Czech ten-year anniversary in the Urals - from trade to turnkey projects

06.12.2011 — Analysis

The Consulate General of the Czech Republic in Ekaterinburg is one of the diplomatic old-timers in the Urals. The Czech flag has been flaunting in the Ural capital since 2002. The diplomats are capably complemented by the representative offices of CzechTourism administering the tourism sector and CzechTrade providing assistance to Czech business people in their contacts with Russian manufacturers. The trio has achieved tangible success in development of bilateral cooperation. In his interview to RusBusinessNews Consul General Miroslav Ramesh told how over ten years the Czechs have spurted forward from export of products to implementation of ambitious projects in Russia.

- Mister Ramesh, anniversary festivities generally take a lot of time and effort. On the other hand, the 10-year milestone is a good point to talk about achievements...

- We are preparing an extensive program that will include cultural and business events. The anniversary will be celebrated in the second half of August in 2012. We expect the delegation headed by the ambassador of the Czech Republic to Russia or another high-ranking official to come to Ekaterinburg.

At the moment I am working on the materials that will include all the information about our diplomatic mission over 10 years. You can compare by yourself: If in 2002 the Consulate General of Czechia issued 2,500 visas, their number reached 26 thousand over the period from January to October in 2011. The statistics do not include bumper months - pre-holiday November and December. By the end of the year we will come up to 30 thousand visas - a 30% increase on a year-over-year basis.

Over the ten-year period the number of the issued visas has increased 15 times! It is convincing evidence that Czech resorts are gaining popularity year after year - not only internationally renowned Karlovy Vary, but also other health resorts find a ready market - totaling about 40 resorts. Russian tourists are interested in Western Czechia, the eastern part of the Republic and South Moravia.

The interest of Russian people to Czechia can also be traced by long-stay visas: Over ten years their number has increased 10 times. In 2002, only 154 long-stay visas were issued; we expect the number of such visas issued in 2011 to reach the level of 2008 - about 1,500 visas.

- Taking into account the increasing tourist flow, are there any plans for underpinning it by additional flights between Ural regions and cities of Czechia?

- Czech Airlines is looking into this possibility. Today, there are 7 flights from Ekaterinburg to Prague scheduled weekly; in future their number will increase to 10. The Chelyabinsk regional government and Czech Airlines negotiated the prospects for flight connection between the region and Karlovy Vary resort. At the moment, the demand for such flights is being analyzed.

- The direct flight connection between Ekaterinburg and Prague facilitates tourism. Does it promote business partnership?

- Business cooperation is given top-priority attention by the Consulate General. In April 2011, we brought a delegation of 100 business people headed by the Minister of Czech Industry. It is yet more proof that interest of the Czech business community to the Urals is growing.

In 2010 the trade turnover between Czechia and Russia increased by 30%, totaling 10.3 billion US dollars. Over the January-June period in 2011 we reached the level of 5.6 billion US dollars - approximately one-third increase as compared to the last year performance. At the end of the year there may be a slight slowdown in business; however, we still expect a 30% gain.

The similar picture is demonstrated by the foreign trade statistics for the Sverdlovsk Region - the last year trade turnover amounted to 136 million US dollars. In 2011 it is expected to increase by one third. Here we should certainly understand that the statistical data reported for the Urals are approximate: Most of the Czech business people come to Russia through Moscow where they get customs clearance for their goods, but we do not have any information about this.

I would like to note that the consular district of the Consulate General of Czechia in Ekaterinburg is the largest one within the Russian territory - it consists of the Siberian, Ural and Far-Eastern Federal Districts. However, the Ural Federal District accounts for the largest share in the trade turnover.

- The construction of a methanol plant in Nizhny Tagil is one of the new large-scale projects with participation of Czech business. However, it is not the first project for the ALTA Company in Nizhny Tagil, is it?

- No, it is not. ALTA, a Czech engineering company, had started operating in the Urals before our consulate was opened. More than once, it supplied equipment for upgrading of large enterprises - Magnitogorsk Iron & Steel Works, OJSC, and Uralvagonzavod Research & Production Corporation, OJSC. For example, in 2010 the production line worth of 44 million euros was launched at the corporation's main factory in Nizhny Tagil. ALTA was the key supplier of equipment, and the Czech Export Bank was the main financial partner of Uralvagonzavod in this project.

At present, UralMethanolGroup (UMG, a joint venture of UCP Chemicals AG and Itera Oil and Gas Company) is embarking on construction of a plant in Nizhny Tagil to produce 600 thousand tons of methanol a year. In July 2010, UMG and ALTA signed an EPC-contract where 71% of financing will be provided by the Czech Export Bank. Such projects are very important for us, as many Czech companies are involved in their implementation.

There is another interesting project - the Czech company, PPF Real Estate Russia LLC, is discussing the development of a logistics center near Revda. It is a turnkey project; therefore, Czech specialists will have to think over everything - from infrastructure to waste disposal.
We pin high hopes on the Ural Industrial - Ural Polar Project. At the moment, we are discussing the possibility of participation of the Czech company OHL ZS in this project. The Czech company can build more than 350 kilometers of the Salekhard-Nadym railway in Yamal (the amount to be involved is 40 billion Czech korunas). The other 300 kilometers will be laid by Russian companies. The financial and technical support for the project will be provided by the Czech engineering concern ČKD GROUP, a.s., Czech Export Bank, and EGAP Insurance Company. The project will open excellent opportunities for other Czech firms. The railway will bolster development of infrastructure and new manufacturing businesses. Czech companies will have business prospects for many years ahead. Besides, it is the largest project that has ever been insured by EGAP.

- What other Ural-based projects look appealing to Czech business people?

- Czech companies are very interested in streetcar repair projects. This issue has been brought up more than once: There are quite a few Czech streetcars in Ekaterinburg.

Small business is stepping up. I look through all information from CzechTrade and I can say confirm the existing interest to the power engineering sector, domestic waste treatment, and water treatment. Czech companies offer innovative technologies for woodworking, furniture manufacturing, and construction. Brewing companies as well as food and medical equipment manufacturers evince great interest in working in Russia. I have a request for cooperation in dentistry from a Czech company. So, we not only sell materials, but also offer high-value-added products.

- Mister Ramesh, can we say that the Ural-Czech cooperation has already passed the period of ordinary trade?

- Yes, now it is much more than trade. Czech brewers and food manufacturers want to open their business operations in Russia and not only in the Sverdlovsk Region. In August the Czech delegation visited the Irkutsk and Omsk Regions.

We found out that Irkutsk encountered the problem, trying to organize present-day tourism services in the vicinity of Baikal Lake. The representatives of the government authorities and business community showed keen interest not only in construction of hotels, but also hotel management and services. Furthermore, the issue of environmental protection, water and waste treatment moves to the fore in such projects as construction of a hotel at the Baikal lakeside. Czech business people can help to solve such issues.

In our turn, we got interested in brewing technologies in Omsk, but, unfortunately, they are German. We, being the country of time-honored brewers, will have to do a lot to regain this niche in Siberia.

Interesting projects are being planned in energy saving. For example, the Thermona Company has offered the Ural Federal University to build cascade boiler-rooms at no charge. The concept is based on series connection of several boilers into the program-controlled integrated heating system. Such systems can be used for upgrading of the energy infrastructure of the Urals, Siberia and the Volga Region.

Such companies as CKD Group, Gas Komplet, Invelt Group, Th s.r.o. are also interested in implementation of energy-saving projects.

- Ural manufacturers can learn a lot from Czechia that sells 20% of the produced energy to other countries. Is this experience sought after?

- Yes, it is. Czech companies participate in many Ural energy projects. The Czech company - PSG International designed the 222 MW Kurganskaya Thermal Power Plant-2 and now is completing its construction. The main equipment has been installed, gas and water piping and conduits have been laid, and the company has commenced set-up and start-up operations. The 12.5 billion-ruble project is scheduled for commissioning by the end of 2011. The Czech Export Bank and EGAP Insurance Company are traditional participants in such large projects.

In addition, PSG-International is the general contractor in the construction of the 268 MW Polyarnaya thermal power plant in Salekhard. The project is being implemented by the Ural Industrial - Ural Polar Generating Company, LLC.

It should be noted that in 2011 our companies participated in some other projects. Skoda Power, a Czech concern, supplied turbines and generators for the power unit at the Sredneuralskaya GRES power plant and two power units at Surgutskaya GRES-2. The Sredneuralskaya GRES contract alone is estimated at 780 million Czech korunas.

- Do Russian companies take part in Czech energy projects?

- Russian President Dmitry Medvedev intends to visit the Czech Republic on December 9 in 2011. The energy issue, in particular, completion of the Temelin NPP construction, will be discussed among other issues included in the top-level agenda. Strong interest in this project is manifested by Rosatom, Westinghouse Electric Co., a US company, and the French energy giant Areva SA. The preliminary construction cost for five units of the power plant is estimated at about 500 billion Czech korunas or 20 billion euros. It means that energy plays a significant role in the Russian-Czech cooperation.

- In 2008, the Ural Mining and Metallurgical Company (UGMK) acquired a controlling stake in Aircraft Industries a.s., a Czech aircraft engineering company. Development of the small aircraft sector is very important for Russia, and this company specializes in manufacturing of short-haul passenger airplanes. What can you say about the operation of the joint venture?

- It operates successfully. Today, Aircraft Industries a.s., the enterprise that was launched using the facilities of the Czech factory LET, is a manufacturer of a wide range of small passenger airplanes and gliders, such as L-410/420, L-13, L-23, L-33. I think that the arrival of the Russian partner represented by the Ural Mining and Metallurgical Company helped to improve sales and move to the new economic level. The quality of the products manufactured by the company is esteemed highly, and I believe that the number of orders will increase in future.

- UGMK can be seen as a representative of large-size Ural business in Czechia. Are there any similar examples?

- There are examples in small business. One of my acquaintances - an Ekaterinburg businessman is successfully working in Czechia. He was able to resume brewing production based on the original formula in Kynsperk nad Ohri. He is planning to open a restaurant and to build a hotel at the site of the old abandoned brewery - to make it a leisure and relaxation area. Similar brewery projects are being implemented by Russian business people in other regions of our Republic.

So, the Consulate General of the Czech Republic in Ekaterinburg, together with the representative offices of CzechTourism and CzechTrade, has a lot to do in the next 10 years.

The interview was prepared by Valentina Mazharova