“GORSHKOV” BECOMES AIRCRAFT CARRIER.
January, 29, 2008 No.7
Cruiser is being reequipped in aircraft carrier. Lots have been said about serious situation regarding reequipment of “Admiral Gorshkov” in aircraft carrier for India Naval Forces. As well as about reasons of breach of contract, the main from them being incorrectly determined scope of works and their cost.
Sevmash received a little bit more than 600 million USD from initially reduced cost. While refurbishment of aircraft carrier “Enterprise”, started in 1989, cost 3,1 mlrd USD for US budget and lasted for 6 years. Refurbishment of aircraft carrier “Karl Vinson” in prices of 2005 will cost US Naval Forces 2 mlrd USD. Building ships of this class is rather expensive business – English aircraft carriers “Queen Elizabeth” and “Prince of Wales” for Royal naval forces will cost 4 mlrd USD each, and prospective American nuclear aircraft carrier “Gerald Ford” will cost even more – 11 mlrd USD. Such great works shall be of national project character. Today Sevmash performs more difficult task within market conditions, it is unique not only for our shipyard but for the whole shipbuilding complex of the country. Resting on state support Sevmash does all his best to progress works. There were personnel displacements and updating of process schedule and organizational chart of production process. Milestone works are completed and they allow judging about positive tendency, being outlined in difficult and many-sided work. Commissioning manager D. STRELCHENKO tells about it.
ACTIVATION OF WORKS ON AIRCRAFT CARRIER
2009-09-08 16:17:57
At Sevmash Actions for Activation of Work for Repairing and Reequipping Aircraft Carrier of Indian Navy are Taken.
In the past week the Presidents of two countries, Russia and India, Dmitry Medvedev and Pratibha Patil agreed on additional financing for repairing and reequipping of aircraft carrier “Vikramaditya”. On negotiation completion the Head of “Rostekhnologii”, Sergey Chemezov declared about this fact. “Of course, we are inspired with favourable decision of the Heads of two countries, – commented Director General of Sevmash, Nikolay Kalistratov, – and we continue great and effective work for repairing and reequipping of aircraft carrier. Receipt of advance at the rate of 102 mln USD gives a good impulse to work activation: required materials (pipes, paint, insulation etc.) are purchased, at the aircraft carrier workforce will be increased up to 2 500 people in the nearest future and back shift is organized. Today it is necessary to decide remaining issues in the shortest possible time”. At stable financing all these measures will allow transferring aircraft carrier “Vikramaditya” to the customer by specified dates.
Anastasiya NIKITINSKAYA,
The Head of Press Service of JSC “PO “Sevmash”
NEGOTIATIONS WERE HELD SUCCESSFULLY
2009-06-01 15:20:53
This assessment was given by Sevmash leaders last week to negotiations concerning aircraft carrier “Vikramaditya” of the Indian Navy.
During a week representatives of the Indian Navy headed by Rear-Admiral Nair Prem Kumar, FSUE “Rosoboroneksport”, JSC “Nevskoye Design Bureau” and the Navy estimated and discussed the progress of the repair and refurbishment of the aircraft carrier at Sevmash. “Negotiations were held successfully”, Director General of Sevmash N. Kalistratov comments the results. “In the near future the project shall be additionally financed, that allows increasing the number of workers on the ship up to 2500 people, the intensity of works will rise. The updated schedule of all types of aircraft carrier tests for 2011-2012 was also signed”. It should be noted that due to the insufficient financing of works in the last two years Sevmash is behind of schedule. In the remaining period the time shall be compensated.
Besides official meetings, the guests accompanied by Director General of Sevmash N. Kalistratov and Deputy Director General for Military and Technical Cooperation S. Novoselov visited the Museum of Wooden Architecture “Malye Karely”.
А. Nikitinskaya,
Head of press service of ОАО “PO “Sevmash”
Photo by М. Vorkunkov
http://www.hindu.com/2007/12/09/stories/2007120953771200.htm
Sources here said that Russia will be prepared to take a second look at the cost estimates presented but India does not want to pay more for a task that has already suffered extensive time overruns. Russian negotiators have let it be known that they would be happier returning the $400 million given by India as advance for repairing and modernising the partially gutted aircraft carrier.
SEPARATE DISCUSSION ON AIRCRAFT CARRIER
2009-07-06 12:02:38
During the recent visit of D. Medvedev to Sevmash, there were a lot of questions about reequipment of the aircraft carrier for Indian Navy.
The President agreed that the contract is new and difficulty for Russia, however it is unacceptable to make such miscalculations in the assessment of the cost of works. These mistakes negatively impact on the development of friendly relations with our strategic partner – India and put Sevmash in a difficult economic situation.
”Now we are facing two very difficult tasks – commented Director General of Sevmash N. Kalistratov. – First of all, we must agree with our Indian friends the minimum acceptable price which provides the project break-even. And secondary to perform all works which are quite new for us- qualitatively and in time”.
This negative example of miscalculation (instead of $ 2 billion the project was rated at $ 617 million) demonstrates the importance of strong economy and pricing services. One gross error influences the plant work for several years – during the whole period of the contract.
A. Nikitinskaya,
Head of press service of ОАО “PО “Sevmash”
It would be highly appropriate to take the refurbishment cost that has been mentioned in the above statement from Sevmash as the FINAL/Increased cost of the project. In all likelyhood this has been the cost that Sevmash has been talking abt for the last 2-3 years and still going on….
The funny part is that the clueless “experts” of media/paid/self-atteseted and all sorts of them have been coming up with all sorts of maths to add different figures and arrive at their FINAL price. These “experts” might be totally confused if we ask them to elaborate on the figures they came up with.
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Setting aside figures from those clueless “experts”, let do some math of our own from the available & reliable source to get some grip & insight on the matter. First of all lets have a look at the initial cost of the Gorshkov deal. Its commonly said to be nearly $1.5 billion deal.
Break-up of the cost gives us —
~ $740 million — MiG-29/Ka-28/Ka-31/simulators/weapons/etc
~ $650-700 million — Gorshkov modernisation
That totals — $1,390 million – 1,440 million … ie. nearly $1.5 billion usually reported.
Like many propaganda for the cost of MiG-29K/KUb @ $45million a piece, the cost of modernisation of Gorshkov are never reported in actual supplier/contractor terms. But ~ $700million is not just for Sevmash, but include — Sevmash + other suppliers & sub-contractors from Italy/India/Germany/Russia etc….
From the reports we do now clearly know how much Sevmash got in the deal –
1) What Sevmash was to get as per 2004 deal — $617 million
2) Indian funding probably till end-2006 — $400 million
3) Indian funding during 2007- Sept2009 —– probably ZERO
4) What Sevmash said probably 3 years back —- estimate went wrong, cost of material increased etc …. cost will reach ~ $2billion.
5) What does that mean —— it means they need additional fund of nearly $1.383 billion to complete the work
6) What India did —- ABSOLUTELY NOTHING, just pondered.
7) RESULT — work went at the slowest pace —
8) Time WASTED due to lack of funding — nearly 3 YEARS
9) Indian funding in 2009 — $102 million in September 2009
10) Indian funding (as per open source) till Jan 2010 — $519 million + anything more??
And the big question remaining is from now on will the funding flow-in smoothly?? If YES, it will be a big achievement by any measure as we have already WASTED 3 Years due to indecision and the completion & delivery of the Ship rest not on Sevmash’s incompetance, but on Indian ministry’s decision process and release of Fund for the project!
So now comes the total cost of the modernisation —
Initial deal — ~ 1.5billion
Cost of modernisation — $1,383million + $700million = $2,083million ($2.083billion)
Cost of Deal — $2,083million + $740million = $2,823million ($2.823billion)
In short, the overall cost have doubled but not trippled or anything like that, increased cost of $3billion – $4billion was propagated by some “experts”. The increase in cost for overall project has to be and can be paid. But the unfortunate part is that due to indecision we LOST 3 YEARS. If proper funding was alloted for those WASTED 3 YEARS, we would have been seeing INS Vikramaditya in Indian Naval service in 2010. Where as we are now waiting for it in 2012, due to the WASTED 3 YEARS!!!
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