It was 26 UAH, but now it’s 56: the hazardous waste disposal market has fallen into the shadows due to the reform of the Ministry of Environment

The Ministry of Environment got into trouble with the reform on the disposal of hazardous waste during the war. The untimely development of rules and reform mechanisms led to the emergence of a “shadow market” in this area. According to experts, the failed timely licensing of recycling companies and the increase in the cost of services from 26 to 56 UAH is the result of the implementation of the “reform”. Analysts tried to understand the causes and consequences of the problem.

As a result of the inconsistency of the actions of the Cabinet of Ministers and the Ministry of Environmental Protection and Natural Resources with the requirements of Law No. 2320-IX “On Waste Management” dated January 9, 2024, a crisis began in Ukraine in the hazardous waste treatment market. At that time, there was no licensed company, which meant that businesses and healthcare facilities could not legally dispose of this type of waste. After all, from January 9 to February 1, 2024, the hazardous waste market did not include a single entity. And as of February 13, only two of more than 200 companies had received licenses, which only exacerbated the situation.

Lyudmila Tsyganok, who is president of the Professionals Association of the Environment (PAEW) and general director of the Office of Permanent Solutions, expressed concern about the possible cessation of the market back in December, appealing to the authorities to avoid this.

She presented legal arguments that reducing the time frame for obtaining new licenses to one month, instead of the planned six, was unacceptable and suggested ways to solve this problem. However, the Ministry of Environmental Protection ignored these calls and continued to carry out pre-licensing inspections.

What's going on with licensing?

Officials were supposed to begin the relicensing process on July 9, 2023. They had a year (starting from July 2022, after the adoption of the Law on Waste Management) to develop relevant by-laws and comply with legal requirements. However, their actions violated the provisions of part two of Article 19 of the Constitution of Ukraine.

After all, back in mid-2023, the government should have approved clear rules and mechanisms for the actual implementation of the law. However, these conditions were approved with a six-month delay and in violation of the legally established deadlines for preparation provided for by the Law “On Licensing Types of Economic Activities.” This resulted in only a few weeks left for “relicensing” instead of six months. Already on January 9, in violation of the law, the register of licensees disappeared from the website of the central government authority.

To obtain a license, an enterprise checks the compliance of its material and technical base with the requirements, which today are enshrined only in the Technological Requirements for Economic Activities. However, these inspections are carried out by authorized persons of the Ministry of Environmental Protection in violation of the procedures established by Order of the Ministry of Environment dated October 31, 2023 No. 729 “On approval of the Procedure for checking the compliance of the material and technical base of the license applicant with the technological requirements for carrying out economic activities for the management of hazardous waste, rules and technological regulations”, violating the established form of the act and exceeding their powers. Indeed, during these inspections, documents are asked that are not at all related to the subject of the inspection and are not determined by the specified procedure, which artificially complicates the work of business entities in the field of hazardous waste management.

How the waste treatment market actually works

However, the absence of licensees on the market did not prevent many of them from sending letters to government and private structures (bodies) with ambiguous “hints” to cooperate exclusively with their company?

However, the lack of a license for hazardous waste management did not prevent these companies from participating in and becoming winners of a number of tenders. One of these is LLC NPK Ukrekoprom.

And here’s a completely strange situation: a company that received a license in 2023 has been operating on the market since 2016 and participating in tenders, collaborating with government agencies.

And from 2020 to 2022, this company received a net profit of 9,723,900 hryvnia, although in 2020 it did not have a single registered employee.

From January to April 2024, the company won 575 tenders. And again, NPK Ukrekoprom LLC was among the first to receive a license.

Problems of implementing the EcoSystems program

The cause of serious concern is the activities of the Ministry of Environmental Protection touted in the field of digitalization through the implementation of the EcoSystem program at the expense of public funds. This program makes it difficult for business entities to enter their data correctly due to constant technical problems. In addition, the system is simply not able to cope with the volume of information and data trying to enter it.

Lyudmila Tsyganok provided screenshots confirming this situation.

The Professional Association of Environmentalists of the World (PAEW) sees in these actions of the Ministry of Environment interference in the activities of business entities and the artificial creation of obstacles to the development of economic activity. Lyudmila Tsyganok on her Facebook page talks about reform only on paper,

that there is a violation of the rights of business entities in the field of handling (management) of hazardous waste to timely bring the activities of existing licensees for the management of hazardous waste in accordance with the norms of the new legislation and obtaining a license for the management of hazardous waste, a threat to the economic and environmental security of the country, as well as attempts to create monopoly in the hazardous waste market, because how the reform of the waste industry could lead to the absence of service providers in it.

Therefore, the situation that has developed in the waste disposal market contradicts the basic principles of state regulatory policy, since the market for services in the field of hazardous waste treatment includes about 215 entities that provide jobs and bring tax revenue to the state budget. Instead of supporting businesses during this difficult period for the country, when everyone is competing for the right to exist, the Ministry of Environmental Protection decided to suddenly introduce “reforms” during wartime, without even having complete regulations in place. In addition, the National Police, namely the Department of Strategic Investigations, are calling business entities that are supposedly “outside the law” and sending out “threatening” letters?

And there is already the first result of the “reform”. Since the beginning of February 2024, monopolization has been observed in the market. The first to receive an unpleasant “surprise” were hospitals and medical institutions from NPK Ukrekoprom LLC - prices for their services doubled compared to the beginning of this year, from 26 UAH per kg to 56 UAH per kg. This creates a hopeless situation for many business entities. After all, medical institutions are institutions financed from the budget and do not have the opportunity to pay such costs for waste disposal services and logistics costs, including.

Therefore, it is time for the Antimonopoly Committee of Ukraine to intervene to make monopolization impossible.

StopCor analysts turned to Lyudmila Tsyganok for comments and with a request for information from NPK Ukrekoprom LLC, the Antimonopoly Committee and the Ministry of Environment.

As of today, a response has been received from the Department of Digital Transformation, Electronic Public Services of the Ministry of Natural Resources, which in its response informed that: “The Unified Environmental Platform “EcoSystem” (hereinafter referred to as EcoSystem) is a nationwide environmental automated information and analytical system for providing access to environmental information and its network , which ensures the creation, collection, receipt, storage, use, distribution, protection, protection of information, as well as electronic interaction between individuals and legal entities, individual entrepreneurs, entities providing administrative services, entities providing public (electronic public) services, centers provision of administrative services for the purpose of obtaining administrative and other public (electronic public) services in the field of environmental protection.

Access to EcoSystem resources is provided through an integrated electronic identification system using an electronic signature based on a qualified public key certificate. User registration in the EcoSystem is carried out once. To authorize, you must follow the link: https://id.eco.gov.ua/ and confirm your identity. Select an identification method and perform the appropriate actions. After identifying the individual, access to your personal account in the EcoSystem will be obtained. Authorization and identification in the EcoSystem is carried out using a personal key and entering a password.”

Separately, it was noted that today about 94,000 users are registered on the EcoSystem platform and more than 10,000 accounts of business entities have been created.

Consequently, business entities can freely use all the advantages of the EcoSystem platform, including: the ability to submit documents electronically in order to obtain permission to carry out waste treatment operations, a license to carry out economic activities for hazardous waste management, to initiate transboundary transportation of waste and etc.

When asked whether companies without a license or other permitting documents had the right to provide hazardous waste disposal services, the Ministry of Environment said: “That the final and transitional provisions of the Law of Ukraine “On Waste Management” (hereinafter referred to as the Law) determined that business entities in the field of management hazardous waste companies collecting and processing hazardous waste are required to obtain a license to carry out business activities for hazardous waste management within six months from the date of entry into force of this Law.

So, before January 09, 2024, business entities must obtain a license to carry out business activities related to hazardous waste management.”

But the director of the Department had not heard about the monopolization of the market in the field of hazardous waste management by NPK Ukrekoprom LLC and noted that: “This information is not reliable, because NPK Ukrekoprom LLC is not the only company that has received a license to carry out economic activities on hazardous waste management.

To date, 15 business entities have received a license to carry out business activities related to hazardous waste management. The license register is published on the official website of the Ministry of Environment.”

We expect other answers and will report further results.