Thailand Salvaging Submarine Deal

ACCORDING to media reports, Thailand has formally requested for Germany to reconsider its unwillingness to allow its MTU396 engine to be exported to China for use on the S26T Yuan-class submarine previously purchased by the kingdom.

Thailand had previously signed a US$410 million deal in May of 2017 to purchase one submarine from China Shipbuilding and Offshore International Co(CSOC) for the Royal Thai Navy (RTN).

The deal was previously left in limbo after Germany disallowed the German-made MTU396 engine to be installed onboard the submarine, which was stipulated in the contract. Following that, the then-Thai government then opted to substitute the deal with a frigate but reverted back to the submarine last May.

Chinese and Thai negotiations had previously agreed to substitute the German engine for a Chinese CHD620 electric generator that would serve as a submarine electric generator rather than an engine. Furthermore, the Chinese side also offered free training simulators to the RTN, free training courses worth US$2.2m on top of a US$3.6m discount. Additionally, the manufacturer extended the submarine’s warranty from two years to eight years.

Despite that, no decision has been made by the new government since then. The revised deal still requires the endorsement of Thailand’s cabinet and China’s Central Military Committee which would encompass an amendment to the contract and a 1,270-day extension to deliver the submarine.

The submarine was supposed to be delivered to the RTN in 2023 but the German embargo on the engine had struck a severe blow to the deal. Completion of the submarine reportedly stood at 64% with Thailand already releasing 63% of the payment amounting to US$227m. Moreover, the RTN had already spent over US$29m to build infrastructure and facilities to accommodate the submarine, including docks, maintenance shipyards, torpedo warehouses and command and communication stations. Should the submarine deal fall through, RTN officials said that many of the new facilities could be used for frigates and corvettes instead.

The RTN is also proposing a plan for up to four frigates to be acquired in the fiscal years of 2026 and 2027. With that, major global defence players will converge at the 12th Defense & Security to be held this November 10-13 at Bangkok’s IMPACT Exhibition Centre in Muang Thong Thani. -shp/adj/dl (Pix:CHINAMIL)