Transcript of Dmitry Kozak's speech:

Mr Speaker, members of the Federation Council, ladies and gentlemen!

The Federation Council has discussed Olympic preparations in Sochi several times from the legal and financial points during its annual work on the draft federal budget. However, I think the House has never yet had a comprehensive discussion of the project in this format, so I would like to offer you a glimpse of history.

You might remember that we started developing Sochi as an alpine resort of national importance following relevant government decisions long before the Olympic Committee's final ballot in Guatemala City.

The federal targeted programme for the development of Sochi as a alpine health resort was endorsed as far back as June 8, 2006. A directorate for its implementation was established four months later, in October 2006. Simultaneously, the first contracts were awarded to design infrastructure pivotal for regional development irrespective of what the International Olympic Committee would decide on the 2014 host city.

The Presidential Council on Physical Fitness and Sports and the Olympic Organising Committee were established in autumn 2007, three months after our Guatemala City victory. The first federal laws determining general project organisation and its management bodies were passed at the same time.

The Olympstroy state corporation was established in November 2007, less than a month after a relevant federal law was endorsed, to become a full legal successor of the directorate of the federal targeted programme. Another federal programme was approved on its basis in December. It concerned Olympic construction and listed Olympic infrastructure projects to be built. Programme implementation began. The first six months and the first year of work revealed the need to further streamline the legal regulatory basis of the programme.

As you know, much has been done within the last two years to update the legal environment. Together we have had to amend the basic Olympic laws on several occasions, mainly where residents who had to be relocated due to Olympic construction were concerned. You may remember that the first version of the law, of 2007, envisaged only financial compensation for the lost property to the people being evicted without guarantees of new accommodation.

The second version, which resulted from a dialogue with the public, envisaged an opportunity of building housing for the evicted persons, and made provision of housing for them mandatory. It stipulated the evaluation of redeemed and granted housing proceeding from market prices. However, this was not enough, either. I will return to this sensitive issue later. Finally, we have had to accept a pattern on which the housing to be demolished is compensated metre for metre irrespective of class, though with consideration for location. Compensations do not depend on the class and market evaluation of housing when the redeemed and granted landed areas coincide. In such instances, mutual settlements concern only the difference between the redeemed and granted housing. The same concerns administrative procedures, mainly the removal of administrative barriers to attracting government as well as private investment in the Olympic project.

I want to express my gratitude to all members of the Federation Council for active participation in this work and for the support we have received. Today, the Sochi experience, mainly of administrative procedures in the sphere of capital investment, is at the basis of the government's action plan to remove redundant administrative barriers in construction. As you know, it is an extremely urgent problem in this country.

The previous two years have also changed the programme of Olympic project construction and the list of projects for construction. I cannot say it is a radical change, just as in the legislative basis. But it is a tangible change.

For greater economy in budget expenditures, decisions were made last year to strike a number of transport and energy projects off the Olympic construction list - all told, approximately 15 projects envisaged by the federal targeted programme. At the same time, practical analyses of the Olympic project became more profound. These analyses and our contacts with the International Olympic Committee and its experts made us extend the list dramatically. Now it includes new transport projects and hotels because the federal programme should envisage accommodating all Olympic contestants and guests. New energy projects also have appeared on the list after we reconsidered the demands and hazards of the Games, with their peak loads.

At present, the list of Olympic projects and related facilities is ready, on the whole, and includes more than 800 mutually independent capital construction projects.

The federal programme envisages 242 capital construction projects and the regional programme another 150. The majority of these are comprehensive projects, each of which includes several projects - some of them more than ten each. Most of those projects are technically interrelated and interdependent. They demand not only close coordination of the deadlines of construction and other works but also smooth succession of design and construction stages. 59 coordinators have been appointed so far to do the ambitious job together, as a team, each strictly responsible for his part of construction at all its stages. That is what makes the whole project so sophisticated from the technical and management points of view, to say nothing of its grand scale.

At the same time, it is a mammoth investment project catalyzing the progress of the Russian construction industry. At present it involves 307 design and construction companies based in 35 regions of the Russian Federation, and more will join in. At the beginning of 2008, I ordered all regional governors to promote leading construction companies' participation in contests for Olympic project design and construction. These efforts have borne fruit. Today, design and construction companies in the Olympic programme represent all parts of Russia from Omsk to Kaliningrad. Close to 30 foreign companies, mainly designers, are also taking part. There is a shortage of top-level design companies in Russia, so we have to attract foreign companies for consultations and subcontracts because the project has an international scope.

Importantly, the works pertaining to the Olympics proper do not exceed 20% of the entire programme. As I said at the beginning, a federal targeted programme for the development of the area as national heritage and an alpine health resort of federal importance had been launched even before the finish of the Olympic bidders' competition. Today, all projects, apart from the 20% that have to do with the Olympics, are a powerful impetus to the development of the city and the entire east of the Russian Black Sea coast. They envisage a top-class airport, several seaports, highways, engineering infrastructure, energy projects and hotels, which I regard as part of the business infrastructure.

The regional infrastructure has major objective limitations. They will vanish as the public infrastructure is upgraded. Its modernisation will expand the ground for private investment in the development of the area as a unique alpine resort for tens of millions of holidaymakers, mainly Russians.

Olympic preparations follow not only the federal and regional programmes I have mentioned but also a number of other plans and programme documents, particularly the Olympic Heritage comprehensive programme, which determines the future of every Olympic facility and envisages its use after the Games to the greatest possible economic effect. We attach critical importance to such use. To have no white elephants after the Olympics is one of the primary demands of the International Olympic Committee: everything built for the Games should work for the benefit of the nation, the city and the region in the post-Olympic time.

A special programme named Sochi the Hospitable City aims to create a new urban environment of the Olympic host. It envisages the modernisation of architecture and spectacularly upgraded consumer services. The architectural concept of Olympic area development, which the government has approved, concerns the entire Greater Sochi. It will make the city truly modern.

There is a plan to increase access for persons with limited abilities. A Cultural Olympics has been planned as part of the Hospitable City programme. Its best projects will be implemented during the Games in 2014. This is the Year of the Cinema, next year will be the Year of the Theatre, 2012 the Year of Music and 2013 the Year of Museums.

Several projects do not concern the Olympics and Paralympics directly. In particular, there is a programme to develop Olympic education on the basis of the Russian International Olympic University. It will be the first international Olympic university in the history of the world Olympic movement. We will coordinate the project with the International Olympic Committee and establish the university during the preparations for the Olympics. In the pre-Olympic period, starting with September 2012, it will be the personnel training basis for the Games. After that, it will train Russian and foreign sports managers.

The government has developed an Olympic healthcare programme and a comprehensive plan for safety and security with due account for the scope and importance of the Games. These problems have been in the focus of global attention for several years and even decades.

Environmental aspects are under special government monitoring. A programme for environmentally friendly Olympic construction, endorsed in 2008, includes compensatory measures to the amount of more than a billion roubles apart from measures envisaged by the design documents of every project.

A construction waste management programme, currently underway, envisages recycling 90% of the waste. This is the best possible result for today. To put in a nutshell, Olympic construction will improve the local environment dramatically.

I want to say a few words about project management. As I have said, its system envisages a top management body for political coordination of the Olympic preparation programme. That will be the Presidential Council, and a presidium headed by the prime minister.

The Presidential Council includes an interdepartmental commission to coordinate Olympic activities. I have the honour of heading it.

The Ministry of Regional Development coordinates the work of executive agencies participating in project implementation directly or indirectly. I want to remind you that the Olympic project involves, for today, 19 federal executive agencies as coordinators. As I have said, they are contracting out the construction of relevant Olympic and infrastructure facilities. There are also more than 20 coordinating agencies. The Ministry of Regional Development oversees the partnership of all agencies, with an emphasis on coordinating ones.

As you know, the Sochi 2014 Organising Committee is the legal organiser of the Games. It acts in compliance with the Olympic Charter and the Host City Agreement with the International Olympic Committee.

The Organising Committee has drawn up a schedule for the qualifying events of 2011-2013 and an Olympic and Paralympic master plan. I want to stress the committee's success with the marketing programme, on which a billion dollars has been raised from sponsors. The business community is responding also to its call to join Olympic construction. I will speak about it in greater detail later. The billion dollars collected on an entirely voluntary arrangement without the slightest administrative efforts by the government or anyone else will help us to minimise direct federal budget expenditures on the Olympics.

The Olympstroy state corporation is the ordering party of the construction and exploitation of approximately 40 Olympic facilities. Its basic mission, however, envisages the coordination and monitoring of the 59 coordinators who have ordered relevant Olympic infrastructure projects.

With this aim in view, the corporation has concluded contracts with all the 59 coordinators, which envisages the monitoring of works, construction schedule and the mutual technical agreement of the design and construction of all the numerous projects included in the programme.

The Krasnodar regional administration and the Sochi municipal administration play a tremendous part in the project. They are responsible not only for the construction of numerous Olympic facilities of regional and local importance but also for land and other property relations, and issues arising with the alienation and assignment of land for Olympic and infrastructure construction. This is an extremely complicated and sensitive matter. That is, above all, why the regulatory framework demands permanent improvement.

As you see in the slide, the overall area of the Olympic and infrastructure projects is slightly less than 6,000 hectares (15,000 acres), of which privately owned land accounts for only 237 hectares (585 acres) for today, that is, considering the present plan of the territory. An even smaller area is occupied by housing, also for today - 614 private houses and 38 blocks of flats with a total of 234 flats in them. In order to relocate these people, we have to build 510 detached houses and 326 flats, according to our calculations and forecasts. Relocation has reached its peak. Housing construction is meeting the deadlines coordinated with the scheduled start of Olympic facility construction in vacated areas.

No doubt, Parliament, particularly its Federation Council, is interested in the cost of the Olympic project. Forecasted cost is 185 billion roubles but some facilities are still being designed and the government expertise is not ready yet (its major part will be over before the end of the year). 93 billion out of the 185 billion come from extra-budgetary sources: from private investors attracted by our efforts.

As I have said, this makes a quarter of allocations to regional development, with no direct bearing on the Olympics. Private funds also make up a considerable part of the sum. 349 billion roubles is enough to build a seaport, an airport, several thermal power plants and several hotels. Just think, 349 billion of private investment! I acknowledge that Russian private business has given an enthusiastic response to the call to join the Olympic cause. On our part, we have offered them more favourable terms than what is accepted in the construction industry in the entire country. We do not impose redundant government and municipal duties on private businesses - to build infrastructure projects, connect them to power grids, and so on. The procedure of land allocation has been simplified. That is why we have attracted so many investors.

Compliance with the law and budget expenditures are monitored by many regulatory bodies from the Audit Chamber to the Federal Service for Fiscal and Budgetary Supervision (Rosfinnadzor), the Federal Service for Supervision of Consumer Protection and Welfare (Rospotrebnadzor), and so on. We have about a dozen such supervisory agencies. I want to stress that monitoring covers every sphere. The president of the Russian Federation has entrusted the Presidential Control Directorate with coordination to bring monitoring into order and plan and regularise all these checks so that watching and mutual reports don't take up all our time.

The International Olympic Committee is prominent in monitoring the implementation of the Olympic project. Its work is of great practical value. Its experts visit Russia every quarter. More than 100 experts made 55 trips to many sites during their latest visit. They do not only keep watch, check and make demands; their participation is very useful, as we know from the experience of Olympic construction in other countries that they make efficient recommendations and proposals to improve construction, reduce its costs, increase its pace and streamline management. In the course of the eight visits by International Olympic Committee, its experts have submitted to us more than 170 recommendations and suggestions which we have found very useful.

Let us summarise what has been done.

We have completed the design of 67 out of the total 240 projects. All design documents will be ready on 177 projects by the end of the year. Construction and assembly is underway on 48 sites at a time. 40 projects will be finished by the end of the year. The number of projects under simultaneous construction will increase threefold to make 144 by the end of the year.

The schedule chart is the main tool for planning and monitoring Olympic construction. The federal government is monitoring compliance with more than 3,000 design and construction deadlines. You must realise that contractors have several hundred times more schedules to check when construction begins and the net chart is confirmed.

Conformity with the schedule is updated online every week. You can see some parts of it on the Sochi 2014 government website. It is an efficient way of checking on progress. The figures give a clear idea of the scope of this project, whose complexity is unique in Russia's recent history.

On the whole, despite routine problems, which International Olympic Committee members call performance situations, we have not the slightest doubt that the project will be implemented well and on time.

We have recently successfully projected the image of the dynamically developing contemporary Russia at the Olympic flag passing ceremony. You have all seen it. That was our first test as Olympic hosts. Everyone says it was much better than the principal Olympic opening and closing ceremonies.

We are on the final stretch of the 2014 Olympic preparations. We should spend the remaining time to the greatest possible effect for our country to make a good host. More importantly, everything we build today should serve our country and nation after the Games.

Thank you very much.