How.to.invest.in.St.Petersburg.2008

HOW TO INVEST IN SAINT-PETERSBURG Eighth revised and supplemented edition

Saint-Petersburg, 2008 1

INTRODUCTION......................................................................................................……....................................4 1. LEGAL REGULATION OF INVESTMENT ACTIVITIES.....................................….................................... 5 2. THE STATE SUPPORT TO INVESTMENT ACTIVITIES IN ST. PETERSBURG........................................6 2.1. Tax benefits for investment in accordance with the federal legislation................................................... 6 2.2. Customs benefits of investment nature......................................................................................……....…9 2.3. The support of investment activities in accordance with the legislation of St. Petersburg......……...…11 3. THE LIST OF LEGAL ACTS REGULATING INVESTMENT SUPPORT.....................................................19 4. PROCEDURES OF INVESTMENT IN ST. PETERSBURG.........................………...................................... 31 4.1. Procedures of financial involvement of the St. Petersburg public authorities in investment activities....31 4.1.1. Drawing up a list of construction projects and sites for federal government needs, and financing of same out of federal budget............................................................….........................................................31 4.1.2. The procedure for including offers into the list of St. Petersburg’s constructions and facilities for the federal government needs and their financing from the federal budgetary funds...................................38 4.1.3. Procedure for making up the St. Petersburg address investment program.…..........................…...... 41 4.1.4. Procedure for granting investment tax credit to applicant organizations................................................. 44 4.1.5. The procedure of providing state warranties of St. Petersburg for implementation of investment projects…........................................................................................................................................... 49 4.2. Administrative procedures on investments in St. Petersburg................................................................... 52 4.2.1. The procedure of decision-making related to provision of property owned by St. Petersburg for construction and reconstruction.......................................................................................................… 52 4.2.2. Procedure of interaction of the St. Petersburg governmental authorities within the framework of investment project implementation at the stage of survey, design and con-struction...............….......64 4.2.3. Procedure for interaction between the executive bodies of St. Petersburg for the purposes of implementing strategic investment projects of St. Petersburg..................................................................70 4.2.4. Procedure for interaction of public authorities concerning the placing of investment projects within the special economic zone of St. Petersburg.............................................................................73 4.2.5. Procedure of interaction between the executive governmental bodies of St. Petersburg and entities as regards sale of publicly-owned land to the owners of property located on such plots....................74 4.2.6. The procedure for leasing non-residential premises....................................................................…… 79 4.2.7. The procedure of approval for real estate management that belongs to public unitary enterprises by the right of economic management..........................................................................…………..……..84 4.2.8. Procedure of preparing a decision on conditions of privatization (sale) of property objects........................90 4.2.9. Procedure of delivering buildings and land plots the latter stand on by way of holding a tender.......97 4.2.10. The procedure for getting the investment accomplishment connected up.........................................100 4.2.11. The procedure for transferring engineering infrastructure objects to special operating institutions...105 4.2.12. Procedure for organizing and holding public hearings and informing citizens about maintaining the town-planning activity in St. Petersburg...................................................................................……. 108 4.2.13. The procedure of state registration of real estate title and related transactions...........................…..112 4.2.14. The procedure for privatizing stocks and shares in regulation capitals of municipal housekeeping companies that are the state property of St. Petersburg..................…………………………………114 4.2.15. The procedure for privatizing state unitary enterprises..................................................................... 117 5. CURRENT SYSTEM OF TAXATION IN ST. PETERSBURG............................................……………....... 121 6. PUBLIC PROCUREMENT IN ST. PERTERSBURG...........………...................................................……. 143 7. NEW MECHANISMS FOR IMPLEMENTATION OF INVESTMENT PROJECTS BASED ON PUBLICPRIVATE PARTNERSHIP PRINCIPLES.....................….....................................................................……... 146 7.1. Legal foundations of public private pertnership, based on the federal law «on concession agreements»..146 7.2. St. Petersburg legislation on state-and-private partnerships. Examples of projects...........................… 151 8. LEGAL FOUNDATIONS OF CREATION AND FUNCTIONING OF SPECIAL ECONOMIC ZONES PREFERENCES GIVEN TO INVESTOR, WHICH IS A RESIDENT OF A SPECIAL ECONOMIC ZONE.....154 9. INVESTMENT PROJECTS/PROGRAMMES OF ST. PETERS-BURG...................................................…..156 2

9.1. Large-scale investment projects and programmes...............................................….………....................156 9.2. Investment in St. Petersburg: success stories.............................................................................................. 164 10. VALUE OF PROPERTY IN ST. PETERSBURG..............................................................................….… 165 10.1. Value of land..........................................……………………………...................………….......…..…...165 10.2. Cost of apartments...............................................................…………………...............………....……..169 10.3. Prices for commercial real estate............................................................…….................……....…..…. 176 11. FEES FOR HOOKING UP TO ENGINEERING AND TECH¬NICAL PROVISION NETWORKS.....….. 182 APPENDIX APPENDIX 1. GLOSSARY……………..........................................…………………………………………… 184 APPENDIX 2. CONTACT DETAILS OF PUBLIC AUTHORITIES AND ENGINEERING AND POWER ENTERPRISES OF ST. PETERSBURG...............................................................................................................187 APPENDIX 3. LIST OF DOCUMENTS REGULATING ACTIVITIES OF PUBLIC AGENCIES IN ST. PETERSBURG………..………………...................................................................................................................…...195 APPENDIX 4. BUSINESS CENTRES OF ST. PETERSBURG: LOCATIONS AND CONTACT…...........….. 197 AUTHORS...............………….....................…………………………………………………………………..... 200

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INTRODUCTION St. Petersburg is the second largest economic, transport, scientific, cultural and tourist centre of Russia. 4.6 mln. citizens live here, the largest industrial enterprises are situated in the city, about 3.3% of gross national product of Russian Federation are produced in it, there are a lot of objects of historical and cultural heritage of global importance, which are highly attractive for tourists.

20% of total import and export freight transportation volume of the country passes through St. Petersburg, including 52% of imported goods, brought to Russia by maritime transport.

St. Petersburg is one of Russian leaders in the field of economic growth, the city created highly attractive investment conditions. It resulted in equity investments in the amount of USD 12.6 bn in the year 2007, of which USD 6.3 bn were foreign investment, foreign trade turnover achieved USD 38.5 bn. The largest countries, which are trade partners of St. Petersburg, are China, Germany, Finland, USA, Netherlands, Italy.

Major international companies have placed their facilities in St. Petersburg, such as Coca-Cola, Pepsi, Gillette, Wrigley, Electrolux, American Tobacco, Bosch und Siemens Hausgeräte, Toyota, etc. There are Philip Morris Izhora factory and a Ford assembly facility in the suburban zone of St. Petersburg. In the nearest future there are a number of major investment projects to be implemented including construction of factories by world automobile industry giants such as «Nissan», «General Motors», «Suzuki» and «Hyundai».

In March 2008 «Standard & Poor‘s» international rating agency upgraded the long-term credit rating of St. Petersburg in foreign and national currency from «ВВВ-» to «ВВВ», the forecast being evaluated as «stable»1.

The aforesaid is an investment class rating. According to the data furnished by «Fitch Ratings» international rating agency long-term credit rating of St. Petersburg in foreign and national currency also ranks among the same investment category (ВВВ, forecast «positive»)2.

However, investors look not only at overall indicators of St. Petersburg’s investment potential; they need to know the specific investment conditions in the city. The revised eighth edition of the guide How to Invest in St. Petersburg is intended to give would-be investors an idea of the St. Petersburg investment activities specificity.

The volume includes not only the legal aspect of investment activity in St. Petersburg and shows the real measures taken to ensure high return on private investments in the city’s economy but, most importantly, outlines in detail the specific procedures followed to pursue the investment process and interact with St. Petersburg Government agencies. With such a reference guide investors will know not only the laws protecting their rights and revenue, but also how to navigate Government channels to achieve their goals most quickly.

1 http://www.standardandpoors.ru 2 http://www.fitchratings.ru/regional/finances/ratings/list/index.wbp 4

1. LEGAL REGULATION OF INVESTMENT ACTIVITIES The existing investment legislation represents a set of federal and regional legal acts, including: Federal laws: 1. The Federal Law «On investment activities in the RSFSR» (modified as of 10.01.2003) of 26.06.1991 №1488-1.

2. The Federal Law «On foreign investments in the Russian Federation» (modified as of 29.04.2008) of 09.07.1999 №160-FL. 3. The Federal Law «On investment activities in the Russian Federation in the form of capital investments» (modified as 24.07.2007) of 25.02.1999 №39-FL. Laws of St. Petersburg: 1. The Law of St. Petersburg «On procedure for providing real estate property of St. Petersburg for construction or renovation» (modified as 06.05.2008) of 17.06.2004 №282-43.

2. The Law of St. Petersburg «On state support of St. Petersburg to investments in residential construction» of 16.07.2001 №568-71.

3. The Law of St. Petersburg «On state support to investment activities on the territory of St. Petersburg» (as amended in accordance with Law of St. Petersburg dated 09.12.2003 T70; 676-101) dated 08.05.2001 T70; 348-46.

4. The Law of St. Petersburg «On tax benefits» (modified as of 16.07.2007) of 14.07.1995 №81-11.

5. The Law of St. Petersburg «On investment tax credit» (modified as of 20.07.2006) of 12.07.2002 №316-28.

6. Decree of the St. Petersburg Government «On providing state guarantees of St. Petersburg» of 17.08.2004, №1385.

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2. THE STATE SUPPORT TO INVESTMENT ACTIVITIES IN ST. PETERSBURG 2.1. TAX BENEFITS FOR INVESTMENT IN ACCORDANCE WITH THE FEDERAL LEGISLATION Besides tax benefits provided to investors through local St. Petersburg and the federal legislation defines common tax benefits for persons performing valid investments on the whole territory of the Russian Federation.

1. Value added tax In accordance with sub-clause 16, clause 2, article 149, TC of RF1 sales of works in Russian Federation, performed during and as a part of socioeconomic target programs (projects) for housing construction for servicemen, including: - construction of social amenities and related infrastructure; - creation, construction, and maintenance of centers for professional retraining of servicemen, retired servicemen, and their families.

The above activities are not subject to tax (exempt from tax) provided they are financed only and directly via loans or credits, provided by international organizations and (or) foreign government, foreign organizations or private individuals under intergovernmental and international agreements signed on behalf of the government of Russian Federation by authorized public authorities.

In accordance with sub-clause 16, clause 3, article 149 of the TC of RF, tax exemptions are applied on the territory of the Russian Federation to scientific and experimental research and work at the expense of the budget funds, as well as funds of the Russian Fund for Fundamental research, the Russian Fund for Technological Development, and non-budgetary funds of ministries, institutions, and associations created for these purposes in accordance with Russian legislation; scientific and experimental research performed by scientific and educational institutions on the basis of economic agreements.

In accordance with the TC of RF, article 150, Clause 7, importation into the customs territory of the Russian Federation of the technological equipment, accessories and spare parts is tax-exempt, if imported as a contribution of the shared capital of a company2.

In accordance with the TC of RF, article 149, Clause 2, Sub-Clause 15, the exemption from Value added Tax is applied to repairs and renovations, conservation and restoration work performed in the course of restoring historical and cultural monuments, protected by the state, and religious buildings and structures used by religious institutions (excluding archaeological work and digging in zones where historical and cultural monuments or religious buildings are situated; construction work for the recreation of historical and cultural monuments or religious buildings which have been completely lost; work manufacturing materials for restoration, conservation constructions; activities on quality control).

In accordance with the TC of RF, article 149, Clause 6, the exemption from value added tax is applied to the activities, in cases when the taxpayer performing these activities has licenses for these activities in accordance with the legislation of the Russian Federation.

2. Profit tax While prior to 2002, there were certain benefits on profit tax (federal tax), at present, in accordance with the TC of RF, Chapter 25, no benefits are provisioned however, there are certain expenses of an investment nature which can be accounted with expenses for the purposes of the taxation of profits In this way, investments are encouraged by the tax system.

Among such expenses, one can list expenses for exploration for natural resources, that is expenses of the taxpayer for geological exploration of natural resources, their survey, and preparatory work (TC of RF, article 261).

Among the expenses of an investment nature one can also list the expenses for Scientific and experimental research (TC of RF, article 262).

Taxpayers expenses for Scientific and experimental research pertaining to creation of new or improved manufactured products (commodities, works, and services), in particular the expenses on inventions are evenly included in other expenditure during one year provided the use of the said research and developments in production and/or commodities sale (works implementation, rendering of services).

1 TC of RF is Tax Code of Russian Federation 2 See the Decree of the State Customs Committee of the Russian Federation «On approval of the Instruction on the procedure of applying value added tax to goods imported into the territory of the Russian Federation by the customs authorities of the Russian Federation» (modified as of 29.12.2006) of 7.02.2001 №131.

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Expenses for Scientific and experimental research carried out with the aim of developing new or perfecting current technology, the development of new types of natural resources or materials which do not achieve successful results, also those that belong to the inclusion of other expenses uniformly during the course of one year, at the rate of actual expenses, within the provisions of the TC of RF. Tax payer expenses for Scientific and experimental research, carried out in the form of deductions for the development of the Russian Fund for Technological Development, and also any branches and inter-branch funds for the financing of Scientific and experimental research provided by Russian legislation «Concerning Science and State Scientific and Technological Policy», acknowledged for the purpose of taxation in the scope of 1,5% of the gross income of the tax payer.

With the aim of stimulating investment activity of organizations point 1.1 of the article 259 of TC of RF established that from the 01.01.2006, the taxpayer has the right to include in expenses of the financial (taxable) period, expenses for capital investments in the scope of no more than 10% of the initial value of fixed assets(with the exclusion of fixed assets received free of charge) and (or) expenses sustained in the event of additional setting up, equipping, modernization, technical re-equipment, partial liquidation of the initial resources, the sum of which is defined in accordance with the TC of RF, article 257.

In this manner the «Investment Incentive» has been introduced, permitting organizations to include in their current expenses a part of their capital investment, reducing by that amount the amortization deduction and speeding up the tempo for covering costs on acquiring the initial finance and assets.

3. Corporate property tax In accordance with the Tax Code of the Russian Federation, article 381, the tax exemption on business property tax is applied to, among others: - organizations, whose main activity is the manufacture of pharmaceuticals - with regard to the property used for manufacturing of veterinary immune-biological medications used for the prevention of epidemics and epidemic animal diseases; - organizations - with regard to railroads in general use, federal highways is general use, main pipelines, power supply lines, as well as the constructions which are an irrevocable part of the above-mentioned objects The list of property relating to the above-mentioned objects is approved by the government of the Russian Federation; - the property of special prosthetic and orthopedic clinics; - the property of the boards of lawyers, law offices and legal aid offices.

4. Special Economic Zones According to the Federal law from 22.07.2005, № 116-FL «Concerning Special Economic Zones in the Russian Federation» a regime was established for the establishment, functioning and liquidation of special economic zones on the territory of the Russian Federation a Special Economic Zone, having been defined by the government of the Russian Federation is a part of Russian territory on which a special regime operates to enable entrepreneurial activities.

The taxation of foreign nationals in SEZ (Special Economic Zones) occurs in accordance with the legislation of the Russian Federation concerning taxes and levies In connection with the adoption of the Federal law from 22.07.2005 №116-FL in the TC of RF, to which changes were introduced by the Federal law from 22.07.2005 №117-FL, coming into force from 01.01.2006.

Special Economic Zones fall within a customs free tax regime, which enables foreign goods to imported and used within the boundaries of the Special Economic Zone without the payment of tax duties and VAT, while Russian goods are exported in accordance with the customs regime of exports, with the payment of excises and without the payment of export custom taxes With the importation of Russian goods falling within the customs regime of the free customs zone for the remaining part of the customs territory of the Russian Federation, for individuals who are not residents of any Special Economic Zone, the basis for taxation is defined as the sum of the tax duties of those goods liable to the payment of tax customs, excises (for those items which are liable to excise duties) (Tax Code of the Russian Federation, Chapter 160; article 1 Point 2 of the Federal Law from the 22.07.2005 №117-FL). With the sale of goods falling under the duty free zone, VAT is taxed at a rate of 0% (article 1 point 3) of the Federal Law from 22.07.2005, №117-FL).

With the importation of goods falling under excise taxes and with those good coming into regions of the free customs regime, except excisable goods imported into the special port economic zone, the excise duties are to be paid in full. When excisable goods are placed under the free customs zone regime of a special port economic zone excise duty shall not be payable (Russian Federation Tax Code, Article 185, Item 1, Subitem 3). With the exportation of goods which are excisable, if they should be located within a customs free regime, the excise duties are not paid, in 7

accordance with the Tax Code of the Russian Federation, article 184, or the sum paid in excise duty is returned by the taxation branches of the Russian Federation, in the regime established by the Tax Code (article 1 Point 5 б of the Federal Law from 22.07.2005, №117-FL).

A discount regime exists for income tax of organizations within Special Economic Zones: 1. taxpayers - organizations, possessing the status of being resident of an industrial-manufacturing Special Economic Zone, has the right of terms for its own starting finances for an established norm of amortization, to take a special coefficient but no more than 2; 2. expenses on Scientific and experimental research (including those which do not achieve a positive result), conducted by the taxpayers - organizations, registered and operating on the territories of Special Economic Zones, established in accordance with the legislation of the Russian Federation, fled within the same financial (taxation) period in which they took place, in the size of the actual expenditure; 3. for special economic zone resident entities Russian Federation federal laws may specify a reduced rate of income tax to be collected to the budget of the relevant subject of the Russian Federation. The benefits in question are applicable solely to income derived as a result of business activities within the special economic zones territory and may be granted only to entities that maintain separate accounting of profits and expenditures related to business activities within the special economic zone territory and outside it. All that taken into consideration, the aforesaid tax rate may not be less then 13.5 per cent under any circumstances (Russian Federation Tax Code, Article 284).

For taxpayers - organizations of personal entrepreneurs possessing the status of a resident of a technical-promotional Special Economic Zone, and payers of personal income tax, working on the territory of the Special Economic Zone pay the following rate of a single social tax: - at the tax rate for each individual with an annual income of up to 280 000 rubles - 14 %; - from 280 001 rubles up to 600 000 rubles - 39 200 rubles + 5,6 % from the remaining sum above 280 000 rubles; - higher than 600 000 rubles - 57 120 rubles + 2,0 % from the remaining sum above 600 000 rubles.

The sum of the single social tax is included in the Federal budget.

Article 381 of the TC of RF frees organizations from the property tax with respect to properties has accounted on the balance of organization- resident of the Special Economic Zone, which was created or purchased for the purpose of conducting of activity on the territory of Special Economic Zone, used within the special economic zone territory within the framework of the special economic zone establishment agreement and having been situated on the territory of given Special Economic Zone for a period of 5 years since the moment of the property being included on the organizations account.

Organizations residents of Special Economic Zone are freed from payment of land tax for the land, situated on the territory of Special Economic Zone for a period of 5 years, since the moment of receiving the right of ownership in each plot of land, (TC of RF, article 395).

Personal income in the form of investment income amount used for purchase (construction) of residential properties by participants of the savings and mortgage system designed to provide housing for servicemen in accordance with Russian Federation Federal Law № 117-FL dated 20.08.2004 «On savings and mortgage system designed to provide housing for servicemen» is not subject to tax.

No other direct benefits to encourage investment activities are provided for in other taxes for businesses.

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2.2. CUSTOMS BENEFITS OF INVESTMENT NATURE In accordance with the customs and the investment legislation, the customs benefits are provided exclusively in accordance with the Law of the Russian Federation «On customs rates and fees» of 21.05.1993 № 5003-1 and Part 2 of the Tax Code of the Russian Federation at the same time, in accordance with article 34 of the Law of the Russian Federation «On customs rates and fees», the procedure of providing the rate preferences, implied by the Law, is defined by the government of the Russian Federation. Thus, application of all types of rate preferences specified by articles 35, 36, 37 of the above-mentioned Law is made only when there is a corresponding resolution of the government of the Russian Federation.

The exemption from value added tax with regard to the goods imported into the customs territory of the Russian Federation is applied in accordance with article 150 of the Tax Code of the Russian Federation. This article is an outline and, as a rule, requires other by-laws, such as decrees of the Russian government.

The excise tax unit is considered to be an instance of importing excisable goods to the Russian Federation customs territory. Under Article 183 of the Russian Federation Tax Code import of excisable goods to the Russian Federation customs territory shall not be subject to excise tax if the excisable goods in question have been abandoned in favour of the state and are intended to be appropriated as state and/or municipal property or accommodated within the port special economic zone. Import of excisable goods to the Russian Federation customs territory is subject to excise tax depending on the customs regime selected in accordance with the provisions of the Russian Federation Customs Code and Article 185 of the Russian Federation Tax Code.

Rate preferences and benefits In accordance with article 35 of the Law of the Russian Federation «On customs rates and fees» (modified as of 27.07.2006) of 21.03.1993 №5003-I the following items are tax exempt: - equipment, including machinery, mechanisms, as well as materials that are the part of the delivery set of the corresponding equipment, and components (excluding excisable ones), imported to the territory of the Russian Federation at the expense of credits provided by foreign countries and international financial institutions under the international agreements of the Russian Federation (article 35, paragraph «n» of the Law); - purchased with the target funds of the federal budget the equipment for production of baby food (components and spare parts to it), if similar equipment is not manufactured in the Russian Federation, according to the list approved by the government of the Russian Federation, as well as the equipment for production of child nutrition (components and spare parts to it), purchased at the expense of the foreign credits provided to Russia by foreign countries or governments of foreign states. The above-mentioned benefit is applied to the equipment for production of baby food (components and spare parts to it), imported (being imported) in to the customs territory of the Russian Federation to implement the federal target program «Development of the baby food industry» of the Presidential program «Children of Russia» (clause «п», art 35 of the Law).

In accordance with article 37 of the Law of the Russian Federation «On customs rates in the course of implementation of the commercial policy of the Russian Federation within its customs territory» it is possible to provide rate preferences represented by reimbursement of the earlier paid customs duty, reduction of the duty rate and in exclusive cases exemption from the duty which applies to several goods: 1. Goods imported in to the customs territory of the Russian Federation and (or) exported from it temporarily under the customs control in accordance with the corresponding customs regimes specified by the Customs Code of the Russian Federation The following customs regimes correspond to the above given definition: re-import, transit, processing on the customs territory, processing under the customs control, temporary import (export), processing outside the customs territory, re-export. The equipment can also be imported under the above-mentioned regimes.

For instance, the customs regime of the temporary import (export) implies provision of customs benefits, namely complete or partial exemption from payment of customs taxes and duties. The cases of complete exemption from payment of customs duties for the temporary imported goods are defined by the government of the Russian Federation at present, the regulations of the government of the Russian Federation of 16.08.2000 №599 «On the list of goods temporary imported (exported) with complete exemption from payment of customs taxes and duties» (modified as of 11.03.2003) are in effect.

2. Goods exported within the complex deliveries for construction of investment collaboration objects abroad in accordance with the inter-governmental agreement, which Russia has signed.

3. Goods imported in to the customs territory of the Russian Federation as contribution to the chartered capital of the businesses with foreign investments and foreign businesses, as well as separate own-made goods exported by these businesses in cases provided for by the agreements on allotment of products signed by the government of the Russian Federation or government bodies authorized by it in accordance with the legislation of the Russian Federa9

tion, or during the repayment period of foreign investments according to the procedure determined by the Supreme Council of the Russian Federation.

Procedure of provision customs duty benefit to businesses with foreign investments is specified by the regulations of the government of the Russian Federation of 23.07.1996 № 883 «On benefits for import tax duty and value added tax for goods imported by foreign investors as investments into the chartered (share) capital of the businesses with foreign investments».

Exemption from customs duties for goods imported by foreign investors as investments into he chartered (share) capital of the businesses with foreign investments is provided by the customs authority making the customs clearance of the goods if all of the following requirements are met: - conformity to the nature of goods-the goods are not excisable and are the main production asset Established in corresponding normative legal acts and methodical directions of Ministry of finance of RF including order under Federal law «On business accounting» (of Ministry of finance of 30.05.2001 № 26н) etc., and in all-Russian Classification registry of Fixed assets ОК 013-94, established by resolution of Gosstandard (Public Standard authority) of Russia of 26.12.1994 № 359 (with amendments and additions); - conformity to the information in the constituent documents-the goods are imported within the terms fixed by the constituent documents for building up the chartered (share) capital, in terms of value and amount are not more than the amount of investments into the chartered (share) capital by the foreign investor, specified by the constituent documents, and are directly used in the activities (manufacturing of goods, provision of services) which specified by the constituent documents; Moreover p. 2 of the resolution of the government of Russian Federation of 23.07.1996 №883 establishes, that in case of sale of goods, which were imported as contribution of foreign investor in the authorized stock capital of organization with foreign investments, custom duties payable on date of conditional issue are paid in accordance with customs legislation of RF. Main guarantees of rights of foreign investors in investments and revenue, received from them, conditions of entrepreneurial activity of foreign investors on the territory of Russian Federation, the terms «foreign investments», «foreign investor» are set in the Federal Law of Russian Federation of 09.07.1999 №160-FL «On foreign investments in Russian Federation».

Tax benefits In accordance with article 150 of the Tax Code of the Russian Federation, import of the technological equipment, accessories and spare parts imported as a contribution into the chartered (share) capital of companies into the customs territory of the Russian Federation is tax exempt.

In case of import of goods into the customs territory of the Russian Federation, the taxation with the value added tax is made in accordance with the chosen tax regime according to the Customs Code of the Russian Federation and article 151 of the Tax Code of the Russian Federation.

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2.3. THE SUPPORT OF INVESTMENT ACTIVITIES IN ACCORDANCE WITH THE LEGISLATION OF ST. PETERSBURG The local legislation, which defines legal practice regulating investment activities, includes the Law of St. Petersburg «On state support of investment activities on the territory of St. Petersburg» (as amended in accordance with Law of St. Petersburg dated 09.12.2003 T70; 676-101) dated 8.05.2001 T70; 348-46. The investment policy of St. Petersburg is based on the following principles: - good will in relationship with investors; - presumption of good faith of investors; - balance of private and public interests; - availability of the information required for investment activities to all investors; - clear and simple investment process in St. Petersburg; - equal rights for all investors and unified public procedures; - objective character and common economic sense of decisions taken; - invariability of decisions taken; - mutual responsibility of St. Petersburg and investors.

In St. Petersburg, the legislation implies different forms of the state support for investment activities.

1. Provision of state warrantees of St. Petersburg.

In accordance with the Decree of St. Petersburg Government of 17.08.2004 №1385 «On provision of state guarantees of St. Petersburg» state warrantees of St. Petersburg are provided to legal entities irrespective of the pattern of ownership in order to provide fulfillment of their obligations to third parties in the course of implementing investment projects that answer the purposes of social and economic development of St. Petersburg.

The share of borrowed assets, which the legal entity takes under the state warranty in the total volume of investment raised for implementation of the investment project should not exceed 50%. The calculated repayment period of the total investment volume of the investment project should be no more than 5 years since the beginning of the investment activity. The borrowing rate of the credit, which the legal entity takes under the state warrantee should correspond to the borrowing rate of St. Petersburg on domestic and external markets for the similar period. The volume of obligations of the guarantor of the state warrantee provided to the creditor (a Russian resident) in order to fulfill credit obligations of the legal entity implementing the investment project, is limited to the principal amount of debt under the credit. In case if the creditor is a foreign resident, the volume of obligations can include all obligations arising from the credit agreement.

The effective period of the state warranty is determined by the date of fulfillment of obligations for which the said warranty was provided. The amount of payment for state warranty of St. Petersburg is defined by the Law of St. Petersburg on the budget of St. Petersburg for the corresponding financial year.

Selection of investment projects to be implemented with the help of assets borrowed under the state warranty is made by the Commission on providing budget support by means of state warranty of St. Petersburg in implementation of investment projects.

Legal entities irrespective of the pattern of ownership (hereinafter referred to as contenders) can apply for state warranty under the following mandatory conditions: - practical experience of the contender at least three years following its state registration; - no delinquencies or debt on credits from the federal budget and the budget of St. Petersburg provided earlier, as well as those on interests, and on accrued penalties; - no delinquencies or debt on tax and duty payments to all budgets and non-budgetary funds based on results of the previous financial year and for the last reporting period; - no delinquencies or debt on loans and credits; - no delinquencies or debt on accounts payable and losses based on the results of the previous financial year and for the last reporting period prior to the date of submitting the application for the budget support in the form of the state warranty; - no delay in payment or deferred payments of taxes and duties to all budgets, non-budgetary funds; as well as of tax and budget credits; - availability of at least 50% of own funds within the total volume of investment required for implementation of the investment project; - availability of other provisions besides the state warranty for return of credit resources (property or securities) The appraisal of the property is made at the expense of institutions willing to obtain state warranty of St. Petersburg.

Legal entities undergoing restructuring, liquidation, or showing any signs of bankruptcy as specified by the fed11

eral legislation are not eligible for the state warranty.

In case of the budget support in the form of the state warranty, the agreement on provision of the state warranty of St. Petersburg should contain the following mandatory conditions: - additional agreement with banks providing settlement and cash services on the right of the guarantor for nonacceptance deduction of funds from the account of the warranty’s recipient in cases provided by the agreement on provision of the state warranty of St. Petersburg; - quarterly provision of the report on implementation of the investment project for which the credit under the state warranty was issued, to the Committee for Economic Development, Industrial Policy and Commerce (with a copy to the guarantor); - quarterly provision of the balance sheets specified by the acting legislation in full volume with the note of tax inspection to the guarantor (a copy to the Committee for Economic Development, Industrial Policy and Commerce), as well as other documents confirming that the credit resources were used for right purpose; - provision to the guarantor of the liquid security for reimbursement of the amounts paid by the latter to fulfill the state warranty to third parties, in terms and on conditions specified by the agreement on provision of the state warranty of St. Petersburg (collateral of property, including issued bonds, shares).

Given all other conditions are equal, the priority right for obtaining the state warranty is offered to contenders, with St. Petersburg being the founder or the owner, as well as those with - the maximums share of own funds in the total volume of investments; - the minimum duration of the requested state warranty; - the minimum repayment period.

Procedure of acceptance and review of documents, selection of projects and preparing the agreement on provision of the state warranty is presented in Section 4.1. of the present reference book.

Amendments and modifications are to be introduced to provisions of Resolution of the Government of St. Petersburg № 1385 dated 17.08. 2004 «On Administration of St. Petersburg Government Guarantees» with due respect for the requirements specified in Articles. 115_2, 117 of the Budget Code of the Russian Federation and modifications specified in Article 42 of Law of St. Petersburg № 371-77 dated 20.07.2007 «On St. Petersburg Budgeting Process».

2. Provision of tax benefits to the investors in the amounts entered in the budget of St. Petersburg in accordance with the acting legislation The list of tax benefits is specified by the Law of St. Petersburg «On tax benefits» (modified as of 16.07.2007) of 14.07.1995 №81-11.

Under Article 5-1 of the Law of St. Petersburg «On tax benefits» residents of the special economic zone established within the territory of St. Petersburg are granted exemption from transport tax for a term of five years after motor vehicle registration in accordance with the procedure established by the acting Russian Federation legislation.

The exemption is not applicable to water- and airborne crafts.

Under Item 11 Article 11-1 of the Law of St. Petersburg «On tax benefits» exemption from corporate property tax is granted to entities involved in business activities listed in Section D «Manufacturing activities» of the AllRussian Classifier of Economic Activities provided the following conditions are complied with the entities applying for tax exemption are payers of corporate property tax collected to the budget of St. Petersburg and have in the course of any three consecutive years after 01.01.2007 commissioned within the St. Petersburg territory and registered in accounting record books fixed assets3 to a total amount of no less than three billion Russian Federation roubles including those appropriated as contribution to the chartered capital (except when received on a gratis basis or under leasing agreements). The tax exemption is granted with regard to the depreciated book value of the fixed assets above-mentioned for a term of five years following the calendar year when the exemption granting requirements came to be complied with. A taxpayer’s title to tax exemption originates on January 1 of the calendar year immediately following the one when the total sum of its investment in fixed assets4 came to amount to at least three 3 Including fixed assets located within the territory of St. Petersburg that have undergone adaptation and/or renovation, among them - assets appropriated as contribution to the chartered capital (except when received on a gratis basis or under leasing agreements), previously never in service/operation within the territory of St. Petersburg, intended to be employed in the production process and/or for the entity’s production-related administrative needs, commissioned within the St. Petersburg territory and duly registered in accounting record books.

4 For investment amount calculation fixed assets entered in the taxpayer’s record books including those appropriated as contribution to the chartered capital (except when received on a gratis basis or under leasing agreements) and commissioned within the St. Petersburg territory during any three consecutive years are to be accounted for at their historical value as per book-keeping records; fixed assets to have undergone adaptation and/or renovation are accounted for at the increment of their historical value as per bookkeeping records. Investment amount is decreased by the depreciated value of fixed assets, registered in the taxpayer’s accounting record books and expropriated (retired) during the period specified after service/operation within the territory of St. Petersburg. A 12

billion Russian Federation roubles.

The investment calculation to be submitted by a taxpayer to the taxing authority it has been registered by for the first accounting period during which the right to tax benefit5 was exercised by the taxpayer as specified in Item 3 Article 11-5-1 thereof shall contain the following data: - fixed asset name, historical value and date of commissioning; - documents supporting formation of fixed asset historical value (with the exception of in-house created fixed assets); - fixed asset name, deprecated value and date of expropriation (retirement).

In case fixed assets come to be expropriated or handed over to the taxpayer’s subsidiaries or any other subdivisions devoid of entity status and located outside the territory of St. Petersburg prior to expiration of a five years’ period after the moment of the tax benefit right origin the amount of corporate property tax to have been collected to the budget of St. Petersburg but for the tax benefit granted shall be refunded to the budget of St. Petersburg in full (for the whole of the tax benefit usage period) within three months after the moment of expropriation. Relevant amendments and modifications shall be introduced to the tax statements for the periods in question in accordance with the procedure specified by the acting taxation and revenue legislation of the Russian Federation.

The taxpayer shall formally cease to be entitled to tax benefit on January 1 of the calendar year immediately following the calendar year during which the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg comes to be less than the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg for the calendar year immediately preceding the one when the benefit application commenced. When calculating the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg the calendar year immediately preceding the one when the benefit application commenced one is not to take into consideration the amount of corporate property tax (including prepayments) to be collected (due and payable) to the budget of St. Petersburg related to the fixed asset items specified in the Article in question.

The rule is not applicable if after expropriation of fixed assets the aggregate value of the fixed assets covered by the tax benefit is still no less than three billion Russian Federation roubles.

For resident entities of the special economic zone established within the territory of St. Petersburg Article 11-3 of the law of St. Petersburg «On tax benefits» specifies a 13.5% rate of corporate profit income tax to be collected to the budget of St. Petersburg related to their activities within the special economic zone territory for the whole of the special economic zone existence period provided the applicant entities maintain separate accounting of profits and expenditures related to business activities within the special economic zone territory and outside it.

The rate for income tax for legal entities is stated in articles 11-4 of the law of the St. Petersburg City Government «On Tax benefits» these consist of the following: - 15.5%, if they carry out investments of a sum from 150 million to 300 million rubles; - 13.5%, if they carry out investments of a sum from 300 million rubles (inclusive) and above.

For taxation purposes investment is understood to be purchase or appropriation as contribution to the chartered capital (otherwise than under leasing agreements) and commissioning of fixed assets previously never in service/ operation within the territory of St. Petersburg as well as fixed asset construction (including in-house), adaptation and renovation.

The right for a reduction in the rate of income tax is available for organizations meeting the following requirements: - are tax payers for the income of organization, the sum of which is included into the St. Petersburg City budget; - performing in the course of any calendar year, beginning from the start of 01.01.2005, investments for manufacturing purposes (with the goal of actual production of goods (labour, services) on the territory of St. Petersburg City, which are designated on completion for third parties in the aim of making an income).

For investment amount calculation fixed assets entered in the taxpayer’s record books including those appropriated as contribution to the chartered capital (except when received on a gratis basis or under leasing agreements) and commissioned within the St. Petersburg territory during any three consecutive years are to be accounted for at their historical value as per book-keeping records; fixed assets to have undergone adaptation and/or renovation are accounted for at the increment of their historical value as per book-keeping records. Investment amount is decreased specific asset is to participate in the calculation in question but once.

5 For investment amount calculation fixed assets entered in the taxpayer’s record books including those appropriated as contribution to the chartered capital (except when received on a gratis basis or under leasing agreements) and commissioned within the St. Petersburg territory during any three consecutive years are to be accounted for at their historical value as per book-keeping records; fixed assets to have undergone adaptation and/or renovation are accounted for at the increment of their historical value as per bookkeeping records. Investment amount is decreased by the depreciated value of fixed assets, registered in the taxpayer’s accounting record books and expropriated (retired) during the period specified after service/operation within the territory of St. Petersburg. A specific asset is to participate in the calculation in question but once.

13

by the depreciated value of fixed assets, registered in the taxpayer’s accounting record books and expropriated (retired) during the period specified after service/operation within the territory of St. Petersburg. Thus the object of the permanent assets can be included in the specified calculation only once.

The right to apply for a reduced income tax rate for organizations occurs from the first date of the first month of the calendar year following that, when the sum of investments of the permanent assets will consist of no less than 150 million rubles.

The right to apply for lowered tax rate is given to the tax bearer for a period consisting of three tax periods.

In case of alienation of main assets, mentioned in p. 1 article 11-4, and in case of their transfer to own branches and other separate departments, which do not have a status of legal person and are situated beyond the territory of St. Petersburg, until expiry of 3 years from the moment of beginning of the right for benefit the amount of corporate profit tax shall be calculated in following way: - if alienation results in becoming of total price of fixed assets, mentioned in p 1 article 11-4, less than 300 mln. rubles, but more than 150 mln. rubles, taxpayer shall recalculate the amount of corporate profit tax to be paid to the budget of St. Petersburg, for all the period of benefit effect on the base of tax rate of 15.5 per cent; - if alienation results in becoming of total price of fixed assets, mentioned in p 1 article 11-4, less than 150 mln. rubles, taxpayer shall recalculate the amount of corporate profit tax to be paid to the budget of St. Petersburg, for all the period of benefit effect on the base of tax rate of 17.5 per cent.

Amount of corporate profit tax, not paid to the budget of St. Petersburg in connection with provision of the benefit, shall be paid to the budget of St. Petersburg within 3 months from the day of alienation (retirement) of fixed assets objects, mentioned in p. 1 article 11-4. Introduction of amendments and additions into tax returns for corresponding reporting (tax) periods is performed under procedure, established by laws of Russian Federation on taxes and duties.

The taxpayer shall formally cease to be entitled to payment of corporate profit tax at a reduced rate on January 1 of the calendar year immediately following the calendar year during which the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg comes to be less than the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg for the calendar year immediately preceding the one when application of the reduced rate of corporate profit tax commenced. When calculating the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg the calendar year immediately preceding the one when application of the reduced rate of corporate profit tax commenced one is not to take into consideration the amount of corporate profit tax (including prepayments) to be collected (due and payable) to the budget of St. Petersburg related to the fixed asset items specified in the Article in question.

According to article 11-5 of the Law of St. Petersburg «On tax benefits» from 14.07.1995 №81-11 the income tax rate for organizations, whose sum is included in the budget of St. Petersburg, are established at a rate of 13.5 % for the legal entities answering the following requirements: - are payers of income tax for the organizations, the sum of which is enlisted in the budget of St. Petersburg; - carry out during any calendar year, from 01.01.2005, an investment in the permanent infrastructure for the industrial purposes (with the goal of actual manufacturing of the goods (works, services) on the territory of St. Petersburg which are intended for realization for third parties with the aim of making a profit) a minimum of 50 million rubles; - incomes which are taken into account for the purposes of income tax, not less than 80 % the proceeds come from the sale of the goods, works, services (made according to the codes of the Russian Classifications for Production ОК 005-93) manufactured for the following kinds of industry: manufacture of computers; manufacture of optical fiber cables; manufacture of electron-optical converters, amplifiers of the image, photo-electronic devices; manufacture of high frequency devices; manufacture of semi-conductor elements, devices; manufacture of transmitting equipment for radio telephone, radiotelegraphic communications, broadcasting or TVs; manufacture of the medical diagnostic and therapeutic equipment, the surgical equipment; manufacture of devices on liquid crystals; manufacture of lasers; development of ready to use software: development of the system software, system tools, applied programs.

The right to apply for a lower income tax rate for organizations arises from the first day of the first month of the calendar year following the calendar year in which the sum of investments into permanent assets occurred, in accordance with articles 11-4, will make not less than 50 million rubles, and it is given for 3 tax periods.

In case of alienation of fixed assets and in case of their transfer to branches and other detached divisions not pos14

sessing the status of legal entities and located outside the territory of St. Petersburg, before the expiration of three years from the moment of occurrence of the right on reception of a benefit, taxpayer shall recalculate the sum of the income tax for the organizations, for all the time of benefit effect on the base of tax rate of 17.5 per cent.

The taxpayer shall formally cease to be entitled to payment of corporate profit tax at a reduced rate on January 1 of the calendar year immediately following the calendar year during which the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg comes to be less than the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg for the calendar year immediately preceding the one when application of the reduced rate of corporate profit tax commenced. When calculating the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg the calendar year immediately preceding the one when application of the reduced rate of corporate profit tax commenced one is not to take into consideration the amount of corporate profit tax (including prepayments) to be collected (due and payable) to the budget of St. Petersburg related to the fixed asset items specified in the Article in question.

This rule is not applied, if as a result of alienation of objects of the permanent infrastructure the total cost of objects on which the privilege is used is less than 50 million rubles.

Under Article 11-5-1 of Law of St. Petersburg «On tax benefits» №81-11 dated 14.07.1995 an entity shall be entitled to payment of corporate profit tax to be collected to the budget of St. Petersburg at a reduced rate of 13.5% only if complying with the following requirements: -the entity is a payer of corporate profit tax to be collected to the budget of St. Petersburg; - in the course of any three consecutive years after 01.01.2007 the entity commissioned within the St. Petersburg territory and registered in accounting record books fixed assets to the total amount of no less than three billion Russian Federation roubles.

- the entity is involved in business activities listed in Section D «Manufacturing activities» of the All-Russian Classifier of Economic Activities.

For investment amount calculation fixed assets entered in the taxpayer’s record books including those appropriated as contribution to the chartered capital (except when received on a gratis basis or under leasing agreements) and commissioned within the St. Petersburg territory during any three consecutive years are to be accounted for at their historical value as per book-keeping records; fixed assets to have undergone adaptation and/or renovation are accounted for at the increment of their historical value as per book-keeping records. Investment amount is decreased by the depreciated value of fixed assets, registered in the taxpayer’s accounting record books and expropriated (retired) during the period specified after service/operation within the territory of St. Petersburg. A specific asset is to participate in the calculation in question but once.

In accordance with the provisions of the Article in question a taxpayer’s title to payment of corporate profit tax at a reduced rate originates on January 1 of the calendar year immediately following the one when the total sum of investment in fixed assets came to amount to at least three billion Russian Federation roubles.

Under the Article in question the benefit of a reduced tax rate is given to a taxpayer for a term of five tax periods.

In case fixed assets come to be expropriated or handed over to the taxpayer’s subsidiaries or any other subdivisions devoid of entity status and located outside the territory of St. Petersburg prior to expiration of a five years’ period after the moment of the tax benefit right origin the taxpayer shall provide for recomputation and of the amount of corporate profit tax at a rate of 17.5% for the whole of the tax benefit usage period.

The taxpayer shall formally cease to be entitled to payment of corporate profit tax at a reduced rate on January 1 of the calendar year immediately following the calendar year during which the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg comes to be less than the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg for the calendar year immediately preceding the one when application of the reduced rate of corporate profit tax commenced. When calculating the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg the calendar year immediately preceding the one when application of the reduced rate of corporate profit tax commenced one is not to take into consideration the amount of corporate profit tax (including prepayments) to be collected (due and payable) to the budget of St. Petersburg related to the fixed asset items specified in the Article in question.

The rule is not applicable if after expropriation of fixed assets the aggregate value of the fixed assets covered by the tax benefit is still no less than three billion Russian Federation roubles.

According to article 11-6 of the Law of St. Petersburg «On tax benefits» from 14.07.1995 №81 -11 organizations paying property tax, the sum of which is included in the budget of St. Petersburg, and carried out since 01.01.2005, on the territory of St. Petersburg during any calendar year of an investment in the permanent infrastructure for industrial purposes (for the purposes of the manufacture of the goods (works, services) within the territory of St. 15

Petersburg which are intended for use of third parties with the aim of making a profit) a minimum of 150 million rubles, pay a property tax for organizations concerning the residual cost of the specified permanent infrastructure with a rate of 1.1 % during 3 tax periods following the period in which the benefit was granted.

The right for applying for a lowered property tax rate for organizations occurs from the first day of the first month of the calendar year following the calendar year in which the sum of the investments in the permanent infrastructure, defined according to point 3 of article 11-4 of the St. Petersburg City legislation «On tax benefits» from 14.07.1995 №81-11, consisting of no less than 150 million rubles.

Taxpayers present to the tax organs at a place of the tax account to report the fi rst accounting period in which the lowered rate of property tax for organizations is applied, the calculation of the sum of the investments, including: - the name, initial cost, date of commissioning of objects which form a part of the permanent assets; - the documents confirming formation of initial cost of the objects of the permanent assets (apart from those assets created in an economic way); - the name, residual cost and date of alienation of the permanent assets or infrastructure.

In case of alienation of objects receiving benefits associated with the permanent infrastructure and in case of their transfer to the branches and other detached divisions not having the status of a legal entity and located beyond the territory of St. Petersburg, before the expiration of three years from the moment of receiving the right of receiving a benefit, the sum of the property tax for organizations, not paid to the Saint-Petersburg City budget in connection with the receipt of a benefit for the specified objects, is subject to being paid to the St. Petersburg City budget within three months from the date of alienation in full for the entire period while receiving this benefit. Relevant amendments and modifications shall be introduced to the tax statements for the periods in question in accordance with the procedure specified by the acting taxation and revenue legislation of the Russian Federation The taxpayer shall formally cease to be entitled to payment of corporate property tax at a reduced rate on January 1 of the calendar year immediately following the calendar year during which the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg comes to be less than the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg for the calendar year immediately preceding the one when application of the reduced rate of corporate property tax commenced. When calculating the aggregate amount of taxes and dues (including prepayments) to be collected (due and payable) to the budget of St. Petersburg the calendar year immediately preceding the one when application of the reduced rate of corporate property tax commenced one is not to take into consideration the amount of corporate property tax (including prepayments) to be collected (due and payable) to the budget of St. Petersburg with regard to the fixed asset items specified in the Article in question.

The rule is not applicable if after expropriation of fixed assets the aggregate value of the fixed assets covered by the tax benefit is still no less than 150 million Russian Federation roubles.

3. Provision of the investment tax credit (deferred tax payment).

In terms of Article 66 Chapter 9 of the Russian Federation Tax Code investment tax credit is such a modification of the tax payment term that allows a taxpayer entity to reduce the amount of tax payments (within certain limits and on condition that the decision to the effect is reasonably substantiated) with the credit amount and interest accrued repaid later in installments.

Investment tax credit may be granted for reimbursement of corporate profit tax as well as regional and local taxes.

After adoption of Law of St. Petersburg №316-28 «On investment tax credit» dated 12.07.2002 (revised 20.07.2006) investment tax credit is also to be granted for reimbursement of corporate property tax.

The investment tax credit on property of business in the amounts payable to the budget of St. Petersburg can be provided to the applicant when at least one of the requirements is met: 1) during the period from 01.01.2002 to the last day of the accounting period immediately preceding the day of submitting an application for investment tax credit in tended for reimbursement of corporate property tax the applicant entity must implement an investment project providing for allocation of investment in procurement and/or upgrade of fixed and intangible assets required to support the manufacturing and servicing activities of the entity within the territory of St. Petersburg in an amount exceeding three billion Russian Federation roubles; 2) During effective term of contract on provision of investment tax credit for organization property tax, performance by organization of investment project providing for spending, aimed at financing of investments in fixed assets and intangible assets (including amounts of modernisation), used for manufacturing of goods (works, services) on the territory of St. Petersburg, in the amount more than 3 million rubles.

Investment project means feasibility study, volume and time of capital investment, including necessary design estimate, developed in accordance with laws of RF and standards (norms and rules), approved in established order, as well as description of practical measures of performing investments (business plan).

16

Mentioned ground for receiving investment tax credit for business property tax shall by documentarily confirmed by organization.

Investment tax credit for business property tax can be given both on one and several investment projects subject to fulfillment of following conditions: - availability of funds, provided for in budget of St. Petersburg for purposes of provision of investment tax credit for business property tax; - amount of investment tax credit, actually accrued in 1 financial year, can not exceed approved budget payments in accordance with с departmental structure of budget spendings of St. Petersburg for that financial year; - no bankrupt proceedings in concerning organization; - no debt of organization in taxes and duties, fees an penalties to all level budgets (excluding case, when amount of debt in taxes and duties to all level budgets does not exceed sum of value added tax, to be compensated (settled, returned) in accordance with existing laws of RF on taxes and duties) on the 1st day of submission by organization of declaration on provision of investment tax credit for business property tax.

Substantiation (business plan, technical and economic assessing one of grounds, provided for by the Law of St. Petersburg «On investment tax credit», can not be used for receiving of investment tax credit for business property tax on other grounds.

Investment tax credit for business property tax can be given for the period from 1 to 10 years.

Rights of organization, arising from the contract on provision of investment tax credit for business property tax can not be assigned to other person.

Term of investment tax credit for business property tax begins from the day of signing by parties of contract on provision of investment tax credit for business property tax. Sums of investment tax credit for business property tax and accrued interests shall be fully paid by the moment of expiry of contract on provision of investment tax credit for business property tax.

In case the applicant obtains the investment tax credit for the tax on property of the business, the interest for the investment tax credit is fixed upon the consent of the parties in the agreement on provision of the investment tax credit within the range between 1/8 and 1 of the refinancing rate of the Central bank of the Russian Federation.

Limit of funds for purpose of providing investment tax credits for business property tax, is established by Law of St. Petersburg on budget of St. Petersburg for corresponding financial year.

Priority in receiving investment tax credit is given organizations with investment projects, which provide for: - minimal time for return of investments; - maximum newly created work places counted per 1 ruble of investment tax credit provided; - maximum tax incomes of budget of St. Petersburg from performance of project counted per 1 ruble of investment tax credit provided.

In other equal conditions priority is given to organization with investment projects to the largest extend corresponding with conditions, provided for by p. 8 art 2 Law of St. Petersburg «On investment tax credit».

Under Article 66 Chapter 9 of the Russian Federation Tax Code an entity having been granted investment tax credit is entitled to reduce its relevant tax payments during the term while the investment tax credit remains in effect.

Reducing is made for each payment of tax, for which investment tax credit is provided, for each period under report until the sum, not paid by organization in result of all these reductions (accrued amount of credit), becomes equal to credit amount provided for by corresponding contract. Exact order of reducing of tax payments is defined by the signed contract on investment tax credit.

If organization signs more than one contract on investment tax credit, which are effective on the moment of payment of tax, accrued amount of credit is defined separately for each contract. Moreover increase in accrued sum of credit is made first of all concerning 1st contract by time of signing, on achieving by accrued amount of credit of size, provided for by mentioned contract, organization may increase accrued amount of credit under next credit.

The procedure of investment tax credit allocation to applicant entities is dwelt upon in Section 4.1. thereof.

4. Provision of benefits on real estate lease for purposes of investment activities.

Provision of lease benefits for land lots is regulated not only by the Law of St. Petersburg «On the state support of investment activities on the territory of St. Petersburg», but also by the Law of St. Petersburg «On procedure of provision of lease benefits for land lots in ownership of St. Petersburg» of 18.03.1997 №44-10. Under Item 2.5. of «Ground rent computation procedure» (hereinafter referred to as the «Procedure») approved by Resolution of Government of St. Petersburg №1561 «On ground rent computation procedures» dated 14.09.2004 (revised 12.10.2006/24.05.2006) Кс = 0.75 reduction factor is applicable to the rent rate calculated in accordance with the Procedure (territory functional usage codes: 10.1 – Construction of industrial and non-residential facilities, 10.2 – Construction of residential facilities Type 1, 10.3 - Construction of residential facilities Type 2) (hereinafter referred 17

to as the «Procedure») for land plots delivered for capital construction and renovation of real estate objects on investment conditions (for the period of design and survey work but under no conditions longer than twelve months) as well as for the period of pre-scheduled capital construction/renovation and land plots adjacent to them leased for accommodation of construction machinery and materials and other belongings used for capital construction and renovation of real estate objects on investment conditions (Item 2.5 of the Procedure).Thus factor Kc is applied only in the case of developing civil and construction work, Government architectural - building supervision of the St. Petersburg Committee for City Construction and Architecture given until the termination of construction activities and under conditions of the actual construction of the capital construction or reconstruction.

5. Provision of delays for payments and deferred payments for provision of real estate and its title on investment terms.

As an investment condition by granting objects of the investment located within the bounds of St. Petersburg, for construction and reconstruction, can be settled within the established regime for the transfer of financial resources by investors. In this case according to the legislation of the St. Petersburg City Government «On the regime for the transfer of financial resources by investors for contracts made according to the Law of St. Petersburg «On regime for granting items of real estate which is the property of St. Petersburg, for construction and reconstruction» from, 15.03.2005 №275 (modified as of 22.08.2006) payment of the specified resources is conducted at the choice of the investor in the order stipulated by points 1.3.1 or 1.3.2 resolution №275, if others are not established by acts of the Government of St. Petersburg. Transfer of financial resources by the investor is carried out: - in full in a months time from the moment of the conclusion of the investment contract or the contract of rent for the land plot on investment conditions or - quarterly, in equal shares paid not later than 10 days of the first month of each calendar quarter, during the period of planning and construction or reconstruction specified in the resolution of the St. Petersburg City Government about tendering in regards to the object of real estate or about granting of that object of real estate for a specially designated purpose. Thus the sum subject to transfer in the quarter during which payment is conducted, is paid with the inclusion of interest equal to the rate repayment of the Central Bank of the Russian Federation as of the date of signature for the contract, for the period from the date of signing of the contract up to the maturity date established in the contract. In case of delivery of real estate objects owned publicly by the city of St. Petersburg for construction or renovation by way of tender, at the latter’s conclusion the sum is being defined to be transferred by the investor to the budget of St. Petersburg, the cash assets sum is calculated without accrual of interest.

6. Participation of St. Petersburg in development, expert evaluation and implementation of the municipal investment and target programs, as well as separate investment projects. The procedure of participation of St. Petersburg in the development of plans in the list of constructions and items of St. Petersburg for the needs of the Federal Government and also I in the Addressed Investment Program for St. Petersburg is described in Section 4.1. of the present Reference book.

18

19

1.2.1. Investment tax credit

1.2. Investment tax credit 1. Russian Federation Tax Code (Part One). Law of the Russian Federation № 147-FL dated 31.07.1998 (revised UFNS Russia for 17.03.2007).

St. Petersburg 2. On approval of the procedure for arranging activities related to administration of deferral, extension, invest- KF ment tax credit intended for discharge of taxes and dues. Order of the Russian Federation Federal Tax Service № САЭ-3-19/798@ dated 21.12.2006 (revised 21.01.2008) 3. On approval of the procedure for consideration of applications for deferral, extension, investment tax credit intended for discharge of taxes and dues by the Russian Federation Federal Tax Service. Order of the Russian Federation Federal Tax Service № САЭ-3-19/654@ dated 04.10.2006.

4. On approval of the investment tax credit agreement forms. Order of the Russian Federation Federal Tax Service № САЭ-3-19/622@ dated 29.11.2005.

ZS, KF, KERPPT Brunch Committees St. Petersburg district administrations

1.1.1. Federal budget. To submit applications, to support them in order to obtain financing from a federal target investment program, federal investment fund.

To control implementation of projects financed from the federal budget

1.1.2. Budget of St. Petersburg. Target investment programme elaboration and implementation procedure (modified as of 28.12.2007). Approved Development and implementa- by the Resolution of the St. Petersburg Government of 06.09.2005 № 1321. tion of Target investment program of St. Petersburg

Public authority

KERPPT KF And Brunch Committees

Main legislative acts

1. Regulations on compilation of the list of construction areas and sites for federal public needs and of their financing from the federal budget. Approved by the Resolution of the RF Government of 11.10.2001 № 714 (modified as of 07.03.2008).

2. On budget investment in capital construction projects owned by the Russian Federation and capital construction projects owned by entities which are neither state or municipal unitary enterprises. Resolution of the Russian Federation Government № 989 dated 29.12.2007.

3. Regulations on activities of public authorities of St. Petersburg in compilation of the list of construction areas and sites for federal public needs and their financing from the federal budget; preparation and submission of report on using federal budget funds. Approved by the Resolution of the St. Petersburg Government of 06.07.2004 № 1270 (modified as of 23.06.2006).

4.Regulations on formation and usage of the Russian Federation Investment Fund budget allocations. Resolution of the Russian Federation Government № 134 dated 01.03.2008.

1.1. Public investments

1. Financial involvement

Directions on Investment Support

3. THE LIST OF LEGAL ACTS REGULATING INVESTMENT SUPPORT

20

1.5.1. Creation of special economic zones

KERPPT

KUGI

1.4.3. Delays for payments and On procedure of funds transfer performed by investors under agreements made in accordance with the Law of St. deferred payments for provision Petersburg «On procedure of providing property objects owned by St. Petersburg for building and reconstruction» of real estate and rights for it on (modified as of 22.08.2006). Resolution of the St. Petersburg Government of 15.03.2005 № 275. investment terms 1. On special economic zones in the Russian Federation. Law of RF of 22.07.2005 № 116-FL (modified as of 30.10.2007).

2. On approval of the Regulation on holding an auction for the selection of claims for the creation of special economic zones. Resolution of the RF Government of 13.09.2005, № 563 (modified as of 31.01.2008).

ZS KUGI KZR&Z

1. On state support of investment activities in St. Petersburg Law of St. Petersburg (as amended in accordance with Law of St. Petersburg dated 09.12.2003. T70; 676-101) dated 08.05.2001 T70; 348-46.

2. On procedure of provision of rental benefits in St. Petersburg (modified as of 28.03.1997). Law of St. Petersburg of 03.06.1996 № 71-28.

3. On procedure of provision of rental benefits for land lots owned by St. Petersburg. Law of St. Petersburg of 18.03.1997 № 44-10.

4. On methods of calculating rental fee for land lots. Annex to the Resolution of the St. Petersburg Government of 14.09.2004 № 1561 (modified as of 12.10.2006).

1.4.2. Benefits with respect to lease of land and public real properties

1.5. Special economic zones

ZS KF UFNS Russia for St. Petersburg

1. On state support of investment activities in St. Petersburg. Law of St. Petersburg (as amended in accordance with Law of St. Petersburg dated 09.12.2003 T70; 676-101) dated 08.05.2001 T70; 348-46.

2. On tax benefits (modified as of 16.07.2007). Law of St. Petersburg of 14.07.1995 № 81-11.

KF KERPPT KUGl UFNS Russia for St. Petersburg ZS

1.4.1. Tax benefits

1.4. Benefits

1.3.1. State warrantees of St. Pe- 1. The Budget Code of the Russian Federation. Law of the Russian Federation of 31.07.1998, № 145-FL (moditersburg fied as 01.12.2007) - Articles 115, 117.

2. On provision of the state warrantees of St. Petersburg. Approved by the Resolution of the RF Government of 17.08.2004 № 1385.

3. Resolution of the Committee for Finance of St. Petersburg «On provision of state warranties of St. Petersburg in implementing investment projects» of 28.02.2005 № 23-r.

Amendments and modifications are to be introduced to provisions of Resolution of the Government of St. Petersburg № 1385 dated 17.08.2004 «On Administration of St. Petersburg Government Guarantees» with due respect for the requirements specified in Articles. 115_2, 117 of the Budget Code of the Russian Federation and modifications specified in Article 42 of Law of St. Petersburg № 371-77 dated 20.07.2007 «On St. Petersburg Budgeting Process».

1.3. Public guarantees

21

1.7.1. Engineering preparation of the territories

1. On development of the territories intended for allocation of industrial, transport-logistic, public, business and storage properties. Resolution of the St. Petersburg Government of 14.12.2004 №1961 (modified as 15.05.2007).

2. On the program «Reconstruction and development of the engineering facilities head sources and mainlines networks in the power supply zone of the energy company JSCLenenergo for the period 2005-2010. Resolution of the St. Petersburg Government of 13.07.2004 № 1271.

3. On the program «Reconstruction and development of water supply and sewage systems in St. Petersburg for the period 2004-2011». Resolution of the St. Petersburg Government of 28.04.2004 № 642.

4. Measures planned until 2010 for the reconstruction and development of head engineering facilities and mainline networks intended for supplying gas to social, public, industrial and housing properties, existing and planned to be launched in the period 2004-2007. Approved by the Resolution of the St. Petersburg Government of 30.03.2004 № 481.

5. Conceptualization of the St. Petersburg power supply general scheme for the period until the year 2015, taking

1.7. Engineering preparation of the territories

1.6.1. Conclusion of concession 1. On concession agreements. Law of RF of 21.07.2005 №115-FL (modified as of 04.12.2007). agreements 2. Model concession agreements approved resolutions of the Russian Federation Government as related to specific concession items.

3. On participation of St. Petersburg in state-and-private partnerships. Law of St. Petersburg № 627-100 dated 25.12.2006 (modified as of 10.04.2008).

4. On form of St. Petersburg participation in state-and-private partnerships. Law of St. Petersburg № 392.dated 16.04.2008.

1.6. Concession agreements

3. On establishment of a technology development special economic zone within the territory of St. Petersburg.

Resolution of the Russian Federation Government № 780 dated 21.12.2005.

4. On approval of the Rules for execution and submission of the claim for the creation of a special economic zone.

Resolution of the RF Government of 13.09.2005, №564 (modified as of 31.01.2008).

5. On Federal Agency for the Administration of Special Economic Zones. Order by the Russian Federation President № 855 dated 22.07.2005 (modified as of 24.09.2007).

6. On Federal agency for governing the special economic zones Resolution of the RF Government of 19.08.2005, №530 (modified as of 29.12.2007).

7. On measures for the creation of special economic zones in St. Petersburg. Resolution of the St. Petersburg Government of 17.10.2005 №1542.

8. Agreement on establishment of a technology development special economic zone within the territory of St. Petersburg. Concluded 18.01.2006 by the Russian Federation Government and the Government of St. Petersburg.

KERPPT KGA KE&IO KUGI Lenenergo Vodokanal Lengaz

KVS KISP

22

1. On foreign investments in the Russian Federation (modified as of 29.04.2008). Law of RF of 09.07.1999 №160-FL. 2. On active measures to attract foreign investments into the economy of the Russian Federation (modified as of 18.09.2004). Resolution of the RF Government of 29.09.1994 №1108.

1. On the procedure of provision of the property owned by St. Petersburg for construction and reconstruction (modified as of 06.05.2008). Law of St. Petersburg of 17.06.2004 № 282-43.

2. On approval of the Resolution on the procedure of decision-making related to provision of the property owned

by St. Petersburg for construction and reconstruction (modified as of 01.07.2008). Resolution of the St. Petersburg Government of 21.09.2004 № 1592.

2.1.3. Procedure of interaction of the St. Petersburg governmental authorities within the framework of investment projects implementation at the stage of survey work, as well as that of design and construction

1. On the procedure of provision of the property owned by St. Petersburg for construction and reconstruction (modified as of 06.05.2008). Law of St. Petersburg of 17.06.2004 № 282-43.

2. Resolution on the procedure of decision-making related to provision of property for construction and reconstruction. Approved by the Resolution of the St. Petersburg Government of 21.09.2004, №1 592 (modified as of 01.07.2008).

3. Procedure of decision-making related to provision of land plots for construction of engineering structures. Approved by the Resolution of the St. Petersburg Government of 02.08.2005, № 1180 (modified as of 16.05.2007).

2.1.2. Provision of land plots 1. Procedure of decision-making related to provision of land plots for construction of engineering structures. Apfor construction of engineering proved by the Resolution of the St. Petersburg Government of 02.08.2005, № 1180 (modified as of 16.05.2007). structures 2. Resolution on the procedure of decision-making related to provision of property for construction and reconstruction. Approved by the Resolution of the St. Petersburg Government of 21.09.2004, № 1592 (modified as of 01.07.2008).

2.1.1. The procedure of providing real estate property of St. Petersburg for town planning and preparing project documents, construction and reconstruction

2.1. Provision of real estate property of St. Petersburg for town planning and projects document preparation, construction and reconstruction

2. Administrative procedures in investments

1.8.1. Joint programs with foreign banking institutions, foreign Governmental bodies, foreign corporations, joint programs with foreign institutions

1.8. Participation in international programs

into account the long-term perspective up until 2025. Approved by the Resolution of the St. Petersburg Government of 05.07.2005 № 953.

KS GU «Management of Investments» GU GAPI KZR&Z KGA KUGI State service for construction supervision and operation

KS GU «Management of Investments» GU GAPI U FRS* KUGI KGA KGIOP KZR&Z KE&IO CGSEN KPOOS JSC FI KVZP&B

KVS

23

1. Regulation on strategic investment projects and strategic investors in St. Petersburg. Approved by the Resolution of the St. Petersburg Government of 01.03.2005, №216.

2. Regulation on procedure of interaction between the executive Governmental bodies of St. Petersburg in implementing strategic investment projects of St. Petersburg. Approved by the Resolution of the St. Petersburg Government of 01.03.2005, №216.

3. A list of necessary documents attached to the application for a strategic investment project in St. Petersburg or strategic investor in St. Petersburg. Approved by the resolution of the Committee for investments and strategic projects of 17.06.2005 №1.

4. Regulation on expert analysis of materials necessary to distinguish the grounds for making a decision on a strategic investment project in St. Petersburg or strategic investor in St. Petersburg. Approved by the resolution of the Committee for investments and strategic projects of 17.06.2005 №1.

5. Resolution on the procedure of listing the strategic investment projects in St. Petersburg and listing the strategic investors in St. Petersburg. Approved by the resolution of the Committee for investments and strategic projects of 20.08.2005 №4.

2.4.1.1. The procedure of leasing non-residential premises

2.4.1. Lease 1. On procedure for decision-making on the lease of non-residential premises owned by St. Petersburg (modified as of 15.02.2008). Resolution of KUGl of 01.02.2000 № 187-r.

2. On city and district real estate management committees. Resolution of St. Petersburg Government № 1735 dated 16.11.2005.

3. On procedure of preparing materials to be considered by the city real estate management committee and procedure of issuing instructions by the Committee for evaluating the results of activities of the city real estate management committee. Resolution of KUGI № 485-р dated 19.08.1996

2.4. Provision of non-residential premises

4. Regulation on procedure of interaction between the executive Governmental bodies of St. Petersburg and agencies in the sale of publicly-owned land plots to the owners of property located on such plots (modified as of 27.03.2007). Resolution of KUGl 31.08.2006 № 262-r.

tion № 122-FL dated 21.07.1997 (modified as of 13.05.2008).

3. On procedure of interaction of the St. Petersburg executive authorities as related to sale of land plots owned by the state to proprietors of real estate objects located within the plots. Resolution of St. Petersburg Government № 76-рп dated 26.06.2006 (modified as of 14.12.2006).

2.3.1. Systems for the sale of cur- 1. Russian Federation Land Code. Law of the Russian Federation № 136-FL dated 25.10.2001 (modirently state-owned land plots to fied as of 13.05.2008). the owners of immovable prop- 2. On state registration of rights to real estate and transactions therewith. Law of the Russian Federaerty located there

2.3. Sale of currently state-owned land plots to the owners of immovable property located there

2.2.1. Systems for the reference of investment projects and investment ratios to strategic ones

2.2. Reference of investment projects and investment ratios to strategic ones

KUGl

KUGl KGA KGIOP KZR&Z UFRS* ОАО FI

KISP

24

1. On procedure of preparation of documents for approval by the municipal council on the real estate management and procedure of issuing resolutions of the Committee based on results provided by the municipal council on real estate management (modified as of 30.01.2008). Resolution of KUGl of 19.08.1996 № 485-r.

2. On city and district real estate management committees. Resolution of St. Petersburg Government № 1735 dated 16.11.2005 (modified as of 24.12.2007).

2.4.1.3. The procedure of approval for pawning the tenant right on non-residential premises

GUP GUION KUGl ОАО FI KGIOP UFRS* KGA KZR&Z JSC FI KUGI KZR&Z KGA KGIOP GUP GUION KUGl

2.4.2.2. Procedure for delivery of On tender sales of buildings and plots of land they are located on (revised 28.12.2007). Resolution of St. Petersbuildings and plots of land they burg Government № № 33-рп dated 2912.2003. are located on by way of tender

2.4.3. Transfer of St. Petersburg 1. On trust management of the property of St. Petersburg (modified as of 14.11.2005). Law of St. Petersburg of treasury property into beneficial 30.06.2004 № 334-51. ownership 2. On transferring the property objects into trust management (modified as of 07.06.2007). Resolution of KUGl of Petersburg of 02.11.2005 № 1567-rk.

3. On procedure of consent for trust management agreement title for property objects. Resolution of KUGl of Petersburg of 21.07.2005 № 258-r.

KUGl

KUGl

2.4.2.1. Systems of preparation On organization of interactions between structural departments of Committee for Municipal Property Manageof decisions on privatization ment and the public corporation «Property Fund of St. Petersburg» in preparing of decisions on conditions of (sale) terms and conditions of privatisation (sale) of property objects (modified as of 09.06.2008). Resolution of KUGl of 03.08.2006 № 233-r. immovable property

2.4.2. Sale

On subletting non-residential premises (modified as of 27.12.2000). Resolution of KUGl of 16.06.1998 № 820-r.

2.4.1.2. The procedure of approval for subletting non-residential premises

4. On procedure of calculating rent for non-residential premises rented out by St. Petersburg (modified as 02.07.2007). Law of St. Petersburg of 08.09.1997 № 149-51.

5. On methods of calculating rent for non-residential premises rented out by St. Petersburg (modified as of 26.12.2007). Law of St. Petersburg of 14.07.2004 № 387-58.

6. On procedure of provision benefits on the lease of non-residential premises from St. Petersburg (modified as of 12.07.2007). Law of St. Petersburg of 19.07.2005 № 377-57.

25

1. Russian Federation Town Planning Code. Law of the Russian Federation № 190-FL dated 29.12.2004 (revised 16.03.2008) (Articles 46_1, 46_2, 46_3).

2. On the procedure of provision of the property owned by St. Petersburg for construction and reconstruction (modified as of 06.05.2008). Law of St. Petersburg of 17.06.2004 № 282-43.

3. On St. Petersburg target programme «On development of buildup areas». Law of St. Petersburg № 238-39 dated 06.03.2008.

4. Regulations on procedure of interaction of the St. Petersburg executive authorities as related to deciding on development of buildup areas within St. Petersburg territory and arrangement of tenders for St. Petersburg buildup areas development contracts. Approved by Resolution of St. Petersburg Government № 386 dated 10.04.2007.

2.5.3. Development of buildup areas

2.6.1. Procedure of obtaining conclusions related to investment performance engineering support

1. Russian Federation Town Planning Code. Law of the Russian Federation № 190-FL dated 29.12.2004 (revised 16.03.2008) 2. On approval of the regulations on elaborating and issuing specifications for connecting a capital construction object to engineering facilities networks and regulations on connecting a capital construction object to engineering facilities networks. Resolution of the Russian Federation government № 83 dated 13.02.2006.

3. On measures to be taken for enforcement of Resolution of the Russian Federation government № 83 dated 13.02.2006 within St. Petersburg territory. Resolution of St. Petersburg Government № 45 dated 23.01.2007.

4. On introduction of a register of specifications for connecting a capital construction object to engineering facilities networks issued by St. Petersburg power engineering enterprises. Resolution of the St. Petersburg Committee for Energy and Engineering Support № 25 dated 21.03.2007.

2.6. Connecting to engineering infrastructure

1. Russian Federation Land Code. Law of the Russian Federation № 136-FL dated 25.10.2001 (Articles 30_2, 38_2).

2. On the procedure of provision of the property owned by St. Petersburg for construction and reconstruction (modified as of 06.05.2008). Law of St. Petersburg of 17.06.2004 № 282-43.

3. On complex development of the territories for housing purposes. Resolution of the St. Petersburg Government of 21.02.2006 № 167.

2.5.2. Complex land use planning and management for housing construction

2.5.1. The procedure of obtain- 1. On activities of territorial development agencies. Resolution of the St. Petersburg Governor of 01.02.2001 ing the status for the «Agency for № 117-r. territorial development» 2. On measures aimed to organize the activities of territorial development agencies. Resolution of KUGl of 28.09.2001 № 1576-r.

2.5. Provision of the complex investment development of the territory of St. Petersburg

KE&IO Vodokanal GUP ТЕК Lenenergo ОАО PES Kurortenergo ZAO TSEK ZAO LTS «Nevsky» branch of TGK-1 SPb ES Peterburg-Gaz «Peterburgteploenergo» LLC

KS

KS

KUGl

26

KE&IO KUGl Entities of the engineer-ing complex of St. Petersburg

2.7.2. Procedure of delivery of Regulations on procedure of interaction of the St. Petersburg executive authorities as related to acceptance of the engineering infrastructure object results of the investors’ having discharged their contractual obligations. Approved by Resolution of St. Petersburg to specialized operating entities Government № 61 dated 01.02.2006. under investment agreements

2.8.1. Procedures of organization and arrangement of public hearings and providing for citizens’ awareness in the course of town planning activities that may be in

1. City-planning Code of the Russian Federation (modified as of 16.05.2008). Federal Law of 29.12.2004 №191-FL. 2. Russian Federation Land Code. Law of the Russian Federation № 136-FL dated 25.10.2001.

3. On fundamentals of St. Petersburg town planning activities regulation. Law of St. Petersburg № 778-116 dated 17.12.2003 (revised 15.02.2007).

KGA Adistrict administration

2.8. Organization and arrangement of public hearings and providing for citizens’ awareness in the course of town planning activities that may be in progress within the territory of St. Petersburg

2.7.3. Procedure of delivery of engineering infrastructure objects to specialized operating entities with the construction being financed out of the funds of the Russian Federation and/or St. Petersburg city budget

Regulations on procedure of interaction of the St. Petersburg executive authorities as related to design, construction and renovation of capital construction objects as financed out of the funds of the Russian Federation and/ or St. Petersburg city budget and their delivery to specialized operating entities. Approved by Resolution of St. Petersburg Government № 187 dated 26.02.2008.

KE&IO KUGl Entities of the engineering complex of St. Petersburg

2.7.1.The procedure of transferring engineering infrastructure objects to special operating institutions

Procedure of transferring engineering infrastructure objects to special operating institutions (modified as of 11.07.2006). Approved by the Resolution of KUGl of 30.09.1999 №1503-r

2.7. Transfer of engineering infrastructure objects

5. On approval of regulations on procedure of deciding on delivery of real estate objects for construction and renovation. Resolution of St. Petersburg Government № 1592 dated 21.09.2004 (modified as of 01.07.2008).

6. On approval of regulations on procedure of interaction of the St. Petersburg executive authorities as related to preparation and coordination of territory planning documents. Resolution of St. Petersburg Government № 596 dated 16.03.2006 (modified as of 15.05.2007).

7. Regulations on non-discriminate access to electric power transmission services and rendering the aforesaid services. Approved by Resolution of the Russian Federation government № 861 dated 27.12.2004 (revised 26.07.2007 )

27

UFRS*

UFRS*

2.9.2. Registration procedure for 1. On the state registration of real estate titles and related transactions (modified as of 13.05.2008). The Law of rights for real estate and transac- the Russian Federation of 21.07.1997 №122-FL. tions therewith 2. The Regulations on the Unified State Register of real estate titles and related transactions (modified as of 22.11.2006). Approved by the Resolution of the RF Government of 18.02.1997, №219.

3. The Instruction on the procedure of state registration of exchange agreements and (or) transfer of property titles located in different registration districts (modified as of 24.12.2004). Approved by the Decree of the Ministry of Justice of the Russian Federation of 01.07.2002 №183.

4. The Instruction on the procedure of state registration of purchase-sale agreements and transfer of property rights to residential premises (modified as of 24.12.2004). Approved by the Decree of the Ministry of Justice of the RF of 06.08.2001 №233.

5. On approval of Guidelines on specifics of making entries to the Uniform register of rights to real estate and transactions therewith in case of state registration of rights to real estate objects which are apartment house common property and delivery of information on registered jointly shared property rights to real estate objects specified. Approved by Decree of the Russian Federation Ministry of Justice № 29 dated 14.02.2007.

6. The Instruction on the procedure of state registration of real estate titles and related transactions involving minors (modified as of 24.12.2004). Approved by the Decree of the Ministry of Justice of the RF of 20.07.2004 №126.

7. The Instruction on the procedure of state registration of real estate titles and transactions therewith (modified as of 19.01.2005). Approved by the Decree of the Ministry of Justice of the Russian Federation of 01.07.2002 №184.

2.9.1. The procedure of registering investment agreements and partnership agreements for construction and reconstruction of real estate in St. Petersburg

On registration of investment agreements and partnership agreements for construction and reconstruction of real estate in St. Petersburg of 18.10.2004 № 482-69.

2.9. Registration of agreements, title for real estate and transactions therewith Under Order by Russian Federation President № 724 dated 12.03.2008 «Issues of system and structure of federal executive bodies»: - functional authorities related to elaboration of a state policy and normative legal regulation in the sphere of state registration of rights to real estate and transactions therewith were delegated to the Russian Federation Ministry of Economic Development (Item 10); - Russian Federation Government Chairman was entrusted with making a motion (in accordance with the established procedure) to have the Federal Registration Service abolished since 01.10.2008 with the authorities former delegated to it being transferred to the Federal Agency for State Property Management (Item 18).

progress within the territory of 4. «On organization and holding of public hearings and on informing of public at implementation of town-planSt. Petersburg ning activity in St. Petersburg. Law of St. Petersburg of 20.07.2006 №400-61.

5. Regulations on procedure of interaction of the St. Petersburg executive authorities as related to design organization and arrangement of public hearings and providing for citizens’ awareness in the course of town planning activities that may be in progress within the territory of St. Petersburg. Approved by Resolution of St. Petersburg Government № 491 dated 15.03.2007

28

2.10.1. Procedure of privatization of shares and stakes in chartered capital of business entities publicly owned by the city of St. Petersburg

2.10. Restructuring of enterprises 1. On privatization of public and municipal property (modified as of 13.05.2008). Federal Law of 21.12.2001 №178-FL. 2. On limited liability companies (modified as of 29.04.2008). Federal Law of 02.02.1998 №14-FL. 3. On joint-stock companies (with comments) (modified as of 29.04.2008). Federal Law of 26.12.1995 №208-FL. 4. On appraisal activities in the Russian Federation (modified as of 24.07.2007). Federal Law of 29.07.1998 №135-FL. 5. On privatization of public property of St. Petersburg (modified as of 29.02.2008). Law of St. Petersburg of 10.03.2005 №59-15.

6. On approval of regulations for determination of standard price for state or municipal property to go private.

Approved by Resolution of the Russian Federation Government № 87 dated 14.02.2006.

7. Regulation on organization of selling public or municipal property by means of auction and Regulation on selling open joint-stock company shares, which are public or municipal property, by means of special auction (modified as of 20.12.2006). Approved by the Resolution of the RF Government of 12.08.2002, №585.

8. Regulations on sale of public or municipal property by means of public offering and without naming the price (modified as of 20.12.2006). Approved by the Resolution of the RF Government of 22.07.2002, №549.

9. On procedure of planning St. Petersburg public property privatization and elaborating the St. Petersburg public property privatization programme. Approved by Resolution of St. Petersburg Government № 1369 dated 23.10.2007.

10. On St. Petersburg public property privatization programme for the year of 2008. Approved by Resolution of St. Petersburg Government № 1664 dated 25.12.2007 11. Resolution of St. Petersburg KUGI «On organization of St. Petersburg property privatization by way of public offering» № 442-р dated 06.08.2004 (modified as of 28.06.06)

8. On approval of administrative regulation for discharge of the state functions related to registration of rights to real estate and transactions therewith. Decree of the Russian Federation Ministry of Justice № 293 dated 14.09.2006 9. Instruction on procedure of state registration of mortgage of real estate/Order of Ministry of Justice of RF of 15.06.2006 №213.

KUGl JSC FI

29

2.10.2. The procedure of privatization of state unitary enterprises (GUP)

1. On privatization of state and municipal property. Russian Federation Federal Law № 178-FL dated 21.12.2001 (revised 13.03.2008) 2. On joint-stock companies. Russian Federation Federal Law № 208-FL dated 26.12.1995 (revised 29.04.2008).

3. On validation activities in the Russian Federation. Russian Federation Federal Law № 135-FL dated 29.07.1998 (revised 24.07.2007).

4. On approval of regulations for holding a tender for state and municipal property items. Resolution of the Russian Federation Government № 584 dated 12.08.2002 (revised 20.12.2006).

5. On approval of Regulations on organization of auction sales of state and municipal property and Regulations on organization of sales of publicly and municipally owned shares of joint-stock companies at a specialized auction.

Resolution of the Russian Federation Government № 585 dated 12.08.2002 (revised 20.12.2006).

6. On approval of Regulations on organization of sales of state and municipal property by way of public offering and without price-making. Resolution of the Russian Federation Government № 549 dated 22.07.2002 (revised 20.12.2006).

7. On privatization of state property. Law of St. Petersburg № 59-15 dated 10.03.2005 (revised 29.02.2008.).

8. On St. Petersburg public property privatization programme for the year of 2008. Approved by Resolution of St. Petersburg Government № 1664 dated 25.12.2007.

9. On procedure of planning St. Petersburg public property privatization and elaborating the St. Petersburg public property privatization programme. Approved by Resolution of St. Petersburg Government № 1369 dated 23.10.2007.

10. On approval of a list and requirements to processment of documents within the framework of preparing a decision on privatization conditions. Resolution of KUGI № 254-р dated 19.04.2004 (revised 28.06.2006).

11. On approval of Regulations on the procedure of elaboration and approval of terms and conditions of a tender for sale of St. Petersburg public property, control over their implementation and the tender winners’ demonstration of compliance with the terms and conditions specified. Resolution of St. Petersburg Government № 1034 dated 24.08.2006.

12. On measures meant to help and reduce the execution term of decisions on sale (on privatization conditions) иof St. Petersburg public property. Resolution of KUGI № 603-р. Dated 10.12.2004 (revised 28.06.2006).

KUGl OA OFI

30

Regulated by the St. Petersburg employment committee.

KZN

UFNS Russia for St. Petersburg St. Petersburg UFAS of Russia

* Under Order by Russian Federation President № 724 dated 12.05.2008 «Issues of system and structure of federal executive bodies»: - functional authorities related to elaboration of a state policy and normative legal regulation in the sphere of state registration of rights to real estate and transactions therewith were delegated to the Russian Federation Ministry of Economic Development (Item 10); - Russian Federation Government Chairman was entrusted with making a motion (in accordance with the established procedure) to have the Federal Registration Service abolished since 01.10.2008 with the authorities former delegated to it being transferred to the Federal Agency for State Property Management (Item 18).

2.10.4. Retraining of released employees

2.10.3.

Restructuring, re- 1. Civil Code of the Russian Federation Part 1 (modified as of 13.05.2008). Federal Law of 30.11.1994 organization (liquidation) and №51-FL. sale of the enterprise 2. On bankruptcy (modified as of 01.12.2007). Federal Law of 26.10.2002 №127-FL.

4. PROCEDURES OF INVESTMENT IN ST. PETERSBURG 4.1. PROCEDURES OF FINANCIAL INVOLVEMENT OF THE ST. PETERSBURG PUBLIC AUTHORITIES IN INVESTMENT ACTIVITIES Below you will find the procedures of the most important functions of financial involvement of the St. Petersburg public authorities in investment activities. Presentation of these procedures in the form of algorithm diagrams will make the study of legislation and statutes in this area much easier. The procedures demonstrate the order of activities and give references to the corresponding legislative and statutory acts.

4.1.1. DRAWING UP A LIST OF CONSTRUCTION PROJECTS AND SITES FOR FEDERAL GOVERNMENT NEEDS, AND FINANCING OF SAME OUT OF FEDERAL BUDGET (1) In accordance with: 1. The resolution on Listing Construction projects and sites for federal public needs, and financing of them out of the Federal budget (modified as of 07.03.2008). Enacted by resolution of RF Government №714, dated 11.10.2001 (hereinafter in the scheme called the «resolution»).

2. Resolution of the Government of the Russian Federation as of 12.12.2007 № 989 «On Making the 2008 Budgetary Investments to the Capital Construction Sites that Are Property of the Russian Federation and Capital Construction Sites that Are Property of Juridical Persons that Are Not State or Municipal Institutions or State or Municipal Unitary Institutions» (hereinafter referred to as the Regulations) Stage of work

Documents on resolution on the outcome 1. Procedure for making up the List

1. Informing the subjects of budgetary planning (hereinafter referred to as SBP) about the procedures for submitting the data that is needed for making up the list that have been elaborated by the Ministry of Economic Development of the Russian Federation (hereinafter referred to as Ministry of Economic Development of Russia).

Informing SBP and state clients (2) about parameters of forecasting the social and economic development of the Russian Federation and organizational and procedural methods elaborated by the Ministry of Economic Development of Russia Completed by: Ministry of Economic Development of Russia

Procedures for submitting the data that is needed for making up the List Parameters of forecasting the social and economic development of the Russian Federation and organizational and procedural methods elaborated by the Ministry of Economic Development of Russia

↓ 2. Submission of proposals to the respective chief distributor of federal budgetary funds (hereinafter in the scheme called GRS) Completed by: Governmental bodies of RF subjects functioning as a state client (hereinafter - state client)

Offers of the necessary amounts of public capital investments (hereinafter in the scheme called public capital investments), distribution of them between construction projects and sites, itemised by the program and extra-program sections of the lists, industries and property forms (according to the forms of the Ministry of Economic Development RF

31

↓

3. Submission of the proposals to the respective SBP. Completed by: GRS

Offers of the necessary amounts of public capital investments (hereinafter in the scheme called public capital investments), distribution of them between construction projects and sites, itemised by the program and extra-program sections of the lists, industries, state clients and property forms (according to the forms of the Ministry of Economic Development and Trade RF (hereinafter in the scheme called Ministry of Economic Development)

↓

4. Submission of the proposals to the Ministry of Economic Development of Russia Completed by: SBP

Proposals on the necessary amounts of public capital investments and distribution of the them between the supposed GRS, including the most important budgetary institutions of science, education, culture, health care and mass media, as attributed to their competence, itemised by the program and extra-program sections of the lists, industries, state clients and property forms (according to the forms of the Ministry of Economic Development )

↓ 5. Forwarding of submissions to the Ministry of Finance of Russia (based on the data submitted by SBP).

Completed by: Ministry of Economic Development of Russia

Offers on forming amounts of public capital investments by SBP and submitted by GRS itemised by the program and extra-program sections of the lists, industries and property forms of construction projects and sites

p. 6 After the Government of RF enacts the main characteristics of the federal budget for the coming fiscal year and the two-year planned period and distribution of budgetary expenditures for the coming fiscal year and the two-year planned period 6. Informing the Ministry of Economic Development about maximal extent of the forecasted amount of budgetary assignments for the coming fiscal year and the two-year planned period, foreseen for implementation of FAIP (limit extent of public capital investments expenditures) Completed by: Ministry of Finance of Russia

Limit extent of public capital investments expenditures

7. Distribution of limit extent of public capital investments expenditures between SBP and supposed GRS (in accordance with foreground targets in forming FAIP for the coming fiscal year and the two-year planned period) Completed by: Ministry of Economic Development of Russia

Distribution of limit extent of public capital investments expenditures between SBP and supposed GRS itemised by the program and extra-program sections of the list and industries

p. 8

32

p. 7 ↓ 8. Submission of the distribution to the Ministry of Finance of Russia for including without modification of the said amounts of public capital investments into the budget limit amounts for the coming fiscal year and the two-year planned period, as announced to SBP. Completed by: Ministry of Economic Development of Russia

Limit amounts of SBP budgets for the coming fiscal year and the two-year planned period.

9. Announcing the limit public capital investments expenditures to the respective GRS as supposed.

Completed by: SBP

Limit extent of public capital investments expenditures GRS.

↓ 10. Submission to the respective GRS as supposed proposals on construction projects and sites for including into the draft list, itemised by clientsthe-build-ers (3), functional and economical classification of budgetary expenditures in RF by the program and extraprogram sections of the lists, industries and property forms.

Completed by: state clients

11. Submission of the offers to the respective SBP (based on Limit extent of public capital investments expenditures regarding proposals made by state clients.

Completed by: the supposed GRS

Submission on distribution of limit public capital investments expenditures between construction projects and sites proposed for including into the draft list, itemised by building companies, functional and economical classification of budgetary expenditures in RF, the program and extra-program sections, industries and property forms.

↓

12. Submission of proposals to the Ministry of Economic Development of Russia (based on the proposals submitted by GRS) Terms: as determined by the Ministry of Economic Development of Russia Completed by: SBP

Submission on distribution of limit public capital investments expenditures between construction projects and sites proposed for including into the draft list, itemised by the respective GRS, including some of the most important budgetary institution, state clients, building companies, functional and economical classification of budgetary expenditures in RF, the program and extra-program sections, industries and property forms (4).

↓ 13. Considering jointly with SBP of the proposals submitted by SBP and making decisions on including the construction projects and sites into the draft list the same as amounts public capital investments for the coming fiscal year and the two-year planned period, executing, when necessary the minutes of disagreements (5).

Completed by: Ministry of Economic Development of Russia

Decision on including construction projects and sites into the draft list Decision on extent of public investments for the coming fiscal year and the two-year planned period.

Minutes of disagreements

p. 14 33

p. 13

Distribution of the limit extent of public capital investments expenditures for the coming fiscal year and the two-year planned period itemised by functional and economical classifications of budgetary expenditures in RF and departmental classification of federal budget expenditures in order to form departmental structure of expenditures in the draft federal budget.

14. Submission to the Ministry of Finance of Russia of distribution of the limit extent of public capital investments expenditures for the coming fiscal year and the two-year planned period Terms: as established by the Government of RF. Completed by: Ministry of Economic Development of Russia

15. Consideration of disagreements between the Ministry of Economic Development of Russia and SBP, unsolved when the draft list has been formed in accordance to the appropriation legislation and regulations governing legal relationships on budget matters.

16. Submission to the Ministry of Finance (regarding the solutions taken in course of solving the disagreements) of the revised distribution of the limit extent of public capital investments expenditures for the coming fiscal year and the two-year planned period.

Completed by: Ministry of Economic Development of Russia 17. Revision of the draft list participated by SBP Terms: in process of enacting the law on federal budget for the coming fiscal year and the two-year planned period.

Completed by: Ministry of Economic Development of Russia

→

The revised distribution of the limit extent of public capital investments expenditures for the coming fiscal year and the two-year planned period itemised by functional and economical classifications of budgetary expenditures in RF and departmental classification of federal budget expenditures.

The revised draft list, formed on the basis of the public capital investments expenditures limit extent as foreseen by the draft federal budget for the coming fiscal year and the two-year planned period for implementation of FAIP.

p.18 After the federal law on federal budget for the coming fiscal year and the two-year planned period comes into force 18. Submission of the draft list to the Government of RF for approval Terms: in two weeks since the date when the federal law on federal budget for the coming fiscal year and the two-year planned period comes into force Completed by: Ministry of Economic Development of Russia

Draft list of the construction areas and sites intended for federal public needs.

19. Approval of the list by the Government of RF Completed by: Government of RF

The approved list of the construction areas and sites intended for federal public needs.

p.20

34

II p. 1.1 and 1.2

p.19

20. Organising and conduction of tenders of tenders for building works on the newly started construction projects and sites in accordance with the legislation of RF (hereinafter called the tenders) (6).

Completed by: state clients

Government contracts made for performance of works and rendering the services for the federal public needs on the construction projects and sites, included into the list (7).

21. Revision of extent of public capital investments (with lowering of construction costs), extents and sources of financing for the total period of construction works itemised by years. Submission of the revised information to the Ministry of Economic Development of Russia for preparation of proposals on modifications of the list in connection to redistribution of the released funds to other construction projects and sites of the respective GRS. Completed by: state clients

Revised information on extents of public capital expenditures, extents and sources of financing for the total period of construction works itemised by years.

22. Submission of proposals on modifications to the list to the Government of RF. Completed by: Ministry of Economic Development of Russia

Proposals on modifications to the list.

23. Modifications to the list (8) Completed by: Government of RF.

The revised list.

II. Procedure for financing the construction of sites and projects included in the Lists (9) I p. 19

I p. 19

1.1. Submission to the Ministry of Finances of RF and the State Statistics Federal Service of the data on the capital construction facilities of Russia’s state property and those that are property of juridical persons that are not state or municipal institutions or state or municipal unitary institutions (hereinafter referred to as capital construction facilities) included in the said lists.

Term: in 10 days since approval by the Government of RF of the 2008 and 2009-2010 lists of construction sites and projects for the federal needs (hereinafter referred to as Lists) Completed by: Ministry of Economic Development of Russia.

1.2. Submission to the SBP and GRS of extracts from the Lists that contain the data on capital construction sites provided by the appropriate managers Term: in 10 days since approval by the Government of Russia of the 2008 and 2009-2010 lists of construction sites and construction projects for the federal needs.

Completed by: Ministry of Economic Development of Russia.

2.1. Submission to the Federal Treasury of the data pertaining to the construction sites and construction projects included in the 2008 and 2009-2010 lists.

2.2. Submission to the MEDRF and the Ministry of Finances of Russia of the data agreed with SBP on capital construction sites included in the 2008 and 2009-2010 lists. RF budgetary classification codes 35

Term: in 7 days since the date of receiving the data from the Ministry of Economic Development of Russia.

Completed by: Ministry of Finance of Russia

including operational codes of the state management sector are also to be submitted.

Term: in 10 days since extracts are sent to the Ministry of Economic Development of Russia Completed by: GRS

3. Approval of limits of budgetary obligations as to budgetary investments to capital construction sites included in the 2008 and 2009-2010 lists, GRS in the event that the requirements stated in the 2008 and 2009-2010 lists approved by the Government of Russia are observed.

4. Settlement of monetary obligations in regard to capital construction sites included in the 2008 and 2009-2010 lists (10).

Completed by: state clients.

5. Submission to the appropriate territorial body of the State Statistics Federal Service at the location of the state client of a report on work (services) progress at capital construction sites included in the 2008 and 2009-2010 lists. The report shall be compiled in accordance with the regulations approved by the State Statistics Federal Service and agreed with the Ministry of Economic Development and the Ministry of Finance.

Term: on a monthly basis Completed by: state clients.

6. Submission of summary reports to the Ministry of Finance of Russia and the Ministry of Economic Development. Summary reports on capital construction sites that are included in the state defence order for the coming fiscal year and the planned period, shall be also submitted to the Military Industrial Commission of the Government of Russia.

Completed by: State Statistics Federal Service.

(1) A List of construction projects and sites intended for public needs as approved by the Government of RF foresees distribution of public capital investments appropriated for implementation of the federal address investment program (FAIP) for the fiscal year and the two-year planned period coming between specific construction projects and sites (hereinafter – the list).

The list shall include the construction projects and sites being a federal property. It may include also the construction projects and sites owned by non-Governmental commercial organizations.

The list shall include the construction projects and sites where the works shall be performed by contractors.

(2) State clients of the construction projects and sites, included into the list, may be: – governmental bodies of RF and the most important budgetary institutions of science, education, health care, culture and mass media with regards to the construction projects and sites, being a federal property the same as the construction projects and sites being a property of non-Governmental commercial organizations.

Functions of state client shall be performed within the limits of funds, foreseen for current maintenance of the respective bodies and institutions.

(3) Client-the-builder shall be determined by the state client on stage of forming the draft list for the coming fiscal year the twoyear planned period.

(4) Construction projects and sites being a property of non-Governmental commercial organizations for which development and

36

approval of the territorial planning documents, pre-project and project documentation is foreseen by legislation of RF can be included into the draft list only if the approved documentation mentioned above is available.

Including of the construction projects and sites being a federal property and requiring development and approval of the city planning and pre-project documentation as foreseen by the legislation of RF, is allowed when the funds intended for design, engineering, pre-project and project works have been appropriated within the total amount of the public capital investment expenditures meant or the respective construction project or site.

Pre-project and project documentation for reconstruction, including technical re-equipment of buildings and structures being a federal property, where the federal Governmental bodies are located the same as construction of such buildings and structures after the state expertise, when such expertise is foreseen by the legislation of RF shall be submitted to the state clients in Ministry of Economic Development of Russia for appraisal of the public capital investments planned for such purposes.

Appraisal shall be carried out as established by the Ministry of Economic Development of Russia.

Approval as established of the said documentation and starting to finance the reconstruction works, including technical re-equipment, and construction of such buildings and structures shall be carried when a positive conclusion made by the appraisal results have been received from the Ministry of Economic Development of Russia.

The subjects of budget planning shall submit to the Ministry of Economic Development of Russia the following documents for each construction project and each site, supposed or including into the draft list: a) a copy of the legal entity registration certificate according to the legislation of RF; b) a copy of the consolidated conclusion made by the state expertise on the pre-project and project documents regarding such construction projects and sites for which such expertise is foreseen by the legislation of RF; c) documents on approval of the project documentation according to the legislation of RF; d) title list of the construction projects and sites to be started i the coming fiscal year and title lists of the construction projects and sites carried over the next fiscal year and the two-year planned period and approved by state clients; e) the documents proving appropriation of the own, borrower and other funds for financing of the construction projects and sites (in case of share financing); f) other documents in accordance to the legislation of RF. (5) Firstly the construction projects and sites which re to be completed in the coming fiscal year shall be included into the draft list.

The newly started construction projects and sites of industrial intention shall be included into the draft list after the construction projects and sites carried over the coming fiscal year and creating the similar capacities have been financed.

(6) Expenditures for conduction of a tender shall be included into the construction project or site estimate. If the contractors have not been determined by the results of the tender, the said construction projects and sites should be excluded from the list. At the same time the federal budgetary funds shall be re-distributed by the Government of RF in the framework of FAIP as offered by the Ministry of Economic Development of Russia.

(7) Regulations on conclusion of state contracts for performing works (services) at sites which construction begins on 01.01.2008 and developers of which are federal state unitary enterprises and open-type shareholding companies are stated in paragraph 8 of the Regulations.

In the event that the state client concludes the state contract with the general contractor that commissions a subcontractor to perform works (services) at capital construction site, the works (services) of the subcontractor are paid by the general contractor from his account with a credit institution on the basis of the agreement with the subcontracting organization.

(8) Modifications to the list, which would not cause re-distribution of public capital investments between functional and economical classes of RF budgetary expenditures and departmental classes of federal budgetary expenditures, and between the federal budgetary funds beneficiaries, and construction projects and sites shall be carried out by Ministry of Economic Development of Russia on the grounds of a proposal made by chief distributors of the federal budget funds.

(9) This section of the draft plan is worked out on the basis of the Regulations establishing the procedure for making budgetary investments in 2008 in projects of capital construction that are state property of Russia and projects of capital construction that are property of juridical persons that are neither state or municipal institutions nor state or municipal unitary enterprises.

(10) Regulations on settlement of monetary obligations are stated in paragraphs 6 and 7 of the Regulations.

Regulations on granting budgetary investments to open-type shareholding companies on term of emergence of right for state possession by RF of an equivalent part of registered capitals and fulfilling budgetary obligations in regard to granting budgetary investments to registered capital of open-type shareholding companies are stated in paragraph 9 of the Regulations.

Regulations on bookkeeping and reporting on operations with budgetary investments are stated in paragraph 11 of the Regulations.

37

4.1.2. THE PROCEDURE FOR INCLUDING OFFERS INTO THE LIST OF ST. PETERSBURG’S CONSTRUCTIONS AND FACILITIES FOR THE FEDERAL GOVERNMENT NEEDS AND THEIR FINANCING FROM THE FEDERAL BUDGETARY FUNDS In accordance with: Provision for arranging activities of St. Petersburg’s Government executive bodies on including offers into the list of constructions and facilities for the federal Government needs financed from the federal budgetary funds, on preparing and presenting reports about federal budgetary funds use approved by resolution of St. Petersburg’s Government of 06.07.2004 №1270 (modified as of 23.06.2006).

Stage of work Documents on resolution on the outcome

I. Procedure for making up the List 1. Submission of offers to include current constructions and facilities into the draft address list in accordance with point 1.3. of regulation to KERPPT Time: till 25 of February of current year.

Implemented by: state executive bodies of St. Petersburg.

Offers to include into draft address list of current constructions and facilities in accordance with point 1.3. of regulation.

2. Forming of draft address list and submission for approval to the Governor of St. Petersburg.

Time: till 5 of March of current year.

Implemented by: KERPPT.

Draft address list

3. Approval of Governor of draft address list

Address list

4.1.Submission of address list to state executive bodies of St. Petersburg Time: within 1 week from approval by Governor.

Implemented by: KERPPT 4.2. Submission to corresponding main managers of funds of federal budget, to the Ministry of Economic Development and Commerce of Russian Federation, Ministry of Finance of Russian Federation of offer of St. Petersburg on necessary amounts of state capital investments and its distribution among constructions and facilities with separating by program and non program parts of the List of constructions and facilities FAIP, by type of economic activity (industry) and kind of property (1).

Time: till 10 of March of current year Implemented by: KERPPT

5. Informing of state executive bodies of St. Petersburg on preliminary parameters of Russian Federation subjects’ socio-economic development forecast and organizational and methodical documents.

Time: within the week after receiving from commissioned federal executive authority of named materials.

Implemented by: KERPPT 38

Preliminary parameters of Russian Federation subjects’ socio-economic development forecast and organizational and methodical documents.

6. Introducing of adjustments to the offers, which were submitted earlier on constructions and facilities, included in address list, approved by Governor of St. Petersburg, with separating by building owners, by functional and economic classification of expenses of budgets of Russian Federation, by program and non program parts of List of constructions and facilities FAIP, by type of economic activity (industry) and kind of property and their submission to KERPPT (1).

Time: till 31 of March of current year Implemented by: state executive bodies St. Petersburg

Adjustments to earlier submitted offers on constructions and facilities, included in address list, approved by Governor of St. Petersburg, with separating by building owners, by functional and economic classification of expenses of budgets of Russian Federation, program and non program parts of List of constructions and facilities FAIP, type of economic activity (industry) and kind of property.

7. Forming of suggestions of St. Petersburg for the List of constructions and facilities FAIP with separating by building owners, by functional and economic classifications of expenses of budgets of Russian Federation, program and non program parts of List of constructions and facilities FAIP, type of economic activity (industry) and kind of property and their submission to main managers of funds of federal budget for including in List of constructions and facilities FAIP, as well as to the Ministry of Economic Development and Commerce of Russian Federation and Ministry of Finance of Russian Federation.

Time: within the period, established by Government of Russian Federation Implemented by: KERPPT

Offers of St. Petersburg to List of constructions and facilities FAIP with separating by building owners, by functional and economic classifications of expenses of budgets of Russian Federation, program and non program parts of List of constructions and facilities FAIP, type of economic activity (industry) and kind of property.

8. Within the limits of its competence, performing of accompanying of offers of St. Petersburg at corresponding main managers of funds of federal budget and monthly informing of vice Governors of St. Petersburg, who supervise corresponding direction, on progress of approving of named offers and by the 5th of each month submission of specified information to KERPPT. Implemented by: state executive bodies of St. Petersburg

9. Informing of state executive bodies of St. Petersburg approved by Government of Russian Federation on parameters of Russian Federation subjects’ socio-economic development forecast, as well as submission to them of developed by commissioned federal executive authority organizational and methodical documents on preparation of offers to adjusted address list within the limits of the forecast of socio-economic development of St. Petersburg.

Parameters of Russian Federation subjects’ socioeconomic development forecast, organizational and methodical documents for preparation of offers for adjusted address list within the limits of the forecast of socio-economic development of St. Petersburg.

39

Time: within the week after receiving informing of Government of St. Petersburg on named data by commissioned federal executive body.

Implemented by: KERPPT

10. Forming of adjusted offers for address list and sending them to main managers of federal budget funds, to Ministry of economic development and commerce of Russian Federation and Ministry of Finance of Russian Federation.

Implemented by: KERPPT

Adjusted address list

(1) St. Petersburg completed by bodies of state power are not allowed to make offers, on behalf of St. Petersburg, to the main organizations in charge of administering federal budget funds to include in the List of construction sites and projects of FAIP without an advance approval by the Committee and the Governor of St. Petersburg.

40

4.1.3. PROCEDURE FOR MAKING UP THE ST. PETERSBURG ADDRESS INVESTMENT PROGRAM (1) In accordance with the Procedure for making up and fulfilling the Address Investment Program – Supplement to the Resolution of the Government of St. Petersburg as of 06.09.2005 №1321 (with amendments as of 28.12.2007) (hereinafter referred to as the Procedure).

Stages of implementation

Document, resolution based on the results of work

1. Informing Committee for Economic Development, Industrial Policy and Trade in accordance with the established procedure about the amount of funds of St. Petersburg budget that is allotted to fulfil the Address Investment Program (hereinafter referred to as AIP) being a part of forecast expenses of St. Petersburg budget for the coming fiscal year and the planned period.

Completed by: Committee of Finance

Information on the amount of funds of St. Petersburg budget that is allotted to fulfil the AIP

2. Distribution of capital investments for the coming fiscal year and the planned period by branches of municipal household and to state clients taking into consideration priorities (2) for the coming fiscal year and the planned period.

Informing state clients about the scheduled figures of expending capital investments by branches, as well as about the procedure and term for considering offers, procedures for submitting information and methodical instructions for compiling applications.

Completed by: Committee for Economic Development, Industrial Policy and Trade

The scheduled figures of expending capital investments by branches.

Procedure and term for considering offers related to inclusion of construction projects, equipment expenses and projecting expenses in the AIP draft plan.

Procedures for submitting information on construction projects, equipment expenses and projecting expenses that are offered for inclusion in the AIP draft plan.

Methodical instructions for compiling applications

p. 5 4. Submission of offers to the state client for including in the AIP draft plan construction projects, equipment installation expenses and projecting expenses related to construction projects of municipal facilities (3) (on the basis of the analysed offers from administrations of St. Petersburg districts) Preparing offers for including construction projects, equipment installation expenses and projecting expenses that are offered for inclusion in the AIP draft plan taking into consideration offers from administrations of St. Petersburg districts (4).

Informing administrations of St. Petersburg districts about the offers accepted and reasons for rejecting offers for including construction projects, equipment installation expenses and projecting expenses in the AIP draft plan.

Completed by: branch committees

←

3. Submission of offers for including in the AIP draft plan construction projects, equipment installation expenses and projecting expenses to branch committees (based on indices of social Economic Development for St. Petersburg districts ).

Completed by: administrations of St. Petersburg districts

p. 5

41

p. 4

p. 2

6. Submission of offers (separately) to the Committee for Economic Development, Industrial Policy and Trade for including in the AIP draft plan expenses for acquiring non-assembled equipment for patronized construction projects meant for public needs that are to be placed in commission in the coming fiscal year and the planned period that are duly agreed with the state client in charge of construction projects meant for public needs.

Completed by: branch committees and administrations of St. Petersburg districts

5. Submission of offers to the Committee for Economic Development, Industrial Policy and Trade for including in the AIP draft plan construction projects, equipment installation expenses and projecting expenses as well as other offers in excess of the established scheduled figures of expenses for capital investments to be considered by the interdepartmental commission on selection of additional construction sites and construction projects to be included in the AIP (5).

Completed by: state clients (6)

p. 8

p. 9

7. Applications conform to methodical instructions as to applications forms and parameters of the reduced scheduled figures showing expenses of capital investment.

Yes

No →

8. Application is not considered and is returned to the state client for a more thorough elaboration.

Completed by: Committee for Economic Development, Industrial Policy and Trade

p. 6 p. 5

9. Making up the AIP draft plan on the basis of state clients’ offers.

Completed by: Committee for Economic Development, Industrial Policy and Trade

The AIP draft plan

10. Agreement upon the AIP draft plan with state clients, with participation of appropriate branch committees.

Completed by: Committee for Economic Development, Industrial Policy and Trade

Agreed AIP draft plan

11. Submission of the AIP draft plan to the Government of St. Petersburg for consideration.

Completed by: Committee for Economic Development, Industrial Policy and Trade

The AIP draft plan as a part of the draft plan for the law on the budget of St. Petersburg for the coming fiscal year and the planned period – a separate supplement to the draft plan for the law on the budget.

12. Approval of the first reading draft plan for the law of St. Petersburg on the budget of St. Petersburg for the coming fiscal year and the planned period.

Completed by: Legislative Assembly

The draft plan for the law of St. Petersburg on the budget of St. Petersburg for the coming fiscal year and the planned period (approved in the first reading).

13. Preparing suggestions to the second reading of the draft plan of the law of St. Petersburg on the

Suggestions based on amendments made by the Governor of St. Petersburg to the second reading of

42

budget (the part concerning the AIP) taking into consideration amendments made by the Governor of St. Petersburg.

Preparing critical observations related to construction projects, equipment expenses and expenses for elaborating the AIP based on amendments by Legislative Assembly deputies to the second reading of the draft plan for the law of St. Petersburg on the budget.

Completed by: Committee for Economic Development, Industrial Policy and Trade

14. Summarizing the accepted amendments in the part concerning the AIP in second reading of the draft plan of the law on the budget.

Elaborating the final variant of the AIP to be approved later as a part of the draft plan of the law on the budget.

Completed by: Committee for Economic Development, Industrial Policy and Trade.

the draft plan for the law on the budget in the part concerning the AIP Critical observations in regard to construction projects, equipment expenses and expenses for elaborating the draft plan for the AIP based on amendments made by deputies of the Legislative Assembly to the second reading of the draft plan of the law on the budget.

The final variant of the AIP

(1) The Address Investment Program (referred to as the AIP) is approved as a part of the law of St. Petersburg on the budget of St. Petersburg for the coming fiscal year and the planned period.

The AIP represents a list of construction projects, equipment expenses and expenses for elaborating the draft plan including the state client’s name, address of the construction site (in some cases juridical address), branch of the municipal household, amounts of budgetary assignments for the coming fiscal year and the planned period.

Construction projects are projects of construction and reconstruction meant for industrial and non-industrial needs, including those of technical expanding and re-armament, road, engineering and transport facilities.

Expenses for equipment are those for acquiring non-assembled equipment for public needs facilities as well as appliances and equipment that are not included in the estimation cost of construction, including means of transportation.

Construction projects of public needs facilities are those pertaining to the following branches of the municipal household, i.e. «Lawprotecting activities and public safety», «Housing construction», «Fire safety», «General education», «Nursery education», «Culture, art, cinematography», «Public health», «Physical culture and sporting activities», «Social policy», «Youth policy», «Other issues of citizens’ common interest».

Expenses for project engineering are those for financing research and projecting works, including pre-projecting and projecting works.

The state client is an executive body of state power of St. Petersburg that is the main commander of budgetary means of St. Petersburg and consequently the state client of St. Petersburg that manages specific construction projects, and commands equipment expenses and projecting expenses.

The basis for including construction projects, equipment expenses and projecting expenses in the AIP is an obligatory presence of the said objects and expenses in the laws of St. Petersburg, long-term target programs of St. Petersburg, other legislative acts of the Government of St. Petersburg, resolutions of the Government of St. Petersburg, with the state client and term for fulfilling construction projects, equipment expenses and projecting expenses being determined.

(2) In priority order the AIP includes: – Uncompleted construction projects that are to be completed in the coming fiscal year; – Construction projects in transition, which construction was started in the previous years, including projecting research works on which procedures for placing the state order of St. Petersburg has been followed and state contracts have been concluded, and work implementation schedules have been approved; – Construction projects as provisioned by legislative acts of the bodies of state power of St. Petersburg intended for settling the most important socio-economic issues; – Construction projects for which fulfilment the state client is provided with extra sources of financing; – Expenses for acquiring non-assembled equipment to be installed at the public needs facilities that are to be placed in commission in the coming fiscal year and the planned period.

(3) The state client that is to manage public needs facilities construction projects is designated by the Government of St. Petersburg.

(4) Branch committees functioning as the state client.

(5) The state clients are responsible for untimely and/or incomplete submission of applications for including construction projects, equipment expenses and projecting expenses in the AIP within the limits of scheduled figures of capital investment expenses and expenses for selecting additional construction sites and construction projects to be included in the AIP, the said selection being made by the interdepartmental commission.

Recommendations relative to the cost estimation are stated in paragraphs 3.16-3.18 of the Procedure.

(6) Branch committees functioning as the state client take into consideration offers made by administrations of St. Petersburg districts.

The state client managing public needs facilities construction projects takes into consideration offers made by the branch committees.

43

4.1.4. PROCEDURE FOR GRANTING INVESTMENT TAX CREDIT TO APPLICANT ORGANIZATIONS In accordance with: 1. Tax code of the Russian Federation (part 1) (as in force on 17.05.2007). Federal law as of 31.07.1998 № 147-FL (hereinafter referred to as the Code).

2. Order by the Federal Tax Service of Russia as of 21.11.2006 № SAE-3-19/798@ «On Approving the Procedure for Organizing the Work to Grant Deferment, Payment by Instalments, Investment Tax Credit on Payment of Taxes And Duties (as in force on 21.01.2008)» (hereinafter referred to as the Order № SAE-3-19/798@).

3. Order by the Federal Tax Service of Russia as of 04.10.2006 № SAE-3-19/654@ «On Approving the Procedure for Considering Applications to Grant Deferment, Payment by Instalments, Investment Tax Credit on Payment of Taxes And Duties » (hereinafter referred to as the Order № SAE-3-19/654@).

4. Order by the Federal Tax Service of Russia as of 29.11.2005 № SAE-3-19/622@ «On Approving the Forms of Agreements on Investment Tax Credit» (hereinafter referred to as the Order № SAE-3-19/622@).

Stages of implementation

Document, resolution based on the results of work

1. Procedure for considering applications to grant investment tax credit (ITC) on payment of Federal taxes and duties (1) 1. Forming the set of documents to be granted the ITC. Completed by: applicant organization that has the right to be granted the ITC (hereinafter referred to as the applicant organization)

The set of documents to be granted the ITC (hereinafter referred to as the set of documents) according to the list stated in paragraphs 1 and 2 of the Supplement to the Order № SAE-3-19/798@).

2. Submission of the set of documents to the Federal Tax Service of Russian Federation (FTS of Russia).

Term: within one month since the date of signing the documents by the authorized person (2).

Completed by: the applicant organization 3. Considering the set of documents and preparing the draft resolution on granting the ITC, agreement on the ITC or the draft resolution on refusal to grant the ITC. Term: not later than on the 5th workday since the date of receipt of the documents by the FTS of Russia.

Completed by: RF FTS Directorate of Debt Settlement and Bankruptcy Procedures (hereinafter referred to as the Directorate)

The draft resolution on granting the investment tax credit in accordance with the Supplement 3 to the Procedure established by Order № SAE-319/654@.

The draft agreement on granting the investment tax credit on payment of organizations income tax in accordance with the Supplement 1 to the Order № SAE-3-19/622@).

The draft resolution on refusal to grant the ITC

4. Signing the prepared drafts of documents by the Director of the Directorate and sending them to the Law Directorate for approval (signing).

Term: not later than on the 5th workday since the date of receipt of the documents by the FTS of Russia.

Completed by: Directorate

The signed draft documents

5. Considering and approval of the documents submitted.

Term: not later than on the 5th workday since the

The draft resolutions signed by the Director of the Directorate and approved by the Law Directorate

44

date of receipt of the draft documents.

Completed by: Law Directorate

6. Sending the draft resolutions on altering the term of payment of federal taxes to be forwarded to the federal budget and/or budgets of the subjects of the RF, local budgets to financial bodies of the appropriate subjects of the RF, municipal organizations for approval Completed by: Directorate

7. Have the approved draft resolutions been submitted?

The draft resolutions on altering the term of payment of federal taxes to be forwarded to the federal budget and/or budgets of the subjects of the RF, local budgets

No

Yes

8.1. Forwarding the approved draft resolutions to the Director of the Federal Tax Service of the Russian Federation for signing Term: 3 days Completed by: Directorate

8.2. Preparing the resolution on refusal to alter the term of tax payment upon a failure to submit approval from financial bodies of the appropriate subjects of the RF and municipal organizations Sending the resolution on refusal to the Law Directorate for approval (signing) Term: 2 days Completed by: Directorate

9.1. Signing the draft resolutions Completed by: Director of the Federal Tax Service of the Russian Federation

9.2. Considering and approval of the resolution on refusal to alter the term of tax payment/duty upon a failure to submit approval from financial bodies of the appropriate subjects of the RF and municipal organizations.

Term: not later than on the 2nd workday since the date of receipt of the documents.

Completed by: Law Directorate

10.1. Sending a copy of resolution on granting the ITC to the applicant organization and the appropriate tax body at the place of incorporation of the taxpayer (and to the interregional Inspection of the FTS of Russia on Work with Principal Taxpayers in case the taxpayer is registered with it) Term: in 3 days since the date when decision is made.

Completed by: Directorate

10.2.

Forwarding a copy of resolution on granting the ITC to the applicant organization and the appropriate tax body at the place of incorporation of the taxpayer.

Term: in 3 days since the date when decision is made.

Completed by: Directorate

The letter in accordance with the recommended form that can be found in Supplement № 4 to the Procedure approved by the Order № SAE-3-19/654@

Copy of resolution on refusal to grant the ITC specifying grounds for such refusal

p. 11 45

p. 10.1

11. Control over fulfilment of obligations by the taxpayer.

Completed by: the tax body at the place of incorporation of the taxpayer is.

2. Procedure for considering applications to grant investment tax credit on payment of regional and local taxes and duties (3) 1. Forming a set of documents for being granted the ITC. Completed by: applicant organization that has the right to be granted the ITC (hereinafter referred to as the applicant organization)

Set of documents for being granted the investment tax credit (hereinafter referred to as the set of documents) according to the list stated in paragraphs 1 and 2 of the Supplement to the Order № SAE3-9/798@)

2. Submission of the set of documents to the Administration of the Federal Tax Service of the Russian Federation at location of the applicant organization (hereinafter referred to as the Administration).

Term: within one month since the date of signing the documents by the authorized person (2).

Completed by: the applicant organization

3. Considering the set of documents and preparing the draft resolution on granting the ITC, agreement of the ITC or the draft resolution on refusal to grant the ITC. Term: not later than on the 5th workday since the date of receipt of the documents by the tax body Completed by: Department of Debt Settlement and Bankruptcy Procedures (hereinafter referred to as the Department).

4. Signing the prepared drafts of documents by the Director of the Department and sending them to the Law Department for approval (signing).

Term: not later than on the 5th workday since the date of receipt of the documents by the FTS of Russia.

Completed by: Administration

The draft resolution on granting the investment tax credit in accordance with the Supplement 3 to the Procedure approved by Order № SAE-3-19/654@.

The draft agreement on granting the investment tax credit on payment of regional and local taxes in accordance with the Supplement 2 to the Order №SAE-3-19/622@).

The draft resolution on refusal to grant the ITC

The signed draft documents

5. Considering and approval of the documents submitted.

Term: not later than on the 5th workday since the date of receipt of the draft documents Completed by: Law Department

The draft resolutions signed by the Director of the Department and approved by the Law Department.

6. Sending draft resolutions on alteration of taxes payment term for approval by financial bodies

The draft resolutions on alteration of taxes payment term.

46

of appropriate subjects of the RF or municipal organization.

Completed by: Administration

7. Have the approved draft resolutions been submitted?

No

Yes 8.2. Preparing the resolution on refusal to alter the taxes payment term due to failure to have it approved by ďŹ nancial bodies of appropriate subjects of the RF and municipal organizations.

Term: 2 days Completed by: Administration

8.1. Forwarding the approved draft resolutions to the Director of the Administration.

Term: 2 days Completed by: Department

9. Signing the draft documents.

Completed by: Director of the Administration

p. 15.2

10. Forwarding the draft resolutions to the RF FTS Directorate of Debt Settlement and Bankruptcy Procedures for approval.

Completed by: Department 11. Considering the draft resolutions, approval or returning them unapproved specifying grounds for such decision.

Term: 5 days Completed by: the RF FTS Directorate of Debt Settlement and Bankruptcy Procedures 12. Have the approved draft resolutions been submitted?

No

Yes 13.1. Forwarding the approved draft resolution to the Director of Department for signing.

Term: 2 days Completed by: Department

14. Signing the draft resolutions.

Completed by: Director of the Administration

15.1. Sending a copy of resolution on granting the ITC to the applicant organi-

The letter in accordance with the recommended form that can be found in Sup-

13.2. Preparing the resolution on refusal to alter the taxes payment term specifying grounds for such decision.

Term: 2 days Completed by: Department

p. 8.2

Sending a copy of resolution on refusal to grant ITC to the applicant organiza-

The letter of optional form on refusal to grant the ITC specifying grounds for 47

zation and the appropriate tax body at the place of incorporation of the taxpayer (and to the interregional Inspection of the FTS of Russia on Work with Principal Taxpayers in case the taxpayer is registered with it).

Term: 3 days since the date of resolution signing Completed by: Administration

plement №4 to the Procedure approved by the Order №SAE3-19/654@.

tion and the appropriate tax body at the place of incorporation of the taxpayer Term: 3 days since the date of resolution signing.

Completed by: Administration

such decision.

11 Checking how the taxpayer fulfils his obligations.

Completed by: the tax body at the place of incorporation of the taxpayer (1) In the period when application for being granted the ITC is on approval, the applicant organization has the right to ask for a temporary deferment in paying the overdue tax. The procedure for considering and making a resolution on this issue is stated in paragraph 6, part I of the Supplement to the Order № SAE-3-19/654@.

The taxpayer application shall be considered and resolution on granting / refusal to grant the investment tax credit shall be made within the period of one month since the date of receipt of the application by the FTS of Russia.

(2) The taxpayer shall inform, within 7 days, the FNS of Russia of any alterations that influence the contents of the documents should they occur after the documents were sent and submit the amended document (documents).

(3) In the period when application for being granted the ITC is on approval, the applicant organization has the right to ask for a temporary deferment in paying the overdue tax (See paragraph 6, part II of the Order № SAE-3-19/654@). The procedure for considering and making a resolution on this issue is stated in paragraph 6, part II of the Supplement to the Order № SAE-3-19/654@.

The taxpayer application shall be considered and resolution on granting / refusal to grant the investment tax credit shall be made within the period of one month since the date of receipt of the application by the FNS of Russia.

48

4.1.5. THE PROCEDURE OF PROVIDING STATE WARRANTIES OF ST. PETERSBURG FOR IMPLEMENTATION OF INVESTMENT PROJECTS In accordance with: 1. The budget Code of the Russian Federation (modified as of 01.12.2007). The Code of the Russian Federation of 31.07.1998 №145-FL Federal Law of 31.07.1998 №145-FL. 2. The resolution of St. Petersburg’s Government «On provision of state warranties of St. Petersburg» of 17.08.2004 №1385.

3. Decree of the Finance Committee of Saint-Petersburg «On the order of granting of St. Petersburg state guarantees during sale of investment projects» of 28.02.2005 №23-r.

Subject to the new requirements as stated in Clause 115_2, 117 of the Budgetary Code of the Russian Federation and amendments to Clause 42 of the Law of St. Petersburg № 371-77 «On the Budgetary Process in St. Petersburg» as of 20.07.2007, the Decree of the Government of St. Petersburg № 1385 «On Granting of State Guarantees of St. Petersburg» shall be duly amended.

Stage of work

Documents on resolution on the outcome

1. Procedure of accepting and consideration of documents

1. Submitting the application and the set of documents (in a sealed envelope (except for the application)) to the office of the KERPPT for obtaining the warranty.

Completed by: Claimant for the warranty (hereinafter referred to as the Claimant)

Application and set of documents including: - documents confirming the legal capacity of the Claimant; - financial documents; - documents on the investment project; - Petition on warranty provision from the branch or territorial executive body of St. Petersburg’s public agencies competent in issues of the investment project implementation.

2. Registration of the application of the Claimant and the enclosed set of documents.

Completed by: KERPPT

Registered application

3. The Committee for Economic Development, Industrial Policy and Commerce reviews the documents for their completeness and authenticity. Expert appraisal of the documents by the branch executive bodies of St. Petersburg’s public agencies and federal executive bodies competent in issues of the investment project implementation.

Completed by: KERPPT, KF, KUGI, etc 4. Drawing up the final summary on the basis of the expert appraisal of the branch executive bodies of St. Petersburg’s public agencies and federal executive bodies, competent in issues of the investment project implementation.

Completed by: KERPPT

Final summary on the project for submitting to the Commission on Budget Support rendered by means of St. Petersburg’s state warranty for the investment projects implementation.

p. 5

49

2. Procedure of the project selection and completing the list of St. Petersburg’s obligations under the state warranty 5. Consideration of final summaries, selecting investment projects for provision of budget support, making decisions (recommendations): - to provide budget support by means of state warranty; - to decline to provide budget support by means of state warranty; - to define means of fulfillment of obligations under state warranty.

Completed by: Commission on budget support by means of the St. Petersburg state warranty for the investment project implementation (hereinafter referred to as the Commission)

Minutes of the meeting of the Commission

6. Informing the Claimant about the resolution of the Commission, transfer of Minutes of the meeting of the Commission to the KF for making up the List of St. Petersburg’s obligations on state warranty Completed by: KERPPT

Letter to the Claimant informing him about the resolution of the Commission Minutes of the meeting of the Commission.

7. Drawing the list of St. Petersburg’s obligations on state guarantees Completed by: KF

List of St. Petersburg obligations on state warranty

8. Adopting the law of St. Petersburg on the budget of St. Petersburg for the coming fiscal year

Law of St. Petersburg on the budget of St. Petersburg for the coming fiscal year

p. 9

3. Procedure of formalizing St. Petersburg’s state warranty

9. Written address to the KF on entering into the agreement on provision of state warranty.

Completed by: Claimant.

50

List of documents: - written address of the Claimant to the Committee for Finance for provision of state warranty; - accounting statements of the Claimant for the last reporting period prior to the date of submitting to the Committee for Finance the documents (forms 1-2) with the acceptance mark of the regional office of the Russian Federal Ministry for Taxes and Duties; - draft credit agreement between the Claimant and the financial institution; - list of collateral property.

10. Registration of the document of the Claimant.

Completed by: KF

Registered documents

11. Analysis of the ďŹ nancial status of the Claimant, inspection of terms of credit agreement provided by the credit institution, appraisal of the collateral property.

Completed by: KF, KUGI

12. Report on ďŹ nancial status of the Claimant

Negative

Refusal

Positive 13. Signing the agreement on provision of the state warranty of St. Petersburg.

Completed by: KF

Agreement on provision of the state warranty of St. Petersburg

14. Signing the agreement on control over the implementation of the investment project with the Claimant.

Completed by: KERPPT

Agreement on control over the implementation of the investment project

15. Signing the agreement for collateral property or securities with the Claimant.

Completed by: KUGI or by KF

Agreement for collateral property or securities

51

4.2. ADMINISTRATIVE PROCEDURES ON INVESTMENTS IN ST. PETERSBURG Below you will find administrative procedures for implementation of the most important investment functions in St. Petersburg, specified by the corresponding legislative and statutory acts. Presentation of these procedures produced in the form of algorithm diagram will make study of legislation and statutes in this area much easier.

The procedures demonstrate the order of activities, define outcome of each phase, and give references to the corresponding legislative and statutory acts.

4.2.1. THE PROCEDURE OF DECISION-MAKING RELATED TO PROVISION OF PROPERTY OWNED BY ST. PETERSBURG FOR CONSTRUCTION AND RECONSTRUCTION (1) In accordance with: 1. Law of St. Petersburg «On the procedure of provision of property owned by St. Petersburg for construction and reconstruction» (modified as of 06.05.2008) of 17.06.2004 №282-43 (hereinafter referred to as the Law).

2. Resolution of the Government of St. Petersburg «On approval of the resolution on the procedure of decisionmaking related to provision of property owned by St. Petersburg for construction and reconstruction» (modified as of 01.07.2008) of 21.09.2004 №1592.

Stage of work

Documents on resolution on the outcome

I. Procedure of acceptance and consideration of an application for delivery of a real property 1. Submitting an application request on property provision for construction and reconstruction to the GU Management of Investments, application for delivery of a real property for performance of a survey aimed at elaborating a plan of geological survey operations and estimate of the subsurface plot fitness for construction and operation of underground facilities unrelated to mining.

Completed by: persons interested in providing real estate property (hereinafter referred to as potential investors)

Application request on real estate property provision for construction and reconstruction (in accordance with the application form approved by the KS (2)) Application for delivery of a real property for performance of a survey aimed at elaborating a plan of geological survey operations and estimate of the subsurface plot fitness for construction and operation of underground facilities unrelated to mining (in accordance with the form approved of by the Construction Committee).

2. Registration of the application submitted by the potential investor.

Deadline: on the day of application entry to the GU Management of Investments.

Completed by: GU Management of Investments

Registered application on property provision for construction and reconstruction.

3. The application original with all the documents appended thereto that are related to delivery of real properties located within non-residential zones shall be referred to the City Agency for Industrial Investment (GAPI) Term: within three days after the application registration Executor: «Investment Management» State Institution.

52

p. 3

4.1. Submitting application to the KGA with the request for basic opportunity of placing investment outcome in accordance with urban planning documents Deadline: 5 days) from the date of registration of potential investor ’s application.

Completed by: GU Management of Investments.

Term: within five days on rerceipt of the application from «Investment Management».

Executor: City Agency for Industrial Investment (with real properties located within nonresidential zones

4.2. Submitting application on appropriating buildings, constructions, units in the process of construction to the units of social heritage (location of land plots within secured zones of social heritage, or its appropriation to the category of the area of social heritage) to the KGIOP. Deadline: 5 days from the date of registration of potential investor’s application.

Completed by: GU Management of Investments.

Term: within five days on rerceipt of the application from «Investment Management».

Executor: City Agency for Industrial Investment (with real properties located within non-residential zones)

4.3. Submitting application on property status in accordance with the competence to the KZR Deadline: 5 days from the date of registration of potential investor ’s application. Completed by: GU Management of Investments Term: within five days on rerceipt of the application from «Investment Management». Executor: City Agency for Industrial Investment (with real properties located within nonresidential zones))

4.4 Forwarding the request on property status in accordance with the competence to the KUGI Deadline: 5 days from the date of registration of potential investor ’s application. Completed by: GU Management of Investments Term: within five days on rerceipt of the application from «Investment Management».

Executor: City Agency for Industrial Investment (with real properties located within nonresidential zones)

4.5. Forwarding the request on approval of placing the investment outcome to the Regional Administration Deadline 5 days from the date of registration of potential investor ’s application. Completed by: GU Management of lnvestm e n t s T e r m : within five days on rerceipt of the application from «Investment Management».

Executor: City Agency for Industrial Investment (with real properties located within nonresidential zones)

4.6. Addressing the Committee for Use of Natural Resources and Environmental Protection an enquiry after geological peculiarities of the subsurface plot intended for construction and operation of underground facilities unrelated to mining (3).

Term: within five days after the investor applicant registration.

Executor: «Invest-ment Man-agement» State Institution.

Term: within five days on rerceipt of the application from «Investment Management».

Executor: City Agency for Industrial Investment (with real properties located within nonresidential zones)

4.7.

Addressing the Transport Committee an enquiry after feasibility of the in-vestment result accommodation in view of the existing transportation network and the latter’s anticipated development prospects (3).

Term: within five days after the investor applicant registration.

Executor: «Investment Management» State Institution.

Term: within five days on rerceipt of the application from «Investment Management».

Executor: City Agency for Industrial Investment (with real properties located within nonresidential zones)

4.8.

Addressing the Committee for Energy and Engineering Support an enquiry after feasibility of the investment result accommodation in view of location of the underground bodies of water providing for reserve water supply of the city of St. Petersburg and activities related to construction of water supply and drainage facilities provided for by the General Layout of St. Petersburg, St. Petersburg Water Supply Master Plan and St. Petersburg Water Drainage Master Plan for the period till 2015 with due regard for prospects of development during the period till 2025 (3).

Term: within five days after the investor applicant registration.

Executor: «Investment Management» State Institution.

Term: within five days on rerceipt of the application from «Investment Management» Executor: City Agency for Industrial Investment (with real properties located within nonresidential zones)

5.1. Preparation of decision on the request of the GU Manage-

5.2. Preparation of decision on the request of the GU Management of Invest-

5.3. Preparation of decision on the request of the GU Manage-

5.4 Preparation of decision on the request of the GU Manage--

5.5. Preparation of decision on the request of the GU Manage-

5.6. Preparation of opinion statements on request by «Investment Manage-

5.7. Preparation of opinion statements on request by «Invest-

5.8. Preparation of opinion statements on request by «Investment Management» SI or City Agency for Indus53

ment of Investments or the City Agency for Industrial Investment (4).

Deadline: 10 days.

Completed by: KGA

ments or the City Agency for Industrial Investment.

Deadline: 10 days.

Completed by: KGIOP

p. 10.

p. 10.

ment of of Investments or the City Agency for Industrial Investment Deadline: 14 days.

Com pleted by: KZR

ment of of Investments or the City Agency for Industrial Investment (5).

Deadline: 14 days .

Completed by: KUGI

ment of Investments or the City Agency for Industrial Investment.

Deadline: 10 days.

Completed by: Regional Administration

ment» SI or the City Agency for Industrial Investment.

Term: 10 days.

Executor: Committee for Use of Natural Resources and Environmental Protection.

ment Management» SI or the City Agency for Industrial Investment.

Term: 10 days.

Executor: Transport Committee.

trial Investment.

Term: 10 days. Executor: Committee for Energy and Engineering Support.

p. 10.

p. 10.

p. 10.

p. 10.

п. 10.

6.1. Sending notification on need for obtaining the information from the GU FRS to the KS. Deadline: 2 days after receiving conclusion from the KZR Completed by: GU Management of Investments

6.2. Addressing the Committee for Economic Development, Industrial Policy and Trade a notification of the necessity to obtain information from the Federal Registration Service Administration.

Term: within two days on receipt of the opinion statement by the Committee for Land Resources and Land Management.

Executor: City Agency for Industrial Investment.

7.1. Submitting request to the GU FRS Completed by: KS

7.2. Addressing a request to the Federal Registration Service Administration Executor: Committee for Economic Development, Industrial Policy and Trade.

8.1. Preparation of the response to the request of the KS Completed by: GU FRS

8.2. Preparation of a reply to the request by the Committee for Economic Development, Industrial Policy and Trade.

Executor: Federal Registration Service Administration.

9.1. Submitting the response of the GU FRS to the GU Management of Investments

9.2. Forwarding the reply prepared by the Federal Registration Service Administration to the City Agency for Industrial Investment Term: within two days on the reply receipt Executor: Committee for Economic Development, Industrial Policy and Trade.

p. 5.1

p. 9.1 p. 9.2

p. 5.2

p. 5.4

p. 5.5

p. 5.6

p. 5.7

p. 5.8

10. Preparation of summary reflecting clauses 10.1,10.2 or 10.3.

Deadline: 5 days from obtaining all summaries by St. Petersburg’s public executive bodies.

Completed by: GU «Management of Investments» or the City Agency for Industrial Investment (with real properties located within non-residential zones).

10.1. Property is to be included into one of the following property lists offered for: - auction of rights for construction and reconstruction; - auction of developing documentation 54

10.2. Potential investor’s application is subject to further examination

10.3. Potential investor’s application is subject to return (provided that the application fails to be implemented due to the conclusions of the St. Petersbung’s executive bodies).

V p. 1.

II p. 1.

11. Notifying potential investor of the outcome of application review on the property provision with certified copies of the summary and the application Deadline: 10 days from the date of signing the summaries.

Completed by: GU Management of Investments or the City Agency for Industrial Investment (with real properties located within non-residential zones).

II. Decision related to provision of land plot for construction together with the draft approval of the location or preparation documents on target provision of the property unit for reconstruction

I p.10.2.

1. Submitting written letter to the corresponding executive body of St. Petersburg (6).

Completed by: potential investor

Submitting supplements: - copies of application certified by the GU Management of Investments; - copies of summaries certified by the GU Management of Investments; - executive summary on social and economic significance of the project; - notarized copies of constituent documents, as well as documents certifying construction financing from corresponding budget (provided that land plot will be provided under the right to perpetual use of land)

2. Preparation of the memo on opportunity to approve potential investor’s application, as well as submitting it to the governor of St. Petersburg.

Deadline: 15 days from the date of the application receipt.

Completed by: corresponding executive body of St. Petersburg

Memo

3. Considering memo and executing written resolution of the governor of St. Petersburg, where clauses 3.1 or 3.2 are reflected.

3.1. On providing a land plot with preliminary approval of the unit location.

3.2. On providing of the property unit for reconstruction.

4. Preparation of the project of resolution of St. Petersburg’s Government on providing of the property unit In rent for carrying out of prospecting works (7).

Completed by: KS

III

5. Approval of the draft resolution of the Government of St. Petersburg at a conference presided 55

over by the Vice Governor of St. Petersburg responsible for issues of capital construction and renovation of real properties, road building, architecture and town planning as related to needs of capital construction (8).

Bringing to the knowledge of the conference participants the information furnished by «Investment Management» SI (on real properties located within non-residential zones) and the City Agency for Industrial Investment (on the number of would-be investors willing to take part in investment activities with regard to the real property in question).

6. Approving resolution of the Government of St. Petersburg on providing a land plot with preliminary approval of the unit location

III p. 2.3.

III. Preparation and approval of the documents necessary for presenting real estate property for construction and reconstruction If KGA comes to the conclusion that investment results are in full in accordance with the urban planning documentation on planning St. Petersburg’s territory development (hereinafter referred to as planning documentation) and town planning documentation on territory development (hereinafter referred to as development documentation) or if the building’s performance and current size parameters remain the same in case of its reconstruction

III p.2.2, 2.3

If KGA comes to the conclusion that investment results allocation is allowed in accordance with the planning documentation, but is not stipulated in the development documentation designed for this very territory

If KGA comes to the conclusion that investment result allocation is allowed in accordance with the planning documentation, while the development documentation is not available

1.2. Scheduling, discussing and approval of time limits for land development

1.3. Scheduling, discussing and approval of time limits for land development

II p.6

2.1. Designing and approval of engineering and town development documentation for presenting immovable property for construction and reconstruction: - approval of investment - results allocation by KGA only (9); - copy of the technical certificate 56

2.2. Order of corresponding urban planning documentation on making changes in the development documentation for the investment results allocation on the ground of KGA’s written permission from the design organization.

Approval of alterations to be made

2.3 Order of designing relevant urban planning documentation on development for investment results allocation on the ground of KGA’s written permission from the design organization and preliminary projects are developed in the established order in accordance

of the building, construction, or structure (in case of reconstruction); - KENERG’s decision for engineering support of the investment results (10); - KGlOP’s decision; - CGSEN’s decision; - decision of the environment supervision body; - other decisions to be made in accordance with the Russian laws

in the development documentation by state urban planning standards and regulations in due course in accordance with the Russian and St. Petersburg’s laws.

with KGA’s decision. approval of the development documentation in the order established.

III p. 2.1.

III p. 2.1.

3. Plot lines project design and approval of by KGA. Completed by: KGA

KGA’s order to approve plot lines project.

4. Public discussions

Public discussion minutes.

5. Elaboration of a report on results of the real property market value appraisal.

Executor: a person meeting the qualification requirements specified for individuals involved in appraisal activities.

Report on results of the real property market value appraisal.

6. Preparing the decision on the object’s market value in due course Completed by: GUION

GUION’s decision on the object’s market value.

7. Preparing the draft act of land selection (in case the land is granted with the object site being approved prior to it), approving of KGA’s act, signing the act by KGIOP KZR, KS.

Act of land selection.

8. Executing the land use survey and work (including plot lines determination and approval, as well as the plot plan design).

Plot lines plan.

9. State cadastral registration of the plot of land.

Land plot cadastral plan.

10. Preparation of an opinion statement of the Committee for Use of Natural Resources and Environmental Protection on availability of a favourable conclusion by the state department for expert appraisal of geological information on subsurface plots fitness for construction and operation of un-

Opinion statement of the Committee for Use of Natural Resources and Environmental Protection.

57

derground facilities unrelated to mining and availability of a design project for construction of an underground facility unrelated to mining approved of by the state expert appraisal department and coordinated with state authorities for mines inspectorate and environmental protection (for consideration of the issue of the landplot delivery to be used for construction of underground facilities unrelated to mining) IV p. 1, V p.4 IV. Making decisions on target with provision of a property unit (11) III

1. Forwarding the documentation set prepared to GU Management of Investments or City Agency for Industrial Investment (with real properties located within non-residential zones) for preparing summary on the documents with regard to their meeting requirements of the Provision.

Completed by: person in charge of documents preparation

Set of documents

2. Preparing summary on the documents with regard to their meeting requirements of the Provision Deadline: 15 days following the date of the documents submission.

Completed by: GU Management of Investments or the City Agency for Industrial Investment.

Expert opinion on compliance of the documents of requirements of the Provision

3. Documents meet the require ments of the Provision?

No →

4. Returning documents to the person who prepared the set, with the listing of those that are not available or do not meet the requirements of the resolution.

Yes 5. Designing the draft regulations of St. Petersburg’s Government on target with provision of a property unit.

Deadline: 5 days following the date of receiving the summary from GU Management or the City Agency for Industrial Investment.

Completed by: KS

Draft regulations of St. Petersburg’s Government on target with provision of a property unit (12).

6. Approving of the draft regulations of St. Petersburg’s Government including settling differences in investment terms of real estate property presentation at a business meeting with the Vice governor of St. Petersburg who is responsible for

Approved draft regulations of St. Petersburg’s Government on target providing a property unit.

58

matters of real estate property capital development and reconstruction, road construction, town architecture and development, land policy of St. Petersburg for the purpose of capital development (13).

7. Adopting the resolution of St. Petersburg’s Government on target with the provision of a property unit.

Resolution of St. Petersburg’s Government on target with provision of a property unit.

8. Forwarding documents necessary for signing an investment contract to KUGI (14).

Deadline: 3 days from the date of the resolution of St. Petersburg’s Government on providing real estate for target purpose becoming effective.

Completed by: Committee for construction

Documents required for investment agreement conclusion (in accordance with Appendix to the Regulation).

V. Making decision on holding tenders for construction and reconstruction I п.10.1 1. Developing and forwarding to KS the list of real estate property units for forthcoming tenders for construction and reconstruction.

Deadline: monthly Completed by: GU Management of Investments

List of real estate property units for the upcoming tenders for construction and reconstruction.

2. Approval of the list of real properties prepared for holding a tender for construction and renovation contracts.

Completed by: KS

Approved list of real properties prepared for holding a tender for construction and renovation contracts.

3. Preparation of documents in accordance with Clauses 3-8 Section I and Section IV thereof and an opinion statement on preparedness of the package of documents for holding a tender for construction and renovation contracts per real property included in the list. The opinion referral to the Construction Committee.

Deadline: 12 months after KS’ approval of the list of real properties for to be auctioned for development.

Completed by: GU Management of Investments

Documentation and conclusion of its availability and status.

III p.10

4. Designing draft resolution of St. Petersburg’s Government on holding tenders for construction and reconstruction.

Deadline: 5 days from the date of receiving the conclusion of GU Management of Investments or

Resolution of St. Petersburg’s Government on holding tenders for construction and reconstruction (15).

59

the City Agency for Industrial Investment Completed by: KS, Committee for Economic Development, Industrial Policy and Trade (with regard to real properties located within non-residential zones).

5. Approval of the draft resolution of St. Petersburg’s Government including settling differences in investment terms of presenting real estate property units at the business meeting with the Vice governor of St. Petersburg responsible for such matters as real estate property capital development and reconstruction, road construction, town architecture and development, land policy of St. Petersburg for the purpose of capital development (16).

Approved draft resolution of St. Petersburg’s Government on the upcoming tenders for construction and reconstruction.

6. Adopting the resolution of St. Petersburg’s Government on the upcoming tenders for construction and reconstruction.

Resolution of St. Petersburg’s Government on the upcoming tenders for construction and reconstruction.

7. Furnishing the party responsible for the tender management with the package of documents required for planning and holding a tender for construction and renovation contracts in accordance with the established procedure.

Term: three days after the Government of St. Petersburg has adopted the draft resolution of the Government of St. Petersburg on holding a tender for construction and renovation contracts.

Executor: Construction Committee, Committee for Economic Development, Industrial Policy and Trade (with regard to real properties located within non-residential)

Documents required for planning and holding a tender for construction and renovation contracts in accordance with the established procedure.

8. Upcoming tenders.

Completed by: JSC FI 1) This scheme presents the order of decision making related to granting of real estate objects for building and reconstruction, which are in the state property of St. Petersburg, including land plots with non-demarcated property rights unless legislation of russian Federation provides otherwise: – land sites granted for new construction, including with the view of construction and operation of underground facilities unrelated to mining; – buildings and constructions granted for reconstruction; – objects of incompleted construction intended for completion.

This order does not cover relations concerned with granting: – of separate living quarters and built into non-residential premises, attics, garrets and basements to carry out investment activities; – of land sites to industrial enterprises for them to vacate buildings and land sites intended by St. Petersburg for the usage for other needs not related to production; – of land sites for building of inner-block and inner-ground constructions and linear objects of engineering infrastructure; – of land sites for individual house-building in the zones of low building up in accordance with the city-planning documentation and standard legal acts in the sphere of construction; – of real estate objects regulated by federal laws on state property privatization.

(2) Model form of the application for delivery of a real property for construction and/or renovation was approved by Resolution № 23 of the St. Petersburg Construction Committee «On approval of model form of the application for delivery of a real property for construction and renovation» dated 28.10.2004 (revised 04.07.2006); Appendices № 1 & 2).

60

(3) Only for implementation of a joint opinion on possibility of considering an application for delivery of a real property for performance of a survey aimed at elaborating a plan of geological survey operations and estimate of the subsurface plot fitness for construction and operation of underground facilities unrelated to mining.

(4) The conclusion of the KGA has to include information about compliance of the placement of the result of the investment with city-planning documentation or about the necessity of development of the corresponding city-planning documentation for placing the result of investment.

(5) The conclusion of the Committee of Municipal Real Estate Management has to include information about the existence of encumbrances, possibilities and potential terms of the encumbrances’ termination in relation to the real estate object, or about the absence of encumbrances.

(6) – in case of investment activities in the sphere of domestic wastes handling and delivery of a hostel building for renovation – to the Housing Committee; – when the buildings, edifices, structures are offered for reconstruction which could be evaluated as emergency – to the regional administration; – when creating the religious structure (for religious rituals) – to the Office of the governor of St. Petersburg; – in case of investment in a culture object – to the Culture Committee; – in case of investment in a health care object – to the Health Care Committee; – in case of investment in physical culture and sports – to the Physical Culture and Sports Committee; - in case of investment in environmental sphere – to the Committee for use of Natural resources, Environmental Protection and Ensuring Environmental Safety; - in case of investment in engineering support – to the KENERG; - in case of investment in education – to the Education Committee; - in case of investment in research and science – to the research and Higher Education Committee; - in case of development of golfing promotion, hotel and tourist infrastructure, implementation of agreements with the strategic investors – to the KISP; - In case of implementation of agreements of St. Petersburg with the Russian Federation, its entities and foreign states – to the Committee for Foreign Relations and Tourism; - in case of investment in industry and commerce, including within territories of non-residential zones – to the KERPPT; - under implementation by the state authorities and their dependent agencies and organizations of house-building and reconstruction of real estate objects for military personnel, officials of law machinery, agencies and authorities of sentence enforcement system, officials responsible for population defiance in cases of emergency situations, ensuring of fire security, officials responsible for security of the state guard objects, officials of the Federal security service of the Russian Federation, officials of the authorities con-trolling circulation of drugs and psychotropic substances, officials of the custom authorities – by the Committee for the issues of law, order and security; - when creating objects of other functional nature – to the regional administration; - In case of investment in the transport system of St. Petersburg – the Committee for Transit and Transport Policy.

(7) With landplots delivered for performance of a survey under a lease contract the landplot state cadastre registration is performed in accordance with the acting legislation. The landplot boundaries in cases referred to are defined by the Committee for Land Resources and Land Management based on relevant documentation furnished by the Committee for City Planning and Architecture upon application by the Investment Management or the City Agency for Industrial Investment.

(8) In accordance with the Procedure adopted by the resolution of St. Petersburg’s Government of 16.12.2003 №100 «On adoption of the schedule of the St. Petersburg Government» (modified as of 11.10.2006).

(9) The letter of KGA’s permission where it is indicated that investment results are allocated in accordance with the planning and development documentation; in case of reconstruction, it is to be indicated that performance and size parameters remain the same.

(10) KEIO’s conclusion including the data of the power and other sources capacity, information of major terms of linking up to engineering systems and structures, the list of works on engineering systems and structures construction (reconstruction), as well as other information.

(11) Granting for special purposes of real estate objects for building and reconstruction can be exercised on the basis of decisions of the Government of St. Petersburg in cases provided for in paragraphs 1-3 of article 5, and paragraph 6 of article 11 of the Law of St. Petersburg from 17.06.2004 №282-43 «On the procedure of granting real estate objects for building and reconstruction, which are in the state property of St. Petersburg» (modified as of 06.05.2008).

(12) Investment terms under the draft resolution of St. Petersburg’s Government are stipulated in accordance with the Law of St. Petersburg from 17.06.2004 №282-43 «On the procedure of granting real estate objects for building and reconstruction, which are in the state property of St. Petersburg» (modified as of 06.05.2008).

In cases of real properties delivery when determining investment conditions applicable to transfer of dwelling premises to be publicly owned by the city of St. Petersburg the value of the dwelling premises being transferred to be publicly owned by the city of St. Petersburg is defined based on data available of the average market value of St. Petersburg residential property per square metre of net floor area (the data being furnished by the City Administration for Real Property Appraisal and Inventory (GUION) on approval by the City Property Management Committee (KUGI)) in the following cases: - in case of renovation, if the building is used as a hostel or if any building or structure has been classified as unserviceable (dangerous to use) in accordance with the established procedure; - for construction purposes, when within the landplot territory there is a property located accommodating residential premises that have been classified as unfit (dangerous) for further occupation and in need of resettlement in accordance with the established procedure.

In other cases for new construction purposes except the case provided for in the previous paragraph when determining investment 61

conditions related to transfer of dwelling premises to be publicly owned by the city of St. Petersburg calculation of the dwelling premises value is performed based on construction costs data furnished either by the Committee for Economic Development, Industrial Policy and Trade or by relevant governmental agencies duly authorized by the latter with the data furnished and the calculation they are based on duly validated/endorsed by the Committee for Economic Development, Industrial Policy and Trade.

The Government of St. Petersburg is entitled to decide on reduction of fees payable for delivery of real properties for construction and renovation prior to the maturity date pre-defined for the payments referred to solely with a view of facilitating implementation of projects related to construction of real properties intended for accommodation and storage of passenger cars with the exception of cases provided for in Resolution of the Government of St. Petersburg № 842 «On determining investment conditions related to delivery of landplots actually occupied by garages and/or temporary parking lots to be used for construction of real properties intended for accommodation and storage of passenger cars» dated 04.07.2006, related to arrangement of engineering utilities infrastructure objects, hotel and healthcare facilities as well as construction of theatres, concert halls, libraries, leisure and entertainment centres and sporting facilities and implementation of strategic projects to the amount of the investment value of the properties under appraisal defined in accordance with the Federal Valuation Standard approved of by Ordinance of the Russian Federation Ministry of Economic Development and Trade № 255 «On approval of Federal Valuation Standard № 2 «Valuation purpose and types of value» on application by the relevant executive authority of the city of St. Petersburg» dated 20.07.2007.

Reduction of fees payable in case of target delivery of landplots for construction of real properties intended for accommodation and storage of passenger cars in accordance with the provisions of the previous paragraph is to be effected on the condition that the predefined rated construction schedule is duly observed.

In case calculations have yielded a negative value of a real property the Government of St. Petersburg is entitled to either: - in case of a landplot lease contract concluded on investment conditions with construction purposes – define the amount of fees payable in accordance with the Ground Lease Calculation Procedure (hereinafter referred to as the «Procedure») approved by Resolution of the Government of St. Petersburg № 1561 dated 14.09.2004; - in case of an investment agreement concluded with purposes of real properties renovation and construction completion – define the amount of fee payable as being equal to 100 (One hundred) Russian Federation roubles.

In case of delivery of real properties for construction with a view of facilitating implementation of projects for arrangement of transport infrastructure within the framework of concession agreements (unless otherwise provided for by the acting legislation) and engineering utilities in accordance with Resolution of the Government of St. Petersburg № 1180 «On decision taking procedure with regard to delivery of landplots for engineering installations construction» dated 02.08.2005 the Government of St. Petersburg is entitled to decide on reduction of the fees payable to the amounts specified by the Procedure prior to maturity date(s) of the payments referred to provided the investment result is to be transferred to be publicly owned by the city of St. Petersburg without compensation.

To provide for compliance with the norms of the acting land use and town-planning legislation there is a provision to be included in the investment conditions specified for delivery of publicly owned communal landplots occupied by squares, public gardens, boulevards and other common amenities for construction and operation of underground facilities unrelated to mining and having overground structural elements that would stipulate free-of-charge transference of all the overground elements of the underground facilities referred to be publicly owned by the city of St. Petersburg on completion of construction activities with the exception of the overground elements which are not regarded as independent objects of civil rights and supply-and-exhaust ventilation shafts.

(13) In accordance with the procedure approved of by the resolution of St. Petersburg’s Government of 12.12.2003 №100 «On approving of the regulations of St. Petersburg’s Government» (modified as of 11.10.2006).

(14) In case of landplot being delivered for design and construction (renovation) of a golf club infrastructure facilities in addition to the contract of the landplot lease on investment conditions there is a landplot lease contract to be concluded with the City Property Management Committee providing for the golf club accommodation without right to capital construction activities and on condition the following provisions are duly complied with: - validity term of the lease contract for the plot of land to accommodate the golf club providing for no right to capital construction shall amount to six years unless otherwise provided for in the relevant resolution of the Government of St. Petersburg on design and construction; the validity term is to be subsequently extended by forty-nine years provided the investor has succeeded in arrangement of an international level golf course; - cost of the permanent improvements that may be introduced by the investor within the territory of the landplot intended to accommodate the golf club shall not be refundable; - the leaseholder shall provide for arrangement of an international level golf course within the term specified which fact is to be born witness of by a certificate of the golf course conformity to international standards and an expert opinion by the Committee for Investment and Strategic Projects. The papers referred to shall be considered documentary grounds sufficient for extension of the validity period of the golf club landplot lease contract by forty-nine years; - in case the investor should violate the contractual provisions concerning permitted use of the landplot to accommodate the golf club any time during the lease contract validity period or fail to provide for arrangement of an international level golf course within six years the City Property Management Committee shall be entitled to unilaterally cancel the golf club landplot lease contract.

The term «golf club infrastructure objects» shall be applicable to the complex of non-residential buildings and structures as well as engineering utilities infrastructure elements required to provide for the golf course operation and maintenance.

Total area of the landplot delivered for design and construction (renovation) of the golf club infrastructure shall not exceed 20 (twenty) per cent of the golf course area unless otherwise provided for by the acting legislation.

By virtue of the St. Petersburg Government resolution on target delivery of a plot of land for arrangement of an underground facility unrelated to mining: - the Committee for Use of Natural Resources and Environmental Protection shall in accordance with the established procedure decide on issuance of a license (permit) to use a local significance subsurface plot for construction and operation of underground facili62

ties unrelated to mining on behalf of the person referred to in the above-mentioned resolution by the Government of St. Petersburg.

- Provided the required license (permit) to use a local significance subsurface plot for construction and operation of underground facilities unrelated to mining has been issued in accordance with the established procedure the City Property Management Committee shall conclude a landplot lease contract on investment conditions.

(15) Investment terms under the draft resolution of St. Petersburg’s Government are stipulated in accordance with the St. Petersburg Law from 17.06.2004 №282-43 «On the procedure of granting real estate objects for building and reconstruction, which are in the state property of St. Petersburg» (modified as of 06.05.2008).

Investment conditions related to transfer of dwelling premises to be publicly owned by the city of St. Petersburg in cases of real properties delivery are to be defined in accordance with the provisions of paragraphs 4-6 Clause 5.2 of the Regulation on the procedure of deciding on delivery of real properties for construction and renovation (approved by Resolution of the Government of St. Petersburg № 1592 dated 21.09.2004).

(16) In accordance with the procedure approved of by the resolution of St. Petersburg’s Government of 12.12.2003 №100 «On approving of the regulations of St. Petersburg’s Government» (modified as of 11.10.2006).

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4.2.2. PROCEDURE OF INTERACTION OF THE ST. PETERSBURG GOVERNMENTAL AUTHORITIES WITHIN THE FRAMEWORK OF INVESTMENT PROJECT IMPLEMENTATION AT THE STAGE OF SURVEY, DESIGN AND CONSTRUCTION In accordance with: 1. Law of St. Petersburg № 282-43 «On procedure of delivery of real properties which are publicly owned by the city of St. Petersburg for construction and renovation» dated 17.06.2004 (revised 06.05.2008).

2. Resolution of St. Petersburg Government № 1592 «On approval of Regulation on procedure of deciding on delivery of real properties for construction and renovation» dated 21.09.2004 (revised 01.07.2008) (hereinafter referred to as the «Regulation»).

3. Resolution of St. Petersburg Government № 1180 «On procedure of deciding on delivery of land plots for construction of engineering utility structures» dated 02.08.2005 (revised 16.05.2007).

Work stage

Resultant document or decision I. Survey performance

1. Adoption of a resolution on survey performance by the Government of St. Petersburg Executor: Government of St. Petersburg

Resolution of the Government of St. Petersburg on performance of survey within the territory of the landplot specified.

2. Referral of the application to the Committee for Land Resources and Land Management.

Executor: investor applicant

Application for delivery of the landplot boundaries plan required for conclusion of a survey performance agreement.

3. Delivery of landplot plans to the investor applicant.

Executor: Committee for Land Resources and Land Management

Landplot plans

4. Submittal of documents to the relevant district real property administrations, departments (agencies) of the City Property Management Committee for conclusion of the landplot lease contract required for survey performance.

Executor: investor applicant

Documents formalized in accordance with Appendix 2 to Resolution № 684-r of the St. Petersburg City Property Management Committee «On approval of model form of the lease contract for a landplot delivered for performance of survey» dated 16.04.2002 (revised 03.10.2007).

5. Conclusion of the lease contract for a landplot delivered for performance of survey (hereinafter referred to as the «Agreement»).

Term: a month after adoption of the Resolution of the Government of St. Petersburg on performance of survey within the territory of the landplot specified Executor: City Property Management Committee

Lease contract for a landplot delivered for performance of survey as per the model form provided for in Appendix 1 to Resolution № 684-r of the St. Petersburg City Property Management Committee «On approval of model form of the lease contractfor a landplot delivered for performance of survey» dated 16.04.2002 (revised 03.10.2007) (2)

6. Preparation of documents on the issue of accommodation, design and construction of a real property within the landplot territory being possible in principle Term: within the term specified in the Resolution of the Government of St. Petersburg on performance of survey within the territory of the landplot specified Executor: landholder

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Documents (as per Appendix 3 to the contract concluded with the City Property Management Committee) on the issue of accommodation, design and construction of a real property within the landplot territory being possible in principle

7. Submittal of the documents prepared to «Investment Management» State Institution or the City Agency for Industrial Investment (with real properties located within non-residential zones).

Term: no later than thirty days after expiry of the validity term of the contract concluded with the City Property Management Committee Executor: landholder

Documents (as per Appendix 3 to the contract concluded with the City Property Management Committee) on the issue of accommodation, design and construction of a real property within the landplot territory being possible in principle

8. Preparation of a report on the survey results and its submittal to the City Property Management Committee Executor: leaseholder

Report on the survey results formalized as per Appendix 3 to Resolution № 684-r of the St. Petersburg City Property Management Committee «On approval of model form of the lease contract for a landplot delivered for performance of survey» dated 16.04.2002 (revised 03.10.2007).

II. Design and construction 1. Preparation of draft resolution of the Government of St. Petersburg on design and construction of a specific real property Executor: «Investment Management» State Institution or the City Agency for Industrial Investment (with real properties located within non-residential zones)

Draft resolution of the Government of St. Petersburg on design and construction of a specific real property

2. Adoption of draft resolution of the Government of St. Petersburg on design and construction of a specific real property Executor: Government of St. Petersburg

Resolution of the Government of St. Petersburg on design and construction of a specific real property featuring indication of investment conditions including terms of design completion and property construction commencement and completion

3. Submittal of documents to the relevant district real property administrations, departments (agencies) of the City Property Management Committee for conclusion of a landplot lease contract on investment conditions Executor: investor applicant

Documents subject to submittal to the relevant district real property administrations, departments (agencies) of the City Property Management Committee for conclusion of a landplot lease contract on investment conditions prepared in accordance with Resolution № 235-r of the St. Petersburg City Property Management Committee «On approval of model forms of the investment agreement and lease contract for a landplot delivered for a real property construction completion, contract of lease for a plot of land on investment conditions» dated 05.07.2005 (revised 03.10.2007).

4. Conclusion of contract of lease for a plot of land on investment conditions (hereinafter referred to as the «Contract») Term: a month after adoption of the Resolution of the Government of St. Petersburg on design and construction of a specific real property.

Contract of lease for a plot of land on investment conditions as per model form specified in Appendix 3 or 4 to Resolution № 235-r of the St. Petersburg City Property Management Committee «On approval of model forms of investment agreement and lease contract for a landplot deliv65

Executor: City Property Management Committee

ered for a real property construction completion, contract of lease for a plot of land on investment conditions» dated 05.07.2005 (revised 03.10.2007).

5. Issuance of the permit documentation required for design of the property on behalf of the investor Term: a month after adoption of the Resolution of the Government of St. Petersburg on design and construction of a specific real property.

Executor: Committee for Town-Planning and Architecture

Permit documentation required for design of the property

6. Property design activities performance.

Term: within the term specified in the Resolution of the Government of St. Petersburg on design and construction of a specific real property.

Executor: investor

Prepared design documentation that is design-andestimate and other documents required for implementation of an investment project whose scope has been specified in accordance with the applicable norms of the Russian Federation acting legislation, legislation of St. Petersburg and provisions of the Contract.

7. Issuance of the permit documentation required for construction of the property in accordance with the established procedure.

Executor: St. Petersburg Service of State Construction Supervision and Expert Appraisal

Permit documentation required for construction of the property

8. Property construction.

Executor: investor 9. Submittal of data on amount of work completed during the previous calendar quarter to the Construction Committee.

Term: on a quarterly basis no later than the twentieth of the month immediately following the quarter under report.

Executor: investor

Data on amount of work completed as per form specified (Appendix 7 to the contract of lease for a plot of land on investment conditions).

III. Control over compliance with the acting legislation norms in the sphere of construction and renovation 1. Preparation of an analytical certificate on the current state of the real property previously delivered for construction/renovation (hereinafter referred to as the «Analytical Certificate» and its submittal to the Investment Management.

Term: a month prior to expiry of the pre-defined term of the real property construction/renovation.

Executor: Construction Committee

Analytical certificate (3)

2.1. As indicated in the analytical certificate the amount of work completed related to the property

2.2. As indicated in the analytical certificate the amount of work completed related to the

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construction is equal to 10% of the total.

Adoption of a resolution on extension of the period of construction/renovation of the real property delivered for construction/renovation.

Executor: Construction Committee

2.1.1. There is reliable evidence available of the investor having duly discharged one’s contracted obligations Preparation of draft resolution of the Government of St. Petersburg containing a provision on extension of the period of construction/ renovation of the real property delivered for construction/renovation without application of penal sanctions provided for in the contract of lease for the landplot on investment conditions (investment agreement) (4).

Executor: Construction Committee

2.1.2. There is reliable evidence available of the construction/renovation deadline non-observance resulting from the investor’s failure to duly discharge one’s contracted obligations.

Preparation of draft resolution of the Government of St. Petersburg containing a provision on extension of the period of construction/renovation of the real property delivered for construction/renovation with application of penal sanctions prov ided for in the contract of lease for of the landplot on investment conditions (investment agreement) (4).

Executor: Construction Committee

property Executor: Construction Committee construction is equal to less than 10% of the total with the non-compliance with the provision specifying the real property construction/renovation deadline resulting from the investor’s failure to duly discharge one’s contracted obligations.

Adoption of a resolution on preparation of a legislative act on annulment of the legislative act by the executive authority of the city of St. Petersburg that sanctioned delivery of the real property for construction/renovation.

Executor: Construction Committee

2.1.3. There is reliable evidence available of the construction/renovation deadline nonobservance resulting from the investor’s failure to duly discharge one’s contracted obligations with the predefined construction completion period having been previously extended by more than nine months in total.

Preparation of draft resolution of the Government of St. Petersburg containing a provision on extension of the period of construction/renovation of the real property delivered for construction/renovation with application of penal sanctions provided for in the contract of lease for the landplot on investment conditions (investment agreement) based on the current report prepared on the market value of the right to investment agreement conclusion and market value of the landplot rentage (4, 5).

Executor: Construction Committee

3. Finalization of the draft resolution of the Government of St. Petersburg and discussion of contradictions related thereto within the framework of a session presided over by the Vice Governor of St. Petersburg responsible for issues of capital con-

2.1.4. There is a necessity to have the real property construction/renovation period extended by no more than nine months in order to provide for the con-struction/renovation completion and commissioning of a property whose availability state is defined as high.

Approval of extension of the period of construction/renovation of the real property without introduction of amendments to the relevant resolution of the Government of St. Petersburg on delivery of the real property for construction/ renovation.

Preparation and promulgation (in accordance with the established procedure) of an instrument by the Construction Committee stating the necessity to extend the period of construction/renovation of a real property whose availability state is defined as high (4, 6).

Executor: Construction Committee

p.5.2.

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struction and renovation of real property assets, road building, architecture and town planning as related to needs of capital construction (7)

p.2.1.4

4. Adoption of the resolution of the Government of St. Petersburg on extension of the period of construction/renovation of the real property delivered for construction/renovation

5.1. Submittal of the instrument stating the necessity to extend the period of construction/renovation of a real property whose availability state is defined as high to the St. Petersburg Service of State Construc-tion Supervision and Expert Appraisal for extension of the validity term of the permit documentation issued with regard to the real property.

Executor: Construction Committee

5.2. Submittal of the instrument stating the necessity to extend the period of construction/renovation of a real property whose availability state is defined as high to the City Property Management Committee.

Executor: Construction Committee

6. Deciding (in accordance with the established procedure) on concluding a supplementary agreement to the contract of lease for the landplot on investment conditions (investment agreement) without application of penal sanctions or introduction of amendments to provisions specifying the investment terms and conditions applicable.

Executor: City Property Management Committee (1) Model form of the application for delivery of a real property for construction and renovation was approved by Resolution № 23 of the St. Petersburg Construction Committee «On approval of model form of the application for delivery of a real property for construction and renovation» dated 28.10.2004 (revised 04.07.2006 ) (Appendices 1 & 2).

(2) The contract shall take effect at the moment when it comes to be signed by the Parties and remain valid during eleven months unless otherwise provided for in the Resolution of the Government of St. Petersburg on performance of survey within the territory of the landplot specified).

(3) The analytical certificate shall contain the following information (under Clauses 6-1.1 and 6-1.4 of Resolution № 1592 of the Government of St. Petersburg dated 21.09.2004): - details of the legislative act adopted by the relevant executive authority of the city of St. Petersburg used as a legal basis for performance of activities related to the real property construction/renovation; - data on availability of legislative acts adopted by relevant executive authorities of the city of St. Petersburg that provide for extension of the real property construction/renovation period; - data on the pre-scheduled date of the real property construction/renovation completion; - data on the amount of construction work completed (percentage wise to the real property availability); - estimate of the investor’s discharge one’s contracted obligation; - decision on either feasibility of the real property construction/renovation period extension by a term specified featuring description of the factors to have caused delay of the real property construction/renovation or necessity to provide for preparation of a legislative act on annulment of the legislative act by the relevant executive authority of the city of St. Petersburg that sanctioned delivery of the real property for construction/renovation).

Opinion statements by the relevant executive authorities of the city of St. Petersburg (if available) shall be appended to the analytical certificate bearing witness of essential circumstances including but not limited to the following: - authorities having promulgated a resolution on annulment of any legislative acts adopted by the executive authorities of the city of St. Petersburg that sanctioned delivery of the real property for construction/renovation; - the City Property Management Committee having failed to duly effect delivery of the real property for construction/renovation in accordance with the provisions of the legislative acts adopted by the executive authorities of the city of St. Petersburg that sanctioned delivery of the real property for construction/renovation; - the City Property Management Committee having failed to timely and properly provide for conclusion of the agreements required with regard to the real property delivered for construction/renovation in accordance with the provisions of the legislative acts adopted by the executive authorities of the city of St. Petersburg that sanctioned delivery of the real property for construction/renovation; - failure to observe the schedule of engineering support head sources connection to external networks as provided for in the legisla-

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tive acts adopted by the executive authorities of the city of St. Petersburg that sanctioned delivery of the real property for construction/renovation.

(4) Extension of the pre-scheduled period of construction/renovation of the real property delivered for construction/renovation shall be feasible only if the investor has fully discharged one’s pecuniary obligations under the contract of lease for the landplot on investment conditions (investment agreement) including those related to payment of the forfeit penalty sums due for the investor’s malfeasance or nonfeasance of one’s obligations.

(5) The current report on the market value of the right to investment agreement conclusion and market value of the landplot rentage shall be prepared by a person meeting the qualification requirements specified for persons involved in performance of appraisal activities and submitted to the City Administration for Real Property Appraisal and Inventory for the latter to formulate and promulgate a relevant resolution in accordance with the established procedure unless otherwise provided for by the acting legislation.

(6) With regard to a specific real property decision on the necessity to extend the period of its construction/renovation due to its availability state being defined as high without introduction of amendments to the relevant legislative acts adopted by the executive authorities of the city of St. Petersburg that sanctioned delivery of the real property for construction/renovation shall be allowed to be taken by the Construction Committee only once.

(7) In accordance with the procedure provided for in Resolution № 100 of the Government of St. Petersburg «On approval of the procedural rules of the Government of St. Petersburg» dated 16.12.2003.

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4.2.3. PROCEDURE FOR INTERACTION BETWEEN THE EXECUTIVE BODIES OF ST. PETERSBURG FOR THE PURPOSES OF IMPLEMENTING STRATEGIC INVESTMENT PROJECTS OF ST. PETERSBURG In accordance with: 1. Regulation on strategic investment projects and strategic investors in St. Petersburg approved by the resolution of the St. Petersburg Government of 01.03.2005, №216.

2. Regulation on procedure of interaction between the executive Governmental bodies of St. Petersburg in implementation of strategic investment projects of St. Petersburg approved by the resolution of the St. Petersburg Government of 01.03.2005, №216 (hereinafter – the Procedure).

3. A list of necessary documents required in attachment to an application for a strategic investment project of St. Petersburg or strategic investor for St. Petersburg approved by resolution of the Committee for investments and strategic projects of 17.06.2005 №1 (hereinafter – the List).

4. Regulation on expertise of materials necessary to distinguish the grounds for a decision about the strategic investment project in St. Petersburg or strategic investor in St. Petersburg approved by resolution of the Committee for investments and strategic projects of 17.06.2005 №1 (hereinafter – resolution on expertise).

5. Resolution on the procedure of listing the strategic investment projects in St. Petersburg and listing of strategic investors in St. Petersburg approved by resolution of the Committee for investments and strategic projects of 20.08.2005 №4 (hereinafter – Listing procedure).

Stage of work

Documents on resolution on the outcome

1. Submission to KISP of an application made in free written form for a strategic investment project (1) a strategic investor (2) (hereinafter - the application) Completed by: Initiators (3) Members of the St. Petersburg Government and the executive bodies of St. Petersburg

Application with the attaches set of documents in accordance to the List (4)

2. Registration of the application Term: on the day of receipt Consideration of the application Term: in 3 business days since the day next to the registration day (5) (may be extended by five days).

Completed by: KISP

←

p.6.2.

3. Decision on the result of considering the application (6).

Completed by: KISP

3.1. On sufficiency of the materials submitted and expressing as foreseen by resolution on expertise.

3.2. On suspension of considering the application in connection with insufficiency of the materials submitted.

4.1. Forwarding a notification in written form about a decision made on sufficiency of the materials submitted and performing the expertise to the initiators.

Term: in 3 business days since the day next to day when the decision has been made.

Completed by: KISP

4.2. Forwarding a notification in written form about a decision made on suspension of considering the application indicating the reasons for considering the submitted materials to be insufficient.

Term: in 3 business days since the day next to day when the decision has been made .

Completed by: KISP

5.1. Performing the expertise of the application in accordance to the resolution on expertise.

5.2. Submission of materials in addition to the application to KISP.

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Term: in 1 month since the moment when the decision has been made (7).

Completed by: KISP

p.2.

Term: 2 months Completed by: Initiators

6.2. Materials submittes?

Yes

No 7.2. Preparation of a negative expert opinion based on the documents submitted having been qualified as insufficient.

Executor: Committee for Investment and Strategic Projects 7.3. A written notification of the initiator of the expert appraisal results.

Executor: Committee for Investment and Strategic Projects 7.4. Termination of considering the application.

Completed by: KISP 6.1. Execution in written form of a conclusion on the expertise results.

Completed by: KISP 6.1.1. Positive conclusion (on compliance of the materials submitted with the necessary conditions and qualification requirements applicable to a strategic investment project or a strategic investor).

6.1.2. Negative conclusion (on non-compliance of the materials submitted with the necessary conditions and qualification requirements applicable to a strategic investment project or a strategic investor).

7.1.1. Written notification of the initiators on the expertise results.

Term: in 5 business days since the expertise conclusion has been made.

Completed by: KISP

7.1.2. Written notification of the initiators on the expertise results (8).

Term: in 5 business days since the expertise conclusion has been made.

Completed by: KISP

8.1.1. Development of a draft legal act of the St. Petersburg Government on the strategic investment project or strategic investor in accordance with the Listing procedure.

Term: in 7 business days Completed by: KISP

8.1.2. Termination of considering the application Completed by: KISP

(1) The conditions necessary to recognize the investment projects and investments as strategic ones in St. Petersburg the same as qualification requirements applicable to a strategic investment project in St. Petersburg are stipulated in clauses 2 and 3 of the resolution.

(2) Strategic investors in St. Petersburg may be physical persons and legal entities and associations of legal entities based on agreements on joint activities without forming a legal entity, bodies of local self-Government and foreign business subjects who actively participate in implementation of strategic investment projects of special importance for social, economical and cultural development of St. Petersburg.

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(3) Initiators are physical persons and legal entities associations of legal entities based on agreements on joint activities without forming a legal entity, Governmental bodies, of local self-Government bodies and foreign business subjects who intend to implement a strategic investment project or to act as a strategic investor.

(4) A set of documents proving compliance of the proposed investment project or investment with the necessary conditions applicable for recognition of the investment projects and investments in St. Petersburg as strategic ones and qualiďŹ cation requirements applicable to a strategic investment project or a strategic investor, as foreseen by clauses 2 and 3 of the resolution.

(5) Total period if considering the application may be extended but not longer than by ďŹ ve business days.

(6) This stage does not refer to the applications submitted to KISP by the Members of the St. Petersburg Government and executive bodies of St. Petersburg.

(7) When the additional information is needed for performing the expertise as decided by KISP the expertise period may be extended but not longer than by one month.

(8) Indicating the grounds for non-compliance of the materials submitted with the necessary conditions and qualiďŹ cation requirements applicable to a strategic investment project or a strategic investor.

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4.2.4. PROCEDURE FOR INTERACTION OF PUBLIC AUTHORITIES CONCERNING THE PLACING OF INVESTMENT PROJECTS WITHIN THE SPECIAL ECONOMIC ZONE OF ST. PETERSBURG In accordance with: 1. Federal Law of 22.07.2005 №116-FL (as of 30.10. 2007) «On Special Economic Zones in Russian Federation».

2. Decree of the President of RF №855 of 22.07.2005 «On the Federal agency for Special Economic Zone management» (as of 24.09. 2007).

3. Decree of the Government of Russia of 19.08.2005 №530 «On the Federal agency for Special Economic Zone management» (as of 29.12.2007).

4. Decree of the Government of Russia of 13.12.2005 №758 «On approval of the regulation for the Special Economic Zone Supervision Council» (as of 04.08.2006).

5. Order of the Ministry of Economic Development of Russia of 19.11.2007 №403 «On approval of the Model regulation for a regional unit of the Federal agency for Special Economic Zone Management».

6. Regulation of RF Government of 21.12.2005 №780 «On Establishment of Special Economic Zone of Technical Innovation Type in St. Petersburg».

7. Agreement between the Government of RF and the Government of St. Petersburg on Establishment of Special Economic Zone of Technical Innovation Type in St. Petersburg of 18.01.2006 (further in scheme referred to as agreement).

8. Regulation of the Government of St. Petersburg of 10.02.2004 №177 «On Committee for Economic Development, Industrial Policy and Commerce» (as amended as of 22.04.2008).

Organization and coordination of St. Petersburg authorities’ activities of as regards establishment and functioning of special economic zones in St. Petersburg is the responsibility of the Committee for Economic Development, Industrial Policy and Commerce (KERPPT).

Special economic technology development zone is created in St. Petersburg and accommodated within two sites in Petrodvorets district (territory «Noydorf» - 18,9 hectares, Strelna settlement) and in Primorsky district (in area to the north from «Novoorlovsky» forest park – 112 hectares) of St. Petersburg. The zone is created with purpose of localization of organizations and science intensive manufacturing and creating conditions for their development, as well as development of services in the field of high technology.

In accordance with article 10 of point 2 Law of RF «On special economic zones in RF» technology development activity is understood as creation and realization of scientific and technological production, adjustment of it for commercial application, including manufacturing, testing and sell of experimental consignments, as well as creation of program products, systems of collection, processing and transfer of data, systems of distributed calculations and rendering services of introduction and maintenance of these products and system.

On the territory of special economic zone of St. Petersburg (hereinafter – SEZ) it is planned to develop following main directions of activity: development of program products (software); means of communication of different purpose; automated engineering procedure control systems; military and civil avionics; medical equipment;, development of analytical instruments, manufacturing and testing of experimental consignments of enterprises resident of zone.

Registration as resident is performed by Territorial administration of Federal Agency for Managing special economic zones in St. Petersburg.

Thirteen companies became residents of the special economic zone1: ZAO «Tranzas», ZAO «Tranzas Technologies», OOO «Laser Systems» R&D Company», ZAO «Gazproject» Design Institution», OOO «Lintex», OOO «LOMOPribor», OOO «Neudorf» Engineering Centre», OOO «Arman», JSC «Priboi» Basic New Technologies», OOO «VVS St. Petersburg», ZAO «LEIVO», OOO «Alpha-Integrator-Infoenergo», OOO «Rakurs-Engineering».

Operation of plot «Neudorf» of the Special Economic Zone is to commence already in 2009.

1 As of february 2008 73

4.2.5. PROCEDURE OF INTERACTION BETWEEN THE EXECUTIVE GOVERNMENTAL BODIES OF ST. PETERSBURG AND ENTITIES AS REGARDS SALE OF PUBLICLYOWNED LAND TO THE OWNERS OF PROPERTY LOCATED ON SUCH PLOTS In accordance with: 1. Land Code of the Russian Federation, Federal Law №136-FL dated 25.10.2001 (revised 13.05.2008).

2. Federal Law of 21 of July 1997 №122-FL «On state registration of rights in real estate and related transactions» (modified as of 13.05.2008).

3. Decree of government of St. Petersburg of 26.06.2006 №76-rp «On order of interaction of state executive authorities of St. Petersburg at sale of land plots in state property to proprietors of immovables situated on this land» (modified as of 14.12.2006).

4. Resolution of Committee of 31.08.2006 №262-r «On order of interaction of structure departments of the Committee and public corporation «Property fund of St. Petersburg» at sale of land plots in state property to proprietors of immovables situated on this land» (modified as of 27.03.2007).

Stage of work

Documents on resolution on the outcome

1. Sending of application to KUGI (1) for acquiring of land plot (share in right of common share property in land plot) in property.

Performed by: legal and natural persons (hereinafter - applicants)

Application for acquiring of land plot (share in right of common share property in land plot) in property with full package of documents (2).

2. Receive and registration (3) of applications from applicants.

Time: in the day of providing of full package of documents.

Performed by : administration of state property management of KUGI (hereinafter- ASPM)

In case if in state cadastre of real estate of St. Petersburg there is data on real estate situated on land plot, for which no documents were presented, confirming property of applicant (applicants), or if documents presented by applicant (applicants) don’t contain data on property of applicant (applicants) in all objects of real estate, on land plot, within 1 working day KUGI prepare notification on suspension of application examination for 1 month and send it to applicant (applicants).

In notification on suspension of examination of application reasons are mentioned, because of which necessity of suspension appeared, and time, within which applicant (applicants) should present missing documents. after expiry of mentioned time in case of not presenting by applicant (applicants) of missing documents KUGI within two working days makes a decision on annulment of application and send to applicant (applicants) corresponding notification with attachment of documents, presented by applicant (applicants).

3. Sending requests to committees Time: within 2 working days from registration of application by ASPM

3.1. On providing data about land plot and objects of real estate on land plot : in KZRiZ, in KGA and and to the district departments (administrations) of the City Property Management Committee.

Performed by : ASPM

74

3.2. On presence of registered rights in land plot, restrictions, charges of land plot, servitudes, on registered rights in objects of real estate on land plot, and legal owners of mentioned objects - to UFRS. Performed by : ASPM

4.1. Sending to ASPM of 3 copies of resolution (hereinafter - resolution).

Time: within the term provided for by the acting federal legislation Performed by: KZRiZ, KGA, KGIOP, district departments (administrations) of the City Property Management Committee and UFRS

4.2. Sending to ASPM of information in form established by legislation Time: within the term provided for by the acting federal legislation.

Performed by: UFRS

5. Resolutions contain conclusion on refusal or disputable questions arose (5)?

No

Yes

6.1. Decision on sale of land plot or share in right of common share ownership in land plot and notification on made decision to administration of district of St. Petersburg, on territory of which land plot is situated. Conclusion of purchase agreement for land plot or share in right of common share ownership in land plot is provided by KUGI in time, established by federal legislation.

Time: with in the term provided for by the acting federal legislation Performed by : ASPM

6.3. Preparation of notification on refuse from sale of land plot or shares in right of common share property in land plot and send it to applicant (applicants). In notification on refuse from sale of land plot or shares in right of common share property in land plot reason of refuse is mentioned. To notification on refuse from sale of land plot or shares in right of common share property in land plot photocopies are attached of documents, received from KGA, KGIOP and UFRS. Performed by : ASPM

6.2. Transfer of package of documents to ОАО «FI» and sending of notification to applicant.

Time: in the day of signing of transfer order and notification Performed by: Public Property Accounting Administration of the State Property Management Committee (hereinafter – UUGS)

6.4. Sending of notification on refuse from buy out of land plot (shares in right of common share property in land plot) to applicant.

Performed by : ASPM

p.7.

p.8.

6.5. Transfer of package of documents for keeping to the authority for Taking Stock of State Property of KUGI (hereinafter - UUGS) for further keeping in established order.

Performed by : ASPM

7. In case of the signing draft agreement of purchase and sale of a plot of land 7.1. Signing draft agreement of purchase and sale of a plot of land (limited interest in joint shared ownership of a plot of land) in three originals. Forwarding a

7.2. Issuing on behalf of the applicant(s) a certificate of state registration of the transfer of ownership of the plot of land signed by the Seller featuring indication (in case of

7.3. Forwarding to the Agency copies of the certificate of state registration of the transfer of ownership of the plot of land or limited interest in joint shared ownership of a plot of

7.4. Forwarding a copy of the draft agreement of purchase and sale of a plot of land (limited interest in joint shared ownership of a plot of land) to the Public Property Accounting 75

signed original of the draft agreement of purchase and sale of a plot of land (limited interest in joint shared ownership of a plot of land) and a relevant notification to the applicant (6).

Term: within five working days on receipt of the transfer order and the package of documents.

Executor: JSC FI

necessity) of limitations of rights to the plot of land that may exist (landplot encumbrances, easements) to be submitted by the applicant(s) to the Federal Registration Service Administration and other relevant documents (including a letter of attorney for submittal of the certificate of state registration of the transfer of ownership of the plot of land to the Federal Registration Service Administration) after obtainment of a copy of the document bearing witness of the applicant(s) having effected payment of the contracted compensation for transfer of ownership of the plot of land (limited interest in joint shared ownership of a plot of land) and a signed original of the agreement of purchase and sale of a plot of land or limited interest in joint shared ownership of a plot of land.

Executor: JSC FI

land.

Term: within a two days’ period on its receipt from the applicant.

Executor: JSC FI

Administration for archive storage.

Executor: ОАО «FI»

p.6.2.

8. In case of the package of documents having been returned to the Federal Registration Service Administration for deciding on application annulment 8.1. Return of the package of documents to the Federal Registration Service Administration for deciding on application annulment in the following cases: - the Applicant’s non-appearance within fifteen days on expiry of the term indicated in Clause 4.1.2 of the Regulation; - the Applicant’s failure to fur 76

8.2. Informing the Committee IT Administration of the Applicant having submitted the documents required or delivery of the package of documents to Public Property Management Administration of the City Property Management Committee in the form of an electronic file.

Term: three days after:

8.3. Decision on application annulment and forwarding a duly signed notification of the application having been annulled to the Applicant. Forwarding copies of the notification to JSC FI and to the Agency Term: a week on receipt of the package of documents from JSC FI

nish the Seller with an original of the duly signed sale-and-purchase agreement during fifteen days on expiry of the term provided for in Clause 4.1.2 of the Regulation; - the Applicant’s refusal to sign the agreement there being no contractual disputes unsolved Term: within two working days Executor: JSC FI.

- the Applicant has submitted to JSC FI a duly signed saleand-purchase agreement;- the Applicant has furnished JSC FI with a copy of the document bearing witness of the Applicant(s) having effected payment of the contracted compensation for transfer of ownership of the plot of land (limited interest in joint shared ownership of a plot of land) in full; - the package of documents has been delivered to the Public Property Management Administration of the City Property.

Management Committee for deciding on the application annulment Executor: JSC FI

Executor: Public Property Management Administration of the City Property Management Committee

1) Declaration on acquirement in property of land plot is fled by proprietor of building (construction, structure).

Participants of common share property in building (construction, structure), and (if any) proprietors of non residential rooms in building (participants of common share property in non residential rooms in building) file common declaration on acquirement in common share property of land plot with indication of shares in right of common share property, passing to them at acquirement of land plot in common share property.

If at the moment of fling of declaration on acquirement in property of land plot land plot is in common share property of state and third persons: - Proprietor of non residential rooms in building file declaration on acquirement of due to him share of right of common share property in land plot.

- Participants of common share property in non residential rooms in building file common declaration on acquirement of due to each of them share of right of common share property in land plot.

(2) 1. Documents required for decision of plot sale or share of right of common property in land plot: For applicants - legal persons: – notarized copies of constituent documents, with full changes and additions; – notarized copy of state registration of legal person certificate; – in case of fling of declaration be representative of legal person a correspondingly drown power of attorney is presented, as well as document, confirming identity of representative of legal person; – documents, confirming presence of legal person in unified state register of legal persons and in taxation documents, with date of issuance not later than 1 month on day of fling.

For applicants – natural persons: One of the documents, confirming identity, which is returned to person requiring registration after ascertainment of correspondence of indicated there data to that, indicated in application, as well as notarized translation of documents, confirming identity, which are made in foreign language Documents, confirming identity include: For citizens of Russian Federation: – passport of citizen of Russian Federation; – interim identity card of citizen of Russian Federation with term of validity no more than two months; – passport of sailor; – identity card of military man of active service or military card for military men; – civil foreign passport of citizen of Russian Federation with note of permanent place of residence abroad; – birth-certificate for infants, of less than 14 years old; – documents, confirming refugee status.

For foreign citizens and persons without citizenship: – national passport of foreign citizen and notarized translation of in Russian; – residence permit of foreign citizen or person without citizenship, permanently living in Russian Federation; – permit for temporary dwelling, issued to foreign citizen; – documents, confirming identity of person without citizenship in Russian Federation.

In the application there should be mentioned Essential elements of document confirming identity, attached to application.

Notarized copies of immovable objects layout with indication of area and cadastral numbers, as well as notarized copies of documents, confirming property rights of applicant (applicants) in all buildings, constructions, structures (rooms), on land plot (purchase agreement, agreed plan of privatization, other documents).

77

In case if property rights of applicant (applicants) in immovable objects on land plot, appeared after taking effect of Federal law «On state registration of rights in immovables and transactions with it», a notarized copy is presented of state registration of right certificate.

Cadastral map (layout) of land plot (hereinafter CMLP), issued and confirmed by body, performing state land cadastre keeping, in 3 copies.

2. Documents, necessary for conclusion of purchase agreement for land plot or share in right of common share property in land plot: – notarized copy of certificate of making record in unified state register of legal persons about legal person; – notarized copy of certificate of registration of legal person by tax authorities; – documents, confirming authorities of managing body of applicant, which made decision on acquiring in property of land plot, and of person, who signed application (minutes of election or duly drown power of attorney); – permission (agreement) guardianship bodies for disposal of property of persons less than 14 years old (in case if land plot or share in right of common share property in land plot is acquired at the expense of infants), and persons, recognized by the court as incapable, by their legal representatives (parents, adoptive fathers, guardians); – permission (agreement) of guardianship bodies for giving by legal representatives (parents, adoptive fathers, guardians) of agreement to infants in the age from 14 to 18 (in case if land plot or share in right of common share property in land plot is acquired at the expense of funds of infants, of which they have no right to dispose) and citizens, recognized by the court as partially capable, for disposal of property; – notarized agreement of spouse for acquiring in property (common share property) of land plot or share in right of common share property in land plot in case if natural person applying is married, and copy of certificate of marriage; – certificate of the size/ share of land plot (in case an application has been submitted for purchase of a share (s) in right of common share property in land plot of the applicant(s), issued by Committee for land resources and land development of St. Petersburg (hereinafter – KZRiZ) not earlier than 6 months before date of fling of application and notarized copy of it – extract from state cadastre of immovables of St. Petersburg on land plot and immovables on mentioned land plot, issued not earlier than 6 months before date of fling of application; – excerpt from the St. Petersburg state real property cadastre containing information on the landplot and real properties located within the territory of the latter issued no earlier than six months prior to the application submission.

3) administration of state property management of KUGI (hereinafter – ASPM): accepts applications and documents, necessary for making decision on sale of land plot or share in right of common share property in land plot, as well as for conclusion of purchase agreement for land plot or share in right of common share property in land plot.

List of documents, necessary for making decision on sale of land plot or share in right of common share property in land plot, as well as for conclusion of purchase agreement for land plot or share in right of common share property in land plot is defined in accordance with point 4 of regulation on order of interaction of state executive authorities of St. Petersburg at sale of state owned land plot to proprietors of immovables situated on them, approved by government of St. Petersburg decree of 26.06.2006 №76-rp (hereinafter decree of government of St. Petersburg), and besides documents indicated in it includes: – copy of document, confirming identity (for applicants – natural persons); – copy of certificate of natural persons registration with tax authorities (for natural persons); – copy of lease contract for land plot (if any) or documents, confirming fact of payment by applicant of land tax (if any).

(3) UGRS has a right to refuse from registration of application exceptionally subject to: – incompletness of presented package of documents (except when cadastral plan of the landplot is unavailable (Clause 5 of the Regulation approved by Resolution of the Government of St. Petersburg dated 26.06.2006)); – if amount of shares of applicant in right of common share property in land plot mentioned in application, which is to be transferred from state property, is not equal to 1 (in case of absence of common share property in land plot at the moment of fling application).

(4) KZRiZ, KGA, KGIOP and UFRS. (5) In cases of dispute there shall be additional requests addressed to the Applicants.

(6) Draft agreement of purchase and sale of the plot of land (limited interest in joint shared ownership of a plot of land) and a notification containing the suggestions that: – within a fifteen days’ time on receipt of the aforesaid documents the Applicant should present oneself to the Seller and submit a duly signed draft agreement of purchase and sale of the plot of land (limited interest in joint shared ownership of a plot of land); – within a fifteen days’ time on submittal of the duly signed draft agreement to the Seller the Applicant should present oneself to the Seller and submit a copy of the document bearing witness of the Applicant(s) having effected payment of the contracted compensation for transfer of ownership of the plot of land (limited interest in joint shared ownership of a plot of land) in full).

78

4.2.6. THE PROCEDURE FOR LEASING NON-RESIDENTIAL PREMISES (1) In accordance with: 1. The resolution of the Committee for Municipal Property Management of St. Petersburg from 01.02.2000 №187-r «On procedure for taking decisions on leasing non-residential premises that are property of St. Petersburg (modified as of 15.02.2008)» (hereinafter referred to as resolution № 187-r).

2. By Resolution of the Government of St. Petersburg № 1735 «On City and district real properties management commissions» dated 16.11.2005.

3. Resolution of the City Property Management Committee № 485-r «On procedure of preparation materials to be submitted for consideration by the city real properties management commission and procedure of issuance of resolutions by the City Property Management Committee based on conclusions arrived at by the city real properties management commission» dated 19.08.1996.

Stage of work

Documents on resolution on the outcome

1. Preparing the set of documents for the object (2).

Completed by: district agency of the KUGI, department for registration of transactions with real estate of the KUGI (hereinafter referred to as the KUGI departments)

Set of documents for the object in accordance with appendix 1 to regulation approved by resolution №187-r

2. Preparation of information on actually vacant properties and its publication in mass media (3).

Subject to publication are also data on non-residen tial properties unlawfully owned by third parties in relation thereto the decision has been taken by the Deputy Chairman of the City Property Management Committee responsible for supervision over the Committee’s district real property administrations (departments) to initiate their preparation for making available for lease with information on the properties included in the info report (Clause 3.3 of Ordinance № 7-r of the City Property Management Committee dated 25.01.2000).

Executor: Real Property Transactions Preparation Administration of the City Property Management Committee, IT Department of the City Property Management Committee.

Publication of information in accordance with the Regulations approved by Ordinance № 7 of the City Property Management Committee dated25.01.2000.

Term specified for of publication of information on the property to be leased: two weeks.

3. Filing the application together with the enclosed documents on leasing the property to the KUGI department as specified in the publication(3).

Deadline: visiting days and hours approved by the order of the KUGI. Completed by: legal entity (individual) (hereinafter referred to as the applicant)

Application in accordance with appendix 2 to regulation approved by resolution №187-r with enclosed documents in accordance with appendix 3 to regulation approved by resolution №187-r

4. Is full set of documents in accordance with the appendix 3 to the resolution №187-r available?

Yes 5.1. Registration of the application in the register for applications in accordance with appendix 4 of

↓ No 5.2. Decline to register the application Performed by: an officer of the KUGI department 79

the regulation approved by resolution №187-r and giving it a registration number.

Deadline: the day of filing the application (4) Completed by: an officer of the KUGI department

6. Has an application been made for the object in the course of 2 weeks since the date of publication of information about it in the Catalogue?

Term: on the application submission date.

No →

In relation to a non-residential property there shall be a package of documents prepared required for deciding on the terms and conditions of the property’s privatization (sale) in accordance with the procedure provided for by Resolution № 233-r of the City Property Management Committee dated 03.08.2006.

Yes 7. Forwarding the prepared set of documents for review by the city (district) commission to the secretary of the city commission on real estate management (hereinafter referred to as the city commission or the district commission) (5).

Deadline: 3 working days from the removal of the object from the publication (6).

Completed by: officer responsible at KUGI

→

Package of documents prepared in accordance with the provisions of Appendices 1 and 3 to the Regulation approved by Resolution № 187-r with a conclusion certificate appended to it formalized in accordance with the provisions of Appendix 5 to the Regulation approved by Resolution № 187-r (hereinafter referred to as the «package of documents») in the hard copy and electronic document forms

8. Including the issue of the lease application into the agenda of the next meeting of the city commission in accordance with the regulations of the city commission.

Deadline: The day of the next sitting of the municipal commission.

Completed by: secretary of the city commission 9. Issue consideration and Resolution Completed by: city commission

Resolution of the city commission, signed by all members present on the meeting

10.1. Decision taken by the city commission on the property’s lease

10.2. Decision taken by the city commission on denial of all the applications for the property lease

11. Preparation of the draft resolution of the KUGI and submitting it for the approval of the department of the economic security of the KUGI. Deadline: 7 business days Completed by: department for registration of transactions with real estate, State Property Accounting Administration

Draft resolution of the KUGI, prepared on the basis of the extract from the resolution of the City commission

12. Coordination of the draft resolution of the KUGI Deadline: no more than three working days.

Completed by: Economic Security Administration of the City Property Management Committee, 80

State Property Accounting Administration of the City Property Management Committee 13. Was the draft resolution of the KUGI approved by the department of the economic security of the KUGI? p.14.4.

Yes

↓

No

14.1. Submitting the approved resolutions of the KUGI I to be signed by the Deputy Chairman of the Committee supervising the city commission on real estate management.

Completed by: department for registration of transactions with real estate of the KUGI

14.2. Sending the draft resolution of the KUGI for revision to the department for registration of transactions with real estate.

Performed by: department of the economic security of the KUGI

15. Registration of the resolutions and their distribution (including delivery) together with the leasing case to KUGI departments for fulfillment.

Deadline: one day.

Completed by: department for documents systematization of the KUGI

14.3. Revision of the draft resolution of the KUGI Deadline: 2 business days Performed by: department for registration of transactions with real estate

14.4 Second agreement of the draft resolution of the KUGI. Deadline: 1 business day Performed by: department of the economic security of the KUGI

p.14.1.

16. Sending a notice for signing the agreement within 2-week period to the applicant in whose favor the decision of the city commission was made.

Deadline: within one business day after the resolution of the KUGI (of the head of the district office) is received.

Completed by: KUGI department

Notice in accordance with appendix 6 to the regulation approved by resolution №187-r

17. Signing the agreement that has already been signed by the applicant Deadline: within 1 business day Completed by: head of the KUGI department

Agreement signed by both parties

18. In established order providing by KUGI department of state registration agreement to administration of Federal registration service in St. Petersburg and Leningrad region (7).

Deadline: within 2 business days Completed by: head of the KUGI department 81

(1) In mentioned section there is a procedure of giving into lease of objects of nonresidential fund, question of disposal of which is previously examined by city commission for disposal of immovable, while procedure of giving into lease of objects of nonresidential fund, question of disposal of which is previously examined by district commissions for disposal of immovable is not presented.

(2) Actually not occupied non residential buildings, structures, rooms, owned by treasury of St. Petersburg.

(3): (3-1) Under Appendix 1 to Resolution of the Government of St. Petersburg № 1735 «On City and district real properties management commissions» dated 16.11.2005 terms of reference of the city commission for lease of non-residential real properties provide for deciding on the following: 1. Target-purpose lease of the following non-residential properties publicly owned by the city of St. Petersburg and falling into property of the Treasury of St. Petersburg and determination of the relevant terms and conditions: 1.1. Properties delivered for usage within the framework of activities recognized as socially significant in accordance with the established order.

1.2. Properties which are freestanding buildings/structures (except buildings and structures intended for usage as private garages).

1.3. Non-residential properties (except non-residential properties the right to decide on lease thereof is provided for by terms of reference of the city commission for lease of non-residential real properties).

2. Target-purpose lease of the following non-residential properties publicly owned by the city of St. Petersburg and allocated on the basis of operational management to state institutions of the city of St. Petersburg (hereinafter referred to as the «Institutions») (with the exception of the non-residential properties allocated on the basis of operational management to district administrations of the city of St. Petersburg and state institutions of St. Petersburg whose activities are managed and coordinated by district administrations of the city of St. Petersburg) and determination of the relevant terms and conditions).

Under Appendix 3 to Resolution of the Government of St. Petersburg № 1735 dated 16.11.2005 terms of reference of the district commission for lease of non-residential real properties provide for deciding on the following: 1. Target-purpose lease of the following non-residential properties publicly owned by the city of St. Petersburg (except properties the right to decide on lease thereof is provided for by terms of reference of the city commission for lease of non-residential real properties) and determination of the relevant contractual terms and conditions): 1.1. Non-residential properties falling into property of the Treasury of St. Petersburg (except the non-residential properties located within buildings and structures immediately adjacent to the major transport thoroughfares of St. Petersburg as per the List appended to the present Regulation) and meeting one of the following criteria: - the rentage market rate does not exceed 4,550 RF roubles per square metre annually (7,000 RF roubles with non-residential properties located in the Admiralteisky, Vasileostrovsky, Petrogradsky and Tsentralny administrative districts of the city of St. Petersburg) with consideration for the rental charge eventual annual increase in accordance with the provisions of Clause 3 of the Law of St. Petersburg № 149-51 «On procedure of calculating the amount of charge for rent of non-residential properties leased by the city of St. Petersburg» dated 03.09.1997; - total annual amount of rental charge calculated without regard for the applicable rentage discounts and benefits does not exceed 3,500,000 RF roubles with consideration for the rental charge eventual annual increase in accordance with the provisions of Clause 3 of the Law of St. Petersburg № 149-51 «On procedure of calculating the amount of charge for rent of non-residential properties leased by the city of St. Petersburg» dated 03.09.1997.

In cases when classification of a property is a controversial issue the final decision shall be taken by the City Real Properties Management Commission.

1.2. Non-residential properties falling into property of the Treasury of St. Petersburg and included in the list of non-residential properties classified as assets of the St. Petersburg Artistic Workshop Fund.

1.3. Non-residential properties allocated on the basis of operational management to district administrations of the city of St. Petersburg and state institutions of St. Petersburg whose activities are managed and coordinated by district administrations of the city of St. Petersburg.

2. Lease or delivery for temporary uncompensated use of non-residential properties falling into property of the Treasury of St. Petersburg intended and delivered specifically for usage as private garages irrespective of the properties’ other characteristics.

(3-2) Excluding the data: – Data on non residential buildings, structures, rooms, including inbuilt and attached to residential houses, rate of rent for which, calculated in accordance with Method of defining rate of rent for objects of non residential funds, established by legislation of St. Petersburg, no more than 30 standard units for 1 square meter a year.

– Cases when conclusion of lease agreement for new term is made on the same conditions (including for the same term but not longer than 10 years) at conforming with requirements of article 621 of Civil Code of the Russian Federation, with tenantry, for lessees for whom rentals under agreement, which has been expired, was calculated using market rate of rent and factor of social significance of 1,0 and duly performed obligations during the entire term of the agreement.

(4) Receiving of applications id ceased after 3 business days after asset withdrawal from the realty bulletin, leave alone case provided for in abstract 2 p. 18 of this regulation. Date of asset withdrawal from the realty bulletin is date of publishing of weekly bulletin of informational agency «Immovables of Petersburg» – «City catalogue of immovables» (hereinafter – catalogue) without information on object to be leased.

Responsible person from KUGI department within 3 business days after the asset is withdrawn from the realty bulletin, send secretary of city commission for disposal of immovables (hereinafter – city commission, district commission) package of documents formed in accordance with attachments 1 and 3 with attachment of certificate (attachment 5) (hereinafter – package of documents) in paper land electronic form for examination by city commission.

(5) Applications received after sending secretary of city (district) commission of package of documents, not later than 3 business days after the asset is withdrawn from the realty bulletin, are additionally sent within 2 business days to secretary of city (district) commission with attachment of package of documents.

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(6) The date of removal of the project from publication is date of publishing of weekly bulletin of informational agency «Immovables of Petersburg» – «City catalogue of immovables» (hereinafter – catalogue) without information on object to be leased.

(7) Should the Applicant in whose favour the city commission has taken the decision on the real property lease fail to sign the property lease contract within the term specified the property lease issue shall be referred to the subsequently summoned regular commission without publication and with invitation of the Applicants to have been registered by the moment of the previous consideration of the issue by the district commission. In such a case the non-residential property in question shall be subject to privatization (sale) in accordance with the procedure provided for in the applicable legal acts to have been issued (adopted) by the City Property Management Committee.

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4.2.7. THE PROCEDURE OF APPROVAL FOR REAL ESTATE MANAGEMENT THAT BELONGS TO PUBLIC UNITARY ENTERPRISES

BY THE RIGHT OF ECONOMIC MANAGEMENT In accordance with: 1) By Resolution of the Government of the Russian Federation № 333 «On implementation of powers related to exercise of rights a proprietor of a federal state unitary enterprise assets is entitled to by federal executive authorities» dated 06.06.2003; 2) By Resolution of the Government of the Russian Federation № 739 «On powers of the federal executive authorities related to exercise of rights a proprietor of a federal state unitary enterprise assets» dated 03.12.2004; 3) By Resolution of the Government of the Russian Federation № 234 «On providing for residential and other construction on the territory of federally owned landplots» dated 03.04.2008 there is a ban imposed on federal executive authorities’ participating in coordination of transactions related to management of federally owned real properties allocated to federal state unitary enterprises on the basis of economic control rights prior to 01.01.2009 (Clause 3); 4) By Agreement № 01/323/34-S concluded 11.11.2005 by the Federal Agency for Federal Property Management and the Government of St. Petersburg on delegating to the Government of St. Petersburg some of the powers related to management of federal property including landplots federally owned by the Russian Federation; 5) The regulations on procedure of approval for real estate management that belongs to public unitary enterprises by the right of economic management (modified as of 05.03.2008) approved by the resolution of the KUGI of 13.08.2001 №1332-r (in the diagram–the regulations).

6) The resolution of St. Petersburg’s government of 04.04.2003 №600-ra «On steps to implement the Federal Law ‘On privatization of public and municipal property’» (modified as of 23.03.2007).

7) By Resolution of the Government of St. Petersburg № 1735 «On City and district real properties management commissions» dated 16.11.2005; 8) By Ordinance of the City Property Management Committee № 85-r «On procedure of implementing control over compliance with the contracted terms and conditions of lease of federally owned real properties allocated to federal state unitary enterprises and federal state institutions on the basis of economic control rights, requirements of the regulatory legal acts of the Russian Federation» dated 27.08.2007 (hereinafter referred to as Ordinance № 85-r of the City Property Management Committee).

Stage of work

1. Providing the set of documents to the Committee on the Municipal Property Management.

Completed by: Public unitary enterprise , owned by the city of St. Petersburg ((in the diagram – GUP), or federal state unitary enterprise ((in the diagram – FGUP)

2. Consideration of the application and the documents.

Completed by: Department for Preparation of Transactions with real estate (hereinafter referred to as UPSON KUGI and RA KUGI)

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Documents on resolution on the outcome For GUP

Documents in accordance with p. 5 of the regulations

For FGUP (2) →

Package of documents prepared in accordance with Appendices 1-4 to the Provisional Regulations to provide for arrangement of the activities of the Federal Agency for Federal Property Management related to coordination of transactions concluded by enterprises in connection with federal property allocated to them approved by Ordinance №169 of the Federal Agency for Federal Property Management (hereinafter referred to as the «Rosimuschestvo») dated 17.09.2007 (hereinafter referred to as the «Provisional Regulations») as well as the documents listed in Clauses 5.1, 5.8.3, 5.8.4 and 5.8.6 of the Regulation

3. Were all documents as out-lined in It. 1 of the diagram presented with no significant flaws?

Yes, for GUP

→

p.11.

Yes, for FGUP

→

p.6.1.

No 4. Sending the applicant the notice that the issue was suspended for the time being Deadline: 10 days Completed by: UPSON KUGI and RA KUGI

5. Were the requested documents presented and deorrected within 3 months fol-ng the submission of the notice?

Yes, for FGUP

Notice, specifying precise remarks to presented documents and suggestions to correct defects

No →

6.2. Notifying the applicant that it is impossible to consider the issue of approval of real estate management of the public unitary enterprise.

Completed by: UPSN KUGI and RA KUGI

Yes, for GUP p.11.

6.1. Has the need to carry out visual inspection of FGUP property been proved?

p.3.

No

p.11.

→

Yes

7. Is the property located outside the St. Petersburg territory?

No

8.1. Providing for visual inspection by officials of the district real property administration, department (agency) of the City Property Management Committee (hereinafter referred to as «RA KUGI»).

Executor: Real Property Transactions Preparation Administration of the City Property Management Committee (hereinafter referred to as «UPSON KUGI») and the relevant district real property administration of the City Property Management Committee (hereinafter referred to as «RA KUGI»).

Term: within two working days on completion of the documents package review with regard to its completeness of set.

Yes 8.2. Preparation and submittal for endorsement by the Deputy Chairman of the City Property Management Committee responsible for supervision over real property management activities of a draft address to the relevant territorial administration of Rosimuschestvo on the necessity to perform a visual inspection of the assets of the Federal State Unitary Enterprise referred to.

Executor: UPSON KUGI, RA KUGI

Address formalized in accordance with the provisions of Clause 20 of the Provisional Regulations with the inspection time indicated (the standard inspection duration being two days).

85

Term: within two working days on completion of the documents package review with regard to its completeness of set 9. Endorsement of the address to the relevant territorial administration of Rosimuschestvo on the necessity to perform a visual inspection of the assets of the Federal State Unitary Enterprise referred to Executor: Deputy Chairman of the City Property Management Committee responsible for supervision over real property management activities.

Term: no more than one working day after the draft address submittal

Address to the relevant territorial administration of Rosimuschestvo on the necessity to perform a visual inspection of the assets of the Federal State Unitary Enterprise referred to signed by the Deputy Chairman of the City Property Management Committee responsible for supervision over real property management activities (hereinafter referred to as the «Address»).

10. Posting the Address to the relevant territorial administration of Rosimuschestvo with copies of the address forwarded to the subdivisions of the City Property Management Committee that participated in the address preparation (by fax or email).

Executor: Organizational Administration of the City Property Management Committee p.3.

p.5.

p.6.1.

11. Asking the opinion summary of the Department on Public Property Management (3).

Completed by: UPSON KUGI and RA KUGI

12. Issuing the opinion statement Completed by: URGS KUGI.

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The opinion summary should analyse the following issues: - conformity of the suggested type of real estate management to the special (charter) legal capacity of the enterprise, as well as to the set in accordance with the approved procedure objectives of St. Petersburg concerning the activity of the enterprise or company the property of which is in ship of St. Petersburg; - economic efficiency of real estate management from the point of view of the enterprise, as well as conformity of the suggested type of real estate management to the planned documents (business plan) of the Enterprise coordinated in accordance with the approved procedure whose property is in the ownership of St. Petersburg (excluding cases specified in p. 15 of the present diagram); expediency of the suggested terms of real estate management; - economic efficiency of real estate management from the point of view of St. Petersburg or the Russian Federation as the owner of the corresponding property (excluding cases in case the proposed way of the real property management provides for alienation of the city of St. Petersburg from ownership of the real property referred to).

13. Preparing the opinion report Deadline: for GUP - three weeks (4) after the documents specified in clause 1 are received; for FGUP - within nine working days on UPSON KUGI and RA KUGI having received the federal state unitary enterprise’s application for a formal consent to management of the properties owned by the federal state unitary enterprise on the basis of economic control rights Completed by: UOSON KUGI 14. Does the real estate in question belong to the public unitary enterprises by the right of economic man-agement, or the KUGI cannot give approval for management of real estate on other grounds?

Opinion report according to the form in appendix 4 to the regulations

Yes →

15. The UPSON KUGI and RA KUGI prepares the notice on refusal for management of the property of the public unitary enterprise.

No 16. Submitting the opinion report for consideration of the City Commission on real Estate Management (hereinafter referred to as the Commission) or the Commission for Management of Federally Owned Properties located within the territory of St. Petersburg.

Completed by: UPSON KUGI and RA KUGI

The opinion report prepared by the UPSON KUGI, with the attached documents received from the applicant, the public authorities and the departments of the KUGI.

17. Considering submitted documents and decision making Completed by: Commission

Decision for approval, including approval of terms in accordance with clause 4 of the regulations, or for refusal for management of the real estate of the public unitary enterprise.

18. Putting the decision into the protocol Deadline: no later than 1 day after the decision was made Completed by: Commission

Excerpts form the Commission’s resolutions shall be signed by the Commission’s chairman and secretary on the day after the Commission session was held in accordance with provisions of Resolution № 1735 of the Government of St. Petersburg dated 16.11.2005.

19. Did the Commission decide to refuse to giveap-of the KUGI for management of estate of the public unitary enterprise?

No

p.21.

→

Yes 20. Preparing the refusal notice.

Deadline: one week after the copy of the Minutes of the Commission is received Completed by: UOSON KUGI

Preparing the notice from the KUGI on refusal for management of the property of the public unitary enterprise

87

п.19.

21. Preparing draft resolution of the KUGI for approval for management of the property of the public unitary enterprise Deadline: one week Completed by: OOSON KUGI

→

Draft resolution of the KUGI for approval for management of the property of the public unitary enterprise

22. Coordination of the draft resolution of the KUGI, specified in clause 21, with the Head of the Department on Public Property Management of the KUGI. Completed by: OOSON KUGI

Draft resolution of the KUGI, specified in It. 21 co-coordinated with the Head of the Department on Public Property Management of the KUGI

23. Coordination of the draft resolution of the KUGI, specified in It. 24 with the Head of the Department of Economic Safety of the KUGI. Completed by: OOSON KUGI

Draft resolution of the KUGI, specified in It. 21 co-coordinated with the Head of the Department of Economic Safety of the KUGI

24. Coordination of the draft resolution of the KUGI, specified in It. 21 with the Deputy Chairman of the KUGI, supervising commission on management of federal property located on the territory of St. Petersburg (5).

Completed by: OOSON KUGI

Draft resolution of the KUGI, specified in It. 21 co-coordinated with the Deputy Chairman of the KUGI, supervising commission on management of federal property located on the territory of St. Petersburg.

25. Did draft resolution KUGI specified in it. 21, insues of giving approval to the Enterprise for free use lease agreements?

Yes →

No 26.1. Coordination of the draft resolution of the KUGI, specified in It. 21 with the Head of the Legal Department of the KUGI Completed by: YU KUGI 27. Who is the owner of the property of the Enterprise?

26.2. Coordination of the draft resolution of the KUGI, specified in It. 21.

Completed by: OOSON KUGI

St. Petersburg

Russian Federation 28.1. Sending the coordinated draft resolution of the KUGI for signing to the First Deputy Chairman of the KUGI. Completed by: OOSON KUGI

p.29.

88

28.2. Sending the coordinated draft resolution of the KUGI for signing to the Deputy Chairman of the KUGI, supervising the City Commission On real Estate Management Completed by: OOSON KUGI

29. Is the draft resolution signed?

Yes

p.32.

No 30. Preparing the notice on refusal for management of the property of the public unitary enterprise signed by the Chairman of the KUGI Completed by: UOSON KUGI

Notice on refusal for management of the property of the public unitary enterprise signed by the Chairman of the KUGI

31. Sending to the Commission the proposal to cancel decision for approval for management of the property of the public unitary enterprise, specifying the reasons Completed by: UOSON KUGI

Proposal to cancel decision for approval for management of property of the public unitary enterprise, specifying the reasons

p.29.

32. Providing the copy of the resolution to the public unitary enterprise Deadline: 5 days after the resolution of the KUGI is signed Completed by: UOSON KUGI

Copy of the resolution of the KUGI for approval for management of the property of the public unitary enterprise

33. Signing the corresponding agreement on real estate management (making the corresponding transaction) Deadline: during 3 months after the resolution is signed (unless otherwise is specified by the decree).

Completed by: applicant

Concluded agreement on real estate management

34. Agreement on real estate management was not concluded during 3 months after the resolu-tion was signed?

35. The resolution is no longer effective (1) Under Clause 3 of Resolution of the Government of the Russian Federation № 234 «On providing for residential and other construction on the territory of federally owned landplots» dated 03.04.2008 there is a ban imposed on federal executive authorities’ participating in coordination of transactions related to management of federally owned real properties allocated to federal state unitary enterprises on the basis of economic control rights prior to 01.01.2009.

(2) Decision on sanctioning management of real properties allocated to federal state unitary enterprises on the basis of economic control rights is taken by the City Property Management Committee based on (with due regard for) resolution by the Commission for management of federally owned properties located within the territory of St. Petersburg and upon availability of an exert opinion of the Public Property Management Administration.

(3) For preparing the opinion report of approval for the real estate management of the enterprise, whose property is in the ownership of St. Petersburg.

(4) In cases specified in pp. 11 и 12 of the present scheme, the duration of the preparation term of the opinion report by the Department on transaction with real estate is suspended for the time when the corresponding issues will be considered.

(5) In preparation of the draft resolution of the KUGI for approval for management of the property of the public unitary enterprise, whose property is in the ownership of the Russian Federation.

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4.2.8. PROCEDURE OF PREPARING A DECISION ON CONDITIONS OF PRIVATIZATION (SALE) OF PROPERTy OBJECTS (1) (2) (3) In accordance with the «Resolution on organization of interaction between structural divisions of Committee for Municipal Property Management and the governmental institution «Property fund of St. Petersburg» in preparation of decisions on property privatization (sale) conditions» modified as of 09.06.2006) (hereinafter in the scheme called the resolution) approved by the resolution of KUGI of 03.08.2006 №233-r.

Work stage 1.1. Addressing the Public Property Accounting Administration a request for issuance of an excerpt from the St. Petersburg Register of Ownership bearing witness of the property being beneficially owned by the city of St. Petersburg. In case the property is non-residential premises located within a non-residential building the request shall feature mention of the necessity to furnish information on joint shared ownership of the plot of land (if any).

Term: within two weeks on accrual of causes to classify the property as subject to privatization under Clause 2 of the Regulation.

Executor: district administration/department/agency for real properties management (hereinafter referred to as the «Agency»)

90

Resultant document or decision 1.2. Addressing the non-residential property leaseholder a letter (hereinafter referred to as the «Letter») containing the offer to conclude a supplementary agreement to the contract of lease providing for extending the contract validity term by ten years under the condition of putting the property up for tender provided the leaseholder has been conscientiously discharging one’s contractual obligation and the following criteria are observed: 3.1. The lease contract shall contractually remain valid for at least ten years or has been concluded for an indefinite term.

3.2. For the time being the lease contract or contracts sequentially concluded with the specific leaseholder has/have continuously remained in effect for at least five years.

3.3. During a continuous recent period of no at least three years the frequency of the pre-defined rent payment schedule non-observance by the leaseholder has never exceeded two instances per calendar year with the delay never exceeding five calendar days.

3.4. The property has never been subleased otherwise than in full accordance with the established procedure.

3.5. There have been no unwarranted alterations introduced to the property design.

Term: within two weeks on accrual of causes to classify the property as subject to privatization under Clause 2 of the Regulation.

Executor: Agency

1.3. Addressing the Committee for Legitimacy, Legal Order and Security (in charge of the territory where the property is located) a request for issuance of a formal statement of the property having no civil defense object status and there existing no encumbrances on the property that might have been conditioned by such a status (hereinafter referred to as the «opinion of the property status by the civil preparedness and contingency authorities»).

Term: within two weeks on accrual of causes to classify the property as subject to privatization under Clause 2 of the Regulation.

Executor: Agency

2.1. Furnishing the Agency with the required excerpt from the St. Petersburg Register of Ownership and a certificate bearing witness of absence of joint shared ownership of the plot of land Term: within three working days on the Agency’s request receipt Executor: UUGS

3. In case of unavailability of technical and cadastral registration documents.

Addressing a request to the relevant subdivision of State Institution «City Administration for Real Property Appraisal and Inventory».

Term: within two days on receipt of the excerpt from the St. Petersburg Register of Ownership bearing witness of the property being beneficially owned by the city of St. Petersburg and the opinion of the property status by the civil preparedness and contingency authorities.

Executor: Agency

Request for preparation of the property technical and cadastral registration documents featuring a notification of the property inspection date

4. Providing for preparation of the property technical and cadastral registration documents in accordance with the established procedure.

Term: within ten days after the request has been forwarded by the Agency.

Executor: subdivision of State Institution «City Administration for Real Property Appraisal and Inventory»(GUP GUION)

The property technical and cadastral registration documents

5. Submittal of documents to the Agency Term: no later than within ten days on receipt of the documents listed in Clause 4.2 of the Regulation Executor: subdivision of State Institution «City Administration for Real Property Appraisal and Inventory» (GUP GUION)

The property technical and cadastral registration documents

6.1. Furnishing JSC FI with the documents package prepared (4) Term: no later than within ten days on receipt of the documents by the Agency

Prepared package of documents: - the property technical and cadastral registration documents, - excerpt from the St. Petersburg Register of Ownership,

6.2. In case there is a running contract of lease with regard to the property, delivery of the relevant notification to the property leaseholder (6).

Notification of the package of documents having been prepared that is required for deciding on the property privatization (sale) terms and conditions in accordance with 91

Executor: Agency

- certificate bearing witness of absence of joint shared ownership of the plot of land, - opinion of the property status by the civil preparedness and contingency authorities (5)

7.1.

7.1.1. Addressing the Committee for State Use and Protection of Monuments (KGIOP) a request for information on whether the property as such or the building (structure) it is located within is classified as a cultural heritage object.

Executor: JSC FI

7.1.2. Addressing the relevant Federal Registration Service Administration (UFRS) a request for information on recorded entitlement of rights to the property, restrictions of the latter, existing encumbrances on the property, easements and holders of rights to the property.

Executor: JSC FI

Executor: Agency

the provisions of Appendix 3 to the Regulation

7.2. In case the property leased is a non-residential building together with the landplot it stands on 7.1.3.

Addressing the Committee for Town-Planning and Architecture (KGA) a request for information on availability of town-planning documentation providing for alternative ways of the property disposal including destruction with the exception of cases when the property is an integrated non-residential facility.

Executor: JSC FI

7.2.1.

Addressing the Committee for Town-Planning and Architecture (KGA) and the Committee for State Use and Protection of Monuments (KGIOP) requests for issuance of opinion statements on the landplot (with the requests featuring indication of the necessity to furnish information specified in Clauses 5.1.1 and 5.1.3 of the Regulation).

Executor: JSC FI

7.2.2. Addressing the relevant Federal Registration Service Administration (UFRS) a request for information on recorded entitlement of rights to the property, restrictions of the latter, existing encumbrances on the property, easements and holders of rights to the property.

Executor: JSC FI

7.2.3. Concluding an agreement with an entity specializing in topological and geodesic survey (TGO) on performance of activities related to the landplot survey and formal registration.

Executor: JSC FI

8.

Submittal of a cadastral plan and an instruction by the Committee for Land Resources and Land Management (KZRiZ) on validation of the boundaries of the landplot the property 92

stands on.

Executor: JSC FI

9. Submittal of documents (according to a list) to the Public Property Accounting Administration for preparation of an instruction by the City Property Management Committee.

Term: no later than within a month on receipt of the documents listed in Clauses 4.3, 4.4 of the Regulation.

Executor: JSC FI

Documents listed in Clauses 4.2, 4.4, 5.1, 5.2 of the Regulation (hereinafter referred to as the ÂŤpackage of documentsÂť)

10. Preparation of instruction or return of the documents to JSC FI for follow-up.

Term: within seven days Executor: Public Property Accounting Administration (URGS)

Deciding on the property privatization (sale) terms and conditions or on alternative further usage of the property in case privatization (sale) of the latter is deemed unfeasible

11. Delivery of the documents to JSC FI Term: within two days Executor: URGS

Instruction on the property privatization (sale) with the package of documents appended thereto

12. Preparation of terms of reference for the property market value appraisal.

Term: no later than within ten days on receipt of the documents listed in Item 11 thereof Executor: JSC FI

Terms of reference for the property market value appraisal

13. Concluding an agreement with the Appraiser Party in accordance with the established procedure.

Term: no later than within ten days on receipt of the documents listed in Item 11 thereof Executor: JSC FI

Agreement on the property market value appraisal performance

14. The property market value appraisal performance.

Executor: Appraiser Party

15. Providing for promulgation of information on the tender to be held including data on the decision taken by the City Property Management Committee on the property privatization terms and conditions. Tender holding arrangements.

Published information on the tender to be held including data on the decision taken by the City Property Management Committee on the property privatization terms and conditions.

93

Term: within forty-five days after the work completion certificate has been signed under the agreement concluded with the Appraiser Party.

Executor: JSC FI

16. Forwarding notifications of the tender being held to the non-residential property leaseholders intending to participate in the privatization activities.

Executor: JSC FI

Notification of the tender being held

17. Property sale in accordance with the previously taken decision on its privatization (sale) Executor: JSC FI

Concluding a purchase-and-sale agreement or issuing a protocol on the tender results having been declared void

18. Notifying the Public Property Accounting Administration and the Agency in charge of the territory where the property is located on the property privatization (sale) results and conclusion of a relevant purchase-and-sale agreement.

Term: within three days after the property purchase-and-sale agreement has been concluded or the tender results have been declared void.

Executor: JSC FI

Information on the property privatization (sale) results and conclusion of a relevant purchase-andsale agreement

19. Forwarding a Copy of the transfer and acceptance act to the Agency in charge of the territory where the property is located.

Term: within three days after the Property has been delivered to the Purchaser under the transfer and acceptance act.

Executor: JSC FI

→

Copy of the transfer and acceptance act

20. Submittal of documents to the relevant Federal Registration Service Administration for registration of the transfer of title for the property from the state to a private entity (person).

Executor: JSC FI

21. Forwarding to the Public Property Accounting Administration and the Agency in charge of the territory where the property is located copies of the certificate of state registration of the purchaser’s title to the property.

Term: within three days after data on state registration of transfer of title to the property have been furnished by the purchaser.

Executor: JSC FI

Copy of the certificate of state registration of the purchaser’s title to the property

(1) The above procedure has been specified for preparation of packages of documents required for deciding upon terms and conditions of privatization (sale) of non-residential building and structures falling into property of the Treasury of St. Petersburg including 94

non-residential facilities integrated into residential premises, integrated and freestanding private use garages and artistic workshops (hereinafter referred to as the «Properties»): 1. Rent for temporary usage of the properties has been pre-paid for a term no less that till 31.12.2009 inclusive.

2. Payment of compensation for the right of tenancy (usage) of the properties has been effected in the form of stakes (shares) in entities’ charter capitals that belong(ed) to the city of St. Petersburg.

3. The rentage rates as calculated in accordance with the Procedure do not exceed: - 1,750 RF roubles per square metre annually for the Kolpino, Kronstadt, Kurortny, Petrodvorets, Pushkin and Krasnoselsky Administrative Districts; - 2,625 RF roubles per square metre annually for the Vyborgsky, Kirovsky, Krasnogvardeisky, Moskovsky, Nevsky, Primorsky and Frunzensky Administrative Districts; - 3,150 RF roubles per square metre annually for the Admiralteisky, Vasileostrovsky, Petrogradsky and Tsentralny Administrative Districts.

4. There have been no applications registered for rental of the aforesaid properties within a two weeks’ time since information on them was published in the «City Real Estate Catalogue» weekly bulletin of «Real Estate of St. Petersburg» Information Agency».

5. The applicant in whose favour the city (district) properties management commission has taken the decision on the real property lease has failed to sign the property lease contract within the term specified there being no other applicants registered.

6. The city real properties management commission has taken the decision on sale of the properties referred to.

7. Rates of rentage for the properties have been calculated otherwise than in accordance with the acting Procedures and the running lease contract does not provide for the lessor’s entitlement to unilateral and unobjectionable decision on modification of the schedule of rentage rates in case there are amendments introduced to normative-and-legal acts of the Russian Federation and/or City of St. Petersburg regulating rentage rates computation.

8. Rate of rentage for the properties calculated as of the date of the Regulation adoption in accordance with the Procedures exceeds the rate of rentage provided for in Clause 3 for the relevant administrative district provided there is a written statement by the leaseholder available of the fact of the decision on the leased property privatization (sale) having been taken in accordance with the established procedure with the exception of properties (apart from non-residential facilities arranged basement and semi-basement storeys) located along the St. Petersburg transport thoroughfares listed in Appendix 5 to the Resolution on the Provision’s approval (hereinafter referred to as the «central thoroughfares») with the rate of rentage for the latter calculated in accordance with the Procedures amounting to 3,500 RF roubles per square metre annually.

9. After 01.01.2006 there has been an additional agreement concluded with regard to the properties referred to that provides for the leaseholder’s exemption from the contracted obligations to effect payment of rent for the non-residential property leased to one with a view of indemnifying the leaseholder for the expenditures incurred as a result of having performed overhaul of the property or introduction of other permanent improvements (except overhaul of the building facade) provided there is a written statement by the leaseholder available of the fact of the decision on the leased property privatization (sale) having been taken in accordance with the established procedure.

(2) In case the leaseholder submits a documented declaration of having the status of a «small business» enterprise preparation of the package of documents required for deciding upon terms and conditions of privatization (sale) of the properties in Clauses 2.1-2.3, 2.6-2.7 of the Regulation in accordance with the procedure provided for by the Regulation shall be performed only if the property leaseholder has made available a written statement of the fact of the decision on the leased property privatization (sale) having been taken in accordance with the established procedure and on condition that all the requirements listed in Clause 2 of the Regulation have been duly observed with regard to the leased property, synchronously and in equal measure.

In such a case the relevant district real property administration/department/agency shall act in accordance with the procedure provided for in Clause 3of the Regulation.

(3) In case the leaseholder submits a documented declaration of having the status of a «small business» enterprise preparation of the package of documents required for deciding upon terms and conditions of privatization (sale) of the properties in Clauses 2.1-2.3, 2.6-2.7 of the Regulation in accordance with the present procedure shall be performed only if the property leaseholder has made available a written statement of the fact of the decision on the leased property privatization (sale) having been taken in accordance with the established procedure and on condition that all the requirements listed below have been duly observed with regard to the leased property, synchronously and in equal measure: - there is a running lease contract formally concluded with regard to the property; - for the time being the lease contract or contracts sequentially concluded with one and the same leaseholder has/have continuously remained in effect for at least three years; - within a recent period of no less than three years: frequency of the pre-defined rent payment schedule non-observance by the leaseholder has never exceeded two instances per calendar year with the delay never exceeding five calendar days; the property has never been subleased otherwise than in full accordance with the established procedure; there have been no unwarranted alterations introduced to the property design; - within a month on receipt of the Agency’s request to the effect the leaseholder has made available a documented declaration of having the status of a «small business» enterprise in accordance with the provisions of Clause 3 of the Russian Federation Federal Law «On state support of Russian Federation «small business» enterprises» and formalized in accordance with the provisions of Appendix № 4 to the Regulation.

(4) 1. In case the Agency has received from the property leaseholder a statement of advance refund of rent under the property lease contract having been approved of the period provided for in Item 5.1 thereof shall be deemed suspended until one of the following occurs: - advance rent payment under the property lease contract has been effected in accordance with the established procedure: 95

- the period specified for advance refund of rent under the property lease contract have expired; - there has been a letter forwarded to the leaseholder containing a statement of refusal to approve of advance refund of rent under the property lease contract.

2. In case of the letter having been posted to the leaseholder the period provided for in Item 5.1 thereof shall be deemed suspended until one of the following occurs: - the property leaseholder’s failure to submit a statement formalized as provided for in Appendix to the Regulation within a month on receipt of the letter; the latter is deemed duly delivered to the leaseholder no later than five days after it was posted by registered mail to the leaseholder’s address indicated in the lease contract; - a supplementary agreement to the contract of lease providing for extending the contract validity term by ten years has been concluded by the Parties (signed and formally registered in accordance with the established procedure.

(5) Besides, depending on reasons for classifying the specific property as belonging to the privatization-subject category provided for in Clauses 2.1, 2.3 – 2.7 of the Regulation one of the following documents: – certificate bearing evidence of rent advance payment having been effected that enables the leaseholder to use the Property till at least 31.12.2009 inclusive and a copy of the lease contract with all the additional agreements thereto (if any) attested by the Agency Chief Official (with properties listed in Clause 2.1 of the Regulation); – a copy of the lease contract with all the additional agreements thereto (if any) attested by the Agency Chief Official (with leased properties listed in Clause 2.3 of the Regulation and properties listed in Clauses 2.7 – 2.9 of the Regulation); – calculation of the amount of rent in accordance with the procedure provided for by the acting legislation of the Russian Federation and city of St. Petersburg (with actually vacant properties listed in Clause 2.3 of the Regulation); – a certificate bearing witness of data on the property target-purpose lease having been published in mass media with no application for conclusion of a relevant lease contract submitted within a two weeks’ time since information on the property was published (with properties listed in Clause 2.4 of the Regulation); – a certificate bearing witness of the applicant in whose favour the city (district) real properties management commission has taken the decision on concluding a lease contract for the real property in question has refused to sign the aforesaid lease contract, there being no alternative applicants registered (with properties listed in Clause 2.5 of the Regulation); – excerpt from the resolution on the property sale passed by the city real properties management commission (with properties listed in Clause 2.6 of the Regulation); – the leaseholder’s statement of decision on the leased property privatization (sale) having been taken in accordance with the established procedure (with properties listed in Clauses 2.8 and 2.9 of the Regulation).

(6) The notification referred to is not to be forwarded to the property leaseholders who has previously received letters provided for in Item 1.2 thereof.

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4.2.9. PROCEDURE OF DELIVERING BUILDINGS AND LAND PLOTS THE LATTER STAND ON BY WAY OF HOLDING A TENDER In accordance with: Resolution of the Government of St. Petersburg № 33-rp «On tender sales of buildings and land plots the latter stand on» dated 29.12.2003 (hereinafter referred to as the «Resolution»).

Work stage

Resultant document or decision

1. Preparation of the package of documents required to arrange for tender sales of buildings and land plots the latter stand on.

Executor: JSC FI

Package of documents prepared in accordance with the list (1)

2. Submittal of the prepared package of documents to the Property Management Committee (KUGI) for issuance of instructions on terms and conditions regulating privatization (sale) of the building and landplot the latter stands on.

Executor: JSC FI

Package of documents prepared

3. Consideration of the package of documents submitted.

Issuance of instructions on terms and conditions regulating privatization (sale) of the building and landplot the latter stands on (2).

Executor: KUGI

Instruction by the KUGI on terms and conditions regulating privatization (sale) of the building and landplot the latter stands on

4. Publishing information concerning the tender holding including data on the decision taken by the City Property Management Committee on terms and conditions of the property privatization.

Executor: JSC FI

→

Publication of information concerning the tender holding including data on the decision taken by the City Property Management Committee on terms and conditions of the property privatization in the official bulletin («Vestnik») of the Property Fund of St. Petersburg and other mass media

5. Submittal of a duly formalized application for participation in the tender.

Executor: applicant.

Signing a deposit agreement (3).

Executor: applicant and JSC FI

Duly formalized application for participation in the tender.

Deposit agreement signed

6. Holding the tender in the form of an open auction.

Executor: JSC FI

Tender results protocol containing: - indication of the tender winner, - statement of the tender results having been declared void

6.1. Has the tender auction taken place?

No

p.1.

Yes p.7.

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p.6.

7. Signing the purchase-and-sale agreement.

Term: within five calendar days after the Protocol has been signed.

Executor: JSC FI and tender winner

Purchase-and-sale agreement signed by the both Parties (4)

8. Compensation of: - value of the real property under the purchase-andsale agreement concluded.

- expenditures incurred by JSC FI related to preparation of the package of documents required for the deposit agreement conclusion.

Executor: tender winner

Document of payment

9. Delivery of the real property to the Purchaser.

Executor: JSC FI

Package of documents (5)

10. Registration of the transfer of title to the real property to the Purchaser with the Federal Registration Service Administration.

Executor: JSC FI and the Purchaser

Certificate bearing witness of the Purchaser’s title to the building and the landplot the latter stands on

(1) The list shall include the following documents: – report on the market value of the building and the landplot the latter stands on; – technical passport of the building formalized by State Unitary Enterprise «City Administration for Real Property Appraisal and Inventory»; – cadastral plan of the building featuring indication of its cadastral number formalized and attested by the authority in charge of maintenance of the St. Petersburg state real property cadastre in accordance with the established procedure; – landplot plan formalized and attested by the authority in charge of maintenance of the state land cadastre in accordance with the established procedure; – copies of the reports by the construction commission for expert examination of dangerous residential and public buildings structures or reports by the interdepartmental commission authorized to decide on residential premises unfitness for dwelling as well as copies of the administrative instructions by the relevant executive authorities of the city of St. Petersburg on the buildings resettlement due to having been qualified as unfit for dwelling (in case there are any available) or evaluation of the building current state by the district department (agency) of the City Property Management Committee (in case there is any available); – statement by St. Petersburg State Institution «Housing Agency for the <relevant> Administrative District of the City of St. Petersburg» of absence of running residential lease agreements concluded with regard to the building (with residential premises); – certificate of the property conservation status by the Committee for State Use and Protection of Monuments; – statement by the relevant Federal Registration Service Administration of the building and the landplot the latter stands on being free from encumbrances whatsoever; – certificate of state registration of the St. Petersburg City title to the building and the landplot the latter stands on.

(2) Instruction on the terms and conditions to regulate privatization (sale) of the building and the landplot the latter stands on shall provide for the following: the party the property is being delivered to shall be liable for either pulling the building down and erecting a new real property in its place within six and forty-two months after signing the purchase-and-sale agreement accordingly or for performing renovation of the real property within forty-two months after signing the purchase-and-sale agreement; should the party referred to fail to discharge either of the aforesaid contractual obligation the agreement shall be declared null and void with the title of the state to the real property and the landplot thus reinstated.

(3) The refundable deposit amount shall be equal to 20% of the trigger price of the property put up for tender.

In case the applicant wins the tender the deposit 20% shall be counted towards the tender winner’s obligation to refund the last bid amount.

Otherwise the sum shall be refundable in the form of transfer to the applicant’s settlement account within three working days.

(4) The date of reference with all the terms specified in the instruction on condition of privatization (sale) of the building and the landplot the latter stands on shall be the moment of signing the purchase-and-sale agreement (see Item 3 thereof, Note 2).

The procedure of preparation for capital construction activities has been approved by Resolution of the Government of St. Petersburg 98

№ 1322 «On the procedure of preparation for capital construction activities in the city of St. Petersburg» dated 27.07.2004 (revised 20.04.2007).

(5) The list shall include the following documents: – real property delivery and acceptance act; – boundary marks delivery and acceptance act; – integrated plan of cadastral survey; – technical passport of the building formalized by State Unitary Enterprise «City Administration for Real Property Appraisal and Inventory»; – cadastral plan of the building featuring indication of cadastral number formalized and attested by the authority in charge of maintenance of the St. Petersburg state real property cadastre in accordance with the established procedure; – landplot plan formalized and attested by the authority in charge of maintenance of the state land cadastre in accordance with the established procedure; – copies of the reports by the construction commission for expert examination of dangerous residential and public buildings structures or reports by the interdepartmental commission authorized to decide on residential premises unfitness for dwelling as well as copies of the administrative instructions by the relevant executive authorities of the city of St. Petersburg on the buildings resettlement due to having been qualified as unfit for dwelling (in case there are any available) or evaluation of the building current state by the district department (agency) of the City Property Management Committee (in case there is any available); – statement by St. Petersburg State Institution «Housing Agency for the <relevant> Administrative District of the City of St. Petersburg» of absence of running residential lease agreements concluded with regard to the building (with residential premises); – certificate of the property conservation status by the Committee for State Use and Protection of Monuments; – statement by the relevant Federal Registration Service Administration of the building and the landplot the latter stands on being free from encumbrances whatsoever; – certificate of state registration of the St. Petersburg City title to the building and the landplot the latter stands on.

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4.2.10. THE PROCEDURE FOR GETTING THE INVESTMENT ACCOMPLISHMENT CONNECTED UP (1) In accordance with: 1. Town-planning Code of RF of 29.12.2004 №190-FL (as of 16.05.2008).

2. Regulation of Government of RF of 13.02.2006 №83 «On approval of rules for determination and provision of technical specifications for linking a capital construction project to utilities».

3. As stated by the Decree of the Government of St. Petersburg as of 01.01.2007 № 45 «On the Measures Aiming at Fulfillment of the Decree of the Government of the Russian Federation № 83 as of 13.02.2006».

4. As stated by the Instruction of the Committee for Power Engineering and Engineering Supply of St. Petersburg as of 21.03.2007 № 25 «On Keeping the Register of Technical Specifications for Getting Capital construction facilities Connected Up to the Engineering Technical Supply Networks Worked Out by Organizations of Engineering and Power Engineering Complex of St. Petersburg».

5. Regulation of the St. Petersburg Government of 21.09.2004 №1592 «On approval of resolution on procedure of decision making and provision of real estate for construction and reconstruction» (as amended 01.07.2008).

6. Regulation of the St. Petersburg Government of 16.05.2006 №596 «On approval of resolution on procedure of interaction of state executive bodies on preparation and coordination of documents for territory planning» (as amended 15.05.2007).

7. As stated by the Regulations of Non-Discriminative Access to Power Supply Services and Rendering These Services approved by Resolution of the Government of the Russian Federation № 861 as of 27.12.2004 (as in force on 26.07.2007).

Stage of work

Documents on resolution on the outcome

I. Preparation and providing of technical conditions of the possibility of connection of capital construction project to networks of the power and engineering enterprise

1. Preparing an application and submitting it to the power and engineering enterprise.

Completed by: Client (physical, juridical person).

Contents of the application: – name of the person that has sent the application, his location and the mailing address; – notarized copies of foundation documents and documents certifying the authority of the person who has signed the application; – documents authorizing the right for the land plot (for the lawful owner of the land plot); – information about the boundaries of the land plot on which a capital construction facility is planned to be erected or on which a reconstructed capital construction facility is located; – information about the permission to use the land plot; – information about the utmost parameters of the permitted construction (reconstruction) of capital construction facilities that correspond to the given land plot; – the needed types of resources to be supplied by the engineering technical supply networks; – the estimated term when the capital construction facility is to be placed in commission (if the appropriate information is available); – the estimated value of the needed load of getting connected up (if the appropriate information is available).

2. Preparation and submission to the Client of preliminary technical specifications.

Deadline: no more than 14 days.

Completed by: a power and engineering enterprise

Technical specifications shall define: - maximum load in possible points of connection to the engineering networks; - period of connection, defined, in particular, in accordance with term of investments programs; - the validity period of technical specifications

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(statements on the possibility of connection) no less than 2 years from the moment of issuing them.

On expiry of this time parameters of technical specifications can be changed.

Information on payment for connection to the engineering networks shall contain - data on tariff for connection, approved on the moment of issue of technical specifications in accordance with order, established by RF legislation; - date of expiry of validity of mentioned tariff (if it expires before technical specifications); - date of next application for information on payment for connection (if on the moment of issue of technical specifications tariff for connection for their period of validity is not set).

II. Connection of capital construction project to networks of the power and engineering enterprise (2) 1. Applying to the organization that maintains the engineering technical supply networks and has supplied technical specifications for getting connected up.

Completed by: Client (physical, juridical person) (3)

Application for getting connected up and the necessary documents (4).

2. Checking if the application for getting connected up and the documents that accompany it comply with the established requirements Completed by: organization that maintains the engineering technical supply networks The set of submitted The set of submitted documents is incomplete documents is complete 3.1. Forwarding to the Client the signed agreement for getting connected up and the specifications for getting connected up (technical specifications for getting connected up) (5).

Term (6): 30 days since the date of receipt of the documents Completed by: organization that maintains the engineering technical supply networks

3.2. Notifying the Client that the set of the submitted documents is not complete.

Term: 6 workdays since the date of receipt of the application.

Completed by: organization that maintains the engineering technical supply networks

3.3. Considering the application for getting connected up.

Term: 30 days since the date of receipt of the missing documents Completed by: organization that maintains the engineering technical supply networks

4. Elaborating the design documentation that is duly approved in accordance with the documents supplied by the organization that maintains the engineering technical supply networks and the specifications for getting the capital construction facility

Duly approved design documentation

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connected up to the engineering technical supply networks.

Completed by: Client (physical, juridical person).

5. Submitting to the organization maintaining the engineering technical supply networks a copy of the section «Information about the engineering equipment, engineering technical supply networks, a list of the design and engineering actions, the contents of technological solutions» that has been elaborated and approved in accordance with established procedure for making up the design documentation.

Completed by: Client (physical, juridical person).

6. Observing the specifications for getting the capital construction facility connected up to the engineering technical supply networks (7) Completed by: Client (physical, juridical person).

7. Checking if the Client observes the specifications for getting connected up.

Completed by: organization that maintains the engineering technical supply networks

8. Granting the Client the permission to get the capital construction facility connected up to the engineering technical supply networks.

Completed by: organization that maintains the engineering technical supply networks

The permission to get the capital construction facility connected up to the engineering technical supply networks.

9. Getting the capital construction facility connected up to the engineering technical supply networks (8) Completed by: Client (physical, juridical person)

10. Signing the document stating that the facility has been connected up.

Completed bys: Client (physical, juridical person) and organization that maintains the engineering technical supply networks

11. Observing the specifications for supplying the resources (9)

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The document stating that the facility has been connected up

3. Coordination of the project documentation 1. Commissioning a special institution to prepare project documentation in accordance with the received technical specifications.

Completed by : Client (physical, juridical person)

Commission to prepare project documentation

p. 5 2. Preparation of the project in accordance with the received technical specifications (or correction in line with comments).

Completed by: special institution

The design documentation that has been worked out in accordance with the supplied technical specifications, normative documents of the Russian Federation pertaining to the field of construction

3. Submitting the project documentation for approval to the power and engineering enterprise which issued technical specifications (in case such accordance is envisioned by the legislation of the Russian Federation) Completed by: Client (physical, juridical person)

Project documentation

4. Consideration of the project documentation Deadline: no more than 30 days (in case of the second at-tempt-2 weeks) Completed by: the enterprise which issued technical specifications 5. Reasonable comments

Yes →

p.2.

No 6. Coordination of the project documentation.

Completed by: the power and engineering enterprise which issued technical specifications

Statement on coordination of the project documentation

(1) The procedure is used to regulate relations: – between the utility operator, local authorities and land owners arising during development and provisions of technical specification of linking facilities under construction, reconstruction of completed but unlinked, to the utility system (hereinafter – technical conditions), including enquiry procedure, and that of determination and provision of technical conditions; – between the utility operator and the party engaged in construction (reconstruction) of facilities, arising during linking of such facilities to the utility system, including the procedure for submission and consideration of the application, provision of conditions, and terms of resource provision.

In accordance with the Instruction of the Committee for Power Engineering and Engineering Supply of St. Petersburg as of 21.03.2007 № 25 «On Keeping the Register of Technical Specifications for Getting Capital Construction Facilities Connected Up to the Engineering Technical Supply networks Worked Out by Organizations of Engineering and Power Engineering Complex of St. Petersburg» the following organizations shall submit to the Department of Expert Examination and Registration of Technical Specifications of the Committee for Power Engineering and Engineering Supply of St. Petersburg information about the submitted technical specifications for getting connected up to the engineering technical supply networks (on a monthly basis) as well as information about the engineering supply sources established capacities as approved to be connected up and in fact connected up (on a quarterly basis): «Vodokanal of St. Petersburg» State Unitary Enterprise and «St. Petersburg Fuel and Energy Complex» State Unitary Enterprise. The following organizations are also requested to submit such data: JSC «Lenenergo», «Nevsky» Branch of JSC «Territorial Generation Company № 1», ZAO «Lenteplosnab», JSC «St. Petersburg Power Networks», OOO «Petersburg-Gas», OOO «Peterburgteploenergo», JSC «Kurortenergo», JSC «Petrodvorets Power Network», ZAO «Tsarskoye Selo Energy Company».

(2) The present section has been prepared based on The Regulations for Getting the Capital Construction Facility Connected Up to the Engineering Technical Supply networks as approved by Decree of the Government of the Russian Federation № 83 as of 13.02.2006 (hereinafter referred to as the Regulations for Getting Connected Up). These Regulations regulate relations between organization that maintains the engineering technical supply networks and the person that implements construction (reconstruction) 103

of the capital construction facilities that evolve in the process of getting capital construction facilities connected up to the engineering technical supply networks.

In accordance with the agreement of the parties, getting the facilities that are not capital construction facilities (temporary constructions, kiosks, awnings and the like structures) connected up to the engineering technical supply networks as well as supplying the appropriate types of resources to the capital construction facilities that are under construction is regulated by Regulations for Getting Connected Up, unless otherwise stated in the legislation of the Russian Federation.

When getting connected up to the centralized electricity supply networks, one shall follow Regulations of Non-Discriminative Access to Power Transmission Services and Rendering These Services approved by Resolution of the Government of the Russian Federation № 861 as of 27.12.2004 (as in force on 26.07.2007).

(3) Physical or juridical person that maintains construction (reconstruction) of facility on the land plot belonging to him either by the property right or on other lawful basis causing an increase in the consumed load or alteration of other parameters established for the given type of resource.

(4) To get connected up to the engineering technical supply networks, the Client shall send to the organization maintaining the engineering technical supply networks the following: – application for connection with full and short title of customer (for natural persons – name surname patronymic), its location and postal address; – notarized copies of constituent documents, documents confirming powers of person, who signed application; – documents establishing rights in land plots; – lay out of project with link to territory of settlement; – topographic map of plot in scale 1:500 (with all surface and underground communications and structures), coordinated with operators; – information on time limits of construction (reconstruction) and commissioning of project constructed (reconstructed); – other documents, corresponding to type of network shall be served in accordance with laws of Russian Federation on power and gas supply.

Organization that maintains the engineering technical supply networks has no right to require that the Client submit documents and information that are not envisioned by the above Regulations.

(5) Specifications for getting connected up (technical specifications for getting connected up) should not contradict to technical specifications previously received by the Client either from the executive or the local authority, or from the previous right owner of the land plot, provided that the term during which technical specifications are valid has not expired.

Specifications for getting connected up shall envision getting connected up within the boundaries of the land plot, except for cases as stated in paragraph 7 of the Regulations for Determining and Supplying Technical Specifications for Getting Capital Construction Facilities Connected Up to the Engineering Technical Supply Networks.

Should the validity term of technical specifications for getting connected up to the engineering technical supply networks expire in the process of constructing (reconstructing) the capital construction facility, the term is prolonged after the Client applied to the executive with request to prolong the term.

Organization that maintains the engineering technical supply networks submits to the Client specifications for getting the capital construction facility connected up to the water supply networks, water drainage and purification of sewage. The specifications shall provide data as stated in paragraphs 16, 17, 18 of the Regulations for Getting Connected Up. Organization that maintains the engineering technical supply networks submit to the Client specifications for getting the capital construction facility connected up to the heat supply network. The specifications shall provide data as stated in paragraph 22 of the Regulations for Getting Connected Up. (6) The term is calculated in workdays since the date of the application registration. The term may be altered on agreement of the parties.

(7) To get the capital construction facility connected up to the water supply networks, water drainage and sewage purification system, the Client shall submit to the organization that maintains the engineering technical supply networks the documents as stated in paragraph 15 of the Regulations for Getting Connected Up. To get the capital construction facility connected up to the heat supply network, the Client shall submit to the organization that maintains the engineering technical supply networks the documents as stated in paragraph 21 of the Regulations for Getting Connected Up. (8) The work of getting connected up may be done by the organization that maintains the engineering technical supply networks on the basis of a separate agreement that is concluded with the Client. The connecting up expenses of the organization that maintains the engineering technical supply networks are not included in the list of expenses that are taken into consideration when the cost of getting connected up is calculated.

(9) Prior to resources (the appropriate services) supply, the Client shall receive a permission to place in commission capital construction facility, conclude the agreements on supply of capital construction facility with the appropriate types of resources (the appropriate services) by way of getting connected up to the engineering technical supply networks.

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4.2.11. THE PROCEDURE FOR TRANSFERRING ENGINEERING INFRASTRUCTURE OBJECTS (1) TO SPECIAL OPERATING INSTITUTIONS (2) Based on the Procedure of transferring engineering infrastructure objects to special operating institutions, approved by the Decree of the Committee for Municipal Property Management of St. Petersburg of 30.09.1999 №1503-r (modified as of 11.07.2006) (hereinafter referred to as the Procedure) (3).

Stage of work

Documents on resolution on the outcome

1. Submitting an application to the Committee for Energy and Engineering Support and to the special operation institution (SEO) for coordination of transferring engineering infrastructure objects (4).

Completed by: an institution (or an individual) which own engineering infrastructure objects to be transferred to the city in accordance with the terms of the investment agreement (hereinafter referred to as the Transferring Institution)

Application for transfer of engineering infrastructure objects with the postal address and telephone of the contracting parties

2. Examination of the submitted list of the engineering infrastructure objects to be transferred.

Completed by: KENERG together with the special operation institution (SEO)

3. Favourable decision on acceptance of the engineering infrastructure objects

No Justified decline →

Yes

4. Submitting documents to the KUGI, the KF, the Transferring Institution.

Completed by: KENRG

Set of documents for the KUGI: - a copy of the application; - original Certificates of acceptance of engineering infrastructure subjects, in 3 copies; - three layouts of the objects (1 original and 2 copies); - a recommendation of the legal basis on which the Committee for KUGI should register officially the transfer of the engineering infrastructure objects to the special operation institution (SEO); - a written consent of the special operation institution (SEO) to accept the property on the above terms, coordinated with the KENRG; - a notice confirming that the transferring party had met the investment terms concerning the engineering infrastructure objects to be transferred in full volume.

Set of documents for the KF: - lists of deficiencies (coordinated with the KENRG); - a statement of the cost of repair or reconstruction of the transferred engineering infrastructure objects (coordinated with the KENRG).

Documents to the Transferring Institution: - a written notice about the decision taken

p.5.

105

p.4.

5. Sending the set of documents together with the covering letter to the KUGI Completed by: Transferring Institution

Covering letter with the following documents enclosed (4): - copies of constituent documents and the registration certiďŹ cate (attested by the notary or the head of the institution); - copies of the title documents for the transferred engineering infrastructure object; - a statement of the ownership on the engineering infrastructure object; - a layout of the engineering infrastructure object; - a draft agreement on gratuitous transfer of the engineering infrastructure object under the state ownership; - a copy of the technical passport for the building and the real estate layout with the cadastre number speciďŹ ed

6. Issuing the decree on assigning the engineering infrastructure objects to the special operation institution (SEO) on the basis of a certain proprietary right or on the transfer of the engineering infrastructure objects to the special operation institution (SEO) under the agreement.

Completed by: KUGI

Decree of the KUGI

7. Preparation and approval of acts of delivery-acceptance of the engineering infrastructure objects.

Completed by: KUGI

Approved by the KUGI acts of delivery-acceptance of the engineering infrastructure objects

8. Submitting documents to the KENRG, the Transferring institution, and the special operating institution Completed by: KUGI

Documents to the KENRG: - one copy of the Decree of the KUGI. Documents to the Transferring Institution: - one copy of the Decree of the KUGI; - approved by the KUGI acts of delivery-acceptance of the engineering infrastructure objects (one copy); - the agreement on gratuitous transfer of the engineering infrastructure object (in case of the gratuitous transfer).

Documents to the special operating institution: - one copy of the Decree of the KUGI; - approved by the KUGI acts of deliveryacceptance of the engineering infrastructure objects (one copy); - the agreement on transfer of the engineering infrastructure object (in case of the transfer under the agreement)

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(1) Utilities – outer engineering networks and structure of water supply, heat supply, street lighting, outer and inner gas pipelines, electric lines, etc.

(2) Special operating institutions are the following power and engineering enterprises of St. Petersburg: «Vodokanal of St. Petersburg» State Unitary Enterprise and «St. Petersburg Fuel and Energy Complex» State Unitary Enterprise. It is also suggested that similar information shall be submitted to the following entities: JSC «Lenenergo», «Nevsky» Branch of JSC «Territorial Generation Company № 1», ZAO «Lenteplosnab», JSC «St. Petersburg Power Networks», OOO «Petersburg-Gas», OOO «Peterburgteploenergo», JSC «Kurortenergo», « JSC «Petrodvorets Power Network», ZAO «Tsarskoye Selo Energy Company».

(3) The procedure above does not foresee specific circumstances of assigning the facilities meant for engineering exploitation to specialized engineering organizations: – in accordance with provisions of the investment agreements, in accordance with the Decree of the Government of St. Petersburg as of 01.02.2006 № 61 «On Approving the Statute as to the Procedure for Interaction between the Executive Bodies of State Power of St. Petersburg regarding Taking and Fulfilling Obligations by Investors» ; – If construction is done at the expense of the budget of St. Petersburg or the budget of the Russian Federation, in accordance with the Decree of the Government of St. Petersburg as of 26.02.2008 № 187 «On Approval of the Statute on Procedure for Interaction between the Executive Bodies of State Power of St. Petersburg at Projecting, Constructing, Reconstructing the Capital Construction Facilities at the Expense of the Budget of the Russian Federation or the Budget of St. Petersburg and Assigning Them to Specialized Exploiting Organizations».

(4) Approval by the specialized exploiting organization to take the facilities meant for engineering exploitation is submitted to the Committee for Power Engineering and Engineering Supply.

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4.2.12. PROCEDURE FOR ORGANIZING AND HOLDING PUBLIC HEARINGS AND INFORMING CITIZENS aBOUT MAINTAINING THE TOWN-PLANNING ACTIVITY IN St. Petersburg In accordance with: 1. The Law of St. Petersburg as of 17.12.2003 № 778-116 «On Basic Principles of Regulating the Town-Planning Activity in St. Petersburg» (as in force on 15.02.2007).

2. The Law of St. Petersburg as of 20.07.2006 № 400-61 «On the Procedure for Organizing and Holding Public Hearings and Informing Citizens while Maintaining the Town-Planning Activity in St. Petersburg» (hereinafter referred to as the Law of St. Petersburg).

3. The Decree of the Government of St. Petersburg as of 15.05.2007 № 491 «On Approval of the Statute on Procedure for Interaction between the Executive Bodies of State Power of St. Petersburg at Organizing and Holding Public Hearings and Informing Citizens about the Maintenance of the Town-Planning Activity in St. Petersburg» (hereinafter referred to as the Statute) (1).

Stages of implementation

Document, resolution based on the outcome of working

1. The procedure for informing citizens about preparing documentation 1.1. Issuing the decree of the Government of St. Petersburg on preparing the draft document of territorial planning (2) and posting it on the official website of the Committee for Town-Planning and Architecture.

Term: 20 days since the date of the decree issuance

1.2. Publishing the legal act issued by the Committee for Town-Planning and Architecture on preparing the draft document related to territorial planning and posting it on the official website of the Committee for Town-Planning and Architecture in the Internet.

Term: 3 days since the date of issuance of the given legal act Completed by: Committee for Town-Planning and Architecture

2. Submitting to the Committee for Town-Planning and Architecture the proposals related to the procedure, term of preparing and contents of documentation (3) Term: since the date of issuance by the Government of St. Petersburg of the decree and legal act on preparing the draft documentation.

Completed by: physical and juridical persons

3. Submitting suggestions of physical and juridical persons to the organizer of preparing documentation (4).

Completed by: Committee for Town-Planning and Architecture 2. Procedure for organizing and holding public hearings regarding documentation 1. Sending a notification to the Administration of St. Petersburg district that public hearings regarding documentation ought to be held (5) and a copy of documentation (6).

Completed by: organizer preparing documentation

2. Preparing the announcement that public hearings are to be held, issuing the newsletter that public hearings on the theme of documentation are to be held (2), mailing (7).

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The notification that public hearings are to be held that includes the list of documentation, information about place and time of documentation exposition, and of discussion regarding documentation.

Term: 10 days since the date when the organizer preparing documentation receives the notification and a copy of documentation and no later than 30 days before holding the discussion of documentation Completed by: Administration of St. Petersburg district

3. Organizing the exposition of documentation (8), securing room for holding the exposition of documentation and discussing documentation (9).

Term: 20 days since the date when the newsletter is issued that public hearings on the theme of documentation are to be held.

The exposition of documentation shall last for at least 10 days.

Completed by: Administration of St. Petersburg district

The issued newsletter.

Mailing

The exposition of documentation

4. Holding the discussion of documentation (10) Term: no later than 7 days after the exposition of documentation is closed.

Completed by: representatives of the administration of St. Petersburg district, the Committee for Town-Planning and Architecture as well as the organizer preparing documentation shall take part in the discussion.

5. Keeping minutes of proceedings of discussing the draft documents of municipal territorial planning or documentation related to planning the municipal territory.

Term: within 7 workdays since the date of discussion regarding documentation.

Completed by: Administration of St. Petersburg district

The minutes are kept as stated in the supplement № 1 of the Statute (11)

6. Preparing the conclusion on the summary of public hearings on the basis of the minutes, proposals and critical observations of interested parties (12).

Completed by: Administration of St. Petersburg district

The summary is made as stated in the Supplement № 2 of the Statute

7.1. Supplying the organizer of preparing documentation a copy of the record of proceedings and the summarizing document as well as the audio and video recording of the discussion of documentation (if any).

Term: 15 days since the date when the discussion was held

7.2. Submitting a copy of the minutes and the conclusion on written request made by interested parties, or a body of state power or a local authority of St. Petersburg.

Term: 10 days since the date of receipt of the request. If such request is received before the minute and the summarizing document are ready, the 109

Completed by: Administration of St. Petersburg district

8. Ensuring it that the summarizing document is issued (13) and posted on the official website of the Committee for Town-Planning and Architecture or the Administration of St. Petersburg district.

Term: no later than 7 workdays since the date when preparing the summarizing document starts Completed by: Administration of St. Petersburg district

ten-day term for submitting copies starts on the date when the above documents are ready.

Completed by: Administration of St. Petersburg district

The issued summarizing document.

The summarizing document posted on the official website of the Committee for Town-Planning and Architecture or the Administration of St. Petersburg district.

9. Informing the Government of St. Petersburg about the summary of public hearings when documentation is considered in the session of the Government of St. Petersburg.

Completed by: Head of the Administration of St. Petersburg district (deputy head of the Administration of St. Petersburg district) 3 Procedure for informing citizens about a possible or awaited availability of the land plot to be used for constructing 1. Forwarding to the Administration of St. Petersburg district a notification that citizens shall be informed about a possible or awaited availability of the land plot to be used for constructing (14).

Term: within 3 days since the date when the draft plan of the land plot limits is approved.

Completed by: organization authorized by the Government of St. Petersburg to elaborate documentation that is needed for making realty facilities available for constructing and reconstructing (hereinafter referred to as the authorized organization)

The notification that citizens shall be informed

2. Preparing a newsletter, publishing it in the media and mailing (15).

Term: within 7 days since the date of receipt of the notification that citizens shall be informed.

Completed by: Administration of St. Petersburg district

The issued newsletter Mailing.

3. Submitting proposals in writing to the Administration of St. Petersburg district.

Term: as stated in the newsletter, but no less than 14 days since the date when the newsletter is published.

Completed by: persons involved

Proposals of interested parties

110

4. Forwarding the submitted proposals to the authorized institution to be re-forwarded to the Committee for Town-Planning and Architecture.

Completed by: Administration of St. Petersburg district

5. Taking into consideration proposals of interested parties when making a decision about a preliminary coordination of the location of the facility that approves the legal act on choosing the land plot Completed by: Committee for Town-Planning and Architecture (1) The present Statute and the above procedure determines the procedure for interaction between the executive bodies of state power of St. Petersburg while informing citizens about a possible or awaited availability of the land plot to be used for constructing, preparing the draft documents related to municipal territorial planning or documentation related to planning the municipal territory (hereinafter referred to as the documentation) and the procedure for interaction between the executive bodies of state power of St. Petersburg while holding public hearings regarding documentation.

The present Statute and the above procedure do not regulate the procedure for interaction between the executive bodies of state power of St. Petersburg while informing citizens and holding public hearings regarding the draft documents of town-planning zoning and the issues of granting permissions for the conventionally permitted type of using the land plot or the capital construction facility, permissions for deviating from the utmost parameters of the permitted construction, reconstruction of the capital construction facilities.

(2) According to the established procedure for the official issue of normative legal acts of St. Petersburg.

(3) Unless otherwise stated in the legislature in effect.

(4) The organizer preparing documentation is a person that has elaborated (prepared) documentation on his own or is the client in compliance with the agreement on such elaboration concluded in accordance with the legislature of the Russian Federation.

(5) The notification contains the data sufficient to prepare the newsletter informing citizens about holding public hearings regarding documentation.

(6) ) In accordance with provision 3 of clause 6 of the Law of St. Petersburg № 400-61 as of 20.07.2006.

(7) Mailing in accordance with established procedure for official issue of normative legal acts and mailing in accordance with the procedure as stated in provision 3 of clause 5 of the Law of St. Petersburg № 400-61 as of 20.07.2006.

(8) The term of exposition cannot be less than 10 days.

(9) The room provided by the Administration of St. Petersburg district shall allow using audio and video appliances during the discussion, so that all necessary information and demonstrative materials providing full and accurate information pertaining to the documentation under discussion can be recorded, reproduced and shown.

The Administration of St. Petersburg district ensures it that representatives of the organizer preparing documentation have a timely access to the room provided so that to display the information and demonstrative materials giving full and accurate information pertaining to the documentation under discussion.

(10) Audio and video recording may be kept during the discussion as well as minutes.

(11) The minutes are prepared in two copies. Each copy is signed by persons as indicated in provision 3.4 of the present Statute.

The record of proceedings includes proposals and critical observations submitted in writing by participants of the discussion within 4 days after the discussion of documentation had been held.

Each copy of the minutes shall be sewn and signed by the representative of the administration of St. Petersburg district who took part in the discussion regarding documentation. The number of the sewn sheets shall be indicated.

(12) When preparing the summarizing document, the administration of St. Petersburg district is authorized to get the organizer preparing documentation involved in considering proposals and critical observations made by the interested parties in order to accept or reject them.

Two copies of the summarizing document shall be prepared and signed by the representative of the administration of St. Petersburg district.

Each copy of the summarizing document is sewn and signed by the representative of the administration of St. Petersburg district who took part in the discussion of documentation. The number of the sewn sheets shall be indicated.

The administration of St. Petersburg district keeps copies of the minutes and the summarizing document.

(13) In accordance with established procedure for the official publication of legal acts and other official information.

(14) The notification that citizens shall be informed is to contain data sufficient for preparing the newsletter about a possible or awaited availability of the land plot to be used for constructing.

(15) In accordance with paragraph 3 of clause 9 of the Law of St. Petersburg № 400-61 as of 20.07.2006.

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4.2.13. THE PROCEDURE OF STATE REGISTRATION OF REAL ESTATE TITLE AND RELATED TRANSACTIONS 1. Federal Law of 21.07.1997 №122-FL «On state registration of rights in real estate and related transactions» (as of 13.05.2008) (hereinafter Law).

2. Regulation of government of Russian Federation of 18.02.1998 №219 «On approval of regulations on the unified State register of rights for real estate and transactions therewith « (hereinafter – regulations on USRR) (as of 21.11.2006).

3. By Order of the Ministry of Justice of Russian Federation of 01.07.2002 №184 «On approval of Methodical recommendations on Order of state registration rights in real property and related transactions» (as of 19.01.2005).

4. By Order of the Ministry of Justice of Russian Federation of 14.09.2006 №293 «On approval of administrative schedule of performance of state function of state registration of rights in real property and related transactions».

The Decree of the President of the Russian Federation as of 12.05.2008 № 724 «Issues of the System and Structure of the Federal Bodies of the Executive Power»: – The Ministry for Economic Development of the Russian Federation has been authorized to elaborate the state policy and establish regulations in the sphere of the state registration of the rights for real property and transactions with real property (paragraph 10); – The Chairman of the Government of the Russian Federation is encharged to submit proposals in accordance with established procedure as to abolition of the Federal Registration Service since 01.10.2008. The authority of the Federal Registration Service shall be delegated to the Federal Agency for Managing the State Property (paragraph 18).

Applicant applies and submits the package of necessary documents

Applicant’s right to revoke the registration procedure

Applicant’s right to withdraw its documents to eliminate faults 1. Receipt of documents, required for state registration

2. Legal examination of documents and the transactions; examination to reveal possible conflict between the claimed rights and previous rights registered for the relevant asset, as well as other grounds for refusal or suspension of registration.

No

Yes No obstacles for registration

No

The process has already been suspended for the relevant reason (otherwise than by Clause)

7. Registration process suspension

3. Record in the unified State register of rights

Yes

8. Rejection

4. Issue of the certificate

5. Handback of documents and delivery of the certificate

112

1) Agreements to undergo mandatory state registration as transactions: 1. the sale-purchase agreement of real estate property (the residential building, the apartment, the enterprise as the property complex, the share in common property right for residential premises); 2. the deed of gift of real estate, including the share in common property right; 3. the waiver of the gift from the recipient (in case if the deed of gift is registered in accordance with the approved procedure); 4. the agreement on exchange of the real estate (the residential building, the apartment, the enterprise as the property complex, the share in common property right for residential premises); 5. the assignment of claim of the real estate based on the transaction which is yet to have state registration; 6. the lease (sublease) agreement of the enterprise as the property complex; 7. the lease (sublease) agreement of the building, construction, premises, land lot concluded for the term over 1 year; 8. the lease agreement of the apartment (residential building), implying later transfer of the property title for the real estate (containing the terms of redemption and redemption price of the real estate); 9. the mortgage agreement; 10. the lease agreement implying alienation of the real estate with the rent payment; 11. the agreement of permanent alimony with maintenance; 12. the agreement of transferring the apartment to the ownership of citizens with the simultaneous option to buyout a share in common property right.

2) The documents can be submitted for the state registration of: - the rights and encumbrances (limitation) on real estate and related transactions (the general list); - the property right on residential premises on the basis of the agreement of transferring the apartment to the ownership of citizens with the simultaneous buying-out of the share in common property right; - the rights on apartments in the blocks of flats of the housing coops; - the rights on the basis of exchange agreements for residential premises (apartments, residential dwellings); - the rights on land lots transferred to the ownership of a private individual from the state owner ship; - the property right on non-residential premises and land lots purchased by means of privatization; - the rights on the enterprises as the property complex and related transactions; - the right of economic ownership and operative management; - the property right on real estate purchased as a result of sale of arrested, confiscated and other real property, which was turned over to the state; - the rights on the real estate transferred in the course of reorganization of legal entities and invested as holdings (additional contributions) into the chartered capital; - the rights for newly constructed real estate; - the rights for construction in progress; - the rights for real estate, incorporated as the result of real split or unification of earlier existing real estate (excluding reconstruction), as well as the cadastre accounting of real estate according to split or merger; - the rights for real estate in summer cottage and garage construction cooperatives (section 17 of the Instruction); - other property rights, encumbrances (limitations) and their cessation (excluding mortgage, arrest); - the mortgage arising on the basis of the mortgage agreement, registration of the change of pawnbroker and cancellation of the register account on mortgage, as well as the documents provided for issue and cancellation of mortgage certificates; - the rights which were registered according to the approved procedure before the Law became effective.

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4.2.14. THE PROCEDURE FOR PRIVATIZING STOCKS AND SHARES IN REGULATION CAPITALS OF MUNICIPAL HOUSEKEEPING COMPANIES THAT ARE THE STATE PROPERTY OF ST. PETERSBURG In accordance with: 1. The Federal Law «On privatization of public and municipal property» (modified as of 13.05.2008) of 21.12.2001 №178-FL. 2. The Federal Law as of 29.07.1998 № 135-FL «On Estimation Activity in the Russian Federation» (as in force on 24.07.2007).

3. The Federal Law as of 26.12.1995 № 208-FL «On Shareholding Companies» (as in force on 29.04.2008).

4. The Federal Law as of 08.02.1998 № 14-FL «On Companies of Limited Responsibility» (as in force on 29.04.2008).

5. The resolution of the Russian Government «On approval of regulations for selling public or municipal property through auctions and the regulations on selling shares of joint-stock companies of public or municipal ownership through special auctions» (modified as of 20.12.2006) of 12.08.2002 №585.

6. The resolution of the Russian Government «On approval of regulations for selling public or municipal property through public offering without stating the price» (as in force on 20.12.2006) of 22.07.2002 №549.

7. The resolution of the Russian Government «On approval of regulations for defining the standard price of public or municipal property to be privatized» of 14.02.2006 №87.

8. The Law of St. Petersburg «On the privatization of state and municipal property of St. Petersburg» (as in force on 29.02.2008) of 10.03.2005 №59-15.

9. The Decree of the Government of St. Petersburg as of 23.10.2007 № 1369 «On the Procedure for Planning Privatization of the State Property of St. Petersburg and the Procedure for Elaborating the Program of Privatization of the State Property of St. Petersburg».

10. The Decree of the Government of St. Petersburg as of 25.12.2007 № 1664 «On the Program of Privatization of the State Property of St. Petersburg for 2008».

11. The Instruction of St. Petersburg Committee for Managing the State Property as of 06.08.2004 № 442-r «On Organizing the Sale of Property of St. Petersburg by Way of the Public Offer» (as in force on 28.06.2006).

Stage of work 1. The normative price of the stock and shares of St Petersburg in the municipal household company that is planned to be privatized exceeds 3 million rubles

Documents on resolution on the outcome No p.3.

Yes 2. Statement of the privatization program for the next financial year (1).

Completed by: St. Petersburg’s Government

List of institutions whose shares are to be privatized

3. Sending a letter to the manager of a municipal household company about the necessity to provide to the KUGI a list of documents and terms of their provision (to issue the resolution on terms of shares privatization).

Completed by: KUGI

Letter to the KUGI with the list of requested documents: - copies of constituent documents with all modifications; - accounting statements and profit and loss statements for the last reporting year and for two previous years; - an excerpt from the shareholders’ register about the privatized shares of the JSC

4. Preparation and provision to the KUGI of the requested documents.

Set of documents prepared in accordance with the letter of the KUGI

114

Completed by: manager of municipal household company

5. Preparing and issuing the resolution of the KUGI on the terms of privatization of shares municipal household company (2).

Completed by: KUGI

Resolution of the KUGI on terms of privatization of shares including the following issues: - description of the property to be privatized (3); - means of privatization (4); - standard price of shares (5); - type of price offers (in case of auction) (6); - type of payment (7); - selling terms; - order to the JSC FI to privatize (sell) shares by the above-mentioned method

6. Provision of market appraisal of privatized shares of municipal household companies, in accordance with which the staring price on auction is defined.

Completed by: JSC FI

Market appraisal done in accordance with the Federal Law of 29.07.1998 №135-FL «On appraisal activities in the Russian Federation» (modified as of 24.07.2007)

7. Publication of the notice on sale of shares (holdings) of municipal household companies.

Completed by: JSC FI

Notice

8. Selling shares of municipal household companies at auction (8).

Completed by: JSC FI

The auction did not take place

10. Selling shares of municipal household companies through public offering (9).

Completed by: JSC FI

The sale did not take place

11. Selling shares of municipal household companies without naming the price (10).

Completed by: JSC FI

9. Transferring the property to the buyer and making all necessary actions to transfer the title Completed by: JSC FI, registrar (1) In accordance with the Decree of the Government of St. Petersburg as of 23.10.2007 № 1369 «On the Procedure for Planning Privatization of the State Property of St. Petersburg and the Procedure for Elaborating the Program of Privatization of the State Property of St. Petersburg», the above property is included in the Program of Privatization if the normative price of the stock and shares of St. Petersburg in the municipal household companies that is defined in accordance with the Federal legislature exceeds 3 million rubles (of every share holding or stock holding that is planned to be privatized).

In reality, most property is presented by shares of joint-stock companies. Participation in limited liabilities companies is considerably rare in comparison with JSC. The Program of Privatization of the State Property of St. Petersburg for 2008 (the Decree of the Government of St. Petersburg № 1664 as of 25.12.2007) does not contain the section covering privatization of stocks and shares of St. Petersburg in the regulation capitals of municipal household companies.

(2) Shares of open joint-stock companies in state ownership can be privatized without limitations. Closed joint-stock company shares, shares in chartered capital of limited liabilities companies are subject to privatization with the execution of their priority right to buy such shares by other shareholders of the above-mentioned legal entities. In this case, the order of the KUGI specifies that shares are privatized by means of selling them to shareholders of closed JSC, limited liabilities companies, trust partnerships to exercise their priority right to buy at the price defend in accordance with the Federal Law «On appraisal activities in the Russian Federation». The JSC FI is obliged to notify all shareholders of the corresponding legal entity about the forthcoming sale of shares in written form in accordance with the procedure specified by the Charter of the legal entity. If these shareholders fail to use their priority right, the shares are to be privatized by means of selling at auction .The terms and procedure to exercise the priority right are specified by the Federal Laws «On joint-stock companies» and «On limited liabilities companies», as well as by the constituent documents of the legal entities whose shares are privatized.

(3) In the description of property to be privatized one mentions the number and type of shares of a JSC, their ratio to the chartered 115

capital of a JSC, share in chartered capital of limited liabilities companies .

(4) Means of privatization, used by the KUGI, include selling shares by auction, by the public offering and without naming the price.

However, other means of privatization specified by the legislation can also be applied.

(5) Standard price of shares is the minimal price at which they can be sold It is estimated in accordance with the Federal Law «On privatization of public and municipal property» (modified as of 13.05.2008) of 21.12.2001 №178-FL, and the Decree of the government of RF «On approval of rules to Set standard process for state of municipal property subject to privatization: d d 14.02.2006 №87.

(6) Type of price offers (in the case of the auction) can be open (the price offers are announced openly during the trading) or closed (the price offers are submitted by auction participants to the trading coordinator in sealed envelops).

(7) Type of payment defines how the buyer pays: simultaneously or by installments.

(8) The Decree of the Russian Federation Government «On approval of the regulations on selling public or municipal property by the auction» of 12.08.2002 (modified as of 20.12.2006) №585. Public or municipal property is sold by auction if the buyers do not have to fulfill any conditions concerning this property. The right to buy belongs to the buyer, who offers the highest price during the trading. The auction is open to participants. The price offers are submitted by auction participants in sealed envelopes or are announced openly during the trading (open type of price offers). The auction in which only one buyer participated is considered invalid. In accordance with Clauses 24 and 36 of the Federal Law as of 21.12.2001 № 178-FL «On Privatizing the State and Municipal Property» (modified as of 13.05.2008), installment of payment is possible if the sale was made without announcing the price.

(9) In accordance with the resolution of the Russian Government «On approval of regulations on selling public or municipal property by public offering and without naming the price» of 22.07.2002 №549, (modified as of 20.12.2006) ) as well as the instruction of the Committee for Managing the State Property «On Organizing the Sale of Property of St. Petersburg by Way of the Public Offer» (modified as of 28.06.06) of 06.08.04 N 442-р. Selling public or municipal property by the public offering takes place if the auction for sale of the said property was considered invalid. The right to buy public or municipal property belongs to the contender who submitted the first application to buy the said property at the price of the offer that was stated as of the date when the application was made. The application is satisfied by the price of the initial offering. If during the specified period there are no other applications for purchase by the price of the initial offering, the price is reduced after a period specified in the notice In that case the first offer to buy at current bid price is satisfied. The bid price can be reduced to the cut-of price. The receiving of offers is completed by the registration of the first offer in the journal of offers specifying the time when it is received (date, month, hours and minutes).

(10) In accordance with the resolution of the Russian government «On approval of the regulations on selling public or municipal property by public offering and without naming the price» of 22.07.2002 №549 (as in force on 20.12.2006.). Selling public or municipal property without naming the price takes place if the sale by the public offering failed. In that case the notice on selling public or municipal property does not contain the starting price. Contenders send their price offers for public or municipal property to the address mentioned in the notice. In case when offers from several contenders are received, the one who offered the highest price for the public or municipal property will be its buyer. In case when several similar price offers for the public or municipal property are received, the one who submitted the offer first will be the buyer.

116

4.2.15. THE PROCEDURE FOR PRIVATIZING STATE UNITARY ENTERPRISES (1) In accordance to: 1. Federal Law «On privatization of public and municipal property» of 21.12.2001 №178-FL (modified as of 13.05.2008).

2. The Federal Law as of 26.12.1995 № 208-FL «On Shareholding Companies» (as in force on 29.04.2008).

3. The Federal Law as of 29.07.1998 № 135-FL «On Estimation Activity in the Russian Federation» (as in force on 24.07.2007).

4. The Decree of the Government of the Russian Federation as of 12.08.2002 № 584 «On Approval of the Statute of Holding the Tender regarding the Sale of the State or Municipal Property» (as in force on 20.12.2006).

5. The Decree of the Government of the Russian Federation as of 12.08.2002 № 584 «On Approval of the Statute of Organizing the Sale of the State or Municipal Property at the Auction and the Statute of Organizing the Sale of the Shares of the Open-Type Shareholding Companies that Are State or Municipal Property at the Specialized Auction» (as in force on 20.12.2006).

6. The Decree of the Government of the Russian Federation as of 22.06.2002 № 549 «On Approval of the Statute of Organizing the Sale of the State or Municipal Property by Way of the Public Offer and without Announcing the Price» (as in force on 20.12.2006).

7. Law of St. Petersburg «On privatization of public property» (modified as of 29.02.2008) of 10.03.2005 №59-15.

8. Resolution of the St. Petersburg government «On the program of public property privatization in St. Petersburg for 2008» of 25.12.2007 №1664.

9. The Decree of the Governm ent of St. Petersburg as of 23.10.2007 № 1369 «On the Procedure for Planning Privatization of the State Property of St. Petersburg and the Procedure for Elaborating the Program of Privatizing the State Property of St. Petersburg».

10. Resolution of KUGI «On approval of the list and requirements applicable to the documents intended for preparing the resolution on privatization conditions» (modified as of 28.06.2006) of 19.04.2004 №254-r.

11. Decree of Government of St. Petersburg «On approval of regulation on order of development and approval of conditions of competition for sale of state property of St. Petersburg, control of their implementation and confirmation by winner of implementation of mentioned conditions» of 24.08.2006 №1034.

12. Decree of KUGI «On measures for reducing terms of execution of decisions on sale (on conditions of privatization) of state property of St. Petersburg» (modified as of 28.06.2006) of 10.12.2004 №603-р.

Stage of work

Documents on resolution on the outcome

1. Defining the list of those state unitary enterprises the property complexes of which were deemed expedient for being privatized.

Completed by: bodies of executive power of St. Petersburg.

The list of those state unitary enterprises the property complexes of which were deemed expedient for being privatized

2. Approval of the privatization program for the coming year.

Completed by: The Government of St. Petersburg

Regular privatization program for the coming accounting year

3. Inventory of SPbGUP’s property and liabilities including the rights for results of scientific and technical activities and other exclusive rights and liabilities of SPbGUP Appraisal of unaccounted property revealed by the inventory regarding the retail prices.

Documenting of the inventory results (2).

Preparation of the intermediate balance sheet (as of the inventory acts execution date) Completed by: head of SPb GUP

Inventory results (3) Intermediate balance sheet as of the inventory acts execution date

p.4.

117

p.3.

4. Audition of authenticity of the intermediate balance sheet and the inventory act.

Completed by: head of SPb GUP

Auditor’s conclusion on completeness and correctness of the inventory and intermediate balance sheet results

5. Forming of the set of documents for submission to KUGI. Completed by: head of SPb GUP

Set of documents (4)

6. Preparation and submission to KUGI of wellgrounded proposals.

Completed by: head of SPb GUP

Well grounded proposals on conditions of transformation into JSC (open joint-stock company) including the proposals on leaving movable and immovable property object of a complex as a property of SPb (on withdrawal to the treasury) the same as well-grounded proposals on encumbering the respective enterprise under privatization by a liability to apply such property as specially specified.

7. Analysis of the documents set submitted for completeness and compliance with the resolution of KUGI dated 19.04.2004 №254-r (modified as of 28.06.2006) Completed by: KUGI

p.5.

No Full Package →

7.1. Request for the lacking documents Completed by: KUGI

Yes 8. Preparation of the resolution on the SPb GUP property complex privatization conditions Completed by: KUGI

8.1. Method of privatization - transformation of GUP into JSC (open joint-stock company) (in case the cost of assets of the state unitary enterprise that form the regulation capital of the shareholding company exceeds the obligatory rate of the regulation capital of the shareholding company which is 100 thousand rubles): - amount of share capital in the newly established JSC, - number and nominal price of the shares; - transformation terms; - appointment of the director general to the newly created JSC (head of GUP shall take this position until the first general meeting of shareholders), number and membership of the board and revision commission; - ordering the head of GUP to provide state registration of the newly created JSC and to organize 118

8.2. Method of privatization - sale by contest or auction (5) the property complex of the state unitary enterprise (in case the cost of assets of the state unitary enterprise is less than 100 thousand rubles): sale terms, conditions of the contest (in case of sale by a contest) (6) organisation authorised to sell the property of GUP complex by the auction or contest (JSC FI); other necessary deeds concerning privatisation of the GUP’s property complex

registering of shareholders and then to submit to KUGI an extract from the register of shareholders; - other necessary deeds concerning privatization of the GUP’s property complex 9. Submitting to the Committee for Print and Mass Media signed copies of resolutions about the terms of privatizing the property of St. Petersburg (excluding the supplements to the resolutions about the terms of privatizing state unitary enterprises) to be officially published.

Term: no later than 14 days Completed by: Committee for Managing the State and Municipal Property.

10. Ensuring it that resolutions about the conditions of privatizing the property of St. Petersburg get published (7).

Completed by: Committee for the Print and Mass Media.

p.8.2

11.1. Submission of the documents necessary for state registration of the newly created JSC to the tax authorities Term: 7 days since the day when KUGI has made a decision on conditions of privatization.

Completed by: head of SPb GUP

11.2. Submission of a set of SPb GUP privatization documents to the specialised organisation – JSC FI – for sale Completed by: KUGI

12.1. Organization of system of registering the shareholders of JSC. Completed by: head of JSC (the former head of SPb GUP)

12.2. Fair appraisal of the property complex Completed by: OFO FI

13.1. Submission of extract from the register of shareholders to KUGI. Completed by: head of JSC (the former head of SPb GUP)

13.2. Issuing the newsletter that announces the sale of the property complex in the journal «Official Bulletin ‘Herald of the Property Fund of St. Petersburg’» Completed by: JSC FI

p.19.

14 Conduction of the auction or contest as established (8) Completed by: JSC FI

16. Handing the property over to the buyer.

Completed by: JSC FI 17. Registration of transferring the property rights.

Completed by: FRS

Yes

15. Has the sale taken place?

No 18. Sale of the property complex by means of public offering and without naming the price (9) p.19.

119

p.18.

p.16.

Yes

19. Has the sale taken place?

No 20. Making a decision on cancellation of the SPb’s property privatization conditions determining farther use of the property

(1) A state unitary enterprise can be privatized in accordance with the legislation of the Russian Federation in the following ways: – by way of transforming it into an open-type shareholding company, if the rate of the regulation capital that was established in accordance with clause 11 of the Federal Law as of 21.12.2001 № 178-FL «On Privatizing the State and Municipal Property» (as in force on 13.05.2008) exceeds the minimal rate of the regulation capital of the open-type shareholding company as it is established by the Federal Law as of 26.12.1995 № 208-FL «On Shareholding Companies» (as in force on 29.04.2008) (1000 minimal rates of labor payment); – by way of selling the property complex of a state unitary enterprise at the auction or the tender, if the rate of the regulation capital is less than the minimal rate of the regulation capital of the open-type shareholding company as it is established by the Federal Law. However, this way of privatizing is not currently used in St. Petersburg, as the procedure for registering the property rights of St. Petersburg and the buyer in the Federal Registration Service is complicated (as a result of selling the property complex of a state unitary enterprise at the auction or the tender). In some cases non-movable assets of a state unitary enterprise can be sold.

(2) Inventory of property and liabilities of GUP shall be carried out in accordance with Instructions on inventory of property and financial liabilities as approved by the order of Ministry of Finance of Russia of 13.06.1995 №49 and Systematic instructions for inventory of rights for results of scientific and technical activities as approved by the joint decree of the Ministry for Property of Russia, the Ministry of Industry and Science of Russia and the Ministry of Justice of 22.05.2002 №1272-r/r-8/149. Appraisal of unaccounted property revealed by the inventory shall be carried out regarding the fair prices (when necessary – on the basis of appraisal statement made in accordance with the Federal Law of 29.07.1998 №135 «On appraisal activities in Russian Federation») (modified as of 24.07.2007).

(3) The inventory results shall be documented by the unified forms as approved by the resolution of resolution of Goskomstat of Russia of 18.08.1998 (modified as of 03.05.2000) №88 regarding Systematic instructions for inventory of rights for results of scientific and technical activities as approved by the joint decree of the Ministry for Property of Russia, the Ministry of Industry and Science of Russia and the Ministry of Justice of 22.05.2002 №1272-r/r-8/149.

(4) A set of documents in accordance with the resolution of the Committee for City Property Management of 19.04.2004 254-r «On approval of the list and requirements to documents for preparing the resolution on privatization terms» (modified as of 28.06.2006 №461-r).

(5) Public or municipal property shall be auctioned if the buyers have not stay within any conditions regarding such property a right of acquisition belongs to the buyer, who offers the highest price for that properties in the auction auctions is open in membership of the participants. Property price offers shall be submitted by the auction participants in sealed envelopes (closed form of price offer submission) or claimed openly in course of the bids (open form of price offer submission) auction participated by only one person shall be deemed invalid. For details see the Federal Law of 21.12.2001 №178-FL «On privatization of public and municipal property» (modified as of 13.05.2008), resolution of RF Government of 12.08.2002 (modified as of 20.12.2006) №585).

A property may be sold by a contest if the buyer has to meet some specific regarding such property a right of acquisition belongs to the buyer, who offers the highest price for that property in the contest on a condition that this buyer shall meet conditions of the contest. The contest shall be advertised in membership of the participants. Price offers for the public or municipal property shall be submitted by the contest participants in sealed envelopes a contest participated by only one person shall be deemed invalid. For details see the Federal Law of 21.12.2001 №178-FL «On privatization of public and municipal property» (modified as of 13.05.2008); resolution of RF Government of 12.08.2002 №584 (modified as of 20.12.2006).

(6) The list of conditions is specified in clause 21 of the article 20 of the Federal Law «On privatization of public and municipal property» of 21.12.2001 №178-FL (modified as of 13.05.2008) (7) Resolution on conditions of privatization of the property of St. Petersburg (except the annexes to the resolutions on conditions of privatization of the Governmental unitary enterprises) shall be broadcasted to the extent as established by clause 4 of the article 15 of the Federal Law «On privatization of public and municipal property» by the mass media authorized for publication of legal acts of the St. Petersburg Administration: the newspaper «Sankt-Peterburgskiye Vedomosti»; the newspaper «Nevskoye Vremia»; the newspaper «Delovoy Peterburg» (8) See: – On approval of the regulations on selling public and municipal property by contest resolution of the RF Government of 12.08.2002, №584 (modified as of 20.12.2006).

– On approval of the regulation on selling public or municipal property by means of auction and regulation on selling shares of open joint-stock companies in public or municipal property by means of special auction (modified as of 04.10.2005) resolution of the RF Government of 12.08.2002, №585(modified as of 20.12.2006).

(9) In accordance to the regulations on selling public or municipal property by means of public offering and without naming the price approved by the resolution of the RF Government of 22.07.2002, №549 (modified as of 20.12.2006).

120

5. CURRENT SYSTEM OF TAXATION IN ST. PETERSBURG Currently taxes established in articles 12-15 of Tax Code are collected in Russian Federation in accordance with the levels of the Russian budget system, three classes of taxes and dues could be specified as follows: - federal taxes and duties, imposed by the Tax Code of the Russian Federation and levied in its territory; - taxes and duties of Russian Federation member territories (hereinafter referred to as regional taxes and duties), imposed by legislative acts of representative authorities of the Russian Federation member territories in accordance with the Tax Code; - local taxes and duties by legislative acts and regulations of local government bodies in accordance with the Tax Code.

Federal taxes comprise (article 13 of the Tax Code): 1. value added tax; 2. excise taxes; 3. individual income tax; 4. unified social tax; 5. business profit tax; 6. severance tax; 7. water tax; 8. duty for use of fauna and water biological resources; 9. state duty.

Regional taxes comprise (article 14 of the Tax Code): 1. business and enterprise property tax; 2. gambling industry tax; 3. transport tax.

Local taxes comprise (article 15 of Tax Code): 1. land tax; 2. private property tax.

It is worth mentioning that according to the above-mentioned articles of the Law and the Tax Code, several taxes are varied among the budget system levels Hereinafter, the tax system is primarily presented from the standpoint of the Tax Code.

Despite the fact that the legislation defines three classes of taxes in accordance with the levels of the budget system, similarly to Moscow, St. Petersburg is a specific Federation entity. In accordance with article 12 of the Tax Code of the Russian Federation, regional taxes and dues are specified by the Tax Code of the Russian Federation and the laws of the Russian Federation entities. They are introduced in accordance with the Tax Code by the laws of the Russian Federation entities and are mandatory for payment on the territories of the corresponding entities of the Russian Federation Local taxes and dues in St. Petersburg and Moscow are defined, introduced, changed, and cancelled by the laws of the above-mentioned entities of the Russian Federation Thus in St. Petersburg, the city of federal significance, local taxes and duties are determined and introduced by the legislation of St. Petersburg.

While introducing regional or local taxes, legislative (representative) bodies of St. Petersburg determine the following elements of taxation: 1. tax rates within the limits set by the Tax Code; 2. procedure and terms of tax payment; 3. tax remissions, basis and order of its application (in the order and limits provided in the Tax Code of Russian Federation.

Other elements of taxation (taxpayers, object of taxation, tax base, tax period, procedure of tax calculation) are fixed directly by the Tax Code. (Under Clause 7 Article 1 of Federal Law №95-FL dated 29.07.2004 after 01.01.2005 the legislative (representative) authorities of the Russian Federation constituent entities have ceased to be entitled to decide on determination of regional and local taxes report forms.

Regional or local taxes that are not provided by the Tax Code of Russian Federation can not be introduced.

In accordance with the above-listed provisions, the section in the table titled «The St. Petersburg Taxes» contains regional and local taxes defined by the Russian Federation tax legislation as well as by legislation of St. Petersburg.

Special tax regimes are provided by the Tax Code of the Russian Federation and are applied in accordance with the procedure provided by the Tax Code and other tax and duty legislative acts. The special tax regimes can also provision special procedure for defining objects of taxation, as well as exemption from several taxes and duties as provided by articles 13-15 of the Tax Code.

121

Special tax regimes comprise: 1) Taxation system for agricultural producers (uniďŹ ed agricultural tax); 2) Simplifed taxation system; 3) Taxation system in the form of a uniďŹ ed tax for imputed earnings for separate types of activities; 4) Taxation system with regard to production sharing agreements.

According to clause 4 of Part 1 of the Tax Code, the federal executive bodies authorized to develop state policy and regulations regarding taxes and duties as well as regarding customs, along with the executive bodies of the Russian Federation entities and local executive bodies within their authorities can issue legislative acts on taxation and duties (when provided by the tax and duty legislation) which can not modify or amend the tax said legislation.

Federal executive bodies, authorized to develop state policy and regulations on taxes, duties and customs and their regional ofďŹ ce has no liability to issue any legislative acts with regard to taxation and duties.

System of taxation of natural and legal persons in St. Petersburg is shown in the table, based on legislative and normative base as of 30.04.2008. Some provisions of normative legal acts will come into force from 01.01.2009.

122

123

Legislative base

Tax Code of the Russian Federation, Part II of 05.08.2000 № 11 7 - F L Chapter 21 (modified as 30.04.2008)

Name

Va l u e added tax

№

1.

1. Sale of goods and commodities (labor, service) in the territory of the Russian Federation, including sales of pledge objects and transfer of goods (results of labor, provision of services) under the compensation or novation agreement as well as proprietary right transfer.

2. Transfer of goods and commodities (labor, services) in the territory of the Russian Federation for internal use, the expenses on which are not accepted for deduction (including those with capital depreciation charges) when determining business profit tax.

3. Construction and assembling works for own purposes.

4. Import of goods to the customs territory of the Russian Federation (In accordance with the article 146 of the Tax Code).

Object of Taxation

Tax Period Reporting Period

1. Cost of goods, labor, services including excises.

2. Customs value plus duty plus excise.

3. The taxable base determined in accordance with the provisions of Articles 153-158 of the Russian Federation Tax Code shall be increased by the following amounts: - received by way of compensation for goods (works or services) sold by way of financial assistance, with a view of social welfare funds replenishment, on account of income increase or otherwise in connection with goods (works or services) sold; - received in the form of interest (discount) related to the bonds and bills of exchange received towards compensation for goods (works or services) sold, interest on commodity credit to the extent of the excess of the interest amount calculated in accordance with the refinance rates specified by the Central Bank of the Russian Federation to be valid and applicable during the interest calculation period; insurance compensation received under a contract of insurance against the risk of misfeasance (nonfeasance) of contracted obligations on the part of the insured creditor’s counterparty in case the contracted obligations being insured provide for the insured party performing Tax period Quarter

FEDERAL ТАXES

Taxation base

-

No later than the 20th of the month following the tax period In case of imports to the customs territory of the Russian Federation the tax amount is paid in accordance with customs legislation.

Payment terms

1. 0%-export and similar operations (see Article 164 of the Tax Code).

2.10%-food products according to the list, goods for children according to the list, books and periodicals related to education, science, and culture according to the list approved by the Resolution of the Government of the Russian Federation of 23.01.2003 №41, and medical goods.

3.18%-those not listed in clause 1,2.

4. Calculation method: ratio of tax rate provided by clauses 2 or 3, to taxation base set at 100 (10/110 and 18/118), and increased by the corresponding amount of tax rate- at receiving of funds accounted from VAT.

Tax Rates

100% into the federal budget.

Distribution among Budgets (1)

124

Name

Excises

№

2.

Tax Code of the Russian Federation, Part II of 05.08.2000 № 11 7 - F L Chapter 22 (modified as of 30.04.2008

Legislative base

1) On territory of Russian Federation sale of excisable produced goods including sale of mortgaged objects and transfer of excisable goods under agreement on providing compensation or novation. Transfer of title to excisable goods from one person to another (in return for a compensation or on a gratis basis) and use of excisable goods for effecting payment in kind shall be deemed instances of excisable goods sale; 2) sales of seized and/or unowned excisable goods abandoned to the State and subject to transfer into federal and/or municipal ownership effected by the person(s) in charge of the above goods under judgment/decisions by courts (including courts of arbitration) and/or other duly authorized authorities and agencies; 3) transfer of excisable goods effected within the Russian Federation territory by the person(s) to have produced the aforesaid goods from customer-owned raw materials to the customer who is

Object of Taxation

1. amount of the excisable goods sold (transferred) in natural units in case there are fixed (specific) tax rates provided for (sum absolute per unit); 2. value of the excisable goods sold (transferred) in case there are ad valorem (%) tax rates provided for; 3. value of the excisable goods sold (transferred) calculated based on the average final disposal prices as of the previous fiscal period or (in case such informational should be unavailable) based on the current market prices less the excise/VAT amount – with excisable goods in whose relation there are ad valorem (%) tax rates provided for; 4. volume of the excisable goods sold (transferred) in natural units for calculation of the excise amount in case of fixed (specific) tax rates applicability and an estimated value (of the excisable goods sold (transferred) calculated based on the minimum retail price for calculation of the

delivery of goods (works or services) whose sale shall be taxable under Article.146 of the Russian Federation Tax Code.

For details concerning taxable base definition specificities per transaction type see Articles 155162 of the Russian Federation Tax Code.

Taxation base

Tax period Calendar month.

Tax Period Reporting Period

Payment of excise at sale of excisable goods - in equal parts not later than 25th day of month following the month under report, and not later than 15th of the second month after the month under report 2. Payment of excise for straight-run petrol and denaturated ethyl alcohol by taxpayers, which have licence of registration of the person, performing operations with straight-run petrol, and (or) registration certificate for organization, performing operations with denaturated ethyl alcohol, is performed not later than 25th day of third month, following the expired tax period.

Payment terms

By types of goods: 1. fixed rates in rubles per unit of natural measure 2. combined rates - in rubles per unit of natural measure Andin%of price.

Tax Rates

To the Federal budget: excises for ethyl alcohol from food raw materials - 50%; for ethyl alcohol from all types of raw materials excluding food, - 100%; for spirit-based goods - 50%; for tobacco goods - 100%; for motor petrol, fuel, motor oils - 40% for cars and motorcycles 100%; for the list of goods subject to excises exported to Russian Federation - 100%. Other

Distribution among Budgets (1)

125

№

Name

Legislative base

Taxation base

excise amount in case of ad valorem (%) tax rates applicability - with excisable goods in whose relation there are combined tax rates provided for consisting of a fixed (specific) and an ad valorem (%) tax rates

Object of Taxation

owner of the materials abovementioned or any third party including acquisition of ownership of the aforesaid excisable goods in payment for the services rendered related to production of excisable goods from customerowned raw materials; 4) in-house transfer of excisable goods produced to be further used for manufacture of non-excisable goods with the exception of in-house transfer of directly distilled gasoline produced to be used for further manufacture of petrochemical products with an entity formally registered as one entitled to handle directly distilled gasoline and /or inhouse transfer of industrial spirit produced to be used for further manufacture of non-alcoholic products with an entity formally registered as one entitled to handle industrial spirit; 5) transfer of excisable goods effected within the Russian Federation by persons to have produced the excisable goods for their in-house needs; 6) transfer of excisable goods effected within the Russian Federation by persons to have produced the excisable goods by way of contribution to the registered (share) capital of an entity, coop share fund or by way of contribution under a simple partnership (joint operation) agreement;

Tax Period Reporting Period

Payment terms

Tax Rates

excises returns - to the budget of Saint-Petersburg.

Distribution among Budgets (1)

126

â&#x201E;&#x2013;

Name

Legislative base

7) transfer of excisable goods an instance of ownership of industrial spirit being acquired; 11) directly distilled gasoline procurement (bringing to account) by an entity duly registered as entitled to perform directly distilled gasoline processing. Procurement of directly distilled gasoline shall be deemed an instance of ownership of directly distilled gasoline being acquired. effected within the Russian Federation by the entity (commercial company or partnership) to have produced the excisable goods to a participant of the entity (commercial company or partnership) or the latterâ&#x20AC;&#x2122;s legal successor in case of retirement (dissociation) from the entity (commercial company or partnership) as well as transfer of excisable goods produced under a simple partnership (joint operation) agreement to a participant of the agreement referred to or legal successor of the latter at apportionment of the participantâ&#x20AC;&#x2122;s share in the joint property of the agreement parties in case such joint property comes to be parceled; 8) transfer of excisable goods for processing on the give-and-take basis; 9) import of excisable goods into the Russian Federation customs territory;

Object of Taxation

Taxation base

Tax Period Reporting Period

Payment terms

Tax Rates

Distribution among Budgets (1)

127

Name

I n d i vidual income tax

№

3.

Taxation base

Income in cash and material form and in form of material benefit. For income taxed at 13% tax rate - tax deductions are applied

Object of Taxation

10) industrial spirit procurement (bringing to account) by an entity duly registered as entitled to manufacture non-alcoholic products.

Procurement of industrial spirit shall be deemed Income received by taxpayers from sources within the Russian Federation and (or) from sources outside the Russian Federation -for individual tax residents of the Russian Federation. Income received by taxpayers from sources within the Russian Federation - for individuals non-residents of the Russian Federation for tax purposes.

Legislative base

Tax Code of the Russian Federation, Part II of 05.08.2000 № 11 7 - F L Chapter 23 (modified and supplemented as of 30.04.2008)

Tax period Calendar year.

Tax Period Reporting Period 1. No later than the day when cash income is received from the bank, as well as the day when tax agents transfer income from their bank accounts to the account of a taxpayer or to bank accounts of third parties upon one’s order. In other cases-no later than the following day after the taxpayer in fact received the incomefor income in cash, and the following day after the day of calculated tax amount is in factfor income in material form or as a benefit.

2. Businessmen-make advance estimate tax payments for JanuaryJune - no later than July 15, for JulySeptember-no later than October 15, for October- December-no later than January 15 of the following year.

Final settlement for the year in accordance with the tax statement is made no later than July 15 of the following year.

Based on a tax statement formalized

Payment terms

13%, unless otherwise provided for in Articles 224 of the Russian Federation Tax Code.

35% - from advertising prizes, from goods, works and services, when exceeding amounts mentioned in p. 28, article 217 of the Tax Code, - interest accrued on bank deposits to the extent of the excess over the amount specified in Clause 28 Article 217 of the Russian Federation Tax Code; amount of interest saving secured by the tax payers when receiving loan (credit) funds from entities and/ or individuals to the extent of the excess over the amount specified in Clause 2 Article 212 of the Russian Federation Tax Code with the exception of material benefits obtained in connection with bank card transactions during the non-interest period provided for in the card issue agreement and material benefits obtained as a result of having secured interest savings while using loan (credit) funds allocated for new construction or purchase

Tax Rates

100% to St. Petersburg’s budget.

Distribution among Budgets (1)

128

№

Name

Legislative base

Object of Taxation

Taxation base

Tax Period Reporting Period

Tax Rates

of a residential house, apartment, room or shares ownership of residential property located within the Russian Federation territory in case the taxpayer is entitled to property-related tax deduction under Sub clause 2 Clause 1 Article 220 of the Russian Federation Tax Code.

- the tax rate shall fixedly be 30% with any revenue of individuals who are no tax residents of the Russian Federation except the revenues received in the form of dividends from share interest in Russian Federation entities’ activities.

- the tax rate shall fixedly be 15% with any revenue of individuals who are no tax residents of the Russian Federation received in the form of dividends from share interest in Russian Federation entities’ activities.

9%: - from income in form of dividends - from income in form of percent for debentures with mortgage coverage, emitted up to 01.01.2007 and also from

Payment terms

as per 3 – NDFL no later than by July 15 of the year immediately following the one under report.

Distribution among Budgets (1)

129

Name

Unified social tax

№

4.

Taxation base

The amount of payments and remuneration (excluding not taxable amounts). For individual businessmen and attorneys- revenues minus expenses. For individuals not considered individual businessmen-the amount of payments and other remuneration for the tax period in favor of individuals

Object of Taxation

1. Compensations and other remunerations accrued for the benefit of individuals under labour and civil law contracts dealing with performance of works or provision of services (except remunerations received by individual entrepreneurs, legal practitionaries and private notaries) as well as copyright agreements.

2. For individual businessmen and attorneys - revenues from business or other professional activities after deducting expenses related to in come acquisition.

3. For individuals, not considered entrepreneurs: - payments and other remuneration on labor and civil contracts for labor or services to individuals, by taxpayers. . Compensations and remunerations shall not be taxable if with the entity in question these payments are qualified as disallowable costs expenditures with regard to the corporate income tax during the current fiscal (accounting) period; with individual entrepreneurs, private notaries, legal practitionaries to

Legislative base

Tax Code of the Russian Federation, Part II of 05.08.2000 № 11 7 - F L Chapter 23 (modified as of 30.04.2008) Tax period: Calendar year. Reporting periods: first three, six, and nine months

Tax Period Reporting Period

Monthly estimate payments are due no later than the 15th of the following month. Calculations of advance tax payments are presented to tax authorities no later than the 20th day of the next month following the reporting period. Quarterly, no later than the 15th of the following month after the end of the quarter-the corresponding information is to be presented to the Social Security Fund of the Russian Federation. The tax statement is to be submitted no later than March 30 of the year following the previous tax period.

Payment terms

Up to 280000 Rubles - 26% From 280 001 up to 600 000 - 72 800 plus 10% from amount over 280 000 Rubles. Over 600 000 Rubles – 104 800 Rubles plus 2% from amount over 600 000 Rubles. Other tax rates are fixed for: - individual businessmen; - taxpayers - agricultural commodity producers; entities specializing in national artistic trades and family (tribal) communities of the Far North indigenous minorities dealing in traditional economy; - taxpayers - organizations and individual businessmen, which have resident status of technical - promotional special economic zone and make payments to natural persons, which work on the territory of technicalpromotional special economic zone; - private attorneys;

income of settlers of trust management of mortgage coverage received on the basis of bought mortgage participatory certificate, issued by the manager of mortgage backing up to 01.01.2007.

Tax Rates

From 20% to 2% into the federal budget minus the amount of accrued insurance premium for obligatory pension insurance.

From 2,9% to 0% in to the budget of the Social Security Fund of the Russian Federation (SSF).

From 1,1% to 0% into the budget of the Federal Fund for Mandatory Medical Insurance (FFMMI) 2% to 0% in to the budget of Territorial Fund for Mandatory Medical Insurance (TFM-MI)

Distribution among Budgets (1)

130

Name

Business profit tax

№

5.

Tax Code of the Russian Federation, Part II of 05.08.2000 № 11 7 - F L Chapter 25 (modi fied as of 30.04.2008

Legislative base

Profit calculated as income minus economically justified and documented expenses aimed at acquisition of income

have established legal aid offices (agencies) and individuals such payments are qualified as disallowable costs expenditures with regard to the personal income tax during the current fiscal (accounting) period

Object of Taxation

Profit in cash equivalent

Taxation base

Tax period: Calendar year. Reporting periods: first three, six, and nine months, for taxpayers calculating monthly estimate advance payments on the basis of actual profit-one month, two months, three months, etc. until the end of the calendar year

Tax Period Reporting Period

Monthly from actual profit, no later than the 28th of the month following the reporting one or by monthly estimate advance payments no later than the 28th of each month in the amount of 1/3 of the amount calculated for the previ-ousperiod (defined by the company). For quarterly and annual settlements- no later than the due date for tax statements. Enterprises with revenues less than 3 million Rubles for 1 quarter, newly incorporated enterprises and several other ones, listed in clause 3 of Article 286 of the Tax Code, pay only quarterly advance estimate payment.

For income received as dividend and as interest from public and municipal securities, the tax payable

Payment terms

1. 24%.

2. For income of foreign companies without permanent representative offices in the Russian Federation: a) 10%-from use, support or lease (freight) of ships, air planes and other movable transport means or containers due to international transportation, b) 20%-from all other income.

3. For income in form of dividend: a) 9%—for income received as dividend from Russian and foreign entities by Russian Federation entities unmentioned in Subclause 1 Clause 3 Article 284 of the Russian Federation Tax Code; b) 15%—for income received as dividend from Russian companies by foreign companies, and for income received as dividend from foreign companies by Russian companies.

- entities specializing in the IT sphere.

Tax Rates

1. With the tax rate - 24%: 6,5% of the taxation base into the federal budget; -17,5% of the taxation base into St. Petersburg’s budget.

2. For other tax rates: -100% ofthe tax amount to the federal budget.

Distribution among Budgets (1)

131

Name

Duty for use of fauna a n d water biological resources

№

6.

Object of Taxation

1. Objects of fauna in accordance with the list specified in clause 1 of Article 333.3 of the Tax Code, withdrawal of which from their habitat is done in accordance with the license (permission) for use of fauna.

2. Objects of water biological resources in accordance with the list specified in clauses 4 and 5 of Article 333.3 of the Tax Code, withdrawal of which from their habitat is done in accordance with the permission for development (catch) of aquatic biological resources

Legislative base

Tax Code of the Russian Federation, Part II of 05.08.2000 № 11 7 - F L Chapter 25.1 (modified as of 30.04.2008)

Number of objects of fauna and water biological resources

Taxation base

Tax Period Reporting Period

Fixed rates provided for in Article 333.3 of the Russian Federation Tax Code

4. For public and municipal securities: a) 15%—for the interest income envisaged by issue, conditions of issue and circulation of which are envisaged by profit income in percents (2); b) 9%—for interest income for municipal bonds issued prior to the period no less than 3 years up to January 1st, 2007 (3) с) 0% - for interest income for municipal and state bonds, issued prior up to 20.01.1997 inclusive (4).

by the tax agent during 10 days after the income payment. Tax retained from receiver of incomes is paid by receivers themselves within 10 days after the end of the corresponding month of report (tax) period in which the income was received.

The duty for use of fauna is payable when obtaining the license (permission) for use of fauna. Duty for use of water biological resources is payable as one-time and regular installments. The onetime fee is defined as 10% share of the calculated total amount of the duty. Payment of the one-time fee is made when obtaining the permission for development (catch) of aquatic biological resources. The remaining amount defined as the difference between the

Tax Rates

Payment terms

Dutyforuse of fauna-100%to St.Petersburg’s budget; duty for use of water biological resources (excluding inland waters)-70% into the federal budget, 30%-to St. Petersburg’s’ budget duty for the use of water biological resources (for inland waters)-100% into the federal budget

Distribution among Budgets (1)

132

Name

Severance tax

№

7.

Tax Code of the Russian Federation, Part II of 05.08.2000 № 11 7 - F L Chapter 26 (modified as of 30.04.2008)

Legislative base

Tax Period Reporting Period

Tax period - Calendar month

Taxation base

1. Cost of extracted minerals (excluding dry desalinized and stabilized oil, oil gas and natural gas from all the types of fields of hydrocarbon raw materials).

It is defined in accordance with Article 340 of the Tax Code. 2.

Physical volume of extracted mineral- when extracting dry desalinized and stabilized oil, oil gas and natural gas from all types of fields of hydrocarbon raw materials. It is defined in accordance with Article 339 of the Tax Code.

Object of Taxation

1. Mineral resources extracted within the Russian Federation territory 2. Minerals extracted from the processed waste (loss), if such extraction is subject to license in accordance with the legislation of the Russian Federation.

3. Minerals extracted outside the Russian Federation, but in territories under jurisdiction of the Russian Federation or leased from foreign states or used under international agreement.

The tax amount is to be paid no later than the 25th of the month following the previous tax period.

calculated total amount of the fee and the onetime fee is payable in equal portions by monthly installments during the period of for development (catch) of aquatic biological resources not later than on 20th day of month.

Payment terms

1. 0% or 0 Rubles when minerals are extracted as part of standard waste, extraction of ill-conditioned minerals, in cases of accompanying extraction, etc. (see clause 1 of Article 342 of the Tax Code). 2. Differentiated interest rates depending on the type of mineral wealth (see clause 2 of Article 342 of the Tax Code). 3.

0.7-reduction factor for taxpayers which at their own expense made search and exploration of mineral wealth fields mined by them or those which completely reimbursed all the government expenses for search and exploration of the corresponding amount of this mineral wealth fields and were exempt from duties for reproduction of mineral wealth during this field development as of July.

Tax Rates

To the budget of St. Petersburg: tax for mining of hydrocarbon raw materials (excluding natural gas fuel) - 5%; tax for generally found minerals -100%; tax for mining operations (excluding hydrocarbon raw materials, natural diamonds and generally found minerals) -60%; tax on extraction of commercial minerals in the form of natural diamonds – at a 100% standard rate; regular pay-

Distribution among Budgets (1)

133

Name

S t a t e duty

№

8.

Tax Code of the Russian Federation, Part II of 05.08.2000 № 11 7 - F L Chapter 25.3 (modified as of 30.04.2008)

Legislative base

Lawsuits and complaints filed into the courts of general jurisdiction, arbitration courts, and the Constitutional Court of the Russian Federation. Notarial acts by the public notaries. State registration of civil status acts.

State registration of legal entities, including state registration of changes in the by-laws of legal entities, for state registration of citizens as individual businessmen and state registration of their cessation of business upon their decision to terminate this activity. Examination and issue of documents connected with the becoming citizen of the Russian

Object of Taxation

Price and keeping of claim, considered in the courts of the general jurisdiction, arbitration, Constitution and Supreme Courts of the Russian Federation; affirmative performance of the other legal significant actions and doc-umentation by the courts, institutes and bodies

Taxation base

Tax Period Reporting Period

Prior to the action or within 10 days period from the date of court decision effectiveness.

Payment terms

In accordance with the Russian Federation Budget Code

ments refundable for extraction of commercial minerals (royalty) when implementing agreements on sharing products in the form of raw hydrocarbons (except natural gaseous fuel) – at a 5% standard rate.

Other earnings - to the federal budget.

1, 2001 (see paragraph 2 of clause 2 of Article 342 of the Tax Code)

Depending on the substance or the amount of the lawsuit: in fixed sum, expressed in Rubles, or percentage to the corresponding sum (lawsuit, certified contracts, etc.)

Distribution among Budgets (1)

Tax Rates

134

Name

Wa t e r tax

Unified tax on imputed Earnings for separate kind of activities

№

9.

10.

Types of using water bodies: water consumption from water bodies; using water area of water bodies, excluding timber transportation in rafts and burses; using water bodies without water consumption for hydro-power purposes; using water bodies for timber transportation in rafts and burses.

Imputed earnings of a taxpayer concerning the following business activities: 1)provision of consumer services, service groups, subgroups, types and/or individual services classified in accordance with the All-Russian Classifier of Personal Services; 2) provision of veterinary services; 3) provision of services on repair, maintenance and cleaning of motor cars 4) provision of services on vehicles storing on paid parking; 5) provision of motor transport services for transportation of passengers and freight by companies and individual businessmen with no more than 20 motor cars in operation; 6) retail trade in booths, stalls, and other sales objects, including those without stationary sales area;

Tax Code of the Russian Federation, Part II of 05.08.2000 №117-FL, Chapter 26.3 (modified as of 30.04.2008) Law of St. Petersburg of 17.06.2003 №299-35 m o d i fied as of 21.11.2005)

Federation or expatriation, as well as other legally important actions.

Object of Taxation

Tax Code of the Russian Federation, Part II of 05.08.2000 № 11 7 - F L Chapter 25.2 (modified as of 30.04.2008)

Legislative base

Imputed earnings calculated as the product of the basis yield on a certain type of activity calculated for the tax period and of the indicator amount for this particular type of activity.

Volume of water consump tion during the fiscal period; area of provided water space; amount of electric power produced; product of the volume of timber transported in rafts and in burses during the fiscal period (thousand cubic meters.) and distance covered (km/100).

Taxation base

-

Tax period Quarter

Tax period quarter

Tax Period Reporting Period

Payment of the unified tax is made by a taxpayer according to results of the tax period no later than the 25th of the first month of the following tax period. Provision of tax statements to the tax authorities no later than the 20th of the first month of the following tax period.

No later than the 20th of the month following the reporting quarter.

Payment terms

15% of the imputed earnings

Thousand RUR depending on specificity of water consumption and economy region where the water use object is located.

Tax Rates

To the budget of Saint-Petersburg - 90% with partial distribution among local budges: to the budget of the FFMM1 - 0.5%; to the budgets of the LFMMI - 4.5%; to the budget oftheSSF - 5%.

100% to the federal budget

Distribution among Budgets (1)

135

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Name

Legislative base

7) provision of catering services through catering facilities unequipped with customer servicing halls; 8) distribution and (or) placement of street advertisement; 9) distribution and (or) placement of advertisement on buses, trolley-buses, trailers, river ships; 10) provision of services in the sphere of temporary possession and/or use delivery of trading places within retail trade system stationary facilities unequipped with salesrooms, retail trade system non-stationary facilities (counters, booths, pavilions, containers, boxes and other objects) as well as catering facilities unequipped with customer servicing halls; 11) retail trade in shops and kiosks with the area of the shop ďŹ&#x201A;oor not exceeding 150 sq. m., booths, stalls, and other sales objects, including those without stationary sales area.

Object of Taxation

Taxation base

Tax Period Reporting Period

Payment terms

Tax Rates

Distribution among Budgets (1)

136

Name

Unified tax paid with application of the simplif i e d taxation system

Minimum tax paid in case of using the simplified taxation system

№

11.

12.

Tax Code of the Russian Federation, Part II of 05.08.2000, №117-FL, Chapter 26.2 (modified as of 30.04.2008)

Tax Code of the Russian Federation, Part II of 05.08.2000, №117-FL, Chapter 26.2 (modified as of 30.04.2008)

Legislative base Revenues in monetary equivalent.

Revenues in monetary equivalent minus expenses.

Revenues in monetary equivalent calculated in accordance with Article 346.15 of the Tax Code.

2.Revenues minus expenses.

Revenues minus expenses. Minimal tax is paid in case if the sum of calculated in common order of single tax with the usage of object taxation the revenues minus expenses, less than amount of calculated minimal tax.

Taxation base

1. Revenues.

Object of Taxation

Tax period Calendar year.

Tax period Calendar year. Reporting periods first three, six and nine months of the calendar year.

Tax Period Reporting Period

Taxpayers-organizations - no later than March 31 of the year following the expired tax period.; Taxpayers-businessmen-no later than April 30 of the year following the expired tax period.

Ta x p a y e r s - o r g a n i zations - no later than March 31 of the year following the reporting period. Taxpayersbusinessmen-no later than April 30 of the year following the reporting period. Advance estimate for tax no later than 25 of the first month following the previous past reporting period.

Payment terms

1% of the tax base

15% of the tax base

6% of the tax base

Tax Rates

To the budget of the Pension Fund of the Russian Federation - 60%; to the budget of the FFMMI - 2%; to the budgets of the LFMMI - 18%; to the budget of the SSF - 20%.

To SaintPetersburg’s budget- 90% with partial distribution among local budges; to the budget of the FFMM 0.5%; to the budgets of LFMMI 4.5%; to the budget of the SSF- 5%.

Distribution among Budgets (1)

137

Name

Single agricultural tax

№

13.

Tax Code of RF, Part II of 05.08.2000 №117-FL, Chapter 26.1 (as amended on 30.04.2008)

Legislative base

Revenues minus expenses.

Object of Taxation

Revenues in monetary equivalent minus expenses.

Taxation base

Tax period -calendar year. Accounting period - 6 months.

Tax Period Reporting Period Tax-payers organization - before or on March 31 of the year following the last finished tax period; Advance tax payments should be made before 25 days from the end of the accounting period.

Payment terms

6% of the tax base

Tax Rates

To the Budget of St. Petersburg 90%; 0.2% - to the Federal Fund of Mandatory Medical Insurance; 3.4% - to regional funds of mandatory medical in-nurance; 6.4% - to the Fund of Social Insurance of RF.

Distribution among Budgets (1)

138

Name

Business and enterprise property tax

№

1.

Tax Code of the Russian Federation, Part II of 05.08.2000 №117-FL Chapter 30 (modified as of 30.04.2008) Law of St. Petersburg of 2 6 . 11 . 2 0 0 3 №684-96 «On enterprise property tax» (modified as of 02.11.2007)

Legislative base

1. For Russian enterprisereal estate and other property, accountable in the balance sheet as fixed assets in accordance with the approved book keeping procedure.

2. For foreign companies operating in the Russian federation with their permanent representative offices-real estate and other property as fixed assets.

3. For foreign companies not operating in the Russian federation with their permanent representations located in the territory of the Russian Federation real estate property owned by the above-mentioned foreign enterprises.

Object of Taxation

Tax Period Reporting Period

Payment terms

Average annual value of the property which is declared the object of taxation. This property is accounted according to its depreciated cost calculated in accordance with the provided procedure of bookkeeping approved by the accounting policy of the enterprise.

Tax period Calendar year.

Reporting periods fist three, six and nine months of the calendar year.

The legislative (rep resentative) body of the Russian Federation entity can envisage for separate categories of taxpayers the right not to calculate and not to make advance estimate tax payments during the tax period. In St. Petersburg advance payments are provided

Tax and advance estimate tax payments are payable no later than the set date for submitting tax statements according to the results of the tax period, tax settlements on advance payments for the reporting period. Taxpayers present tax calculations on advance tax payments no later than 30 days after the date when the corresponding reporting period is over. Tax statements according to the results of the tax period are submitted by taxpayers no later than March 30 of the year following the previous tax period.

SAINT-PETERSBURG’S TAXES

Taxation base

Tax rates are set by the law of the Russian Federation member territories and cannot exceed 2.2%. The rates can be differentiated depending of the categories of taxpayers and (or) property being object of taxation. The unified rate 2.2% is fixed in St. Petersburg.

Tax Rates

100% to St. Petersburg’s budget.

Distribution among Budgets (1)

139

Name

Private property tax

№

2.

Law of the Russian Federation of 09.12.1991, №2003-1 «On taxes for private property» (modified as of 22.08.2004) Law of St. Petersburg of 11 . 11 . 2 0 0 3 №625-93 «On specific issues of taxation in St. Petersburg» (modified as of 08.05.2007).

Legislative base Dwellings, apartments, summer cottages, garages, and other buildings, premises and structures.

Object of Taxation

Inventory value property

of the

Taxation base

Tax Period Reporting Period In equal portions in two periods-no later than September 15 and November 15

Payment terms

The following rates are established in Saint-Pe te rsb urg: - concerning dwellings, apartments, summer cottages and other living buildings, premises and structures: Up to 300,000 Rubles - 0,1%, From 300,000 Rubles up to 500,000 Rubles; - 0,2%, Over 500,000 Rubles; - 0,3%. - Concerning garages and other non-dwelling buildings, premises and structures; Up to 300,000 Rubles - 0,1%; From 300,000 Rubles up to 500,000 Rubles - 0,3%, (Over 500,000 Rubles - 2,0%);

Tax Rates

To the local budges of municipal unions of St. Petersburg of the place where the object of taxation is located

Distribution among Budgets (1)

140

Name

Land tax

№

3.

Tax Code of the Russian Federation, Part II of 05.08.2000, №117-FL, Chapter 31 (modified as of 30.04.2008) Law of St. Petersburg of 2 8 . 11 . 2 0 0 5 №611-86 «On land tax in St. Petersburg» (modified as of 2.11.2007) and on adding in Law of St. Petersburg «on tax remissions» (modified as of 29.03.2007)

Legislative base

Taxation base

Cadastral value of land plots recognized as taxable properties as of 1 January of the year which is the tax period Tax base is defined separately for each land plot and each share in the right of common ownership of land plot considering categories of taxpayers and certain tax rates.

Object of Taxation

Landplots, landplot parts, shares in joint ownership of landplots located within the territory of Saint Petersburg and delivered to entities and individuals on terms of beneficial ownership, permanent perpetual use or lifetime ownership with hereditary succession.

Tax period Calendar year.

Reporting period for organizations and individual entrepreneurs - I quarter, II quarter, III quarter calendar year

Tax Period Reporting Period Oanizations and individual entrepreneurs perform advance payments of tax not later than the last of the month immediately following the period under report expired with the land tax accrued for a fiscal period to have expired refundable no later than February 1 of the year immediately following the fiscal period Natural persons who are no individual entrepreneurs and individual taxpayers who are individual entrepreneurs failing to exploit the landplots owned by them to provide for the needs of their business activities pay tax on the base of received tax notification not later than 1 April of following year.

Payment terms

Distribution among Budgets (1) 100 % to the budget of St. Petersburg

Tax Rates

0,004% of cadastral value of land plots, related to lands included in zones of agricultural use in settlements and used for agricultural manufacturing; 0,042% of cadastral value of land plots, used for: - available housing; - engineering infrastructure of housing and communal services (excluding objects, not related to available housing and its infrastructure); - garages - plots, provided for housebuilding; - for personal auxiliary and suburban household, gardening, cattle breeding and market gardening; 1,5% of cadastral value of other land plots

141

Name

Transportation tax

№

4.

Tax Code of the Russian Federation, Part II of 05.08.2000 №117-FL Chapter 28 (modified as of 30.04.2008) Law of St. Petersburg of 4.11.2002 №487-53 «On the transport tax» (modified as of 26.09.2007)

Legislative base

Payment terms

Organizations make advance payment no later than the last day of the month, following the expired period under report (30 of April, 31 June, 31 of October). The tax due according to the results of the tax period shall be paid no later than the date due for submitting the tax statement for the results of the tax period - 1 February of the year, following the expired tax period natural persons pay tax on the base of tax notification not later than l June of the year, following the expired tax period.

Tax Period Reporting Period Tax period Calendar year. Reporting period for organization s- I, II, III quarters

Taxation base

1) for vehicles, which have motor - engine power in horse-powers; 2) for air vehicles for which traction of jet engine is determined - passport static traction of jet engine on take-off regime on ground conditions in kilograms of power; 3) for water non-selfpropelled (towed) vehicles - gross tonnage in register ton; 4) for other water and air vehicles - a unit of vehicle.

Object of Taxation

Cars, motorcycles, motor scooters, buses and other self-propelled vehicles and machines (pneumatic or caterpillars), air planes, helicopters, motor ships, yachts, sailing ships, powerboats, snow mobiles, motor-sledge, motor boats, jet ski, nonself-propelled (towed) ships and other water and air means of transport, registered in accordance with the approved procedure according to the legislation of the Russian Federation.

Distribution among Budgets (1) To St. Petersburg’s budget of the place where the transport vehicle is located

Tax Rates

The rates are established in fixed amount depending on the engine power or the gross tonnage of the transport vehicle, on the category of the transport vehicle on the basis of one horse power of the engine power of the vehicle, one register ton of the vehicle or one transportation unit.

142

G a m bling tax

5.

Tax Code of the Russian Federation, Part II of 05.08.2000 №117-FL Chapter 29 (modified as of 30.04.2008) Law of St. Petersburg of 11 . 11 . 2 0 0 3 №623-94 «On gambling tax in St. Petersburg» (modified as of 18.10.2004)

Legislative base

Taxation base

Number of gambling tables, game machines and cash desks.

Object of Taxation

Gambling tables. Game machines. Sweepstakescash desks. Wagers and betting cash desks.

Tax period - Calendar month.

Tax Period Reporting Period No later than the 20th of the month following the previous tax period.

Payment terms

1. From a gambling table125,000 Rubles per month.

2. From a game machine-7,500 Rubles per month.

3. From a sweepstakes cash desk-125,000 Rubles per month.

4. From a wagers cash desk125,000 Rubles per month.

Tax Rates

100% to St. Petersburg’s budget.

Distribution among Budgets (1)

(1) In accordance with the provisions of the Russian Federation Tax Code and Articles 50, 56, 61.1 and 146 of the Russian Federation Budget Code approved by Federal Law №145-FZ dated 31.07.1998 (revised 01.01.2008).

(2)15% rate also applies to earnings in form of interest on bonds with mortgage cover, issued after 01.01.2007 and earnings of founders of asset management with mortgage cover, received on the base of acquiring of mortgage certificates of participation, issued by mortgage cover manager after 01.01.2007.

(3)9% rate also applies to earnings in form of interest on bonds with mortgage cover, issued before 01.01.2007 and earnings of founders of asset management with mortgage cover, received on the base of acquiring of mortgage certificates of participation, issued by mortgage cover manager before 01.01.2007.

(4) 0% rate also applies to earnings in form of interest on bonds of government currency bonded debt of 1999, issued at novation of bonds of internal government currency debt of III series, issued for the purpose of providing conditions, necessary for balancing internal currency debt of former USSR and internal and external currency debt of Russian Federation.

Name

№

6. PUBLIC PROCUREMENT IN SAINT-PERTERSBURG The legislation of the Russian Federation and City of St. Petersburg in the sphere of public order formation, placement and execution comprises the following regulatory legal acts: - Federal Law №94-FL «On placement of orders for delivery of goods, performance of works and provision of services for federal and municipal needs» dated 21.07.2005 (hereinafter referred to as «Federal Law №94-FL»); - Russian Federation Civil Code; - Russian Federation Budget Code; - Federal Law №135-FL «On providing for business competition» dated 26.07.2006; - Instruction of the Russian Federation Government №236-r dated 27.02.2008 (List of goods, works and services whose delivery/performance/provision orders are to be placed by way of tender); - Resolution of the Government of St. Petersburg №1829 «On measures to provide for the St. Petersburg public order system improvement» dated 30.11.2005 (hereinafter referred to as «Resolution of the Government of St. Petersburg №1829»); - Resolution of the Government of St. Petersburg «On formation of commissions of the authority in charge of the St. Petersburg public order placement» dated 30.11.2005 (revised 12.12.2007); - Instruction of the Committee for Economic Development, Industrial Policy and Trade №97-r «On approval of the procedural requirements to the documentation related to the St. Petersburg public order placement» dated 27.12.2005 (revised 27.09.2007); - Instruction of the Committee for Economic Development, Industrial Policy and Trade №99-r «On approval of the procedures, rules and regulations for the executive authority of the city of St. Petersburg in charge of functions related to placement of the St. Petersburg public order with Level 1 public customers» dated 30.12.2005.

Federal Law №94-FL provides for a unified order placement procedure and is immediately applicable within the whole of the Russian Federation territory. Federal Law №94-FL provides for definition of the key terms related to the public order activities, determination of the public order placement methods, detailed specification of the public order placement procedures (including tendering). There is also a procedure specified for the public order placement participants to lodge administrative claims related to the public order placement activities.

Under Federal Law №94-FL a federal or municipal contract is an agreement concluded by a customer on behalf of the Russian Federation or the Russian Federation constituent or municipal entity with a view of providing for federal and municipal needs.

A federal or municipal order may be placed: 1) through tendering in the form of an auction or competition that may be held by electronic means; 2) without tendering (enquiry after price quotations, with a single supplier/performer/provider, at commodity exchange(s)).

Tendering shall be the standard order placement procedure with the exception of the cases provided for in Federal Law №94-FL. A competition is a tender won by the bidder to have offered the best terms and conditions of a federal or municipal contract execution whose application for participation in the competition has been assigned №1.

An auction for a federal or municipal contract is a tender won by the bidder to have offered the lowest price of a federal or municipal contract.

Competition and auction may be open (public) and closed.

The procedure of holding the tender in the auction or competition forms is provided for in Chapters 2, 3 of Federal Law №94-FL. The procedure of order placement without tendering is provided for in Chapters 4-7 Federal Law №94-ФЗ.

Under Article 8 Federal Law №94-FL order placement participants are all the persons claiming the right to conclude a federal or municipal contract. Any entity irrespective of its form of incorporation, form of ownership, location and capital origin and any individual such as an individual entrepreneur is entitled to be an order placement participant.

The following binding requirements shall be applicable to all participants of order placement carried out in the form of tender in accordance with the procedure provided for in Chapter 11 Federal Law №94-FL: 1) order placement participants comply with the requirements specified by the Russian Federation acting legislation for parties involved in supply, performance and provision of goods, works and/or services constituting the tender subject; 2) the order placement participant has not undergone a liquidation procedure (requirement applicable to entity participants) and there is no arbitration court judgment currently in effect declaring the order placement participant bankrupt with bankruptcy proceedings having been initiated (requirement applicable to entity and individual 143

entrepreneur participants); 3) as of the date when the application for participation in the competition (auction) was submitted the order placement participant’s operation had not been suspended in accordance with the procedure provided for in the Russian Federation Administrative Offences Code; 4) the order placement participant has not failed to refund accrued taxes, fees and other mandatory payments to any level budget(s) and/or state extra-budgetary funds with the total sum of such payments defaulted during the previous calendar year amounting to or exceeding 25% of the order placement participant’s assets book value as determined based on the data of accounting statements for the previous report period (an order placement participant is deemed to comply with the requirement in case of having lodged a complained to falsify the alleged arrears existence in accordance with the procedure provided for by the acting Russian Federation legislation with the case remaining unsettled as of the date when the application for participation in the competition (auction) was submitted).

In case the order placement is carried out in the form of tender the competent authority shall also be entitled to put forward the following requirements to be additionally complied with by the order placement participant: 1) the order placement participants has the exclusive rights to relevant intellectual properties in case in the course of the federal or municipal order execution the customer is to become entitled to such properties; 2) the order placement participants is unmentioned in the unconscientious contractors’ register; 3) if an order for construction (renovation of overhaul) of a capital construction object is placed by way of auction tendering with the contract trigger (maximum) price (lot price) amounting to or exceeding 50 million RUR the federal (municipal) level customer, competent authority shall be entitled to specify the requirement of the applicant having had (during the five years immediately preceding the date when the application for participation in the auction was submitted) experience of carrying out construction (renovation of overhaul) of a capital construction object belonging to the same group(s) or subgroup(s) of activities as those the applicant is willing to contract for as per the nomenclature of goods, works and services providing for federal (municipal) needs approved of by the competent federal level executive authority in charge of regulating activities in the order placement sphere, the value of such objects being no less than 20% of the contract trigger (maximum) price (lot price) of the contract which is subject of the auction; in such a case one takes into consideration (with due regard for legal succession) the total value of all the construction, renovation and overhaul works to have been performed by the applicant on a capital construction object (selected at the applicant’s discretion in case there are multiple variants to choose from).

The Government of the Russian Federation is entitled to specify additional requirements to be complied with by participants of placement of an order for supply of products required to provide for the country’s defense and national security.

Specifying requirements unprovided for in Article 11 of Federal Law №94-FL is prohibited.

With regard to the provisions of Article 3 of Federal Law №94-FL the public needs of the city of St. Petersburg as constituent entity of the Russian Federation are to be defined as the demand of the city of St. Petersburg authorities and institutions as well as the relevant municipal level public customers for goods, works and services required to provide for the St. Petersburg authorities, institutions and public customers duly discharging their functions and exercising the powers delegated to them including those related to implementation of regional target programmes which demand is satisfied out of the funds allocated from the budget of St. Petersburg and extra-budgetary sources.

Depending on the range of their competences and powers delegated to them the St. Petersburg public customers are classified into those of Level 1 and Level 2.

Level 1 public customers of St. Petersburg are the city executive authorities acting as the ultimate decisionmakers with regard to the St. Petersburg budget funds management in accordance with the departmental structure of the St. Petersburg budget expenditures adopted for the relevant financial year.

Level 2 public customers of St. Petersburg are budget-funded entities and other St. Petersburg budget funds recipients duly authorized to carry out public order placement by Level 1 public customers of St. Petersburg in accordance with the procedure provided for in Resolution of the Government of St. Petersburg №1829.

The Regulations on organization of the St. Petersburg executive authorities’ activities in the sphere of the St. Petersburg public order formation, placement and execution (hereinafter referred to as the «Regulations») approved by Resolution of the Government of St. Petersburg №1829 provide for a procedure of coordinating the St. Petersburg executive authorities’ activities in the sphere of the St. Petersburg public order formation, placement and execution.

In accordance with Resolution of the Government of St. Petersburg №1829 the Committee for Economic Development, Industrial Policy and Trade shall be the St. Petersburg executive authority in charge of functions related to placement of the St. Petersburg public order for delivery of goods, performance of works and rendering of services to provide for the needs of the Level 1 public customers of St. Petersburg (hereinafter referred to as the «Competent Authority»).

144

The Competent Authority is delegated the following powers (except the right to sign St. Petersburg public contracts): - to hold tenders in the form of an open competition and open auction with the trigger (maximum) contract price with all the competition (auction) lots being equal to a sum no less than 30 billion RUR inclusive except when the contract is related to delivery of products procured by the Committee for Landscaping and Road Facilities, Construction Committee and the Committee for Energy and Engineering Support; - to hold tenders in the form of an open competition and open auction with the trigger (maximum) contract price with all the competition (auction) lots being equal to a sum no less than 100 billion RUR inclusive when the contract is related to delivery of products procured by the Committee for Landscaping and Road Facilities, Construction Committee and the Committee for Energy and Engineering Support; - to hold tenders in the form of an open competition and open auction in accordance with the List of products procured by the Competent Authority by way of holding tenders irrespective of the trigger (maximum) contract price which List is to be approved of by the Government of St. Petersburg upon recommendation of the Committee for Economic Development, Industrial Policy and Trade as well as in other cases provided for in the Regulations; - to hold tenders in the form of a closed competition and closed auction in irrespective of the trigger (maximum) contract price in cases provided for by the acting Russian Federation legislation; - placement of St. Petersburg public order for delivery of exchange goods to provide for the City of St. Petersburg public needs with commodity exchanges with the trigger (maximum) contract price being equal to a sum no less than 30 billion RUR inclusive.

The Competent Authority is also delegated other powers in the sphere of public order placement provided for by the acting Russian Federation legislation.

Control functions at each stage of the public procurement process are distributed between the relevant St. Petersburg executive authorities.

The Committee for Economic Development, Industrial Policy and Trade, to the extent of its competence under the acting Russian Federation legislation and the Regulations, exercises control over: - St. Petersburg public order formation; - compliance with the procedural requirements; - the procedure of St. Petersburg budget funds recipients being assigned the Level 2 public customer status; - the customers’ compliance with the procedures of formation and authorization of state commissions for St. Petersburg public order placement.

The St. Petersburg Committee for Financial Control exercises control over: - the St. Petersburg public order placement in accordance with the acting Russian Federation legislation; - the St. Petersburg public order placement execution in accordance with the plans approved of by Governor of St. Petersburg or special instructions by the latter.

Apart from the St. Petersburg Committee for Financial Control control over the St. Petersburg public order execution is exercised by the St. Petersburg Finance Committee and the Level 1 public customers of St. Petersburg (to the extent of their competences under the acting Russian Federation legislation and the Regulations).

The regulations also provide for a mechanism of joint decision-making on issues related to procurement activities to provide for the City of St. Petersburg public needs through the mediation of the three-level system of commissions for St. Petersburg public order placement with their competence domains having been delineated depending on the public order amount and placement procedure: – interdepartmental public commissions for St. Petersburg public order placement (six commissions formed by the Competent Authority depending on the order amount and specificity of the product being procured); – public commissions of the Level 1 public customers of St. Petersburg for St. Petersburg public order placement; – public commissions of the Level 2 public customers of St. Petersburg for St. Petersburg public order placement.

Alternative ways of St. Petersburg public order placement by Level 1 and 2 public customers of St. Petersburg - in accordance with the latter competences provided for in the Regulations.

The commissions implement their activities based on responsible, overt and collegiate discussion and decisionmaking with a view of improving efficiency of the St. Petersburg budget funds management for the benefit of the population of St. Petersburg.

145

7. NEW MECHANISMS FOR IMPLEMENTATION OF INVESTMENT PROJECTS BASED ON PUBLIC-PRIVATE PARTNERSHIP PRINCIPLES 7.1. LEGAL FOUNDATIONS OF PUBLIC PRIVATE PERTNERSHIP, BASED ON THE FEDERAL LAW «ON CONCESSION AGREEMENTS» Main normative legal acts in the field of public private partnership mechanisms legal regulation during performance of investment activity on the base of concession agreements are: 1. The Constitution of Russian Federation of 12.12.1993.

2. The Budget Code of Russian Federation of 31.07.1998 №145-FL (as of 8.11.2007).

3. The Town-Planning Code of Russian Federation of 29.12.2004 №190-FL (as of 16.05.2008).

4. The Civil Code of Russian Federation (Part 1) of 30.11.1994 №51-FL (as of 13.05.2008).

5. The Civil Code of Russian Federation (Part 2) of 26.01.1996 №14-FL (as of 06.12.2007).

6. The Land Code of Russian Federation of 25.10.2001 №136-FL (as of 13.05.2008).

7. The Federal law «On road Safety» of 10.12.1995 №196-FL (as of 01.12.2007).

8. The Law of the Russian Soviet Federate Socialist republic «On Investment activities in RSFSR» of 26.06.1991 №1488-1 (as of 10.01.2003).

9. The Federal law «On investment activity in Russian Federation, the form of capital investments» of 25.02.1999 №39-FL (as of 24.07.2007).

10. The Federal law «On Foreign Investment in Russian Federation» of 09.07.1999 №160-FL (as of 29.04.2008).

11. The Federal law «On general Principles of Organization of Legislative (representative) and Executive authorities in regions of RF» of 06.10.1999 №184-FL (as of 29.03.2008).

12. The Federal law «On Concession agreements» of 21.07.2005 №115-FL (as of 04.12.2007).

13. The Federal law «On state registration of rights for real estate and deals concerning them» of 21.07.1997 №122-FL (as of 13.05.2008).

14. Resolution of the Russian Federation Government №134 «On approval of the Rules of buildup and usage of the budget allocations of the Russian Federation Investment Fund» dated 01.03.2008.

Above mentioned list of legislative and other normative legal acts of Russian Federation is not exhaustive and includes only the most important normative legal acts, applicable to legal relationships, connected with signature and implementation of concession agreement In particular, technical standards and regulations, which are applicable with respect to design, construction and operation of subjects of concession agreement are not indicated in the list mentioned.

Under concession agreement one party (concessionaire) commits itself to at its own expense create and (or) to reconstruct real estate defined by this agreement (subject of concession agreement), which is owned or will be owned by other party (grantor), to perform activity with use (operation) of subject of concession agreement, and grantor commits itself to provide to concessionaire right of possession and use of subject of concession agreement for execution of indicated activity for the period, established by this agreement.

In accordance with the provisions of Articles 3, 4, 5, 7, 8, 10, 11 of Federal Law №115-FL «On concession agreements» dated 21.07.2005 (hereinafter referred to as «Law on concession agreements» there are the following components distinguished in the structure of the legal relationships arising out of a concession agreement: Element: Parties to agreement

Description (definition of contents): concession

– grantor: Russian Federation, on behalf of which the Government of Russian Federation acts or federal executive authority authorised by it, or subject of Russian Federation, on behalf of which public authority of subjects of Russian Federation acts, or municipal formation, on behalf of which local Government authority acts; – concessionaire: individual entrepreneur, russian or foreign juridical person or two or more named juridical persons acting without forming juridical person under contract of society in participation (joint activity contract)

Subject matter of concession agreement

Real estate (including motor roads and engineering structures of transport infrastructure, objects of public health, education, culture and sport and other objects of social, cultural and everyday purpose) to be created and (or) reconstructed by concessionaire, which are owned or will be owned by grantor

146

Properties, provided to – subjects of concession agreement; concessionaire for pos- – in cases, provided for by concession agreement, property owned by grantor, session and use forming single whole with subject of concession agreement and (or) meant for general use for performance by concessionaire of activity, indicated in concession agreement; – land provided by grantor under lease contract (sublease), on which subjects of concession agreement are located and (or) which is required for performance by concessionaire of activity, provided for by concession agreement Concession fee

Payment made in different forms, paid by concessionaire to grantor during the period of operation of subject of concession agreement

Investment of grantor

obligations

– provision to concessionaire on terms of lease (sub lease), of land required for placement of subject of concession agreement and performance of activity, provided for by concession agreement; – in cases, provided for by concession agreement, providing to concessionaire for possession and use of property, owned by grantor, forming single whole with subject of concession agreement and (or) meant for general use for performance by concessionaire of activity, provided for by concession agreement; – in cases, provided for by concession agreement, assumption of part of expenses for creation and (or) reconstruction of real estate, use (operation) subject of concession agreement and providing guarantees to concessionaire, in accordance with Federal laws, other normative legal acts of Russian Federation, laws of subjects of Russian Federation, normative legal acts of local Government authority; – other obligations, provided for by concession agreement

Investment obligations of concessionaire

– at his own expense to perform within the time established by concession agreement, unless otherwise provided for by concession agreement, creation and (or) reconstruction of subject of concession agreement and to put it into operation; – at his own expense to bear costs of maintenance of subjects of concession agreement in working order within currency of concession agreement (including, performance of current repairs and major repairs of these objects); – other obligations, provided for by concession agreement in accordance with law on concession agreements

Legal regulation of procedure of signature of concession agreements Procedure of preparation and signature of concession agreement indicated in art. 4 of the Federal law of 21.07.2005 №115-FL (as of 04.12.2007) «On concession agreements» (hereinafter - the law «On concession agreements»), can be divided into following stages: 1) Preparation and making of decision of signature of concession agreement in accordance with article 22 of the law «On concession agreements» (including preparation and approving of bid Documents for bid procedure to select the concessionaire, which includes, among other, drafts of concession agreement and lease contract for land, meant for implementation of activity, provided for by concession agreement with necessary attachments).

2) Bid procedure to select the concessionaire.

3) The very signature (signing) of concession agreement Decision of signature of concession agreement is made by grantor.

With respect to subjects of concession agreement, owned by subject of Russian Federation, – public authority of subject of Russian Federation.

In accordance with art. 22 of the law «On concession agreements» decision of signature of concession agreement there shall establish: – bid Documents for bid procedure, including provisions of concession agreement (consisting in accordance with p. 1 art. 23 of the law «On concession agreements»); – procedure of signature of concession agreement; – membership of bid Evaluation Committee for bid procedure to select the concessionaire.

Following procedure of bid can be foreseen (with establishment of terms of performance of certain stages and procedures of bid, as well as persons, responsible for their implementation): 147

№

Name of procedures and stages of bid procedure for the right for signature of concession agreement

1.

Publication of notification on open bid procedure

1.1

Publication of notification on open bid procedure in official printed edition (hereinafter – official printed edition) defined by grantor and placement of notification on official site of grantor in «Internet» (hereinafter – official web site)

1.2

Publication of notification on open bid procedure in international specialized edition (e.g. in Development business)

2.

Familiarization of concerned persons with Bid Documents subject of concession agreement

3.

Provision of set of Bid Documents

4.

Interpretation of Bid Documents on demand of candidates

4.1

Sending of inquiries for interpretation of bid Documents

4.2

Rendering interpretation of provisions of bid Documents

4.3

Placement at official site interpretation of provisions of bid Documents

5.

Amendment of Bid Documents by grantor (if necessary)

5.1

Amendment of bid Documents by grantor

5.2

Publication in official edition and placement at official site in «Internet» of notification on amendment of bid Documents

6.

Submission of applications for participation in bid procedure

6.1

Deadline for submission of applications for participation in bid procedure

6.2

Deposits security for the Candidate’s fulfillment of commitments related to the bidding Procedure

6.3

Expiry of deadline for submission of applications for participation in bid procedure

6.4

Recall or change of served application for participation in bid procedure

7.

Opening of envelopes with applications for participation in bid procedure

7.1

Opening of served envelopes with applications for participation in bid procedure by bid Evaluation Committee

8.

Examination of applications for participation in bid procedure

8.1

Examination of application for compliance with requirements set forth in the bid Documents

8.2

Decision of bid Evaluation Committee for results of preliminary selection

8.3

Sending of notifications about decisions on preliminary selection made by bid Evaluation Committee to applicants, who submitted applications

8.4

Return of deposits to applicants, not accepted for participation in bid procedure

9.

Adjustment (change) of provisions of Bid Documents and establishment of final provisions of draft concession agreement and draft of land lease contract

9.1

Open consultations of grantor with participants of bid procedure for discussing bid Documents and provisions of concession agreement

9.2

Amending by grantor of bid Documents according with results of discussing bid Documents with participants of bid procedure

9.3

Publication in official edition and placement at official site in «Internet» of notification on amending of bid Documents

9.4

Sending of amendments of bid Documents to participants of bid procedure

10.

Submission of bids

10.1

Date of presentation by participants of bid procedure and bids submission

148

10.2

Date of period for submission of bids expiry

10.3

Recall or change of served bid

11.

Opening of envelopes with bids

11.1

Opening by bid Evaluation Committee of envelopes with bids

11.2

Announcement of bid procedure being abortive in accordance with decision of grantor, which is made in case, if bid Evaluation Committee receives less then two bids or if bid Evaluation Committee recognizes less then two bids as corresponding to criteria of bid procedure

11.3

Return of deposit to participant of bid procedure – in case of announcement of bid procedure being abortive

11.4

Examination of bid served by the only participant of bid procedure under p. 11.2 present draft schedule of bid procedure, if it corresponds to criteria of bid procedure, making decision of signature with this participant of bid procedure for concession agreement in accordance with provisions, contained in bid served by him

12.

Identifying of successful bidder

12.1

Examination and evaluation by bid Evaluation Committee of bids, served by participants of bid procedure

12.2

Signing of proceeding of examination and evaluation of bids

12.3

Signing of proceeding on results of bid procedure

12.4

Publication of notification on results of bid procedure or decision on announcement of bid procedure being abortive with substantiation of this decision in official edition, in which notification on bid procedure was published, and placement of this notification on official site in the Internet

12.5

Return of deposits to participants of bid procedure (leave alone participant, recognized as successful bidder)

13.

Signature of concession agreement

13.1

Sending of notification to participants of bid procedure about results of bid procedure

13.2

Sending to successful bidder of a copy of minutes on results of bid procedure, as well as draft of concession agreement, corresponding to draft of concession agreement, attached to bid Documents, and bid served by successful bidder

13.3

Signing of concession agreement

13.4

In case of refusal or evasion of successful bidder from signing of concession agreement within established time, sending draft of concession agreement, corresponding to draft of concession agreement, attached to bid Documents, and bid served by such participant of bid procedure to participant of bid procedure, whose bid contains best conditions, following conditions, offered by successful bidder according to results of examination and evaluation of bids

13.5

In case of making a decision on conclusion of concession agreement in accordance with p. 11.4 present draft schedule of bid procedure, sending draft of concession agreement, corresponding to draft of concession agreement, attached to bid Documents, and bid served by such participant of bid procedure to participant of bid procedure, who is offered to sign indicated agreement

13.6

Signing of concession agreement with participant of bid procedure, to whom draft of concession agreement is sent in accordance with p. 13.4 or p. 13.5 present draft schedule of bid procedure

Concession agreement, signed in accordance with results of bid procedure (i.e. after identifying of successful bidder), in accordance with article 36 of the law «On concession agreements» is to be signed not later than in 90 (ninety) working days from the day of signing of minutes on results of bid procedure.

At that grantor within 5 (five) working days from the day of signing by members of bid Evaluation Committee of minutes on results of bid procedure send to successful bidder a copy of indicated minutes, as well as draft of concession agreement, corresponding to draft of concession agreement, attached to bid Documents, and bid served by successful bidder.

149

With a number of particular concession items there have been standard concession agreements drawn approved by the following resolutions of the Russian Federation Government: Resolution of the Russian Federation Government №90 «On approval of the standard concession agreement concluded in connection with leisure, sporting, recreation, tourism facilities and other socio-cultural infrastructure objects» dated 09.02.2007.

Resolution of the Russian Federation Government №791 «On approval of the standard concession agreement concluded in connection with underground railways and other public transportations» dated 22.12.2006.

Resolution of the Russian Federation Government №745 «On approval of the standard concession agreement concluded in connection with sea and river ports, port hydraulic engineering structures, port process and engineering infrastructure objects» dated 05.12.2006.

Resolution of the Russian Federation Government №747 «On approval of the standard concession agreement concluded in connection with hydraulic engineering structures» dated 05.12.2006.

Resolution of the Russian Federation Government №746 «On approval of the standard concession agreement concluded in connection with marine and riverine vessels, vessels for combined river-sea navigation, vessels employed for rendering icebreaker assistance and for performance of hydrographic and other research activities, ferries, floating and dry docks» dated 05.12.2006.

Resolution of the Russian Federation Government №748 «On approval of the standard concession agreement concluded in connection with components of the utility infrastructure and other community facilities including systems of heating, water, gas and power supply, drainage, wastewater treatment, domestic wastes recycling/ disposal/burial as well as objects providing for illumination and improvement of urban and rural settlements territory and social welfare facilities» dated 05.12.2006 (revised 18.08.2007).

Resolution of the Russian Federation Government №744 «On approval of the standard concession agreement concluded in connection with railway transportation objects» dated 05.12.2006.

Resolution of the Russian Federation Government №739 «On approval of the standard concession agreement concluded in connection with airfields, buildings and/or structures intended to provide for airborne vehicles’ takeoff, landing, taxing and parking as well as airport process and engineering infrastructure objects« dated 05.12.2006.

Resolution of the Russian Federation Government №673 «On approval of the standard concession agreement concluded in connection with objects employed for production, transmission and distribution of electric power and thermal energy» dated 11.11.2006.

Resolution of the Russian Federation Government №672 «On approval of the standard concession agreement concluded in connection with pipeline transportation objects» dated 11.11.2006.

Resolution of the Russian Federation Government №671«On approval of the standard concession agreement concluded in connection with education institutions’ facilities» dated 11.11.2006.

Resolution of the Russian Federation Government №319 «On approval of the standard concession agreement concluded in connection with motorways and transportation infrastructure engineering facilities including bridges, viaducts, tunnels, posts for vehicle admittance and collection of toll» dated 27.05.2006.

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7.2. ST. PETERSBURG LEGISLATION ON STATE-AND-PRIVATE PARTNERSHIPS. EXAMPLES OF PROJECTS St. Petersburg was the first Russian Federation constituent entity to elaborate a package of legal acts regulating establishment and operation of state-and-private partnerships at the regional level including in the first place: Law of St. Petersburg №627-100 «On participation of St. Petersburg in state-and-private partnerships» dated 25.12.2006 (revised 10.04.2008) and Regulation of the Government of St. Petersburg №392«On forms of St. Petersburg’s participation in state-andprivate partnerships» dated 16.04.2008.

The law above-mentioned provides for the procedure, rules and conditions of St. Petersburg’s participation in state-and-private partnerships by way of concluding and executing agreements (including concession ones) on behalf of the City of St. Petersburg. While participating in state-and-private partnerships the administration of St. Petersburg pursues the following aims: implementation of socially significant projects within the territory of St. Petersburg, attraction of additional investment in the city economy, improvement of the St. Petersburg municipal assets management, enhancement of the quality of goods, works and services delivered to the consumer.

Under Article 4 of the Law a state-and-private partnership is mutually profitable cooperation of St. Petersburg administration with Russian and foreign persons and/or entities and/or associations of entities acting unincorporated under a simple partnership agreement (joint operation agreement) with regard to implementation of socially significant projects by way of concluding and executing agreement (including concession ones); Article 5 of the Law provides for forms of St. Petersburg’s participation in state-and-private partnerships depending on the object of the agreement (landplots, movable and immovable property, exclusive powers the city of St. Petersburg is entitled to), objectives of the agreement (construction/renovation/operation of the object of the agreement, provision of services to the consumer) and proprietary rights to the project of the agreement (the object remains public property of the city of St. Petersburg, the object is transferred to be publicly owned by the City of St. Petersburg on expiry of a term contractually specified, the object remains property of the partner).

Under Article 6 of the Law the following property items may be objects of state-and-private partnership: 1) all sorts of vehicles and transport infrastructure facilities (including those belonging to the spheres of road, railway, waterborne, airborne and underground (subway) transport and other public transportation modes); 2) utility infrastructure components and other community facilities including systems of heating, water, gas and power supply, drainage, wastewater treatment, domestic wastes recycling/disposal/burial as well as objects providing for operation and improvement of residential and non-residential properties located within the territory of St. Petersburg; 3) power supply infrastructure objects including systems of power generation, transmission and distribution; 4) fixed and mobile communication and data transmission facilities; 5) facilities involved in treatment, preventive and other activities of the public healthcare system; 6) facilities employed by educational, cultural and social welfare institutions; 7) sporting, recreation and tourism facilities.

Participation of St. Petersburg in state-and-private partnerships may provide for the following payments for the partner’s benefit: 1) payments related to tariff regulation of prices for goods (works/services) and the partner performing sales of goods (works/services) in accordance with the schedule of rates specified by the city of St. Petersburg administration; 2) payments related to the partner’s obligations to perform delivery of goods, performance of works and provision of services in accordance with the provisions contracted; 3) payments related to the contracted necessity to provide for the contractually guaranteed minimum yield of property operation by the partner; 4) payments related to the agreement termination in cases provided for in the agreement proper and by the acting legislation of the Russian Federation at large; 5) payments (payments combinations) provided for by the acting legislation of the Russian Federation.

The powers of decision-making on concluding agreements with regard to properties publicly owned by the city of St. Petersburg are vested with the Government of St. Petersburg. The power to conclude agreements (including concession ones) on behalf of the City of St. Petersburg are vested with the Government of St. Petersburg or the executive agency of the City of St. Petersburg duly authorized by the Government of St. Petersburg. An agreement shall be concluded by way of tender held in accordance with the terms and conditions specified by the agreement conclusion decision. The formal decision on an agreement conclusion shall specify the following: 1) form of St. Petersburg’s participation in state-and-private partnerships; 151

2) composition and description of the object of the agreement and the basic agreement provisions; 3) name of the executive agency of the city of St. Petersburg duly authorized to provide for the agreement conclusion and execution; 4) agreement conclusion procedure; 5) tender documentation requirements; 6) membership of the tender commission charged with holding the tender for the contract.

Examples of PPP projects in St. Petersburg Adoption of the federal law «On Concession agreements» in June 2005 created a legal base for implementation of investment projects using public private partnership mechanisms («PPP»).

Currently there are two projects being implemented within the territory of the city of St. Petersburg in accordance with the concession scenario.

The both projects serve as the first examples of the state-and-private partnership concept being implemented related to the city transport infrastructure. Under each of the projects the Government of St. Petersburg acts in the capacity of the party entitled to exercise the Concessor’s powers on behalf of the City of St. Petersburg in accordance with the relevant decision on the concession agreement conclusion. The Concessionary is the party to have won the open tender for the contract and concluded the relevant concession agreement with the Concessor which agreement provides for the aforesaid party’s obligation to provide for construction and operation of the toll highway facilities specified.

To provide for the projects implementation there has been a public management company established that is charged with coordination of the activities of all the parties involved in the facilities construction and operation process and control over the Concessionary’s compliance with the concession agreement provisions and fulfillment of the contracts concluded by the city authorities with third parties acting as contractors.

In terms of incorporation form the above public management company is an open joint-stock company whose shares are exclusively held by the state («ZSD» OJSC) which solution provides not only for management flexibility and efficiency but also for feasibility of multiple public entities (primarily – the Russian Federation and the City of St. Petersburg, currently – the City of St. Petersburg) participation in the registered capital, attraction of budget allocations and independent revenue management.

The financial profiles provide for shared funding of each object construction as attracted by project companies in the form of investors’ monetary contributions (investors pool) to their registered capitals and debt financing in the form of loans taken out in the domestic and foreign markets. On the part of the State financing is provided largely out of the Russian Federation Investment Fund resources and funds directly allocated from the budget of St. Petersburg. Allocation of monetary resources of the Russian Federation Investment Fund is initiated by the City of St. Petersburg with the Concessionary to have won the tender acting in each case as the recipient of the Russian Federation Investment Fund resources allocated.

In each case the Concessionary provides for immediate implementation of the investment project for facilities design, construction and reimbursable operation including fulfillment of the related administrative and managerial functions. The concessionary is entitled to independently and on one’s behalf conclude credit agreements with granting bodies, contract agreements for performance of design and construction works as well as other agreements that may be required for expedient implementation of the project(s).

Since in accordance with the acting Russian Federation legislation all public motorways shall be monopolistically owned by the state the BTO (Build-Transfer-Operate) project model ultimately providing for public ownership of the highway facilities to be constructed has been deemed to be the most suitable one relating to both the Western High Speed Diameter and the Orlovsky Tunnel projects.

The project implementation schemes envisage the following stages: – decision to close the concession agreement; – bid for the right to close the concession agreement to implement and operate the toll facility, signature of the concession agreement; – design and construction stage; – operation stage.

Chronology for WHSD project In 2000 the Decree of the Governor of St. Petersburg №113-r approved the alignment selection act for the Western High Speed Diameter. In compliance with the decree of the Government of St. Petersburg, designs works for the motorway started in 2004. The highway is to be 46.4 km long (including a 28 km stretch located within highly developed urban territories), with fourteen interchanges. The traffic intensity is preliminarily estimated to vary within the range of 20,000 – 128,000 vehicles per diem with different sections of the highway. The aggregate amount of investment is to be equal to some 212.7 billion RUR. 152

In 2005-2006 designs for construction phases I, II, III, IV and V of the Western High Speed Diameter were completed, went through public hearings, obtained all necessary approvals from control and supervision authorities, as well as positive conclusions from the Glavgorexpertiza of Russia.

In September 2005, construction of phase I of the southern section of the WHSD which provides the southern exit from the grand Sea Port of St. Petersburg began under the public contract, with the financing from the budget of St. Petersburg. The phase is to be completed in 2008.

There were four international consortiums competing for the Western High Speed Diameter that unite such European giants as «Hohtif» and «Enka» as well as other major companies including «Intertol» of South Africa: • MLA Lieferas-Phalt GmbH, • «ZSD – Nevsky Meridian» LLC, • «Vincida Grupo de Inversiones 2006, SL» LLC, • «St. Petersburg Speed Highway BV».

The tender held on 06.06.2008 was won by ZSD – Nevsky Meridian» LLC consortium that unitse leading Russian and foreign companies including «Strabag A.G.». A detailed account of the project implementation is available at: www.whsd.ru.

Chronology for the Orlovsky Tunnel project In 2005 an investment feasibility study was developed for construction of a tunnel under the Neva river in transit of Piskarevsky prospect – Orlovskaya street, which has obtained all necessary approvals from control and supervision authorities, as well as positive opinions from ecological and non departmental expertise entities. In April 2005 design works were launched. The maximum amount of financial support allocated from the state budget that is equal to 17.572 million RUR is a major criterion of bids appraisal.

There has also been a design elaborated for construction of the Orlovsky Tunnel under the Neva River.

On the 15.05.2006, there was a session of the Expert Committee for Public-Private Partnership of the Ministry of Transport of Russian Federation, where the construction designs for the Orlovsky tunnel in St. Petersburg were examined. As a result of the procedure, a positive decision was received from Ministry of Transport of Russian Federation.

On 14.09.2007 the concession for design, construction, financing and operation of the Orlovsky Tunnel under the Neva River was put to open bid.

On 21.12.2007 the applicants preliminary selection results were summed up by the tender commission with the following four applicants allowed to participate in the tender proper: «Nevskaya Concession Company» LLC (represented by «Vinci» Group); «Nevsky Tunnel» LLC (Strabag AG, Suri Holdings Limited, Zueblin AG, Egis Project SA); «Boyuguesproject Operating» CJSC («Boyugues» Group); Neva Traverse GmbH (Hochtief Construction AG, Hochtief PPP Solutions, Royal Boskalis Westminster NV).

Bidding is to be done till 24.10.2008 with the tender winner’s name to be announced 31.10.2008. Cost of design, construction, financing and operation of the Orlovsky Tunnel is to be defined based on the data quoted in the bids. A detailed account of the project implementation is available at: http://www.orlovtunnel.ru/ Currently in St. Petersburg there are a number of other transport infrastructure development projects being implemented involving (to a varied extent) state-and-private partnership mechanisms such as construction of the Marine Passenger Terminal, Overground Express and others.

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8. LEGAL FOUNDATIONS OF CREATION AND FUNCTIONING OF SPECIAL ECONOMIC ZONES PREFERENCES GIVEN TO INVESTOR, WHICH IS A RESIDENT OF A SPECIAL ECONOMIC ZONE Federal law of 22.07.2005 №116-FL (as of 30.10.2007) «On special economic zones».

Regulation of the Government of RF of 13.09.2005 №563 (as of 31.01.2008) «On approving of provisions of bid procedure for selection of applications for creation of special economic zones».

Regulation of the Government of RF of 21.12.2005 №780 «On creation of special economic zone of innovational type on the territory of city of St. Petersburg».

Regulation of the Government of St. Petersburg of 17 10 2005 №1542 «On actions for creation special economic zones on the territory of St. Petersburg».

Agreement «On creation of special economic zone of innovational type on the territory of St. Petersburg» Signed 18.01.2006 between the Government of RF and the Government of St. Petersburg.

Law of Saint Petersburg №190-29 «On introduction of amendments to particular laws of Saint Petersburg regulating tax exceptions granting issues» dated 02.05.2006.

For purpose of development of manufacturing branch of economy, high-tech industries, manufacturing of new types of products, transport infrastructure, as well as tourism and sanatorium and resort sphere special economic zones (SEZ) are created.

In accordance with art. 2 of the Federal law of 22.07.2005 №116-FL (as of 30.10.2007) «On special economic zones» special economic zone is understood as part of the territory of Russian Federation defined by the Government of Russian Federation, where there is a special regime of performing entrepreneur activity.

On the territory of Russian Federation special economic zones of following types can be created: 1) industrial and manufacturing special economic zones; 2) innovational special economic zones; 3) tourist’s and recreation special economic zones; 4) port special economic zones.

Special economic zones (except port ones) may be established within landplots publicly owned by the Russian Federation and/or the municipality.

Decision of creation of special economic zone on the territory of subject of Russian Federation and municipal formation is made by the Government of Russian Federation and is formalized by regulation of the Government of Russian Federation on base of regulation of the Government of RF of 21.12.2005 №780 «On creation of special economic zone of innovational type on the territory of the city of St. Petersburg» and in accordance wit results of competition (regulation of the Government of RF of 13.09.2005 №563 «On approving of provisions of bid procedure for selection of applications for creation of special economic zones») between Government of RF and Government of St. Petersburg an agreements was signed of Government of RF and Government of St. Petersburg 18.01.2006 (hereinafter - Agreement) on creating special economic zone on the territory of St. Petersburg in course of interaction of parties of agreement.

The Committee for Economic Development, Industrial Investment and Trade has been authorized by the Government of Saint Petersburg to decide on issues related to establishment and operation of special economic zones.

In accordance with Agreement special economic zone is created on two sections: №1 – in area of the territory «Noydorf» (Strelna settlement) of Petrodvorets district of St. Petersburg and №2 – in area to the north from «Novoorlovsky» forest park of Primorsky district of St. Petersburg for a term of twenty years.

In accordance with p. 2 art. 9 of the Federal law of 22.07.2005 №116-FL (as of 30.10.2007) «On special economic zones» resident of special innovational economic zone is understood as individual entrepreneur or commercial organization, unitary enterprise excepted, registered in accordance with legislation of Russian Federation on the territory of municipal formation, within the borders of which special economic zone is situated, and which signed agreement with machinery of government of special economic zones on conduction of innovational activity on the basis and subject to conditions, provided for by present Federal law.

On the territory of special economic zone the resident of special innovational economic zone has a right to carry out only innovational activity within the limits, provided for by agreement on conduction of innovational activity concluded by a resident and the Federal Agency for Special Economic Zones Management.

Agreement on innovational activity is signed by Federal agency for managing special economic zones (hereinafter - Agency) on the base of decision of the Expert board on results of examination of business plan, provided to agency 154

by the company, which would like to gain status of resident.

Machinery of government of special economic zones prepare and sign agreement on conduction of innovational activity with applicant within ten working day from the day of decision on support of business plan subject to conditions, indicated in application for signature of agreement on conduction of innovational activity. Agreement comes into force from the day of its signing by parties.

Land within the territory of special economic zone can be given for temporary possession and use on the base of lease contract exceptionally.

Taxation of residents of special economic zone is made in accordance with legislation of Russian Federation on taxes and duties.

Type of tax

Common conditions

Within SEZ

Ust

26%

14%

Customs duties

In accordance with customs regime

No duty

Land tax

Max 1,5%

0% - for a term of five years

Property tax

2,2%

0% - for a term of five years

Transport tax

Max 200 rub

0 rub - for a term of five years

24%

20% - for the whole of the special economic zone operation period

Profit tax

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9. INVESTMENT PROJECTS/PROGRAMMES OF ST. PETERSBURG 9.1. LARGE-SCALE INVESTMENT PROJECTS AND PROGRAMMES1 ST. PETERSBURG STRATEGIC INVESTMENT PROJECTS2 WESTERN HIGH-SPEED DIAMETER HIGHWAY CONSTRUCTION Project term: 2004-2013 Project goal: Construction of an urban motorway to link the St. Petersburg transport hub including the grand Port of St. Petersburg and major transport and logistics systems of the city to the federal road network and enhance efficiency of urban transportation. The Western High-Speed Diameter will provide for direct roadway communication between the north-western, central and southern districts of St. Petersburg.

Project description: The total length of the motorway is 46.6 km, including 17.1 km of roads and 29.3 km of elevated sections. There will be 14 traffic interchanges at intersections of the WHSD with the street and road network of the city and non-urban roads. Sections of the motorway are designed to accommodate 4 to 8 traffic lanes depending on traffic flow estimates.

Location: The WHSD from the southern interchange with the ring road up to the interchange with the E-18 «Scandinavia» road: - Southern Section -10.99 km (from the interchange with the ring road up to Kanonerski Island). The sections will run across the densely built-up southern part of the city and take traffic from the grand Port of St. Petersburg to the ring road and major federal roads such as M-10 «Russia», M-11 «Narva», M-20 «St. Petersburg - Pskov Belarus»; - Central Section – 9.55 km (from the Kanonerski Island up to Primorski Pr.). The Section will run along the western extremity of the Vassilievski Island linking the passenger ferry system and the housing projected on hydraulic fill area of the western part of Vassilievski Island; - Northern Section – 26.06 km (from Primorski Pr. up to intersection with Е-18 «Scandinavia» road near Beloostrov). The Section will run outside the urban development in the North-West (Severo-Primorskaya) part of the city, pass over recreational and agricultural lands, and have an interchange with the ring road. The Northern Section will provide a new point of access for the Scandinavia motorway into the city.

Project status: Investment feasibility study has been completed, as well as designs for construction phases I, II, III, IV and V. The first phase of the WHSD is under construction. On 17.11.2006 open bid is declared for the right of concluding concession agreement concerning motorway «Western High-Speed Diameter». The tender held 06.06.2008 was won by «ZSD – Nevsky Meridian» consortium uniting such companies as «Strabag A.G.», «Bouygues Travaux Publics», «Hochtief PPP Solutions», «Egis Projects» and «Mostotryad №19» OJSC. Project budget: 212.7 billion RUR. Project implementation framework: Public-private partnership.

CONSTRUCTION OF MARINE PASSENGER TERMINAL IN THE VASILEVSKY ISLAND Project term: 2005 -2010 Project goal: Arrangement of a state-of-the-art international level complex of facilities for marine passenger crafts handling within a territory newly reclamated. The project implementation will provide for enhanced comfort and safety of sea voyages and will help create no less than 60,000 workplaces in the sphere of marine transportation, tourism and related infrastructure.

Project description: The project provides for deepening and widening the Petrovsky Fairway, arrangement of an approach channel and the port aquatorium deepening, construction of seven berths suitable for mooring both ferries and ocean liners with a length over 311 m and a draft of up to 9 m, erection of the Terminal buildings and structures and border checkpoint facilities.

Location: Site on the Gulf of Finland coast in the western part of the Vasilevsky Island not far from the city centre (at a distance of 6 km from the Hermitage).

Project status: Bottom dredging activities within the Nevskaya Guba Bay were mostly accomplished during 2005-2007, the work portion remaining to be done in 2008 being equal to 430,000 m3 of soil. The Terminal is expected to be commissioned already in autumn 2008.

1 Based on the web-site «The Open City»: www.st-petersburg.ru and the web-site of the Committee for Investment and Strategic Projects: www.gov.spb.ru/gov/admin/otrasl/invest 2 In accordance with the list contained by Resolution of the Government of St. Petersburg №837 «On approval of the List of St. Petersburg strategic investment projects and the List of St. Petersburg strategic investors» dated 21.06.2005 (revised as of 03.10.2007) 156

Project budget: The aggregate amount of funds allocated for performance of the bottom dredging and construction activities is equal to $ 600 million.

Project implementation framework: Out of the funds allocated by private investors and the Russian Federation federal budget assignments.

RECLAMATION OF TERRITORY IN THE WESTERN PART OF THE ST. PETERSBURG VASILEVSKY ISLAND TERRITORY Project term: 2006—2011 - territory reclamation, since 2007 onward – territory development.

Project goal: Reclamation of vast territories to accommodate a new city district.

Project description: Reclamation of a territory with an area of some 400 hectares in the western part of the Vasilevsky Island and the territory development so as to accommodate a new city district including both residential, public and office premises.

Location: The territory newly reclamated is actually westward continuation of the Vasilevsky Island.

Project status: All the permit and licenses have been obtained both at the federal and regional levels. For the territory reclamation the hydraulic fill technology is employed with the sand being procured from the sea floor deposits (the total demand for sand is estimated to amount to some 24 million m³). As a result of the activities the western part of the Vasilevsky Island is expected to extend into the Gulf of Finland by 800-1,200 m.

Project budget: $800 million (territory reclamation), $10 billion (real property construction activities).

Project implementation framework: Out of the funds allocated by private investors.

THE BALTIC PEARL Project term: 2005-2013 Project goal: territory development and construction of the «Baltic Pearl» multifunctional complex comprising residential, public, social welfare and business facilities in the southwestern part of the city of St. Petersburg territory.

Project description: This investment project involves development of a major residential zone on the area of 205 hectares, including various housing, social facilities. The aggregate area of the territory under development is equal to some 1.76 million m². The project provides for construction of residential properties (total area = 1.07 million m²), commercial facilities (total area = 0.62 million m²) and social welfare infrastructure objects (total area = 0.17 million m²) including schools, hospitals, sporting grounds and complexes, a swimming pool, a social welfare centre, parks and recreation zones.

Location: South-West of St. Petersburg, the cost of the Gulf of Finland.

Project status: Construction of the first business centre and the local access road branching off Petergofskoye Shosse has been accomplished. Currently the initial construction works within the «Southern Square» site and two residential blocks are being performed. One is working on design of the thoroughfares along the western border of the «Baltic Pearl» complex territory (to Geroev Prospect) and along the residential blocks eastern side, within the stretch from the local access road along Petergofskoye Shosse to Geroev Prospect. Construction works are also in progress in Admiral Tributs Ulitsa, along the access road to the west of the «Baltic Pearl» complex territory.

Bridges to be constructed across the Bezymyanny and Dudergofsky Canals are being designed, as well as the sea costal protection structures and the sea embankment to be arranged in the northern part of the ‘Baltic Pearl» complex territory, with design of the bridge across the Matisov Canal nearly accomplished. One has also completed correction of the «Baltic Pearl» territory development plan with regard for the «Overland Express» passenger transportation line to be arranged along Geroev Prospect.

Project budget: 33.8 billion RUR. Project implementation framework: The investor responsible for the project implementation if «Baltiyskaya Zhemchuzhina (Baltic Pearl)» CJSC (Shanghai United Overseas Investment Company (Shanghai, PRC).

REDEVELOPMENT OF THE «MOSKOVSKAYA-TOVARNAYA» STATION ZONE TERRITORY Project term: 2006—2009 Project goal: Integrated territory development.

Project description: The total area of the territory under development within the project framework is equal to approximately 317 hectares. The project provides for relocation of the freight yard of the «Moskovskaya-Tovarnaya» railway station and the hospital outside the territory under development and arrangement in their place a business centre and residential facilities.

157

Location: St. Petersburg Tsentralny administrative district territory (city centre).

Project status: currently implementation of the project’s first stage is actively in progress that provides for intensive development of a 24 hectare landplot within the «Moskovskaya-Tovarnaya» station territory. The Government of St. Petersburg has elaborated and approved of a territory development plan for «Sushary-3» nonresidential zone.

There has been a «building lines» plan elaborated for the territory of the former freight yard of the «St. Petersburgtovarny-Moskovsky» railway station. The prepared model development concept and the project layout have been presented at a session of the Town-Planning Council of St. Petersburg.

Project implementation framework: Delivery of vacated landplots to the investor for development on investment conditions.

NEW HOLLAND (NOVAYA GOLLANDIA) ISLAND AREA DEVELOPMENT Project term: 2005-2010 Project goal: to create a new cultural centre, as well as commercial and residential facilities on the New Holland Island.

Project description: The area of 180 000 m2 will accommodate offices, shops, three hotels, 9000 m2 of housing, the Festival Palace, an art gallery, a museum, and an underground parking zone. The area of the Festival Palace is to be 16 300 m2, including a concert hall for 2 000 seats and an open amphitheatre for 3 000 seats. The underground parking is designed for 1093 vehicles. The Project involves reconstruction of two and construction of eight bridges.

Location: The Admiralteysky District, Kolomna. The island occupies 7.6 ha in the city centre in a 15-minute walk from the Hermitage and in a 5-minute walk from the Neva and the State Academic Mariinsky Theatre.

Project status: The international tender for the best investment and architectural project of the New Holland Island territory development was won by «ST New Holland» LLC that is actually a constituent company of «ST Group» construction holding. The project it presented had been elaborated by the British architect Sir Norman Foster.

There has been a project prepared for planning and boundary survey of the New Holland Island territory as limited by the Kryukov Canal, the Moika River embankment and the Admiralteisky Canal and town-planning plans elaborated for four sites located within the aforesaid territory. One has accomplished activities related to construction of a buried wall within the island territory and investigation into the impact produced by excavation on the buildings recognized as monuments of history and architecture, the latter having been cleared of built-on structures having no monumental value and prepared for restoration. Based on the geological engineering survey findings there has been analysis of the soil texture performed. One has proposed structural solutions meant to ensure integrity of the historical buildings and specific construction methods deemed optimal under the given circumstances. A package of documentation has been also prepared related to arrangement of buried wall protective enclosures.

Project budget: $378 million.

Project implementation framework: Investment is secured under a 99 year lease agreement for facilities to be reconstructed, through property rights for new facilities, and property rights for the land under the new facilities.

CONSTRUCTION OF THE BUILDING TO ACCOMMODATE THE SECOND STAGE OF THE STATE ACADEMIC MARIINSKY THEATRE Project term: The second stage of the State Academic Mariinsky Theatre is to ceremonially unveiled in June 2009 at the beginning of the «white night» season.

Project description, project goal: The design created by Dominique Perrot provides for construction of a hightech building with an area of 40,000 m² encased in a golden shell. The audience hall equipped with a unique acoustic system will be able to accommodate 2,000 spectators. The newly erected second stage pavilion will be connected to the Mariinsky Theatre historical building with a glazed passage over the Kryukov Canal Location: 34а Dekabristov Ulitsa, right opposite the historical building of the State Academic Mariinsky Theatre.

Project status: The site works already accomplished include demolition of four buildings previously located within the territory, dismantlement of their foundations and relocation of the gas and water supply networks.

Currently activities related to relocation of power supply networks, installation of a new distribution transformer substation and sewage collector resurfacing are coming to an end. In addition to that, through with the excavations and piling field arrangement, one proceeds with the building substructure concreting.

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Expected amount of investment: $200 million.

Project implementation framework: 100% state budget funding.

CONSTRUCTION OF A FOOTBALL STADIUM IN St. Petersburg Project term: 2006 – 2009 Project goal: Construction of a new state-of-the-art football stadium for at least 62 000 seats to meet requirements of UEFA and FIFA. Project description: The stadium is intended to be qualified for hosting both Russian football championship and international level matches. It will be used as a training ground by FC «Zenit» and children’s sports clubs and serve as a sporting facility generally available to the citizens, providing for the latter’s leisure and recreation.

Location: Western St. Petersburg; coastal part of the Krestovski Island.

Project status: The international competition of proposed architectural solutions and feasibility study variants was won by «Kisho Kurokawa architect & associates» with «Avant» LLC pronounced winner of the tender for the stadium design and construction contract.

Currently one is through with the excavations, Stage 1 of the piling field arrangement and the landing stage construction, proceeding with initial construction activities. Works are also being carried out within the power park zone such as wall, encasement and overlaps concreting.

Project budget: 6.500 billion RUR. Project implementation framework: The project will be financed from the budget of St. Petersburg.

ST. PETERSBURG HOTEL INFRASTRUCTURE DEVELOPMENT PROGRAMME Project term: 2004—2009 Project goal: Development of the St. Petersburg hotel infrastructure and industry of tourism. Increase of the aggregate capacity of the city hotels to be equal to 34,000 rooms (14 accommodations per 1,000 citizens).

Project description: Currently the total capacity of the 372 hotels of St. Petersburg amounts to 20,576 rooms. There are 172 projects being implemented to increase the index by 15,424 rooms. «The programme for accommodation of hotel infrastructure facilities within the territory of St. Petersburg» contains a target list of 170 buildings and landplots reserved for arrangement of hotel complexes. A detailed account is available at www.hotelinvest.ru.

Location: In the Programme target list there are buildings and landplots included that represent all the administrative districts of St. Petersburg.

Investment prospects: Target delivery of landplots for implementation of hotel infrastructure projects. Auction sales of real properties reserved for arrangement of hotel facilities.

CONSTRUCTION OF A MOTORCAR PLANT OF «TOYOTA MOTOR CORPORATION» Project term: 2005 – 2007 (Stage 1).

Project goal: Development of St. Petersburg as an industrial centre comprising international high-tech companies.

Project description: Implementation a car manufacturing facility to produce 25 000 vehicles per annum, with further capacity enhancement up to 200 000 vehicles per annum.

Location: Industrial Zone «Shushary-2», in immediate proximity to the ring road.

Project status: The plant was commissioned in December 2007; currently preparation for Stage 2 construction is in progress.

Project budget: 2.6 billion RUR. Project implementation framework: The project is implemented by the investor «Toyota Manufacturing Russia» LLC.

CONSTRUCTION OF A MOTORCAR PLANT OF «GENERAL MOTORS CORPORATION» COMPANY Project term: 2006 - November 2008 Project goal: Development of St. Petersburg as an industrial centre comprising international high-tech companies.

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Project description: Implementation a car manufacturing facility with design capacity of 75 000 vehicles per annum with a possibility of further expansion.

Location: Industrial Zone «Shushary-2», in immediate proximity to the ring road.

Project status: building license has been obtained; construction works are currently in progress.

Project budget: $303 million.

Project implementation framework: The project is implemented by «General Motors Auto» LLC. CONSTRUCTION OF A MOTORCAR PLANT OF «NISSAN MOTOR CO., LTD» Project term: 2006 – 2009.

Project goal: Development of St. Petersburg as an industrial centre providing for international level high-tech companies being involved in the process.

Project description: Arrangement of a car manufacturing facility with a rated capacity of 75,000 vehicles per annum providing for eventual production expansion sufficient for the annual output capacity to be equal to 500,000 cars.

Location: Southeast of the Western High-Speed Diameter/Ring Road intersection (territory of the Vyborgsky Administrative District of the city of St. Petersburg).

Project status: Construction works are in progress.

Project budget: 5.2 billion RUR. Project implementation framework: The investor in charge of the project implementation is «Nissan Manufacturing RUS» LLC CONSTRUCTION AND OPERATION OF THE SOUTH-WEST THERMOELECTRIC PLANT Project term: 2006—2011 Project goal: Development of the St. Petersburg power industry.

Project description: Construction of a thermoelectric plant up-to-date equipped will enhance general reliability of the city power supply system and help to fill up the electric power and thermal energy deficit that is currently an urgent problem with the southwestern districts of the city of St. Petersburg. The area to be occupied by the plant facilities amounts to 26.2 hectares.

Location: Southwestern part of the St. Petersburg city territory.

Project status: The territory has been prepared for construction activities performance. The plant detailed design is in progress. Arrangement of the buildings piled foundations has commenced.

Project budget: 20.0 billion RUR. Project implementation framework: Public-private partnership.

MANUFACTURING FACILITY FOR MOTOR VEHICLE AND ARCHITECTURAL SHEET GLASS Project term: 2006 - 2009 Project goal: Development of new high-tech industries in St. Petersburg.

Project description: Implementation glassworks to produce vehicle and architectural sheet glass using environment friendly ox gas technology by PPG (USA). The capacity of the plant is to be 1200 tons of glass stuff per day.

Location: Quarter V of the Metallostroi industrial zone.

Project status: Design and construction stage: the project is being prepared for submittal for a state expert appraisal; one has completed landplot grading and commenced initial construction activities.

Project budget: 16.2 billion RUR. Project implementation framework: The project is implemented by the investor «Russkaya Sodovaya Kompania» LLC (Moscow).

REDEVELOPMENT OF THE «APRAKSIN DVOR» TRADING CENTRE TERRITORY Project term: 2008—2013 Project goal: Arrangement of an integrated multifunctional public and business premises complex within the «Apraksin Dvor» territory.

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Project description: The multifunctional complex is to include: residential properties (with a total area of 70,000 m²), commercial and leisure facilities (80,000 m²), offices (70,000 m²), two hotels (40,000 m², 4* and 3*+ 550 rooms), a parking lot with 2,500 stalls (87,500 m²), restaurants and a walking promenade. The aggregate area of the premises within the newly constructed complex is equal to 347,500 m².

Location: territory limited by Sadovaya Ulitsa, Lomonosov Ulitsa, Apraksin Pereulok, Stepanovsky Proezd, Torgovy Pereulok and Architect Rossi Ulitsa, Buildings 1—3.

Project status: The investment tender held in January 2008 was won by «Glavstroi» Company that presented an architectural project elaborated by the British design bureau of «Wilkinson Eyre Architects Ltd». The investment agreement was concluded with «Glavstroi- SPb» LLC. Project budget: 28.2 billion RUR ($1,082.8 million).

Project implementation framework: private investment.

«PULKOVO» AIRPORT DEVELOPMENT Project term: 2008—2025 Project goal: «Pulkovo» airport facilities upgrade and expansion due to arrangement of a reliable state-of-theart infrastructure and provision of additional services (rendered by both terrestrial and ground subdivisions) with a view of ensuring the airport capacity should meet the current and anticipated requirements with proper regard for intensification of the passenger traffic and cargo turnover expected in the medium and longer term.

Using the «Pulkovo» airport as the basis for establishment of an international level transportation node of significance for the whole of the Baltic Sea region that could serve as the natural airport for entry in the Russian Federation and a connection centre (hub) further providing for inland traffic by way of implementation and provision of the minimum package of services complying with the requirements specified for Level «С» of the IATA classification of quality airport management systems.

Project description: The «Pulkovo» airport infrastructure includes: an airfield with two flight strips, two passenger terminals, a cargo handling terminal, a refuellling complex as well as parking and other facilities. «Pulkovo» ranks as the fourth major airport of the Russian Federation with the three larger ones located in Moscow; it services 68 airway companies with the passenger traffic and cargo turnover as of 2007 amounting to 6.1 million people and 29,500 tons accordingly.

Project status: By Instruction of the Russian Federation Government №1432-r dated 16.10.2007 title to 100% of the «Pulkovo» Airport» JSC stock of shares was transferred to the city of St. Petersburg.

The «Pulkovo» airport asset complex (with the exception of the facilities of the air traffic management integrated system) was transferred to be publicly owned by the City of St. Petersburg by Instruction of the Russian Federation Government №1940-р dated 29.12.2007.

On 21.04.2008 the tender was formally opened for construction, renovation and operation of facilities included in the «Pulkovo» airport asset complex with the project to be implemented based on the state-and-private partnership scenario.

During May 7—9, 2008 the project’s official presentation («road show») was held in London, taken part in by over 120 would-be bidders from bith Russia and abroad as well as financial and credit entities.

Tendering schedule: submittal of applications for participation in the tender — till 31.07.2008; participants’ «short list» preparation — by 11.08.2008; bidding — till 05.02.2009; evaluation of bids and winner nomination — by 12.03.2009; negotiations with the tender winner — till 15.06.2009.

Investment amount: According to the preliminary estimates the total amount of funds to be invested in the new terminal arrangement and the airside update will amount to 30 billion RUR.

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OTHER MAJOR INVESTMENT PROJECTS NADZEMNY EXPRESS (OVERGROUND EXPRESS) Project term: 2007– 2012 Project goal: Construction of a new high-speed passenger transportation line based on the state-and-private partnership scenario.

Project description: The «Overground Express» line will be arranged within the territory of six administrative districts of the city (Petrodvorests, Krasnoselsky, Kirovsky, Moskovsky, Frunzensky and Nevsky) connecting three subway lines and two railway stations. The «Overground Express» route total length is expected to amount to 29.9 km with 22 km of it falling to the share of its elevated sections.

Number of stops – 16. Average speed with the stops taken into consideration - 35 km/h.

Location: southern districts of St. Petersburg.

Project status: On 28.12.2007 tender was opened for the Contract for construction and subsequent operation of an innovative passenger transportation line with the project to be implemented based on the state-and-private partnership scenario. On 05.05.2008 the tender participants’ «short list» was published including: - «Strelna - Express» consortium uniting «Bombardier Transportation UK Limited» and «VINCI Concession Russie»; - «Southern Express» consortium uniting «Alstom Transport SA», «Bouygues Travaux Publics SA», «Transdev SA», «Mostotryad №19»; «Northern Capital Express» consortium uniting «Strabag AG», «Siemens AG», «Basic Element», VTB Bank; - consortium uniting «Ansaldo Transporti Sistemi Ferrovanti S. p. A»., «Љkoda Transportation s. r. o.», «ATM Azienda Transporti Milanesi S. p. A.», «Soares da Costa Grupo SGPS»; - «Mitsui & Co., Ltd» of Japan.

Bidding is to be done by the companies included in the «short list» till 25.11.2008.

The tender winner is to be nominated on 24.12.2008.

Project budget: 21.8 billion RUR. Project implementation framework: Public-private partnership.

ORLOVSKI TUNNEL Project term: 2005-2010 Project goal: Enhanced capacity of the Volgo-Baltic Waterway/ Development of the St. Petersburg transport system.

Project description: Implementation of a new continuous link between right– and left-bank districts of St. Petersburg to increase open-bridge periods to provide for the growing demand for international water transit, as well as to relieve existing bridges and arterial streets of the city. Demand expectations for 2010 is 49 000 vehicles per day.

Location: between Liteyny and Bolsheokhtinski bridges. Such location enables a direct outlet from the historic centre of the city to the Ring road and northern highways.

Project status: Basic design activities completed.

On 14.09.2007 the concession for design, construction, financing and operation of the Orlovsky Tunnel under the Neva River was put to open bid. On 21.12.2007 the applicants preliminary selection results were summed up by the tender commission with the following four contestants allowed to participate in the tender proper: «Nevskaya Concession Company» LLC (represented by «Vinci» Group); «Nevsky Tunnel» LLC («Strabag AG», «Suri Holdings Limited», «Zueblin AG», «Egis Project SA»); «Boyuguesproject Operating» CJSC («Boyugues» Group); «Neva Traverse GmbH» («Hochtief Construction AG», «Hochtief PPP Solutions», «Royal Boskalis Westminster NV»).

Bidding is to be done till 24.10.2008 with the tender winner’s name to be announced on 31.10.2008.

Project budget: 26.361 billion RUR (including 8.786 allocated from the St. Petersburg city budget and 8.786 billion RUR – from the Russian Federation Investment Fund Project implementation framework: Public-private partnership.

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«SUZUKI» AUTOMOBILE PLANT Project term: 2007—2009 Project goal: Development of the St. Petersburg automobile industry.

Project description: Arrangement of a car manufacturing facility with a rated capacity of 30,000 vehicles per annum.

Location: «Shushary-2» industrial zone to the south of the Ring Road.

Project status: Survey works are in progress.

Project budget: 2.990 million RUR. Project implementation framework: The investors in charge of the project implementation is «Suzuki Motor Corporation» and «Itochu Corporation».

«HYUNDAI» MOTOR CAR PLANT Project term: under the Memorandum of Intent signed middle December 2007 «Hyundai Motor Company» undertakes to implement in St. Petersburg an investment project in the sphere of automobile industry.

Project goal: Development of the St. Petersburg automobile industry.

Project description: Arrangement of a car manufacturing facility with a rated capacity of 100,000 vehicles per annum.

Location: «Kamenka» industrial zone.

Project status: Survey works are in progress.

Project budget: $400 million.

Project implementation framework: The project is being implemented out of the funds allocated by «Hyundai Motor Company» and «Hyundai Mobis».

CONSTRUCTION OF PLANT FOR MANUFACTURE OF PRESSED BODY PARTS AND A SERVICE CENTRE (INVESTOR – «MAGNITOGORSK IRON & STEEL WORKS» OJSC) Project term: the foundation stone ceremony took place in December 2007; the construction is to be completed in 2009 Project goal: Development of the St. Petersburg automobile industry.

Project description: manufacture of pressed body parts for the needs of the automobile industry enterprises located both in St. Petersburg and in Europe. The project is being implemented by «Magnitogorsk Iron & Steel Works» JSC jointly with the St. Petersburg company of «Interkos IV» CJSC that specializes in manufacture of car component parts.

Location: «Izhorskie Zavody» industrial zone.

Project status: Survey works are in progress.

Project budget: €300 million.

Project implementation framework: The project implemented is financed out of the funds allocated by «Magnitogorsk Iron & Steel Works» OJSC.

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9.2. INVESTMENT IN ST. PETERSBURG: SUCCESS STORIES3 Projects implemented in 2007: «BSH Household Appliances» LLC (Bosch und Siemens Hausgerate GmbH) Construction of a plant for manufacture of household equipment at: Petrodvorets District, settlement of Strelna, «Neudorf» industrial zone).

Amount of investment - €50 million (Stage 1).

Number of workplaces created – 500.

Construction commencement - August 2005.

Construction completion – 2007. Plant commissioned 21.06.2008.

«Toyota Manufacturing Russia» LLC Construction of a motorcar plant of «Toyota Motor Corporation».

Arrangement of a car manufacturing facility with a rated capacity of 25,000 vehicles per annum providing for eventual production expansion sufficient for the annual output capacity to be equal to 200,000 cars («Shushary-2» industrial zone in immediate proximity to the Ring Road).

Amount of investment: $150 million.

Construction commencement – 2005.

Construction completion – December 2007. (Stage 1).

The investor in charge of the project implementation is «Toyota Manufacturing Russia» LLC. Projects implemented in 2006: OOO Russian Standard Vodka Construction of a Russian Standard Vodka distillery (Pulkovskoye Shosse near the Wrigley`s and Coca-Cola Factories).

Investment: USD 60 million.

Jobs created: 300 Construction launched: November 2004.

Plant commissioned 30.09.2006.

ZAO Izhorsky Tube Works («Severstal» OJSC) Construction of a large-diameter tube manufacturing facility and updating of a tube-mill 5000 (1, Lenin Prospect, Izhorsky Works, Kolpino).

Investment: USD 576 million (USD295million + USD281 million).

Jobs created: 500 The project was introduced 14.07.2006 ZAO Knauf Gips SPb (Knauf) Construction of a gypsum board factory in Kolpino.

Investment: around Eur 60 million.

Jobs created: over 200 Construction launched: September 2005.

The facility was put in operation 30.08.2006.

Projects implemented in 2005: OOO Pepsi Bottling Group (St. Petersburg) Construction of a production/warehousing facility (Parnas Industrial Zone).

Investment: USD 20-25 million.

Jobs created: 30 Construction launched: autumn 2004.

Facility opened: September 2005.

3 Based on the Web-site of the Committee for Economic Development, Industrial Policy and Commerce of St. Petersburg: http:// www.cedipt.spb.ru 164

10. VALUE OF PROPERTY IN ST. PETERSBURG 10.1. VALUE OF LAND Total area of Greater St. Petersburg (including the suburbs) amounts to 139,900 hectares. As of 01.01.2007 the share of residential development areas and territories occupied by public and office buildings was equal to 21,300 hectares (16% of the land reserves aggregate) while that of industrial zones - to 18,700 hectares and 13% of the land reserves available accordingly (see Table 10.1.1.).

Table 10.1.1.

Composition of St. Petersburg lands as of 01.01.2007 Item No

Lands composition

Area, hectares / %

1

Residential development lands

9,100/7

2

Territories occupied by public and office buildings

12,200/9

3

Industrial zones

18,700/13

4

Common use lands

13,200/9

5

Lands accommodating the transport, communications and engineering utilities infrastructure

7,200/5

6

Agricultural lands

28,900/21

7

Areas of preferential protection

33,100/24

8

Territories occupied by bodies of water

5,300/4

9

Lands occupied by military purpose objects and other limited access facilities

7,700/4

10

Lands occupied by other special purpose objects

1,400/1

11

Lands uninvolved in development or other activities

3,300/3

Total:

139,900/ 100

Source: data furnished by the St. Petersburg Committee for Land Resources and Land Management (http://www.kzr.spb.ru).

The lands are mostly (83%) publicly owned. About 3% of the total amount of land resources available are property of individuals and 14% – that of entities (see Table 10.1.2).

Table 10.1.2 Distribution of the St. Petersburg land reserves as per forms of ownership.

Item No

Proprietor

Area (hectares)

Area (%)

1

Public (at the federal and municipal levels)

116,800

83

2

Individuals

4,400

3

3

Entities

18,700

14

Total

139,900

100

Source: data furnished by the St. Petersburg Committee for Land Resources and Land Management (www.kzr.spb.ru)

Currently in St. Petersburg lease is by far the dominant form of granting rights to publicly owned land, instances of the latter’s sale to be private property of individuals/entities remaining rare exceptions. The prevalent form of entitlement to usage of land to be developed is that of tendering procedures (on the basis of an incomplete («short») or complete package). Incomplete package tenders are regarded as a forced temporary measure to be allowed only during the period until the city authorities have tuned up the procedures of documentation formalization and territory engineering preparation at the expense of the budget. They provide for sale of the landplots leasehold for a period of 165

six years (the time to be allocated as follows: 1.5 years - survey, 1.5 years – design and 3.0 years - construction).

Data on the tenders for landplot lease contracts concluded on investment conditions to have been held during 2007 are presented in Table 10.1.3.1. The trigger price per landplot square metre (annual rent determined based on a report by an independent appraiser) remained within the range of 994.23 - 10861.57 RUR. Sales price per landplot square metre (annual rent to have been offered by the tender winner) remained within the range of 1088.67 - 13572.12 RUR. Table 10.1.3 Results of the tenders for landplot lease contracts concluded on investment conditions to have been held during 2007.

1

2

3

4

5

6

Landplot area (square metre)

51 650

3 200

4 960

3 231

3 812

3 425

Functional purpose

NA

TE

NA

NA

TE

TE

Trigger price (RUR)

561 000 000

4 880 000

5 900 000

5 255 000

3 790 000

3 790 000

Sales price (RUR)

701 000 000

7 080 000

6 190 000

9 675 000

4 150 000

4 150 000

Trigger price per square metre (RUR)

10861,57

1525

1189,52

1626,43

994,23

1106,57

Sales price per square metre (RUR)

13572,12

2212,5

1247,98

2994,43

1088,67

1211,68

Notation: TE – for needs of the transport and engineering infrastructure; NA – no (data) available

Rent for leased publicly owned landplots located within the St. Petersburg territory is calculated in accordance with the Procedure approved by Resolution №1561 of the Government of St. Petersburg dated 14.09.2004 (revised 12.10.2006). The policy pursued by the city authorities is aimed at providing for creation of conditions urging entities to acquire ownership of landplots.

In accordance with Law of St. Petersburg №692-101 «On determination of the price for land in St. Petersburg» dated 29.12.2004 the price for land per square metre shall be equal to the land tax rate applicable within the territory of St. Petersburg multiplied by the factor of nine. Since 2006 the amount of land tax refundable is calculated in St. Petersburg based on the cadastral value of a specific plot of land. On 16.11.2005 Law of St. Petersburg №611-86 «On land tax in St. Petersburg and introduction of amendments to Law of St. Petersburg «On tax allowances» was adopted (revised 02.10.2007). The law provides for the following annual land tax rates applicable within the territory of St. Petersburg after 01.01.2006: 0.004% of the cadastral value with landplots used for agricultural production; 0.042% of the cadastral value with landplots occupied by residential properties and facilities of the housing and utility complex engineering infrastructure (with the exception of limited interest in the right of ownership of a landplot occupied by objects unrelated to residential properties and facilities of the housing and utility complex engineering infrastructure) or garages and landplots purchased (delivered) for purposes of personal subsidiary economy and small-scale suburban construction, cultivation, gardening and animal breeding. With regard to other landplots the applicable land tax rate shall be 1.5% of the cadastral value. Besides, the law contains a list of privileged categories of individuals granted exemption from payment of land tax within the St. Petersburg territory.

In accordance with the «Rules of state cadastral valuation of land» approved by Regulation of the Russian Federation Government №316 dated 08.04.2000 (revised 17.09.2007) state cadastral valuation of land is performed based on classification of landplots as per their purpose and function. State cadastral valuation of land within urban and suburban residential areas as well as territories allocated to non-profit associations of summer cottage owners and cultivation (gardening) enthusiasts is performed based on data of market prices statistic analysis and other information available on the real properties in question with use of alternative methods of real property mass valuation. State cadastral valuation of land is to be performed at least every three and at most every five years.

As of the year to date in accordance with Resolution of the Government of St. Petersburg №1432 «On validation of the results of state cadastral valuation of land to have been performed in St. Petersburg» dated 28.11.2006 state cadastral valuation of lands within 5,716 cadastral quarters of the territory of St. Petersburg has been carried out. For 1 According to data presented by the St. Petersburg Committee for Land Resources and Land Management (www.kzr.spb) based on materials furnished by «St. Petersburg Property Fund» OJSC. 166

the cadastral quarters there has been a schedule of fourteen varied cadastral value rates specified as per the fourteen variants of landplot functional use. Data on the fluctuation ranges of land cadastral value per square metre classified as per variants of landplot functional use are available in Table 10.1.4.

Table 10.1.4.

Fluctuation ranges of land cadastral value per square metre classified as per variants of landplot functional use Item No

Variants of land functional use as per the state cadastral valuation classification

Minimum cadastral value (RUR per square metre)

Maximum cadastral value (RUR per square metre)

1

Lands occupied by higher and higher rise residential properties

341

8158

2

Lands occupied by individual residential properties

307

7342

3

Lands allocated to non-profit associations of summer cottage owners and cultivation (gardening) enthusiasts

307

7342

4

Lands occupied by garages and parking lots

2154

36330

5

Lands occupied by retail, catering and consumer service facilities as well as those of fuel filling stations and car care canters

1781

41726

Lands occupied by facilities of institutions for education, healthcare, social welfare and culture, sporting facilities and religious buildings

72

888

6

737

10094

7

Lands occupied by industrial enterprises, utility service facilities, facilities of the infrastructure for supply of materials and machinery, procurement, subsistence and marketing, transport infrastructure facilities (except fuel filling stations, car care centres, garages and parking lots) and communication facilities Lands occupied by facilities of administrative and managerial institutions as well as financial, credit, insurance and retirement insurance enterprises, entities and businesses

1095

35921

8 9

Lands occupied by defense facilities

66

808

10

Lands occupied by sanatory and recreational facilities

376

4603

11

Lands used for agricultural purposes

29

820

362

4441

12

Lands occupied by forests located within settlement boundaries and tree and shrub vegetation unclassified as forest resources (including forest parks, parks, public gardens and avenues)

13

Lands occupied by insulated bodies of water

362

4441

14

Other lands within settlement boundaries (including the land reserve)

659

8075

29

41726

Average as per categories

Note: the calculations have been performed in accordance with the provisions of Appendix to Resolution of the Government of St. Petersburg №1432 «On validation of the results of state cadastral valuation of land to have been performed in St. Petersburg» dated 28.11.2006 Cadastral valuation of land as per the basic quarters the city territory is divided into was performed with due regard for the prevalent development type that is why the sum total of land usage payments due with regard to a shop or other enterprise located within an industrial zone is less than that refundable with a totally identical business situated in an office quarter.

Apart from the state there are three major categories of the land market participants: entity owners of privatized territories, entities or (less frequently) individuals to have acquired land in the primary/secondary market, city residents owning landplots allocated for individual conduit.

167

Cadastral registration of real properties (including landplots) In accordance with the provisions of Article 3 of Federal Law №221-FL «On state cadastre of real property» dated 24.07.2007 cadastral registration and maintenance of the state real property cadastre shall be entrusted to the federal executive agency duly authorized in accordance with the procedure provided for in the Russian Federation Constitution and Federal Constitutional Law №2-FL «On the Government of the Russian Federation» dated 17.12.1997. Unless otherwise provided for by the Russian Federation Government the powers delegated to the federal cadastral registration agency may be exercised by subordinate institutions of the latter.

Under Resolution of the Russian Federation Government №418 «On approval of Regulations on the Federal Agency for Realty Cadastre» dated 19.08.2004 the powers of cadastre registration performance and state real property cadastre maintenance are vested with the federal executive authority of the Federal Agency for Realty Cadastre with the aforesaid Resolution of the Russian Federation Government providing for the Federal Agency for Realty Cadastre implementing its activities both directly and through mediation of its territorial subdivisions. The territorial subdivision of the Federal Agency for Realty Cadastre entitled to perform state cadastral registration of real properties including landplots within the territory of the city of St. Petersburg is the Administration of the Federal Agency for Realty Cadastre for the City of St. Petersburg (hereinafter referred to as the «Rosnedvizhimost St. Petersburg Administration»).

Under Ordinance of the Federal Agency for Realty Cadastre №П/0069 dated 07.03.2006 Federal State Institution «Land Cadastre Chamber for the City of St. Petersburg» is a state agency subordinate to the «Rosnedvizhimost St. Petersburg Administration».

In accordance with Joint Ordinance of the Rosnedvizhimost St. Petersburg Administration and Federal State Institution «Land Cadastre Chamber for the City of St. Petersburg» №19/18 »On approval of the Procedure of interaction of the Rosnedvizhimost St. Petersburg Administration and Federal State Institution «Land Cadastre Chamber for the City of St. Petersburg» in connection with real properties state cadastral registration activities» dated 24.03.2008 applications for state cadastral registration of landplots shall be received and completed by specialists of Federal State Institution «Land Cadastre Chamber for the City of St. Petersburg». Applications shall be received and completed in accordance with the forms approved by Ordinance of the Russian Federation Ministry of Justice №34 «On approval of the form of application for real property state cadastral registration» dated 20.02.2008 at the real property location (that is with the authority in charge of the relevant cadastral quarter).

In accordance with the provisions of Article 16 of Federal Law №221-FL «On state cadastre of real property» dated 24.07.2007 cadastral registration of a real property (including a landplot) is performed based on a package of documents required therefore which is to be furnished by the applicant. The documents to be appended to the application for real property state cadastral registration are the landplot boundaries plan and a copy of the document of title bearing witness of the applicant’s right to the landplot.

In accordance with the provisions of Article 38 of the aforesaid Federal Law the landplot boundaries plan is a document prepared based on the cadastral plan of the territory referred to or cadastral excerpt on the landplot in question and featuring data on the landplot being constituted and a reproduction of certain data included in the state real property cadastre. The boundaries plan consists of the graphic and the text parts and must be drawn by professionals of a survey entity included in the Register of persons entitled to perform landplot boundaries settlement within the territory of St. Petersburg. The boundaries plan is actually the result of landplot boundaries settlement activities.

In accordance with the acting legislation landplot boundaries settlement activities shall be performed based on the cadastral works terms of reference. Under Ordinance №P/0069 of the Federal Agency for Realty Cadastre dated 07.03.2006 the powers to approve of terms of reference for cadastral works to be performed within the territory of St. Petersburg are vested with Federal State Institution «Land Cadastre Chamber for the City of St. Petersburg».

The procedure of approval of cadastral works terms of reference has been determined by Ordinance of Federal State Institution «Land Cadastre Chamber for the City of St. Petersburg» №29 «On approval of the Instruction on furnishing additional information required for performance of cadastral works and consideration of applications for cadastral works performance» dated 28.04.2008. Review and acceptance of the cadastral works results is also performed by Federal State Institution «Land Cadastre Chamber for the City of St. Petersburg» in accordance with the established procedure.

168

10.2. COST OF APARTMENTS In St. Petersburg residential properties are to be purchased both in the primary and the secondary markets. As a rule, the standard of prices in the primary market is lower, but by the moment the house under construction is ďŹ nally delivered all the apartments may turn already sold out. An alternative way of residential property procurement is rent.

The present section contains data on behaviour of prices in the primary and secondary markets of residential property during the recent six months and the average cost of apartment rent as per the city districts.

Residential properties primary market The average rate at the primary market of residential real estate as of the middle of May 2008 was equal to 87,118.9 RUR per square metre. The behaviour of the average buying price since December 2007 is traced in the diagram presented in Figure 10.2.1.

95 000 85 000 75 000 65 000 55 000 3 dec

25 feb

14 jan

7 apr

19 may

Figure 10.2.1. Behaviour of the average buying price in the St. Petersburg residential property primary market during December 2007 - May 2008.

In Figure 10.2.2 we ďŹ nd a diagram illustrating the behaviour of the average residential property buying price as per apartment type depending on the number of rooms: single (1 RA), two (2RA), three (3RA) and four (4RA) room apartments. The diagram show the trend for price increase was to be observed with any type apartments without exception with the behaviour of the price for larger (four-room apartments) being the least stable of all.

1 RA 3 RA

110 000

2 RA 4 RA

90 000

B/C

BW

100 000

80 000

90 000

70000

B

80 000 60 000 70 000 50 000

50 000 3 dec

14 jan

25 feb

7 apr

19 may

Figure 10.2.2. Behaviour of the average buying price as per apartment types (RUR per square metre)

3 dec

14 jan

25 feb

7 apr

19 may

Figure 10.2.3. Behaviour of the average buying price as per house types (RUR per square metre)

The diagram in Figure 10.2.3. illustrates the behaviour of the average residential property buying price as per house type the categories under consideration being as follows: bearing-wall houses (BW), brick houses (B) and houses of brick and cast-in-situ concrete (B/C). It is noteworthy that occasionally brick house residential properties were relatively more expensive than identical ones located in houses of brick and cast-in-situ concrete while at other moments it was just the other way round.

Table 10.2.1. contains data on the average residential property price per square metre with various apartment 169

types as of the middle of May 2008. The trend observed is that of the average residential property price per square metre being the highest with four-room apartments (over 100,000 RUR) and the lowest - with three-room ones.

As far as different house types are concerned the difference between the level of prices (per square metre) for the cheapest and the most expensive residential property (located in bearing wall houses and those built of brick and cast-in-situ concrete) amounts to some 13,000 RUR (see Table 10.2.2).

Table 10.2.1. The average residential property price per square metre with various apartment types as of the middle of May 2008

Table 10.2.2. The average residential property price per square metre with various house types as of the middle of May 2008

Apartment type (number of rooms)

Price (RUR per square metre)

House type

Price (RUR per square metre)

Single-room apartments

87 980.1

Bearing wall house

74 070.8

Two-room apartments

86 458.5

Brick house

84 607.3

Three-room apartments

84 650.4

Houses of brick and cast-in88 057.5 situ concrete

Four-room apartments

104 032.5

Table 10.2.3. shows that the most expensive residential property of St. Petersburg is that located in the Tsentralny and the Petrogradsky Districts with the price per square metre exceeding 140,000 RUR. At the same time, it is with these very districts that the price per square metre of residential real estate has remained the most stable of all having increased by 7.67% and 3.43% accordingly during the five months’ time since December 2007 while with some other districts the rate of price growth exceeded 31 %.

Table 10.2.3. Residential property buying price as per the city districts (as of the middle of May 2008).

Administrative District

Price, RUR square metre

per Price behaviour since December 2007

Admiralteisky

NA

-

Vasileostrovsky

99 945.3

11.58%

Vyborgsky

84 862.2

21.43%

Kalininsky

88 333.0

28.74%

Kirovsky

78 559.4

26.71%

Krasnogvardeisky

91 316.5

30.04%

Krasnoselsky

69 293.1

31.53%

Moskovsky

93 544.2

31.66%

Nevsky

79 011.7

29.46%

Petrogradsky

141 647.3

3.43%

Primorsky

80 922.6

23.50%

Frunzensky

76 252.4

30.94%

Tsentralny

147 747.6

7.67%

Table 10.2.4 contains information on the apartment types currently in greatest demand according to the data made available by the «Kvartirny Vopros» City Real Estate Inquiry Service. Figure 10.2.4 illustrates the behaviour of demand for apartment properties in the primary real estate market during December 2007 - May 2008.

170

600

400

200

0 22 1 30 11 4 m november january february april Figure 10.2.4. Demand intensity (number of primary applications by potential residential property purchasers) Table 10.2.4.Variants most frequently requested by purchasers of residential property according to the data made available by the ÂŤKvartirny VoprosÂť City Real Estate Inquiry Service Rating

Number of rooms/district

Average price (RUR)

1

1/suburban districts

2 068.8

2

3/Frunzensky District

5 222.2

3

1/Primorsky District

3 395.0

4

1/Moskovsky district

3 675.0

5

1/Frunzensky District

3 280.7

Residential properties secondary market The average rate at the primary market of residential real estate as of the middle of May 2008 was equal to 101,137.9 RUR per square metre. The behaviour of the average buying price is traced in the diagram presented in Figure 10.2.5.

105 000

95 000

85 000

75 000 3 dec

14 jan

25 feb

7 apr

19 may

Figure 10.2.5. Behaviour of the average buying price in the St. Petersburg residential property secondary market during December 2007 - May 2008.

171

In Figure 10.2.6 we find a diagram illustrating the behaviour of the average residential property buying price as per apartment type depending on the number of rooms: single (1 RA), two (2RA), three (3RA) and four (4RA) room apartments. The diagram shows the trend at price increase was to be observed with any type apartments. The diagram in Figure 10.2.7 illustrates the behaviour of the average residential property buying price as per house type the categories under consideration being as follows: bearing-wall houses (BW), brick houses (B) houses constructed during 1930-1950-s (the so-called «Stalin time houses»)(S) and older stock houses (O).

110 000

108 000

1 RA 3 RA

100 000

98 000

90 000

88 000 2 RA

80 000 70 000

BW

B

O

S

78 000

4 RA

3 dec

14 jan

25 feb

7 apr

19 may

Figure 10.2.6. Behaviour of the average buying price as per apartment types (RUR per square metre)

68 000 3 dec

14 jan

25 feb

7 apr

19 may

Figure 10.2.7. Behaviour of the average buying price as per house types (RUR per square metre)

Judging by Table 10.2.5 shows that trend observed is that of the average residential property price per square metre being the highest with single-room apartments (over 106,000 RUR) and the lowest - with three-room ones (the same as in the primary real estate market). As far as different house types are concerned the difference between the level of prices (per square metre) for the cheapest and the most expensive residential property (located in bearing wall houses and «Stalin time» ones) amounts to some 14,000 RUR (see Table 10.2.6).

Table 10.2.5. The average residential property price per square metre with various apartment types as of the middle of May 2008

Table 10.2.6. The average residential property price per square metre with various house types as of the middle of May 2008

Apartment type (number of rooms)

Price (RUR per square metre)

House type

Price (RUR per square metre)

Single-room apartments

106 322.5

Brick house

102 043.3

Two-room apartments

101 850.7

Bearing wall house

94 349.2

Three-room apartments

97 846.2

Stalin time houses

108 643.9

Four-room apartments

98 081.1

Older stock houses

105 141.0

Having analyzed variation of price as per the city districts one comes to the conclusion that the most expensive residential property is concentrated in the Petrogradsky and the Tsentralny administrative districts (the same as in the primary market), with the cheapest apartments available being those located in the Krasnoselsky District. During December 2007 - May 2008 the real estate value increased at a rate within the 22.06% – 33.18% depending on the location (see Table 10.2.7).

Table 10.2.7. Residential property buying price as per the city districts (as of the middle of May 2008).

Administrative District

Price, RUR per square metre

Price behaviour since December 2007 г

Admiralteisky

102,230.7

22.51%

Vasileostrovsky

106,740.0

23.94%

Vyborgsky

100,114.0

27.67%

172

Kalininsky

96,734.6

30.84%

Kirovsky

94,407.5

29.07%

Krasnogvardeisky

96,816.7

28.22%

Krasnoselsky

87,084.4

29.25%

Moskovsky

107,654.7

27.38%

Nevsky

93,049.7

30.45%

Petrogradsky

108,688.5

23.73%

Primorsky

98,556.0

26.53%

Frunzensky

92,058.2

33.18%

Tsentralny

111,953.0

22.06%

Table 10.2.8 contains information on the apartment types currently in greatest demand according to the data made available by the «Kvartirny Vopros» City Real Estate Inquiry Service. Figure 10.2.8 illustrates the behaviour of demand for apartment properties in the primary real estate market during December 2007 - May 2008.

600

400

200

0 30 nov

11 jan

22 feb

4 apr

16 may

Figure 10.2.8. Demand intensity (number of primary applications by potential residential property purchasers) Table 10.8. Variants most frequently requested by purchasers of residential property according to the data made available by the «Kvartirny Vopros» City Real Estate Inquiry Service Rating

Number of rooms/district

Average price (RUR)

1

2/Primorsky District

4 864.7

2

1/Primorsky District

3 710.8

3

2/Nevsky District

4 565.1

4

1/Nevsky District

3 542.2

5

2/Frunzensky District

4 444.6

6

1/Frunzensky District

3 452.6

7

2/Kalininsky District

4 407.1

8

2/Vyborgsky District

5 003.6

9

1/Kalininsky District

3 506.8

10

1/Vyborgsky District

3 626.7 173

Apartment rent According to the data made available by the «Kvartirny Vopros» City Real Estate Inquiry Service during the first week of June single-room apartments located in the Nevsky, Primorsky, Frunzensky, Vyborgsky, Kalininsky and Vasileostrovsky administrative districts remained in top demand with potential tenants of urban residential property ready to «cash out» 15,000-20,000 RUR monthly for a single-room apartment.

Multiple requests are also registered by the «Kvartirny Vopros» City Real Estate Inquiry Service for two-room located in the Nevsky, Primorsky and Frunzensky administrative districts with the monthly rent for them estimated by would-be tenants as equal to approximately 20,000 RUR. Panel houses New series 137, as well as series 121 gatchinskaya and 504 – «Д» are included in category «good panels». Main property, by which they can be identified, is kitchen of more than 9 meters and large total area of apartment (e.g. 3 room apartment in these houses is 70 sq. m.) as a rule, these houses are situated in the districts of recent construction: Rzhevka, Primorsky, Kupchino, in the new part of Vyborgsky district.

Series of «medium» panels includes panel houses of old 137, 600.11 and 606 series. They are a bit smaller in terms of area (3 room apartment 63-69 meters) accordingly, smaller is the area of auxiliary rooms: kitchen 8-9 meters. E. g., only 137 series (earlier known as the most prestigious among panel construction) today is represented in the market at least in 4 variants. History of its «stratification» began in early 90, when the largest European Housing Construction Facility-2 stopped, which was meant for construction of million of sq. m. of dwelling a year.

The cheapest panel houses – so called «ships» and old series 504 «Ship» – is a house with small kitchen (6,3 m) and without possibility of planting flowers: there are no window-sills and window are situated but «peoples dwelling» doesn’t mean «bad dwelling». There are no more cramped kitchens, freezable walls, fissures between joints– all the features because of which people don’t like panel houses. In new projects of dwelling houses of gatchinskaya series effective 3 layers protecting panels are used, for closing fissures – reliable silicone pressuriser area of kitchens is increased up to 12-14 sq. m., area of rooms increases, height of ceilings In a panel there can be an arch or doorway (600 11) In improved series 600.11 apartments from 39 to 85 sq.m., with large cosy kitchens and spacious halls, stockrooms, triple glazing successfully solves tasks of heat and acoustic insulation. Houses, built by close corporation «gatchinsky ССК» are very special: facade of building is covered with granite or marble aggregate of different colors, roofs of building are crowned with color metal tile. They add to modern architecture of St. Petersburg their own coloring.

Production methods for triple wall panels meet latest requirements of CNr for energy-saving and comfort Increase of thickness of worming layer of outer walls from 100 to 180 mm saves up to 40% heat energy, increases frostresistance and insulation to 87 decibel Only in houses of close corporation «gatchinsky ССК» in accordance with methods triple outer wall panels are made (400 mm), consisting of: – outer armoured layer – concrete of class В20 (60 mm); – inner bearing armoured layer – concrete of class В20 (160 mm); - layer of foam polystyrene slabs - С of mark 25 (180 mm).

Brick houses Technology of «pure brick» traditionally has lots of admirers in St. Petersburg Firstly because brick is material, approved by centuries and everything is known about its properties at present brick houses are known as class of dwelling of increased comfort.

Stalin style houses Today Stalin style houses are understood as massive buildings of brick or strong ceramic panels, with high first floor. For facing these buildings granite slabs were often used (both whole and of aggregate). Most noticeable ensembles were decorated with peaked turrets, resembling that of Kremlin Houses, which are called today Stalin style buildings, were built in Leningrad from the end of 1930.

After the revolution construction of houses in the city was made in accordance with model projects. In the houses built before 30s there often were no conveniences (no bathrooms), the very houses were of barrack type, brick, e g as at Traktornaya street near Narvskye Vorota.

Before the war, mainly in southern districts, there were built elite Stalin style houses as a rule, pre-war Stalin style houses plastered, with good planning, with halls and apartments of large area, with large kitchen and bathroom, strong foors.

Post-war Stalin style houses (50s) - brick or faced In comparison with pre-war apartments have smaller area, 174

kitchens are smaller - 7-8,5 m all Stalin style houses have ceilings of 3 m height and more. In most cases - water heaters.

Rooms: separate.

Total area: 1 room - 32-50 sq. m.

2 rooms - 44-65 sq. m.

3 rooms - 59-80 sq. m.

4 rooms - 80-100 sq. m.

Kitchen: from 6 to 12 sq. m.

Lavatory: separately or combined.

Wall material: brick.

Height of ceilings 350 cm.

In 50s houses appeared which are today called «houses of Stalin period»: regardless of similar date of construction, planning of these houses is much worse. That’s why is we speak of a house constructed in 50s, it’s important where it’s situated: Moskovsky district is better, than Kirovsky Kirovsky better than Nevsky.

Also in 50s experimental houses were created - so called panel Stalin houses: ceilings of 3m height, apartments of larger area (20 houses at Sedova St. and 4-6 at Yelizarova Pr.).

Pre-revolution buildings There are only 11.3 thousand houses of pre-revolution construction. Old fund of St. Petersburg consists mainly of profit houses. Still there were some small apartments with dark pass through kitchens with wood-burning stove, an what is now called corridor system (one lavatory for 38 rooms), and two-storey manor-houses of area up to 250 m2, hidden in the large house.

Except profit houses, old fund includes «packed» private residences, houses built on fund of credit unions, reconstructed quarters and food stores, built over coach-house, i. e. all residential rooms «packed» in pre-revolution constructions.

Old fund consists of 2 categories: «old fund with overhaul» – «OFO» and «old fund without overhaul» – «OF».

Brick and solid houses Most of dwelling complexes constructed nowadays are brick and solid houses construction of which is based on principle of combination of hard solid concrete frame with outer brick walls.

As it is known, Petersburg is situated on swamp, soft ground. That’s why even long piles of strong houses don’t protect basement from destruction and for Petersburg ground optimal are solid constructions. On the deep piling basement they are most resistible to earthquakes and foods; there are no joints in them, in fact they are solid hard structures.

How safe and long-lived are brick and solid houses? Experts come to conclusion that brick and solid houses doesn’t cause harmful influence on health of people living in it: all the embankments of the city ate made of the same granite, of which crushed stone is made, used for construction of solid buildings, but increase of ionizing radiation background in Petersburg is not observed Safety of solid houses is proven by ecologists brick and solid house – is a single frame, where bearing are internal walls – partitions between apartments at building of facades architects and builders has large freedom of choice of forms and materials as a rule, outer walls are faced with brick or building blocks with several layers of special heater as result level of heat insulation and noise protection increases by 2040%.

Brick and solid houses give full freedom for imagination to future owner of apartment to join two rooms or make additional partitions real «serviceable life» of solid is more than 100 years.

175

10.3. PRICES FOR COMMERCIAL REAL ESTATE Background information2 The total area of the non-residential stock of St. Petersburg according to the data provided by Federal Unitary Enterprise»City Administration for Real Property Appraisal and Inventory» as of 01.01.2008 is 81,040,900 m2 (a 17.9% as compared to the data as of 2006), of which 72,374,800 m2 is represented by separate buildings and 8,666,100 m2 are premises built in residential houses (Table 10.3.1.) Таble 10.3.1.

Main indices, describing non-residential stock of St. Petersburg Index

for 01.01.2007

for 01.01.2008

Number of buildings, buildings

41904

44217

area of buildings, m2

60483,3

72973,5

area of built-in non-residential premises, m2

8244,5

8666,1

Total area of non-residential stock, m2

68727,8

81040,9

Source: the Municipal Department for the Inventory and Appraisal of Real Estate (GUP GUION)

As of 01.01.2006 the total amount of non-residential properties publicly owned by the city and leased exceeded five million square metres (was equal to approximately 5.3 million square metres, to be more exact). In 2005 among the 18.1 billion RUR asset management budget revenues 11.67 billion RUR fell to the share of lease (14% of the aggregate pre-planned budget revenues).

The demand for commercial real estate is formed by the following consumer sectors: – companies from other cities entering the St. Petersburg market; – foreign companies; – local companies expanding their operations; and – newly founded enterprises.

The leading professional participants in the St. Petersburg commercial real estate market include: «AventinRealty’, «Alexander-Realty», «St. Petersburg Realty», «Atrium», «Benoit», «Bekar», «Dinas«, «»Nord» Agency,» «Russian House», «Darko», «Advex – ROSSTRO», «Centre», «»Your House» Real Estate Agency», «IthacaRealty», «Inata», «Apartment Shop – 2», «Majordomo», «Octave», «RosProjectNedvizhimost», »Russian Realty Fund Ltd.», «Ecoton», «Legion-Realty», «TsAN», the OOO Soyuz real Estate agency; the OOO MIEL SP; Free Market; Colliers International; Astera; Knight Frank and others.

Practically all large realty companies have commercial real estate departments.

In some commercial real estate sectors, the infuence of professional operators is especially noticeable. For example, experts believe that reliable operation of business-centres is possible only if they are run by a managing company. In recent years, St. Petersburg has seen the emergence of a number of large managing companies, including the ZAO VMb-Trust, the OOO UK Becar, the OOO UK Piter and the ZAO MK PSb, «Gorod» CJSC, « Property Transactions Bureau» LLC, «North-West Investment Company» LLC, «TBS Development» Management Company,«, »Elis» Construction Corporation» LLC, «Astera» LLC, «MTL. Real Estate Operation» CJSC, «Super – Service» LLC, «Alpol» CJSC, ««Service» Association for Repairs and Operation» LLC, «SV – City» CJSC, «Invent» CJSC, «Decor-Centre» LLC, «Rost-Realty» CJSC, «Rodnik» LL, »Advex-Trust» Management Company» LLC, « «Fastсom» Holding Company» CJSC, «Aventin Realty» LLC, «Real Estate Institute» Non-governmental Educational Institution, «PSB – Invest Group» LLC, «Adamant» Holding Company, «IB GROUP» Group of Companies, «Alpha-Holding» LLC. Currently the practice of real properties trust is becoming increasingly popular in St. Petersburg. Thus during 1999 - 2005 there were approximately twenty trust agreements concluded by autjotities acting on behalf of the City.

2 This section uses data of the document entitled «A forecast of the development of the non-residential premises leasehold market in St. Petersburg (for the second half of 2006 and for 2007) and its impact on the socio-economic situation in St. Petersburg» (GUP GUION) (http://www.guion.spb.ru/) and other data furnished by Federal Unitary Enterprise» City Administration for Real Property Appraisal and Inventory» 176

Office premises According to the data made available by the City Administration for Real Property Appraisal and Inventory as of 01.01.2007 the aggregate area of the city office facilities was equal to 14,666,200 square metres including 12,953,500 m² of office buildings (88% of the total amount) and 1,712,700 m² of integrated facilities (a 12% share).

The major participant dominating the office real property market is the City of St. Petersburg represented by the City Property Management Committee (KUGI): as of 01.01.2007 the total area of real properties leased by it amounted to 1.9 million m².

The second largest source of office premises in St. Petersburg are business centers – office buildings with professional management offering their leaseholders such additional services as security, cleaning, catering services, etc. Estimates of the aggregate area of business centre premises as of 01.01.2008 vary within the range from 1.39 million m² (Becar Commercial Property SPb) to 1, 17 (London Consulting & Management Company).

To the third category belong integrated facilities privately owned by entities and individuals.

Business centre prices depend on three major parameters: – location, – building type and technical status, and – the managing company’s professional level and quality of services provided Class A business centers are centrally located, isolated specialized office buildings with good transport access, high-quality interior repair/decoration and internal communications (back-up heat-supply sources, air conditioning, central heating, fibber-optic communication channels) They are run by managing companies with well-known brand names that provide varied additional services and highly professional round-the-clock security including videomonitoring; efficient floor layout with isolated office blocks and parking facilities.

Class B business centers are centrally located, isolated specialized office buildings with selective capital repairs, a high level of interior decoration and good internal communications (ventilation, central heating and fibber-optic communication channels). They are run by professional managing companies that provide additional services, round-the-clock security including video-monitoring, good floor planning and parking facilities Class C business centers located in outlying districts in the administrative buildings of R&D institutes with varying state of interior decoration (ranging from soviet-style repair to good modern interior), ventilation systems and a sufficient number of phones. They have a good layout and are run by managing companies providing maintenance, cleaning and security services.

The share of Category «А» and «В» facilities in the total amount of office real properties commercially used (which is estimated to be over 2 million m²) is relatively insignificant (approximately 15%) but recently there has been a steady trend for its increase. There are varied explanations being put forward by real estate market experts. First, real property itself and its maintenance services are growing increasingly expensive with lease of Category «С» office facilities having ceased to yield the payback required (or, at least, desirable). Second, enhanced availability of financial resources such as loans stimulates owners of Category «С» real properties to perform their upgrade repair and renovation. Third, intensification of business activities results in increase of demand for quality office facilities.

The addresses of major St. Petersburg business centers are provided in appendix 4.

The distribution of office space by business-centre class is shown in Table 10.3.2.

The rent rates in the business centres of St. Petersburg are shown in Table 10.3.3. Таble 10.3.2.

Total amount of the city office facilities as of 01.01.2008.

Business centre category

Data furnished by Becar Commercial Property SPb

Data furnished by London Consulting & Management Company

area, m²

share, %

area, m²

share, %

«А»

151800

10,9

125000

10,7

«В»

675600

48,5

737500

62,8

«С»

565600

40,6

311500

26,5

Total

1393000

100

1174000

100

177

Table 10.3.3.

Rent rates range in St. Petersburg business centers by class in USD Annual rate of rent including maintenance, RUR

Category average

min

max

А

20388

5400

34716

В

13608

6960

30000

С

10344

4368

24000

Source: data furnished by GUION

The amount of supply available in the city market of office real estate has been growing mainly in Category «В» properties segment.

The latter’s share in the business centre facilities market volume increased from 24% to 32% during early 20052006. With most of the business-centres classified as belonging to this category currently there are next to no facilities available for rent. Annual increase of the aggregate area of Category «В» office facilities has come to be equal to 85,000 m² (44% of the total market volume). Tendencies of office premises market can be described as growing demand, connected with increase in incomes of companies, entrance of new Moscow and international firms in the market. All these factors results in raise of requirements to quality of office spaces and their dimensions.

One of the recently steady market trends is that for increase of the demand for quality office facilities. Occupancy rate of business centres remains at an invariably high level of 95–96% (according to the data made available by «Colliers International»). The number of companies interested in rent of offices with a total area exceeding 500 m² tends to gradually grow Commercial premises Total area of St. Petersburg real properties used for purposes related to trade amounts to some 9 million m².

The retail real estate market of St. Petersburg can be split into four segments: – built-in retail premises, – shopping centers, – booths and pavilions, and – street markets.

As of 01.01.2008 nearly 30% of the commercial real property market fell to the share of integrated facilities.

According to the data furnished by «ARIN» LLC during 2007 after commissioning of new properties with a total area of approximately 331,790 m² the aggregate amount of St. Petersburg quality commercial facilities came to be equal to some 2,360,460 m².

According to «Colliers International» in 2007 availability of quality mall commercial facilities per 100 citizens of St. Petersburg amounted to 303 m². However, other companies claim the value has been underestimated; thus judging by the data furnished by «ARIN» LLC in early 2008 availability of quality commercial facilities per 100 citizens with St. Petersburg trading centres was equal to 517 m².

Availability of quality commercial facilities (per 1000 citizens) 600 500 400 300 200 100 0

Warshaw

Prague

Data furnished by «ARIN» LLC

178

Sa.Petersburg

Kazan

Paris

Moscow

London

The strongest demand has been enjoyed by retail outlets located in areas with intensive traffic and pedestrian flows: the Nevsky, Liteyny and Vladimirsky Prospect, the Bolshoy Prospect of the Petrogradsky District, and the Moskovsky Prospect; and in bedroom communities – in the vicinity of Metro stations and on the main thoroughfares.

The retail space market of St. Petersburg is witnessing an increase in the supply of quality retail space due to continuing construction of new large shopping centers and a downward trend in the share of low-quality retail outlets.

Rent rate depends not only on location, but also on trade mark of leaser, its specialisation (type of products sold), and on size of rented area. It is worth mentioning, that for «anchor» leasers rent rates are set on a lower level (2 times and more), than for common leasers3. Таble 10.3.4.

Rent rates for «anchor» leaseholders at shopping centers in St. Petersburg, 2008 «Anchor» type

Average space, m2

Annual rate, USD/m2 per annum

Hypermarket

5 000–20 000

100–160

Supermarket

1 000–4 000

120–300

Electronics

2 000–8 000

180–400

Sports and recreation

500–2 500

300–550

Cloths

500–2 000

200–540

Entertainments

500–14 000

150–300

Household goods

500–6 000

180–450

Goods for children

500–2 500

260–400

Source: Colliers International Manufacturing and warehousing premises According to the data made available by the City Administration for Real Property Appraisal and Inventory as of 01.01.2008 the aggregate area of St. Petersburg manufacturing and warehousing premises was equal to 30,534,000 m² with 77.9 % (23,801,000 m²) of the amount falling to the share of the former and 22.1% (6,733,000 m²) – to that of the latter.

Joint portion of manufacturing and warehousing facilities in the total of the city non-residential real estate fund volume amounts to some 37.4% with 77.4 % (23,645,000 m²) falling to the share of the former and 19.8% (6,052,000 m²) – to that of the latter.

The main factors influencing the development of this market include economic growth in the country, improvement of the population’s purchasing power and increased inflow of both domestic and foreign investments in the city economy. However, an acute deficit of warehousing space supply in the city continues. The two main growth areas of warehousing facility supply remain conversion of old production premises and transfer of technical floors and ground floors of residential buildings into non-residential stock.

The strongest growth of warehousing space is registered in the Vyborgsky, Krasnogvardeisky, Moskovsky and Pushkin administrative districts. With the Vyborgsky district (northern part of the city) new projects are being implemented mainly within the non-residential zone of «Parnas».

The annual rate of rent with Category «А» and «B» facilities varies within the range of 115–140 $/m² and 110 120 $/m² accordingly (VAT and maintenance expenditures excluded). Similarly, the daily rate of secure storage with the same categories amounts to $0.4–0.5 and $0.34–0.42 per pallet item, VAT and handling expenditures excluded (according to the data made available by «Colliers International»).

According to the data collected by the City Administration for Real Property Appraisal and Inventory as a result of the commercial real estate market monitoring during the first quarter of 2008 the annual rate of manufacturing and warehousing rent varied within the range of 672-8,436 RUR (approximately $28-359) per square metre.

Objects of commercial real estate, planned to be created in St. Petersburg in 2008, are shown in tables 10.3.5, 10.3.6.

3 The «anchors» being major retail operators of renown such as «Lenta», «Maxidom», «Technosila», «Adamant», «M-video», «O’key», «Sportmaster», «Matrix» and others.

179

Table 10.3.5.

Major projects for construction of office facilities with an area over 10,000 m² to be commissioned during 2008.

Name

Address

Category

Office facilities area, m²

Pre-scheduled commissioning deadline

«Senator» (Stage 3& 4)

34 Professor Popov Ulitsa

А

43 000

Fourth quarter of 2008

«Renaissance Plaza»

69-71 Marat Ulitsa

A

28 852

First quarter of 2008

«RESO»

Bogatyrsky Prospect/ Gakkelevskaya Ulitsa intersection.

A

25 550

Second quarter of 2008

«Aeroplaza»

Pulkovo-3, Startovaya Ulitsa, Site 4

A

22 000

First quarter of 2008

«Linkor»

34 Petrogradskaya Naberezhnaya

A

18 000

Third 2008

«Parade Quarter» (Stage 1)

Paradnaya Ulitsa./Vilensky Pereulok/Radischev Ulitsa

A

15 000

Fourth quarter of 2008

«Tolstoy Square»

9 Leo Tolstoy Ulitsa

A

14 200

First quarter of 2008

«Renaissance Court Yard»

61-63 Ligovsky Prospect

A

12 560

Third 2008

«Benoit Wing» (Stage 2)

44а Sverdlovskaya Naberezhnaya

A

12 000

First quarter of 2008

«Leader»

Konstitutsii Ploschad

B

28 000

First quarter of 2008

«Arena Hall»

16 Dobrolyubov Prospect

B

27 300

First quarter of 2008

«Obukhov-Centre» (Stage 2)

271а Obukhovskoy Oborony Prospect

B

22 500

Second quarter of 2008

«Haven»

Vasilevsky Island 88 Sredny Prospect

B

18 750

First quarter of 2008

«Currency Exchange» (Stage 1)

15, 26th Line of the Vasilevsky Island

B

16 500

Second quarter of 2008

Unnamed

21 Dunaisky Prospect

B

14 000

Third 2008

«Commonwealth» (Stage 2)

33 Kolomyazhsky Prospect

B

12 000

First quarter of 2008

«Renaissance Tower»

14 Reshetnikov Ulitsa

B

12 000

Third 2008

«Avenue»

7 Aptekarskaya Naberezhnaya

B

11 400

First quarter of 2008

«The Smolenka River»

Dekabristov Pereulok./Smolenka Embankment, Site 1

B

11 100

Fourth quarter of 2008

«Imperial» (Stage 2)

48 Stachek Prospect

B

11 000

Second quarter of 2008

«Senator» (Stage 2)

31, 18th Line of the Vasilevsky Island

B

10 845

Third 2008

Source: Colliers International (http://www.colliers.spb.ru/)

180

quarter

quarter

quarter

quarter

quarter

of

of

of

of

of

Table 10.3.6.

Quality warehousing complexes currently under construction to be commissioned in 2008.

Name

Total area, m²

Address

Investor/Developer

«Kolpino»

Shushary, Kolpino Settlement, Site 26

«Eurasia Logistic»

«AKM»

Shushary, «Lensovetskoye» enterprise terri«АКМ Logistics» tory, Site 76

150 000

«Neva» logopark

Shushary, Moskovskoye Shosse./Ring Road «Avalon Logistics» / intersection Raven Russia

143 000

MLP «Utkina Zavod»

Vsevolozhsky District, within the Ring MLP Road zone

122 380

«Sterkh»

Vyborgskoye Shosse./Gorskoye Shosse./ «Sterkh» Ring Road

95 000

«Theorem Terminal»

295 Obukhovskoy Oborony Prospect

«Theorem»

87 710

EPI

Gorelovo

EPI

75 000

«Alex»

Gorelovo

«Astros Logistic»

34 000

«Shushary»

Shushary

Eurosib - Terminal

25 000

«Terminal «Staraya Der12 Mebelnaya Ulitsa evnya»»

205 757

«Terminal «Staraya Der- 22 000 evnya»»

PAN

Shushary, Mira Ulitsa/Lenin Ulitsa intersec«Unipark» tion.

17 500

«Porter»

Utkina Zavod

17 000

«Interterminal I Predportovy»

75/1 Kubinskaya Ulitsa, Predportovaya-1 «Interterminal» industrial zone

«Theorem Obukhovo»

South-East Direction, »Obukhovo» underground railway station

100 000

Warehousing complex

Shushary, in immediate proximity to the Ring Road (5 km), and the St. Petersburg – Moscow highway (М10)

75 000

Warehousing complex

Kolpino District

40 000

«Coulomb - Pulkovo» Southern part of the St. Petersburg territory, office and warehousing 200 m off Pulkovskoye Shosse complex

36 000

Manufacturing and warehousing complex

City of Kolpino, Izhorsky Zavod

15 000

Unnamed

Parnas, Domostroitelnaya Ulitsa

«Porter»

Nord Intrans Ltd. («Euroconsulting» CJSC)

12 857

10 000

Source: Colliers International (http://www.colliers.spb.ru/)

181

11. FEES FOR HOOKING UP TO ENGINEERING AND TECHNICAL PROVISION NETWORKS The Federal Law «On tariff regulation principles for utility complex organizations» №210-FL of 30.12.2004 (modified as of 18.10.2007) (hereafter, the Law) become effective on 01.01.2006. The Law establishes the principles of tariff regulation at utility-complex organizations engaged in electricity-, heat- and water supply, water removal and sewage treatment, utilisation (disposal) of solid domestic wastes, as well as mark-ups on prices (tariffs) for consumers and mark-ups on tariffs for goods and services provided by utility-complex organizations.

Among other things, the Law requires that the tariffs for hooking up newly constructed (renovated) real estate facilities to the utility infrastructure system should be regulated (Chapter 1, article 1, Point 2).

In compliance with article 12, Chapter 3 of the Law: 1. Fees for hooking up to engineering and technical provision networks that make a part of the utility infrastructure system of a given municipal entity shall be established for persons implementing construction and/or renovation of a building, structure, installation or other facility, provided that such renovation involves an increase in the power consumption by the building, structure, installation or other facility under the renovation.

2. The size of hooking-up fees is calculated as the product of the tariff for hooking up to the corresponding utility infrastructure system factored by the declared power consumption (increased power consumption for facilities under renovation) provided by a given utility infrastructure system for the building, structure, installation or other facility under construction or renovation.

3. Hooking-up fees shall be paid based on a public contract between a given utility-complex organization and the applicant implementing construction and/or renovation of a building, structure, installation or other facility. Such a contract shall define the procedure and conditions for hooking-up a given building, structure, installation or other facility to the utility infrastructure system, the procedure for payment of the hooking-up fees by the persons implementing construction and or renovation of a building, structure, installation or other facility, as well as the procedure for distributing the said fees among the organizations of a given utility complex implementing a programme for comprehensive development of the systems of a given utility infrastructure.

In compliance with Article 13 of the Law, tariffs for hooking up to a utility infrastructure system cannot be established for a period shorter than one year.

In accordance with the provisions of Chapter 2 (Article 4) of the Law rates of the fees payable for services rendered by public utility enterprises shall be determined by the executive authorities of the Russian Federation constituent entity with due regard for the marginal growth rates specified for the region in question by the federal executive authority in charge of tariffing and surcharging regulation.

Under Article 15 of the Law regulation of rates for products and services by public utility complex entities specializing in delivery of heat and/or power supply services and products shall be carried out in accordance with the procedure established by the acting Russian Federation legislative acts applicable to electric power industry, Federal Law №41-FL «On state regulation of tariffs for electric and heat energy in the Russian Federation» dated 14.04.1995 and the regulatory legal acts of the Russian Federation and the Russian Federation constituent entities as may have been adopted based thereupon. Under Article 6 of Federal Law №41-FL «On state regulation of tariffs for electric and heat energy in the Russian Federation» dated 14.08.1995 the powers delegated to the executive authority of the Russian Federation constituent entity in charge of tariffing state regulation includes the power to determine the rate of fee payable for engineering connection to power distribution networks and/or unified schedule of tariffs for determination of the above fee rates applicable with territorial network entities.

The relevant powers are delegated to the Saint Petersburg Tariff Committee (Resolution of the Government of Saint Petersburg №1346 «On the Saint Petersburg Tariff Committee» dated 13.09.2005).

Thus in accordance with Instructions of the Saint Petersburg Tariff Committee Nos. 152-р and 153-r dated 17.12.2007 there is a schedule of tariffs specified to be valid during 2008 for determination of the amount of fees payable for engineering connection to power distribution networks of »Saint Petersburg Power Networks» JSC and «Lenenergo» JSC located within the territory of Saint Petersburg depending on the voltage and capacity indices of the applicant’s power installations mounted within the engineering connection territorial zone.

182

The procedure of calculating the amount of fees payable for engineering connection to power distribution networks is provided for in the following documents: Rules of engineering connection of power receivers (power plants) owned by individuals and entities to power distribution networks approved by Resolution â&#x201E;&#x2013;861 of the Russian Federation Government dated 27.12.2004; Guidelines for determination of the amount of fees payable for engineering connection to power distribution networks approved by Ordinance of the Federal Tariff Service â&#x201E;&#x2013;277-e/7 dated 23.10.2007.

183

APPENDIX 1.

GLOSSARY Investments1 - cash, securities, other assets, including interests, other rights having pecuniary valuation, invested in objects of business and (or) activities in order to receive profit and (or) to achieve other beneficial effects.

Investment activity1 - making investments and taking action in order to receive profit and (or) to achieve other beneficial effects.

Capital investments1 - investments in fixed capital (fixed assets), including costs of new construction, expansion, reconstruction and technical re-equipment of existing enterprises, purchase of machinery, equipment, tools, costs of project and research works and other expenses.

FINANCIAL INVOLVEMENT OF ST. PETERSBURG’S GOVERNMENT AUTHORITIES IN INVESTMENT ACTIVITIES The federal address investment program2 - a component of the federal budget for the next fiscal year. Defines the charges for state capital investments, including in the form of grants and subventions, provided on achievement of federal target programs (subprograms), departmental target programs, and also on the decision of the separate major social and economic questions which have been not included in these programs (subprograms), on the basis of the offers approved by the President or the Government of the Russian Federation.

The address investment program of Saint-Petersburg3 - list of construction projects and instrumentation and design expenditures featuring indication of the public customer, site and (whenever applicable) registered address, relevant city economy sphere, amount of budget funds allocated for the coming financial year and planning period.

Investment tax credit4 – a modification of the tax payment deadline that provides for the taxpaying entity being able (upon availability of grounds specified in Article 67 of the Russian Federation Tax Code) to reduce the sums of tax payments (during a certain period and within the limits specified) with subsequent phased refund of the credit amount and interest accrued.

Public or municipal warranty5 - type of debenture providing for the Russian Federation, Russian Federation constituent entity or municipal entity (warrantor) being liable in case of occurrence of the event warranted against (warranty event) to refund the party warranted (beneficiary) on a written request by the latter a sum of money out of the relevant budget funds in accordance with the warrantor’s pledge to incur liability for a third party’s (principal’s) discharge of one’s obligations to the beneficiary.

Tax and duty benefits4 - advantages provided to certain categories of taxpayers and payers of duties, specified by the tax and duty legislation, in comparison with other taxpayers and payers of duties, including the possibility not to pay a tax or a duty at all or to have decreased tax payments.

Special economic zone6 - a part of territory of the Russian Federation, determined by the Government of the Russian Federation on which a special regime for encouraging entrepreneurial activity operates. Special economic zones are created with a view of development manufacturing branches of the economy, hi-tech branches, and the manufacture of new types of production and the development of transport infrastructure as well as tourism sector and sanatorium and resort industry.

Concession agreement7 - a contract in which one party (the concessionaire) at his own expense undertakes to create and (or) to reconstruct the real estate determined by this agreement, the property right which belongs or will belong to other party (the grantor) to carry out activity with use of object of the concession agreement, and the grantor undertakes to give the concessionaire for the term of, established by this agreement, rights of possession and using the object of the concession agreement for the completion of the specified activity.

1 Federal Law of 25.02.1999 №39-FL «On investment activity in Russian Federation, in form of capital investments».

2 Resolution of RF Government of 11.10.2001 №714 «On approval of regulation on forming of list of constructions and facilities for federal and state needs and their financing at the expense of federal budget funds».

3 Resolution of Government of St. Petersburg of 06.09.2005 №1321 «On the Target investment programme elaboration and implementation measures».

4 Federal Law of 31.07.1998 №146-FL «Tax Code of Russian Federation».

5 Federal Law of 31.07.1998 №145-FL «Budget Code of Russian Federation».

6 Federal Law of 22.07.2005 №116-FL «On special economic zones of Russian Federation» 7 Federal Law of 21.07.2005 №115-FL «On concession agreements».

184

ADMINISTRATIVE PROCEDURES DURING THE INVESTMENT PROCESS IN ST.PETERSBURG Real estate (property of St. Petersburg)8 - a land plot, a building, a structure, a site or construction in progress which is a property of St. Petersburg.

Investor8 - an individual or a legal entity, as well as the entity incorporated under the agreement of joint activity and having no legal status associations of legal entities, state organs, organs of the local Government and also foreign subjects of entrepreneurial activities.

Potential investor8 - a person that has intention to undertake investment activity and takes actions on provision of real estate prior to entering into the agreement Strategic investor9 - a physical or legal entity, and also one created on the basis of the contract concerning joint activities and not having the status of the legal person of association of legal persons, the state organs, institutions of local Government, and also the foreign subjects of entrepreneurial activity participating in completion of strategic investment projects, having special value for the social, economic, cultural and other development of St. Petersburg.

The strategic investment project9 - a set of the actions appropriate to a principle of strategic importance for St. Petersburg, for the creation or modernization of various kinds of property with a view to making a profit and (or) achievements of any other useful purpose. Result of realization of strategic investment projects is the substantial improvement of the social and economic and cultural conditions of life of inhabitants.

Investment agreement8 - 1) a transaction made in accordance with the legislation of St. Petersburg, aimed at investment activities being a shared agreement with the obligations of the parties to develop a land lot, reconstruct, complete construction (other investment terms); 2) an agreement of real estate owners (owners of separate premises in a realty asset) on the procedure of investment with real estate; 3) an agreement on servitude on the land lot; 4) agreement on building up on land plot, in accordance with sub-clauses 1 and 2 of Clause 1, article 6 of the Law «On order of provision of state owned real estate of St. Petersburg, for construction and reconstruction».

Land lease agreement with investment terms8 - a shared agreement aimed at investment activities of a land lot and containing obligations for the parties of the land lease, its development and other investment terms.

Agreement of sale and purchase of a land lot8 - an auction deal on onerous alienation of a land lot in the state ownership for purposes of construction.

Investment conditions8 - cumulative rights and obligations of St. Petersburg and of the investor when providing real estate defined in accordance with the laws of St. Petersburg.

Starting price of a real estate, starting price of the right to conclude the investment agreement (4) - market value of real estate, and the right to conclude an investment agreement calculated in accordance with the legislation on real estate appraisal Target provision8 - provision of real estate in accordance with the present Law of St. Petersburg without an auction or in case the auction is voided.

Investment performance8 - newly incorporated real estate property being the result of investment activities.

Internal-block engineering constructions10 - engineering constructions intended for maintenance of energy needs of objects existing and planned for construction (reconstruction) of the real estate within the borders of a block, including central thermal points, transformer substations and pump stations.

Agency for territorial development11 - an organization which has entered into an agreement with St. Petersburg with the objective to implement the concept of investment development of the part of St. Petersburg’s territory within the boundaries agreed upon by the Committee for City Planning and architecture. Within the boundaries of the territory, the agency for territorial development forms and develops a complex strategy for reconstruction, development, and the use of real estate, prepares the territory for investment activities of individuals and legal entities and provides consulting services to investors.

Confidential management12 - transfer of rights to management of property (objects of the real estate (a building, structure, construction, premise, enterprise and other property complexes, other objects), a personal estate (including securities, shares, shares in economic societies, other property), and also exclusive rights) with a view to: 1) increasing a profits and (or) reducing expenses of the St. Petersburg City budget, including an increase of efficiency 8 Law of St. Petersburg of 17.06.2004 №282-43 «On procedure of submission of real estate objects, owned by St. Petersburg, for construction and reconstruction».

9 Resolution of Government of St. Petersburg of 01.03.2005 №216 «On strategic investment projects of St. Petersburg».

10 Resolution of Government of St. Petersburg of 02.08.2005 №1180 «On procedure of decision making on provision of land for construction of engineering structures».

11 Decree of St. Petersburg Governor of 01.02.2001 №117-r «On agencies for territory development».

12 Law of St. Petersburg of 30.06.2004 №334-51 «On asset management of property of St. Petersburg».

185

in the use of property and maintenance of property in good condition; 2) preservations and augmentation of property; maintenance and development of the engineering infrastructure; 3) attraction of additional appropriate investment resources for the economy of the city; 4) successful actions for the preservation of the environment and health of the St. Petersburg population; 5) reductions of costs in activity in the management of property; 6) increases of the size of the minimal gross revenue from use of property; 7) the substantial improvement of social and economic and cultural conditions of the life of city inhabitant; 8) stimulation of economic activity in the speciďŹ ed areas of the municipal economy.

186

187

5.

4.

3.

2.

Leonid P. Bogdanov, Chairman of the Committee

Alexander V. Prokhorenko, Chairman of the Committee

1, Lomonosova Square, 191023, St. Petersburg http://www.gov.spb.ru/gov/admin/otrasl/c_govcontrol E-mail: kgiop@gov.spb.ru

Vera A. Dementyeva, Chairman of the Committee

Committee for State Control, Utilization and Protection of Historical and Cultural Landmarks (KGIOP)

Smolny, 191060, St. Petersburg http://www.gov.spb.ru/gov/admin/otrasl/c_zakonnost http://www.zakon.gov.spb.ru E-mail: bogdanov@zakon.gov.spb.ru

Committee for the Issues of Law, Order and Security (KVZP&B)

Smolny 191060, St. Petersburg http://www.gov.spb.ru/gov/admin/otrasl/c_foreign http://www.kvs.spb.ru/ru/ E-mail: prokhorenko@kvs.gov.spb.ru

Committee for External Relations of St. Petersburg (KVS)

11, Ostrovskogo Square, 191023, St. Petersburg http://www.gov.spb.ru/gov/admin/otrasl/gilfond http://www.gilkom.spb.ru E-mail: gk@gov.spb.ru

Unis H. Lukmanov, Chairman of the Committee

Natalia V. Dudkina, Head of Receiving Office, Head of the Department

4, Pereulok Antonenko, St. Petersburg E-mail: br-citizen@assembly.spb.ru

Housing Committee (KGP)

Vadim A. Tyulpanov, Chairman of the Legislative Assembly Delegate of the Legislative Assembly Electoral constituency: 15 Administrative district: Kirovsky

Legislative Assembly of St. Petersburg (ZS)

1.

Name, Last Name of the Public Officer

6, Isaakevskaya Square, 190107, St. Petersburg http://www.assembly.spb.ru/ E-mail: Vtulpanov@assembly.spb.ru

Postal address, web page, e-mail address

№

315-43-03 571-64-31

576-79-70 576-47-12

576-71-13 576-72-04

710-48-85

570-32-70

570-30-01 570-33-51

Tel.

710-42-45

576-43-74

576-76-33

710-47-26

570-32-68

570-33-51

Fax

APPENDIX 2.

CONTACT DETAILS OF PUBLIC AUTHORITIES AND ENGINEERING AND POWER ENTERPRISES OF ST. PETERSBURG

188

11.

10.

9.

8.

7.

6.

Pavel B. Pankratov Committee Chairman

Alexander P. Viktorov, Chairman of the Committee, Chief Architect of St. Petersburg

Nana M. Gvichiya, General Manager

Maxim Y. Sokolov, Chairman of the Committee

10-12 Moskovsky Prospect, Lit. A, 190031, Saint Petersburg, Rus- Ilya E. Gudkov, sian Federation General Manager http://www.asi-cisp.spb.ru E-mail: info@asi-cisp.spb.ru

St. Petersburg Public Agency «Agency of strategic investments» (SPb GU «Agency of strategic investments»)

Sadovaya street 14,191011, St. Petersburg http://www.visit-petersburg.com E-mail: info@saintpetersburgvisit.ru

St. Petersburg state enterprise «City tourist information center»

Smolny, Entrance 6,191060, St. Petersburg, http://www.gov.spb.ru/gov/admin/otrasl/invest http://www.hotelinvest.ru/ http://www. investinfo.spb.ru/ E-mail: info@cisp.gov.spb.ru

Committee for Investments and Strategic Projects (KISP)

62, Suvorovsky Prospect, 191124, St. Petersburg http://gov.spb.ru/ Julia E. Kiseleva, gov/admin/otrasl/kzr Chairman of the Committee http://www.kzr.spb.ru E-mail: kzr@gov.spb.ru

Committee for Land Resources and Land Development of St. Petersburg (KZR)

7 Galernaya Ulitsa, 190000, Saint Petersburg, Russian Federation http://www.rspb.ru/ E-mail: admin@kzn.spb.ru

Saint Petersburg Employment Committee (KZN)

2, Lomonosova Square, 191023, St. Petersburg http://www.go v.spb.ru/gov/admin/otrasl/architecture http://www.kgainfo.spb.ru E-mail: info@kgainfo.ru

Committee for City Planning and Architecture (KGA)

310-02-47

310-28-22 310-28-62

576-69-88

740-36-45

312-92-36 312-88-35

315-52-16

310-25-20

310-28-22

576-44-02

740-36-41

312-88-35

710-48-03

189

19.

18.

17.

16.

15.

14.

13.

12.

Yury Y. Zinchuk, Chairman of the Committee

Sergei V. Ivanov, General Manager

Lev A. Vinnik, Director

Andrei A. Isaev, Manager

Smolny, Entrance 6,191060, St. Petersburg http://gov.spb.ru/gov/admin/otrasl/c-property www.commim.spb.ru E-mail: in@commim.spb.ru; kugi@gov.spb.ru

Committee for City Property (KUGI) Igor M. Metelski, Chairman

16, Voznesensky Prospect, 190000, St. Petersburg http://www.gov. Oleg B. Trishkin, spb.admm/otrasl/energ_kom Chairman E-mail: rek@gov.spb.ru

Committee for Tariffs (KT)

76 Moika Embankment, 190000, Saint Petersburg

St. Petersburg’s Public Agency «The Capital Construction and Reconstruction Fund» (FCC)

5, Pirogova Passage, 190000, St. Petersburg http://www.stateinvest.spb.ru E-mail: ui_info@stateinvest.spb.ru

Public Agency on Management of Investments (GU Investment Management)

76 The Moika Embankment ,190000, St. Petersburg E-mail: sk@comlink.spb.ru

St. Petersburg Public Agency «Stroykomplect»

76, The Moika Embankment, 190000, St. Petersburg http://www. Roman E. Filimonov, gov.spb.ru/gov/admin/otrasl/komstroy Chairman of the Committee E-mail: mironova@kstr.gov.spb.ru

Committee for Construction (KS)

5/3, Kamennoostrovsky Prospect, 197046, St. Petersburg http:// Dmitry A. Golubev, www.gov.spb.ru/gov/admin/otrasl/ecology Chairman of the Committee E-mail: head@kpoos.gov.spb.ru

Committee for Use of Natural Resources, Environment Protection, and Environmental Safety (KPOOS)

Smolny, 191060, St. Petersburg http://www.gov.spb.ru/gov/admin/otasl/committee/press E-mail: kpress@gov.spb.ru

Committee for Press and Mass Media Relations (KP&SMI)

576-75-57

315-22-65

570-33-15

310-02-05

570-34-03

570-30-30

232-83-69

576-79-83

274-10-26

315-15-43

570-33-15

310-02-05

312-60-21

570-33-14

232-83-27

576-62-61

190

26.

25.

24.

23.

22.

21.

20.

Eduard V. Batanov, Chairman of the Committee

Oleg B. Trishkin, Chairman of the Committee

Andrey N. Stepanenko, General Manager

Dmitry A. Kurakin, Head of the Department

Alexey I. Sergeev, Chairman of the Committee

88-90, The Griboedova Embankment, 190068, St. Petersburg http://www.spbmrc.ru E-mail: spbmrc@yandex.ru

Public Agency «St. Petersburg’s interregional resource centre»

65 Б, Suvorovsky prospect, 191124, St. Petersburg http://www.quality.spb.ru E-mail: mail@quality.spb.ru

Vladislav L. Raskovalov, General Manager

Alexander V. German, Director

St. Petersburg’s Public Agency «Centre for goods (products), works and services quality control»

16, Voznesensky Prospect, 190000, St. Petersburg http://www.gov.spb.ru/gov/admin/otrasl/c_economy http://www.cedipt.spb.ru/ E-mail: info@cedipt.spb.ru E-mail: kerppt@gov.spb.ru

Committee for Economic Development, Industrial Policy and Trade (KERPPT)

16, Voznesensky Prospect, 190000, St. Petersburg http://www.gov.spb.ru/gov/admin/otrasl/finance http://www.fincom.spb.ru/ E-mail: press@kfin.gov.spb.ru

Committee for Finance of St. Petersburg (KF)

4, Pereulok Antonenko, 190000, St. Petersburg http://www.gov.spb.ru/gov/admin/otrasl/ingen E-mail: kenerg@gov.spb.ru

Committee for Energy and Engineering Support (KENERG)

5, Pereulok Grivtsova, 190000, St. Petersburg http://www.property-fund.ru E-mail: info@property-fund.ru

JSC «Property Fund of St. Petersburg» (JCS «FI»)

1-3, Zodchego Rossi Street, Entrance 6,191011, St. Petersburg http://www.guion.spb.ru/ E-mail: info@guion.spb.ru

State Unitary Enterprise «The Municipal Bureau for Inventory and Real Estate Appraisal» (GUP GUION)

326-42-75

274-14-30

315-51-52

314-56-74

312-54-11

571-05-83

710-48-93

326-42-74

274-14-32

570-35-54

570-39-39

570-39-01

571-00-01

710-47-80

191

31.

30.

29.

28.

27.

Andrei Y.Korotkov, General Manager

320-50-16

320-50-15

Department of documentation reception for the legal persons and real estate agencies having formal contracts with the Board

5th floor, suit 412,41, Komsomola Str, 195009, St. Petersburg

Mikhail Y. Prokofev, Director

1/3, Zodchego Rossi Street, Entrance 6,191023, St. Petersburg http://www.expertiza.spb.ru E-mail: ugve@gov.spb.ru

Office of State Expertise Service (UGVE)

49, Ligovsky Ave., 191040, St. Petersburg http://gov.spb.ru/gov/admin/otrasl/slujba http://www.expertiza.spb.ru E-mail:gne@gov spb.ru

Rudolf A. Faltinsky Deputy Head of the Service, Head of Department

Alexander I. Ort, Head of the Service

Service for the State Building Supervision and Expertise of St. Petersburg (Gorstrojnadzor and expertise SPb)

20, Kutuzova Embankment, 191187, St. Petersburg http://www.sztu.customs.ru

North West Customs Administration of the Federal Customs Service

Department of documentation reception on the real estate objects located in the Nevsky district of St. Petersburg

Build. 1,100, Oktyabrskaya Embankment, 193079, St. Petersburg

571-22-74 571-00-90

717-09-46

273-16-19 275-83-00

740-62-97

447-85-05

Galina A. Volchetskaya 324-59-10 Head of the UFRS, Chief State Registrar for St. Petersburg and Leningrad region

3, Galernyi Proezd, 3, Vasilyevsky Ostrov, 199226, St. Petersburg http://www.gbr.ru/ E-mail: info@gbr.ru

71-22-745

719-89-11

275-43-70

324-59-02

Central Administrative Board of the Federal Registration Service at St. Petersburg and Leningrad region (UFRS) Under Order by Russian Federation President №724 dated 12.05.2008 «Issues of system and structure of federal executive bodies»: - functional authorities related to elaboration of a state policy and normative legal regulation in the sphere of state registration of rights to real estate and transactions therewith were delegated to the Russian Federation Ministry of Economic Development (Item 10); - Russian Federation Government Chairman was entrusted with making a motion (in accordance with the established procedure) to have the Federal Registration Service abolished since 01.10.2008 with the authorities former delegated to it being transferred to the Federal Agency for State Property Management (Item 18).

88-90, The Griboedova Embankment, 190068, St. Petersburg http://www.spbgapi.ru E-mail: gapi@spbgapi.ru E-mail: Korotkov@spbgapi.ru

Public Agency «The City’s Agency on Industrial Investments» (GU GAPI)

192

38.

37.

36

35.

34.

33.

32.

Oleg V. Kolomyichenko, Head of the Service

Lyudmila V. Vorobyeva, Head of the Department

577-13-29

448-88-40

740-40-03

314-79-14 571-99-06

274-60-23

448-88-40

315-22-42

315-78-51

764-42-38

577-15-65

1, Malaya Sadovaya Street, 191023, St. Petersburg http://www.fguz-cgie-spb.sp.ru/ E-mail: fguzcgie_spb@mail.ru

Yurij N. Korzhaev, Head Physician

710-50-88 570-38-11

710-50-88

Federal state agency of public health care «Centre for hygiene and epidemiology in the city of St. Petersburg» (FGUZ «Centre for hy-giene and epidemiology in the city of St. Petersburg»)

62 Suvorovsky Prospect, 191124, Saint Petersburg, Russian Federa- Valery V. Kalugin tion Director http://r78.kadastr.ru/fgu/ E-mail:fgu78@kadastr.ru

764-49-74

Igor A. Rakitin, 577-19-94 Head of the «Regional Board of Rospotrebnadzor for St. Petersburg», Chief Sanitary Inspector for St. Petersburg

Federal State Institution «Land Cadastre Chamber for the City of Saint Petersburg»

19, Stremyannaya Str, 191025, St. Petersburg http://www.rpnadzor.sp.ru E-mail: rpnadzor@mail.wplus.net

«Regional Board of the Federal Service on supervision in the sphere of consumers protection and human well-being in St. Petersburg» («Regional Board of Rospotrebnadzor for St. Petersburg»)

62 Suvorovsky Prospect, 191124, Saint Petersburg, Russian Federa- Dmitry V. Gordo Head of the Administration tion http://r78.kadastr.ru/ E-mail: u78@kadastr.ru

Administration of the Federal Agency for Realty Cadastre (Rosnedvizhimost) for the City of Saint Petersburg

16 Voznesensky Prospect Office 101, 190000, Saint Petersburg, Yury A. Mikhailov Russian Federation Head of the Administration http://www.spb.rosoez.ru E-mail: info@rosoez.spb.ru

Territorial Administration of the Federal Agency for Special Economic Zones Management for the City of Saint Petersburg

76, Fontanka Embankment, St. Petersburg, 191180 http://www.r78.nalog.ru/ E-mail: u78.@r78.nalog.ru

Board of the Federal Tax Service for St. Petersburg (UFNS Russia for St. Petersburg)

7-9, Nevsky Ave., 191186, St. Petersburg, http://www.antimonopoly.spb.ru/ E-mail: to78@fas.gov.ru

Federal Anti-Trust Service Office in St. Petersburg and Leningrad Region (St. Petersburg UFAS)

193

45.

44.

43.

42.

41.

40.

39.

Felix V. Karmazinov, General Manager

Alexander N. Kuzyakin, General Manager

Alexandr P. Lashitsky Branch Director

11, Chistyakova Street, Pushkin, 196600, St. Petersburg http://www.lenteplosnab.ru E-mail: lenteplosnab@lenteplosnab.ru

ZAO (Closed Joint Stock Company) Lenteplosnab (ZAO LTS) Vladimir I. Khlebnikov, General Manager

60 Bolshoi Sampsonievsky Prospect, 194044, Saint Petersburg, Sergei V. Gustov Russian Federation Director General http://www.ptenergo.ru/ E-mail: office@ptenergo.ru

«Peterburgteploenergo» LLC

1 Artilleriyskaya Ulitsa Lit. «A», 191104, Saint Petersburg, Russian Konstantin V. Lobko Federation Director General http://www.peterburggaz.spb.ru Е-mail: peterburggaz@pgaz.spb.ru

«Petersburg - Gas» LLC

160 Leninsky Prospect, 196247, Saint Petersburg, Russian Federa- Maxim S. Voronkov tion Director General http://www.spbes.ru E-mail: office@spbes.ru

«Saint Petersburg Power Networks» OJSC

1 Marsovo Pole, 191186, Saint Petersburg, Russian Federation E-mail: office@tgc1.ru

«Nevsky» branch of «Territorial Generation Company №1» JSC ( «Nevsky TGK -1» Branch)

12, Malaya Morskaya Street, 190000, St. Petersburg http://www.gptek.spb.ru/ E-mail: info@gptek.spb.ru

State Unitary Enterprise Fuel and Energy Complex of St. Petersburg (GUP ТЕК)

42, Kavalergardskaya Street, 191015, St. Petersburg http://www.vodokanal.spb.ru E-mail: office@vodokanal.spb.ru

GUP St. Petersburg Vodokanal

476-57-81

334-50-60

335-59-44

375-76-86

595-32-45

312-58-66

326-52-52

465-99-69

334-50-60

335-59-44

375-62-26

595-32-46

314-53-54

274-13-61

194

51.

50.

49.

48.

47.

46.

Igor A. Filimonov, General Manager

Veronika V Tarnorutskaya, General Manager

Maxim S. Voronkov, General Manager

Vladislav G. Kuzminov, General Manager

26/28, Razezzhaya Str., 191002, St. Petersburg http://www.911spb.ru E-mail: info@911spb.ru Alexander G. Ivanov, Head of the Central Board

Central Board on the issues of civil defence and emergency situations in St. Petersburg (GO and TS St. Petersburg)

1 Marsovo Pole, 191186, St. Petersburg http://www.nw-upr.ru

ОАО «Severo-Zapadnaya Energeticheskaya Upravlyajushaya Compania»

9, Volodi Dubinina Street, Petrodvorets, 198510, St. Petersburg http://www.pes-spb.ru E-mail: office@pes-spb.ru

ОАО (Open Joint Stock Company) Petrodvorets Power Network (ОАО PES)

1 Konstitutsii Ploschad, 196247, Saint Petersburg, Russian Federa- Dmitry V. Ryabov, tion General Manager http://www.lenenergo.ru/ E-mail: office@lenenergo.ru

ОАО Lenenergo

16, Kommunarov Street, Sestroretsk, 197706, St. Petersburg E-Mail: hkenergo@hotmail.ru

ОАО Kurortenergo

3, Glinki Street, Pushkin, 196600, St. Petersburg http://www.powergrid. ru E-mail: info@powergrid.ru

ZAO Tsarskoselskaya Power Company (ZAO TSEK)

578-41-13

494-38-68

427-56-90

595-86-13

437-24-23

451-75-66

316-92-06

315-04-47

427-16-19

494-32-54

437-17-57

465-65-74

APPENDIX 3.

LIST OF DOCUMENTS REGULATING ACTIVITIES OF PUBLIC AGENCIES IN ST.PETERSBURG 1. Charter of Saint Petersburg dated 28.02.1998 (revised 13.12.2007).

2. On the list of the government executive agencies of St. Petersburg. The resolution of the Governor of St. Petersburg of 05.11.2003 №8 (modified as of 21.01.2008).

3. On the Government of St. Petersburg. Law of St. Petersburg of 30.10.2003 №642-87 (modified as of 06.07.2007).

4. On formation of the Government of St. Petersburg. The resolution of the Governor of St. Petersburg of 27.12.2006 №97-pg.

5. On distribution of responsibilities among Vice-Governors of St. Petersburg (modified as of 24.04.2008). The resolution of the Governor of St. Petersburg of 29.12.2003 №175.

6. Provisions on the Housing Committee (modified as of 26.02.2008). Adopted by the resolution of the St. Petersburg Government of 30.12.2003 №175.

7. Provisions on the Committee for City Improvement and Roads (modified as of 26.02.2008). Adopted by the resolution of the St. Petersburg Government of 24.02.2004 №222.

8. Provisions on the Committee for External Relations and Tourism (modified as of 26.02.2008). Adopted by the resolution of the St. Petersburg Government of 13.01.2004 №5.

9. Provisions on the Committee for State Control, Utilization and Protection of Historical and Cultural Landmarks (modified as of 26.02.2008). Adopted by the resolution of the St. Petersburg Government of 28.04.2004 №651.

10. Provisions on the Committee for Urban Planning and Architecture (modified as of 03.07.2007). Approved by Resolution of the Government of Saint Petersburg №1679 dated 19.10.2004.

11. Provisions on the Committee for Land Resources and Land Development of St. Petersburg (modified as of 25.12.2007). Approved by Resolution of the Government of Saint Petersburg №640 dated 05.06.2007.

12. Provisions on the Committee for Investments and Strategic Projects (modified as of 30.01.2008). Adopted by the resolution of the St. Petersburg Government of 16.12.2003. №89.

13. Provision on the Committee for Press and Cooperation with Mass Media (modified as of 26.02.2008). Adopted by the resolution of the St. Petersburg Government of 02.12.2003 №44.

14. Committee for Use of Natural Resources, Environment Protection and Environmental Safety (modified as of 26.02.2008). Adopted by the resolution of the St. Petersburg Government of 06.04.2004 №530.

15. The provisions on the Committee for Construction (modified as of 26.02.2008). Adopted by the resolution of the St. Petersburg Government of 28.04.2004 №650.

16. The provision on the Committee for Rate of Saint-Petersburg (modified as of 14.08.2007). Adopted by the resolution of the St. Petersburg Government of 13.09.2005 №1346.

17. Provisions on the Committee for Municipal Property Management of St. Petersburg (modified as of 01.04.2008). Adopted by the resolution of the St. Petersburg Government of 21.09.2004 №1589.

18. On establishing the public corporation «Property Fund of Saint-Petersburg» (modified as of 11.07.2005). The resolution of the Saint-Petersburg Government of 11.07.2005 №1002.

19. Provisions on the Committee for Energy and Engineering Support (modified as of 26.02.2008). Adopted by the resolution of the St. Petersburg Government of 18.05.2004 №757.

20. Provisions on the Committee for Finance of St. Petersburg (modified as of 20.02.2007). Adopted by the resolution of the St. Petersburg Government of 05.05.2004 №721.

21. Provisions on the Committee for Economic Development, Industrial Policy and Commerce (modified as of 22.04.2008). Adopted by the resolution of the St. Petersburg Government of 10.02.2004 №177.

22. General provision on Territorial body of Federal Registration Service for subject (subjects) of Russian Federation (modified as of 20.12.2007). Adopted by the resolution of the Department of Justice of Russian Federation of 03.12.2004 №183.

Under Order by Russian Federation President №724 dated 12.05.2008 «Issues of system and structure of federal executive bodies»: - functional authorities related to elaboration of a state policy and normative legal regulation in the sphere of state registration of rights to real estate and transactions therewith were delegated to the Russian Federation Ministry of Economic Development (Item 10); - Russian Federation Government Chairman was entrusted with making a motion (in accordance with the established

195

procedure) to have the Federal Registration Service abolished since 01.10.2008 with the authorities former delegated to it being transferred to the Federal Agency for State Property Management (Item 18).

23. Regulation on the Saint Petersburg Service for State Construction Supervision and Expertise Appraisal (modified as of 25.12.2007). Adopted by the resolution of the St. Petersburg Government of 26.12.2004 №1747.

24. Provisions on the administration of a district of St. Petersburg (modified as of 15.01.2008). Adopted by the resolution of the St. Petersburg Government of 23.12.2003 №128.

25. Provisions on the territorial body of the Federal Anti-Trust Policy (modified as of 13.02.2008). Adopted by the resolution of the Federal Anti-Trust Policy of Russian of 15.12.2006 №324.

26. Regulations on the Federal Agency for Realty Cadastre (revised 29.05.2008). Approved by Resolution of the Russian Federation Government №418 dated 19.08.2004.

27. Regulations on the Administration of the Federal Agency for Realty Cadastre for the City of Saint Petersburg.

Approved by Ordinance of the Federal Agency for Realty Cadastre for the City of Saint Petersburg №P/116 dated 28.12.2004.

28. Charter of Federal State Institution «Land Cadastre Chamber for the City of Saint Petersburg». Approved by Ordinance of the Federal Agency for Realty Cadastre for the City of Saint Petersburg №P/0069 dated 07.03.2006.

196

197

Atrium

Beliye Nochi

Geneum

Nevsky 38

Dom Turgeneva

Mikhailovsky

Evropeysky Dom

Admiralteysky

Mariinsky

Renaissance House

Admiralty House

Tavrichesky

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

Name

http://www.bcmgroup.ru http://www.bcmgroup.ru

272-71-08 for lease-related issues tel. 325-98-40 274-33-2 for lease-related issues tel. 325-98-40

http://www.bcmgroup.ru

6400

51, Shpalernaya Street, 193015, St. Petersburg

274-33-22 for lease-related issues 325-98-40/576-72 91

6700 2500

E-mail: desnapm@mail.ru

3, Konnogvardeysky Boulevard, 190000, St. Peters325-62-26/325-84-26 burg

17, 2-nd Sovetskaya Street, 193024, St. Petersburg

331-89-80/331-89-85

http://www.bcmgroup.ru

тел. 325-98-40 for lease-related issues 325-98-40/274-33-22

4500

6500

http://www.bcmgroup.ru

274-33-22 35, Bolshaya Morskaya Street, 190000, St. Petersfor lease-related issues burg 325-98-40/325-98-40 58, Moyka Embankment, 190000, St. Petersburg

11000

2300

700

4500

http://www.nevsky38.com E-mail: sharova@mcicb.ru

571-20-05/571-22-28 329-12-29

6200

10000

Office area, m2

1600

E-mail: info@nevsky25.com

Web-site, e-mail address

http://www.geneum.ru E-mail: info@geneum.ru

718-36-72/718-36-73

326-25-00/326-25-01

Tel/Fax

324-23-00/324-23-01

1, Artilleriyskaya Street, 191014, St. Petersburg

5, Marsovo Pole, 191186, St. Petersburg

38, Fontanka Embankment, 191025, St. Petersburg

38, Nevsky Prospect, 191011, St. Petersburg

10, Nevsky Prospect, 191186, St. Petersburg

23, Malaya Morskaya Street, 190000, St. Petersburg

25, Nevsky Prospect, 191186, St. Petersburg

Address

APPENDIX 4.

BUSINESS CENTRES OF ST. PETERSBURG: LOCATIONS AND CONTACT

198

3150

http://www.dobrolubov.ru E-mail: dobrolubov@peterlink.ru

Dobrolubov

City-Centre

Ofisny Dom at Lva 7, Lva Tolstogo Street, 197376, St. Petersburg Tolstogo, 7

TV-Polis

Elizavetinsky

Granat

Admiral

Neptun

Obvodny

Nobel (1 Phase)

Samsonievsky

Aquatoria

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

9000 15600

32, BolshoySamsonievsky Prospect, 191044, St. Pe324-24-34/324-27-63 tersburg 61, Vyborgskaya Embankment, 197342, St. Peters718-32-75/718-32-75 burg

http://www.aquatoria.ru E-mail: business@aquatoria.ru

5500

21, Pirogovskaya Embankment, 194044, St. Peters320-49-00/320-49-00 burg

5500 8600

http://www.neptun.spb.ru

93-a, Obvodny Kanal Embankment, 196084, St. Pe324-46-00/315-66-25 tersburg

9000

1700

6500

5500

4500

24-a, Obvodny Kanal Embankment, 193167, St. Pe346-75-00 tersburg

http://www.mcicb.ru E-mail: murtola@mcicb.ru

2 Mitrofanievskoye Shosse Building 1 Lit. K, 198095, тел./факс 441-37-53 St. Petersburg

E-mail: bl@bl.sp.ru

E-mail: tv-police@vmb-service.ru

E-mail: best@mtlgroup.ru

321-92-57/327-89-98

718-41-21

54/2 Maly Prospect of Vassilievsky Island, 199178, 324-72-01/324-72-01 St. Petersburg

14, 13th Line of Vassilievsky, 199034, St. Petersburg

6, Chapygina Street, 197022, St. Petersburg

380-16-26/380-16-26

18, Petrogradskaya Embankment, 197046, St. Peters332-01-32/332-01-38 burg

11, Dobrolubova Street, 198329, St. Petersburg

6000

3000

http://www.avgustmc.ru E-mail: info@granos.ru

in 8 Blokhin Ulitsa Lit. A, 197198, Saint Petersburg, 449-97-79 Russian Federation

Business Centre Blokhin Ulitsa

16.

http://www.citycentre.ru

3750

http://www.avgustmc.ru E-mail: info@granos.ru

Business Centre in Ya- 12 Yablochkov Ulitsa Lit. Ц, 197198, Saint Peters449-97-79 blochkov Ulitsa burg, Russian Federation.

15.

232-02-90/235-12-48

3100

5 A, Detskaya Street, 199106, St. Petersburg

320-66-40

6600

Respect

http://www.dkvn.spb.ru/gren/

14.

47, Vyborgskaya Embankment, 194044, St. Peters591-62-70/542-58-82 burg

Grenadersky

13.

199

Moskovsky

Sheremetiev

Sofiysky

Regent Hall

Kellermann Center

Stels

Veda-House

Austrian Centre

Senator

Renaissance Centre

Obukhov-Centre

Kantemirovsky

Brigantine

Alia Tempora

Gryphon-House

30.

31.

32.

33.

34.

35.

36.

37.

38.

39.

40.

41.

42.

43.

44.

324-9849

329-12-29/320-14-59

329-12-29/320-14-59

303-82-42/303-82-42

380-15-00/380-15-00

327-92-84/327-92-85

20A Petrogradskaya Naberezhnaya, 197046, Saint Pe777-77-99, 334-81-00 tersburg, Russian Federation

32/19, BorovayaStreet,191119, St. Petersburg

22,10-th Krasnoarmeyskaya Street, 198103, St. Pe326-63-63, 575-00-30/326-50-41 tersburg

23, Vladimirsky Prospect, 191002, St. Petersburg

17, Sofiyskaya Street, 192236, St. Petersburg

47, Stachek Prospect, 198097, St. Petersburg

212, Moskovsky Prospect, 196066, St. Petersburg

2-a, Kantemirovskaya Street, 197342, St. Petersburg

9000

7500

15000

19/21 Dostoevsky Ulitsa, 191002, Saint Petersburg, 718-36-25/718-36-72 Russian Federation

4500

7000

http://www.aliatempora.ru E-mail: info@aliatempora.ru

3-b Mayakovsky Ulitsa Lit «A», 191025, Saint Pe- 323-53-53 tersburg, Russian Federation

6000 5000

702-08-51/335-04-32

41 Rizhsky Prospect, 190020, Saint Petersburg, Rus644-43-98 sian Federation

3 Instrumentalnaya Ulitsa Lit. B, 197376, Saint Petersburg, Russian Federation

29500

http://www.teorema.info

60000

271 Obukhovskoi Oborony Prospect, 192012, Saint 633-30-28/633-30-28 Petersburg, Russian Federation

http://www.senator.spb.ru E-mail: arenda2@senator.spb.ru

http://www.abc-stp.spb.ru/ front.htm E-mail: office@ 4034 tilmankraus.spb.ru

http://www.veda-house.ru

http://www.stelsbc.ru

http://www.kellermann.ru E-mail: center@kellermann.ru

8000

332-13-88/3213011

6500

http://www.mcicb.ru E-mail: sale@mcicb.ru

6500

12000

E-mail: arenda@regent-hall.ru

8600

http://www.mcicb.ru E-mail: sale@mcicb.ru

5900

E-mail: m212@lleninetz.ru

E-mail: times@mtlgroup.ru

26A Shatelen Ulitsa, 194021, Saint Petersburg, Rus635-50-50/635-50-51 sian Federation

31, 18th Line of the Vasilevsky Island, 199178, Saint Petersburg, Russian Federation

Business 4 Orenburgskaya Ulitsa, 194044, Saint Petersburg, 541-86-87/ 294-64-52 Russian Federation

Times

29.

AUTHORS: Committee for Economic Development, Industrial Policy and Trade of St. Petersburg A.I. Sergeyev – Chairman of Committee S.A. Fiveisky – First Deputy President of the Committee A.Y. Egorova – Head of the Industrial Investment Office A. Y. Korotkov – Director of Saint Petersburg State Institution of «State Agency for Industrial Investment» A.A. Rogozhuk – 1st Grade Specialist of the Investment Policy Department of the Industrial Investment Administration Address: 16 Voznesenski pr., 190000, St. Petersburg, Russia Phone: (812) 315-51-52 Fax (812) 570-35-54 E-mail: info@cedipt.spb.ru International Centre for Economic and Social Research «Leontief Centre» I.A. Karelina – Director General, Ph.D. in Economics O.V. Rusetskaya – Head of the Investment Projects Planning Department, Ph.D. in Economics E.E. Kolchinskaya – Senior Researcher of the Investment Projects Planning Department, Ph.D. in Economics A.R. Batchaev – Senior Researcher of the Territorial Strategic Planning Department, Ph.D. in Economics N.B. Zhunda – Senior Researcher of the Territorial Strategic Planning Department, Ph.D. in Economics V.V. Rusetsky – Researcher of the Development Department E.N. Chetvergova – Head of the Publishing and Advertisement Department N.A. Lebedeva – Expert, Chief Executive Officer of the Non-Profit Partnership of «Association of specialists in territories’ economic development», Ph.D. in Economics Address: 25 7th Krasnoarmeiskaya Ulitsa, 190005, Saint Petersburg, Russia. Telephone: +7 (812) 314-41-19.

Fax: +7 (812) 570-38-14. E-mail: karelina@leontief.spb.su http://www.leontief.ru/ We also would like to take the opportunity and express gratitude to state authorities and agencies that rendered us valuable assistance in reviewing contents of the sections thereof: North-Western Customs Administration of the Federal Customs Service Administration of the Federal Registration Service for the City of Saint Petersburg and Leningrad Region Administration of the Federal Tax Service for the City of Saint Petersburg Territorial Administration of the Federal Agency for Management of Special Economic Zones for the City of Saint Petersburg Saint Petersburg Committee for Land Resources and Land Management Committee for Investment and Strategic Projects Saint Petersburg Tariff Committee City Property Management Committee Committee for Energy and Engineering Support Saint Petersburg Finance Committee Saint Petersburg State Institution «Investment Management» Saint Petersburg State Institution «State Agency for Industrial Investment» Saint Petersburg State Unitary Enterprise «City Administration for Real Property Appraisal and Inventory» «Saint Petersburg Property Fund» JSC Design and prepress by OOO «Piece of Cake» Printed at the print shop of OOO «Bill-Bo» Aggregate circulation: 2400 copies. Order № 293

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