President Jacob Zuma's cabinet appears to have passed one of its biggest tests so far, with opposition parties and the ANC's alliance partners united in lauding its decision to terminate the R47 billion Airbus A400M contract.
The cabinet took the decision on Wednesday.
Briefing MPs in Parliament yesterday afternoon, Defence Minister Lindiwe Sisulu said: "It would be wrong, it would be incomprehensible that we continue with a project that would cost us this much when we have other needs."
She said the government was hoping it would be refunded the R2.9bn so far sunk into the deal, and would "redirect it".
'We've duly informed the European consortium' Initially costed at R17bn when the deal for the eight planes was signed in 2005, cost escalations - partly linked to production delays - saw the price soar by more than R30bn, raising the ire of Cosatu and opposition parties.
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Details emerged last month after the Auditor-General queried the lack of any proper tender process when he noted that R2.9bn had been paid towards the deal from the Special Defence Account.
Sisulu briefed the National Assembly's defence portfolio committee soon after the cabinet's decision was announced. She said she was confident South Africa would not lose the R2.9bn, having secured a team of "outstanding" lawyers to ensure the money was returned as soon as possible.
"We've duly informed the European consortium, as is required by the contract. We've also informed Airbus." she said.
It is not yet certain whether the industrial participation programme involving two South African companies - state-owned Denel Saab Aerostructures and Aerosud - in manufacturing the new-generation aircraft would be jeopardised by the government's cancellation of the contract.
Themba Maseko, the government's chief spokesman, said yesterday the government had also embarked on an extensive review of South Africa's needs in terms of airlift capability, which could not be shelved because of its peacekeeping commitments on the continent.
"We've terminated the contract with Airbus, but we have not terminated our quest to have that capability," Sisulu told MPs, who have expressed concern over the lack of capability in the wake of the termination of the contract.
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This article was originally published on page 3 of The Star on November 06, 2009
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