Per aspera ad ports
Private investors commencing green-field projects encounter lots of problems related to legislation drawbacks and specific application. This subject was brought up by Alena Ashurkova, President of National Container Company (NCC) at the conference TransRussia-2008. According to NCC, the construction of a container terminal in Ust-Luga continues only due to cooperation of RZD (Russian Railways) specialists with state institutions at the level of executors in the absence of formal decisions. Such a situation cannot but makes investors feel concern.
NCC builds a container terminal in Ust-Luga. The works started in April 2007. By December 2007, the upper layer of the berths of the first phase was covered with concrete in compliance with the schedule. According to Alena Ashurkova, preparation for the project execution lasted for 6 years. In 2005-2007, investments totaled $50 million while in 2008-2020 they are to make at least $900 million. In 2008, it s planned to complete dredging works, construction of railway approaches and rear part of the terminal. Launching of the first phase with the capacity of 500,000 TEU is scheduled for the middle of 2009. The terminal’s maximum capacity is to be 3 million TEU peryear. However, Alena Ashurkova says it may be raised to 5-6 million TEU if necessary.
Today’s private investments into construction of container terminals in Russia considerably exceed average world rate per capacity unit. In Europe and Asia it is $200-250 per TEU while in Ust-Luga it is as high as $350-450 per TEU. NCC attributes it mainly to solving more problems and issues during longer periods in Russia as compared with the situation abroad. Thus, the payback period of port terminals makes 15-17 years. To cut payback periods NCC proposes introduction of tax privileges for private investors, in particular, for import of container terminal equipment.
Investors think a number of tasks are to be solved for successful development of business. First of all, it is necessary to decrease the period of preparation for construction. At the initial stage of construction in Ust-Luga there were no laws enough to determine owners of land plots, berths and terminals. As of today, new Land Code, Town Planning Code and the Law on Ports regulate all the necessary procedures though there is lack of experience and subordinate legislation necessary for their execution.
Non-fulfillment of the current legislation and lack of coordination of different structures’ activities may result in delay or even in suspension of construction in the port. According to NCC, the limits of the port of Ust-Luga have not been determined yet, there is no town-planning documentation while a master plan and design traffic of cargo are being adjusted. All the above causes certain problems for both private investors and Russian Railways. In 2008, RZD plans to invest some RUR 14 billion into railway approaches to the port of Ust-Luga. Efficient spending of investments depends on precise coordination with port activities.
NCC says the issue of port limits and town-planning documentation became urgent in 2008: no permits for construction have been granted from January 08, the works are being carried out with permits obtained earlier and may be terminated at any moment.
As of today, there is no conception for cooperation with Russian Railways, main agreement or approved standard techniques and procedures. Thus the terminal may not develop a procedure for taking out of containers by railway or to start construction of its own approach tracks.
Meanwhile, the RF Ministry of Transport confirms that the new law has not been applied much in practice yet. It has been operating for only four months in the absence of a number of by-laws. According to Igor Rusu, deputy head of RosMorRechFlot (Russia’s Federal Agency of Marine and River Transport), the Law has predetermined the new procedure for setting port’s limits: it is necessary to carry out cadastral registration, identify all land plots within the port’s territory and then to determine the limits. Besides, by that moment the Ministry of Transport should develop and furnish for approval the layouts of territorial planning including federal transport facilities (marine, railway, etc.). Constituent entities of the Russian Federation should also provide their own layouts of territorial planning after which the Government Office will approve the limits. Vyacheslav Popov, Chairman of the National Maritime Policy Committee (under the Council of Federations), proposes to simplify the procedure. He suggests that the limits of new ports may be approved as facilities are completed in order not to interfere with the operation of the existing terminals.
NCC thinks it is necessary to resume operation of Ust-Luga Coordinating Council (which used to work in 2004-2005) to ensure stable development of the port.