During the year of 2006 the growth rate in production volume in main kinds of economic activity kept stable positive dynamics.

Full implementation of the planned activities and other measures in implementation of priority national project "Development of Agricultural Sector" as well as the increase of budget allocated funds for the support of agriculture allowed increasing the volumes of agricultural production to the end of the year at rates exceeding average in Russia.

In the year of 2006 rate of inflation on consumer market were lower than previous year. The regional consumer market continued to actively develop due to increase of population income, increase of actual salary and pension, expansion of shop network of large trading companies, activation of consumer crediting.

Throughout the year there preserved positive tendencies on the labor market and in the employment sector: decrease of unemployment rate, increase of organizations' need in employees.

Positive tendencies in regional economics have positively influenced the development of foreign-economy and interregional connections.
In January-November 2006 a number of most important financial indicators preserved stable tendency to growth (balanced financial result, profit from paying business, volume of tax inpayments). The financial state of enterprises was strengthened, the number of organizations that have overdue arrears was decreased, and the state of accounts was improved.

At the same time the growth pace in construction work was decreased, there was a lack of funding in federal and regional target investment programmes. The maritime traffic and transshipment of dry cargo decreased. There was observed a stable tendency of passenger traffic decrease on all kinds of common transport.

There was preserved high unit weigh of unprofitable enterprises and problems with solvency in certain fields of activity that require reforming and having a need in significant investments (fuel-energy complex, agricultural and housing and communal services, construction works).

The regional dependence on world nonferrous labour market condition, economical and financial policy of holding companies that include budget-forming regional enterprises.

INDUSTRIAL PRODUCTION

The index of industrial production exceeded last year's by two and came to 102.2%, that made the following numbers in various kinds of activity:
mining operations - 101.4%, manufacturing activities - 102.5%, production and distribution of electricity, gas and water-102.5%.

In the year 2006 the extractive industry dispatched the goods of its own production, implemented work and services by their own efforts valued 29.5 milliard rubles (108.9% to the level of year 2005 in going price), in mining operations - 55.1 milliard rubles (121.4%), produced and supplied electricity, gas and water valued 23.5 milliard rubles (103.5%). A significant growth of volumes of manufacturing activities in going prices was mainly achieved due to favorable situation on the world nonferrous labour market.

Mining operations

In the year 2006 the regional enterprises have produced 10.1 million tons iron ore concentrate (102.7% compared to year 2005), 4.1 million tons apatite (100% P2O5) concentrate (97.8%).

Compared to year 2005 the production of brazilite, nepheline and loparite concentrates, nonmetalliferous construction materials.

Kovdor Ore-Dressing and Processing Enterprise increased output of apatite and brazilite concentrates due to successful implementation of investment project that resulted in launch new arrangement of raw material processing. The implemented modernization of the equipment allowed the dressing complex to simultaneously process crude ore and anthropogenic crude - the so-called "tailings" (previously the enterprise was able to work only with one kind of crude and when the crude was changed there were planned technological breaks made).

The enterprise of "Olkon" public corporation there continues the construction of deep mines. The terms of reference for conditions were developed, examining and calculation of resources for deep-mined output at the field named after 15th October Anniversary. It is planned to discuss and approve of documentation in the first quarter of 2007. In April or May there might start the construction of the second deep mine.

Last year the "Apatite" public corporation continued the upgrading of their production - replacement of worn-out equipment, modernization, and capital construction work. A significant event was the finalization of the reconstruction and launch of the third flotation block ANOF-2 in December 2006.

Manufacturing activities

The largest unit weigh in the volume of the factory shipments of manufacturing enterprises lied with metallurgical production and production of ready-made metalwork (71.3%), production of foodstuffs, including drinks (8.4%), means of transport and equipment (7.8%), chemical production (6.2%).

The volume of metallurgical production made 100.3% to the level of the year 2005. Increased was the output of nickel (102.3%), cobalt (104.9%), aluminum (102.9%), building metallurgic constructions and goods (in 1,5 times). In connection with termination of copper scrap production the production of refined copper decreased by 19%.

In 2006 a branch of "SUAL" public corporation called "KAZ-SUAL" produced record-breaking amount of aluminum raw product which exceeded the designed power of the plant on 30%. This became possible due to the introduction of new technologies into production process.

Volume of foodstuffs production, including drinks made 108.1 % compared to previous year. Increased was the volume of production of sausage (104.2%), prepared meat food (107.6%), whole-milk products (103.1%). Decreased was the output of meat and meat products (91.8%), flour (93.5%), bread and bakery (96.3%).

In order to create the conditions for further development of enterprises of coastal fishing complex there is the regional target programme titled "Development of Coastal Fish Processing in the Murmansk Region" for the years 2006-2008. This programme provides for partial reimbursement of costs for interest on credits, which the coastal fish processing companies receive in Russian lending agencies in 2006, from the regional budget. One of the most important conditions for such a subsidy is that an enterprise should spend it on reinforcement of circulating assets, procurement of raw and subsidiary materials. However, not all of the enterprises are ready to meet this condition depriving them of an opportunity to receive the subsidy. For the year of 2006, there were 20 million rubles planned for subsidies, but on 1 January 2007 there were only 10 million rubles received by fourteen fish processing enterprises.

Implementation of the above-mentioned programme allowed improving of the provision of fish-processing enterprises with raw materials and increase the output of marketable fish products, including tinned up to 50 thousand tons (119.7%).

Taking into consideration the grown activity of enterprises in attraction of credit sources for the procurement of raw materials it is supposed that next year the coastal fish-processing enterprises will use entirely 20 million rubles planned in the regional budget.

Growth of volumes in chemical production (104.1%) is reasoned by the increase of sulfuric acid output (101.9%), explosive substances (107.6%).
Regarding other kinds of activity the volume growth should be noted in pulp and paper production and printing industry (112.9%), production of other nonmetal products (107.4%), machinery and equipment (126.9%), electrical equipment (122.7%).

Decreased were the volumes of textile and clothing manufacture (80.1 %), processing of wood and production of wooden goods (80.8%).

Production and supplies of electricity, gas and water

Compared to the year 2005 the production of electricity increased on 4.2%, which is reasoned by the increase of supplies outside the region, production ofthermal power decreased by 1.5%.

Murmansk Region Government continues to develop public and private partnership. For several years already they have been making agreements on social and economical cooperation with largest industrial companies of the region. These agreements are aimed at consolidation of efforts to provide stable social and economical development of the region, improve northern standard of living, solve economical and social tasks, increase investment attractiveness of the region. Last year such agreements were made with the following public corporations: Kola Mining Company, Kovdor Ore Dressing Enterprise, Apatite, Olkon, SUAL holding company.

On 20 December 2006 the "Declaration of Intention to Invest the Development of Platinum and Metal Field called Fedorova tundra, located in Lovozero district of Murmansk Region" was approved. This declaration was presented by close corporation "Fedorovo Resources".

The project provides for the construction of ore-dressing enterprise in Lovozero district of the Murmansk Region. This ore-dressing enterprise is planned to have the productivity of 150 thousand tons concentrate per year. This concentrate will be delivered to Kola Mining Company for further processing.

It is also planned to build electric line and watch settlement, repair and build the motorway and dead-way railway track. It is planned to create up to 700 new working places. The cost of this project is about 17 milliard rubles. Already this year it is planned to develop the terms of reference for this project. The commercial production is planned to begin at the end of 2009.
DEVELOPMENT OF AGRICULTURAL SECTOR

In 2006 the estimated cost of agricultural production was 1963.2 million rubles, index of agricultural production -108.3% compared to 2005.
The pig population at agricultural enterprises of all types of property increased on 30.3%. The poultry population decreased by 7.7% and cattle population decreased by 3.3%.

On the basis of quantities there were produced 26.8 thousand tons milk (101.9% compared to previous year), 6.2 thousand tons meat (107.9%), 189.1 million eggs (127.9%), 1.2 thousand tons vegetables (91.9%).

Productivity of livestock and poultry in 2006 was as follows: milk yield per cow - 6576 kilogram milk or 138% compared to the level of 2005, productivity of laying hens - 287 eggs (97.3%).

In 2006 the agricultural producers received 307 million rubles for budget against 261.4 million rubles in 2005 (117.4%), including 288.9 million rubles against 244.5 million rubles form the regional budget. Among these funds the subsidies for livestock sector production were 194.1 million rubles (in 2005 -168.8 million rubles), culturing of vegetables on sheltered soil - 3.1 million rubles (3.3 million rubles).

In the framework of the implementation of priority national project "Development of Agricultural Sector" the list of objects entitled to subsidies from the federal budget includes 5 objects of 4 enterprises in the Murmansk Region (agricultural enterprise "Poliarnya Zvezda", public corporation "Industry" agricultural company, Murmansk Poultry Factory, "Prigorodnyj" pig breeding enterprise). These enterprises made credit agreements with banks in order to receive investment credits of 181.3 million rubles for up to 8 years for the reconstruction and modernization of stock-raising complexes (farms).

The works at "Industry" agricultural company were completed: the pigpen was reconstructed and upgraded which allowed increasing of pigs population on 30.3% and meat production on 7.4%.

The feeding, milking and manure removal at stock-raising farm of the enterprise were upgraded. This allowed increasing milk production on 8.3% and improving its quality.

The "Poliarnaya Zvezda" agricultural complex plans to use the credit from the national project on upgrading the milk farm. They have already procured the necessary equipment,which allows increasing of milk production on 3.9% (compared to 2005). In the nearest future they will receive new food dispensers, cooling tanks, new milking machines. As a result they will milk without loss, get milk of high quality and extend the operation life of mulch herd.

Murmansk Poultry Factory has reconstructed poultry-keeping complex for floor-level breeding of broilers and production of meat. The construction and assembly work at six poultry yards was finished. The technological equipment for 180 thousand broilers produced in Israel was received. As a result the production increased on 20.8% (compared to 2005).

"Prigorodnyj" pig-breeding enterprise is reconstructing working areas. Under the terms of financial leasing they received 100 pedigree pigs at the price of 1 million rubles) from Udmurtia which made 50% of the allocated money. Introduction of advanced technologies of keeping and feeding of pigs as well as the improvement of their genetic qualities allowed increasing meat production volumes on 15.3%.

However, in the sphere of material and technical provision and upgrading of transport, the system of federal leasing does not live up to peasants' expectations. Limited variety of machinery and its minimal choice at high prices cannot meet the needs of agricultural enterprises. The main efforts are made in seed-planting areas and their interests. The peculiarities of extreme North and the needs of agricultural enterprises situated beyond the Polar circle are not taken into consideration. Lack of necessary equipment did not allow "RosAgro-Leasing" public corporation to use the allocated funds to full extent.

In the framework of the implementation of one of the parts of national project "Encouragement of Development of Small-scale Enterprises of Agricultural Complex" in Murmansk Region in year 2006 there were only two agricultural consumers' cooperative societies created. This is connected with the prevalence of urban population in the region (91 %). There are not so many private and peasant farms.

Besides this, with the help of "Rosselkhozbank" public corporation there were 83 credit agreements made. Total sum of credits given for the development of small-scale agricultural enterprises is estimated as 15.2 million rubles: 12.2 million rubles to private farms, 3 million rubles to peasant and farming enterprises.

In the framework of another part of the national project "Provision of Accommodation to Young Specialists and their Families in the Countryside", there were 3 young families who improved their accommodation with total area of 162.6 square meters (1.3 million rubles). These families received 375 thousand rubles as subsidy.
FISHING AND FISH BREEDING

The turnover of fishing and fish breeding organizations in 2006 was 18.8 milliard rubles, which in going prices is 10.8% more than in 2005.
Index of industrial production in fishing was 101.1%.

The volume of industrial quota for catch of water biological resources in 2006 was 384.7 thousand tons, including coastal fishing quota of 31.5 thousand tons. The used percentage is 74% and 43.8% accordingly.

However, despite of incomplete quota use, in 2006 the catch of fish and other seafood increased compared to previous year on 4.7% and was 606 thousand tons. This was reached mainly due to larger volume of catch of resources in African regions which are not under quota system. Significantly increased (in 3.9 times) are the volumes of Kamchatka crab catch (in 2005 the catch was 2.9 thousand tons, in 2006 -11.6 thousand tons).

In order to avoid the delay of vessels and the disruption of fishery in 2006 there were timely issued the orders of the Federal Fishery Agency about the distribution of quotas for the catch of main water biological resources. This allowed enterprises to start working from 1 January 2007. In the last quarter of 2006 the meetings of international fishery committees took place, which resulted in approval of quota volumes for the catch in the Barents Sea, in the Faeroe Islands area, Morocco, Greenland area, countries of North-Eastern Atlantic Fishing Commission.

In 2006 the coastal fishing companies worked more efficiently and stable compared to 2005.

In 2006 there were 13.8 thousand tons water biological resources caught (in 2005 -11.6 thousand tone), including 12.2 thousand tons of valued fish. The growth of catch volume became possible after the extension in the beginning of 2006 of legal coastal fishing area to the border of Russian exclusive economic zone. Another reason was the timely issuing of orders by federal bodies in quota allotment for Murmansk region users and fishing enterprises in 2006.

Out of 26 enterprises only 16 have completely used the allotted quota. Moreover, in the last quarter of 2006 the enterprises, which previously requested insignificant volume, have dramatically increased the catch. So in accordance with annual results 44 enterprises used the allotted quota for over 80%.

In 2006 there continued the implementation of the regional target programme "Development of Coastal Fishing, Aquaculture and Fishing in Internal Water Bodies of Murmansk Region in 2004-2008". In accordance with programme results the coastal fishing enterprises used 122.5 million rubles for the production development of which41.5 million rubles were of their own input.

Commercial fish breeding (aquaculture) in Murmansk Region in 2006 is represented by the following enterprises:

- breeding of rainbow tout and hutchling: "Severnyj Forpost" Co Ltd, "Ba-rentseva Leasingovaya Kompaniya" Co Ltd (Barents Leasing Company), fish breeding area of "Kolenergo" public corporation;

- breeding of Atlantic salmon: "Gigante-Petchenga" Co Ltd;

- further breeding of crab (under agreement of scientific support): V.M. Gorbunov private businessman, "Severnyj proekt" Co Ltd.

In 2006 the volume of commercial breeding of hydrobionts in internal waters of Kola Peninsula was 416 tons of commercial grade fish and 530 thousand items of hutchling.

In the last three years there is a dramatic increase of a number of companies and businessman who would like to deal with commercial breeding of aquaculture objects in internal waters. So, in 2003 there were 8 enterprises of the kind and in 2006 there were already 16 enterprises. The majority of those are yet being forming. The reasons for such a tendency are the following:

- availability of aquaculture market - the demand of Atlantic salmon in Russian market is approximately 1580 thousand tons per year;

- aquaculture is less dependent than fishing on annual variations in volumes of catch of natural biological resources;

- lower production costs compared to traditional trade.

However, the region needs better scientific and technical base (scientific and research complex with training centre and monitoring of biological technique for hydrobionts breeding, etc), as well as production capacities for composition of brood stock, breeding of seeding and provision of farms with those.

In this connection the following suggestions were sent to the Russian Ministry of Agriculture:

- creation of scientific production centre for the development of aquaculture of the Northern catchment area and inclusion of its costs to the national project for agricultural sector development;

- inclusion of aquaculture regional enterprises ("Gigante-Petchenga" Co Ltd, "Nord Stream" Co Ltd, "Severnyj Forpost" Co Ltd) into the national project for agricultural sector development in order to subsidize two thirds of credit interest rates which aquaculture enterprises receive in banks. Such support will enable the enterprises to get credits for the production development on preferential terms.

- territory a hot water boilerwith power of 1 gigacalorie and 0.18 km of water-supply network.

Ongoing is the construction and reconstruction of social buildings in Murmansk (medical centre for young drug addicts, regional palace of culture, regional antituberculous clinic, maternity hospital), in Olenegorsk (school in Pro-toki settlement, maternity department at city central hospital), Kandalaksha (infectious diseases building).

The industrial objects for trade and catering services branch the following were brought into service: 12.8 thousand square meters of commercial establishments, public catering establishments with 768 seats, 3.4 thousand square meters for common goods storage. For the past period, there was also one liquefied gas filling station. There were oil capacities of 0.4 thousand square meters volume introduced. In communication sector, there were 1.5 thousand numbers in city automatic exchange brought into service. In Kola district there were 13.4 km motorways introduced.
CONSTRUCTION

In 2006 the enterprises and organizations carried out works and provided services in construction valued 9.3 milliard rubles (88.4% to the level of 2005). Decrease of pace in connected to the finalization of construction of the bridge across the Kola Bay in 2005 as well as the crease of the works in construction of long-term storehouse for nuclear wastes in Saida Bay.

There were 13.7 thousand square meters of accommodation brought into service, which is in 1.7 times more that in 2005.

The reconstruction of tourist hotel (71 guests) in Lovozero district and two camping sites (32 guests) in Kolskiy and Terskiy districts were completed. In the city of Murmansk cultural institutions for 410 guests have been reconstructed. There was a building for secondary vocational education brought into service on the territory of the region. After reconstruction work in Monchegorsk
CONSUMER MARKET

Growth paces in turnover of retail trade and catering services in 2006 were the highest compared to last seven years. This year the population has bought goods at the cost of over 53.1 milliard rubles that is on 16.4% higher than in 2005. The physical volume of retail trade turnover increase on 9% compared to 7.4% and 5% in 2005 and 2004 accordingly.

Growth pace of turnover of nonfoods have significantly exceeded growth pace of food turnover (113% compared to 105.6% last year), which stipulated for the decrease of provisions share in the structure of turnover in retail trade up to 53.2% compared to 53.8% in 2005.

The retail trade is getting more and more stationary character. In overall turnover volume of retail trade the ratio of sales in clothing, mixed and food markets is decreasing every year: in 2006 share of markets was 21.2% compared to 24% in 2005.

The physical volume of turnover in retail trade by trading organizations increased on 13% compared to 2005, on clothing, mixed and food markets decreased on 3.5%.

Turnover of public catering services in 2006 was at the cost of 3.1 milliard rubles, which is on 20.8% more than last year. The index of physical volume was 105.7% (in 2005-104.7%).

The growth of volumes of paid services provided to population. In 2006, the population was provided with paid services at the cost of over 27.8 milliard rubles, which is on 21.2% more than last year. Actual volumes of paid population services increased on 7.5% (in 2005- on 13.1 %).
In 2006 the physical volumes of the majority of investigated kinds of services exceeded the level of 2005, including the following: tourist services- in 1.7 times, physical culture and sport-24.5%, culture-15.6%, education-15.1%, personal services-13.2%. Volumes of housing, transportation, and veterinary services increased on 9-11 %.

The physical volumes of services of juridical character, hotel and medical services did not reach the level of the previous year with 92%, 94.7%, and 98.9% accordingly.
FOREIGN ECONOMIC ACTIVITY
Results of activities in January-September 2006

Foreign trade turnover in Murmansk Region for nine months of 2006 was 1885.2 million dollars (147.4% compared to same period of 2005).
Murmansk Region is an export-oriented region, external trade is surplus. The costs of exported supplies exceeded the cost of imported in 16 times.
The main trade partners are far abroad countries. The share of countries of Commonwealth of Independent States (CIS) in trade turnover is 2.5%.
In the period for January till September 2006 84.6% of external trade was with 10 countries - the Netherlands, China, Norway, the Republic of Korea, Sweden, Great Britain, Finland, USA, Taiwan and Belarus.

The export of goods made 1774.6 million dollars, which is 56.4% more than during nine months of 2005, including far abroad countries-1742.9 million dollars (57.4% growth), CIS countries- 31.7 million dollars (17.4% growth).

The main items of export commodity composition are raw materials.

The main export goods are nonferrous metals and goods made of them. Cost volume of metals export increased in 1.9 times and their share grew on 12.2 percent points and made 63.1% of overall export volume. In natural terms metal supplies increased on 9.3%, and contract prices on copper (175.3%), nickel (139.5%)and aluminium (137.3%) increased.

Significant place in export commodity composition is taken by apatite concentrate, fish and crustaceans. Cost value of apatite concentrate export decreased on 1.9%, export ratio compared to same period of 2005 decrease on 5 percent points to 8.3%. Export offish increased on 45.7%, but its share in overall export volume decreased on 1.6 percent points and was 21.2%.

On the basis of quantities export of fish and crustaceans increased (135.5%) as well as export of electricity (104.5%). Decreased were the supplies of apatite (85.8%) and iron ore (92.1 %) concentrates, while the export price for apatite concentrate increased (on 14.4%) and iron ore price decreased (on 43.1%).

Import of goods in January- September 2006 was 110.6 million dollars (76.5% to the same level of 2005), including from far abroad countries - 96 million dollars (73.6%), CIS countries -14.6 million dollars (103.5%).

The largest import ratio lies with machinery and equipment (36.2%), transport means (14.2%), chemical production (13.1%) and provisions (12.5%).
Export and import of international services were 121.9% and 126.3% accordingly compared to the level ofthe previous year.

Foreign Economic Contacts

In 2006 quite evident was the activation of foreign economic contacts with Norway and Finland. These are characterized by close collaboration of entrepreneurial circles in industrial sector. The collaboration engaged largest Norwegian companies like "Statoil", "Hydro", "Aker Kvaerner", "Reinertsen". There was established an Association of Oil Industry Suppliers "Murmanshelf'. The largest Norwegian bank DNB NOR opened its branch in Murmansk in 2006. Contacts with partners from Great Britain, Germany and China were developing dynamically.

In 2006 on the territory of the region, there have been 64 international projects implemented at overall cost external funding of 60 million euro. The largest projects were implemented in the spheres of radiation and nuclear safety. Actively used were the financial opportunities ofthe European Union programmes. Funding of 3.2 million euro was received in the framework of the European Union "Interreg Kolarctic" programme for the implementation of 14 projects in the Murmansk Region. Number of foreign economic projects increased. Their funding is provided in the framework of bilateral agreements and plans for cooperation with foreign partners.

The region established the system of international activities, which contribute to the development of foreign economic contacts - commercial and industrial exhibitions, economic presentations, business conferences and seminars. Only one international "SEVTEK-2006" exhibition, which took place last November, involved 59 foreign companies.

The work on awareness raising among regional organizations about the conditions and consequences of Russian entrance to WTO was continued.

Interregional contacts

The issues of development of economic, scientific, technical and social contacts ofthe Murmansk Region and other Russian regions are an important element for strengthening of regional economy. Interregional contacts of the Murmansk Region cover 60 Russian regions. There were 41 agreements on cooperation made between the Murmansk Region and other Russian regions.

INVESTMENTS

In 2006 the volume of investments to basic capital at the expense of all sources of funding was approximately 20.9 milliard rubles, thus increased on 2.5% compared to 2005.

In 2006 a transport branch of Kolskaya Mining and Smelting Company have procured container ship of ice class "Norilskiy Nikel" to work on the Northern shipping lane.

"Evroros" trade company is leading an intensive expansion of its trade squares. "Ramstore" hypermarket has been brought into service.
Under federal target investment programme with annual funding limit of 156.9 million rubles, of which 144.5 million rubles (92.1%) were used. The work was carried out on objects of transport and water industries, environment protection, education, and agriculture.

Under regional target investment programme with annual funding limit of 1182.3 million rubles, 1156.2 million rubles (97.8%) were used. Capital investments of 345.3 million rubles were used on objects of accommodation, healthcare, culture, municipal engineering. In 2006, the prepayment of 780 million rubles was made to "Reconstruction of Centralized Operational Units at Murmansk regional clinic Hospital named after P.A. Bayandin" for the procurement of medical and technological equipment in 2007.

In September 2006 the regional target programme "Development of Investment Activity in Murmansk Region" in 2007-2010.
The development of terms of reference for the creation of port special economicarea(stage l).
FOREIGN INVESTMENTS

In the period of January- September 2006, Murmansk region economy received 91.8 million US dollars of foreign investments, which is 3.9 times more than in January-September 2005.

In the structure of the received foreign investments, the shares of direct and other investments were 13.2% and 86.7% accordingly, share of portfolio investments (shares)-0.07%.

Direct investments for nine months of 2006 increased compared to corresponding period of 2005 in 2.2 times and were 12.1 million US dollars. The funding came mainly from investors from Estonia, Virgin Islands (Britain), Cyprus, Norway, and Germany.

The largest volume of direct investments (66.3%) was received as credits from foreign co-owners of enterprises.

Other investments in January-September 2006 achieved 79.6 million US dollars, which is 4.4 times more than the level of the corresponding period of the previous year. The main investor of long-term credits (94.2%) was Germany.
TRANSPORT

In 2006, volume of cargo carried by common transport enterprises was 34.3 million tons, which practically corresponds to the level of 2005 (99.4%).
At this volume of cargo carried by rail transport was a bit larger than previous year (101 %) due to increase of iron ore concentrate carrying.

Decrease of traffic volume by shipping (95% to the level of 2005) is first of all connected with the fact that using vessels on time-charter conditions, when the cargo is not considered, is more profitable. There were come changes made in shipping of cargo: in connection with the fact shipping by coasting grew on 8%, their share reached 17.6% in total volume (15.9% in 2005), decrease of cargo shipping to foreign countries on 4.3% led to the decrease of their unit weigh to 82.4% (84% in 2005).

Last yearthe seaports of Murmansk region transshipped 18.2 million tons cargo, which is 9.7% more than last year. In total in 2006, there were exported 9 million tons oil and oil products (111 % to the level of 2005). At the same time the volumes of transshipping of dry cargo decreased (95% to the level of 2005).

In the sphere of passenger transportation, in 2006 there appeared a tendency of decrease in passenger turnover on all kinds of common transport compared to previous year. There was a slight decrease on bus transport (93.4% compared to 2005) due to liquidation of unprofitable bus routes and decrease of runs.
TOURISM

In 2006 the volume of investments to basic capital at the expense of all sources of funding was approximately 20.9 milliard rubles, thus increased on 2.5% compared to 2005.

In 2006 a transport branch of Kolskaya Mining and Smelting Company have procured container ship of ice class "Norilskiy Nikel" to work on the Northern shipping lane.

"Evroros" trade company is leading an intensive expansion of its trade squares. "Ramstore" hypermarket has been brought into service.
Under federal target investment programme with annual funding limit of 156.9 million rubles, of which 144.5 million rubles (92.1%) were used. The work was carried out on objects of transport and water industries, environment protection, education, and agriculture.

Under regional target investment programme with annual funding limit of 1182.3 million rubles, 1156.2 million rubles (97.8%) were used. Capital investments of 345.3 million rubles were used on objects of accommodation, healthcare, culture, municipal engineering. In 2006, the prepayment of 780 million rubles was made to "Reconstruction of Centralized Operational Units at Murmansk regional clinic Hospital named after P.A. Bayandin" for the procurement of medical and technological equipment in 2007.

In September 2006 the regional target programme "Development of Investment Activity in Murmansk Region" in 2007-2010.

The development of terms of reference for the creation of port special economicarea(stagel).

In 2006 the regional target programme "Development of Tourism in the Murmansk Region in 2006-2008" started its implementation. Due to programme approach tourism started to develop municipalities of the region: tourist information centre was opened in Kola, tourist centre in Kirovsk is going to be opened. In 2007, tourist information centers will appear in Umba and Kandalaksha.

In order to develop the image of the Murmansk Region as of the region, favorable for tourism development, and improvement of investment attraction to tourism, there was an advertising tour organized for the representatives of British largest tour operators. The Murmansk region was presented in Worldwide

Tourism Exhibition "WTM-2006" which took place in London (Great Britain).

Fishing tourism is becoming increasingly popular. There already are over 30 fishing camps, which receive tourists in the summertime from more than 20 countries. In 2006 there took place a scientific and practical conference "Fishing Tourism on Kola Peninsula - Experiences and Prospects", which summarized the experiences of fishing tourism development, in accordance with the specialists' opinion fishing tourism in the Murmansk region is one of the best in Russia.

Ongoing is the work in the framework of the Russian-Finnish project on development of tourism; cross border cooperation and development of joint tourism products "LapKola2" and European Union project "Development of Tourism in North-Western Russia" (TACIS).

Booklets "Fishing on Kola Peninsula" and "Tourism. Murmansk Region" were published in Russian and English. Murmansk Region guidebook is ready for publishing. The following projects were implemented: "The Holy Places of Terskiy coast", "Pomor Heritage", "Grandfather Frost in Lapland Nature Reserve".
FINANCIAL RESULTS OF ACTIVITY OF LARGE AND MID-SCALE ORGANIZATIONS IN JANUARY-NOVEMBER 2006

In the period of January-November 2006 large and mid-scale regional organizations (with the exception of organizations dealing with agriculture, banks, insurance companies and budget organizations received the profit of 25.4 milliard rubles (144.6% compared to relevant period of 2005) and 3.1 milliard rubles loss (growth in 1.9 times).

Summarized financial result of the regional organizations was 22.3 milliard rubles, which is on 40.3% more compared to relevant period of the previous year (increase on 6.4 milliard rubles).

The most significant growth of summarized financial results compared to indicators of 2005 were achieved in metallurgical industry and production of readymade metal goods, fishery and fish breeding, production of electrical equipment, wholesale and retail trade.

The profit of enterprises for metallurgy and production of metal goods increased in 1.9 times (on 7.3 milliard rubles) and was 15.5 milliard rubles. Such a significant acceleration of profit volume is reasoned by growth of prices for nonferrous metals throughout the year as well as the increase of the output of nickel and cobalt. Due to high acceleration of profit the share of enterprises of metallurgy and production of metal goods in the structure of summarized financial result increased from 52.4% up to 69.6%.

Summarized profit of enterprises in mining operations was 5.3 milliard rubles with the acceleration compared to previous period of 2005 of 9.3% or 453 million rubles.

The summarized financial results of fishery and fish breeding enterprises increased in 1.4 times (1.1 milliard rubles against 788 million rubles), which was promoted by growth of fish and seafood catch and the increase of sales of expensive seafood.

As a result of significant growth of production volumes (128.2%) the summarized profit of the enterprises for production of electrical equipment increased in 6.7 times and was estimates as 31.5 million rubles against 4.7 million last year.

In conditions of the growth of retail trade turnover, the summarized financial result of enterprises of wholesale and retail trade increased and reached 573.5 million rubles against 402 million rubles for the relevant period last year.

The enterprises of the following kinds of activity completed the reporting period with profit against loss in January-November 2005:
- Production of food - because of production of coastal fish processing;
- Transfer and distribution of gaseous fuel - because of compensation of increase of price for gas on internal market and growth of price for population;
- Construction - due to activity of organization implementing an international agreement in entombment of nuclear reactors from submarines, financed by an international partner.

In other kinds of economic activity there took place either decrease or worsening of summarized financial result.

The summarized profit of transport enterprises decreased in 2.4 times, 739 million rubles against 1.76 milliard rubles last year. Worsening of financial result tool place in all kinds of transport, but especially significant was the decrease with water transport enterprises.

Worsening of financial result of seaports activities is mainly reasoned by severe competitive conditions and suppression of growth of cargo carrying prices. Enterprises of land transport bear losses because of the growth of prices forfuel, which is not compensated by fares.

Stable detrimental are the production, transfer and distribution of electricity, steam and water: loss increased in 5 times to 1.4 milliard rubles during the reporting period against 274 million rubles loss last year. The growth of price for oil products exceeds the growth of prices for the services of heat and power engineering sector, which in accordance with the acting legislation cannot be revised. In order to avoid expensive fuel there was a decision made to build coal boilers in several regional municipalities in cooperation with Kolskaya Mining and Smelting Company.

The sector of ineffectively working enterprises in quite significant: share of unprofitable enterprises was 34.6% against 31.8% in January-November 2005. This indicator remains high for production, transfer and distribution of heat energy (73.7% against 57.9% last year), land transport (85.7% against 57.1 %), construction (56.4% against41 %).
BUDGET EXECUTION

As at 1 December 2006 the consolidate budget of Murmansk Region (without internal turnovers, including closed administrative territories) received income of 26.5 milliard rubles, which is 25% (5.5 milliard rubles) more than in 2005.

As to expenditure, the budget was executed in the sum of 23.2 milliard rubles with acceleration on 17% (3.6 milliard rubles) against last year's level.
With respect to annual allocations, there were 98.7% profits received and 79.9% expenditures executed.

The result of the consolidate budget execution is the surplus of 3.3 milliard rubles or 13.7% compared to profit excluding financial support of higher standing budgets (in 2005 - surplus of 1.2 milliard rubles or 6.6%).

There was a surplus of 1.6 milliard rubles in the execution of regional budget and 1.7 milliard rubles of surplus in local budgets. The surpluses are reasoned by significant increase of income tax from Kolskaya Mining and Smelting Company.

Tax and none-tax incomes of consolidate regional budget were received with acceleration of 6.3 milliard rubles (143%), grants from federal budget with decrease on 0.8 milliard rubles (87.3%). At this, the regional budget received on 289 million rubles more from federal level and budgets of closed administrative units received on 1094 million rubles less (on 28%).

The share of four budget-forming enterprises (public corporation "Kolskaya Mining and Smelting Company", public corporation "Kovdorskiy Ore Dressing Enterprise", public corporation "Apatite", public corporation "Olkon") in tax and non-tax incomes of regional consolidate budget was 32.1 %.

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