[home page][map of the server][news of the server][forums][publications][Yabloko's Views]

Trud-7, April 24, 2003

The Housing and Utilities Sector Reform for Monopolies

By Sergei Mitrokhin

The Federation Council voted for the governments' draft law on housing and utilities sector reform. It can be summed up as follows: subsidies to enterprises in the housing and utilities sector should be liquidated and replaced with subsidies to households with small incomes from budgets at all levels. In 2005 the federal budget will stop providing assistance to a significant proportion of the present categories of citizens entitled to benefits - their fate should be decided by the regions. It is easy to understand that most low and medium-incomes regions will have to abolish these benefits.

The fate of subsidies is the same. Federal budget aid to the regions is calculated proceeding from the federal standards of the population's share in payment for utilities. At present it amounts to 90%. The law establishes when this standard becomes a single standard for the country. In accordance with government plans, the regions will simultaneously transfer to 100% payment and will stop receiving federal aid for subsides either next year or in 2005. However, poor regions cannot maintain subsidies from their own funds.

In examination of the draft law in the State Duma the YABLOKO faction proposed the introduction of regional standards instead of a [single] federal standard for population's payment for services, in order to differentiate the transfer to targeted subsidies, depending on economic and climate conditions in the regions. As the transitional period should be longer than average in the country for the Far North and Far East, for example, the volume of subsidies should be much higher. However, this amendment was rejected by the government.

So what do we end up with? In the regions with a low levels of solvency, 70-90% of families will be entitled to such a benefit additional subsidies]. According to the government's calculations no more than 20% of families will ask for subsidies, and the rest will pay the full price. However, people will have to pay in accordance with rising tariffs and the level of payments today is already 50% for Kamchatka and 40% for Magadan Region. The housing and utilities sector will have less money for repairs of engineering networks. And this will lead to an unpredictable chain of disasters at utilities.

So who benefits from this law? The answer is clear – Anatoli Chubais has announced the establishment of a management company to operate in the housing and utilities sector: the monopolies will grasp the whole housing and communal services sector for its debts provoked by their ability to independently dictate tariffs. Given a 100% payment requirement and the right to evict bad debtors from their housing, the housing and utilities services business will become very profitable.


See also:

Housing and Communal Reform

Trud-7, April 24, 2003

[home page][map of the server][news of the server][forums][publications][Yabloko's Views]