rose high
The Ministry of Construction has begun developing proposals for the massive replacement of elevators. The main intrigue of the future document, which should be presented in April, is who will get control over cash flows from the state treasury. So far, the main contender for billions is the head of the state corporation DOM.RF, Vitaly Mutko.
Recently, Deputy Minister of Construction and Housing and Communal Services Alexey Eresko admitted the obvious: it is impossible to replace the required 78.4 thousand elevators by February 15, 2025, as required by the Technical Regulations of the Customs Union.
Therefore, the Ministry of Construction proposed to postpone the deadline.
However, even if the deadlines are changed, the main problem is unlikely to be solved. So far there has been no money to replace the elevators. The thing is that the old lifts were supposed to be replaced as part of regional overhaul programs. But since the overhaul idea turned out to be a failure, nothing came of replacing the elevators either.
Now the Ministry of Construction will think about where to get the money, who to entrust its distribution to and how to ultimately replace the elevators – the Ministry of Construction will be thinking about this until April. Considering that the average cost of one elevator is 2–3 million rubles, we are talking about a considerable budget. Replacing 78 thousand units will require more than 200 billion rubles. Naturally, the struggle for the division of cash flows has already begun.
Are Khusnullin’s protégé being asked to move?
The main person responsible for replacing elevators is formally the Territorial Development Fund (TDF), headed by the deputy prime minister Marat Khusnullin Ilshat Shagiakhmetov. It is the fund that is responsible for the overhaul program, within the framework of which the elevators should be replaced. The problem, however, is that in some cases the contributions collected from residents for major repairs were initially not enough not only to replace the elevators, but even to paint the facades. The result of the implementation of regional capital repair programs turned out to be very sad: in the absence of funds to carry out serious work in houses, regional capital repair funds use dubious schemes to control financial flows.
It is noteworthy that the FRT, thinking about solving the problem of replacing old elevators, still intended to rely solely on contributions from residents. Unless it was planned to supplement the already existing schemes with some credit mechanisms.
However, the attacks on the FRT may not have been accidental.
State corporation schemes
Therefore, it can be assumed that DOM.RF’s participation in the elevator replacement program was agreed upon in advance. Indirect confirmation is the fact that Deputy Head of the Ministry of Construction Alexey Eresko named installment plans from large manufacturers and co-financing programs from the regions as measures that can help speed up the replacement of lifts. DOM.RF already offers both. In December 2022, a pilot project to replace elevators was launched in Nizhny Novgorod with the participation of DOM.RF. For this purpose, the regional Overhaul Fund entered into an agreement with the Shcherbinsky Elevator Plant (ShchLZ), which is part of the state corporation. And recently the Ministry of Construction announced that as part of this project, it is planned to install 4.5 thousand new elevators in Nizhny Novgorod, for which 3.6 billion rubles will be allocated from the regional budget. Budget allocations will cover about 1.5 million rubles of the cost of each lift.
The peculiarity of this scheme is that in this case, the “installment plan” is essentially a commercial loan. That is, de facto, today only the only player on the market, DOM.RF, can implement such a scheme, under whose roof there is both an elevator building plant and a bank.
Elevator Empire
The processes of monopolizing the domestic elevator industry under the roof of DOM.RF began even before its current head joined the state corporation Vitaly Mutko. The same ShchLZ came under the management of DOM.RF back in 2018. With Mutko’s arrival at the state corporation, its position in the elevator market began to strengthen. In 2021, DOM.RF allocated funds for the modernization of ShchLZ, and in 2022, it began the procedure for “bringing out of bankruptcy” two more elevator-building enterprises – the Karacharovsky Mechanical Plant and Siblift. True, it could be called a “recovery from bankruptcy” with great stretch. After all, the main creditor of the bankrupt enterprises was the structures of the same “DOM.RF”, which at one time bought out the debts of both factories.
Presumably, the actions of “DOM.RF” were coordinated. Otherwise, how can we explain the fact that the Karacharovsky Mechanical Plant, which was included in the list of systemically important enterprises, was subsequently excluded from this list. And this happened exactly after DOM.RF began “bringing him out of bankruptcy.”
Concerns about the creation of a monopolist were then expressed by representatives of the Russian Elevator Association. Industry leaders published an open letter in which they referred to a certain draft government resolution, which dealt with the purchase of services for replacing elevators as part of regional overhaul programs only from large manufacturing plants.