Russian products should be assembled of domestic components

28 september 2016

“The main requirement of the Ministry of Energy of the Russian Federation is that Russian products should be assembled of domestic components, which should help small and medium sized businesses to grow"’ said Sergey Romanov, Deputy Director of the Department for State Energy Policy of the Ministry of Energy of the Russian Federation, at a round table on “Promotion of competition among local manufacturers of import substituting equipment for the fuel and energy sector”, which was held at the Analytical Center.

Mr. Romanov pointed out the sectors, in which small and medium sized businesses could find a niche in the context of import substitution. “There are several sectors and the most important of them is innovative products,” he said. “There is a program for innovative development of state companies, through which we can influence what products and from what suppliers the state companies will buy. So it is vital that we have all the information about new equipment.” The small and medium sized businesses could also manufacture spare parts and components, an area in which, according to Mr. Romanov, no big breakthroughs have been observed yet, but which holds a lot of promise. The third area where domestic suppliers could find a niche is software for the oil and natural gas industry, for the electric power sector and for the coal industry. And the fourth area regards services rendering. “We have got foreign players in this sector now that employ Russian experts,” the expert explained.

Among the requirements that must be met by small and medium sized businesses is high quality, according to the expert. “Their products must be as good as the imports. Top quality is one requirement that all market players must meet,” Mr. Romanov believes. Other considerations are also important: domestic products should not be more expensive than imports, companies should not only focus on the domestic market, they have to be agile and flexible, willing to change their product line and respond to the requirements of global players in a timely manner, the expert is convinced.

“One element of state support that we have is the Small and Medium Sized Business Corporation, which has developed a program of preferential loans for small and medium sized companies,” Mr. Romanov said. The corporation also offers various kinds of guarantees, allowing small companies to save money, the expert explained.

Vladimir Malyshkin, a representative of Gazprom Neft, PJSC, believes that Russia needs to create a centralized institution for companies to apply for state support through. The expert thinks the state services portal could be used in this role. “Applications for state support could be submitted digitally through the portal. Each must comprise no more than 15 pages, and the review process should take between 1 and 2 months,” the expert said.

During the discussion the experts noted that the import substitution plans had to be adjusted to take into account the real amounts of financing available, the production capacity that companies actually have as well as measures to support exports.