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A new French nuclear submarine is seen in the Naval Group shipyard in Cherbourg, France in July 2019. Photo: AFP

Aukus fallout: French submarine builder to send Australia invoice for scrapped ‘contract of the century’

  • France’s Naval Group is seeking compensation after Australia decided to go with nuclear-powered vessels from the US and Britain instead
  • Australia had previously complained that the project was years late and well over budget

France’s Naval Group said Wednesday it will send a “detailed and calculated proposal” to Australia in the coming weeks of the costs it expects Canberra to pay for scrapping a massive contract to purchase French submarines.

Australia in 2016 agreed to buy 12 diesel-powered submarines built by Naval Group in a deal dubbed the “contract of the century” worth US$36.5 billion and later revalued at US$60 billion.

However last week Australia ditched the deal in favour of nuclear-powered submarines from the United States and Britain, in a secretly negotiated agreement that infuriated Paris and sparked a diplomatic row.

Naval Group CEO Pierre Eric Pommellet told France’s Le Figaro newspaper on Wednesday that a bill would be sent to Australia “in a few weeks”.

Australia’s concerns over French submarine deal ‘known for years’

“Australia terminated the contract for convenience, which means that we are not at fault,” he said.

“It is a case that is planned for in the contract and will require a payment of our costs that were incurred and those to come, linked to demobilisation of infrastructure and IT as well as the redeployment of employees,” he added.

“We will assert our rights.”

Australia had previously complained that the deal with Naval Group, which is partly owned by the French state, was years late and well over budget.

France’s defence ministry has said Naval Group has already started talks about a financial settlement with Canberra.

Naval Group had already completed €900 million (US$1.1 billion) in work on the submarines, the ministry said, but suffered no losses as the work was covered by Australian payments already made.

But calling the pull-out “a betrayal”, the ministry said the talks would now determine the size of “compensations and damages” owed by Australia.

Pommellet told Le Figaro that “this decision was announced to us without any prior notice, with unprecedented brutality”.

This article appeared in the South China Morning Post print edition as: French builder to send invoice
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