Rustam Minnikhanov: There is some tension but we are fulfilling all social obligations

At an extended meeting the Tatarstan Industry and Trade Ministry discussed Tatarstan’s energy and industry performance in the first quarter of 2009 on May 15. Tatarstan Prime Minister Rustam Minnikhanov attended the meeting.

According to Industry and Trade Minister Ravil Zaripov, the global financial crisis and the ensuing consumer demand crisis had led to a deep recession in the Tatarstan’s economy. The industrial production index due to solid performance in 2008 totalled 104.3 percent versus 2007. The figure in the Russian Federation is 102.1 percent. Over the fourth quarter of the last year, though, a drastic decrease in production was seen.

The industrial production index has over the first quarter of 2009 decreased by nearly 16 percent versus the same period last year, totalling 169 billion rubles. Oil recovery and refining accounts for the greater part of the total production, being 42.5 percent, which is more than last year. The share of machine building has decreased by 6.5 percent. It is related to a sharp decrease in the auto industry output. The industrial production index has in the first quarter of 2009 been 84.1 percent, while in Russia it has been 85.7 percent.

According to the data presented by the minister, the worst effect on the industrial production index has been produced by the decrease in production in the machine building sector, where the industrial production index has been 38 percent, and 84 in the oil and petrochemical industries. Still, projections for this year for some companies are optimistic: 106.6 percent in the chemistry and petrochemistry branch, and 101.3 percent in the fuel sector. Production within the military defence sector is forecasted as last year’s.

“Based on a preliminary estimate, industrial production will this year total 750 billion roubles, which is 17.5 percent less than last year. The biggest influence on industrial growth is made by the decline in the machine building branch,” said the official.

A drastic decrease in profits has been the worst after-effect of the crisis. Based on the January-February operations, 207 firms incurred losses, which is 33 percent more than in the same period last year.

The average monthly salary has over the first quarter totalled 15.5 thousand roubles, which is 5 percent less than over the first quarter of 2008. Salary arrears are one of the negative after-effects of the ongoing crisis. According to the data available for 1 May 2009, arrears at production companies totalled 35.4 million roubles, which is 12 million less than at the beginning of April.

Ravil Zaripov went on to note that the measures adopted by the governments of Russia and Tatarstan, aimed to stabilise the banking and real economy sectors, had somewhat slowed down the recession. Owing to the local government’s prompt action, 11 local companies had been included on the list of the federal backbone companies.

Prime Minister Rustam Minnikhanov summarised the meeting. “At the end of last year, we said the crisis was to affect all of us and would be severe. Our forecasts have come to be true. The crisis has seriously affected our republic. The results of the first quarter’s performance signify the situation is difficult. We will optimise all our costs”, he said. According to the premier, the oil industry keeps operating, its products are in demand. The oil companies have adopted some drastic anti-crisis measures. The petrochemical branch has found itself in a difficult situation due to exchange differences. “I think things will recover”, said Minnikhanov.

He went on to say that every opportunity arising at the federal level should be used. Tatarstan needs to take part in all federal projects, using to the maximum the Federation Council’s potential. “We should work with all the federal ministries and entities,” enhanced the Tatar premier.