Roman Nitsovych, Program Manager, DiXi Group Analytical Centre, joined the series of round tables, dedicated to the Extractive Industries Transparency Initiative (EITI), which recently took place in Kharkiv, Okhtyrka and Sumy.
The events were organized by Nova Energia, a civil-society organization and DiXi Group’s partner in the Energy Transparency coalition, with the support from Deutsche Gesellschaftfür Internationale Zusammenarbeit (GIZ) and the International Renaissance Foundation.
Discussions, held in Ukraine’s key oil and gas production regions, are aimed at improving a dialogue among companies, government authorities and local communities. Establishment of modern social and corporate partnership models will promote creation of new jobs and improvement of health care and infrastructure.
“The practice of entering into social agreements between production companies and oblast state administrations has not proven to be efficient in all cases. Communities request a direct dialogue concerning the most pressing issues, such as drinking water supply, repair of bad roads, waste treatment, and additional health care expenditures. The EITI provides a tool to start such a dialogue”, says Roman Nitsovych.
During the round tables, he presented the findings of the first EITI Report of Ukraine, published in December 2015, and highlighted its importance for the government and communities. The Report allowed for a comprehensive sector analysis and boosted building relations between government authorities and communities.
According to Roman Nitsovych, in parallel with preparation of the EITI Report, the Oblast Administration interviewed communities in the Sumy Oblast. “Heads of village and settlement councils often proved to know nothing about companies’ activities. In particular, they almost don’t know whether certain wells are in operation or plugged and abandoned. It is only one of the facts proving the need for a dialogue.
It is remarkable that the initiative was supported at the high level: the round table in Kharkiv was attended by heads of line departments and units of the Oblast State Administration; in Okhtyrka — by the mayor, in Sumy — by the Head and Deputy Heads of the Oblast Council.
At each event, representatives of the communities living in oil and gas exploration and production areas had the opportunity to express their views. The main requirement was to change the sector tax scheme, in particular, to direct at least 5 percent of rent payments to local budgets. Representatives of the business community also expressed their opinion. They supported a more fair tax system which takes account of citizens’ interests.
“I was shocked when I got to know that one of village councils in the area with over 100 operating wells received budget subsidies”, says Nitsovych. In his opinion, development of the EITI process in the provinces will help receive additional arguments for improved transparency of all aspects of extraction industry.
For reference: The Extractive Industries Transparency Initiative (EITI) is a global independent and voluntary standard to promote transparency, implemented in 51 countries throughout the world, including Kazakhstan, Norway, Great Britain, Germany, the USA and others.