Financing: USAID Energy Security Project (USAID ESP)


Role of MDI Ltd.: Project implementer


Timeframe: April 2021 – February 2022, June 2023 - October 2024


The overall objective of this assignment is to provide support to the Ministry for Communities, Territories and Infrastructure Development of Ukraine (MinInfrastructure) to improve tariff regulatory framework in the area of district heating and to implement the Incentive Based Regulatory framework for district heating activities carried out by licensees of local governments.


Specifically, MDI will work on achieving the following objectives:

  1. Provide support to establishing a framework (rules and procedures) for accounting and reporting by licensed activities.
  2. Provide support to improving current DH tariff setting methodology (“cost plus”) and drafting relevant amendments to current regulatory framework.
  3. Provide support to implementation of RAB-based tariff setting for heat transportation activities.
  4. Provide support to resolving asset revaluation problem before applying incentive based (RAB) tariff framework.
  5. Provide support to development and application of Incentive based (RAB) tariff framework for thermal energy generation.
  6. Provide support to revising framework for long-term investment planning into DH systems.
  7. Provide support to ensuring monitoring and disclosure of aggregated data on investment programs by DH entities.

Upon ESP’s request due to the Russian invasion of Ukraine the implementation of Project tasks according to Project Work Plan was put on hold in early March 2022. At the same time, MDI continued to finalize the tasks whose implementation had started before February 24, 2022.


In June 2023 the project was relaunched.


Project events

April 27, 2021 –kick-off meeting with MinInfrastructure
May 15, 2021 – project start (implementation begun)
November 2, 2021 – Draft Routine (Rules) for Accounting by the Licensed Activity Types in DH discussed with MinInfrastructure and licensees (online)
November 11, 2021 — concept for investment activity regulation in the future discussed with MinInfrastructure and licensees (online)

June 14, 2023 – kick-off meeting (ESP Project re-launch after a hiatus)

July 5, 2023 – kick-off meeting with the SCE “Lutskteplo”, a pilot enterprise, which will be testing the elaborated proposals on improvement of “cost+” tariff formation approach

July 28, 2023 – meeting with MinInfrastructure representatives (discussion of the Project’s Work Plan)