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The participants examined ways to clean up the damage caused by wildfires in Khakassia and Trans-Baikal Region as rapidly as possible. Particular emphasis was on rebuilding housing and infrastructure, and compensation for farmers.

The most relevant issues raised during the recent Direct Line with Vladimir Putin live call-in programme were also discussed, in particular the use of maternity capital, the effectiveness of using money from the reserve funds, and quality control of fuel for cars.

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Excerpts from transcript of meeting with Government members

President of Russia Vladimir Putin: Good afternoon, colleagues,

Mr Medvedev and I already started discussing a few issues. Above all, we discussed how the clean-up effort is going after the wildfires, and in Trans-Baikal Territory the fire-fighting efforts continue.

I therefore want to start with this matter now and ask Mr Kozak to report on the clean-up effort in Khakassia and on the fire-fighting efforts and the work to rebuild infrastructure and housing in Trans-Baikal Territory. Please, go ahead.

Deputy Prime Minister Dmitry Kozak: Mr President, colleague,

Mr President, acting on the instructions you gave following your trip to Khakassia, the Government has organised work, above all as concerns identifying the individual buildings and people affected by the fires in Trans-Baikal Territory and Khakassia.

A complete list has been made now of all homes damaged by the fires. A total of 1,373 homes were completely destroyed or cannot be repaired and must be built anew, and there are 64 homes that need complete renovation. A list has also been drawn up of all social facilities and engineering infrastructure that needs to be repaired. We have given the necessary instructions and they are now being carried out. Everything will be repaired by September.

Draft resolutions on allocating funds for this work have already been prepared and submitted to the Government. The Government will examine them at its meeting tomorrow. The money comes to 2.8 billion rubles. This is the first tranche only. It will be spent on social infrastructure facilities and homes that we know for sure were destroyed and for which we have already established what exactly needs to be built now.

This work will be complete by May 15. If necessary, we will make additional funds available. But today, we will settle the issues in sections, so as to be clear about the funding sources and make the decisions needed to get contracts signed and start on the construction work.

Even though this work calls for tight deadlines and rapid decisions, we still need to make sure the results are up to standard. At the moment, we are completely confident that this work will be carried out as planned, but we will monitor the situation on a daily basis. This monitoring will take place at Government level.

(Mr Kozak also spoke about preparations for the construction work, the choice of model house designs, sub-contractors, companies to deliver the construction materials, and preparation of detailed construction schedules for each site).

A decision has also been taken to provide assistance to the regions in order to compensate for losses suffered by agricultural goods producers. The Government will examine this matter too at its meeting tomorrow. To date, the claims on which we need to make decisions – cases backed up by all the necessary documentation – come to a total of only 43 million rubles. These decisions will be taken tomorrow.

By May 15, the Agriculture Minister and the regions concerned will draw up a complete list of affected agricultural producers in order to make full decisions on total compensation, including to owners of small private farms, as you instructed.

The Economic Development Ministry and the regions concerned will make an assessment of the damage to small and medium-sized enterprises (SME) in these regions within the limits of the money allocated for the programme to support SMEs. Additional money will be made available for rebuilding the corresponding infrastructure.

Overall, the work is already underway at an intensive pace. The executive authorities in the regions, local government officials and representatives of the federal executive bodies in the regions are working practically around the clock. We will report on the results as need be. If any problems arise, we will speak openly about them.

Vladimir Putin: The evaluation work needs to be completed as quickly as possible. We need to know the extent of the damage, then we can allocate funds. An objective assessment of the damage must be carried out as quickly as possible.

Dmitry Kozak: The regional executive authorities are asking for around 7 billion rubles for the damaged housing and social and engineering infrastructure, but this assessment needs the documentation to support it.

Vladimir Putin: I ask you not to wait until all of this is sitting on your desk. You need to work directly with them and achieve quality and rapid results.

Dmitry Kozak: This work is underway, Mr President.

Vladimir Putin: Good.

There are also a number of matters connected to the Direct Line programme. You saw that there were many questions and it was impossible to answer all of them. Of course, we knew this would be the case, but nonetheless, the sheer amount of questions reflects our people’s main concerns, and I would like to address a few of these questions today.

The first question concerns the possibility of putting the maternity capital towards the needs of families with seriously ill children or children with disabilities in the difficult circumstances in which some of our people have found themselves. I know that the Government has looked into this and has drafted the relevant proposals and even made decisions.

Ms Golodets please, go ahead.

Deputy Prime Minister Olga Golodets: Mr President,

Let me briefly give the situation with maternity capital as things stand today. I remind you that the programme has been underway since January 1, 2007. Its primary goal is to encourage childbirth and improve young families’ material situation. In 2007, 1,610,000 children were born in Russia, but last year, we reached the highest level yet since 2000, with 1,947,000 childbirths.

What is important is that more and more people are having a second child now. In 2007, only 493,000 second children were born, but last year, the figure was up to 658,000. The overall birth rate has increased from 1.4 to 1.75. Essentially, we have already reached the target we set for 2018.

To date, 5.8 million families have received maternity capital certificates and 3.3 million families have already used them. The vast majority of families use the maternity capital to improve their housing conditions. Over this period, 3.1 million families have improved their housing situation by moving into new apartments or renovating their current homes; 194,000 families decided to put the maternity capital towards their child’s education.

(Ms Golodets went on to speak about other possible uses for the maternity capital, in particular, for obtaining mortgage loans or ensuring the conditions for children with disabilities’ education and development).

Vladimir Putin: There were many questions concerning the efficient use of resources from the reserve funds.

I asked Ms Golikova to look into it.

Chairperson of the Accounts Chamber Tatyana Golikova: Mr President, colleagues,

In accordance with your instructions and the State Duma resolution, we monitored the use of resources from the Reserve Fund and the National Welfare Fund. We have summed up the results for the first quarter of 2015, and I want to present this information to you.

As ofApril 1, 2015, the total volume of the Reserve Fund and the National Welfare Fund stood at 8.8 trillion rubles. Over 2014, we added a total of 86.5 billion rubles to this figure by using the revenue we earned on our deposits with the Central Bank and through the replenishment measures.

But if we are to talk separately about the use of resources from the Reserve Fund and the National Welfare Fund, the Reserve Fund was created as a measure to balance the budget, while the National Welfare Fund is designed to fund self-liquidating projects and support the relevant banks, also within the framework of the anti-crisis plan.

As for the Reserve Fund, in February 2015, the Finance Ministry used its right to allocate 500 billion rubles from the Reserve Fund to cover the national budget deficit, and the reduction of its volume is partially due to this decision.

As for the National Welfare Fund, as of April 1, 2015, the amount of resources from this fund used to implement the decisions I just mentioned was 592.6 billion rubles. Where did this money go?

First, as everyone knows, a decision was made in 2013 to allocate part of the National Welfare Fund resources toward eleven self-liquidating infrastructure projects. Basically, we spent the entire 2014 on approving project design passports and negotiating terms and conditions for funding.

The volume of funding that needs to be allocated toward these goals is nearly 815 billion rubles, and as of April 1, 2015, 187.6 billion rubles has been allocated toward five projects. These include the construction of intelligent networks, and the funds were allocated in the amount of 1.1 billion rubles; closing digital access gaps in sparsely populated areas – 4 billion rubles; construction of gas extraction and purification facilities on the Yamal Peninsula – 75 billion rubles; modernisation of railway infrastructure on the Trans-Siberian and Baikal-Amur mainlines – another 50 billion rubles, and 57.5 billion rubles will be spent on construction of a nuclear power plant in Finland.

As for other resources used for these purposes, we are talking about another 126 billion rubles that were allocated toward deposits and subordinated loans to the VTB Bank, and placement of the National Welfare Fund resources in preferred shares in VTB, Rosselkhozbank, and Gazprombank invested to ensure their stability.

At the same time, I want to say that in accordance with your instructions and the State Duma resolution, we are required to monitor the use of resources on a quarterly basis. At the moment, this monitoring was limited because the decisions were made primarily on allocating resources in the first quarter, but starting in the second quarter, it will include control activities to monitor the use of resources locally.

I would like to say that the Finance Ministry has completed the initial phase of its work, essentially launching this mechanism. Now, the main responsibility largely lies with the Economic Development Ministry and Transport Ministry, since they are the coordinators for a significant part of the projects and are responsible for the monitoring and targeted use of these funds.

The cooperation that will be established between these ministries as project initiators and us is fundamentally important, because according to last year’s experience, we have the opportunity to support projects in order to avoid any undesirable use of federal budget funding.

And finally, as I already said, 126 billion was allocated to VTB. Part of the funds, 100 billion rubles, was placed in subordinated deposit, including 30 billion used to buy Russian Railways bonds and traction rolling stock.

At the same time, I want to point out that the placement of funds in subordinated loan with VTB provided the opportunity to increase the bank’s capital adequacy ratio, and this naturally enhanced its stability.

In conclusion I want to once again say that we will continue the work and will certainly report to you on the situation unfolding with regard to the use of National Welfare Fund resources.

Vladimir Putin: I ask you to continue this work so that the Cabinet responds in a timely manner and has additional information from you on how this funding is used. And, naturally, for the State Duma deputies to also have complete information, so they can use it when making any decisions in the future.

Incidentally, as far as the traction rolling stock is concerned, we need to look into it; after all, such orders, orders for locomotives, will put an extra load on our production capacity. And private companies would be ready to do this provided they can use the locomotives in their work. We need to discuss this with the Transport Ministry, the companies, and Russian Railways.

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Vladimir Putin: And there are a lot of complaints from car enthusiasts about the quality of motor fuel – not just petrol but diesel as well. I asked Rosstandart to conduct corresponding inspections. They are underway. And these audits have confirmed that the quality of automotive fuel quite often does not meet the necessary standards, first and foremost in terms of its physico-chemical properties, and several other parameters.

Can we finally put an end to this practice?

Please, Mr Manturov, go ahead.

Industry and Trade Minister Denis Manturov: Mr President, Rosstandart, which reports to our ministry, is indeed carrying out regular scheduled inspections, not just at gas stations, but also at oil refineries and storage facilities. Last year, a total of 1,000 facilities were inspected, with 300 improvement notices involving administrative fines issued.

We had the fewest complaints with regard to oil refineries. Because they are currently conducting fairly large-scale modernisation within the framework of four-party agreements signed between oil refineries, the Federal Anti-Monopoly Service, Rostekhnadzor and Rosstandart, the work is fairly routine. This is true of both 2014 and the first quarter of this year.

The only thing I can confirm is that even taking into account tougher requirements and ban on the production and sale of Euro 3 fuel, the number of violations has decreased. In other words, if we take the results for the first quarter, out of 120 gas stations inspected, violations were discovered at 20.

Together with the Energy Ministry, we have compiled a list of measures, including amendments to the Administrative Offences Code, that would introduce so called “turnover” fine, which will be levied on the turnover depending on the revenue of the enterprise, and going as far asterminating that enterprise’s activities. But given the positive dynamic we are seeing on the backdrop of more stringent requirements to gas stations, we will continue with inspections and monitoring. If the situation worsens, we will rapidly issue an initiative to make corresponding amendments to the Administrative Offences Code. And we will continue our work.

Vladimir Putin: What sanctions exist today?

Denis Manturov: Today, if we take the violations revealed last yea, administrative fines issued directly to gas stations total about 10 million rubles.

Vladimir Putin: Listen, Mr Manturov, this is truly theft. This not only leads to problems when car engines break down more often and need to be repaired more often, etc. This is actually cheating consumers. Are you saying that nobody is held liable for this?

Denis Manturov: We are preparing an assignmentfor our inspection authorities, including the Prosecutor General’s Office and the Interior Ministry, in order for them to get involved when there is not only a mismatch between fuel quality and the standard, but when we are talking, first and foremost, about under-filling.

But this is not related to Rosstandart inspections; we are responsible specifically for the fuel itself, for its chemical properties. So in this respect, we propose introducing administrative fines, what I said with regard to amendments to the Administrative Offences Code. I think that this will be a good incentive, including for decreasing those administrative violations.

Vladimir Putin: Let’s agree to that. I will ask the Prosecutor General’s Office to work with you and other relevant departments and agencies to analyse the situation in this area and for all of you to make corresponding proposals.

Denis Manturov: Ok.

Vladimir Putin: Then it’s agreed.

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