Slovakia is increasingly facing droughts and flash floods, yet its irrigation and drainage systems are not prepared to cope with these challenges. “Most of them were built between the 1960s and 1980s, and many are now in a state of disrepair or completely non-functional. They require major reconstruction, while the state enterprise Hydromeliorácie has not even prepared the necessary project documentation. This infrastructure is vital, as it should support farmers and at the same time protect the landscape from extreme weather events,” said SAO Vice-President Henrieta Crkoňová.

According to the national auditors, the irrigation systems – the main assets of the state enterprise – were leased for less than 18% of the total area (just under 55,000 hectares out of 315,000 ha), with most contracts charging less than €6 per hectare per year. Such low rental income is insufficient for the enterprise to operate sustainably, pushing it into deficit. The 9,400 km irrigation network was used on less than 15% of its capacity. The company has no investment plan and has not quantified its investment debt – meaning it has no estimate of the funds required to restore its assets. The use of EU funds has also been very limited: of several planned projects, only one – Data Management in the Field of Hydromelioration (€347,000) – was implemented, while another project, Mechanisation for the Maintenance of Irrigation Canals and Water Facilities, worth nearly €7.1 million, has been underway this year. Two other projects worth tens of millions of euros were not implemented at all.

The state enterprise Hydromeliorácie has been operating at a loss for many years, mainly due to high depreciation costs. The company has been offsetting its negative results by reducing its share capital. Since its establishment in 2003, it has lost over 93% of its value – specifically €202 million – with only €14.12 million remaining at the end of 2024. Unless the situation changes, the company could soon fall into negative equity.

Závodisko, š. p., the only horse racing authority in Slovakia, is responsible for organising races, registering horses, and coordinating horse breeding. Nevertheless, during the audited years 2022 and 2024, it generated only minimal profits – in the low thousands of euros – mainly thanks to ministry funding. In 2023, Závodisko recorded a loss of €119,000. With limited own resources, it remains heavily dependent on ministry funding. Without a clear financing model, the enterprise risks losing its ability to fulfil its role in breeding specific horse breeds and organising races.

The company’s largest and most financially demanding investment project – the construction of a new grandstand at the Závodisko racecourse – began in 2010 but was suspended two years later. More than €1 million had been spent, while the remaining €2.3 million was returned to the state budget. The grandstand remains unfinished and in decay; completing it would now require more than €6 million. Despite repeated requests, the company received no subsidies from the ministry in 2023 or 2024, and without state support it cannot complete the project.

National auditors also found that the supervisory boards of both state enterprises were non-functional and lacked quorum for significant parts of the audited period due to ministry inaction. In the case of Závodisko, this applied to part of 2023 and the whole of 2024; in Hydromeliorácie, the supervisory board was inactive from mid-May 2020 for almost two years, and again for more than ten months from November 2023. This led to delays or failures in discussing key documents, including financial plans.

“The ministry’s approach to managing state enterprises raises serious concerns. It is necessary to establish clear responsibilities and procedures for their governance to prevent further losses and ensure sound management of public investments,” stated SAO Vice-President H. Crkoňová.

According to the law, state enterprises should operate independently and cover their costs primarily from their own business activities. However, the audit showed that they are unable to generate sufficient income and remain dependent on state financial aid. Instead of introducing systemic support, the ministry has been transferring funds to the enterprises through subsidies without a clear strategy, creating risks of inefficient use of public resources. Weak management and methodological guidance have thus contributed to their economic stagnation. Recruitment for managerial positions in the state enterprises was also found to be flawed, and frequent personnel changes in key ministerial posts further undermined their stability.

Both state enterprises are of strategic importance, yet their current operational model is unsustainable. In the future, it will be necessary either to redefine their status – for example, by transforming Závodisko into a public-benefit enterprise – or to reconsider their economic model so that it meets legal business requirements. In the case of Hydromeliorácie, several options are being considered, such as merging with the Slovenský vodohospodársky podnik (Slovak Water Management Enterprise) or restructuring Hydromeliorácie into an asset management entity responsible for irrigation infrastructure, while investment projects could be implemented by the state enterprise Vodohospodárska výstavba (Water Management Construction).