Transcript of the beginning of the meeting:

Vladimir Putin: Mr Kuzmitsky, let's discuss the social and economic situation in the Kamchatka Territory. I've looked through the document: your industrial production has grown in the first two quarters, if a little slower than the national average. Your growth rate is 4.8%, almost 5%, and the national average is 6.9%, almost 7%.

There have been some noticeable achievements: wages and salaries have grown by 6.7%, and that is not bad at all. Unpaid wage debts have decreased by 20%, which is also good. But housing construction has declined, and has not yet reached your previous levels. Housing construction is still 70% below what it was before.

The financial situation is also pretty good: you have a surplus of almost four billion roubles. We planned to give you assistance worth 22.2 billion roubles for evening out budget expenditures, and so we will do this.

You are carrying out a number of good investment projects whose benefits can be seen throughout the territory. Five of them have to do with airport management, including at the Petropalovsk-Kamchatsky Airport. I would like to discuss this with you in more detail. How are these projects going?

Finally, by late August or early September, Gazprom will finish opening up two gas deposits on Kamchatka and the construction of the pipeline to supply gas to Petropalovsk-Kamchatsky. You will have to deal with the urban and probably suburban gas networks, or at any rate wherever you want to supply gas in the city.

Let's start with this. How is this project going?

Alexei Kuzmitsky: Mr Putin, we are working in line with the synchronised schedule and within the established time limits. You said that the gas pipeline will be competed in August: the urban gas pipeline from the gas distribution plant to thermal power station No. 2 will also be built by that time. We will supply this station with gas right from the beginning. Fifty-four million cubic meters of gas will be supplied this year, and about 175 million cubic meters of gas will be supplied next year, according to the synchronisation plan.

We will also connect thermal power station No. 1 with the gas network by 2012. For the time being, we are working on energy conservation and energy efficiency programmes. We plan to provide gas to the entire Kamchatka Territory under this programme. The first stage of this programme involves connecting generating facilities and heating facilities with the gas supply network.

We will finish preparing this programme by the end of the year and begin implementing it at the beginning of next year. Most of the cost for us will go to building networks between communities.

Vladimir Putin: When will you start?

Alexei Kuzmitsky: Next year. Today the price of gas is a very important issue. The Federal Tariff Service has sent us instructions on how to get money for investment: from gas payments, which does not mean increasing gas prices, but using payments we have to modernise and implement an energy conservation programme for the Kamchatka Territory's thermal power system. We are discussing this issue for now. We'd like to get your approval for the gas price at the national level. This would greatly help us to develop the region's thermal power system and, more importantly, modernise and replace the equipment that is 90% to 95% worn out, particularly in isolated energy network of the Koryak Area.

Mr Putin, in 2007 you instructed us to build the pipeline. This is a major project for our territory. Overall, it helps us diversify our energy sources. You know that Kamchatka consumes 470,000 tons of fuel oil [mazut], and is dependent on it. Figuratively speaking, this project will help Kamchatka overcome its addiction to fuel oil. The gas pipeline will significantly improve the environmental situation as well as the overall safety of the energy system.

It would be great if, upon the completion of the project, you could come to the inauguration of the pipeline to light the torch.

Vladimir Putin: I'll come and see, by all means. Let's discuss other issues now.

Alexei Kuzmitsky: I'd like to focus on some other important issues. In the first four months of this year, the territory has seen its net increase in migration since 1991. The territory lost 2,300 people in 2008 and 1,300 people in 2009. And in the first four months of this year the region's population has increased by 1,274. This is a very good trend.

The population of the Kamchatka Territory has also seen a natural increase of the population in 2007, 2008 and 2009, but this trend has stalled in the first quarter of this year. I hope that this is just a temporary setback, and we'll finish the year with natural growth again.

As you said, wages and salaries are also growing. Per capita incomes are increasing as well. And most importantly, we managed to supplement pensions and thus raise them to the pensioner's cost of living. An average pension is now 20% higher than the pensioner's cost of living. Of course, that's not enough, but pensions were only 80% to 90% of the cost of living before. And now they're 120%.

Vladimir Putin: How much do doctors receive on average?

Alexei Kuzmitsky: About 26,000 to 27,000 roubles.

Vladimir Putin: Teachers earn 26,000 in your region, and doctors receive a bit more, to the best of my knowledge.

Alexei Kuzmitsky: Yes, a bit more. In nominal terms, salaries increased significantly, but in absolute terms the increase was not that high, about 6%. Our main objective is...

Vladimir Putin: I'm sorry to interrupt you, why are there wage arrears in the region?

Alexei Kuzmitsky: Wage arrears?

Vladimir Putin: Yes. In what industries are there wage arrears?

Alexei Kuzmitsky: Mr Prime Minister, there are currently 1.6 million roubles in wage arrears. At present two bankrupt companies owe this money to 38 people. The rest of the debt has been settled. There are only 1.6 million roubles in debt.

Vladimir Putin: Are there any wage arrears in the public sector?

Alexei Kuzmitsky: Absolutely not. We do not allow any wage arrears in the public sector. There is no debt here.

As I see it, my job as a governor at present is to ensure that people's real incomes grow; it's my number one priority. My number two priority is to lower the cost of living, or at least keep it down.

For this purpose, we increased the region's social accessibility index, which you helped us with. The region can now invest in social services.

This year we opened our first sports and fitness complex, which consists of six gyms. It has an area of 6,000 square metres.

Vladimir Putin: It's in Petropavlovsk-Kamchatsky?

Alexei Kuzmitsky: Yes. This year we'll start construction on a second complex, with a swimming pool, in the town of Yelizovo, which has a population of 40,000. This facility's area will also be 6,000 square metres. By next year, we're planning to finish the design and construction documentation for an ice arena in Petropavlovsk-Kamchatsky. In 2013, we'll construct a second sports and fitness centre there.

Vladimir Putin: How are fishing companies doing?

Alexei Kuzmitsky: Not bad. They are increasing catching quotas for several years in a row. As of now, the region's fishing companies have caught 370 metric tons of fish, which is 22% more than during the same period last year. And investment has increased; new facilities are being built, old ones are being modernised.

Fishing companies now have good opportunities. They have been given land ownership rights for 20 years, with investment distributed among them for 10 years. These businesses are sure that no one will take the land away from them all of a sudden. If they are scrupulous and abide by the law, their investments in production will bring good yields. This encourages them to leave their added value in the region and develop fish processing more effectively than before.

Still, our main objective is the radical improvement of the region's social infrastructure. This year we'll start construction on two kindergartens, the first new kindergartens in 20 years. One kindergarten, for 340 children, will be in Petropavlovsk-Kamchatsky, and the second in the northernmost settlement in Kamchatka, Ayanka, which is inhabited by indigenous people. The climate is very severe there, but that's where we're building our second kindergarten.

Kamchatka was very proud to host an international biathlon competition for the second time, in which the best biathletes from 18 countries participated. The president of the International Biathlon Union also attended this competition. This year we have constructed a modern biathlon complex instead of a temporary one. It meets all requirements of the IBU, and its president noted that the speed of construction and the infrastructure allow for hosting top-level competitions here.

I'd like to present you this album of biathlon photos.

Vladimir Putin: Thank you.