Experts Discuss the Decline in the Consumption of Oil and Oil-Products in the Heat Supply System

21 april 2016

The Analytical Center has held a discussion of the action plan to improve the state regulation aimed at promoting lower consumption of oil and oil products for heating.

Victoria Gimadi, the Head of the Department for Fuel and Energy Sector of the Analytical Center, reminded those present that the goal of the Plan was to reduce the cost of heating for consumers by replacing oil and oil-products used in utility boiler rooms with alternative fuels where it made economic sense. During the event experts discussed Items 2, 3, 4 and 6 of the Plan and made recommendations on how they could be improved.

Item  2 deals with environmental and energy safety; and its goal is to offer municipalities methodological aid in assessing projects. There are four categories for assessing safety whose criteria are regulated by various statutory documents. The experts looked at how exhaustively safety issues were covered during the implementation of investment project and considered options for sharing responsibility for monitoring it. “We have already got all of this in existing regulations and statutory acts, all the requirements get taken into account, so it would be wrong to create a new document that would prevent projects from getting approved for implementation,” said Evgeny Chicherov, Deputy CEO of ETS-Project LLC. The expert added that there is a chain of organizations supervising energy safety issues. A similar viewpoint was expressed by Sergey Sivaev, Senior Director of FCPF OJSC: “We are already overregulated so instead of trying to come up with new regulations we should be thinking about which of the existing administrative barriers could be removed.” Experts also believe that special attention should be devoted to issues having to do with reserving fuel.

As for Item 3 that deals with methods to account for subsidies to compensate for the reduced revenue of new boiler rooms, Mr. Sivaev believes that the mechanism of concession agreements would be a better solution here. “The situation with concessions looks more optimistic because if we compare concessions to other available mechanisms, the risks are going to be lower,” he said. The expert does not think that developing a regulatory contract system would be justified.

Experts also discussed proposals for how to incentivize the heads of local government authorities to switch their boilers from oil and petroleum products to alternative priority types of fuel and the need to harmonize the provisions of regulations governing the rates with those government concession agreements in the heating sector.