REPUBLIC OF KENYA

KENYA NATIONAL AUDIT OFFICE

REPORT

OF l •

THE AUDITOR-GENERAL

ON

THE FINANCIAL STATEMENTS OF INFRASTRUCTURE FINANCE

AND PUBLIC PRIVATE PARTNERSHIPS PROJECT (IDA CREDIT N0.5157 KE)

FOR THE YEAR ENDED 30JUNE 2014

THE NATIONAL TREASURY

101276P

ublic

Dis

clos

ure

Aut

horiz

edP

ublic

Dis

clos

ure

Aut

horiz

edP

ublic

Dis

clos

ure

Aut

horiz

edP

ublic

Dis

clos

ure

Aut

horiz

ed

Telephone: +254-20-342330 Fax: +254-20-3 11482 E-Mail: oag@oagkenya.go.ke Website: www.kenao.go. ke

REPUBLIC OF KENYA

P.O. Box 30084-00 I 00 NAIROBI

KENYA NATIONAL AUDIT OFFICE

REPORT OF THE AUDITOR-GENERAL ON INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT (IDA CREDIT N0.5157 KE) FOR THE YEAR ENED 30 JUNE 2014- THE NATIONAL TREASURY

REPORT ON THE FINANCIAL STATEMENTS

have audited the accompanying financial statements of the Infrastructure Finance and Public Private Partnerships Project ( IDA Credit No.5157 KE) set out on pages 14 to 28, which comprise the statement of financial assets as at 30 June 2014, and the statement of receipts and payments, statement of cash flow, statement of comparative budget and actual amounts, and the special account statement 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, Section 8 of the Public Audit Act, 2003 and the financing agreement between the International Development Association (IDA) 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.

' '•

Management's Responsibility for ·Financial Statements

The Principal Secretary for the National Treasury and Project Manager are responsib·le for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards and for such int~rnal 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.

The Accounting Officer and Project Manager are also responsible for the submission of the financial statements. to the Auditor - General in accordance with the . provision~ of Section 7 ~f the Public Audit, 2003.

Auditor-General's Responsibility • r

My responsibility is to express an opinion on these financial statements based on the audit and report in accordance with the provisions of Section 9 of the Public Audit Act, 2003.' The audit was conducted in accordance with International Standards on Auditing. Those standards require compliance with ethnical requireme.nts and that the audit be planned and performed to obtain reasonable assurance .about whether the financial statements are free from materi_al misstatement. · · · · ,

Promoting Accountability in the Public Sector

' h

' .

; H I ! :

' i ' I

I i

l i I I

i I ' I

i I I

. I I

i

An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the project's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the project's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonable of accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects the financial position of the project for the year ended 30 June 2014 and of 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.

In addition, the special account statement presents fairly, transactions for the year, and the closing balance has been reconciled with the books of account.

Edward R. 0. Ouko, CBS AUDITOR-GENERAL

Nairobi

19 December 2014

2

()

THE NATIONAL TREASURY

INFRASTUCTlJRE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS (IFPPP) PROJECT

IDA CREDIT NUMBER 5157 KE

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30Tlt JUNE, 2014

Prepared in accordance with the Cash Basis of Accounting Method of the International Public Sector Accounting Standards (IPSAS) \

! ·i

INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JlJNE 30, 20 14

TABLE OF CONTENTS

I. PROJECT INFORMATION AND OVERALL PERFORMANCE .. .... .. .................. .. .... 3

2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES ............ .... ...... I 0

3. REPORT OF THE INDEPENDENT AUDITORS ON THE INFRASTRUCTURE

FINANCE AND PUBLIC PRIVATE PARTNERSH IPS (IFPPP) PROJECT .............. .. ... .... 11

4.STATEMENT OF FINANCIAL ASSETS AND LIAB ILITIES AS AT 30rn JUNE,

2014 .................................. .... ................. ......................... ...................................................... 15

5.STATEMENT OF CASHFLOW FOR THE YEAR ENDED 30TH JUNE 2014 ............. 16

6.STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS ............... 17

7.NOTES TO THE FINANCIAL STATEMENTS .. ... ....... .............. .. .................................. 18

2

()

n INFRASTRUCTURE rINANCE AND PUBLIC PRIVATE PARTNERSH IPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JlJNE 10, 2014

1. 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 th Floor, Uni versity Way/Monrovia Street NAIROBI

Objective

The main obj ective of the project is to improve the enabling environment to generate a pipel ine of bankable Public Private Partnership (PPP) Projects.

Address:

The National Treasury Anniversary Towers, North Tower th Floor

' University Way/Monrovia Street Nairobi KENYA.

The address of its registered office is:

P.O.BOX 30007-00 I 00

NAIROBI

Tel: 020 -21 2227 1/4

Email: info@piu.go.ke

Contacts:

Telephone: (254) 020-22 1027 1 /4

E-mail : info@piu.go.ke

Webs ite: www.pppu.go.ke

3

I I I I

i

I I

I I I

I ! I I

INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AN D FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JlJNE 30, 2014

1.2 Project Information

Project Start Date:

Project End Date:

Project Manager:

Project Sponsor:

1.3 Project Overview

Line Ministry/State Department of the project

Project number

Strategic goals of the project

Achievement of strategic goals

4

The project start date is I I 111 February, 2013

The Project end date is 3151 December, 2016.

The project manager is Mr. Charles R. Musau

The project sponsor is International Development Association (IDA)

The project is under the supervision of the National Treasury.

51570 KE

Overall Objective- to increase private investment 111 the Kenya infrastructure market across sectors and to sustain this participation over an extended period of time. This involves three key areas of development: (i) enabling environment (i i) pipe line of potential transactions and (iii) financing.

Specific Objective- to improve the enabling environment to generate a pipeline of bankable PPP projects.

The project is in YR2 and the fo llowing achievements are in reference to the YR2 targets as documented in the Project Appraisal Document.

(i) Indicator I- Expression of Interests (EO!s) issued to prospective sponsors for three targeted PPP transactions

YR 2 Target- I EOI by end of YR 2.

Achievement - The transaction for the Development of students' hostels lo accommodate 6,000 students is at negotiation stage between Kenyatta University and the prospective sponsor.

(ii) Indicator 2- PPP Regu lations associated with the new Law agreed to with MoF

YR 2 Target- PPP regulat ions in place.

Achievement- The AG's Office has completed Re-drafting of the National PPP Regulations and are to be tabled before the Parliamentary Committee. The draft County PPP regulations have been fina lized and are to be disseminated to the Public for review and feedback. The Petitions Committee has been established.

(ii i) Indicator 3- PPP Fiscal Commitment and Contingent Liabil ity

()

n INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED Jl lNE 10 20 14

Other important background information of the project

Current situation that the project was formed to intervene

5

Framework operationalized as measured by: upstream DMD due diligence on prospecti ve (feasibility stage) transactions completed in line with Law.

YR 2 Target- upstream DMD due diligence on prospective (feasibi lity stage) transactions completed in line with Law

Achievement- l'CCL/VGF consultant is be ing recruited to assist develop and operationalize the FCCL/VGF framework. Development of the TO Rs for the assignment is ongoing

(iv) Indicator -I Regular issuance of Government benchmark bonds in medium and long-term maturiti es up to 7110 year tenures.

YR 2 Target- 0

By helping to strengthen the PPP enabling environment framework, the IFPPP APL I will assist the GoK to develop a solid foundation to systematica lly prepare PPPs and realize the benefits of PPPs more effectively. This would foster increased private investments 111

infrastructure, increased employment opportunities, improved service delivery to enterprises and the population in general, improved fi scal impact on government from better project preparation, more balanced ri sk allocation, increased transparency, wider quality control, greater efficiency, and enhanced financial sector support. This framework wi ll enable an increase in the avai lability and quality of infrastructure in different sectors to boost enterpri se growth and productivity and improve the well-being of Kenyans.

Component 1: Institutional Support and Regulatory Reform a) Subcomponent IA - Support to PPP Institutions The objectives of this sub-component is to support the establishment and functioning of a PPP Unit at the National Treasury and PPP Nodes in selected line Ministries an.d to build the capacity of GoK stakeholders to implement the PPP program through training, expenence exchange, technical ass istance, awareness and communication programs. Progress; -The recruitment of the key PPPU Experts and Specialists was completed. -Procurement of ICT equipment for PPPU & DMD was done. -Nine (9) workshops held i.e. Airpo1is, Ports, Roads PPP Workshops, Nairob i County, Mombasa County PPP sensitization workshops, PPP Financial Sector Awareness Workshop, PPP Professional Awareness Workshop, Cabinet & Principal Secretaries Awareness Workshop and County Executives Workshop.

b) Subcomponent lB - Legal and Regulatory Reform The objecti ve of this sub-component is to support PPP pol icy dialogue and implementation of the PPP Act including preparation and adoption of the Regulations and effecti ve implementation.

i 1 t

! I j

• 1

! I ' I I

I i 1

~ i !

I ' i

INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JlJNE 30, 2014

6

Progress; -The AG's Office has completed Re-drafting of the National PPP Regulations and are to be tabled before the Parliamentary Committee. The draft County PPP regulations have been finalized are to be disseminated to the Public for review and feedback.

-Petitions Com1nittee eslublished.

Subcomponent lC - Institutional Development for Financial Products and PPP Approaches The objective of this sub-component is to suppo1t institutional arrangements for a range of financing instruments such as VGF, guarantees, infrastructure funds, financial intermediary lending fac ilities and development of local capital markets.

Progress; Recruitment is underway for a Capital Markets Advisor to support implementation of this sub-component.

Component 2: PPP Pipeline Preparation The obj ective of this sub-component is to carry out technical and financial feas ibility studies to prepare PPP transactions up to the stage of bidding.

Progress; -Sector PPP Advisors: Ports and Airports PPP Advisors were hired by the World Bank and implementation of assignment is on-going. -Recruitment of Advisor to PPPU Director has been completed -Recruitment of PPP Advisors for County Government, Ra il, Health, Education, Energy and Water is on-going.

First mover transactions:

-9 projects were identified as first mover projects; Nairobi Southern By Pass, Nairobi-Mombasa Highway, Nairobi-Nakuru Highway, O&M of Nairobi-Thika Highway} , 2 nd Nyali Bridge in Mombasa, Kisumu Port, Development of 560 MW Geothermal power plant at Olkaria, Development of Univers ity Hoste ls, Solid Waste Management (County Governments) .

-NOB was granted for the combined Technical Evaluation Report (TER) on the Transaction Advisor (TA) for the 211

c1 Nyali Bridge. The Consultancy for the Transact ion Advisor for 211

d Nyali Bridge is expected to commence in September 2014.

()

0 INFRASTRUCTURE FINANCE AN D PUB LIC PRIVATE PARTNERSHIPS PROJECT ANN UAL REPORT AND FINANC IAL STATEMENTS FOR TH E FINANCIAL YEAR ENDE D JlJN E 30, 201 4

Project duration

7

Component 3: Improvements to Fiscal Commitment and Contingent

Liability (FCCL) Risk Management Framework Most of the activities under this component yet to commence. The objective of this component is to strengthen the FCCL risk management fra mework especially associated with infrastructure. Progress; -Equipment for the Debt Mariagement Office (OMO) were procured. -FCCL/YGF consultant rs being recruited to assist develop and operationalize the FCCL/YGF framework. Development of the TORs for the ass ignment is ongoing

Component 4: Support for Program Management A Project Implementation Unit (PI U) is established within the National Treasury that provides the fiduciary, safeguards, Monitoring and Evaluation (M&E) expertise required for the implementation of the IFPPP project in accordance with Bank policies and requirements .

The project started on 11 th February 20 13 and is expected to run until 31st December, 201 6.

i i

I I I ,

INFRASTRUCTU RE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS

()

EOR THE FINANCIAL YEAR ENDED llJNE 30, 2014

1.4 Bankers The following are the bankers for the current year: Kenya Commercial Bank Ltd University Way Branch University Way NAIROBI.

. : .

1.5 Auditors ,

. ... .

The Kenya National Audit Office (KENAO) Anniversary Towers University Way/ Monrovia Street NAIROBI.

16 R I o es an dR "bT . espons1 1 1hes Names T itle designation

Eng. Stanley Director, PPPU Kam au

Charles R. Musau Project Manager

Maurice 0 . Pedo Financial Management Specialist

Wycl iffe Ondieki Monitoring and Evaluation Speci::I ist

Danae N. Ottaro Procurement Specialist

Emma Procurement W.Kirungu Specialist

Gaudencia N. Assistant Project Mukisu Accountant

8

Key qualification

• MBA( Finance Option)

• Bachelor of Commerce (Finance Option)

o CPA(K)

• Master of Education (Educational Psychology)

• Bachelor of Education (Mathematics & B. Studies)

• Bachelor of Commerce ( Business Administration)

• Master of Science 111

Procurement & Logistics

• Bachelor of Commerce (Finance Option)

• CPA(K)

Responsibilities

Project coordination

Project Management

Project financia l management

Estab lish & implement the Monitoring & Evaluation Function & System for the PIU

Procurement Management

Procurement Management

Provide Management, Financial and Accounting Support to the Project.

n INFRASTRUCTURE FINANCE AND PUBLIC PRI VATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIA L STATEMENTS FOR THE FINANCIAL YEAR ENDED l! JNE 10, 2014

1.7 Funding summary The Project is for a duration of 4( four) years from 5th December 20 12 to 3151 December, 2016 with an approved budget of US$ 40Million equiva lent to KShs 3.5 Bi ll ion as highlighted in the table below: Source of funds

. "~-· ....

i Loan International Development Association- IDA

Total

Donor Commitment-

. .............. .

US$ . f(sll.fii

' (A) (A')

40 3.5 Million Billion

40 3.5 Million Billion

1.8 Summary of Overall Project Performance:

Amount received II .

to date - ( 30 ' 1 ·J\alic'; 20111)"'" .;;:.,, ··

Dou or Clll'l'ell<:J'

(B)

3. 1 Million

3.1 Million

/(sll.\'

(H')

236 Million

236 Million

;lJndrnwn balance to date ' (J011".J\'1ii~c, 20 f4) :· .... · ~ -·~

US$ /(sll.\·

(A)-(B) (A ')-(B')

36.9 3.2 Million Bi llion

36.9 3.2 Million Billion

As part of institutional support and regulatory reform; all PPPU experts have been recruited, National PPP regulations have been finali zed and are to be tabled before the Parliamentary Committee while the draft County PPP regulation is to disseminated to the Public for review and feedback. In addition, recruitment is underway fo r a Capital Markets Advisor to suppo1t institutional development for financial products and PPP approaches. To enhance public awareness on PPPs, nine PPP workshops/awareness sessions were held for with stakeholders in various sectors among them Cabinet & Principal Secretaries, stakeholders in other sectors such as Road and Ports. On the other hand, the recruitment of PPP sector advisors to support PPP pipe line preparation is at various advanced stages. Nine First Mover projects have been identified among then Nairobi-Mombasa Highway.

A transaction for the Development <?f students' hostels to accommodate 6,000 students is at negotiation stage between Kenyatta Universi ty and the prospective sponsor. As pait of supporting improvement to Fiscal Commitment and Contingent liabilities, the OMO has been equipped with ICT equipment. In addition, the recruitment process is underway for FCCL/VGF consultant to support the development and operationali zation of the FCCL/VGF framework. The PIU is fu lly staffed and support the IFPPP project management.

1.9 Summary of Project Compliance There are no indications of non-compliance of the IFPPP Project on the overall project perfo rmance.

9

1 !

i

INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS EOR THE FINANCIAL YEAR ENDED JlJNE 30, 2014

2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Principal Secretwy for the National Treasury and the Project Manager for Infrastructure Finance and Public Private Pmtnerships (IFPPP) Project are responsible for the preparation and presentation of the Project's financial statements, which give a true and fair view of the state of affairs of the Project for and as at the end of the financial year ended on June 30, 2014. This responsibility 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 di sc lose with reasonable accuracy at any time the financia l 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 Secretary for the National Treasury and the Project Manager for Infrastructure Finance and Public Private Pmtnerships (IFPPP) 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 Secretwy for the National Treasury and the Project Manager for Infrastructure Finance and Public Private Partnerships ( IFPPP) 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 financial year ended June 30, 20 14, and of the Project's financ ial position as at that date. The Principal Secretary fo r the National Treasury and the Project Manager for Infrastructure Finance and Public Private Partnerships ( IF PPP) 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 the Project Manager for Infrastructure Finance and Public Private Partnerships (IFPPP) 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 financia l 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 Secretmy for the National Treasury and the Project Manager for Infrastructure Finance and Public Private Pattnerships (IFPPP) Project on 2014 and signed by the

~·· < ~-:77,df,, .

' '

Project Manager

10

) INFRASTRUCTURE FINANCE AND PU8LIC PR IVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDFD JUNE 30, 20 I 4

3. REPORT OF THE INDEPENDENT AUDITORS ON THE INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS (IFPPP) PROJECT

., , . .

11

j

~ • j l

~

I I l 4

I ~

INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS EOR THE FINANCIAL YEAR ENDED JlJNE 30, 2014

REPORT ON PROJECT PERFORMANCE AND VALUE FOR MONEY ACHIEVEMENT

12

INFRASTRUCTURE FINANCE /\ND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAi. YEAR ENDED II !NE 30, 2014

STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30TH JUNE 2014

RECEIPTS I DA Funds(Loan from Development Partner) IDA Direct Payments

Other Receipts

Tota l receipts

PAYMENTS

Goods and Equipment Minor Civil Works

Consulting Services

Training & Workshops

Operating Costs

TOTAL PAYMENTS

SURPLUS/DEFICIT FOR THE YEAR

Principal Secre ·

1/; ~Jty: Date I { 1

14

Note

8.3 8.4

8.5

8.6

8.7

8.8

8.9

2012/13

Ksh:s

Cumulative

to date

Kshs

37,890,000 235,573,940

4,069,602

37,890,000 239,643,542

3,182,394

2,379,750 79,838,908

779,38 1 15,028,638

13,597,743 29,507,597

110,800,663 16,756,874 127,557,537

112,086,005

INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEA R ENDED JIJNE 30, 20I 4

STATEMENT OF FINANCIAL ASSETS 2014

FINANCIAL ASSETS

Cash and Cash Equivalents

Bank Balances

Fixed Deposit Facility

TOTAL FINANCIAL ASSETS

REPRESENTED BY:

Cash and cash equiva lents b/fwd

Surplus/Defic it for the year

NET FINANCIAL POSITION

Note

8.2

8.2

8.2

8.2

AS AT 30TH JUNE

2012/2013 Kshs

21, 133,126

21,133,126

21, 133, 126

21,133,126

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 ______ 2014 and signed by:

Principal Secrv 1

~~/ Project Manager --

Date 1/t'-hf ;}(fhof'(_

Date /

15

I ~

J I

i

I I

()

INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED llJNE 30, 2014

STATEMENT OF CASHFLOW FOR THE YEAR ENDED 30TH JUNE 2014

Receipts for operating income

Proceeds from IDA funding

Other Receipts Payments for operating expenses

- Goods & Equipment - Minor Civi l Works - Consultancy Services

- Training & Workshops

- Operating Costs

Net cash flow from operating activities

NET INCREASE IN CASH AND CASH EQUIVALENT Cash and cash equivalent at BEGINNING of the year Cash and cash equivalent at END of the year

J '

2013/2014 KSHS.

o, 182,394),

(77_,459, 158)

(14,249,257.)

(15,909,854) fl ,. ~ •

c110;soo,663) , ; • ~~'rt

SQ,883,2176 't

90,952,819

21, 133~ 1-26

il.:12,086,fil)~

2012/2013 KSHS.

37,890,000

(2,379,750)

(779,381)

(1 3,597,743)

16,756,874.00

21,133,126

21,133,126

21,133,126

The accounting policies and explanatory notes to these financial statements form an integral part of the fin ancial statements. The project's financial statements were approved on _ _ _ _ 2014 and signed by:

\

16

' I ! 1 i i

I l ~

I

INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSH IPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAi. YEAR EN DED JlJNE 30, 2014

STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS

2013/14 2013/14

Original Approved Variance Budget Adjustment Budget Actual

KShs. KShs. KShs.

RECEIPTS External Assistance: IDA Funds (

Transfer from Special Account)

- Loan 1,062,500,000 812,500,000 250,000,000 197,683,940 (52,316,060)

- Other Receipts 4,069,603 4,069,603

TOT AL RECEIPTS 1,062,500,000 812,500,000 250,000,000 201,753,543 48,246,457

PAYMENTS Prnject Expenditure: '-Goods &

Equipment 29,240,000 7,925,000 21,315,000 3,182,395 18,132,605 '-Consultancy

Services 972,716,000 849,337,211 l .'.3,378,789 77,459,159 45,919,630 - Training & Workshops 20,984,000 (10,801,363) 31,785,363 14,249,258 17,536,105

- Operating Costs 39,560,000 (33,960,848) 73,520,848 15,909,853 57,610,995

TOTAL PAYMENTS 1,062,500,000 812,500,000 250,000,000 110,800,663 139,199,336

SURPLUS FOR THE YEAR 90,952,879 (90,952,879)

NOTES: 1. The deficit of actual expenditure over the budget is KSh. 139,199,336.35(56.0%

under budget).The lower than projected expenditure is largely attributable to the delayed recruitment of Project Transaction Advisors whose cost forms a major part of the overall project budget.

11. No significant budget utilisation/performance differences has been reali sed by the P · ct to be disclosed in these financial statements.._

~~~~'L/-1-~- :~~/ Project Manager

:7i{IJ2 0 ''I

17

[)

%of Variance

(0)

0

1

0

1

1

55.68'Yo

(")

INFRASTRUCTURE FINANCE /\ND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEA R ENDED llJNE 30, 201 4

NOTES TO THE FINANCIAL STATEMENTS

The principal accounting policies adopted in the preparation of these financial statements are set out below:

8.1 Statement of compliance and basis of preparation

18

The financial statements have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS) with particular emphasis on Cash Bas is Financial Reporting under the Cash Basis of Accounting. The financial statements comply with and conform to the form of presentation prescribed by the Accounting Standards Board of Ken ya.

The financial statements are presented in Kenya Shillings, which is the functional and reporting currency of the Project and all values are rounded to the nearest one Shilling. The accounting policies adopted have been consistently applied to all of the years presented.

The fi nancial statements have been prepared on the cash bas is following the Government's standard chart of accounts. The cash bas is of accounting recognises transactions and events only when cash is received or paid out by the Project.

1. Recognition of revenue and expenses

The Project recognises all revenues from the various sources when the event occurs and the related cash has actually been received by the Project. In addition, the Project recognises all expenses when the event occurs and the related cash has actually been paid out by the Project.

ii. In-kind donations

In-kind donations are contributions 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 of in-kind donations can be reli ably determined, the Proj ect includes such value in the statement of receipts and payments both as revenue and as an expense in equal and opposite amounts; otherwise, the donation is not recorded.

iii.Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and cash at bank, sho1t-term depos its 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 ri sk of changes in value. Bank account balances include

I I I

I l

l I I !

I i !

I I I I I I

t I

I ~

I

I

~ l I ! I

i ;

I I l I i

INFRASTRUCTURE FINANCE AND PUB LIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR EN DED II JNE 30, 2014

19

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 authorised public officers and/or institutions which had not been surrendered or accounted for at the end of the financial year.

iv.Pending bills

Pending bills consist of unpaid liabilities at the end of the financial year arising from contracted goods or services during the year. Pending bills do not involve the payment of cash in the repo11ing period and have simply been disclosed in the notes to the financial statements.

v.Budget

The budget is developed on the same accounting basis (cash basis), the same accounts classification 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. A high-level assessment of the Project's actual performance against the comparable budget for the financial year under review has been included in an annex to these financia l statements.

vi.Exchange rate differences

The accounting records are 1naintained in the functional currency of the primary economic environment in which the Project operates, Kenya Shillings. Transactions in foreign currencies during the year are conve11ed into the functional currency using the exchange rates prevail ing 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 recognised in the statements of receipts and payments.

vii.Comparative figures

Where necessary comparative fi gures fo r the previous financial year have been amended or reconfigured to conform to the required changes in fi nancial statement presentation.

viii .Subsequent events

There have been no events subsequent to the financial year end with a significant impact on the financial statements for the year ended June 30, 2014.

)

>

INFRASTRU CTURE FIN ANCE /\ND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED l\ JN E 30, 201 4

8.2 CASH BALANCES

20

Bank Account (KCB /\ IC No. 1138915874) KCB Fixed Deposit Facility Office Standing Float Sundry Receipts

2013/14 KShs.

29,84 1, 116 82,244,890

=========

2012/13 KShs.

20,932, 126

200,000 1,000

======== 21,133,126

i. 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 sho1t-term money market instruments.

ii. The project bank account had a credit balance of KSh. 29,841,116 the Fixed Deposit Facility had a balance of KSh. 82,244,889 as at 30.6.2014.

~ .

I I I 1

I t

I I I I

I

I

INFRASTRUCTURE FINANCE AN D PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEA R EN DED HINE 30, 2014

8.3 LOAN FROM EXTERNAL DEVELOPMENT PARTNERS

0

During the 12 months to 30 June 2014 the Project received funding from development partners in form of loans negotiated by the National Treasury donors as detailed in the table below:

~ Name of Doiior Date ~ Amount ; ~oans Loans Total amount in.KS.hs:,

·" Loans Received from M ultilateral Donors (International Orga nizations

l nternational

received s

t

24.09. 13

in loan received in currency cash

USD KSh.

1,500,000 13 1, 190,000

received as '.~lircct t pa)·mcnt

f Date

,, FY 2013/14 F~ 2012/ 13

KSh. KSh. KSh.1 received

I Development Association

2 1.03. 14 283,000 03.04. 14 283,000

24,589,870 24,420,070

- 131, 190,000 24,589,870 24,420,070 I

37,890,000 Total

30.06. 14 200,000 2,266,000

8.5 OTHER RECEIPTS

Interest income Other income

TOTAL

2 1

17,484,000 197,683,940

17,484,000 6.05.20 13 - 197 ,683,940

2013/14 Kshs

4,037,602 32,000

4,069,§02 '

2012/13 KShs

Nil N il

=======

Nil

37,890,000

n INFRASTRUCTURE FINANCE AND PUB LIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANC IAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JlJNE 10, 201 4

8.6 GOODS & EQUIPMENT

Reporting Period

Opening balance Additions (as p er Statement of Receipts and Payments)

Disposals

C losing Balance

Computer & IT · Equipment

2012/13 Kshs

2013/14 Kshs

1,622,914.60

1,622,914.60

Stationery & Office supplies

GRAND TOTAL

Equipment, Furniture & Fixtures

2012/13 Kshs

2013/14 Kshs

842,840.00

842,840.00

2012/13 Kshs

Total

2013/14 Kshs

2,465,754.60

2,465,754.60

716,640.00

3,182,394.60

This schedule includes all assets acquired from the commencement of the · Project. The assets are stated at original cost. The existence and beneficial ownership has been veri fied by the Ministry. The relevant schedules for property, motor vehicles and other fixed assets are attached. Included in the fi gure of Ksh. 3,182,394.60 are costs for consumable stores (office stationery and supplies) procured under goods & equipment total ing Ksh. 716,640.00.

8.7 CONSULTING SERVICES

International Consultants/Experts Local Consultants Public Private c partnership Unit Local Experts

Project implementation unit Local Specialist

Advertisement for procurement of Consulting Services

22

2013/14 KShs.

28,297,786 1,788,999

14,617,749

23,289,300

9,465,324 77,459,158

2012/13 KShs.

2,379,750

2,379,750

l ! t

I l t i

INFRASTRUCTURE FINANCE AND PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED Il !NE 30, 20 14

8.8 TRAINING & WORKSHOPS

International Training & Events Local Training & Events Local PPP workshops & meetings

8.9 OPERA TING COSTS Staff Income Tax - PA YE Staff Pension Contributions Staff Salaries Office space rent Staff training & registrations Communication Advertisements Hospitality Expenses Office Stationery Transport Office Newspapers Bank Service Charge General office expenses

23

6,308,268 862,025

7,078,964

2013114 Ksh.

514,795 87,250

1,798,955 5,203,892

154,495 1,332,404 3,025,668

845,944 299,750 504,906 325, 104

89, 193 1,727,498

1s;~o9,~s4

429,080

350,30 l

779,382

2012/13 Ksh. 1,93 1,846

62,6 18 3,780,360 1,051,359

5,950 227,900

6,658,400 138,499 45,810 61,494 17,590

61 ,9 15 14,043,742

C)

)

l

'

'

INFRASTRUCTURE FINANCE /\ND PUB LIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JlJN E 30, 2014

8.10 PENDING BILLS The Project had the following contracts signed and committed as at 30111 June, 20 14:

ANNEX 2A - ANALYSIS OF PENDING BILLS

Supplier of Original Date Amount Outstanding Outstanding Goods or Amount Contracted Paid To- Balance Balance Services Date 2013/14 2012/13

a b c d=a-c

Supply of Goods 17,308,026 3, 182,395 14, 125,63 1 -

Sub-Total 17,308,026 3,182,395 14,125,631

Supply of Services I .PPP Advisor 12,3 12,822 - 12,312,822

2.Loca l PPP 2,5 17,63 1 25 1,763 2,265,868 County Regulations-preparation and amendment of drafts-3 months

Sub-Total 14,830,453 251,763 14,578,690

Grand Total 32,138,479 3,434,158 28,704,321

ANNEX 2B - ANALYSIS OF PENDING STAFF BILLS

Name of Staff Job Original Date Amount Paid Outstanding Group Amount Payable To-Date Balance

Contrac 2013/14 ted

a b c d=a-c

Contracted Sta ff-PPPU I .PPP Technical 24,378,389 10,143,014 14,235 ,375 Advisor 2.Financia l Expert 22,918,442 16,850,192 6,068,250

3.Lega l Expert 9,720,000 7,290,000 2,430,000

24

Outstanc ng

Balanc(' 2012/13

-

-

-

INFRASTRUCTURE FINANCE AND·PUBLIC PRIVATE PARTNERSHIPS PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED HINE 30, 2014

4.External Affairs 7,800,000 3,900,000 Expert 5.Executive 3,840,000 3,520,000 Assistant

3,900,000

320,000

Sub-total 68,656;831 41,703,206 26,953,625

Contracted Staff-PIU Project Manager 10,509,300 10,509,300 -

Financial 4,380,000 4,380,000 -Management Specialist Procurement 4,200,000 4,200,000 -Specialist Procurement 4,200,000 4,200,000 -Specialist Monitoring and 4,200,000 1,050,000 3, 150,000 Evaluation Specialist I

I

- I I Assistant Project I 1,320,000 1,320,000 -

Accountant Driver 906,000 906,000 -

Driver 720,000 - 720,000

Messenger 300,000 175,000 125,000

Sub-total 30,735,300 26,740,300 3,995,000

Total 99,392,131 68,443,506 30,948,625

GRAND TOTAL 131,530,610 71,877,664 59,652,946

25

·~ -

-

-

- t

-

-1

-

-

-

-

. -

-

-

•

),

'I.

. . . .

SPECIAL ACCOUNT STATEMENT

For period ending 30th June,2014 Account No. 11 36321365 Depository Bank KENYA COMMERCIAL BANK Address MOI AVENUE Related Loan/ PROP IF & PART PROJ PRE P Credit Agreement Currency USO · ·

Part A - Account Activity Beginning balance of 1st July, 2013 as per C.B.K. Ledger Account

Add :

Total Amount deposited by World Bank

Tota l Interest earnings if deposited in account

Total amount refunded to cover ineligible expenditure

Deduct:

Total amount withdrawn

Total service charges if not included above in amount withdrawn

Ending balance on 30th June,2014

AUTHORISED REPRESENTATIVE CENTRAL BANK OF KENYA

AUTHORISED REPRESENTATIVE EXTERNAL RESOURCES DEPARTMENT~REASURY

....

. ' . .

.. ..

- I

/ 49,994.00

- 34,29°4.02 . ---------------------x-------

SIGNATU RE: -~ DA TE :--:~:'I1:1:t:~~;:±::: .SIGNATUR~f~

·------------ -- ---------- -- ----

DA TE -~-~-~-\-~~~---

NOTE: The ending balance as per Central Bank of Kenya Ledger Account and the off-shore

Specia l Account as at 30th June,2014 have been reconciled and a copy of the supporting Reconciliation Statement is 2 .. - -i...~~

, l PROJECT NAME AND NUMBER

KENYA INFRASTRUCTURE FINANCE/PPP PROJECT STATEMENT OF SPECIAL (DESIGNATED) ACCOUNT RECONCILIATION

FOR THE YEAR ENDED 3orn JUNE, 2014 PART B: ACCOUNT RECONCILIATION ST A TEMENT

Credit No.5157KE-KENY A INFRASTRUCTURE FINANCE/PPP PROJECT Bank Account No.1136321365 Held with KENYA COMMERCIAL BANK

1.

2.

3.

4.

5.

6.

7.

8.

9.

NOTES

Amount advanced by World Bank Less Total amount recovered by World Bank

Outstanding Amount advanced to Special Account Balance

Represented by:

Ending Special Account Balance at 30 June, 20 14

Amount claimed but not credited at 30 June, 2014

Amount withdrawn and not claimed

Service charges (if not included in 5 & 6 above) Less Interest earning (if included in Special Account)

Total advance to Special Account year ended Jtme 30, 14,

US$

2,000,000.00

0.00

2,000,000.00 ¥\

34,294.02

0.00

1,965,705.98

2,000,000.00

f\ Discrepancy between total appearing on lines 3 and 9

Notes: 1. Explain any discrepancy between totals appearing on lines 3 and 9 above (e.g.

amount due to be refunded to cover ineligible expenditures paid from the Special/Designated Account)

2. Indicate if amount appearing on Line 6 are eligible for financing by the World Bank and provide reasons for not claiming the expenditures.

Amount appearing on line 6 are eligible for financing by the World Bank and it is the responsibility of the implementing agents to document and claim for replenishment.

/~J~ AUTHORIZED REPRESENTATIVE <")_~f I \ !.' d-£:)) EXTERNAL RESOURCES DEPARTMENT - TREASURY DATE:· ............ :..... . \.{--

CENTRAL BANK OF J<ENYA - RECONC/l/A TION

STATEMENT AS AT : 30/06/2014

G.L A/C NO: 1000172746

OFF-S HORE A/C NO: . 1136321365 l<CB-PPF INFR. FINANCE & PU B. PRIVAT

DETAILS CURRENCY AMOUNTS . REMARKS ACTION TAKEN

l.BALANCE AS PER OFFSHORE STATEMENT: USO . 575,482.02 /

2.ADD DEBITS NOT IN NRB

3.LESS CREDITS NOT IN NRB

16/06/2014

27/06/2017

4.ADD DEBITS NOT IN OFFSHORE

S.LESS CREDITS NOT IN OFFSHORE

30/06/2014

6.BALAN CE AS PER CBK LEDGER

(118,395.88) INWARD SWIFT

(172,79f12) INWARD SWIFT

(250,000.00) E.P. 01/07/2014

-34,294.02 / 34,294.02

/\

Prepared By: MAJAU Checked by: ~ Mlartt/rt--App roved By: ___JUJ!!.uu.:.._v ____ _

Date: 11/07 /2014 Date: \ Jt-1 07/~Q llf 11/ tUo J l/-~ ,

Date:

I ~

I l ~ '