Russia, Moscow, VDNH, Pavilion 55, 57
30 June 2020

Governmental support will accelerate the replacement of elevators

On June 15, a meeting was held in the Ministry of Construction of Russia on the development of governmental tools of support to replacement of elevators in the framework of regional programs for overhaul in apartment buildings.

Sergey Chernyshov, head of Commission on elevators of the Public Council under the Ministry of Construction, a member of the Presidium of the Public Council, reminded that the elevators with expired lifetime in the residential stock of the Russian Federation, shall be replaced by February 15, 2025. 

This large-scale objective follows from the content of the Technical regulations of the Customs Union "Safety of elevators" (TR TS 011/2011). 

The analysis conducted by the Ministry of Construction of Russia showed that a significant portion of the constituent entities will not be able to cope with it in time without a governmental support. The contribution of owner coming into the overhaul funds are often insufficient for this, especially difficult situation with replacement of the elevators in the apartment buildings, where the overhaul funds are accumulated in special accounts. 

Upon coming to such conclusions, the Ministry of Construction of Russia addressed to the government, which responded and instructed the Ministry to promptly present its vision of governmental support mechanisms for upgrading of the elevators park. 

According to Sergei Chernyshov, initially the professional elevator community was inclined to the idea of subsidizing by the state of each elevator replacement, but the government indicated another vector of state support - subsidizing the interest rate on the loans for the replacement of elevators. 

There are two directions within this framework: 1) development of the mechanisms for subsidizing the interest rate; 2) study of the opportunities for leasing of the elevators in the residential apartment buildings. 

In the opinion of experts, it is expedient to subsidize the interest rate in two cases: 1) if a contractor receives a loan and provides a installment payment for the overhaul fund,  then it is feasible to compensate the interest to the contractor or bank that provided the loan at the rate of refinancing (5,5%); 2) in factoring, when the state budget compensates to the contractor the interest at the rate of refinancing of the factoring company that bought the regional operator debt.
As for credits to overhaul funds and special accounts by the banking sector, it is unlikely that government support will come soon. Although the Ministry of Construction methodically develops this area of activities, the professionals see there a large amount of risk for banks and other outstanding issues. 

From the experts’ point of view leasing in a residential stock is unacceptable for a number of reasons. For example, a leasing company is not entitled to transfer elevators to the property of an overhaul fund at the conclusion of a contract, since in accordance with the Urban Development Code of the Russian Federation the elevator belongs to the general property of the apartment building
In addition, in the housing and public utilities the leasing model is not viable, because there is no secondary market for elevators, and the elevator as a collateral cannot be taken from an apartment building without acute social consequences. 

Therefore, the well-tested by the industry projects of accelerated elevators replacement, which will receive the governmental support through the forthcoming government ordinance, remain a reliable mechanism to get in compliance with the important requirement of the Technical regulations by 2025. 

If the industry businessmen jointly with the Ministry of Construction manage to elaborate the ordinance draft promptly, the industry will open up new opportunities to increase the market for sales of the products, loading with work of many thousands of specialized elevator organizations, ensure safety and comfort of the citizens living in the apartment buildings.