Financial Attest Audit Report on the Accounts of Dasu Hydropower Project For the Financial Year 2022-23 International Development Association (IDA) Loan No.5498-PK Auditor General of Pakistan Islamabad 化＿ TABLE OF CONTENTS Page No. Abbreviations and Acronyms I Preface 2 PART-1 3 Project Overview 4 Auditor's Report to the Management (Audit Opinion) 5 Financial Statements 6 PART-11 13 EXECUTIVE SUMMARY 14 MANAGEMENT LETTER 15 1 Introduction 16 2. Audit Objectives 16 3. Audit Scope and Methodology 16 4. AUDIT FINDINGS AND RECOMMENDATIONS 17 4.1 Procurement and Contract Management 17 4.2 Overall Assessment 20 4.3 Follow-up of Prior Year's Audit Recommendations 21 5. CONCLUSION 24 ACKNOWLEDGEMENT 25 角奮 Abbreviations and Acronyms CCECC China Civil Engineering Construction Corporation CGICOP China Gansu International Corporation for Economic and Technical Corporation DAC Departmental Accounts Committee DHC Dasu Hydropower Consultants GM General Manager IPCs Interim Payment Certificates IPSAS International Public Sector Accounting Standards ISSAIs International Standards of Supreme Audit Institutions IDA International Development Association KKH Karakoram Highway KPRA Khyber Pakthunkhwa Revenue Authority KPST Khyber Pakhtunkhwa Sales Tax MoWR Ministry of Water Resources MW Main Work NTDC National Transmission and Dispatch Company PC-I Planning Commission Proforma-I PCI-OIR Project Colony and Infrastructure (Phase-l Revised) PD Project Director PST Provincial Sales Tax Rs. Pak Rupee US$ United States Dollar WAPDA Water and Power Development Authority ，間 PREFACE The Auditor General of Pakistan conducts audit in terms of Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan 1973, read with Sections 8 and 12 of the Auditor General's (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001. The audit of financial statements of Dasu. Hydropower Project with reference to loan No.IDA-5498-PK funded by International Development Association (World Bank) for the financial year 2022-23 was carried out accordingly. The Directorate General Audit, Water Resources conducted audit of the project during July-August, 2023 for the financial year 2022-23 with a view to reporting significant findings to the stakeholders. Audit examined the record with regard to economy, efficiency and effectiveness aspects of the project. In addition, Audit also assessed, on test check basis. whether the management complied with applicable laws, rules, and regulations in managing the project. The Audit Report indicates specific actions that, if taken, will help the management realize the objectives of the project. The Report has two parts. Part-1 contains Auditor's Report (Audit Opinion) and Financial Statements. Part-11 contains Executive Summary, Management Letter and Audit Findings. The Report has been prepared for submission to the International Development Association (IDA) in terms of loan agreement for Dasu Hydropower Project (Stage4) bearing loan No.IDA-5498-PK. Dated: Pet, ;02,3 KAMRAN SIDDIQ Place: Lahore DIRECTOR GENERAL AUDIT WATER RESOURCES 2 es « PART-I 1. PROJECT OVERVIEW 2. AUDITOR'S REPORT TO THE MANAGEMENT 3. FINANCIAL STATEMENTS 3 me PROJECT OVERVIEW Name of Project: Dasu Hydropower Project (Stage-I) Sponsoring Authority: International Development Association (World Bank) Executing Authority: Ministry of Water Resources (WAPDA, NTDC) Loan No: Loan No.IDA-5498-PK Total Loan Amount: US$ 588.40 million (WAPDA's portion US$ 573.40 million) PC-I Cost (Stage-I): Rs.486,093.30 million with FEC of Rs. 218,547.5 million Date of Commencement of Project: January, 2015 (Stage-I as per PC-I) Actual Date of Commencement: January, 2015 Date of Completion of Project: January, 2019 (Stage-I as per PC-I) Date of Approval by ECNEC: March 28th, 2014 Loan Closing Date (Revised): May 31st, 2024 Loan Utilization Status in FY 2022-23: Rs.4,504.589 million (US$ 17.571 million) Progressive Expenditure upto FY 2021-22: Rs.43,278.911 million (US$ 307.784 million) 4 m. AUDITOR'S REPORT TO THE MANAGEMENT We have audited the accompanying financial statements of financing for Dasu Hydropower Project (Stage-I) that comprises, Statement of Receipts and Payments, Statement of Comparison of Budget and Actual together with the notes forming part thereof for the financial year ended June 30th, 2023. It is the responsibility of the project management to establish and maintain a system of internal controls, and prepare and present the Statement of Receipts and Payments in conformity with the requirements of Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standard. The responsibility of the auditor is to express an opinion on the financial statements based on the audit conducted. We conducted our audit of Financial Statements in accordance with the International Standards of Supreme Audit Institutions (ISSAls). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. The audit process includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. It also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall statement presentations. We believe that our audit provides a reasonable basis for our opinion. In our opinion: a) The financial statements presents fairly, in all material respects, the cash receipts and payments by the project for the financial year ended June 30th, 2023 in accordance with Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standard. b) The expenditure has been incurred in accordance with the requirements of legal agreements. Dated: Ve xc, )-ax RAN SIDDIQ Place: Lahore DIRECTOR GENERAL AUDIT WATER RESOURCES 5 el' ßm a Financial Statements For the Year Ended 30th June, 2023 6 |= 4 DASU HYDROPOWER PROJECT Statement of Comparison of Budget and Actual Amounts (IDA-54980) For The Financial Year 2022-23 & 2021-22 BudgetedlActual Amount Budgeted Amount Actual Amount Amount No4te ReesRep" Roa , Roptns Receipts External Assistance-IDA 3 3,000,000,000 4,779,929,378 3150 0 6,423,955,010 Interest Earned 4 - Total Receipts 3,000,000,000 4,779,929,378 3,150,000,000 6,423,955,010 Payments Consultancy Services 5 830,880,000 1,937,376,501 661,500,000 1,492,868,205 Land Acquisition 6 50,000,000 38,045,484 409,500,000 911,758,548 Works 7 2,119,120,000 2,529,166,616 2,079,000,000 4,492,875,919 Payments on behalf of NTDC 8 - 247,264,964 - 8 6 ,2 5 6 ,0 8 0 Total Payments 3,000,000,000 4,751,853,565 3,150,000,000 6,983,758,753 The accompanying notes form an integral part of these financial statements. Dy. Manager (Ac unts 4 Finance) 7 n $* DASU HYDROPOWER PROJECT Statement of Receipts and Payments (IDA-5498) For The Year Ended June 2023 2022-232012 Note I Rapees Rupees Receipts External Assistance-IDA 3 4,779,929,378 6,423,955,010 Interest Earned 4 - - Total Receipts 4,779,929,378 6,423,955,010 Payments Consultancy Services 5 1,937,376,501 1,492,868,205 Land Acquisition 6 38,045,484 911,758,548 Contractors Payments 7 2,529,166,616 4,492,875,919 Payments on behalf of NTDC 8 247,264,964 86,256,030 Total Payments 4,751,853,565 6,983,758,753 Increase / (Decrease) in Cash 28,075,813 (559,803,743) Cash at the Beginning of Year 83,959,129 643,762,872 Cash at the End of Year 9 112,034,942 83,959 ,1 2 9 Contingencies and Commitments 10 75,746,975346 57,854,518,743 Dy. Mana r (Accounts & Finance) e e ”止＿ Dasu WXdpuRwer ft2leSj Notes to the Financial Statements JIDA-5498-PK) For the Year encleci June 30, 2023 1 Reporting Entity The financial statements are for additional financing of"Dasu Hydropower Project" (the pro*t). The financial statements encompass the reporting entity a$ defined in the Financing agreement between the Islamic Republic of Pakistan and International Development Association. The financing agreement was signed on 25th August 2014 for an amount of SOR 379.7 Million equivalent to US $ 588.4 Million and became effective on October 24,2019. NTDCs Portion in the Loan is US $15 Million. The project objective is development of Dam named "Dasu Hydropower Project" on Indus river of a 2,160 MW hydropower plant fStage-1) which can be expanded to 4,320 MW in the future (Stage-il) at Dasu Kohistan (area). Funds are received from IDA-WB according to financial requirement In line with Financing Agreement into the project's designated bank account. 2 Significant Accounting Policies 2.1 Basis of Preparation The financial statement have been prepared in accordance with Cash basis IPSAS Financing Reporting under the Cash basis of Accounting. The accounting policies have been applied consistently throughout the period. 2.2 Reporting Currency The Reporting Currency is Pak Rupees. 2.3 Revenue Recognition Revenue recognized on the date of receipt of money in the bank or clearance of cheque. Revenue is recognized on a gross basis and any related Cost$ are recorded. 2.4 Recognition of Expenses Expenditure is recognized on the date when payment is made from Assignment Account at conversion rate applicable on FIFO Basis and for direct payments, the conversion rate used on value date. 2.5 Foreign Currency Transaction Transaction in foreign currencies are accounted for in compliance With the rules of finance division. 2.6 Employee Terminal Benefits Service benefits of government deputations employees are accounted for in their respective department, while no service benefit are paid to contractual employees. 2.7 Payments to third party Payments to third party represents direct payments made by IDA-WB to contractors/consultants on behalf*f project for the services procured by the project. 2.8 Depredation As the Project is at development stage and Is neither a profit earning nor 0 autonomous entity, hence fixed assets are reported at cost and depreciation is not accounted for in books. 3 External Assistance-IDA External assistance was received in the form of Credit from the world Bank under Loan Agreement No. 5498-PK between the World Bank and Government of Pakistan JGOP). The Following amounts were received by the Project during the period. The amount also includes disbursement on behalf of NTDC amounting to As. 196,949,929 for the FY2022-23 and Rs. 70,878,634 for the FY2021-22. Note 2Q2,2-Z3 20 1 :a Pak Rupees Pak Rupees Direct Payments made by World Bank 3.1 4,636,782,178 6,053,794,210 Payment received in Assignment Account 3.2 143,147,200 370,160,800 4,779,92%V$ 6,423,955,010 Direct payments represent amount paid directly by the World Bank on behalf of the project in respect of goods and services procured/imported by the 3.1 Project. The payments were made on basis of Withdrawal Application submitted by the Project. 3.2 An amount of US S 0.5 Million was credited in assignment account through withdrawal application No. 441 during the FY2022-23. 33 There has been no instance of non-compliance with the terms and conditions ofthe financing agreement between IDA and GOP Credit which has resulted in cancellation of IDA i02 43 - 2 "V 3.4 Undrawn External Assistance US$ J US$ Closing balance as per cash book of IDA assignment account No. 221085 391,328 453,636 391,328 453,636 14 4le ,0?, q \M A'o I i. 6 3. 4 Interest Earned Interest on Assignment Account 4.1 - 4.1 No interest is earned on assignment account # 221085-1 as maintained with National Bank of Pakistan, Main Branch Lahore. 5 Consultancy Services Pak Rupees Pak Rupees 5.1 Withdrawal applications 1,937,376,501 1,491,747,644 5.2 IDA assignment account - 1,120,561 1,937,376,501 1,492,868,205 6 Land Acquisition Pak Rupees Pak Rupees 6.1 Payments for Land Acquisition from IDA Assignment account 38,045,484 911,758,548 38,045,484 911,758,548 7 Contractors Payments PkRupees PkRpe 7.1 Withdrawal applications 2,480,237,881 4,491,204,087 7.2 IDA assignment account 48,928,735 1,671,832 2,529,166,616 4,492,875,919 8 Payments on behalf of NTDC PkRupees PkRpe 8.1 Withdrawal applications 219,167,796 70,842,478 8.2 IDA assignment account 28,097,168 15,413,602 247,264,964 86,256,080 8.3 Payments on behalf of NTDC are being released from the loan portion worth USD15 Million allocated by the world bank for tramission line. 8.4 Balance Provision of NTOCs Loan Amount of Loan 15,000,000 15,000,000 Progressive Expense through Withdrawal (4,035,967) (3,205,228) Progressive Expense through IDA Assignment account (1,845,467) (1,769,527) Remaining provision of loan 9,118,566 10,025,245 9 Cash atsBankZV 22-"I Closing balance as per cash book of IDA assignment account No. 221085 Rupees 112,034,942 83,959,129 112,034,942 83,959,129 10 Contingencies & Commitments 22-23 2012 Represents the remaining amount of credit available under the financing agreement Pak Rupees Pak Rupees Dasu HPP 73,111,842,694 55,803,455,851 NTDC 2,635,132,652 2,051,062,891 75,746,975,346 57,854,518,743 11 General Figures have been rounded off to the nearest rupee and comparative figures have been rearranged where necessary for the purpose of comparison. 12 Authorization for Issue These Financial statements have been authorized for issue by the General Manager/PD on Dy. Man Finance) e era Me ge P e/ PAKISTAN WATER AND POWER DEVELOPMENT AUTHORITY Phone: +92 (042) 99202676 General Manager/PD, Dasu HPP, WAPDA E-mail: dasuhpp@yahoo.com 325 - WAPDA House, Camp Office, Lahore No.GM/PD/Dasu HPP/ Dated: 51 .07.2023 Director General Audit (WR), Sunny View Estates Kashmir Road, Lahore. Subject: NO IMPREST ACCOUNT CERTIFICATE IN RESPECT OF IDA CREDIT LOAN NO. 5498 PK It is certified that no imprest account is being maintained by GM/PD Dasu HPP for IDA credit loan No. 5498 PK, Hence no bank reconciliation statement is prepared in subject case. Moreover, an assignment account No. 22-221085-1 is maintained with NBP, Main Branch Lahore. The reconciliation of which is already provided. Dy. ger (A&F) G an rP ect Director Dasu Hydropower Project Dasu Hydropower roject Y.AUsman Ahmed\Financial data doc 戶一＿ "J PAKISTAN WATER AND POWER DEVELOPMENT AUTHORITY Phone: +92(042)99202676 General Manager/PD, Dasu HPP, WAPDA E-mail: dasuhpp@yahoo.com 325 - WAPDA House, Camp Office, Lahore No.GM/PD/Dasu HPP1,,ktt_4-/-)_, _6 Dated. J .07.2023 Subject: CERTIFICATE OF COMPLIANCE WITH ALL THE REQUIREMENTS OF THE DONOR IDA CREDIT LOAN ACCOUNT NO.5498 PK It is certified that the Dasu Hydropower Project has complied with all the codal formalities related to IDA Loan No. 5498-PK as required by the donner. Dy. Ma , Vger (A,&F) G'x e a anager Proj ct Director a nager Proj ct Directc Dasu Hydropower Project Dasu Hydropower roject Y Wsman AhmeMirtancial data doc & W P 4