MUNICIPAL
      PUBLIC UTILITIES FRANCHISE AGREEMENT

    


    Party
      A: Construction
      Bureau of Yutian County

    


    Party
      B: Beijing
      Zhong Ran Wei Ye Gas Co., Ltd.

    


    Date: November
      27, 2003

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    



    MUNICIPAL
      PUBLIC UTILITIES FRANCHISE AGREEMENT

    


    Contract
      SN: 200301

    Signatory
      Location:  Construction
      Burea of Yutian

    


    


    Party
      A: Construction
      Bureau of Yutian County

    Party
      B: Beijing
      Zhong Ran Wei Ye Gas Co., Ltd.


    


    Chapter
      I General
      Principles

    


    	1.1  	
            To
              improve the efficiency and quality of public utilities services and
              to
              protect the public interests and the legal rights and benefits of the
              public utilities operators, in accordance with the Hubei
              Public Utilities Franchise Administration Procedures
              and the other relevant laws and regulations, the Parties hereby agree
              as
              follows in relation to the construction of pipeline
              gas
              project in the downtown of Yutian County.

          


    


    Chapter
      II Parties

    


    	2.1  	
            Construction
              Bureau of Yutian County (hereinafter referred to as “Party
              A”)

          


    Legal
      representative: Yang
      Huifang

    Legal
      address:  No.
      659
      Fanrong Road, Yutian County, Hebei Province

    Tel.:  (0315)
      6163761

    


    
      	    
              2.2	
              Beijing
                Zhong Ran Wei Ye Gas Co., Ltd.
                (hereinafter referred to as “Party
                B”)

            


    

    Legal
      representative: Liu
      Yuchuan

    Legal
      address:  No.
      8
      Jiangbin Mansion, Beicheng Road East, Chaoyang District, Beijing 

    Tel.:  (010)
      84992156

    


    Chapter
      III Business
      Scope

    


    	3.1  	
            Party
              B accepts the authorization of Party A to be responsible for the
              investment, design, construction and operation of certain pipeline
              gas
              projects.

          


    


    	3.2  	
            Scope
              of Franchise:within
              the municipal planning area of the Yutian
              County

          


    


    	3.3  	
            Term
              of Franchise: 50
              years.

          


    


    Chapter
      IV Rights
      & Obligations of the Parties

    


    	4.1  	
            Party
              A has the right to supervise Party B to fulfill its legal
              obligations.

          


    


    	4.2  	
            Party
              A has the right to handle any public complaints against Party
              B.

          


     

    
      
         

      

      
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    	4.3  	
            Party
              A has the right to supervise and inspect the quality of products and
              services provided by Party B.

          


    


    	4.4  	
            Party
              A has the right to temporarily take over Party B’s operation and
              management [of pipe gas projects] in case of
              emergency.

          


    


    	4.5  	
            6
              months prior to the expiration of the franchise term, Party A has the
              right to solicit new investors and operators through public
              bidding.

          


    


    	4.6  	
            Party
              A has the right to terminate the franchise right granted to Party B
              hereunder upon approval by the People’s Government of Yutian County upon
              occurrence of any of the following
              situations:

          


    


    	4.6.1  	
            Disposition
              of the franchise by transfer, lease, lien and
              etc.;

          


    


    	4.6.2  	
            Becoming
              disqualified as a franchisee due to transfer of equity in Party
              B;

          


    


    	4.6.3  	
            Failure
              to meet the national standards and requirements applicable to the public
              utilities industry that seriously affects the public
              interest;

          


    


    	4.6.4  	
            Mismanagement
              that causes serious quality and safety accidents and seriously affects
              the
              public interest;

          


    


    	4.6.5  	
            Mismanagement
              that results in deteriorating financial conditions and seriously
              jeopardize the public interest.;

          


    


    	4.6.6  	
            Incompliance
              with the overall municipal construction planning and refusal of Party
              B’s
              request for revision within the specified time
              limit;

          


    


    	4.6.7  	
            Unauthorized
              and arbitrary termination and suspension of operation that affects
              the
              public interest and safety; and

          


    


    	4.6.8  	
            Other
              situations as specified under the applicable laws, regulations and
              rules.

          


    


    	4.7  	
            Party
              A has the right to enforce the other powers and rights provided under
              the
              applicable laws, regulations and rules.

          


    


    	4.8  	
            Party
              A has the obligation to establish special institution and to designate
              specific person(s) to assist Party B in the following
              matters:

          


    


    	4.8.1  	
            the
              application and registration procedures to establish a
              company;

          


    


    	4.8.2  	
            the
              land use, planning and commencement of project construction
              procedures;

          


     

    
      
         

      

      
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    	4.8.3  	
            making
              available water, electricity and transportation and other infrastructure
              related matters;

          


    


    	4.8.4  	
            organizing
              the designing and construction of the
              project;

          


    


    	4.8.5  	
            timely
              provision of the municipal planning and relevant materials to Party
              B upon
              its request;

          


    


    	4.8.6  	
            application
              of all potentially available tax and administrative fee waivers and
              deductions.

          


    


    	4.9  	
            Party
              B has the right to operate and manage the pipeline
              gas
              project within the agreed term and scope. Party B may realize reasonable
              returns through its operation and management of the project in compliance
              with the law and taking of the corresponding business
              risks.

          


    


    	4.10  	
            The
              setting up of the station and renovation of the pipelines shall comply
              with the general planning by the municipal planning department. In
              case of
              emergency, Party B is authorized to undertake emergency repair; provided,
              that Party B shall concurrently notify the relevant parties of the
              municipal government and comply with the required procedures
              retroactively.

          


    


    	4.11  	
            Party
              B shall cooperate with the government when the government, in the public
              interest, exercise its eminent domain power over the public utilities,
              and
              shall have the right to request reasonable compensation from the
              government.

          


    


    	4.12  	
            Party
              B further undertakes the following obligations and responsibilities
              in
              exchange for the municipal franchise right granted
              hereunder:

          


    


    	4.12.1  	
            compliance
              with the applicable laws, regulations and
              rules;

          


    


    	4.12.2  	
            performance
              of this agreement and provision of public utilities products and services
              to the public in compliance with applicable
              standards;

          


    


    	4.12.3  	
            allowing
              Party A’s supervision and inspection of the products and services, and
              temporary takeover and other regulatory measures pursuant to laws,
              regulations and rules;

          


    


    	4.12.4  	
            timely
              submission of accurate reports and other relevant materials to the
              relevant governmental departments;

          


    


    	4.12.5  	
            organizing
              safe production and allowing supervision and inspection by the relevant
              governmental departments in accordance with the safety production
              regulations and industrial safety production
              specifications;

          


    


    	4.12.6  	
            timely
              maintenance and renovation of production equipments and facilities
              and
              guarantee that the facilities are in good
              condition;

          


     

    
      
         

      

      
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    	4.12.7  	
            guarantee
              that the enterprise complies with the relevant qualification requirements
              and are qualified thereunder.

          


    


    	4.12.8  	
            Setting
              and adjusting the prices of the products and services in accordance
              with
              laws, regulations and rules.

          


    


    	4.12.9  	
            Accepting
              public supervision.

          


     

    Chapter
      V Supervising
      Mechanism

    


    
      	    
              5.1	
              A
                Municipal Public Utilities Franchise Operation Supervisory Commission
                (the
                “Commission”) will be established comprising of Party A, Party B, industry
                experts and representatives of the public. The Commission will be
                responsible for collecting opinions of the public and Party B,
                periodically publishing reports and study results, providing suggestions
                for improvements and better supervision, and supervising the municipal
                public utilities franchise on behalf of the
                public.

            


    

    


    Chapter
      VI Breach
      Liabilities

    


    
      	    
              6.1	
              If
                Party A breaches this Agreement during the term of this Agreement,
                Party
                will bear the losses caused by its breach. Party B breaches this
                Agreement
                during the term of this Agreement, Party A will terminate the franchise
                right granted to Party B hereunder. Party B will also bear the
                corresponding economic consequence. Party A shall notify Party B
                of Party
                A’s decision to terminate the franchise right granted to Party B hereunder
                in writing. Within 30 days following the receipt by Party B of such
                written notice, Party B submit a written argument or request for
                a
                hearing. Party A shall organize the hearing, if so requested by Party
                B.
                Party B may apply for administrative review or bring administrative
                suit
                in accordance with the applicable law if it is not satisfied with
                Party
                A’s decision to terminate the franchise
                right.

            


    

    


    Chapter
      VII Miscellaneous
      Provisions

    


    
      	    
              7.1	
              Party
                B shall submit a deposit of RMB  100,000 
                to
                Party A, which shall be refunded to Party B after the inspection
                and
                acceptance by Party with respect to the completion of the first-stage
                milestones of the project. If Party B withdraw from the project because
                of
                its fault, or the project is not completed timely, Party A shall
                keep the
                deposit as compensation for
                damages.

            


    

    


    	7.2  	
            Any
              modification to this agreement shall not be valid and effective unless
              such modification is in written and signed by both parties to this
              Agreement.

          


    


    	7.3  	
            There
              are four originals of this agreement. Each party holds two
              originals.

          


    


    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	Party A (Seal): 
              _Sealed	Party B (Seal): Sealed
              
	 	 
	Representative (Signature): 	Representative (Signature):
	 	 
	
              Date: November
                27, 2003

            	Date: November
              27, 2003


    

    


    
      
         

      

      
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