NELSAP-CU Po Box 6759 NILE BASIN INITIATIVE Rwanda INITIATIVE DU BASSIN DU NIL +250 788307334 nelsapcu@nilebasin.org Nile Equatorial Lakes Subsidiary Action Program Coordination Unit (NELSAP-CU) Your ref: Our Ref: NELSAP/JN/ /17 21t December 2017 Ms Yadviga SEMIKOLENOVA TTL project Nr P075941 The World Bank Washington-DC USA. Subject: AUDIT REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30th 2017 Dear Madam, Here is an original hard copy of the audit report and financial statements for the period ended June 30th 2017 of Regional Rusum ctric Project and the related Management Letter. NESAP Yours faithfully CoofoINATI Eng. EIcad ly NYA YA NELSAP Regional Coordinator o acevne sm si ec evtcknom ic eeopmel augh I le eqitale ciso , and boneh , 1o comnon Ao. ILanwate s iocmee oatro ndiveloppeeon" s conque duab gre 6 Une will n _diutWe do toowueni nomsusm quon du basin ckp #ot ou avoanotn M MOORE STEPHENS Fenraj Conseil ti %I Nil IL C REGIONAL RUSUMO FALLS POWERPLANT PROJECT FINANCIAL AUDIT FOR YEAR ENDED 30 JUNE 2012 AUDITORS FINAL REPORT RegJonal Rusuma Falls Power plant Projec- Final audit report CONTENT Fenr Cone)1MoreSte hens Regional Rusuma Falls Power plant Project. Final audit report 1. INTRODUCTION 1.1. PROJECT BACKGROUND 1.1.1. Background The Nile Basin Initiative (NBI) was set up in 1999 by the countries bordering the Nile, except Eritrea, with a view to tapping the economic development potential of the Nile Basin. The member countries of NBI are: Burundi, Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Rwanda, Sudan. Tanzania and Uganda. The initiative is based on a common vision of "achieving viable socio-economic development through equitable harnessing of the common resources of the Nile Basin and fair distribution of profits generated". The Nile Basin Countries thus opted for implementation of this vision through a Strategic Action Plan integrating projects both at the basin and sub-region levels. In addition to this Plan, two subsidiary action programmes were put in place. These are (a) the Subsidiary Action Programme fur the Nile Oriental region consisting of Egypt, Ethiopia and Sudan and (b) the Subsidiary Programme for the Nile Equatorial Lake countries of Burundi, RDC, Egypt, Kenya, Rwanda, Sudan, Tanzania and Uganda. It is in this latter NBI context that NELSAP - Nile Equatorial Lakes Subsidiary Action Programme resolved to organize field solidarity action in order to combat poverty, promote eLonUmL. growth and reverse the envirunmental degradation of the region Thus, twelve multinational projerts including hydro-electric energy and electrical interconnections were Identified. Fenr Consell Moore Ste hens * _ _Regional mRusuma Falls Fbwer plant PrJec- Final audit orpart The map of the Nile Equatorial Lake region is shown hereafter CARTE DE LA ZONE 1.1.2 Regional Rusumo Hydro-power Project The Regional Rusumo Falls Hydroelectric Project consists in the following main components: 1. A dam and hydro-electric power station of about 80 MW an the Kagera River at the Rusumo Falls located on the border between Rwanda and Tanzania to be shared between the three countries, and the multi-purpose project area development to improve the quality of life of the affected population; Fenry cansell Mooe Stephens | 4 Regional Rusuma Falls Power plant Project- Fina audilt repat 2. Power Transmission lines connecting the power plant to the electricity grids of Burundi (at Gitega - 161 km), Rwanda (at Birembo/Shango - 109 km) and Tanzania (at Nyakanazi - 98km); Substations in Muyinga and Gitega for Burundi, Birembo and Bugesera for Rwanda, and Nyakanazi for Tanzania, Only the first component is financed by the above agreements signed with the World Bank. The REGIONAL RUSUMO FALLS POWER-PLANT PROJECT (RRHP) is a Nile Basin Initiative key project prepared through NELSAP, Within this framework, the governments of Burundi, Rwanda and Tanzania have agreed to develop a joint Development Project with the primary objective of generating hydroelectric power (80MW) that will be.shared equitably among the three countries. The Rusumo Power Company Limited (RPCL) is the owner of the Rusuma Power Project. The company was created by the three countries to design, develop, construct, finance, Insure, own, operate and maintain the Rusumo Hydropower Facility. The RPCL has delegated to NELSAP CU i) the implementation of procurements and the provision of supervision services of the construction of the Generation Facility and (ii) the construction of the Generation Facility. 1.1.3 Project Highlights The RRHP project has completed the preparation phase and is now moving to the implementation phase The selection process of the contractors CP1 and CP2 is ongoing. After the pre*qualification of contractors and the preparation of the bidding documents, the bidding documents were submitted to pre-qualified contractors in December 2015 CP1 Pre-qualified firm submitted their bids on 101 April 2016 and the evaluation process started Immediately. The project submitted CP1 Evaluation report to the WB for No objection on 19h April 2016. The Project received comments from the WB on 2611, April 2016 and the review process is ongoing. For the CP2, the bids were received on 3rd May 2016 and the Evaluation report was submitted on 26111 May to the WB for No objection. The Project received comments from the WB on 2ad June and the review process is still ongoing. The environmental and social risks of the Rusumo Falls Hydropower Project are evaluated as high and impacts as significant. Consequently, the Run of River (RoR) Environmental and Social Impacts Assessment (ESIA) and Resettlement Action Plan (RAP) were finalized in March 2013. Froni that period, the Safeguard team engaged in the RAP implementation and the major activity was the land acquisition and Fenri Corncil Moore Stephens 5 I rftp? Regional Ruumo Fatlh Power piont Project.Final audit report compensation, With the completion of land compensation, the Social team is now engaged in the Livelihood Restoration Program planning and Implementation. The livelihood restoration is part of the RAP and aims to enabling PAPs to fully restore their livelihoods. Other Social activities included the collection of additional baseline information to facilitate future PAPs livelihood monitoring, grievance redress monitoring and the development of Induced In- Migration Management plan. On the environmental side, it was judged important to have additional environmental baseline information including the fish baseline survey, the spray zone biodiversity survey, the water quality baseline study and water hyacinth study. The baseline studies will provide information against which further results from monitoring will be compared to appreciate any change resulting from RFHP construction and operational activities. The biodiversity of the Rusumo spray zone and Fish and Fishery baseline survey were finalized and the water quality baseline study is ongoing. In addition, the project is planning to undertake water hyacinth management study to understand water hyacinth importance and mitigate its potential impacts on the power plant. The TORs for the water hyacinth study were developed, approved by the Bank and advertised to recruit a consultant to undertake the study 1.1.4 Project Cost and Financing The table below summarizes project costs in USS million and the percentage contribution of IDA financing per component.. The main co-financiers for this project are the Africa Development Bank (AFDB), which will provide parallel financing for Component B (construction for the tr nsmission lines) Project Cost and Financing Project Project Cost IDA Percentage Components (US$ million) Financing (US$ (%) IDA million) Financing 1. Power Plant Complex Civil Works 155 0 155 0 100 2 Mechanical and E ectr a we 1 60 1260 100 3 Engineering Administration dS pe v o 37 100 Costs 4. Social and Environmental Impact M tigat on 22 22 100 Costs Total project Costs 340 34 100 Total financing Required 340 34 100 Fenr Consell Moe Stephens Proposed IDA Amount of Amount of the Percentage(%) of financing per the Credit/Grant allocated Expenditure to be Country Credit/Grant (Equivalent US$ Financed Country allocated million) (inclusive of (50R Taxes) illion) B rundi 7560 11343 100 Rwanda 7550 11343 100 Tanzania 7540 11314 100 otal 3400 100 1.1.5 Schedule of Disbursements as at 30/06/2017 Fenrl ConeU Moore Stephens Fen; Consei Moore Stephens i mar4>' . . . . __Reginal Ruluma Foifs Powerptnt Project. Final audit report Designated Account We are also required to verify, in addition to the financial statements, movements of funds in the designated account related to the project, and to form an opinion on whether the Bank procedures have been followed and on the closing balance of the designated account at the year end. We will have to ascertain whether transactions effected during the period under review, as well as closing balances, were justified and correct, to verify whether the designated account was managed and utilized in accordance with the Credits Agreements, and to ensure that controls applicable to that disbursement method are adequate. The schedules relating to the designated account operations, and the audit opinion thereon, should accompany the financial staItements of the project. Livelihood Restauration Program Livelihood Restauration Programme was being implement in Ngara/Tanzania and in Kirehe/Rwanda where the project paid only advance to the Communities Organizations. The related costs incurred during the period under review will are not part the present assignment and they will subjected to the separate audit financial engagement 1.3 AUDIT METHODOLOGY Our audit was conducted in accordance with International Standards of Auditing (ISA) and included all the tests and controls that we deemed necessary under the circumstances. The audit methodology that we adopted is summarized as follows * Obtain an understanding of the terms of reference, * Knowledge of the project's business and environment. * Evaluate the internal control procedures and systems of the project * Perform detailed examination of the financial statements, * Wrap up sessions and compilation and submission of audit reports. Examination of financial statements iniluded, inter alia a) Vouching of financial transactions to supporting documents b) Control of assets/liabilities recording and their evaluation c) Direct confirmation of third party balances at the end of the year including bank Fen Consel Moare Ste hens 10 Meiono0I RusumO Falls Power plant Project- Finalaudit report confirmations d) Verifications of reldtons through exmiunallon of penodiL reports on the progress of the study. This report contains the following - Report on the financial statements at 30 June 2017 - Report on the operations ol the designated account and funds withdrawals at 30 June 2017 - Report on the execution of the project at 30 June 2017 - Report to the Project Coordinator on internal controls. Fend Corsell Moore Stephens Regional Rusurno Faill Power plant Project. Final audit report 2. REPORT ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 2.1. INDEPENDENT AUDITORS' OPINION To the NELSAP Regional Coordinator Coordination Unit (PCU) Kigali, Rwanda We have audited the accompanying financial statements of the a REGIONAL RUSUMO FALLS POWER-PLANT PROJECTm on pages 16 to 23 for the YEAR ended 30 June 2017, which have been prepared on the basis of accounting policies set out on page 18. This project is financed by the World Bank through Project NO P075941, CREDIT Agreements N IDA H8720. IDA H8730, IDA 52960 and IDA 52950. signed in October 2013 between the World Bank and the respective Government ofTanzania. Burundi and Rwanda. This report is strictly confidential and is addressed to the Project management and the World Bank. The firm cannot be held responsible for any unauthorized distribution or uses. RESPECTIVE RESPONSIBILITIES OF THE PROJECT MANAGEMENT AND THE INDEPENDENT AUDITORS The management of NELSAP is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the project and for ensuring that the financial statements comply with the International Financial Reporting Standards and the World Bank grant and credits and guidelines. They are also responsible for safeguarding the assets of the prUjeCLt and hence for taking rea!unable step for the prevention and detection of fraud and other irregularities. It is our responsibility to form an independent opinion, based on our audit, on these financial statements and to report our opinion to you. BASIS OF OPINION We conducted our audit in accordance with International Standards of Auditing (ISA) issued by the international Federation of A.ountants I hose standards require that we plan and perform the audit to obtain reasonable assurance that the accounts are free from material misstatement. An audit includes examining, on a 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 project management, as well as evaluating the overall financial statement presentation We believe that our audit provides a reasonable basis for our opinion Fenr/CornellMooreSre hens 9no Fath Power p In ou ononthfnacasaeesfRoage1 to 1B give a true and fair view of the finan ft r t at 30 lune 17 and of its statement of recepts and payrnen sfrheproedd30 June 2017, Ion 11rmnay with Internatianal Public Sector Acot IS anad SS,ad the World baink agreements and guidelines, exebe 2017 L): RAJ BSGEETH BSC (ECON) FCA PARTNER BUSGEETH Dharnraj (Raj], Bsc (Econ) FCA Lead Partner Feord Coonell Mwore ste hens Regional Rusuma falls Power plant Project. Finot audit report 2.2. STATEMENT OF MANAGEMENT RESPONSIBILITIES Management is responsible for maintaining books of account and records of the RRHP. preparing reports on budget execution, managing revenues and expenditures. preparing, maintaining and coordinating the use of financial plans, managing the financial resources for the project effectively, efficiently and transparently, ensuring sound internal control systems in the Pru ect and safeguarding the public property held by the project. We accept responsibility for the annual financial statements, which have been prepared in accordance with International Public Sector Accounting Standards (IPSAS) issued International Federation of Accountants (IFAC) with the "modified cash basis" of accounting and using appropriate iccounting policies supported by reasonable and prudent judgments and estimates as well as compliance with World Bank credit guidelines and laws and regulations. These financial statements have been extracted from the accounting records of Regional Rusumo Falls Hydropower Project (RRHP) and the information provided is accurate and complete in all material respects In our opinion, except for the matters mentioned on the financial statements give a true and fair view of the state of the financial affairs of RRHP. We further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of finindil stItMeMLnt en u ng adequate systems of internal financial control and afeguarding ie. %se o RRHI NELSAP ReBi nal ordin or RPCL Managing Director Date *_ ___Date _O_ _n Ferlo ConselH MoreStephenz Regiondd Rum FoasJ Patverplant ProjeL-Fink audli report NELSAP PROJECT i REGIONAL RUSUMO FALLS POWEPLANT PROJECT 2.3. STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 Not 30/06/2037 30/06/2015 JÄså uss Asst Realizations Consultanis Fees 2 8,400,138 5,930 117 Training and Workshop 3 151,871 118,657 Goods 4 3,302,481 3,287,199 Operating Costs 5 2 081,415 868,138 Works 6 15.410299 29 346,204 10,204.110 Debtors and prepayment Cashi at bank and in hand 7 1 9,9 ,3,1 Prepayrnent6 TotaI assets World bank disbursements Prqaification fees AccrualIs Total Liabliltiles Approved by: NELSAP RIRPCL Managing Director Date:_ - D a Fn)Arm- l MreSphems Reglonal Husumo Fails Power planr Projer- Final audit report NELSAP PROJECT c REGIONAL RUSUMO FALLS POWER PLANT PROJECTo 2.4. STATEMENT OF RECEiPTS AND PAYMENTS FOR THE PERIOD ENDED 30 JUNE 2017 3 46178 9328251 Tiriin an vworkshop 7358 Goods 24737 Operating Costs 52 5 Works 27 Therrist Cahtean s aoin havbenapodby NFL~ ~ ~V RPLncegngD Date: Date Regional Rusuma Fais Power p Projcnct audit repor NELSAP PROJECT u REGIONAL RUSUMO FALLS POWERPLANT PROJECTN 2.5. SCHEDULE OF REALISATIONS FOR THE PERIOD ENDED 30 JUNE 2017 Note 30/06/2017 30/06/2016 US$ US$ Consultants Fees 2 2 470 021 3355 226 Training and Workshop 3 33 215 76 881 Goods 4 15282 2473718 Operating Costs 5 1213 277 521550 Works 6 15410299 19142094 6427374 feAr Conell MooreSt IRegional Rusjum Falls Power plont Prata- Final audit report 2.6. NOTES TO THE FINANCIAL STATEMENTS - 30 JUNE 2017 Notel. Accounting Policies a. Basis of accounting The financial statements of the project have been prepared in US Dollars under the historical cost convention and in accordance with applicable International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants (I FAC). The Financial Statements have been prepared on a modified cash basis of accounting. except where stated otherwise. The modified cash basis of accounting means financial transactions which are recognized in the books of account as follows: 1. Generally, transactions are recognized only at the time the associated cash flows takeplace 2. The expenditure on acquisition of fixed assets is not capitalized Thus fixed assets are written-off on acquisition and the wear and tear (depreciation) of those assets is not recorded in the books of account; and 3. Prepaid expenditure/advances are written-ofr during the period of disbursement. The recognized "modification" is as follows 1. Invoices for goods and services which are outstanding on the date of the closure of the fiscal year are recognized as liabilities for that specific fiscal year; 2 Loans and advances are recognized as assets/liabilities at the time of disbursement and related interest is recognized only when disbursed Interest payable on public debt is actrued; and 3. Book balances denominated in foreign currencies are converted into the US Dollar at rates of exchange ruling on that date issued by the National bank of Rwanda. The associated exchange losses are recorded as recurrent expenditure while the exchange gains are recorded as recurrent revenue. These financial statements constitute as third financials covering the year from 1" luly 2016 to 30 june 2017. Frnrj Consell Moore Stephens - f-Q Regiunal Ruruma Falls Power plant Project. Final audit report b. Realizations These represent expenditure Incurred by the Project on the various categories of the finance agreement, namely: - Consultants' fees; - Goods; - Training and workshops. * Operating costs. They are accounted for as long term assets in the Statement of financial position. c. World Bank Credit disbursements The World Bank credit disbursements constitute advances and replenishments to the designated account in respect of expenses incurred by the project during a specific period or direct payments to the service providers. They are recognized in the accounts upon their transfers to the designated account or direct settlement by World Bank. Fenr CUnSelI Moore Stephens Feni} Consel Moore Stephens Regional Rusuma Falls Power plant Project- Final audit report Note 3. Training and workshop cumulative 30/06/2016 30/06/2015 30/06/2017 US$ US$ us$ 69 945,45 28 169,52 40414,21 4068,00 35345,21 27916,65 15551,68 12 365,00 13 595,00 13 595,00 151 871,34 33214,68 75 810,73 Note 4. Goods ㄴ嶼些룐〃긴 . L-OW147AY"i .- - I Note 6. Works cumulative 30/06/2017 30/06/2016 30/(16/2017 US$ us$ 05R0332 CPZ Andritz electromechaniCid 4201130,75 4201130,75 05R0335 CPI CGCOC&JWHC JV 11209 168,72 11209 168,72 15 410 299,47 --iT410 2-93,47 Note 7. Cash at bank and in hand 30/06/2017 30/06/2016 US$ U5$ 102137 PETTY CASH RUSUMO/RPCL 85,32 125 14 12246 RUSUIVIO RPCL 15 775 148.09 3431601,67 11247 Rusumo Resettlement A/C 19362,84 10338692 15 794 S96,25 3535113,72 Note 8. Fund transferred to Designated account cumulative 6/2017 30/06/2016 30/06/2017 US$ US$ US$ 8237324 5224363 012911 8359503 6246592 2 112961 13603942 942649 4 177445 14872712 10448726 4423986 45073491 31346178 13 7V 303 Fenr/Comell Moore Ste hen, Rieglonal iusuma Folls Power plant Project Vinot udit report 3. REPORT ON THE OPERATIONS OF THE i REGIONAL RUSUMO FALLS POWERPLANT PROJECTn DESIGNATED ACCOUNT AND FUNDS WITHDRAWAL REQUESTS SUBMITTED TO THE ADF FOR THE YEAR ENDED 30 JUNE 2017 3.1. INDEPENDENT AUDITORS' OPINION To the NELSAP Regional Coordinator Project Coordination Unit (PCU) Kigali, Rwanda In the course of our audit of it REGI0ANL RU5UIV-D FALOELATPOET for the year ended 30 June 2017, we eamnd a) Thestransactions-poste 'in the Designated Ayccount. deminated in US Dollars, I The nrim finaia r t i FRs) supporting te funs whdrawa reuests submtte to the Wor Bank- in support of grartan lo withrwl une the-' desmated account N' 1000028228, as shown inth accomayn ceue Our audit was- conducted in accordance wt inraion Stnad onAdtig(SA n relevant Wor Bak -udeies, and thus nii e xmnn,o ts ai,teitra contros and aoui transactions ref C As which we cL necessary under the PCti tances In our opinion, a) The delnae acount has been operated in accordnc wi th the provisions of the relvat finac agrement, and ihd ccmay-isheua give a true and fair view of the finaci positIon of the deinae accun andth Credit as at 30 June 2017 in accordanc w ith the riternationa Puic SetrAcuntmng Standards(JIPSAS) and the World Bank guidelines; b) With respect to IFR5, adequate supporting documentation has been maintained to support dlaims to the WorldI Bank for settlernent of the expenditures incurred, and such expenditures are! c' igbefr financing under the relevant financing agreement. 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Total IDA 52960 H872 ID 52950 H8730 Total Loan (US$) 113233274 113433363 56 716 69Z 56716681 340000000 Disbursements (M) 14872712 13603942 8237324 8359503 45073481 Disbursed with PPA 0 1526724 3024163 0 4550887