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Prime Minister Vladimir Putin and his deputy Dmitry Kozak meeting in the Novo-Ogaryovo residence outside Moscow, Monday, March 22.
Prime Minister Vladimir Putin said Monday that the government should prevent construction costs for large infrastructure projects from increasing and promised to fire officials responsible for unjustified cost inflation.
Construction officials are wasting budget funds by failing to seek lower prices for state-funded construction projects, he said.
The announcement came less than a week after President Dmitry Medvedev warned federal and regional officials that they could find themselves out of a job for not fulfilling his orders in a timely fashion.
The government has made reviving the construction industry, which was virtually paralyzed as lending markets dried up in late 2008, a central part of its economic recovery plan. Putin and Medvedev have regularly discussed how to make mortgages more affordable in hopes of stimulating demand.
But in a meeting with Deputy Prime Minister Dmitry Kozak, who oversees construction in the government, Putin warned that companies working for the state needed to keep the prices they charge in check.
Pricing guidelines for construction are still "unsatisfactory, to put it mildly," Putin said, adding that budget funds needed to keep flowing to the sector anyway.
"It's extremely important in terms of the budget deficit, in terms of the big volume of funds we allot for these purposes," Putin told Kozak. "And in general, we can't squander state money."
In May, the government ordered the Regional Development Ministry to reconsider pricing principles for construction and to check whether the procedure for determining cost estimates was reliable.
Some pricing guidelines have been changed since the check, but the result appeared to be "opposite of expectations," Putin said, according to a transcript of the meeting posted on the government web site.
According to preliminary findings, construction costs in Russia are higher in Europe, while wages in the industry, as well as prices for materials and energy, are lower, Putin said. It was not clear to which findings he was referring.
The issue is of added importance as Russia is financing two massive construction projects: infrastructure for the 2014 Winter Olympics in Sochi and the 2012 Asian-Pacific Economic Cooperation summit in Vladivostok.
"Prices have increased, including prices for construction of bridges, of big new projects. Dmitry Nikolayevich, what's going on?" Putin asked Kozak, who served as regional development minister until his promotion to deputy prime minister in October 2008.
Kozak said some of the changed pricing policies have only been approved on paper, meaning that builders and officials were still using the old guidelines and inflated prices. He called the situation "intolerable" and said Regional Development Minister Viktor Basargin had been ordered to conduct a new check of the cost estimation rules.
Putin then ordered Kozak, a longtime ally, to start solving the problem "today."
"Officials who fulfill the government's decisions in such a way must be discharged immediately," he told Kozak.
Basargin has already proposed firing one of his deputies, Sergei Kruglik, in response to the criticism, RIA-Novosti reported, citing a source in the ministry.
Putin and Medvedev will continue to roll out threatening warnings to officials, although they are largely for show, said Lilia Shevtsova, a senior associate with Carnegie Moscow Center.
Putin and Medvedev operate under the presidential power vertical, as then-President Putin's centralized rule came to be known, and the system needs a whip to continue functioning, she said.
Even if people are fired following Putin's comments, most of them will likely be shuffled to other positions, Shevtsova said. "It's evident that firings will follow because the whip doesn't work otherwise."
During their morning meeting, Putin and Kozak also discussed fees for utilities in the regions, a key concern among low-income voters.
Municipal utility fees exceed the maximally permissible level by more than 25 percent in 10 percent of the country's regions, Kozak said. The increased fees could be canceled in cities or towns found to have overstated them, he said.
