Lorenzana confident OPV deal with Austal exempted from loans ban

FILE: EXERCISE RESTRAINT AROUND PH WATERS. Department of National Defense (DND) Secretary Delfin Lorenzana appeals to foreign nations to exercise restraint while their warships pass through the West Philippine Sea and waters near the country, during the media briefing at Camp Aguinaldo in Quezon City on Monday (June 10, 2019). Lorenzana said any imprudent behavior could lead to an international incident or conflict, as he cited the two incidents between US, China and Russian warships in the South China Sea and West Philippine Sea in October 2018 and in June 2019. (PNA photo by Joey O. Razon)

MANILA — Department of National Defense (DND) Secretary Delfin Lorenzana is optimistic that the proposed offshore patrol vessel (OPV) project with Australian defense contractor and global shipbuilder, Austal, will be exempted from the government’s foreign loans and grants ban.

“We were travelling from Moscow when I told him (President Duterte), I said, he just nod, he said okay you know, so I still have to make the formal request but I’m almost certain na (that) he will approve it because of this, the mode of procurement is not being built outside, it will be built in the Philippines and one of his marching orders at the start of his Presidency was to develop our capability (to construct naval ships) in-country,” Lorenzana told reporters on the sidelines of “Mateship and Bayanihan: The Story of Philippine-Australian Defense Ties” exhibit launch at the Quezon Memorial Circle Thursday.

The DND is currently in talks with Austal on the possibility of building six OPVs at its Balamban, Cebu shipyard via a soft loan or government-to-government procurement.

Lorenzana also placed a “60 percent” chance of the agreement finalized or signed within the end of the year.

“Let’s give it a 60 percent (chance of being signed),” he added.

Once this is signed, Lorenzana said the OPVs can start construction by next year with the first ship being delivered in 18 months’ time.

The OPVs are part of Horizon Two of the Armed Forces of the Philippines Modernization Program and expected to replace the World War II corvettes and minesweepers still in PN service as of this time.

Earlier, the DND chief said he might ask the Chief Executive to exempt the DND from the suspension of loans and grants from 18 countries that supported the Iceland-sponsored United Nations Human Rights Council resolution calling for investigations on the Philippines’ illegal drugs campaign.

Of the 18 countries covered with the suspension of loans and grants memorandum issued by the Chief Executive through Executive Secretary Salvador Medialdea last August 27, the Philippines is known to source military equipment and items from four nations which include Australia, United Kingdom, Spain, and Italy.

Items acquired from these countries include the AW-109 combat utility and AW-159 anti-submarine helicopters from the United Kingdom and Italy, and the C-295 medium transports from Spain and a possible soft loan grant from Australia to build the Navy’s six offshore patrol vessels.