Exhibit 10.3.36

                           LEYTE OPTIMIZATION PROJECT



                                  BOT AGREEMENT



                                     between



                       PNOC-ENERGY DEVELOPMENT CORPORATION



                                       and



                                      ORMAT







                                    CONTENTS


ARTICLE 1  DEFINITION OF TERMS.................................................2

1.1  DEFINITIONS...............................................................2
1.2  INTERPRETATION............................................................9

ARTICLE 2  PROJECT............................................................10

2.1  POWER FACILITY...........................................................10
2.2  ENERGY CONVERSION........................................................10
2.3  OWNERSHIP................................................................10
2.4  COMMENCEMENT AND PROSECUTION OF THE PROJECT..............................11

ARTICLE 3  GENERAL RESPONSIBILITIES OF THE OPERATOR...........................11

3.1  CONSTRUCTION PERFORMANCE SECURITY........................................11
3.2  RESPONSIBILITY FOR DAMAGE AND LOSSES.....................................12
3.3  ENVIRONMENT AND CHANGE OF LAWS...........................................13
3.4  ORGANIZATION.............................................................14

ARTICLE 4  CONSTRUCTION OF THE POWER PLANT....................................15

4.1  MILESTONE DATES..........................................................15
4.2  TRANSMISSION LINE, INTERCONNECTION AND GEOTHERMAL FLUID..................16
4.3  SITE PROVISION...........................................................16
4.4  INGRESS AND EGRESS RIGHTS OF OPERATOR....................................17
4.5  EQUIPMENT IMPORTATION....................................................17
4.6  PERMITS..................................................................18
4.7  DRAWINGS, DOCUMENTS, DATA & INSTRUCTIONS.................................18
        4.7.1 SUBMISSION OF DRAWINGS AND DATA.................................18
        4.7.2 MODIFICATION RIGHTS.............................................19
        4.7.3 FUTURE MODIFICATION.............................................20
        4.7.4 CONSTRUCTION SCHEDULE...........................................20
        4.7.5 MONITORING RIGHTS...............................................20
        4.7.6 DRAWINGS AND DOCUMENTS TO BE PROVIDED...........................21
4.8  DISCLAIMER...............................................................21
4.9  RESPONSIBILITY FOR UTILITIES.............................................22
4.10  DELAYS..................................................................22
4.11  PENALTY DUE TO DELAYS...................................................23
4.12  LIGHTS AND BARRIERS.....................................................23

ARTICLE 5  TESTING OF THE FACILITY............................................23

5.1  TESTING PROCEDURES.......................................................23
5.2  TEST SCHEDULES...........................................................24




5.3  NOTICE OF TESTS..........................................................24
5.4  TESTS BEFORE COMPLETION..................................................24
5.5  TESTS DURING COOPERATION PERIOD..........................................26

ARTICLE 6  OPERATION OF THE FACILITY..........................................27

6.1  COMPLETION DATE..........................................................27
6.2  POWER RATES FOR INITIAL DELIVERY.........................................27
6.3  DEDICATION OF FACILITY...................................................27
6.4  OPERATING PARAMETERS ....................................................27
6.5  DISPATCH PROCEDURE.......................................................28
6.6  ENGINEERING STANDARDS....................................................28
6.7  ENVIRONMENTAL STANDARDS..................................................28
6.8  PROTECTIVE DEVICES.......................................................28
6.9  INTEGRITY LOSS...........................................................28
6.10  SETTINGS OF PROTECTIVE DEVICES..........................................29
6.11  SERVICE COMMITMENT......................................................29
6.12  MAINTENANCE DURING EMERGENCY............................................29
6.13  ANNUAL CAPACITY NOMINATION..............................................29
6.14  MAINTENANCE SCHEDULE....................................................29
6.15  APPROVAL OF MAINTENANCE SCHEDULE........................................30
6.16  APPROVAL OF OVERHAULS...................................................30
6.17  COMPLIANCE WITH APPROVED MAINTENANCE SCHEDULE...........................30
6.18  UNSCHEDULED OUTAGE .....................................................30
6.19  DAILY OPERATING REPORT..................................................30
6.20  OPERATING RECORDS.......................................................30
6.21  PNOC-EDC ACCESS TO THE POWER PLANT......................................31

ARTICLE 7  GEOTHERMAL FLUIDS..................................................31

7.1  GEOTHERMAL FLUID SUPPLY..................................................31
7.2  NON-CONDENSIBLE GASES & NON-GEOTHERMAL WASTE.............................31
7.3  SURPLUS CONDENSATE.......................................................32
7.4  OTHER GEOTHERMAL WASTE...................................................32
7.5  ENERGY MANAGEMENT........................................................32

ARTICLE 8  DELIVERY OF CAPACITY AND ENERGY....................................32

8.1  OBLIGATIONS OF THE PARTIES...............................................32
8.2  METERING.................................................................33
       8.2.1 METER MAINTENANCE AND OWNERSHIP..................................33
       8.2.2 PLANT MONITORING EQUIPMENT.......................................33
       8.2.3 METER SEALS AND INSPECTION.......................................34
       8.2.4 METER TESTS......................................................34
       8.2.5 METER ACCURACY...................................................34



8.3  TERMS OF PAYMENT.........................................................34
       8.3.1 CAPACITY PAYMENTS................................................34
       8.3.2 ENERGY FEE.......................................................36
       8.3.3 ESCALATION.......................................................38
8.4  BILLING PROCEDURES.......................................................38
8.5  DISPUTES.................................................................39
8.6  TAXES....................................................................39
8.7  PAYMENT PROCEDURES.......................................................40

ARTICLE 9 BUYOUT..............................................................40

9.1  BUYOUT CONDITIONS........................................................40
9.2  BUYOUT PRICE.............................................................41
9.3  PAYMENT TERMS............................................................42
9.4  TRANSFER PROVISION.......................................................42

ARTICLE 10 REPRESENTATIONS & WARRANTIES OF THE PARTIES........................43

10.1  CORPORATE EXISTENCE.....................................................43
10.2  AUTHORIZATIONS..........................................................43
10.3  WARRANTY AGAINST CORRUPTION.............................................43
10.4  NO SOVEREIGN IMMUNITY...................................................44
10.5  GEOTHERMAL SERVICES CONTRACT............................................44

ARTICLE 11 INDEMNIFICATION....................................................44

11.1  OPERATOR INDEMNIFICATION................................................44
11.2  PNOC-EDC INDEMNIFICATION................................................45

ARTICLE 12 INSURANCE..........................................................45

12.1  APPLICABLE TERMS........................................................45
12.2  INSURANCE DURING CONSTRUCTION...........................................45
12.3  INSURANCE DURING COOPERATION PERIOD.....................................46
12.4  APPROVAL BY PNOC-EDC....................................................46
12.5  EQUITABLE ADJUSTMENT....................................................46

ARTICLE 13 TRANSFER OF OWNERSHIP..............................................47

13.1.  TRANSFER OF TITLE......................................................47
13.2.  DOCUMENTATION COSTS....................................................47
13.3  TRAINING OF PNOC-EDC STAFF..............................................47
13.4  CONDITION OF POWER PLANT ON TRANSFER....................................48

ARTICLE 14 FORCE MAJEURE......................................................48

14.1  FORCE MAJEURE...........................................................48
14.2  EFFECT OF FORCE MAJEURE.................................................49



14.3  REMEDIES................................................................50

ARTICLE 15 SUSPENSION, TERMINATION AND ABANDONMENT............................51

15.1  TERMINATION PRIOR TO EFFECTIVITY DATE...................................51
15.2  TERMINATION FOR DEFAULT AND SUSPENSION OF DELIVERY......................53
15.3  SUSPENSION OF PAYMENT...................................................54
15.4  ABANDONMENT.............................................................54
        15.4.1 ABANDONMENT DURING CONSTRUCTION................................54
        15.4.2 ABANDONMENT DURING COOPERATION PERIOD..........................55

ARTICLE 16 SEVERAL OBLIGATIONS................................................56

ARTICLE 17 COMMUNICATIONS AND NOTICES.........................................56

17.1  COORDINATION MEETINGS...................................................56
17.2  COMMUNICATIONS AMONG PARTIES............................................57
17.2  NOTICES.................................................................57

ARTICLE 18 NON-WAIVER.........................................................58

ARTICLE 19 ASSIGNMENT.........................................................58

ARTICLE 20 PRIVATIZATION ASSURANCES ..........................................59

ARTICLE 21 DISPUTE RESOLUTION; JURISDICTION...................................60

ARTICLE 22 ENTIRE AGREEMENT AND SEPARABILITY .................................61

ARTICLE 23 GOVERNING LAW......................................................61

ARTICLE 24 LIMITATION OF LIABILITY............................................61

ARTICLE 25 DURATION OF THE AGREEMENT .........................................62

25.1  TERM....................................................................62
25.2  SURVIVABILITY...........................................................62

ARTICLE 26 EFFECTIVITY........................................................62

26.1  PNOC-EDC CONDITIONS ON THE OPERATOR.....................................62
26.2  OPERATOR CONDITIONS ON PNOC-EDC.........................................62
26.3  OTHER CONDITIONS........................................................64
26.4  FULFILLMENT OR WAIVER...................................................65



                           LEYTE OPTIMIZATION PROJECT

                                  BOT AGREEMENT

This Agreement made and executed on this 4th day of August, 1995 by and between:

     1. PNOC-ENERGY DEVELOPMENT CORPORATION, hereinafter referred to as
     PNOC-EDC, a wholly-owned subsidiary of the Philippine National Oil Company,
     a corporation created and organized under Presidential Decree No. 334, as
     amended, with principal office address at PNPC Complex, Merritt Road, Fort
     Bonifacio, Makati, Metro Manila, Philippines, herein represented by its
     President Mr. NAZARIO C. VASQUEZ, who is duly authorized to represent it in
     this Agreement.

     2. ORMAT INC., hereinafter referred to as the Operator, a private
     corporation duly organized and existing under the laws of the State of
     Delaware, U. S. A. licensed to do business in the Republic of the
     Philippines through its branch office at 8th Fl., Solid Bank Bldg., 777
     Paseo de Roxas, Makati, Metro Manila, Philippines, represented herein by
     its Vice President, Mr. Jacob Menahem, who is duly authorized to represent
     it in this Agreement.

WITNESSETH THAT

     WHEREAS, Republic Act 6957 dated July 9, 1990 as amended by RA 7718 (BOT
     Law) authorized government infrastructure agencies, including PNOC-EDC, to
     enter into contracts with private contractors for the financing,
     construction, operation and maintenance of infrastructure projects;

     WHEREAS, NAPOCOR and PNOC-EDC have previously executed a Memorandum of
     Understanding for the Development of Geothermal Power Plants in PNOC-EDC
     Projects, including the geothermal resources of the Leyte Power
     Optimization Project Areas, where PNOC-EDC holds an existing Geothermal
     Service Contract.

     WHEREAS, PNOC-EDC has invited several contractors to submit proposals for
     the design, construction, operation and maintenance of geothermal power
     plants on a build-operate-transfer (BOT) basis for the Leyte Geothermal
     Power Optimization Project Geothermal Service Contract Area, and these
     power plants will convert PNOC-EDC's geothermal energy into electricity for
     sale to NAPOCOR; and



     WHEREAS, the Operator wishes to design, construct, own and operate
     geothermal electricity generating plants, utilizing the geothermal
     resources of the Leyte Geothermal Power Optimization Project Area and with
     a Contracted Capacity of 49.00 MW net and wishes to deliver electricity
     exclusively on behalf of PNOC-EDC on such terms and conditions as are set
     forth herein.

NOW, THEREFORE, for and in consideration of the foregoing presents and the
mutual covenants hereinafter set forth, the Operator and PNOC-EDC have agreed as
follows:

ARTICLE 1 DEFINITION OF TERMS

1.1  DEFINITIONS

When used in this Agreement, the terms below shall have the following meanings:

ACCESSION UNDERTAKING: The accession undertaking to be executed in accordance
with Subsection 19(c) and in the form of Annex E.

AGREEMENT: This Agreement including attachments, as may be amended from time to
time.

ATMOSPHERIC CONDITIONS: The atmospheric conditions specified in the Interface
Data attached hereto as Annex C.

BILLING PERIOD: The time interval from 10:00 AM on the twenty-fifth (25th) day
of the current month to 10:00 AM on the twenty fifth (25th) day of the following
month where the Operator shall read meters and accumulate data needed for the
purpose of billing capacity and energy delivered to NAPOCOR on behalf of
PNOC-EDC.

BOI: The Board of Investments of the Republic of the Philippines.

BUYOUT DATE: The meaning specified in Section 9.3.

CAPACITY PAYMENT: The total capacity payments made pursuant to Section 8.3.1.

COMMERCIAL OPERATION DATE: The first day of the Billing Period following the
Completion Date of each Plant as defined in Section 4.1(a).

COMMISSIONING PERIOD: The period of three months prior to the scheduled
Completion Date of Plant 4. The period of four months prior to the scheduled
Completion Date of Plants 1, 2 and 3.

COMPLETION DATE: With respect to each Plant, the day upon which the Operator
certifies to PNOC-EDC that such Plant is capable of operating in accordance with
the Operating Parameters


                                       2


and has successfully completed testing in accordance with Article 5 or the date
that such Plant is deemed completed in accordance with Section 5.4.

CONSTRUCTION PERFORMANCE SECURITY: The Performance Security described in Section
3.1(a).

CONTRACTED CAPACITY: Thirty-five and sixty-five hundredths (35.65) MW (net) for
the period after the Completion Date for Plants 1, 2 and 3 and before the
Completion Date of Plant 4 and forty-nine (49.00) MW (net) for the period after
the Completion Date of Plant 4 and thereafter for any year during the
Cooperation Period. Contracted Capacity contemplates availability for the
duration of the Cooperation Period and assumes the continuous delivery and
acceptance of Geothermal Fluid by PNOC-EDC as specified in the Geothermal Fluid
Specifications. Said power shall be the aggregate power of all Plants measured
per Plant at (a) the Interconnection Point MP1 for NAPOCOR Power and (b) the
Interconnection Point MP2 for Steamfield Power, each as indicated in Figures C.1
- C.4 in Annex C and Annex C.

CONTRACT CAPACITY PRICE: The basic capacity purchase price per kilowatt (kW) per
month for electric capacity nominated by the Operator consisting of the Contract
Capacity Rate for Capital Costs (CCR), the Contract Capacity Rate for Fixed
Operating Costs (OCR), and the Service Fee Rate to reflect Return on Investments
(SFR).

CONTROL: To establish the electrical output of the Plants through dispatching
procedures including shut-down and start-up.

COOPERATION PERIOD: The period of ten (10) years of commercial operation
starting from the last Commercial Operation Date of Plants 1, 2 and 3 and
continuing until the 10th anniversary of that Commercial Operation Date.

CORRECTION CURVES: The curves, set forth in Annex B, used to adjust the Power
Plant performance for variation in the Geothermal Fluids and Atmospheric
Conditions from those specified in the Geothermal Fluid Specifications and the
Interface Data.

EFFECTIVITY DATE: The date upon which PNOC-EDC and the Operator agree that all
conditions precedent set forth in Article 26 have been either duly fulfilled or
waived to the satisfaction of the relevant Party.

ELECTIVE MODIFICATIONS: Modifications to the Operator's design of the Power
Plant requested by PNOC-EDC that are not solely for the purpose of correcting
design errors made by the Operator in its design of the Power Plant.

EMERGENCY: A condition or situation which in NAPOCOR's sole judgment affects
NAPOCOR's ability to maintain safe, adequate, and continuous electrical service.

                                       3


ENERGY DELIVERED: An amount of energy expressed in kilowatt hours (kWh)
generated by the Power Plant which are delivered to NAPOCOR on behalf of
PNOC-EDC at the Point of Interconnection plus those delivered to PNOC-EDC for
its own use (points MP1 and MP2 as indicated in Figures C.1 - C.4 in Annex C).

ENERGY FEE: The fees payable pursuant to Subsection 8.3.2.

FORCE MAJEURE: An event specified in Section 14.1.

GENERATING UNIT: A single turbine generator unit, together with its associated
auxiliaries and ancillary plant required to enable it to generate electricity
and to be connected to and operate in parallel with NAPOCOR's electricity
transmission system.

GEOTHERMAL FLUID: The geothermal steam to be supplied to the Operator by
PNOC-EDC and the condensed steam and low pressure steam to be received from the
Operator by PNOC-EDC.

GEOTHERMAL FLUID SPECIFICATIONS: The design point and other Interface Data
specifications for and quantities of Geothermal Fluid set forth in Annex C
including, without limitation, PNOC-EDC's undertakings to accept low pressure
steam and to accept condensed steam from the Plants for reinjection and/or other
proper disposal.

GOVERNMENT: The government of the Republic of the Philippines including all of
its political subdivisions and the agencies and instrumentalities of the
foregoing.

GUARANTEED COMMERCIAL OPERATION DATE: The dates set forth in Section 4.1 for
each Plant opposite the terms "Guaranteed Commercial Operation Date", as such
dates may be extended pursuant to this Agreement.

GUARANTEED NET PLANT STEAM RATE: With respect to each Plant, the Net Plant Steam
Rate guaranteed by the Operator, which, for any year during the Cooperation
Period, is the amount set forth in Annex I corresponding to such year, as
corrected for variations in Atmospheric Conditions and in the Geothermal Fluid
provided by PNOC-EDC using the Correction Curves.

INTERCONNECTION FAILURE: Any event, circumstance or state of facts located
beyond the Power Plant side of the Points of Interconnection which curtails or
eliminates the ability of NAPOCOR or PNOC-EDC to request and utilize power from
the Power Plant including, without limitation, problems in interconnection or
transmission equipment located beyond the Points of Interconnection described in
Annex C.

NAPOCOR: The National Power Corporation.

NAPOCOR ELECTRIC SYSTEM INTEGRITY: Operation of NAPOCOR's electric system in a
manner which minimizes risks of injury to persons and/or property and enables
NAPOCOR to provide


                                       4


adequate and reliable electric service to its customers, all in accordance with
generally and internationally-accepted utility practice.

NAPOCOR POWER: An amount of energy (in kWh) delivered to NAPOCOR on behalf of
PNOC-EDC measured in each one of the Plants at the high voltage side of the
transformer (MP1) at the relevant Point of Interconnection as indicated in
Figures C.1.-C.4 in Annex C.

NET PLANT STEAM RATE: For each Plant, it is the total Geothermal Fluid flow into
the that Plant over a given period of time, expressed in kilograms, divided by
the Energy Delivered over the same period expressed in kWh. Any measurement of
Net Plant Steam Rate shall be corrected for variations in the Atmospheric
Conditions and in the Geothermal Fluid provided by PNOC-EDC during such period
of time from the Geothermal Fluid Specifications using the Correction Curves.

NEWCO: The company organized under the laws of the Republic of the Philippines
which will be a party to this Agreement by and under the terms of the Accession
Undertaking.

NOMINATED CAPACITY: The capacity or amount of power that the Operator guarantees
in accordance with Section 6.13 to deliver to NAPOCOR on behalf of PNOC-EDC for
a period of one year, including the Steamfield Power.

OPERATING PARAMETERS: The operating parameters set forth in Annex B4 attached
hereto.

OPERATING REPRESENTATIVE: Individual(s) appointed by each Party and by NAPOCOR
for the purpose of securing effective cooperation and interchange of information
between the Parties and NAPOCOR in connection with administration and technical
matters related to this Agreement and the Power Purchase Agreement.

OPERATION PERFORMANCE SECURITY: The Performance Security described in Section
3.1(d).

OUTAGE: The inability of the Operator to meet a capacity up to the Nominated
Capacity when requested by NAPOCOR, provided, that no Outage shall occur if:

     (a)  the capacity adjusted per the Correction Curves which the Operator
          makes available to NAPOCOR is at least equal to current Nominated
          Capacity less Steamfield Power; or

     (b)  PNOC-EDC fails to deliver or to accept Geothermal Fluid from any Plant
          or the Geothermal Fluid delivered to or accepted from any Plant varies
          from the Geothermal Fluid Specifications and such variation is outside
          the range of the Correction Curves, except that in as far as
          acceptance of Geothermal Fluid from the Operator is concerned,
          PNOC-EDC's obligation under the Geothermal Fluid Specifications is
          limited to the steam exit pressure only; or

                                       5


     (c)  an Interconnection Failure has occurred; or

     (d)  the inability of the Operator is due to Force Majeure; or

     (e)  the inability of the Operator is due to Scheduled Maintenance provided
          that the number of hours in any one year under this clause (e) shall
          not be considered an Outage, if it does not exceed the number of
          Scheduled Maintenance hours stated for that year; or

     (f)  the failure by PNOC-EDC or NAPOCOR to request or utilize power from
          the Power Plant is due to any dispute between PNOC-EDC and NAPOCOR
          (under the Power Purchase Agreement or otherwise) which did not arise
          from any default of the Operator under this Agreement, including
          termination or expiration of the Power Purchase Agreement,

               OUTAGE HOUR: Any hour in which, due to Outage, the Operator
               failed, for a continuous period of thirty (30) minutes, to
               deliver power adjusted per the Correction Curves at a level of at
               least ninety five percent (95%) of the Nominated Capacity. For
               the purpose of defining Outage Hour, if NAPOCOR requests dispatch
               of capacity in excess of the amount defined in Subsection (a) of
               the definition of Outage, failure to deliver such excess amount
               shall not constitute an Outage Hour. For purpose of calculating
               the Total Outage Hours (TOH) for any given period (including
               Billing Period), the following formula shall be used:

                           n 0.95 x NC - (ACi + NRCi)

                TOH = (Sigma) ----------------------------------- x Wi

                      i=l0.95 x NC

where:

TOH    =   Total outage hours in any Billing Period.

NC     =   Nominated Capacity for that Billing Period expressed in kW.

n      =   The number of hours in that Billing Period.

ACi    =   The total power delivered during hour i expressed in kW adjusted
           per the Correction Curves.

                                       6


NRCi   =   NC less power requested by NAPOCOR in hour i, expressed in kW.

wi     =   Variable for hour i defined as follows:



if,



1)  (ACi  +  NRCi)  (greater than or equal to) 0.95 x NC; or

2)  (ACi  +  NRCi)  (less than) 0.95 x NC for a period shorter than 30 continues
                                minutes in hour i;

                         or

3)  Any of the events defined in Subsections (a), (b), (c), (d), (e) and (f) of
    the definition of Outage occurs during hour i,

then   wi = 0

otherwise   wi = 1

PARTIES: The contracting parties in this Agreement, referring to the Operator
and PNOC-EDC.

PERFORMANCE SECURITY: The Construction Performance Security required to be
posted by the Operator to guarantee its performance during the construction of
the Power Plant and to be converted into the Operation Performance Security to
guarantee Operator's performance during the Cooperation Period in accordance
with Section 3.1 hereof.

PLANT: Each of the power plants as described in Annex B and Annex C and
identified as follows: Plant 1 is the power plant in Mahanagdong "A" Area; Plant
2 is the power plant in Mahanagdong "B" Area; Plant 3 is the power plant in
Tongonan 1 Area; and Plant 4 is the power plant in Malitbog Area.

POINT OF INTERCONNECTION: The point at the interconnection facilities where the
transfer and metering of electrical energy among PNOC-EDC, NAPOCOR and the
Operator takes place, which point shall be the transformer high side terminals
at each Plant.

POLITICAL FM: An event specified in Section 14.1(b).

POWER PLANT: The Operator's generating equipment consisting of four (4) Plants
including all of the step-up transformers and switching facilities, together
with all protective and other associated


                                       7


equipment and improvements, necessary to produce electrical energy at the Point
of Interconnection of each Plant excluding associated land, land rights and
interests in land, which equipment shall include the proposed Generating Units
with a total gross capacity of 49.59 MW, conforming to the technical
specifications set forth in Annex B and Annex C.

POWER PURCHASE AGREEMENT: The contractual agreement dated March 04, 1994 and
addendum agreement dated May 06, 1994 between NAPOCOR and PNOC-EDC for the sale
by PNOC-EDC of electric capacity and energy from the Leyte project including
this Power Plant to NAPOCOR.

PROTECTIVE APPARATUS: The equipment and apparatus installed by the Operator
and/or NAPOCOR pursuant to Sections 6.8 hereof.

SCHEDULED MAINTENANCE: The maintenance referred to in Section 6.14 and approved
in accordance with section 6.15 and 6.16.

SCHEDULED OUTAGE: A planned interruption of the Power Plant's generating
capability that has been scheduled with PNOC-EDC in accordance with Sections
6.14 and 6.15 and is for maintenance, testing, inspection, repair, overhauls,
replacement, improvement or similar activity.

SITE: The land located at the Leyte Power Project Expansion Geothermal
Reservation to be provided by PNOC-EDC for the construction and operation (and
purposes incidental thereto including all other areas reasonably required to
perform the construction and operation) of the Power Plant as more particularly
described in Annex A.

STEAMFIELD POWER: An amount of energy (in kWh) delivered to PNOC-EDC and
measured in each one of the Plants at the relevant Points of Interconnection as
indicated in Figures C.1 - C.4 of Annex C.

T-BILL RATE: The rate per annum, on any day, at which Philippine Treasury Bills
(with terms of thirty (30) days or if no such bill with a term of thirty (30)
days is issued such bill which is issued having the term nearest to thirty (30)
days) were issued by the Government on the Friday immediately preceding such
day, or, if no such bills were issued on such Friday then the day immediately
preceding such Friday on which such bills were issued.

TERMINATION DATE: The date upon which this Agreement is terminated pursuant to
Article 9 or 15.

TRANSFER DATE: The day following the last day of the Cooperation Period;
provided, however, that in case of termination of this Agreement pursuant to
Article 9, the Transfer Date shall be the date following full payment of the
Buyout Price as defined in Section 9.2.

TRANSMISSION LINE: Has the meaning specified in Section 4.2.

                                       8


1.2  INTERPRETATION

     In this Agreement:

     (a)  any reference to an "Article", "Section", or "Clause" is a reference
          to an article or section hereof or an annex hereto or a clause or
          section in an annex hereto;

     (b)  the headings and sub-headings appear as a matter of convenience and
          shall not affect the construction of this Agreement;

     (c)  the singular includes the plural and vice versa, and words importing
          any gender include the other genders;

     (d)  a reference to a person includes a reference to a body corporate and
          to an unincorporated body of persons; and

     (e)  references to any Party include the successors and any permitted
          assigns of that Party.

1.3  ABBREVIATIONS

     In this Agreement:

     (a)  "$" and "dollar(s)" and "cents" denote lawful currency of the United
          States of America;

     (b)  "Ps" and "peso(s)" denote lawful currency of the Republic of the
          Philippines;

     (c)  "MW" denotes a megawatt;

     (d)  "MWh" denotes a megawatt hour;

     (e)  "kW" denotes a kilowatt;

     (f)  "kwh" denotes a kilowatt hour;

     (g)  "kV" denotes kilovolt;

     (h)  "DC" denotes direct current; and

     (i)  "AC" denotes alternating current.

                                       9


ARTICLE 2 PROJECT

2.1  POWER FACILITY

     The Operator shall be responsible for the finance, design, supply,
     construction, testing operation and maintenance of four (4) Plants with an
     aggregate gross capacity of approximately 51.00 MW to be installed on the
     Site, whose net generation (exclusive of the Steamfield Power) shall be
     delivered to NAPOCOR on behalf of PNOC-EDC during the Cooperation Period.
     The Power Plant shall be located on the Site which shall be made available
     by PNOC-EDC at no cost to the Operator and subject to the provisions of
     Subsection 4.3.

2.2  ENERGY CONVERSION

     PNOC-EDC, at no cost to the Operator, shall supply and deliver all
     Geothermal Fluid and receive all Geothermal Fluid in conformity to the
     Geothermal Fluid Specifications needed by the Operator for each Plant to
     generate the electric capacity and energy required by NAPOCOR and PNOC-EDC
     for Steamfield Power up to the Nominated Capacity. The Operator shall
     convert such Geothermal Fluid and, on behalf of PNOC-EDC, deliver all
     electrical capacity and energy generated by the Power Plant to NAPOCOR less
     (i) energy required by the Operator for auxiliary purposes; and (ii) the
     Steamfield Power. PNOC-EDC shall pay the Operator conversion fees as
     provided in Section 5.4 or Article 8, as the case may be. It is the
     intention of the Parties, without creating a contractual obligation under
     this Agreement, thatPNOC-EDC shall exercise its best effort to increase the
     Geothermal Fluid inlet pressure to Plants 1,2 and 3 as per Geothermal Fluid
     Specifications to allow, to the extent possible, an increase in the
     Contracted Capacity of the Power Plant.

2.3  OWNERSHIP

     (a)  From the Effectivity Date until the Transfer Date, the Operator shall
          own the Power Plant and all the fixtures, fittings, machinery and
          equipment on the Site and used in connection with the Power Plant
          which have been supplied by it or at its cost, and the Operator shall
          operate and manage the Power Plant for the purpose of converting the
          Geothermal Fluid delivered by PNOC-EDC in accordance with this
          Agreement into electric capacity and energy.

     (b)  On the Transfer Date, ownership, management and operation of the Power
          Plant shall be transferred by the Operator to PNOC-EDC in accordance
          with Article 9 or 13 or 15, as applicable.

                                       10


     (c)  Ownership of the Site shall remain with PNOC-EDC at all times during
          the term of this Agreement.

2.4  COMMENCEMENT AND PROSECUTION OF THE PROJECT

     The Operator shall develop and construct the Power Plant, with such
     resources, construction equipment and temporary facilities as, in the
     judgment of the Operator, are sufficient to complete the Power Plant on or
     before the corresponding Guaranteed Commercial Operation Date. The capacity
     of the construction equipment and temporary facilities, sequence of
     operations, method of operations, and resources employed shall be such, in
     the judgment of the Operator, as to insure that the Commercial Operation
     Date of each Plant occurs on or before the relevant Guaranteed Commercial
     Operation Date.

ARTICLE 3 GENERAL RESPONSIBILITIES OF THE OPERATOR

3.1  CONSTRUCTION PERFORMANCE SECURITY

     (a)  To guarantee the faithful performance by the Operator of its
          obligation to completely construct the Power Plant in accordance with
          the terms and conditions of this Agreement, within ten (10) days of
          the Effectivity Date the Operator shall post and deliver the
          Construction Performance Security in a form acceptable to PNOC-EDC in
          a sum equivalent to One Hundred Dollars (US$100) per kilowatt (kW) of
          total Contracted Capacity for all the Plants or its equivalent in
          Philippine Pesos or other currencies. Prior to such delivery, the
          Operator shall ensure that the Bid Security required under the bid
          documents shall be extended until such time the Construction
          Performance Security shall have been posted and delivered; provided
          that, in the event that the Effectivity Date does not occur on or
          before March 01, 1996, the Parties shall discuss and agree on any
          further extension of the Bid Security. PNOC-EDC shall have recourse to
          the Construction Performance Security to satisfy the final judgment in
          an arbitral proceeding in accordance with Article 21.

     (b)  The Construction Performance Security shall be in any of the following
          forms: (i) cash; (ii) irrevocable letter of credit issued in a form
          and by a bank acceptable to PNOC-EDC, provided that if the letter of
          credit is issued by a foreign bank it must be confirmed by an
          acceptable local bank or offshore banking unit; (iii) a bank draft
          guarantee issued by an accredited local bank, or if the issuing bank
          is a foreign bank, such guarantee shall be confirmed by a local bank
          acceptable to PNOC-EDC; or, (iv) surety bond, callable on demand, from
          the Government Service Insurance System (GSIS). All foreign banks
          issuing a letter of credit or bank guarantee shall be required to
          submit itself to the jurisdiction of Philippine courts.

                                       11


     (c)  This Construction Performance Security shall be valid and in effect
          from ten (10) days after the Effectivity Date until the earlier of (i)
          the Guaranteed Commercial Operation Date plus six (6) months
          thereafter or (ii) such time it is converted into the Operation
          Performance Security..

     (d)  Effective on the Completion Date, the Operator shall either convert
          the Construction Performance Security into or post and deliver an
          Operation Performance Security which shall be in any of the forms
          provided above for the Construction Performance Security in an amount
          equivalent to Sixty-Six Dollars ($66) per kilowatt (kW) of Contracted
          Capacity, or its equivalent in Philippine pesos or other currencies.
          The Operation Performance Security shall guarantee the faithful
          performance by the Operator of its obligations during the Cooperation
          Period and, in case of abandonment, shall be forfeited in full in
          favor of PNOC-EDC.

     (e)  If any security furnished in connection with this Agreement
          subsequently becomes unacceptable to PNOC-EDC in its reasonable
          discretion, or if the issuing company fails to furnish reports as to
          its financial condition from time to time as requested by PNOC-EDC,
          the Operator shall promptly furnish an additional security or a
          replacement security as may be required to protect the interests of
          PNOC-EDC in the Project.

3.2  RESPONSIBILITY FOR DAMAGE AND LOSSES

     (a)  The Operator shall be responsible for and shall promptly repair all
          damage to property belonging to PNOC-EDC, NAPOCOR, private parties or
          the Government caused by the negligent acts or omissions of Operator,
          its employees, agents, representatives, contractors and
          subcontractors.

     (b)  Except as set forth herein, any and all losses and damages to the
          Power Plant, due to any cause or causes, whatsoever, that are the
          responsibility of the Operator, its employees, agents,
          representatives, contractors and subcontractors during the prosecution
          of the Agreement shall not relieve the Operator from any of its
          obligations under this Agreement.

     (c)  Except as otherwise provided for in this Agreement and except for
          causes attributable to PNOC-EDC, PNOC-EDC shall not be responsible for
          any damage due to any increased difficulty in the performance of the
          obligations under this Agreement on account of any hindrance or delay
          due to any cause whatsoever in the progress of the development,
          construction, operation or maintenance of the Power Plant. Except as
          otherwise set forth herein or to the extent arising from causes
          attributable to PNOC-EDC, no adjustment in the prices as set forth in



                                       12


          Article 8 shall be made on account of any such damage, increased
          difficulty, hindrance or delay, but said hindrance or delay may
          entitle the Operator to an extension of time for completing the
          construction of the Power Plant as herein provided.

3.3  ENVIRONMENT AND CHANGE OF LAWS

     (a)  Prior to the Effectivity Date, the Operator and PNOC-EDC shall
          mutually agree upon which requirements of the Environmental Compliance
          Certificate issued in respect of the Power Plant are to be performed
          by the Operator, and which requirements are to be performed by
          PNOC-EDC. The Operator shall keep the Site in a sanitary condition and
          in compliance with the environmental requirements and mitigation
          measures to be performed by the Operator pursuant to such
          Environmental Compliance Certificate, Authority to Construct, Permit
          to Operate, and in accordance with the laws of the Republic of the
          Philippines in effect as of the date hereof.

          The costs for compliance with the environmental requirements shall be
          charged to the account of the Operator except that (i) with respect to
          H2S emissions, if any control of such emissions will be required from
          Operator, then Operator will charge all costs related to the
          installation of necessary equipment and facilities for such control as
          well as all additional costs of operation and maintenance, to PNOC-EDC
          who agrees to pay Operator all such additional costs and PNOC-EDC
          shall have the right to approve the manner, method and associated
          proposed costs of compliance with such requirements and (ii) the
          Operator will comply with any environmental or non-environmental laws,
          rules and regulations (and official interpretations thereof) affecting
          the construction, operation or maintenance of the Power Plant or the
          Operator's costs that are adopted or changed after the date of this
          Agreement; provided that if such compliance would:

          (i)    result in the Plants being unable to operate at the Guaranteed
                 Net Plant Steam Rate in accordance with the Operating
                 Parameters, or otherwise in accordance with the specifications
                 set forth in this Agreement; or

          (ii)   result in the interest of the Operator in the Power Plant
                 and/or the Operator's expectation of its economic return (net
                 of tax or other imposition) on its investment being reduced or
                 otherwise adversely affected; or

          (iii)  result in the scheduled Completion Date being delayed;

                                       13


          PNOC-EDC shall pay to the Operator the additional capital costs and
          expenses necessary to comply with such new requirements and PNOC-EDC
          shall have the right to approve the manner, method and associated
          proposed costs of compliance with such requirements. With respect to
          any disagreement or to other impacts resulting therefrom the Parties
          shall meet and endeavor to agree on amendments to this Agreement and
          if after sixty (60) days no such approval or agreement has been
          reached, then the provisions of Article 9 shall apply.

     (b)  If it is necessary, in the development, construction, operation or
          maintenance of the Power Plant, to interrupt or obstruct the natural
          flow of rivers or streams, the drainage of the surface, or the flow of
          artificial drains, the Operator shall provide adequate measures to
          prevent damage to either public or private properties. The Operator
          shall be liable for all damages caused by its negligence or willful
          misconduct with respect to such interruption or obstruction.

     (c)  Subject to Section 3.3 (a) and except for any liability which may
          arise from emissions of H2S prior to the installation of any H2S
          abatement system, the Operator shall assume responsibility for any
          costs and liabilities arising from any adverse environmental damage or
          health impacts that are caused by the Operator's negligence or willful
          misconduct in the construction, operation, and maintenance of the
          Plants and their related facilities.

3.4  ORGANIZATION

     (a)  The Operator shall maintain at the Site an efficient and capable
          organization with an adequate capacity and amount of construction,
          operating and maintenance equipment and facilities to satisfactorily
          develop, construct, operate or maintain the Power Plant in a safe,
          efficient, environmentally sound and professional manner.

     (b)  The Operator shall assign to the Site English-speaking foreign
          personnel. Any interpreters required shall be provided by the Operator
          at its expense.

     (c)  The Operator shall employ an engineer(s) appropriately licensed to
          practice in the Philippines who shall participate in the supervision
          of the development, construction, operation or maintenance of the
          Power Plant.

                                       14


ARTICLE 4 CONSTRUCTION OF THE POWER PLANT

4.1  MILESTONE DATES

     (a)  The Operator shall in good faith use all reasonable efforts to
          construct the Power Plant in accordance with the following schedule:

          Activity                                 Date

          Target Effectivity Date                  March 1, 1996

          Ordering of long lead items              the later of (i) July 1, 1996
          (turbogenerators)                        or (ii) 120 days after the
                                                   Effectivity Date

          Start of Commissioning Period of         May 1, 1997
          Plants 1, 2, and 3.

          Start of Commissioning Period of         October 1, 1997
          Plant 4

          Scheduled Completion Date for            September 1, 1997
          Plants l, 2, and 3

          Scheduled Completion Date for            January 1, 1998
          Plant 4

          Guaranteed Commercial Operation Date     September 25, 1997
          for Plants 1, 2 and 3

          Guaranteed Commercial Operation Date     January 25, 1998
          for Plant 4

          If the Commercial Operation Date of any Power Plant does
          not occur on or before the relevant Guaranteed Commercial
          Operation Date, the Operator shall be subject to the
          penalty provisions set forth in Section 4.11.

     (b)  Each of the dates set forth in Section 4.1(a) shall be extended by the
          duration of any event of Force Majeure or any breach by PNOC-EDC of
          any of its obligations under this Agreement or any delays as a result
          of requirements upon the Operator by PNOC-EDC or by any relevant
          Government authority to install an H28 abatement system. In addition,
          if the date for ordering the long-lead items is after July 1, 1996 as
          provided in clause (a) above, each of the dates set


                                       15


          forth in Section 4.1(a) shall be extended day for day for the period
          between July 1, 1996 and such date.

4.2  TRANSMISSION LINE, INTERCONNECTION AND GEOTHERMAL FLUID

     (a)  PNOC-EDC shall ensure that on or before each of the dates specified in
          Section 4.1(a), for the Start of Commissioning of each Plant as such
          dates may be extended pursuant to Section 4.1(b) for reason of Force
          Majeure, a 230 kV transmission line, including all interconnection
          facilities up to and including the Point of Interconnection for such
          Plant on the side of the transmission line (collectively, the
          "Transmission Line"), is installed and is capable of being connected
          to the Plants and receiving all power generated by those Plants which
          are about to be commissioned, plus any Plants already in operation.

     (b)  PNOC-EDC shall likewise ensure that on each of the dates specified in
          Subsection 4.1(a) for the Start of Commissioning Period for each Plant
          Geothermal Fluid and the acceptance of the down stream Geothermal
          Fluid from the Plants complying with the Geothermal Fluid
          Specifications are made available to the Operator.

     (c)  The Operator shall construct and maintain all interconnection
          facilities on the Plants' side of the Point of Interconnection.

4.3  SITE PROVISION

     (a)  PNOC-EDC shall make the Site available exclusively to the Operator for
          the purpose of building and operating the Power Plant, free and clear
          of liens and encumbrances that could interfere with the Operator's
          construction or operation of the Plants and at no cost to the
          Operator, and the Operator shall have the right to possess, use and
          enjoy the Site for the period from the Effectivity Date until the
          Transfer Date. The inability of PNOC-EDC to comply with its
          obligations under this Section 4.3 shall constitute a Political Force
          Majeure. Ownership and administration of the Site shall remain with
          PNOC-EDC throughout the effectivity of this Agreement. PNOC-EDC shall
          be responsible for, and hold the Operator and its successors and
          assigns harmless from, all claims by third parties relating to the
          land provided for the Site, including, without limitation, claims
          under colour of ownership of any interest in such land, real estate
          and other taxes or other claims that might give rise to any lien on
          the land or any improvements to it (other than those claims arising
          out of the Operator's construction, operation or maintenance of the
          Power Plant). If PNOC-EDC fails to duly satisfy such claims on a
          timely basis, the Operator


                                       16


          may do so (at his sole discretion and upon prior consultation with
          PNOC-EDC) and PNOC-EDC shall promptly reimburse such expenses.

     (b)  The Operator shall not obstruct any existing road or drainage or
          disturb existing structures and facilities on the land so furnished
          for construction purposes unless and until given written permission by
          appropriate authorities. Unreasonable withholding or delay of such
          permission shall constitute Force Majeure.

     (c)  PNOC-EDC shall make available to the Operator, free and clear of liens
          and encumbrances that could interfere with the Operator's construction
          or operation of the Plants and at no cost to the Operator, all other
          lands, easements, and rights-of-way for developing, constructing,
          operating, or maintaining the Plants (including areas and temporary
          access for the disposal of spoils) or such other purposes which the
          Parties agree are necessary in the implementation of this Agreement
          for the period from the Effectivity Date until the Transfer Date.

4.4  INGRESS AND EGRESS RIGHTS OF OPERATOR

     PNOC-EDC shall ensure that all necessary access to and from the Site is
     made available to the Operator, its employees, contractors, subcontractors
     and advisers, at no cost to the Operator, for the period from the date of
     this Agreement until the Transfer Date.

4.5  EQUIPMENT IMPORTATION

     (a)  The Operator shall be responsible for the importation and
          transportation to the Site of all equipment for development and
          operation of the Power Plant, and construction of the Power Plant. It
          is the responsibility of the Operator to secure from the Government,
          its agencies and instrumentalities, the necessary permits, licenses,
          and other documents for the importation of the Operator-owned
          construction or maintenance equipment that it may decide to bring into
          the country for use in connection with this Agreement. PNOC-EDC shall
          use its best efforts in assisting the Operator to obtain all such
          licenses and documents.

     (b)  PNOC-EDC shall use its best efforts to cause the Government to grant
          the Operator exemptions from all custom duties or other importation or
          exportation tax in respect of all items of plant, machinery and
          ancillary items, including consumables and spare parts, required for
          the construction, operation, maintenance and repair of the Power
          Plant, provided however that if such exemptions are not obtained, the
          provisions of Section 8.6 shall apply.

                                       17


     (c)  Any delays caused by meeting customs procedures for material equipment
          and supplies or in obtaining necessary permits, licenses, and other
          documents caused by an event of Force Majeure and to the extent that
          they affect the Operator's ability to undertake its performance under
          this Agreement shall extend the project milestone dates set forth in
          Subsection 4.1(a) equivalent to the period of the delay in obtaining
          such permits, licenses and other documents. The Operator or PNOC-EDC
          shall promptly notify the other Party of each such delay, and the
          Parties shall cooperate to promptly satisfy the relevant authority and
          remove the cause of the delay. Any delay in excess of sixty (60) days
          after notification by the Operator to PNOC-EDC shall cause Article 9
          to apply. The Operator shall not be subject to delay penalties as a
          result of such a delay.

4.6  PERMITS

     Following the Effectivity Date, the Operator, at no cost to PNOC-EDC, shall
     be responsible for securing from the Government all requisite
     authorizations, licenses and permits not previously provided under the
     provisions of Article 26 for the construction and operation of the Plants,
     their associated facilities, and related waste management facilities,
     except the Environmental Compliance Certificate, which shall be obtained by
     PNOC-EDC. PNOC-EDC shall cooperate with and use its best efforts to assist
     the Operator in obtaining such authorization, licenses and permits.

     Any delays, caused by an event of Force Majeure and to the extent that they
     materially affect the Operator's ability to undertake its performance under
     this Agreement, caused in obtaining requisite authorizations, licenses and
     permits shall extend the Completion Date and other benchmark dates day for
     day. The Operator or PNOC-EDC shall promptly notify the other Party of each
     such delay, and the Parties shall cooperate to promptly satisfy the
     relevant Authority and remove the cause of delay. Any delay in excess of
     sixty (60) days after notification shall cause Article 9 to apply. The
     Operator shall not be subject to delay penalties as a result of such a
     delay.

4.7  DRAWINGS, DOCUMENTS, DATA & INSTRUCTIONS

     The Operator shall comply with the following on matters of drawings and
     other documentary information, and PNOC-EDC rights thereto:

     4.7.1 SUBMISSION OF DRAWINGS AND DATA

          The Operator shall submit to PNOC-EDC copies of all drawings, plans,
          calculations, operating and maintenance instructions and, in general,
          copies of all material documents related to the Power Plant reasonably
          requested for reference and information. Prior to the start of
          construction,


                                       18


          within thirty (30) working days following receipt thereof, PNOC-EDC
          shall describe to the Operator in writing any flaws perceived by
          PNOC-EDC in the designs. Failure by PNOC-EDC to describe any flaws in
          such designs within such thirty (30) day period shall be deemed
          PNOC-EDC's waiver of its right to describe such flaws.

          The Operator shall also advise PNOC-EDC of the names of potential
          suppliers of material components or material services who have been
          shortlisted by the Operator. Within thirty (30) working days following
          receipt of such advice, PNOC-EDC shall advise the Operator of any such
          potential suppliers to which PNOC-EDC objects, together with the
          reasons for objection and may request the Operator to exclude such
          suppliers from the shortlist. The Operator shall comply with such
          requests by PNOC-EDC as it shall deem reasonable.

          Following the start of construction by the Operator on the Site, and
          in any case not earlier than 120 days after the Effectivity Date, the
          above-mentioned thirty (30) working days periods shall be reduced to
          fifteen (15) working days.

     4.7.2 MODIFICATION RIGHTS

          During the same thirty (30) or fifteen (15) working day period
          following the receipt of the documents or list of such suppliers under
          Section 4.7.1, PNOC-EDC shall have the right to require modifications
          to the design as it deems necessary within the scope of work set forth
          in Annex B and Annex C for proper and safe operation of the Power
          Plant as it affects the operation of the PNOC-EDC geothermal fluid
          collection and disposal system and the NAPOCOR power system. In the
          event PNOC-EDC requests any Elective Modifications, then the Parties
          shall negotiate in good faith (i) to adjust the Contract Capacity
          Price to maintain the Operator's economic return on its investment as
          if no such Elective Modifications were performed and (ii) adjust the
          dates set forth in Section 4.1 to reflect any delays in designing such
          Elective Modifications and any additional time required by the
          Operator to complete such Elective Modifications; provided that the
          Operator shall not be required to make such Elective Modifications if
          such Elective Modifications would likely impair the Operator's ability
          to perform its obligations hereunder. In the event the Parties are
          unable to reach agreement on such adjustments within sixty (60) days
          following PNOC-EDC's request, PNOC-EDC may withdraw such request.
          Thereafter, if such request is not withdrawn, the Operator shall
          either comply with such request or terminate this


                                       19


          Agreement by giving written notice of termination to the PNOC-EDC;
          provided, however, that if the Operator gives such a written notice of
          termination to PNOC-EDC, PNOC-EDC shall have five (5) working days
          following delivery of such notice of termination to again withdraw its
          request. If such request is withdrawn by PNOC-EDC such written notice
          of termination will be of no effect. Upon such termination, the
          provisions of Article 9 shall apply. If, following the process as
          described in this Subsection 4.7.2, in the Operator's reasonable
          judgment a delay has been caused to its construction schedule, and
          such a delay is not due to a flaw in the Operator's drawings, the
          dates set forth in Subsection 4.1(a) shall be extended and adjusted
          proportionally to such a delay.

     4.7.3 FUTURE MODIFICATION

          All changes to the design of the Power Plant desired by the Operator
          shall be subject to the review and approval of PNOC-EDC and such
          approval shall not be unreasonably withheld. Except as set forth in
          Section 4.7.2 and this section, neither Party shall have the right to
          make or require any changes in the design of the Power Plant without
          the prior written consent of the other Party.

     4.7.4 CONSTRUCTION SCHEDULE

          The Operator shall submit to PNOC-EDC a detailed construction schedule
          of the Power Plant within three (3) months following the Effectivity
          Date. This schedule shall contain, in particular, dates for the
          submission of all drawings, documents and data, acceptance thereof,
          witnessing of tests and the overall procurement schedule. PNOC-EDC
          shall have the right to review and approve, which approval shall not
          be unreasonably withheld, the construction schedule of the Power
          Plant. Failure to disapprove such schedule within thirty (30) days
          following receipt of the same shall be deemed PNOC-EDC's approval of
          the same.

     4.7.5 MONITORING RIGHTS

          PNOC-EDC shall be entitled at its own cost to monitor the progress and
          quality of the construction and installation work. For this purpose,
          the Operator shall:

     (a)  submit to PNOC-EDC a monthly progress report in such detail and format
          as may be reasonably requested by PNOC-EDC;

                                       20


     (b)  ensure that PNOC-EDC and any experts appointed by PNOC-EDC in
          connection with the Power Plant are afforded reasonable access to the
          Site at times to be agreed with PNOC-EDC provided that such access
          does not materially interfere with the development, construction,
          operation or maintenance of the Power Plant or expose any person on
          the Site to any danger; and

     (c)  make available for inspection at the Site copies of all plans and
          designs.

     4.7.6 DRAWINGS AND DOCUMENTS TO BE PROVIDED

          The Operator shall furnish PNOC-EDC drawings and technical details
          that are prepared by or on behalf of the Operator such as, but not
          limited to, the following:

     (a)  arrangement plans for the general layout of machinery and equipment;

     (b)  general and detailed drawings and specifications for electromechanical
          works;

     (c)  general and detailed drawings and specifications for civil and
          architectural works; and

     (d)  operation and maintenance manuals

          in accordance with the construction schedule as submitted and approved
          in accordance with Section 4.7.4.

          Within six (6) months following the Commercial Operation Date of the
          last Plant, the Operator shall supply PNOC-EDC with three (3) copies
          of all "as built" plans, drawings, and design calculations related to
          construction and the performance of the Power Plant as well as quality
          assurance records, one of which copies shall be reproducible.

4.8  DISCLAIMER

     The following disclaimer shall be recognized in this Agreement:

     (a)  Any engineering review by PNOC-EDC of the Power Plant is solely for
          its information. By making such review PNOC-EDC makes no
          representation as to the engineering soundness of the Power Plant.

     (b)  The Operator shall in no way represent to any third party the
          engineering soundness of the Power Plant as a result of the review
          made by PNOC-EDC.

                                       21


     (c)  Subject to the other provisions of this Agreement, the Operator is
          solely responsible for the economic and technical feasibility,
          operational capability and reliability of the Power Plant.

     (d)  PNOC-EDC shall not be liable to the Operator for, and the Operator
          shall defend, hold harmless, and indemnify PNOC-EDC from, any claim,
          cost, loss, damage, or liability arising from any contrary
          representation made by the Operator concerning the effect of
          PNOC-EDC's engineering review of the Power Plant.

4.9  RESPONSIBILITY FOR UTILITIES

     The Operator and PNOC-EDC shall be each responsible for the provision of
     needed utilities, such as electric service, water, communications and the
     like, necessary during the construction and operation of the Power Plant
     according to the requirements of Annex B2.3 and Annex B3 respectively.

4.10 DELAYS

     Should the Operator be obstructed or delayed at any time in the progress of
     the construction work due to any of the following causes:

          (i)    Failure of the Operator to obtain the necessary access to the
                 Site, or failure of PNQC-EDC to deliver and accept geothermal
                 fluid meeting the Geothermal Fluid Specifications; or the
                 failure of PNOC-EDC to fulfill any of its other obligations
                 that at Operator's reasonable judgment will cause a delay in
                 the scheduled Completion Date; or the failure of the Operator,
                 for reasons not attributable to the Operator, to obtain the
                 Authorization to Construct and Permit to Operate; or

          (ii)   Any delay described in Sections 4.5 and 4.6, or any delay
                 caused by a PNOC-EDC directed modification in accordance with
                 Subsection 4.7.2 other than a modification which is
                 necessitated by a flaw in the Operator's drawings or any delays
                 as a resultof requirements upon the Operator by PNOC-EDC or by
                 any relevant Government authority to install an H2S abatement
                 system; or

          (iii)  Delays due to Force Majeure conditions:

     the Operator shall promptly notify PNOC-EDC of such delay, including
     details and supporting documents reasonably calculated to describe the
     problem, steps taken to resolve it and any proposed cooperative solution.
     Any delay under the terms of this


                                       22


     Section 4,10 shall extend day for day, unless otherwise agreed between the
     Parties, the Guaranteed Commercial Operation Date and all other related
     target dates directly related to the delay and within the responsibility of
     Operator.

4.11 PENALTY DUE TO DELAYS

     (a)  In the event the Commercial Operation Date of any individual Plant
          does not occur on or before the relevant Guaranteed Commercial
          Operation Date (as the same may be extended pursuant to this Agreement
          or by mutual agreement), the Operator shall pay PNOC-EDC an amount as
          defined in Annex 13. If the Operator fails to pay such amount within
          five (5) working days after due, PNOC-EDC shall have the right to draw
          on the Construction Performance Security to the extent of the amount
          defined in Annex E. In no event shall the aggregate amount of
          penalties for delay exceed the sum of $5,700,000.

     (b)  In the event that the Commercial Operation Date of any Plant does not
          occur within one hundred fifty (150) calendar days following the
          Guaranteed Commercial Operation Date for that Plant (as the same may
          be extended pursuant to this Agreement or by mutual agreement) then
          Section 15.4.1 shall apply.

4.12 LIGHTS AND BARRIERS

     During construction, the Operator shall put up and maintain at the Site
     such danger lights and barriers as the Operator deems reasonably necessary
     to prevent all accidents in consequence of the development or construction
     of the Power Plant. If work is done at night, the Operator shall maintain
     from sunset to sunrise during the performance of such work such adequate
     lighting on or about the Site and on the work area as the Operator deems
     necessary for the safety of the construction forces and for the proper
     observance and inspection of the construction and erection activities.

ARTICLE 5 TESTING OF THE FACILITY

5.1  TESTING PROCEDURES

     The procedures for the testing of the Power Plant set forth in Annex F
     shall be followed by the Operator.

5.2  TEST SCHEDULES

     (a)  The Operator and PNOC-EDC shall agree on test schedules and schedules
          of Geothermal Fluid requirements for the tests for the Power Plants.
          The schedules shall take into consideration the operational
          requirements of PNOC-


                                       23


          EDC and NAPOCOR, provided, however, that the Operator shall not be
          delayed by more than 7 calendar days in his proposed test schedules.

     (b)  In so far as Plants 1,2 and 3 are concerned, the Operator agrees to
          accept Geothermal fluid for a total period of three (3) months during
          the commissioning period. Over these three (3) months the Operator, at
          Operator's request, shall be entitled to two (2) months of Geothermal
          Fluid supply for plant 3 and two (2) months of Geothermal Fluid supply
          for Plants 1 and 2.

5.3  NOTICE OF TESTS

     The Operator shall notify PNOC-EDC at least fifteen (15) calendar days
     prior to carrying out any tests on the Power Plant and prior to:

     (a)  the initial parallel operation of each of the Operator's Plants; and

     (b)  all testing of the Protective Apparatus.

5.4  TESTS BEFORE COMPLETION

     (a)  PNOC-EDC reserves the right to witness all tests, including equipment
          testing at the Operator's or other subcontractor's or equipment
          supplier's premises during the course of this Agreement. NAPOCOR shall
          have the right to have a representative present at all tests of the
          Protective Apparatus.

     (b)  The representatives of PNOC-EDC shall have the right to be present
          during any test activity done by the Operator on the Power Plant.
          Tests conducted without the presence of PNOC-EDC's representative
          shall not be valid for the purposes of this Agreement; provided that
          if the Operator has complied with the notice provisions of Section 5.3
          and PNOC-EDC representative fails to be available for such tests at
          the scheduled time, the Operator may conduct such tests and such tests
          shall be valid for the purpose of this Agreement and the Operator
          shall have the right to issue, without need of PNOC-EDC's concurrence,
          the certificates required by Section 5.4(c).

     (c)  Upon completion of any test, the Operator and PNOC-EDC shall jointly
          issue a certificate that testing has been done on each Plant and that
          agreed testing procedures shown in Annex F had been followed.

     (d)  The Operator shall use best efforts to demonstrate the Power Plant's
          ability to provide to NAPOCOR on behalf of PNOC-EDC the Contracted
          Capacity. If, pursuant to the tests performed pursuant to this Article
          5, any Plant is unable to demonstrate a capacity equal to its
          proportional portion of the Contracted


                                       24


          Capacity, then the Operator shall perform the tests required by this
          Article 5 at such other capacity as the Operator elects. Upon
          completion of such tests, the Parties shall certify the Completion
          Date for the relevant Plant.

     (e)  No later than seven (7) calendar days after the Completion Date of
          each Plant, the Operator shall notify PNOC-EDC of the adjusted
          Nominated Capacity of the Power Plant for the first year of operation.
          The total Nominated Capacity of the Power Plant for the first year of
          operation shall be adjusted upon the Completion Date of each Plant in
          order to include the proportional portion of the Nominated Capacity
          related to that completed Plant.

     (f)  All costs, excluding Geothermal Fluid, incurred during the testing of
          the Power Plant shall be borne by the Operator.

     (g)  Energy generated during testing shall be delivered to NAPOCOR on
          behalf of PNOC-EDC and paid for by PNOC-EDC at fifty percent (50%) of
          the rate actually paid by NAPOCOR to PNOC-EDC. The Operator shall bill
          PNOC-EDC for such energy in accordance with Section 8.4.

     (h)  Notwithstanding anything to the contrary in this Agreement, in the
          event that, from and after the date set forth in Section 4.1 for the
          start of commissioning of a Plant, that Plant is capable of being
          tested, but performance tests required under Section 5.4(d) cannot be
          performed because of:

          (i)    an Interconnection Failure; or

          (ii)   PNOC-EDC's failure to deliver or accept Geothermal Fluid as
                 specified in the Geothermal Fluid Specifications; or

          (iii)  the Operator's failure to receive all permits, licenses, other
                 governmental approvals and utilities required for operation of
                 the Power Plant, notwithstanding its reasonable efforts to
                 obtain the same, and assuming the Operator has complied with
                 the scope of work set forth in Annex B; or

          (iv)   PNOC-EDC or NAPOCOR's failure to provide any personnel or
                 resource necessary to witness and approve such testing; or

          (v)    any dispute between PNOC-EDC and NAPOCOR (under the Power
                 Purchase Agreement or otherwise) which did not arise from any
                 default of the Operator under this Agreement, including the
                 termination or expiration of the Power Purchase Agreement,
                 then, in any such events, the Completion Date for such Plant(s)
                 shall be deemed to have occurred and


                                       25


                 PNOC-EDC shall be obligated to commence payments of the
                 Capacity Payments and the Energy Fee to the Operator on and
                 from the Completion Date provided, however, that Completion
                 Date for such payments shall not occur prior to August 1, 1997.
                 The capacity for purposes of calculating the Capacity Payments
                 payable under this Subsection shall be deemed to be delivery of
                 Nominated Capacity equal to the Contracted Capacity of such
                 Plant(s).

     At such time when all events described in subparagraphs (i), (ii), (iii),
     (iv) and (v), above have been cured and no longer exist regarding the
     affected Plant, the Operator shall perform the performance tests required
     under Section 5.4(d) and advise PNOC-EDC of the adjusted Nominated Capacity
     of the Power Plant and thereafter shall receive Capacity Payments based on
     the adjusted Nominated Capacity.

     In the event that the Operator is unable to pass all of the Plant's
     performance tests as set forth herein and provided that such tests are
     conducted within six (6) months from the Completion date of the affected
     Plant, the Operator will be obligated to refund or credit against future
     capacity made available and actually delivered to PNOC-EDC that amount of
     Capacity Payment actually received by the Operator prior to and during such
     tests which exceeds the amount of Capacity Payment which the Operator would
     have been paid at the lower capacity rating actually demonstrated in
     testing the Plant.

     In the event there is a difference of opinion about test results before or
     during the Cooperation Period, which cannot be resolved by the Parties
     within seven (7) days, the controversy shall be resolved by a reputable
     engineering firm chosen in advance as provided herein after. The Operator
     shall propose the engineering firm, acceptable to PNOC-EDC which acceptance
     shall not be unreasonably withheld, and the Parties will agree on such
     engineering firm not later than six (6) months prior to the estimated start
     of the Commissioning Period for the first Plant. The Parties shall equally
     share any costs associated with this procedure.

5.5  TESTS DURING COOPERATION PERIOD

     The net plant capacity and the Net Plant Steam Rate shall be tested every
     year in the presence of PNOC-EDC personnel following the procedures set
     forth in Annex F. This test shall be performed at the Operator's election
     within six (6) months after completion of the annual maintenance on each
     individual Plant and shall form the basis for determining the Nominated
     Capacity for the following year under Section 6.13. The Operator shall be
     entitled to repeat any of the aforesaid tests. If any of the events
     described in Subsection 5.4(h) affect the results of any such tests, the
     provisions of Subsection 5.4(h) shall apply for purposes of determining
     Nominated Capacity for such year.

                                       26


ARTICLE 6 OPERATION OF THE FACILITY

6.1  COMPLETION DATE

     (a)  Upon the substantial completion of the Power Plant and subject to
          confirmation by PNOC-EDC (which confirmation shall not be unreasonably
          withheld), the Operator may certify that the Completion Date of the
          Power Plant has occurred notwithstanding that the Power Plant is
          unable to produce the Contracted Capacity adjusted per the Correction
          Curves or to achieve the Guaranteed Net Plant Steam Rate, but in that
          event adjustments shall be made to the Capacity Payments in accordance
          with the penalty provisions of Subsection 8.3.1; provided, however,
          that such certification may not be made if the Power Plant is unable
          to produce at least seventy percent (70%) of the Contracted Capacity,
          after application of the Correction Curves.

     (b)  On the Completion Date of the Power Plant, the Operator shall commence
          the delivery of electric capacity and energy to NAPOCOR on behalf of
          PNOC-EDC and shall be paid for such delivery in accordance with the
          provisions of Section 8.3. All other related provisions on the
          operation of the Power Plant and the tariffs, discounts, bonuses, and
          penalties on the regular sale of electric capacity and energy shall
          also take effect on this date.

6.2  POWER RATES FOR INITIAL DELIVERY

     In the event that the Completion Date of any Plant falls on a date other
     than the Commercial Operation Date, PNOC-EDC shall pay the Contract
     Capacity Price for the Power Plant to the Operator on a prorated basis
     based on the number of days elapsed from the Completion Date.

6.3  DEDICATION OF FACILITY

     The Operator shall operate and dedicate all energy and capacity of the
     Power Plant (net of Operator's and PNOC-EDC's usage allowed hereunder) to
     NAPOCOR.

6.4  OPERATING PARAMETERS

     The Operator shall operate the Power Plant following the Operating
     Parameters as stipulated in Annex B(4).

                                       27


6.5  DISPATCH PROCEDURE

     It is the expectation of the Parties that the Plant(s) will be operated as
     base-load plant(s). However, the Operator shall Control and operate the
     Plant(s) consistent with NAPOCOR's dispatch requirements and the Plant(s)
     shall be so capable.

6.6  ENGINEERING STANDARDS

     The Power Plant shall be designed, operated and maintained by the Operator
     in accordance with prudent industry standards and good engineering
     practices.

6.7  ENVIRONMENTAL STANDARDS

     Subject to the provisions of Section 3.3(a), the Power Plant shall be
     designed, constructed, operated and maintained by the Operator in
     accordance with R.A. 6969 and DENR Administrative Orders 14, 34 and 35, and
     other applicable environmental standards and regulations, and in particular
     with the requirements of the Environmental Compliance Certificate, the
     Authority to Construct, and the Permit to Operate issued in respect of the
     Power Plant. In case of any changes in law or official interpretation of
     law, Section 3.3 shall apply.

6.8  PROTECTIVE DEVICES

     The Operator shall install Protective Apparatus in accordance with general
     specifications for such equipment and as approved by PNOC-EDC, NAPOCOR and
     the Operator conforming to the specifications set forth in Annex B and
     Annex C, to ensure the NAPOCOR Electrical System Integrity. The Power Plant
     shall be operated by the Operator with all of the Protective Apparatus in
     service whenever it is connected to or is operated in parallel with the
     NAPOCOR electric system.

6.9  INTEGRITY LOSS

     If, at any time, NAPOCOR reasonably doubts the integrity of any of the
     Operator's Protective Apparatus and reasonably suspects that such loss of
     integrity would be hazardous to the NAPOCOR Electric System integrity, the
     Operator shall demonstrate, to NAPOCOR's and PNOC-EDC's reasonable
     satisfaction, the correct calibration and operation of the equipment in
     question. If not so reasonably satisfied, NAPOCOR shall have the right to
     disconnect the Operator and refuse to receive the energy delivered by the
     Power Plant and, for the duration of such disconnection, the Power Plant
     shall be deemed to have suffered an Outage for billing purposes. The
     inability of the Operator to meet capacity by reason of any demonstration
     made by the Operator under this


                                       28


     Section 6.9 shall not be an Outage if the Operator is able to show correct
     calibration and operation of Protective Apparatus.

6.10 SETTINGS OF PROTECTIVE DEVICES

     All settings of all Protective Apparatus shall be subject to the reasonable
     approval of NAPOCOR. Tests and calibration of this Protective Apparatus
     shall be at the expense of the Operator.

6.11 SERVICE COMMITMENT

     At NAPOCOR's request, the Operator shall make all reasonable efforts on
     behalf of PNOC-EDC to deliver energy during periods of Emergency.

6.12 MAINTENANCE DURING EMERGENCY

     In the event that the Scheduled Maintenance coincides with an Emergency,
     the Operator shall make all reasonable efforts to reschedule such Scheduled
     Maintenance.

6.13 ANNUAL CAPACITY NOMINATION

     (a)  The Nominated Capacity of the Power Plant shall be specified by the
          Operator for the second year and each subsequent year of the
          Cooperation Period no later than thirty (30) calendar days prior to
          the anniversary of the first Commercial Operation Date of the Power
          Plant.

     (b)  If, for a particular year, the Operator fails to specify a Nominated
          Capacity, then the lower of the Contracted Capacity, the last
          Nominated Capacity or the last capacity demonstrated in testing in
          accordance with Section 5.5 adjusted per Correction Curves shall be
          the Nominated Capacity for that particular year.

6.14 MAINTENANCE SCHEDULE

     The Operator shall submit a written maintenance schedule for the necessary
     overhaul, maintenance, inspection and repair of the Power Plant no later
     than one hundred (100) calendar days prior to the start of each calendar
     year following the Commercial Operation Date of the Power Plant setting
     forth the Operator's proposed Scheduled Maintenance for such year provided,
     however, that each Plant shall not be scheduled for Scheduled Maintenance
     for more than twenty-one (21) days per year in which a major overhaul of
     that Plant occurs, and seven (7) days per year in which no major overhaul
     occurs, and the interval between major overhauls of each Plant shall not be
     less than a cycle of two years.

                                       29


6.15 APPROVAL OF MAINTENANCE SCHEDULE

     PNOC-EDC shall notify the Operator, within forty-five (45) calendar days
     after receipt of each maintenance schedule from the Operator, whether the
     requested maintenance schedule is approved, which approval shall not be
     unreasonably withheld. If not approved, the Parties shall promptly and in
     good faith negotiate an alternative mutually-agreeable maintenance
     schedule.

6.16 APPROVAL OF OVERHAULS

     The Operator shall not schedule major overhauls without the prior approval
     of PNOC-EDC and such approval shall not be unreasonably withheld or
     delayed.

6.17 COMPLIANCE WITH APPROVED MAINTENANCE SCHEDULE

     The Operator shall perform Scheduled Maintenance on the Power Plant during
     the periods set forth in the maintenance schedule approved pursuant to
     Section 6.15, unless such other times are approved by PNOC-EDC, and such
     approval shall not be unreasonably withheld.

6.18 UNSCHEDULED OUTAGE

     The Operator shall immediately notify PNOC-EDC, and NAPOCOR on behalf of
     PNOC-EDC, of any unscheduled Outage and the estimated duration of such
     Outage.

6.19 DAILY OPERATING REPORT

     For record purposes, the Operator shall keep PNOC-EDC and NAPOCOR's power
     management center regularly informed as to the daily results of operation
     and generation capability of the Power Plant, including, without
     limitation, any Outages.

6.20 OPERATING RECORDS

     The Operator shall maintain an operating log for each Plant with records
     of:

     (a)  real and reactive power production,

     (b)  changes in operating status,

     (c)  Outages,

     (d)  Protective Apparatus operations, and

                                       30


     (e)  any unusual conditions found during inspections.

     Changes in the setting of Protective Apparatus shall also be logged. In
     addition, the Operator shall maintain customary records applicable to the
     Power Plant, including maintenance and overhaul records, the electrical
     characteristics of the generator and settings or adjustments of the
     generator control equipment and Protective Apparatus. At the end of the
     Cooperation Period, such records shall be turned over to PNOC-EDC at no
     cost.

6.21 PNOC-EDC ACCESS TO THE POWER PLANT

     Upon at least twenty four (24) hours advance notice under normal
     circumstances, PNOC-EDC shall have rights of access to the Power Plant at
     mutually agreed upon times for the purpose of monitoring the Operator's
     operation and maintenance of the Power Plant, subject only to any
     reasonable restrictions that the Operator may impose for reasons of
     personnel and equipment safety and to avoid any impairment to the
     operations or maintenance of the Power Plant. However, in the event of an
     emergency, no advance notice shall be required provided that PNOC-EDC
     representative shall be accompanied by the Operator's representative. The
     Operator shall make the necessary arrangements to allow free access at any
     time to PNOC-EDC equipment.

ARTICLE 7 GEOTHERMAL FLUIDS

7.1  GEOTHERMAL FLUID SUPPLY

     (a)  PNOC-EDC shall supply and accept at no cost to the Operator the total
          Geothermal Fluid requirements and output of the Power Plant. Such
          Geothermal Fluid shall conform to the Geothermal Fluid Specifications.

     (b)  If neither Party shall have reason to believe that any Geothermal
          Fluid delivered to or accepted from the Site do not comply with the
          Geothermal Fluid Specifications, that Party shall promptly notify the
          other Party. Such notice shall be reasonably detailed and focused on
          possible solutions to the problem.

7.2  NON-CONDENSIBLE GASES & NON-GEOTHERMAL WASTE

     Except as provided for in Sections 3.3 and 11.2, the Operator shall be
     responsible for disposal of non-condensible gases resulting from the
     operation of Plant 4 and all non-Geothermal Fluid related waste arising
     from the Operator's construction, operation or maintenance of the Power
     Plant. If requested by the Operator, PNOC-EDC shall dispose of such waste
     at the Operator's cost, such disposal to be in accordance with applicable
     law. The disposal activities of PNOC-EDC on behalf of Operator shall be
     subjected to a


                                       31


     separate Waste Disposal Agreement between PNOC-EDC and the Operator. This
     disposal shall be in accordance with the requirements of the Environmental
     Compliance Certificate issued in respect of the Power Plant and attached
     hereto as Annex L.

7.3  SURPLUS CONDENSATE

     The Operator shall deliver to PNOC-EDC and PNOC-EDC shall accept for
     disposal at no cost to the Operator all surplus condensed geothermal steam,
     including cooling tower blowdown; provided, however, such surplus
     condensate complies with the specifications set forth in Annex C.

7.4  OTHER GEOTHERMAL WASTE

     Except as set forth in Section 7.2, PNOC-EDC shall be responsible at no
     cost to the Operator for the disposal of all waste products related to the
     Geothermal Fluid and/or steam supplied by PNOC-EDC for the operation or
     testing of the Power Plant. This disposal shall be in accordance with the
     requirements of the Environmental Compliance Certificate issued in respect
     of the Power Plant and attached hereto as Annex L.

7.5  ENERGY MANAGEMENT

     The Operator shall use its reasonable efforts to optimize steam and
     electricity use and shall exercise due diligence in the operation and
     management of main and auxiliary machinery so as to minimize energy
     consumption and waste.

ARTICLE 8 DELIVERY OF CAPACITY AND ENERGY

8.1  OBLIGATIONS OF THE PARTIES

     (a)  The Operator hereby agrees to convert PNOC-EDC's Geothermal Fluid into
          electric energy and PNOC-EDC hereby agrees to sell to NAPOCOR, at the
          Point of interconnection, the Nominated Capacity and energy delivered
          by the Operator to NAPOCOR on behalf of PNOC-EDC during the
          Cooperation Period less any Steamfield Power. PNOC-EDC agrees to pay
          the Operator for the Nominated Capacity and energy delivered by the
          Operator at the Points of Interconnection for NAPOCOR Power and
          Steamfield Power.

     (b)  During the testing prior to the Completion Date of each Plant, the
          Operator shall not receive any payments for Contracted Capacity or
          Nominated Capacity for that Plant but shall receive payments for
          energy as set forth in Section 5.4(g).

     (c)  From and after the Completion Date of each Plant, the Operator shall
          make available electric capacity of that Plant and shall deliver
          energy in accordance with


                                       32


          this Agreement and receive the Capacity Payments and receive or make
          the Energy Fee described in Section 8.3.2.

8.2  METERING

     8.2.1 METER MAINTENANCE AND OWNERSHIP

     (a)  PNOC-EDC shall supply, own and maintain as part of the interconnection
          facilities at the Point of Interconnection and at the point of supply
          of the Steamfield Power, meters and related equipment reasonably
          satisfactory to the Operator for the measurement of electricity.
          Billing under this Agreement shall use the readings of these meters.

     (b)  NAPOCOR may also supply, own and maintain as part of the
          interconnection facilities at the Point of Interconnection, meters and
          related equipment for the measurement of electric power and energy.

     (c)  PNOC-EDC shall supply, own and maintain meters and related equipment
          reasonably satisfactory to the Operator for the measurement of
          Geothermal Fluid flow. These meters and equipment shall be located in
          the Geothermal Fluid piping upstream of the interface point of
          Geothermal Fluid supply from PNOC-EDC to the Operator. Billing under
          this Agreement shall use the readings of these meters

     (d)  The Operator shall supply, own and maintain equipment for the
          measurement, calculation and recording of those parameters required
          for the application of the Correction Curves. The equipment used for
          measuring Atmospheric Conditions shall be located close to the air
          intake of the cooling tower of Plant 4, in accordance with the Cooling
          Tower Institute (CTI) Standards.

     8.2.2 PLANT MONITORING EQUIPMENT

          For the purpose of monitoring the Power Plant's operation, the
          Operator shall make reasonable provisions for the installation of
          other metering and telemetering devices at the generation side of the
          step-up transformers at the Point of Interconnection as part of the
          PNOC-EDC Supervisory Control and Data Acquisition (SCADA) system.

     8.2.3 METER SEALS AND INSPECTION

          PNOC-EDC's meters shall be sealed and the seals shall be broken only
          when the meters are to be inspected or tested by PNOC-EDC. The
          Operator shall be given reasonable notice of such occasions and shall
          have the right to have a representative present at such tests.

                                       33


     8.2.4 METER TESTS

     (a)  PNOC-EDC's electricity meters, installed in pursuance to this
          Agreement, shall be tested by PNOC-EDC at its own expense every six
          months. Other tests may be conducted at any reasonable time upon
          request by either Party, at the requesting Party's expense (subject to
          the next sentence). If the Operator makes such request, the Operator
          shall reimburse said expense to PNOC-EDC within thirty (30) days after
          presentation of a bill therefore, unless such tests demonstrate that
          such meters are not 100% accurate plus or minus one percent (1%), in
          which case PNOC-EDC shall bear the expense for such tests.

     (b)  The Operator's equipment for the calculation and recording of
          theoretical Geothermal Fluid consumption shall be tested by the
          Operator at its own expense, in the presence of PNOC-EDC, every six
          months.

     8.2.5 METER ACCURACY

          Electric metering equipment found to be inaccurate pursuant to Section
          8.2.4 or otherwise shall be repaired, adjusted, or replaced by
          PNOC-EDC such that the accuracy of said equipment shall be within 100%
          plus or minus one percent (1%). Should the inaccuracy exceed plus or
          minus one percent (1%), the correct amount of energy delivered during
          the current and previous Billing Periods shall be estimated by
          PNOC-EDC subject to agreement by the Parties. Adjustments for meter
          inaccuracy shall be made only for the current Billing Period and the
          Billing Period immediately preceding it except when such meter
          inaccuracy is due to fraud.

8.3. TERMS OF PAYMENT

     8.3.1 CAPACITY PAYMENTS

          The total Capacity Payments shall be the sum of the Capital Cost
          Recovery Fee, the Fixed Operating Cost Recovery Fee, and the Service
          Fee to reflect Return on Investment. The Capacity Payments shall be
          computed on the basis of the following formulae:

     (a)  Capital Cost Recovery Fee (A) to be paid in Dollars.

            A = [(CCR x NC)(l - TOH/Nh)] - [(y x O.2)(CCR)(CC - NC)]

     (b)  Fixed Operating Cost Recovery Fee (B) to be paid in Philippine Peso
          and Dollars.

            B = [(OCR x NC)(1 - TOH/Nh)] - [(y x 0.2)(OCR)(CC - NC)]

                                       34


     (c)  Service Fee for Return on Investment (C) stated in Dollars and
          payable, at the option of PNOC-EDC, either in Dollars or in equivalent
          Philippine Pesos using the same day telegraphic transfer selling rate
          for Dollars of the Philippine National Bank at the time of payment. In
          no case shall the Service Fee be lower than 8% of the sum of the
          Capital Cost Recovery Fee and the Fixed Operating Cost Recovery Fee.

            C = {[(SFR x NC) (1 - TOH/Nh)] - [(y x 0.2)(SFR)(CC-NC)]}

          where,

          A      =     Capacity Payment to recover capital cost for the Billing
                       Period.

          B      =     Capacity Payment to recover fixed operating cost for the
                       Billing Period.

          C      =     Capacity Payment to reflect return on investment of the
                       Operator for the Billing Period

          CCR    =     $10.42 per kW per month.

          OCR    =     Ps28.90 per kW per month and $l.97 per kW per month.

          SFR    =     $6.42 per kW per month.

          CC     =     Contracted Capacity, in kW.

          TOH    =     Total Outage Hours in the Billing Period.

          Nh     =     Total number of hours in the Billing Period.

          NC     =     Nominated Capacity for the year, in kW.

          y      =     variable, defined as follows:

          if 0.95 x CC (less than) NC (less than) 1.05 x CC, then y = 0

          otherwise y = 1

     8.3.2 ENERGY FEE

          Energy Fee (D) shall be computed on the basis of the following formula
          and be paid in Philippine Pesos. (Energy Fee will be paid by PNOC-EDC


                                       35


          to the Operator in case D is positive and by the Operator to PNOC-EDC
          in case D is negative.)

                            4
          D        =     (Sigma)  Ui  (Vgi  - Vti) x Zi
                           i=l

          where:

          D        =     Energy Fee for the Billing Period.

          Ui       =     Steam Price for Plant as set forth in Annex I.

          Vgi      =     Cumulative theoretical steam consumption of Plant i
                         during Relevant Hours for the Billing Period in metric
                         tons computed on the basis of the Guaranteed Net Plant
                         Steam Rate for each hour (SRg), using the formula:

                                       n
                         Vgi  =  O  (Sigma)EDij  x  SRgij
                                      j=1

                         where:

                         j     =    Any Relevant Hours during the Billing
                                    Period.

                         n     =    Number of Relevant Hours hours in the
                                    Billing Period.

                         EDij  =    Energy Delivered during the Billing Period
                                    from Plant i in hour j expressed in kilowatt
                                    hours (kWh).

                         Srgij =    Guaranteed Net Plant Steam Rate of Plant i
                                    for each hour j adjusted for variations from
                                    Geothermal Fluid Specifications, Atmospheric
                                    Conditions and load change using the
                                    formula:



                                    Guaranteed Net Plant Steam Rate

                                       36


                         Srgij=     ___________________________________

                                    F1ij x F2ij x F3ij x Faij  x Fgij

                         where:

                         F1ij   =   Steam pressure correction factor per
                                    Correction Curves for Plant i in hour j.

                         F2ij   =   Partial load correction factor per
                                    Correction Curves for Plant i in hour j.

                         F3ij   =   Steam flow correction factor per Correction
                                    Curves for Plant i in hour j.

                         Faij   =   Ambient wet bulb temperature correction
                                    factor per Correction Curves for Plant 4 in
                                    hour j.

                                    Faij = 1 for Plants 1, 2, and 3.

                         Fgij   =   NCG content in steam flow correction factor
                                    per Correction Curves for Plant i in hour j.

          Vti      =     Measured steam consumption of Plant i for the Billing
                         Period in metric tons minus steam consumed by Plant i
                         during Non Relevant Hour in metric tons.

          Non Relevant Hour   =     (a) Any hour in which, for Plants 1, 2 and 3
                                        only, the Plant is in partial load
                                        operation mode (75% of that Plant's
                                        portion of the Contracted Capacity or
                                        less, when the load reduction is
                                        achieved by throttling the supply of
                                        steam to one or more of the Generating
                                        Units which are then delivering
                                        electricity) due to dispatch and: (i)
                                        the steam inlet pressure is different
                                        from the Geothermal Fluid Specifications
                                        by 2% or more; or (ii) the steam outlet
                                        pressure is different from the
                                        Geothermal Fluid Specifications by 3% or
                                        more; or

                                    (b) Any hour in which an event described in
                                        sub-paragraph (b) of the definition of
                                        Outage Hour occurs.

          Relevant Hour       =     Any hour other than Non Relevant Hour.

                                       37


          Zi       =     Variable for Plant i, defined as follows:

                         if 0.95 x Vgi (less than) Vti (less than) 1.05 x Vgi

                         then Zi = 0

                         otherwise Zi = 1

     8.3.3 ESCALATION

          In the Billing Periods commencing January 25th and July 25th of each
          year (using the indices for the prior months of December and June,
          respectively), the amount of :

     (i)  Fixed Operating Cost Recovery Fee (OCR); and

     (ii) Service Fee for Return on Investment (SFR)

          shall be increased proportionately by the increase in the index
          applicable to each component, as specified in Annex K as appropriate,
          as from the levels of such indices prevailing in January 1995.

8.4  BILLING PROCEDURES

     The Operator shall bill PNOC-EDC for the delivery of electric power and
     energy as adjusted on a monthly basis until the termination of this
     Agreement.

     Operator shall arrange its billing schedule in accordance with the billing
     system of PNOC-EDC. The Billing Period shall cover the period from 10:00 AM
     on the twenty-fifth (25) day of the current month to 10:00 AM of the
     twenty-fifth (25th) day of the following month. Any changes in the billing
     system of PNOC-EDC shall be followed by the Operator in billing PNOC-EDC.
     The Operator shall send PNOC-EDC its bills within five (5) days reckoned
     from the last day of the Billing Period. PNOC-EDC shall be required to
     settle its monthly bills to the Operator within thirty (30) days from
     receipt of billing to avoid penalties.

8.5  DISPUTES

     If PNOC-EDC disputes the amount specified in any invoice it shall so inform
     the Operator within seven (7) days following receipt of such invoice. If
     the dispute is not resolved by the due date PNOC-EDC shall pay the
     undisputed amount on or before such date and the disputed amount shall be
     resolved as soon as is reasonably practicable following the due date for
     such invoice.

                                       38


8.6  TAXES

     (a)  All payments made to the Operator pursuant to this Agreement shall be
          paid together with all taxes, duties, fees, levies and other
          assessments to be paid by the Operator in respect of such payments,
          the Power Plant or this Agreement, including "value added taxes" and
          all other taxes but excluding national income taxes assessed after the
          expiration of the tax holiday that would be applicable to the Operator
          if it were granted pioneer enterprise status under the Omnibus
          Investments Code of 1987 (whether or not the Operator is granted such
          pioneer enterprise status) and excluding Philippine withholding taxes
          imposed on the Operator not in excess of fifteen percent (15%) (which
          shall be separately stated in all invoices) in dollars in respect of
          the dollar portion and in pesos in respect of the peso portion and
          each sum payable shall be increased so as to ensure that after
          PNOC-EDC has deducted therefrom any and all taxes or charges required
          to be deducted therefrom by PNOC-EDC there remains a sum equal to the
          amount that would have been payable to the Operator had there been no
          requirement to deduct or withhold such taxes or other charges.

     (b)  PNOC-EDC shall promptly reimburse the Operator upon demand for all
          custom duties, national internal revenue taxes, value added taxes and
          other taxes actually paid by the Operator with respect to the
          importation of capital equipment, or spare parts related to the Power
          Plant, provided that the Operator shall avail of the applicable import
          incentives granted to it by the Board Of Investment.

     (c)  PNOC-EDC shall be responsible for the payment of all taxes imposed by
          the Government on the Operator or the Power Plant during the period of
          construction and Cooperation Period including without limitation,
          value added taxes, real estate taxes in respect of the Site and the
          buildings and other improvements thereon, including the Power Plant,
          but except as set forth in Sections 8.6(a) and (e) or elsewhere in
          this Agreement not (i) corporate 4.7 or 14.3 (or any other applicable
          provisions of this Agreement) make Article 9 applicable or, in the
          reasonable opinion of PNOC-EDC or the income tax on the Operator, (ii)
          taxes on dividends or prof its remitted from the Philippines by the
          Operator, and (iii) reasonable construction and permit fees and
          charges not exceeding $50,000, and (iv) any and all taxes, fees,
          documentary stamps and charges, as well as all costs and expenses,
          incurred and paid by the Operator in connection with or arising from
          any loan or financing agreement, mortgages and security interests. The
          Capacity Payments do not include custom duties, national internal
          revenue taxes, value added taxes and other taxes with respect to the
          importation of capital equipment or spare parts related to the Power
          Plant by the Operator.

                                       39


     (d)  PNOC-EDC will be responsible for covering any new or increased taxes
          due to changes in the Omnibus Investments Code of 1987, the BOI rules
          and future regulations, or due to new or amended laws, rules and
          regulations.

     (e)  The Operator shall apply for and shall use good-faith efforts to
          obtain all exemptions from any such taxes available to the Operator.

8.7  PAYMENT PROCEDURES

     All payments to be made to the Operator under this Agreement shall be paid
     in the applicable currency as specified in this Agreement without any
     deductions for set-off or counterclaims and shall be wire transferred in
     immediately available same Day funds not later than 11:00 AM on the due
     date to the account(s) within or outside the Republic of the Philippines as
     designated by the Operator from time to time by notice given in accordance
     with Subsection 17.3. Without limiting any other rights of the Operator,
     any payments not paid by PNOC-EDC to the Operator when due under this
     Agreement shall bear interest at the rate equal to "one month Libor" for
     Dollar + 3%, determined and compounded daily, from the date due until the
     date paid.

ARTICLE 9 BUYOUT

9.1  BUYOUT CONDITIONS

     If,

     (a)  during the Cooperation Period in the reasonable opinion of PNOC-EDC or
          the Operator, changes in or adoption of new policies, laws and
          regulations, including taxes, or any interpretations thereof of the
          Government adversely affect the operation or maintenance of the Power
          Plant or the after tax cash flow of the Operator, or

     (b)  prior to the Cooperation Period, the provisions of Subsections 3.3(a),
          4.5, 4.6, 4.7 or 14.3 (or any other applicable provisions of this
          Agreement) make this Article 9 applicable or, in the reasonable
          opinion of PNOC-EDC or the Operator, changes in or adoption of new
          policies, laws and regulations, including taxes, or any
          interpretations thereof of the Government adversely affect the
          construction of the Power Plant or the after tax cash flow of the
          Operator; or

     (c)  PNOC-EDC fails to make any payments when due to the Operator under
          this Agreement including without limitation the Capacity Payments and
          the Energy Fees; or

                                       40


     (d)  at any time during the effectivity of this Agreement, PNOC-EDC or
          NAPOCOR is privatized in whole or in part or reorganized, or the
          events defined in Article 20 shall occur,

     then PNOC-EDC or the Operator as the case may be shall notify the other
     Party of the occurrence of any of the foregoing events and the Parties
     shall promptly meet and endeavor to make amendments to the Agreement and
     agree to such amendments. If, after ninety (90) calendar days or sixty (60)
     calendar days in case of Section 9.1(c), since the occurrence of such
     events, no such agreement has been reached, either party may require a
     buyout of the Operator's Power Plant by PNOC-EDC. If either Party
     determines that such an impasse has been reached, that Party may deliver
     written notice to the other Party requiring a buyout under this Article 9
     provided that for purposes of Section 9.1(a) above an adverse effect on the
     Operator's after-tax cash flow (after taxes) for any taxable year, as
     confirmed by an independent auditor agreeable to both Parties and provided
     that in case of Section 9.1(c) above, only the Operator shall have the
     right to require a buyout. If the Parties cannot promptly reach a
     definitive, written agreement embodying the terms of a buyout (notably the
     Buyout Price and payment terms Article 21 shall apply.

9.2  BUYOUT PRICE

     The purchase price (Buyout Price), payable in Dollars, of the Power Plant
     as a result of the buyout shall be

     (a)  If the provisions of Sections 9.1 or 15.4.1 apply prior to the
          Commercial Operation Date of the last Plant, the purchase price
          payable, in United States dollars, shall be an amount equal to the
          aggregate of all the costs and expenses (including without limitation
          accrued interest and other costs incurred in financing the development
          of the Power Plants) incurred by the Operator in connection with the
          performance of its obligations under this Agreement as estimated by an
          independent accountant jointly appointed by the Parties plus an amount
          equal to ten percent (10%) of such aggregate costs.

     (b)  During the Cooperation Period the net present value of the remaining
          stream of payments for the Capacity Payments less Fixed Operating Cost
          Recovery fees for the rest of the Cooperation Period on the basis of
          the last Nominated Capacity, and using an annual discount rate equal
          to the last published Commercial Interest Reference Rate (CIRR) having
          the shortest maturity term for United States dollars published by the
          Organization for Economic Cooperation and Development (OECD) provided
          however that such discount rate shall not exceed nine point two six
          percent (9.26%) per annum.

                                       41


In calculating aggregate costs in accordance with clause (a), amounts disbursed
by lenders shall be prima facie evidence of actual disbursements of costs and
interest accrued (whether or not paid) shall be deemed actual disbursements. The
actual rates of interest payable to lenders shall be the interest rate
attributable to that portion of the Buyout Price.

9.3  PAYMENT TERMS

     (a)  Completion of a buyout pursuant to Sections 9.1 or 15.4.1 shall take
          place on the date that is sixty (60) days following delivery of the
          notice specified in this Agreement (the "Buyout Date") at which time
          (i) PNOC-EDC will pay to the Operator the purchase price calculated in
          accordance with Section 9.2 and payable in United States dollars and
          return all security held by PNOC-EDC in connection with this
          Agreement, including any bid securities, the Performance Security,
          letters of credit and bank guarantees, and (ii) the Operator shall
          transfer to PNOC-EDC all of the Operator's rights, title and interest
          in the Power Plant and shall warrant that upon such buyout the Power
          Plant shall be free from any lien or encumbrance created by the
          Operator.

     (b)  In the event that the provisions of Sections 9.1 or 15.4.1 apply as a
          result of Section 14.3(c), then there shall be deducted from the sum
          payable pursuant to Section 9.2 an amount equal to the value, if any,
          of any insurance proceeds received by the Operator in respect of such
          event of Force Majeure, but only to the extent that such insurance
          proceeds were not used by the Operator in an attempt to correct the
          damage caused by such event of Force Majeure.

9.4  TRANSFER PROVISION

     In respect of any transfer of ownership of the Power Plant pursuant to the
     conditions stated above, the provisions on transfer of ownership in Article
     13 hereof shall apply thereto.

ARTICLE 10 REPRESENTATIONS & WARRANTIES OF THE PARTIES

10.1 CORPORATE EXISTENCE

     (a)  The Operator represents for itself that it is a corporation duly
          organized and existing under and by virtue of the laws of the state of
          Delaware, U.S.A. licensed to do business in the Philippines through
          its branch office and that it has the corporate power and authority to
          execute, deliver and carry out the terms and conditions of this
          Agreement.

                                       42


     (b)  PNOC-EDC represents that it is a wholly-owned subsidiary of the
          Philippine National Oil Company, a corporation created and organized
          under Presidential Decree No. 334, as amended, and that it has the
          power and authority to execute, deliver and carry out the terms and
          conditions of this Agreement.

10.2 AUTHORIZATIONS

     (a)  The Operator represents and warrants for itself that it has taken all
          necessary corporate action to enter into this Agreement and to perform
          its obligations hereunder with the exception that it has not obtained
          final approval of the terms of this Agreement from its Board of
          Directors prior to signing the Agreement. The Operator represents that
          it will use its best efforts to obtain such approval in the shortest
          possible time following signature.

     (b)  PNOC-EDC represents and warrants for itself that it has taken all
          necessary corporate action to enter into this Agreement and to perform
          its obligations hereunder.

10.3 WARRANTY AGAINST CORRUPTION

     The Operator hereby warrants for itself that it or its representative
     acting on behalf of it has not given or promised to give any money or gift
     to any employee or official of PNOC-EDC to influence the decision regarding
     the awarding of this Agreement, nor has it and/or its representatives
     acting on behalf of it exerted or utilized any unlawful influence to
     solicit or secure this Agreement through any agreement to pay a commission,
     percentage, brokerage or contingent fee. The Operator agrees that breach of
     this warranty shall be sufficient ground for the Philippine National Oil
     Company or its affiliate to deduct, at its discretion, such commission,
     percentage, brokerage or contingent fees from the contract price without
     prejudice to it or any person's civil or criminal liability under the
     Anti-Graft Law and other applicable laws.

10.4 NO SOVEREIGN IMMUNITY

     PNOC-EDC acknowledges and agrees that this Agreement, the Accession
     Undertaking and the consent of PNOC-EDC specified in the last sentence of
     Section 19(a) and the transactions contemplated thereby and hereby
     constitute commercial activities of PNOC-EDC in respect of which PNOC-EDC
     is subject to set-off, suit, judgment and execution. PNOC-EDC acknowledges
     and agrees that it does not have, nor is it entitled to, any immunity,
     whether characterized as sovereign immunity or otherwise, from any legal
     proceedings, whether in the United States of America or elsewhere, to
     enforce or collect upon such agreements (including without limitation
     immunity from service of process, immunity from jurisdiction of any court
     or tribunal, and immunity of any of its property


                                       43


     from attachment prior to entry of judgment and from attachment in aid of
     execution, or from execution upon a judgment) in respect of itself or its
     property.

10.5 GEOTHERMAL SERVICES CONTRACT

     PNOC-EDC represents and warrants that it is a party to the Geothermal
     Services Contract, dated May 14, 1981, between PNOC-EDC and the Republic of
     the Philippines, which sets forth the rights of the parties thereto to the
     Site. PNOC-EDC agrees to take any and all actions necessary to ensure that
     the Operator's right to use the Site (and the interests of any secured
     parties or the Operator in the Site) are not adversely affected by the
     rights and obligations of PNOC-EDC under the Geothermal Services Contract,
     as amended from time to time.

ARTICLE 11 INDEMNIFICATION

11.1 OPERATOR INDEMNIFICATION

     (a)  The Operator shall hold free and harmless and defend PNOC-EDC its
          officers, contractors, and employees from any and all claims,
          liabilities and suits for losses and damages to properties of third
          parties arising from the negligence of the Operator in the prosecution
          of the Agreement, except to the extent caused by the negligence, gross
          negligence or willful misconduct of PNOC-EDC.

     (b)  The Operator shall hold free and harmless and defend PNOC-EDC, its
          officers, contractors and employees from liabilities, damages or
          obligations of any nature or kind, including costs and expenses, on
          account of any copyrighted or uncopyrighted composition, secret
          process, patented or unpatented invention, article, method or
          appliance manufactured or used by the Operator in the performance of
          the Agreement.

     (c)  Any fines or other penalties incurred by the Operator or its officers,
          employees or contractors for non-compliance by the Operator, its
          officers, its employees, or contractors with the laws, rules,
          regulations or ordinances of the Republic of the Philippines shall be
          the exclusive responsibility of the Operator.

11.2 PNOC-EDC INDEMNIFICATION

     PNOC-EDC shall hold free and harmless and defend the Operator, its
     officers, employees and contractors harmless against any claims of any
     person who directly or indirectly suffers or is injured by the performance
     by the Operator or its officers, employees or contractors of the
     obligations under this Agreement, including damage or injury as a result of
     an interruption of electricity supply or Geothermal Fluid delivery or
     acceptance


                                       44


     or any other disruption or surge of electricity supply or Geothermal Fluid
     delivery or acceptance (including without limitation interruptions or
     disruptions related to plants operating upstream or downstream from the
     Power Plant) or emissions of H2S prior to the installation of any H2S
     abatement system in accordance with Section 3.3(a), and the Operator's, its
     officers', employees' or contractors' actions or omissions in connection
     therewith, except to the extent caused by the negligence, gross negligence
     or willful misconduct of the Operator.

ARTICLE 12 INSURANCE

12.1 APPLICABLE TERMS

     The Operator shall, at its own expense, obtain and maintain in force
     insurances as specified in Sections 12.2 and 12.3. The Operator shall
     provide to PNOC-EDC evidence of these insurances. In particular, evidence
     of the insurance specified to be held during the Cooperation Period shall
     be furnished prior to commencing initial testing of the Power Plant.

12.2 INSURANCE DURING CONSTRUCTION

     From the applicable date that the exposure to the subject risk being
     insured under such coverage arises until the commissioning of the Power
     Plant, the Operator shall, at own expense, obtain and maintain in force the
     following insurances:

     (a)  All Risks Marine Insurance for the full value of each plant and
          equipment to be imported into the Philippines;

     (b)  All Risks "Builder's Risk Insurance" to cover the full value of the
          entire works from any and all kinds of damages customarily covered;
          and, covering at least the Contractor's All Risk (CAR) Insurance for
          civil works, electro mechanical works and transformer installations.

     (c)  "Third Party Liability Insurance" to cover injury to or death of
          persons including those of PNOC-EDC or physical damage to tangible
          property including those of PNOC-EDC caused by the works or by the
          Operator's vehicles, tools and/or equipment or personnel including its
          subcontractors.

     Such insurance shall provide for at least the following recoveries:

     a)  Bodily Injury     Ps 250,000 per person
                           Ps 250,000 per incident


                                       45


     b)  Property Damage   Ps 1,000,000 per property
                           Ps 1,000,000 per incident

12.3 INSURANCE DURING COOPERATION PERIOD

     From the completion of the Power Plant, the Operator, at its own expense,
     shall keep the Power Plant insured against accidental damage from all
     normal risks and to a level normal for prudent operators of facilities
     similar to the Power Plant. In addition, the Operator shall secure adequate
     insurance cover for its employees as may be required by law.

     The insurance coverages that the Operator shall secure and maintain should
     at least include an All-Risks Insurance (All Natural Perils including
     Fire), and Comprehensive General Liability and a Machinery Breakdown
     Coverage during the last year of the Cooperation Period.

12.4 APPROVAL BY PNOC-EDC

     Certified true copies of insurance policy certificates for all the above
     coverages and official receipts of premium payments on the above shall be
     filed with PNOC-EDC within fifteen (15) working days from the issuance of
     the policies or of the receipts of premium payments and shall be subject to
     PNOC-EDC's approval as to the enumeration of items covered under Sections
     12.2 and 12.3.

12.5 EQUITABLE ADJUSTMENT

     PNOC-EDC agrees that it shall not unreasonably withhold its consent to any
     amendments to this Agreement which are proposed by the Operator in order to
     make equitable adjustments to this Agreement in the event that as a result
     of the application of insurance proceeds (including without limitation such
     application pursuant to a security assignment by the Operator contemplated
     by the last sentence of Section 19(a)) such proceeds are not made available
     to the Operator to repair or restore the Power Plant.

ARTICLE 13 TRANSFER OF OWNERSHIP

13.1. TRANSFER OF TITLE

     Title to the Power Plant shall automatically vest to PNOC-EDC on the
     Transfer Date provided that PNOC-EDC has made (i) a payment equivalent to
     the net present value of the remaining Capacity Payments less Fixed
     Operating Cost Recovery Fees for Plant 4 for the period commencing on the
     Transfer Date until the date which is one hundred twenty (120) months from
     the Commercial Operation Date for Plant 4 on the basis of the last
     Nominated Capacity of Plant 4, and using an annual discount rate equal to
     the last


                                       46


     published Commercial Interest Reference Rate (CIRR) having the shortest
     maturity term for United States dollars published by the OECD, provided,
     however, that such discount rate shall not exceed nine point two six
     percent (9.26%) per annum, and (ii)all other payments required to be made
     by it pursuant to this Agreement, and returned to the Operator all security
     held by PNOC-EDC in connection with this Agreement, including any bid
     securities, the Performance Security, letters of credit and bank
     guarantees. The Operator shall execute such documents as may be necessary
     to effect the transfer of the title to PNOC-EDC, including, without
     limitation, assignments of all contract rights, claims and other rights
     related to the Power Plant that are being assigned by the Operator to
     PNOC-EDC.

13.2. DOCUMENTATION COSTS

     The Parties shall pay their own costs and expenses, including but not
     limited to documentation, fees and taxes, incurred in connection with the
     transfer referred to in Section 13.1 hereof. In no event shall the Operator
     be obligated to pay more than $50,000 under this Section 13.2.

13.3 TRAINING OF PNOC-EDC STAFF

     (a)  During a minimum period of twelve (12) months prior to the Transfer
          Date, the Operator shall provide training in operation and maintenance
          of the Power Plant for PNOC-EDC's staff. This training shall be
          provided in accordance with a program to be agreed between PNOC-EDC
          and the Operator and shall be provided at no cost to PNOC-EDC.

     (b)  PNOC-EDC shall endeavor to offer to the Operator that PNOC-EDC take
          over the employment of such of the Operator's operating and
          maintenance staff employed on the Power Plant at the end of the
          Cooperation Period as PNOC-EDC may, at its sole discretion, consider
          suitable for employment with PNOC-EDC and under such terms and
          conditions of employment as PNOC-EDC shall consider acceptable.

13.4 CONDITION OF POWER PLANT ON TRANSFER

     (a)  Within a period of six (6) months prior to the Transfer Date, the
          Operator shall undertake performance and efficiency testing of the
          Power Plant as specified in Annex F to demonstrate the condition of
          the Power Plant at the Transfer Date.

     (b)  Notwithstanding any testing performed pursuant to Section 13.4(a), the
          Power Plant and all other equipment transferred pursuant to this
          Agreement shall be transferred on an "as is" basis and any warranties
          which would otherwise be


                                       47


          implied by statute or otherwise, including, without limitation,
          warranties as to its fitness for the purpose, the absence of patent or
          inherent defects, description or otherwise of whatsoever nature will
          be excluded; provided, however, that upon transfer the Operator shall
          warrant that, on the Transfer Date, the Power Plant will be free from
          all liens and encumbrances created by the Operator. After the Transfer
          Date, the Operator shall be under no liability whatsoever to PNOC-EDC
          the respect of the operation or otherwise of the Power Plant by
          PNOC-EDC or a person designated by PNOC-EDC and PNOC-EDC shall
          indemnify and keep indemnified the Operator against any liability to
          any person or damage to any property arising from the use or operation
          of the Power Plant after the Transfer Date, provided, however, that
          the Operator shall subrogate or assign to PNOC-EDC any and all rights
          and benefits which it is able to subrogate or assign of any unexpired
          warranties in respect of the building, plant and equipment of the
          Power Plant under applicable laws or otherwise.

ARTICLE 14 FORCE MAJEURE

14.1 FORCE MAJEURE

     (a)  Force Majeure" means any event or circumstance beyond the reasonable
          control of a Party which affects the performance by such Party of its
          obligations hereunder including but not limited to any war, declared
          or not, or hostilities, or belligerence, blockade, revolution,
          insurrection, riot, public disorder, expropriation, requisition,
          confiscation or nationalization, export or import restrictions by any
          governmental authorities, closing of harbors, docks, canals, or other
          assistances to or adjuncts of shipping or navigation of or within any
          place, rationing or allocation, whether imposed by law, decree or
          regulation by, or with the compliance of industry at the insistence of
          any governmental authority, or fire, unusual flood, earthquake,
          volcanic activity, storm, typhoons, lightning, tide (other than normal
          tides), tsunamis, perils of the sea, accidents of navigation or
          breakdown or injury of vessels, accidents to harbors, docks, canals,
          or other assistances to or adjuncts of shipping or navigation,
          epidemic, quarantine, strikes or combination of workmen, lockouts or
          other labor disturbances, or any other event, matter or thing,
          wherever occurring, which shall not be within the reasonable control
          of the Party affected thereby.

     (b)  "Political FM" means any event of Force Majeure to the extent such
          event satisfies the following requirements: war, declared or not, or
          hostilities occurring in or involving the Republic of the Philippines,
          or belligerence, blockade, revolution, insurrection, riot, public
          disorder, expropriation, requisition, confiscation or nationalization
          by or involving and occurring in the Republic of the Philippines,
          export or import restrictions by any governmental authorities,


                                       48


          regional or municipal authorities of or within the Republic of the
          Philippines, closing of harbors, docks, canals, or other assistances
          to or adjuncts of shipping or navigation of or within the Republic of
          the Philippines, rationing or allocation, whether imposed by law,
          decree or regulation by, or with the compliance of industry at the
          insistence of any governmental authority of or within the Republic of
          the Philippines, or any other event, matter or thing, wherever
          occurring, which shall be within the reasonable control of PNOC-EDC or
          the Government.

14.2 EFFECT OF FORCE MAJEURE

     (a)  Neither Party shall be responsible nor liable for nor deemed in breach
          or default hereof or give rise to any claim by any Party against any
          other Party (including without limitation any claims to pay damages or
          penalties for delays) because of their respective failure or omission
          to perform or delay in the performance of their respective obligations
          hereunder due to Force Majeure provided that:

          (i)    The non-performing Party gives the other Party within
                 forty-eight (48) hours or as soon thereafter as reasonably
                 practicable a written notice describing the particulars of the
                 occurrence;

          (ii)   The suspension of performance and the extension of scheduled
                 and guaranteed dates are of no greater scope and of no longer
                 duration than is required by the Force Majeure;

          (iii)  The affected Party uses reasonable efforts to remedy its
                 inability to perform; and

          (iv)   When the affected Party is able to resume performance of its
                 obligations under this Agreement, that Party shall give the
                 other Party written notice to that effect.

     (b)  Notwithstanding anything to the contrary in Section 14.2(a), PNOC-EDC
          shall not be excused from any of its obligations under this Agreement
          including its obligation to make the Capacity Payments, the Energy Fee
          and any other payments to the Operator under this Agreement by the
          occurrence of any Political FM, an Interconnection Failure or any
          condition or event that affects the ability of PNOC-EDC to deliver or
          accept Geothermal Fluid from any Plant as provided under this
          Agreement, including any dispute between PNOC-EDC and NAPOCOR (under
          the Power Purchase Agreement or otherwise) which did not arise from
          any default of the Operator under this Agreement, including
          termination or expiration of the Power Purchase Agreement.

                                       49


     (c)  Notwithstanding Section 8.3.1, and subject to Sections 14.2(b) and
          14.3(c), PNOC-EDC shall be relieved of its obligations to make
          Capacity Payments in respect of any Power Plant which is unable to
          deliver energy due to a Force Majeure affecting that Power Plant for
          the duration of such Force Majeure; provided, however, that in such an
          event the Cooperation Period shall be extended by the same number of
          days as the duration of such Force Majeure.

14.3 REMEDIES

     (a)  Except as otherwise provided, in no event shall any condition of Force
          Majeure extend this Agreement beyond its stated term.

     (b)  The Parties shall consult with each other and take all reasonable
          steps to minimize the losses of or delays incurred by either Party
          resulting from Force Majeure.

     (c)  If any one or more conditions of Force Majeure delay a Party's
          performance for a time period that is: (i) if before the Completion
          Date, greater than ninety (90) days in the aggregate in any twelve
          (12) consecutive months, or (ii) if after the Completion Date, greater
          than (x) ninety (90) consecutive days, or (y) one hundred twenty (120)
          days in the aggregate during any twelve (12) consecutive months where
          the interval between the occurrence of any two (2) consecutive events
          of Force Majeure conditions is not more than six (6) months, either
          Party may, after such period, either (a) suspend this Agreement by
          giving written notice of suspension to the other Party or (b) upon
          thirty (30) days written notice, terminate this Agreement and the
          provisions of Article 9 shall apply. Except that in case of such delay
          as a result of conditions of Force Majeure after the Completion Date,
          the parties agree that during the required thirty (30) day notice
          period as provided for under this Subsection 14.3(c) (ii) (b), each
          party has the right to initiate a consultation between the Parties, to
          take place during such thirty (30) day notice period, in order to try
          and agree on conditions for eventual waiving of the recourse to the
          provisions of Article 9 and provided that if an agreement can not be
          reached during same thirty (30) day notice period, the provisions of
          Article 9 shall apply at the end of such 30 day notice period. (The
          period set forth above for termination shall satisfy the ninety (90)
          day period specified in the second sentence of Section 9.1.

ARTICLE 15 SUSPENSION, TERMINATION AND ABANDONMENT

15.1 TERMINATION PRIOR TO EFFECTIVITY DATE

     (a)  Each Party shall use good-faith efforts to cause the conditions set
          forth in Article 26 to be satisfied as promptly as practicable after
          the date of this Agreement and


                                       50


          each Party will exercise reasonable discretion in electing to
          terminate this Agreement pursuant to this Section 15.1.

     (b)  If the Effectivity Date has not occurred by March 1, 1996, or within
          such longer period as the Parties may agree to, due to a failure of
          the conditions set forth in Section 26.1 to have been satisfied prior
          to such date, if such conditions have not been waived in writing by
          PNOC-EDC, the Parties shall consult with each other in good faith with
          the view to achieving the Effectivity Date. If a mutually acceptable
          arrangement is not reached and implemented within fifteen (15) days
          thereafter, either Party shall have the right to terminate this
          Agreement by giving written notice to the other Party. Upon such
          termination, PNOC-EDC shall return to the Operator all security held
          by PNOC-EDC in connection with this Agreement, including any bid
          securities, letters of credit and bank guarantees, the Operator shall
          reimburse PNOC-EDC for all costs and expenses incurred by PNOC-EDC as
          of the date of and in connection with this Agreement except those of
          PNOC-EDC related to the preparation of the request for proposals and
          the bid evaluation until such termination, and thereafter, neither
          Party shall have any further liability to the other and this Agreement
          shall immediately and automatically become null and void.
          Notwithstanding anything to the contrary in this Agreement, this
          provision shall become effective upon execution of this Agreement and
          shall remain effective until the Effectivity Date.

     (c)  If the Effectivity Date has not occurred by March 1, 1996, or within
          such longer period as the Parties may agree to, due to a failure of
          the conditions set forth in Section 26.2 to have been satisfied prior
          to such date, if such conditions have not been waived in writing by
          the Operator, the Parties shall consult with each other in good faith
          with the view to achieving the Effectivity Date. If a mutually
          acceptable arrangement is not reached and implemented within fifteen
          (15) days thereafter, either Party shall have the right to terminate
          this Agreement by giving written notice to the other Party. Upon such
          termination, PNOC-EDC shall return to the Operator all security held
          by PNOC-EDC in connection with this Agreement, including any bid
          securities, letters of credit and bank guarantees, PNOC-EDC shall
          reimburse the Operator for all costs and expenses incurred by the
          Operator as of the date of and in connection with this Agreement, and
          thereafter, neither Party shall have any further liability to the
          other and this Agreement shall immediately and automatically become
          null and void. Notwithstanding anything to the contrary in this
          Agreement, this provision shall become effective upon execution of
          this Agreement and shall remain effective until the Effectivity Date.

     (d)  If the Effectivity Date has not occurred by March 1, 1996, or within
          such longer period as the Parties may agree to, due to a failure of
          the conditions set forth in


                                       51


          Section 26.3 to have been satisfied prior to such date, if such
          conditions have not been waived in writing by both Parties, the
          Parties shall consult with each other in good faith with the view to
          achieving the Effectivity Date. If a mutually acceptable arrangement
          is not reached and implemented within fifteen (15) days thereafter,
          each Party shall bear its own costs and expenses. In the event,
          however, of the failure of the condition in Section 26.3 (a) (ii)
          other than for reasons due to adverse economic or political conditions
          in the Philippines, and the Parties do not waive the fulfillment of
          this condition, either Party may terminate this Agreement by giving
          written notice to the other Party, and the Operator shall reimburse
          PNOC-EDC for all costs and expenses incurred by PNOC-EDC as of the
          date of and in connection with this Agreement except those of PNOC-EDC
          related to the preparation of the request for proposals and the bid
          evaluation until such termination. Neither Party shall have any
          further liability to the other and this Agreement shall immediately
          and automatically become null and void. Notwithstanding anything to
          the contrary in this Agreement, this provision shall become effective
          upon execution of this Agreement and shall remain effective until the
          Effectivity Date.

     (e)  Costs and expenses referred to in this Section 15.1 shall not include
          any consequential or special damages (including without limitation
          lost profits, lost revenues, increased operating costs or loss of
          revenues from the Power Plant), whether such liability arises in
          contract, warranty, tort (including negligence) or otherwise.

     (f)  The amount of costs and expenses to be reimbursed by either Party to
          the other Party under this Section 15.1 shall be estimated by an
          independent accountant jointly appointed by the Parties and the costs
          associated with such estimation shall be paid by the Party making the
          reimbursement.

15.2 TERMINATION FOR DEFAULT AND SUSPENSION OF DELIVERY

     (a)  PNOC-EDC may temporarily suspend receipt of electricity from the
          Operator for:

          (i)    Tampering with meters by the Operator; or

          (ii)   A condition on the Operator's side of the Point of
                 Interconnection, dangerous to life or property.

                 Such condition shall be subject to confirmation by an
                 independent third party expert satisfactory to both Parties. If
                 so confirmed, PNOC-EDC shall be excused payment of capacity and
                 energy charges for the duration


                                       52


                 of such suspension and such suspension shall cease on
                 rectification of the initiating condition.

     (b)  Subject to the Operator's cure rights set forth in paragraph (c)
          below, upon the material breach by the Operator of any of its
          obligations hereunder, PNOC-EDC may, as its sole remedy, terminate
          this Agreement. Upon such termination, (i) if termination occurs prior
          to the Commercial Operation Date, the entire proceeds of the
          Construction Performance Security shall be forfeited in favor of
          PNOC-EDC and the Operator shall transfer, at no cost, all of the
          Operators right, title and interest in the Power Plants to PNOC-EDC
          and (ii) if termination occurs after the Commercial Operation Date of
          the Power Plant, the Operator shall transfer, at no cost all of the
          Operator's right, title and interest in the Power Plants to PNOC-EDC.
          Upon such termination and forfeiture and/or transfer, as the case may
          be, the Operator shall have no further liability hereunder.

     (c)  No such termination shall be made by PNOC-EDC without thirty (30) days
          (or longer pursuant to this paragraph) prior written notice to the
          Operator. Such notice shall be delivered, personally or by registered
          mail, stating in particular the provision of this Agreement which has
          been violated. If the Operator fails to correct any default within the
          thirty (30) day period from its receipt of the notice, or such period
          exceeding thirty (30) days as reasonably necessary to accomplish such
          cure provided the Operator has commenced curing such default within
          such thirty (30) day period and continues to diligently proceed to
          cure such default until cured, PNOC-EDC may terminate this Agreement;
          provided, however, that any dispute by the Operator in good faith as
          to the correctness of any bill from PNOC-EDC shall not be a cause to
          terminate this Agreement. Any suspension of the deliveries of
          electricity to NAPOCOR on behalf of PNOC-EDC or termination of this
          Agreement upon any authorized grounds shall in no way relieve the
          Operator of its liability to compensate PNOC-EDC for any amounts owed
          by the Operator to PNOC-EDC under this Agreement less any amounts owed
          by PNOC-EDC to Operator under this Agreement.

15.3 SUSPENSION OF PAYMENT

     Subject to the provisions of Section 14, payments under this Agreement,
     upon written request of the Operator, and for a period reasonably required
     to replace or repair the Power Plant, may be suspended if the Operator is
     temporarily unable to produce the electric capacity or energy contracted
     for due to physical destruction of or damage to the Power Plant.

                                       53


15.4 ABANDONMENT

     15.4.1 ABANDONMENT DURING CONSTRUCTION

     The construction of any or all of the Plants shall be deemed abandoned to
     the extent set forth below under any of the following circumstances:

     (a)  If the Operator, through a written notice to PNOC-EDC, terminates
          construction of the Plants other than by reason of Force Majeure or
          for reasons not attributable to the Operator with the intent that such
          termination be permanent;

     (b)  If the Operator fails (other than by reason of Force Majeure or for
          reasons not attributable to the Operator) to place a confirmed order
          for the long lead items in turbo-generators) within one hundred twenty
          (120) days period following the Effectivity Date;

     (c)  If the Operator fails (other than by reason of Force Majeure or for
          reasons not attributable to the Operator) to resume work (i) within
          one hundred twenty (120) calendar days following receipt of insurance
          proceeds relating to, and in amounts sufficient to cover loss or
          damage arising from, a Force Majeure situation affecting one or more
          of the Plants provided, however, that in case of release to the
          Operator of partial insurance proceeds, the Operator shall resume work
          to the extent of the amounts so collected, or (ii) in case no material
          damage to such Plants has occurred, within one hundred twenty (120)
          calendar days following the termination or cessation of such Force
          Majeure situation, provided that a notice of such termination or
          cessation was given by PNOC-EDC to the Operator; or

     (d)  Subject to the provisions of Section 14 and except for reasons not
          attributable to the Operator, if the Commercial Operation Date of any
          Plant does not occur within one hundred fifty (150) calendar days
          following the relevant Guaranteed Commercial Operations Date (as the
          same may be adjusted in accordance with this Agreement or by mutual
          agreement).

     If construction of one or more Plants is deemed abandoned as set forth
     above, PNOC-EDC may terminate this Agreement by giving the Operator not
     less than fifteen (15) days prior written notice of its intention to so
     terminate this Agreement. If the Operator has not commenced work under
     clause (b) or (c), as the case may be, of this Section 15.4.1 before the
     expiration of such fifteen (15) day period, this Agreement shall
     immediately and automatically terminate. Upon such termination, the
     Operator shall forfeit the portion of the Construction Performance Security
     relating to such abandoned Plants to PNOC-EDC and transfer, upon payment by
     PNOC-EDC of a purchase price calculated pursuant to Section 9.2 for the
     Plants not so abandoned, all of the Operator's right, title


                                       54


     and interest in the Power Plant to PNOC-EDC. Upon such termination,
     forfeiture and transfer, the Operator shall have no further liability
     hereunder.

     15.4.2 ABANDONMENT DURING COOPERATION PERIOD

     The Power Plant shall be deemed abandoned during the Cooperation Period
     under the following circumstances:

     (a)  If the Operator, through a written notice to PNOC-EDC terminates
          operation of the Power Plant with the intent that the termination be
          permanent except for (i) Force Majeure or (ii) reasons not
          attributable to the Operator;

     (b)  If the Operator fails to deliver energy to NAPOCOR on behalf of
          PNOC-EDC for a period of one hundred twenty (120) consecutive calendar
          days other than as a result of an Outage, without written notice of
          temporary suspension, except for (i) Force Majeure or (ii) reasons not
          attributable to the Operator; or

     (c)  Subject to the provisions of Section 14 and except for reasons not
          attributable to the Operator, if within one hundred twenty (120)
          calendar days following receipt of insurance proceeds relating to, and
          in an amount sufficient to cover loss or damage arising from, a Force
          Majeure situation, the Operator fails to resume reconstruction of the
          damaged Plants provided, however, that in case of release to the
          Operator of partial insurance proceeds, the Operator shall resume work
          to the extent of the amounts so collected, or, in case no material
          damage to the Plants has occurred; within one hundred twenty (120)
          days following the termination or cessation of a Force Majeure
          situation, the Operator fails to resume delivery of energy to NAPOCOR
          on behalf of PNOC-EDC, provided that a notice of such termination or
          cessation shall have been given by PNOC-EDC to the Operator.

     If the Plants are deemed abandoned during the Cooperation Period as set
     forth above, PNOC-EDC may terminate this Agreement by giving the Operator
     not less than fifteen (15) days prior written notice of its intention to so
     terminate this Agreement. If the Operator has not commenced work under
     clause (b) or (c), as the case may be, of this Section 15.4.2 before the
     expiration of such fifteen (15) day period, this Agreement shall
     immediately and automatically terminate. Upon such termination, the
     Operator shall transfer, at no cost to PNOC-EDC, all of the Operator's
     right, title and interest in the Power Plant to PNOC-EDC. Upon such
     termination and transfer, the Operator shall have no further liability
     hereunder.

                                       55


ARTICLE 16 SEVERAL OBLIGATIONS

     Except where specifically stated in this Agreement to be otherwise, the
     duties, obligations, and liabilities of the Parties are intended to be
     several and not joint or collective. Nothing contained in this Agreement
     shall ever be construed to create an association, trust, partnership, or
     joint venture among the Parties. Each Party shall be liable individually
     and severally for its own obligations under this Agreement.

ARTICLE 17 COMMUNICATIONS AND NOTICES

17.1 COORDINATION MEETINGS

     (a)  Coordination meetings between the Operator, PNOC-EDC and NAPOCOR
          personnel shall be conducted for purposes of clarifying problems that
          may arise during the prosecution of the construction work and
          throughout the Cooperation Period.

     (b)  The site of such meetings shall be mutually agreed upon by all
          Parties. All expenses to be incurred by any Party shall be at such
          Party's own account.

17.2 COMMUNICATIONS AMONG PARTIES

     All orders and formal communications shall be made in writing.

17.3 NOTICES

     Any notice or communication required to be in writing hereunder shall be
     given by: registered mail, telex, telefax, courier or personal delivery.
     Such notice or communication shall be sent to the respective Parties at the
     address listed below. Any notice given by registered mail shall be
     considered sent upon posting and the same shall be considered received upon
     its acknowledgment.

     In the case of Operator to:

     Mr. Nessim Forte
     Resident Manager
     Ormat Inc. Manila Branch
     Solid Bank Building, 8th Floor
     777 Paseo de Roxas
     Makati City 1200
     Metro Manila
     The Philippines
     Telefax No. (632) 812-5638

                                       56


     with a copy to:

     Ormat Inc.
     Attn: Ms. Y. Bronicki President (or such other officer of Operator as may
     be authorized by her in writing and notified to PNOC-EDC)
     980 Greg Street
     Sparks, NV 89431-6039
     U.S.A.
     Telefax No. (702) 356.9039

     In the case of PNOC-EDC to:

     Mr. Nazario C. Vasquez
     President (or such other officer of PNOC-EDC as may be authorized by him in
     writing and notified to the Operator)
     PNOC-Energy Development Corporation
     Merritt Road
     Fort Bonifacio
     Makati City
     Metro Manila
     The Philippines
     Telex No. 22666 EDC PH
     Telefax No. (632)815-2747

     Either Party may, by written notice to the other, change the representative
     or the address to which such notices and communications are to be sent.

ARTICLE 18 NON-WAIVER

     None of the provisions of this Agreement shall be considered waived by
     either Party except when such waiver is given in writing. The failure of
     either Party to insist, in any one or more instances, upon strict
     performance of any of the provisions of this Agreement or to take advantage
     of any of its rights hereunder shall not be construed as a waiver of any
     such provisions or the relinquishment of any such rights for the future,
     but the same shall continue and remain in full force and effect.

ARTICLE 19 ASSIGNMENT

     (a)  Except as set forth in paragraphs (b) or (c) below, the Operator shall
          not assign or transfer any or all of its rights and obligations under
          this Agreement without the written consent of PNOC-EDC. Any such
          assignment or


                                       57


          transfer made without such written consent shall be null and void.
          Consent for such assignment or transfer shall not be unreasonably
          withheld, provided that, in the opinion of PNOC-EDC, the assignee or
          transferee possesses all the legal, financial and technical
          qualifications required to operate and maintain the Power Plant.

     (b)  Notwithstanding the foregoing, the Operator may assign or create a
          security interest over its rights and interests in this Agreement for
          the purpose of financing the design, construction, ownership and
          operation of the Power Plant. PNOC-EDC agrees to execute such consents
          to or acknowledgements of such assignments as the Operator or its
          lenders reasonably require and under such terms and conditions
          acceptable to PNOC-EDC. In addition, PNOC-EDC agrees to reasonably
          cooperate with the Operator's proposed lenders and agrees to amend
          this Agreement as reasonably required by such lenders provided such
          amendments do not materially increase PNOC-EDC's obligations or
          materially decrease PNOC-EDC's rights hereunder.

     (c)  All obligations under this Agreement which the Operator agrees to be
          responsible for hereunder shall be assumed by NEWCO which shall
          undertake to perform the Operator's obligations to perform such work
          and in consideration of which shall be paid all fees payable to the
          Operator under this Agreement. NEWCO, in carrying out such work and
          receiving the fees payable to the Operator under this Agreement, shall
          act on its own behalf and for its own benefit, and not as an agent or
          representative of the Operator. For such purpose, PNOC-EDC, the
          Operator and NEWCO shall execute and deliver the Accession
          Undertaking, upon the effectiveness of which NEWCO shall become a
          party hereto without the need of any further action on the part of the
          Operator and the rights and obligations of PNOC-EDC and the Operator
          under this Agreement shall be transferred and amended in accordance
          with the terms of the Accession Undertaking, as fully as if NEWCO had
          executed this Agreement as amended by the terms of the Accession
          Undertaking.

     (d)  Without limiting the generality of Subsection 19(b), PNOC-EDC shall in
          the consent of PNOC-EDC specified in the Subsection 19(b) acknowledge
          and agree that (i) it has been informed of and consents to the
          execution, delivery and performance of the assignment and security
          agreements between the Operator and the lenders, and the terms thereof
          including any provisions relating to the assignment and application of
          the proceeds of insurance policies described in the Agreement and (ii)
          to give the lenders notice of any default under or breach by the
          Operator of any provision of this Agreement or the Accession
          Undertaking and of any abandonment under Article 15 of this Agreement
          and agree to not terminate this Agreement or the Accession Undertaking
          on the basis of such breach, default or abandonment without providing
          the lenders designated in such consent with at least ninety (90) days
          within which to cure such breach, default or abandonment,


                                       58


          which period will commence on the later of (x) the lenders' receipt of
          the aforesaid notice and (y) expiration of the period provided in this
          Agreement for the cure of such breach, default or abandonment by the
          Operator.

ARTICLE 20 PRIVATIZATION ASSURANCES

     In the event that either of the common stock or other equity interests in
     PNOC-EDC, or NAPOCOR, or any other portion of their assets or business
     activities are sold or otherwise transferred or announced to be sold or
     otherwise transferred, or any merger or other corporate reorganization (or
     a series of any of the above):

          (i)    results in a real or purported assignment of rights or
                 assumption of obligation under this Agreement; or

          (ii)   substantially and adversely changes the net assets, projected
                 profits, projected net cash flow from operations, or otherwise
                 would prompt a reasonable person to conclude that the ability
                 if the relevant entity to duly perform its obligations
                 hereunder on timely basis had been materially and adversely
                 affected;

     then the Operator shall have the right to request reasonable assurances
     from PNOC-EDC, NAPOCOR and the Government that the Operator's rights and
     net economic returns under this Agreement are preserved and that PNOC-EDC's
     ability to fully and satisfactorily comply with its obligations under this
     Agreement is not impaired. If no mutually agreed, written resolution of the
     issues is reached within ninety (90) days, then the provisions of Article 9
     shall apply. Without limiting PNOC-EDC's obligation to make such buyout if
     the ability of PNOC-EDC to fund any resulting buyout is in question,
     PNOC-EDC shall exercise any rights it may have to cause NAPOCOR or other
     third-party to assume PNOC-EDC's rights and obligations under this
     Agreement, paying the proceeds directly to the Operator.

ARTICLE 21 DISPUTE RESOLUTION; JURISDICTION

     (a)  As much as possible, all disputes shall be settled amicably between
          the Parties. The Parties each hereby elect binding arbitration as
          their sole and exclusive remedy for any claim arising under this
          Agreement or in any way related to the Project.

     (b)  The Parties agree that in the event that there is any dispute or
          difference between them arising out of this Agreement or in the
          interpretation of any of the provisions hereof, they shall endeavor to
          meet together in an effort to resolve such dispute by discussion
          between them. But failing such resolution, the Chief executives of


                                       59


          PNOC-EDC and the Operator shall meet to resolve such dispute or
          difference, and the joint decision of such Chief Executives shall be
          binding upon the parties hereto. In the event that a settlement of any
          such dispute or difference is not reached pursuant to this subclause,
          then arbitration under the next following subclause shall apply.

     (c)  Where any dispute is not resolved as provided for in the preceding
          subclause, then the Parties shall enter into binding arbitration
          procedures under the rules of conciliation and arbitration of the
          International Chamber of Commerce. Such arbitration shall take place
          in Paris, France before a tribunal of three arbitrators, one to be
          chosen by each of the Operator and PNOC-EDC, and the third to be
          chosen by the two first selected. The arbitration proceedings shall be
          conducted in the English language.

     (d)  To the extent that in any jurisdiction of (i) PNOC-EDC may claim for
          itself or its assets or revenues immunity from suit, execution,
          attachment or other legal process or (ii) there may be attributed to
          PNOC-EDC or its assets or revenues such immunity (whether or not
          claimed), PNOC-EDC agrees not to claim and unconditionally and
          irrevocably waives such immunity to the full extent permitted by the
          laws of such jurisdiction. PNOC-EDC consents generally in respect of
          the enforcement of any judgment against it in any such proceedings in
          any jurisdiction to the giving of any relief or the issue of any
          process in connection with such proceedings (including, without
          limitation, the making, enforcement or execution against any property
          of PNOC-EDC).

ARTICLE 22 ENTIRE AGREEMENT AND SEPARABILITY

     This Agreement constitutes the entire agreement between the Parties hereto
     and supersedes all prior negotiations and agreements, whether written or
     oral. If any part or parts of this Agreement shall be declared invalid by
     competent courts, the other parts hereof shall not thereby be affected or
     impaired.

ARTICLE 23 GOVERNING LAW

     This Agreement shall be governed and construed in accordance with
     Philippine Law.

ARTICLE 24 LIMITATION LIABILITY

     Except for the penalty provisions in respect of Capacity Payments and
     Energy Fee, any claim under the Bid Security, the Construction Performance
     security and the Operation Performance Security pursuant to this Agreement
     and the penalty described in Annex E, the Operator and its contractors and
     subcontractors shall not be liable for any


                                       60


     consequential or special damages (including without limitation lost
     profits, lost revenue, increased operating costs or loss revenues from the
     Power Plant), whether such liability arises in contract, warranty, tort
     (including negligence) or otherwise. Further, except as expressly set forth
     in this Agreement, the Operator make no warranties or guarantees, express
     or implied, with regard to the Power Plant and PNOC-EDC hereby waives any
     and all implied warranties imposed under applicable Law.

ARTICLE 25 DURATION OF THE AGREEMENT

25.1 TERM

     Except as set forth in Section 15.1, this Agreement shall be effective from
     the Effectivity Date up to the Transfer Date or Termination Date, whichever
     comes first.

25.2 SURVIVABILITY

     Notwithstanding anything to the contrary contained in this Agreement, (i)
     the rights and obligations of the Parties set out in Articles 9, 11, 13,
     15, 21, and 24, shall survive the termination of this Agreement, and (ii)
     the rights and obligations set out in Section 8.3 shall survive the
     termination of this Agreement until all amounts to be paid by PNOC-EDC
     and/or the Operator pursuant to this Agreement have been paid.

ARTICLE 26 EFFECTIVITY

26.1 PNOC-EDC CONDITIONS ON THE OPERATOR

     It shall be a condition precedent to the effectivity of this Agreement that
     the following are submitted by or on behalf of the Operator to PNOC-EDC
     (except for such documents the submission of which is waived by PNOC-EDC).

     (a)  a copy of the license to do business in the Philippines issued to the
          Operator by the Securities and Exchange Commission, as certified by an
          authorized officer of the Operator in a manner satisfactory to
          PNOC-EDC.

     (b)  a copy of the certificate of registration of NEWCO with the Board of
          Investments, as certified by an authorized officer of the Operator in
          a manner satisfactory to PNOC-EDC.

     (c)  a copy of the Articles of Incorporation of NEWCO as registered with
          the Securities and Exchange Commission, certified by the corporate
          secretary of NEWCO in a manner satisfactory to PNOC-EDC.

                                       61


26.2 OPERATOR CONDITIONS ON PNOC-EDC

     It shall be a condition precedent to the effectivity of this Agreement that
     the following are submitted by or on behalf of PNOC-EDC to the Operator
     (except for such documents the submission of which is waived by the
     Operator):

     (a)  copies of the Articles of Incorporation and By-Laws of PNOC-EDC, and
          of resolutions of its Board of Directors authorizing the execution,
          delivery and performance by PNOC-EDC of this Agreement and the
          Accession Undertaking, each certified by the corporate secretary of
          PNOC-EDC in a manner satisfactory to the Operator;

     (b)  a certificate of the corporate secretary of PNOC-EDC confirming that
          all necessary corporate and other approvals and action have been duly
          obtained and taken for the execution, delivery and performance by
          PNOC-EDC of this Agreement and the Accession Undertaking;

     (c)  a true copy of the Power Purchase Agreement executed between PNOC-EDC
          and NAPOCOR, less such sections that PNOC-EDC deems to be of a
          confidential nature and do not relate or pertain to the rights of the
          Operator under this Agreement;

     (d)  copies of resolutions of the Board of Directors of each of PNOC-EDC
          and NAPOCOR authorizing the execution, delivery and performance by
          each of PNOC-EDC and NAPOCOR of the Power Purchase Agreement;

     (e)  confirmation that PNOC-EDC has ownership of or the right to use the
          Site and that the Operator has the right to use the Site from the
          Effectivity Date to the Transfer Date;

     (f)  copies of such consents, licenses, permits, approvals and registration
          by or with the Government may be necessary to ensure the validity and
          enforceability of this Agreement and to permit PNOC-EDC to perform its
          obligations of this Agreement, including

          (i)    a Performance Undertaking executed on behalf of the Republic of
                 the Philippines by the Secretary or any of the Undersecretaries
                 of Finance named in the President of the Republic of the
                 Philippines' Full Powers Authorization, to guarantee the
                 performance by PNOC-EDC of its obligations under this
                 Agreement, such Performance Undertaking to be substantially in
                 the form of Annex K and acceptable to the Operator;

                                       62


          (ii)   an opinion by the Department of Justice confirming the
                 validity, enforceability and binding effect of the Performance
                 Undertaking;

          (iii)  Registration of this Agreement and the Power Plant project with
                 the Bangko Sentral ng Pilipinas ("Central Bank");

          (iv)   the Environmental Compliance Certificate issued by the
                 Department of Environment and Natural Resources for the Leyte
                 project covering the Power Plant;

          (v)    registration of PNOC-EDC as a Block Power Production Facility
                 under Executive Order No. 215;

          (vi)   an opinion by the National Electrification Administration and
                 the Energy Regulatory Board confirming that the operation by
                 the Operator of the Power Plant will not constitute a public
                 utility so as to require a franchise, certificate of public
                 convenience and other similar license;

          (vii)  National Economic Development Authority certification that the
                 project is a high priority economic project for power
                 development which is financed by or through foreign funds;

          (viii) an endorsement by the City or Regional Development Council for
                 the City or Region of the Power Plant project and endorsement
                 of the Power Plant project by the relevant local government
                 unit.

26.3 OTHER CONDITIONS

     It shall be a condition precedent to the effectivity of this Agreement that
     the following is obtained or delivered by:

     (a)  The Operator:

          (i)    Board of Investments registration of NEWCO as a pioneer
                 enterprise, approval for the incentives set forth in Annex J
                 and endorsement to by the Department of Justice for foreign
                 nationals to be employed in supervisory, technical and advisory
                 positions in the Power Plant.

          (ii)   confirmation by the Operator of the availability of financing
                 or funding, at terms and conditions acceptable to the Operator,
                 such as written commitments or letters of intent, in accordance
                 with the practice of each lender and of insurance for the
                 Operator's equity investments.

                                       63


          (iii)  Central Bank approval for the Operator to establish offshore
                 dollar accounts for the purpose of receiving payments under
                 this Agreement and for any foreign currency loans to be made by
                 financial institutions for the purpose of repaying any bridge
                 loans extended to the Operator and for meeting the capital
                 requirements of the Power Plant project.

     (b)  by PNOC-EDC:

          (i)    NEDA Board/Investment Coordinating Committee approval of this
                 Agreement.

26.4 FULFILLMENT OR WAIVER

     (a)  Upon the fulfillment or waiver of each individual condition precedent
          enumerated in Sections 26.1, 26.2 and 26.3, each of PNOC-EDC and the
          Operator shall certify in writing within seven (7) days the
          fulfillment or waiver of such a condition precedent.

     (b)  Upon the fulfillment or waiver of all the conditions precedent
          enumerated in Sections 26.1, 26.2, and 26.3, each of PNOC-EDC and the
          Operator shall certify in writing that all the conditions enumerated
          in Section 26.1 (in the case of PNOC-EDC) and Sections 26.2 and 26.3
          (in the case of the Operator) have been fulfilled or waived.

     (c)  In the event that the BOI denies NEWCO/Operator's registration as a
          pioneer enterprise, including its availment of tax incentives under
          the Omnibus Investments Code of 1987, for causes not attributable to
          the Operator, and the Parties agree to waive such condition under
          Section 26.3, PNOC-EDC shall pay all national income taxes of the
          Operator for a period of six (6) years from the Commercial Operation
          Date.

IN WITNESS WHEREOF, the parties hereto have set their hands this 4th day of
August, 1995 at Makati, Metro Manila, Philippines.


ORMAT INC.                                   PNOC-Energy Development Corporation
(Operator)                                   (PNOC-EDC)

/s/ Jacob Menahem                            /s/ Nazario C. Vasquez
--------------------------------             -----------------------------------
By:  JACOB MENAHEM                           By:  NAZARIO C. VASQUEZ
Its: Vice President                          Its: President


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                            Signed in the Presence of


----------------------------------            ----------------------------------



                                       65



                                 ACKNOWLEDGMENT

                           Republic of the Philippines

     BEFORE ME this 4th day of August 1995, in Makati, M.M., Philippines
personally appeared NAZARIO C. VASQUEZ with Res. Cert. No. 9598088 issued on
March 8, 1995 at Mandaluyong, M.M.; and JACOB MENAHEM WITH Passport No. 404937
issued on 28.9.93 at Belgigue representing their respective companies; known to
me to be the same persons who executed the foregoing agreement and they
acknowledged to me that the same is their free corporate act and deed.

     This instrument, consisting of 314 pages, including all annexes and page on
which this acknowledgment is written has been signed above their respective
names on page 66 by the parties and their witnesses and initialed on the left
hand margin of the other pages.

     IN WITNESS WHEREOF, I have hereunto set my hand, the day, year and place
above written.

                                  NOTARY PUBLIC

                       My commission ends on Dec. 31, 199_

Doc. No.
Page No.
Book No.
Series of 1995


----------------------------
Jose Jesus G. Laurel
Notary Public
until Dec. 31, 1995
PTR No. 2491927
issued at Makati, Metro Manila
on January 3, 1995




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