Document:

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.

          

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    	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;

          

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
 

    	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;

          

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    	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

    

    

    
      
         

      

      
        6[Stamp
      Tax]

    

    URBAN
      GAS DEVELOPMENT AGREEMENT

    (For
      Wholly Owned Gas Company)

    

    Party
      A: Construction
      Bureau of Yutian County

    

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

    

    Date: November
      7, 2003

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    URBAN
      GAS
      DEVELOPMENT AGREEMENT

    

    Contract
      SN: YTWY-001

    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  	
              WHEREAS,
                (i) the Government of Yutian County agrees to authorize Party B the
                exclusive right to develop, construct and operate the pipeline gas
                project
                in the urban area of Yutian County (the “Pipeline
                Project”),
                (ii) based on the Contact
                Law of the People’s Republic of China,
                the
                Cooperative Joint Venture Law of the People’s Republic of China
                and
                other relevant applicable laws and regulations, and (ii) after field
                study
                and friendly consultations, the Parties hereby agree as follows in
                relation to the construction of the Pipeline Project in Yutian County
                (the
                “Agreement”).

            

    

    

    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
      Huibin Mansion, Beicheng Road East, Chaoyang District, Beijing 

    Tel.:  (010)
      84992156

    

    Chapter
      III Establishment
      of the Company

    

    
      	3.1  	
              Party
                A, authorized by and on behalf of the Government of Yutian County,
                agrees
                that Party B will be responsible for the urban Pipeline Project of
                Yutian
                Country and the total financing of the Pipeline
                Project.

            

    

    

    
      	3.2  	
              Name
                of the Company: Yutian
                Zhong Ran Wei Ye Gas Co., Ltd.
                (Interim)

            

    

    

    
      	3.3  	
              The
                Company as a legal person und the PRC law: is subject to the jurisdiction
                and protection of the PRC laws, regulations and relevant rules
                (hereinafter referred to as “PRC
                laws”),
                and is authorized to conduct its business activities in compliance
                with
                the PRC laws.

            

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Chapter
      IV Business
      Scope

    

    
      	    
              4.1	
              Business
                Scope of the Company: within
                the urban planned area of Yutian County, to: design, construct, manage,
                develop and operate the pipeline network of natural gas and its auxiliary
                facilities, and provide relevant maintenance and emergency repair
                services; construct and operate natural gas stations; supply natural
                gas
                and provide after-sale services to industrial transmission, commercial
                construction, civic utility and public transportation; exploit natural
                gas
                reserves, design for the transportation and transmission thereof,
                construct and management the operation related
                thereto.

            

    

    

    Chapter
      V Exclusive
      Operating Right

    

    
      	5.1  	
              Party
                A authorizes Party B to execute the pipe natural gas project within
                the
                urban planned area of Yutian County and guaranties that Party B has
                the
                exclusive right to develop and construct the pipe gas project within
                the
                urban planned area of Yutian County for 50
                years.

            

    

    

    
      	5.2  	
              Party
                A will consider extending the 50 year exclusive operation term; provided,
                that Party B can ensure the normal supply of gas during such
                period.

            

    

    

    
      	5.3  	
              If
                Party A breaches this Agreement during the term of this Agreement,
                Party A
                shall bear the losses resulting from such breach. If Party A or any
                of its
                agents or entrusted parties breach this Agreement during the term
                of this
                Agreement (which causes Party B to lose the exclusive operating right
                granted hereunder), Party A shall compensate Party B for its projected
                economic benefits for the term of this Agreement. If Party B breaches
                this
                Agreement or fails to accurately forecast the natural gas market,
                or it
                fails to conduct normal operation, which causes suspension of operation
                or
                bankruptcy, Party B shall compensate the customers for the initial
                installation fees incurred by them, and Party A shall have the right
                to
                terminate this Agreement and engage new natural gas
                suppliers.

            

    

    

    Chapter
      VI Rights
      & Obligations of the Parties

    

    
      	6.1  	
              The
                Parties shall construct the Pipeline Project based to the high standards
                and principles. The Pipeline Project is designed for supply gas to
                an
                aggregate of 20,000 units with the total investment of approximately
                RMB
                86 million. The first stage of the Pipeline Project is to supply
                for 1,500
                units for the Changsheng Community (the “First Stage”). Party B agrees
                that it shall complete the First Stage and start gas supply to the
                first
                customers within 6 months. 

            

    

    

    
      	6.2  	
              Party
                A shall be responsible for the coordination with the local government
                and
                relevant departments of the government and shall provide the following
                warranties to Party B in the form of official government
                documents:

            

    

    

    
      	
            	 
              6.2.1	
              to
                grant Party B the exclusive right to construct and operate natural
                gas
                project within the urban planned area of Yutian County for 50 years
                and
                ensure the legality thereof; not to approve any new pipe gas project
                during such time;

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	6.2.2  	
              to
                ensure that Party B shall enjoy the relevant government preferential
                policies relating to business investment and raising of capital,
                urban
                infrastructure construction and land grant in Yutian County. Considering
                that the Pipeline Project is an urban infrastructure project, any
                government fees to be incurred by Party B for the destruction of
                municipal
                roads for the construction of the condensed gas station and pipeline
                network shall be deducted by 50%.

            

    

    

    
      	
            	     
              6.2.3	
              to
                require the inclusion of construction of pipeline gas project as
                part of
                any new real estate development project and any renovation or expansion
                projects related thereto in order to obtain the required government
                approval; The government departments that are in charge of urban
                construction, planning, public utilities, real estate must supervise
                closely to ensure that pipeline gas projects are designed, constructed
                and
                inspected simultaneously and together with the principal projects,
                and can
                only be constructed by Party B; otherwise, such projects shall not
                be
                approved for construction, inspection and no sales permit shall be
                issued
                therefor.

            

    

    

    
      
        	    
                6.3	
                Party
                  A shall be responsible for assisting Party B in the following
                  matters:

              

      

    

    

    
      	6.3.1  	
                 
                the application and registration procedures to establish the gas
                project
                company;

            

    

    

    
      	6.3.2  	
                  the
                procedures for land use, planning, fire protection and commencement
                of
                project construction;

            

    

    

    
      	
            	 
              6.3.3	
              making
                available water, electricity and transportation and handle other
                infrastructure related matters and assisting Party B to organize
                the
                design and construction of    the
                project;

            

    

    

    
      	6.3.4  	
              application
                of all potentially available tax and administrative fee waivers and
                deductions;

            

    

    

    
      	6.3.5  	
              timely
                provision of the municipal planning and relevant materials to Party
                B upon
                its request;

            

    

    

    
      	6.3.6  	
              uniform
                planning, implementation and management of pipeline gas project in
                accordance with the urban planning of Yutian Country; complete and
                improve
                the pipe gas network in stages in accordance with users’
                requests.

            

    

    

    
      	    
              6.4	
              Party
                B’s Responsibilities

            

    

     

    
      	
            	 
              6.4.1	
              raising
                funds for the Pipeline Project;

            

    

    

    
      	6.4.2  	
                 
                project design and construction, and operation management upon completion
                of the Pipeline Project;

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
            	 
              6.4.3	
              repair
                of broken facilities during
                construction;

            

    

    

    
      	
            	 
              6.4.5	
              periodic
                inspection, repair and maintenance of gas stations and pipelines
                inside
                and outside residential buildings according to the PRC rules to ensure
                year-round safe operation;

            

    

    

    
      	
            	 
              6.4.6	
              guaranteeing
                that the quality of gas supplied hereunder complies with the relevant
                PRC
                rules;

            

    

    

    
      	
            	 
              6.4.7	
              organizing
                project inspection by the relevant parties upon completion of the
                Pipeline
                Project;

            

    

    

    
      	
            	 
              6.4.8	
              [guaranteeing
                that the pipeline networks constructed by Party B in Yutian County
                pursuant to this Agreement accept natural gas when the long natural
                gas
                pipeline reaches Yutian County, and the continual operation of the
                pipeline network];1 
                The meaning of the original Chinese text for this provision is clear.
                

            

    

    

    
      	
            	 
              6.4.9	
              guaranteeing
                that the initial residential installation fee shall be no higher
                than RMB
                2,000/unit and the residential sale price shall be no higher than
                RMB 2.1
                per cubic meter within the first 2 years. Thereafter, if there is
                any
                adjustment to the national industrial standard and gas price, the
                initial
                installation fee and gas sale price may be adjusted accordingly after
                approval by the county government, and periodical hearings on gas
                prices
                will be held among residential owners and the government departments
                in
                charge of gas pricing.

            

    

    

    
      	
            	     
              6.4.10	
              guaranteeing
                that the Pipeline Project will be duly executed and completed in
                accordance with to the plan and schedule [agreed to by the
                Parties.]

            

    

    

    

    Chapter
      VII Miscellaneous
      Provisions

    

    
      	
            	 7.1	
              Any
                modification to this agreement and its supplemental agreement(s)
                shall not
                be valid and effective unless such modification is in writing and
                signed
                by both parties to this Agreement.

            

    

    

    
      	    
              7.2	
              Should
                any Party fail to perform any of its obligations under this agreement
                or
                materially breach the provisions of this agreement, which causes
                the
                project company to discontinue its operation or be unable to meet
                the
                operational purposes of the Pipeline Project as provided under this
                agreement, the breaching Party shall be deemed to have unilaterally
                terminated the agreement, and the non-breaching Party shall have,
                in
                addition to any right to and claim for damages, the right to apply
                to the
                original approving government authority for the termination of this
                Agreement in accordance with this
                Agreement.

            

    

     

    
      	    
              7.3	
              Should
                any Party be prevented from performing its obligations under this
                agreement due to the occurrence of any event of Force Majeure such
                as
                earthquake, windstorm, flood, fire, war and any other unforeseeable
                event
                whose occurrence and consequences are beyond control, such Party
                shall
                immediately notify the other Party, and within 15 days [following
                the
                occurrence of such event], provide documents stating the details
                of such
                event, the reasons for complete or partial nonperformance by such
                Party
                and documents evidencing the occurrence of such events. Such documents
                shall be issued by a notary public institution located at the place
                where
                such event occurs. The Parties shall negotiate whether to cancel
                the
                entire Agreement or to discharge certain obligations of the non-performing
                party under this agreement based on the extent to which the performance
                of
                this Agreement has been affected.

            

    

    
       

      
        
1
        The meaning of the original Chinese text for this provision is clear.

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	    
              7.4	
              Any
                and all disputes arising out of or relating to the performance of this
                Agreement shall be settled by the Parties through friendly consultations.
                If the disputes are not resolved through friendly consultations,
                then each
                party agrees to be subject to the jurisdiction of the People’s Court of
                the locality where this Agreement is
                executed.

            

    

    

    
      	    
              7.5	
              In
                the course of judicial procedures, the Parties shall continue to
                perform
                their respective obligations under this Agreement, with the exception
                of
                those parts of this Agreement which are under
                dispute.

            

    

    

    
      	    
              7.6	
              The
                Parties may negotiate and execute documents to supplement this Agreement.
                Such supplemental agreements shall have the same force and effect
                as this
                Agreement. 

            

    

    

    
      	    
              7.7	
              This
                Agreement and any of its supplemental agreements shall not be binding
                upon
                any Party unless signed and sealed by the
                Parties.

            

    

    

    
      	    
              7.8	
              There
                are four originals of this agreement. Each party holds two
                originals.

            

    

     

    
      	Party A (Seal): Sealed 	Party B (Seal): Sealed
              
	 	 
	Representative (Signature): 	Representative (Signature): Signed
	 	 
	
              Date: November
                7, 2003

            	Date: November
              7, 2003

    

    

    
      
        
        

      

      
        6

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