The special audit initiated by the Minister of Finance identified shortcomings in the management of Eesti Energia AS during the years 2020 to 2023, leading to environmental violations, economic losses, and effects on the reliability of the distribution network.

Minister of Finance Jürgen Ligi explained that the special audit was initiated by the previous minister and was based on internal audits and documentation of the group. ‘The purpose of the special audit was to provide a legal assessment of the management’s actions, specifically to determine whether the due diligence obligation was breached. Substantive observations had already been made by the company’s internal audits, and corrections have either already been made or are in progress. The most challenging aspect is getting emissions under control.’

The special audit analysed four areas and made a total of 35 observations. “We checked the implementation of agreed activities in internal audits. For that we analyzed the documents, explanations provided and the information which was obtained during the interviews,” explained the methodology a partner of a law firm Sorainen dr Kadri Härginen.

Major violations were identified concerning compliance with environmental requirements and financial risks – emissions from older oil plants and power stations exceed the limits allowed by the integrated environmental permit, and harmful hedging transactions have been carried out. Additionally, shortcomings were noted in ensuring the reliability of the distribution network.

It is highlighted that the managing bodies have violated their due diligence obligation on several occasions and have taken unjustified risks. ‘Further steps and decisions can be made by the Environmental Board and the new management board of Eesti Energia,’ Ligi stated.

According to the minister, the owner has good cooperation with the current management board. ‘The Management Board and Supervisory Board of Enefit Power have been replaced, the derivatives transaction system reorganised, the division of Elektrilevi reversed, and active efforts are underway to resolve the emissions issue. However, the question of responsibility remains unresolved,’ the minister noted.

Andrus Durejko, Chairman of the Management Board of Eesti Energia, said the aim is to build a strong and effective energy group to achieve the goals set by its owner, the Estonian state. ‘Our objective is to improve Eesti Energia. The concerns highlighted by the special audit were already known to the company, and we are focused on addressing them. We aim to be a transparent and open company, which is why we decided to publish the full audit report,’ said Durejko.

The analysis was conducted by the law firm Sorainen OÜ and Grant Thornton Baltic, and covered the period from 1 January 2020 to 31 December 2023.