REPUBLIC OF KENYA FICE OF THE AUDITOR-GENERAL REPORT OF THE AUDITOR-GENERAL ON THE FINANCIAL STATEMENTS OF INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIP PROJECT - (IDA CREDIT NO.51570 KE) FOR THE YEAR ENDED 30 JUNE 2018 THE NATIONAL TREASURY OFFICE OF THE AUDITOR GENERAL P. 0. Box 30084 - 00100, NAIROBI REGISTRY 2.9 SEP 2018 fly REPUBLIC OF KENYA THE NATIONAL TREASURY AND PLANNING INFRASTUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS (IFPPP) PROJECT IDA CREDIT NUMBER 51570 - KE ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JUNE 30, 2018 ISSUED ON: SEPTEMBER 30, 2018 Prepared in accordance with the Cash Basis of Accounting Method of the International Public Sector Accounting Standards (IPSAS) INFRASTRUCTURE fzINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCI L STATEMENTS FOR THE YEAR ENDED JUNE 30,12018 LEGAL BACKDROP As set out in Section 81 of the Public Finance Management Act, 2012, an Accounting Officer is required to prepare annual reports for national government entity as follows; (1) At the end of each financial year, the accounting officer for the national government entity shall prepare financial statements in respect of the entity. (2) The accounting officer shall include in the financial statement- (a) appropriation accounts; (b) statement of the entity's debt which is outstanding at the end of the financial year; (c) a statement of entity's debt guaranteed by the national government as at the financial year; (d) a statement of the entity's assets and liabilities as at the end of the financial year in respect of the recurrent vote , development vote and funds and deposits; (e) a statement of the accounting policies followed in preparing the financial statements; (f) a statement of the national government entity's performance against predetermined objectives. (3) The accounting officer shall prepare the financial statements in a form that complies with the relevant accounting standards prescribed and published by the Accounting Standards Board from time to time; 2 ~a g e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 a) PROJECT INFORMATION AND OVERALL PERFORMANCE .................................................4 b) STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES ...................... ..... 17 c) REPORT OF THE INDEPENDENT AUDITORS ON THE INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS (IFPPP) PROJECT..................................................................... 18 d) STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED JUNE 30, 2017 ........ 19 e) STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS'AT JUNE 30, 2018 ....................20 f STATEMENT OF CASHFLOW FOR THE YEAR ENDED JUNE 30, 2018................................ 21 g) STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS.................................. 22 h) NOTES TO THE FINANCIAL STATEMENTS................................................... ................. 23 i) A PP E N D IC E S .......... ................ ..... ...... .. .................................................. 36 3 J) a g e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 a) PROJECT INFORMATION AND OVERALL PERFORMANCE 1.1 Name and registered office The official name of the project is Infrastructure Finance and Public Private Partnerships (IFPPP) Project. The project is located at: Anniversary Towers, North Tower 7th Floor, University Way/Monrovia Street NAIROBI Objective The main objective of the project is to improve the enabling environment to generate a pipeline of bankable Public Private Partnership (PPP) Projects. Address: The National Treasury and Planning Anniversary Towers, North Tower 7th Floor, University Way/Monrovia Street Nairobi KENYA. The address of its registered office is: PO.BOX 21190-00100 NAIROBI Tel: 020 -2122271/4 Email: info@piu.go.ke Contacts: Telephone: (254) 020-2210271/4 E-mail: info@piu.go.ke Website: www.pppu.go.ke 4 | P ag e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 1.2 Project Information Project Start Date: The project start date is 11th February, 2013 Project End Date: The Project end date is 31st October, 2022 Project Manager: The project manager is Mr. Ray Charles Musau Project Sponsor: The project sponsor is International Development Association (IDA) 1.3 Project Overview Line Ministry/State The project is under ihe supervision of he National Treasury and Planning Department of the project Project number 51570 -KE Strategic goals of the Overall Objective- to increase private investmentin the Kenya infrastructure market project across sectors and to sustain this partici. ioII over an exen d(.d ;eriod of Irne. This involves flhme key arfins of development: (i) enabling environment (ii) pipeline of potential transactions and (iii) financing. Specific Objective- to improve the enabling environment to generate a pipeline of bankable PPP projects. Achievement of strategic I The project is in YR5 and the following achievements are in reference to the YR 5 goals targets as documented in the project results framework (in the Project Appraisal Document) and as amended during the mid-term review of-the project. Project development objectives (i) Indicator 1- Expression of Interests (EOIs) issued to prospective sponsors for three targeted PPP transactions. End Target- 6 EOIs by end of project. Achievement- 10 EOls were issued. The EOls were for the following projects; Mombasa Port Development Project (MPDP)-2nd Container Terminal, 980 MW Coal Power Plant in Lamu, 800 MW LNG Power Plant Dongo Kundu, 460 MW Menengal Phase 1 (105MW- .3 FOls each 35 MW). Kenyatta University Student Hostels, Civil Servants Housing project, Multilevel Car park in Nairobi CU. (ii) Indicator 2- PPP Regulations associated with the new Law agreed to with the National Treasury. End Target- Yes Achievement- Yes 5 iPag e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 The National PPP Regulations- these were gazetted in December 2014 and submitted to the Parliamentary Committee. ([ii) Indicator 3- PPP Fiscal Commitment and Contingent Liability Framework operationalized as measured by: upstream Debt Management Department (DMD) due diligence on prospective (feasibility stage) transactions completed in line with Law. End Target- Yes Achievement- Yes The FCCL framework was approved by the PPP Committee on 6th June 2018.The Baseline Circular on FCCL shall be issued in FY 18/19 (iv) Indicator 4 Regular issuance of Government benchmark bonds in medium and long-term maturities up to 7/10 year tenures. End Target- At least one issue by maturity bucket per year and minimum size of benchmark issue Achievement- The Government issued the following bonds during the period 2014- 2017; Two 1yr bonds, Six 2yr bonds, Three 5yr, One 7yr, Two 9yr, Six 1Oyr, Three 12yr, Two 15yr. COMPONENT 1 Intermediate Results (i) Indicator 1- Capital Markets Authority Bill 2011 approved by Cabinet for Indicators submission to Parliament End Target-Yes Achievement- In progress Bill was revised and re-submitted to the National Treasury (NT) as the Financial Services Authority (FSA) Bill, The Bill shall be finalized after Parliament approves the Financial Sector Authority (FSA) Bill The FSA was submitted to the Cabinet and is pending approval. (ii) Indicator 2- Securities and Investments Bill 2011 approved by Cabinet for submission to Parliament End Target- Yes Achievement- In progress The Securities and Investments Bill 2011 was revised and repackaged as the Securities, Investments and Derivatives Bill. The Bill shall be finalized after Parliament approves the Financial Sector Authority (FSA) Bill. The FSA was submitted to the Cabinet and is pending approval. COMPONENT 2 INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 (i) Indicator 1- Ten feasibility studies completed and submission by contracting authorities to the PPPSC (PPP Committee) acceptable to the Association, including Safeguards End Target- 10 Achievement- 12 The PPP Committee approved had approved 12 feasibility studies as at end FY 2016. The approved feasibility studies were for the following projects; Kenyatta University Student Hostels, Road Annuity (phase 1), Nairobi-Nakuru Mau Summit Highway, O&M of Nairobi Southern By Pass, O&M of Nairobi-Thika Road, Nairobi-Mombasa Highway, 980MW Coal Power Plant in Lamu, 460MW Menengai Phase I, Mombasa Port Development Project (MPDP)-2nd Container Terminal Phase II & Il, Civil Servaiis Housing Project, -MultiStorey-Car-Park-and Commercial-Facility in Nairobi CBD (ii) Indicator 2- Line Ministries and Agencies "Nodes" for First Mover Transactions established and operational End Target- 2 A total of 60 PPP Nodes have been established and operational in various government Ministries and Agencies. COMPONENT3 (i) Indicator 1- PPP Fiscal Commitment and Contingent Liability Framework, including Disclosure Procedures approved by Cabinet Secretary, National Treasury End Target- Yes Achievement- The PPP Committee approved the FCCL framework in June 2018. The FCCLs are disclosed by the annual debt report prepared by the PDMO. This report is also part of annual budget policy statement. Other important By helping to strengthen the PPP enabling environment framework, the IFPPP APL background information 1 will assist the GoK to develop a solid foundation to systematically prepare PPPs of the project and realize the benefits of PPPs more effectively. This would foster increased private investments in infrastructure, increased employment opportunities, improved service delivery to enterprises and the population in general, improved fiscal impact on government trom better project preparation, more balanced risK aiiocation, increased I transparency, wider quality control, greater efficiency, and enhanced financial sector I support. This framework will enable an increase in the availability and quality of infrastructure in different sectors to boost enterprise growth and productivity and improve the well-being of Kenyans. The current IFPPP APL1 project period was extended to October 2022. The GOK requested for USD 50 million World Bank -funding for IFPPP-Additional Financing (FPPP-AF) project. The fundinSis for the 7 1a1e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 period 2017-2022, The funding for IFPPP-AF was signed on 7Th August, 2017 and the project became effective from 21st December, 2017. Current situation that the COMPONENT 1: INSTITUTIONAL SUPPORT AND REGULATORY REFORM project was formed to a) Subcomponent 1A - Support to PPP Institutions intervene The objectives of this sub-component is to support the establishment and functioning of the PPP Unit at the National Treasury and PPP Nodes in selected line Ministries and to build the capacity of GoK stakeholders to implement the PPP program through training, experience exchange, technical assistance, awareness and communication programs. Progress; *As part of institutional support and regulatory reform; most of the PPPU experts and specialists are in post except for two positions that fell vacant i.e. Financial Expert and Technical Expert. Recruitment for these positions shall commence Q1, FY 18/19. The PPPU staffing structure was approved by the Public Service Commission (PSC) and recruitment of the 5 deputy directors commenced. Two of the deputy directors were appointed and are in post i.e. Senior Deputy Director and Deputy Director Economic Services. * PPP draft manual is in place. Graphic design for the manual is being finalized. * Consultant was hired with support of funding from PPIAF. Both the PPP Disclosure Framework and PPP Disclosure Portal were finalised and approved by the PPP Committee, The Disclosure Portal was officially launched on 19th June 2018 and is operational, * A consulting firm called Castalia was hired with support from PPIAF. The consultant undertook the following; screening of PPP projects (both those that were at proposal stage in PPP pipeline and new project concepts that had been submitted by some of the CAs), developed a projects screeening tool, revised PPP proposal template, developed short list of 15 potential priority projects for project preparation support under IFPPP-A. The consultant completed the assignment in April 2018. * Contract for renovation and equipping of PPPU's new offices (located at the Reinsurance building) awarded to AKA Studio. The consultant finalized the drawings, bills of quantities and specifications for equipment. Following completion and approval of these, tender for contractor for the office-fit-out was awarded. First phase of partitioning was completed and the PPPU is now using 5th and 6th floors of the re- insurance plaza offices. Second phase- partitioning and refurbishment of 7Th fir has also been completed and final touches are being undertaken. * During the period under review, the project supported fifteen (15No) international PPP related individual trainings for Public Officers. In addition, 13 local PPP related individual trainings were also supported during the period under review. Since commencement of the IFPPP project, a total of sixty six (66No.) PPP related 8 11P a u e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 international individual trainings for public officers have been supported. Other PPP related individual trainings supported include 8 online courses and 37 local trainings. The public officers who attended these trainings were drawn from the PPP Committee, Petition Committee, PPP Unit, National Treasury and other MDAs. Also, during the period under review, trainings on PPP Projects Screening were held for public officers drawn from select Nbtional and County Governments. These were held in February & March, 2018 and sixty two (62No) public officers were trained. During the period under review, the Southern African Development Conimunity(SADC) was contracted and provided the following PPP Courses: training on Advanced Project Finance where 25 public officers were trained during the period 13h -17' November 2017. training on Investment Appraisal & Risk Analysis during the period 20th -241' November 2017 whero 25 public officers were trained, training on kiroduction to Financial Modeling during the period 20th -24th November 2017 where 25 public officers were trained. * During the FY 16/17, a number of training institutions were contracted and provided various PPP course. The International Law instilute (1LU) was contracted and facilitated training in December 13-16, 2016 where 21 public officers were trained on oo ct Pr r nation, Analysis and Finance as it relates to [P s. ILL also facilitated training in May 24-28, 2017 where 20 public OficPrs were I ained on Project Finance in PPs. IP3 was contracted and facilitated training locally in June 12-14, 2017 where 20 public officers were trained on Effective Management of PPPs. IP3 also facilitated training locally in June 26-30, 2017 where 20 puhle officers were trained on PPP I Project Monitoring and Evaluation. * During the FY 2015/16, IP3 was contracted and facilitated seven (7) modular trainings between June 2015 and May 2016. The number of public officers trained is as follows; (i) Module 1- Foundations df PPPs- 73 Public Officers (ii) Module 2- Project Selection - 32 Public Officers (iii) Module 3- Financial Modelling- 42 Public Officers (iv) Module 4- Fiscal Risk Management- 31 Public Officers (v) Module 5- Legal Agreements- 47 Public Officers (vi) Module 6- PPP Procurement- 35 Public Officers (vii) Module 7- PPP Contract Management- 41 Public Officers. In addition, 9 public officers were trained locally on PPP Contract negotiations. The training was facilitated by Crown Agents (UK) on 13th-17th June 2016. During past FYs, 19 PPP related articles (10 of which were initiated by the PPPU) appeared in various local print media. 8 PPP related media articles were broadcast in various local electronic media, PPPU participated in interviews hosted by 2 national TV channels. PPPU spoke at LSK, ICPAK and ISK Workshops. PPPU participated at the CMA exhibition. 4 public notices were issued. 9 I ' i INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 * The following PPP awareness/promotional workshops were held during the period under review, the number of participants is indicated in brackets: PPP awareness workshop for Laikipia County officials was held on 14th December 2017 (35), Road PPPs Lenders engagement was held on 20th Sep 2017 (50), PPP Awareness Workshop for Ministry of Housing was held on 12th-Sep 2017 (9). PPP awareness/promotional workshops held during FY 16/17 include Toll roads workshop with Private Sector held May 18, 2017 (40). PPP awareness/promotional workshops held using past FYs include ; The Kenya PPP Roads Investor Conference was held on 15th& 16th November 2016 (350 participants; 200 of them international from 167 organizations participated).; State Department of Higher Education (7), Maasai Mara University (35 ), Embu University College (23), Egerton University (7), Nairobi County PPP sensitization workshop (20), Mombasa County PPP sensitization workshop (47), Airports Sub-Sector PPP sensitization workshop (31), Roads Sub-Sector PPP sensitization workshop (45), Ports Sub-Sector PPP sensitization workshop (37), Financial Sector PPP sensitization workshop (60), PPP sensitization workshop for Professionals (83), PPP sensitization workshop for Cabinet Secretaries and Principal Secretaries (36), PPP sensitization workshop for Counties in Coast Region (27), PPP sensitization workshop for Higher Education sub-sector (160), Stakeholders Workshop on Roads Annuity Fund Regulations (90), Road Annuity Programme Consultative meeting with the financial sector (95), PPP sensitization retreat for the Media (35).A Public Relations firm was contracted in March 2016 and contract execution is ongoing. Tasks accomplished by the PR firm include; supported organizing of investor conference held November 15-16, 2016, designing the PPPU website, drafting of PPPU Communication Strategy and Toll Roads Communication Strategy. During the period under review, The PPPU was represented at the 9th APPP Conference in South Africa, held from 23rd- 24th November 2017 in South Africa, EBK workshop held on 27th March 2018, annual LSK seminar, two PPP sensitization workshops were held for staff of the National Industrial Training Authority (NITA)- 30 staff attended the workshops. Also, the PPPU facilitated a PPP awareness session with representatives of the Pension Fund Trustees. b) Subcomponent 1B - Legal and Regulatory Reform The objective of this sub-component is to support PPP policy dialogue and implementation of the PPP Act including preparation and adoption of the Regulations and effective implementation. Progress; 10 I ) t INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 b) PPP (Amendment) Bill 2018- The amendments to the PPP Act were submitted to the Parliamentary Committee of the National Assembly. The Committee held public hearings on the proposed amendments. The amendments shall be tabled in Q1 FY 2018/19 before the Committee of the full House. (c) County PPP regulations- stakeholder consultations on the draft County PPP regulations were concluded. Prior to issuance of the Regulations, a review of the provisions in the PPP Act, 2013 to address some of the imprecise provisions in primay slatute is ongoing. The amendments to the Act are before the National Assembly. (d) Petition Regulations- stakeholder consultations on the draft Petition regulations were concluded and process was put on hold pending completion of amendments to the PPP Act 2013 (e) Project Facilitation Fund (PLE) Regulations-stakeholder consultations on the draft Project Facilitalion Fund (PFF) regulations were concluded. The PFF regulations were gazetted in May 2017, The development of the PFF Governance and Operational was Finalized and the PFF became operational in June 2018. Development of PPP Petition Regulations completed and finalization is pending -..n n):ii fM4.1 DngtIinr [Drnrarlwroc and Renistry approval of the PPP (Amendmrient) DiI01 U eU I I Procedures1and -0e-gI I Manual finalized and is being implemented. The Petition Committee is operationalizing the Petition Procedures and Registry Manuals I * The National Surface Transport Funding Policy was been finalized and approved by the Cabinet in December 2016. Subcomponent 1C - Institutional Development for Financial Products and PPP Approaches The objective of this sub-component is to support institutional arrangements for a range of financing instruments such as VGF, guarantees, infrastructure funds, financial intermediary lending facilities and development of local capital markets. Progress; * The Consultant commenced work in December 2014 and contract ended in October 2016. *Medium term Debt Management Strategy, Annual Public Debt Management Report and the 2017/18 Medium Term Debt Management- Strategy was developed by Treasury and submitted to Parliament, CRA and County Governments as required by Law. The first Issuance Calendar was published in July 2016 The FY 17/18 calendar was not published. Preparations for FY 2018/19 calendar are underway *Various stakeholder workshops with PPP stakeholders have been conducted between CMA ABS adviser and market participants. CMA issued the revised guidelines in August 2016. 11l Pa go INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 * The activities under this sub-component have since been moved and are being implemented under the Financial Sector Support Project (FSSP) which commenced in April 2015. COMPONENT 2: PPP PIPELINE PREPARATION The objective of this component is to assist contracting authorities with to ensuring that the first projects to come before the PPP Committee are well prepared, "bankable "and take into account lessons learned from previous PPP projects, the privatization program in Kenya and regional and international experience. Progress; Sector Advisors Since commencement of the PPP program, 13 PPP Advisors/Consultants have been hired to support PPP Nodes in preparation of PPP projects. The beneficiary sectors are; Water, Education, Health, Ports, Airports, Energy, Rail. Advisors/consultants were also hired for Director PPP Unit, PPP Procurement, Capital Markets, PPP Manual, FCCL and Counties. Contracts of these advisors ended expect for the Water Sector PPP Advisor whose execution is ongoing. Transaction Advisors (TAs) * Since commencement of the PPP program, 9 Transaction Advisors have been hired under the IFPPP project for the following PPP projects; Kisumu Sea Port (BOOT), Nairobi Southern Bypass (O&M), Nairobi-Thika Highway (O&M), 2nd Nyali Bridge (DBFMT), Nairobi-Mombasa Road (DBFMT) and Nairobi-Nakuru Road (DBFMT), umbrella University Hostels project, 140MW Olkaria VI and 300 Bed Hospital PPP Project. Execution of these contracts is ongoing except for TA Kisumu Port and Nairobi Southern By Pass which ended. Procurement is underway for consultant to Toll Operator PPP project. Stakeholders sensitized on PPP projects *During the period under review, meetings were held with management of (a) Kenya Wildlife Services (b) Kenya Forest Service (c) National Transport Safety Authority (d) National Environment Management Authority to brief them on the Road PPP Projects COMPONENT 3: IMPROVEMENTS TO FISCAL COMMITMENT AND CONTINGENT LIABILITY (FCCL) RISK MANAGEMENT FRAMEWORK The objective of this component is to provide support and guidance to the Treasury and other relevant agencies on the fiscal commitment and risk framework associated with infrastructure, with emphasis on contingent liabilities from PPPs. Progress; * The National Treasury with support from the World Bank finalized the FCCL. The PPP Committee approved adoption of revised FCCL manual as a non-regulatory tool 12|P a INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 to guide FCCL analyses and assessments. The baseline circular on FCCL shall be issued in FY 2018/19. * A draft policy on Government Support Measures is in place but is currently being revised to be made fit-for-purpose. Based on this, draft GSM instruments such as guarantees, letters of comfort and binding letters of undertaking are to be drafted. Currently, a draft letter of support (LoS) has been developed and has been used both in the power and transport sectors * Hands-on Workshop: Valuation of Fiscal Commitment and Contingent Liabilities (FCCL) in PPP Projects in Kenya held on 5th-6th February 2015. Nineteen (19No.) staff from CAs, PPP Unit and other NT departments participated. A five-day workshop on FCCL was held 26th February to 2nd March 2018 where 22 public officers drawn from NT and contracting authorities were trained. Two (2) PDMO staff attended FCCL training at IP3, Washington. Seven (9o.TStafftralined in-the local PPPI Modular training (5 trained on Fiscal Risk Management, 1 trained on Project Selection) * The PDMO established the FCCL Unit within it. * Computer equipment and software (Oracle's Crystal Ball) were supplied to the FCCL Unit at the PDMO * Process and structure has been setup for the collection and maintenance of leading economic indicators for use in FCCL work. Consisting of: GDP growth rate, Inflation Rate, Interest Rates and Exchange rate. This has now morphed into a wider consideration for creating a relational data base for the PDMO ' 2No. Financial Graduate Analysts were recruited and are working towards strengthening the FCCL function of the PDMO. COMPONENT 4: SUPPORT FOR PROGRAM MANAGEMENT A Project Implementation Unit (PIU) is established within the National Treasury Ihat provides the fiduciary, safeguards,. monitoring and evaluation (M&E) expertise required for the implementation of Uhe IFPPP project in accordance with Bank policies and requiremeiits. The PIU is staffed wilth Project Manager, Financial Management SSpe ist, Prcuiremlent Seciaist. Monitorina and Evaluation Specialist. Assistant PI610ect AccoLintant. Office Mafngei aid 4 Support staff. ReCrui[mMLt oAssistant Project Accountant is underway. Progress; * IFPPP auarterly reports are consistently submitted within the required timelines, * Semi-annual program review meetings are organized as required and implementation of action points monitored. * The PIU team supported the design of IFPPP-AF project. Project duration The project commended on 11th February 2013 and is expected to run until 31st October, 2022. 13 P a ge INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 1.4 Bankers The following are the bankers for the current year: a) Special Deposit Account Kenya Commercial Bank Ltd University Way Branch University Way NAIROBI. IDA Credit No. 5157-KE - Account No. 1136321365 b) Local Project Account Kenya Commercial Bank Ltd University Way Branch University Way NAIROBI. IFPPP - Account No. 1138915874 1.5 Auditors Office of the Auditor General Anniversary Towers University Way/ Monrovia Street NAIROBI. 1.6 Project Governance The Project's governance framework requires the stakeholders to uphold the highest professional, ethical, moral and legal standards. This is achieved through effective segregation of duties with clear checks and balances as articulated in the Project Loan/Credit Agreement, the PFM Act, 2012, the Project Design Report, the Implementation Manual and the Finance and Procurement Manuals. 1. The Project Steering Committee (PSC) This Committee is responsible for overseeing the implementation of the Project, approving the annual work plan and budget, and ensuring that the activities are in compliance with the donor and government policies. 2. International Development Association( IDA) IDA under the World Bank is the project sponsor. They are responsible for reviewing and approving the project's withdrawal applications, expenditure justifications, no objection requests, reviewing and approving the annual work plan and budget, expenditure category reallocation request, and participating in implementation support missions, 3. The National Treasury and Planning The National Treasury is the parent ministry ensures that the Project's budget is captured in its development projects and disbursement of exchequer transfers. The ministry reviews and tracks the Project's annual work plan and budget against the set targets and makes the approvals. The parent ministry also oversees the execution of the project coordinating team. 14 P a g e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 4. The Auditor The Supreme Audit Institution in Kenya, that is, the Office of the Auditor General, is mandated by the Constitution of Kenya Chapter 12, Part 6, Article 229 which establishes the Office of the Auditor General. Chapter 15, Adicle 248, Section 3 and Article 249, Section 2 (a) and (b) and section 10 of the Public Audit Act, 2015 provide for the independence of the Office of the Auditor General. The Auditor General is mandated to audit all national government entities, which include government development projects and present these statutory financial statements to the Parliament, This facilitates the submission of the aUdted report to the projects sponsors by 31 December each year. 5. Project Coordinating Team (PCT) This team is based in Naimbi and is responsible for the project management and coordination functions. The PCT comprises of the Project Coordinator and a team of Technical Officers. The PCT is also supported by other administrative staff. These key staff, who form the project coordinating team that is involved in the day to day management of the project and its implementation arei Names Title designation Key qualification Responsibilities CPA Judith A. M. Ag. Director PPPU I MA (Daystar University), B_ Provides Project Nyakawa Com (Accounting) (Hons), Coordination support UoN at the National Treasury Mr. Ray Charles Musau Project Manager Project Management CPA Maurice Owino Financial Master of Business Project Financial and Pedo Management Administration Finance Risk Management Specialist Option) * Bachelor of Commerce (Finance Option) * Certified Public Accountant of (K) Mr. Wycliffe Paul Monitoring and Master of Education Establish &oversee Ondieki Evaluation Specialist (Educational Psychology) implementation of Bachelor of Education Evaluation Function (Mathematics & B. Studies) l& Systemforthe PlU Ms. Danae Nandwa Procurement - Bachelor of Commerce Procurement Ottaro Specialist (Business Administration) Management Ms. Gaudencia N. Assistant Project Bachelor of Commerce Provide Mukisu Accountant (Finance Option) Management, ____ _ _ - L_ . _ _ _ _ - -...-Financial and 15 P a ge INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 M Certified Public Accountant Accounting Support of (K) to the Project. Ms. Norah Munyiva Office Manager X Bachelor of Commerce Office Administration (Marketing Option) 2.1 Funding summary The project is for a duration of 10 (ten) years from 5th December 2012 to 31st October, 2022 with an approved budget of US$ 40Million equivalent to KSh 4.0 Billion. (iGra nt- - _ _ - _ _ _ Loan .__ _ 1 International Development 40.00 4.00 32.1 3.24 7.90 0.76 Association- IDA .___ Million. Billion Million Billion Mi l l i o n Billion (iiid Counterpart funds ( 30h Je (h J Government of Kenya - - - - Total 40.0 4.00 32.1 3.24 i 7.90 0.76 I Million Billion Million Billion I Million - - Billion 2.2 Summary of Overall Project Performance: During the year under review, the project received KSh.805,617,092 and incurred a cumulative expenditure of KSh. 621,643,103. 1.9 Receipts Utilization The Project received KSh. 805,636,092 against a final budget of KSh.862,037,718 . This represented utilization of 93%. 1.10 Payments Utilization The Project paid KSh. 621,643,103 against a final budget of KSh. 862,037,718. This represented utilization of 72%. 1.11 Challenges Encountered No major challenges were encountered during the year under review. 1.12 Summary of Project Compliance There are no indications of non-compliance of the IFPPP Project on the overall project performance. 16 P1l a g e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 b) STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Principal Secretary for the National Treasury and Planning and the Projecf Manager for Infrastructure Finance and Public Private Par[nerships Project are responsible for the preparation and presentation of the Project's financial statements, give a 1rue and fair view of the state of affairs of the Project for and as at the year ended June 30, 2018. This responsibilty includes: (i) maintaining adequate financial management arrangement and ensuring that these continue to be effective throughout the reporting period, (ii) maintaining proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Project; (iii) designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statement, and ensuring that they are free from material misstatements, whether due to error or fraud; (iv) safeguarding the assets of the Project; (v) selecting and applying appropriate accounting policies; and (vi) making accounting estimates that are reasonable in the circumstances. The Principal Secretaryfor the National Treasury and Planning and the Project Managerlor Infrastructure Finance and Public Private Partnerships Project accept responsibility for the Project's financial statements, which have been prepared on the Cash Basis Method of Financial Reporting, using appropriate accounting policies in accordance with International Public Sector Accounting Standards. The Principal Secretary for the National Treasury and Planning and the Project Manager for Infrastructure Finance and Public Private Partnerships Project are of the opinion that the Project's financial statements give a true and fair view of the state of Project's transactions during the year ended June 30, 2018, and of the Project's financial position as at that date. The Principal Secretary for the National Treasury and Planning and the Project Manager for Infrastructure Finance and Public Private Partnerships Project further confirm the completeness of the accounting records maintained for the Project, which have been relied upon in the preparation of the Project financial statements as well as the adequacy of the systems of internal financial control. The Principal Secretary for the National Treasury and Planning and the Project Manager for Infrastructure Finance and Public Private Partnerships Project confirm that the Project has complied fully with applicable Government Regulations and the terms of external financing covenants, and that Project funds received during the financial year under audit were used for the eligible purposes for which they were intended and were properly accounted for. Approval of the Project financial statements The Project financial statements were approved by the Principal Secretary for the National Treasury and Planning and the Project Manager for Infrastructure Finance and Public Private Partnerships Project on 2018. Principal Secreta . Project Managr Project ccountant Dr. Kamau Thugge, CB Charles Musau CPA Maurice Pedo ICPAK Number: 4037 17 P age REPUBLIC OF KENYA Telephone: +254-20-342330 P.O. Box 30084-00100 Fax: +254-20-311482 E-mail: oag@oagkenya.go.ke NAIROBI Website: www.kenao.go.ke OFFICE OF THE AUDITOR-GENERAL REPORT OF THE AUDITOR-GENERAL ON INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIP PROJECT - IDA CREDIT NO. 51570 KE- FOR THE YEAR ENDED 30 JUNE 2018 - THE NATIONAL TREASURY REPORT ON THE FINANCIAL STATEMENTS Opinion I have audited the accompanying financial statements of the Infrastructure Finance and Public Private Partnership Project (IDA Credit No. 51570 KE) set out on pages 19 to 34, which comprise the statement of financial assets and liabilities as at 30 June 2018, and the statement of receipts and payments, statement of cash flows and statement of comparison of budget and actual amounts for the year then ended, and a summary of significant accounting policies and other explanatory information in accordance with the provisions of Article 229 of the Constitution of Kenya and Section 35 of the Public Audit Act, 2015 and Financing Agreement NO. 51570 KE between the International Development Agency and the Government of Kenya dated 5 December 2012. I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the purpose of the audit In my opinion, the financial statements present fairly, in all material respects, the financial position of Infrastructure Finance and Public Private Partnership Project as at 30 June, 2018, and its financial performance and its cash flows for the year then ended, in accordance with International Public Sector Accounting Standards (Cash Basis) and comply with the Financing Agreement No. 51570 KE dated 5 December 2012. Basis for Opinion The audit was conducted in accordance with International Standards of Supreme Audit Institutions (ISSAls). I am independent of Infrastructure Finance and Public Private Partnership Project in accordance with ISSAI 30 on Code of Ethics. I have fulfilled other ethical responsibilities in accordance with the ISSAI and in accordance with other ethical requirements applicable to performing audits of financial statements in Kenya. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, are of most significance in the audit of financial statements. There were no Key Audit Matters to report in the year under review. Report of the. Auditor-General on the Financial Statements of Infrastructure Finance and Public Private Partnership Project (IDA Credit No. 51570 KE) for the year ended 30 June 2018 - The National Treasury Proinoting Accountability in the Public Sector REPORT ON LAWFULNESS AND EFFECTIVENESS IN USE OF PUBLIC RESOURCES As required by Article 229(6) of the Constitution, based on the audit procedures performed, except for the matter(s) described in the Basis for Conclusion on Lawfulness and Effectiveness in Use of Public Resources section of my report, I confirm that, nothing else has come to my attention to cause me to believe that public resources have not been applied lawfully and in an effective way. Basis for Conclusion Compliance with the Public Procurement and Assets Disposal Act 2015 - Publication of Contract Awards and Termination Section 138 (2) of Public Procurement and Assets Disposal Act, 2015 provides that an Accounting Officer of a procuring entity shall report all contract awards to the Public Procurement Regulatory Authority, PPRA as prescribed. PPRA Circular No.1/2016 on 'Mandatory Reporting Requirements' requires procuring entities to report quarterly to the Authority all contract awards valued at Kshs. 5,000,000 and above. The report is to contain the tender number, tender particulars, procurement method, status, invitation date, closing date, notification of applicants, approval of the contract award, name of the supplier who was awarded the contract and the date the contract was signed. In addition, section 63(2) provides for the Procuring entity to notify the PPR A within fourteen day of any termination of the procurement proceeding. Contrary to the above provisions, examination of records maintained by the Project revealed that the project management awarded Tender No. IFPPP/PPPU/W/NCB/02/2016-2017 and Tender No IFPPP/KNH/34/2016-2017 at a contract price of Kshs 97,000,000 and USD 997,716 (approximately Kshs.101 million) respectively all valued above Kshs 5,000,000 but did not report or issue a quarterly report whenever such contract were consummated as required by law. Similarly, the Project management terminated a procurement process on Tender No. IFPPP/PPPU/NCB/03/2017/2018 but failed to notify the PPRA as provided for in the law. The Project management has indicated that the National Treasury and Planning is the procuring entity as prescribed in the Act and thus the entity that reports to PPRA. The Project Implementation Unit, as currently set up, procures through the Head Supply Chain Management Services who reviews and provides the Procurement Opinion to the Accounting Officer and processes contract award and signing. Thus the Project has relied on the National Treasury to submit the requisite reports to PPRA. It is the responsibility of the Project management to be proactive to cause its operations to be in compliance with the existing regulations. The audit was conducted in accordance with ISSAI 4000. The standard requires that I comply with ethical requirements and plan and perform the audit to obtain assurance about whether the activities, financial transactions and information reflected in the Report of the Auditor-General on the Financial Statements of Infrastructure Finance and Public Private Partnership Project (IDA Credit No. 51570 KE) for the year ended 30 June 2018 - The National Treasury 2 financial statements are in compliance, in all material respects, with the authorities that govern them. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my conclusion. REPORT ON EFFECTIVENESS OF INTERNAL CONTROLS, RISK MANAGEMENT AND GOVERNANCE As required by Section 7 (1) (a) of the Public Audit Act, 2015, based on the audit procedures performed, I confirm that, nothing has come to my attention to cause me to believe that internal controls, risk management and governance were not effective. The audit was conducted in accordance with ISSAI 1315 and ISSAI 1330. The standards require that I plan and perform the audit to obtain assurance about whether effective processes and systems of internal control, risk management and governance were operating effectively, in all material respects. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my conclusion. Responsibilities of Management and those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (Cash Basis) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Project's ability to sustain its services, disclosing, as applicable, matters related to sustainability of services and using the going concern assumption unless the management either intends to terminate the Project, or have no realistic alternative but to do so. Management is also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions of Section 47 of the Public Audit Act, 2015. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor-General's Responsibilities for the Audit of the Financial Statements The audit objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion in accordance with the provisions of Section 48 of the Public Audit Act, 2015 and submit the audit report in compliance with Report of/the Auditor-General on the Financial Statements of Infrastructure Finance and Public Private Partnership Project (IDA Credit No. 51570 KE),for the year ended 30 June 2018 - The National Treasury 3 Article 229(7) of the Constitution of Kenya. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAls will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISSAls, I exercise professional judgement and maintain professional skepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit 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. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. * Conclude on the appropriateness of the management's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern or to sustain its services. If I conclude that a material uncertainty exists, I am required to draw attention in the auditor's report to the related disclosures in the consolidated/ financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my audit report. However, future events or conditions may cause the Project to cease to continue as a going concern or sustain its services. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. * Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities of the project to express an opinion on the financial statements. Report of the Auditur-General on the Financial Statements of hfrasiructure Finance and Public Private Partnership Project (IDA Credit No. 51570 KE) fbr the year ended 30 June 2018 - The National Treasury 4 * Perform such other procedures as I consider necessary in the circumstances. I communicate with the management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that are identified during the audit. I also provide management with a statement that I have complied with relevant ethical requirements regarding independence, and communicate with them on all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. FCPA Edward R. 0. Ouko, CBS AUDITOR-GENERAL Nairobi 27 December 2018 Report of the Auditor-General on the Financial Statements of Infrastructure Finance and Public Private Partnership Project (IDA Credit No. 51570 KE) for the year ended 30 June 2018 - The National Treasury 5 INFRASTRUCTURE FINANCE AND-PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 c) REPORT OF THE INDEPENDENT AUDITORS ON THE INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS (IFPPP) PROJECT INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 d) STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED JUNE 30,2018 Note 2017/18. 2016/17 KSh. KSh. RECEIPTS Loan from external development 8.3 805,617,092 596,701,447 partners IDA Direct payments 8.4 - 34,594,895 Miscellaneous receipts 8.5 19,000 906,578 TOTAL RECEIPTS 805,636,092 632,202,920 -------PAYMENIS- -- ----- Compensation of employees 8.6 64,795,051 60,587,399 Purchase of goods and services 8.7 94,961,665 93,211,027 Acquisition of non-financial 8.8 461,886,387 515,602,830 assets TOTAL PAYMENTS 621,643o103 669,401,256 SURPLUS FOR THE YEAR 183,992,989 (37,198,336) Cumulative figures for project life to date provided under Note 8.9 are integral part of the financial statements. The accounting policies and explanatory notes to these financial statements are an integral part of the financial statements. Principal Secrtar Project Manager Projo I Accountant Dr. Kamau Thugge, BS Charles Musau CPA Maurice Pedo ICPAK Number: 4037 V11 1~ INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 e) STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT JUNE 30, 2018 Note 2017118 2016/17 KShs. KShs. FINANCIAL ASSETS Cash and Cash Equivalents Bank Balances 8.2 198)854,313 14,861,324 TOTAL FINANCIAL ASSETS 198!854,313 14,861,324 REPRESENTED BY: Cash and cash equivalents b/fwd 8.2 14,861,324 52,059,660 Surplus/Deficit for the year 8.2 183,992,989 (37,198,336) The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The Project's financial statements were approved on 2018 and signed by: Principal Secr t Project Manager Projec Accountant Dr. Kamau Thug , Charles Musau CPA. Maurice Pedo ICPAK Number: 4037 2011) a g e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 f) STATEMENT OF CASHFLOW FOR THE YEAR ENDED JUNE 30, 2018 2017/18 2016/17 KSh, KSh. Receipts for operating income Miscellaneous receipts 19,000 906,578 19,000 906,578 Payments for operating expenses Compensation of employees (64,795 .051) (60,587,399) Purchase of goods and services (64,961!665) (93,163,032) Acquisition of non-financial assets (459,989 097J (515,602,830) (619,745;813) (669,353,261) Net cash flow from operating activities (619,726,813) (668,446,683) CASHFLOW FROM INVESTING ACTIVITIES Acquisition of assets (1.,897,290) (47,995) Net cash flow from investing activities (1,897,290) (47,995) CASHFLOW FROM FINANCING ACTIVITIES Proceeds from external development partners 805,617,092 631,296,342 Net cash flow from financing activities 805,617,092 631,296,342 NET INCREASE IN CASH AND CASH EQUIVLENT183,992,989 (37,198,336) EQUIVALENT Cash and cash equivalent at BEGINNING 14,861,324 52,059,660 of the year Cash and cash equivalent at END of the 198,854,313 14,861,324 year The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements, The Project's financial statements were approved on LU() U OII OIIU - - 8d sgned by , IC-k Principal Secre Project Manager Proje Accountant Dr. Kamau Thug Charles Musau CPA Maurice Pedo ICPAK Number: 4037 211 P aP INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 g) STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS 2017/18 2017/2018 Original AApproved Budget Adjustment Budget Actual Variance 0/0 of KShs. KShs. KShs. KShs. KShs. Variance RECEIPTS Loan from external development 481,876,200 380,161,518 862,037,718 805,617,092 56,420,626 6.5% partners Miscellaneous Receipts -19,000 (19,000) 0.0% TOTAL RECEIPTS 481,876,200 380,161,518 862,037,718 805,636,092 56,401,626 6.5% PAYMENTS Compensation of employees 48,187,620 17,600,431 65,788,051 64,795,051, 993,000 1.5% Purchase of goods and services 77,100,192 74,440,275 151,510,467 94,961,665 56,578,802 37.3% Acquisition of non-financial 356,588,388 288,120,812 644,709,200 461,886,387 182,822,813 28.4% assets TOTAL PAYMENTS 481,876,200 380,161,518 862,037,718 621,643,103 240,394,615 27.9% SURPLUS FOR THE YEAR - 183,992,989' (183,992,989) 1. The deficit of actual expenditure over the budget is KSh. 240,394,615 (27.9% under budget). The lower than projected expenditure is largely attributable to: 1. Delayed achievement of deliverables and corresponding payments for civil works for the PPPU for KSh.23.6m, Contract No. IFPPP/PPPU/W/NCB/02/2016-17; 2. An amount of KSh. 12.9m provided on the price variation for the transaction advisory services for development, operation and maintenance of Nairobi- Nakuru Road, Contract No. IFPPP/KeNHA/015/2013-14; 3. Delayed conclusion in procurement of a tolling operator to Provide Transaction Advisory Services for Kenya's first mover toll roads PPP Programme and procurement of furniture for the PPPU. These had a total provision of KSh. 48m during the year; 4. Suspension of capacity building activities during the 2nd half of the year with a budget of KSh.104.5m . 2. No significant budget utilisation/performance differences has been realised by the project to be disclosed in These financial statements. The acc nting policies and explanatory notes to these financial statements form an integral part of the financial n . The Project's financial statements were approved on - nd : Principal Se Pr Project - countant Dr. Kamau T S Charles Musau CPA Maurice Pedo ICPAK Number: 4037 22 1P1 a g c INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 h) NOTES TO THE FINANCIAL STATEMENTS The principal accounting policies adopted in the preparation of these financial statements are set out below: 8.1. Basis of Preparation 8.1.1. Statement of compliance and basis of preparation The financial statements have been prepared in accordance with Cash-basis IPSAS financial reporting under the cash basis of Accounting, as prescribed by the PSASB and set out in the accounting policy note below. This cash basis of accounting has been supplemented with accounting for; a) receivables that include imprests and salary advances and b) payables that include deposits and retentions. The financial statenents comply with and conform to the form of presentation prescribed by the PSASB. The accounting policies adopted have been consistently applied to all the years presented. 8.1.2. Reporting entity The financial statements are for the Infrastructure Finance and Public Private Partnerships (IFPPP) Project under The National Treasury. The financial statements encompass the reporting entity as specified in the relevant legislation PFM Act 2012. 8.1.3. Reporting currency The financial statements are presented in Kenya Shillings (KShs), which is the functional and reporting currency of the Project and all values are rounded to the nearest Kenya Shilling. 8.2. Significant Accounting Policies a) Recognition of receipts The Project recognises all receipts from the various sources when the event occurs and the related cash has actually been received by the Government. Transfers from the Exchequer Transfer from Exchequer is be recognized in the books of accounts when cash is received. Cash is considered as received when payment instruction is issued to the bank and notified to the receiving entity. External Assistance External assistance is received through grants and loans from multilateral and bilateral development partners. 23 1 P a uc INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 8. NOTES TO THE FINANCIAL STATEMENTS (continued) 8.2 Significant Accounting Policies (Continued) a) Recognition of receipts Donations and grants Grants and donations shall be recognized in the books of accounts when cash is received. Cash is considered as received when a payment advice is received by the recipient entity or by the beneficiary. In case of grant/donation in kind, such grants are recorded upon receipt of the grant item and upon determination of the value. The date of the transaction is the value date indicated on the payment advice. o Proceeds from borrowing Borrowing includes Treasury bill, treasury bonds, corporate bonds, sovereign bonds and external loans acquired by the Project or any other debt the Project may take on will be treated on cash basis and recognized as a receipt during the year they were received. * Undrawn external assistance These are loans and grants at reporting date as specified in a binding agreement and relate to funding for the Project currently under development where conditions have been satisfied or their ongoing satisfaction is highly likely and the project is anticipated to continue to completion. An analysis of the Project's undrawn external assistance is shown in the funding summary Other receipts These include Appropriation-in-Aid and relates to receipts such as proceeds from disposal of assets, interest income and sale of tender documents. These are recognised in the financial statements the time associated cash is received. b) Recognition of payments The Project recognises all payments when the event occurs and the related cash has actually been paid out by the Project. * Compensation of employees Salaries and Wages, Allowances, Statutory Contribution for employees are recognized in the period when the compensation is paid. * Use of goods and services Goods and services are recognized as payments in the period when the goods/services are consumed and paid for. If not paid for during the period where goods/services are consumed, they shall be disclosed as pending bills. a Interest on borrowing Borrowing costs that include interest are recognized as payment in the period in which they incurred and paid for. 26 |Pag INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 8. NOTES TO THE FINANCIAL STATEMENTS (continued) 8.2 Significant Accounting Policies (Continued) b) Recognition of payments (continued) * Repayment of borrowing (principal amount) The repayment of principal amount of borrowing is recognized as payment in the period in which the repayment is made. The stock of debt is disclosed as an annexure to the consolidated financial statements. Acquisition of fixed assets The payment on acquisition of property plant and equipment items is not capitalized. The cost of acquisition and proceeds from disposal of these items are treated as payments and receipts items respectively. Where an asset is acquired in a non- exchange transaction for nil or nominal consideration and the fair value of the asset can be reliably established, a contra transaction is recorded as receipt and as a payment. A fixed asset register is maintained by each public entity and a summary provided for purposes of consolidation. This summary is disclosed as an annexure to the consolidated financial statements. c) In-kind donations In-kind contributions are donations that are made to the Project in the form of actual goods and/or services rather than in money or cash terms. These donations may include vehicles, equipment or personnel services. Where the financial value received for in-kind contributions can be reliably determined, the Project includes such value in the statement of receipts and payments both as receipts and as payments in equal and opposite amounts; otherwise, the contribution is not recorded. d) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at bank, short-term deposits on call and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Bank account balances include amounts held at the Central Bank of Kenya and at various commercial banks at the end of the financial year. For the purposes of these financial statements, cash and cash equivalents also include short term cash imprests and advances to authorized public officers and/or institutions which were not surrendered or accounted for at the end of the financial year. Restriction on cash Restricted cash represents amounts that are limited/restricted from being used to settle a liability for at least mweive m-oniths aftpr the reportLing period. ThI Is cash Is mie f dIet u se,.1 I reqired by spua I . Amounts maintained in deposit bank accounts are restricted for use in refunding third party deposits. 27 Pa1g INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 8. NOTES TO THE FINANCIAL STATEMENTS (continued) 8.2 Significant Accounting Policies (Continued) e) Accounts receivable For the purposes of these financial statements, imprests and advances to authorized public officers and/or institutions which were not surrendered or accounted for at the end of the financial year is treated as receivables, This is in recognition of the government practice where the imprest payments are recognized as payments when fully accounted for by the imprest or AlE holders. This is an enhancement to the cash accounting policy. Other accounts receivables are disclosed in the financial statements, f) Pending bills Pending bills consist of unpaid liabilities at the end of the financial year arising from contracted goods or services during the year or in past years. As pending bills do not involve the payment of cash in the reporting period, they recorded as 'memorandum' or 'off-balance' items to provide a sense of the overall net cash position of the Project at the end of the year. When the pending bills are finally settled, such payments are included in the statement of receipts and payments in the year in which the payments are made. g) Budget The budget is developed on a comparable accounting basis (cash basis), the same accounts classification basis (except for accounts receivable - outstanding imprest and clearance accounts and accounts payable - deposits, which are accounted for on an accrual basis), and for the same period as the financial statements. The Project's budget was approved as required by Law and National Treasury Regulations, as well as by the participating development partners, as detailed in the Government of Kenya Budget Printed Estimates for the year. The Development Projects are budgeted for under the MDAs but receive budgeted funds as transfers and account for them separately. These transfers are recognized as inter-entity transfers and are eliminated upon consolidation. A high-level assessment of the Project's actual performance against the comparable budget for the financial year/period under review has been included in an annex to these financial statements. h) Third party payments- Included in the receipts and payments, are payments made on its behalf by to third parties in form of loans and grants. These payments do not constitute cash receipts and payments and are disclosed in the payment to third parties column in the statement of receipts and payments. During the year there were no loan disbursements received in form of direct payments from third parties, i) Exchange rate differences The accounting records are maintained in the functional currency of the primary economic environment in which the Project operates, Kenya Shillings. Transactions in foreign currencies during the year/period are converted into the functional currency using the exchange rates prevailing at the dates of the transactions. Any foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statements of receipts and payments. 28 1P1 g INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 j) Comparative figures Where necessary comparative figures for the previous financial year/period have been amended or reconfigured to conform to the required changes in financial statement presentation. k) Subsequent events There have been no events subsequent to the financial year/period end with a significant impact on the financial statements for the year ended June 30, 2018. 1) Errors Material prior period errors shall be corrected retrospectively in the first set of financial statements authorized for issue after their discovery by: i. restating the comparative amounts for prior period(s) presented in which the error occurred; or ii. If the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and net assets/equity for the earliest prior period presented. 2 9 111g INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 8. NOTES TO THE FINANCIAL STATEMENTS (continued) 8.2 CASH BALANCES Project Cash and Bank Account Status. '2017/18 2016/17 KSh KSh. Office Standing Float 31,435 Bank Account( KCB Account No. 1138915874) 198 854 313 14,829,889 KCB Fixed Deposit Facility - - 198,854,313 14,861,324 [. Cash comprises cash on hand, demand deposits and cash equivalents. Demand deposits and cash equivalents consist of balances with banks, advances given out pending submission of accountability documents, outstanding temporary imprests, prepayments and investments in short-term money market instruments. ii. The Project Special (Designated) Deposits Bank Account is maintained with KCB Bank Limited (Account No. 1136321365). The balances of this account are not included in the Statement of Financial Assets since they are below- the -line items and are yet to be drawn into Exchequer Account as voted provision. The Special Deposit Account (SDA) movement schedule which shows the flow of funds that were voted in the year is presented below. These funds have been reported as loans received in the year under Statement of Receipts and Payments. 30 11 INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 8.3LOAN FROM EXTERNAL DEVELOPMENT PARTNERS During the 12 months to June 30, 2018 the Project received funding from the International Development Association (IDA World Bank) in form of loans negotiated by the National Treasury and Planning donors as detailed in the table below: Loans Loans Lon Name of Donor Date Amount In loan received In received as Total amount in KShs received currency cash direct T payment USD KSh. KSh. KSh. KSh. Loans Received from Multilateral Donors ,-(InternationaL Organizations) 23.08.2017 600,000 62,166,000 07.09.2017 1,756,200 181,011,534 16.01.2018 969,631 100,414,986 International 30.01.2018 Development 1,700,000 174,981,000 Association - 805,617,092 596,701,447 (IDA) 15.02.2018 1,000,000 101,630,000 21.03.2018 928,221 93,917,371 27.04.2018 600,000 60,180,000 27.06.2018 310,000 31,316.200 Total 7,864,052 805,k17,092 0 805,617,092 596,701,447 8.4 DIRECT PAYMENTS 2017/18 2016/17 KSh. KSh. Genesis Analytics PvT Ltd 34,594,895 34,594,895 8.5 MISCELLANEOUS RECEIPTS 2017/18 2016/17 KSh. KSh. Interest Income 847,671 31 )Pag INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 Sale of Tenders 19,000 17,000 Sundry Receipts 41,907 906,578 8.6 COMPENSATION OF EMPLOYEES 2017/182016/17 KSh. KSh. PPPU local experts '31994,168 30,147,217 PIU technical experts 29,958,774 28,524,403 PIU support staff 2,842,109 1,915,779 64,795,051 60,587,399 8.7 PURCHASE OF GOODS AND SERVICES 2017/18 2016/17 KSh. KSh. Office space rent 8,873,975 11,294,715 Communication 1,239,697 957,860 Advertising services .4,579,456 4,591,681 Hospitality expenses 100,619 46,108 Office stationery 863,670 31,000 Transport 930,919 629,080 Office newspapers 671,030 549,200 Bank service charge .190,360 219,794 General office expenses 6,657,412 4,014,019 International training & events 33,341;704 56,156,978 Local training & conferences 37,512;823 14,721,592 94,961,665. 93,212,027 32|1P a g e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 8.8 ACQUISITION OF NON-FINANCIAL ASSETS 2017118 2016117 KSh... KSh. Purchase of office furniture & 17,290 1,390,572 general equipment Purchase of office computer 1.880,000 equipment & printers Civil works for the PPPU 57,832,904. Research, studies ,project preparation, design & supervision: Transaction Advisory Services for 42,993,619 50,266,400 1st Umbrella University Hostels Transaction Advisory Services for 69,419,890 2nd Nyali Bridge Transaction Advisory Services 47,511,253 for Mombasa-Nairobi Road Transaction Advisor Services for Nairbi-Tika oad14,106,677 75,025,680 Nairobi-Thika Road Transaction Advisory Services , for Nairobi -Nakuru Transaction Advisory Services for 140MW Olkaria VI Geothermal 6,8," 5 62,303,742 Transaction Advisory Services 9212335 for Southern By-Pass Road I ransaction Advisory Selvices for 300 Bed private hospital 2 General consultancies and Sector 111,43r666 169,327,653 based studies 461,886,387 515,602,830 INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 8.9. CUMULATIVE EXPENDITURE FOR PROJECT LIFE TO DATE Prior year Current Year Total Cumulative Cumulative KSh. K(Sh. KSh. RECEIPTS Loan from external development 1,833,439,287 805,617,092 2,639,056,379 partners(IDA) IDA Direct Payments 270,370,858 ________270 370 858 Miscellaneous receipts 16,752,M2 19,000 16,771,121 Total Receipts _________ __ _Q,562,266 806309 - PAYMENTS Compensation of employees 2208642 64,795,051 285,659176 I1 Purchase of goods & services 328,620,990 94,961,665 423,582,655 Acquisiton of non- financial assets 1,556,215,927 461,886,387 2,018,102,314 Total Payments _______ ____ 3105 700,942 621,643,103 ___2 727,344,045 Surpl us/Deficit for the year 14,861,324 183,992,989 198,854,313 9.0 PENDING BILLS There were no pending bills as at June 30, 2018. 10. PROGRESS ON FOLLOW UP OF AUDITOR RECOMMENDATIONS There were no Auditor Recommendations for follow up during the year ended June 30th ,2018. 341I Pau c INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 ANNEX 1: FIXED ASSETS REGISTER THE NATIONAL TREASURY AND PLANNING INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ASSETS SCHEDULE AS OF 30TH JUNEZation - odel Ya 1f No.1o Purchase No. .Item D5srlIslon - Make _ L Serial n Ow jl.) Total Cost - __ _ r"LuipIneRqICLTEr1rwfl - -IA _- FY2017-18 __ - - IDA 1 MacBook iiplop_ Mac Book Pro CO2t85rgho3q 4 2017 PPPU ____ ________ ___ __ C0449aNo3q t__: C02t42beho3q _ _ CO2t44XVho3> _ _ @470,000 _ 1- 880 000 2 Microwave ME731K 04BR7WAJ900038 995 10.995 _ 2017 PPPU sub total - - - - - - - 3 Cooker _VON H/P-DBL HPTC-21CW _ 1 __ 295 2017' PIU Office Fit Out at I Reinsurance 4 Plaza, Nairobi Civi works _ 57.832,904 _ _ 2018 PPPU 2017/2018 L5.3.91 Note : Included in the figure of KSh. 461,886,387 under Note. 8.8 is an amount of KSh. 402,156,194 for the feasibility studies being undertaken on the PPP projects in the Country. 35 Pa Rt INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 APPENDICES BANK RECONCILIATIONS AND CASH ACCOUNT CERTIFICATE -jUj 20-- uy 21 o KCS Bank Kenya Llrted UnIveralty Way Bmanch 06, July 2018 Anniversary Towers P 0. Box 7206-00300 Nalrobi, Kenya Tel: +254 20 3123809/ 213701/229227 Emuall: 1218 CA 41 BRANCHES Email: CMM1IATE 2FBALANCE KCB Bank Limited (Incorporaled in Kenya) CERT1818705673 KCB UNIVERSITY WAY 06 JUL 2018 Certified that Ihe balance at the CRFDIT Of INFRASTRUCTURE FINANCE AND P P A/C 1138915874 at the close of business on 30 JUN 2018 Was KES TWO HUNDRED AND NINETEEN MILLION SIX HUNDRED AND THIRTY THREE THOUSAND SIX HUNDRED AND FIFTY ONE CENTS SIXTY SEVEN KES 219,633,651.67 Examined by Manager Service Quality $ Compliance Branch Manager Kub 0.nK Kenya.ra.!Led Drscw. A. A KrLa-) iCha.rn); J.. Ogaa. 1 Iponal; HK Rollch; A W. +aiv. 5. K r.c. MI. N. Onyango: 3. Mau. onww (rbr,,,n, 36|IP a g e REPUBLIC OF KENYA BANK RECONCILIATION AS AT 30.062018 Statior IFPPP Annivary Towers KCB ACCOUN"l NO- 1138915874 Ksh V) Balanc as per Bank Statement r . ! 219,633,65167: 1!Pavments in Cash Book not yet | recorded in Bank Statemnent|¯ I(Unpresented Chiues) ¯¯¯¯ ¯¯¯¯ 21.096891 42: <_ 2 Receipts in Bank Statemnt not 317,553.00- yet recorded in Cash Book | ____ 3 Pavments in Bank Statement not v et recorded in C-tsh Book lI Bank Charges -T _____ 4 Receipts in Cash Book notvyet ¯¯¯¯¯¯ ¯¯___ 1._________ recorded in Bank Statement ¯ Bank Balance as per Cash Book ....... ...... ..........................1.................... 198,85k313.25 : 1 PAYMENTS IN CASH BOOK NOT Y-T RECORDED IN BANK STATN-, NT (UNPREENTE- C-¯QUES1 SCHQUE PAYEE - AMOUNT CHEQUE PAYEE AMOUNT No IDate Shs.j No Date -b5 002809|21.06.18 |Pavmaster Generzl A/C 1,011,480.00 1 002831 26.06.18 INSSF 4,320.00 002845 27.06.18 Pavmaster Gener- A/ C 267,30000 . - 00217 27.06.18 -Xenya Reinsurance Comoration Ltd | 2,003,555 42 0 002.845127-06-18 Commissioner for VAT | 109,285.00 i 002850127.06.18 Commissioner for DTD | 396.27500, 0028527.06.18 I Nation Media Greup Ltd 649,000.00 - l 002852127.06.18 !Commissioner for VAT 35.40000 002854i27.06.18 iCommissioner for DTDD 251,520.00 ¯1¯1¯¯ 002855127.06.18 ýPaymasterGenerl A/C 217.12200 00285 27.0618 Pav masterGeneralIA/C 71222.0D L 002858127.06.18 'NSSF l 4,320¯00¯¯¯¯ 002859127.0618 |NHIF| 1,700.00 1f 002850127.06.18 INH= 1,00.0 0 Lä. 002861r27.06.18 Kaara Waina 1 %.00 I 002862 27.06l8 |Glo bus Tours & Trave! Ltd 170300.001 0286317.-06.18 |Ken0Obil Ltd 5 70 002864 27.06.18 ]Gitau Zachana Karan 1002867[27.06.18 l|NSSF -.M-- 002869128.06.18 lAKAN Stud io Ud 2.641427.20 002870 28.06.18 1Commissionr for DTD 125,782.00 002871 28.06.18 Commissioner for VAT 1002872 28.06.18 Nick Alen A dvisory Ld 1 2.914,985.80 I 002873128.06.18 Com ,issioner for CTE I 135,821.00 002874 28.06.18 Commissioner for VAT i62.964.0- 002876206.18 Comissioner for VAT 002877|28.06.18 Uni obe NotlineTrav 300,50.00 002881 28.06.18 Commissioner for DTD 3.49.827.00 1 ru00288.29.06.18 Commissioner for VAT 3,134,25.00 002883 28.06.18 Comrissioner for 528,734.00 00S428.06,18 Kaara W a0-0 - P EPARED BY: C itmFIED BY Q 2N rnn 2ý;Z 2 2) O o INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 REPUBLIC OF KENYA FO. 51 Date .03107/2018. Report of the Board of Survey on the Cash and Bank Balances of IFPPP . . a sI.. .............. .. Be at the close of business on . 3 G 20 The Board consisting of - (Names and official lilies) CHAIRMAN .,, DAVID M. MALONZA. .. MEMBER TERESA A SIMBA. .. ......... MEMBER...CYRUS N. KARWENI.......... ............ Aseembled at the office of CASH . IFPPP . ... ... .... ; . AWilYE SAHY TOWERS.................. ......................... . me) on thi .3.30. PMM .M.. .. And the following cash was produced: - Notes. . Sh ..................... Nil....... ......................... Sliver . . .l......................N........Sh.....................Nl,......................... Copper ... Sh. ...................Nil ... .............. ............. Cheques (ao per detellson reveras)., ShN.....................Nil ........................... It was observed that cheques amounting to ShNC.................NII ....,................. Cl . NI . Had been on hand for more then 14 days prior to the dale of the aur'. The cash consists of East African currency and does not conteln any demonetled coin or notes. The Cash Book reflected the followIng balances as at the close of business on tr 30.06 2018.. C ash on h n .. .. . .. . .. . . , , , ,.. . S h ....o. ,..... ............. N il .... . . . . . . . . .. . . .. . . . .. . . . . . . .. Bank Balance....e. Sh. 198,854,313.25. The bankcertifIcate ofBalance showed asum of Kshs....219,633,651.............. ct 67 .... sh NIl cs . . standing to the credit of the account on ....... ._,30.05.2018.................. The dfrence between this fIgure and the Bank Balance as shown by the Cash Book I accounted for In the Bank i i Sateament (F.O. 30) attached. Dote . 0307018. .... .. ..... . . I r. - r 391PaJ//gj 391 j) p, o INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE30, 2018 INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIP PROJECT STATEMENT OF SPECIAL (DESIGNATED) ACCOUNT RECONCILIATION FOR THE YEAR ENDED 30 JUNE 2018 Credil No.: IDA LOAN CREDIT NO.5157-KE l3ank Accant No.: 1136321365 Held with KCB NAitOril NOTES AMOUNT USD USD I Amount advanced by IDA 3 500,000.00 Less: 2 Total amount documented 3 Outstanding amount to be documented 3,500,000.00 Represented by: 4 Ending Special account Balance as as 30 June 2018 671,811.17 5 Amounts claimed but not credited as at 30th June 2018 ( 6 Amounts withdrawn and not claimed l,h24,_ ____1,8 188.83 7 Service Charges (if not included in lines 5 and 6 above) 8 Interest earned (if included in Special Account) 9 Total advance to Special Account Year ended 30 June 2018 3,500,000.00 Discrepancy between total appearing on line 3 and 9 Notes: I Explain the discrepancy between totals appearing on lines 3 and 9 above (e.g amount due to be refunded to cover ineligible expenditures paid fron the Special/Designated Account) 2 Indicate if amount appearing on line 6 is eligible for fnanciang by IDA and provide reasons for not claiming the expenditures The amount appearing on line 6 Is eligible for financing by World Bank and shall be documented in subsequent IFRs AUTHORISED REPRESENTATIVE RESOURCE MOBILISATION DEPARTMENT DATE: V) IO THE NATIONAL TREASURY AUG 20 401P1ag e INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 SPECIAL ACCOUNT STATEMENT For period ending 30th JUNE, 2018 Account No. 1136321385 Depository Bank KENYA COMMERCIAL BANK Address MOI AVENIJE Related Loan KCB-PPF INFR.FINANCE Credit Agreement Q821 -KE Account Activity Currency USD Beginning balance of 1ST July, 2017 as per C.B.K. Ledger Account 1,455,125.33 Add: Total Amount deposited by World Bank 7,084,737.65 Total Interest earnings If deposited In account Total amount refunded to cover ineligible expenditure Deduct: Total amount withdrawn 7,864,051.71 Total service charges if not included above in amount withdrawn Ending balance on 30th June,2018 AUTHORISED REPRESENTATIVE SIGNATURE: CENTRAL BANK OF KENYA DATE DATE U AUTHORISED REPRESENTATIVE EXTERNAL RESOURCES SIGNATURE: DEPARTMEN 1-TREASURY DATE ---- C-- c ----- -------- NOTE:The ending balance as per Central Bank of Kenya Ledger Account and the off-shore Special Account as at 30th June, 2018 have been reconciled and a copy of the supporting Reconciliation Statement is attached 41 INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2018 42 1 P a g c