2022 August 19 15:40

Shipbuilding facilities have to be upgraded for implementation of new projects by 2030 — Denis Manturov

Hefty state support is required to carry out large-scale fleet modernization with a preferential leasing arrangement being the key measure

When speaking at the meeting on developing the shipbuilding industry held by Russian President Vladimir Putin, Denis Manturov, Deputy Prime Minister – Minister of Industry and Trade, said that the capacities of the shipbuilding plants have to be upgraded and expanded considerably to implement several hundred new projects by 2030. The meeting transcript is available on the official website of the Kremlin.

According to the official, in previous years, money for retooling was allocated solely to the military shipbuilding industry. “Currently, shipyards are assessing the capital outlays and investment needed to implement civilian orders. Given that their cost-effectiveness is restricted by regulations, we will possibly need budget investment, but we have to finalise calculations in this regard,” he said adding that hefty state support is required to carry out large-scale fleet modernisation. “A preferential leasing arrangement is the key measure in this sense. Today, the arrangement works effectively and, properly speaking, is the main driver of the available orders,” said Denis Manturov.

“We have drafted a programme which will be implemented, if we borrow from the National Welfare Fund at 1.5 percent annual interest. We have preliminary coordinated this approach with the Finance Ministry. Currently, the State Transport Leasing Company is specifying the amount of funding involved in bankrolling the draft programme. It is this pattern alone that will enable us to ensure transport connectivity, promote domestic water tourism, and develop new international routes and the Northern Sea Route transport corridor.

Apart from building new ships, we need to tackle repair and maintenance issues. Following up on your instructions, Mr President, we worked together with the Finance Ministry and found a way to offer zero-rate VAT for ship repairs, on the condition that providers sign investment contracts with us and undertake to invest the profit they make in upgrades, which in fact will pave the way to creating a new sector. We are now drafting corresponding amendments to the Tax Code with our colleagues,” said the Deputy Prime Minister.

“To ensure uninterrupted production and technological independence, we need verified ship equipment, especially taking into account the need for replacement components due to our foreign partners’ refusal to fulfil their obligations, as you mentioned today. Many shipowners, especially fishing companies, customers of large-capacity vessels have burnt their fingers when they preferred to include imported components and units in their projects even though Russian-made analogues were available at that time.

We are now forced to redesign many vessels, including projects that are already under construction. For fishing vessels alone, the change will involve additional costs of over 2 billion rubles for all participants.

Shipbuilders are currently checking their remaining projects for components that require changes and adjusting the cost of redesigning them. This is an objective reason that will shift delivery deadlines to the right. In this regard, to avoid customer penalties imposed on shipyards, we propose to extend the construction deadlines by two years after agreeing on the final cost – a similar arrangement was made with respect to major construction projects. We will prepare the necessary legislative amendments if you support us.

As for new projects, potential customers will be offered a standard range of vessels for various purposes with maximum reliance on domestic equipment. This way we will streamline serial production, reduce the vessels’ cost, and most importantly, dampen the risks of supply disruption,” said the official.

According to him, “today, the icebreaker fleet is perhaps the most independent segment technologically, and we will seek to achieve this across the board. We have defined the critical positions as regards hardware and units that have to be developed in the short term and put into serial production, including with account taken of the Zvezda shipyard’s large tonnage needs.”

The meeting was followed by specific instructions – to allocate an additional 7 billion rubles to produce Russian equipment for the fishing fleet. The Finance Ministry has included another 15 billion for the next two years in the draft three-year budget. 

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