Date: 27 february, 2020 Mr. Subodh Adhikari e ¶ r31TWPI Task Team Leader The Word Rank, Nepal Country Of 2 FEB 2020 NORLDMANK RECEPTION Subject: Audited Project Accounrt FY9AL/019Q075/76). Dcar ivh.Adhikari. WVe are pleased to submiät the Audited Project Account of the Scalng U5 Renewabie in c rogram (SREP) (IDA Grant No: TF 016552NP) of IY 201 8/019 (2075/76) for yomu nlcessary action and approval. h:ak yOU fOr cooperntion. Sincerely yours Nadhusudhan Adhikari Executive Direcno 1 hr Secreary, Ministryo Energy, \Vjter Resource and irrinatin, Singh Durbar, Kathmandu 2. The Fiinneal Comproll GeneraAnamnagar Kathmandu h- ice uditor Gener Iaharminhl, Katmandu MrRgyPn rbn, Sr.OpMrton Okcer,The World Bän1k, Nepl Country O c . mimAukeåh GhAr. Propit e MInager, ISREP) The Nait iol Agency Work ng for Re newable Energy and1 Enrgy Efficiency Mbiey ~ ~ i. o :gy erRsuce 'and Irrig-ation /diemdirEnrgy romoionCentre (TF 016552NP) ( 7 y2018 &i 16 July 2019) Ref No.: - 2076/77- Date: February 26, 2020 INDEPENDENT AUDITOR'S REPORT The Secretary Minisoy o Finance Singh Durbar, Kathmandu Report on the Financial Statements We have audited the accompanying Project Financial Statements including Statement of Designated Account and Statements of Expenditures (SOEs) of the " Scaling- Up Renewable Energy Program (SREP) " financed by IDA Grant No. TFO]16552 NP" as at 16 July, 2019 (31N Ashad, 2076) and for the year then ended and a summary of accounting policies and other explanatory notes. Management's Responsibility for Financial Statements Management is responsible for the preparation and fair presentation of the Financial Statements in accordance with the Government of Nepal (GoN) accounting policies and relevant practices. This responsibility includes: designing, implementing and maintaining internal control relevant to preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these Project Financial Statements based on our audit. We conducted our audit in accordance with the INTOSAI (International Organisation of Supreme Audit Institutions) Fundamental Auditing Principles. Those Principles require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 judgement, 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 entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion Management letter highlighting areas for improving financial management is attached herewith. In our opinion, the Project Financial Statements including statement of Designated Account in all material respects, give a true and fair view of the financial position of the " Scaling- Up Renewable Energy Program (SREP) " as of 16 July 2019 and of the results of its operations and its cash flows for the year then ended in accordance with GoN accounting policies. We also report that funds provided under IDA Grant No. TF016552 NP and have been utilized for the intended purposes. In addition, with respect to SOEs, a) adequate supporting documentation has been maintained to support claims to donors for reimbursement of expenditures incurred; and b) expenditures are eligible for financing under the above mentioned Grant. (1swar Nepal) Deputy Auditor General Aiternative Energy Promotion Centre Salng-up Renewable Energy Program (TF 016552NP) Audited Project Account Cont entrs Report I Su mmary of Sources and Uses o1' Funds Report 2 Designated Account Reconciliation Statement & Cash Projection Reporl 3 Stalement of Lxpenditure Rcpon 4 Statement of Expenditure for Withdrawal Application Report 5 Disbursement Note I GoN FuInd and GoN Reimbursable Fund/ IDA Fund Replenishable Statement Note 2 Reconciliation Statement Audited Project Account Report 1 Scaling-up ReneWable Energy Program (TF 016552NP) Summary of Sources and Uses of Funds Fiscal Year: 2018/019 from 17 July 2018 to 16 July 2019, ----__----_ Amount in NPR Notes to. `Cumulative up to Description Previous Fiscal Cumulative to Date Account Year Budget Allocation(Proposed Budget of FY 018-19) 766,430,000.00 425,800,000.00 1,192,230,000.00 A. Opening Cash/Bank Balance B. Sources of Funds 145,839,657.25 97,809,567.00 243,649,224.25 GoN Fund 1 - - GoN Reimbursable Fund - 48,480,792.00 6,877,897.00 55,358,689.00 IDA Funds Replenishable I_6,941,888.00 _(1,789,504.00) 5,152,384.00 IDA Funds 90,416,977.25 92,721,174.00 183,138,151,25 Total (A+B) 145,839,657.25 97,809,567.00 243,649,224.25 C. Uses of Funds by Category/ Component Non consulting,Consultants services &training a 3 40,482,215.75 29,023,269.00 69,505,484.75 DFS(Market reseach,BP,EMP etc) 3 13,014,266.00 2,966,380.00 15,980,646.00 Incremental operating - 3 7,538,212.50 4,116,716.00 11,654,928.50 Reimbursable Part of Subsidy Payment 3 84,804,963.00 64,014,073.00 148,819,036.00 Less- Refund of Advance Subsidy - 2,310,871.00 2,310,871.00 Net Reimbursable Part of Subsidy Payment (4 1 84,804,963.00 67146,508,165.00 Total 145,839,657.25 97,809,567.00 243,649,224.25 D. Closing Balance- Total (C+D) 145,839,657.25 97,809,567.00 243,649,224.25 Designated Account Statement I Opening_Balance __ - 0,266,132.92 2 Fund Received from IDA _ _75,161,154.16 47,634,087.54 122,795 241.70 3 Total Cash Balance (1+2) 75,161,154.16 67,900,220.46 122,795,241.70 4 Less: Transfer to GoN Treasury Ac count 54,632,432.50 46,175,536.00 100,807,968.50 5 Less: Direct Payment from Designated Account 394,443.75 - 394,443.75 6 Foreign Exchange Gain/Loss (+/-) 1 131,855.01 584,831.00 716,686.01 6. Closing Balance (3-4-5+6) 20,266,132.92 22,309,515.46 22,309,515.46 CA Sangam Dulal Yuba Raj Acharya Madhusu han Adhikari Financial Management Expert Chief Account Comptroller Executive Director AEPC AEPC AEPC Yam Prasad Dhungana Dinesh Kumar Ghimire Gop7th Mainal swar Nepa Under Secretary (Account) Secretary Financial Comptroller General Deputy Auditor General MoEWRI MoEWRI Financial Comptroller General Office of Auditor General Office Auditedé Proi, e c Acem:n Scaliin,-up Reneaihe Energy -rgram (TF 016552NP) Designated Account RZec,onciliaetioni Statlieni & C'ash Projection H,caj) c a r: 201810! 9 froma 17 July 2018 fo 16 July 2019 Antmilt in 1[SD Sni lCm ti u ti (o R e port ing P Y 2017/018 FY 2l1/019 1. )peIning Ca0i Blance - 85.349.67 2. Add Reccipi of Funds 707 -90 02 426.543 54 1 134.038 56 3. Tonad Cash Lkalancc ( 1+2) 707.495 02 611,893.21 1.134.038 56 4, L.css :0() Trnoser to GON Treasury from1 DCsiUnatd AccoUnIt 5 18,468.35 407,892.52 926,360 87 b) Dircet Payment fron Designtd Account 3.677.00 - 3.677 00 - Coin Designated AccounI Balancc at the end of Repoling Period (3-4) 185,349.67 204,000.69 204,000.69 CA Sangam Dulal Yuba Raj Acharya n (sudhan Adhikar Financial Management Expert Chief Acceunt Comptroller Executive Director AEPC AEPC AEPC _ / I р � �Г� -{ � i ( I� ^ ® � �_.�� - � i �� , � `. 1{ 1 - + � f : � f � �� \ � __ �^ j А 1�-� У Ir - I �( У��, � г'.. 1 .7 rs �с © - � � - - �'I I -sq и � �1 � j � � � ы ^ I{ -_ с�и б f V L Ш Ш � _ й .� Q - ri r ^-. Л + Т °k г Т � I '✓. '"!" � � Pt I � � \ и.К Г- ,[�1 t� г I Л'- 1 Х ^ v: »I -о Ш ГЭ � С � � - в,Vj N h N С Г! Г 1 _ 1Г, f'+ i(� .�н' _ С� Г° _ _ {'Р- V' 4- �' _ 1(. 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'�. °� ^-. _� 4 � � ш сГ п г� о п п со и� и и о� 0 �-г г� �.� м т�. г� мч г� .--i � --� � Q � -�. а �-ь �. � '� -.. еп �д rv й � п n.-i ,`�-i л.rv-r cr ш.а п т rr т ц т О k� гНоц 2 О � , *-i д .ч �с � оо оо ао со оо оо д7 т rn rn т О ги ? U�' C�S о� д д 6 С7 0 4 4� 4 � и� Е с r� tv гч гv м м г. г� г.i г.ь г�г р Е и т У �-�--��е°�-�-���� и ги -� г ш а п rv о.-ч cr оа ш и гл ,. 't � j sëo �`�,�-и �'Ч �` - � � с.з �, п п,� .-�- ,-", .-�, п й и г-� са � Q � й U, о Sealing U1) Reiieýý,able Fnergy 1. Accounting Policy and Fxl)laiiatoi-.N, Notes I . 11ý-oject Back-ground: IDA Gi-ý,,iit TV 0 16ý52N]' xN-ýýs si,,iiý2d of 7.9 Million US Dý)llýi;- out of \\ýhieli 6.9 iiýllioii is allocated for 01' 11,iý-iiicýit and b,-ýlaiicc for Technical Assistance. The gi-allt/pi-o.ýect 1('reenlellt \,,,as approved oil 24 Noveii)l)eý- 2014. 2. Staternent of Cornpliance Project Financial Statcnicnts have been prepared in ýiceoi-dýi[ice kvith Audit Guide of Projeel Financial S1Z1tCVuCil1S iSSLled býý Oý1-ice oý'tiic Auditør General, Nepal in 20 15; Financial fli-ocedtiiý,11 Act and Rules ofGON and CON Accountin.- Guideline 2016 issued by FCGO. 3. Basie of Accounting The iii-eýjeci has iiitýi)tiii)ed accounis accordiuýø to the Government ofNepal Accoiititiii.ý, policics on a cash basis of accounting and double entry accounting systeins. 4. Fund Floýv mechanisni After the annual bLICIýICI jS, 2pproved by the parliarnent, MOF issues authorization Ictter to the Ministry of Water Rcsource &- (Mof-WRI), MoEWRI then issues ýiiillioriz,-itioti letter to Ille Executive Director of AEPC to sliend bud-et. GON fund and reimbUrsable fund is released by Distriet Treasury and Controller Officc as per Treasurv Single Account Systeni (TSA) as per approved annua] pro-l-alil and bild,ýel breýikdoNvii. AF-lIC is solelý, i-esi)oýisibie føl, all payments. AUC prepares \vitlidrawal appHealjons and sends to IDA for reirnbursement and replenishment. 5. Designnted Account Desý-(,iý,ited Account (in USD) have been establislicd. Desi(riiýtted Account is operated \villi tliejoilit si-natories of Ille Executive Dircctor nid Chief- of Accoiýiit Sýýelioii of AEK. Separate led-ers have been I iiiý!iýitaiilecl at AEPC for dav to day financial transactions for both Accounts. It is tised to Iransfer the alliotillt to tliý: GON central -,ýccount for reimbursenlent purpose. 6. Sources and Uses of Fund ProJect Financial St,ýteiiiciiý (NInin slicet) reflects the figures as Source and Uses of Fund. GON fund, GON i-eiiiibiýrsa,i[c fund, Donor`s ?,ild Donor fund replenishable ýiiiioLiiit are the main sources of the proýicet. Cate.Oory wise total expenditure arc shown in the Uses. The e,\peiises made under different cate,-ory have been reelassifled from Interim 1-inancial Monitoring Report as per actual na ire of exfienditure. 7. (unmulitive up to the Previuns FY and Cuirrenl FY Cumula:ive up to PreN ios FY is shiwn for cumulativte pur posC and conIsists oJ cumullatiVe anmount at the end oF provious year , om inceptio of the project Similarly, eumulative up to the eurrent FY is derived by adding cumulative up to previous year and current year's data. 8. Advances Advances are treated as expenditure. Unsettled advances at the end FY is NPR 523,540 only. 9. Exchange Rate Applicable Biuying rate (exchange rate) as per Nepal Rastra Bank is applied for the unspent balance (USD) in the Designated account at tlie end date of FY to convert it in Nepalese rupees. 10. Nepalese Fiscal Year FY 2018/19 commenced from 17 July 2018 and ended on 16 July 2019. The figures mentioned in this Project Financial Statement are wiithin this reporting period. 1. Budget VS Expenditire of the Current FY Annual % of Budget Expenditure expenditure Caeor)escr-iption/ ComlponentI Allocation (FY 18-19) over budget (FY 18-19) allocation Non consitlirng, Consultants services & training(Launeh of online web portal, Third party verification, Provision of subsidy for partial financing ofw2e) 37,400,000.00 29,023,269.00 77.60 DFS (Market research, BP.EMP etc.) l0,000,000.00 2,966,380.00 29.66 increiental operating(consumables, vehiele rental/leasing., equipment maintcnanceurepair, dornestic travel, comunlication, bank 3 charges, adsertisement) 4,500,000.00 4______ 910491.4_8 4 Reinibursable Part of Subsidy Payrnent 373,900,000.00 64,014,073.00 17.12 -Total 425,800,000.00 100,120,438.00 23.51 12. Reporting currency The reporting currency is in Nepalese Rupees- NPR (currency oflNepal). The amount disbursed from IDA Grant are separately shown in Report-5 of Project Financial Statements. 13. Intended Purpuse IDA Grants have been used only fr the intended purpose of the project 14. Date of Aåithorization 1iese project financial staerents have been authI d fr issue by the Ahernative Energy Promotion Center, Lalitpur on 15 December 20 19. CA Sangam Dulal Yuba Raj Achara Madhusud kan Adhikari Financial Managenent Expert Chief Account Controller Executive Director