Ukraine has made meaningful progress with considerable improvements in implementing the 2016 EITI Standard

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

This requirement is not applicable in Ukraine.

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.

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

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.

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.

This requirement is not applicable in Ukraine.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.