Before the full-scale russian invasion of Ukraine, the EITI Reports provided data on the average number of full-time employees (including by gender) in the extractive industries, obtained from the State Statistics Service in response to a request from the Independent Administrator. Obtaining the specified data for 2024 turned out to be impossible in accordance with the Law of Ukraine “On Protection of the Interests of Subjects of Reporting and Other Documents during the Period of Martial Law or a State of War”, since individuals, individual entrepreneurs, legal entities have the right not to submit statistical reporting during martial law. That is why the state statistics bodies were unable to generate objective statistical information.

According to the reports actually submitted by the enterprises and the reassessments of the State Statistics Service indicators, the number of employees employed by economic entities in the extractive industry and quarry development amounted to 138 thousand people, or 1.83% of the total number of employed people in Ukraine. Also, 40 thousand people worked in the metal ore mining industry, of which 28 thousand people were in the iron ore mining industry. 39 thousand people worked for business entities in the crude oil and natural gas mining industry, which is 0.51% of the employees employed by business entities in Ukraine. 16 thousand people worked in the stone, sand and clay mining industry (0.21% of the total employees in Ukraine). The information will be clarified after the statistical data are updated.

Before the full-scale russian invasion, the EITI Reports provided data on the average number of full-time employees (including by gender) in the extractive industries, obtained from the State Statistics Service in response to a request from the Independent Administrator. Obtaining the specified data for 2023 turned out to be impossible due to the Law of Ukraine “On Protection of the Interests of Subjects of Reporting and Other Documents during the Period of Martial Law or a State of War”, since individuals, individual entrepreneurs, and legal entities have the right not to submit statistical reports during martial law. This made it impossible for state statistics bodies to form objective statistical information.

According to the reports submitted by the enterprises and the reassessments of the indicators calculated by the State Statistics Service, the number of employees in the extractive industry and quarry development business entities was 147 thousand people, which is 1.95% of the total number of employees in Ukraine. Of them, 44 thousand people were employed in the metal ores mining industry, including 31 thousand people – in the iron ore mining industry. 38 thousand people worked in the crude oil and natural gas extractive business entities, which is 0.50% of the employees of business entities in Ukraine. 17 thousand people were employed in the stone, sand and clay mining industry (0.22% of the employees of Ukraine).

Obtaining data on the average number of full-time employees (including by gender) in the extractive industries from the State Statistics Service for 2022 turned out to be impossible due to the Law of Ukraine “On Protection of the Interests of Subjects of Reporting and Other Documents during the Period of Martial Law or a State of War”, since individuals, individual entrepreneurs and legal entities have the right not to submit statistical reports during martial law. This made it impossible for state statistics bodies to form objective statistical information.

Thus, the state statistics bodies suspended the publication of statistical information, including information on the average number of full-time employees in total and by gender, during the period of martial law and for three months after its termination. In view of the above, a comparison of the data presented in this section with the data published in previous EITI Reports is not appropriate.

According to the reports submitted by the companies and the reassessments of the indicators calculated by the State Statistics Service, the number of employees employed by business entities in the extractive industry and quarry development amounted to 169 thousand people in 2022, which is 2.23% of the total employment in Ukraine. At the same time, 55 thousand people were employed in the metal ore mining industry, including 38 thousand people in the iron ore mining industry. A total of 39 thousand people worked in the crude oil and natural gas extractive industry, which is 0.51% of the employees employed by business entities in Ukraine.

According to the reports submitted by the companies and the reassessments of the indicators calculated by the State Statistics Service, the number of employees employed by business entities in the extractive industry and quarry development amounted to 169 thousand people in 2022, which is 2.23% of the total employment in Ukraine. At the same time, 55 thousand people were employed in the metal ore mining industry, including 38 thousand people in the iron ore mining industry. A total of 39 thousand people worked in the crude oil and natural gas extractive industry, which is 0.51% of the employees employed by business entities in Ukraine.

In 2021, the average number of full-time employees in the extractive industries was 184 thousand people, which is 1.29% less than in the previous year. At the same time, the total number of full-time employees in Ukraine decreased even more, by 3.39%. The share of the extractive industries in the total number of full-time employees in Ukraine remained almost unchanged, amounting to 2.59% in 2021 compared to 2.54% in 2020.

Among all extractive industries, metal ore mining and hard coal mining traditionally employed the largest number of full-time employees, with 63 thousand and 62 thousand employees respectively in 2021.

As in previous periods, the gender structure of full-time employees in the extractive industries in 2021 was dominated by men. Of the 184 thousand full-time employees in the extractive industries, 137 thousand were men (74.46%) and 47 thousand were women (25.54%).

Similar to the extractive industries, men also predominated in the structure of full-time employees in the industrial sector as a whole, accounting for 62.66% in 2021. In contrast, women predominated in the overall economy of Ukraine among the average number of full-time employees, accounting for 53.48% in 2021.

At the same time, the share of women in the extractive industries has been gradually increasing. Their share among full-time employees amounted to 24.75% in 2018 and gradually increased to 25.54% in 2021.

In 2020, the average number of full-time employees in the extractive industries was 186.4 thousand people – a decrease by 4.90% compared to the previous year. Overall, the extractive industries employed 2.54% of the average number of full-time employees in Ukraine in 2020, including 0.92% (67.4 thousand people) in hard coal and lignite mining, and 0.82% (59.9 thousand people) in metal ore mining.

The average monthly salary of the extractive industries’ employees in 2020 was UAH 16,763, which is 7.25% more than in 2019. Moreover, the average monthly salary of employees in the extractive industries is 44.62% higher than the average monthly salary in Ukraine and 31.38% higher than the average monthly salary of the people employed in the industrial production industry.

As in previous years, the people employed in all extractive industries, namely 74.68%, were mostly males. The share of women was 25.32%. A similar trend was observed in all extractive industries

The average number of full-time registered employees in the extractive industries decreased annually by an average of 5.63% and in 2019 amounted to 196 thousand people. The direct contribution of the extractive industries to the total average number of full-time registered employees in Ukraine amounted to 2.63% in 2019. Among all economic activities included in the mining industry, the largest number of full-time registered employees was employed in the mining of hard coal and lignite – 72 thousand people or 0.97% of the total number of full-time registered employees in Ukraine. The second top industry was non-ferrous ores mining – 65 thousand people or 0.88% of the total in Ukraine.

The largest share of staff in the extractive industries was employed at enterprises in Dnipropetrovsk (34.41%), Donetsk (23.62%), Poltava (9.41%), Lviv (5.57%) regions. Extractive industries are important for the generating personal income, because, according to official statistics, the average wage in the extractive industries is 50% higher than in the country. While the average monthly wage in Ukraine increased by 18.41% in 2019 compared to previous year and amounted to UAH 10,497, in the extractive industries it increased by 25.52% to UAH 15,630.

The gender structure of full-time employees in all mining industries is predominated by men with a share of 74.57%, while the share of women is 25.43%. The structure of full-time employees in each mining industry is shown in the figure below

In 2018, the average number of full-time employees in the extractive industries was 202 thousand people, or 10.91% of all full-time employees in all industries and 2.64% of all full-time employees in Ukraine. More than half of all employees in the extractive industries are working at the enterprises in Dnipropetrovsk (34.54%) and Donetsk regions (22.86%).

The number of full-time employees in the extractive industries continued to decline, albeit at a slower pace: in 2017 it decreased by 8.19% compared to the previous year, and in 2018 – by 5.16%. Such employment dynamics in the extractive industries is significantly affected by the general economic downturn and the loss of control of companies over their extractive assets located in the eastern part of Ukraine in the area of Unified Forces Operations.

At the same time, the extractive industries have a significant impact on the personal income of the population, because, according to the State Statistics Service, the average salary of full-time employees in the extractive industries in 2018 was UAH 12,452, which is 40.46% more than the average salary in Ukraine (UAH 8,865). While the average wage in Ukraine in 2018 increased by 24.79% compared to 2017, in the extractive industries it increased slightly more – by 28.32%.

The bulk of full-time employees in the extractive industries, namely 75.25%, are men. The share of women in 2018 was 24.75%

According to data provided by the State Employment Centre, 4,720 permits for the employment of foreigners and stateless persons were issued in Ukraine in 2024, including 537 to women. As of 2024, the total number of valid permits was 13,582, including 1,492 to women. In 2024, the number of permits issued for the employment of foreigners and stateless persons increased by 56.55% compared to 2023.

However, the analysis by NACE type of economic activity shows the opposite trends. In the extractive industry (section B), the number of permits issued in 2024 decreased by 73.43% compared to the previous year and amounted to only 13, of which one was to a woman. In contrast, in the transport sector (Section H), there is an increase of 65.12%, which is equal to 284 permits, including 19 for women.

As of 2024, 44 permits for the employment of foreigners and stateless persons were in force in the material reporting companies, of which 4 permits were issued during the year.

In the period from 2020 to 2023, Ukrainian extractive companies continued to actively attract foreign specialists to meet the needs for qualified labour. In 2022, due to the full-scale russian invasion of Ukraine, the number of permits issued for the employment of foreigners decreased fourfold compared to 2021. Detailed information on the number of permits issued for the employment of foreigners and stateless persons in the mining industries during this period is provided below.

According to data provided by the State Employment Centre as part of the preparation of the EITI Report for 2023, the total number of permits issued for the employment of foreigners or stateless persons continued its downward trend and amounted to 3,015 permits, which is 22.93% less than the number of permits issued in 2022. At the same time, the number of special permits issued in 2023 for NACE Section B (extractive industry and quarry development) increased by 53.13%. Despite this, Section H (transport, warehousing) demonstrated a decrease of 34.60% compared to the previous period.

38 permits for the employment of foreigners and stateless persons were in force with the material reporting companies in 2023, nine of which were issued in that same year.

In accordance with requirement 6.3 A (IV) of the EITI Standard, companies are encouraged to disclose information on the gender pay gap. However, the current version of the EITI Law does not contain a direct requirement for reporting companies to make such disclosure. In view of this, the Independent Administrator made an additional request to the material reporting companies to disclose information on the gender pay gap.

The gender pay gap requires further attention from all stakeholders to identify possible disparities in certain extractive industries. Conducting such an analysis will allow to identify potential structural inequalities, contribute to a more inclusive development of the extractive sector and ensure compliance with international standards of transparency and sustainable development.

The Law of Ukraine "On State Aid to Business Entities" provides that state support measures must be checked by the Antimonopoly Committee of Ukraine ("AMCU") for eligibility for state aid, which is subject to verification on admissibility for competition.

In general, state aid to business entities is their support in any form at the expense of state or local resources, which distorts or threatens to distort economic competition, creating advantages for the production of certain types of goods or the implementation of certain types of economic activity

State aid can be provided in various forms (for example, in the form of subsidies, guarantees, an increase in the state share in the authorized capital of business entities, tax benefits, compensation for losses, etc.).

Criteria for admissibility of state aid for competition may be established by the CMU for certain categories of state aid.

In 2023, the Criteria for assessing the admissibility of state aid to economic entities in the coal industry came into force, which determined the following criteria for assessing the admissibility of state aid in this field:

AMCU maintains the Register of State Aid Programs at the link:

http://pdd.amc.gov.ua/portal/registry/registryofstateaid/list

The AMCU prepares an annual report on state aid granted in the previous financial year by 1 September of the following year, submits it to the CMU for approval, and publishes it in the Uryadovy Kuryer newspaper and on the Government’s website. The AMCU’s reports on state aid granted to undertakings, based on information provided by state authorities and local self-government bodies, are available at the following link:

Report for 2023: https://amcu.gov.ua/pro-nas/zvitnist/richni-zviti-pro-nadannya-derzhavnoyi-dopomogi/2023

During the period of martial law and for one year after its termination, providers of state aid were temporarily exempted from the obligation to notify the AMCU of new or existing state aid, and all state aid provided during martial law was declared admissible for competition. In addition, a rule has been established according to which certain provisions of the Law of Ukraine "On State Aid to Business Entities", in particular those regulating the maintenance of the Register of State Aid, do not apply. This made it difficult to implement the powers of the AMCU and the functioning of the national state aid control system, in particular, in the part of maintaining the Register of state aid programs and drawing up the annual report on the provision of state aid.

In 2022, the Criteria for assessing the admissibility of state aid to economic entities in the coal industry were in effect, which defines the following criteria for assessing the admissibility of state aid in this field: https://amcu.gov.ua/pro-nas/zvitnist/richni-zviti-pro-nadannya-derzhavnoyi-dopomogi

Such state aid may be permissible if it is provided for clearly defined purposes (liquidation of coal mining enterprises, covering exceptional costs, etc.) and covers only costs related to coal for the production of electricity, combined heat and electricity, coke production and as a fuel for blast furnaces in the steel industry.

The criteria for assessing the admissibility of state aid to economic entities for environmental protection provide for the construction or re-equipment of energy infrastructure facilities, which are subject to the tariffs and conditions of connection to the grid, determined by the legislation of Ukraine, for the purposes of environmental protection.

According to these Criteria, to facilities energy infrastructure includes equipment and facilities located on the territory of Ukraine, including those that connect it with one or more other countries, namely:

At the same time, the law provides for some exceptions, including for state aid related to the provision of services of general economic interest (which include the services related to the natural gas market operations under the imposition of special obligations mechanism)

From March 2022, for the period of martial law and for one year after its termination or cancellation, state aid providers were temporarily exempted from the obligation to notify the AMCU of new or current state aid, and all state aid provided during martial law was recognized as admissible for competition.

In 2021, such state aid may be permissible if (1) it is granted for clearly defined purposes (liquidation of coal mining enterprises, coverage of exceptional costs, etc.) and (2) it covers only costs related to coal for the production of electricity, combined heat and power, coke production, and as a fuel for blast furnaces in the steel industry.

On October 11, 2021, the CMU also adopted a resolution "On the approval of criteria for assessing the admissibility of state aid to economic entities for environmental protection", which provides for the construction or re-equipment of energy infrastructure facilities, which are subject to the tariffs and conditions of connection to the network, determined by the legislation of Ukraine, for the purposes of environmental protection.

Costs that can be reimbursed to the recipient of state aid are capital investments for the construction or re-equipment of the above energy infrastructure facilities. The amount of such state aid should not exceed the difference between the costs that can be reimbursed to the recipient of state aid and the operating profit from the investments of the recipient of state aid.

Any new state aid, as well as current aid in case of significant changes to it, can be granted only after receiving a positive decision of the AMCU. State aid provided contrary to the requirements of the law is considered illegal and subject to full refund to the state or may be terminated by the AMCU.

At the same time, the Law provides for some exceptions, including for support related to the provision of services of general economic interest (among them - services in the field of functioning of the natural gas market within the framework of the imposition of special obligations).

AMCU maintains the Register of State Aid Programs at the link:

http://pdd.amc.gov.ua/portal/registry/registryofstateaid/list.

AMCU annually publishes reports on the provision of assistance to business entities based on information provided by state and local self-government bodies and publishes them at the link: https://amcu.gov.ua/pro-nas/zvitnist/richni-zviti-pro-nadannya-derzhavnoyi-dopomogi.

The Law of Ukraine "On State Aid to the Business Enterprises" stipulates that state support measures should be reviewed by the Antimonopoly Committee of Ukraine (the "AMCU") to identify the measures qualifying as state aid, which is subject to review for its competition permissibility.

Generally, support to business entities in any form at the expense of state or local resources, which distorts or threatens to distort economic competition, creating advantages for production of certain goods or certain economic activities, is considered "state aid".

State aid may be provided in various forms (e.g., in the form of subsidies, guarantees, increase in the state share of the charter capital of business entities, tax benefits, compensation of losses, etc.).

The criteria for permissibility of state aid may be set by the CMU for certain categories of state aid.

For instance, according to the results of public discussions during 2019-2020, 13.01.2021 the CMU adopted the resolution "On Approval of the Criteria for Permissibility of State Aid to Companies in the Coal Industry", which defines the following criteria for assessing the eligibility of state aid in this area:

Such state aid may be eligible if (1) it is provided for clearly defined purposes (liquidation of coal mines, coverage of exceptional costs, etc.) and (2) covers only costs related to coal for electricity generation, combined heat and power generation, coke production and as a fuel for blast furnaces in the steel industry.

Any new state aid, as well as on-going state aid if its conditions significantly change, may only be granted after a positive decision of the AMCU. State aid granted contrary to the requirements of the law is considered illegal and is fully repayable to the state813 or may be terminated by the AMCU.

The draft law provides for some exceptions, e.g., for aid related to provision of services of general economic interest (these include services related to operation of the natural gas market provided within the scope of special obligations).

The AMCU maintains the Register of State Aid Programs, available at:

http://pdd.amc.gov.ua/registry/registryofstateaid/list.

The AMCU publishes annual reports on state aid granted to business enterprises based on the information provided by public authorities and local governments and discloses all its decisions related to state aid cases, on the State Aid Portal:

http://pdd.amc.gov.ua/portal/registry/refistryofcases/list.

According to state authorities, the total tax and non-tax revenues from the reporting companies of the material extractive industries in favour of the state in 2024 amounted to UAH 172,238,074.24 thousand, including by:

Like in the previous reporting periods, production royalty for extraction of mineral of national importance is the largest of all types of payments in favour of the state from the extractive industry companies — 29.80% of the total revenue from the reporting extractive industries (or UAH 51,332,239.11 thousand). The second and third top types of payments are VAT on goods produced in Ukraine (excluding budget VAT refund) and the corporate income tax — 24.74% (UAH 42,610,133.51 thousand) and 18.06% (UAH 31,103,978.98 thousand), respectively.

According to the state authorities, the total tax and non-tax revenues from the reporting companies in the material extractive industries to the state in 2023 amounted to UAH 150,754,831.95 thousand. They include payments by:

Like in previous years, of all types of payments in favour of the state from extractive companies, the largest was the production royalty for the use of subsoil of national importance – 39.45% of the total revenues from the reporting extractive industries (or UAH 59,418,960.19 thousand). The second and third top were value added tax on goods produced in Ukraine (excluding VAT refunds from the budget) and corporate income tax – 25.93% (UAH 39,057,738.39 thousand) and 20.96% (UAH 31,602,930.26 thousand), respectively.

According to the state authorities, the total tax and non-tax revenues from the reporting companies in the material extractive industries in favour of the state in 2022 amounted to UAH 188,422,641.60 thousand. Of this amount, 82.24% (UAH 154,951,355.58 thousand) was paid by companies in the oil and gas industry (including oil and natural gas transportation), 11.01% (UAH 20,743,273.75 thousand) by companies in the metal ore mining industry (iron, titanium and manganese ores), and 6.76% (UAH 12,728,012.27 thousand) by companies in the coal mining industry.

As in previous years, of all types of payments in favour of the state from extractive companies, the largest was the production royalty for the use of subsoil of national importance — 46.73% of the total revenues from the reporting extractive industries (or UAH 86,630,312.56 thousand). The second and third largest types of payments were value added tax on goods produced in Ukraine (excluding VAT refunds from the budget) and corporate income tax — 23.32% (UAH 43,226,354.94 thousand) and 14.40% (UAH 26,690,523.17 thousand) respectively.

According to the state authorities, the total tax and non-tax revenues from the companies in the material extractive industries in favour of the state in 2021 amounted to UAH 216,642,527.55 thousand. Of this amount, 71.54% (UAH 152,606,241.68 thousand) was paid by companies in the oil and gas industry (including oil and natural gas transportation), 23.80% (UAH 50,767,495.20 thousand) by companies in the metal ore mining industry (iron, titanium and manganese ores), and 4.66% (UAH 9,945,921.55 thousand) by companies in the coal mining industry.

As in previous years, of all types of payments in favour of the state from extractive companies, the largest was the production royalty for the use of subsoil of national importance, accounting for 37.39% of the total revenues from the reporting extractive industries, or UAH 81,002,620.54 thousand. The second and third largest types of payments were corporate income tax and value added tax on goods produced in Ukraine (excluding VAT refunds from the budget), accounting for 26.01% or UAH 56,354,348.55 thousand and 22.12% or UAH 47,927,918.28 thousand, respectively.

Based on the information provided by the state authorities for 2021, 57 extractive companies whose payments in favour of the state were the most material were identified (hereinafter referred to as material or reporting companies). In addition, 11 types of payments for which revenues from extractive companies were the highest were identified (hereinafter referred to as material types of payments). Thus, the total amount of revenues in favour of the state from these material reporting companies for the material types of payments amounted to UAH 211,508,834.62 thousand in 2021.

According to government agencies, the tax and non-tax revenues from the companies of the significant extractive industries in favor of the state in 2020 amounted to UAH 186,658,453.51 thousand, which is 11.42% more than in 2019. The largest share in the total revenues is from oil and natural gas extraction industry (including oil and natural gas transmission) – 89.48% or UAH 167,014,400.80 thousand. At the same time, the share of the companies of the metal ore (iron, titanium, and manganese ore) mining industry in favor of the state in 2020 was 5.76% of the total taxes and other payments or UAH 10,752,674.85 thousand, and that of the companies of coal mining industry – 4.76% or UAH 8,891,377.86 thousand.

As in 2019, the production royalty was the largest in absolute terms and as a percentage of payment paid by the companies in the extractive industries in favor of the state – 26.24% of the total revenues from the reporting extractive industries or UAH 48,987,010.31 thousand. The second and the third were the value added tax on goods and services produced in Ukraine (excluding budget reimbursement of VAT) and corporate income tax – 21.95% or UAH 40,975,372.34 thousand and 21.52% or UAH 40,177,554.47 thousand, respectively.

The total payments in favour of the state from the reporting companies in the extractive industries amounted to UAH 165,350,870.54 thousand in 2019. The largest contribution to the total revenues from the reporting extractive industries was made by the oil and natural gas industry (including oil and natural gas transportation) – 85.14% of the total revenues. At the same time, the metal ore mining industry (iron, titanium and manganese ores) accounted for 8.25% of the total amount of taxes and other payments in favour of the state, while coal mining companies accounted for 6.60%.

The production royalty for the use of subsoil was the largest type of payment in absolute terms made by extractive companies in favour of the state, accounting for 26.48% of the total revenues from the reporting extractive industries. Corporate income tax ranked second, accounting for 23.79%.

The total payments in favour of the state from the reporting companies in the extractive industries amounted to UAH 187,938,735.57 thousand in 2018. The largest contribution to the total revenues from the reporting extractive industries was made by the oil and natural gas industry (including transportation) – UAH 160,584,406.52 thousand or 85.45%. The second largest contribution to payments in favour of the state was made by the metal ore mining industry (iron, titanium and manganese ores) – UAH 15,349,886.50 thousand or 8.17% of the total amount of taxes and other payments. The coal mining industry also made a significant contribution to revenues from the extractive industries — UAH 12,004,442.54 thousand or 6.39%.

The largest types of payments in favour of the state were value added tax on goods produced in Ukraine (excluding VAT refunds from the budget), which accounted for 24.34% of the total revenues from the reporting extractive industries, and the production royalty for the use of subsoil, which accounted for 22.33% of the total revenues

EITI Requirement 6.2 requires the disclosure of quasi-fiscal expenditures by state-owned enterprises (SOEs), including extractive-funded expenditures undertaken on behalf of the government that are not reflected in the national budget, such as expenditures related to social services, public infrastructure, fuel subsidies and national debt servicing

The list of quasi-fiscal transactions was approved by the CMU in 2012. The main quasi-fiscal transactions related to the extractive sector and meeting the definition of the EITI Standard include:

Due to martial law introduced in 2024, special obligations were imposed on some companies of the state-owned Naftogaz Group to supply gas at established prices to ensure general public interests.

The CMU Resolution continued to be in force in 2024, which imposed new special obligations on the following natural gas market entities:

In 2023, the CMU Resolution remained in force, which assigned new special obligations to the following natural gas market participants:

In 2023, the legislation also provided for special obligations regarding the supply of natural gas to thermal energy producers and budgetary institutions. The relevant special obligations are assigned to:

Typical quasi-fiscal transactions in Ukraine’s extractive sector include the supply of natural gas at preferential prices to district heating companies for the production of thermal energy consumed by households, the accumulation of accounts receivable of Naftogaz of Ukraine NJSC arising from the sale of natural gas to households and district heating companies, and public service obligations (PSOs) under loan agreements.

Due to martial law introduced in 2022, public service obligations (PSOs) were assigned to certain companies of the state-owned Naftogaz Group to ensure the supply of natural gas in the public interest. Assignment of public service obligations (PSOs) and their nature

During the period from 1 January 2021 to 20 May 2021, the relevant Regulation assigned the following public service obligations (PSOs) to the following natural gas market participants:

As of May 20, 2021, the above-mentioned resolution became invalid, and for the period until the end of 2021, natural gas market entities were not subject to any special obligations.

The procedure for determining compensation provided to natural gas market entities with assigned special obligations provides for a norm according to which compensation shall be provided taking into account the requirements of budget legislation and establishes a formula for calculating such compensation taking into account a number of indicators, including the volume of economically justified costs of the relevant entity.

The results of calculations made using the compensation formula are subject to verification by the State Audit Service upon submission by natural gas market entities.

Compensations to natural gas market entities with assigned special obligations shall be financed at the expense of the State Budget expenditures for the designated purpose, as provided for by the Law on the State Budget of Ukraine for the relevant period. However, neither the Law of Ukraine “On the State Budget of Ukraine for 2024”, nor the Law of Ukraine “On the State Budget of Ukraine for 2025” as of the date of preparation of this Report contain provisions on compensation for business entities that perform special obligations.

The procedure for determining the amount of compensation to natural gas market participants with special obligations requires providing compensation in compliance with the requirements of budget legislation and establishes a formula for calculating such compensation taking into account a number of indicators, including the volume of economically justified costs of the relevant entity. In 2023, the provisions and calculation formulas of the procedure were updated in connection with the establishment of new special obligations.

The results of calculations made using the compensation determination formula are subject to verification by the State Audit Service upon submission by natural gas market participants.

The compensation to natural gas market participants with assigned special obligations is financed from the state budget expenditures for the designated purpose, provided for by the Law on the State Budget of Ukraine for the relevant period. However, neither the Law of Ukraine “On the State Budget of Ukraine for 2023” nor the Law of Ukraine “On the State Budget of Ukraine for 2024” contain provisions on compensation for business entities that perform special obligations (as of the date of the preparation of this Report).

The Law of Ukraine “On the Natural Gas Market” grants natural gas market participants with assigned special obligations the right to receive compensation for economically justified costs incurred in the performance of such obligations, less the income received in the course of their performance and taking into account an allowable level of profit, in accordance with the procedure approved by the CMU. Sources of financing and the procedure for determining compensation are mandatory components of a CMU decision imposing special obligations.

In 2022, the Law of Ukraine “On the Peculiarities of Regulation of Relations in the Natural Gas Market and in the Heat Supply Sector during Martial Law and the Subsequent Restoration of Their Functioning” entered into force. The Law provides that economically justified costs incurred by natural gas market participants with assigned special obligations shall be compensated on a monthly basis.

State Budget funds allocated for financing compensation of costs incurred in the performance of special obligations, except for reimbursement of expenses incurred by natural gas market participants and entities in the heat supply sector as a result of military actions and for the purpose of preventing humanitarian crises through the repair of damaged production facilities and infrastructure, shall be used exclusively for settlements with:

► Naftogaz of Ukraine NJSC;

► Gas Supply Company Naftogaz Trading LLC;

► Gas Supply Company Naftogaz of Ukraine LLC;

► Gas Transmission System Operator of Ukraine LLC;

► Ukrtransgaz JSC.

The procedure for determining the amount of compensation provided to natural gas market participants with assigned special obligations provides for compensation from the State Budget and establishes a formula for calculating such compensation taking into account a number of indicators, including the volume of economically justified costs of the relevant entity. In 2022, the provisions and calculation formulas of the procedure were updated in connection with the establishment of new special obligations.

The Law of Ukraine “On the State Budget of Ukraine for 2022” defined sources of compensation for business entities performing special obligations, namely funds received under assistance programmes of the European Union, foreign governments, international organisations and donor institutions provided to ensure financing of measures aimed at regulating relations in the natural gas market and in the heat supply sector during martial law and the subsequent restoration of their functioning. In total, UAH 111.1 billion was allocated for compensation of costs related to the performance of special obligations.

In December 2020, the CMU approved the procedure for determining the amount of compensation provided to natural gas market participants with assigned special obligations. The procedure provides for compensation from the State Budget and establishes a formula for calculating such compensation taking into account a number of indicators, including the volume of economically justified costs of the relevant entity. The provisions of this procedure applied until 20.05.2021 (the date on which CMU Resolution No. 867 on the imposition of special obligations ceased to be effective). At the same time, the State Budget of Ukraine for 2021 did not provide for sources of compensation to natural gas market participants for the performance of special obligations.

On 8 April, the Cabinet of Ministers of Ukraine amended Annexes 1–3 to Resolution No. 858, “Certain issues of ensuring transparency in the extractive industries”, requiring state-owned and state-controlled companies to disclose information on their quasi-fiscal expenditures as part of the Report on payments to government.

Based on information received from Ukrgazvydobuvannya JSC and Naftogaz of Ukraine NJSC, the total amount of quasi-fiscal expenditures reported by the company in 2024 amounted to UAH 62,268,038.09 thousand.

As of 31.12.2024, the Company does not supply gas to consumers within the meaning of the Law of Ukraine “On the Natural Gas Market” and other regulatory legal acts regulating activities on the natural gas market of Ukraine, however, it ensures the formation of a natural gas resource for Gas Supply Company Naftogaz Trading LLC, which, in turn, supplies natural gas.

The request for quasi-fiscal operations was addressed to all material reporting extractive companies. According to information provided by Naftogaz of Ukraine NJSC, the company’s total quasi-fiscal expenditures in 2023 amounted to UAH 17,651,377.86 thousand. This amount represents the accumulation of accounts receivable of Naftogaz of Ukraine NJSC, Gas Supply Company Naftogaz of Ukraine LLC, and Gas Supply Company Naftogaz Trading LLC arising from the sale of natural gas to households, public sector institutions, entities supporting national defence, and district heating companies.

As of 31.12.2023, the company does not supply gas to consumers within the meaning of the Law of Ukraine “On the Natural Gas Market” and other legal acts regulating operations in the natural gas market of Ukraine. However, the company provides natural gas resource to Gas Supply Company Naftogaz Trading LLC, which, in turn, supplies natural gas to consumers.

The request for quasi-fiscal operations was addressed to all material reporting extractive companies. However, no material types of quasi-fiscal operations were identified in the extractive sector other than in the natural gas industry.

According to information provided by Naftogaz of Ukraine NJSC, the company’s total quasi-fiscal expenditures in 2022 amounted to UAH 23,241,417.65 thousand. This amount represents the accumulation of accounts receivable of Naftogaz of Ukraine NJSC, Gas Supply Company Naftogaz of Ukraine LLC, and Gas Supply Company Naftogaz Trading LLC arising from the sale of natural gas to households, public sector institutions, entities supporting national defence, and district heating companies.

By the decision of the EITI MSG, based on the available information and the recommendations of the Independent Administrator, quasi-fiscal operations in the natural gas industry of Ukraine were identified as the only material quasi-fiscal operations to be disclosed in the EITI Report (Minutes of the EITI MSG meeting dated 22 November 2019). No other material types of quasi-fiscal operations were identified. For the purposes of preparing the EITI Report 2020, the request regarding quasi-fiscal operations was addressed to all material extractive enterprises in the state sector of the economy (Minutes of the EITI MSG meeting dated 1 October 2021).

According to the Law of Ukraine “On the Natural Gas Market”, the functioning of wholesale and retail natural gas markets is based on the principle of free pricing. An exception applies where special obligations are imposed on market participants in order to ensure public interests in the process of the functioning of the natural gas market, as provided for in Article 11 of the Law of Ukraine “On the Natural Gas Market”.

According to information provided by Naftogaz of Ukraine NJSC, the company’s total quasi-fiscal expenditures in 2021 amounted to UAH 27,694,306.00 thousand. This amount represents accumulated accounts receivable arising from the sale of natural gas to households and district heating companies as of 31.12.2020. No quasi-fiscal operations were carried out by other reporting natural gas production companies during 2020.

According to Naftogaz of Ukraine NJSC, the company's total quasi-fiscal expenditures amounted to UAH 37,158,778 thousand in 2020. This amount is the accumulated receivables for the sale of natural gas to the population and heat energy enterprises as of December 31, 2020.

According to the response of Naftogaz of Ukraine NJSC to the request, in 2019 the total quasi fiscal expenditures amounted to UAH 43,128,737.43 thousand

According to the Naftogaz of Ukraine NJSC, the total quasi-fiscal expenditures amounted to UAH 38,871,381 thousand

Quasi-fiscal operations were not conducted by other material reporting gas companies during 2018-2020.

According to Requirement 6.1 of the EITI Standard, extractive companies are to disclose their material mandatory social and environmental expenditures. Where material mandatory payments are contractually mandated, disclosure of the relevant contracts is also expected.

In 2023 - 2024, the main social and environmental payments of extractive companies, the payment of which is mandatory according to the Ukrainian law, were the environmental tax and the Unified Social Contribution.

Extractive enterprises paid the Pension Fund of Ukraine reimbursement for the costs of payment and delivery of preferential pensions in accordance with the Law of Ukraine "On Compulsory State Pension Insurance".

In the funds from the companies do not fully cover the expenditures related with paying and delivering such pensions, the lacking funds are financed from the general fund of the State Budget of Ukraine. The specified payments are not tax payments.

According to the PFU as of January 1, 2025 the total of 106,349 persons were to receive preferential pensions from the material reporting companies, including 27,774 women.

The current EITI Law does not provide for the disclosure of such information, therefore, the information was not requested from the material reporting companies. The debt to the Pension Fund as of 01.01.2024 is UAH 905.89 million.

In 2023–2024, coal mining companies provided free coal to employees and privileged categories of citizens for household needs, which may be considered as a mandatory social payment in kind. According to Article 43 of the Mining Law, the following categories of persons are entitled to receive such coal:

The current law does not provide for a direct obligation for business entities to disclose such information. According to the information received by the Independent Administrator from the Ministry of Energy of Ukraine regarding the provision of household fuel to the employees of the state-owned mines, 7,904 coal recipients received coal free of charge in 2024. The volume of coal provided free of charge to the employees of coal mining enterprises is not a material payment in 2024.

Given that the Ministry of Energy collects information only from the state-owned mines, the Independent Administrator sent requests to other material reporting companies in order to obtain data on the provision of free coal to the coal recipients. The only company that provided information is DTEK Pavlohradcoal PrJSC. The price of one ton of coal (excluding VAT) was UAH 6,250 in the reporting period. The total volume of free coal provided was 60,393.20 tons, which was distributed among 12,575 coal recipients. The estimated cost of the volume is UAH 377,457.50 thousand (excluding VAT).

Also, as part of the report on payments in favour of the state, Colliery Group Pokrovs'ke PrJSC disclosed information on the provision of household coal to the worth of UAH 40,531.70 thousand.

In the reporting period, the reporting coal mining companies also provided preferential categories of the population with free coal in accordance with current legislation.

The total need of preferential categories of the population for household fuel in 2024 was 6,812.9 tons of coal for 1,238 people. However, during the year, only 1,054 people were provided with fuel, i.e. 85.1% of the need. Also, the distribution of fuel between preferential categories did not reach the planned amount - it reached 5,646.4 tons of coal, which is 82.9% of the need. Based on the information on providing preferential categories of beneficiaries with coal for household fuel for 2024.

Since the beginning of the year, 52,347.8 tons of coal for 10,824 people* were exported by coal-mining enterprises to provide workers and privileged categories with free fuel.
The total need of privileged categories of the population to provide household fuel in 2023 was 6,013.5 tons of coal for 1,102 persons*.
*Information provided to the Ministry of Energy at the request of the Independent Administrator, and includes only information about state-owned enterprises that are subordinate to the Ministry of Energy.

PSAs may provide for the investor’s obligation to make social or environmental payments.

The extracts and essential terms of a number of PSAs, which are posted on the Ministry of Energy’s website, provide for the possibility of making infrastructure and social payments in favour of the state or local communities. The essential terms of the PSAs specify general provisions on financing social investments and infrastructure modernization. Obligations to make environmental payments do not directly follow from the publicly available essential terms of the PSA.

As part of the Report on payments in favour of the state, 5 material reporting companies disclosed information on the existing contractual obligations for social and environmental payments in the amount of UAH 1,515.41 million. The payments were below the materiality threshold approved by the EITI MSG for 2024.

In 2024, the law did not provide for mandatory contributions by extractive companies to infrastructure development or social payments as conditions for obtaining special permits for subsoil use.

At the same time, a number of material reporting companies made social, environmental or infrastructure payments in 2024 in accordance with agreements concluded to fulfil the conditions for issuing special permits issued before 2015.

Until 2015, the granting of special permits for subsoil use required approval from the relevant regional councils, and decisions on approval of the issuance of special permits could contain obligations to fulfil certain social and infrastructure obligations.

Natural Resources PrJSC and Eastern Geological Union LLC received approval to obtain a special permit from the Poltava Regional Council in 2011 and 2014. As part of the agreements, the regional council obliged both companies to conclude annually, during the term of the special permit, agreements with local authorities for the construction, reconstruction, repair, and maintenance on a shared basis of social infrastructure facilities, local roads, and environmental protection measures.

In 2023, the legislation did not require extractive companies to make mandatory infrastructure development contributions as a condition for obtaining special permits for subsoil use.

The EITI Report 2024 presents data on 59 material reporting companies that submitted the relevant information via the EITI online platform. The current reporting form requires the companies to provide the total expenses without disaggregation by social and environmental areas. Therefore, the Independent Administrator determined the following key categories of the payments:

The first 6 categories are subtypes of social expenditures, and the category of environmental payment is a separate one. In addition, due to the russian full-scale invasion of the territory of Ukraine in 2022, a significant amount of voluntary expenditures of extractive companies were directed to the needs of military formations and to assist citizens affected by the hostilities. For this reason, the Independent Administrator has identified a separate category of expenses “Assistance to Defenders and Strengthening Ukraine’s Defence Capability”. This additional category in 2024 includes purchases of vehicles and fuel, personal protective equipment, tactical equipment and other purchases to satisfy the needs of the defenders of Ukraine. Also, part of the expenses of the material reporting companies were directed to support internally displaced persons, military families and humanitarian aid. These expense items are combined into the “Charity” category.

Overall, 19 material reporting submitted information on their social expenditures, including 12 companies that belong to oil and gas industry, 6 companies – to metal ore industry, and 1 company to the coal industry.

The largest category of expenditures is Assistance to Defenders – 81.97% of the total funds voluntarily spent by material companies were for the needs of the Armed Forces of Ukraine in 2024. The total amount of the reported payments is UAH 841,108.08.

The EITI Report 2024 presents data on 59 material reporting companies that submitted the relevant information via the EITI online platform. The current reporting form requires the companies to provide the total expenses without disaggregation by social and environmental areas. Therefore, the Independent Administrator determined the following key categories of the payments:

The EITI Report 2023 presents data on 59 material reporting companies that submitted the relevant information via the EITI online platform. The current reporting form requires the companies to provide the total expenses without disaggregation by social and environmental areas. Therefore, the Independent Administrator determined the following key categories of the payments:

The first 6 categories are considered subtypes of social expenses, and the last category is deemed to be environmental payments. In addition, due to the full-scale russian invasion of the territory of Ukraine in 2022, extractive companies spent a significant amount of their voluntary expenses to satisfy the needs of Ukrainian military formations and to assist Ukrainians who suffered as a result of hostilities. For this reason, the Independent Administrator has identified a separate category of expenses “Assistance to Defenders and Strengthening the Defense Capability of Ukraine”. In 2023, this additional category includes purchases of vehicles and fuel, personal protective equipment, tactical equipment and other purchases aimed at the needs of defenders. Also, part of the expenses of the reporting extractive companies were directed to support internally displaced persons, military families and humanitarian aid. All these expenses are combined into the category “Charity”.

23 material reporting companies submitted information on social expenditures, including 6 iron ore mining companies, 1 coal mining company, and the rest – oil and natural gas extraction companies.

The item "Assistance to Defenders" is the largest one in the category – it accounted for 42.18% of all funds voluntarily spent by material companies for social needs in 2023. The total amount of the reported payments is UAH 2,579,186.54.

The 2022 EITI Report presents data from 65 material reporting companies that submitted the relevant information through the UAEITI Portal. Given that the current reporting template collects expenditure data without distinguishing between social and environmental spending, the Independent Administrator has classified these expenditures into the following categories:

The first 6 categories are considered subtypes of payments for social purposes, and the category of environmental expenditures is highlighted separately.

In addition, in connection with a full-scale invasion of the territory of Ukraine in 2022, a significant amount of voluntary spending by mining companies was directed to the needs of military formations and to help citizens affected by hostilities. For this reason, the Independent Administrator has singled out the expenditure category "Assistance to defenders and strengthening the defense capability of Ukraine". This additional category in 2022 includes purchases of vehicles and fuel, personal protective equipment, tactical equipment and other purchases aimed at the needs of defenders.

Also, part of the expenses of accountable companies in the extractive industry were directed to the support of internally displaced persons, military families and humanitarian aid. The specified expenditure items are combined into the "Charity" category.

Among the material companies, 19 companies submitted information on spending for social purposes, six of which belong to the iron ore mining industry, one each to the titanium ore and hard coal mining industries, and the rest to the oil and natural gas mining industry.

The 2021 EITI Report presents data of material reporting companies, the total volume of funds directed to social and environmental goals amounted to UAH 44,524.02 million. In terms of target directions, the largest share of social and environmental costs of accountable companies was attributed to the category "Education and science, support of educational institutions" - UAH 13,134.07 million, or 29.50% of total payments.

In terms of administrative regions, the largest part of the funds was directed to the support of communities in the Poltava region - UAH 25,572.71 million, or 57.44% of the total payments.

Of the 54 material reporting companies for EITI Report 2020, 24 material companies provided information on spending on social and charitable purposes, of which 14 companies operate in the field of oil and natural gas production, 8 companies in the field of iron ore mining, and 2 companies in the field of hard coal mining. According to the data of the companies, their total payments for social and charitable purposes in 2020 amounted to UAH 1,152.38 million.

In terms of target areas, the largest share of social and charitable expenses of accountable companies was assigned to the category "Health care, support of medical institutions" - UAH 663.94 million, or 57.61% aggregate payments.

In order to disclose in the EITI Report for 2019 information on the expenditures of mining companies for social and charitable purposes, the data of the accountable companies, provided by them during the survey, was collected. The division of such costs by the following areas was carried out by the independent administrator:

Information on expenditures for social and charitable purposes was provided by 19 material reporting companies, of which 11 are active in the field of oil and natural gas production, 6 companies in the field of iron ore production, and 2 companies in the field of hard coal production. According to the data of these companies, their total payments for social and charitable purposes in 2019 amounted to UAH 257,829.09 thousand.

In terms of target areas, the largest share of social and charitable expenses of accountable companies was assigned to the category "Support of local communities" - UAH 203,446.16 thousand, or 78.91%. Expenditures in the spheres of "Health care" and "Education and science" amounted to UAH 13,983.68 thousand (5.42%) and UAH 18,844.39 thousand (7.31%), respectively.

In order to disclose in the EITI Report for 2018 information about the expenditures of material reporting companies in the extractive industry for social and charitable purposes, data provided by them during the survey was collected. The distribution of these payments according to their target directions was carried out by the Independent Administrator, as the reporting forms approved by the CMU do not provide for such a division. The following areas were highlighted:

Information on expenses for social and charitable purposes was provided by 18 material reporting companies, of which 10 were active in the field of oil and natural gas extraction, 6 companies - in the field of iron ore extraction, and 2 companies - in the field of hard coal extraction. Total payments for social and charitable purposes in 2018, according to the data of the indicated companies, amounted to UAH 448,125.91 thousand.

In terms of target directions, in 2018 more than half of the social and charitable expenses of material reporting companies in the extractive industries were assigned to the category "Support of local communities" - UAH 355,317.81 thousand, or 79.29%.