Cost shoots down A400M

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The Airbus A400M Loadmaster may have cost South African taxpayers as much as R30 billion, defence minister Lindiwe Sisulu told an extraordinary session of Parliament’s Joint Standing Committee on Defence earlier this afternoon.

Briefing MPs Sisulu said the initial cost was set at R17.646 billion when the contract with was finalized on December 1, 2006.

However, Sisulu emphasised that negotiations were still continuing and that final costs had not been determined yet.

Cabinet spokesman Themba Maseko earlier today put the cost at R40 billion at a post-Cabinet briefing.

That figure is just below the R47 billion that had been cited in a previous hearing before Parliament by state arms procurement agency Armscor.

Sisulu added that she hopes the R2.9 billion paid so far would be refunded back to the Department of Defence and not the National Treasury.

She also avered that the termination of the A400M contract would not necessarily impact the industrial offset program in which aircraft parts manufacturer Denel would make components for the still to fly transport.

“The supplier was in serious breach of contract and we need the money desperately for other things within defence,” she said.

Sisulu also told Parliament that a standstill agreement had been signed earlier this year after the A400M prototype had failed to fly on schedule in March. The aircraft still has to take to the skies.

“We have looked at the contract and we have determined we have met our obligations and that the failure of the aircraft to fly was in breach of their contract with us,” she said.

A European source says Armscor CE Sipho Thomo is in Toulouse, France, at the moment to cancel the deal.

Responding to questions from the politicians, Sisulu said that the SA Air Force had to no “go back to the drawing board to redefine its airlift needs”.

Members of Parliament from all the political parties welcomed the decision but expressed the view that the lack of airlift capability would hamper South Africa’s participation in peacekeeping missions on the continent.

Democratic Alliance defence shadow minister David Maynier repeated his previous calls for an investigation into how the contract was signed.

“Over so many years, there have been so many questions about this issue. How did we get ourselves into the situation where we signed a contract for an aircraft the Air Force did not want and could not afford?” he asked.

Manyier also asked when government would stop the “bleeding at Denel” after it had injected R673 million into the state-owned enterprise as risk mitigation for the industrial offsets for the Airbus contract.

Denel is supposed to manufacture certain Airbus components and is still busy with the production of them.

Armscor chairperson Popo Molefe said the agency was still studying the A400M contract and, in particular, the formulas as stated in it.

“For instance, we have to examine whether or not the supplier gave warnings about certain milestones not being reached,” he said.



Meanwhile, an industry source says a Lockheed Martin sales-team was recently in SA and was overheard to say there was a local requirement for five of the latest C130J variant of the aircraft. SA currently operats eight of the early B-models.