The Philippines is still in the process of terminating its arms procurement deal with Russia and has formed a committee to facilitate the recovery of the P1.9-billion the government gave the supplier as advance payment.
Defense Secretary Jose Faustino Jr. disclosed this during the Senate finance subcommittee’s hearing on the budget of the Department of National Defense (DND) and its attached agencies, on Tuesday, September 27, when Sen. Ronald “Bato” Dela Rosa inquired about the status of the P12.7-billion military procurement contract with Russia for the purchase of 16 military helicopters.
Dela Rosa, a former Philippine National Police (PNP) chief, said he hopes that the P1.9-billion payment deposit can still be recovered to help fund the government’s social and economic recovery programs.
Faustino assured that the DND and the Armed Forces of the Philippines (AFP) is pursuing the full termination of the contract. The deal, which involves the procurement of 16 Russian-made Mil Mi-17 helicopters, is now being pursued by the Marcos administration.
“We have already constituted our contract termination review committee and it is processing the contract termination under the terms of reference of the
project and in consonance with the termination of contract under Republic Act No. 9184,” Faustino told the Senate sub-panel.
“It was the previous administration that ordered the termination, but there were no formal documentary processing...so what we did was to form the contract termination review committee to formalize the termination of the contract sir,” he further said, referring to the Duterte administration.
He said the P1.9-billion fund given as advance payment was transferred to the Development Bank of the Philippines last Jan. 10, 2022, or before the Russia-Ukraine war commenced.
“The DND-AFP recognizes the difficulty of funding the advance payments sir, as the supplier is also invested in the project. However, right now—the DND and AFP—we are now exerting effort to refund the amount through diplomatic chanels considering that the project was implemented through government to government procurement, sir,” he said.
“So that is the status now... the project has not yet been officially terminated or cancelled, the process of termination is still ongoing. The DND has reconstituted, as I mentioned the contract termination review committee, which is currently undertaking the appropriate processes,” the defense chief further said.
According to Faustino, the Duterte administration had deemed it is no longer feasible to pursue the project given the major sanctions imposed on Russia that affected its financial transactions.
Nevertheless, he said it was a major challenge for the department to facilitate the transfer of payments to the supplier and it took the DND a year to process the advance payment.
Dela Rosa said he hopes the funds could still be refunded since the counterpart supplier is Filipino.