UKRAINE IMPROVES RULES FOR SUBSOIL BUSINESSES
On October 23, 2019, the Cabinet of Ministers of Ukraine (hereinafter – CMU) adopted Resolution No.928 on amendments to Resolution No. 615 on the procedure for granting special permits for subsoil use, approved by the CMU on May 30, 2011. Resolution No.928 entered into force on November 21, 2019.
The State Service of Geology and Mineral Resources of Ukraine (hereinafter – SSGMR) will now be free from the obligation to get confirmation from the Commission on Subsoil Use (hereinafter – Commission) when making decisions on subsoil use.
This document will explain the principal changes for businesses put in place by Resolution No.928.
Resolution No.928 excludes the Commission from decision-making processes of the SSGMR on granting extensions of validity, termination, renewal and cancellation of special permits for the use of subsoil.
We draw your attention to the fact that the SSGMR had previously made the aforementioned decisions only after the Commission approved them. In practice this meant that the SSGMR mostly depended on the decisions of the Commission as of a collegial body.
It is worth saying that the collegiality of the Commission made it possible to erode the responsibility of certain officials in the SSGMR for making decisions. This carried a certain corruption risk and created a collective lack of responsibility. With the adoption of Resolution No.928, these problems have been greatly reduced.
All the provisions from Resolution No. 615 that obligated the SSGMR to create such a Commission and make decisions only after the Commission had considered the relevant issues were withdrawn.
If we look at the statistics of the SSGMR for the period of 2016 – 2019, we can see that a significant part of the scheduled meetings of the Commission did not take place due to lack of a quorum. Sometimes situations arose that made it impossible to hold meetings of the Commission in general.
As a result, preliminary considerations of materials on the granting, extension of validity, termination, renewal and cancellation of permits were not held, which led to a delay of the above actions regarding special permits.
If we compare the current state of affairs with the previous one, it is worth noting that by adopting order No.440 on November 28, 2019, almost immediately after the entry into force of Resolution No.928, the SSGMR was able to resolve problems of more than 76 subsoil users, 23 of which can finally resume work with renewed permits.
Since Resolution No. 928 was passed the SSGMR has already taken more than 20 orders, which indicates a significant increase in decision-making speed from previous periods.
The government has made an extremely important decision in order to simplify the operation of businesses in the field of subsoil use. These changes will contribute to:
- improvement of investment performance;
- elimination of corruption risks;
- improvement of the development of the country’s resource potential;
- ensuring the rights and interests of business entities in the sphere of subsoil use;
- ensuring effective and transparent procedures on granting extensions of validity, termination, renewal, cancellation of permits etc.
Considering the SSGMR will now be able to implement transparent and effective policy, these actions by the government create good conditions for attracting foreign investment into Ukraine and facilitating the flow of funds into the state budget.
It should be noted that these changes are particularly important for foreign investors and for international businesses, many of whom hold stakes in mining ventures in Ukraine. Previously, many of them faced barriers to conducting transparent and stable business. There is now reason to believe that many of these risks have been greatly diminished.