The Russian Federation is losing its cruise river fleet. Lack of comfortable vessels is among the factors hindering the development of cruise tourism. Amid the market demand Russian shipbuilders are busting a decades-long myth about Russia not able to build passenger ships.
Average age of passenger ships is 42 years. Half of 90 vessels operating today is 50-60 years old. In the nearest decade this fleet is likely to be decommissioned and we will have just about 40 vessels left.
Lack of required ships hinders the development of cruise tourism in Russia. Cruise river ships in our country carry about 350,000 tourists per year.
Meanwhile, the number of cruise tourists is constantly growing worldwide. According to the forecast of some foreign companies, the year of 2017 will see about 24 mln cruise passengers.
It should be noted that the market of river recreation has rich traditions in Russia. It was developing in the post war period. In 1957-1958 Krasnoye Sormovo shipyard (Nizhny Novgorod) built two diesel-electric ships, the Lenin and the Sovetsky Soyuz, which have been successfully involved in transportation of tourists.
The second one is coming
Amid the market demand Russian shipbuilders are busting a decades-long myth about Russia not able to build passenger ships.
Krasnoye Sormovo shipyard (United Shipbuilding Corporation) will build the second cruise liner of Project PV-300VD. According to newspaper Kommersant, the contract signed by United Shipbuilding Corporation and shipping company Vodohod (UCL Holding) is estimated at RUB 3.2 bln with an expected payback period of 15 to 25 years. The delivery is scheduled for 2020. The four-deck cruise will be 141 meters in length and 16.5 meters in breadth. The 300 and 500 passenger capacity cruise ships were designed by Marine Engineering Bureau.
The first cruise liner was laid down by Astrakhan based shipyard Lotus in August 2016. The customer of the ship intended for Caspian cruises is Moscow River Shipping Company. Read more >>>>
The second liner is to be used at the route between Moscow and Saint-Petersburg. The industry experts say this route will be popular among foreign tourists as Moscow and Saint-Petersburg are the key cities visited by foreigners. However, this route will also be interesting for Russian travelers.
Krasnoye Sormovo shipyard was selected due a high level of its operation and implementation of its obligations as scheduled. Having not received an order for extension of a series of dredging ships recently built at Krasnoye Sormovo the shipyard has all the resources for this order implementation.
Support measures
Construction of passenger ships of Project PV-300VD is financed through leasing and with state support measures.
To encourage the construction of civil ships and facilities the government has developed a number of measures supporting ship owners. The Ministry of Industry and Trade, the Ministry of Transport and the United Shipbuilding Corporation have developed a programme of beneficial leasing to facilitate the construction of passenger ships.
Other support measures applicable in Russia today include RF Government Decree dated 22.05.2008 (No 383) on granting subsidies to Russian transport companies and shipping lines to compensate for 2/3 of the cost of interest on loans obtained to acquire vessels built at Russian shipyards. However, this measure requires extension for a 15-year long period (it annual prolongation today).
Besides, Federal Law No 305 (dated 07.11.2011) on support of domestic shipping and shipbuilding provides for tax privileges when it comes to registration of vessels built by domestic shipyards after January 1, 2010.
Moreover, there is an additional measure to encourage the fleet renovation – the programme of fleet utilization. This programme lets shipping (shipbuilding) companies get ship utilization grants.
“In the part of technical and economical solutions, everything has been done. The matter now depends on a utilization grant. Then the construction of passenger fleet can begin. Our shipyards are capable of this”, comments Victor Olersky, Deputy Transport Minister of Russia, Head of Rosmorrechflot.
Over RUB 10 bln is to be spent in 2017-2030 for financing of ship utilization grants. According to Denis Manturov, Minister of Industry and Trade, the mechanism of a ship utilization grants is included into the state programme of the Russian Federation “Development of Shipbuilding and Facilities for Offshore Fields” from 2017.
Ship utilization grant is a lump-sum compensation provided to a company utilizing its old fleet. The grants can be used exclusively for construction of new vessels at domestic shipyards. It can be provided to a shipping company scrapping ships whose age exceeds 30 years and owned by the company for at least 3 years. The compensation is supposed to be provided upon construction and delivery of a new vessel.
SUG calculations will be based on deadweight, cargo and passenger capacity as well as the power of ships. A grant is to make at least 10% of the construction costs. SUG for passenger fleet exceeds that for other types of vessels.
Apart from building new cruise liners of Project PV-300VD, construction of passenger ship Knyaginya Olga is nearing completion in Moscow, Khabarovsk shipyard has built high-speed passenger ship 70 Let Pobedy and Sredne-Nevsky Shipyard (Leningrad Region) launched passenger catamaran made of composite materials. Russia needs new fleet able to become a growth driver for both shipbuilding and cruise industry, as well as for a number of related industries.
Margarita Babkova