OSHC «BARQI TOJSK Central Asia South Asia Electricity Transmission and Trade Project Grant No. TF A4615 Special Purpose Project Financial Statements for the year ended December 31,2018 and independent auditors* report OPEN STOCK HOLDING COMPANY UBARQI ТО Л К» PROJECT IMPLEMENTATION UNIT CENTRAL ASIA SOUTH ASIA ELECTRICITY TRANSMISSION AND TRADE PROJECT GRANT NO. TF A4615 TABLE OF CONTENTS Page STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31,2018 2 INDEPENDENT AUDITORS， REPORT 3-5 SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 Statement of cash proceeds and disbursements 6 Statement of uses of funds by project components 7 Notes to the special purpose project financial statements 8-12 STATEMENT OF MANAGEMENTS RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 The following statement, which should be read in conjunction with the independent auditors’ responsibilities stated in the independent auditors’ report set out on pages 3-5， is made with a view to distinguish the respective responsibilities of management and those of the independent auditors in relation 3 to the special purpose project financial statements of "Advisory Support for the Regional Trade Initiatives Project” financed under Financing Agreements Grant No. TF A4615 (the “Project”). 3 Management is responsible for the preparation of this special purpose project financial statements, cash 3 proceeds and disbursements, uses of funds by project components for the year ended December 31, 2018 in accordance with International Public Sector Accounting Standard ^Financial Reporting Under the Cash 3 Basis of Accounting” （the “IPSAS”） issued by the International Public Accounting Standards Board of the n International Federation of Accountants and the World Bank’s Financial Management Sector Board’s “Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities” （the “WB Guidelines”). 1 In preparing the special purpose project financial statements, management is responsible for: • selecting suitable accounting policies and applying them consistently; • making judgments and estimates that are reasonable and prudent; • stating whether IPSAS and WB Guidelines have been followed, subject to any material departures disclosed and explained in the special purpose project financial statements; and 3 • preparing the special purpose project financial statements on a going concern basis, unless it is inappropriate to presume that the Project will continue its activity for the foreseeable future. 1 Management is also responsible for: 3 • designing, implementing and maintaining effective and sound system of internal control and for 3 revealing risks in system of internal control; • maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial position of the Project, and which enable them to ensure that the special purpose project financial statements of the Project comply with IPSAS and WB Guidelines; 3 • compliance with laws and regulations of the Republic of Tajikistan, accounting system of the Project 3 and the requirements of the World Bank; • taking such steps as are reasonably available to them to safeguard the assets of the Project; and • detecting and preventing fraud and other irregularities. The special purpose project financial statements for the year ended December 31,2018 were approved and authorized for issue on June 13, 2019 by the management of the Project. J Dushanbe, Republic of Tajikistan 2 MOORE STEPHENS MOORE STEPHENS KSC ASSURANCE SRL 175 Calea Floreasca, Floreasca Tower Building, 13th floor, District 1 Bucharest —Romania T +4 0374 490 074 +4 0374 094 191 E info@moorestephens-ksc.ro www.moorestephens-ksc.ro INDEPENDENT AUDITORS5 REPORT To the Management of “Central Asia South Asia Electricity Transmission and Trade Project”: Report on Ше special purpose project financial statements Opinion [1] We have audited the accompanying special purpose project financial statements ofA dvisory Support for the Regional Trade Initiatives Project”， financed under Financing Agreements Grant No. TF A4615 (the uProjectw ) which comprise the statement of cash proceeds and disbursements, the statement of uses of funds by project components for the year ended December 31, 2018 and a swnmary of significant accounting policies and other explanatory information (the "special purpose project financial statements”). [2] In our opinion, the accompanying special pmpose project financial statements are consistent, in all material respects， cash proceeds and disbursements， uses of firnds by project components for tile year ended December 31, 2018 in accordance with International Public Sector Accounting Standard “Financial Reporting Under the Cash Basis of Accounting” （the “IPSAS”) issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, and the World Bank5 s Financial Management Sector Boards ^Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Acthdties” (the “WB Guidelines”). Basis for opinion [3] We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor^ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountants5 Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in the Republic of Tajikistan, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter [4] Without qualifying our opinion, we draw attention to Note 2 to the special purpose project financial statements which describe the basis of accounting. These special purpose project financial stateanents were prepared for complying with the appropriate World Bank Guidelines and Grant agreement requirements, and therefore are not intended to be a complete presentation of the “Advisory Support for the Regional Trade Initiatives Project (the “Project”） operations. Other Matter [5] The special purpose project financial statements are prepared to assist the Project to comply with the requirements of the World Bank. As a result the special pmpose project financial statements may not be suitable for another purpose. 3 MOORE STEPHENS Responsibilities of management and those charged with governance for the special purpose project financial statements [6] Management is responsible for the preparation and fair presentation of the special purpose project financial statements in accordance with International Public Sector Accounting Standard "Financial Reporting Under the Cash Basis of Accounting” （the “IPSAS”） issued by the International Public Accounting Standards Board of the International Federation of Accx>untants, and the World Bank's Financial Management Sector Board's ^Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities” （the “WB Guidelines’’)， and for such internal control as management determines is necessary to enable the preparation of the special purpose project financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibilities for the audit of the special purpose project financial statements [7] Our objectives are to obtain reasonable assurance about whether the special purpose project financial statements as a whole are free from material misstatement， whether due to fraud or error， and to issue an auditor^ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in acxx>rdance 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 special purpose project financial statements. 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 special purpose project 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, but not for the purpose of expressing an opinion on the effectiveness of the Project’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management^ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Projecfs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the special purpose project financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Project to cease to continue as a going concern. • Evaluate the overall presentation, stmcture and content of the special purpose project financial statements, including the disclosures, and whether the special purpose project financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 4 MOORE STEPHENS [8] We communicate with those charged with governance 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. [9] We also provide those charged with goveraance 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. Moore Stephens KSC Bucharest, Romania June 13,2018 OPEN STOCK HOLDING COMPANY “BARQI TOJIK” PROJECT IMPLEMENTATION UNIT CENTRAL ASIA SOUTH ASIA ELECTRICITY TRANSMISSION AND TRADE PROJECT GRANT NO. TFA4615 STATEMENT OF CASH PROCEEDS AND DISBURSEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (in US Dollars) Notes For the year Cumulative For the year Cumulative ended ended December 31, December 31, 2018 2017 Opening balance - - - ■ Funds received Grant IDA TF-4615 4 - - 賴 - OSHC "Barki Tojik" contribution 4 112,995 127,162 14,167 14,167 Total funds received 112,995 127,162 14,167 14,167 Project expenses Consulting Firms 5 81,363 81,363 Consulting Individuals 5 - - - ■ Training (Trips) 5 31,632 45,799 14,167 14,167 Other 5 - - ■ - Total project expenses 112,995 127,162 14,167 14,167 Closing balance _ _ 一 _ June 13,2019 Dushanbe, Republic of Tajikistan The notes on pages 8-12 form an integral part of the special purpose project financial statements. The Independent Auditors' Report is on pages 3-5 6 OPEN STOCK HOLDING COMPANY “BARQI TOJIK” PROJECT IMPLEMENTATION UNIT CENTRAL ASIA SOUTH ASIA ELECTRICITY TRANSMISSION AND TRADE PROJECT GRANT NO. TF A4615 STATEMENT OF FUNDS BY PROJECT COMPONENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (in US Dollars)_____________________________________ For the year Cumulative For the year Cumulative ended ended December 31, December 31, 2018 2017 Consulting Firms 81,363 81,363 - - Consulting Individuals ■ - ■ - Training (Trips) 31,632 45,799 14,167 14,167 Other ■ - - 讎 112,995 127,162 14,167 14,167 Head of РШ The notes on pages 8-12 form an integral part of the special purpose project financial statements. The Independent Auditors* Report is on pages 3-5 OPEN STOCK HOLDING COMPANY (tBARQI ТО Л К» PROJECT IMPLEMENTATION UNIT CENTRAL ASIA SOUTH ASIA ELECTRICITY TRAMSMISSIOM AND TRADE PROJECT GRANT NO. TFA 4615 NOTES TO THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (in US Dollars)______________________________________________________________ 1. GENERAL INFORMATION According to the Agreement between the Republic of Tajikistan and International Bank for Reconstruction and Development / International Development Association (the ccWorld Bank,:,) dated September 14,2017, the World Bank provided a Grant No TF A4615 in the amount of 1,000,000 US Dollars to the Republic of Tajikistan The Grant was provided for the “Central Asia South Asia Transmission” （the “Project”). Project purpose The objective is to create the conditions for sustainable electricity trade between the Central Asian Countries of Tajikistan and Kyrgyz Republic and the South Asian countries of Afghanistan and Pakistan.. The Project consists of the following parts: Part A: Construction of High Voltage Transmission Infrastructure 1. High Voltage DC Transmission Line 2. High Voltage DC Converter Stations 3. High Voltage AC Transmission Interconnection between Kyrgyzstan and Tajikistan. 4. Tajikistan Grid Reinforcement. Part B: Technical Assistance and Project Implementation Support 1. High Voltage DC and High Voltage AC Owner's Engineers. 2. Environment and Social Management Support. 3. Audits and Financial and Revenue Management. 4. Project Management Support 5. Coordination 6. Project Communications 7. Capacity building Part C: Community Support Program Carrying out the Community Support Program for the benefit of the communities living in the area of the Project. Project management The project is implemented by the Project Implementation Unit (the “РЩ”） at the OSHC “Barqi Tojik”. Contribution o f OSHC "Barqi Tojik" to the Projects ОSHC “Barqi Tojik” contributes to the Project by performing direct payments， as well as providing funding sources, when granted funds are not readily available, which are subsequently reimbursed. Duration of the Project is from September 14, 2017 to June 30, 2020. 2. PRESENTATION OF THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS Basis of preparation These special purpose project financial statements have been prepared in accordance with the International Public Sector Accounting Standard (the ^IPSAS^) ^Financial Reporting under the Cash Basis of Accounting^ issued by the Public Sector Committee of the International Federation of Accountants, and incorporate the following principal accounting policies, which have been consistently followed in all material respects and comply with the World Bank;s Financial Management Sector Board's "'Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities,5 P e “WBGiHddines”). Under the cash basis system income (or expenditure) is recognized when cash is received (or paid) irrespective of when goods or services are received. The Project's approved budget disclosed by categories of expenses is not publicly available and as such comparison of budget and actual amounts is not presented. These special purpose project financial statements consist of: • Statement of cash proceeds and disbursements; ® Statement of uses of funds by project components; • Notes to the special purpose project financial statements, including short description of main statements of accounting policy and other descriptive notes. The reporting currency of these special purpose project financial statements is US Dollars (the