Putin Hosts Meeting on Port Infrastructure Development

Vladimir Putin held a meeting on developing ports in the Azov and Black Sea basins. The President proposed holding a number of meetings to discuss the prospects for developing ports in key Russian waters.

The meeting was attended by Chief of Staff of the Presidential Executive Office Sergei Ivanov, First Deputy Prime Minister Igor Shuvalov, Presidential Aide Andrei Belousov, Transport Minister Maxim Sokolov, Presidential Adviser Igor Levitin and Russian Railways CEO Vladimir Yakunin.

“In recent years we have repeatedly turned to the issue of port infrastructure. This is understandable, because following the tragic events associated with the collapse of the Soviet Union, Russian ports’ capacity decreased significantly as we lost a huge number of cargo handling facilities, many of which were very advanced for their time. Therefore, Russia incurred serious losses in this sector; even if these were not direct losses, then they were incomes that were not received, and these sums are very large.

“Due to a whole range of projects, which sometimes had to be started from scratch, we have been able to turn the situation around. New port facilities and terminals have been set up in the Baltic Sea, the North Sea, the Black Sea and in the Far East. As a result, during the past year more than 565 million tonnes of cargo passed through Russian ports. This is 25% more than in 1984, when such traffic was at its highest during the Soviet period.

“However, it is also clear that we must move on, move forward, and increase our capacities. This is in the light of increasing growth in both individual regions and the entire national economy, and increases in export and transit shipments, including within integration associations. First and foremost, I am referring to the Customs Union and the Common Economic Space. We need clear guidelines for the future, linked with the plans of our major companies, and, of course, with developing other forms of transportation, namely pipeline, rail and road.

“In this respect, I propose we hold a whole series of meetings to talk about the prospects for developing ports in our key waters. Today we will discuss plans for increasing the capacity of port infrastructure in the Azov and Black Sea basins. In terms of capacity, the Russian ports here are second only to those in the Baltic Sea, and every year their load increases. For example, experts estimate that by 2030 transshipments of dry goods in the ports of the Southern Federal District alone will reach 150 million tonnes, which is more than double current capacity.

“Already terminals are pushed to their limits. These infrastructure limitations constrain international trade growth and prohibit goods from transiting to the south. In fact, what we are talking about are the limitations current infrastructure places on the growth of our entire national economy. Companies have to use foreign ports, and therefore incur additional costs. For Russia, this amounts to a direct loss of revenue.

“Along with this, the potential for further capacity increase of the major ports in this part of Russia, I mean first of all Tuapse and Novorossiysk, is limited by a number of objective factors. According to experts, the development and modernisation of these two ports alone cannot fully meet the considerable demand for transport services in that region of the Russian Federation.

“Our goal is not just to remove existing infrastructure constraints, but also to create a sufficient reserve of port capacities. This will smooth out peaks in seasonal loads and mitigate downtimes, and help us build an effective and competitive logistics system.

“Already today, as my colleagues and I noted earlier, trains are crowding together as they approach these ports. At present there are almost 200 trains traveling to Tuapse and Novorossiysk. If we are talking about building new port facilities, we must first of all think about addressing these infrastructural constraints. We must synchronise and think through everything we do, as I have already said. We also need to think about using topical models of public-private partnership.

“Businesses are already actively investing in ports. However, we need to create such conditions that the volume of private investments increases significantly. Naturally, the Government should make sure that as different businesses reach agreements among themselves, they feel confident of the state’s support and make full use of it to harmonise their relations. Without this support, it is unlikely that businesses will be able to agree among themselves and harmonise their relations.

“I am referring to clear, predictable rules necessary to attract investors. It is also crucial to minimise administrative and commercial risks, and use effective co-financing tools. In particular, we must clearly indicate the infrastructure facilities whose construction will be state-funded and the amounts involved, what will be funded by business, under what conditions, and determine in advance conditions governing how facilities will be used.

“Another important task involves providing competitive, attractive tariffs for port services and improving logistics services. This is one of the most critical components affecting the way Russia’s ports function today. Often, our shippers turn to foreign services precisely because of poorly developed logistics, excessive tariffs and so on. It is necessary to look over these issues again very carefully,” stated Putin.

[mappress]

Press Release, August 20, 2013