16:06 GMT, November 5, 2009 defpro.com | The South African government today announced that it has cancelled its order for eight Military Airbus A400M aircraft.

In its ordinary meeting yesterday in Cape Town, the Cabinet decided to terminate the contract to purchase eight strategic lift aircraft. This decision follows a review of the contract by the Ministries of Defence and Military Veterans, Finance, Trade and Industry, Science and Technology and Public Enterprises, a spokesman said.

According to the cabinet, the termination of the contract is due to extensive cost escalation and the supplier’s failure to deliver the aircraft within the stipulated timeframes.

The Armaments Corporation of South Africa Ltd, Armscor will be instructed to terminate the programme as soon as possible, the spokesman told reporters.

The cost escalation would have placed an unaffordable burden on the taxpayer at a time when the national fiscus is under pressure due to the economic downturn. An amount of R2.9 billion will be refunded to National Treasury as per the contract provisions.

Cabinet believes that the interests of the South African taxpayer will be best served by not proceeding with the contract.

The Minister of Defence and Military Veterans will brief the Portfolio Committee on Defence about this decision this morning.