19 november 2008

Vladimir Putin met with Regional Development Minister Viktor Basargin

Vladimir Putin

Meeting with Regional Development Minister Viktor Basargin

"It is important to make sure that construction companies comply with all required rules and laws in dealing with the funds of citizens who invested in the construction."

Transcript of the meeting's beginning: 

Vladimir Putin: Good afternoon. How is the situation?

Viktor Basargin: Good afternoon, Mr Putin. Everything is going well. I would like to report to you on the Ministry's work on some programmes. Mostly, these are construction programmes we have been working on.

Vladimir Putin: All right. Could you please tell me about moving people out of dilapidated housing?

Viktor Basargin: An additional 50 billion roubles have been earmarked for this purpose.

Vladimir Putin: I know that. How have you organised the work?

Viktor Basargin: The State Duma and the Government will adopt all the normative documents by the end of this month. Our Ministry has set up a commission together with the Fund of Assistance to Housing and Utilities Reform. The commission will determine the quotas for the purchase of nearly completed housing for every region.

Vladimir Putin: Nearly completed? What does that mean?

Viktor Basargin: We use this expression when a building is 70% ready.

Vladimir Putin: In this case, when is the building supposed to be fully completed?

Viktor Basargin: Tentatively, it should be completed within half a year. We are also trying to resolve the problem of equity holders who invested in the construction.

Vladimir Putin: We have talked about this already. It is important to make sure that construction companies comply with all required rules and laws in dealing with the funds of citizens who invested in the construction. There must be no financial or construction pyramids, whose organisers have no idea what to do with what they have produced, or with the buildings they cannot complete.

Viktor Basargin: We will work to enhance the responsibility of construction companies. Insurance and responsibility are important for this sector.

Vladimir Putin: In any case, you need to set up mechanisms and instruments to protect the interests of the people.

And what about major projects?

Viktor Basargin: As regards housing construction, in the last 10 months we have commissioned more than 40 million square metres of housing, which is five percent more than last year. Unfortunately, the demand has gone down. We hope to reach the figure of 61 million this year. This is about the same amount as last year.

We estimate carry-over construction at over 50 million square metres. This sector certainly needs promotion. To support regional and federal demand for such housing, we believe it is essential to focus funding on public welfare developments. We will call constituent entities to build such blocks of flats for social needs. Of course, this is an expensive programme. Nevertheless, the federal centre is duty bound to meet its budget obligations to particular social groups. Next year will be dedicated to new housing for World War II veterans.

Vladimir Putin: Yes, the problem should be settled by all means.

Viktor Basargin: Yes, we are making relevant plans. There are proposals to increase veterans' per capita floor space from 22 to 36 sq m of new housing, which demands extra federal allocations.

As for housing prices, the hope that they will plummet has been thwarted because buildings commissioned today were built in the previous pricing period, so it is an average 53,000 roubles per square metre, as before, and 57,000 for the secondary market.

Vladimir Putin: That's true - the money was spent before. But then, the past years have seen tremendous profits.

Viktor Basargin: Construction companies expected threshold profits at 25% or even 50%, so the issue demands thorough consideration.

Price formation and regulation of construction costs and technical standards are among the current priorities of the Regional Development Ministry. We intend to pass approximately 50 regulatory documents before the end of this year and early next year, because everything pertaining to expertise and evaluation, including investment programme projects, depends on an entirely new system of price formation.

Vladimir Putin: What about the Far Eastern project?

Viktor Basargin: As for APEC summit preparations, we will finish listing relevant projects before the end of the year. We presently have 36 comprehensive projects on the list. Construction of five has started by now to give impetus to the whole endeavour. The largest projects already under construction are two bridges - across the Golden Horn Bay and the Eastern Bosphorus Strait.

We've made some progress on the programme. There is only one problem - the underfunding of transport, energy and some other projects. We faced a tack to optimise expenses, to put the funds to the most effective use. The transport infrastructure lacked 25 billion and the energy more than 40 billion. Now, the total deficit is 25 billion.

Vladimir Putin: I see. That's good.

Viktor Basargin: The deficit has been reduced thanks to prudent technological decisions. For example, we have seen that there is no need to dig a tunnel for a blueprinted motorway, and so have saved 12 billion roubles.

We think we can save more, so we have made more calculations and another round of initial project preparations with 56 government contracts made for today. We have a chance to settle certain problems through price cuts. That might make approximately 17% of total contract costs and save around 12 billion.

Vladimir Putin: Good.

Viktor Basargin: We have set contractors the task of using Russian-manufactured equipment and materials as far as possible, if the market situation allows.

Vladimir Putin: That's good.