Bangkok: Thailand's government has again stated that it is ready to cancel the languishing Chinese submarine deal if the conditions of the procurement cannot be met.

The Thailand Navy commander-in-chief Adm Choengchai Chomchoengpaet last week said they are prepared to pull out of its submarine purchase project with China if the conditions of the procurement are unfavourable, according to the English-language daily newspaper The Bangkok Post.

In 2017, Thailand agreed to a 13.5 billion baht deal with state-owned China Shipbuilding & Offshore International Co (CSOC) for the procurement of an S26T Yuan-class submarine, with expected delivery in 2023.

According to Bangkok Post, the contract called for the installation of the well-proven German-made MTU 396 diesel engine. However, Berlin will not allow it to be sold to China.

Earlier this year, construction on the submarine ground came to a halt when the German company said that it would not supply its cutting-edge MTU396 diesel engines to CSOC for installation in the Thai submarine.

The German company said it was barred from making the sale due to a European Union government embargo on the sale of military items to China.

In response to sanctions, the Chinese state-owned enterprise has instead offered to install a Chinese-made engine in the submarine or to offer Thailand two decommissioned boats from the People's Liberation Army Navy.

Writing for The Diplomat magazine, columnist Sebastian Strangio said the Thai government refused this offer, insisting that the German engines be installed as per the letter of the contract.

"What do we do with a submarine with no engines? Why should we purchase it?" Prime Minister Prayut Chan-o-cha told reporters in March, as quoted by The Diplomat, raising the possibility that the deal could face the axe.

Facing a choice between cancelling the procurement, Thailand's government and military have reportedly come to some sort of compromise.

On Tuesday, the Thai Navy chief, in an apparent diluted stand, said the country wanted the Chinese navy to guarantee the Chinese-made CHD620 engine the builder wants to use in the S26T Yuan-class submarine ordered from China Shipbuilding & Offshore International Co (CSOC).

However, the Royal Thai Navy chief told reporters about "a delay in clarification about the engine."

"There is a delay in clarification about the engine... The first-stage test of the engine was completed. The second stage concerns spare parts... The navy is making inquiries about the matter with CSOC," he was quoted as saying by The Bangkok Post.

Furthermore, he said it would be good if the Chinese navy would guarantee the engine to be installed in the submarine. "Without a guarantee, we cannot be confident that it is good," he said.

Answering a question on termination of the contract if conditions are not met, he said, "Yes. At this stage, it can be terminated anytime."