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President of Russia Vladimir Putin: Good afternoon colleagues.

Today, we are here to discuss several issues. I would like to start with several matters that came up during the Direct Line. These include allocated the required funds to affected regions, hit by spring floods or fires, and, above all, making sure that they reach their recipients, the ordinary citizens. You heard the complaints that came in from citizens, and these are justified complaints. The money has not always reached its recipients. This issue demands our attention. I ask the Emergency Situations Minister to brief us on the current situation on the ground.

We will then discuss proposals on possibilities for continued use of residential buildings and capital infrastructure installations located in the protected area around oil and gas pipelines. I realise that this is a sensitive issue for both network operators and our citizens. We need to find a solution.

Next, we will look at protecting the rights of people involved in shared-equity construction projects, and defining the legal status of self-employed people. Finally, we will look at giving Russian ships a priority right to transport and store hydrocarbon fuel extracted on Russia’s continental shelf and in its exclusive economic zone.

Let us begin with the first question I outlined, namely, making sure that state funds allocated for helping those affected by disasters reach the people they are intended for.

Let me add here that the federal and regional authorities must monitor this constantly and strictly. We are talking here about both financial compensation for full or partial loss of property and rebuilding housing.

Mr Puchkov, you have the floor.

Civil Defence, Emergency Situations and Disaster Relief Minister Vladimir Puchkov: Mr President, colleagues,

Acting on your instructions, the Emergency Situations Ministry continues to bolster its disaster relief capabilities and enhancing the efforts of personnel and management on the ground.

There are, however, a number of problems with submitting the documentation needed for obtaining material assistance. Just two or three years ago, it took 3–6 months to receive this assistance, but the Emergency Situations Ministry and Finance Ministry have worked since then on speeding up allocation of funds from the Government Reserve Fund, and today, it takes ten days for a Government resolution on aid. We continue work on improving these procedures.

Acting on your instructions, in Stavropol Territory we have taken additional efforts. All federal agencies’ operations groups and the relevant Sberbank offices are working 24/7 to complete the work. Of the 17,000 people affected, 12,000 have already received financial aid from the federal budget and Stavropol Territory’s budget. We still have 24 aid centres working on the ground, providing the necessary help and support to people. These centres also offer legal services with specialists from the relevant organisations helping people to get the documentation ready and assisting them with court rulings to get people recognised as eligible for assistance. We are also building up the federal authorities’ and regional agencies’ efforts to further improve work in this area.

At the same time, taking into account our experience, Mr President, I propose giving the Emergency Situations Ministry the added function of tightening oversight over local government and regional executive bodies’ work to prepare the necessary documents, update the lists of disaster victims, get the appropriate aid to all, provide housing, restore social infrastructure, and resolve other tasks.

This ends my report. Thank you for your attention.

Vladimir Putin: I am not against the idea, but we would need to work with the lawyers and look at the issue. I think though, that within the scope of your powers with regard to disaster relief, this is probably something that could be done. In any event, we need greater discipline in this area.

Regarding particular regions, I know that money reached people on the day of the Direct Line, but the money was there in the accounts. In Stavropol Territory, for example, they had up to 6 billion rubles, I believe, on the accounts. Knowing that the money had been transferred in full, they could have been quicker to begin this work. Of course, the Emergency Situations Ministry should monitor closely what is happening. However, your ministry should be quick in its work to assess the extent of the damage. We know that without relevant conclusions from the commissions doing this work, decisions cannot be taken. Therefore, you need to work faster and avoid delays. All right?

Vladimir Puchkov: Yes.

Vladimir Putin: Mr Siluanov, do you have any comments on this matter?

Finance Minister Anton Siluanov: Mr President, the Finance Ministry and Federal Treasury are directly responsible for transferring and monitoring funds for people affected by disasters. The treasury has received the necessary instructions to ensure that decisions are implemented and money for compensation is transferred without delay, the moment the decisions have been made and the lists of people in need of aid are finalised. The Finance Ministry keeps this matter under particularly close watch and money is transferred without delay the moment the necessary decisions have been made.

Vladimir Putin: But this is not happening without delay. How can we say ‘without delay’ if the money is transferred only on the day of the Direct Line? This is not ‘without delay’. I ask you to pay greater attention to this matter.

Anton Siluanov: I see.

Vladimir Putin: Now, on the subject of dumps and putting order into the situation with solid household waste landfills. You saw them too, not that seeing them matters. You know quite well how serious this matter is. I just want to understand who exactly gave permission for construction there, at a site in Moscow Region, for example? Mr Donskoy, do you have information on this? You cannot say that people simply occupied the land of their own accord and built something there in violation of the laws. We are talking about entire apartment blocks, multi-storey blocks.

Minister of Natural Resources and the Environment Sergei Donskoy: Yes, Mr President. Let me clarify. Our ministry is not responsible for this, but we raised these issues and clarified the following information. The safety zone set by the sanitary and epidemic officials around this dump is 500 metres and it was set in 2003. The buildings concerned were built outside this zone and did not violate any regulations. We have spoken with the head of Rospotrebnadzor [national consumer protection agency] about clarifying and assessing the risks this dump poses. They say that the construction of these buildings, which was approved several years ago, did not violate any regulations. This is the legal situation as it stands today.

Vladimir Putin: No laws were violated, but it is impossible to live there.

Sergei Donskoy: Yes, we are acting on this and have agreed on the following steps. We have reached agreement with the governor on closing this dump in 2019, with the construction of new facilities. Given the amount of waste transported from Moscow to Moscow Region, we will need to build new landfills. However, before the dump in question is closed, they have already received instructions to build the necessary infrastructure to reduce or even eliminate emissions of biogas and filtrate. In other words, they will need to take the steps necessary to reduce the environmental impact.

Overall, this issue is quite serious. Around the country as a whole, we have more than 4000 authorised landfills. Over the last four years, we have identified more than 200,000 illegal dumps. Of these, 70 percent have been liquidated and 57,000 remain at present. We realise that this matter needs a systemic solution. We passed a law in 2014 that puts in place conditions for developing a new waste treatment system.

Vladimir Putin: Law 458?

Sergei Donskoy: Yes.

The key issues that need to be resolved in the nearest future are drawing up and approving the territorial plans, appointing regional operators, setting the relevant price rates, and having the regions adopt investment programmes. To date, 83 regions have approved territorial plans, and 7 regions have already chosen regional operators. Operation is due to begin on January 1, 2019, when all regions are supposed to make the transition to the new system, but 27 regions have confirmed that they are ready to start work under the new system this year. They will choose regional operators in the second half of this year and on this basis will establish investment programmes that will take into account measures for liquidating the dumps and building a new infrastructure.

The law’s second innovation is to oblige producers and importers to either treat goods themselves once they are no longer fit for use, or pay the state an environmental tax. Let me stress that this environmental tax is not so much a tax instrument as an incentive for companies to treat waste. This provision has come into effect now and companies began paying this tax in the first quarter. We have collected 1.5 billion rubles, which will be used as subsidies for the pioneer regions.

However, the regions still note an investment deficit. We think it necessary to change the approach to calculating this environmental tax. This is primarily because a decision was taken in 2015 to set a minimum level for waste treatment of goods. This was economically acceptable at the time, but today, with the need to invest in building infrastructure and to liquidate the landfills themselves, we propose having the Government come back to the matter of expanding the list of goods that could come under waste treatment schemes and increase the level of waste treatment from a minimum level to a level that would be acceptable now. This would, in principle, make it possible to collect up to 30 billion rubles to allocate to the regions to fund the necessary work.

The Government has also approved the Clean Country priority project, which also involves work to close dumps. This programme will see the closure of 15 dumps in 11 regions. More than 5 billion rubles will be spent on this before 2019.

I would like to point out another important aspect. We realise that reclamation of landfills is a fairly complicated issue. Occasionally, it is impossible to track down their owners, and this becomes the responsibility of the state. We propose drafting an economic mechanism that would guarantee the liquidation of landfills once they have run their course. In other words, there must be an anchor, so to speak, to keep everyone in place, to stave off bankruptcies and, accordingly, liquidate all landfills. There is an international practice of creating liquidation funds for such sites. Accordingly, if possible, please instruct the Government to work through such a scenario as well.

There is another issue that I would like to bring up, which is Class I and Class II waste, which, we believe, also needs to be handled more efficiently, as these are the most dangerous waste classes. According to international practice, dedicated state-run entities deal with Class I and Class II waste. We propose working through this issue in conjunction with Rosatom, which, as a state organisation, deals with hazardous radioactive waste. We have held talks with the factories, which used to engage in liquidation of chemical weapons. We could involve them in this work. There is a lot to do, so we can upgrade these plants and use them to handle Class I and Class II waste.

Thank you.

Vladimir Putin: Thank you for sharing this with us. It is interesting and important, without a doubt. This is quite a job, and this matter has been swelling for decades, dating back to Soviet times. The issue is clear and requires vast systemic efforts.

You said it is impossible to identify the owners. Well, this is our fault. What kind of operation is it if we cannot even tell who the owners are? I still have questions after what you told us, just like the people you represent who asked me questions about how one can live in such conditions. Tell me, as a representative of the people who live near this dump, when will this dump, which makes life so difficult for them and their children, be closed? When will it be closed and how do you plan to go about it? In specific terms.

Sergei Donskoy: The Governor promised to close this landfill in 2019. Before this is done, in 2017 they will start designing systems for reclaiming it and will begin preparations for their installation in 2018. Modern reclamation technology requires systems for biogas diversion and filtration. They are planning to install them this year.

Vladimir Putin: Wait. Please tell me what exactly must be done with this landfill. Will it be eliminated? What will happen to it? I simply want to understand it myself.

Sergei Donskoy: Its license will be withdrawn by 2019.

Vladimir Putin: We will discuss the deadlines shortly. What exactly should be done?

Sergei Donskoy: First, it is necessary to make all preliminary estimates for the condition of this landfill, and this is being done now. Plus, by 2019…

Vladimir Putin: No, you are again talking about 2019. I do not want to hear any deadlines. I want to understand what has been done. “It is necessary to make all preliminary estimates…” Estimates of what?

Sergei Donskoy: First, the condition of the landfill’s geology plus the structure of the waste. It will be necessary for the design work.

Vladimir Putin: All right. That is clear. What next?

Sergei Donskoy: Next comes the reclamation project. This, in turn, will be subjected to environmental expert evaluation. Once this is done, the Governor must request that the Government include this landfill in the register of sites slated for elimination of past damage. Then the elimination will begin, starting in 2019.

Vladimir Putin: Elimination?

Sergei Donskoy: The landfill’s elimination.

Vladimir Putin: So, will everyone continue bringing waste there until 2019?

Sergei Donskoy: Mr President, this landfill was not included in the list of sites slated for elimination.

Vladimir Putin: It does not matter whether it was included or not. My question is different: will rubbish be dumped there until that time?

Sergei Donskoy: No decision has been made to close it once and for all as of today. It was necessary to carry out all the preliminary work.

Vladimir Putin: Now listen to me, and I want Vorobyev [Moscow Region Governor] to hear me as well. Close this landfill within one month. The documents that must be prepared (I do not want to give you impossible tasks) should be ready in the shortest possible time. I am referring to this expert evaluation: geological surveys, the structure of the waste and the like. I do not know how quickly this can be done but in a month I will ask you and Vorobyev what has been done.

Thirdly. You said that he has to write a request for the required funding. Consider this done. The request will come in by the end of the day for sure. We have 5.4 billion rubles of federal budget funds allocated for this purpose and another 1.5 billion collected through the environmental tax. This makes close to 7 billion rubles. So, use this money. If needed, we will ask the Finance Ministry and we could even allocate some money from the Government reserve fund and my reserve fund – we have money there – for financing this work. The question of where the waste will be taken must be settled as rapidly as possible, to some other location, far from places where people reside permanently.

I want the Presidential Executive Office to write this down as an instruction. Mr Medvedev, I ask you to take this under your control and see it through. Do you remember what I said?

Sergei Donskoy: Yes, Mr President.

Vladimir Putin: Good.

Now, regarding the reconstruction of the regional road network. I have discussed on past occasions with the Finance Ministry the matter of allocating part of the revenue collected from excise duties, which were raised a while ago.

Mr Sokolov will begin and Mr Siluanov will then comment.

Mr Sokolov, you have the floor.

Transport Minister Maxim Sokolov: Thank you.

Mr President,

Today, according to the National Statistics Agency, the national road network comes to around 1.5 million kilometres. Of these, around 500,000 kilometres are regional roads and around 930,000 kilometres are local and municipal roads. According to the Statistics Agency, only 41.5 percent of the roads meet the quality norms for roads, and less than 40 percent meet the standards for regional, local and municipal roads. This is due to many reasons, particularly because the regional road funds receive insufficient funding to be able to ensure that roads are kept up to standard. The regional road funds are financed at only around 15–16 percent of their stipulated levels (which vary from region to region but for a large part conform to federal standards). This money is then spent on road maintenance, capital repair and bringing roads up to regulation standard.

Moreover, decisions were made in previous years to increase the amount of excise taxes, but the bulk of these additional taxes has never made it to the regional road funds. Earlier, the ratio between the federal budget and the regional road funds was 88 to 12 (12 went to the federal budget), but, in accordance with the amendments introduced to the Budget Code, only 61 percent of collected excise taxes go to regional road funds. Even less, 57.5 percent is planned for 2018, and about 60 percent in 2019.

Of course, we are convinced that all excise taxes should be sent to the regional road funds and be used to fundamentally improve the situation with maintaining regional and municipal roads. This year, this could amount to about 110 billion, and in 2018, if we bring it up to the previous standard, it could total 160 billion. If we go all the way and make 100 percent of all collected excise taxes available to the regional road funds, it would give them an additional 225 billion, that is, almost one third of the existing amount. These funds would be used to repair, rebuild and renovate roads and, of course, this would help improve the situation with the regional road funds.

However, it should be noted that the regional authorities themselves do not send the collected excise taxes to their respective road funds. According to the Treasury, Saratov Region regularly withdraws about 6 billion rubles from its regional road fund, which is more than half. Kalmykia uses federal transfers to almost completely substitute for the collected excise taxes, as do Tver Region, Krasnodar Territory, and Stavropol Territory. Of course, regional authorities would also benefit from stricter discipline. The legislation was amended accordingly last year, and the Government closely monitors to ensure the full compliance by regional authorities with their obligations related to replenishing the road funds.

These are the main causes and our proposals that could improve regulations regarding the upkeep of regional and local municipal roads over the next few years.

Thank you.

Vladimir Putin: Do you check the costs involved in maintaining one kilometre of road?

Maxim Sokolov: Yes, the federal Government adopted the federal road maintenance standards. Most recently, we have amended our key resolutions accordingly and cut the amounts. We believe the regions should be guided by this federal approach. Some of them have already brought their regulatory documents in line with federal requirements, others not. Of course, initially the regions would be advised, based on the funds available in the budget, to adopt such documents. We believe this can be done this year or the next. In the future, 100 percent of the regional road funds should be used to repair and maintain regional and local roads the way it is done at the federal level with regard to federal motorways.

Vladimir Putin: Mr Siluanov, please.

Anton Siluanov: Mr President, in recent years, especially when federal budget revenues declined, we decided to raise excise taxes which were directed to the federal budget and used for federal needs. By the way, we use these excise taxes to help the regions to partially carry out such federal road projects. Indeed, this amounts to about 200 billion rubles. Therefore, simply transferring this source of revenue from the federal budget to the regions could cause issues with us meeting our obligations. We have some ideas.

We are now preparing proposals for changes in the taxation system. I think we could use these proposals to improve the taxation system and to address this issue as well, and ultimately transfer the excise taxes in full to the regional budgets without detriment to the federal budget. In addition to federal roads, we have other major challenges. We spend less on federal roads than the regions. We spend about 660 billion rubles from the federal budget for the purposes of the Federal Road Fund, whereas the regions spend about 740 billion.

Of course, we would also like to make sure that all excise taxes on petroleum products are transferred to the regional road funds. However, we need to take into account the interests of the budget. We have come up with appropriate proposals as part of our proposals regarding changes to the taxation system.

Vladimir Putin: When we resolved on these excises, we believed they would mostly go to the regions, as far as I remember. How was the question raised initially, Mr Sokolov?

Maxim Sokolov: Yes, this is how it was raised initially. When this decision was made, there was a certain ratio in the distribution between the federal budget (not even the Federal Road Fund but the federal budget) and the regional road funds. This ratio was observed: 88 percent from the collected funds went into the regional budget and 12 percent into the federal budget. However, two years ago and last year decisions were made to increase excises. In all, excises on different classes of petrol and diesel were increased by four rubles but from these four rubles roughly only one rouble went to the regional road funds. This is why this ratio was changed and today we have reached the figures I mentioned – roughly 60 to 40.

Vladimir Putin: Mr Siluanov, we made a decision on distributing revenues from excises two years ago in fairly complicated economic conditions. Now the situation is changing. GDP forecasts are changing for the better and the federal budget fill rate is on the up. By how much have budget revenues increased over the past year? 26 percent?

Anton Siluanov: Yes.

Vladimir Putin: By 26 percent.

Now about federal, local and regional roads. About 77 percent of the federal roads have been put into shape, right? For regional roads, the figure is about 46–52 percent. The difference is huge. What about regional roads?

Maxim Sokolov: For regional roads, the figure is even smaller. It will reach about 42 percent by the end of this year.

Vladimir Putin: Yes, 34–42. Therefore, we should keep the current pace on federal roads but should not ignore regional roads to such an extent. Therefore, what you said is probably right. Strictly speaking, ‘probably’ is the wrong word. This is exactly right, not probably. But again, redistribution within the tax system should not be like this – you compel them to pay excises and then pinch off so much that again they have no money for roads.

When were you going to formulate this proposal?

Anton Siluanov: Mr President, under the plans for upgrading the tax system we must prepare our proposals this year, adopt tax legislation next year and implement in 2019.

Vladimir Putin: So, 2019 again. Very good.

Mr Medvedev, I would like to ask you to work with your colleagues on this issue separately. I will not decide now how much, but it is absolutely clear that part of the funds we took from these excises should be redistributed to the regions. At least one rouble must be added to them.

Prime Minister Dmitry Medvedev: We will get to the bottom of the matter and come up with proposals on how to increase the regional component.

Vladimir Putin: 50 kopecks, one rouble, I do not know. Think about this, all right?

Dmitry Medvedev: All right.

Vladimir Putin: Mr Siluanov, I would like you to study the problem in the same vein or else we will go beyond 2019, followed by 2020 and 2025 and we will ride there in carts because it will be impossible to move at all. The road network is degrading. It is vital to pay attention to this. Now let us turn to the issues that I described as the main ones: oil pipelines and residential buildings that are located along them.

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