Housing and utilities services: still cheap and affordable

April 22, 2016 18:38

Housing and utilities services have retained key Soviet achievements: they are cheap and affordable. However, a lack of funds - mostly because the government subsidizes about 70% of the cost – is forcing housing administrations to reduce service standards and to delay renewing ageing assets. Despite utility rates in Belarus being the lowest in the region, consumer debt is increasing.

Since the Soviet era, the Housing and Communal Services (HCS) have made minor changes to their organizing principle. Facilities have been upgraded, but extremely slowly. And in recent years, upgrades have become less frequent due to a lack of funds (Grodno region is the only exception). For example, in 2013, there were plans to replace 143.6 km of heating pipelines in the Minsk region. By July 1st, only 19.7% had been completed.

The slow pace of heating networks upgrades has had an impact on the delay in switching on heating during abnormally cold weather since September 24th. Minsk was the least prepared for the heating season. On October 2nd and 3rd, hot water was switched off in the centre of Minsk due to accidents caused by the launch of the centralized heating system. Most likely, the General Director of the Minsk Oblast Housing Administration will be blamed for these failures. On September 19th, he was arrested on suspicion of stealing a large amount of budget funds. In general, corruption scandals in the housing sector are not uncommon.

Housing and utility tariffs in Belarus remain the lowest in the region (with the exception of some parts of Ukraine). Meanwhile, the rising HCS tariffs and the mismatch between the growth rate of wages and social benefits have resulted in a constant increase in household debt for HCS. In Gomel region alone, citizens’ total debt for housing services was over BYR 1 billion (more than USD 100 thousand), and 12 people were evicted.

Layoffs have also affected the HCS system. During 2013, 500 workers were laid off from the housing services administration in the Gomel region alone. In addition, in some regions, staff shortage is chronic. In Brest region, the shortage is compensated by involving local residents in cleaning the streets.

Cases of corruption, the poor quality of housing services, and shortages of professional staff mean that the HSC’s reputation is on a downward slope. The population believes that they overpay for their housing and utility services. Consequently, citizens delay payments and build up debts. Instead of considering housing reform, the government is thinking of beefing up repressive mechanisms which will allow property to be seized from non-payers.

For reference

Over the summer, electricity tariffs were raised twice, in June by 16% and in August by 14%. On September 1st, electricity tariffs were raised by 11.8 % making it BYR 479.1 rubles (USD 0.05) per 1 kWh. On October 1st, heating and hot water tariffs increased from BYR 68,833.5 rubles to BYR 70898.5 (USD 7.8) per 1 Gcal. Gas tariffs increased from BYR 358.8 to BYR 404.3 (USD 0.05) per 1 cubic meter or by 12.7%.