Money for the pipe: The Ministry of Construction plans to update the housing and communal services industry

The Ministry of Construction and Housing and Communal Services of Russia has proposed a radical reform in the housing and communal services sector: to allow the use of budget funds for the modernization of private communal facilities. According to experts, this initiative is capable of changing the logic of the existing market, from restoring abandoned networks to reducing tariff pressure on citizens.​ Details can be found in the Izvestia article.

The budget goes down the drain

The Russian municipal infrastructure system is going through a critical moment: over 40% of the water supply, heat supply and sanitation networks need to be replaced. At the same time, current regulations prohibit the allocation of government subsidies to private property. The Ministry of Construction intends to eliminate this gap by creating uniform conditions for financing regardless of the form of ownership. In the federal budgets of 2025-2026, 47 billion rubles are allocated for this, which will be the first step towards a comprehensive renewal of the industry.​

Photo: RIA Novosti/Vladimir Astapkovich

Privatization of water supply is prohibited, but there are many heating systems in private ownership, said State Duma deputy Svetlana Razvorotneva. Private owners do not always have the resources to restore facilities to normal. Budget co-financing will help to solve problems faster. She notes that for many years the government has relied on private investment, but low profitability and the unpredictability of tariffs have scared off investors. In some cases, the payback period of some water utilities exceeded 100 years.

"Today, it has finally been understood that the state of the infrastructure is the responsibility of the state," the deputy adds.

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At the same time, the cost of work in the MCD may rise in price, industry experts say.

Infrastructure wear reaches 70%, and only 1.5% of networks are updated annually. This situation cannot be reversed without government intervention, says Vladimir Koshelev, first deputy chairman of the State Duma Committee on Construction and Housing and Communal Services.

According to him, the use of the budget for private assets is permissible only under the strictest control, so that "taxpayers' money does not turn into a gift for unscrupulous businesses."

Photo: RIA Novosti/Pavel Lisitsyn

He believes that the new mechanism should be accompanied by an audit of all operators in order to exclude cases when profits are withdrawn without investments in modernization.

"The main goal should be the preservation of vital infrastructure, not the enrichment of the RSO,— adds Koshelev.

Economics of modernization: balance or skew

Lina Tkachenko, President of the AKON Association, sees in the proposal of the Ministry of Construction a revision of the tariff logic of housing and communal services.

— The tariffs of resource-supplying organizations already include modernization costs, and concession agreements allow them to be indexed in order to return on investment. But before allocating new funds, you need to understand where the money already raised has gone," she emphasizes.

Deputy Razvorotneva, in turn, focuses on the fact that budget loans will help curb the growth of tariffs: the population should not pay for the modernization in its entirety.

Photo: TASS/Kirill Kukhmar

"This will also attract private capital, because loans are too expensive for the industry today," says the parliamentarian.

These changes are aimed at achieving the indicators of the national project "Modernization of communal infrastructure", approved by presidential decree. We are talking about the repair of buildings with a wear rate of over 70%. At the same time, no significant increase in tariffs is expected, said Andrei Zhbanchikov, an expert in the housing and communal services sector.

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Ownership and accuracy of wording

The state of the networks varies in the regions. In many cases, resource-supplying organizations only lease property from municipalities, which have the right to allocate funds for repairs, explains Sergey Kostyuchenkov, Chairman of the Committee on Housing and Communal Services of the Tula Chamber of Commerce and Industry.

He emphasizes that with a competent legal structure, budget participation is possible today, without violating the law, but at the same time it is necessary to tighten control over the investment programs of the RSO, which often do not fulfill their obligations.

Photo: TASS/Oleg Spiridonov

Razvorotneva agrees with this: "It will take at least 4.5 trillion rubles to upgrade the networks, one third of which will be provided by budgets, the rest by private investment. However, with a high key rate, the rate of network replacement depends on how comfortable conditions we create for investors."

At the strategy level

The Ministry of Construction confirms that work to improve the quality of life of citizens is proceeding systematically. The Ministry is implementing the federal project "Modernization of communal infrastructure" as part of the national project "Infrastructure for Life". The plans provide for the construction and repair of more than 7 thousand facilities and the replacement of over 140 thousand km of networks by 2030.

"By this date, we must provide high—quality public utilities for 20 million Russians," the ministry said in a comment.

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According to the Ministry of Construction, almost 2,000 investment programs are being implemented and 2,449 concession agreements are in force, 90% of which are financed by private capital.

"The mechanism of budgetary participation in concession projects will allow to untie the knot that prevented the renewal of networks. The main thing is to maintain transparency and efficiency," the ministry said.

Photo: RIA Novosti/Konstantin Mikhalchevsky

Expert Andrey Zhbanchikov adds that "by 2030, it is necessary to invest at least 4.5 trillion rubles. This is the only way Russia can reach a new level of communal development."

The initiative of the Ministry of Construction, in fact, opens a new page in the history of housing and communal services. The government is ready to share finances, but requires transparency and accountability. According to expert estimates, by 2026, we can expect a doubling of network upgrades, which will partially stop the degradation of infrastructure and make the industry attractive for investment.​

"As a result of this step, it is important to prevent the repetition of old mistakes, so that the state does not become a hostage to other people's debts again," Lina Tkachenko emphasizes.

Budget funds will go into the pipes, but they will return with increased trust, quality of services and reduced accident rates. Such a course, according to experts, may become a turning point for the Russian housing and communal services.