Korean firm bags P25B deal to build PH Navy corvettes
MANILA, Philippines — It’s official: South Korea’s Hyundai Heavy Industries (HHI) has secured a contract to build two corvettes for the Philippine Navy for P25 billion.
A notice of award was issued by the Department of National Defense (DND) last Dec. 15, two senior security officials familiar with the matter told Inquirer.net.
The development came shortly after the Department of Budget and Management (DBM) released funding for the 15 percent downpayment of the corvette acquisition project worth P3.75 billion last Dec. 10.
A contract signing could happen before yearend, said the senior officials.
The acquisition would be financed by a government-to-government loan agreement, Defense Secretary Delfin Lorenzana said in earlier statements.
HHI has been the favored supplier for the program since it was announced in 2019, based on statements of top defense and navy officials. The South Korean shipbuilder also built two multi-role frigates for the Philippine Navy in a P16 billion contract in 2016.
But the frigate acquisition project attracted public interest in 2018 after a conflict in the selection of the combat management systems (CMS), considered as the “brain” of the warships.
The disagreements stemmed from the failure of the shipbuilder to meet the original preference for a Link 16 compatible CMS by the Philippine Navy’s technical working group. In the end, the South Korean Ministry of Defense issued a guarantee that the ships’ CMS is compatible with Link 16 despite the absence of US certification, and the shipbuilder has offered to pay for the integration of the CMS to Link 16 when the Navy acquires this capability in the future.
The corvette acquisition project, which is estimated to cost P28 billion including weapon systems, is one of the big-ticket items in the Philippine Navy’s upgrade program. Plans to acquire the corvettes had been stalled last year because of the diversion of defense funds to pandemic response.
The warships would boost the country’s presence around the archipelago especially in the West Philippine Sea, where tensions continue to rise.
The Navy recently retired the last two of its World War 2-era patrol ships despite the lack of immediate replacements. Navy chief Vice Adm. Adeluis Bordado said the two corvettes and six offshore patrol vessels would see initial deliveries in two to three years.
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