Final Report

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Final Report Market Assessment RESIDENTIAL SECTOR OF UKRAINE: LEGAL, REGULATORY, INSTITUTIONAL, TECHNICAL AND FINANCIAL CONSIDERATIONS FINAL REPORT August 2011 Prepared for European Bank for Reconstruction and Development One Exchange Square, London, EC2A 2JN Prepared by: Reading, Pennsylvania, USA IB MunicipalDevelopment Oslo,Norway HousingInstitute Institute, Ltd. Bratislava,Slovakia Kyiv,Ukraine Framework Contract FC474/EBSF-2010-08-124F Framework Contract FC474/EBSF-2010-08-124F ACKNOWLEDGEMENTS Participants in the project include the following: Name and Position in Project Name and Position in Project WorleyParsons Municipal Development Institute Mike DeLallo, Select Director Alyona Babak, Project Manager Andrew Popelka, Project Manager Gennadiy Farenyuk, Civil Engineer; David B. Stauffer, PE, Documents review Anatoly Kolienko, Heating Engineer Jason L. Sweigart, Documents review Roman Zherdystskyi, Financial Analyst Raymond Rice, Procurement Specialist Olga Olefirova, Lawyer ENSI, Energy Saving International, a.s Dmitry Levytsky, Lawyer Trond Dahlsveen, Financial Expert Ima Khrenova-Shimkina, Economist, Marketing Specialist Natalia Grytsenko, Energy Efficiency Viktora Pogorelova, Housing Specialist Expert Lubomir Tchervilov, Energy Expert Atatoly Nicheporchuk, Civil Engineer Ministry Steering Committee Kadria Safiulina, Sociologist Olga Romanyuk, Deputy Minister of Housing Institute Housing and Communal Economy Larisa Novikova, Head of Section on Jaroslava Zapletalova, PhD, Housing Energy saving, Department of Heat regulatory expert Energy Irina Savinkova – Chief specialist of the heating energy sector development, Department of Heat Energy Maria Savchenko-Belska, Chief specialist of the section of housing economy sector, Department of Housing Policy Framework Contract FC474/EBSF-2010-08-124F iii Framework Contract FC474/EBSF-2010-08-124F iv TABLE OF CONTENTS LIST OF ANNEXES ....................................................................................................... VII LIST OF EXHIBITS.........................................................................................................IX EXECUTIVE SUMMARY ............................................................................................... 11 1. INTRODUCTION .............................................................................................. 19 1.1 Background ...................................................................................................... 19 1.2 Report Structure ............................................................................................... 19 2. RESIDENTIAL SECTOR REVIEW................................................................... 21 2.1 Review of Sector Statistics ............................................................................... 21 2.1.1 Housing Stock in Ukraine .................................................................................... 21 2.1.2 Recent Housing Stock Development .................................................................. 23 2.1.3 Construction Activities and Volumes................................................................... 23 2.1.4 Energy Consumption in Ukraine ......................................................................... 25 2.2 Review of Tariffs............................................................................................... 27 2.2.1 District Heating .................................................................................................... 27 2.2.2 Electricity ............................................................................................................. 30 2.2.3 Natural Gas ......................................................................................................... 30 2.2.4 Water Supply....................................................................................................... 31 2.2.5 Wastewater Services........................................................................................... 34 2.2.6 Summary of Tariff Policies .................................................................................. 36 2.3 Energy Saving Potential in the Housing Stock of Ukraine ................................. 36 2.3.1 Selection of Representative Objects ................................................................... 38 2.3.2 Energy Saving Potential...................................................................................... 38 2.3.3 Assessment of Energy Saving Economic and Market Potential ......................... 42 2.4 Legislation on Energy Efficiency in Buildings, EPBD Transposition .................. 44 2.4.1 Main Ukrainian legislation and regulations related to energy efficiency in buildings ........................................................................................................................... 45 3. OWNERSHIP AND MAINTENANCE ISSUES.................................................. 47 3.1 Forms of Ownership ......................................................................................... 47 3.2 Models of Ownership and Management in Residential Sector .......................... 47 3.2.1 Ownership System .............................................................................................. 47 3.2.2 Owners Organization Structures ......................................................................... 48 3.2.3 Land Issues ......................................................................................................... 49 3.2.4 Conclusions......................................................................................................... 50 3.3 Management Models ........................................................................................ 51 3.3.1 General Management Principles......................................................................... 51 3.3.2 Model 1 - Apartment Building Management by Housing and Maintenance Organization..................................................................................................................... 51 3.3.3 Model 2 - Apartment Building Management by a Condominium......................... 53 3.3.4 Model 3 – Apartment Building Management by a Managing Company.............. 54 3.3.5 Model 4 – Apartment Building Management by a Housing and Construction cooperative (HCC) ........................................................................................................... 55 3.4 Comparison of Ukrainian Model With Other Countries...................................... 56 3.5 Conclusions...................................................................................................... 57 3.6 Recommendations............................................................................................ 58 Framework Contract FC474/EBSF-2010-08-124F v 4. RESIDENTIAL INSTITUTIONAL ARRANGEMENTS....................................... 59 4.1 Goods and Services in Housing and Communal Services Market .................... 59 4.2 Institutional Structures and Their Relationships ................................................ 61 4.2.1 Electricity and Gas Supply Contracts.................................................................. 63 4.2.2 Agreements between Customers and “Producers/Providers” of Housing and Communal Services. ........................................................................................................ 63 4.2.3 Role of Local Self-Government ........................................................................... 64 4.2.4 Issus to be Addressed......................................................................................... 65 4.3 Price Setting in Housing and Communal Sphere .............................................. 65 4.4 Past Arrangements Used for Contracting and Financing of Building Reconstruction in Ukrainian Municipalities ....................................................... 68 4.4.1 Project "Sustainable Self-Maintenance of Multi-Family Buildings" ..................... 68 4.4.2 Housing Rehabilitation Project in Nizhyn. ........................................................... 69 4.4.3 Housing Rehabilitation Project in Berdychiv. ...................................................... 70 4.4.4 Housing Rehabilitation Project in the City of Lutsk (2010).................................. 70 4.4.5 Housing Rehabilitation Project in the City of Chernivtsi (2004-2010). ................ 70 4.4.6 Projects Implemented by GTZ (German Technical Assistance Organization) ... 71 4.5 Summary.......................................................................................................... 71 4.6 Recommendations............................................................................................ 71 5. FINANCING ARRAGEMENTS FOR ENERGY EFFICICIENCY IN RESIDENTIAL SECTOR ................................................................................. 79 5.1 Residential Sector Market Participants ............................................................. 79 5.1.1 Contractors - ESCO and Construction Companies............................................. 79 5.1.2 Banks................................................................................................................... 80 5.1.3 Other Financial Institutions – Leasing Companies, Credit Unions...................... 82 5.1.4 Building Managers............................................................................................... 82 5.1.5 Market of Energy Efficiency Equipment Suppliers .............................................. 84 5.1.6 Market
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