THE UNITED REPUBLIC OF TANZANIA NATIONAL AUDIT OFFICE REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF DAR ES SALAAM URBAN TRANSPORT IMPROVEMENT PROGRAM (CREDIT 5957-TZ AND CREDIT N0.5958 - TZ) FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2018 1 The Controller and Auditor General, I National Audit Office, ! 16 Samora Machel Avenue, II P.O. Box 9080, 'i 111101 Dar es Salaam, Tanzania. Tel: 255 (022) 2115157/8, iFax: 255 (022) 2117527 E-mail: ocag@nao. go. tz Website: www.nao.go.tz I I /oecember, 2018 AR/DUTP-T AN R/WB 2017/2018 -· ___ _J _______ TABLE OF CONTENTS ABBREVIATIONS .................................................................................. iii 1.0 GENERAL INFORMATION .................................................................. 1 1. 1. Mandate ..................................................................................... 1 1.2. Vision, Mission and Core Values .......................................................... 1 1. 3. Audit Objectives ........................................................................... 2 1.4. Audit Scope ................................................................................. 2 1.5. Audit Methodology ......................................................................... 2 2.0 INDEPENDENT REPORT OF THE CONTROLLER AND AUDITOR GENERAL ......... 3 """ ii National Audit Office AR/DUTP-TANR/WB/2017/2018 Abbreviations DUTP Dar es Salaam Urban Transport Improvement Program IESBA Code International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants IPSAS International Public Sector Accounting Standards ISSAls International Standard of Supreme Audit Institutions NAO National Audit Office PAPs Project Affected Persons TANROADS Tanzania National Roads Agency WIP Work-in-Progress iii National Audit Office AR/DUTP-T AN R/WB/201 7/2018 1.0 GENERAL INFORMATION 1.1. Mandate The statutory duties and responsibilities of the Controller and Auditor General are given under Article 143 of the Constitution of the United Republic Tanzania of 1977 (revised 2005) and in Section 10 (1) of the Public Audit Act No.11 of 2008. 1. 2. Vision, Mission and Core Values Vision To be a highly regarded Institution that excels in Public Sector Auditing. Mission To provide high quality audit services that improves public sector performance, accountability and transparency in the management of public resources. Core Values In providing quality services, National Audit Office (NAO) is guided by the following Core Values: ./ Objectivity: We are an impartial public institution, offering audit services to our clients in unbiased manner . ./ Excellence: We are professionals providing high quality audit services based on standards and best practices . ./ Integrity: We observe and maintain high standards of ethical behaviour, rule of law and a strong sense of purpose . ./ People focus: We value, respect and recognize interest of our stakeholders . ./ Innovation: We are a learning and creative public institution that promotes value added ideas within and outside the institution. ,/ Results Oriented: We are an organization that focuses on achievement based on performance targets . ./ Team work Spirit: We work together as a team, interact professionally, share knowledge, ideas and experiences. We do this by: - • Contributing to better stewardship of public funds by ensuring that our clients are accountable for the resources entrusted to them; • Helping to improve the quality of public services by supporting innovation on the use of public resources; • Providing technical advice to our clients on operational gaps in their operating systems; • Systematically involve our clients in the audit process and audit cycles; and • Providing audit staff with appropriate training, adequate working tools and facilities that promote their independence. © This audit report is intended solely for the information of TANROADS (DUTP Projects) and the World Bank. However, upon release by the World Bank, it becomes a public record and its distribution may not be limited. 1 National Audit Office AR/DUTP-TANR/WB/2017/2018 1. 3. Audit Objectives To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and are prepared in accordance with an applicable financial reporting framework; and whether laws and regulations have been complied with. 1.4. Audit Scope The audit was carried out in accordance with the International Standards of Supreme Audit Institutions (ISSAls) and other audit procedures as were deemed appropriate under the circumstances. This covered the evaluation of the effectiveness of the financial accounting system and internal control over various activities of the Dar es Salaam Urban Transport Improvement Program (DUTP) project under the TANROADS. The audit was conducted on a sample basis; therefore, the findings are confined to the extent that records, documents and information requested for the purpose of the audit were made available to me. Audit findings and recommendations arising from the examination of the accounting records, appraisal of the activities as well as evaluation of the Internal Control System which requires management's attention and actions, are set out in the management letter issued separately to the TANROADS. As an auditor, I am not required to specifically search for fraud and therefore, my audit cannot be relied upon to disclose all such matters. However, my audit was planned in such a way that I would have reasonable expectations of detecting material errors and misstatement in the financial statements resulting from irregularities including fraud. The responsibility for detection, prevention of irregularities and the maintenance of an effective and adequate system of internal control rests with the management of the TANROADS. 1. 5. Audit Methodology - My audit approach included tests of the accounting records and other procedures in order to satisfy the audit objectives. My audit procedures included the following: • Planning the audit to identify and assess risks of material misstatement, whether due to fraud or error, based on an understanding of the entity and its environment, including the entity's internal controls. • Obtain sufficient appropriate audit evidence about whether material misstatements exist, through designing and implementing appropriate responses to the assessed risks. • Form an opinion on the financial statements based on conclusions drawn from the audit evidence obtained. • Follow up on the implementation of the previous year's audit findings and recommendations in order to ensure that proper action has been taken in respect of all matters raised. 2 National Audit Office AR/DUTP-TANR/WB/2017 /2018 2.0 INDEPENDENT REPORT OF THE CONTROLLER AND AUDITOR GENERAL Chairperson of the Board of Directors, Tanzania National Roads Agency, P. 0. Box 11364, DAR ES SALAAM. REF: REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF DAR ES SALAAM URBAN TRANSPORT IMPROVEMENT PROGRAM FOR THE YEAR ENDED 30TH JUNE 2018 Unqualified Opinion I have audited the accompanying Financial Statements of Dar es Salaam Urban Transport Improvement Program (DUTP) project, which comprise the Statement of Financial Position as at 30th June 2018 and the Statement of Financial Performance, the Statement of Changes in Net Assets/Equity the Cash Flow Statement and the Statement of Comparison of budget and Actual Amounts for the year then ended, as well as the Notes to the Financial Statements, including a summary of Significant Accounting Policies set out in the annexure of this report. In my opinion, the accompanying Financial Statements present fairly in all material respects, the Financial Position of DUTP project as at 30 June 2018, and its Financial Performance and its Cash Flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS) Accrual basis of accounting and in the manner required by the Public Finance Act, 2001 revised 2004. Basis for Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAls). My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the financial statements section of this report. I am independent of DUTP in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to my audit of the financial statements in - Tanzania, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. 3 National Audit Office AR/DUTP-TANR/WBi2017 /2018 "Information Other than the Financial Statements and Auditor's Report Thereon My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed on the other information that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I have determined that there are no Key Audit Matters to communicate in my report. Responsibilities of Management and those charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the Financial Statements in accordance with IPSASs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, management is responsible for assessing the entity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the entity's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my 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 4 National Audit Office AR/DUTP-TANR/WB/2017 /2018 reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. In addition, Section 10 (2) of the Public Audit Act No.11 of 2008 requires me to satisfy myself that, the accounts have been prepared in accordance with the appropriate accounting standards. Further, Section 48(3) of the Public Procurement Act No.7 of 2011 requires me to state in my annual audit report whether or not the audited entity has complied with the provisions of the Law and its Regulations. Report on Other Legal and Regulatory Requirements Compliance with the Public Procurement Act, 2011 In view of my responsibility on the procurement legislation and taking into consideration the procurement transactions and processes I have reviewed as part of this audit, I state that, DUTP project procurement transactions and processes have generally complied with the requirements of the Public Procurement Act No. 7 of 2011 and its underlying Regulations of 2013. ~- Salhina M. Mkumba Ag.CONTROLLER AND AUDITOR GENERAL 31 December 2018 National Audit Office of Tanzania, P.O. Box 9080, - 11101 Dar es Salaam, Tanzania. Tel: 255 (022) 2115157/8 Fax: 255 (022) 2117527 Email: ocag@naogo.tz Copy to: The Chief Secretary, State House, P.O. Box 9120, 1 Baraka Obama Road, 11400 DAR ES SALAAM. ------- 5 National Audit Office AR/DUTP-TANR/WB/2017 /2018 Permanent Secretary and Paymaster General, Ministry of Finance and Planning, Treasury Square Building, 18 Jakaya Kikwete Road, P.0. Box 2802, 40468 DODOMA. Permanent Secretary, Ministry of Works, Transport and Communication, Tanzania Building Agency (TBA) House, P.0. Box 2888, 404 70 DODOMA. Country Director, Finance Control Department, African Development Bank, P. 0. Box 6024 DAR ES SALAAM. 6 National Audit Office AR/DUTP-TANR/WB/2017 /2018 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WORKS, TRANSPORT AND COMMUNICATION • TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN TRANSPORT IMPROVEMENT PROJECT (DUTP) (CREDIT NO. 59570-TZ AND 59580-TZ) Tanzania National Roads Agency P. 0. Box 11364 Jd Floor Airtel House Ali Hassan Mwinyi / Kawawa Road Junction Dar es Salaam TABLE OF CONTENTS 1.0 TABLE OF CONTENTS ......................................................................................................................................................................... 1 2.0 LIST OF ABBREVIATIONS AND ACCRONYMS ................................................................................................................................. 4 3.0 GENERAL INFORMATION ....................................................................................................................................................................5 4.0 THE PROJECT BASIC INFORMATION .................................................................................................................................................6 4.1 Introduction ..........................................................................................................................................................................................6 4.2 Project Development Objective .......................................................................................................................................................... 7 4.3 Project Components and Scope of Works ........................................................................................................................................ 7 4.3.1 Component A: Establishment of the Third and Fourth Phases of the Dar es Salaam BRT System (US$287.1 million including US$11 million contingencies) .............................................................................................................................................................7 4.3.2 Sub-Component A.1: Establishment of BRT Phase 3 Infrastructure .............................................................................................. 7 4.3.3 Sub-Component A.2: Establishment of BRT Phase 4 Infrastructure ............................................................................................. 8 4.3.4 Sub-Component A.3: Preparation for Operation of the BRT System ............................................................................................ 9 4.3.5 Sub-Component A.4: Upgrading of the Fare Collection System and Improving Traffic Management along the BRT Corridors .......................................................................................................................................................................................·........................ 9 4.3.6 Sub-component A.5: Implementation Support for Integrated Transit-Oriented Development along the BRT Corridors ........ 10 4.3.7 Component B: Improvement of the Ubungo Intersection and Complementary Road Safety Infrastructure for the BRT Phase 1 System (US$99.9 million including US$2.4 million contingencies) .............................................................................................. 11 4.3.8 Sub-Component B.1: Upgrading the Safety of the Ubungo Intersection and Integration of the BRT Corridor with Ubungo Up- country Bus Terminal ........................................................................................................................................................................ 11 4.3.9 Sub-Component B.2: Road Safety Strengthening along the BRT Corridor and Kimara-Mbezi Feeder Section ..•................... 11 4.3.10 Component C: Institutional Strengthening and Reform, ICT Innovation, Safety Net, and Transport Studies (US$38 million).12 4.3.11 Sub-Component C.1 Capacity Strengthening of Implementing Agencies .................................................................................. 12 4.3.12 Sub-Component C.2: Support to Restructuring of DART and Establishment of DUTA ............................................................ 12 4.3.13 Sub-Component C.3: Support to Road Safety Agencies .............................................................................................................. 13 4.3.14 Sub-Component C.4: Piloting of Safety Nets and Impact Evaluation ......................................................................................... 13 4.3.15 Sub-Component C.5: ICT Innovation and Open Data Pilot in the Public Transport System .................................................... 13 4.3.16 Sub-Component C.6: Improving Oversight Capacity of the MoWTC .......................................................................................... 14 4.3.17 Sub-Component C.7: Transport Studies and BRT Communication Programs .......................................................................... 14 4.4 Project Financing ...............................................................................................................................................................................14 4.5 Institutional and.Implementation Arrangements ............................................................................................................................ 16 4.5 Project Implementation Period ......................................................................................................................................................... 17 Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-Tl I 4.6 Implementation Status .......................................................................................................................................................................18 4.7 Road Safety Strengthening Along BRT Corridor ............................................................................................................................ 18 4.8 Institutional Strengthening and Reform ........................................................................................................................................... 18 4.9 Resettlement Action Plan ..................................................................................................................................................................18 4.10 Going Concern ...................................................................................................................................................................................19 4.11 Risk Management and Internal Controls ......................................................................................................................................... 19 4.12 Auditors ..............................................................................................................................................................................................19 5.0 FINANCIAL STATEMENTS .................................................................................................................................................................20 5.1 STATEMENT OF MANAGEMENT RESPONSIBILITY FOR THE YEAR ENDED 30TH JUNE 2018 ................................................ 20 5.2 DECLARATION OF THE HEAD OF FINANCE AND CHIEF ACCOUNTANT .................................................................................... 22 5.3 STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2018 .................................................................................................. 23 5.4 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30TH JUNE 2018 ......................................................... 24 5.5 STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30TH JUNE 2018 ..................................................................................... 25 5.6 STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 30TH JUNE 2018 ........................................................... 26 5.7 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNT FOR THE YEAR ENDED 30TH JUNE 2018 ................. 27 5.8 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2018 .............................................................. 28 5.8.1 Statement of Compliance and Basis of Preparation ....................................................................................................................... 28 5.8.2 Summary of Significant Accounting Policies .................................................................................................................................. 28 5.8.3 Cash and cash equivalents and GoT advances ..............................................................................................................................31 5.8.4 Mobilization Advances ....................................................;.......................................................;......................................................;... 32 5.8.5 Work in Progress ................................................................................................................................................................................32 5.8.6 Retention Money Payable ..................................................................................................................................................................32 5.8.7 Cumulative Deferred Capital Grants IDA .......................................................................................................................................... 33 5.8.8 Deferred Capital Grants - GOT..........................................................................................................................................................33 5.8.9 Foreign Exchange loss ......................................................................................................................................................................33 5.8.10 Amortised Recurrent Grant .............................................................................................................................................................34 5.8.11 Recurrent Expenses ......................................................................................................................................................................... 34 5.8.12 Recurrent grant IDA ..........................................................................................................................................................................35 5.8.13 Payment for Development Works ...................................................................................................................................................35 5.8.14 IDA Loans Received .........................................................................................................................................................................35 Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 2 5.8.15 Statement of Expenditure (SOE) ..................................................................................................................................................... 36 5.8.16 Payables ............................................................................................................................................................................................37 5.8.17 Statement of Receipt and Payment ................................................................................................................................................ 37 5.8.18 Planned Budget Versus Actual expenses incurred ...................................................................................................................... 37 Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 3 2.0 LIST OF ABBREVIATIONS AND ACCRONYMS AFCS Automated Fare Collection System BRT Bus Rapid Transit CBD Central Business District CTCP2 Second Central Transport Corridor Project DA Designated Account DART Dar Rapid Trans it DUTA Dar es Salaam Urban Transport Authority DUTP Dar es Salaam Urban Transport Improvement Project ERB Engineers' Registration Board ESMP Environmental and Social Management Plan FYDP Five Year Development Plan GOT Government of the United Republic of Tanzania ICT Information and Communication Technology IDA International Development Association IE Impact Evaluation ITS Intelligent Transportation System JNIA Julius Nyerere International Airport MOWTC Ministry of Works, Transport and Communication NMT Non-Motorized Transport PAD Project Appraisal Document PAP Project Affected People PDO Project Development Objective PIT Project Implementation Tearn PPP Public Private Partnership RAIS Road Accident Information System RAP Resettlement Action Plan RSA Road Safety Authority SEAP Structured Engineers Apprenticeship Program SOR Special Drawing Rights SUF Scale-Up Facility SUMATRA Surface and Marine Transport Regulatory Authority TANROADS Tanzania National Roads Agency TOC Traffic Operations Center TOD Transit-Oriented Development Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 4 3.0 GENERAL INFORMATION Tanzania National Roads Agency (TANROADS) was established on 1st July 2000 under the Executive Agencies Act, 1997, by an order gazetted in the Government Notice No. 293 dated 25th August 2000 as a semi- autonomous agency of the then Ministry of Works (MoWTC}. The primary objective of setting up TAN ROADS is to provide cost-effective and sustainable maintenance and development of the primary road network to support the economic and social development of Tanzania. The headquarters of TAN ROADS is in Dar es Salaam and its physical address is: P.O Box 11364 3rd Floor Airtel House Ali Hassan Mwinyi/Kawawa Roads Junction Dar es Salaam Tel. No. + 255 22 2926001 - 6 Fax No. + 255 22 2926011 Email: tanroadshq@tanroads.go.tz Website: WINW.tanroads.go.tz PROJECT BANKERS The Bank of Tanzania P.0.Box 2939 Dar es Salaam. PROJECT LAWYERS The Attorney General Ministry of Justice and Constitutional Affairs P.O.Box 70069 Dar es Salaam. PROJECT STATUTORY AUDITORS The Controller and Auditor General (CAG) National Audit Office P.O. Box 9080 Dar es Salaam. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 5 TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN TRANSPORT IMPROVEMENT PROJECT 4.0 THE PROJECT BASIC INFORMATION 4.1 Introduction The Management of the Dar es Salaam Urban Transport Improvement Project (DUTP} has the pleasure in submitting their report, together with the financial statements of the Project for the year ended 30th June 2018. The Government of the United Republic of Tanzania (GOT) received a Credit from the International Development Association (IDA) in the form of IDA Regular Credit in the amount of SOR 167.40 million (equivalent to US$ 225 million) and IDA Scale-Up Facility Credit in the amount of SOR 148.80 million ("SUF Credit") (equivalent to US$ 200 million), to support the Dar es Salaam Urban Transport Improvement Project (DUTP). The financing agreement between GOT and IDA was signed on 20th March 2017. DUTP is consistent with the National Development Strategy in Tanzania and the New National Five Year Development Plan (FYDP) of FY2017-21 of June 2016, which is based on Tanzania's Development Vision 2025. This strategy aims to transform Tanzania into a middle-income country by 2025. The proposed interventions in DUTP are also consistent with both the Urban Transport Strategy and the more - recent transport strategy of the World Bank, which stipulates that "in order to improve efficiency of transport, the needs of each mode must be addressed - the road system, Non-motorized Transport (NMT}, public passenger transport, and mass transit with special attention on the role of private sector. DUTP is the Project for addressing the traffic congestion, through scale-up of Bus Rapid Transit (BRT) system, and the improved accessibility into the rapidly sprawling city of Dar es Salaam. Dar es Salaam City is the Tanzania's largest city, which is also a business hub of the country. Population of the city and the importation of vehicles are growing exponentially while the growth of transport infrastructures is stagnant. This has contributed to the traffic chaos in almost every corner of the city and the traffic situation is worse during peak hours. To alleviate the traffic congestion in the city, GOT has embarked on a program for development of the transportation system that includes road widening schemes and establishment of BRT network, among which are BRT phases 3 and 4 and construction of interchange at Ubungo intersection to be implemented under DUTP. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580· 1Z 6 Tanzania National Roads Agency (TANROADS) and Dar Rapid Transit Agency (DART) are the implementing entities of the Project. 4.2 Project Development Objective The Project Development Objective (PDO) is to improve transport mobility, accessibility, safety, and quality of transport service delivery along the selected corridors in Dar es Salaam. The primary Project beneficiaries are the public transport users within the BRT phase 1, 3, and 4 trunk and feeder network covering Kinondoni, Ubungo, Temeke, and llala Municipalities as well as cyclists and pedestrians along the BRT trunk corridors. 4.3 Project Components and Scope of Works In order to achieve the Project objective, DUTP is implemented under the following three key components: a) Establishment of the Third and Fourth Phases of the Dar es Salaam BRT System; b) Improvement of the Ubungo Intersection and Complementary Road Safety Infrastructure for the BRT Phase 1 System and c) Institutional Strengthening and Reform, ICT Innovation, Safety Net, and Transport Studies. The components comprise of sub-components as described under the following sections - 4.3.1 Component A: Establishment of the Third and Fourth Phases of the Dar es Salaam BRT System (US$287.1 million including US$11 million contingencies) This component comprises of five sub-components as follows: 4.3.2 Sub-Component A.1: Establishment of BRT Phase 3 Infrastructure This sub-component will support the development of physical infrastructure for the 23.6km BRT Phase 3 trunk corridor. The phase 3 corridor starts at Posta within the Central Business District (CBD) and passes along Maktaba Street, Bibi-Titi Street, and Nyerere Road past Julius Nyerere International Airport (JNIA) to the Gongolamboto area. Another branch starts at the Kariakoo BRT terminal along Uhuru Street to Buguruni and Nelson Mandela Road and joins Nyerere Road at the TAZ.ARA junction. The infrastructure will include the BRT trunk corridor, three terminals, one bus depot, three feeder-transfer stations, 25 BRT stations; and five pedestrian crossing bridges. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 7 The BRT trunk corridor will have a median exclusive lane for buses with a lane in each direction and overtaking lanes at stations and terminals. The trunk infrastructure will include five pedestrian crossing bridges at the Kisutu market, Buguruni Rozana feeder terminal, JNIA terminal, Banana, and at Gongolamboto. The two mixed traffic lanes will be reconstructed in both directions for the entire corridor (currently only available between the CBD and the airport). Bicycle lanes and pedestrian walkways will be constructed on both sides of the corridor at the outmost. Service roads will be maintained / constructed whenever possible. The three terminals will be constructed at the Kariakoo hub terminal where all BRT phases integrate, opposite the JNIA, and at Gongolamboto. The Project will also support the infrastructure for integrating the BRT corridor with the TAl.ARA central railway station, the JNIA, and vegetable/petty traders' markets along the corridor. The BRT bus depot will be constructed at Gongolamboto, and the three feeder-transfer stations will be located at - Jet Club, Banana, and the Buguruni Rozana area. Park-and-ride facilities for private car owners are planned to be supported near the Jet Club feeder-transfer station and at the Gongolamboto terminal. The petty traders and vegetable markets at Kisutu, Mchikichini, and Buguruni will be provided with a safe linkage to the BRT corridor. This sub-component is implemented by TANROADS and estimated cost is US$148.2 million. 4.3.3 Sub-Component A.2: Establishment of BRT Phase 4 Infrastructure This sub-component is intended to support the construction of the 25.9 km BRT phase 4 trunk corridor infrastructures. The corridor runs from the Maktaba/Bibi Titi Road junction at the CBD (where it connects with the BRT phase 3 corridor) through Ali Hassan Mwinyi Road to Morocco (existing BRT phase 1 terminal). From Morocco, it continues to Mwenge and ends at Tegeta. The trunk corridor has a branch at Mwenge connecting to the BRT phase 1 trunk route at the Ubungo terminal. The sub component will be implemented by TANROADS and the estimated cost is US$97.9 million. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 8 - 4.3.4 Sub-Component A.3: Preparation for Operation of the BRT System This sub-component involves the development of a fare integration policy (between BRT corridors and with other modes) and transaction advisory services for the selection of private sector operators through Public-Private Partnership (PPP) arrangements. The Transaction Advisers will update the financial analysis for BRT phases 1, 2, 3, and 4 and design the operation arrangements (including fare integration within the network). Procurement for the operation include (a) two trunk bus operators for BRT phase 3; (b) one trunk bus operator for BRT phase 4; (c) scaling-up of the contract for operation of the fare collection system and station management; and (d) scaling-up of the fund management contract. As part of their key assignment, the Transaction Advisers will also help the existing Daladala (minibus) operators establish companies, cooperative, or franchises in line with the sector transformation efforts by the Surface and Marine Transport Regulatory Authority (SUMATRA). The design for operations will i) Sensitize the local transport operators (trucks operators, up-country bus operators, and Daladala owners) to work with international bus manufacturers and bankers (local and international) to participate in the bidding for operation of BRT trunk bus services; and ii) Support transformation of the existing Daladala operators and help them establish a company, cooperative, or franchise that can become one of the operators of the BRT phase 3 and 4 system. This sub-component will be implemented by DART and the estimated cost is US$ 8.0 million. 4.3.5 Sub-Component A.4: Upgrading of the Fare Collection System and Improving Traffic Management along the BRT Corridors This sub-component involves the design and scaling-up of the Automated Fare Collection System (AFCS), including the supply of smart cards and establishment of the Intelligent Transportation System (ITS) covering the BRT trunk corridors. The standards for AFCS and ITS upgrade will ensure an open and interoperable system with General Transit Feed Specification data format that are fully accessible to the Government. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 9 The support will include construction of a DART traffic control center at the Kariakoo terminal, installation of traffic control systems, the ITS, closed circuit television systems within the BRT corridor, installation of the AFCS along BRT phases 3 and 4, control center help desk, and linkage of the control center with the road safety database. The traffic operations center (TOG) will collect all ITS and operators' data and become the key function for collaboration with different entities. The ITS Master Plan will be prepared for the entire BRT system that will also be consistent with the national one. The traffic operations center could be used to monitor traffic conditions using cameras and other technology, providing traveler information on road conditions and coordinating congestion management and incident response with different agencies. This sub-component will be implemented by DART and the estimated cost is US$ 18.0 million. 4.3.6 Sub-component A.5: Implementation Support for Integrated Transit-Oriented Development along the BRT Corridors. This subcomponent will support a series of implementation support activities to promote transit and pedestrian-oriented land development, known as Transit-Oriented Development (TOD) and Pedestrian- Oriented Development, respectively, as well as approaches for land value capture and tax increment financing to create a high-density commercial and residential center within the BRT corridors. The activities will include: i) Preparation of Integrated Land Use and Transport Plans for BRT phases 3 and 4 corridors; and ii) Advisory and transaction support to guide the redevelopment of stations areas along the BRT phase 1 corridor using PPP mechanisms. The principles of the Integrated Land Use and Transport Plans developed for the BRT phase 1 corridor will be applied to BRT phases 3 and 4 corridors. This will enable city authorities to manage land use demand along the corridor in a manner that will increase BRT ridership and decrease traffic congestion and sprawl while ensuring that an attractive and safe environment around transit stations is developed. This sub-component will be implemented by DART and the estimated cost is US$ 4.0 million. Dar es Salaam Urban Transport Improvement Project (DUTPJ Credit No. 59570 & Credit No. 59580-TZ 10 4.3.7 Component B: Improvement of the Ubungo Intersection and Complementary Road Safety Infrastructure for the BRT Phase 1 System (US$99.9 million including US$2.4 million contingencies) This component constitutes support for improvement of traffic flow at Ubungo intersection by constructing an interchange and associated works. The Project will also support the development of complementary infrastructure to support the BRT phase 1 network. These activities will include the following: i) Improvement of the Ubungo up-country bus terminal, establishment of the BRT depot platform at the terminal, and construction of an access road connecting the terminal to Sam Nujoma Road; ii) Construction of NMT facilities (pedestrian walkways and bicycle lanes) for approximately 2 km along the BRT phase 1 corridor from the Kibo station to the Kimara terminal; iii) Establishment of traffic management measures along the Kimara-Mbezi feeder route to improve safety and reduce traffic congestion; and iv) Rehabilitation of a 500 m section of Obama Road to provide safe access to passengers arriving, departing or transferring between the Kivukoni ferry terminal and Kivukoni BRT terminals. This component comprises of two sub-components as follows: 4.3.8 Sub-Component 8.1: Upgrading the Safety of the Ubungo Intersection and Integration of the BRT Corridor with Ubungo Up-country Bus Terminal This subcomponent will involve the following: · i) Construction of an interchange at the Ubungo intersection; ii) Rehabilitation of the Ubungo up-country bus terminal; and iii) Construction of a road linking the up-country bus terminal with the interchange for smooth entrance and departure of buses to and from up-country. This subcomponent will be implemented by TANROADS and the estimated cost is US$86 million. 4.3.9 Sub-Component 8.2: Road Safety Strengthening along the BRT Corridor and Kimara-Mbezi Feeder Section This subcomponent will involve the following: i) Improvement of pedestrian and cyclist safety along the BRT phase 1 corridor by providing respective exclusive lanes between Kibo and Kimara; Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580- TZ 11 ii) Integration of the Kivukoni terminal with the ferry terminal for safe pedestrian and vehicle movements; iii) Improvement of infrastructure for enabling traffic flow (especially right-turning intersections) along the BRT corridor and the Kimara-Mbezi feeder line; and iv) Establishment of a performance-based maintenance contract for the BRT phase 1 corridor. This sub-component will be implemented by TANROADS and the estimated cost is US$11.50 million. 4.3.10 Component C: Institutional Strengthening and Reform, ICT Innovation, Safety Net, and Transport Studies (US$38 million). The component will involve incremental support to implementing agencies, support to public transport institutional transformation, together with capacity building, training and support to designs of the remaining BRT phases. The Project will also help the city develop an open data system for the public transport system. It will further support the Impact Evaluation (IE) of the BRT system; road safety, mapping of gender violence in public transport; and pilot the introduction of social safety nets for reduction of poverty to the urban poor in the public transport system. This component has seven sub-components as follows: 4.3.11 Sub-Component C.1 Capacity Strengthening of Implementing Agencies This subcomponent will involve the following: i) Capacity strengthening to TANROADS, including technical assistance, equipment, training, and . incremental operating costs; ii) Capacity strengthening to DART including technical assistance for managing the BRT system, equipment, training, and incremental operating costs; and iii) Capacity strengthening to SUMATRA for development of mass transit regulations and support to knowledge sharing with other mass transit regulators. Total estimated cost for this sub-component is US$21.00 million. 4.3.12 Sub-Component C.2: Support to Restructuring of DART and Establishment of DUTA This sub-component will involve the following: i) Technical assistance for restructuring of DART and Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580· TZ 12 ii) Technical assistance, equipment, training, and initial operating cost for DUTA. Estimated cost for this sub-component is US$5.00 million. 4.3.13 Sub-Component C.3: Support to Road Safety Agencies This sub-component will support the establishment of the Road Safety Authority (RSA) by providing the following: i) Technical assistance, equipment, training, and initial operating costs; ii) Enhancement and further rollout of the road accident information system (RAIS); and iii) Support to the Department of Road Safety and Environment of the Ministry of Works, Transport, and Communication (MoWTC) to conduct a road safety audit and monitoring along the BRT corridors in Dar es Salaam. Estimated cost for this sub-component is US$2.50 million. 4.3.14 Sub-Component C.4: Piloting of Safety Nets and Impact Evaluation This subcomponent will involve the following: i) Design and implementation of a pilot program for providing public transport subsidy to the urban poor; ii) Skills development (training) to Daladala drivers; and iii) Design and implementation of impact evaluation (IE) programs for the development of the Dar es Salaam BRT system. Estimated cost for this sub-component is US$2.00 million. 4.3.15 Sub-Component C.5: ICT Innovation and Open Data Pilot in the Public Transport System This subcomponent will involve the following: i) Introduction of open data in public transport in Dar es Salaam City through information and communication technology (ICT) innovation. The ICT innovation would include creation of public transport maps using 'open transport' principles; ii) Establishment of public bus service and bicycle routes; iii) Creation of a mobile phone-based system for public transport passengers to provide feedback on the quality of BRT services and enable the authorities to improve service delivery; iv) Development of a gender-based violence reporting system (mobile phone based) to be mapped to enable authorities take action; and v) Development of an accident mapping system along the BRT corridors for advocacy purposes. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 13 Estimated cost for this sub-component is US$2.00 million. 4.3.16 Sub-Component C.6: Improving Oversight Capacity of the MoWTC This subcomponent will involve the following: i) Supporting the training program of the MoWTC (Works) including long-term training courses to low and mid-level professional staff and ii)Supporting the living allowances (stipend) to fresh graduate engineers to enable them to participate in the Structured Engineers Apprenticeship Program (SEAP). The support of SEAP will be linked to the development and adoption of a sustainable funding mechanism under the Engineers Registration Board (ERB). This sub-component will be implemented by MOWTC (Works) at estimated cost of US$2.70 million. 4.3.17 Sub-Component C.7: Transport Studies and BRT Communication Programs This subcomponent will involve the following: i) Updating of the conceptual design for the Dar es Salaam BRT system, detailed engineering design of phases 5 and 6, and preparation of the related environmental and social safeguards instruments {This activity will be implemented by TANROADS); ii) Study for development of an analytical model for a fare subsidy policy in Dar es Salaam City (This activity will be implemented by DART); and iii) Support to communication programs for the preparation and operation of the Dar es Salaam BRT system (DART will implement this activity). Total estimated cost for this sub-component is US$2.8 million. 4.4 Project Financing Most of studies and Project preparatory activities have been funded under the Second Central Transport Corridor Project (CTCP2). It is expected that any land acquisition and other costs related to the implementation of the Resettlement Action Plans (RAPs), estimated at US$25.8 million, will be covered entirely by the GOT. The rest of the Project activities, equivalent to US$425 million will be financed by IDA (100 percent), which is US$225 million from an IDA Credit and US$200 million equivalent from IDA Scale-Up Facility Credit. GOT has requested retroactive financing in the amount of US$25 million to cover for advanced contracted activities. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 14 The Project costs are as summarized in table, below. Summary of Project Cost Allocation Project Cost IDA (US$ IDA Project Component (US$ Mio) Mio) Financing A. Establishment of the Third, Fourth and Fifth 306.9 287.1 94% Phases of the Dar es Salaam BRT System A.1 Establishment of BRT Phase 3 Infrastructure 148.2 148.2 - A.2 Establishment of BRT Phase 4 Infrastructure 97.9 97.9 - RAP Implementation (GOT contribution) 19.8 - - A.3 Preparation for Operation of the BRT System 8.0 8.0 - A.4 Upgrading of the Fare Collection System and Improving Traffic Management along the BRT 18.0 18.0 - Corridors A.5. Implementation Support for Integrated Transit- 4.0 4.0 - Oriented Development along the BRT Corridors Contingencies 11.0 11.0 - . , B. Improvement of the Ubungo Intersection and Complementary Road Safety Infrastructure for 105.9 99.9 94% the BRT Phase 1 System B.1 Upgrading the Safety of the Ubungo Intersection and Integration of the BRT Corridor with Ubungo 86.0 86.0 - Up-country Bus Terminal B.2 Road Safety Strengthening along the BRT Corridor 11.5 11.5 - and Kimara-Mbezi Feeder Section RAP Implementation (GOT contribution) 6.0 - - Contingencies 2.4 2.4 - Dar es Salaam Urban Transport Improvement Project (DUTP} Credit No. 59570 & Credit No. 59580-TZ 15 Project Cost IDA (US$ IDA Project Component (US$ Mio) Mio) Financing C. Institutional Strengthening and Reform, ICT 38.0 38.0 100% Innovation, Safety Net, and Transport Studies C.1 Capacity Strengthening of Implementing Agencies 21.0 21.0 - C.2 Support to Restructuring of DART and 5.0 5.0 - Establishment of OUT A C.3 Support to Road Safety Agencies 2.5 2.5 - C.4 Piloting of Safety Nets and Impact Evaluation 2.0 2.0 - C.5 ICT Innovation and Open Data Pilot in the Public 2.0 2.0 - Transport System C.6 Improving Oversight Capacity of the MoWTC 2.7 2.7 - C.7 Transport Studies and BRT Communication 2.8 2.8 - Programs Total Funding 450.8' 425.0 94% 4.5 Institutional and Implementation Arrangements TANROADS is the overall implementing agency with overall fiduciary and safeguards responsibility for project execution, while the other implementing entities will support the process and implement their respective components or subcomponents. 4.5.1 TANROADS Responsibilities TANROADS will implement the project through a defined Project Implementation Team (PIT). The Project Implementation Team comprises full-time employees of TANROADS (complemented by consultants), including a Project Manager, a Financial Management Specialist, a Procurement Specialist, an Environmental Specialist, and a Social Specialist - leading a Resettlement Unit, and the technical expertise from the TANROADS BRT team. The overall responsibility for monitoring of the RAP and ESMP implementation will lie with TAN ROADS. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 16 - TANROADS will directly monitor the implementation of the RAP and ESMP for Components A and B. The Environmental and Social Unit of TANROADS will ensure that the national regulations and the World Bank's safeguards policies are fully complied with. In general, responsibilities of TANROADS will include the following: i) Management of the Designated Account (DA); ii) Financial Management and reporting on the overall Project; iii) Ensuring the execution of the audit of the Project; iv) Preparation of quarterly financial and biannual progress reports; v) Management of the environmental and social safeguards aspects; and vi) Oversight of the procurement and contract management activities of the other executing agencies. 4.5.2 DART Responsibilities Apart from overall oversight and implementation by TANROADS, another implementing agency is DART with the following responsibilities: i) Procurement and management of contracts for capacity strengthening to DART and establishment of DUTA, ii) ICT innovation, iii) Transaction advisory services; iv) Monitoring and evaluation; v) Managing capacity for public transport operations; vi) Preparation for BRT operations; vii) Provision of support to TAN ROADS in the implementation of the Safeguards Instruments; and viii) Establishment of the DART traffic control center. 4.5 Project Implementation Period According to the Project Appraisal Document (PAD), the Project will be implemented over a ?-years period from January 2017 to December 2023. This period reflects complexity of the urban setting for implementation, the one-year ramp-up period for operations of BRT system, and the complexity of the associated institutional reforms for long-term sustainability of the project. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 17 4.6 Implementation Status The financing agreement between GOT and IDA for implementation of DUTP was signed on 20th March 2017 and became effective in June 2017. However, implementation of some few activities commenced before the project effectiveness date. Payment During the year, payment of US$ 26.6 million was made out of which US$ 0.36 million was for Component A, US$. 25.5 Million for Component B and 0.79 Million for Component C. Disbursement During the year under review, amount disbursed for the year was US$ 46.3 million, out of which GOT portion was US$ 4.16 million and IDA portion was US$ 42.3 million. This is 0.02% of the total credit approved. 4.7 Road Safety Strengthening Along BRT Corridor Selection of the Consultant for design and supervision of the complimentary safety infrastructure along BRT corridor is ongoing. Draft Contract and Minutes of Pre-contract negotiations submitted to Bank on 26th June ~~ 2018. 4.8 Institutional Strengthening and Reform Preparations for strengthening capacity to implementing agencies are ongoing. This includes recruitment process of Technical Assistants for strengthening (i) contract management of the project within TANROADS and (ii) the management of the BRT system by DART. 4.9 · Resettlement Action Plan GOT has disbursed a total of TZS 9 Billion equivalent to US$ 4.16 Million for implementation of RAP for the construction of Ubungo Interchange and associated Works only. The first phase of implementation of RAP at Ubungo project has been completed. The exercise involved 29 PAPs with a total expenditure ofTZS 7.79 Billion. The second phase of implementation of RAP for the Ubungo Interchange projects covers the road link between Ubungo Up-Country Bus Terminal and Simu 2000. The evaluation report was approved on July 28, 2017. Total number of PAPs to be removed is 72 involving 41 landlords and 31 tenants. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-1Z 18 4.10 Going Concern Continuation of the activities of the project was contingent upon satisfying IDA requirements so as to secure approvals at various stages of implementation apart from the financial Covenants stipulated in the financing agreement. During the year under review, the Project Management satisfied IDA requirements and therefore, approvals at various stages were given. The going concern basis has been adopted in preparing the financial statements. The Management has no reason to believe that Project will not be a going concern in the foreseeable future based on the Loan Agreement between the Government and the World Bank. 4.11 Risk Management and Internal Controls The Project Management accepts final responsibility for the risk management and internal control systems of the Project. It is the task of management to ensure that adequate internal financial and operational control systems are developed and maintained on an on-going basis in order to provide reasonable assurance regarding the effectiveness and efficiency of operations in: i) Safeguarding of the Project's assets (including information); ii) Compliance with the applicable laws, regulations and supervisory requirements; iii) The reliability of the accounting records; iv) Compliance with Loan Agreement covenants; v) Business sustainability under normal as well as adverse conditions; and vi) Responsible behaviour towards all stakeholders. The Management assessed the internal control systems throughout the financial year ended 30 June 2018 and is of the opinion that they met acceptable criteria. 4.12 Auditors The Controller and Auditor-General (GAG) is the statutory auditor for the Project pursuant to the provisions of Article 143 of the Constitution of the United Republic of Tanzania of 1977 (revised 2000), Section 9 - 12 of the Public Audit Act, 2008, Section 15 (2) of the Executive Agencies Act, 1997 (amended 2009) and Public Finance Act No 6 of 2001 (revised 2004). Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 19 TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN TRANSPORT IMPOVEMENT PROJECT 5.0 FINANCIAL STATEMENTS 5.1 STATEMENT OF MANAGEMENT RESPONSIBILITY FOR THE YEAR ENDED 30TH JUNE 2018 Pursuant to Section 25(4) of the Public Finance Act, 2001 (R.E. 2016), the Management is required to prepare financial statements for each financial year, which give a true and fair view of receipts and payments of the reporting entity as at the end of the respective financial year. It also requires Management to ensure the reporting entity keeps proper accounting records, which disclose with reasonable accuracy at any time the financial position of the reporting entity. The Management is also responsible for safeguarding the assets of the entity. The Project Management accepts responsibility for annual financial statements for the year ended 30th June 2018 which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Public Sector Accounting Standards Accrual Basis (IPSAS - Accrual) and in the manner required by Section 25(4) of the Public Finance Act, 2001 (R.E. 2004), Section 15(1) of the Executive Agencies Act No. 30 of 1997 (amended 2009), the Agency's Accounting Manual and the Financing Agreement. The Project Management is of the opinion that, the financial statements give a true and fair view of the state of the financial affairs of the Project. Management, further, accepts responsibility for maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control. Management is responsible for safeguarding the assets of the Project and hence for taking reasonable steps for prevention and detection of frauds, errors and irregularities. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. To the best of the Management's knowledge, the system of internal control has operated adequately throughout the reporting period and that the records and underlying accounts provide a reasonable basis for the preparation of the financial statements for the financial year 2017/2018. The Management accepts responsibility of the integrity of the financial statement, the information it contains and its compliance with the Public Finance Act, 2001, the Executive Agencies Act, 1997, instructions from the Treasury and the Financing Agreement. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 20 Procurement of goods, works, consultancy, and non-consultancy services to the extent that they are reflected in these financial statements have been done in accordance with the Public Procurement (Amendment} Act, 2016 and Public Procurement Regulations, 2013. At the time of preparing this report, there was no evidence that came to the attention of the Project Management to signify that the Project will cease its operations; therefore, the Dar es Salaam Urban Transport Improvement Project expects to continue in operation as a going concern from the date of this statement. /\A,,,~~~ ........................................................ Eng. P.A.L. Mfugale CHIEF EXECUTIVE Dar es Salaam Urban Transport Improvement Project (DUTP} Credit No. 59570 & Credit No. 59580-TZ 21 TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN TRANSPORT IMPROVEMENT PROJECT 5.2 DECLARATION OF THE HEAD OF FINANCE AND CHIEF ACCOUNTANT The National Board of Accountants and Auditors (NBM) according to the power conferred under the Auditors and Accountants (Registration) Act. No. 33 of 1972, as amended by Act No. 2 of 1995, requires financial statements to be accompanied with a declaration issued by the Head of Finance/Accounting responsible for the preparation of financial statements of the entity concerned. It is the duty of a Professional Accountant to assist the Board of Directors/Governing Body/Management to discharge the responsibility of preparing financial statements of an entity showing true and fair view of the entity's position and performance in accordance with applicable International Accounting Standards and statutory financial reporting requirements. Full legal responsibility for the preparation of financial statements rests with the Management as under Management Responsibility statement on an earlier page. I, CPA Rhoda P. Gwivaha being the Head of Finance and Chief Accountant of Tanzania National Roads Agency (The Dar es Salaam Urban Improvement Transport Project (DUTP) hereby acknowledge my responsibility of ensuring that financial statements for the year ended 30th June 2018 have been prepared in compliance with applicable accounting standards and statutory requirements. I thus, confirm that the financial statements give a true and fair view of the Dar es Salaam Urban Improvement Transport Project (DUTP) as on that date and that they have been prepared based on properly maintained financial records. ~.................... signed by: ..... :..... Position: P.i9a.t!~~-~.RLf.imm~ and.Ch~f Accountant NBAA MembershipNo.: ... l.49.~. Date: .. ~~-,$.~p~'oAr ~l& Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 22 TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN TRANSPORT IMPROVEMENT PROJECT 5.3 STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2018 Notes 30-Jun-18 30-Jun-17 USD USD ASSETS Current Assets Cash at bank 5.8.3 19,663,142.77 Advances- GoT 5.8.3 661,787.39 119,972.42 Mobilization Advances 5.8.4 12,105,360.83 Total current assets 32,430,290.99 119,972.42 Non · Current Assets VVork in Progress 5.8.5 12,732,115.12 3,060,882.86 Total non-current assets 12,732,115.12 3,060,882.86 Total Assets 45,162,406.11 3,180,855.28 LIABILITIES Current Liabilities Creditors 5.8.16 977.41 Retention money 5.8.6 482,371.60 Total current liabilities 483,349.01 Non-current liabilities Deferred capital grant IDA 5.8.7 40,516,587.37 . Deferred.capital grant GoT . 5.8.8 4,163,089.46 3,180,855.28 Total non-current liabilities 44,679,676.83 3,180,855.28 Total Liabilities 45,163,025.84 3, 180,855.28 NET ASSETS (619.73) NET ASSETS/EQUITY Accumulated Surplus (619.73) Total Net Assets/Equity (619.73) .......~··············· Chief Executive Director of Business Support ....... ~.&./.9.l}~..t.f....................... . . . ~.Q.1.~.:!?5:.f .~. . .. Date Date Dar es Salaam Urban Transport Improvement Project (DUTP} Credit No. 59570 & Credit No. 59580-TZ 23 TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN TRANSPORT IMPROVEMENT PROJECT 5.4 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30TH JUNE 2018 Notes 30-Jun-18 30-Jun-17 Revenue US$ US$ Recurrent Grant (IDA) 5.8.11 1,802,808.45 Total Revenue 1,802,808.45 Expenditure Foreign Exchange Gain/Loss 5.8.9 619.73 Component A - Establishment of the Third and Fourth Phases of the Dar BRT System 5.8.12 361,302.32 Component B: Improvement of the Ubungo Intersection and Complementary Road Safety Infrastructure for the BRT Phase 1 System 5.8.12 653,684.24 Component C: Institutional Strengthening and Reform, ICT Innovation, Safety Net. and Transport Studies 5.8.12 787,821.89 Total Expenditure 1,803,428.18 Su plus/Deficit for the year (619.73) ~· ... ~......................... . Chief Executive Director of Business Support ...... ~& Date /03/~1~. . . . . . . . . . .. .. .?.:~l?.~./~. ,. ~ Date · Dar es Salaam Urban Transport Improvement Project (DUTPJ Credit No. 59570 & Credit No. 59580-TZ 24 TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN TRANSPORT IMPROVEMENT PROJECT 5.5 STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30TH JUNE 2018 Notes 30-Jun-18 30-Jun-17 US$ US$ Cash Flows from Operating Activities: Receipt Recurrent Grant Received IDA 5.8.12 1,801,831.04 Cash generated from operations 1,801,831.04 Payments Payment to suppliers 5.8.12 (1,801,831.04) Net cash from operating activities Cash flows from investing activities Development Grants Received (IDA) 5.8.14 40,517,564.78 Development works (IDA) 5.8.13 (20,854,422.01) Development Grants Received (GoT) 440,419.21 3,060,882.86 Development works (GoT) (440,419.21) (3,060,882.86) Net cash from investing activities 19,663,142.77 Cashflows from financing activities Net cash used in financing activities Net increase in cash and cash equivalents 19,663,142.77 Cash and cash equivalents at the beginning of the period Cac:h and cash equivalents at the end of the period 5.8.3 19,663,142.77 ~ ................................................ Director of fllsiness Support ......~~.l.~.1{~~-~.Y...... . Date Dar es Salaam Urban Transport Improvement Project (DUTP} Credit No. 59570 & Credit No. 59580-12 25 TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN TRANSPORT IMPROVEMENT PROJECT 5.6 STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 30TH JUNE 2018 US$ 1st July 2017 Surplus/Deficit for the Year (619.73) At 30th June 2018 (619.73) 1st July 2016 Surplus/Deficit for the Year At 30th June 2017 .~~ ····························· ~ Chief Executive ·~i~~~~·~;-~-,~~~·~·s;;;~rt······ . . . . . . .~~/9..1./3:0 ~ Date .1. ...... ........ &8/09 / dJSJlf ·o;~·-.................................... . Dar es Salaam Urban Transport Improvement Project (DUTP} Credit No. 59570 & Credit No. 59580-TZ 26 } , TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN IMPROVEMENT PROJECT (DUTP) 5.7 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNT ,FOR THE YEAR ENDED 30TH JUNE 2018 Original Budget Final Budget Actual Amount Difference Percentage USO USO USO USO (A) (B) (C) (D=B·C) (E=C/B*100) Revenue Component A - Establishment of the Third and Fourth Phase of the Dar es salaam BRT System 51,800,000.00 51,800,000.00 361,302.32 51,438,697.68 70% Component B · Improvement of Ubungo Intersection and Complementary Road Safety Infrastructure for the BRT Phase I System 52,546,500.00 52,546,500.00 41,171,249.02 11,375,250.98 78% Component C- Institutional Strengthening and Reform, JCT Innovation, Safety Net and Transport Studies 9,300,000.00 9,300,000:00 786,844.48 8,513,155.52 8% 113,646,500.00 113,646,500.00 42,319,395.82 71,327,104.18 Expenses . Component A- Establishment of the Third and Fourth Phase of the Dar es salaam BRT System 51,800,000 ,.51,800,000 361,302.32 51,438,697.68 70% Component B- Improvement of Ubungo Intersection and Complementary Road Safety Infrastructure for the BRT Phase I System 52,546,500 52,546,500 21,508,106.25 31,038,393.75 41% Component C - Institutional Strengthening and Reform, ICT Innovation, Safety Net and Transport Studies 9,100,000 9,300,000 786,844.48 8,513,155.52 8% 113,646,500 113,646,500 22,656,253.05 90,990,246.95 Surplus/(Deficit) during the year 19,663,142.77 -19,663,142.77 ~~ ~ , .................. .................. Date ~ i{ ~1 /~lg' Director of Business Support o~t;. ·9-:g/ttff~t f Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580- TZ 27 TANZANIA NATIONAL ROADS AGENCY DAR ES SALAAM URBAN IMPROVEMENT PROJECT 5.8 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2018 5.8.1 Statement of Compliance and Basis of Preparation The financial statements of the Project have been prepared in accordance with International Public Sector Accounting Standards (IPSAS) and comply with the Public Finance Act, 2001 as amended in 2000, the Executive Agencies Act, 1997 and the Financing Agreement. The financial statements are presented in United States Dollars (US$), which is the functional and reporting currency of the Project. The accounting policies will be applied consistently to all the years to be presented. The financial statements have been prepared on the basis of historical cost basis, unless stated otherwise. The cash flows statement is prepared using the direct method. The financial statements are prepared on an accrual basis. Although this is the first Financial Statement of the project, there will be comparison figures as compensation money was received in the Financial year 2015/2016 and 2017/2018. 5.8.2 Summary of Significant Accounting Policies The accounting policies adopted for preparation of Project's financial statements, which will be consistent with those of subsequent years, are shown below. a) Foreign currency translation Functional and presentation currency Items included in the financial statements of the Project are measured using the functional currency. Financial Statements are prepared in United States Dollars which is the currency of the Credit Agreement. Therefore, United States Dollar is the Project's functional and presentation currency. Payments are normally made in the currency or currencies in which the bid price was stated. However, if the payment of a portion of the bid price is made in other currencies, the exchange rates applied are those used in the bid and thus the contract. On the date of payment portions denominated currencies other than US$ are converted into US$ using prevailing exchange rate at the date of transaction. Monetary items in the statement of financial position are translated by using exchange rate at the closing date. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 28 Exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in other currencies are recognized in the statement of financial performance. b) Cash and cash equivalents Cash and bank balances in the statement of financial position comprise cash at banks and in hand and short-term deposits with an original maturity of three months or less, and is measured at amortized cost. For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. c) Revenue recognition The Project receives its revenue from the IDA in line with the signed Loan Agreement between the World Bank and the Government of Tanzania. Revenue from the World Bank is accounted for on accrual basis. Revenue from the World Bank is accrued and recognised in the financial statement when it is probable that future economic benefit will flow to the Project and if the benefits are reliably measured. The following specific recognition criteria must also be met before revenue is recognized: Recurrent grants are recognised as income when such grant has been received and expensed to match expenditure incurred with the Grants received. Capital grants are deferred until when the Project assets are fully recognised in the book of the project implementing entrty or whoever may be allocated such assets. Thereafter, the grant is amortised and recognised as income in systematic and rational basis over useful life of the assets. This means since the road project assets are still in progress and other assets have not yet been allocated to the entity the grant received will be deferred until when the full asset recognised in the financial statement and start depreciating. d) Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 29 e) Property, plant and equipment The project costs are accumulated in the items of work-in-progress infrastructure assets which are measured at cost. The cost of work-in-progress infrastructure assets include costs of material, direct labour and any other costs directly attributable to bringing the asset to a condition where it is ready for its intended use. Work-in-progress infrastructure asset is ready for its intended use once hand over certificate is issued and at this point work-in-progress is recognised as an item of property, plant and equipment; for this particular project, it will be infrastructure asset. f) Provisions Provisions are recognised when the Project has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Project expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in surplus/deficit net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. g) Taxes The Project being a Government Project is exempted from tax on the surplus/deficit for the year. h) Events after reporting date Events after the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. Two types of events can be identified: • those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period); and • Those that are indicative of conditions that arose after the reporting period (non-adjusting events after the reporting period). Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 30 i) Judgments The preparation of the Project's financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. In the process of applying the Project's accounting policies, management has made no specific judgments. j) Related parties The Project regards a related party as a person or an entity with the ability to exert control individually or jointly, or to exercise significant influence over the project or vice versa. Members of the project steering committee and members of the project implementation team are regarded as related parties. 5.8.3 Cash and cash equivalents and GoT advances The project maintains a cash book in United States dollars. The designated account is maintained at the Bank of Tanzania (BOT). During the financial year 2017/2018, there was a total cash balance of US$ 19,663,142.77 at the designated account maintained at the Bank of Tanzania. In this project, there is also some funds from the government for compensation to PAP's. The government has disbursed a total of US$ 4,163,089.46 to date. A total of US$ 3,501,302.07 has been spent leaving a balance of US$ 661,787. 30-Jun-18 Details US$ BOT Designated Account no. 9931219371 19,663,142.77 Total 19,663,142.77 30-Jun-18 30-Jun-17 30-Jun-16 US$ US$ US$ Opening Balance 119,972.42 3,180,855.28 Received During the year 982,234.18 3,180,855.28 Paid during the year (440,419.21) (3,060,882.86) Closing balance 661,787.39 119,972.42 3,180,855.28 - Dar es Salaam Urban Transport Improvement Project (DUTP} Credit No. 59570 &Credit No. 59580- 7Z 31 5.8.4 Mobilization Advances The mobilization advances represent amount advanced to the various contractors/consultants exclusively for the cost of mobilization in respect of works or services as per the agreement. The advanced amount is interest -free, payable in proportion of foreign and local currencies of contract price, but in no event exceed the agreed percentage. The Amount advanced is Subject to Percentage recovery from interim payment certified or invoiced. Initially, the Project advanced a total of US$ 12,105,360.83 to Contractors; however, up to 30th June 2018 the advance has not yet started to be recovered. 5.8.5 Work in Progress Project Expenditure represents the gross amounts of invoices raised for services rendered or Interim Payment Certificates (IPC) approved for the construction works done and compensation money. Details 30-Jun-18 30-Jun-17 US$ US$ Opening Balance 3,060,882.86 Ubungo Interchange-Works 7,660,085.91 Ubungo Interchange-Supervision 1,570,727.14 Compensation 440,419.21 3,060,882.86 TOTAL 12,732,115.12 3,060,882.86 5.8.6 Retention Money Payable The retention money is 5 % of contract value and is deducted from all payments made to the contractors at 10% against each certified IPC until it reaches the maximum limit. Retention money is a credit balance payable to contractor upon finalization of satisfied completion and performance of works. Total amount retained from Contractors as at 30th June 2018 was USO 482,371.60 as analysed hereunder: 30-Jun-18 Retention Money Payable US$ Beginning Balance Additional for the year 482,371.60 Payment during the year Closing Balance 482,371.60 Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 32 5.8.7 Cumulative Deferred Capital Grants IDA These are cumulative funds received for capital expenditure but have been deferred for amortisation until assets are recognised into respective categories of assets. This includes expenditure for infrastructure assets and office operating assets. 30-Jun-18 Deferred Capital Grants US$ Beginning Balance 40,516,587.37 Additional for the year Closing Balance 40,516,587.37 5.8.8 Deferred Capital Grants - GOT Under this project, GOT is responsible to meet costs of compensation to the Project Affected Persons. Total amount of compensation received and deferred to date is USO 4,163,089.46. Deferred Capital Grants 30-Jun-18 30-Jun-17 30-Jun-16 US$ US$ US$ Beginning Balance 3,180,855.28 3,180,855.28 Additional for the year 982,234.18 3,180,855.28 Closing Balance 4,163,089.46 3,180,855.28 3,180,855.28 5.8.9 Foreign Exchange loss This loss came from the difference in WIP, actual cash used to pay WIP was USO 9,231,432.78 while the General Ledger for WIP from the system (Epicor) show USO 9,230,813.05. This has led to a realisation of foreign exchange loss of USO 619.73. 30-Jun-18 Foreign Exchange Loss US$ Beginning Balance Additional for the year 619.73 Closing Balance 619.73 Dar es Salaam Urban Transpo,t Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 33 5.8.10 Amortised Recurrent Grant This refers to amount of disbursed recurrent grant which was spent during the year and hence expensed. The actual cash outflow for recurrent expenses for IDA was US$ 1,801,831.04 and during the year, there was a payable amounting to US$ 977 .41. Therefore, the amount of IDA recurrent grant amortised during the year was US$ 1,801,831.04 plus US$ 977.41 which brings a total of US$ 1,802,808.45. Amortised Recurrent Grant 30-Jun-18 US$ Beginning Balance Expenses (IDA) 1,801,831.04 Expenses (IDA) 977.41 Amortised During the year (1,802,808.45) Closing Balance 5.8.11 Recurrent Expenses During the financial year 2016/2017, a total of US$ 3,060,882.86 was spent as compensation to PAPs. Financial statements were not prepared as we had very few transactions. Recurrent Expenses 30-Jun-18 US$ Foreign Exchange Gain/Loss 619.73 Component A - Establishment of the Third and Fourth Phases of the Dar es Salaam BRT System 361,302.32 Component B: Improvement of the Ubungo Intersection and Complementary Road Safety Infrastructure for the BRT Phase 1 System 653,684.24 Component C: Institutional Strengthening and Reform, ICT Innovation, Safety Net, and Transport Studies 787,821.89 Total Expenditure 1,803,428.18 Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580· Tl 34 5.8.12 Recurrent grant IDA This is the actual cash outflow used to cover recurrent expenses. 30-Jun-18 Recurrent Grant IDA US$ Beginning Balance Received during the year 1,801,831.04 Payment during year (1,801,831.04) Closing Balance 5.8.13 Payment for Development Works 30-Jun-18 Payment for Development Works IDA US$ Construction of Ubungo Interchange CCECC 19,283,203.01 Supervision of Ubungo lnterchange-Dasan 1,571,219.00 Total 20,854,422.01 5.8.14 IDA Loans Received IDA Loan Proceeds represent cumulative amount advanced to Designated Account and eligible expenditure directly paid to the clients under the financing agreement. For the financial year ended 30th June 2018, a total of US$ 42,319,395.82 was disbursed to the Designated Account after submission of the forecasted expenditure for the respective period. US$ 42,319,395.82 has been disbursed to the Designated Account since inception of the Project. Amount paid for recurrent expenses under IDA was US$1,801,831.04 leaving a balance of US$ 40,517,564.78 as development grant. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-Tl. 35 Date Advanced to DA as at 30th Payment for Recurrent Advanced to DA AS AT June 2018. Expenses 30th June 2018. USD USD USD 25/07/2017 8,190,850.00 8,190,850.00 2011/2017 2,390,098.50 10,580,948.50 7/11/2017 6,536,759.23 17,117,707.73 12.12.2017 25,201,688.09 (1,801,831.04) 40,517,564.78 Total 42,319,395.82 (1,801,831.04) 5.8.15 Statement of Expenditure (SOE) Statement of Expenditure (SOE) refer to expenditure incurred for eligible payments of project activities valued below the "prior review threshold", meaning that they do not need procurement process to be reviewed by IDA at all stages in the standard manner. These are usually small valued shopping and operating expense purchases. IDA requires that the annual audits include through verification of expenditures incurred under shopping procedures or otherwise for which the bank did not get involved in every stage of the procurement process. The maximum values for SOE are as follows: Contracts for civil works valued at less than US$ 5, million equivalents each; Contracts for goods valued at less than US$ 500,000 equivalents each Contracts for Consulting firms less than US$ 200,000; Individual consultants valued at less than US$ 100,000 equivalents each respectively. During this financial year, US$ 627,499.34 was paid under SOE. The detailed expenditure is shown below; 30-Jun-18 Statement of Expenditure (SOE) US$ Operating Cost DART 333,611.94 Training DART 145,748.30 Operating Cost TANROADS 2,921.15 Training MOWTC 145,217.95 Total 627,499.34 Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 36 5.8.16 Payables These relate to outstanding payment to various suppliers. 30-Jun-18 Payee Description US$ Air ticket Cost For Travel Link DART staff 977.41 Total 977.41 5.8.17 Statement of Receipt and Payment 30-Jun-18 30-Jun-17 30-Jun-16 Receipts US$ US$ US$ Opening Balance 119,972.42 3,180,855.28 Receipt from IDA 42,319,395.82 Receipt from GoT 982,234.18 3,180,855.28 Total Receipts 43,421,602.42 3,180,855.28 3,180,855.28 Payments Compensation 440,419.21 3,060,882.86 Component A - Establishment of the Third and Fourth Phases of the Dar es Salaam BRT System 361,302.32 Component B: Improvement of the Ubungo Intersection and Complementary Road Safety Infrastructure for the BRT Phase 1 System 21,508,106.25 Component C: Institutional Strengthening and Reform, ICT Innovation, Safety Net, and Transport Studies 786,844.48 Total Payments 23,096,672.26 3,060,882.86 Balance 20,324,930.16 119,972.42 3,180,855.28 5.8.18 Planned Budget Versus Actual expenses incurred All of the significant variances between planned budget and actual budget is due to the fact that, not all planned activities and components were implemented during this financial year. Dar es Salaam Urban Transport Improvement Project (DUTP) Credit No. 59570 & Credit No. 59580-TZ 37