Russian crab licences redistribution to bring state at least $2bn

Russian crab licences redistribution to bring state at least $2bn
The value of new licences for crab fishing in Russia stands at RUB125.5bn ($1.9bn), Vedomosti daily reported citing the documents by the Ministry of Agriculture and approved by the Prime Minister Dmitry Medvedev. / wiki
By bne IntelliNews September 2, 2019

The value of new licences for crab fishing in Russia stands at RUB125.5bn ($1.9bn), Vedomosti daily reported citing the documents by the Ministry of Agriculture and approved by the Prime Minister Dmitry Medvedev.

The world famous Kamchatka red crab is Russia’s “other caviar” and fetches high prices from export as well as being highly valued by the Russians themselves as a favourite delicacy.

As reported by bne IntelliNewsRussia moved to auction off 50% of crab fishing quotas instead of assigning the quotas to market players in proportion to the catch as in previous years. The respective law was signed by the President Vladimir Putin on May 1 2019.

The government will net much more than RUB80bn-RUB110bn previously expected from shaking up the crab market and redistributing the licences. The total starting price is still below the RUB152bn proposed by the Federal Antimonopoly Service (FAS).

The initiative was first proposed in 2017 and was virulently opposed by established market players that had already spent $2bn on quotas in 2001-2017, which argued that withdrawing the roll-over assignment of the licences would lead to disruption of operations and investment among smaller regional players.

Under the new rules 50% of all the crab fishing quotas are pegged to the auction winner for 15 years, with the winners of the auctions having to implement a very loosely defined "investment project".

The analysts and union representatives believe the prices set for the auctions are too high. "There is an impression that the prices have been ramped up to exclude most of the potential participants, with only a handful of market players able to afford them," the head of the Association of Fishing Businesses of the Primorks region Georgy Martynov argued to Vedomosti daily.

In the meantime, previous reports claimed that Russian Industrial Fish Company (RRPK) of Gleb Frank, the son-in-law of stoligarch and Kremlin insider Gennady Timchenko, is behind the market redistribution initiative.

Reportedly, it was Frank's RRPK which suggested to president Vladimir Putin to redistribute crab quotas through auctions in the autumn of 2017, unnamed market participants told Vedomosti back in 2018. RRPK has entered the market by spending a record RUB10bn on crab fishing quotas in May 2017.

 

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