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Thursday 28 August 2014

Cost of two new naval vessels jumps by €9m

Shane Phelan, Public Affairs Editor

Published 21/11/2013 | 02:00

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TWO new naval vessels being bought by the State are set to cost up to €9m more than originally announced.

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The increased cost only emerged after the British government published details of the export licence for the deal.

The boats are being constructed at a shipbuilding yard in England and one, the LE Samuel Beckett, will arrive in Ireland next year, and the other, the LE James Joyce, in 2015.

The Department of Defence announced in 2010 the vessels would cost €99m.

However, following queries about the cost of the vessels from the Irish Independent after details of the UK export license were published, it now admits that the cost has increased to €108m.

It said there had been further negotiations since 2010, with the department agreeing to pay more as an insurance policy to guard against even higher costs.

"In effect, these renegotiations involved the contractors agreeing to transferring risks of increased costs to themselves should the as-constructed costs be higher than anticipated," the department said.

The statement said the increased price had not been prompted by "any factors in the design and construction" of the boats. There were regular meetings between department officials and the contractor to monitor construction and they were happy it was "progressing in a satisfactory manner", the statement said.

On top of the €108m, an additional €7.8m is being spent providing weapons systems for them. The cost of the weapons systems has remained the same since the original contract was signed.

The naval vessels are part of £96.5m (€115.8m) worth of military exports from the UK to Ireland approved by the British government so far this year.

CONTRACT

The contract for the building of the boats was entered into with Babcock Marine UK in October 2010.

The cost of the boats is being paid in instalments, with the final payment due in 2017.

Special licences need to be granted for all military exports from the UK by its Department of Business, Innovation and Skills.

Ireland operates a similar regime, run by the Department of Jobs, Enterprise and Innovation. However, unlike in Ireland, where only broad figures are published on a six-monthly basis, with little indication as to the exact nature of the exports, the UK publishes data on approved military export licences more regularly and with a greater level of detail.

Apart from the license approved for the export of the new naval vessels, the British government also gave the go-ahead to several consignments of military exports to Ireland since the start of the year.

These included:

* £1.32m (€1.57m) worth of electronics.

* £511,800 (€609,500) worth of electromagnetic wave absorbing materials.

* £58,065 (€69,153) worth of imaging equipment.

Amnesty International has called for greater transparency surrounding the sale and importation of military equipment.

Irish Independent

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