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“Second Dushanbe Water Supply Project” Grant No. H692-TJ, Grant No. D087-TJ, Credit No. 5709-TJ
Special purpose project financial statements for the year ended December 31, 2016
and independent auditors’ report
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“SECOND DUSHANBE WATER SUPPLY PROJECT” GRANT NO. H692-TJ, GRANT NO. D087-TJ, CREDIT NO. 5709-TJ
TABLE OF CONTENTS
Page
STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION
AND APPROVAL OF THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016 2
INDEPENDENT AUDITORS’ REPORT 3-5
SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Statement of cash proceeds and disbursements 6
Statement of uses of funds by project components 7-8
Notes to the special purpose project financial statements 9-17
7
“SECOND DUSHANBE WATER SUPPLY PROJECT” GRANT NO. H692-TJ, GRANT NO. D087-TJ, CREDIT NO. 5709-TJ
STATEMENT OF FUNDS BY PROJECT COMPONENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (in US Dollars)
For the year
ended
December 31,
2016
Cumulative For the year
ended
December 31,
2015
Cumulative
Component 1: Metering and
demand management 131,509 5,877,624 1,395,241 5,746,115
Installation of 76,500 residential
water meters 115,928 2,593,908 1,046,591 2,477,980
Customer satisfaction surveys 15,581 50,238 15,582 34,657
Purchase of 76,500 residential
water meters - 2,901,173 273,716 2,901,173
Purchase and installation of bulk
flow meters at water production
facilities - 216,253 22,416 216,253
Purchase of Network Information
System - 31,500 - 31,500
Communication strategy and
public awareness campaigns to
promote metering and demand
management - 84,552 36,936 84,552
Component 2: Water quality
improvement 2,851,061 4,903,270 1,332,485 2,052,209
Partial renewal of filtration
capacity at Samotechnaya Water
Treatment Plant 2,793,551 4,162,368 1,237,462 1,368,817
Purchase and installation of re-
chlorination units at 5 reservoirs 47,475 47,475
Cleaning network sections and
reservoirs 10,035 294,334 95,023 284,299
Purchase of hydraulic excavator - 281,996 - 281,996
Purchase of laboratory equipment - 63,275 - 63,275
Purchase of the measuring
equipment for leakage detection - 53,822 - 53,822
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“SECOND DUSHANBE WATER SUPPLY PROJECT” GRANT NO. H692-TJ, GRANT NO. D087-TJ, CREDIT NO. 5709-TJ NOTES TO THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (in US Dollars)
1. GENERAL INFORMATION
According to the Financing Agreement between the Republic of Tajikistan and International Development
Association (“IDA”) dated July 13, 2011, the IDA provided a Grant No. H692-TJ in the amount of
10,100,000 Special Drawing Rights (“SDR”) to the Republic of Tajikistan.
According to Financing agreements between the Republic of Tajikistan and International Development
Association (“IDA”) dated August 7, 2015 the IDA provided an additional financing in the form of Grant
No.D087-TJ in the amount of 3,300,000 SDR and Credit No. 5709-TJ in the amount of 4,000,000 SDR.
The Grant and Credit were provided for the implementation of “Second Dushanbe Water Supply Project”
(the “Project”).
Effective date of the Project is October 12, 2011. Project completion date is September 30, 2018.
Project purpose
The purpose of the Project is to assist the State Unitary Enterprise “Dushanbe Vodokanal” (the “DVK”) in
improving the efficiency water services company activities and water supply services in certain districts of
Dushanbe.
The Project comprises the following components:
Component 1: Metering and demand management;
Component 2: Water quality improvement;
Component 3: Institutional strengthening and capacity-building;
Component 4: Project implementation support.
Component 1. Metering and demand management
The component finances consumption metering and bulk metering of water, for increased revenue, reduced
wastage, and better tracking of losses, including: (i) supply and installation of 76,500 residential meters
(i.e. approximately 46% of DVK users) and installation of 1,500 apartment building master meters in
selected areas of the city; (ii) rehabilitation of 1,500 apartment building service connections; (iii) supply
and installation of bulk flow meters at water production facilities; (iv) supply and installation of a Network
Information System (NIS); (v) communication strategy and public awareness campaigns to promote
metering and demand management; and (vi) installation of SCADA system.
Component 2. Water quality improvement
The component supports system upgrades for improved quality of water, including: (i) partial renewal of
filtration capacity at Samotechnaya Water Treatment Plant (the “WTM”); (ii) network cleaning; (iii)
installation of in-network re-chlorination systems; (iv) equipment for water quality monitoring; (v)
reconstruction of pumping station and tanks at the Napornaya WTP; and (vi) procurement of maintenance
equipment.
10
Component 3. Institutional strengthening and capacity-building
The component finances activities to build institutional capacity and improve utility performance of DVK,
which includes (i) carrying out an assessment of DVK’s organizational and capacity-building needs; (ii)
installation of modern accounting, billing and water revenue collection systems; (iii) provision of technical
assistance to the management of DVK to improve its financial performance; (iv) provision of technical
assistance, and carrying out of studies to improve the water supply operations of DVK, including studies
for hydraulic modeling, and for design of pressure zones and SCADA system; and (v) implementation of
training programs for DVK staff.
Component 4. Implementation Support
The component provides project implementation support including (i) design and supervision of works;
(ii) project implementation operating costs, and (iii) annual project audits.
Project management
The Management is implemented by the Project Administration Unit (the “PAU”) within the scope of the
State Unitary Enterprise “Dushanbe Vodokanal”.
2. PRESENTATION OF THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS
Basis of preparation
These special purpose project financial statements have been prepared in accordance with the International
Public Sector Accounting Standard (the “IPSAS”) “Financial Reporting under the Cash Basis of
Accounting” issued by the Public Sector Committee of the International Federation of Accountants, and
incorporate the following principal accounting policies, which have been consistently followed in all material
respects and comply with the World Bank’s Financial Management Sector Board’s “Guidelines: Annual
Financial Reporting and Auditing for World Bank Financed Activities” (the “WB Guidelines”).
Under the cash basis approach income (or expenditure) is recognized when cash is received (or paid)
irrespective of when goods or services are received.
The Project’s approved budget disclosed by categories of expenses is not publicly available and as such
comparison of budget and actual amounts is not presented.
These special purpose project financial statements consist of:
Statement of cash proceeds and disbursements;
Statement of uses of funds by project components;
Notes to the special purpose project financial statements, including short description of main
statements of accounting policy and other descriptive notes.
The reporting currency of these special purpose project financial statements is US Dollars (the “USD”).
11
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash basis of accounting
Special purpose project financial statements are prepared on a cash basis of accounting. The cash basis of
accounting recognizes transactions and events only when cash (including cash equivalents) is received or
paid by the entity. Special purpose project financial statements prepared under the cash basis provide
readers with information about the sources of cash raised during the period, the purposes for which cash
was used and the cash balances at the reporting date. The measurement focus in the special purpose project
financial statements is balances of cash and changes therein.
Foreign currency
Operations in foreign currency initially are counted in functional currency by the currency exchange rate
settled by the commercial bank on a date of operation.
Funds received are translated into USD at official exchange rate of Special Drawing Rights (the “SDR”) at
the date of funds receipt. All payments made in local currency are translated into USD at the official exchange
rate defined by commercial bank, at the date of transaction.
Monetary assets and liabilities expressed in foreign currency are converted to functional currency at official
exchange rate on a date settled by the commercial bank.
All foreign exchange differences resulted from maturity or recounting are included in statement of cash
proceeds and disbursements.
Non-monetary items are valued according to their historic cost in foreign currency, which are recalculated
on rates of the initial operation date.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and due from banks, which can be converted to
the corresponding amount of cash in the short term.
Taxes
Calculation and payment of personal income tax and social security contributions from income of staff and
consultants is made in accordance with the requirements and rates of the Tax Code of the Republic of
Tajikistan and relevant legislation of the Republic of Tajikistan.
Project expenses
The expenses are recorded in the period when they were actually paid.
Sources of funds
The funds were provided by the World Bank to the Project by replenishment of designated account or
through direct payment to the end supplier of goods and/or services.
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4. CASH AND CASH EQUIVALENTS Cash and cash equivalents as at December 31, 2016 and 2015 comprise:
Source of financing Currency December 31,
2016
December 31,
2015
Special account Grant No. H692-TJ USD 36,401 48,607
Special account Grant No. D087-TJ USD 184,209 -
Co-financing account Co-financing by LSEA USD 607,137 719,168
Co-financing account Co-financing by LSEA TJS 118,992 147,832
Co-financing account -
Additional financing Co-financing by LSEA TJS 8,554 -
Transit account Grant No. H692-TJ TJS 23,881 58
Transit account Grant No. D087-TJ TJS 33 -
Tender account Grant No. H692-TJ TJS 1,490 1,679
Tender account Grant No. H692-TJ USD 394 394
Advances to employees Grant No. H692-TJ USD 172 448
981,263 918,186
5. FUNDS RECEIVED
The fund received was presented by the following methods:
For the year
ended
December 31,
2016
Cumulative For the year
ended
December 31,
2015
Cumulative
Financing method /
source of financing:
Grant No. H692-TJ
Reimbursement of
expenses 1,674,674 5,561,611 2,091,119 3,886,937
Direct payment 1,452,177 5,269,001 553,530 3,816,824
Advance - 600,000 - 600,000
Special commitment - 2,347,171 - 2,347,171
Grant No. D087-TJ
Advance 600,000 600,000 - -
Co-financing by LSEA
Replenishment of
account 236,461 3,013,310 1,365,093 2,776,849
3,963,312 17,391,093 4,009,742 13,427,781
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6. PROJECT EXPENDITURES
Project expenditures on major categories are presented in the statement of cash proceeds and
disbursements. Project expenditures by components are presented in the statement of funds by project
components. Breakdown of project expenses by nature and grants is presented as follows:
Works, goods, advisory services including audit and operating costs:
For the year ended December 31, 2016 Cumulative For the year ended December 31, 2015 Cumulative
Grant
No.
H692-TJ
Grant
No.
D087-TJ
Co-
financing
by LSEA
Grant
No.
H692-TJ
Grant
No.
D087-TJ
Co-
financing
by LSEA
Grant
No.
H692-TJ
Grant
No.
D087-TJ
Co-
financing
by LSEA
Grant
No.
H692-TJ
Grant
No.
D087-TJ
Co-
financing
by LSEA
Works 2,575,837 346,571 343,677 5,817,002 346,571 1,252,479 1,958,182 - 420,893 3,241,165 - 908,802
Consultants’ services 281,813 20,152 - 3,499,101 20,152 - 594,499 - - 3,217,288 - -
Goods 201,523 42,728 8,175 3,357,117 42,728 708,308 112,803 - 299,013 3,155,594 - 700,133
Payroll and related taxes 24,630 5,979 - 113,180 5,979 - 25,317 - - 88,550 - -
Audit 15,428 - - 133,920 - - 17,346 - - 118,492 - -
Business trips 6,203 - - 14,801 - - - - - 8,598 - -
Stationery 2,248 - - 17,988 - - 1,309 - - 15,740 - -
Fuel expenses 2,200 - - 15,075 - - 2,912 - - 12,875 - -
Trainings 1,545 - - 222,223 - - 25,875 - - 220,678 - -
Communication 1,363 - - 10,592 - - 2,267 - - 9,229 - -
Bank fees 850 211 - 7,106 211 - 351 - - 6,256 - -
Advertising expenses 212 - - 4,184 - - 51 - - 3,972 - -
Operating expenses - - - 516,453 - - 50,515 - - 516,453 - -
Other 887 - - 10,512 - - 366 - - 9,625 - -
3,114,739 415,641 351,852 13,739,254 415,641 1,960,787 2,791,793 - 719,906 10,624,515 - 1,608,935
14
7. FINANCIAL POSITION
Financial position as at December 31, 2016 and 2015 comprise:
December 31,
2016
December 31,
2015
ASSETS AND EXPENDITURES
Cash and cash equivalents 981,263 918,186
Cumulative project expenditures 16,115,682 12,233,450
Foreign exchange rate differences 135,146 117,242
Other expenditures 209,100 208,939
TOTAL ASSETS AND EXPENDITURES 17,441,191 13,477,817
FINANCING
Funds received 17,391,093 13,427,781
Other income 50,098 50,036
TOTAL FINANCING 17,441,191 13,477,817
8. WITHDRAWAL APPLICATIONS
Withdrawal applications for the year ended December 31, 2016 comprise:
Sources of financing Applications Date Advance Works, goods,
advisory
services
including audit,
operating costs
Total
Grant No. H692-TJ
32 February 3, 2016 - 124,832 124,832
33 February 26, 2016 - 176,070 176,070
35 May 4, 2016 - 156,982 156,982
36 May 4, 2016 - 564,870 564,870
37 June 16, 2016 - 564,636 564,636
38 July 6, 2016 - 751,553 751,553
40 October 26, 2016 - 545,168 545,168
41 December 30, 2016 - 242,740 242,740
- 3,126,851 3,126,851
Grant No. D087-TJ
39 July 26, 2016 600,000 - 600,000
600,000 - 600,000
Co-financing by LSEA
August 9, 2016 - 223,162 223,162
December 14, 2016 - 13,299 13,299
- 236,461 236,461
600,000 3,363,312 3,963,312
15
9. SPECIAL ACCOUNT
Special accounts for the year ended December 31, 2016 comprise:
Special accounts Grant No. H692-TJ Grant No. H692-TJ Grant No. D087-TJ Total
Currency US Dollars US Dollars US Dollars
Bank account 20206840800000013801 20206840600240000110 20206840500240000113
Bank OJSC “Tojiksodirot Bank” OJSC “Bank Eskhata” OJSC “Bank Eskhata”
Bank’s location 47 Bekhzod str.,
Dushanbe, Tajikistan
11 Adhamov str.,
Dushanbe, Tajikistan
11 Adhamov str.,
Dushanbe, Tajikistan
Description
Balance as at January 1, 2015 192,738 - - 192,738
Reimbursement of expenses 2,091,119 - - 2,091,119
Total funds received to a special account 2,091,119 - - 2,091,119
Expenditures paid 2,235,250 - - 2,235,250
Balance as at December 31, 2015 48,607 - - 48,607
Reimbursement of expenses - 1,674,674 - 1,674,674
Advance - - 600,000 600,000
Transfer between accounts - 329,000 329,000 658,000
Total funds received to a special account - 2,003,674 929,000 2,932,674
Expenditures paid - 1,495,878 334,631 1,830,509
Transfer between accounts 48,607 471,395 410,160 930,162
Balance as at December 31, 2016 - 36,401 184,209 220,610
16
10. UNDRAWN FUNDS
As at December 31, 2016 undrawn funds with breakdown by grants are presented as follows:
Grant No.
H692-TJ
in SDR
Grant No.
D087-TJ
in SDR
Approved grant amount 10,100,000 3,300,000
Disbursed during the period from
July 13, 2011 to December 31, 2016 9,383,959 432,628
Undrawn amount 716,041 2,867,372
Grant received as at January 1, 2016 7,140,451 -
Disbursed in 2016 2,243,508 432,628
Grant received as at December 31, 2016 9,383,959 432,628
11. COMMITMENTS
In the normal course of activities, the Project concludes agreements with suppliers of goods and services
in accordance with the established budget and procurement plan. Contract value of obligations valid as at
December 31, 2016 was as follows:
Counterparty Contract No. Contract
value
(in USD)
Paid up to
December 31,
2016
Remaining
amount to
be paid
P.J.S.C “Shimbar” DWSP2- 09 5,970,673 4,162,367 1,808,306
LLC “Adolat-2013” DWSP2AF-13 132,250 47,475 84,775
Counterparty Contract No. Contract
value
(in TJS)
Paid up to
December 31,
2016
Remaining
amount to
be paid
Firuz Safarov DWSP2AF/IC-17 392,500 47,100 345,400
LLC “Komroni Aziz” DWSP2AF/CS-07 230,000 69,000 161,000
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12. LEGAL CASES
There were no any legal claims related to the Project.
13. EVENTS AFTER THE REPORTING DATE
During 2017 until the date of issue of these special purpose project financial statements the World Bank
provided financing to the Project as follows:
Source of financing Financing method Date Application Grant No.
H692-TJ
Grant No. H692-TJ Reimbursement of expenses January 31, 2016 42 539,217
539,217
As at the date of issue of the special purpose project financial statements no other significant events or
transactions happened, which should be disclosed in the special purpose project financial statements,
except for the events or transactions described above.