Ban on communal enterprises: why tariffs may increase drastically

The head of the Union of Consumers of Communal Services Oleg Popenko spoke about an important change that has occurred in Ukraine. According to information from 'Hvylya', a new law that came into force on August 28 prohibits the establishment of new state and communal enterprises. Additionally, all existing communal enterprises will have to re-register as Limited Liability Companies (LLC) within three years.

Opposition to Innovations

'This is complete mockery. Communal enterprises exist in Germany, Poland, the USA - in most countries of the world. A communal enterprise is one where local self-government bodies are the owners,' Popenko explained.

Popenko believes that the changes could lead to the enrichment of elites and an increase in corruption. He warns that during the re-registration, the owners of the enterprises might change to offshore companies, creating new threats to economic stability.

Risks for the population and communal services

Experts believe that the transition to private ownership could lead to a rapid increase in communal tariffs. Small settlements, where communal enterprises perform important social functions, will be particularly vulnerable to these changes. Moreover, the new scheme may cause losses in city subdivisions and the force from tariff increases and deficiencies of the new management system.

Previous state and communal ownership in Ukraine is transitioning into private hands, which may lead to the enrichment of elites, the expansion of corruption, and an increase in communal tariffs, especially for small settlements. This could create new challenges for the management and quality of communal services in the future.