Publication: Sowetan Issued: Date: 2009-11-06 Reporter: Anna Majavu

Military airbus deal drops its wings




Date 2009-11-06
Reporter Anna Majavu
Web Link

Government cancels contract

The government has terminated its contract to spend R47billion on buying planes capable of transporting helicopters and tanks.

The government is also expected to recoup the R2,9billion already paid to the arms consortium manufacturing the planes.

Briefing the portfolio committee on defence and military veterans yesterday, Defence Minister Lindiwe Sisulu said the government would not have to pay any penalties for cancelling the deal because Airbus had not delivered on time.

Last month Armscor’s chief executive Sipho Thomo told Parliament that R2,9billion had already been paid to the manufacturers. He revealed that the programme was four years behind schedule and that the costs had ballooned from R17billion to R47billion.

Government spokesperson Themba Maseko said yesterday that spending R47billion on eight A400M military airbuses would have placed “an unaffordable burden on the taxpayer”.

The deal, which was never put out to tender, was made by then defence minister Mosiuoa Lekota and the previous cabinet in 2005 – although the SANDF said in 2004 that the planes – designed to transport tanks and military helicopters – were unnecessary.

The cancellation of the controversial deal is another feather in the cap of the auditor-general’s office, which had identified the R2,9billion paid by Armscor to the Airbus consortium as “possible irregular expenditure”.

The Democratic Alliance and the Independent Democrats welcomed the cancellation.

DA spokesperson on defence and military veterans David Maynier said Sisulu had made the right decision.

Last month Maynier argued that continuing with the deal would have cost the taxpayer nearly three times the total budget for the air force in the 2009/2010 financial year.

ID leader Patricia de Lille said the move showed that the current government had learnt a lesson from the cost incurred in the previous arms deal.

De Lille also blamed the previous cabinet for having signed such a costly deal.

“It shows that the previous cabinet did not really pay attention when they signed this contract,” De Lille said.

Arms deal bidder and commentator Richard Young said the government should never have made the deal in the first place.

The aircraft would have cost up to R3billion a year to operate, on top of the R47billion purchase price, he said. *2

With acknowledgements to the Sowetan.

*1       Arms deal bidder (in a big way)
Arms deal winner (in a small way)
Arms deal loser  (in a small way)

*2      Bullshit.

My exact response was :
"R2 billion to R3 billion operating costs, over and above acquisition costs."
The R47 billion included R30 to R36 billion of yearly maintenance costs (R2 billion x 15 years = R30 billion, or .R2 billion x 15 years + R3 billion x 2 years = R36 billion)

Or whoever's voodoo arithmetic one might want to accept.

Maintenance costs are not acquisition cost.

The acquisition cost was about R11 to R14 billion.

My guess is that in addition to acquisition cost, cost of ownership would have been R2 billion maintenance costs and R1 billion operating costs annually.

But any which way it is too high for the SAAF.