Polyot largely expected to win, after intensive lobbying, but doubts linger over whether any candidate can raise the funding needed (603 words)

Published: 9/18/2001

The outcome - expected imminently - of the Russian Aerospace Agency's (RAKA) tender for the production of the An-70 has prompted much behind the scenes lobbying, accompanied by plenty of media speculation as to which of the bidders will emerge victorious. Eight aviation plants were invited to take part in the tender: Aviastar, Aviakor, IAPO, NAPO, Polyot (Omsk) and two Ukrainian plants, believed to be Aviant and Kharkov. According to Leonid Polezhayev, Governor of the Omsk Region, he has managed to convince Yury Koptev, RAKA's General Director, that the production of the transport aircraft would be best placed at the region's Polyot facility, which recently repaired the An-70 prototype after it crashed on takeoff earlier this year at Omsk Airport. Polezhayev is confident that Polyot will be the lead contractor with the originally scheduled producer, Aviakor, manufacturing the aircraft's wings. However, Polezhayev's statements, made ahead of any official announcement, were tempered by the caveat that “shady dealing may occur, and members of the committee may change their minds”. His caution may be well founded. The Military News Agency (AVN) has reported that Konstantin Titov, Governor of the Samara region, is fully engaged in the lobbying process to influence the outcome of the tender and has canvassed the support of Anatoly Kornukov, Commander of the Russian Air Force, to bring the work to Aviakor, which is based in Samara. The AVN report claims that Titov reminded Kornukov in a letter that the plant, as the original designated producer, had already invested Rb42m from its own funds and had received only Rb7m from the state. He also said that about 70% of the Aviakor's production facilities are already reserved for the programme and that 540 tooling jigs have been made in anticipation. However, the letter appears to make no reference to future funding and the primary reason that the An-70's production went to tender was because Aviastar could not produce sufficient guarantees of its ability to provide its proportion of the financing required. However, Titov may find that Polezhayev is something of a redoubtable rival. There are reports of extensive lobbying of government ministers and industry agencies at a conference held on 4th September to discuss the industry's development in Siberia at Novosibirsk-based NAPO. Ilya Klebanov, Minster responsible for the industry, announced at a press conference after the meeting that there had been "no serious objections" from the management of plants to the federal programme for restructuring the industry and the government was not going to draw tax revenues from the region: all of which points to a commitment to further orders in order to support the region's plants. Klebanov also assured the region's military producers that the government would pay back its Rb16 billion debt by 1st October in a combination of cash and government paper. Polezhayev's confidence, backed by a number newspaper reports claiming that the deal has been done, may still prove premature. There has been no confirmation yet from RAKA and, according to the Deputy General Director of Aviakor, Gennady Belogub, no award has been made. Additional sources report that, although Polyot is the winner of the tender, Titov's lobbying is stalling the announcement. Regardless of which plant wins, there is still the unanswered question as to whether either could realistically provide the $170m of funding to take the aircraft in production without substantial government assistance. The evidence at present suggests not. The terms of the contract, particularly relating to financing, will therefore make interesting reading when publicly revealed.

Article ID: 2767