Prime Minister Vladimir Putin chairs a meeting on state defence contracting in shipbuilding in Severodvinsk
Opening remarks by Prime Minister Vladimir Putin:
Good afternoon, colleagues,
A series of important contracts for the development and construction of naval and civilian maritime equipment was signed as part of a state defence order. Among them were seven contracts signed by the Defence Ministry, and two civilian contracts, which include Yasen and Borei class strategic nuclear submarines.
As you may recall, we have allocated about 4.7 trillion roubles for the comprehensive retrofitting of the Navy as part of the State Armaments Programme for 2011-2020. One-third of these funds will be set aside within the next five years.
Over 85 billion roubles has been allocated from the federal budget this year for the construction of nuclear submarines, frigates, ship repairs and maintenance. This amount will reach 93 billion in 2012.
As of right now, 66 contracts worth 77 billion roubles have been signed. Today, we signed contracts worth 280 billion roubles, half of which were signed by the Defence Ministry. I am confident that the implementation of this armaments programme, which is unprecedented in terms of its objectives and its allocated resources, will help us carry out a full-scale retrofitting of the Army and Navy, fundamentally renovate the Naval infrastructure, create strategic Naval nuclear forces comprising fourth-generation submarines, purchase modern surface ships and conduct upgrades and repairs of the existing equipment. Our main stake, of course, is on Russian enterprises. Our shipbuilding industry should be prepared for the serial production of advanced models of equipment and armaments that conform with all modern requirements and objectives of the Russian Navy. We need the best available equipment at prices that are cost-effective. I talked about this in detail this morning with the defence minister, his colleagues, the deputy prime minister and the chairman of the Military-Industrial Commission under the Government of the Russian Federation. We spoke in particular about the economic feasibility of the sales prices. The enterprises of the military-industrial complex should certainly have sufficient financial reserves and an acceptable degree of profitability in order to be able to expand, conduct their own modernisation and facilitate the employment of promising young engineers, technicians and workers.
I'd like to point out that the Defence Ministry signs its contracts based on a 20% profitability, which is quite sufficient to achieve the above objectives. In addition, the Defence Ministry as a contractor agrees to increase profitability to 30% or even 35%, provided that these funds will be used for the upgrading of enterprises. This will need to be proved separately. Many aspects of the defence industries' operations need to be changed: costs need to be cut and inefficiencies need to be ironed out.
Furthermore, we have thoroughly analysed the causes that led to problems during the placement of state orders, of which there are many. These issues need to be addressed in the future as well. We are proceeding precisely based on this logic in our decision to place state orders for three years, or even seven for certain contracts, instead of one year, as is the case now. This will help enterprises plan and pace their work. Our ambitious plans to renovate the Army and the Navy must be carried out; this is a task of paramount national importance. I would like to wish success in this complex and crucial work to shipbuilders, including those in Severodvinsk, as well as all employees of the Russian defence sector.
As I mentioned earlier, a number of civilian contracts have been signed as well. LUKoil is continuing to implement a large-scale programme for the development of oil fields in the northern parts of the Caspian Sea. This company alone will invest over $1 billion in its projects. As you may know, the first Russian oil and gas field in the Caspian Sea, named after Yury Korchagin, was commissioned on April 28, 2010. As of today, LUKoil has signed a series of contracts for the construction of stationary platforms for the development of the Vladimir Filanovsky oil and gas field. As I said earlier, the company will be investing a lot of money in development and production – over 500 billion roubles – if you include expenses involved in developing the coastal infrastructure.
The implementation of the project to develop the Northern Caspian Sea fields will allow us to significantly improve the energy capabilities of the Caspian Sea regions as well as all of Russia, and most importantly, to create additional jobs in the fuel and energy complex and many other industries, provide long-term contracts for the manufacturing of high-tech civilian products for domestic shipbuilders, and help diversify production capacities. For example, in Astrakhan, they have built a pioneering industry from the ground up for construction of sea platforms. On our part, we will provide all the necessary support, including legal support, to shipbuilders. An entire package of amendments has been passed. We discussed this today. These adjustments are very timely, and they are significantly improving the work being done in this area. They clearly identify mechanisms that should encourage businesses and companies, with state participation, to provide full loads of orders to Russian dealers. This is very important for us and for our manufacturers, and especially for the new shipbuilding cluster that is being formed in the Far East. Two new shipyards are being built in the Maritime Territory: Vostok-Ruffles, in partnership with a Singaporean company, and Zvezda-DSME, a joint venture with a Korean firm. The work has begun, the building is being erected, and work is in full swing. We need the entire product line of civilian, sea and river ships, ranging from icebreakers and supertankers to special-purpose vessels. We will engage in this work consistently, in conjunction with our research centres and businesses.
