Sisulu: SAAF needs new planes

2009-11-05 16:14

Cape Town - The R2.9bn refund that the government is expecting to receive after cancelling its contract with Airbus may be used to buy new planes for the SA Air Force, Defence Minister Lindiwe Sisulu said on Thursday.

This comes after the government announced that it cancelled its contract to buy eight multi-billion rand Airbus A400M aircraft.

Sisulu said cancelling the deal has left SAAF in dire need of improved airlift capabilities, because it could not continue using outdated Herculus C130S planes.

She said she would ask Cabinet to give it the R2.9bn refund to shop for an alternative.

The government dropped the deal after "re-evaluating the benefit to South Africa and the taxpayer, Sisulu said.

Costs skyrocketed

The cost of the deal had sky-rocketed from R17bn when it was inked five years ago to R47bn.

"The termination of the contract is due to extensive cost escalation and the supplier's failure to deliver the aircraft within the stipulated timeframes," government spokesperson Themba Maseko told a post-Cabinet briefing on Thursday.

Sisulu said by April 2005, government was warned of "challenges" in meeting the delivery deadlines. It later emerged delivery would be four to five years late and that the planes would cost an additional R30bn.

"We had to re-evaluate the benefit to South Africa and the taxpayer. We have withdrawn as from yesterday (Wednesday).

"We hope the R2.9bn will be refunded to us as provided in the contract," she told Parliament's portfolio committee on defence.

"We are confident that we have kept to our contractual obligations so we see no reason why the R2.9bn will not be refunded to us."

Airbus surprised

Sisulu and Maseko said South Africa would not face any penalties for reneging on the contract with the troubled European aircraft maker, which expressed surprise at Pretoria's decision.

Airbus spokesperson Linden Birns said: "It very much regrets such an announcement, especially at a time where the programme is making very good progress towards first flight before the end of the year.

"At this point in time, Airbus Military is studying the possible financial and industrial impact of this announcement."

According to Birns, the company expected delivery of the planes to start three years after the first test flight. Under the deal, South Africa had the right to pull out if delivery of the aircraft were delayed by 14 months.

Democratic Alliance spokesperson David Maynier said it was the right decision, but there was a still a need to appoint an ad hoc committee to probe how the government could decide to buy aircraft "it did not want and could not afford".

"This contract has raised so many questions over so many years that we need to investigate the matter."