Dragomir Tsanev, Eneffect: The technical passport of the buildings can be paid by the state following the example of many EU countries

From 2023, the renovation will be done with 20% of the costs of the owners, but there are still no credit opportunities to finance the deductible

Energy / Analysis / Interview , Bulgaria
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Raya Lecheva

We are talking to Dragomir Tsanev, Executive Director of the Center for Energy Efficiency "Eneffect" about the funds for renovation of residential buildings in the Recovery and Sustainability Plan. In reality, the measure for residential buildings is a continuation of the National Energy Efficiency Program. It takes a similar approach to funding in that it continues to insist on a 100% grant for buildings applying by April 2023. The difference is that these buildings must apply with a technical passport, including a technical and energy audit, which the Owners' Association must provide with its own funds. One of the pitfalls in the transition to the program of the Recovery and Sustainability Plan is that the consulting service for the preparation of technical passports will be taken over by the owners. There will be no support before that. Dragomir Tsanev shares what changes are ahead to promote the energy efficiency of buildings in our country and whether there are more pitfalls.

Mr. Tsanev, is there a serious resource for energy efficiency in the Recovery Plan? What do you think are the challenges to the effective use of these remediation tools?

The Recovery and Sustainability Plan has several areas for energy efficiency - for residential and non-residential - administrative and industrial buildings. They must be considered separately, because the written rules for each of them have their own specifics. In reality, the measure for residential buildings is a continuation of the National Energy Efficiency Program. It takes a similar approach to funding in that it continues to insist on a 100% grant for buildings applying by April 2023. The difference is that these buildings must apply with a technical passport, including technical inspection and energy audit, which the Owners' Association must provide with its own funds.

It is not fixed where he will apply, whether he will be in the municipalities again or there will be another center, which will be quite unproductive at the moment. Information about the option to apply directly to the Ministry of Regional Development and Public Works appears in the public space. If this happens, it has already been tested, it doesn't work. The fact that project management was transferred to the municipalities was one of the few good things in the National Energy Efficiency Program. Municipalities are much more flexible and interested in providing the service and have more trust in citizens.

What will be the change in the percentage of citizens' deductible for rehabilitation?

From 2023, it is expected that a 20% deductible from owners will be introduced. But there is a big "But" here. It is not clear how these 20% will be provided. There is currently no clear mechanism. It relies solely on citizens' own funds, and there is no mechanism for preferential credit or interest-free credit. There is also no specific text that says that the energy poor will continue to benefit from 100% support because low-income people cannot take out loans and are presumed to have no savings.

How are people expected to participate because there is a risk that the funds will not be used effectively? With what legislative changes, the Deputy Minister of Regional Development Mr. Asparuhov said that changes are being prepared in the Law on Condominium Management?

There should be a fan of measures and financial instruments, including those in which owners' associations benefit from a lower grant, but make their own decisions and do not have to wait for state aid. The first and most important thing is, of course, to make the planned changes in the Condominium Management Act. With them, for example, to impose the opinion of the majority in one direction or another without the possibility of an individual owner to interfere with the decision of the condominium. Another change that could take place is to enable the owners' association to have its own bank accounts in which to collect and provide guarantees to a lending institution that they are solvent and can repay the loan, although this is a secondary factor. These are basic changes that are part of the established European practice. At the same time, there must be specialized financial instruments that allow condominium loans to be taken from a specialized intermediary or from individual households.

Every building must have a professional house manager and why?

These financial instruments can be very diverse. What a professional community perceived as the most appropriate is to use a specialized intermediary who not only manages the process, but even can take or guarantee credit for condominiums. This loan can be repaid after the implementation of the condominium measures, ie. once savings have already been generated. It would be logical for this specialized intermediary to be a professional building manager in combination with an energy consultant so that they can provide a comprehensive service. And the payments of the owners should be linked to the already existing payments to the manager of the building. Thus, owners who do not want to finance this renovation with their own funds, can add to their contribution to the entrance manager and the amount to repay a loan for building renovation. The cost of renovating an apartment is roughly about 20,000 levs. With a 20% deductible, this means BGN 4,000, which a household must set aside to participate in the renovation program. According to the possibilities of the households, some of them can be provided from existing savings, and the rest can be distributed in the future after the implementation of the measures and the realization of savings. They can be paid as supplements to the contributions that are paid to the house manager or facility manager anyway. With a normal payback period of 5 years, this means a fairly minimal monthly load, which will certainly be less than the savings.

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