Shipowners are craving more incentives

Representatives of shipbuilding industry, the Russian shipyards have been finalizing previously signed civil vessels orders, and to ensure new shipbuilding contracts the government will have to provide financial support to shipowners.

River ships building expect more funds

Almost all shipyards have completed or are completing existing contracts. This was said General Director of Marine Engineering Bureau Gennady Egorov at a meeting of the Public Expert Council for Transport "Implementation Strategy for the Development of Inland Water Transport of the Russian Federation for the period up to 2030" in Nizhny Novgorod. He believes that to enhance river shipbuilding it is needed to resume the Russian government order on compensation of 2/3 of the interest rates on loans and introduce old ships recycling lump sum payment to shipping companies, which can be used exclusively for the construction or purchase of new vessels.

The proposal was backed at the meeting by Volga Shipping Co. Board Chairman Rishat Bagautdinov. He noted that with the entry into force of the Federal law on the support of shipping and shipbuilding sectors and of the government's decree №383 aimed at subsidizing rates several fleet operators began to upgrade their fleet. Overall, Russian shipping companies between 2010 and 2014 have built more than 70 merchant cargo ships. However, Rishat said, Russian banks had stopped long-term financing of shipbuilding. They'd rather "prefer to keep their money or to be involved in currency speculation," and this has led to absence of new civil vessel orders at Russian shipyards. The head of the shipping company considers it necessary to give further effect to the 383rd regulation into 2015 and beyond.

Deputy Minister of Transport of Russia Victor Olersky at the following day general meeting of the Russian Chamber of Shipping said that his Ministry supports the idea of further effect to the Government's regulation №383. "In our view, the obligation of the state should be assumed for a longer period, say, for the period of 8 to 10 years. Then it will encourage businesses to upgrade the fleet," the official said.

The acting Director of the Department of Shipbuilding and Marine Engineering Industry and of Russia's Ministry of Industry and Trade Boris Kabakov, speaking at the general meeting said that the funds for subsidies were assigned by the Ministry until 2017. However, the regulation is effective only in respect of the shipbuilding contracts signed before 2014. "Lack of funds under this item for 2015 is RUB 1,650 million. Ministry of Industry is trying to raise funds through redistribution among other budget items," Kabakov said. He also agreed with the importance of the regulation both for shipowners and shipyards. The governmental initiative has enabled Russian shipping companies to build about 80 vessels at Russian shipyards.

Shelf under Russia's flag

Alexei Klyavin, President of Russian Chamber of Shipping told the general meeting that the organization has prepared proposals for inclusion into the Russian government's anti-crisis plan. In maritime transport segment it is proposed to develop and carry out additional measures aimed at increasing the share of Russian fleet of shipping companies in total traffic volume of domestic foreign trade and transit cargoes. This requires some changes to the law on the state regulation of foreign trade activity; broadening the concept of "cabotage"; transfer of strategic goods transportation contracts to the Russian-flagged vessels; changes to the laws "On production sharing agreements" and "On subsurface resources"; development of measures to upgrade the fleet.


Deputy Minister Victor Olersky noted that the state plans to secure in the proposed draft amendments to the subsurface use law the transfer of a portion of the Russian cargo base to ships flying the Russian flag.

"The Ministry of Transport in this draft bill did not insist on securing overall cargo base to all vessels sailing under the Russian flag. This would be harmful and unnecessary. As for the crude oil produced on the Russian shelf and liquefied natural gas (LNG), I believe it appropriate to assign such shipments only to the Russian flagged vessels. This requirements should come into force in 2020," the official said.

He also added that there is also a possibility under consideration in the near future to hand over legally to Russian-flagged vessels all the works to support offshore production, including seismic works and offshore platforms supply.

According to Central Marine Research and Design Institute (CNIIMF Ltd.) there were 778 vessels with a total 3.6 million DWT registered under Russian International Ship Register (RMRS) as of February 1, 2015.

The merchant transport fleet includes 495 vessels (total 3.3 million DWT). The non-transport fleet - 283 vessels (total 0.3 million DWT).

The so called non-transport fleet includes: river fleet - 45 vessels, emergency and rescue fleet - 21 vessels, auxiliary fleet - 105 vessels, technical fleet - 23 vessels, RV fleet - 8 units, and other vessels - 81 units.

The current difficult economic situation has affected the program of construction of the icebreaker fleet. For example, Vyborg Shipyard has announced that because of irregular funding from the Public Procurement and due to the RUB devaluation (which influenced imports supply) the delivery of "Novorossiysk", the third in a series of diesel-electric icebreakers of Project 21900M was postponed.

The draft amendments to Federal Target Program "Development of Transport System of Russia (2010-2020)" envisage a reduction in the number of sea-going newbuildings (compared to initially projected) for socially important routes - by 20 vessels, of service ships – by 12 units.

Vitaly Chernov.