Business Calls on Government to Abandon Reorganization of State Geological Service Due to Risks to Investment Climate and Budget

Companies that are part of the European Business Association (EBA) have expressed significant concern over the Ministry of Economy, Environment, and Agriculture's intentions to reorganize the State Service of Geology and Subsoil of Ukraine and create a new State Agency for Natural Resource Management, as reported by the EBA press service.

Association representatives emphasize that transferring powers from the existing service to the new body could negatively impact the stability of the extraction industry. This, in turn, could lead to a halt in the issuance and extension of special permits for subsoil use, which are critically important for the functioning of enterprises in this sector.

According to the business community, changing the institutional model amid ongoing war poses serious threats to the implementation of international investment agreements. This is particularly relevant for agreements made under the U.S.-Ukrainian Investment Fund for Reconstruction. The reorganization also creates uncertainty regarding the execution of production-sharing agreements, which could paralyze the operations of related geological services, such as the approval of mineral reserves and access to geological information.

The business community believes that the duration of the transitional period for transferring functions, assets, and budgetary obligations could range from six months to three years. This period would be accompanied by the risk of losing qualified personnel, which could adversely affect the efficiency of the newly established body.

The EBA also draws attention to the economic aspect of the agency's activities. Specifically, the association notes that, based on the results of auctions in 2025, the state budget received approximately UAH 1.8 billion. If the regulator's operations are temporarily halted, this would lead to a loss of these revenues, delays in ongoing investment projects, and a decrease in trust from international partners.

Furthermore, there is a risk of hindering the development of Ukraine's mineral resource base and the state accounting of deposits. This could have long-term consequences for the country's economy, as the extraction industry is a vital component of the national budget.

Considering all the aforementioned factors, the association urges the Cabinet of Ministers of Ukraine not to initiate the reorganization of the State Service of Geology and Subsoil without broad discussion with the market. Instead of creating new structures, the business community suggests focusing on strengthening the capabilities of the existing agency to ensure stable state governance in the extraction sector, which is necessary to support the investment climate in Ukraine.