Independent NGOs Ask the Government to Announce a Long-Term Plan for Monetizing Subsidies by the End of the Year

08 December 2016

Independent NGOs operating in the field of energy and energy efficiency filed an open letter to Prime Minister of Ukraine Volodymyr Groysman asking to announce by the end of the year a long-term plan for a phased transition to the monetization of subsidies with a gradual reduction of social normative standards, and provide an opportunity for the recipients of subsidies to use the funds saved as a result of the difference between the normative and actual level of consumption in the relevant heating season.


"We believe that timely and responsible commitment of the Government regarding the plan to monetize subsidy will encourage energy saving and energy efficiency projects, without prejudice to instruments of state support for vulnerable customers," states the letter.


The appeal was signed by the Civic Network OPORA, the DiXi Group Think Tank, the Ukraine Crisis Media Centre, the Institute of Social and Economic Research, the Ukrainian Centre for European Policy, the Association "Energy Efficient Cities of Ukraine", the Energy Efficiency and Energy Saving Association, and the Bioenergy Association of Ukraine. 

A long-term plan for a phased transition to the monetization of subsidies, according to the authors, should include: cancellation of clearing settlements with heating enterprises; gradual reduction of social normative standards for calculating the subsidy amount; creation of a single database of the recipients of subsidies and monitoring actual consumption of each household; timely financial settlements between the state budget and public utilities enterprises and apartment building co-owners associations; implementation of the mechanism for reviewing the intended use of saved funds (which can be borrowed from the existing energy efficiency programs); development of the mechanisms for transferring funds directly to the settlement accounts of the public.


In addition, due to incomplete criteria for evaluating the solvency of applicants for subsidies and the existence of cases of abusing the program by people who do not really need public aid, the signatories consider it necessary to:

  • expand the list of grounds under which the subsidy is not granted;

  • expand the list of types of income that are taken into account for assigning subsidies;

  • implement a strict grantee verification procedure;

  • implement "means testing" procedure: checking the real level of household income and expenses.


It should be mentioned that the Ministry of Social Policy predicts that the number of households that need subsidies to pay for housing and utility services will increase from 5.5 million to 8.5 million in the 2016-2017 heating season after the establishment of a uniform gas price for all categories of consumers since May 1.


According to the Institute of Social and Economic Research, only 25% of recipients of subsidies are really poor and need help.

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