Russia again demands more money

(Photos: The Intermediate Jet Trainer (bottom), which has been fitted with the first AL-55I engine developed by Russia; the engine is currently undergoing static and runway taxi tests. Above it are close-ups of the new engine. Incidentally, the IJT in the picture is the same one that veered off the runway in Aero India 2007, when its canopy opened during take off)

Business Standard: 23rd June 08

Dateline: Bangalore

India’s search for an advanced jet trainer (AJT) took an agonising two decades before the Hawk was finally purchased from UK major, BAE Systems. But the wait for an intermediate jet trainer (IJT) --- which will replace the Indian Air Force’s (IAF’s) venerable Kiran trainer ---- could be half that time. Designed and built in India by Hindustan Aeronautics Limited (HAL), the Bangalore-headquartered Indian defence PSU, the sleek HJT-36 Sitara has used a combination of indigenous design and international purchases to vault from the drawing board to the runway at a speed unmatched in contemporary aircraft development.

On Saturday, the Sitara IJT passed an important milestone. The newly-developed Russian AL-55I engine --- which was specially designed by Russian engine maker, NPO-Saturn, to power the Sitara --- was successfully tested in a ground run at HAL.

But the jubilation has a bitter edge. Even as the Bangalore complex celebrates, it is dealing with a Russian demand for more money. NPO-Saturn claims that it has spent more time and money on developing the AL-55I engine than it had bargained for, and that manufacturing technology will only be transferred to India if HAL pays NPO-Saturn an extra US $64 million, over and above the contracted amount. The Russian company had beaten out French engine-maker Snecma in 2005, in the US $350 million contract to design the AL-55I engine and transfer technology to build it in India.

Top MoD sources are furious; they allege Russia is repeating what it did with the Gorshkov aircraft carrier. HAL’s design chief is in Moscow trying --- so far unsuccessfully to persuade NPO-Saturn to lower its demands.

Russia’s ambassador to New Delhi, Vyacheslav Trubnikov acknowledges that NPO Saturn has asked for more money, but he told Business Standard that he expects an amicable resolution of this issue. Mr Trubnikov said, “Both sides are engaged in the fixing of the price. I don’t think the question is extraordinary. Discussions are in progress on the question of how many engines India will be allowed to manufacture.”

Sources in HAL, however, point out that all these issues had been settled as a part of the original contract between HAL and NPO-Saturn. Adding to Indian frustration is the role of Russia’s state-owned arms agency, Rosoboronexport, which is telling HAL that it should pay up quietly.

As with the Gorshkov aircraft carrier, for which Russia cited cost overruns to double the contracted price to US $1.2 billion, India has little choice but to pay up. MoD sources point out that, even with the extra US $64 million added on, NPO-Saturn’s price will be less than what Snecma quoted. They also grudgingly accept that Russia is the only major arms manufacturer that actually transfers all the technology to India that is demanded in a contract. But the biggest reason for paying up quietly is that the IJT programme --- which has already waited three years for this engine --- will face a delay of several more years if it launches an international search for another engine.

While waiting for the AL-55I engine to be developed, India has flown the IJT with an interim engine, the French Larzac power plant, which was never powerful enough for the Sitara. The AL-55I generates 20% more power than the Larzac and also consumes appreciably less fuel per flying hour.