Uralvagonzavod has renewed its contract with the Russian Federation Defense Ministry

14.05.2012 — News

The Russian Ministry of Defense has signed a three-year contract for the supply of military equipment with the Uralvagonzavod Research and Production Corporation, OJSC (UVZ). This contract, which was announced during Russian President Vladimir Putin's visit to the company, will allocate 6 billion rubles to UVZ for the purpose of modernizing 360 armored vehicles and the same amount in order to technically upgrade the firm.

The first billion rubles will be disbursed in 2012. It is assumed that the majority of the funds will be used to modernize the T-72 tank that is used by the Russian army, since the Russian Federation Ministry of Defense does not intend to purchase new tanks before 2015.

Experts were surprised by the size of the contract. This past February the Russian defense minister, Anatoly Serdyukov, reported to Vladimir Putin that 6 billion rubles were to be allocated for the modernization of 170 T-72 tanks. Two weeks later his first deputy, Aleksander Sukhorukov, promised to add another 45 tanks to this total, increasing the size of the 2012 contract to 215 tanks. According to calculations, it costs 34 million rubles to modernize a single T-72 (data from the Russian Ministry of Defense), so 1 billion rubles would only cover the cost of renovating 30 tanks. This makes it difficult to understand how there could be plans to modernize 215 military vehicles in 2012 under the contract reached with UVZ.

The Ministry of Industry and Science in the Sverdlovsk region has refused to endorse the statements made by the federal officials. One of the ministry's key employees told RusBusinessNews: "The person who gave those figures is the person responsible for them". 

The Defense Industry Union in the Sverdlovsk region pointed out that 6 billion rubles for three years is a ridiculous amount for Uralvagonzavod. Even during the economic crisis in 2009 the company produced 50 billion rubles worth of products.