THE AGREEMENT

    ON
      

    DEVELOPING
      THE PIPELINE GAS PROJECT IN XINTANG COUNTRY

    


    Contract
      SN: 

    Signatory
      Location:


    


    Party
      A: Planning
      Department of Xingtang Country

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

     

    WHEREAS,
      (i) to accelerate developing public utilities and improve the living conditions
      of citizens, (ii) based on the natural gas safety rules of Xingtang and other
      relevant applicable laws and regulations, and (ii) after field study and
      friendly consultations, the Parties hereby agree as follows (the “Agreement”).

    


    
      	1.	
              The
                Project

            


    

    


    
      	
            	1.1	
              Name
                of the Project: The Project of Supplying Natural Gas in Xingtang
                Country

            


    

    


    
      	
            	1.2	
              Purpose
                of the Project: constructing a gas station, main pipelines, an urban
                pipeline network, and inner pipeline networks for some public building
                owners, industrial customers and 6,000 households in Xingtang (To
                achieve
                the purpose of the Project as soon as possible, the first stage of
                the
                Project to supply for 1,000 households shall be conducted with
                CNG.)

            


    

    


    
      	
            	1.3	
              Investment
                of the Project: total investment of RMB 50 million for the Project
                with
                around RMB 10 million for the first
                stage.

            


    

    


    
      	
            	1.4	
              Cycle
                of the Project: The first stage of the Project will be completed
                with a
                normal gas supply capacity at the end of June in 2006. The subsequent
                stages will be implemented in accordance with the urban planning
                of the
                local government, and the purpose of the Project shall be achieved
                in
                three years.

            


    

    


    
      	
            	1.5	
              Gas
                price and Installation Fee

            


    

    


    
      	
            	1.5.1	
              For
                residential customers, the initial installation fee (including IC
                gas
                appliance and natural gas stove) for a household shall be RMB 2,200/unit.
                

            


    

    


    
      	
            	1.5.2	
              For
                other customers (including plants, restaurants, hotels, governments,
                armies, hospitals, schools etc), the initial installation fee shall
                be RMB
                500/day.

            


    

    


    
      	
            	1.5.3	
              The
                gas price shall be RMB 2.4 per cubic meter. (Interim)
                

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    
      	
            	1.5.4	
              The
                gas price shall not be changed unless the PRC Government formulates
                policies to adjust the gas price.

            


    

     

    
      	2.	
              Obligations
                of the Parties

            


    

    


    
      	
            	2.1	
              Obligations
                of Party A

            


    

    


    
      	
            	2.1.1	
              to
                grant Party B the exclusive right to invest, construct and operate
                the
                Project;

            


    

    


    
      	
            	2.1.2	
              to
                make the land to construct the natural gas station be available at
                a
                favourable price due to its advantage of monopolizing primary land
                market;

            


    

    


    
      	
            	2.1.3	
              to
                provide the accurate and feasible municipal planning to design a
                more
                reasonable pipeline network;

            


    

    


    
      	
            	2.1.4	
              to
                organize a group made up of people from different departments
                (the
                Group)
                to assist Party B in obtaining approved documents related to the
                Project
                and authorization for temporary land occupation during the construction;
                to propose preferable policies about reducing compensation for land
                and
                other administration fees;

            


    

    


    
      	
            	2.1.5	
              to
                publish advisory documents on employers’ subsidizing initial residential
                installation fee for their staff;

            


    

    


    
      	
            	2.1.6	
              all
                the gas connection projects to be constructed or under construction
                shall
                be started after acquiring permission of the Group and signing of
                the gas
                supply contracts between customers and Party
                B.

            


    

    


    
      	
            	2.1.7	
              to
                make a plan of replacing coal and other harmful energy resources
                by
                gas.

            


    

    


    
      	
            	2.2	
              Obligations
                of Party B

            


    

    


    
      	
            	2.2.1	
              contriving
                the scheme of the Project and implementing in stages in accordance
                with
                the urban planning of Xingtang Country;


            


    

    


    
      	
            	2.2.2	
              raising
                funds for the Project; project design and
                construction;

            


    

    


    
      	
            	2.2.3	
              implementing
                the fee-related provisions in this Agreement; not changing the price
                without authorization;

            


    

    


    
      	
            	2.2.4	
              ensuring
                the continuous and safe gas supply during the operation except in
                the case
                of force majeure, examination and
                repair;

            


    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
            	2.2.5	
              operating
                and managing in accordance with the PRC laws, regulations and relevant
                rules; allowing supervision and inspection of the
                Group.

            


    

    


    
      	3.	
              Miscellaneous
                Provisions 

            


    

    


    
      	
            	3.1	
              The
                Parties may negotiate and execute documents to supplement this Agreement.
                Such supplemental agreements shall have the same force and effect
                as this
                Agreement. 

            


    

    


    
      	
            	3.2	
              There
                are four originals of this agreement. Each party holds two
                originals.

            


    

    


    
      	
            	3.3	
              This
                Agreement and any of its supplemental agreements shall not be binding
                upon
                any Party unless signed and sealed by the
                Parties.

            


    

     

    
      	Party A (Seal): Sealed
              	 	Party B (Seal): Sealed
	 	 	 
	Representative (Signature): Signed	 	Representative (Signature): Signed 
	 	 	 
	Date: August
              27, 2003	 	Date:
              August 27, 2003 


    

     

    
      
         

      

      
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