Ukraine’s national parliament passed the widely-backed Law 6229 ‘On ensuring transparency in extractive industries’ on 18 September 2018. The new legislation sets out legal principles for the collection, disclosure and dissemination of data on Ukraine’s extractive industries. It is hailed by campaigners as a milestone on the road to transparency and accountability in the country’s oil, gas and mining sector.
Ukraine is rich in various natural resources; however, internal mismanagement and external interference in the country’s integrity result in the extractive sector contributing a relatively insignificant amount to the economy. The main sub-sector in Ukraine is the petroleum sector. Government revenues in 2015 from petroleum companies, which were reconciled in the EITI Report, accounted for 77% of total reconciled revenues. Coal accounted for roughly 11% while the metal ores (iron, manganese and titanium) accounted for 12%. Another important sub-sector is the oil and gas transportation system, operated by the SOE Ukrtransnafta PJSC.
The government aims at bringing economic growth and foreign investment by tackling corruption and reforming the regulation of the extractive industries and energy transit.
Ukraine established the world’s first beneficial ownership register of legal entities, and asset register for government officials. In 2014, the government adopted legislation on beneficial ownership disclosures for all companies. Since then, about 70% of companies reported, including the extractive industries. The data is publicly accessible through unified company register hosted by the Ministry of Justice.
In 2013 production of oil amounted to 3.07 million tons and natural gas amounted to 21.45 billion m3. According to State Statistics Service the natural gas and oil produced in Ukraine are not exported whilst ferrous metals hold 18.7% of country’s export. Five new deposits were discovered in 2013 in the east oil and gas region.
|Coal||112.3||billion tons||1.5% of world's brown coal reserves.|
|Iron ores||20.9||billion tons|
The contribution of the oil and gas sector to Ukraine’s GDP is insignificant. According to the State Statistics Service, the oil and gas sector holds about 1.3% of Ukraine’s GDP. The 2013 EITI report documents USD 3.3 billion of payments by oil and gas companies (including oil and gas transportation companies).
The major share of oil and gas payments is channeled to the state budget. Taxes and other regular fees paid to the state budget may be used to fund any budget items. Therefore, the revenues from oil and gas received by the state are used in the same proportion as other revenues in the country. The Budget Code of Ukraine No. 2456-VI 2010 determines the procedures for allocation of tax revenues between state and local budgets.
Starting from 1 January 2018, 5% of the rental payments from oil and gas companies will be channeled to the regions where extraction occurs, which will greatly contribute to improved dialogue and revenue sharing between local communities, extractive companies and authorities.
On 16 June 2015, Parliament adopted a Law entitled “Introduction of Amendments to Certain Legislative Acts of Ukraine on Ensuring Transparency in the Extractive Industries” that requires extractive companies to report in accordance with the EITI requirements. The Cabinet of Ministers issued Regulation #1039 to define the mechanism for collection and dissemination of information, required by the EITI Standard.
Following the recommendations from the EITI reporting, the government, with support from the MSG, developed a draft Law #6229 entitled "Transparency of Information in the Extractive Industries” that passed the first reading in Parliament in February 2018.
The EITI Report covers oil, gas and mining industries; in particular, coal, iron, manganese, titanium, clay, and sand. Metal ores account for 97% of Ukraine’s extractive sector exports – almost 6% of total exports of Ukraine.
The strength of Ukraine’s EITI implementation has been its success in using the process to address local concerns, both through active dissemination and outreach efforts and by providing a platform for an informed public debate. Civil society plays a central role in the EITI by being the main driver for the reforms and by keeping the government accountable for the revenues received.
EITI implementation has complemented broader economic, financial and institutional reforms, in particular by adopting a Law #521-VIII entitled “Amendments to Certain Legislative Acts of Ukraine on Ensuring the Transparency in the Extractive Industries”, and by amending a Law on “State Registration of Legal Entities and Individual Entrepreneurs” and a Law “Budget Code”.
The Annual Progress Report provides an overview of all EITI Ukraine's activities during 2017.
The report is available in Ukrainian.
This is the Ukraine EITI 2018 work plan (in accordance with Requirement 1.5).
This Validation has been completed.Ukraine was found to have made meaningful progress.
Validation commenced on 1 July 2017.
Country visit: 18-22 September 2017
Secretariat initial assessment was completed on 14 March 2018.
Comments from the MSG on the draft Validation report were received on 23 May 2018.
The Validation report was issued on 24 May 2018.
Discussed in VC at meeting on 26 April and 6 June 2018.
Recommendation from VC to Board on 14 June 2018 via Board Paper 40-6-G.
Documents related to the Validation:
This EITI Report covers Ukraine's extractive sector in 2016. It was published in May 2018. The Report is available in English and Ukrainian.
The Annual Progress Report provides an overview of all EITI Ukraine's activities during 2016.
The report is available in English and Ukrainian.
This EITI Report covers Ukraine's extractive sector in 2014-2015. It was published in February 2017. Attached below is a summary report.
Attached below is Ukraine's open data policy, published in December 2016.
This EITI Report covers Ukraine's extractive sector in 2013. It was published in November 2015.
This is the Ukraine EITI 2014 Annual Progress Report (in accordance with Requirements 7.4 and 8.4).
This is the Ukraine EITI 2015 work plan (in accordance with Requirement 1.5).
Oliana is Country Manager at the EITI International Secretariat working with Eastern Europe, the Caucasus and Central Asia. Nationality: Ukrainian Prior to joining the EITI in November 2015,
Olesia supports Eastern Europe, the Caucasus and Central Asia team at the EITI International Secretariat.
Olesia holds bachelor’s degree in Economic Theory from Ukraine and MSc in Strategic Marketing Management from Norway.