Aleksandr Davydenko: operational results of water transport in 2008 and tasks for 2009

On February 26, an extended meeting of the RorMorRechFlot (Russia’s Federal Agency of Marine and River Transport) was held in the Ministry of transport. A report on major operational results of maritime and inland water transport in 2008 and tasks for 2009 was provided by Aleksandr Davydenko, head of RorMorRechFlot.

According to the report, the Agency’s work was focused on achievement of goals and implementation of tasks set up by the President and the Government of the Russian Federation, as well as by Maritime Board of the RF Government and RF Ministry of Transport.

In 2008, the Government approved two documents significant for the industry:

Transport strategy of the Russian Federation till 2030;

Federal special-purpose program “Development of Russia’s transport system in 2010 - 2015.

Last years saw positive tendencies at major commodity ad freight markets though the financial crisis influenced the volume of foreign trade which was felt in the forth quarter of 2008.

Amid the global crisis we have to review our plans, to specify priorities and to strengthen control over expenses.

The Governmental Committee on improvement of Russia’s economical development has a approved the list of basic companies including the following representatives of the branch: Sovcomflot, FESCO, PRISCO, Murmansk Shipping Company, North-West Shipping Company Moscow Shipping Company, Volga Shipping Company, Ob-Irtysh Shipping Company and Lena Shipping Company, Novorossiysk Commercial Sea Port, Rsotov Port and RosMorPort FSUE.

The banks have been selected for the industry’s loans.

A special Working Group has been formed in the Ministry of Transport for monitoring of financial situation and development of proposals on state support of the branch companies.

In 2008, maritime transport of the Russian Federation 2009 we expect topreserve the level of 2008. carried 35.7 million tonnes of cargo (+27%, year-on-year). Foreign trade transportation increased by 34% to 27.3 million tonnes, coastal trade transportation – by 8% to 8.5 million tonnes. In the reported period, cargo turnover of maritime transport grew by 21.5% to 85 bln t-km. Liquid bulk cargo, metal and coal account for 22%, 20% and 15% of total cargo volume transported by Russian vessels. The volume of cargo delivered by maritime transport to the Far North totaled 3.6 million tonnes (+6%, year-on-year). In

22 vessels of transport fleet (with total deadweight of 1.2 million tonnes) and 3 vessels of auxiliary fleet were built in 2008. 7 transport vessels and 3 auxiliary vessels were registered under the Russian flag.

As of the beginning of 2009, the number of transport vessels under Russian control totals 1,486 (17.0 million tonnes in deadweight) while 65.3% of the tonnage is operated under foreign flags.

In 2009, the transport fleet is to get 27 vessels with total deadweight of about 2.3 million tonnes.

In 2008, throughput of Russian seaports slightly exceeded the result of the previous year (+1.1%) and amounted to 455 million tonnes (against earlier planned 485 million tonnes). Russian ports accounted for 80% of total volume handled by Russian, Baltic and Ukrainian ports (the same share as in 2007).

Experts say in 2009 Russian ports may handle 475 million tonnes against earlier planned 515 million tonnes, a 4.4-pct growth against 2008.

During the past year, total capacity of newly commissioned facilities (in Primorsk, Ust-Luga, St. Petersburg, Kaliningrad, Novorossiysk, Murmansk, Taman, Vitino) amounted to 60 million tonnes.

In 2009, new facilities are to be put into operation in the ports of Ust-Luga, Baltijsk, Shakhtersk, Vladivostok, Kavkaz, Taman (total capacity is to exceed 53 million tonnes).

Inland water transport of the Rusian Federation carried 151 million tonnes of cargo, which is similar to the result of 2007. Against the positive dynamics of previous years the growth rates slowed mainly in the sector of foreign trade transportation. In 2009, the volume of cargo to be carried by inland water transport of Russia is expected to be the same as in 2008.

Despite a number of external factors like low water level in the eastern river basin and diesel fuel prices growth, delivery of cargo to the Far North grew by 8%, year-on-year, to 25 million tonnes.

Last years saw a stable growth of handling operations: from 177 million tonnes in 2003 to 226 million tonnes in 2008. The result of 2008 exceeded that of 2007 by 0.5%. Handling of export-import cargo accounts for some 5% of total volume. River ports focus mainly on handling of dry cargo, the share of which makes 93-95% with the rest 5-7% falling on crude and oil products being handled at specialized terminals.

Transportation of passengers fell by 7.9% to 19.8 million people.

Total length of inland waterways with guaranteed dimensions of navigational ways was increased by 10.3%, year-on-year, to 48,112 km. In 2000 it was about 42,000 km.

A new gateway of Kochetkovsky hydraulic engineering complex was put into operation in 2008. Until recently the gateway of Kochetkovsky hydraulic engineering complex was the narrowest place of Russia’s inland waterways.

In 2008, the volume of cargo transported by United Deepwater System increase by 5% to 102 million tonnes.

Other narrow places (Nizhnesvirsky lock and Volga section near Gorodets) are to be planned within the framework of a program Development of Russia’s Transport System in 2010-2015.

As of January 1, 2009 the number of hydraulic engineering structures with low safety level, unsatisfactory safety level and unsafe level fell by 10.5%.

In 2008, federal budget allocated RUR 4.85 bln for implementation of subprogram Inland Waterways (1.8 times more as compared with 2007). Reconstruction covered 43 facilities with design and survey works carried at 19 facilities. According to the schedule reconstruction of 9 facilities is to be completed in 2009, implementation of new projects will be started within 8 basins.

RorMorRechFlot jointly with the related parties has developed a draft Concept for reforming of RF inland waterways management system. It envisages establishment of river basin administrations and specialized economic entity to separate administrative powers and business functions. Federal property of river ports is to transfer to the balance of newly established enterprises. The Concept is currently under approval of state authorities.

According to statistics, the number of accidents at water transport fell by 32.5% (169 cases in 2007 and 114 – in 2008), the number of injured persons at maritime transport fell from 20 in 2007 to 2 in 2008, at river transport – from 8 in 2007 to 0 in 2008. Death toll in general fell from 27 in 2007 to 1 in 2008.

Special measures undertaken after the Kerch disaster of November 11, 2007 contributed to accident rate reduction.

Safety Management System for inland water transport is under development and approval of RF Transport Ministry.

In 2008 RorMorRechFlot and Transport Ministry worked on enforcement of the Law on Seaports.

The Government of the Russian Federation approved the limits of 5 seaports: Varandei, Vysotsk, Passenger Port of St. Petersburg, Prigorodnoje and Taman. 32 draft orders are prepared to be furnished to the Government.

The documents on the boundaries of 6 more seaports will be provided to the Transport Ministry in the first quarter of the current year (Azov, Vladivostok, Makhachkala, Petropavlovsk-Kamchatski, Rostov-on-Don).

Draft documents on boundaries of Sakhalin, Chukotka and Arctic ports are to be completed in 2009.

Administrations of seaports and sea fishing ports have been united in compliance with the Government Decree No 773 on improvement of sea fishing ports management system. Thus the system of state port authorities has already built up in general.

We have also developed proposals on setting up of a specialized federal state institution – Northern Sea Route Administration.

The Agency pays a special attention to improvement of property and land relations, which are a basis for all investment projects. Article 30 of the Law on Seaports empowers RorMorRechFlot with additional functions on providing services and management of federal property in seaports.

Jointly with the RF Ministry of Transport the Agency carries out work on introduction of amendments in certain legislative acts and in the Agency Regulations. The draft Procedure for leasing out of such property has been furnished to the Ministry of Economic Development for approval.

Efficient development of maritime and river transport infrastructure is hindered by the existing tax system. For example property tax of RosMorPort FSUE totaled some RUR 300 mln in 2008.

In 2009, when motor-rail ferry complex, passenger terminal on Vasiljevsky island and other facilities are put into operation the property tax will exceed RUR 500 mln.

By 2015 when all facilities planned by the Federal special-purpose program are put into operation it will amount to RUR 1 bln which is comparable with total revenues of the company from leasing out of all berths in case of their reappraisal.

The situation is the same in Moscow Canal FSUE and it will become typical for a new economic entity of inland waterways.

We think it is necessary to ensure equal competitive environment for all types of transport when it comes to taxes for land and property. Railway transport, Rosavtodor, energy supply facilities and pipeline transport are exempt from such taxes. We think amendments should be introduced into federal legislation.

One of the most significant spheres is a specialized education.

Against transformation of the global economy and Russia’s transfer to innovative socially oriented type of economic development we face the deficit of qualified engineers and workers.

We have managed to preserve the system of specialized education. We have held a number of activities on establishment of seven educational complexes. We currently work jointly with the Ministry of Education and Science on transfer of our educational institutions to Bachelor’s and Master’s Programme in compliance with international standards.

The federal special-purpose program for 2010-2015 provisions construction of social facilities. In general, I would like to note that the Agency works in different directions to fulfill the tasks set up by the Transport Strategy till 2030 and federal special-purpose programs.

To succeed during global financial crisis we need to have a precise layout of priorities, to improve efficiency and quality of our work, to tighten control of budget money spending, to preserve our educational system, our personnel and work places.

A special attention should be paid to improvement of safety systems at both maritime and river transport.

I’m sure that skills, experience and devotion of the industry representatives to their duties will ensure successful solution of the set up tasks.

Based on materials of RF Ministry of Transport