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President of Russia Vladimir Putin: Good afternoon, Mr Khusnullin.

Deputy Prime Minister Marat Khusnullin: Good afternoon, Mr President.

Vladimir Putin: In early October, I asked the Government to come up with proposals concerning reliable water supply to Sevastopol and Crimea. I know that this work has been completed, corresponding decisions have been made, and funding sources identified in the amount of almost 50 billion rubles to be released in several phases. I would like you to review this and report to me in more detail what exactly will be implemented and in what timeframe.

This is important for the people in Sevastopol and Crimea and for those who vacation there. It is also important for businesses, especially when making plans in the sphere of recreation and when making investment decisions on the construction of new hotels, resorts, etc. Clearly, to put it mildly, it is difficult to implement projects like this without water.

Mr Khusnullin, please go ahead.

Marat Khusnullin: Mr President,

Following your instructions on ensuring safe and quality water supply in the Republic of Crimea and Sevastopol, the Government has drafted and endorsed a comprehensive plan of action.

The plan includes 14 measures from 2020 to 2024 with an overall funding of 48 billion rubles, including 45.9 billion from the federal budget and the rest from regional funds.

The plan envisages the development of new underwater resources (luckily, we have water reserves) and the construction of hydraulic structures, water distribution and water discharge facilities. We are also considering, of course, the need to put in order and conduct major repairs on the existing infrastructure. This infrastructure is pretty worn-out and leads to big losses.

I would like to note that the plan was drafted with consideration for Rosgidromet [Federal Service for Hydrometeorology and Environmental Monitoring] forecasts. Regrettably, in the fourth quarter of 2020 we will still have difficulties due to low water levels. Apparently, a lack of water will still be a problem. The water level of the rivers will fluctuate from 10 to 60 percent of the norm. This situation is different from the past several decades.

We have divided the plan into priority, mid-term and long-term measures. At present, eight of 14 measures are now being carried out.

To implement priority measures based on your instructions, the Government has allocated priority amounts – 5.83 billion rubles from the Reserve Fund, including 4.95 billion rubles for the construction of a water supply inlet on the Belbek river, and a water pipeline to transfer water from the Kadykovsky reservoir to Sevastopol.

We have informed the Defence Ministry of the parameters and it has started working on these facilities: 144 people and 45 units of equipment are already involved. Under our plan, about 200 people and additional equipment will be mobilised in the next two weeks. As of today, we are on schedule.

Some 880 million rubles have been allocated to Crimea and Sevastopol to implement measures on reducing losses in the water supply systems. The design and preparatory work are underway now.

Also on your instruction, Rosgeo is prospecting for water intakes to increase the use of groundwater at existing water inlets. Up to 10 earth augers will be working there by the end of the year; six are already working. They will drill 30 wells, of which 22 will already supply water to the system.

We are ahead of schedule on the construction of the Beshterek-Zuisky water intake and water line to Simferopol. These measures will make it possible to avoid water restrictions in Simferopol and Sevastopol.

In the mid-term, we suggest continuing the measures on reducing losses in the water systems of both Crimea and Sevastopol. We are also conducting geological studies of the ground to find new groundwater sources for the future and to divert part of the Salgir River’s water volume to the Mezhgorny hydroelectric complex. We are also planning to launch a system for sewage water treatment for its reuse for technical purposes at current waste water reclamation plants or plants under construction.

Mr President, our plan also provides for building water connections from the Chernorechensky Reservoir to supply water to Sevastopol and constructing two facilities for reverse osmosis saline water conversion. For now, each of them has a capacity of 20,000 cubic metres per day. However, we will determine their final capacity after analysing the efficiency of the improvements I mentioned and with due account for the economic and social gains. We are also calculating how this will affect utility rates.

On the whole, implementation of the plan will make it possible to additionally supply Crimea and Sevastopol with more than 300,000 cubic metres per day. Of this amount, at least 209,000 cubic metres per day will go to Crimea and at least 100,000 cubic metres per day to Sevastopol. These volumes will be enough to provide residents with reliable water supplies and implement the plan for comprehensive economic development on the peninsula, the plans, as you said, on infrastructure and housing construction.

Funding for the plan is provided under the federal targeted programme for the development of Crimea and Sevastopol. Following your instructions, Mr President, this programme will be extended to 2025, which will make it possible to fully consider the funding for all planned projects. We are most grateful to you for this instruction. It allows us to work consistently for five years.

We maintain daily contact with all interested participants. I would like to ask you to issue an instruction for me to visit Crimea in the near future. It will allow me to personally monitor the implementation of the plan, to see what the builders are doing and how the plans are proceeding so I can report to you on the progress of this work again.

Mr President, I have good news to report to you. At some point, you issued instructions to improve Crimea’s economic appeal for businesses. Just a few days ago, we drafted and issued a Government decision on additional capitalisation for RNKB Bank with 7.5 billion, which we reported to you earlier this year. This will significantly expand lending to businesses and individuals in the region. It is particularly important now that the demand for mortgage loans in Crimea and Sevastopol is on the rise. This decision will also have a positive effect on the dynamics of housing and other construction in the region.

The Government also decided to allocate 500 million rubles for additional capitalisation of the Fund for Microfinance of Entrepreneurship of the Republic of Crimea. This will make it possible to issue several hundred loans for small- and medium-sized businesses.

Also, Mr President, we are working on introducing a special arrangement for investment activities in Crimea and Sevastopol in order to bring in greater amounts of equity capital. We believe this arrangement should allow investors to comfortably ensure the flow of funds into the economy and, of course, improve the Crimean economy. We will report the proposals to you before the end of the year.

That concludes my report.

Vladimir Putin: Okay.

Mr Khusnullin, with regard to the water pipelines that will be built to supply Sevastopol with water from a number of waterbodies, will these projects harm the environment or residential buildings in any way? Will they avoid putting local residents in a difficult situation?

Marat Khusnullin: We carefully considered everything and agreed on these things with everyone, and then identified the route. It was not an easy thing to do. Indeed, our initial proposals touched on the interests of a number of people. We have resolved these issues, and there will be no damage either to the environment or to other users who reside near these waterbodies. We have taken this into account and have agreed on everything with the regions.

Vladimir Putin: Excellent. Keep this possibility in mind when you go to the region, and also talk with the people.

Marat Khusnullin: I will, Mr President.

Vladimir Putin: Okay then, thank you.