Fresh Out of the Oven: Fresh EITI Law Adopted in Ukraine

Gas pipeline construction site in front of a forest in Ukraine

On 16 June 2015, the Parliament of Ukraine adopted the law “On amendments to some legislative acts of Ukraine on increasing transparency in the extractive industries in Ukraine” (Reg. № 2591 from 04.07.2015).
This is a big step forward for transparency and accountability in the sector in Ukraine and the result of years of campaigning by civil society including the PWYP affiliated coalition under leadership of Dixie Group and politicians in the country. It is expected to lead to major changes in the legislative system as it needs to be aligned with the EU Transparency Directive.

The law was prepared to enable the disclosure of financial information and business activities of Ukrainian extractive companies ahead of the EITI report due to be submitted by 17 October 2015. The report will cover the 2013 calendar year only, proving that Ukraine still needs to have a stronger law on mandatory disclosures with reporting data on annual bases and in open online and machine readable format.

The disclosure of payments from extractive companies to the government and of the government’s revenues from their activities will help overcome corruption, ensure the creation of a favourable investment climate and enable an effective and competitive environment in Ukraine.

One of the supporters of the law – Member of Parliament Ms. Natalia Katser-Buchkovska, from the “People’s Front” party, wrote on her Facebook page: “Thanks to the implementation of this initiative, every citizen will have access to: information on national and local taxes paid by gas producing companies; information on the geological exploration, use and protection of natural resources. In its turn, the government will have opportunities to manage better the mining sector of the economy.”
Transparency standards will have a positive impact on the sovereign credit rating of Ukraine, will facilitate cash flows and will strengthen investors’ trust as a result of reduced corruption and increased competitiveness of the industry.
In addition, these measures will lead to the modernisation of Ukraine’s gas transit projects by allowing technical assistance from international financial institutions, with the expectation that this will enable Ukraine to use gas pipeline systems for reverse gas transportation from the European Union. As a major gas transit from Russia to Western Europe, Ukraine earns millions each year.

Olena Pavlenko, president of the DIXI Group and member of PWYP’s Global Council, feels very optimistic about the adoption of the new transparency law: “Civil society in Ukraine has been campaigning for the implementation of the EITI since 2008. In 2013, after over 5 years of non-stop campaigning, we reached our goal and Ukraine finally became a candidate country. However, this was just the tip of the iceberg. It took us another 1,5 years and consolidated joint efforts from all stakeholders to push this law through. Our coalition and other supporters are very excited about it and are looking forward to the shift from transparency to accountability. There is always room for improvement so we’ll continue our everyday modest work towards a better future for the citizens of Ukraine.”

This win highlights the important role that civil society plays in ensuring transparency and accountability in the extractive industries in Ukraine and beyond. But this is not the end of the road in Ukraine, next steps will be to make change happen progressively through the EU Transparency Directive and mandatory disclosures.

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