Extractive Industry Rental Payments Discussed in Kharkiv Region
14 August 2017

A roundtable Rational Use of Rent at the Local Level: A Road towards Sustainable Socioeconomic Development of Extractive Regions was conducted in Zmiiv, Kharkiv Oblast, on 10 August. The event was attended by representatives of local governments, extractive companies, the general public, and local media from five extractive raions of the Kharkiv Oblast: Chuhuiv, Balakliia, Zmiiv, Izium, and Shevchenivskyi raions.

The roundtable participants discussed the issues of assuring transparency in operation of extractive companies at the local level and rational use of rent payments by local governments. Experts of the NOVA Energia NGO have familiarized the attendees with the key findings of the second report of the Extractive Industries Transparency Initiative (EITI) in Ukraine for the years 2014-2015 and the amounts of rent payments made by companies of the oil and gas extractive sector in the Kharkiv Oblast in 2016.

Liudmyla Nemykina, vice-president of the Local Government Association of the Kharkiv Oblast and the member of the Kharkiv Oblast Council has noted: “Approval of the Law 1793-VIII, which envisages remittance of 5% of rent payments made by oil and gas extractive companies into local budgets, was a great success. Therefore, local governments must start preparing infrastructure projects and programs for using these funds as soon as possible, for them to be used to address the pressing problems in the gas extractive areas starting immediately at the outset of next year.” The representatives of local governments received recommendations at the roundtable for developing their plans of improving the energy efficiency of their settlements and raions, for implementation of which they will be able to use the funding from the rent paid by extractive companies into local budgets, starting in 2018. Vitalii Filenko, chairman of the Board of the NOVA Energia NGO has shared the information about the opportunities of using the technologies based on renewable energy sources for modernizations of social infrastructure assets.

Experts of the NOVA Energia NGO have noted that despite significant achievements of Ukraine on the road to EITI implementation, combating corruption, and ensuring openness of data, the extractive industry and companies still remain extremely reticent as regards exchange of data and constructive dialog.

They maintain that the key problem is obtaining access to the data of state-owned companies with regard to the volume of hydrocarbons extraction by administrative-territorial unit.