State support for residential-sector energy efficiency in 2010-2011

Housing and communal sector is one of the biggest consumers in Ukraine, which takes nearly 36% of fuel energy, what is 28 b. m3 of natural gas per year. 20 b. m3 of it (25% of produced energy) is spent on heating and water heating. Compare: metallurgy consumes nearly 13%, chemical industry - 11% of the total amount of gas consumed. Generally housing and communal service of Ukraine consumes around 70 million ton of conditional fuel, what is nearly third part of total fuel consumption in Ukraine.

  • Houses of so-called first mass series (60-70-years of construction) require the biggest attention for today. Their quantity is 25573 (10% of multi-apartment housing fund), and total area - about 72 million square meters (14.4%).
  • According to the Ministry of regional development of Ukraine, houses of “mass construction” have poor shielding properties of enclosing constructions, what causes around 40% of thermal energy loss.
  • A potential of energy saving in housing and communal services is estimated by experts in 45-45%, what gives hope on reduction of fuel consumption by housing services in 2 - 2.2 times.

How funds are allocated from the state budget

The Verkhovna Rada of Ukraine adopts the Law on the National targeted program (we are interested in the National program on reforming and developing housing and communal services on 2009-2014 (hereinafter – Program)). The program includes actions and planned funding for all term of Program duration in years. In the Law "On the State Budget of Ukraine" the Verkhovna Rada of Ukraine approved the amount of expenditure on Program or its separate parts. If needed, the Verkhovna Rada works out in detail or generalize a paragraph from a budget. The Cabinet of Ministers of Ukraine by its resolution and within the budget lines allocates funds between budget programs and in regions of Ukraine. It also determines conditions of receiving funds or delegates its authority on allocation to main manager on fund allocation – the respective ministry. The respective Ministry (by the Program – the Ministry of regional development) announces a competition of the projects, determines the membership of tender committee and principles of project selection. A list of projects selected for the state financing is approved by the resolution of the Ministry according to the results of competition. The amount of financing should coincide with approved by CMU distribution according to regional and program principles. At the end of the financial year is passed an annual report on the implementation budget program by the results of actually spent funds.

What was planned to be financed within the National program on reforming and developing housing and communal services on 2009-2014

For securing reform in housing sphere by the Program, was provided financing of following actions and tasks:

1. regulatory, scientific and technical support of Program implementation tasks;

2. technical re-equipment of Housing and communal services, reducing specific indicators of energy consumption for production (provision) of housing services through:

2.1 stimulating realization of investment projects on reconstruction and major repairs of residential buildings with application of energy efficient technologies and equipment; supplying housing fund with equipment for accounting and control of water and heat consumption for a whole building;

2.2. Assistance in elaboration and realization of pilot (innovative) projects in housing and communal services, aimed at improvement of the system of housing management, reducing technology expenses and energy loss, introducing progressing technologies;

2.3. providing state support for realization of investment projects on technical re-equipping and major repairs of residential houses, with newly created of already functioning Condominiums;

3. securing wide public support of state reforming and developing housing and communal services;

4. creating system of effective management of building and enterprises of housing and communal services through training officials of local governments and employees of communal enterprises on issues connected to the reforming and development of housing and communal services.    

Lets focus on the task 2 – how the government stimulated energy efficiency in 2010 and 2011 (we are interested in multi-apartment buildings).

Condominiums in energy efficiency and financial requirements of the Program to projects

Apartment owners are co-owners of common property belonging to multi-apartment building. Co-owners ought to maintain their property and are interested in creation of comfort living conditions and reasonable prices for housing and communal services.  Condominium is a legitimate mechanism for decision making in conditions of common property in Ukraine.

The state is interested in energy security and should participate financing of the house as a former owner. Therefore, a political decision was taken to direct budget costs on buildings in which owners united for preservation of housing and are ready to deposit own funds in energy efficiency. The Program provided that realization of projects will be realized on co-financing conditions. In particular, in 2009-2010 owners of buildings’ premises had to gather not less than 10% of costs, allocated from state budget, and in 2011-2014 – not less than 20% of funds allocated from state budget.

State financing of energy efficiency in housing in 2010

The Verkhovna Rada of Ukraine by the Law "On the State Budget of Ukraine" of 27.04.2010 No. 2154-VI provided financing on realization of the National program on reforming and developing housing and communal services and National program "Drinking Water of Ukraine" in amount of UAH 500 million.

The Cabinet of Ministers of Ukraine approved distribution of expenses by Resolution No.461 of 16.06.2010 (which was amended in 18 August 2010) in the following areas:

  • repayment of budgetary accounts payable for executed works which appeared in 2007-2009 by the budget programs;
  • reconstruction and major repairs of residential buildings with application of energy efficient technologies and equipment (repair or replacement of elevators that are in disrepair);
  • reconstruction of the centralized water supply and drainage systems using energy saving equipment and technologies;
  • energy efficiency, development and reconstruction of heating systems;
  • public welfare of regional centers and small cities (re-equipping of street lighting network);
  • supply housing fund with equipment for accounting and control of water and heat consumption for a whole building;
  • support realization of investment projects: on technical re-equipping and major repairs of residential houses (put into service before 1 January 1989) with newly-created or already functioning Condominiums;
  • on technical re-equipping of residential houses with newly-created or already functioning Condominiums;
  • on technical re-equipping and major repairs of elevators in residential houses with newly-created or already functioning Condominiums;
  • securing wide public support of state reforming and developing housing and communal services;
  • assistance in realization of pilot projects in housing and communal services, aimed at improvement of the system of housing management, reducing specific indicators of energy consumption, introducing alternative energy sources and fuels;
  • stimulating realization of investment projects by certain decisions of the Cabinet of Ministers of Ukraine.

Thus, 190 million 304 thousand UAH was allocated for housing sector. From which – on houses, with created or planned for creation Condominiums – 105 million 742 thousand UAH on major repair of houses, and 40 million 909 thousand UAH on repairing of elevators, in total, 146 million 651 thousand UAH. By the Resolution of the Cabinet of Ministers these fund were divided by a territorial principle.

UAH 20 million were given for “improvement of the system of housing management, reducing specific indicators of energy consumption, introducing alternative energy sources and fuels”. Theoretically, these costs could be used for realization of energy efficiency projects in multi-apartment buildings, however only one project is realized in housing fund. 3 million 239 thousand UAH was allocated for reconstruction of one house adding a mansard floor on conditions of co-financing. Other funds were put into energy efficiency programs, but not in housing sector.

The Ministry of housing and communal services was a major fund manager, and state administrations, Kyiv and Sevastopol City state administration, The Council of Ministers of AR Crimea. Recipients – state or communal enterprises-contractors.

Virtually, in 2010 with state support in buildings with Condominiums were repaired 384 elevators on the amount of 34 million 883 thousand UAH, 298 345 m2 of roofs on the amount of 40 million 500 thousand UAH, internal-building system with total length of 41,703 linear meters in the amount of 4 million 584 thousand UAH, 249 317 m2 of major repairs on the amount of 42 million 360 thousand UAH.

In multi-apartment residential houses without Condominiums in 2010 were repaired 506 elevators on the amount of 49 million 17 thousand UAH, including 34 million 103 thousand UAH with the state support. The average expense on repairing one elevator is around 90 thousand UAH, an average expense on replacement of one elevator – 235 thousand UAH.

In 2010 from a state budget were financed projects in housing fund generally costing 155 million 210 thousand UAH.

State financing of energy efficiency in housing in 2011

The Law of Ukraine "On the State Budget of Ukraine" provided only 100 million UAH on the project “Realization of pilot projects in housing and communal services”. The procedure of using these funds was approved by the Resolution of CVU No.160 of 28.02.11. The same as in 2010, these costs were given for “improvement of the system of housing management, reducing specific indicators of energy consumption, introducing alternative energy sources and fuels”.

Financing of pilot projects is realized on conditions of co-financing at the expense of local budgets and/or other sources. Co-owners had to gather not less than 20%.

Selection of projects was made by the Ministry of regional development on the grounds of applications, submitted by regional state administrations. By the results of tender committee meeting by the decree of the Ministry of regional development No.70 of 07.06.11 was approved the respective list. Funds were partly given to objects of non-residential area same as in the last year, but predominantly to projects in multi-apartment buildings with Condominiums.

In 2011, with the state support of multi-apartment residential buildings was planned:

  • To repair 75 elevators costing 9 million 922 thousand UAH, (including 8 million 388 thousand UAH from the state budget);
  • To repair 75 roofs in fifteen houses costing 4 million 522 thousand UAH, (including 3 million 574 thousand UAH from the state budget);
  • To modernize internal-building systems in twelve houses costing 5 million 366 thousand UAH (including 4 million 346 thousand UAH from the state budget);
  • To conduct major repairs in nineteen houses costing 10 million eighty two thousand UAH (including 8 million 679 thousand UAH from the state budget);
  • To modernize five houses costing 14 million 500 thousand UAH (including 8 million 864 thousand UAH from the state budget);

The Civil Network OPORA makes “pilot” visits of objects financed from the state budget for conducting rapid surveys of co-owners. Read the next article to know about the realization of projects in multi-apartment buildings financed from the state budget.

Infographics – Yuliia Fedorovych

The publication is prepared within project of the Civil Network OPORA "Housing reform in Ukraine: viewpoint of public", realized with the assistance of the program "Civil Society and Appropriate Administration" of the Renaissance international foundation.