Use of Subsurface Resources: Price Formation Methodology for Permits Changed.

Changes in the Methodology for Determining the Price of Special Permits for Subsurface Resource Use

The Government of Ukraine has made changes to the methodology for determining the initial selling price at auction for special permits to use subsurface resources. These innovations will improve the mechanism for calculating permit costs using new criteria and calculation methods.

'The main reason for the necessity to revise the Methodology was the sharp increase in the cost of special permits for subsurface resource use. This sharp rise of more than a hundred times in 2024 has made the acquisition of such permits practically inaccessible for small and medium-sized businesses. The government is responding to this situation by adopting changes to the Methodology. These changes will help prevent sharp price fluctuations and make the calculation process predictable for businesses,' - officials from the Ministry of Environmental Protection and Natural Resources reported.

The updated Methodology includes the following changes:

• comparison of indicators in permitting documents and those declared by taxpayers;
• calculation of the weighted average price;
• application of data from Appendix 1 of the Declaration 'calculation of rent payment for subsurface resource extraction';
• use of only verified indicators according to a specific algorithm.

A working group participates in determining the price of special permits, consisting of representatives from the State Service of Geology and Subsoil, the State Tax Service, and the State Commission on Mineral Reserves. Members of the working group will analyze the indicators and establish a maximum value for determining the initial price. In the absence of necessary data from the State Tax Service or the State Commission, data from the official website of the State Service of Geology will be used. The working group plans to review and update indicators quarterly depending on changes in the mineral market.

'Another important change is the exclusion of the possibility of using prices determined during the approval of reserves when calculating the initial price of a special permit for subsurface resource use, if less than a year has passed since the approval. Banning this approach will allow for the use of current pricing data when determining the cost of permits. Previously, the different approach to valuation created unequal conditions for market participants. The new methodology will ensure a unified approach and create fair competition and equal conditions for business entities,' - explained representatives of the ministry.

Clear and stable pricing rules reduce risks and create favorable conditions for investment.