Removal of old environmental burdens is still slow, it has not accelerated even in recent years and the state has already paid CZK 66.2 billion for it
PRESS RELEASE ON AUDIT NO 23/01 – 29 January 2024
Last year, after six years, the Supreme Audit Office (SAO) resumed auditing old environmental burdens caused by the activities of former state-owned enterprises in the period before their privatisation. It investigated whether the formerly slow pace of removing these burdens has accelerated in recent years and whether funds for the disposal of environmental damage are being spent economically. The SAO concluded that there was no acceleration between 2018 and 2022 and that the measures taken by the Ministry of Finance (MoF) were not effective. At the same time, unresolved old environmental burdens pose serious environmental damage and are a risk to both nature and the health of the population.
The removal of old environmental burdens began in the Czech Republic in 1991, 32 years ago. So far, the state has paid CZK 66.2 billion for it. At the time of the SAO audit, 120 out of 327 environmental contracts had still not been completed, i.e. 37% of them. Since 2018 the MoF has intended to significantly accelerate the process of removing old environmental burdens and complete the process by the end of 2028. However, this will not happen as the measures taken by the MoF have not been effective in this respect. There are still sites where remediation has not even started. According to the latest estimates from the MoF, the removal of old environmental burdens may extend until at least 2042. The SAO has repeatedly warned in the past that the process of removing these burdens is slow and ineffective.
The slow pace is illustrated, for example, by the Ostramo oil lagoons. The environmental contract was concluded in 1997. The sludge started to be removed and disposed of in the summer of 2004, and this process took 18 years. The follow-up remediation of contaminated soils near the lagoons is still in the preparatory phase. It is expected to be completed in 2032, 35 years after the conclusion of the environmental contract.
The consequence of the slow pace is the growth of state expenditure. The removal of old environmental burdens is made more expensive by so-called mandatory protective remediation pumping. This temporary remedial measure aims to prevent the spread of groundwater contamination to the surrounding area until the final remediation occurs. However, it only maintains or slightly improves the condition. The SAO found that this temporary measure (paid for by the MoF) lasted for more than 10 years at nine sites, and, for example, at the Jan Šverma Coking Plant it even took 25 years. The MoF has already paid a total of CZK 187.3 million for this one measure alone.
Although the MoF had CZK 2.5 billion available annually in special privatisation accounts to accelerate the removal of old environmental burdens between 2018 and 2022, it spent significantly less - on average only 35% of this amount. In this context, the SAO warns that there may be a shortfall in these accounts in the future. This is due to the unstable and fluctuating revenues (mainly dividends from ČEZ) and the fact that, starting in 2019, part of these funds has been transferred to the state budget each year. For example, in 2022 the government approved the transfer of CZK 24 billion and in 2023 even CZK 54 billion.
When concluding the environmental contracts, the state commited to the purchasers of privatised property to reimburse them for the costs of removing the environmental burden up to a predetermined amount (the so-called guarantee). However, according to the SAO's findings, in April 2023, the state guarantee proved insufficient to cover the necessary expenses for 16 sites. As a result, remediation work was stopped, limited or not initiated at all in 15 cases. Only in one case did the purchaser of the privatised property fund the continuation of the remediation. Although property purchasers are responsible for removing old environmental burdens, the existing legislation prevents the state from enforcing completion of remediation when environmental contracts are terminated due to a lack of guarantee. According to the SAO, there is a risk that the number of sites where remediation will not be completed due to the exhaustion of the state guarantee will increase. This poses a risk of spreading contamination, even to areas where the state has already paid for the remediation.
Communication Department
Supreme Audit Office