Russian business daily Kommersant reported that Russian shipbuilding plant Yantar has asked Russia state arms exporter, Rosoboronexport for an additional USD 100 million to complete construction of three frigates for the Indian Navy.

As per report, a USD 1.6 billion contract on the construction of the ships was signed in summer 2006. Although the ships were scheduled for completion by 2011 to 2012 a lack of funds has delayed construction.

Mr Igor Orlov the director general of the Kaliningrad-based plant said "The lack of funding is linked to the VAT refund problem we will only receive after the frigates have been supplied to India."

A source close to Rosoboronexport told Kommersant the Indian side was aware of the issue and was treating it with understanding.

The source said "We are not considering increasing the contract price for India. We propose the problem be settled using domestic reserves, including those of the United Shipbuilding Corporation."

Russian shipyards have struggled to complete Indian naval contracts on time and budget on several occasions. The price of a refit for the Admiral Gorshkov aircraft carrier has been almost doubled and its completion date was put back from 2008 to late 2012.

(Sourced from RIA Novosti)