1 INTERNATIONAL FINANCE CORPORATION FINAL FINANCIAL AND OPERATIONAL REPORT USAID Grant CCS-0005-G-00-2023-00 Small-Scale Privatization June 1995 I SUMMARY OF CONTENTS This document contains final financial report as well as summary descriptions of the International Finance Corporation's privatization-related activities in the former Soviet Union funded under USAID Grant #CCS-0005-G-00-2023-00 (funding period 5/26/92- 2/28/95). Under this grant, IFC completed or initiated the following projects: Equipment Purchase for GKI in Russia (completed); Small-Scale Privatization in Russia (completed); Trucking Transport Privatization in Russia (completed); Land Privatization in Russia (ongoing with British financing); Small-Scale Privatization in Ukraine (ongoing with new USAE) financing); Small-Scale Privatization in Belarus (ongoing with new USAE) financing). For each project, the summary descriptions cover IFC's design and implementation of the pilot phase; pilot results; expansion; and total results to date. FINAL FINANCIAL REPORT International Finance Corporation June 1995 TABLE OF CONTENTS Statement of Cash Receipts, Disbursements and Grant Balance .................. 3 Financial Report .............................................. 4 Equipment Inventory .......................................... 19 .y International Finance Corporation USAID Grant #CCS-0005-G-00-2023-00 Small-Scale Privatization Grant Period May 26, 1992 - February 28, 1995 Statement of Cash Receipts, Disbursements and Grant Balance (Expressed in US dollars) Receipts Contributions 1,150,000.00 1,600,000.00 1,000,000.00 900,000.00 3,000,000.00 1,900,000.00 Interest income 209,528.22 Total receipts 9,759,528.22 Disbursements Project disbursements 9,531,354.78 Excess of receipts 228,173.44 Grant balance consists of: Cash 18,645.22 Interest 209,528.22 Total balance FINANCIAL REPORT Total amount: US$9,550,000 Starting date: 05.26.92 Expiration date: 02.28.95 The grant was disbursed to IFC in six sums: US$1,150,000 (request of 08.31.92) US$1,600,000 (request of 10.05.92) US$1,000,000 (request of 11.12.92) US$ 900,000 (request of 01.26.93) US$3,000,000 (request of 08.25.93) US$1,900,000 (request of 01.14.94) The final breakdown of costs by projects is the following: Project FY92 FY93 FY94 FY95 TOTAL Russia GKI 78,170.50 431,877.29 510,047.79 Equipment Russia Small- 1,738,991.29 282.984.32 2,021,975.61 Scale Russia 726,480.67 113,555.02 840,035.69 Trucking Transport Russia 430,728.57 1,318,581.35 73,662.63 1,822.972.55 Land Russia 96,854.53 786,777.16 883,631.69 Moscow Central Washington 38,990.95 66,449.06 10,428.25 115,868.26 Central Ukraine 625,473.09 1,398,966.95 582,859.57 2,607,299.61 Small-Scale Belarus 13,500 536,744.27 149,244.71 699,488.98 Small-Scale Consultant 6,107.55 19,943.35 3,983.70 30,034.60 Insurance TOTAL 78,170.50 4,109,003.94 4,524,001.48 820,178.86 9,531,354.78 The breakdown of costs inside each project is the following: RUSSIA: GKI FY 92-93 Expense category Expended Staff travel 44,915.79 Contractual services 21,950.10 GKI equipment FY92 78,170.50 GKI equipment FY93 365,011.40 Total 510,047.79 RUSSIA: SMALL-SCALE PRIVATIZATION FY 93-94 Expense category Expended Consultant salary 301,077.88 Consultant relocation, monthly allowance 92,000 Consultant travel (includes local staff 292,583.72 salaries, office supplies, office equipment, office rent) Staff travel 77,772.43 Consulting companies 17,150 (Advanced Information Services) Consulting companies 33,613.70 (Doradca) Consulting companies 176,001.53 (Young & Rubicam) Consulting companies 385,629.00 (Bain & Link) Legal 76,598.85 (White & Case) Manual 546,685.46 Equipment through Washington 22,863.04 Total 2,021,975.61 RUSSIA: TRANSPORT PRIVATIZATION FY93-94 Expense category Expended Consultant salary (and leave) 213,823.20 Consultant relocation, monthly allowance 35,500 Consultant travel (includes 172,061.79 local staff salaries, office supplies, office equipment, office rent) Staff travel 82,992 Consulting companies 150,155.31 (Young & Rubicam) Legal 67,096.16 (White & Case) Equipment through Washington 4,691.20 Manual 113,716.03 Total 840,035.69 RUSSIA: LAND FY93-95 Expense category Expended Consultant salary 308,649.88 Consultant relocation, monthly allowance 106,500 Consultant travel (includes local staff 132,648.07 salaries, office supplies, office equipment, office rent) Staff travel (in some cases includes local 272,285.52 staff salaries, office supplies, office - equipment, office rent) Consulting companies 45,046.34 (Chemonics) Consulting companies 205,219.53 (Burson Marstellar) Consulting companies 267,254.27 (Agland) Consulting companies 45,671.00 (Young & Rubicam) Agrarian Institute 9,790 Legal (Chadbourne & Parks) 359,634.82 Legal (White & case) 22,009.34 Contractual services 2,757.35 Farmers' trip 42,153.38 Equipment through Washington 3,353.05 Total 1,822,972.55 UKRAINE: SMALL-SCALE FY93-95 Expense category Expended Consultant salary (and leave pay) 573,351.29 Consultant relocation and monthly 100,000 allowance Consultant travel (includes local staff 1,304,080.44 salaries, office supplies, office equipment, office rent) Staff travel 17,298.24 Consulting companies 24,800 (PERU) Consulting companies 30,957.25 (Advanced Information Services) Consulting companies 114,563.60 (Warsaw Consulting) Legal (Baker & McKenzie) 238,317.94 Legal (Goussev) 2,400 Manual 162,790.85 Satellite phone 38,740 Total 2,607,299.61 BELARUS: SMALL-SCALE FY94-95 Expense category Expended Consultant salary 142,083.38 Consultant relocation, monthly allowance 28,000 Consultant travel (includes local staff 225,782.69 salaries, office supplies, office equipment, office rent) Staff travel 16,735.70 Consulting companies (Doradca) 214,839.35 Legal (Baker & McKenzie) 24,784.35 Manual 47,263.51 Total 699,488.98 10 RUSSIA: MOSCOW CENTRAL FY 93-94 Expense category Expended Consultant salary 47,132.04 Consultant relocation 20,625 Consultant travel 9,278.19 Local operating costs (local staff salaries, 806,596.46 office rent, office supplies, office equipment, local travel) Total 883,631.69 11 WASHINGTON CENTRAL FV 93-95 Expense category Expended Consultant salary 88,087.68 Staff travel 24,231.83 Price Waterhouse audit (arranged by World 3,548.75 Bank Trust Fund Unit) Total 115,868.26 12 4. Here follows a brief explanation of the expense categories. a. Consultant salaries include salaries of 45 consultants (both long- and short-term, all US nationals) having worked on the projects hi the course of three years. b. Relocation, housing and transport allowances were paid to long-term consultants living in Russia, Ukraine and Belarus. The allowances were calculated taking COLA adjustments and security issues into consideration. c. Consultant travel includes long- and short-term consultant travel expenses as well as local operating costs such as translation services, local staff salaries, business communications, purchase of computer equipment (see attached Equipment Inventory), apartment rental, local staff travel. These costs were accumulated hi the consultant travel category because of internal IFC accounting system constraints concerning cash transactions in Russia. d. Staff travel includes the travel expenses of IFC Europe Department staff who worked on the project - Anthony Doran, Gretchen Wilson, Roberta Feldman, as well as trips and travel expenses of other IFC staff members from the legal, corporate relations and engineering departments assisting hi die implementation of the projects. Travel expenses of staff members include local operating costs such as translation services, local staff salaries, business communications, local staff travel and salaries. These costs were accumulated in the staff travel category because of internal IFC accounting system constraints concerning cash transactions in Russia. e. Consulting companies contracted to work on the projects are the following: Company Area Advanced Information Services privatization Doradca privatization Young & Rubicam public relations Bain Link privatization White & Case legal Chemonics agricultural privatization Burson Marstellar public relations Agland agriculture Chadboume & Parke legal PERU privatization Warsaw Consulting privatization Baker & McKenzie legal 13 r f. Moscow central office was set up in the course of implementation of projects. Expenses incurred include local staff travel, local legal companies, local travel, equipment and other operating expenses. g. Washington coordination aspect includes consultants working on the project in Washington (as of now i Russian, 2 US national). It also includes equipment bought through Washington and sent to the field and transferred, together with the equipment bought locally, to local authorities when the work was finished (see attached Equipment Inventory). h. Consultants' Insurance consists of the health insurance contributions for long-term consultants. 5. The staff members directly involved in the projects made a contribution of 391 staff- weeks which is the equivalent to $3,881,000. Project Name Days Contribution Russia: OKI Equipment Shapiro 34 68,000 McFayden 20 40,000 Aston 13 26,000 Nicholson 10 20,000 Russia: Small-Scale Jones 32 64,000 Jungreis 5 10,000 Segal 8 16,000 Doran 230 460,000 Feldman 6 12,000 Russia: Trucking Jones 7 14,000 Kasrai 10 20,000 Bakaleinik 32 64,000 Wilson 607 1,214,000 Doran 118 236,000 Russia: Land Wilson 70 140,000 Doran 220 440,000 14 / Hechl 45 90,000 Segal 6 12,000 Cobban 4 8,000 Ukraine: Small-Scale Feldman 260 520,000 Jungreis 7 14,000 Belarus: Small-Scale Feldman 164 328,000 Washington Central Garama 21 21,000 Tetley 22 44,000 TOTAL 1,951 3,881,000 In addition to the above, there were other IFC staff members taking part in the development of the program in the course of meetings, consultations and discussions.