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12 May, 2009 03:27

Russian shipbuilders look for tide to come in

Prime Minister Putin has criticised Russian companies ordering ships from abroad, while the domestic shipbuilding industry is on the rocks.

The Amursky shipyard in Russia’s Far East made dozens of warships and submarines during the Second Word War.

Cargo ships, refrigerator vessels, platforms…the shipyard’s managing director told Prime Minister Putin what it used to make, and what it’s building today – just two tankers for a German customer.

Local companies build just 6% of the ships Russia needs. The rest come from abroad – and the PM believes ship buyers need to shop at home.

“I think it's unacceptable to commission ships from foreign shipbuilders if such orders can well be placed at Russian shipyards.”

Two of the far eastern shipbuilders are already bankrupt, and 8 others are unprofitable and deeply in debt. Lack of orders is one of the main problems for the Russian ship-yards, most of which were originally set up for naval construction.

The government says the answer is to turn them into civil shipbuilders, but industry players such as Andrei Krainy, Head of Federal Fishing Agency, say that’s easier said than done.

“Historically, Russia's Far Eastern shipbuilding was military focused. Now companies don't know how to control costs, and therefore today we are not competitive nor by the price, neither by deadlines.”

Russia needs to attract foreign capital and projects to build new dockyards and modernise old ones. The United Shipbuilding Corporation says Singapore is considering invest $5 billion in the construction of a Russian dockyard in which Russia will have a 25% stake.

Meanwhile, the state is buying a 59% stake in the Amursky, with its billion dollar debt, for a symbolic price in order to save it.

And State lender Sberbank is to loan the yard $400 million for ten years. It remains to be seen if that can keep the business afloat.