Wednesday, January 14, 2009

Why Are You Still Harping On The Price?

My fellow forumer Tin in Cari forum highlighted a good point about the on-going debate on the price of the EC725 Combat Search and Rescue (CSAR) helicopters paid, especially when compared with a similar timed purchase by Brazil. As we in the business industry well knows, you should compare something apple to apple, that is, something must be compared on a similar platform, in this case CSAR platform and todate nobody has been able to provide information on the Brazilian helicopters' specification. Nonetheless Tin has managed to unearth the details of a similar EC725 CSAR helicopter deal by Eurocopter's home nation France that I append below. I hope you can spot what I want to say before I comment on it after the post.

Eurocopter Receives Notification of a Contract for 10 EC 725 Helicopters for the French Special Forces

In late November 2002, the SPAé (French Aeronautical Production Agency), acting on behalf of the French General Delegation for Armaments (DGA), notified Eurocopter of a contract for the supply of 10 medium-sized EC 725 helicopters to the French Special Forces. The contract, which is worth 271 million euros, covers the helicopters, general customization costs, and support services.

Delivery of the first EC 725 is set for late 2004, with the follow-on deliveries spread out over 2005 and 2006. With this contract notification, the EC 725/225 order book now totals 18 machines. The latest newcomer to the Cougar range benefits not only from the operating experience of its predecessors, but also from major technical upgrades. The French Air Force - the EC 725 launch customer - has announced a current need for 14 of these helicopters to fly Combat Search And Rescue (CSAR) missions for the French Armed Forces. This new medium-sized twin is in the 11-ton class, and exists in a military (EC 725) and a civil (EC 225) version. It first flew in November 2000 and offers much higher performance, with a military payload and a radius of action substantially higher than on the Cougar Mk 2. Compared to the Cougar MK2, the EC 725 has a brand new, 5-bladed Spheriflex main rotor, a strengthened main gearbox, a new Turbomeca Makila 1A2 based powerplant, and a new integrated piloting and display system. The powerplant has an emergency rating of 1,800 kW (2,448 hp, 2,413 shp), 14% higher than the previous engine version. Eurocopter retained the Cougar Mk2 airframe for the EC 725 because of its proven in-service record, and the high-performance equipment and optional items that are available.

To date, a total of 652 helicopters from the Super Puma/EC 225-Cougar/EC 725 family have been ordered by 85 customers in 47 countries.
Looking at the value of this order of Euro271 million for 10 helicopters against Eurocopter's bid price of Euro233.3 million for 10-12 units shows that we are paying less per unit of CSAR helicopters. The fact is that in 2002 Euros the value for each CSAR helicopter is Euro27.1 per unit. So the whole contract value in Ringgit Malaysia(RM) at today's exhange rate of Euro4.528 per RM is at RM1.227 Billion and when comparing it with Eurocopter disclose price of Euro233.234 million = RM1.056 billion shows that France's purchase even in 2002 values costs more than our purchase. And this is for a contract for their home nation with no countertrade. So this piece of comparative purchase news serves to confirm that the Malaysian Government has obtained a good offer for this tender. In fact you can also compare the difference between a normal military specified EC725 against the CSAR specified version from this article. So get your monetary facts right. You do not need a bipartisan parliamentary committee to investigate a purchase that has disclosed the correct figures showing it is above board just in order to justify some cooked-up figures as demanded by the opposition while suspending the deal. We need these helicopters now! The facts has been laid down on your feet. It is now up to your common sense to make a sound judgement.


reezo said...

Contracts & Key Events

look at the update at explains everything that they misquoted wrong figure (U1.2B) in June 2008 and in Dec 2008, the actual contract was Euro 1.9B equiv. US 2.7B....
-NURI jadi mangsa politik dan kesilapan fakta...

EC725 Cougar
(click to view full)Dec 23/08: French President Nicolas Sarkozy and Brazilian President Luiz Inacio Lula da Silva sign the EUR $1.9 billion (about $2.7 billion) contract in Rio de Janeiro. French government | EADS Eurocopter | Bloomberg

Dec 18/08: Brazil releases a new National Defense Strategy that sets out broad range of goals, including the rebuilding of Brazil’s defense industry. AP report | Estrategia Nacional de Defesa [Portuguese].

June 30/08: Brazil and France sign an agreement in principle for Eurocopter to build helicopters in the South American country via its subsidiary Helibras. Brazil’s Defense Minister Nelson Jobim reportedly said that the country intended to buy 50 “Super Cougar” models, the first of which would be delivered in 2010. The deal’s value was initially reported as $1.2 billion, but reports put the signed contract at $2.7 billion equivalent.

mumuchi said...

Thanks for the update.

The data needs to be widely distributed and I will write more on this later, tks.