No.RW/NH-24020/3/2015-WB/EAP Government of India Ministry of Road Transport &Highways (EAPSection) Transport Bhawan, 1, Parliament Street, New Delhi-11 0001 Dated: 16.05.2019 To, Mr.T. Pratap, Team Task Leader-NHIIPand SeniorTransport Specialist, World Bank, Hindustan Times Buildings, 18-20 Kasturba Gandhi Marg, New Delhi-110001 Fax~49247643 Subject: Rehabilitation and upgradation to 2-lane/2-lane with paved shoulders configuration from single/intermediate lane and strengthening of stretches of various National Highways in the States of Bihar, Rajasthan, Odisha, West Bengal and Karnataka being taken up with World Bank loan assistance under Phase-I of National Highways Interconnectivity Project (NHIIP) - CAGAudit reg. Sir, In compliance to the External Audit requirements as per Clause8 of Project Financial ManagementManual, please find enclosed the Management Letter (Annexure-I), Report on the Project Financial Statement (Annexure-II), Audit Certificate (Annexure-III) for the subject for the Financial Year 2017-18. (KhushalChand) Chief Engineer(EAP) Tel. NO.:011-23314334 Encl.: As above. Copy to: The Additional Secretary(Fund Bank and ADB), Department of Economic Affairs, Ministry of Finance, New Delhi-110 001 for information please. OFFICE OF THE PRINCIPAL DIRECTOR OF AUDIT, ECONOMIC & SERVICE MINISTRIES, AGCR BUILDING, I.P. ESTATE, NEW DELHI NO. AMG IV/EAPINHIIP/8301-IN/2017-18/ ::5£ Dated J 5 MA Y 2019 AUDIT CERTIFICATE The Statement of Expenditure of World Bank (International Bank for Reconstruction and Development (IBRD)) assisted National Highways Interconnectivity Improvement Project (NHIIP) Loan no.8301-IN for the year 2017-18, attached hereto, have been audited in accordance with the regulations and standards of audit of the Comptroller and Auditor General of India and accordingly included such tests of accounting records, internal checks and controls, and other auditing procedures necessary to conform that the expenditure statements/financial statement are correct. During the course, Statement of Expenditure and the connected documents were examined and these can be relied upon to support reimbursement under the Loan Agreement as detailed in Annexure 'A'. On the basis of the information and explanations that have been obtained required and according to the best of out information as a result of test audit, it is certified that the Expenditure Statements/Financial Statements read with the observations set out below represent a true and fair view of the implementation (and operations) of the Project for the year 2017-18. This certificate is issued without prejudice to CAG's right to incorporate the audit observation in the Report of CAG of India for being laid before Parliament. (} ~~ H ~_.L.t.--- (C. ~;~ez&an) Principal Director of Audit Annexure A Statement showing the expenditure qualifying for re-imbursement in respect of World Bank assisted National Highway Interconnectivity Improvement Project (NHIIP) Loan No.8301 IN for the period 2017-18 (Rs in thousands) SI. States Gross Security Expenditure Agency Net eligible Net eligible World Eligible No. Expendit Deposit/ during charges amount as per amount as Bank amount ure retention maintenance State AG worked out by Loan admitted in money period for certificate the Ministry Share as audit for supervision per reimbursement Ministry (Rs. in crore) 1 2 3 4 5 6 = 1 -(2+3+4) 7 8 1 Delhi 230157 - - - 230157 230157 184125 18.41 2 West Bengal 351359 -10995 22586 13904 325864 325864 169453 16.95 3 Odisha 1995331 150913 0 60189 1785200 1784229 910312 91.10' 4 Bihar 5282044 636503 0 161152 44840312 4484389 2286020 224.86J 5 Kamataka 14075814 72692- 0 31440 1304595 1303448 661072 66.156 6 Rajasthan 217811 -108990 91621 5730 148712 229450 116134 8.04 Total 9484284 740123 114207 272416 8278559 8357537 4327115 425.51 IMoRTH claimed Rs.91.03 crore where Audit certified claim of Rs.91.10 crore as MoRTH did not claim Rs.0.07 crore inadvertently related to Supervision consultancy payment in NH 217 for the month of August 2017 to October 2017 2 The eligible expenditure of Rs.0.03 crore is less than expenditure claimed by the MoRTH due to withholding of retention money which is not reimbursable. 3 Difference (of Rs.3.74 crore) is due to disallowance ofRs.3.71 crore by Audit and Rs.0.03 crore as indicated in footnote no. 2 4 Rs.560683/- relates to NGO which was already paid in FY 2016-17 but could not claim in Financial year 2016-17 (Reference footnote consolidated expenditure statement submitted by Ministry) 5 An amount of Rs.0.17 crore towards miscellaneous recovery has not been included under security deposit/retention money head. 6 Difference of Rs.405160/- due to Rs.853706 (50% of Rs.1707412.00 miscellaneous recovery) minus Rs.448546.00 (80% of Rs.560683/- of gross expenditure) -------- - - - - , OFFICE OF THE PRINCIPAL DIRECTOR OF AUDIT ECONOMIC & SERVICE MINISTRIES, AGCR BUILDING, I.P. ESTATE, NEW DELHI 7 To i' 5 MA Y 2019 No. AMG IV/EAPINHIIP/8301-INn017-18/.1 Dated: , The Secretary, Ministry of Road Transport and Highways, Government of India, Transport Bhawan New Delhi. Report on the Project Financial Statement World Bank Loan no. 8301-IN. Sir, We have audited the accompanying Financial Statements of the World Bank assisted I.e. International Bank for Reconstruction and Development (IBRD) assisted National Highway Interconnectivity Improvement Project (NHIIP) Loan no. 8301-IN, which comprise the Statement of Sources and Application of Funds and the Reconciliation of Claims to total Applications of Funds for the year 2017-2018. These statements are the responsibility of the Project's Management. Our responsibility is to express an opinion on the accompanying Financial Statements based on our audit. We conducted the audit in accordance with the Auditing Standards promulgated by the Comptroller and Auditor General of India. These standards require that we plan and perform the audit to obtain reasonable assurance that the Financial Statements are free of material misstatement. Our audit examines, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. It also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the Financial Statements present fairly, in all material respects, the sources and applications of funds for World Bank International Bank for Reconstruction and Development (IBRD) assisted National Highway Interconnectivity Improvement Project (NHIIP) Loan no. 8301-IN for the year 2017-18 in accordance with Government of India accounting standards with respect to NHIIP New Delhi, Rajasthan, Odisha, Bihar, West Bengal & Karnataka. In addition, in our OpInIOn, with respect to Interim Un-audited Financial Reports (lUFRs)/Statement of Expenditure (SOE), adequate supporting documentation has been maintained to support claims to the World Bank for reimbursement of expenditure incurred; except for audit observations mentioned in the Management letter appended to this audit report, expenditures are eligible for financing under the Loan Agreement. During the course of audit, Statement of Expenditure detailed in Annexure 'A' and the connected documents were examined and these can be relied upon to support reimbursement under the Loan Agreement. This report is issued without prejudice to C&AG's right to incorporate the audit observations in the Report of C& AG of India for being laid before Parliament. c. Principal Director of Audit Annexure A I I Statement showing th e expen di . . . for re-Imbursement iture quahfymg . in respect of World Bank assisted . NatIona I H'Ighway I I Interconnectivity Improvement Project (NHIIP) Loan No.8301 IN for the period 2017-18 I I . thousands) (R sm SI. States Gross World Eligible Security Expenditure Agency Net eligible Net eligible No. Expendit Bank amount Deposit/ during charges amount as per amount as ure Loan admitted in retention maintenance State AG worked out by Share as audit for money period for certificate the Ministry I I per reimbursement I supervision (Rs. in crore) I Ministry I 1 1 -(2+3+4) 7 8 1 2 3 4 5 6 18.41 Delhi 230157 230157 184125 - - - 230157 I I I 2 3 West Bengal Odisha 351359 -10995 22586 13904 325864 325864 169453 910312 16.95 91.101 I r 1995331 150913 0 60189 1785200 1784229 4 Bihar 4484389 2286020 224.86J 5282044 636503 0 161152 44840311 5 Kamataka 14075814 1303448 661072 66.156 72692:> 0 31440 1304595 8.04 6 Rctiasthan 217811 229450 116134 -108990 91621 5730 148712 425.51 Total 9484284 740123 114207 272416 8278559 8357537 4327115 lMoRTH claimed Rs.91.03 crorc wI '. . . Supervision consultancy . rere Audit certified claim of Rs.91.1 0 crore as MoRTH did not claim Rs.0.07 crore madvertently related to payment In NH 217 11 th h f .' ~r e mont 0 August 2017 to October 2017 2 • • The ell81bleexpenditure of R . . reimburlable. .. 5.0.03 crore IS Jess than expenditure claimed by the MoRTH due to withholding of retention money which IS not : Difference (ofRs.3.74 crore) is due t di II Rs.560683/- relates to NGO hi 0 isa owance ofRs.3.71 crore by Audit and Rs.0.03 crore as indicated in footnote no. 2 consolidated expenditure stat w ich ~as already paid in FY 2016-17 but could not claim in Financial year 2016-17 (Reference footnote 5 An amountof Rs 0 17 c ernent submitted by Ministry) 6 . Difference " rore of Rs.405160/- duetowards to R miscellan eous recovery has not been included under security deposit/retention . money hea d . ""xnpndilure) s.853706 (50% of Rs.1707412.00 miscellaneous recovery) minus Rs.448546.00 (80% of Rs.560683/- of gross Annexure -I Name of the Project: National Highways Interconnectivity Improvement Project Loan No. : 8301 IN Statement of Sources and Application of Funds Report for the Period Ended 31st March 2018 In Rs.'OOO Previous Current year Project to Year (For the Period date Particulars (For the Period from 01 April ( Up to 31 March from 01 April 2017 2016 to 31 March 2018) to 31 March 2018) 2017) - - - Openinfg Balance, (If cash balances are controlled by the entity) (A) Receipts Funds received from Government through Budget (Including External 9,484,284 9,389,950 28,759,112 Assistance received by Government for the Project. ) Funds received directly by Project implementing Authouiity through - - External Assestance Beneficiary Contribution (if any) - - - Total Receipts (B) 9,484,284 9,389,950 28,759,112 Total Sources (C=A+B) Expenditures by Component Component A: Road improvement and Maintenance Component 9,303,292 9,383,315 28,571,486 Component B: Institutional Development 160,644 - 160,644 Component C: Road Safety 20,347 6,635 26,982 Total Expenditures (0) 9,484,284 9,389,950 28,759,112 - - - Closing Balance, (if case balances are controlled by the entity) (C-D) Notes: 1. Information about the basis of preparation of the financial statements with regard to the Financial Rules and Codes applicable • The above details are related to expenditure which have been incurred on the the Projects under National Highways Interconnectivity Improvement Projects (NHIIP) and are eligible to be reimbursed from the World Bank under World Bank Loan No. 8301 IN 2. The above figures are based on monthly/quarterly abstract accounts prepared by the accounts compiling offices, duly reconciled by the respective DDOsof 5 Project States viz. Bihar, Rajasthan, Odisha, Karnataka and West Bengal and also the EAPZone MoRTH 3. Name of accounting units whose financial statiments are aggregated to prepare the consolidated accoucts: - Regional Officers of MoRTH in the Project States viz. Bihar, Rajasthan, Odisha, Karnataka and West Bengal and also the EAPZone MoRTH 4. Any other project specific Note: a. Cash Balances are not controlled by the entity Signed Project Director. EAP Cell Annexure - 2 Name of the Project: National Highways Interconnectivity Improvement Project loan No. : 8301 IN Reconciliation of Claims to Total Application of Funds Report for the Year Ended 31st March 2018 Amoun t In Rs.'000 Current Previous Year year Project to (For the Period (For the Period date Particulars Schedules from 01 April from 01 April ( Up to 31 March 2017 to 31 March 2016 to 31 March 2018) 2018) 2017) Bank Funds Claimed during the Year (A) I 4,327,115 4,486,330 13,479,465 Total Expenditure made during the year (8) 9,484,284 9,389,950 28,759,112 Civil Works through Item-rate contracts (1) 1,231,287 2,003,437 10,058,396 Civil Works through EPC Contracts (1a) 6,631,761 6,537,346 15,183,144 Maintenannce of Sub Projcect Roads for 5 Years 101,947 23,788 125,735 Supervision during construction period (2) 313,498 263,288 885,743 Supervision during Maintenance period (2a) 12,260 6,215 18,475 Other costs (including Agency Charges) 272,416 238,595 754,734 Retention Money I Security Deposits 740,123 310,647 1,545,258 Institutional Development Component (3) 160,644 - 160,644 Road Safety Component (4) 20,347 6,635 26,982 less: Outstanding AC Bills ( C ) - - - Ineligible Expenditures (D) 1,126,746 579,244 1,705,990 Other costs (including Agency Charges) 272,416 238,595 754,734 Retention Money I Security Deposits 740,123 310,647 1,545,258 Maintenannce of Sub Projcect Roads for 5 Years 101,947 23,788 125,735 Supervision during Maintenance period 12,260 6,215 18,475 Expenditures not claimed (E) - - - Total Eligible Expenditures Claimed (F) = (B) - ( C) - (0) - ( E ) 8,357,537 8,810,706 27,053,122 World Bank Share @ .... % of ( F ) 4,327,115 4,486,330 13,479,465 Civil Works through Item-rate contracts (1+1a) @ 50% 3,931,524 4,270,392 12,620,770 Supervision during construction period (2) @ 80% 250,799 210,630 708,594 Institutional Development Component (3) @ 80% 128,515 - 128,515 Road Safety Component (4) @ 80% 16,278 5,308 21,586 ;~~k SI~ Project Director, EAP Cell ~ ~/KliUSHAL CHAND p ....../~EnQ~ . ~~'q1f~~ MInIICry of RoecI Treneport & HlghWIIVI ....... /Gov.mm.nt of Indl. 1IIf ..... /New O.lhi-110001 RWINH-24020/3/2015-WB/EAP Government of India Ministry of Road Transport & Highways (EAPZone) Transport Bhawan, 1, Parliament Street, New Delhi - 110001 To, Dated: 09th May, 2019 Director General of Audit 010 Director General of Audit (Economic & Service Ministries) Indraprastha Estate, New Delhi-110002 Subject: Management Assertion Letter for the audit of National Highways Interconnectivity Improvement Project (World Bank Assisted) for the period from 01 st April 2017 to 31st March 2018. This assertion letter is provided in connection with your audit of the financial statements of the National Highways Interconnectivity Improvement Project (World Bank Assisted) for the Financial Year 2017-18. We acknowledge our responsibility for the fair presentation of the financial statements in accordance with the cash basis of accounting followed by the Government of India, and we confirm, to the best of our knowledge and belief, the following representations made to you during your audit: • The project financial statements are free of material misstatements, including omission. • Project funds have been used for the purposesfor which they were provided. • Project expenditures are eligible for financing under the LoanAgreement with the World Bank. • There have been no irregularities involving management or employees who have a significant role in internal control or that could have a material effect on the project financial statements. • We have made available to you all books of account and supporting documentation relating to the project. • The project has complied with the conditions of all relevant legal agreements, including the Financing Agreement, the Project Agreement, the Project Appraisal Document, the Minutes of Negotiations, and the Borrower's Project Implementation Plan. Project Director, EAPZone, MoRTH