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Meeting with Government members

November 12, 2018, Novo-Ogaryovo, Moscow Region

Vladimir Putin held a regular meeting with Government members.

The meeting focused, in particular, on oil product price regulation and increasing the competitiveness of Russian higher education at the international level.

Deputy Prime Minister Olga Golodets briefed the meeting on the President’s instruction to establish a national youth symphonic orchestra. Healthcare Minister Veronika Skvortsova reported on preliminary results of the information and analytical system for the monitoring and control of state procurement of medication.

Other topical issues were also discussed.

* * *

President Vladimir Putin: Good afternoon, colleagues.

Today we will talk about solid household waste treatment and hear a report on the issue by the Minister of Natural Resources and Environment.

But first, I would like to ask Mr Kozak to tell us about oil product price regulation.

A month ago, we agreed that the Government would take the necessary measures. What progress has been made? We understand that the situation depends on the market and this is exactly what we see now. But when oil prices have risen in the global market, which they did, significantly, this does not imply that we must ensure the same excessive revenue within the country. This industry must be regulated one way or another.

Mr Kozak, please.

Deputy Prime Minister Dmitry Kozak: Thank you, Mr President.

Colleagues, briefly, the situation has stabilised. The prices were frozen and will remain so until the end of March, adjusted for inflation and changes in tax law.

Speaking in more detail, the situation is as follows. Indeed, this year the market has acquired a peculiarity. Before the ruble grew stronger when oil prices rose, and the ruble export alternative was equally profitable and sometimes it was more profitable to sell motor fuel at home than abroad. This year the situation has changed – primarily due to the budget rule – the ruble grew weaker when oil prices went up. As a result, the ruble price of oil products in international markets was practically double the figure when the cost of a barrel exceeded $100.

In this context, in late May the Government took urgent measures. The additional excise on motor fuel, the introduction of which was scheduled for July 1, was reduced. At the same time all oil and oil processing companies made a commitment to freeze prices at the late May level until September. All vertically integrated oil companies kept this commitment. However, starting in the middle of August, prices for oil and oil products began to grow. First of all, there was a substantial increase in stock prices on diesel fuel and petrol began to grow substantially. This decreased margins for the market’s retail segment and it became unprofitable to sell motor fuel at home.

In this context a meeting was held with all vertically integrated companies and the union of owners of independent petrol stations. The participants agreed to freeze prices starting November 1 and signed a relevant protocol. On November 7–10 agreements were signed with all oil companies. Each agreement specified the parameters of an oil company’s supplies of oil products to the domestic market, the stock exchange and the small-scale wholesaler market in the amount corresponding to the relevant month of 2017 plus three percent. It also determined price parameters for wholesale supplies of oil products to each region of the Russian Federation on the basis of the historical principle.

The companies have been fulfilling these obligations since November 1. Literally the next day, almost overnight, we agreed on everything late at night, and on the morning of November 1 diesel fuel was down 4 percent on the exchange, A- 92 petrol dropped by 3.5 percent and A-95 petrol lost almost 3 percent. Prices have remained roughly at this level since then.

(Dmitry Kozak proceeded to discuss specific issues related to the duration of agreements and regional and seasonal pricing mechanisms.)

We agreed with the companies that they will abide by the “one for all and all for one” principle, otherwise they will descend into unfair competition. Should anyone fail to fulfill the corresponding agreement, we will be forced (and all companies have been warned about this) to use system measures that are provided for by law, namely, prohibitive export duties, which will be painful for oil companies, in particular, the independent oil refineries. So, as was earlier said, this should only be used as a last resort.

Thank you.

Vladimir Putin: As you may be aware, vertically integrated companies complain about the retail segment. According to company executives, retail companies manipulate trading on the exchange, and then run products through an inordinate number of middlemen whose sole purpose is to inflate the price, not to provide actual market service. How are we supposed to handle this?

Dmitry Kozak: We have figured it out. Instructions have been issued.

First, with regard to bad practices of independent petrol stations, instructions have been issued to the Federal Antimonopoly Service, Rospotrebnadzor and Rosstandart to ensure enhanced control over the so-called independent petrol stations in terms of the quality of their products, and to focus particularly on those whose margins are higher than the benchmarks set by the Government.

In addition, the Antimonopoly Service and the Ministry of Energy have been tasked with analysing the entire network of independent companies (independent petrol stations account for 62 percent of the petroleum product market) for monopolisation of these markets, because very often, despite their large numbers, they are owned by a certain number of individuals and act in violation of antitrust laws. So, we will complete this analysis before the end of December, and if we identify companies that hold monopoly positions on the retail market, we will sign a corresponding agreement with them as well.

Vladimir Putin: Good, thank you.

As you know, I recently had a meeting with Mikhail Shmakov, Chairman of the Federation of Independent Trade Unions of Russia. Trade unions are drawing attention to the fact that according to them, the fiscal and quasi-fiscal burden on the population, on people, is increasing. We must do an analysis of the current situation, in every industry and region. We have to understand what is really going on – not just on paper, but in real life.

Mr Medvedev, please see to that, talk to your colleagues about it. Thank you.

Mr Kotyukov wanted to speak about the increased competitiveness of Russian higher education, education in general and science, too.

Please, a few words.

Minister of Science and Higher Education Mikhail Kotyukov: Mr President, Mr Prime Minister, colleagues.

I would like to say a few words about the increase in the competitiveness of Russian higher education at the global level.

The project to increase the competitiveness of the leading Russian universities was launched under the Presidential Executive Order of May 7, 2012, On Measures to Implement State Policy in the Sphere of Education and Science. In addition to the systematic efforts of the leading Russian universities, such as Lomonosov Moscow State University, St Petersburg State University and many others, we also launched a project under the working title 5–100. This project brought together 21 Russian universities from various parts of the country – from Kaliningrad to Vladivostok.

The results that have already been achieved are worth noting. In recent years, Russian universities significantly increased their presence in the leading world rankings, which serve as an instrument to assess how effective universities have been at improving their competitiveness. It is important that the universities are progressing in all rankings: some are doing better than the others, some not as good but still good in general – in any case, there is always progress.

In late October, Kaliningrad hosted the 11th session of the international council coordinating this programme. The participants examined the reports of all universities involved. The international council recommended continuing the momentum, and rated the results achieved so far as generally positive.

Importantly, rankings are just one of the instruments for assessing efforts to enhance global competitiveness, which enjoys worldwide recognition. But rankings should not be an end in themselves. We must understand our position in the world and learn to track our dynamics with their help.

These dynamics are fairly positive: during the project’s implementation over six years the total number of Russian universities presented in institutional, sectoral and subject rankings has increased practically three-fold. Out of the world’s top 500 universities 15 are Russian. There are 11 Russian universities in the world’s top hundred, and 19 Russian universities among the world’s 200 best universities in the subject and sectoral rankings.

Universities have to work very hard to improve their rankings. As was already noted, a major role in these efforts is played by the universities participating in the 5–100 project, which are developing in a comprehensive manner. They are increasing the quality of education, enhancing its international character, developing research and integrating education with enterprises of the real economy to address practical challenges of major socioeconomic significance.

I will quote just a few figures for each of these areas.

Issues of enhancing the quality of education are linked with the development of joint network educational programmes with the world’s leading universities and research centres. Thus, since 2013 the participants in the project elaborated over 1,300 educational programmes and 650 of these are carried out in Russia in a foreign language, English for the most part. This allows us to more actively compete for the intellectual capital in the world market. On this score, the number of foreign students in Russia has grown by 100,000 people during this time, and every fifth of international students studies in these leading universities.

Universities have substantially increased research activity, which they are conducting at the highest level. Since 2013 alone, the participants in the project conducted over 3,000 research projects with the involvement of leading scientists from Russian and foreign research centres and in cooperation with other research and educational organisations. By tradition, Russia is doing research in physics and engineering. It has also launched active work in social sciences and the humanities.

The third important area is cooperation with the real economy. During the period under review, practically 5,000 joint research, design and experimental projects have been carried out with Russian and international high-tech companies.

The work carried out as part of the above areas of focus includes improving the quality of education, taking it to the international level, promoting science, improving the universities’ links with industrial partners and expanding innovation-related activities. This work made it possible to shape the reputation of Russian universities as leading international academic and research centres, and certainly contributed to promoting Russia’s higher education and research system in the global arena.

The recognition of Russian universities in the media increased significantly. The number of positive mentions of Russian universities almost doubled in foreign media in 2014–2016, and this trend continues.

Although the 5–100 project formally includes only 21 universities, it has a major impact on Russia’s entire system of higher education. Federal universities, national research and core universities conduct centralised activities to increase their appeal for students and faculty, industrial partners and regional governments and actually measure themselves using the indicators that have been developed as part of this project.

This project and the fact that other universities are taking their cues from it, has significantly increased the number of Russian universities that are visible in the international arena, including in individual subject areas, where our universities have already become recognised leaders. This allowed us to establish and fine-tune the mechanisms that actually influence international competitiveness in order to take advantage of them during the subsequent stages.

However, we believe it would be inappropriate to stop there. Already, large numbers of countries are competing for the best minds and the best technology, so the work to improve the competitiveness of Russian higher education and science should certainly continue.

We have ambitious goals to become, by 2024, part of the top ten countries in terms of competitiveness of higher education and the top five countries in research and development, to at least double the number of foreign students studying in Russia, to form at least 15 world-class research and academic centres, to create international science centres and much more.

Measures to make qualitative changes in Russian higher education, which will enable it to achieve these benchmark indicators, are envisaged in the national project Education and the national project Science, and will be aimed at developing the objective competitive advantages of Russia’s system of higher education and science and implemented with closer cooperation between science, education and the economy, with a corresponding role to be played by both the Russian Academy of Sciences and the executive authorities of the Russian regions.

Thank you.

Vladimir Putin: Thank you.

Mrs Golodets, we are all but done forming a national youth symphony orchestra. How will it operate?

Deputy Prime Minister Olga Golodets: Mr President, Mr Prime Minister, colleagues,

Indeed we have been instructed to establish a youth symphony orchestra. And today we can say without hesitation that the orchestra has been established and the instructions fulfilled.

Culture is one of our national priorities for the country’s development, and we are focused on training young professionals. The establishment of a national youth orchestra is a most important tool to develop the professional skills of our young musicians.

The project was launched, and this June the Moscow Philharmonic, which was tasked with implementing it, held a national contest. Over 400 students and musicians took part in it, and the youth orchestra was formed based on its results.

Today the orchestra is comprised of students and young musicians from 20 Russian cities. The orchestra’s first project is a big tour across Russia for students and young people. They have already visited Tomsk, Omsk, Kemerovo and Nizhny Novgorod, and gave several concerts for Moscow students. Young and adult musicians work with them as well as outstanding virtuosos. They are ready for the biggest premiere ahead of the orchestra: at the end of November the youth orchestra will perform on the stage of the Moscow Philharmonic in the Tchaikovsky Hall.

Vladimir Putin: Thank you. We will wish them success.

And the last question in this relaxed format concerns provision of medicines. An information and analysis system that monitors purchases of medicines was launched on January 1. How does it work? Has there been any analysis of its functionality?

Healthcare Minister Veronika Skvortsova: Mr President, Mr Prime Minister, colleagues,

Starting January 1, an information and analysis system was launched for monitoring and control in state medication procurement, which was created in 2017 by the Ministry of Healthcare together with the Rostec State Corporation with the involvement of other federal bodies, and was tested in 2017.

The system is designed to prevent inefficient spending of state funds in medication procurement, and is part of the Unified State Health Information System in the healthcare sector.

To provide transparency of procurement procedures, regulations were developed by the Ministry of Healthcare and were adopted, as was the Government's resolution on how to describe medications in procurement, and the Ministry of Healthcare's orders on standard contracts for the supply of medications and on approval of the procedure for determining the contract's starting price.

By integrating the information and analysis system into the Unified Procurement System, operated by the Federal Treasury, all medication data submitted by customers for contracts go into the system and create a body of data on procurement.

For accurate descriptions, a computerised medication catalogue is used, which presents all medications in a structured manner as homogenous groups on the basis of three basic criteria: international generic name, pharmaceutical form, and dosage strength.

As such, the system works as an anti-corruption mechanism, which prevents adjusting contracts for specific suppliers and manipulating starting prices.

In parallel, the information and analysis system allows for creating analytical reports on the volume of medications purchased, comparative price analysis among entities and specific customers, and this data serves as the basis for the response of supervisory agencies.

In the long term, state supervision should cover all procurement stages, starting with the planning stage. The system makes it possible to do this automatically and excludes contracts that exceed certain specified figures, creating a system for preventing violations in this sector.

The system continues developing in two areas. The updated version of the programme that takes into account additional elements like equivalent pharmaceutical forms and equivalent dosage units, and replaceability of medicines will become operational on January 1. The introduction of the notion of “replaceability” will open up an additional opportunity for a competitive reduction of prices on replaceable drugs.

In line with current legislation, only 16 percent of medications may be classified as replaceable today. Fulfilling your instruction, we elaborated a draft law in cooperation with the Federal Antimonopoly Service, which expands the notion of “replaceability.” This draft has been approved by all departments and submitted to the Government of the Russian Federation.

In addition, we have endorsed a plan to determine replaceability of medications until 2021, which will allow us to increase it to 60–70 percent with due account of international experience. Thus, starting in 2019 we will introduce stage-by-stage referent prices for replaceable medications. This is an additional opportunity to reduce prices.

The second area is the inclusion of regional centralised segments of the subsystem of managing pharmaceutical benefits in the information and analysis system. The plan has been discussed with all regions of the Russian Federation and approved until 2020.

This will allow every region to control the planning and purchase of medications and reveal opportunities for supplying more people with medications.

Thank you.

Vladimir Putin: This is the main point. You said in the beginning that the main aim of the system is to prevent inefficient use of budget funds, which is important. Yet, the ultimate goal of the system is to prevent procurement of medications at inflated prices, which will shift the cost burden to citizens. This system should prevent this from happening. Do you think it performs its role in this respect?

Veronika Skvortsova: It performs its role. Tentative data show that we are already reducing prices by 10–15 percent for a whole number of homogenous pharmaceutical groups. However, we believe the expansion of the list of replaceable medications will allow us to reduce them further. So, we will see the main decrease in price in 2019 with the expansion of the list of replaceable medications.

Vladimir Putin: Okay, thank you.


November 12, 2018, Novo-Ogaryovo, Moscow Region