Transcript of the beginning of the meeting:

Vladimir Putin: Mr Sobyanin, I have reviewed the city’s performance over the first half of the year. In all, the results are positive. Industrial production grew significantly. What is the growth, according to your estimates?

Sergei Sobyanin: Twelve percent.

Vladimir Putin: If I’m not mistaken, it’s 11.9%.

Sergei Sobyanin: Yes, 11.9%. If you recall, I reported to you late last year that it was a little over 4%. So the trend is positive.

Vladimir Putin: It is almost double the country’s average. Correspondingly, other indicators have also improved. The unemployment rate fell – it currently stands below 1%, at 0.8%. The city finances…

Sergei Sobyanin: In essence, the city’s finances depend on two factors – the growth of industry and of trade. Our industry grew by 11.9%, and trade, by 4.7%. Consequently, tax revenues increased at a corresponding rate, and, obviously, so did salaries. Salaries grew by about 12%, with the average pay approaching 40,000 roubles. Needless to say, our current objective is to increase salaries of government-paid workers, too. However, it isn’t that far below the target level in certain areas – in healthcare the average pay is even a bit higher, while in education it is still lower.

We are switching our schools to the new funding and pay system while simultaneously increasing the standard per-student funding levels. If you recall, at a meeting on education in Moscow we were saying that some schools are funded on the highest scale, while others receive half or two thirds of this amount according to standards. So we are simultaneously changing the school funding system and raising the lowest standard level. We expect to finish this process roughly by mid-2012. Correspondingly, salaries in all schools will be above the city’s average, while currently there are major discrepancies in salary levels. But we are not forcing this process. It is crucial to make sure that schools are ready and want to transition to the new system. At a meeting of the city government yesterday, we decided to add a further 130 schools in to the 125 involved in this experiment. So it currently involves 255 schools. We also have about 300 applications, but we are not accepting all of them. In some schools, the teaching staff is not ready; in some the directors have not completed their special training. We simply don’t want this process to go awry. However, we have identified a timeframe – most schools will transition this year, with the rest completing the process in 2012.

Vladimir Putin: Very good. As we all know, transport is one of the most critical issues that Moscow residents face. As far as I know, you intend to replace a third of vehicles used by the Mosgortrans municipal transport company, or about 2,500 buses and over 100 trolleybuses.

Sergei Sobyanin: Yes, our plans include more than 2,000 buses. The main fleet – large buses – includes a little over 4,000 vehicles, and we will replace almost a third of the total fleet. Also, the buses we are purchasing are new large low-floor buses powered by engines that meet at least the [Euro] IV emission standard, while the previous ones only met the I and II standards. New buses will be both more environmentally-friendly, and more comfortable and accessible for people with disabilities. So this will be a breakthrough. In addition, the metro system will receive new carriages. Line 5, the Circle Line, will start using only brand-new carriages. These will be state-of-the-art carriages with air conditioning systems – they will offer a new level of comfort.

Vladimir Putin: You are also continuing the development of the metro system as a whole.

Sergei Sobyanin: Yes, we are… Unfortunately, the initial stage proved very difficult because we had neither projects nor any design work. However, we are working on this issue together with the Ministry of Regional Development and other agencies in charge of project inspections. This has allowed us to launch basic construction projects in the metro system this year.

This work generates positive results. First of all, we are placing orders with design and construction organisations and are also purchasing machines from Russian machine-building facilities. The orders we placed allowed the Transmashholding plant to reach its full capacity. We could have ordered more carriages but they just cannot produce any more. We have ordered almost 2,000 buses from GAZ Group – brand-new buses – making them reach their production capacity as well. So, our work is generating positive results. In total, we have placed orders worth almost 34 billion roubles.

Vladimir Putin: I see that you also have major plans to rebuild the Moscow Ring Road. What do you plan to do?

Sergei Sobyanin: We intend to complete all pre-project work related to the Moscow Ring Road and its interchanges with all major motorways this year. This pre-project work will generate preliminary project documentation and an estimation of the scope and cost of construction. Based on this, we will draw up our plans for the next three or four years in terms of how to distribute our funds and focus our priorities so that we don’t end up with protracted construction projects. Regarding the Moscow Ring Road project, we don’t mean to build another ring road around Moscow. We will be improving certain intersections and building new bypass roads, bays and access roads to shopping centres and others, to make sure the Moscow Ring Road can function properly.

Vladimir Putin: I recall you telling me about good plans to automate the city transport regulation and introduce new management systems.

Sergei Sobyanin: Yes, we are introducing an information management system. We held a bid inquiry and set up a consortium of foreign and Russian entities to introduce such an information system. Its first stage will be completed this year.

Vladimir Putin: Unfortunately, according to the data I have, housing commissioning has slowed down a bit. We all know that Moscow has outgrown its boundaries. I hope that the long overdue decision to expand the city’s boundaries will also boost the growth of the construction sector.

Sergei Sobyanin: I hope so as well. We have taken the first steps in this direction. First, over the past six months we have reached the construction rate of last year. Second, together with the Moscow Region government, we will introduce a decision about the existing municipal boundaries within the next two days. Moreover, there are some additional areas. For example, the Moscow Region government will provide an additional 500 hectares for housing construction at Lyubertsy. This will allow boosting housing construction within a short timeframe. So, we can expect a positive trend here, too.

Vladimir Putin: Good.