Russia will continue to develop

The outgoing year was quite complicated: the consumer demand and real income of the population have decreased; capital outflow came amid high bank credit rates and closing up of many investment programs; reduction of the GDP and industrial production was recorded for the first time since 2009; inflation was significantly accelerated. However, sanctions and devaluation of the ruble resulted in net profit double-valued growth of many domestic companies. Expensive import and low ruble smoothed path for the Russian manufacturers to the domestic market; now there is an opportunity to push export more efficiently.

Moreover, a number of major investment projects are at the final stage. The next year we expect them to be completed or to be in a startup phase of first priority (see table 1).

Table 1. Major investment projects of Russia expecting to be completed (in full/alternately) in 2016, investment volume exceeds 100 bln RUB.

ProjectRegion, city/townInvestorInvestment declared, bln RUB
1 Construction of “Western High-Speed Diameter” high-speed motorway. The central section Saint-Petersburg Northern Capital Highway, LLC 213
2 Unit for petrol production on Kirishi oil refinery The Leningrad region, Kirishi OJSC Surgutneftegas 170
3 Gas chemical complex in Budennovsk The Stavropol Territory, Budennovsk LUKOIL oil company 140
4 Boguchansky aluminum plant The Krasnoyarsk Territory, Tayezhniy settlement OJSC RUSAL 122
5 Reconstruction of Komsomolsk oil refinery The Khabarovsk Territory, Komsomolsk-na-Amure OJSC ROSNEFT 119

Western High-Speed Diameter. The central section is a toll high-speed motorway aimed at transport connection of the Big port Saint-Petersburg with the federal ways to Moscow, regions of Russia, the Baltics and Northland countries through the ring road. The motorway will also reduce traffic load in the historical part of the city.

Kirishi oil refinery will raise the oil refining ratio. A unit for the production of Euro-5 high-octane gasoline and the capacity of 2 bln t/year is constructing.

Gas chemical complex in Budennovsk (as a part of OOO “Stavrolen”) will process up to 5 bln cubic meters/year of gas from the North Caspian fields. The complex will be the largest center in Russia for manufacture of polymers (along with OOO “Tobolsk-Polimer”). Considering that there was almost no modern polymer production in Russia until recently, the mentioned event will be momentous for the whole Russian industry.

Boguchansky aluminum plant is one of the most modern and the largest metallurgical enterprise in Russia. In terms of full capacity, the plant takes the 3rd place following the Krasnoyarsk and Bratsk aluminum plants. Boguchansky plant is able to manufacture about 600 th tons of aluminum per year.

Komsomolsk oil refinery will be modernized. This will help to raise the oil refining ratio. The high value added products are always of high demand, for example for the PRC, our neighbor from the East.

In addition to the infrastructure projects mentioned above, many other programs are implemented despite of all difficulties. The outside observer will be quite surprised after exploring them: the stereotype about the country trading with raw materials without recycling and “manufacturing nothing” for the self-use is just a frustrated affirmation.

Absent circumstances of insuperable force, the GDP and industrial production growth are expected to raise in the medium-term. The reduction of the Central Bank key rate will revive the credit market.

Information agency Credinform congratulates you with the forthcoming New Year! May the 2016 year give you new business prospects, investments for the development and new clients!

Federal Antimonopoly Service of the RF is vested with oversight functions in procurement according to 223-FL

Currently main federal laws controlling the Government procurement in Russia are:

  • «On the contract system in state and municipal procurement of goods, works and services» (№44-FL of 05 April 2013, as amended on 13.07.2015);
  • «On Procurement of Goods, Works and Services by Certain Legal Entities» (№223-FL on 18 July 2011, as amended on 29.06.2015).

223-FL is by definition and requirements to the Government procurement more loyal than 44-FL. For example, the last one in a serious way limits ways of bidding, sums and procurement of goods amount, works and services; demands proving the starting price of contract, describing functional characteristics of goods and services to the full extent. The reasons of passing 44-FL are: misregulating of relations appeared while using the previous law connected with the Government procurement; grown corruption level; development of business activity in Russia.

223-FL, for example, does not demand proving the Government procurement, the starting price of contract, the possibility of making amendments into completed contract. Other differences of 223-FL are represented in table 1.

Table 1. Principal differences of 223-FL from 44-FL
 Name of law provision223-FL44-FL
1 Procurement plan Can be changed. It is by definition easier and customer defines its structure and content Yearly plan-diagram and 3-year procurement plan for the state institutions are demanded
2 Reason for procurement Not required Obligatory
3 Description of procurement Can be any, including with direct reference to brand name, manufacturer, country, origin Neutral, objective, without brand names
4 Source of financing Self-gained finances Transfers (subsidies), provided for the Government task fulfillment
5 Conditions of contract Can be changed Limited change
6 Making contract with winner Not obligatory Only with winner
7 Conditions of procurement Customer defines Heavy regulations
8 List of cases for procurement by the sole supplier Customer defines Limited
9 Ways of procurement Any ways depending from the customer`s choice Limited

Analysis of 223-FL realization shows that several state companies abuse loyalty of the law, for example, tens of times driving up procurement prices, as a result increase of expenses is close to 100%. When there is a violation of 223-FL participant of procurement can lodge a complaint to the Federal Antimonopoly Service of the RF (FAS). Among the violations are: not placement of data on procurement in the unified information system; inaccurate information about procurement; additional requirements to suppliers. However, it turned out to be inadequate, that is why the Government of the RF made a decision to enforce procurement control of state companies.

According to the Government regulation №1139, amendments were made to the FAS activity. Since 1 November 2015 FAS is vested with oversight functions in the procurement area of «Certain Legal Entities» in accordance with 223-FL. They include state and municipal unitary enterprises with a government stake more than 50%. Moreover, FAS got a possibility to make decisions on suspense of plan implementation of goods procurement, works, services, and also innovative and high-technology products, medical products concerning procurement of small and medium-sized business entities.