A further acknowledgement of the sorry state Denel finds itself in comes from Defence and Military Veterans Minister Nosiviwe Mapisa-Nqakula who, in response to a Parliamentary question, said the state-owned defence and technology conglomerate cannot continue to exist in its current form.
“It is clear, without a significant bailout by government, Denel will not be able to exist in its current form and will not be in a position to meet its contractual obligations to Armscor,” she told Kobus Marais, the Democratic Alliance (DA) MP who shadow ministers her portfolio.
Mapisa-Nqakula also indicated Denel’s performance against Department of Defence (DoD) contracts is “hindered to a great extent as a result of financial distress which impedes procurement of sub-systems and components required to meet contractual deliveries”. Making matters worse is “a significant loss of capability in certain critical areas”.
She went on to inform Marais both Armscor and the DoD “developed alternative options” as regards the future of Denel. These, which she did not elaborate on, still have to be heard and considered by “decision makers in government” with the rider that “specific critical strategic and sovereign capabilities not duplicated elsewhere in South Africa and the proposed options going forward are aimed at maintaining at least these”.
The long-awaited new infantry combat vehicle – Badger – is still effectively on hold.
“Project Hoefyster suffered significant delays and Denel is currently reneging on contractual deliveries for this project. In 2018 Denel formally indicated to Armscor it cannot complete the project within timescales, specifications or budget and requested a reset of the contract.
“Armscor presented several options going forward with the project to relevant DoD forums. These options were thoroughly considered by Armscor and the DoD and a preferred option for deferment was further developed and motivated. This was supported by the SA Army, and presented to the DoD governance forums DOD and eventually recommended to the Armaments Acquisition Council (AAC) chaired by the Minister of Defence and Military Veterans. The AAC is the final decision making authority on projects and will provide guidance regarding going forward with the project,” Mapisa-Nqakula’s reply read.