Greek submarine force could go under as TKMS cancels two contracts

The Hellenic Navy could lose its submarine capability within the next decade following the collapse of two submarine procurement and upgrade contracts with German shipbuilder ThyssenKrupp Marine Systems (TKMS).

The company announced the cancellation of the contracts on 22 September; they include the construction of four Papanikolis-class (Type 214) submarines and the modernisation of three Type 209 boats for the navy.

Outstanding payments on both contracts total EUR524 million (USD775.3 million), including EUR300 million owed to TKMS' Greek subsidiary, Hellenic Shipyards (HSY).

Despite negotiations over the past two years, TKMS stated that no solution has been found to secure payments for the submarines and consequently Greece is in default of its contractual obligations.

A TKMS spokeswoman told Jane's : "A continuation of the contract is no longer economically justifiable." She added: "HDW [Howaldtswerke Deutsche-Werft] and HSY intend to file for arbitration in case there [is] no solution."

TKMS subsidiary HDW built the first Type 214 submarine, Papanikolis, at its shipyard in Kiel, Germany, and offered the boat for acceptance in 2006. It was refused by the Greek Ministry of Defence (MoD), which claimed the boat did not perform to requirements. However, Papanikolis was subsequently certified as seaworthy by the German MoD during sea trials off the coast of Norway in 2008.

The next three Type 214s were built in Greece by HSY, at Skaramangas near Athens. Pipinos was launched in April 2007, Matrozos followed in 2008 and Katsonis at the end of that year.