The Russian government could postpone a second phase of quota auctions for crab and other seafood species amid the financial fallout created by global sanctions in response to the country's invasion of Ukraine.
Russia Federal Agency for Fisheries Head Ilya Shestakov told Fishnews that a decision on whether or not auctions take place in 2023 as initially planned will largely depend on the financial shape of potential bidders.
“The most-important factor is the availability of funds, including access to bank loans, for companies so that as many bidders as possible could take part and the federal budget could earn as much as possible through a sale of quotas,” he said. “So the possibility of postponement of the auctions will depend on the situation next year. I think one year will be enough for the Russian economy to adapt to the new conditions, and we will conduct the auctions delivering the maximum value for the state.”
Prior to the invasion of Ukraine, the agency had stated its intention to move forward with additional auctions under its investment-quota program, despite protests from some members of Russia's seafood industry. Quotas for 24 percent of Russia's herring and pollock catch, 50 percent of its crab catch, and 100 percent of its shellfish total were to be auctioned in 2022. Winners of the auctions would have to build 30 fishing vessels, 35 crab-fishing boats, and 10 processing plants – investments worth roughly RUB 300 billion (USD 3.6 billion, EUR 3.25 billion).
The industry has been split between proponents of the reforms, with large companies like Norebo and Russian Fishery Company in favor and smaller players opposed. In late 2021, when the framework of a second round of auctions was made public, trade associations representing small- and medium-sized seafood companies initiated a lobbying campaign against the move.
Russia's return to auctions to award quota began in 2018 with bidding on 50 percent of the country's crab catch. The auctions took place as planned, but many small crab companies vehemently opposed the measure. Following the auction, a Russian financial watchdog said the process didn’t achieve any of its stated goals.
Just prior to Shestakov's statement that the new round of auctions may be rescheduled, the All-Russian Association of Fishing Industry (VARPE) said new international sanctions levied against Russia would make the investment-quota program infeasible.
“A large part of fisheries’ revenues in foreign exchange is spent for bunkerage and repair abroad,” VARPE President German Zverev said at a public meeting, Kommersant reported. But those transactions are now practically impossible, as it the purchase of on-board equipment manufactured outside of Russia, he said.
“In such circumstances, it’s impossible to plan long-term investments,” Zverev said.
The Collective Fisheries Union also called for a delay in the second round of auctions until the results of the first phase have been fully calculated.
“The financial outcome of the first investment program, as well as the level of obligations fulfillment by fisheries, would be a real criteria to decide whether another phase is needed,” it said in a statement.
Photo courtesy of Russian Crab Company
