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Water and heat will flow from lease to concession

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The State Duma approved yesterday in the first reading a draft law on a simplified transition from the lease of heat and water supply facilities to long-term concessions. Such agreements will be concluded without bidding for a period of up to 49 years – subject to a significant increase in the investment obligations of ex-tenants. The introduced mechanism will be temporary – tenants must declare their desire to use it before January 1, 2022. On the whole, experts assess the initiative positively, but note that the procedure for calculating investment obligations should be clarified by legislators.

The draft law on the simplified transformation of lease agreements for housing and communal services into long-term concessions – for a period not exceeding 49 years and without a tender – was approved yesterday by the State Duma in the first reading.

To use the mechanism, a private party must increase its investment obligations by at least one and a half times compared to their volume for the entire period of the lease agreement.

If investments are not provided, then the investment obligations must be at least three times the rent for the entire duration of the contract, or at least one and a half times the replacement cost of the object. The choice of the method for calculating obligations is provided to the head of the region. This mechanism will be temporary – tenants will have to send notifications about the transformation of relations by January 1, 2022.

The initiative is aimed at attracting investments in heavily worn out networks (in water supply, the depreciation rate is about 70%). Note that a similar transformation is already possible without a tender – but the new agreement is limited by the lease term. According to the deputy head of the Ministry of Construction Svetlana Ivanova, this period is now a maximum of ten years, which “is not interesting for either the owner of the property or the investor.”

Yesterday, when discussing the bill, some MPs expressed concern about the conclusion of concessions without a competition.

To this, Svetlana Ivanova explained that now the tenants have the opportunity to offer to organize tenders, but as a result, another organization may win – therefore they do not express interest in this and continue to act without attracting the necessary funding for the modernization of infrastructure facilities. Concerns were also voiced yesterday about the too short duration of the new mechanism. Svetlana Ivanova suggested discussing the issue of extending the deadline for the second reading.

Rosvodokanal General Director Anton Mikhalkov calls the project a “breakthrough” – according to him, it will allow “to multiply investments in infrastructure, and also open up new development prospects for conscientious tenants, and gives the regions the opportunity to ensure reliable provision of services” by upgrading the networks. According to him, the transformation of lease agreements will entail adjusting investment programs to include current requirements and the best available technologies.

According to Anna Batueva, the chief lawyer of the National PPP Center (part of the VEB.RF group), the project solves the problem of significantly expanding the cases when the transformation of a lease into a concession agreement will be possible, but some formulations require clarification. For example, the expert has questions about the determination of the minimum investment obligations on the basis of rent – as Ms. Batueva believes, “the needs of the communal system for modernization should be the basis”.

Evgeniya Kryuchkova

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