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EITI in Ukraine:

EITI in Ukraine:. long way to candidate status. Roman Nitsovych , DiXi Group Oliana Valigura , Q-Club. Why EITI matters to Ukraine?. Strengthening of energy security More ‘ comprehensive ’ policy of Ukraine for the advanced countries (EU, U.S.) Reducing level and impact of corruption

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EITI in Ukraine:

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  1. EITI in Ukraine: long way to candidate status Roman Nitsovych, DiXi Group OlianaValigura, Q-Club

  2. Why EITI matters to Ukraine? • Strengthening of energy security • More ‘comprehensive’ policy of Ukraine for the advanced countries (EU, U.S.) • Reducing level and impact of corruption • Creating trust for foreign investors • Increasing sovereign credit rating, reducing risks

  3. Why Ukraine matters to the EITI? • Better investment climate for EITI-supporting companies (such as Chevron, ExxonMobil, GdF, Shell etc.) • More transparent energy market integrated with the EU (important for such supporting countries as Germany, France, Italy, UK, and the U.S.) • A pioneer in the Black Sea region (can involve in the process other countries of the region) • A lab for testing new EITI-covered areas (transit of hydrocarbons)

  4. EITI process: early beginnings 2008: • Analytical report “Oil and Gas Sector of Ukraine: transparency of functioning and revenues”(NOMOS) 2009: • (March)International conference on modernization of the gas transportation system – Ukraine obliged to ensure transparency in the energy sector • (July) Letter of Ukrainian NGOs to the government on joining the EITI, mentioning the IFIs and the EU position • (May-Dec) Creation of the “EnergoTransparency” Association (NOMOS, DiXi Group, Q-Club, Institute of Sustainable Development and others) • (Sept) Resolution and Statement of the Cabinet of Ministers of Ukraine on joining the EITI

  5. EITI process: pressure increases 2010: • Initiatives to expand EITI scope ontransportation of hydrocarbon resources(CSOs) • Report on energy transparency in Ukraine, study on Ukrainian legislation changes to bring it closer to EITI requirements (NOMOS) • (July) Ministry of Fuel and Energy confirmed its intension to continue EITI implementation • (Oct) Website launched on the EITI implementation in Ukraine and abroad (DiXi Group) • (Nov) Memorandum with the IMF under the new stand-by program: “further steps to join the EITI”promised • (Dec) 5th Joint Report on the implementation of the EU-Ukraine MoU in the energy sector

  6. EITI process: more commitments taken 2011: • (Jan) Public parliamentary hearingson the reforms in upstream sector (NOMOS) • (Feb) Ukrainian journalists and experts visited the EITI International Secretariat(Q-Club) • (Feb) Round table "Prospects of Ukraine's accession to the EITI“(DiXi Group, Shell, ACC) • (Feb) Ukraine joined the Energy Community, obliging to implement acquis communautaire in energy • (Mar) Open discussion “Oil – current situation review and expert forecasts”(Q-Club) • (Apr) The President signed an Order to accelerate the process of Ukraine joining the Initiative • (Aug) The Cabinet of Ministers adopted the Resolution on establishment of the working group for EITI implementation • (Sept) Ukraine joined the Open Government Partnership, aiming compliance with the EITI accession criteria by December 2012

  7. EITI process: a breakthrough? 2012: • (Feb) Forum of the “EnergoTransparency” Association: joint position on key issues defined • (March) 6th Joint Report on the implementation of the EU-Ukraine MoU in the energy sector • (March) The Cabinet of Ministers adopted the Resolution on changing the Authorized for the EITI implementation; first meeting of the governmental Working Group • (March) Pilot edition of the Energy Sector Transparency Index (DiXi Group), study on hydrocarbon transit transparency (Revenue Watch Institute), study on Ukrainian coal sector transparency (Institute for Sustainable Development) • (April) Summit of the Open Government Partnership: Ukraine confirmed its willingness to implement EITI in the OGP action plan • (Feb-May, June→) Project on information and analytical support of the government(DiXi Group) • (July)“EnergoTransparency” Association addressed the government to include EITI commitments in the update of the Energy Strategy by 2030 • (Sept) Nomination of representatives in the MSG from each of the constituencies

  8. EITI process: a breakthrough? 2012: • (11 Oct) International conference “Ukraine on the way to join EITI”(Ministry of Energy, World Bank) + 1st MSG meeting • Legal status defined (Order of the Ministry of Energy) • General issues discussed (EITI requirements, principles of MSG functioning) • Training for MSG members by the EITI International Secretariat • (30 Oct) 2nd MSG meeting • Drafts of the MSG Principles of Association and Terms of Reference considered • Scope of EITI in Ukraine defined • Principles of the national work plan discussed • Issues of creating the MSG Secretariat and its financing raised • (13 Nov) 3rd MSG meeting (to be held)

  9. Stakeholder positions — Govt • The Ministry of Energy and Coal Industry as the main authorized body • Position of the IMF and World Bank crucial as they contributed to speed up the process • Close cooperation of the govt representatives with civil society and international community contributed to better understanding and knowledge transfer • Slow, yet stable decision-making in terms of bureaucracy (drafts of all relevant documents to be coordinated and agreed among 13 agencies)

  10. Stakeholder positions — CSOs • Most active and manageable part of the MSG, united into a single network • Improved awareness: number of analytical studies, press releases, policy briefs produced; assisting the govt with the draft documents needed • Organizing and holding events to promote comprehensive transparency in extractive sector (incl. hydrocarbon transit and coal) • Website on the EITI in Ukraine as both online-media and database, monitoring of all relevant activities (progress reports) • Good international engagement: participation in the EITI Global Conferences, visit to EITI Secretariat, trainings of the Eurasia Extractive Industries Knowledge Hub, meetings of the Eurasia Transparency Network • Capacity-building as well as involving more CSOs needed

  11. Stakeholder positions — business • Most of the companies were involved in the MSG during the latest phase (nomination of representatives) • Multinational majors (Shell, Chevron) engaged earlier strongly supporting EITI, as it corresponds to their CSR practices • Ukrainian state-owned companies cautious, following position of the government • International accounting standards still could be a problem for small companies

  12. Stakeholder positions — donors • EITI Multi-Donor Trust Fund — not applicable • EITI International Secretariat — supports Ukraine as a prospective candidate country through dialogue and consultations • IMF, World Bank — expect Ukraine will comply with obligations and/or commitments taken; mostly monitoring activities, very limited direct assistance • EU Delegation, Embassies of the U.S. and Norway — raise the issue of transparency, advocate for better business climate and good governance in the sector • International Renaissance Foundation — promotes good governance in the energy sector, the only institution to support CSOs on systematic basis • Revenue Watch Institute — supports networking activities and trainings in wider Eurasia region, activity in Ukraine quite limited

  13. Risks to be adressed Govt • Formalistic approach to implementation • Lack of cooperation with other stakeholders • Lack of state financing needed CSOs • Still low capacity to execute control over implementation • Distancing from both grassroots and GONGOs • Dependent on donors, low sustainability Business • Low general awareness • Transparency not a main priority in CSR practices • Accounting standards in medium and small companies

  14. Thank you! Questions? www.ua-energy.org/eiti www.qclub.org.ua

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