Russia's Anti-Trust Authority okays Bid for last Government-owned Cod Harvester

Russia's Federal Anti-monopoly Service (FAS) has satisfied the application of OOO VIRMA (LTD) to take part in the forthcoming tender in order to try and purchase 100% of the shares of OAO Arkhangelsk Trawl Fleet (plc), the last government-owned combine with big whitefish quotas, reports http://www.megafishnet.com/.

Virma is based in Petrozavodsk south of Murmansk in Russia's Republic of Karelia province. The company owns ООО SZRK-Murmansk (a major red king crab quota holder in the Barents Sea) and is a major player in the North West Fishing Consortium, which was registered in the year 2002 as a result of consolidation of several fishing companies in North West Region of Russia into one professional organization.

ATF was put up for sale as on 7 June 2012 Russia's PM Dmitry Medvedev approved a draft order on introducing amendments into the state privatization program for the period of 2011-2013 thus unleashing a race for privatization of the last government-owned fishing combine Arkhangelsk Trawl Fleet - the 10-year quota share holder with more than 20,000 MT of annual cod fishing rights.

Table 1. OFFSHORE capture quotas of Arkhangelsk Trawl Fleet in 2006-2012

Note: The table has been compiled by FISHNET analysts from official figures of Russia's Federal Fisheries Agency.

ATF's 10-year (2009-2018) quota shares are certainly the most interesting part of the package put up for sale and their value is set to grow further as the rights will most probably be extended from 10 to 20 years after 2018.

Table 2. Сapture quota shares of Arkhangelsk Trawl Fleet for offshore and inshore fishery as well as for fishery in the areas under the jurisdiction of the international agreements of the Russian Federation in 2009-2018

Note. The table has been compiled by FISHNET analysts from official figures of Russia's Federal Fisheries Agency.

The combine owns a fleet of 21 fishing vessels (middle and large trawlers), a fish processing plant, a developed coastal infrastructure containing port's cargo area, warehouses and coldstores.

Apart from domestic sales, ATF has been successfully operating on the world market exporting cod, haddock, herring, blue whiting and mackerel. It offers not only commodities but also such premium-class products as scallops, cod's tongues and cheeks.

Many of the boats have EU approval and the company has been able to remain profitable, what is not typical for government-owned combines. In particular, it is reported that it made a net profit of nearly USD 1.5 million even in the crisis year of 2009.

Fears

However the current combine's leadership has expressed fears that VIRMA or the Consortium it represents are mostly after the quotas and may decide in case of purchase of ATF to dispose of the capital assets including the factory, the port and the boats axing many jobs. This appears to be a feasible outcome with the consortium already having all the necessary capacity to fish, process and market the catch which will normally be landed in St-Petersburg and Murmansk making the ATF's freezing Fish Port redundant. The only hope remains that the government will decide in favour of a tender rather than an auction because a tender might contain conditions to keep the infrastructure for a certain period of time.

Consortium

According to the consortium, the first companies joining the co-operation started with fishing of Cod and Haddock and delivering fresh fish to customers in Murmansk and Petrozavodsk in the year 1993. Further growth of Consortium was based on purchase of Russian and foreign built vessels for the purpose of increasing volumes of processed fish and expanding range of products.

Now the Consortium claims it has one of the biggest fleets in the region, consisting of crab-catching, fish-catching, and transport vessels. Besides fishing, Consortium is occupied with fleet reparation and supplies through specialized departments having all required licenses.

The Office of the Management Company is based in St. Petersburg while the office of the Fleet Operating Company is located in Murmansk. Consortium has representative offices in Moscow and in Petrozavodsk. About 800 persons are working for companies joined by Consortium, including administration and seamen.

Member-companies of the Consortium have formed a complete business cycle  to cover fishing, processing of raw material on board the vessels and in shore factories, transportation of finished products, reparation and supplies of vessels, distribution and sales of products in the Russian market and all over the world. Also the Consortium takes part in fishery research programs.

More information from Consortium's management company at phone: +7 812 448-5430, Fax: +7 812 448-5813, E-mail: info@szrk.ru