To build ships fleet? Piece of cake ...
In the next several years, Russia will have to renovate completely its inland water transport: the ships still operated, are largely outdated, but most of bulk carriers and tankers, built 30-40 years ago, will either should be sold for scrapping, or will be subjected to thorough modernization. The fleet building and renovation program is intended for thousands of ships and tens of billions of rubles.
"In the next 5-10 years, up to 90% of the existing river fleet might be decommissioned because of obsolescence" said Denis Manturov, Deputy Minister of Industry and Trade speaking at the roundtable "River Shipbuilding in Russia: Problems and Prospects”, adding that it is about 9,000 ships. At the same time, he said, the growth of freight traffic makes reasonable the upgrade of the fleet. It is urgent to build new vessels since the fleet has become outdated and the safety international rules have gone into effect.
"At the same time, there are several factors hindering the process of updating the fleet. This, above all, seasonal operation of the river fleet, and as a consequence - long-term payback. This might be around 10 or 15 years,” Denis Manturov said. “Besides, it is limited capabilities for credit that many have faced with in recent years".
The Industry Ministry official announced of the preliminary approval by the Ministry of Finance and Economic Development of the lease mechanism for the next few years. "We came out with an initiative on the release of a new government mandate. I think that we will soon have such a document. The subsidy for leasing will be intended for 7-8 years, which enables our shipping companies to rely on a constant support of the government during the period for which the lease agreement will be signed ", Mr. Manturov said.
However, another statement followed: to start building ships on favorable lease terms the shipping company will be able before the end of 2011, not until 2017 as earlier stated. Mr. Manturov explained that the government had to plan the budget for a shorter period. According to the lease scheme the shipping companies will have up to 90% of interest rate on the loan compensated, versus two-third currently effective.
"In the next 5-10 years, up to 90% of the existing river fleet might be decommissioned because of obsolescence" said Denis Manturov, Deputy Minister of Industry and Trade speaking at the roundtable "River Shipbuilding in Russia: Problems and Prospects”, adding that it is about 9,000 ships. At the same time, he said, the growth of freight traffic makes reasonable the upgrade of the fleet. It is urgent to build new vessels since the fleet has become outdated and the safety international rules have gone into effect.
"At the same time, there are several factors hindering the process of updating the fleet. This, above all, seasonal operation of the river fleet, and as a consequence - long-term payback. This might be around 10 or 15 years,” Denis Manturov said. “Besides, it is limited capabilities for credit that many have faced with in recent years".
The Industry Ministry official announced of the preliminary approval by the Ministry of Finance and Economic Development of the lease mechanism for the next few years. "We came out with an initiative on the release of a new government mandate. I think that we will soon have such a document. The subsidy for leasing will be intended for 7-8 years, which enables our shipping companies to rely on a constant support of the government during the period for which the lease agreement will be signed ", Mr. Manturov said.
However, another statement followed: to start building ships on favorable lease terms the shipping company will be able before the end of 2011, not until 2017 as earlier stated. Mr. Manturov explained that the government had to plan the budget for a shorter period. According to the lease scheme the shipping companies will have up to 90% of interest rate on the loan compensated, versus two-third currently effective.
Who's first?
According to information announced during the roundtable, the first and so far the only company that began building in leasing, was the Volga Shipping Company that operates the fleet of 301 ship with a total deadweight 804.200 tons. With the state support 10 river bulk cargo carriers are planned to be built at Oka Shipyard. According Rishat Bagautdinov, the Company’s Board Chairman, "it is a trifle" for a large company, the more so the fleet includes tankers, passenger ships and auxiliary vessels. He believes that fleet renovation is possible only with broad public support, including through the provision of long-term money for thorough modernization of vessels.
According to information announced during the roundtable, the first and so far the only company that began building in leasing, was the Volga Shipping Company that operates the fleet of 301 ship with a total deadweight 804.200 tons. With the state support 10 river bulk cargo carriers are planned to be built at Oka Shipyard. According Rishat Bagautdinov, the Company’s Board Chairman, "it is a trifle" for a large company, the more so the fleet includes tankers, passenger ships and auxiliary vessels. He believes that fleet renovation is possible only with broad public support, including through the provision of long-term money for thorough modernization of vessels.
And, according to Mr. Bagautdinov, the current interest rates, taking into account compensation received from the state, "look very reasonable. However, he says any middle-size company today could hardly afford building of 10 ships. The Volga Shipping official pointed out insufficient pledge base of domestic companies. The shipping company, which has been able to attract public funds to implement its shipbuilding program, is part of a major transportation holding that gives is a broader base for the loan guarantees.
Russian shipbuilding companies would hardly get along without the help of the state, said in his turn, Dmitry Mironenko, Vice-President of the United Shipbuilding Corporation (the Russian Federation is a 100% owner). It is planned to revive 3 shipbuilding plants: in Khabarovsk, Kaliningrad, and in the Astrakhan region as part of river shipbuilding program.
Lotos Shipyard in the southern region of Russia was selected as one of the base enterprises for shipbuilding program. A private group of companies Caspian Energy holds a 45-percent stake in the Shipyard, the state-run USC owns 44% of shares, and the regional administration holds the minority stake in the company. "We're starting to control the enterprise in terms of its management," said a top manager of the USC, but did not mention the reason why Lotos Shipyard was chosen as a base enterprise. Dmitry Mironenkov explained that the control of the enterprise was gained thanks to agreement with the Astrakhan region authorities, and that it is needed to remove the Shipyard’s head to work effectively. The company will revive thanks to the contract for construction of two ships for Western Shipping Company. The Caspian Energy officials in an interview with PortNews IAA have confirmed the information. The Shipyard is reported to build 4-6 ships a year.
The MNP Group holding a majority stake in Krasnoye Sormovo Shipyard (Nizhny Novgorod) are ready to provide greater volume of shipbuilding. As Vadim Malov, the head of the Group said, in 2011 the shipyard expects to build seven 5,530dwt tankers of 19614 project for the "VF Tanker and two new tankers of project 19900 for Sommet Finance.
The MNP CEO said the shipbuilding orderbook for the next year has been formed, and it exceeds the shipyard’s output of previous years: earlier, the enterprise could build 7 or 8 ships a year.
According to Nikolai Smirnov, president of the Association of Shipping Companies (ASC), to date, 21 shipyards in Russia are ready to begin construction of river ships or rive-sea going vessels. He reminded that in 1980 the then Soviet shipyards were able to build 1,041 vessels. So, he believes that Russian enterprises can cope with the task of updating the fleet of the country. At the same time, Mr. Smirnov added, there were still some issues, such as outdated vessels project, which require a large consumption of fuel, unnecessary number of crew members, the general rules for all shipping companies operating on the market of river traffic. For example, he said, container shipments by rivers is quite a promising market, but it is not easy for every company to build a modern container ship and get a customs carrier license.
The law on measures to support the shipping and shipbuilding industry could urge the businesses to start construction of ships, said Deputy Transport Minister Viktor Olersky who pointed out that several ministries have worked on the bill, realizing the importance of the document. "We believe that this year, in October or November we will be able to introduce this bill before the State Duma. We have already received the first unofficial review of the bill of the State Duma, and it is not bad, so I think we have great chances the bill could become the law," Mr. Olersky added.
Svetlana Enaki
The MNP Group holding a majority stake in Krasnoye Sormovo Shipyard (Nizhny Novgorod) are ready to provide greater volume of shipbuilding. As Vadim Malov, the head of the Group said, in 2011 the shipyard expects to build seven 5,530dwt tankers of 19614 project for the "VF Tanker and two new tankers of project 19900 for Sommet Finance.
The MNP CEO said the shipbuilding orderbook for the next year has been formed, and it exceeds the shipyard’s output of previous years: earlier, the enterprise could build 7 or 8 ships a year.
According to Nikolai Smirnov, president of the Association of Shipping Companies (ASC), to date, 21 shipyards in Russia are ready to begin construction of river ships or rive-sea going vessels. He reminded that in 1980 the then Soviet shipyards were able to build 1,041 vessels. So, he believes that Russian enterprises can cope with the task of updating the fleet of the country. At the same time, Mr. Smirnov added, there were still some issues, such as outdated vessels project, which require a large consumption of fuel, unnecessary number of crew members, the general rules for all shipping companies operating on the market of river traffic. For example, he said, container shipments by rivers is quite a promising market, but it is not easy for every company to build a modern container ship and get a customs carrier license.
The law on measures to support the shipping and shipbuilding industry could urge the businesses to start construction of ships, said Deputy Transport Minister Viktor Olersky who pointed out that several ministries have worked on the bill, realizing the importance of the document. "We believe that this year, in October or November we will be able to introduce this bill before the State Duma. We have already received the first unofficial review of the bill of the State Duma, and it is not bad, so I think we have great chances the bill could become the law," Mr. Olersky added.
Svetlana Enaki