Russia » Economics
Author`s name Dmitry Sudakov

Putin orders to create United Shipbuilding Corporation

Long-expected reforms of the Russian shipbuilding  all of a sudden took off after a military type command from the very top. President of Russia Vladimir Putin ordered the government to prepare within a week a draft decree on creating the United Shipbuilding Corporation (OSK, ОСК - Russian abbreviation). The presidential administration is to participate in this work aimed at “legal registering the decisions which we had coordinated”. The chairman of the government Michael Fradkov was personally asked to supervise staff support for the above plans. Addressing to the First Vice Premier and the head of the Military-Industrial Commission Sergey Ivanov President Putin said "I recognize that you continue to control the situation concerning creation of SOK, it is in the sphere of your direct duties. Within a week together with Victor Borisovich (Khristenko, Minister of Industry) finish this work".

Unlike the United Aviation-building Company (ОАК), which for over a year stayed in the status of a non-commercial partnership, OSK is to take shape in much shorter terms. According to the Ministry of Industry the authorized capital of the new structure even today can be formed on the basis of PKB Neva’s assets. This state owned design bureau has been recently converted into a JSC.

However, summarizing the comments by the head of the defense dept of the Ministry of Industry Yuri Koptev and deputy head of the agency of industry Andrey Dutov it is clear that for some time non-commercial partnership in the shipbuilding will exist as well. Similar to the pattern laid down by aviation builders, before the officially registered parent JSC OSK appears, the state run businesses will unite in the form of non-commercial partnership.

Today there are several patterns of establishing the parent company. Final decision hasn’t been taken yet. However, according to the official assessments the procedure of creating OSK can be finished within two-three months, times quicker than the same process in aviation. As it has been mentioned above the state owned shares of the JSC Nevskoe KB are likely to become the first input into the authorized capital of OSK. In the further the authorized capital of the parent company can be increased by bringing in the stocks of the design bureaus (mostly state owned) converted into JSCs.

Simultaneously with this process regional "daughters" of OSK (JSCs Western Center of Shipbuilding», Northern Center of Shipbuilding and Far East Center of Shipbuilding) will be created according to the same organizational principals. As in the case of with ОАК, most likely, final decisions will be taken by the governmental commission.

Schemes of the often mentioned state-private cooperation are also in the focus of attention. Today the government is ready to discuss even exchanging the shares of the shipyards belonging to private businesses for the shares in regional sub-holdings and even in the parent company. However, it could be understood with no comments at all that the state will not discuss the controlling interest. The officials acknowledge possible difficulties with the private businessmen, which can delay the process of forming OSK, but it is highly likely this will have principle meaning.

Unofficially it is said that even today the state can find this or that mechanism to make any private business work in the right direction. Uniting the power in a single structure like OSK it will be easier to make the proposals from which it would be possible to refuse. The process of “collecting the industry” (in shipbuilding or elsewhere is aimed first of all at ensuring state control over the strategic industries). At the same time 100% private shipyards are welcome in the OSK. This has been repeatedly stated at different official levels. At the same time today there are some restrictions for the private businessmen. In particular, they will not be able to participate in the northern holding of shipbuilding, in the sphere concerning nuclear submarines.

One more principal difference between OAK and OSK is worthy of note. OAK has been and remains the leader among military exporters. OSK will concentrate first of all on the home market and civil products.

The basic which would regulate the developments in the shipbuilding is the federal target program Development of Civil Marine Engineering for 2008-2015. Till 2015 it is planned to invest about 140 billion rubles, of which 97 billion from the state budget, in national shipbuilding. The Ministry of Industry forecasts 220% production growth before 2015. The share of civil projects will grow from today’s 25 % up to 34 %. Over 60% of the civil ships planned for manufacture are to be delivered to the shelf operators. However, officials acknowledge considerable uncertainties in this sphere. According to Yuri Koptev Gazprom has not yet decided what is more advantageous: to deliver liquefied gas using gas tankers (favorable for shipbuilding) or to develop the system of pipelines. By the way the Ministry of Industry has already announced tenders on designing the perspective oil and gas tankers. The government welcomes private businesses in this sphere.

The last detail for today is, probably, the inevitable rumours by “independent” experts, who claim that the state hurries with the reforms to accomplish the process before the nearing elections, after which everything could be suspended. In such cases they say “to a point”. The reason of the Ministry of Industry looks much more related to reality. According to it the respective expenses must be included in the three year budget 2008-2010. All in all, even according to the sceptical evaluations OSK may start working as soon as in the end of this year.

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