French Defence Minister Francois Leotard signed a FF 5,500 million ($964 million) contract for the supply of three submarines and the renovation of the Karachi dockyard on September 21. French officials said that the contract had been the object of long negotiations and intense competition, notably with Britain and Sweden.

It will provide for the supply by the French Defence Ministry's Direction des Constructions Navales (DCN) of three diesel-powered Agosta 90 B-type submarines. Two are to be assembled at the Karachi dockyards, which are also to be renovated by DCN. The submarines are to be completed by 2000.

French officials said that the technology transfer element had been a key factor in Pakistan's decision to place the order in France. Another had been the French government's decision, announced earlier this month, to supply Pakistan with three Breguet-Atlantique-1 naval patrol aircraft destined as a source of spare parts for three identical aircraft delivered in 1976. France also had the advantage of having already supplied the Pakistani navy with four Daphne-type and two Agosta-type submarines in the late 1960s and late 1970s, respectively.

Negotiations on the contract have been taking place since the visit to France in January 1992 of the then prime minister, Nawaz Sharif. The French Defence Ministry had been hoping to sign last year but, reportedly, ran into opposition from the Finance Ministry which raised doubts about Pakistan's solvency. Subsequently, Sweden's Kockums shipyard put in a competing offer to supply A 17-type submarines, offering attractive financing arrangements. This bid was finally rejected in favour of the French one last May, according to French reports, but was replaced by a late British offer to supply second-hand Upholder-type submarines but without any transfer of technology.

The British bid was reported to have the support of some senior personalities in the Pakistani defence establishment but, according to French sources, did not comply with contract specifications. It is understood that France has agreed to supply the submarines equipped with Aerospatiale's SM 39 missile, a version of the Exocet which can be launched from a submerged submarine.