Panagiotis G. Zacharioudakis, Europa Venture gave a presentation on ‘’Shortsea Fleet Renewal : The Green Compliance & Financing perspective’’ during the 2016 GREEN4SEA Conference & Awards . He stated that the shipping industry is currently facing a toxic cocktail; the ever increasing need for significant investments on infrastructure and at the same time a constantly dropping route of the prices in the shipping markets. Therefore, Europa Venture (EV) has been established to act as a multi-financing platform for the green compliance with the EC and IMO regulations. One of the primary roles of EV is to focus on the renewal of Short Sea Fleet of South Europe through a highly innovative project, the so called “EUROPA SHIP” Plan (ESP), developed based on an initiative of the Hellenic Short Sea Ship-owners Association.
Everybody agrees that what we are facing ahead is a toxic cocktail. Many are the regulations that are coming into force; the Sulphur cup, the ballast water treatment system, MRV, NOX, CO2 etc. Similarly to what Deutsche bank pointed out, everybody would agree that we cannot foresee an incline for the freight market before 2018-2019. Generally, the situation is expected to be difficult especially for shipping and even worse for the Shortsea Shipping Sector. We may have in mind that this is a strong sector, yet the figures show that we refer to aged and low valued vessels. The circumstances demand generating capital investments incentives in order to renew the old vessels or retrofit the existing ones in order to comply with the new regulations; yet in most cases the remaining lifetime of a vessel is not adequate to give us a payback. The “do nothing” scenario is not an option for the Shortsea Shipping Sector nor is an option the attempt to postpone the implementation of the regulations. That option was attempted in the North with no success.
We believe the way forward is to change this mentality in general. In tied collaboration with the Hellenic Shortsea Ship-owners Association, we are taking the current situation in the market and try to combine it with the EU environmental objectives to create a “win-win” solution for everybody. We have established Europa Venture, a multi financing platform to serve the green compliance of EU Shortsea Shipping Sector. We are not claiming inventing the wheel. This is an attempt already happening in the North; there is a similar SPV there the Zero Vision Tool and more than 20 vessels are already included in a renewal plan while many vessels are already retrofitting in order to comply with the new regulations. What we are actually trying to do is to serve the plan of the renewal of the South Europe Shortsea fleet, by applying a financial blending mechanism, combining financing tools such as:
- co-funding CEF/regional funds
- financial instrument (Juncker Plan EIB lending/risk sharing mechanisms); and
- traditional lending from commercial banks and funds.
Two are the primary targets of Europa Venture. First of all is the renewal of the South Shortsea fleet, as we have many vessels which are aged and devalued and cannot comply with the new regulations. Secondarily, it is the assistance with accessing funding for retrofits and other green installations for the existing fleet. To serve the goal of the renewal, we have initiated in collaboration with HSSA the Europa Ship Plan.
The concept is to standardize and apply economies of scale by gathering the ship-owners’ needs into specific classes of vessels. That approach can lead us to a significant CAPEX reduction up to 15% as compared to a traditional single order / single construction. Additionally, by using dual fuel technology an OPEX reduction is feasible up to 20% compared to HFO scrubber alternative. Moreover, a reduction of fuel costs up to 40% is expected compared to LSF/MGO use. The aim is to create a cheaper vessel able to comply with the future regulation; a vessel which will have a low carbon footprint in general.
Everyone is aware of the Junker plan and how the reindustrialization of Europe and the increase of employment are some of its most important targets and based on that EIB and European incentives are offering funding to projects that are in line with the targets set by the Junker Plan. We believe that the Europa Ship Plan is a “win-win” situation not only for shipping but also for Europe and for Greece in particular. We intend to use European shipyards, European equipment and Greek equipment, as there are many Greek companies that can provide high valued equipment for these vessels.
The latest update of this initiative is our joint proposal application with Zero Vision Tool, the respective SPV of the North, to the Connecting Europe Facility (CEF). In this application we include all the necessary actions in order to finance six pilot LNG fueled vessels with eco-friendly characteristics:
- four (4) RoPax ferries &
- two (2) freight short haul vessels.
These are the pilot initial cases and there are many more to come in the future.
The most important issue is that along with Hellenic Shortsea Ship Owners Association we are changing the mentality. The new mindset we promote is that if you cannot avoid the regulation, you should be there to make them suit your profile. A “Detailed Implementation Plan” for MoS is now being built for Shipping and Ports by DG-Move. The DIP once approved (June 2016) by the European Parliament and Member States, will constitute a clear and precise guidance document for Development and Research priorities throughout the Union’s Development, Funding and Co-operation Programs and a very important development is that Europa Venture and Europa Ship Plan have already been included in the draft DIP.
Above text is an edited article of Panagiotis Zacharioudakis presentation during the 2016 GREEN4SEA Conference and Awards
You may view his video presentation by clicking here
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The views presented hereabove are only those of the author and not necessarily those of GREEN4SEA and are for information sharing and discussion purposes only.
About Dr. Panagiotis Zacharioudakis, Managing Director, Europa Venture
Dr. Panayotis G. Zacharioudakis has a 10-year experience as the Managing Director of OceanFinance Ltd., a marine intelligence consulting firm active in Financial and Environmental Engineering specializing in the Shipping Market. He has participated in a wide number of private and EU-funded projects in the fields of Finance, Transportation and Energy. His active entrepreneurial spirit lead to creation of Europa Venture in 2015, a private entity that focuses on financing European shipping projects.
He holds a doctoral degree in the fields of Shipping Modelling and Investment Evaluation. He also holds a MSc in Shipping, World Trade & Transport (NAME) from the University of the Aegean (2000-’02), a MSc in Marine Science & Technology from the NTUA (1998- ’00), while his Diploma was in Chemical Engineering from NTUA (1992-’98).
Panayotis has also lectured Maritime Economics, Logistics, Shipping Finance and Transportation Systems in the School of Naval Architecture and Marine Engineering in NTUA and in the Department of Shipping in the University of Piraeus.