Naval Air: And The Final Price Is…

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March 14, 2010:  Russia and India have finally signed off on a revised deal for the Indian purchase of a refurbished Russian aircraft carrier. After five years of confusion, accusations, stonewalling and renegotiation, India has agreed to pay Russia $2.35 billion to have the Russian aircraft carrier refurbished to Indian specifications. The original deal was the for getting it done for about a billion dollars. But once the Russians got to work, things got complicated, and out of control.

Indian naval officers have admitted that they were partially to blame for the Gorshkov fiasco. When the original deal was signed in 2004, the Indians failed to have engineers scrutinize the Gorshkov, and agreed, after a cursory inspection, that many electrical and mechanical components, buried within the ships' hull, were serviceable. It turned out that many of those components were not good-to-go, and had to be replaced, at great expense. Shortly after the contract was signed, the Russians discovered that the shipyard had misplaced the blueprints for the Gorshkov, and things went downhill from there.

After four years of haggling over Russian demands for more money, India agreed to pay about a billion dollars more, instead of the original (2004) agreed on one billion dollars, for a Russian shipyard to refurbish an old, damaged, aircraft carrier (the Admiral Gorshkov) for Indian use. Last year, Russia threatened to give the Gorshkov back to the Russian Navy if the Indians didn't come up with even more money.

The 44,000 ton Gorshkov was supposed to have been delivered last year, and renamed the INS Vikramaditya. But now delivery has been delayed until 2012. The Russians admitted that this project suffered from inept planning, shoddy workmanship, and poor management, but they wanted India to pay for most of those mistakes. The Indians were not amused, and played hard ball, making much of the fact that India was now the biggest customer for Russian military exports. Russia was also aware that India was increasingly turning to more expensive (and more capable) Western arms suppliers.

Building a Gorshkov type carrier today would cost about $4 billion, and take eight years. India even looked into buying one of the new, 65,000 ton, British Queen Elizabeth class carriers (for about $6 billion). The Russians were willing to admit to mistakes and put things right, for a price. It has taken over a year of negotiations to determine what a mutually agreeable price would be. Meanwhile, the boss of Sevmash naval shipyard, when the Gorshkov deal was negotiated, was fired and subject to a criminal investigation for financial mismanagement.

The Admiral Gorshkov entered service in 1987, but was inactivated in 1996 because it was too expensive to operate on a post Cold War budget. This attracted the attention of India, which was looking for a way to expand their carrier aviation capabilities. India is currently building another carrier, from scratch, but that 40,000 ton vessel won't be ready until 2015. By 2015, India will have two large carriers in operation, and some bitter memories of their experience with the Russians over the Gorshkov.

 

 


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