South African defence contractors on track to meet offset obligations

Most of the companies that won contracts as part of South Africa's 'strategic defence packages' acquisition project have met or are on track to meet their National Industrial Participation (NIP) obligations, according to the South African Department of Trade and Industry's (DTI's) annual report to Parliament, released in late February.

A number of contracts were signed in 1999 under the project, which began in 1997.

The Defence Industrial Participation (DIP) obligations, which are handled by South Africa's armaments acquisition organisation, Armscor, have already been met by all of the companies.

By late 2008, a number of contractors had been awarded credits by the South African government for fulfilment of NIP obligations.

These include BAE Systems and Saab, which are in the process of delivering 24 Advanced Jet Trainer Hawks and 26 Gripen multirole fighter aircraft, and have fulfilled USD6.335 billion-worth of obligations against a USD7.2 billion joint obligation.

The two companies have until 2012 to meet their obligations.

Other contractors include the German Frigate Consortium (GFC) and Thyssenkrupp (providing 4 Meko A200 frigates), which have collectively fulfilled USD1.612 billion in NIP obligations against a commitment of USD2.047 billion.

There are four other GFC/Thyssenkrupp projects in progress that were expected to meet the outstanding NIP obligation by the end of 2008. However, the audited figures have not yet been released.

In addition, the German Submarine Consortium (GSC) and Ferrostaal, which are together providing 3 Type 209 1400 submarines, have fulfilled EUR1.692 billion (USD2.122 billion) against a NIP obligation of EUR2.852 billion, with a further EUR1 billion already in the approval process.