December 16, 2009 3:38:08 am
The Indian Air Force (IAF) may have to wait longer to get a new fleet of mid-air refueling aircraft with the Finance Ministry questioning the credibility of an ongoing contract that had led to the selection of European Airbus 330 MRTT aircraft.
While the deal has been hanging fire for the past few months after the aircraft was down selected by the IAF,Defence Minister AK Antony on Monday informed Parliament that the Finance Ministry has questioned the high price of the selected aircraft.
The procurement was referred to the Ministry of Finance which has expressed certain reservations relating to the competitiveness of the bids and the
reasonableness of the price, Antony informed the Lok Sabha.
As first reported by this newspaper,the procurement had hit a road block in September with the Finance Ministry questioning the selection of the European aircraft that costs almost twice as much as its Russian-built competitor.
As the minister informed,the Finance Ministry has also questioned the competitiveness of the bids,indicating that the trials and selections should have been more broad-based. As reported earlier,only two aircraft Airbus 330 MRTT and Russian IL 78 had taken part in the global tender taken out in 2006 to provide six refueling aircraft for the Air Force.
The Finance Ministry took objection to the selection of the Airbus 330 MRTT,given that the deal would cost upwards of
Rs 8,000 crore against the estimated budget of
Rs 5,000 crore set by the Defence Ministry. On the other hand,the fleet of Russian-built IL 78 would have cost the exchequer Rs 4,800 crore.
The Finance Ministry also pointed out that the IAF already operates a fleet of the IL 78 refueling aircraft,the last of which was inducted in late 2004,making it easier to induct a larger number of the aircraft.
Sources said that the ministry could now go in for a fresh procurement process and call more contenders for the trials in order to get a better deal. As per the rules governing defence deals,the government can at any time cancel an ongoing procurement without giving any reason for the change.
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