19 october 2017

Central Asia news

Russia encountered problems with fulfillment of an aircraft contract with China

15.05.2007 10:46 msk

Gazeta

Business

According to Victor Livanov, Ilyushin Aviation Complex General Director, fulfillment of the contract for 34 IL-76 military transport planes and 4 IL-78 flying tankers with China is halted. The contract worth $1.5 billion was signed in September 2005. If the aircraft are delivered to the customer at the price specified in the contract, the producer is bound to lose a great deal of money because the cost of materials and work has gone up since 2005. Negotiations are under way over ways and means of completing the contract, Livanov said.

Boris Aleshin of the Federal Agency for Industry will visit Uzbekistan on Monday. Nominally, he is going to Uzbekistan to attend a meeting of the Russian-Uzbek government commission. It is clear, however, that the future of the Tashkent Aircraft Manufacture named after Chkalov and its role in fulfillment of the Chinese contract are to be in the focus of attention.

All heavy IL-76s in the Soviet Union were assembled in Tashkent. Russian factories lack the facilities for IL-76 assembly.

This is what was missed when the contract with China was being signed in 2005. The Chkalov factory in Tashkent or rather its relations with Russian partners in fulfillment of the contract were never specified. There is no saying now whose fault it was - that of Rosoboroneksport, Federal Service for Military-Technical Cooperation, or Ilyushin. "Complexity of the contract has been clear since the very beginning," to quote Ruslan Pukhov of the Center for Analysis of Strategies and Technologies. Even aware of the complexity, the involved parties chose to sign the contract raw and hope for the best.

Something has to be done now. A trustworthy source from the Russian military-industrial complex claims that the contract will be fulfilled. "An assembly line should be established in Russia, say, in Voronezh," Pukhov said. "Particularly since the Russian army is going to need heavy military transport planes too, and soon."

Livanov will accompany Aleshin on a visit to Tashkent. His words are probably an indication that Russia will insist on changes in the cost of the contract - at least by $80-100 million (the cost of establishment of a new assembly line in Russia) - and that the Chinese should be prepared for it.

Author: Vladimir Stepanov

Source: Gazeta, May 14, 2007, p. 18