Rate Wars

Oleksandr Shlapak, head of department, even claimed the rates are overstated in every other case, according to what the checks already conducted have shown. He stated that the current situation in the housing and residential utilities sector of the Ukrainian nation’s economy continues to “cause problems in the fuel and energy complex, which leads to substantial losses to the state budget.”

An elementary drug test would, however, slightly reduce the positive impression from the intention. When analyzing the rate audit conclusions, the minister could disprove the practice of cross subsidizing the population at the expense of enterprises, which, in turn, affects their competitiveness. In his opinion, housing and residential utilities services are not able to make up their service expenses. The only way for them to continue to function is not to pay their own accounts, in particular for electricity and natural gas, reports Interfax-Ukraine. According to Minister Shlapak, people still prove to be the main debtor for housing and utilities. Their debts have been increasing in recent years and amount now to more than 85% of the debt total.

Here one cannot avoid a couple of simple questions. Who else, actually, besides people, pays for housing and residential utilities? If it is the state, then why did it not set an example for people, quitting the club of deadbeats that holds no great honor? Just imagine the effect of paying off at once 15% of the debts would have on development and strengthening of that very housing and residential utilities! Moreover, if, according to what the minister claims, the rates really are too high, why not start to bring order by reducing them, rather than with criticizing the unscrupulous and dishonest people?

Alas, this is hardly what the minister intends to do. He believes increasing of people’s debt for housing and utility services to be peculiar to the regions with the highest incomes. Those are Dnipropetrovsk, Donetsk oblasts, Kyiv, and the regions with higher rates of paying off wages arrears. “This proves the situation in the housing and utilities sector has deeper causes,” noted the state’s chief economist. The poverty of the very people appears not to matter at all. The total amount of nonpayment has long exceeded 8 billion hryvnias, which, according to Shlapak, should be blamed on the number of those who are exempt from payments or pay reduced rates. All the consumers of housing and utility services also wait for their debts to be canceled. “The absence of any legal basis inducing the taxpayers to pay on time for the services consumed” is the next reason. To make a long story short, here we have a happy beginning, with the minister opening with the idea of unfairly overstated tariffs, and unhappy ending with him ending up demanding more, in fact, a club for punishing the those who fail to pay, the latter consisting in any case of the poorest social strata. Though not denying fully his economic calculations, especially those concerning the discrepancies between the rates for individuals and industry, we must note that ordering the rate policy is exactly what the transformation should start with.

When this material was being prepared The Day received a phone call from a Kyiv reader living in one of the cooperative houses of the Obolon district (Pryozerna Street). According to him, 40% of the tenants have debts of over and 36% up to a thousand hryvnias. Nevertheless, since home meters were installed, cooperative housing is not among the debtors, for the money it gets from its scrupulous members is quite enough for it to pay for utilities. Speaking of the overstated rates and calling on the local executive bodies to think again (on the eve of the cold season) the question of rate calculation is where the minister appeared to be right (while the State Committee on Housing and Residential Utility Services of Ukraine and, it seems, the government as well stand for the function of establishing mates to be transferred to the executive). Hopefully, the minister’s appeal will be heard first in the capital, where the city administration has acted as a pioneer of the rate onslaught on the people since July 1, which resulted in serious protests against the issue signed by Mayor Oleksandr Omelchenko. The issue provides for raising electricity rates for all the consumers, as well as for heat, cold water, and hot water for everybody.

It is now difficult to foresee where the rate dispute between the central and local authorities will lead. For the rate question was once handed over to lower level authorities just in order to overcome the parliament’s resistance to utility hikes. One should also recall that already for seven years Verkhovna Rada has been unable to pass the Housing Code. This is why currently the USSR Housing Code of 1984 with its out-of-date standards is still in force. And the one being worked out by The State Committee on Housing and Communal Services of Ukraine, as sailors say, can hardly expect a fair wind. For, although the document provides for introducing social accommodation meant for unprotected social strata, it also comprises a number of sanctions toward these very layers in case of nonpayment for housing and residential utilities. These sanctions include, in particular, eviction (after going to court), with hostel accommodation provided. According to Valery Cherep, chairman of the State Committee on Construction and Architecture and former Verkhovna Rada deputy, “The Housing code should have been passed long ago, but it never happened for political reasons.” The situation is now changing, for why else would the thesis of inflated rates appear? But, as one can see, in our country any good initiative can easily be embodied in such a way that is exactly the opposite of what was intended.

INCIDENTALLY

Deputy Director of Housing, Communal, and Construction Policy Bureau of the Economy and European Integration Ministry Liudmyla Bondarenko, informed The Day that, according to the data of housing and utility rates monitoring for the first half-year, in the prevailing majority of regions the people’s tariffs cannot make up the services costs. In the Crimea, as well as in Sevastopol and Mykolayiv, with only 30 – 60% of the bills being paid, the situation is the worst. The practice of discriminatory rates for industry continues. According to Bondarenko, the primary tasks to be done, when working on increasing housing and utility service payoff, are first reducing costs, expenses, and complete monitoring of wasted resources.