Chapter 3.3. Housing utility services
Housing utility industry in Russia is a multi-branch economic complex which
includes about 20 sub-branches and more than 30 types of activities. Activities of
enterprises of all forms of property in the market of housing utility services directly or
indirectly are connected with satisfying requirements of the population, protection
rights and health of the population safeguarding security of the state.
Conducted municipalisation of the housing utility services objects, changes
in the legislation with regards to differentiation of the authorities between the
levels of power, administration in the housing utility sphere, increased demands
for the quality and efficient functioning of the life-support system as an object of
management, represented by the engineering infrastructure of the cities and human
settlements led to significant changes in their structure. The total list of works and
services is determined by the Housing Utility Works and Services Classificatory passed
by the Gosstroy of Russia in 2000.
In a very general meaning the housing utility services are the services
provided to maintain and restore proper technical and sanitation and hygienic
condition of the buildings, structures, equipment, communications and objects of
the housing utility purpose, removing domestic waste and supply with electric
power, potable water, gas, heating energy and hot water.
The objects of housing utility services are understood the objects of external
improvement of the cities and human settlements territories (green plantations, urban
roads and elements of their improvement, pedestrian and bicycle sideways, objects of
the engineering protection of the territory, street lights, objects of sanitation and
cleaning, etc). Also improvement of grounds, parking lots, plots of land, structures
and constructions of different materials in the adjacent to buildings territory.
(Housing utility services. Technical terms are determined by the Gosstandart of
Russia. Moscow 2002).
2
Today the crisis condition of the Housing Utility Industry is well known, and
mostly conditioned by its high cost, lacking of economic incentives to cut down
expenses for production housing utility services, undeveloped competitive
environment and, as a sequence high level of wear and tear of the fixed assets,
inefficient work of the enterprises, huge losses of energy, water and other resources.
The key problems of the housing utility infrastructure development which
require urgent solution are the following:
Securing financial stability of the housing utility services enterprises;
Forming market mechanisms for operation housing utility complex;
Creating conditions for attraction investments in the housing utility complex,
ensuring sustainable operation of the housing utility system of life support;.
Attracting people for self-organisation in any form for housing stock
administration..
The medium term Programme of the Government of the Russian Federation
for 2003-2005 suggests to undertake the following to address these problems:
 To conduct inventory and restructuring of the housing utility enterprises
indebtedness;
 Secure in full volume financing of current expenses of the housing utility
enterprises connected with providing services to the consumers by using all
sorts of financing;
 De-monopolise and stimulate development of competition in the field of
provision housing utility services and housing stock administration, mainly by
attracting small businesses for maintenance. In the municipal sector functions
of the housing stock owners should be separated from the function of
administration and maintenance of this housing stock. To switch to selection of
contractors - organisations for repair and maintenance, as well as
administration of the municipal housing stock on mostly competitive basis;
 To shift to the system of concluding agreements between the bodies of local
self-governments and housing utility enterprises for municipal property
administration providing for sustainable development of the communal
3
infrastructure, increase of the quality and reliability of the provided services to
the consumers;
 Improve the system of agreement interrelations in the housing utility complex;;
 To shift from direct donating housing utility producers to the system of
personalised allowances for housing and utility services by using the system of
personalised social accounts;
 To finalise experiment on processing the system of personalised social
accounts, and taking into account the results of the experiment to introduce the
system of personalised system of social accounts in all subjects of the Russian
Federation;
 Upgrade the tariffs for housing utility services provided for the population and
other consumers to the economically justified level;
 To render support for creation and operation partnerships of housing owners
and other forms of citizens self-organisation in the housing sphere, including
by transferring them budget subsidies replacing donations to housing utility
enterprises;
 To differentiate authority between different levels of power in the questions of
regulating payments for shelter and housing utility services, regulate granting
allowances and improve mechanisms of social protection of the population
with regards to payment for these services based on adoption changes and
amendments to the Law of the Russian Federation “On the Fundamentals of
the Federal Housing Policy”;
 To improve the system and principles of tariff regulation for the utility
producers – natural local monopolies, ensure co-ordination their tariffs with
those for electric power, gas and also with the budget process. To create
incentives for cutting down production costs at the enterprises of housing
utility sector, connected with provision housing utility services;
 Elaborate mechanisms of governmental support and attraction borrowed funds
for communal infrastructure modernisation and development based on modern
4
technologies and materials. To introduce new construction standards for
energy saving and secure control for their observance;
 To create legal framework for use concession mechanisms in the housing
utility sector.
Utility providers
One of the key issue of the further promotion of the transformations in the
housing utility sector is urgent addressing the problems of inventory and
restructuring housing utility enterprises debt.
By the 2002 end the size of debit indebtedness reached Roubles 179.2 billion.
With the growth of credit indebtedness by 2001 by 6.8%, respectfully 269.7& by
7.5%. Compared to the level of 2001 as a whole in Russia payroll indebtedness of
the housing utility providers grew by 8.2% and comprised Roubles 4.5 billion. The
amount of outstanding indebtedness formed due to insufficient financing from
territorial budgets and lack of own means of enterprises.
Outstanding indebtedness for the consumed housing utilities by the
organisations financed from the federal budget as of the beginning of 2002 was
reduced to Roubles 2.6 billion (against Roubles 7.6 billion for the 2001 year end),
however by the year end again grew to Roubles 5.4 billion.
The volume of provided services to the population based on the preliminary
data for 2002 comprised Roubles 554 billion and increased 1.5 fold compared to
2001. The population financed around Roubles 292 billion, or 52.8% compared to
Roubles 170.6 billion (47.4 %) in the previous year. The budget earmarked funds to
cover expenses comprising Roubles 202.5 billion. Or 36.5% against Roubles 129.1
billion (35.9%) in 2001. Thus, the volume of insufficient financing comprised
Roubles 59 billion, or 10,7% while in 2001 analogue indicators comprised Roubles
60.3 billion, or 16.8%.
Positive changes should be noted in the structure of expenses coverage for
delivery housing utilities, which, first of all are connected with reduction of volumes
5
of insufficient financing providers in the industry. Moreover, significantly increased
the volume of population covering expenses for the delivered housing utility services.
 Tariff setting
The housing utilities cost for 1 m2 of the total floor area based on the locally set
economically justified tariffs generally in Russia in 2002 comprised Roubles 22.5.
The coefficient of the federal standard of housing utilities services cost observance is
– 1.18. Increase of housing utility services cost, first of all is explained by the growth
of prices for the main resources of energy in the period from year beginning, leading
to revision of the existing tariffs for the local housing utility services. Only during the
1st half of 2002 the cost of production 1 H cal grew more than by 40%, by the year
end with the same price rise dynamics coefficient of price increase for the main
energies and comprised 75% average in Russia.. In such regions as Far East, northern
regions of Siberian federal district, Kaliningrad oblast increase of cost of services for
heating comprised more than 80%. At the same time price rise for the housing utility
services not always is accompanied by energy saving, which can allow to cut don
non-productive expenses and increase the quality of services. In the most regions
differentiation of tariffs for the main services which should be determined depending
on the normative of consumption and quality of provided housing utility services is
not available.
The practice of such measures show, that cut down expenses for housing utility
provision comprises on average up to 15-16%.
At the same time in the most subjects of the Russian Federation average level of
payment is lower compared to the set out by the regions standards and comprises
69.8%. The “folk” between the existing locally rates and tariffs for payment housing
utilities by the population and regional standards leads to permanents accumulation
of insufficient financing of the industry, on average comprising around Roubles 1.3
billion per month.
6
Here, factual expenses of the population on payments for housing utilities services in
the average per capita income by the 2002 end comprised 7.3%, which means that are
significantly lower compared to the set out federal standard. The number of families
receiving allowances generally in Russian Federation comprised, based on the results
of 2002, 11.4% and based on the forecasts in 2003, will increase insignificantly by 12%. However reimbursement expenses for producers for the granted allowances and
benefits in spite of growth of figures compared to 2001 still remains incomplete and
comprises Roubles 15.4 billion. To a significant extent exactly these unrecognised
debts become one of the serious sources of forming indebtedness of producers.
Presently both at very different levels of power and among specialists openly people
talk about a threat to Russia of “Infrastructure crisis” of engineering systems in cities
and human settlements. This is connected with the fact that dilapidation of the
communal infrastructure, based on evaluations, comprises more that 60%, and about
one half of the fixed assets have ended their lifetime. The number of accidents grew
over the last 10 years about 5 fold ad comprised 70 accidents for 100 kilometres of
water pipelines and 200 accidents for 100 kilometres of heating pipelines in 2000.
The volume of dilapidated and accident-risk housing stock comprised about 50
million m2. Only to demolish it and move people to new apartments will require
about Roubles 160 billion.
Without belittling importance of all directions of the housing utility services it should
be recognised that the key question of the reform is improvement of the system of
payments for housing and housing utility service..
Naturally the main reason which brakes the process of transformation of the
industry to the regime of non subsidising operation, is the low incomes of the most
citizens. However this is not the sole reason. The rates of growth slow down due to
lack of accounting of differentiation incomes of citizens for payments for housing
and half way through reform for housing and housing utility payments. Total
switching to the personalised housing allowances based on the preliminary
calculations will free significant part of budget funds, which is channelled through
subsidies to the housing utilities producers, and first of all, to the households with
7
high incomes and close to them households with average incomes. At the expense of
these freed budget funds it is possible to ensure higher protection of the households
with low incomes in the process of reforming the system of payments for housing
and housing utilities services..
Introduction of the personalised housing allowance shall allow the following:
 Improve branch financing, and, consequently shall ensure its upsurge;
 Significantly save funds of local budgets,
 To implement to a better extent, than today, social protection of the low income
and average income households,
 To safeguard social stability, because that will be welcome by the most
population,
 Activate households with high incomes, who due to their mental ability really can
execute control on the activities of the housing utility producers,
 Promote development new forms of housing stock administration, in particular
creation of partnerships of housing owners, through which self-government shall
be administered, as well as introduction maintenance on a competitive basis, etc.
Solid Domestic Waste
Every year in Russia are accumulated about 130 million m3 of solid domestic
waste, which makes about 0.9 m3 per capita per year. The volume of accumulated
solid domestic waste in the cities of Russia in blocks of flats with housing utility
services comprises 0,96 m3 per capita per year at average density 0.2 t/m3. In the
cities the volumes of solid domestic waste accumulations fluctuate in the following
range: from 190 kg per year to 350 kg per year in the cities with a million dwellers.
Increased volumes of solid domestic waste accumulation experts connect with a
larger share in the structure of human consumption in some cities of imported goods
in modern packaging.
8
As a rule from the total volume of solid domestic waste 90% are discharged for
burial in the damps and special grounds, most of burial places for solid domestic
waste do not correspond to the existing normative.
About 3% of solid domestic waste are industrially recycled are.