• 2015 June 4

    Looking for incentives

    Russian Ministry of Transport and Federal Fisheries Agency suggest providing vessels flying the flag of Russia or built in Russia with the preferences in access to resource and cargo base. The proposal is supported by the Ministry of Industry and Trade. Such measures do not require any extra budget allocations while supporting domestic shipbuilding and contributing to RF flag attractiveness.

    Inconvenient ‘flags of convenience’

    The competitiveness of Russian shipbuilding is generally low as compared with the foreign one. Potential customers in Russia have no ‘long’ and cheap money which hinders ordering of new vessels at domestic shipyards. Ship owners, especially those in the fishery sector, can hardly ensure enough orders at national yards without state incentives while shipbuilders cannot upgrade their enterprises without orders. Only state support measures can help leave this endless circle.

    Besides, it is necessary to transfer at least some vessels from convenient flags to the flag of Russia. It is especially important for vessels involved in strategically significant sectors, like transportation of hydrocarbons, amid complicated geopolitical situation and international sanctions against Russia.

    The main idea of the Ministry of Transport and the Federal Fisheries Agency is focused on providing ship owners building their fleet in Russia and flying the flag of the Russian Federation with preferences in the access to the cargo (Transport Ministry) and resource (Fisheries Agency) bases.

    According to Deputy Minister of Transport Victor Olersky, the proposed draft amendments to the Subsurface Use Law are to secure the transfer of a portion of the Russian cargo base to ships flying the Russian flag.

    The draft law provides the vessels flying the flag of the Russian Federation with an exclusive right for NSR transportation of cargo required for the development of fields located in Russia, the country’s internal sea waters, exclusive economic zone and continental shelf as well as with an exclusive right for transportation of cargo produced at those fields.

    "The Ministry of Transport in this draft bill did not insist on securing overall cargo base to all vessels sailing under the Russian flag. This would be harmful and unnecessary. As for the crude oil produced on the Russian shelf and liquefied natural gas (LNG), I believe it appropriate to assign such shipments only to the Russian flagged vessels” the official said.

    He also added that there is also a possibility under consideration in the near future to hand over legally to Russian-flagged vessels all the works to support offshore production.

    As IAA PortNews learnt from a source at the Ministry of Transport, the bill is under approval of the federal executive authorities.

    Fish soup for shipyards

    The Federal Fisheries Agency, in its turn, is developing measures of state support aimed at encouraging of a newbuilding programme for the construction of fishing fleet at Russian shipyards through providing of special quotas for production of aquatic bioresources.

    The proposal has been included into the package of amendments into the Federal Law “On Fisheries and Conservation of Aquatic Biological Resources” being elaborated by the Fisheries Agency.

    State support is to be provided through authorization of fishing by vessels built in Russia and fully owned or operated under lease agreements.

    “A subsidy in the form of quota will be provided to fishing companies building new ships at Russian shipyards, – said Ilja Shestakov, head of the Fisheries Agency. – This measure is aimed at renovation of domestic fishing fleet.”

    The terms and conditions of the state support will be set forth by the Russian Government. The subsidies are supposed to be provided when the new ship is put into operation which is to ensure the efficiency and transparency of the grant scheme.

    The Government will also determine the degree of localization considering the opportunities of domestic shipyards.

    As Shipbuilding Industry and Marine Facilities Department of RF Ministry of Industry and Trade told IAA PortNews, they are set to support both proposals (those of Ministry of Transport and Federal Fisheries Agency) as they encourage the development of Russian shipbuilding and transfer of vessels to the flag of Russia. “On our part, we are going to work towards the most constructive dialogue between different authorities,” they said.

    Vitaly Chernov