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President Vladimir Putin: Good afternoon, dear colleagues.

Recently we are always coming back to energy issues. And this is not by chance. Despite the fact that we have engaged in hard work towards accomplishing the main task, or one of the main tasks, namely ensuring about a seven percent yearly growth rate and doubling Russia’s GDP in ten years, today it is obvious that insufficient energy capacities act as a natural constraint that prevent us from accomplishing this task. And today this deficit is already visible.

On average over the past five years consumption has grown by two percent and in the last nine months of 2006 – according to available data – there has been a jump of 4,8 percent. And in some regions the growth of energy consumption per year already amounts to eight or ten percent. The fact that in some regions energy reserves are decreasing to a level that does not allow one to repair and modernise out of date equipment merely aggravates this problem.

Unfortunately, we still do not have a precise and clear idea of what the optimal balance of energy resources – primary energy resources – should be in order to accomplish the tasks we are talking about. Until now there are no clear and comprehensible programmes for developing electrical energy in view of the country’s economic growth, as well as increasing the effectiveness of manufacturing and energy usage. As far as I understand, there is no project underway to develop a comprehensive scheme for arranging electrical energy installations.

I realise that various companies have their own development plans – both Gazprom and Unified Energy System of Russia have them and they exist in nuclear energy as well – but, unfortunately, we do not yet have a clear concept and a government plan that is to be implemented throughout the country.

All of those present here understand that we cannot base the country’s whole economy on one type of energy, namely on natural gas. This is inadmissible, even from the point of view of national security. We need to ensure that all economic actors benefit from equal access to energy resources, including on the country’s whole territory in order to ensure that production capacities develop uniformly across the country. And we should probably think about certain incentives in several territories if we wish them to develop and ensure that they remain Russian in a long-term historical perspective.

We know that depopulation is continuing in many regions and, probably, first and foremost because of the high rates for energy, transport, and because of other problems that, in the final analysis, are connected with energy.

Let us consider all these questions as carefully as possible. I expect that after today’s meeting the government will create the documents I mentioned as fast as possible and present them to me so that you and I can finally approve them.

(Addressing Prime Minister Mikhail Fradkov) Mikhail Efimovich, is there anything to add?

Mikhail Fradkov: That is all correct Vladimir Vladimirovich. Perhaps this issue is one of the sharpest ones for Russia today and determines our position as an energy power both in the present and in the future. We must correctly define a balance and we need a clear, goal-oriented policy. We are engaged in pipelines, gas pipelines and generating energy but the time has come to develop a uniform vision in a long-term perspective.

These issues are very topical.