Parliament’s portfolio committee on defence has warned that cost-cutting measures at the Armaments Corporation of South Africa (Armscor) could endanger key projects, including the acquisition of three inshore patrol vessels (IPVs) for the South African Navy being built at Damen Shipyards Cape Town.
The news of the cuts emerged during a briefing on the impact of the adjusted estimates of national expenditure for the Department of Defence and the Department of Military Veterans and its entities. Armscor’s budget has been cut by R120 million.
While the committee praised the manner in which Armscor reorganised its budget to absorb the cut, they were wary of the effect.
The committee said“the impact on acquisition activities is of particular concern since Armscor runs the risk of having to terminate key projects such as Project Biro and Project Hotel, on which Armscor had already spent massive amounts”.
The committee also heard that the risk associated with the termination of these contracts could also attract penalty payments.
The Project Biro IPVs are already under construction. According to the Damen Shipyards Cape Town website: “The project aims to develop South Africa’s maritime security, ensuring that the country has the capability to respond effectively, rapidly and cost-efficiently to maritime threats such as illegal trafficking and fishing.
“The IPVs will be the first vessels of a Damen Sea Axe design to operate in South Africa.”
The company said the Sea Axe was a patented hull design, which offered exceptional sea-keeping behaviour.
“The straight-edged, axe-shaped bow cuts through the water, minimising slamming for improved safety and comfort on board and significantly reduced fuel consumption and emissions.”
In May, Armscor told Parliament that Project Biro was well on track, with the first vessel to be delivered in the middle of next year.
On May 28, general manager for acquisition at Armscor Sipho Mkwanazi told the joint standing committee on defence that steel cutting for the second vessel had commenced and that Damen Shipyards Cape Town laid the keel of the first IPV in February 2019.
Meanwhile, the committee welcomed the R3million in relief funding provided by the Department of Defence to the Castle of Good Hope’s governing body, the Castle Control Board.
The money is meant to assist the board in dealing with the financial stress it has suffered because of the collapse of the tourist industry caused by the Covid-19 pandemic.
The committee was also briefed on the R137million cut in the Department of Military Veterans’ budget. This included a R60million reduction in the education support budget for military veterans and their beneficiaries.
The Department of Military Veterans told the committee that it hoped to reduce the effect of the latter cut by approaching the National Student Financial Aid Scheme about funding for students, and provincial education departments regarding financial assistance for military veterans.