The Royal Thai Navy's (RTN) plan to purchase submarines is seemingly sinking to the bottom of the ocean after a Chinese supplier reportedly admitted it could not meet its contractual obligations.
It is reported that China Shipbuilding & Offshore International Co (CSOC) finally admitted it could not fit submarines with German-made MTU396 engines.
A government-to-government agreement involving the procurement of three S26T Yuan-class submarines was approved in 2017 at 36 billion baht, or about 12 billion baht each. So far, the country has paid 7 billion baht as part of an instalment plan to have the Chinese shipbuilder deliver the first vessel in 2024.
However, this plan hit a snag recently as the CSOC can no longer fulfil its purchase agreement, which specifies the use of MTU396 diesel engines supplied by Germany's MTU. Germany has barred MTU engines from being used in Chinese military vehicles.
The RTN categorically requires the German MTU engines as the navy has been using its technologies for a long time, thus establishing trust. It is reported that the engines are particularly safe and reliable and have been used in other submarines.
Despite the contractual violation being a setback for the RTN, it should and must not go into a deal with the CSOC feeling rushed.
Indeed, the RTN can cancel the deal and file for compensation. The RTN can also hold a new round of bidding simply because there are valid reasons to do so. The RTN deserves and must get the quality submarines that it needs, not those that sellers want to offload.
The big question is: Are the RTN and its top brass willing to do so?
Despite the contractual violation, it is reported that the RTN is in negotiations with the CSOC, which offers Chinese-made engines, instead of the preferred German engines.
The RTN reportedly has to make a decision by Sept 15 on whether to accept a new CSOC agreement to use the CHD620 diesel engines to replace the German-made MTU369s. The CSOC will reportedly be giving away two free second-hand submarines to the RTN to make it up.
RTN chief-of-staff Adm Thaloengsak Sirisawat reportedly said the RTN will ask the CSOC to send the engines for testing, and if passed, there will be no need to amend the contract. It is surprising that the RTN suddenly revealed the contract, stating that the CSOC is permitted to change any part of the submarines as long as replacements are at least equal in quality.
But how can the RTN decide whether this alternative is on par with the trusted German MTU369s? The RTN has not used submarines for at least 70 years. Also, the CHD620 engine is a new model not in current use anywhere. If the RTN agrees to take the engines, Thailand and Pakistan will be the only two countries using CHD620s in submarines.
Such revelations are a far cry from the previous stance by the RTN and the government to stick with the original contract.
In April, navy commander Adm Somprasong Nilsamai reportedly said China would have to comply with the contract as signed.
Prime Minister Prayut Chan-o-cha, in his capacity as defence minister, said on April 4 that the submarine procurement deal will face the axe if China cannot fit the engines specified in the purchase agreement.
Now, the CSOC is not installing the specified engines. Therefore, it is time for our top brass to walk the talk or see their credibility sink to the seabed.
