Article Posted on : - Jul 29, 2009

A File Photo of aircraft carrier Admiral Gorshkov at a plant in Russia

NEW DELHI (PTI): Stung by CAG criticism for escalating cost of second-hand aircraft carrier Admiral Gorshkov bought from Russia, the government assured Rajya Sabha that it would finally agree to a fresh price for the warship only after going through the audit report.

"Before entering into any contract, the government will go through all details. We will assess the criticism, including that of CAG, on the issue. At present, the Gorshkov price escalation is in negotiation stage. Nothing has been finalised," Defence Minister A K Antony said during Question Hour, Wednesday.

India had bought the 45,000-tonne Gorshkov from Russia in January 2004 at a total cost of USD 974 million, which included its refit and repair.

As the repair and refit of Gorshkov began in the Sevmash Shipyard, Russians made an additional demand for USD 1.2 billion towards the escalating cost of the work.

After revising the repair costs three times since 2007, Russia made a final demand for additional USD 2.9 billion in February this year.

The CAG report for 2008 laid in Parliament last week had slammed the Defence Ministry for buying the old warship at the price of a new aircraft carrier.

The CAG had noted that till 2008 the escalated cost was about USD 1.82 billion for the warship and another USD 52 million for the sea trials, which was originally pegged at USD 27 million in the 2004 contract.

"We had entered into a contract with Russia in 2004 to buy Admiral Gorshkov. However, that country faced a lot of difficulties during the intervening period. Subsequently government was quoted a fresh price by Russia," Antony said.

Accepting that repair and refit of Gorshkov was coming at a "substantially huge" price, he said "we have not entered into any contract with Russia (on the fresh price), and are only having negotiations with them."

He said when India started searching for an aircraft carrier, there were very few manufacturers in the world.

"After an elaborate search, no country except Russia was willing to give it to us. The decision to acquire it was taken in consultation with the Navy, as per the price quoted by Russia then," Antony said.

However, the minister said Russia was quoting a fresh price, as most of the parts of the Kiev-class carrier are manufactured in Ukraine.

Earlier, Minister of State for Defence M M Pallam Raju said the country was building an aircraft carrier indigenously, while the Navy had another aircraft carrier in service.

"The government sanction for the indigenous aircraft carrier was accorded in November 2002. The construction of the Indigenous Aircraft Carrier (IAC) is progressing at Cochin Shipyard, with the launch scheduled in 2010. However, the final delivery of the ship is likely in 2014," he said.

Raju said induction of ships in the Navy, including aircraft carriers, is driven by the need to maintain the desired force levels.

"Future requirements of aircraft carriers could be met either from indigenous or from foreign sources depending on the required capabilities and envisaged time frames," he said.

Antony had laid the keel of the indigenous aircraft carrier at Kochi in February, while two more indigenous aircraft carriers have been sanctioned.

The Navy currently operates INS Viraat, a 28,000-tonne Centaur-class aircraft carrier, which has served both British and Indian Navy for 50 years.