National Audit Office: the Environmental Investment Centre needs to be reformed

Toomas Mattson | 8/6/2008 | 12:00 AM

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TALLINN, 6 August - According to the National Audit Office (NAO), the financing of the environmental sector through the Environmental Investment Centre (EIC) is not transparent and the internal controls applicable in the foundation give no assurance that the aid amounts are used purposefully and effectively.

The NAO audit showed that the EIC is used to finance the core activity of the government area of the Ministry of the Environment (ME) outside the state budget. In 2006, the EIC allocated about EEK 202 million or 41 % of its total aid awards for supporting the projects of the ME and its government area. Several projects in the ME’s government area were used to finance activities which should be financed from the state budget.

The NAO believes that financing the core activity of the ME's government area through EIC's projects is inappropriate, because the current arrangements for deploying the funds received from environmental charges limit the responsibility of the Minister of the Environment for managing the environmental sector and allow the Minister to cover a substantial part of the expenditure of the ME's government area by extra-budgetary means.

The audit revealed that in the ME the projects to be financed from the EIC are determined by officials who draw up the project applications of the ME. As a result, the extra-ministerial project applications have a disadvantage compared to the projects of the ME’s government area.

Plus, the monitoring of the use of aid needs to be improved, since inadequate monitoring does not always give assurance that the aid is used purposefully and effectively. The audit demonstrated that the EIC and the ME have not systematically assessed the effect of projects financed from environmental charges on the expected results, and that the documentation on the monitoring of projects was inadequate.

The NAO audited the transparency of the support scheme for environmental projects financed from the state budget funds received from environmental charges, and the functioning of the EIC's internal controls as regards the targeted financing of environmental projects.


According to the Environmental Charges Act, the state budget revenue received from environmental charges is used for preserving and improving the natural environment. The use of funds for specific purposes is managed by a public foundation – the Environmental Investment Centre (EIC) – which employs the funds received from environmental charges to support environmental projects aimed at preserving the state of the environmental, reproducing natural resources and remedying environmental damage. The EIC’s support provides a major contribution to the implementation of the environmental projects of the private and public sectors and constitutes, besides the state budget, one of the main sources of financing the attainment of objectives set in the National Environmental Strategy.

In 2000-2007, the EIC has supported more than 10,000 environmental projects amount to a total of EEK 3.3 billion. In 2007, the EIC provided support for 1,392 projects with a total cost of nearly EEK 686 million.

Toomas Mattson
Communication Manager of National Audit Office
Telephone: 6400 777
Mob: 51 34900
E-mail: [email protected]

  • Posted: 8/6/2008 12:00 AM
  • Last Update: 9/15/2015 8:59 AM
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