“Warm credits” program should continue and expand – activists

November 08, 2016.

 

The state credit program for households should continue as it fosters energy efficiency and helps to decrease funds currently paid for subsidies.

 

The State Targeted Economic Program on Energy Efficiency should continue over the next year: it has already shown the first positive results and started to gain public confidence. “Warm credits” and Energy Efficiency Fund should act as parallel programs, the first – for smaller jobs, the second – for complex thermal modernization projects. It is also necessary to improve control and verification of the results. This was stated by public experts and representatives of the State Agency on Energy Efficiency and Energy Saving at a discussion held at Ukraine Crisis Media Center.

“We have sent a petition to the Cabinet of Ministers demanding to continue the State Program and to make appropriate amendments to it. […] It should not be terminated, on the contrary – it should be expanded and further deepened,” stated Tetyana Boyko, coordinator for housing & public utilities programs, civil network “OPORA”. She noted that the government had spent 70 times more money on subsidies for public utilities than on the energy efficiency program this year. “Our members of Volyn region council will also draft an appeal to the Verkhovna Rada on budget revenues under this program. For us, it is really vital,” added Yulia Sabatiuk, housing cooperative “Luchany”, head of the Board.

However, the program is to be improved, in particular, it must oblige households to install metering units together with thermal modernization activities, to improve control, to introduce monitoring and verification and to involve more banks.

According to Karel Hirman, Slovak expert from Balcerowicz-led advisory group, the “warm credits” program should continue for small loans, while the Energy Efficiency Fund will patronize programs for comprehensive modernization of buildings. “People see that it works, critical mass is gradually gaining. We should not “jump” from one program to another. We have to support two levels of the programs systematically – then people will join by themselves,” stressed the expert. He noted that not only Slovakia, but also all the “Visegrad Four” had successfully implemented this model.

 

Terminating the program will lead to loss of confidence 
According to Tetyana Boyko, if the program does not continue, the government will lose the trust of population. In addition, there will be a large time period between the termination of the current program and the launch of Energy Efficiency Fund, and other small programs will not allow people to implement thermal modernization projects.

“If the program does not continue, timely compensations to borrowers will be at risk. Although we will provide compensation in any case, so credits to housing cooperatives do not stop,” said Igor Gorovykh, Deputy Director of Strategic Development Department at the State Agency on Energy Efficiency and Energy Saving of Ukraine. Due to the lack of budgetary financing, the program can continue only in terms of stimulating housing cooperatives within the remaining special funds – UAH 32, 2 million. Of the UAH 894 million allocated for this year, remaining funds are expected only within housing cooperatives – about UAH 30 million. The draft resolution on the involvement of these funds has been sent to the Ministry of Justice, now we are waiting for the vision of the Finance Ministry and Economic Development Ministry.

 

The first achievements at the national level
Igor Gorovykh informed that during the year the number of people wishing to take “warm credits” has gradually increased. Currently, housing cooperatives have taken 472 credits worth UAH 59.1 million (compared to 194 credits at the beginning of 2016), and individuals – credits worth more than UAH 156,000. A half of them have taken small credits for mounting modern windows. 95 percent of borrowers are individuals.

Recently the State Agency on Energy Efficiency in cooperation with USAID and the International Finance Corporation surveyed the first 127 credit recipients. “100% of respondents are fully satisfied with the program and feel positive changes, 70% have enjoyed a saving. It should be noted that some of the measures were taken during or after the heating season, that is, not everyone could compare the results before and after implementing the energy efficiency measures. 81% have felt increased comfort,” informed Igor Gorovykh. Among 1,000 surveyed households, these figures are respectively 94%, 65% and 84%.

 

How does it work?
Igor Gorovykh reminded that housing cooperatives or individuals can take up a bank loan for implementing energy efficiency measures, such as replacement of windows or complete thermomodernization of the house. The borrowers pay about 50% of the full loan, and the state program reimburses 30% to owners of private homes, 40% – to housing cooperatives, and 70% – to state-aided people living in housing cooperatives. The local aid is 9%. “In all cases (as to housing cooperatives – UCMC note), the monthly loan repayment does not exceed the saving achieved by the house,” he noted. The costs are recovered only after submission of the Acceptance Certificate to the bank.

As to local programs, there is more uncertainty because usually they recover the interest rate. “If they recover the interest rate, they have a problem with making provisions in the annual budget. Now some cities have also begun to reimburse the loan in full to avoid problems with the budget process,” noted Tetyana Boyko.

The bank as an intermediary decides independently whether to issue credits. That is why sometimes individuals face difficulties. “Previously, banks refused to issue credits to the recipients of subsidies, but when the state began to recover 2/3 of the loan, they amounted to 45% of borrowers,” said Igor Gorovykh. The program has been working successfully in the front-line area. “Donetsk region is one of the leading regions,” he noted.

 

Success story of Lutsk housing cooperatives
Yulia Sabatiuk informed that today they have completed a full thermomodernization of five houses. People pay for heating four times less – about UAH 150 thousand instead of almost UAH 450 thousand. “We have saved almost UAH 300 thousand. We paid UAH 200 thousand to the bank, and UAH 85,000 remained in the pockets of owners of apartments,” she noted. Next year they are planning a full thermomodernization of another 4 houses. According to her, this year Lutsk has attracted loans worth UAH 10 million.

In the experience of “Luchany,” to meet the deadlines it is better to take up a loan before  October 1. “Compensation will be based on the Acceptance Certificate, and therefore we must accomplish these works by December 15,” explained Yulia Sabatiuk.

Tetyana Boyko and Karel Hirman emphasized that thermomodernization should be started with the housing sector instead of generation, becuase in Ukraine 50% of heat loss occurs in houses.

Share

Twitter
More news on the topic