Fund de netiet e Ptii de Abasecient

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Grete Mapt Water Suply Prjc

Credit Ageeen Nr 5290 M

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Fundo de Investimento e Patrimnio de Abastecimento de Agua (FIPAG)Greater Maputo Water Supply Project

Credit Agreement Nr.52900-MOZ

Financial Statements

fbr the year ended 31 December 2015

Financial Statementsfor the vear ended 31 December 2015

Index Page

Report of the independent auditors 2 -3

Statement of receipts and payments 4

Statement of designated account 5

Notes to the financial statements 6-9

Disbursements 10

Statement of Management Responsibilities

The management of FIPAG - Fundo de Investimento e Patrim6nio de Abastecimento de Agua is

responsible for the preparation and presentation of the financial statements of the Greater Maputo

Water Supply Project - Credit Agreement Nr. 52900 - MOZ for the year ended 31 December 2015,which comprise the statement of receipts and payments, statement of designated account, and the notes

to the financial statements, which include a summary of significant accounting policies and other

explanatory notes, in accordance with the cash receipts and disbursement basis of accounting described

in note 2.

Management is also responsible for determining that the basis of accounting is an acceptable basis for

preparing and presenting the financial statements in the circumstances, for such internal control as the

management detennine is necessary to enable the preparation of financial statements that are free from

material misstatement, whether due to fraud or error; and for maintaining adequate accounting records

and an effective system of risk management.

Management is also responsible for the other project internal controls and for compliance with the

relevant project agreement terms and local laws and regulations applicable to the project. The

responsibility for the prevention and detection of non-compliance rests with management.

Approval of the financial statements

The financial statements for the year ended 31 December 2015, were approved by the management on

24 May 2016 and are signed on their behalf by:

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KPMG Auditores e Consultores, SA Telefone: +258 (21) 355 200Edificio HOLLARD Telefax: +258 (21) 313 358Rua 1.233, No 72 C Caixa Postal, 2451

Maputo, Mo9ambiqueEmail: mz-fminformation(akoma.com

Web:www.kpmg.co.mz

Independent auditors' report

To the Management of FIPAG - Fundo de Investimento e Patrim6nio de Abastecimento

de Agua

We have audited the financial statements of the Greater Maputo Water Supply Project - Credit

Agreement Nr. 52900 - MOZ for the year ended 31 December 2015, which comprise the statement of

receipts and payments, statement of designated account and the notes to the financial statements which

include a summary of significant accounting policies and other explanatory notes.

Management's responsibility for the financial statements

The management of FIPAG is responsible for the preparation and presentation of the financial

statements in accordance with basis of accounting described in note 2, for determining the acceptabilityof this basis of accounting, and for such internal controls as management determines necessary to

enable the preparation of financial statements that are free from material misstatements, whether due to

fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the 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 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 making those risk assessments, we considers internal control relevant to the entity's

preparation and 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 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.

2

KPMG Auditores a Consultores SA, uma soc edade anonima de Registad. em Mop.mq.e sob a designaghedo, KPMG

responsalidade limitada, o membro da KPMG Internacional, uma Audtres a Consultores, SA

cooperative Silvo

KPMG A.ditos e Consultoes, SA, a Mazambique limited liability Registored In Mo-ambique, as KPMG Auditos

caompany, is a moember of KPMG International, a Swoss cooperative . C.osltor.s. SA

Opinion on the statement of receipts and payments

In our opinion, the statement of receipts and payments of Greater Maputo Water Supply Project -

Credit Agreement Nr. 52900-MOZ for the year ended 31 December 2015 has been prepared, in all

material respects, in accordance with accounting policies disclosed in note 2.

Opinion on the statement of designated account

In our opinion, the statement of the Designated Account for the IDA Credit agreement Nr. 52900 -

MOZ at 31 December 2015 was prepared, in all material respects, in accordance with IDA's

Guidelines.

Opinion on the statement of expenditure

With respect to the statements of expenditure (SOEs), we confirm that adequate supporting

documentation has been maintained to support claims to the International Development Association

(IDA) for reimbursements of expenditure incurred and these expenses are eligible for financing under

the Credit Agreement Nr. 52900- MOZ

KPMG

24 May 2016

Maputo

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Fundo de investimento e Patrionion de Abastecimento de Aigua (FIPAG)Greater Maputo Water Supply Project

Credit Agreement Nr.52900-MOZFinancial Statements

for the year ended 31 Decenber 20/5

Statement of receipts and paymentsFor the Year ended 31 December 2015

Note IDA CreditUSD

Description

Receipts

Initial advance from IDA 3 1 000000

Reimbursements to designated account 4 1 118 706

Total receipts 2 118 706

Payments

Works, goods, non-consulting services, consultant's services

and training (1) 1 304415

Total payments 1 304 415

Closing balance as at 31 December 2015 5 814 291

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Fundo tie Inrtimnenlo e Patrimnio de Abastecimento de Agua (FIPAG)Greater Maputo Water Supply Project

Credit Agreement N. 52900-MOZFinancial Statements

for the year eoded 31 December 2015

Statement of designated accountfor the year ended 31 December 2015

Description

IDA CreditUSD

Receipts

Initial advance from IDA 3 1 000 000

Reimbursements to designated account 4 1 118 706

Total receipts 2 118706

Payments

Works, goods, non-consulting services, consultant's servicesand training (1) 1 304415

Total payments 1 304 415

Closing balance as at 31 December 2015 5 814 291

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Fundo de Investimento e Parrimonio de Abastecimento de Agua (FIPAG)Greater Maputo Water Supply Project

Credit Agreement Nr.52900-MOZFinancial SiateMents

/br the war ended 31 December 2015

Notes to the financial statementsfor the year ended 31 December 2014

1. Project background

On 31 January 2014 a development Loan agreement was signed between the Republic of

Mozambique and International Development Association (IDA), wherein IDA agreed to

provide a Loan of an amount equivalent to SDR 118 800 000 to implement the Great Maputo

Project, Loan Agreement Nr. 5290-MZ.

The Project consists of the following parts:

Part A: Investment in Water Supply Network System

Expansion and extension of water supply system capacity in the Greater Maputo

Area through the construction of an abstraction point and transmission pipeline from

the Corumana Dam, a water treatment plant, and a transmission pipeline to the

Machava distribution center.

Part B: Investment in Water Supply Distribution System

Expansion and extension of water distribution system in Greater Maputo Area through

installation of approximately 300 kilometers of water supply distribution network and

100,000 new connections, including associated water meters.

Part C: Technical Assistance to FIPAG

Support to FlPAG. through the provision of goods, consultants' services, and Training

for the purpose of: (i) supervision of works as well as implementation of Resettlement

Action Plan and other Safeguard Documents under the Project; ii) preparation of the

second phase of the program to increase the amount of water available to Greater

Maputo Area to meet residential household demand by 2025, including technical

assistance for engineering, dam safety, safeguards and economic analyses;

(iii) preparation of a follow-on project to cover other select cities of the Recipient;

(iv) Project implementation including support to the transition of the operator of

Greater Maputo Area in 2014; (v) carrying out of financial and technical audits; and

(vi) carrying out of training and capacity building for FIPAG and the operator of

Greater Maputo Area staff.

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Fundo de Investimento e Patrhn6nio de Abastecimento de Agua (FIPAG)Greater Maputo Water Supply Project

Credit Agreement Nr.52900-MOZFinancial Staiements

f6r the 1ear ended 31 December 2015

Notes to the financial statements (cont.)fr the Year ended 31 December 2014

Part D: Capacity Building and Operational Support to CRA

Support to CRA to enhance its capacity to discharge its regulatory role in the

territory of the Recipient including: (i) expanding the scope of CRA's regulatoryframework and oversight capabilities, particularly in relation to peri-urban areas; and

(ii) reviewing the financial means - and the structure and form of subsidies for low-

income customers - to extend water and sanitation services to the urban poor, all of

the above through provision of goods, technical assistance, Training and OperatingCosts required for the purpose.

2. Accounting policies

The following paragraphs describe the main accounting policies applied consistently by the

project.

2.1 Accounting convention

The statement of receipts and payments is prepared on a cash basis under the historical cost

convention.

2.2 Cash basis

The statement of receipts and payments has been drawn up on the cash basis from the

information reflected in the financial reports and accounting records of the project.

2.3 Currencies

The books of accounts of the Project are maintained in United States Dollars (USD). The

statement of receipts and payments is also expressed in United States Dollars (USD) unless

otherwise stated. The transactions in other currencies are translated to USD at the official

exchange rate ruling at the date of the transactions.

2.4 Cash at bank

The cash at bank represents the bank balance at 31 December 2015.

2.5 Fixed assets

Fixed assets acquired by the Project are expensed in the year of purchase.

2.6 Procedures

The disbursements of the funds, made available by the International Development

Association (IDA), are carried out by direct transfers or by requests of payments sent to the

Special Account, which was opened with funds made available by IDA, in a bank account of

the project in Maputo (Bank ABC).

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Fundo de Investimento e Patrimonio de Abastecimento de Agua (FIPAG)Greater laputo Water Supply Project

Credit Agreement Vr.52900-MOZFinancial Statements

for the ear ended 31 December 2015

Notes to the financial statements (cont.)for te Year ended 31 December 2015

3. Initial Advance from IDA

In line with the Project Credit Agreement, on 30 January 2015, an amount of USD 1 000 000

was withdrawn from the Credit balance and maintained in the Designed Account (FIPAG) of

the Project.

4. Reimbursements

Application number Category 2015 2015USD SDR

2 1 621 355 438 816

3 1 127 182 91 0154 1 221 518 157213

5 1 148651 108240

Total reimbursements during the year 2015 1 118 706 795 284

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Fundo de Investimento e Patrimeinio de Abastecimento de Agua (FIPAG)Greater Maputo Water Supply Project

Credit Agreement Nr..52900-JOZFinancial Statemenis

[hr the year ended 31 December 20/5

Notes to the financial statements (cont.)fo- the year ended 31 December 2015

31 December2015USD

5. Closing balance

The closing balance is represented by:

Cash at bank - ABC Acc# 112377200219 814 291

6. Reconciliation of advance from IDA

6.1 Initial Advance from IDA 1 000 000

Represented by:

a) Cash at bank 814 291

b) Expenditure submitted on 28 December 2015 underWA nr. 6 and reimbursed on 4 January 2016 51 665

c) Expenditure not yet submitted 134 044

1 000 000

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Fundo de Investimento e Patrimonio de Abastecimento de Agua (FIPAG)Greater Maputo Water Supply Project

Credit Agreement Nr.52900-MOZFinancial Statemens

for the Year ended 31 December 2015

Notes to the financial statements (cont.)for the Year ended 31 December 2015

Disbursementsas at 31 December 2015

Loan Agreement Nr. 52900-MOZ

Expenditure Total Credit

Total credit disbursements available as

agreement at 31/12/2015 at 31/12/2015

SDR SDR SDR

Works, goods, non- consulting services, consultant's 115 500 000 795 284 114 704 716

services, and training (A,B,C)

Designated account A - 709 320 (709 320)

115500000 1 504604 113995396

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