When investing 3.1 million euros in the development of its network of electric vehicle (EV) charging stations, the Ministry of Agriculture has not acted following its development plans and in a meaningful way, as the State Audit Office of Latvia concluded after the audit. The introduced network of EV charging stations does not meet the current and future needs of the Ministry’s fleet, and the charging equipment installed in it also does not meet the technical capabilities available in the respective locations.
BRIEFLY:
- When investing 3.1 million euros in the development of its network of electric vehicle (EV) charging stations, the Ministry of Agriculture has not acted following its development plans and in a meaningful way.
- The Ministry of Agriculture announced a procurement without specifying either the fleet of electric vehicles to be maintained and its dynamics, nor a required number and locations of EV charging points. The development of a plan for EV charging station network was one of the procurement orders, but technical parameters of EV charging equipment were already determined in a procurement regulation.
- The network of EV charging stations of the Ministry of Agriculture has been deployed both by choosing an inappropriate technical solution and implementing the chosen solution in such a way as not to achieve the goal with the least use of financial resources.
- Under the pretext of the need to establish a network of EV charging stations by the end of 2022, the Ministry of Agriculture purchased equipment of another manufacturer and of other capacity instead of the charging equipment offered in the procurement and approved in the documentation of the general agreement. The Ministry already paid about 80% of the allocated funds in 2022 whereas the first EV charging stations were put into operation only in the autumn of 2023.
“During the audit, we concluded that the EV charging station network of the Ministry of Agriculture previously unplanned and established by means of the 3.1 million euros allocated from the state budget in 2022 with 52 EV charging facilities (60 kW) does not meet the existing and prospective needs and technical capabilities of the Ministry because the network is too large. Moreover, it was created by paying a relatively expensive price for EV charging equipment. We understand the desire of the Ministry of Agriculture to proceed in the direction of the Green Deal, but what the audit findings show that the Green Deal has rather been used as a cover for unjustified and wasteful use of state budget funds in this case,” indicated Ms Inga Vilka, Council Member of the State Audit Office of Latvia.
The network of EV charging stations of the Ministry of Agriculture with 52 EV charging facilities at 42 charging points has been introduced by choosing a technical solution that does not meet the needs. The audit concluded that the EV solution chosen by the Procurement Commission to install only high-power (more than 22 kW) EV charging equipment does not comply with national policy planning documents and the practice of sectoral experts. For example, state-owned enterprises engaged in EV charging install conventional power charging equipment for their own needs. The state-owned enterprises indicate that building high-power EV charging stations for such needs lacks economic rationale due to the costs of providing the necessary capacity and maintenance.
The audit has discovered that competition was restricted by setting unreasonably high and disproportionate requirements for applicants in procurement. The advantages created by the procurement requirements gave the sole bidder the opportunity to offer relatively high prices for both EV charging equipment and materials and works, for which the general agreement was concluded accordingly. According to a cautious estimate by the auditors, the increase in price for EV charging equipment constituted approximately 600,000 euros.
The Ministry of Agriculture announced the procurement without specifying either the fleet of EVs to be charged and its dynamics, nor a required number and locations of EV charging points. The development of a network plan for EV charging stations was one of the procurement orders. The Ministry of Agriculture accepted the plan of the network of EV charging stations, which also defined such EV charging points that did not meet the criteria of the methodology developed as part of the procurement regarding the power reserve of the power grid.
The Ministry of Agriculture purchased the EV charging equipment of the Polish company with a different capacity instead of the EV charging equipment of the Spanish company offered in the procurement and approved in the documentation of the general agreement. Although there were only six EVs in the fleet of the Ministry of Agriculture in 2022, the Ministry justified the change of equipment with the need to complete the establishment of a network of EV charging stations by the end of 2022. The Ministry of Agriculture paid 2.4 million euros or about 80% of the allocated funds to the economic operator, but the first EV charging points were put into operation only in the autumn of 2023 and the network with all 52 EV charging stations was completed only in July 2024.
In mid-August 2024, more than half of the built EV charging stations were still unused, and charging is carried out in only 15 places. The power of the electrical grid is such that the installed equipment could operate at full capacity only at some EV charging points, and the EV charging equipment is configured at maximum capacity only at one charging point. Almost the only user of those EV charging stations is the Food and Veterinary Service (92% of all charging).
“We can mention some examples to understand the costs and the extent of the needs. According to the auditors’ calculations, the total depreciation costs of eight devices installed at the EV charging point near the building of the Ministry of Agriculture, which was put into operation in the autumn of 2023, was 337 euros per 100 km in the period until the middle of 2024 when attributing them to the actually performed charging. At the EV charging station on Kraujas Street in Riga, the 60 kW device is configured to work with 6 kW power, as there is no larger power grid power reserve available at the address. There are 18 EV charging stations built at addresses where the structural units of the State Forest Service are located, but they have not used the installed EV charging equipment at all,” explained Ms Inga Vilka, Council Member of the State Audit Office of Latvia.
By applying the practice of other state-owned enterprises and installing standard power charging equipment for their own needs, the Ministry of Agriculture could have saved at least 2.7 million euros from the state budget funds. The auditors consider that by installing standard power equipment and using about 278,000 euros, the Ministry of Agriculture could have saved the budget funds or buy up to 60 new EVs with these funds. The Ministry of Agriculture could have also entrusted the construction of a network of EV charging stations to professionals by leasing them land at the required addresses. Such an approach would provide an opportunity to ensure EV charging, reduce expenses, and generate income.
“When the management of the Ministry of Agriculture undertook a function that was not typical for the Ministry, the need to organize monitoring of the equipment and settlement of accounts has also arisen. In its turn, it increases the administrative burden and requires additional resources. This is how the management of the Ministry has acted contrary to the reasonable development direction of the state administration,” emphasised Ms Inga Vilka, Council Member of the State Audit Office of Latvia.
The State Audit Office of Latvia also draws the attention of the Cabinet of Ministers to the fact that allocating state budget funds to ministries for unplanned, unjustified, unprepared measures unrelated to the core activities of a ministry would not be permissible.
The Ministry of Agriculture submitted an application for priority measures for 2022 in accordance with the statutory procedure. It did not include a priority measure related to the creation of a network of EV charging stations. The funds were allocated as a result of discussions among the representatives of the political parties forming the government. The construction of a network of EV charging stations was not envisaged in the Strategy of the Ministry of Agriculture or in annual work plans, and the State Budget Law for 2022 and its explanations revealed the information in such a way that no such intention of the Ministry of Agriculture could be detected.
The State Audit Office of Latvia will inform law enforcement institutions about the incompliant and uneconomic use of state budget funds in the Ministry of Agriculture so that they can assess the liability of public officials and employees of the Ministry of Agriculture.
Recommendations of the State Audit Office #PēcRevīzijas
The audit provides three recommendations, whose implementation shall 1) increase the use of the Ministry of Agriculture’s network of electric vehicle charging stations, 2) introduce the most advantageous and non-distorting market model for managing the network of EV charging stations, 3) provide an understandable and convenient billing and accounting system for the use of the network and the electricity used for charging.
Additional information: audit report summary
About the State Audit Office of Latvia
The State Audit Office of the Republic of Latvia is an independent, collegial supreme audit institution. The purpose of its activity is to find out whether the actions with the financial means and property of a public entity are legal, correct, useful and in line with public interests, as well as to provide recommendations for the elimination of discovered irregularities. The State Audit Office conducts audits in accordance with International Standards of Supreme Audit Institutions of the International Organization of Supreme Audit Institutions INTOSAI (ISSAI), whose recognition in Latvia is determined by the Auditor General. Upon discovering deficiencies, the State Audit Office of Latvia provides recommendations for their elimination, but it informs law enforcement authorities about potential infringements of the law.
Additional information
Ms Gunta Krevica
Head of PR and Internal Communication Division
Ph. 23282332 | E-mail: gunta.krevica@lrvk.gov.lv