COMMERCIAL UPDATE FROM SAKHALIN     

27 January 2000

 

AUTHOR:ELENA SABIROVA, BISNIS REPRESENTATIVE IN YUZHNO-SAKHALINSK     

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND THE U.S. DEPARTMENT OF STATE, 2000.  ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

 

SUMMARY.  This report summarizes business developments in the Sakhalin region, the Russian Far East, for December-January 2000. End summary.

 

FOOD PROCESSING INDUSTRY DEVELOPS

 

1.  Sakhalin food processing enterprises are showing improvements from the previous years' results.  According to the Sakhalin Administration Department for Food and Food-Processing, one of the main reasons for this improvement is the increased labor productivity of these enterprises.  For instance, productivity in local meat-processing enterprises increased by 50%.  Liqueur and vodka production facilities, as well as beer breweries, have also been very successful and expect to experience continued improvements as a result of the promising potential in that industry.

 

2.  Several local companies are pursuing infrastructure improvements.  The local liqueur-vodka plant is hoping to obtain 15 million rubles (about US $ 550,000) for reconstruction. The reconstruction would make it possible for the plant to utilize new technologies; for example, processing of grain wastes into food for poultry.  A feasibility study on brewery reconstruction in Yuzhno-Sakhalinsk is also being completed.

 

3.  The Makarov Collective Farm has obtained a mini-plant module for milk processing.  These facilities will supply the district with pasteurized milk, butter, cheese, cottage cheese and cream and will introduce the use of vacuum sealing. The mini-plant is able to process 1500-2000 liters of milk per day and needs only 4-5 people to operate. The equipment was purchased from a Russian company in Perm.  Such small modules are especially useful for the Sakhalin market with its small towns and villages, where badly developed infrastructure makes effective transportation of perishable goods difficult.

(Source: local press)

 

FISHING

 

1.  1999 was a good year for the Sakhalin fishing industry. The total catch was 450,000 tons of fish and seafood, of which 330,000 tons were processed into value-added goods.  The catch of salmon was the largest in the past decade - more than 111,000 tons.

 

2.  The Governors of Khabarovsk, Kamchatka, Magadan and Sakhalin oppose the fishing quota distribution system, which is determined on the federal level. The Governors have sent a letter to Acting President Putin requesting changes to the existing system. Currently, quotas are distributed according to the number of vessels in each  region.  The Sea of Okhotsk, where the majority of Russian Far East fish are caught, geographically refers to Khabarovsk, Sakhalin, Magadan and Kamchatka.  However, since the Primorye region has the most vessels, funding for the fish catch goes to the budget of Primorye and not to the budgets of the other regions. (Sources: local press and www.sakh.com)

 

ENERGY

 

1.  The first stage of the Nogliki Gas Turbine Power Station was put into operation, with four turbines of the plant working at a 40 MW load. The station is the first gas-utilizing power plant on Sakhalin, and was designed to alleviate the regional problem of frequent power outages due to non-timely coal deliveries to existing coal power plants.

 

The use of gas in the local energy system is much lower than the average for Russia as a whole  - 20% compared to 63%.  Locally produced gas is three times cheaper to use than local coal, and the increased use of gas will also result in a saving of about 400 tons of coal daily.

 

Infrastructure is already available for the construction of the second stage of the gas turbine station.  The construction of the second stage will complete the power system upgrade in the region and gas utilization will reach 40% - 45% of the total fuel balance. (Source: local press)

 

INFRASTRUCTURE DEVELOPMENTS

 

1.  A two-stage plan for water system renovation on Sakhalin will be implemented in 2000-2005 and 2006-2011.  For the last two years, the Regional Administration has been working on a program called "Sakhalin Drinking Water".  Data on local water network conditions, water intakes, and sewage plants was gathered from all districts in the Sakhalin Oblast.  Plans include not only laying new pipes, but also introducing new technologies for water treatment and waste processing.  The cost to implement this program is estimated at 6.5 billion rubles, about 70% of which should be covered by the Regional Budget.  Local and federal budgets will cover an additional portion, with some non-governmental funding still needed to make up the total.