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World’s Most Powerful Diesel-Electric Icebreaker – the Viktor Chernomyrdin Delayed Again

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World's Most Powerful Diesel-Electric Icebreaker - the Viktor Chernomyrdin Delayed Again

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The deadline for the construction of the world’s most powerful diesel-electric icebreaker, the Project 22600 Viktor Chernomyrdin was, once again, postponed to the first quarter of 2020, Russian outlet Kommersant reported.

As per Kommersant’s sources, the delay was not ordered by a Russian government decree, rather  if the United Shipbuilding Corporation (USC) transfers the vessel to the FSUE “Rosmorport” customer now, then it will face fines and penalties of up to 1 billion rubles ($16 million).

The government has so far refused to issue a new resolution on the postponement of the deadline. In addition, Rosmorport does not want to compensate for an increase in the cost of the icebreaker by 3-4 billion rubles (between $48.5 million and $64.7 million), which USC insists on.

As Kommersant learned, USC is not ready to transfer the world’s largest diesel-electric icebreaker Viktor Chernomyrdin on December 25th, despite its customer FSUE Rosmorport previously stated that it would happen.

Three sources in the industry told Kommersant about this. At Rosmorport, Kommersant confirmed that the delivery was postponed until 2020, and added that they were waiting for an invitation from USC to accept the icebreaker, the vessel was technically ready, and the crew was formed.

USC said that they had completed all construction work, mooring and sea trials of the icebreaker. The official transfer of the vessel will occur immediately after the settlement of all financial and legal issues with the customer, as well as the receipt of the necessary documents from the relevant ministries and departments.

The planned deadline for the delivery of the icebreaker is the first quarter of 2020, the corporation concluded. The Ministry of Industry and Trade said that work and tests on the icebreaker have been completed, and the ship will soon be handed over.

The contract for the most powerful diesel-electric icebreaker (25 MW) “Viktor Chernomyrdin” for 7.94 billion rubles ($128.5 million) was concluded in 2011.

Initially, it was to be delivered by the end of 2015. In 2017, the deadline was shifted to September 2018, and then there was information that the icebreaker will be commissioned in June 2019, but ice testing will only take place in 2020.

In November 2018, a fire occurred on the ship, causing damages amounting to 150 million rubles ($2.4 million), and also affecting the completion date of the work.

Initially, the vessel was intended to operate on the Northern Sea Route, but over the eight years of icebreaker construction, the concept of icebreakers in the Arctic has changed, and Rosatom has become responsible for the infrastructure in the region.

The plan was then to determine the final application of the icebreaker after it passes the ice tests.

According to a Kommersant source close to Rosmorport, the Federal State Unitary Enterprise is ready to accept the icebreaker “even today”, but this requires a government order for a delay of delivery.

That is because the latest order is for the delivery of the icebreaker to take place on September 30th, 2018. If there is no new document, then Rosmorport will be forced to set penalties and late fees. Interlocutors of Kommersant do not exclude that their size can reach up to 1 billion rubles ($16 million).

A similar conflict has already arisen between the parties. In March 2016, Rosmorrechflot filed a lawsuit against the corporation with a request to pay 667 million rubles ($10 million), in September at a court hearing it was reported that the amount of the penalty increased to 1.2 billion rubles ($19 billion).

Payment of these penalties was avoided, as the government issued an order to delay delivery.

USC and Rosmorport need to agree on the final price. According to USC, the icebreaker has risen in price by 3-4 billion rubles, but Rosmorport is not going to pay this money, they believe that the price increase is due to incorrect design decisions and extended construction periods.

The Russian government hasn’t extended the deadline, so the contract is essentially expired. USC believed that the contract is valid until the obligations are completed, but the legal department of the government decided otherwise.

The Ministry of Transport is already working on adjustments to the state program, as soon as they are completed, the Ministry of Industry and Trade will again prepare a draft government order, according to a Kommersant source. After approval of the document, the parties will be able to conclude an additional agreement to the contract and sign closing acts.

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