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President of Russia Dmitry Medvedev: Good afternoon,

Vyacheslav Yevgenyevich, we have been discussing for quite some time now the issue of transferring ownership of shares in the open joint-stock company Vologda Aviation Enterprise to Vologda Region so that further investment can be made and the enterprise turned into a real modern business.

I can inform you now that I have signed the according decree, and so you can start work.

We have quite a large number of airports in the country – 331 civil airports – but only 53 of them have federal status. You know yourself what kind of technical state the airports are in. I therefore see this decree and your subsequent action as a means of bringing this airport infrastructure up to standard.

Governor of Vologda Region Vyacheslav Pozgalyov: We have drawn up a programme under which we will invest 2.5 billion [roubles] in developing our airport infrastructure, but we have not been able to do this so long as ownership has remained in federal hands. The Budget Code prohibits us from financing what comes under federal mandate. The transfer of this enterprise marks the start of Volodga aviation’s revival and the region’s entire civil aviation sector thanks you for it.

Dmitry Medvedev: The main thing is that it benefits the region’s people and that the investment you have planned is carried out on schedule and in accordance with the plans you have made.

Another subject I would like to discuss is forestry and the timber processing industry. I just met with my colleagues, including the President of Finland, and we discussed investment in developing the Russian forestry sector, including investment in facilities for high value-added timber processing. You have one of the most resource-rich regions in this area. What is the current situation and what plans do you have?

Vyacheslav Pozgalyov: Today we process half of the calculated amount of timber. We realise that the region’s economic development is closely linked to the forestry industry. We have drawn up a programme to develop timber processing. Twelve big projects are currently underway in the region and will enable us to process up to 15 million cubic metres. There are projects involving medium-sized companies and projects involving big companies, what you could call mega projects. There are three projects with total investment from 500 million euros to 1.5 billion euros.

Dmitry Medvedev: Which projects are these?

Vyacheslav Pozgalyov: There is a project with Bank of Moscow to build a pulp and paper mill in the town of Sokol, a project with Finnish company UPM Kymmene with investment of 1.1 billion euros, and a project with Finnish company Ruukki Group in the Veliky Ustyug area with investment of around 500 million euros.

Dmitry Medvedev: And what will they produce?

Vyacheslav Pozgalyov: In two cases pulp and paper, and in Veliky Ustyug it will be boards made from low-grade timber.

Dmitry Medvedev: Will this be modern production? I mean the pulp production side of things: will chlorine-free bleaching be used? And in general, will all the environmental regulations be respected?

Vyacheslav Pozgalyov: These will be the most modern production facilities in Russia and probably in the world.

Dmitry Medvedev: Today we have to build in a different way to twenty years ago.

Vyacheslav Pozgalyov: There is a century-old enterprise that we will be closing down, and in its place we will build a new enterprise together with Investlesprom from the Bank of Moscow Group. This will be an enterprise of the most advanced type with the most modern cleaning and processing systems, able to produce high value-added timber products.

Dmitry Medvedev: Will it create new jobs?

Vyacheslav Pozgalyov: It will create new jobs and also offer new working conditions. This is a highly mechanised and automated production facility. These are cutting edge projects used, the very latest the world has developed.

Dmitry Medvedev: When will construction begin?

Vyacheslav Pozgalyov: Actual construction will begin this year and next year.

Dmitry Medvedev: So all of the administrative and corporate decisions have already been taken?

Vyacheslav Pozgalyov: The decisions have all been taken and all the necessary preparation work regarding preliminary design, technical and economic feasibility studies and land allocation has been completed.

Dmitry Medvedev: We need to encourage investment in Russia’s own timber processing industry and not continue the all too familiar situation when a large part of our timber is simply sent abroad. The necessary decisions have been taken now. We are in talks with the European Union and a number of other countries, but our main task is to develop timber processing here at home.

Vyacheslav Pozgalyov: We are getting support from the Investment Fund for our projects. We have already made our applications and have received the Fund’s approval for these projects. I must say that the Russian Government’s firm line on the export of round wood has brought results. The Finns have realised that we are no longer simply going to export round wood and they have come to us with investment: three enterprises are being built with Finnish capital. I think this is a normal practice and it should continue.