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Russia Expanding Its Impressive Icebreaker Fleet Even Further

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Russia Expanding Its Impressive Icebreaker Fleet Even Further

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The Russian Ministry of Finance has found private investors for the Rosatom megaproject for the construction of an icebreaker fleet to operate along the Northern Sea Route (NSR), Russian outlet Izvestia reported.

The Deputy Finance Minister Andrei Ivanov told Izvestia, that half of the cost of building the ships was agreed to be undertaken by businesses such as Novatek, Nornickel, and others, including foreign, investors.

In exchange for this, companies will receive reduced tariffs for navigation through the NSR. It is estimated that approximately 20 billion rubles ($314 million) would be taken off the construction costs of each icebreaker.

Initially, Rosatom planned to finance the creation of icebreakers worth about 40 billion rubles each ($630 million) entirely from the budget, Andrei Ivanov said.

“We considered that the costs of creating these icebreakers are to the benefit and are actually created for commercial companies, and we would be wrong to shift the entire cost to the taxpayers. Rosatom began to look for funding sources in the market. As a result, we agreed on a discount for the usage of the NSR for the businesses that would invest,” Ivanov said.

According to the Deputy Finance Minister, Novatek, Nornickel, as well as a number of other companies, including foreign ones, will cover about half the cost of building ships for Rosatom.

The press service of the state corporation specified that private capital will be involved in the construction of the third and fourth icebreakers of the LK-60 series (project 22220).

Their cost will amount to 100 billion rubles, of which 45 billion ($706 million) is provided by the state budget, and Rosatom should attract the remaining funds. The construction is expected to finish my 2026.

There are also plans to construct an icebreaker “Leader”, the initial cost of the lead vessel of this project is estimated at 127.5 billion rubles ($2 billion). Construction starts in 2020 and should be financed from the federal budget, Rosatom explained.

When asked if other companies were interested in investing in the icebreaker fleet, the state corporation reported that they only included organizations operating in the Arctic, as well as a number of banks.

Nornickel clarified that the deal wasn’t simply about direct investment in the creation of the fleet, but about the conclusion of a long-term agreement on navigation along the Northern Sea Route. Nornickel will provide guaranteed demand for the services of the state corporation in the long term.

Novatek reported that they also did not participate in direct financing of the construction of nuclear icebreakers.

However, the energy company’s transit can provide more than half of the target traffic for the NSR. According to the order of Russian President Vladimir Putin, it should be at least 80 million tons by 2024.

Earlier, at the St. Petersburg International Economic Forum the signing of an agreement was announced between the Russian Direct Investment Fund (RDIF), DP World (one of the world’s largest port operators), Nornickel and Rosatom on the development of the NSR infrastructure.

The RDIF said that at the moment, together with these partners, they were actively exploring the possibilities of attracting private capital, including foreign capital, to the Northern Sea Route projects.

Rosatom plans to build eight new nuclear icebreakers by 2035, as per deputy head of the Northern Sea Route Directorate Maxim Kulinko. According to him, five universal vessels of project 22220 with a capacity of 60 MW and three Leaders with a capacity of 120 MW will be built.

Currently, three icebreakers are under construction at the Baltic Shipyard, two more ships will be commissioned before 2025, as contracts for them have already been concluded.

He added that in 2020 the state corporation intends to conclude an agreement with the Zvezda shipyard in the Primorsky Territory on the construction of the first Leader.

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