In expectation of Zvezda: will Karakurt wreck Ivan Yegorov’s state holding?

The Russian Defence Ministry’s Emergency Response Centre ordered Zelenodolsk to wait for the ‘last bullet’

In expectation of Zvezda: will Karakurt wreck Ivan Yegorov’s state holding? Photo: Roman Khasayev

The Gorky Zelenodolsk Plant postpones the commissioning the first two Karakurt small missile ships of Project 22800, which were to be given to the Russian Navy late this year. The postponement to a later date happened due to failed supplies of diesel engines by Zvezda enterprise from Petersburg, which put the Zelenodolsk shipbuilder at the back of the queue for power units. The administration of Ak Bars Shipbuilding Corporation, which is part of Ak Bars holding, confirmed ''the one-year leave'' but emphasised they didn't consider the delay critical to the enterprise's financial situation. Meanwhile, independent experts are sure the company is obviously hurt at least because it lost 14-15bn rubles of revenue. And if loans were taken out, the black ''spiders'' can also wreck.

''We are turning to the right for a year''

The Gorky Zelenodolsk Plant turned out to be trapped in the chain of shipboard equipment suppliers after Pella shipbuilding plant from Petersburg. The latter spoiled the dispatch of diesel engines for the Karakurt class missile corvette, which built at its yard (the Russian Defence Ministry is the customer). According to the militants' idea, the updated Karakurt corvettes are to strengthen the fleet of Buyan-M missile corvettes thanks to better nautical characteristics. It should be reminded the latter distinguished themselves when launching missile attacks on ISIS groups (terrorist organisation banned in Russia) in Syria from the Caspian Sea.

Zvezda engine-building factory from Petersburg whose M507 diesel engine and DGAS-315o generator are used to equip ships for the short-range coast guard of the Russian Navy officially notified the Zelenodolsk shipbuilders of the impossibility of their supply in 2018. Several sources in Tatarstan shipbuilding at once told Realnoe Vremya about it. ''There was a failure because Zvezda plant had a big volume of orders to supply ship engines to the Russian Ministry of Defence,'' one of the directors of Karakurt project in the Zelenodolsk enterprise told us. ''As we understand, Zvezda wasn't ready for their appearance either technically or financially. The conveyor simply can't handle the military orders that collapsed on them. Routinely, they calmly produced reliable engines.''

''Pella from Leningrad, which produced the first series of Karakurt ships, ''stopped'' because of it first. But it managed to launch only the lead ship. And then our plant also got the notification with the refusal to supply engines on time like a chain reaction,'' our sources shared. Photo: nevskii-bastion.ru

The sudden production collapse at Zvezda immediately became known for problems in Russian shipbuilding. ''Pella from Leningrad, which produced the first series of Karakurt ships, ''stopped'' because of it first. But it managed to launch only the lead ship. And then our plant also got the notification with the refusal to supply engines on time like a chain reaction,'' our sources shared.

According to unofficial data, the delay in supply of engines is equal to about a year. It's unknown at the moment if it increases. It was agreed Zvezda promised to dispatch engines for the first small missile carrier codenamed Musson in June 2019 and in December 2019 for the second one, Passat. If this schedule is kept, Zelenodolsk will be able to commission the ships in the 2020-2021s, the sources say.

Director of Ak Bars Shipbuilding Corporation Renat Mistakhov confirmed Realnoe Vremya the fact of unscheduled postponement of the execution of the state defence order in 2018. According to him, the process of approval of new terms of supplies of diesel engines with Zvezda's officials ended and expects to be confirmed by the customer.

''Our enterprise sent a project of an additional agreement for the state contract to the Russian Ministry of Defence, which presupposes the postponement of commissioning Karakurt missile corvettes in the 2019-2021s,'' Mistakhov said. ''We are turning to the right for a year.''

The updated missile ship construction programme Karakurt was prepared under today's Deputy Defence Minister of Russia Yury Borisov (centre). Photo: prav.tatar.ru

How Karakurt ships went to private companies bypassing USC

The updated missile ship construction programme Karakurt was prepared under today's Deputy Defence Minister of Russia Yury Borisov (currently Russian Vice Prime Minister). The peculiarity of the programme is that it was completely taken by private shipbuilders who took orders under the nose of the state United Shipbuilding Corporation (USC). Pella from Leningrad won the first contract of the defence ministry, the Gorky Zelenodolsk Plant got the second one. Experts estimate the value of one Karakurt missile corvette can vary from 7 to 10bn rubles. It's supposed that several Russian factories from the USC, which lost the long-awaited support, were real candidates to get it. But now they can breath a sigh of relief: the ''natural disaster'' passed them by.

Meanwhile, the Zelenodolsk factory thoroughly invested to lay and build Karakurt corvettes. As it's said in the explanatory note to the accounting report of the enterprise in 2017, it made an advanced payment of the construction of three out of five missile corvettes of the Project 22800 (they were given factory numbers 801, 802, 803). So the carcass of the ship No. 801 (Musson) has been completely created, the cisterns have been painted, windows have been installed, equipment (pumps, compressors), armature have been assembled. The carcass of the second missile corvette had been created on the slipway, field joints have been put into operation. ''Welded equipment and foundation are installed in the blocks 1, 2, 3, 4, the superstructure is planned to be assembled in the middle of March 2018,'' the explanatory note to the report says. A strong carcass of the third missile corvette is created on the slipway, the superstructure is simultaneously built. Foundation and elements of welded equipment are laid. Agreements have been signed, the supply of the core equipment for the three missile corvettes has been advanced.

The exact sum of advanced payments isn't mentioned. But it's known the Russian Defence Ministry sends the general constructor of the construction no more than 10% of the state contract's value for this purpose. It's not excluded the factory could use loans from banks, as it has small profit from commissioning military ships. In 2017, the factory's revenue totalled 32,2bn rubles, while its net profit was just 90,5m rubles.

Experts estimate the value of one Karakurt missile corvette can vary from 7 to 10bn rubles. Photo: twitter.com

Keep calm and wait!

The collapse at Zvezda appeared after the German high-speed ship engines MTU stopped supplies to Russia in 2017, several years after the sanctions imposed by the EU. ''We've asked the Russian Ministry of Industry and Trade questions many times, we had good relations with foreign suppliers,'' one of the directors of the Karakurt project claimed. ''Everyone counted on Zvezda and though foreigners would always help us. And now we're having big losses.''

To get out of the difficult situation, the project's designers offered the Ministry of Defence a ''Chinese alternative'' – to equip the ships with PRC diesel engines, said Mil.Press FlotProm with a link to sources in the shipbuilding sector. According to the page, a corresponding offer was sent by Naval Propulsive Systems to the shipyard. However, officials of the Russian Defence Ministry denied this initiative, though it had to call the Emergency Response Centre to solve the problem with engine supplies.

''Deputy Chief Commander of the Russian Navy on armament, Vice Admiral Viktor Bursuk has monthly working meetings with the administration of Zvezda, which is loaded with orders to make gears, engines, diesel generators and many other things,'' one of the members of the Emergency Response Centre told us. ''There were discussed many options, including gas turbine plants with electric power and without. But this was much more expensive – the price reaches 2bn rubles! Pelle was offered first because they were first in line. But the director general had to refuse this idea because it was more expensive, and temporary costs were the same. Chinese engines could be a real option, but the speed falls twice with them! The militants don't like it, of course. At the last meeting, Bursuk ordered not to rush about, they weren't going to call the Chinese to help.

We will keep calm and wait for Zvezda – he ordered all present shipbuilders.

Meanwhile, Director Ak Bars SC Renat Mistakhov understands the delay. He says it's linked with the change in priorities of the Ministry of Defence. ''A long-range fleet strategy has been chosen now, that's to say, ships going to the Mediterranean are built as a priority. While missile corvettes are coast guard ships, this is why they will have to wait,'' he said.

Realnoe Vremya's request in the press service of Zvezda remained unanswered.

Meanwhile, Director Ak Bars SC Renat Mistakhov understands the delay. He says it's linked with the change in priorities of the Ministry of Defence. Photo: Maksim Platonov

Ak Bars to bite a slice of Zvezda

And Zvezda, which has been managed by Sinara GC since this spring, has already begun to hand out orders to its partners. According to Realnoe Vremya's interlocutor, technical documentation to make engines was given to the Kingisepp Machine-Building Plant (part of Kalashnikov concern). The director of Ak Bars ship-building company also expressed his interest in the transfer of some components for Russian engines. Renat Mistakov confirmed Realnoe Vremya the corporation would choose the nomenclature of production of components by the end of the year. ''After terms of reference are approved, the business project will be defended and banks to borrow money will be chosen,'' he said.

But the main question is: what are the losses the factory will have from postponing the deadline of Karakurt ships for at least a year?

''The schedule of payments will obviously change after signing additional agreements with the Ministry of Defence on these ships. It's obvious harm to the factory, it's unlikely something can be compensated. But nobody will be able to call the exact numbers outside the factory,'' scientific editor of Export of Armament magazine Mikhail Barabanov claimed to Realnoe Vremya. Expert of the Centre for Analysis of Strategies and Technologies Andrey Frolov agrees.

''Indeed, Karakurt ships aren't perhaps a priority now. There can be losses if loans from banks are taken out to finance the construction of ships. They will get the money for the order only in 2020, not 2018.

They will have to pay loans with revenue from other contracts, not to mention that military acceptance doesn't compensate loan costs. If so, it means obvious losses for Zelenodolsk,'' he supposes.

By Luiza Ignatyeva
Tatarstan