Summary of the audit report Public Utility Service of Water Regulation in the Impact Area of the
Lower Sava River Energy Exploitation
The Court of Audit of the Republic of Slovenia carried out a regularity and performance audit of
providing and performing a public utility service of water regulation in the impact area of the Lower Sava
River energy exploitation (hereinafter: PUS of the Lower Sava River regulation) in the period from 2006
to 2008 at the Ministry of the Environment and Spatial Planning (hereinafter: the Ministry) and in the
public corporation Infra, izvajanje investicijske dejavnosti, d. o. o., (Infra, implementation of investment
activities), Leskovec pri Krškem (hereinafter: the Infra public corporation).
The audit objectives were to express an opinion on whether the Ministry secured conditions for an efficient
performance of PUS of the Lower Sava River regulation and to express an opinion on whether in the
period from 2006 to 2008 the Infra public corporation performed PUS of the Lower Sava River regulation
efficiently and in accordance with regulations.
PUS of the Lower Sava River regulation was introduced by the Act Governing the Conditions of the
Concession for the Exploitation of Energy Potential of the Lower Sava River. To this end, the
Government of the Republic of Slovenia in the year 2004 established the Infra public corporation, which
made a contractual commitment to adapt and improve water, state and local infrastructure in the impact
area of the Lower Sava River energy exploitation for Boštanj, Blanca, Krško, Brežice and Mokrice
hydroelectric power plants. The implementation of these adaptations and improvements is financed from
the state budget water fund.
The Court of Audit makes an assessment that the Ministry failed to secure conditions for an efficient performance of
PUS of the Lower Sava River regulation, since under the adaptation and improvement of water, state and local
infrastructure it did not provide a unified system, failed to plan activities in accordance with the Infra
public corporation planning and did not provide regular financing of investments. Execution of works
under PUS is regulated contrary to Public Utilities Act and Waters Act. The existing distinction between
water and energy infrastructure in itself does not entirely consider the reason for the construction of
particular infrastructure. Financing of the construction of new infrastructure facilities and moving of the
existing infrastructure facilities due to the construction of energy infrastructure unnecessarily burden the
state budge. Simultaneously there comes to a risk of allocating unauthorised state aid to an electricity
power producer involved in market activities. With the Act Governing the Conditions of the Concession
for the Exploitation of Energy Potential of the Lower Sava River, the Infra public corporation under the
adaptation and improvement of infrastructure is enabled to raise bank loans guaranteed by the State, even
though for the repayment of the principal and interest the lessee acquires all the funds from the state
budget only.
The Court of Audit makes an assessment that in the period from 2006 to 2008 the operations of the Infra public
corporation in performing PUS of the Lower Sava River regulation were inefficient, since the corporation was late with
the preparation of business plans for the years concerned, whereby business plans were not in line with
water fund programmes. It did not adapt and improve infrastructure in accordance with the planned time
limits and within the amount of provided funds while in some instances it used more funds for the
achievement of the same outcomes. Up until 31 December 2008, the Infra public corporation failed to
complete infrastructure adaptations and improvements for the Boštanj hydroelectric power plant, the
construction of which was planned to be completed by September 2005. The adaptations and
improvements implemented by 31 December 2008 for the Blanca hydroelectric power plant did not
enable the planned completion of works in May 2009 either. In providing replacement construction, it
withdrew from the concluded purchase contract. After the new appraisal, almost 50 percent higher
expense for the replacement construction was agreed upon. For the achievement of business outcomes in
certain categories, the calculated and paid expenses were unduly high.
As regards operations of the Infra public corporation, the Court of Audit expressed an adverse opinion, since
the operations were significantly inconsistent with regulations and policies. The Infra public corporation
acted contrary to Public Finance Act, for it sold on its own behalf and for its own account assets owned
by the State. In several instances, it acted contrary to the provisions of the legislation that regulates public
procurement. It also violated the provisions of Waters Act respectively Decree on the Water Fee, for it did
not file water fee return for the use of alluvial deposits. In the period from 2006 to 2008, the Infra public
corporation in relation to Slovenian accounting standards disclosed under tangible fixed assets funds used
for the adaptation and improvement of water, state and local infrastructure, which was contrary to
Companies Act. It, however, ceased to do so, with the adoption of the 2010 annual plan.
For the established inefficiencies to be eliminated, the Court of Audit demanded from the Ministry of the
Environment and Spatial Planning the implementation of a corrective measure, i.e. preparation of a plan of
activities for the adoption of amendments and supplements of the Act Governing the Conditions of the
Concession for the Exploitation of Energy Potential of the Lower Sava River as well as amendments of
the Decree on the Method of Implementation of a Public Utility Service relating to the Water Regulation
in the Impact Area of the Energy Exploitation of the Lower Sava River. The Infra public corporation was
not demanded to submit a response report, because already during the audit procedure it eliminated the
established irregularities respectively adopted appropriate corrective measures as regards the recording of
water, state and local infrastructure construction as operations for foreign account.
Both auditees were also provided several recommendations for the improvement of operations under their
further performance of PUS of the Lower Sava River regulation.
Ljubljana, 20 September 2011
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