Inland waterways reform needs some changes

In a recent interview with IAA PortNews President of the Yenisei Shipowners Association, General Director of JSC Yenisei River Shipping Company Alexander Ivanov touched upon the challenges facing the shipping companies operating on Russia’s inland waterways.

- Mr. Ivanov, can you compare the 2013 navigation with the last year’s season?

- The comparison would be incorrect, because the situation is radically different. 2012 was not typical for the Yenisei basin, primarily because of the wildfires. In August smoke reduced visibility on some parts of the Yenisei to 100 - 200 meters. Our ships remained idle as we could not pass the rapids and restricted areas. In addition, the past year was characterized by a severe drought in Siberia, the lack of rains, and the water lowered to its dramatically low level. The Krasnoyarsk Dam started emergency water discharge. The Boguchan hydro dam on the Angara River began to fill the bed of the reservoir. On September 14, 2012 we had to halt shipping on the Angara River. Because of the low level on the river rapids our vessels could not even reach Krasnoyarsk. We could carry cargo only to Lesosibirsk. Even our passenger boats could not sail from Krasnoyarsk to Dudinka and Igarka, but from Yeniseisk, located 400 km downstream.

Operations also ceased on the Angara, with only 20%-30% of loads, and once in a while, there was no navigation at all. We failed to deliver some volumes for the Polyus gold mining company. Some shipping companies were not able to execute their contracts for delivery of timber cargo along the Angara, which greatly affected the performance and development of the timber industry of the Angara region.

Last year we faced huge operational costs, we strove to ensure northern delivery. There are no roads just 500 kilometers north of Krasnoyarsk and the Yenisei River is the only way, some 2,500 km. And with tributaries, where river shipping companies operate, it is 8,000 km of navigable waterways. Besides river vessels, aircrafts are the only means of transport in this vast region for delivery of consumer goods and cargoes for industry of the Arctic, but it costs an awful lot. So last year, river shipping companies realizing their responsibility did all the best to deliver on the Yenisei every last tonne. There was only one failure in the Evenkiya, where we could not deliver 3,500 tonnes of crude oil from Podkamennaya to Tunguska. Actually, it was not our fault, a technical snag – an oil depot just could not supply sufficient volumes, and while we were waiting, the water levels had dropped to a critical level.

- How is the situation on the rivers this year?

- The situation is not bad so far. There were some fires and fogs in August, our vessels were lying idle from time to time on the Angara and the Yenisei, but the situation is a lot better then a year earlier. However, we are afraid there might be some problems with Boguchanskaya HPP that is expected to halt discharges of water on the Angara. It would be critical for us as we have not yet delivered 40% of all contracted cargoes. The water level on some stretches is not quite high so we to load only 300 to 400 tonnes on a 1,000-tonne barge.

- Do you have to transship cargoes for passage of shallow-water stretches?

- This is done on the tributaries. Today, there are some ships on the Bol’shaya Kheta where we carry cargo for VankorNeft. We had delivered 140,000 tonnes in time, then the level dropped, and 1.5 million tonnes of loads stuck on the 320th km stretch just 100 km off the destination point. So far, the oil company delivered 56 tonnes of the most valuable and necessary equipment by helicopters.

- What’s your shipping season’s results outlook in the Yenisei basin?

- Our shipping company has planned for this year to move 3.5 million tonnes of cargo, including 1.9 million for the Norilsk industrial district. We will deliver everything in this direction. We’re still uncertain about the Angara. We were contracted to deliver to a gold mining company and municipalities more than half a million tonnes. If HHPs authorities will block the Angara, then, of course, we can hardly deliver the above volumes. All other tasks will be performed by our company.

- What is the current condition of your fleet?

- Average age of our fleet of about 700 vessels is 30 years. This is a lot. But we are trying to keep the fleet in good condition. Yenisei River Shipping is one of the few shipping companies, investing in renovation 300 to 400 million rubles a year. We have our own shipyard, ship repair facilities. We have a fleet upgrade program, which includes 50 newbuilds to be constructed by 2016, 27 of them have already been built. Those are largely non-self-propelled vessels. Such ships service life is a lot shorter than the self-propelled vessels, which we repair, replace engines (up to 20 - 30 units a year).

Last year, officials of the Russian Security Council Secretary inspected our Podtesovskaya maintenance and production base and gave the highest ratings. In the Soviet era it was one of the largest shipyards. Since then, we have not closed any shop or facility. Everything is working today just exactly the same way as it was before, for our needs. Moreover, it’s not just working. We are constantly upgrading our equipment. The Podtesovskaya base manufactures products for the entire river fleet of Russia, including rubber products, Goodrich bushings, supplying 70% of them in the Russian market. We have our own molding shop and we manufacture the screws, not only for ourselves but also for many businesses entities of the Ob and the Lena basins.

- Last year a new system of traffic control on the Russian inland waterways came into force. What’s your opinion about its effectiveness?

- The decision to establish the Basin Authorities was right. There should be one owner, responsible for the entire basin. They introduced port state control in the basins. Earlier, they had 30 inspectors, now there are more than 50 of them. But the inspectors are not supplied with equipment, fuel, so are not mobile and are not able to check unscrupulous shipping companies and ship owners, who always violate some regulations. Shipping inspectors without fast transport just can not to cover all the tributaries. They sit at our ports, so basically they are checking Yenisei Shipping Company and another 3 - 4 companies, and they can not reach those who operate on the tributaries, on the Far North.

- That is, initially the idea was good, but it turned out to be “as always”?

- Right, as always. After a disaster with the Bulgaria boat they introduced the law on transport security. Since 2013, they began to work under the Safety Management System requirements. As a result, now we have separate transport security and SMS. And to fulfill all the requirements they need a whole lot of money. In addition, the number of payments under the tonnage tax is increasing. They have introduced new tonnage tax in Dudinka, significantly hiked rates for the passage of regulated areas, increased, sometimes unreasonably, the number of those regulated areas. Now we're suing the Port Authority of Murmansk, which includes the harbour master of Dudinka. River carriers will have to pay about RUB 10 million of tonnage dues in Dudinka. This is too much for the tiny shipping companies. They plan to establish a checkpoint in Igarka – again to fork out money, and so on.

Yenisei Shipping Company has estimated that over the last few years, thanks to all these innovations, we additionally had spent more than RUB 100 million. With all those soaring dues the industry will eventually go bust. And in general good policy of reforms and desire to restore order on the river in reality the reforms stuck and turn out to be a heavy financial burden on honest shipowners. Of course, we can not agree with it. The reform should be reviewed, it needs some amendments, taking into account the views of the very people who work on the rivers. How we can talk about fleet upgrade, or leasing schemes for newbuilds construction, when the river carriers have no money? In Russia, only several shipping companies are developing that have sea-going fleet and access to sea. Those who operate in Siberia, on inland waterways are gradually slipping into the red. There are not a few shipowners on the Yenisei River whose fleet stays idle, without a job.

- Then how come the shipping companies are developing in other regions?

- Those are largely the companies that operate mainly at sea, engaged in international transportation. It’s pretty hard to develop working on the inland waterways, especially in the Urals, with more than 70% of the inland waterways of the country. Take the Lena, Tom’, Irtysh, Yenisei and Ob rivers - Siberian carriers are in a difficult situation. A somewhat different situation is on the Volga River. They have access to the sea, to the markets, and thus they have good volumes of traffic and so on. I have communicated with my colleagues at Moscow Shipping Company, they have a declining cargo volumes. But they can compensate something at the expense of tourist cruises. We don’t have such a possibility here. The passenger cruise season lasts only three months. During this time, you won’t earn enough money. Tourists want to come to us, but the cruising fleet is aging. The regional authorities seek to buy new passenger boats, but it also needs funds. In 2006 we turned over passenger ships to PassazhirRechTrans, and it was a good decision, because today the company receives hundreds of millions of rubles from the budget. If the passenger traffic in Siberia is not subsidized the sector will just die. The vessels should be maintained a whole year, while they operate only for three months.

However, in general, we try to remain optimistic, having faith in the future. We hit our targets and tackle the challenges facing us. But, I repeat once again - the reform of the inland waterways should be amended.

Interviewed by Alexander Chizhenok