jessica in lithuania: an effort to renovate apartment blocks inesis kiškis lithuanian ministry of...
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JESSICA IN LITHUANIA:An Effort to Renovate
Apartment BlocksInesis Kiškis
Lithuanian Ministry of EnvironmentBRUSSELS, March 23, 2011
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Facts about Lithuanian Housing (I)
• population - 3,37 million• more than 38,000 apartment blocks• more than 800,000 apartments• 66 % of population lives in multi family
buildings built before 1993
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Facts about Lithuanian Housing (II)
• most in poor condition, lack of proper management• inefficient heating systems and engineering
equipment, poor quality windows, roofs, seals between panels
• more than 57 % of households are not satisfied with their houses
• During privatization, only apartments were privatized, but not the buildings as such
• 97% private, only 3 % municipal rental stock
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Energy supply pattern
65 % of multifamily buildings are served by district heating systems
Current energy consumption ~ 160 kWh/m2
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Why JESSICA?
• Attempts to launch modernisation of apartment blocks in early 90’s were rejected;
• World Bank Project in 1996-2004• Subsidised renovation program launched in
2006• Program ran out of money in late 2007• Decision to launch a “win-win” scheme using
JESSICA in early 2009
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JESSICA Holding Fund
Committed: € 227 million:- € 127 million European Regional
Development Fund - € 100 million National co-financing
Actual Contribution to date: €149,4 million- € 127 million European Regional Development Fund- €22,4 million National co-financing
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“Old” Renovation Program
• 50% of investment cost compensated
• Commercial banks participated in offering “own” contribution at market rates
• Borrowers were home-owner associations
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“New”Renovation Program• Fixed interest rate at 3%• Maturity up to 20 years• 2 years grace period (during construction)• No collateral• 15% written-off if certain energy efficiency level
achieved (upon completion) 85-110 kWh/m2 (Class “C”) 110-145 (Class “D”)
• 100% of costs to prepare renovation documentation reimbursed (paid from national funds)
• 100% of reimbursement of installments to low income families
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Some additional figures
• Number of eligible apartment blocks – 24000• Estimated cost to renovate one apartment
block (60 apartments @50 m2) 290,000 Euro• After the modernization, one house would
halve energy consumption and save 125 MWh a year
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Eligible costs
• Costs contributing to increase of energy efficiency:– Replacement of windows– Replacement of doors– Insulation of ceilings/roofs– Insulation of walls– Installation of solar panels/wind mills– Replacement of energy related equipment – Replacement of elevators and electrical wiring in
shared areas (stair wells, basements)…
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Major actors (I)
• House-owner associations – project proponents
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Major Actors (II)
• Housing and Urban Development Agency (HUDA) – advisory services and certification of works
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Major Actors (III)
• Commercial banks aka Urban Development Funds (UDFs) – assess creditworthiness, award and administer loans
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Who Does What: Flowchart
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Achievements to Date
• Agreements with 3 UDFs signed• 3 loans with home-owner associations signed• 71 home-owner associations have decided to
join the program• 31 investment projects have been vetted by
Housing and Urban Development Agency (HUDA)
• 5 applications under review by UDFs
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Major Challenge
To overcome the distrust, to restore confidence in Government sponsored programs
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EIB Involvement• Selected without any procurement procedure• Contract negotiations pretty fast and smooth• EIB does a lot of analytical and technical work • Authorities hardly would have had enough
human resources to accomplish all tasks– Review of the relevant legal acts: EU and national– Identification of the stumbling blocks– Prepare selection criteria for selection of Urban
Development Funds (UDFs)– Selection of UDFs– Negotiation and signing agreements with UDFs
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The Challenges
• Number of challenges indentified during negotiations with UDFs– Possible state aid issues – need to identify and
register– Legality of personal data handling– Turning the apartment owners into borrowers
(possibly) against their will, and as a consequence:– Questioning the constitutionality of entire scheme
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It Shall Work Like This
Before After
Thank you!