panda  Cayman
          Interfunding Company, as Borrower. (1)

10.03     Promissory    Note   issued   by   Panda   Interfunding
          Corporation   on  July  31,  1996  to   Panda   Funding
          Corporation  in  the  original  principal   amount   of
          $105,525,000,  endorsed to Bankers  Trust  Company,  as
          Collateral Agent. (1)

10.04     Security Agreement, dated July 31, 1996, between  Panda
          Interfunding Corporation and Bankers Trust Company,  as
          Collateral Agent. (1)

10.05     Security Agreement, dated July 31, 1996, between  Panda
          Funding  Corporation  and  Bankers  Trust  Company,  as
          Collateral Agent. (1)

10.06     Security Agreement, dated July 31, 1996, between  Panda
          Cayman  Interfunding  Company,  as  Debtor,  and  Panda
          Interfunding Corporation, as Secured Party. (1)

10.07     Stock  Pledge Agreement (Panda Interfunding Corporation
          Stock),  dated  July  31, 1996,  between  Panda  Energy
          Corporation  and Bankers Trust Company,  as  Collateral
          Agent. (1)

10.08     Stock  Pledge Agreement (Panda Funding Corporation  and
          PIC  Entity Stock), dated July 31, 1996, between  Panda
          Interfunding Corporation and Bankers Trust Company,  as
          Collateral Agent. (1)

10.09     Trust  Indenture,  dated July 31,  1996,  among  Panda-
          Rosemary Funding Corporation, Panda-Rosemary, L.P.  and
          Fleet National Bank, as Trustee. (1)

10.10     First  Supplemental Indenture to Trust Indenture, dated
          July    31,   1996,   among   Panda-Rosemary    Funding
          Corporation,  Panda-Rosemary, L.P. and  Fleet  National
          Bank, as Trustee. (1)

10.10.1   Second Supplemental Indenture to Trust Indenture, dated
          January   15,   1997,   among  Panda-Rosemary   Funding
          Corporation,  Panda-Rosemary, L.P. and  Fleet  National
          Bank, as Trustee. (1)

10.11     Form  of 8-5/8% First Mortgage Bonds due 2016 of Panda-
          Rosemary Funding Corporation. (1)

10.12     Deposit  and  Disbursement Agreement,  dated  July  31,
          1996,  among Panda-Rosemary Funding Corporation, Panda-
          Rosemary,  L.P.,  Fleet National  Bank,  as  Collateral
          Agent,  and  Fleet National Bank, as Depositary  Agent.
          (1)

10.13     Collateral  Agency and Intercreditor  Agreement,  dated
          July   31,   1996,   among   Panda   Rosemary   Funding
          Corporation, Panda-Rosemary, L.P., The L/C Issuer,  The
          Trustee  Under  The  Trust  Indenture,  The  Depositary
          Agent,  The  Collateral  Agent and  The  Other  Secured
          Parties, all as named therein. (1)

10.14     Deed  of  Trust and Security Agreement, dated July  31,
          1996,  by Panda-Rosemary, L.P., Grantor, Ross J. Smyth,
          Trustee, and Fleet National Bank, as Collateral  Agent,
          the Beneficiary. (1)

10.15     Security  Agreement,  dated July 31,  1996,  by  Panda-
          Rosemary,  L.P. to Fleet National Bank,  as  Collateral
          Agent. (1)

10.16     Security  Agreement,  dated July 31,  1996,  by  Panda-
          Rosemary Funding Corporation to Fleet National Bank, as
          Collateral Agent. (1)

10.17     General  Partner  Pledge and Security Agreement,  dated
          July  31, 1996, by Panda-Rosemary Corporation to  Fleet
          National Bank, as Collateral Agent. (1)

10.18     Limited  Partner  Pledge and Security Agreement,  dated
          July  31, 1996, by PRC II Corporation to Fleet National
          Bank, as Collateral Agent. (1)

10.19     Stock  Pledge  and Security Agreement, dated  July  31,
          1996,   by  Panda  Interholding  Corporation  to  Fleet
          National Bank, as Collateral Agent. (1)

10.20     Stock  Pledge  and Security Agreement, dated  July  31,
          1996,  by Panda-Rosemary, L.P. to Fleet National  Bank,
          as Collateral Agent. (1)

10.21     Partnership  Guaranty, dated July 31, 1996,  by  Panda-
          Rosemary,  L.P.  in  favor of Fleet National  Bank,  as
          Trustee. (1)

10.22     Reimbursement  Agreement, dated July 31, 1996,  between
          Panda-Rosemary,     L.P.,    Panda-Rosemary     Funding
          Corporation  and Bayerische Vereinsbank  AG,  New  York
          Branch. (1)

10.23     Irrevocable  Direct  Pay Letter  of  Credit  issued  by
          Bayerische Vereinsbank AG. (1)

10.24     Construction Loan Agreement and Lease Commitment, dated
          March  30,  1996,  between Panda-Brandywine,  L.P.  and
          General Electric Capital Corporation. (1)

10.24.1   Participation Agreement, dated December 18, 1996, among
          Panda-Brandywine,  L.P., Panda Brandywine  Corporation,
          General  Electric Capital Corporation,  Fleet  National
          Bank,  First  Security Bank, National Association,  and
          Credit Suisse. (1)

10.24.2   Letter   of   Credit  Reimbursement  Agreement,   dated
          December 18, 1996, among Panda-Brandywine, L.P.,  Panda
          Brandywine  Corporation  and General  Electric  Capital
          Corporation. (1)

10.24.3   Equity  Loan Facility Letter Agreement, dated  December
          18,  1996,  among  Panda Brandywine Corporation,  Panda
          Energy   Corporation  and  General   Electric   Capital
          Corporation. (1)

10.25     Bill  of  Sale and Severance Agreement, dated  December
          30,  1996,  between Panda-Brandywine, L.P., as  Seller,
          and Fleet National Bank, Owner Trustee, as Buyer. (1)

10.26     Facility Lease, dated December 18, 1996, between  Fleet
          National  Bank, as Owner Trustee, and Panda-Brandywine,
          L.P. (1)

10.27     Steam  Lease,  dated as of December 18,  1996,  between
          Panda-Brandywine,  L.P. and Brandywine  Water  Company.
          (1)

10.28     Amended and Restated Security Deposit Agreement,  dated
          December 18, 1996, among Panda-Brandywine, L.P.,  Panda
          Brandywine   Corporation,  General   Electric   Capital
          Corporation,  Fleet National Bank,  Credit  Suisse  and
          First Security Bank, National Association. (1)

10.28.1   First   Amendment  to  Amended  and  Restated  Security
          Deposit Agreement, dated February 21, 1997, among Panda
          Brandywine, L.P., General Electric Capital Corporation,
          Fleet  National Bank, Credit Suisse and First  Security
          Bank, National Association. (1)

10.29     Amended   and  Restated  Deed  of  Trust  and  Security
          Agreement,   dated  December  18,   1996,   by   Panda-
          Brandywine,  L.P.  to Chicago Title Insurance  Company,
          Trustee  for  the  benefit of Fleet National  Bank,  as
          Security Agent, Beneficiary. (1)

10.30     Amended  and Restated Steam Lessee Security  Agreement,
          dated December 18, 1996, by Brandywine Water Company in
          favor of Fleet National Bank, as Security Agent. (1)

10.31     Amended and Restated Security Agreement, dated December
          18,  1996, by Panda-Brandywine, L.P. in favor of  Fleet
          National Bank, as Security Agent. (1)

10.32     Amended  and  Restated Trust Agreement, dated  December
          18, 1996, between General Electric Capital Corporation,
          as Owner Participant, and Fleet National Bank, as Owner
          Trustee. (1)

10.33     Amended  and Restated General Partner Pledge Agreement,
          dated   December   18,   1996,  by   Panda   Brandywine
          Corporation to Fleet National Bank, as Security  Agent.
          (1)

10.34     Amended  and Restated Limited Partner Pledge Agreement,
          dated  December 18, 1996,  by Panda Energy  Corporation
          to Fleet National Bank, as Security Agent. (1)

10.35     Amended  and  Restated  Stock Pledge  Agreement,  dated
          December 18, 1996, by Panda Interholding Corporation to
          Fleet National Bank, as Security Agent. (1)

10.36     Assumption Agreement and Release, dated July 31,  1996,
          by  Panda Interholding Corporation in favor of  General
          Electric  Capital Corporation and Fleet National  Bank.
          (1)

10.37     Power  Purchase and Operating Agreement, dated  January
          24, 1989, between Panda Energy Corporation and Virginia
          Electric and Power Company. (1)

10.38     Amendment   No.  1  to  Power  Purchase  and  Operating
          Agreement, dated October 24, 1989, between Panda Energy
          Corporation  and Virginia Electric and  Power  Company.
          (1)

10.39     Amendment   No.  2  to  Power  Purchase  and  Operating
          Agreement, dated July 30, 1993, between Panda-Rosemary,
          L.P. and Virginia Electric and Power Company. (1)

10.40     Fuel  Supply  Management Agreement, dated  October  10,
          1990,  between Panda-Rosemary Corporation  and  Natural
          Gas Clearinghouse. (1)

10.41     Amendment  No.  1 to Fuel Supply Management  Agreement,
          dated March 5, 1991, between Panda-Rosemary Corporation
          and Natural Gas Clearinghouse. (1)

10.42     Gas  Purchase  Contract, dated April 12, 1990,  between
          Panda-Rosemary    Corporation    and    Natural     Gas
          Clearinghouse. (1)

10.43     Amendment  of  Gas  Purchase  Contract  between  Panda-
          Rosemary Corporation and Natural Gas Clearinghouse. (1)

10.44     Pipeline Operating Agreement, dated February 14,  1990,
          between   Panda   Energy  Corporation,   Panda-Rosemary
          Corporation and North Carolina Natural Gas Corporation.
          (1)

10.45     Amendment No. 1 to Pipeline Operating Agreement,  dated
          May  7,  1990, between Panda Energy Corporation, Panda-
          Rosemary  Corporation  and North Carolina  Natural  Gas
          Corporation. (1)

10.46     Assignment  Agreement,  dated June  15,  1990,  between
          Panda    Energy    Corporation    and    Panda-Rosemary
          Corporation. (1)

10.47     Amendment No. 2 to Pipeline Operating Agreement,  dated
          November  19,  1991,  among Panda  Energy  Corporation,
          Panda-Rosemary  Corporation and North Carolina  Natural
          Gas Corporation. (1)

10.48     Real  Property Lease and Easement Agreement, dated June
          9,  1989,  between The Bibb Company and  Panda-Rosemary
          Corporation. (1)

10.49     First  Amendment  to Real Property Lease  and  Easement
          Agreement,  dated  October 1, 1989,  between  The  Bibb
          Company and Panda-Rosemary Corporation. (1)

10.50     Second  Amendment to Real Property Lease  and  Easement
          Agreement,  dated  January 31, 1990, between  The  Bibb
          Company and Panda-Rosemary Corporation. (1)

10.51     Leasehold  and Real Property Assignment and  Assumption
          Agreement,  dated  January  6,  1992,  between   Panda-
          Rosemary Corporation and Panda-Rosemary, L.P. (1)

10.52     Third  Amendment  to Real Property Lease  and  Easement
          Agreement,  dated  March  15, 1996,  between  The  Bibb
          Company and Panda-Rosemary, L.P. (1)

10.53     Cogeneration Energy Supply Agreement, dated January 12,
          1989,  between Panda Energy Corporation  and  The  Bibb
          Company. (1)

10.54     First   Amendment   to   Cogeneration   Energy   Supply
          Agreement, dated October 1, 1989, between Panda  Energy
          Corporation,  Panda-Rosemary Corporation and  The  Bibb
          Company. (1)

10.55     Service   Agreement,  dated  July  26,  1996,   between
          Transcontinental Gas Pipe Line Corporation  and  Panda-
          Rosemary, L.P. (1)

10.55.1   Form  of  Amendment  to  Service  Agreement,  effective
          January 1, 1997, between Transcontinental Gas Pipe Line
          Corporation and Panda-Rosemary, L.P. (1)

10.56     Service  Agreement  Applicable  to  Transportation   of
          Natural  Gas Under Rate Schedule FT, dated  August  20,
          1996,  between CNG Transmission Corporation and  Panda-
          Rosemary, L.P. (1)

10.57     Gas  Transportation Agreement, dated  August  1,  1996,
          between  Texas Gas Transmission Corporation and  Panda-
          Rosemary, L.P. (1)

10.58     Assignment  and  Assumption Agreement,  dated  May  15,
          1989,  between  Panda  Energy  Corporation  and  Panda-
          Rosemary Corporation. (1)

10.59     Bill  of  Sale and Assignment and Assumption Agreement,
          dated   January   6,   1992,   between   Panda-Rosemary
          Corporation and Panda-Rosemary, L.P. (1)

10.60     Assignment  and Assumption Agreement, dated January  6,
          1992,  between  Panda  Energy  Corporation  and  Panda-
          Rosemary Corporation. (1)

10.61     Power Purchase Agreement, dated August 9, 1991, between
          Panda-Brandywine,  L.P.  and  Potomac  Electric   Power
          Company. (1)

10.62     First  Amendment  to  Power Purchase  Agreement,  dated
          September 16, 1994, between Panda-Brandywine, L.P.  and
          Potomac Electric Power Company. (1)

10.62.1   Present  Assignment of Power Purchase Agreement,  dated
          December  18, 1996, by Panda-Brandywine, L.P. to  Fleet
          National  Bank,  as Owner Trustee, for the  benefit  of
          General   Electric   Capital  Corporation,   as   Owner
          Participant. (1)

10.62.2   Amended  and  Restated  Consent  and  Agreement,  dated
          December   30,  1996,  among  Potomac  Electric   Power
          Company,  Panda-Brandywine, L.P., Fleet National  Bank,
          as  Security Agent and Owner Trustee, General  Electric
          Capital  Corporation, as the issuer of the  Letters  of
          Credit,  the  Interest Hedging Counterparty  and  Owner
          Participant,    First    Security    Bank,     National
          Association,  as Indenture Trustee, and Credit  Suisse,
          as Administrative Agent. (1)

10.63     Amended  and  Restated  Turnkey  Cogeneration  Facility
          Agreement,   dated  March  30,  1995,  between   Panda-
          Brandywine, L.P. and Raytheon Engineers & Constructors,
          Inc. (1)

10.64     Raytheon  Parent Guaranty, dated May 18, 1994,  between
          Raytheon Company and Panda-Brandywine, L.P. (1)

10.65     Steam  Sales  Agreement, dated March 30, 1995,  between
          Panda-Brandywine,  L.P. and Brandywine  Water  Company.
          (1)

10.66     Gas  Sales  Agreement, dated March  30,  1995,  between
          Cogen  Development Company and Panda  Brandywine,  L.P.
          (1)

10.67     Precedent  Agreement, dated February 25, 1994,  between
          Columbia  Gas  Transmission   Corporation  and   Panda-
          Brandywine, L.P. (1)

10.68     Amending  Agreement,  dated  March  24,  1995,  between
          Columbia   Gas  Transmission  Corporation  and   Panda-
          Brandywine, L.P. (1)

10.69     Amended and Restated FTS Service Agreement, dated March
          23, 1995, between Columbia Gas Transmission Corporation
          and Panda-Brandywine, L.P. (1)

10.70     FTS  Service  Agreement, dated of as  March  30,  1995,
          between  Cove Point LNG Limited Partnership and  Panda-
          Brandywine, L.P. (1)

10.71     Gas Transportation and Supply Agreement, dated November
          10, 1994, between Panda-Brandywine, L.P. and Washington
          Gas Light Company. (1)

10.72     Amended  and  Restated Site Lease, dated  December  18,
          1996, between Panda-Brandywine, L.P. and Fleet National
          Bank, as Owner Trustee. (1)

10.73     Amended and Restated Site Sublease, dated December  18,
          1996,  between Fleet National Bank,  Owner Trustee,  as
          Sublessor,  and Panda-Brandywine, L.P.,  as  Sublessee.
          (1)

10.74     Purchase Agreement, dated July 26, 1996, between  Panda
          Funding Corporation and Jefferies & Company, Inc. (1)

10.75     Additional  Projects  Contract, dated  July  31,  1996,
          among  Panda  Energy International, Inc., Panda  Energy
          Corporation, and Panda Interfunding Corporation. (1)

10.76     Non-Petition  Agreement, dated  July  31,  1996,  among
          Panda   Interfunding  Corporation,  Panda  Interholding
          Corporation,   Panda-Rosemary   Corporation,   PRC   II
          Corporation,  Panda-Rosemary  Funding  Corporation  and
          Panda-Rosemary, L.P. (1)

10.77     Non-Petition  Agreement, dated  July  31,  1996,  among
          Panda    Funding   Corporation,   Panda    Interholding
          Corporation, Panda Interfunding Corporation  and  Panda
          (Cayman) Interfunding Company. (1)

10.78     Joint  Venture  Contract for Tangshan  Panda  Heat  and
          Power  Co.,  Ltd.,  dated September  4,  1994,  between
          Luannan  County  Heat  &  Power Plant  and  Pan-Western
          Energy  Corp.,  LLC,  as  amended  July  19,  1996  and
          November 18, 1996, respectively. (2)

10.79     Joint  Venture  Contract for Tangshan Pan-Western  Heat
          and  Power Co., Ltd., dated September 3, 1994,  between
          Tangshan  Luanhua  Co. (Group) and  Pan-Western  Energy
          Corp.,  LLC, as amended July 19, 1996 and November  18,
          1996, respectively. (2)

10.80     Joint  Venture  Contract for Tangshan Cayman  Heat  and
          Power  Co.,  Ltd., dated May 11, 1996, between  Luannan
          County Heat & Power Plant and Pan-Western Energy Corp.,
          LLC,  as  amended July 19, 1996 and November 18,  1996,
          respectively. (2)

10.81     Joint Venture Contract for Tangshan Pan-Sino Heat  Co.,
          Ltd.,  dated May 28, 1996, between Luannan County  Heat
          Company  and Pan-Western Energy Corp., LLC, as  amended
          July 19, 1996 and November 18, 1996, respectively. (2)

10.82     Coal  Supply Agreement between Tangshan Panda Heat  and
          Power Co., Ltd. and Kailuan Coal Mining Administration,
          dated February 3, 1996. (2)

10.83     General  Interconnection Agreement between North  China
          Power Group Company, Tangshan Panda Heat and Power Co.,
          Ltd. and Tangshan Pan-Western Heat and Power Co., Ltd.,
          dated September 22, 1995. (2)

10.84     Electric  Energy  Purchase and Sales Agreement  between
          North  China Power Group Company, Tangshan  Panda  Heat
          and  Power Co., Ltd. and Tangshan Pan-Western Heat  and
          Power Co., Ltd., dated September 22, 1995. (2)

10.85     Supplemental Agreement for General Interconnection  and
          Electric  Energy  Purchase and Sales Agreement  Between
          North  China Power Group Company, Tangshan  Panda  Heat
          and  Power Co., Ltd. and Tangshan Pan-Western Heat  and
          Power Co., Ltd. dated February 10, 1996. (2)

10.86     Construction Agreement between North China Power  Group
          Company,  Tangshan Panda Heat and Power Co.,  Ltd.  and
          Tangshan  Pan-Western Heat and Power Co.,  Ltd.,  dated
          February 10, 1996. (2)

10.87     Loan Agreement between North China Power Group Company,
          Tangshan  Panda Heat and Power Co., Ltd.  and  Tangshan
          Pan-Western  Heat and Power Co., Ltd.,  dated  February
          10, 1996, as amended June 18, 1996. (2)

10.88     Agency  Contract  for  Entrusted  Loan  between   China
          Information Trust and Investment Corporation,  Tangshan
          Panda Heat and Power Co., Ltd. and Tangshan Pan-Western
          Heat  and  Power  Co. Ltd., dated  June  18,  1996,  as
          amended July 17, 1996. (2) (4)

10.89     Transfer  of Loan Agreement among Tangshan  Panda  Heat
          and  Power  Co.,  Ltd., Tangshan Pan-Western  Heat  and
          Power  Co., Ltd. and Tangshan Pan-Sino Heat  Co.,  Ltd.
          (2)

10.90     Engineering,  Procurement  and  Construction   Contract
          among Tangshan Panda Heat and Power Co., Ltd., Tangshan
          Pan-Western  Heat and Power Co., Ltd. and Harbin  Power
          Engineering Company Limited, dated April 24,  1996,  as
          amended  July 4, 1996, September 14, 1996 and  December
          17, 1996, respectively. (2) (4)

10.91     Engineering  and Design Contract among  Hebei  Electric
          Power Survey and Design Institute, Tangshan Panda  Heat
          and  Power Company, Ltd. and Tangshan Pan-Western  Heat
          and  Power Company, Ltd., dated December 21,  1995,  as
          amended June 21, 1996. (2)

10.92     Guaranty by China Harbin Power Equipment Group Company,
          dated July 16, 1996. (2)

10.93     Performance  Guarantee  by The  Export-Import  Bank  of
          China, dated January 3, 1997. (2)

10.94     Amended   and   Restated  Operation   and   Maintenance
          Agreement  between Tangshan Heat and Power  Co.,  Ltd.,
          Tangshan Pan-Western Heat and Power Co., Ltd., Tangshan
          Cayman Heat and Power Co., Ltd., Tangshan Pan-Sino Heat
          Co., Ltd. and Duke/Fluor Daniel International Services,
          dated March 6, 1997. (2) (4)

10.95     Construction  Agreement  of  Heat  and  Steam   Network
          between  Tangshan Pan-Sino Heat Co., Ltd. and  Tangshan
          Heat and Engineering Company, dated June 20, 1996. (2)

10.96     Amended and Restated Shareholder Loan Agreement between
          Pan-Western Energy Corporation, LLC and Tangshan  Panda
          Heat and Power Co., Ltd., April 1, 1997 (2) (4)

10.97     Amended and Restated Shareholder Loan Agreement between
          Pan-Western  Energy Corporation, LLC and Tangshan  Pan-
          Western Heat and Power Co., Ltd., April 1, 1997 (2) (4)

10.98     Amended and Restated Shareholder Loan Agreement between
          Pan-Western Energy Corporation, LLC and Tangshan Cayman
          Heat and Power Co., Ltd., April 1, 1997 (2) (4)

10.99     Amended and Restated Shareholder Loan Agreement between
          Pan-Western  Energy Corporation, LLC and Tangshan  Pan-
          Sino Heat and Power Co., Ltd., April 1, 1997 (2) (4)

10.100    Water,  Heat,  Steam  and Hot Water  Supply  and  Usage
          Agreement  between  Tangshan  Cayman  Heat  and   Power
          Company,  Ltd.,  and  Tangshan  Panda  Heat  and  Power
          Company, Ltd., dated October 3, 1996. (2) (4)

10.101    Water,  Heat,  Steam  and Hot Water  Supply  and  Usage
          Agreement  between  Tangshan  Cayman  Heat  and   Power
          Company,  Ltd. and Tangshan Pan-Western Heat and  Power
          Company, Ltd., dated October 3, 1996. (2) (4)

10.102    Steam  for  Process and Heating Water  Sales  Agreement
          between  Tangshan Cayman Heat and Power Company,  Ltd.,
          and Tangshan Pan-Sino Heat Company, Ltd., dated October
          16, 1996. (2)

10.103    Articles  of  Association of Tangshan  Panda  Heat  and
          Power  Co.,  Ltd. between Luannan County Heat  &  Power
          Plant and Pan-Western Energy Corp., LLC dated September
          4, 1994. (2)

10.104    Articles  of Association for Tangshan Pan-Western  Heat
          and  Power  Co.,  Ltd.,  between Tangshan  Luanhua  Co.
          (Group)   and  Pan-Western  Energy  Corp.,  LLC,  dated
          September 3, 1994. (2)

10.105    Articles  of Association for Tangshan Cayman  Heat  and
          Power  Co., Ltd., between Luannan County Heat  &  Power
          Plant and Pan-Western Energy Corp., LLC, dated May  11,
          1996. (2)

10.106    Articles of Association for Tangshan Pan-Sino Heat Co.,
          Ltd.,  between  Luannan County Heat  Company  and  Pan-
          Western Energy Corp., LLC, dated May 28, 1996. (2)

10.107    Application Regarding Power Price among Tangshan  Panda
          Heat and Power Co., Ltd., Tangshan Pan-Western Heat and
          Power  Co.,  Ltd., and Tangshan Municipal Price  Bureau
          dated October 17, 1995, as amended October 18, 1995 and
          May 8, 1996, respectively. (2) (4)

10.108    Administrative Services Agreement between Panda  Energy
          International,  Inc. and Panda Global  Holdings,  Inc.,
          dated April 22, 1997. (2)

10.109    Development  Services  Agreement between  Panda  Energy
          International,  Inc. and Panda Global  Holdings,  Inc.,
          dated April 22, 1997. (2)

10.110    Form  of  Purchase Agreement among Donaldson, Lufkin  &
          Jenrette  Securities Corporation, Panda  Global  Energy
          Company,  Panda Global Holdings, Inc. and Panda  Energy
          International, Inc., dated April 11, 1997. (2)

10.111    Form  of  Issuer  Loan Agreement between  Panda  Global
          Energy Company and Pan-Western Energy Corporation, LLC,
          dated April 22, 1997. (2)

10.112    Form  of Issuer Note of Pan-Western Energy Corporation,
          LLC, dated April 22, 1997. (2)

10.113    Registered  Capital Contribution and  Agency  Agreement
          among  Tangshan  Panda  Heat and Power  Company,  Ltd.,
          Tangshan  Pan-Western  Heat and  Power  Company,  Ltd.,
          Tangshan  Cayman Heat and Power Company, Ltd., Tangshan
          Pan-Sino  Heat Company, Ltd., Luannan County  Heat  and
          Power  Plant,  Tangshan Luanhua  (Group)  Co.,  Luannan
          County Heat Company and Pan-Western Energy Corporation,
          LLC, dated March 26, 1997. (2)

10.114    Form  of  Account  Agreement among  Panda  Interfunding
          Corporation, Panda Energy Corporation and Panda  Global
          Holdings, Inc., dated April 22, 1997. (2)

10.115    Form  of  Pledge Agreement between Panda Global  Energy
          Company  and  Bankers Trust Company, as Trustee,  dated
          April 22, 1997. (2)

10.116    Form   of  Pledge  Agreement  between  Pan-Sino  Energy
          Development Company, LLC and Bankers Trust Company,  as
          Trustee, dated April 22, 1997. (2)

10.117    Form  of  Pledge  Agreement between Pan-Western  Energy
          Corporation, LLC and Bankers Trust Company, as Trustee,
          dated April 22, 1997. (2)

10.118    Form of Pledge Agreement between Panda Global Holdings,
          Inc. and Bankers Trust Company, as Trustee, dated April
          22, 1997. (2)

10.119    Form  of Cash Collateral Agreement between Panda Global
          Energy  Company and Bankers Trust Company, as  Trustee,
          dated April 22, 1997. (2)

10.120    Form  of  Cash Collateral Agreement between Pan-Western
          Energy  Corporation, LLC and Bankers Trust Company,  as
          Trustee, dated April 22, 1997. (2)

10.121    Form  of  Cash  Collateral Agreement  between  Pan-Sino
          Energy  Development  Company,  LLC  and  Bankers  Trust
          Company, as Trustee, dated April 22, 1997. (2)

10.122    Form   of   Pledge  Agreement  between   Panda   Energy
          International,  Inc.  and  Bankers  Trust  Company,  as
          Trustee, dated April 22, 1997. (2)

10.123    Form  of Cash Collateral between Panda Global Holdings,
          Inc. and Bankers Trust Company, as Trustee, dated April
          22, 1997. (2)

10.124    Form  of Cash Collateral Agreement between Panda Energy
          Corporation  and  Bankers Trust  Company,  as  Trustee,
          dated April 22, 1997. (2)

10.125    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation,  LLC, Tangshan Panda Heat and  Power  Co.,
          Ltd.  and  Tangshan Cayman Heat and  Power  Co.,  Ltd.,
          dated September 24, 1996. (2)

10.126    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation,  LLC, Tangshan Panda Heat and  Power  Co.,
          Ltd. and Tangshan Pan-Western Heat and Power Co., Ltd.,
          dated September 24, 1996. (2)

10.127    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation,  LLC, Tangshan Panda Heat and  Power  Co.,
          Ltd.  and  Tangshan  Pan-Sino  Heat  Co.,  Ltd.,  dated
          September 24, 1996. (2)

10.128    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation, LLC, Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd. and Tangshan Pan-Sino Heat Co., Ltd.,  dated
          September 24, 1996. (2)

10.129    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation, LLC, Tangshan Pan-Western Heat  and  Power
          Co.,  Ltd. and Tangshan Panda Heat and Power Co., Ltd.,
          dated September 24, 1996. (2)

10.130    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation, LLC, Tangshan Pan-Western Heat  and  Power
          Co., Ltd. and Tangshan Cayman Heat and Power Co., Ltd.,
          dated September 24, 1996. (2)

10.131    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation, LLC, Tangshan Cayman Heat and  Power  Co.,
          Ltd. and Tangshan Panda Heat and Power Co., Ltd., dated
          September 24, 1996. (2)

10.132    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation, LLC, Tangshan Cayman Heat and  Power  Co.,
          Ltd.   and  Tangshan  Pan-Sino  Heat  Co.  Ltd.,  dated
          September 24, 1996. (2)

10.133    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation, LLC, Tangshan Cayman Heat and  Power  Co.,
          Ltd. and Tangshan Pan-Western Heat and Power Co., Ltd.,
          dated September 24, 1996. (2)

10.134    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation, LLC, Tangshan Pan-Sino Heat Co., Ltd.  and
          Tangshan  Cayman  Heat  and  Power  Co.,  Ltd.,   dated
          September 24, 1996. (2)

10.135    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation, LLC, Tangshan Pan-Sino Heat Co., Ltd.  and
          Tangshan  Pan-Western Heat and Power Co.,  Ltd.,  dated
          September 24, 1996. (2)

10.136    Form    of   Guarantee   between   Pan-Western   Energy
          Corporation, LLC, Tangshan Pan-Sino Heat Co., Ltd.  and
          Tangshan   Panda  Heat  and  Power  Co.,  Ltd.,   dated
          September 24, 1996. (2)

10.137    Operation and Maintenance Agreement between Bhote Koshi
          Power  Company  Private Limited and  Harza  Engineering
          Company International L.P. dated April 24, 1997. (2)

10.138    Amended  and  Restated  Contract for  the  Engineering,
          Procurement  and Construction of the Upper Bhote  Koshi
          Hydroelectric    project   between    China    Gezhouba
          Construction  Group Corporation and Bhote  Koshi  Power
          Company  Private Limited dated December 19, 1996  ("EPC
          Contract"). (2)

10.138.01 Change Order No. 001 to EPC Contract, dated February 1,
          1997. (3)

10.138.02 Change  Order No. 002 to EPC Contract, dated April  26,
          1997.  (3)

10.138.03 Change  Order No. 003 to EPC Contract, dated  September
          4, 1997. (3)

10.138.04 Change  Order No. 004 to EPC Contract, dated  September
          5, 1997. (3)

10.138.05 Change  Order  No. 005 to EPC Contract, dated  November
          12, 1997.  (3)

10.139    Project  Agreement between His Majesty's Government  of
          Nepal  and  Bhote  Koshi Power Company Private  Limited
          dated July 21, 1996. (2)

10.140    Power   Purchase   Agreement  between   His   Majesty's
          Government  of  Nepal  and Bhote  Koshi  Power  Company
          Private Limited dated July 21, 1996. (2)

10.141    Services  Agreement between Panda of  Nepal  and  Harza
          Engineering  Company International L.P.  (for  services
          provided outside of Nepal) dated July 11, 1997. (2)

10.142    Services  Agreement between Panda of  Nepal  and  Harza
          Engineering  Company International L.P.  (for  services
          provided in Nepal) dated July 11, 1997. (2)

10.143    Investment Agreement, General Conditions between  Bhote
          Koshi  Power  Company  Private  Limited,  International
          Finance  Corporation and DEG-Deutsche  Investitions-und
          Entwicklungsgesellschaft mbH dated December  18,  1997.
          (3)

10.143.01 Investment Agreement, Special Conditions between  Bhote
          Koshi  Power  Company Private Limited and  DEG-Deutsche
          Investitions-und  Entwicklungsgesellschaft  mbH   dated
          December 18, 1997. (3)

10.143.02 Investment Agreement, Special Conditions between  Bhote
          Koshi  Power  Company Private Limited and International
          Finance Corporation dated December 18, 1997.  (3)

10.143.03 Investment  Agreement, Definitions (Schedule  A)  dated
          December 18, 1997.  (3)

10.144    Participation Agreement in respect of B Loan  to  Bhote
          Koshi  Power  Company Private Limited between  Dresdner
          Bank  AG,  New  York  and  Grand  Cayman  Branches  and
          International  Finance Corporation dated  December  18,
          1997.  (3)

10.145    Participation Agreement in respect of B Loan  to  Bhote
          Koshi  Power Company Private Limited between Bayerische
          Vereinsbank  AG  and International Finance  Corporation
          dated December 18, 1997.  (3)

10.146    Participation Agreement in respect of B Loan  to  Bhote
          Koshi Power Company Private Limited between Nederlandse
          Financierings-Maatschappij   Voor   Ontwikkelingslanden
          N.V.   and  International  Finance  Corporation   dated
          December 18, 1997.  (3)

10.147    Share  Retention  and Project Funds  Agreement  between
          Bhote Koshi Power Company Private Limited, Panda Energy
          International, Inc., Panda Bhote Koshi, Panda of Nepal,
          Harza  Engineering  Company  International,  a  Limited
          Liability    Company,    Harza   Engineering    Company
          International, L.P., Resource Development  Consultants,
          a  Limited  Liability Company, RDC  of  Nepal,  Soaltee
          Enterprises  Private Ltd., Soaltee  Hotel  Ltd.,  Surya
          Enterprises  Private  Ltd., Himal  International  Power
          Corporation    Pvt.    Ltd.,   International    Finance
          Corporation,    and    DEG-Deutsche    Investitions-und
          Entwicklungsgesellschaft mbH dated December  18,  1997.
          (3)

10.148    Equity Subscription Agreement between Bhote Koshi Power
          Company  Private  Limited,  Himal  International  Power
          Corporation  Ltd., and Wilmington Trust  Company  dated
          December 18, 1997.  (3)

10.149    Equity Subscription Agreement between Bhote Koshi Power
          Company  Private Limited, Panda of Nepal and Wilmington
          Trust Company dated December 18, 1997.  (3)

10.150    Equity Subscription Agreement between Bhote Koshi Power
          Company  Private Limited, RDC of Nepal  and  Wilmington
          Trust Company dated December 18, 1997.  (3)

10.151    Shareholder's  Agreement  between  Bhote  Koshi   Power
          Company  Private  Limited,  Himal  International  Power
          Corporation  Pvt. Ltd., Panda of Nepal, RDC  of  Nepal,
          and  International Finance Corporation  dated  December
          18, 1997.  (3)

10.152    Shareholder's  Agreement between Panda Bhote  Koshi,  a
          Cayman  Islands  exempted company, Panda  of  Nepal,  a
          Cayman Islands exempted company and Panda Global Energy
          Company and MCNIC Nepal Limited, as the Shareholders of
          Panda Bhote Koshi, dated December 18, 1997. (3).

10.152.01 Guarantee  Agreement  of  MCN  Investment  Corporation,
          dated December 18, 1997. (3)

10.152.02 Guarantee  Agreement  of  Panda  Energy  International,
          Inc., dated December 18, 1997. (3)

10.153    Master  Agreement  between Bhote  Koshi  Power  Company
          Private  Limited and International Finance Corporation,
          dated December 12, 1997.  (3)

10.153.01 Schedule and Annexes to Master Agreement between  Bhote
          Koshi  Power  Company Private Limited and International
          Finance Corporation, dated December 12, 1997. (3)

10.154    HMGN  Letter Approval of Financing Documents  addressed
          to   International  Finance  Corporation,  DEG-Deutsche
          Investitions-und   Entwicklungsgesellschaft   mbH   and
          Wilmington Trust Company dated December 8, 1997.  (3)

10.155    Risk  Management Facility Agreement between Bhote Koshi
          Power Company Private Limited and International Finance
          Corporation dated December 18, 1997.  (3)

10.156    Trust and Retention Agreement between Bhote Koshi Power
          Company    Private   Limited,   International   Finance
          Corporation,        DEG-Deutsche       Investitions-und
          Entwicklungsgesellschaft  mbH  and   Wilmington   Trust
          Company dated December 18, 1997.  (3)

10.157    Nepal  Agency  and  Retention Agreement  between  Bhote
          Koshi  Power  Company  Private  Limited,  International
          Finance   Corporation,  DEG-Deutsche   Investitions-und
          Entwicklungsgesellschaft mbH, Wilmington Trust Company,
          as  Trustee,  and  Nepal Grindlays Bank  Limited  dated
          December 18, 1997.  (3)

10.158    Mortgage Deed between Bhote Koshi Power Company Private
          Limited,          DEG-Deutsche         Investitions-und
          Entwicklungsgesellschaft mbH and International  Finance
          Corporation dated December 19, 1997. (3)

10.159    Security  Agreement and Assignment between Bhote  Koshi
          Power  Company  Private Limited, International  Finance
          Corporation,        DEG-Deutsche       Investitions-und
          Entwicklungsgesellschaft  mbH  and   Wilmington   Trust
          Company, as Trustee, dated December 18, 1997.  (3)

10.160    Security  Agreement  and Assignment  between  Panda  of
          Nepal,  International Finance Corporation, DEG-Deutsche
          Investitions-und   Entwicklungsgesellschaft   mbH   and
          Wilmington  Trust Company, as Trustee,  dated  December
          18, 1997.  (3)

10.161    Share  Pledge  Agreement  between  Himal  International
          Power  Corporation Pvt. Ltd., Wilmington Trust Company,
          as  Trustee,  and  Bhote  Koshi Power  Company  Private
          Limited  dated December 18, 1997.  (3)

10.162    Share Pledge Agreement between RDC of Nepal, Wilmington
          Trust  Company,  as  Trustee,  and  Bhote  Koshi  Power
          Company Private Limited  dated December 18, 1997.  (3)

10.163    Share  Pledge  Agreement  between  Panda  Bhote  Koshi,
          Wilmington  Trust  Company, as Trustee,  and  Panda  of
          Nepal, dated December 18, 1997.  (3)

10.164    Share   Pledge  Agreement  between  Panda   of   Nepal,
          Wilmington  Trust Company, as Trustee, and Bhote  Koshi
          Power Company Private Limited, dated December 18, 1997.
          (3)

10.165    Performance Guarantee by Industrial and Commercial Bank
          of China dated December 10, 1997. (3)

10.166    Equity  Letter of Credit by The Northern Trust  Company
          for  the  account of RDC of Nepal, dated  December  16,
          1997. (3)

10.167    Equity  Letter of Credit by The First National Bank  of
          Chicago  for  the  account of  Panda  of  Nepal,  dated
          December 17, 1997.  (3)

10.168    Bhote Koshi Power Company Private Limited  Amended  and
          Restated   Joint   Venture  Agreement   between   Himal
          International Power Corporation Ltd., Panda  of  Nepal,
          RDC  of  Nepal  and International Finance  Corporation,
          dated December 12, 1997.  (3)

10.169    Articles  of  Association of Bhote Koshi Power  Company
          Private Limited, dated August 22, 1997. (3)

10.170    Memorandum of Association of Bhote Koshi Power  Company
          Private Limited, dated August 22, 1997. (3)

10.171    Engineering  Services  Agreement  between  Bhote  Koshi
          Power  Company  Private Limited  and Harza  Engineering
          Company International L.P., dated December 1, 1997. (3)

12.00     Computation of Ratio of Earnings to Fixed Charges. (3)

21.00     Subsidiaries of Registrant. (3)

24.00      Powers of Attorney, included on signature page  hereof
(3)

27.00     Financial Data Schedule (3)


(1)        Previously  filed  as an exhibit to  the  Registration
  Statement  on  Form S-1 (Registration No. 333-19445)  of  Panda
  Funding  Corporation, Panda Interfunding Corporation and  Panda
  Interholding  Corporation (affiliates of the  registrant),  and
  incorporated herein by reference.
(2)        Previously  filed  as an exhibit to  the  Registration
  Statement  on  Form S-1 (Registration No. 333-29005)  of  Panda
  Global  Holdings,  Inc. and Panda Global  Energy  Company,  and
  incorporated herein by reference.
(3)       Filed herewith.
(4)         Confidential   treatment   of   certain   information
  identified   in  these  exhibits  has  been  granted   by   the
  Securities and Exchange Commission.

     (b)  Reports on Form 8-K  The Company filed a Report on Form
          8-K   (reflecting  disclosure  under  "Item  5.   Other
          Events") with the Securities and Exchange Commission on
          February  19,  1998.   No  financial  statements   were
          included in such filing.

     Supplemental Information to be Furnished With Reports  Filed
Pursuant  to Section 15(d) of the Act by Registrants  Which  Have
Not Registered Securities Pursuant to Section 12 of the Act.

       No  annual  report  or  proxy  statement  or  other  proxy
soliciting  material  was  sent  to  security  holders   of   the
registrant during the registrant's last fiscal year.



                              F-1
                 INDEX TO FINANCIAL STATEMENTS


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

  Independent Auditors' Report                             F-2

  Consolidated Balance Sheets as of December 31, 1996
    and 1997                                               F-3

  Consolidated Statements of Operations for the years
    ended December 31, 1995, 1996 and 1997                 F-5

  Consolidated Statements of Shareholder's Deficit for
    the years ended December 31, 1995, 1996 and 1997       F-6

  Consolidated Statements of Cash Flows for the years
    ended December 31, 1995, 1996 and 1997                 F-7

  Notes to Consolidated Financial Statements for the
    years ended December 31, 1995, 1996 and 1997           F-8




                  INDEPENDENT AUDITORS' REPORT




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

We have audited the accompanying consolidated balance sheets of
Panda Global Holdings, Inc. and subsidiaries (the "Company") as
of  December  31,  1996 and 1997, and the related  consolidated
statements of operations, shareholder's deficit and cash  flows
for  each  of the three years in the period ended December  31,
1997.    These  consolidated  financial  statements   are   the
responsibility  of the Company's management. Our responsibility
is  to  express  an  opinion  on these  consolidated  financial
statements based on our audits.

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

In  our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company at December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years  in
the   period  ended  December  31,  1997,  in  conformity  with
generally accepted accounting principles.




DELOITTE & TOUCHE LLP

Dallas, Texas
March 23, 1998


                           PANDA GLOBAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1997

                                     ASSETS

<TABLE>
<CAPTION>

                                                                      1996            1997
                                                             -------------   -------------
<S>                                                          <C>             <C>
Current assets:

  Cash and cash equivalents ...............................  $   1,335,086   $   2,929,289
  Restricted cash - current ...............................     17,809,921      92,828,082
  Accounts receivable .....................................      9,402,685       9,786,837
  Fuel oil, spare parts and supplies ......................      7,913,777       6,264,549
  Other current assets ....................................        164,905         257,877
                                                             -------------   -------------
    Total current assets ..................................     36,626,374     112,066,634

Plant and equipment:

  Electric generating facilities ..........................    288,716,711     291,515,328
  Furniture and fixtures ..................................        494,418         533,663
  Less: accumulated depreciation ..........................    (26,539,539)    (38,114,058)
  Construction in progress ................................           --        36,131,069
  Development costs .......................................      6,053,361       2,942,340
                                                             -------------   -------------
    Total plant and equipment, net ........................    268,724,951     293,008,342

Investment in joint venture ...............................           --           836,654

Restricted cash - debt service reserves and escrow deposits     32,548,366      72,430,527

Debt issuance costs, net of accumulated

  amortization of $165,015 and $1,583,368 respectively ....      7,570,521      13,539,612
                                                             -------------   -------------

                                                             $ 345,470,212   $ 491,881,769
                                                             =============   =============
</TABLE>
          See accompanying notes to consolidated financial statements

                                      F-3

<PAGE>

                           PANDA GLOBAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1997

                      LIABILITIES AND SHAREHOLDER'S DEFICIT

<TABLE>
<CAPTION>

                                                                   1996            1997
                                                          -------------   -------------
<S>                                                       <C>             <C>
Current liabilities:

  Accounts payable and accrued expenses:

    Construction costs .................................  $     660,167   $   5,600,000
    Interest and letter of credit fees .................      6,297,558       9,697,648
    Operating expenses and other .......................      6,991,796       4,879,522
  Current portion of long-term debt ....................      5,717,623       5,816,974
                                                          -------------   -------------
      Total current liabilities ........................     19,667,144      25,994,144

Deferred revenue .......................................           --        13,140,387

Long term debt, less current portion ...................    209,830,918     349,667,769

Capital lease obligation ...............................    217,488,645     231,278,528

Minority interest ......................................           --         5,741,166

Commitments and contingencies (Note 9)

Shareholder's deficit:

  Common stock, $.01 par value; 1,000 shares authorized,

     issued and outstanding ............................             10              10
  Advances to parent ...................................    (52,782,940)    (52,738,381)
  Accumulated deficit ..................................    (48,733,565)    (81,201,854)
                                                          -------------   -------------
                                                           (101,516,495)   (133,940,225)
                                                          -------------   -------------

                                                          $ 345,470,212   $ 491,881,769
                                                          =============   =============
</TABLE>
          See accompanying notes to consolidated financial statements

                                      F-4

<PAGE>

                           PANDA GLOBAL HOLDINGS, INC.

                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
                                                                              1995            1996            1997
                                                                      ------------   -------------   -------------
<S>                                                                   <C>            <C>             <C>
REVENUE:
  Electric capacity and energy sales ...............................  $ 29,858,475   $  32,273,736   $  65,004,373
  Steam and chilled water sales ....................................       473,040         502,757         623,934
  Interest income ..................................................       895,268       1,518,006       8,050,356
                                                                                                     -------------
                                                                      ------------   -------------   -------------
                                                                        31,226,783      34,294,499      73,678,663
                                                                      ------------   -------------   -------------

EXPENSES:
  Plant operating expenses .........................................     9,347,707      12,050,495      26,245,012
  Project development and administrative ...........................     2,550,376       5,187,348      11,579,911
  Interest expense and letter of credit fees .......................    11,715,929      19,414,012      55,329,157
  Depreciation .....................................................     4,209,453       5,531,502      11,574,519
  Amortization of debt issuance costs ..............................       554,311         493,799       1,418,353
  Amortization of partnership formation costs ......................       533,116         533,100            --
                                                                      ------------   -------------   -------------
                                                                        28,910,892      43,210,256     106,146,952
                                                                      ------------   -------------   -------------

INCOME (LOSS) BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM ......     2,315,891      (8,915,757)    (32,468,289)

  Minority interest ................................................    (5,047,580)     (2,405,160)           --
                                                                      ------------   -------------   -------------

LOSS BEFORE EXTRAORDINARY ITEM .....................................    (2,731,689)    (11,320,917)    (32,468,289)

  Extraordinary item - loss on early extinguishment of debt ........          --       (21,336,550)           --
                                                                      ------------   -------------   -------------

NET LOSS ...........................................................  $ (2,731,689)  $ (32,657,467)  $ (32,468,289)
                                                                      ============   =============   =============

</TABLE>
          See accompanying notes to consolidated financial statements


                                      F-5
<PAGE>

                           PANDA GLOBAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>

                                           COMMON STOCK                                   Total
                                           -------------   Advances    Accumulated     Shareholder's
                                           Shares Amount   to Parent     Deficit         Deficit
                                           -------------   ---------     -------         -------
<S>                                        <C>    <C>  <C>            <C>            <C>
BALANCE, January 1, 1995 ................  1,000  $10  $(13,864,929)  $(13,344,409)  $ (27,209,328)

  Advances to parent, net ...............   --     --   (13,004,619)          --       (13,004,619)

  Net loss ..............................   --     --          --       (2,731,689)     (2,731,689)
                                           -----  ---  ------------   ------------   -------------

BALANCE,  December 31, 1995 .............  1,000   10   (26,869,548)   (16,076,098)    (42,945,636)

  Advances to parent, net ...............   --     --   (25,913,392)          --       (25,913,392)

  Net loss ..............................   --     --          --      (32,657,467)    (32,657,467)
                                           -----  ---  ------------   ------------   -------------

BALANCE,  December 31, 1996 .............  1,000   10   (52,782,940)   (48,733,565)   (101,516,495)

  Advances from parent, net .............   --     --        44,559           --            44,559

  Net loss ..............................   --     --          --      (32,468,289)    (32,468,289)
                                           -----  ---  ------------   ------------   -------------

BALANCE,  December 31, 1997 .............  1,000  $10  $(52,738,381)  $(81,201,854)  $(133,940,225)
                                           =====  ===  ============   ============   =============
</TABLE>
          See accompanying notes to consolidated financial statements

                                      F-6
<PAGE>
                           PANDA GLOBAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
                                                                        1995            1996           1997
                                                                   ------------  -------------   -------------
<S>                                                              <C>             <C>             <C>
OPERATING ACTIVITIES:
  Net loss ..................................................... $  (2,731,689)  $ (32,657,467)  $ (32,468,289)
  Adjustments to reconcile net loss to
    net cash provided by operating activities:

      Loss on early extinguishment of debt .....................          --        21,336,550            --
      Minority interest ........................................     5,047,580       2,405,160            --
      Depreciation .............................................     4,209,453       5,531,502      11,574,519
      Amortization of debt issuance costs ......................       554,311         493,799       1,418,353
      Amortization of partnership formation costs ..............       533,116         533,100            --
      Amortization of loan discount and deferred
        interest on capital lease obligation ...................       124,176         391,491      22,250,146
  Changes in assets and liabilities:
    Accounts receivable ........................................       460,319      (4,202,686)       (384,152)
    Fuel oil, spare parts and supplies .........................       261,516      (4,829,609)      1,649,228
    Other current assets .......................................        26,484        (152,241)        (92,972)
    Accounts payable and accrued expenses ......................       (81,728)      9,529,946       1,287,815
                                                                   ------------  -------------   -------------
      Net cash provided (used) by operating activities .........     8,403,538      (1,620,455)      5,234,648
                                                                   ------------  -------------   -------------

INVESTING ACTIVITIES:

  Restricted cash - current ....................................       695,684     (15,933,779)    (75,018,161)
  Additions to property, plant and equipment ...................  (124,109,566)    (62,881,838)    (30,918,077)
  Investment in joint venture ..................................          --              --          (836,654)
  Acquisition of minority interest .............................          --       (34,256,423)           --
  Restricted cash - debt service reserves and escrow deposits ..      (747,655)    (21,600,418)    (39,882,161)
                                                                   ------------  -------------   -------------
      Net cash provided (used) by investing activities .........  (124,161,537)   (134,672,458)   (146,655,053)
                                                                   ------------  -------------   -------------

FINANCING ACTIVITIES:

  Contributions from minority interest owners ..................          --              --         5,741,166
  Distributions to minority interest owner .....................    (3,800,279)     (1,152,113)           --
  Advances (to) from parent ....................................   (13,004,619)    (25,913,392)         44,559
  Deferred revenue .............................................          --              --        13,140,387
  Proceeds from long term debt .................................   147,541,291     299,677,926     145,025,088
  Repayment of long term debt ..................................   (17,500,000)   (128,415,271)     (5,717,621)
  Repayment of capital lease obligation ........................          --              --        (7,831,527)
  Debt issuance costs ..........................................      (334,391)     (7,735,536)     (7,387,444)
                                                                   ------------  -------------   -------------
      Net cash provided (used) by financing activities .........   112,902,002     136,461,614     143,014,608
                                                                   ------------  -------------   -------------

Increase (decrease) in cash and cash equivalents ...............    (2,855,997)        168,701       1,594,203

Cash and cash equivalents, beginning of period .................     4,022,382       1,166,385       1,335,086
                                                                   ------------  -------------   -------------

Cash and cash equivalents, end of period ....................... $   1,166,385   $   1,335,086   $   2,929,289
                                                                   ============  =============   =============
                                                                 $        --
SUPPLEMENTAL CASH FLOW INFORMATION:

  Interest paid, net of amounts capitalized .................... $  11,799,297   $  15,656,801   $  51,929,067

NONCASH OPERATING, INVESTING AND FINANCING ACTIVITIES:

  Accrued construction costs ................................... $   5,597,818   $     660,167   $   5,600,000

</TABLE>
          See accompanying notes to consolidated financial statements

                                      F-7



          PANDA GLOBAL HOLDINGS, INC.  AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      For the Years Ended December 31, 1995, 1996 and 1997

1.   ORGANIZATION AND BASIS OF PRESENTATION

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

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

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

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

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

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


2. SIGNIFICANT ACCOUNTING POLICIES

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

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

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

      Restricted Cash - Debt Service Reserves and Escrow Deposits
--   Debt service reserves and escrow deposits include cash  held
by the bank to pay debt service and capital improvements pursuant
to the trust indenture agreements.

      Fuel  Oil, Spare Parts and Supplies --  These items include
fuel  oil  stored  on-site and various spare parts  and  supplies
necessary  for  plant maintenance. The items are valued  at  cost
using  the  weighted average method, and are expensed,  as  plant
operating expenses, when used.

      Plant and Equipment --  Electric generating facility assets
are  recorded  at  cost and depreciated using  the  straight-line
method  over the estimated useful lives of the assets,  generally
twenty-five  years. Depreciation of office furniture,  equipment,
and  leasehold  improvements is provided using the  straight-line
method  over the estimated useful lives of the assets,  generally
three  to five years. Costs, including interest on funds borrowed
to  finance  the construction of facilities, related to  projects
under  construction are capitalized as construction in  progress.
Construction  in  progress balances are transferred  to  electric
generating  facilities  when  the  assets  are  ready  for  their
intended  use.  Capitalized interest was $5,793,296,  $11,055,172
and   $2,057,000  during  1995,  1996  and  1997,   respectively.
Maintenance and repair costs are charged to expense as  incurred.
Other  projects  currently  under  development  by  PEII  may  be
transferred  to  the  Company  at  PEII's  historical  cost  when
construction  financing has been obtained or when  the  completed
projects have commenced commercial operations, subject to certain
limitations in the Company's indentures (see Note 7).

     Debt Issuance Costs --  The costs related to the issuance of
debt  are  capitalized and amortized using the effective interest
method over the term of the related debt.

      Partnership  Formation Costs --  The costs related  to  the
formation of Panda-Rosemary were capitalized and amortized over a
five year period ended December 31, 1996.

      Deferred  revenue  -- Revenue from the sale  of  rights  to
future  interest income from certain of the Company's  restricted
cash  accounts  (debt  service reserves and escrow  deposits)  is
deferred and recognized as interest revenue over the lives of the
related debt obligations.

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

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

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

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

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

     Allocation of Administrative Costs --  PEII performs certain
accounting,  legal, insurance, and consulting  services  for  the
Company.  These  general and administrative costs  are  generally
allocated  to  the  Company using the  percentage  of  time  PEII
personnel spent performing these services. The expenses allocated
were  $1,599,200,  $3,308,000 and $5,975,000 in  1995,  1996  and
1997,  respectively, and are included in project development  and
administrative   expenses   in  the  statement   of   operations.
Management  believes the method used to allocate these  costs  is
reasonable.

      Asset  Impairment  --   In  accordance  with  Statement  of
Financial  Accounting  Standards  No.  121  "Accounting  for  the
Impairment of Long-Lived Assets and for Long-Lived Assets  to  be
Disposed of" (SFAS 121), the Company evaluates the impairment  of
long-lived  assets  if circumstances indicate that  the  carrying
value of those assets may not be recoverable. The Company adopted
SFAS 121 in 1996 and such adoption had no material impact on  its
financial position or results of operations.

      Interest  Cost  -- Total interest cost incurred,  including
capitalized   interest,   was   $17,509,225,   $30,469,184    and
$57,386,157 in 1995, 1996 and 1997, respectively.


3.  ADVANCES TO PARENT

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

      The  advances  to parent for the years ended  December  31,
1995, 1996 and 1997 consist of the following:

<TABLE>

 <S>                                              <C>
  Balance, January 1, 1995                         $13,864,929
  Cash advanced to parent, net                      14,603,819
  Administrative costs allocated from parent       (1,599,200)

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

  Balance, December 31, 1996                        52,782,940
  Cash advanced to parent, net.                      5,930,441
  Administrative costs allocated from parent.      (5,975,000)

  Balance, December 31, 1997.                      $52,738,381
</TABLE>

      The  average balance of advances to parent was $20,367,000,
$39,826,000   and  $52,760,000  during  1995,  1996   and   1997,
respectively.

4. FUEL OIL, SPARE PARTS AND SUPPLIES

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

<TABLE>
<CAPTION>                                 1996               1997
         <S>                           <C>              <C>
          Fuel oil                      $3,496,269       $3,232,983
          Spare parts and supplies       4,417,508        3,031,566
                    Total               $7,913,777       $6,264,549

</TABLE>

5. POWER PROJECTS

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

      The  Rosemary Project produces both electricity and  useful
thermal energy in the form of steam. Electric capacity and energy
sales  are  based  on  the terms of the power purchase  agreement
between   Panda-Rosemary  and  Virginia  Electric  Power  Company
("VEPCO")  dated January 24, 1989. The agreement requires  Panda-
Rosemary to provide VEPCO with all the available capacity of  the
Rosemary  Project on an as-needed basis with VEPCO  obligated  to
pay  for  the  power  delivered and dependable  capacity  of  the
facility  at  a  rate  per kilowatt which  decreases  in  certain
periods as defined by the agreement. The term of the agreement is
25  years and  expires December 2015. A financial institution has
provided  a  letter  of  credit  for  approximately  $5   million
guaranteeing   Panda-Rosemary's  performance  under   the   power
purchase agreement. Steam and chilled water are sold to  a  third
party  under  a separate agreement which also has a  term  of  25
years  and expires December 2015. The Rosemary Project is managed
by  PRC,  the  general partner, and was operated by an  unrelated
third  party  through  1996.   Effective  January  1,  1997,  the
Rosemary  Project  is  operated by a  subsidiary  of  PEII.   The
Company  incurred management fees of $1,675,142 to the affiliated
management company for the year ended December 31, 1997.

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

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

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

      Brandywine  Project  -- On August 9, 1991, Panda-Brandywine
entered  into  a  power purchase agreement ("PPA")  with  Potomac
Electric  Power  Company ("PEPCO") to build a 230  megawatt  gas-
fired  facility  in Brandywine, Maryland ("Brandywine  Project").
The  Brandywine  Project, constructed by Raytheon  Engineers  and
Constructors,  Inc.  ("Raytheon") under  a  fixed  fee,  turn-key
contract,  was  substantially completed and commenced  commercial
operations in October, 1996.

      The PPA requires Panda-Brandywine to supply PEPCO with  all
available capacity from the facility for the 25-year term of  the
agreement with a guaranteed dispatch level of at least  60  hours
per  week for the first 15 years.  In late 1997, Panda-Brandywine
and  PEPCO reached a tentative agreement for modification of  the
PPA (see Note 9). A construction loan commitment in the amount of
$215 million was provided by General Electric Capital Corporation
("GECC")  in April, 1995. On December 30, 1996 the loan converted
to a capital lease with GECC in the amount of $217.5 million with
a  twenty  year term and two five year renewal options (see  Note
7).   GECC  has committed to provide letters of credit  up  to  a
maximum    of   approximately   $7.3   million   (under   certain
circumstances) guaranteeing Panda-Brandywine's performance  under
the agreement.

      Kathleen  Project   --  In  1991,  through  a  wholly-owned
subsidiary,  the  Company entered into a 30-year  power  purchase
agreement  with  Florida Power Corporation ("Florida  Power")  to
build  a  75  megawatt gas-fired facility near Lakeland,  Florida
("Kathleen Project").  The Company and Florida Power are  engaged
in  litigation before various state and federal forums in Florida
over  the interpretation of the Kathleen power purchase agreement
(see  Note  9).  Actual construction of the Kathleen Project  has
not  yet  commenced and is subject to the outcome of the  related
litigation  and  the successful completion  of   financing.   The
Company  has incurred development costs for the Kathleen  Project
of  $2.8  million and $2.9 million as of December  31,  1996  and
1997,  respectively,  which are included in plant  and  equipment
under development costs in the accompanying balance sheet.

     Luannan Project  -- In 1994, PEII entered into a preliminary
letter of intent with a subsidiary of the North China Power Group
Company  ("NCPGC") for the purchase and sale of  electric  energy
from two 50 megawatt coal-fired cogeneration plants to be located
in  Luannan County, Tangshan Municipality, Hebei Province,  China
("Luannan  Project").  On September 22, 1995, Tangshan Panda  and
Tangshan Pan-Western entered into a Power Purchase Agreement with
NCPGC  for  the  purchase and sale of electric  energy  from  the
Luannan  Project. Under the terms of the 20-year  agreement,  all
electrical  output  of the project will be sold  to  NCPGC.   The
steam  and  hot  water  generated by  Tangshan-Cayman's  facility
within   the  project  will  be  sold  to  the  domestic  Chinese
industrial   and   commercial  markets  by   Tangshan   Pan-Sino.
Financing  for the project was completed in April 1997 (see  Note
7).  The Luannan Project is being constructed pursuant to a fixed-
price,  turnkey  contract with Harbin Power  Engineering  Company
Limited,  subject to escalation under certain circumstances.  The
Company  has  incurred  costs for the  Luannan  Project  of  $3.3
million  and  $36.1  million as of December 31,  1996  and  1997,
respectively,  which  are included in plant and  equipment  under
development  costs  (1996)  and under  construction  in  progress
(1997)  in  the  accompanying  balance  sheet.   The  costs  were
reclassified from development costs to construction  in  progress
due  to  the  completion  of financing and  the  commencement  of
construction activity for the project in 1997.

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

      Nepal Project -- The Company has an equity investment in  a
hydroelectric power project in Nepal.  See Note 6.


6.   INVESTMENT IN JOINT VENTURE

     The Company has an investment in a joint venture (Bhote
Koshi Power Company, Pvt. Ltd., referred to as "BKPC" )  with a
major hydroelectric engineering company and a local Nepalese
party to build a 36 megawatt hydroelectric facility on the upper
Bhote Koshi River in Nepal ("Nepal Project").  The investment is
accounted for under the equity method.  The Company's ownership
interest was transferred from a subsidiary of PEII to the Company
at historical cost in June 1997.  A 25-year power purchase
agreement with the Nepal Electricity Authority was signed in July
1996.  The Nepal Project is being constructed pursuant to a fixed-
price, turnkey contract with China Gezhouba Construction Group
Corporation.  Commercial operations are scheduled to commence in
2000.

     On December 29, 1997 financial closing occurred with respect
to the Nepal Project.  BKPC received commitments for (i)  up to
approximately $68.8 million in nonrecourse debt financing from a
group of international lenders and (ii) up to approximately $29.5
million in equity from the Company and a group of third-party
investors which includes one of the lenders.  At December 31,
1997, approximately $17.9 million of the debt commitments had
been funded and were outstanding. The interest rates on the loans
are a combination of fixed and variable rates, generally at the
annual rate of 325 to 350 basis points above the London Interbank
Offered Rate.  Semiannual interest and principal payments on the
loans commence in March 1998 and March 2001, respectively.  Final
maturity of the loans occurs at dates ranging from 2008 through
2011.  Commitment fees of 1% to 2% are payable on undisbursed
portions of the loan commitments.

     The equity commitments of up to approximately $29.5 million
referred to above include approximately $3.1 million in project
development and administrative expenses previously incurred by
PEII and the investors which cannot be capitalized under GAAP and
which therefore are not  reflected in BKPC's balance sheet.  At
December 31, 1997, approximately $5.1 million of the equity
commitment (in addition to the $3.1 million of project
development and administrative expenses referred to above) had
been contributed.  The Company had contributed $10.8 million in
capitalized development costs (in addition to $1.2 million in
project development and administrative expenses) and received
cash reimbursement from BKPC at financial closing for $10.0
million of those costs.  The Company has satisfied its equity
commitment of $2 million as of December 31, 1997.  In  addition
to the basic equity commitment, the Company and the investors are
required to contribute up to $10 million on a pro-rata basis in
the event of cost overruns.

     The Company and an outside investor ("Investor") jointly own
a 75% interest in BKPC and other investors own the remaining 25%.
Based on the agreement with the Investor, cash flow attributable
to the Company's and the Investor's combined 75% ownership
interest will be allocated 85% to the Investor and 15% to the
Company until the Investor achieves a 20% internal rate of return
on its investment (the "Flip Date"), and 90% to the Company and
10% to the Investor thereafter.

     BKPC is a development stage enterprise.  All development and
construction costs incurred to date have been capitalized.
Summarized balance sheet information for BKPC at December 31,
1997 is as follows:

<TABLE>
         <S>                             <C>
         Cash                             $      146,000
         Restricted cash - current             5,637,608
         Construction in progress             18,332,944
         Debt issue costs                      1,967,758

         Total assets                       $ 26,084,310

         Current liabilities               $   3,126,827
         Long-term debt                       17,851,667
         Stockholders' equity                  5,105,816

         Total liabilities and equity       $ 26,084,310
</TABLE>

7. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION

      Long-term debt and capital lease obligation of the  Company
as of December 31, 1996 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
                                      1996             1997
<S>                               <C>             <C>
First Mortgage Bonds for
   Rosemary Project                $110,023,541    $104,521,719
Series A Bonds                      105,525,000     105,309,201
Senior Secured Notes                         -      145,653,823
Total long-term debt                215,548,541     355,484,743
   Less current portion             (5,717,623)     (5,816,974)
                                   ------------    ------------
                                   $209,830,918    $349,667,769
                                   ============    ============
 Capital lease obligation for
   Brandywine Project               $217,488,645   $231,278,528
                                    ============   ============
</TABLE>

     Taxable Revenue Bonds  -- In October 1989, PRC obtained long-
term  financing  for the Rosemary Project in  the  form  of  $116
million  of  taxable revenue bonds ("Tax Bonds")  issued  by  the
Halifax Regional Economic Development Corporation ("Halifax"),  a
nonprofit  corporation organized in North Carolina. In connection
with  the  issuance  of  first mortgage bonds  for  the  Rosemary
Project  in  July 1996 as discussed below, the Company refinanced
the  Tax Bonds and incurred a loss of $13.3 million on the  early
extinguishment of that obligation. The Tax Bonds bore interest at
a fixed rate of 9.25% payable semiannually.

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

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

      First  Mortgage  Bonds  --   In July  1996,  Panda-Rosemary
Funding Corporation ("PRFC"), a wholly-owned subsidiary of Panda-
Rosemary,  issued $111,400,000 of first mortgage bonds ("Rosemary
Bonds").  The Rosemary Bonds bear interest at a fixed rate of  8-
5/8%  payable quarterly commencing November 15, 1996.   Scheduled
principal payments are required quarterly commencing November 15,
1996,  and  will continue through maturity on February 15,  2016.
The  Rosemary Bonds are subject to mandatory redemption prior  to
maturity  under  certain  conditions.   The  Rosemary  Bonds  are
unconditionally guaranteed by Panda-Rosemary but are non-recourse
to  the  Company,  and are secured by substantially  all  of  the
assets  of  Panda-Rosemary  as well as  all  of  the  outstanding
capital  stock  of PRC, PRC II and PRFC.  The indenture  contains
certain   covenants,  including  limitations  on   distributions,
additional debt and certain other transactions.

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

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

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

      In  connection with the issuance of the Series A Bonds, the
Company  advanced approximately $34.8 million to PEII for project
development and general corporate purposes.  See Note 3.

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

      Construction Loan and Capital Lease --  On April 10,  1995,
Panda-Brandywine  closed the initial funding of  a  $215  million
construction  loan  commitment with GECC. The  construction  loan
bore an interest rate of the Eurodollar rate plus 2.5%.

      The  Brandywine Project commenced commercial operations  on
October  31, 1996.  The construction loan was converted to  long-
term  non-recourse financing of $217.5 million in the form  of  a
capital  lease  on  December  30,  1996.   To  effect  the  lease
financing, title to the Brandywine Project was transferred  to  a
third  party  trustee  and leased back to Panda-Brandywine.   The
Brandywine facility lease is a net lease with an initial term  of
20  years  and two five-year renewal options.  The minimum  lease
payments through 2000 are less than the interest expense  on  the
capital lease obligation, resulting in increases in the principal
amount  of  the  capital lease obligation.  Amortization  of  the
original principal amount of the capital lease obligation  begins
in  2007.   The  documents governing the lease financing  contain
various affirmative and negative covenants, including limitations
on  the ability of Panda-Brandywine to make distributions to  its
partners.  In  connection with the capital lease financing,  GECC
has committed to provide letters of credit up  to  a  maximum  of
approximately $7.3 million under certain circumstances (see  Note
5).   The  letters of credit have an annual fee of 1.50%  on  any
amounts outstanding.

     The future minimum lease commitments under the capital lease
for the Brandywine Project are as follows:
<TABLE>
<CAPTION>

<S>                                   <C>

1998                                  $   10,419,439
1999                                      17,584,915
2000                                      20,489,320
2001                                      25,613,918
2002                                      27,770,137
Thereafter                               473,645,389
                                       -------------
Total minimum lease payments             575,523,118
Amounts representing interest          (344,244,590)
                                       -------------

Present value of net minimum
    payments                            $231,278,528
                                       =============
</TABLE>
      Long-term  Debt Maturities --  The principal maturities  of
long-term  obligations, excluding the capital lease  relating  to
the  Brandywine  Project, for each of the five  years  succeeding
December 31, 1997 and thereafter are as follows:

<TABLE>
<CAPTION>

      <S>                                   <C>
      1998                                  $    5,816,974
      1999                                       5,926,269
      2000                                       7,674,598
      2001                                      11,629,603
      2002                                      18,081,509
      Thereafter                               315,901,967
      Total                                    365,030,920
      Less discount                            (9,546,177)
                                              $355,484,743
</TABLE>
8. INCOME TAXES

     A provision for income taxes for 1995, 1996 and 1997 has not
been recorded since operating losses were incurred for each year.

      The  Company has approximately $47 million of domestic  net
operating  loss carryforwards at December 31, 1997, the  benefits
of  which will be available to the Company when realized by PEII.
The net operating loss carryforwards will expire during the years
2007  to  2012.  PEII may become subject to a limitation  on  the
amount  of  net operating loss carryforwards which  may  be  used
annually to offset income should certain changes in its ownership
occur  in  the  future.  Should PEII become  subject  to  such  a
limitation,  the amount of tax benefits available to the  Company
could   be   reduced.    Additionally,  the   Company's   foreign
subsidiaries have approximately $10 million of net operating loss
carryforwards  which  are considered to be  permanently  invested
outside  the  United  States and are not currently  available  to
offset U.S. taxable income.

      Domestic  deferred tax assets of approximately $14  million
and  $24  million as of December 31, 1996 and 1997, respectively,
consist  primarily of interest in partnerships and net  operating
losses and are offset by a valuation allowance. The deferred  tax
asset  for  interest in partnerships relates  to  the  difference
between  the  tax  basis  of  the  assets  contributed   to   the
partnership  upon  its  formation  and  the  Company's  financial
reporting  basis in those assets.  Additionally, the Company  has
foreign  deferred  tax assets of approximately $3  million  which
consist  primarily of net operating losses and are  offset  by  a
valuation allowance.

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


9. COMMITMENTS AND CONTINGENCIES

      In connection with a previous borrowing from Nova Northwest
Inc.  ("Nova"), Nova received a cash flow participation  interest
in  the  distributions from the Rosemary Project for the term  of
the    Panda-Rosemary   L.P.   partnership    agreement.     Such
participation  interest amounted to 4.33% of  the  Company's  own
participation  interest, which was 10% at the time the  agreement
was  entered into.  PEII  filed an action with the District Court
of  Dallas  County,  Texas  seeking a declaratory  judgment  that
Nova's  cash  flow participation is 0.433% of the Company's  100%
interest  after  the acquisition of the institutional  investor's
90%  limited  partnership interest.  In 1997,  this  dispute  was
settled.  The settlement cost will be paid by PEII;  accordingly,
the  cost is not reflected in the Company's financial statements.
The settlement did not have a material impact on the consolidated
financial position, results of operations or cash flows of PEII.

       In  August  1996,  Panda-Brandywine  and  PEPCO  commenced
discussions concerning commercial operational requirements of the
Brandywine  Project  and conversion of the construction  loan  to
long-term  financing  in  the form  of  a  lease.   During  these
discussions,  disagreements  arose between  Panda-Brandywine  and
PEPCO  with respect to certain provisions of the Brandywine Power
Purchase  Agreement  which  relate to the  determination  of  the
interest  rate  that  is  the  basis for  reduction  in  capacity
payments thereunder (the "PEPCO Interest Rate Dispute"). In  late
1997,  Panda-Brandywine reached a tentative agreement with  PEPCO
under which the amount of capacity payments will be increased (as
compared  with  the  capacity  payments  originally  anticipated)
during  the  first  ten  years  following  the  commencement   of
commercial  operations,  and will be  reduced  during  the  final
fifteen  years  of the Power Purchase Agreement.   The  agreement
provides  that  PEPCO  will  pay to Panda-Brandywine  within  two
business days following the effective date of the settlement  (as
discussed below) approximately $3.8 million, which represents the
difference between the originally scheduled capacity payments and
the  capacity payments due under the agreement for the first nine
months of 1997.  Capacity payments for the final three months  of
1997  were  made  in  accordance with  the  tentative  agreement.
Additionally,  PEPCO  has agreed to release  certain  amounts  of
capacity  to  Panda-Brandywine for  resale  of  energy  to  other
parties,  and  to  grant  Panda-Brandywine  the  right  to   sell
additional energy to other parties subject to the availability of
the  facility.  The effectiveness of the agreement with PEPCO  is
subject to the consent of the financing parties, including  GECC,
under  the capital lease financing arrangements for the facility.
In  this regard, Panda-Brandywine has commenced discussions  with
GECC  and  the other financing parties concerning such  consents,
and  has  executed  an agreement in principle with  GECC.   Among
other  things, this agreement in principle provides for  (i)  the
reallocation  of  lease payments to GECC in order  to  match  the
revised   capacity  payment  schedule  with   PEPCO,   (ii)   the
reimbursement  to GECC by Panda-Brandywine of certain  fees,  and
(iii)  certain  technical amendments to the applicable  financing
documents.   The  finalization  of  the  tentative  agreement  is
subject  to   several conditions, including but  not  limited  to
written  consents  from  all other financing  parties  and  other
applicable parties, receipt of legal opinions concerning the  tax
and   regulatory  consequences  of  the  transaction,   and   the
preparation  of definitive legal documentation of the transaction
to the satisfaction of all parties involved.

      As discussed in Note 5, Raytheon constructed the Brandywine
Project   pursuant   to   a  fixed-price,  turnkey   engineering,
procurement  and  construction  contract  (the  "Brandywine   EPC
Agreement")   with  Panda-Brandywine.   Raytheon  completed   the
construction and start-up of the Brandywine Project and  has  met
the   requirements  for  commercial  operations  and  substantial
completion under the Brandywine EPC Agreement, although the  date
on  which commercial operations were achieved and the entitlement
of  Raytheon  to  certain  early  completion  bonuses  under  the
Brandywine  EPC  Agreement are the subject of a  dispute  between
Panda-Brandywine  and Raytheon.  The Company estimates  that  the
amount  in dispute is less than $1 million and believes that  the
resolution  of  this  dispute will not have  a  material  adverse
effect upon the financial position, results of operations or cash
flows of the Company.

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

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


10. RELATED PARTY TRANSACTIONS

      The  Company purchases insurance coverage through an agency
owned by a major shareholder of PEII who is also a member of  the
board  of  directors of PEII and a relative of  PEII's  chairman.
The  Company believes such coverage is on terms that are no  less
favorable  than  reasonably  available  from  unaffiliated  third
parties.   Total  insurance purchases through  this  agency  were
$298,728,  $754,388 and $1,666,623 for the years  ended  December
31, 1995, 1996 and 1997, respectively.

     The Rosemary Project is operated by an affiliated management
company which is a subsidiary of PEII (see Note 5).

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

      The  estimated  fair  values  of  the  Company's  financial
instruments as of December 31, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>


                                     Carrying Value   Fair Value
<S>                                  <C>             <C>
1996:  Long-term debt,
including current portion            $215,548,541    $220,824,791
1997:  Long-term debt,
including current portion             355,484,743     360,485,472
</TABLE>

       The  Rosemary  Bonds, the Series A Bonds  and  the  Senior
Secured Notes have limited trading. The fair value of these bonds
is estimated based on a third party quotation.

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

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




                           SIGNATURES

Pursuant  to  the  requirements of Section 13  or  15(d)  of  the
Securities  Exchange Act of 1934, the registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.

                                        PANDA   GLOBAL  HOLDINGS,
                                        INC.

Date:     March 27, 1998                By:  /s/ Robert W. Carter
                                             Robert   W.  Carter,
                                             Chairman   of    the
                                             Board    and   Chief
                                             Executive Officer


                        POWER OF ATTORNEY

      KNOW  ALL  PEOPLE  BY  THESE PRESENTS,  that  each  of  the
undersigned officers and directors of Panda Global Holdings, Inc.
(the  "Company") hereby constitutes and appoints Robert W. Carter
or  Janice Carter or any of them (with full power to each of them
to  act  along), his or her true and lawful attorney-in-fact  and
agent, with full power of substitution, for him or her and on his
or  her   behalf and in his or her name, place and stead, in  any
and  all  capacities,  to sign, execute, and  file  any  and  all
documents relating to the Company's Form 10-K for the year ending
December   31,  1997,  including  any  and  all  amendments   and
supplements hereto, with any regulatory authority, granting  said
attorneys  and each of them; full power and authority to  do  and
perform  each and every act and thing requisite and necessary  to
be done in and about the premises in order to effectuate the same
as  fully  to  all  intents and purposes as he  himself,  or  she
herself,  might  or  could  do  if  personally  present,   hereby
ratifying  and  confirming  all that said  attorneys-in-fact  and
agents,  or either of them, or their or his or her substitute  or
substitutes, may lawfully do or cause to be done.

Pursuant to the requirements of Securities Exchange Act of  1934,
this  report  has been signed below by the following  persons  on
behalf  of the registrant and in the capacities and on the  dates
indicated.


Signature                Title                    Date

/s/  Robert W. Carter    Chairman of the Board,   March 27, 1998
Robert W. Carter         Chief Executive Officer
                         and Director (Principal
                         Executive Officer)

/s/  Janice Carter       Executive Vice President,   March 27,  1998
Janice Carter            Secretary and Treasurer
                        (Principal Financial
                        and Accounting Officer)