Reserve Bank – not Armscor – will pay shipyards for new vessels

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Main contractors on the two SA Navy (SAN) projects currently underway need not concern themselves about receiving payment for building four new seagoing platforms for the maritime service of the national defence force.

The re-assurance to Damen Shipyards Cape Town (DSCT) and Sandock Austral Shipyards (SAS) in Durban came from Defence and Military Veterans Minister Nosiviwe Mapisa-Nqakula in reply to a Parliamentary question.

She told Democratic Alliance (DA) parliamentarian Kobus Marais the Department of Defence (DoD) “conducted a reprioritisation exercise to allocate the remaining Special Defence Account (SDA) budget to ensure sufficient funding to meet contractual obligations for Project Biro”.

This project, for three inshore patrol vessels (IPVs) as opposed to the six initially wanted, is being executed at DSCT with vessel number one put to into the water at the Victoria & Alfred basin last month (March). The SAN originally sought to acquire three specialist offshore patrol vessels (OPVs) as well but this was derailed by an ongoing lack of financing allocated to Minister Mapisa-Nqakula’s department.

Indications are the first multi-mission inshore patrol vessel (MMIPV) will be handed to the SAN around September. Construction of the second MMIPV is underway at DSCT with all three planned to be commissioned and working by 2023. They will join the refurbished pair of strikecraft to form the SAN patrol fleet at Naval Base Durban.

Mapisa-Nqakula told the opposition shadow minister for her portfolio “sufficient budget allocation is available in the Special Defence Account (SDA) to meet contractual obligations” for Project Hotel, the acquisition of a new hydrographic survey vessel (HSV) and associated workboats as well as an onshore upgrade of SAN hydrographic facilities.

The replacement for the ageing SAS Protea (A324) is underway in Durban with indications the new vessel will be ready for South Africa’s maritime service around August 2023. The building and delivery of workboats, part of the overall project, has been completed by Cape Town-based Veecraft.

Mapisa-Nqakula allayed any possible fears her questioner might have as regards funding provision for both naval acquisition projects.

“Funding is not transferred to Armscor for prime mission equipment acquisition. Armscor as the procurement agency for the DoD manages the procurement and contracting process on behalf of the department. The payment is released directly to the supplier from the DoD account via the Reserve Bank. Payments are made after Armscor, as the contract manager, confirms achievement of the specific milestone on the contract,” she wrote in her reply to Marais.



Last September 2020, Parliament’s Joint Standing Committee on Defence (JSCD) heard the Dod’s then current Strategic Capital Acquisition Master Plan (SCAMP) funding for the Biro, Hotel and Hoefyster projects amounted to R2.8 billion with funding needed to honour these contracts amounting to R13.7 billion, leaving the DoD with a  nearly R11 billion shortfall over the contract periods for the three projects. Armscor earlier flagged reduced SCAMP funding as a risk to Biro and Hotel.