Oleksiy Vadaturskiy: the state must be interested in business reorientation of freight traffic to the river

Continuing the topic of prospects of inland water transport development in Ukraine «SHIPPING» magazine asked for comments to a number of leading Ukrainian companies, having a direct relation to freight traffic on the river. Today the situation in the industry commented the Hero of Ukraine, «Nibulon» general manager Oleksiy Vadaturskiy.

 vadaturskiyYour opinion about the bill №2475a «On inland waterway transport» pending by the Verkhovna Rada: how it meets the modern requirements of the industry standards, whether it needs any additions or changes – and how soon is it necessary to adopt it (taking into account a long enough period of consideration by parliamentarians)?

– In this document, there are some positive moments. Among them, it is worth noting such legal rules as the release of shipowners from paying for the passage of sluices and laying on hydropower complex responsibilities for the financing of the sluices content, opening of inland waterways for the fleet which is operated under the flags of other countries.

However, in my opinion, there are a lot of rules, the effect of which will have a rather negative impact on the maritime complex of our country than will contribute to its development. For example, the concept of the bill provides for the concentration in the hands of the state the management of inland waterway transport and for strengthening of the regulatory and control functions of the central authorities, in particular of the Ministry of Infrastructure – and endowing it with new indistinctive powers, for instance, the harmonization of the construction of berths (hithes) and operating waters of the berths (hithes).

The bill does not provide for the participation of local authorities, local government and local territorial communities in the formation and implementation of state policy in inland waterway transport sphere, land allocation for the development of existing and the construction of new facilities of inland waterway transport, in relevant infrastructure development – which, in the end, will deprive them of the interest in the effective operation and development of this mode of transport. In addition, the bill does not abolish the obligatory tax payments and does not provide proper use of funds, which today, according to the Tax Code, are paid by shipowners as a rental fees for special use of water resources for the needs of water transport – and as excise duty on petroleum products. Instead, it provides an additional fee in the form of so-called «river charge».

Thus, the document is not perfect and needs substantial improvement – both on the part of clear and understandable separation of functions of the state as for monitoring the activities of inland waterway transport, maintenance and operation of public infrastructure at the expense of existing mandatory payments, and also on the part of the transport sphere management by business entities of state ownership.

An important point. It is not only the opinion of one of the company «Nibulon». This position is supported by European Business Association, American Chamber of Commerce in Ukraine, the US-Ukrainian Business Council, Ukrainian Grain Association and other organizations.

 

Your opinion about river charge: it is a necessity or a hindrance for the industry – and how significantly will it weigh with inland shipping development in Ukraine?

– The bill, despite the fact of the payment existing for inland waterways in Ukraine, provides for the introduction of a new (additional) tax for the use of waterways by inland waterway transport – of the form of a river charge. In my opinion, this brings to nought the possibility of a positive effect on the document. After all, as I have said, in accordance with the current legislation of Ukraine, the shipowners already pay to the Government the obligatory payments for the use of inland waterways: in the form of rental fees for special use of surface water for the needs of water transport – and in the form of the excise duty on petroleum products. That is, the use of inland waterways of Ukraine is already paid. This document provides for the introduction of fee for the use of inland waterways – river charge that in the context of the immutability of the relevant provisions of the tax legislation will lead to increased fiscal pressure on inland waterway transport and the loss of competitiveness in comparison with other modes of transport. In fact, the introduction of the river charge is, in my opinion, the main purpose and essence of the developed draft law «On inland waterway transport», which provides for its fiscal focus.

River charge introduction, as an additional charge for the use of inland waterways for the needs of water transport is economically unjustified, fails to the experience of the EU and the US – and will not contribute to the harmonization of national legislation with EU legislation and the integration of Ukrainian inland water transport into the European transport system.

Objective and reasonable economic basis for the introduction of any additional legal fees (taxes) and fees for the use of inland waterways for transport needs are absent today. Provided by the bill introduction of fees in the form of a river charge will reduce the attractiveness of Ukrainian inland waterways for river shipping.

 

How do you judge the present state of the river transport infrastructure in Ukraine?

Today, river infrastructure is in critical condition. For example, for maintenance of the sluices of the Dnieper cascade, we have three times less funding from the state budget than necessary. And the modernization or the introduction of advanced technologies is at all out of the question.

I am noting a few major problems:

– The lack of navigational equipment. The bulk of them are not at their regular places, and more than that are not lit, i.e. flights can only be made during daylight hours.

– Very often the sizes of the bridges are not lit as well.

– There is no systematic work on maintenance of the guaranteed depths for ships and their increase, I mean dredging works.

– Large-scale poaching in the fishing industry, which leads to the emergency situations, such as the winding of fishing-nets on ships’ screws etc.

 

Where, in your opinion, are the perspectives for inland waterway transport in Ukraine – in the aspect of infrastructure modernization and integration into international logistics routes?

The development of inland waterway transport in Ukraine is possible in the presence of, at least, a few conditions: the creation of the conditions of existence for economic activities, as to the business was itself concerned to redirect their cargo on the waterways, and also creating the opportunities for water transport  to compete with the land one.

The development of inland waterway transport is to be fixed and determined as a priority at the Maritime Doctrine of Ukraine, and should be reflected in the Transport Strategy of Ukraine.

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The group of companies «Nibulon» (Nikolaev) in the 2015-2016 marketing year exported 4.66 million tons of grain. This is 14% (572 ths of tons) more than in the 2014-2015 MY.  The main export crops are traditionally wheat (more than 1.9 million tons), maize (1.8 million tons) and barley (about 560 ths tons).

Export geography covers 28 countries. The largest consumers are Egypt (18.1% of export volume), Saudi Arabia (10.7%) and Spain (9.9%).

To fulfill export contracts 122 foreign cargo vessels were attracted at an average rate of the shipload almost 35 ths tons.

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