Working Day

5 november, 2009 17:30

Vladimir Putin chaired a meeting of the Government Presidium

Vladimir Putin chaired a meeting of the Government Presidium
“The recent tragedy at the Sayano-Shushenskaya electric power station reminded us how cautious we must be while dealing with infrastructure security. Operating without accidents and meeting the demands of the economy and ordinary people are the main criteria by which we must evaluate the effectiveness of an energy system. Clearly, this can be achieved by thoroughly modernising electric power stations and distribution networks, and refurbishing obsolete facilities with reliable cutting-edge and high-capacity equipment.”
Vladimir Putin
At a meeting of the Government Presidium

Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon,

Let's start our meeting by exchanging the latest information. Mr Shmatko will tell us about what we have to do this autumn and winter, in light of the decreased capacity of the Sayano-Shushenskaya hydropower plant.

We discussed this when we were at that very hydropower plant. At that meeting I raised the issue of cross-flows and rebuilding what was destroyed as a result of the accident. Could you please tell us what has been done?

Sergei Shmatko: Mr Putin, members of the Presidium.

Preparations for the coming autumn and winter are drawing to a close. The commissions charged with ensuring the readiness of power generation facilities for autumn and winter peak loads have practically finished their work. This work will be fully completed by the middle of November.

By November 1, reserves of coal and fuel oil were 42% and 30% higher than average, respectively. The list of regions considered the least prepared for autumn and winter peak loads includes five regions this year: Khakassia, Tyumen, Sakhalin, the Primorye Territory, and Kuban. They have worked out plans for minimising these risks.

By and large, there are no critical problems connected with the preparations for winter. Progress is being reviewed at the daily meetings of the Energy Ministry working groups. The industry is at a high state of readiness for the winter.  

The tragedy at the Sayano-Shushenskaya power plant has compelled us to change our traditional winter preparations substantially. We have prepared a plan, and are carrying out additional measures on the Siberian United Energy Systems. These are technical measures for strengthening the energy facilities that are carrying higher loads, and some organisational steps. 

 Apart from strengthening companies' mobile, emergency and repair crews and conducting emergency training, we have expanded programmes for repairing energy facilities at extra expense.

Our main goal is to guarantee that emergency crews respond as quickly as possible to any accidents. I have reported to you on the high voltage line in Khakassia. Its backup capacity is very limited, and for this reason only recovery efforts can guarantee steady supply of electricity to the region.

We are paying special attention to distribution companies, and have instructed the Federal Grid Company to install a reactive power source at the substation on the Alyuminivaya-Oznachennoye 500-kilovolt line. This will make it possible to avoid emergency shutdowns after an accident.

We are going to bring the Askiz-Beya power transmission line into operation before the end of this year. This is essential to bring power into the Khakassian energy system.

We are also working with Russian Railways on commissioning reactive-power compensator batteries at substations on the Kuzbass-Khakassia and Krasnoyarsk-Khakassia transit line.

In general, the operation of the Siberian UES is stable enough. We have reported to you that we have done everything possible to avoid a sharp increase in the cost of electricity in the region. We have achieved this goal. We have no evidence of price increases in Siberia because of the accident at the Sayano-Shushenskaya power plant. This takes care of my report.

Vladimir Putin: So, you have managed to prevent an increase of prices.

Sergei Shmatko: Yes, we have.

Vladimir Putin: Good. As you know, we are in the final stages of an extensive programme to finish construction on more than 17 major bridges. Construction began in the Soviet era but was later stopped. But these are very important infrastructure facilities, and construction on them will be finished this year. We'll even exceed the quota by building one extra bridge.

Today, I signed an executive order prepared by the Transport Ministry establishing bridges and roads in need of repair. This includes many facilities - in Vologda, Novaya Ladoga in the Vologda Region, the Saimaa Canal, the Krasnodar Territory in the south, St Petersburg, the Moscow Region, the Don, Volgograd, and the city of Kamensk-Shakhtinsky on the border with Ukraine.

Mr Ivanov, could you please describe these projects in more detail?

Sergei Ivanov: Yes, Mr Putin. First, I will speak about the construction of the new bridges and the completion of the abandoned Soviet projects that you have just mentioned.

Indeed, in a week or 10 days we will complete the construction of the last of the 17 major bridges. Their construction began either during Soviet times or in the first years after the formation of the Russian Federation.

A relevant programme was adopted on your initiative in 2004. There is one extra bridge near Murom, which you have mentioned. You attended its commissioning. The second 24-km-long bridge in Ulyanovsk will be put into operation in the near future. It will be the longest in Europe. This will be the final project in this programme.

During this time, only three large bridges had been built across the Volga River - in Ulyanovsk, which I have mentioned, in Saratov and in Volgograd. The latter seven km-long bridge was commissioned a month ago. That will be the last stage of this programme.

As for the order you mentioned, it provides for long-term contracts for the major renovation, repair and maintenance of both bridges and a number of federal highways. We will be able to fund these projects through the Transport Ministry, which initiated this decision. Everything has been approved.

Due to the Fiscal Code, for the time being we can only award contracts for the maintenance, major renovation, and current repairs on bridges and roads only for one fiscal year.

Regrettably, in practice this creates a huge problem. At the beginning of the year, relevant ministries and departments receive funds in their accounts. By law, they are supposed to hold public auctions, which take at least 30 to 40 days. Then the winner signs a contract and receives the money. Thus, in the best-case scenario, the maintenance and repair of roads starts in late February or March.

As a result, in January and February, there is practically no maintenance work done on roads or bridges, which results in high transportation and traffic risks.

The executive order, which you have signed or will sign, will make it possible to award contracts for a term of three years. And during these three years, the winner of a public auction will be able to maintain and repair facilities all year round, monitor the condition of roads, carry out maintenance or major renovations, if need be, and make sure than there is no snow on the roads in January.

The first benefit of this order is that contractors will be able to guarantee traffic safety all year round.

The second benefit is that long-term contracts will compel serious contractors to upgrade their equipment, and lease quality road and construction equipment in the long term. This will also help our industry lease equipment through a company that we have recently set up, and will improve quality.

And the last point. The Transport Ministry will demand that the companies that receive contracts establish a special service to guarantee road quality. Under these contracts, the contractors will be financially liable for failing to guarantee quality all the time rather than for three or four months, as is the case now. At present, once the year is over, everyone disappears and it is difficult to bring anyone to account.

This is the gist of the executive order.

Vladimir Putin: Good. Thank you. Mr Khristenko, this year we enacted a large-scale programme to support the automobile industry, which, based on what automobile manufacturers and regional and municipal authorities say, has proven very effective.

As part of this support programme, the Government allocated 12.5 billion roubles to purchase vehicles for federal agencies.

We have an opportunity to increase this amount for this year.

Viktor Khristenko: Mr Prime Minister, I would like to note first of all that this programme, which was launched this year, accounted for over 40% of Russian automobile manufacturers' total production and sales. If it were not for this programme, the situation could be dire.

There is a related decision pending that would increase funding for the purchase of vehicles for federal executive bodies by 3 billion roubles. This would specifically apply to the Ministry of Defence, the Ministry of the Interior, the Ministry of Civil Defence, Emergencies and Disaster Relief, and the Ministry of Healthcare and Social Development. This measure is justified and transparent. It is unique in one way: A portion of vehicles purchased for the Ministry of Healthcare and Social Development will be deployed to that agency's regional departments.

Vladimir Putin: To municipal healthcare institutions?

Tatyana Golikova: To mobile employment centres.

Vladimir Putin: I see. Good.

Viktor Khristenko: This establishes a precedent for federal agencies to take into account every step in the process of carrying out their responsibilities.

This practice is currently being applied to employment centres. Next year, we expect it to apply to vehicles used for social programmes and medical transport.

The allocation of 3 billion roubles follows another measure which expands banks' opportunities to participate in programmes to provide easy-term loans for the purchase of automobiles.

The former measure is designed to stimulate state and municipal demand, while the latter encourages individual demand.

Some 50,000 loans have been issued so far, and we hope that the decision to increase the number of banks authorised to participate in this programme will allow for up to 80,000-100,000 favourable loans to be issued by the end of this year. As I mentioned, these plans are a comprehensive measure that already account for over 40% of support for Russian automobile manufacturers' production and sales.

Vladimir Putin: We agreed to prepare another programme to support the automobile industry, specifically to encourage Russians to purchase new vehicles to replace their old ones. I asked that this programme be prepared as soon as possible, no later than November of this year, so that we can launch it early next year. Has there been progress on this programme?

Viktor Khristenko: Mr Prime Minister, following your directive, all the regulatory documents necessary to start this programme on January 1 are to be adopted by December 1.

All the necessary legislation has been prepared. We are currently discussing it with federal agencies, the governments of the regions where disposal sites will be located, and with large businesses such as scrap metal recycling companies, which operate in this market and can handle the disposing of these vehicles.

We are confident that your directive will have been carried out by December 1, and by January 1 we'll have the understanding of how this system will function.

Vladimir Putin: One more question about the automobile industry. We have implemented several programmes this year, one of which we have just mentioned and which involves the federal government's purchase of vehicles for its own needs. Another programme involves procuring various types of vehicles for municipal governments. Initially we planned to end this programme by 2010. But my meeting with the municipal heads in Kaliningrad, or rather, with the heads of some municipalities, has persuaded me that the programme should be continued as well. I have asked you to consider the issue. What do you suggest?

Viktor Khristenko: We are working out the technical details on a tentative resolution that would allocate an additional 20 billion roubles for the purchase of vehicles, especially by federal agencies.

We suggest the following. First, because this concerns the agencies we have already mentioned - the Defence Ministry, the Interior Ministry, and the Ministry of Emergencies and the Ministry of Health and Social Development - we should continue the 20-billion-rouble plan proposed this year into the following year, so that each ministry, municipality and region can procure public transport, medical, and police vehicles through their parent agencies.

As for the municipal programme being implemented this year, taking into account the capabilities of the regional and municipal governments, we believe the programme can and must be extended through 2010. The parameters of this programme and how much the regions must contribute must be precisely established. But we believe that a little more should be added to the 20 billion that has already been allotted.

Vladimir Putin: Let us do that then, with due regard of the Finance Ministry's opinion. We can afford it, considering the availability of reserve funds. And we should see to it that the programme continues uninterrupted and, as you have rightly said, that it should continue smoothly into 2010.

Viktor Khristenko: So we will include this provision in the package we are preparing, on your instructions, by December 1.

Vladimir Putin: Very well. Now, we would all be interested to hear your opinion about GM's refusal to go ahead with the sale of Opel to the Magna-Sberbank consortium.

Viktor Khristenko: First of all, it means that GM has received massive support, including financial support, from the US Government, which enabled it to see Opel as a fairly viable asset.

On the other hand, I would not regard this as a tragedy for the Russian automobile industry. We have gained some useful experience in working in such situations and on this kind of deals. Pursuant to your directive, we are finalising the strategy for developing the automobile industry up to 2020. And we will keep this experience in mind.

We will discuss this project with Igor Shuvalov on November 10, and I think we will be ready to present it to you in mid-November, after taking into account all these decisions.

We understand the strategic potential of the Russian automobile industry and market. I think together we will be able to make the right choice.

Vladimir Putin: I agree with our Minister. The decision of General Motors not to go ahead with the deal and not to sell Opel to the Magna-Sberbank consortium does not damage our interests. That is clear.

That said, we were ready to support the deal. We supported Sberbank's decision to take part in the Sberbank-Magna consortium created in order to buy Opel. We gave them political support as well. In fact, several days ago, during a conversation with the German Chancellor, I reaffirmed the Russian Government's decision to provide 250 million euros in state guarantees to ease the load on the German Government and the German financial institutions.

On the understanding, of course - and this was in our interests - that the plan to rescue Opel would be an investment in the Russian automobile industry, and that the plan would involve the transfer of technology.

The members of the consortium worked hard with government agencies, GM, and with trade unions. The plan had been fully agreed upon. The last-minute decision to pull out of the deal does not harm our interests, but it does say something about the somewhat peculiar culture of our American partners when dealing with their partners. That is obvious.

Judging from what we are seeing in the European press and the European media, GM did not warn anyone about its change of course and did not discuss it with anyone. They just presented everyone with a fait accompli, in spite of the earlier agreements and the documents they had already signed, including legal documents.

Well, as Viktor Khristenko said, this is a good lesson. Not just experience, but a lesson. We should be aware of this style of dealing with partners in the future. I repeat that such a neglectful attitude to one's partners - and I mean above all the Europeans and not us - should be borne in mind in the future.

As for our own plans, they will not be changed. We will work with everyone, including American manufacturers. GM has a presence in the Russian Federation. We will support its activities in Russia, just as we will maintain contacts with the European manufacturers, such as our German and French partners, as well as with all those who have come to our market. For example, the Japanese producers.

We have our own ambitious plans with which we will go ahead regardless, if not within this arrangement, then under some other arrangement. These plans are still alive and well, and they will continue and be completed. There is no doubt about it.

This brings me to our arrangements regarding AvtoVAZ. We have agreed to support that company's leadership in their plans for development and dealing with the crisis. We will find the 38 billion roubles required to cover the bad debts. And another 12 billion roubles to create new production facilities and pursue our plans for providing support to workers, which is also very important. This entails creating temporary jobs for those workers who are made redundant, as we discussed at one of our previous meetings. However, it costs money to create these jobs, and we will raise another 4.8 billion roubles for this purpose.

Yet even that is not all. Additional investments will be needed to ensure the plant's competitiveness in the long run. The cost is tentatively estimated at 5 billion roubles. But that would be the next stage. I ask the Cabinet members who are working on this project to provide the funds, to do it as soon as possible, and to launch the programmes we have agreed upon.

Mr Khristenko, there is one more issue that involves your Ministry, and that is its assistance to defence companies. We have been working on this issue throughout the year. You have prepared some suggestions. Could you fill us in on this?

Viktor Khristenko: This involves two enterprises - the Serov and Leningrad mechanical plants - both of which receive defence contracts and are on the list of strategic enterprises. We have prepared two resolutions that would grant subsidies to these enterprises in order to prevent their bankruptcies and solve their financial problems.

The Serov Mechanical Plant supports the city of Serov, which by all accounts is a city dominated by a single industry. So this decision will affect the situation in the city. I would also like to stress that the plans for the financial rehabilitation of these plants are important and are tied in with the plans to consolidate these enterprises with the newly-created entities within Russian Technology. The enterprises will be transferred to Russian Technology and will be integrated within its framework. The decisions will speed up that process as well.

Vladimir Putin: Do you believe the money will be used efficiently?

Viktor Khristenko: I think we are bound by duty to carry out the rehabilitation so that we can start implementing the programme for financial recovery and make these enterprises more effective. Without it, we won't be able to move forward on this matter.

Vladimir Putin: (to Tatyana Golikova) An executive order has been signed on the creation of federal high-tech medical centres in Krasnoyarsk, Tyumen, Khabarovsk and Chelyabinsk. Your comment, please.

Тatyana Golikova: The executive order you have signed is essentially an order to open four centres in late 2009 and early 2010. The creation of legal entities now means that the required number of staff can be hired to do the preparatory work for the launching of these centres.

The first centre, to be opened in December 2009, is the cardio-vascular centre in Khabarovsk. The three other centres are to be opened in March 2010: two cardio-vascular centres in Krasnoyarsk and Chelyabinsk respectively and one neuro-surgery centre in Tyumen.

In addition, based on the results of a recent meeting chaired by Alexander Zhukov, Russian Technology, the government agency that ordered the programme, proposed the following schedule for launching other centres: the Perm centre in September 2010. Feasibility is being assessed for centres in Barnaul and Kaliningrad in 2010, although Kaliningrad has its problems and may not be opened until 2011. All the other centres are to be opened by 2011.

Basically, preparations are complete. What remains is some additional measures which are being carried out by Russian Technology. I think the final schedule of inaugurations will be proposed in December 2009.

Vladimir Putin: Does each of them have its own specialisation?

Tatyana Golikova: Yes, cardiovascular, neuro-surgery and emergency. We currently have two cardiovascular centres in Astrakhan and Penza respectively and one orthopaedics centre in Cheboksary. The new one will also be cardiovascular, and the first neuro-surgical centre in Tyumen will open in March 2010.

Vladimir Putin: Mr Zhukov, what is the situation in the labour market?

Alexander Zhukov: The number of registered unemployed has been dropping steadily since the end of April. The number practically hit a plateau last week. The latest unemployment figure is 2,012,000.

However, considering seasonality, typically the number of unemployed increases in October compared with the summer months. Now we see that it is fairly stable. It does drop a little every week.

The number of employees who are idle by management decision, working short hours or on involuntary leave, has dropped by more than 10,000 during the past week.

Vladimir Putin: Just in one week?

Alexander Zhukov: We have weekly monitoring. At present we monitor over 60,000 enterprises. We receive data on the hiring and firing of workers and those who are idle and so on every week.

We have also organised monthly registration of the total number of unemployed in Russia. Previously, Rosstat carried out these surveys every quarter, now it is every month. The latest data for September put the total unemployed figure at 5.8 million. This year the peak was reached in February (7.1 million, or 9.5%). Now unemployment stands at 7.6%, almost 2 percentage points down from the peak this year.

I believe the regional programmes should be given much of the credit for this stabilisation. As of today, we have disbursed 33 billion roubles out of the total sum allocated for regional programmes.

The fund distribution will be ongoing until the end of the year. Most of them have been updated. Add to this the money earmarked for the AvtoVAZ employment programme. It will be financed this year and next year.

What is important to note, we are encouraging the regions to continue these programmes next year; we have included funding in the budget. And it is important that these programmes shift the focus more towards creating permanent jobs.

While this year we focused on creating temporary jobs, public works, and retraining, next year it will be more on creating permanent jobs, integrating programmes for credit, financing and the creation of small businesses and for regional employment programmes.

Vladimir Putin: OK. You know that for some time now we have concentrated on the development of the energy infrastructure to ensure uninterrupted export of our energy resources. We focus on pipelines: both oil and gas pipelines.

One of the best known and most important projects today is Nord Stream, which would bring our hydrocarbon resources to West European consumers.

Under international maritime law, we had to secure permission from the countries through which the pipeline would pass, the special economic zone in the Baltic Sea, to be more precise. The first to grant permission was the Government of Denmark. We had difficult negotiations with our Finnish partners and with the Swedish Government, which put forward some additional environmental requirements to Nord Stream.

Nord Stream has consistently complied with the Swedish Government's requirements. I would like to read out part of the Swedish Government's press release: "The Government of Sweden grants permission to the Nord Stream concern to lay two parallel pipelines to transport gas via the Swedish economic zone in the Baltic Sea." I would like, on behalf of Russian leadership, to thank our Swedish colleagues, the Swedish Government, for this decision.

I would like to remind you that the Russian Federation currently holds the presidency of the Baltic Sea States Council. Just lately, several days ago, I signed off on the plan for the Russian Government's work as President of the Baltic Sea States Council. We are completing, have completed the practical work on the plan to improve the Baltic Sea environment for 2010-2012.

It includes specific projects such as the building of purification facilities, including in the Kaliningrad Region. I ask the Ministry of Economic Development and the Finance Ministry to pay particular attention to finalising all the formalities connected with this work. Incidentally, according to the plan it will be carried out in collaboration with our European partners.

Let us pass on to the business of the day.

One of the key objectives of our anti-crisis plan and the long-term development concept is to make the Russian economy more competitive.

Today we will discuss two issues that are vital for meeting these challenges. I am referring to the need for greater efficiency from the natural monopolies in energy and to the goal to stimulate import replacement in key industries.

Let me be clear. Import replacement is not, for us, an end in itself, and import replacement should by no means always be our goal. Yet it is a topic that merits discussion, as I will explain a little later.

The recent tragedy at the Sayano-Shushenskaya electric power station reminded us how cautious we must be while dealing with infrastructure security. Operating without accidents and meeting the demands of the economy and ordinary people are the main criteria by which we must evaluate the effectiveness of an energy system. Clearly, this can be achieved by thoroughly modernising electric power stations and distribution networks, and by refurbishing obsolete facilities with reliable cutting-edge, high-capacity equipment.

I believe that safety and quality must form the basis of the technical rules that regulate the generation and distribution of power. These regulations should be prepared as soon as possible.

Internal measures to cut the costs of generating companies, both in the operation and in the design of new facilities are equally important. Opportunities to save arise not only from a drop in building materials costs and contractors' services due to the crisis, but above all from effective and fair competition in awarding orders to natural monopolies, which, unfortunately, is not always the case.

For its part the Government will try to ensure that benefits from cost cutting are shared equally by the power companies with additional investment, and by electricity consumers due to the slowdown in the growth of tariffs.

I would remind you that this year tariffs have grown by 25%. And I would like to remind you that we have agreed - and I expect you to deliver on that - that the increase in 2010 should not exceed 10%.

The next issue is import replacement. Many industries in the real sector of the economy have such programmes, especially where we have obvious competitive advantages, such as accessible raw materials, a large internal market and long-standing traditions and expertise. What are these industries? Forestry and the light industry, pharmaceuticals and the auto industry come to mind.

I would like to stress that import replacement is not an end in itself. Sometimes it makes more sense to operate within an international division of labour getting cheap quality products from our partners abroad. But in some cases we should of course seek to replace imports because even in the areas that seem to be far removed from defence and security matters, in the final analysis, many things connected with the defence industry cross over into the civilian market. We cannot afford to ignore that.

The same holds to a large extent for providing people with cheap and modern quality medicines. And this is also true of some other sectors.

Needless to say, in each case a specific set of measures should be used to stimulate modernisation, ranging from combating illegal imports to supporting major investment projects.

Let me stress that our goal is not to close the domestic market and perpetuate backward technology, but, on the contrary, to create truly competitive production facilities which put out quality consumer goods that are in demand. For instance, Russian-made cars, especially those made in collaboration with foreign investors, fully meet world quality standards.

Let's get to work.

Sergei Sobyanin: Reuters reports that Finland has also given its approval...

Vladimir Putin: Yes, during my recent meeting with Prime Minister Vanhanen in St Petersburg he told me that the Finnish Government was planning to make the final decision to allow the building of the northern gas pipeline under the Baltic Sea in the special economic zone of Finland some time in early November. Reuters reports that the Finnish Government has made the decision. We are very grateful to our Finnish partners.


More Information