OREANDA-NEWS. On 21 April 2009 was announced, that the first calling of united subject Legislative Assembly meets a lot of new deputies. General Director of JSC “Irkutskenergo” Andrey Konovalov elected at single election constituency in the list of candidates from the party “United Russia”, is among them. He has to perceive all nuances of regional parliamentarism in the context of economic crisis.

“The range of enterprises which will receive financial support is determined at federal level. It is probably worth making the same list at regional level. Which sectors of economy require support, from your point of view? And why?”

“It is undoubtedly, that there are enterprises at federal and regional levels, which need certain financial support. I do not mean direct support which is grants and subsidies, as the federal budget won’t be enough for everybody. But the government is able to provide loan guarantees and reasonable interest rate. Why is it so important? Financial assistance is necessary to carry on investment programs launched one-two years ago by enterprises. Otherwise, the standing idle will negatively affect business development rates. On the other hand, loss of some investments because of temporary close-down will turn out for refusal to invest further. If we talk about priority sectors, they can be the sectors of electric power, retail, etc., but they must be able to provide multiple effects on regional development.”

“"Irkutskenergo" is one of the seventeen backbone enterprises of Irkutsk which will get financial support. What’s the sense of it?”

“Although we were included in the list of backbone enterprises which require investments or would like to get them, we don’t have any preference yet. Today we have to turn ourselves in. On the other hand, it’s important to remember that money assigned by the government for real economy is not enough and such assistant must be approached reasonably, locally, considerably. It is surely hard to manage without support of federal and regional authorities. Moreover, creation of solidity backlog wasn’t successful since the beginning of the new Irkutsk authorities’ term because of objective crisis reasons. Projects aimed at fast return (I mean gas, oil, gold production) were not implemented because of absence of time. In the context of unstable market economy is it quite important to estimate the situation and take steps necessary for its stabilization.”

“Government has implemented the measures on granting of cheap credits to banks so that the latter could direct funds in real economy. But bank credits remain non-available for enterprises. What is the reason?”

“Banks began to analyze investment programs with partiality, and it is easy to understand. They do not want to take the risk of recessive industry crediting. Nevertheless, although enterprises of fuel and energy sector were affected by the crisis (the objective rate of production decrease is 7-10%), they remain stable, and in general they work stable.”

“Do business units separated during reforming of “Irkutskenergo” (for example, “Irkutsk Electric Grids”) have enough safety factor? Or is it necessary to take several steps which do not allow canceling of achieved results under crisis conditions?”

“During a spin-off of “Irkutsk Electric Grids” from “Irkutskenergo”, we have observed legislation on RF electric power reforming, which distinguishes between so called natural monopoly sphere and competitive sphere. Thus we avoided compulsory division of the company in respect to observation of anti-monopoly legislation. Grid companies are at 100% regulated by the government. Their task is maximal reduce of costs and electric power losses. With relation to business, such enterprises are stable. That’s why “Irkutskenergo” does not need assistance.”

“Today there are discussions on support of small and medium business at all levels of authorities. Reduction of tax burden is considered to be one of effective measures. Is it reasonably to speak about privileges in the Irkutsk Region?”

“I dare say no. There is no doubt that financial crisis had an impact on effective work of business. Certainly, we’d most like that the level of tax burden was lower. But a serious analysis is necessary to change taxation scheme in at least one sector. It means appearance of additional costs which is inadmissible in the context of current deficit. The Ministry of Finance has enough work at other directions now connected with resistance to crisis. It would be more sound to talk about lowering of tax checks which make entrepreneurs nervous and interfere with calm work.”

“Entrepreneurs talk about barriers which do not allow them to develop their businesses. Connection to electric grids is one of them. Currently, actual costs of enterprises for connection to grids with capacity of more than 100 kW in the Irkutsk Region are RUR 700 K. Can you comment upon it?”

“Electric power is a capital-intensive industry. The problem of connection to electric grids touches upon not only the Irkutsk Region but Russia in a whole. According to the Order of the Service for Tariffs of the Irkutsk Region of 12 December 2008 No.53-P, there were established the tariffs for connecting to electric grids of “Irkutsk Grid Company” Ltd. in 2008 in the region. Thus, for individuals applying for technical connection to consume electric power for domestic needs (payment includes VAT) with the capacity of less than 15 kW including, the tariff is RUR 500. Everyone working with larger capacity have to pay accordingly. On the other hand, it is a significant part of investment programs of grid companies licensing connection. What means the payment for connection? Primarily it means intensification of the grids which is necessary to carry out in 80% of cases. It is the realization of investment program. Achievement of this goal needs serious expenditures. I suppose that solving of this problem lies in another field: it’s worth talking about the possibility of payment by installments rather than about sum of connections. This decision is optimal and will suit all parties and give impulse to development of small and medium business.”

“You are a member of the Committee for Budgeting, Pricing, and Financial, Economic and Tax Legislation. You are aware of the degree in which economic crisis added to the problem of municipal budgets. Revenue side does not cover the expense one. How can legislature help municipality?”

“Legislature won’t cope alone with the budget problems existing in the region and in the whole country. Measures from executive power are necessary. On a large scale, legislators should adopt a regulatory system which would be balanced and consistent, to meet interests of municipalities. Moreover, the mission of Legislative Assembly lies in receiving of feedback from municipalities. The Parliament is the body which enough clearly and adequately constructs possibilities of authorities and expectations of population in the form of legislation. That is, we should know the way people live at a single area and which impulse is needed for development. Such feedback work is not carried out fully today. It means that we will work out this direction more actively.”

“Many conflicts between executive and legislative bodies occurred through fifteen years of functioning of the regional Parliament. They were not always constructive. From your point of view, may such confrontation be avoided?”

“Current calling shows balanced interests of separate territories and parties. But the party “United Russia” has the majority of representatives in Legislative Assembly. It means that out party is responsible for almost all decisions of the deputies. Moreover, deputies of a regional Parliament meet strict requirements, take it from me. It helps to avoid creation of clans in the worst meaning of this word, waste confrontation and conflicts of personalities. That’s why deputies mostly concentrate on decision-making over tasks connected with life support of a region. They have no time for confrontation with anybody. Crisis tests strength of each of us, and it’s hard to forecast how much we’ll have to pay in the end. But we should have patience, not lose hope and keep a stiff upper lip. And the most important is to work again and again.

Under the conditions of unstable economic situation it’s quite important to estimate the state of things adequately and take steps necessary for stabilization of the situation.