Project Hotel sees progress but funding is a concern


Project Hotel, for the provision of a new hydrographic survey vessel for the South African Navy, is seeing concrete progress, with six out of ten sections of the vessel complete and upgrading of South African Navy Hydrographic Office (SANHO) infrastructure progressing well.

This is according to Sipho Mkwanazi, General Manager for Acquisition at Armscor, who gave an update on Project Hotel during a presentation to the Joint Standing Committee on Defence (JSCD) on 28 May.

Armscor’s presentation stated that at the moment, construction of six sections of the vessel have been completed and four of the remaining sections are in progress. Sandock Austral Shipyard (previously Southern African Shipyards) cut the first steel for the vessel in November 2018. On 28 November 2017, Southern African Shipyards was given the contract to build the new vessel to replace the incumbent SAS Protea.

The vessel is being built to a Vard Marine 9 105 design. This is a 95 metre long ice-strengthened vessel with a 10 000 nautical mile range and top speed of 18 knots. She will have a 12.24 MW installed diesel-electric power plant.

In addition to the hydrographic survey vessel, Project Hotel also provides for the delivery of two Survey Motor Boats (SMB) and a Sea Boat as well as a third fully operational inshore survey motor boat, kept ashore in reserve, and the upgrading of the South African Navy Hydrographic Office.

Veecraft Marine is supplying the boats. In its May presentation, Armscor said construction of all three survey motor boats has commenced and these are 75% complete, with delivery on schedule. Construction of the hull of the sea boat is 66% complete and installation is in progress.

The SANHO upgrade is on schedule and “progressing well. All major civil works completed and all equipment installed,” Armscor said. Teledyne CARIS was selected to deliver a full software solution to the South African Navy’s Hydrographic Office as part of Project Hotel.

According to Armscor, Project Hotel has a contract value of R1.74 billion excluding taxes and other costs, but factoring in taxes, escalation and other costs the contract value is about R2.74 billion. To date, Armscor has paid R1.4 billion and expects the project to be completed around August 2023 – the contractual completion date is November 2022.

Risks to the programme include financial and schedule delays due to the coronavirus pandemic. “The current funding deficit is placing the project at severe risk as the significant funding shortfall will coincide with peak production in FY2021/22,” Armscor’s presentation said.

The Joint Standing Committee on Defence also raised concerns over the shortfall in funding for both Projects Hotel and Biro (for three inshore patrol vessels for the South African Navy). “Despite the commendable progress in the implementation of the projects, the committee is concerned by funding risk factors on both projects due to reduction of the acquisition budget of the Department of Defence. The committee has called upon Armscor and the Department of Defence to reflect on the funding challenges and offer possible solutions to the funding shortfalls,” the committee said.