Indonesia begins contract negotiations for two Scorpene Evolved submar…

An Indian Navy Scorpene submarine. Indonesia has begun negotiations to procure the Scorpene Evolved variant of the boat, which will be equipped with lithium ion batteries. (Naval Group)

Representatives from French shipbuilder Naval Group have arrived in Jakarta to begin contract negotiations for two lithium ion batteries-equipped Scorpene Evolved diesel-electric submarines (SSKs).

Separate sources have confirmed to Janes that negotiations for the possible contract began at the Indonesian Ministry of Defense's (MoD's) office on Jalan Medan Merdeka Barat on 26 February. A major point of the discussions included how the programme would be financed should a contract materialise.

As part of its offer, Naval Group has partnered with the French government's Directorate General of the Treasury to fully fund the programme via three sources of loans, Janes has been informed.

These include a credit facility with France's Banque publique d'investissement and a direct loan from the Directorate General of the Treasury, which would fund up to 85% of Naval Group's portion of the contract.

A third source of loans, which would be arranged with a private commercial lender that has yet to be determined, will fund the remaining 15% of Naval Group's portion in the contract and up to 100% of state-owned shipbuilder PT PAL's portion in the contract.

A contract to procure the submarines will involve the two companies as part of a technology transfer agreement.

Under this arrangement, both submarines will be fully built in Surabaya, with construction work on the first boat scheduled to begin 14 months after the contract becomes effective and once funding sources and an initial payment are secured.