Experience of the EITI can be used for further reforms in the extractive sector
DiXI Group representatives attended the online conference “The role of the Extractive Industries Transparency Initiative“, held on 8 February.
The attendees discussed, in particular, the impact of the EITI on changes in the extractive sector in view of the global transformation of economy and energy sector due to climate change, and also, the energy transition and “ecologization” of extractive industries.
“The extractives are a really important part of the economy. And so, it’s incredibly important that the government and people of Ukraine have the best information possible to manage these valuable resources effectively,” Christopher Abrams, Director of the Office of Economic Growth at USAID Ukraine, said. “Transparent information not only ensures that Ukraine benefits from this wealth in the form of taxes, revenues, jobs. But also, it provides the basis to ensure concurrent investments, environmental protection and social wellbeing… The EITI Standard helps ensure the transparency and openness of data in the extractive sector,” he pointed out.
The implementation of Extractive Industries Transparency Initiative (EITI) standards reveals those areas of the energy sector that need development, the Energy Ministry believes.
“Today, we are working on the new energy strategy until 2050. It is very important to ensure that the vector of the energy sector’s development is directed at achieving climate neutrality and carrying out the “green” transformation,” Yaroslav Demchenkov, Deputy Energy Minister for European Integration, said during the conference.
In his opinion, EITI standards help focus attention on the sector’s problems and allow to identify the areas that need development.
“The EITI instrument was the driving force behind successful changes concerning subsoil use, economic and social partnership in regions, implementation of the practice of broad public discussions, and so on. The Extractive Industries Transparency Initiative picks up the pace in Ukraine. We see that year after year, EITI reports are becoming of better quality, demonstrating achievements earned by the parties involved in this process,” Mr. Demchenkov summarized.
Speaking during the conference, DiXi Group President Olena Pavlenko said that EITI standards can be of use for continuing reform of the extractive sector. In particular, she pointed out the base elements of the sector’s future development, which are currently being discussed by various stakeholders.
“They include reduction of emissions during extraction and transportation operations, tightening of environmental regulation as Ukraine joined a whole number of decarbonization and [European] Green Deal initiatives, improvement of social dialogue and environmental standards in the extractive sector, continuing digitalization, elimination of fossil fuels by 2040/2070, increasing transparency,” Mrs. Pavlenko said.
The reporting on methane emissions in Ukraine might be included to national and international standards under the Extractive Industries Transparency Initiative (EITI).
“Even today, the law requires companies to report on carbon emissions. But, perhaps, the inclusion to the EITI of such element as methane emissions should also be considered. In the oil and gas sector, this is a quite familiar problem the entire world is trying to tackle,” the expert said.
According to Olena Pavlenko, organizations monitoring methane emissions in extraction and transportation of energy resources have already developed quality methodologies of reporting.
DiXi Group’s Sustainable Development Manager Olha Polunina stressed upon the importance of publishing copies of production sharing agreements (PSAs), which is now required by the recently-adopted amendments to legislation. She also provided details of international requirements concerning environmental impact assessment (EIA). According to Mrs. Polunina, the EIA in the extractive sector needs to be improved, and so does the disclosure of contracts, which is a requirement of environmental protection conventions.
It is worth reminding that amendments to the extractive industries transparency law were adopted in December 2021. The transparency requirements were significantly tightened with regard to disclosure of information about production sharing agreements (PSAs) and improvement of reporting procedures at state enterprises.
The EITI Report for 2020 was also approved in December 2021. It describes in detail the role of the extractive sector in the national economy. In particular, it offers information about documentation of rent payments, the contribution of extractive industries to the economy (GDP, employment, capital investments, exports), quasi-fiscal transactions, budget programs, and financing programs of state enterprises. In addition, it contains a separate annex with financial statements of companies and information about their beneficiaries and owners, as well as information about auctions.
During the discussion of this document, DiXi Group President Olena Pavlenko said that the report presented in this form can serve as an example for many other countries.
Watch the video about the 2020 EITI Report and the contribution of Ukraine’s extractive sector.
This event was organized by the National Secretariat of the Extractive Industries Transparency Initiative, the Energy Ministry of Ukraine and the International Renaissance Foundation with the support from the German Government through the Good Financial Governance ІІІ project implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, and by USAID’s Energy Sector Transparency project implemented by DiXi Group NGO.
