Working trip to Grodno Oblast

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President of the Republic of Belarus Aleksandr Lukashenko said that Grodno Oblast should be developing in a more productive way during a working trip to the region on 14 November.

The head of state visited the Grodno hydroelectric power plant. It is  the largest hydroelectric power plant in Belarus. It has the capacity of 17MW. The constriction works began in May 2008. The facility was launched in August 2012. In 2013 the Grodno HPP produced 91.7 million kWh of electric energy. As a result, it was possible to substitute about 22 million cubic meters of natural gas. The prime cost of electric energy production at the Grodno HPP does not exceed US 3.5 cents per 1kWh. The Grodno HPP can satisfy the electric energy demand in Svisloch District and Oshmyany District or Zelva District and Mosty District.

Apart from that, the reservoir of the Grodno HPP can be used for different purposes, including for the development of water sports and tourism. Builders of this reservoir did not resettle people living on nearby territories and did not dismantle household buildings. The reservoir does not occupy agricultural lands and is located in the area of water rise caused by the spring floods on the Neman River. Dredging and pitching works helped improve over 300 hectares of unused lands.

Aleksandr Lukashenko was informed about the development of the Belarusian energy system and further construction of hydroelectric power stations.

The use of the hydroelectric potential is one of the main ways to reduce the import of energy resources. Specialists say that the maximum capacity of all water streams in Belarus is 850MW.

Belarusian President Aleksandr Lukashenko gave an instruction to determine the volume of construction of hydroelectric power plants in Belarus. The President was told that there are 45 HPPs in Belarus. Belarus’ national program of HPP construction for 2011-2015 envisaged the construction (renovation) of 33 hydroelectric power plants. In 2011-2013 the program stipulated the commissioning of 16 facilities with the total capacity of 18.7MW. In 2013 the output of existing hydroelectric power plants reached 136.7 million kWh. This amount is 2.8 times bigger than that of 2010.

The Energy Ministry is planning to implement three projects as part of the program. In particular, there are plans to build the Polotsk HPP with the capacity of 21.75MW and the Vitebsk HPP with the capacity of 40MW on the Zapadnaya Dvina River, the Neman HPP with the capacity of 20MW on the Neman River. Apart from the projects included in the program, the Energy Ministry is going to build the Beshenkovichi HPP, the Verkhnedvinsk HPP and a hydroelectric power chain on the Dnieper River.

It is necessary to keep in mind that HPPs have a big payoff period. Taking into account the possible increase in gas prices, hydroelectric power plants will be of huge importance for the Belarusian energy system.

Aleksandr Lukashenko remarked that he was the initiator of building HPPs in flat lands. At the same time he stressed: “But if we do not get satisfactory results in the near future, we will think what to do next. If we had extra money, why not to invest it there? In present-day conditions we have to decide whether it makes sense to build this number of power plants,” the head of state said.

However, he noted that it is a good idea to build hydroelectric power plans. “It is needed for the preservation of the HPP construction school as we will not have to restore it in the future. But the main thing is to decide if we need to build this volume,” the President stressed.

According to First Vice Premier Vladimir Semashko, the construction of HPPs makes sense in view of the possible increase in gas prices. Energy Minister Vladimir Potupchik also believes that Belarus will get a comprehensive effect from building hydroelectric power plants in the future. Aleksandr Lukashenko gave an instruction to make a thorough of the issue taking into account the economic efficiency of the efforts to ramp up the hydroelectric power production in Belarus.

The Belarusian President also demanded transparent tariffs on utility services, including on electricity. “We must have transparent utility tariffs,” the President stressed. He remarked that he gave the corresponding instruction when he appointed Vladimir Potupchik Energy Minister.

Grodno also played host to the session with the high-ranking officials of Grodno. At the meeting Grodno Oblast Governor Vladimir Kravtsov delivered a report about the current state and prospects of the social and economic development of the region.

Aleksandr Lukashenko reminded that when Vladimir Kravtsov had been appointed Grodno Oblast Governor, it had been agreed that after Vladimir Kravtsov would get into the swing of the work in the new capacity, a serious discussion would be held about the challenges and prospects of the region. “Grodno Oblast has a special place in our country and I always hold it up as an example. The region is actively upgrading many industrial and agricultural companies. The region is one of the biggest producers of milk, meat and cereal crops. Grodno Oblast accounts for 8.5% of the gross domestic product and generates over 16% of the country’s farm produce. However, the recent slowdown in the social and economic development is a matter of serious concern,” the President said.

The statistics suggests that the region is gradually losing its edge in agriculture, although the market environment in the country, in the Customs Union and other countries is more than favorable for boosting the production and export of farm produce, the President said. In January-September 2014 the sales of cattle and poultry for slaughter shrank by 6%. Pig population has been reducing the second year consecutive. Pork production has dropped at 15 out of 25 major pig breeding farms, although the President gave an instruction to restore and increase pig population. The head of state wanted to know the reasons for such a state of things.

He drew attention to the situation with the newly commissioned dairy complexes. Only three out of 17 complexes meet the projected milk yield targets. The President asked: why is this situation neglected by members of the executive committee and the First Deputy Governor?

The head of state pointed to the inadequate work load of companies processing agricultural produce (the work load at meat processing companies is 93%, down 4% compared to the previous period; the work load at dairy processing companies is estimated at 90%). The President noted that the country has a unique chance to take this industry to a brand new level. The head of state asked how the region plans to ramp up the export amidst the increased demand for foodstuffs.

The President gave much attention to the issues in the manufacturing industry. The industrial output has grown by 1.2% in the region this year. The growth was mainly generated by the processing industry. For example, wood processing companies posted a 21% output growth. At the same time, the sales dramatically lag behind the production growth – the backlog of inventory is equal to a two-month output. “Who wants this work?” Aleksandr Lukashenko asked.

The President also reminded about modernization, especially of wood processing companies.

“It is a very dangerous tendency I would like to turn the attention of the government and the State Control Committee. We have injected enormous resources. It is a crime when we modernize companies and then cannot sell their products. Why have we invested in these companies then? Why have we decided to undertake these upgrading projects knowing we would not be able to sell these goods?” the head of state noted.

“The most important issue is to make furniture companies work and sell their goods abroad,” the President added.

“We have modernized our companies because, first of all, we have our own raw materials and, secondly, we believed these products would be in high demand. It is inadmissible if upgraded companies cannot sell their goods. It is a crime,” Aleksandr Lukashenko stressed.

In his words, there is not any output growth in 10 out of 17 districts of the region. For example, Grodno District, Lida District and Slonim District are going to fall short even of their last years’ production figures. The head of state wanted to know the reasons for recession in these well-developed industrial areas.

The President pointed to the production decline at some of the region’s biggest companies, including Lidakhleboproduct, Skidel Sugar Refinery, Lakokraska and Belcard.

“I read reports about manipulations with stock in storage. Lida Plant of Electrical Products has not documented nearly Br7.5 billion in finished products. Grodno-based Belvtorpolimer reduced the cost of warehouse reserves only on paper. Tell me, who needs this eyewash? It is not a Grodno style,” Aleksandr Lukashenko said.

The head of state noted that another grave issue facing the region is poor efficiency of capital investments. Newly-commissioned facilities do not operate at their designed capacity. The company Konus is a case in point. For nearly three years the company has been operating only at 50% of its capacity. This company was central to the Br185 billion project to protect large-size metal structures from corrosion. However, there is no due payback from these investments yet. The President emphasized that all the governors are responsible for every facility located in their regions. “After all, the local authorities did not object to this project when it was designed and implemented. What now? Nobody wants this plant anymore?” the head of state asked.

The President noted that ill-considered spending is absolutely unacceptable in the current circumstances; there should not be any risky ventures. “There should be personal responsibility and tough punishment for mismanagement,” the head of state demanded.

He noted that Grodno Oblast needs to raise the inflow of foreign investments. In January-September the region raised only $49 million in investment on net basis. The inflow of investments reduced by about 35% as against the same period last year.

The President wanted to know what Grodno Oblast has done to promote interaction with neighboring countries of the European Union, namely Lithuania and Poland. “Every year you hold investment forums; mass media provide extensive coverage of the events. This is good. But where is the result? You should raise Polish and Lithuanian direct investments,” the President said.

In his words, about a third of the population in near-border regions do not work hard and make their living during trips to the neighboring countries of Europe. “What will we get? The generation of profiteers who foster the grey economy? Such ‘businessmen’ will not bring robust investments,” the head of state stressed.

He also asked if the local authorities did their best to implement projects to develop companies using local raw materials, to promote import substitution, manufacture of export oriented projects, and to engage entrepreneurs in the areas of paramount importance for Belarus.

Aleksandr Lukashenko demanded to punish those who re-appoint ineffective executives from one high-ranking job to another. Aleksandr Lukashenko instructed the President’s Administration and the State Control Committee to analyze this issue in the near future. “I want to hear about measures which can be applied to those who re-appoint them from one job to another. Such practices should be crushed in the bud,” the head of state said.

According to the President, there is a lot of talk that goes like “it is not so good here”. Some say that it is totally bad, or that life in Poland is so much better.  “I am not to tell you how they live in Poland. You know it for yourselves, and if you still live here, it means you have made the right choice. The grass is always greener on the other side,” the head of state assured.

In his words, Poland and other countries have their eyes firmly set on Belarus, in particular, Grodno Oblast, one of the gems of the country. According to Aleksandr Lukashenko, there is no city like Grodno in the entire world; no place is more beautiful than this region. “Everyone would say: look at Switzerland. I have been to Switzerland; however I would not want to live there. There are beautiful places, mountains there, however the country is overpopulated. We have the same beauty here. Nobody interferes with your lives here. I am saying this not because I want you to love your country. It is up to you. Of course, I would want you to love it as much as I do. However, keep in mind one thing, Russians, Ukrainians, Jews and Poles – this is your land and it is you belong here. There is no better place for your,” Aleksandr Lukashenko said.

“When some officials and other people from Poland tell me about Poles, I ask them right away: what Poles they mean? You should keep in mind that Poles living in Grodno are our Poles and this is their land.

The head of state emphasized that he had delivered on all the promises he made during all his election campaigns. “Integrity and justice that I promised to you is still at the heart of my politics,” Aleksandr Lukashenko said.

“I am not going to woo anyone, as this leads to the collapse and disintegration of the state. As soon as we start dividing our land on the basis of ethnicity, you know what will happen. The example is in the south. This is your land and you should do your best to make it better and more beautiful. To make it happen, you need to invest your brains and your work,” Aleksandr Lukashenko said.

“We should make up the executive personnel that will root for this country. We will not have another land. We should hold it. The main thing is our independence. We have set up this state and we should make it stronger today,” the President said.

Aleksandr Lukashenko is confident that the economy is the focal point.

“If we have a viable economy, we should be afraid of neither color revolutions nor external interventions, nothing. But if we bend down, sink in corruption, irresponsibility and carelessness, it will make the ground for these color revolutions. It will be the main factor for these color revolutions to win,” the President noted.

“The same happened in Ukraine. The same was in every country that witnessed these revolutions. If we had given even the smallest reason over the years of our new history, we would have been destroyed. If such a rich state as Ukraine had been mopped up we would have been the first in the post Soviet space. We should withstand. We should make our state stronger. And the main thing here is the economy. We have all the rest,” the Belarusian leader said.

The meeting focused on the problem issues of development of Grodno Oblast and the measures to raise the efficiency of companies in the region.

According to the Governor, in the coming years there are plans to increase the gross regional product and industrial output by 19%. It is also planned to increase the agricultural production by 16.5%, the export of goods by 1.5 times, and the export of services by 4.5 times.

Grodno Oblast accounts for 8.5% of Belarus’ gross domestic product, 16.7% of agricultural production, 10% of industrial output. In comparison with the beginning of the current five-year period, the region’s figures, except for the export of goods, were on the rise.

Vladimir Kravtsov believes that the oblast can fulfill the majority of the social and economic development targets.

According to First Vice Premier Vladimir Semashko, the efforts of Grodno Oblast can be praised. It has the second largest gross regional product in the country after Minsk Oblast.

At the same time, he mentioned the complicated financial situation. The First Vice Premier believes that local authorities should constantly monitor the situation in order to ensure the profitability of economic entities, reduce accounts payable and accounts receivable.

Aleksandr Lukashenko deems it necessary to eliminate accounts receivable in Grodno Oblast. “We have reduced accounts receivable and warehouse inventory in the country by over $5 billion,” the head of state said.

“If you do it, I guarantee that you will have a normal interest rate. But if you spent colossal funds to make a product and did not sell it, where will you get money?” the President wondered.

Aleksandr Lukashenko added that the work to revise the expensiveness of loans has been launched: “I will try to make the loans cheaper. If the banks tighten their belts, they will get a 3-4% margin. Therefore, the loans can be made cheaper”.

The President emphasized that Grodno Oblast should remember it is in the forefront of development.

“Of course it is bad that not all indicators have been met. They informed that 5 of 9 were failed. It is bad that the number of loss-making enterprises in Grodno Oblast has doubled. It is bad that the backlog of inventory has been rising. This is unacceptable that the funds sit idle, more so that there is a shortage of them now,” the head of state noted.

"But what is even more amazing is that you are planning to increase the production of vegetables and fruits, and this is the right decision, but you failed to build the vegetable storage facilities. What is this, a Soviet approach again? Then we will lose 30% of the vegetable and fruits because they become unmarketable? This approach is unacceptable,” the President stressed.

"Look what results we have achieved after we built storage facilities for vegetables, fruit and potatoes. Now we can wait for the time when prices are profitable for us. The profitability is 70% and above. You would not earn as much on oil,” the head of state gave an example.

Aleksandr Lukashenko also touched upon the efforts to ramp up export of goods.

“I am surprised at your lamenting about Russia. Indeed, we see the devaluation of the Russian ruble, our main market. I could have said that you should be looking for other markets. But I understand that it is difficult to find them so quickly. But look: today the Russian embargo extends to your neighbors, first of all, Poland and Lithuania. Why don’t you use the raw materials from these countries to mitigate the effects of devaluation? Buy the raw materials from them at half-price today, and process them. Your companies are underutilized by 10-15%. You can buy the raw materials cheap and sell the ready-made products at the current Russian prices. They are not so much profitable for us but still the prime costs will be lower. Have you though this idea through,” the President asked.

“Purchases of under 1%? Are you joking? And you want to cover the devaluation of the Russian ruble by this one percent,” Aleksandr Lukashenko wondered.

The President stated that the authorities are taking their main exam next year.

“Let us prepare for this exam thoroughly,” the head of state said.

Aleksandr Lukashenko urged the Governor of Grodno Oblast to fulfill the instructions which were given at the session.