25 March, 2008

Preamble

The Limited Liability Company ‘Donbass Fuel-Energy Company’, the town-forming enterprises - the Limited Liability Company ‘Vostokenergo’, the Open Joint-Stock Company ‘Pavlogradugol’, the Open Joint-Stock Company ‘Komsomolets Donbassa Mine’ (hereinafter referred to as the Enterprises);

and the local self-government bodies of the respective administrative-territorial entities – Zugres Town Council of Donetsk Region, Kirovskoe Town Council of Donetsk Region, Kurakhovo Town Council of Donetsk Region, Schast’ye Town Council of Zhovtnevy District of Lugansk Region, Pavlograd City Council of Dnepropetrovsk Region, Pershotravensk Town Council of Dnepropetrovsk Region, Ternovka Town Council of Dnepropetrovsk Region, Pavlogradskiy District Council of Dnepropetrovsk Region, Petropavlovskiy District Council of Dnepropetrovsk Region (hereinafter referred to as the Local Self-Government Bodies);

- sharing the common goals, principles and forms of social partnership and long-term cooperation on the basis of the corporate social responsibility concept;

- in order to set up a framework for the development of mutually beneficial partnership relations in the social sphere;

- have approved and signed the present Declaration on Social Partnership:

Foundations and Principles of Social Partnership

In view of the successful implementation of joint social projects and programmes in the cities, towns and districts where the Enterprises are located, the Participants of the present Declaration declare their joint intention to enhance the successfully progressing practice and to form a long-term social partnership programme.

The Participants of the Declaration commit themselves that the transition to the social partnership policy will be based on the following principles:

voluntary character of corporate social responsibility;
efficiency of social investments and their matching to the scale and prospects of the Enterprises’ business development;
each party’s awareness of its own share of responsibility for sustainable development of communities.

Social Partnership Objectives

When building the long-term partnership relations, the Participants of the present Declaration don’t pursue any political or commercial objectives, but are guided exclusively by the interests of living standards’ enhancement, setting the sustainable conditions for accelerated socio-economic development, ensuring citizens’ welfare, strengthening of the rule of law and encouragement of public initiative.

Specific projects and programmes in the sphere of social partnership will be aimed at:

improvement of municipal management quality and efficiency within the framework of competence and possibilities of Local Self-Government Bodies in close cooperation with regional communities;
increasing the role of social investments as an additional factor in the steady growth of the Enterprises’ competitiveness;
introduction of the strategic approaches and modern management techniques into the social sphere.

Forms and Methods of Social Partnership

Based on their corporate social responsibility policies, the Enterprises are disposed to consider and support the long-term projects and programmes presented by the Local Self-Government Bodies in the following spheres:

modern education;
healthcare;
cultural heritage and development.

The preferred tool for implementing the social investments is direct financing by the Enterprises of socio-economic development programmes and corresponding actions initiated by the Local Self-Government Bodies within the limits of the agreed amounts ear-marked for the realization of social partnership programmes. The Enterprises would use various forms of social support, including the direct charity assistance – financial or in-kind – to those in difficult life situations. However, the strategic priority of the Participants of the present Declaration is the support of major social projects and programmes of the Local Self-Government Bodies, which allow provision of evident and long-term contribution to the alleviation of significant social problems.

The Enterprises intend to provide the Local Self-Government Bodies with consultative assistance in working out long-term strategic plans of cities’ development for the purpose of raising their investment attractiveness. Such assistance will be rendered in the form of provision of expert services and other agreed assistance within the framework of the “Local Economic Development – LED” project of the US Agency for International Development (USAID) to be implemented in the Enterprises’ towns of operations. In the course of development, adoption and update of the strategic plans, the primary support by the Enterprises will be given to the programmes and projects that will be directly linked to realization of these plans.

One of the key characteristics and the guarantee for successful social partnership is openness and transparency. Preferential support of the Enterprises will be given to the programmes and projects that have successfully passed public hearings or have otherwise been supported by civil society organizations and institutions. Public control and participation should become one of the basic principles of planning and implementation of the social partnership programme. The Participants will cooperate in adequate presentation of successful projects in social reports of the Enterprises.

In the long term, the Enterprises in cooperation with the Local Self-Government Bodies will strive to set up a competitive system for programme selection, ponder options for implementation of pilot projects, the expediency of launching grant programmes, etc.

Governance and Coordination

In order to ensure streamlined and efficient social investments into development of cities and territories, the Participants of this Declaration will work out the most appropriate contractual terms of their relations in the social sphere, which will clearly stipulate their rights and obligations, joint management procedures, criteria for assessment of efficiency of programmes’ development and the reporting procedure on mutually-agreed disbursement of social investments.

For the purposes of effective day-by-day coordination of joint practical activities in the social sphere, monitoring of the programmes’ implementation and development of further cooperation plans, the Enterprises and the Local Self-Government Bodies will delegate their authorized representatives to the Local Coordinating Working Groups on Social Partnership. The composition, procedure and methods of Working Groups’ activities will be determined independently between the respective Enterprises and the Local Self-Government Bodies.

In order to strategically co-ordinate social partnership, analyze and propagate the best practices and to develop strategic lines for improving the social investments’ efficiency, the Enterprises and the Local Self-Government Bodies will delegate their authorized representatives to the Co-ordination Committee on Social Partnership. The composition, procedure and methods of work of the Co-ordination Committee will be reviewed at the working-level meeting of the Participants’ representatives, scheduled for 25^th of April 2008.

Final Provisions

The present Declaration is open for accession by enterprises, administrative-territorial and municipal entities (districts, cities/towns and communities) in the regions of the Enterprises’ operation. Accession is exercised through signing of the Declaration by the authorized representatives of respective enterprises, authorities and local self-governing bodies.

Signed in Donetsk on the 25^th of March 2008.

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