Transcript of the meeting's beginning:

Vladimir Putin: How are things going in the region?

Alexander Kozlov: I am studying the situation. I have already covered the majority of issues.

We have brought regional legislation up to date and slashed the number of officials to 900 from nearly 1,250 over a short period of time. I believe this number will suffice at the current stage to organise operation. We have formed a team and the Government. The majority of people working here have been dismissed.

A few words about the situation. Our real sector comprises 400 small and 211 medium-sized enterprises. It showed a decline in the first quarter. The industrial production index is only 62%. This has complicated our efforts to ensure good living conditions for people, because some enterprises are working at half shift, and some of them are laying off personnel.

At present, we have 8,500 jobless, or approximately 2% of the employed population. The Government has helped us by allocating some 220 million roubles, and we have also appropriated slightly more than 12 million roubles from the regional budget. The ratio is not fair, but this is as much as we can allocate from the budget.

The regional budget is only 20 billion roubles, and it has become smaller since some of the expense items were cut. It depends on transfers [allocated from the federal budget] for levelling off budgets. But even so, this money has helped us to create approximately 5,600 jobs, mostly social jobs, and by organising training [for the jobless]. A total of 1,500 people were trained in new professions in the first quarter.

The [negative] trend is now on the decline. Enterprises have become more energetic, even though they are working at half shift. I am talking about the enterprises that have suffered the most. Those that had worked in a more or less standard routine are still doing well. We have a joint venture with the Czech Republic producing tiles, and the Gamma textile factory is supplying its output to Moscow. This is all I wanted to say about the real sector.

Agriculture is developing quite well. We managed to preclude a decline there in the first quarter. Some companies even reported a growth, slightly more than 12% in actual prices. Processing companies are also working well. Overall, the situation in agriculture is not very tense.

However, the spring is late this year, and so we need to complete the sowing campaign quickly. We started sowing 10-12 days ago, and plan to complete the sowing of spring plants on April 26. We have an area of 1.9 million hectares of farmland, with grains sown on some 1.5 million. We sow about 350,000 hectares to spring crops and 80,000 hectares to perennial grasses and beetroot. Beetroot is very important for us because we have four sugar plants. We are trying to grow enough raw materials for them, and so beetroot is a very valuable crop for us.

The most important thing is to fulfil the target plan. We have as good as done so: We will complete the sowing campaign on April 26 and beetroot sowing on April 28, if nothing untoward happens.

We have some problems, even though the figure for connection to gas supply systems is one of the highest in the country, 90%.

Vladimir Putin: That was the task of Governor Stroyev.

Alexander Kozlov: Yes, he worked hard on that programme. However, we still have some outlying hamlets with a very small population where laying gas supply pipes would be very difficult and expensive. We now want to be included in Gazprom's LNG programme. We need to complete the gas supply; we have not yet built 20 metres of the gas supply line linking Bolokhov with Mtsensk.

But I will do my best. At the end of May, [Gazprom CEO] Alexei Miller and I intend to sign a new agreement, which has been drafted in detail. Our main problem is our gas supply debt. We signed an agreement to restructure it last week, which is good, because we cannot even discuss possible Gazprom investment if we owe it money. This is as it should be. We will repay all debts, especially debts for gas supplied for the heat system, under the restructuring programme.

Vladimir Putin: Can you report on your achievements in the social sphere?

Alexander Kozlov: On the whole, we have no wage arrears in the public sector. But the problem is that we spend some 80% of the budget on that sector, which has left very little for innovations and development. But still, we are doing our best to prevent wage arrears. All current spending in this quarter has been fully financed.

Here is the problem we will address now: It has been decided that the minimum monthly wage should be 2,300 roubles, although some regions raised it to 4,300 and 4,500 roubles. The average pay of teachers without special qualifications is now 7,500-7,800 roubles. This is not enough, and the teachers have been complaining. We are now drafting proposals to increase their salaries by cutting spending in other spheres.