The prime minister has found a sector that can do without state support.
On Tuesday, Prime Minister Vladimir Putin visited the Nizhnekamsk petrochemical plant. He chaired a meeting there and said, among other things, that environmental considerations should not hinder the sector's development.
Putin began his one-day tour of Tatarstan with a visit to the Kamaz auto works. The managers tried to persuade him that in no other place had the government's anti-crisis policy brought such tangible results. "We have made the best use of the government's measures, such as restrictive [import] taxes, state orders and others," said one of the company's top managers, who pointed to the growing activity in the domestic automobile market. He doesn't hide his satisfaction with the current situation: on November 17, the Russian-American joint venture Cummins Kama launched diesel engine production and this event coincided with the prime minister's visit.
"I visited Kamaz last December and we outlined a programme of support for the company and the automotive industry as a whole. This programme has done its work," Putin said when the managers were displaying the joint venture's successes to him.
Now, the plant will assemble Euro-3, Euro-4 and Euro-5 engines of 140-300 hp for the Russian market. Next year it will assemble 7,000 engines and by 2015 annual production will be increased to 25,000. Though the new Kamaz trucks will be more expensive (by 5%), the engines will have a longer service life (more than double) and lower fuel consumption (down 15%).
"We have earmarked additional funds for the purchase of vehicles for state needs, first 12.5 billion roubles and then another 3 billion, with half of the total sum used to buy Kamaz trucks. Apart from this, Rosagroleasing's authorised capital was increased by 25 billion roubles, of which 5 billion roubles had to be used for the purchase of motor vehicles," Putin said.
Workers were quite impressed by the Moscow guest's calculations and they came closer to him in order to ask some questions. However, the prime minister said that he had to chair a meeting in Nizhnekamsk which was due to begin soon and left in a hurry. Nevertheless, some of the workers managed to ask the question that worried them, perhaps, more than anything else at that moment, i.e., what was Putin's forecast for the Russia-Slovenia play-off game on which the national team's participation in the 2010 FIFA World Cup in South Africa depends. "It's hard to make forecasts in sport, this is not forecasting but crystal-ball gazing. But I think our team must win," Putin said.
This time the prime minister did not ask his traditional question about wages and the workers seemed not so much interested in this as, say, in the national team's prospects for victory. The RG daily was told later on that before the crisis the Kamaz employees' monthly wage averaged 17,000-20,000 roubles, while now it does not exceed 12,000 roubles. "We will talk about it later; I will have a regular direct communication line with the public and I will ask the film crew to come to you by all means," Putin said when leaving the workshop.
As regards the future gains of the national economy, the prime minister talked about them at the Nizhnekamsk petrochemical plant. At first, however, he complained that Russia, which provides 9%-10% of crude exports, accounts for less than 1% of exports of high-tech products such as polymers. Besides, imports account for 33% of domestic petrochemicals consumption. "We sell raw materials and then import finished products which are often produced from our raw materials," Putin said.
However, the Russian government has no intention of using restrictive measures again; instead, the enterprises must change their strategies. The national petrochemical industry lags behind its western rivals, according to the prime minister, because it uses the outdated machinery and equipment; besides, most enterprises are located too far from their external markets. However, Putin is convinced that the sector has an important advantage, which is a unique raw materials base. Apart from this, petrochemicals production is a highly profitable business which does not need big state subsidies. This facilitates efforts to modernise the sector.
The prime minister was ready to help mostly with advice. Putin explained that, on the one hand, it was necessary to enlarge petrochemical plants to make them more competitive. "The scale of national petrochemical and gas chemical production is too small compared with Western or Asian giants; neither cheap long-term loans nor R&D financing are accessible to an average Russian company in the sector," Putin said. On the other hand, the government intends to restrict competition in the market, inherited from the Soviet times. "Product pipelines and other network facilities were established within integral territorial production complexes, so today all the enterprises concerned must have equal access to them," the prime minister said. And it stands to reason that it is necessary to expedite the sector's scientific and technical modernisation and to introduce innovative management methods.
If the government decides to support enterprises, state aid will go only to efficient ones. "The government must help well-established and competitive companies instead of keeping inefficient production units afloat at all costs," Putin said. At the meeting, he asked businessmen to determine fair and predictable prices of raw materials and intermediate products and also to make information on their costs more transparent.
Pierre Sidibe