Government has quietly signed a R6,4bn deal to buy eight military transport aircraft, concluding an acquisition that has been dogged by controversy, because SA's bid for the planes was not put out to tender.

The agreement's total cost amounts to about 14% of the R30bn strategic arms package — although the two deals are unrelated — and government's downplaying of its signing yes-terday raises questions about whether it has learnt anything from the tainted arms deal.

The deal was signed by Defence Minister Mosiuoa Lekota and European aircraft manufacturer Airbus yesterday morning and announced by government spokesman Joel Netshitenzhe.

SA's purchase of the eight A400M, a new generation military transport, could however be a lifeline for the country's beleaguered state-owned arms manufacturer Denel. It will also boost the defence force's reach into the continent and help support peacekeeping efforts.

Public Enterprises Minister Alec Erwin described the deal as "very good news for SA's aerospace industry", saying the à830m purchase would help revitalise the aerospace industry.

"This (the deal) fits in well with our strategy to develop the aerospace industry in SA."

Erwin said the aircraft, the first of which is expected to be delivered to the South African Air Force in 2010, were bought on terms favourable to SA.

"We are not an ordinary buyer. We are part of a production consortium … the contract makes us a part of the procurement and production process."

Government and Airbus say the deal will mean at least à400m, or R3,14bn, in work for the local aviation industry, offering a possible lifeline to Denel.

Erwin said the production of the A400M's components by Denel and Aerosud, a local privately-owned arms manufacturer, would "commence very soon" and that Airbus had already received about 180 orders from around the world for the planes.

He said that being a part of the production consortium would allow SA to have its orders delivered as early as 2010.

"We want to be fairly close to the top of the queue … there's a degree of urgency *1 on our part."

The aircraft would boost the defence force's ability to operate over long distances in Africa as they will relieve a critical shortage in airlift capacity. They have double the capacity in volume and weight of the world's most widely used military air transporter, the US-made Hercules C130.

The deal comes after a statement from government late last year that it was considering an acquisition of up to 14 of the new transporters. Until that statement — and in stark contrast to the now controversial arms package — there was never a hint that government was even considering the purchase of new military transporters even though a review of defence policy by Parliament was under way at the time.

The work that SA will receive through the deal will be in proportion to its order of eight of the total of 188 airplanes Airbus plans to produce, mainly for European air forces. In addition to the work on the plane, SA will be entitled to a levy payment in proportion to its purchase. Airbus says the levy will be available only after the 242nd airplane is sold.

Rafeek Shah, defence spokesman for the Democratic Alliance, said the acquisition was designed to bail out Denel and not for "operational requirements". Shah said SA should have considered alternatives such as the C130 and the Russian-made Antonov.

The acquisition of the A400M will more than double the air force's transport capacity and allow SA to play a large role in providing military airlift for the planned southern African brigade of the African Standby Force.

SA's peacekeeping missions in Burundi, the Democratic Republic of Congo and in the Darfur region of the Sudan have stretched the air force's airlift capacity, particularly as seven of the air force's nine C130s cannot be flown because of an investigation into problems with their wing spars. This has forced the air force to rely heavily on its ageing fleet of three Boeing 707s.

Meanwhile, Netshitenzhe yesterday announced the appointment of Bulelwa Yako as director- general of the environmental affairs and tourism department. He replaces Chippy Olver.

Godfrey Mokate was named National Devel-opment Agency CEO.

With acknowledgements to Jonathan Katzenellenbogen, Jacob Dlamini and the Business Day.

*1 Things are always urgent when the wonga needs a splodgin'.