The housing and public utilities sector of Belarus is expected to save at least 173,000 tonnes of fuel equivalent in 2013
As is known, energy resources, in particular, natural gas, account for the lion’s share of the country’s spending. Therefore, it is imperative that all economic sectors of Belarus should dramatically reduce the consumption of heat and electric energy. The problem is particularly relevant for housing and public utilities, as they consume about 35% of the heat energy generated in the country. The reduction of energy consumption in this sector will result in lower energy intensity of GDP and considerable energy saving for the country. However, this is not the only way to save resources. For example, housing and public utilities are actively working to expand the use of recoverable resources, reduce expenses associated with service provision, and encourage people to optimize the use of energy resources.
Reducing the Prime Cost
Consistent work on saving resources and optimizing their use is coupled with a tough control over the fulfillment of the energy conservation targets. After all, housing and public utility services are provided at fixed rates and this sector is subsidized by the government. Therefore, control and supervision are essential here.
In 2013 the housing and public utilities sector was tasked with reducing spending on service provision to individuals by 10% in comparable conditions. In H1 all the regions and the city of Minsk overachieved this target. The saving was estimated at 10.5% or nearly Br500 billion. With a view to bringing down the cost of housing and public utility services, administrative control was imposed on the formation of prices for heat (water heating), water supply, water disposal and housing maintenance. This means that every housing and public util- ity organization was instructed to act within specified price caps.
In fact, it is quite a challenge to stay within these price bands; however the sector is doing pretty well. In H1 2013 only five out of 136 organizations went beyond the price cap for water supply, three out of 136 companies failed to meet the water disposal target, four out of 135 companies did not fulfill the heat supply target, and 19 out of 136 companies fell short of the housing maintenance target. In each and every case representatives of the Ministry of Housing and Public Utilities look into the reasons for the failure to meet these important indicators. Such a stringent control is needed because by 2016 the housing and public utilities sector is expected to cut down costs associated with service provision by at least 25% as against 2010.
A new economic instrument will be developed to meet this target. The Council of Ministers’ Resolution No. 593 dated 5 July 2013 envisages a totally new approach to subsidizing housing and public utility services. At present financing is proportional to the amount of expenses on service provision. However, very soon financing will be pegged to specific prices established for the sector and effective for the entire year. This will offer economic incentives for cutting costs, enhancing financial discipline, responsibility and the role of district and town executive councils that distribute public funds. This economic instrument provides that a well-performing company will be able to use the spare funds in a way it deems necessary. However, it will have to invest at least 70% of these funds into upgrade and up to 30% into bonuses for personnel. At the same time, poorly performing companies will have to compensate for extra costs on their own.
“Reducing the cost of public services and cutting energy consumption are impossible without upgrading the entire industry. Like all the other economic sectors, the housing and public utilities sector has an upgrade plan,” said Deputy Minister of Housing and Public Utilities of Belarus Anatoly Shagun.
Modernization is primarily aimed at reducing fuel and energy consumption because energy accounts for the lion’s share of the cost of public services. For example, it accounts for over 50% of the cost of heat supply and about 20% of water supply and sewage. This year the public utilities industry has developed a sectoral energy saving program, with the total energy
saving being estimated at not less than 173 tonnes of fuel equivalent. From January to June, energy consumption has been reduced by more than 50%.
Work is underway to replace the worn-out heat supply networks with new ones to reduce heat loss. More than 776.3km of heat supply networks were replaced with modern pre-insulated pipes last year. This year at least 769km will be upgraded.
“These activities allow decreasing heat loss by approximately 1.52% annually. This year we seek to ensure that not more than 16.3% of heat energy is lost as it is transported to consumers. In addition, the modern pipes we use to replace the old heating systems are highly reliable and durable,” said Anatoly Shagun.
It should also be noted that work is in progress to increase the use of local fuels and to upgrade the thermal insulation of the housing stock with an ultimate goal of reducing energy consumption and the cost of housing and public utilities.
Austerity measures in the housing and public utilities sector will produce little effect unless everyone becomes energy conscious. Today, not everyone is ready to live by austerity rules.
As is known, on 1 October 2011 Belarus enforced differentiated tariffs for water supply and water disposal depending on consumption levels. The economic effect was not long in coming. For example, in H1 2013 water consumption went down by 2.8% as compared to the same period last year. When calculated in cubic meters, this equals the water supply of such cities as Bobruisk and Baranovichi.
On 1 February this year, the country enacted differentiated tariffs for electricity and gas services depending on consumption levels. “Differentiated tariffs are imposed for those services which consumption can be adjusted by consumers on their own. This enables a responsible approach towards the use of resources and encourages consumers to look for the ways to save more,” said Anatoly Shagun.
The differentiation of tariffs for housing and public utilities, according to the Deputy Minister, complies with the principles of social justice. After all, the state subsidizes the services to all equally, and if a person consumes more than the established norm, the share of state support will be reduced while the payment will increase respectively.
One of the main goals of differentiation is to encourage people to take a more solicitous attitude towards resource conservation. For this reason the Belarusian public utilities development program envisages further expansion of differentiated payment by 2015, for instance, for heat supply depending on the total area of living space. The introduction of the tariffs for heating energy similar to water supply and electricity is a more distant prospect. The heat submetering program in the housing stock was launched in the 2000s. Earlier-constructed houses cannot be individually metered as the installment of new connection networks is economically inadvisable. Differentiated rates will enable transition to unsubsidized operation of the housing and public utilities sector, with households paying the full cost of these services. The first steps have already been made. Thus, for instance, maintenance fees for apartments, which are not registered as a residence of the owner or the owner’s family members, are much higher than fees for inhabited apartments. The same is true for capital repairs and heat consumption.
It can be said that rates for almost all public utilities have been differentiated, except for the use of elevators. Careful upkeep of shareduse facilities in multi-dwelling units remains a priority. Today over 85% of housing in Belarus is privatized. But still many owners do not see shared-use facilities as their own property. With the attitude changed, it would be possible to cut on both maintenance and repair costs.
As for housing capital repairs, a number of amendments have been recently introduced here. Now, only a part of works will be funded by the state budget and dwellers’ monthly contributions. The other services like the installment of water supply and sewerage connections, window replacement, etc., will be paid solely by dwellers. State budget funds are used to repair and winterize outside walls, roofs, engineering water supply, sewerage and heating systems.
The public utilities sector has been tasked with repairing 2 million square meters of housing in 2013. This figure should reach 3 million square meters in 2015. The tasks are quite tough to accomplish: last year as much as 1.3 million square meters of houses was repaired. In the 1990s the construction of new houses considerably surpassed the amount of capital repairs, resulting in, let us say, a whole layer of houses in need of renovation. So today it is of great importance to increase the volume of capital repairs and find the money for it.
An increasing use of secondary resources is another way of saving with benefits. This way has been chosen by many countries that understand that the use of secondary resources is not just environmentally important but makes economic sense, too. Belarus is still lagging behind its Western-European neighbors on this front.
It should be noted that our people turned out to be very responsive to the separate waste collection program. A decade ago, when the initiative was given a start in the country, there were quite a few skeptics who said Belarusians would never get used to separate waste collection. Today the picture is absolutely different: in 2003 only 2-3% of
households had separate waste bins; today this figure exceeds 80%.
It should be mentioned that now the amount of secondary resources collected separately exceeds the amount of unsorted waste delivered to reception points for a price. A couple of years ago it took almost a week for households to fill in their separate waste bins. Today, some areas have such waste bins full in less than a day. On the whole, there are an estimated 100,000 unsorted general rubbish collectors and about 50,000 separate recycling bins in Belarus. These figures suggest that Belarusians have a much better understanding of environmental problems today.
The national program to collect and process recyclable materials for 2009-2015 is in progress in Belarus. In line with the program, the per capita amount of recyclable materials collected in the country should approximate the European level. Last year Decree No. 313 introduced extended responsibility of manufacturers and suppliers of certain goods for their collection, disposal and utilization after these goods are no longer used. By the way, the document provided for two options: to use in-house schemes of garbage collection or to make financial contributions to the common waste collection network, i.e. to conclude an agreement with a specialized organization, the Material Recycling Operator.
The innovation has already produced tangible results. About 5,500 legal entities in Belarus signed agreements with the Operator. In January-June 2013 the organization collected 146,600 tonnes of waste paper and cardboard, up 10% over the same period of 2012. The collection of glass went up almost 1.5 times, scrap tires – 42%, polymer wastes – 32%.
The proceeds and the payments which the Operator gets from manufacturers for waste disposal are funneled into the national program. These funds are also used to pay compensations to legal entities and self-employed businessmen regardless of the form of ownership and subordination for each tonne of recyclable materials collected from households and shipped to waste recycling plants. Since the decree was passed such compensations have exceeded Br30 billion. Annual compensations are expected to reach Br80 billion. This stimulates waste collectors and recycling companies to increase purchase prices for recyclable materials collected from households.
Belarus has also launched the project to recycle complex household equipment. For instance, OAO BelVTI is prepared not only to collect equipment from households for free but also to arrange transportation. At present many Belarusian organizations importing household equipment are considering setting up their own facilities to collect recyclable materials. However, it is necessary to join efforts with the Finance Ministry and polish certain documents regarding the licensing because household equipment contains precious metals.
The project to recycle complex household equipment has been launched by the Minsk Oblast Technopark. The organization will soon finish the construction of a facility for the automated recycling of refrigerators which is now done manually. There are plans to recycle up to 45 old refrigerators and 3 tonnes of other household equipment per hour. The abovementioned company has also launched a big facility to recycle scrap tires. In the past this raw material was used as a fuel by local cement plants or was processed by private companies. Now the tires are used to manufacture high-quality rubber crumb which can be sold on the domestic market or exported. As for the recycling of luminescent mercury-bearing lamps, the facility is already operational at Brest Electric Lamp Plant.
In late 2012 a new facility to sort mixed glass cullet was opened in Minsk. The maximum capacity of the plant is 120,000 tonnes per year if it operates on a three-shift basis. The company not only satisfies the demand of the local glass industry but also exports services, i.e. sorts glass cullet upon orders of foreign companies. At present companies in Minsk and other Belarusian cities are mulling over investment projects to build waste recycling and sorting plants.