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The meeting discussed the State Council working group’s proposed solutions for the sector’s main problems, which arise from the slow pace of modernisation of the sector’s infrastructure and its lack of investment attractiveness. Proposals to resolve the sector’s debt problem and address the personnel shortage issue were also examined.

Before the meeting, Mr Putin looked over an exhibition about the new state information system being introduced in the housing and utilities sector.

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President of Russia Vladimir Putin: Good afternoon, colleagues,

We are here today to discuss improving the quality of our housing and utilities services.

Let me start by saying that, as you know, we have already held all manner of meetings, conferences, parliamentary hearings and round tables on this issue. We have passed laws and approved a mass of documents. Just before entering this hall I saw the mountain of documents, all the various regulations, and hope you saw them too. There has been a lot of discussion and a lot of decisions taken.

Pilot projects are underway, and overall they have been successful so far. There are definitely some positive trends in the sector. This year, as [Deputy Prime Minister] Mr Kozak just reminded me, more than 40 regions have kept prices in the sector from rising by any more than 7 percent, and in some regions the figure is even lower.

But at the same time, we have yet to see real fundamental change in the sector. The problems are still serious. Many people are unhappy with the poor quality of services, dishonest management, and constantly rising costs. Of course they turn with these complaints to the authorities at every level, from the municipal officials to the federal authorities.

Reform is still moving too slowly. We need to identify the priorities and systemic problems and set precise deadlines and mechanisms for resolving these problems. We need to define the state authorities’ role in this work and coordinate action at all of the different levels of government. The paramount objective is to modernise the sector. Improving the quality of housing and utility services depends directly on our ability to achieve this goal.

We have already said a lot about worn-out infrastructure in the sector. The experts say that preliminary upgrading alone would require more than 9 trillion rubles [more than $280 billion]. If we do not change the situation in general, this figure will only keep rising. It is ineffective and insufficient to invest budget money alone in this sector. This way, there will never be enough money. But the amount of private investment in the sector is only minimal at the moment – 8 percent of the sector’s companies’ total turnover. 

The housing and utilities sector is a potentially huge market with turnover equivalent to 4.2 trillion rubles a year, but it does not interest long-term serious investors. Instead, as we know all too well, it has attracted its share of those who are used to simply skimming the cream and taking their cut without investing a single penny. We all know the reasons for this situation: non-transparent financial procedures, corruption, and cronyism in the sector. Everyone knows this. 

The price regulation policy is another factor holding back investors. Let me stress that we have a duty to remember that the housing and utilities sector is a socially-focused sector and the state authorities therefore need to keep sector prices under control. We cannot allow sudden and unjustified price rises for housing and utilities services. I propose that we discuss today whether or not we should set procedures at the federal level for regulating long-term price rises in the sector. Obviously, any state price policy must be clear and transparent so that investors can work out how long it will take them to recoup their investments and what sort of return they can expect. Only this way can we hope to achieve the needed results. It must be profitable to invest in the housing and utilities sector. This is a justified approach. There is no other effective means of modernising the sector in today’s circumstances. 

Moving on, the law introducing the legal right to make broad use of concession agreements in the housing and utilities sector will come into force as from January 1 next year. This is a promising model for business and the state authorities. The transition to concession agreements and private investment will bring real competition into the sector, which will make it healthier. In this context we also need to carry out an objective evaluation of the municipal companies’ efficiency in this sector. Unfortunately, many of these companies have already managed to merge together with the local authorities, as we know, and we therefore need to be aware that some municipalities will not want to move over to the new ways of working. In its work with the regions then, the Government will need to act as the methodological overseer and, where justified and necessary, coordinate the handover of housing and utilities infrastructure to concessions and keep close watch to make sure that quality standards and deadlines are respected.

Colleagues,

As we already noted today, the legislation in the housing and utilities sector has made great strides forward. More than 100 different laws and regulations were passed over recent years, and many more are being drafted. But at the same time, I think you would all agree that this is a sector where we particularly need compact and clear legislation, rules and regulations for things to work normally. 

Another task is to set standards for housing and utilities service provision. We need to have a strict oversight system in place to ensure that standards will be respected all around the country.

Businesspeople need to be ready not just to invest money in the sector but also to ensure quality fulfilment of their tasks and their obligations to the consumers, and to have qualified personnel. We know though, that the shortage of specialists in the housing and utilities sector is close to 70 percent. We must ensure training and re-training programmes for personnel so as to attract professionals capable of building a modern and civilised market for housing and utilities services. 

Let me say again that one of the state authorities’ biggest duties is to protect citizens’ rights. This includes making people’s housing and utilities bills more transparent. We also need to provide support for citizens with low incomes. We must develop an information system that will let people carry out unobstructed monitoring of what they consume and what and how they pay for these services. This information is in such a muddled state at the moment that even people with a financial background can’t figure it out. People realise what is going on only when the time comes to pay the bills.

I also want to draw the Government’s attention to the requests from the regions to develop a new system for financing complete overhaul of multi-apartment buildings. Many regions are only now starting to address this task, and they should not be left to deal with the problem on their own. This is something we discussed at one of the extra-mural meetings not long ago.

We need to attract people who are not indifferent and know how to take the initiative into getting involved in reforming the housing and utilities sector and establishing a public oversight system. There are people out there who are offering their services and are willing to work, and we should support them. The local authorities should not shut themselves away from the public in their offices. They need to be accessible and work directly with people, meet with them and reach mutual understanding with them. We will only be successful in improving the quality of housing and utilities services if we can secure people’s support and give them confidence in the authorities and in our work.

Let’s now discuss the report the State Council’s working group prepared.

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