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President of Russia Vladimir Putin: Good afternoon, colleagues,

I have signed an executive order on the development of Federal Hydrogenerating Company RusHydro. The plan is to increase its capital by 50 billion rubles [over $1.6 billion], a substantial sum, with allocations from the 2012 federal budget. The funding will be injected in the development of the energy industry in the Far East, in particular the following facilities: the thermal power station in Sovetskaya Gavan, Sakhalin GRES-2 (first stage), Yakutskaya GRES-2 (first stage) and the Blagoveshchenskaya Thermal Power Station (second stage).

The executive order includes instructions to the relevant agencies to ensure an efficient use of budget funds, which must be spent for the intended purpose. These conditions must be fulfilled meticulously and I want to emphasise this to Mr Ishayev as a federal minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District, as well as to the company’s management.

You must exercise strict control over all subsequent actions taken after the company’s recapitalisation. I hope I have made myself clear and you understand the situation. Any further steps to develop the company or its various divisions are possible only with regard to the interests of the state and the investment made in the relevant facilities.

Let us discuss this in more detail now.

MINISTER IN CHARGE OF RUSSIA’S FAR EAST DEVELOPMENT AND PRESIDENTIAL PLENIPOTENTIARY ENVOY TO THE FAR EASTERN FEDERAL DISTRICT Viktor Ishayev: Thank you.

Mr President, energy is a fundamental industry that determines the overall development of the Far East. The facilities that have been selected are essential. First, the degree of depreciation is significant and the people are waiting for these issues to be resolved. We have been discussing these matters for a long time.

New, more efficient technologies and types of fuel will be introduced. Certain facilities will run on both gas and coal. This is the right decision given the diversification of fuel, and we have already seen that the system itself will generate additional revenues by reducing costs. This may not lead to an immediate reduction in tariffs, but at least the tariff growth rate will be stabilised, which is a very positive fact that will benefit both individual consumers and manufacturers.

If we improve the situation in the energy sector, the region will immediately become more attractive for investment, and this will serve as an impetus and a signal from the government to investors. Thank you very much for signing the executive order.

Vladimir Putin: All my visits to the region and the analysis of the economic situation there show that inequality in energy tariffs leads to inequality in economic activity and in the living standards. Therefore, we must begin our efforts to develop and support the region with the energy industry. This is just one of the steps we plan to take to promote the development of East Siberia and the Far East.

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