Russia's Roscosmos On Way Out Of Crisis

Russia's Roscosmos on Way Out of Crisis

The new leadership of Russian State Space Corporation Roscosmos, whose aim was to bring the company out of a difficult financial and economic situation, managed to do this by the end of 2018

MOSCOW (UrduPoint News / Sputnik - 04th February, 2019) The new leadership of Russian State Space Corporation Roscosmos, whose aim was to bring the company out of a difficult financial and economic situation, managed to do this by the end of 2018.

The main hope for reviving the industry is now pinned on the increase of carrier rocket launches and financial savings.

The unfavorable situation in Roscosmos evolved over the years and worsened last summer. In early June, problems with contracts arose and the debts of enterprises increased. The Russian leadership then decided to appoint former Deputy Prime Minister Dmitry Rogozin as the head of the corporation. The new team approached the challenges in a systematic way by introducing strict financial control and firing some of the top employees.

In 2018, Roscosmos managed to reduce its debt burden and to expand the Russian orbit group. Another launch of the heavy-class Angara rocket and the beginning of construction of the second spaceport for its launches at Russia's Vostochny space center are among the plans for 2019.

The crisis in Roscosmos has passed, and the situation is improving, Russian Deputy Prime Minister Yury Borisov said in January following a meeting on the financial and economic condition of the corporation.

"The situation is not simple. It has been unfolding not for one day, but over the years. We appreciated the work of the new administration. I think that the crisis is over. The crisis struck in the second quarter of 2018. As an example, the budget implementation rate was 22 percent, the lowest in all industries. Three quarters of the planned volume of activities had to be implemented in six months, which is impossible," Borisov said.

However, Roscosmos' new administration was almost able to do the "impossible." In any case, as the state corporation told Sputnik, the cash execution of the budgetary obligations was increased to 97.4 percent in the second half of 2018, and all budget allocations brought to Roscosmos were contracted. To remedy the critical situation, the state corporation had to completely change the personnel in the financial, economic, contractual and construction sectors.

The total debt load of Roscosmos enterprises is currently about 200 billion rubles ($3 billion).

The leader in this area is the Khrunichev State Research and Production Space Center, which owes the bankers and Roscosmos 111 billion rubles. The debts were formed mainly because of loans and penalties. The suspension of launches of Proton-M carrier rockets for a year also had a negative effect on the financial condition of the center.

The "second place" is occupied by is the Rocket and Space Corporation Energia. Its debts at the end of 2018 amounted to about 30 billion rubles. In early January, this debt fell by 7.5 billion rubles, as the company received insurance for a lost satellite it had built for Angola.

Energia's financial problems arose because of losses on the Sea Launch project and because of the AngoSat and EgyptSat satellites, which went out of service and which the company will have to build at its own expense. Moreover, if the corporation maintains the same level of net profit, it will be able to get out of debt without external assistance only in 25 years.

Roscosmos said that under these conditions, it had taken a number of strict financial control measures. The corporation introduced personal responsibility for officials for the cash execution of the budget, and a number of heads of space enterprises were dismissed for financial reasons. Roscosmos also took measures to reduce the expenses of the state corporation administration.

Creating integrated structures also continued to reduce costs. The first one will be the holding as part of the rocket engine manufacturer NPO Energomash.

"This year, the integration of missile production enterprises, tool making and satellite construction enterprises is beginning. Thus, enterprises will get rid of duplication of functions and will reduce non-production costs and personnel by 15 percent," Roscosmos press service told Sputnik.

The state corporation's bank Fondservisbank, which is planned to be renamed to Rosсosmosbank, should also help to save money.

Until quite recently, the bank was being reorganized. Roscosmos is to now sort it out.

Efforts to revive the industry have become the most important area of the new administration's work. The goal was to implement new rocket and space technology and to increase incomes from the commercialization of space activities. Clearly, it is impossible to create a complex rocket and space technology in one year. Under these conditions, the further development of the new Russian manned spacecraft Federatsiya (Federation) was continued and the contract for the creation of the Soyuz-5 super-heavy rocket was signed. The new launch of Russia's Angara rocket is planned for 2019.

"A conceptual design of a super-heavy rocket has been prepared to be submitted to the government. The master schedule for the creation of a super-heavy complex and its ground infrastructure has been signed. The tests of the Angara-5 heavy rocket will resume this year. According to the plan, which was agreed on with the Ministry of Defense, Omsk is preparing for its serial production starting 2023," the press service of the corporation said.

This year, Roscosmos announced a twofold increase in rocket launches. There were 22 of them last year and 45 are planned to be held in 2019. These will be launches from Russian space centers Plesetsk, Baikonur and Vostochny, as well as from the Kourou space center in French Guiana. Those will include not only space, but also military launches.

"Roscosmos, unlike NASA and the European Space Agency, is also involved in military space activities. While combat missiles are undergoing flight tests and are not serially produced, test launches should be taken into account in the total number of launches," the corporation said.

Also, at the end of 2018, Roscosmos reported an increase in the composition of the Russian orbital group, which expanded by eight spacecraft. Thus the total number of Russian military and dual-use satellites reached a total of 156.

"At the end of the year, after a successful launch from the Vostochny spaceport, our group of Earth remote sensing satellites has significantly expanded. At the same time, the industry enterprises created a pilot project in the interests of the government and business, which, on the basis of processed highly detailed images received from the devices, allows quick analyzing of the state of the infrastructure of the country's regions, monitoring forests and arable land, controlling construction sites and others," the press service told Sputnik.

Monitoring the construction of the Vostochny cosmodrome is a different issue. Russian Prime Minister Dmitry Medvedev said that the construction of the first phase was to be completed last year, but in fact only five out of 19 facilities were ready. Nevertheless, this does not prevent Russia from launching Soyuz rockets from the new Russian space center for the third year in a row and the fact that the facilities are not ready is primarily due to the theft of funds within the Russian Federal Agency for Special Construction Spetsstroy.

"Currently, the construction of secondary facilities of phase one is underway," Roscosmos said.

At the same time, it will be necessary to complete the construction of the facilities at the corporation's own expense, while pumping out funds from negligent contractors in courts.

Due to financial problems, the start of the construction of the cosmodrome's second phase, comprising the launch infrastructure for the Angara, hangs in the air. It turned out that a Kazan construction company chosen as the lead contractor for the construction of the second stage has financial problems. Hence, it was decided to terminate the contract with the company and to choose a new contractor.

"Work at the Vostochny cosmodrome as part of the creation of the second phase for launching heavy Angara rockets by 2022 has begun. The design documentation is being developed. The construction work will start in April," the company said.

Roscosmos believes that the main thing is that the government supported the completion of the first stage of the cosmodrome and will support the creation of a "launch pad" for the Angara.

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