On March 1, 2018, the Law No. 6229 “On Ensuring Transparency in Extractive Industries” was approved by the Verkhovna Rada (Parliament) of Ukraine in the first reading. Now the Law is being prepared for the second reading. 231 members of parliament voted for this law. This was made possible due to the consistent community efforts. More than two years ago DiXi Group set to drafting this law and its promotion in the agenda of the Parliament.
On March 1, 2018, the Law No. 6229 “On Ensuring Transparency in Extractive Industries” was approved by the Verkhovna Rada (Parliament) of Ukraine in the first reading. Now the Law is being prepared for the second reading. 231 members of parliament voted for this law. This was made possible due to the consistent community efforts. More than two years ago DiXi Group set to drafting this law and its promotion in the agenda of the Parliament.
The draft law No. 6229 was developed in order to make Ukraine accept international standards and best practices in the field of information disclosure in the extractive industries, according to the international Extractive Industries Transparency Initiative (EITI). This is already the second draft law in this field and it shall oblige all producers to disclose their production reports and payments on an annual basis. The first law was passed in 2015 and obliged extractive companies to disclose information on their oil and gas extraction.
“The adoption of the Draft Law No. 6229 in the first reading is very important, but this is only the first step towards ensuring the extractive industry transparency. The law’s passage or rejection in the future will generally become a test for the State: is it ready to provide its citizens with accurate and timely information about what is happening in the extractive sector”, explains Oleksiy Orlovsky, Director of the Democratic Practice Program Initiative of the International Renaissance Foundation, a Board member of the Extractive Industries Transparency Initiative (EITI).
He also noted that this is a question of compliance with Article 13 of the Constitution of Ukraine, according to which the land and subsoil within the territory of Ukraine are objects of property rights of the Ukrainian people, thus, citizens shall have the right of access to the information required by this draft law. First and foremost, this is about compulsory business reporting on extraction volume and profits, as well as disclosing the names of genuine owners of companies and the information on concluded contracts.
More details on the essence of this draft law and its requirements are explained by DiXi Group.
For many years, the International Renaissance Foundation has been supporting the extractive industry reform. In particular, 10 years ago the Foundation became the leader of the international Extractive Industries Transparency Initiative (EITI) in Ukraine, whereas in 2013 the State has officially joined the Initiative. During this time, under the community influence the following was achieved:
- open the information on license issuance for subsoil use and transport in the territory of the country;
- introduced the procedure of reconciliation of payments and budget revenues received from extractive companies in the budgets of different levels;
- made amendments to the Budget Code, according to which, starting from the beginning of 2018, 5% of rent payments payable by oil and gas companies shall be credited to the local budgets of those communities, districts and regions, in territories of which the extraction takes place;
- open free access to the register of beneficiary owners of enterprises, which also includes the mining companies. Ukraine was the first in the world to do this.
