In six years, the Ministry of Industry and Trade has supported the regeneration of less than a tenth of registered brownfields
PRESS RELEASE ON AUDIT NO 23/16 – 2 September 2024
At the beginning of this year, a total of 4,349 of these unused, neglected and in some cases contaminated properties (areas, sites, land plots or buildings) were registered in the National Brownfields Database in the Czech Republic. The Ministry of Industry and Trade (MoIT) provided a total of CZK 5.06 billion from the state budget and EU funds for brownfields regeneration projects for business use between 2018 and 2023 and supported a total of 415 projects. As the Supreme Audit Office (SAO) audit showed, the support did lead to a reduction in the number of brownfields in the Czech Republic, but not to the extent originally planned by the MoIT. The MoIT managed to support the regeneration of less than a tenth of registered brownfields in the audited period from 2018 to 2023.
Of the five support programmes audited, the MoIT financed three programmes from state funds and two from EU funds. Support could be obtained by municipalities and regions, but also by entrepreneurs. However, unlike entrepreneurs, municipalities and regions were not interested in support very much.
Entrepreneurs showed the greatest interest in subsidies from the European programme "Real Estate OPPIK" (Operational Programme Enterprise and Innovation for Competitiveness). Business entities submitted a total of 1,601 applications for subsidies. The MoIT approved 357 projects for subsidies and paid out a total of CZK 4.2 billion by the end of 2023. The aim of this programme, which contributed to reducing the number of brownfield sites, was to make it easier for small and medium-sized businesses to modernise outdated, spatially and technically inadequate buildings or replace them with new buildings designed for business. This was intended to maintain or increase employment in the region, improve working conditions for employees or the environment.
In addition to the subsidy, the programme also allowed projects to be supported by a financial instrument (e.g. loans, guarantees or equity investments). Unlike a subsidy, this is a repayable support where the funds are returned to the system and can be reused. The MoIT has supported four projects in this way - in the form of a soft loan - for an amount of CZK 118 million. In addition to the MoIT, two other entities - the administrator and the financial intermediary* - participated in the provision of the financial instrument. The SAO auditors found that remuneration of CZK 31.4 million has been paid to these entities so far, i.e. almost 27% of the support provided.
As regards the expenditure related to the remuneration of the financial intermediary, the SAO points to the risk of uneconomic conduct, as the remuneration was calculated until the end of 2023 on an amount higher than the amount actually managed. The financial intermediary collected CZK 23.3 million in remuneration. According to the SAO, it is essential that the MoIT insists that the administrator recalculates the remuneration for the financial intermediary on the basis of the contributions actually paid.
Communication Department
Supreme Audit Office
* The administrator is a subsidiary of a state-owned bank and is mainly responsible for selecting the financial intermediary and calculating its remuneration. The financial intermediary, on the basis of a call for proposals, selects the final beneficiaries, concludes investment contracts with them, carries out investment evaluations of individual projects and manages the development fund, which is a joint stock company where the financial intermediary is the sole shareholder and statutory body.