Thailand agrees with China to go ahead with sub deal

A joint working panel from both the Thai and Chinese defence ministries has agreed to go ahead with the controversial submarine procurement deal and let the sub be mounted with a Chinese engine.

According to a source familiar with the negotiations, the two sides have agreed to continue with the acquisition of a submarine, instead of a frigate.

General Somsak Rungsita, an advisor to Defence Minister Sutin Klungsang, led the Thai side of the negotiations held at the Defence Ministry on Tuesday and Wednesday.

The Chinese side comprised representatives from the China State Shipbuilding Corporation (CSSC), the Bureau of Military Equipment and Technology Cooperation (BOMETEC), and the State Administration of Science, Technology and Industry for National Defence (SASTIND).

The source said Sutin was also present at the talks on Tuesday.
The negotiations focused on whether the deal to purchase a submarine should be changed to frigate now that the CSSC cannot acquire a German MTU 396 diesel engine to mount on the submarine as required in the original contract.

The two sides agreed that if the submarine deal was cancelled and replaced by a frigate, it would create more problems than benefits for the Thai side. Plus, the payment that the Royal Thai Navy has made towards the submarine can only be partially returned, the Chinese side said.

The talks, meanwhile, ended with both sides agreeing that the submarine deal should be preserved for the sake of long-standing bilateral ties.

The Chinese side said they will make up for the breach of contract by providing Thailand with free relevant tools, such as training simulator, and will also provide insurance and training to Thai naval officers.

The source quoted Chinese negotiators as saying that the compensation package will be worth several hundreds of millions of baht, but would not disclose details of the package before it is final.

The Defence Ministry will submit a summary of the negotiation to Prime Minister Srettha Thavisin and the Cabinet for approval.
Cabinet approval is necessary as the original contract will have to be amended in two key places. First, it would have to be extended by another 1,200 days, and second, it would have to be amended to allow the sub to be mounted with the China-made CHD620 engine.

The Thai side was assured that the CHD620 engine was certified by the Classification Societies and that Pakistan had also bought a submarine with a CHD620 engine.

The source added that Chinese negotiators accepted Thailand’s demand, but did not use the word “compensation”. Instead, they said, the demand has to first be endorsed by China’s central military committee. The negotiators also promised to ask the Chinese government to purchase Thai agricultural products as part payment for the submarine.

However, the Chinese side said the deal would be clearer if Thailand amends the contract first.

The Royal Thai Navy’s submarine procurement project hit a huge setback when Germany refused to supply a diesel engine for the vessel. German law restricts the use of German-made engines in weapons made by foreign nations.