Andrei Biryukov
Putin orders Regional Development Ministry to Support Construction Industry
At a meeting yesterday, the Government decided to focus on stabilising the national industry, in particular, the construction sector.
Prime Minister Vladimir Putin met with the former Minister for Regional Development Dmitry Kozak (he has since been appointed to a new position; see article on page 7) and Minister of Finance Alexei Kudrin. Mr Putin instructed the Ministers to urgently allocate an additional 50 billion roubles from the Housing and Utilities Fund (HUF) to support the construction industry.
"The most important goal for HUF is to support the elimination of the housing stock unfit for living. Under the current circumstances, it is necessary to rapidly allocate extra subsidies for the Russian constituent entities to buy housing for resettlement of people from apartment buildings unfit for living," Mr Putin said.
The additional 50 billion roubles will be granted under simplified terms, a source at HUF told Gazeta. "Because of the crisis, some of the buildings currently under construction may remain unfinished," the source said. The idea is to create a new 50-billion rouble fund, which will finance the residents' resettlement from the apartment buildings unfit for living to the buildings that are nearly completed. This will minimise the risk of unfinished construction. Application requirements for financing from the new fund will be significantly lowered in comparison to funding requirements for unfit housing reconstruction or resettlement to buildings still under construction. According to the source, the 50 billion roubles may be transferred to the national industry by the end of 2008, provided the amendments to the current law are adopted expeditiously.
The state corporation, The Housing and Utilities Sector Reform Fund, was established following Mr Putin's instructions and is formed out of the penalties and fees paid by the oil company Yukos for underpayment of taxes.
The fund (240 billion roubles) is meant to finance capital repairs of apartment buildings and resettlement of people from housing unfit for living. Spending, however, has been limited, due to strict requirements for funds allocation. To be funded, a region (a constituent entity of the Federation) should meet 14 criteria: 25% of the companies in the region's housing and utilities sector should be privatised; about 5% of the apartment buildings should be under the maintenance of owners' associations; the region's population should be paying 100% of the utility bills. So far, 68 regions have entered into agreement with and received subsidies from the Fund. The subsidies received a total of 32 billion roubles, whereas only 7 billion roubles out of this amount has been spent for residents' resettlement to new homes. Prior to Mr Putin's instructions yesterday, a total of 18 billion roubles was to be allocated to the regions by the end of the year.
A provisional decision to allocate 50 billion roubles was made on October 11 at a Government meeting that discussed measures to stabilise the Russian economy.
President Dmitry Medvedev also spoke in support of the construction industry yesterday. Mr Medvedev said that it was necessary to support real estate developers. He made his comments during a meeting with Dmitry Kozak and Viktor Basargin, who will soon be appointed the Minister for Regional Development (for details see article on the same page).
In particular, the President stressed the need for stable real estate prices and urged maintaining the current rate of housing construction. Funds will be allocated in support of this goal, said Mr Medvedev, and asked Mr Basargin to engage in the work immediately.
