Taiwan poised to scrap satellite deal

Taipei had decided to buy the equipment from France instead, although the United States and other competitors in the aerospace market were also pushing for the contract, said the island's China Times.

The project was frozen after Germany, under pressure from China, refused to issue manufacturer Dornier Satellite System an export permit for the Rocsat-2 satellite, said Hwang Jenn-tai, chairman of Taiwan's National Science Council, which oversees the satellite project.

"Communist China went through the German Government to put pressure on Dornier and prevent them from obtaining the permit," said Mr Hwang.

According to the paper and Taiwan's official Central News Agency, Germany was reluctant to allow the technology to be sold to Taiwan because of objections from Beijing, which claims Taiwan would use the satellite to spy.

Officials from the council's National Space Programme Office yesterday refused to comment.

But the paper quoted the office's director, Wang Hung-chih, as saying there could be an announcement on the contract this month or early next month.

The satellite was scheduled to be launched in 2002, the paper said.

French manufacturer Aerospatiale Matra had agreed to build the satellite for the same price and meet the time frame and other technical conditions specified in the original contract, it said.

Beijing had accepted French assurances that the satellite would not have a military capability and had not raised objections to Matra taking on the project.

Matra company officials visited Taiwan last week to discuss the deal with council officials, the paper said.

However, to allow the contract to be awarded to Matra, Taiwan must allow an exception to its procurements law requiring open bidding for all such projects.

The US and other countries had also raised objections to the plan, saying their companies should be allowed to bid to build the satellite, the paper said.

Taiwan's first commercial satellite, the Rocsat-1, was launched in January.

The island reportedly plans to spend about US$500 million to put three communications satellites in orbit by 2006.

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