SOFIA, (BM) – The Council of Ministers has given the green light to the Ministry of Defense [MoD] to conclude a contract worth nearly BGN 1 billion with VAT [$605M] for the construction of two new modular patrol ships with the German company Fr.Lurssen Werft GmbH & Co.KG, learned BulgarianMilitary.com citing Segabg.com.
The decision was taken in a closed government meeting after the end of the regular one and was not officially announced on Wednesday. The contract with the German shipyard is to be signed next week – according to Capital on November 9 or 11. The project for the construction of the two new warships is the second major program for modernization of the Bulgarian army, which is about to be finalized. The budget allocated for it by the National Assembly in 2018 amounts to BGN 984 million with VAT [595M], which according to the project for investment expenditure must be paid for a period of 9 years.
It remains to be seen whether, in the end, the funding scheme has not changed and whether there will be no larger advance payment than originally set. According to the preliminary information, there was also such an option in order not to draw a bank loan and make the deal more expensive.
Meanwhile, on Tuesday, Maritime.bg spread the position of the Italian state shipyard Fincantieri, which remained in second place in the race. It claims that there were very serious breaches of the rules of procedure, the bid was “evaluated with the most points on all indicators: technical parameters, industrial cooperation with local industry and price”, but the Italian company was not selected for contractor. The manufacturer appealed the commission’s decision in court, but the court refused to hear the case on the merits because it was a government decision on a matter of national security.
Only a few days ago, Defense Minister Krassimir Karakachanov said that there was an attempt to fail to sign the contract through a series of appeals in order to include another country in the deal, which did not participate in the competition. “In a country where there is a problematic competition, there is a win, there are court appeals that have passed. By the way, I have not spoken on the subject for a long time deliberately, when they asked me when you will sign a contract, there was an appeal sucked from the fingers. Appeal to the Ministry of Defense, appeal against the decision of the Council of Ministers. It is clear to me why it is being done, it is clear to me who they want to include in this deal, it will not happen,” he said, but did not want to go into details. .
Some time ago, the Ministry of Defense uploaded an updated project for investment expenditure “Acquisition of a multifunctional modular patrol ship for the Navy”, which makes clear the history and basic parameters. The contract for the new ships is expected against the background of plans to pay in installments. Part of the planned amount of BGN 171 million can be paid by the end of the year, said Deputy Defense Minister Anatoliy Velichkov in the defense commission. “The Ministry of Defense will be able to pay in advance this year out of the 171BGN planned [$103M], most likely 21 in advance,” he was quoted as saying by BNR.
Velichkov added that next year’s budget provides 150m levs for the new ships, and up to a billion will be paid in five years. The Deputy Minister did not comment on the unofficial information that higher initial installments are planned to be paid in order to start the project. BGN 1.625 billion is the money for next year for the Ministry of Defense. With the funds provided by the budget for the ships, the project for the Land Forces, the infrastructure for the new fighters, the amount becomes about 2 billion and 99 million levs.
However, the ministry asked for nearly BGN 30 million [$18M] more in its budget for next year. This money is needed for spending on already retired military, military courts and prosecutors, as well as for the permanent representation in NATO, and next year there is expected to be a 10 percent increase in salaries in the budget. Deputies from the parliamentary defense committee approved the military budget at first reading, with the BSP and MRF voting against. 10 of the deputies in it voted “for”, 6 were against and only one abstained. The deputies in the relevant commission discussed the military budget for about 2 hours.
Deputy Defense Minister Anatoliy Velichkov explained after the meeting that the draft budget for next year was based on the needs for staff, maintenance and capital expenditures of the Ministry of Defense: “The increase in defense expenditures for next year is BGN 111 million [$67M]. Basically, these funds will go to increase staff costs, ie. salaries of servicemen, which increase by 10% … At the same time, in the defense funds, which are provided in the central budget, we have costs for investment projects for the acquisition of weapons and equipment of about 350 million [$218M] for next year,” he said. Velichkov.
In total for defense for next year he estimates that BGN 2.099 billion [$1.270B] are planned. According to the National Plan for increasing defense spending to 2% of Bulgaria’s gross domestic product by 2024, for next year in defense spending as a percentage of GDP is recorded to be 1.64.
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