P,. Box 8759 Kigal e. Rwanda +250 788307334 nelsapcu n ebas or Nile Equatorial Lakes Subsidiary Action Program Coordination Unit(NELSAP.CU) Public Disclosure Authorized Our Ref: NELSAP/JS/ 2016 20thDecember 2016 Ms Yadviga SEMIKOLENOVA TTL project Nr P075941 The World Bank Washngton-DC USA Re: AUDIT REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30th JUNE 2016 FALLS HYDRO ELECTRIC PROJECT Public Disclosure Authorized Name of the Project: REGIONAL RUSUMO PROJECT No P075941 Dear Madam, Here is an original hard copy of the audit report and financial statements for the period ended June 30th 2016 of Regional Rusumo Falls Hydroelectric Project and the related Management I.etter. The report covers the financial year 2015/2016. Yours sincerely, Public Disclosure Authorized Eng. Elic d Nyalie NELSAP Regional Coordinator Public Disclosure Authorized Buuno DLv Congo,-VEgypt- Kn4y Ran1 San4 naAUUgnd Buirundi, 1).1t, Congo, Egypt, Kenya, R1wanda, Sudan,Twania, Upaida MOORE STEPHENS Fenraj Conseil MARORELSUS LP EL FIA December 14, 2016 RusuMM FOIs Pfwter pIk PMe*t- fM audit rO0 CONTENT I. INTRODUCTION... *.4.*.................*............... ...... 1.1 PROJECT BACKG ROUND........... .................................................. f.1.1.Sackground........................................... 1.2.2. Regionol Rusumo hlydro-power Proect........................................ 2.13. Project Highights............. .............................................. s 1.1.4. Project Cosr and Finanding.................................... 1.1.5. Schedie of Disbursements as or 30/06/2016... ................................ 8 1.2, AI11 COJCEiVES AND SCOPE .... ..................... .................... ........ 9 13 AUDITMETHODOLOGY ....................................................... 12 2. REPORT ON THE FINANCrAL STATEMENTS FOR THE YEAR ENDED 30 IUNE 2014 ...........................* . ..... .....- 13 21, JNDEPENDENT AU DITORS' OPINION. ........................................ 13 2.2 STATEMENT OF MANAGEMENT RESPONSIBILITIES..... ............. ..... .. ............. Is 2. STATEMENT OF FW'ANO. POSITON AS AT 30 JUNE 2016. ............... ............ 16 2.3. STATEMENTOF RECEPTS ANO PAYMENTS....................... ........................ 17 2.4. SCHEDULE OF REALISATIONS............................... ........................ 2.5. NOTES TO THE FINANCIAL STATEME TS -30 JUNE 2016 ................... ............ 19 3. REPORT ON THE OPERATIONS OF THE ( REGIONAL RUSUMO FALLS POWERPLANT PROJECTy SPECIAL ACCOUNT AND FUNDS WITHDRAWAL REQUESTS SUBMITTED TO THE ADF FOR THE YEAR ENDED 30 JUNE 2016..................................................................**.. * .........-..-..-.... *..*...**....... ****.*. **......................................... 24 3.1.INDEPENDENT AUDITORS'OPINION.......... ......................................... 24 3.2. SPECIAL ACCOUNT AT BANQUE NATIONALE DU RWANDA: "REGIONAL RUSUMO FALLS POWERPLANT PROJECT- DEPOSIT BANK- NATIONAL BANK OF RWANDA - USD A/C N' 10000268228. IDA CREDIT 52950, 52960, H8720, H8730..... ................................................................. 26 3.3. SCHEDULE OF FUNDS WITHDRAWAL REQUESTS ........................................... 27 3.4. SCHEDULE OF DISBURSEMENTS ....... ...................................................... 29 4 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE .......................................... 30 5 REPORT TO THE PROJECT MANAGEMENT ON INTERNAL CONTROL............................................................31 Fenroj Consell Moore Stephens Decembher 14, 2016 Regional Rusumo Falls Power plant Project- Final audit report I. INTRODUCTION 1.1. PROJECT BACKGROUND 1.1.1. Background The Nile Basin Initiative (NBI) was set up in 1999 by the countries bordering the Nile, except Eritrea, with a view to tapping the economic development potential of the Nile Basin. The member countries of NBI are: Burundi, Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Rwanda, Sudan, Tanzania and Uganda. The initiative is based on a common vision of "achieving viable socio-economic development through equitable harnessing of the common resources of the Nile Basin and fair distribution of profits generated". The Nile Basin Countries thus opted for implementation of this vision through a Strategic Action Plan integrating projects both at the basin and sub-region levels. In addition to this Plan, two subsidiary action programmes were put in place. These are (a) the Subsidiary Action Programme for the Nile Oriental region consisting of Egypt, Ethiopia and Sudan and (b) the Subsidiary Programme for the Nile Equatorial Lake countries of Burundi, RDC, Egypt, Kenya, Rwanda, Sudan, Tanzania and Uganda. It is in this latter NBI context that NELSAP - Nile Equatorial Lakes Subsidiary Action Programme resolved to organize field solidarity action in order to combat poverty, promote economic growth and reverse the environmental degradation of the region. Thus, twelve multinational projects including hydro-electric energy and electrical interconnections were identified. Fenraj Conell Moore Stephens Regional Rusunto Falls Power plant Project- Final audit report The map of the Nile Equatorial Lake region is shown hereafter CARTE DE LA ZONE I I Libye Reuve N9 Egypte I/ - rytr6e Thd Soudan . A I- Soudan Ke a e *ROA Etipia .7- Somalie RDC Ouganda CO Tanzanie Rwanda Burundi LEGENDE . Angola Zamb;e -C . - Lim ile de r [a 6giondes pay s LE N ' tw i IV'Io.? biclue Fenraj Conseil Moore Stephens I Decemer2016Regional 14 Rusumno Falls Power plant Project- Final audit report 1.1.2. Regional Rusumo Hydro-power Project The REGIONAL RUSUMO FALLS POWER-PLANT PROJECT (RRHP) is a Nile Basin Initiative key project prepared through NELSAP. Within this framework, the governments of Burundi, Rwanda and Tanzania have agreed to develop a Joint Development Project with the primary objective of generating hydroelectric power (80MW) that will be shared equitably among the three countries. The Rusumo Power Company Limited (RPCL) is the owner of the Rusumo Power Project. The company was created by the three countries to design, develop, construct, finance, insure, own, operate and maintain the Rusumo Hydropower Facility. The RPCL has delegated to NELSAP CU i) the implementation of procurements and the provision of supervision services of the construction of the Generation Facility and (ii) the construction of the Generation Facility. 1.1.3. Project Highlights The RRHP project has completed the preparation phase and is now moving to the implementation phase. The selection process of the contractors CP1 and CP2 is ongoing. After the pre-qualification of contractors and the preparation of the bidding documents, the bidding documents were submitted to pre-qualified contractors in December 2015. CP1 Pre-qualified firm submitted their bids on lt April 2016 and the evaluation process started immediately. The project submitted CP1 Evaluation report to the WB for No objection on 1 9 th April 2016. The Project received comments from the WB on 26th April 2016 and the review process is ongoing. For the CP2, the bids were received on 3 ' May 2016 and the Evaluation report was submitted on 2 6th May to the WB for No objection. The Project received comments from the WB on 2 nd June and the review process is still ongoing. The environmental and social risks of the Rusumo Falls Hydropower Project are evaluated as high and impacts as significant. Consequently, the Run of River (RoR) Environmental and Social Impacts Assessment (ESIA) and Resettlement Action Plan (RAP) were finalized in March 2013. From that period, the Safeguard team engaged in the RAP implementation and the major activity was the land acquisition and compensation. With the completion of land compensation, the Social team is now engaged in the Livelihood Restoration Program planning and Implementation. The livelihood restoration is part of the RAP and aims to enabling PAPs to fully restore their livelihoods. Fenraj Consell Moore Stephens December 14, 2016 Regional Rusumo Falls Power plant Project- Final audit report Other Social activities included the collection of additional baseline information to facilitate future PAPs livelihood monitoring, grievance redress monitoring and the development of Induced In- Migration Management plan. On the environmental side, it was judged important to have additional environmental baseline information including the fish baseline survey, the spray zone biodiversity survey, the water quality baseline study and water hyacinth study. The baseline studies will provide information against which further results from monitoring will be compared to appreciate any change resulting from RFHP construction and operational activities. The biodiversity of the Rusumo spray zone and Fish and Fishery baseline survey were finalized and the water quality baseline study is ongoing. In addition, the project is planning to undertake water hyacinth management study to understand water hyacinth importance and mitigate its potential impacts on the power plant. The TORs for the water hyacinth study were developed, approved by the Bank and advertised to recruit a consultant to undertake the study. 1.1.4. Project Cost and Financing The table below summarizes project costs in US$ million and the percentage contribution of IDA financing per component.. The main co-financiers for this project are the Africa Development Bank (AFDB), which will provide parallel financing for Component B (construction for the transmission lines). Project Cost and Financing Project Components