Good afternoon, colleagues,
We have gathered here on purpose. This waterworks facility is the first one built in Russia for the past twenty years, though it may not make such a huge impression. We have been constructing it for five years, spending over 3 billion roubles ($127.7 million). This is a worthy and up-to-date installation that boasts a modern look and advanced technologies. This is exactly what we need, and we will talk about it in more detail now.

Russia has a vast fleet of hydro-technical facilities, a very good resource that is still scarcely used.

During the meeting, we will have to consider the issues related to utilisation of Russia's water resources. The scope of subjects is very broad, ranging from the current condition of domestic waterways and the environmental situation to development of hydro-power engineering, the river fleet and tourism. There are also such issues as combating floods and water utilisation in communal services, industry and agriculture.

All these issues, to varying degrees, relate to the quality of drinking water - that is, they concern each of us. This is a sphere where the interests of various industry sectors meet. You remember the saying from the well-known old Russian movie that goes: "No water, no life". There are plenty of problems, and their solution requires a systemic approach.

Today, the world is facing an increasing deficit of fresh water. Water is already ranked alongside such key natural resources as oil, natural gas and metals. Thank nature and God, due to its location Russia owns the world's largest resources of fresh water. However, we still use this treasure wastefully and inefficiently, without even keeping records.

Nevertheless, certain steps have been taken in this respect. First of all, a legal regulatory system has been adjusted. As you know, the new Russian Water Code came into effect on January 1, 2007, with water resources preservation as its priority. The Code defines the division of powers and competences between federal, regional and local authorities, with a considerable part of these powers given to the regional bodies.

However, we still lack effective economic means to encourage sustainable water use and implementation of up-to-date water cleansing technologies. In this regard, I request you to duly consider updating water consumption rates for different industry sectors and the rates-related issues - of course, I mean tariffs for water as well.

We also ought to impose order on the use of ground waters. Wells that have been illegally drilled for industrial needs above all, either should be closed or a certain economically appropriate charge should be levied for using the resources.

Today, hydraulic fills are often used for constructing facilities. The time has come to impose legal regulations on this issue to avoid damaging water areas and biological resources, and to settle the question of compensation for any damage caused.

Let us go further. Russia's hydroelectric plants produce about 18 percent of the overall electric power yield. At first sight, this is not a bad outcome - nevertheless, we could work more and gain more results, and not only by constructing new hydroelectric stations but also by increasing the productivity of those operating.

In this regard, we ought to solve the long-term task of accumulating water reserves for the plants to work to their full capacity during the so-called dry periods, which usually occur in winter when the need for electricity is particularly demanding.

Here is another example. Just today I have talked to colleagues, who spoke about their sector. Russia has over 100,000 kilometers of inner waterways, more than the overall length of the country's railways. However, only two percent of freight is shipped by river transport - an exceptionally low amount, ‘a drop in the ocean.'

We should considerably expand the carrying capacities of the country's internal navigable waterways, bringing them in line with modern standards and eliminating so-called limiting paths - which means modernising the whole complex of water transport facilities.

Many of them, unfortunately, are currently in a very poor condition. As far as I remember, we have 723 facilities on record. Just imagine that 75 percent of them have been used for a periods ranging from 50 to 180 years. In the 1990s, the finances allocated for their maintenance and development were practically null. Of course, the whole sector is now in a serious condition.

Particular attention should be paid to the integrated deepwater system of western Russia. This unique network, which links the White, Baltic, Caspian and Black Seas and the Sea of Azov, has a huge shipping potential. This system can be incorporated into Europe's water transport corridors, which start at the Danube and go further to the north of Europe.

The additional programme for developing the country's internal water transport, which is part of the federal target programme Developing the Transport System up to 2010-2015, implies constructing a low-pressure waterworks facility in the city of Nizhny Novgorod. Valery Shantsev [governor of the Nizhny Novgorod Region] has repeatedly spoken about making the decision for the past several years. As the saying goes, "He who expects a lot from a promise must wait for three years" - now the decision has been made at last.

The programme implies reconstruction of the deepwater system's navigable parts, with a scope of activities concerning a vast number of water transport facilities. Those include the Moscow Canal, the White Sea-Baltic Canal, the Severodvinsk gateway canal, the Volga-Baltic waterway, the Volga-Don Shipping Canal, the Azov-Don basin, the basins of the Volga, Lena, Kama and Yenisei Rivers, and the river gateways in the city of Novosibirsk.

We cannot do without an extensive replenishment of the river fleet. No doubt, much depends here on business activities and the willingness of river navigation companies to invest in developing the fleet, which requires a certain motivation.

But the federal bodies could also put more effort into solving this issue. For instance, they could place orders for constructing vessels for the state needs and stimulate the purchase of vessels from state-owned shipyards, thus compensating the customers at least part of their expenses for credits and leasing payments. Also, they could partly finance development and engineering works on future shipbuilding projects.

For the first time, the finances for implementing such projects are provided in the 2008-2010 federal budget. If the experiment proves to be successful, we will develop it further. I also think the finances of the Russian Bank for Development should also be involved in shipbuilding projects. I ask you to consider this and we will discuss these opportunities at our next meeting.

We are really prepared to create the most favourable conditions for our navigating companies, and we will consider and solve this question during meetings with the companies' top management. We expect an adequate response from them - that is, increasing investments and freight shipping volumes.

However - and I would like to put a special emphasis on this - we cannot endlessly block the market from competition and thus damage customers' interests. And if our companies fail to satisfy the demands - in case the situation changes for the better - we will have to seriously consider opening our domestic waterways to vessels sailing under foreign flags. Of course, we will have to also take into consideration both our own economic interests and national security issues.

And last, there is another big and burning issue. Each year, we have to deal with the aftermath of massive floods, restoring residential houses and other buildings and facilities. Of course, we have to abandon this practice of ‘mending holes' for more systemic solutions. First of all, we need certain ways of monitoring and forecasting emergency situations - and on a daily, not on a monthly basis. The areas prone to flooding are known very well, and we have to provide these territories with a special plan for the building and economic activities.

Finally, it is time to develop an integrated strategy for developing the water utilities sector and reproduction and preservation of water resources up to the year 2020.

It is necessary to consider the consumer interests of different sectors, such as transport, power engineering, communal services and industry. We also have to consider environmental concerns and provide the country's residents with good-quality fresh water. As a whole, it is necessary to formulate the long-term goals we set for this sphere.

We have to establish a joint system for managing water resources, including a system for coordinating the issues of the water utilities sector.