SOL-121-16-000014.pdf

Energy Security through Competitive Energy Markets Program in Ukraine RFP No. SOL-121-16-000014

Date Issued: November 25, 2016 Deadline for Questions: December 2, 2016, 16:00 Hours Local Kyiv Time Closing Date: January 23, 2017 Closing Time: 16:00 Hours Local Kyiv Time

Subject: Request for Proposal (RFP) No. SOL-121-16-000014 Energy Security through Competitive Energy Markets Program in Ukraine

To All Prospective Offerors:

The United States Government, represented by the U.S. Agency for International Development (USAID) through its Mission in Ukraine (USAID/Ukraine), is soliciting proposals from qualified organizations interested in providing the services described in the attached solicitation. USAID/Ukraine anticipates awarding one cost plus fixed fee completion type contract with a period of performance of five (5) years. The maximum amount of the contract (including costs and fee) is in the range of $85-$90 million, subject to the availability of funds. The principal geographic code is 937 and the NAICS code is 541990. Cost-effective approaches to achieving the results stated in the government requirement are highly encouraged. Offerors must propose costs that they believe are realistic and reasonable for the work. Cost proposals will be evaluated as part of the best value procedure in determining the contract award.

Only electronic proposals will be accepted. Proposals must be sent to eparinova@usaid.gov and oluchukvysotska@usaid.gov. Detailed requirements for Offerors’ proposals are outlined in Section L of this solicitation. Proposals must be signed by an official who is authorized to bind the organization and are to be submitted to USAID no later than the closing date and time stated above.

Any questions regarding this solicitation must be submitted in writing via email to Ms. Elena Parinova at eparinova@usaid.gov and Ms. Olga Luchuk-Vysotska at oluchukvysotska@usaid.gov by the date and time specified above.

This solicitation, amendments to this solicitation, and announcement of contract award will be made available through the government point of entry at http://www.fedbizopps.gov. It is the Offeror’s responsibility to check this site periodically for official updates to this solicitation.

Issuance of this solicitation and the submittal of a proposal do not constitute a commitment on the part of the U.S. Government nor USAID to make an award; neither does it constitute an obligation for any costs incurred in the preparation and submission of a proposal.

Thank you for your interest in working with USAID/Ukraine.

Sincerely, /s/

Michael Capobianco Regional Contracting Officer USAID/Kosovo mailto:eparinova@usaid.gov mailto:oluchukvysotska@usaid.gov mailto:eparinova@usaid.gov mailto:oluchukvysotska@usaid.gov http://www.fedbizopps.gov/

1. THIS CONTRACT IS A RATED ORDER RATING PAGE OF PAGES

UNDER DPAS (15 CFR 700)

2. CONTRACT NUMBER 3. SOLICITATION NUMBER 4. TYPE OF SOLICITATION 5. DATE ISSUED 6. REQUISITION/PURCHASE NUMBER

SEALED BID (IFB)

NEGOTIATED (RFP)

7. ISSUED BY CODE 8. ADDRESS OFFER TO (If other than Item 7)

NOTE: In sealed bid solicitations "offer" and "Offeror" mean "bid" and "bidder".

9. Sealed offers in original and _____________________________ copies for furnishing the supplies or services in the Schedule will be received at the place specified in Item 8, or if hand carried, in the depository located in until local time _______________________ (Hour) (Date)

CAUTION - LATE Submissions, Modifications, and Withdrawals: See Section L, Provision No. 52.214-7 or 52.215-1. All Offers are subject to all terms and conditions contained in this solicitation.

A. NAME B. TELEPHONE (NO COLLECT CALLS) C. E-MAIL ADDRESS

AREA CODE NUMBER EXT.

(X) SEC. DESCRIPTION PAGE(S) (X) SEC. DESCRIPTION PAGE(S)

PART I - THE SCHEDULE PART II - CONTRACT CLAUSES

A SOLICITATION/CONTRACT FORM I CONTRACT CLAUSES

B SUPPLIES OR SERVICES AND PRICES/COSTS PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.

C DESCRIPTION/SPECS./WORK STATEMENT J LIST OF ATTACHMENTS

D PACKAGING AND MARKING PART IV - REPRESENTATIONS AND INSTRUCTIONS

E INSPECTION AND ACCEPTANCE

F DELIVERIES OR PERFORMANCE

G CONTRACT ADMINISTRATION DATA L INSTR., CONDS., AND NOTICES TO OFFERORS

H SPECIAL CONTRACT REQUIREMENTS M EVALUATION FACOTRRS FOR AWARD

K REPRESENTATIONS, CERTIFICATIONS AND OTHER

STATEMENTS OF OFFERORS

NOTE: Item 12 does not apply if the solicitation includes the provisions at 52.214-16, Minimum Bid Acceptance Period.

12. In compliance with the above, the undersigned agrees, if this offer is accepted within ____ calendar days (60 calendar days unless a different period is inserted by the Offeror) from the date for receipt of offers specified above, to furnish any or all items upon which prices are offered at the price set opposite each item, delivered at the designated point(s), within the time specified in the schedule.

13. DISCOUNT FOR PROMPT PAYMENT 10 CALENDAR DAYS (%) 20 CALENDAR DAYS (%) 30 CALENDAR DAYS (%) CALENDAR DAYS (%) (See Section I, Clause No. 52-232-8)

14. ACKNOWLEDGEMENT OF AMENDMENTS AMENDMENT NO. DATE AMENDMENT NO. DATE

(The offeror acknowledges receipt of amendments to the SOLICITATION for offerors and related documents numbered and dated:

CODE FACILITY 16. NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER 15A. NAME AND

ADDRESS OF

OFFEROR

(Type or print)

15B. TELEPHONE NUMBER 17. SIGNATURE 18. OFFER DATE

AREA CODE NUMBER EXT. 15C. CHECK IF REMITTANCE ADDRESS IS DIFFERENT FROM

ABOVE - ENTER SUCH ADDRESS IN SCHEDULE

19. ACCEPTED AS TO ITEMS NUMBERED 20. AMOUNT 21. ACCOUNTING AND APPROPRIATION

22. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION: 23. SUBMIT INVOICES TO ADDRESS SHOWN IN ITEM (4 copies unless otherwise specified)

10 U.S.C. 2304(a) ( ) 41 U.S.C. 253(c) ( )

24. ADMINISTERED BY (If other than Item 7) 25. PAYMENT WILL BE MADE BY CODE CODE

26. NAME OF CONTRACTING OFFICER (Type or print)

Michael Capobianco Regional Contracting Officer

27. UNITED STATES OF AMERICA 28. AWARD DATE

IMPORTANT - Award will be made on this Form, or on Standard Form 26, or by other authorized official written notice.

(Signature of Contracting Officer)

(REV. 9-97)

10. FOR INFORMATION CALL:

11. TABLE OF CONTENTS

STANDARD FORM 33

SOLICITATION, OFFER AND AWARD N/A

SOLICITATION

OFFER (Must be fully completed by Offeror)

AWARD (To be completed by Government)

SOL-121-16-000014

X

11/25/2016 REQ-121-16-000039

USAID/Ukraine/Regional Contract Office Department of State 5850 Kyiv Pl.

Washington D.C. 20521-5850

See Section L of the RFP

See Section L

16:00(Kyiv LT) 01/23/2017

Ms. Elena Parinova Acquisition & Assistance Specialist +380-44 521-5438 eparinova@usaid.gov

See Attached Table of Contents

X 2

X 3-5

X 6-18

X 19

X 20

X 21-30

X 31-34

X 35-58

X 59-65

X 66

X 67-77

X 78-86

X 87-89

USAID/Ukraine/Regional Contract Office

USAID/Ukraine/Office of Financial Management

PART I – THE SCHEDULE

SECTION B – SERVICES AND PRICE/COSTS

B.1 PURPOSE

The purpose of this contract is to provide technical assistance and other services as described in detail in Section C for the implementation of USAID/Ukraine’s program entitled “USAID/Ukraine Energy Security through Competitive Energy Markets Program.”

B.2 CONTRACT TYPE AND CONTRACT SERVICES

This is a cost-plus-fixed-fee (CPFF) completion-type contract. For the consideration set forth below, the Contractor must achieve the performance objectives and deliverables or outputs described in this contract.

B.3 ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT

a) The estimated cost for the performance of the work required hereunder, exclusive of fixed fee, is $______. The fixed fee, if any, for the contract period is $_________. The total estimated cost plus fixed fee is $_________.

b) Within the estimated cost plus fixed fee (if any) specified in paragraph (a) above, the amount currently obligated and available for reimbursement of allowable costs incurred by the Contractor (and payment of fee, if any) for performance of the contract period hereunder is $_____. The Contractor must not exceed the aforementioned obligated amount.

c) Funds obligated hereunder are anticipated to be sufficient through _______. Funding for this contract will be on an incremental basis, subject to the availability of funds.

B.4 CONTRACT BUDGET AND CEILINGS

a) The contract budget found herein is based on the Contractor’s original proposal and/or final proposal revision, which was accepted by USAID through award of this contract.

b) The following itemized budget sets forth the estimates for individual line items of cost:

Cost Category Amount Direct Costs TBD Grants Under Contract TBD Indirect Costs TBD Fixed Fee TBD Total Cost Plus Fixed Fee TBD

B.5 PAYMENT OF FIXED FEE

The Government must pay the Contractor for performing this contract the fixed fee specified in Section B.3. Payment of the fixed fee will be made upon receipt of the deliverables identified in the Reports, Deliverables and Fee Schedule set forth in Section F.6.

In the event of discontinuance of the work in accordance with the clause of the contract entitled “Termination (Cost Reimbursement)” (FAR 52.249-6), the fee must be re-determined by mutual agreement equitably to reflect the reduction in the work actually performed. The amount by which such fee is less than, or exceeds, payments previously made on account of the fee must be paid to, or repaid by the Contractor, as applicable.

B.6 INDIRECT COSTS

The contract clause entitled “Allowable Cost and Payment (DEC 2002)”, FAR 52.216-7, specifies that the indirect cost rates must be established for each of the Contractor’s accounting periods that apply to this contract. Pending establishment of revised provisional or final indirect rates, allowable indirect costs must be reimbursed on the basis of the following negotiated provisional or predetermined rates and the appropriate bases:

Description Rate Base Type Period 1/ 1/ 1/

[TO BE DETERMINED]

B.7 ADVANCE UNDERSTANDING ON CEILING INDIRECT COST RATES

AND FINAL REIMBURSEMENT FOR INDIRECT COSTS

(a) The Contractor must make no change in its established method of classifying or allocating indirect costs without the prior written approval of the Contracting Officer.

(b) Reimbursement for indirect costs must be at the lower of the negotiated final provisional/pre- determined rates or the following ceiling rates:

Description 2017 2018 2019 2020 2021 [Rate 1 description to be inserted] % % % % % [Rate 2 description to be inserted] % % % % % [Rate 3 description to be inserted] % % % % %

(c) The Government will not be obligated to pay any additional amount should the final indirect cost rates exceed the negotiated ceiling rates. If the final indirect cost rates are less than the negotiated ceiling rates, the negotiated rates will be reduced to conform to the lower rates.

(d) This advance understanding must not change any monetary ceiling, cost limitation or obligation established in the contract.

B.8 MULTI-YEAR CONTRACT AND CANCELLATION CEILING

This contract is considered non-severable, and is therefore a multi-year contract as defined in FAR 17.103. Therefore, this contract is subject to the requirements of FAR 17.106.

a. Performance under this contract during the second and subsequent years is contingent upon the appropriation of funds. All program years except the first are subject to cancellation. Cancellation shall occur by the dates specified below if the Contracting Officer:

1. notifies the Contractor that funds are not available for contract performance for any subsequent program year or

2. fails to notify the Contractor that funds are available for performance of the succeeding program year.

b. Cancellation Ceiling:

This is a CPFF type contract where the Contractor is authorized to be reimbursed for all costs which are allowable in accordance with FAR 52.216-7, “Allowable Costs and Payment.” Therefore, the Contractor will not incur any costs which would have been amortized over the life of the contract should the contract be cancelled in accordance with FAR 52.217-2.

The Government’s liability for cancellation charges shall not exceed $TBD. This amount will be reduced in accordance with FAR 17.106-1(c)(1) at the conclusion of each program year, as follows:

Program Year Cancellation Date Cancellation Ceiling Year 1: 2017/2018 N/A N/A Year 2: 2018/2019 DATE TBD, 2018 $TBD Year 3: 2019/2020 DATE TBD, 2019 $TBD Year 4: 2020/2021 DATE TBD, 2020 $TBD Year 5: 2021/2022 DATE TBD, 2021 $TBD

[END OF SECTION B]

SECTION C – DESCRIPTION / SPECIFICATIONS / STATEMENT OF WORK

C.1 PURPOSE

The primary purpose of the USAID/Ukraine Energy Security through Competitive Energy Markets Program is to enhance Ukraine’s energy security. Improving the energy legal and regulatory environment and increasing resilience of energy supply will help the Mission achieve broad-based, resilient economic development as a means to sustain Ukrainian democracy. Specifically, the USAID/Ukraine Energy Security Program through Competitive Energy Markets, implemented by the Contractor, must focus on the following goals:

• Increase the renewable energy share to 20%;

• Increase regulatory capacity and to ensure sufficiency of energy supplies to meet the demand; and

• Increase cross-border electricity and gas networks to at least 15% of Ukrainian market volume.

C.2 IMPLEMENTATION APPROACH

The USAID/Ukraine Energy Security through Competitive Energy Markets Program utilizes the following development hypothesis and theory of change:

If the Government of Ukraine (GOU) and the National Energy and Utilities Regulatory Commission (NEURC) establish and properly implement EU directives-based and competitive energy markets, then Ukraine will facilitate private sector-led energy investments, increase renewable energy generation and provide secure, reliable and affordable energy for all Ukrainians.

The development hypothesis is based on the following causal assumptions:

• EU directives-based technical assistance and the capacity building of energy sector participants will enable the implementation of competitive energy markets in Ukraine;

• USAID will obtain GOU and NEURC commitment to the formation of a steering committee that will guide the USAID/Ukraine Energy Security through Competitive Energy Markets Program technical assistance and ensure execution of reciprocal reform obligations of Ukrainian counterparts;

• Transparent market rules, competitive energy markets, and rationalized tariffs and subsidy schemes will encourage private sector investment in Ukraine’s energy sector including the development of renewable energy resources;

• Overall investment competitiveness of Ukraine will also increase with public sharing of vital energy sector information and transparent manner market signals;

• Electricity and natural gas energy infrastructure reliability and sustainability will increase with modern operation and maintenance management systems; and

• Energy security of Ukraine will increase through GOU, USAID, and other USG and donor initiatives to diversify energy supply, increase reliability of energy infrastructure, and improve energy efficiency.

The Contractor must ensure the following innovative features are integrated in its implementation approach:

• Advanced donor coordination: the Contractor must coordinate with the Energy Community Secretariat, European Delegation, World Bank, EBRD, the U.S.

Department of Energy, the U.S. State Department Bureau of Energy Resources, other sector donors and stakeholders and utilize advanced coordination mechanisms for the development and monitoring of the progress of enabling regulatory and legislative framework, conduct energy policy and planning scenarios, and prepare and promote renewable energy investments. While USAID will lead coordination with other donors and International Financial Institutions (IFIs), the Contractor must propose concrete mechanisms for coordination with activities implemented by other donors and IFIs.

• Expansive and robust stakeholder participation: the Contractor must conduct public outreach, public-private dialog meetings that will achieve direct outcomes in the implementation of energy sector reforms and energy markets development.

• Procurements: during the project implementation phase, the Contractor must propose and rank for USAID’s approval several performance improvement procurements that will not include any construction activities. These procurements may include, but are not necessarily limited to, new meters, information technologies for operation and maintenance of energy sector infrastructure, such as oil and gas transmission pipelines, electricity transmission lines, electricity substations, and oil and gas pump stations. Most importantly, they must be designed to improve the reliability, efficiency, maintenance and reliability of the energy sector infrastructure, and the payment will be made on delivery and completion basis. Particular emphasis must be placed on the sustainability of performance improvement procurements through proper operation and maintenance practices.

• Increased leverage of USG resources: the promotion of renewable energy projects, in terms of completed pre-feasibility studies, prepared information memorandums, completed workshops, and similar efforts will result in financial closing of these projects through private sector participants. Financial closing refers to merchant power plants with non-recourse, project financing.

• Partnerships: the Contractor must utilize grants and/or subcontracts to perform certain activities, such as, end-user energy surveys, partnerships with GOU agencies and institutions for least-cost energy planning programs, among other possible instruments and initiatives.

• Coordination with other USAID projects: the Contractor must coordinate, cooperate, and communicate with other pertinent USAID projects in Ukraine, and seek synergies and enhanced results with other USAID implementing partners operating in the country.

• Human and Institutional Capacity Development (HICD): the Contractor must develop HICD programs for select GOU and other related energy sector entities, and follow the guidelines developed by USAID (Reference, Human and Institutional Capacity Development Handbook, October 2010, http://pdf.usaid.gov/pdf_docs/pnadt442.pdf).

The Contractor may present similar HICD programs for better results and monitoring features.

• Exclusion: the Contractor activities must not include any interventions that are currently implemented under USAID’s Municipal Energy Reform Project (MERP) or other demand-side energy management interventions. All activities must focus on energy policy, strategy, supply, and energy markets development.

C.3 ACTIVITIES AND TASKS

Activity 1: Competitive Energy Markets Reform and Development

The Contractor must facilitate the design and implementation of functioning and competition-based energy market reforms including inclusive private sector competition, non-recourse project financing and according to EU energy Acquis Communautaire.

http://pdf.usaid.gov/pdf_docs/pnadt442.pdf

The Contractor must prepare milestone-based roadmaps in consultation with other USG agencies, donors and the Government of Ukraine (GOU). These schedules may be signified and mandated by the memoranda of understanding with relevant counter parties, through implementation letters under the U.S. Government and GOU Development Objective Agreement. Envisaged goal is to achieve competition in energy generation, energy supply and efficient retail energy supply areas with regulated transmission and distribution networks in gas and electricity sectors. The Contractor must provide technical assistance to NEURC to design and adopt full cost recovery energy tariffs, and to promote private sector investments based on incentive-based tariffs with properly collected benchmarks. A focus of attention must be on the design of market rules, tariffs, and removal of barriers for investments in renewable energy resources in Ukraine.

The technical assistance provided by the Contractor must target key GOU agencies, including, but not limited to, the Ministry of Energy and Coal Industry, transmission system operator Ukrenergo, market operator Energorynok, distribution system operators (oblenergos), NEURC, regional institutions, and future government establishments, such as the power exchange, market clearing house and related private sector market participants. The Contractor’s technical assistance must include both primary and secondary legislation development, collection and transparent dissemination of information, as well as institutional capacity development of the regulator and other market participants. Capacity building efforts shall not include Naftogaz or UGV (UkrGazVydobuvannya) as long as they are receiving technical assistance for corporate governance from the State Department’s Bureau of Energy Resources.

The Contractor must follow a progressive step type road map approach with six-month action plans, prepared and signed between the USAID, GOU and NEURC, including the conditions of Ukrainian markets with proper public service obligations and renewable energy schemes.

The Contractor must seek the establishment of bilateral (over the counter) and day-ahead markets with hourly planning, trading, balancing, settlement and clearing, ancillary and intraday markets, power exchanges with both delivery and financial products, explicit and implicit (market coupling) auctions for cross-border trading with European countries. As for an initial step, a market coupling with Moldova must be considered, as proposed by the Energy Community Secretariat. The Contractor must cooperate and collaborate with regional USAID projects on transmission planning and regulatory partnership.

For the gas sector, the Contractor must design and implement best utilization methods for the underground gas storage facilities, according to competitive market principles. Interventions must include, but not be limited to, drafting and amending primary and secondary legislation, congestion management, balancing rules, imbalance charges, penalties, security of supply measures and public service obligations allowing progressive increases gas prices to cover the cost of services.

For the district heating sector (DH), the Contractor must design and implement best practices that will promote competitive energy markets and provide reliable services to the end-users with options and affordability. The Contractor must start the USAID/Ukraine Energy Security through Competitive Energy Markets Program assistance in the heating sector area after the scheduled end of USAID’s Municipal Energy Reform Project (MERP) in Ukraine on September 30, 2017, and only after receiving technical direction from USAID.

DH area technical assistance must include, but not be limited to, related primary and secondary legislation development, required capacity building efforts for the regulator, central and municipal governments, best practices and EU directives-based cost-basis and/or incentive-based tariffs that employ such methods of regulatory asset basis, and multi-year network development plans.

As a result of these interventions and enabling business environment, the Contractor must achieve the following:

• EU energy directives and third energy package compliant legislation and implementation including but not limited to generation, transmission, distribution and supply area technical rules, third party access rules, capacity allocation rules, and market rules, tariffs, must be established on a competitive market basis for:

o Three large cities (population more than half million) o Seven cities (population between 100,000 and 500,000)

Specific attention must be provided for customer protection and the protection of vulnerable customers based on EU Directives and best international practices. The Contractor must ensure that market participants, public and competitive suppliers make this information available at their public disclosure sites and before concluding end-user agreements.

The Contractor’s regulatory assistance must focus on the technical and organizational capacity development of an independent and competent energy sector regulator, the funding of regulatory activities and the organization through conventionally accepted license fees and sanction penalties, the monitoring of all gas and electricity markets, including cross-border commercial activities and the regulatory agency accountable to the parliament, and will protect the rights of Ukrainian citizens, as envisaged by the EU directives.

The success of the activity will be dependent on the participation of public and private sector actors in reform concept formation, drafting processes and in the implementation of the reforms. The Contractor must seek a comprehensive and inclusive public consultation process with the GOU, private sector participants, non-governmental organizations, and educational institutions and, as required, must organize meetings, conferences and workshops. Special focus must be given to promote the energy profession in youth and underserved gender groups. The Contractor must prepare periodic policy brief updates and summaries for

USAID.

The Contractor must prepare methodological and best practices-based approaches to design, train, implement and measure the success of human and institutional capacity building process for GOU energy sector participants and NEURC.

The Contractor must provide technical assistance to work towards improving corporate governance in Ukrainian energy institutions and aim to create favorable and stable business enabling conditions for energy independence. Proper mission and vision guidelines, standardization of policies, procedures, information technology systems, performance improvement incentives, budget and cost management and chart of accounts will enable these institutions to perform their respective duties competently, transparently and eliminate unnecessary government interferences. The Contractor’s technical assistance must include EU's Third Energy Package-compliant ownership unbundling requirements of the Ukrainian energy sector institutions with ownership, legal, accounting and functional separation. Partner organizations include but are not limited to Ministry of Energy and Coal Industry, Transmission System Operators and Market Operators, such as Ukrenergo, for the electricity and gas markets, energy market regulator and as-needed basis, the distribution system operators.

The process must include drafting corporate mission and vision documents with proper organizational structures, staffing levels, required funding, and defined organizational duties with the purpose of adopting and implementing EU directives-based competitive energy markets. The Contractor must prepare and promote energy education and the professional practice of energy economics in key Ukrainian institutions with curriculum development for undergraduate, graduate and vocational schools and provide assistance for the graduates in job placement. Specific attention must be given to the training and accreditation of energy traders. The Contractor must assess Ukrainian energy market development progress, prepare professional requirements, competence areas, certification requirements, geographic and institutional priorities and submit them for USAID approval.

Ukraine plans to privatize state-owned energy enterprises. However, due to legacy post- Soviet and populist partisan practices, these enterprises currently work in subsidized or cross-subsidized environments. As a prerequisite, there is a need to reform these sectors to remove the subsidy schemes to create transparent loss and profit environments. This is especially important for the enterprises that work in regulated segments of the market, such as district heating, electricity and gas distribution networks. The Contractor must provide technical assistance to work towards improving these enterprises for the development of competitive electricity, gas and heating sectors in Ukraine.

Tasks:

Task 1.1 Development of Energy Market Models for Gas and Electricity and Heating Markets and Six-Month Implementing Party Action Plans: Based on enacted electricity, gas and heating market laws, EU Directives or new modifications, the Contractor must develop compliant energy market models for natural gas and electricity markets with six-month implementing party action plans, as a result of inclusive and broad stakeholder consultations with the GOU entities, transmission system operators, distribution system operators, market operators, energy sector regulator and other donors. For the heating sector, the Contractor shall proceed with technical assistance only after receiving technical direction from USAID.

Market models may include additional functional units in addition to those in adapted laws and transitional approaches, but the final version should be compliant with competitive market structures according to EU Energy Directives. The Contractor must draft and prepare proper venues for the execution of these action plans between USAID and counterpart GOU entities and the energy regulator.

Task 1.2 Developing Enabling Legislative and Policy Environment: The Contractor must assist in drafting or revising primary and secondary legislation, policy, resolutions, and regulations, necessary for the development, enactment and enforcement of laws and regulations identified in the six-month action plans. Inclusive and broad stakeholder consultations are critical.

Task 1.3 Implementing Party Technical Capacity Building: The Contractor must prepare and conduct training programs for the implementing GOU entities and the regulator to perform their duties according to six-month action plans. Activities must cover all required technical knowledge and competence for the implementation of competitive gas, electricity, and district heating markets in Ukraine.

Task 1.4 Market Coupling with Moldova: The Contractor must prepare an EU Directives-based market coupling procedure and process for the coupling of Ukrainian and Moldovan electricity markets with explicit and implicit cross-border trading of electricity.

Task 1.5 Inclusive, Robust and Expansive Public Private Dialogs and Outreach: The Contractor must prepare and organize outreach events to bring the private sector entities and the relevant Government and regulatory sector institutions to review and implement key energy market issues, promote investor conferences, promote energy profession for youth and women.

Task 1.6 Prepare and Implement Human and Institutional Capacity Development (HICD) Plans for GOU entities and the Regulator: The Contractor must prepare best practices-based plans, compliant with EU Directives-based competitive energy market requirements, supportive of transparency, reducing and eradicating corruption, and improving performance measurement tools. Beneficiary selection must provide sufficient coverage for the development of gas, electricity, and district heating markets in Ukraine. The extent and competency level of the HICD programs must be designed to meet or exceed the timelines of reforms, as stipulated in the primary and secondary electricity and gas legislation of Ukraine, but not less than accomplishing the following minimums during the five-year life of the contract: For electricity and gas markets: 100% of the bilateral trade market must be established, 10% of the real-time market (day-ahead market and intraday market) must be established.

Task 1.7 Prepare and Implement Curriculum for Energy Education and Energy Traders: The Contractor must prepare programs to graduate sufficient number of energy professionals and certified energy traders for Ukrainian energy markets.

Activity 2: Energy Supply

The Contractor must assist to diversify primary energy resources and supply routes to increase energy security and energy sufficiency, utilize least-cost generation plans and increase contributions from renewable energy resources alternatives.

Ukrainian renewable energy resources of hydro, wind, solar, geothermal and biomass origin should be promoted using a least-cost energy generation model with socially and environmentally friendly development schemes and lower emission development methods.

Incentive mechanisms should be creative and economical for affordable energy consumption.

Where applicable, cost-benefit and regulatory impact analyses should be utilized to maximize public benefit. Ukraine’s coal industry is a legacy inherited from the Soviet times. It is a complex infrastructure with supply and value chains including coal mines, coal transportation systems, power plants, industrial, metallurgy and steel plants and a sizable work force. A transition in energy generation from higher carbon combustion to lower carbon utilization should be accomplished over time.

The Contractor must target and promote the increased share of renewable energy resources, by means of improved legislation, regulation, prices, and creative energy investment promotion schemes. Energy strategy considerations must consider all renewable energy resources for a balanced and resilient energy market security. Safety, sustainability and a transitional approach to a lower emission and carbon-free energy sector development must be considered.

The Contractor must review existing studies, identify key impediments and prepare market-based and environmentally and socially friendly private sector solutions to increase renewable energy production. The interventions may involve updates and revisions to energy policy and energy strategy documents.

Latest legislative and regulatory developments must be considered and the assistance may include the finalization of the environmental impact assessment laws on Environmental Impact Assessment and Strategic Environmental Assessment, if not adopted earlier. It is expected that the law will comply with EU directives and will ensure proper implementation of Access to Justice Environmental Matters (Aarhus Convention) and the Convention on Environmental Impact Assessment in Transboundary Context (Espoo Convention).

For the fuel supply, the Contractor’s assistance to Ukraine needs to satisfy EU’s security of supply requirements and the assistance. Illustrative activities include a cost-benefit analysis with environmental and social impacts properly monetized; medium and long-term energy strategies for the mining of coal, coal processing and transport systems; conversion of existing coal-power generation units to better plant efficiency and reduced emissions footprints.

Improvements can be achieved in combustion efficiency and boiler efficiency, the optimization of the steam cycle, the reduction of auxiliary power consumption by means of upgrading different pumps, motors, drives and power supplies, employment of best practices in plant operations, procedures and maintenance.

The Contractor must adopt a building block approach for renewable energy promotion and development, including small hydroelectric, geothermal, biomass, wind and solar energy resources. The Contractor’s activities on renewable energy must consider the effect of renewable energy into power grid integration, the viability of smart incentives, such as reverse auctions, competitive procurement practices for new generation capacity, locational concentration, climate planning and financial support through international financial institutions. Permit and license processes need to be streamlined for one-stop shopping approach. If required, the National Renewable Energy Action Plan (NREAP) will be revised for the assessment of achievable national targets. The Contractor must prepare pre-feasibility studies for renewable energy projects and must promote successful implementation of NREAP goals.

A pre-feasibility study must include initial public consultations at proposed project sites, but must exclude environmental assessments at the site as methodology of actual commercial practices may be different. Renewable energy development will include small and medium size run-of-river hydro power plants, wind, solar and biomass power plants. Assistance will exclude the development of large hydro power plants as defined in the World Commissions On Dams (2000) by the International Commission on Large Dams (ICOLD). All dams with a height of 15 meters or more from the foundation or dams between 5-15 meters high that have a reservoir volume of more than 3 million m3 are considered as large dams.

The Contractor must provide key studies, assessments, and market road maps for the implementation of key interventions, for USAID approval. All these deliverables will be shared with relevant GOU entities and other stakeholders at project outreach meetings.

Outcomes will be reported in the revised versions of these documents.

The subjects may include updates on energy policy, energy strategy, renewable energy development, and end-user surveys for residential, commercial, industrial consumers. The Contractor will coordinate with the State Statistical Service of Ukraine, stakeholders and NEURC for the publication of energy and price statistics in monthly and annual periods, according to EU Directives and best international practices.

The Contractor must: establish a permanent national platform with a leading GOU entity to share the project information developed; facilitate investors to access this information;

collaborate with international investment support institutions, such as the U.S. Commercial Service, OPIC, Exim Bank, and other U.S. agencies to align and leverage U.S. and other international agencies; and will coordinate and collaborate with international and local private finance advisory networks and systems, such as PFAN (Public Finance Advisory Network), REEEF (Renewable Energy & Energy Efficiency Partnership), Cleantech Open, and Greencubator. The clean energy pre-feasibility study projects must cover Ukraine with the likely exception of areas outside territorial control of the GOU.

For renewable energy development, the Contractor must achieve the following key results during the contract duration:

• Capacity of project developers, businesses, and other related actors in project development and financing improved. In order to verify this result, the Contractor will conduct capacity surveys at the beginning of the activity, at its midterm, and in the end. The capacity building process must at least produce the following pre-feasibilities: memoranda of understanding, financial closings, investments and greenhouse gas emission reductions as stated below;

• At least 50 technically and financially viable renewable energy pre-feasibility study projects prepared and presented to potential investors; At least 25 of them brought to memorandum of understanding stage and 5 of them brought to financial closing phase with non-recourse project financing;

• At least $200 million in funds directly or indirectly mobilized for renewable energy investments in Ukraine as a result of the assistance provided;

• Avoided or reduced greenhouse gas emissions as a result of this assistance amounts to at least 500,000 metric tons of CO2 over an assumed average 20-year investment projects life cycle;

• At least a total of 30 project development experts in three organizations trained and fully capable of supporting renewable energy investment project development and providing financial closing support;

• Well designed, well marketed web-based information platform established, operated and maintained, and its sustainability after the USAID/Ukraine Energy Security through Competitive Energy Markets Program completion secured; and

• Legal and regulatory environment for renewable energy investment improved to the extent that projects will qualify for non-recourse financing.

The Contractor must achieve the following results for bioenergy development:

• Government bioenergy policy improved by adopting key legislative and regulatory acts;

• Implementation of National Action Plan for Renewable Energy supported;

• Stakeholders’ awareness of financing sources, best international and local practices regarding bioenergy enhanced to the extent that at least five projects receive non-recourse project financing;

• Capacity of local stakeholders to design and implement bioenergy projects enhanced to the extent that at least five projects receive non-recourse project financing;

• Portfolios of ready bioenergy projects formed for attracting investments as well as financing attracted for implementing pilot projects;

• Increase by at least 50% in investments by the state and external financing sources in bioenergy projects, replication and multiplication of pilot projects; and

• Raised awareness in Ukrainian society about bioenergy projects opportunities in Ukraine, as well as best practices in bioenergy worldwide.

The Contractor must coordinate efforts with the ongoing activities funded by the other donors, such as the Government of Iceland to promote geothermal energy resources, and integrate new findings on geothermal energy into the National Action Plan for Renewable Energy. To accomplish these tasks, the Contractor may utilize grants and/or subcontracts for some of these activities, subject to USAID approval.

Primary production and final consumption energy balances of Ukraine must be used for the least cost energy planning forecasts, revenue requirements for the regulated transmission and distribution companies, cost-benefit analysis, and regulatory impact analysis. Related work must include, but not be limited to, subsidy schemes, social safety nets, forecasts for energy generation and consumption, current and future electricity load profiles, preparation of road maps and required documentation for day ahead, intraday, bilateral and cross-border energy trade markets, required technical and market rules, power exchanges and market clearing house and regulatory accounting. The Contractor must identify and partner with key Ukrainian stakeholders to prepare, maintain and sustain these activities. All activities must be prepared according to the needs of the Ukrainian market, EU Energy Directives, USAID priorities, and approved by USAID.

The Contractor must assist in the establishment of energy sector data centers, warehouses and modern methods of information dissemination by the Government agencies. The Contractor must prepare and rank a list of key performance improvement projects of approximately $30 million during the project lifetime. These procurements must focus on increased reliability and efficiency and improved operation and maintenance of the energy sector, such as equipment procurement, software and business management systems; and to increase the reliability and sustainability of the electricity and gas networks under GOU and regulated institutions. For these procurements, GOU commitments must be obtained for the proper operation, maintenance and sustainability by the beneficiary government agency.

Illustrative interventions include procurement of operation and maintenance management systems for petroleum and electricity transmission networks (such as IBM’s Maximo Asset Management software) with spare part stocks, centralized emergency control systems (using synchrophasors) with remedial action schemes, data centers for the storage and dissemination of oil and gas well data (such as a data center within Ukrndigaz and Kharkiv Institute), and web-based public data and information sharing systems for energy sector GOU agencies and the regulator.

The Contractor must complete an Environmental Review Check List (ERC) and/or Environmental Monitoring and Mitigation Plan (EMMP) for performance improvement projects, make a preliminary determination regarding any negative environmental impact, and submit to the USAID Contracting Officer’s Representative (COR) and Mission Environmental Official (MEO) for their review and approval. Approval of the Europe and Eurasia Bureau of Environmental Official (BEO) of the completed ERC/EMMP is required.

The Contractor must utilize an Information Technology (IT) expert to procure systems/data centers, etc. (in line with the best international practices and standards).

Task 2.1 Development of Evidence-Based Analytical Tools, Energy Policy Briefs and Updates to Energy Policy and Energy Strategy of Ukraine: Review existing energy statistics, energy balance of Ukraine, update data with required end-user energy surveys, least-cost energy models and revenue requirement models for the regulated energy sector; Review existing energy policy, energy strategy documents and provide updates with new data and energy market development.

Task 2.2 Development of New Incentive Mechanisms, Pre-Feasibility Studies, Investor Promotion and Project Financial Closing for Renewable Energy Generation: the Contractor must draft and implement required pre-feasibility work for renewable energy promotion, draft and implement with relevant GOU entity and the regulator creative incentive mechanisms, including but not limited to, hydro, wind, solar, geothermal and biomass resources and facilitate the private sector investment process to financial closing.

Task 2.3 Development of Least-Cost Energy Generation Models for Security of Energy Supply with Indigenous Natural Resources of Conventional and Unconventional Resources and Coal: The Contractor must prepare building-block approach for more renewable energy integration into Ukrainian energy mix, obtain GOU and stakeholder support for creative incentive mechanisms and conduct pre-feasibilities. The Contractor must prepare evidence-based analysis, including cost-benefit analysis, draft and implement required technical material, prepare short, mid and long-term action plans with broad stakeholder and donor participation, and obtain stakeholder consensus. The Contractor must draft and implement required technical and institutional capacity development of sector stakeholders, governmental and non-governmental. All interventions will comply with EU directives and best practice development methodologies.

Task 2.4 Development and Implementation of Policies and Strategies for Lower Emission Power Generation: The Contractor must prepare pre-feasibility work for two (2) currently available coal power plant units for the improvement of combustion efficiency and boiler efficiency, optimization of the steam cycle, reduction of auxiliary power consumption by means of upgrading different pumps, motors, drives and power supplies, and employment of best practices in plant operations, procedures and maintenance. The Contractor must provide technical assistance in securing project financing from financial institutions.

Task 2.5 Procurement of Key Performance Improvement Projects for Electric Grid Stability, Reliability, Energy Network Operation and Maintenance, and Dissemination of Energy Sector Information to Public and Investors: The Contractor must prepare projects for USAID’s approval and provide procurement services with beneficiary Government entities or the regulatory agency, NEURC.

C.4 SUSTAINABILITY

The success of the USAID/Ukraine Energy Security through Competitive Energy Markets Program is dependent on the sustainability of the competitive energy market measures by the implementing GOU agencies and the independent regulator. Subject matter related technical and institutional sustainable capacity developments are required for functioning energy markets with greater transparency and regulatory market control.

The Contractor must encourage participation of local organizations in implementing this activity, either through subcontracts or grants, to develop their institutional capacity, encourage ownership of results and ensure sustainability of reforms.

C.5 CORRUPTION

The USAID/Ukraine Energy Security through Competitive Energy Markets Program will combat corruption by creating a transparent and predictable regulatory environment less prone to corruption and abuses by utility managers and public authorities. Uniform Systems of Accounts will establish regulatory accounting principles for the energy sector and bring predictability in rate setting process. Local capacity building and public information activities will inform citizens about their rights. The Contractor must incorporate specific anti-corruption elements in its approach.

C.6 INCLUSIVE DEVELOPMENT

Every dimension of human diversity has the potential to influence people’s needs, experiences, opportunities, and rights and therefore the Contractor must consider this prior to any significant interventions planned during the USAID/Ukraine Energy Security through Competitive Energy Markets Program implementation. In this case, significant interventions will include assistance in developing policies and monitoring policy implementation, drafting laws and regulations, establishing industry standards and product access rights, and designing and providing training programs. USAID funds will be used to create opportunities for all and everyone to contribute to and benefit from the development regardless of age, sex, ethnic origin, health status, family structure, sexual orientation, education, employment, income, housing, food security, safety, or any other dimensions of human diversity.

C.7 GENDER ISSUES

The USAID/Ukraine Energy Security through Competitive Energy Markets Program will lead to a more competitive and less polluting energy sector, including reliable electricity and gas delivery systems for populations that include men, women, children, and the elderly.

The Contractor must ensure that men and women are equally supported through USAID-funded activities and that gender awareness and gender dynamics are taken into consideration in all USAID/Ukraine Energy Security through Competitive Energy Markets Program activities. To the extent possible, the implementer must seek to include men and women in all aspects of the USAID/Ukraine Energy Security Program through Competitive Energy Markets, including participation in stakeholder meetings, training and other activities during the USAID/Ukraine Energy Security through Competitive Energy Markets Program implementation.