VARPE proposes to increase the period of use of investment quotas under the program for the construction of fishing vessels
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In the face of the risk of rising costs for the construction of fishing vessels under the investment quota program, their customers are trying to improve the terms of such contracts. The All-Russian Association of Fisheries Producers (VARPE) proposed to the Ministry of Agriculture to increase the period of use of such quotas from the current 15 years. Rosrybolovstvo considered this idea an attempt to change the rules to please individual players.
VARPE President German Zverev proposed to the head of the Ministry of Agriculture, Dmitry Patrushev, to instruct him to work out a mechanism for increasing the period of use of investment quotas for investors who are ready to review the cost of building ships under this program. Kommersant has a copy of VARPE’s letter dated October 10. A representative of the Ministry of Agriculture said that the appeal is being considered. The investment quota program was launched in 2017. As part of the first stage, contracts were concluded for the construction of 105 ships and 27 factories in Russia. In exchange, fishing companies receive quotas for a period of 15 years to catch pollock, cod, herring, etc.
As stated in the VARPE letter, the construction of over 80% of the ships under the program continues, there are risks of incomplete completion within the eight years envisaged by the projects, and some shipyards see the need to revise the cost of contracts. At the same time, Mr. Zverev writes, the profit of marine fishing enterprises for January-July 2023 year-on-year decreased threefold, to 37 billion rubles, and the tax burden and the cost of servicing loans are growing. The rise in the cost of ships threatens to reduce the financial stability of investors and does not correspond to the economic models on the basis of which investment decisions were made, the appeal says. As VARPE notes in its letter, Sberbank also sent a proposal to increase the validity period of investment quotas. No comment was provided there.
President of the Association of Fishing Fleet Shipowners (ASRF) Alexey Osintsev confirms that delays in fleet construction, mainly due to sanctions, significantly increase the cost of investments and the payback period for new vessels is shifting. But the proposal to extend the period for fixing quotas postpones the solution to the problem, since they are distributed only after the vessels are put into operation, he points out. According to the ASRF, it is necessary to find a solution for state support for the construction of the fleet.
The manager of Dobroflot Group of Companies, Alexander Efremov, notes that the main problem is the initially inflated requirements for investment objects. In Russia, there are only three shipbuilding enterprises capable of carrying out projects of any complexity, and this requires huge amounts of money, which is why fishing producers are looking for opportunities to improve the terms of contracts, he points out. Executive Director of the Association of Industrial and Trading Enterprises of the Fish Market Alexander Fomin adds that sanctions have complicated exports for fishing producers and the cost of some types of resources, in particular crabs, is decreasing, which may affect profits from the development of quotas.
The United Shipbuilding Corporation (USC) told Kommersant that the process of redesigning the vessels and their equipment is underway, and the key problems are the lack of some locally produced equipment, such as fish flour and refrigeration units. We have to reorient ourselves to suppliers from friendly countries, which may lead to an increase in prices and construction time, USC notes. The Ministry of Industry and Trade told Kommersant that so far the ships are being built in accordance with the established deadlines. The Ministry supports the VARPE proposal if the measure does not upset the balance of aquatic biological resources and is agreed upon with the Ministry of Agriculture.
Rosrybolovstvo representative Dmitry Klokov points out that increasing the terms for using quotas will not affect the financial model that banks evaluate when considering projects, since loans are issued for shorter periods. In addition, he adds, there is no mechanism to identify investors who actually need an extension. So far, the initiative is more like an attempt to change the rules of industry regulation to please individual market players, according to Rosrybolovstvo.
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