Rising Cost of Utilities in Ukraine

February 11, 2007

A big topic in Ukraine right now is the dramatic increase in the cost of utilities (water supply, hot water, plumbing, gas, etc.) for apartment owners that rippled across the country in November-December 2006. These services increased by two to three times in most cities. Reasons for the rise are increasing natural gas prices, debts in the utitilies industry, and behind-the-scenes power shuffles.

Until the changes, utilities prices were quite low compared to European countries, with the average household in a one or two-room apartment paying $15-25 USD a month on utilities and building maintenance. Now, many Ukrainians' low salaries and pensions do not allow them to pay the new rates, and they are scrambling to register for government subsidies according to the new rules that have been publicized.

The drastic increase in utilities prices has spawned discontent and even some demonstrations and political battles across the country, most notably in Kiev. As a result, the Kiev city council has just decreed to reduce the cost of utilities to just under twice the level they were before December 1st, 2006.

Utilities are controlled by state-owned companies that are almost universally criticized for poor service and inefficiency. The rise in utilities rates has highlighted the need for reform in utilities management.

Another controversial topic is the use of water meters and autonomous hot water systems by apartment owners. Most apartments lack water meters and must pay the "average water consumption rate" for their building regardless of their actual water usage.

Some apartment owners prefer to install autonomous hot water and heating systems in order to control their expenses and save money, but they must go through an often difficult and lengthy approval process. In many if not most cases they are turned down, and local authorities have tried to prohibit this practice in order to keep the money coming into the communal utilities fund. Also, some sources say the heating units are not completely safe or produce unhealthy emissions.

Ukraine's community utilities strategy will require a lot of development in coming years to handle rising energy prices and demands of modernization.

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