Development and modernization of the utility infrastructure to assure quality of the utility services is now one of the RF strategic areas. In his February Address to the Federal Assembly the President Vladimir Putin set the task to ramp up modernization of this infrastructure, having said that up to 2030, 4.5 trillion rubles will be allocated for these goals, including private investments.

The utility infrastructure modernization program is already developed. However, the extreme deterioration of the housing sector and utility networks is one of the main problems of the housing and utilities sector preventing from a powerful leap forward.

«The RF utility infrastructure, basically heat supply and electric power supply, are characterized by heavy wear», says Pavel Kachkaev, First Deputy Chairperson of the State Duma Committee on Construction and Housing.

He provides the data of the Ministry of Construction, according to which almost 42% of networks, that is nearly 400 thousand km, need to be replaced.

«Utility systems have grown obsolete and fail to comply with modern environmental standards. Insufficiency, wear and tear or lack of the surface waters transport system in the majority of cities poses direct threat to people’s health and property, as well as to the country’s economy», Olga Serdyuk, Deputy Executive Director of the Association of Utility Companies «Unified Housing and Utilities Council», estimates the current situation.

The population’s fear relating to utility accidents goes right after the fear of terrorists. This follows from the survey cited as an example by Olga Serdyuk.

«As it turned out, people are afraid of terrorists most of all, the third place is occupied by mice and rodents, and utility companies are in-between. So, we are somewhere between terrorists and rodents», she smiles.

In general, the state provides for big investments for modernization of the housing and utilities sector. Maria Sinichich, Director of the Department of Integral Territorial Development of the Ministry of Construction Industry, Housing and Utilities Sector of the Russian Federation, tells about an aggregate amount of 1 trillion rubles, that includes the entire package of measures – seven publicly funded infrastructure loans and additional proposals on modernization of the utility infrastructure (since 2025, 150 billion rubles will be provided in the budget, an option of indirect subsidizing is also under consideration).

But, as the industry representatives consider, the program of utility infrastructure modernization will not be implemented without raising private investments. However, today the largest owners of the utility infrastructure are the state and municipalities, and private investors who are desperately needed by the public utilities are not actually involved in this sphere.

This problem was outlined by Andrey Maksimov, General Director of the Union of the Russian Cities. According to him, the actual network upgrading rate is planned at about 2% per year. Meanwhile, 3% per year are required just to maintain their technical condition, the strategic documents provide for 5% per year.

«We won’t go far without these 5%! If we do not allocate them, no business will ever undertake this», he said.

Olga Serdyuk believes that only an integrated approach may be the way out.

«To have successful results in the long run, we have to provide for the project integration, that is to fund comprehensive programs and not just their elements. Along with that it is necessary to prioritize the projects bringing maximum effects; to enhance competency of the technical and organizational decisions taken; to provide flexible instruments for funding and implementing the program», she says.

Olga Serdyuk is of the opinion that first of all it is necessary to ensure implementation of projects aimed to enhance reliability and sustainability and of those having maximum economic effects. It is essential to improve the quality of resource supply schemes by ensuring their digital implementation, and, due to digitalization, to enhance control over the execution quality of modernization schemes and programs. In this case, budgetary funding should be combined with the funds of the investors and bank financing, by applying various mechanisms of the public private partnership.

«All accidents that happened this and last year are the consequences of those decisions that were taken or failed to be taken 5–6 years ago. Therefore, we should initially elaborate the rules of the long-term programs so that municipalities and all market participants could understand the long-term prospects, and make more transparent the rules for the industry enterprises’ participation in the programs on utility infrastructure modernization, so that everyone could plan financing of such participation», concludes Olga Serdyuk.