Government officials, experts, and civil society representatives discussed the transparency of extractive industries and the EITI Report 2019
DiXI Group joined the organization of and took part in expert discussions during the international conference “Transparency and accountability of the extractive sector” held on 30 March 2020 in the online format. The conference discussed Ukraine’s Extractive Industries Transparency Initiative (EITI) Report for 2019, the government’s plan of increasing transparency of the extractive sector, public monitoring of extractive industries, transition to online data opening, environmental impact from extraction operations and how to minimize it.
During the conference, representatives of international organizations voiced support to the Ukrainian government and civil society in their desire to make the energy sector more transparent and conformant with international standards.
USAID Mission Director James Hope said in his speech that USAID Ukraine is aimed to help improve governance of the extractive sector and enhance the country’s energy security. “Ukraine is rich in resources – oil, gas, minerals, and therefore, the extractive sector is important for it and capable of changing economic balance,” he said. “However, it means that the sector and the government must be as transparent and open as possible, and their work with investors must be based on the best legal practices. The EITI is a global cooperation initiative that promotes these values. It allows countries to see for themselves that the extractive sector will be efficient today and in the future. The EITI Report for 2019 objectively shows how far the progress was achieved.”
Good Financial Governance III Project Director at GIZ, Thomas Meyer, added that transparency in the energy sector also allows to enhance control and that the EITI often plays the decisive role in these efforts.
EITI International Secretariat Executive Director, Mark Robinson, stressed that extraction companies are currently facing a potential crisis related to COVID-19, prices and declining demand for oil, diversification of investment portfolios and the move toward decarbonization.
Democratic Practice Program Director at the International Renaissance Foundation, Oleksii Orlovskyi, said that today, Ukraine becoming an example for many countries in terms of achieving transparency in various aspects, particularly in extractive industries.
“In order for reforms to succeed, there must be trust between citizens and the government. This trust begins with open, transparent information about what’s going on in this sector,” Deputy Energy Minister Yaroslav Demchenkov said when speaking at the conference. The sixth EITI Ukraine Report, for 2019, was recently published. It became the first report released within the new, improved legislative framework. It contains information about, for example, environmental aspects of extractive operations and the government’s participation.”
He made a separate emphasis on corruption risks in the sector. According to Mr. Demchenkov, the EITI helped cancel licenses of the companies that haven’t started extraction within two years after receiving the license.
The State Service of Ukraine for Geology and Subsoil is going to check a third of all special extraction permits, the agency’s chairman Roman Opimakh said during the online conference, when speaking about the importance of open data and making it publicly accessible, in particular, on Geoinform website.
51 companies were checked within the EITI Report’s framework. It was noted that many companies provided the required information relatively quickly, and as of the end of 2020 the percentage of cross-verification reached 99.1%, which is an extremely high figure comparing to the previous years and even comparing to other countries that prepare EITI reports.
The Energy Ministry hopes that extraction companies will be able to file reports in electronic form already in 2021, Head of the Energy Ministry’s Directorate for Formation of Energy- and Resource-Efficient Policy, Viktoria Hnatovska, said during the online conference.
“An electronic reporting system for companies required to disclose information, an online EITI platform, creates a fundamentally different level of reporting conformant with international standards on transparency. I hope that in 2021, companies will be able to file reports in electronic form,” she said.
The openness of information in the extractive sector is growing, and so is public awareness of what’s going on in this sector. DiXi Group President Olena Pavlenko said in her speech that according to a nationwide sociological survey ordered by her think tank, only 8% of Ukrainians believe that the sector is completely nontransparent. The majority of respondents said that the sector’s transparency degree is medium or found it hard to answer this question. The survey results indicate that greater efforts must be taken to increase transparency. “The majority of Ukrainians absolutely favors clean energy and renewable energy sources, and is prepared to develop them. However, the very same 70% are not ready to pay more for this energy. This is a large task for the government, for civil society, for all of us. We are all responsible for improving the environmental situation in our country,” the expert said.
EITI standards encourage disclosure of information about environmental impact from extractive industries, but only 7 out of the 55 EITI member states disclose climate change-related information, DiXi Group expert Olha Polunina said during the online conference. At the same time, Ukraine provided this information in its 2019 report. It concerns the amount of waste generated by particular extractive industries, the volume of СО2, pollutant and greenhouse gas emissions itemized by enterprises, disaggregated environmental tax revenues from extractive industries, environmental protection costs and investments. To increase transparency of extractive industries, the expert proposed a number of changes in the EITI Standard.
The event is held by EITI National Secretariat,
USAID Energy Sector Transparency implemented by NGO DiXi Group,
International Renaissance Foundation
and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.
To view the conference video, click here.