Transcript of the beginning of the meeting: 

Vladimir Putin: Mr Kozak, first of all I would like to talk about a problem we also raised when discussing indexation of retirement benefits from April 1, 2010. I emphasised then that a rise in pensions was absolutely necessary, also to compensate for the growing housing and utilities bills, which is often unjustified. Legally, this issue is in the competence of regional governments and city halls; yet, the federal government should not ignore it, and should share the responsibility for the situation.

Unfortunately, the Federal Tariffs Service was not even authorised to conduct the relevant monitoring. Therefore, I asked the lawmakers to make appropriate amendments to the Statute on the Federal Tariffs Service. What is the current state of affairs?

Dmitry Kozak: Your directive has been fulfilled. A government resolution has been issued granting the Federal Tariffs Service the authority to monitor the situation, which it is already doing in the regions.

The monitoring immediately revealed the following problem. Some of the municipalities were indeed violating the regional governments' decisions and raised utilities fees above the ceiling established by those decisions. Therefore, the actual housing and utilities bills surged much higher than the allowed ceiling.

President Dmitry Medvedev expressed concern over the results we reported. On March 15, he chaired an intercom conference with all regional governors, who also joined the monitoring process along with the Federal Tariffs Service, which was acting upon your directive.

He ordered that exorbitant fees set by local governments abusing their authority should be cancelled right away. In all cases where actual bills were at least 25% higher than last year, the fees were considered too high and had to be revised, whether there were legal grounds for the rise or not. A comprehensive audit was recommended.

Russian regions joined in the effort. The preliminary results available at this point (a week from your directive) suggest that over 25% spikes in utilities bills were exposed in at least 10% of Russian regions (the monitoring covers 22 regions so far); that is, some local governments violated the law either deliberately or by political ignorance.

Vladimir Putin: Right, so they have to be brought to a level below a 25% increase over the year.

Dmitry Kozak: No more than 25%, yes. The housing and utilities fees rose by an overage of 15%, the markup ranging from 8% to 18% across Russia. Indicatively, where growth exceeded 25%, it turned out that municipalities had not reformed their housing and utilities sectors for years to make them more effective. They had failed to use government subsidies provided to inefficient housing and utilities companies to cover part of the low-income families' bills. Having failed to do all that over the past few years, they made these decisions instantaneously on January 1, 2010. In addition, part of those decisions was outside their competence and sent local utilities bills above the regionally adopted ceiling.

Vladimir Putin: The monitoring needs to be continued, and the decisions made need to be implemented.

Speaking of implementing the decisions we make, I have also asked you to analyse the reasons for the current pricing policies in construction, which are unsatisfactory, to put it mildly.

We are currently implementing several supersize construction projects. I am referring to the 2014 Olympics projects and the preparations for the APEC summit in Vladivostok, the Kazan Student Games (Universiade) and other projects implemented with the government money. A preliminary analysis has shown that construction works often cost more in Russia than in neighbouring European countries, which is difficult to explain given that salaries are lower and building materials and electric power are cheaper in Russia.

I have looked at the situation recently. Some of the pricing policies have been changed, and what happened? The effect was the opposite - the prices went up instead of going down. The same holds true for major projects such as bridge construction. What do you think is happening, Mr Kozak?

Dmitry Kozak: The situation is as follows: A government resolution was adopted in May to revise the pricing policy and the system of budget estimates for all federal and regional projects financed by the government. To implement this resolution, the Ministry of Regional Development, as the agency responsible for this sphere, had to issue a series of sublaws, the so-called estimate standards, which should be revised according to the principles you just mentioned.

Formally, this resolution has been fulfilled by now, and the renewed standards approved. But preliminary checks have revealed that some of the standards (maybe not all of them, so this is only a reason to study the situation further) have been revised only formally, and therefore some of the construction estimates of works done without the use of modern technology could have grown. This is certainly unacceptable. The Ministry Board has instructed the minister to re-inspect all the estimate standards and make the necessary decisions.

Vladimir Putin: Mr Kozak, I am asking you now to thoroughly analyse the processes underway one more time.

Second, it is essential to streamline the pricing policies in a way that they would lower construction project costs, not send them up. This is extremely important given the budget deficit we are running and the large amounts we are allocating for construction. We really cannot afford to squander the government money.

The officials who are doing that instead of implementing government decisions should be replaced. I need you to submit proposals to change the situation as soon as possible. Straight away, please.