Government doubles guarantee fees for subsoil use auctions
The amount of payment will be increased two times for the first repeated auction, five times for the second one and 15 times for each subsequent auction
The Cabinet of Ministers of Ukraine has amended the Procedure for holding auctions for the sale of special permits for subsoil use by increasing the amount of the guarantee fee for their participants.
This is stated in the Resolution of the Cabinet of Ministers No. 247 dated 21 March 2023.
The amount of the guarantee fee is still set at 20% of the initial price. However, according to the document, the amount of payment must be at least 10 million UAH for minerals that are of strategic importance for the sustainable development of the economy and the state's defence capability (previously 5 million UAH); 20 million UAH for hydrocarbons (previously 10 million UAH); 2 million UAH for deposits and/or subsoil areas containing sand (previously 1 million UAH).
At least 1 million UAH of the guarantee fee will have to be paid for other minerals (except for lots with special permits for geological exploration for pilot industrial development (PID) and groundwater extraction). Previously, the minimum payment was 0.5 million UAH.
It is worth noting that a year ago, the government already increased the minimum guarantee fee. However, according to the Ministry of Environmental Protection and Natural Resources, cases of unfair competition during auctions have not declined. "Some bidders offer inflated amounts for a lot, and after winning the auction, refuse to buy the lot. As a result, the competitor is eliminated, and the loss of the guarantee fee is insignificant compared to the benefits they receive by preventing competitors from entering the market," the statement said.
At the same time, the Cabinet of Ministers has determined the amount of guarantee payments for each repeated auction – increased it two times for the first repeated auction; five times for the second one; and 15 times for each subsequent repeated auction.
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