Energy saving requires investments and large-scale modernization - an expert

Public procurements are often not focuses on the profitability and efficiency of transactions.
5 February 2015 Verkhovna Rada (Parliament) of Ukraine adopted the draft law "On introduction of new investment opportunities, rights and legal interests of subjects of entrepreneurial activity for large-scale energy modernization."
In Ukraine there are about 98 thousands of financial institutions. The costs for heating are 2-3 times higher than the corresponding level of heating costs budget of the institutions of the European Union. It should be noted that the ratio of energy consumption to gross domestic product is one of the largest in the world. On import of energy carriers for heating, we spend over 15 billion US dollars. It is a very big price.
The important question is about the wide implementation of energy service contracts, while ensuring the rights of investors. The implementation of targeted investment policy in the sphere of energy saving, aimed at reducing of energy dependence of Ukraine on imported energy, creates conditions for attracting investments, development of foreign trade activities, ensuring the rights and legal interests of subjects of entrepreneurial activity, the development of Ukrainian industry.

"If the public procurement of energy are carried out by the public procurement procedures in the manner prescribed by the Law of Ukraine "On public procurement", the most important innovation of the new legislation, according to the legislators, should be made to determine the most advantageous proposals for public procurement considering energy saving. To determine the economically most advantageous offer, the customer instead of such a criterion, as the contract price, evaluates and compares such criterion as an indicator of the efficiency of the energy service contract," - said Adrian Fitio.

The performance indicator of energy service contract is calculated according to the methodology applied in the financial and economic calculations, and is much more accurate and more relevant criterion than just the price of the contract. Simply, the energy service company implements energy efficiency projects at their own expense, which returns from the savings costs of consumption of energy resources and utility of energy service during the term of the contract. The duration of the contract is from 3 to 15 years.

"The approach to project-based management in public procurement will contribute the reducing of unit costs, extremely scarce for Ukraine energy, increasing the efficiency of both public and corporate finance, in turn, will contribute to balancing demands for currency, and led to the stability of hryvnia. NGO "Community Development" considers it necessary to support this bill, and suggests that the MPs will not delay the crucial vote," said the expert Adrian, Fitio.