VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Transcript of the beginning of the meeting:
Vladimir Putin: Good afternoon, ladies and gentlemen. This is the first meeting of the Government Presidium of 2011. I would like to once again wish everyone a happy New Year. We have a wide range of both economic and social challenges to address in 2011, so it’s important that we get down to work without delay.
I would like to start with two issues that have been at the centre of attention recently – restoring power supply in the central regions of the country and the rescue operation in the Sea of Okhotsk. Regarding power supply, we will certainly discuss the central regions today, but first I would like to draw the attention of the Energy Ministry, MRSK Holding, the country’s main power grid company, and the heads of Russia’s northwestern regions to the following: You have no doubt heard the weather forecast and you know there may be a cyclone in this region as well. We need to do our best to prepare for nature’s potential surprises.
As for power supply and repairing grids in the Central Region, let me remind you that about 4,400 communities, with more than 900,000 residents in total, have been without electricity since December 26 due to power lines icing over and trees falling due to snowfall. There are also a number of communities that suffer temporary blackouts. There are also some parts of grids and transformer substations that have been operating under a temporary scheme, and repairing and rebuilding the damaged parts will require a lot of work.
I have invited the governors of the Moscow Region, the Niznhy Novogorod Region, the Tver Region and the Smolensk Region to attend today’s meeting. Their regions suffered severe power outages. We were working on this problem on New Year’s Eve. I know that not everything depends on us, on the engineers, on the regional heads, but we nevertheless managed to organise the response to the problem. It’s now clear that we have mobilised a sufficient number of repair teams, using workers from other regions of Russia in this work – I will say a few of words on this. What’s most important is that we made sure repair work was carried out consistently, and I would like to thank you for that.
We will also hear a report from the head of the Interregional Distribution Grid Company (MRSK). First, I would like to hear about MRSK’s specific proposals to make power systems more reliable. We obviously need a long-term programme to increase the reliability of power systems. This will be accomplished, first and foremost, by replacing grids and equipment and ensuring that the areas around power lines are cleared of hazardous trees and branches. It is very unfortunate that the Russian government needs to step in to once again address these problems. I hope we will solve the problem once and for all, especially since we have the necessary documents to accomplish this. We need to consider creating backup power sources for key infrastructure and for housing and utilities. Let’s start with this issue. Is the Minister of Energy present? Please, Mr Shmatko, let’s start with you.
Sergei Shmatko: Mr Putin, members of the Presidium! Allow me to report on the current status of emergency recovery operation underway in the power grid of Central Russia, and in particular the Moscow Region, as well as on the conclusions we have drawn and the measures we have taken to prevent such situations in the future, even under abnormal conditions.
Mr Putin, you have already mentioned that the freezing rain that precipitated failures was a totally abnormal phenomenon, which has not occurred in our country for over 35 years. Over the course of the storm, the power transmission lines of the Moscow Joint Power Network Company were hit or damaged by 132,000 fallen trees. The result was the simultaneous disruption of 217 high-voltage lines and the disconnection of 134 high-voltage (220 kilovolt) feeder centres, as well as more than 10,000 transformer substations in the Moscow Region alone. Under such circumstances, we still managed to preserve stability in the power system, preventing the threat of a rolling blackout and other systemic failures. Not a single station was forced to stop supplying electricity.
Subsequent large-scale emergency rehabilitation efforts have involved 52,000 people and over 1,500 pieces of specialised machinery. We have employed power engineering teams from all over the country: from Central Russia, the Volga Region, the Northwest Federal District, Kuban, the Northern Caucasus and even Krasnoyarsk. People worked round the clock. As early as January 1, as we initially reported, the effects of the freezing rain had been largely mitigated, albeit through temporary measures. Regrettably, the weather did not give us anything to cheer about, and the trees kept falling; but our reinforced team of engineers is capable of remedying any new technological damage within the shortest time possible. To date, as of 14:00, there are 176 people left who are still receiving their electricity from twelve diesel-powered generators. Currently, power engineers have to resort to power disconnections lasting several hours, as agreed with the Emergencies Ministry and the municipal authorities, in order to reintegrate consumers back from temporary and unreliable lines to the normal power supply. We plan to complete this work by the end of the month. And this is the answer to the question you just asked, Mr Putin. This is the first time that Russian power engineers have faced such a broad scope of damage as a result of natural factors and mounted such a large-scale rehabilitation effort.
Now, as to the basic conclusions that we’ve drawn. First, I would like to point out a unique feature of the Moscow Region: all its forests are referred to as “first category.” This means that lifting restrictions on felling or thinning them and obtaining authorisations to follow through with the clean-up process is more complicated. This year, we have managed to take several steps forward toward a normal legal framework for the issue, and at present, we have set up a working team involving both the Ministry of Energy and the Forestry Agency. In fact, we have already started felling trees in the Shatura and Domodedovo Districts. By our estimate, we will need about six months to put things in order. That is, by the end of the following autumn-winter period, we expect to make decent progress. Essentially, we will be felling trees under and around high-voltage power transmission lines. On the other hand, according to a preliminary forecast, we will need about 750 million roubles for the project. We have already begun negotiations on the work with mechanised teams, amounting to about 250 subunits.
Second. Mr Putin, I have already reported that we faced some problems in relation with the local power companies, so the Ministry of Energy and the Moscow Region administration have established a working group. As you have said, Mr Putin, first of all, we will perform a full-scale checkup on local electricity supply networks jointly with the regions. Then we will toughen the requirements for the implementation of investment programmes and the maintenance of networks in working order. If private owners or, perhaps, municipal bodies prove unable to keep the power networks in working condition, we will resort to consolidation, which means, in essence, a transfer of property from their ownership to the operating management of our network distribution system. In fact, there is no other alternative.
There is one more long-term option: a transition to local energy systems in order to eliminate the need to stretch long-distance lines across local grids of more than five or six buildings. However, this is a more remote perspective.
Furthermore, Mr Putin, I would like to report that it was discovered that the requirements for bolstering power generation facilities in major transport hubs are absolutely insufficient. Above all, I am referring to what happened at Domodedovo airport. We are working actively enough on this issue with the Ministry of Transport, and we have made certain decisions already on categorising these flash points and adopting new standards amounting to a 30% increase on the current requirements per each million passengers.
Despite our fairly effective organisation and the sufficient supply of equipment in our network under normal operating conditions, we experienced a shortage of specialised equipment during this crisis. Our current shortfalls include telescopic mobile towers mounted on cross-country chassis and special hardware for the removal of tree debris. Mr Putin, all this equipment can be produced by Russian manufacturers. We have prepared a list of such necessary additions. The Interregional Network Distribution Company jointly with the other entities concerned (primarily the Russian regions) will soon place a large order for such equipment with Russian enterprises.
Subsequently, this hardware must be stored under special conditions. It will hardly be needed in everyday work, but in terms of the ability to promptly react to such abnormal situations, we believe it should be at our disposal. Moreover, the funds required for such an endeavor are not so large. Maintaining contact with the consumer population during this period was important as well as problematic. The point is that, initially, the system of accepting mass repair applications was created in haste. Now we have coped with the situation, and I have checked the system’s operation myself. Currently, practically all applications are met in time. We scrupulously examine any applications involving complaints (for instance, if someone refuses to perform a service or those applications allegedly related to extortion): all cases are duly documented and investigated. Furthermore, I have issued a directive to set up a permanent advanced service for consumer claims, including those made in the wake of extreme conditions.
Mr Putin, I would like to report that despite abnormal past or present conditions, we have decided that simulated testing in the event of such occurrences should become part of our routine winter preparation procedures. This means that such scenarios will be included in the preparations for each winter. It means that we will conduct the relevant training, establish the requisite standards of diesel-powered generators and maintain special equipment reserves. This will require certain financing. If the decisions on network tariffs do not allow for it, we will turn to the Government of the Russian Federation for help. I want to assure you that we expect to live through the next winter in a more or less normal manner: we will be guaranteed against such a – I won't say slow, but prolonged – implementation of large-scale operations, which this year we in fact completed with success. Thank you.
Vladimir Putin: Good. Let us turn to the situation in the regions. Mr Gromov (Boris Gromov, Governor of the Moscow Region), please. The Moscow Region.
Boris Gromov: Mr Putin, by and large, I agree with the minister; we discussed all these matters together and worked in the Moscow Region together for the duration of the process. I only want to emphasise that, despite widespread damage and destruction, we prevented disconnections and failures in the utilities infrastructure of the entire region. These operations progressed smoothly because we had purchased sufficient emergency power sources ahead of time.
I would like to add something more, if I may. It concerns a topic we have also discussed. Mr Shmatko did not mention it, though I am sure he is abreast of the situation. I think that we should establish a unified monitoring service for the entire Moscow Region and, possibly, for other regions as well. There are many different power grids, and I don’t think we should wait for them to pass from hand to hand, if at all – we need such a service now.
And again: the laws on emergency relief were passed in 1994, but now I believe that we should extend the rights of emergency commissions in the regions – particularly for the acquisition of equipment, workforce, premises and so forth. It all amounts to a long list we have compiled from the experiences of summer wildfires and, most recently, freezing rain. This crisis was not as bad as the fires. After all, when we fought the fires last summer, many authorities flatly refused to assign us equipment and workers. I think a new set of rules would make administrators at all levels more responsible to emergency measures. This is all that I wanted to conclude.
Vladimir Putin: Thank you. I have asked the Ministry of Energy and the Emergencies Ministry to analyse the proposals of Moscow Region Governor Boris Gromov and report their own proposals to me. Mr Shantsev has the floor.
Valery Shantsev: Mr Putin, ladies and gentlemen,
As in the Moscow Region, we mobilised our resources together with emergency workers rapidly enough to ensure the stable performance of social projects, infrastructure and utilities. It was difficult to cope with power failures. All our villages and homes are on the grid now. I would only like that we draw due conclusions from this experience. I, for my part, see quite well that if the situation repeats itself, we will face the same challenges merely because the greatest problems began when high voltage transmission lines failed – I'm referring to 100, 35, 10 and 6 kilowatt lines. Over great distances, we could not even see all at once what had happened and why the lines were failing.
So, first of all, we should purchase equipment. Someone mentioned it here. But, moreover, we need the latest high-speed snowploughs simply to reconnoitre and reach emergency sites over 20-45 km distances that heavy vehicles traverse too slowly. Purchases have started, but we are currently buying Russian-made Buran ploughs, which cannot cope with the deep snow we have been facing.
Second, villages differ. There are villages with only two people in them, and there are some where 15, 20, 100 or even 1,000 people live. Long transmission lines, which require the greatest effort, are often expended on reaching the smallest villages. So we need proportionate power generators that are able to supply 5, 10, 30, 60, 100 or 250 kilowatts, depending on the size of the village. Villages should first be connected to such generators, so as to repair transmission lines that do not require an emergency schedule. In that case, engineers will have all the time they need.
Finally, engineers have begun to equip all village grids with steel insulated wires, which are quite safe. One cannot be injured even when such a wire tears. True, they are rather expensive: a kilometre of such wire costs 150,000 – 200,000 roubles, compared with 50,000 – 70,000 roubles for a similar length of conventional naked wire. However, insulated wires are far more reliable. A village with such wiring will be guarded against any wind and or other conventional breakage. So we’ll have no problems – we just tap the village into a generator and repair the line in an orderly manner.
There is one more problem with the transmission lines. To be honest, I am not sure that our regulations address every problem related to lines that are laid through forested areas. Different regulations follow different standards. Some require a 4 metre distance from the outermost wire to the top of the nearest tree, while others require 15 metres. Experience has shown that the distance should equal the average tree height lest a fallen tree hit the line. We should document that common observation and simplify the issue of felling licenses – and do it immediately. Mr Putin, otherwise we will need five years to cut the necessary paths for power infrastructure.
I took a helicopter to tour over all affected localities and saw virtually no forest clearings. Transmission lines run through dense woods – the clearings are overgrown. We must take the matter very seriously.
The equipment situation is similar. Mr Shmatko was right – we don't have the equipment we need. Take our crawler tractor factory. It manufactures Elk tracked- vehicles for hunters. They can be modified for repair works. Elks have broad tracks of 1.4 to 1.7 metres, and so can be adapted to carry a telescopic tower. They can travel across rough terrain at good speed. Each vehicle seats 19 people and can carry all necessary tools for carrying out repair work at heights. We are ready to take on Elk production orders.
I also think we should probably look at the number and proficiency of transmission line service operators. Personnel efficiency has decreased since we started cutting costs and simplifying everything. It would also be good to carry out some stock-taking.
Vladimir Putin: Thank you. Smolensk Region Governor Sergei Antufyev, please go ahead.
Sergei Antufyev: Mr Putin, Presidium members,
We have the situation under control in our region but the bad weather means we cannot just rest on our laurels, which is why the emergency HQ is staying up and running as before. Especially since, as you said, the cyclone moving in from the northwest, is expected to hit the Pskov Region soon. That borders on the Smolensk Region. So the western part of our region is ready for possible power outages.
I ordered to our electrical power engineers to complete their work on the transfer from an intermittent to a permanent energy supply by January 25. The regional administration will meet that day to endorse a programme for the reclamation of these electricity grid buffer zones, that my colleagues have just now mentioned.
Falling trees were to blame in most cases for damage to transmission lines. So we must reclaim these buffer zones and forest clearings, however much time and money it might take. We think we will manage to get the job done by 2015 especially since it does not require any budget resources. We can assign tree felling to businesses, or we can sell the resulting timber to the population as firewood. Thus, the outlay will be commensurate to the task set of restoring these buffer zones. You were quite right to say that ensuring there reserve energy sources is the specific task that confronts us today. In 2008, we adopted a regional targeted programme to ease the aftermath of any possible emergency situations that might arise. We have purchased seven portable electric diesel generators and two heat generators as standby devices for boilers in these past two years. This year we plan to buy nine more diesel generators and four heat generators. The regional budget earmarks 80 million roubles for off-roaders. The lack of them is one key problem we currently face – repairmen cannot access damaged transmission lines.
Last but not least, I should like to draw our electrical power engineers' attention to another problem. We must assess the condition of the pylons. There have been cases where reinforced concrete pylons have folded under the weight of iced wires – we had up to 5 cm of ice. These pylons could withstand a vertical load but perhaps because they are 40 or 50 years old, there was no flexibility in them, they couldn't bend. That is why 240 pylons collapsed in our region. So we can see that we ought to be ready for all emergencies, and the weather forecasts are alarming. Mr Putin, our emergency headquarters are up and running and we will repair damaged transmission lines as quickly as possible wherever necessary. All our towns and villages have electricity now.
Vladimir Putin: Good. Tver Region Governor Dmitry Zelenin, please, go ahead.
Dmitry Zelenin: Mr Putin, Presidium members,
The Tver Region was affected by extremely bad weather, and there were several instances of disruption to the electricity supply.
The first large-scale outage occurred on November 26, and many teams, some of which came from other Russian regions, worked on restoring supplies, including in January. Altogether there were 11 teams from seven regions: Yaroslavl, Smolensk, Orel, Kostroma, Lipetsk and others. I would like to mention particularly the Emergencies Ministry’s efforts. Its operation centres were real crisis headquarters in those peak moments. I would also like to say that rehabilitation work is still going on, and power transmission lines and transformers are being switched to permanent operation mode. The work will be completed in two weeks’ time, but the situation remains critical. For the Tver Region, it concerns routes cut through forests for power lines. There is altogether 35,000 kilometres of such routes in our forests and if we are to bring them up to standard size, this will involve cutting down 6,000 hectares of wood, or half a million cubic metres of timber, a year’s amount of work. In cost terms it equals the investment programme prepared by the Interregional Distribution Grid Company (MRSK) for the Tver Region. Other decisions can and must be taken here if we are to bring the routes up to standard.
Another important issue is oversight of power lines, poles, wires and forest routes. This is the job done by the Federal Service for Supervision of Environment, Technology and Nuclear Management. This agency does not have a large staff for oversight. Generally, inspections are carried out once in three years, but in emergency situations and by way of preparation for winter we can call upon other departments, including regional ones, such as housing inspections, or electric grid supervision services.
I agree that we do not have enough heavy equipment, but it is not required in large quantities throughout the year under normal conditions. So the decision to set up power crisis centres (similar to forest fire centres, with four of them now being equipped with help from the Forest Agency) is a very important one. I believe the establishment of such centres, perhaps for one region, or interregional centres (provided with tracked equipment that can be used for fire fighting, if coupled with trailers) is crucial, especially in anticipation of possible similar events in the future. So to sum up, I can say that the headquarters is active, relief work is continuing, and all power transmission lines are being switched back to permanent operation modes.
Vladimir Putin: Good. Mr Shvets, do you have anything to add?
Nikolai Shvets: Mr Putin, members of the Presidium. To improve the reliability of distribution grid facilities, especially those exposed to the elements, subsidiaries of the MRSK holding have drawn up programmes to make these facilities more dependable. Grid companies will restore electricity supplies in the basic 35-22 kV grid and in the Moscow Region distributory grid by January 31, in the Smolensk and Tver regions by January 20, and in the Nizhny Novgorod Region by January 16. Now that Order No. 485 by the Federal Agency for Forestry has been registered with the Ministry of Justice and came into effect on December 30, 2010, grid companies have started broadening power transmission routes through forests to standard widths. For this purpose, it is planned to clear routes of the basic 110-220 kV grid in the affected areas: over 4,000 hectares in the Moscow Region, over 2,200 hectares in the Tver Region and over 920 hectares in the Nizhny Novgorod Region.
In the other 64 regions of the Russian Federation, where the MRSK holding has its branches, an area of 60,000 hectares will be cleared in 2011. Under investment programmes agreed with regional heads and providing funds for reliability improvement programmes under tariff agreements, the Moscow Region will spend 5.6 billion roubles in 2011; the Nizhny Novgorod Region, 3.4 billion roubles; and the Tver Region, 1.1 billion roubles.
For prompt response to massive disruptions of power supplies it has been decided to set up additional stand-by emergency teams equipped with special facilities. In the course of the year, we created 3,000 such mobile teams. Reliability issues were examined at the holding’s board meeting, the proposals it adopted will be reported to the directors, and on January 3, a task force to study causes and propose suggestions for improving reliability and related measures was created.
Availing myself of the opportunity, I would like to express my sincere gratitude to Mr Putin, the government, federal agencies, the Emergencies Ministry, and regional heads for their understanding and cooperation, and to the people affected for their understanding of the grave situation in which the distribution grid complex found itself.
Vladimir Putin: Good. The Ministry of Energy must sum up all the problems we have encountered in connection with these anomalies. It must also analyse the proposals submitted by regional heads concerning new wire quality, new equipment, transport, alternative energy sources, personnel training and improvements in norms and regulations and report on it in the nearest future.
Regrettable as it might be, but money should be channeled to prepare us against any such eventuality. Incidentally, if everything is done in good time, no extraordinary expenses will be required.
The report must be submitted to me within the next couple of weeks. And now, without wasting time, please do all the preparatory work with governors of the North Western regions to ensure that all services there are fully ready to respond properly if anything like what we have seen in Central Russia happens there.
Now the minister of transport will report on the rescue operation in the Sea of Okhotsk.
Igor Levitin: Mr Putin, colleagues. Since 3 p.m. January 13, the icebreakers Magadan, Krasin and Admiral Makarov have been involved in the rescue mission. Assistance is being rendered to two vessels. Currently, the Sodruzhestvo head ship is being released. Assisting it to clear waters has been difficult due to heavy ice and the large size of the ship. The refrigeration ship Bereg Nadezhdy was taken to a safer location on the day before. Its total release from the ice is planned simultaneously or after the release of the head ship. Everything will depend on the ice situation.
I would like to say that these two vessels are carrying 388 people. On the day before, the icebreakers assisted the research vessel Professor Kizevetter, the fish freezing trawler Mys Yelizavety and some other ships to safety.
To ensure refueling of the icebreakers, the tanker Viktoria is being dispatched to the area. An Emergencies Ministry helicopter is engaged in aerial reconnaissance. The Federal Agency for Fisheries (Rosrybolovstvo) is also involved in the effort.
Vladimir Putin: Please convey my gratitude to the crews of the icebreakers Magadan, Krasin and Admiral Makarov for their efforts and for quickly coming to the rescue of people in such a difficult situation.
Now Mr Kudrin, will you please report the preliminary results of the implementation of the 2010 federal budget.
Alexei Kudrin: Mr Putin, government members. We have drawn up a summary of federal budget implementation. Final results will be available in early April, based on reports submitted by all financial agencies. Currently, we can say that revenues have been reported at 8.299 trillion roubles, or 105.4% of the target, 5.4% more than we planned in the middle of the year when we revised the budget.
Budget spending has been implemented at 10.087 trillion roubles. In expense terms, this is 97.9% of the target, but the implementation percentage is higher than in 2009 or 2008. Some of the spending was not realised – I will talk about that in a minute. On the whole, budget revenues and spending have produced a budget deficit (or reduced it compared with the planned figure) of 1.787 trillion roubles, or 3.9%, which was met from different sources, above all by contributions from the reserve fund.
Vladimir Putin: What were our projections in late 2009 and early 2010?
Alexei Kudrin: In late 2009 and early 2010, we planned a deficit of just over six percent.
Vladimir Putin: Six point eight?
Alexei Kudrin: Sorry, it was 5.3%.
Vladimir Putin: 5? No. What deficit did we plan at the end of 2009? It was over six.
Alexei Kudrin: We recommended about 6.8%.
Remark: I think it was 6.4%.
Vladimir Putin: It was over 6%, definitely over 6%.
Alexei Kudrin: 6.8% was when we submitted a budget in the middle of the year, that is to say, in October 2009.
Vladimir Putin: That was our first forecast.
Alexei Kudrin: That’s right, the first forecast.
Vladimir Putin: The first forecast was a 6.8% deficit, and the deficit we reached is 3.9%. Now that is an excellent result.
Alexei Kudrin: Let me explain. In the middle of the year, when it was certain that the oil price will be substantially higher and we targeted it at $75 for that year, or substantially higher, our planned deficit was 5.3%, an updated version in the middle of the year. At the moment, it stands at 3.9%. If we take a look at its make-up, we will see the following components that go into it: first, the change (or the improvement) in macroeconomic indices that yielded a 0.6% drop in the deficit. That was mainly due to the fact that imports grew compared with forecasts and, naturally, earned an additional 130 billion roubles. The oil price turned out to be $77.5, not $75. That yielded another 110 billion roubles. You see only due to the changes in the macro forecast we had a 0.6% reduction in the deficit. If the macro forecast had been realised, as we targeted it in the middle of the last year, our current deficit would have been 4.5%.
The other components –another 0.3% reduction in the deficit – were due to surplus revenues obtained from other sources. Above all, that was administration, collectability and increased advance payments by companies compared with planned customs payments. At the end of the year, companies’ advance payments increased, compared with planned targets. And nearly 0.5% of the reduction followed from savings, or unspent expenses of 213 billion roubles. I will now name the basic expenses that were not made: 54 billion roubles …
Vladimir Putin: Where did the savings come from?
Alexei Kudrin: Where did the savings come from? First, 54 billion roubles was saved when the board of the EurAsEC decided against providing more funds for its anti-crisis war chest. These savings were an insurance that lasted throughout the year and is still effective. Our plan for 2011 is the same, with the EurAsEC anti-crisis fund continuing to function as an insurance against crisis situations in its countries. Only it has never been called upon to provide such an amount.
And the second aspect - 26 billion in debt servicing savings. With the deficit thus reduced, we borrowed less and as a result we saved 26 billion on debt servicing. Now I would like to address other matters. We saved another 11.8 billion roubles in our law enforcement agencies. Some 9.4 billion roubles were saved in the Ministry of Healthcare and Social Development, 5,3 billion in the Ministry of Education and Science, 4.2 billion roubles in the Ministry of Economic Development, 3.9 billion in the Federal Road Agency, 3.4 billion in the Ministry of Agriculture and 2.7 billion in the Federal Service for Labour and Employment. Savings elsewhere were slightly smaller, but modest savings were made in practically all other fields.
But I ought to mention the fact that in the main these were savings made on initiatives that required preparatory work or where a smaller proportion of the grants or payments were used. I should stress that this is through no fault of the ministries and agencies. We are talking about those funds usually assigned to fulfil particular measures, but where, in the event, less was needed. There were almost no cases of funds not being used as needed in fulfilling the obligations undertaken. Thus, at the beginning of the year, we find we have more funds than we had initially planned; we have maintained our reserve fund. No outlays came from the reserve fund: at the beginning of the year, there were some 775 billion roubles in the reserve fund against the 425 billion initially planned. This remains, as before, our reserve fund. At the same time I would like to mention that if this favourable economic environment continues and oil prices keep on growing, then we will see somewhat larger revenues this year. The budget plans for a price of $75 per barrel. But in reality, the figure is even higher, and according to the latest Ministry of Economic Development estimates this figure is set to exceed $80; these are the latest forecasts. Therefore, the inflation risk will continue through 2011. Last year’s higher than planned inflation resulted in rising food prices, and we will continue to see this inflation-generated food price growth throughout the early part of this year. We plan to have minimised inflation risks by yearend at the earliest, which is why we believe that it would be unwise to use the reserve fund next year, when the revenues are so high. It is reasonable to hold it as a kind of insurance we may have need to call on in the future.
Latest assessments of the international markets give cause for concern, since many countries around the world are potentially facing debt crises, and global economic growth could fall in comparison with initial forecasts. We barely touched the National Welfare Fund, spending only about 2.5 billion from it to co-finance voluntary pension contributions. In being used to match voluntary pension contributions the fund was well within its remit, and a contribution of a paltry 2.5 billion was all that was needed. Thus, the National Welfare Fund had 2.695 trillion roubles at the beginning of the year; it serves an insurance both for the pension system itself and as a form of protection against longer-term demographic risks. Thank you.
Vladimir Putin: Thank you very much. I am sure you noticed me attending and taking part in the Federation of Independent Trade Unions’ meeting where employment was one of the key issues we addressed.
Ms Golikova, what was the situation on the labour market at the end of 2010 and what do we plan in this field in 2011?
Tatyana Golikova: We all remember that 2010 was the second year of the regional programmes to ease tensions in the labour market. According to traditional indicators provided by the State Statistics Service, such as the overall and registered unemployment levels, overall unemployment as of December 1, 2010, was considerably lower than on December 1, 2009: 5.1 million unemployed compared to 6.2 million.
As for registered unemployment, we had 1.595 million registered unemployed as of January 12, 2011, an increase of 20,700 people or 1.3% compared to December 29, but this is seasonal change. In January 2010, there were 2.2 million registered unemployed or nearly 700,000 more than we have now.
As for the [employment] programmes we were implementing in 2010, they involved 1.8 million people. Of them, 1.4 million did community work, 131,000 enrolled in retraining courses and 113,000 underwent onsite training. We also found jobs for 6,200 people with disabilities. A total of 8,900 people were offered employment and relocation, and 173,000 people started their own businesses creating 58,200 new jobs. Since we implemented the Connection programme last year, those who started up a business providing employment for several people received an additional 60,000 roubles allocated for self-employment.
As for the 2011 outlook, I would like to remind you that it will be the last year of the programme to ease tensions in the labour market, with budgetary allocations of 27 billion roubles.
We expect that 885,000 people will be involved but have curtailed community work. Such jobs will be offered only in single-industry cities where registered unemployment has reached 152,300 people. As you know – you have addressed the issue repeatedly – we will launch new employment projects and increase funding for other fields.
In conclusion, I would like to say that our attention within regional programmes will focus on the North Caucasus republics in 2011 because the unemployment level there is considerably higher than in other Russian regions.
On the whole, tensions on the labour market in Russia have decreased by 50%, which means people have more employment opportunities.
Vladimir Putin: Ms Golikova, when will the regional employment programmes be submitted to the government?
Tatyana Golikova: You have signed the relevant resolution, we have analysed 82 programmes and 37 programmes are almost ready for implementation. Seven programmes – for the Khabarovsk Territory, the republics of Karelia and Mordovia, and the Arkhangelsk, Saratov, Sverdlovsk and Kirov regions – have been approved by the commission chaired by Alexander Zhukov, and agreements should be signed with them any day now. We will complete the process for all regions in January.
Vladimir Putin: Good. Ms Nabiullina, do you have the latest data for inflation in the past year?
Elvira Nabiullina: Inflation was 8.8% last year.
Vladimir Putin: And what was the initial forecast?
Elvira Nabiullina: Initially, we expected inflation at 7% to 8%, but later the forecast was upgraded to 8.5%, and then again to 8.5%-8.7% because of the summer’s drought. Unfortunately, the average daily price growth in the last week of the year (which is a customary rise) exceeded all our forecasts. It was because of a sharp growth of prices in the last few days of the year that the final inflation figure is 8.8%.
Vladimir Putin: So, it is 8.8% and not 8.5%-8.7%?
Elvira Nabiullina: That’s right, it was not as we forecast.
Vladimir Putin: Your forecast was 8.5%-8.7%, wasn’t it?
Elvira Nabiullina: No, the initial forecast was 7%-8%.
Vladimir Putin: So, at first it was 7%-8% and then it was raised to 8.5%-8.7%.
Elvira Nabiullina: Yes.
Vladimir Putin: But it turned out to be 8.8%.
Elvira Nabiullina: Yes.
Vladimir Putin: You should seriously consider this issue and take into account the proposals of the Finance Ministry.
Elvira Nabiullina: We have held a special meeting chaired by Igor Shuvalov to make preparations for next year, because risks remain.
Vladimir Putin: This is good, on the whole, but clearly you still have unresolved problems.
Well, let’s get down to the issues on our today’s agenda. Today we will discuss the reform of railways, which are a strategic sector. We have always provided considerable assistance to this sector because of its economic and social importance. Last year it was granted over 180 billion roubles, compared to 103.2 billion roubles in 2009. This allowed the railways to set lower prices for passenger and cargo transportation than initially planned.
Railway traffic grew by over 10% in 2010, which is fresh evidence that the country’s economy is recovering from the crisis. This is one of the main and best indicators of recovery. We should draft plans for the development of the railway industry with due account for growing consumer demand.
The investment programme of Russian Railways (RZD) in 2010 amounted to 315 billion roubles. The company completed large projects such as the first stage of the Novorossiisk Tunnel on the North Caucasus Railway and built modern rail approaches to ports in the south of the Gulf of Finland. It also continued building the Kuznetsovsky Tunnel in the Far East, which will allow us to lift limitations on cargo transportation by the Baikal-Amur Mainline (BAM) to the ports of Vanino and Sovetskaya Gavan.
In 2011, RZD plans to increase its spending on development to about 350 billion roubles. This investment will have an even bigger effect if the company simultaneously tackles its systemic tasks.
Ten years ago we started the large-scale restructuring of the railway transport industry. The goal is to lift infrastructure limitations from Russia’s economic development. I have just mentioned the southern coast of the Gulf of Finland: the port would have been unable to operate without a railway line and allocations (to date, billions of euros have been invested in the Ust Luga infrastructure); there would have been no port there. We must make our railways more effective, available and safe, and attract private investment [into such projects].
What have we achieved so far? First, we have created and put into operation a full-scale market of the rolling stock. Second, passenger transportation has become an independent sector with the Federal Passenger Company put in charge of long-distance railway transportation since 2010. Independent transport companies have also come to the market; such competition should benefit consumers.
Over a half of commuter passengers are using the services of regional companies. In addition, the railways continue to divest noncore assets. Conditions are being created for attracting private investment for repairs and maintenance of the rolling stock, construction and repair of infrastructure assets, transport logistics and technological modernisation. In particular, Germany’s Siemens started manufacturing modern electric trains at its joint venture, Ural Locomotives, last year.
We are also using the assistance of foreign partners to develop the priority sphere of high-speed transportation. High-speed trains currently run on the Moscow-St Petersburg, Moscow-Nizhni Novgorod and St Petersburg-Helsinki routes. I think we should review our programme of high-speed rail transportation to commission new facilities ahead of schedule and add new routes. In particular, we should consider establishing high-speed lines between the cities that will host the 2018 FIFA World Cup.
It should be said that the reform of the railway industry is proceeding according to schedule, virtually without any major drawbacks. But it is certainly far from complete; several important decisions are yet to be made. Therefore, I suggest that we extend the railway structural reform until 2015 (it ended in 2010).
Moreover, I’d like to draw your attention to the following important issue. Efforts to reform the railway industry should be made in close coordination with our partners in the common economic space, which we are creating. Importantly, railways must become a powerful integrating element of our common market. The railways of Russia, Belarus and Kazakhstan should operate according to common technical regulations and coordinate their pricing policies so as to create maximally comfortable conditions for the passengers and businesses.
Let’s get down to work.
