Ship repair capacities’ shortage is brewing in Arctic and Far East

Ship repair capacities’ shortage is brewing in Arctic and Far East

June 29, 2022

The zero VAT will allow ship owners to receive 20 percent benefits from repairs in Russia.

#ARCTIC. #SIBERIA. THIS IS TAIMYR. Participants of the International seminar on shipbuilding and ship repair in the Arctic, which was held as part of the St. Petersburg International Economic Forum, discussed the ships’ construction and the existing fleet’s modernization for use in northern latitudes. The event was included in the Russian Chairmanship of the Arctic Council’s plan, the events’ operator is the Roscongress Foundation.

The First Deputy Minister of the Russian Federation for the Development of the Far East and Arctic Gadzhimagomed Huseynov:

One of the main challenges in the field of shipbuilding and ship repair is the fulfillment of the task set by the Russian President to ensure the transportation of at least 80 million tons of cargo along the Northern Sea Route by 2024 and 150 million tons by 2030. Such volumes require large investments and fleet’s construction. Today we feel the ship repair capacities’ shortage, especially in the Arctic and the Far East. We have to solve a number of fundamental tasks here.

According to him, preferential regimes operate in the region. In particular, benefits for insurance premiums are available for companies: the Arctic zone residents pay 7.5 percent instead of 30 percent.

In addition, there are income tax preferences, and there is also the possibility of the free customs zone procedure’s applying, which provides for zero VAT on goods placed under the free economic zone customs procedure. But the deputy minister emphasized that it was necessary to provide for zero VAT in addition to the existing benefits for ship repair enterprises.

The owners preferred to repair ships in foreign countries for one reason or another. One of the reasons is that the ships belong to foreign jurisdictions. The Board and General Director of United Shipbuilding Corporation JSC’s chairman Alexey Rahmanov said:

We must make the Russian flag convenient for shipping purposes, this will contribute to the domestic ship repair’s development. The zero VAT allows ship owners to receive 20 percent benefits from repairs in Russia compared to Norwegian shipyards.

Arkhangelsk Region governor Alexander Tsybulsky noted that today half of foreign ports were closed for the Russian ships’ repair, while Indonesia and Turkey had significantly increased the cost of work in this area. He said

Our prices are not only becoming competitive, we can already do it cheaper.

Earlier we told that shipping in the Arctic will increase so much that it could lead to new trade routes in international waters due to the effects of melting Arctic ice.

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Text: Ekaterina Maksimova, Photo:

June 29, 2022

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