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“AFK Sistema may become an anchor investor in Yakutia”

The head of the Agency for attracting investment and export support of the republic, Alexander Kondrashin, told EastRussia about breakthrough projects in the region

The harsh climate, difficult working conditions and remoteness from central Russia did not become an obstacle to attracting investment in Yakutia. Alexander Kondrashin, head of the regional Agency for attracting investments and export support, told EastRussia in an interview about whether it is possible to start production in the republic without a preferential regime, why the regional capital needs hotels and an anchor investor.

“AFK may become an anchor investor in Yakutia


- Alexander Igorevich, tell us what successes the Agency achieved last year and what goals were set for this year?

- In 2019, the department successfully fulfilled performance benchmarks: it attracted 600 million rubles of private investment, participated in the conclusion of agreements in the framework of public-private partnership (PPP) for 15 billion rubles. The agency’s objectives this year are to attract two billion rubles of private investment. Due to the coronavirus pandemic, a catastrophic decline in business activity is observed, events are canceled one after another. But nobody took off tasks from us. We need to work out and fulfill key indicators for attracting investments, PPPs and exports. Previously completed projects are at the stage of concluding agreements - this is the construction of the Center for Active Longevity, which will be operated by the group of companies “Social Geriatric Center" Guardian "", two hotels in Yakutsk, the construction and launch of a timber processing plant in the Lensky District, and a medium-tonnage plant for the production of liquefied natural gas in Megino-Kangalassky ulus.

The LNG company, which plans to increase the production of liquefied natural gas to 530 thousand tons per year, has been supplying its products to Mongolia by rail since last year. Volume and price are the subject of company trade secrets. The medium-tonnage project, at least the construction of the first stage, the company plans to start this year. If we do this, we will completely close our key performance indicators.

- Did the situation with the coronavirus pandemic affect the Agency?

- This is an export. There we are, indeed, in an ocean of uncertainty. Entries and exits from the country are closed. Because of this, for example, recently the investor of the Jinheitong-Keramika plant from China was unable to participate in our session, in which we talked about small industrial projects that are within the reach of the business community of the republic. Representatives of the Marubeni company were unable to attend the technical meeting on the development of the gas engine fuel market, which was held recently with the assistance of the Ministry of Industry of Yakutia. Today I received a message that the Canadian company Iridia Medical, with which Yakutia discussed cooperation on mobile first-aid posts, also received an internal directive to suspend business trips. The events that we need and are important for us are being canceled. For example, we planned to participate in a jewelry exhibition in India. She will not be.

We support the existing negotiation processes, we see no risks for this year, we will close it normally. But we are not sure about the next year, because without trips we will not be able to find new contractors.

- You said that over the past year, 600 million rubles of private investment have been attracted. What projects are in this volume?

- Construction of the third stage of the Sayuri greenhouse, Tekhservice LLC asphalt plant, insulation project for Bazalt LLC. These are the projects of residents of the Yakutia TOP.

- But TOR companies are often considered only as an opportunity to avoid paying taxes. So far, only they have won in this matter.

- If we are discussing whether TOR is needed, then this is a matter of federal law. As a tool to attract investment, they are. And if we have the opportunity to offer investors the best conditions, we will always do it.

- And what ultimately do the residents of the republic get from this, for the benefit of which you work?

- I think that this is again a question of whether TOR is needed, but voiced differently. I think TOR is needed. If there is no preferential treatment, then there will be no new production project with jobs, payment of a number of taxes. Residents bear huge risks, invest their own and borrowed funds. Yes, we are ready for some time to endure the fact that they still pay less taxes. If these projects were not there would be nothing, given that our economy is small, especially in Yakutsk. Here the economy is budgetary, there are very few industries. And production has a multiplier effect: each ruble creates three to five rubles of additional economic activity.

- Speaking of “Sayuri”, is it the state’s investment in the state?

- In this project there are many participants, both regional, municipal and foreign - everyone sees his own. What is the agency’s vision? The agency believes that this is a completely accompanied project. It all started with the fact that an employee of the agency Petr Shishigin met a potential investor. The Japanese company proposed a technological solution that found implementation. Now the project is on the way to the construction of the third stage of greenhouses. This is an agricultural project, this industry is difficult, especially in Yakutia, mainly non-repayable funds are invested in it, preferential and departmental financing is used. If Sayuri is compared with other agricultural projects, then this is an extremely successful project.

The volume of investments in this project is 1,7 billion rubles, the share of Japanese private investment is five million rubles. But the Japanese participated as a key technology partner. The project would not have been possible without their participation.



- Well, let's talk about current projects. Is there any movement to attract investors to build a hotel? How will the issue of land purchase for the hotel complex be resolved?

- At the moment, a scenario has been agreed with the city administration so that we do not allow the outrage that happened in Kamchatka. There, the investor had to buy land for his project. This is just bad taste. This is terrible and unacceptable. Trutnev (deputy prime minister - presidential envoy to the Far Eastern Federal District - approx. Ed.) When he saw this disgrace, recommended that the governor of Kamchatka dismiss the entire economic pool. We don’t want anything like that. Last March we agreed with the city that the land should go into this project according to the mechanism of a large-scale investment project.

- We are now talking about the construction of a hotel, the operator of which was supposed to be Hilton?

- The project was designed under the Hilton. But if Cosmos arrives (carries out operational management of Sistema's assets in the hotel business - approx. Ed), then he will prescribe it for himself and manage it. This is the RIK project that the company is currently discussing with Sistema.

Cosmos Group is present in million-plus cities. Moreover, with the exception of megacities, municipalities conduct plots for free in all projects because they need these hotels. Because if there are hotels, then there will be tourists, and the city will earn on this. There will be a huge bandwidth - the quality of service will improve, and we will be able to do end-to-end tours. This is necessary for the city.

- Through tours where?

- We want to focus on the development of a tourist destination on Lena Pillars. Now we are working with the Lena Pillars National Park to develop an investment project and choose one of the two sites. The tourist complex will be located either on Us Buotama or on Batamai. In the first case, these will be modular structures, in the second - capital construction projects. We held meetings, discussed the issue with the Agency for Strategic Initiatives, the Ministry of Economy of the Russian Federation, Rostourism, the Ecotourism Development Fund "Dersu Uzala" and came to the conclusion that it is better to put modular designs.

Both sites have their pros and cons. Us Buotama is a habitable site, but the road there is seasonal. If you take Batamay, you will have to start from scratch, even the land has not been formed there. But then the area has year-round transport accessibility.

To make an end-to-end route, you need three components. We are still in the deep study of two of them. They wrote a financial model, made a project to modernize the international terminal of the Yakutsk airport. We signed an agreement with the bank and found a technology partner. This is a good topic. The next step is the hotel. There are two projects, they move quite quickly, and they have a strategic investor.  

The third is the formation of a consensus of what we need at Lena Pillars. This is the main attraction of Yakutia, if we reveal its tourist potential, it will be great. For me, frankly, the question of personal ambition - I want it to be convenient to go to Lena Pillars.

And to make this project, we need an investor. The amount of investment depends on the type of structure. If these are modular structures, then 50-200 million rubles will be required, if capital structures - 500 million.

- How much will the route cost?

- We will know the cost when we determine what kind of structure it will be. The decision so far does not depend on the whim of the investor, because now our main task is to decide for ourselves what we want to build in Yakutia, on Lena Pillars. When we decide, then we can take it. It will certainly be cheaper to visit than the Kronotsky Park in Kamchatka. 15 thousand people go there every year. If as many tourists visit us on Lena Pillars, then this will be a great story.

- It is unlikely that there will be so many tourists, because it will take a lot of money: people first need to fly to Yakutsk, then get to this area.

- This is probably not quite the right judgment. There are internal and external tourist flows. Our internal one is growing, while by about ten thousand a year, last year there were a little more than 200 thousand people. Foreign tourist flow to Yakutia is 11 thousand people. Tickets are expensive because no one rides. If they will come to us, at least to Vladivostok, where now 40 flights a week fly from Korea, because there is hype, infrastructure, and most importantly, they have where to come. Nowhere to come to Yakutsk, tourists come and remain alone with themselves. Therefore, we want a cross-cutting route. When it will be, then, we assume a tourist flow, and the price of the flight will become cheaper.   



- For several years in a row, there was talk about the development of timber processing in the republic. Why has so far failed to attract an investor in this area?

- These were conversations at the level it would be necessary to find an investor. Now we have sharply increased the level of elaboration of our projects. In all projects accompanied by the agency, there is a presentation, financial model, business plan. Most of the projects we accompany with our colleagues in Moscow.

For a project to develop a timber industry complex based on the Almas forestry complex, we have been looking for an investor for a long time and found one of the largest timber processing complexes in Russia. This is a holding Segezha Group, which is negotiating, signed an agreement. And now he and Almas are conducting a substantive conversation about the possibility of shareholding. There was still a problem with the logistics in this project. This task is also solved - we found a transport and logistics operator. Unfortunately, I can’t name it. The cost of this project is five billion rubles. This is a serious story.

- Did you manage to find the investment partner of FAPK Yakutia?

- There are two stories. The first is the large debt of the enterprise; it is a deeply loaned enterprise. In this we cannot help him, and our task is not in this. The second story is that we developed an investment project, a number of modernization measures that will allow the company to become much more profitable, the most important of which is to change the steam boiler room. This will cost the company about 242 million rubles. Moreover, this money can be recaptured in two years.

It is difficult for us to attract an investor in this project, because it is a state-owned enterprise, there are many risks, they can be assigned some task or some of the support measures provided to tear out. But at the same time, we worked out the possibility of financing the investment project of FAPK Yakutia with four banks, they are now in negotiations.

- If this company exports successfully, then why does it have such poor performance?

- The performance of the enterprise must be watched in dynamics. Now his financial situation is much better than three to five to ten years ago. And the dynamics of the enterprise is positive, unlike other agricultural enterprises in Yakutia. Yes, the enterprise does not sow or reap, but it belongs to the agricultural industry.

- The company produces alcohol. This is a profitable business.  

- This is not a money machine. This company is engaged in the production of food products in the agricultural industry. And doing this in Yakutia, as well as doing something in Yakutia, is more expensive than in any other region. To produce something in Yakutia is to heat a building for nine months, to pay northern allowances, this is a huge cost. And they affect the agricultural enterprise very hard. In this industry, even large companies receive departmental support. Rusagro, Miratorg are our majors, and even they get a lot of money from the state, because by its nature it is a complex business.

We wrote model projects for processing meat, fish and wild plants, and worked with a number of potential investors. Lipetsk Refrigerator Plant showed interest. They want to make us a small fish processing workshop. From the very beginning, when we pledged, we understood that if they did not have a partial refund of capital expenditures, then there would be no project.

- If the workshop will work here, then the cost of production will be high.

- The cost price will be higher than the national average. But we have calculations. We will try to influence the investment decision so that the workshop works here. And just it should work in a preferential mode. Our projects are laid out under the TOP regime, because otherwise it is difficult to compete in central Russia.

The cost of the fish processing workshop is 140 million rubles, meat - 63,9, wild plants - a little more than 20. Each of these enterprises will open 10-20 jobs. The logistic scheme for fish and wild plants is in full synchronization with the infrastructure of the northern delivery on the basis of the Yakutoptorg company. We can arrange for the loading of such an investment project points of collection and purchase of fish, wild plants. We closely cooperate with the Yakutoptorg company, for them this is an excellent sales perspective.



- You mentioned the Center for Active Longevity. What kind of project is this?

- The Center for Active Longevity is an opportunity for Yakutia to take care of elderly people to a radically new level. The project will partially offset the costs of maintaining our elderly people from tariffs. The client will be able to receive funds from this tariff and co-finance the residence of his relative in this institution. The center is designed for 300 beds, it will be located approximately on the Sergelyakhskoye highway. The volume of investments is approximately in the range of one to two billion rubles. This project has no analogues in size, nor in structure, nor in throughput in Russia. This will be a terrific project, which representatives of all regions of our country will come to, watch and study.

Just like in a project with a year-round center for children's recreation, it will cost us a little blood. The project of the children's camp was structured by us with the involvement of a capital grant from the Ministry for the Development of the Far East. In total, the project, worth 1,5 billion rubles, cost the republic 40 million rubles.

We really like this scheme. This is a very cool scheme, made by us first in the country and in the Far East. Many colleagues from other regions ask how we did this. They are trying to replicate our objects, to reproduce this scheme.

- And how did it really happen?

- It turned out to be possible to do this, because at the federal level this project tirelessly and extremely effectively accompanies, like other projects in which we want to carry out a capital grant, my former colleague, investment director of the Far East Agency for attracting investments and export support in the field of medicine Elvira Ramilovna Nurgalieva. She helped us to carry out this project through all federal approvals, to apply for a sub-commission. And in principle, with its help, this mechanism was developed. It's a great story.

- It turns out that if other regions had their friends, would they also be able to achieve funding?

- I think that it is not a matter of acquaintances, but of finished projects. A year and a half ago, when I came to work, the main thing I came across was the low level of project development. We learned how to solve this problem, now our projects are worked out. And this is absolutely accurate, and it’s much easier for us to seek funding of any kind, to enter into experimental mechanisms of any kind, to do something cool first ahead of the rest, because we have projects. If they were not there, we would not be able to do anything. And this is the trouble of the entire Far East. We in Yakutia decided this, so we are handsome. The rest should be caught up with us, because they have practically no developed projects.



- Let's talk about export. The volume of exports from Yakutia last year amounted to $ 154 million. Besides diamonds and diamonds, what does the republic export?

- This has never happened before, now it is: we export children's books, tea. We have always exported, we sell even more jewelry, mammoth tusks, the sale of which has become completely legal. We put our products, for example, berry syrups, preserves, on Alibaba, eBay trading floors.

- Can you tell how much and how much money the exporters received?

- Under the binding agreements of the Russian Export Center, we reported about $ 1,6 million. All the time in Yakutia two universes are confused. There is a universe in Yakutia that pumps oil, digs coal, takes out diamonds. This share of the economy traditionally approaches 90%. No need to compare, as they say, a snake with a hedgehog. If we compare our export of raw diamonds or even faceted diamonds with everything else, then these are two completely different figures. I think that, given the fact that we began to sell many different new types of products that Yakutia never sold for export, this is a pretty decent figure. The benchmark of the Russian Export Center, taking into account the fact that in our region the number of small and medium-sized enterprises that meet the requirements of the exporter, is extremely small, we exceed several times.

- Which countries are trading without diamond supplies?

- China, Canada. Forests are being exported to Austria. A little bit started to sell to Japan. I think that this year we will start selling sugar tea. Conducted four rounds of analyzes, checks. It remains to agree on a price.

- What is the volume of trade with China?

- Of these 1,6 million dollars - about 900 thousand accounted for by China. These are mainly mammoth ivory products that are exported by the Yakut Export Factory. Most of the products were sold by Tusku. As far as I know, they are not residents of the Yakutia TOP.

By the way, the resident of TOR “Sakha Lipsnele” with our help sells its boilers to Mongolia, Kyrgyzstan and Kazakhstan.

- When you first started working in Yakutia, you talked about plans to attract an anchor investor. Found this one?

- Yes, I said that we need our Kaluga Volkswagen, which will bring its friends. I think that AFK Sistema could become this “Volkswagen”, given that it is a versatile large holding. His subsidiary MTS in Yakutia is very active, and is also working on the Smart City project. In this part, the presence of the company in the region is definitely there. This time. Another asset - Cosmos Group - is considering participating in our hotel project. Segezha Group is considering participating in timber processing. We are also considering the possibility of cooperation in the development of our industries. So far, this topic is just emerging from them, and if it grows, it will be very good. The specificity of AFK Sistema is that if one unit comes, then all the others can come after it, and some related synergistic effects will be created. That is, if a hotel arrives, then it will be assisted by a neighboring close travel company. This can give us synergy. We are now moving in this direction, and it will be a good story.

This is option one. And option two is a major technological and financial partner for the LNG medium-tonnage project. Maybe it will be NOVATEK, maybe Atomenergomash or Rostec, which. markedly indicated its presence in the region and will certainly increase it. This is the correct scenario. When a large business arrives, it is followed by its divisions, contractors, friends and friends of friends.

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