Shipyards Compete for $1.4Bilion Deal

In January, Russian state arms-selling giant Rosoboronexport announced a deal to supply two Project 956 destroyers to China. Severnaya Verf, the yard that has built destroyers for the Russian Navy and supplied two destroyers to China in 2000, was named as the contractor for the deal some time in February. In the meantime, a tender was called and a government tender commission recommended on 19th January that Baltiisky Zavod carry out the contract. Allegations were made hat Severnaya Verf owed the government millions of dollars for the two previously delivered destroyers and an audit was initiated in February.

Oleg Shulyakovsky, general director of Baltiisky Zavod, the St. Petersburg shipbuilding company, said he has information the government plans to hand the contract to build two destroyers for China - signed earlier this year - to Severnaya Verf, which is also in St. Petersburg. Fearing that Baltiisky Zavod might lose the lucrative contract, Shulyakovsky said that his plant, which contributes heavily to the construction of the Project 956 Sovremenny-class destroyers, will not supply components should the contract be transferred to Severnaya Verf. His grievance is against decisions "being taken behind closed doors," he said. "There is no way you can deal without Baltiisky Zavod, be it with regard to the navy's existing fleet or to newly built ships," Shulyakovsky said, adding that his firm "will supply components neither to Severnaya Verf nor to anyone else in such a situation."

Valery Pogrebenkov, spokesperson for New Programs and Concepts, a holding company that controls Severnaya Verf, said it had not received any notification from the Russian Shipbuilding Agency. He said that in the event that Baltiisky Zavod refuses to supply parts, they could be bought abroad at a comparable price.