73322 NATIONAL ROAD REHABILITATION (OSH-BATKEN-ISFANA) PROJECT GRANT/CREDIT NO.H520 KG/4658 KG ADDITIONAL FINANCING AGREEMENT GRANT/CREDIT NO.H619 KG/4826 KG FOR DEVELOPMENT PURPOSES OF INTERNATIONAL DEVELOPMENT ASSOCIATION Special Purpose Project Financial Statements For the year ended 31 December 2011 "-'\ ,. ". • ._~l ~ .' ~ NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG TABLE OF CONTENTS Page STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS INDEPENDENT AUDITORS' REPORT 2-3 SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011: Summary of sources and uses offunds 4 Summary of sources and uses of funds by categories 5-11 Statement of withdrawals on IDA Grants and Credits 12-14 IDA Grants and Credits Special account statements 15-17 Notes to the special purpose project financial statements 18-21 STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE SPECIAL PURPOSE PRO"IECT FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 Management of the National Road Rehabilitation (Osh-Batken-Isfana) Project (the "Project") implemented by the Investment Project Implementation Group under the Ministry of Transport and Communications of the Kyrgyz Republic is responsible for the preparation of the special purpose project financial statements that present fairly the summary of sources and uses of funds, summary of sources and uses of funds by categories, statement of withdrawals on International Development Association ("IDA") Grants/Credits, IDA Grant/Credit Special account statements for the year ended 31 December 2011, in compliance with the International Public Sector Accounting Standard "Financial Reporting under the Cash Basis of Accounting" ("IPSAS Cash Basis") and the World Bank's Financial Management Sector Board's "Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities" (the "WB Guidelines"). In preparing the special purpose project financial statements, management is responsible for: • Properly selecting and applying accounting policies; • Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; • Providing additional disclosures when compliance with the specific requirements in IPSAS Cash Basis are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Project, summary of sources and uses of funds, summary of sources and uses of funds by categories, statement of withdrawals on IDA Grants/Credits, IDA Grants/Credits Special account statements for the year ended 31 December 2011 ; • Making an assessment of the Project's ability to continue as a going concern. Management is also responsible for: • Designing, implementing and maintaining an effective and sound system of internal controls, throughout the Project; • Maintaining adequate accounting records that are sufficient to show and explain the Project's transactions and 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 Cash Basis and the WB Guidelines; • Maintaining statutory accounting records in compliance with Kyrgyz Republic legislation; • Taking such steps are reasonably available to them to safeguard the assets of the Project and to affirm that funds received on the basis of Agreement on Grant NO.H520 KG and Credit No,4658 KG, Additional Financing Agreement on Grant No. H619 KG Credit No,4826 KG were used for the purposes the financing was provided for; and • Preventing and detecting fraud and other irregularities. The special purpose project financial statements for the year ended 31 December 2011 were approved by the Management on 16 October 2012. ment: Mamaev u anychbek Zainalov Ulan Director of Investment Project Financial Manager Implementation Group "National Road Rehabilitation" Project Deloitte Deloitte & Touche, LLC Room 504, 109/1, Turusbekova Street, Bishkek, 720001 Kyrgyz Republic Tel: +996 (312) 39 40 80 Fax: +996 (312) 394081 www.deloitle.kg INDEPENDENT AUDITORS' REPORT To the Investment Project Implementation Group under the Ministry of Transport and Communications of the Kyrgyz Republic ("KR"): We have audited the accompanying special purpose project financial statements of the National Road Rehabilitation (Osh-Batken-Isfana) Project (the "Project") financed under Financing Agreement on Grant No,H520 KG, Credit No.4658 KG and Additional Financing Agreement on Grant No,H619 KG and Credit No,4826 KG, which comprise a summary of sources and uses of funds, summary of sources and uses of funds by categories, a statement of withdrawals on IDA Grants and Credits, IDA Grant and Credit Special account statements for the year ended 31 December 2011 and a summary of significant accounting policies and other explanatory information (collectively referred to as the "special purpose project financial statements"), The special purpose project financial statements have been prepared by management of the Project using the Cash Basis International Public Sector Accounting Standard, Financial Reporting under the Cash Basis of Accounting ("IPSAS Cash Basis"), and the Guidelines on Annual Financial Reporting and Auditing for World Bank ­ Financed Activities issued by the World Bank's Financial Management Sector Board (the "WB Guidelines"), Management's responsibility for the special purpose project financial statements Management is responsible for the preparation and fair presentation of these special purpose project financial statements in accordance with the basis of accounting described in Note 2. This includes determining that the IPSAS - Cash Basis of accounting is an acceptable basis for the preparation of the special purpose project financial statement in the circumstances, 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. Auditors' responsibility Our responsibility is to express an opinion on these special purpose project financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the special purpose project financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the special purpose project financial statements, The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the special purpose project financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Project's preparation and fair presentation of the special purpose project financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Project management, as well as evaluating the overall presentation of the special purpose project financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion, Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member finns, each of which is a legally separate and independent entity. Please see www.deloitte.comJaboutfora detailed description of the legal structure of Deloitte Touche Tohmatsu Limned and its Oeloitte Opinion In our opinion, the special purpose project financial statements present fairly, in all material respects, summary of sources and uses of funds, summary of sources and uses of funds by categories, statement of withdrawals on IDA Grants and Credits, IDA Grants and Credits Special account statements for the year ended 31 December 2011, in accordance with IPSAS - Cash Basis and the WB Guidelines. Basis of accounting and restriction on distribution and use Without moditying our opinion, we draw attention to Note 2 to the special purpose project financial statements which describes the basis of accounting. The special purpose project financial statements are prepared to assist the Project to comply with the requirements of IDA. As a result, the special purpose project financial statements may not be suitable for another purpose. Our report is intended solely for use by the management of the Project, the Ministry of Transport and Communications of the Kyrgyz Republic, and IDA should not be distributed or used by anyone other than these specified parties. Other matter The special purpose project financial statements of the Project for the year ended 31 December 2010 were audited by another auditor who~Jes!e~~~ unmodified opinion on those statements on 24 May 2011 . .,..;/" el'OHI /·f ;" '. ?,,/ ,~~ ___-_ 1J'~' .. ',. Pd4~eI~UC fJ 1 (fJo_""'_!!!1JI~i-.A" i , :\ _\ a. II UM .... ill:.,;: I I '\-'-'~ / 16 October 2012 ~{;;.~~ h e ' ~C! ",'. Bishkek Kyrgyz Republic \~~ ~:>'J,(kJ'))i~"'))~;:;"/ . , / / ' , '\i~~~\>~:/ NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG SUMMARY OF SOURCES AND USES OF FUNDS AT 31 DECEMBER 2011 (Amounts are shown in US dollars) Current period Accumulated Opening cash balances IDA Grant H520 KG Designated account 124,915 Government co-financing 501 Other accounts 2,704 Total opening cash balances 128,120 Sources of funds IDA Grant account IDA Grant H520 KG IDA Grant H619 KG 2,411,795 IDA Credit Account: 784,408 IDA Credit 4658 KG 784,408 Government Co-Financing 1,354,239 2,030,942 Refinancing of the advances given for preparation of the Project under Grant Q624 KG (from sources of the Grant H520 KG) 707,449 Other Income 10,188 Total cash available 9,627,661 Uses of funds I.Works under Part A of the Project 6,227,583 9,438,914 2.Goods, Operating costs and Training for Parts Band C of the Project 75,613 111,059 3.Consultants' Services including audit for Parts A, B and C of the Project 742,965 1,095,582 4.,Refund of Preparation Advance 707,449 5.AFI Works, Goods, Operating Costs, Training and Consultants' Services including audit 2,330,762 2,330,762 9.0ther Non-Operating Expenses Total uses of funds 9,376,923 Other non-operating expenses 2,531 Foreign exchange difference Total uses of funds Net cash available Closing cash balances rDA Grant Designated Account: 88,647 88,647 IDA Grant H520 KG 7,804 7,804 IDA Grant H619 KG 80,843 80,843 IDA Credit Designated Account: 260,000 260,000 IDA Credit 4658 KG 260,000 260,000 Other accounts 10,420 10,420 Advances to employees 142 142 Total closing cash balances 359,209 359,209 ent: Mamaev Kubanychbek Zainalov Ian Director ofInvestment Project Implementation Financial Manager Unit "National Road Rehabilitation" Project 16 October 2012 Bishkek, Kyrgyz Republic ------ TIONAL ROAD REHABILITATION PROJECT ANT NO. H520 KG, CREDIT NO. 4658 KG - -- - - - - - - - - - - - D. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG MARY OF SOURCES AND USES OF FUNDS BY CATEGORIES 1 DECEMBER 2011 ounts are shown in US dollars) Actual Budget Variance (unaudited) (unaudited) From Project From Project From Project Current period Current period Current period start start start ning cash balance Special Account IDA Grant H520 KG (USD) 124,915 Government Cofinancing account (KGS) 501 her account 2,704 Tender account 682 Percent account 2,022 al opening cash balance 128,120 behalf of~he Manage "'-~ - - - - -...........- - - : : - - - - - ' - - - - - - - - d~- maev Kubanychbek Zainalov Ulan ctor of Investment Project Implementation Financial Manager "National Road Rehabilitation" Project ctober 2012 kek, Kyrgyz Republic notes on pages 18-20 form an integral part of these special purpose project financial statements. 5 ------------------- TIONAL ROAD REHABILITATION PROJECT ANT NO. H520 KG, CREDIT NO. 4658 KG D. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG MARY OF SOURCES AND USES OF FUNDS BY CATEGORIES (CONTINUED) 1 DECEMBER 2011 ounts are shown in US dollars) Actual Budget Variance (unaudited) ( unaudited) From Project From Project From Project Current period Current period Current period start start start rces of funds A Grant 7,478,826 10,527,309 DA Grant H520 KG 5,067,031 8,115,514 SA Replenishment 1,121,478 1,313,837 Direct payments 3,715,553 6,351,677 nitial deposit 230,000 450,000 DA Grant H619 KG 2,411,795 2,411,795 SA Replenishment 1,961,795 1,961,795 nitial deposit 450,000 450,000 A Credit 784,408 784,408 DA Credit 4658 KG 784,408 784,408 SA Replenishment 89,302 89,302 Direct payments 435,106 435,106 nitial deposit 260,000 260,000 overnment 1,354,239 2,030,942 nancing of the advances given for preparation of Project under Grant Q624 KG (from sources of the nt H520 KG) 707,449 al Sources of Funds 9,617,473 14,050,108 /" d~ aev Kubanycbbek Zainalov / ctor of Investment Project Implementation Financial Manager "National Road Rehabilitation" Project ctober 2012 kek, Kyrgyz Republic notes on pages 18-20 form an integral part of these special purpose project financial statements 6 ------------------- TIONAL ROAD REHABILITATION PROJECT ANT NO. H520 KG, CREDIT NO. 4658 KG D. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG MARY OF SOURCES AND USES OF FUNDS BY CATEGORIES (CONTINUED) 1 DECEMBER 2011 ounts are shown in US dollars) Actual Budget Variance (unaudited) (unaudited) From Project From Project From Project Current period Current period Current period start start start -operating income ign exchange gain 4,720 4,865 rest income 10,103 12,742 me on tender documentation 85 1,967 al Non-Operating Income 14,908 19,574 al Sources of Funds 9,632,381 14,069,682 s of Funds Works under Part A of the Project 6,227,583 9,438,914 6,510,360 14,971,730 282,777 5,532,816 I I I. Works (IDA Grant) 5,402,206 8,613,537 5,725,230 14,186,600 323,024 5,573,063 I.IDA Grant H520 KG 4,278,516 6,852,756 4,580,184 11,349,280 301,668 4,496,524 5.Govemment of Kyrgyz Republic 1,123,690 1,760,781 1,145,046 2,837,320 21,356 1,076,539 1/2.Works (IDA Credit) 825,377 825,377 785,130 785,130 (40,247} (40,247} 2.IDA Credit 4658 KG 692,008 692,008 785,130 785,130 93,122 93,122 5.Govemment of Kyrgyz Republic 133,369 133,369 ( 133,369) (133,369) maev Kubanychbek Zainalov Ulan ctor of Investment Project Implementation Financial Manager "National Road Rehabilitation" Pro.iect ctober 2012 kek, Kyrgyz Republic notes on pages 18-20 form an integral part of these special purpose project financial statements 7 ---------- -------- - - TIONAL ROAD REHABILITATION PROJECT ANT NO. H520 KG, CREDIT NO. 4658 KG D. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG MARY OF SOURCES AND USES OF FUNDS BY CATEGORIES (CONTINUED) 1 DECEMBER 2011 ounts are shown in US dollars) Actual Budget Variance (unaudited) ( unaudited) From Project From Project From Project Current period Current period Current period start start start Goods, Operating costs and Training for Parts B C of the Project 75,613 111,059 419,577 6,377 308,518 2/1.Goods 14,639 14,639 22,420 7,781 I.1DA Grant H520 KG 13,175 13,175 13,176 20,956 7,781 5.Govemment of Kyrgyz Rcpublic 1,464 1,464 1,464 2/2. Goods for Component 2 236,110 236,110 I.1DA Grant H520 KG 188,888 188,888 5.Govemment of Kyrgyz Republic 47,222 47,222 3,797 11,111 (3,797) 7,314 I.1DA Grant 1-1520 KG 3,417 10,000 (3,417) 6,583 5.Govemment of Kyrgyz Republic 380 1,111 (380) 731 2/4.0perating costs 57,177 67,350 149,936 10,173 57,313 UDA Grant H520 KG 51,387 83,361 60,615 134,942 9,228 51,581 5.Govemment of Kyrgyz Republic 5,790 9,262 6,735 14,994 945 5,732 b'h.lfOfth~ aev Kubanychbek ZainalovtJlan ctor of Investment Project Implementation Financial Manager "National Road Rehabilitation" Pro.iect ctober 2012 kek, Kyrgyz Republic notes on pages 18-20 form an integral part of these special purpose project financial statements 8 ------------------- TIONAL ROAD REHABILITATION PROJECT ANT NO. H520 KG, CREDIT NO. 4658 KG D. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG MARY OF SOURCES AND USES OF FUNDS BY CATEGORIES (CONTINUED) 1 DECEMBER 2011 ounts are shown in US dollars) Actual Budget Variance (unaudited) From Project From Project From Current period Current period Current period start start start Consultants' Services including audit for Parts A, B C of the Project 786,700 3/l.Consultats· Services (Supervision) 770,680 1,270,680 LIDA Grant H520 KG 655,617 972,972 693,612 1,143,612 37,995 5.Govemment of Kyrgyz Republic 77,068 127,068 3/2.Consultats· Services (Component 2) 11I,1I0 I. IDA Grant H520 KG 99,999 99,999 5.Govemment of Kyrgyz Republic 1I,1l1 II, III 3/3.Audit 16,026 16,020 25,740 I.IDA Grant H520 KG 14,423 14,423 14,418 23,166 (5) 8,743 5.Govemment of Kyrgyz Republic 1,603 1,602 2,574 971 Refund of Preparation Advance 707,449 (707,449) ent: maev Kubanychbek Zainalov ctor of Investment Project Implementation Financial Manager "National Road Rehabilitation" Project ctober 2012 kek, Kyrgyz Republic notes on pages 18-20 form an integral part of these special purpose project financial statement 9 -------------------- TIONAL ROAD REHABILITATION PROJECT ANT NO. H520 KG, CREDIT NO. 4658 KG D. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG MARY OF SOURCES AND USES OF FUNDS BY CATEGORIES (CONTINUED) 1 DECEMBER 2011 ounts are shown in US dollars) Actual Budget Variance (unaudited) (unaudited) From Project From Project From Project Current period Current period Current period start start start AF! Works, Goods, Operating Costs, Training and sultants' Services including audit 2,330,762 2,330,762 (34,062) (34,062) 511.Works (AF I) 2,029,535 2,029,535 37,765 37,765 5/1/1.18 Works (AF) 2,029,535 2,029,535 37,765 37,765 3.IDA Grant H619 KG 2,029,535 2,029,535 930,285 930,285 (1,099,250) (1,099,250) 4.IDA Credit 4826 KG 1,137,015 1,137,015 5/2.Goods (AF I) 79,512 79,512 72,140 (7,372) (7,372) 5/2/2.Goods (AF) 18,561 18,561 18,580 18,580 19 19 3.lDA Grant H619 KG 18,559 18,559 18,580 18,580 21 21 5.Govemment of Kyrgyz Republic 2 2 (2) (2) 512/3.0perating costs (AF) 60,951 60,951 (7,391) (7,391) 3.1DA Grant H619 KG 60,951 60,951 53,560 (7,391) (7,391 ) 5/3.Consultants' Services (AF 1) 221,715 221,715 157,260 (64,455) (64,455) 5/3/1.Supervision (AF) 221,715 221,715 157,260 157,260 (64,455) (64,455) 3.1DA Grant H619 KG 221,715 221,715 70,767 70,767 (150,948) (150,948) 4.1DA Credit 4826 KG 86,493 86,493 86,493 86,493 0ther Non-Operating Expenses 1,200 (1,200) al Uses of Funds 9,376,923 13,684,966 9,675,750 19,095,537 298,827 5,410,571 e maev Kubanychbek Zainalov Ulan ctor of Investment Project Implementation Financial Manager "National Road Rehabilitation" Project ctober 2012 kek, Kyrgyz Republic notes on pages 18-20 fonn an integral part of these special purpose project financial statement 10 - - -- - - - - - - - - - - - - - - - TIONAL ROAD REHABILITATION PROJECT ANT NO. H520 KG, CREDIT NO. 4658 KG D. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG MARY OF SOURCES AND USES OF FUNDS BY CATEGORIES (CONTINUED) 1 DECEMBER 2011 ounts are shown in US dollars) Actual Variance From Project From Project From Current period Current Current period start start start -Operating Expenses r non-operating expenses 90 232 (90) (232) es 1,244 1,508 (1,244) (1,508) r services 1,197 1,525 (1,197) (1,525) ign exchange loss 21,838 22,242 (21,838) (22,242) l Non-Operating Expenses 24,369 (24,369) (25,507) l Uses of Funds 9,401,292 13,710,473 9,675,750 19,095,537 274,458 5,385,064 ing Cash Balance nds of IDA Grant 88,647 88,647 Special Account IDA Grant H520 KG (USD) 7,804 7,804 Special Account IDA Grant H619 KG (USD) 80,843 nds of IDA Credit 260,000 260,000 Specal account IDA Credit 4658 KG (USD) 260,000 260,000 her account 10,420 Tender account 776 776 Percent account 9,644 9,644 dvance to t::m.olclvec~s 142 al Closing Cash Balance 359,209 359,209 ent: aev Kubanychbek Zainalov Ulan ctor of Investment Project Implementation Financial Manager "National Road Rehabilitation" Project ctober 2012 kek, Kyrgyz Republic notes on pages 18-20 form an integral part of these special purpose project financial statement 11 NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG STATEMENT OF WITHDRAWALS ON GRANT NO. H520 KG FOR THE YEAR ENDED 31 DECEMBER 2011 (Amounts are shown in US dollars) With- Date requested Date received Advance Payment categories Total drawal Works Goods, Constulti withdraw No. Operating ng n costs, services Training 1100003 02 March 2011 09 March 2011 230,000 230,000 1100004 16 March 2011 17 March 2011 701,409 701,409 1100005 13 April 2011 21 April 2011 27,676 80,916 108,592 1/00006 27 May 2011 01 June 2011 97,637 14,556 220,455 332,648 12 27 July 2011 28 July 2011 838,229 838,229 1/00008 12 August 2011 23 August 2011 9,995 137,729 147,724 1/00011 31 August 2011 02 September 2011 1,079,409 1,079,409 1/00012 28 September 2011 06 October 2011 125,007 10,644 49,729 185,380 1/00014 19 October 2011 20 October 2011 158,110 5,654 91,539 255,303 1/00017 09 November 2011 14 November 2011 1,096,507 1,096,507 1/00016 23 November 2011 02 December 2011 3,664 88,166 91,830 GRANT NO. H520 KG 230,000 4,096,308 72,189 668,534 5,067,031 Mamaev Kubanychbek Director of Investment Project Implementation Financial Manager Unit "National Road Rehabilitation" Proiect 16 October 2012 Bishkek, Kyrgyz Republic Th~ nnt~c nn n-:loIT~C 1 R_'?n fnrm. -::lIn 1ntpCTr!l1 n~rt nfthpc;:p c;:np{"l!=11 nnrnn~p nrnlPC't fin:::lnC'.l:::11 c;;,t:::ltpmpnt NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG STATEMENT OF WITHDRAWALS ON GRANT NO. H619 KG FOR THE YEAR ENDED 31 DECEMBER 2011 (Amounts are shown in US dollars) Withdrawal No. Date requested Date received Advances AFI Works, Total withdrawn Goods, Operating costs, Training, and Consulting Services including audit 1100001 04 February 2011 07 February 2011 450,000 450,000 1100007 27 June 2011 28 June 2011 171,126 171,126 1/00008 27 July 2011 01 August2011 152,392 152,392 1100009 12 August 2011 18 August 2011 284,227 284,227 1/00010 14 September 20 II 16 September 20 II 333,053 333,053 1/00013 19 October 2011 25 October 20 II 290,588 290,588 1100015 09 November 2011 14 November 20 II 406,226 406,226 1100019 14 December 20 II 22 December 20 II GRANT NO. H619 KG 450,000 1,961,795 Mamaev Kubanychbek Zainalov Ulan Director of Investment Project Implementation Financial Manager Unit "National Road Rehabilitation" Project 16 October 2012 Bishkek, Kyrgyz Republic The notes on pages 18-20 form an integral part of these special purpose project financial statement NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG STATEMENT OF WITHDRAWALS ON CREDIT NO. 4658 KG FOR THE YEAR ENDED 31 DECEMBER 2011 (Amounts are shown in US dollars) Withdrawal No. Date requested Date received Advances Works under Total Part A of the withdrawn Project 1/00018 09 November 20 II 10 November 2011 260,000 260,000 1100001 07 December 2011 14 December 20 II 435,106 435,106 1100021 14 December 20 II 20 December 2011 89,302 CREDIT NO. 4658 KG 260,000 524,408 zai.al~ o n ; : J ~ M ageme.t, Mamaev Kubanychbek Director of Investment Project Implementation Financial Manager Unit "National Road Rehabilitation" Project 16 October 2012 Bishkek, Kyrgyz Republic Th,." not,."", on mUle", I R-'O form an integ-ral nart of these snecial oumose oroiect financial statement NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG SPECIAL ACCOUNT STATEMENT ON GRANT NO.H520 KG AT 31 DECEMBER 2011 (Amounts are shown in US dollars) Bank account number 1280091146299127 Bank CJSC "Kyrgyz Investment Credit Bank" Bank location Grant agreement 21 Erkindik blvd., Bishkek, Kyrgyz Republic Grant No. H520 KG Currency US dollars Opening balance as of 1 January 20ll 124,915 Add: World Bank replenishments 1,351,478 Minus: Payments from the Special Account (1,468,589) Ending balance as of 31 December 2011 7,804 anagement: Mamaev Kubanychbek Zainalov a Director of Investment Project Implementation Financial Manager Unit "National Road Rehabilitation" Project 16 October 2012 Bishkek, Kyrgyz Republic NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG SPECIAL ACCOUNT STATEMENT ON GRANT NO. H619 KG AT 31 DECEMBER 2011 (Amounts are shown in US dollars) Bank account number 1280091146299329 Bank ClSC "Kyrgyz Investment Credit Bank" Bank location 21 Erkindik blvd., Bishkek, Kyrgyz Republic Grant agreement Grant No. H619 KG Currency US dollars Opening balance as of 1 January 2011 Add: World Bank replenishments 349,302 Minus: Payments from the Special Account (89,302) Ending balance as of31 December 2011 260,000 Management: Mamaev Kubanychbek Zainal~ Director of Investment Project Implementation Financial Manager Unit "National Road Rehabilitation" Project 16 October 2012 Bishkek, Kyrgyz Republic NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG J SPECIAL ACCOUNT STATEMENT ON CREDIT NO. 4658 KG AT 31 DECEMBER 2011 (Amounts are shown in US dollars) Bank account number 1280091146299430 Bank CJSC "Kyrgyz Investment Credit Bank" 1 Bank location Grant agreement 21 Erkindik blvd., Bishkek, Kyrgyz Republic Credit NO. 4658 KG Currency US dollars Opening balance as of 1 January 2011 Add: World Bank replenishments 2,411,795 Minus: Payments from the Special Account (2,330,814) Minus: Advances to employees (138) Ending balance as of31 December 2011 80,843 anagement: Mamaev ubanychbek zaina:?oViaD Director of Investment Project Implementation Financial Manager Unit "National Road Rehabilitation" Project 16 October 2012 Bishkek, Kyrgyz Republic The notes on pages 18-20 form an integral part of these special purpose project financial statements. NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG NOTES TO SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 1. PROJECT DESCRIPTION The National Road Rehabilitation Project ("the Project") has started its activity in 20 I 0 based on the IDA Development Financing Agreement on Development Grant No. H520 KG and Credit No. 4658 KG dated 3 December 2009 between the Kyrgyz Republic and the International Development Association ("the Agreements"). The objective of the Project is to assist the Government in: i) contribution to the reduction of transport costs and travel time along the Osh-Batken-Isfana Road corridor; and ii) improvement road safety planning. Component 1: Rehabilitation of a Section of the Osh-Batken-Isfana Road Corridor Provision of works and consultants' services for the rehabilitation of about thirty (30) kilometers of the Osh-Batken-Isfana road corridor. Component 2: Road Safety Planning Provision of goods, and consultants' services for: a) the development and launch of a national road safety program; b) preparation of pilot demonstration projects for road safety; and c) improvement of road safety planning. Component 2: Project Management and Implementation Provision of goods, consultants' services, training, and Operating costs, including an audit, to support Project coordination, implementation and management. IDA Grant/Credit Agreement No. H520 KG/4658 KG defined financing by the following categories: Categories Credit allocated Grant allocated % Of expenditure to amount, amount, be financed at the Special Drawing Special Drawing expense of IDA Rights Rights Grant/Credit 1. Work for Part A of the 8,800,000 4,340,000 80% Project 2. Goods, operating costs and 855,513 90% training for Part Band C of the Project 3. Consulting including audit for Parts A, Band C of the Project services 1,304,487 90% 4. Refund of Preparation 700,000 Amount to be paid in Advance Preparation accordance with the Advance provisions of Section 2.07 of the General Conditions Total 8,800,000 7,200,000 NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG NOTES TO SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2011 Credit No. 4658 KG is to be repaid semiannually on 15 January and 15 July: 1% starting from 15 January 2020 and to including 15 July 2029; and 2% starting from 15 January 2030 and to including 15 July 2049. On 1 October 2010 Additional Financing Agreement was signed between the KR and IDA on Grant No. H619 KG and Credit No. 4826 KG. The purpose of the Additional Financing Agreement is to: i) repair and rehabilitate the road infrastructure in the cities of Osh and Jalal Abad; ii) create temporary employment in the performance of routine tasks; and improve iii) the efficiency of planning for road safety. Credit allocated Grant allocated % Of expenditure to amount, amount, be financed at the Special Drawing Special Drawing expense of IDA Rights Rights Grant/Credit (1) Works, Goods, Operating 3,700,000 3,000,000 100% Costs, Training, and Consultant's services including audits for the Projects Total 3,700,000 3,000,000 According to the Additional Financing Agreement, the Credit funds can be used only after the Grant funds are totally withdrawn. During 2011 the Credit funds were not used because the Grant funds were still available. Credit No. 4826 KG is to be repaid semiannually on 15 January and 15 July in the following schedule: 1% of the principal amount during the period from 15 January 2021 to 15 July 2030; and 2% starting from 15 January 2031 to 15 July 2050. 2. ACCOUNTING POLICY Financial Statements Presentation Principles Basis of accounting These special purpose project financial statements are prepared on the cash basis of accounting based on International Public Sector Accounting Standards Financial Reporting under the Cash Basis of Accounting issued by the International Public Sector Accounting Standards Board and incorporate the following principal accounting policies, which have been consistently followed in all material respects and comply with the Guidelines on Annual Financial Reporting and Auditing for World Bank Financed Activities issued by the World Bank's Financial Management Sector Board. Project financing is recognised as a source of project funds when the cash is received. Project expenditures are recognised as a use of project funds when the payments are made. NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG NOTES TO SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2011 Accouuting method These special purpose project financial statements were prepared on the cash-basis accounting method that implies that: • All funds deposited at the special account in US Dollars or funds deposited at the settlement account in the national currency and which are disclosed in statements when received should be recorded as income regardless of the nature and sources; • Expenses are the funds used for payment for works, goods and services and which are disclosed in statements when paid. Presentation currency and transactions in foreign currency These special-purpose financial statements are denominated in US Dollars, which allows carrying out verification between the Grant/Credit accounts and the International Development Association's records. The primary accounting records on the Project were made in the national currency Kyrgyz Som. Incomes and expenses not denominated in US Dollars were translated at the bank's commercial exchange rate effective on the day of the operation. Disbursements of the PIU staffs salaries were converted using the National Bank of the Kyrgyz Republic's official exchange rate. Any difference between the exchange rates arising in the process of revaluation of money items as of the date of issuance of regular statements is included into gains or losses from the exchange rate difference, and is specified in an individual line of the Statement of Sources and Uses of Funds. Exchange rates Balances of funds in the national currency were revaluated at the latest conversion commercial rate. At 31 December 2011 kyrgyz som rate with regard to US Dollar equals to 46 som. 3. GOING CONCERN In accordance with IDA Financing Agreement Grant NO.H520 KG, Credit N0.4658 KG and dated 3 December 2009 between the Kyrgyz Republic and International Development Association the expected date of the grant's accounts closing is determined as 31 December 2014. In accordance with the Additional Financing Agreement Grant NO.H619-KG, Credit No.4826-KG dated 1 October 2010, the expected date of the grants'!credits' accounts closing is determined as 31 December 2014. NATIONAL ROAD REHABILITATION PROJECT GRANT NO. H520 KG, CREDIT NO. 4658 KG ADD. GRANT NO. H619 KG, ADD. CREDIT NO. 4826 KG NOTES TO SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2011 4. SUBSEQUENT EVENTS On 25 July 2011 the Ministry of Finance and International Development Association signed Agreement on second additional financing by Credit No.4975 KG amounting to 5,500,000 SDR (equivalent US Dollars 8,800,000); and Grant No.H711 KG amounting to 4,500,000 SDR (equivalent US Dollars 7,200,000). Implementing agency is the National Road Rehabilitation Project under the Ministry of Transport and Communication. Second additional financing will be allocated 100% to works, goods, operating costs, training, and consultant's services including audits starting from 2012. 5. APPROVAL OF SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS These special purpose project financial statements were authorized for issue by the management of the Project on 16 October 2012.