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Russian-owned Helsinki shipyard could cost taxpayer millions

Finland's state-owned financing company Finnvera has guaranteed loans of more than 200 million euros for the building of two cruise ships at the facility.

Ilmakuva: Helsingin telakka
The 17-hectare facility is located in the Hietalahti district of the capital. Image: Janne Järvinen / Yle
Yle News

Financial difficulties at the Russian-owned shipyard in Helsinki could lead to losses running into millions of euros, with the tab being picked up by the Finnish taxpayer.

Finland's state-owned financing company Finnvera has guaranteed loans of more than 200 million euros, which has been used to finance the building of two cruise ships at the yard.

The facility was taken over by Russian state-owned United Shipbuilding Corporation (USC) in 2015, before ownership was switched to the Cyprus-based Algador Holdings Ltd in 2019. Economic sanctions imposed on Russia by the EU and the United States following its invasion of Ukraine may affect its operations.

Ships manufactured by the yard may also be subject to an EU export ban. In practice this would apply to icebreakers ordered at the beginning of this year, and any possible future orders. It would not apply to vessels already ordered.

"In general, I can say that Russia's national situation has changed significantly. Finnvera stopped granting export guarantees to Russia on 22 February [Russia invaded Ukraine on 24 February]. However, I cannot comment on individual cases," Finnvera's Business Director Jussi Haarasilta told Yle.

According to Finnvera's own definition, an export guarantee is a guarantee given to a lending institution to facilitate the granting of financing for working capital that benefits "economic development in Finland … serves a Finnish interest."

However, if the original borrower defaults, the guarantor will be liable for the loan.

Haarasilta told Yle that the granting of export guarantees has also been ended in Ukraine, and a similar decision related to Belarus was made in the summer of 2021.

Finnvera must adhere to regulations regarding financial confidentiality in its operations, which is why, Haarasilta noted, the company cannot provide more detailed information on matters related to the Helsinki shipyard.

Although the shipyard is not directly subject to sanctions, and the company says it is still able to make payments as normal, the downturn in the Russian economy brought about by the sanctions may also affect the operations of the Helsinki facility.

The City of Helsinki is also considering terminating the company's lease, which runs until 2035.

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Edit note: Article updated on 14.3.2022 at 10.42am to clarify Helsinki shipyard is owned by Cyprus-based Algador Holdings Ltd.

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