, Vj().:T TUVALU ENERGY SECTOR DEVELOPMENT PROJECT Funded by: World Bank (International Development Association - (IDA Grant D029-TV) Small Island Development Fund (SIDS) DOCK Support Program Multi Donor Trust Fund - (TF018949) Government of Tuvalu (GoT) FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2019 TUVALU ENERGY SECTOR DEVELOPMENT PROJECT Contents Statements by Tuvalu Energy Sector Development Project 3 Notes to the Financial Statement 4-5 Statement of Funds Received and Expenditures - By Component by Source 6 Statement of Funds Received and Expenditures - By Category by Source 7 Statement of Balances 8 Audit Opinion 9-10 2 TUVALU ENERGY SECTOR DEVELOPMENT PROJECT Laemen e In Vhe uvalu r FOR THE FINANCIAL YEAR ENDED 31r DECEMBER 2018 On behalf of the Tuvalu Energy Sector Investment Project, we state that in our opinion the accompanying financial statement of the project set out in pages 4 to 7 for the year ended 31 ' December 2019 are drawn up so as to (1) give a true and fair view of state of affairs of the project and the result of its operation and statement of balances, (2) in accordance with the accounting policies described in Notes to the financial statement. We are not aware of any circumstances which would render any particulars included in the financial statements to be misleading or inaccurate. , Mr. Mafalu Lotolua Mr. Av foa Irata Project Manager Chief Executive Public Utilities & Infrastructures 3 Tuvalu Energy Sector Development Project Nteste n Slatementi For the year ended 31 December 2019 The Tuvalu Energy Sector Development Project (TESDP) officially commenced on 25 February 2015 being the effective date of the IDA Grant DO29-TV. The closing date is currently set as 30 September 2020. TESDP is funded jointly by the World Bank (WB; through its International Development Association - IDA), the Small Island Development States (SIDS) DOCK Support Program Multi Donor Trust Fund - TF018949 and the Government of Tuvalu (GoT), as follows: * IDA-Grant of Special Drawing Rights (SDR) 4.8 million (with estimated AUD$ equivalent of AU$ 8.12 million); established through a Financing Agreement dated 25 February 2015. * SIDS MDTF - US$ 2.1 million (with estimated AU$ equivalent of AU$ 2.63 million); established through a Financing Agreement dated 25 February 2015. The objective of TESDP is to enhance the Recipient's energy security by reducing its dependence on imported fuel for power generation, and by improving the efficiency and sustainability of its electricity system. The Project consists of the following components: Component 1- Renewable Energy investments: Part 1. Supply and installation of power generation and grid management equipment such equipment to include, solar photovoltaic, wind-power generation, batteries, battery inverters and an integrated power-control systems and a satellite based communications system. Component 2 - Energy Efficient Investments. Carrying out of program of activities designed to enhance efficient use of energy, such to include: (a) Supply and installation of prepayment meters for TEC consumers and smart meters for the largest electricity consumers. (b) Supply and installation of selected energy efficient investment, such as enhanced insulation in buildings to be selected by TEC in accordance with criteria agreed with Association; and replacement of inefficient lighting and appliances in said buildings. (c) Developing policy, standards and labelling for energy efficient. (d) Activities aimed at raising the consumer awareness on energy efficient, and related capacity building activities and training. Component 3 - Technical Assistance and Project Management Support (a) Carrying out of program of activities designed to enhance the capacity of the Recipient and TEC for implementation of the project, including, coordination, administration, technical operation, procurement, financial management, environmental and social management, monitoring, evaluation and reporting of the project. (b) Provision of technical assistance to support the Recipient in mainstreaming gender dimensions into the Project. 4 Tuvalu Energy sector Development Project 7tes Co th e inan E1tC.a tte n For the year ended 31 December 2019 The TEC is responsible for implementing the project including financial management and procurement for this project and be responsible for realizing the governmental accounting, payments, withdrawal applications and auditing as well as managing risks during project implementation, such as operational, developmental, social, environmental, governance, reputational, and capacity/implementation, as appropriate, to the Project's development effectiveness, as well as responsible for project budgeting, accounting, reporting and support in Procurement, Disbursements and Audited financial statements. TEC remains responsible as the implementing agency for contractual obligations and legal covenants. TvAIP-PST is responsible for the oversight of all financial and accounting operations of the project. WB administers both the IDA and SIDS MDTF funding. One bank account ("Designated Accounts") has been established in Tuvalu. In addition, larger payments under WB-administered funding may be made directly by WB and charged directly to the respective grant, rather than channelling through the Designated Accounts, in accordance with agreed WB procedures. The Financial Statements are prepared by TvAIP under the historical cost convention and in accordance with the modified cash basis of accounting; expenditures are charged when paid except: * Advances (which are given for approved official purposes only) are charged against a Receivables Account initially, and are charged to expenditure based on advance acquittals with supporting documents; and * Payables are taken up for income tax and provident fund liabilities at the time of payment of salaries and are cleared through the settlement of the liabilities to the respective authorities, on a monthly basis. The reporting currency is Australian Dollars (AU$). Transactions in currencies other than AU$ are translated into AU$ using the actual exchange rate applied by the bank (where the transaction are paid from the Designated Accounts) or at the applicable rate (where the transactions are paid directly by WB). Although there were expenditure incurred during the financial year, no Withdrawal Application for replenishment was made as there was a need to sort out the new authorised signatories. This is the fourth year of operation for TESDP and the Financial Statements therefore include figures for Prior Year. 5 Tuvalu Energy Sector Development Project aeme t hundis Reerec, and Eu Year Ended 31 December 2019 2019 2018 Total All Total All Sources IDA SIDs Sources IDA SIDs Project Funding $ $ $ $ $ $ Funding to TvAIP bank account 323,343 163,359 159,984 501,473 341,488 159,985 Direct payments by World Bank 2,639,615 1,268,257 1,371,357 323,343 163,359 159,984 501,473 341,488 159,985 Project Expenditure: Component 1 -Renewable Energy investments 216,304 56,420 159,884 Component 2 - Energy Efficiency investments 21,119 21,119 Component 3 - Technical Assistance and Project Management Support Country Project Operation Costs Mnternational Travel 21,254 21,254 2,950 2,950 Per diems 2,200 2,200 1,631 1,631 Vehicle running costs 65 65 Office supplies Fixed Assets 1,889 1,889 Meeting Other Expenditure 550 550 374 374 Finance Costs 1137 1037 100 1,932 1,932 Technical Assistance & Project Support 190,594 190,594 169,238 169,288 Total Project Expenditure 453,158 293,174 159,984 178,129 178,129 Closing Balances 129,815 129,815 - 323,344 163,359 159,985 6 Tuvalu Energy Sector Development Project Year Ended 31 December 2019 2019 2018 Total All Total Sources IDA SIDs Sources IDA SIDs Project funding Opening Balances 397,226 237,241 159,985 501,473 341,489 159,985 Funding to TESDP Bank Accounts 210,121 210,121 73,882 73,882 Direct Payments by World Bank 2,639,615 1,268,257 1,371,358 607,347 447,362 159,985 575,355 415,371 159,985 Project Expenditure By Category God, works, training, non-consulting services and consultants 428,018 268,133 159,885 169,288 169,288 Increment costs 25,141 25,042 100 8,841 8,841 Total Project Expenditure 453,159 293,174 159,985 178,129 178,129 Closing balances 154,188 154,188 3 9 7 , 2 2 6 237,242 159,985 7 Tuvalu Energy Sector Development Project Year Ended 31 December 2019 2019 2018 Total All Sources IDA SiDs Total IDA SIDs Sources Cash at Bank $ $ $ $ $ $ Balance per DA 117,839 117,839 0 384,767 224,783 159,985 Statement/IFR Funding to TESDP Bank -590. -590 Accounts Accounts Receivables Others 16,059 16,059 Tuafafa Latasi 2,013 2,013 Isimasi Apisai 5,225 5,225 Mafalu Lotolua 12,153 12,153 12,153 12,153 Pusineli Laafai 4,071 4,071 4,071 4,071 Accounts Payable Provident Fund -925 -925 -946 -946 PAYE -2,247 -2,247 -2,229 -2,229 Total Balance per statement of funds 154,188 154,188 397,226 237,242 159,985 received & expenditure GOVERNMENT OF TUVALU Office of the Auditor-General Private Mail Bag, Vaiaku, Funafuti, TUVALU Email: t o o Phone No: + (688)20131, 20132: Fax No: + (688) 20133 22 October 2020 The Project Manager Tuvalu Energy Sector Development Project Funafuti. a) Audit opinion of the TESDP Financial Statements We have audited the accompanying Financial Statements comprising Statement of Funds Received and Expenditures and Statement of Balances of the Tuvalu Energy Sector Development Project for the year ended 31 December 2019. These statements are the responsibility of the Tuvalu Energy Sector Development Project and management is responsible for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Our responsibility is to express an opinion thereon based on our audit. We conducted our audit in accordance with the International Standards of Supreme Audit Institutions. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall statement presentation. We believe our audit provides a reasonable basis for our opinion. The Tuvalu Energy Sector Development Project management's policy is to prepare the accompanying statements on the cash receipts and payments basis in conformity with the modified cash basis of accounting. On this basis, cash receipts are recognized when received and cash expenditures are recognized when paid rather than when incurred except for advances and payables. In our opinion, the financial statements present fairly the cash receipts and payments of the project during the year ended 31 December 2019 in accordance with the modified cash basis. 9 b) Audit opinion on the accuracy and propriety of Expenditures We have audited the accompanying Statement of Funds Received and Expenditures for the year ended 31 December 2019. We conducted our audit in accordance with the International Standards of Supreme Audit Institutions that accordingly included examination, on a test basis, of evidence supporting the amounts and disclosures in the Statement of Funds Received and Expenditure. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall statement presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the Statement of Funds Received and Expenditures is fairly presented. c) Audit Opinion on the Operation of the Designated Accounts We have audited the operation of the designated accounts with its balance shown in the accompanying Statement of Balances for the year ended 31 December 2019. We conducted our audit in accordance with International Standards of Supreme Audit Institutions that accordingly included examination, on a test basis, of evidence supporting the amounts and disclosures in the Statement of Balances- Our testing also includes ensuring that funds in the designated accounts were used on project related purposes in an effective and efficient manner. In our opinion, the designated account is presented fairly and is operating with appropriate internal controls. d) Key internal control weaknesses and non-compliance with the Financing agreement terms. No key internal control weaknesses were noted during the audit. No instances of non-compliance with the Financing agreement terms were noted during the audit. Selai Managreve Acting Auditor General of Tuvalu 1n