• 2018 August 28

    Peotr Savchuk: “We should have our fishing ships built at domestic shipyards”

    The process of fishing fleet modernization has finally got moving in Russia. Peotr Savchuk, deputy head of the Federal Agency for Fishery (Rosrybolovstvo), tells IAA PortNews about the demand for fishing ships, required measures of state support, absence of demand for domestic designs and instruments to improve attractiveness of Russian shipyards.

    – Mr Savchuk, how many fishing ships are being built today under the “keel quota” programme and how many will be totally built by the end of this campaign?

    – As of today, the investment quota programme covers the construction of 20 large-size vessels (80 meters long and larger), 12 mid-size vessels (55 to 70 meters long) and 1 fresh fish trawler of more than 30 meters long. The total number is 33 ships.

    Besides, the new phase of this campaign starting in September will see more applications for pollock and herring quotas in the Far East basin. Investors are expected to build at least eight large-size vessels. 

    All in all, we suppose that Russian shipyards will build at least 150 fishing ships by 2030 through application both investment quotas and other support mechanisms.

    More over, it is important to ensure conditions for renovation of refrigerating ships average age of which is over 30 years. We need at least 10 units for the Far East and about five units for the Northern region. 

    – What do you think about including ships with live fish tanks into investment quota programme?

    – In general, it is a promising direction, particularly for the segment of large-scale pelagic fishery in the Far East, Volga-Caspian, Western and Azov-Black Sea basins. For example, this technology is applied by Turkish fleet when catching Black Sea anchovy. The catch is pumped to live fish carriers which deliver it to processing plants for high-level processing. It is an optimal solution when it comes to economical efficiency and preservation of the product quality. However, investment quota programme does not cover Caspian, Baltic Sea and Western basins. Therefore, we should offer other instruments to encourage fleet renovation. 

    – You have suggested compensating up to one forth of total newbuilding costs and the Ministry of Industry and Trade criticized the idea. Do you insist on this proposal?

    – We suggested a mechanism to subsidize capital costs to support modernization of small-size fishing ships dealing with aquatic bioresources of low profitability rate. It is not about barges or boats but it is about large fishing ships of 25 to 55 meters in length. With their specific draft, capacity of holds and catching equipment they can be operated in almost all fishing basins. 

    It is easier to have vessels built in China today and it will be considerably cheaper than in Russia. We see that from commercial proposals. Therefore, this measure is needed for domestic shipbuilders rather than for fishing companies. Certain conditions are needed to inspire interest of fishing companies. According to our calculations, subsidizing 25% of construction costs for vessels built in Russia will be enough to make vessels’ payback period acceptable. The subsidies we suggest will partially cover the costs when a vessel is put into operation. It is a transparent scheme of support for both fisheries and shipbuilding. 

    We have returned to discussion of this idea with the Ministry of Industry and Trade and we came to understanding. A legal framework should be developed before we start working. If this measure is approved we can speak about building up to 40 vessels for the Azov-Black Sea Basin, 20 vessels for the Caspian Basin, about 30 vessels for the Baltic Sea and the same amount for the North with the Far East to get some 100 vessels. Those vessels will be of МРС, РС and СТР types, small-size and mid-size vessels. It is an ambitious and a good programme.

    We offer targeted support. No vessel – no subsidy.

    The situation is as follows: a fishing company will either continue awarding orders to foreign shipbuilders or will opt for a Russian shipyard. As of today, we cannot meet price competition when compared with Turkey or China. Therefore, a targeted and a substantial impetus is needed. We should have vessels built by domestic shipyards to make the economy work through a multiplicative effect. Then, our shipyards will become competitive in the future. And the funds invested today will return to the budget in multiplied volumes.

    – Do you think that leasing is a promising financial instrument to encourage construction of fishing ships?

    – Leasing is able to streamline the process of ordering fishing ships considerably. It can be a substantial support for small- and mid-size companies which do not currently have free financial resources or competent specialists to manage and control the process of ship designing and construction. Interest rates in leasing schemes are lower as compared with those in bank credit schemes. For the fishing industry, leasing is certainly an additional instrument to raise the demand for newbuilds.

    We discuss leasing programmes with the leading organizations. Sberbank Leasing, VTB Leasing, VEB Leasing and STLC are ready for partnership with fishing companies.

    – Are there plans to build vessels for fishing in Antarctic regions? What are other promising regions?

    – It is really a promising region we should not miss. In Norway, they are building two more 200-meter long vessels for that purpose. Such vessels are very expensive: about $200 million each. Norway has a programme for operation in Antarctic regions. Of course, for Russia it is a historically important area and we are not represented there in terms of fishing. We should think of economic incentives to ensure long and large-scale operation there. Some of our companies are ready for that if state support is provided. First of all, it is commercial krill harvesting.

    We have been absent there following many years and it is not that easy to return. For the beginning, we follow the instructions of RF President on performing scientific research in the Antarctic. Our research ship will go there in the nearest time. 

    Of course, to develop this region we should build fishing and auxiliary ships. Initially, we will need 2 or 3 ships of 100-120 meters long. They should be state-of-the-art, economically efficient and powerful vessels able to catch at least 60,000 tonnes of krill per year. Aker ships catch 60,000-80,000 tonnes each. Earlier mentioned Norwegian ships will catch over 100,000 tonnes each. If we enter this segment we should select a project that would be optimal in terms production and economic efficiency. We can begin with our CCAMLR quota.

    Besides, we should look into a programme on catching tuna in the Atlantic and the Pacific oceans. It is a valuable product which is not currently covered by our fisheries. Here, we return to the issue of state support which will not be offered before 2030. Businesses should take their own decision on how many vessels  should be sent to those areas. We should provide scientific support. In this segment, the demand is 15 mid-size vessels of 40 to 55 meters long. 

    – Which are the most promising technologies in construction of fishing ships?

    – We are currently designing a scientific research ship of new generation, a unique ship worldwide. It will be equipped with an autonomous submersible, unmanned underwater/aerial vehicles, a helicopter for aerial observation of fish concentration, a meteorological observing station. With Azipod units it will ensure high accuracy of research.

    Fishing ships should be efficient, powerful and spacious. Construction involving composite materials is under discussion. In my opinion, it could be in demand for small-size ships, 15-20 meters long.

    Promising aspects of fishing and shipbuilding will be discussed at the International Fisheries Forum on September 13-15, in Saint Petersburg. It will gather both Russian and foreign companies.  

    – What is the local content in newbuild fishing ships?

    – Today, the orders show that the local content will make 40% though it was expected to reach 30%. Engines and main equipment is still supplied by foreign manufacturers while the hull and other equipment is produced in Russia.

    Engineering is an essential element. Yes, it is difficult to build a large-capacity fleet. For example, one of the companies decided to have its lad ship built in Turkey with serial ships to be built in Russia. What are the advantages of shipbuilding in Turkey? They have the same equipment, European one. But they feature smooth engineering process. Ensure it in Saint Petersburg or in Vladivostok and hey will be able to show the same results. Of course, everything needs time but we should not forget about increasing local content. The Ministry of Industry and Trade is currently working on establishing local production of engines and technological equipment. We see this process has been launched. For example, Ak-Bars Group is manufacturing hoisting winches and trawling equipment together with a Croatian company. I think, Russia could establish manufactures together with MAN, Wartsila, Caterpillar, Baader and other leading companies. That would let decrease the final cost of ships. Besides, service centers should be established across Russia. It is a large and promising market. Every year, ship repair at the ports of Norway, S. Korea, China takes at least $200 million from Russian shipping companies. At least, we should set ourselves a task: vessels being built in Russia should undergo repair and maintenance in Russia.

    – Why, in your opinion, Russian designs of fishing ships are not in demand?

    – The main thing here is the following: our design bureaus do not offer anything new to fishing companies with the exception of Kaliningrad Technical University which offered quite good designs for the Baltic Sea. 

    Anyway, everything should comply with the requirements of the Russian Maritime Register of Shipping. Even foreign designs should be russified through a Russian designer. Perhaps, that will help our design bureaus develop their own designs.

    – What do you think about developing a standard fishing ship design to be financed at public expense?

    – When it comes to designing, would like to “train” with small-size and mid-size vessels. I do not generally support R&D since this work is often done “for the basket”. However, if a certain design bureau wins a competition, let them develop a state-of-the-art design of a small-size fishing ship. We study this issue. Perhaps, we will apply public-private partnership to guarantee an order for such a ship.

    I think standard designs are needed for small-size and for large ships. They will let reduce their costs by 20-30% in case of large series. 

    Interviewed by Vitaly Chernov