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. Last Updated: 07/27/2016

Kasyanov Makes His Case in Duma

Warning that large and small utilities across the country are on the verge of collapse, Prime Minister Mikhail Kasyanov urged lawmakers on Wednesday to act quickly to prevent a looming disaster in housing infrastructure.

Kasyanov, making a rare appearance at the State Duma, also demanded that deputies approve a sweeping revamp of the electricity industry in a crucial vote Friday.

"Stupid and counterproductive subsidies must be done away with" in the housing sector, Kasyanov said.

He said some 300 billion rubles ($9.5 billion) is needed to modernize utilities such as water, sewage, electricity, gas and heating and, with the proper financing and work, the desperate situation could be turned around in five years.

"Any further foot-dragging on housing reform is fraught with grave risks and will worsen the quality of life of our people," he said.

Kasyanov, who usually does not visit the Duma more than twice a year, spoke during the so-called government hour at the request of the lawmakers, who had asked him to report on the state of utilities. The Duma had asked Kasyanov to give the report last month, but when he sent a deputy on his behalf irate lawmakers canceled the session -- a reaction that underlined the politically charged nature of the issue.

A week later, President Vladimir Putin said housing infrastructure was in ruins and that this should "galvanize local and regional authorities and the government to change things."

He told the Duma to consider legislation for two reforms -- housing and electricity -- as interconnected and crucial to the economy and expressed hope for "the collective mind and wisdom of the parliament."

Kasyanov on Wednesday accepted a Duma proposal to set up a joint commission of government officials and lawmakers to draw up housing reform plans.

People's Deputy faction head Gennady Raikov, who proposed the commission, asked Kasyanov to push the ministries to come up with ideas for the reform.

"You're an assertive man, Mikhail Mikhailovich, so show some character and bring your fist down on all these federal agencies," he said at the end of the session.

Kasyanov acknowledged that a lot of work needed to be done to hammer out the issue. The Duma has passed a package of reform bills in a first reading that does little more than divide the rights to regulate public utility fees between the federal government, regions and cities.

More than 350,000 people have spent at least 36 hours this winter in unheated apartments, offices, schools and hospitals because of large breakdowns in municipal heating systems, Kasyanov said.

The number of breakdowns across the country grew from 175 in 2000 to 222 in 2002, he said, adding that 75 major utilities failures have occurred in 38 regions since the beginning of winter.

Much of today's infrastructure was constructed in the 1960s when there was an urgent need to build housing, pipes and power lines have never been renovated.

Federal funding and tariff hikes have not helped, largely because the entire infrastructure is out of whack.

"Up to 50 percent of heat and water that has been paid for by consumers is lost in the system," Kasyanov said.

Last year, the government spent 34 billion rubles on subsidies for consumers, and this year spending has been doubled.

Tariffs on housing services are growing fast, increasing 8.3 percent in January alone.

Kasyanov said that instead of hiking tariffs, officials need to concentrate on reform that would introduce competition into the sector and make "a real business project out of a black hole."

Turning to electricity reform, Kasyanov told the Duma that it was high time to pass in second reading the package of bills that lawmakers have subjected to repeated delays.

"Unlike housing, reform measures for the electricity industry might not seem urgent, but that would be deceptive," Kasyanov said. "We should learn the lesson of the housing sector and avoid the old Russian proverb 'A man doesn't cross himself until the thunder rolls." If we don't start acting now, the thunder will be rolling in five years."

Although Kasyanov had only been asked to address housing issues, Duma deputies brought up electricity reform in an attempt to get assurances that the government would take complete responsibility for its outcome.

The proposed overhaul of the electricity industry and restructuring of power monopoly Unified Energy Systems is one of the most complicated reforms Russia has ever tried to tackle.

"We are ready to bear the responsibility and are asking the Duma to approve the amendments," Kasyanov said, a reply he gave about five times as different deputies asked the same question.

Deputies are worried about any fallout from the reform that could cost them their seats in elections this fall.

Putin made Kasyanov personally responsible for getting the bills pushed through the Duma after lawmakers refused to vote on them in December.

Kasyanov said the amended bills guarantee the creation of a market with competitive prices. He said, however, that the government cannot be fully responsible for tariff hikes throughout the country. Regional commissions have free rein to set their own rates.

In response to tariff concerns, the Duma on Wednesday adopted a resolution asking the federal government to force regions to bring their rates within the legal limits.

The government has ordered the regions not to raise electricity prices by more than 14 percent for all of 2003. However, 23 regions, including Rostov, Samara, Saratov and Irkutsk, have increased electricity rates already by 30 percent to 50 percent, said Vyacheslav Volodin, head of the Fatherland-All Russia faction.