“The creation of the district heating holding is, from the perspective of the national authority for external audit, an example of good practice that could be applied to other state-owned companies in healthcare or agriculture. The merger of several companies into one created a strong player in the energy market. The company improved in all economic indicators, its overall and loan indebtedness significantly decreased, personnel costs were reduced, and in 2024 it achieved for the first time a profit from heat sales amounting to almost €11 million,” said Jaroslav Ivančo, Vice-President of the SAO SR.

The company generated profit from electricity sales throughout the audited period (2022–2024). The economic results achieved in 2022–2024 contributed to an increase in equity by 77%, reaching €337 million. The downside is the delayed investments in environmentally friendly heat sources. Already in 2021, the company declared that it would stop burning coal by 2023.

“In fact, hard coal still accounted for 4.60% of the fuel mix last year. The use of brown coal even increased from 16.20% in 2022 to 20.60% in 2024,” added the Vice-President of the SAO SR.

Among the major environmental projects, for example, the investment in Košice for the utilisation of heat from the GEOTERM project, originally planned for 2021, is still not completed.

The largest share of MHTH’s total revenues came from production. Across the holding, production accounted for more than 88% of total revenues between 2020 and 2024. Of this, revenues from heat sales reached a maximum of 70% in 2020 and a minimum of 50% in 2022. Revenues from electricity sales accounted for a maximum of 39% in 2022 and a minimum of 21% in 2020. The largest contributions came from the district heating campanies in Košice and Bratislava, which together accounted for two-thirds of total revenues. The companies in Martin and Žilina contributed a quarter, while Trnava and Zvolen had the smallest share. Any wrong decisions taken in Košice or Bratislava would therefore have the biggest impact on the overall performance of the holding.

The SAO takes a critical view of the fact that the Ministry of Economy decided in 2025 not to apply the same approach to all heat suppliers. State-owned companies were put at a disadvantage, while private companies were still able to request compensation for heat sales at the government-approved reduced price.

“For the holding, this represents a shortfall of around €26 million, which will negatively affect its financial results, investment planning, and even company value,” warned Mr Ivančo, pointing to the consequences of the decision.

He recalled a similar situation during the COVID-19 support scheme, when business entities established by municipalities were excluded. At that time, the SAO warned against an unfair system that might conflict with constitutional principles.

The auditors also reviewed dividend payouts. When the holding was established in 2022, valuation differences from the revaluation of assets and liabilities arose. MHTH decided to spread the taxation of part of these valuation differences over seven years, paying nearly €1.2 million in tax annually from 2022 to 2024. However, in 2022 the Ministry of Economy decided to pay dividends of €300,000. Under the Income Tax Act, this triggered the obligation to pay the full tax of €8.35 million in 2022, instead of spreading it over seven years.

Based on the SAO’s findings, MHTH will submit additional tax returns for 2022, 2023, and 2024, in line with an oral agreement with the Financial Administration. The correctness of this tax treatment regarding the revaluation differences was confirmed by the Ministry of Finance of the Slovak Republic, as the legislative guarantor.

“Decisions of the state, even in its role as shareholder, cannot be influenced by company managers. However, when it comes to tax obligations, the responsibility of managers is clear, and therefore it is legitimate to raise the question of accountability should a fine be imposed,” concluded Mr Ivančo.

MHTH is currently facing strategic decisions concerning the optimal balance between producing heat from its own sources and the future share of purchased heat. Without supplies from external providers, the holding cannot sufficiently meet the required share of renewable energy sources. It is expected that by 2028 the share of heat produced in-house will fall to just 55%. Business partners, due to the need for financial coverage of their investments in new technologies, require MHTH to sign long-term contracts specifying volumes and prices, so that these contracts can be presented to financing institutions.