RUSSIAN SHIP FINANCE REPORT

By John Helmer in Moscow

When the Soviet Union collapsed in 1991, the largest state-funding program for shipbuilding in the world at the time, began a rapid decline. In the decade since then, public finance for Russian ship-building has shrunk every year until 2001, when the Transport Ministry in Moscow was able to begin a small subsidy program for interest rates on newbuild contracts with local yards. This has been no more than a finger in the dyke.

This year the Transport Ministry is seeking government approval to double the subsidy program. But most domestic shipping companies and banks with an interest in the maritime sector, are unconvinced that, given the large discrepancy between Russian and international bank finance terms for shipbuilding, even doubling the interest rate subsidy will make much difference. Overshadowing this calculation is the worry throughout the Russian maritime industry that, in the aftermath of the war in Iraq, oil prices may sink so low as to deter the local demand for additional pipelines and shipping to carry Russian oil to market.

A state plan

A state drafted plan for ship construction in Russia between now and the year 2010 envisages investment of Rb207.6 billion ($6.7 billion) in newbuildings. However, just Rb5.3 billion ($171 million) will come from budget funds. Last year, an estimated Rb6.6 billion ($220 million) was slated to be spent on shipbuilding by Russian companies: just Rb630 million ($20 million) from state funds.

This is only an excerpt of RUSSIAN SHIP FINANCE REPORT

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.

Existing Users Login
Username
Password

Related Archive Files

• No Related Post