Saimaa Channel is waiting for a new agreement

New stage of negotiations on the lease of Saimaa Channel by Finland has been scheduled for August 10-11. Representatives of Russia’s Ministry of Transport and SA Saimaa Channel will visit Helsinki and discuss Russia’s proposals with our northern neighbors.

The agreement between Russia and Finland on the lease of the canal’s Russian part was signed in 1962 for the period till 2011. Fixed rate of annual rental payment is $330 thou. The last stage of negotiations between the two ministers of Russia and Finland on continuation of agreement was held this February. After that meeting Yuhani Korpela, Minister of Transport of Finland, said to Russia’s mass media that he is ready to prolong the agreement for 30-50 years in order to repay the investments. Finnish government spends about 10 million euro annually for maintenance of the Saimaa Channel. But Russia’s Ministry of Transport looks as if it is not ready for long-term liabilities the Finnish side counts for. According to the information provided to PortNews IAA by the source close to the Ministry of Transport, Russian draft agreement provisions the raise of rent and the decrease of contractual time from 50 years to 25 years.

The rent in Russia’s proposal is calculated on the basis of two components: fixed rate and payment depending on cargo turnover. The Ministry does not specify the value of a fixed rate yet. However, one of the interviewees of PortNews IAA underlined: “Russia is not to be left to the bad”. The second component of payment may amount to about EUR 0.15-0.18 per a ton of transported cargo.
The Saimaa Channel links internal lake system of Finland with Vyborg Bay. Cargo turnover over 2005 navigation amounted to 2.2 million tons of cargo. The canal is mainly used for transportation of timber, coal, metal and general cargo.

Negotiations scheduled for August are to become a ground for the meeting of two transport ministers to be held on September 9 in Vyborg where 150-year anniversary of the Saimaa Channel will be celebrated with participation of Michail Fradkov, Prime-minister of RF, and transport emissary of European Union.
The Ministry of Transport of Russia considered in 2005 the possibility of incorporation of a joint venture with Finland for the operation of the Saimaa Channel. Such company could manage the canal’s hydraulic engineering structures and shipping.  But according to Kommersant newspaper, “the officials have come to a conclusion that Russia has nothing to contribute into such a joint venture and the canal may come to a complete end in some years if it is taken over from the Finnish side”. That was something that stimulated the Ministry to negotiate new lease agreement striving to make the terms more profitable for Russia.

Some of those who participate in negotiations think that new agreement may be transferred to the State Duma of RF and the Parliament of Finland before the end of the current year for further consideration.