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Irkutsk Region: Between Potential and Reality
Irkutsk Region is one of the most economically promising regions in Russia. Here are some of the largest deposits of gold, gas and oil on the mainland. Here are the cheapest hydropower resources. The largest enterprises for the production of aluminum, cellulose and others. And if you add Lake Baikal, which contains 19% of the world's fresh (and very clean) water, then the puzzle can be considered complete
However, there is sometimes a huge gap between the words “potential” and “reality”. Ruslan Sitnikov, First Deputy Chairman of the Government of the Irkutsk Region, spoke about how it is being overcome.
- Ruslan Leonidovich, let's start with such a thing as the sectoral balance of the Irkutsk region's economy. If you can characterize it by industry, how would you do it? First are the key industries, then those that you are now paying attention to and which you are trying to develop?
- The vast raw material base of the Irkutsk region ensured the predominance of large industrial enterprises in the structure of the regional economy. The largest share in the GRP structure is traditionally formed by mining - 29%, manufacturing - about 10%, transportation and storage - 8,7%.
Extraction of hydrocarbon minerals, production of petroleum products, metallurgy, mechanical engineering, timber industry and pharmaceuticals provide the main contribution to the added value created in the economy of the region, and bring the largest share of tax revenues to the consolidated budget.
The main Russian processing and forestry companies are present in the region.
In terms of export revenue, we rank 11th among the regions of Russia. We set ourselves the task of getting into the top 8. It is interesting that the share of non-resource non-energy exports in our country is 68%. That is, we have a second redistribution - aluminum, logging and processing. The latter occupy the main share.
ПBy his decree, the resident set the task to increase the share of exports of non-primary non-energy goods by at least 70% by 2030. We are close to this indicator.
If we move away from big business to small and medium-sized ones, then our task is to increase the share of these companies in the total export volume of the region to 24%.
- And now how much?
- About 20%. And if we talk about exports in general, today 6% of exporters - about 30 large companies - provide about 80% of export earnings. And if we do not see any problems with the export of large companies, then raising the share of small and medium-sized businesses from 20% to 24% is a very serious task for us.
We have conducted a survey of more than one and a half thousand enterprises. Identified the main problems. If we are talking about large companies, then, in principle, they have two main problems. The first is logistics. The workload of the Transsib and BAM in the eastern direction is very high, but at the federal level a decision has been made to expand the Transsib and BAM within four years. Эit is now the main constraining factor for increasing exports and, in general, the volume of products towards the Asian and Eastern markets. Plus, the reception of the Chinese side, they also have certain restrictions there in connection with the covid, and they cannot cope.
As for small businesses, there are more problems here. They also have logistical problems, but related to the internal logistics of groupage cargo. We understand this, so we are now paying a lot of attention to the development of the logistics component.
Another acute problem of small and medium-sized businesses is in marketing, in the possibilities of promoting and selling products to other markets, including for export. We have organized a marketing center at the My Business Service Center, which is developing this area, including jointly with the Russian export center.
Еthere are certain restrictions, including those related to customs and tariff fees. We have identified this problem and are now formulating an export program with a phased solution of these tasks.
ЧAs for the region's economy as a whole, it is an economy with high potential, with enterprises producing products with high added value. There are logistical problems caused by the remoteness of the region from the center. Therefore, we are working out and introducing various mechanisms, including subsidizing transport costs.
If we are talking about big business, here the main task of the government is to accelerate, prompt support of investment projects. Many large projects are being implemented on the territory today. This, for example, is the Irkutsk Polymer Plant - a project of the Irkutsk Oil Company. The company, along with oil production, is implementing a project for the efficient use of associated gas. Ilim Group creates another cardboard production facility in Ust-Ilimsk. Pharmasynthez implements projects for the production of pharmaceutical substances and finished medicinal products. Well, the Irkutsk Aviation Plant - a project of a new medium-range aircraft MS-21.
Since 2020, we have been participating in a national project to increase labor productivity. We have now concluded more than 20 agreements with enterprises, in which initiatives related to the reorganization of technological and organizational processes will be implemented. In general, the program is designed for three years, but we have six enterprises already deeply involved in the project - they have been working on it for a year now - and they show very positive results. Labor productivity there increased by 10, and in some cases by 30%. In production, this happens due to a more efficient arrangement of equipment, due to optimization of the alignment of work with a warehouse, due to competent planning of warehouse stocks, and, of course, due to digitalization. It works like this - a team of experts, both ours and federal ones, comes to the enterprise and analyzes specific operations. Moreover, this is done together with the workers, together with the employees of the enterprise, and then proposals for improving the processes are born. A concrete example is our enterprise "Oblkommunenergo", which is engaged in the laying of networks, among other things. After the work of the experts, they reduced the time costs for one of their operations by 75%! That is, they used to spend an hour on it, but now only 15 minutes.
Under the terms of the project, enterprises with revenues exceeding RUB 400 million per year can participate in it. While they can do it free of charge - at the expense of the federal budget. All training, all implementation takes place, I repeat, right in production.
- Can you tell us a little more about the MC-21? We saw everything that the head of Rostec, Sergei Chemezov, reported to the President that all issues had already been resolved regarding the composite wing and engine. And when will serial production start?
- As the head of Rostec reported to the President, the launch of the aircraft into series is scheduled for next year. The plane is being tested at the moment. It has certain competitive advantages: a fairly good engine is economical, and the fuselage is wider than competitors. Import substitution issues have been resolved as much as possible, the wing will be made of our material, and we will not depend on anyone.
- Coming back to the topic of small business: you described the export component well and how you help export. Is it possible to say whether they have internal problems, for example, problems with lending. And if so, are there programs in the area to help them? During the covid period, there was a serious reduction in small business, and was it possible to save some part, what part died?
- Yes, we have lost a small part of the business. The fall was 4%.
- That is, not critical ...
- Well, isn't it critical? It depends on how you treat. We believe that any loss is bad. But I would like to note that during the covid period we ended up in 8 constituent entities of the Russian Federation, which provided the maximum number of support measures from the regional budget to preserve and maintain business in general as a whole.
- Who did you support in the first place? How did you decide for yourself that we will help with this, and these will cope with it?
- There was a decree on the affected industries, they were all given a reduction in taxes and fees. Simplified taxation system - we have given a minimum rate for the affected industries. The transport tax was reduced by 50%, the corporate property tax was reduced by 2 times, that is, if the rate is 2,2, then we had 1,1. We have estimated our shortfall in tax revenues at about 400 million rubles. This is what we indirectly invested in supporting small businesses in 2020.
Plus, we have very active institutions for the support and development of entrepreneurship, programs for the affected industries. The My Business Center, the Guarantee Fund, and the microfinance lending fund (loans were provided at 3% for three years) worked very well. In general, we have allocated another 300 million rubles for direct support. In general, it turned out about 800 million rubles for direct and indirect support measures.
- Did you help large enterprises in any way, did you give any indulgences?
- We did not restrict or suspend the activities of large enterprises, thereby ensuring an uninterrupted production process. And they gave a real increase: in the manufacturing industry, for example, in 2020, 112,8% against the level of 2019.
Moreover, our pharmaceutical industry has shown a huge increase, has grown by 2,5 times, producing antioxidant drugs. This is the Pharmasintez project in the city of Bratsk. They originally planned the production of anti-tuberculosis, anticancer drugs. But they changed very quickly.
Recently, the rating of the Ministry of Industry and Trade of the Russian Federation was presented, in terms of the volume of support for the industry, we took the 7th place among all the constituent entities of the Federation. We are talking about the support that we provide to industrial enterprises for the modernization, development and implementation of new investment projects.
- At SPIEF, ASI announced a rating of investment attractiveness. Where do you find yourself there?
- We are in 22nd place, and the dynamics are positive - we have made progress. We had a rather low rating, and our investment potential was clearly underestimated. But this year we have improved markedly.
The indicators of the national rating are formed from three positions - statistics, with which you practically can not do anything, with what you have, with which you live - this is the first. The second is the assessment of the business community. And the third is the assessment of experts. When we see the results of the layout according to the national rating, we note that our experts underestimate us, and, in principle, entrepreneurs do not always evaluate us positively.
But we have dealt with this issue, there are two factors. The first factor we admit is that there are problems: we are being pulled down by administrative barriers. Many regions are faced with this. We organized the work on analysis, monitoring and made the appropriate decisions. And we had a failure in organizing work to correct these expert assessments. But we organized the work: somewhere the feedback did not work, somewhere at the wrong time we reacted. This feedback system was built, and this year the indicator has improved immediately. This is true because the region is potentially quite industrially developed and promising. At the same time, it is economically independent. We are in the top ten in terms of investment and in the tail in terms of the investment climate in entrepreneurship.
- Well, climate is an assessment category, but here is a real investment ...
- We are in the top ten, one of the best.
- Where are the investments going? We all know, of course, the big story about the Polyus - the development of Sukhoi Log.
- "Pole" - time. "Highest" - two. These are gold mining companies.
- Kovykta, gas pipeline. We say that yes, now about 19 thousand people are involved in the construction of facilities; in addition, it is planned to create about a thousand more jobs during the operation period.
- Gas will go to China: export, everything is fine. And the Irkutsk region itself is not supplied with gas. How to solve this problem?
- Unfortunately, there is such a question, and the governor is actively promoting the interests of the Irkutsk region. At the moment we are gasified only by 1,1%.
It is planned to connect Kovykta with Chayanda. Gas from Chayanda has already started. Here is the Amur Region along the way, gas chemistry began to develop on its territory, gasification of settlements began in parallel. Unfortunately, this is not the case with us. Therefore, we defend our interests.
First of all, we consider the industrial gasification of our enterprises in order to create competitive advantages. Our task, of course, is to lay the Kovykta-Sayansk-Irkutsk gas pipeline. Why Sayansk? This is a chemical cluster. Sayanskkhimplast has long been ready to receive gas. In the future - Irkutsk, here both energy facilities and production facilities are ready to operate on gas.
- Can Gazprom make this branch?
- We are currently negotiating at the highest level. But in general, the Irkutsk Region, the Trans-Baikal Territory and Buryatia, in terms of gasification of the country, fell into a separate section. And now this issue is being actively discussed, after all, how to carry out this gasification, together or separately. Of course, there are business interests of the Gazprom company. But there are also the interests of the regions: projects do not converge everywhere in terms of profitability, and our task is to find a middle ground. The Governor will raise this issue with the President.
С From the point of view of industrial gasification, an important topic is also in the aspect that the Irkutsk region is the Baikal territory, there are more stringent environmental requirements. Therefore, gas is needed as one of the most environmentally friendly types of fuel. Boiler houses around Baikal should be converted from coal to gas. This is a priority for us.
We are looking for a solution. We have independent subsoil users, that is, various oil producing companies that have associated gas in large volumes. And this gas can also be drawn into circulation, into the gas transmission system. With such a proposal, the governor is now going to the president to work out the issue.
- How can you help investors?
- Our main task is to support investment projects. There are many issues related to infrastructure and others that the investor cannot solve on his own. This requires the support of both the federal center and the regional center, respectively, and some kind of business participation, and the return of this money through market mechanisms.
For example, regarding the Sukhoi Log field. We understand expensive roads in this project. In addition, there is Bodaibo airport, which was included in the reconstruction plan thanks to the investment project, respectively, for 2022-24 the federal center provided 4 billion rubles for reconstruction, which will increase transport accessibility. That is, all these activities are being carried out, but, as you understand, this process is not fast.
Рpoison is also "Vysochaishy" - compared to Sukhoi Log, the project is small, but also with a good budgetary effect.
I have already told you the Ust-Kut gas chemical complex of the Irkutsk Oil Company - this, I think, is our pearl. For 10 years, we have created a new industry in the region by means of correct incentives. We did not have oil production, it appeared over the last decade, and in many respects - thanks to the support from our side and from the Federation.
- Do the representatives of the timber industry complex have plans for further investment, or have they already invested everything that they wanted?
Ilim plans to develop cardboard production. In general, we have a significant timber processing industry on the territory of the Irkutsk region, it is export-oriented. Taking into account the decisions of the President on protective duties on the export of round timber, the question of deep processing of raw materials is being raised. The Ministry of Industry and Trade took measures to support and stimulate further deep processing, and support measures were introduced at the regional level.
We are now also directing all our efforts to stimulate enterprises, and there are more than 500 of them in the forestry sector, for deep processing. I think everything will work out here too.
- Trutnev came up with an initiative to create a unified state company, which will be allowed to export round timber.
- Yes, I heard. It is still difficult to comment on this. We are seeing a shortage of round timber even on the domestic market. And projects on deep processing of wood, we regularly review and discuss for assistance in the maintenance and provision of measures of state support. Our entrepreneurs adequately assess the prospects for the development of the industry. The Russian government has given time to prepare, announced in advance that the export of round timber will be prohibited, and our companies are quite actively rebuilding themselves for processing.
- Are the finished products exported?
- Both for the domestic market and for export. Our timber industry is export-oriented, about 80% of the proceeds come from export contracts. At the moment, there is a shortage of raw materials. There are enterprises with cutting areas, with neighborhoods, and there are processing enterprises without cutting areas, we receive signals about a shortage of raw materials.
- Returning to large investment projects, do you still actively present Rusal's projects?
- Yes, they are building two factories - anode and aluminum. The projects are not entirely new, they were just frozen for a long time. In general, we have competitive advantages, so we are very well suited for the location of metallurgical plants.
- Because the electricity is cheap?
- Including. Therefore, we initially created and developed jointly metallurgical and energy complexes.
- Now, of course, due to the global political situation both in the Far East and in the country as a whole, the interests of foreign investors are covered up. What about you? Or do you have enough Russian ones that foreign ones are not needed?
- We are not leaders in foreign investment. Yes, we have projects both Russian-Japanese, and Russian-Chinese, and Russian-Korean, but they have been implemented for a long time, and these joint ventures have been working successfully for a long time. We have no new large foreign projects yet.
The question is what? The main investment projects with foreign participation are automotive assembly or something else. They are mainly in the central part of Russia, closer to consumers. If we calculate the population beyond the Urals - about 25-30 million people. And the main consumer demand is in central Russia.
And we ourselves will master raw materials projects, we have already learned how to do it well: enterprises are quite serious and possess technologies, and they have their own training base. We have a Technical University, where all large enterprises in various sectors teach students within the target enrollment, therefore educational programs have been developed for them. In principle, this is already cooperation: the chains are all lined up.
These chains include not only education, but also science. The international scientific and educational center "Baikal" of the world level has been established in the region. And we have quite interesting innovative projects announced, initiated by large industrial enterprises of the Irkutsk region.
- And what is there specifically for innovative developments?
- For example, developments associated with an increase in the percentage of gold recovery from dumps. Or, for example, there are rotational camps of the Irkutsk Oil Company, where food waste processing can be organized. Another important topic for us is the processing of sawmill and forestry waste. The pharmaceutical industry is actively using scientific research. We really solve those problems of industrial production that are in the region, using our science.
Every sixth inhabitant of the city of Irkutsk in our country is a student or a scientific worker, therefore, our cooperation between science and business is quite serious.
- Let's talk about the problems left by the old Soviet economy - BPPM and Usoliekhimprom.
- These are not problems - these are our capabilities. We consider these to be potentially new areas for development, including in terms of investments, the development of the urban environment, and the integrated development of these territories.
If we are talking about Baikalsk: a group of companies headed by VEB.RF have formed a master plan for the development of this territory.
As for Usolye, measures have already been taken, it was possible to eliminate the threat of damage from accumulated waste, a project and documentation for further comprehensive reclamation of the industrial territory is being developed.
This is also a territory with great potential. And by 2024 it is planned to bring it into a safe state, to create a good industrial site here, in which Rosatom is also interested.
- That is, they will do further processing of waste, besides the fact that they will now clear the site?
- This topic has just entered the stage of discussion. But other industries will definitely develop there, for example, an enterprise for the manufacture of lithium batteries, with an average number of 2,5 thousand people. We must pay tribute to both the federal center and the governor: there is a comprehensive development of the territory, that is, this is the development of appropriate social facilities and the construction of roads so that people can really live comfortably in these territories.
- How does the Federation help? That is, they give some kind of money? Well, besides the fact that Rosatom as a corporation is building its new chains.
- Yes, first of all, this is quick decision-making, because, you know, these issues are supervised at the level of the Deputy Prime Minister on a weekly basis. Secondly, financing from the consolidated budget.
- There is direct active work ...
- The work is going on actively at two sites. Rosatom is now dealing with the elimination of the accumulated environmental damage at the sites of Usoliekhimprom and BPPM. There is, accordingly, federal budget funding, at the expense of which these works are carried out.
- About Baikal. Different structures are engaged in it - both from the point of view of ecology and nature conservation, and from the point of view of tourism development ... Much has been said for a long time about the integral development of the Baikal territory and the Baikal region, but so far this has not happened. Why?
- Under the leadership of the governor, we tried to systematize this work. We have set four main tasks for ourselves. We unambiguously understand and believe it is correct that the Baikal agenda is closely related to the environmental agenda. This is first and foremost.
The first task is, of course, to restore the tourist flow to the pre-pandemic level. This is 1,8 million people a year, of which about 370 thousand are foreign (China, Europe).
The second main task is the maximum development of winter and off-season tourism. And such tendencies have already started - the Ice Baikal festival, Zimniada and others. As for winter, off-season tourism, we have also created a marketing center, its task is to inform, popularize the region through various Internet resources, event events.
Further, we set ourselves the task of increasing the duration of stay in the region at the expense of the unused, let's say, resource of the city of Irkutsk. A beautiful city with beautiful architecture - both ancient architecture and classical architecture. Often a tourist flew to the airport, drove past Irkutsk - straight to Lake Baikal. Such tourists should be interested in good programs in Irkutsk. This is also one of the main tasks.
The next task, taking into account the environmental agenda, is the development of the tourist potential of other districts, municipalities, territories of the Irkutsk region. And we have already employed three "pilots" and are digitizing them. Because we understand that Baikal is not the only tourist attraction in the Irkutsk region. The topic is relevant for intra-regional tourism, weekend tourism. It is necessary to give people the opportunity to travel to other parts of the region, and also to have a good and good time. This also applies to the environmental agenda.
And the most important thing is infrastructure development. Here we have identified a number of projects for ourselves: this is the regional project, the Taltsy Museum, and the Circum-Baikal Railway. We are also talking about the development of the Special Economic Zone in Baikalsk, which we have. Yes, the dynamics for the development of the SEZ was not very good, but we are now carrying out a number of events, specialists from the Tourism Corporation will come in the near future to evaluate infrastructure projects.
And, accordingly, another of the projects is the Historical Quarters in the city of Irkutsk. We have already implemented the 130th Quarter project, but this is only a small part of the restoration of historical buildings and renovation of adjacent territories.
- When will the new airport be in Irkutsk?
- We work in the legal field. The first stage is the most difficult. We conducted competitive procedures to select a consulting company that will accompany this project and that will fully analyze the proposals. The first time there was a bad winner, some local company with no experience. She withdrew her bid and we re-tendered. The winner was the world-class company KPMG, which has already started analyzing and preparing proposals. All stages of the "road map" are scheduled.
- Hasn't anyone expressed a desire before ...
- We have a list of 54 investors. This is the last old airport in Russia with a high, 10 percent, dynamics of passenger traffic and, in general, with a high volume of passenger traffic. Therefore, it is in great demand. Our task is to conduct a transparent deal, and the more participants, the more profitable for the region. This asset is interesting to everyone.
- How many TASEDs are there in the Irkutsk region and how do they work?
- Four. These are Cheremkhovo, Usolye, Tulun, Sayansk. Usolye is generally the very first: we were a "pilot" in the Russian Federation, we entered the first wave - in 2016. Cheremkhovo and Sayansk were connected much later. And the fourth territory - the very last that was created - is the PSEDA in Tulun, after the flood. There we were very strongly supported by the Foundation for the Development of Single-Industry Towns and VEB, which is the curator of this project. And those projects that came to Tulun - they are small, but really working - received quite serious support from the Monocities Development Fund. There are loans at zero percent, and other support measures.
- What tax breaks exist in your PSEDA?
- PSEDA in single-industry towns is, in fact, a tax-favored regime. This includes income tax benefits: the first five years - zero, the second five years - 5%, property tax for five years - zero, land tax - municipalities make a decision and release a resident. But that's not the point. The main thing is the benefit to extra-budgetary funds, the Russian Federation pays for it from the federal budget, where instead of 30,2%, entrepreneurs pay only 7,6%.
- Everything is the same as in the Far East.
- Yes, but TASED in the Far East work as a combination of TASED and a special economic zone, when they also build infrastructure for residents, and this is a limited area, and there is a management company of TASED.
- So you don't build infrastructure for residents?
- We are not building. But there is support from the Monocities Development Fund, when for 95% of the federal budget it is possible to build infrastructure for an investment project.
- And how actively do residents go to these PSEDA?
- Monocities are not just settlements created by a single enterprise, they are really complex territories. And when they are filled with small investment projects, this certainly gives an impetus to development. Well, here in Usolye we generally have a cool resident, for example, who produces a very good hand sanitizer. And they started long before the covid. We also included them in the PSEDA, helped with subsidies, with infrastructure, and with resource-supplying organizations to negotiate. And now, when this pandemic has happened, they have just an explosive growth in production and demand for it. We understand how accurately we got into this area in terms of specialization, in terms of problems, and that even such a small project is very effective. And in the pharmacies of Irkutsk there were no interruptions in hand antiseptic products, because we have our own manufacturer.
- In general, here in Irkutsk they say that in Usolye-Sibirskoye it is generally unclear why small business is developed.
- They are very active, it's true. In the Irkutsk region, the average percentage is different, we have territories that are both very active in terms of small business development, and quite inert. The city of Usolye is really distinguished by an active business environment. If our share of the proceeds of small businesses is 27%, then for Usol it is 50%. And they have very interesting projects. They are engaged in the production of furniture, production in the field of light industry, low-tonnage chemicals. That is, they do not just buy and sell, they have interesting production projects.
Plus, we have many projects supported by the Favorsky Institute of Chemistry of the Irkutsk Scientific Center of the SB RAS. There is a young, very active leader who just has a lot of ideas. As for antiseptics, this is also their project, they launched it as a startup, and then landed it at the Usolye-Sibirskoye site.
- What will the Irkutsk region benefit from the expansion of the Transsib?
- Our bandwidth is now limited. And given the growth in exports, including the growth in coal exports from Kuzbass, a transport problem arises. Therefore, this project is very important and necessary for us, because at the moment we are observing downtime at the enterprises. When entrepreneurs understand exactly how much they can produce, ship and sell, production volumes and efficiency will increase. It is an independent, working system, business environment. And when they depend on the capacity of the railway, it is wrong.
- Do you have labor resources for this expansion?
- The construction will be large-scale, so it is now being actively planned, and we are now actively consulting with the federal authorities. There are many near-infrastructure projects that also depend on the region.
- What are your plans in the economic sphere of the Irkutsk region for the next five years? And what are you dreaming about, what should the Irkutsk region become?
- We have a total portfolio of investment projects worth more than 2 trillion rubles. These are 26 thousand jobs. It's not just about plans, but about our realities.
I personally dream of solving those pressing issues that still hinder the implementation of our socially and economically significant projects, including those that have a tourist effect.
And, of course, the most important thing is a decrease in migration flows, so that the residents of the Irkutsk Region remain here, it is necessary to stop the outflow. And this is a question of creating a favorable comfortable environment, creating high-paying jobs so that talents do not leave us. We understand that if we do not provide jobs with interesting competencies, then we will not succeed. In principle, this is the main goal that needs to be achieved, and we are working on it.
Born in 1979 in the village of Kremovo, Primorsky Territory. In 2001 he graduated from the branch of the Military Financial and Economic University in Yaroslavl, receiving a diploma with honors. From 1996 to 2009, he served in the Armed Forces of the Russian Federation in senior positions in the financial block. In 2009-2015 - Deputy Head of the Main Directorate of the EMERCOM of Russia in the Voronezh Region for financial and economic work. From 2015 to 2016 - Deputy Head of the Main Directorate of the Ministry of Emergencies of Russia for the Voronezh Region for Crisis Management. In 2016-2017 - Acting Deputy Head of the Central Regional Center of the EMERCOM of Russia (Moscow). In 2017, he worked as a managing partner of Fakel LLC (Voronezh). In 2018 - General Director of the production enterprise LLC RosEkoPlast. Since 2018 - a manager - an individual entrepreneur of manufacturing enterprises of Kedr-Facades LLC, FABRICHE RUS LLC.
On February 21, 2020, he was appointed Deputy Chairman of the Government of the Irkutsk Region.
Has departmental awards of the EMERCOM of Russia: medals "For excellent service" I, II, III degrees, badges "For Merit", "Honorary badge of EMERCOM of Russia", Certificate of honor of the EMERCOM of Russia.