UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                            FORM 10-Q

(Mark One)
[X]  QUARTERLY  REPORT PURSUANT TO SECTION 13  OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 1997

                                   OR

[  ] TRANSITION  REPORT PURSUANT TO SECTION 13 OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934
     For the transition period from __________ to __________.

               Commission File Number 333-14495-02
                                
                                
                 PANDA INTERHOLDING CORPORATION
     (Exact name of registrant as specified in its charter)

          Delaware                              75-2660917
     (State or other jurisdiction of          (IRS Employer
     incorporation or organization)        Identification Number)

    4100 Spring Valley Road, Suite 1001, Dallas, Texas 75244
  (Address of principal executive offices, including zip code)
                                
                         (972) 980-7159
      (Registrant's telephone number, including area code)
                                
                             None
 (Former name, former address and former fiscal year, if changed
                       since last report)

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

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of November 11, 1997.

     Common Stock, Par Value $.01 Per Share            1,000



PART I - FINANCIAL INFORMATION


                                                                 

Item 1.   Financial Statements (Unaudited)                   F-1

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations      1


PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K                   5



                         PANDA INTERHOLDING CORPORATION
                                AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                                                      (Unaudited)
                                                                                             December 31              September 30
                                                                                                 1996                     1997
                                                                                             -------------            -------------
<S>                                                                                          <C>                      <C>          
Current assets:
  Cash and cash equivalents ......................................................           $     828,787            $   2,996,347
  Restricted cash - current ......................................................               8,781,393                7,062,753
  Accounts receivable ............................................................               9,402,685                8,559,518
  Fuel oil, spare parts and supplies .............................................               7,913,777                5,988,990
  Other current assets ...........................................................                 164,905                  310,912
                                                                                             -------------            -------------
    Total current assets .........................................................              27,091,547               24,918,520

Plant and equipment:
  Electric generating facilities .................................................             288,716,711              290,862,770
  Furniture and fixtures .........................................................                 494,418                  501,392
  Less: accumulated depreciation .................................................             (26,539,539)             (35,386,467)
                                                                                             -------------            -------------
    Total plant and equipment, net ...............................................             262,671,590              255,977,695

Restricted cash - debt service reserves and escrow deposits ......................              17,357,524               20,555,467

Debt issuance costs, net of accumulated
  amortization of $73,986 and $214,904 respectively ..............................               3,680,902                3,578,811
                                                                                             -------------            -------------
                                                                                             $ 310,801,563            $ 305,030,493
                                                                                             =============            =============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-1



<PAGE>
                         PANDA INTERHOLDING CORPORATION
                                AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDER'S DEFICIT

<TABLE>
<CAPTION>
                                                                  (Unaudited)
                                                   December 31    September 30
                                                     1996             1997
                                                 -------------    -------------
<S>                                              <C>              <C>         
Current liabilities:
  Accounts payable and accrued expenses:
    Construction costs .......................   $     660,167    $        --
    Interest and letter of credit fees .......       1,186,191        1,141,700
    Operating expenses and other .............       6,935,068        5,801,289
  Current portion of long-term debt ..........       5,501,823        5,711,478
                                                 -------------    -------------
      Total current liabilities ..............      14,283,249       12,654,467

Deferred revenue .............................            --          9,026,337

Long term debt, less current portion .........     104,521,718      100,185,362

Capital lease obligation .....................     217,488,645      228,408,012

Advance from parent ..........................      15,387,447        4,573,148

Commitments and contingencies (Note 3)

Shareholder's deficit:
  Common stock, $.01 par value; 1,000 shares
     authorized, issued and outstanding ......              10               10
  Accumulated deficit ........................     (40,879,506)     (49,816,843)
                                                 -------------    -------------
      Total shareholder's deficit ............     (40,879,496)     (49,816,833)
                                                 -------------    -------------
                                                 $ 310,801,563    $ 305,030,493
                                                 =============    =============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-2



<PAGE>
                         PANDA INTERHOLDING CORPORATION
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND ACCUMULATED DEFICIT
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                    1996            1997
                                                                ------------    ------------
<S>                                                             <C>             <C>         
Revenue:
  Electric capacity and energy sales ........................   $ 21,495,843    $ 48,346,898
  Steam and chilled water sales .............................        388,119         439,042
  Interest income ...........................................        611,242       1,114,900
                                                                ------------    ------------
                                                                  22,495,204      49,900,840
                                                                ------------    ------------
Expenses:
  Plant operating expenses ..................................      7,813,737      20,867,693
  Project development and administrative ....................      1,260,884       5,745,683
  Interest expense and letter of credit fees ................      9,051,394      23,236,954
  Depreciation ..............................................      3,159,659       8,846,929
  Amortization of debt issuance costs .......................        358,370         140,918
  Amortization of partnership formation costs ...............        399,826            --
                                                                ------------    ------------
                                                                  22,043,870      58,838,177
                                                                ------------    ------------
Income before minority interest and extraordinary item               451,334      (8,937,337)

  Minority interest .........................................     (2,405,160)           --
                                                                ------------    ------------
Loss before extraordinary item ..............................     (1,953,826)     (8,937,337)

  Extraordinary item - loss on early extinguishment of debt .    (21,336,550)           --
                                                                ------------    ------------
Net loss ....................................................    (23,290,376)     (8,937,337)

Accumulated deficit, beginning of period ....................    (14,788,098)    (40,879,506)
                                                                ------------    ------------
Accumulated deficit, end of period ..........................   $(38,078,474)   $(49,816,843)
                                                                ============    ============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-3



<PAGE>
                         PANDA INTERHOLDING CORPORATION
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND ACCUMULATED DEFICIT
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     1996            1997
                                                                ------------    ------------
<S>                                                             <C>             <C>         
Revenue:
  Electric capacity and energy sales ........................   $  6,936,940    $ 16,060,659
  Steam and chilled water sales .............................        125,117         154,739
  Interest income ...........................................        224,416         256,347
                                                                ------------    ------------
                                                                   7,286,473      16,471,745
                                                                ------------    ------------
Expenses:
  Plant operating expenses ..................................      2,752,391       7,238,987
  Project development and administrative ....................         68,225       1,933,163
  Interest expense and letter of credit fees ................      2,681,640       7,773,610
  Depreciation ..............................................      1,053,220       2,949,025
  Amortization of debt issuance costs .......................         76,555          47,338
  Amortization of partnership formation costs ...............        133,276            --
                                                                ------------    ------------
                                                                   6,765,307      19,942,123
                                                                ------------    ------------
Income before minority interest and extraordinary item.......        521,166      (3,470,378)

  Minority interest .........................................       (499,077)           --
                                                                ------------    ------------
Income before extraordinary item ............................         22,089      (3,470,378)

  Extraordinary item - loss on early extinguishment of debt .    (21,336,550)           --
                                                                ------------    ------------
Net loss ....................................................    (21,314,461)     (3,470,378)

Accumulated deficit, beginning of period ....................    (16,764,013)    (46,346,465)
                                                                ------------    ------------
Accumulated deficit, end of period ..........................   $(38,078,474)   $(49,816,843)
                                                                ============    ============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-4



<PAGE>
                         PANDA INTERHOLDING CORPORATION
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                     1996             1997
                                                                -------------    -------------
<S>                                                             <C>              <C>           
Operating activities:
  Net loss ..................................................   $ (23,290,376)   $  (8,937,337)
  Adjustments to reconcile net loss to
    net cash provided by operating activities:
      Loss on early extinguishment of debt ..................      21,336,550             --
      Minority interest .....................................       2,405,160             --
      Depreciation ..........................................       3,159,659        8,846,929
      Amortization of debt issuance costs ...................         358,370          140,918
      Amortization of partnership formation costs ...........         399,826             --
      Amortization of loan discount and deferred interest ...         391,491       16,140,385
  Changes in assets and liabilities:
    Accounts receivable .....................................      (2,079,293)         843,167
    Fuel oil, spare parts and supplies ......................        (159,380)       1,924,787
    Other current assets ....................................         (14,525)        (146,007)
    Accounts payable and accrued expenses ...................         994,467       (1,178,271)
                                                                -------------    -------------
      Net cash provided (used) by operating activities ......       3,501,949       17,634,571
                                                                -------------    -------------
Investing activities:
  Restricted cash - current .................................      (1,114,820)       1,718,640
  Additions to property, plant and equipment ................     (55,332,280)      (2,813,200)
  Acquisition of minority interest ..........................     (34,700,000)            --
  Restricted cash - debt service reserves and escrow deposits      (4,144,756)      (3,197,943)
                                                                -------------    -------------
      Net cash provided (used) by investing activities ......     (95,291,856)      (4,292,503)
                                                                -------------    -------------
Financing activities:
  Distributions to minority interest owner ..................      (1,152,113)            --
  Advances (to) from parent .................................      53,651,235      (10,814,299)
  Deferred revenue ..........................................            --          9,026,337
  Proceeds from long term debt ..............................     170,408,627             --
  Repayment of long term debt ...............................    (127,038,813)      (4,126,701)
  Repayment of capital lease obligation .....................            --         (5,221,018)
 Debt issuance costs ........................................      (3,461,588)         (38,827)
                                                                -------------    -------------
      Net cash provided (used) by financing activities ......      92,407,348      (11,174,508)
                                                                -------------    -------------
Increase (decrease) in cash and cash equivalents ............         617,441        2,167,560

Cash and cash equivalents, beginning of period ..............       1,160,096          828,787
                                                                -------------    -------------
Cash and cash equivalents, end of period ....................   $   1,777,537    $   2,996,347
                                                                =============    =============
Noncash operating and financing activities:

  Interest expense on capital lease obligation ..............   $        --      $  16,140,385
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-5






                 PANDA INTERHOLDING CORPORATION
                                
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      For the Nine Months Ended September 30, 1996 and 1997


1. ORGANIZATION AND BASIS OF PRESENTATION

       Panda   Interholding   Corporation   ("Interholding",   or
collectively with its subsidiaries the "Company"), a wholly owned
subsidiary  of Panda Interfunding Corporation ("PIC"),  which  in
turn  is  an  indirect wholly owned subsidiary  of  Panda  Energy
International, Inc. ("PEII"), was formed in July 1996 to hold the
ownership interests in two independent power projects which  were
formerly  owned  by  another subsidiary of PEII.   The  ownership
interests  were  transferred to the Company at PEII's  historical
cost.   Because  the  transfers occurred between  entities  under
common  control, the transactions have been accounted  for  in  a
manner similar to a pooling of interests.

      Interholding, through its wholly owned subsidiaries,  holds
the Company's ownership interests in the Rosemary project and the
Brandywine project and has no other independent operations.   The
entities  holding such ownership interests include the following:
Panda  Rosemary  Corporation ("PRC"), a 91%  general  partner  in
Panda-Rosemary, L.P. ("Panda-Rosemary"); PRC II Corporation ("PRC
II"),  a  9%  limited partner in Panda-Rosemary; Panda Brandywine
Corporation,  a  50%  general partner in  Panda-Brandywine,  L.P.
("Panda-Brandywine");  Panda  Energy  Corporation   (a   Delaware
corporation),  a  50%  limited partner in  Panda-Brandywine;  and
Brandywine  Water Company.  The Company, through its general  and
limited  partnership interests, owns 100% of  Panda-Rosemary  and
Panda-Brandywine.  Prior to July 31, 1996, the Company owned  10%
of  Panda-Rosemary.   The  Rosemary and Brandywine  projects  are
located in the United States.

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

2. SIGNIFICANT ACCOUNTING POLICIES

      The accompanying unaudited condensed consolidated financial
statements  have  been  prepared  in  accordance  with  generally
accepted  accounting principles and should be read in conjunction
with the audited financial statements for the year ended December
31,  1996.  The  accompanying  unaudited  condensed  consolidated
financial statements for the three- and nine-month periods  ended
September  30, 1996 and 1997 include all adjustments,  consisting
of   normal   recurring  accruals,  which  management   considers
necessary for a fair presentation of the results for the  interim
periods.  The results of operations for the three- and nine-month
periods  ended September 30, 1997 are not necessarily  indicative
of  the results that may be expected for the year ending December
31,  1997.  The  amounts presented in the  balance  sheet  as  of
December  31,  1996  were  derived  from  the  Company's  audited
consolidated financial statements.

     Allocation of Administrative Costs  -- PEII performs certain
accounting,  legal, insurance, and consulting  services  for  the
Company.  These  general and administrative costs  are  generally
allocated  to  the  Company using the  percentage  of  time  PEII
personnel spent performing these services. The expenses allocated
were  $946,000 and $1,612,000 for the nine months ended September
30,  1996  and 1997, respectively, and were $392,000 and $557,000
for   the  three  months  ended  September  30,  1996  and  1997,
respectively.   The  allocated expenses are included  in  project
development  and  administrative expenses  in  the  statement  of
operations. Management believes the method used to allocate these
costs is reasonable.

                            F-6


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

3.  COMMITMENTS AND CONTINGENCIES

      In  July 1996, Panda Funding Corporation ("PFC"), a wholly-
owned  subsidiary of PIC, issued $105,525,000 of  pooled  project
bonds ("Series A Bonds").  The Series A Bonds bear interest at  a
fixed  rate  of 11-5/8% payable semiannually commencing  February
20, 1997.  Scheduled principal payments are required semiannually
commencing  February 20, 1997 and will continue through  maturity
on  August 20, 2012.  The Series A Bonds are subject to mandatory
redemption  prior  to  maturity under  certain  conditions.   The
Series  A Bonds are fully and unconditionally guaranteed by  PIC.
Although  not  direct obligations of the Company,  the  Series  A
Bonds are guaranteed on a limited basis by Interholding up  to  a
maximum  amount  specified  by  the  guarantee  agreement   which
approximates $25.1 million at December 31, 1996 and September 30,
1997.  Additionally, the Series A Bonds are secured by (i) all of
the  capital  stock  of  PFC, PIC and  Interholding,  (ii)  PIC's
interest  in  distributions from Interholding, and (iii)  certain
other   collateral.    The   Series  A  Bonds   are   effectively
subordinated  to  the  obligations of  PIC's  subsidiaries  under
project-level  financing arrangements.   The  indenture  contains
certain   covenants,  including  limitations  on   distributions,
additional debt and certain other transactions.

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

      In  connection with the issuance of the Series A Bonds, PIC
advanced  to  the  Company  (i) approximately  $25.1  million  to
partially fund the acquisition of the outside investor's  limited
partnership interest in Panda-Rosemary as discussed in Note 5  to
the   Company's audited financial statements for 1996,  and  (ii)
approximately $26.4 million to retire the term loan as  discussed
in Note 6 to the Company's audited financial statements for 1996.

      In connection with a previous borrowing from Nova Northwest
Inc.  ("Nova"), Nova received a cash flow participation  interest
in  the  distributions from the Rosemary Project for the term  of
the    Panda-Rosemary   L.P.   partnership    agreement.     Such
participation  interest amounted to 4.33% of  the  Company's  own
participation  interest, which was 10% at the time the  agreement
was  entered  into.   The Company has filed an  action  with  the
District  Court  of  Dallas County, Texas seeking  a  declaratory
judgment  that  Nova's cash flow participation is 0.433%  of  the
Company's   100%   interest  after   the   acquisition   of   the
institutional   investor's  90%  limited  partnership   interest.
Management believes that the resolution of this dispute will  not
have  a  material  effect on the financial position,  results  of
operations or cash flows of the Company.  PEII and Nova each have
the   option   to  convert  the  present  value  of   cash   flow
participation, as defined by the agreement, to PEII common  stock
at $6 a share.

                              F-7


       In  August  1996,  Panda-Brandywine  and  PEPCO  commenced
discussions concerning commercial operational requirements of the
Brandywine  Project  and conversion of the construction  loan  to
long-term  financing  in  the form  of  a  lease.   During  these
discussions,  disagreements  arose between  Panda-Brandywine  and
PEPCO  with respect to certain provisions of the Brandywine Power
Purchase  Agreement  which  relate to the  determination  of  the
interest  rate  that  is  the  basis for  reduction  in  capacity
payments  thereunder (the "PEPCO Interest Rate Dispute").   PEPCO
and  Panda-Brandywine are presently attempting to  resolve  these
disagreements but there are no assurances that such efforts  will
be  successful.  If the PEPCO Interest Rate Dispute is determined
adversely  to  Panda-Brandywine, the capacity  payments  paid  by
PEPCO  under  the  Brandywine  Power  Purchase  Agreement  (which
commenced   in  January  1997)  will  be  less  than   originally
anticipated, thereby adversely affecting the revenues realized by
Panda-Brandywine, and consequently, reducing the amount of  funds
that would be available for distribution to the Company.

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

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

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

                             F-8



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

     (Dollar amounts are in thousands unless otherwise noted)

General

      The financial statements reflect the financial data of  the
entities that held partnership interests in  Panda-Rosemary, L.P.
("Panda-Rosemary")    and   Panda-Brandywine,    L.P.    ("Panda-
Brandywine") (collectively the "Project Entities", which own  the
Rosemary  Facility and the Brandywine Facility, respectively,  as
described   in  the  following  paragraph)  during  the   periods
presented.   In  July  1996,  these  partnership  interests  were
transferred to Panda Interholding Corporation ("Interholding,  or
collectively  with its subsidiaries the "Company"),  which  is  a
wholly  owned  subsidiary  of Panda Interfunding  Corporation  ("
PIC"),  by  PIC's parent and recorded at the parent's  historical
cost.   PIC and Interholding were incorporated in July  1996  and
were  not  in  existence during the first  six  months  of  1996;
however,   the  entities  that  currently  own  such  partnership
interests   are   wholly-owned  subsidiaries   of   Interholding.
Interholding  has no independent operations beyond its  ownership
of  the  Project Entities.  Thus, references herein to  financial
data  of  the  Company are for convenience of reference,  and  it
should  be  understood  that  all  such  references  are  to  the
financial  information of the entities that held  such  interests
during the periods presented.

      The  Company  owns 100% equity interests in  two  completed
electric  power generation facilities in the United  States:  the
Rosemary  Facility, which began commercial operations in December
1990,   and  the  Brandywine  Facility,  which  began  commercial
operations in October 1996.  Prior to July 31, 1996, the  Company
owned a 10% equity interest in the Rosemary Facility.

Results of Operations

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

  Third Quarter 1997 compared to 1996

      The  Company  recorded a net loss of $3,470  in  the  third
quarter  of  1997 on revenues of $16,472 compared to  net  income
(before  minority  interest and extraordinary item)  of  $521  on
revenues  of $7,286 during the same period in 1996.  The increase
in revenues in the 1997 period was primarily caused by operations
of the Brandywine Facility (which commenced on October 31, 1996),
supplemented by an increase in revenues at the Rosemary Facility,
and  by  increased  interest income.  The  1997  period  reflects
operations  of  both  the  Rosemary  and  Brandywine  facilities,
whereas the 1996 period includes only the Rosemary Facility.  For
the  1997  and  1996 periods, capacity revenues for the  Rosemary
Facility  were  $5,768  and  $6,182, respectively,  reflecting  a
contractual  decrease of $414. Energy revenues for  the  Rosemary
Facility  for  the  1997 and 1996 periods were $1,463  and  $756,
respectively.  The increase in energy revenues for  the  Rosemary
Facility  is  attributable  to  higher  dispatch  hours  at  that
facility  compared to the 1996 period.  During the third  quarter
of  1997,  the  Rosemary  Facility was dispatched  478  hours  as
compared to 223 hours in the 1996 period.  Capacity revenues  and
energy  revenues  from  Potomac Electric Power  Company  for  the
Brandywine Facility for the third quarter of 1997 were $5,003 and
$3,780, respectively.  The Brandywine Facility was dispatched 976
hours  during this period.  Additionally, the Company had  energy
revenues  of  $46  from  the  sale  of  natural  gas   to   other
purchasers.  Plant operating expenses, which included fuel  cost,
operation and maintenance expense, insurance and property  taxes,
increased  (as  a  percentage  of revenues)  to  $7,239  (44%  of
revenues)  in  the 1997 period from $2,752 (38% of  revenues)  in
1996,  primarily due to higher operating costs at the  Brandywine
Facility,  which had not yet commenced operations  in  the  third
quarter of 1996.

                              -1-


      Project development and administrative expenses were $1,933
(12%  of revenues) and $68 (1% of revenues) for the 1997 and 1996
periods,  respectively.   The  increase  in  1997  was  primarily
attributable to additional administrative activities  related  to
the  commencement  of  commercial operations  at  the  Brandywine
Facility and higher administrative costs required to support  the
increased size and complexity of the Company's operations.  Also,
the  1996  amount  was  lower than normal due  to  correction  of
certain accruals in the third quarter of that year, the effect of
which was to reduce expense by approximately $200.

      Interest expense increased to $7,774 (47% of revenues)   in
the 1997 period from $2,681 (37% of revenues) in 1996 as a result
of  the increase in outstanding indebtedness from the issuance of
$111.4 million original principal amount of first mortgage  bonds
for  the Rosemary Facility (the "Rosemary Bonds") and the capital
lease financing for the Brandywine Facility.  The impact of  such
new  indebtedness was partially offset by the refinancing of  the
taxable  revenue  bonds issued in 1989 for the Rosemary  Facility
and  the repayment of other term loan financing on July 31,  1996
from  portions  of  the proceeds of the Rosemary  Bonds  and  the
Series A Bonds issued by PIC.

       Depreciation,  amortization  of  debt  issue   costs   and
amortization  of partnership formation costs amounted  to  $2,996
(18% of revenues) in the 1997 period and $1,263 (17% of revenues)
in 1996.  The increase was primarily attributable to depreciation
for the Brandywine Facility in 1997.

      For  the  1996 period, minority interest in net income  was
$499.  There is no minority interest in 1997 due to the Company's
acquisition  on  July 31, 1996 of the minority interest  holder's
limited  partnership interest in Panda-Rosemary. As a  result  of
this acquisition, the Company owns 100% of Panda-Rosemary.

      For  the 1996 period, the Company incurred an extraordinary
loss  on  early extinguishment of debt of $21,337 as a result  of
the  refinancing of the taxable revenue bonds issued in 1989  for
the  Rosemary  Facility  and the repayment  of  other  term  loan
financing on July 31, 1996 from portions of the proceeds  of  the
Rosemary Bonds and the Series A Bonds issued by PIC.

      As  a  result of the various factors discussed  above,  the
Company  recorded net losses of $3,470 and $21,314 for  the  1997
and 1996 periods,  respectively.

                              -2-



     First Nine Months of 1997 compared to 1996

      The Company recorded a net loss of $8,937 in the first nine
months  of  1997 on revenues of $49,901 compared  to  net  income
before  minority  interest  and extraordinary  item  of  $451  on
revenues of $22,495 during the same period in 1996.  The increase
in revenues in the 1997 period was primarily caused by operations
of the Brandywine Facility (which commenced on October 31, 1996),
partially  offset  by  a  decrease in revenues  at  the  Rosemary
Facility,  and  by increased interest income.   The  1997  period
reflects   operations  of  both  the  Rosemary   and   Brandywine
facilities,  whereas the 1996 period includes only  the  Rosemary
Facility.  For the 1997 and 1996 periods, capacity  revenues  for
the  Rosemary  Facility  were $18,438 and $19,781,  respectively,
reflecting a contractual decrease of $1,343. Energy revenues  for
the  Rosemary Facility for the 1997 and 1996 periods were  $2,302
and  $1,715,  respectively.  The increase in energy revenues  for
the Rosemary Facility is attributable to higher dispatch hours at
that facility compared to the 1996 period.  During the first nine
months of 1997, the Rosemary Facility was dispatched 720 hours as
compared to 490 hours in the 1996 period.  Capacity revenues  and
energy  revenues  from  Potomac Electric Power  Company  for  the
Brandywine  Facility  for  the first nine  months  of  1997  were
$15,038  and  $8,831, respectively.  The Brandywine Facility  was
dispatched  2,685  hours during this period.   Additionally,  the
Company  had energy revenues of $3,738 from the sale  of  natural
gas  and fuel oil to other purchasers in the 1997 period.   Plant
operating  expenses,  which included  fuel  cost,  operation  and
maintenance  expense, insurance and property taxes, increased  to
$20,868 (42% of revenues) in the 1997 period from $7,814 (35%  of
revenues) in 1996, primarily due to lower margins obtained on the
sale of natural gas and fuel oil to other purchasers.

      Project development and administrative expenses were $5,746
(12%  of  revenues) and $1,261 (6% of revenues) for the 1997  and
1996  periods, respectively.  The increase in 1997 was  primarily
attributable to additional administrative activities  related  to
the  commencement  of  commercial operations  at  the  Brandywine
Facility and higher administrative costs required to support  the
increased size and complexity of the Company's operations.

      Interest expense increased to $23,237 (47% of revenues)  in
the 1997 period from $9,051 (40% of revenues) in 1996 as a result
of  the increase in outstanding indebtedness from the issuance of
$111.4 million original principal amount of first mortgage  bonds
for  the Rosemary Facility (the "Rosemary Bonds") and the capital
lease financing for the Brandywine Facility.  The impact of  such
new  indebtedness was partially offset by the refinancing of  the
taxable  revenue  bonds issued in 1989 for the Rosemary  Facility
and  the repayment of other term loan financing on July 31,  1996
from  portions  of  the proceeds of the Rosemary  Bonds  and  the
Series A Bonds.

       Depreciation,  amortization  of  debt  issue   costs   and
amortization  of partnership formation costs amounted  to  $8,988
(18% of revenues) in the 1997 period and $3,918 (17% of revenues)
in 1996.  The increase was primarily attributable to depreciation
for the Brandywine Facility in 1997.

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

      For  the 1996 period, the Company incurred an extraordinary
loss  on  early extinguishment of debt of $21,337 as a result  of
the  refinancing of the taxable revenue bonds issued in 1989  for
the  Rosemary  Facility  and the repayment  of  other  term  loan
financing on July 31, 1996 from portions of the proceeds  of  the
Rosemary Bonds and the Series A Bonds.

      As  a  result of the various factors discussed  above,  the
Company  recorded net losses of $8,937 and $23,290 for  the  1997
and 1996 periods,  respectively.

                             -3-



Liquidity and Capital Resources

      To  date, the Company has obtained cash from operations  of
the  Rosemary  Facility and the Brandywine  Facility,  borrowings
under  non-recourse  project debt of  Panda-Rosemary  and  Panda-
Brandywine,  an equity contribution by Ford Motor Credit  Company
("Ford")(a  former minority interest partner in  Panda-Rosemary),
senior indebtedness issued to Trust Company of the West, and  the
issuance  of  the Rosemary Bonds and advances from the  Company's
parent.   The Company utilized this cash to refinance the project
debt of Panda-Rosemary, fund development and construction of  the
Brandywine   Facility,   service  its  debt   obligations,   make
distributions to its parent to fund project development  efforts,
and  for  general and administrative expenses.  Additionally,  on
July   31,  1996,  the  Company  repaid  all  outstanding  senior
indebtedness  to  Trust Company of the West and purchased  Ford's
remaining limited partnership interest in Panda-Rosemary.

      The  Project  Entities  (and  therefore  the  Company)  are
dependent  on  capacity  payments under  their  respective  power
purchase  agreements  to meet their fixed obligations,  including
payment  of project-level debt service, and to make distributions
to the Company.  Capacity payments can be adversely affected by a
major   equipment   failure,  resulting  in  a   facility   being
unavailable  for  dispatch  for  an  extended  period  of   time.
Capacity  payments can also be subject to reduction  pursuant  to
regulatory disallowance and, under contractual provisions,  as  a
result  of  events outside the Company's control.  In 1997,  1999
and  2006,  the capacity payments for the Rosemary  Facility  are
scheduled to decrease by approximately $1.8 million (6.7%),  $1.8
million  (7.1%) and $5.4 million (23.1%), respectively, based  on
the  facility's  current capacity rating.  The capacity  payments
for the Brandywine Facility, which commenced in 1997, are subject
to  specified downward adjustments in 1998 and 2000,  and  upward
adjustments in 2001 and 2007 through 2021.  The Company currently
believes  it  will  be able to continue to meet  its  obligations
during the periods such reductions are applicable.

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

Impact of Inflation

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

                             -4-



PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

     (a)  The following exhibits are filed as part of this
          Quarterly Report on Form 10-Q:


Exhibit
Number    Exhibit Description

27.01     Financial Data Schedule.*

* Filed herewith.

     (b)  The registrant did not file any reports on Form 8-K
          during the quarter for which this report is filed.
  
                            -5-	
  




  
                           SIGNATURES
  
  
Pursuant  to the requirements of the Securities Exchange  Act  of
1934, the registrant has duly caused this report to be signed  on
its behalf by the undersigned thereunto duly authorized.


                              PANDA INTERHOLDING CORPORATION


Date:  November 11, 1997           By:  /s/ Janice Carter
                                        Janice Carter
                                        Executive Vice President,
                                        Secretary and Treasurer




EXHIBIT INDEX
                                                   Sequentially
                                                    Numbered
Number    Description                                  Page

27.01          Financial Data Schedule