27 august 2009

Prime Minister Vladimir Putin chaired a meeting of the Government

Vladimir Putin

At a Government meeting

“I would like you to focus on the priorities of the proposed Energy Strategy of Russia until 2030. To begin with, its implementation should fully meet the perspective demand of the national economy for energy resources and strengthen its standing on the global market. I don’t think anyone has any doubts about the eventual resurgence of the domestic and external demand.”

Vladimir Putin's opening remarks:

Good afternoon, colleagues.

The key issue on the agenda of the Government meeting today is the draft Energy Strategy of Russia until 2030.

I would like to remind you that we have a similar document that covered the period until 2020. We should use it as the basis while at the same time expanding the horizons of planning in the energy sector. Bearing in mind the extended investment cycle in the fuel and energy sector, we should give our companies an opportunity to develop truly long-term programmes.

I would like you to focus on the priorities of the proposed Energy Strategy of Russia until 2030. To begin with, its implementation should fully meet the perspective demand of the national economy for energy resources and strengthen its standing on the global market. I don't think anyone has any doubts about the eventual resurgence of the domestic and external demand.

Therefore, we should consistently lift infrastructure limitations, above all in electric power generation. Moreover, we should create considerable reserves. The dramatic situation at the Sayano-Shushenskaya Hydroelectric Power Plant has once again highlighted the critical importance of such reserves. The Draft Strategy stipulates establishing a reserve of some 17% of the designed capacity of Russia's power plants by 2030.

Second, we should ensure a priority reproduction of the fuel and energy base. In other words, annual increment of the prospected reserves of natural gas, oil, coal and uranium should exceed their annual production. At the same time, we plan to focus our attention on the development of fields in East Siberia and the Far East, as well as offshore fields.

Third, we must change the structure of the energy balance to increase the share of the so-called non-fuel power generation, non-fuel sources of energy such as nuclear power generation, hydropower generation, and other renewable resources. As for hydrocarbons, the key priority should be a deep conversion of the commodities, the production of high value-added output, and the development of modern gas chemistry and petrochemical sectors. The share of power generation should grow to 14% by 2030, and the depth of conversion to 90% from 72%.

And lastly, we should complete the liberalisation of domestic markets of energy resources by 2030. At least 20% of energy resources must be sold at exchanges.

The development of market rules in the sphere of fuel and energy should stimulate such key spheres as energy saving, reduction of energy intensity, and introduction of environmentally safe technology.

Overall, the implementation of the Strategy should balance the fuel and energy sector, modernise it and enhance its efficiency, and ensure a large safety margin.

Energy saving is closely connected to the next issue on today's agenda.

I am referring to the measures aimed at enhancing the effectiveness of local monopolies that provide utilities services. Simply put, we must consider the efficiency and quality standards of the systems that supply electricity, water and heat to residential housing and other facilities.

We all know about the problems in this sphere, namely high outlays, inadmissibly large losses of resources, and a high level of infrastructure depreciation. As a result of this, we continue to "heat the street," as they say, which costs tens of billions of roubles. Prices are growing from year to year, but the situation is, unfortunately, not improving.

It is extremely important to create effective stimuli to encourage the companies in the utilities sector to cut these expenditures and raise the quality of their services to the people.

In order to carry out a large-scale modernisation of the sector, we must raise its transparency, create the environment for attracting investment, and use public-private partnership mechanisms.

We must also widely use positive regional experience to lower outlays during the production and consumption of utilities resources, such as programmes to introduce water, heat and other meters.

On the whole, I consider it expedient to draft a special federal targeted programme of reforming and modernising the housing and utilities sector in the period until 2020.

You will also consider today amendments to the Budget Code and the Law on the Central Bank of Russia.

Their objective is to attract additional revenue to the federal budget in the next three years.

It is the federal budget and the federal treasury that bear the brunt of responsibility for implementing anti-crisis measures today. I am referring to assistance to employment, encouragement of demand for Russian-made goods, financial assistance to banks and the real economy sector. In addition, the federal budget has considerable social commitments. As you know, they will grow substantially next year.

All these expenditures must be backed with the necessary resource base. To strengthen it, we must make maximum use of all available reserves. In other words, we have agreed to cut non-crucial, non-priority allocations. On the other hand, we should ensure additional budget revenues.

With this objective in mind, we propose transferring the severance tax (mineral production tax) to the federal budget in full beginning next year. At present, 95% of the severance tax is transferred to the federal budget and 5% to the budgets of Russia's constituent entities. In the past, we permitted that minor deduction to the regional budgets, but the decision to transfer 100% of the severance tax to the federal budget will increase it by at least 46 billion roubles in 2010.

Of course, we should consider a measure to make up for this revenue shortfall of the regions. We know that the regions have their own social development and investment programmes. This is why transition to the new system of taxation should be smooth and painless.

We will stimulate subsidies to balance the budget. Their size will depend on the current share of severance tax revenues in the budget of each particular region. The decision will concern 32 regions, and we will work with each of them separately to balance their budgets.

Also, all revenue from the management of the assets of the Reserve Fund and the National Welfare Fund will be transferred to the federal budget from January 1, 2010.

In addition, the share of profit which the Bank of Russia will be obliged to transfer to the federal budget will be increased from 50% to 75% in the next three years.

Overall, all these decisions should increase the federal budget revenue by 144.4 billion roubles next year.

Let's get down to work.

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