15 Oct 2018 11:02

Cost of building Leader nuclear icebreaker put at nearly 100 bln rubles - paper

MOSCOW. Oct 15 (Interfax) - The cost of building the Leader nuclear powered icebreaker will be 98.6 billion rubles, not including VAT, according to the estimate of an interdepartmental working group chaired by Russian Deputy Prime Minister Yury Borisov, Kommersant reported on Monday, citing an October 3 report that Rosatom CEO Alexei Likhachev gave to the government.

The contract for the first vessel is supposed to be signed by December 2019, the keel is supposed to be laid by February 2020 and the vessel is supposed to be completed in 2027.

Construction will be completely financed by the government, a position that President Vladimir Putin supported on September 11, the paper said.

The laying of the keel for the subsequent two icebreakers is planned for 2023. The financing sources for their construction have not been determined yet, the paper said.

Government budget financing for the first Leader is only expected to begin in 2020. In order to stay on schedule for laying the keel, state oil major Rosneft , the key member of the Zvezda Shipyard consortium, will provide an advance of 3.5 billion rubles (not including VAT) for the shipyard to get started on the working design documentation for the icebreaker, Kommersant said, citing a joint letter from Borisov and Rosneft CEO Igor Sechin. The advance will later be repaid from the federal budget.

The development of the documentation includes the completion of the RITM-200 reactor, including the development of the reactor core. Zvezda is supposed to sign the contract for the development of the documentation with the Iceberg Central Design Bureau in the first quarter of 2019.

Money cannot be borrowed for the flagship icebreaker due to the "high construction and market risks," the Borisov/Sechin letter said.

Likhachev said in his report that the price tag of 98.6 billion rubles for the icebreaker does not include a bank guarantee, insurance for the period of construction and nuclear fuel for the initial loading. The Finance Ministry, Economic Development Ministry and Rosatom are supposed to find the money for this by November.

A decision must be made by December as to whether to build the icebreaker with the usual value-added tax rate of 20% or with a zero VAT. Past experience building 60 MW nuclear icebreakers has shown that applying a zero VAT leads to a cash shortage at the shipyard, which receives budget financing without VAT, but pays counterparties with VAT, since it can only get a refund on the tax after delivering the vessel, Likhachev said.

Rosneft, Zvezda, Rosatom and the Industry and Trade Ministry must also by December work out essential and scenario conditions for financing the government contract, distribution of money by year, and a list of the main associate contractors.

In February 2019, Rosatom and government agencies must submit proposals for amendments to the budget starting 2020 taking into account the construction of the Leader. The cost of the icebreaker might be adjusted for inflation, like the Crimea Bridge, the paper said.

The Industry Ministry is supposed to allocate 950 million rubles in 2018-2020 for the development of an electric propulsion system for the icebreaker, Kommersant reported. A tender for this R&D work will be announced in October as part of the government program to develop shipbuilding, with the work to be done in 2020, the ministry said.

Rosneft, the Economic Development Ministry and Finance Ministry did not respond to questions, the paper said.