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A line is drawn under the crisis

Within the framework of a business program of the 10th international exhibition «NEVA-2009» which took place in St. Petersburg, PortNews IAA held a conference "Beyond the crisis outline. New routes of water transport development". The list of speakers included great international experts in the sphere of maritime transport, representatives of the RF Ministry of Transport, Ministry of Finance, RF Customs, Fishery Agency, RosMorPort FSUE, port of Rotterdam, Russian ports and transport holdings who covered the perspectives of further development and told about implementation of the largest investment projects in the ports.

The world needs Russian ports …

There is a deficit of port assets in the world today and the most promising regions to create them are Eastern Europe, Russia and Asia, Dr. Khalid Bichou, Imperial College of London, told the conference. According to him, today we face an overproduction of vessels built before the crisis in view of further boom in the international shipping market against a simultaneous lack of port facilities, especially container terminals. “The process of cargo containerization will surely continue,” Dr. Khalid Bichou believes. International container carriers intend to invest in creation and development of such port facilities”. According to the expert, they express interest in investing into Russia’s port infrastructure.

As Olga Denshchikova, marketing director of National Container Company (NCC LLC), said at the conference, NCC experts think $6.5-7.5 bln of investments are required today for the development of Russian container terminals.  She says investments are needed for the development of both port and logistics component of Russian container terminals. The expert thinks the industry will be able to raise this amount after 2011.

Foreign investors could operate in Russia within the framework public-private partnership. According to Dr. Khalid Bichou, 95% of new port projects in the world are based on PPP principles with 25% of ports operated by private companies. He also underlined that private capital should be better attracted under a long-term basis to avoid possible risks – there are examples in the global practice when international private investors left off certain projects because of the changed infrastructure or other reasons with the state loosing investments and newly created work places. The conference participants were told about PPP projects in Russia by Roman Mezhlumyan, representative of the Directorate of the State Customer for Marine Transport Development Programmes (Federal Agency of Marine and River Transport of the RF Transport Ministry). 

Having listened to his report, Dr. Khalid Bichou noted that port information is the most efficient in developing countries, where the major flow of investments could be directed. Port infrastructure of the USA was named by Dr. Khalid Bichou as an example of inefficient operation.

Russian ports need good legislation

To succeed in attraction of foreign investments Russianeeds to create and to improve its regulatorybackground. Representatives of the RF Ministries of Transport and Finance told about the development of PPP system, improvement of the legal framework and bringing of Russian ports into conformity with international standards.

According to Aleksei Klyavin, Director of the Department for State Policy in Maritime and River Transport, RF Transport Ministry, the balance the proportions of the public and private capital in Russian port projects is similar to that in the world today, which was confirmed by Dr. Khalid Bichou. “So we can say we follow worldwide trends in this respect,” Aleksei Klyavin said. Besides, he reminded about IMO Audit to start on the 28th of September. According to Aleksei Klyavin, will help to reveal “narrow spaces” and develop measures for legislation improvement in order to bring it into conformity with international norms and standards.

Sergei Razgulin, deputy head of Tax and Customs Tariff Policy Department of the Ministry of Financea draft law on exemption of ports from property tax had been submitted to RF Government for consideration.

According to him the tax exemption is envisaged for ports, where infrastructure is currently being developed at the expense of the federal budget. “The increase in value of the port’s property driven by the reconstruction and modernization and entailing furious tax take is supposed to be exempted from property tax for 15 years,” he said. told in his turn that

Private business is up-and-doing

It is clear that port development is beyond the state’s power without attraction of private capital. The most vital example of port projects based on PPP principles is that being implemented in the port of Ust-Luga (Leningrad region). However, the global financial crisis threatened a number of projects in the port because of the lack of prompt investments. In particular, in August of the current year the media frequently discussed the prospects of a container terminal in Ust-Luga in respect of the schedule earlier announced by National Container Company LLC. According to the report of Aleksandr Goloviznin, deputy Director General of Company Ust-Luga OJSC, the company has received a letter from Andrei Bezsalov, Director of Ust-Luga Container Terminal with a confirmation that a terminal is to be put into operation in 2010.

In August 2009, the term scheduled for commissioning of the container terminal in Ust-Luga port were questioned due to a possible delay of financing from NCC. FESCO, one of NCC incorporators, said investment into the project is unreasonable amid the crisis. The new terminal’s annual capacity is 3 TEUs. So NCC incorporators seem to have agreed as regards investments into the project. If so, it is a good news and a certain signal of optimism returning to investors.

As Aleksandr Shcherbinin, Director on development of stevedoring business of Transport Asset Management LLC (UCLH subsidiary), said at the conference, a container terminal of Sea Port of Saint Petersburg is to be put into operation in early 2010. It will operateparallel to the coal terminal. It is being built in the territory of Forth Stevedoring Company, where a coal terminal is being operated as well.

According to Igor Pankov, deputy Director General of Sovcomflot transporting oil from the LUKOIL terminal Varandey, this northern project proved its efficiency despite difficult climatic conditions. As of the middle of September, oil shipment from the terminal totaled 7.19 million tonnes.

The improved efficiency of another oil port in Primorsk was covered by Andrey Tereshchenko, deputy Director General of Commercial Seaport Primorsk LLC. According to him, EDP system  (Early Departure Procedure) is being introduced in the port in order to cut vessels’ dead time in the port. This generally recognized electronic system has been successfully applied for a long time at many international export-import terminals. EDP introduction is recommended by an International Convention on Facilitation of International Maritime Traffic (FAL, 1965) ratified by Russia as early as in 1967. However, it is not in practice at Russian sea terminals. 

Apart from the above reports, Aleksei Timofeyev, deputy Director General of RESO Garantia, told about the creation of the Association of Marine Insurance in Russia. The Association is incorporated by Russia’s leading insurance companies.

There were a number of other interesting reports at the conference. The summary of the conference is the following: with certain and well coordinated efforts of the authorities and the business, Russian port industry has an opportunity to become stronger than it was before the crisis, and to improve its efficiency and attractiveness for investors.

Here is a photo report on the conference within the framework of which a water tour around the port was arranged onboard the motor boat provided by Port Fleet CJSC. Upon completion of the official program the guests left by a leisure ship of Vodokhod for the reception arranged at the residence of the GB Consul General.