A powerful new player has emerged out of the results of controversial government-run auctions for crab quotas in Russia.
Gleb Frank is now being referred to as The Crab King by Russian media outlets after his company, Russian Fishery Company (RFC), won more than one-third of the quotas up for auction in October. The auctions, which collectively handed out 15-year fishing rights to around 50 percent of Russia’s total allowable catch for crab, or around 46,000 metric tons (MT).
According to the Russian Federal Agency for Fisheries, 41 lots were offered, with 31 one of them covering fishing in the Russian Far East primarily in the Sea of Okhotsk and the remaining 10 for the Northern Fishery Basin, the Barents Sea. Of the total, 36 lots were sold, with the other five all for deep-sea fishing were considered too risky regarding their commercial attractiveness. Out of 23 bidders in the auction, 18 won some share of the quotas on offer.
The cumulative starting price was RUB 120.9 billion (USD 1.89 billion, EUR 1.7 billion), with the outcome netting RUB 142.4 billion (USD 2.22 billion, EUR 2.01 billion) in total for the Russian government. That’s lower than the RUB 160 billion (USD 2.5 billion, EUR 2.26 billion) the government was discussing back in 2017 when weighing in the prospect of the auctions. Of the total, RUB 99.5 billion (USD 1.56 billion, EUR 1.4 billion) was paid for Far Eastern quotas, and RUB 42.8 billion (USD 669.64 million, EUR 600.44 million) was paid for the northern ones.
Frank may have benefitted from a behind-the-scenes move that originally gave Russian President Vladimir Putin the idea to move 50 percent of Russia’s crab fishery quota into auctions. In late 2017, Putin received an anonymous letter urging the government to make the move to auctions and away from a quota distribution system based on historical catch, which had a mandate that was set to expire in 2019.
The old system generated very little revenue for the federal government. In fact, Putin saw evidence of this in May 2017, when a crab firm that had run afoul of fishing regulations had its quota auctioned off by the government. The sum paid for the quota exceeded by several times the amount paid in taxes by the entire crab sector in 2016. One of the winners of the May 2017 auction was RFC, which purchased 2,600 metric tons (MT) of crab quota for RUB 10 billion (USD 156.5 million, EUR 141.3 million).
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