TRANSMISSION COMPANY OF NIGERIA NIGERIA ELECTRICITY AND GAS IMPROVEMENT PROJECT ANNUAL REPORTS AND ACCOUNTS FOR THE PERIOD ENDED

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized TRANSMISSION COMPANY OF NIGERIA ANNUAL REPORTS AND ACCOUNTS FOR THE PERIOD ENDED 3 1T DECEMBER, Public Disclosure Authorized

2 CONTENTS Page Content 1 Project Management Team 2 Report of Auditors 3-4 Statement of Accounting Policies 5 Balance Sheet 6 Receipt and Payment Account 7 Cash flow Statements 8 Notes to the Financial Statements 9-11 Special Account Reconciliation Statement Schedule of IDA Receipts 15 Fixed Asset Schedule 16-17

3 PROJECT MANAGEMENT TEAM ENGR. JOSEPH A. CIROMA Head PMU/General Manager ENGR. SOLOMON UYOKO Coordinator (Transmission) ENGR. ADEBAYO DOKUNMU Coordinator (Distribution) ENGR. OLORUNLEKE PETER Procurement Officer (NEGIP) ENGR. AKINKUNMI ADEGUWA Coordinator (Civil/WRDSEM) MRS. COMFORT SAKO Coordinator (Environmental & Safety) MRS VICTORIA MOU Head Human Resources MR. ANDREW E. OFOMAJA Project Accountant BANKERS Central Bank of Nigeria First Bank Plc Standard Chartered Bank PROJECT AUDITORS HARUNA YAHAYA & CO. (Chartered Accountants) Ahmadu Bello House, Shiroro Road P.0 Box 2994, Minna, Niger State Tel: ,

10QUIDxU VIDtLivil (Chartered Accountants & Tax Practitioners)- www.harunayahaya.org e-mail: infohq@harunayahaya.

4 10QUIDxU VIDtLivil (Chartered Accountants & Tax Practitioners)- BU CORPORATE HEAD OFFICE: ABUJA OFFICE: LAGOS OFFICE: KADUNA OFFICE: Ahmadu Bello House, No. 20, Victoria Ironsi Crescent, No. 10, Tafowa Bolewa Crescent 4th Floor, Ha za Zayyad House, Shiroro Road, Gwarinpa 1 Estate, Abuja. Off Adediron Ogunsanya Street, No. 4, Muhammadu Buhari Way, R0. Box 2994, Minna. Tel: R 0 Box 3043, Surulere, Lagos P 0. Box 8607, Kaduna. Tel: Tel: Tel: The General Manager, May 16, 2017 Project Management Unit, Transmission Company of Nigeria, Nigeria Electricity and Gas Improvement Project, No. 7, Hombori Street, Off Ademola Adetokunbo Crescent, Wuse 2, Abuja. REPORT OF THE AUDITORS ON THE FINANCIAL STATEMENTS OF THE TRANSMISSION COMPANY OF NIGERIA, (NIGERIA ELECTRICITY AND GAS IMPROVEMEMT PROJECT) FOR THE YEAR ENDED 31T DECEMBER, 2016 (CREDIT NO.4620-UNI) Report on the Project Financial Statements We have audited the accompanying project financial statements of the World-Bank Assisted Transmission Company of Nigeria (Nigeria Electricity and Gas Improvement Project), as at December 31, 2016 (for the period 1 st January 2016 to 3 1 st December, 2016) as set out on pages 6 to 13 and prepared on the basis of the accounting policies on page 5. The project is financed by the IDA, credit number 4620-UNI. Respective Responsibilities of the Project Management Unit and Auditors: The Worlk-Bank Assisted Transmission Company of Nigeria (Nigeria Electricity and Gas Improvement Project), Project Implementation Unit and Project Management Unit coordinate the activities of the project and are as such responsible for the preparation of the financial statements. It is our responsibility as auditors to express an independent opinion, based on our audit, on the financial statements and to report our opinion to you. Basis of Opinion We conducted our audit in accordance with the Nigerian and International Standards on Auditing and World Bank guidelines. These standards and World Bank guidelines require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the estimates and judgments made by the project officers in the preparation of the financial statements, and whether the accounting policies are appropriate to the project circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free of material misstatements, whether caused by fraud, other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of the financial statements. Member of the Public Practice Section of ICAN

Opinion In our opinion, the project financial statements give a true and fair view of the financial position and of the cash flow statements of the World-Bank assisted Transmission Company of Nigeria

5 Opinion In our opinion, the project financial statements give a true and fair view of the financial position and of the cash flow statements of the World-Bank assisted Transmission Company of Nigeria (Nigeria Electricity and Gas Improvement Project) for the period ended December 31, 2016, in accordance with the provisions of section 4.01 of the Development Credit Agreement (DCA) and the Statements of Accounting Standards issued by the Financial Reporting Council of Nigeria. The Statement of Expenditure (SOE) are in agreement with the books of accounts, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditure incurred and which expenditure are eligible for financing under the credit agreement. The Statement of Special Account: (SA) of the project on page 12 have been prepared on the basis of cash deposits and withdrawals for the purpose of complying with the credit agreement and did show a true and fair view of the beginning and ending balances and the account activity for the period ended 3 1 st December aruna N. Yahaya, FCA FRC/20!3/ICAN/ Minna, Nigeria For: Haruna Yahaya & Co. May 16, 2017 Chartered Accountants. 4

6 STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDED 31 ST DECEMBER, 2016 The following are the significant accounting policies adopted by World-Bank assisted Transmission Company of Nigeria (Nigeria Electricity and Gas Improvement Project) in preparing its project's financial statements. ACCOUNTING CONVENTION The accounts were prepared under the historical cost convention. BASIS OF ACCOUNTING The cash basis is adopted in the preparation of the project's financial statements. Income and expenditures relating to a specific financial year are taken into account only when the related cash are received or paid for. PRESENTATION OF THE PROJECT FINANCIAL STATEMENTS Details of general and specific funds are disclosed by way of notes in the Project Financial Statements of the Nigeria Electricity and Gas Improvement Project. DEPRECIATION No depreciation charge has been brought into the accounts as fixed assets are stated at cost in the Balance Sheet. INCOME Income from interest on current and fixed/call deposit accounts were recognized when the current account is credited while income from other sources are credited when cash is received. DEVELOPMENT EXPENDITURE Capital expenses that are directly related to the Project for which the credit was granted were capitalized to form part of development Expenditures through which the main activities of the PMU are reported. FOREIGN CURRENCIES Transactions in foreign currencies are converted into Naira at the rates of exchange ruling at the date of each transaction. Balance in foreign currencies are translated into Naira at the exchange rates ruling at the balance sheet date and gains or losses arising on translation are credited to or charge to reserve in the period which they arise. 5

7 BALANCE SHEET AS AT 3 1 ST DECEMBER, 2016 ASSETS Notes Bank Balances 1 4,633,927,776 2,387,455,136 Project Development Expenditure: Fixed Assets 2 136,465, ,317,726 Goods and Works 3 23,562,078,446 14,746,695,714 Consultancy Services 4 1,515,406, ,040,418 Capacity Building and Training 5 1,792,366,208 1,628,852,783 Operating Cost 6 1,199,918, ,214,071 TOTAL ASSETS 32,840J l,575,848 FINANCED BY: Exchange Gain Equalization 7 137,909,938 0 IDA Credit Loan Account 8 32,284,664,746 20,531,575,848 Other Project's Fund in TCN-PMU Pool Account 9 417,588,736 0 TOTAL LIABILITIES 32,840,163,420 20,531,575,848 Head PMU/General Manager Project Accountant 6

8 RECEIPTS AND PAYMENTS ACCOUNTS FOR THE YEAR ENDED 3 1 ST DECEMBER Notes RECEIPTS/INCOME N N IDA Credit Loan Account 11,753,088,898 2,959,187,753 Other Income 10 4,573,322 2,557,990 Other Project's Fund in TCN-PMU Pool Account 417,588,736 0 Exchange Equalization 137,909,938 0 TOTAL RECEIPTS PAYMENTS 12,313,160,894 2,961,745,743 Project Development Expenditure: Fixed Assets ,404,245 Goods and Works 8,815,382,732 1,997,309,632 Consultancy Services 726,366, ,976,285 Capacity Building and Training 163,513, ,293,397 Operating Cost 354,704, ,127,785 TOTAL PAYMENTS 10,062,114,932 2,867,111,344 Excess/(Deficit) of Receipts over Payments 2,251,045,962 94,634,399 7

9 CASHFLOW STATEMENT FOR THE YEAR ENDED 3 1 ST DECEMBER Operating Activities Adjustment for changes in operating Assets 0 Cashflow from Operating Activities 0 Investment Activities: Project Development Expenditure: N N Fixed Assets (2,148,000) (7,404,245) Goods and Works (8,815,382,732) (1,997,309,632) Consultancy Services (726,366,401) (213,976,285) Capacity Building and Training (163,513,425) (475,293,397) Operating Cost (354,704,374) (173,127,786) Cashflow used in Investing activities (10,062,114,932) (2,867,111,345) Financing Activities: IDA Credit Loan Account 11,753,088,898 2,959,187,753 Other Project's Fund in TCN-PMU Pool Account 417,588,736 0 Exchange Equalization 137,909,938 0 Cashflow from Financial Activities 12,308,587,572 2,959,187,753 Net cash/cash Equivalent 2,246,472,640 92,076,408 Opening cash balance 2,387,455,136 2,295,378,728 Closing cash balances as the end of the year 4,633,927,776 2,387,455,136 Represented by: (1,6,1,3) First Bank TCN-PMU Pool Account 1,763,846,720 0 Standard Chartered Bank Special Account-IDA 2,753,387,805 0 Treasury Single Account (TSA)-Drawdown Account 116,693,251 2,387,455,136 TOTAL 4,633,927,776 2,387,455,136

10 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31S' DECEMBER Bank Balances N N First Bank Plc, TCN-PMU Pool Account 1,763,846,720 0 Standard Chartered Bank Special Account-IDA 2,753,387,805 Treasury Single Account (TSA) - Drawdown Account 116,693,251 2,387,455,136 Total 4,633,927,776 2,387,455,136 2 Fixed Assets Opening balance 134,317, ,913,481 For the year 2,148,000 7,404,245 Total 136,465, ,317,726 Breakdown of Fixed Assets Motor Furniture & Office Total Vehicles Fittings Equipments N N N N 1/1/ ,582,690 21,688,471 32,046, ,317,726 Addition 0 600,000 1,548,000 2,148,000 Disposal /12/ ,582,690 22,288,471 33,594, ,465, Goods and Works Opening Balance 14,746,695,714 12,749,386,082 for the year 8,815,382,732 1,997,309,632 Total 23,562,078,446 14,746,695,714 9

11 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31f DECEMBER N N 4 Consultancy Services Opening Balance 789,040, ,064,133 for the year 726,366, ,976,285 Total 1,515,406, ,040,418 5 Capacity Building and Training Opening Balance 1,628,852,783 1,153,559,386 for the year 163,513, ,293,397 Total 1,792,366,208 1,628,852,783 6 Operating Cost Insurance expenses 823,167 1,102,427 Advert placements 29,567,027 9,274,372 Postage and Courier 1,678,792 1,110,315 Fueling of official car 7,545,436 3,740,040 Repair and Maintenance 4,269,232 3,595,353 Utilities 2,120,657 1,604,264 ICT Maintenance fee 5,807,023 12,591,428 Solid/liquid waste 510, ,300 Traveling and tour 57,979,365 44,024,088 Salaries and wages 8,028,710 9,989,406 Printing and Stationeries 4,600,850 2,863,202 Telephone Expenses 837, ,157 Duties and others 155,020,180 44,495,127 Audit/Professionals fees 2,200,000 3,521,374 Bank charges 585,873 5,374,681 Entertainment 12,111,958 7,911,990 ICT Subscription 11,668,120 4,314,646 Traveling for Factory 17,958,059 4,111,252 Repair and Maintenance of Fittings 3,385,640 1,746,412 Security Expenses 9,936,062 2,613,446 Fueling of Generators 5,137,920 4,808,666 Office Maintenance & Repairs 13,545,476 3,424,700 Other Related Service 2,743,550 1,164,000 Motor Vehicle License 1,216,500 1,267, ,277, ,685,776 Other Income for the year (Note 10) (4,573,322) (2,557,990) Opening Balance B/F 845,214, ,086,285 Total 1,199,918, ,214,071 10

12 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31ST DECEMBER Exchange (Gain)/Loss Equalization Exchange Gain 137,909,938 0 Total 137,909, IDA Credit Loan Amount Opening Balance 20,531,575,848 17,572,388,095 for the year 11,753,088,898 2,959,187,753 Total 32,284,664,746 20,531,575,848 9 Other Fund Liability Other Project's Fund in TCN-PMU Pool Account 417,588,736 0 Total 417,588, Other Income Interest from Special Account 4,573,322 2,422,990 Sales of Tenders 0 135,000 Total 4,573,322 2,557,990 11

13 STATEMENT OF SPECIAL ACCOUNT-DOLLAR FOR THE PERIOD ENDED 31ST DECEMBER BANK: STANDARD CHARTERED BANK - CBN - TCN/PMU-NEGIP ACCOUNT IDA CREDIT NO UNI. IDA CREDIT NO UNI ACCOUNT NO.: US DOLLAR 1 IDA Direct Receipts (1 Jan Dec. 2016) 13,107, Interest received on Account 10, ,118, Less: 3 Amount of Eligible Expenditure paid and documented in withdraw Applications (779,578.82) 4 Transferred to Drawdown Account (CBN-TSA-PMU) (3,310,680.02) 5 Bank Charges (384.25) Closing Bank Balance 9,027,

14 STATEMENT OF SPECIAL ACCOUNT-DOLLAR FOR THE PERIOD ENDED 31ST DECEMBER, 2016 BANK: FIRST BANK UK - TCN-PMU POOL ACCOUNT IDA CREDIT NO UNI. IDA CREDIT NO UNI ACCOUNT NO.: USD-GL BANK 40 US DOLLAR 1 Opening Balance B/F 2,835, IDA Receipts Payment ( ) 1,066, NEGIP Fund Transferred from CBN 12,092, Other Project's Fund 3,351, Interest Received 11, ,357, Less: 6 NEGIP Payments and Expenditures (8,747,158.36) 7 Other Project Expenditures (4,826,819.51) 8 Bank Charges (334.81) Closing Bank Balance 5,783,

15 STATEMENT OF RECONCILIATION FOR THE PERIOD ENDED 31ST DECEMBER BANK: CBN/TSA: TCN - PMU- NEGIP DRAWDOWN ACCOUNT IDA CREDIT NO UNI. IDA CREDIT NO UNI ACCOUNT NO.: NAIRA 1 Opening Balance 3,186, Transferred from Standard Chartered Account ( ) 1,131,695, Transferred from the TCN-PMU Pool Account 1,354,699, ,489,582, Less: 4 Amount of Eligible expenditure paid and documented as withdrawal application & related expenses (2,372,888,797.36) Closing Bank balance as per Bank Statement 116,693,

16 IDA RECEIPTS INFORM OF SPECIAL COMMITMENT AND DIRECT PAYMENT IDA CREDIT ID:- P106172: IDA CREDIT ID:- P106172; Currency of Exchange Transaction in Transaction in Naira Date Type Transaction Rate Dollar 12/8/2015 DA-A $ 1,066, ,066, ,166, /4/2016 Special commitment $ 226, , ,013, /26/2016 Direct Payment C 310, , ,572, /26/2016 Direct Payment $ 400, , ,600, /29/2016 Special commitment $ 2,600, ,600, ,424, /29/2016 Special commitment $ 129, , ,734, /14/2016 Direct Payment N 68,668, , ,668, /14/2016 Special commitment $ 261, , ,120, /17/2016 Direct Payment $ 445, , ,742, /18/2016 Special commitment $ 2,197, ,197, ,316, /22/2016 Direct Payment N 103,224, , ,224, /22/2016 Direct Payment $ 1,302, ,302, ,248, /22/2016 Direct Payment $ 3,882, ,882, ,653, /22/2016 Direct Payment N 333,519, ,675, ,519, /1/2016 Direct Payment N 112,166, , ,166, /1/2016 Direct Payment $ 1,707, ,707, ,828, /12/2016 Special commitment $ 1,489, ,489, ,667, /12/2016 Special commitment $ 1,018, ,018, ,114, /15/2016 Direct Payment N 48,568, , ,568, /20/2016 Direct Payment $ 299, , ,909, /6/2016 Direct Payment $ 299, , ,909, /11/2016 Direct Payment $ 376, , ,898, /31/2016 Refunds $ (299,712.03) , ,893, /31/2016 DA-A $ 7,868, ,868, ,395,895, /27/2016 Direct Payment $ 3,289, ,289, ,328, /27/2016 Direct Payment $ 2,368, ,368, ,349, /27/2016 Direct Payment $ 2,366, ,366, ,919, /30/2016 Direct Payment N 87,726, , ,726, /1/2016 DA-A $ 5,239, ,239, ,598,022, /9/2016 Direct Payment $ 229, , ,858, /17/2016 Special commitment $ 751, , ,168, /6/2016 Special commitment $ 1,381, ,381, ,444, /7/2016 Special commitment $ 27, , ,451, /7/2016 Special commitment $ 652, , ,114, /9/2016 Special commitment $ 222, , ,890, /30/2016 Special commitment $ 245, , ,681, /11/2016 Special commitment $ 138, , ,067, /11/2016 Special commitment $ 197, , ,011, /11/2016 Special commitment $ 168, , ,203, /11/2016 Special commitment $ 279, , ,229, /27/2016 Direct Payment C 431, , ,197, /23/2016 Special commitment $ 210, , ,023, /23/2016 Special commitment $ 17, , ,222, /23/2016 Special commitment $ 71, , ,788, /1/2016 Special commitment $ 195, , ,624, /6/2016 Direct Payment $ 123, , ,486, /6/2016 Direct Payment $ 138, , ,209, Total 48,206, ,753,088,

17 SCHEDULE OF PROJECT FIXED ASSETS S/NO. DESCRIPTION MOTOR FURNITUREAND OFFICE TOTAL VEHICLES FITTINGS EQUIPMENTS N N N N 1 Procurement of office tables and chairs 85,000 85, fair light drawer cabinet _ 100, ,00 3 Laser printer, photocopier, scanner, steel cabinet with glass doors (2), steel 972, ,800 cabinet with steel doors (5) HP Split Unit (2) 160, , HP Split Unit (2) , HP NCS (second wing) 181, HP NCS (Accounts office) 191, HP Panasonic Split A/C and 175,000 Computer system 175,000 9 HP Desktop System (14gb,320 hdd,hp '19 flat screen monitor) 194,250 19d, HP Colour Laser JetCP6015XH,5200DTN (2),CP3525(2),HP PANASONIC A/C 4,229,875 4,229, Toyota Land Cruiser Prado and Toyota Hilux (2) 24,638,250 24,638, Office Chairs for PMU Office 140, , Toyota Hilux Pick up 5,333,333 5,333, Toyota Hilux Pick up 5,333,333 5,333, Toyota Hilux Pick up 5,333,333 5,333,!33 16 Toyota Hilux Pick up 5,333,333 5,333, Toyota Hilux Pick up 5,333,333 5_ Toyota Hilux Pick up 5,333, Toyota Corolla 4,888,888 4,888, Toyota Corolla 4,888,888 4,888, Toyota Prado 14,166,666 14,166, HP LaserJet printer 41, Laptop computer 320, , Projector 70,000 70, LG TV 32 CS410 and LG Bracket 32 71,050 7(,0 Universal 26 Haier Thermo cool fridge Model No:HR135A 53,000 S3Oc HP Desktop computer, 1. Levono Think centre edge and 1.1.SKVA UPS 324, ,750 mercury. 28 4No. Desktop computer Levono Think, 1.5KVA UPS, Microsoft office 2010 (10) 1,311,000 1,311,000 and (1) Scanner Dell Inspiron Laptop, 1. Ms-office , , Multipurpose Industrial photocopy/printer with full accessories 6,701,965 6,/ Office filling cabinet 45, Office Tea Utensils 85, El PR1 Channel 400, , m Executive Chair 660, , Chairs 22,600 22, GSM Wireless Desk Phone 30,000 30, Office Chairs 380, , Dining set 280, ,000 Sub -Total 80,582,690 1,568,400 16,060,390 98,211,480 16

18 Sub-Total B/F 80,582,690 1,568,400 16,060,390 98,211, Executive Chairs 750, , Office Tables 220, , Television 60,000 60,0 42 TV 60,000 60, TV Stand 31,000 31, Waste Basket 171, , TV 120, , Fabrication and installation of Diesel 170, ,000 Tank 47 Office Equipment 29,500 29, Water Pump 28,400 28, Fire Fighting Equipment 978,975 97SS KVA Generating Set 7,077,263 7,07/, Office furniture 12,344,300 12,344, Office furniture 4,023,476 4,023,zl16 53 Laptop 309, , Supply of 3no. Industrial Air Condition 641, , Installation of Air condition 150, , Supply and installation 105, , Supply and installation 344,000 34,00 58 Supply & Inst. Air 105, , Proc. Of Refrigerator 52,000-52, Supply of Chairs 795, , Replacement of Faulty lenovo desktop 45,000 45,00 62 Replacement of official Chair 90,000 90,00 63 Projector/ Presentation Remote Control 33,000 33, Projector/ Screen & Monitoring 750, ,000 Accessories 65 3HP standing A/C 242, , CISCO Layer 3Switches 1,560,000 1, Voice Technology Reviewer 1,541,300 l,s 41, 30 0 j 68 Photocopier 520, , UPS (650) at TSP 860,650 86(,62( Nos Chairs 1,111,500 ' 11, Construction of File Cabinet 785, scanner and Adobe Converter 140, , A3 HP Office jet 95,000 95, Refrigerator 58,000 58, Set Executive Chairs 600, , Air Conditional 161, , Panasonic 21HP A/C 744, , Window Panasonic 2HP A/C 154, , Panasonic A/C 2HP 196, , TOTAL 80,582,690 22,288,471 33,594,

TRANSMISSION COMPANY OF NIGERIA NIGERIA ELECTRICITY AND GAS IMPROVEMENT PROJECT ANNUAL REPORTS AND ACCOUNTS FOR THE PERIOD ENDED

TRANSMISSION COMPANY OF NIGERIA NIGERIA ELECTRICITY AND GAS IMPROVEMENT PROJECT ANNUAL REPORTS AND ACCOUNTS FOR THE PERIOD ENDED ANNUAL REPORTS AND ACCOUNTS FOR THE PERIOD ENDED 3 1sT DECEMBER, 2015. CONTENTS Page Content 1 Project Management Team 2 Report of Auditors 3-4 Statement of Accounting Policies 5 Balance Sheet 6 Receipt