DiXi Group presents a draft law to implement the updated Extractive Industries Transparency Initiative Standard
On 5 February, the event ‘Transparency in the Extractive Industries: Ukraine’s Progress and Necessary Changes in EITI Regulation’ was held. Representatives of government agencies, civil society, international organisations and business discussed the state of implementation of the Extractive Industries Transparency Initiative (EITI) in Ukraine and the necessary changes in the sector’s regulation.
Despite the war, Ukraine remains committed to the principles of transparency, said Oleksiy Orlovsky, moderator of the first panel, Director of the Democracy and Good Governance Programme at the International Renaissance Foundation.
“Despite the fact that our energy sector is under constant shelling, we continue to implement the Extractive Industries Transparency Initiative, setting an example and inspiring other countries to increase transparency in the sector even in extremely difficult conditions,” – said Oleksiy Orlovsky.
Implementation of the Standards not only enhances transparency, but also helps to attract investment in the extractive industry. In addition, the EITI principles are one of the elements of effective natural resource management, said Olena Pavlenko, President of DiXi Group.
“Any country that attracts international investment for the development of natural resources must form its own vision: what it wants to do with these resources, how it wants to manage them. When such a vision exists, it is easier for the country to communicate with international stakeholders and build a ‘puzzle’ of policies that constitute good governance. The EITI is one of the pieces of this puzzle, which allows us to make the rules transparent, and cooperation effective and fair to us,” – DiXi Group President Olena Pavlenko.
Subsoil use is one of the most important sectors of the country’s economy, and it is one of the structural components of the budget revenue. Accordingly, the implementation of the Standard is an important indicator of the future development of the extractive industry, said Mykola Kolisnyk, Deputy Minister of Energy of Ukraine.
“We are already working on amendments to the EITI Law that will help us meet the new requirements of the updated Standard. The document provides a lot of appropriate tools for interaction with subsoil users, just as subsoil users already have feedback thanks to the online platform operated by the Ministry of Energy. The resource provides access to public data, thus demonstrating to subsoil users or those who want to become subsoil users a qualitative cut of the market,” – added Deputy Minister of Energy of Ukraine Mykola Kolisnyk.
Ukraine’s work on the implementation of the Initiative was also recognised by international partners. Mark Barnett, Regional Director of the EITI International Secretariat, noted that Ukraine has made significant progress in meeting the requirements of the EITI Standard 2023, in particular in the areas of beneficial ownership transparency and anti-corruption. Digital reporting and ESG standards not only strengthen accountability at the national level, but also set an important example for the European region.
“Ukraine has a lot of best practices to share with other EITI countries in Europe, and we greatly appreciate your input. I am convinced that the success of the Initiative is based on a multi-stakeholder model that brings together government, civil society and business on one platform with equal representation of all parties,” – added Mark Barnett.
During the panel: “Opportunities and Conditions for Implementation of New EITI Requirements in Ukraine”, moderated by DiXi Group’s General Manager for Sustainable Development, Viktoriia Kovalenko, DiXi Group’s project expert Yevheniia Zahumennova-Krupovych presented a draft law that would implement the provisions of the updated EITI Standard approved in the summer of 2023 into national legislation.
Among the expected changes to the legislation is the expansion of the list of those who have to disclose information in the field of mining. In particular, the State Customs Service will disclose data on mineral exports; the Ministry of Finance will disclose the projected budget revenues from extractive companies; and the Ministry of Environment will have to provide access to information on the methodology for calculating tax rates and/or carbon pricing mechanisms. In addition to the already established disclosure obligations, the State Service of Geology and Subsoil of Ukraine will have to provide data on the issuance of special permits without auctions (electronic bidding) or tenders with justification for the feasibility of such a procedure, as well as on confirmed mineral reserves of national importance.
The scope of information that extractive companies, in turn, will have to disclose in their reports on payments to the state is expanded. More detailed information is expected to be disclosed on participation in social, environmental or infrastructure projects or programmes, information on employees, financial relations with state-controlled entities, greenhouse gas emissions in CO₂ equivalent, etc.
More details on the implementation of the updated EITI Standard can be found at the link to the broadcast: https://bit.ly/4jOBY8s.
During the event, the tenth anniversary EITI Report for 2023 was presented. Following the discussion, the participants agreed to intensify work on improving the subsoil use policy, in particular in the context of the updated requirements of the EITI Standard.
The event was organised by the Ministry of Energy of Ukraine with the financial support of the International Renaissance Foundation in cooperation with the DiXi Group think tank.
