CIAR GROUP               TSIAR-FINANS, LLC
E  Uzbekistan, Tashkent, 100077, 2a, Chust street
9 Tel/Fax: (998-71) 262-50-70; 262-50-90
E E-mail: reception(Dciar.uz; reception(aciarcroup.net
www.ciar.uz
((PAP-ANGREN RAILWAY)) PROJECT
(LOAN AGREEMENT No. 8465-UZ)
INDEPENDENT AUDITOR'S REPORT
ON THE SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2018 TO DECEMBER 31, 2018


LI AR jRUP                                                           TSIAR-FINANS LLC
2
CONTENT
C O N T E N T  .................................................. .2-................. -. .   ................................................. .................  2
IN D EPEN D ENT  A U D ITO R '  R EPO RT  ......................................................................................................... 3
STATEM  ENT  OF  SO URCES  AND  USES  OF FUND S .................................................................................... 5
STATEMENT   OF USES  OF FUNDS  BY  PROJECT  COMPONENTS...................................................... 7
STATEMENT OF USES OF FUNDS BY PROJECT CATEGORIES FROM UZBEKISTON TEMIR YOLLARI
SUBSIDIARY  LOAN  PROCEEDS....................CEEDS..............--.. -. . -- ......---- ..-.-.-.- .. 8
STATEMENT OF USES OF FUNDS BY PROJECT CATEGORIES FROM UZBEKENERGO SUBSIDIARY
LO ANL P R O C E E D S ....OA N.................... ..... .... .. ...PROCEEDS..........- .....-.--- .....---- ....---- ...---- ...---- ..----.--.....--- ..----- .....- -1.-
STATEMENT   OF  UTY  PIU'S  USD  SPECIAL  ACCOUNT...................I.....................-............................... 10
STATEMENT   OF  UTY  PIU S  EURO  SPECIAL  ACCOUNT.......................................................................... 11
STATEM  ENT  OF  UE'S  USD  SPECIAL  ACCOUNT ... ........................ ..............................................-...... 12
STATEMENT   OF  UE  PIU'S  USD  SPECIAL  ACCOUNT...................  .... .................................................... 13
NOTES TO  THE  SPECIAL PURPOSE  FINANCIAL STATEMENTS ........  ....................................... ... 14
1   PROJECT BACKGROUND  .......... .... ...                                       ..... 14
2.  G OING  CONCERN ........ ...........          ...                  ....  . . .   15
3.  PROJECT's ACCOUNTING POLICY  ..            .                 ..    ..   ..  .    15
4.  ADJUSTMENTS TO THE OPENING BALANCE               ..      .                     . 16
5   PRESENTED FINANCIAL STATEMENTS  ........... 17
6.  CASH AND CASH EQUIVALENTS...                       ..17
7   STATEMENT OF EXPENDITURE (SOE) PROCEDURES                                        18
8.  DIRECT PAYMENT PROCEDURES..                                                  .. 19
9.  LEGAL STATUS, TAXES AND FEES                                                    19
10. EVENTS AFTER THE DATE OF THE FINANCIAL STATEMENTS       .                 . .   20


C ISIN, AR  (RULI                                              TSIAR-FINANS LLC
3
INDEPENDENT AUDITOR'S REPORT
To:   JSC <Uzbekiston Temir Yollarb,
JSC <Uzbekenergo)
We have audited the accompanying Special Purpose Financial Statements of the <PAP-ANGREN RAILWAY))
Project No. 8465-UZ ("the Project"), implemented by Joint Stock Company "Uzbekiston Temir Yollari" ("the
UTY") and Joint Stock Company "Uzbekenergo" ("the UE") and financed by the International Bank for
Reconstruction and Development ("the IBRD", "the Bank") against the proceeds of the Loan Agreement
No. 8465-UZ dated March 4, 2015 ("the Loan Agreement"), for the period from 1 January 2018 to 31 December
2018.
The Special Purpose Financial Statements comprise: (i) Statement of Sources and Uses of Funds, (ii)
Statement of Uses of Funds by Project Components, (iii) Statement of Uses of Funds by Project Categories
from UTY Subsidiary Loan Proceeds, (iv) Statement of Uses of Funds by Project Categories from UE
Subsidiary Loan Proceeds, (V) Special Accounts Statements (VI) a Summary of significant accounting policies
and other explanatory information.
The Special Purpose Financial Statements have been prepared by the management of the UTY and UE
according to the International Public Sector Accounting Standards (hereinafter - IPSAS) under the Cash Basis
of Accounting and the World Bank's requirements.
Management's Responsibility for the Special Purpose Financial Statements
The management of the UTY and UE is responsible for preparation and fair presentation of these Special
Purpose Financial Statements in accordance with IPSAS under the Cash Basis of Accounting. This
responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and
fair presentation of the special purpose 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.
Auditor's Responsibility
Our responsibility is to express an opinion on the accompanying Special Purpose Financial Statements based
on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA), issued by
International Auditing and Assurance Standards Board of the International Federation of Accountants. Those
standards require that we should follow ethical norms, plan and perform the audit to obtain reasonable
assurance that there is no incorrect or false data in the Special Purpose Financial Statements.
Audit stipulates carrying out the procedures, which are aimed to get audit proofs as regards numeric data and
information, contained in the Special Purpose Financial Statements. Choosing the procedures is based on
auditor's professional judgment, including the estimation of risks of substantial misrepresenting of financial
statement as a result of fraud or mistakes. In the process of estimation of above-mentioned risks, Auditor
considers internal control system related to the preparation and authentic submission of financial statement of
the organization to develop audit procedures, which are necessary in the present circumstances, but not to
express opinion on the effectiveness of organization's internal control system.
An audit also includes evaluating principles of accounting policies used and estimates made by the
management, as well as evaluating the overall presentation of the Special Purpose Financial Statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.


-  %Q IAR OROUP                                                 TSIAR-FINANS LLC
4
Opinion
in our opinion, the above-stated Special Purpose Financial Statements give a true and fair view of the sources
and uses of funds of the Project for the period from 1 January 2018 to 31 December 2018 in accordance with
International Public Sector Accounting Standards (hereinafter - IPSAS) under the Cash Basis of Accounting.
Moreover, (a) with respect to Statements of Expenditures (SOEs), adequate supporting documentation has
been maintained to support claims to the Bank for reimbursement of expenditures incurred; and (b) the
expenditures comply with objectives stipulated in the Loan Agreement No.8465-UZ.
In our opinion, the Special Accounts Statements on IBRD Credit No. 8465-UZ for the period from 01 January
2018 to 31 December 2018 give a true and fair view of the financial position of the Special Accounts of the
Project as at 31 December 2017 and of the cash flows for the for the year then ended and complies with the
World Bank's guidelines.
Emphasis of Matter
Without expressing the modified Auditor's opinion, we would like to pay attention to the Notes 7 and 8,
describing no Project financing on the reporting date under the SOE and Direct Payments Procedures on UE
Subsidiary loan.
Basis of Accounting
We draw attention to Note 3 to the Special Purpose Financial Statements, which describes the basis of
accounting. The Special Purpose Financial Statements are prepared to assist the UTY and UE to comply with
the financial reporting provisions on the requirements conditions of the Agreement and IPSAS. As a result, the
Special Purpose Financial Statements may not be suitable for another purpose.
Other Matter
Financial Audit reports and opinions, as ruled by the requirements set by the World Bank, shall be uploaded,
published and publicly accessible on the World Bank's website.
Auditor:
TSIAR-FINANS, LLC
2A, Chust Street   /    2     /
Tashkent, 100077
Republic of Uzbekistan
Tashkent, 28 October 2019


«PAP-ANGREN Railway» Project
Loan Agreement No. 8465-UZ                                                            5
STATEMENT OF SOURCES AND USES OF FUNDS
For the period from 1 January 2018 to 31 December 2018
(USD)
Actual
~adicator          Note   Budget                            From 4 March  Cumulative
 2015 to  from the
31 December beginning of
2016     the Project
FINANCING
IBRD Financing:
UTY Subsidiary Loan:         5.1               19041 758    10417005    8100000     37558763
-Direct payments              8                9741 758     4417005            0    14158763
- Replenishment of the UTY   6.1               9300000      6000000     8100000     23400000
PIU's USD Special Account
UE Subsidiary Loan           5.1                   0        1 021 337   9483 514    10 504 851
-Direct payments              8                    0         1021337     7 383 514   8404851
Replenishment of the UE's   6.2                   0               0    2 100 000    2 100 000
USD Special Account
Total IBRD Financing                           19 041 758   11 438 342  17 583 514  48063 614
TOTAL FINANCIANG                               19041 758    11 438342  17583514     48063614
EXPENSES
Expenses by IBRD:
Uses of funds by Project
categories from UTY Subsidiary  6, 8  108 629 168  (20 517 266)  (13 862 309)  (1 735 551)  (36 115 126)
loan Proceeds
Goods, works, non-consulting
services and consultants'    6 8   108 629 168  (20 517266)  (13862309)  (1 735551)  (36115126)
services for Parts ll, IV, Vand VI
of the Project
Uses of funds by Project
categories from UE Subsidiary  6, 8  35 000 000    0       (1 475 377)  (8 801 151)  (10 276 528)
loan Proceeds
Goods, works, non-consulting
services and consultants'    6, 8   35 000 000     0       (1 475 377)  (8 801 151)  (10 276 528)
services for Part li/ of the Project
Total expenses by IBRD             143 629 168  (20 517 266)  (15 337 686) (10 536 702)  (46 391 654)
TOTAL EXPENSES                                (20 517 266)  (15 337 686) (10 536 702)  (46 391 654)
Exchange rate difference                           0               0           0           0
Excess of Receipts over                        (1 475 508)  (3 899 344)  7 046 812   1 671 960
SPayrments
Con tinued on the next page


«PAP-ANGREN Raiiway» Project
Loan Agreement No. 8465-UZ                                                          6
Continued. Beginning at the previous page
Actual
From 4 March Cumulative
Indicator             Note  Budget                         2015 to   from the
2018      2017
231 December beginning of
2016    the Project
Balance as at 1 January reporting
perlod.......
IBRD funds
UTY PIU's USD Special Account       6.1           2919 145   1 469835          0          0
UTY PIlUs EURO Special Account      6.1                  0         0           0          0
UTY PIU's Credit Letters                                 0   4894614           0          0
UE's USD Special Account            6.2             228 323   682 363          0          0
-        UE PIU's USD Special Account        6.2                  0         0           0         0
Total IBRD funds                                   3 147468  7046812           0          0
Total Proiect funds as at 1 reporting              3 147 468  7 046 812        0          0
period
Net Available Funds                                1 671960  3147468     7046812   1 671 960
Balance as at 31 December
IBRD funds
UTY PIU's USD Special Account       6.1           1 443637   2919145    1 469835   1 443637
UTY PIU's EURO Special Account      6.1                  0         0           0          0
UTY PlU's Credit Letters                                 0         0    4894614           0
UE's USD Special Account            6.2             228 323   228 323     682 363    228 323
UE PIU's USD Special Account        6.2                            0           0
Total IBRD funds                                   1 671 960  3 147 468  7 046 812  1 671 960
Total Proiect funds as at 31 December              1 671 960  3147468    7046812   I 671 960
reporting period
Signed by the management  SC « Uzbekiston Temir Yollari » on 15 July 2019
Mr. Salimov S.S                               Mr. Arziev K.I.
Head of PIU «Ang                             Accountant of IU  ngren-Pap»
Signed by the manpgernnt of JSC « Uzbekenergo» on 15 July 2019
Mr. Sultan  At.                               Mr. Shukurov N.R.
Acting Get at/r c .t ,f the?                  Acting Chief Accountant of the
UE «Uze/       Y,ros -                        UE «Uzelectroset»
Slatement o             es of F-unds" to be read in conjunction with Notes (pages from 14 to 20) thereto
forming an integra part of the Project spccial purpose financial statemnents.


«PAP-ANGREN Railway» Project
Loan Agreement No. 8465-UZ                                                            7
STATEMENT OF USES OF FUNDS BY PROJECT COMPONENTS
For the period from 1 January 2018 to 31 December 2018
(USD)
A vailable
Actual                         Budget      Fvnds
Components                               From 4 March  Cumulative  Cumulative  Cumulative
2015 to     from the    from the     from the
31 December beginning of beginning of beginning of
2016      the Project  the Project  the Project
Rail Electrification,
Signaling, Track
Maintenance and       19153 199   12372497      1 175181   32700877    102629168    69928291
Railway Video
Surveillance System
Power Distribution                 1 475 377    8 801 151  10276 528    35 000 000  24 723 472
Line
Technical
Assistance to UTY
for Supporting               0            0           0            0      500 000      500 000
Railway
Construction
Technical
Assistance to UTY            0            0           0            0     1 000 000   1 000 000
for Improving
Railway Logistics
Implementation         1 364 067   1 489 812     560 370    3414 249    4500 000     1 085 751
-        Support
Total          20 517 266   15 337 686  10 536 702   46 391 654  143 629 168  97 237 514
Signed by the management of JSC « Uzbekiston Temir Yollari » on 15 July 2019
Mr. Salimov S.S.                               Mr. Arziev K.I.
Head of PlU «                                  Accountantof PV«Angren-Pap»
Signed by th                C « Uzbekenergo» on 15 July 2019
Mr. Sultanov A.    ~                           Mr. Shukurov N.R.
Acting Gener   r   tófo                        Acting Chief Accountant of the
UE «Uzele rtO                                 UE «Uzelectroset»
-        Statement    u     nA    of Funds" to be read in conjunction with Notes (pages from 14 to 20) thereto
forming an int    r e4     roject special purpose financial statements.


«PAP-ANGREN Raiway» Project
Loan Agreement No. 8465-UZ                                                           8
STATEMENT OF USES OF FUNDS BY PROJECT CATEGORIES FROM UZBEKISTON TEMIR YOLLARI
SUBSIDIARY LOAN PROCEEDS
For the period from 1 January 2018 to 31 December 2018
(USD)
Actual                        Budget      Available
Funds
Categories                             From 4 March  Cumulative  Cumulative  Cumulative
2015 to    from the    from the     from the
31 December beginning of beginning of the beginning of
2016     the Project   Project    the Project
Goods, works, non-
consulting services
and consultants'
de oua rtsl,  20517266    13862309     1 735551  36 115126   108629168    72514042
IV, V and VI of the
Project
Total          20517266    13862309     1 735551   36 115126   108629 168   72514042
Signed by the management of JSC « Uzbekiston Temir Yollari » on 15 July 2019
Mr. Salimov S.S.     k a r                    Mr. Arziev K.I.
Head of PlU «Ang  -                           Accountant of PlU Angren-Pap»
Statement of Uses o  ds4by   ct Categories from Uzbekiston Temir Yollari Subsidiary Loan Proceeds" to
be read in conjunction wi  o3es (pages from 14 to 20) thereto forming an integral part of the Project special
purpose financial statements.


<PAP-ANGREN Railway)) Project
Loan Agreement No. 8465-UZ                                                          9
STATEMENT OF USES OF FUNDS BY PROJECT CATEGORIES FROM UZBEKENERGO SUBSIDIARY
LOAN PROCEEDS
For the period from 1 January 2018 to 31 December 2018
(USD)
Available
Actual                       Budget       Funds
Categories                           From 4 March  Cumulative  Cumulative  Cumulative
2015 to     from the    from the     from the
2018       2017     31 December  beginning of  beginning of  beginning of
2016      the Project  the Project  the Project
Goods, works, non-
consulting services
and consultants'           0     1 475 377   8801 151    10276 528   35 000 000   24 723 472
services for Part II of
the Project
Total               0     1475377     8801 151    10276528    35000000     24723472
Signed by the management of JSC << Uzbekenergo> on 15 July 2019
Mr. Sultanov A.A.                             Mr. Shukurov N.R.
Acting General birector of the                Acting Chief Accountant of the
UE (Uzelectrosetb                             UE qUzelectroseth
Statement of Uses of Funds by Project Categories from Uzbekenergo Subsidiary Loan Proceeds" to be read in
conjunction with Notes (pages from 14 to 20) thereto forming an integral part of the Project special purpose
financial statements.


aPAP-ANGREN Railways Project
Loan Agreement No. 8465-UZ                                                       10
STATEMENT OF UTY PIU's USD SPECIAL ACCOUNT
For the period from 1 January 2018 to 31 December 2018
Account No:                                 2021 0840 9006 0031 5026
Depositary bank:                            NB FEA RU Mirabad branch office
Address,                                    165, Banokatiy str., Tashkent, Uzbekistan
Related loan:                               8465-UZ
Currency:                                   USD
USD
Balance as at 1 January 2018                                                   2919145
Inflow:
IBRD financing                                                                 9 300 000
Bank Charge                                                                         (20)
Total inflow                                                                   9 299 980
Outflow:
Expenses on related categories                                                 9 601 365
Transfers to UTY PIU's EURO Special Account                                    1 174 123
Total outflow                                                                 10 775 489
Balance as at 31 December 2018                                                 1443637
Signed by the management of JSC << Uzbekiston Temir Yollari > on 15 July 2019
Mr. Salimov S. .                            Mr. Arziev K.I.
Head of PlU                                 Accountant of P/U f ngren-Pap
"Statement of UTY      D Special Account" to be read in conjunction with Notes (pages from 14 to 20)
thereto forming an integral part of the Project special purpose financial statements.


(PAP-ANGREN Railway) Project
Loan Agreement No. 8465-UZ                                                       11
STATEMENT OF UTY PIU's EURO SPECIAL ACCOUNT
For the period from 1 January 2018 to 31 December 2018
Account No:                                 2021 0978 9006 0031 5005
Depositary bank:                            NB FEA RU Mirabad branch office
Address:                                    165, Banokatiy str., Tashkent, Uzbekistan
Related loan:                               8465-UZ
Currency:                                   EURO
USo          EURO
Balance as at 1 January 2018                                            0             0
Inflow:
Transfers from UTY PIU's USD Special Account                     1 174 123     1 014 503
Total inflow:                                                    1 174 123     1 014 503
Outflow:
Expenses on related categories                                   1 174 123     1 014 503
Total outflow:                                                   1 174 123     1 014 503
Balance as at 31 December 2018                                          0             0
Signed by the management of JSC < Uzbekiston Temir Yollari > on 15 July 2019
IVr. Salimov S.S.   1ar,,Mr. Arziev K.I.
Head of P/U <                               Accountant of P /Angren-Paps
"Statement of UTY P/U's EURO Special Account to be read in conjunction with Notes (pages from 14 to 20)
thereto forming an integral part of the Project special purpose financial statements.


((PAP-ANGREN Railway) Project
Loan Agreement No. 8465-UZ                                                       12
STATEMENT OF UE's USD SPECIAL ACCOUNT
For the period from 1 January 2018 to 31 December 2018
Account No:                                 2262 6840 5001 1783 2002
Depositary bank:                            JSCB "Uzpromstroybank"
Address:                                    3, Shahrisabz str., Tashkent, Uzbekistan
Related loan:                               8465-UZ
Currency:                                   USD
USD
Balance as at 1 January 2018                                                    228 323
Inflow:
IBRD financing                                                                        0
Total inflow                                                                          0
Outflow:
Transfers to UE PIU's USD Special Account                                             0
Total outflow                                                                         0
Balance as at 31 December 2018                                                  228 323
Signed by the management of JSC < Uzbekenergo> on 15 July 2019
Mr. Sultanov A.A.                           Mr. Shukurov N.R.
Acting General  ector of the                Acting Chief Accountant of the
UE (Uzelectro't,                            UE (Uzelectroset>>
"Statement of UE's USD Special Account" to be read in conjunction with Notes (pages from 14 to 20) thereto
forming an integral part of the Project special purpose financial statements.


(fPAP-ANGREN Railway)) Project
Loan Agreement No. 8465-UZ                                                       13
STATEMENT OF UE PIU's USD SPECIAL ACCOUNT
For the period from 1 January 2018 to 31 December 2018
Account No:                                 2262 6840 0041 2772 9001
Depositary bank:                            Tashkent city branch of JSCB "Uzpromstroybank"
Address:                                    5, Mustaqillik sq., Tashkent, Uzbekistan
Related loan:                               8465-UZ
Currency:                                   USD
USD
Balance as at 1 January 2018                                                          0
Inflow:
Transfers from UE's USD Special Account                                               0
Total inflow:                                                                         0
Outflow:
Expenses on related categories                                                        0
Total outflow                                                                         0
Balance as at 31 December 2018                                                        0
Signed by the management of JSC < Uzbekenergo> on 15 July 2019
Mr. Sultanov A.A.                           Mr. Shukurov N.R.
Acting Genera] Orector of the               Acting Chief Accountant of the
UE (Uzelectrdseb)                           UE ((Uzelectroset)
"Statement of UE P10's USD Special Account" to be read in conjunction with Notes (pages from 14 to 20)
thereto forming an integral part of the Project special purpose financial statements.


<<PAP-ANGREN Railway)) Project
Loan Agreement No. 8465-UZ                                                    14
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
for the period from 1 January 2018 to 31 December 2018
1.    Project background
In accordance with the Loan Agreement between the Republic of Uzbekistan and International Bank for
Reconstruction and Development ("Bank", "IBRD") dated March 4, 2015 ("Loan Agreement"), the Bank agreed
to lend the Republic of Uzbekistan the amount of USD 195,000,000 (one hundred and ninety-five million) on
the terms and conditions stipulated in the Loan Agreement, for the purpose of co-financing the "Pap-Angren
Railway" Project ("Project").
According to the Loan Agreement, the Republic of Uzbekistan provides the JSC "Uzbekiston Temir Yollari"
("UTY") a portion of the loan at the amount of USD 160,000,000 (one hundred and sixty million) ("UTY
Subsidiary Loan") and 35,000,000 (thirty five million) to the JSC "Uzbekenergo" ("UE") ("UE Subsidiary Loan")
to finance the relevant part of the Project referred to in Section III "Power Distribution Line" of the Project.
-        Pursuant to the Sub-lending Agreements dated July 31, 2015 and signed between the Ministry of Finance on
behalf of the Republic of Uzbekistan and JSC "Uzbekiston Temir Yollari" and between the Ministry of Finance
on behalf of the Republic of Uzbekistan and JSC "Uzbekenergo" the whole amount was sub-lent to UTY ("UTY
Subsidiary Loan") and UE ("UE Subsidiary Loan"). Subsidiary loan funds are made available to the Republic of
Uzbekistan for Project financing shall only be used for the Intention and on the Terms and Conditions of the
Loan Agreement. According to the Project Agreements between UTY and IBRD and between UE and IBRD
dated March 4, 2015 ("Project Agreements"), UTY and UE declare their commitments to implement the
-        respective part of the Project.
Decree No.2362 dated 26 June 2015 of the President of the Republic of Uzbekistan designates
JSC "Uzbekiston Temir Yollari" as an executive agency responsible for the target and effective use of loan
proceeds and implementation of the next components: "Rail Electrification, Signaling, Track Maintenance and
Railway Video Surveillance System", "Technical Assistance to UTY for Supporting Railway Construction",
"Technical Assistance to UTY for Improving Railway Logistics", "Implementation Support". JSC "Uzbekenergo"
is responsible for the target and effective use of loan proceeds and implementation of the "Power Distribution
Line" component of the Project.
To ensure the coordination of works under the Project the JSC "Uzbekiston Temir Yollari" and JSC
"Uzbekenergo" have established the Project Implementation Units (hereinafter - UTY PIU and UE PlU,
respectively) responsible for the overall Project Management, control and accounting of the Project funds in
compliance with the Bank guidelines and relevant national regulatory requirements.
The objective of the Project is to reduce transport costs and to increase transport capacity and reliability
through the construction of a rail link between the Uzbek part of the Ferghana Valley and the rest of the
Borrower's territory.
The Project consists of the following parts:
Part 1: Rail Main Infrastructure
Construction of a new railway line infrastructure, including embankments, ballast, rail, bridges, and a tunnel.
Pan II: Rail Electrification, Siqnaling, Track Maintenance and Railway Video Surveillance System
Provision of works, goods, and technical assistance for: (i) the installation of a microprocessor based train
control system; (ii) the construction of two traction substations and the installation and implementation of
SCADA; (iii) the provision of necessary track maintenance equipment; and (iv) the installation of a video
surveillance and broadcasting system.
Part Ill: Power Distribution Line
Provision of works, goods, and technical assistance for: (i) the dismantling of overhead power lines, including
the removal of the Angren-Obihayot power line; (ii) the provision of equipment (including, inter alia,
communication equipment, protection relays, metering and controlling instruments) for the installation of new
power lines; and (iii) the reconstruction of the Obihayot power substation and the construction of new power
distribution lines.


<<PAP-ANGREN Railway)) Project
Loan Agreement No. 8465-UZ                                                      15
Part IV: Technical Assistance to UTY for Supporting Railway Construction
Provision of technical assistance to UTY to strengthen: (i) UTY's financial management and asset management
capacity; (ii) modernized marketing arrangements; and (iii) capacity development.
Part V: Technical Assistance to UTY for Improving Railway Logistics
Provision of technical assistance to UTY to improve the railway logistics in the Angren region and the part of
the Ferghana Valley located in the Borrower's territory, including on traffic forecast and supply chain analysis.
The total cost of the Project is estimated to be USD 195 million. The breakdown of various cost items of the
Project is shown in the Table below:
USD
No.                   Project Components                   Funds recipient    IBRD
Rail Electrification, Signaling, Track Maintenance and Railway  UTY    154 000 000
Video Surveillance System
2   Power Distribution Line                                    UE           35000000
3   Technical Assistance to UTY for Supporting Railway Construction  UTY      500 000
4   Technical Assistance to UTY for Improving Railway Logistics  UTY         100000
5   Implementation Support                                     UTY           4500000
Total                                            195000000
In October 2018 Bank has reduced its financing for the <<PAP-ANGREN RAILWAY> Project. Following is the
revised and updated Project budget:
USD
NP                 Component                  Initial budget  Cancelled    Revised budget
Rail Electrification, Signaling, Track Maintenance
1154 000 000 51 370 831,95 102 629 168,05
and Railway Video Surveillance System
2  Power Distribution Line                       35 000 000             0     35 000 000
Technical Assistance to UTY for Supporting
3                                                  500000               0       500 000
Railway Construction
Technical Assistance to UTY for Improving Railway
4                                                 1 .  000000           0      1 000000
-   ~     Logistics-
5  Implementation Support                         4500 000              0     4500000
Total                                         195 000 000   51 370 831,95 143 629 168,05
2.    Going concern
Project Implementation Term is from 2015 throughout 2019. Pursuant to the letter dated 04th February 2019,
Bank cancelled some portion of the loaning financing for the Project and extended Project Closing Date by 31st
March 2020 with payment transactions to be completed by 31st July 2020 (pls. refer to the Note 10).
3.    Project's Accounting Policy
These Special Purpose Financial Statements have been prepared, in accordance with requirements of
International Public Sector Accounting Standards (hereinafter - IPSAS) under the Cash Basis of Accounting,
issued by the IPSAS Board of International Federation of Accountants, following the IBRD recommendations.
3.1.  Basis for the preparation of financial statements
Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Components, Statement of
Uses of Funds by Project Categories from UTY Subsidiary Loan Proceeds, Statement of Uses of Funds by
Project Categories from UE Subsidiary Loan Proceeds, Special Accounts Statements and Notes to the Project
Special Purpose Financial Statements were prepared based on the cash flow basis to reflect operations
conducted in the Project's framework, in accordance with below-stated principles.


<<PAP-ANGREN Railway)) Project
Loan Agreement No. 8465-UZ                                                      16
3.2.  Financing
-    IBRD Financing
The Project financing is recognized when:
*    suppliers of material resources or services are paid by the Bank under Direct payment procedures
(pis. refer to the Note 8);
*    the funds from IBRD's Account were transferred to the UTY PIU's USD Special Account opened with
the Mirabad Branch of the National Bank For Foreign Economic Relations (hereinafter - NB FEA RU)
(pis. refer to the Note 6.1);
*    the funds from IBRD's Account were transferred to the UE's USD Special Account opened with the
JSCB "Uzpromstroybank" (pis. refer to the Note 6.2);
*    withdrawal from the LC accounts in favor of the Project vendors/suppliers.
3.3.  Expenditures
Project expenditures are recognized as such and stated in the Project Special Purpose Financial Statements,
when the payment is made to suppliers of goods, works and/or services. The payments are made either
directly from Account administered by the IBRD, either from Special Accounts of Project.
3.4.  Reporting currency and exchange rate methodology
The reporting currency of the Project is United States Dollar (USD).
Operations conducted in currencies other than USD are exchanged into USD based on the following principle:
*    for IBRD funds, expenses in currency, different from USD, are restated in USD exchange rate,
effective on the date of conversion.
4.    Adjustments to the opening balance
In the period from 4 March 2015 to 31 December 2016 and for the 2017, the Project Accountant has adjusted
Project financial statements. In particular, adjustments are made in Statement of Sources and Uses of Funds.
Respective adjustments to the Special Purpose Financial Statements are given below:
Data after                     Data before
Indicator               adjustments as at  Adjustments  adjustments as at
31 December 2017                31 December 2017
IBRD Financing:
UTY Subsidiary Loan:                          18517005            30         18516975
Bank Charge                                          0            30              (30)
Total IBRD Financing                          29 021 856          30         29 021 826
TOTAL FINANCIANG                              29 021 856          30         29 021 826
Expenses by IBRD:
Uses of funds by Project categories from UTY  (15 597 8          (30)      (15 58
Subsidiary loan Proceeds:
Goods, works, non-consulting services and
consultants' services for Parts II, IV, V and VI  (15 597 860)   (30)       (15 597 830)
of the Project
Total expenses by IBRD                        (25 874 388)      (30)        (25 874 358)
TOTAL EXPENSES                                (25 874 388)      (30)        (25 874 358)
On 31st December 2017 the Statement of Sources and Uses of Funds was updated and introduced
adjustments on the correspondent bank commissions for interbank transactions.


<PAP-ANGREN Railway)) Project
Loan Agreement No. 8465-UZ                                                    17
Adjustments were introduced to the Section "Financing" as negative and reduced total project financing. In
order to ensure transparent and true reporting in the Statement of Receipts and Payments, the total bank
commissions are included in the Project expenditures,
5.    Presented Financial Statements
Project Special Purpose Financial Statements for the reporting period are prepared in accordance with IPSAS
based on the cash method by the UTY and UE PIUs of the <(Pap-Angren Railway) Project.
The Project Special Purpose Financial Statements have been signed on 15 July 2019 for and on behalf of:
*   the JSC <Uzbekiston Temir Yollari> - by Mr. Salimov S.S., the Head of PIU "Angren-Pap", and by Mr.
Arziev K.l., the Accountant of PIU "Angren-Pap", and;
*    the JSC xUzbekenergo>, UE <Uzelectroset - by Mr. Sultanov A.A., Acting General Director, and by
Mr. Shukurov N.R., the Acting Chief Accountant.
Project Special Purpose Financial Statements for the reporting period are generated as follows:
5.1.  Statement of Sources and Uses of Funds
This Statement reports the sources of Project's funds and detailed breakdown of Project expenditures.
During the reporting period the Project expenditures were covered by the IBRD financing for total of
USD 19,110,446 including direct payments for total of USD 9,810 446 (pls. refer to the Note 8), replenishment
of the UTY PIU's and UE USD Special Accounts for total of USD 9 300 000 including bank charge in amount of
USD 20 (pls. refer to the Notes 6.1).
5.2.  Statement of Uses of Funds by Project Components
This Statement has detailed the information on the Expenditures of the Project Reported Period by the Project
components.
-        5.3.  Statements of Uses of Funds by Project Categories from UTY and UE Subsidiary Loans
Proceeds
These Statements have detailed the information on the Expenditures of the Project Reported Period by the
Project categories from UTY and UE Subsidiary Loans Proceeds.
6.    Cash and cash equivalents
The Project has a number of bank accounts. The Project's accounts and their purposes are listed below:
6.1.  UTY PlU's Special accounts
The UTY PIU has established two Special Accounts: USD Special account and EURO Special account to cover
the PIU recurrent costs eligible for IBRD financing.
-    UTY P/U's USD Special Account
During 2018 the UTY PlU's USD Special Account was transferred from IBRD in the amount of USD 9,300,000
including interbank charge in amount of USD 20. The total of USD 9,601,365 was paid to suppliers. The total of
USD 1,174,123 was converted and transferred to the UTY PlU's EURO Special Account.
UTY PiU's EURO Special Account
UTY PlU's EURO Special Account is intended to cover payments billed by the suppliers of services and goods.
In 2017 the total of USD 1,174,123 (EURO 1,014,503) was transferred to cover the costs billed by the
suppliers.


«PAP-ANGREN Railway» Project
Loan Agreement No. 8465-UZ                                                      18
6.2.  UE and UE PIU's Special accounts
The UE and the UE PlU has established USD Special accounts to cover the PlU recurrent costs eligible for
IBRD financing. There are no transactions with the use of referred Special accounts.
The balances of the Project's bank account are provided in the following table:
Balance as at 1 January 2018                                                      USD
UTY PIU's USD Special Account                                                 2 919 145
UTY PIU's EURO Special Account                                                       0
UE's USD Special Account                                                       228 323
UE PIUVs USD Special Account                                                         0
Total                                                                         3147468
-        Balance as at 31 December 2018                                                    USD
UTY PIUs USD Special Account                                                  1 443 637
UTY PIU's EURO Special Account                                                       0
UE's USD Special Account                                                       228 323
UE PIU's USD Special Account                                                         0
-Total                                                                               1 671 960
7.    Statement of Expenditure (SOE) procedures
SOE procedure is used by the Project to replenish funds to the UTY and UE PIUs' USD Special Accounts in
accordance with the conditions of the Loan Agreement and IBRD Guidelines' requirements. Summary data on
funds recovered and reimbursed through SOE procedures is stated in the following tables:
- UTY PLU:
Total amount reported under SOEs                                             11 481 186
Less: expenditures no submitted to IBRD on 31 December 2018                        (10)
Subtotal:                                                                    11 481 176
Reimbursed to the UTY PIU's USD Special Account                               9 300 000
Less: advance payments for UTY PlU under:                                   (9 300 000)
WA No.40                                                                    (8300000)
WA No 43                                                                     (1 000000)
Subtotal reimbursed:                                                                 0
Liquidated under:                                                            11 481 176
WA No 39                                                                      2655175
WA No 44                                                                      8826001
Subtotal liquidated:                                                         11 481 176
Deviation:                                                                           0
* Total expenses under the WA No.39 is actually USD 2,655,175. 18 including USD 705,678 are the expenses
of the period from 01 January 2017 to 31 December 2017.
-    UE PIU:
During the reporting period there was no replenishment of the USD Special account (JS "Uzbekenergo") under
the Statement of Expenditures.


<<PAP-ANGREN Railway)) Project
Loan Agreement No. 8465-UZ                                                               19
8.     Direct Payment Procedures
The List of Direct payments made by the IBRD for the period of January 1, 2018 to December 31, 2018 is
summarized below.
-     Direct payments from UTY Subsidiary loan proceeds:
Amount
NQ WA        Supplier                     Component                 Payment
currency In payment  inUSD
currency
URALSPECMASH-     Rail Electrification, Signaling, Track Maintenance  U
23       EXOTLC*          adRiwyVdoSrelac           ytmUSID                   168 000   168 000
EXPORT LLC *     and Railway Video Surveillance System
20      SIA BELAM RIGA*   Rail Electrification, Signaling, Track Maintenance
and Railway Video Surveillance System
2135     A ChKZ-ELAMORT *  Rail Electrification, Signaling, Track Maintenance  USD  552 957  552 957
and Railway Video Surveillance System
URALSPCMASH       Rail Electrification, Signaling, Track Maintenance
ChK-EXPORT Lt*   and Railway Video Surveillance System
URALSPECMASH-     Rail Electrification, Signaling, Track Maintenance
24       EXPORT LLC*      and Railway Video Surveillance System     USD       604 000   604 000
22  hURaLNaiolEMASH-  Rail Electrification, Signaling, Track Maintenance UD 4500   4200
EXPORT LLC*      and Railway Video Surveillance System
China National Electrc  Rail Electrification, Signaling, Track Maintenance
Export & Import Corp.* and Railway Video Surveillance System
.         . . .  ..  ..  .. . ... ... ...... . .....     .... . .. ..    . . . .
China National Electric Rail Electrification, Signaling, Track Maintenance
Export & Import Corp.* and Railway Video Surveillance System
China National Electric Rail Electrification, Signaling, Track Maintenance
27    Export & Import Corp.* and Railway Video Surveillance SystemUS4053                4758
3     China National Electc  Ral Electrification, Signaling, Track Maintenance USD  7     7
2  Export & Import Corp.* and Railway Video Surveillance System
28 China National Electric  Rail Electrification, Signaling, Track Maintenance UD9167  157
Export & Import Corp.*2 and Railway Video Surveillance System
Societe Des Anciens Ets Rail Electrification, Signaling, Track Maintenance
32 pot L GImaor Cop.* and Railway Video Surveillance System
2 nJSC Energotechnika.,  Rail Electrification, Signaling, Track Maintenance
42 p  Russia.       and Railway Video Surveillance            USD       512 000   512 000
Total                                          9 741 758
-       *tpaid by Credit Letter
-     Direct payments from UE Subsidiary loan proceeds:
In 2018 there was no Project financing by Direct payment under the Uzbekenergo subsidiary Loan.
9.     Legal Status, Taxes and Fees
Services and goods acquired from IBRD funds are exempted from all taxes and levies based on Tax Code of
the Republic of Uzbekistan.


«PAP-ANGREN Railway» Project
Loan Agreernent No. 8465-UZ                                                         20
10.    Events after the date of the financial statements
Pursuant to the Bank letter dated 04Ih February 2019 some portion of the loan financing for the «PAP-ANGREN
RAILWAY» Project was cancelled and Project Closing Date was extended by 31$t March 2020 with payment
transactions to be completed by 31' July 2020.
Following is the revised Project budget:
- - -  - - - -   - - - -.          - -         -.                       _U S D
N9                 Initial budget               Initial budget   Cancelled    Revised budget
Rail Electrification, Signaling, Track Maintenance
and Railway Video Surveillance System                 .               00    53 999 168.05
2  Power Distribution Line                         35000000        24240000       10760000
Technical Assistance to UTY for Supporting        50000500
Railway Constrution                                                    0         500000
STechnicaI Ass ista ce to UTY for I mprovi ng
RaayLoisic                              1000 000              01 000 000
i Railway Logistics
5  Implementation Support                           4 500 000             0        4 500 000
Total                                        143 629 168.05  72 870 000.00  70 759 168.05
..          . .. . .. . . . .. . .   . . ..  . . .. . .. . . . .   . .  . .... . .  . . .  . .  . .  . .. . .   . .  . .   . . .. . ..