Vyacheslav Gaizer, Komi Republic
Release Date: 2010-08-25
Vyacheslav Gaizer, Governor of Komi Republic, has been interviewed by Russiaenergy.com for a Russia Special report for Oil and Gas Financial Journal to discuss the current guidelines and the main priorities of the regional government and the way the O&G sector fits the social and economic agenda of the Komi Republic.You ascended to the position of the Governor of Komi Republic from the position of Finance Minister of Komi Republic in January 2010. Could you comment on the current guidelines and the main priorities?
Of course, it’s normal that something changes when a new person takes the office. In general, the current policy continues the strategy developed by the previous government, although I am also defining new projects and choosing new tools to implement these strategies.
How does the O&G sector fit the social and economic agenda of the Komi Republic and how will it continue in its future development?
I would say that, as the main source of tax proceeds, the O&G sector of the Komi Republic defines the development of social and economic agenda bringing the main share of profit in the budget. Aside from this, an important contribution comes from the social partnerships outside the budget under the agreements that O&G companies sign with the regional government and the municipal administration to solve the local social issues. In fact, these are charity projects covering a wide range of issues: capital development, social events, competition, healthcare, education and ecology. In this regard, business and the government have common interests.
Recently, under the tax reforms in Russia, revenues from the tax on natural resources production were directed from the regional to the federal government, in order to be then re-distributed to the regions. How did it affect the Komi Republic’s budget and, in light of these reforms, what steps have you taken to adapt these investments and build on the relationship with the O&G industry?
We understand that the centralization of the tax on natural resources production as a source of revenue is necessary, to involve our companies and to encourage them to implement investment programs creating an industrial base in the region. The majority of these companies is vertically integrated and can take decisions on their production programs whenever they wish. We, as the government, see our main task as encouraging investors to develop the local base of investment programs in order to create a tax base that would make up our regional revenues; this would be to the mutual benefit of the region and the operating companies. In this regard, I always stress the importance of creating not only workplaces but also the fixed assets, regional legislation that provides support for investments and tax breaks for the investment projects.
President Medvedev has spoken on the importance of adding value to the activities to retain more wealth in Russia instead of simply exporting crude products. How does the Komi Republic manage to create value in the projects, attract investors and retain more value in the local activities?
Of course, we are convinced that this is the best solution. This is why the main priority of our strategy is focusing on refining. In this sector there are currently two large projects: modernization of Ukhta oil refinery by LUKOIL and construction of a refinery with a capacity of one million tons of oil by Yenisey Oil Company. Development of the refining depends on expanding the market for our products because the Komi Republic is a very small market. This is why we’re interested in finding a transport solution; one of the strategic federal projects, carried out jointly with our neighbors in Arkhangelsk, is the construction of a new railway to make railway transport cheaper.
As OGFJ is a financial publication as well, your remarks as the ex-Finance Minister are very relevant to this report. We know that finance and funding from international investors is very important for the long-term development of oil and gas projects in Russia. In a moment when the financial markets are risk-adverse, how you convince the investors to come and lend money to the Komi Republic?
This requires a sophisticated and multifaceted approach linked to developing the legal base – namely the laws that regulate the support of innovations and investments. By this I mean the tax breaks and simplification of the procedures to obtain permissions and approvals. When there are fewer administrative barriers, an investor coming here will not be as worried about how to proceed through these stages. If somebody wants to make a project here, our priority is to make it as quick and easy as possible.
According to the Ministry of Natural Resources of Russia, it is necessary to make the policies for developing strategic reserves more flexible and make them more open to add jobs and bring technologies to Russia. It is important to know that, from the public side, these efforts are also put in place. Is there any coordination between the local and the national policies to make Russia and its regions more attractive?
Strategically, this is represented by a unified guideline that has been agreed on all the levels in spite of the differing views on the federal and the regional level. Most importantly though, we are sharing the same concept of direction and have a single objective.
What would be your final message to the readers of Oil and Gas Financial Journal on the role that the Komi Republic will play in the future of Russia?
Komi Republic is unlikely to ever account for the main share of the production and refining of hydrocarbons in Russia in terms of reserves, but we will do everything to ensure support for the Russian oil and gas industry, increase our activities and maintain our position and stability in this niche with regards to the other federal subjects involved in such projects.
| Company: | Komi Republic |
| Position: | Head |
| Country: | Russian Federation |