Ukraine passes extractive industries transparency law based on best practice from EITI and EU

Ukraine’s national parliament passed the widely-backed Law 2545-VIII ‘On ensuring transparency in extractive industries’ on 18 September 2018. The new legislation sets out legal principles for the collection, disclosure and dissemination of data on Ukraine’s extractive industries. It is hailed by campaigners as a milestone on the road to transparency and accountability in the country’s oil, gas and mining sector.

Ukraine’s national parliament passed the widely-backed Law 2545-VIII ‘On ensuring transparency in extractive industries’ on 18 September 2018. The new legislation sets out legal principles for the collection, disclosure and dissemination of data on Ukraine’s extractive industries. It is hailed by campaigners as a milestone on the road to transparency and accountability in the country’s oil, gas and mining sector.

Law 2545-VIII was developed with the aim of harmonising Ukraine’s legislation with the EITI Standard and the EU Accounting Directive. The law mandates the disclosure of payments at the project level, the ultimate beneficial owners of companies and “material” elements of contracts relating to the extractive industry, such as social obligations, building infrastructure and barter arrangements.

The law was passed by 244 votes. For Ukraine’s transparency campaigners, including parliamentarians, companies, and civil society organizations that assisted in drafting and passing the law, the outcome of the vote is significant.

“This is a victory for transparency campaigners in Ukraine,” said Olga Bielkova, Member of Ukrainian Parliament and EITI Board Member. “Companies will now have to report what deals have been agreed in the oil, gas and mining sector and by whom.  This law incorporates best international transparency practice from the EU and the EITI and unifies it with Ukrainian law. It enshrines transparency and accountability principles into Ukrainian laws and regulations, strengthening governance and institutions.” 

Olga Bielkova, Member of Ukrainian Parliament and EITI Board Member. 

The new law paves the way for more systematic reporting of industry data. It requires that all payments and contract disclosures should be published online, in open data formats and by the government agencies and companies. All data must be approved by an external certified auditor. Failure to report data correctly will result in high penalties. 

The new law will give the Ukrainian people access to valuable information to understand and evaluate the economic and social impact of the exploitation of the country’s oil, gas and mineral resources. According to campaigners, the enhanced transparency provided by the law will also create a more attractive investment environment in Ukraine.

“The law contains EITI best practices and recommendations - project by project reporting, opening significant parts of the contract up and disclosing information about beneficial owners,” said Olena Pavlenko, President of DiXi Group. “If the law is implemented properly, it will ensure fair and open reporting processes from both government and companies entities. We very much hope that it will lead to more trust and cooperation between civil society, government and companies, better governance of natural resources and sustainable development of Ukraine.”

For further information about the EITI in Ukraine, please visit the country page.