Financing: USAID
Role of All-Ukrainian Charitable Organization "Municipal Development Institute": subcontractor to International Resources Group
Project implementation period for MDI: January 2014 – March 2018; extension: April 2018 - March 2019



During January 2014 - March 2018, the Project worked to achieve the main goal - enhancing Ukraine's energy security - by improving energy policy; developing energy efficiency; increasing investments in the energy sector; increasing end use energy efficiency; cutting GHG emissions and energy expenditures and imports. In April 2018 the Project got extension and the task for MDI is to provide assistance in planning, optimization and development of heating networks.  


MDI Tasks and Achievements


Heating networks planning, optimization and development


   Assistance to the Ministry of Regional Development, Construction and Housing and Municipal Economy in heating networks planning, optimization and development. Documents prepared for the Ministry include:

  • Collection of Laws and Regulations, Technical Rules and Standards regulating DH sector in whole and heat energy transportation in particular
  • Overview of legislation that is seen as an obstacle to the long-term development planning in the DH sector, incl. heating networks development
  • Overview of authorities and competences of key players in DH sector - as regards long-term planning for heating networks development
  • Overview of authorities and competences of key players which are seen as an obstacle to the long-term planning in DH sector, incl. heating networks development.

   Collaboration with Kyiv Heating Company on Kyiv heating network planning, optimization and development, including institutional and skills development for Company's staff (6 trainings - 350 participants) and tariff assistance (tariff for heat energy was calculated for the Company based on the Company's actual needs in resouces for operations and investment).


   Collaboration with the Ministry of Regional Development, Construction and Housing and Municipal Economy to implement incentive-based tariff regulation by DH companies, who receive licenses for carrying out operations from oblast governments and Kyiv City State Administration:

  • White Book on Incentive Based Regulation in District Heating Sector in Ukraine was prepared;
  • following the Round Table with Deputy Minister of Regional Development Eduard Krugliak in October 2018, a Working Group was established for drafting normative and legal acts on incentive-based regulation for such heating companies


Legal drafting


   bill on the specifics of the right of ownership in a multi-family residential building – adopted in 2015 as Law #417

   bill on changes to the Tax Code of Ukraine regarding taxation of some non-profit organizations – adopted in 2015 as Law #263-19

   bill on housing and communal services. In 2017, draft bill was passed by VRU in the second reading and in whole

   bill on Commercial Metering of Communal Services – adopted in 2017 as Law #№ 2119-VIII #№ 2119-VIII

   by-laws: for homeowners associations, including a new version of the Model Statute of a Homeowners Association


Tariffs, service quality monitoring, benchmarking, separate accounting for licensed activities


   17 training seminars were conducted for the National Regulator staff and licensees

   Asset Valuation Methodology for Natural Monopolies in Heating and Water Supply and Sewage Sectors was revised

   8 draft resolutions on incentive-based regulation in heating and water supply and sewage sectors were developed: 4 for each sector; all adopted during 2017-2018

   Test calculations of tariffs for heat energy transportation and centralized water supply and sewage were completed at the pilot utility companies: Chernihiv Heating Company Oblteplocomunenergo and Ternopil Water Supply and Sewage Company

   Key Performance Indicators were developed for introducing of benchmarking in water supply and sewage and in heating sectors

   Clustering of licensees in the heating sector was carried out 

   Quality indicators for heating sector (heat energy generation, transportation and supply) were developed

   Tools for automated monitoring of quality in heating and centralized water supply and sewage sectors were developed

   Reporting forms on quality of water supply and sewage services were developed; adopted in 2017

   Approaches to assessing the value of effectiveness indicator (X) and a series of target indicators, including quality indicators (Q) for heat energy transportation, district water supply and sewage, were developed

   Existing regulatory reporting forms were revised and necessary changes in the forms were introduced in 2017

   New reporting forms for licensees who decided to apply incentive-based tariffs were developed

   Rules/Procedure for separated accounting by type of licensed activity in water supply and sewage and in heating sectors were developed; adopted in 2017 

   Rules/Procedure for separated accounting in heating and centralized water supply and sewage sectors (for companies applying incentive-based tariffs) were developed


Social protection for consumers of housing and utility services


   Ministry of Labour and Social Protection received assistance to prepare for transition to monetized social assistance: Concept Paper was developed

   Ministry of Regional Development, Construction, and Housing and Municipal Economy received assistance to develop proposals on improvement of a social housing norm and a norm for consumption of housing and utility services

   State Agency for Energy Efficiency and Energy Saving received assistance to develop the concept for stimulating energy efficiency in households, housing subsidies recipients

   Regional social protection bodies were trained in provision of subsidies (trainings organized jointly with the Ministry of Social Policy of Ukraine and World Bank) 

online Subsidy Calculator was designed

   Information materials on subsidies were developed for general public (materials are available in Ukrainian)

   Drafting/revision of draft bills and by-laws:

  • draft order on unused subsidy amounts granted for payment for district heating (heat supply) services, cold and hot water supply and sewage services, supply of natural gas and electricity for individual heating (adopted as GOU Resolution #300 in 2017)
  • changing social norms for consumption of district heating and natural gas and electricity for individual heating (adopted as GOU Resolution #51 in 2017)
  • draft order for determining the ceiling of expenses incurred with payment for housing management in an apartment block, based on which subsidies are granted to population (edopted as GOU Resolution #1022 in 2016)
  • changing social norms for consumption of electricity supply services with time-based (separate) metering of electricity consumption (adopted as GOU Resolution #842 in 2015)
  • changes to Regulations on allocation and provision of subsidies for population to compensate for utility bills, purchase of liquefied gas, solid and liquid stove fuel (adopted as GOU Resolution #106 in 2015)
  • draft order on social housing norms and norms for consumption of housing and communal services for payment for which the government grants subsidies and establishes privileges (adopted as GOU Resolution #409 in 2014)


Assistance to municipalities to increase energy efficiency, reduce budget expenditures for provision of energy carriers to budgetary institutions, attract private investments to energy efficiency improvements


   First ever in Ukraine, the Regional Energy Plan for Odesa Region was developed

   Catalog of investment Projects and Investment Strategy and a Concept for Increasing Effectiveness of Public Transport were developed for Kramatorsk

   Design and cost estimate documentation was developed for 5 Homeowners Associations from Dnipro, Zaporizhzhia, Kamianets-Podilskyi, and Lviv

   9 SE(C)APs: Vinnytsia, Lutsk, Khmelnytskyi, Chernihiv, Izmail, Bilhorod-Dnistrovskyi, Myrnohrad, Pokrovsk, Rubizhne were prepared 

   PRAIP - The Program for Ranking and Analysis of Investment Projects, and User Guidance on PRAIP was developed for cities developing and implementing SECAPs

   Business Plans were prepared for Lutsk, Khmelnytskyi, and Pavlohrad in seeking NEFCO loan for increasing energy efficiency of budgetary buildings

   Design and cost estimate documentation on clean energy projects in budgetary buildings under PPP arrangements was developed for Kyiv and Lviv

   Bank LVIV received assistance to expand its lending program to SMEs by using USAID Development Credit Authority Loan Guarantee; 19 loans for the total of UAH 8,261,300.00 (USD 550,000; EUR 1,947,400.00) were issued


Carrying out information campaigns on energy efficiency and energy saving, dissemination of information materials


   Two seasons of Tviy Dim TV Program on UA:PERSHIY channel were produced with assistance from MDI

   Public hearings on SEAPs were organized in partner cities, condensed versions of SEAPs were developed and disseminated to public.

   Methodological Recommendations on Conducting of Public Hearings were developed (available in Ukrainian)

   Energy efficient behavior of school students was promoted through a school contest on energy saving in 16 partner cities (78 secondary schools)



Main documents prepared:

  1. White Book on Incentive-Based Regulation in District Heating Sector in Ukraine
  2. Recommendations on improving transparency of regulatory decisions on tariff formation and setting
  3. Recommendations on considering special aspects regarding performance of utility companies (currency risks, losses in networks, fines and penalties) in the tariff model 
  4. Revisions to Asset Valuation Methodology (in view of introducing of incentive based regulation) 
  5. Methodological Recommendations (Manual) for licensees on the long-term investment programs development in water and sewage sector, under incentive based tariff regulation
  6. Key Performance Indicators for the heating sector and initial data for assessing the value of indicators
  7. Report on Benchmarking of NEURC Licensees Operating in the Heating Sector
  8. Methodology and tools for conducting the survey on quality of certain utility services and willingness to pay for better quality services
  9. PRAIP – Program for Ranking and Analysis of Investment Projects and User Manual (in Ukrainian)
  10. Clean Energy Project Proposal Manual (in Ukrainian)
  11. Methodological Recommendations on Conducting of Public Hearings (in Ukrainian)