“Dutch auction” deciding investment quota shares for factories in Russian Far East

Russia’s Federal Agency for Fisheries (FAF) has conducted a Dutch auction for companies bidding to win investment capture quota shares of Pacific cod, flounders, grenadier, wachna cod and halibut. The quota shares are linked to an obligation for winners to build a total of four land-based fish processing factories, according to FAF.

The bidding had to be conducted for a fall because the number of applications selected at the second stage of the campaign exceeded the volume of the investment quota share allocated for them.

The investment object of the auction was “a small capacity fish processing plant” (except for Alaska pollock). The сapture quotas in question covered such species as cod, Pacific flounders, grenadier, wachna cod and halibut to be harvested in the Kamchatka Kurile and West Kamchatka subareas of the Russian Far East Basin.

At the auction the quota share went down from 24.3% to 6.075% for cod, flounders and grenadier and from 48.6% to 4.86% for halibut.

The investment quota was distributed between four participants. Namely, the winners were OOO Nevod, OOO Oktyabrskiy-1, OOO Alaid and OOO Zarya. According to their applications, the processing plants will be commissioned in Sakhalin, the North Kuriles, Kamchatka and Magadan.

The auction’s protocol is placed on the official website of Russia’s Federal Agency for Fisheries (FAF) in “the Investment quotas” section and on the auction’s official site www.torgi.gov.ru.

As a result of the first stage of the investment quota programme, the participants have already signed agreements for the building of 33 fishing vessels at Russian yards as well as 18 processing plants in the Russian Far East and in the North Basin. The second stage has resulted into applications for investment quotas versus obligation to build groundfish vessels and factories in the Russian Far East.

At the third stage of the application campaign which will continue until 29 January 2019 the government will distribute the shares of quotas remaining undistributed during the first stage. Those will cover packs of quota shares for capture of Alaska pollock and herring, cod and haddock, as well as other groundfish for human consumption.

In these massive projects good business opportunities also open up for foreign suppliers as the bulk of the equipment for the newbuildings and new land-based factories has so far to be imported.