The Turkish Ministry of Transport has launched an initiative to enhance the Turkish commercial fleet!
A NEW INITIATIVE BY THE MINISTRY OF TRANSPORT AND INFRASTRUCTURE
The new regulation that entered into force in 28 April 2021 has important objectives. The Ministry of Transport and Infrustructure aims to enhance the Turkish commercial fleet by enabling Turkish shipowners to renovate their vessels by sending the old ones to the scrapyard and building new vessels. The Ministry also aims to improve shipping by promoting a more environmental friendly industry both nationally and internationally.
The regulation stipulates a method to finance this initiative by providing a maximum of 5 vessels a year and by prioritizing older vessels.
I. Financing will be available to commercial vessels that fulfill these conditions:
· The vessel must be registered -6 months prior to an application for the financing- under either the Turkish International Ship Registry or the Turkish National Ship Registry;
· The vessel must be between 1000 GT and 5000 GT;
· The vessel must be a general cargo vessel, container vessel, liquid or bulk carrier, or finally a purpose-built commercial cargo vessel;
· Last but not least, the vessel must be minimum 20 years old.
Vessels that have the potential to be scrapped are required to provide a valid seaworthiness certificate and must they must be free from any maritime liens, arrests, mortgages or other encumbrances.
The amount to finance the building of the new vessel will be different regarding the valuation of the subject vessel. The calculation stipulated by the regulation is simple, we will multiply the lightship weight of the vessel with 75% of the scrap steel price per ton quoted by the London Metal Exchange to obtain the amount that is going to be financed. If the financing will be granted, the shipowner will have 4 months to conclude the shipbuilding contract with the shipyard.
II. The payment plan provided by the regulations is as follows:
· Once the vessel under construction is registered to the Turkish Ship Registry for Vessels Under Construction then 40% will be financed.
· Once the hull is constructed 30% will be paid.
· Furthermore, 30% will be paid once the vessel will be permanently registered to the Turkish Registry.
Finally, the Ministry requires the registration of a first-degree mortgage upon the newly built vessel in order to secure the financing provided to the shipowner.
III. The new vessel must meet some conditions:
· The new vessel must be over 1000 GT;
· The new vessel must be a general cargo vessel, container vessel, liquid or bulk carrier, or finally a purpose-built commercial cargo vessel;
· The new vessel must be built under the supervision of the Turkish Lloyd;
· The new vessel must be built with at least 50% national contribution;
· The new vessel’s construction must be completed in 3 years.
· Finally, the new vessel must issue a classification certificate, by a recognised organisation, for the first five years after its registration.
The regulation also stipulates that the new vessel must operate under the Turkish flag for a minimum of 5 years. During the period, the sale or charter of the new vessel under a foreign flag is prohibited.
Please contact Interlegal-Turkey (Dogu Law) for further information!
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