Investment Environment in the Irkutsk Region

OVERVIEW OF IRKUTSK REGION

Located in the middle of the Asian part of Russia, the Irkutsk region stretches 1,400 kilometers from north to south, 1,200 kilometers from west to east, and covers 774,800 square kilometers. The region is bordered by Krasnoyarsk Territory, Chita Region, the Republic of Sakha (Yakutiya), the Autonomous Republic of Tuva, and the Buryat Republic. The region comprises the Ust-Orda Buryat Autonomous Area and 33 districts. About 86 percent of the region is forested, and timber resources are estimated at more than 8 bilion cubic meters. The climate is continental, with extreme winter and summer temperatures.

The population of the Irkutsk region is 2.8 million (about 2 percent of Russia's total population), with major centers in Irkutsk (587,000) Angarsk (272,000), Bratsk (283,000), and Usolye Sibirskoye (195,000). Four other towns (Ust-Ilimsk, Cheremkovo, Ust-Kut, and Tulun) have populations between 50,000 and 100,000. The overall population density is 3.7 persons per square kilometer, compared to 8.7 in Russia as a whole. The social and political situation of the region is considered to be among the most stable in Russia.

At the beginning of the century, much of the region's development was connected with the construction of the Trans-Siberian Railroad, which crosses the southern part of the region, and the Taishet-Baikal-Amur Railway branch line, which crosses the region's northern districts. The Trans-Siberian Railroad remains the most important transportation network in the region and annually services more than 57 million tons of freight, mostly timber, coal, oil products, ferrous and nonferrous metals, and construction materials. Airports in Irkutsk, Bratsk, and Ust-Ulimsk serve all classes of aircraft and offer direct international flights to Beijing, Shenyan, Nigata, Seoul, and Ulan-Bator. Roads are used for overland freight to western Russia, as well as to China and Mongolia. Pipelines bring oil from Western Siberia to the Angarsk Oil Refinery; oil is also shipped via rail from Angarsk to refineries in Khabarovsk and Komsomolsk-on-Amur..

The Irkutsk region is rich in mineral resources and has industrial deposits of potassium, table salt, mica, talc, titanium, and niobium, as well as a variety of materials used in the construction industry. The area remains among Russia's major gold-producing regions, and a newly-discovered deposit at Sukhoi Log may be able to produce up to 50 tons of gold annually. Brown and hard coal are mined in Cheremkhovo, Tulun and Ust-Ilim. Development of rich oil and gas deposits is expected to permit an increase in export production by local refineries. Ferrous metallurgy is represented by production of iron ore concentrate, while non-ferrous metallurgical enterprises produce aluminum and aluminum alloys, silumin, and gold. The machine-building and metal-working sector produces and repairs river vessels, road-building equipment, and assorted machinery for the metallurgical and petrochemical industries.

IRKUTSKENERGO Corporation is one of Russia's largest producers of power and heat. The corporation operates 36 facilities, including thirteen thermal power plants and three hydroelectric stations: the Irkutsk Hydroelectric Station (660,000 kw), the Bratsk Hydroelectric Station (4.5 million kw), and the Ust-Ilimsk Hydroelectric Station (3.84 million kw). In 1995, Irkutskenergo produced a total of 58.5 billion kilowatt-hours of electricity. Since 1994, leaders of Irkutskenergo have been negotiatin with Chinese companies regarding construction of a 2,300-kilometer segment of a 1,500-volt transmission line from Bratsk to Beijing or Shenyan. The $1.5 billion project is based on projected transmission of 25 billion kilowatt-hours per year. Both Russian and Chinese partners seek investors for the project.

There are more than 1,550 industrial enterprises operating in the Irkutsk region. The combination of rich natural resources, a strong power complex providing cheap electricity, a diversified industrial structure with a well-developed processing sector, and a good transportation system have been vital ingredients for the development of the region and have moderated some of the production declines being experienced in other Russian regions. The following table represents annual industrial output of the Irkutsk region during 1994:


PRODUCT                                           IRKUTSK SHARE OF 
                                                  RUSSIAN TOTAL

PULP (THOUSAND TONS)                    612.7     47.8%
ALUMINUM (TH. TONS)                     893.3     40%
CAUSTIC SODA (TH. TONS)                 209.8     18.4%
PLASTICS & SYNTHETIC ROSIN (TH. TONS)   222.3     13.4%
LUMBER (MIL. CUBIC M)                     8.7     11.8%
PRIMARY FUEL PROCESSING (MILLION TONS)   17.0     9.2%
SAWN-TIMBER (MIL. CUBIC M)                1.6     8.5%
ELECTRICITY (BILL. KW/H)                 57.4     6.6%
IRON-ORE (MILLION TONS)                   4.5     6.1%
COAL (MILLION TONS)                      15.6     5.8%
FERTILIZERS (TH. TONS)                  229.8     3.1%
CEMENT (TH. TONS)                       529.1     1.4%

About 10 percent of Russia's timber reserves are located in Irkutsk, and the region produces 12-14 percent of the country's timber products. During the last ten years, the timber industry has accounted for 15 to 25 percent of the region's total industrial output. The regional administration estimates that the 200 enterprises operating in the timber industry have the capacity to produce 40 million cubic meters of timber and 1.5 million tons of pulp (cellulose) annually. In 1995, the region exported 780,000 tons of cellulose, 500,000 cubic meters of sawn timber, and the same amount of logs. Currently, 75 timber joint ventures have been registered in Irkutsk, half of which involve partners from former Soviet republics. According to officials at the Analytical Department of the Regional Timber Policy Committee, most regional timber producing/processing companies are in need of modern equipment and machinery.

The petrochemical industry in Irkutsk is one of the most developed in Russia and employs approximately 60,000 workers. A network of closely interrelated enterprises engaged in oil refining, petrochemical, chemical, biochemical and pharmaceutical production accounts for one-third of the region's industrial output. The Angarsk oil refinery processes 24 million tons per year and is the largest fuel supplier in eastern Russia. The Sayansk complex has the capacity to produce 130,000 tons of caustic soda per year, 250,00 tons of different sorts of synthetic resin, and 130,000 tons of chlorine. The Usolsk chemical complex consists of seven major facilities which produce caustic soda (110,000 tons), suspension resin (110,00 tons), fertilizers, pesticides, artificial crystals for the aerospace industry, tetrachloroethane, and a wide range of paints and lacquers.

The Usolsk Khimfarmkombinat is a major producer of pharmaceuticals, although only three of its ten production lines are currently in operation. Microbiological production is mainly located in Angarsk, where more than 120,000 tons of proteins are synthesized. Also in Angarsk, there is a special chemical plant producing a broad variety (600-700 types) of especially pure reagents. Officials report that the region exports 50 percent of its chemical production.

In April 1993, the joint-stock company "Finprom" was established with the goal of stimulating development of a market economy. The corporation, founded by the Regional Property Fund and the Regional Committee for Property Management, owns 10-20 percent of the shares and stock in more than 50 regional enterprises, including most of the region's leading enterprises. Finprom's Security Fund provides Russian and foreign investors with guarantees based on financial resources and stock of industrial enterprises, as well as natural resouve.

The Eastern Siberian Chamber of Trade and Industry (ESCTI) operates in Irkutsk, as well as Novosibirsk, Omsk, Tomsk, Kemerovo, Chita regions, Krasnoyarsk and Altay territories, and the Republic of Sakha (Yakutiya). During the last two years this organization has served mainly enterprises in Irkutsk. In 1995, ESCTI was recognized among Russia's four largest chambers, after Moscow, St. Petersburg, and Krasnodar. At present, the Irkutsk Chamber has 100 members, including the largest banks and industrial enterprises of the region, and employs 150 persons. ESCTI publishes an information bulletin and offers matchmaking assistance. Leaders of the chamber expressed strong interest in development of cooperation with U.S. companies and trade promotion organizations. In the near future, ESCTI will be electronically connected to a business information center operating in Germany which provides its clients with commercial information.

FOREIGN TRADE AND INVESTMENT

150 regional enterprises are engaged in foreign economic activity with more than 80 countries. There are 25 Russian-American joint ventures operating in the region, and the total number of joint ventures registered by Irkutsk administration exceeds 280. Statistics provided by regional officials indicate that Irkutsk is Russia's largest exporter of aluminum, timber and timber products and pulp. In 1995, international trade turnover was about $4 billion, with the following approximate shares: fuel, minerals, metals - 52 percent; timber products and pulp - 27 percent; chemical products -13 percent; machinery and equipment - 1 percent. In 1995, the region had exports to the United States of $640 million and imports of $53 million. During the first half of 1996 these figures were $266 million and $44 million, respectively.

[...] Boris Vasilyev, Vice-Governor and head of the International Economic Department, pointed out that creation of favorable business environment for foreign investment is a priority of the regional administration. In December, "The Baikal Business Center" (BBC) is to be opened. Billed as the largest commercial complex in Siberia, the BBC is located in a 10-story modern office complex with exhibition facilities and a 4-star hotel for 75 guests.

Sibexpocentre, Irkutsk's leading international exhibition organizer, sponsors a number of trade events each year. The following is a select list of events scheduled for 1997:

JANUARY 22-25   CINEMA-PHOTO-VIDEO
FEBRUARY 5-8    INFORMATION TECHNOLOGIES
FEBRUARY 19-22  BANK SERVICES, INVESTMENTS AND SECURITIES
MARCH 26-29     PACKAGING EQUIPMENT
APRIL 23-26     "SIBVESNA-97" (GENERAL)
MAY 21-24       "STROYINDUSTRY-97" (BUILDING/CONSTRUCTION)
MAY 21-24       HOUSEHOLD APPLIANCES
JUNE 4-7        "SIBAUTOSERVICE" (CAR PARTS AND SERVICES)
JUNE 18-21      RECREATION AND SPORTS
AUGUST 27-30    CHILDREN'S CLOTHES AND TOYS
SEPTEMBER 24-27 "INTERNATIONAL UNIVERSAL IRKUTSK FAIR"
OCTOBER 8-11    "SIBERIAN PUBLIC HEALTH"
OCTOBER 22-25   "HARVEST-97: FOODPROCESSING EQUIPMENT AND TECHNOLOGIES"
NOVEMBER 12-15  WOOD-PROCESSING EQUIPMENT

ADDITIONAL INFORMATION ON THESE EVENTS IS AVAILABLE FROM SIBEXPOCENTRE: 37 KARL MARX STREET IRKUTSK, RUSSIA 664011 TEL: +7 (3952) 336727, 333452 FAX: +7 (3952) 343-641 TELEX: 231815 EXPO RU

LEADING COMPANIES:


"FINPROM" JOINT-STOCK COMPANY
38 MARATA STREET 0R P.O. BOX 50
IRKUTSK, RUSSIA 664000
TEL: +7 (395) 346570 OR 346-579
FAX: +7 (395) 346574
TELETYPE: 231-350 BRIZ
PRESIDENT: VITALIY IVANOV
GENERAL MANAGER OF EXTERNAL RELATIONS
DEPARTMENT: SERGEY MENDYUK

"IRKUTSKENERGO" JOINT-STOCK COMPANY
3 SUKHE-BATOR STREET
IRKUTSK, RUSSIA
TEL: +7 (3952) 288305 OR 275234
FAX: +7 (3952) 288899
DIRECTOR GENERAL: VICTOR BOROVSKIY

"RUSIA" PETROLEUM COMPANY
36 DEPUTATSKAYA STREET
IRKUTSK, RUSSIA 664047
TEL: +7 (3952) 430641, 348591
FAX: +7 (3952) 432222, 277514
DIRECTOR GENERAL: LEV PLATONOV

"ANGARSKNEFTEORGSINTEZ" JOINT-STOCK COMPANY
ANGARSK, IRKUTSK REGION, RUSSIA 665458
TEL: +7 (39518)71581
NOTE: PRODUCES ALCOHOL, AMINO ACIDS, PHTHALIC
ANHYDRIDE, TRANSFORMER AND ENGINE OILS, AND JET
FUEL.

"IRKUTSKKABEL" JOINT-STOCK COMPANY
SHELEKHOV, IRKUTSK REGION, RUSSIA 666020
TEL: +7 (39510) 22433
FAX: +7 (39510) 23862
NOTE: PRODUCES DIFFERENT TYPES OF WIRES, POWER
CABLES WITH PAPER-IMPREGNATED INSULATION,
CONTROL CABLES, AND CONSUMER GOODS.

"KHIMPROM" JOINT-STOCK COMPANY
USOLYE-SIBIRSKOYE, IRKUTSK REGION,
RUSSIA 665470
TEL: (7-39543) 57696
FAX: (7-39543) 33934
NOTE: PRODUCES CARBIDE, CAUSTIC SODA, CHLORINE,
PVS PITCH, MONOCRYSTALS, AND
EPICHLORINECHYDRIDE.

"KHIMPROM" JOINT-STOCK COMPANY
SAYANSK, IRKUTSK REGION, RUSSIA, 665358
TEL: +7 (39513) 4646
NOTE: PRODUCES CAUSTIC SODA, PVC PITCH,
CHLORINE-4 CARBON, AND HYDROCHLORIC ACID

"KHIMPHARMCOMBINAT" JOINT-STOCK COMPANY
USOLYE-SIBIRSKOYE
IRKUTSK REGION, RUSSIA 665776
TEL: +7 (39543) 32353

UST-ILIMSKIY TIMBER PROCESSING COMPLEX
UST-ILIMSK, IRKUTSK REGION, RUSSIA 665776
TEL: +7 (39535) 92266
FAX: +7 (39535) 71505
NOTE: PRODUCES PULP, TIMBER MATERIALS, RESIN

BRATSK TIMBER PROCESSING COMPLEX
BRATSK, IRKUTSK REGION, RUSSIA 665718
TEL: +7 (3953) 438113
FAX: +7 (3953) 441048
NOTE: PRODUCES PULP, CAUSTIC SODA, LEAD, TALLOW
OIL, LIQUID CHLORINE, PLYWOOD, AND OTHER TIMBER
MATERIALS.

BAIKAL PULP PLANT
BAIKALSK, SLYUDYANSKY DISTRICT,
IRKUTSK REGION, RUSSIA 665914
TEL: +7 (39542) 427
FAX: +7 (39542) 2285
NOTE: PRODUCTION OF PULP, WRAPPING PAPER,
TALLOW OIL, AND TURPENTINE.

BRATSK ALUMINUM PLANT
BRATSK, IRKUTSK REGION, RUSSIA 665716
TEL: +7 (3953) 441751
FAX: +7 (3953) 439216
NOTE: PRODUCES ROLLED AND PIG ALUMINUM

IRKUTSK ALUMINUM PLANT
SHELEKHOV, IRKUTSK REGION, RUSSIA 666020
TEL: +7 (39510) 22255
FAX: +7 (39510) 21929
NOTE: PRODUCES ROLLED AND PIG ALUMINUM

"VOSTSIBUGOL" JOINT-STOCK COMPANY
IRKUTSK, RUSSIA 664674
TEL: +7 (3952) 273347
FAX: +7 (3952) 275237
NOTE: LARGE PRODUCER OF COAL AND COAL
CONCENTRATE

"VOSTOKSLUDA" JOINT-STOCK COMPANY
IRKUTSK, RUSSIA 664695
TEL: +7 (3952) 244070
NOTE: MICA

"BAIKALAVIA" JOINT-STOCK COMPANY
IRKUTSK, RUSSIA 664009
TEL: +7 (3952) 286304, 95792
NOTE: CARGO AND PASSENGER AIR TRANSPORTATION

IRKUTSK AVIATION PRODUCTION UNION
IRKUTSK, RUSSIA 664020
TEL: +7 (3952) 429443 OR 420519
FAX: +7 (3952) 421535
NOTE: AIRCRAFT PRODUCTION.

"IRKUTSKLESPROM" JOINT-STOCK COMPANY
IRKUTSK, RUSSIA 664003
TEL: +7 (3952) 277225 OR 277214
FAX: +7 (3952) 277261


LEADING TRADING COMPANIES AND BUSINESS
PROMOTION ORGANIZATIONS

"BAIKALIT" JOINT-STOCK COMPANY
IRKUTSK, RUSSIA 664009
TEL: +7 (3952) 347379
FAX: +7 (3952) 278145
TRADES IN BROAD RANGE OF CONSUMER GOODS,
OPERATES INTERNATIONALLY

"YERMAK" JOINT-STOCK COMPANY
16 DZERZHINSKI STREET
IRKUTSK, RUSSIA 664003
TEL: +7 (3952) 348711
FAX: +7 (3952) 333902
ENGAGED IN EXPORT OF NATURAL RESOURCES, IMPORT
OF TECHNOLOGIES, MEDICINES, FOOD, CONSUMER
GOODS.

"VENTA LTD" TRADING COMPANY
1 OKTYABRSKOY REVOLYUTSII STREET
IRKUTSK, RUSSIA 664007
TEL: +7 (3952) 349470 OR 349447
FAX: +7 (3952) 349447
IMPORTS FOOD PRODUCTS, EQUIPMENT FOR TRADING
FIRMS

"VOSTOKSIBCOM" JOINT-STOCK COMPANY
2 MOPRA STREET, OFFICE 118
IRKUTSK, RUSSIA 664026
TEL/FAX: +7 (3952) 331468
HOME APPLIANCES, INDUSTRIAL HEATERS

EVRODIZAIN COMPANY
24 KIEVSKAYA STREET
IRKUTSK, RUSSIA 664003
TEL/FAX: +7 (3952) 284135
CONSTRUCTION, HOUSE REPAIRING MATERIALS

IRKUTSK CENTER OF METROLOGY, CERTIFICATION
AND STANDARDIZATION
8 CHEKHOVA STREET
IRKUTSK, RUSSIA 665011
TEL: +7 (3952) 344897 OR 344805
FAX: +7 (3952) 340804

YEFIM DAVYDOV ADVERTISING COMPANY
1 PARTIZANSKAYA STREET, OFFICE 74
IRKUTSK, RUSSIA 664003
TEL: +7 (3952) 275530 OR 333430
FAX: +7 (3052) 274679
THE COMPANY CAN ARRANGE ADVERTISING IN ANY
REGION OF SIBERIA.

SIBEXPOCENTER
(IRKUTSK INTERNATIONAL EXHIBITION CENTER)
37 KARL MARX STREET
IRKUTSK, RUSSIA 664011
TEL: +7 (3952) 336705 OR 336727
FAX: +7 (3952) 343641
DIRECTOR GENERAL: MR. KOTSAR

THE EASTERN SIBERIAN CHAMBER OF TRADE AND
INDUSTRY
16 SUKHE-BATORA STREET
IRKUTSK, RUSSIA 664003
TEL/FAX: +7 (3952) 335116
E-MAIL: TPP23@RFCCI.ROSPAC.MSK.SU
VICE-PRESIDENT: ALEXANDER LAY

BAIKAL BUSINESS CENTER
279 BAIKALSKAYA STREET
IRKUTSK, RUSSIA 664050
TEL: +7 (3952) 351736
FAX: +7 (3952) 350923
COMMERCIAL DIRECTOR: VERA SHERESHKOVA

BANKS:


A. BANKS WITH GENERAL LICENSES ISSUED BY THE
CENTRAL BANK OF RUSSIA:

VOSTSIBKOMBANK
12 ROSSIYSKAYA STREET
IRKUTSK, RUSSIA
TEL: +7 (3952) 334148
FAX: +7 (3952) 334202
PRESIDENT: TAMARA TSARIK

RUSSIAN-ASIAN STOCK BANK
35 TIMERYAZEVA
IRKUTSK, RUSSIA
TEL: +7 (3952) 274662
PRESIDENT: FLER BABTRAKINOV

B. BANKS LICENSED TO CONDUCT FOREIGN CURRENCY
OPERATIONS:

KOMSOTBANK
16 LENIN STREET
IRKUTSK, RUSSIA
TEL: +7 (3952) 349593
PRESIDENT: LIDIA NECHAYEVA

ANGARSK BANK
30 LENIN STREET
ANGARSK, IRKUTSK REGION, RUSSIA
TEL: + 7 (39510) 22566
PRESIDENT: TAMARA MOKHOVA

BAIKALSKY BANK
7 ZHUKOVA STREET, IRKUTSK, RUSSIA
TEL: +7 (3952) 421162
PRESIDENT: OLGA KRASNOPYOROVA


TOURIST AGENCIES AND HOTELS:

IRKUTSK-BAIKAL INTOURIST
44 GAGARIN BOULEVARD
IRKUTSK, RUSSIA 664055
TEL: +7 (3952) 296315 OR 290167
FAX: +7 (3952) 277872
DIRECTOR GENERAL: E. LUKYANCHIKOV
NOTE: THE COMPANY OPERATES TWO HOTELS IN
D0WNTOWN IRKUTSK WHICH CAN ACCOMMODATE 500
PERSONS, AS WELL AS A HOTEL ON THE SHORE OF LAKE
BAIKAL WITH 200-PERSON CAPACITY.


GRAND HOTELS TOUR COMPANY
3 PERVAYA SOVETSKAYA STREET,
IRKUTSK, RUSSIA 664003
TEL: +7 (3952) 348335 OR 278335
FAX: +7 (3952) 348335 OR 336904


"RUS" HOTEL
TEL/FAX: +7 (3952) 271530
CONTACT PERSON: SERGEY MARKOV
NOTE: SAFE, WELL-RUN HOTEL WHICH IS OWNED BY
THE REGIONAL GOVERNMENT.

SOURCE: FM AM EMBASSY MOSCOW