Heating Season Preparation Provides Clues to Russia's Investment Plans: Putin's Meeting With Members of Government

Where I live on the Oregon coast and throughout most of the USA, few think of the need to plan for heating season or Winter. Some like myself plan when we build our homes, in our case we chose wood as our primary heat source followed by radiant electric heat because of environmental, health and cost reasons. In most of our cities, houses and apartments are supplied gas and electricity as fuels to provide heat, and few give either a second thought. Heating systems elsewhere in the high northern latitudes are often different and require preparation for each season. This year because of its self-induced energy crisis, much is being made of Europe's ability to provide heat to its citizens. The peoples of the Far North live communally/collectively for very good reasons as it's much easier for all to survive when living in that manner. That cultural philosophy impacts how modern Russia has chosen to organize its nation and thus its investments in itself to improve its condition.

This meeting covers two primary topics. First, there's the preparations for the heating season for which two reports are provided. The second deals with Russia's investment regime, which is an ongoing topic for these meetings with the general government. There are other topics covered—repair of Kerch Strait bridge and the expedition "North Pole - 41" on a unique ice-resistant platform built at the Admiralty shipyards being two. But the main topic is Russia's plans to continue to uplift its people and thus the nation, for Putin has made it very clear that Russia's collective goal is People Centered Development, or as I call it, Socialism with Russian Characteristics. Just the reconstruction work done in the new territories proves that beyond doubt as here within the Outlaw US Empire people would have to pay for such work to be done individually as is the case for Floridians who lost their homes from hurricane Ian.

What follows is the machine translation from Russian without any corrections or emphasis on my part:

As for the topic of our meeting today, these are tools to support investment in the current conditions. Maintaining the necessary level of investment is one of the main tasks at any time, and today this is especially relevant, we all understand, there is no need to go into any details here, we will talk about this in more detail and discuss this issue after the report of Maxim Reshetnikov.

And in the beginning, as we agreed, there were several current questions, and the first one was addressed to Marat Shakirzyanovich [Khusnullin]: how is the work on the restoration of the Crimean bridge going?

Maxim Khusnullin: Mr President,

The government commission established on your instructions has launched work to restore the Crimean bridge and ensure transport links with the Crimean Peninsula. To date, work has already been completed to strengthen the span structures and repair the supports of the left undestroyed side of the bridge.

According to the results of in-depth studies, it was established that four spans of this side of the bridge structures were damaged and deformed, and we will have to replace them with new ones. Nevertheless, at present, the movement of cars and passenger vehicles, buses and, if necessary, part of the freight transport in both directions is carried out on this side of the bridge in normal mode with the provision of 100% inspection of vehicles and constant monitoring, which is conducted by specialized organizations around the clock.

In order to accelerate the restoration of the bridge, it was decided to combine the technological processes for the restoration of work in both directions of the bridge. For the right destroyed part, 1218 tons of metal structures were manufactured and delivered in record time from three factories across the country: Tyumen, Voronezh, Kurgan. And I want to say, Mr President, that they produced and delivered it so quickly, and I want to thank the heads of companies, the regions that manually monitored the work around the clock, how the work was going on, and the traffic police, which accompanied all these machines as soon as possible.

Of these 1218 tons, 925 tons have already been enlarged on site in the form of specific span products. And we are starting from November 5 to 10 the installation of new span structures.

Work is carried out around the clock, 500 people and 50 units of equipment are involved, as well as two floating cranes.

In general, I would like to note that 8 out of 25 days since the terrorist attack were storms, but despite this, we maintain the schedule, although we could not practice all the days - the floating cranes did not always work, but in general the schedule is maintained.

The Government has allocated the necessary funding for the restoration of the road bridge, and a state contract has been concluded.

We plan to launch traffic on both lanes of the right side of the bridge: on December 5 - on one lane, on December 20 - completely, on the other. Next, we will begin work on the dismantling of the spans of the left, less affected, side of the bridge, and we plan to complete it by March 30. We will have works there that do not affect traffic – technical, local-cleaning and others – we will finish them on July 1.

In order to provide the Crimean Peninsula with goods and prevent their shortage, we are working separately to reduce traffic jams and congestion of vehicles for the period of repair and restoration work.

To ensure the movement of freight transport through the Kerch Strait, a ferry crossing consisting of five car ferries and two rail ones was organized. Also two vessels to transport people if necessary.

In the area of the Kerch crossing, two mobile inspection and inspection complexes have been moved from other regions of Russia to organize inspection, two more are on the way, during November the Ministry of Transport and the Federal Customs Service [Federal Customs Service] will be installed.

For waiting trucks, intercepting parking lots have been organized in the Krasnodar Territory, the Rostov Region, and the Crimea. Parking lots are equipped with the necessary infrastructure, hot meals, and the supply of fuel and lubricants is provided. I would like to thank the heads of the regions for their prompt work and for organising this work.

The measures taken have made it possible to reduce the number of trucks in intercepting parking lots. So, if in the Krasnodar Territory on October 13 we had 1100 vehicles, today at seven in the morning we have only 150 vehicles left. And the waiting time, which was from three to seven days, today we have no more than three days. The task is to shorten this period, so that during the day all cars can either cross the crossing or cross the ferry. In total, today we have 400 vehicles waiting, of which 150 are in the Krasnodar Territory, 94 trucks in the Rostov Region are waiting for passage along the new route and 156 from the Republic of Crimea.

On October 10, an alternative road route has been launched, running through the territories of the new subjects of the Russian Federation. The route is already working, and cars are driving along it, and at the same time we continue restoration work.

Of the 180 kilometers that require repair, 150 kilometers have already been repaired, we plan to complete the work by November 30 of this year. Drivers can travel along the alternative route in both directions both individually and as part of an organized escorted convoy. The safety of the alternative route is provided by the forces of the Ministry of Defense and Rosgvardia.

Significantly reduced the time of passage and time through border crossings. This is due to the fact that additional lanes were built at border checkpoints and the border service added additional people.

We are working to notify drivers. Road users are informed about the current situation on the alternative route through the website and telegram channel of the Ministry of Transport. On federal highways on the scoreboard there are announcements about the occupancy of the ferry crossing and alternative routes.

As for the railway part of the bridge, reverse traffic is carried out on it along the first track. All trains run according to the schedule, there are no delays. Currently, the terms of reference for the design of the restoration of the second railway track have been approved. It will also be necessary to replace two span structures.

I would like to note that Roszheldor [the Federal Agency for Railway Transport] and the contractor have submitted a schedule of work to launch traffic on the second track by September 15, 2023. But mr President, we are asking for more time, and we will take another look at the commission. We believe that this work should be done in a more expedited manner. We will work literally for a few days. I'll probably move out again and look at it again. The final decision will be made to speed up.

The government has allocated funding in the amount of the necessary amount for the restoration and has identified the only supplier for the design of the restoration of the railway part.

Mr President, we are conducting everything normally. In the morning, in the evening – a report on the situation. For now, we're on schedule, as I said. Promptly collect the commission. We take all measures. We hope that the provision of the Crimean peninsula with everything necessary will be fully restored.

Thank you. The report is over.

Vladimir Putin: All right.

Many thanks to everyone who takes part in this work. I join your words of gratitude to those who produce all the necessary structures in the right time. I hope that all plans will be implemented in the very near future. Thank you.

Irek Envarovich, how does our heating season begin? Actually, it began a long time ago, but nevertheless, now only in the European part of the cold is coming, the movement is already going to the cold, to winter. How is the situation in general?

I.Faizullin: Dear Vladimir Vladimirovich,

Yes, the heating season has begun normally in the regions of the Russian Federation and 8,311,000 residential buildings have been fully prepared upon completion. Also, 252,732 objects of the socio-cultural sphere were prepared. Among them are 71,742 health facilities, 43,803 schools, 44,047 kindergartens.

The overall level of readiness of communal infrastructure today is 100 percent. 74,098 boiler houses and 920,360 kilometers of engineering networks were prepared. Here, a number of delays that were in the preparation have now been eliminated, fuel reserves have been fully formed. The federal headquarters, the headquarters in the regions, together with the Ministry of Energy, Rostekhnadzor, have coordinated all the necessary actions on the passage of the heating season. Rostekhnadzor conducted an assessment of the readiness of 2415 municipalities, are preparing to issue a readiness passport until November 15 in accordance with the deadline.

Separately, I would like to inform you about preparations for the winter in the four new territories of the Russian Federation. Despite all the difficulties, the work on preparation for the heating season continues as planned. In total, we are preparing 48,953 facilities and 11,713 kilometers of engineering networks. It should be noted that the work is related to the restoration of destroyed facilities and the construction of new ones. At the same time, we note a very high wear and tear of networks in these territories, it is much higher than the average Russian one. In general, the plan for the preparation of new regions was fulfilled by 93.8 percent, in the DPR, excluding the cities of Mariupol, Volnovakha, was fulfilled by 98 percent, the plan for the Lugansk Republic was fulfilled by 99.6 percent, this is without the Severodonetsk agglomeration. For Zaporizhzhya, the result today is 82.7 percent, Kherson region is 90.6 percent.

Mr President, we are under special control the situation with regard to preparations for the winter in the cities of Mariupol, Volnovakha, Enerhodar, as well as in the Severodonetsk agglomeration, which have the largest number of damaged and destroyed facilities that we are restoring. Where heat supply sources have been completely destroyed or their restoration requires a significant amount of time, block-modular boiler houses are supplied in the amount of 211 units.

In general, Mr President, work continues on the survey of the territories. As new facilities are prepared, they are included in the schedules and prepared for the passage of the heating season. Deliveries of the necessary resources for the formation of an emergency and technical stock have been organized. The formed reserves of materials and labor are sufficient for the prompt conduct of work. In terms of labor, we are constantly increasing the number of construction groups.

Taking this opportunity, I would like to thank the regions involved, builders, housing and utilities workers involved in preparing for the winter, power engineers, gas workers, road builders and railway workers who work in difficult conditions in these territories.

The report is over. Thank you.

Vladimir Putin: All right. Overall, I know there are some supply disruptions. Of course, everything must be done to ensure that we meet the necessary standards. Please work on the regions.

Igor Faizullin: We will work it out.

Vladimir Putin: Yes, we need to work with the regions, help them where necessary, and support them in a timely manner. The main thing is to do everything on time.

I will not list it now, I know that you know that you understand where and what is missing there, we need to do it: for fuel oil, and for other types of fuel, and so on, for coal. Ok?

Igor Faizullin: All right, Mr President.

Vladimir Putin: Please report to me separately later.

Nikolai Grigorievich, do you have anything to add?

N.Shulginov: Yes, Mr President, there is something to add.

Dear Vladimir Vladimirovich,

The preparation of the electric power industry entities for work in the autumn-winter period has been completed, meetings of the government commission on ensuring the safety of electricity supply were held in all federal districts and also in new territories. An assessment of the work done with the issuance of readiness passports will be carried out before November 5. It is predicted that 97 percent of power facilities will confirm their readiness to work during this difficult period. In general, the Russian energy system has the necessary margin of safety, a sufficient reserve of generating and grid capacity, which ensures the balance reliability of the Russian energy system.

Issues of resource provision have been resolved. As of November 1, the reserves of liquid and solid fuels at power plants are 170 percent of the standard, gas reserves in underground gas storage facilities meet the target level and amount to 72.6 billion cubic meters.

Reserves of hydro resources within the average long-term. The exception is the Yenisei Cascade. These are the Sayano-Shushenskaya HPP and the Krasnoyarsk Hydroelectric Power Station, where reserves are 36 percent lower than the long-term average, so additional generation is provided at thermal power plants in Siberia and the Far East.

Energy companies are provided with an emergency supply of materials, equipment, diesel generators. In addition, plans for the repair of power facilities, taking into account the volume of technical re-equipment and reconstruction, have been maintained in the amount of 2021, and their financing has been ensured.

In accordance with your instructions, the active implementation of programmes for the consolidation of the electric grid complex has begun. Over the next year, it is planned to reduce by 18 percent the number of small territorial network organizations with the transfer of the functioning function to large network organizations. The adopted plans include the consolidation of the main grid complex of JSC Electromagistral of the Novosibirsk Region on the basis of the federal grid company Rosseti.

On gas supply. The necessary routine maintenance work was carried out, the operating modes of gas transmission systems were tested. Gas supply to the Kaliningrad Region, the Far Eastern Federal District and the Republic of Crimea is under separate control. The Portovaya natural gas liquefaction complex was commissioned, all transport and logistics schemes for fuel delivery to the Kaliningrad Region were worked out and tested.

To ensure gas supply to the Far Eastern District, a scheme for the uninterrupted operation of the Sakhalin-1 and Sakhalin-2 projects has been implemented through re-registration to the Russian jurisdiction and a change of operator.

To stabilize the situation with gas supply to consumers in the Republic of Crimea, additional gas injection into the Glebovskoye underground gas storage facility was provided. In addition, the supply of natural gas through the main gas pipeline to the Krasnodar Territory - Crimea for the period of the OZP was increased by 760 million cubic meters. By December, a new gas distribution station in Kerch will be put into operation, which will increase the capacity of this gas pipeline by 1.3 times.

Mr President, now let's talk briefly about the functioning of the electric power facilities of the border regions: Belgorod, Bryansk and Kursk.

The management of the operation of power grid facilities in the border zone has been transferred mainly to the use of operational and mobile brigades. In total, there are 200 objects on this territory with a voltage of 110 kilowatts and above. An emergency stock of equipment and spare parts in excess of the approved nomenclature is completed. Plans for preparing for the winter are being carried out taking into account the evolving situation.

On new territories.

Currently, the energy systems, as well as the gas supply systems of the new constituent entities of the Russian Federation, are technologically integrated into the Unified Energy System and the Unified Gas Supply System, for which electrical connections with the Crimean Energy System and the main gas pipeline have been restored. This makes it possible to ensure a balance of electricity and natural gas in the territories of new entities.

Regime and balance conditions have been developed to ensure power supply to the Zaporizhzhya and Kherson regions mainly through the supply of electricity to the Crimean energy system with control of permissible flows along the Crimean energy bridge. In addition, a scheme for greater reliability of the Kherson and Zaporizhzhya energy systems is being implemented with partial use of previously destroyed infrastructure and the creation of non-standard schemes.

The main work of preparation for the autumn-winter period of the four new territories is related to the restoration of the destroyed energy infrastructure. In general, the work is carried out with the coordinating role of the working group of the special infrastructure project, which is headed by Deputy Prime Minister Marat Shakirzyanovich Khusnullin. To date, the restoration of four units of the Luhansk TPP has been completed, work continues on the restoration of the Kakhovka hydroelectric power plant and preparations for the launch of the Zaporizhzhya TPP.

At the TPP, it is necessary to restore the destroyed switchgears, electrical connections of the station with the main feeding centers. This will make it possible to supply voltage to the own needs of the Zaporizhzhya NPP from the Russian energy system. Technologically, everything is clear. There are, of course, questions about ensuring the safe performance of work on these measures.

Routine maintenance work was carried out on the previously functioning generation facilities of the Donetsk People's Republic - these are the Zuya thermal station and the Starobeshevskaya thermal station. Fuel reserves have been accumulated on them.

Together with the administration of the new subjects, energy companies and the Ministry of Construction have formed and implemented schedules for the restoration of the electricity and gas supply infrastructure. They are synchronized with the schedules for connecting housing and communal services and social infrastructure. Restoration is carried out both for the objects of the backbone network, and for objects of low voltage class. About 50 power grid facilities of class 110 kilowatts and above and almost 3,000 objects of distribution networks were put into operation. 100 kilometers of main and more than a thousand kilometers of gas distribution networks were restored, gas was supplied to 360 distribution points.

In record time, the construction and commissioning of the main gas pipeline between the cities of Berdyansk and Melitopol was completed. This made it possible to ensure gas supply to 145 thousand consumers of the southern part of the Zaporizhzhya region. Work has begun on the construction of another 12 kilometers of the main gas pipeline to restore gas supply to the city of Volnovakha and the surrounding areas. By the end of this month, this work will also be completed.

Particular attention is paid to the cities of Mariupol, Volnovakha and the Severodonetsk agglomeration. In Mariupol, the main feeding centers have been restored, work continues in the distribution networks to create a more reliable scheme for the external supply of the city.

Initially, the agreed plans for connecting social facilities, housing and communal services infrastructure and households to the networks have been completed, the work continues, and we take into account the increase in the number of facilities ready for connection.

To date, more than 35 thousand residential buildings, more than 600 social facilities, 27 water supply nodes and more than 80 heat supply facilities, that is, boiler houses, have been restored in these settlements. Taking into account the restrictions on access for the work, a partial restoration of the supply networks for the power supply of Lysychansk, Severodonetsk and Rubezhne was ensured. Until November 10, we plan to restore the ring power scheme from the Luhansk CHPP to the Lysychansk substation. Work continues on low-voltage distribution networks within the cities themselves. In the city of Rubezhne, electricity supply is connected to 83 percent of consumers, in Severodonetsk - 44, in Lisichansk electricity supply to socially significant objects of the city is carried out from diesel generators. We plan to complete the restoration of power supply by the beginning of December. The previously restored power supply scheme was destroyed. According to the schedule, by December 1, work will be completed on the restoration and power supply of consumers in the city of Svitlodarsk of the DPR and adjacent settlements.

In addition to regional companies, about 2700 power engineers from federal companies, as well as 670 units of special equipment, are involved in restoration work. As the work unfolds and access to power grid facilities, their number will increase.

Work on the restoration of energy infrastructure and electricity supply to the population, social facilities and housing and communal services will continue throughout the autumn-winter period. Power engineers will not only have to operate existing facilities, promptly respond to emergency situations, but also restore damaged energy infrastructure to provide residents of new subjects of Russia with light, gas and heat.

The report is over.

Vladimir Putin: All right. Ok.

Just to study the climate, meteorology and other issues, we have built a new vessel at the Admiralty shipyards and started working. In fact, it is a year-round scientific center for the study of the Arctic. The vessel has already started work.

Alexander Alexandrovich, how is this work going?

A.Kozlov: Good afternoon, Mr President, Colleagues.

For exactly a month, the Expedition "North Pole - 41" has been working in the Arctic Ocean. Dislocation is an ice self-propelled platform. It has no analogues in the world and is not expected. The strength of the hull is such that the platform can freeze into the ice and drift for two years. This will allow you to get to those corners of the Arctic, where it is extremely difficult to reach, and where no one has ever been. Accordingly, we will begin to obtain unique data on the state of the high-latitude Arctic. We don't have them now.

The main task of the platform is to become a key point for collecting information about the natural environment, which is needed to create weather and climate models. Data from the platform will be uploaded to the "North" system of Roshydromet. It is used by all companies operating on the Northern Sea Route, in particular Rosatom, where the entire icebreaker fleet is concentrated. The system is necessary for the transition to year-round navigation along the Northern Sea Route.

In addition, the platform will perform sub-satellite experiments, that is, verify and calibrate images from space, which will be made by our constellation of satellites. Also, scientists will regularly take and analyze samples of water, snow, ice for pollution with heavy metals and oil products, and in air samples determine the content of aerosols, including soot. These data are especially important for active navigation along the Northern Sea Route, including the use of greenhouse gas monitoring, which is important for the global climate agenda.

On September 17, the North Pole platform left Murmansk and on the 30th, to the north-east of the Novosibirsk Islands, with the help of satellite images and aerial reconnaissance from a helicopter, they chose a suitable ice floe: an area of 42 square kilometers, a thickness of almost 1 meter. The platform has docked and is now coming to it to become a single entity. On October 2, the expedition began its work. A science camp was set up on the ice. These are dozens of tons of machinery and equipment. A meteorological complex has been launched, analogues of which are only in observatories on the coast. In fact, this is the first and only complex deployed in the high-latitude Arctic. Weather reports from the complex are already received by Roshydromet four times a day.

Another unique complex for these places is oceanographic. It is installed on the platform itself. The device weighs almost a ton, and therefore could not be used before on ice, it is too heavy. With the help of the complex, you can measure water parameters at any depth. The information is needed to constantly update current maps, and will also help scientists see how the waters of the Atlantic and Pacific Ocean move into the Arctic Ocean. Warm water affects the rate of melting of ice, for us this is also very important.

By the way, the platform itself is in principle a measuring device, sensors are mounted in the vessel that record the compression of ice on the hull. The data in the future will be useful for builders of ships and icebreakers. On board the platform there are 17 scientific laboratories, each for individual works: for example, to study the gravitational field of the Earth, the ozone layer, biology, ice physics and the atmosphere. The relief of the ocean will also be explored. Now it is not fully studied, and thanks to soil samples from the bottom, geologists will be able to update the state geological maps of the Arctic.

In total, scientists on the platform will perform about 50 types of research and analysis, and the platform for polar explorers is both a workplace and a house. The crew is 14 people, and 34 scientists live in comfortable cabins, and just a few years ago, polar explorers risked their lives going to drifting stations.

But the program, which began with the famous drift of Ivan Papanin in 1937, in 2013 had to be curtailed because of the threat to the lives of scientists. The ice quickly melted, and rescue operations were organized to evacuate the polar explorers. It was then that the Arctic and Antarctic Institute of Roshydromet came up with the North Pole platform.

The current figure of the expedition is 41, because it is a continuation of the legendary drifting stations, now safe and modern. And it can also become a platform for world science in the Arctic. We are always open to the international scientific community.

How long the Expedition "North Pole - 41" will last, it is still difficult to say. It all depends on the melting of the ice fields with which the platform drifts, the trajectory and the speed that cannot be predicted with 100 percent certainty. If by the summer of next year the ship is carried to the Frama Strait - this is between Greenland and Spitsbergen - then the LSP will return to Murmansk and then go on an expedition again. If the trajectory is more complex and the ship is delayed in the Arctic, then scientists will continue their work.

Separately, I would like to say thank you to the Admiralty shipyards that built the platform. Up to two thousand workers were involved, and at the stage of commissioning they coped without representatives of foreign equipment suppliers. Now there is a technical employee of the shipyards working on the platform, who controls the devices, and according to the reports that we receive, everything goes normally. Shipyards have always built complex vessels for Roshydromet, and I hope that they will do this in the future.

Mikhail Vladimirovich Mishustin supported us in the construction of a new scientific expedition vessel, but for Antarctica, the money is taken into account in the draft federal budget. Next year we will lay this vessel, it will be "five in one": a tanker, an icebreaker, a scientific, passenger and cargo vessel and will bear the name of the legendary Russian polar scientist Ivan Frolov.

Thank you. The report is over.

Vladimir Putin: All right. Thank you very much.

Let's move on to the main issue, the main one, for which we are gathered today.

Please, Mr Reshetnikov. I hope that the repair work that is underway in the Moscow City complex will not prevent you from making a report.

You are welcome.

M.Reshetnikov: Dear Vladimir Vladimirovich,

Dear colleagues!

Yes, electricity has been restored.

The condition for the structural restructuring of the economy is the growth of investment. At the same time, there are a number of factors that affect investment activity at the current time.

But, first, it is a decrease in demand for investment in export-oriented sectors: the oil and gas sector, chemistry, metallurgy. Last year, they accounted for almost a third of the total investment.

The second point is the reduction of enterprises' own funds, which occupy more than half of the financing of investments. Of course, we see this in the reduction in income tax, which we have recently seen.

The third factor is an increase in general uncertainty and, as a result, the unwillingness of business to take long-term risks. The answer to these challenges should be to strengthen the role of the state as an investor of last resort. We are talking not only about direct state regulations that are provided for by federal and regional targeted investment programmes, and here all the money is provided for in our budgets for the coming years. These are important expenses, but they occupy only 16 percent of the total investment structure. The task of the state is to guarantee the provision of investment projects with the necessary infrastructure, as well as to reduce uncertainty and risks for private investors. This is especially true, and it remains to be done taking into account a rather tight budget.

In recent years, the Government has developed a wide range of investment support tools. Now they are being adjusted taking into account new challenges and tasks. First of all, this concerns the creation of infrastructure for investment projects. The key mechanism here is infrastructure and budget loans. On your instructions, the Government has distributed the entire limit of such loans to the regions – 1 trillion rubles for the next four years. A selection of projects for which infrastructure will be built has been carried out. Basically, the regions finance transport, roads, gas, water and electricity. According to the estimates of the regions themselves, with the help of this tool they plan to attract up to 10 trillion rubles of investment and create 300 thousand jobs. Here, it is important that both the regions and, first of all, investors understand the responsibility for implementing projects in the terms and parameters that were stated when making decisions on the allocation of money, so that the built infrastructure is in demand, and taxes from projects allow the regions to repay budget loans.

Another tool is the restructuring of already accumulated budget loans to the regions. The regions can, instead of repaying their debts to the federal budget, send money to create infrastructure for new investment projects, and already from these projects the taxes received are counted and reduce the debt of the regions. The mechanism was launched in 2020, now it is used by 69 regions. To create infrastructure, they can use more than 0.5 trillion funds, of which half of them are already in the works, and now more than 500 projects are being implemented. They will bring the economy 3.9 trillion rubles of investment and create 165 thousand jobs. At the same time, a number of projects have already been implemented, the plants have been launched, and from this year they will begin to write off debts due to new taxes.

I'll give you some examples. A new transport and logistics terminal in the Kaluga Region – a water intake and a road were built for it, and this year 180 million rubles of federal taxes were announced for write-off to reduce the region's debt. In Karelia, a road to a new pulp plant was built, 48 million rubles were declared for write-off. In Tatarstan, funds for water purification, overpasses, electrical substations were provided, infrastructure for oil refining was created, and more than 900 million rubles were announced for write-off this year.

What is offered here? It seems important to us to extend the work of this mechanism and give those regions that have fully used the restructuring resources until 2024 the opportunity to do this for debts to be repaid in 2025–2026. We also propose extending the period of debt cancellation through new taxes until 2034, so that as many entities as possible can reduce the financial burden on their budgets.

We also propose to meet the regions halfway and give the opportunity to direct funds for the reconstruction of port, station, sea and river infrastructure, as well as mooring walls. First of all, this is necessary, of course, for the development of river tourism and, in general, transport on rivers and sea transport.

In the structure of investment activity, a large share is traditionally occupied by natural monopolies: railways, power grids, oil and gas pipelines. At the same time, their investment programs are approved at the moment by different departments independently, and therefore are not always synchronized with each other. At the same time, the reorientation of cargo flows and the integrated construction of large infrastructure require the interconnection of plans of related industries. Therefore, we propose to assign to the Government the approval of investment programs of natural monopolies, as well as uniform requirements for the development and monitoring of such investment programs.

Another important source of support for investment projects is the National Welfare Fund. From 2014 to 2020, 11 projects worth 750 billion rubles were financed by the NWF. Now 142 billion rubles have already been returned to the state according to the schedule (some projects even returned the money ahead of schedule), and for every ruble of NWF funds, 4 rubles of private investment were attracted.

This year, the work was accelerated. Decisions have already been made on 14 projects worth 1.5 trillion rubles. Among them are the routes "Moscow - Nizhny Novgorod - Kazan" and "Kazan - Yekaterinburg", the Eastern Polygon of Railways, the rolling stock of the St. Petersburg Metro, the Central Transport Hub in Moscow, the program of the Housing and Communal Services Fund, and support for airlines. This year, these projects have been financed by 500 billion rubles. In the near future, the Government will submit proposals to supplement the list of such projects with additional projects.

Not only financial support is important, but also risk sharing with investors. To this end, we are developing a mechanism of agreements on the protection and promotion of investments. It is based on the principle of the so-called grandfather clause - in other words, a guarantee of the invariability of the conditions for the implementation of the project throughout the entire period of its implementation.

Also, this mechanism provides for the reimbursement of investors' costs for the creation of infrastructure in the amount of tax deductions received. In September, we updated the mechanism taking into account the wishes of business and the regions, and now Vnesheconombank is considering more than 70 applications for projects.

Another mechanism for reducing risks is the Project Finance Factory, implemented by VEB.RF. Now within the framework of the "Factory" 17 projects worth 750 billion rubles are being implemented. Among them are the construction of the mining and metallurgical plant "Udokan" in Transbaikalia, the coal port in Primorye, the construction of fertilizer plants in the North-West and the Far East, the reconstruction of the airport in Novosibirsk and other projects.

On your instructions, Mr President, fabrika has been recapitalised for 120 billion rubles, and this will make it possible to finance projects by another half a trillion. Currently, 62 projects are at various stages of VEB's consideration.

To increase the effectiveness of this mechanism, we offer several solutions.

First, we propose to reduce the minimum requirements for an investor's own funds from 20 to 15 percent, while proposing to do this not for the entire period, but for the next two years as a kind of temporary relief in response to the current situation.

Second point. We propose to give an opportunity to replace VEB's financing with the provision of guarantees, since VEB does not always have the cheapest money, sometimes banks give cheaper, but banks need VEB guarantees as additional guarantees.

Third point. We propose to allow the implementation of existing projects on the balance sheet of existing enterprises and not to require the creation of new companies.

And the fourth point. Separately, we propose to create opportunities for more active participation of banks together with VEB.RF in financing the equity capital of investment projects, so that banks not only can enter with debt financing, but we are working on mechanisms, certain parameters are already in place, so that banks, together with VEB, create funds and at the expense of these funds additionally give money to those projects that we now need.

In addition, recently we have used veB's guarantee mechanism as an anti-crisis mechanism, and indeed, it turned out to be very popular, we have supported quite a lot of programs over these six months, and before that it was used within the framework of COVID. But now we still have limits, so we propose to send them to launch a new program to support investment projects on a long-term basis – again, in the areas and areas that we need now, primarily those related to import substitution, of course.

The mechanism of state guarantees can also reduce the risks of investors. Now we have little use of it due to the revocable nature of these guarantees. Over the past four years, our portfolio of investment loans, which was supported by state guarantees, has halved. Therefore, we propose instructing the Finance Ministry and the Central Bank to ensure the launch of the mechanism of irrevocable guarantees, so that banks do not need to form additional reserves for such loans, because banks are not now associated, let's say, with state guarantees.

Mr President, this is not the entire mechanism and not the entire range of tools that we use. Both businesses and regions are also in demand for the mechanism of special economic zones, which we are also developing from year to year, constantly creating new special economic zones based on the regions' proposals, working with existing ones, developing them.

Offset contract mechanism. The mechanism of public-private partnership is developing, when the state and business share the risks. These tools are widely used and replicated.

But taking into account new tasks, we are also creating new mechanisms. Mechanism of investment tariff benefit. It will allow us to allow duty-free import of equipment necessary for specific projects in priority sectors of the economy. Today we have approved the first four projects. Equipment for the production of plywood, lumber and elements of gas turbines will be delivered. Five more projects are under consideration, but we launched this tool literally in the last month.

From the first of January 2023, a modernized mechanism of industrial clusters, focused on import substitution, is launched. This project is led by the Ministry of Industry and Trade.

On behalf of the Prime Minister, together with the Finance Ministry and the Central Bank and business, we are developing a special taxonomy of technological projects that will contribute to the adaptation of the economy. This is similar to what we did on the ESG agenda, when there are clear criteria, there are special projects that undergo a special procedure and classification. The Bank of Russia is ready to soften the regulatory requirements for banks that will finance such projects. That is, this is a market mechanism, banks will be more willing to finance them, because the requirements for them will be lower. And these are also import substitution and technology projects.

At the same time, of course, there are tools that need deep modernization, maybe even some kind of replacement. For example, an investment tax deduction. This year and next, we will use it to introduce a regional investment standard, and from 2024 we propose to significantly modernize it and, perhaps, revise or reorient the funds allocated to support this element.

It is also important to remember that a quarter of our investment in the economy falls on small and medium-sized businesses. At the same time, in the loan portfolio, which is formed under preferential lending programs, about 60 percent now falls on investment loans for small and medium-sized businesses. In particular, on your instructions at the St Petersburg Forum, at the end of last year – the instruction was given earlier – we launched a new mechanism for providing umbrella guarantees to SME corporations. It allows companies that do not have sufficient collateral in the bank to nevertheless obtain a loan, because the corporation guarantees the bank coverage of part of the possible losses on the portfolio of such projects. This significantly increased the number of companies that have access to borrowed lending. At the same time, they do not require additional funds at the time.

We also propose to give the SME corporation the status of a public sector organization. This will allow banks to apply a reduced risk ratio to loans and, accordingly, reduce the burden on capital. The solution we are proposing will increase lending to small businesses by at least 250 billion rubles.

One last point. For the long-term provision of sufficient financial resources to finance investments, it is important to develop financial markets. Here it is necessary to develop not only debt, but also equity financing, expand tools to attract "long" money to the economy and stimulate companies to enter the capital market. The Government will solve such tasks together with the Bank of Russia. In August, we had a long-term special session under the leadership of the Prime Minister on this topic, and we worked out a number of proposals there.

Mr President, to sum up, a wide range of tools has been created to support investment. Taking into account the current situation, we are, of course, fine-tuning it together with business, regions and business associations. Specific proposals for improving the tools are presented in the draft protocol decision, which has been worked out with the departments.

Please support.

Vladimir Putin: Thank you very much for the proposal, for the work, for such thorough work.

You have mentioned VEB and its role in this work in general many times.

Igor Ivanovich, do you have any comments on this?

I.Shuvalov: Thank you, Mr President.

What was just reported by Maxim Gennadyevich is the fruit of the work of your Executive Office, the Government and many other organisations, including VEB.RF.

I support the conclusions that the Minister of Economic Development voiced, in particular, the proposals for the modernization of the Project Finance Factory, the creation of a share capital fund and the beginning of a new stage of work with VEB.RF guarantees. Over the next five to six months, we have the opportunity to release about 500–700 billion rubles from the programme that was approved as an anti-crisis programme. I think this will greatly help the investment process and lending from commercial banks.

Thank you.

Vladimir Putin: Look, I read here, in paragraph three of the draft instructions: "The state-owned VEB Development Corporation guarantees a minimum yield on the investment of the fund's credit institutions in the amount of at least 4 percent per annum, with part of the risk attributed to the balance sheet of credit institutions." And credit institutions will rejoice in this, no?

Igor Shuvalov: Mr President, this is an initiative to create a share capital fund. We are now discussing this initiative with Sber, VTB and very actively with Gazprombank. Initially, we thought that a single fund would be created, but then the banks proposed that this initiative should concern the creation of several funds. And the fund will not be filled with cash on the part of VEB – at least now, the working model is like this – and we will guarantee that at some point we will buy out the liabilities of this fund with a guaranteed yield.

Thus, this is a low yield, not in the same way as funds operate in the market, but it is a guaranteed return that will allow us to form an initial share capital. And in aggregate, the draft instruction that has been submitted to you allows you to form a share capital of up to 10 percent, together with the relaxations that Maxim Gennadyevich spoke about on the Project Financing Factory – that the share capital should be at least 15 percent when the Factory is launched. This is a completely different situation for the launch of new investment projects and the distribution of risks between commercial banks, the project initiator and the Development Bank. I fully support this measure, I believe that it is absolutely in demand today.

Many people say: "Look at how much, for example, entrepreneurs have accumulated liquidity in their accounts." But we need to make sure that this liquidity works, so that this liquidity comes to new projects. I think that such a share capital fund and the new work with VEB guarantees – it is already widely used in conjunction with commercial banks – will help us start this work in a different way.

<... >

Vladimir Putin: I am very pleased that we are in a constant dialogue on key issues of economic development, and such a lively and interested dialogue, when I often hear if not diametrically opposed approaches, but different ones. This is the creative approach that allows us to maintain the line thanks to which we are steadily developing both public finances and the economy as a whole. I hope that we will continue to work in the same way.

In conclusion, I would like to say something.

We always say that one of the key elements of development is the provision of investments. And I don't remember the time when we would have said that everything here is done brilliantly. We have always worked to improve the mechanisms for attracting, and above all attracting private investment.

Of course, in modern conditions, in today's conditions, the task has become much more complicated. But there are also certain niches that arise with these challenges. We should certainly take advantage of them. This is the mobilization of intellectual and financial resources, our capabilities, the capabilities of our companies, and these opportunities are not decreasing. The challenges are related to the need for our own developments in the most important areas of development. Investments by the state in these priorities should certainly yield results.

I would like to thank everyone for having carefully worked out this proposal, this draft list of instructions. Clearly, I agree with my colleagues that some points need to be improved. But I have a huge request: do not delay these improvements. I understand that they are partly even of a key nature, and you can "dance" around them as much as you want, but I ask you to finish this process in the very near future.

Mikhail Vladimirovich, how much do you think it takes to coordinate these points?

M.Mishustin: Mr President, we would take a week – there are nuances here. But no more.

Vladimir Putin: Excellent. I agree completely.

As for the use of the borrowing mechanism, debt obligations – this is a fundamental issue, I think that we will not immerse it here, of course. We must coordinate everything with the Central Bank, and the Finance Ministry must take an active part here. But in general, I think that this is a very good job, done at a good level, and the approaches are quite bold. Of course, this will give a good result, I have no doubt.

Thank you very much. Best regards.