Timber merchants complain about the lack of government support promised in February

Participants in the Russian timber industry complained to Deputy Prime Minister Victoria Abramchenko that the support measures promised after the February meeting with Russian President Vladimir Putin did not work. It is about granting a deferral of payment for the lease of forest plots, increasing the transport subsidy for exports and improving the situation with logistics. The largest timber industry enterprises complain about losses and insufficient government assistance a year after the introduction of sanctions.

As it became known to Kommersant, the Arkhangelsk deputies, following the results of the meeting with the participation of enterprises of the timber industry sector of the Arkhangelsk, Vologda, Kostroma regions and Karelia, turned to Deputy Prime Minister Victoria Abramchenko with a number of proposals to stabilize the situation in the timber industry. The letter, a copy of which Kommersant has, states that the instructions of President Vladimir Putin given during the meeting on February 10 have not yet been fully implemented.

Companies are asked to expedite the adoption of a draft resolution developed by the Ministry of Natural Resources, according to which timber merchants in 2023 will be able to pay for the lease of forest plots based on the actual volumes of timber harvested. It is proposed to introduce a moratorium in 2024 on the indexation of rental rates (they were supposed to increase by 4.6%), as well as to shift the entry into force of new rules for calculating rental payments to January 1, 2026.

The participants of the meeting again asked to increase subsidies for the transport of timber for export or to increase its established limits for enterprises in the North-West. The letter states that, for example, six leading timber industry players in the Arkhangelsk region have submitted applications for subsidies, but the amount of subsidies for them is only 1.5 billion rubles. with a need of 10 billion rubles. In addition, timber merchants point to the need to increase the number of ship calls to the ports of the Baltic basin. The Russian marine fleet is under sanctions, and the available fleet is registered in countries with which there are no agreements on the exclusion of double taxation. As a result, when chartering a ship, the manufacturer is forced to act as a tax agent for a foreign shipowner and pay a tax of 10% of the cost of the charter, which nullifies the economic meaning of transportation. The companies propose to temporarily zero the rate of this tax.

As Nikolai Ivanov, vice president of Segezha Group, explained to Kommersant, the company participated in the preparation of an appeal to Victoria Abramchenko. “Our holding is facing a similar situation with its Siberian assets in the Irkutsk Region and the Krasnoyarsk Territory,” he says. “One of the key tasks that needs to be urgently addressed is rail logistics. There is a paradoxical situation in connection with the difficult supply of empty stock – delivery to China is cheaper for us from Onega in the Arkhangelsk region, and not from Lesosibirsk or the Irkutsk region geographically close to China.

Anton Zebants, CEO of the VLP Vologda group of companies, recalls that in the second half of 2022, most timber companies worked in the red. Some of them broke even in the first quarter thanks to low winter logging costs and a weakening ruble, but the situation remains tense. Thus, the volume of harvesting in the Vologda Oblast in the first quarter fell by 17%, plywood production – by 25%. “In connection with this and the inaccessibility of European markets, it is necessary to quickly take measures to support the industry, which we have been talking about since last year, since delay can lead to extremely negative consequences,” he says. Alexander Dyatlov, deputy chairman of the regional assembly of Arkhangelsk, who signed the letter, calls the situation in the timber industry complex stably difficult, and the key task is to preserve enterprises, most of which are city-forming. Dmitry Gvozdev, general director of Region-Les LLC, whose proposals were also taken into account in the letter, notes that “the industry has been under sanctions for almost a year, and the current and ongoing support measures are still not enough.”

Olga Mordyushenko