(Published on Friday October 26, 2018 in daily the Dawn (ISD_RWP/LHR/KHI) editions and daily the Jang (ISD_RWP/LHR/KHI/MUL editions)

Transcription

1 (Published on Friday October 26, 2018 in daily the Dawn (ISD_RWP/LHR/KHI) editions and daily the Jang (ISD_RWP/LHR/KHI/MUL editions)

2 Call for Proposals (RFP # R OCT 18/24) Issue Date: October 26, 2018 Results Based Financing Facility for Quality Verified Small Solar Home Solutions in Remote Off grid Areas Application submission Deadline: November 12, 2018 Table of Contents 1. Background Overview of the Project RBF Incentive for the Solar Vendors... 3 Application Process... 3 Role of NRSP... 4 Role of GIZ REEE... 4 Independent Verification Eligibility criteria... 4 RBF recipients... 4 Solar products Target districts and customers... 5 Districts... 5 Customers Submission of Applications Clarifications Attachments to this Call... 6

3 1. Background National Rural Support Program (NRSP) is planning to implement a Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) funded Results Based Financing (RBF) project that provides financial incentives to private sector organizations involved in provision and up scaling of IFC Lighting Global certified solar home solutions with innovative flexible payment solutions and mechanisms (pay as you go, loans, instalment payments etc.). The project implementation will start from December 2018 and end in November 2019 after the completion of one year. It will receive applications from interested companies or organizations for participation in this project through this Call for Proposals, the deadline for which is November 12, Applications received after this deadline will not be accepted. 2. Overview of the Project The RBF initiative targets to provide incentives to the companies (herein referred to as RBF Beneficiaries ), selling International Finance Corporation (IFC) Lighting Global Solar Home Solutions to end consumers in the remote areas through a financing mechanism as mentioned above. The project is planned to encourage the development and up scaling of good quality solar home solutions at the last miles with warranties and operations and maintenance of the systems in place. This project does not include solar lanterns or torches. Only solar home solutions fulfilling the criteria as indicated in this document later will qualify for this project. The incentives will be in the form of cash grants, which will be disbursed to RBF beneficiaries as ex post payments upon delivery and verification of agreed upon results. The agreed upon results in this case are the number of IFC certified solar home solutions sold to the end consumers on credit or flexible payment methods (e.g. pay as you go in both ownership and lease models). The value of the incentives will be a certain proportion of the value of the products sold to the end users, which will be varying depending upon the specifications of the respective system. The details can be found in the Guidelines on products and incentives, attached herewith. The RBF incentives can be used by the beneficiaries to develop their infrastructure at the last mile or as a working capital investment or both. The RBF incentives may be used for other relevant activities such as financing partnerships, marketing and awareness, training, improving the distribution channels, scaling up relevant existing solar activities etc. It will be at the discretion of each applicant to decide how to best allocate the incentives in order to introduce and / or increase the number of quality verified small solar home solutions for the target markets.

4 3. RBF Incentive for the Solar Vendors The RBF mechanism will be used to encourage RBF beneficiaries to develop and upscale their existing markets for solar home solutions. Moreover, the mechanism encourages the use of PAYGO (pay as you go) with a remote monitoring software for the monitoring of the solar home solutions and better operations and maintenance. This RBF mechanism will only incentivize the organization selling or installing the solar home solutions at the end customer s premises, which might be a retailer, distributor, vendor, or manufacturer. The whole mechanism of the scheme is as under: Application Process Companies will apply through the submission of an application on the template provided. Those companies selected to participate in the RBF programme will enter a Service Level Agreement with NRSP. The total amount of fund allocated for the RBF project is EUR 500,000. To each company a secured access to EUR 15,000 will be guaranteed within the first 6 months. After this period, the fund is open for all participants with a first come first serve approach. 1 As RBF incentives are only disbursed after results are verified, it is the responsibility of companies to pre finance the activities required to achieve the agreed results. NRSP is not required to extend credit from its own resources but may decide to do 1 Amount and time might be subject to change due to the number of participant companies

5 this on its own account. During and at least three months after the project ends, companies need to comply with regular checks carried out by NRSP and GIZ for verification purposes. Role of NRSP NRSP is responsible to execute the project and do the financial management of the RBF fund on behalf of GIZ. NRSP will screen the companies applications, realise contractual arrangements with the private companies, administer the fund, verify results and disburse the RBF incentives. Role of GIZ REEE GIZ REEE (Renewable Energy & Energy Efficiency) will coordinate the overarching processes of the RBF project and assist NRSP in setting up and running the project. In this context, GIZ REEE will provide backstopping and quality control, monitor the use of the NRSP budget and check the use of funds in line with the project objective. Independent Verification An independent verification, either by GIZ or its consultant, will be carried out to do spot checks of the verification reports submitted by NRSP for the results achieved by companies. 4. Eligibility criteria RBF recipients All companies are eligible which are officially registered with Securities & Exchange Commission of Pakistan (under Companies Ordinance, 1984) sell eligible IFC Lighting Global certified products (as mentioned in the Products Eligibility Criteria) provide after sales service during the warranty period and offer end customer financing solutions (PAYGo or micro finance) As the idea is also to work with micro finance institutions (MFIs), the use of PAYGo is not a condition for eligibility. The companies are encouraged to use the incentives not to subsidise the products, but the operational costs of product delivery. Solar products In order to guarantee the promotion of high quality products, only IFC Lighting Global certified

6 solar home systems (SHS) are eligible. This does not include products like solar lanterns and other similar solar pico products. If products have been directly subsidised, they are not eligible for incentives. This means, if a company or NGO uses other grant funds to obtain the products or to subsidise product prices, these sales are not eligible for RBF incentives. All sales of eligible products within the contract period are entitled to the respective RBF incentive amount. 5. Target districts and customers Districts RBF is a pilot project and for this pilot, only three districts, namely Thatta, Badin, and Muzaffargarh have been selected for its implementation. Only sales to households in these three districts will be eligible for qualification for the incentives. Customers All sales to customers are eligible, who live in a household that does not have any electricity connection through the grid, kunda or borrowing from nearby households. 6. Submission of Applications The applications cover letter (signed by the relevant person in the organization) and the completed application in the template provided should be submitted in hard copy, not later than Monday November 12, 2018, 3:00pm, to: SPO Procurement National Rural Support Programme IRM Complex, 7, Sunrise Avenue, Park Road, Chak Shehzad, Near COMSATS University, Islamabad. Ph: procurement@nrsp.org.pk The applications will be opened in the presence of applicants or their representative on the same day Monday November 12, 2018 at 3:30pm. 7. Clarifications Any questions or clarifications regarding this call for application should be addressed to procurement@nrsp.org.pk by 1200 hours, Friday, November 2, A document will be uploaded on the NRSP website on Tuesday, November 6, 2018, responding to all the questions received during the clarification period. A meeting can also be set up on November 6, 2018, responding to the queries. A notification will be uploaded on November 2, 2018 on the NRSP website if the meeting is to be set up on Tuesday. Anyone not able to join in person

7 can be taken on Skype. The venue and details for a public link to access the meeting will be informed in the notification uploaded on the website. 8. Attachments to this Call Application template Annex A Guidelines on products and incentives Annex B

8 Annex A Application Template for Companies for Results based Financing for Off grid Electrification Application Deadline: November 12, 2018

9 1. Applicant background Information Name of applicant Contact person Name: Position: Full contacts of organisation (Please also submit the Incorporation Certificate from SECP) Type of organisation Current footprint (list of districts / tehsils where your organization operates or has operated Implementing partners (if any) Physical: Telephone: 1. Manufacturer/distributor 2. MFI 3. NGO 4. Others (specify) Postal: 2. Description of the business model a) Which solar products do you promote? Are they Lighting Global Certified? Please provide a list of all of your products as a part of this application. Also make a distinction between the Lighting Global certified and noncertified products. b) Briefly describe your current business model (distribution channels, marketing strategies etc.) c) Does your company/organization have a flexible payment methods for products at consumer level? If yes, briefly describe this method

10 d) Does your company/organization have an understanding / MoU with an MFI for microfinancing these products? If yes, mention the name of the MFI(s) and briefly describe the type of agreement. e) Does you company have Operations & Maintenance team available? Briefly describe your warranty and O&M mechanism and how you handle errors in products. 3. Barriers that motivate your organization to apply to this RBF project a) Briefly describe business and market barriers that motivate you to participate in the RBF project b) Briefly describe the proposed solutions/actions that your organization will implement to mitigate the barriers identified above c) Briefly describe how the RBF project will help you mitigate barriers mentioned above, including how do you potentially plan to spend the RBF incentives.

11 4. Sales performance and projections a) How is your quarterly sales performance (per product) for the last one year prior to your application for the RBF project? Product type/model Quarter/Year Number of products sold Sales turnover (PKR) Product X (indicate specific product here) Q2/2018 Q1/2018 Q4/2017 Q3/2017 Product Y Q2/2018 Q1/2018 Q4/2017 Q3/2017 Product Z Q2/2018 Q1/2018 Q4/2017 Q3/2017 NB: Add more rows as appropriate b) How do you project your average monthly sales performance during the duration of the RBF project Product type/model Quarter/Year Number of products sold Sales turnover (PKR) Product X (indicate specific product here) Q4/2018 Q1/2019 Q2/2019 Q3/2019 Product Y Q4/2018 Q1/2019 Q2/2019 Q3/2019 Product Z Q4/2018 Q1/2019 Q2/2019 Q3/2019 NB: Add more rows as appropriate

12 5. Data management and reporting a) Briefly describe your data management and reporting system (M&E system). The system must enable verification of sales to end user. Also mention if you use remote monitoring software. 6. Statement on how the RBF will add value into your business a) Briefly describe how the RBF project will add value into your business? b) How can you this value addition be quantified? Please briefly describe key business development indicators you would expect to transform during the RBF project (provide the details current situation and value added for each indicator mentioned)

13 Annex B Guidelines for products and incentives for the off grid solar RBF project October 26, 2018 Table of Contents 1. Inclusion of products in the off grid solar RBF project Quality requirements of the solar products Minimum products specifications Validity of product admission Notice to RBF contracted applicants Impact of withdrawal of product admission on RBF incentives Incentive structure Background Incentive calculation methodology Capping modalities Utilization of funds Treatment of repossessed and unrecoverable products Data sharing and types of repossessions Treatment of repossessed and unrecoverable solar products Responsibilities of RBF beneficiaries... 10

14 1. Inclusion of products in the off grid solar RBF project 1.1. Quality requirements of the solar products Category Status of Admission to Quality Requirements the RBF project a) SHS products approved by IFC Lighting Global 1 (larger than 10W) Direct admission Proof of a valid IFC Lighting Global verification letter For systems with fans, only energy labelled fans would be allowed. For example, for fans manufactured in China, CEL 3 star labelled fans, for Pakistan, PEL 3 star labelled fans, for EU manufacturing EU labelled fans, that rank the highest in energy b) Small Solar Home Systems (SHS) that would meet the new Lighting Global Quality Provisional admission 1.2. Minimum products specifications efficiency would be acceptable. Proof of submission of the products to the IFC Lighting Global for testing; Preliminary test results for key specifications Only fans, energy labelled through certified national ratings would qualify. The product does not have a minimum specification. The only minimum requirement is that the product should have at least two lights and a mobile phone charger. Systems with fans will be accepted without lights and mobile phone chargers also Validity of product admission Admission can be withdrawn if the Lighting Global approval of the product expires without evidence of renewal. Sales finalized before the expiry date will qualify for incentives. Provisional admission is only entertained for proposal submission purposes. The systems will not qualify for incentives until they are finally certified and approved by IFC Lighting Global Notice to RBF contracted applicants The contracting of RBF applicants will ONLY take place if the applicants are dealing in at least one of the products meeting the product selection criteria, and there is an evidence of an existing flexible financing mechanism (e.g. loan or PAYGO etc.) for such products 1 2

15 The RBF project does not prevent the contracted RBF beneficiaries from dealing with products of their choice whether they meet RBF criteria or not. However, the beneficiaries will only be eligible for incentive claims against approved products that meet the RBF product selection or eligibility criteria. The list of approved products for this scheme will be updated after six months and the list will be updated on NRSP website, however, NRSP reserves the right to update or revise the list at any time subject to request by the RBF beneficiary and approval by the RBF team in writing. This does not include products that lose their certification because of expiry of the verification. For such products, admission will be withdrawn with effect from the date of expiry of the approval. Should the products that are currently NOT meeting the RBF criteria, but their testing process has commenced, and they subsequently get approved in the future, all the sales made by the RBF applicant within one year before and up to the products approval date (and within the contracted period) will be eligible for incentives. This is only applicable for already contracted RBF beneficiaries. Those companies that fail to submit their proposals with provisional admission of the products are not eligible under this clause Impact of withdrawal of product admission on RBF incentives In the event of withdrawal of product admission: The withdrawn product will no longer be eligible for RBF incentives; The RBF beneficiary shall not refund the previously disbursed incentives 3

16 2. Incentive structure 2.1. Background The value of incentives is a percentage of the total value of the solar home systems sold to the end consumer. The amount of incentive varies from product to product depending upon the specifications of the products. Since all products have a different output and different efficiency, the amount has been calculated on the basis of the overall efficiency of the output rather than the size of the system. For the purposes of calculations, Renewable Energy Service Units (RESUs) have been introduced and the efficiency of the output has been linked to these units. Only lights, fans, and mobile charging ports have been incentivized. Televisions and other electronics might be a part of the overall solar home system, but the amount of incentives is dependent on the basis of the equipment mentioned above. Moreover, since both PAYGO and non PAYGO systems are allowed as long as a flexible payment mechanism through micro financing or installments exists, there is an additional incentive for the sale of PAYGO enabled systems, that can be monitored remotely. There is a maximum cap on the amount of incentive and the overall fund for the purposes of payment of incentives, which is explained below in Capping modalities. Moreover, although all the calculations have been done in Euros, the final amount of incentives has been calculated in PKR at the exchange rate mentioned below, which will remain fixed for the whole duration of the project to avoid frequent fluctuations in the amounts of incentives Incentive calculation methodology The methodology that has been used to calculate the amount of incentives is as under: 1 lumen hour = 1 RESU 1 RPM hour = 0.35 RESU Availability of mobile charging port: 150 RESU Remote monitoring through PAYGO: Euro 5 1 RESU = Euro 0.01 Exchange rate (1 Euro) = Pakistani Rupees 150 The specifications and details of the systems have been taken from the specification sheets on IFC Lighting Global website and those shared by the IFC Lighting Pakistan program Capping modalities The overall amount of incentive for the whole scheme is EUR 500,000, which will be divided between companies as per their products and the number of systems that have been sold by the company as per the requirements of this scheme. The incentive amount for each system continues to be calculated as mentioned above but some capping 4

17 measures have been put into place to limit the amount of incentives to ensure that the objective of this scheme is achieved in essence, which is to trigger the market and not subsidizing the products. The following caps have been put in place: Sr. Type of cap No. 1 Maximum amount per system 2 Percentage of the price Description The maximum amount of incentive that would be paid out against each system is 60 Euros, that is PKR 9,000. The amount of incentive is limited to a maximum of 30% of the price of the system that has been submitted to the IFC Lighting Pakistan program for reference purposes. The lower of the two caps will be applicable to each system i.e. if the 30% of the total price of the system is over PKR 9,000, the maximum incentive will be 9,000 rupees. However, if PKR 9,000 is more than 30% of the price, although the specifications of the system allow for a higher incentive to be paid, the cap of 30% of the price will be applied. Brand Product Size Accessories +PAYGO Final Incentive Payable (PKR) Sun King Home Watt 3 LEDs 4,170 1 portable light Fan 20 Watt 1 Fan 3,750 d. light D Watt 2 LEDs 2,745 1 Tubelight X Watts 1 Tubelight 8,850 4 Bulbs Torch 5

18 19" TV SF20 16 Watt 1 Fan 3,300 LED Light inbuilt Energy Watts 3 LEDs 7,800 1 Fan 1 TV Niwa Energy Watts 3 LEDs 6,287 1 Fan 1 TV BBOXX Roshni Advanced 50 Watts 2 Bulbs 9,000 1 able Tubelight 1 Fan PAYGO Roshni Premium 50 Watts 4 Bulbs 9,000 1 able Tubelight 1 Fan PAYGO Omnivoltaic Energy Solutions Sigma Home 35 Watts 3 Bulbs 6,939 1 Fan 6

19 Sigma Home Plus 55 Watts 4 Bulbs 9,000 1 Fan Sigma Premium 75 Watts 4 Bulbs 9,000 1 Fan The amount of incentives mentioned here has been calculated considering that the systems having PAYGO modality are actually PAYGO enabled. For the systems that do not have PAYGO modality enabled for the systems on ground and cannot be monitored remotely, the additional PAYGO incentive of EUR 5 has not been calculated. The companies will be mentioning in their claims about the availability of PAYGO modality. Moreover, the companies using PAYGO will also be required to give access to their remote monitoring software for the duration of the project. If a company introduces remote monitoring through PAYGO technology with flexible payment mechanism in the course of this scheme, they can put up a request to NRSP to revise the incentive. All such requests will be considered on a case to case basis Utilization of funds The overall funds allocated for the RBF scheme amount to EUR 500,000. Each contracted company will have access to at least EUR 15,000 in the first quarter, however, the amount will be proportional to the number of sales and if the sales are higher, a higher amount can also be claimed. After the first quarter, the overall fund will be utilized on a first come first serve basis. The project is planned to continue for twelve months, however, if the market picks up scale really quick and the funds are utilized before twelve months have passed, the scheme will come to an end too. In that case, all the companies contracted under this scheme will be informed at least three months before the closure and updated about the status of utilization of funds. 7

20 3. Treatment of repossessed and unrecoverable products 3.1. Data sharing and types of repossessions All the companies contracted under the RBF scheme will be required to share data about the repossessed systems alongside their regular reports. The data on the repossessed systems will then be assessed in order to establish a proper mechanism on how to treat them with regard to incentive pay out, taking into consideration the RBF verification guidelines (particularly on traceability of products to the consumer level) and fraud risk. The following scenarios may arise: Permanent repossessions This occurs when the end consumers have completely defaulted payment and the companies are capable of repossessing the systems. This only occurs when the cost of repossession makes financial sense for the companies. Otherwise the companies face the risk of loss due to defaulting customers if the cost of recovery does not make financial sense. This affects both PAYGO and non PAYGO products. Temporary repossessions This occurs when the companies temporarily repossess the products (partially or completely) from the defaulting customers temporarily due to cash flow problems in order to enforce the agreed upon payment schedules. Once the customers resume payments, the products are returned to them. Unrecoverable This occurs when the customers have defaulted but the products cannot be repossessed due to uneconomical cost of recovery. For PAYGO products, they are usually switched off when the customers do not adhere to the payment schedules. Such products will usually not be in use despite them being physically at the customers premises, unless where the customers bypass the control Treatment of repossessed and unrecoverable solar products Sr. Type of No. repossession 1 Permanent repossession with possibility of resale Details Permanent default but the product is in good condition and can be resold to consumers Treatment Deducted from the incentive calculation in the current reporting period. The incentive payout will be considered in subsequent reporting period subject to proof that the products in question are resold to other clients and can be traced (products should still be in good working condition and should have 8

21 2 Permanent repossession without possibility of resale 3 Temporary repossession 4 Unrecoverable products due to default Permanent default but the product can be repossessed. However, it cannot be resold due to poor conditions. Temporary and means of enforcing payment Permanent default (at least 6 months) but the products cannot be repossessed due to uneconomical cost of recovery the same warranty terms as other customers) Deducted from the incentive calculation in the current reporting period. However, the incentive payout can be considered at the end of the project subject to the following conditions: Proof that the repossessed systems cannot be resold to other customers due to their poor condition and have been written off the balance sheets of the company. Proof that the products in question have been repossessed for at least six months. The incentive payout will only cover repossessed systems of up to 5% of the total sales over the entire project period (partial risk cover for unforeseen default). Deferred to the next reporting period and considered for incentive payout subject to the following conditions: Proof that the products in question have been returned to the original customers who acquired them; or Proof that the products in question have been resold to other customers and can be traced. Deducted from the incentive calculation in the current reporting period. However, the incentive payout can be considered at the end of the 9

22 project subject to the following conditions: Proof that the products in question have been defaulted for at least six months The incentive payout will however, only cover repossessed products of up to 5% of the total sales over the entire project period (partial risk cover for unforeseen default) Responsibilities of RBF beneficiaries The beneficiaries will continue disclosing the data of the repossessed and unrecoverable systems, clearly indicating at least the following information depending upon the nature of the transaction: Type of repossession Repossessed products that have been returned to the original customers (in case of temporary repossession) Repossessed products that have been resold to the new customers (providing the details of the new customers to aid the verification and tracking process) Repossessed products that have no resale value (written off products) Database of unrecoverable products In case, the case of repossession is different from the abovementioned types of repossession, the companies can explain the scenario in the report and management will look at those scenarios from a case to case basis) 10