India may have to pay $2b more for GorshkovNEW DELHI: India may have to shell out as much as $2 billion more to Russia to get aircraft carrier Admiral Gorshkov by end-2012.
This will be over and above the original $1.5 billion package deal signed in January 2004, under which India was to get a fully-refurbished Gorshkov with 16 MiG-29K fighters.
The defence ministry, after a lot of groundwork, now hopes to begin the "formal renegotiation" of the entire 2004 contract with Russia in August after a nod by the Cabinet Committee on Security (CCS).
"All the parameters and benchmarks set for payments in the 2004 contract have changed totally. The scope of work on Gorshkov is very different now from what was originally assumed. A new contract is needed now," said defence ministry sources on Friday.
After a flurry of top-level discussions and visits to the Sevmash shipyard in north Russia, where the decommissioned carrier has been berthed for the last 12 years, India now acknowledges it will have to pay "substantially more" for the 44,570-tonne warship.
"Though the exact contours are yet to be finalised, the new package deal could be worth around $3.4 billion now. The fuel costs of the year-long sea trials after Gorshkov's refit, to be held in Barents Sea during 2011-2012, alone will be around $100 million. The CCS, of course, will have to give the final nod," said a source.
As per the 2004 contract, the refurbished Gorshkov, rechristened INS Vikramaditya after India paid an initial $500 million, was to be delivered by August 2008.
But once the partly-burnt huge warship was "opened up" at Sevmash, Russia found it had "grossly underestimated" the work needed to make it fighting fit again. The estimate for the ship's new cabling, for instance, jumped up to 2,400 km from the original 700 km.
Then, of course, the work entails removal of the huge missile launchers on the bow to build a ski-jump at a 14.3 degree angle for MiG-29Ks, apart from new-generation communication, air defence and other weapons, including new missile systems.
Holding that a lot of equipment on the 283-metre long carrier like cables, steel, motors, turbines, boilers and the like needed to be completely replaced, Russia stunned India by asking for $1.2 billion more last year.
After strong protests about cost escalation in a "fixed price contract", India finally accepted the Russian view that "many errors" were made in the original estimate in the absence of blueprints since the carrier was built in Ukraine in the 1980s before the Soviet Union breakup.
But such huge cost escalation is sure to lead to questions whether India should, in fact, go in for Gorshkov. "In 2004, no other country was willing to give us an aircraft carrier and we ourselves could not build one immediately," said an official.
"We have already invested a lot of money in Gorshkov and there is no question of giving it up. An aircraft carrier is a critical requirement that we as a country need," he added.
Gorshkov, of course, forms a crucial part of India's plan to have two operational 'carrier battle-groups' by the middle of the next decade. The country's solitary and ageing 28,000-tonne carrier INS Viraat is currently undergoing another life-extension refit to ensure it can run at least five more years.
Moreover, the delivery of the 37,500-tonne indigenous aircraft carrier being built at Cochin Shipyard is likely to take place only by 2014-2015 or so.
Source
http://timesofindia.indiatimes.com/India/India_may_have_to_pay_2b_more_for_Gorshkov/articleshow/3198631.cms
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