Relevant topics

2018 March 30

State support

Russia has laid a course for import substitution, introduction of new technologies in shipbuilding and support of domestic shipyards. Development of new financial mechanisms including leasing is also underway. Besides, a law is being drafted to ensure the priority deployment of vessels built in Russia while the Ministry of Industry and Trade is implementing its own project on support of LNG-powered ships.

Romances about finances

A package of measures is currently being implemented to ensure state support of purchase (construction) of civil ships in the Russian Federation under the state programme “Development of shipbuilding and facilities for offshore fields, 2013 – 2030”.

First of all, they include subsidies to cover loan and leasing interest rates as well as ship utilization grants.

As Elena Kvasnikova, head of the Division for Strategic Planning and Management, Department for Shipbuilding Industry and Marine Equipment, RF Ministry of Industry and Trade, the subsidies provided to Russian transport and shipping companies to cover part of interest rates on loans obtained from Russian credit institutions and State Corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)"  for the purchase of civil ships in 2008 - 2016 totaled RUB 923 million as of 2018.

Subsidies provided to Russian transport and shipping companies to cover part of lease payments under leasing agreements signed with Russian companies for the purchase of civil ships in 2008 – 2016 totaled RUB 1,639,507,800 as of 2018.

Subsidies provided to Russian organizations to partially cover the expenses for the purchase (construction) of new civil ships (utilization grant) totaled RUB 371,275,800 as of 2018.

According to Victor Olersky, Deputy Transport Minister of Russia – head of Rosmorrechflot, the interest to ship utilization grant will grow amid interest rate cut by Bank of Russia.

The problem here is only related to limited financing of this support measure, it will not cover all the requests.

One more measure under consideration today is a programme of privilege leasing for construction of new vessels in Russia. 

In his interview with IAA IAA PortNews, Igor Ivashin, head of Sea and River Transport Department at STLC JSC, commented: “State measures of support available today let stop the fleet aging but to ensure a full-scale renewal of the fleet it is necessary to launch a state programme of leasing support. In our opinion, the best way is to contribute budget funds to the authorized capital of a state leasing company focused on projects in transport industry, which is the specialization of STLC. That will ensure loading of all USC and non-USC shipyards for a maximum renewal of the fleet by the period of maximum decommissioning of vessels expected in early 2020-ies.” 

Read more about prospects of leasing programmes in Russia >>>> 

Made in Russia

One of the new developments in the Russian legislation is the priority deployment of vessels built in Russia. According to Elena Kvasnikova, the draft law does not foresee any limitations or, far less, ban to operate certain vessels. 

“The bill is aimed to ensure a priority of using products of domestic origin but it allows operation of vessels built outside the Russian Federation. The bill has been approved by the Ministry of Transport and the Ministry of Energy of the Russian Federation. Upon obtaining other approvals required by the regulations of RF Government, the draft law will be submitted to the Government,” said the official.

The Ministry of Industry and Trade has developed four criteria to confirm the Russian origin of ships: engineering documentation should be developed by a Russian design company, hull material should be 100% of Russian origin, hull should be built in Russia, propulsion unit should be of Russian origin. Yet, the latter criterion can be downplayed by the Ministry through its dialogue with the market.

Step on the gas

A hot topic, especially in the Baltic basin, a part of the ECA, is the introduction of gas as a marine fuel and construction of gas bunkering ships.

The Ministry of Industry and Trade of the Russian Federation is implementing its own project “Development of gas-fuelled fleet for navigation in coastal waters and inland water ways”. Implementation of the project (its publicly-funded part) is a part of the state programme “Development of shipbuilding and facilities for offshore fields, 2013 – 2030”. Its implementation period: November 2017 – December 2025. 

According to Elena Kvasnikova, the project includes a number of activities like R$D for the development of innovative samples of vessels, equipment and technologies as well as creation of prototypes of equipment and facilities with their test operation, providing of subsidies for construction of vessels at Russian shipyards. 

The Ministry expects that successful implementation of all activities under this project will facilitate the growth of gas-fuelled commercial fleet (including cargo and passenger ships, bunkering vessels and floating bunkering bases, support and auxiliary vessels) built in the Russian Federation, up to 38 units by 2030 with the share of domestic components exceeding 50%. Besides, the number of re-trained and certified specialists able to work with gas fuel will be increased to 800.

Krylov State Research Center has recently won three tenders for performing R&D works in respect of using gas fuel by ships.  Read more >>>>

Implementation of three R&D works is to be completed in October 2019: “Ship modernization and conversion to gas fuel, pilot operation of a ship with gas-fuelled power plant running on LNG for navigation in coastal waters and on inland water ways, based on Professor Pavlovsky research ship”; “Designing, building a prototype and pilot operation of an LNG bunkering ship intended for navigation in coastal waters and on inland water ways”; “Development of a technology to meet the tasks of logistic support of the service for bunkering vessels with gas and to estimate bunkering infrastructure required for inland water ways of the Russian Federation”.

The Ministry of Transport has also developed a state programme of the Russian Federation “Expansion of natural gas usage as a motor fuel by transport and special purpose equipment (“Marine and river transport” sub-programme).

Vitaly Chernov.

The topics mentioned in the article will discussed in details at the XI Russian Forum “Current State and Prospects for Development of Russian Bunker Services Market” which will take place in Saint-Petersburg on 21-22 June 2018. 

Elena Kvasnikova will speak at the Forum about measures undertaken by the Ministry to support domestic shipbuilding.

In their turn, representatives of STLC will answer questions related to financing of construction under leasing contracts.