Investment activities on the territory of Petrozavodsk in 2009

Under the modern conditions, the key factor of social and economic development of Petrozavodsk municipality is raising investments. The major task of the City Administration is to establish investment-friendly environment on the territory and support the industries that would allow to increase investments aimed at achieving planned social and economic indicators, such as economic growth, enhancement of the infrastructure, creation of jobs, increase of the income of people, and achievement of standard indicators for national projects. The investment policy of Petrozavodsk Municipality is based on the following principles:

support to investment activities on the territory of the municipality;
securing the investors with equal rights for getting municipal support for investment activities;
involvement of governmental resources in financing projects aimed at the development of the infrastructure;
support — in the format of municipal guarantees — to the implementation of investment projects in accordance with the municipality development priorities;
information openness and publicity on making decisions on investment policy implementation;
simplification of procedures for supporting investment activities on the territory of Petrozavodsk municipality, including selection of land parcels available for construction;
control over proper use of the money from the city budget and non-budgetary funds.

Consistent implementation of those principles is targeted to achieving the following indicators:

growth of investments in the fixed assets of enterprises and organizations of Petrozavodsk Municipality;
building up the infrastructure necessary for attracting and securing stable growth of investments;
reduction of the investment risk, growth of the rating of the area and increase of its attractiveness for foreign and Russian investors;
successful implementation of investment projects;
ncrease of taxable base by means of creating new companies and upgrading the existing ones;
sustainable financial situation of the enterprises implementing investment projects;
creation of new jobs with decent pay and complete social security package.

Implementation of those principles contributed to the annual increase of investments in the fixed capital. Thus, as of 2008, the amount of the investments in the fixed capital made about 5,9 billion RUR, what was 22,9% more than in 2007.

Dynamics of investments in the fixed capital (billion RUR)

However, due to the global financial crisis, the amount of investments in the fixed capital shrank in 2009 compared to the similar periods of 2008. Thus, as of the 1 st quarter the amount of investments was 59,6% compared to the similar period of 2008; for 6 months it was 64,6%, for 9 months — 66,9%, and for the whole 2009 — 72,8% (4019,9 m RUR, what is 30,4% of the total amount of investments in the fixed capital in the republic).

Most investments were made in the following fixed capital: machines, equipment, vehicles (40,7%), buildings (excluding dwelling houses) and facilities (39,8%).

By types of economic activities the biggest volume of investments in the fixed capital belonged to power, gas and water production and distribution (13,5%), processing industries (21,0%), transactions with real estate, rent and services (28,9%).

Compared to 2008, the amount of investments in hotels and restaurants increased (by 3.1 times), municipal, social and personal services (by 2.2 times), and in processing industries.

In 2009, the share of equity funds being one of the main sources of investments made 27,4%, whereas in 2008 this figure was 43,2%.

The key reasons for such a situation were the lack of proprietary resources for implementing projects and stricter conditions for bank loans.

Investment profile by sources (%)

Monitoring of investment activities on the territory of the municipality showed that some investment projects were suspended or delayed.

The actual amount of project investments made 1456 m RUR out of 2012,0 m RUR that had been planned, and 467 jobs were created. The biggest investments were made in the following projects:

reconstruction of a building in Lenina av. 31 for the first block of the IT park of Petrozavodsk State University;
construction of car sales and service center with a car wash (OOO Avtodom);
extension of the production area and procurement of modern equipment for producing fire fighting robots and equipment (ZAO Inzhenerny Centr EFER);
construction of a factory for producing food products from berries (OOO Jagoda Karelii);
construction of a gas station (OOO LUKOUIL-Severo-Zapadnefteproduct);
construction of a shopping center (TH Lotos);
establishment of an exhibition and leisure center «Kaleidoscope» (OOO Severny Kraj; OOO Territorija);
reconstruction of a building on Lososinskaya nab. for a hotel for 21 rooms (OOO Gostinitsa Zarechnaya);
opening a cafe for 86 persons in the building of Lenta hypermarket (OOO Randevu);
opening a cafe and a bar Bavarius (OOO Firma Omega-Trade).

At the same time, due to the active work of Petrozavodsk Municipality, the major goal of which has become raising funds for the budgets of all levels, the share of budget resources in the total volume of investments in the fixed capital increased significantly in 2009.

Compared to the similar period of 2008, the increase made 13,8 percent, and the share of budget funds made 45%. Those resources were used for social and infrastructural projects.

In 2009, design and construction of facilities for the sum of 110,5 m RUR or 90,6% of the planned volume (122,0 m RUR) was financed in the framework of targeted investment program of Petrozavodsk Municipality

Targeted investment program (million RUR)

For dynamic development of the territory, projects are important aimed at comfortable living conditions of the people, including social sector (health care, education and sports).

In August 2009, Petrozavodsk branch of Saint-Petersburg office of MNTK “Eye Microsurgery” named after academician S. N. Fyodorov completed the reconstruction of the 1 st floor of the building in Varkausa nab. 1B for the clinic. The reconstruction and expansion of services is planned for 2010.

At present, design estimates for the construction of a new perinatal center are under governmental evaluation. The documents were developed in 2009 at the expense of the budget of Petrozavodsk municipality. Detailed design and construction are planned for 2010 with some financing from the federal budget after all permits are received.

In 2009. the reconstruction of Yunost stadium was continued, administrative building was commissioned, and a fitness center was equipped at the expense of the municipal budget. At the expense of the charitable fund “New Generation” a skate park (1,7 m RUR) was built in the area of Yunost stadium, and in the area of Sulazhgora a universal sport ground was constructed with artificial turf (2,1 m RUR). Design documents were developed for the construction of an extension for a sport center to the Boxing Club (the total cost is 106,6 m RUR) and for the construction of a sport center at the bottom-land of the Neglinka River (the total cost is 348,0 m RUR). The designs were approved and included into a long-term application of State Sport Committee of the Republic of Karelia for acquiring federal co-financing.

388,7 m RUR were allocated for repairs and reconstruction of motor roads, including 105,95 m RUR from the municipal budget in 2009. 183,7 thousand square meters of asphalt and concrete roads were repaired, what is 36,8% more than in 2008.

In 2009–2010, repairs will be done of Syktyvkarskaya str. for the sum of 32,5 m RUR. Design documents for the road was developed at the expense of the budget of Petrozavodsk municipality (400,0 thousand RUR). The repairs will be completed on 01.06.2010.

Balanced development of all life spheres is indispensable for the successful development of the city, and first of all power supply, heating, gas and water are important. Therefore, large investment projects and programs on engineering networks are being implemented. In fact, due to the investment projects run by “Karelsky” branch of “TGK-1”, “Karelenergo” branch of OAO “MRSK Northwest” the deficit of electricity has almost been negated and heating has been secured for the municipality.

The issue of gas supply is being solved in the framework of the program “Gas Supply for the Regions of Russia by OAO Gazprom for 2008–2010”. Petrozavodsk municipality and ZAO “Kareltransgas” are continuing the works on switching dwelling houses to natural gas. Project “Pure Water” is of great importance.It will not only provide high-quality drinking water to people, but also it will allow to increase the capacity of water supply and wastewater treatment. In 2009, resources were acquired from the federal budget in the sum of 303,8 m RUR for completing the first stage of the reconstruction of water treatment plant, and Investment agreement was signed for getting budget money from the Investment Fund of the Russian Federation for the reconstruction of the water treatment plant. The investment from the federal budget will be 237,6 m RUR, and 69,9 m RUR will be provided from the budget of the Republic of Karelia.

For further development of the investment potential of the area, Petrozavodsk municipality developed a municipal target program “Development of Investment Climate in Petrozavodsk for 2009–2011”, which identifies the actions of Petrozavodsk authorities, companies and other participants of investment activities on creating unified rules clear for everybody and a series of measures aimed at increasing investment attractiveness of the city, establishing conditions for developing business and infrastructure. The actions of the program are targeted to implementing priority areas of social and economic development of the region. The program incorporates monitoring of investment processes, contributing to timely responses to changing situations and territory development priorities.

In order to present advanced projects, Petrozavodsk municipality took an active part in exhibitions. The XV International Congress Exhibition “High Technologies. Innovations. Investments” (St. Petersburg) showed innovative projects of Petrozavodsk enterprises. The project on the IT Park of Petrozavodsk State University “Program Planning System for Production at „Gofrotar“ was awarded a Diploma of category 1 and the Big golden medal, and projects by company „Proryv“, „Automatic Information and Control Power Supply Safety System“ and „Germicide Coating on the Basis of Modified Nanotube Aluminum and Titanium Oxides“ by OOO „Nelan-Oxide“ were awarded Diplomas of category 2 and Silver medals of the exhibition.

In August 2008, Petrozavodsk City Administration participated in the exhibition “Economy of the Republic of Karelia — Future Prospects for Cooperation”, which took place in the framework of Days of the Republic of Karelia in Moscow. The event provided for establishing over 100 business contacts, many of which might turn into investment projects.