Govt scraps $1.5B OPVs

The vessels were purchased by the PNM administration for use by the Coast Guard in marine drug interdiction.

However, sources said Government has decided to cancel the contract after reviewing the cost, determining it would be too expensive to acquire and maintain the OPVs.

Newsday understands that due to a confidentiality clause in the contract Government cannot make any public statements on the deal because if it does it stands to lose more than TT$1 billion.

Coast Guard sources said 55 sailors who were sent to Scotland earlier this month for training in the use of the vessels are to return home in October.

A report carried in the Daily Telegraph in the United Kingdom yesterday stated ship-workers in Hampshire were “reeling from the news” that Government had cancelled the order for the three vessels.

“It’s a blow to major county employer BAE Systems Surface Ships, which employs 3,000 in Hampshire, which had already almost finished work on the three offshore patrol vessels for the Trinidad and Tobago Coast Guard,” the Telegraph reported.

It stated BAE estimated it would take a ?150 million (TT$1.5 billion) hit on its accounts before finding a buyer for the vessels.

The Telegraph also reported BAE said it would look to engage Government in “commercial discussions... to find an equitable settlement”.

BAE is reported to have said the first patrol ship was in the final stages of being handed over to Government, while the second would have been ready next month.

The Telegraph cited local media reports that the previous PNM government had become frustrated by delays in the delivery of the OPVs which were scheduled for completion in mid-2009. It was noted that Government spent millions of dollars training sailors to serve on the ships.

The British newspaper also said the three vessels underwent test runs at the Scotstoun shipyard in Scotland on July 16, this year.

Another report out of Britain in Jane’s Defense Weekly also confirmed the cancellation of the contract.

“The Republic of Trinidad and Tobago has given notice that it wishes to formally terminate the ?150 million (US$234 million) contract with BAE Systems to deliver three offshore patrol vessels (OPVs), leaving the UK group with the prospect of selling the nearly completed vessels on the world market,” Defense Weekly reported.

BAE confirmed the requested cancellation in a statement on Tuesday, and, as the Telegraph did, said the company will “seek to engage in commercial discussions” with Government to find an “equitable settlement”.

“A spokesman for the shipbuilder said it remains hopeful that the contract can be salvaged,” Defense Weekly reported.

The programme — which has previously suffered both cost and time overruns — was entered into by the PNM administration and the VT Group in April 2007.

Ownership of the programme passed first to BVT Surface Fleet (a joint venture shipbuilding company created in mid-2008 by BAE Systems and VT Group) and subsequently to BAE Systems Surface Ships when BAE Systems acquired sole ownership of the venture in September 2009.

When it pulled out, VT Group provided ?43 million (TT$430 million) of capital to BAE Systems to compensate for cost overruns and delays in the programme.

The first of the three OPVs, Port-of-Spain, is currently going through final work; the second, Scarborough, has completed sea trials with what was previously viewed as an October 2010 delivery date and work continues on the third, San Fernando, with a view to sea trials in November. BAE Systems stressed on Tuesday that all work relating to the programme is continuing.