EXHIBIT NO. 146


                     INVESTMENT NUMBER 7365



                    Participation Agreement

                          in respect of
                           a B Loan to
            BHOTE KOSHI POWER COMPANY PRIVATE LIMITED


                             between


           NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR
                     ONTWIKKELINGSLANDEN N.V.


                               and


                INTERNATIONAL FINANCE CORPORATION


                  Dated as of the Closing Date



                        TABLE OF CONTENTS

     ARTICLE I
     Definitions and Interpretation

          Section 1.1.  Definitions                             2
          Section 1.2.  Interpretation                          2

     ARTICLE II
     Terms of Participation

          Section 2.1.  Amount and Interest Rate                3
          Section 2.2.  Prepayment                              4
          Section 2.3.  Balance of Loan                         4
          Section 2.4.  Disbursements                           4
          Section 2.5.  Commitment Fee                          5
          Section 2.6.  Front-end Fee                           5
          Section 2.7.  Annual Fee.                             5
          Section 2.8.  Maintenance Amount                      5
          Section 2.9.  Additional (Default Rate) Interest      6
          Section 2.10. Funding Costs                           6
          Section 2.11. Illegality                              6
          Section 2.12. Taxes                                   7
          Section 2.13. Payments                                7

     ARTICLE III
     Allocation

          Section 3.1.  Obligation to Allocate                  7
          Section 3.2.  Pre-Bankruptcy or Liquidation
                        Allocation                              7
          Section 3.3.  Post-Bankruptcy or Liquidation
                        Allocation                              8

     ARTICLE IV
     Other Aspects of Administration

          Section 4.1.  Consent for Amendments and Waivers -
                        Conditions of  Disbursement and
                        Payments                                8
          Section 4.2.  Consent for Amendments and Waivers -
                        Project Funds Agreement                 8
          Section 4.3.  Consultation for Amendments and
                        Waivers - Covenants                     9
          Section 4.4.  Consent and Consultation for
                        Amendments and Waivers - Security       9
          Section 4.5.  Exercise of Other Rights                9
          Section 4.6.  Events of Default: Notification         9
          Section 4.7.  Voluntary Acceleration                  9
          Section 4.8.  Mandatory Acceleration                 10
          Section 4.9.  Payments With Regard to Security and
                        Insurance.                             10
          Section 4.10. Costs and Expenses                     10
          Section 4.11. Refund of Distributions                11

     ARTICLE V
     Miscellaneous

          Section 5.1.  Reduction of Commitment                12
          Section 5.2.  Financial Statements and Reports       12
          Section 5.3.  Confidential Information               12
          Section 5.4.  No Representations                     12
          Section 5.5.  IFC's Standard of Care                 13
          Section 5.6.  Assignment                             13
          Section 5.7.  IFC's Rights not affected by  other
                        Investments and Loans                  14
          Section 5.8.  Reliance on Notices                    14
          Section 5.9.  Applicable Law                         14
          Section 5.10. Notices                                14
          Section 5.11. Counterparts                           15



                    PARTICIPATION AGREEMENT

AGREEMENT,  dated  as  of the Closing Date,  between  Nederlandse
Financierings-Maatschappij  voor  Ontwikkelingslanden   N.V.,   a
company  organized and existing under the laws of the Netherlands
(herein  called  the  "Participant")  and  International  Finance
Corporation (herein called "IFC").

WHEREAS:

(A)  Pursuant to an investment agreement (herein called the  "IFC
     Investment Agreement") dated as of the Closing Date, between
     Bhote Koshi Power Company Private Limited (herein called the
     "Company")  and  IFC, IFC has agreed to  make  a  loan  (the
     "Loan")  to  the  Company, the Loan being  composed  of  two
     portions  (the "A Loan" and the "B Loan", respectively),  in
     the amounts, for the purpose and on the terms and conditions
     set forth in the IFC Investment Agreement.

(B)  Pursuant  to  a Share Retention and Project Funds  Agreement
     (the  "Project  Funds Agreement") dated as  of  the  Closing
     Date,   between  Panda  Energy  International,  Inc.,  Harza
     Engineering  Company International L.P.,  Harza  Engineering
     Company  International, a limited liability  company,  Himal
     International Power Corporation Pvt. Ltd., Panda  of  Nepal,
     RDC   of   Nepal,   Panda  Bhote  Koshi  Company,   Resource
     Development   Consultants,  a  limited  liability   company,
     Soaltee  Enterprises Private Ltd., Soaltee  Hotel  Ltd.  and
     Surya   Enterprises  Private  Ltd.  (the  "Sponsors"),   the
     Company,     IFC     and    DEG-Deutsche    Investitions-und
     Entwicklungsgesellschaft mbH ("DEG"), the Sponsors have,  on
     the  terms  and conditions set forth therein, undertaken  to
     provide  additional funds to enable the Company to  complete
     the Project and meet certain of its financial obligations as
     they fall due.

(C)  Xerox copies of the signed IFC Investment Agreement and  the
     Project   Funds   Agreement  have  been  provided   to   the
     Participant.

(D)  The  Participant  has agreed to purchase a participation  in
     the   B   Loan   in  the  amount  of  ten  million   Dollars
     ($10,000,000)   (and  to  pay  for  such   participation   a
     corresponding  sum in Dollars, payable upon request  by  IFC
     and  otherwise  as  provided below),  and  in  consideration
     thereof  IFC  has  agreed  to  sell  to  the  Participant  a
     participation in the B Loan, on the terms and conditions set
     out in this Participation Agreement.

NOW, THEREFORE, the parties hereto agree as follows:


                           ARTICLE I

                 Definitions and Interpretation


      Section 1.1.  Definitions.  Wherever used in this Agreement
and unless the context otherwise requires:

      (a)   the terms defined in Schedule A to the IFC Investment
Agreement  and  not defined herein shall have the  same  meanings
when  used herein. In particular and as defined in Schedule A  to
the  IFC Investment Agreement, the term "Participants" means  the
Participant  and the other participants in the B Loan  (or  their
successors and assignees) and the term "Participations" means the
Relevant  Participation  and  the  participations  of  the  other
Participants in the B Loan.

      (b)   In  addition  the  following  terms  shall  have  the
following meanings:

                     (i)   the terms "A Loan",  "B
               Loan",  "Company",  "Project  Funds
               Agreement", "IFC", "IFC  Investment
               Agreement",  "Loan",  "Participant"
               and  "Sponsors" have the respective
               meanings already given to them; and

                      (ii)   the   term  "Relevant
               Participation"      means       the
               participation of the Participant in
               the  B  Loan in the amount referred
               to  in  Section 2.01 below, or,  as
               the   context   may  require,   the
               principal amount thereof from  time
               to time outstanding.

     Section 1.2.  Interpretation.  In this Agreement, unless the
context otherwise requires:

      (a)  headings and underlinings are for convenience only and
do not affect the interpretation of this Agreement;

      (b)   words  importing the singular include the plural  and
vice versa;

      (c)  an expression importing a natural person includes  any
company,   partnership,   trust,  joint   venture,   association,
corporation   or  other  body  corporate  and  any   governmental
authority or agency;

      (d)   a  reference  to a Section, Article  or  Annex  is  a
reference to that Section or Article of, or that Annex  to,  this
Agreement;

      (e)   a  reference to a document includes an  amendment  or
supplement  to, or replacement or novation of, that document  but
disregarding any amendment, supplement, replacement  or  novation
made in breach of this Agreement; and

      (f)   a reference to a party to any document includes  that
party's successors and permitted assigns.

                           ARTICLE II

                     Terms of Participation

      Section  2.1.  Amount and Interest Rate.  (a)  The Relevant
Participation  which the Participant has agreed to  purchase  and
which  IFC  has  agreed to sell is in the amount of  ten  million
Dollars ($10,000,000), representing a part of the B Loan  as  and
when  it  is  disbursed, and shall be repayable in the  principal
amounts and on the maturity dates as set forth below:

          Principal
           Amount                       Maturity Date

          $262,359.69                   March 15, 2001
          $275,252.04                   September 15, 2001
          $288,777.93                   March 15, 2002
          $302,968.48                   September 15, 2002
          $317,856.35                   March 15, 2003
          $333,475.81                   September 15, 2003
          $349,862.81                   March 15, 2004
          $367,055.07                   September 15, 2004
          $385,092.16                   March 15, 2005
          $404,015.58                   September 15, 2005
          $423,868.91                   March 15, 2006
          $444,697.83                   September 15, 2006
          $466,550.28                   March 15, 2007
          $489,476.56                   September 15, 2007
          $513,529.44                   March 15, 2008
          $538,764.27                   September 15, 2008
          $565,239.15                   March 15, 2009
          $593,015.00                   September 15, 2009
          $622,155.76                   March 15, 2010
          $652,728.49                   September 15, 2010
          $684,803.57                   March 15, 2011
          $718,454.82                   September 15, 2011

Total           $10,000,000.00

      (b)   The interest rate on the Relevant Participation shall
be  three  and one-half percent (3.50%) per annum above the  rate
which  appears  on the Dow Jones Market Screen  Page  the  column
headed  "USD"  as  of  11:00 a.m., London time,  on  the  B  Loan
Interest  Determination  Date for one month,  two  months,  three
months or six months, whichever period is closest to the duration
of  the  B  Loan Interest Period (or, if two periods are  equally
close  to the duration of the B Loan Interest Period, the  longer
one)  (the  "B  Loan  Floating Rate"), and shall  be  payable  in
Dollars  on  the dates provided for in the Special Conditions  of
the IFC Investment Agreement and shall otherwise be in accordance
with  Sections 3.3(b)(i), (ii), (iv) and (v).  IFC shall promptly
advise  the  Participants of the B Loan Floating Rate  each  time
that it is determined.

      Section  2.2.   Prepayment.  The B  Loan  (and  in  certain
circumstances,  just the part of the B Loan  represented  by  the
Relevant  Participation) is subject to prepayment as provided  in
the IFC Investment Agreement.

      Section  2.3.  Balance of Loan.  IFC reserves the right  to
allot,  assign  or  transfer any part of the Loan  which  is  not
represented  by  the  Relevant Participation; provided,  however,
that  IFC  shall at all times retain not less than 25% of  the  A
Loan  for its own account.  In addition, IFC shall not assign  or
transfer its right (as lender of the B Loan) to receive from  the
Company payments on or with respect to the B Loan.

       Section  2.4.   Disbursements.   (a)   IFC  shall  request
remittance  by  the  Participant  on  account  of  the   Relevant
Participation  (in an aggregate amount up to the full  amount  of
the  Relevant  Participation) only  as  needed  to  meet  B  Loan
Disbursements to the Company. IFC shall give the Participant  not
less  than three (3) Business Days' notice of the date  when  any
such  remittance is due. The Participant shall remit  the  amount
specified  in  the  said notice to Northern  Trust  International
Banking Corporation, New York (or such other bank in New York  as
IFC  may notify the Participant from time to time) for credit  to
IFC's account on or before 11:00 a.m. (New York time) on the date
specified in the said notice for value that date.  Provided  that
the  funds  are  received by IFC in good  time  on  the  date  so
specified,  then unless any event occurs which would justify  IFC
in not making the relevant Disbursement to the Company, IFC shall
disburse  those funds as part of the relevant B Loan Disbursement
for  value  the  same day that they are remitted to  IFC  by  the
Participant.

      (b)  Upon receipt from Northern Trust International Banking
Corporation  (or  such other bank as aforesaid)  of  advice  that
IFC's  account has been credited with such remittance  and  after
having  effected  the relevant Disbursement to the  Company,  IFC
shall,  if  so  requested  by  the Participant,  deliver  to  the
Participant a receipt substantially in the form of Annex A, dated
the  date  of  such  Disbursement  and  in  the  amount  of  such
remittance.  After  the  final Disbursement  of  the  B  Loan  or
cancellation of the undisbursed portion thereof, the  Participant
may  request  IFC  to deliver to the Participant a  Participation
Certificate  substantially  in  the  form  of  Annex  B,  in  the
aggregate  amount  of all such remittances made  to  IFC  by  the
Participant  hereunder and disbursed by IFC to the  Company.  IFC
shall   then  deliver  such  Participation  Certificate  to   the
Participant  which  shall return to IFC any  receipts  previously
delivered to the Participant evidencing such remittances.

      (c)   All Disbursements of the B Loan shall be made as  set
out  in  Section  3.2  of  the  Special  Conditions  of  the  IFC
Investment  Agreement and pro rata with Disbursements  of  the  A
Loan  (as  provided  in  such Section 3.2).   IFC  shall  request
remittances  from each of the Participants to meet  each  B  Loan
Disbursement  in  proportion (as nearly as  practicable)  to  the
amounts  of  their  respective  Participations.  The  Participant
acknowledges that IFC may however make a B Loan Disbursement on a
relevant Disbursement date even if the amount disbursed  is  less
than the full aggregate amount whose remittance was requested  by
IFC,  due to the fact that (for whatever reason) not all  of  the
Participants have remitted their funds in time.

      (d)   At  the  request  of  the  Participant  on  or  after
September 30, 2000, IFC shall cancel the right of the Company  to
request  Disbursements in respect of the undisbursed  portion  of
the B Loan which is represented by the undisbursed portion of the
Relevant Participation.

      Section  2.5.  Commitment Fee.  IFC shall also pay  to  the
Participant (but only proportionately out of amounts received  by
IFC  by  way  of  the commitment fee for the B Loan  pursuant  to
Section  3.4(a)(i)(B)  of  the  Special  Conditions  of  the  IFC
Investment Agreement) a commitment fee at the rate of one-half of
one  percent  (0.5%)  per  annum  on  so  much  of  the  Relevant
Participation  as  from time to time remains  unremitted  by  the
Participant.  The commitment fee shall accrue from  the  date  of
this Participation Agreement and with regard to each Disbursement
of  the  B Loan, shall cease to accrue as of the date on which  a
remittance  is  due from the Participant as provided  in  Section
2.04  (a) above with respect to the amount of the remittance then
due.  The commitment fee shall be payable semi-annually on  March
15  and September 15 in each year; the first such payment  to  be
made on March 15, 1998.

      Section  2.6.  Front-end Fee.  IFC shall also  pay  to  the
Participant (but only proportionately out of the amounts received
by   IFC   pursuant  to  Section  3.4(a)(ii)(B)  of  the  Special
Conditions  of the IFC Investment Agreement) a front-end  fee  of
one percent (1%) of the amount of the Relevant Participation.

      Section  2.7.   Annual  Fee.  IFC shall  also  pay  to  the
Participant (but only proportionately out of the amounts received
by  IFC pursuant to Section 3.4(a)(iii) of the Special Conditions
of  the  IFC Investment Agreement) an annual fee of six  thousand
two  hundred fifty Dollars ($6,250.00), to be paid on  the  first
Interest  Payment  Date  and every second Interest  Payment  Date
thereafter until the B Loan is repaid in full.

      Section  2.8.  Maintenance Amount.  IFC shall  request  the
Company to remit to IFC, in accordance with Section 3.17  of  the
Special  Conditions of the IFC Investment Agreement, such amounts
as  the  Participant shall from time to time certify  to  IFC  as
being  its  Maintenance Amount as specified in that Section.  The
Participant  shall  take all steps necessary  to  enable  IFC  to
comply with all the requirements on IFC's part contained in  that
Section  (and the related definitions) with respect to any  claim
to  be  made  by  IFC  thereunder  in  respect  of  the  Relevant
Participation. IFC shall pay to the Participant (but only out  of
any  amounts received by it under that Section) such  amounts  as
are received by IFC under that Section in respect of the Relevant
Participation.

     Section 2.9.  Additional (Default Rate) Interest.  IFC shall
pay  to  the  Participant (but only proportionately  out  of  any
amounts  received  by  IFC  under  Section  3.9  of  the  Special
Conditions  of  the  IFC Investment Agreement)  such  amounts  of
interest  at  the default rate specified in that Section  as  are
attributable to the Relevant Participation.

      Section  2.10.   Funding  Costs.  With  regard  to  amounts
payable  by  the Company pursuant to Section 3.16 of the  Special
Conditions of the IFC Investment Agreement, IFC shall pay to  the
Participant  (but  only  out  of  any  amounts  received  by  IFC
thereunder)  such  amounts as are attributable  to  the  Relevant
Participation. The Participant agrees to use reasonable  efforts,
in  its discretion, to minimize any costs, expenses or losses  of
the  nature referred to in the said Section 3.16 and relevant  to
the  Relevant  Participation,  and the  Participant  agrees  that
promptly  after  any  such costs, expenses or  losses  have  been
incurred,  it  will notify IFC of such fact and  the  amount  and
calculation thereof.

      Section 2.11.  Illegality.  With respect to Section 3.15 of
the Special Conditions of the IFC Investment Agreement:

     (a)  the Participant shall give notice to IFC of (i) any new
legislation   or   regulation  and/or   amendment   to   existing
legislation  or  regulation or the interpretation or  application
thereof  which  would  make it unlawful for  the  Participant  to
maintain  or  to  fund the Relevant Participation  and  (ii)  any
proposal  or  action  which might result  in  the  legal  changes
referred  to in (i) above, promptly after the relevant  event  or
proposal has become known to the Participant;

      (b)  the Participant shall not request IFC to call upon the
Company  for  the  repayment  of  the  portion  of  the  B   Loan
represented  by  the Relevant Participation until all  applicable
grace  periods  granted  by the new law  or  regulation  (or  its
interpretation or application) have expired;

      (c)   at  the  request  of IFC, the Participant  shall  use
reasonable  efforts,  but  without  prejudice  to  it,  to   seek
extensions of the said applicable grace periods and shall  submit
the necessary application to the competent authorities requesting
that  the Relevant Participation be exempted from the application
of  the new law or regulation or its interpretation, if there are
reasonable grounds for such application;

      (d)   the  Participant  shall use reasonable  efforts  (but
without  prejudice  to  it) to assign and transfer  the  Relevant
Participation   and  shall  collaborate  with  IFC   in   seeking
appropriate transferee(s) of the Relevant Participation; and

      (e)   in  the  event  that the reasonable  efforts  of  the
Participant under sub-sections (c) and (d) above are of no  avail
and it has become unlawful for the Participant to maintain or  to
fund the Relevant Participation, then upon written notice to  IFC
from  the Participant, IFC shall promptly request the Company  to
prepay  the  portion of the B Loan represented  by  the  Relevant
Participation, together with all interest and Maintenance  Amount
(if  any)  accrued thereon, in accordance with the provisions  of
the said Section 3.15.

      Section 2.12.  Taxes.  If the Company is required under the
terms  of  Section  5.9  of the General  Conditions  of  the  IFC
Investment  Agreement to gross-up the amount of any  payment  and
then to deduct or withhold tax from such grossed-up payment,  IFC
shall  endeavor  to  pass on to the Participant,  to  the  extent
practicable, its proportionate share of the tax receipt or  other
evidence  of deduction or withholding which the Company sends  to
IFC.

      Section  2.13.   Payments.   (a)   IFC  shall  pay  to  the
Participant  all  amounts  payable in  respect  of  the  Relevant
Participation promptly after it receives the corresponding amount
itself, whether from the Company or otherwise.  All payments made
to  the  Participant  by  IFC shall be made  in  same  day  funds
(together with any interest actually earned by IFC on such  funds
from  the  date of receipt by IFC to the date of payment  to  the
Participant)  to such account as the Participant may  advise  IFC
from time to time.

      (b)  Any taxes or other charges which may be applicable  to
any  payments  made in respect of the Relevant Participation  and
which  for  whatever  reason are not paid or  reimbursed  by  the
Company  pursuant to the IFC Investment Agreement, shall  be  for
the account of the Participant.


                          ARTICLE III

                           Allocation

     Section 3.1.  Obligation to Allocate.  If IFC should receive
less  than the full amount then due and payable to IFC under  the
IFC  Investment Agreement, then notwithstanding any of the  other
provisions  of this Agreement, IFC shall (unless it is  prevented
by  applicable  law  or  by the order of  a  court  of  competent
jurisdiction) apply and allocate such amounts between the A  Loan
and the B Loan and among the various Participants as set forth in
Sections  3.2 and 3.3 below and in accordance with the Trust  and
Retention Agreement.

      Section  3.2.   Pre-Bankruptcy or  Liquidation  Allocation.
Unless  the  Company becomes bankrupt or insolvent or  goes  into
liquidation (or any analogous event occurs):

      (a)   such  monies  shall be applied  first  to  costs  and
expenses  (if  any),  secondly to interest  and  any  other  sums
besides  principal  then  due  and payable  and  thirdly  to  any
principal of the A Loan and the B Loan then due and payable;

      (b)  such monies shall be allocated between the A Loan  and
the  B  Loan in proportion to the respective amounts of  interest
and  other  sums besides principal, or (as the case  may  be)  of
principal, then due and payable on and in respect of the  A  Loan
and the B Loan respectively; and

      (c)   monies allocated to the B Loan shall be applied among
the  Participants  in  proportion to the  respective  amounts  of
interest  and other sums besides principal, or (as the  case  may
be)  of  principal  then  due and payable  in  respect  of  their
respective Participations.

     Section 3.3.  Post-Bankruptcy or Liquidation Allocation.  If
the   Company  becomes  bankrupt  or  insolvent  or   goes   into
liquidation (or an analogous event occurs):

      (a)   such  monies  shall be applied  first  to  costs  and
expenses (if any) and then to the principal of, interest  on  and
any other sums due and payable in respect of the A Loan and the B
Loan;

      (b)  such monies shall be allocated between the A Loan  and
the B Loan in proportion to the respective aggregate amounts then
due  and payable on and in respect of the A Loan and the B  Loan,
respectively; and

      (c)   monies allocated to the B Loan shall be applied among
the  Participants  in  proportion  to  the  respective  aggregate
amounts  then  due  and payable in respect  of  their  respective
Participations.


                           ARTICLE IV

                Other Aspects of Administration

       Section  4.1.   Consent  for  Amendments  and  Waivers   -
Conditions  of Disbursement and Payments. IFC shall not,  without
the consent of the Participant:

      (a)  amend or waive any condition of Disbursement contained
in  Article  3  of  the General Conditions or Article  6  of  the
Special Conditions which is relevant to a Disbursement of  the  B
Loan; or

      (b)   amend or waive the obligations of the Company to pay,
in  the  specified currency and (where specified) on the relevant
due dates and in the relevant place(s), the amounts of principal,
interest or any other payments due on or in respect of the B Loan
in accordance with the provisions of the IFC Investment Agreement
(or,  for  the avoidance of doubt, increase the amount of  the  B
Loan provided for in the IFC Investment Agreement).

      Section 4.2.  Consent for Amendments and Waivers -  Project
Funds Agreement.  IFC shall also not, without the consent of  the
Participant, agree to any amendments to, or grant any waivers  in
respect  of,  any of the obligations on the part of the  Sponsors
contained  in the Project Funds Agreement if those amendments  or
waivers  would, in the reasonable opinion of IFC, materially  and
adversely   affect   the  interests  of  the   Participants   (as
Participants).

      Section  4.3.   Consultation for Amendments and  Waivers  -
Covenants.   IFC  shall  consult  with  the  Participants  before
agreeing to any amendment or granting any waiver or consent  with
respect to any of the covenants contained in Articles 5 and 6  of
the General Conditions of the IFC Investment Agreement or Article
7  of the Special Conditions of the IFC Investment Agreement,  if
such  amendment,  waiver  or consent  would,  in  the  reasonable
opinion of IFC, materially and adversely affect the interests  of
the Participants (as Participants).

      Section  4.4.  Consent and Consultation for Amendments  and
Waivers  - Security.  If, in the reasonable opinion of  IFC,  any
release,  amendment, waiver or consent referred  to  below  would
materially and adversely affect the interests of the Participants
(as Participants):

      (a)   IFC  shall  not without the consent  of  Participants
holding  Participations which in the aggregate  represent  sixty-
seven  per cent (67%) or more of the outstanding principal amount
of the B Loan agree to release any part of the Security; and

     (b)  IFC shall consult with the Participants before agreeing
to  any  amendment or granting any other waiver or  consent  with
respect to any of the Security Documents.

      Section  4.5.   Exercise of Other Rights.  Subject  to  the
preceding  provisions of this Article and subject  to  the  other
provisions of this Agreement:

     (a)  the administration and exercise of rights under the IFC
Investment  Agreement and the Project Funds Agreement,  including
all  matters provided for or contemplated by any provision of the
IFC  Investment Agreement and the Project Funds Agreement,  shall
be handled solely by IFC; and

      (b)  IFC specifically reserves the right, in its discretion
and without notice to the Participants, to exercise, refrain from
exercising  or waive any rights under or in relation to  the  IFC
Investment  Agreement or any other agreement with the Company  or
under  or in relation to the Project Funds Agreement or to modify
any provisions of any of them.

      Section 4.6.  Events of Default: Notification.  As promptly
as  practicable but, in any event, within fifteen (15) days after
the  occurrence of an Event of Default shall become known to IFC,
IFC shall advise the Participants of the occurrence of such Event
of  Default and shall consult with the Participants on the course
of action which IFC intends to take with respect to such Event of
Default. Except in the case of payment defaults, IFC shall not be
deemed  to have knowledge of any Event of Default unless notified
in writing thereof by the Company or the Participant.

      Section  4.7.  Voluntary Acceleration.  (a)   At  any  time
after  the  occurrence of an Event of Default  IFC  may,  at  its
discretion (but after consultation with the Participants, if time
permits), declare the principal of, all accrued interest  on  and
any other amounts payable in respect of, the A Loan and/or the  B
Loan  to  be immediately due and payable and make demand  on  the
Company for the payment thereof pursuant to the terms of the  IFC
Investment Agreement.

      (b)  If IFC declares the principal of, all interest accrued
on  and any other amounts payable in respect of, the A Loan to be
due  and  payable as a result of the happening  of  an  Event  of
Default,  IFC shall concurrently therewith declare the  principal
of,  all  interest  accrued on and any other amounts  payable  in
respect of, the B Loan to be due and payable.

      Section  4.8.   Mandatory Acceleration.  If  the  Event  of
Default  is for non-payment of the principal of, or interest  on,
the B Loan and if the Participants do not agree with IFC on IFC's
proposed  course  of  action within thirty (30)  days  after  the
commencement  of  IFC's consultation with the Participants,  IFC,
shall   at   the   written   request  of   Participants   holding
Participations  which in the aggregate represent sixty-seven  per
cent  (67%) or more of the outstanding principal amount of the  B
Loan sent to IFC at any time after the said period of thirty (30)
days  has  elapsed, if the said Event of Default  is  still  then
continuing, declare the principal of, all accrued interest on and
any  other  amounts  payable in respect of,  the  B  Loan  to  be
immediately  due and payable and make demand on the  Company  for
payment thereof pursuant to the IFC Investment Agreement.

       Section  4.9.   Payments  With  Regard  to  Security   and
Insurance.  (a)  If the Security is enforced in whole or in part,
IFC  shall account to the Participants for the proceeds which IFC
receives of any property which is charged or pledged as  part  of
the  Security in the same way as it accounts for monies  received
by it under the IFC Investment Agreement.

      (b)   If  in  accordance with and subject to the applicable
provisions  of  the  IFC Investment Agreement  and  the  Security
Documents, IFC receives (or is entitled to receive) the  proceeds
of   any  insurance  coverage  (as  loss  payee  or  assignee  or
otherwise) and IFC has the right to apply such proceeds to prepay
all  or  part of the Loan, it is expressly agreed that  IFC  may,
after  consultation with the Participants, return to the  Company
up  to  the  full amount of any insurance proceeds if,  in  IFC's
reasonable opinion, the Company should be allowed to use the said
proceeds  to  replace or repair the relevant loss or  destruction
and  carry  on with the Project; provided, however, that  if  the
Loan  has  been accelerated or the Security enforced,  IFC  shall
account to the Participants for all the insurance proceeds  which
it  receives in the same way as it accounts for any other  monies
which it receives from the Company or as part of the proceeds  of
the enforcement of the Security.

      Section  4.10.   Costs and Expenses.  (a)  The  Participant
shall  indemnify and keep IFC indemnified against,  and  promptly
upon  demand by IFC pay to IFC, its pro rata share (in  the  same
proportion  as the Relevant Participation bears to the  whole  of
the  B  Loan), of any liabilities, costs, damages and  reasonable
expenses  incurred by IFC in respect of the B Loan in  connection
with  the  implementation or enforcement of  the  IFC  Investment
Agreement or any other agreement with the Company, or the Project
Funds   Agreement   or  the  Security,  or  the   protection   or
preservation  of  rights  thereunder or in  connection  with  any
matter arising therefrom and against any sums in respect of the B
Loan  which  IFC may be required to pay to any person  thereunder
(and  which  are not the result of IFC's own gross negligence  or
willful misconduct). IFC acknowledges, however, that it will seek
reimbursement of any such costs and expenses from the Company  in
the  first  instance  (without  being  under  any  obligation  to
commence legal proceedings or take any other action beyond making
demand for such reimbursement), that any monies received from the
Company  will  be  allocated  pro  rata  to  costs  and  expenses
attributable to the A Loan and the B Loan, and that it will  only
ask  the  Participants for reimbursement of a pro rata  share  of
such  costs  and expenses if and to the extent that  the  Company
does not reimburse the full amount of such costs and expenses  to
IFC.   Any  request  for  reimbursement will  provide  reasonable
details of the costs and expenses involved.

      (b)   Without  prejudice  to the foregoing,  IFC  shall  be
entitled,  before  exercising any discretion  or  performing  any
duties  in  respect of the B Loan under this Agreement,  the  IFC
Investment Agreement, or any other agreement with the Company  or
the Project Funds Agreement or the Security to be indemnified  by
the Participants (pro rata to the participation in the B Loan  of
each   of   the  Participants)  against  any  liability  directly
resulting  from such exercise on such terms as IFC may reasonably
require.

       (c)   Any  costs  and/or  expenses  which  apply  to   the
preservation or protection of both the A Loan and the B Loan  and
their  respective rights or which arise in respect of both the  A
Loan  and  the B Loan shall be allocated pro rata between  the  A
Loan  and  the  B  Loan; and the Participants  shall  bear  their
respective  shares of the portion allocated to  the  B  Loan,  as
provided in subsections (a) and (b) above.

      Section  4.11.  Refund of Distributions.  (a)  If  for  any
reason IFC is required by law to refund to any person any payment
in  respect  of the Loan received by IFC under the IFC Investment
Agreement  or  the  Security Documents  or  any  other  agreement
contemplated by the IFC Investment Agreement and IFC has  already
made  a  corresponding payment of all or any part of such receipt
to  the Participant (whether by way of the repayment of principal
,  payment of interest thereon or otherwise), then IFC shall give
notice  of  such  requirement to the Participant as  promptly  as
practicable  after  IFC  becomes aware thereof.  The  Participant
shall pay to IFC (pro rata to the payment received by it to which
the  refund  or  payment relates) a sum in Dollars equivalent  to
such  refund or payment, together with a similar pro rata portion
of  the interest and other costs (if any) required by law  to  be
paid by IFC to such person in relation to such refund or payment.

      (b)   IFC shall endeavor to minimize the amount of any sums
which  it  may be required to refund as aforesaid and shall  only
refund  to  the  Company or such other person the minimum  amount
required by, and at latest time permitted by, law. If, subsequent
to  such refund, IFC shall recover from any person (other than  a
Participant)  any amount on account of a refund payment  made  by
IFC  in  respect  of  the Loan of the sort contemplated  in  this
Section,  then  IFC  shall  pay  to  the  Participant  (but  only
proportionately out of those amounts so received or recovered  by
IFC  in  respect of the Loan and then pro rata to the entitlement
of  the Participant to the amount so received or recovered by IFC
in  respect  of  the  Loan) an amount in  Dollars  equal  to  the
Participant's entitlement to any such amount.


                           ARTICLE V

                         Miscellaneous

      Section 5.1.  Reduction of Commitment.  If the whole or any
part  of the B Loan is cancelled pursuant to Section 3.14 of  the
Special Conditions of the IFC Investment Agreement (except at the
request  of the Participant pursuant to Section 2.4 (d)  of  this
Agreement,  or  of  any other Participants  pursuant  to  similar
provisions in their Participation Agreements), the amounts of the
Participations  which  the Participants have  agreed  to  acquire
shall  be  reduced pro rata.  In addition, if the Participant  is
unreasonably refusing to respond to any request to remit funds to
meet   a  B  Loan  Disbursement,  IFC  may,  by  notice  to   the
Participant,   reduce  the  principal  amount  of  the   Relevant
Participation,  except in respect of amounts previously  remitted
by  the  Participant. In any such case, the commitment fee  shall
immediately  cease  to  accrue as to  the  amount  by  which  the
Relevant Participation is reduced.

      Section  5.2.  Financial Statements and Reports. IFC  shall
deliver  to the Participant as promptly as practicable copies  of
(a)   all  financial  statements  and  Project  progress  reports
received  by  IFC  from the Company in accordance  with  the  IFC
Investment  Agreement  and (b) such other  periodic  reports  and
certificates  as IFC may receive from the Company under  the  IFC
Investment Agreement.

      Section  5.3.   Confidential Information.   Notwithstanding
anything  to the contrary expressed or implied in this Agreement,
IFC   shall  not  be  bound  to  disclose  to  any  other  person
information  relating  to the Company or  the  Sponsors  if  such
disclosure  would or might in IFC's reasonable opinion constitute
a  breach of any law or regulation or be otherwise actionable  at
the suit of any person.

      Section  5.4.   No  Representations.   (a)   IFC  makes  no
representation  or warranty as to the merits of  the  investment,
the  financial condition of the Company, the Sponsors or  of  any
other Project participants, the validity or enforceability of the
IFC  Investment  Agreement  (or any related  agreements)  or  the
Project  Funds Agreement or the performance by the  Company,  the
Sponsors   or  of  any  other  Project  participants   of   their
obligations  contained in the IFC Investment  Agreement  (or  any
related agreements), the Project Funds Agreement or of any  other
agreements executed in connection with the Project respectively.

      (b)   The Participant confirms that it is not entering into
this  Agreement  in reliance on any statement, representation  or
warranty  by IFC and confirms that: (i) it has itself  been,  and
will  continue to be, responsible for making its own  independent
appraisal  of  and  investigations into the financial  condition,
creditworthiness, affairs, status and nature of the Company,  the
Sponsors and of any other Project participants; and (ii)  it  has
not  solely relied, and will not solely rely, on IFC to  appraise
or  keep  under  review  on its behalf the  financial  condition,
creditworthiness, affairs, status or nature of the  Company,  the
Sponsors or of any other Project participant.

       (c)   The  Participant  acknowledges  that  IFC  makes  no
representation  or  warranty, express  or  implied,  as  to,  and
assumes  no responsibility for, or with respect to, the  accuracy
or completeness of the Information Memorandum dated April 1997 or
the  other documents distributed in connection with the financing
hereby contemplated.

      Section  5.5.  IFC's Standard of Care.  IFC shall  exercise
the  same  care in the administration and enforcement  of  rights
under  or  in  relation to the IFC Investment Agreement  and  the
Project Funds Agreement so far as the B Loan is concerned  as  it
exercises with respect to the A Loan or any other loans which are
for   its  own  account.  Nonetheless  IFC  shall  not   in   the
administration  of  the  Loan, be liable  for  any  loss,  costs,
damages or otherwise which may result from any act or omission on
the  part of IFC unless caused by its gross negligence or willful
misconduct.

      Section  5.6.  Assignment.  (a)  The Participant represents
that  it  is  acquiring the Relevant Participation  for  its  own
account  and  not  with  a view to resale  or  distribution.  The
Participant  shall consult with IFC prior to any  proposed  sale,
transfer  or  other disposal ("assignment") of the whole  or  any
part  of  the  Relevant  Participation. It is  however  expressly
agreed that without the express consent of IFC (such consent  not
to be unreasonably withheld or delayed), the Participant may not:
(i)   assign   the   Relevant  Participation  before   the   full
Disbursement  of  the  B  Loan  (or  the  cancellation   of   any
undisbursed  balance); (ii) assign less than  the  whole  of  the
Relevant  Participation or to more than one transferee; or  (iii)
assign the whole or any part of the Relevant Participation  to  a
transferee  which  is  not a financial institution  or  which  is
incorporated or resident (as a branch or otherwise) in Nepal.

      (b)  Until such time as IFC has received written notice  of
assignment  (after  IFC's  consent has  been  obtained,  if  such
consent  is required), IFC may deem and treat the Participant  as
the   absolute  owner  of  the  Relevant  Participation  for  all
purposes,  notwithstanding any notice to the  contrary,  and  any
payment  made  to  or  on  the order  of  the  Participant  shall
discharge  the liability of IFC to the extent of the  payment  so
made.  The  provisions of this subsection are  however  expressly
subject to the provisions of any Participation Certificate  which
may be issued, as provided in Section 2.4 (b) above.

      (c)  If the Participant does make any such assignment (with
IFC's consent, if so required), any assignee of the whole or  any
part of the Relevant Participation shall be bound by the terms of
this  Agreement  as  if  references to the  Participant  and  the
Relevant  Participation were references to the assignee  and  its
Participation and otherwise mutatis mutandis.

     (d)  Solely for the purposes of item (iii) of subsection (a)
above  it is expressly agreed and understood: (i) that a transfer
from  one  office or branch to another office or  branch  of  the
Participant  shall  be treated as an assignment  and  accordingly
that no assignment to an office or branch resident in Nepal shall
be  permitted without the express consent of IFC; and  (ii)  that
the  Participant  is initially taking the Relevant  Participation
for  the account of the office or branch disclosed in the Notices
Section of this Agreement (Section 5.10) and that the Participant
will  inform  IFC  forthwith of any  change  in  such  office  or
account.

     Section 5.7.  IFC's Rights not affected by other Investments
and  Loans.  The Participant expressly acknowledges that although
IFC may make other loans to and investments in the Company in the
future, that shall not diminish in any respect: (a) any of  IFC's
rights,   authority   or   discretion   with   respect   to   the
administration of the Loan or (b) IFC's freedom to  exercise  any
of  such  rights, authority or discretion in the manner it  deems
appropriate under the terms of this Agreement.

      Section  5.8.   Reliance on Notices.   In  the  absence  of
manifest error, IFC may rely on any notice or other communication
received from the Participant, the Company or any other person as
contemplated in this Agreement which IFC reasonably  believes  to
be genuine and correct and to have been communicated or signed by
the  person by whom it purports to be communicated or signed, and
IFC  shall  not  be  liable to the Participant  for  any  of  the
consequences of such reliance.

      Section  5.9.   Applicable Law.  THIS  AGREEMENT  SHALL  BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, UNITED STATES OF AMERICA 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).

      Section  5.10.  Notices.  Any notice or other communication
hereunder shall be in writing and may be delivered by hand,  mail
(if  the  Participant  has an address in  the  United  States  of
America),  airmail, facsimile or telex and may be sent by  either
party to the other at its address specified below (or by SWIFT or
by  any other means in common usage, if agreed by the parties) or
to  such  other  address as either party  by  notice  shall  have
designated.  Any  such  notice or other  communication  shall  be
effective upon receipt.

     For the Participant:

          Gerrit M. van Kampen
          FMO, Koningskade 40
          P.O. Box 93060
          2509 AB The Hague
          The Netherlands


          Alternative address for communications by telex:

               _____________________
               _____________________


          Alternative address for communications by facsimile:

               70-3246187

          Alternative address for communications by telephone:

               70-3149660

     For IFC:

          International Finance Corporation
          2121 Pennsylvania Avenue, N.W.
          Washington, D.C. 20433
          United States of America

          Alternative address for communications by telex:

               248423 - World Bank
                64145 - World Bank
               197688 - World Bank
                82987 - World Bank

          Alternative address for communications by facsimile:

               (202) 974-4307


     Section 5.11.  Counterparts.  This Agreement may be executed
in  several  counterparts,  each of  which  shall  be  deemed  an
original, but all of which together shall constitute one and  the
same agreement.

     IN WITNESS WHEREOF, the parties hereto, acting through their
respective  duly  authorized representatives,  have  caused  this
Agreement to be signed in their respective names, as of the  date
and year first above written.


                    NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ
                    VOOR ONTWIKKELINGSLANDEN N.V.


                    By:
                         Dr. L.B.M. Mennes
                         Managing Director


                    INTERNATIONAL FINANCE CORPORATION



                    By:__________________________________________
                              Authorized Representative



                                                          ANNEX A
                                                      Page 1 of 1


                            RECEIPT


      International Finance Corporation ("IFC") has received from
Nederlandse  Financierings-Maatschappij voor  Ontwikkelingslanden
N.V.    (the    "Participant")   the    principal    amount    of
______________________ Dollars ($__________) and  has  registered
on  its  books in the name of the Participant a participation  of
that  amount  in the B Loan provided by IFC to Bhote Koshi  Power
Company  Private  Limited  (the "Company")  pursuant  to  an  IFC
Investment  Agreement dated as of the Closing Date,  between  the
Company and IFC.

Such  participation is subject to the terms of the  Participation
Agreement  between  IFC  and the Participant,  dated  as  of  the
Closing Date.

THIS  RECEIPT IS NOT AN OBLIGATION OF THE INTERNATIONAL BANK  FOR
RECONSTRUCTION AND DEVELOPMENT OR OF ANY GOVERNMENT.

                    INTERNATIONAL FINANCE CORPORATION



                    By:_________________________________________
                              Authorized Signature




                                                          ANNEX B
                                                      Page 1 of 5


                    PARTICIPATION CERTIFICATE


      THIS  IS  TO CERTIFY that International Finance Corporation
("IFC")  for  value received has registered on its books  in  the
name     of    Nederlandse    Financierings-Maatschappij     voor
Ontwikkelingslanden N.V. (the "Participant") a participation (the
"Relevant   Participation")   in   the   principal   amount    of
_______________  Dollars ($__________) in  the  B  Loan  (the  "B
Loan"),  which  together  with the A Loan  (the  "A  Loan"),  was
provided by IFC to Bhote Koshi Power Company Private Limited (the
"Company"),  pursuant to the IFC Investment Agreement  (the  "IFC
Investment  Agreement") dated as of the Closing Date between  the
Company and IFC.
                                                          ANNEX B
                                                      Page 2 of 5


      1.    The Relevant Participation shall be repayable in  the
principal  amounts  and  on the maturity dates,  and  shall  bear
interest at the rate per annum all as set forth below:

Principal
 Amount        Maturity Date       Interest

$__________    _____________       Three and one-half percent
$__________    _____________       (3.50%) per annum above the
$__________    _____________       rate which appears on the
$__________    _____________       Dow Jones Market Screen
$__________    _____________       Page the column headed
$__________    _____________       "USD" as of 11:00 a.m.,
$__________    _____________       London time, on the B Loan
$__________    _____________       Interest Determination
$__________    _____________       Date for one month, two
$__________    _____________       months, three months or
$__________    _____________       six months, whichever
$__________    _____________       period is closest to the
$__________    _____________       duration of the B Loan
$__________    _____________       Interest Period (or, if two
$__________    _____________       periods are equally close to
$__________    _____________       the duration of the B Loan
$__________    _____________       Interest Period, the longer
$__________    _____________       one), and shall be payable
                                   in Dollars on the dates
                                   provided for in the Special
                                   Conditions of the IFC
                                   Investment Agreement and
                                   shall otherwise be in
                                   accordance with Sections
                                   3.3(b)(i), (ii), (iv) and (v)
                                   thereof.

Total     $_________

The  Relevant  Participation  is limited  to  the  principal  and
interest specified above and does not include the A Loan  or  any
other part of any other investment by IFC in the Company.



                                                          ANNEX B
                                                      Page 3 of 5


      2.    This Participation Certificate is transferable by the
Participant, or by the Participant's attorney duly authorized  in
writing,   upon   presentation   and   surrender   thereof    for
cancellation,  duly  endorsed,  or  accompanied   by   a   proper
instrument of assignment and transfer. Upon such transfer, a  new
certificate  of the same tenor shall be issued to the transferee.
IFC   may   deem  and  treat  the  person  in  whose  name   this
Participation Certificate is registered on the books  of  IFC  as
the  absolute owner thereof for all purposes, notwithstanding any
notice  to  the contrary; and any payment to or on the  order  of
such person shall discharge the liability of IFC to the extent of
the payment so made.

      3.   Payment of all sums payable by IFC hereunder shall  be
made  in  accordance  with the provisions  of  the  Participation
Agreement referred to below.

      4.    This Participation Certificate is issued pursuant  to
the Participation Agreement dated as of the Closing Date, between
IFC     and    Nederlandse    Financierings-Maatschappij     voor
Ontwikkelingslanden  N.V., and is subject to  the  provisions  of
that Agreement.
                                                          ANNEX B
                                                      Page 4 of 5



      5.   This Participation Certificate shall be surrendered to
IFC upon payment in full of all sums due hereunder.

      THIS PARTICIPATION CERTIFICATE IS NOT AN OBLIGATION OF  THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT OR  OF  ANY
GOVERNMENT.

                    INTERNATIONAL FINANCE CORPORATION



                    By:____________________________________
                              Authorized Signature




                                                          ANNEX B
                                                      Page 5 of 5


Date:



     FOR VALUE RECEIVED (I) (we) hereby sell, assign and transfer
to
_________________________________________________________________
_________________________________________________ the certificate
issued by International Finance Corporation to which this form of
transfer   is  attached;  and  we  hereby  irrevocably  authorize
International Finance Corporation to transfer such certificate on
its books.



Dated



Witness: