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Date Posted: 24-Sep-2009

Jane's Defence Weekly

Greece in dispute with TKMS over cancelled submarine projects

Tim Fish Jane's Naval Reporter
London


The Hellenic Navy (HN) could lose its submarine capability within the next decade following the collapse of two submarine procurement and upgrade contracts with German shipbuilder ThyssenKrupp Marine Systems (TKMS).

The company announced the cancellation of the contracts on 22 September; they involve the construction of four Papanikolis-class (Type 214) submarines and the upgrade of three Type 209 boats under the Neptune II Mid-Life Modernisation (MLM) programme signed in 2002.

According to TKMS, outstanding payments on both contracts total EUR524 million (USD775.3 million), including EUR300 million owed to TKMS' Greek subsidiary, Hellenic Shipyards (HSY).

A TKMS spokeswoman told Jane's that, despite negotiations lasting two years, a continuation of the contract "is no longer economically justifiable". She added that Greece was in default of its contractual obligations and that "HDW [Howaldtswerke Deutsche-Werft] and HSY intend to file for arbitration in case there [is] no solution."

Evangelos Vasilakos, director of the Greek Defence Procurement Agency, told Jane's on 23 September that TKMS had already been paid approximately EUR1.5 billion for the Type 214 programme, "but [TKMS] have not delivered, they are late in their delivery schedule".

Vasilakos added: "The Neptune programme was for three submarines at a total cost of about EUR1 billion and we have paid EUR700 million, again with no delivery of submarines. [TKMS] has received a lot of money without delivering anything."

TKMS subsidiary HDW built the first Type 214 submarine, Papanikolis , at its shipyard in Kiel, Germany, and offered the boat for acceptance in 2006. It was refused by the Greek Ministry of Defence (MoD), which claimed the boat did not perform to requirements. However, Papanikolis was subsequently certified as seaworthy by the German MoD during sea trials off the coast of Norway in 2008.

"With Papanikolis there was a dispute over technical problems, which TKMS eventually accepted," said Vasilakos. "TKMS claims they have been rectified and this needed to be put into contractual terms as it changed the specifications of the submarines."

The next three Type 214s were built in Greece by HSY at Skaramangas near Athens. Pipinos was launched in April 2007, Matrozos followed in 2008 and Katsonis at the end of that year. The four boats could now be exported, but TKMS was unable to comment on potential customers at this stage.

Under the EUR826 million Neptune II MLM programme, HSY was contracted to upgrade three Type 209 submarines with a Siemens air-independent propulsion (AIP) system through the addition of a 6.5 m-long hull plug. The first boat, HS Okeanos , was relaunched by HSY on 26 February 2009, but its future is unclear.

Two more boats were due to complete the MLM, but Jane's reported in February that the Greek MoD was considering aborting the upgrade programme after a single boat and purchasing instead two new AIP-equipped Type 209/1400 submarines.

"TKMS agreed to the Greek proposal to replace two upgraded submarines with two new boats and then went back on this promise. We reached a preliminary agreement, but when it came to sign the contract papers TKMS refused to do so," Vasilakos explained.

The cancellation of the programmes has left the HN with eight Type 209s aged between 29 and 38 years old, all but one of them in urgent need of modernisation or replacement. "We will assess the situation and then make a decision," said Vasilakos.

The navy operates two classes of submarine: four Glavkos-class (Type 209/1100) boats commissioned in 1971 and 1972; and four Poseidon-class (Type 209/1200) boats that entered service in 1979 and 1980.

The Glavkos-class submarines - HS Glavkos , HS Nereus , HS Triton and HS Proteus - were upgraded under the Neptune I programme between 1993 and 2000 and were expected to decommission when the Papanikolis-class vessels entered service.



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