Ukraine disclosed data on payments in oil and gas production for the first time

At the Sustainable Resource Management Forum, held on December 7-8, the first Ukrainian report under the Extractive Industries Transparency Initiative (EITI) Standard was presented. From now on, everyone has an opportunity to discover information about key Ukrainian oil and gas fields, license holders, production volumes, as well as the payments companies made to budgets of all levels. The data introduced in the EITI report is well detailed, reconciled and cover the year of 2013.

Representatives of the Ministry of Energy and Coal Industry, the Ministry of Environment and Natural Resources, the Ministry of Finance, the World Bank in Ukraine, extractive companies, civil society and international partners participated in the event.

“Having made a long way, Ukraine finally published the first EITI report. We are very grateful to everyone who supported the EITI, joined the process of preparing the document, and we invite all stakeholders to an extensive discussion,” the head of EITI National Secretariat Dina Narezhneva commented.

The EITI report was developed based on the data provided in parallel by both extractive companies and state authorities, and reconciled under independent expertise. According to conclusions of the Independent Administrator, the well-known company EY which conducted reconciliation, less than 10% of extractive companies provided answers on voluntary basis, with Ukrnafta being the last one to report. There were also issues of concern with obtaining information from government authorities, particularly from the State Fiscal Service.

Summarizing the experience gained during the EITI report development, participants of the Sustainable Resource Management Forum emphasized the importance of aligning Ukraine’s legislation with the EITI Standard not to have the situation repeated in 2016 as the report will be extended to sectors of coal and iron ore production.

Special attention of the Forum participants was paid to the international experience of implementing the EITI, opportunities for civil society, and perspective of disaggregating the data reported.

“Data disclosure is indeed not an extraordinary achievement in the modern world. It is the necessary part of a dialogue between local communities, the government and companies, aiming to build trust and fair cooperation. Without such dialogue one cannot speak about fast and efficient development and long-term investment. That is why we are on the way of developing our extractive industries, and now it’s important to keep going further,” stressed Olena Pavlenko, President of DiXi Group think tank.

The UAEITI report was published in Ukrainian, Russian and English, and is available on the website of the Ministry of Energy and Coal Industry as the EITI Standard requires.

The Extractive Industries Transparency Initiative is an international anticorruption standard for providing transparency in extractive industries, being implemented in 49 countries, including the U.S., Canada, Norway, Kazakhstan.

The essence of the EITI is that companies disclose information about the amount of payments they made to the government for extraction of mineral resources, including taxes, duties, royalties, special and administrative payments (payments for licenses, permits etc.), and the government authorities disclose information about the payments received from companies.

This information is collected, processed and verified by the Independent Administrator – an auditing service company chosen in open competition. The EITI report is finally approved by the Multi Stakeholder Group formed on the national level from representatives of government, companies and civil society, and the EITI International Secretariat runs validation to check compliance with the Standard.

Ukraine’s intentions to combat violations in the extractive sector through implementation of the EITI Standard received wide support of strategic partners and became a positive signal for investors and the international community. Commitment to implement the EITI is now part of the Coalition Agreement, action plans on implementation of the Open Government Partnership, agreements for receiving macrofinance assistance from the IMF, the EU and the World Bank.

The Sustainable Resource Management Forum is organized by the Ministry of Energy and Coal Industry and DiXi Group think tank with the support from the World Bank and the International Renaissance Foundation.