But Defence Minister Phil Goff denies' />

The Government is expecting to pay more than $750 million for the Defence Force's new fleet of helicopters.

But Defence Minister Phil Goff denies this figure is a blowout on a 2002 estimate of up to $560 million.

He acknowledges, however, that the lower New Zealand dollar is partly to blame for the difference.

The Cabinet has authorised the Ministry of Defence to negotiate the purchase of up to eight helicopters to replace 14 ageing Iroquois and smaller Sioux trainers.

In March last year it decided on European-designed NH90 helicopters.

The NH90 is bigger than the 40-year-old Iroquois and is due to enter service in 2009.

The original cost estimate was $400 million to $560 million.

Mr Goff yesterday said the original estimates for the long-term development plan in 2002 were "just that, estimates".

"The figure used in the long-term development plan of up to $560 million was a 'guesstimate' in 2002 for an aircraft not yet off the production line."

He said New Zealand expected to pay market price for the aircraft.

That market price would be higher than originally thought, in part because there were now concrete figures for an aircraft that is in production.

"We are, of course, also affected by the valuation of the New Zealand dollar. That won't come as a surprise to anyone. Anything that New Zealand imports at a lower dollar value is going to cost more and that will be the case with this."

Mr Goff indicated the total cost would be more than the reported $750 million once the cost of spare parts, logistics and a training package were taken into account.

He would not confirm the exact cost, saying negotiations were continuing.

The Government was trying to get the "best price" it could, he said.

It would be "a substantial purchase" for what was a "quality aircraft".

"There's no blowout. There's an increase because of the cost of products bought from overseas [with a devalued dollar]," Mr Goff said.

"We can manage the purchase within the acquisition programme. It will be reasonably tight. It's a 10-year programme. This is the last major purchase within that programme."

Air Marshal Bruce Ferguson, when he was Defence Force chief, had said the Air Force needed eight NH90 helicopters and Mr Goff said the Government would negotiate to buy up to that number.

He would not say specifically how many the Government would buy - it depended on the negotiations - but he wanted to buy what was required.

"We're negotiating with the producer, Nato Helicopter Industries, and we hope to get a deal that we think that we can fit within our budget and will provide the best aircraft for our needs over the next 30 to 40 years," he said.

As for the 40-year-old Iroquois, Mr Goff said there was not much of a market for these.

"It's possible that they can be resold at the end of it but the return that you'd get on the Iroquois is very, very small indeed."


NH90 HELICOPTER

* Payload

Can carry 16 fully equipped troops compared with seven in the ageing Iroquois. It has a rear ramp which will ease cartage of equipment such as quad bikes.

* Performance

A 2398hp state-of-the-art aircraft that can fly at 245 km/h over 900km in poor conditions.

* Flying costs

The helicopter industry estimates that it will cost between $6000 and $8000 per flight hour.The Iroquois costs $2500 an hour.

- NZPA