**COMMERCIALUPDATE FROM KHABAROVSK (RUSSIAN FAR EAST)**

**27 January 2000**

** **

AUTHOR: ANDREY VASENYOV, BISNISREPRESENTATIVE IN KHABAROVSK. 

 

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

 

SUMMARY. This report summarizes business developments andselected prices in Khabarovsk, the Russian Far East.  End summary. 

 

EBRD BUYS AMUR-PIVO’S EQUITY 

 

The DAIWA Regional Venture Fund, acting under a mandate ofthe European Bank for Reconstruction and Development (EBRD), announced plans topurchase a 25 percent share of the Amur-Pivo enterprise.  The first $2.5 million will betransferred to the company in January 2000 for reconstruction of its productionfacilities.  The investment willpermit the company to improve product quality and triple its output over thenext five years.  Amur-Pivo, thelargest brewery in the Krai, is the third EBRD investment in Khabarovsk’s foodprocessing industry. (Source: Komsomolskaya Pravda, December 22)

 

FORESTRY CERTIFICATION CENTER

 

The establishment of the Center for Forestry Certification(Lescenter) was announced in Khabarovsk. The Center will be engaged incertification of forest exploitation and logging.  It is expected to focus on the industry’s use ofenvironmentally friendly technologies. More details about the center’s functions and structure will beavailable in early 2000. (Source: Priamurskiye Vedomosti, January 5)      

 

BRIDGE ACROSS THE AMUR RIVER

 

The Ministry of Transportation and the Russian Road Fundwill provide 800 million rubles for the construction of an additional railroadtrack across the Amur River bridge. The first stage, construction of a railroadtrack and two-lane highway, was completed in November 1999 but the rapid growthin cargo shipments via the Transsiberian Railroad requires further expansion ofthe infrastructure.  The secondrailroad track across the Amur will be completed by 2003. (Source: “TOZ”,December 15)

 

ENERGY INDUSTRY NEWS:

 

Gasification as an Energy Solution for the RFE

 

The Russian federal government has approved a gas supplyprogram for Sakhalin, Khabarovsk and Primorye.  According to the program, the first priority is to completethe construction of a gas pipeline from Komsomolsk to Amursk (Khabarovsk Krai)by the next heating season. Another high priority is the construction of apipeline from Komsomolsk to Khabarovsk, which is currently at the planningstage. (Source: “TOZ”, December 22)

 

Production of Coal Grew in 1999

 

According to Yuriy Matveyev, First Deputy Governor ofKhabarovsk Krai, the quantity of coal extracted in the Khabarovsk Krai in 1999(about 1.9 million tons) exceeded the previous year’s level by 50 to 60percent.  In a few years, a newmine, Severnaya, will be opened to replace the exhausted Urgalskaya mine, thusallowing for output of coal to grow to over 3 million tons per year. (Source:Priamurskiye Vedomosti, December 3)

 

Energy Consumption in 1999 Grew to the 1995 Level

 

Khabarovskenergo reported an increase in energyconsumption by its clients at a recent press conference.  According to the company’s management,growth occurred for the first time in eight years.  In 1999, Khabarovskenrgo’s total electric power productiongrew by 9.5 percent, thus reaching the level of production in the Krai in 1995.(Source: “TOZ”, December 28)

 

PRICES IN KHABAROVSK

 

The Khabarovsk State Statistics Committee publishedinformation on prices in November 1999. Compared to October 1999, the priceindex was 101.7 percent for food products versus 101% for the RussianFederation, 103.1 percent  (101.5percent) for industrial goods, and 103.5% (101.7) for services granted topopulation.  Following is the pricegrowth data on selected products, which indicates that the actual inflation maybe higher than reported above. 

 

Price Growth on Selected Food Products:

Eggs – 10.9%

Meet, fish, dairy– 1.5-4%

Fresh cabbage – 52.2%

Carrot s– 17.7%

Beets – 16.9%

Potatos – 6.8%

Fruit – 1.5%

 

Growth of prices on selected industrial products:

Watches, school supplies, stationary, office equipment,gasoline: 8.4-21.7%.

Fabric, fur, footwear, furniture, electric appliances andbuilding materials: 2.3-6.1%  

 

Growth of prices on selected services:

Airfare – 11.4%

Railroad fare – 9.1%

 

Priceson Basic Products in Khabarovsk (December 1999 - early January 2000)

(exchangerate applied - 27.08 rubles for 1 USD)

 

Product                    Quantity          Price(Rubles)              USD Equivalent 

                                                                               

Loafof bread             0.6kg              5                                 0.18

Vegetableoil            1liter              26                                0.96

Butter              1kg                 65                                2.40

Margarine            0.25kg            6                                  0.22

Mayonnaise            1kg                 26.6                             0.98

Milk                1liter              11                               0.41

Cottagecheese            1kg                 33                                1.22

Cheese            1kg                 55-80                           2.03-2.95

Macaroni                        0.5kg              7                                  0.26

Flour               1kg                 5-7                               0.19-0.26

Sugar              1kg                 7-9                               0.26-0.33

Salt                  1kg                 1.80-2.50                 0.07-0.09

Rice                 1kg                 7.2-11                          0.27-0.41

Buckwheat            1kg                  16-19                           0.59-0.70

Vegetablejuice    1 liter              18                               0.66

Fruitjuice            1liter              23                               0.85

 

Pollock                          1kg                 19                                0.70

FrozenSalmon            1kg                 42                                1.55

Beef                 1kg                 70                                2.58

Pork                 1kg                 75                                2.77

BolognaSausage 1kg                 70                                2.58

Poultry                        1kg                 38                                1.40

Eggs                10eggs            14                                0.52

 

Apples            1kg                 26                                0.96

Bananas            1kg                 32                                1.18

Tomatoes            1kg                 34                                1.26

Cucumbers            1kg                 35                                1.29

Potatoes            1kg                 18                                0.66

 

Bottleof vodka  0.5 liter                 31-36                           1.14-1.33

Mineralwater            1.5liter                 5-8                               0.18-0.30

RussianBeer            0.5liter                 12                                0.44

Foreignbeer            0.5liter                 18                                0.66

 

Soapbar            0.25kg            20                                0.74

Detergent(Tide)1 kg                   40                                1.48

Toothpaste               0.1kg              15                                0.55

 

Khabarovskcurrently is the 15th most expensive city in Russia based on the cost of abasic food basket. In comparison, Moscow and St. Petersburg are the 12th and22nd, respectively.  The leastexpensive city is Ulyanovsk (Lower Volga Region)- 414.53 rubles.

 

 

**Cost of an Individual Food Basket**

**Consisting of 25 Basic Food Products**

**November 1999**

 
| Region

 

-----------------------------------

Russian Federation

Anadir (Chukotka)

Magadan

Petropavlovsk-Kamchatskiy

Yakutsk

Yuzno-Sakhalinsk

Moscow

Vladivostok

Khabarovsk

Birobidzhan

Saint-Petersburg

Blagoveschensk | Cost per month 

(rubles)

-----------------------------

549.59

1631.39

911.84

891.21

877.91

820.94

734.24

694.00

654.65

601.90

591.00

578.74 | Cost increase compared to Jan, 1999 (%)

--------------------------

29.12

40.79

34.65

39.90

23.79

36.12

39.60

18.8

28.14

18.50

33.69

8.18 |
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