Baltic Export, Energy, Energy Market, Estonia, Financial Services, USA

"The decisions about the development of the Jordanian and Utah projects of Eesti Energia covered in the audit of the National Audit Office were made by the supervisory board of Eesti Energia and the company's owner, i.e. the state of Estonia. In general, there isn't much to criticise about the way decisions were made in the projects. What can be pointed out is that decisions were made in haste in the case of the Utah project, as there was a competitor to beat. Some circumstances should have been given more attention," Auditor General Alar Karis said in a press release.

Karis points out that it is still early to say whether the Jordanian and Utah projects of Eesti Energia were successes or failures, because the project plans have not been completed yet. "The current status of the projects has been largely influenced by an external factor independent of Eesti Energia – the decrease in oil price, and processing the oil shale has also proved to be more complicated," he said.

The audit reveals that the supervisory board, management board and general meeting of Eesti Energia knew that the Utah oil shale project was a risky investment, but the political support in Estonia and also in the United States gave them the confidence to proceed with the project. The oil shale deposit in Utah was purchased in a rush because another investor was also interested in the land and the mineral reserves.

The National Audit Office finds that at the time of developing the projects in Jordan and Utah, Eesti Energia had no certainty that in addition to implementing these ambitious foreign projects, it would also have adequate resources and possibilities for making the necessary investments in Estonia.

When the decision on the Utah project was made in 2010, the foreign investment budget of Eesti Energia was small than the intended total investment in the projects in Jordan and Utah. In addition to the foreign projects, Eesti Energia was also planning to make major investments in the Auvere Power Plant, Enefit280 oil plant, distribution network and desulfurization equipment in Estonia, it is written in the audit.

The audit shows that Eesti Energia has updated its decision-making processes in the course of the development of foreign projects and considerably reduced the risk level of its investment projects.

In the audit, the National Audit Office advised the Minister of Finance to guarantee that all public undertakings proceed from the same principles when making decisions about and implementing major investments, which would make it possible to develop large projects with the smallest possible risks and expenses, and to implement them in stages.