RENOVATION OF MERCHANT FLEET FACES ROUGH SEAS IN RUSSIA

RENOVATION OF MERCHANT FLEET FACES ROUGH SEAS IN RUSSIA

Delays in renovating the Russian merchant fleet are costing the country US$4 billion a year to charter foreign cargo ships, said Nikolay Tsakh, deputy head of the merchant fleet department of the transport ministry.

The collapse of the Soviet Union left Russia with a limited number of cargo ships, whose average age is 17.3 years.The government's renovation program envisages construction of 589 new vessels.

Of these, 269 will be built by Russian shipbuilders. A special renovation fund was set up, intended to contribute 26 percent of the necessary investment.

However, Mr. Tsakh said the renovation fund is practically empty. The ruble portion of the fund, which is supposed to be filled by diverting half of the profit tax levied on merchant shipping enterprises, has had no contributions so far because of the absence of appropriate legislation.

In order to fill the dollar portion of the fund, merchant shipping enterprises have been obliged to sell half of their hard currency revenues to the Central Bank of Russia, and not on the domestic hard-currency market.

Mr. Tsakh said the central bank, while taking the merchant fleet's hard- currency contributions, is slow in giving back their ruble equivalent.

Of the $6.5 million sold by the fleet to the central bank since the renovation fund was set up in early October, not a single penny has been returned so far in rubles.