FINANCIAL STATEMENTS FOR.THE YEAR ENDED 30 SEPTEMBER 2014 Public Disclosure Authorized Public Disclosure Authorized

Transcription

1 KHAMMOUANE DEVELOPMENT PROJECT (KDP) FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION UNDER DEVELOPMENT PROJECT NO. P (ORIGINAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA H404 - LA AND PROJECT NO (ADDITIONAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA H LA FINANCIAL STATEMENTS FOR.THE YEAR ENDED 30 SEPTEMBER 2014 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

2 KHAMMOUANE DEVELOPMENT PROJECT (KDP) FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION UNDER DEVELOPMENT PROJECT NO. P (ORIGINAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA H404 - LA AND PROJECT NO (ADDITIONAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA LA FINANCIAL STATEMENTS

3 KHAMMOUANE DEVELOPMENT PROJECT (KDP) FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION UNDER DEVELOPMENT PROJECT NO. P (ORIGINAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA H404 - LA AND PROJECT NO (ADDITIONAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA H766 - LA FINANCIAL STATEMENTS CONTENTS Page(s) Statement by the Project management 1-3 Independent auditor's report on the financial statements 4-5 Statement of cash receipts and disbursements 6 Statement of fund balance 7 Statement of designated bank account reconciliation 8 Notes to the financial statements 9-24

4 KHAMMOUANE DEVELOPMENT PROJECT (KDP) STATEMENT BY THE PROJECT MANAGEMENT Khammouane Development Project (KDP/the Project) is highly complementary to Nam Theun 2 (NT2) related activities, which are underwritten by a major commitment on the part of the Government of Lao People's Democratic Republic (PDR) and the International Development Association (IDA). With its strong emphasis on capacity building and complementary investments, the proposed Project would ensure that NT2 upstream and downstream compensatory activities are followed up by measures that enhance institutional sustainability and establish a provincial level public sector framework that is able to deliver the quality goods and services in the long term. The Project moreover, will provide opportunitiesbeyond those already envisaged- to profit from the downstream irrigation potentially generated by the NT2 facility. Considerable experience of building capacity in variety of areas across the country has brought a more systematic and cross-cutting approach to building capacity at the provincial level. These areas include bottom-up planning systems, linking planning and budgeting processes, strengthening public financial management, improving the investment climate and strengthening the monitoring and evaluation systems. The Project will make substantial contribution to: (i) sustaining the growth, (ii) improving social outcome, (iii) strategic approach to capacity development and partnership, and (iv) supporting NT2 implementation. The Project is financed by an International Development Association (the Association) Grant of Special Drawing Rights (SDR) 5,600,000 (USD 9,000,000 equivalent) signed on 25 July 2008 under financing agreement for grant no. IDA HA404-LA (the financing agreement). It was agreed that Khammouane Province would contribute in cash equivalent up to USD 504,000 towards the District Development Fund (DDF) and Provincial Development Fund (PDF) funding, corresponding to approximate 10% of the total expected value of DDF / PDF -financed investments. Khammouane Province has received an Additional Financing (AF)under grant number H756-LA amounting to USD8.5 million. The additional grant would mainly finance the costs associated with scaling up the original project to enhance impact. The AF would provide additional allocation for: (a) the District Development Fund (DDF) under Component 1 to develop rural infrastructure for poorer districts and facilitate post-disaster reconstruction for rural infrastructure damaged by the recent Typhoon NokTen; (b) rehabilitation of additional irrigation schemes along the Xe Bang Fai (XBF) River under Component 2; and (c) a new Component 3 to provide rural livelihood assistance for poorest villages. This new component (which would scale-up activities originally implemented under Component 1) is dedicated to rural livelihoods and agricultural development activities and expands coverage of the poorest villages. To facilitate implementation and expand capacity building, responding to the request of the province, responsibility for Component 3 would be assigned to the Provincial Agricultural and Forestry Office (PAFO) and the District Agricultural and Forestry Offices (DAFOs). The KDP AF has become effective on 4 April 2012, and the duration of the implementation period is until 31 March The project closure date will be on 31 March 2016 The Project consists of three components as below: Component 1: Local Development and Provincial Capacity Building, which would mainly support the public investment through the District Development Fund (DDF) and the Provincial Development Fund (PDF) facilities, and provides technical training for the various departments of the provinces; and Component 2: Support for irrigation development along Nam Theun 2 (NT2) downstream channel and lower Xe Bang Fai (XFB), which would mainly support the development of irrigation facilities utilizing the discharge water from the NT2 hydropower station. 1

5 KHAMMOUANE DEVELOPMENT PROJECT (KDP) STATEMENT BY THE PROJECT MANAGEMENT (Continued) Component 3 The new component, Component 3 is established to strengthen capacity of PAFO and its district offices, DAFOs to provide effective livelihood support and extension services for local communities and farmers. The Component 3 is also tailored to assist PAFO/DAFOs to take over livelihood achievements initiated. by Namtheun 2 Downstream Program (NT2 DSP) in 5 districts' along Xe Bang Fai river, and to expand Xe Bang Fai extension center and Agriculture Livelihood Grant (ALG) activities initiated under the original KDP. The Project components performances for the year ended 30 September 2014 are as follow: Component 1: i) Baseline surveys were conducted in relation to rural infrastructure needs carried out by the districts as a basis to implement the DDF; ii) Around 50 percent completion of civil works in the three initial districts financed by DDF and the advanced preparation work underway for the remaining six districts which were all being managed by the Districts; iii) Improvements in project administration, particularly financial management and procurement; iv) Progress in developing and moving forward the Provincial Development Fund (PDF) and the capacity building activities for DPI and DOF including completion of a comprehensive capacity needs assessment at provincial and district levels. v) The ALG livelihood support activities was transferred and managed by PAFO to implement its activities in an efficient and accountable manner and scaling up and expansion of the ALG activities to other poorest villages. Component 2: The Component 2 contributed to: i) rehabilitation of existing irrigation facilities in ThaThot village, Gnommalat district; ii) support for pilot downstream irrigation development in the ThaThot area; iii) strategic investment plan for irrigation development along the NT2 downstream channel; iv) rehabilitation and institutional strengthening of small scale pumped irrigation schemes along lower Xebangfai, and v) component management. In the reporting period the Component 2 has made achievements in implementing the planned activities under its five sub-components mentioned above. The Rehabilitation of ThaThot Irrigation Scheme is on track, Feasibility Study and Preparation of Strategic Investment Plan for Downstream Irrigation Development is underway, Rehabilitation and Institutional Strengthening of Small Scale Pump Irrigation Schemes along Lower Xebangfai is going well, and KDP Safeguard policies and guidelines has effectively been applied to the implementation of all Civil Works. The Component 2 continued to strengthen the capacity and effectiveness of DAFO and PAFO staff through a capacity building program to ensure effective implementation of Component 2. Component 3 The initial assessment of the progress of the newly established C3 under the KDP AF, includes its accomplishment in component management unit that started carrying out a range of preparatory activities including consultant mobilization and baseline survey. Ngommalath, Mahaxay, Xe Bang Fai, Nongbok and also Xaybouly in Savannakhet 2

6 KHAMMOUANE DEVELOPMENT PROJECT (KDP) STATEMENT BY THE PROJECT MANAGEMENT (Continued) There are 33 proposed additional villages to be supported by the ALG under the KDP AF needs to be revised and discussed with other organizations providing similar assistance) to ensure that the poor villages and households are better targeted and villages are not overlapping with those to be covered by the other projects. The ALG implementation would be intensified in the first 27 villages supported through the original KDP since there are still many more poor households which have not received livelihood support. The Project maintains its records and prepares its financial statements in accordance with the cash receipts and disbursements basis of accounting for the Project. Any direct payments made by financiers for the Project expenditures are recorded by the Project at the time they take place. The financial statements are the responsibility of the Project management. The followings are the components of financial statements: * Statement of cash receipts and disbursements * Statement of fund balance o Statement of designated bank account reconciliation " Notes to the financial statements As the responsible officials, we do hereby state that the financial statements, to the best of our knowledge and belief: - have been prepared in accordance with IDA's financing requirements for grant No. IDA H404-LA and IDA H756 - LA; and - are prepared, in all material respects, in accordance with the basis of accounting set out in Note 2. We also hereby state that the statement of disbursements only includes costs which are eligible for financing under IDA Financing Agreement No. IDA- H404 - LA and IDA- H756 - LA and adequate supporting documentation has been maintained for these costs. On behalf of the Project: Mr. Phousana Xaykosy Mr. Khamhou Phanthavong Mr.Dethsackda Manikham Component 1 Manager, KDP Component 2 Manager, KDP Component 3 Manager, KDP Date: 27 March 2015 Date: 27 March 2015 Date: 27 March 2015 Mr.SoukVathllitthichack Project Director, KDP Date: 27 March

7 pwc Indepeiideiit auditor's report on the financial statements To ie Management of Khanunouane Development Project and the International Development Association ('tle Association'/ 'the World Bank') We have audited the accompanying financial statements of the Khammouane Development Project ('the Project') for grant agreement number IDA-H404-LA and IDA-H756 - LA (financing agreements), which comprise the statement of cash receipts and disbursements, statement of fund balance, and statement of designated bank account reconciliation for the year ended and as at 30 September 2014, and a summary of significant accounting policies and other explanatory information. The financial statements have been prepared by management of the Project in accordance with the accounting policies described in Note 2 to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements in accordance with the accounting policies described in Note 2 to the financial statements 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. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements, The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In maldng those risk assessments, the auditor considers internal control relevant to the entity's preparation 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. PrircetvaterhouseCoopers (Loo) Co., Ltd., 40 Floor, ANZ Vientiane Conunercial Building, 33 Lane Xang Avenue, PO Box 7oo3, Telephone: , Facsimile: , lilpvutjcoit 4

8 pwc Opinion In our opinion, the financial statements of the Project for grant number IDA-H4o4-LA and IDA-H756 - LA as at and for the year ended 30 September 2014 are prepared, in all material respects, in accordance with the accounting policies described in Note 2 to the financial statements. Basis of accounting Without modifring our opinion, we draw attention to Note 2 to the financial statements, which describe the basis of accounting. The financial statements are prepared to assist the Project to comply with the financial reporting provisions of the agreements above. As a result, the financial statements may not be suitable for another purpose. Other matters This report is intended for the information of Project, the Association/the World Bank, and Government of Lao, P.D.R. as the beneficiary represented by Ministry of Finance and for no other purpose. However, upon release by the Association/the World Bank, this report is a matter of public record and its distribution is not limited. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come, except where expressly agreed by our prior consent in writing. For PricewaterhouseCoopers (Lao) Co., Ltd. By Paiboon Tunkoon Partner Vientiane, Lao PDR Date: 27 March PricewaterhiouseCoopers (Lao) Co., Ltd., 4 zh Floor, ANZ Vientiane Coin mercial Building, 33 Lane Xang Avenue, PO Box 7oo3, Telephone : , Facsimile: , MVIow.pwc.cOn /a 5

9 H404 - LA AND PROJECT NO (ADDITIONAL FINANCING) - FINANCING AGREEMENT STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS Receipts From 1 October From 1 October to 30 to 30 September 2014 September Note USD USD USD Designated account replenishment 4 2,226,082 10,859,635 13,085,717 Counterpart fund contribution 4 64, , ,894 Foreign currency exchange, gain, (net) ,166 Total receipts 2,291,277 11,177,500 13,468,777 Disbursements Component /5.2 1,636,589 3,577,058 5,213,647 Component / ,631 4,605,212 4,967,843 Component / , ,726 1,869,469 Advance movements - C ,786 1,070 12,856 Advance movements - C ,087-5,087 Advance movements - C3 5.3 (5,556) 16,397 10,841 Total disbursements 2,918,280 9,161,463 12,079,743 (Deficit)surplus of receipts over disbursements (627,003) 2,016,037 1,389,034 Mr. Phousana Xaykosy Mr. Khamhou Phanthavong Mr.Dethsackda Manikham Component 1 Manager, KDP Component 2 Manager, KDP Component 3 Manager, KDP Date: 27 March 2015 Date: 27 March 2015 Date: 27 March 2015 uk L hack Date: 27Mar 0 15 The accompanying notes on pages 9 to 24 form an integral part of the financial statements. Auditors' report - pages 4 and 5. 6

10 PROJECT NO, P (ORIGINAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA H404 - LA AND PROJECT NO (ADDITIONAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA H766 - LA STATEMENT OF FUND BALANCE AS AT 30 SEPTEMBER 2014 Fund balance Note USD USD Opening fund balance 2,016,037 1,594,081 (Deficit)/surplus of receipts over disbursements (627,003) 421,956 Closing fund balance 3 1,389,034 2,016,037 Represented by: Cash on hand and at banks 3 1,389,034 2,016,037 1,389,034 2,016,037 Mr. Phousana Xaykosy Mr. Khamhou Phanthavong Mr.Dethsackda Manikham Component I Manager, KDP Component 2 Manager, KDP Component 3 Manager, KDP Date: 27 March 2015 Date: 27 March 2015 Date: 27 March 2015 Mr. ouk aqlft t<achack Projecftirector, DP Date: 27 March 2015 The accompanying notes on pages 9 to 24 form an integral part of the financial statements. Auditors' report - pages 4 and 5 7

11 H404 - LA AND PROJECT NO (ADDITIONAL FINANCING) - FINANCING AGREEMENT STATEMENT OF DESIGNATED BANK ACCOUNT RECONCILIATION AS AT 30 SEPTEMBER Note USD USD Opening balance 3 968,293 1,329,999 Fund transfers from IDA 4 2,226,082 3,661,787 Replenishments to sub-account (Cl) 6.1 (1,739,609) (1,125,739) Replenishments to sub-account (C2) 6,ii (505,030) (1,243,319) Replenishments to sub-account (C3) 6.iii (543,698) (1,147,387) Payments from designated bank account (Cl) 7 (143,082) (125,633) Payments from designated bank account (C2) 7 (30,391) (381,415) Payments from designated bank account (C3) 7 (125,111) Closing balance 3 107, ,293 it>' Mr. Phousana Xaykosy Mr. Khamhou Phanthavong Mr.Dethsackda Manikham Component 1 Manager, KDP Component 2 Manager, KDP Component 3 Manager, KDP Date: 27 March 2015 Date: 27 March 2015 Date: 27 March 2015 M 0otds i t hack KDP Projc Pirea 0 Date: 27 arch 15 The accompanying notes on pages 9 to 24 form an integral part of the financial statements. Auditors' report - pages 4 and 5. 8

12 1. General information The Lao People's Democratic Republic (the Recipient) carries out the Khammouane Development Project (the Project) through Khammouane Province. The Project implements the Project and manages the funds provided by International Development Association (the Association) and by Lao People's Democratic Republic, in accordance with the grant agreement number H404 LA (the financing agreement) signed on 25 July The Association agrees to provide a grant on the terms and conditions set forth in the financing agreement in an amount equivalent tospecial Drawing Rights (SDR) 5,600,000 or United States Dollar (USD) 9,000,000 equivalent. It was agreed that Khammouane Province would contribute in cash equivalent up to USD 504,000, (referred to as counterpart funds) towards the District Development Fund (DDF) and Provincial Development Fund (PDF) funding, corresponding to approximate 10% of the total expected value of DDF / PDF -financed investments. Khammouane Province has received an additional financing of USD8.5 million. The additional grant would mainly finance the costs associated with scaling up the original project to enhance impact. The additional financing (AF) would provide additional allocation for: (a) the District Development Fund (DDF) under Component 1 to develop rural infrastructure for poorer districts and facilitate post-disaster reconstruction for rural infrastructure damaged by the recent Typhoon NokTen; (b) rehabilitation of additional irrigation schemes along the Xe Bang Fai (XBF) River under Component 2; and (c) a new Component 3 to provide rural livelihood assistance for poorest villages. This new component (which would scale-up activities originally implemented under Component 1) is dedicated to rural livelihoods and agricultural development activities and expands coverage of the poorest villages. To facilitate implementation and expand capacity building, responding to the request of the province, responsibility for Component 3 would be assigned to the Provincial Agricultural and Forestry Office (PAFO) and the District Agricultural and Forestry Offices (DAFOs). The KDP AF has become effective on 4 April 2012, and the duration of the implementation period is until 31 March The Program consists of three distinct and mutually reinforcing components as below: Component 1: Local Development and Provincial Capacity Building, which would mainly support the public investment through the District Development Fund (DDF) and the Provincial Development Fund (PDF) facilities, and provides technical training for the various departments of the provinces; and Component 2: Support for irrigation development along Nam Theun 2 (NT2) downstream channel and lower Xe Bang Fai ('XFB'), which would mainly support the development of irrigation facilities utilizing the discharge water from the NT2 hydropower station. Component 3: is established to strengthen capacity of PAFO and its district offices, DAFOs to provide effective livelihood support and extension services for local communities and farmers. The Component 3 is also tailored to assist PAFO/DAFOs to take over livelihood achievements initiated by Namtheun 2 Downstream Program (NT2 DSP) in 5 districts 2 along Xe Bang Fai river, and to expand Xe Bang Fai extension center and ALG activities initiated under the original KDP. Ngommalath, Mahaxay, Xe Bang Fai, Nongbok 9

13 1. General information Primary Program objectives: strengthen the planning process and public financial management associated with decentralized delivery of public services and infrastructure, including irrigation development, in Khammouane Province, i) Objective 1: strengthening infrastructure and service delivery with improved local transparency and accountability (Component 1); 1i) Objective 2: supporting the development of a strategic vision for the technically, economically and socially sustainable development of irrigation along the NT2 Downstream Channel and in areas situated along the lower Xe Bang Fai River (Component 2). iii) Objective 3: provide effective livelihood support and extension services for local communities and farmers, The Project's office is located in Thakek District, Khammovane Province, Lao PDR. 2. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below, a. Basis of preparation The statements of cash receipts and disbursements, fund balance, and designated bank account reconciliation are expressed in USD, have been prepared under the historical cost convention and the cash receipts and disbursements basis of accounting. Under the cash receipts and disbursements basis of accounting, transactions are recorded when cash is paid or received by the Project. Advances are included in the Project's disbursements in accordance with Note 2(c). The Project maintains its accounting records in USD, as this is the currency in which the majority of its transactions are denominated and settled. The Project maintains its financial management systems and prepares financial statements in accordance with consistently applied accounting standards acceptable to the Association. b. Cash receipts Receipts consist of the authorised allocation of the Association, direct payments made by Association, eligible expenditure refunded to date and funds contributed by the Lao People's Democratic Republic (the counter-party). These funds are accounted for when received or, in the case of direct payments made by Association, when notified as having been paid from the Program's funds from Association. c. Cash disbursements Disbursements represent all cash costs of the Project (whether funded by Association or Counter-party) paid in line with the Project's objectives and approved budgets. Disbursement costs include advances which represent amounts paid in advance to the Project staff for the purpose of travel to the province, district or overseas or meetings, workshops or conferences and to the districts for the implementation of the District Development Fund (DDF) activities. Advances are included in the project's disbursements and presented as 'advanced movement' in the statement of cash receipts and disbursements. 10

14 2. Significant accounting policies (Continued) c. Cash disbursements(continued) The expenses related to advanced amount are only classified to the related expenditure category line on the date of submission of supporting evidences of the actual expenditures incurred. Per Project policy, advances should be cleared within 10 working days after the completion of activities. An excess amount returned to the Project will be debited to cash account upon receipts by the Project. An advance control book is maintained for monitoring, follow-up, and control purposes of the Project. d. Fixed Assets The cost of fixed assets is charged to related expenditure categories and reported as disbursements in the period of purchase. A fixed assets register is maintained by the Program for control purposes. e. Foreign exchange currency translation The transactions arising in currency exchange other than United States Dollar (USD) are based on the currency exchange rate on the date of actual release from the bank at the Component Account inbanquepoure Le Commerce ExterieurLao Public (BCEL). Monetary balances in currencies other than USD as at reporting date are translated in to USD using the bank prevailing rate as at the period end. Foreign exchange currency differences are included in the statement of receipts and disbursements. This policy became effective on I October f. Special account replenishment The special account replenishment represents cash received by the Project under the Financing Agreement and Counterpart Fund, which are maintained in a special deposit account and used exclusively to cover the Association's share of eligible expenses. g. Direct disbursements Direct disbursements relate to direct payments made by the Association to suppliers, contractors and consultants. These payments are accounted for when the payments are notified by IDA to the Project. h. Counterpart fund Counterpart fund is recognised as receipt upon notification of payment by the Government of Lao PDR through the Department of Planning Investment under Khammouane Province. Disbursements from counterpart fund are recognised in accordance with note 2(c). 11

15 3. Cash on hand and at banks Cash on hand As at 30 Original Currency September 2014 USD Component 1 USD 1,436 1,436 Component 2 USD 1,257 1,257 Component 3 USD 1,100 1,100 3,793 Cash at bank Component 1 USD 393, ,478 Component 2 USD 360, ,749 Component 3 USD 134, ,345 Designated Account USD 107, ,454 Government of Lao P.D,R Account LAK 3,128,119, ,215 1,385,241 1,389,034 Cash on hand As at 30 Original Currency September 2013 USD Component 1 USD 1,063 1,063 Component 2 USD 1,373 1,373 Component 3 USD ,255 Cash at bank Component 1 USD 406, ,196 Component 2 USD 192, ,893 Component 3 USD 365, ,389 Designated Account USD 968, ,293 Government of Lao P.D.R Account LAK 627,047,892 80,011 2,012,782 2,016,037 All cash on hand and cash at banks in Lao Kip are translated into USD using the average exchange rate when replenishment from the designated bank account (Bank of Lao PDR) is made. 12

16 3. Cash on hand and at banks (Continued) Cash at banks represent cash deposited in the current accounts at local banks, which carry no interest, under the accountability of each component. The details of cash at banks are as follows: Component I Account No. : Account Name : Khammouane Development Project Depository Bank : Banque pour le Commerce Exterieur Lao ('8CEL'), Khammouane Province Branch Address : Ban Phonsaad, Thakhek District Currency : USD Component 2 Account No. : Account Name : Khammouane Development Project Depository Bank : Banque pour le Commerce Exterieur Lao, Khammouane Province Branch Address : Ban Phonsaad, Thakhek District Currency : USD Component 3 Account No. : Account Name : Khammouane Development Project Depository Bank : Banque pour le Commerce Exterieur Lao, Khammouane Province Branch Address : Ban Phonsaad, Thakhek District Currency : USD Designated bank account Account No. : Account Name : Kharnmouane Development Project Depository Bank : Bank of Lao ('BoL') PDR tinder the name of: Khammouane Development Project 'KDP', Authorised by Ministry of Finance Address : Yonet Road P.O. Box 2925 Vientiane, Lao PDR Related credit : Project No. P087716, IDA H404 - LA, AF LA Currency : USD Government of Lao P,D,R. account AccountNo. : Account Name : Khammouane Development Project Depository Bank : Banque pour le Commerce Exterieur Lao, Khammouane Province Branch Address : Ban Phonsaad, Thakhek District Currency : LAK 13

17 4. Fund receipts From 1 October 2008 to 30 September USD USD Designated account replenishment 2,226,082 10,859,635 Counterpart fund contribution 64, ,458 2,290,518 11,177,093 Withdrawal application (W/A) for the Program will be submitted to International Development Association (IDA) by the Project Steering Committee (PSC) through the Ministry of Finance. This will incorporate transactions and documentation submitted by Downstream Irrigation Management Unit (DIMU) through the province. Fund at designated bank account will be used for implementing activities. It will be managed by the Ministry of Finance, day by day management and submission of withdrawal application will be done by the Project Steering Committee including expenditures incurred by Component 1, 2 and 3. Application Date of 2014 number application Particular USD H404 22/11/2013 The Replenishment No ,151 38,151 AF756 20/11/2013 The 23r, Replenishment No ,059 AF756 21/04/2014 The 24 h Replenishment No ,595 AF756 03/07/2014 The 2 5th Replenishment No ,000 AF756 11/08/2014 The 26 th Replenishment No ,277 2,187,931 2,226,082 14

18 4. Fund receipts (Continued) Application Date of 2013 number application Particular USD H404 09/10/2012 The 191" Replenishment No ,797 H404 01/03/2013 The 2 0 Replenishment No , /06/2013 The 21st Replenishment No , /2013 The 22n0 Replenishment No ,109 H404 23/08/2013 The 23' Replenishment No ,000 Receipts from IDA-H404 - LA 2,415,572 AF756 25/02/2013 The 2 0 ' Replenishment No ,286 AF756 12/06/2013 The 2 1 " Replenishment No ,954 AF756 31/07/2013 The 22 nd Replenishment No ,976 Receipts from IDA-H756 - LA 1,246,216 Total 3,661,788 15

19 PROJECT NO. P (ORIGINAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA GRANT NO. IDA H756 - LA 5. Disbursements 5. 1 Disbursements by Project's component activities category are as follows: From 1 October 2008 Component 1: Costs on local development and livelihoods H404 H756 Total to 30 September support USD USD USD USD Support for District Development Fund (DDF) 949, ,356 1,520,730 Support for Provincial capacity Building 68,799-68, ,277 Support for component 1 - Management() (80,265) 710, ,220 1,082, , ,485 1,648,375 3,578,128 Component 2: Costs on Support for irrigation development for Nam Theun 2 (NT2) downstream and lower Xe Bang Fai (XBF) B(i) Rehabilitation of ThaThot Irrigation Scheme - 79,114 79, ,195 B(ii) Development of Downstream Irrigation Scheme in ThaThot ,580 B(iii) Rehabilitation of small pump scheme in lower XBF ,528 B(iv) Strategic investment plan for Downstream Irrigation Development - 126, ,380 2,501,454 B(v)Support for component 2- Management support (- 162, , , , ,718 4,605,212 Component 3: Cost of Livelihoods support, Agricultural Livelihood Grant, Entrepreneur Support Grant, Capacity Building for PAFO Agricultural Livelihood Grant - 156, , ,322 C3 (i)-xbf Extension Centre - 212, ,052 91,352 C3 (ii)- Technical Training PAFO and DAFO - 64,700 64,700 31,478 C3 (ii)- Implementation support livelihood activities - 121, , ,469 Support for component 3 Management() - 347, , , , , , ,890 1,980,390 2,918,280 9,161,463 T The total amount of USD2,918,280presented include the advance movements of Component 1, 2 and 3 amountingto USD 11,317 as disclosed in Note

20 PROJECT NO. P (ORIGINAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA GRANT NO. IDA H756 - LA 5. Disbursements (Continued) 5.2 Disbursements by expenditures cost category as follows: Component 1 Component 2 Component 3 Total From 1 October 2008 to 30 September Category USD USD USD USD USD Sub-project grants 1 (BBG) 1,218,598 5, ,213 1,374,898 1,239,753 Sub-project grants (ALG) ,793 Sub-project grants (PDF) 103, , ,847 Civil work - 71, , ,157 2,312,190 Goods & vehicle 84,174 30,370 24, ,991 1,906,091 Consultant services 204, , , ,788 1,601,429 Training and study tour (40,669) 20, , , ,688 Incremental operating costs 78,611 61,245 77, , ,672 Total 1,648, , ,187 2,918,280 9,161,463 The total amounts presented include the advance movements of Component I and 3 as disclosed in Note

21 GRANT NO. IDA H766 - LA 5, Disbursements (Continued) 5,3 Advance movements As at 30 As at 30 September September Movements Component 1 USD USD USD Advances-other 12,856 1,070 11,786 Component 2 12,856 1,070 11,786 Advances-other --- 5,087-5,087 Component 3 5,087 _ 5,087 Advances-other 10,841 16,397 5,556) 10,841 16,397 (5,656) 28,784 17,467 11,317 As at 30 As at 30 September September Movements Component I USD USD USD Advances-other 1, Component 3 1, Advances-other 16,397 7,105 9,291 16,397 7,105 9,291 17,467 7,732 9,734 18

22 6. Replenishments i, Replenishments to sub-account (Component 1) Replenishment Date of 2014 number replenishment Description USD 30 25/10/2013 First DDF investment fund 544, /2014 CA reimbursement from DA No /07/2014 Second DDF investment fund 533, /08/2014 CA reimbursement from DA No ,926 1,739,609 Replenishment Date of 2013 number replenishment Description USD 14 26/10/2012 Replenishment No.14 30,068-06/12/2012 CA account increasing 400, /12/2012 Replenishment No.15 14, /2013 Replenishment No , /08/2013 Replenishment No ,943 TOTAL 1,125,739 19

23 6. Replenishments (Continued) ii. Replenishments to sub-account (Component 2) Replenishment Date of Description 2014 number replenishment USD 48 10/01/2014 CA reimbursement from DA No , /06/2014 CA reimbursement from DA No , ,030 Replenishment Date of Description 2013 number replenishment USD 44 24/10/2012 Replenishment No ,253-06/12/2012 CA account increasing 400, /12/2012 Replenishment No , /03/2013 Replenishment No , /06/2013 Replenishment No ,246 TOTAL 1,243,319 20

24 6. Replenishments (Continued) iii. Replenishments to sub-account (Component 3) Replenishment number Date of replenishment Description 2014 USD 09 15/01/2014 Replenishment No , /06/2014 Replenishment No , ,698 Replenishment number Date of replenishment Description 2013 USD 04 25/10/2012 Replenishment No , /2012 Replenishment No , /12/2012 Replenishment No , /05/2013 Replenishment No , /09/2013 Replenishment No ,890 TOTAL 1,147,387 The replenishments represent cash transferred from the BoL to BCEL bank accounts of Component 1, 2, and 3. The account in BoL is maintained in a special deposit account and used exclusively to cover the IDA's share of eligible expenses for Component 1, 2, and 3. 21

25 PROJECT NO. P (ORIGINAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA 7. Payments from designated bank account Account Component Component Component 2014 code Description USD Vehicle & motorbike - 11,912-11, Bank charge Office equipment , ALG investment , , DDF 143, , ,082 30, , ,584 Account Component Component Component 2013 code Description USD Rehabilitation of Irrigation Systems - 325, , Vehicle & motorbike 36, , Bank charge Provide new pontoons for 12 PIS with "Very Poor" Ranking - 55,800-55, ADPC 31, , DDF 57, , , , ,047 The grant was disbursed according to the IDA's system of disbursement- Disbursements or transfers to Project accounts are made from the national designated account which is replenished by the IDA against Statement of Expenditures (SOEs). 22

26 8. Commitment The total committed expenditures are as follows: USD USD Consultant servicesk 362, ,630 Construction services" 172, ,527 Goods 15, ,008 Sub-grants - 868, ,780 1,406,568 * Consultant service mainly commitment salary base on contracts remaining of theproject * Construction service include construction work of Nongbok district and Xebangfai district. 23

27 PROJECT NO. P (ORIGINAL FINANCING) - FINANCING AGREEMENT GRANT NO. IDA GRANT NO- IDA H756 - LA 8. Commitment (Continued) The details of commitments for consultant services are as below: Commitment by each Component 1 Component 2 Component 3 Total component USD USD USD USD USD USD USD USD Construction services 61,256 35,214 19, ,063 91,782 18, , ,630 Local consultants 124,679 10,678 28,893 24,618 42, , , ,527 International consultants 106,907-30,137-30, ,181 - Goods 15, ,008 15, ,008 Sub-grants to districts - 868, ,403 Total 307, ,295 78, , , , ,780 1,406,568 Significant amounts of the above total commitment are expected to be settled within April

28