Monetization of subsidies: What to expect in March 2019

The government adopted a resolution that describes the mechanism of subsidies monetization, which will be launched in March. Samopomich deputy Aliona Babak explains what monetization is, why it is beneficial for people and, most importantly, that it is simple.

What is the monetization of subsidies?

This is special-purpose social assistance of the state for the payment for housing and communal services in cash. It concerns almost 4 million households that are recipients of subsidies in our state.

Where do I get my subsidy?

About 70% of these 4 million receivers of subsidies are pensioners. They will get their subsidy along with their pension. Public sector employees who are serviced at “Oshchadbank” will also be able to receive subsidy funds through their cards. All other citizens will receive information in their mailboxes that they can get their funds in any branch of “Oshchadbank”, and the same message will indicate what kind of documents they will need to have in order to receive these funds.

Previously, the Ministry of Social Policy stated this would be just an identity document.

Can one spend subsidies at their own discretion?

Subsidies are special-purpose. They are the state’s assistance for people’s payment of utilities. It is not exactly right to say that people can dispose of them at their discretion. People receive these funds, pay for utilities, and if they have something left, then they can use the balance at their own discretion. For those who have overpayments in February bills at the expense of subsidies from the previous periods, it is advisable to keep the funds that the person will receive after introducing monetization and not use them until all the checks on subsidies are completed so that there are funds for the final settlement. Later, these funds can be used at people’s discretion. As not to have any unpleasant surprises, it is better to keep the funds till May.

Is the monetized subsidy larger or smaller?

The amount of the subsidy is the same. If a person is granted a subsidy of 1,000 hryvnias for some services, then one thousand hryvnias will be paid in cash. The amount does not change, the calculation algorithm is the same as with the non-monetized subsidy.

Condominiums and monetization of subsidies

The monetization of subsidies does not apply to condominiums. According to the law, the subsidy is paid to citizens in cash. Therefore, condominiums neither have to open any accounts in “Oshchadbank”, nor submit any registries of recipients and the like. Condominiums have their own relations with consumers in homes, and these are the social security departments to which people should address their social protection issues. Whereas condominiums should be completely excluded from the administration of subsidies by the state. Because social protection is about the state and the citizen, without any intermediaries.

Can my subsidy be overlooked?

Now there is a reconciliation check of the register of recipients of subsidies and the transfer of this registry to “Oshchadbank” underway. If we are talking about pensioners, then the verification involves the Pension Fund. The Ministry of Social Policy coordinates the register of recipients of subsidies and pensioners. As for those who are not pensioners, the reconciliation check is now taking place in all social security departments and the single register is being transferred to “Oshchadbank”. This will let people come to any department, give their name, give the document confirming their identity, have their name found in this register and have the funds intended for them paid to them in cash. People should be able to do this as soon as in March.

What if there is force majeure?

Various situations might occur: a person got into a hospital or went on a business trip, thus delays appeared. But consumers have time until May – then the social security department will perform a reconciliation check with all service providers and determine if any subsidy recipient has arrears. If a person is entitled to the subsidy, this subsidy was allocated and received in “Oshchadbank”, but the utility bill was not paid, then there will be questions concerning assigning the subsidy for the next period. May is the latest when all subsidy recipients must make sure they have no arrears. This will allow appointing the subsidy for the next heating season or to continue it for the summer.

Are additional agreements needed?

No, but after May all recipients of subsidies will have to apply to the social security department and submit applications for subsidies again. Because the social security department wants to have the phone numbers of all the recipients of subsidies so that there is constant contact with them.

Is there enough money in the budget?

There are funds for subsidies in the budget, but the question is whether the government will ensure the payment discipline. The Ministry of Social Policy should administer these funds in accordance with the budget, and it is their responsibility to make sure people receive their money on time. On time means by the date of the deadline for the payment of utilities – the 20th of the next month. Now the Ministry of Social Policy promises that as early as March 12-13, the money will be in “Oshchadbank” for the non-pensioner recipients of subsidies.

Why do I and the state need this?

1) Because of transparency. Because of the direct consumer-state administration system, which excludes any abuses, “dead souls”, double payment of subsidies to some family. Now a person with the same identification code will not be able to receive a subsidy twice.

2) Clarity. People will know that there are bills, there is money from the state, there is some amount that consumers have to pay additionally. If they saved on electricity or gas bills, they can keep the remaining money.

3) Elimination of any intermediaries in the administration of subsidies. The ultimate goal of monetization is to have a responsible state represented by the Ministry of Social Policy, responsible both for the correctness of the accrual of subsidies and for the correctness and timeliness of payments. This responsibility should not be transferred to other ministries. This will let Ukrainians enter the system of reforming the gas market, the electricity market, and the management of public utilities without being tied to the so-called mechanisms of mutual settlements between settlement participants.

After all, if, let’s say, we live up to the time when the consumers are able to choose their gas supplier or electricity supply company, these new suppliers will not have to open any accounts for the mutual settlements with each specific consumer. The subsidy administration system should not block the ability of a consumer to change a particular service provider. A person has money, he/she chooses anyone and settles with them in the way he/she wants. These are not utopian things. We are moving towards this, and the entire settlement system must be prepared so as not to constrain consumers in their choice of suppliers.

Alona Babak
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