Project "Vietnam Energy Efficiency for Industrial Enterprises" Audited Financial Statements Under IBRD Loan Agreement No. 8739-VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam and IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socialist Republic of Vietnam Year ended 31 December 2021 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socia/&t Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socialst Rep ublc of Vietnam Contents STATEMENT OF THE PROJECT MANAGEMENT BOARD..................................................................2 INDEPENDENT AUDITORS' REPO RT.....OR..................................................................................... 4 CONSOLIDATED STATEMENT OF SOURCES AND USES OF FUNDS............................................... 10 CONSOLIDATED STATEMENT OF FUND BALANCE ...................................................................... 11 STATEMENT OF SOURCES AND USES OF FUNDS AND FUND BALANCE - Component 1 - BIDV...... 12 STATEMENT OF SOURCES AND USES OF FUNDS AND FUND BALANCE - Component 2 - PMB....... 13 STATEMENT OF DESIGNATED ACCOUNT - COMPONENT 1 - BIDV .............................................. 14 STATEMENT OF DESIGNATED ACCOUNT - COMPONENT 2 - PMB -B.1.................................... 15 SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 220402001....................................................... 16 SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 188840070000012............................................ 17 NOTES TO THE FINANCIAL STATEMENTS.................................................................................. 1 A A Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socialist Republic of Vietnam STATEMENT OF THE PROJECT MANAGEMENT BOARD The Project Management Board of Vietnam Energy Efficiency for Industrial Enterprises Project ("the Project Management Board") under the Ministry of Industry and Trade is responsible for the Financial Statements of the Project "Vietnam Energy Efficiency for Industrial Enterprises" ("the Project") for the year ended 31 December 2021. The Project The Project "Vietnam Energy Efficiency for Industrial Enterprises" is implemented by the Ministry of Industry and Trade (MOIT) - the Socialist Republic of Vietnam, and is funded by the World Bank's credits through International Bank for Reconstruction and Development ("IBRD") under Loan Agreement No. 8739-VN dated 18th August 2017 and through International Development Association ("IDA") under Financing Agreement No. 6011-VN dated 181h August 2017, with amounts of USD100,000,000 and 1,300,000 Special Drawing Rights ("SDR"), respectively, and the counterpart funds from the Project Financial Institutions ("PFIs"), the Industrial Enterprises, and the Government of the Socialist Republic of Vietnam. The Project involves the participation of commercial banks including the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and the Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) under the Project Agreement dated 18th August 2017 among International Bank for Reconstruction and Development ("IBRD"), BIDV and VCB. On 6 November 2020, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) issued Document No. 31351/VCB-VTDQT to the Department of Energy Saving and Sustainable Development - Ministry of Industry and Trade and the Department of Debt Management and External Finance - The Ministry of Finance to cancel its undisbursed credits from the World Bank due to difficulties and obstacles in the implementation of the Project. The Ministry of Industry and Trade and the Ministry of Finance completed the procedures to cancel the unused portion of VCB's credit limit with the World Bank in 2021. The Project became effective on 29 December 2017 and will be closed by 31 July 2022. The development objective of the Project is to improve energy efficiency in industrial sector, thereby contributing to achieving the government's energy saving targets and greenhouse gas emissions reduction objectives. The Project consists of two (2) components: - Component 1 - Energy Efficiency Investment Lending has been managed by two (2) banks, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB). The Component's objective is to carry out an energy efficiency investment lending program through the provision of a credit line for the Project Financial Institutions (PFIs) providing Energy Efficiency Sub-loans to Industrial Enterprises (IEs) or Energy Services Companies; and - Component 2 - Project Implementation Support is implemented by the Project Management Board under the MOIT. This Component's objective is to provide technical assistance and capacity building support to the MOIT on Project monitoring and supervision, including audits of Project activities and safeguards implementation. io 2 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socialst Republic of Vietnam STATEMENT OF THE PROJECT MANAGEMENT BOARD (CONTINUED) Project Management Board The members of the Project Management Board responsible for the management of the Project during the year ended 31 December 2021 and at the date of this report were as follows: Mr. Phuong Hoang Kim Director Mr. Trinh Quoc Vu Deputy Director Ms. Dang Thi Thuc Project Accountant Auditors The accompanying Financial Statements for the year ended 31 December 2021 have been audited by NEXIA STT Co., Ltd. Responsibility of the Project Management Board in respect of the Financial Statements The Project Management Board is responsible for the Financial Statements which give a true and fair view of the financial position and designated account balances of the Project as at 31 December 2021 and of its sources and uses of funds, operations of designated accounts and total funds withdrawn for the year ended 31 December 2021. In preparing the Financial Statements, the Project Management Board is required to select suitable accounting policies and then apply them consistently. The Project Management Board is responsible for ensuring that proper accounting records are kept which enable the Financial Statements to be prepared in compliance with the accounting policies set out in Note 2 to the Financial Statements. The Project Management Board is also responsible for safeguarding the assets of the Project and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Project Management Board assumes the responsibility to provide, and has provided, the auditors with all accounting records, supporting and other documents, minutes, any pertinent information and explanations, either orally or by written confirmation, necessary for the audit. it Approval of the Financial Statements We hereby approve the accompanying Financial Statements of the Project "Vietnam Energy Efficiency for Industrial Enterprises" on pages 10 to 21 which give a true and fair view of the financial position and designated account balances as at 31 December 2021 and its sources and uses of funds, operations of designated accounts and total funds withdrawn during the year ended 31 December 2021 in accordance with the accounting policies as described in Note 2 to the Financial Statements and withdrawals have been adequately reconcled to the statements of expenditures prepared by the Project during the year, and such statements of expenditures were adequately supported. The Financial Statements were prepared in compliance with the Applicable Provisions of the Loan and Financing Agreements and other Guidance from the World Bank. On behalf of the Project Management Board Mr. Phuong Hoang Kim Director Hanoi, 27 June 2022 3 Hanoi Office 19Fl, C'Land Tower, 156 Xa Dan I Dong Da. Hanoi P:-84(24)39350990 - F:+84(24)3935099 Hai Phong Office 245 Bach Dang, Thuong Ly, Hong Bang, Hai Phong P: +84 (225) 3539 969/666/555 - F: +84 (225) 3539 789 Hochiminh City Office 9 FI. Estar BIdg 147-149 Vo Van Tan, DIstrict. 3, Fl chiminh City P: -84 (28)39300488 - F: +84(28)39 300484 E:nexasltt8nexiavn W:www.nexa.vn INDEPENDENT AUDITORS' REPORT On the Project Financial Statements To: The Management Board of the Project "Vietnam Energy Efficiency for Industrial Enterprises" 25 Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) Audit opinion We have audited the accompanying Consolidated Statement of Fund balance as at 31 December 2021, the Consolidated Statement of Sources and Uses of Funds, the Statements of Sources and Uses of Funds and Fund balance by Component, the Statements of Designated Accounts and the SOE Withdrawal Schedules for the year ended 31 December 2021 (collectively referred to as the "Financial Statements") of the Project "Vietnam Energy Efficiency for Industrial Enterprises" ("the 4s Project") implemented by the International Bank for Reconstruction and Development's credits ("IBRD") and the World Bank's credits through International Development Association ("IDA"), and summary of significant accounting policies and other explanatory information. In our opinion, in all material respects: a) the Consolidated Statement of Fund balance, the Consolidated Statement of Sources and Uses of Funds, and the Statements of Sources and Uses of Funds and Fund balance by Component give a true and fair view of the financial position as at 31 December 2021 and of its funds and expenditures for the year ended 31 December 2021 of the Project in conformity with the accounting policies described in Note 2; b) the Statements of Designated Accounts and the SOE Withdrawal Schedules give a true and fair view of designated account balances as at 31 December 2021 and of operations of designated T1 accounts, and of the funds withdrawn for the year ended 31 December 2021, in conformity with the accounting policies described in Note 2; and c) the Statements of Expenditures and Summary Sheets are fully prepared and maintained with adequate supporting documents to support for the replenishment requests submitted to the World Bank. Funds disbursed through the statements of expenditures and summary sheets are utilized for purposes defined in IBRD Loan Agreement No. 8739-VN and IDA Financing Agreement No. 6011-VN. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the Auditors'Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in accordance with International Ethics Standards, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have 4 Aobtained is sufficient and appropriate to provide a basis for our opinion. 205 N r a nLrid All r,ihtr erv- d Ne i Intrnatinli ed I ed dwidJ etorT % rkCofIrdepenF ri La:co(n g an+dtrcon .ultn r~ ,pr g campr henive porfalo ofad0 c countanc. xanadioysris.N i It nton 4Kist tradn naoNeirt Itra-onlLintd a.ompaytOrtgis ti t slooMan Comany reita nube551C.?Rgistered-tic-1n loo StyCla IRa d Ocnn ha ix oMan. "I ^That nur S Nt XIA tnIta]NTER A lA'NiA t -Ih XAL 'ogo a r uned b 1 Iternainal 1in tixi a Inti onal andi t rrnih mbe imi rnt. part o i de p,arnersip. Responsibilities of the Project Management for the Financial Statements The Project Management is responsible for the preparation and fair presentation of the Financial Statements in accordance with Note 2 and for such internal control as management determines is necessary to enable the preparation and presentation of Financial Statements that is free from material misstatement, whether due to fraud or error. Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements of the Project as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' 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 the Financial Statements. A further description of the auditors' responsibilities for the audit of the Financial Statements is included in Appendix I of this auditors' report. This description, which is represented at page 22, forms part of our auditors' report. NEXIASTT Co., Ltd. Nguyen Viet Nga Deputy General Director Audit Practicing Registration Certificate No. 2041-2018-225-1 Audit report No.: 163/2022/HN-AUD/WB-VEEIE Hanoi, 27 June 2022 ;01 i4 Hanoi Office 19 F., C'Land Tower, 156 Xa Dan I Don g Da, Hano P: +84 (24) 3 935 0990 - F: -84 (24)3 935 0991 Hai Phong Office 245 Bach Dang, Thuong Ly Hong Bang. Ha Phong P. -84 (225) 3539 969/666/555 - F: +4 (225) 3539 789 Hochiminh City Office 9" FL Estar Bldg., 147-149 Vo Van Tan, District. 3, Hochiminh City P: +84 (28) 39 300 488 - F: -84 (28) 39 300 484 E: nexiasttDnexia.vr W: www.noxia.vn INDEPENDENT AUDITORS' REPORT On Compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of the Loan and Financing Agreements To: The Management Board of the Project "Vietnam Energy Efficiency for Industrial Enterprises" Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) Audit opinion We have audited the Compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of Loan Agreement No. 8739-VN and Financing Agreement No. 6011-VN of the Project "Vietnam Energy Efficiency for Industrial Enterprises" implemented by the International Bank for Reconstruction and Development's credits ("IBRD") and the World Bank's credits through International Development Association ("IDA") for the year ended 31 December 2021. In our opinion, the Project was, in all material respects, in compliance with the applicable laws, regulations, the procurement procedures and other provisions of Loan Agreement No. 8739-VN and Financing Agreement No. 6011-VN that could have a direct and material effect on the Project's Financial Statements for the year ended 31 December 2021. Basis for Opinion We conducted our engagement in accordance with International Standards on Assurance Engagements 3000, "Assurance Engagements other than Audits or Reviews of Historical Financial Information", issued by the International Auditing and Assurance Standards Board. Our responsibility is to express an opinion on the Project's compliance with the requirements, based on our procedures. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the compliance with the applicable laws, regulations and other provisions, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Project Management The Project Management Board is responsible for compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of Loan Agreement No. 8739-VN and Financing Agreement No. 6011-VN that could have a direct and material effect on the Financial Statements for the year ended 31 December 2021. 2015 N A -11 r ti , d. Al tl r v V t -,N,dIl dou. , N x i n t 1et di n r1fx l o.rn ,ia cmp .r iterdinthes )fl l n SC n tr n r r u.Reit r ie:1 nfl or.Sixt Cre o Cogt I.loo.M tn I l T1c C radem[ r k NXIAI TE NATIONALNEXI A'n+hN IAgoro n y xaIn io.irnITed .Nx l r tol dt r rr:r 1-r5not Oro l I t h i. M b -fT irn f xi -lr-aind'i Nd EpA[ri ln , [ td. xi arn to l doeno t[cc eptn-' s pIotyyorr It ecornm I f t ,arCmissi on hy, - rth -ibl [ Auditors' Responsibilities Our responsibility is to express an opinion on the Project's compliance with the requirements, based on our procedures. We conducted our engagement in accordance with International Standards on Assurance Engagements 3000, "Assurance Engagements other than Audits or Reviews of Historical Financial Information", issued by the International Auditing and Assurance Standards Board. That standard requires that we comply with ethical requirements, plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the Project has complied with the requirements. An assurance engagement to report on the compliance with regulatory and contractual requirements at a Project involves performing procedures to obtain evidence about whether the Project's activities are free of material noncompliance with the requirements. The procedures selected depend on the auditor's judgment, including the assessment of risks that the Project does not comply with the requirements and whether such noncompliance could have a direct and material effect on the Project's Financial Statements. Our procedures included testing the compliance with the requirements that we consider necessary to provide reasonable assurance that the requirements are complied by the Project. NEXIA STT Co., Ltd. Nguyen Viet Nga Deputy General Director Audit Practicing Registration Certificate No. 2041-2018-225-1 Audit report No.: 163/2022/HN-AUD/WB-VEEIE Hanoi, 27 June 2022 Hanoi Office 19 F., C Land Tower 156 Xa Dan II, Dong Da Hanoi P: +84 (24) 3 935 0990 - F: 84 {24) 3 935 0991 Hai Phong Office 245 Bach Dang, Thuong Ly, Hong Bang, Hai Phong P: +84 (225) 3539 969/666/555 - F: +84 (225) 3539 789 Hochiminh City Office 9 Fl. Estar Bldg., 147-149 Vo Van Tan, District. 3, Hochirninh City P: +84 (28) 39 300 488 - F +84 (28) 39 300 484 E nexiasttra)nexa.vn W: www.nexa.vn INDEPENDENT AUDITORS' REPORT On the effectiveness of internal control over the compliance with requirements that could have a direct and material financial effect on the Financial Statements as well as of internal control over financial reporting To: The Management Board of the Project "Vietnam Energy Efficiency for Industrial Enterprises" Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) Audit opinion We have audited, in accordance with International Standards on Auditing, the Financial Statements of the Project "Vietnam Energy Efficiency for Industrial Enterprises" ("the Project") implemented by the International Bank for Reconstruction and Development's credits ("IBRD") and the World Bank's credits through International Development Association ("IDA") for the year ended 31 December 2021 and issued the auditors' report thereon expressing an unqualified opinion on those Financial Statements. In connection with our audit of these Financial Statements, we also examined the effectiveness of internal control over the compliance with requirements that could have a direct and material financial effect on these Financial Statements as well as of internal control over financial reporting. In our opinion, the Project has maintained, in all material respects, effective internal control over compliance with requirements that could have a direct and material financial effect on these Financial Statements as well as of internal control over financial reporting for the year ended 31 December 2021. Basis for Opinion We conducted our engagement in accordance with International Standards on Assurance Engagements 3000. Our responsibility is to express an opinion on the effectiveness of internal control over the compliance with requirements that could have a direct and material effect on these Financial Statements as well as internal control over financial reporting based on our examination. We are independent of the Project in accordance with the ethical requirements that are relevant to the audit to evaluate the effectiveness of internal controls on the compliance of the requirements that may directly and materially affect the financial statements as well as of internal control in preparation of financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Project Management The Project management is responsible for designing and maintaining effective internal control over compliance with requirements that could have a direct and material effect on the Financial Statements as well as over financial reporting for the purpose of properly preparing and presenting the financial statements so as to minimize errors and frauds; and take responsibility for its assertions as to the effectiveness of such internal control. 15 Ni aI rnatIona Lin- td AIl, rI r va 4is the t ,ra fm o -rr ,cor ny r'5A.Trhd i--rh0 Ii ofI Mn. Comran rNgi,tr,tion r 31cC .r g i r r ofI :ltra, Si Crrcur ro id, Doug --Ic - Mar, BMt 5A. ThtrLademrsNEIAt INT.RAIONAL NEXA and th iEXAogorenownedcbyNoa trtn Imited. Nei c e aina r r fi ro i. r rni n., ,, f 0u *c.i-, tnr .i Auditors' Responsibilities Our responsibility is to express an opinion on the effectiveness of internal control over compliance with requirements that could have a direct and material effect on the Financial Statements as well as internal control over financial reporting based on our examination. Our examination was conducted in accordance with International Standard on Assurance Engagement 3000, accordingly, included obtaining an understanding of internal control over compliance with requirements that could have a direct and material effect on the Financial Statements as well as of internal control over financial reporting, testing, and evaluating the design and operating effectiveness of the internal control, and performing such other procedures as we considered necessary in the circumstances to obtain sufficient appropriate evidence on which to base our opinion. Because of inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not to be prevented or detected on a regular basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. NEXIA STT Co., Ltd. Nguyen Viet Nga Deputy General Director Audit Practicing Registration Certificate No. 2041-2018-225-1 Audit report No,: 163/2022/HN-AUD/WB-VEEIE Hanoi, 27 June 2022 *9 -A Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socia/t Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socia/st Republic of Vietnam CONSOLIDATED STATEMENT OF SOURCES AND USES OF FUNDS Year ended 31 December 2021 Accumulated Accumulated Note Year ended from 1/1/2018 from 1/1/2018 31/12/2021 to 31/12/2020 to 31/12/2021 USD USD USD Sources Funds received from the 68,291.87 34,352,005.82 34,420,297.69 World Bank Other income - 7.70 7.70 68,291.87 34,352,013.52 34,420,305.39 Uses of funds 1. Energy Efficiency Sub- loans under 4 8,522,337.28 14,719,357.96 23,241,695.24 Component 1 of the Project 2. Goods, Works, non- consulting services, consultants' services, and Incremental 5 92,587.38 207,801.34 300,388.72 Operating costs under Component 2 of the Project 8,614,924.66 14,927,159.30 23,542,083.96 (Deficit)/Surplus of sources (8,546,632.79) 19,424,854.22 10,878,221.43 against uses of funds Fund balance, beginning of the 19,424,854.22 year/period Fund balance, end of the 10,878,221.43 19,424,854.22 10,878,221.43 year/period Prepared by: i 7 Approved by: Dang Thi Thuc Phuong Hoang Kim Project Accountant Director Hanoi, 27 June 2022 The accompanying notes form an integral part of the Financial Statements 10 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of t7e Socialist Republc of Vietnam CONSOLIDATED STATEMENT OF FUND BALANCE As at 31 December 2021 As at As at 31/12/2021 31/12/2020 USD USD FUND BALANCE, END OF THE YEAR Represented by; Cash at bank - Designated account (USD) 10,844,065.84 19,366,403.12 at BIDV Cash at bank - Designated account (USD) 34,155.59 58,451.10 at the Project Management Board (PMB) 10,878,221.43 19,424,854.22 Prepared by: 1/4 Approved by: Dang Thi Thuc Phuong Hoang Kim Project Accountant Director Hanoi, 27 June 2022 The accompanying notes form an integral part of the Financial Statements Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739-VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement /Vo. 6011- VN between the International Development Association and the Government of the Socialst Repubic of Vietnam STATEMENT OF SOURCES AND USES OF FUNDS AND FUND BALANCE Component 1 - BIDV Year ended 31 December 2021 Accumulated Accumulated Year ended from 1/1/2018 from 1/1/2018 Note 31/12/2021 to 31/12/2020 to 31/12/2021 USD USD USD Sources Funds received from the 3 31,500,00000 31,500,000.00 World Bank - 31,500,000.00 31,500,000.00 Uses of funds 1. Energy Efficiency Sub- loans under Component 1 of the Project Goods 8,522,337.28 12,133,596.88 20,655,934.16 4 8,522,337.28 12,133,596.88 20,655,934.16 (Deficit)/Surplus of sources (8,522,337.28) 19,366,403.12 10,844,065.84 against uses of funds Fund balance, beginning of the 19,366,403.12 year/period Fund balance, end of the 10,844,065.84 19,366,403.12 10,844,065.84 year/period Represented by: Cash at bank - Designated 10,844,065.84 19,366,403.12 10,844,065.84 account (USD) Prepared by: Approved by: Dang Thuy Linh Nguyen.Thi Kim Ngan Manager, International Entrusted Funds Director, International Entrusted Funds Hanoi, 27 June 2022 The accompanying notes form an Integral part of the Financial Statements 12 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and iL the Government of the Socialist Republic of Vietnam STATEMENT OF SOURCES AND USES OF FUNDS AND FUND BALANCE Component 2 - PMB Year ended 31 December 2021 Accumulated Accumulated Year ended from 1/1/2018 from 1/1/2018 Note 31/12/2021 to 31/12/2020 to 31/12/2021 USD USD USD Sources Funds received from the World 3 68,291.87 266,244.74 334,536.61 Bank Other income - 7.70 7.70 68,291.87 266,252.44 334,544.31 Uses of funds 1. Goods, Works, non-consulting services, consultants' services, and Incremental Operating costs under Component 2 of the Project Goods - Consultants' services 92,572.38 207,703.64 300,276.02 Training/workshops - - Bank charges incurred at 1500 97.70 112.70 intermediate banks 5 92,587.38 207,801.34 300,388.72 (Decifit)/Surplus of sources (24,295.51) 58,451.10 34,155.59 against uses of funds Fund balance, beginning of the 58,451.10 - - year/period Fund balance, end of the 34,155.59 58,451.10 34,155.59 year/period Represented by: Cash at bank - Designated 34,155.59 58,451.10 34,155.59 account (USD) 34,155.59 58,451.10 34,155.59 Prepared by: Approved by: 'Il Dang Thi Thuc Phuong Hoang Kim Project Accountant Director Hanoi, 27 June 2022 The accompanying notes form an integral part of the Financial Statements 13 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socia/it Republic of Vietnam STATEMENT OF DESIGNATED ACCOUNT COMPONENT 1 - BIDV Year ended 31 December 2021 Account No.: 220402001 Account holder: Joint Stock Commercial Bank for Investment and Development of Vietnam Bank: Joint Stock Commercial Bank for Investment and Development of Vietnam Address: BIDV Tower, 35 Hang Vol, Hoan Klem district, Hanoi Loan Agreement No.: 8739- VN Part A - Account activities Note 31/12/2021 USD Opening balance 19,366,403.12 Add: Total amount advanced to the Designated Account 3 - Deduct: Total amount withdrawn (8,522,337.28) Closing balance 10,844,065.84 Part B - Account reconciliation Amount advanced from the World Bank 31,500,000.00 Add: Amount replenished by the World Bank 3 - Deduct: Amount recovered by the World Bank (17,966,863.68) Outstanding amount advanced to the Designated Account as 13,533,136.32 at 31 December 2021 Closing Balance of the Designated Account 10,844,065.84 Add: Amount withdrawn and not yet claimed 6 2,689,070.48 Total advances to the Designated Account as at 31 December 13,533,136.32 2021 Prepared by: Approved by: Dang Thuy Linh Nguyen Thi Kim Ngan Manager, International Entrusted Funds Director, International Entrusted Fund Hanoi, 27 June 2022 The accompanying notes form an integral part of the Financial Statements 14 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739-VN between the International Bank for Reconstruction and Development and the Government of the Socia/&t Republic of Vietnam Under IDA Financing Agreement Ao. 6011-VN between the International Development Association and the Government of the Socialist Republic of Vietnam STATEMENT OF DESIGNATED ACCOUNT COMPONENT 2 - PMB Year ended 31 December 2021 Account No.: 188840070000012 Account holder: PMB of the Vietnam Energy Effiiency for Industial Enterprises Project Bank: Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) - Hoan K/em Branch Address: No. 32 Tran Hung Dao, Hoan Kem district, Hanoi Loan Agreement No.: 6011- VN Part A - Account activities Note 31/12/2021 USD Opening balance 58,451.10 Add: Total amount advanced to the Designated Account 3 68,291.87 Deduct: Total amount withdrawn (92,572.38) Bank charges incurred at intermediate banks (15.00) Closing balance 34,155.59 Part B - Account reconciliation Amount advanced from the World Bank 266,244.74 Add: Amount replenished by the World Bank 3 68,291.87 Deduct: Amount recovered by the World Bank (258,577.04) Outstanding amount advanced to the Designated Account as 75,959.57 at 31 December 2021 Closing Balance of the Designated Account 34,155.59 Add: Amount withdrawn and not yet claimed 6 41,698.98 Bank charges incurred at intermediate banks 105.00 Total advances to the Designated Account as at 31 December 75,959.57 2021 Prepared by: Approved by: Dang Thi Thuc Phuong Hoang Kim Project Accountant Drector Hanoi, 27 June 2022 The accompanying notes form an integral part of the Financial Statements 15 Vietnam Energy Efficiency for Industrial Enterprises Under IBRO Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist Repub/ic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socialist Republic of Vietnam SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 220402001 Year ended 31 December 2021 Unit: USD Amount claimed and Withdrawal applications documented Energy Efficiency Sub- No. Date Advance loans under _Componenti BIDV-04A 21/10/2021 - 6,267,106.27 Total advanced/ documented amount - 6,267,106.27 Withdrawal application 04A represented total documented amount of USD6,267,106.27 for disbursements recognised for the period from 1 December 2020 to 15 December 2021. Prepared by: Approved by: Dang Thuy Linh hi Kim Ngan Manager, International Entrusted Funds 0[retor, International Entrusted Funds Hanoi, 27 June 2022 The accompanying notes form an Integral part of the Fnancial Statements 16 Vietnam Energy Efficiency for Industrial Enterprises Under 1BRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Assocation and the Government of the Socialst Republic of Vietnam SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 188840070000012 Year ended 31 December 2021 Unit. USD Withdrawal applications Amount claimed and Amount received documented Goods, consultants' services, No. Date Advance training and Date Amount workshops and incremental costs under the _ Component 2 07 14/9/2021 68,291.87 94,494.26 24/9/2021 68,291.87 Total advanced/ documeadned/ 68,291.87 94,494.26 68,291.87 documented amount Withdrawal applications No. 07 represented total documented amount of USD94,494.26 for disbursements incurred in the period from 10 November 2020 to 30 June 2021. Prepared by: Approved by: Dang ThiThuc 1V Phuong Hoang Kim Project Accountant Director Hanoi, 27 June 2022 The accompanying notes form an integral part of the Financial Statements 17 Vietnam Energy Efficiency for Industrial Enterprises Under ISRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socia&/t Republic of Vetnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socialist Republic of Vietnam NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2021 1. Project background The Project "Vietnam Energy Efficiency for Industrial Enterprises" is implemented by the Ministry of Industry and Trade (MOIT) - the Socialist Republic of Vietnam, and is funded by the World Bank's credits through International Bank for Reconstruction and Development ("IBRD") under Loan Agreement No. 8739-VN dated 18th August 2017 and through International Development Association ("IDA") under Financing Agreement No. 6011-VN dated 18th August 2017, with amounts of USD100,000,000 and 1,300,000 Special Drawing Rights ("SDR"), respectively, and the counterpart funds from the Project Financial Institutions ("PFIs"), the Industrial Enterprises, and the Government of the Socialist Republic of Vietnam. The Project involves the participation of commercial banks including the Joint Stock Commercial Bank .A for Investment and Development of Vietnam (BIDV) and the Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) under the Project Agreement dated 18th August 2017 among International Bank for Reconstruction and Development ("IBRD"), BIDV and VCB. On 6 November 2020, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) issued Document No. 31351/VCB-VTDQT T to the Department of Energy Saving and Sustainable Development - Ministry of Industry and Trade and the Department of Debt Management and External Finance - The Ministry of Finance to cancel its undisbursed credits from the World Bank due to difficulties and obstacles in the implementation of the Project. The Ministry of Industry and Trade and the Ministry of Finance completed the procedures to cancel the unused portion of VCB's credit limit with the World Bank in 2021. The Project became effective on 29 December 2017 and will be closed by 31 July 2022. The development objective of the Project is to improve energy efficiency in industrial sector, thereby contributing to achieving the government's energy saving targets and greenhouse gas emissions reduction objectives. The Project consists of two (2) components: - Component 1 - Energy Efficiency Investment Lending has been managed by two (2) banks, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB). The Component's objective is to carry out an energy efficiency investment lending program through the provision of a credit line for the Project Financial Institutions (PFIs) providing Energy Efficiency Sub-loans to Industrial Enterprises (IEs) or Energy Services Companies; and - Component 2 - Project Implementation Support is implemented by the Project Management Board under the MOIT. This Component's objective is to provide technical assistance and capacity building support to the MOIT on Project monitoring and supervision, including audits of Project activities and safeguards implementation. V1 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socia/lSt Republic of Vietnam 2. Summary of significant accounting policies The significant accounting policies, which have been adopted by the Project Management Board in the preparation of the Financial Statements, are as follows: Basis of preparation of the Financial Statements The Financial Statements were prepared under the cash basis of accounting. This basis of accounting is considered appropriate to the operation of Project by the management. Funds Funds received from the World Bank were recorded when actual payments were made to the Project Financial Institutions ("PFIs") or remittances were made into the Designated Accounts or direct payments were made to contractors/suppliers. Expenditures i Expenditures of Component 1 were recorded when the Project Financial Institutions' ("PFIs") branches disbursed funds upon procedures to the Industrial Enterprises ("IEs") for the lending purpose of the Project. In details, the loan disbursements upon procedures included the following main documents: original payment orders made by PFIs' branches to IEs or its contractors, summary of withdrawals, F1 credit agreements and its appendices between the PFIs' branches and IEs, and copies of payment records related to the IEs' energy saving items. *I Expenditures of Component 2 were recorded when actually paid rather than the obligation to pay them arose. Reporting currency and foreign currency transactions and translation The Financial Statements, which were expressed in United States Dollar ("USD"), were prepared considering the requirements of the World Bank. The format of the Financial Statements was created by the Project to meet the requirements of the World Bank. Project Financial Institutions ("PFIs") and Industrial Enterprises ("IEs") (implement Component 1) maintain their accounting books in Vietnam Dong ("VND"). For the purpose of reporting to the World Bank, the Statements of Sources and Uses of Funds were translated to USD using exchange rates ruled by the PFIs at transaction dates for expenditures denominated in VND and subsequently adjusted by using the exchange rate ruled by the World Bank at withdrawal dates for withdrawal transactions before the balance sheet date. The Project Management Board Vietnam Energy Efficiency for Industrial Enterprises (implements Component 2) maintains its accounting books in USD. Ai Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739-VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socialist Republic of Vietnam Designated Accounts Designated Accounts included 1 deposit account in USD opened at Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) for the Component 1's activities, and 1 deposit account in USD at Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) - Hoan Kiem Branch, which was held by the Project Management Board for settlements of the Component 2's activities. Payments made via Designated Accounts are for eligible expenditures of the Project in accordance with provisions of Loan Agreement No. 8739-VN dated 18th August 2017 and Financing Agreement No. 6011-VN dated 18th August 2017. 3. Funds received from the World Bank Accumulated Accumulated Year ended from 1/1/2018 from 1/1/2018 31/12/2021 to 31/12/2020 to 31/12/2021 USD USD USD Loan Agreement No. 8739-VN - 34,085,761.08 34,085,761.08 Advance - 31,500,000.00 31,500,000.00 Reimbursements to PFIs - 2,585,761.08 2,585,761.08 Financing Agreement No. 6011-VN 68,291.87 266,244.74 334,536.61 Advance 68,291.87 266,244.74 334,536.61 Reimbursements - - - 68,291.87 34,352,005.82 34,420,297.69 Details of Funds received from the World Bank by designated account for the year ended 31 December 2021 were as follows: Project Management Board - Component 2 (funds transferred to Account No. 188840070000012) Receipts under withdrawal applications No. Date USD 07 24/9/2021 68,291.87 4. Expenditures - Energy Efficiency Sub-loans under Component 1 of the Project Accumulated Year ended 31/12/2021 from 1/1/2018 to 31/12/2021 Equivalent Equivalent VND USD VND USD BIDV 195,160,000,000 8,522,337.28 475,553,508,282 20,655,934.16 VCB - 60,000,000,000 2,585,761.08 195,160,000,000 8,522,337.28 535,553,508,282 23,241,695.24 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- Vbetween the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socialist Republic of Vietnam 5. Expenditures - Goods, Works, non-consulting services, consultants' services, and Incremental Operating costs under Component 2 of the Project These represented expenditures for consultancy contracts, which were covered by the World Bank's funds under Financing Agreement No. 6011-VN dated 18th August 2017. 6. Amount withdrawn and not yet claimed These represented payments for the Project's activities. These expenses will be included in the next SOE Withdrawal Schedules. Prepared by: Approved by: - angThi Thuc 1h/ Phuong Hoang Kim Project Accountant Director Hanoi, 27 June 2022 21 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist RepublIc of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socialst Republc of Vietnam Appendix I - Auditors' Responsibilities for the Audit of the Financial Statements Year ended 31 December 2021 As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, 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. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. * Evaluate the appropriateness of accounting policies used and related disclosures made by Project management. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with the Project Management Board 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. We also provide those charged with the Project Management Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with the Project Management Board, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 22