Mounting lawsuits over unpaid bills have hit Russian defence companies following a liquidity crisis that has gripped the sector.
The Kremlin has placed Russia’s economy on a war footing and ramped up production of military equipment to prosecute the ongoing hostility with Ukraine.
Meanwhile, the Russian city of Kstovo has been thrown into blackout as a drone strike targeting a local oil refinery, reports Russian Telegram channels.
Putin’s government is investing a massive US$145 billion (£107bn) in defence spending for this fiscal year, which represents 6.3 per cent of Russia’s GDP. Yet despite the huge inflows of cash into the sector, many companies appear unable to pay their bills, prompting suppliers to take them to court. In the most recent case, Magnitogorsk Iron and Steel Works (MMK) filed its third lawsuit in two months against Uralvagonzavod (UVZ).
The state-owned UVZ produces the T-90M tank and reportedly owes MMK 105 million roubles (£995k). The case was filed in the Chelyabinsk Arbitration Court and adds to a growing series of legal actions stemming from Russia’s deteriorating war economy.
UVZ is based in Nizhny Tagil and is central to the Kremlin’s armoured vehicle production. In total, the company now faces over 160 million roubles (£1.5m) in court claims from suppliers, with earlier suits filed in April and June. It has been beset by financial problems over a number of years, with reports suggesting its debts already exceeded 880 million roubles (£8.3m) as far back as 2020.
Production at the plant has slumped, with Western sanctions cutting off access to critical components needed for the manufacture of the tanks. The company failed to meet its output target of 1,000 T-90M tanks last year, managing to produce just 300 units, according to the International Institute for Strategic Studies.
The liquidity problems extend beyond UVZ and have affected other major Russian military-industrial enterprise. Aircraft manufacturer Tupolev – producer of the Tu-160 and Tu-95MS bombers – is also facing a lawsuit for unpaid bills.
In April, the United Engine Corporation (UEC) subsidiary Kuznetsov filed a lawsuit with the Moscow Arbitration Court to recover 425 million roubles (£4m) from the manufacturer. Moreover, the Khrunichev State Research and Production Space Centre, which produces Russia’s ICBMs, faces claims exceeding 211 million roubles (£2m).
Meanwhile, residents of Kstovo have reported thick black smoke rising above a local refinery. The fire at the plant was still burning by morning.
It is also known that part of the city lost power due to the strikes which its explosions were heard in nearby settlements. Residents of Volodarsk, Reshetikha, and Dzerzhinsk said they heard what sounded like air defense systems operating.
At the same time, local authorities tried to downplay the incident. Governor Gleb Nikitin claimed the attack was successfully repelled. He added there were no casualties.
Meanwhile, the Russian Ministry of Defense reported intercepting and destroying 36 Ukrainian drones overnight Sunday in several regions including Belgorod where 26 were reportedly intercepted, four over Voronezh, three over Lipetsk, and three over the Nizhny Novgorod region.
Last month, a large fire broke out at a factory in Kstovo, Nizhny Novgorod region. The blaze started shortly after a drone attack.
Shortly before that, reports emerged of strikes on several important military targets in Russia. These included an oil depot in Engels, the Dyagilevo airfield, and the Progress weapons factory in Michurinsk.
A few days earlier, residents of Bryansk complained of a series of powerful explosions over the city. They also reported a fire near the local airfield.
Comments are closed.