The Department of National Defense (DND) announced Wednesday, August 10, that it was formalizing the termination of a contract with a Russian company for the procurement of 16 units of Mil Mi-17 heavy-lift helicopters for the Philippine Air Force (PAF).
DND spokesperson Arsenio Andolong said the department was coordinating with Sovtechnoexport LLC to sort out issues that might arise from the scrapping of the deal.
“We have reconstituted the DND Contract Termination and Review Committee (CTRC) that will undertake the appropriate processes and exercise due diligence in formalizing the termination of the project’s contract,” said DND spokesperson Arsenio Andolong.
The DND said the deal was terminated by the previous administration because of “changes in priorities necessitated by global political developments.”
Part of the matters that will be studied by the DND-CTRC is whether the department can recover the P1.9 billion down payment that it paid to Sovtechnoexport LLC in January of this year.
“We are also preparing to initiate a diplomatic dialogue with the Russian side regarding matters arising from the project’s cancellation,” Andolong added.
The project worth P12.797 billion was signed in November 2020 and sought to provide the PAF with a Soviet-designed military helicopter mostly used as a medium twin-turbine transport chopper as part of the revised modernization program of the Armed Forces of the Philippines.
Former DND secretary and now Bases Conversion and Development Authority (BCDA) Chairperson Delfin Lorenzana was quoted as saying in an ABSCBN report last August 4 that he was the one who terminated it upon the orders of former president Duterte.
Accordingly, if the deal pushes through, the Philippines stands to face possible sanctions from the United States under the Countering America’s Adversaries Through Sanctions Act (CAATSA), a law which imposes sanctions on countries buying military and defense materials from countries hostile with US.
These sanctions might reportedly include the freezing of Philippines’ accounts in foreign reserves and blocking of sending of remittances from Filipinos working in US.
Conflict between Russia and United States worsened when the latter expressed support to Ukraine after it was invaded by Moscow earlier this year.