EXHIBIT NO. 10.151

                     SHAREHOLDERS' AGREEMENT


                              among


           BHOTE KOSHI POWER COMPANY PRIVATE LIMITED,


        HIMAL INTERNATIONAL POWER CORPORATION PVT. LTD.,


                         PANDA OF NEPAL,


                          RDC OF NEPAL,


                               and


                INTERNATIONAL FINANCE CORPORATION





                  Dated as of the Closing Date






                             INDEX
                                                         Page No.

     ARTICLE 1
     Definitions

          Section 1.1   Definitions                                     1
          Section 1.2   Principles of Construction                      3

     ARTICLE 2
     The Company

          Section 2.1   Shareholding of the Company and the Sponsor
                        Shareholders.                                   4
          Section 2.2   Ownership Free and Clear                        5
          Section 2.3   Boards of Directors                             5
          Section 2.4   Charter Documents; Other Actions                6
          Section 2.5   Indemnification of Directors                    8
          Section 2.6   Dividend Policy                                 8

     ARTICLE 3
     Transfer of Shares

          Section 3.1   Transferability of Shares                       9
          Section 3.2   HMGN Buyout                                     9
          Section 3.3   Tag-Along Rights                               10
          Section 3.4   Legend                                         11
          Section 3.5   Registration and Other Rights                  11

     ARTICLE 4
     Miscellaneous

          Section 4.1   No Inconsistent Agreements                     14
          Section 4.2   Recapitalization Exchanges, Etc                15
          Section 4.3   Remedies                                       15
          Section 4.4   Notices                                        15
          Section 4.5   Benefit of Agreement                           17
          Section 4.6   No Waiver; Remedies Cumulative                 17
          Section 4.7   Documents                                      17
          Section 4.8   Governing Law                                  17
          Section 4.9   Counterparts; Integration                      18
          Section 4.10  Heading Descriptive                            18
          Section 4.11  Amendment or Waiver                            18
          Section 4.12  Severability                                   18
          Section 4.13  Termination                                    18
          Section 4.14  Expenses                                       18
          Section 4.15  Joint Venture Agreement                        18


          EXHIBIT A

CERTIFICATE OF REGISTRATION OF THE COMPANY                            A-1


          EXHIBIT B

MEMORANDUM AND ARTICLES OF ASSOCIATION,
as amended and as in effect, of the Company                           B-1


          EXHIBIT C

REGISTRATION RIGHTS                                                   C-1

          Section 1   Piggy-Back Rights     C-1
          Section 2   Indemnification     C-2
          Section 3   Restriction on Sale by the Company and
                      Sponsor Shareholders                           C-3



                    SHAREHOLDERS' AGREEMENT

      THIS SHAREHOLDERS' AGREEMENT (this "Agreement") is made and
entered  into  as  of the Closing Date among  BHOTE  KOSHI  POWER
COMPANY  PRIVATE  LIMITED,  a private limited  liability  company
organized and existing under the Nepalese Company Act, 2021  (the
"Company"),  HIMAL INTERNATIONAL POWER CORPORATION PVT.  LTD.,  a
corporation  organized  and existing  under  the  laws  of  Nepal
("HIPC"),  PANDA OF NEPAL, a corporation organized  and  existing
under  the laws of the Cayman Islands ("Panda of Nepal"), RDC  OF
NEPAL,  an exempted company with limited liability organized  and
existing  under the laws of the Cayman Islands ("RDC of  Nepal"),
and   INTERNATIONAL   FINANCE   CORPORATION,   an   international
organization  established  by Articles  of  Agreement  among  its
member  countries ("IFC").  Each of HIPC, Panda of Nepal, RDC  of
Nepal and IFC and any other Person who shall become a party to or
agree  to be bound by the terms of this Agreement after the  date
hereof  and  who  shall own Shares directly  in  the  Company  is
sometimes hereinafter referred to individually as a "Shareholder"
and collectively as "Shareholders."


                      W I T N E S S E T H:

      WHEREAS,  IFC  has  entered into a certain  IFC  Investment
Agreement  dated as of the Closing Date between the  Company  and
IFC (the "IFC Investment Agreement");

      WHEREAS, the Company, IFC and DEG-Deutsche Investitions-und
Entwicklungsgesellschaft  mbH  have  entered  into  that  certain
Investment  Agreement General Conditions dated as of the  Closing
Date (the "General Conditions"); and;

      WHEREAS,  it  is  a  condition  of  the  subscriptions  and
disbursements under the IFC Investment Agreement that the parties
hereto shall have entered into this Agreement.

     NOW, THEREFORE, the parties hereto agree as follows:

                           ARTICLE 1

                          Definitions

      Section  1.1     Definitions.  For  all  purposes  of  this
Agreement,  capitalized  terms used  but  not  otherwise  defined
herein  shall have the meanings set forth in Schedule  A  to  the
General  Conditions.  In addition, the following  terms  as  used
herein have the following meanings:

"Accounting Firm"        means an accounting firm to be mutually
                    agreed upon by the Lenders and the Company;

"Buyout"                has the meaning set forth in Section 3.2;

"Change of Control"         means, in respect of the Company, the
                    occurrence  of  one or more of the  following
                    events:  (i) an event or a series  of  events
                    occurs  by  which  any  Person  or  group  of
                    Persons acting in concert (other than one  or
                    more  of the Sponsor Shareholders) shall have
                    become  the  beneficial  owner  (within   the
                    meaning  of  Rule 13d-3 under the  Securities
                    Exchange  Act of 1934, as amended) of  shares
                    of  the  Company, representing a majority  of
                    the  combined voting power of the outstanding
                    shares  of the Company ordinarily having  the
                    right  to  vote in the elections of directors
                    or  (ii) directors nominated or elected by  a
                    Person  or  a  group  of  Persons  acting  in
                    concert  (other  than  one  or  more  of  the
                    Sponsor  Shareholders)  shall  constitute   a
                    majority  of  the board of directors  of  the
                    Company or (iii) any direct or indirect sale,
                    lease,  exchange  or other transfer  (in  one
                    transaction   or   a   series   of    related
                    transactions)  of all, or substantially  all,
                    of the assets of the Company to any Person or
                    group  of  Persons; provided,  however,  that
                    none of the events set forth in the preceding
                    clauses   shall  constitute  a   "Change   of
                    Control"  if  caused  directly  by  creditors
                    exercising  remedies pursuant to any  of  the
                    Loan Documents;

"Charter Documents"    means, with respect to any Person, (i) the
                    Certificate  of Incorporation of such  Person
                    and  (ii)  the  Memorandum  and  Articles  of
                    Association of such Person, as amended and as
                    in  effect  on  the date of  this  Agreement;
                    copies  of  the  Charter  Documents  of   the
                    Company are attached hereto as Exhibits A and
                    B;

"Company"                 has  the meaning set forth in the first
                    paragraph of this Agreement;

"Harza LP"                  means   Harza   Engineering   Company
                    International  L.P.,  a  limited  partnership
                    organized and existing under the laws of  the
                    State of Delaware;

"Harza LLC"                 means   Harza   Engineering   Company
                    International, a limited liability company, a
                    limited   liability  company  organized   and
                    existing  under  the laws  of  the  State  of
                    Wyoming;

"HIPC Shareholders"      means Soaltee Enterprises, Soaltee Hotel
                    and Surya.

"IFC Nominee"       has the meaning set forth in Section 2.3(b);

"Indemnitees"       has the meaning set forth in Section 2.5;

"Issuer Offering"   has the meaning set forth in Section 1(a)  of
                    Exhibit C hereto;

"Joint Venture
Agreement"                shall  mean  the Amended  and  Restated
                    Joint    Venture   Agreement   among    Himal
                    International  Power Corporation  Pvt.  Ltd.,
                    Panda   of   Nepal,   RDC   of   Nepal    and
                    International Finance Corporation dated as of
                    the Closing Date;

"Panda"                   means Panda Energy International, Inc.,
                    a  corporation  organized and existing  under
                    the laws of the State of Texas;

"Piggy-Back
Registration"             has  the  meaning set forth in  Section
                    1(a) of Exhibit C hereto;

"Public Offering"       means any underwritten public offering of
                    equity securities or shares in the Company on
                    a  firm  commitment basis in accordance  with
                    applicable  securities  regulations  of   any
                    stock exchange;

"Shareholder"              has the meaning set forth in the first
                    paragraph hereof;

"Shareholder
 Offering"                has  the  meaning set forth in  Section
                    1(a) of Exhibit C hereto;

"Sponsor"                 has  the meaning set forth in  the  IFC
                    Investment Agreement;

"Sponsor
 Shareholder"            means,  each of HIPC, Panda of Nepal and
                    RDC of Nepal and any transferees or assignees
                    thereof; provided, however, that HIPC,  Panda
                    of  Nepal  and RDC of Nepal may only transfer
                    or  assign shares in the Company or rights or
                    obligations  hereunder  to  the  extent   and
                    subject   to   the  conditions  provided   in
                    Section 4.6 hereof, and provided further that
                    IFC (or its assignees or designees) shall  in
                    no event be a Sponsor Shareholder;

"Sponsor Transfer"  has the meaning set forth in Section 3.3(a);

"Soaltee Enterprises"     means Soaltee Enterprises Private Ltd.,
                    a  private  company  organized  and  existing
                    under the laws of Nepal;

"Soaltee Hotel"          means Soaltee Hotel Ltd., a public company
                    organized  and  existing under  the  laws  of
                    Nepal;

"Surya"                   means Surya Enterprises Private Ltd., a
                    private company organized and existing  under
                    the laws of Nepal;

"Tag-Along Notice"  has the meaning set forth in Section 3.3(b);

"Transfer"                means, with respect to any security  or
                    shares,  any  direct  or  indirect  transfer,
                    sale,   assignment,  pledge,   hypothecation,
                    encumbrance  or  other  disposition  by   any
                    Person of such security or shares (other than
                    the  pledge of shares in the Company  or  any
                    other  shares to IFC or the Trustee  for  the
                    benefit of the Lenders pursuant to the  Share
                    Pledge Agreements);

"Transferring Sponsor
 Shareholder"        has the meaning set forth in Section 3.3(a).


     Section 1.2    Principles of Construction.  For all purposes
of  this  Agreement, the principles of construction set forth  in
Schedule A to the General Conditions shall apply.

                           ARTICLE 2

                          The Company

      Section 2.1    Shareholding of the Company and the  Sponsor
Shareholders.

      (a)   Shareholding of the Company.  The Company  represents
and  warrants  that, as of the date hereof, the total  amount  of
issued,  fully paid up and outstanding Shares, which is the  only
class  of  shares authorized by its Charter Documents as  of  the
date hereof, is owned of record as follows:

           Name                               Percentage of Share
         Ownership

     Panda of Nepal                                         75 %
     RDC of Nepal                                            5 %
     Himal International Power Corporation Pvt. Ltd.        10 %
     International Finance Corporation                      10 %

      (b)   Shareholding  of  Panda of  Nepal.   Panda  of  Nepal
represents  and warrants that, as of the date hereof,  the  total
amount  of issued, fully paid up and outstanding shares of  Panda
of  Nepal,  which is the only class of shares authorized  by  its
Charter  Documents as of the date hereof, is owned of  record  as
follows:

             Name                           Percentage  of  Share
           Ownership

     Panda Bhote Koshi                                 100 %

      (c)  Shareholding of RDC of Nepal.  RDC of Nepal represents
and  warrants  that, as of the date hereof, the total  amount  of
issued,  fully  paid up and outstanding shares of RDC  of  Nepal,
which  is  the  only class of shares authorized  by  its  Charter
Documents as of the date hereof, is owned of record as follows:

             Name                           Percentage  of  Share
           Ownership

     Resource Development Consultants,
     a limited liability company                            50 %
     Harza Engineering Company International L.P.           50 %

      (d)   Shareholding of HIPC.  HIPC represents  and  warrants
that,  as  of the date hereof, the total amount of issued,  fully
paid  up and outstanding shares of HIPC, which is the only  class
of  shares  authorized by its Charter Documents as  of  the  date
hereof, is owned of record as follows:

             Name                           Percentage  of  Share
            Ownership

     Soaltee Hotel Ltd.                                      3.00%
     Surya Enterprises Private Ltd.                         96.75%
     Soaltee Enterprises Private Ltd.                        0.25%

      (e)   It  is  expressly acknowledged and agreed that  IFC's
subscription  obligations  shall be  subject  to  the  terms  and
conditions of the IFC Investment Agreement.

       (f)    Each  subscription  and  payment  by  the   Sponsor
Shareholders in respect of Shares shall be made at such  time  as
may be determined by the Company.

      The  Company agrees with IFC that the Company will  require
subscriptions and payments at such times as may be  necessary  to
ensure  that  the  Company  is  able  to  fulfill  the  condition
contained  in  Section  3.5(i)  of  the  General  Conditions  and
Article  2 of the Subscription Agreements so as to enable  it  to
utilize the Loans and IFC Subscription made available to it under
the  Investment Agreement in order to continue to  finance  in  a
timely   manner   the  procurement,  supply,   construction   and
installation of the Plant.

      Section  2.2    Ownership Free and Clear.  As of  the  date
hereof,   each   of  the  Company,  and  each  of   the   Sponsor
Shareholders, represents and warrants to IFC, as to itself,  that
no  Person  other than the respective Shareholders identified  in
Section  2.1 hereof (and as so identified, limited to the  shares
set  forth  adjacent to such shareholder's name), has any  right,
title  or  interest in or to the shares described in Section  2.1
hereof,  and that such shares have not been pledged, hypothecated
or  encumbered  by such shareholder (other than pursuant  to  the
Security Documents).

      As  of the date hereof, and deemed repeated and made by the
Company  and each of the Sponsor Shareholders as of each date  of
subscription and purchase of shares in the Company by each of the
Sponsor Shareholders, each of the Sponsor Shareholders represents
and  warrants to IFC, as to itself, that no other Person has  any
right, title or interest in or to the shares described in Section
2.1(b),  (c) and (d), as the case may be, subscribed by  it,  and
that such shares have not been pledged, hypothecated or otherwise
encumbered  by such Sponsor Shareholders (other than pursuant  to
the  Security Documents); and the Company represents and warrants
to  IFC  that it has no notice of any factual information to  the
contrary.  As of the date hereof, and deemed repeated and made by
the  Company and each of the Sponsor Shareholders as of each date
of  subscription and purchase of shares in the Company by each of
the  Sponsor  Shareholders, the Company and each of  the  Sponsor
Shareholders represents and warrants that, except for the  rights
under  this  Agreement, the Investment Agreement or the  Security
Documents, no options, warrants or rights to purchase  shares  in
the   Company  or  securities  or  shares  convertible  into   or
exchangeable for, any class of shares in the share capital of the
Company have been issued by it or are outstanding.

     Section 2.3    Boards of Directors

      (a)   As provided in Section 17.2 of the Company's Articles
of  Association,  IFC shall have the right  to  appoint  one  (1)
Director.   IFC  shall  have  such  other  rights  in  connection
therewith (including, without limitation, the right to remove and
reappoint  Directors  and  the  right  to  appoint  an  alternate
Director)  as  may  be  provided in  the  Company's  Articles  of
Association  or the Joint Venture Agreement or may  otherwise  be
available under applicable law.

      (b)   If  and for so long as IFC owns five percent (5%)  or
more  of the Shares of the Company, to the extent a vote  of  the
Shareholders is legally required to appoint a Director,  each  of
the  Sponsor Shareholders agrees to vote (whether directly or  by
proxy) a sufficient number of shares of the Company owned or held
of  record by it at any general or extraordinary meeting  of  the
shareholders  of the Company called for the purpose  of  electing
Directors, and agrees to take all actions otherwise necessary, to
ensure  the election of the Director nominated by IFC  (the  "IFC
Nominee") to the Company's Board of Directors.  If an IFC Nominee
resigns,  dies  or otherwise is rendered unable  to  fulfill  his
obligation as a Director of the Company, then, to the extent  the
vote  of  remaining Directors is required to fill  such  vacancy,
each  of  the  Sponsor  Shareholders shall cause  each  remaining
Director  who was a nominee of such Sponsor Shareholder  to,  and
such Director shall, vote to fill such vacancy with a person then
nominated  by IFC to be the IFC Nominee on the Board of Directors
of  the  Company.   Nothing  contained  herein  shall  require  a
Director  to  take  any action which is illegal under  applicable
law.

      (c)   Each Sponsor Shareholder hereby agrees that,  at  any
time  (if  at  all)  that it is then entitled  to  vote  for  the
election or removal of an IFC Nominee or a Director appointed  by
IFC, it will not vote in favor of the removal of such IFC Nominee
or  Director unless such removal shall be (i) at the  request  of
IFC  or  (ii) for Cause as hereinafter defined.  For the purposes
of  this  Section  2.3(b), "Cause" shall mean (A)  the  continued
failure  by a Director substantially to perform his duties  as  a
Director of the Company (as relevant), the engaging by a Director
in  conduct which is demonstrably and materially injurious to the
Company  (as relevant) or the Director's conviction of any  crime
constituting  a  felony  or  (B)  the  disqualification  of  such
Director to serve as a Director under applicable Nepalese law.

     Section 2.4    Charter Documents; Other Actions.

      (a)   The Company represents and warrants that, as  of  the
date  hereof,  Exhibits A and B set forth accurate  and  complete
copies  of  its Charter Documents and the Joint Venture Agreement
as in full force and effect on the date hereof.

      (b)   The  Company covenants that it will act in accordance
with its Charter Documents and the Joint Venture Agreement.

      (c)   So long as IFC owns five percent (5%) or more of  the
Shares  of  the  Company (but provided that the outside  date  by
which  IFC  may  possibly put Shares pursuant to  Section  3.5(b)
hereof has not occurred), then except as otherwise prohibited  by
applicable   law,  the  Company  shall  not,  and  each   Sponsor
Shareholder  shall ensure that the Company shall  not,  take  any
action  regarding  the  following  matters  without  either   the
affirmative vote of the IFC Nominee on the Board of Directors  of
the  Company or the affirmative vote of IFC at a meeting  of  the
Shareholders of the Company:

                     (i)   any material amendment of the  Charter
               Documents  of  the  Company or the  Joint  Venture
               Agreement,  unless  expressly  permitted  by  this
               Agreement,

                        (ii)     any    merger,    consolidation,
               recapitalization  or other reorganization  of  the
               Company with or into any other Person,

                     (iii)      the  taking of any  corporate  or
               other   action  by  the  Company   for   the   (A)
               commencement of a voluntary winding up  under  any
               applicable  bankruptcy, insolvency or similar  law
               now  or  hereafter in effect, (B) consent  to  the
               entry of any order for relief in winding up  by  a
               court  or  under the supervision of a court  under
               any  such  law, (C) consent to the appointment  or
               taking   possession  by  a  receiver,  liquidator,
               assignee,  custodian,  trustee,  sequestrator   or
               similar  official  of  the  Company  or   of   any
               substantial part of the property of the Company or
               (D)  making by the Company of a general assignment
               for the benefit of creditors,

                     (iv)  any  sale, lease, exchange,  transfer,
               pledge,  contribution to a joint venture or  other
               disposition of assets resulting in the  diminution
               of  assets  or other properties, or the incurrence
               or   exposure,   contingently  or   directly,   of
               liability, which individually or in the  aggregate
               would materially impair the ability of the Company
               to   construct,  own  and  operate  the  Plant  in
               accordance with the scope of the Project,

                     (v)  any transaction between the Company and
               any  Affiliate,  any officer or  director  of  the
               Company  or  any Shareholder (or any Affiliate  of
               any   of   them),  except  future   arm's   length
               transactions  and  except the performance  of  the
               Principal  Documents, as applicable, in accordance
               with the terms thereof,

                     (vi)  any  change in the Company's  line  of
               business from the Project,

                     (vii)      any change in any of the  Sponsor
               Shareholders' line of business from the holding of
               shares in the Company and matters related thereto,

                     (viii)     the entering into of any contract
               which individually provides for aggregate payments
               in  excess  of $10,000 or together with all  other
               contracts  provides  for  aggregate  payments   in
               excess  of  $100,000  and  which  is  not  in  the
               ordinary  course of business or is on  terms  less
               favorable  to the Company than those available  in
               arm's   length   transactions  between   unrelated
               parties, or

                    (ix) any expansion of the Project,

                     (x)   for such time that any portion of  the
               IFC  Loans is outstanding or during which IFC  has
               any  commitment with respect to the IFC Loans, the
               appointment  of a replacement firm of Auditors  in
               the  event  the  firm  then  engaged  resigns  its
               engagement  or such engagement is proposed  to  be
               terminated by the Company,

                      (xi)   except  as  required  by  the  Share
               Retention  and  Project Funds Agreement,  any  (A)
               increase  or  reduction in  the  authorized  share
               capital  of the Company, or (B) issuance, sale  or
               reduction  by  the  Company of  share  capital  or
               securities convertible into, exchangeable  for  or
               otherwise  granting  the right  to  acquire  share
               capital  (including  options, warrants  and  other
               rights), and

                     (xii)     any creation, grant, incurrence or
               sufferance of any Liens other than as permitted by
               the   Investment   Agreement  (except   that   the
               affirmative vote of the IFC Nominee on  the  Board
               of  Directors or the affirmative vote of IFC at  a
               meeting of Shareholders shall not be required  for
               the  creation  of  a Lien in connection  with  the
               refinancing of the Loans);

provided,  that in the event IFC is entitled to nominate  an  IFC
Nominee as a Director of the Company, but has not nominated  such
a  Director as of the time of a meeting of the Board of Directors
called  to consider any of the foregoing matters, the affirmative
vote of a Director who is an IFC Nominee shall not be required in
order for any of such actions to be validly taken by the Board of
Directors, but the affirmative vote of IFC as a Shareholder  will
nonetheless be required in all events for the Company to take any
of the actions described above in this Section 2.4(c).

      (d)  With respect to clause (ix) of Section 2.4 (pertaining
to  expansion  of  the Project), in the event that  IFC,  in  its
capacity  as a Shareholder, casts a negative vote but  all  other
necessary  votes and corporate action have been taken  to  enable
the Company to take the action specified in said clause (ix) were
it  not  for  the  negative vote of IFC (in  its  capacity  as  a
Shareholder),  then  the Company may give  notice  to  IFC  that,
unless IFC changes its negative vote to an affirmative vote,  the
Company,  if and to the extent permitted by applicable law,  will
elect  to  purchase  IFC's Shares (the "Election  Notice").   If,
within  thirty  (30) days after IFC receives the Election  Notice
(such  thirty (30) day period referred to herein as the  "Initial
Thirty  Day Period"), IFC changes the aforesaid negative vote  to
an affirmative vote, then the Company shall not have the right to
purchase IFC's Shares.  If, within the Initial Thirty Day Period,
IFC does not change the aforesaid negative vote to an affirmative
vote,  then  the  Company,  if and to  the  extent  permitted  by
applicable law, shall have the right, which must be exercised (if
at  all)  within  sixty  (60) days after the  expiration  of  the
Initial  Thirty Day Period, to purchase all (but  not  less  than
all)  of  IFC's  Shares at a purchase price per share  that  will
provide to IFC a return on equity calculated on the same basis as
the  calculation  provided in Section 3.5(b)(3)  hereof.   It  is
expressly  acknowledged and agreed that IFC's failure to  approve
any  expansion of the Project in IFC's capacity as a lender shall
not trigger any rights of the Company to purchase IFC's Shares as
set  forth  in this Section 2.4(d).  In the event the Company  is
not   legally  permitted  to  purchase  the  Shares  or  if   the
Shareholders  (other than IFC) so decide even if the  Company  is
legally  permitted  to  purchase the Shares,  the  right  of  the
Company  contemplated in this Section 2.4(d) to purchase  all  of
IFC's  Shares  may be exercised by the Shareholders  (other  than
IFC),  pro rata to their then existing holdings of Shares  or  in
such other proportion as they may agree.

     (e)  Each Shareholder shall be permitted, at its own expense
(if  acting  then  solely in its capacity as a  Shareholder),  to
visit during regular business hours any of the premises where the
business  of the Company is conducted and to have access  to  its
books of account and records.

      Section  2.5    Indemnification of Directors.  Each  Person
and  each of its officers, directors, agents, nominees, designees
and  employees  (collectively, such Person and such  others,  the
"Indemnitees") who was or is at any time a party or is threatened
to be made a party to, or is involved in, any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that  such
Indemnitee  is or was a Director of the Company, or acted  or  is
acting  on  behalf,  or  at the request  or  direction,  of  such
Director,  shall be indemnified and held harmless by the  Company
to  the fullest extent permitted by applicable law, except to the
extent  that  any loss or expense incurred by such Indemnitee  is
determined by a court of competent jurisdiction to have  directly
and  solely  resulted from such Indemnitee's gross negligence  or
willful  misconduct.  The right to indemnification  conferred  in
this Section 2.5 shall also include the payment by the Company of
expenses  incurred in connection with any such  action,  suit  or
proceeding  in  advance of its final disposition to  the  fullest
extent  permitted by applicable law (except as  aforesaid).   The
obligations  of the Company under this Section 2.5 shall  survive
the  termination of (i) any Person's role or status as a Director
of the Company or (ii) this Agreement.

      Section  2.6     Dividend Policy.  It is the  Shareholders'
intention  that the Company declare and pay semi-annual dividends
to  the  extent, and in the amounts, permitted by Section 6.3  of
the General Conditions and any other applicable provisions of the
Loan  Documents, subject to and in accordance with the  Company's
determination of prudent and sound business practices in relation
to  the  other  needs  or uses of capital for  the  construction,
ownership  and  operation of the Plant and subject to  applicable
law.

                           ARTICLE 3

                       Transfer of Shares

     Section 3.1    Transferability of Shares.

               (a)  (i)  No Sponsor Shareholder shall (whether in
               a   single   transaction  or  in   a   series   of
               transactions) Transfer any shares in  the  Company
               directly  or  indirectly owned by it (beneficially
               or  otherwise)  if, after giving  effect  to  such
               Transfer, a Change of Control of the Company would
               occur, unless prior to such Transfer, the proposed
               transferee of such shares enters into an agreement
               in  form and substance satisfactory to IFC whereby
               such  transferee covenants and agrees to be  bound
               to  this Agreement to the same extent as a Sponsor
               Shareholder; provided, however, that the  entering
               into  of  such agreement by such transferee  shall
               not  be  deemed  to  cure or otherwise  waive  the
               occurrence  of such Change of Control,  and  shall
               not  prejudice  or  impair the  right  of  IFC  to
               exercise  its option, and the obligation  of  each
               Sponsor  Shareholder to perform  its  obligations,
               pursuant   to  Section  3.5(b)  hereof  upon   the
               occurrence thereof; and provided further  that  no
               such agreement shall be required of Panda of Nepal
               and/or  RDC  of  Nepal  in  connection  with   any
               Transfer  by  HIPC of Shares pursuant  to  Section
               2.1(a)(iv)  of  the  Share Retention  and  Project
               Funds  Agreement, it being acknowledged and agreed
               that  Panda of Nepal and RDC of Nepal, as  parties
               hereto, are bound to this Agreement.

                     (ii)  None  of Panda, Harza LLC,  Harza  LP,
               Soaltee Enterprises, Soaltee Hotel or Surya  shall
               (whether  in a single transaction or a  series  of
               transactions) Transfer any shares in any of  Panda
               of  Nepal, RDC of Nepal or HIPC, as the  case  may
               be,   directly   or   indirectly   owned   by   it
               (beneficially  or  otherwise)  if,  after   giving
               effect to such Transfer, any of the provisions  of
               Article 2 of the Share Retention and Project Funds
               Agreement would be violated (regardless of whether
               any of the Loans are outstanding or any commitment
               remains with respect thereto).

      (b)   No provision of this Agreement shall be construed  to
permit any Sponsor Shareholder or any of Panda, Harza LLC,  Harza
LP,  Soaltee Enterprises, Soaltee Hotel or Surya to Transfer  any
of  its  shares in the Company, Panda of Nepal, RDC of  Nepal  or
HIPC,  as  the case may be, directly or indirectly  owned  by  it
(beneficially or otherwise) in violation or contravention of  any
provision of the Share Retention and Project Funds Agreement, the
Investment  Agreement or any other Loan Document,  from  time  to
time  and  as in effect, which provisions may prohibit, limit  or
otherwise  restrict  the Transfer of any such  shares,  it  being
acknowledged and agreed that in the event of any conflict between
those  provisions  and  any provisions of  this  Agreement,  such
provisions  of  the Share Retention and Project Funds  Agreement,
the Investment Agreement and other Loan Documents shall control.

      Section 3.2    HMGN Buyout.  If HMGN shall purchase all  of
the  Company's  right, title and interest in and to  the  Project
pursuant  to  the terms of Section 6 of the Project Agreement  (a
"Buyout"),  each  Sponsor Shareholder shall,  promptly  following
receipt  by the Company, the Trustee or the Agent, as applicable,
of  the  proceeds of the Buyout, cause the Company, in all events
subject  to  the provisions of the Loan Documents (including  the
prepayment  of all outstanding Obligations), to (i)  declare  and
pay  as  promptly as practicable a dividend in the maximum amount
permitted  by applicable law, (x) to IFC in the event the  Buyout
results  from  the  Company's intentional  or  grossly  negligent
actions as more particularly set forth in Sections 6.2(a) and (b)
of  the  Project Agreement and (y) otherwise to all Shareholders,
and  (ii)  immediately following payment of any dividend referred
to  in  clause  (i)  above,  wind up  the  Company's  operations,
liquidate  and  distribute  proceeds  and  amounts  therefrom  in
accordance  with applicable law and subject to the provisions  of
the applicable Loan Documents and the Project Agreement.

     Section 3.3    Tag-Along Rights.

     (a)  No Sponsor Shareholder shall Transfer any shares in the
Company  other  than for cash in an arm's length  transaction  in
accordance  with this Agreement, the Share Retention and  Project
Funds  Agreement, the Investment Agreement, and  the  other  Loan
Documents.    If,  at  any  time,  any  Sponsor  Shareholder   (a
"Transferring  Sponsor Shareholder") proposes to Transfer  shares
in  the Company to any proposed transferee in any transaction  or
series of related or similar transactions (such proposed Transfer
by  a  Transferring  Sponsor Shareholder, a "Sponsor  Transfer"),
such  Transferring  Sponsor  Shareholder  shall  afford  IFC  the
opportunity  to  participate  proportionately  in  such   Sponsor
Transfer in accordance with this Section 3.3.

     (b)  IFC shall have the right to Transfer, at the same price
and  upon identical terms and conditions as such proposed Sponsor
Transfer, such percentage of IFC's shares in the Company as shall
equal  the  following percentage:  the percentage of the  Company
being   Transferred  by  the  Transferring  Sponsor   Shareholder
multiplied  by  the quotient of 100 divided  by  90.   Thus,  for
example, if RDC of Nepal Transfers five percent (5%) of the total
shares  in  the Company and IFC owns one hundred (100) shares  in
the Company, IFC would be entitled to sell on account thereof the
following number of shares in the Company: (5% x 100/90)  of  100
shares,  which  equals  5.56 shares.  At the  time  of  any  such
proposed  Sponsor Transfer, such Transferring Sponsor Shareholder
shall  give  notice  to IFC of its right to sell  shares  in  the
Company  hereunder  (a "Tag-Along Notice"),  which  notice  shall
identify the proposed purchaser and state the number of shares in
the  Company proposed to be Transferred in such Sponsor Transfer,
the  proposed  offering price and any other  material  terms  and
conditions  of  the  proposed Sponsor  Transfer.   The  Tag-Along
Notice shall also contain a true and correct copy of any offer to
the Transferring Sponsor Shareholder by the proposed purchaser to
purchase such shares in the Company.

      (c)  Within forty-five (45) calendar days after the date of
delivery  of a Tag-Along Notice, IFC may elect to participate  in
such  Sponsor  Transfer pursuant to the terms and  conditions  of
such Tag-Along Notice by delivery of a notice to the Transferring
Sponsor  Shareholder.   IFC shall not be  required  to  make  any
representations  and warranties to any Person in connection  with
such  Transfer except as to the existence of its legal title  in,
and  the  absence of security interests created by IFC in,  IFC's
shares in the Company and the authority for and the validity  and
binding   effect,  against  IFC,  of  any  normal  and  customary
agreements entered into by IFC in connection with such Transfer.

      (d)  Notwithstanding anything to the contrary contained  in
Section 3.3(a), (b) or (c), the provisions of such sections shall
not  apply to the Transfer by HIPC of an amount of Shares of  the
Company not to exceed five percent (5%) to Panda of Nepal  and/or
RDC  of Nepal in accordance with Section 2.1(a)(iv) of the  Share
Retention and Project Funds Agreement.  This Section 3.3(d) shall
not  apply to a Transfer by a transferee or assignee of HIPC with
respect to such Shares.

      Section 3.4    Legend.  Each of the Company and the Sponsor
Shareholders agrees that each certificate representing shares  in
the Company issued to the Sponsor Shareholder or any certificates
issued  in  exchange  for  or  in replacement  of  any  similarly
legended  certificates, shall bear, to the  extent  permitted  by
applicable law the following legend:

     "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
     TO  RESTRICTIONS ON TRANSFER SET FORTH IN (i) THE SHARE
     RETENTION AND PROJECT FUNDS AGREEMENT DATED AS  OF  THE
     CLOSING  DATE,  AND  (ii)  THE SHAREHOLDERS'  AGREEMENT
     DATED  AS OF THE CLOSING DATE, COPIES OF WHICH  MAY  BE
     OBTAINED FROM THE COMPANY."

     Section 3.5    Registration and Other Rights.

      (a)   The Company and each Sponsor Shareholder hereby grant
to  IFC the registration and other rights set forth in Exhibit  C
hereto, which is incorporated by reference herein as if fully set
forth  herein.   In  furtherance of the  foregoing  (but  not  in
limitation  thereof),  each  of  the  Company  and  each  Sponsor
Shareholder agrees that, in connection with any Public  Offering,
IFC shall have the right to approve, in advance of their use, all
terms   and   provisions  that  describe,  refer   to   or   make
representations with respect to IFC.

                    (b)  Put Option.

          (1)  In the event that:

                               (A)   on  or before the  Ten  Year
                    Anniversary, any Sponsor shall have  breached
                    any  of  its material obligations  under  the
                    Share  Retention and Project Funds  Agreement
                    and  such  breach shall not have  been  cured
                    within   ten   (10)   days   following    its
                    occurrence; or

                               (B)   on  or before the  Ten  Year
                    Anniversary,   the   Company    shall    have
                    materially  amended  or altered  its  Charter
                    Documents   (other  than  to   increase   its
                    authorized  share  capital)  or   the   Joint
                    Venture  Agreement without the prior  written
                    consent of IFC; or

                               (C)   on  or before the  Ten  Year
                    Anniversary, the Company shall not  have  (i)
                    listed  all outstanding shares of the Company
                    and  all  of IFC's shares in the Company  and
                    (ii)  registered fifty percent (50%)  of  all
                    outstanding shares of the Company, with  such
                    registration including all of IFC's shares in
                    the   Company,  or  such  higher  amount   as
                    required  by law, on the Nepal Stock Exchange
                    or another stock exchange, such as the Bombay
                    Stock Exchange, the Hong Kong Stock Exchange,
                    the  Jakarta  Stock Exchange,  the  Singapore
                    Stock  Exchange  and the Kuala  Lumpur  Stock
                    Exchange  (if such registration  is  required
                    for  listing by the rules applicable to  such
                    other  stock exchange), reasonably acceptable
                    to IFC; or

                               (D)   on  or before the  Ten  Year
                    Anniversary, a Change of Control specified in
                    Section  3.1(a)(i)  shall have  occurred  and
                    such  breach shall not have been cured within
                    ten  (10)  days following its occurrence,  or
                    there  shall  have occurred a breach  of  the
                    obligations  under Article  2  of  the  Share
                    Retention  and  Project Funds  Agreement  and
                    such  breach shall have not have  been  cured
                    within   ten   (10)   days   following    its
                    occurrence; or

                               (E)   on  or before the  Ten  Year
                    Anniversary,  Panda sells  or  transfers  its
                    direct   or   indirect  beneficial  ownership
                    interest  in  the  Company; Harza  LP  and/or
                    Harza  LLC  sell or transfer their direct  or
                    indirect beneficial ownership interest in the
                    Company;   or   any  or  all  of   the   HIPC
                    Shareholders sell or transfer their direct or
                    indirect beneficial ownership interest in the
                    Company  (except  for any transfer  expressly
                    permitted by Section 3.3(d), as to which this
                    Section 3.5(b)(1)(E) shall not apply),

then (i) the Company agrees (with respect to clauses (B) and  (C)
above) that, if and to the extent permitted by law, it shall,  at
the option of IFC (which option, in the case of clause (B), shall
expire  two  hundred seventy (270) days after  IFC  has  received
written notice from the Company or a Sponsor Shareholder that the
events  specified in such clause which trigger  the  option  have
occurred; and in the case of clause (C), shall expire two hundred
seventy (270) days after IFC has received written notice from the
Company  or  a  Sponsor Shareholder that the events specified  in
such  clause  which  trigger the option have occurred),  purchase
some  or  all  (at IFC's option) of IFC's shares in the  Company;
provided,  however, that the failure of the Company or a  Sponsor
Shareholder to deliver any of the aforesaid notices (or any other
notices under this Section 3.5(b)) to IFC shall not preclude  IFC
from  exercising its option to put its shares to the Company upon
the  occurrence  of the event specified in any applicable  clause
under  this  Section  3.5(b)  which  triggers  the  option,   and
provided,  further, that the Company may purchase such shares  of
IFC only with funds available to the Company for the distribution
of  dividends pursuant to the Investment Agreement, and (ii) each
of Panda of Nepal, RDC of Nepal, and HIPC agrees (with respect to
clauses  (D) and (E) above) that it shall, at the option  of  IFC
(which  option,  in  the  case of clause (D),  shall  expire  two
hundred seventy (270) days after IFC has received written  notice
from  the  Company  or  a  Sponsor Shareholder  that  the  events
specified  in such clause which trigger the option have occurred;
and  in the case of clause (E), shall expire forty-five (45) days
after  IFC  has  received written notice from the  Company  or  a
Sponsor  Shareholder  that the events specified  in  such  clause
which trigger the option have occurred), purchase some or all (at
IFC's  option) of IFC's shares in the Company; provided, however,
that in the case of clause (E), Panda of Nepal, RDC of Nepal,  or
HIPC (as the case may be) shall only be required to purchase such
percentage  of  IFC's shares in the Company as  shall  equal  the
following  percentage:   the  percentage  of  the  Company  being
Transferred beneficially, directly or indirectly, by Panda, Harza
LP  and Harza LLC, or the HIPC Shareholders (as the case may  be)
multiplied  by  the  quotient of 100  divided  by  90;  it  being
understood that with respect to clause (E), Panda of Nepal  shall
only  be  obligated to purchase IFC's shares in the  event  of  a
direct or indirect Transfer by Panda, RDC of Nepal shall only  be
obligated  to purchase IFC's shares in the case of  a  direct  or
indirect  Transfer by Harza LP and/or Harza LLC, and  HIPC  shall
only  be  obligated to purchase IFC's shares in  the  case  of  a
direct  or  indirect  Transfer by any of the  HIPC  Shareholders)
(except  for any transfer expressly permitted by Section 3.3(d));
and  provided  further, that in the case of a Transfer  by  Panda
under clause (E), Panda of Nepal shall not be required on account
thereof  to  purchase IFC's shares to the extent the Transfer  by
Panda  involves  shares which are not required  to  keep  Panda's
beneficial ownership in the Company above fifty-one percent (51%)
of  the  total  ownership interest in the Company;  and  provided
further, that in the case of clause (D), each Sponsor Shareholder
shall  only  be required to purchase its Sponsor Share  of  IFC's
shares  in  the  Company, and (iii) with respect to  clause  (A),
Panda of Nepal, RDC of Nepal or HIPC, whichever has breached  (or
has  had a direct or indirect parent Sponsor breach) the material
obligation under the Share Retention and Project Funds Agreement,
agrees that it shall, at the option of IFC (which option, in  the
case  of said clause (A), shall expire two hundred seventy  (270)
days  after  IFC has received written notice from the Company  or
the  breaching Sponsor Shareholder that the events  specified  in
such  clause  which  trigger the option have occurred),  purchase
such percentage of IFC's shares in the Company as shall equal the
following percentage:  the percentage of the Company owned by the
breaching Sponsor Shareholder multiplied by the quotient  of  100
divided by 90.  Thus, for example with respect to clause (A),  if
RDC  of Nepal is the breaching Sponsor Shareholder and owns  five
percent (5%) of the total shares in the Company and IFC owns  one
hundred  (100)  shares in the Company, IFC would be  entitled  to
sell  on  account of the breach by RDC of Nepal under clause  (A)
the  following number of shares in the Company: (5% x 100/90)  of
100  shares, which equals 5.56 shares.  Furthermore, for  example
with  respect  to clause (E), if Panda were to own fifty  percent
(50%)  of the total shares in Panda of Nepal, and Panda of  Nepal
were to own fifty percent (50%) of the Shares in the Company, and
Panda  were  to  Transfer to an entity (the  "Panda  Transferee")
which is not owned by Panda fifty percent (50%) of Panda's shares
in Panda of Nepal (thereby resulting in a Transfer by Panda of  a
twelve and one-half percent (12.5%) indirect beneficial ownership
interest in the Company) and IFC owns one hundred (100) shares in
the  Company, IFC would have the option to sell to Panda of Nepal
on  account  of  the  Transfer  by Panda  under  clause  (E)  the
following  number of shares in the Company: (12.5% x  100/90)  of
100 shares, which equals 13.89 shares.

                     (2)  In the event the Company is not legally
               permitted  to  purchase, does not have  sufficient
               funds  which  would  otherwise  be  available  for
               distribution of dividends, or otherwise  fails  to
               purchase,   IFC's  shares  in   the   Company   in
               connection   with   clause   (B)   or    (C)    of
               Section 3.5(b)(1) within sixty (60) days after IFC
               has given notice of its exercise of its option  to
               put  such shares to the Company, then each Sponsor
               Shareholder agrees that it shall, at the option of
               IFC, purchase its Sponsor Share of IFC's shares in
               the Company.

                     (3)   Any  purchase of IFC's shares  in  the
               Company   by   the  Company  or  by  any   Sponsor
               Shareholder in connection with clause (1)(A), (B),
               (C),  or (D) of Section 3.5(b)(1) or in connection
               with  Section 3.5(b)(2) shall be at  a  price  per
               share that will provide a return on equity, taking
               into  account dividends paid and any prior  return
               of  capital, for IFC of twelve percent  (12%)  per
               annum  calculated for the period from the date  on
               which IFC acquired its shares through the date  on
               which  IFC's shares are purchased and measured  in
               constant  Dollars by adjusting all Dollar  amounts
               by   the  rate  of  change  during  the  foregoing
               calculation  period  in the  U.S.  Consumer  Price
               Index for all urban consumers.

                     (4)  In the event any Sponsor Shareholder is
               required  to purchase IFC's shares in the  Company
               pursuant  to clause (E) of Section 3.5(b)(1),  the
               parties  shall in good faith promptly  attempt  to
               reach mutual agreement on the price to be paid for
               such  IFC shares (the "Purchase Price").   If  the
               parties  are  unable  to  mutually  agree  on  the
               Purchase  Price within thirty (30) days after  IFC
               has  given  notice of its option to  put  the  IFC
               shares  in the Company to the Sponsor Shareholders
               (the  "Put  Notice"), the parties  shall  in  good
               faith  promptly attempt to reach mutual  agreement
               on  an  appraiser to determine the Purchase Price.
               If  the parties are unable to mutually agree on an
               appraiser  within fifteen (15) days,  the  parties
               shall  request that the Secretary General  of  the
               Permanent  Court  of  Arbitration  at  The   Hague
               appoint  such appraiser.  The appraiser  shall  be
               directed to make his valuation within thirty  (30)
               days  after his appointment and the Purchase Price
               shall  be  the Purchase Price determined  by  such
               appraiser.   The appraiser appointed  pursuant  to
               this  clause (4) shall be an independent certified
               public  accountant or investment  banker  with  at
               least   ten  (10)  years'  experience  in  valuing
               independent  power projects and  shall  not  be  a
               present  employee  or agent of, or  consultant  or
               counsel to, any party to any Principal Document or
               any affiliate of any such party.  The valuation of
               the  Purchase  Price  shall be  in  writing.   The
               expenses  of  the appraiser appointed pursuant  to
               this clause (4) shall be borne by the Company.

                               (i)   IFC  shall not exercise  its
                    option  to  put its shares in the Company  to
                    the Company or to the Sponsor Shareholders in
                    the  case  of clause (C) above in  the  event
                    that  IFC  has  foreclosed upon  the  Project
                    pursuant to the Investment Agreement and  the
                    Security Documents.

                               (ii)  IFC  hereby agrees  that  it
                    will,  at the written request of the  Company
                    but  at no cost or expense to IFC, reasonably
                    cooperate  with  the Company to  establish  a
                    holding  company  for  the  purpose  of   the
                    listing  of  the  Shares; provided,  however,
                    that  the foregoing shall not require IFC  to
                    take  any action which it, in its good  faith
                    judgment,   believes  (A)  may   impair   its
                    security  interest  or  other  Lien  on   any
                    Collateral  or (B) is contrary to  applicable
                    law.

                           ARTICLE 4

                         Miscellaneous

     Section 4.1    No Inconsistent Agreements.  Each Sponsor and
the  Company represents and warrants to IFC that none of them  or
their  Affiliates has entered, and each Sponsor and  the  Company
agrees  with  IFC that, without IFC's consent, none  of  them  or
their  Affiliates will hereafter enter, into any  agreement  with
respect to the shares in the Company or securities of the Company
that  is  inconsistent  with the rights granted  to  any  of  the
Shareholders in this Agreement.

The  Company represents and warrants to each Shareholder that  it
has  not  entered into any agreement (other than this  Agreement)
with respect to any of its debt or equity securities granting  to
any Person rights similar to those described in Exhibit C.

      Section  4.2    Recapitalization Exchanges,  Etc.   In  the
event  that  any share capital or other securities or shares  are
issued in respect of, in exchange for, or in substitution of, any
Shares   by   reason  of  any  reorganization,  recapitalization,
reclassification,  merger, consolidation,  spin-off,  partial  or
complete  liquidation, bonus shares, split-up,  sale  of  assets,
distribution to shareholders or combination of the Shares or  any
other  change in capital structure of the Company (including  the
increase  in authorized capital thereof), appropriate adjustments
shall  be  made with respect to the relevant provisions  of  this
Agreement  so  as  to fairly and equitably preserve,  as  far  as
practicable, the original rights and obligations of  the  parties
hereto  under  this  Agreement and the  term  "Shares,"  as  used
herein,  and references herein to shares in the Company shall  be
deemed  to  include  shares  of  such  share  capital  or   other
securities or shares, as appropriate.

      Section  4.3     Remedies.  Each of  the  Company  and  the
Sponsor Shareholders acknowledges and agrees that in the event of
any  breach  of this Agreement by any one of them, IFC  would  be
irreparably harmed and could not be made whole solely by monetary
damages.   Each  of  the  Company and  the  Sponsor  Shareholders
accordingly  agrees (i) to waive the defense that in  any  action
for  specific performance a remedy at law would be adequate,  and
(ii) that IFC, in addition to any other remedy to which it may be
entitled  at  law  or  in  equity, shall be  entitled  to  compel
specific  performance of this Agreement in any action  instituted
in  the  Courts  of  the  State of New York  in  the  Borough  of
Manhattan or of the United States District Court for the Southern
District of New York or in any court of competent jurisdiction in
Nepal  or  elsewhere.   Each  of  the  Company  and  the  Sponsor
Shareholders irrevocably submits to the nonexclusive jurisdiction
of  any State or Federal court sitting in New York City over  any
suit,  action  or proceeding arising out of or relating  to  this
Agreement.   Each  of  the Company and the  Sponsor  Shareholders
waives, to the fullest extent permitted by law, any objection  it
may  now  or  hereafter have to the laying of venue of  any  such
suit,  action  or proceeding brought in any such  court  and  any
claim  that any such suit, action or proceeding has been  brought
in  an  inconvenient forum.  Each of the Company and the  Sponsor
Shareholders  agrees  that a final judgment  in  any  such  suit,
action  or  proceeding  brought  in  any  such  court  shall   be
conclusive and binding upon it and may be enforced in  any  other
courts  to the jurisdiction of which it is or may be subject,  by
suit  upon such judgment or by any other procedure applicable  in
that   jurisdiction.   Each  of  the  Company  and  the   Sponsor
Shareholders hereby irrevocably designates, appoints and empowers
CT  Corporation  System,  with offices  on  the  date  hereof  at
1633  Broadway,  New  York,  New York  10019,  as  its  designee,
appointee and agent to receive, accept and acknowledge for and on
its  behalf, and in respect of its property, service of  any  and
all  legal process, summons, notices and documents which  may  be
served in any such action or proceeding.  If for any reason  such
designee, appointee and agent shall cease to be available to  act
as  such, the Company and each of the Sponsor Shareholders agrees
to  designate  a new designee, appointee and agent  in  New  York
City.   The Company and each of the Sponsor Shareholders  further
irrevocably consents to the service of process in any such action
or  proceeding by the mailing of copies thereof by registered  or
certified mail, postage prepaid, to it, at its address set  forth
below,  such service to become effective fifteen (15) days  after
such mailing.  Nothing herein shall affect the right of any party
to  serve  process in any other manner permitted  by  law  or  to
commence  legal  proceedings  or otherwise  proceed  against  the
Company or the Sponsors in Nepal or in any other jurisdiction.

      Section  4.4    Notices.  Each communication given pursuant
to  or  in accordance with the provisions of this Agreement shall
be  made by facsimile transmission or telex, courier or otherwise
in  writing.   Each communication or document to be delivered  to
any party under this Agreement shall be sent to that party at the
facsimile number or telex number or address, and marked  for  the
attention of the Person (if any), from time to time designated by
that  party  to IFC (or, in the case of IFC, by it to each  other
party) for the purpose of this Agreement.  Notice shall be deemed
to  have  been  given  (a)  (i) when sent  by  overnight  courier
service,  on  the Business Day following the date of delivery  to
such courier service, or such later day as demonstrated by a bona
fide  receipt  therefor  or (ii) in the  case  of  deliveries  by
courier  service to Nepal or the Cayman Islands, on  the  seventh
(7th) day following the date of delivery to such courier service,
or  such  later  date  as demonstrated by  a  bona  fide  receipt
therefor,  (b) when presented personally, or (c) when transmitted
by  facsimile,  upon  receipt  of confirmation.   Any  party  may
designate  from  time  to time by written  notice  to  the  other
parties another address to which notices are to be sent.

     For the Company:

     Address:       c/o Panda Energy International Inc.
                    4100 Spring Valley Road
                    Suite 1001
                    Dallas, Texas 75244
     Attention:     General Counsel

     Facsimile:     (972) 980-6815


     For HIPC:

     Address:       c/o Soaltee Hotel Limited
                    Tahachal, Kathmandu
                    Nepal
     Attention:     Chairman

     Facsimile:     011 977-1-272201


     For Panda of Nepal:

     Address:       c/o Panda Energy International, Inc.
                    4100 Spring Valley Road
                    Suite 1001
                    Dallas, Texas 75244
     Attention:     General Counsel

     Facsimile:     (972) 980 6815


     For RDC of Nepal:

     Address:       c/o Harza Engineering Company International L.P.
                    Sears Tower
                    233 South Wacker Drive
                    Chicago, Illinois 60606-6392
     Attention:     General Counsel

     Facsimile:     (312) 831-3999


     For IFC:

     Address:       International Finance Corporation
                    2121 Pennsylvania Avenue, N.W.
                    Washington, D.C.  20433

     Attention:     Director, Power Department

     Facsimile:     (202) 974-4307

      Section 4.5    Benefit of Agreement.  This Agreement  shall
be binding upon and inure to the benefit of and be enforceable by
the  parties hereto and their respective successors and permitted
assigns and the Indemnities referred to in Section 2.5; provided,
however,  that none of the Sponsor Shareholders nor  the  Company
may   assign  or  transfer  any  of  its  respective  rights   or
obligations  hereunder without the prior written consent  of  IFC
except   as   expressly  permitted  herein,  in  the   Investment
Agreement,  the Share Retention and Project Funds  Agreement  and
the  other  Loan Documents.  At its election, IFC  may  transfer,
assign  or  grant  its  rights hereunder  in  connection  with  a
Transfer  of any or all of its then owned shares in the  Company,
and  in  connection therewith, each Sponsor Shareholder  and  the
Company agree to and shall join in a written acknowledgement that
all such rights extend in favor of such IFC transferee; provided,
however,  that  any  such  IFC  transferee  shall  not  have  the
following special rights hereunder which extend in favor  of  IFC
but  not to any of the other Sponsor Shareholders:  the right  to
affirmatively approve certain actions as set forth in Section 2.4
hereof,  the tag-along rights as set forth in Section 3.3 hereof,
and  the  registration rights and the put  option  set  forth  in
Section  3.5  hereof.  Any assignee of rights or obligations,  or
both as applicable, of any Sponsor Shareholder hereunder will  be
required  by  the assignor and each other Sponsor Shareholder  to
enter into an agreement (acceptable in form and substance to IFC)
to be bound by the terms of this Agreement.

      Section 4.6    No Waiver; Remedies Cumulative.  No  failure
or delay on the part of any party hereto in exercising any right,
power or privilege hereunder and no course of dealing between the
parties  hereto shall operate as a waiver thereof; nor shall  any
single  or  partial  exercise of any right,  power  or  privilege
hereunder preclude any other or further exercise thereof  or  the
exercise  of any other right, power or privilege hereunder.   The
rights,  powers  and  remedies  herein  expressly  provided   are
cumulative  and not exclusive of any rights, powers and  remedies
which  the parties hereto would otherwise have.  No notice to  or
demand  on  any party hereto in any case shall entitle any  party
hereto  to  any other or further notice or demand in  similar  or
other circumstances (other than as specifically required pursuant
to  the  provisions of this Agreement) or constitute a waiver  of
the rights of any party hereto to any other or further action  in
any circumstances without notice or demand.

      Section 4.7    Documents.  All documents to be furnished or
communications to be given or made under this Agreement shall  be
in  the  English  language or, if in another language,  shall  be
accompanied  by  a  translation  into  English  certified  as  to
accuracy  and  completeness by a representative of  the  Company,
which translation, subject to its acceptance by IFC, shall be the
governing version among the Sponsors, the Company and IFC.

     Section 4.8    Governing Law.  This Agreement and the rights
and  obligations of the parties hereunder shall be  construed  in
accordance  with and be governed by the law of the State  of  New
York  without regard to the conflicts of laws provisions  thereof
(other than Sections 5-1401 and 5-1402 of the General Obligations
Law of the State of New York), save and except (for avoidance  of
doubt), the application of the Nepalese Company Act, 2053  as  it
may  or shall apply to the powers of the Company and the internal
management of its affairs.

      Section  4.9    Counterparts; Integration.  This  Agreement
may  be  executed  in  any  number of  counterparts  and  by  the
different parties hereto on separate counterparts, each of  which
when  so executed and delivered shall be an original, but all  of
which  shall together constitute one and the same instrument.   A
set  of counterparts executed by all the parties hereto shall  be
lodged  with  the  Company.  This Agreement  (together  with  the
Memorandum of Association and the Articles of Association and the
Joint  Venture  Agreement) constitutes the entire  agreement  and
understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to
the subject matter hereof.

      Section  4.10   Heading Descriptive.  The headings  of  the
several  sections and subsections of this Agreement are  inserted
for  convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.

      Section 4.11   Amendment or Waiver.  Neither this Agreement
nor  any  of  the  terms hereof may be amended, changed,  waived,
discharged  or terminated unless such amendment, change,  waiver,
discharge  or  termination is in writing signed  by  all  of  the
parties hereto.

      Section  4.12   Severability.  If any provision  hereof  is
invalid  or  unenforceable  in any  jurisdiction,  then,  to  the
fullest extent permitted by law, (i) the other provisions  hereof
shall  remain  in full force and effect in such jurisdiction  and
shall be liberally construed in order to carry out the intentions
of  the parties hereto as nearly as may be possible; and (ii) the
invalidity  or  unenforceability of any provision hereof  in  any
jurisdiction  shall not affect the validity or enforceability  of
such provision in any other jurisdiction.

      Section 4.13   Termination.  This Agreement shall terminate
upon the earliest of (i) the purchase of all of the shares in the
Company of IFC pursuant to the exercise by IFC of the put  option
or  options granted pursuant to Section 3.5(b) hereof,  and  (ii)
the  date  of  consummation of a Full  Transfer  which  does  not
include  the transfer by IFC of its rights under this  Agreement.
For  the  purposes of this Section 4.13, a Full Transfer means  a
Transfer of all (but not less than all) of its then owned  shares
in  the Company; provided, however, that any indemnities provided
hereunder for the benefit of IFC or the Trustee shall survive any
termination.

      Section  4.14   Expenses.  Without in any way limiting  the
generality of the Investment Agreement, the Company agrees to pay
to  IFC  or  as  IFC  may direct all fees  and  expenses  of  IFC
(including  legal  and  other) incurred in connection  with  this
Agreement.

      Section 4.15   Joint Venture Agreement.  The parties hereto
acknowledge and agree that nothing contained in the Joint Venture
Agreement or the Company's Memorandum of Association or  Articles
of  Association is intended to diminish in any way the rights  of
IFC under this Agreement or the obligations of any of the Sponsor
Shareholders or the Company under this Agreement.  In the  event,
however,  that anything contained in the Joint Venture  Agreement
or  such  Memorandum  of Association or Articles  of  Association
would  at  any  time  so diminish the rights of  IFC  under  this
Agreement  or  the obligations of any of the Sponsor Shareholders
or the Company under this Agreement, the Sponsor Shareholders and
the  Company shall promptly amend the Joint Venture Agreement and
such  Memorandum  of Association and Articles of  Association  in
order  to  eliminate  the aforesaid diminishment  in  rights  and
obligations under this Agreement, to the extent permitted by law.

      IN  WITNESS  WHEREOF, the parties hereto have  caused  this
Agreement  to  be  duly  executed by their respective  authorized
officers as of the date first above written.

ATTESTATION OF WITNESSES:

                              BHOTE KOSHI POWER COMPANY PRIVATE LIMITED


Name:                         By:
Occupation:                        Name:
Address:                           Title:


                              HIMAL INTERNATIONAL POWER CORPORATION
                              PVT. LTD.


Name:                         By:
Occupation:                         Name:
Address:                            Title:


                              PANDA OF NEPAL


Name:                         By:
Occupation:                         Name:
Address:                            Title:


                              RDC OF NEPAL


Name:                         By:
Occupation:                         Name:
Address:                            Title:


                              INTERNATIONAL FINANCE CORPORATION


Name:                         By:
Occupation:                         Name:
Address:                            Title:




                            EXHIBIT A

           CERTIFICATE OF REGISTRATION OF THE COMPANY


                            EXHIBIT B

             MEMORANDUM AND ARTICLES OF ASSOCIATION,
           as amended and as in effect, of the Company


                            EXHIBIT C

                       REGISTRATION RIGHTS



    Section 1. Piggy-Back Rights.

     If  at  any  time  the  Company or any  Sponsor  Shareholder
proposes  to make a Public Offering, the Company or such  Sponsor
Shareholder, as applicable, shall give written notice to  IFC  of
such  proposed Public Offering as soon as practicable but  in  no
event  less  than sixty (60) calendar days prior to any  proposed
filing with applicable regulatory authorities in connection  with
such proposed Public Offering (a "Piggy-Back Registration").  IFC
shall  have  the  opportunity to sell  in  such  proposed  Public
Offering,  and  register with applicable regulatory  authorities,
such number of shares in the Company as hereinafter provided.   A
Public  Offering in which the Company offers shares is  sometimes
hereinafter  referred  to as an "Issuer Offering"  and  a  Public
Offering  in which the Company does not offer shares is sometimes
hereinafter referred to as a "Shareholder Offering."  The Company
or  such Sponsor Shareholder shall cause the managing underwriter
or  underwriters of the proposed Public Offering  to  include  in
such  Public Offering the shares requested to be included by  IFC
on the same terms and conditions as the Company's or such Sponsor
Shareholder's  shares  in  the Company.   IFC  may  withdraw  its
request  for inclusion of shares in the proposed Public  Offering
at any time prior to ten (10) days before the commencement of the
Public  Offering by giving written notice to the Company  of  its
request  to  withdraw.   The Company may  withdraw  a  Piggy-Back
Registration  at any time prior to the time it becomes  effective
under  applicable law, provided that the Company shall  reimburse
IFC  for  all reasonable out-of-pocket expenses (including  legal
fees and expenses) incurred prior to such withdrawal.

     (a)    Number  of  Shares  and Apportionment  in  an  Issuer
Offering.  In an Issuer Offering, IFC may include such number  of
shares  in  the  Company  as  it may request.   If  the  managing
underwriter of such Issuer Offering shall inform the Company  and
the  holders of shares requesting such registration by letter  of
its opinion that the number of shares requested to be included in
such  registration exceeds the number which can be sold  in  such
Issuer Offering or that the inclusion would adversely affect  the
marketing  of  the securities to be sold by the Company  therein,
then  the  Company  may include all securities  proposed  by  the
Company  to  be  sold for its own account and  may  decrease  the
number  of shares so proposed and so requested to be included  in
such Public Offering to the extent necessary to reduce the number
of  shares  to  be  included  in the registration  to  the  level
recommended by the managing underwriter.  In the event of such  a
reduction,   the  number  of  shares  to  be  sold   by   Sponsor
Shareholders and IFC shall be reduced (including to  zero)  on  a
pro rata basis in relation to the number of shares proposed to be
offered for sale by each of them.

     (b)    Number  and  Apportionment of Shares  in  Shareholder
Offerings.  In a Shareholder Offering, IFC may include  a  number
of  shares  in  the  Company equal to or  less  than  the  number
(rounded  upward  to  the  nearest whole  number)  determined  by
multiplying the number of shares in the Company then owned by IFC
by  a fraction (i) the numerator of which is the number of shares
in  the  Company  owned by Sponsor Shareholders requested  to  be
included in such Shareholder Offering and (ii) the denominator of
which is the total number of shares in the Company then owned  by
all  Sponsor Shareholders.  If the managing underwriter  of  such
Shareholder   Offering  shall  inform  the  holders   of   shares
requesting  such registration by letter of its opinion  that  the
number  of  shares requested to be included in such  registration
exceeds  the  number  which  can  be  sold  in  such  Shareholder
Offering, the number of shares so proposed and so requested to be
included in such Public Offering shall be decreased to the extent
necessary  to reduce the number of shares to be included  in  the
registration   to   the  level  recommended   by   the   managing
underwriter.   In the event of such a reduction,  the  number  of
shares  to  be  sold by Sponsor Shareholders  and  IFC  shall  be
reduced  on a pro rata basis in relation to the number of  shares
proposed to be offered for sale by each of them.

    (c)   To the extent consistent with the tax objectives of the
Sponsor Shareholders, the Company will use all reasonable efforts
to cause all shares included in the Piggy-Back Registration to be
listed  on the Nepalese stock exchange or another stock exchange,
such  as the Bombay Stock Exchange, the Hong Kong Stock Exchange,
the  Jakarta Stock Exchange, the Singapore Stock Exchange and the
Kuala Lumpur Stock Exchange, reasonably acceptable to IFC.

     (d)    In connection with any Piggy-Back Registration,  each
Sponsor Shareholder selling in the Public Offering shall pay  all
out-of-pocket expenses (including fees and disbursements  of  its
counsel)  incurred  by it (including underwriting  discounts  and
commissions applicable to its sold Shares).  The Company will pay
all  other  expenses  of the Public Offering, including,  without
limitation, all registration, filing and National Association  of
Securities  Dealers, Inc. (or similar body) fees,  all  fees  and
expenses of complying with securities or blue sky laws, all  word
processing,  duplicating  and printing  expenses,  messenger  and
delivery  expenses,  the  reasonable fees  and  disbursements  of
counsel  for  IFC,  the Company and of the Company's  independent
accountants,  including the expenses of  any  special  audits  or
"cold   comfort"  letters  required  by  or  incident   to   such
performance  and  compliance  and premiums  and  other  costs  of
policies of insurance obtained by the Company against liabilities
arising out of the Public Offering.

    Section 2. Indemnification.

     (a)    The Company (and each of Panda of Nepal, RDC of Nepal
and  HIPC  with  respect to its own statements or other  actions)
agree   to   indemnify  and  hold  harmless  IFC,  its  officers,
directors,  employees and agents, and each Person,  if  any,  who
controls IFC (each, an "Indemnified Party") from and against  any
loss,  claim,  damage  or liability and  any  action  in  respect
thereof to which such Indemnified Party may become subject  under
applicable  securities laws or otherwise, insofar as  such  loss,
claim,  damage, liability or action arises out of,  or  is  based
upon,  any  untrue  statement or alleged untrue  statement  of  a
material   fact  contained  in  any  registration  statement   or
prospectus  relating to the shares in the Company (as amended  or
supplemented  if the Company shall have furnished any  amendments
or  supplements thereto) or any preliminary prospectus, or arises
out  of,  or  is based upon, any omission or alleged omission  to
state  therein a material fact required to be stated  therein  or
necessary  to   make the statements therein not  misleading,  and
shall  reimburse each Indemnified Party for any legal  and  other
expenses  reasonably  incurred  by  that  Indemnified  Party   in
investigating  or  defending or preparing to defend  against  any
such  loss, claim, damage, liability or action; provided however,
none  of the Company, Panda of Nepal, RDC of Nepal or HIPC  shall
have  any  indemnification obligations  pursuant  hereto  to  the
extent  that any such loss, claim, damage or liability,  or  such
action,  suffered  or  incurred  by  the  Indemnified  Party   is
determined by a court of competent jurisdiction to have  directly
and   solely   resulted  from  such  Indemnified  Party's   gross
negligence or willful misconduct.

     (b)    If the indemnification provided for in paragraph  (a)
above is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to therein,  then
the  Company (and each of Panda of Nepal, RDC of Nepal  and  HIPC
with   respect   to   its  own  statements  or   other   actions)
(collectively, the "Indemnifying Party"), in lieu of indemnifying
such  Indemnified Party, shall contribute to the amount  paid  or
payable  by  such Indemnified Party as a result of  such  losses,
claims, damages or liabilities as between the Indemnifying  Party
on  the one hand and the Indemnified Party on the other, in  such
proportion as is appropriate to reflect the relative fault of the
Indemnifying  Party  and of the Indemnified Party  in  connection
with  statements  or  omissions which resulted  in  such  losses,
claims,  damages  or liabilities, as well as any  other  relevant
equitable  considerations. The relative fault of the Indemnifying
Party  on the one hand and of the Indemnified Party on the  other
shall  be determined by reference to, among other things, whether
the  untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates  to
information  supplied  by such party, and the  parties'  relative
intent,  knowledge,  access  to information  and  opportunity  to
correct or prevent such statement or omission.

     Section  3.  Restriction on Sale by the Company and  Sponsor
Shareholders.   Each of the Company and the Sponsor  Shareholders
agrees  not to effect any sale or distribution of any  shares  in
the Company, or any shares or securities similar to shares in the
Company,  or  any  shares  or  securities  convertible  into   or
exchangeable or exercisable for shares in the Company, during the
fourteen  (14)  calendar days prior to, and  during  the  180-day
period  beginning on, the later of (x) the effective date of  any
registration  statement  (except as  part  of  such  registration
statement)  and (y) the commencement of a public distribution  of
shares  in  the  Company, except shares included  in  the  Public
Offering.