<FERGANA VALLEY WATER RESOURCES MANAGEMENT,
PHASE 1) PROJECT IDA CREDIT#4648-UZ
INDEPENDENT AUDITOR'S REPORT
AND SPECIAL FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2016


﻿Iy a/,jC RV rifv'r(nf AlaaemeNi. pha'5-A Th-ic IL)7) 1credil #46-48-lX
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT                                       1
SUMMARY OF SOURCES AND USES OF FUNDS SHOWING THE WORLD BANK AND COUNTERPART
FUNDS SEPARATELY                                                   5
STATEMENT OF EXPENDITURE DETAIL ON PROJECT COMPONENTS              7
SOE WITHDRAWAL SCHEDULE - IDA CREDIT                               8
RECONCILIATION STATEMENT FOR REPLENISHED AND RECOVERED SOE DISBURSEMENTS -
IDA CREDIT                                                         9
DIRECT PAYMENTS SCHEDULE - IDA CREDIT                             10
SPECIAL PURPOSE BALANCE SHEET AS OF DECEMBER 31, 2016             11
USD DESIGNATED ACCOUNT STATEMENT                                  12
UZS DESIGNATED ACCOUNT STATEMENT                                  13
UZS BLOCK ACCOUNT MAWR STATEMENT                                  14
UZS TREASURY CO-FINANCING ACCOUNT STATEMENT - FINANCING OF S&E    15
UZS BIDDING ACCOUNT STATEMENT                                     16
UZS PLASTIC CARD ACCOUNT STATEMENT                                17
-       1 PROJECT DESCRIPTION                                              18
2 ACCOUNTING POLICY                                               20
3 PRESENTED FINANCIAL STATEMENTS                                  22
4 PROPERTY, PLANT AND EQUIPMENT                                   24
5 DESIGNATED (SPECIAL) SPECIALAND CURRENT ACCOUNTS                24
6 LEGAL STATUS, TAXES AND LEVIES                                  26
7 RECONCILIATION OF IDA CREDIT EXPENDITURES                       26


﻿0 GrantThornton
An instinct for growth
AO 000 <Grant Thornton*
Pecny6nKa Y36eK/CTaH,
100128, TaLUKeHT,
yn. AMa. 1A
Ten.: +998 (71) 244-47-45/46
OaKc: +998 (71) 244-47-43
"Grant Thornton" AO LLC
INDEPENDENT AUDITOR'S REPORT                                                 1A, Abay Str.,
Tashkent. 100128,
Republic of Uzbekistan
Management of the Project Implementation Unit of World Bank under the        Tel.: +998 (71) 244-47-45/46
Ministry of agriculture and water resources of the Republic of Uzbekistan,   Fax: +998 (71) 244-47-43
Project <Fergana Valley Water Resources Management. Phase - I               VV: vww.gtiorg
Ve have audited the accompanying Special Purpose Iinancial Statements (hereinafter the financial statements)
of the Proiect "Fergana Valley Water Resources Mfanagement, Phasel" (hereinafter - the Projcct), financed
from the credit proceeds of the International Development Association (hereinafter - Association, IDA)
accordlino to the financing Agreement M'\--46d8-UZ (hereinafter - financing Agreement) for the period of from I
January 2016 to 31 December 2016 as follows is folloWs: (i) Summary of Sources and Uses of Funds showing
the World Bank and counterpart funds separately, (it) Statement of FSpendliture Detail on project components.
(iii) SOEi Withdrawal Schedule - IDA Credit, (iv) Reconciliation Statement for Replenished and Recovered SO1
Dishursements - IDA Credit, (v) Direct Payments Schedule - IDA Credit; (vi) Special Purpose Balance Sheet,
(vii) Designated (Special) Account Statements as at 31 December 2016 and for the year then ended, and a
summary of significant accounting pohlcies and other explanatory information. The Special Financial Statements
have been prepared by the management of the Project according to the International Public Sector Accountn)
Standards (hereinafter - IPSAS) and World Bank's recquircments, based on the Cash flow method.
Management's Responsibility
The management of Project Implementation Unit for Water Infrastructure (hereinafter - PIL of \WI) is
responsible for preparation and fair presentation of these Special Financial Statements based on the cash flow
basis in accordance with IPSAS. This responsibility includes: designing, implementing and maintaining internal
control relevant to the preparation and fair presentation of the special financial statements that are free front
material misstatement, whether clue to fraud or error; selecting and applying appropriate accounting policies
Auditor's Jeponsibility
Our responsibility is to express an opinIon on these financial statements based on our audit. We conducted our
audit in accordance with International Standards on Auditing (ISA). Those standards require that xw'e comply
with ethical reCluirememnts and plan and perform the audit to obtain reasonable assurance Whether the financial
statements are free from material missiatement. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the
auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments the auditor considers internal control relevant
to the preparation and fair presentation of the Project' financial statements in order to design audit procedures
that arc appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiven"'ss
of the Iroject's internal control. An audit also includes e'aluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the Project's management, as Well as evaluating
the overall presentation of the financial statements.
WXe beheve that the audit evidence We have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
CERT


﻿Opinion
In our opinion, the above-stated Special Purpose Financial Statements give a true and fair view of the sources
and uses of the eFergana Valley Water Resources Management, Phase - I Project funds for the period from 01
January 2016 to 31 December 2016 and complies with conditions of the Financing Agreement and IPSAS.
Moreover, (a) with respect to SOEs, adequate supporting documentation has been maintained to support
claims to the Association for reimbursement of expenditures incurred; and (b) the expenditures comply with
objectives stipulated in the Financing Agreement.
Paragraph requiring attention
Implementing project with World Bank's participation considers investment of republic of Uzbekistan in the
realization of this project equal in value of USD 27,75 million dollars, including USD16,2 million dollars - in
the form of tax privileges and other obligatory payments. However, in the project account only mandatory
payments from the wage fund were taken into account. For detailed information see paragraph 3, clause 7.
Restriction on Distribution and Use
This report is intended solely for presentation of information and use by Management of the Project, IDA and
Government of Republic of Uzbekistan, and cannot be used by any third party other than abovementioned.
te
03 April, 2017
Tashkent, U


﻿aFergana Valley Water Resources Aanagenent, Phase b> Project
IDA Credit.V4648- UZ                                                                    5
SUMMARY OF SOURCES AND USES OF FUNDS SHOWING THE WORLD BlANK AND
COUNTERPART FUNDS SEPARATELY
for the period from January 01, 2016 to December 31, 2016
Actual
Note       Year to Date   Cu   laiet
Date
Sources of Funds
IDA Funds                                                 3        1 234 336      50603928
DS-A                                                     3              -        25099864
Direct payments                                          3        1234336        25504064
Government Funds                                          3           14221         209060
Bid. documents receipts                                   3           2000           17216
Pension Funds                                             3              -            9481
Other                                                     3             110         143984
Total                                                             '1250 667       50983669
Project expenditure
Works, Goods, Consultants' services, Training
Al- Improvement of irrigation Network ( ICB-2)                      332 746        3 548 173
A2- Improvement of Drainage Network(ISB-1)                           148695       17392377
A3- Improvement of Network & GW Development (ISB-1)                2 403 591      16420483
A4- Environmental Management Activities                                  -               -
A6- Design Implementation Support Consult (CON-1)                    38 535        3 467 406
83- Technical, Institutional and Training Support Co                     -               -
C1- Project Management                                               72 827        1 087 270
C2- Audit                                                             9475           90491
C3- Monitoring & Evaluation Consultancies                           292755         1 138586
C4- Preparation of Phase-lI                                         129 970         721 821
B1. Institutional Strengthening of Public Institutions                   -          163335
B2. Demonstration Plots, Institutional Strengthening                 59630         3 178711
Total                                                              3 488 224      47 208 653
Cash compensation RPF & RAP
A5- Resettlement Policy Framework and Action Plan                   256 478        1 173803
Total                                                               256478         1 173803
Operating costs
Cl- Project Management                                               25207          407 308
Total                                                                25207          407308
Pension
Pension                                                   3              -            9435
Total                                                                                 9435
Tender's documents
Tenders documentation                                      3          3322           20838
Total                                                                 3 322          20 838
Other costs
Other costs                                               3              -          140688
Total                                                                    -          140 688
Total project expenditure                                          3 773 229      48 960 725
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﻿<fFergan Vally Water Resources Management, Phsc Io Projec
IDA CrcditAo648-[LIZ                                                                   6
SUMMARY OF SOURCES AND USES OF FUNDS SHOWING THE WORLD BANK AND
COUNTERPART FUNDS SEPARATELY
for the period from January 01, 2016 to December 31, 2016 (Continued from the previous page)
Actual
Note       Year to Date   Cu   laiet
. Date
Excess of Receipts over Payments                                  (2622562)        2022944
Opening Cash Balance
IDA Funds                                                 5        4533191
Government Funds                                          5           8518
Total                                                              4 541 709             -
Net Available Cash                                                 2019147         2022944
Closing Cash Balance
IDA Funds                                                 5        2016809         2016808
Government Funds                                          5           1955            1 955
Total                                                              2018764         2018763
Exchange rate difference  .                               3             382           (4180)
Signed for and on behalf of Management on 03 April 2017
PIU Head                             aV        Project Accountant
Daliyev A.SH.                                o   ubareva I.Sh.
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﻿«Fergana Valey Ivater Resources Managern ent, Phase-> Projeet
IDA Credit #4648- UZ                                                                   9
RECONCILIATION STATEMENT FOR REPLENISHED AND RECOVERED SOE
DISBURSEMENTS - IDA CREDIT
for the period froni January 01, 2016 to December 31, 2016
(ä IJJ U)
T otai SOE Expenditures 2 516 383
SOE #120 is being reviewed by the Bank                                            (152 085)
Total                                                                             2 364 298
Recovered                                                                         3187422
inciuding on SOE #110 for 2015                                                    (823 124)
Total                                                                             2 364 298
Difference
Signed for and on behalf of Management on 3 April 2017
PIU Hlead                                      Project Accountant
Dabvev A.SH.                                     ubareva I.Sh.
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﻿«Fergaia Vllev  a tcr Resources Management, Phase-I» Project
IDA Credit #4648-UZ                                                                   10
DIRECT PAYMENTS SCHEDULE - IDA CREDIT
for the period from Januarv 01, 2016 to December 31, 2016
'       -                                              -   I.drawaa  payren -
application #     Category       Payrnent currency      currency       Total amount in USD
111              i                 USD               130644             130644
112              1                 USD               129 97.0           129970
114              1                 USD               85059 -             85059
116              1                 USD               77052               77062
118              1                 USD               758090             758090
119              1                 GBP              .43671               53521
Total                                                                   1 234 336
Signed for and on behalf of Management on 3 April 2017
PIU Head                                        roject Accountant
Daliyev A.SH.                 ------            ubareva I.Sh.


﻿<oFergana Valley Water Resources Aanagement, Phase b)
IDA Credit #4648-UZ
SPECIAL PURPOSE BALANCE SHEET AS OF DECEMBER 31, 2016
(hi LSD)
Notes           as of 31.12.2016        as of 31.122015
ASSETS
Cash and cash equivalents               5                 2 018 763               4541 708
Property, Plant and Equipment           4                   87 003                 106 505
Project expenditure
Loan 4648-UZ                                           48 654 129              44 880 545
Government Funds                                          209060                  194839
Tender's documentation                                     20838                   17516
Payment of pension                                          9435                    9435
Other expenses                                                                        -
Total expenditures                                       48893461                45102335
Gain (Loss) from foreign exchange differences                4 180                   3 798
TOTAL ASSETS                                             61 003 407              49 754 346
ACCUMULATED FUNDS
Project financing:
Loan 4648-UZ                                           50603928                49369592
Government Funds                                          209060                  194839
Tender's documentation                                     17216                   15216
Payment of pension                                          9481                    9481
Other                                                     143984                  143874
Total financing                                          50 983 669              49 733 002
Revaluation of the Property, Plant and Equipment            19738                   21 345
TOTAL ACCUMULATED FUNDS                                  51 003407               49754347
Signed for and on behalf of Management on 3 April 2017
PIU Head                                       Project Accountant
Daliyev A,SH.                                   Zuba-reva I.Sh.
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﻿<<Fergana Valley Water Resouirces Management, Phase l>
IDA Credit #4648-LZ                                                                        12
USD DESIGNATED ACCOUNT STATEMENT
for the period from January 01, 2016 to December 31, 2016
Account#                                2021 0840 9041 2284 9010
Depository Bank:                       "InFin BANK"
Address                                 18b, Navoi Street, Tashkent 100011, Uzbekistan
Loan:                                  IDA #4648-UZ
Currency:                               USD
Balance as of 01 January 2016 4 533178
Cash inflow:
Financing of IDA
Total
Cash outflow:
Expenditure by category                                                              (1 705 664)
Converted into UZS and transferred to Infin Bank UZS Special Account (5123)           (810 710)
Total                                                                                (2 516 374)
Balance as of 31 December 2016                                                        2 016 804
Signed for and on behalf of Management on 3 April 2017
PIU Head                                        Project Accountant
Daliyev A.SH.            ,--ubareva I.Sh.
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﻿q,Fergana Valley Watcr Resources Management, Phase &
IDA Credit #4648-UZ                                                                        13
UZS DESIGNATED ACCOUNT STATEMENT
for the period from January 01, 2016 to December 31, 2016
Account #                               2021 0000 8041 2284 9020
Depository Bank:                        "InFin BANK"
Address                                 18b, Navoi Street, Tashkent 100011, Uzbekistan
Loan:                                   IDA #4648-UZ
Currency:                               UZS
USD        UZS1000
Balance as of 01 Janur 2016                                               13             36
Cash inflow:
Converted into UZS                                                    810710       2390461
Total                                                                 810710       2390461
Cash outflow:
Transfer to UZS Block Account MAWR of UzKDB Bank (5140)              (58900)       (174 135)
Expenditure by category                                             (751 305)     (2 214 747)
Transfer to bidding account (5168)                                      (514)        (1 603)
Total                                                                (810 719)    (2 390 485)
Balance as of 31 December 2016                                             4             12
Signed for and on behalf of Management on 3 April 2017
PIU Head                                          ject Accountant
Dalivev A.SH.                 .                     reva I. S    h.
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﻿<,Fergana Valley Warer Resources Management, Phase &h
IDA Credit #4648- UZ                                                                      14
UZS BLOCK ACCOUNT MAWR STATEMENT
for the period from January 01, 2016 to December 31, 2016
Account#                         2021 0000 9041 2284 9001
Depository Bank:                 UzKDB Bank, Yunusabad branch
Address                          77, Nasirov Street, Tashkent 100084, Uzbekistan
Loan:                            IDA #4648-UZ
Currency:                        UZS
USD           UZS1000
Total balance on two projects as of
January 1, 2016                                                      12 812          3564
Including FVWRI Project, Phase-1                                      5972            16 811
Cash inflow on two projects:
Including FVWRM Project, Phase-I
Transferred from IDA UZS Special Account                             58900           174 135
Transfer from Social payment account                                   577             1 776
Revenues from the UZS Bidding Account (5168)                          2000            6 150
Exchange gain                                                            8                0
Total by FVWRM, Phase-1:                                             61 485          182 061
Cash outflow on two projects:
Including FVWRM Project, Phase-I
Payment of salaries                                                  48446           142544
Pacxogbi no COOTBeTCTByOL4MM KaTeropmqm
Payment of income tax of Project Staff                                9612           28526
Payment of social charges                                             5040            15034
Bank charges                                                          1 783           5251
Transferred to UZS Plastic card Account (5192)                        1 528           4566
Exchange loss                                                          135                0
Total by FVWRM, Phase-I:                                             66544           195920
Balance of the two projects as of 31
December, 2016                                                       15269           49341
Including FVWRM, Phase-I as of 31
December, 2016                                                         913             2951
Signed for and on behalf of Management on 03 April 2017.
PIlU Head                                        oJect Accountant
Dahyev A.SH.                                    Zul reva I.Sh. ____________
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﻿<<Fcrgana Vallev 1Water Resources Management, Phase &
IDA Credit #4648- UZ                                                                         15
UZS TREASURY CO-FINANCING ACCOUNT STATEMENT - FINANCING OF S&E
for the period from January 01, 2016 to December 31, 2016
Account#                             1000 1086 0262 77704292 0170 001
Depository Bank:                    Treasury of the Ministry of Finance of the Republic of Uzbekistan
Address                             5, Mustakillik Sq., Tashkent 100008, Uzbekistan
Loan:                               IDA #4648-UZ
Currency:                           UZS
USD            UZS1000
Balance as of 01 January 2016
Cash Inflow:
Government financing                                                  14221              42025
Total                                                                 14221              42025
Cash outflow:
Eligible social payment                                               14221             42025
Total                                                                 14221              42025
Balance as of 31 December 2016
Signed for and on behalf of Management on 3 April 2017
PIU Head                                        Project Accountant
Daliyv A.SH.                                     Zubareva I.Sh.
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﻿<<FCtgayna Vallev Water Resources Aanagement, Phase In
IDA Credit #4648- UZ                                                                        16
UZS BIDDING ACCOUNT STATEMENT
for the period from January 01, 2016 to December 31, 2016
Account#                                2021 0000 8041 2284 9021
Depository Bank:                       "InFin BANK"
Address                                 18b, Navoi Street, Tashkent 100011, Uzbekistan
Loan:                                  IDA #4648-UZ
Currency:                               UZS
USD            UZS1000
Balance as of 01 January 2016                                       2535                 7123
Cash inflow:
Bidding receipts                                                        514              1 603
Other receipts
110               313
Total                                                                   624              1 916
Cash outflow:
Expenditure by category                                               1 276        3896,92015
Transfer of funds to the UZS MA WR Block Account (5140)                 577           1775,884
Exchange loss                                                           264                 -
Total                                                                 2 118             5673
Balance as of 31 December 2016                                        1041              3366
Signed for and on behalf of Management on 3 April 2017
PIU Head                                          oject Accountant
Daliyev A.SH.                                      bareva I.Sh.
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﻿&Fej:i,ana Valley WaterResonrces Afaaagemeia, Phase-to
IDA Citedit #4648- 11Z (Notes to Project  ;perial Finaricial Statemenzts)                       Is
1 PROJECT DESCRIPTION
Government of Uzbekistan received Financing of International Development Agency (hereinafter - IDA) to
implement "Fergana Valley Water Resources Management, Phase - I" Project (hereinafter - Project). Mentioned
agreement was signed 'in accordance with the Resolution of the President of the Republic of Uzbekistan
No.PP-I 265 dated January 19, 2010 "On ineasures of implementation of the Fergana Valley Water Resources
Management, Phase-I Pro'ect".
P1
The funds were allocated in accordance with IDA Financing Aereeinent No.4648-UZ, signed on February 9,
P1            2010 (hereinafter - Financing Agreement).
In accordance with Clause 7 of the abovementioned Resolution, acting Project Implementation Unit for Water
Infrastructure (hereinafter - PIU for WI) was charged to manage and coordinate the u'nplementation of
"Fergana Valley Water Resources Management, Phase-I" Project with binding agreement of Staff List and
P1            annual estimate budgets of financing of groups with the Ministry of Finance of the Republic of Uzbekistan.
The PIU for V71 was created by Order No.308 dated 11 December 2000 of the Ministry of Agriculture and
Water Resources of the Republic of Uzbekistan (hereinafter - _T%,1A1,VR). Based on Order No.91 dated April 16,
2001 of the MAINR and Resolution No.564 dated 21 May 2001 of Khokim. of Shaykhontokhur District of
Tashkent City, the PIU for WI becamean 'independent legal entity with the responsibibty for the overall
administration of the activities to be carried out under Project.. Based on Resolution of the President of
P1            Uzbekistan No PP-2506 dated and Order No 93 dated 31.05.2016 PIU for WI renamed PIU of World's bank
under MAWR of the Republic of Uzbekistan.
The objectivc of the Project is to improve agricultural production in areas affected by water-logging, and to
reduce damage to housing and infrastructure from rising ground water levels and saLiniq in the Project Districts
Pi            The Project components are as follows:
Component A. Imptovernent of irrigatiotiand drainage system
A 1.    Improvement of irrigauon network
A 2.    Improvement of drainage network
P1                    A 3.   Improvement of vertical drainage, GW Development & Management
A 4.    Environmental Management Plan
A 5.    Resettlement Policy Frameworkand Specific Resettlement Action Plan
A 6-    Design Implementation Support Consii1tants
Component B. Instittitional Strengthening and Agricultural Development Stipport
Bl.     Institutional Strengthening of Public Ins6rutions
B2.     Demonstration Plots, Institutional Strengthen ing and training for WUAs
P1                    B3.    Technical Institutional and Training Support Consultancies
Component C. Project Management, Audit, Monitoringantl Evaluation
Cl.     Project Management
C2.     Annual Audit
C3.     Monitoring and Evaluation Consultant


﻿,,Fcrgana Valley Witer Resources Aanagemyent, phase-I)
IDA Credit #4648-UZ (Notes to Project Special Financial Statements)                 19
C4.    Phase-II Preparation
IDA funds were allocated to finance the folloving items of expenditures:
IDA credit's
allocted aount IDA credit's
Category                          in SDR*      allocated amount in
equivlent  SDR' equivalent
1. Works, goods, consultants' services and training in the  36104 157,32   100%
framework of the Project
2. Cash compensation and other kinds of assistance according  862000       100%
with RPF and RAP**
3. Operational costs                                         330000        100%
4. Unallocated
Total                                                   37 296 157,32
Cancellation as of February 19, 2015 (***)                 452 194,56
Cancellation as of June 30, 2016 ("")                    4 451 648,12
Total                                                      42 200 000
* SDR - Special Drawing Rights (Note2.4)
** RPF - Resettlement Policy Framework, RAP - Resettlement Action Plan.
***According to The International Development Association' s letter Ng 0280./15 SDR equal to 452 194,56
was annulled on 19 February 2015 from category N91 credit.
**** According to letter of Ministry of Finance of the Republic of Uzbekistan No MM/13-02-278 dated on
28.06.2016 was annulled savings:
1, 17 mln. SDR from category e Works, Goods, Consultants' services and Training)
3, 28 mln. SDR from category aUnallocated expenditure).
Going concern
According to Financing Agreement the Project is supposed to be completed by 31 December, 2016.
The deadlmie for submiting application (grace period) is set for 30 April 2017.


﻿aFergan  Valley Water Resources Aanagement, Phase-IL
IDA Credit #4648- UZ (Notes to Project Special Financial Statements)                            20
2 ACCOUNTING POLICY
Basis of presentation
These Special Purpose Financial Statements have been prepared, in accordance with requirements of
International Public Sector Accounting Standards (hereinafter - IPSAS) following the cash flow basis and
compliant with the World Bank recommendations
"Summary of Sources and Uses of Funds showing the World Bank and counterpart funds separately",
"Statement of Expenditure Detail on project components", Special Purpose Balance Sheet and the
accompanying Notes are prepared to present operations within the frames of "Fergana Valley Water Resources
Management, Phase - I" Project.
"Summary of Sources and Uses of Funds showing the WB and counterpart funds separately", "Statement of
Expenditure Detail on project components", Special Purpose Balance Sheet and Designated (Special) Accounts
Statements are prepared based on cash flow basis in accordance with the following principles.
Financing
Financing of the Project is recognized when:
Funds are transferred to the supplier of resources or services by IDA (Direct payments Procedure).
Funds are transferred from the Credit Account administered by IDA and/or from the bank accounts of
the Treasury of the Ministry of Finance (hereinafter - MOF) to Designated Accounts of the PIU for WI opened
in UzKDB Bank, and POJSCB "Invest Finance Bank" (hereinafter - InFinBank).
Investnictt of Republic of Uzbekistan
In accordance with the Resolution of the President of the Republic of Uzbekistan No.PP-1265 dated January
19, 2010 "On measures of implementation of the Fergana Valley Water Resources Management, Phase-I
Project", implementing project with World Bank's participation considers invcstment of republic of Uzbckistan
in the realization of this project equal in value of USD 27,75 million dollars, including USD 16,2 million dollars
- in the form of tax privileges and other obligatory payments
Expenditure
Project expenditures are recognized and reported in the Special Purpose Financial Statements in cases when:
*   Payment is made to suppliers of goods, works and/or services either directly from IDA Credit Account
or from Designated (Special) and current accounts of the Project;
*   Payments for financing travel expenditures, salaries to the Project's employees, income tax of Project
Staff, social charges and bank charges from Designated (Special) and current accounts of the Project.
Property, Plant and Equipment (PPE) purchased or received by the PIU for WI for the purpose of the efficient
implementation of Project objectives is entered to the expenditure account right after such acquisition. List of
Property, Plant and Equipment utilized by Project as at December 31, 2016 is below (pls. refer to the Note 4).
For the purposes of these financial stateinents, PPE is not depreciated and accounted for at fair (revalued)
value. Control over the safe keeping of the deployed property is exercised through the annual physical inventory
counts of property plant and equipment.
Reporting currency and currency exchange imthodology
The national currency of the Republic of Uzbekistan is the Uzbekistan Soum (UZS).
The Special Financial Statements are presented in United States Dollars (hereinafter referred to as "USD"),
which is the Project functional and presentation currency, as financing from IDA is carried out in USD. Items
included in the Special Financial Statements are measured using that functional currency.


﻿aFergw7a Valley Water Resources Alanagent, Phase-I
IDA Credit #4648- UZ (Notes to Project Special Financial Statements)                            21
IDA Credit Agreement was signed with the amount of 42.20 million SDR, which is Equivalent to USD 65.54
million. The reporting currency of the Project is US Dollars (USD).
However, according to letter of Minim- of Finance of dhe Republic of L xbekisran n M/13-02-278 dated on 28,062016
was annulled savings:
1, 17 rnin. SDR from category aWorks, goods, consultants' services and trainingn
3, 28 mln. SDR From category KUnailocated expenditures.
Annulled funds for violations of procedures:
0, 45 mln SDR from caregoert a\Works, goods, consultants' senices and rxaining5
While developing the Project Special Financial Statements the following exchange rate principles were used:
*   for IDA funds, expenditures in local currency (UZS) are converted into USD at the rate of Central
Bank of the Republic of Uzbekistan (CBU) effective at the date of USD to UZS conversion;
*   for co-financing funds all receipts and expenditures in local currency (UZS) are converted into USD at
the rate of CBU effective at the date of transactions;
*   for expenditures of IDA funds under procedures of direct payments in Great Britain Pounds (GBP) are
converted into USD at the fixed rate of the World Bank at the date of transactions;
*   Direct payments in UZS disbursed by the IDA for civil works, converted into USD:
- Under Contract No. FWRMP/ICB-1 dated 27 May 2011 at the exchange rate fixed in the
Contract: UZS 1,595 / USD 1;
UZS balances in Project's bank accounts are revalued at the rate of CBU effective at the reporting date. As at 31
December 2016 the CBU's UZS/USD exchange rate was UZS 3,231.48 / USD 1.
U
U


﻿aFergana Va/ley Waer Resources Management, Phase-!)
IDA Credit #4648- UZ (Notes to Project Special Financial Statements)                          22
3 PRESENTED FINANCIAL STATEMENTS
The Special Financial Statements have been prepared by the Project Implementation Unit eFergana Valley
Water Resources Management, Phase - I Project. The Project Special Financial Statements have been signed
for and on behalf of PIU Management by PIU Head Mr. Dahyev A.SH. and Accountant Mrs. Zubareva I.SH
on 06 June 2016.
Special Financial Statements on the Project for the reporting period are prepared in accordance with IPSAS
based on the cash method in following composition:
(1) Summary of Sources and Uses of Funds showing the World Bank and counterpart funds separately.
During the reported period the Project was funded by IDA in the amount of USD 1,234,336 where direct
payments and replenishment of the Project USD Designated Account and Government co-financing for the
amount of USD 14,221 is a payment of Single Social Charge (SSC) through the UZS Treasury Co-financing
Account opened in the Uzbek MOF Treasury.
In 2016 the Project has generated revenues from the sales of bidding documents for total of USD 2000.
In 2016, Other income amounted to 110 USD.
Financing and expenditures related to Other and Bidding funds as well as Payment of pensions are reported in
the "Summary of Sources and Uses of Funds showing the World Bank and counterpart funds" separately and
not reflected as a part of financing and expenditure categories since are not direct sources/expenditures of the
Project.
Total Project expenditures for the reported period comprise USD 3,773,231.
The negative exchange difference generated from the conversion of UZS into USD during the reported period
is USD 382. Accrued negative exchange difference from the Project bcginning is USD 4,180.
(2) Statement of Expenditure Detail on Project Components.
The given statement gives more detailed information on expenditures for the reporting period for the Project
within components of the Project. Total Project expenditures for the reported period comprise USD 3,769,909.
Among them the IDA funds for total of USD 3,755,688 and co-financing for total of USD 14,221. It should be
noted, this statement contains information only about expenditures concerned the Project directly.
Expenditures for payment of pensions, preparation of bid documents and others are not included in this
statement, since they are not direct sources/expenditures of the Project.
(3) SOE Withdrawal Schedule - IDA Credit.
This Statement, detailed by the Applications for Withdrawal, reports the expenditure categories on the account
of advanced payments.
(4) Reconciliation Statement for Replenished and Recovered SOE Disbursements - IDA Credit.
This Statement reports the total expenditures by the SOE procedures and the expenditure categories on the
account of advanced payments.
(5) Direct Payments Schedule - IDA Credit
The given statement reports the amount of funds within the categories, that has been withdrawn from Credit
Account according the procedure <Direct Payment> for the year ended on 31 December, 2016.
(6) Special Purpose Balance Shcet
The statement provides the information about cash and cash equivalents, PPE, expenses and sources of funds
only for "Fergana Valley Water Resources Management, Phase - I" Project.


﻿aFergana Valley Water Resources Afanagement, Phasc-
IDA Credit #4648-UZ (Notes to Project Special Financial Statements)                             23
Special Purpose Balance Sheet has been prepared following cash flow basis and provides the following
information:
-   under Accumulated Funds - summary amount of funds, received by PIU for W from different source
of financing (IDA, Government of the Republic of Uzbekistan, bidding proceeds, Pension Fund and
others) and the amount of accumulated asset revaluation;
-   Under Assets - Property, plant and equipment, cash and cash equivalents and amount of expenses of
PIU for WI detailed in all sources of financing.
PIU for WI maintains the same bank accounts for implementation of various projects. The line <<Cash and cash
equivalents)) reports funds at PIU's bank accounts only in the part of the Project <<Fergana Valley Water
Resources Management, Phase-I . The cash balances on PIU's bank accounts in UZS are represented in USD
equivalent at the CBU official rate for reporting date.
The line "Property, plant and equipment" includes fixed assets purchased within framework of Projcct
implementation (see Note 5) at fair (revalued) cost for the end of reporting period. For the purposes of
preparation of these financial statements the fixed assets are not depreciated.
The line <<Project expenditures) includes the expenditures related to Project implementation made by the PIU
for WI from all sources of funding.
The line "Revaluation of Property, plant and equipment" includes the amount of annual revaluation of PPE as
atJanuary 1, carried out by the PIU for \VI on annual basis in accordance with the requirements of the current
legislation of the Republic of Uzbekistan.
(7) Accounting of investment of the Republic of Uzbekistan
In accordance with the Resolution of the President of the Republic of Uzbekistan No.PP-1265 dated January
19, 2010 "On measures of implementation of the Fergana Valley Water Resources Management, Phase-I
Project", implementing project \vith World Bank's participation considers investment oft republic of Uzbekistan
in the realization of this project equal in value of S27,75 million dollars, including $16,2 million dollars - in the
form of tax privilcgcs and other obligatory payments. I Iowever, in the project account only mandatory
payments from the wage fund were taken into account. At the end of project according to project accounting,
investment of the Republic of Uzbekistan comprises USD 218 541, including USD 9 481 for pension fund.
Accounting the state's share in the form of granting benefits for taxes and other mandatory payments, is not
made.


﻿I
 aFergana Valley Water Resources Afanagemeint, Phasc-h
IDA Credit #4648- UZ (Notes to Project Special Financial Statements)                       24
1.           4 PROPERTY, PLANT AND EQUIPMENT
-The Property, Plant and Equipment (PPE) of the Project consist of computers and office hardware, furniture
and other PPE purchased by the Project for the use during the period of the Project implementation. The
physical inventory counting of the Project was conducted on 25 May 2016 in the presence of representatives of
p            Grant Thornton, LLC Audit Company.
The movement of PPE for 2016 is summarized in the table below:
(in USD)
Opening balanceClsn
as at 01 January  Revaluation  Purchases     Disposals  bancast
2016                                  31 December
20166
Computer equipment              27957        -            14 166        12907        29216
Office equipment                13 845       657             247         1 378       13 370
Measuring regulating             6 151       303             562         2 841        4 175
devices
Furniture                       28066        817          13970         17310        25544
Vehicles                        15025       2055             -          11 563        5517
Other fixed assets              15461        639                         6919        13845
Total                          106 505        4471          28 945      52 918       87 003
PIU held revaluation of fixed assets, as of January 2, 2016, on the basis of "Regulations on the procedure for the
annual revaluation of fixed assets as ofJanuary 1", the registered MU of December 4, 2002 N" 1192. Revaluation is
made on the index method. Fixed assets assigned to the materially responsible persons. The latest inventory of
fixed assets made on December 01, 2016.
5 DESIGNATED (SPECIAL) SPECIALAND CURRENT ACCOUNTS
In 2016 the Project has maintained the following accounts:
in UzKDB Bank, Yunusabad branch:
Acon#Account                                      decito
2021 0000 0041 2284 9888           UZS Social Payment Account
2021 0000 9041 2284 9001           UZS Block Account MAWR
Social Payment Account, opened in UZS is used for contributions from the State Pension Fund, designated for
pension payments to working pensioners.
UZS Block Account MAWR is the primary account of PIU for \VI, which is used for cash payments as a salary
to PIU for WVI's staff, business travel expenditures, pensions as well as income taxes and individual pension
contribution of the Project staff. During 2016 PIU get refund from Tax to MAUWR account and these funds
were also expensed on costs, acceptable to the vB for the respective categories.
M
I
I


﻿kFergana Valley Water Resources Alanagemrent, Phase-In
IDA Credit #4648-U Z (Notes to Project Special Financial Statements)                       25
in UzKDB Bank:
Account # Account description
2262 0000 3041 2284 9002           UZS Plastic Card Account
UZS Plastic Card Account is opened for accounting of funds on plastic card that are used for payment to local
suppliers.
in InFinBank:
Account#                                   Account description
2021 0840 9041 2284 9010           USD Designated accoun
2021 0000 8041 2284 9020           UZS Designated accoun
2021 0000 8041 2284 9021           UZS Bidding Account
USD Designated Account is used by PIU for WI for IDA financing and conversion of USD into UZS or any
other currency stipulated by concluded contracts, for the payment for business trip expenditures outside the
Republic of Uzbckistan, and to suppliers of goods and services.
UZS Designated Account is opened to account funds of conversion of USD, which are used by the PIU for
payments to local suppliers under eligible categories of expenditure as well as for salary of PIU's staff, for
business travel expenditures within the Republic of Uzbekistan and bank charges.
USD Block Account is used for accumulate proceeds from sale of bid documents.
UZS Bidding Account is used to accumulate proceeds from sale of bid documents.
*  in the Treasury of the Ministry of Finance of the Republic of Uzbekistan:
Account#                                   Account description
1000 1086 0262 7770 4292 0170 001      UZS Treasury Co-financing Account
UZS Treasury Co-financing Account is opened in the Treasury of the Ministry of Finance of the Republic of
Uzbekistan and used for payment of eligible social charges (Single Social Charge).


﻿I
-            aFergana Valky Water Resources Alanagement, Phgse-J)
IDA Credit #464- UZ (N4tes to Project Special Financial Statements)                       26
Balances of the Project's bank accounts are summarized in the following table:
USD         UZS'000
Balance as of 01 January, 2016
USD Designated account                                                4533178
UZS Designated account                                                       13           36
UZS Bidding Account                                                       2535          7123
UZS Block Account MAWR                                                    5982          16811
UZS Social Payment Account                                                    -            0
UZS Plastic Card                                                              -            0
Total                                                                  4 541 708       23 970
Balance as of 31 December, 2016
USD Designated account                                                 2016804       6519275
UZS Designated account                                                     3,85           12
UZS Bidding Account                                                       1 042         3366
UZS Block Account MAWR                                                     913          2951
UZS Social Payment Account                                                 0,01          0,04
UZS Plastic Card                                                              -             -
Total                                                                  2018763      6525604
6 LEGAL STATUS, TAXES AND LEVIES
The PIU for XI is a legal entity operating on the basis of Charter registered by resolution of Shaykhontokhur
Khokimiyat (Municipality) of Tashkent city No.564 dated May 21, 2001.
PIU for XI is state non-for-profit organization and is exempted from all local taxes, levies and duties in
accordance with the Tax Code of the Republic of Uzbekistan.
Pursuant to the Presidential Decree No.HH-1265 dated 19 January 2010 the Ministry of Finance has allocated
funds to the Project for 100% financing of mandatory contributions by Project staff from the Payroll, including
Pension fund contributions of 25% from the Payroll.
7 RECONCILIATION OF IDA CREDIT EXPENDITURES
Reconciliation between Client Connection at www\v.worldbank.org data and PIU for WI report as of December
31, 2016 is stated below:
Per (www.worldbank.org)                PoetDfeec
Client Connection
IDA Funds             50603928                50 603 928
I