AFRICAN DEVELOPMENT BANK

MULTINATIONAL

GREEN MINI-GRIDS MARKET DEVELOPMENT PROGRAMME

PHASE 2

PEVP/PGCL DEPARTMENTS

June 2017

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Table of Contents

Acronyms ........................................................................................................................................ i

Table of Contents ........................................................................................................................... 3

1. Introduction ............................................................................................................................ 1

1.1. Regional Context and Sector Issues ................................................................................. 1

1.2. Project Description and Rationale .................................................................................... 1

1.3. Justification for SEFA Intervention .................................................................................. 2

2. SEFA Enabling Environment Grant ....................................................................................... 2

2.1. Objective ........................................................................................................................... 2

2.2. Project Executing Agency ................................................................................................ 3

2.3. Grant Components/Activities ........................................................................................... 4

2.4. Budget/Cost Structure ..................................................................................................... 11

2.5. Outputs and Deliverables of Grant Activities ................................................................. 11

2.6. Implementation Schedule ............................................................................................... 12

2.7. Implementation, Procurement and Disbursement Modalities ........................................ 13

3. Conclusion & Recommendations ......................................................................................... 17

ANNEX I - LOGICAL FRAMEWORK FOR SEFA GRANT ...................................................... I

ANNEX II – KEY ACHIEVEMENTS AND LESSONS LEARNED ........................................ III

ANNEX III - RISK MATRIX ...................................................................................................... V

ANNEX IV - BREAKDOWN OF BUDGET (24 months) ......................................................... VI

ANNEX V - PROCUREMENT PLAN ...................................................................................... VII

ANNEX VI – SEFA GOVERNANCE ..................................................................................... VIII

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Acronyms

AfDB African Development Bank

ARE Alliance for Rural Electrification

AU African Union

CEMG Clean Energy Mini-Grid

DFID Department for International Development (UK)

DSM demand-side management

ECREEE ECOWAS Center for Renewable Energy and Energy Efficiency

ESMAP Energy Sector Management Assistance Program (World Bank)

FEI Debt Fund for Energy Inclusion

GDP Gross Domestic Product

GEF Global Environment Facility

GIS Geographic Information System

GMGs Green Mini-Grids

GVEP Global Village Energy Partnership (now Energy 4 Impact)

HIO High Impact Opportunity

IEA International Energy Agency

IED Innovation Energie Développement

IFC International Finance Corporation

LEAP Lighting and Energy Access Partnership

MDP Market Development Programme

NEPAD The New Partnership for Africa's Development

PECG Climate Change and Green Growth Department (AfDB)

PENP Energy Partnership Department (AfDB)

PEVP Power Energy Climate and Green Growth Complex (AfDB)

PPP Public Private Partnerships

RISE Readiness for Investment in Renewable Energy indicators (World Bank)

SE4ALL Sustainable Energy for All

SEFA Sustainable Energy Fund for Africa

SSA Sub Saharan Africa

UNDP United Nations Development Programme

UNF United Nations Foundation

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Abstract – GMG Market Development Programme Phase 2

Task Manager: Daniel Schroth Grant Beneficiary: AfDB (SE4ALL Africa Hub Team)

Dept. / Division: Energy Partnerships Dep’t (PENP) Grant Amount: USD 3.000.000

Project Description:

In response to the critical need for rural energy and rural development generally, and specifically to the challenges facing

the green mini-grid sector, the SE4ALL Africa Hub at the African Development Bank designed and launched the Green

Mini-Grid Market Development Programme (GMG MDP) with grant funding from the Sustainable Energy Fund for Africa

(SEFA) in mid-2015. The GMG MDP is organized into five work streams or business lines: (1) Market Intelligence –

aimed at providing stakeholders with better information on potential mini grid markets throughout the continent; (2)

Business Development Services – provides web-based and personalized technical assistance to GMG developers; (3)

Policy Support – targets public sector players and the creation of an enabling environment for private sector investments

into mini-grids; (4) Quality Assurance – aims to ensure that any mini-grids developed will be to a standard sufficient to

build a positive reputation for the technologies and business models, to be developed in a second phase of the project; (5)

Access to Finance – provides financing guidance and financing support tools to GMG developers. The Programme has

since become a key source of market information and policy developments on the continent: the GMG Developers’ Help

Desk became the sector’s de facto technical assistance and advisory portal after only five months on-line; on the policy

front, the GMG Africa Strategy, developed under the GMG MDP, has been adopted as the AU’s position on how best to

structure at the country-level the policies and regulations fostering private investment into mini-grid businesses; on access

to finance, the AfDB’s Debt Fund for Energy Inclusion (FEI), also developed with SEFA support and GMG MDP inputs

(approved by the Board in December 2016), inter alia envisages financing of mini-grid projects, while the GMG MDP will

additionally contribute to the pipeline for FEI and provide TA support for such mini-grid businesses. The first phase of the

GMG MDP will reach completion in Q2/Q3 2017. The 2nd phase will then begin immediately after to ensure a seamless

evolution of activities. Phase 2 of the GMG MDP envisages transforming the MDP into the “go to” one-stop-shop for mini-

grids in Africa. This is also a key piece of the Bank’s ambitious 100% energy access target by 2025 under the New Deal on

Energy for Africa.

SEFA Alignment

and Role:

This project is aligned with SEFA’s mandate under component III to strengthen the enabling environment for private sector

investments in sustainable energy and will additionally complement SEFA’s activities across its three components - project

preparation, equity investments and enabling environment – as some of its activities are in the mini-grid space.

Cost Structure:

The breakdown of the Phase 2 grant is of US$ 3 million (Market Intelligence $500.000, Business Development Support

$800.000, Policy and Regulatory Support $600.000, Quality Assurance $350.000, Access to Finance $450.000 and

Programme management, communication, and outreach $300.000)

Description of

Recipient: The GMG MDP will be implemented by the SE4ALL Africa Hub team in the Energy Partnerships Department (PENP).

Bank’s Role:

The Bank hosts the SE4ALL Africa Hub in partnership with the African Union Commission, the NEPAD Agency and

UNDP and supports African countries in achieving the three objectives of SE4ALL. The GMG MDP contributes to the

implementation of the energy access objective and will thus strengthen the Bank’s leadership role on energy access. It will

also pave the way for an increased participation of the Bank in the financing of projects beyond the “grid connected” space,

building on the success and visibility of Phase 1.

Implementation

Arrangements:

Some activities are to be directly implemented by the Bank through “in-house” capacity on mini-grids. A substantial part

of the activities, however, are to be contracted out to the best available skills and expertise using inter alia targeted calls for

proposals. The MDP will be implemented in a coordinated manner with the SE4ALL partnership on Clean Energy Mini

Grids, including the World Bank (ESMAP), DFID, UNEP and several US Agencies (DOE, USAID, State Dept.).

Strategic

Alignment:

The GMG MDP Phase 2 aligns with the Bank’s Energy Sector Policy and contributes directly to the Bank’s New Deal on

Energy for Africa by contributing to energy security, increased energy access (in particular in rural areas), transition to

cleaner energy paths, promotion of innovation to increase financial flows, and promotion of knowledge transfer, research

and development. Moreover, the MDP Phase 2 will complement other Bank activities, notably the green credit lines under

preparation in several countries and the Debt Fund for Energy Inclusion (FEI), contributing to a pipeline of mini-grid

projects that can in turn be supported by FEI, and improving the investment conditions for FEI.

Development

Outcomes:

The GMG MDP addresses a series of bottlenecks for the scale-up of GMG investments in Africa, enabling investments in

clean energy mini-grid projects across the continent. Once in operation, these projects will provide increased access to

sustainable electricity for households and businesses, resulting in local economic development, better health services,

improved education, and gender empowerment.

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1. Introduction

1.1. Regional Context and Sector Issues

It is estimated that 645 million people in Sub Saharan Africa, nearly 60%, don’t have electricity.1 The latest SE4All Global Tracking Framework also highlights that there is a significant urban – rural

divide, with access to electricity in urban areas in Sub-Saharan Africa amounting to 69% compared to

only 15% in rural areas. According to the IEA by 2040, 70% of new rural supply in SSA will be most

economically provided by off-grid and mini grids, two thirds of which powered by renewables as a

result of falling costs, technological advancements and more efficient appliances.2

Green Mini-Grids (GMG) are “small” and independent electricity networks providing renewable

power to households, businesses and institutions in rural communities. GMGs generate their power

(between a few kilowatts and up to 10MW) from renewable sources of energy, such as solar, wind,

biomass and hydropower, as well as hybrid combinations of any of the above, including diesel

generators for back-up and peak loads. Mini-grids development escapes the high cost inherent in

constructing the long transmission line infrastructure of main grids (on average around USD 15,000 per

kilometre), while providing more power than off-grid solar solutions. That additional capacity above

what off-grid solutions provide is needed to power energy-consuming productive use appliances, such

as mills, pumps and refrigerators, applications critical for economic development.

However, the development of GMGs comes with various challenges of a financial, technical and

regulatory nature undermining their “bankability”. Chief amongst these challenges is profitability

and therefore financial sustainability, as the business model entails the investment and management of

both generation and distribution assets, with power sales directly in rural African environments where

households and businesses have limited consumption levels and ability to pay. GMGs require

dependable business clients purchasing electricity in order to generate the necessary revenue to be

economically viable. In fact, local economic vitality and anchor clients are so important to GMG

developers that many seek actively to develop “productive use” clients in their market areas. Additional

challenges include technical development (e.g. developer capacity for designing robust systems and

structuring the project financing), policy and regulatory (e.g. cost-reflective tariffs, compensation

and/or integration within the main grid “when it arrives”, quality and safety standards), operations and

maintenance (e.g. lack of qualified labour, marketing and consumer service), and currency mismatch

(revenues in local currency are exposed to volatility and depreciation undermining equity returns and

debt servicing generally denominated in hard currency. All things considered, the rates of return thus

tend to be lower relative to more conventional on-grid generation projects, while facing more risks that

are harder to mitigate. As such, commercial financing of any mini-grid initiative, particularly through

local financial institutions, remains an impossibility as the projects are simply not deemed “bankable”.

1.2. Project Description and Rationale

In response to the critical need for rural energy and rural development generally, and specifically to the

challenges facing the green mini-grid sector, the SE4All Africa Hub at the African Development Bank

designed and launched the Green Mini-Grids Market Development Programme (GMG MDP) to

remove or reduce market barriers and strengthen the ecosystem for the scaling-up of GMG

investments in Sub-Saharan Africa. Seeded with USD 1 million grant funding from the Sustainable

Energy Fund for Africa (SEFA), the Programme’s key value propositions includes:

Promoting a pan-African network of expertise on GMGs;

Ensuring coherence with SE4All Action Agendas and Investment Prospectuses;

1 Half of those, or 325 million, come from only six countries; Nigeria, Democratic Republic of Congo, Ethiopia, Kenya,

Uganda and Tanzania. “African Development Bank Group Strategy for the New Deal on Energy for Africa 2016-2025”,

May 2016 2 “Africa Energy Outlook: A focus on energy prospects in sub-Saharan Africa”, International Energy Agency, 2014

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Strengthening capacity of developers to develop / operationalize GMG business models;

Engaging financiers and supporting the development of suitable financial solutions;

Promoting a sound policy and regulatory environment;

Providing an interface with leading sector participants and groups.

Launched in mid-2015, the GMG MDP has successfully positioned itself over the last two years

at the center of the mini-grids movement in Africa. The Programme has become a key source of

information about GMG markets and policy developments on the continent and the GMG Developers’

Help Desk became the sector’s de facto technical assistance portal after only five months on-line. The

GMG Africa Strategy, developed under the GMG MDP, has been adopted as the AU’s position on how

best to structure at the country-level the policies and regulations fostering private investment into mini-

grid businesses. The AfDB’s Debt Fund for Energy Inclusion (FEI), also developed with SEFA support

and approved by the Board in December 2016, inter alia envisages financing of mini-grid projects,

while the GMG MDP will contribute to the pipeline for FEI and provide TA support for the mini-grid

businesses financed by FEI. Phase 2 of the GMG MDP envisages transforming the MDP into the “go

to” one-stop-shop for mini-grids in Africa. This is also a key piece of the Bank’s ambitious 100% energy

access target by 2025 under the New Deal on Energy for Africa.

1.3. Justification for SEFA Intervention

This GMG MDP is aligned with SEFA’s eligibility criteria and mandate to support activities that

create an enabling environment for private investments in sustainable energy in Africa. The SEFA-

financed activities target market barriers to investments and accelerate deployment of commercially

viable GMG projects in Africa.

The development of Clean Energy Mini-Grids is one of the focus areas under the SE4ALL

initiative for which the Bank is playing the lead role for Africa. The Clean Energy Mini-Grids

Partnership is galvanizing action on the five interlinked barriers facing the sector, with the engagement

of public, private and civil society expertise and resources. The Clean Energy Mini-Grids Partnership,

including the co-ordination group, secretariat and wider membership, is the established forum for

discussion and coordination of the efforts of development partners to advance the adoption of GMGs.

The AfDB is an active member of the Partnership and the GMG MDP was designed from the beginning

to be integrated and closely coordinated with the activities carried out in the framework of the

Partnership. Phase 2 of the Programme will include more direct support for the strengthening of the

CEMG Partnership, solidifying the GMG MDP’s position within the DFI community as the central

pillar of mini-grid developments in Africa.

The GMG MDP Phase 2 aligns with the AfDB’s Energy Sector Policy and contributes directly to

the Bank’s New Deal on Energy for Africa by contributing to energy security, increased energy access

(in particular in rural areas), transition to cleaner energy paths, promotion of innovation to increase

financial flows, and promotion of knowledge transfer, research and development. Moreover, the MDP

Phase 2 complements other Bank activities, notably the green credit lines under preparation in several

countries and the Facility for Energy Inclusion, contributing to a pipeline of mini-grid projects that can

in turn be supported by FEI.

2. SEFA Enabling Environment Grant

1.4. Objective

The GMG MDP (Phase 2) aims to expand the support to mini-grid sector actors (private, public,

finance sectors) for the scale-up of investments in commercially viable GMG projects. The

programme seeks to remove or reduce market barriers at regional scale and strengthen the ecosystem

for the emergence of a thriving GMG sector in Sub-Saharan Africa – contributing significantly to the

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objectives of the New Deal. It follows the five business lines that respond to specific barriers for

different groups of stakeholders, as in the table below.

Table 1 - Business Lines, Barriers and Partners

BUSINESS LINE BARRIERS

ADDRESSED PARTNERS

Market Intelligence Information gaps and

asymmetries

Project Developers, Public Entities, Business/ Industry

Associations

Business Development

Support

Lack of Proven Business

Models, Unmade Linkages

Project Developers, Customers/Communities,

Business/ Industry Associations

Policy and Regulatory

Support Policy Environment Governments, RECs, AU

Quality Assurance

Lack of standard solutions

and need for consumer

protections

Regulators and Industry associations; RECs, Rural

Energy Agencies

Access to Finance Business Models, Access

to Finance

Financial Institutions, Project Developers, Business/

Industry Associations

Partners and beneficiaries:

The GMG MDP targets the following groups of partners and beneficiaries:

GMG project developers and equipment vendors, including community or private developers

and Public Private Partnerships (PPP);

Customers/communities, including anchor clients (e.g. telecoms), businesses (e.g. local

MSMEs), and community customers (i.e. households and public services);

Governments, regional institutions, public sector, public institutions, including public utilities,

rural electrification agencies, and local institutions involved in the preparation of laws,

regulations, codes and standards for quality assurance and legal frameworks;

Business/industry associations involved in supporting and representing their members through

advocacy, research, networking and events;

Financial institutions involved in the provision of risk, equity and debt capital for GMG

projects, as well as risk-mitigation instruments. This includes private investors, local

commercial banks, development finance institutions and governments.

Phase 2 of the GMG MDP builds on the positive experience and lessons learned from the first

phase3 as well as on an extensive consultation process with CEMG Partnership stakeholders, GMG

experts, members of the Energy Access Practitioner Network organized by the United Nations

Foundation (UNF), the Alliance for Rural Electrification (ARE) and many others. The comments

received helped to shape this MDP grant proposal, to prioritize the activities for this second

implementation phase, to avoid duplication and to ensure close coordination with other activities in this

area.

1.5. Project Executing Agency

The Programme is being Bank-executed through the Sustainable Energy for All (SE4ALL) Africa

Hub hosted in the Energy Partnerships Directorate (PENP) of the Power, Energy, Climate and

Green Growth (PEVP) complex of the Bank. The Hub has the mission to advance the SE4ALL initiative

in Africa, providing guidance and support to African countries and coordination of activities with

partners and the global initiative.

3 See Annex II for a review of Key Achievements and Lessons Learned from GMG MDP Phase 1.

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The Hub has an oversight committee composed of AfDB, African Union, NEPAD, UNDP and one

representative of the Regional Economic Communities (currently SADC) and it works in close

collaboration with the SE4ALL Global Facilitation Team and its Chief Executive Officer (CEO), Ms.

Rachel Kyte. The Hub also supports the implementation of the SE4ALL Partnerships, including the

Partnership on Clean Energy Mini-Grids to which this proposal will directly contribute.

1.6. Grant Components/Activities

The Green Mini-Grids Market Development Programme has been conceived as a multi-phase

multi-component initiative for reasons of implementation flexibility and capacity. The Bank’s

experience in GMGs has been building-up through the implementation of the first phase, and the Bank

is now recognized as one of the institutions leading on advancing the GMG sector in Africa. The phased

approach allows for a much greater degree of flexibility to adapt to the changing landscape, assuring a

gradual implementation of the activities in parallel with increasing internal knowledge and experience,

in close coordination with the actions carried out by other SE4ALL partners, and with the developments

at the regional and national levels.

Phase 2 of the GMG MDP takes into consideration the programmes of other stakeholders

providing support to the nascent GMG sector in Africa, such as Power Africa, GIZ, the World

Bank/IFC, the EU and others. Planned Phase 2 activities include specific collaborations with Power

Africa, ESMAP and GIZ, as well as support for the increased sustainability and utility of the CEMG

Partnership. Phase 2 activities also respond to additional sector needs identified during the

implementation of Phase 1.

Several of the Phase 2 activities outlined below are country-specific and the impact of certain activities

make most sense if carried-out in conjunction with others. Naturally the Programme will prioritize high-

impact countries (i.e. countries with large numbers of non-electrified citizens) and countries with

emerging GMG sectors. Additionally, the Programme will target countries whose Governments have

demonstrated commitment to enabling private sector investment into the GMG sector, as evidenced by

a Government’s clear support for the GMG Africa Strategy.

The GMG MDP Phase 2 will be implemented through five (5) components, also know as “business

lines” (BL):

BL1: Market Intelligence:

Under phase one, the GMG MDP gathered mini-grid market intelligence on five countries – Burkina

Faso, Cameroon, Ethiopia, DRC and Mozambique (some of these research projects are to be completed

during Q1 2017). These countries were selected based upon experience with or potential for mini grids,

while ensuring some regional balance. Generally, this market intelligence consists of main-grid rollout

plans, population centers and densities, distribution of renewable energy resources, dominant economic

sectors and potential anchor clients, and details of mini grid policy frameworks. The information is

made available through the GMG Help Desk, in the form of maps, raw data, and analysis, as well as

packaged into country market intelligence reports.

For the second phase of the GMG MDP the following activities are proposed:

1. Expansion of this market intelligence gathering in new countries as well as regularly updating

the information from countries already analysed. The information contained in these reports,

notably Global Information System (GIS) reports, will be made available through the GMG

Help Desk. The second phase will prioritize high-impact countries (countries with large numbers

of non-electrified communities), with high mini-grid potential, and seek synergies with related

activities, such as SEFA GMG country programs where policy and regulatory frameworks are

being developed but there is a lack of market information. The analysis will also inform the

Bank’s activities at country level under the New Deal on Energy for Africa

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2. Beyond these country-specific market intelligence studies, however, there remain gaps in market

information such as resource mapping for small hydro and biomass potential. These gaps

were identified on several occasions while conducting the initial market assessments, with the

consultants recommending further in-depth studies to fill these gaps (an example is the absence

of site-specific information on small hydropower potential in Ethiopia). Such studies either do

not exist or are outdated and incorrect. On the other hand, some few countries have benefited

from hydro resource mapping, such as the “Small Hydro Resource Mapping in Tanzania” report

commissioned by ESMAP. In West Africa, ECREEE began in late 2016 a program to begin

mapping small hydropower resources in its member states, beginning with Guinea and Sierra

Leone. These studies are valuable to small hydro project developers and should be encouraged.

Similarly, there is a lack of specific information relative to biomass energy resources in most

countries. The Programme will not duplicate efforts to inventory RE resources conducted by

ESMAP, IRENA or other development partners but rather fill some of the remaining gaps.

3. The issue of lack of market information on the size of the African, regional or country GMG

markets, the number of mini-grids and their financing remains a major constraint for the sector’s

development. For example, in a country such as the DRC it is known that private sector mini

grids have emerged in the absence of a viable public utility, but the ownership models, size,

clientele and economics are widely unknown. The development and regular update of GMG

market data is therefore a key priority. The data will permit stakeholders to follow the evolution

of the GMG sector over time, monitoring specific KPIs. Through the GMG MDP, a database

on GMG sector indicators will be constructed and a methodology for its continuous updating

and maintenance will be adopted.

The Energy Sector Management Assistance Program (ESMAP) of the World Bank Group is

also currently building a methodology and database related to mini-grids. The GMG MDP will

collaborate closely with ESMAP on developing this GMG market data system, potentially with

the MDP developing the system for Africa and ESMAP applying the same or similar system in

Asia and Latin America. The two partners could then periodically jointly produce a report on

the “State of the Global GMG Sector”.

Key to the sustainability of this activity will be identifying an institution that will take

“ownership” and responsibility for the GMG database. For example, for the off-grid sector in

Africa, similar market data is collected and maintained by the Global Off-Grid Lighting

Association (GOGLA), however it remains to be determined whether GOGLA or a different

institution is the most appropriate owner of the GMG database. Another option is for this GMG

database to become the responsibility of the Clean Energy Mini-Grids (CEMG) Partnership and

available on their website. The GMG MDP is exploring opportunities to increase its support of

the CEMG Partnership, and this may prove to be an activity that fits well with the Partnership’s

role of promoting the GMG movement and providing evidence of the sector’s progressive

development. Further to this interest in increasing support to the CEMG Partnership is creating

stronger links between the Partnership’s website and the GMG Help Desk, which by their

natures should be inherently complimentary.

BL2: Business Development Services:

The second phase of the Business Development Services business line will see a continuation and

expansion of the support services to mini-grid developers. The following activities are proposed:

4. The Programme proposes to continue to maintain the GMG Developers Help Desk, develop

and upload new knowledge products, provide country-specific information and offer technical

assistance (both through the website as well as more personalized in-depth TA assignments).

The website and TA approach also need to be evaluated on a cyclical basis to make

improvements where necessary. Specifically, under Phase 2 the country-specific information on

the Help Desk, notably on issues related to licensing and permitting questions, will be expanded

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building on the Tanzania example.4 The Help Desk interface needs an alternative French

language option.

5. Information related to thriving economic sectors and potential anchor clients is also of critical

value to GMG project developers. Similarly to the methodology described above relative to

renewable energy resources, the GMG MDP will commission an analysis of the gaps in

information related to countries’ local economies and anchor clients. Based on this gap analysis,

the Programme will engage consultants to map countries’ productive use options and anchor

clients. Data for these mappings will be sourced from relevant private sector actors and their

industry associations (e.g. telecoms, tourism, agro-processing).

The GMG MDP will develop an approach to assist mini grid developers in stimulating the

productive use of electricity in their market areas. Obviously, GMGs’ profitability improves

as sales of electricity increase with static fixed costs and variable costs increasing only modestly.

This is especially true for hybrid solar-diesel mini-grids, which aim to increase daytime energy

consumption relative to night-time consumption, when storage and diesel fuel increase costs.

Building on the experiences of the Rockefeller Foundation in India and some of the early movers

in the GMG sector in Africa, the Programme will develop a best practices methodology on how

to seed local electricity demand. The methodology will likely include community economic

assessments (that may focus on irrigation, agro-processing and cold storage), local community

engagement and locally available business development services and microfinance. The

methodology will then be refined through an action-research element with existing GMGs,

whereby the Programme provides support in exchange for data sharing.

In parallel, GMG best practices relative to demand-side management will also be documented,

building on the Global Lighting and Energy Access Partnership (Global LEAP)’s research into

the global off-grid efficient appliance market. Similarly to a GMG’s aim to increase daytime

demand for electricity, the GMG also aims to decrease night-time and peak demand, when diesel

generators are frequently deployed to top-up solar power captured and stored during the day.

Diesel fuel is the most expensive variable cost for a hybrid solar-diesel GMG, so efforts to

control this cost also improves profitability. A best practices demand-side management (DSM)

methodology will be combined with the productive use methodology, with the results packaged

into knowledge products and tutorials available on the GMG Help Desk. The methodology will

also be applied through an action-research activity with existing GMGs, whereby the

Programme provides support in exchange for data sharing.

The Programme is discussing collaborating with Power Africa on the development of these

productive use/demand-side management best practices, with Power Africa focusing on GMGs

in Zambia while the GMG MDP focuses on GMGs in Nigeria. The Programme’s focus on

Nigeria will also bring it into closer collaboration with the GIZ and its mini-grids programme in

that country.

6. In response to the urgent need for Africa to address the human resource capacity gap in the

energy sector, the African Development Bank is supporting in collaboration with the

Association of Power Utilities of Africa (APUA) and the Agence Française de Développement

(AFD) four training institutions as ‘Training Centres of Excellence in Electricity’:

The Eskom Academy of Learning (South Africa)

The Kafue Gorge Regional Training Center (Zambia)

The Institute de Formation pour l’Electricité et le Gaz (Algeria)

The Centre des Sciences et Technologies en Electricité (Morocco)

These training centres are primarily owned and operated by their countries national utilities (for

example, Eskom in South Africa). The GMG MDP will assist these centres in offering training

4 Developed under support by the IFC, the Tanzanian GMG help desk can be consulted at http://www.minigrids.go.tz

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programs in mini-grid development and operation for the benefit of GMG developers and their

staffs throughout Africa. In addition to these four centres, there will likely be a need for at least

a fifth training centre - and maybe more - that focuses more specifically on private sector GMG

training and provides greater regional and linguistic balance (e.g. there is no Centre of

Excellence in West Africa and none providing training in Portuguese). The Programme will

conduct a human resources and training needs assessment amongst the emerging companies in

the GMG sector to pinpoint what are the specific skills lacking. Simultaneously, the Programme

will engage in discussions with the different Centres of Excellence and other vocational training

institutions to measure their willingness to offer capacity building to the green mini grid

employees. If the assessment uncovers specific needs that can be filled through training, and

for those Centres of Excellence and vocational training institutions interested in providing GMG

training, the Programme will subsequently develop the components of a GMG curriculum, in

collaboration with the GIZ, ESMAP and other development partners engaged in training in the

sector.

BL3: Policy and Regulatory Frameworks:

The following activities are proposed under the policy and regulatory business line:

7. The Programme will provide knowledge products and TA services to public sector institutions

(Ministries, regulators, rural electrification agencies, etc.) involved in the development of GMG

policy and regulatory frameworks. Already under the GMG MDP’s Phase 1, policies, strategies,

acts, laws, regulations and other public instruments relative to GMGs in Africa have been

catalogued. In addition, there exist a number of other documents that are valuable, such as the

“Mini-grid Policy Toolkit”5 and “Policies and Regulations for Private Sector Renewable Energy

Mini-grids”6. The Programme will create a GMG Policy Help Desk linked with the GMG

Developers Help Desk. Assistance to public sector actors will be provided both through the

helpdesk, as well as through more personalized in-depth TA assignments. An example of the

kind of TA that could be provided via the GMG Policy Help Desk could be helping a Ministry

to develop GMG auctions. The GMG MDP will cooperate with existing policy support

providers, such as the Clean Energy Solutions Centre Ask an Expert service to ensure

complementarity.

The GMG MDP Phase 2 will follow up and monitor implementation of the GMG Africa

Strategy through the GMG Policy Helpdesk, endorsed by the AU Energy Ministers in March

2017. The document builds consensus amongst energy ministries and regional bodies and

includes a minimum number of recommended policy positions, for example that GMG

developers have the latitude to fix cost-reflective tariffs (or receive cross-subsidy up to that

level), and that they merit fair compensation for their investment in the case of the arrival of the

main grid into their market area. Early implementers of the GMG Strategy will determine the

GMG MDP’s principal focus countries under Phase 2 for in-depth assistance through the Policy

Helpdesk.

8. The GMG Gap Analysis7 commissioned by the Programme under Phase 1 recommended that

mini grid developers look into alternative billing methods, specifically the possibility of

charging power consumers ‘airtime’ instead of for kilowatt-hours. Increasingly, more

stakeholders in the energy sector argue that mini grid tariffs must reflect the real cost of

generating and distributing power in order to be sustainable. The GMG MDP Phase 2 will study

the feasibility of alternative billing methods, for example the sale of airtime units instead of

kilowatt-hours, which would result in an inability to compare the prices of main grid power with

5 European Union Energy Initiative Partnership Dialogue Facility (EUEI PDF), 2014 6 International Renewable Energy Agency, 2016 7 Available for reference on the GMG Help Desk

8

mini grid electricity.8 PAYG business models frequently combine solar power provision with

access to highly efficient appliances, and the pricing schemes followed by many PAYG

companies are based upon what consumers currently pay on average for their energy products

and services (kerosene, batteries, phone charging, etc.). For GMGs, one option to consider might

be the bundling of wireless internet services (super wifi) with electricity so that the GMG is

genuinely offering a bundled utility service.

Also related to GMG policy development, but independent of the GMG MDP, are the SEFA GMG

country programmes. The country programmes work with governments to develop GMG enabling

environments (policies, strategies, regulations, etc.). Programmes are currently underway in

Mozambique, Rwanda, Niger and the Gambia, and in the pipeline for the DRC, Burkina Faso, Sao Tome

& Principe, Angola and Nigeria. The MDP will seek synergies with the country programmes to enhance

impact.

BL4: Quality Assurance:

Under the quality assurance business line the following activities are proposed:

9. The Isolated Community Power Quality Assurance Framework (QAF) is nearing completion

(by the Global LEAP initiative) and elements of the QAF are about to undergo a consultation

process and pilot testing in India and Tanzania (the latter under the IFC’s GMG project). The

GMG MDP Phase 2 will work with relevant national institutions in one African country (likely

to be Nigeria) to adapt and implement the QAF.9 The target country should be one that is

relatively advanced in terms of their mini-grid legal and regulatory framework.

The QAF’s monitoring and reporting includes both technical and commercial KPIs. The QAF

is designed to be implemented simultaneously from the “bottom up” – at the community level

with the mini-grid developer – and from the “top down” – with the regulator at the national

level. The Programme’s approach will be based upon building the capacities of the several

actors identified under the framework (regulators, Ministries, rural energy agencies, utilities,

mini-grid developers, investors, customers and CBOs) together, side by side, through a

combination of workshops and field application. The IFC’s approach in Tanzania has revolved

around the formation of two consultative groups, one for the public and one for the private sector

actors. A common set of standards and reporting is then the product of negotiations between the

two groups. Implementation of the QAF in any country involves an 8-step process:

I. Specify project goals (for example hours of power availability, number of connections

or revenue generated)

II. Develop reporting and measurement requirements

III. Develop performance, measurement, and reporting plans and procedures

IV. Develop a project or programme QA verification process

V. Develop project documentation

VI. Implement QA verification process

VII. Implementation of the electrification / mini-grid deployment project

i. Community needs assessments

ii. Design power system

iii. Determine rate structure

iv. Install power system

v. Implement power monitoring system

vi. Power system commissioning

8 Some years back the off-grid solar market was slow to develop until the Pay-As-You-Go business model was introduced.

PAYG is essentially an alternative method of purchasing solar energy, and perhaps a similar business model breakthrough

could catapult the GMG sector. 9 The Programme has been discussing with Power Africa the possibility of collaborating on introducing the QAF, with the

Programme targeting one West African country while Power Africa targets one East African country, and both share

information and experiences.

9

VIII. Collection and analysis of long-term system operational data

Global LEAP has drafted detailed implementation guidelines that will be used by the GMG

MDP and its consultants. The GMG MDP will engage a consulting firm to conduct the QAF

capacity building. A concerted effort should be made to select correctly the companies,

institutions and individuals to be trained. The MDP is exploring cooperation on the QAF

implementation with Power Africa.

BL5: Access to Finance:

In the 1st phase of the MDP, IED was hired to assist in reflecting upon and developing appropriate

GMG financing tools that the Bank could potentially offer to project developers.

The following assumptions in relation to Phase 2 were made:

Debt and results-based financing (to subsidize rural community connection fees) are the missing

links in GMG finance. Corporate equity appears to be moving into the sector, while grants for

project preparation and a share of CAPEX are also available from various sources;

Commercial banks will be reluctant to lend to this sector in the short or medium term, until

business models have proven track records;

There are currently between ten and twenty GMG developers looking to acquire debt of around

$10 million each for working capital if the terms are advantageous (in terms of loan tenor and

interest rates);

Flexibility as to the currency of loan disbursement and reimbursement would contribute to

mitigating currency risk.

Also recently in December 2016 – independent of the GMG MDP but supported by a SEFA grant – the

Bank approved the establishment of the Facility for Energy Inclusion (FEI) targeting off-grid projects,

mini-grids and small grid-connected IPPs with project costs as low as $10 million. The Bank has

committed $100 million to the $500 million Fund. The GMG MDP will have a natural symbiotic

relationship with the FEI, generating pipeline for the Fund while providing technical assistance to GMG

investments. The FEI is currently in its procurement and set-up phase and is likely to be operational by

the end of 2017.

With these Phase 1 findings in mind, and with the establishment of the FEI, we propose the following

activities for the 2nd phase of the MDP.

10. The GMG MDP proposes to work towards capitalizing a results-based financing (RBF) grant

fund with support and in collaboration with donors and foundations (possibly including

Rockefeller Foundation, DFID, USAID, etc.). The RBF would be provided based upon new

power connections and at an amount relative to the QAF tier quality of electricity service

provided by the mini-grid (e.g. Tier 1 grids would receive smaller grants than Tier 3 grids).

Grants would likely range between $200 and $500 per connection, depending on the tier. The

purpose of these RBF grants is to subsidize power connections for rural households, so that the

modest incomes of these households do not represent a barrier to GMG growth. Based upon

lessons learned elsewhere (such as in Tanzania and Kenya) the GMG MDP will design this RBF

facility, draft an action plan and conduct outreach to potential contributors. The GIZ has a good

deal of experience implementing RBF funds and the GMG MDP will look toward this

experience and collaboration.

11. Integrating commercial banks into the GMG sector is a key objective of the Access to Finance

business line. Commercial bank involvement enhances the sustainability of the GMG finance

sector and would serve the smaller and local GMG developers. In addition to proven GMG

business models with payment track record, commercial banks would likely need three types of

assistance before they would actively engage in GMG finance. Firstly, they would need an

understanding of the sector acquired through capacity building and training. This could be

10

provided by a consulting firm, with the training introduced gradually on a country-by-country

basis, beginning with the countries most advanced in enabling the mini grid sector and focusing

initially notably on those countries with existing or upcoming credit lines that can benefit the

mini-grid sector (i.e. the AfDB is preparing credit-lines for small-scale renewables and energy

efficiency in several African countries). A capacity needs assessment and development of a

training program would be a pre-requisite to any specific capacity building activities involving

the commercial finance sector, and this needs assessment and training program development

will be an activity under GMG MDP Phase 2. Secondly and thirdly, the other two forms of

assistance that commercial banks are likely to require to engage with the GMG sector are firstly,

money to lend (a line of credit, for example), and secondly, partial credit guarantees.

12. Most companies manufacturing the equipment required of a GMG – solar panels, turbines,

gasifiers, meters, etc. – are located outside of Africa, primarily in Europe, the US, China and

Japan. These companies are in competition to get their products on the market, and the off-grid

rural electrification market in Africa represents a potential frontier for these companies, worth

seeding for future growth. Many of these companies would be willing to provide supplier credit

of their equipment to trustworthy GMG developers. In parallel, many of these companies’

national governments support their export through export credit programs. The GMG MDP

proposes to study the potential scope for financing GMG debt through supplier and export

credit arrangements. This potential source of debt was not examined under the GMG finance

supply and demand study conducted by IED.

If this study concludes that there is ample potential to foster regular supplier and/or export

credits for GMG developers, this could subsequently lead to the development of a “matchmaker”

activity under the GMG MDP.

Additionally, to further develop Africa’s economies in general, and clean energy sectors

specifically, it is desirable that renewable energy technologies begin to be manufactured and

assembled on the continent. In fact, solar panels are being assembled currently in Senegal and

Mozambique, solar batteries are made in Kenya, and solar lantern manufacturing has recently

been launched in Burkina Faso and Mali. Manufacturing in Africa is also to the benefit of the

foreign company making the investment, providing them with competitive cost advantage by

reducing associated shipping expenses and gifting tax privileges. To this end, while working to

facilitate supplier and export credit arrangements, the GMG MDP will look to identify

opportunities to foster foreign investment into clean energy technology manufacturing.

Programme Management, Communication and Outreach

The daily operation of the MDP is managed by a long-term consultant in a Programme Officer

role. The Programme Officer works under the direct supervision of the SE4ALL Africa Hub

coordinator, who is the task manager for this project.

The project has developed a communication and outreach plan that is being implemented by the

project team. The dissemination of the results of the initiative is being achieved through a GMG

document series and through communication instruments put in place in-house by the SE4ALL Africa

Hub team and will closely link to overall communication efforts under the New Deal on Energy,

including the development of a web infrastructure and social networking, the hiring of a dedicated

communication consultant and the utilization of external communication channels set up by the CEMG

Partnership Secretariat and by the SE4ALL Global Facilitation team.

The project is being implemented in close coordination with the CEMG Partnership and with

ESMAP/World Bank, who is responsible for the implementation of the DFID-financed Action Learning

and Evaluation component. The project also benefits from coordination with the results of the DFID-

financed Mini-Grid country activities in Kenya and Tanzania, and has begun collaborating with a further

DFID-funded GMG initiative in the Democratic Republic of Congo (the ESSOR Programme). DFID

is also supporting GMG development in Mozambique and Sierra Leone.

11

1.7. Budget/Cost Structure

The cost of the first implementation phase was US$ 1 million, of which US$ 959,190.92 (96%) has

been contracted to date. The contracted amount is expected to be completely disbursed by the end of

Q3 2017.

The cost of the second implementation phase is calculated to be US$ 3 million, representing the increase

in scope and scale from the first phase’s US$ 1 million budget. DFID has earmarked part of its

contribution to the SEFA for financing of Phase 2 of the GMG MDP. DFID has communicated that the

level of support requested in this grant request is in line with its expectations.

The budget breakdown is presented in Annex IV.

Table 2 - Budget / Cost Structure # Activities Total In US$k

BUSINESS LINE 1 – MARKET INTELLIGENCE

1 Conduct national market assessments 200

2 Conduct small hydro and biomass resource mappings 100

3 Continuously monitor sector market data 200

BUSINESS LINE 2 – BUSINESS DEVELOPMENT SUPPORT

4 Maintain and expand GMG Developers Help Desk and technical assistance provided 500

5 Conduct mappings of productive use and action-research activities relative to productive use and

demand-side management

200

6 Support “Training Centers of Excellence in Mini-Grids” 100

BUSINESS LINE 3 – POLICY AND REGULATORY SUPPORT

7 Provide advisory/helpdesk services to policy makers 500

8 Conduct feasibility study on alternative billing methods (to mitigate tariff debate) 100

BUSINESS LINE 4 – QUALITY ASSURANCE

9 Introduce Quality Assurance Framework in selected countries 350

BUSINESS LINE 5 – ACCESS TO FINANCE

10 Design of RBF facility in support of GMG rural consumer connections 100

11 Conduct commercial financiers’ capacity needs assessment and subsequent training program linked

to envisaged green credit lines 200

12 Conduct study of supplier and export credit arrangements and promote local manufacturing 150

PROGRAMME MANAGEMENT, COMMUNICATION, AND OUTREACH

13 Programme management 300

TOTAL 3,000

Further, it is worth noting that the multiplicity of activities proposed under the Programme’s Phase 2

will not result in a concurrent multiplicity of implementing partners. The Programme will group

together related activities under four sub-contracts in order to facilitate coordination and ensure greater

consistency and quality of products and services.

1.8. Outputs and Deliverables of Grant Activities

The outputs and deliverables for the second phase of the GMG MDP are highlighted in Table 3 below.

12

Table 3 - Activities and Outputs

1.9. Implementation Schedule

The GMG MDP Phase 2 activities will be implemented over 24 months as per the following schedule.

Table 4 - Implementation Schedule for Phase 2 Activities

# Activities Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

BUSINESS LINE 1 – MARKET INTELLIGENCE

1 Conduct national market

assessments XX XX XX XX XX XX XX XX

2 Conduct small hydro and

biomass resource mappings XX XX XX XX XX XX

3 Continuously monitor sector

market data XX XX XX XX XX XX XX

BUSINESS LINE 2 – BUSINESS DEVELOPMENT SERVICES

4

Maintain and expand GMG

Developers Help Desk and

technical assistance provided

XX XX XX XX XX XX XX XX

5

Conduct mappings of

productive use and action-

research activities relative to

productive use and demand-

side management

XX XX XX XX XX XX

# Activities Outputs and Deliverables

BUSINESS LINE 1 – MARKET INTELLIGENCE

1 Conduct national market assessments Market opportunity country data and analysis for ten

countries published online

2 Conduct small hydro and biomass resource mappings Mappings published online

3 Continuously monitor sector market data Market data current and available online

BUSINESS LINE 2 – BUSINESS DEVELOPMENT SUPPORT

4

Maintain and expand GMG Developers Help Desk

and technical assistance provided Developers’ Help Desk operational

Help Desk regularly evaluated and improved

Help Desk supports at least 30 developers

5

Conduct mappings of productive use and action-

research activities relative to productive use and

demand-side management

Mappings published online

Case studies on action-research activities and best

practices published online

6 Support “Training Centers of Excellence in Mini-

Grids” Training needs assessment delivered

GMG training curriculum delivered

BUSINESS LINE 3 – POLICY AND REGULATORY SUPPORT

7

Provide advisory/helpdesk services to policy makers Policy makers’ Help Desk operational

Help Desk regularly evaluated and improved

Help Desk supports at least 10 countries

8 Conduct feasibility study on alternative billing

methods (to mitigate tariff debate) Feasibility study delivered and published online

COMPONENT 4 – QUALITY ASSURANCE

9

Introduce Quality Assurance Framework in selected

countries Reports detailing the implementation of Quality

Assurance Framework in two countries available

online

COMPONENT 5 – ACCESS TO FINANCE

10 Design of RBF facility in support of GMG rural

consumer connections RBF facility design delivered

11

Conduct commercial financiers’ capacity needs

assessment and subsequent training program linked

to envisaged green credit lines

Financiers’ capacity needs assessment delivered

Financiers’ training program delivered

12 Conduct study of supplier and export credit

arrangements Study of supplier and export credit arrangements

delivered

13

# Activities Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

6

Support “Training Centers

of Excellence in Mini-

Grids”

XX XX XX XX XX XX XX

BUSINESS LINE 3 – POLICY AND REGULATORY SUPPORT

7 Provide advisory/helpdesk

services to policy makers XX XX XX XX XX XX

8

Conduct feasibility study on

alternative billing methods

(to mitigate tariff debate)

XX XX XX

BUSINESS LINE 4 – QUALITY ASSURANCE

9

Introduce Quality Assurance

Framework in selected

countries

XX XX XX XX XX XX

BUSINESS LINE 5 – ACCESS TO FINANCE

10

Design of RBF facility in

support of GMG rural

consumer connections

XX XX XX XX

11

Conduct commercial

financiers’ capacity needs

assessment and subsequent

training program linked to

envisaged green credit lines

XX XX XX XX

12

Conduct study of supplier

and export credit

arrangements

XX XX XX XX

1.10. Implementation, Procurement and Disbursement Modalities

Programme implementation will be carried out in accordance with the fiduciary and procurement rules

for services applicable to the Bank’s Administrative Budget.

As per the previous phase, the implementation of Phase 2 of the GMG MDP will be Bank-executed

relying on a combination of Bank staff, individual consultants and consulting firms (see Annex V for

the detailed procurement plan and table 5 for an overview of human resources). Project coordination

will be assured by the SE4ALL Africa Hub team housed at PENP, with a long-term consultant to act as

Programme Officer to handle the day-to-day operations of the GMG MDP.

2.7.1. Procurement Arrangements

The procurement of consulting services will be carried out in accordance with the Bank’s Presidential

Directive 02/2012 concerning the procedures for the acquisition of consulting services funded by the

administrative or capital expenditure budget of the Bank Group dated 21 February 2012 as well as the

Delegation of Authority Matrix issued by Presidential Directive No. 06/2012, as these can be amended

from time to time.

The procurement arrangements are as follows:

2.7.1.1. Recruitment of Firms

Four firms will be recruited to implement the twelve activities described above. In three of the cases

QCBS will be used as the selection method, as it is the default method used for the recruitment of firms.

In one case direct negotiation will be applied in order to retain a current service provider, for the

exceptional reasons described below.

a) A firm will be recruited to conduct national mini-grid market opportunity assessments, conduct

mappings of mini hydro and biomass resources, and monitor GMG market data across the

14

continent for an estimated amount of USD 500,000 through shortlisting using the QCBS

selection method.

b) A firm will be recruited to operate the GMG Developers’ Help Desk, provide technical

assistance to GMG developers, conduct mappings of and action-research activities relative to

productive use and demand-side management, support “Training Centers of Excellence” in

developing mini-grids training, develop a GMG Policymakers’ Help Desk, provide technical

assistance to public sector actors, and conduct a feasibility study on alternative billing methods,

for an estimated amount of USD 1.4 million. The selection method for this procurement is

proposed to be a direct negotiation, for the reasons outlined in section 2.7.1.3. below.

c) A firm will be recruited to introduce the GMG Quality Assurance Framework in selected

countries for an estimated amount of USD 350,000, through shortlisting using the QCBS

selection method.

d) A firm will be recruited to design an RBF facility in support of GMG consumer connections,

conduct commercial financiers’ capacity needs assessment and develop subsequent training

program, and study potential supplier and export credit arrangements targeting GMGs while

identifying local manufacturing opportunities, for an estimated amount of USD 450,000 through

shortlisting using the QCBS selection method.

2.7.1.2. Recruitment of Individual Consultants

One individual consultant will be recruited to serve as Programme Officer for the GMG MDP for an

estimated amount of USD 216,000 over 24 months subject to the approval of the Purchasing Committee

in accordance with the DAM. Additional short-term individual consultants will be recruited to provide

services related to communications, specifically for 40 days of English editing and 40 days of graphic

design work, for an estimated amount of USD 25,000 each.

2.7.1.3. Justification for Direct Negotiation

PD 02/2012 allows for direct negotiations single source procurement exceptions under certain

circumstances, such as the following from section 9.1.e: “Assignments which are a continuation of

activities undertaken by the Consultant, where the initial Contract was awarded following competition

on the basis of a shortlist and where the Consultant’s performance has been assessed satisfactory”.

A firm will be recruited for the activities listed in section 2.7.1.1.b above.

The selection method for this procurement is proposed to be a direct negotiation, as the Programme

wishes to retain the current service provider. Under Phase I, a consortium make up of two firms, Energy

4 Impact and Inensus, was contracted subsequent to an open competition to design, develop and operate

the GMG Developers’ Help Desk, and to provide technical assistance to GMG developers, for an

amount of USD 412,500 (UA 298,629 as of March 2016), using the QCBS selection method for one

year . The development of the Help Desk was a long and arduous – but ultimately very successful –

process. The Programme has also been satisfied with the technical assistance provided by the

consortium to GMG developers. To now, under Phase 2 of the Programme, hire a different firm for the

continuation of this work would present important complications and likely significant additional costs

and delays. The Help Desk would have to be migrated from the current service provider to the new

service provider, or re-developed again from scratch. This would cost time and money. Furthermore, it

would take a new service provider a certain amount of time to become operational with a high likelihood

that the Help Desk would not be operational for a certain period of time, which would seriously

undermine the credibility of the Help Desk and by extension the Bank. Therefore, the Programme

wishes to retain the services of the current consortium in accordance with section 9.1.e of PD 02/2012

and directly negotiate an extension of the current contract for an additional 24 months, subject to

15

approval by the Purchasing Committee in accordance with the DAM. The Consortium will provide the

Bank with both technical and financial proposals which shall be the basis for negotiating with the Bank.

2.7.1.4. Advertisement

For consultancy services contracts valued at more than UA 200.000 (for firms) and individual

consultants valued at more than UA 50.000, advertisement for the procurement must be placed in the

UN Development Business Online and the Bank’s external website. The Bank can also choose to

publish in other specialized journals due to the specific nature of the required services. When the amount

of the contract is less than UA 200.000 for firms and less than UA 50.000 for individual consultants,

the Bank may limit the publication of the request for expressions of interest (REOI) to its external

website. However, any eligible consultant, being regional or not, may express his desire to be short-

listed.

2.7.2. Procurement review: Approvals will be done in accordance with the Delegation of Authority

Matrix (DAM).

2.7.3. Procurement capacity: The Hub currently has an Operations and Contracts Officer already in

place that takes care of all the aspects regarding procurement and contract management for the Hub and

who will deal with the procurement aspects of the GMG MDP.

2.7.4. Audit: The Programme will be audited as part of SEFA annual audit by the External Auditors of

the Bank in conformity with the Trust Fund agreement. The Financial Control Department of the Bank

(FFCO) procures the Annual Audit and carries out checks on quarterly un-audited financial statements.

The Programme will also be subject to independent procurement reviews (IPRs).

2.7.5. Evaluation: The Programme will subject to external evaluation by a method as yet under

discussion with SEFA and the UK’s Department of International Development.

Table 5 - Human Resources Foreseen for Each Activity

# Activities Human Resources

1 Conduct national market assessments, small hydro and

biomass resource mapping, mapping of productive use Consulting Firm Services (1)

2 Conduct small hydro and biomass resource mappings Consulting Firm Services (1)

3 Continuous monitoring of sector market data Consulting Firm Services (1)

4 Maintain and expand GMG Developers Help Desk and

technical assistance provided Consulting Firm Services (2)

5 Conduct mappings of and action-research activities relative

to productive use and demand-side management Consulting Firm Services (2)

6 Support “Training Centers of Excellence in Mini-Grids” Consulting Firm Services (2)

7 Provide advisory/helpdesk services to policy makers

Consulting Firm Services (2)

8 Conduct feasibility study on alternative billing methods (to

mitigate tariff debate) Consulting Firm Services (2)

9 Introduce Quality Assurance Framework in selected

countries Consulting Firm Services (3)

10 Design of RBF facility in support of GMG rural consumer

connections Consulting Firm Services (4)

11

Conduct commercial financiers’ capacity needs assessment

and develop subsequent training program linked to envisaged

green credit lines

Consulting Firm Services (4)

12 Study of supplier and export credit arrangements Consulting Firm Services (4)

13 Programme Management, Communication and Outreach PENP Staff and Individual Consultants

16

2.7.6 Disbursement Modalities: Disbursements from SEFA will follow the rules and procedures of

the Bank, as laid out in the Bank’s disbursement handbook10. The method of “direct payments” will be

used.

The disbursement schedule will follow the Calendar of Implementation of the Activities. For the

activities carried on by Consulting Firms, the payments will be divided in tranches paid upon reaching

of contracted milestones. For Individual Consultants, the payment will be a monthly sum and expenses

for missions, associated costs and per-diems will be paid.

Table 6 - Disbursement Schedule (thousands of dollars, rounding applies)

# Activities Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019 Total

BUSINESS LINE 1 – MARKET INTELLIGENCE

1 Conduct national market assessments 20 60 60 60 200

2 Conduct small hydro and biomass

resource mappings 10 30 30 30 100

3 Continuously monitor sector market

data 20 60 60 60 200

BUSINESS LINE 2 – BUSINESS DEVELOPMENT SERVICES

4

Maintain and expand GMG

Developers Help Desk and technical

assistance provided

50 100 100 100 150 500

5

Conduct mappings of and action-

research activities relative to

productive use and demand-side

management

20 100 80 200

6 Support “Training Centers of

Excellence in Mini-Grids” 10 50 40 100

BUSINESS LINE 3 – POLICY AND REGULATORY SUPPORT

7 Provide advisory/helpdesk services to

policy makers 50 100 100 100 150 500

8

Conduct feasibility study on

alternative billing methods (to

mitigate tariff debate)

10 50 40 100

BUSINESS LINE 4 – QUALITY ASSURANCE

9 Introduce Quality Assurance

Framework in selected countries 35 65 100 150 350

BUSINESS LINE 5 – ACCESS TO FINANCE

10 Design of RBF facility in support of

GMG rural consumer connections 10 40 50 100

11

Conduct commercial financiers’

capacity needs assessment and

subsequent training program linked

to envisaged green credit lines

20 80 100 200

12 Conduct study of supplier and export

credit arrangements 15 60 75 150

PROGRAMME MANAGEMENT

Programme Management,

Communication and Outreach 37 38 37 38 37 38 37 38 300

10 See http://www.afdb.org/en/documents/policy-documents/guidelines-and-procedures/

17

3. Conclusion & Recommendations

The development of a strong GMG market is a necessary step towards achieving universal energy access

in Africa. GMGs are the least cost option for energy access in rural areas that are distant from the grid

but with some settlement density and commercial activities. GMGs respond to a specific market need

that is properly addressed neither by grid connection nor by solar home systems (SHS) and can be

designed in a way that is compatible with future grid extension and still maintain their functional value

as distribution networks with attached decentralised generation and/or backup.

The Green Mini-Grid market is developing rapidly in Africa, attracting big and small investors,

including international corporations and DFIs. Still, a series of barriers relating inter alia to market

fragmentation, inadequate policy and regulatory environment and insufficient access to finance have

limited the widespread adoption of GMGs necessary for achieving the targets set under the New Deal

for Energy in Africa and the SDGs. The GMG MDP is addressing these barriers along five business

lines, which include specific actions to improve market intelligence, support business developers,

address policy and regulatory issues, improve quality control and standardization, and improve access

to finance for GMG projects. During its 1st Phase, the GMG MDP has quickly established itself as a

focal point and strengthened the role of AfDB as one of the lead partners developing the GMG sector

in Africa. The 2nd Phase of the GMG MDP will further support the GMG sector in Africa toward

becoming a thriving industry.

The SE4ALL Africa Hub has shown itself to be uniquely positioned to implement the MDP drawing on

its increasingly knowledgeable and experienced team and the convening power of its members. The

Hub is also best placed to ensure continuous coordination with relevant stakeholders in this space,

notably in the context of the Clean Energy Mini-Grids Partnership, as well as to promote the GMG

theme in SE4ALL Action Agendas and Investment Prospectuses.

The 1st Phase of the GMG MDP developed and applied a market assessment methodology that allows

for subjectively comparing GMG opportunities country by country. The Programme developed the

GMG Developers’ Help Desk and began providing technical assistance to 24 developers in fourteen

countries. The GMG Africa Strategy was adopted by the African Union’s energy ministers, providing

direction on how to address the critical policy and regulatory issues facing the sector. The Programme

provided a better understanding of GMG financing needs, which contributed to the AfDB’s

establishment of the Fund for Energy Inclusion.

This 2nd SEFA grant will transform the GMG MDP into the “go to” one-stop-shop for mini-grids in

Africa and accelerate the growth of the GMG market on the continent. This is also a key piece of the

Bank’s ambitious 100% energy access target by 2025 under the New Deal on Energy for Africa. It is

therefore recommended that the Board of Directors approves this grant request in line with the SEFA

Multi-Donor Arrangement.

I

ANNEX I - LOGICAL FRAMEWORK FOR SEFA GRANT

RESULTS CHAIN PERFORMANCE AND PROCESS INDICATORS

MEANS OF VERIFICATION

Indicator Baseline Target

IMPA

CT

Widespread, sustainable implementation of GMG projects in sub-Saharan Africa makes

an important contribution to SE4ALL’s goal

of universal energy access by 2030

Energy access rate in SSA

Access

figures

from

IEA’s World

Energy Outlook

2015

100% by 2030

Global Tracking Framework

IEA’s World Energy Outlook is

published biannually

OU

TC

OM

ES

Investments are scaled up in commercially viable GMG projects

The ecosystem for the emergence of a thriving GMG sector in Sub-Saharan Africa

is strengthened

Supported developers have operational

projects and connect new households

Private sector GMG investment

New GMG installed capacity since 2015

New GMG HH connections since 2015

Operational projects by supported GMG developers

New connections by supported GMG developers

0

0

0

0

0

$50m of private finance (equity and debt) leveraged by 2020

10MW of new installed capacity by 2020

75,000 household connections

20 GMG developers with operating mini-grids by the end of Phase 2, 50 by 2020

15,000 by 2020

Global Tracking Framework, National documents, Project Reports, SE4ALL

Reports, RISE

OU

TPU

TS

1. Conduct national market assessments Market opportunity country data and

analysis published online

Not

applicable

Online publications will appear on the

Programme’s (SE4All Africa Hub) website on a

bi-monthly basis, ten (10) in total over Phase 2

Project Reports, GMG Help Desk and

SE4All Hub websites (as appropriate)

2. Conduct small hydro and biomass resource

mappings Mappings published online Not

applicable

Online publications will appear on the

Programme’s (SE4All Africa Hub) website on a bi-monthly basis. The number of studies

conducted will depend upon need, cost and

resource availability

Project Reports, GMG Help Desk and

SE4All Hub websites (as appropriate)

3. Continuously monitor sector market data Market data current and available online Not

applicable

Online publications will appear on the

Programme’s (SE4All Africa Hub) website on a

bi-monthly basis. KPIs monitored will include GMG developers, GMG developments, public

and private investment, MW installed,

connections made, etc.

Project Reports, GMG Help Desk and

SE4All Hub websites (as appropriate)

4. Maintain and expand GMG Developers Help Desk and technical assistance provided

Developers’ Help Desk operational

Help Desk regularly evaluated and

improved

Help Desk supports at least 30 developers

Help Desk currently

supporting

16 developers

(12/16). All

others not

applicable

Subcontractor to submit quarterly reports on Help Desk development and TA. Number of

developers assisted to rise to thirty (30) by the

end of Phase 2 and fifty (50) by 2020.

Project Reports

II

RESULTS CHAIN PERFORMANCE AND PROCESS INDICATORS

MEANS OF VERIFICATION

Indicator Baseline Target

5. Conduct mappings of and action-research activities relative to productive use and

demand-side management

Mappings published online

Case studies on action-research activities

and best practices published online

Not applicable

Subcontractor to submit quarterly reports beginning Q1 2018. Online publications will

appear on the GMG MDP website as completed,

beginning Q1 2018. The number of mappings conducted will depend upon need, cost and

resource availability.

Project Reports, GMG Help Desk and SE4All Hub websites (as appropriate)

6. Support “Training Centers of Excellence in Mini-Grids”

Training needs assessment delivered

GMG training curriculum delivered

Not applicable

Training needs assessment and training curriculum will appear online by end Q1 2018

and end Q4 2018 respectively. At least six (6)

training centres will be targeted in Phase 2.

Project Reports, GMG Help Desk and SE4All Hub websites (as appropriate)

7. Provide advisory/helpdesk services to

policy makers Policy makers’ Help Desk operational

Help Desk regularly evaluated and

improved

Help Desk supports at least 10 countries

N/A

N/A 0

Subcontractor to submit quarterly reports on

Help Desk development and TA. At least ten (10) countries’ public sectors supported during

Phase 2.

Project Reports

8. Conduct feasibility study on alternative

billing methods (to mitigate tariff debate) Feasibility study delivered Not

applicable

Study will appear online by end Q2 2018 Project Reports, GMG Help Desk and

SE4All Hub websites (as appropriate)

9. Introduce Quality Assurance Framework in

selected countries Reports detailing the implementation of

Quality Assurance Framework available

online

Not

applicable

Subcontractor to submit quarterly reports

beginning Q4 2017. QAF introduced in two

countries

Project Reports, GMG Help Desk and

SE4All Hub websites (as appropriate)

10. Design of RBF facility in support of GMG rural consumer connections

RBF facility design delivered Not applicable

Subcontract to submit system design document by end Q1 2018

Project Reports

11. Conduct commercial financiers’ capacity

needs assessment and develop subsequent training program linked to envisaged green

credit lines

Financiers’ capacity needs assessment delivered

Financiers’ training program delivered

Not

applicable

Training needs assessment and training

curriculum will appear online by end Q2 2018 and end Q4 2018 respectively

Project Reports

12. Conduct study of supplier and export credit arrangements

Study of supplier and export credit arrangements delivered

Not applicable

Study will appear online by end Q1 2018 Project Reports, GMG Help Desk and SE4All Hub websites (as appropriate)

BU

SIN

ES

S

LIN

ES

Business Line 1 – Market Intelligence

Business Line 2 – Business Development Services Business Line 3 – Policy and Regulatory Support

Business Line 4 – Quality Assurance

Business Line 5 – Access to Finance

INPUTS

US$ 3 million SEFA component III

III

ANNEX II – KEY ACHIEVEMENTS AND LESSONS LEARNED

During GMG MDP’s 1st Phase an important number of activities were successfully implemented that

now provide the foundation for the Programme’s 2nd Phase.

Under the Market Intelligence business line, the Programme signed a contract with a consortium

made up of Carbon Trust, UNEP and ECREEE. The consultants have analysed existing GMG

market research methodologies and have designed an approach that combines elements of

different (primarily GIS) methodologies, and that results in country-specific GMG market

information and maps. The newly developed methodology has to-date been applied in

Mozambique, Ethiopia, Burkina Faso and Cameroon. Research will be conducted in the

Democratic Republic of Congo before the end of the GMG MDP’s first phase, for a total of five

countries.

Energy 4 Impact (formerly GVEP) and INENSUS were contracted to implement the Business

Development Services business line, and to-date a thorough analysis of the knowledge and

service gaps facing GMG developers was produced and published as Document #1 under the

GMG MDP’s green mini-grid document series. A GMG web-based helpdesk for developers was

launched on 1 October 2016 (http://greenminigrid.se4all-africa.org) at the International Off-

Grid Renewable Energy Conference (IOREC). The GMG helpdesk is populated with knowledge

products and tutorials, and provides technical assistance to GMG project developers. Simple

assistance is provided through the helpdesk, while more intensive assistance is being provided

on a case-by-case basis. By the end of February 2017, the Programme was engaged with 24

GMG developers in fourteen countries (Benin, Botswana, Cameroon, Ghana, Kenya,

Madagascar, Malawi, Nigeria, Rwanda, Sao Tome & Principe, Senegal, Somalia, Togo, Uganda

and Zimbabwe). To date, most of the TA provided so far has been related to demand assessment,

technical system design, business plan development and financial modeling. The Programme is

supporting a broad range of developers, covering all major technologies (solar, solar-battery,

solar hybrid, biomass gasification, wind and small hydro), and projects at different stages in

their life cycle from very early stage to mid and late stage. Between 12 October 2016 and 1

February 2017, there were 1,295 visitors to the GMG Developers Help Desk and they visited

the site 2,547 times.11

Under the Policy Support business line a process of cataloguing existing GMG policy and

regulatory instruments was conducted and a GMG Africa Strategy was drafted and vetted by

sector stakeholders. The GMG Africa Strategy was approved by the African Union’s Energy

Ministers meeting in March 2017, and consists of basic policy principles required by each

country in order to lay the foundation for the development of a sustainable GMG sector.

No activities were planned for the Quality Assurance business line during the first phase of the

Programme. The Programme was waiting for the Global Lighting and Energy Access

Partnership (Global LEAP) to complete the development of a mini-grids quality assurance

framework (QAF), which categorizes mini-grids into tiers relative to the quality of services

provided. The development of the QAF is now complete. The categorizing of GMGs allows

developers to uniformly report on their mini-grids performance, improving understanding by

sector stakeholders, especially donors and financiers.

Under the Access to Finance business line, the Programme hired Innovation Energie et

Développement (IED) to study the supply and demand of green mini-grid financing and conduct

five case studies of mini grids with illustrative financing experiences. IED also made

recommendations to the AfDB on possible appropriate GMG financing approaches and

instruments, primarily focused in the immediate term on the Bank providing debt directly to

GMG project developers and in the longer term providing GMG financing through a line of

credit (and technical assistance) offered to local commercial banks. The information on available

11 Source: Google Analytics

IV

support instruments (supply-side scoping) is available through the GMG helpdesk, enabling

GMG stakeholders to identify financing and technical assistance support instruments.

A good number of lessons have been learned over Phase 1 of the Green Mini-Grids Market

Development Programme.

Under BL1, the team learned that though there are a number of GMG market assessment methodologies

currently in existence – especially GIS-based – no one methodology combined all of the different

critical pieces of information that we wanted to be included in the Programme’s market assessment

reports (e.g. main grid plans, RE resources, population densities, stakeholder initiatives, GMG policies

and regulations). In response, beginning with the very first country market assessment, for

Mozambique, the Programme has opted to apply a hybrid methodology that includes aspects of several

complementary methodologies.

Also under BL1, we learned that there was a dearth of information related to the availability of small

hydro and biomass renewable energy resources. For this reason, preliminary assessments of these

resources have been included as an activity under the Programme’s Phase 2.

Under BL2, requests for Technical Assistance through the GMG Help Desk have emerged more quickly

than anticipated. This has not resulted in any failure on the part of the Programme to provide that

assistance, which is actively on-going. However, it was obvious that virtually all demand has come

from Anglophone countries. Though GMGs are being developed in Francophone countries, few

technical assistance requests were coming from West Africa. Thus, we learned that the fact that the

Help Desk is not bilingual prevents it from being a useful resource to developers that work in French.

The Help Desk will become bilingual under the Programme’s Phase 2.

The major lesson learned relative to BL3 was that there are essentially three GMG policy issues that

left unaddressed inhibit the development of a mini-grid sector in any given country:

The existence of clear and simplified GMG licensing procedures;

The need to have and communicate regularly main grid extension plans;

The need for freedom by GMG project developers to apply cost-reflective tariffs to power

customers.

These lessons and there inclusion as policy recommendations are at the core of the GMG Africa

Strategy, developed by the Programme and submitted to the AU’s Energy Ministers in March 2017.

The Programme didn’t conduct any activities under BL4 during the Programme’s first phase, though

discussions with the Clean Energy Ministerial and the Global LEAP program have allowed the

Programme’s team to conceptualize the BL4 activities for Phase 2.

During Phase 1 implementation of the Access to Finance business line, the team learned that the

principle missing financial products and services were debt, results-based funding (RBF) to support

consumer connections, and tools to mitigate investor risk (such as currency risk and the risk of main

grid encroachment into a mini-grid market). The AfDB last December approved the Debt Fund for

Energy Inclusion, which combined with Phase 2 activities to develop a credit line for local banks, begins

to address the lack of credit available to mini-grid developers. The Programme is also planning to

develop an RBF fund under Phase 2.

The above represents the key achievements and major lessons learned by the GMG MDP under its first

phase and how the Programme team has responded to those lessons in developing the Programme’s

second phase.

V

ANNEX III - RISK MATRIX Risk Risk Analysis and Mitigation Measures

Duplication with

other partners

Risks:

The Green Mini-Grid space in Africa is both an area where much intervention is needed to achieve

the universal access objective and an area where an increasing number of actors are intervening.

The possibility of development partners duplicating their efforts is a threat to development

effectiveness.

Mitigation Measures:

Two mitigations measures will be taken: 1) Close coordination within specific partners, such as

Power Africa, ESMAP and GIZ, as well as with the Clean Energy Mini-Grids Partnership, which

is now the established forum of exchange for GMG partners and practitioners; 2) A phased

approach to the roll-out of the MDP that will allow adjustment to new developments and

implementation of a flexible work programme, avoiding duplication and increasing effectiveness.

Insufficient

financing

Risks:

There continues to be difficulties mobilizing GMG project financing.

Mitigation Measures:

The MDP will work closely with the Bank’s Debt Fund for Energy Inclusion (and other similar

vehicles) as well as contribute to the gradual implementation of clean energy lines of credit to

local commercials banks. The Programme will develop a results-based financing fund to

contribute to overcoming the barrier related to the high cost of connections relative to the very

limited purchasing power of typical households in rural Africa.

Commercially

viable business

models still to be

established

Risks:

There remain few commercially viable GMG business models.

Mitigation Measures:

The GMG MDP will expand its technical assistance offering to greater numbers of GMG

developers and document best practices relative to stimulating productive use and demand-side

management. The Programme will work with the CEMG Partnership to develop and promote

evidence of successful GMG business models. The emergence of commercially viable business

models has also been hampered by the policy environment, and specifically the reticence in many

countries to allow the application of cost-reflective tariffs. The Programme will address these

policy shortcomings through the implementation of the GMG Africa Strategy, technical assistance

to public sector policymakers, and the set-up of a GMG Policy Help Desk.

Off-grid solar home

systems (SHS),

especially those

sold through the

PAYG business

model, provide

strong competition

to the establishment

of GMGs

Risks: The off-grid PAYG offering expands at the expense of the development of the GMG

market.

Mitigation Measures: The principal aim of the GMG MDP is achieving universal power access

by 2025, as targeted by the AfDB’s New Deal on Energy for Africa. As such, the Bank and the

Programme are more than happy when the off-grid solar market grows. Off-grid solar, however,

cannot power productive use applications in the way that GMGs can; they improve quality of life,

especially for rural households, but SHS cannot contribute significantly to economic growth. The

Programme does not in any way want to discourage the growth of the SHS PAYG market.

VI

ANNEX IV - BREAKDOWN OF BUDGET (24 months)

Business Lines Unit Type Unit Price

(USD)

Quantit

y

Total

(USD)

1 - Market Intelligence

Senior international experts working days 900 250 225,000

Junior or Local Experts for data collection and analysis working days 450 250 112,500

International travels package 3000 26 78,000

Data collection and local travel expenses package 2500 26 65,000

Reports and communications package 450 26 11,700

Contingencies 7,800

TOTAL 500,000

2 - Business Development Support

Senior International Experts working days 900 400 360,000

Junior or Local Experts working days 450 400 180,000

International travels package 3000 40 120,000

Local travel expenses package 2500 44 110,000

Reports and communications package 450 50 22,500

Contingencies 7,500

TOTAL 800,000

3 - Policy and Regulatory Support

Senior International Experts working days 900 300 270,000

Junior or Local Experts working days 450 400 180,000

International travels package 3000 24 72,000

Local travel and expenses package 2500 24 60,000

Reports and communications package 450 20 9,000

Contingencies 9,000

TOTAL 600,000

4 – Quality Assurance

Senior International Experts working days 900 150 135,000

Junior or Local Experts for data collection and analysis working days 450 300 135,000

International travels package 3000 12 36,000

Data collection and local travel expenses package 2500 12 30,000

Reports and communications package 450 6 2,700

Contingencies 11,300

TOTAL 350,000

5 - Access to Finance

Senior International Experts working days 900 250 225,000

Junior or Local Experts for data collection and analysis working days 450 300 135,000

International travels package 3000 13 39,000

Data collection and local travel expenses package 2500 13 32,500

Reports and communications package 450 10 4,500

Contingencies 14,000

TOTAL 450,000

6 - Programme Management, Communication, and Outreach

Project Officer / Coordinator months 9000 24 216,000

Editor & Designer package 25000 2 50,000

Contingencies 34,000

Total 300,000

GRAND TOTAL 3,000,000

VII

ANNEX V - PROCUREMENT PLAN

Contract

Description Selection Method

Type

Estimated

Amount in USD

Estimated amount in UA

Prior/Post Review

EOI Publication Date

Contract Start Date

Comments

1

Conduct national market assessments, conduct small hydro and biomass resource mappings, continuously monitor sector market data

QCBS Lump Sum

500,000

371,932.49

Prior Review

Q2 2017 Q4 2017 Contract 1 combines

activities 1-3

2

Maintain and expand GMG Developers Help Desk and technical assistance provided, conduct mappings of and action-research activities relative to productive use and demand-side management, support “Training Centers of Excellence in Mini-Grids”, provide advisory/help desk services to policy makers, and conduct a feasibility study on alternative billing methods

Direct negotiation

Lump Sum

1.4 million

1,041,411 Prior

Review Q2 2017 Q4 2017

Contract 2 combines activities 4-8

3 Introduce Quality Assurance Framework in selected countries

QCBS Lump-Sum

350,000 260,352.74 Prior

Review Q2 2017 Q4 2017

Contract 3 is for activity 9

4

Design of RBF facility in support of GMG rural consumer connections, conduct commercial financiers’ capacity needs assessment and develop subsequent training program linked to envisaged green credit lines, and conduct study of supplier and export credit arrangements

QCBS Lump-Sum

450,000 390,239.25 Prior

Review Q2 2017 Q4 2017

Contract 4 combines activities 10-12

Programme Officer IC Time-base

d 216,000 193,919.37

Prior Review

Q2 2017 Q3 2017

English Editor IC Time-base

d 25,000 21,679.96

Prior Review

Q2 2017 Q3 2017

Graphic Designer IC Time-base

d 25,000 21,679.96

Prior Review

Q2 2017 Q3 2017

Total Cost 2,966,0

00 2,572,110.25

VIII

ANNEX VI – SEFA GOVERNANCE

SEFA is administered in accordance with Bank procedures, rules and policy guidelines. In line with the

Technical Cooperation Fund Reform12, which articulates the division of labor of the different

departments as far as TF is concerned as below. The Resource Mobilization and Partnerships

Department (FIMB) provides fiduciary oversight and is responsible for formal communications with

existing and potential donors to the trust fund.

The SEFA Secretariat is housed in the Renewable Energy Department (PERN). The Renewable

Energy Division (PERN1) is the operational supervisor of SEFA as it monitors and ensures the

implementation progress of all approved projects, as well as coordinates the assessment of impact and

results of each project funded thereunder. The Secretariat is composed of a Coordinator (PERN staff

member), and technical advisors in finance, policy and operations.

The PERN Department Management Team (DMT) reviews all requests for funding against

eligibility and selection criteria and makes a formal decision to clear grant requests for SEFA’s pipeline

in close coordination with the Energy Financial Solutions, Policy & Regulation (PESR). This allows

origination teams to move forward in the internal review and approval process. The DMT is chaired by

the PERN Director and includes the Division Managers of PERN1 (Renewable Energy Division),

PERN2 (Off-Grid Division).

The Technical Review Committee (TRC), established under the Multi-Donor Arrangement, examines

and reviews all proposals for funding and ensures that these are technically and financially sound, are

fully aligned with the Bank’s strategies and policies and comply with applicable rules and procedures.

The TRC is chaired by the divi of the Resource Mobilization and Partnerships Department (FIMB) and

includes representatives from the Office of the General Counsel & Legal Services Department (PGCL),

Fiduciary & Financial Management, Inspection & Procurement PolicyDepartment (SNFI), Financial

Control Department (FIFC), Strategy & Operational Policies Department (SNSP) and sector operations

departments including the Renewable Energy Department (PERN) and Energy Financial Solutions,

Policy & Regulation (PESR). Other Bank’s Operational Departments and/or Units can also be called

upon to provide technical inputs, as necessary.

An Oversight Committee (OC) composed of representatives of Donors to the Trust Fund and

representatives of Bank Management is responsible for the overall governance of SEFA. The OC is

chaired by the Vice-President - Power, Energy, Climate and Green Growth (PEVP) Complex. It meets

at least once a year to: (i) provide general policy and guidance, (ii) review and approve the operational

focus of SEFA, (iii) undertake annual reviews of the progress made during the year and examine and

approve annual work program and objectives of SEFA for the coming year, and (iv) approve Component

I and Component III proposals over USD 1 million prior to presentation to the Bank’s Board of

Directors. The decision making methods and procedures of the OC will be determined by the committee

members.

Board of Directors (BOD): grant requests exceeding USD 1 million are referred by the OC to the BOD

for final review and approval in line with standard operating procedures.

12 ADF/BD/WP/2005/113/Rev.3 dated 14 July 2006