Finance minister launches special audit at Eesti Energia

By decision of the minister of finance acting as the sole shareholder's representative, a special audit will be conducted at Eesti Energia this year to evaluate the energy conglomerate's management activities to date.
According to Finance Minister Mart Võrklaev (Reform), there have been longstanding issues with the performance of Eesti Energia.
"Sector-specific audits conducted by the new board have identified questionable aspects in the previous operations that need answers. We have constructive cooperation with the current board; we discussed the situation in more detail with the company's head, Andrus Durejko, at the beginning of March, when I asked for an overview of the problem areas and the situation. Having listened to the consortium's leaders and stemming from ownership responsibility, I have decided to initiate an audit process to clarify whether the past management activities meet the duty of diligence," the minister stated.
Võrklaev mentioned that the state, as the owner, wants clarity on how the current situation arose – whether there have been systemic errors in management and to what extent the previous management's responsibility is involved.
The audit will cover the period from January 1, 2020, to December 31, 2023.
"As a result of the special audit, the impact of management activities and decisions on the company's results and financial condition should become clear. The audit will be carried out during 2024, and the investigation will not affect the operation of Eesti Energia services – the usual activities of the group's companies will continue during the audit," the ministry announced.
The ministry added that several risks materialized in the financial activities of the group in 2023, and at the beginning of this year, the company announced unprofitable economic results.
Former CEO: Eesti Energia's results good in 2022 and 2023
Hando Sutter, head of the energy group between 2014 and March of 2023, told ERR that he cannot comment on the special audit decision yet as he only learned of it himself.
Sutter noted that Eesti Energia put in its best result to date in 2022 and, without the Auvere plant's write-off, 2023 was also a good year for the firm.
The sole shareholder of Eesti Energia AS is the state, on whose behalf the Ministry of Finance manages the shares and is represented by the minister of finance.
In early April, it was unexpectedly revealed that Aavo Kärmas, the CEO of Enefit Green, in which Eesti Energia has a majority stake, would leave his position by agreement with the board as of July 1.
Eesti Energia's net profit from business operations in 2023 was €253 million, but an accounting write-down of the value of oil shale-powered power plants amounting to €628 million resulted in a net loss of €376 million for the group.
The group's normalized EBITDA (earnings before interest, taxes, depreciation, and amortization), excluding the effects of changes in the value of long-term electricity purchase agreements, was €483 million in 2023, an increase of 45 percent compared to the previous year. As a result of the write-down in the value of the oil shale power plants, Eesti Energia's normalized net profit was -€376 million.
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Editor: Marcus Turovski