Government meeting


Transcript of the beginning of the meeting:

Dmitry Medvedev: Colleagues, on Wednesday, President Vladimir Putin delivered his state of the nation address. This event is always important, all the more so as many of the head of state’s directives traditionally refer to the Government’s area of work, highlighting objectives which are already being accomplished and those which will continue to be worked on. Consequently, the Government, in conjunction with the Presidential Executive Office, will have to draft a list of directives based on implementing the state of the nation address.

As for today’s agenda, we continue to examine state programmes. Today, we will discuss the North Caucasus, focusing on a programme for the development of the North Caucasus Federal District up to 2025. Our main goal is to create new economic growth centres, industrial and tourist and leisure zones in the region. Moreover, we must also coordinate public-private investment strategies so as to develop the transport, industrial and hotel infrastructure. We must use the region’s rich potential effectively. Mountains, fresh air, rivers, and, of course, local mineral resources and proximity to major markets give the Caucasus a competitive advantage.

A considerable part of the programme deals with ways of resolving social issues, such as the reduction in unemployment levels, the modernisation and construction of hospitals, schools and kindergartens. Naturally, this also includes better and more affordable education and healthcare services in the North Caucasus Federal District. As you know, we regularly hold government commissions meetings on this issue. The latest one was in October.

There are plans to spend almost 235 billion roubles’ worth of federal funding on this three-stage state programme in 2013-2020. Funding volumes and sources will have to be finalised during the last stage.

Naturally, we will make assessments looking at GDP growth statistics and investment volumes, including foreign investment, the increase in the number of high-yield jobs, small and medium-sized businesses, the effectiveness of restructured defence-industry enterprises and, of course, standards of living standards and the quality of life of regional residents.

I would like to remind you all that, in September 2012, all special economic tourist and leisure zones of the North Caucasus, Adygea and the Krasnodar Territory were merged into a joint touristic area. We are establishing a major resort, which will include alpine skiing centres and seaside resorts. This resort should channel extra revenue into republican and municipal budgets. It should also create over 15,000 jobs, or, perhaps more, because the initial targets were originally set higher.

As usual, regional leaders whose territories are directly covered by the programme are present at today’s meeting. Taimuraz Mamsurov, Head of the Republic of North Ossetia – Alania, and  Magomedsalam Magomedov, President of the Republic of Dagestan are here. Naturally, I will also give them an opportunity to voice their opinions on this issue.

We will also examine the heating-season issue. On the whole, it appears that we have prepared for the heating season in a satisfactory manner. We have repaired 75,000 boiler rooms, or almost 100% of the planned amount, about 162,000 kilometres of heat-supply networks and almost 460,000 km of water-supply networks, or also almost 100%. Electric power stations have stockpiled more coal and boiler oil than planned. We have repaired over 94,000 km of power-transmission lines, which were in need of repairs, as well as about 430 km of heating mains.

But of course, there are problems because this infrastructure is in itself problematic. Moreover, Russia is a very large and complicated country. Boiler rooms in numerous Karelian towns were not activated until late October. In November, a heat-supply pipeline was damaged in Voronezh. As a result many people, about 50,000, were left without heating and hot water. And, what’s particularly unpleasant, seven social facilities, including kindergartens, schools and hospitals, also lacked hot water and heating. Also in November, boiler rooms in Rostov-on-Don had to be stopped due to a pressure drop in a local heat-supply network. On the whole, these examples show that difficulties, problems and miscalculations still exist.

People have complained to the Government about the poor quality of heat-supply networks in Tatarstan, the Altai Territory, the Khabarovsk Territory, and the Ryazan, Rostov and Sverdlovsk regions. Military towns face a multitude of problems. Defence Ministry facilities still owe money to municipal utilities agencies.

Winter has just begun, and the main part of the cold season still lies ahead. The weather forecasts are hardly comforting, and additional cold weather is expected. It is believed that the current winter will be among the severest winters of the past few decades. We must therefore prepare for this. I would also like to draw your attention to the fact that we must react promptly to heat-supply shut-offs. The problems must be eliminated, and we must try and prevent them from recurring. The New Year's Eve celebrations will start soon. Consequently, local governments and the energy sector must monitor the situation around the clock.

I would also like to touch upon another issue at the start of our meeting. This issue is linked with the allocation of funding that is due to be received by Russian regions. This funding will be used to co-finance projects of the state programme for the development of agriculture. In this context, I would like to note that the programme for the development of the countryside is certainly our priority, and that the creation of a modern social infrastructure is a highly important goal. It is suggested that an additional 2.3 billion roubles be spent on the relevant projects, including 1.6 billion roubles’ worth of surplus federal budget revenues, and an extra 700 million roubles, which were redistributed in line with the state programme. The funds should be spent on improving housing conditions – first and foremost for young families and young specialists, and also for providing gas and water and supporting education and culture.

Let’s start discussing the agenda. The first item concerns the North Caucasus Federal District's development. We will listen to the Minister of Regional Development and our other colleagues who are present today. Please go ahead.

Igor Slyunyayev (Minister of Regional Development): Mr Medvedev, ladies and gentlemen. The Ministry of Regional Development has prepared a draft federal programme for the North Caucasus Federal District's development up to 2025. This draft has been coordinated with 17 federal executive bodies and all of the areas in this district. It has also been approved by the Public Council at our Ministry. In the past few years, we have adopted comprehensive decisions aimed at developing the North Caucasus Federal District. 

We have established special development institutes – two corporations – and special economic zones. We have also adopted territorial and federal targeted programmes.  

Over 100 major projects worth more than 115 billion roubles are conducted under natural monopoly investment programmes alone. All of these measures have produced a positive result. Since 2003, the region’s industrial production has been steadily rising. The GRP growth rates are higher than the national average. In 2003, the district’s GRP was 220 billion roubles. According to preliminary estimates, the GRP exceeded 1 trillion roubles in 2011. That have been said, the socio-economic situation in the Caucasus still leaves much to be desired.

What are the major problems? First, the district has a very high unemployment rate. Last year, it was 15%. This October, it was 13.7%, which is more than double the national average. Second, the district does not have sufficient social facilities. On average, only 36% of children receive pre-school education due to the kindergarten shortage. Over 1,700 schools – 51% of the total number – work in two or three shifts. Over 570,000 children in the Caucasus study at these facilities. Some 2,400 schools – or 70% of the total figure – do not have basic amenities, such as water and sewage systems, central heating, or gyms. Most of them require major repairs.

The healthcare system is not doing much better. The hospital and outpatient clinic shortage is increasing with every year. Only 54% of the population have access to inpatient clinics and there is shortage of qualified medical personnel. The district has a high infant mortality rate, which is more than 1.5 times higher than the national average. In most key economic indicators like the GRP, per capita investment, labour productivity and the level of the real economy, the North Caucasus District lags behind all of the country's other federal districts. Its budget is less than half the national average and it only covers 40% of its expenses through its own revenues. 

The potential of the North Caucasus remains high, but it is not used in full. The district has a number of clear advantages. It is conveniently located as regards major markets and has natural resources and available production capacities. Its transport network is fairly well developed and integrated into the North-South international transport corridor. The district has favourable conditions for the development of the agro-industrial complex, tourism, the electric energy industry, and the mining and processing industries. It has a specially protected spa as well – Caucasus Mineral Waters. The district has over 130 sanatoriums and 80 mineral water sources. The number of people who spend their vacation there annually is expected to exceed 1 million this year. 

Most importantly, the district has the nation’s highest natural population growth rates. One-quarter of its residents are below the employable age. This is the highest figure in the country. These are the people with whom we will build a new economy and a new life in the Caucasus.

The primary goal of the federal programme for the district is to create conditions for rapid economic growth and to create new jobs. Three of the 11 sub-programmes are aimed at reaching this goal – notably, at making the district more investment-attractive, and developing the Caucasian Mineral Waters spa and the tourist industry. We expect just two of these directions to create over 113,000 jobs. Different instruments of state support will be used to increase the district’s investment appeal – federal budget co-financing, state guarantees, interest payment subsidies, property contributions, and regional tax benefits. Linking natural monopoly investment programmes with major private company projects should become an important function of the federal programme. This will streamline expenses for the construction of the required infrastructural facilities. We believe that the implementation of all of the measures under this programme will make it possible to improve the district’s economy considerably. Over 400,000 jobs will have been created by 2025. Annual investments will increase to 2 trillion roubles and the GRP will reach 6 trillion roubles.

The second key goal under the federal programme is to increase the living standards in the district. The federal targeted programme should become the primary instrument for modernising and building social facilities. This will make it possible to construct 338 facilities for pre-school and general education, 168 healthcare facilities, 91 cultural projects, 385 sports grounds, and 43 other social facilities. We are planning to significantly improve the level of social infrastructure development and the quality of services. By 2025, the average per capita income will increase threefold, while unemployment is expected to decline from 15% in 2011 to 10.7% in 2025.  

The principal feature of the state programme is that it includes seven territorial development sub-programmes for the regions that are part of the federal district. They will, first of all, help ensure an analytical and facility-based accounting of resources and capital investment in the development of the regions. Second, the sub-programmes will help assess the adequacy of Government support measures and ensure effective planning of socio-economic development in the North Caucasus. Our task is to ensure targeted and transparent spending of budget funds, based on strategic planning and a purpose-based approach.

A total of 2.5 trillion roubles will be spent to fund the state programme throughout its implementation, while 90% of these funds will be provided from extra-budgetary sources. The state programme reflects the long-term objectives as defined by the innovative development strategy of the Russian Federation for the period through 2020.

This first of all includes state support for priority investment projects, and second, the localisation of production and the creation of industrial, agro-industrial, tourism, and technology parks in the regions, as well as implementation of anchor projects in every region of the country.

Third, there is the implementation and maintenance of a comprehensive and innovative system for investment monitoring in the federal district. The proposed system will help improve coordination among the investment process participants, and will significantly reduce administrative barriers.

Mr Medvedev, colleagues, I ask you to support the draft state programme The Development of the North Caucasus Federal District until 2025. I am confident that the state programme will provide us with a comprehensive mechanism for managing the process of socio-economic development in the federal district, and will help us move from the policy of stabilisation to the policy of development in the North Caucasus Federal District, thus ensuring a significant improvement of quality of life in the region. Thank you for your attention.

Dmitry Medvedev: Thank you. I would still like to hear a more accurate figure. How many jobs are you planning to create? I had one figure, and you then mentioned a different one, and then a third one…

Igor Slyunyayev: We expect that the measures and facilities included in the programme will help create 460,000 new jobs.

Dmitry Medvedev: That is, nearly 500,000?

Igor Slyunyayev: Yes, nearly 500,000.

Dmitry Medvedev: All right. Have a seat, please.

Colleagues, does anybody have any questions or comments about the North Caucasus development programme? Let’s start with the Minister of  Education, followed by the Minister of Finance. Go ahead please. 

Dmitry Livanov (Minister of  Education): Indeed, as Mr Slyunyayev mentioned, the problems in the education system in the North Caucasus Federal District are very serious. And in view of the demographic situation, the trends that we see today and the forecast for the coming years based on budget projections for 2013-2015, these problems will not be resolved in the next three years and will be aggravated even further.

I understand the logic behind the programme, and we have approved it with an understanding that the federal budget has already been adopted. But I would also like to propose that we consider and include in the programme another even more ambitious scheme, involving additional funding for the social sphere, primarily infrastructure, including the education system, for 2013-2015 and maybe 2014-2015, and to consider the possibility of allocating additional funding in the budgets of the coming years. Thank you.

Dmitry Medvedev: Thank you. Mr Siluanov, please.

Anton Siluanov (Minister of Finance): Thank you Mr Medvedev. I have to disagree with my colleague’s suggestion to include additional schemes in the programme, as the three-year budget has indeed been already approved. But at the same time, we have been significantly increasing funding from the federal budget beyond the framework of this three-year budget. Therefore, as we implement the 2013-2015 budget, we will have an opportunity to provide additional resources for education, healthcare, culture and so on. We will adjust the programme, as we have done previously on various occasions. It is better to adjust the programme in the course of budget implementation than to include from the outset various commitments that are often impossible to realise.

I have different kinds of questions and concerns. Mr Medvedev, we have approved the programme, but there are certain points that I want to emphasise. First, the regions could take a more active part in funding the programme. Indeed, the regions of the North Caucasus are not the richest regions in Russia. Here are some figures. Total funding of the state programme in 2013 (excluding additional needs) accounts for 178 billion roubles, including 11.3 billion roubles in federal funds, and 2.6 billion from regional budgets, meaning that the regional share accounts for some 1.4% of the total funding, and is 22.8% of the size of the federal share. And what happens after 2015? The regional share falls while the federal share significantly increases. Thus in 2017, the regional share is under 1%, around 0.5%, and falls from 22.8% of the size of the federal share to 3.6%.

And what will the situation be like beyond the year 2015? The share of the regions will shrink despite the fact that there will be a dramatic increase in the federal share and the share of the porogramme’s total volume. If we take 2017, for example, the regions' share will go below 1% (about 0.8%), whereas the regional/federal funding ratio will drop to 3%, down from 18%. So I reasoned that regional allocations for the programme  shouldn't be cut but rather increased. Especially given that new jobs will be created and, consequently, there will be some growth in budget revenues.  But what we're doing, actually, is slashing the funding in money terms. This is something to be thought over, I believe. This is one issue.

Another thing is that the programme provides, staring in 2016, for the resources from the Investment Fund – about 6 billion roubles per year between 2016 and 2020. In the Government, Dmitry Kozak and I, we've decided to stop using the Investment Fund as an institution in the years to come. But here, from 2016 onward, it reappears again. I think we'll need some additional discussions as to whether there's a real need for restoring those same mechanisms. We could possibly use the funds allowed for in the programme within the effective new financing instruments, investments, not as part of the Investment Fund.  Thank you for your attention.

Dmitry Medvedev: Thank you. Please go ahead.

Sergei Donskoy (Minister of Natural Resources and Environment): Yes, Mr Medvedev. We've coordinated the programme, but not without reservations. We've got two reservations on the subprogramme for advancing the tourist cluster. First of all, since we expect growth in the tourist inflow, there'll be a resulting increase in solid household waste.  We've made a proposal to create appropriate infrastructure to treat such waste, given that the proposed subprogramme doesn't provide for any related measures. Secondly, the area where mountain resorts are to be developed is a high-risk zone for avalanches and mudflows. This is a potential public hazard, and so the subprogramme should contain an analysis of local hydrometeorological conditions along with projected measures to minimise the risk. We've suggested engaging the Federal Service for Hydrometeorology and Environmental Monitoring (Rodhydromet), given that it has the necessary expertise, drawing on related measures taken in Sochi. This all could be reflected in the program. Well, that's what I had to say, basically. 

Dmitry Medvedev: Thank you. Ms Golodets, please go ahead.

Olga Golodets (Deputy Prime Minister): We've supported the programme in principle, Mr Medvedev. No doubt it's useful and relevant. But I'm going to take up the issue raised by fellow ministers – that of an acute shortage of school places. Nowhere in Russia is the situation as bad as in Ingushetia and Dagestan. That's where all the schools with three daily shifts are concentrated. This problem has been neglected for years. We may or may not analyse the root causes, we may speak of where the problem stems from, but getting it resolved before 2016 is an absolute imperative because a school takes at least one year to build, even if it’s being built according to a standard design approved by authorities. We should now agree on some sources and mechanisms of finance so that we could launch those within 2014. The situation is a serious one. Let me just remind you that the birth rate and the demographic situation in those republics are also incomparable to any other province. And in preschool education, the situation is even worse: 36% is a very optimistic figure, which takes into account statistics on children aged from three to seven only. Elsewhere in Russia, kids have access to preschool education starting from the age of one and a half. But in the republics at issue, schooling is out of reach to kids that young.  Working in partnership with colleagues, we should try to bring those republics up to the national level. It's public education that we must above all focus our energies on.

Dmitry Medvedev: Thank you. Mr Khloponin, it's your turn now.

Alexander Khloponin (Deputy Prime Minister, Plenipotentiary Envoy of the Russian President to the North Caucasus Federal District): Mr Medvedev, I've got several comments to make. I go along with almost all of my colleagues who had their say on the programme while it was being prepared.

I agree with Mr Siluanov’s view on funding the proportion of regions. Since we have an instruction to develop a federal targeted programme in 2013, we should take this aspect into account and increase funding for regions. We should remember that when new facilities, especially social facilities, are opened, the load on regional budgets increases because these are additional regional expenses. We need to find a way to take this into account. 

As for the funds which are absent in 2013-2016, the arguments by Ms Golodets and the Minister of Education are absolutely justified; but we said that the federal targeted programme Southern Russia was considerably sequestrated in the Chechen Republic and in Ingushetia in previous years due to the crisis. We have a list of social infrastructure facilities with design estimates, everything has been prepared. We have raised an issue that should a future budget have additional income, we will submit a request to the Government to channel a part of these funds, the additional income, into financing these social infrastructure facilities. This refers to developed projects that are ready to be financed. If  this additional income appears. 

Now about the investment fund. I think we will regulate this issue in terms of the federal targeted programme; perhaps this mechanism will not be necessary as an instrument.

As for household waste, we currently have the Arkhyz project, which is at an advanced stage of implementation. We have taken into account all the specifics that you mentioned, including about household waste. We are actively involving the Federal Service for Hydrometeorology and Environmental Monitoring. We understand the specifics of the North Caucasus. However, we need to take this position into account, and I agree with it in terms of the development of the federal targeted programme next year. Thank you.

Dmitry Medvedev: Good. Mr Belousov, go ahead please.

Andrei Bolousov: We supported the programme and I think it should be adopted in its present form because it is a unique document – for the first time it includes a comprehensive and balanced estimate, though we also have some concerns. I’ll cite one figure: according to our programme, GRP will double every five years until 2025 (in the last five years, it has grown a bit slower) and investment is doubling.  Unemployment is not falling: 15% in the first five years, then it falls to 11% and to 10%-11% until 2025 – you can see it on the slides. In any case the indicators will be different. Nevertheless I believe we should adopt this programme, because its mobilising role is very high; it is very intensive; therefore we should do our best to reach those targets by 2015. 

I have another question concerning legal and organisational aspects. I want to understand the status of this programme, now that this is  for the second time that we have such a situation. The protocol decision says that we approve it; the materials introduced propose to adopt it. But it is not clear what should be adopted because the draft instruction has no annex in the form of the  programme, it just says: “To be adopted.” If we propose it for adoption, then the draft protocol decision should read: “Adopt the draft directive on this issue,” as we usually write in such cases, and the draft directive should say: “Adopt the annexed state programme.” Then it acquires the features of a normative legal act, and we thus get expenditure commitments and so on – this is an understandable design. Or we approve it, but in this case it is not necessary to annex the draft directive.  

Dmitry Medvedev: What is the difference between just approving and adopting a programme?

Andrei Bolousov: If it is approved, it does not become a normative act and, correspondingly, does not generate expenditure commitments. 

Dmitry Medvedev: What is the value of this programme?

Andrei Bolousov: This is a softer version, rather an orienting version… I propose it should be adopted by a directive of the Government.

Dmitry Medvedev: I see. Do you support it?

Remark: Yes, of course, to adopt it.

Andrei Bolousov: To introduce amendments in the directive of the Government. Add the word “annexed.”

Dmitry Medvedev: It is easy to change this, please do so. What does the minister say?

Igor Slyunyayev: Mr Medvedev! Of course, the programme should be adopted by a Government decision, because there are no programmes without funding, and this programme includes events, facilities, and, most importantly, includes commitments to develop a federal targeted programme under which we intend to regulate the issues of the investment fund which still exists and future models we do not yet understand – an investment fund or a similar instrument.

The problem of solid waste, the problem of mudflow… By the way, together with Mr Shoigu, I took part in dealing with the aftermath of the high-risk events in the North Caucasus in 2002. The forecasts are difficult indeed, although some measures and monitoring should be included in the federal targeted programme. 

As for the growth of the Gross Regional Product, there is currently an annual growth of 130-150 billion roubles. Based on these data, we expect GRP to come to 6 trillion roubles by 2025, at this rate of growth. The programme should be adopted.

Dmitry Medvedev: Good, thank you. Mr Surkov, over to you.

Vladislav Surkov (Deputy Prime Minister – Chief of Staff of the Government Executive Office): We exchanged opinions with Mr Belousov, we also have no doubts about it. I only want to make this point – all other state programmes should have the same status. We had considerable financial gaps on some of the programmes; but a normative act of the Government can be amended by the Government itself at a later date…

Dmitry Medvedev: Of course.

Vladislav Surkov: I just want to ask you to remember this nuance. 

Dmitry Medvedev: Essentially it is not a normative act, it is a mistaken view, since it is an executive, regulatory act of the Government. Generally a normative act can be applied to an unlimited number of cases and has a universally binding  character. But this is a targeted directive. But this does not change the fact that it can be amended. We will do this depending on the budget.

Good, agreed. Let us do this in respect of all programmes so that we have legal clarity concerning all programmes.


Dmitry Medvedev: In terms of the 2012-2013 heating season, we have reports from two ministers – Mr Novak and Mr Slyunyaev. Please go ahead.

Alexander Novak (Minister of Energy): Thank you. Mr Medvedev, colleagues... I will start by summarising the readiness of electric utilities for the heating season. According to the plan approved in May, we have been continuously monitoring repairs and fuel stock levels at power stations. I held winter preparation staff meetings in all of the federal districts from August to September, and kept in touch with the relevant authorities via conference calls.

We have also worked on improving the legal and regulatory framework. In July, we adopted new guidelines for commissions auditing energy company preparedness for the heating season. We have also drafted a bill to toughen energy company liability should a company fail to obtain the proper readiness certificates.

On 15 November, which is the deadline that you, Mr Medvedev, have set, the Ministry of Energy commission finished the scheduled power company inspection for their readiness for a heating season. We have inspected power companies with an installed capacity of over 400 megawatts and managing network companies with an installed capacity of over 150 mW/amps.

All 72 companies have been properly certified for the heating season. However, as you can see in Slide 2, five electric power facilities obtained readiness certificates after the commission’s special decision. This means that these energy companies failed to comply with the additional requirements for the heating season, which do not, however, affect their operation in winter peak load periods.

We have set deadlines for remedying these violations. If they are not met, we will revoke the readiness certificates. Four electricity facilities have been issued readiness certificates with reservation. They can be seen in Slide 2. Alongside the Ministry of Energy commission, executive bodies’ commissions have worked in these regions. We inspected 530 electric power utilities, which, according to the new regulations, are now to be inspected by the regional commissions.

Thirty electricity companies from 12 regions have failed to receive readiness certificates and will have to remedy the violations within the timeframe set by these commissions. I will name just a few – four electrical utilities in Mordovia, four in Bashkortostan, six in the Amur Region, and three in the Ivanovo Region. The rest can be seen in Slide 3. We have compiled a utilities compliance check-list that will be used by the regional executive authorities for verification purposes.

Based on our previous inspection experience and the poor weather forecasts for this winter, the Ministry of Energy has tightened the winterisation requirements. We have carefully analysed performance under energy company investment and maintenance programmes, inspected the widening of forest corridors for overhead lines, and examined the availability of fuel supplies and the readiness for relief operations. Emergency drills for power generation and grid companies are mandatory for obtaining readiness certificates.

Our analysis helped us to identify six regions that have a high risk of performance failure for the upcoming heating season. This year, the list includes the south-western grid district in Kuban. The Nefteyugansk electricity grid of the Tyumen Energy System was removed from the list. The Ministry issued an order that includes measures to mitigate the risk of power supply interruptions in particularly vulnerable regions.

Sixty-three of the 84 measures scheduled for completion by December have been conducted, and risk mitigation activities are being monitored by the Ministry.

Widening forest corridors for overhead lines is another important aspect of the winterisation programme. This includes providing grid companies with specialised equipment and machinery and standby power supply sources.

Grid companies performed work over an area of 14,000 hectares to widen and clear the overhead power line forest corridors and to conduct fire-break ploughing along the width required for ground fire protection. Grid operators have 851 mobile units with 6,000 employees and 2,800 special machinery units for using in relief operations.

We plan to introduce new power generation equipment with a capacity of 6 GW, just like last year. We have commissioned 3.1 GW of capacity in the past 10 months and invested 475.8 billion roubles. We have drafted an investment action plan for each facility. Owners who break the deadlines or fail to perform under the agreements will be fined.

Maintaining the main power equipment is a separate area of our winterisation programme. The repair work is proceeding on schedule. Certain instances of failing to comply with the schedule are due to the increased workload, and they do not affect the reliability of the heating equipment.

The Ministry monitors the actual fuel stocks at electric power providers on a daily basis.

Dmitry Medvedev: Mr Novak, do you know exactly which regions have problems? Why would we listen to endless presentations about things being fine and so on…

Alexander Novak: I was about to mention this...

Dmitry Medvedev: Please give us specific names and places. That will be much more useful. We are talking live and the regional heads will know about it anyway.

Alexander Novak: Coal and heavy fuel reserves are one of the performance indicators.

Dmitry Medvedev: All right.

Alexander Novak: Current stocks exceed requirements. We have a problem with a thermal power plant at the Baikal Pulp and Paper Mill. They are running low on fuel stock, with 2,900 tonnes (only 33%) against the required 9,000 tonnes, which is due to their failure to pay coal suppliers on time. Sixty-five open box cars of coal have been delivered to the plant, which will bring the stock up to 3,900 tonnes. More coal will be brought in on 14 December. We are on top of the situation.

The heating season is on in all Russian regions... Electricity consumption is by 1.3% higher than it was last year and the load of power plants is 152,552 MW – up 4% from last year. As you may be aware, the all-time high was 157,000 MW in 2012 (a 5,000 MW difference from a historic maximum only).

The power supply systems in a number of regions have already been tested by the weather. In late November and early December, cyclones swept through the Pskov, Leningrad, Novgorod and Sakhalin regions and the Primorsky Territory, causing power outages. Power was restored fairly quickly – within a few hours to a few days. With its worn-out grids, Sochi is a problem area. The Federal Grid Company decided to invest another 1.5 billion roubles plus additionally 7 billion roubles from the federal budget to improve electricity supplies to Sochi. We are on top of this issue as well.

Generally speaking, I believe that we have made adequate preparations for the heating season. The Ministry of Energy, the Ministry of Regional Development, Rostekhnadzor and regional executive authorities should keep the situation under their control to ensure that the heating season proceeds without any problematic issues. The Ministry of Transport, Russian Railways and other relevant organisations should ensure a steady fuel supply to meet energy needs. Thank you.

Dmitry Medvedev: Please keep an eye on the situation. Have you restored the duty system? Do you have employees on duty at the Ministry?

Alexander Novak: Yes, we have them on duty 24/7.

Dmitry Medvedev: Okay.

Mr Slyunyaev, please go ahead.  

Igor Slyunyaev: Mr Medvedev and colleagues, we completed the winterisation of housing and utilities on 1 November. Eighty-three regions started the heating season on 21 November. We are better prepared for the heating season across the board than last year. Buildings, boilers, heating systems and water supply systems... Everything is ready. Russian regions allocated 209 billion roubles to prepare for this heating season.

There is such a thing as emergency supplies... We have allocated 6.3 billion roubles for this purpose, and I would like to call the attention of the heads of the Chechen Republic, Republic of Ingushetia, Amur, Arkhangelsk, Irkutsk, Kirov, Tula and Tyumen regions to this issue to make sure that they have them in place.

All of the regions that worked with imported fuel, fuel oil, and coal have the required supplies and minimum reserves – 45 days for coal and 30 days for liquid fuel. However, two regions – the Republic of Karelia and the Jewish Autonomous Region – have failed to stock up properly on fuel. Nothing disastrous, but I would still like the heads of these regions to keep this situation under control.

For the first time this year, most regions have complied with our recommendations to make sure that 100% of municipal housing, boilers, heating units and heating systems are ready for the heating season. We made sure that these regions have access to standby power equipment and redundant power sources. As a result, 80% of the heat, electricity and water supply units have redundant power supply sources.

The figure for the outlying regions is approaching 100%. This is the goal towards which we had been working for the past three years.

We are concerned about the big debts of the utility services. They come to 91.8 billion roubles as of 1 December, which is 4.5% higher than in the same period last year. Utility debts have risen by over 1 billion in the Volgograd, Sverdlovsk and Ulyanovsk Regions and the Perm Territory, compared to last year. At the same time, these debts have been almost halved in the Murmansk Region and reduced by one third in the Vladimir Region. These two regions have been working to replace imported fuel with locally produced fuel, mainly coal and peat. There has been progress in the Kamchatka Territory, which previously was a cause of concern for the federal centre but has now repaid all its debts. Moreover, not a single major violation in the heat supply system has been reported or registered there over the past year.

I’d like to draw your attention to cases of deliberate bankruptcy of utility companies. For example, debts accumulate over three years, after which point the company declares itself bankrupt and therefore does not repay its debts. As a result, the total amount of debt in the system is growing.

A few words about emergencies: since the beginning of the heating season we have registered two emergencies, one in the Republic of Dagestan (the mudslide in the city of Derbent) and the explosion in the heat supply network in the Korolyov District of the Moscow Region, which left 20,000 people without heating. The consequences of the latter emergency have been cleared up. We are conducting daily monitoring of emergencies. The deadline for follow-up remedial action is 36 hours, but regional leaders usually receive an alert notification from the Ministry of Regional Development 20 hours after the relief efforts begin.

Eleven accidents have happened in Kaliningrad, Oryol, Novokuibyshevsk and Voronezh this heating season, mostly due to adverse weather conditions. There were power supply problems in the Pskov and Sakhalin Regions and in the Republic of Buryatia. There were delays in heating supply at the beginning of winter in some municipalities in the Republic of Karelia, the Altai Territory and the Kurgan, Ryazan and Rostov Regions. The main reasons behind this are the dilapidated surface engineering systems and debts of the utility companies.

There are big problems in St Petersburg, where the authorities are doing their best to ensure the safe operation of the extremely dilapidated surface infrastructure. We are working together with the St Petersburg government to draft a programme for improving these systems. The most damaging mains bursts happened in the Kirovsky and Frunzensky Districts of St Petersburg.

But on the whole, the utility companies have done reasonably well at the beginning of the heating season. We hope that the heating season will be comfortable thanks to the coordinated actions of the supply systems, the heads of the regions and local governments. That is all I wanted to say. Thank you.

Dmitry Medvedev: All right. I don’t know how well it will go, because you need to monitor everything, so I can tell you what I have told the Minister of Energy: your specialists, the Ministry’s specialists, must monitor the situation in all regions.

You mentioned Derbent. I know that the situation is complicated there. Please, meet me after this Government meeting together with Mr Magomedov (Magomedsalam Magomedov, Head of the Republic of Dagestan) and the Minister of Emergencies.

What’s going on in the Far East?

Viktor Ishayev (Minister for the Development of the Far East and Presidential Plenipotentiary Envoy to the Far Eastern Federal District): The Far Eastern regions have prepared [for the winter season] quite well. However, I’d like to say that the approved norm of 4%-5% does not fully cover the depreciation of the supply network system. Of course, there are other technologies, when the pressure on the system increases for testing and using the system during the winter season, but in general, this practice should be reviewed. Otherwise, the same accidents as those that have happened in St Petersburg will also happen more frequently in other sectors. In the event of emergencies, the relevant services are responding quickly and repairing everything in a matter of four to six hours. We are working closely together with our colleagues and so there we have virtually nothing to complain about.

Dmitry Medvedev: Thank you, Mr Ishayev. Does anyone else want to take the floor?

Arkady Dvorkovich: Concerning the Baikalsk pulp and paper mill.

Dmitry Medvedev: Please proceed.

Arkady Dvorkovich: The situation was really complicated there. A week ago, we met with all the parties concerned, including the management of the Baikalsk pulp and paper mill, the creditors, Vnesheconombank and the leadership of the Irkutsk Region. The necessary decisions were made and supplies resumed. We are gradually approaching the approved volume of fuel reserves. This week, VEB will complete talks with creditors and issue a credit line worth up to 500 million roubles. Together with releasing blocked accounts, which we have already done, this will ensure the purchase of the necessary volume of fuel. The Irkutsk Region authorities have also pledged to ensure the timely payment of heating and electricity bills by customers in the city of Baikalsk. I believe that this will suffice, but I will continue to monitor the situation to ensure that all of the planned measures are implemented.

Dmitry Medvedev: All right, please do that. Thank you.


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