Audit Report of
HCFC Phase-Out ODS III Project
Project # P127702
Ministry of Environment, Amman - Jordan
for the year ended 31 December 2022
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TABLE OF CONTENTS
I. Independent Auditor Report
II. Statement of Cash Receipts & Payments
III. Notes to the Financial Statement
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INDEPENDENT AUDITOR REPORT
To Ministry of Environment
HCFC Phase-Out ODS III Project
Amman, Jordan
Opinion
We have audited the accompanying special purpose project financial statement comprising of
the statement of Cash Receipts and Payments of HCFC Phase-Out ODS III Project P127702
for the year ended 31 December 2022, and the explanatory notes for the year then ended. In
our opinion:
(a) The special purpose project financial statement presents fairly, in all material respects, the
cash receipts and payments of the Project for the year ended 31 December 2022 in accordance
with the International Public Sector Accounting Standards, under the cash basis of accounting
(b) Internal control over financial reporting involved in the preparation of replenishments,
direct payments and reimbursement can be relied upon to support the related withdrawals for
the period
(c) The project was in all material respects in compliance with laws, regulations, guidelines
and provisions governed by the Grant agreement
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those provisions and standards are further described in the auditor’s
responsibilities for the audit of the statement section of our report. We are independent of the
project management, in accordance with the International Ethics Standards Board of
Accountants’ Code of Ethics for Professional Accountants, and we have fulfilled our other
ethical responsibilities in accordance with this code. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Project Management responsibilities
Project Management is responsible for the preparation and fair presentation of the statement
for and for such internal control as management determines is necessary to enable the
preparation of a statement that is free from material misstatement, whether due to fraud or error.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the statement is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these documents.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
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1. Identify and assess the risks of material misstatement, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for expressing an
opinion on the effectiveness of the organization’s internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
4. Evaluate the overall presentation, structure and contest of the project financial
statements including the disclosures, and whether the financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
5. Obtain sufficient appropriate audit evidence regarding the financial information of
the project activities within the project to express an opinion on the financial
statements. We are responsible for the direction, supervision and performance of
the project audit. We remain solely responsible for our audit opinion.
We communicate with project management regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
Other matter:
This report is intended solely for the information and use of World Bank, the Government of
Jordan, Ministry of Environment and the related project management.
Mohammad Qazzaz
License # 712
22 June 2023
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HYDROCHLOROFLUOROCARBON
(HCFC) PHASE - OUT project (ODS III)
WB Project # P127702
Statement of Cash Receipts & Payments
for the year ended 31 December 2022
amounts in USD
Year Dec 2022
Cumu-
Financing 2022 lative
Initial Deposit Transferred from WB - 300,000
WB to Designated Account (Replenishments) 257,525 2,125,783
Direct Transfers from WB to Contractors - -
Refund - Cancelation of contract - -
Total Financing 257,525 2,425,783
Expenditures
Category (1)
Sub-grant to Beneficiary Enterprises 177,320 1,216,997
Category (2) -
Consultants Services, Training, Goods and Incremental Operating Cost
under Component 2 of projects 22,735 486,055
Category (3) -
Consultants Services, Training, Goods and Incremental Operating Cost
and Recurrent Cost under Component 3 of projects 59,494 661,811
Total Expenditures 259,549 2,364,863
Net Fund (Surplus/Deficit) 60,920
* The attached disclosures are integral part of this statement
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HCFC Phase-Out ODS III Project
WB Project # P127702
Ministry of Environment, Amman - Jordan
Notes to the Financial Statement 31 December 2022
1. General Background
The original OTF Grant TF013968:
Agreement Date: 20 May 2013
Grant Amount: USD 1,463,552
The Hashemite Kingdom of Jordan ratified the Montreal Protocol on Substances that Deplete
the Ozone Layer and both its London and Copenhagen Amendments. Jordan also ratified the
Montreal and Beijing Amendments. The National Ozone Unite (NOU) in the Ministry of
Environment (MoEnv) has been empowered to monitor the implementation of ozone depleting
substances (ODS) phase-out activities in Jordan in order to fulfill obligations under the
Montreal Protocol.
The meeting of the parties in 2007 decides to phase-out (HCFCs) as follow:
1. Freezing consumption in 2013 according base line consumption in (2009-2010).
2. Redacting 10% in 2015 according baseline.
3. Redacting 35% in 2020 according baseline.
4. Redacting 67.5% in 2025 according baseline.
5. Redacting 97.5% in 2030 according baseline.
6. Redacting 100% in 2040.
In November 2011, the Multilateral Fund for the Implementation of the Montreal Protocol
(MLF) approved Jordan’s HCFC Phase-out Management Plan (HPMP), which constructs a
detailed picture of HCFC consumption and uses by substance and product, presents patterns of
growth and identifies priority sectors for receiving MLF funding and achieving its first
reductions. HCFC consumption in Jordan is made up of primarily HCFC-141b and HCFC-22
for manufacturing in the foam and refrigeration and air-conditioning (RAC) sectors,
respectively, as well as HCFC-22 for servicing installed refrigeration and air-conditioning
equipment. The HPMP assumed an average HCFC growth rate of 15%. Using historical
consumption figures for each major sector (foam and RAC manufacturing, and servicing)
however, variations were seen with the growth rate for HCFC-22-based manufacturing of AC
units coming out in front at an estimated 28%. Of the total HCFC-22 consumed in 2010, 25
tons, or 43%, went to AC manufacturing alone. Industrial trends in Jordan and neighboring
countries confirm growing demand for air-conditioning with two new enterprises starting
operations in 2008 and 2009, enlarging the sector to six HCFC-based manufacturers.
The Bank has been engaged with Jordan on Montreal Protocol implementation since the early
1990s. The first Jordan ODS Phase-out Project (P005238) saw the creation of the institutional
and regulatory framework for implementing the Protocol as well as the implementation of the
first investment activities targeted at reducing CFC consumption. The ODS Phase-out II Project
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(P049706) continued in the same vein through support for enhancing the institutional capacity
of the ozone focal point in the Ministry of Environment while providing grants to enterprises
for reduction and total elimination of CFCs and halon (controlled as “Annex A” substances)
by the 2010 MP phase-out target. The cumulative phase-out of 834 CFC tons of consumption
under ODS II has also resulted in climate benefits amounting to roughly 5.8 million tCO2 eq.
per year of avoided emissions (given the GWP of CFCs of up to 10,900).
Jordan received funding in April 2010 from the MLF Executive Committee (under UNIDO) to
phase out HCFC use at one AC manufacturer by the end of 2011 (Petra Engineering). Although
the project presented the opportunity to demonstrate improved energy efficiency in appliances
when converting operations from HCFC, the national impact of this project in terms of energy
efficiency and HCFC phase-out will be negligible and not enforceable given that the remaining
AC manufacturing base continues to grow at a rapid pace based on the production of cheaper,
energy inefficient HCFC-based units to maximize profits from high demand for air-
conditioning. It is in the context that the Government of Jordan has decided to prioritize HCFC
phase-out in the entire AC manufacturing sector for meeting its first two Montreal Protocol
obligations, allowing it to eventually ban both manufacturing and import of HCFC-22 based
AC units, while pursuing, in close coordination with the MEMR and other related agencies, an
intervention that aims to transform the AC sector to the production of more energy efficient
appliances in line with its energy strategy.
Accordingly, the new revised withdrawal table ( Budget) shall be as per the following:
Category (1)
Sub-grant to Beneficiary Enterprises 628,000
Category (2)
Consultants Services, Training, Goods and Incremental Operating
Cost under Component 2 of projects 352,300
Category (3)
Consultants Services, Training, Goods and Incremental Operating
Cost and Recurrent Cost under Component 3 of projects 483,252
Total Expenditures 1,463,552
The Jordanian Ministry of Environment – National Ozone Unit is responsible for the
administrative and financial implementation of the project
On 31 Dec 2017, the Government of Jordan and the International Bank for Reconstruction
and Development agreed to extend the project by singing an additional financing agreement
OTF Grant # TF0A2653 as an amendment to the original OTF Grant TF013968 in which a
new funding of USD 2,452,408 for the continuation of the current project with a new closing
date of 29 December 2023. The allocation of the new grant as per the following
Category (1)
Sub-grant to Beneficiary Enterprises 1,614,522
Category (2)
Consultants Services, Training, Goods and Incremental Operating
Cost under Component 2 of projects 460,714
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Category (3)
Consultants Services, Training, Goods and Incremental Operating
Cost and Recurrent Cost under Component 3 of projects 377,172
Total Expenditures of the additional grant 2,452,408
2. Summary of Significant Accounting Policies
Basis of Accounting & Reporting:
The Ministry of Environment followed and maintained its accounts under Cash Basis of
Accounting in recording the transactions; accordingly, project management recognizes funds
when received and expenditures when paid.
As for reporting of this grant project management reports the project operations in accordance
with International Public Sector Accounting Standards, under the cash basis of accounting.
Translation of currencies:
Functional currency for the project operations is Jordanian Dinars (JOD) and translated into
United States Dollars (USD) at the prevailing exchange rates between of USD 1 = JOD .708
to .710, and maintains the accounts in USD.
Reporting:
The project reports all transactions in USD.
3. Designated Account
Ministry of Environment opened a bank account (3193/3660/1) in USD as a project designated
account with the Central Bank of Jordan.
Initial Deposit:
Initial Deposit from the World Bank of USD 300,000 was transferred to the Designated
Account in February 2014
Disbursements: Disbursements made from the Designated Account during the period are
illustrated below in USD:
Beginning Balance
62,944
Add:
World Bank Replenishment
257,525
Refund - Cancellation of Alqanadeel
contract 16,368
Deduct:
Payments for Expenditures
(275,917)
Ending Balance
60,920
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4. Uses of grant funds per part (component) in USD:
Cumulative
Year 2022 2022
Component 1
Invest. in HCFC-22 Consumption Reduction 177,320 1,216,997
Component2
Tech. Assist. policies and AC Sector plan Mgt. 22,735 486,055
Component 3
Institutional Strengthening 59,494 661,811
Total Expenditures 259,549 2,364,863
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5. Detailed Cumulative Expenditures per Category as of 31 December 2022 in USD:
Category (1)
Sub-grant to Beneficiary Enterprises
1 Abu Haltam Group for Investment 382,430
2 National Refrigeration Company 268,690
3 Investment project no. 1 ( pioneer) 129,852
4 Investment project no. 2 (Al safa). 95,479
5 Investment project no. 5 (Yousef Workshop for Metal Industries) 227,449
6 Investment project no. 6 (Alqanadeel). -
7 Investment project no. 7 (Maani - Prefabricated Buildings). 64,538
8 SMEs 48,559
1,216,9967
Category (2)
Consultants Services, Training, Goods and Incremental Operating
Cost under Component 2 of projects
1 Consultants Services 208,927
2 Training 194,963
3 Goods and Incremental Operating Cost under Component 2 82,165
486,055
Category (3)
Consultants Services, Training, Goods and Incremental Operating
Cost and Recurrent Cost under Component 3 of projects
1 Consultants Services 367,988
2 Training 109,149
Goods and Incremental Op. Cost and Recurrent Cost under
3 Component 3 184,674
661,811
2,364,863
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6. Contract Listing:
The Status of signed contracts under the grant as of 31 December 2022 is illustrated in the
following table in USD:
Total Disbursed as Unpaid
# Contractor
Contract of Dec 2021 balance
1 Yousef Workshop for Metal Industries 105,708 84,566 21,142
2 Abu Haltam 116,090 92,872 23,218
3 Maani - Prefabricated Buildings 80,673 64,538 16,135
4 Pioneer 162,313 129,850 32,463
5 Financial Consultant - Faris Tubaishat 11,848 6,912 4,936
6 Procurement Specialist - Mai Albdour 10,155 5,924 4,231
Total 486,787 384,662 102,125
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