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Northern Delivery: A New Supply Chain
6 September 2022
10:00—11:30
KEY CONCLUSIONS
Northern delivery directly affects the quality of life

For us, the northern delivery is not just about solving transport and logistics problems. Behind every kilogram and every ton of fuel we see the lives of our people, real families and their well-being — Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

Half the price of a house being brought in is the transportation cost. Half of a washing machine in Kamchatka is the transport cost again. Therefore, the quality of life of people and prospects for economic development of the region depend on stable delivery, how effective this "road of life" is — Mikhail Kuznetsov, Director, Eastern State Planning Center (FANU Vostokgosplan).

No one has ever heard of Yakutia disrupting northern delivery. Because for us, disrupting the northern delivery is, unlike for many others, a matter of life and death. Of course, we have always implemented it at any cost and will continue to do so in the future — Aisen Nikolaev, Head of Sakha Republic (Yakutia).

Developed infrastructure will allow to cut both cost and delivery time in half

We have valuable experience ... with creating trade and logistics centres in the our Arctic areas. We have already built a few of them and I can say that they are really capable of bringing down prices by two or three times for certain types of products due to optimization of transport logistics, due to more optimal delivery — Aisen Nikolaev, Head of Sakha Republic (Yakutia).

Having a developed infrastructure would allow us to almost halve the delivery time and make it several times more predictable in terms of timing of this delivery. Maybe then we would optimize our transport and logistics centres and warehouses as well — Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

Movement and content of shipments must be monitored

The trigger was last year's situation, when first we had several ships stuck near the Kara Gate (the strait in the Barents Sea – Ed.). Accordingly, a simple question was asked: what is in these ships, what is the volume of northern delivery, does the region need it, in what volume? <...> We could not fully answer these questions. <...> We propose to fully monitor and track all cargo and its movement, to make procurement easier, faster — Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

If you had asked me six months ago how much cargo our entrepreneurs had to bring via northern delivery by the fall for the settlements – primarily food – I probably would not have answered. I roughly have an idea, but this is definitely something we need to monitor and always know for sure — Alexander Kalinin, First Deputy Governor of the Yamal-Nenets Autonomous District.

ISSUES
High credit burden and lack of financing in the regions

The budgets of constituent entities should be provided with funds for reimbursement of expenses on payment of interest on freight imports, at least for state and municipal needs. <...> Due to the lack of working capital companies are forced to take loans, especially in the North, where the turnover rate is extremely low — Aisen Nikolaev, Head of Sakha Republic (Yakutia).

As of today, fuel is imported from us by Chukotnsnab, a state enterprise. I would definitely support Aysen [Nikolayev – Ed.] in terms of credit issues, i.e. the interest on the loans we pay, plus the logistics in fuel. Look: 11 billion roubles as of today is the cost of fuel delivery by Chukotnsnab. 20% of these 11 billion (it is not difficult to calculate – it is more than 2 billion roubles) are the interest on loans and logistics — Ilya Davidenko, First Deputy Governor of Chukotka Autonomous Region.

As some regions tell us, many entrepreneurs are interested in receiving such support as concessional lending. This is especially relevant today with the rising cost of money, credit resources, and, as colleagues have already mentioned, the difficulty of obtaining such financial support in general — Andrey Shevchenko, Chairman, Committee on Federal Structure, Regional Policy, Local Self-Government and Northern Affairs, Federation Council of the Federal Assembly of the Russian Federation.

Northern delivery has been decentralized during the post-Soviet era

In Soviet times, there were a number of legal acts that regulated all this. There were bodies at the federal level that dealt with this, and at the regional level too. Still, it was more centralized. But in the last decade the responsibility has shifted to the heads of the subjects — Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

If we talk history, I involuntarily recall the year 1990. <...> Back then... centralized delivery practically collapsed. And it was necessary to somehow re-establish all these relationships — Nikolay Kharitonov, Chairman of the Committee on the Development of the Far East and the Arctic, State Duma of the Federal Assembly of the Russian Federation.

SOLUTIONS
Backbone infrastructure must be financed

We propose to write it out in the law that all this supporting infrastructure should be financed and maintained in accordance with the standards. At the federal level, we have such norms for federal highways and inland waterways. Accordingly, we propose to apply similar norms to all infrastructure, which will be accepted by the Government as a foundation — Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

There was a good presentation here on the financial regulations of the backbone network, such as airports, waterways. I absolutely agree, it should be done. But inland waterways today are not financed by norms, they are financed on the residual principle — Aisen Nikolaev, Head of Sakha Republic (Yakutia).

Unified federal operator is needed

We are creating a single maritime operator. It will be a state operator, which will provide cargo delivery by sea in two water bodies: in the waters of the Northern Sea Route and in the Pacific basin — Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

We are talking about trading platforms, about a single forwarder. <...> In terms of regulation, it probably makes sense to give the subject the right to do this at the first stage. Why? Because our entrepreneurs actively use the supply channels of the fuel and energy complex. <...> In other words, it is much easier to "stick together" on the same barge and get a few places for containers, rather than independently build the logistics operator — Alexander Kalinin, First Deputy Governor of the Yamal-Nenets Autonomous District.

The material was prepared by the Russian news agency TASS