Circular No. 114/1998/TT-BTC guides the implementation of the loan agreement with Spain for the expansion project of Song Con Sugar Factory in Nghe An Province.

CIRCULAR

Guidelines for Implementing the Spanish Loan Agreement for the Investment Project to Expand the Song Con Sugar Factory in Nghe An Province

扩建宋聪糖厂，宁安省

Pursuant to Decree No. 87/CP dated August 5, 1997 of the Government promulgating the Regulations on Management and Use of Official Development Assistance (ODA) sources;

Pursuant to Decision No. 306/TTg dated May 9, 1997 of the Prime Minister on investment to expand the Song Con Sugar Factory in Nghe An Province (hereinafter referred to as the "Project");

Pursuant to the Preferential Loan Agreement between the Ministry of Finance and the Spanish National Credit Institution (hereinafter referred to as "ICO") signed on July 10, 1998, with a value of 6.8 million USD (hereinafter referred to as the "Government Loan Agreement") to finance 50% of the value of the Equipment Supply Contract for the Project;

Pursuant to Circular No. 415/CP-KTN dated April 16, 1998 of the Government assigning the Ministry of Finance to guarantee the commercial loan of 6.8 million USD under the Credit Agreement signed on June 2, 1998 (hereinafter referred to as the "Credit Agreement") between the Song Con Sugar-Wine Enterprise, Nghe An Province and the Spanish Bank Bilbao Vizcaya, S.A. (hereinafter referred to as "BBV") to finance the remaining 50% of the value of the Equipment Supply Contract for the Project;

Pursuant to Circular No. 749/CP-QHQT dated July 8, 1998 of the Government approving the contents of the Government Loan Agreement and the mechanism for rescheduling the preferential loan under the Government Loan Agreement.

The Ministry of Finance hereby provides guidance as follows:

1. These regulations guide the screening of HIV testing for blood transfusion, blood product transfusion, and the implementation of assisted reproductive techniques and organ transplantation at state-owned, private, and public health facilities (hereinafter referred to as health facilities).

1. The preferential loan from the Spanish Government through ICO is a foreign debt of the Government. Therefore, the entire loan amount will be recorded in the state budget. The Ministry of Finance is responsible for repaying the debt to the foreign side when due.

The project investor (Song Con Sugar-Wine Enterprise, Nghe An Province) is responsible for using the capital for its intended purpose in accordance with the conditions stipulated in the Government Loan Agreement and returning it to the state budget according to the terms of the rescheduling loan agreement signed with the State Investment Development Administration - Ministry of Finance.

The Investment Development General Department is responsible for implementing the relending and recovering the debt from the project owner and shall enjoy the relending fee for state credit capital according to current regulations.

2. The commercial loan from BBV is a corporate loan (the Song Con Sugar-Wine Enterprise, Nghe An Province directly borrows from BBV) under the principle of self-borrowing and self-responsibility for repayment according to the conditions committed in the Credit Agreement. This Credit Agreement is guaranteed by the Ministry of Finance (government guarantee).

1. Provisions on HIV screening tests:

The investment project to expand the Song Con Sugar Factory with the value of imported equipment and technology under the Commercial Contract signed on December 2, 1997 (hereinafter referred to as the "Contract") between the Song Con Sugar-Wine Enterprise, Nghe An Province and the Spanish BBV Trade Group, S.A. is 13.6 million USD and will be financed from two sources:

- Preferential loan from the Spanish Government of 6.8 million USD (50%).

- Commercial loan of 6.8 million USD (50%) under the conditions of the OECD, with government guarantee.

The value of the aforementioned Contract includes the credit insurance fee paid to the Spanish Export Credit Insurance Agency (CESCE) for the commercial loan portion.

1. Regarding the Government Loan Agreement:

The conditions for the Government Loan Agreement are as follows:

- Loan amount: 6.8 million USD. The loan proceeds will be used to pay 50% of the Contract value.

- Loan term: 30 years, including a 10-year grace period starting from the date the Government Loan Agreement becomes effective.

- Interest rate: fixed at 0.3% per annum.

- Commitment fee: 0.25% per annum on the undrawn balance, calculated from four months after the Government Loan Agreement becomes effective, payable every six months.

- Management fee: 0.15% of the loan amount, payable once on the first interest payment date.

- Penalty interest: 5% per annum.

The Ministry of Finance (State Investment Development Administration) will reschedule the loan portion under the Government Loan Agreement to the Project Investor under the following specific conditions:

- The Project Investor must accept the debt from the State Investment Development Administration (in USD) for the entire loan amount under the Government Loan Agreement.

- Rescheduling interest rate: 1% per annum, which already includes the rescheduling fee collected by the State Investment Development System of 0.2% per annum and other fees outside the country as stipulated in the Government Loan Agreement. The Ministry of Finance will directly transfer the fees collected according to the Government Loan Agreement (commitment fee, management fee) to the foreign side, then recover them from the Project Investor through the above rescheduling interest rate.

- Rescheduling term: 20 years, including a 10-year grace period starting from the date the Government Loan Agreement becomes effective.

- Late payment penalty interest rate will be specifically defined in the rescheduling loan agreement signed with the Project Investor by the State Investment Development Administration, but not less than the penalty interest rate stipulated in the above Government Loan Agreement, and the late payment period shall not exceed six months.

2. For the Credit Agreement guaranteed by the Ministry of Finance:

The conditions for the Credit Agreement are as follows:

- Loan amount: 6.8 million USD.

- Interest rate: fixed at 6.58% per annum.

- Loan term: 8.5 years, starting repayment of principal six months after signing the Provisional Acceptance Certificate.

- Commitment fee: 0.2% per annum on the undrawn balance, calculated from the date the Credit Agreement becomes effective, and payable every six months.

- Management fee: 0.4% of the loan amount, payable once within 30 days after signing the Credit Agreement.

- Penalty interest: 1% per annum added to the above interest rate.

3. Guidelines for withdrawing funds and repaying debts:

a. Counterpart funds:

The Project falls under the category of rescheduling Official Development Assistance (ODA) loans from the Spanish Government according to the Prime Minister's Investment Decision (Article 1, Decision No. 306/TTg dated May 9, 1997). Domestic counterpart funds include domestic loans under the current regime, the Project Investor's own capital, and funds raised from other sources. Therefore, according to Decree No. 87/CP dated August 5, 1997 of the Government, the Project Investor is responsible for balancing the annual counterpart fund plan (including the portion for tax payments) to implement the project.

b. Drawing down the Spanish loan:

The Project Investor bases on the Government Loan Agreement, the Credit Agreement, and the progress of the Commercial Contract signed to develop the annual foreign capital withdrawal plan to send to the Ministry of Finance.

For the portion of the loan under the Government Loan Agreement, the Ministry of Finance will send a Payment Authorization to ICO to withdraw funds from the Spanish Government's Development Aid Fund (FAD) to repay BBV.

For the portion of the loan under the Credit Agreement, the Project Investor, who is also the Borrower under this Agreement, will send a Documentary Payment Order to BBV.

Payment to the Supplier will be made from two sources of loans based on the set of documents presented by the Supplier to BBV in accordance with the Commercial Contract. Based on the Uniform Customs and Practice for Documentary Credits (UCP 500 version issued in 1993 by the International Chamber of Commerce), BBV is responsible for carefully examining the set of documents and sending to ICO a Certification confirming that the documents comply with the Commercial Contract to withdraw funds from the Government Loan Agreement, and/or BBV will directly provide a loan for payment according to the Documentary Credit Drawdown Order under the Credit Agreement. The specific procedures are as follows:

+ Advance payment at a rate of 15% of the Contract value:

After reviewing the Supplier's documents, BBV will issue a Payer Bank Certification for ICO to withdraw funds from the Government Loan Agreement.

The Project Owner needs to request BBV to provide a bank guarantee for the advance payment of 15% of the Contract value mentioned above.

+ Payment at a rate of 15% of the Contract value after the Supervisory Agency reports confirming that the Spanish Supplier has placed orders for at least 50% of the Contract value with production units, BBV will withdraw funds from the Credit Agreement to pay this amount.

The Project Owner needs to request the Supplier to designate an international consulting supervisory company as the Supervisory Agency to conduct inspections and supervision of the Contract implementation.

+ Payment for equipment supply according to each delivery shipment at a rate of 65% of the invoice value:

Based on the payment order for documentary credits issued by the Project Owner, BBV will act on behalf of the Project Owner to directly pay the Supplier based on commercial invoices and other valid delivery documents presented by the Supplier in accordance with the Commercial Contract. The payment will be sourced from the Government Loan Agreement and the Credit Agreement in a ratio of 50/50.

+ Payment at a rate of 5% of the Contract value upon completion of the project:

Based on the Provisional Acceptance Certificate signed between the Project Owner and the Supplier and confirmed by the TECNOAZUCAR Design Company (or the aforementioned Supervisory Agency), BBV will also process the withdrawal of funds to pay the Supplier in a ratio of 50/50 from the aforementioned loan sources.

Prior to making the above payment of 5%, the Project Owner needs to request BBV to provide a bank guarantee with a corresponding value (5% of the Contract value) for a term of 12 months (equivalent to the warranty period under the Commercial Contract).

c. Management of re-lending and repayment of loan principal:

The Project Owner is responsible for timely repayment of debt to BBV and strictly adhering to commitments with the Lender as stipulated in the Credit Agreement.

The Project Owner is responsible for signing a re-lending agreement with the Ministry of Finance (Investment Development General Department) under the conditions for re-lending specified in point II.1 above.

Each time receiving a notice of fund withdrawal under the Government Loan Agreement from ICO, the Ministry of Finance (Investment Development General Department) is responsible for notifying the Project Owner of the actual amount withdrawn, the repayment schedule, and requesting the Project Owner to sign a promissory note for the debt. The date of debt acceptance is the day ICO repays the amount paid to BBV and is recorded on the withdrawal notice sent by ICO to the Ministry of Finance.

The Investment Development General Department is responsible for checking the use of loan funds, recovering government re-lent funds, and reporting to the Ministry of Finance on the recovery of re-lent funds.

d. Reporting system:

The Project Investor has the responsibility:

- Reporting to the Ministry of Finance (Investment Development General Department, Foreign Financial Affairs Department), the Ministry of Planning and Investment, and the competent authority every six months on the situation of receipt, use, and repayment of government loan funds.

- Reporting to the Ministry of Finance (Foreign Financial Affairs Department) every six months on the situation of debt repayment to BBV, project implementation progress, and business financial results.

- Providing reports and necessary documents to the inspection teams of the Ministry of Finance regarding the project implementation when requested.

III. IMPLEMENTATION PROVISIONS:

This Circular takes effect fifteen days after the date of signature. During implementation, if there are any difficulties, the Project Owner, the People's Committee of Nghe An Province, and relevant agencies are requested to promptly reflect them to the Ministry of Finance for consideration and resolution.