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Economic development of the Republic of Karelia in 2006

  Economic Policy

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   Results of 2006


Determinative influence on state of affairs in manufacturing activity regarding such kinds of activity as manufacture of machines and equipment, manufacture of ready metal manufactures and manufacture of electric equipment, electronic and optical equipment is rendered by largest enterprises, such as Petrozavodskmash Corp., Onego Tractor Plant, Inc., AEK, Ltd., Kostomuksha.

Therefore rendering practical assistance by Government of the Republic of Karelia in restoration and loading of capacities has been directed, first of all, on these enterprises.

Government of the Republic of Karelia rendered assistance to Petrozavodskmash Corp., in establishing economic relations with enterprises of the CIS and other foreign countries as with potential consumers. In common were completed tasks on placing of orders to manufacture paper-making and chemical equipment for enterprises of Byelorussia, Republic of Tatarstan, Moscow and other regions, and also to increase deliveries of production to pulp-and-paper enterprises of the Republic of Karelia. Great attention in work with the enterprise in 2006 was paid to timeliness of manufacturing and delivery of paper-making machine to Byelorussia for the factory constructed in Shklov. Equipment at the cost of 600 million rbl. was produced and shipped within this contract in 2006.

In 2006 Onego Tractor Plant , Inc., did not manage to overcome industrial and financial crisis. As a result, external management was introduced at the factory since November, 2006. Under these conditions Government of the Republic of Karelia assisted the enterprise in development and implementation of new industrial policy, took active part in the External Management Plan development.

Measures listed in the Plan are aimed at expansion of assembly of modern import wheel type equipment, at simultaneous preservation of traditional manufacture of caterpillar equipment. It is planned to organize manufacture of the second factory platform, and sell of excessive property and equipment. It is planned that implementation of the External Management Plan at Onego Tractor Plant, Inc., will allow the enterprise to overcome financial crisis and achieve the level of profitability.

Implementation of Karhakos, Ltd., production capacities construction investment project in the town of Kostomuksha allowed to bring the enterprises of this group at full planned production capacity. Besides AEK, Ltd., specializing on production of electric wiring for supersize cars, there has been founded a new enterprise of Elektrokos, Ltd., producing electronic plates. The volume of production of this enterprise in 2006 has exceeded 60 million roubles, and cost of production produced by the entire group of enterprises made more than on 400 million roubles. Experience of successful development of investments in Karhakos, Ltd., also using measures of state support, is recommended to distribution in the republic within the framework of the program of increasing competitiveness of Karelian industrial enterprises implemented together with Chamber of Commerce and Industry of the Republic of Karelia.

Focusing special attention on the largest enterprises, Government of the Republic of Karelia cooperated with enterprises where work less than 300 employees (Avangard Shipyard , Inc., Petroset, Ltd., Inavtomarket Karelia, Ltd., etc.).

Reduction of wage payment debts of enterprises, escalating of production volumes, including within the government's defence order is possible to consider as positive result of this work.

Long work on increasing the government's defence order brings positive results: there has been reached an agreement with the Ministry of Defence of the Russian Federation about additional placing of orders at Avangard Shipyard, Inc.

Avangard Shipyard, Inc., is included in the List of the strategic enterprises of the Russian Federation and by decision of Government of the Russian Federation it defined the only one in the country executor of works on base trawlers repairing. In 2006 value of contracts concluded on government's defence order performance made 58 million rbl. (compared to 28 million rbl. in 2005).

Further prospects of development of the enterprise are connected with placind the order for construction of 2 trawlers which is now studied by the enterprise together with the Ministry of Defence of Russia.

Analysis of state of affairs in power economy of the Republic of Karelia testifies that there is a disproportion between rates of growth of development and consumption of electric energy. In 2006 due to electric power developed in the republic, only 45% of total power consumption was provided. In the long term deficiency of electric power and capacities will increase, including due to putting into operation of new large power-intensive enterprises.

With a view of power economy development in the republic, the Government is taking measures directed on development of power capacities on the one hand, and on energy savings on the other hand.

In 2006 there has been approved investment program of electric-power industry in the volume 131,8 million roubles which was executed in full. The first stage of the project on providing reliable power supply of the island of Valaam is implemented: four new modern diesel generator have been purchased, of which two were installed according to temporary scheme and started up. The reconstructed transforming station in settlements of Tolvuja, Helylä, electric mains between settlements of Konchezero and Shuiskaya Chupa, Girvas and Spasskaya Guba, Medgora and Perguba are put into operation.

Traction substations for electrification of Octyabrskaya railway in Segezha and Ladva put into operation.

According to the project of Strategy of Social and Economic Development of the Republic of Karelia till 2020 development of energy complex of the republic is planned due to construction of natural gas heating and power plant, as well as small-scale power generation development, increase in a share of using local kinds of fuel in municipal energy In the long-term prospect development of Shtockman gas-condensate field and construction of cross-country gas pipe-line from the north to the south of the republic will promote completing of gasification in the republic.

Energy savings is one of thje most important spheres of concern of the Government. During implementation of the republican target program on energy saving for the period till 2006, need for power resources was reduced by 8.8% from total amount of primary fuel and energy resources, economic benefit for the period of the Program implementation has made 276,9 thousand tons of conditional fuel.

Large industrial enterprises of the republic invested significant means in energy saving projects.

Karelsky Okatysh, Inc., implemented project of independent maintenance of indurating machines with compressed air of low pressure. Volume of investments within this project made 12 million roubles, at 25,3 million kWh decrease of electric power consumption. Grinding-concentrating factory introduced adjustable speed drives on pumps. Cost of this action made 789 thousand roubles, and annual economy of electric power is estimated to make 562 thousand kWh.

Reconstruction in the NAZ-SUAL, Inc., branch provides annual energy saving of 800 thousand kWh.

Work on energy saving is held at Segezha Pulp and Paper Mill, Inc., Petrozavodskmash Corp., Onego Tractor Plant, Inc., and other enterprises.

In Kondopoga, Inc., transition to natural gas of four boilers of industrial boiler-house provided annual economy of 6 424 tons of conditional fuel. In 2006 there has been constructed gas main from gas-distribution plant; automated control system on evaporator has been installed, other actions on energy saving have been introduced. Outstanding disbursements made 62,4 million roubles.

Now regional program on energy saving is being developed for the period to 2012.

The Active involving of local fuel and energy resources in fuel and energy industry of the Republic of Karelia for the period of 2007-2010 regional target program concept has been approved and project developed.

Measures of the program are aimed at achieving the basic purpose of republican energy policy of the most efficient use of natural fuel and energy resources and potential of energy sector for economic growth and improvement of the quality of life in the republic.

Basic tasks the Government of the Republic of Karelia faces in the sphere of industrial policy in 2007 are the following:

  • creation of conditions for steady economic growth, modernization of economy;
  • assistance to attraction of investments for creation of new industrial workplaces, improvement of investment appeal of industrial enterprises;
  • assistance in organization of release of competitive innovative products;
  • increase in efficiency of using all kinds of resources;
  • assistance to development of personnel potential. Implementation of personnel selection directed on maintenance of needs of industrial enterprises in highly skilled engineers and production workers.
  • creation of conditions providing social stability and increase of wages at industrial enterprises;
  • development of optimum forms of cooperation and dialogue between bodies of the government of the Republic of Karelia and business.
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Created: April 20, 2007. Last updated: May 3, 2007.
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