State-owned defence company Denel has said its contract to supply new generation Badger infantry fighting vehicles (IFVs) to the South African National Defence Force (SANDF) is not in jeopardy and it will continue to deliver vehicles in terms of its contract.
This comes after the City Press reported that Denel had “jeopardised” the Project Hoefyster contract worth R8 billion by failing to deliver Badgers to the SA Army for more than 10 years, and is now being sued by Finnish defence company Patria for R112 million over contract failure – the Badger is based on a Patria design.
In a statement released on Monday, interim Group CEO of Denel, Mike Kgobe, said reports that Patria is suing Denel for R112 million over the project, are false.
According to Kgobe, Denel reached a settlement agreement on outstanding issues with Patria in December 2022.
“All legal actions by Patria were halted in terms of this agreement and Patria continues to support Denel in the execution of the contract,” he explained.
Kgobe conceded that the contractual and financial difficulties that affected the project in recent years have now been resolved and the programme is continuing, as approved by the Department of Defence.
“The contract is definitely not at risk,” Kgobe stressed.
“We are working closely with Patria, Armscor and other stakeholders to ensure the SANDF receives modern combat vehicles which deliver superior mobility, protection and firepower for our troops.”
The Hoefyster programme, according to Denel, is a critical component of the broader moves to modernise the SANDF and ensure its operational readiness.
Denel in March this year received billions of rands in bailout money from National Treasury, allowing it to restart much of the production at its facilities that have been dormant for years due to the fallout from state capture and mismanagement.
Denel Chief Restructuring Officer Riaz Saloojee told defenceWeb the company is confident it can get Badger production back on track for the South African Army.
Project Hoefyster phase one – for the design and development of five main vehicle variants (Command, Missile, Section, Fire Support, and Mortar) – came into effect in June 2007 with delivery expected in May 2012. This was to be followed by phase two – industrialisation and production of 238 Badgers – with a completion date of November 2023. Armscor was at one point so concerned about Project Hoefyster it recommended cancelling the programme and diverting funds to upgrade Ratels as an interim solution.
To date, nearly R8 billion has been spent on Project Hoefyster, and factoring in VAT, escalation and other costs, Armscor values the project at over R16 billion.