White Sun of the Desert

A colleague forwarded this to me, sourced from here.  It describes the procedures, time, and cost to build a warehouse in Russia.

Data as of: January 2008
Estimated Warehouse Value: RUB 26,120,000
City: Moscow

54 different bureaucratic hurdles to overcome in order to build a warehouse.  And it should be noted that the costs listed are the official costs only, which the authority in question can legally charge.  Often before an authority will consider an application, the submitted documents must be checked and approved by a third party private company which is the only one the authority will recognise, and hence can charge what it likes.  I have seen these companies charge $30k for “pre-approving” what the governmental authority charges $200 for, and it is not difficult to understand where a big chunk of this additional fee ends up.  With so many authorities to satisfy the scope for corruption is enormous, and many of these approvals bodies have become industries in themselves offering lucrative careers involving little more than glossing over documents at ones leisure whilst accepting hefty backhanders either directly or via a third party company, which may or may not be owned by your brother.

This list should give you some idea of how difficult it is to build an LNG facility or an offshore platform in Russia.  Construction schedules in Russia are unlike anything you would experience in the west, which is made all the more difficult by the 4-month summer construction window (where groundworks are concerned) which exists in much of Russia including Sakhalin.  For the last part of 2008 I was involved with the construction of a two-storey office building, the type of which would be thrown up in six or eight weeks in the UK.  It took our Russian contractor over two years to complete, and still the building is not registered.  A good chunk of this time was spent sitting about waiting for various authorities to review documents, turn up for inspections, and stamp bits of paper.

If anyone wants to know why Russia remains poor despite a well educated population possessing impressive technical skills, looking at how long it takes to complete a simple construction project and what is involved is a good place to start looking.

Some of my long-time readers will remember the tale of my first ever visit to Russia back in February 2004, which involved a 3-day train journey from Moscow to Nizhnekamsk (or a town nearby, at least) in the Republic of Tatarstan.  On my return I published a lengthy account of my trip which remained online for a number of years before I thought it wise to take it down, a decision I have no intention of reversing.

Anyway, I recall being on the train crossing some godforsaken snowfield the size of Wales and a scruffy policeman coming into my carriage demanding to see my papers.  After handing them back to me he asked to look through my bags, and I remember him making me empty all my clothes onto the seat and explain the charger for my Canon digital camera.  Once I’d been told I could pack my stuff away, I asked him what he was looking for.  “Drugs, guns, bombs” came the answer.  I looked out the window where I couldn’t even see one of the collection of tumbledown wooden shacks which pass for Russian villages.  We hadn’t seen anything concrete in over an hour.  I asked him how long he had been doing his job, and he replied a number of years.  I asked him how many foreign tourists he had caught on a train in the middle of absolutely nowhere carrying drugs, guns, or bombs in their luggage.  Answer: none.

A rich seam of ludicrously pointless security checks runs right through Russia from the Baltic Sea to the Kamchatka Peninsular, and it does not bypass Sakhalin Island on its way.  I am currently working on a small building project of negligible significance to anyone outside the company who wants it done.  The location of the construction is on a flat piece of sand a couple of kilometres inland from Sakhalin’s east coast way up in the north of the island.  It is about as remote as remote can be.  It is a couple of hours by Landcruiser from the nearest railway station in Nogliki.  The nearest settlement of any kind is a half-hour drive away.  There is no structure or installation for miles and miles which does not form part of the facility which our construction is adding to.  A friend who worked there in 2005 said it was the closest he came to working on the moon.  I spent yesterday on the site, and it is as remote and desolate as anything Kuwait had to offer. 

The first part of the works involves carrying out a topographical survey, which is effectively a survey showing what hills, bumps, and structures are around the worksite.  It takes about 1-2 days to complete.  Before we can begin construction we must get approval from the authorities: fair enough.  The authorities insist we carry out a survey beforehand: also fair enough.  The authorities say the surveyors must be licensed: still fair enough.  The authorities demand that the results of the survey cannot be released to any foreign company without their first having been sent to the FSB for examination, which takes 30 days: WTF?!!  Yes, that’s right: no results of a survey of (from what I can gather) any kind taking place in Russia can be used by a foreign company without FSB approval, even if the survey is recording a few foot-high lumps of sand at the arse-end of Sakhalin Island a helicopter ride from the nearest sizeable town.

I suspect were I to ask the Sakhalin FSB chief how many nefarious plots hatched by foreign companies against Russian national interests had been foiled by the FSB taking a month to review construction survey results, the answer would be roughly similar, nay exactly the same, as the one my policeman friend gave me on the train to Nizhnekamsk.  Security, like so much else, rarely makes sense in Russia.