MANILA — The Department of National Defense (DND) said Wednesday that it is formalizing the termination of its contract with Russia for the supposed procurement of 16 units of Mi-17 heavy-lift helicopters for the Philippine Air Force.
“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,” DND spokesperson Arsenio Andolong said in a statement.
Andolong said the department is coordinating with Russian firm Sovtechnoexpert LLC to sort out issues that might arise from the scrapping of the project.
“We are also preparing to initiate a diplomatic dialogue with the Russian side regarding matters arising from the project’s cancellation,” he added.
Former defense secretary Delfin Lorenzana earlier said the country had made an initial payment of P2 billion to Russia, noting that he wasn’t sure whether or not the Philippines could get the money back.
“We don’t know if we could still get back the money since we are the ones who terminated the contract. It will take some time for the negotiations for us to get back the P2 billion,” Lorenzana said.
Lorenzana confirmed to ABS-CBN News on August 3 that the government had called off a deal to purchase the military transport helicopters with a Russian company due to fears of possible sanctions by the United States.
It was former president Rodrigo Duterte’s decision to scrap the deal, he added.
“It was canceled because it was the decision of the president [Rodrigo Duterte] to cancel it because of the threat of being sanctioned. On the recommendation of the Secretary of Finance to the Ambassador to the US, he said that it is better for us to terminate the contract because the disadvantage that we will get is more than if we get the choppers,” Lorenzana told ABS-CBN News.
Possible sanctions include "freezing the accounts of the Philippines," and stopping remittances from Filipinos in the US, said Lorenzana.
“We can resume the choppers maybe after some time that the sanction is lifted by the US against Russia. We thought that if we pursue with the purchase, we might not be able to pay the payment because of the sanctions,” he added.
The DND said the deal was terminated by the previous administration because of “changes in priorities necessitated by global political developments.”
Andolong clarified the amount for the initial payment made was P1.9 billion. The CTRC will be studying how to recover the down payment, which was paid by the Philippine government last January.
The P12.797-billion project was a “multi-year procurement contract” signed in November 2021.
Under the agreement, the first batch of multipurpose helicopters would have been scheduled for delivery by Russia in about two years. The Russian-made helicopters could have been used for combat, search and rescue operations, and medical evacuations.