Russia's delay of stealth frigates mirror problems with Gorshkov deal

After having delayed the delivery of the Indian aircraft carrier INS Vikramaditya (formerly Admiral Gorshkov) by four years and doubled its price, Russia may delay the delivery of three stealth frigates to the Indian Navy as it says that it has lost RUR500 million due to exchange rate fluctuations. It is now seeking a $60-million loan to complete the construction of the frigates.

Yantar, based in the port city of Kaliningrad on the Baltic Sea also is negotiating a $60-million loan with the Russian national development bank Vnesheconombank (VEB), to complete the construction of three stealth frigates for the Indian Navy. (See: Russian shipyard building Indian frigates runs out of funds)

The state-owned Yantar shipbuilding factory's director general Igor Orlov said this week that when the contract was signed in 2006 to build three Project 1135.6 Krivak IV-class guided missile frigates for the Indian Navy, the exchange rate for the rouble was 28.2 roubles for a $1, but since then, it has fallen to 23.5 roubles resulting in the shipyard losing approximately RUR500 million. Today, however the exchange rate is 31 roubles for $1.

The $60-million loan is over and above the $100 million it had taken recently from the VEB to tide over financial constraints, Russian newswire RIA Novosti said quoting Yantar's director general Igor Orlov.

Yantar's claims of financial problems are somewhat hard to digest since in the first quarter of 2009, it posted a net profit RUR106.390 million (Rs161 million), up from the RUR119.322-million loss in the same period in 2008, according to the company's first quarter result.