PROJECT PREPARATORY TECHNICAL ASSISTANCE (Preparing the Gujarat Solar and Smart Grid Development Investment Program) 1. A project preparatory technical assistance (PPTA) for $700,000 in grant funds is included in the 2011 COBP for India. This is to cover the processing of 2 solar MFF namely Gujarat and Maharashtra. Based on the due diligence requirements, this PPTA is being requested for $350,000. A. Justification 2. The PPTA is required to carry out proper due diligence on technical, economic, financial, social and environmental aspects of the Program as well as the tranche 1 sub-projects. The PPTA will also make an initial assessment of the requirements for capacity development in GETCO and distribution companies to implement the MFF. B. Major Outputs and Activities 3. The outputs of this PPTA include completed social and environmental analysis and documentation, technical, economic and financial due diligence for the MFF and Tranche 1, and a well designed capacity development and implementation support component. 4. The major outputs and activities are summarized in Table A5.1. Table A5.1: Summary of Major Outputs and Activities Major Activities Completion Date Major Outputs Completion Date Hiring of PPTA consultants March 2012 Signed contracts March 2012 Social and environmental due March 2012 Relevant consultant March 2012 diligence initiated. mobilization Social and environmental April 2012 EARF, RF, IPDF posted on April 2012 framework document ADB Website completed and disclosed IEE completed and disclosed April 2012 IEE posted on ADB Website April 2012 RP Completed and disclosed May 2012 RP posted on ADB Website May 2012 Financial and Economic April 2012 Financial and Economic April 2012 Analysis completed Analysis reports Financial Management April 2012 Reports April 2012 Assessment, Procurement Capacity Assessment completed ADB = Asian Development Bank; EARF = environmental assessment and review report; IEE = initial environmental examination; IPDF = indigenous peoples development framework; RF = resettlement framework; RP = resettlement plan;
C. Cost Estimate and Proposed Financing Arrangement 5. The TA is estimated to cost $350,000 equivalent 1, to be financed on a grant basis by ADB's Technical Assistance Special Fund (TASF-other sources). GETCO and distribution companies will provide counterpart resources by way of office space, counterpart staff, and communication facilities (telephone and internet). 6. The detailed cost estimate is presented in Table A5.2. Table A5.2: Cost Estimates and Financing Plan ($'000) Total Item Cost A. ADB Financing a 1. Consultants a. Remuneration and per diem i. International consultants (9 person-months) 207.0 ii. National consultants (5 person-months) 30.0 b. International and local travel 50.0 c. Reports and communications 5.0 2. Workshops, training, seminars, and conferences b a. Facilitators 4.0 b. Training and conference 20.0 3. Surveys 10.0 4. Miscellaneous administration and support costs 0.0 8. Contingencies 24.0 Total 350.0 a Financed by the Asian Development Bank's Technical Assistance Special Fund (TASF-other sources) b 2 Workshops and 2 training programs Source(s): ADB staff estimates D. Consulting Services 7. Consultants will be engaged in accordance with the Guidelines on the Use of Consultants (2010, as amended). A total of 8 positions and 14 person-months of consulting services are required. Individual consultants will be engaged for 4 positions for 8 personmonths, namely, the Distribution Specialists (International and National), and the Social and Environmental Safeguards Specialists, as their services are required to commence at the earliest. The remaining 4 positions for 6 person-months would be recruited through a firm by obtaining a biodata technical proposal, following the quality and cost based selection method with 80% weight for quality and 20% weight for price. To expedite project processing, advanced contracting procedures are proposed to be adopted, so that the consultants can be on board soon after the TA is effective. Work to be performed by the consultants includes assisting ADB with (i) detailed technical assessment of the proposed solar power generation and transmission program; (ii) detailed capacity assessment of the executing agencies, and suggested remedial action plan to build EA capacity to minimize procurement, financial management and governance risks; (iii) preparation of bid document and a procurement plan for tranche 1 loan; 1 The TA cost excludes the cost of counterpart contribution in kind by the Government of Gujarat which is estimated to be about 10%.
(iv) preparation of social safeguards framework documents, and social safeguards due diligence for tranche 1 loan including census surveys, consultations and preparation of a resettlement plan; (v) preparation of environmental safeguards framework document and environmental safeguards due diligence for the tranche 1 subprojects including consultations and preparation of an initial environmental examination; (vi) economic and financial due diligence for the tranche 1 subprojects; and (vii) assessment of the readiness of GETCO and distribution companies to undertake the project, and organizing workshops for procurement training, conferences to promote solar projects in Gujarat and ascertain investor expectations, and suggesting an action plan for capacity development in this area. Table A5.3: Summary of Consulting Services Requirement International National Name of Positions Person-months Name of Positions Person-months Distribution Specialist 2 Distribution Specialist 2 Economics Specialist/Team 2 Financial Specialist 2 Leader Social Development Specialist 2 Environmental Safeguards 2 Specialist Solar Specialist 1 Solar Specialist 1 Source: Asian Development Bank estimates 8. The outline terms of references for the project preparatory TA consultants are described in paras. 9 to 14. 9. Distribution Specialist (international, 2 person-months, national 2 person-months). The international consultant will have a degree in electrical engineering, and have at least 15 years of prior experience in working on distribution network power systems particularly on HVDS. The consultant should also have suitable knowledge on integration issues with renewable energy (particularly solar). He/She should have prior experience of having worked in India, and knowledge of ADB loan processing modalities. The consultant would review the project planning, procurement and implementation capabilities of EAs, and include recommendations for capacity development during the duration of the MFF. The consultant should also review the distribution DPRs for technical viability, and prepare full technical descriptions of the tranche 1 subprojects including the associated technical layout and line diagrams. The national specialist, with a degree in electrical engineering and at least 10 years of prior experience in working on distribution networks particularly on HVDS, would support the international specialist in data gathering and analysis, organizing meetings, and in the preparation of the reports. 10. Economics Specialist & Team Leader (international, 2 person-months). The consultant should have a university bachelor s degree in engineering, economics, management accounting or business administration, and 10 years experience in economic analysis of energy sector projects. He/She should have prior experience of having worked in India, and knowledge of ADB loan processing modalities. The consultant, who will function as the team leader, will convert the financial costs and prices into economic prices, and carry out an economic analysis of the tranche 1 subprojects following ADB s Guidelines on Economic Analysis of Projects. The team leader will also calculate the total green house gas emission reductions resulting from the Program. 11. Social Development Specialist (international, 2 person-months). The consultant should have a university bachelor s degree in sociology, anthropology or social sciences, and 15 years overall experience. The consultant will review the national legal policies on land acquisition and
involuntary resettlement to verify adequacy and consistency with ADB's Safeguard Policy Statement (2009) (SPS), and recommend measures to bridge any gap. In full consultation with the stakeholders and in accordance with ADB's SPS, Operations Manual F1/BP and F1/OP (2010), and relevant local laws, policies and regulations, the consultant will prepare a Resettlement Framework and Indigenous People s Development Framework, a Resettlement Plan (RP) for the Tranche 1 subprojects. This will require organizing field investigations including questionnaire interviews in the subproject areas, consulting with relevant officials from the government and other organizations to supplement available secondary data, and preparing a poverty profile of the subproject area. The consultant will engage in a consultative process with women and affected groups, conduct poverty and social impact assessment (as required) and collect socioeconomic data in the relevant adjacent communities, and identify potential gender, social, employment generation, and health impact issues.the consultant will also review GETCO and distribution companies social safeguard capacity and track record and recommend capacity development activities, describe institutional arrangements for social safeguard implementation, calculate budget for IR and IP safeguards and prepare social safeguard monitoring plans for Tranche 1 and the MFF. 12. Environmental Safeguards Specialist (international 2 person-months). The consultant should have at least a university bachelor s degree in environmental sciences, and an overall experience of about 15 years including about 10 years in the energy sector. The consultant will prepare an Environmental Assessment and Review Framework for the proposed Program in accordance with ADB's SPS, review the detailed project reports and environmental reports, if any, for the proposed investment components in the Tranche 1 loan, conduct site visits to the subproject areas including holding consultations as required, and prepare Initial Environmental Examination (IEE) reports for the tranche 1 investments in accordance with ADB's SPS. 13. Solar Specialist (international, 1 person-month, and national, 1 person-month). The international consultant should possess a university bachelors degree in electrical engineering, and 10 years experience in working in solar power generation projects. The national consultant should possess a university bachelor s degree in electrical engineering, and have atleast 5 years experience in working in solar power projects. The consultants will function as a team and carry out an assessment of the legal and institutional environment in Gujarat to facilitate investments in the solar sector in cities and villages. They would develop an appropriate mechanism for the distribution companies to develop solar rooftop projects in an optimal manner. 14. Financial Specialist (national, 2 person-months). The consultant should have a university bachelor s degree in engineering, economics, management accounting or business administration, and 10 years experience in financial analysis of energy sector projects. The consultant will conduct the financial assessments for the Tranche 1 subprojects in accordance with ADB s Financial Management and Analysis of Projects (2005), using the financial internal rate of return method and comparing it with the relevant weighted average cost of capital. The consultant will also perform a detailed tariff analysis and review the existing regulatory framework in Gujarat, with particular reference to the renewable purchase obligations and renewable energy certificates, and assess how this affects the investment projects financially. Finally, the consultant would design fund flows and disbursement mechanisms for ensuing products based on the financial management assessment of executing/implementing agencies and identify capacity building requirements.
E. Implementation Arrangements 15. Gujarat Energy Transmission Company Limited (GETCO), the power transmission utility licensed to operate in the state of Gujarat, along with Uttar Gujarat Vij Company Limited (UGVCL) and Paschim Gujarat Vij Company Limited (PGVCL) will be the joint executing agencies (EA). The EAs will provide in-kind contributions by providing office accommodation, support facilities, counterpart staff, maps, reports, and other logistical support. Two workshops should be organized to promote solar park investments in Gujarat and to assess investor expectations. Disbursements under the TA will be made in accordance with ADB's Technical Assistance Handbook (May 2010, as amended). 16. The proposed TA processing and implementation schedule is listed in Table A5.4. Table A5.4: Proposed Technical Assistance Processing and Implementation Schedule Major Milestones Completion Date TA Commencement March 2012 Mobilization of consultants March 2012 Inception Report / Feedback from consultants April 2012 Completion of due diligence and submission of draft RRP May 2012 Financial closure of TA December 2012 RRP = report and recommendation of the President; TA = Technical Assistance Source: Asian Development Bank estimates.