The Minister of National Defence, Mr. Nikolaos Panagiotopoulos, delivered his opinion today, Tuesday October 6th 2020, on the Amendment no. 492/83 5.10.2020 on the “Arrangement on the shipbuilding of two Guided Missile Fast Patrol Boats (GMFPB) and the completion of works on submarines of the Hellenic Navy”.
The text of his speech follows:
I hope that this amendment, following other similar amendments tabled in the past both on “Elefsis Shipyards” and on “Skaramagkas Shipyards”, is the last. However, this will depend on the procedure in both shipyards that has been opened by the competent Ministries of Development and Finance. As regards Elefsis Shipyards, it has nothing to do with the finding of a private investor, but with his entry, since he has practically taken over their control; however – as far as I know – a restructuring plan should be submitted to the Court pursuant to the provisons of the Bankruptcy Act. In order to be approved, the lessees’ prior consent is required. One of them is the Ministry of National Defence.
Then, upon the approval of this plan, the procedures for the completion of the investment and its support by American capitals will move forwards, given that the USA actually invest not only in “Elefsis Shipyards” but in the entire Greek shipbuilding industry in order to maintain inter alia not only the Hellenic Navy’s vessels, but also to attract other projects, including the shipbuilding of new vessels, as soon as the decisions to that effect are taken by the Ministry of National Defence and the Hellenic Navy.
As regards the Skaramagkas Shipyards, of course there is an interest in finding a new investor; however, this will take place through a tender procedure that we – as Ministry of National Defence – hope that it will be completed by the end of the year.
Therefore, there is a single amendment with filing no. 492 and special number 83 dated October 5th 2020 with two provisions: the first one involves the shipbuilding of two Guided Missile Fast Patrol Boats (GMFPB) in Elefsina and the second one involves the completion of works on Submarines of the Hellenic Navy in Skaramagkas. These provisions fall within the scope of measures adopted by the Ministry on the ongoing increase of the combativeness of the Armed Forces and the Hellenic Navy in particular. How necessary this is has been demonstrated over the past months.
The first provision governs the completion of the shipbuilding of two torpedo boats of the Hellenic Navy. A three-month extension to the works contract between the Hellenic Navy and the shipyards’ workers is granted. It involves the shipbuilding programme of two Roussen-class torpedo boats No. 6 and No. 7 of the Hellenic Navy at “Elefsis Shipyards”. Let me remind you that the Torpedo Boat no. 6 has already been delivered since June. The Hellenic Navy flag was raised on June 1st 2020 and has been given the name “Lieutenant Karathanasis”, after one of the fallen heroes during the Imia incident.
It has been integrated into the Hellenic Navy’s structures and currently, the final testing of the weapon systems, but also the combat systems and the command at sea are being carried out. At the same time, the shipbuilding for Torpedo Boat no. 7 is ongoing. This was launched on August 5th 2020 and now is in the process of final testing. However, it has not been delivered yet to the Hellenic Navy, since some procedures need to take place. We believe that these will last from some months to one year until this boat as well is delivered and integrated into the Hellenic Navy.
For the completion of the shipbuilding work and the delivery of the torpedo boats, the extension of the programme by three months is required; an additional funding up to the amount of EURO 3.375.000 involves workers’ salaries and insurance contributions, the personnel’s transport service operating expenses, materials and services for the completion of the programme.
The second provision has to do with Skaramagkas and involves the completion of works for four submarines of the Hellenic Navy at Skaramagkas Shipyards. It is a known fact that the workers’ knowhow and skills assist the maintenance work of these four 214-type submarines that are much needed for the structure of the Armed Forces and the Hellenic Navy. I would say that these are the most effective weapon systems for our Navy. They proved to be particularly useful during the crisis in the Aegean Sea and the Eastern Mediterranean some time ago.
Additional funding is also required for the completion of works and sea trials and the operational performance of the Submarines, due to the expiry of the extension that has been granted in the past. Since we became the Government, two extensions of six months in length each have been granted. Since we reasonably expect that the tender procedure will be completed by the end of the year, we grant another three-month extension, as in the case of Elefsis Shipyards.
Ever since the first day that we assumed our duties as the Government and in the Ministry of National Defence, we moved in two directions:
The first direction was to move forcefully, in order to get the country’s shipbuilding industry back to its feet. This meant to find solutions to the standstill that the Country’s two largest shipyards have been brought to. I believe that this has been achieved to a certain extent; however, we are at the difficult – final stage of the entry of investors in both shipyards. There are reasonable grounds for believing that the tender procedure for Skaramagkas and the completion of the procedure for the entry of the new investor in “Elefsis Shipyards” will be finished by the end of the year. This will boost the Country’s Defence Industry, as well as the national economy’s entire productive fabric.
The other direction in which we moved was to make clear from the beginning that we did not intend to leave the workers of both production units to chance. As you can understand, a healthy, normal situation in an “economic regularity” would be that the workers are getting paid by their natural employer, which is the ownership in the shipyards’ management and not the Hellenic Navy for a specific project, under terms of a project contract carried out on the account of the Hellenic Navy. The shipyards undertake work by the Hellenic Navy, possibly by third parties as well, and by performing these works, they pay their workers.
In recent years, this was not possible due to difficulties that both shipyards were facing. In this way, the Hellenic Navy appeared, entering in effect into an agreement with workers upon the approval and the consent of the shipyards’ ownership, so that a solution would be given to the problem and the shipbuilding of vessels and the maintenance of submarines would be completed. Hopefully, we will soon reach regularity, both shipyards will operate under normal conditions, so that works would be undertaken and workers would be paid, who in the meantime had to be ensured. That was the meaning of these consecutive extensions to the agreements on the shipbuilding of Torpedo Boats for Elefsina, the maintenance of Submarines for Skaramagkas and that is where our intervention lies.
I would like to conclude by wishing that this is the last time that we have to proceed with such an intervention by these two three-month extensions granted by this amendment, but also that the two main production units of the country’s shipbuilding industry will stand on their feet. I believe that we are very close to it. However, until this happens, we grant this extension, so that the shipbuilding work would proceed and the workers would feel that the Government – and in this case, the Hellenic Navy that gives them work – covers them and recognizes their effort all this time.
In view of all this, I urge the Members of this Parliament to approve – from what I understand the amendment tabled has already been approved by the competent Minister – I urge the Members to consent to and approve this amendment with these two provisions that in my opinion give a solution until the final solution is given to the unresolved issues with both shipyards”.
“Mister President, let me provide some answers to Mr. Loverdos.
The issues he raises are certainly interesting. First of all, in order to finally and irrevocably overcome the myth of “submarines that cannot right themselves”, given that I had formerly been a member of the inquiry committee that examined the life and time of four or five Ministers who handled the submarine contracts. They were four or five and throughout their term of service, there have been stages of total or partial acceptance or evaluation or certification of the systems for these submarines.
Well, these submarines have always been upright. Or, rather, let me put this right: The prototype one, on some first sea trials and under certain specific circumstances, meaning at a certain speed and under specific conditions at sea (if I am not mistaken, more than wind force 5 in the Beaufort scale), presented a slight inclination. It is something absolutely normal, I explain this, for a prototype at the Northern sea. Unlike any other built up to that time. Similarly, this could have happened with the “Belharras” that are currently being built in French shipyards. But these are frigates, not submarines. Anyway, to help you understand the meaning of the prototype; it presented these little problems. It is absolutely normal for a prototype vessel.
Some interventions were made and this slight inclination has been corrected. Once they were delivered and were integrated into the operational structures of the Hellenic Navy, they were delivered in excellent condition, obviously without any inclination or any other problem that may occur in all prototypes.
They have proven their worth as differentiating powers of superiority in the field during the recent crisis. The Turkish forces are still trying to find them. As a result of the special features as regards propulsion, they have a silent (if I may put it simply) system and they are undetectable to helicopters or airplanes or surface vessels looking for them.
I think that we should get past all this silliness about “submarines that cannot right themselves”. It is not about whether the cost has been high or not. However, they were the absolutely necessary weapons needed by the Hellenic Navy and this remains true today.
Apart from that, let’s move on to other questions: You asked whether the procedure for the completion of the investment in Elefsina advances or is delayed. When I took the floor I explained that there are some procedural issues. In other words, the company’s restructuring plan will be submitted to the Court, creditors will consent because this is a necessary condition and upon approval (as I am confident it will) of this restructuring plan, DFC will be a part of the equation; this American corporation that provides investment funds for Defence investments. There is an agreement but this will be activates as soon as we go through the stage of the approval of the restructuring plan by the Court. Based on my information, we are at the final stage so that this plan would be submitted before the courts.
As regards workers, as you know based on the agreement with the Hellenic Navy, they get 60% of their salary. Of course, 20% of workers currently work on these two torpedo boats. This is another interesting element, but in any case in order to keep everyone happy, that was what was agreed. I am not in a position to give you any details, because I am not supervising the compliance with this procedure. I am here to speak to you on the account of the client, which is the Hellenic Navy, and as you can understand the Hellenic Navy is a client that has a reason not to feel very satisfied over time, due to all these considerable delays in the implementation of the programmes.
However, over the last few months, possibly driven by the prospect of completion of the investment, the pace of work has been increased and this is undoubtedly due to the workers. I don’t doubt it. I have not seen the restructuring plan to be submitted before the Court, but I know that the new investor’s objective is to move in the immediate period ahead, so we could get over this.
The situation with Skaramagkas is somewhat different, as far as I know. As you know, the shipyards there have been placed under liquidation; at the same time though there is an international dispute with the former owner, which has led to some decisions by the International Arbitral Tribunal. The proceedings are ongoing. However, the only thing we should have in mind is that the liquidation process is being completed and beyond that, the tender procedure to find an investor. I do not know whether there will be developments; I guess this depends on a future award of the Arbitral Tribunal.
In all cases though, the Greek Government will leave no stone unturned in its attempt to find a solution so that there will be a “clear following day” for Skaramagkas Shipyards. And I am providing you this information outside my competence; however it is the only information available to me at the moment.
The Ministry of National Defence’s standpoint adopted is that of a party that is interested in the completion of the programmes relevant to the Hellenic Navy’s support and the enhancement of the combat effectiveness of the Armed Forces. Like I said, the procedure in both shipyards is supervised by the competent Ministries of Development and Finance. There are reasonable grounds for believing that the procedures will be completed by the end of the year and that we will possibly go through the following day, not only of both shipyards but of our country’s shipbuilding industry in general with all the positive consequences that entails for the support of the Hellenic Navy.