Tuesday, March 20, 2018
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Still no confirmation on future management of the Simon’s Town dockyard

It’s been a year since the announcement that new Denel division – Denel ISM (Integrated Systems and Maritime) – will be the manager of the Simon’s Town naval dockyard but since then Armscor is still effectively in charge of the facility.

In Denel’s latest annual report, acting chief executive Zwelakhe Ntshepe names the handover of dockyard management to the State-owned defence and technology conglomerate in his performance review.

“This gives Denel a strong foothold in the naval environment and I am confident it will become a catalyst for our participation in a number of maritime acquisition programmes currently in the pipeline,” Ntshepe wrote.

The maritime acquisition programmes he refers to are Projects Biro and Hotel. Originally meant to supply the SA Navy with seven new platforms, it has been cut by three with only a new hydrographic vessel and three inshore patrol vessels (IPVs) still – hopefully – on the acquisition list.

The Simon’s Town facility, whether managed by Denel ISM or not, doesn’t feature in the current list of Armscor’s preferred bidders for the four vessels. Southern African Shipyards (SAS) in Durban is the preferred bidder for the new hydrographic vessel and Damen Shipyards Cape Town enjoys the same status as regards the IPVs. The Request for Offer (RfO) for the OPV component of Biro was withdrawn earlier this year - apparently due to budget constraints with no indication of when, or if, it will be resuscitated.

This has also put the spotlight onto the memorandum of understanding entered into between Denel and Poly Technologies of China. That document was apparently predicated on the Chinese company being awarded either the hydrographic or patrol vessels shipbuilding contract and becoming involved in the dockyard.

This also raises the question of the role of Germany’s ThyssenKrupp Marine Systems (TKMS) in the dockyard. In March this year it signed an agreement with Denel covering the support of the South African Navy’s three submarines and four frigates, with TKMS to provide general support to the dockyard operations, infrastructure and maintenance. As per the MoU, TKMS would provide technical support for frigate and submarine work in the dockyard.

At present there is no clarity. Will Denel, in the form of its maritime division, take over Simon’s Town shipyard management? When will Denel have the National Treasury approvals Armscor maintains are needed before it can take over the dockyard? In September last year Denel ISM was selected to take over dockyard management, with Armscor interfacing between the SA Navy and Denel. Transfer to Denel ISM was supposed to take place after certain conditions were met.

With President Jacob Zuma scheduled to imminently update the nation on the blue economy component of Operation Phakisa it would be good to know the shipbuilding and maintenance that can be done at Simon’s Town will in fact happen.

At the same time progress to the point of naming contractors and starting dates for work on the new SA Navy platforms would also be welcome, if the projects do indeed go ahead.

In its 2017 Annual Performance Plan, the Department of Defence said it has “reprioritised the planned acquisition of a hydrographic vessel to the FY2017/18 and the acquisition of offshore patrol vessels to the FY2018/19. This is expected to increase spending in the Maritime Combat Capability sub-programme in the Maritime Defence programme in those years.”

However, the Maritime Defence budget allocation will not change much over the coming years, increasing slightly from R4.790 billion in 2017/18 to R4.893 billion in 2018/19 but then drop to R4.482 billion in 2019/20, almost the same as 2016/17.