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Forestry reform: what does the creation of a single SE "Forests of Ukraine" provide for?
posted 07 September 2022 20:40

The Cabinet of Ministers of Ukraine adopted a resolution that provides for the reform of the forestry industry.

Instead of 24 regional departments of the State Forest Resources Agency of Ukraine, nine regional offices of forestry and hunting are formed. 158 forestry enterprises are merged into a single state specialized forestry enterprise "Forests of Ukraine".

In the future, the structure of "Forests of Ukraine" should consist of three levels: local branches, regional offices, central office. The new enterprise will focus on planning, coordination and quality control of works. External contractors will be engaged to perform works on a competitive basis.

"The management model being created is fully consistent with European practice - the experience of the Baltic countries, Poland and many others. A single company achieves better economic results, attracts investments more effectively and introduces new technologies. Business processes in a single company are more transparent and standardized. A single company with centralized management is more manageable, which is important both during the war and in the period of post-war economic reconstruction", - said the Head of the State Forest Resources Agency of Ukraine Yuriy Bolokhovets.

Thus, in Ukraine, as in most European countries, a model with two independent verticals of forest management is being formed. SE "Forests of Ukraine" manages, regional departments of the agency implement state policy and control the activities of forest users - both state and all others.

The central office of the State Forest Resources Agency of Ukraine coordinates the interaction of both verticals of management. After all, during the transformation of the system it is very important to maintain its manageability.

At the same time, the forests will remain state-owned. The CMU resolution stipulates that the privatization of forests of the SE "Forests of Ukraine" and PJSC is prohibited in accordance with the Law of Ukraine "On Privatization of State and Communal Property".

The condition of the reform is to preserve workplaces in the industry and the level of tax revenues to local budgets.

The reform will be accompanied by digital transformation. This process is already underway, but we will do everything to ensure that the state forest management system is fully digitalized.

For six months of the war, the military operations continued on almost 3 million hectares of forests. Now, 12.6% of the enterprises belonging to the sphere of management of the State Forest Resources Agency of Ukraine are under occupation. This is about 600 thousand hectares of forests. Preliminary losses to forestry enterprises amount to 1 billion dollars.

Improving the efficiency of forest management requires significant financial resources and investment. However, it is extremely difficult to attract donor investments when forestry activities are carried out by individual enterprises.

The indicators of the pre-war period show that the level of investment and financing of reforestation in the EU countries is much higher than in Ukraine, in particular in the EU it is 24 dollars per 1 hectare, and in Ukraine - 0.3 dollars per 1 hectare.

All this is a prerequisite for a comprehensive reform of state property management in the forestry sector.

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