LOAN NO: 3/65
AGREEMENT dated 8 Rabi Al-Thani
1398 A.H., corresponding to 17th March, 1978 A.D. between.
1 THE REPUBLIC OF CHINA (herein-after called the Borrower) repr-
esented by His Excellency W.H. Fei, Minister of Finance.
and
2 SAUDI FUND FOR DEVELOPMENT, Riyadh, Kingdom of Saudi Arabia (
hereinafter called the Fund) represented by His Excellency Dr.
Mahsoun B. Jalal, Vice Chairman of the Board of Directors of
the Fund and Managing Director
PREAMBLE
WHEREAS the Borrower has requested the Fund to grant it a loan
to assist in the financing of the Telecommunication Developme-
nt Project described in Schedule (2) to this Agreement (herei-
nafter called the Project.).
WHEREAS the purpose of the Fund is to assist developing countri-
es in developing their economies and to provide them with loans
necessary for the excution of their development projects and pr-
ograms.
WHEREAS the Fund is convinced of the importance of the Project
and its beneficial effects for the economic development of the
friendly people of the Republic of China; and
WHEREAS the Board of Directors of the Fund has agreed, in view
of the foregoing, by its Resolution No. 6/23-25/1/1398 A.H. to
grant the Borrower a loan on the terms and conditions set forth
in this Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE Ⅰ
General Conditions; Definitions
Section 1.01. The parties to this Agreement accept all the prov-
isions of the General Conditions Applicable to Loan Agreements
of the Fund issued by Resolution of the Board of Directors of t-
he Fund No. 11/14 dated Rajab 29, 1396 A.H. Corresponding to Ju-
ly 26, 1976 A.D., with the same force and effect as if they were
fully set forth herein (said General Conditions Applicable to L-
oan Agreements of the Fund being hereinafter called the General
Conditions).
Section 1.02. Wherever used in this Agreement, unless the conte-
xt otherwise requires, the several terms defined in the General
Conditions have the respective meanings therein set forth and t-
he following additional terms have the following meanings:
(a) "Directorate" means the Directorate General of Telecommunic-
ations established pursuant to the Borrower's Telecommunica-
tion Act 1985, as amended to date, or may successor to that
Directorate acceptable to the Fund.
(b) "Subsidiary Loan Agreement" means the Agreement to be enter-
ed into between the Borrower and the Directorate pursuant to
the provisions of Section 3.01 (b) of this Agreement, as the
same may be amended from time to time.
ARTICLE Ⅱ
The Loan
Section 2.01. The Fund agrees to lend to the Borrower on the te-
rms and conditions in the Loan Agreement set forth or referred
to, an amount of One hundred Five million (105,000,000) Saudi R-
iyals.
Section 2.02. The Borrower shall be entitled to withdraw the am-
ount of the Loan from the Loan Account in accordance with the p-
rovisions of Schedule (1) to this Agreement, as such Schedule m-
ay be amended from time to time by agreement between the Fund a-
nd the Borrower, for expenditures made (or, if the Fund shall so
agree, to be made) in respect of the reasonable cost of goods a-
nd services required for the Project and to be financed out of
the proceeds of the Loan.
Section 2.03. The Borrower shall apply the proceeds of the Loan
exclusively to financing the reasonable cost of the goods requi-
red for the carrying out of the Project. The specific goods to
be financed out of the proceeds of the Loan and the methods and
procedures for the procurement thereof, shall be determined by
agreement between the Fund and the Borrower subject to modifica-
tion by further agreement between them. The Borrower shall obta-
in the Fund's approval before awarding the contracts to be fina-
nced out of the proceeds of the Loan and before effecting any m-
aterial modification thereto in the future.
Section 2.04. The Closing Date shall be 30th June 1982 or such
later date as shall be agreed between the Fund and the Borrower.
Section 2.05. The Borrower shall pay a loan charge at the rate
of Five per cent (5%) per annum on the principal amount of the
loan withdrawn and outstanding from time to time.
Section 2.06. Loan Charge and other charges shall be payable se-
mi-annually on 15th March and 15th September in each year.
Section 2.07. The term of the loan shall be twenty years includ-
ing a five-year grace period. The Borrower shall repay the prin-
cipal amount of the loan in accordance with the Amortization Sc-
hedule set forth in Schedule (3) to this Agreement.
ARTICLE Ⅲ
Execution of the Project
Section 3.01 (a) The Borrower shall carry out the Project throu-
gh the Directorate with due diligence and efficiency and in con-
formity with appropriate engineering, financial and administrat-
ive practices and shall provide or cause the Directorate to pro-
vide, promptly as needed, the funds, facilities, services and o-
ther resources required for this purpose.
(b) The Borrower shall relend the proceeds of the Loan to the D-
irectorate under a subsidiary loan agreement to be entered
into between the Borrower and the Directorate, under terms
and conditions which shall have been approved by the Fund.
The Subsidiary Loan Agreement shall provide for the executi-
on by the Directorate of all the obligations and conditions
which the Borrower undertakes by virtue of the provisions of
this Agreement to cause the Directorate to comply with.
(c) The Borrower shall exercise its rights under the Subsidiary
Loan Agreement in such manner as to protect the interests of
the Borrower and the Fund and to accomplish the purposes of
the Loan, and except as the Fund shall otherwise agree, the
Borrower shall not assign, nor amend, abrogate, or waive the
Subsidiary Loan Agreement or any provision thereof.
(d) In addition to be proceeds of the Loan, the Borrower shall
make available to the Directorate, promptly as needed, all
other funds which shall be required for the carrying out of
the Project (including any funds that may be required to me-
et any increase in cost beyond the estimated cost of the pr-
oject at the time of signing this Agreement), all such sums
to be made available on terms and conditions acceptable to
the Fund.
Section 3.02. The Borrower shall cause the Directorate to insure
, or make adequate provision for the insurance of, the imported
goods to be financed out of the proceeds of the Loan against ha-
zards incident to the acquisition, transportation and delivery
thereof to the place of use or installation, and for such insur-
ance any indemnity shall be payable in a currency freely usable
by the Directorate to replace or repair such goods.
Section 3.03. The Borrower shall ensure that all goods and serv-
ices financed out of the proceeds of the Loan shall be used exc-
lusively for the project.
Section 3.04. The Borrower shall cause the Directorate to furni-
sh to the Fund, promptly upon their preparation, the plans, spe-
cifications, reports, contract documents and construction and p-
rocurement schedules for the Project, and any modifications the-
reof or additions thereto, in such detail as the Fund shall req-
uest.
Section 3.05. (a) The Borrower shall cause the Directorate (i)
maintain records adequate to record the progress of the Project
(including the cost thereof) and to identify the goods and serv-
ices financed out of the proceeds of the Loan, and to disclose
the use thereof in the project; (ii) enable the Fund's accredit-
ed representatives to visit the facilities and construction sit-
es included in the Project and to examine the goods financed out
of the proceeds of the loan and any relevant records and docume-
nts; and (iii) furnish to the Fund all such information as the
Fund shall request concerning the Project, the expenditure of t-
he proceeds of the Loan and the goods and services financed out
of such proceeds.
(b) The Borrower shall cause the Directorate to enable the Fund-
's representatives to examine the plants, installations, si-
tes, works, buildings, property and equipment of the Direct-
orate and any relevant records and documents.
ARTICLE Ⅳ
Particular Covenants
Section 4.01. The Borrower shall cause the Directorate to have
at all times qualified and experienced management and staff.
Section 4.02. The Borrower shall cause the Directorate to:
(i) operate and maintain its equipments and property, and from
time to time make all necessary renewals and repairs thereof
, all in accordance with appropriate engineering standards
and telecommunication practices;
(ii) take all steps necessary to maintain and renew all rights,
powers privileges and franchises which are necessary or us-
eful in the conduct of its business; and
(iii) at all times carry on its operations and maintain its fin-
ancial position in accordance with appropriate business p-
ractices.
Section 4.03. The Borrower shall cause the Directorate to take
out and maintain with responsible insurers, or make other provi-
sion satisfactory to the Fund for insurance, against such risks
and in such amounts as shall be consistent with appropriate bus-
iness practices.
Section 4.04. The Borrower shall cause the Directorate to maint-
ain records adequate to reflect in accordance with consistently
maintained appropriate accounting practices its operations and
financeal condition.
Section 4.05. The Borrower shall cause the Directorate to: (i)
have its accounts and financial statements (balance sheets, sta-
tements of income and expenses and related statements) for each
fiscal year audited, in accordance with appropriate auditing pr-
iciples consistently applied, by independent auditors acceptable
to the Fund; (ii) furnish to the Fund as soon as available, but
in any case not later than six months after the end of each such
year, (A) certified copies of its financial statements for such
year as so audited and (B) the report of such audit by said aud-
itors, of such scope and in such detail as the Fund shall have
requested; and (iii) furnish to the Fund such other information
concerning the accounts and financial statements of the Directo-
rate and the audit thereof as the Fund shall from time to time
request.
Section 4.06.
(a) The Borrower and the Fund confirm their agreement that no o-
ther external debt shall enjoy any priority over the Loan by
way of a lien created on governmental assets. To that end,
the Borrower undertakes that, except as the Fund shall othe-
rwise agree, if any lien shall be created on any assets of
the Borrower as security for any external debt, such lien w-
ill ipso facto and at no cost to the Fund equally and ratab-
ly secure the payment of the principal of the Loan, the Loan
charge and other charges on the Loan and that in the creati-
on of any such lien express provision will be made to that
effect.
(b) The undertaking provided for in paragraph (a) of this Secti-
on shall not apply to:
(i) any lien created on property, at the time of purchase the-
reof, solely as security for the payment of the purchase
price of such property;
(ii) any lien on commercial goods to secure a debt maturing n-
ot more than one year after the date on which it is orig-
inally incurred and to be paid out of the proceeds of the
sale of such commercial goods; or
(iii) any lien arising in the ordinary course of banking trans-
actions and securing a debt maturing not more than one y-
ear after its date.
(c) As used in this Section, the term "governmental assets" mea-
ns assets of the Borrower, of any political or administrati-
ve subdivision thereof and of any entity owned or controlled
by, or operating for the account or benefit of, the Borrower
or nay such subdivision, including gold and foreign exchang-
e assets held by any institution performing the functions of
a central bank or exchange stabilization fund, or similar f-
unctions for the Borrower.
ARTICLE Ⅴ
Remedies of the Fund
Section 5.01. For the purposes of Section 6.02 of the General C-
onditions, the following additional event is speechified pursua-
nt to paragraph (f) thereof, namely that:
The Telecommunication Act of 1958 A.D. referred to in Subsection
(a) of Section 1.02 of this Agreement has been amended, suspend-
ed, abrogated, repealed or waived in such a way as to, material-
ly and adversely affect the ability of the Directorate to carry
out and operate the Project.
Section 5.02. For the purposes of Section 7.01 of the General C-
onditions, the following event is specified pursuant to paragra-
ph (d) thereof, namely, that the event specified in Section 5.01
of this Agreement shall occur.
ARTICLE Ⅵ
Effective Date; Termination
Section 6.01. The following event is specified as an additional
condition to the effectiveness of the Loan Agreement within the
meaning of Section 12.01 (b) of the General Conditions, namely,
that the execution and delivery of the Subsidiary Loan Agreement
on behalf of the Borrower and the Directorate, respectively, ha-
ve been duly authorised or ratified by all necessary government-
al and corporate action.
Section 6.02. The following is specified as an additional matte-
r, within the meaning of Section 12.02 (b) of the General Condi-
tions, to be included in the legal opinion or opinions to be fu-
rnished to the Fund, namely, that the Subsidiary Loan Agreement
has been duly authorized or ratified by, and executed and deliv-
ered on behalf of, the Borrower and the Directorate, respective-
ly, and is legally binding upon the Borrower and the Directorate
in accordance with its terms.
Section 6.03. The date June 15,1978 is hereby specified for the
purposes of Section 12.04 of the General Conditions.
ARTICLE Ⅶ
Representative of the Borrower; Addresses
Section 7.01. The Minister of Finance of the Borrower is design-
ated as representative of the Borrower for the purposes of Sect-
ion 11.03 of the General Conditions.
Section 7.02. The following addresses are specified for the pur-
poses of Section 11.01 of the General Conditions:
For the Fund:
The Saudi Fund for Development
P.O. Box 5711
Riyadh
Kingdom of Saudi Arabia.
Cable Address:
SAUDI FUND FOR DEVELOPMENT
RIYADH
KINGDOM OF SAUDI ARABIA
Telex:
20145 SUNDOQ SJ
For the Borrower:
Ministry of Finance
2Al Kuo West Road
Taipei, Taiwan
Republic of China
Telex:
11840 TAIPEI
In WITNESS WHEREOF, the parties hereto, acting through their re-
presentative thereunto duly authorized, have caused this agreem-
ent to be signed in their respective names in Taipei, Republic
of China, as of the day and year first above written, in two cu-
nterparts in the Arabic language, each of which shall be an ori-
ginal.
FOR
THE REPUBLIC OF CHINA
(Signed)
W.H. FEI
Minister of Finance and Authorized Representative
FOR
THE SAUDI FUND FOR DEVELOPMENT
(Signed)
MAHSOUN B. JALAL
Vice Chairman and
Managing Director
SCHEDULE 1
Withdrawal of the Proceeds of the Loan
A. The table below sets forth the Categories of items to be fin-
anced out of the proceeds of the Loan, the allocation of the
amounts of the Loan to each Category and the percentage of e-
xpenditures for items so to be financed in each Category:
───────────────────────────────
Amount of the Loan % of
Allocated Expenditures
(Expressed in Saudi Riyals) to be
Category Financed
───────────────────────────────
1. Installation of Metaconta 10C 38,220,000 100% of Foreign
Electronic Switching Equipme- Expenditure
nt of 210,000 Lines in Taich-
ung, Kaohsuing and Tainan
(Under Part A of the Project)
2. Expansion of Toll and Rural 64,750,000 100% of Foreign
Telephone Circuits (Under Pa- Expenditure
rt B of the Project)
3. Contingencies 2,030,000
───────────────────────────────
Total: 105,000,000
───────────────────────────────
B. For the purpose of this Schedule, the term "foreign expendit-
ures" means expenditures in the currency of any country other
than the Borrower and for goods or services supplied from the
territory of any country other than the Borrower.
c. Notwithstanding the provisions of paragraph A above no withd-
rawal shall be made in respect of payments made for:
(a) Expenditures prior to the date of this Agreement.
(b) taxes levied by, or in the territory of, the Borrower on
goods or services, or on the importation, manufacture, p-
rocurement or supply thereof.
SCHEDULE 2
Description of the Project
The Project is a part of the Directorate's 1975-81 Medium-Range
Telecommunications Development Plan, described in the Annex to
this Schedule, for expansion of local and long distance telecom-
munication facilities.
The project consists of the following parts:
PART A:
Installation of Metaconta 10C Electronic Switching Equipment of
210,000 lines in:
1. Taichung 70,000 lines
2. Kaohsiung 120,000 lines
3. Tainan 20,000 lines
PART B:
Expansion of Toll and Rural Telephone Circuits
1. Expansion of Microwave System, 80 sets.
2. Expansion of Rural Telephone System, 40 HOPS.
3. Installation of digital coaxial cable system between Hsinchu
and Kaohsiung, 8 tube system.
4. Telephone management and services system.
The total cost of the project is estimated at US$ 94.78 million
equivalent to SR 331.73 million.
The project is expected to be completed by December 1981.
ANNEX TO SCHEDULE 2
Medium-Range Telecommunication
Development Plan
June 1975-June 1981
A. LOCAL TELEPHONE SERVICE
Installation of 2,049,100 lines of local telephone exchange,
and 2,680,000 pairs of local telephone line plant as well as
an addition of 1,443,900 subscribers and 2,185,000 telephone
stations. The breakdown will be as follows:
───────────────────────────────
Added Added Line Added Added
Exchange's Plant Subscribers Telephone
Area Lines (Pairs) Stations
───────────────────────────────
Taipei 803,300 1,171,000 629,900 958,200
Kaohsiung 290,000 416,000 220,700 330,900
Taichung 211,000 325,000 175,400 261,600
Other 744,800 768,000 417,900 634,300
───────────────────────────────
Total 2,049,100 2,680,000 1,443,900 2,185,000
───────────────────────────────
B. NATIONAL LONG-DISTANCE SERVICE
Installation of 36,566 domestic toll telephone circuits and
42,290 lines of toll exchange.
C. INTERNATIONAL SERVICE
Establishment of the third earth station for satellite commu-
nication and submarine cable system, to increase 1,115 circu-
its for international communications, 3,000 lines of interna-
tional automatic telephone exchange and 23,500 lines of inte-
rnational telex exchange.
D. MISCELLANEOUS ITEMS
1. Land acquisition of 0.475km
2. Buildings
3. Power Supply
4. Air Conditioning Equipment
5. Vehicles
6. Others
SCHEDULE 3
Amortization Schedule
───────────────────────────
Allotment No. Date of Payment of Principal
Payment (Expressed in Saudi Riyals)
───────────────────────────
1. March 15, 1983 3,500,000
2. September 15, 1983 3,500,000
3. March 15, 1984 3,500,000
4. September 15, 1984 3,500,000
5. March 15, 1985 3,500,000
6. September 15, 1985 3,500,000
7. March 15, 1986 3,500,000
8. September 15, 1986 3,500,000
9. March 15, 1987 3,500,000
10. September 15, 1987 3,500,000
11. March 15, 1988 3,500,000
12. September 15, 1988 3,500,000
13. March 15, 1989 3,500,000
14. September 15, 1989 3,500,000
15. March 15, 1990 3,500,000
16. September 15, 1990 3,500,000
17. March 15, 1991 3,500,000
18. September 15, 1991 3,500,000
19. March 15, 1992 3,500,000
20. September 15, 1992 3,500,000
21. March 15, 1993 3,500,000
22. September 15, 1993 3,500,000
23. March 15, 1994 3,500,000
24. September 15, 1994 3,500,000
25. March 15, 1995 3,500,000
26. September 15, 1995 3,500,000
27. March 15, 1996 3,500,000
28. September 15, 1996 3,500,000
29. March 15, 1997 3,500,000
30. September 15, 1997 3,500,000
───────────────────────────
105,000,000
───────────────────────────