You're reading: Business community praises expulsion of state-owned waste disposal company

Importers and producers of packaged goods are moving forward to replace a state-owned waste management company that had dominated the market for 14 years.

After the Cabinet of Ministers eliminated Ukrecoresursy on March 18, the business community and government officials drafted a bill designed to bring Ukraine’s recycling market to European Union standards in five years.

If lawmakers pass the law, it will take the market about a year to start recycling 15 percent of waste and an additional 5 percent each year afterward, according to Volodymyr Slabyi, head of the Ukrainian Ecological Packaging Coalition. The European Union average is 40 percent.

The new law, according to a written explanation by the European Business Association, is built on principles that place additional responsibility on producers, a common practice in European countries.

“The gist of it is that business will be able to create new companies for the collection and recycling of packaging, therefore it will develop healthy competition in this market, which is new for the country,” the EBA concluded.

According to Slabyi, one of the authors of the law, this will be the fourth attempt to pass the bill. Previously Ukrecoresursy had kept the bill off parliament’s agenda. This time, after the state monopoly was eliminated by a March 18 Cabinet of Ministers resolution, he said, “we hope there will be enough votes to pass it.”

Svitlana Kolomiyets, deputy head of the Ministry of Ecology and Natural Resources, said that the ministry is not completely happy with the proposed measures.

“We need to work not only with the recycling of new waste, but also to decrease its generation, to develop a system of separate collection, and to develop the recycling of waste that has been already collected,” she said.

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However, Kolomiyets said, the ministry doesn’t object to the liquidation of Ukrecoresursy’s monopoly.

The business community and current officials praised the March 18 resolution as a step for further cracking down on corruption.

State-owned waste processor Ukrecoresursy had for 14 years abused its government-sanctioned position by coercively steering business its way while neglecting to actually handle waste, Economy Minister Aivaras Abromavicius said at an April 28 conference in Kyiv.

Importers or producers of packaged goods such as bottled beverages were required to either use the government-run company for recycling waste or a third party company, according to the resolution. In reality, law enforcement bodies would investigate companies that bypassed Ukrecoresrsy, Taras Kachka, vice president of the American Chamber of Commerce in Ukraine, said.

So it got to a point that a business, wishing to responsibly recycle waste, would have to pay twice – a fee to Ukrecoresursy and to a private company that actually handled the waste, Kachka said.

In essence it was a monopoly.

After the resolution was passed, the EBA reported that, throughout its existence, Ukrecoresursy was receiving about Hr 30 million per month on importers fees, but “nothing was done whatsoever.”

Some of the money then went toward financing political parties, Abromavicius said.

“The liquidation of the Ukrecoresursy’s monopoly – is a small step in the nationwide scale, but is a huge victory for business,” EBA said. “For years business has been talking about this problem, and only now the authorities got enough of the political will to root out this corruption scheme.”

Anatoliy Ivashchenko, Ukrecoresursy deputy head, denied it was a corrupt monopoly.

“Resolution 915 stated that the companies that produced or imported the packaged goods were supposed to take care of the waste, on their own or to sign the contract with Ukrecoresursy,” Ivashchenko told the Kyiv Post. “Those who chose to do that themselves, turned to third parties, which were private recycling companies.”

Ukrecoresursy serviced only 30 percent of companies on the market, according to Ivashchenko.

Only about 4 percent of all waste gets recycled in Ukraine, while the rest goes to landfills, according to the Ministry of Regional Development and Utilities of Ukraine. Reliable statistics on the area of landfills are unavailable, according to Svitlana Kolomiyets, deputy head of the Minitsry of Ecology and Natural Resources.

But Tetra Pak’s environmental protection manager, Anna Tarantsova, said that landfills occupy more than 7 percent of Ukraine’s territory or more than 42,000 square kilometers, which is one and half times the area of Kyiv Oblast.

According to Kachka, Ukraine now needs a company to operate the whole waste disposal system. Usually it is a company that is either created or financed by market players – recyclers, importers and manufacturers of packaged goods.

“In our case, the state (had) created such an organ, which, due to its isolation from market participants, didn’t start working, and switched to the collection of money,” Kachka told the Kyiv Post.

Kyiv Post staff writer Alyona Zhuk can be reached at [email protected].