Publication: Monitor Volume: 3 Issue: 84

On April 28 Russian president Boris Yeltsin signed a decree ordering an increase in utility fees and the introduction of competition in the provision of housing services. First Deputy Prime Minister Boris Nemtsov said the decree lays down general principles and instructs the government to come up with a detailed program in three months. (Interfax, RTR, April 28) Individual plans will have to be drawn up for each region, and federal funding will be tied to the speed with which regions introduce utility reform.

Yefim Basin, the chairman of the State Committee for Housing and Construction, will be in charge of implementing the reform. Basin said housing uses one third of the country’s energy and one third of capital investment, with operating subsidies amounting to 100 trillion rubles ($17 billion) a year. (NTV, April 28) The installation of meters will encourage people to economize, and should cause a one third fall in consumption. Nemtsov said competition should lead to an improvement in communal services, and prevent providers from arbitrarily cutting off supplies or hiking prices. Currently, tenants cover just 27 percent of utility costs: the plan is to raise this to 35 percent in 1997 and then in steps to 100 percent by 2003. Subsidies will be paid to any family whose utility payments exceed 16 percent of their income (rising to 20 percent by 2000).

Increases in utility payments in St. Petersburg and Saratov earlier this year led to street protests, and Moscow mayor Yuri Luzhkov has bluntly stated that he will not implement the reform. (RIA Novosti, April 27) Even assuming that regional administrators press ahead, the ingenuity of Russian consumers should not be underestimated. St. Petersburg residents have learned how to disable the new meters by inserting a film strip, which is removed when the inspector arrives.

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