July 6, 2015, Kotelva village, Poltava region: The Ministry of Energy and Coal Industry of Ukraine, with participation from Minister Vladimir Demchishin and the Chairman of Poltava Regional State Administration Valery Golovko held an open meeting with largest Ukrainian gas producers.
The meeting was also attended by other state representatives, in particular, the Head of Department for Land management, use and protection of land resources Alexander Krasnolutskyi, the Chairman of State Commission of Ukraine on Mineral Reserves Georgiy Rudko, an Acting chairman of State Service of Geology and Mineral Resources of Ukraine Mykola Boyarkin and the Head of State Service of Mining Supervision and Safety of Ukraine Oleg Pavlyuk.
The Energy Minister Vladimir Demchishin said that the rent payments for gas production should be significantly lower – circa 35% for the transitional period and 20% in the future on a permanent basis. According to him, gas companies need reduced rates for rent payments to overcome the industry crisis following an inconsiderate sharp increase in rent payments in August 2014 stated in Tax and Budget Codes for 2015. Vladimir Demchishin claims that the Ministry of Energy representatives are trying to convince the Ministry of Finance to lower the rent. Moreover, the rent should be reduced immediately, and globally – in the future, and the whole system of taxation in the sector should be simple and understandable.
The largest independent gas companies with foreign investments were invited to make their input. Burisma Holdings was represented by Advisor to the Board of Directors Vadym Pozharskyi and company’s CFO Alexander Gorbunenko.
“It is no coincidence that Burisma Holdings took part in the meeting, since we are one of the largest investors in Ukrainian gas sector, as well as one of industry’s biggest tax payers. The Holding’s companies have always had an active social position in production areas, intensively working on social and community projects and investing in local infrastructure. Our work involves an ongoing dialogue with local authorities, which already gained us a reputation of the best employer in the industry. Should rental rates be reduced, we could increase production by 30% by the end of this year “- said the Adviser to the Board of Directors at Burisma Holdings Vadym Pozharskyi.
According to company’s CFO Alexander Gorbunenko, policy of the Ukrainian government can hardly be called investor-friendly. “Only last year working conditions for gas companies radically changed three times. Apart from repressive fiscal policy, the government has made the work even more complicated by limiting the right to free natural gas sales. This is not conducive to the development of investment programs, – says Alexander Gorbunenko. – The state should maintain relations with business primarily built on trust. Gas is a strategic resource associated with country’s energy independence. Therefore, industry requires highly skilled and professional management. We have repeatedly tried to reach out to high offices and call for effective dialogue. Why would not “Naftogaz of Ukraine” buy gas from domestic producers? This is one of the key proposals coming from business and a guarantee of energy security of Ukraine. “
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