NEW DELHI, July 31 (UPI) -- The euphoria over the launch of the first domestically built nuclear-powered submarine by India's navy has barely abated, but already that is getting clouded by the controversy over the navy's deal to acquire the Russian-built aircraft carrier Admiral Gorshkov.
What is causing headache to the Congress Party-led coalition government of Prime Minister Manmohan Singh is the recent release of the latest annual report of the Comptroller and Auditor General office. The opposition is going to town with the CAG report.
Dismissing the cost overrun- and delay-plagued carrier as a "secondhand" vessel, the government watchdog said the ship will still end up costing 60 percent more than a new one. It said even without further delay, the navy would only be getting a "secondhand ship with a limited life span."
CAG also said the carrier would have limited operational capabilities and that certain key capabilities to make the vessel meet potential threats or challenges had either not been provided for or been put off to a later date, Indian media reports said.
Under the original deal made in 2004, India was to pay $1.5 billion for the 45,000-ton Admiral Gorshkov, with $948 million going for refitting the carrier and the rest for acquiring MiG-29 combat planes and Kamov anti-submarine helicopters for on-deck deployment, the Economic Times-IANS reported.
Russian media reports say the Admiral Gorshkov, which is about 928 feet long and 167 feet wide, was put to service in 1987.
In the past two years Russia had been pressing India for more money, saying the actual repair costs on the vessel were far higher than previously estimated, pushing the two sides into lengthy negotiations.
Russia apparently was unable to give a more accurate estimate of the cost at the time as most of the ship's components reportedly were made in Ukraine.
The Press Trust of India reported the final price could be between $2.2 billion and $2.9 billion.
The Hindu newspaper, quoting Defense Ministry sources, said this week that under the original contract, the aircraft carrier should have been delivered to India last year. However, it is now expected the delivery will be sometime in 2012. The report also said the final price tag could be closer to the Russian demand of $2.9 billion.
During a visit in early July to the Russian shipyard where Admiral Gorshkov is undergoing repairs, Russian President Dmitry Medvedev said the project had become the only problem in Russian-Indian relations, Itar-Tass news agency reported.
"It should be completed and commissioned," the president said, adding, "Otherwise, this will have bad consequences."
Replying to opposition party concerns in the Indian Parliament on Wednesday, Indian Defense Minister A.K. Antony said India and Russia were yet to reach agreement over the price.
"Russia has demanded a substantial increase. The negotiations on this so far have been inconclusive. Before we take a final decision, we will verify everything including the (CAG) report," Antony said.
He said the Indian navy had been looking for an aircraft carrier since 1994 but had no luck until Russia made the offer to give Admiral Gorshkov as a gift in return for India paying for its retrofit and for the on-deck planes.
Commenting on the protracted negotiations, Defense Ministry sources told the Hindu newspaper: "Eventually, it must be remembered that this is not a commercial negotiation between a buyer and a seller but a government-to-government engagement. Yet, the negotiations have been arduous."
