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«    June 2017    »

Utilities development strategy: the highly-strung are asked not to read

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Utilities development strategy: the highly-strung are asked not to read

The criticized-by-experts Strategy of Utilities Development has been adopted. What is to follow?

The Government has adopted the Strategy of the Utilities Sphere Development until 2020, developed by the RF Ministry of Construction, Housing and Utilities.


“A very important document”

According to the Government’s assessments, the utilities sphere is one of the basic industries of the Russian economy, providing the population with services meeting vital needs, and industries with the necessary engineering infrastructure. The annual turnover in the utilities sphere surpasses 4.1 trn rubles, which makes up more than 5.7% of Russia’s GDP.

The Strategy includes the highlights of state policy in the utilities sphere. It is about the management of blocks of flats, major repairs to communal facilities in blocks of flats, displacement from failing housing stock, activities in the sphere of heat, of cold and hot water supply, sewage and waste utilization.  

The aim of the policy is to form an active and responsible attitude in owners Minstroy explained. Besides this, the Strategy is directed at the promotion of entrepreneurship, competitive environment enhancement and private investments attraction in the sphere of utilities, improvements to the system of relations between the blocks of flats’ owners, and managing and supplying organizations.  Promotion of entrepreneurship, competitive environment enhancement and private investments attraction in the sphere of utilities are the priorities. Another area of focus is industry’s energy efficiency increase.

“When we developed our priorities, we took into consideration people’s demands and what they first need when living in a house”, Prime Minister Dmitry Medvedev said, speaking at the “Urban development: housing and utilities” forum. “It is clear that water, light and heat are the primary things which must be delivered continuously. And the cost of the service in the bill must be extremely high, but must provide an appropriate rate of return – no more than that”, the Head of the Cabinet of Ministers resumed.

“The Strategy is a very important document. It will be a clear working plan for the Ministry in reforming the utilities sphere”, the Minister of Construction, Housing and Utilities, Mikhail Menn, commented on the adopted Strategy.  

So, during the coming four years Russia will develop its utilities sphere in line with this document, published on the official website of the RF Government. As follows from the explanatory notes, the quality of the Strategy’s implementation will be assessed according to target values formed with an account of the President’s and Government’s charges.  

Our journal has published comments on the document, giving the floor both to  its authors ()  and its opponents.

Today, the Strategy having been adopted, we again invite interested experts and laymen to speak about it.  


The Head of the All-Russia People’s Front for the “Public expertise” center on independent monitoring of the President’s orders fulfillment, Nickolai NICKOLAEV:

As regards the strategy of utilities development, the document is to determine clearly and definitively a step-by-step implementation of the key issues of state policy in the sphere of regulation and development of the industry. Nevertheless, it is in this aspect that the adopted Strategy is far from perfect. It is rather vague, though it was due to be a document with well-defined targets and their step-by-step implementation.  

For that purpose, the All-Russia People’s Front (ARPF) has organized wide-spread protests against the Strategy. Our experts have voiced constructive suggestions on the project’s amendment. They are all organized in an integrated document which was sent to the RF Ministry of Construction… in summer, 2015. Deputy Minister Andrei Chibis claimed that his department is ready to take all the ARPF’s remarks into consideration and even thanked us for them. However, only a small part of the expert community’s proposals was taken into account, and no significant changes were introduced into the existing text.  This resulted in the absence of a complex approach to the solution of the utilities sphere problems.  

The Strategy does not contain the answers to a number of problems of management of blocks of flats, major repairs, displacement from failing housing stock, or utilities services’ quality improvement. But it follows that the RF Ministry of Construction … has chosen the right way for utilities development.

I think that the Strategy in its present state will not allow us to solve the acute problems of the industry. To reach a target it is necessary to define it, and the adopted document does not formulate the result to be achieved. Neither is there an integral concept of the utilities sphere development.

The fact that the document does not contain clearly defined tasks, of course, erodes the Ministry’s responsibility for their implementation. For example, the adopted Strategy does not contain a mechanism for displacement from the housing stock recognized as failing after January 1st, 2012 in spite of the charge having been formulated in the RF President’s order № 600, dated 07.05.2012.  And how will this be fulfilled if the mechanism on how to do it in practice is not clear?

The chief drawback of the document is that it does not give the expected results of the utilities sphere development, so it is highly probable that by 2020 it will seriously lag behind the tasks determined by the President’s orders for the Ministry of Construction, Housing and Utilities.

These and a number of other gaps in the adopted document, from my standpoint, do not allow me to consider it a strategy. It is merely a plan of work for the coming 4 years.


Alexei MERKUSHEV, Chair of the “Utilities owners’ rights protection” public organization (Izhevsk, Republic of Udmurtia):

As the document is rather sizable, I daresay that many officials have not read it to the very end. It is quite clear only to its developers, who obtained all the information and processed it. The utilities sphere reformation has been ongoing for some years already, and many experts speak of it rather negatively – and neither do property owners feel good about it, and they are meant to play a leading role in the Strategy. From our point of view, it is that drawback which means that many issues voiced in the Strategy will fall short.

I think that the different levels of wealth, education and knowledge regarding the utilities sphere of the people living in one and the same block of flats will not allow the owners to manage their property well and efficiently.

Entrepreneurship development and an increase in competitiveness are being seriously weakened by the current crisis. In these conditions, we cannot speak about serious investments.  

Another obstacle for the industry’s development is an explicit twist of the existing legislation in favor of resource providers. The bigger part of the owners’ payments goes to them, and the remaining money is not enough for housing upgrading and proper maintenance.

All innovations are narrowed down to the growth of utility payments, leading to the elderly, the disabled and the poor suffer.

There are also a lot of questions concerning major repairs. Lending preferential credit is rather a good idea proposed by the regions. But with our level of bureaucracy and corruption anyone but the owners will win — officials, contractors, bankers. This is the reality of our life.

Objectively speaking, I may say that the Russian utilities sphere is still alive not because of but in spite of all the innovations being adopted. The industry will survive until there are professional and active owners. And even in the current difficult conditions it is necessary to work to create order in our houses.  


Life takes its course

So, for the coming four years Russia will develop its utilities sphere according to the document, published on the website of the RF Government. As it goes from the explanatory note to the adopted document, the quality of the Strategy’s implementation will be assessed in accordance with the target values of the President’s and the Government’s charges.  

But, as they say, a paper is a paper and life takes its course. Only one fact can we be sure of: the day after the Strategy had been adopted, the Moscow regional authorities suggested increasing the investment component in utilities tariffs.  The Minister of Utilities of the Moscow region, Evgeny Khromushin, told journalists about this brave measure.

“We have asked them to consider an increase of the investment share in the tariff’s component from 7% to 15%. Consequently within the same tariffs we suggest increasing the investment share”, Khromushin said. It is necessary to attract investments and to recompense them, he concluded.

“Hurrah! We are not merely citizens of Russia and residents of the Moscow region. We are utilities sphere investors. And from this year on we shall invest twice as much,” was Vladimir Alexandrov’s reaction to the innovation. “Utilities minister Khromushin decided thus. And so nicely explained! A specialist…”…Utilities sphere reformation is going on. The highly-strung are asked not to watch.



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