5 years is not enough

Stevedoring companies and Rosmorport FSUE will start concluding new agreements on lease of state property in Russian ports in the second half of December. Contrary to what one might expect, new agreements may hardly be called long-term agreements. Rosmorport FSUE suggests that leaseholders sign new agreements for just five years.

Competition without law

Heads of largest stevedoring companies, Rosmorport management, representatives of Federal Agency of Marine-and-River Transport under RF Ministry of Transport as well as deputies of State Duma and Council of the Federation held a “round table” in order to discuss the issue of lease relations and state-private partnership at the ports of Russia. The event was initiated by the working group of the seaport legislation Expert Council of the Committee on Economic Development, Entrepreneurship and Tourism under State Duma of RF introduced in December 2006.

Transport independence of the country is the major principle of Russian economy strategic development, the participants of the “round table” say.  Thus, major task of the state is to handle Russian cargo in Russian ports. Russia’s joining of WTO is obviously to influence considerably the growth of throughputin Russian ports as well as competition with Baltic ports.

Russian ports are currently behind their nearest competitors – the ports of neighboring states – considering a number of parameters, the press release says. Port complexes of the Russian Federation have enormous investment potential and perspectives of further development, though actual implementation depends directly on correct and rational decisions on state issues. First of all, it is related to the absence of Federal Law “On seaports ofRF”, regulations and normative documents regulating relations of the port business.

Investors without guarantees

The law on ports has been under consideration at the Government having not been introduced to the State Duma. Actually it is the law, which could clarify the issue of berth leasing. Correspondingly, the law will specify the rules and terms for investments to be attracted from private business for the development of state objects comprising the infrastructure of seaports.

Without the law the agreements on berth lease were re-concluded every 11 months, which  prevented stevedoring companies from normal development of their projects with attraction of outside investments. Of course, no one is ready to invest into the project, which may terminate in a year if its extension fails. “We are ready to invest but do not understand our costs since we do not know what part of our investments will be guaranteed by the state,” Sergei Chelyadin, Director General of the Sea Port of Saint Petersburg told at the press conference.

5 years instead of 15 years

The issue of berth lease has been actively discussed during the whole year. Moreover, it was provided for consideration of Marine Board under RFGovernment. Both representatives of the Ministry and business as well as legislators expressed their proposal to increase lease periods to at least 15 years. However, several weeks ago, Rosmorport informed the leaseholders that it has developed and sent the proposal on 5-year lease agreement for consideration of Rosimushchestvo and Rosmorrechflot. Yury Parfeonov, Director General of Rosmorport, did not deny at the press conference held on Thursday that the ports need longer lease periods. According to Parfeonov, this proposal will for the moment being ease the tension of the issue. “Let atleast some legal agreements be signed,” he added. Parfeonov says Rosimushchestvo seem to accept the proposal. “We make the proposal within the limitsof current legislation but it should be approved,” Parfeonov says. Today Rosmorport carries out evaluation of the property and calculates possible rates for the lease based on 5-year period. According to stevedoring companies interviewed by PortNews IAA it is the agreement they will finally have to sign.

As PortNews IAA told earlier, the situation of lease agreements is the most complicated in the port of Saint Petersburg. The prosecutor’s office has claimed a number of agreements of the port’s largest stevedoring companies. Thus, the first agreements are to be signed by stevedoring companies of Saint Petersburg. Parfeonov assured that the problems of Saint Petersburg port will be solved by December 15.

PortNews IAA has asked Vladimir Morkovkin, the partner of state non-commercial organization Yurinflot SPb lawyer bureau about the difference between development of 5-year and 15-year agreements. According to Morkovkin, there is no difference at all. “Having decided in favor of 5-year agreementsRosmorport has acquired economic guarantees,” he said. Morkovkin thinks that the law on ports to be passed within five years may enable stevedoringcompanies to apply to the Arbitrage for the change of a five-year agreement for another agreement to conform with the period provisioned by the law. 

At the edge of competitiveness

Besides agreement relations the discussion touched the issues of port charges, which are to be raised from January 1, 2007 as well as tariffs for cargo transhipment regulated by the government.

Today Russian stevedoring companies including Seaport of Saint Petersburg have not the possibility to follow the market changes through increase of competitiveness by setting  independently the tariff rates since the decision of Antimonopoly Ministry of Russia adopted in 1999 (edition of 2000) specifies Unified Limits for the tariffs. According to the estimations of the “round table” participants current tariffs grew by 23% from 2000 to 2006 was 23%. At thesame time the major macroeconomic indicators influencing growth of costs grew several times from 2000 to 2006. In particular, railway tariffs of  RZD grew 2.9-fold, tariffs for energy –2.5-fold, cost of diesel fuel doubled while inflation totaled 77.3%.

Port charges collected by government in Saint Petersburg port exceed the charges of Baltic ports in the neighboring states while permanently growing railway tariffs for cargo delivery to Russian ports and attempt to raise rent payments for the use of state property forced many of the cargo owners to re-orient their flows to Tallinn, Riga, Klaipeda and Ventspils.

Malysheva Nadezhda