16 june 2010

Prime Minister Vladimir Putin chairs a meeting of the Government Presidium

Vladimir Putin

At a meeting of the Government Presidium

"Russia is a world leader in its reserves of oil, natural gas, gold, diamonds, silver, copper, lead, iron ore and coal. This is our natural competitive advantage, which we must use, but use wisely. Ultimately, mining accounts for over 30% of the country’s GDP. Today geological exploration is a promising and attractive enterprise, where each rouble invested by the government attracts 10 roubles of private investment."

Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, ladies and gentlemen,

As usual, let's begin with the latest updates.

We have devoted a lot of time and attention to removing various unnecessary administrative barriers, especially for the construction industry. Mr Kozak, please. I asked you to prepare a relevant proposal.

Dmitry Kozak: Yesterday you signed a government executive order approving an action plan to improve government supervision and licensing policies as well as streamline government services for the construction industry and urban planning. We held extensive discussions on the subject with the construction industries and concluded that the root of the problem lies in the economy, where, as a result of several historical factors and the lack of progress in implementing reform, investors in major construction projects face some of the most significant administrative barriers.

This executive order and the government's action plan to eliminate administrative barriers are especially relevant for the construction industry today, because data from the Federal State Statistics Service shows that in the first four months of the year the Russian construction industry has failed to reach its pre-crisis level in terms of construction volume and the number of people employed. This order should give a fresh impetus to this industry (if we implement it), raising it to new heights and creating more favourable conditions for investment in major construction projects.

We started preparing this action plan long ago, late last year.

We have already started working on the measures that we have reached an agreement on and that did cause any fundamental differences. A number of measures in the action plan are being implemented. The plan will specify their deadlines. We expect to finish half of them in the first six months of next year, as required by the government executive order.

One of the key issues for eliminating administrative barriers, allocating land and ensuring that land management officials act transparently is improving the mechanism for spatial planning. Following a previous government directive, we prepared and introduced into the State Duma a draft federal law to improve the spatial planning system, which has turned out to be a very important area of our work, because, unfortunately, the system has been overwhelmed with red tape. We've been unable to finish this work for six years, but the draft law that was approved by the government may help us to make substantial progress.

In addition, the draft executive order includes some other measures, such as the creation of a federal geographic information system for spatial planning. The lack of such a system is another major impediment to site development projects, especially in cases when the overall plan or site development plans developed by the regions of the Russian Federation have been prepared, but the quality is low due to a lack of a unified information system.

The new legislation will also streamline rules for allotting land for construction and prohibit allotting land without consulting a comprehensive auction list, which will be established by the law.

We also plan to develop - and this will take some time - amendments to land management and urban planning legislation in order to get rid of the very corrupted procedure for categorising land and transferring land from one category to another, which slows down the process of putting land into economic use.

The new legislation also envisions tax incentives encouraging landowners to put land available for major construction projects into economic use.

There is another very important provision, which complements another government programme. This provision will oblige government bodies to publish information on official websites about all unoccupied land available for major construction, as well as information about all administrative procedures necessary to be carried out in a particular municipality to acquire land and receive the right to its development.

Another important area of our work is strengthening the institution of independent review of project documentation. We should work very closely on this issue. This is a very serious challenge. We need to work out all these mechanisms so that both government and independent experts could review construction projects.

It's also necessary to root out abuse that takes place when new facilities are connected to utilities systems. This is a critical problem that prevents us from speeding up administrative procedures in construction.

Everything, or almost everything except maybe the amendment to the land legislation, will entail extensive reform and an overhaul of land categorisation principles. We expect to finalise all the documents necessary to eliminate administrative barriers in 2010, and we must do everything in our power to ensure that this gets done. If we are successful, we can greatly improve the situation in the industry, which has a decisive influence on the country's economy.

Vladimir Putin: Good. We should finish everything this year, as we agreed. Please do not put this issue on the back burner.

Mr Khloponin (addressing Presidential Envoy to the North Caucasus Federal District), the governor of the Stavropol Territory has requested that the facilities of Mineralnye Vody Airport be transferred to the ownership of this territory. You recently held a meeting to discuss this issue. How is this going? This airport will be upgraded and further developed.

Alexander Khloponin: Mr Putin, following your instruction we held a meeting with all the ministries and agencies involved, as well as with the government of the Stavropol Territory. At the meeting we hammered out the necessary decisions.

On July 1 all the legal documents should be complete, and a certificate on the transfer of the airport facilities to the ownership of the Stavropol Territory should be submitted to the government. The government of the Stavropol Territory and the Ministry of Transport will look into the matter and decide what additional funds are needed to reconstruct the runway and develop the airport infrastructure.

We have coordinated the issue with all the ministries concerned. All necessary documents and regulatory acts will be complete by July 1.

Vladimir Putin: Good, thank you. Mr Trutnev (addressing Minister of Natural Resources and Environment), you planned to meet with our Chinese partners in Khabarovsk to discuss transborder rivers. What exactly do you intend to discuss?

Yury Trutnev: Mr Putin, as you know, pollution of transborder rivers has caused serious concern for residents of Russia's Far East.

The Russian-Chinese agreement for joint preservation and sustainable management of natural resources expired in 2008. We set up a joint system for monitoring 40 types of pollutants. China spent almost $1.5 billion on a programme to treat wastewater. And there have been improvements in water quality, very significant ones in some indicators. However, other concerns remain. Some pollutants are still present at their maximum permissible concentrations. That is why we are meeting with our Chinese colleagues on the site: we want to make sure our previous efforts have been effective and outline a programme for the future.

Vladimir Putin: Good. I also asked you to draft proposals for cleaning up some northern regions, including the Franz Josef Land archipelago and the Northern Sea Route. I'm talking about massive pollution left over after the withdrawal of armed forces and some other units from the region. This mostly pertains to numerous barrels with petroleum products, which were abandoned and froze to the ground. Please, report on this issue.

Yury Trutnev: Following your instructions, we plan to make an inventory, do a cost assessment and make certain legislative improvements. After the bidding process we will need to transfer the ownership of the raw materials and resources retrieved in the clean up to the winner of the bid.

All necessary legislative changes will be introduced by the end of this year. The entire project is estimated to cost approximately 1.2 billion roubles, 110 million roubles of which will be spent at the preliminary stage. This work will serve as a necessary basis for further clean up operations at all 194 sites we have identified in the Russian Federation.

Vladimir Putin: When do you think can we start this work?

Yury Trutnev: We are planning to start this work early next year.

Vladimir Putin: Then all the proposals should be worked out, including the financial aspects. We are working on the budget right now, and we need to know what resources will be needed and when.

Yury Trutnev: Yes.

Vladimir Putin: You and I recently visited a place called Losiny Ostrov. It was on Environment Day. We had a group of schoolchildren with us. One of the young environmentalists, Dima Tokarev, proposed tougher punishment for environmental pollution. He sent me a letter. I will forward these proposals to you. Please respond accordingly.

Yury Trutnev: I absolutely agree with the young environmentalist's wishes. We will fulfill your instructions.

Vladimir Putin: Very well. Thank you. Mr Sechin (Addressing Deputy Prime Minister Igor Sechin), another issue that is closely linked with the environment is developing deposits in East Siberia. We have discussed taxing this type of activity in this region.

Igor Sechin:  In accordance with the decisions taken last February in Kirishi, and in connection with the falling price of crude oil on the world market, since December 2009 we have imposed a zero percent export duty on East Siberian fields.

This measure supports the oil industry, namely by increasing investment in the development of the fields in the region, and has proven its effectiveness and timeliness.

However, because the federal budget must be balanced in the medium term, and considering that some fields in the region are expected to generate profitable returns during this period, we propose a new method for determining export duties for East Siberian oil.

We have worked out the details of this plan with experts and the Energy Ministry, the Finance Ministry, the oil companies and the Federal Customs Service. Under the new plan, 45% of difference (if the difference is positive) between the actual price of oil and the set price of $365 per tonne, or $50 per barrel, will go to the budget.

This approach is based on the principle of state support for private companies, primarily in order to encourage the development of new fields. This method will also enable the federal budget (within the current price range of $80 per barrel) to receive up to 35% of the revenue that would have been obtained by levying a 100% duty. The procedure will be introduced on July 1, provided that the current macroeconomic situation continues. Additional revenues for the budget could reach 11.9 billion roubles in 2010, 128.3 billion in 2011 and 207 billion roubles in 2012. Total revenues during this period could amount to 353.2 billion roubles. Once the internal revenue rate tops 16%, we plan to transition to a 100% customs duty. We would like to have your approval for this approach.

Vladimir Putin: Which means that you support the Finance Ministry?

Igor Sechin: This is a joint instruction.

Vladimir Putin: Agreed. We'll discuss this in more detail today. Mr Fursenko (addressing Minister of Education and ScienceAndrei Fursenko), we have reached an agreement on a new form of support for university science through subsidies to the companies that pay Russian institutes of higher education to carry out research and development. If I remember correctly, each individual subsidy should not exceed 100 million roubles. How is this project coming along?

Andrei Fursenko: Preparatory work has been completed, and in accordance with your instructions, the competitive process has begun to support scientific research at institutions of higher education. There are three interconnected approaches: first, as you said, subsidies to industrial companies; second, support for the infrastructure necessary for innovation at institutions ofhigher education; and third, inviting leading scientists - from Russia and other countries - to take part in research at our institutions of higher education and establish new departments. The preparatory work has been completed, and the competition has been announced. We have conducted a tentative survey and found that about 400 industrial companies have expressed an interest in taking part in these competitions. Yesterday we met with representatives from our leading institutions of higher education. About 70 of them were present, and not all of them were under my Ministry; for example, there were several from medical universities. We believe we will start giving out funding for this project in September. Projects have been planned for three years in all areas that will receive subsidies. We are talking about 300 million in subsidies over three years. At the same time, the companies will invest their own money and sign commitments to commercialise and utilise the solutions the universities develop.

Vladimir Putin: Thank you. Mr Mutko (addressing Minister of Sport Vitaly Mutko), the FIFA World Cup is underway in South Africa. You have met with FIFA officials there. How is our bid for 2018 doing?

Vitaly Mutko: On June 10, on the eve of the World Cup, the 208-member International Football Federation held its congress. All nine countries that have placed bids for 2018 and 2022 were given an equal opportunity to make their presentations. We have made ours. Igor Shuvalov came for our presentation and we believe it was very successful.

Our booth and our bid attracted much attention. We secured meetings with the FIFA President, and we conveyed to him your message in which you wish success to the World Cup and reaffirm our commitment to meet all our obligations.

Australia has withdrawn its bid for 2018 and will now bid for 2022. And so there remains only one non-European country: the United States. But I think that they will change their bid for 2022 before the vote begins on December 2.

That leaves four European countries that have a real chance of hosting the 2018 World Cup.

Vladimir Putin: That's Spain, Portugal, Britain...

Vitaly Mutko: England, Belgium and the Netherlands - they made a joint bid - Spain, Portugal and Russia.

Overall, judging by the effect of the presentations and our meetings with members of the executive committee, Russia's bid has aroused much interest and enjoys significant support. At the next stage, several members of the executive committee would like to visit Russia in June and July to inspect construction sites.

The evaluation commission will be visiting Russia between August 16 and 19. They plan to tour four cities where preparations are now underway. And we'd like to ask you to meet with them.

And then we have the individual work, and in December the FIFA executive committee will make the final decision. On the whole, the World Cup leaves behind excellent facilities and a rich legacy. Very much has been done already: new stadiums, airports, railway terminals, roads and housing have been built, and it's quite impressive.

Vladimir Putin: Good, thank you.

Now let's move on to today's agenda. I'd like to touch on several issues. Today we'll consider several important issues, one of which I'd like to highlight. It is the Strategy for Geological Development up to 2030.

Russia is a world leader in its reserves of oil, natural gas, gold, diamonds, silver, copper, lead, iron ore and coal. This is our natural competitive advantage, which we must use, but use wisely. Ultimately, mining accounts for over 30% of the country's GDP.

Today geological exploration is a promising and attractive enterprise, where each rouble invested by the government attracts 10 roubles of private investment. In recent years proven reserves of strategic reserves, including oil, gas, gold and copper, have grown faster than the amount of these resources produced each year. This shows that we've resolved the problem we faced several years ago when we produced more than we developed, which caused certain problems and concerns. Today we can report that we have resolved the priority issues for exploration in this field.

Now we need to work for the future, creating the necessary conditions to supply Russian industries with raw materials for years ahead. In my opinion, this is the key objective of the Strategy we're considering today.

First, we need to more clearly define the areas of responsibility of the government and private business as far as reclaiming mineral reserves. Our general principle is that the state should fund geological prospecting at the initial stage and give private businesses the opportunity to conduct detailed research and develop particular fields and deposits at the next stages.

Second, we should ensure maximum access to public information resources, in particular by digitalising the so-called geological archives. I'd also like to remind you that the parliament passed a government-initiated law abolishing the fee for accessing minerals databases.

Third, it's necessary to eliminate excessive administrative barriers, which prevent small and medium-sized businesses from moving into this field. These companies could occupy a promising niche that is now empty. They could do research and prepare all the necessary information to develop small and medium-sized deposits in which large, vertically integrated companies have no interest.

Forth, today Russian geological prospecting is facing the fundamentally new challenges of large-scale surveying on the continental shelf, as well as developing ultra-deep deposits and mineral reserves in remote regions of the country. Therefore, it's necessary to pay special attention to the measures to improve geological prospecting technology, take advantage of innovative methods and cutting-edge equipment and launch advanced training programmes for personnel.

The next item of our agenda is one of the government's strategic projects: establishing a new innovative research centre at the Kurchatov Institute. This project will also allow us to retain and build on our competitive edge, carrying out research and development projects in key branches of modern science.

Today we'll consider and approve a joint research programme for the Kurchatov Institute and several other leading research centres, including the Konstantinov Nuclear Physics Institute, the Institute for High Energy Physics and the Institute for Theoretical and Experimental Physics.

The programme contains several priority provisions, including the development of fundamental science and applied research in the energy industry, energy conservation, nanosystems and cutting-edge materials, which will allow us to develop breakthrough technologies that have practical application and are in demand in the market for innovation products.

This means next-generation nuclear reactors, systems for the safe disposal of radioactive waste, medical equipment and systems for treating cancer and other serious illnesses. This programme envisions sizeable investment in modernising scientific equipment, including accelerators and research reactors, as well as investment in training programmes.

This plan will lead to closer integration in higher education and involve talented young researchers. And of course, this programme will allow Russian scientists to be involved in large international projects on equal terms with their international partners. We'll allocate an additional 10 billion roubles for the Kurchatov Institute programme from 2010 through 2012, as we previously agreed.

Finally, in formulating new objectives for Russian science, we cannot forget the scientists who established its great traditions. Next year we'll celebrate the 100th birthday of one outstanding scientist, one of the founding fathers of the Russian space industry, Academician Mstislav Keldysh. These celebrations should be held nationwide. Today we'll also discuss this issue and make an appropriate decision.

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