Mineral agreement: details of how and what MPs will vote for have become known

Tomorrow, May 8, the Verkhovna Rada plans to ratify a historic agreement between the United States and Ukraine. As it became known earlier, the deputies must approve the agreement on the establishment of a joint investment fund. UNN learned what else the deputies will vote for and in what order.

According to sources in the Verkhovna Rada, the parliamentarians will first vote on the draft Law on Amendments to the Budget Code of Ukraine regarding the implementation of the Agreement between the Government of Ukraine and the Government of the United States of America on the establishment of the American-Ukrainian Reconstruction Investment Fund (No. 13256), previously submitted to the parliament by the government.

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The project proposes to amend the Budget Code regarding the allocation to the special fund of the State Budget of Ukraine in terms of revenues:

·         50 percent of the rent for the use of subsoil for the extraction of minerals of national importance according to the list of Natural Resource Assets, taking into account the conditions of their extraction, established by the Agreement on the reconstruction fund;

·         50 percent of the fee for issuing special permits for the use of subsoil according to the list of Natural Resource Assets and the conditions of their issuance, established by the Agreement on the reconstruction fund, and 50 percent of the funds from the sale of such permits ;

·         50 percent of the funds from the use (sale) of part of the produced products that remain in state ownership in accordance with product sharing agreements, and/or funds in the form of a monetary equivalent of such state part of the products according to the list of Natural Resource Assets and the conditions of their issuance, established by the Agreement on the reconstruction fund.

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It is expected that the funds received to the special fund of the State Budget of Ukraine from the above-mentioned sources will be used to pay a contribution to the Reconstruction Investment Fund in the form of a limited partnership, created in accordance with the Agreement on the establishment of the Reconstruction Investment Fund and the Agreement on limited partnership.  At the same time, it is proposed that income received from the Reconstruction Investment Fund in the form of partnership in the form of distributions or otherwise, and income received from the Russian Federation or its representatives as reparations for the Russian Federation’s invasion of Ukraine be credited to the income of the general fund of the State Budget of Ukraine in full.

After voting for the specified draft law, the deputies will proceed to vote for the Draft Law on Ratification of the Agreement between the Government of Ukraine and the Government of the United States of America on the establishment of the American-Ukrainian Reconstruction Investment Fund.

This Agreement will be in effect until Ukraine and the United States agree to terminate it. It is enshrined that in the event of the provision of new military assistance from the United States (including the transfer of weapons systems, ammunition, technology or training), the capital contribution of the partner will be considered increased by the estimated value of such military assistance. It is also stipulated that in the management of the fund, neither party will have an advantage, all decisions will be made jointly and the fund will be filled by Ukraine and the United States 50/50.

From the US side, these will be monetary contributions or new military assistance. In the first 10 years, the Fund’s profits are not withdrawn from Ukraine, but are reinvested in Ukraine. The fund will guarantee commercial purchases of products on a “take or pay” basis. The Fund, through the American agency DFC, will attract American and European state-of-the-art technologies, which will accelerate the reconstruction and modernization of Ukraine. The fund’s income will be exempt from taxation in both countries. 

The agreement does not mention any debt obligations of Ukraine. But there are also no clearly defined security guarantees for Ukraine.

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According to the conclusions, the Agreement does not contradict other international obligations of Ukraine. At the same time, the implementation of a number of provisions of the Agreement will be determined by the mechanisms established by the Agreement on limited partnership and the Agreement on the establishment of the “General Partner”, to which the Agreement contains numerous references. And without the texts of these agreements, it is impossible to fully analyze what the deputies will vote for tomorrow. The parliamentarians do not currently have the texts of the two mentioned agreements.

The Agreement on limited partnership (on the establishment of the Fund itself) is expected to be signed between the American corporation DFC (International Development Finance Corporation of the United States) and the Ukrainian Agency for Public-Private Partnership. The agreement will establish the mechanism for the creation, financing, and management structure of the fund. And the parties can sign it immediately after the Verkhovna Rada ratifies the intergovernmental agreement.

The Agreement on the establishment of the “General Partner”, as expected, within the framework of the implementation of this agreement, a superstructure over the fund will be created with 3 Ukrainian and 3 American representatives. As assumed in the Verkhovna Rada, most likely the American company will actually play the role of the General Partner. It will be responsible for the management of the fund, the selection of projects, and possibly the distribution of income. 

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