Danube Shipping Company can only be saved with alteration of Ukraine’s national policy
Ukrainian Danube Shipping Company (UDP OJSC), Ukraine’s national carrier providing strategic river and sea-and-river export transportation of raw materials as well as mining and smelting products, is on the brink of bankruptcy. Vidim Sukhonenko, UDP President and head of the BOD tells about the company’s opportunities, social problems and ways to solve them.
- The first quarter of each year is traditionally a planned loss-making period due to the ice situation at the Danube and repairing of cruise passenger vessels within the framework of their preparation for navigation. Apart from this, add our expenses for solving the problem with a group of sea vessels handed over a year ago under a bareboat charter and then left by the charterer in the ports of Ukraine and Turkey.
Besides, we have to invest a considerable part of earned freight in maintenance of laid up fleet. In 2008, the loss from maintenance of such vessels amounted to some UAH 27 mln.
During my meetings with UDP captains I heard ideas on measures to attract the attention of state authorities to UDP problems. In particular, they discussed blocking of Danube as an extreme measure. I think we succeeded in persuading the seamen this should not be done because of a special international status of the Danube.
As for the necessity to dismiss people - 600 persons of the shipboard personnel earn money to pay wages to 3,400 of the company’s other personnel.
We realize that the sale of the fleet is not a panacea. It is necessary to bring internal environment of the company to conformity with the external one, that is to ensure the company’s competitiveness. For this transition period we require financial resources and opportunity to radically cut non-production expenses.
We have drafted proposals for the deputy corps of Verkhovnaya Rada to support the bill on regulating administration of state companies’ property. We also ask for governmental assistance in refunding VAT to the amount of about UAH 5 mln. A decision is required on sea vessels being built at Kilija Shipyard: the government either resumes financing or entitles us to sell unfinished vessels to investor and settle bank loans. We also think it is necessary to give Ukrainian Danube ports the ‘third flag’ status.
PortNews IAA reference: in 2008, the loss of UDP OJSC grew by 67%, year-on-year, to UAH 65.4 mln (about $8 mln). Over 90% of the total loss came from operation of the marine fleet. The loss from river fleet operation totaled UAH 2.6 mln ($0.3 mln). The loss of the company’s passenger fleet amounted to UAH 1.6 mln ($0.18 mln). Cargo transportation fell by 28.5%, year-on-year, to 3.014 million tonnes.