RFI_No._72036720R00001-_Urja_Nepal.pdf

REQUEST FOR INFORMATION (RFI)

ISSUANCE DATE: Friday, October 4, 2019; 17:00 Hours Nepal Time

RFI CLOSING DATE: Friday, October 18, 2019; 17:00 Hours Nepal Time

SUBJECT: RFI – Urja Nepal

REFERENCE: RFI No. 72036720R00001

Dear Prospective Respondents and Interested Parties, The United States Government (USG), represented by the U.S. Agency for International Development’s Nepal Mission (USAID/Nepal) issues this RFI per the Federal Acquisition Regulation (FAR) sections 15.201(c)(7) and 15.201(e), respectively, to provide stakeholders an opportunity to review, comment, suggest and enhance areas in the attached concept note for a planned new USAID/Nepal energy-focused activity, tentatively titled Urja Nepal.

USAID issues this RFI solely for information and planning purposes. This RFI does not constitute a request for proposals. USAID posts its competitive business opportunities on www.fbo.gov. It is the potential offeror’s responsibility to monitor this site for announcements of new opportunities.

By issuing this RFI for consultation, USAID/Nepal aims to consult with a broad community of public and private sector actors concerned with improving energy security in Nepal. USAID/Nepal requests your comments to help refine the concept and ensure maximum development impact. USAID/Nepal may significantly revise the approach based on comments received and further stakeholder consultations.

RFI Submission:

All organizations and firms (large and small business) are strongly encouraged to provide information and comments by the closing date and time noted on the cover page. Responses should be sent to kathmanduoaaexchange@usaid.gov with the Subject Line reading “Urja Nepal RFI Response”. We request that respondents limit their submissions to 10 pages and would particularly value comments responsive to the consultation questions listed below.

Consultation Questions

1. To what extent are the proposed objectives accurately focused on the areas of greatest USAID/Nepal comparative advantage vis-a-vis government of Nepal priorities, other relevant development partner-supported activities, and the specific types of technical assistance organizations such as yours are best suited to provide? Are there any major gaps USAID/Nepal should consider? Are there proposed focus areas that may present particular risks or implementation challenges?

RFI No. 72036720R00001 - Urja Nepal

2. Within the four proposed objectives, what specific potential interventions or areas of support does your organization views as likely to be particularly cost-effective and impactful? Should hydropower remain a significant focus of USAID’s in-line with its current National Hydropower Development Program

(NHDP)?

3. Regarding energy distribution and support for advanced energy systems at the municipal level, what specific investments and approaches does your organization view as likely to be the most successful vis-a-vis Asia EDGE priorities?

4. With respect to the key performance indicators listed in section 9, to a first degree of approximation, what scale of results does your organization view as likely to be feasible within a three to five-year time frame and roughly what level of resources would be required?

5. While the investment needs in the energy sector within Nepal are quite large, it is also a sector in which a number of other development partners and U.S. government agencies are active. What are the most significant coordination gaps in the sector? At the activity level, how can Urja Nepal best ensure strong coordination, avoid duplication and ensure the greatest possible development impact?

Issuance of this RFI neither obligates the USG to issue a solicitation or award a contract nor commits the USG to pay for any costs incurred or information resulting from this request. Respondents remain solely responsible for all expenses associated with responding to this RFI.

Sincerely, Marva M. Butler Contracting Officer

Draft Concept Note - Urja Nepal

1. Problem Statement

Reliable access to electricity is a necessity for Nepal’s prosperity and the health of its citizens. Nepal is endowed with an immense hydropower potential of more than 80,000 megawatts, rich solar and wind resources, and burgeoning cities ripe for urban energy and sustainable transportation advances. Despite recent gains, however, a significant portion of Nepal’s population remains entirely off-grid and Nepal has one of the lowest per capita rates of electricity usage in the world - only about 140 kilowatt hours per year.

After years of extensive load shedding that hampered Nepal’s economic growth, the Government of Nepal (GoN) has made significant progress in improving electricity supply since 2016. However, the country is not yet able to meet its electricity demand, which is increasing rapidly and estimated at ten percent annual growth.

It is estimated that an average investment of 1.2 - 2.3 billion dollars will be needed annually between 2019 and 2040 to meet projected demand and take advantage of the country’s export potential1, which cannot be met by the public sector alone - private investment must be mobilized to develop the energy sector for Nepal’s Journey to Self-Reliance.

Developing Nepal’s energy potential will ensure the country is able to meet its domestic energy needs. It could position Nepal as a reliable and clean energy supplier for the South Asia region, contributing directly towards enhancing regional connectivity, stability and growth. Essential to capitalizing on this potential are quality sector policies and regulatory frameworks, high-performing electric utilities, strong private sector engagement and robust cross-border power trade. USAID is well positioned to partner with Nepal on all four of these development opportunities.

2. Development Hypothesis

The goal of the U.S. government’s Asia EDGE Initiative (Enhancing Development and Growth through Energy) is to grow sustainable and secure energy markets throughout the Indo-Pacific region via four pillars:

(1) utility modernization, (2) increased deployment of advanced energy technologies, (3) transparent, best value procurement, and (4) regional energy trade and integration.

In order to contribute to this goal, Urja Nepal will prime the Nepali energy sector for increased private investment to deliver more reliable and secure power supply and service.

The draft development hypothesis is:

If the energy sector is run on a commercial basis with a financially viable and efficient utility;

And if the sector is planned, regulated, and managed to minimize system costs, risks, and environmental impact;

And if the sector reduces cost and increases transparency through competitive procurement;

1 World Bank, 2019. Nepal Energy Infrastructure Sector Assessment

And if the Nepali public and private sector are better equipped to take advantage of regional market opportunities;

Then Nepal will be able to provide affordable, reliable, and sustainable power necessary for the journey to self-reliance.

3. Goals and Objectives

The goal of Urja Nepal is to create a financially viable electricity sector that provides affordable, reliable and secure power and enables the entry of private investment into the Nepali market.

As presently conceived, Urja Nepal will have four interrelated objectives:

Objective 1: Utility performance and relevant sector policies improved.

Objective 2: Advanced energy systems deployed.

Objective 3: Increased private sector engagement.

Objective 4: Cross border electricity trade between Nepal and its neighbors advanced.

4. Draft Results Framework

5. Anticipated Approach

USAID/Nepal intends for the Urja Nepal award to be flexible and adaptive in line with evolving sector needs and uncertain resource availability. In close consultation with USAID, the implementer should focus investments on those activities that most cost-effectively address constraints to private sector investment.

Strong coordination with other relevant USG-supported activities is of critical importance as further described below. Urja Nepal may be particularly well placed to help develop energy projects to the financing stage, at which point there may be significant opportunities for other USG entities.

Strategies and potential requirements for coordination and for bridging the project development and financing divide are welcome subjects of responses to this RFI.

6. Complementary Activities

There are many relevant activities underway supported by USAID/Nepal, other USG agencies, and other development partners. These activities include, but are not limited to:

The Program for Aquatic Natural Resources Improvement (PANI) is USAID/Nepal’s project promoting aquatic biodiversity. It is generating hydropower river basin analysis and energy options analysis that can serve as critical inputs into Urja Nepal’s strategic planning set of activities.

The Millennium Challenge Corporation (MCC) is planning a $500 million Compact with the Nepali government, scheduled to enter into force in the coming months. The Compact will focus on building 300 kilometers of high voltage electricity transmission lines as well as the addition of a second cross-border transmission line to facilitate electricity trade with India, but will also include some level of technical assistance around transmission-related topics to National Electricity Authority and ERC such as a tariff study. MCC is currently working on a needs assessment to determine future TA opportunities. Close coordination with MCC will be necessary to ensure Urja Nepal is helping safeguard MCC investments and providing complementary support.

The Asian Development Bank (ADB) is primarily working with NEA on grid extension projects through a distribution master plan mostly focused on infrastructure procurement and some technical assistance. ADB is also creating a smart grid roadmap. ADB recently assisted the GoN in structuring a transaction for procuring 25 MW of large scale solar and expects to continue this process with a second round on which Urja Nepal could assist. With regard to support for ERC, ADB is providing funding for ERC to access short-term consultant expertise since the Commission does not yet have permanent staff. ADB is also the focal point for coordinating the donor working and UJRA Nepal should ensure that information is shared with USAID prior to working group meetings.

The World Bank is supporting NEA’s institutional restructuring under a $100 million (energy sector Development Policy Credit (DPC) with GoN. The Bank has also procured PSR’s OptGen package for generation planning. On the renewables side, the Bank is working on a nationwide renewable energy resource mapping study and results will be posted on the ESMAP website. The Bank coordinated closely with NHDP in the past on reducing barriers for hydropower investment and Urja Nepal could continue a broader collaboration.

7. Geographical Focus

Urja Nepal is currently envisioned to focus mainly at the national level. It will also, however, aim to support the federalism process and may invest at the provincial and municipal levels. The deployment of advanced energy systems, with an initial focus on electric vehicles and energy efficiency, will be initially focused on the City of Kathmandu (and potentially other municipalities in the Kathmandu Valley), which enjoy a nationally robust level of own resources and have relatively advanced capacity and plans in place. There will also be a geographical overlap with PANI, as the river basin-based analysis of hydropower will be an important input for this project.

8. Potential Required Results by Objective

Objective 1: Utility performance and relevant sector policies improved.

IR 1.1 Policy and regulatory frameworks for the decentralization of NEA improved.

IR 1.2 Electricity regulator (ERC) technical capacities increased.

IR 1.3 Improved commercial and operational performance of NEA and its provincial centers.

Objective 2: Advanced energy systems deployed

IR 2.1 Strategic, least regrets energy planning process established and institutionalized.

IR 2.2 Sustainable energy technologies incentivized and deployed by local governments.

Objective 3: Increased private sector engagement

IR 3.1 GON capacity for conducting competitive bidding strengthened

IR 3.2 Program for procuring new renewable energy projects developed

Objective 4: Cross border electricity trade between Nepal and its neighbors advanced

IR 4.1 The technical systems, regulatory regimes, and power agreements needed to conduct CBET developed.

IR 4.2 Transparent agreements between cross-border buyers and sellers completed.

9. Performance Monitoring

The Performance Monitoring, and Learning Plan (PMLP) for this activity will be strongly aligned with the overall performance monitoring framework for Asia EDGE. The activity will draw mainly from the standard and custom indicators developed for the Asia EDGE initiative including:

● EG.7.2-1 and EG. 12-4: Amount of investment mobilized in USD for energy projects and/or clean energy as supported by USG assistance

● EG7.1-1: Number of beneficiaries with improved energy services due to USG assistance

● EG 12.5: Generation capacity (MW) supported by USG assistance that has achieved financial closure

○ According to previous Agency practice, this can include clean energy generation capacity awarded through competitive procurement. It does not need to reach financial close to report.

● EG.7.3-1 and EG.12-3: Number of laws, policies, regulations or standards to enhance energy sector governance and/or address Clean Energy formally proposed, adopted or implemented as supported by USG assistance

● Custom: Percentage of leadership positions in USG-supported management entities that are filled by a woman or a member of a vulnerable group

10. Target Beneficiaries

The project focuses on improving the performance and service quality of the power sector at the central level;

therefore, all populations connected to the grid (around 78% of total population) will benefit from more affordable, reliable, and sustainable grid power. Improved financial viability of the sector should also enable new grid connections where economically viable, benefitting currently unconnected populations. Improved strategic planning, particularly of hydropower resources, will directly benefit communities within the watersheds where hydropower is currently haphazardly planned.

[ End of RFI No. 72036720R00001]