Fuel and Energy Companies Need More State Support

6 december 2016 | ComNews

In July, 2016 the Analytical Center conducted a large survey of representatives of industrial companies to find out what problems were being faced by fuel and energy companies and by related business in the area of import substitution. The survey’s participants included employees of 38 fuel and energy companies with production facilities in 42 regions of the country. "The survey found that fuel and energy companies were actively implementing import substitution programs and that by and large they were in agreement with the state’s priorities with regards to the development of domestic industry. At the same time, the survey also identified several groups of problems holding back effective implementation of import substitution plans in the fuel and energy sector," Analytical Center Expert Daria Nester told a Standard Magazine correspondent, talking about the findings of the survey.

Daria Nester
Daria Nester
Department for Fuel and Energy Sector

Companies believe that the import substitution policy currently being pursued by the state can have a positive impact on the development of industrial manufacture in the fuel and energy sector. "On the whole the companies regard their production processes as efficient and yet they say more work is needed to make their products more competitive. Most of the respondents see a lot of import substitution potential in the fuel and energy sector and believe that the policy currently being pursued by the state is creating incentives for investments. In addition, the companies are interested in manufacturing competitive products to satisfy the domestic market demand," the expert said.

As they try to engineer and manufacture competitive products, Russian fuel and energy companies first of all have to deal with the obsolescence of their technologies and lack of financing to solve this problem, Ms. Nester explained. "For example, when it comes to the key factors contributing to competitiveness, the companies emphasize increased investments, manufacture of unique products and state support. The importance of these factors can hardly be overestimated given that huge investments are needed to independently develop advanced production technologies. Our companies are not yet ready to completely ditch foreign suppliers of tools, materials, spare parts and production equipment that they need to make competitive products. For this reason, the state’s import substitution policy should first and foremost focus on reducing the technology gap and promoting domestic manufacture of fuel and energy products that have the same specifications as the best foreign solutions. And this means primarily various types of financial aid," the specialist said.

Most of the survey participants believe that the state support measures available at the moment are ineffective and fail to provide sufficient help to promote domestic manufacturing. "The respondents talk about such obstacles as excessive red tape, lack of clearly defined and transparent priorities in how the state wants to see the sector developing, lack of adequate regulations and a number of others. As a result, we’re now in a situation where industry wants to get various types of support from the state and development institutions and is ready to get it, but at the same it can not use such support because the procedures for providing it are extremely ineffective. This results in companies having doubts about whether the state will be able to achieve its ambitious import substitution targets," Ms Nester said. Thus, the expert concludes that the existing measures of state support have failed for the most part to meet companies’ expectations, which is forcing them to look for alternative ways to support the development of local production.