JESSICA IN LITHUANIA:An Effort to Renovate
Apartment BlocksInesis Kiškis
Lithuanian Ministry of EnvironmentBRUSSELS, March 23, 2011
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
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
Energy supply pattern
65 % of multifamily buildings are served by district heating systems
Current energy consumption ~ 160 kWh/m2
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
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
“Old” Renovation Program
• 50% of investment cost compensated
• Commercial banks participated in offering “own” contribution at market rates
• Borrowers were home-owner associations
“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
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
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)…
Major actors (I)
• House-owner associations – project proponents
Major Actors (II)
• Housing and Urban Development Agency (HUDA) – advisory services and certification of works
Major Actors (III)
• Commercial banks aka Urban Development Funds (UDFs) – assess creditworthiness, award and administer loans
Who Does What: Flowchart
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
Major Challenge
To overcome the distrust, to restore confidence in Government sponsored programs
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
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
It Shall Work Like This
Before After
Thank you!