On 30 May 2011, the Cabinet of Ministers of Ukraine adopted a new procedure governing the auction sales of special permits for subsoil use (“Procedure”), which is now not limited to the span of the 2011 calendar year, and will apply onwards. The decision to part with the tradition to annually revisit the contents of the auction procedure should hopefully eliminate the continuous delays in sales of special permits for subsoil use, caused each year by such ill practice.

The new auction procedure has gained more transparency, compared within that 2010, and in general has brought some positive changes, which are as follows:

  • the Procedure now requires fewer state authorities to give consent before a subsoil area can be put for auction, and they must now either consent or reject that within a 30-day deadline;
  • the price for the auction documents package has been fixed at the level of 3.12% of the initial price of a special permit, but in any case shall not be less than UAH 4,500 (about EUR 400) or exceed UAH 72,550 (about EUR 6,400);
  • the auction announcement as well as the list of the winners of the auction shall be additionally published on the website of the State Service for Geology and Subsoil; and
  • results of the auction can only be challenged in court (previously the Cabinet of Ministers of Ukraine could declare results of an auction void at its own discretion).

Among other substantial changes, it should be noted that following the recent administrative reform in Ukraine, the State Service for Geology and Subsoil of Ukraine has become the organizer and administrator of the auction. However, special permits for exploration or production of strategic mineral deposits will be sold upon consent of the Interdepartmental Commission on the Subsoil Use, formed by the Prime Minister.

Finally, from now on an unmotivated refusal of the auction’s winner to sign the auction minutes or to enter into a special permit sale and purchase agreement, will ban them from participation in other subsoil auctions.

Law: Resolution of the Cabinet of Ministers of Ukraine “On Approval of the Procedure for Holding Auctions for Sale of Special Permits for Subsoil Use” No. 594 dated 30 May 2011.