Gorshkov deal: Navy to pay 60 pc more

Admiral Gorshkov: A sea of financial irregularities

The report has stated that the government will pay at least USD 945 million for the carrier, Admiral Gorshkov, 60 per cent more than the amount mentioned in the original contract. A major share of the money will be paid to the Russian Navy for conducting the sea trial once the refitting is done.

Much of the additional payment - USD 522 million - has been earmarked for sea trials for which a meagre provision of USD 27 million was made in the original contract, which was signed in 2004.

While the contract specifies the amount of USD 875 million (4025 crore) as the price for Admiral Gorshkov, it is now likely to be USD 1.82 billion (Rs 7207 crore).

“The navy could have spent less in buying a brand new aircraft carrier with longer lifespan,” the report noted. The amount of financial irregularities is suspected to be more, since CAG officials could not audit all relevant documents. The negotiations are said to be going on.

Arvind Awasthy, additional deputy CAG, said documents were not provided after October 2007. “The ministry’s cooperation in taking forward the audit effort was less forthcoming than usual,” the CAG further mentioned.

The Ministry of Defence began price renegotiation on the Russian carrier almost at the same time when the Russians demanded extra sums of about USD 1.2 billion.

So far, the government has maintained that most of the additional expenses will be for cabling the entire ship and for arming the Sevmash dockyard.

The CAG report reveals that the Navy has not included charges by Russian navy for sea trials, which is said to have increased by 20 per cent. “This is unprecedented,” said another CAG official, who wished not to be named.

Sea trials

The sea trials are expected to be nearly 16 months longer than the 19 months envisaged originally. Though the ship, rechristened as INS Vikramaditya, was to join the service by 2012, the delivery schedule is still stated as “high-risk”. The CAG report also notes that the earliest completion of the acceptance trials would be 2012.

Even if the ship were to be delivered by December 2012, it will still be a delay of 52 months. The refitted carrier will not have its Close in Weapon System (CIWS), for detecting and destroying incoming anti-ship missile in close range, before 2017, when her first refit will be carried out in India.

Since the anti-aircraft missile complex selected to be fitted in the carrier failed during trials, the contract was concluded without the missile system.

The CAG found India's complacence in supervising the deal, as 66 per cent of the money for repair and refit was paid when only 35 per cent of the work was completed.

Though the government set up three committees to oversee the Admiral Gorshkov project, none could foresee the problems till the Russians presented the revised cost figures and delivery dates in November 2007.

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