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Kyiv, Ukraine

Ukraine

Status
Meaningful progress
Joined
17 October 2013
Latest validation
2021
Latest data from
2017
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Overview and role of the EITI

While largely an agricultural economy, Ukraine is also a leading producer of iron, manganese and titanium ores. The country also produces oil, gas and coal as well as clays and sand.

Ukraine has used the EITI platform to increase the availability of extractives data and strengthen collaboration and dialogue between the central government, local governments, companies and local communities. It has used the process to address local concerns through dissemination and outreach campaigns. As active participants in the EITI process and main drivers for reform, civil society and development organisations such as DiXi Group and International Renaissance Foundation play a central in keeping the government accountable for the revenues received.

In February 2022, EITI Chair Helen Clark issued a statement following the Russian invasion of Ukraine.

Economic contribution of the extractive industries

11.2%
to government revenues
4.9%
to exports
4.5%
to GDP
2.5%
to employment
  • Step 1
  • Step 2
  • Step 3

Download country data

Download open data on government and company revenues, revenues by revenue stream and indicator, summary data and more.


Innovations and policy reforms

  • In September 2018, Verkhovna Rada (Ukraine’s Parliament) passed the widely-backed Law 2545-VIII ‘On ensuring transparency in extractive industries’, which sets out legal principles for the collection, disclosure and dissemination of data on Ukraine’s extractive industries. 
  • In January 2018, Ukraine enacted a law stipulating the allocations of extractive revenue shares to local government budgets in areas hosting extractive activities.
  • In 2020, Ukraine developed a monitoring and evaluation system for Ukraine EITI.
  • Since February 2021, the Ministry of Energy has been hosting a pilot online reporting and analysis platform, which was used to collect company reporting for the 2020 Ukraine EITI Report.
  • In December 2021, draft Law “On amendments to some legislative acts of Ukraine to ensure transparency in the extractive industries” was passed by the parliament which is expected to increase transparency and accountability of the extractive sector through, for example, more comprehensive contract disclosure.
  • In 2022, Ukraine began working on the establishment of local multi-stakeholder groups.

Extractive sector data

Revenue collection

Level of detail 2

Revenue distribution

2017
Standardised revenue types

Top paying companies

2017

Extractive sector management

License and contracts

In most cases, mining companies apply for special subsoil use permits (licenses), which are awarded through auction by the State Service of Geology and Mineral Resources. In 2020, licenses were sold at the electronic auctions on the basis of “Prozorro.Sales”. The government maintains an online license registry. In addition, license areas for subsoil use for each region can be viewed through an interactive map.

At the same time, alternative license allocation procedures (without auction) are applied to product sharing agreements and other specific cases defined in the legislation.

In 2019, the State Service of Geology and Subsoil began publishing license agreements (special permits) concluded from 2016 onwards. Some contracts are published on the Resource Contracts portal. The Law “On amendments to some legislative acts of Ukraine to ensure transparency in the extractive industries” that was passed in December 2021 is expected to strengthen contract transparency.

Beneficial ownership

In 2014, the Ukrainian government adopted legislation on beneficial ownership disclosures for all companies. In 2017, Ukraine established one of the world’s first beneficial ownership registers of legal entities under the Ministry of Justice. Since then, Ukraine has also established an asset register for government officials and a separate portal that provides information on politically exposed persons

Since 2017, the government has been working with Open Ownership on high quality data production in order to integrate its national central register of beneficial ownership with the Open Ownership Register

Revenue distribution

Most extractive taxes and payments are channelled to the state budget. However, some are allocated to regional, district or local governments’ budgets. The Budget Code of Ukraine determines the procedures for allocation of tax revenues between state and local budgets.

In January 2018, Ukraine enforced the Law on Amendments to the Budget Code of Ukraine Regarding the Inclusion of Rent Payment for the Use of Subsoil for the Extraction of Oil, Natural Gas and Gas. The law stipulates that 2% of the rent paid by companies be directed to regional budgets, 2% to district budgets and 1% to local government budgets at the place of location (production) of the relevant natural resources. The remaining 95% of rent payments are directed to the general fund of the state budget.


EITI implementation

Governance

Ukraine EITI (UAEITI) is administered by the Ukraine Multi-Stakeholder Group (MSG). The MSG is hosted by the Ministry of Energy and chaired the Minister of Energy.

Validation

Ukraine was found to have made meaningful progress in implementing the 2016 EITI Standard in March 2021, following its second Validation. Ukraine fully addressed three of the eight corrective actions identified in its previous Validation. The next Validation is scheduled to commence in October 2023.

Scorecard

Latest Validation: 5 May 2021
Year

Assessment of EITI requirements

  • Not met
  • Partly met
  • Mostly met
  • Fully met
  • Exceeded
Scorecard by requirement View more Assessment View more

Overall Progress

MSG oversight

1.1Government engagement

There are regular, public statements of support from the government, a senior individual has been appointed to lead on the implementation of the EITI, and senior government officials are represented on the MSG. Despite political instability, the government is actively and effectively engaged in the design, implementation, monitoring and evaluation of the EITI.

1.2Industry engagement

Mining, oil and gas companies are actively and effectively engaged in the EITI process, both as providers of information and in the design, implementation, monitoring and evaluation of the EITI process. There are clear legal provisions requiring EITI reporting for all oil and gas companies in Ukraine, that enable the largest extractive taxpayers to report. Reporting from the mining industry remains challenging.

1.3Civil society engagement

There is a strong and vibrant civil society, which is actively and effectively engaged in the EITI process and has contributed significantly to EITI implementation in Ukraine. Since 2009, civil society has fundamentally driven the EITI process, providing high-quality feedback; influencing policies and reform agenda for the government; and effectively utilising the results of the EITI disclosures.

1.4MSG governance

The MSG has been formed and includes self-appointed representatives from each stakeholder group with no suggestion of interference or coercion. The CSO members of the MSG are operationally and in policy terms independent from government and companies. The ToRs for the MSG addresses the requirements of the EITI Standard and stakeholders renewed it in accordance with the 2016 EITI Standard.

1.5Work plan

Ukraine has an updated work plan for 2017, approved by the MSG in February 2017. The work plan contains clear objectives aligned with national priorities, as well as actions aimed at ensuring the objectives are met. The work plan includes a broad timeline for achieving the objectives, as well as costings and proposed funding sources. In practice, the work plan is well managed and followed by all stakeholders.

Licenses and contracts

2.1Legal framework

The 2014-2015 Ukraine EITI Report provides all required information on the legal and fiscal framework in Ukraine in a clear and consistent manner. Stakeholders also confirm the comprehensiveness of this requirement, although noting that the information is not up-to-date due to the speed at which the Ukrainian government is passing reforms.

2.2License allocations

The report covers all significant aspects of the requirement, disclosing the relevant procedures and practices for allocating licenses or extractive rights in Ukraine. The Independent Administrator clearly states that no significant deviations from existing procedures were identified. The 2014-2015 EITI Report itself covers most of the information and where information is missing in the report, references and links are provided.

2.3License register

The Ukrainian online and publicly available license registry, Geoinform, is maintained and regularly updated. It contains all necessary information on license holders, coordinates, relevant dates of the licences, and information regarding which commodities the special permits pertain to.

2.4Policy on contract disclosure

The 2014-2015 EITI Report and supplementary comments to it clarify that there is no single government policy on contract disclosures, and no requirements to disclose contracts exist in laws governing the legal agreements used in Ukraine. The EITI Report outlines terms and conditions of contracts. The MSG and national secretariat have made significant efforts in promoting contract disclosure through the draft law.

2.5Beneficial ownership

Ukraine has agreed definitions of “beneficial owner” and “politically exposed person” (PEP) that are in line with the 2016 EITI Standard. All companies, including those operating in the extractive sector and applying for extractive licenses, were required to report on their beneficial owners. The data were provided in a publicly accessible state register managed by the Ministry of Justice. Information about PEPs is disclosed in the state register of electronic declarations and other publicly accessible sources.

2.6State participation

The 2017 EITI Report addresses several aspects of the requirement on state participation. There are subsidiaries and associate extractive companies (minority-owned) for which SOEs’ precise equity stakes, or the terms associated with the equity interests, are not publicly disclosed. There appears to be some significant differences between the contents of the EITI Report and other publicly accessible documents, especially regarding retained earnings and reinvestments. There is no data on dividend income of all material SOEs. Loans and loan guarantees are documented through publicly accessible documents and EITI reporting, though neither stipulate the precise terms and repayment schedules, nor which precise loans are guaranteed by the state.

Monitoring production

3.1Exploration data

The 2014-2015 EITI Report provides an overview of the extractive industries, including significant exploration activities and developments in all sub-sectors. Where there are gaps in publicly-available information on the extractive industries such as reserves estimates, the MSG is exploring options for improving the process.

3.2Production data

The 2017 EITI Report provides production volumes and values of almost all main extractive commodities produced in Ukraine in 2017. All sources of information are clearly stated and differences in methodologies applied by different state agencies are documented. While the MSG has been transparent about constraints on disclosure of titanium production data, EITI reporting provides titanium production values for only some – but not all – of the extractive companies operating in this sector.

3.3Export data

Export data is available both as volumes and values for all sectors. Volumes are available as both aggregate figures per commodity and some disaggregated by subtypes such as hard coal versus brown coal. Both volumes and values are disaggregated by country-destination, and the disclosures overall are in accordance with Requirement 3.3.

Revenue collection

4.1Comprehensiveness

The MSG agreed on a targeted reconciliation approach for material revenue streams and set a clear materiality threshold for material companies. The scoping study to the 2017 EITI Report also provides an assessment of materiality of different extractive sub-sectors; however, it does not comment on the significance of uranium and thorium ores’ revenues in total extractive revenues.

4.2In-kind revenues

Not applicable

This requirement is not applicable in Ukraine.

4.3Barter agreements

Not applicable

This requirement is not applicable in Ukraine.

4.4Transportation revenues

The 2017 EITI Report marks an improvement in disclosures of transportation revenues compared to the previous Validation, with MSG efforts to disclose more detailed data. However, the EITI Report and public disclosures do not present extractive transport revenue data disaggregated by individual company/customer.

4.5SOE transactions

The 2017 EITI Report marks an improvement in disclosures of transactions related to state-owned enterprises compared to the first Validation. Where previously information was gathered through stakeholder consultations and in tables without adequate details, the report now reports data more systematically. However, given the lack of a comprehensive review of material transactions between government and SOEs or from extractive companies to SOEs, it is not possible to conclude that disclosure of material SOE transactions in the EITI Report is comprehensive or reliable.

4.6Direct subnational payments

Not applicable

This requirement is not applicable in Ukraine. Although some taxes are channelled to the local level, there is a centralised taxes and payments collection system monitored by the SFS. Thus, the local governments do not directly receive and account for payments by extractive companies.

4.7Disaggregation

The 2015 EITI Report is disaggregated by individual revenue stream, company and government entity.

4.8Data timeliness

The 2014-15 EITI Report was published within extended deadline agreed by the EITI Board.

4.9Data quality

The MSG agreed the ToRs for the IA for the 2017 EITI Report that are consistent with the standard ToRs and agreed-upon procedures issued by the EITI Board. The IA has undertaken a reconciliation of revenue streams by applying international best practices. The assurance and data reliability consisted of attestation of reporting templates by senior company management or senior government officials. Overall, the IA’s conclusion is that data provided in the 2017 EITI Report is comprehensive and reliable.

Revenue allocation

5.1Distribution of revenues

The 2014-15 EITI Report explains how revenues are recorded in the national budget. Ukraine has also gone beyond the minimum requirements by including references to the national budget classification systems as encouraged by the EITI Standard.

5.2Subnational transfers

The 2014-15 EITI Report describes the system for transferring subsidies (subventions) and compares the budgeted amounts with executed transfers. Although the report does not contain a clear formula, it provides a link to the formula in the government’s resolution. The broader objective of transparency in subnational transfers is met.

5.3Revenue management and expenditures

Reporting on revenue management and expenditures in encouraged but not required by the EITI Standard and progress with this requirement will not have any implications for a country’s EITI status. Ukraine has gone beyond the minimum requirements by providing additional information on revenue management and expenditures as encouraged by the EITI Standard.

Socio-economic contribution

6.1Mandatory social expenditures

Ukraine has gone beyond towards meeting this requirement by covering the encouraged aspect of the requirement. While the EITI Through consultations among stakeholders and through the third-party research it is confirmed that there are no mandatory social expenditures. The report provides unilateral aggregated disclosure of the discretionary social payments from the company side.

6.2Quasi-fiscal expenditures

The report identifies three forms of quasi-fiscal expenditures in Ukraine, two of which were relevant in the period under review. The report provides some methodology for calculating these quasi-fiscal expenditures, and indicates which SOEs are involved in these expenditures. No other quasi-fiscal expenditures were reported to exist.

6.3Economic contribution

The 2017 EITI Report provides comprehensive information on the extractive industries’ contribution, in absolute and relative terms, to GDP, government revenues, exports and employment and notes the main regions of production. The report provides a thorough overview of informal employment and elaborates on shadow economy estimates.

Outcomes and impact

7.1Public debate

The UA-EITI Reports are comprehensible, actively promoted through varied channels (including print, online and through active outreach), publicly accessible and have tangibly contributed to public debate on the extractive industries in Ukraine. Ukraine has gone beyond the minimum requirements through active subnational outreach and dissemination. The three stakeholder groups have also actively contributed to dissemination of the EITI reports.

7.2Data accessibility

Not assessed

This requirement is only encouraged and should not be taken into account in assessing progress. Ukraine’s EITI data is available in machine-readable formats through UAEITI’s website and the EITI global website. The MSG has published summary reports in multiple languages and is currently exploring opportunities for automated or more timely disclosures.

7.3Follow up on recommendations

The MSG has taken steps to act upon lessons learnt, to identify weaknesses of the EITI process and to consider the recommendations for improvements from the Independent Administrator. Although the MSG did not fully investigate and address the causes of discrepancies, the MSG was aware of the issue and added it into the work plan for 2017.

7.4Outcomes and impact of implementation

The MSG has reviewed progress and outcomes of implementation on a regular basis, including by publishing annual progress reports over the past four years. The APR notes the strengths and weaknesses of the EITI process in Ukraine. It highlights the main impact stories and addresses recommendations from the previous EITI Report.


Key documents