Ukraine’s national parliament passed the widely-backed Law 2545-VIII ‘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.
The extractive sector plays an important role in Ukraine’s economy, amounting to around 6% of GDP. The industry contributes UAH 120 billion to the state budget, representating 41% of government revenues from 100 biggest tax payers in Ukraine in 2018. The major extractives companies operating in the Ukraine are Ukgasvydobyvannia PJSC (gas), Ukrnafta PJSC (oil) and DTEK PJSC (coal). They paid UAH 41.26 billion, UAH 15.54 billion and UAH 8.44 billion respectively. Despite the developed extractive sector, Ukraine remains dependent on imports from extractive commodities.
Ukraine joined the EITI in 2013 with the aim to strengthen governance and reduce corruption in its extractive sector. The country has since published three EITI Reports between 2013 and 2016 that provide detailed analysis of the extractive sector, including oil and gas, hydrocarbon transportation, coal, iron, titanium and manganese ores, clays and quartz sand. In order to enhance the implementation of the EITI Standard, the country has also adopted legislation that provides incentives for companies to disclose information.
Ukraine established the world’s first beneficial ownership register of legal entities under the Ministry of Justice, and for government officials. In 2014, the government adopted legislation on beneficial ownership disclosures for all companies.
Since May 2017, the government has been working with OpenOwnership to produce high quality data to integrate its national central register of beneficial ownership with the OpenOwnership Register.
In 2017, Ukraine produced 34.9 million tons of coal, 20.5 bcm of gas and 2.2 million tons of oil. Oil and natural gas production are mainly led by state-owned enterprises. In 2017, Ukrgazvydobuvannia PJSC produced 15.3 bcm of natural gas, representing 74.3% of total national production. The remaining amount is produced by Chornomornaftogas PJSC, Ukrnafta PJSC and others.
Most of the reserves and extraction volumes are concentrated in the eastern region (Poltava and Kharkiv Oblasts), where 239 fields account for 80.96% of the reserves and 94.49% of the total production. The share of the western region (Lviv, Ivano-Frankivsk Oblasts) in the total production volumes amounts to 5.77%. The largest company in oil sector is Ukrnafta PJSC, and DTEK is the largest in the mining sector.
|Coal||112.3||billion tons||1.5% of world's brown coal reserves.|
|Iron ores||20.9||billion tons|
As of 2018, the extractive sector holds 6% of Ukraine’s GDP, according to the State Statistics Service. The biggest tax payer in 2018 was Naftogaz, which is accountable for 23.3% of the total revenues from the extractive industry. In 2018, the extractive sector contributed around USD 4 billion to the national economy.
The majority of oil and gas payments made to the government is channelled to the state budget, and is received in the form of taxes and other regular fees. The Budget Code of Ukraine No. 2456-VI 2010 determines the procedures for allocation of tax revenues between state and local budgets.
From 1 January 2018, 5% of the rental payments from oil and gas companies are channeled to the regions where extraction occurs through subnational payments, contributing to improved dialogue and revenue sharing between local communities, extractive companies and authorities.
Ukraine’s national parliament passed the widely-backed Law 2545-VIII ‘On ensuring transparency in extractive industries’ on 18 September 2018. The legislation sets out legal principles for the collection, disclosure and dissemination of data on Ukraine’s extractive industries.
Since 1 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 Condensate No. 1793-VIII. 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. As an exception, budgets of cities of republican and regional significance and budgets of the amalgamated communities receive 3% of the rent. The remaining 95% of rent payments are directed to the general fund of the state budget.
EITI reporting 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 informing public debate. As active participants in the EITI process and main drivers for reform, civil society organisations such as xx and xx play a central in keeping the government accountable for the revenues received.
The Ministry of Energy and Coal is responsible for implementing the EITI. The national secretariat, hosted by the Ministry, supports the functioning of the multi-stakeholder group (MSG) and delivery of the work plan.
EITI implementation has complemented broader economic, financial and institutional reforms. The recently adopted Law 2545-VIII aims to harmonise Ukraine’s legislation with the EITI Standard and the EU Accounting Directive.
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).