(Bloomberg) --Germany is poised to order 18 Leopard 2 main battle tanks to replace units sent to Ukraine with an option for 105 more at a total cost of around EUR2.9 billion ($3.2 billion), according to people familiar with the plan.
The budget committee in the lower house of parliament is expected to approve the initial order of 18 tanks -- worth about EUR525 million -- at the end of this month, said the people, who asked not to be identified discussing confidential information.
The order is the latest in a broader push to modernize Germany's armed forces triggered by Russia's war on Ukraine. On top of the annual defense budget of some EUR50 billion, Chancellor Olaf Scholz's ruling coalition has created a special fund worth EUR100 billion to try to reverse years of underinvestment in the military.
A Defense Ministry spokeswoman confirmed that the government is in advanced talks to buy 18 Leopard tanks to replace those sent to Ukraine. She declined to comment on the financial details of the order, saying talks are still ongoing.
The Leopard tank is built by Krauss-Maffei Wegmann GmbH & Co. KG, with Rheinmetall AG supplying components including the gun and MTU Solutions -- a unit of Rolls-Royce Holdings Plc -- the drive systems. A spokesman for KMW declined to comment, while spokespeople for Rheinmetall did not immediately respond to a request for comment.
German lawmakers this week approved the purchase of 50 Puma infantry fighting vehicles at a cost of EUR1.5 billion and Defense Minister Boris Pistorius raised the prospect of another order later this year.
The contract for the Pumas includes an option for 61 additional units, taking the total ordered to 111, the people said.
--With assistance from Alexander Pearson.
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