The procedure for holding auctions for sale of special permits for subsoil use has been updated. What changes should business expect?

Ukraine has updated the procedure and, accordingly, the order for holding auctions for sale of special permits for subsoil use.

On 27 October 2020, the Resolution of the Cabinet of Ministers of Ukraine “On Approval of the Procedure for Holding Auctions for Sale of Special Permits for Subsoil Use” entered into force. It replaced the relevant Resolutions of the Cabinet of Ministers of 2011 and 2018, which expired.

Analysis of the updates shows that the procedure for sale of a special permit for subsoil use at e-auctions through has significantly changed and become more unified. In practice, this means that subsoil users have received the opportunity to initiate an auction. We expect that this will have a positive impact on business and speed up many procedures while obtaining special permits for subsoil use.

We would recommend that entrepreneurs pay attention to the following aspects:

  1. Interested persons can initiate an auction by submitting the relevant application to the State Service of Geology and Mineral Resources of Ukraine (Derzhgeonadra).
  2. A lot can be sold after determining its initial price in accordance with the established methodology.
  3. The costs for preparation of lots for the auction, incurred by Derzhgeonadra, shall be reimbursed by the winner for each lot whereby the winner shall purchase an auction documentation package.
  4. The winner, within 30 working days as of the date of the sale and purchase agreement for the permit or the conditional sale agreement for the permit, shall pay to the state budget funds in the amount equal to the difference between the selling price of the lot and the guarantee fee.
  5. The winner of the auction shall pay the cost of the geological information within 30 working days as of the date of the sale and purchase agreement for the permit or the conditional sale agreement for the permit with a condition precedent.
  6. The winner shall pay remuneration to the operator, through which the winner obtained the right to participate in the auction within 10 working days as of the date of publication of the minutes of the auction in the electronic trading system for the sale of permits by Derzhgeonadra.
  7. The winner shall pay the cost of the auction documents package within 20 working days as of the date of publication of the minutes of the auction in the electronic tendering system for the sale of permits by Derzhgeonadra.
  8. The winner shall pay remuneration to the operator, through which the winner of the auction acquired the right to participate in the auction before the date of conclusion of the sale and purchase agreement for the permit or the conditional sale agreement for the permit between Derzhgeonadra and the winner of the auction.
  9. The permit and the agreement on subsoil use shall be issued within 30 working days in accordance with the terms of the agreement for the sale and purchase of the permit (in case of an conditional sale agreement for the permit – – within 30 calendar days as of the date thereof) based on the results of the auction upon application of the winner in the premises of the State Service of Geology and Mineral Resources of Ukraine to the winner or his representative authorized to sign an agreement on subsoil use and obtain the permit and the agreement.
  10. In case of sale of a permit for geological exploration of oil and gas bearing subsoil, including pilot development of the deposits, with subsequent production of oil, gas (industrial development of the deposits) and/or mining of minerals and conclusion of a sale and purchase agreement for the permit, the special terms of the permit shall include a prohibition on conducting activities determined by the Law of Ukraine “On Environmental Impact Assessment” without obtaining an opinion on environmental impact assessment in accordance with this Law and the State Service of Geology and Mineral Resources of Ukraine is obliged to amend the special terms of the permit taking into account the results of the environmental impact assessment.