Heating mains are disconnected from the tariff // Ministry of Construction insists on the consolidation of private utilities

The Ministry of Construction is seeking a solution to the problem of ineffective operation of communal infrastructure by private owners who own small sections of heating networks. For this, the department proposes to toughen the criteria for classifying them as heating network organizations. The initiative, in the opinion of the business community, can remove from the market 95% of small and medium-sized enterprises (SMEs) – owners of network fragments. Although the project received a negative assessment of the regulatory impact, the market still fears its adoption and rely on mechanisms to compensate bona fide owners in the event of loss of TGO status.

The head of Opora Rossii, Aleksandr Kalinin, sent a letter to the government criticizing the draft government decree developed by the Ministry of Construction, introducing requirements for the owners of heating network sites to classify them as heating network organizations (TGO) – heat service providers. Now any owner of heating networks can become a TSO, while business interest in the industry is aroused by a guaranteed flow of funds due to tariffs for services. Meanwhile, the authors of the project note that not all organizations provide proper operation and emergency dispatch service of networks, which reduces the quality of the services provided.

The project of the Ministry of Construction contains a requirement for the minimum length of heating networks, depending on the number of municipalities. Thus, in cities with a population of 1 million or more residents of the TCO, owners of heating networks with an unbreakable length of at least 10 km, more than 500 thousand inhabitants – at least 3 km, from 250 thousand – at least 1 km can become owners. According to Opora Rossii, no more than 5% of the owners of such objects will fall under the new criteria in cities with a population of 500 thousand or more. The withdrawal from the market of 95% of small and medium-sized companies will result in a sharp increase in orphan networks on the balance sheet of municipalities, which, on the contrary, can lead to an increase in the number of accidents and worsen the quality of services, experts say. According to Alexander Kalinin, the criterion of the length of the networks does not speak about the integrity of the TSO and does not affect the quality of their work. “Possible quality criteria are, for example, permissible interruptions in heat supply, technical parameters of the heating network, percentage of wear and tear,” he notes.

The government became concerned with the problems of the low quality of housing and communal services due to the transfer of networks to private owners back in 2011. Then the authorities refused to privatize the industry in favor of concession agreements, pointing out the risks of “social catastrophes” in the event of bankruptcy of private traders. Concessions allowed to partially improve efficiency in housing and communal services, but in the private segment the problem has not been resolved, and the accumulation of problems in this sector can slow down investment activity of both concessionaires and resource suppliers: the growth of their efficiency is “eaten up” by worn out sections of networks. At the same time, there are still situations in which the owners of small plots provide services at high rates. The authorities have not yet been able to stimulate the owners of small networks to modernize the infrastructure. The Ministry of Construction expects that the tightening of requirements for the length of networks will contribute to the consolidation of the assets of small and medium-sized TGOs and will eliminate inefficient spending of tariff proceeds.

Note that this is the second attempt by the Ministry of Construction to achieve stricter criteria: for example, the department presented the initial draft in 2020. Following criticism from experts, the ministry relaxed the minimum network ownership requirement from five years to a year. The updated draft has already been considered in the working groups of the “regulatory guillotine” at the government commission for the administration of the administrative reform. At the same time, the working group in the field of construction and housing and communal services agreed on it, the working group in the field of ecology demanded its revision, and earlier the project also received a negative opinion from the Ministry of Economy on the assessment of the regulatory impact. The owners of small sections of heating networks, however, are afraid of accepting the project in its original form and count on a compensation mechanism in the event the project is approved and the owners lose the status of TGO, that is, to buy out their sections of the heating network “on favorable terms for the owner.”

Diana Galieva

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