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Russian Fishery Company (RFC) president, Gleb Frank

Gleb Frank's fishing group proposed a reform of the industry

Click on the flag for more information about Russian Federation RUSSIAN FEDERATION
Wednesday, August 05, 2020, 16:10 (GMT + 9)

One of the largest fishing companies in the country - the Russian Fishery Company (RFC) Gleb Frank joined the process of reforming the industry. As it became known to Kommersant, the group proposed to Prime Minister Mikhail Mishustin to expand the mechanism of investment quotas, to hold new auctions for the most profitable types of resources and to tighten the application of preferential tax regimes.

The government has already instructed to study the initiatives of the relevant ministries and departments. Experts are confident that the measures are beneficial only to the RFC itself and threaten with losses to other market participants.

Russian Fisheries Company (RFC), industry reform, investment quotas mechanism

The RFC sent proposals on reforming the fishing industry to Prime Minister Mikhail Mishustin in July; Kommersant has a copy of the appeal. As noted in the letter, despite the "optimistic dynamics" of the catch and trade balance, the fundamental indicators of the industry remain "at a critically low level."

Thus, in the production of pollock, herring, cod, etc., the share of products with low added value reaches 80%, and the specific gross cost of 1 kg is 30-50% lower than in similar fisheries abroad.

The key problem in the RFC is considered to be a worn-out and outdated fleet, whose age is mainly over 30 years. Within the framework of investment quotas, more than 90 orders for the construction of ships have been placed at Russian shipyards, but this will allow upgrading no more than 40% of the capacities, the RFC says. At the same time, they emphasize, the regulator does not have a plan for further transformations, and there are no incentives in the legislation for the development of the industry.

RFC proposes to provide 100% the capacity of the fleet under construction with investment quotas. The mechanism guaranteed loading up to 50% of the capacity, and some of the largest users of quotas in the Far East (Okeanrybflot, Gidrostroy, PBTF, NBAMR, etc.) refused to participate in the program, the letter says. As a result, the RFC points out, in the next 13 years more than half of the quotas will be used by the outdated fleet. In "Okeanrybflot", "Gidrostroy", PBTF and NBAMR "b" did not answer.

The RFC also considers it expedient from 2034 to limit the development of quotas in the exclusive economic zone of Russia by ships built in the Russian Federation, the age of which does not exceed 30 years.

The company proposes to hold new auctions on quotas for the most valuable resources (crabs, shrimps, etc.) with obligations to build ships. Finally, they advocate strict criteria for the application of a single agricultural tax regime and a preferential rate of collection for the use of resources. The original goals of benefits have lost their relevance due to the growing profitability of the industry, and their "widespread use" deprives the budget of 20-30 billion rubles. income per year, writes RFC.

The ideas of the RFC partially overlap with the proposals that the Ministry for the Development of the Russian Far East has prepared as part of measures to support the Far East and the Arctic (increasing the share of investment quotas for catching crabs from 50% to 100%, and fish from 20% to 50%). The ministry explained that the measures are under discussion. The RFC declined to comment. The government's press service told Kommersant that the company's appeal was instructed to work out the Ministry of Agriculture, the Ministry of Industry and Trade, the Ministry of Economy and the Federal Antimonopoly Service (FAS). The Ministry of Agriculture and the Ministry of Industry and Trade confirmed the receipt of proposals. The deputy head of the FAS Mikhail Evraev told Kommersant that the service supports the transition from the “historical principle” to auctions with investment obligations, but after the end of the existing contracts. The Ministry of Economy did not provide comments.

The head of the Information Agency for Fisheries, Alexander Savelyev, notes that there are now about 2.5 thousand fishing vessels in the Russian Federation, many of which are not used anyway.

The United Shipbuilding Corporation supports the RFC proposals, but considers it necessary to reduce the number of projects and increase the serial production of ships. German Zverev, President of the All-Russian Association of Fisheries, believes that only the company itself will benefit from the proposals of the RFC. So, he explains, the expansion of the investment quotas mechanism will give the group the right to harvest more than 650 thousand tons of pollock and herring, and investors of coastal factories in Kamchatka, for example, will lose quotas. The proposal to tighten the application of benefits is also based only on the confidence that the RFC will not be affected by the measure, adds German Zverev.

The RFC has already been called the initiator of changes in the rules of the game in the industry. So, Kommersant's sources claimed that the company was behind a letter sent at the end of 2017 to President Vladimir Putin with a proposal to transfer the distribution of quotas for catching crab to auctions. The RFC denied this. At the auctions held at the end of 2019, Mr. Frank's structures won almost a third of the lots, having received about 15% of all crab quotas.

Source: Kommersant

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