February 29, 2008:¬† India has agreed to pay an additional billion
dollars to complete the refurbishment of the Russian aircraft carrier Gorshkov.
In addition, India will send 500 shipyard workers, technicians and managers to
Russia, to take direct charge of the work. The Russians not only demanded more
money, but also admitted that a labor shortage would make delivery, in 2012,
four years late. The Indian shipyard team will try to get the carrier out of
the Russian yards earlier, and will also keep an eye on quality control. The
Russians have also admitted that the project also suffers from shoddy
workmanship. The Indians have lots of experience with this sort of thing, and
the Indian workers will try to catch mistakes before the ship gets to India,
hopefully in two or three years, rather than four.
The new deal will make the total cost
$2.5 billion. This deal includes the purchase of the poorly maintained Russian
aircraft carrier Admiral Gorshkov, and Russian shipyards performing $700
million worth of repairs, modifications and upgrades. Another $800 is to be
spent on aircraft, weapons and equipment. Building a Gorshkov¬† type carrier today would cost about $4
billion, and take several years more.
Late last year, Russia announced that
it wanted a lot more money for the project. India insisted on getting what the
original contract called for. The carrier is in Russia, but India, which has
already paid the Russians half a billion dollars, insisted that India now owned
the ship. The Indians were not happy with the situation, and the Russians are
now worried about losing future military business with India if it is not all
The Admiral Gorshkov entered service in
1987, but was inactivated in 1996 (too expensive to operate on a post Cold War
budget). The Indian deal was made in 2004, and the carrier was to be ready by
2008. But a year ago reports began coming out of Russia that the shipyard doing
the work, Sevmash, had seriously miscalculated the cost of the project. The
revised costs were more like $1.1 billion for the $700 million refurb. The
situation proceeded to get worse, with Sevmash reporting ever increasing costs
to refurbish the carrier.
The Indians were not happy, and at
first insisted that the Russian government (which owns many of the entities
involved)¬† make good on the original
deal. India sent its own team of technical experts to Russia, and their report
apparently confirmed what the Russians reported, about shipyard officials
low-balling the cost of the work needed. This is a common tactic for firms
building weapons for their own country. It gets more complicated when you try
to pull that sort of thing on a foreign customer. The Russian government will
cover some of the overrun cost. The Sevmash managers who negotiated the low bid
are being prosecuted.
Once refurbished, the Gorshkov,
renamed¬† INS Vikramaditya, should be good
for about 30 years of service. That's because, after the refit, 70 percent of
the ships equipment will be new, and the rest refurbished.¬† India wants the Gorshkov in service before
2012, because that's when it's existing carrier (the 29,000 ton INS Viraat) is
to be retired.