Government cancels excessive Airbus contract
By Ofentse Mokae
05 November 2009
Government has decided to terminate the controversial contract to purchase eight military A400 Airbus transport aircraft.
The decision was made at yesterday’s Cabinet meeting.
Government spokesperson Themba Maseko confirmed the termination of the contract was due to extensive cost escalation and the supplier’s failure to deliver the aircraft in the stipulated timeframes.
Maseko said this at a post-cabinet media briefing in Cape Town.
He says the cost had escalated from six-point-four-billion-Rands in 2004 to 47-billion-Rands, which prompted Cabinet to instruct Armscor to terminate the program.
The R2,9-billion already paid would be refunded to the National Treasury as per the contract provisions.
There would be no penalties for cancelling the contract, because of the delays in the delivery deadlines stipulated in the contract, Maseko said.