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Business news
2008 City Budget Comes Under Fire From Deputy
10.05.2007 13:38

under_the_mallet By Galina Stolyarova

Staff Writer

A long-standing State Duma deputy and member of its Budget and Taxes Committee has hit out at St. Petersburg’s 2008 city budget saying it is riddled with murky investment projects, contains state subsidies to local energy monopolists and inflated construction costs of socially important construction projects.

Oksana Dmitriyeva, who was once aligned with Yabloko and is currently with Just Russia, said on reviewing the budget — now passing through the St. Petersburg Legislative Assembly — that she was surprised to find billions-worth of subsidies to such suppliers as Peterburgteploenergo, slated to received 7.5 billion rubles ($30 million) in subsidies next year, and Petroenergosbyt, due to receive 2.4 billion rubles ($10 million) in city subsidies.

“These monopolists are not state agencies, they have long become joint-stock companies,” Dmitriyeva said. “And the city is not getting any benefits in return for sponsoring these giants, which sell energy to local residents at market prices.”

Governor Valentina Matviyenko said in a statement released by the governor’s press service in September, “The budget for 2008 and for the period up to 2010 will be socially oriented. Once again the budget maintains the balance between spending on social activities and the development of communal services and the city’s infrastructure.”

Dmitriyeva said she appreciated the presence of new schools, hospitals and rehabilitation centers in the budget, but expressed alarm over what she called “a consistent pattern of exaggerating construction costs” of such “socially oriented” projects.

Next year’s planned spending represents a 50 percent increase compared to 2007 and tenfold increase compared to 2003, with construction costs for schools listed at $2,000 per square meter, almost the equivalent of market prices.

Dmitriyeva said such costs must be reduced by half.

“Market prices incorporate the costs of land, which are very high, but the city does not pay for it; profits from selling the resulting real estate also make the prices higher but I do not suppose the city intends to sell the schools,” Dmitriyeva said. “The city does not bear many of the expenses that private construction firms do, and has to price such construction projects accordingly.”

Dmitriyeva, who personally supervised the construction of a series of children’s rehabilitation centers and hospitals in Russia, said construction costs for similar centers in St. Petersburg are almost two times higher than the sums that other centers have been built with.

For example, Dmitriyeva said, the cost of the recently opened Raisa Gorbachev Center for Child Hematology and Transplantology, which was funded by both the Russian government and private sponsors, was 600 million rubles ($24 million). By comparison, Dmitriyeva said, the planned cost of a new children’s infectious diseases hospital in the city budget is seven times higher than that figure

“A rehabilitation center costs 30 million rubles at most but St. Petersburg City Hall offers to build them at a price of 110 million or more,” Dmitriyeva said.

The draft budget also allocates 5 billion rubles ($201 million) for creating a “telecommunications network for the city administration and government structures” but Dmitriyeva said the money could be better spent.

“The combined costs of all social housing construction projects, including, for example, new housing for people living in communal apartments and dilapidated buildings or housing for young families, are going to cost the city less than this questionable novelty, designed for officials to exchange databases and information,” Dmitriyeva said.

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