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2022 June 3
Anchored effect
Photo by Global Ports As far as IAA PortNews is informed, FSUE Rosmorport has a negative outlook on possible effect from cutting payments for berths rented in Great Port of Saint-Petersburg. Amid the sanctions, general turnover has reduced by almost a half, which affected the stevedoring companies, says the Smolny (Saint-Petersburg Government). Together with the decrease of calls and, consequently, port revenues, potential reduction of rental rates will worsen financial results of Rosmorport, the company responsible for investments into port infrastructure.
Amid the fall of calls at Great Port of Saint-Petersburg and, consequently, revenues from port charges, the reduction of rental rates will certainly aggravate the financial situation of FSUE Rosmorport, the company told IAA PortNews.
“In its turn, that will lead to the necessity to curtail capital investments into infrastructure,” emphasized Rosmorport.
Established in 2002, FSUE Rosmorport is in charge of navigation safety, organization of works in seaports and collection of port dues. The company owns over 2,500 real estate facilities worth over RUB 120 billion (hydraulic engineering facilities including underwater ones, safety systems) as well as 277 ships. In 2021, the company’s revenues totaled RUB 34.4 billion, its net profit doubled to RUB 1 billion, EBITDA totaled RUB 8 billion.
Photo by Aleksandr Chizhenok The Smolny earlier discussed the proposals on support of freight ports and stevedores in the context of the data provided by the regional government on reduction of Great Port of Saint-Petersburg’s turnover by almost a half. “The city is going to address RF Government with a request to decrease the rates of berth rental in seaports of Saint-Petersburg. The berths used by the market players are owned by the federal ministries,” said the statement of the municipal government.
Aleksey Korabelnikov, Vice-Governor of Saint-Petersburg for Economy and Finances, could not provide prompt comments on reduction of rental rates or effect expected from the initiative.
Saint-Petersburg is the owner of Passenger Port “Marine Façade” which also has a check point for freight. However, the port has been not operating from the beginning of the pandemic. In 2021, Association of Commercial Sea Ports (ASOP) asked to resume operation of the port having lifted coronavirus related restrictions but the company subordinate to the Smolny is still out of operation.
According to earlier publications of IAA PortNews, Rosmorport’s plans for 2022-2024 included investment of over RUB 15 billion of revenues from port dues for investment purposes (investment port dues, IPD) that have been collected from the beginning of 2021. Investments were planned for construction and reconstruction of Russian sea terminals. Total expenditures under the investment programme will make RUB 25.9 billion, one third of expenditures for hydraulic engineering facilities over the previous three-year period. The most expensive project in the current list of Rosmorport is the construction of a universal trade terminal of Novotrans in Ust-Luga (Leningrad Region). Rosmorport’s investments in that project are estimated at RUB 8 billion to be covered by IPD. Other works financed by FSUE Rosmorport include reconstruction of hydraulic engineering facilities at the terminal for cruise and cargo ships in Pionersky (Kaliningrad Region) and berths of GlobalPorts’ First Container Terminal in Great Port of Saint-Petersburg.
However, in March Rosmorport announced the revision of its priorities within its operation programme for 2022 taking into account the forecast for income reduction.
Image source: Global Ports According to the market players, container turnover in the North-West ports is expected to sink by almost 90% in January-May. Meanwhile, the volumes are to recover if a carrier and a new hub is defined in friendly country, for example Turkey, UAE or Morocco.
Stevedore market stakeholders polled by IAA PortNews welcome the initiative of Saint-Petersburg Government while not specifying the effect on their finances, though. According to the Agency’s source in the industry, stevedores renting berths expect a discount of “at least 50% to cover 10% of the salary fund”.
“Seaports offer great number of jobs for the city. Yes, there are proposals on recovery of the cargo flow involving new hubs and on investments in Russian shipping companies but time is needed for implementation of those plans while resources for fulfillment of rental obligations are required right now,” the source told IAA PortNews.
The initiative of Saint-Petersburg Government is not directly connected with the problem of pumping up the regional budget but it can contribute to employment retention in the industry and, consequently, to sustainable tax payments, believes Aleksandr Goloviznin, Director, Logistics and Analytical Research, Morstroytechnology.
Image source: Sea Port of Saint-Petersburg “Saint-Petersburg stevedores have been seeing considerable fall of cargo flow from April. The companies’ revenues have sunken while their expenditures are mostly fixed. Rent payments actually account for not that large share of expenses as the salary fund, following instance. This initiative is really aimed at helping the stevedores survive this challenging time the duration of which cannot be forecasted so far. That is practically all the government can do to help stevedores. It cannot create a cargo base for them,” he says.
According to the expert, investments of Rosmorport in development of the North-West region infrastructure will not be highly required in the near time while financing of maintenance dredging will be covered even taking into account the decrease of revenues from port dues and rental payments. In general, the budget of the state company will not suffer a lot in view of revenues from the calls in the Far East that can grow, the expert says.
Aleksandr Goloviznin refers to the proposals of Saint-Petersburg Government as an adequate but minor step “since the wage costs are more essential and stevedores will have to cut jobs and wages,” he summarized.
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Author

Yana Wojciechowska
editor@portnews.ru
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