Mikhail Romanovski about revision of port charges

Mikhail Romanovski, President of RF Union of Ship Owners (SOROSS), has made a report on revision of port charges at a round table conference arranged by Marine Council under Saint Petersburg Government and Edinaya Rossiya party. PortNews IAA provides some abstracts from the report.

- According to the decree No ИЛ-17-р of RF Transport Ministry dated February 07, 2005, a Work Group was set up for revision of the current charges taken from the vessels at the RF ports. Throughout a year the Work Group held regular meetings and RF Union of Ship Owners acknowledged absence of standard legal basis for setting, collection, regulation and use of charges. According to SOROSS, development of such a basis is a priority task.

In particular,

the Provision on Setting and State Regulation of Charges for Vessels in Seaports was provided to RF Government in 2003, though it has not been completed yet;

there is no proposal on introduction of amendments into RF Government Decrees No 1299 and No 705 related to authorities on charge collection;

there are no approved scenario options for revision of charges;

there are no methods, comparative analysis or grounds for setting charge rates;

the issue of amount of charges, terms for their calculation, collection, deduction or complete exemption, etc. has not been solved yet;

no method for conversion of “cubic module” into gross capacity of vessel has been adopted. The transition from “cubic module” to GCV was to be undertaken in 1994 according to the provisions of International Convention on tonnage measurement;

no list of activities related to the sphere of natural monopolies has been made.

Execution of a high quality regulatory document is impossible without solving of the above issues.

Besides, the very method of collecting charges and interpretation of their status proved to be different and contradicting. Russian legislation does not provide any clear definition of port charges.

The method for setting tonnage, lighthouse, canal or navigational charges should not be based on costs alone, SOROSS thinks. These charges are of special status according to legislation and practice of maritime nations. Such charges are collected and transferred for financing of costs covering expenses on maintenance of port infrastructure and construction of new ports.

However, fees for specific one-time services ordered by vessels, such as piloting, tugging, icebreaking or ecological services are of different status. Transport Ministry is wrong in including these charges into the list of obligatory ones. These charges are of different legal nature. Their collection should be regulated within the framework of civil law relations and reflect availability, recoverability and conformity of a specific service. These charges imply compensation for expenses as the service is provided.

However, Transport Ministry presumes that all the charges including fees for certain services should be considered as tariffs (prices) for services provided at the ports within the framework of civil law relations. This position is supported by representatives of the Federal Tariff Service. At the same time, income from these service subjects to tax, from which the taxpayers were exempted.

As of today, the rates of port charges in Russia are 35-40% higher compared to those of foreign ports, while the level of port charges in certain Russian ports is several times as high as that of comparable foreign ports.

Number of departures of ferries (Rо-Rо) at the Baltic ports in 2004-2005, per week:

As seen from statistics provided, the lowest number of ferries calling to the ports of the Baltic Sea falls on those of Russia, which proves unfavorable conditions for development of ferry (Ro-Ro) lines in Russian ports of the Baltic Sea.

One of the main negative factors hindering development of ferry (Ro-Ro) lines operating between the ports of Russia and Germany is current level of port charges in Russia. Owing to a roll-on method of loading/unloading, full loading of a ferry in terms of volume results in the use of maximum 30-40% of the vessel’s cargo carrying capacity, while port charges are calculated basing on the vessel’s module, which is a product of length by breadth and by freeboard. Specific operation of ferry lines according to a certain schedule implies departure of the vessels with any amount of cargo onboard, which entails the necessity to pay high fixed charges and raises carrier costs. In order to attract ferries, port authorities of foreign countries provide considerable discounts. Here is an example of port charges for motor ship Translubeck

It should be noted that the most expensive port in Europe is that of Arkhangelsk. Specific weight of costs for tugging services for mooring in the port of Novorossijsk in total volume of charges taken from the vessel totals 70% under normal weather conditions. Different charges make 25-30% of expenditure budget of any shipping company. It is a little bit less than fuel costs and several times more than wage costs with all related payments.

The principle adopted by the Transport Ministry for pricing of services based on recovery of expenses for maintenance of numerous organizational structures (administrations of seaports (ASP), Rosmorport FSUE etc.), related to management of commercial seaports and on deriving of maximum profit without appropriate methodical provisions may result in further growth of port charge rates. Such an approach cannot be considered as reasonable from the point of view of customers and payers.

The approach based on the principle aimed at covering expenses for maintenance of growing port structures means that any revision will initially imply upward dynamics of the rates which contradicts Maritime Policy of RF in the sphere of marine transportation targeted at raising competitiveness of marine transport as a whole and its elements like ports and fleet in particular.

Thus, SOROSS asks Transport Ministry to consider the following issues within the framework of the text part of Provisions on Charges for Vessels in Seaports:

Reduction of the list of charges

Clear status differentiation of charges (tonnage, lighthouse, canal or navigational charges) and fees for services (tugging, sanitary, piloting, ice-breaking) provided they remain in the Provisions

Exemption from all charges for vessels registered with International Register of Vessels or exemption from navigational, canal or lighthouse charges not related to services and having tax, or fiscal character

Restoration of tugging charge based on engine capacity of a tug-boat and period of its operation

Calculation of charges for waste removal from a vessel should be based on amount of waste actually taken from a vessel. The vessels fitted with end-of-pipe equipment are exempt from this type of charge (sanitary charge)

Exemption from all the charges for vessels entering the port’s harbor waters for auxiliary operations not related to cargo handling in the port

Collection of charges in the ports with neighboring harbors should be executed only once in the port carrying out handling and other works at the vessels

The rates for charges to be taken from vessels deployed for coastal cruise should not exceed 0.1-0.2 of the fixed rate.