Press center
27.04.2024
SEZ Lotus Becomes a Link of the International North-South Transport Corridor
SEZ Lotus is becoming an important link of the International North-South Transport Corridor in the Astrakhan Region. Sergey Milushkin, Co-Chairman of the Technologies and Logistics Union and Director General of SEZ Lotus JSC, discussed the development of the SEZ.
– Mr. Milushkin, your company celebrated its 9th anniversary in April. What summary could you make of the results during this period?
– Actually, it is too early now to provide a summary of the 9-year life of the project, which was established for 49 years. The “lifetime” of economic zones was defined this way for a reason. In order to build at least one plant in a once empty field, it is necessary to complete a significant amount of work, from preparing a site design to, for example, installing utility lines on a tenant's land plot. And the most important thing is to find an investor, convince him, and support him at every stage of the project implementation.
How many plants of this kind can be launched during a 9-year period? This is a rhetorical question; somewhere a new plant can be launched every year, somewhere every 5 years. There are too many factors involved.
I believe that over the past 9 years we have achieved a lot for a region with a population of less than 1 million people and location in almost 1.500 km from Central Russia. It should be taken into account that we had to spend the first 3 years on preparing documents, arranging land plots, and searching for funding to build the infrastructure. It should be noticed the first plant was constructed from the scratch in SEZ Lotus at the end of 2018 (Gexa-Lotos LLC, geosynthetics production), and a week before we completed the construction of the first water supply, power supply, and other engineering facilities.
Thus, we attracted the first tenants even without any infrastructure, which made us different not in the best way from other Russian SEZs, where tenants were invited to nicely levelled plots of land with infrastructure already in place.
There are 16 existing tenants, including those from Iran and Italy, 4 launched production units, over 5 billion rubles of investments made by tenants, 550 new jobs, two enterprises under construction, and three more companies planning to start land works by the end of the current year. It should be noted that the peak of SEZ Lotus development fell on sanctions, change of accents of international policy, and the coronavirus pandemic.
SEZ Lotus JSC was established in 2015 and is the Management Company of the industrial production SEZ Lotus in the Narimanov District and the Port SEZ in the Liman District of the Astrakhan Region. In accordance with Decree of the Government of the Russian Federation of November 7, 2020 No. 1792, the SEZs have been merged into the Caspian Cluster. SEZ Lotus JSC is the Management Company, which was headed by Sergey Milushkin after its establishment.
– What would you highlight as your main achievement?
– Well, I would say that the most significant achievement was the justification of the need to establish the Port Special Economic Zone in the Astrakhan Region, which we subsequently began to manage. The development spanned the challenging years of 2018-2019, and the fact that we were supported by Vladimir Putin, the President of the Russian Federation, and the Federal Government allocated funds for infrastructure construction, tells volumes. However, prior to this, there was a massive work of the entire company for the development of the International North-South Transport Corridor project; we believed and continue to believe that Astrakhan must be the center of the corridor, the main port hub, and the place where all the countries of the Caspian Five come together.
– What is your outlook for the further development of SEZ Lotus? After all, the SEZ was originally established as a shipbuilding zone, but now its tenants are companies from various industries.
– Yes, while establishing SEZ Lotus, the focus was made on creating a shipbuilding cluster around its anchor tenant – Lotos Shipyard (incorporated in the Southern Shipbuilding and Ship Repair Center of the USC JSC). However, time has shown that tenants of the shipbuilding sector can co-exist with companies belonging to, for example, the light industry. Time and business itself dictates the perspective - the focus has been shifted to Asian partners, and with the growing interest in the INSTC, tenants from various industrial sectors are becoming attracted to SEZ Lotus.
For example, a large Russian aquaculture feed plant (JSC Rybniye-Korma) has been launched, and an Iranian household chemicals plant, the first of its kind in Russia, is under construction in the SEZ. In addition, shipbuilding companies are implementing projects, and SEZ Lotus is attracting an increasing number of new orders, including those with the potential for increasing cargo turnover via the INSTC. There are innovative dredgers and modern container carriers under construction, and these projects became possible with the involvement of SEZ Lotus JSC.
In the near future, two projects will be resumed in SEZ Lotus and three more tenants will start the construction of their units.
Over the past 9 years, 35 engineering facilities have been built and put into operation in SEZ Lotus, and 19 more are currently in various stages of construction and design.
In 2024, it is planned to attract at least two new companies to the industrial SEZ Lotus. Negotiations are underway with companies from Russia, Belarus, China, Iran, and other countries.
SEZ Lotus every year has been recognized as effective by the Ministry of Economic Development of the Russian Federation and took rightful places in independent ratings of special economic zones. In 2020, SEZ Lotus JSC also started managing the Port SEZ established in the Limanskiy District of the Astrakhan Region.
– How is the development of the Port SEZ going now? Has its vector changed due to foreign policy events?
– Currently the first phase of the Port SEZ, which includes modern container, break-bulk, oil, and grain terminals, is being carried out on the territories of the 8th and 9th berths of the Olya seaport. Two tenants – PLC Caspiy LLC and AgroTerminalCaspiy LLC – are engaged in implementing projects there. The total volume of declared investments is about 30 billion rubles. The construction of warehouses for temporary grain storage and the access road to the berths has been completed, and the first trial shipments of grain have already been executed under the temporary scheme. The start of container handling operations is scheduled for this summer, with the installation of crane equipment, the completion of necessary site works, and the arrangement of the checkpoint. The capacity of the new berths will exceed 2 million tons of cargo.
At the same time, the infrastructure and facilities of the first phase are being constructed in the Port SEZ with federal financing. The contractor, who won the open tender under Federal Law No. 44-FZ in May of last year, is building crane rails, water supply networks, power supply facilities, an access road, the port administration office, and other facilities. The construction works are being executed on schedule; the schedule has been slightly revised due to the need to build a checkpoint, and the revised schedule has been approved by the Government of the Astrakhan Region.
We are engaged in negotiations with a number of companies that are considering implementing projects in the Port SEZ. An agreement of intent to establish a logistics center of Turkmenistan within the Port SEZ has been signed with JSC Transport and Logistics Center of Turkmenistan. Russian and foreign companies with projects in flour production, fruits and vegetables refrigeration, and cargo transportation are also considering the opportunity to obtain the status of a tenant.
– In your opinion, what other projects, in addition to the Port SEZ, should be implemented to accelerate the development of the INSTC?
– Only port infrastructure is not enough for the full launch of the INSTC. Furthermore, we were discussing the first phase of the Port SEZ – the 8th and 9th berths of the Olya Seaport. Even with the existing port capacities in the Astrakhan Region, this is not enough to handle the cargo flow currently passing through Iran. Therefore, we are working in cooperation with PLC Caspiy LLC to implement the project of a large container port in the area of Zaburunny Ilmen. This is the seconf phase territory of the Port SEZ development. The plan is to construct about 20 new berths there, with a total capacity of more than 20 million tons of cargo. Several prospective partners from Russia and abroad are interested in the project, and we are developing this field.
In addition to the port infrastructure, numerous other elements influence the development of the INSTC. The Government of the Russian Federation is aware of this, which is why they have recently made a number of decisions on dredging, shipbuilding support, and others. The INSTC is a complex project, and each of its elements must operate with others as a system.
It is necessary to resolve the shortage of containers by building a plant in Russia, and we have discussed such a project with our Chinese partners. It is essential to build more modern vessels for container transportation at Russian shipyards, to establish a regular shipping line between Russia and Iran, to remove barriers, including in Iran, and to work with India and other countries. We are addressing all these issues in one way or another in cooperation with the relevant agencies and partners, establishing a cargo base, and resolving the problematic issues related to the land part of the route in Iran.
A unified management is also important for the Trans-Caspian route of the INSTC, as it requires a unified mechanism and support at the start for its real launch.
The current situation in the logistics services market has created a new trend for the establishment of a fast, convenient, and cost-effective route with access to India, South Asia, the Arab countries, and East Africa. This route will be a success, but it needs to be “pulled together”, which is a major complex work.
– Your management company actively cooperates with partners from Iran and is respected in this Islamic country. Could you please share at which stage this cooperation is?
– From the beginning, we have been working with Iranian partners both to develop the INSTC and to expand the cooperation between our tenants and Iranian companies, also searching for prospective tenants.
For example, we are successfully working with economic zones in the north and south of the country, as well as with Mostazafan Foundation, the largest Iranian investment company in the Middle East. Our cooperation has led to the establishment of a joint Russian-Iranian company for arranging road transportation between the northern and southern ports of Iran.
The cooperation with Iranian partners within the framework of the Technologies and Logistics Union is a separate area. The Union was established last year between SEZ Lotus JSC, SEZ Technopolis Moscow JSC, and ANO Directorate of International Transport Corridors with the aim of developing production and logistics chains with the Caspian Sea countries and the countries interested in the INSTC. On February 28, as Cochairman of the Union, I signed a memorandum on the establishment of the International Union of Special and Free Economic Zones of the INSTC with Mohammad Siahkarzadeh, Managing Director of the Anzali FEZ, in Tehran. The signing ceremony was held during the 17th meeting of the Russia-Iran Joint Economic Cooperation Commission, with the participation of Alexander Novak, Deputy Chairman of the Government of the Russian Federation, and Javad Owji, the Minister of Petroleum of the Islamic Republic of Iran.
– How did you manage to attract an Iranian tenant to the SEZ?
– In 2017, we established the first contact with the large private Iranian holding company Golrang Industrial Group. At that time, they were just considering entering the Russian market. During many years of negotiations, we convinced the head staff of the relevance of establishing production in our industrial SEZ. And today we can already see the constructed workshops of the first Iranian household chemicals plant (Rosa LLC) established in Russia. We continue to cooperate with partners from Iran, and they tend to establish other enterprises in SEZ Lotus, largely due to the effective teamwork in addressing investors’ issues and the reputation we have among Iranian partners.
In 2021, Sergey Milushkin, Director General of SEZ Lotus JSC, was awarded a certificate of honor by the Governor of the Astrakhan Region in recognition of his achievements in conscientious work, high professionalism, and great contribution to the socio-economic development of the Astrakhan Region.
- You mentioned the International Union of Economic Zones. What will be the exact impact of this project on the development of SEZs in the Astrakhan Region and in Russia as a whole?
- The creation of the International Union of Special and Free Economic Zones of the INSTC is aimed at increasing the level of economic cooperation between the countries interested in the INSTC through the interaction of management companies and associations of economic zones. Together, we will be able to accelerate the launch of this route and use it to foster the trade and economic cooperation between our countries.
The creation of the International Union of Economic Zones will give a significant impetus to the establishment and development of the Trans-Caspian route of the INSTC. This will facilitate the international coordination of efforts in production cooperation and logistics, and the removal of barriers caused by differences in the legislation of our countries. The cooperation will not be limited to the representatives of Russia and Iran – it is planned to invite other Caspian Sea countries and countries interested in the development of the INSTC to join the International Union. Currently, we are working with partners from Turkmenistan and Kazakhstan to add them to the International Union of Economic Zones.
For the Astrakhan SEZs, it is an opportunity to attract tenants more effectively and expand trade cooperation between the tenants of our SEZs and FEZs of member-countries of the International Union of Economic Zones. At the national level, this project can be used to solve the tasks of developing production and technological chains, and it will create conditions for establishing enterprises in Russia and allow our enterprises to enter new markets. We are already working with more than 70 interested companies from Iran and about 50 from Russia. We will then include other countries as their companies join the International Union.
– What, in your opinion, is holding back the development of both Industrial SEZ and Port SEZ?
– There is a shortage of staff in the districts of the Astrakhan Region, where the SEZs are located. Therefore, the tenants often hire specialists from Astrakhan and other cities. Non-resident specialists must live in Astrakhan and get to the place of work, which takes about an hour, due to a shortage of rental housing in Narimanov. This issue is even more acute in the Port SEZ, which is 120 kilometers away from Astrakhan.
We have proposed the creation of modern, ergonomic satellite cities in the districts of the Astrakhan Region, where the SEZs are located, which will be formed around the needs of the SEZs, as well as the entire International North-South Transport Corridor, which is of strategic importance for Russia today due to the closure of many logistics chains for well-known reasons.
This is a significant issue, because the lack of comfortable living conditions can become one of the main reasons for postponing the schedules of tenants' projects.
“We came to SEZ Lotus when it was an empty field. To be honest, the shareholders were wondering whether it was worthwhile to establish a project there, and were more inclined to the sites where the infrastructure had been built. However, the representatives of the Management Company convinced us that by establishing the enterprise in the Astrakhan Region, we would be able to enter new markets for our products. The conditions for expanding production were also created there. From a small workshop of 1.5 thousand m² we have grown into a large enterprise, and are now launching the third stage of the geosynthetics plant. We have reached the production capacity of 10 million m² of products per year, we supply our products throughout Russia, as well as to Kazakhstan, we have increased the number of staff from 50 to 200 people and we do not intend to stop there. At all the stages of development, we were supported by the head staff and employees of the Management Company”, – comments Alexander Kochetkov, General Director of Gexa-Lotos LLC.
Source: the Regional Russia magazine“The Astrakhan SEZs have created a favorable environment for foreign investors. This is, first of all, due to the tremendous professional work of the managers and staff members of the Management Company in establishing relationships with companies, including those from Iran. Sergey Milushkin is personally known and respected in the Iranian governmental and business structures. He is well familiar with the specifics of the INSTC project, its problems and ways of resolving them. The establishment of the International Union of Economic Zones and the involvement of the Iranian side in this project, represented by the Supreme Council of Free Trade-Industrial and Special Economic Zones of the Islamic Republic of Iran and the Anzali FEZ, demonstrates that the Astrakhan SEZs have significant potential to go beyond the regional project and become an international one, and Astrakhan can become a logistics capital of the South of Russia", – comments Seyd Jalalifar, an expert on economic relations with Russia and the development of the INSTC, as well as Consultant and Representative of Director General of SEZ Lotus JSC in Iran.
