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23:39 | Nov 29 | 2011

Sakha is open for investments

Yakutia’s progress in implementation of the Program of Public-Private Partnership.

The Minister of Economy and Industrial Policy of the Republic of Sakha (Yakutia) Mikhail Osipov told us to what extent and why Yakutia can be attractive to investors, and what investment attraction programs are being implemented in the region.

Cooperation is the priority
- At the International Conference “Integrated Infrastructure Development in the North-East Russia” a lot was said about the public-private partnership as a priority instrument for financing new economic projects. What steps have been made in this direction?

- In view of developing the public-private partnership a Regional Center of Public-Private Partnership is being created in the Republic; a Department of Public-Private Partnership has been created at the Ministry of Economy and Industrial Policy of the Republic of Sakha (Yakutia); regional legal and regulatory framework is being developed. In particular, a Law “On Participation of the Republic of Sakha (Yakutia) in Public-Private Partnership Projects” is to be adopted by the end of 2011; the Law will contribute to improvement of the investment climate in the Republic of Sakha (Yakutia) and allow creating necessary transparent mechanisms for cooperation between the state and private investors.
It is worth noting that the Republic of Sakha (Yakutia) is one of the leaders in the Russian Federation in terms of the potential for implementation of investment projects in its territory, including by the amount of necessary investments. The basis for this are projects for integrated industrial development of territories, which are based precisely on the principles of public-private partnership.
- Which projects can serve as examples of successful implementation of such a partnership?
- It is the “Integrated Development of Southern Yakutia” Project, which should demonstrate to the investors the real possibilities for cooperation with the Republic and become a visiting card of practical implementation of the principle of public-private partnership. This project is currently being implemented successfully, in broad terms; the Project participants fulfill their obligations. Design documentation is being developed for industrial facilities, transport and electric grid infrastructure.
The public-private partnership is to be used as an implementation mechanism for projects in the area of social infrastructure: housing and community amenities, healthcare, education, culture, sports. This will allow “equalizing” in future the standards of living of the population and providing quality services.

Tiksi will be given new life
- It looks like the most “intensive” program is the one for integrated development of Southern Yakutia. And what programs are there for development of other regions of the Republic?
- In Western Yakutia
we envisage development of oil and gas deposits, construction of underground diamond mines, and construction of the “Viluy” motorway and power lines that should link Yakutia with the Irkutsk Oblast. As you know, the first stage of the “Eastern Siberia – Pacific Ocean” Oil Transportation System was built in this part of the Republic in unprecedentedly short time. Besides, a Yakut center of gas production will be created here on the basis of Chayadinsko-Botuobinskaya group of gas deposits. In cooperation with Gazprom main implementation stages for development of the Chayadinskoe oil and gas condensate deposit have been identified. Construction of a Yakutia – Khabarovsk – Vladivostok gas pipeline is envisaged in the same corridor with the oil transportation system. In total, more than 30 bil cubic meters are planned to be supplied, which will account for 23% of the natural gas extraction in the Eastern Siberia and Far East region.
The North-Eastern Yakutia cluster is to specialize in extraction and processing of non-ferrous and rare earth metals. Here, Nezhdaninskoe gold field and Verkhne-Menkechenskoe silver-containing complex deposit are expected to be developed, and Dzhebariki-Khainskaya Heat and Power Plant in the village of Khandyga constructed by private investors.
In the Central Yakutia a transport and logistics hub and a science and education complex are being created; further development of the jewelry and diamond-cutting industry is envisaged. After the construction of the Barkakit – Tommot – Yakutsk railroad is completed, a transport corridor with high potential will be created, oriented towards covering domestic transport needs, as well as to a large extent towards Russia’s and Asia-Pacific Region’s external economic relations with Europe.
In each cluster, development of key urban locations to form agglomerations centered on the cities of Mirny, Lensk, Yakutsk and Neryungri and possessing good social infrastructure is envisaged.
- And what can you say about the Republic’s arctic territories? What is planned to be done, in particular, to further revive and develop the Northern Sea Route and the port of Tiksi?
- As you know, half of the territory of the Republic of Sakha (Yakutia) falls within the Arctic zone, with more than 68 thousand people living there. For this reason, the regional government takes an active part in preparation of federal complex strategies for development of the Arctic zone. For example, scientific research is being carried out in the Republic in view of formulating well-grounded proposals for a subprogram of the Russian Federation State Program “Economic and Social Development of the Arctic Zone of the Russian Federation for the period 2011 – 2010”. A pilot project for creating a special Arctic zone envisaging development of the town of Tiksi has been prepared; based on the results of this project the experience from it is expected to be applied to the entire Arctic zone of the Russian Federation.
The Government of the Republic of Sakha (Yakutia) systemically works on reviving the Northern Sea Route. We propose to create an international meridional transport corridor: Northern Sea Route – Lena River – Berkakit-Tommot-Yakutsk Railroad – Baikal-Amur Railroad (Trans-Siberian Railroad) – Asia. In this regard development of the town of Tiksi in the Bulunsky district of the Republic, with a seaport and a federal airport located in that town, is of strategic importance.
Besides, Tiksi is considered as one of the strategic control centers for the Northern Sea Route infrastructure with regard to the Northern Sea Route’s development, the need to create an integrated system for navigation control and safety, traffic management in areas with intensive navigation.

Gold finders will be assisted by … bacteria
- Taking about modernization is now a commonplace. What innovative technologies, nanotechnologies will be developed and implemented in Yakutia?

- It is true that tasks related to modernization of the economy, the Republic’s technological and innovation-based development are today our top priority. In order to create favorable conditions for launching innovative products and services, increasing the industry’s ability to compete in the marketplace a State Program of the Republic of Sakha (Yakutia) “Scientific, Technical and Innovation-based Development of the Republic of Sakha (Yakutia) for the period 2012 – 2016” has been adopted. In addition, amendments to the Law of the Republic of Sakha (Yakutia) “On Science and State Scientific and Technical Policy” allowing the budget-funded scientific and educational institutions’ creating legal entities for practical application (implementation) of results of their intellectual activities were introduced in 2010. A Conceptual Framework for the Republic of Sakha (Yakutia) scientific, technical and innovation policy for the period until 2015 and main strands for the period until 2030 have been approved.
- So what kinds of innovations are expected to be implemented in specific sectors of industry?
- For example, underground diamond mining technologies and crystals-friendly softening of kimberlite are expected to be implemented when building underground mines in Mirny, Aikhal, Udachny.
In the diamond-cutting industry, software for stock-taking of raw diamonds during their processing and for evaluation of cut diamonds, as well as SARIN/HELIUM, OGIMARKER/MEGASCOPE technological equipment for laser marking of rough diamonds with simultaneous assessment of parameters of diamonds to be produced, are being widely implemented. Laser is used to saw the raw diamonds. Such equipment is already installed at OOO DDK and OAO Sakha Diamond. Implementation is planned at other gem-cutting plants, too.
In the coal industry development of the coal chemistry is envisaged, and increasing the coal enrichment and improvement (production of coal briquettes) levels planned.
While developing one the large gold fields “Nezhdaninskoe”, a modern technology for enrichment of the so-called “refractory ores”, i.e. ores with high content of sulfides and arsenic, will be applied. The technology is called “bacterial leaching”; it relies on bacteria for extraction of the precious metal from the ore. Ores from the deposit have undergone a complete technological cycle of laboratory and industrial testing, and the results have been accepted by the designing company.
In the jewelry sector, IT and technical innovations aimed at automation of accounting, as well as a plenty of production innovations are being implemented and used. And such traditional sectors as agriculture should be touched upon by innovations, too. It is planned to create zonal mechanized complexes for production, processing and storage of agricultural products, to develop technologies for renewal of natural biological resources, and other things.
The Republic’s potential allows it becoming a leader in production of new construction and technical materials, as well as in application of nanotechnologies, new technologies in the mining industry, biomedical technologies and medicines based on deer farming products.

Nature as an investment resource
- To what extent, in your view, is the Republic of Sakha attractive for investments?

- I believe that our Republic with respect to investments is one of the most attractive regions in the North-East of Russia, and it offers terrific opportunities to potential investors due to objective factors. The most important factor is, of course, existence of natural resources that are estimated at 3 trillion US dollars and make Yakutia number one region in Russia by total reserves.
Not less important factors, in my view, are stable social situation in the Republic and existence of long-term strategic plans based on efficient use of super-rich natural resources for improving the quality of life of the people. The year-to-year growth in the Republic’s main macroeconomic indicators over the last five years reconfirms that the right strategy was chosen. In 2010 Gross Regional Product was almost 20% higher than in 2005, while the industrial output grew by 14%.
In October this year the Republic of Sakha (Yakutia) was awarded a First Class Diploma in the nomination “Development of a Regional System for Strategic and Territorial Planning” at the 10th All-Russia contest held within the framework of the “Strategic Planning in the Regions and Cities of Russia” Forum.
- To what extent are large companies interested in building cooperation with the Republic?
- Large Russian and foreign companies persistently express interest in complex projects for development of Yakutia’s territories, something that reconfirms, by the way, that the Republic offers favorable investment climate. While in the beginning of 2000s only one large company – ALROSA – operated in the Republic’s territory, now about a dozen of them do, including Surgutneftegaz, Mechel, Transneft, Transstroy, Russian Railways, Gazprom, Polus Zoloto and others.
Of course, we are aware of our weaknesses, too. These include large distances, underdeveloped infrastructure, difficult climate conditions related to the harsh winter. This is why the main policy strands pursued by the Republic’s authorities are related to elimination of these weaknesses in view of increasing the Republic’s investment attractiveness. On December 20, 2012 the start-up complex Tommot – Nizhny Bestyakh is to be put in operation. The backbone road network is being extended. Power lines and new generation facilities are being designed and constructed.
As a result of implementation of the existing infrastructure development plans, by 2020 the cost of delivery of one ton of cargo to the Republic’s districts should be two times lower than what it is now, and the electric energy tariffs should achieve the average Russia level.