By IANS
New Delhi : Conceding that India would have to pay more for a Russian aircraft carrier it has purchased in a $1.5 billion deal, Defence Minister A.K. Antony said Friday negotiations were underway on this – but declined to lay down a timeline.
“Negotiations are on. We are trying to find a solution to this issue,” Antony told reporters here on the sidelines of a defence function.
“Both government’s are talking at the right level,” he added.
Asked when the negotiations would conclude, Antony said: “At this stage, I can’t say anything,” adding that the deal was very much on.
Under the deal signed in 2004, India had bought from Russia the aircraft carrier Admiral Gorshkov, re-christened INS Vikramaditya, for $1.5 billion. Of this, $970 million was meant for the refurbishment of the vessel, which has been mothballed since a devastating fire ripped through it in 1995.
The remaining $530 million was meant for the MiG-29K fighter jets and Kamov surveillance and anti-submarine warfare helicopters that will be deployed on the vessel.
Russia last year hiked the price by $1.2 billion, saying the work involved on the vessel had been grossly underestimated.
A senior defence ministry official had said last month that India would have to fork out a substantially higher sum for the carrier as the $970 million allocated for its refurbishment was not “doable”.
“The figure of $970 million is perhaps not seriously doable,” Defence Secretary Vijay Singh, who had visited Moscow in February for discussions on the Russian demand, told reporters here.
“It’s hard to put a figure. It could be even more than that,” Singh said, adding that the two countries hoped to resolve the issue by the end of March.
The increased cost, the Russians say, has been necessitated by the new engines and boilers the ship requires, “hundreds of miles” of cabling, the strengthening of the flight deck, refurbishing the arrester wires and other safety equipment, as also the extensive sea trials the ship will have to undergo after the refit.
“We have drawn up a list of the revised scope of work. This is now being finalised on an item-by-item basis after which the additional cost will be worked out,” Singh said.
“We will look at the essentiality of refurbishment required and the reasonableness of the increased money being demanded. We will hold one meeting here and another in Russia and hope to sew this up by the end of March,” he added.
As for the 18-month-long sea trials that are likely to begin in 2010, he said the possibility of a part of these being conducted in India was being examined in a bid to lower costs.
Once the revised price is arrived at, this would be submitted to the cabinet committee on security (CCS) for approval.
“What we would be getting is a ship that would be in service for 30 years,” Singh pointed out.
Independent analysts pointed out that even if India were to meet the entire demand for the additional $1.2 billion – at $2.7 billion – the ship would come at a bargain as the cost of building a new aircraft carrier is in the region of $4 billion.