Funding sufficient for Projects Hotel and Biro to be completed


The Department of Defence (DoD) has reprioritised funding to ensure sufficient money is available to honour the full acquisition of inshore patrol vessels and a hydrographic survey vessel under Projects Biro and Hotel.

This emerged during a Portfolio Committee on Defence and Military Veterans (PCDMV) meeting on 18 August. Last September, Armscor said a funding deficit was placing Project Hotel at severe risk, with a significant funding shortfall coinciding with peak production in FY2021/22. The Joint Standing Committee on Defence also raised concerns over the shortfall in funding for both Projects Hotel and Biro.

Parliament’s Joint Standing Committee on Defence (JSCD) in September 2020 heard that Strategic Capital Acquisition Master Plan (SCAMP) funding for Projects Biro, Hotel and Hoefyster amounted to R2.8 billion, but the funding needed to honour these contracts amounted to R13.7 billion.

Now, the DoD says allocated funding to Projects Hotel and Biro is sufficient in order to honour contractual obligations.

The Hydrographic Survey Vessel (pennant number A187), currently under construction by Sandock Austral Shipyards under Project Hotel will, upon projected delivery to the SA Navy in April 2023, take over the hydrographic survey function currently executed by the ageing SAS Protea, which is 49 years old. The SAS Protea will thereafter be retained for a training role only.

The three Multirole Inshore Patrols Vessels (MMIPVS) currently under construction by Damen Shipyards Cape Town under Project Biro will, upon projected delivery to the SA Navy in August 2021, September 2022 and January 2024 respectively, take over the maritime coastal patrol function currently executed by the obsolete Offshore Patrol Vessels (OPVs) SAS Isaac Dyobha and SAS Makhanda, as well as execute other Force Employment tasks that may be ordered, the DoD said.

In terms of maintenance, the new vessels will be maintained by the SA Navy, in cooperation with the Armscor Dockyard. “No major maintenance and repair of the vessels are anticipated over the respective Medium-Term Expenditure Framework cycles, following their delivery, starting from FY2021/22. Routine maintenance and repair costs, as may be required, will be executed within the SA Navy’s operating budget allocation,” the DoD told Parliament.

The operating/running costs of the new vessels will be offset through the phased decommissioning and placement in reserve of current obsolete platforms. The OPV SAS Galeshewe had already been placed in reserve in October 2020. The OPV SAS Isaac Dyobha will be placed in reserve by September 2021 and the OPV SAS Makhanda by January 2023.

It is projected that the SAS Protea will only retain a core crew, should she be utilised as a training platform, subject to an investigation, following the commissioning of the new hydrographic survey vessel. In addition, there will be no additional Cost of Employer expenditure involved, as the post structure of the new vessels are being created based on the principle of financial discounting of the posts of the vessels being placed in reserve, as well as of other obsolete vessels that have already been place in reserve. The crews currently serving on board the obsolete vessels will continue to be retrained for utilisation on board the new vessels, as they are being placed in reserve.

The DoD said the new vessels will contribute significantly to capacitate the SA Navy to achieve its planned annual sea hour target, which has negatively been affected by the unavailability of existing vessels that require extended maintenance and repair.