I nh.Tf-k1 4a1at.lt'l! JI.'l°ht.iLl'l! ti11,th I f 'l.P/11 9"Coo&. h1A°lll-T JIC7" lo 111 The Federal Democratic Republic of Ethiopia I Audit Services Corporation I I I INDEPENDENT AUDITOR'S REPORT TO THE SUPERVISING AUTHORITY OF ETHIOPIAN ELECTRIC POWER I We have audited the financial statements of Ethiopian Electric Power, Geothermal Sector Development Project, financed under SCF-SREP Grant No TF 017206, which comprise the I balance sheet as at 7 July 2017, and the statement of sources and uses of funds and the Designated Account statement for the year then ended, and a summary of significant accounting policies and other explanatory information. I Chief Executive Officer's Responsibility for the Financial Statements The Chief Executive Officer of Ethiopian Electric Power is responsible for preparation of I financial statements that give a true and fair view under the modified cash basis of accounting as described in note 2 to the financial statements and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from I material misstatement, whether due to fraud or error. Auditor's Responsibility I 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. Those I standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. I 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 I 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 entity's preparation and fair presentation of the I 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 I policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I ~ 251-011-5515222 Fax 251-011-5513083 E-mail: ASC@ethionet.com 1815720 251-011-5535012 I 251-011-5535015 251-011-5535016 I I I INDEPENDENT AUDITOR'S REPORT TO THE SUPERVISING AUTHORITY OF ETHIOPIAN ELECTRIC POWER (continued) I We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. I Opinion I In our opinion the financial statements give a true and fair view of the financial position of Ethiopian Electric Power, Geothermal Sector Development Project, financed under SCF- SREP Grant No TF O17206, as at 7 July 2017 and of its sources and uses of funds for the year I then ended in accordance with the modified cash basis of accounting described in note 2 to the financial statements. I Report on Other Requirements In our opinion I all necessary supporting documents, records and accounts have been maintained in respect of all Project activities; I - there was a clear linkage between the books of account and the financial statements; I - our examination reveals no major weaknesses or irregularities in the system of internal control over financial expenditures other than that mentioned in the management letter; and I - the Designated Account has been maintained in accordance with the provisions of the financing agreement and funds disbursed out of the Account were used only for the I purposes intended in the financing agreement. I ,{luJ:+: ~,t':ce.S G1 _)Q~~~ 3 January 2018 I I I I I 2 I I I I ETHIOPIAN ELECTRIC POWER GEOTHERMAL SECTOR DEVELOPMENT PROJECT I SCF-SREP-GRANT No. TF 017206 STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 7 JULY 2017 I I 2017 Cumulative Ethiopian Birt Ethiopian Birr 2016 Ethiopian Birr I FINANCING Credit from IDA I Initial deposit to Designated Account Gain on foreign exchange 1,123,017 30,670,950 3,198,267 1,867,500 I TOTAL FINANCING 1,123,017 33,869,217 1,867,500 I PROJECT EXPENDITURES Operating cost 156,196 156,196 156,196 156,196 - - I EXCESS OF FINANCING OVER I EXPENDITURES 266.821 1.86'.Z.5!!!! I I I I I I I I 3 I I I ETHIOPIAN ELECTRIC POWER GEOTHERMAL SECTOR DEVELOPMENT PROJECT I SCF-SREP-GRANT No TF 017206 BALANCE SHEET AS AT 7 JULY 2017 I I ASSETS Notes 2017 Ethiopian Birr 2016 Ethiopian Birr I CURRENT ASSETS Advance to contractors 14,121,841 I Advance to IDA-54680-ET Cash at bank 3 5,944,910 13,646,270 32,746,200 33.713.021 32,746.200 I REPRESENTED BY I ACCUMULATED FUND J3,7]J.02l 32,746.200 I I I I I I I I I I 4 I I I ETHIOPIAN ELECTRIC POWER GEOTHERMAL SECTOR DEVELOPMENT PROJECT I SCF-SREP-GRANT No TF 017206 DESIGNATED ACCOUNT STATEMENT I For year ended 7 July 2017 Account number 100651300009 I Depository bank Address National Bank of Ethiopia Addis Ababa, Ethiopia Related Grant I Currency SCF-SREP-GRANT No TF 017206 USD I USO Equivalent in Ethiopian Birr I Beginning Balance as at 7 July 2016 1,500,000.00 32,746,200.00 I Less:payment for goods and services 909,990.63 590,009.37 20,222,947.46 12,523,252.54 I Add: Gain on foreign exchange Ending balance at 7 July 2017 1,123,017.49 590.009.37 13,646.270.03 I I I I I I I I I 5 I I I ETHIOPIAN ELECTRIC POWER GEOTHERMAL SECTOR DEVELOPMENT PROJECT SCF-SREP-GRANT No. TF 017206 I NOTES TO THE FINANCIAL STATEMENTS 7 JULY 2017 I 1 PROJECT INFORMATION This Project was established to implement SCF-SREP- Grant No TF 017206 which I was jointly financed by the Government of the Federal Democratic Republic of Ethiopia and the International Development Association (IDA) on 10 June 2014.The grant amounts equal to twenty four million five hundred thousand United States I Dollar ($24,500,000).The objective of the Project is to develop Geothermal Resources in the territory of Ethiopia which consists of the following part: I Part I: Alto Geothermal Site Development I (a) Drilling and testing production wells and setting up a steam gathering system; (b) Financing of drilling management and supervision contracts, as well as services related to reservoir engineering and management of Aiuto geothermal site I development. 2 SIGNIFICANT ACCOUNTING POLICIES I a) Basis of preparation I These financial statements have been prepared on a modified cash basis whereby non- monetary assets are expensed when acquired and monetary assets and liabilities are carried at fair value. I b) Currency These financial statements are presented in Birr. Transactions in foreign currency are I translated into Birr at the approximate rate of exchange prevailing at the date of the transaction. Cash balances denominated in foreign currencies are translated into Birr at the exchange rates ruling at the balance sheet date. I 3 BANK BALANCES Ethiopian I National Bank of Ethiopia- Birr Ale No. 0 I 00651300009 13.646.270 I 4 DATE OF AUTHORIZATION I The Chief Executive Officer of Ethiopian Electrical Power authorized the issue of theses financial statements on 3 January 2018. I 6 I I