The comeback of the fine

In the instance of a delayed or incomplete payment for housing and utility services a fine of 0.1 percent of the sum per day of delay, following the 20th day of the month under review, shall be levied. This is the initiative proposed by the Ministry for Regional Development, Construction, and Housing and Communal Services in its draft law “On Amending the Law ‘On Housing and Utility Services.’” The amount of the penalty may not be altered by arbitration agreement, nor can it exceed 100 percent of the total sum of the debt. It is proposed that the fine be charged by the provider or producer of housing and utility services.

It is not the first time that debtors to public utility companies have been punished with a fine. Until 1996, for one delayed day a fine of 0.01 percent of the total debt was levied, but its sum might not exceed 100 percent of the sum total. However, from 1996 to 2011 this practice was stopped due to a moratorium on penalty, since government itself regularly delayed salaries, wages, pensions, scholarships, and other payments to the population.

This moratorium expired on January 1, 2011, but the amount of the fine still remains legally undefined. Arsenii Yatseniuk, opposition MP, tried to prolong the moratorium, but his draft law was not able to get even through the first reading in the parliament.

Will the comeback of the fine do good – or will it, conversely, make a pitfall for the housing and utility companies? The Day interviewed Oleksii KUCHERENKO, ex-minister for the housing and utility services of Ukraine:

“I do not understand why they keep trying to solve the problem of utility debts on the legislative level, while it is merely a matter of model contract. The contract is negotiated between the providers of housing and utility services, on the one hand, and the consumer, on the other. It looks as if the ministry in question would like to shift the responsibility for solving this problem onto someone else. However, the problem must be solved, since the total sum of the population’s utility services debt has reached 12 billion hryvnias. The increase of the debt has been greatly spurred by the growth in rates for utility services. This is how the population responded to the higher prices.

“In my view, the government must discharge the population’s debts as hopeless and thus write them off, just as it did a year ago with the debts of the firms in the fuel and energy sector. Back then, some got rid of 24 billion hryvnias in debt, while others (that is, the population) were left to face it. This is not fair. In my opinion, the debt of the recent three years should be written off. And only after this has been done, the government should enforce strict control over penalizing the population for delayed utility payments.

“Besides, if penalty is to be introduced, another aspect must be considered. I mean the consumer’s guarantee for the quality of service. To this effect the service provision agreement should contain a clause, defining fines for the provider for low-quality services, such as insufficient heating, water supply, and other breaches of contract. There should be parity of both the provider and the consumer.”