Chechnya: socio-economic forecast

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As of Feb 2009, Chechen demand for electricity averaged about 380 MW (source). There are thermal power plants in Argun and Groznyy, but there is no evidence that either have been repaired since the Chechen War [KS: Recommend additional search in Russian]. Plans have been made to repair the Argun thermal plant and bring its capacity from a pre-war 12 MW to 50 MW (source). Plans have also been made to construct a series of hydroelectric plans on the Argun river with a total capacity of 800 MW (source), which would make Chechnya an electricity exporter. Chechnya currently imports most of its electricity from plants in neighboring Russian republics and had a backlog of unpaid receipts totaling nearly $500 million in April 2010. Chechnya also has a backlog of payments due for natural gas receipts (source).
Industrial output in Chechnya amounted to about $588 million in 2009 (source; STRATFOR calculation). For comparison Armenia’s goods exports were $684 million the same year (ITC Trademap). Unemployment in Chechnya stands at 42.7% (source).
In 2010, Dagestan imported in the neighborhood of $200 million in agricultural commodities (source; STRATFOR estimate). For comparison however, in 2009, Dagestani farms grossed over $1.4 billion according to Rosstat figures.



Chechnya: socio-economic forecast

22 Feb, 2011

MEDT predicts the development of the republic in the coming years
In February, the Ministry of Economic Development and Trade (MEDT) of Chechnya published its forecast for the socio-economic development of Chechnya. The projected plans are expected to be supported through an increased growth of investment attractiveness, efficient use of natural-resource potential, diversification of the economy in favor of manufacturing and high technology industries, improvement of products’ competitiveness, implementation of major infrastructure projects, creation of an optimal structure for agricultural production, food security and an increase in the contribution of small business to the economy.
Industry. The federal program "Social and Economic Development inChechnya for 2008-2011" provides for the development and reconstruction of 18 facilities of the construction industry by the end of 2012.
According to the forecast of the MEDT, industrial output in Chechnya will amount to 30 billion rubles by the end of 2013, and will increase 1.8 times in comparison with the corresponding figure in 2009.
Agriculture. The “National Program of Agricultural Development and Regulation of Agricultural Markets” is aimed at solving problems of the agricultural sector and regulating the market for raw materials and food for the period 2008-2012, as well as the implementation of the priority national project "Development of Agriculture."
The federal target program "Socio-economic Development of the Chechen Republic for 2008-2011" provides for the construction of livestock farms, putting farmland complexes into circulation due to land reclamation and restoration and reclamation of the system of raw material zones for the restoration of power processing plants. As a result of the reclamation, 11 thousand hectares of fertile land in the foothills of Chechnya are expected to be put into agricultural use.
Timmur Utsaev, Grozny. Exclusively for VK

Economic development priorities in Chechnya

2 Mar, 2011

According to official statistics, the highest level of unemployment in the first month of 2011 is still registered in the North Caucasus Federal District (NCFD) – 16.2%. (6.6% in Stavropol Krai, 12.4% in Kabardino-Balkaria and Dagestan, 47.5% in Ingushetia and 42.7% in Chechnya). VK already told its readers about the projects that are aimed at solving this problem in Chechnya, and today we will tell about the development of business, transport and communications in the republic.
Allocations to small business development rose considerably this year (670 million rubles). A special Fund was created to help smaller enterprises in their development by giving special one-year credits. 40 million rubles are already borrowed from the Fund.
The Chechen Ministry of Economic Development is optimistic on the subject: according to its data the number of smaller enterprises is already growing and the number of people employed by them reached 25 000.
Federal program of social and economic development of Chechnya for 2008-2012 years stipulates that 365 150 people will be employed in the economy sphere of the Republic this year, 399 240 the next and 433 540 in 2013. The number of unemployed should decrease from 297 000 to 233 180 by 2013.
As for the sphere of public transport, the “Grozny” airport will be reconstructed to meet international standards. The Grozny-Nazran-Beslan-Minvody highway along with some other roads will also be restored. Railroad and its infrastructure reconstruction are also on the agenda. Private enterprises are expected to participate in the effort. Some 17 objects of Republic’s public transport facilities are to be restored this year. 705 million rubles are allocated to these activities.
‘Rosneft’ company plans to construct a new oil-processing facility in Grozny, and that will also boost cargo-transporting operations in the Republic.
In the sphere of mass communication the number of cell-phone users is expected to increase. Information technologies development is also on the list of priorities.
Timur Utsaev. Exclusively for VK.

UES renames Southern Grid Co as IDGC of the N Caucasus

August 1, 2007 Wednesday 8:32 PM EET

Prime-Tass English-language Business Newswire

Russia's electric power monopoly UES has renamed the Southern Grid Company as the Interregional Distributing Grid Company (IDGC) of the Northern Caucasus, a spokesman for the grid company said Wednesday.
The company was registered Wednesday in the city of Pyatigorsk in the Stavropol Region.
The renaming is part of the ongoing reform of Russia's electric power sector.
UES holds a 100% stake in IDGC of the Northern Caucasus.
The company includes three power distribution companies, the Caucasus Electric Power Management Company, or KEUK, Stavropolenergo, and Dagenergo, five power sales companies, Kabbalkenergo, Karachayevo-Cherkessenergo, Sevkavkazenergo, Kalenerosbyt and the Dagenstan Power Sales Company, as well as Ingushenergo and Nurenergo.

Chechen president concerned at global crisis impact on economy

Source: Rossiyskaya Gazeta website, Moscow, in Russian 10 Feb 09
Text of report by the website of government-owned Russian newspaper Rossiyskaya Gazeta on 10 February
[Interview with Chechen Republic President Ramzan Kadyrov, by Timofey Borisov; place and date not given: "Ramzan Kadyrov: 'We are proceeding with development of the republic'"]
The situation today is such that the subject of the Chechen Republic has for some time been practically absent from the television screens and has virtually disappeared from the newspapers.
Accordingly, no commentary from the Chechen Republic president has appeared in the news media, although there is a great deal people would like to hear from him - about the global crisis, transformations in the republic, and the development of local self-government. But this interview with Ramzan Kadyrov was not planned in advance, as is usually the case with VIPs. It turned out that since I was in Chechnya, I requested a meeting with the president without preliminary coordination. Ramzan Kadyrov agreed.
Rossiyskaya Gazeta [RG]: Ramzan Akhmatovich, let me pose, first of all, what has now become a traditional question - about the crisis which is alarming everyone. As everyone knows, this crisis is moving across the entire planet. How has it affected the republic's inhabitants and plans for development?
Ramzan Kadyrov: We are feeling the crisis just like everyone else. To the extent I am aware, the prediction is that we will see a drop of approximately 15 per cent in the financing for our republic. If this does take place, it will be a great blow to us. But not a fatal one. Still, I sent a letter to Moscow and hope to fight for this provision of the budget with no decrease.
RG: Will you succeed?
Kadyrov: I don't know. I will try. But I would like to say that we have now progressed to a new stage which affords us the opportunity to survive the crisis without losses. Not only is the war a thing of the past, but so is the stage of restoration of a ruined economy. Now we are moving towards full-fledged development of the republic.
RG: So is the Chechen Republic no longer a "hot spot"?
Kadyrov: You can forget all about that. For anyone who does not believe it, he should visit Groznyy or any of our population centres. Although Groznyy is probably the most representative, because it suffered more than other cities as a result of the last war. There were years when Groznyy was compared to Stalingrad by virtue of the destruction. Today our capital is a flourishing garden with flower beds, new avenues, parks with landscape design, and new homes. And all this is not only in the city centre. The city is all lit up at night. You will not see litter or cigarette butts on the streets. You can take your girl friend for a walk or stroll alone until morning without feeling any apprehension.
RG: It seems to be a setting worthy of an artist's painting. Are your problems resolved?
Kadyrov: We have a different problem now - workers are being discharged. Whereas it used to be that large numbers of Chechens were busy working at construction sites and infrastructure facilities - for example, projects to restore the sewage system, electricity, and water supply, now we have to think about how to employ these people. We cannot have laborers losing work. True, we have our own plan here which must be introduced immediately, so that there are no interruptions or forced temporary unemployment.

RG: I am convinced that Groznyy has water and electricity and that the sewage system is functioning. What about other localities?

Kadyrov: There is water, electricity, and gas practically everywhere. Even in the most remote villages, where it was lacking during the Soviet era. We are developing industry and agriculture. Before the war, 75 per cent of the republic populace worked in agriculture. State farms are already operating with total success in the northern part of Chechnya. We are planning to start up another 80 state farms. I am personally in charge of development of the Iskra state farm in my native Tsentoroy. I am certain that if we have bread and can cultivate the arable land, we need fear no crisis.
We have adopted a republic programme for agricultural production output. By 2012 we expect to see an increase of more than 72 per cent over the 2006 level in every farming category of agricultural production output. The average annual growth in volume of agricultural production over the five-year period is expected to be over 14 per cent. But I am certain we will have other successes as well.
RG: In industry, in the energy sphere?
Kadyrov: Right now Chechnya comprises a zone quite favourable for investments. We have generated a number of investment projects, implementation of which will enable us to improve the republic economy. We were visited by a delegation of businessmen from the United Arab Emirates headed by Valid Sayd Sail Salman, vice president of S.A.L., an international company. This company basically specializes in gas energy, the industrial sphere, the transportation infrastructure, and housing and municipal facilities. It is considered the eighth largest company in the world and operates in 48 countries of the world.
Our guests were invited to choose from five investment projects - utilization of hydraulic power resources on the Argun River, set-up of production of automobiles and vehicle components, restoration and modernization of the Argun TETs [thermal power station], organization of construction and operation of the Kavkaz hotel complex in Groznyy, and the second stage of restoration of the Groznyy Airport. The company chose the airport and a gas-energy project.
A contract was signed in Groznyy in May of last year between the Argunenergo GUP [State Unitary Enterprise] and RIKO GROUP, a firm from Slovenia. Plans call for the construction of 10 GES [hydroelectric power plants] in series on the Argun, from the village of Chiri-Yurt to the rayon centre of Itum-Kali, high in the mountains. The total capacity will amount to nearly 800 MW. For comparison purposes we note that all of Chechnya today consumes 380 MW. The project is expected to be completed within a five-year period, during which all of the strictest sanitary-ecological norms will be observed.
This is only the beginning. About 15 major banks have expressed the desire to generate investments in the republic. According to the forecasts, we expect a total influx of investment funds into the republic this very year on the order of R50bn.
RG: I recall - I think it was in 2002 - that as Groznyy still lay in ruins, your father met with Council of Europe Commissioner Alvaro Hil-Robles. When the guest asked how much money would be necessary to completely rehabilitate the republic, Akhmat-Hajji [Kadyrov - late president of Chechnya] immediately cited the figure R100bn. This was seen as an almost inconceivable amount at that time. But today you are citing comparable figures in estimating the investments you expect to receive for the year. Are you not exaggerating?
Kadyrov: Are you using my words to trip me up? Just remember - five years from now you will not recognize Chechnya.
For example, construction of the series GES is considered an extremely large investment project today. This is not some wild scheme, not castles in the air. Implementation will begin in April this very year and will enable us not only to generate inexpensive energy that can even be sold for export, but also to create thousands of new jobs.
Incidentally, this is not the first time the Slovenians have been in Chechnya. The last time they were here, they brought technical solutions for an Argun automobile assembly plant, livestock breeding enterprise, and a dairy enterprise, as well as a footwear production plant. In addition to them, we have established good business relations with Turkish and South Korean businessmen. The Koreans, for example, will build a large enterprise for the assembly of high-technology electronics in the republic. In this regard, the production output will be marketed under the Chechen brand Aymani.
RG: Last year your announcement that a branch of AvtoVAZ [car plant] would be built in the Chechen Republic caused a great deal of commotion. Have you not rejected production of the Zhiguli [Lada] following the numerous stinging comments published in the press?
Kadyrov: This is a totally realistic and serious project. A programme for establishment and prospective development of the republic's automobile industry was developed by the Chechen Government and Open Joint-Stock Company AvtoVAZ. I think that by 2012, we will reach our target output - the production of 60,000 cars a year. And I am talking about production, not assembly, because the vehicle components will also be manufactured here in the republic.
RG: There is the danger that in times of crisis, we might have a glut on the market of the Lada, which is not all that popular. Are you afraid this might happen?
Kadyrov: We have tremendous internal reserves. Even now our functioning enterprises are operating mainly by virtue of internal reserves, given a total absence of financing, investments, state requisitions, and working capital. Still, the output produced by our plants increased by 126.9 per cent over the year. You have to understand that when everything is destroyed and demand is tremendous, it is fairly easy to develop production.
RG: Well, what kind of industry is there today in the Chechen Republic? And what is the average wage? I confess that in asking this, I catch myself thinking that the word "industry" may be too vague...[ellipsis as published]
Kadyrov: Not really. Last year in the republic, for example, about 300 product designations and varieties of services were assimilated at our enterprises. The output produced by the OOO [limited liability enterprise] Electropult-Groznyy and GUP Groznyy Electromechanical Plant conforms to international standards. While the output produced by the Berkat enterprise, Argun Pishchemash [Food Processing Machinery] Plant, and Transmash Tractor and Trailer Equipment Plant meets Russia-wide standards.
As far as wages are concerned, people receive varying amounts depending on their qualifications and occupational area. But on the average, wages amount to R10,000-15,000.
RG: Today the Chechen Republic and your neighbours in Ingushetia remain, it would seem, the only Russian Federation components where the introduction of local self-government is sliding. What is the reason for this? Do you have some special status?
Kadyrov: We have not forgotten, and certainly are not ignoring either the law on local self-government or other federal laws. And I would like to emphasize that we are a region of Russia just like every other, without any special status. But there are objective reasons. The introduction of local self-government in Chechnya and Ingushetia was postponed until we had a determination of the administrative borders between the republics. A deadline was set. Municipality boundaries must be determined prior to 31 March 2009. And elections to the bodies of local self-government will take place in October. This is today one of the priority issues facing the republic. We are working on it and will make progress here.
RG: The FSB [Federal Security Service] recently reported the elimination of Isa Khadiyev, [Chechen rebel prime minister] Akhmed Zakayev's alleged emissary. But you once spoke about Zakayev's possible return. Does not the elimination of his emissary influence your plans for the return of fellow countrymen?
Kadyrov: My long-term strategic programme is to return to the republic everyone who does not have blood-stained hands. After all, many of those who left simply desired to find more comfortable conditions in the West. In no way were they fleeing the war or persecution.
Zakayev once came to me himself and said that he wanted to return.
RG: He contacted you himself?
Kadyrov: Yes. He phoned and I spoke with him personally. I do not know...[ellipsis as published] perhaps he was planning to form certain groups. The FSB will have a better idea. If Isa was in fact his agent, he did not manage to carry out any terrorist acts. Zakayev himself is also no warrior. He is a good actor and very well educated. We have the Groznyy theatre, where he could once again appear or be in charge of the State Concert Hall. So he does have the prospect of working in the Ministry of Culture. I can confirm this.
RG: What do you think? Will he decide to come back?
Kadyrov: He will have to overcome his fears. If there was a war, sins must then have been committed. But we want to end the war. We must therefore be able to forgive and bring people back. Let them come home. I have already returned two of [late Chechen rebel president Aslan] Maskhadov's representatives from Europe - Sugaipov and Khambiyev Umar. They came back and saw that nothing here prevented them from praying, building mosques, or pursuing a peaceful life. Not like during the time of "independence," when nothing was built and people were robbed.
The people have rejected the combatants. They themselves have always been at odds with each another. [leader of "the Caucasus Emirate" Dokka] Umarov, [Chechen rebel ideologist Movladi] Udugov, and Zakayev are more afraid of one another than the federal authority. Zakayev wants to return - I have spoken with him. He told me: "I want to contribute more."
RG: And what does he mean by that?
Kadyrov: The way he expressed it to me, he wanted to gather everyone together who is in Europe and return with them. He wanted to be the one who brought them all back. But I answered him saying - the longer you stay there, the more you will be used by the special services and various forces for anti-Russian purposes. Incidentally, many Chechens in Europe understand this today.
Let me add to this. I expect to hear some kind of resounding public statement from the father of [one of Nord-Ost hostage-takers] Movsar Barayev any day now. He too is presently abroad. At one time he was the general representative of Dokka Umarov - that is what they called him. Today he intends to declare that although he lost everything because of the war, he will still return, throw up his hands, and say: "Forgive me, I will stand with Russia." I know this to be a fact because he told me so a month ago when he was among his own people.
Few men have remained with us following the war. I believe we must fight for the heart and soul of every Chechen.
RG: Has the programme for returning Chechens from Europe begun to produce real results?
Kadyrov: I think the process will now proceed more rapidly. I am planning to establish a fund to provide assistance to those returning from Europe. After all, many want to return, but they sold everything upon leaving and now they do not have any money or housing. True, our budget is not very flexible, but we will strive to the extent we are able to help them get out of Europe.
RG: Are the flagrant murders of people a manifestation of vengeance against you personally for revival of the republic? Especially considering that Chechens performed heroically during the course of the war in South Ossetia. I saw with my own eyes how they went into battle 11 August [2008] near the village of Nikozi screaming: "Allahu Akbar! For Russia!"
Kadyrov: Anything is possible. Indeed, there have been way too many flagrant killings in recent times.
I do not know who is behind all these crimes and why we see the bloodshed. We are reviving the republic, and these people who have been killed have not been obstructing us in any way. Their elimination was apparently advantageous only to the enemies of Chechnya.
RG: What do you consider the highest goal in your life?
Kadyrov: To see my people happy.

Foreign Trade

Dagestan’s foreign trade turnover doubles and hits $812m

30 Jan '09 | South West | Finance, business$812m

The Republic of Dagestan’s foreign trade turnover in 2008 was $812.2m, up 99% on 2007, Interfax reports.
Imports reportedly amounted to $532.4m, while exports came in at $279.8m.
The region traded with 47 countries. Prominent among the region’s trading partners were Azerbaijan, Malta, Denmark, Iran and China.
Russia: Dagestan's foreign trade reaches USD 321mn in January-September 2010

November 21, 2010 Sunday

Esmerk Russia News

In January to September 2010, foreign trade of the Republic of Dagestan increased by 12.9% y/y to USD 321mn (EUR 233.61mn). Exports (including oil) amounted to USD 125.8mn (up 8.9%), while imports totalled USD 195.2mn (up 5.7%). Foodstuffs accounted for 46.8% of exports, mineral products for 35.5%, wood and products made of wood for 8.6%. The imports were dominated by foods and raw materials for their products (82.9%), engineering products (4.5%), footwear and clothing (2.8%). Among major trading partners of Dagestan (in alphabetical order) are Azerbaijan, Iran, China, Turkey, Kyrgyz Republic, Kazakhstan, Germany, Ukraine, Uzbekistan, Turkmenistan, Tajikistan (in all, more than 30 countries).

Chechnya's foreign trade turnover in 2008 at $14.16m

February 3, 2009 Tuesday 10:55 AM GMT

SKRIN Market & Corporate News

The republic of Chechnya’s foreign trade turnover in 2008 was $14.16m, up ten times on 2007, regional officials report.
Exports reportedly came in at $810,000, while imports amounted to $13.35m.
The region mostly imported building materials from the CIS countries and Turkey, officials said.
It exported honey, nuts and lamb wool, officials added, Marchmont Capital Partners said.

Chechnya Remains Bound To Moscow By Economic Weakness

April 22, 2009

Radio Free Europe

Chechnya depends on subsidies from the federal center for up to 90 percent of its annual budget. Moreover, Moscow has provided huge additional sums for postconflict reconstruction and restitution payments for families whose homes and properties were destroyed during the fighting. It is that steady intravenous drip of money from Moscow that keeps the republic afloat.
And the Russian leadership insists on retaining a controlling stake in the one natural resource that could render Chechnya even partially economically self-sufficient. Its oil reserves are controlled by a joint venture in which Grozneftegaz, a subsidiary of the state-owned Rosneft, owns a 51 percent stake. Rosneft then exports and refines Chechen oil and transfers a share of the profits to Grozny. All efforts by Kadyrov, and by his late father before him, to wrest total control and to have an oil refinery built in Chechnya to obviate the need to export crude for refining have been resolutely rebuffed by Moscow.
Indeed, it is doubtful whether Chechnya could survive as a quasi-independent state just on the profits from exporting oil. Annual oil production is currently estimated at less than 2 million tons. Kadyrov himself in a recent interview with "Rossiiskaya gazeta" affirmed that he does not need sovereignty as "one day the oil will run out, and what would I do then as an independent state?"

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