Transcript of the beginning of the meeting:

Vladimir Putin: Mr Shtyrov, I know you have something to tell me about specific large projects, but let us begin with the state of affairs in the republic.

Vyacheslav Shtyrov: If you look at the economic indicators for five months - the official statistics - they are not bad in general. Industrial output has grown. Most importantly, basic industries such as diamonds, coal and gas are working steadily. Agricultural output has also grown. That is especially important for us because the previous years have been difficult, what with flooding and so on. But basically, we have gone through the winter and now agriculture is doing quite well. The gross regional product increased by about 5% in five months, and people's incomes have increased by about the same percent. But you know, Mr Putin, we northern people live in our own sense of time. The winter has come to an end, and this is always a difficult period for us. The flood period is very difficult. This year too, we have not been spared flooding. We see that global climate change is happening, even in places that used to be comparatively calm and safe, for example, the tundra on the coast of the Arctic Ocean or central Yakutia where we have always feared either droughts or floods. Nevertheless, the flood period passed without panic. The Ministry for Emergencies and the municipalities have pooled their resources to cope with the situation. Now we are clearing the aftermath.

For four years now we have been building anti-flood walls, including in the cities of Yakutsk, Ilimsk and Olekminsk. Projects are being developed for ten more cities. We have launched research work jointly with the Ministry of Natural Resources to understand what will happen to the permafrost.

The navigation season has begun. Navigation is proceeding normally, according to plan. Last year, in connection with the start of the construction of the Eastern Siberia-Pacific Ocean pipeline and other major projects, we carried more cargo than in any of the last 15 years. This year we are matching the same schedule. This is very good news for us because the navigation period is short. We have a natural deadline in preparing for it.

The agricultural season has started. As everywhere, spring sowing is underway. Preparations for the winter are also underway. In short, it is our usual working routine. Conditions are more or less normal, stable.

We hope that we will meet the targets we set for ourselves this year. A platform for accelerated development of the republic is being created on the basis of the comprehensive development plan for which we have secured government approval on your instructions.

Vladimir Putin: What about the large infrastructure projects? You remember we discussed them when I visited your republic, the development of new fields and so on?

Vyacheslav Shtyrov: Infrastructure is of course Yakutia's Achilles heel. If you look at the map, we appear close to the rest of the country, but in reality it is one of the least accessible parts of the planet. However, the construction of the railway to Yakutsk is moving forward at a rapid pace. In general, we are meeting all the plan targets. Most importantly, the issues of further construction, financing of the railway and the bridge have been solved.

Simultaneously we are building five major roads: three are federal roads - Irkutsk-Yakutsk, Yakutsk-Magadan and the reconstruction of the road from the Amur Region to Yakutia. Two are republican roads. Actually, they are interregional because we are building a road to the Khabarovsk Territory and on to Ayan. In general, financing is routine and work is going according to plan.

We are actively developing pipeline transport. Under our republican programme we are to build nearly 500 kilometres of pipeline this year to bring gas to communities. Most importantly, the construction of the Eastern Siberia-Pacific Ocean pipeline is underway. Half of it, almost 2,400 km, passes through the territory of Yakutia. Just recently the seam on the 2,000th km was welded. So, that problem is being solved.

Together with the Transportation Ministry we set up a pilot federal government enterprise for the operation of airports in Yakutia. We transferred under its jurisdiction not only the federal airports, such as Yakutsk and Tiksi, but also our local airports. That experience can then be spread to other regions of the Federation, if it is successful. Our strategy is to start subsidising the operation of airports and thus cut air fares. So far, it seems to be working. We have gone through the organisation period and passenger traffic on these routes has increased noticeably.

In general, the infrastructure projects, following your instructions, are making good progress.

Vladimir Putin: Why are you subsidising the airports? They must be able to pay for themselves. Elsewhere in the world, airports are profitable operations.

Vyacheslav Shtyrov: I'll tell you what the problem is. Take for example, a small airport in a district centre. The only way for people to travel is through the airport. There is no other way of connecting to federal airline. The price of tickets is high. What does it consist of: the cost of air carriage and port charges. Up until now our port charges have covered the entire cost of the airport operation. If that component is cut, then one can cut the cost of the tickets. But that component is controlled because the federal government enterprise operates according to a cost estimate.

Vladimir Putin: I understand that. But still an airport is a profitable enterprise.

Vyacheslav Shtyrov: And if you only have one flight a day?

Vladimir Putin: Yes, I see. It's like oil wells with a low recovery rate.

Vyacheslav Shtyrov: But we have larger airports such as Mirny, Yakutsk and Tiksi, and they pay for themselves.