Murmansk Shipping Company might loose nuclear icebreakers

Publish date: April 15, 2005

Over one year the Russian Accounts Chamber has been trying to prove the Murmansk Shipping Company operates the nuclear icebreakers illegally and ineffectively.

The Russian Accounts Chamber stated last month that its decision from 2004 when effectiveness and proper use of the nuclear icebreakers by the Murmansk Shipping Company, or MSC, was inspected, has not been fulfilled. According to the statement, the Russian government has not taken measures on depriving Murmansk Shipping Company of the federal property, the nuclear icebreakers, which were transferred to the company illegally in 1998.

The Accounts Chamber claims the trust management is ineffective and damages the state interests. So, the MSC keeps renting out nuclear icebreakers to the foreign companies for the cruises to the North Pole when the profit of the foreign companies is four times bigger than the rent pay what shows that some part of the money stays abroad. Besides, the MSC did not pay the state for the rent of the nuclear icebreakers, so just in 2002-2004 Russia lost 468 million roubles (about $16.7m). The collegium of the Audits Chamber decided to send a note to the president, the government and the general prosecutors’ office.

On the other side, the Murmansk Shipping Company informed media about the profit due to the effective nuclear icebreakers’ operation in 2004. After paying all taxes the profit was equal to 139.9 million roubles ($5m). According to the Russian law, all the profit received from the federal property operation in trust management should be transferred to the state budget. The MSC is expecting all the bank details from the authorities to transfer the 2004 profit. Besides, the MSC stated that in 2003 it had transferred 180.62 million roubles ($6.5m) profit to the state budget what can be confirmed by the account documents.

The Murmansk Shipping Company is the only Russian company operating in Arctic all year around. The MSC has been operating the nuclear icebreakers since 1959, and from 1998 they were transferred under the trust management of the MSC. The company is the monopoly on the strategic market of the icebreaker assistance in the Arctic. It delivers cargo for various oil and mining companies as well as ships goods to the remote Russian cities in the Arctic region.

Some transport experts believe it hardly possible to operate the nuclear icebreakers with better profit. ”It is no doubt, the MSC manages the icebreakers’ fleet in the best possible way” said to RBC-daily one of the directors of the SeaNews information agency Alexey Bezborodov. He added that hardly the state itself could operate it better, and only some foreign management team might get better results. Besides, the experts believe, the MSC contributed the state budget quite well in comparison with the other Russian natural resources monopolies. For example, in 2003 the MSC paid 0.05 roubles for one rouble of the assets, while the giant gas monopoly Gasprom paid just 0.002 roubles, concluded Alexey Bezborodov to the RBCDaily.