Rustam Minnikhanov and Sergei Levkin discussed the issues related to building production facilities in Alabuga zone

January 30, Rustam Minnikhanov, Tatarstan Prime Minister and Sergei Levkin, general director of the special economic zone "Alabuga" discussed issues related to building production facilities in Alabuga zone.

The Alabuga zone’s general director reported of the 2008 performance, the main tasks for 2009, and of a development concept aimed to make the company operate without losses before 2011.

Opening the meeting, Rustam Minnikhanov thanked the zone’s management for effective cooperation. "We are satisfied with our relations, hope we will maintain them. We have no discrepancies in terms of clear understanding of our tasks, we have established a single line of work. There has been a balance of interests and competences as well," said the head of government.

Alabuga general director told of the results of the work. "In 2008, we fulfilled all the obligations and reached the targets at the year’s beginning. We disbursed and invested in the infrastructure 2.4 billion rubles. The target for this year is 3.1 billion rubles. Half of the zone’s territory, 1 thousand hectares, will at the end of the year be supplied with a requisite infrastructure, allowing our tenants to place production facilities," he said.

"There is one problem we currently have. It is not strategic, it is tactical in terms of gains and covering the costs of the subsidiary. This is due to that an infrastructure has been built on a space of 500 hectares, while tenants have so far not filled the entire zone with their plants and facilities. Consumption of energy is therefore minimal. Depreciation and operation costs are for the moment higher than profits we expect the residents to generate. Some particular measures have been devised that in the near future will be submitted to the federal government and to Russia’s Economic Development Ministry. According to our forecasts, considering the tenants to come, in 2012-2013 we will begin operating without losses. In the next 2-3 years, we need to find sources to cover the costs," he said.

Igor Nossov, SEZ territorial division’s official attending the meeting said the recession seen in the world economy has had its negative effects, primarily affecting potential tenants. "This means an increase in the cost of money. Along the negative, there are some positive effects as well, like a sharp decrease in the cost of construction in US dollars," he noted.

He went on to say that an upturn is to follow the crisis. According to various agencies, it may happen in 1.5-3 years’s time. "You cannot build a big plant in less than 3 years. Beginning construction now, a Russian or foreign company is to have a ready-made product at the time of an economic boom and may considerably improve its position on the market," he emphasized.