The meeting was attended by Prime Minister Mikhail Mishustin, Chief of Staff of the Presidential Executive Office Anton Vaino, First Deputy Prime Minister Andrei Belousov, First Deputy Chief of Staff of the Presidential Executive Office Sergei Kiriyenko, deputy prime ministers Viktoria Abramchenko, Yury Borisov, Tatyana Golikova, Alexander Novak, Alexei Overchuk, Marat Khusnullin and Dmitry Chernyshenko, Deputy Prime Minister and Chief of the Government Staff Dmitry Grigorenko, Deputy Prime Minister and Presidential Envoy to the Far Eastern Federal District Yury Trutnev, Presidential Aide Maxim Oreshkin, Minister of Economic Development Maxim Reshetnikov and Finance Minister Anton Siluanov. The meeting was also attended by Minister of Labour and Social Protection Anton Kotyakov, Minister of Industry and Trade Denis Manturov, Minister of Healthcare Mikhail Murashko, Minister of Agriculture Dmitry Patrushev, Minister of Transport Vitaly Savelyev, Minister of Construction and Housing and Utilities Irek Fayzullin, Minister for Development of the Russian Far East and Arctic Alexei Chekunkov, Energy Minister Nikolai Shulginov and Head of the Federal Agency for Tourism Zarina Doguzova.
* * *
President of Russia Vladimir Putin: Good afternoon, colleagues,
Alexei Chekunkov's report on the socioeconomic development of the Far East and the Arctic is the main item on today’s agenda.
But as usual, we will start with the current issues. This afternoon, Mr Mishustin and I had a meeting, and he briefed me on his trip to a number of Siberian regions. We agreed that he would share his impressions and the results of this work in Siberia in more detail not only with me, but with our colleagues as well.
Mr Mishustin, if you don’t mind, let's start with you. Please go ahead.
Prime Minister Mikhail Mishustin: Mr President, colleagues,
My working trip to five Siberian regions ended last week. I would like to brief you on the results.
We went to the Altai Territory, the republics of Altai and Tuva, and the Novosibirsk and Kemerovo regions. Three of them are on the list of the territories with the most complicated socioeconomic situation. Individual programmes have been compiled for each of them, and the Government allots a billion rubles for each region every year.
I would like to mention the Kemerovo Region specifically. We discussed in detail the socioeconomic situation and the state of the coal industry there. Under your instructions, the Government expedited and completed the drafting of the socioeconomic development programme for Kuzbass. It has been approved. The programme will run for four years and over 51 billion rubles will be allocated for its implementation. The programme provides for building key social facilities. Under your instructions, we reviewed investment in transport, public utility infrastructure, and tourism. This will allow us to create jobs in industries that are not related to coal mining, and, hence, to diversify the economy of Kuzbass. You have repeatedly drawn our attention to this, including at the meeting a week ago.
In addition, in Kemerovo we held a meeting on transport support for the delivery of coal from the region, including the development of the Eastern Operating Domain, including the expansion of the Baikal-Amur Mainline and the Trans-Siberian Railway. With this, we followed the instructions you gave the Government. The Transport Ministry has already prepared a draft quarterly schedule for construction with indicators for carriage and traffic capacity and the maximum average weight of a freight train to the smallest detail. We will adjust this documentation in the wake of our discussion in Kemerovo and report back to you.
Now I would like to say a few words about the other Siberian regions we visited. A number of important decisions were made in each of them. All of them are aimed at improving living standards and the situation in the economy, social sphere, science and education.
Funds will be allocated for completing the construction of a school and kindergartens in Tyva to accommodate all children this year. Two schools in Barnaul and a building for a lyceum in Gorno-Altaisk will be built under a public-private partnership.
We will continue providing schools with modern technology and equipment. Schoolchildren and students in big and small cities, rural areas and even difficult-to-access locations will receive more opportunities for education and communication. On your instruction, all schools in the country must have internet access by the end of the year. This is important, especially for rural schools, and this task is under the special supervision of the Ministry of Digital Development, Communications and Mass Media.
We have also visited Novosibirsk and toured Siberia’s largest sorting centre operated by Russian Post. It will become a key element of the international e-commerce routes connecting Europe and Asia. It is a state-of-the-art complex with an area of 40,000 square metres boasting a processing speed of 1.5 million mailings per day. Letters and parcels will no longer be sorted exclusively in Moscow, but will be promptly sorted at centres like this to speed up delivery. People in all corners of our country will be able to use this service more widely. This is the reason for creating a network of hubs.
We also held meetings with employees of major research centres to discuss their work-related problems. Just like the school education system, they lack modern equipment, labs, and renovated premises to conduct research and permanently accommodate students.
The situation is much the same at the Novosibirsk Specialised Education and Research Centre for Gifted Children. Mr President, as you are aware, there are five such centres. Three more will be built in the next three years. They will be properly equipped so that future scholars and researchers can develop their talents and do research. Such centres need steady financing, including for boarding. So, a law was drafted, which we will promptly submit to the State Duma so that the deputies can review it during the spring session.
We are using public-private partnership to accelerate the renovation of major research centres. An investor is willing to invest in the construction of new buildings at the Novosibirsk State University campus, including for the Specialised Education and Research Centre that I mentioned earlier.
During the trip, we discussed unique projects to fight cancer and dangerous infections, including the coronavirus, as well as the Siberian researchers’ other achievements. We discussed the research community’s concerns, primarily, funding the research to identify innovative breakthrough cancer treatment methods, which is being conducted at the Budker Institute of Nuclear Physics. We will allocate an additional 800 million rubles to this end.
Young researchers need help to improve their housing conditions. We are upgrading the programme for housing certificates to make university teachers eligible for them as well. We will make this procedure more accessible and convenient, and draft the necessary amendments for this.
Mr President, when I met with the researchers at the Institute of Nuclear Physics, they recalled with warmth your visit and asked me to convey to you their best regards. So I am fulfilling their request as promised.
In Siberia we also had several meetings with representatives of the industry, the agro-industrial sector and tourism. They presented a number of proposals and we will meticulously study all of them.
I would also like to report to you today that according to the Finance Ministry, Norilsk Nickel has paid its fine in full. Thus, it has given up its claims. I would also like to tell you, Mr President, that this issue is closed at this point.
Vladimir Putin: Thank you.
Mr Mishustin, your visit was very eventful and substantive. I hope for the implementation of the agreements that were reached during this visit with your colleagues from the Government and the regions you have visited. Naturally, it is necessary to attract the required investment to these regions to reach these specific goals, including the improvement of the living standards for the residents of these regions.
You have described the plans for developing Kuzbass. In general, this is a very positive concept, and, I think, a promising form of work. I am referring to the drafting of individual development programmes with account for the peculiarities of the different regions, including in this case those you visited. I believe this is a good approach, and we must follow how it goes in Kuzbass. We have this experience and can draft individual development plans for specific regions.
We discussed this issue when we met today. I am referring to the disparity in utility rates, primarily electricity rates. We know the gap is very big and this is often the case even with neighbouring regions. I would like you to note this and study all these issues with a lot of attention, as we agreed this morning.
Regarding receipt of funds from Norilsky Nickel, I believe that we can state with satisfaction that the company is fulfilling its obligations. We hope it will stay that way.
As agreed, I would like to ask you to spend this sum total on improving the mid-term and long-term environmental situation in Norilsk and the adjacent region. Certainly, it is hardly possible to make effective use of such resources in one and the same vicinity because environmental problems do not accumulate in one area and because they encompass larger territories. It therefore appears that we can use this funds to solve environmental problems in the entire region, all the more so as this amount, or 146 billion rubles, will eventually be transferred to Norilsk. Let’s organise our work in precisely this manner.
I would like to thank you and all colleagues who have visited Siberia for this work. I hope that all agreements that have been reached will be duly fulfilled on time.
In this connection, I would like to ask Mr Novak about how he regards the agreements with colleagues in the OPEC Plus format, bearing in mind that our main oil production facilities are located in Siberia.
Please, you have the floor.
Deputy Prime Minister Alexander Novak: Mr President, Mr Prime Minister,
As per your instruction, we continue to coordinate the actions of 23 oil-producing countries in order to stabilise the situation on the oil markets. A regular meeting was held on March 4, the discussion was difficult, although constructive. Different opinions on the situation and possible subsequent actions were voiced. The parties therefore approved the following package of agreements.
First, OPEC Plus countries agreed to retain January 2021 oil production levels throughout April. Earlier, it was believed that oil output would increase by 0.5 million barrels in April. Saudi Arabia also announced its decision to extend additional oil production cut totalling one million barrels daily.
At the same time, Saudi Arabia did that in February and planned to partially reinstate oil production in April. That way, they have also extended their oil production cuts.
Second, in accordance with the agreements reached, Russia can increase oil production by 130,000 barrels per day (bpd) in April. This is our quota. If the aggregate volume of production was increased by 500,000 bpd in April as planned, we would have been assigned this quota, which means that we have retained it. This has been done above all thanks to our position regarding the more favourable epidemiological situation in Russia, because we are lifting quarantine restrictions and we also need to satisfy a growing demand for oil products.
Third, we have also agreed that there will be compensation for the shortfall due to some countries’ failure to fulfil their quotas. This issue has been coordinated as well, and the OPEC Plus countries will do this before July.
Fourth, the next meeting has been scheduled for early April. We will discuss oil production volumes for May.
Mr President, I would like to point out that these agreements, which are positive for us, with the main players on the oil market have been reached thanks above all to your support and the attention you are constantly paying to this matter. Of course, we are also grateful to our partners for their constructive approach.
As a result of these agreements, the recovery of oil production in Russia will be 890,000 bpd when the agreement comes into effect. This is 45 percent of the maximum reduction figures agreed in May and June last year. In other words, we will recover nearly half of the production shortfall in April.
A faster recovery of oil production compared to the OPEC Plus schedule will allow us to market an additional 3.5 million tonnes of oil. I am referring to the additional 130,000 bpd we will produce and the February-March agreement regarding the production of additional 65,000 bpd. Overall, the additional income for the industry will be about 125 billion rubles, which means additional revenue for the Russian regions and the federal budget, extra supplies to our oil refineries for the domestic market and to meeting the growing demand, as well as new contracts for related industries.
If I may, I will say a few words about the current market situation.
As of today, the market is more stable, thanks to the OPEC Plus deal and the general revival in demand, among other things.
The demand is gradually recovering. Let me remind you that last year it was falling by 20–22 million barrels per day in general. Over this period of time, it has recovered by 15–17 million barrels per day. This year we expect the general recovery of demand at about 5.5 million barrels per day. The final recovery of the pre-crisis demand level is expected in 2022.
There is a deficit on the market at the moment, meaning a lack of resources, which makes it possible to exploit the rest of the resources accumulated during the pandemic, especially last year when the demand plummeted. We expect that this year the accumulated resources will decrease to the average five-year number.
We can also see prices growing. If last year prices fell to $20 per barrel (last April), this year the price for Brent already exceeds $65. The current price for today is $67 per barrel. The average price since the beginning of the year is about $60.
At such a level, we expect additional income to the National Welfare Fund at about 2.5 trillion rubles, at an average annual price of $60.
Speaking about prospects, there are positive and negative factors influencing the market. For example, positive factors include the beginning of vaccinations in many countries: as of March 1, vaccinations have begun in 71 countries. The demand is reviving in the Asia-Pacific: we can see that the consumption of oil products in the APR countries is higher than the same month last year by almost a million barrels. And in a positive way, many countries have adopted stimulating packages to drive their economies towards recovery.
Speaking about negative factors, or uncertainties, I would like to note the quarantine measures that are still in force in Europe. Despite the start of vaccinations, many countries maintain some restrictive measures. The mobility of population is still low. If we talk about commercial transportation, for example aviation, this level is at 60 percent of the pre-crisis level, so there is still potential for growth and recovery. And we note as an uncertainty that OPEC Plus non-member countries can also increase production as a result of rising prices.
In conclusion, Mr President, I would like to say that we will continue to monitor the situation on the markets. We will also maintain interaction with our partners regarding the restoration of the market in order to increase the output as demand continues to grow, and in the future to increase investment. This, of course, will have a positive impact on the implementation of national goals as per your instructions.
Vladimir Putin: Thank you.
What did you say the global market deficit was?
Alexander Novak: The current price of Brent is $67 per barrel; on average the price has been $60 since the beginning of the year.
Vladimir Putin: Not the price, what is the deficit on the global market?
Alexander Novak: I am sorry, I did not catch you. The deficit is about one to two million barrels per day, that is, the reserves are being depleted by one or two million barrels every day.
Vladimir Putin: Given this production rate and our increase in production, when will the balance be reached, in your opinion?
Alexander Novak: One of the main indices that show the balance on the market is the lowering of the reserves to the level of the average five year amount. Last year, when oil demand fell sharply and supply had not yet fallen, the reserves accumulated in March, April, May and June were above the average five-year amount by approximately 230 million barrels per day. As of now, they have reached 140 million barrels per day. That is, if there is a deficit of one or two million barrels per day, then we will reach the average five-year indices in 70 or 100 days. Then the market will be considered to have been restored. At the same time, there will be no need to maintain the deficit, but we will need to maintain the balance between supply and demand and target supply as the demand grows.
Vladimir Putin: Ok, good, thank you very much. It was hard work and overall fruitful, so thank you.
Alexander Novak: Thank you.
Vladimir Putin: There is another big problem with a permanent seasonal character in Russia that is related to the fuel-and-energy complex. This year many regions in the Russian Federation have abnormally low temperatures. This is also true now in the central part of Russia.
How is the winter heating season going in Russia and how is the power industry doing? I would like to address these questions to both Irek Fayzullin and Nikolai Shulginov.
(Minister of Construction and Housing and Utilities Irek Fayzullin described some accidents at housing and utilities infrastructure facilities during the abnormal winter weather in many regions and explained this by the high wear-and-tear of water supply systems. He said timely and coordinated actions on all accidents made it possible to avoid complicated technological consequences.
Energy Minister Nikolai Shulginov also reported on the performance of fuel-and-energy sector facilities in the extreme weather conditions this winter. These conditions did not disrupt the operation of the national power grid. They did not lead to a substantial increase in wholesale prices for electricity and did not entail large blackouts in generation or for consumers, as was the case in other countries. The Russian energy system has adequate reserve capacity, and the energy generating equipment is designed to work in extreme temperatures. According to the Minister, there were no systemic accidents like the separation of mainland Europe into two isolated parts with disruptions for consumers. Every incident in the Russian power grid was of a local nature. Due to weather conditions, energy grids in neighbouring countries were also subjected to extreme loads, and Russia met Ukraine’s request for the supply of over 100 million kWh of electricity to Ukraine under a commercial arrangement.)
Vladimir Putin: We all know that for the most part the bigger accidents were due to the wear-and-tear of grids. This is the responsibility of the regions and municipalities, not really of the Government that deals with energy on an overall scale. However, considering that this is a long standing problem, the Government must pay more attention to it. It could issue methodological recommendations. The Federation must pay more attention to this when funding individual projects.
Obviously, there are laws and rules that are set forth in the regulations, but apparently it will be impossible to do without the direct involvement of the Federation in these issues. The main point is that people suffer from these accidents. Yes, we say, and the ministers have just reported that these accidents are local, but thousands and tens of thousands of people are not just uncomfortable – some get into serious situations and suffer.
This cannot be isolated from the tasks that are tackled at the federal level by the Government of the Russian Federation and in this context it is necessary to develop close cooperation with the regions as soon as possible. This applies to both housing and utility problems and energy. Therefore, I would like to ask you to tell us in more detail what considerations and proposals you have in this respect. I am referring not only to Mr Shulginov and not only to housing and utilities, but also to other areas of cooperation with regional authorities and regional teams.
Even though abnormally cold weather is raging through almost all of the European part of Russia, the winter is coming to an end. How was this winter tourist season, keeping in mind that we made a point of promoting domestic tourism recently?
(Head of the Federal Agency for Tourism Zarina Doguzova reported that during the three winter months, about 15 million Russians travelled within the country, including one-day trips. This is 25 percent less than before the pandemic last winter. All domestic ski resorts were in high demand with the number of visitors increasing by 15–20 percent. The number of tourists in southern Russia increased 10 percent during the winter. New winter eco-destinations, such as Altai, Lake Baikal and the Russian North, have become available, and people go there for colourful winter sights like the northern lights, winter fishing or Lake Baikal ice. The tourist season was unaffected by the coronavirus outbreak in resort areas because the necessary precautions were taken. Ms Doguzova mentioned the winter charter programme, the tourist cashback programme and preparations for the summer season.)
Vladimir Putin: Look, some countries, the economies of which heavily depend on tourism, have already said that they would open their borders to tourists. We must not and we will not stop our citizens who would like to spend their summer vacations abroad from doing so. Sure, many in our country will have well-founded concerns about going abroad, including the countries that are traditional destinations for our tourists, because the coronavirus situation there is nothing short of challenging. Look at the situation in Southern Europe which is very challenging with no signs of getting better. Let's hope the vaccination will proceed at a faster pace, and the situation will improve.
However, promoting domestic tourism remains high on our list of priorities. Everything must be done to create proper conditions for people who prefer to spend their vacations at home. Clearly, this cannot be accomplished overnight. Above all, we need to focus on infrastructure. This requires time and investment, as well as state support. Clearly, too, all programmes designed to promote domestic tourism must be supported and expanded.
But tourism is not the only sector of the economy that has not recovered yet. The affected industries that are still recovering include small and medium-sized businesses in such sectors, as we know, as catering, culture, entertainment and sports. We had an entire range of support programmes for these industries, many of which have ended by now. I know that the Government developed one more support programme, as we agreed: three-percent interest loans (previously, it was two percent; now it is three) for 12 months. Mr Reshetnikov, please tell us more about this programme.
(Minister of Economic Development Maxim Reshetnikov reported on the effect of the anti-crisis measures on small and medium-sized businesses – in particular, about subsidised loans and support of investment programmes by large companies, including those with state participation. They placed 3.9 trillion rubles worth of orders with SMEs last year. As concerns the industries mentioned by the President that have not yet recovered, the minister reported that a programme for subsidised loans had been developed. Potential borrowers filed 750 loan applications for a total of 1.3 billion rubles. This will support 1.5 million jobs and 75,000 companies, as the President instructed. The previous programme supported 5 million jobs.)
Vladimir Putin: The previous two-percent interest loan programme proved to be very much in demand considering changes on the labour market and the gradual economic recovery. I think this three-percent interest loan programme will be just as efficient. We need to closely monitor its actual progress.
Now let us talk about the main issue, which is the socioeconomic development of Russia’s Far East.
(Minister for the Development of the Russian Far East and the Arctic Alexei Chekunkov reported on the implementation of a package of measures to upgrade living standards and expedite economic development. Since 2015, 2,700 new companies have been set up in priority development territories and the free port of Vladivostok. They have already invested almost 1.5 trillion rubles in the region. During this period, the growth of industrial production in the Far East has been double the national average – 24 percent versus 12 percent. The minister also presented a number of specific proposals on the growth of the Far East. They concern housing construction, development of the Innovative Scientific and Technological Centre on Russky Island, overcoming natural and infrastructure restrictions in agriculture, and the promotion of tourism, including eco-tourism.
Remarks and proposals on Mr Chekunkov’s report were made by Deputy Prime Minister Alexander Novak, Finance Minister Anton Siluanov, Minister of Economic Development Maxim Reshetnikov, Deputy Prime Minister Viktoria Abramchenko and Deputy Prime Minister and Plenipotentiary Presidential Representative in the Far Eastern Federal District Yury Trutnev.
Transport Minister Vitaly Savelyev reported on the development of Aurora, a Far East regional airline with 535 established socially important routes. Its fleet will consist of 131 aircraft – 91 planes and 40 helicopters.)
Vladimir Putin: Here is what I would like to say to you at the end of our current discussion.
I will not talk about the importance of the Arctic, the Far East, and the Far Eastern Federal District for the country, for its future and for the development of the Russian state. We have discussed this many times already, we understand the current, mid-term and long-term historical significance of these regions; and the Minister has delivered a detailed and specific report. At the same time, I would like to draw your attention to some aspects.
We should never forget our earlier agreements, we should not forget the tasks that we have set ourselves, and need to proceed from what has been accomplished. By the way, we have accomplished a lot. We are implementing major projects and creating jobs for skilled workers. We can even see a certain influx from other regions whose residents are coming to work at newly-established enterprises, including Zvezda and some others. But we have to objectively assess everything, and we should understand which actions are yielding results, and which do not produce the desired results. We should understand the causes of this and draw the relevant conclusions, rather than contemplate tremendous plans, without comprehending real-life developments.
And what is happening there? For example, we have the Far Eastern Demographic Policy Concept, approved by a Government directive in June 2017. This time, I will not go into any details, but I will recall that the document aimed to stabilise the size of the population. More or less positive results have been achieved here. We have scored less impressive results in our effort to increase the total birth-rate coefficient. Regarding efforts to reduce mortality rates, it is clear that the pandemic has made its sad contribution to these statistics. Nevertheless, we have to closely analyse this. In this connection, we have to sum up the results of implementing the Concept’s first stage, and analyse the reasons for failing to attain the set indicators in the most important fields that I have just mentioned. We also have to update the measures and specific targets of the second stage of implementing the Concept in 2021–2025.
The next closely related issue concerns healthcare. The Russian Popular Front has pointed out that emergency medical care is not available round the clock in some regions of the Far Eastern Federal District. The situation seems to be improving following the RPF’s report, but all the same. How can it be that an emergency medical service does not work round the clock? If this is the case, it is not an emergency service. These are basic things.
The reason for this shortcoming is, among other things, a shortage of medical personnel, which is the case in many medical spheres. On the other hand, programmes for the development of the first aid system should be adjusted to the needs of each particular region. In this instance, we are talking about the Far East, where populated areas differ widely from each other in terms of population size and the distance between them. The Far East cannot be measured by the common yardstick stipulated for other, densely populated Russian regions. I would like you to take this into account in your future work.
In this connection, it is necessary to prepare and submit proposals on additional measures to develop the healthcare system in this region.
Next, transport. The Transport Minister has mentioned some issues. I would like to ask the Government to assess the adequacy of the measures taken for the transportation of those who would like to travel to other Russian regions, regardless of age limits.
Yes, we have adopted a decision and allocated an additional 5 billion rubles. This is very good, but I would like to ask you to analyse how this system is working and whether we need more funds to ensure normal passenger transportation. We have already discussed this, including with the Transport Minister, Mr Savelyev. How much have we allocated to subsidise railway passenger transportation? 20 billion rubles? And we have also allocated an additional 5 billion rubles for this programme, which is a lot of money. But we must take a look at how this is working and whether these funds are enough. Let us do this, all right?
Mr Savelyev has just mentioned the establishment of an airline. This is great; it has been set up to ensure transportation within this region. It is a huge region. Thank you for telling us that the routes have been mapped out and so on; the network is being created. But in this case we must also think about making this network affordable for people, and, of course, we must use primarily and mostly Russian-made aviation equipment.
Speaking of agriculture, a lot of things have been done to support this sector of the economy. However, we should do everything possible so that the price growth for agricultural products in the Far Eastern Federal District does not exceed the average across Russia. But the price growth is fluctuating, so I am asking you to pay attention to it, as well as to fish processing and deliveries to the European part of Russia. I would like to ask you to discuss additional measures to deliver fish from the Far East to the central regions, which perhaps would require adopting an entire range of managing interdepartmental decisions. I know about the Ministry of Agriculture’s decisions on this, but we should wait and see how these decisions will be implemented and whether they are enough to solve the tasks I have just mentioned.
Finally, about housing. The deficit in the primary housing market still remains, and it is serious. I will not list the reasons, because there are many of them, including the high cost of infrastructure, and this is understandable. I would like to draw your attention to growing prices. We have introduced preferential mortgages in the Far East, but I think our colleagues who are involved in this know that prices of new-builds sold have gone up by 18.1 percent. This greatly devalues our preferential mortgage decisions.
We must develop local complexes. The necessary effort must be made. There are no projects of complex housing construction.
Yes, there are problems there, but we know that such complex housing construction shows its effectiveness in many of the regions. In terms of the Far East, we must also think how to make it work there. I believe it is possible if we elaborate all the details and support this sector. In fact, we should simply propose a set of measures to increase supply on the housing market, on the primary one above all.
Speaking about the Arctic, I would like to ask you to complete the drafting and the approval of the joint plan to develop the Arctic, and to do so within a month. This issue is extremely important, so let us not exclude it from our current work.
I agree with the proposals made by Minister Chekunkov and I would like to ask you to finalise them. Mr Mishustin, please control this process considering the proposals we have heard.
Prime Minister Mikhail Mishustin: Thank you, Mr President, we will do it.
Vladimir Putin: Thank you very much.
All the best.