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Business calls for corruption risks to be avoided in the sphere of subsoil use

23/ 02/ 2022
  Today, the Verkhovna Rada Committee on Environmental Policy and Nature Management will consider draft law №5390 on the development of the resource base for low-carbon energy. The document contains a range of positive amendments and proposals to the current legislation in the field of oil and gas production. For example, it improves auction procedures and procedures for concluding and executing production sharing agreements (PSAs), enables the inclusion of the right to extract associated minerals in these agreements, optimizes the timing of EIA, and so on. At the same time, some of these provisions duplicate those in draft law №4344 on improving the PSA mechanism, which has already been approved by several VRU committees and recommended for adoption by MPs. Along with the positive novelties, the document provides some dubious provisions, such as: Possibility to use several separate subsoil areas within one PSA. This may create a low-quality and non-transparent mechanism of subsoil use due to non-compliance with the unified geological structure and economic model of subsoil use within one PSA. Possibility of concluding PSA without holding a competition based on the decision of the Interdepartmental Commission. Such an extension of the commissions powers may lead to high corruption risks and potentially delay the consideration and conclusion of PSA in certain cases. Olga Boiko. EBA Industrial Ecology and Sustainable Development Committee Coordinator. Draft Law №5390 proposes pinpoint changes to certain legislative acts in the field of subsoil use, including the Subsoil Code itself. At the same time, the Verkhovna Rada Ecocommittee is now actively working on the text of draft law №4187-d, aimed at supporting and developing domestic subsoil use industries. Among the many attempts to restore the investment attractiveness of the extractive industry, this document is the most comprehensive and balanced. That is why the business community proposes to continue the focus on the reform. Thus, the European Business Association calls on MPs to reject draft law №5390, as one that will lead to an additional burden on transparent business.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

Today, the Verkhovna Rada Committee on Environmental Policy and Nature Management will consider draft law №5390 on the development of the resource base for low-carbon energy.

The document contains a range of positive amendments and proposals to the current legislation in the field of oil and gas production. For example, it improves auction procedures and procedures for concluding and executing production sharing agreements (PSAs), enables the inclusion of the right to extract associated minerals in these agreements, optimizes the timing of EIA, and so on. At the same time, some of these provisions duplicate those in draft law №4344 on improving the PSA mechanism, which has already been approved by several VRU committees and recommended for adoption by MPs.

Along with the positive novelties, the document provides some dubious provisions, such as:

  1. Possibility to use several separate subsoil areas within one PSA. This may create a low-quality and non-transparent mechanism of subsoil use due to non-compliance with the unified geological structure and economic model of subsoil use within one PSA.
  2. Possibility of concluding PSA without holding a competition based on the decision of the Interdepartmental Commission. Such an extension of the commission’s powers may lead to high corruption risks and potentially delay the consideration and conclusion of PSA in certain cases.
Olga Boiko EBA Industrial Ecology and Sustainable Development Committee Coordinator
Draft Law №5390 proposes pinpoint changes to certain legislative acts in the field of subsoil use, including the Subsoil Code itself. At the same time, the Verkhovna Rada Ecocommittee is now actively working on the text of draft law №4187-d, aimed at supporting and developing domestic subsoil use industries. Among the many attempts to restore the investment attractiveness of the extractive industry, this document is the most comprehensive and balanced. That is why the business community proposes to continue the focus on the reform.

Thus, the European Business Association calls on MPs to reject draft law №5390, as one that will lead to an additional burden on transparent business.

 

Be the first to learn about the latest EBA news with our Telegram-channel EBAUkraine.

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