Russia on verge of shift to commercial shipbuilding

Russia’s Zvezda yard could be sold to private investors under plans announced by USC’s new management to concentrate principally on non-military shipbuilding Russia’s Zvezda yard could be sold to private investors under plans announced by USC’s new management to concentrate principally on non-military shipbuilding

The Russian shipbuilding and shipboard equipment industry is on the verge of big changes, writes Eugene Gerden.

The changes follow the appointment on 15 August of Andrew Dutov, currently director of the Krylov Shipbuilding Research Institute, Russia’s leading shipbuilding research Institute, as new head of United Shipbuilding Corporation (USC), the country’s shipbuilding monopoly.

The candidature of Andrew Dutov was lobbied by the Russian Ministry of Industry and Trade and his appointment may lead to big changes and shift the entire future of USC, in particular its shift to commercial shipbuilding instead of its current military emphasis as promoted by Russia’s deputy Prime-Minister Dmitry Rogozin.

Mr Dutov replaced the former head of the company, Andrew Dyachkov, during a period when the company failed to implement several projects in military and civil shipbuilding, as well as delays in construction of shipyards in Russia’s Far East.

According to Mr Dutov, during the next few years USC will significantly increase investment in research, particularly in commercial shipbuilding, which is considered essential as presently some 80% of merchant ships purchased by the Russian government and private operators are built in foreign yards.

It is planned that initially the company will concentrate mostly on unified designs for both military and civil ships rather than pursuing separate military and civil ivisions, as proposed by some Russian officials. The new company’s management does not consider military shipbuilding as a priority sphere of activity, due to its current unprofitability and the complex financial situation enterprises supplying warships and submarines to third-world countries such as Algeria.

At the same time the company plans to step up building ice-class vessels, most likely in cooperation with foreign companies including Nordic yards. In addition, USC has announced plans to strengthen cooperation with Finnish company Aker Arctic, in order to gain access to leading EU shipyards.

USC hopes that with its new management it will be able to retain the majority of existing customers, in particular Russian oil giant Rosneft.

The increased foreign cooperation and fears of growing independence of USC have already sparked criticism from conservative elements in the Russian government, headed by Rogozin. It is also possible that the new management may consider selling the Zvezda super-shipyard, currently being built in Russia’s Far East, to private investors, some of which may be foreign.

According to previously-announced plans, by 2030 USC plans to have invested RUB 338 billion in the development of commercial shipbuilding.

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