Tatarstan

reprinted from Euromoney magazine, December 2007

Interview

“We can!” Tatarstan’s President Mintimer Sharipovich Shaimiev talks to Euromoney about the republic’s economic development, its plans for the future and its determination to succeed Please tell us about the specifics of Tatarstan’s economic development and about the priorities for 2008? The main objective of Tatarstan’s development strategy is to achieve a European standard of living for the population. We aspire to build a democratic society on the basis of a competitive market economy, organically integrated into the world system. Tatarstan is capable of achieving this aim. I say this because the results of social and economic development in 2007 bear witness to the dynamic development of the republic. Today our industrial production is growing at a rate of slightly less than 9%. Across the Russian Federation the rate is 7 %. The value of industrial output by the end of the year will be little bit more than Rbl 700 billion. Growth of 1% means €200 million, which is the value of production at the Kazan helicopter plant. And 10% of growth is €2 billion a year. The cost of our growth is very high. Our economic model involves strategic planning and a complex approach to goal-setting and task-solving. We proceed from the fact that solving the major problems of economic and social development demands acceptance of complex measures and a sufficient period of time. A principal tool of government in Tatarstan has become a targeted/planned approach. Here I would like to mention the second major element of the Tatarstan way of development - innovation. Serious organizational changes in forms and methods of economic management are being implemented in the republic, aimed at a qualitative increase in efficiency. Formation of the republic’s innovation infrastructure is under way. The integral investment system has been founded, of which the central elements are four specialized investment funds (stabilization mortgaging/insurance; investment/venture; regional fund for investment in small scientific and technical enterprises; IT support fund). Their objective is the financing of effective innovative projects. The network of 14 techno-parks is already functioning. I want to emphasize that all elements of the infrastructure created by us are operating successfully. Especially close attention is given to the formation of a holistic system of innovative education. In 2006, a programme of grant support for talented students and the best teachers started. Financing has been allocated from the budget of the republic. A

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Mintimer Sharipovich Shaimiev, President of Tatarstan total of 1,153 people have been sent for training to the best universities and centres of science in the Russian Federation, the US, UK, France, Switzerland and Germany. Another feature of our economy is cluster development. We set out the strategic task of developing four main clusters: oil/petrochemical, car-building, aviation and power production. Here the most effective industrial complexes have been formed by various enterprises with a single sector orientation. We pay great attention to developing small businesses. By 2010, we intend to raise the small business share of total regional product to 30%. This may not be a high level compared to Western Europe or the US. But as recently as the beginning of the 1990s small businesses barely existed in our country. As to prospects for 2008, I would like to report some figures. Growth of total regional product is predicted at 7%. Industrial production should grow a little bit faster - by 7.5%. It is a distinctive feature of the structure of our economy. The highest rates of growth are expected in producing vehicles and equipment (over 18%), manufacture of petrochemicals and finished metal constructions (11%), and chemical production and electric equipment manufacturing (10%). Now, we are working on the programme for the development and placing of the productive forces of Tatarstan on the basis of the cluster approach until 2020 and for the period to 2030 within the limits of which priorities will be offered, development scenarios of the competitive advantages of the republic developed and economic regions inside the republic formed. The primary goal of the programme is complex and effective development of territories. One of the key, strong elements of the programme will be the development of the Kamskoye economic region. In the long term this region will become a basic locomotive of economic growth in the republic. Every decade the total territorial product will be doubled here, and by 2020 the volume of industrial output will have increased more than six times. Big hopes are placed on development of the automobile cluster and its leader JSC Kamaz. The net profit of the company in 2007 is expected to be 2.6 times that of 2006. The company will carry out a programme of re-engineering and develop cooperation with

Overview

leading world producers of auto components. In 2006, jointly with US company Cummins, the enterprise for engine production was founded. Created together with German company Zahnradfabrik, the enterprise for assembly, and subsequently production, of automatic transfer gearboxes is successfully operating. It is planned to achieve production of up to 86,000 units a year with local content of up to 90%. In December 2007, an agreement was signed with German company Knorr-Bremse on creating a joint venture to produce brake mechanisms. With significant growth in the economy, demand for power resources is growing. Alongside energy-saving programmes, we pay great attention to accelerated modernization of the power industry. We plan by 2020 to commission new highly effective capacities in amount of 5,000MW. We understand that such a grandiose renovation of power supply capacity cannot be realized without attracting external investments and strategic investors. In developing the wholesale market for electricity, the conditions for attracting foreign investment have been created. We are ready for a dialogue.

In 2007, the annual meeting of the European Bank for Reconstruction and Development (EBRD) took place in Kazan. What is its significance for the republic? It was a great honour for us to receive such a high-ranking international forum. The sessions of the EBRD council of managing directors are held in the best-known, most prosperous cities in the world. The fact that this took place in Kazan, capital of Tatarstan, had both economic and political value. Official delegations from the bank’s shareholders, 61 countries and two international organizations, the European Investment Bank and European Commission, came here. All in all, participants in the EBRD events came to 2,364 people from 69 countries. From the Russian Federation, representatives of government and business also took part.

At the opening session, Jean Lemer, president of the EBRD council, noted that Tatarstan represents the future of Russia and the future of the EBRD, which is paying increasing attention to investment outside Russia’s two largest cities. I myself, as head of the republic, in my welcome speech remarked that holding such an event is an excellent opportunity to learn high technologies, gain experience of financial management and to present offers in the sphere of economic and investment cooperation to the international financial elite. A lot of contracts were signed during the meeting, among them the credit agreement between the EBRD and the municipal unitary enterprise Vodokanal on financing for modernizing Kazan’s water supply systems. The contract was signed during the international investment forum ‘Russian regions - strategy of growth’. The cost of the project is estimated at Rbl 500 million, of which Rbl 350 million is allocated by the EBRD. Other example of cooperation between Tatarstan and the EBRD include the purchase by the EBRD of 28.25% of the shares in jointstock commercial bank Spurt. The EBRD is planning to develop more actively a system of credits for small and medium enterprises in the republic, simultaneously increasing terms of crediting, and to participate in financing purchases of equipment by Tatarstan companies.

How much does the economy of the republic depend on the petroleum industry and the price of oil?

Tatarstan is one of the oldest oil-extracting regions in Russia. For 64 years, 3 billion tons of oil have been extracted from the republic. At current development rates, proven reserves of oil will allow this to continue for at least three decades. In addition, pilot projects have begun to develop recovery of oil from bitumen deposits, which could provide up to 7 billion tons. Raw materials account for 31% of our gross regional product. It is clear that the present favourable conjuncture in the market for raw materials will not exist for ever. Therefore, 10 years ago we began a programme to increase added value on extracted hydrocarbons. Our main efforts are directed to deepening oil refining. And, if in 2006 we increased the volume of oil recovery by approximately 2%, production of petrochemicals grew by more than 20 %. More than Rbl 130 billion is being invested in construction of new oil processing and petrochemical production in the city of Nizhnekamsk, with capacity to refine 7 million tons a year of oil. Tire production is progressing, with JSC Nizhnekamskshina providing about 31% of the tires produced in the Russian Federation. An investment project on tire production using Pirelli technology has been completed successfully. So we are gradually abandoning our raw material export orientation and creating an innovative, Prime minister of Tatarstan Rustam Minnikhanov, EBRD president Jean science and technology-based economy. It is our Lemierre and president of Tatarstan Mintimer Shaimiev during the EBRD strategic choice. annual meeting in Kazan, May 2007

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Overview

We have always held the view that the state must bear responsibility for rational and effective utilization and preservation of natural resources. As one alternative energy source today, we are considering the prospects for bio-fuel production. The decision has been taken to begin construction of a pilot plant to produce bio-ethanol, with processing capacity of 1 million tons of grain and a business plan for the plant has been developed. And the raw material is available: on average, in the past seven years, total grain harvests have been 5 million tons. As you can see, the development path for the republic’s economy has been defined and we are looking forward to “life after oil”.

What do you consider the place of Tatarstan in the global economic community? What are the prospects for the republic? Tatarstan aspires to take an active part in global cooperation in the fields of production, trade and innovation. According to our agreement with the government of the Russian Federation, since 26 June 2007 the republic has responsibility for foreign economic relations (including with government bodies of foreign states) and participates in the activities of international organizations (the United Nations, UNESCO, UNIDO, ILO, EBRD, Council of Europe, Congress of Local and Regional Authorities of Europe, International Union of Local Authorities, Council of European Communes and Regions, and a number of other international and regional organizations). Our international economic activities in figures look approximately like this: foreign turnover of the republic from January-September 2007 (preliminary data), $11,482.8 million, an 18.4% increase in comparison with the corresponding period of 2006. The volume of exports increased by 14.8 %, to reach $10,285.7 million. Imports increased during the same period by 62.5%, to $1,197.1 million. In 2007, foreign trade turnover will reach $13,410 million. An additional incentive for progressing the economy of republic, in our opinion, will be the project to create the Alabuga special economic zone. Work has already started, and the project will further promote the development of international cooperation. Its specialization will be export-oriented and import-substitution

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production. Already five companies are resident in the zone. Total investment will exceed $400 million. It is planned by 2011 to have attracted more than $2 billion of investment to the zone. According to the most realistic estimates, in the first five years we will have attracted over 30 resident companies. In the past seven years, the volume of foreign investment in the

“We are gradually abandoning our raw material export orientation and creating an innovative, science and technologybased economy. It is our strategic choice”

economy of Tatarstan has increased more than three times. The number of enterprises with foreign capital participation has doubled since 2000. Until recently, foreign investment was traditionally concentrated in chemical production (about 70%). However, the situation has changed and about half of foreign investments in 2007 were directed to the food processing industry (with chemical production taking 22%). In the first nine months of 2007 foreign investment in Tatarstan reached $676 million, 2.7 times more than during the corresponding period the previous year. I think that Tatarstan has introduced itself to the world and, by providing competitive goods for the world market, we shall achieve new heights in international cooperation. There is a popular expression among Tatarstaners: “Bez buldrabiz!” (We can!). That exactly sums up where we are today and how we feel about the future.

Overview

Putting Kazan on the map Tatarstan’s 1,000-year-old capital is getting a dramatic new look thanks to its ambitious mayor, Ilsur Metshin The first thing that strikes visitors to the Tatarstan capital Kazan is how everything seems so fresh and new. That is because it is. The city commemorated its 1,000th anniversary in 2005 and celebrated with the completion of several outstanding architectural gems such as the Millennium Bridge. Often billed as the third city of Russia after Moscow and St ­Petersburg, each of the past four years has seen a steady increase in investment in the city. In 2006 this topped $3 billion. Kazan feels like a boom town. “As you can see, here in Kazan we have an IKEA outlet, Metro Cash & Carry, shopping malls and almost all the major western and European brands are available,” Metshin points out. “I think it’s very important that when potential investors come to Kazan they see world-known brands presented here, and feel much more comfortable.” Metshin is a former mayor of Nizhnekamsk, the heartland of the petrochemical production area of Tatarstan. He is a board member of Tatarstan’s major bank Ak Bars. The mayor has a number of priority projects, including the building of the National Library. The tender for the $80 million project was won by Dutch architect Erick van Egeraat, who has been involved in similar projects in London and Budapest. The design of the building features two towers, one bending to the east, the other to the west. “It’s a massive undertaking calling for the consolidation of much of our nation’s literary and cultural heritage in one place.” More than five million books will be kept in the library.

municipal infrastructure of Kazan. Russian banks Zenit bank, Sberbank and VTB, as well as Tatarstan’s Ak Bars are also involved. “We have travelled to cities like London and Lisbon to see how they have managed their regeneration projects,” says Metshin. The waterfront development will overlook the Kazan Kremlin, which sits at the confluence of the Volga and the Kazanka ­Rivers. This is the definitive postcard from Kazan – breathtakingly beautiful and monumentally significant culturally because the Kul

Another ambitious investment project involving the residential development of the right bank of the Kazanka River is due to start soon. The project will be carried out by Millennium Zilant-City (MZC), a company set up by the municipal authorities for just such large projects in the capital. MZC aims to become the main Kazan developer of investment projects, using a variety of loans, land sales and commercial rentals. Their charter capital has come from a transfer of municipal assets – commercial real estate (about 450 premises with a total area of 90,000 square meters) and land parcels in the centre of Kazan. Chief architect of Barcelona, Josep Asebillo Marin, consulted on the project, while the US architectural firm NBBJ developed the master plan for construction, to be finished by 2015. In order to raise bonds worth R2 billion, Kazan is also making full use of the World Bank and European Bank of Reconstruction and Development, which have both invested in the social and

Sharif mosque and the Russian Orthodox Annunciation cathedral (Blagoveshenskaya) stand side by side. New housing projects like Sky 7 (see page vii) will bring more than 100,000 apartments to the city. But the new accommodation is more spacious and Metshin says the current city plan foresees living space per capita increasing from 20.6 square meters to 31 square meters by 2010. The mayor is doing everything possible to enhance the public transport network. Kazan is the only city in Russia to replace all their buses within one year. While coping with 35,000 new cars on the road a year can be problematic, finding new development projects is not. The city plans to move its main railway station out of the city centre to relieve traffic congestion, and has also introduced a toll road on the river bridge connecting Dementyeva and Amirhana streets to raise funds for ongoing developments on the user-pay principle. Up to seven new junctions will be built in the near future.

Mayor Metshin, Mayor of Kazan

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Overview

Tatarstan: Moving on downstream

Tatarstan’s new economy minister reflects on how the republic is turning its oil-backed boom into sustainable long-term growth

Tatneft, the predominant Tatar oil producer, enjoyed an increase in share value, the only oil stock in Russia to do so. Approximately two-thirds of Tatarstan’s economy is based on oil and petrochemical products. Of the 31 million tonnes of crude oil a year produced annually in Tatarstan, Tatneft accounts for 25 million and also produces more than 800 million cubic meters of gas every year in the process of drilling and excavating oil.

“We’re trying to build a market economy here,” says Tatarstan’s Minister of Economy, Marat Safiullin, PhD in Economics, an MBA who has studied abroad and been a public servant since 1992. “I believe we’re about 80% of the way there.” He was an economic advisor to the President of the Republic for four years, before being given his first ministerial post in 2007. From 1995 to 2000, development focused on the market economy and stabilization. From 2000 to 2005 the focus was on diversification (value-added). Between 2006 and 2010 ‘innovation and development’ is the policy watchword in turning Tatarstan’s oil-backed economic boom into sustainable growth in tomorrow’s increasingly high-tech world. Today, Tatarstan pursues the innovation and development phase of its economic development. “It’s demotivating to be an oil producer in Russia,” Safiullin explains. “91% of tax receipt go to the federal budget in Moscow, whereas the level is 74% in other areas.” Despite the tax burden now being imposed on producers, as of the end of 2007, JSC

The price of crude oil is steadily climbing to $100 a barrel which has to be good news, despite the long-term intention of lowering oil’s share in the economy. This newfound and unexpected wealth provides the government of the Republic of Tatarstan with the funds it needs to pursue its ambitions. The Investment-Venture Fund is an example where the state, following the Singaporean model, is use public money to develop businesses by buying shares in startup companies, and this is proving successful. Comparisons between Tatarstan and Russia as a whole show just how progressive the government of Prime Minister Rustam Minnikhanov has been in recent years. In 2007, for example, gross regional product was up 9.1% compared with 7.9% in Russia as a whole. The consumer price indexes for 2006 and 2007 remained about two percentage points lower than in the Russian Federation. Industrial production in Tatarstan was up 9.9% (7.7% Russia) in the first six months of 2007. Tatarstan also outstripped Russia in salary growth, with a remarkable 28.5% rise in 2007, or 21.3% in real terms,

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Overview

Investment and Venture Fund takes new directions

Marat Safioullin, economy minister, Tatarstan

compared with 26.7% and 17.5% respectively in Russia. The gap between the annual GDP per capita in Russia and in Tatarstan has grown every year since 2004, and the predictions to 2010 suggest this will continue. Using 2004 figures as the 100% benchmark, the respective industrial production growth indexes for Tatarstan and Russia are 120.7 and 113.7 for 2007, and, the estimates to 2010 show the gap widening. Speaking about international acknowledgement of Tatarstan and its general investment attractiviness having hosted the EBRD annual general meeting in May, which brought representatives of the 69 countries on the EBRD Board along with the European Community and the European Investment Bank to Kazan, Rustam Minnikhanov is determined to give Kazan another international showcase in 2013 with the Universiade Games. “We came second for the 2011 Games even though we applied only five months before the decision. This time, when the decision is made in May 2008, we can only be content with victory.”The capital of the Republic of Tatarstan “created a powerful sports base” – new sports complexes and swimming pools that meet world standards and has all chances to host Universiade-2013, that would be a final rehearseal before Olympic Games 2014 in Sochi. In order to build stronger local government, the 45 districts of Tatarstan have recently been divided into seven economic zones; North, South, East and West, plus the already clearly specialized areas of Metropolital (Kazan), the Kamski industrial region around Elabuga and the Petroleum region in the southeast. The details are still being discussed, but the basic rules of comparative advantage will be applied. “We want to encourage investors to come as well to places other than Kazan especially to the Special Economic Zone Alabuga,” says Rustam Minnikhanov. It is a priority in Tatarstan to strengthen its regions. Looking ahead to 2010, Safiullin has set growth targets of 1.3 times in real prices and 22.5% in comparative prices with 2007; and in industrial production 1.4 times and 216%. Furthermore, the ministry expects to see growth in agricultural production, basic capital, expenditure on housing and average salaries by 60% compared to 2007 and growth of real incomes by 30%. “We want to be the Switzerland of Russia, but even better.”

Investment-Venture Fund of the Republic of Tatarstan (www. ivfrt.ru) is the hub of many of the scientific innovations that will help economic transformation and growth to the point where a disruption in the price of oil will not represent a threat to the Republic’s future. The fund was founded to implement the republican programme of innovation development in 2004-2010 and to support the application of these innovations in industry. During a year Fund’s assets value composed R824 million and net profit is €457,100 According to the fund’s director, Aynur Aydeldinov, the target date for the completion of the ‘Life without Oil’ initiative is 2015. But meanwhile, squeezing the most out of Tatarstan’s oil and gas resources and the product lines associated with petrochemicals is essential in order to develop the potential of further industries. Another significant target date is 2010, by which time Aydeldinov expects small and medium-sized enterprises (SMEs) to represent some 30% of the economy. “If you consider that in 2005 SMEs represented 12% and by the end of 2007 they were up to 19.5%, it’s an ambitious but realizable goal.” The Investment-Venture Fund is always looking for interested investors. Earlier this year the fund took part in the Regional Investment Projects conference at the Economic Forum in St Petersburg. Among the 16 prospective projects presented by the Fund were the development of solvent technology for natural bitumen processing, the establishment of continuous production processes for bio-diesel fuel in the medium of supercritical methanol, and a new type of gravity dynamic separator for the separation of emulsions. Another of the fund’s priorities is moving into the hightech industries. The fund has helped facilitate an agreement between Technopark “Idea” and the US computer giant IBM to develop a technology centre. The agreement focuses on creating a strategy for a technological centre of embedded system IT-products in mechanical engineering and petrochemistry. It will be situated in the Idea Technopark and also in the Khimgrad industrial park, which provides a wide range of opportunities for realizing SME projects. These including projects relating to the Kazanorgsintez and Nizhnekamskneftekhim petrochemical refineries. Details of the technology centre project are still being finalized, but it could represent an investment of as much as €129 million. The Investment-Venture Fund of the Republic of Tatarstan has a wide range of other interests too. It is conducting seismological research using magnets to replace the current system of drilling for oil and gas. It is also involved in pesticide bio-agents for crop protection, a rabbit farm and a wide range of medical and pharmaceutical product projects. During a recent board of Trustees meeting, Troika Dialog asset management presented four new projects for realization by the fund in the near future: Liko, a restaurants and fast-food cafes management system; Competentum, a distance learning system; DocsVision, a Microsoft-based document management and business process management system; and Safe’n’Sec, a new generation of protection systems against IT security threats such as viruses, worms, trojans and spyware.

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Banking

Flagship bank consolidates position Tartarstan’s largest bank, Ak Bars, is also the Russian leader in small business lending. And it’s growing fast With profits up by a stunning 30% in the first six months of 2007, it’s not surprising that there are many clients for Tatarstan’s Ak Bars bank (www.akbars.ru). It is one of the biggest in the country with more than 35% of the lending markets. The temptation is great, given that KBC Group (Belgium) paid more than a billion dollars for 92.5% of Absolut Bank in 2006 and Raiffeissen (Austria) paid a392.8 million for Impexbank earlier this year. Italian bank Intesa Sanpaolo is also interested in local bank procurement. So regional Ak Bars is growing in importance at the same time with interest from European partners. But it is in no hurry to sell its assets. “If there’s a slowdown in our growth, we will think about it,” says the chairman of AK Bars Bank, Robert Minnegaliev. Meanwhile, it’s difficult to imagine when that slowdown might come as Ak Bars’ growth is moving in tandem with growth in the country as a whole. With an increasingly diversified manufacturing and economic base, that growth appears unstoppable. In the first two months of 2007 alone, Ak Bars increased its mortgage loans portfolio by 10% to reach more than A77.1 million. Compared with European banks, the growth figures are dizzying, but as Minnegaliev explains, the bank is actually quite conservative. “The level of bad loans in Russia can reach 15%, but at Ak Bars it’s just 1.7%. That’s because we lend money only to people and businesses that can pay.” The bank had a record a45.1million in revenues in 2006. It also had help from abroad in attaining this market-leader position, in particular from the International Finance Corporation (IMF-World Bank). Based on IFC recommendation, the bank reduced the number of members on its board from 17 to 11, and of the 11, five are independent. “The move has helped us make decisions that respond more closely to the bank’s needs,” says Minnegaliev. Earlier this year the international ratings agency Fitch upgraded the ratings of AK Bars Bank as follows: national long-term rating from “A-(rus)” to “A+(rus)”, long-term from “B+” to “BB-” and the rating of support from “4” to “3”. The agency confirmed another bank’s ratings: short-term “B”, individual “D”. The forecast for long-term rating is Stable. The Fitch rating for the Republic of Tatarstan was upgraded to BB+ in 2006. A year ago Russia’s central bank posted the results of an additional issue of Ak Bars Bank shares worth a320 million. At that time Ak Bars had just signed a Syndicated Loan Agreement worth

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Robert Minnegaliev, AK Bars Bank

$140 million, up $40 million from the amount declared initially. 21 banks from 12 countries participated. ABN Amro Bank (Netherlands) and Deutsche Bank (London Branch) were lead managers of the syndicated loan, which was granted at LIBOR + 1.3% for a period of one year with a possible extension. As a result of the additional issue of shares, Ak Bars Bank’s authorized capital will exceed a548.6 million. Ak Bars is listed as the sixth bank in Russia overall. In terms of the loans issued to small and mid-sized businesses it is one of the leaders among Russian banks. The bank has won a tender arranged by the Investment-Venture Fund of the Republic of Tatarstan to issue R100 million to small and medium-sized businesses. Another priority has been a major expansion of its branch network. The bank now offers more than 430 facilities, including 37 branches, 101 additional offices, four credit and cash offices, 123 operational cash desks, 181 post and banking offices and one affiliated bank with eight branches. Much of that expansion is taking place in Russia and its developing regions. The bank is also in the process of finalizing a a42.8 million investment partnership with a major South Korean petrochemical concern.

“The level of bad loans in Russia is sometimes around 15%, but at Ak Bars it’s 1.7%. That’s because we lend money only to people and businesses that can pay”

Banking

Sky Seven – a city within a city

Apartments in Kazan’s huge new housing development are selling fast before they are built. The scheme is benefiting from the saturation of the market in Russia’s other leading cities “This is more than a housing complex here at Sky 7. It’s a totally new district – a new city within the city of Kazan,“ says Ilya Velder, the project manager from Ak Bars bank. To get the 198 hectare, $1.52 billion project approved, the developer was also obliged to build schools, parks, a hospital, communications services and other related infrastructure. Sky 7 will provide accommodation for 60,000 people within the next few years. The price range for the flats is R1.5 million to R3 million. Ak Bars bank was at the international property market forum MIPIM in Cannes and Hong Kong and at Expo Real in Munich recently, heading up a road show to encourage potential investors and promoting the project. Ak Bars bank is already looking for co-investors for the second stage of the nearby real estate project, Light Valley so that 100,000 people will be housed. Moscow and St Petersburg have become super-hot markets. The Sky 7 project is still in the early days of the negotiating process. But there are big offers on the table and the bank is open to a wide range of ideas to make the district a viable place to live, work and play. Even though construction of the project is far from complete, some 80% of the dwellings are already spoken for. That‘s a boon for Ak Bars bank, which is in the enviable position of both

developing the project and providing the mortgages for this and several other such developments in Tatarstan. People are anxious to put money down on an apartment that isn’t built yet. This way they know it won’t be sold out before they make their decision to buy and they are saving money by securing the property early. Specialists say that the price of each apartment will go up between 24% and 30% during construction, because the cost of building materials is constantly rising. The 17-tower complex overlooks the Kazan hippodrome, which was built on the 90 hectare site of the former airport. It has wonderful views and can be compared with the elegant design of the hippodrome in Montreal. According to Eduard Galeev, financial director of the real estate project, “The project would not have been possible without the assistance of the Government of the Republic of Tatarstan and its social mortgage programme. With the high cost of housing today in relation to salaries, it would otherwise be impossible for many people to enter the market.”

Calender of Forthcoming International Events in Tatarstan: June 2008 - The Islamic Bank for Reconstruction and Development Conference, Kazan October 2008 - The Euromoney Tatarstan Investment Forum, Kazan

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Industry

Fine words for Tatarstan President of Russian Federation, Vladimir Putin, from his question-and-answer session televised live from Kazan on October 18 2007 I envy you because I really like the Kazan Kremlin. It’s a wonderful place. I always come to Kazan, to Tatarstan, with a special feeling. I admire it not only for its unique beauty but also because we may hold up this region as an example of the peaceful and fraternal coexistence of different cultures and religions... President of the European Bank for Reconstruction and Development (EBRD), Jean Lemierre, at the EBRD’s Annual Meeting and Business Forum in Kazan on May 20-21 2007 Tatarstan is a symbol of a new Russia. Minister Mentor of the Republic of Singapore, Lee Kwan Yew, at the St. Peterburg Economic Forum about his visit to the Special Economic Zone “Alabuga” (Tatarstan) On my recent visit to Alabuga and Kazan I was startled by the significant progress in made in the special economic zone in just one year. It shows promise of growth and progress. President of the Assembly of European Regions’ Economy and Regional Development Committee, Onno Hoes. at the plenary meeting held in Kazan on September 19-21 2007 It’s a great honour for AER to hold the forum in Kazan because Tatarstan is one of the most rapidly developing regions of the country. Secretary-general of the Assembly of European Regions, Klaus Klipp Your politicians and your administration are very open. They easily and with great pleasure transact with their partners. We really appreciate this attitude. We are proud of the diversity of cultures that we have in Europe and this is our advantage. In our opinion, other European regions might follow Tatarstan’s example.

President of Emerging Markets Theatre for Cisco Systems, Paul Mountford, at the 5th international conference, ‘Infocommunication technologies of global informationoriented society’, held in Kazan on September 5-6 2007 Tatarstan is one of the most innovative and dynamic regions of Russian Federation in the development of information technologies. Mayor of Budapest, Gabor Demszky, at the 9th World Congress of the Organization of World Heritage Cities (OWHC), held in Kazan on June 19-23 2007 I was so astonished by Kazan that I sometimes forgot where I was …in Rome or in Venice? …in Austria or London? The Musa Djalil Tatarstan State Academic Opera and Ballet Theatre is comparable with Grand Opera in France. Nobel laureate, Jean-Marie Lehn, Professor of Chemistry at Louis Pasteur university, Strasbourg, on his visit to Kazan State University, on September 21 2007 I am very pleased to return here once again. I am attracted to Kazan’s special beauty, its culture and the dynamic development of all the sciences, particularly chemistry. Kazan School of Chemistry has made a great contribution to the development of Russian science. Its role in the field of chemistry is enormous.



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Tatarstan’s cluster initiative The Republic of Tatarstan has established itself as a leader in the production of petrochemical-related goods. “The republic is responsible for 36% of the polyethylene, 44% of the isoprene rubber and 31% of the tyres produced within the Russian Federation,” says Iskander Muflikhanov, foreign relations advisor to Prime Minister Rustam Minnikhanov. About a500 million are invested annually in the development of the petrochemical industry, and these branches attract a lot of investment. The Republic authorities support a model of cluster development, based on Tatarstan’s successful petrochemical, gas and automobile clusters, which are continuing to develop. The petrochemistry cluster is operating as an integrated and interrelated system including oil recovery and chemical refinery plants. “God created oil to be made into other products,“ exclaims Rafinat Jarullin, General director of Tatneftekhiminvest-Holding, the body which co-ordinates all the gas and petrochemical companies in Tatarstan. The complex of refinery and petrochemical plant construction is concentrated near Nizhnekamsk city, and has been further developed to enable the processing of petrochemical products by small and medium-sized businesses. Europe’s largest petrochemical enterprises such as JSC Niznhekamskneftehim, the tyre producer Nizhnekamskshina, oil refinery plant JSC TAIF-NK (facilities refining 7 million tons of oil a year) and Nizhnekamsk Technical Carbon Plant are all concentrated in the Nizhnekamsk industrial complex. The best-known oil fields of Tatarstan are Romashkinskoye, NovaYelkhovskoye and Pervomaiskoye in the south east of the country while the petrochemical plants are elsewhere. Nizhnekamskneftekhim is in the north east and Kazanorgsintez in the north west. The truck manufacturer, KamAZ Inc and the SeverstalAuto assembly and techno park KIP Master line form the main core of an automobile cluster. The second level of this cluster is made up of sophisticated car component manufacturers and tooling suppliers. Related sectors, including scientific and technological suppliers, service centres, auto-specific financial and credit businesses, educational institutions, social organizations and insurance and consulting companies form the third level of the cluster.

Industry

Let’s get cracking Tatarstan’s plans for its downstream future centre on the huge Taneco refinery and petrochemicals project The oil coming from the ground of Tatarstan is ‘sour crude’, with a high sulphur and bitumen content. According to Jarullin, it’s quite similar to what is produced in the Alberta tar sands in Canada, and specialists from the Fort McMurray plant have been frequent visitors to Tatarstan. “Their technologies are used in the recovery of bitumen. At this point, there is plenty of money available for project development in Russia. We’re very interested in their technical expertise.” “For the companies affiliated with Tatnefttekhiminvest-Holding the bottom line is not always profit,“ says Jarullin. The Kazanorgsintez factory, for example, is engaged in a longterm effort to expand plastics recycling. Unlike in western Europe,Russians are not used to separating waste, and that’s just the beginning of the what will be required to create a viable plastics-recycling operation. Kazanorgsintez (www.kazanorgsintez.ru) has 40 years of experience in the chemical goods market and it is one of the largest manufactures of polyethylene products and polyethylene pipes in Russia. Kazanorgsintez produces a wide range of organic chemistry products. More than 1 million tons a year meet international quality standards and are exported to many countries around the world. Production includes more than 300 different scientifically named grades, and more than 20% of products are exported. Their production complex includes a range of factories with common transport, electric power and telecommunication infrastructure: an ethylene plant (including phenol-acetone production); a high density polyethylene production and processing plant (HDPEPP); a low density polyethylene plant (LDPE); an organic products plant; a nitrogen, oxygen and a nitrogen, oxygen production; a capital repair plant; and also auxiliary facilities. 2007 profits are up once again across the entire petrochemical sector in Tatarstan. With a Eurobond obligation of $200 million and a consortium of banks including ABN Amro, Eximbank and Sberbank behind it, Kazanorgsintez this year succeeded in introducing new products to the Russian market, according to director-general Leonid Alekhin. The open joint-stock company TAIF is the majority shareholder in Kazanorgsintez, and the state holds 28%. This autumn the company started to produce polyethylene products that are used mainly in gas, water, sewerage and heating pipes and are resistant to temperatures as low as –35 degrees Celsius. Kazanorgsintez is also producing bimodal polyethylene, known for its ability to hold caustic materials. Global sales of these low-pressure polyethylene products are growing rapidly. The processing capacity of the plant is expected to go up

Leonid Alekhin, general director, Kazanorgsintez

from 430,000 tonnes a year to 640,000 tonnes. The company is also increasing the output of the ethylene plant. “At the moment we never have enough feedstock and have to buy it from Nishnekamsknefekhim and from Salavat in Bashkortostan.“ There is also a new plant bisphenol factory at the plant. Bisphenol-A is used for a wide variety of plastic packaging. “The raw materials we are producing are used as discs for CDs and DVDs, car lights and lenses, thermal dishes for microwaves and cling–film wrap. Many of the so-called glass-tower buildings are actually polycarbon products,“ says Alekhin. Kazanorgsintez will decide whether or not to offer an IPO to complete at a later date, in consultation with ABN Amro, the lead bank in the consortium. Kazanorgsintez had net profits of A80 million on revenues of more than A448.6 in 2007 and is looking for better results in 2008. ”The new bisphenol-A plant was practically built within two years,” says Leonid Alekhin. Kazanorgsintez arranged a licensing agreement and a basic design project with Japanese company Idemitsu Kosan Co., Ltd. Kazanorgsintez plans to start production of polycarbonates in the second quarter of 2008. The polycarbonate plant was set up after Asahi Kasei Chemicals Corp agreed to license its polycarbonate (PC) production technology to Kazanorgsintez. Toyo Engineering Corp undertook the detailed design and procurement of equipment and materials for both plants. The new Kazanorgsintez capacities are dedicated to manufacturing 65,000 tons of polycarbonates and 70,000 tons of bisphenol-A per year. No downstream projects are so far planned in Russia. The project will allow Kazanorgsintez to produce Bisphenol-A from acetone and phenol supplied in-house and to produce polycarbonate with the aim of achieving a high added value of the feedstock with an integrated system of production, from raw material to finished product. The process will also use 20,000 tonnes of carbon oxide.

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Petrochemicals

Nizhnekamsk petrochemical cluster

Everything is set for Nizhnekamsk to become an industrial petrochemical cluster. Motor gasoline, polypropylene production plants and vacuum gas oil refineries have already been commissioned Every year new petrochemical plants and factories are built and others are modernized. Moreover, open joint-stock company Taftnet has built a modern complex of high-tech oil refineries and competitive export-oriented petrochemical facilities. OJSC TANECO (the successor to Nizhnekamsk Refinery, www. nnpz.ru) operates the project. Tatneft (www.tatneft.ru) was selected by the government of Tatarstan to act as the coordinator for the oil complex construction. The new complex will incorporate a refinery with capacity for 7 million tonnes of crude oil a year, a deep conversion refining plant with annual throughput of 3.5 million tonnes and a petrochemical plant to manufacture products based on aromatic hydrocarbons. Construction is due to be completed by 2011. The cost of the project is A3.7 billion and has a pay-back period of 6.6 years. The annual profit should reach A2.3 billion. An agreement to invest in the Oil Refining and Petrochemical Plants Complex in Nizhnekamsk was signed in Moscow at the Ministry of Economic Development and Trade of the Russian Federation on August 2 2007. The commissioning of a new refinery has been planned for the year 2009 within the framework of the complex construction. Director of Economics of the oil refinery, Nail Gamirov says, ”In 2006 the project was granted federal status and at the same time the State Investment Commission decided to allocate R471.4 million from the Russian Federation investment

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fund for the construction of complex infrastructure. This includes the reconstruction of a 128km-long product pipelines, the construction of a 117.3km pipeline and external rail tracks with a total length of 28.5 km.” More than 10 foreign companies are involved in realising the project. International engineering company Foster Wheeler is heading up the management consultancy. Fluor (US) will provide engineering, procurement and construction management services including the utilities, off-sites and infrastructure for the complex. The international financial adviser is Bank BNP Paribas. The legal adviser is Allen & Overy. More than 20 licence technologies have been implemented. TANECO has agreed contracts with DuPont-STRATCO, Haldor Topsoe, Chevron Lummus Global, UOP, Worley Parsons, Shell Global Solutions, BV (Shell GSL), Axsens, Basell and GE Energy. The plant is planning to produce 20 types of the deep conversion refining products starting with European quality motor fuels and moving on to a wide range of high demand petrochemical products. This will fully satisfy the needs of Taftnet’s own oil retail network in petroleum products, with the number of Tatneft’s filling stations increasing by 300 units in Russia alone in the coming years. It will also provide high-quality products for Russian industry. The quality of its products will meet Euro-4 and Euro-5 standards. Apart from that there is a plan to construct another one oil refinery that would process crude oil from small oil companies, where Japanese company Mitsui & Co is offered to be a project financing moderator of the construction of the oil refinery with the cost varying from $3 billion to $5.5 billion and at the same time its shareholder. New refinery will supply oil stock for the JSC Nizhnekamskneftehim (www.nknh.ru). The company’s 120-products include chemical and petrochemical products such as monomers, collastics (halobutyl rubber supplying 100% of Russian market), plastics,

Petrochemicals

Automobile cluster

Vladimir Busigin, general director, Kama Tyres

alpha olefins, isoprene, ethylene glycol, synthetic resins and styrene. The commodity output of the enterprise for 2006 composed A1.314 billion, that means more than 115 % by current prices. Nizhnekamskneftehim has seen its profits rise 13% on R47.6 billion following a refit of the plant. As the First Deputy General Director and Chief Engineer Khamit Gilmanov explained, “Such growth ratio is the result of production reconstruction and modernization and creation of new high technological facilities.” One of the most significant steps in the retooling programme is a stage-by-stage modernization of the ethylene complex One of the most significant steps in the retooling program is a stage-by-stage modernization of the ethylene complex and the construction of a new ethylene plant that will allow to rise the total output capacity up to 1 million kpta. The company is focused on the expansion of its positions in the Russian market. Total export sales went down to 55%. But at the same time sales of synthetic rubbers, mainly to Nizhnekamskshina, have risen to 65%. Listed on the Moscow Stock Exchange, Nizhnekamskshina (www.kama-tyres.ru) produces some 31% of tyres bound for the Russian market and exports to more than 50 countries around the world – in Europe under the brand name Kama-Euro. It now produces 12.2 million tyres for all varieties of vehicles, and has further expansion plans underway. “We are doing everything to meet European standards in tyre production“, says Irek Khafizov, managing director of production. “Our quality compares favourably with Chinese, European and other producers.“ Nizhnekamskshina, with 10,500 workers, has turned to the west for the technical assistance required to retool the plant. Tomorrow’s tyres need to be lightweight and, above all, durable. A tyre can normally expect about 75,000 kilometres of use today. Khafizov‘s goal is to double that figure. While the details of the arrangement remain confidential until the end of the contract‘s life, Nizhnekamskshina has brought in specialists from Pirelli (Italy), considered the best tyre manufacturers in the world. “They came here for three months and worked on rubber mixes and helped us install new equipment bought in USA, Holland, Germany and Italy. Later, Pirelli audited our products and found them to be at the same level as its own,“ says Khafizov. In his opinion, projections suggest that the company will be making 15 million tyres a year by 2012.

The KIP Master in Naberezhnye Chelny in north-east Tatarstan is home to the heavy-truck maker KamAZ. “To put it simply, we rent companies,“ says Alexander Gordeev, vice-director of the Kama Industrial Park, which has some 120 companies on site. “In conditions where the industrial manufacturing production index is 116%, small businesses should be growing at a rate of no less than 30% a year,” say experts. The Tatarstan government has been a major supporter of the KIP Master concept as a way to increase the Gross Regional Product. It is joint owned by the government and KamAZ, and the park employs around 2,000 people. In a country as big as Russia, the costs of transporting parts and materials can make or break a company. This prompted the idea of bringing the suppliers and sub-suppliers together under one roof, in a factory space covering 108,000 square meters. In exchange for relocating to KIP Master, companies receive internet connection, medical coverage, parking and security, catering and customs services, banking and accounting services, legal services, cleaning and rail services. There are also some tax benefits, with exemption from property and land taxes. Companies pay rents of R66 to R85 per square metre of factory floor space and R120 for office rentals. This facility is unique in Russia at present. Most importantly, in KIP MASTER each company at KIP Master has a ready-made customer order sheet. KamAZ produces about half of Russia’s diesel trucks and its sales are growing at about 20% a year. Earlier this decade KamAZ tripled its capitalization, developing competitive new models and support services. It also raised its brand profile, not least through five successive wins in the full size truck class of the Paris-Dakar rally. From January to September of this year KamAZ made a net profit of R6,23 billion, that is 29 times more than in the previous nine months. Over the same period, sales volumes increased by 25.7% to R60,95 billion compared with the same period of the previous year. The production volume of trucks grew by 24.1% to 38,093 units and production of engines and power units by 22.5% to 46,108. Several foreign firms have been attracted to KIP Master, including the German manufacturer Jost-Werke, which makes sensor couplings, special axle caps and hubodometers, king pins (torques) and wear limit gauges. However, the vast majority of companies come from the Russian Federation or the CIS. The glassmaker STiS has joined the cluster. As well as making glass for windshields and mirrors, it also produces glass for buildings. It specializes in energy conservation, protection from sun glare and noise insulation. Demand for such facilities is high. A similar industrial park will be developed on another site near KIP Master.

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Special economic zone

Alabuga economic zone pulls in foreign investors The incentives offered to investors in the Alabuga economic zone have lured some major global brands. Car-makers are leading the way, but that’s only the beginning

working flat out” says general director Adil Shirinov. The plant covers 645,000 square metres and will house the three sections of a modern auto plant: body shop provided by FFT-EDAG, paint shop by Eisenmann and a final assembly system supplied by Durr. Adil Shirinov, who has recently managed a similar start-up for Ford in St Petersburg, says the unique thing about the SeverstalAuto project is that 100% of the products that go into making the vehicle will be Russian. The plant is scheduled to build 75,000 Ducato vans a year, plus 25,000 vehicles from other ranges. They are expecting to reach full capacity in 2009 and will employ more than 2,000 people. “We’re getting applications from all around the world, even from Canada, where the auto sector has recently been hit hard by closures,“ says Shirinov. “We’ll be offering salaries above what the domestic market will bear, but less than half what workers would be paid in Moscow or St Petersburg.“ Residents receive a wide range of benefits. They pay no property tax. They have complete customs clearance facilities, a preferred taxation rate of 20%, reasonable and fixed utility prices, a centralized food centre, access to highly skilled and relatively inexpensive workers, a railway, banks, conference halls, an exhibition centre, all pertinent regulatory offices, the four-star Katerina-Elabuga spa hotel built by Ak Bars Bank. They

The first and most important rule at Tatarstan’s newly-opened Special Economic Zone Alabuga is no oil or gas companies, please. After that, anyone is welcome and new companies like Severstalavto-Elabuga, Polimatiz, Rockwool -Volga, Technical equipment plant, are among the first to establish residency at the multi-million dollar investment complex – one of seven throughout the Russian Federation. Russian President Vladimir Putin introduced legislation on January 1 2006 to allow the development of seven Special Economic Zones across the Russian Federation, and he has continued to support their progress. “It’s necessary to complete the project in Alabuga. It’s not only important for the Republic, but for the whole country,“ said Putin earlier this year. The governments of Russia and Tatarstan split the set-up costs equally. The initial outlay was A311.4 million on infrastructure alone, of which A154.3 billion was committed by the federal budget and the total commitment to 2011 is $550 million. However, the speed at which the SEZ has been built has given investors the opportunity to consider Russia, rather than heading directly to China. The founding father of the Special Economic Zone, Singapore’s Lee Kuan Yew, is taking a great interest in the project, which he visited in June. ”We must recognize that a great deal has been done in this area. The infrastructure facilities have been built successfully, both in the city and on the industrial site. The business administration centre only took a year to build. The only other thing SEZ has to do is let the world know more about its capabilities.” Severstalavto (www.severstalauto.ru), dedicated largely to assembling lightweight Fiat Ducatos, is the most important resident at the moment. The van and mini-bus manufacturer is working triple shifts to prepare the factory floor. Forty trucks arrive daily, carrying high-tech Office building in Alabuga machines and car-making equipment. “We’re

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Special economic zone

Nefis means beautiful in Tatar

Lee Kwan Yew, Minister Mentor of the Republic of Singapore: “On my recent visit to Alabuga and Kazan I was startled by the significant progress made in the special economic zone in just one year. It shows promise of growth and progress.”

have the complete range of services and infrastructure that one could expect in a city of 60,000, the number of people expected to move here within two to three years, according to Igor Nosov, director of investor relations for SEZ Alabuga. “I try to emphasize in my presentations abroad that nearly half of the 148 million people of Russia live within a 1,000 km radius of here. Most people are not aware of just how concentrated the population is in the ‘European‘ part,“ says Nosov. “It’s a huge emerging market and, furthermore, for car makers the complete range of synthetic rubbers and plastics manufacturers are already here, as are Kia, VAZ, UAZ, GAZ and IZH. We’re starting to see an automobile manufacturing cluster emerge.“ Ten years ago, the Special Economic Zone was only a concept and it is quite astounding that the first phase has already been completed. The single-window system, or the single-window system as it’s called in Russia, is attracting new residents. 40 resident companies are expected in the first instance, with many more arriving within four years. The customs clearance facilities mean that the area almost has its own borders within Russia. It is also important that the machinery and components imported to the zone are exempt from import duty and VAT. Nor is there any export duty. The rental rates are also very attractive at $.07 a square metre a year, or you can buy space at $.17 per square metre. This equals a rental price of $7,700 a year or a purchase price of $17,400 for 10 hectares. The Tatarstan government‘s long-term strategy is to complete the industrial and business structure by 2011. This will use an area of 20 square kilometres of land, should provide 30,000 jobs and support a population of as much as 100,000. “And it’s not just car makers and their suppliers we envisage coming here,“ explains Nosov. “We are also interested in the processing of agricultural and timber products, pharmaceuticals, and aerospace component, optical fibre and machine-tool makers. The SEZ will transform the nearby city of Elabuga, that has just celebrated its Millennium anniversary.“

Using local products and skills for producing biofuel and enhancing economic development was on show when chairman of the State Duma, Boris Gryzlov, and the agriculture minister, Alexei Gordeyev, joined the Tatarstan’s President, Mintimer Shaimiev in opening the new oil extraction plant production plant (www.sorti.ru, www. nefco.ru). Nefis Cosmetics holds a 65% stake in the plant and the Investment Venture Fund of Tatarstan has 35%. Nefis plans to buy out the Venture Fund share in 2010. “Construction of the plant is a global event not only for Tatarstan but at the same time for Russia. This enterprise is the instance of high technologies introduction into agro-industrial complex. In this field by the way Tatarstan is one of the leaders, ” emphasized Gryzlov. This was truly an occasion to celebrate as Nefis, the number three producer behind Procter & Gamble (US) and Henkel (Germany) in all of Russia, is closing in on the foreigners in the detergents market. Oil extraction of a different variety – oils from rapeseed and sunflower seed – is taking place at the new R4.6-billion plant. Through hydrode-thermal cracking, the agro-industrial materials used in making vegetables oils, that afterwards are used in producing butylated oil, mayonnaise and ketchup, a wide range of soaps and commercial fatty acids (stearine). “In the past we had to import most of our raw materials on the Russian market,” says plant manager Dmitri Kharitonov. “Now we’re going to be able to process 300,000 tonnes of oilseeds a year.” The process is similar to producing bio-ethanol fuel, but our products are far more valuable on the marketplace. “What is leftover is also usable as animal feed,” explains Kharitonov. Vegetable oil, for example, requires 8,500 tonnes of feed material to produce 4,500 tonnes of oil. All finished products meet international standards, production process is up to environmental requirements.

Boris Gryzlov, chairman of the Russian State Duma and President of Tatarstan Mintimer Shaimiev

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Engineering

Tatarstan enterprises earn international recognition The Zelenodolsk Gorky Shipbuilding Plant, on the banks of the Volga River in western Tatarstan, is thriving. It has a combined workforce of 4,600. “From 1991 to 2004 we were heavily reliant on state and public sector orders, so the company really struggled,” recalls vice-direc-

in its building berth, with blocks weighing up to 400 tonnes. Petrochemical and gas engineering and metallurgical production are also developing in the area. It is the only worldwide plant that has the capacity to found 2,750 kilo titanium casts. Next door to the shipyard is the refrigerator manufacturer Pozis

tor Natalia Fedorova. “ But gradually the business has improved. Since 2004 we have trebled production, tax assessments to the state budget quadrupled at more than R300 million, and this year looks like it will be highly profitable too.” Established in 1895, and named after Maxim Gorky, the company makes a range of sea and river-going vessels of various classes of up to a displacement tonnage of 12,000. More than 1,500 vessels have left the plant’s slipways including barges and paddle-boats, tugs and fishing boats, refrigerated cargo carriers and hydrofoils, speedboats, anti-submarine vessels and guardships. The high-speed passenger hydrofoil ‘Meteor’, the air-cavity passenger craft ‘Linda’ and the ‘Vega’ sea-going ferry are all made here and are much in demand. The Volga, stretching some 3,700 kilometres en route to the Caspian, is Europe’s largest river, “and it’s the river’s size that makes the company think big and take on major construction projects,” says Fedorova. For example, Gorky does large hull block assembly

(www.pozis.ru), which started up three years after the shipyard. Their steel-foundry works has become one the largest industrial enterprises in the Republic of Tatarstan, and the third largest fridgeproducer in Russian Federation. It produces 420,000 refrigerators a year, plus freezers. The plant also has strategic significance, as it makes cartridges used in a wide variety of weapons. Over the past decade, the refrigeration industry has been transformed by the demand for CFC-free products. Pozis has make that transition successfully, and carved a niche for itself in the computer-operated deep freezer market. These models have been developed for specialized use in hospitals for various blood and plasma products, the latter of which requires temperatures of -80 degrees Celsius. “We are constantly adapting our products and I can say quite confidently that we will never lose our market position in Russia,” says first deputy director Mikhailov, in the knowledge that state orders are reliable as these products are unique to Russia.

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Engineering

The petrochemical refrigerant that makes a fridge CFC-free is environmentally friendly Isobutane R600A. It’s use is mandatory for any company that wants to gain entry to the European or international marketplaces, and it is already used at the plant. However, the export potential for the company is still somewhat limited because of the costs of the modernization process. In cooperation with Italian designers, the company set about applying new designs to their fridges. “We have a professional group of painters, who are able to produce to order individual pictures on the fridge surfaces. Some people even like to have pictures of themselves covering their refrigerators. This practice is unique,” says Mikhailov. Production has increased 6% year-on-year and tends to range between 5% and 10% a year. Kazan Helicopters (www.kazanhelicopters.com) has been producing world-class helicopters for more than 50 years. As heli­copters take on a wider and wider range of civilian as well as military uses, the future of the helicopter industry is promising. In September, producers, designers and research institutes from around the world came to Kazan for the European Rotorcraft Forum, held here in recognition of Kazan’s role in the production and design of helicopters. “Whether the helicopters are to be used for search and rescue or for carrying passengers, we are currently refining our product to meet all different requirements,” says Valery Pashko, marketing director. Kazan Helicopters‘ 7,000 employees can hardly keep up with its orders to customers from more than 80 countries. To meet the needs of carrying both passengers and cargo, the Ansat helicopter has been wholly designed in Kazan. Ansat means simple or plain in the Tartar language.

Depending on the model, these helicopters can be fitted out with a range of equipment, including emergency floatation gear, life-rafts, skis, sand-prevention filters, ferrying tank, cargo slings, electrical hoists, search and landing lights, flares and crop-spraying features. This means the Ansat can be adapted for use by the emergency medical services, rescue operations, surveillance, fire-fighting, training and a range of other specialized needs. It has been designed for a take-off weight of 3,300 kilos, and uses the so called “fly-by-wire” joystick piloting, which makes it easier to fly. The lightweight Aktai helicopter, weighing 1,150 kg, can only fly for six hours without refuelling, but has the major advantage of costing only $350,000. That’s not much more than some luxury cars, and the company will be looking to develop this market segment in the not-so-distant future. The Aktai is so manoeuvrable that a skilled pilot can land it in a car parking spot and, indeed, it isn’t much bigger than some of the SUV/RUV type vehicles that have become so popular in the past decade. The Aktai can even be adapted to run on motor car fuels and oils. The market is still in its infancy, but more and more of the world’s wealthiest people will be buying their own helicopters, as traffic jams in the world’s major cities increase. However, Kazan Helicopters is not completely abandoning the development of its utility Mi-17 helicopters, according to technical director Igor Bugakov. The Mi models are capable of carrying a wide range of mission equipment. “The new generation include the Mi-17V-5 and the Mi-38, both of which can be adapted for civilian and military users,” says Bugakov. “Some of the new features that can be installed include an electro-optical systems, searchlights, electronic maps and special equipment for night flights”.

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Sports

Getting in the swing

No more than 20 minutes from the capital is one of the most wonderful golf clubs of Russian Federation, located on the banks of the Volga river. The complex is uniquely combined with a ski resort nearby which operates six months of the year. The Golf Kazan project was kindly presented to us by the manager Ravil Ziganshin. Once the idea of building a golf course was approved, the next step was to commission Peter Harradine, president of the European Institute of Golf Course Architects, to build the course. Harradine’s family has been building golf courses since the 19th century. Our objective was to build a quality golf course to European standards. It currently has nine holes, but will soon have 18 and eventually 27 holes. A playable course is still more than a year away, and will cost over $10 million. The cottages for sale and rent on the site are situated on the river side. “It’s important that we don’t try to rush the construction

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of the golf course,” Ravil says. “Every hole is meticulously sculpted in order to present a challenge to golfers. That means lots of trees, water hazards, bunkers and long fairways.” Kazan will use the golf course as one of its selling points in its efforts to win the 2013 Universiade; the games have included golf since the 1980s. Despite local unfamiliarity with the game, golf has an extra­ ordinarily promising future in Tatarstan. There are no local trainers, but Golf Kazan aims to stage tournaments that will attract serious golfers from St Petersburg and elsewhere in Russia. Some of these players will likely be taken on as professionals at the club.

Photographs contributed by Mukhametzyanov, Yakupov, Ermolaev, ­Kozlovsky and Gubaev