1._SOL-306-16-000003_-_Amendment_No_8.pdf

SOL-306-16-000003

Amendment 08

I. There is no change to the deadline to submit proposals.

Proposal Closing Date: April 24, 2016

Closing Time for All Deadlines: 4.00 p.m. local time (Kabul)

II. Attachment 1 to the RFP (the draft Power Purchase Agreement) is revised as follows:

a. Section 9.6 Purchase Payment Security. Add the following:

(b) Purchaser shall provide Seller, promptly upon execution of this

Agreement, a list of the banks in Afghanistan that receive payments due for electricity services from Purchaser of at least the amount of funds stated in Section 9.3(a), and Seller may choose from among those banks the bank it prefers to be party to the Escrow Agreement. From time to time throughout the Term Seller may by notice request from

Purchaser a then-current list of banks that receive payments due for electricity services from Purchaser of at least the amount of funds stated in Section 9.3(a), and by further notice request Purchaser to re-establish the Escrow Agreement at a different bank from the then-current list; provided, that if Seller makes more than one (1) such request during the Term, Seller shall reimburse Purchaser for its costs of re-establishing the Escrow Agreement each additional time; provided further, that Purchaser shall be responsible for the costs of re-establishing the Escrow Agreement in any event where the current

Escrow Agreement is with a bank that no longer meets the receivables threshold set forth in Section 9.3(a).

b. Section 15.1(b) Definition of Force Majeure. Add the following:

iii. before the Commercial Operations Date, any excessive delay caused by a GOA official at the [Spin Boldak [or ________] border crossing] in clearing the importation of components or equipment to be used in the construction of the Facility, provided that Seller has timely presented the relevant GOA official(s) with the required information, in the proper format, to facilitate border clearance

c. Section 15.1(c) Definition of Force Majeure, DELETE section (i) and REPLACE with the following:

(i) late delivery or interruption in the delivery of machinery, equipment, materials, spare parts, or consumables, except to the extent caused by a GOA official as provided in Section 15.1(b)(iii);

III. The revised draft Power Purchase Agreement is attached to Attachment I as

Attachment 1.

IV. Attached hereto as Attachment I is a complete copy of the Revised Request for Proposal, including all attachments. There are no changes to the RFP since Amendment No. 7. This RFP is attached for ease of reference.

V. QUESTIONS AND RESPONSES

The following are questions received after January 20, 2016 through the date of this Amendment and responses to such inquiries:

Question No. 1:

RFP Amendment #3; Response #30:

Except 15 minutes energy storage, whether contractors need to consider 10MWp Solar Power Plant’s Lighting or contractor can get connection from DABS through net‐metering for plant lighting

RESPONSE:

The storage required is to support the plant’s ancillary equipment (e.g., communications, monitoring, switchgear operation, security, lighting) and, in general terms, all AC/LV capacity required to operate the non‐generation related equipment during a grid failure event. It is Offerors’ responsibility to size that back up storage for the auxiliary and ancillary equipment according to their estimated consumption. Note that the SPV‐SIP feeder will not be energized during nighttime, therefore Offeror must account for its own independent means of supply during nighttime according to the estimated demand of the stand‐by, security, lighting and other non‐generation related equipment. This grid independent supply can be in the form of a diesel generator, battery pack or combination of both.

Question No.2:

RFP Amendment #3; Response #35:

Contractor also need clean water for Cleaning of Solar Modules at site on regular interval. Please confirm wether water is available at site or contractors need to arrange from other places in the Afghanistan or contractor need to establish bore wells at Site or need to construct water storage system at site. If contractors need to establish bore wells/Storage then let us know about ground availability/situation at Kandahar Site.

It is the responsibility of the contractor to furnish the supplies required for the plant maintenance. It is the Offeror’s choice to install permanent water storage on site or have it delivered to the site on demand basis. If Offeror is willing to construct a bore well on site, it is the responsibility of the Offeror to obtain any required feasibility studies, permits, equipment, construction and maintenance for such well.

Question No. 3:

RFP Amendment #3; Response 4 & 40:

Please let us know about local taxes & duties applicable on solar power plant construction/equipment.

It is the responsibility of the successful offeror to work with the Afghan authorities to be aware of and pay all applicable Afghan taxes under Afghan law. The Afghan Investment Support Agency (AISA) www.aisa.org.af/ is tasked to provide information and promote and support private sector investment.

Question No. 4:

Please let us know about taxes & duties applicable on solar energy generation from this solar power plant

See above answer.

Question No. 5:

Generally Solar power plant’s life is 25 years but you have asked in the tender for 15 Years PPA. Please clarify wether you need power for 15 years only or you will renew the PPA after 15 Years with same terms and conditions or you will provide contractors escalation on the prices after 15 years. If you will provide escalation then what will be the percentage, please let us know.

The PPA term is fifteen (15) years. As set forth in the PPA, the parties will confer near the end of the agreement to discuss next steps. These next steps can include turning over the plant to DABS or DABS hiring the Independent Power producer (IPP) to run the plant (either as an O&M contractor or as an IPP). The design life of systems should be 25 years, which is a market norm.

Question No. 6:

The estimated budget for the budget exceeds the Viability Gap Funding (VFF) of the $10 million. Please consider whether the USG payment can be increased.

The USAID Award will contribute up to $10 million to the selected Contractor to meet the partial capital costs for the design, installation and commissioning of the described 10MPw solar power plant. The firm fixed price of the contract will not be increased. The purpose of providing this Viability Funding is to incentive independent power purchasers to invest in solar power production in Afghanistan.

Question No. 7:

About PPA ....after long search with DABS and ministry of electricity and water eventually we met with Mr (Wahidullah Tawhidi) and asked about PPA but he said that we should be in contact with you because we couldn't find anything about PPA weather we have to sign before or after the bid. at second page (Subject: Solicitation: Request for Proposals (RFP) SOL‐306‐16‐000003) it says that we should have willingness to sign the PPA so how and what should we do either sign the intention letter or it means that we are willing to sign the PPA with price.

All documents and updates pertaining to this project can be found at https://www.fbo.gov/. It is the market norm in many international tenders that project agreements are made available before bid for the potential offerors to analyze and review the terms spelled out in this suite of documents.

The entire Request for Proposals and attachments thereto (including the draft Power Purchase Agreement) are attached to this Amendment for easy reference.

Question No. 8:

Reference: SOL Section C.3.2 (C), paragraph 4, page 12.

Thanks for the changing on the PV modules degradation rate, but please make notice that, the first year`s degradation is higher, for polycrystalline silicon PV modules, first year`s degradation rate is 2.5%, from the second year to twenty‐ fifth year, the average rate is 0.7% /year.

The module degradation warranty provided by contractor must adhere to the degradation warranty provided by module manufacturer, providing those are in conformity with international industry standards for the module technology selected.

Question No. 9: How long does it take to register and obtain DUNS and SAM Registration?

The time to obtain a DUNS and registering in SAM varies but Offerors should expect the process to take at least three (3) weeks to complete.

Question No. 10: Are construction permits required?

Construction permits are not required for construction in rural areas.

Question No. 11: If the USAID Award expires after one year, are we still required to satisfy the requirements (i.e., branding requirements) and other terms and conditions after the first year?

The USAID Award is for a period of performance of one year. All obligations set forth in the USAID Award between USAID and the Successful Offeror will terminate upon expiration of the contract.

Question No. 12: 1. Reference: Interconnection Requirements (RFP: C.3.2 e), pp. 13‐14);

Acknowledgment of Real‐time Grid Conditions (RFP: L.9 (b), p. 72); Protection Devices (PPA: Section 6.5, pp. 35‐36); Seller and Purchaser Interconnection and Metering (PPA: Schedule 3, pp. 86‐87); and Reactive Power Compensation and Harmonics (PPA: Items 2.5 and 2.10 in Schedule 5, Technical Limits and Minimal Functional Requirements, p. 91)

The above cited sections of the RFP and PPA correctly recognize that the current DABS 20‐kVA Grid System on the eastside of Kandahar City (specifically the 514 feeder) is highly unstable. This fact is evidenced in the attached U.S. Army Engineers' 5‐day (30 Oct to 2 Nov 2013) operations report (typical of similar reports we have seen) when "free electricity" from the 10 MW Shorandam Industrial Park (SIP) diesel power plant was being used to energize the 514 feeder when it was being operated as an isolated "microgrid." Schedule 3 of the PPA indicates that the new 20 kVA line from the Facility will be connected to the existing 20 kV bus at SIP. Thus, the solar PV power supplied by the Seller will be used (at least in part) to energize the unstable 514 feeder.

Schedule 5 of the PPA indicates that the IPP should include reactive power compensation(RPC) and/or harmonic mitigation devices as part of its Facility for overcome grid instability. However, neither the RFP nor the PPA provides data on current Grid System conditions at SIP nor does either document provide minimum performance requirements and/or specifications for such devices. Instead, the PPA simply says such measures "will be based on winning bidder's technical proposal as approved by DABS and USAID Engineer." The absence of technical data on actual Grid System characteristics at SIP and/or specification for critical SPV plant components in the bid documents places responsible bidders ‐‐ who know the current problems with the Grid System in Kandahar ‐‐ at a disadvantage. Moreover, this vagueness could result in DABS and USAID accepting a winning low‐bid proposal that does not adequately address this serious problem; consequently, this "show case" SPV plant ‐‐ financed in part by the USG ‐‐ will be frequently tripped off and remain off‐line for many hours per day as occurred on a daily basis when the 10 MWAC SIP diesel plant in Kandahar were being operated by U.S. Army in 2011‐13.

To address this problem, we suggest that items 2.5 (Reactive Power Compensation) and 2.10 (Harmonics) be deleted from Schedule 6 on p. 91 of the PPA; and instead following language be added to Section 4.1, Construction of the Facility, p. 26 of the PPA:

"(e) Actual data are not available on the characteristics the Grid System at the designated Interconnection Point that Seller must take into consideration in designing the necessary technical measures for ensuring a safe and effective interface between the Facility and the existing Grid System. Within 60 days after the Effective Date, Seller shall have conducted an analysis of the characteristics of the Grid System at the designated Interconnection Point and shall present a report to the Engineer, the Purchaser, and the USAID Engineer detailing Seller's proposed mitigation measures for overcoming Grid System instability and enabling the maximum use of solar PV power generated by the Facility for the benefit of DABS customers in Kandahar. Seller shall include in said report the estimated costs and a proposed Supplemental Tariff for compensating Seller for installing and operating said mitigation measures over the term of the Agreement. The Parties shall negotiate in good faith an amendment to the Agreement to incorporate the mutually agreed mitigation measures and the Supplement Tariff into the Project. As Grid System conditions change over the term of the Agreement, Seller shall propose to Purchaser further mitigation measure that could be taken based on Seller's expertise to increase the availability and use of the solar PV power produced by the Facility. The Parties agree to negotiate in good faith further amendments to the Agreement to incorporate Grid System stability measure into the Project for maximizing the use of solar PV power by DABS customers in Kandahar."

DABS has initiated the process for erection of the 20 KV transmission lines between the Solar Power Plant and Shorandam Industrial Park (SIP) Substation. Also, SIP is well connected to Breshna Kot (BK) Substation through the existing grid lines. DABS had confirmed that the transmission lines between the Solar Power Plant and SIP will be well equipped (185 sq. mm conductor) to maintain stable grid conditions and that the grid lines between SIP and BK Substation will be augmented to satisfactory technical levels to maintain the stability of the grid for evacuation of power from the Solar Power Plant. Hence, DABS will provide an adequate power evacuation system and the Seller will not be required to provide any major equipment for grid stability. In light of these improvements, the proposal to conduct an additional study post‐Effective Date, which would have the effect of slowing the construction schedule, is deemed not appropriate or necessary.

Please note that offerors are able to visit the chosen site and review the grid infrastructure.

Question No. 13: 2. Reference: Purchaser Payment Security (PPA, Section 9.6, page 48)

In this section, the PPA states that the $US 1,000,000 Escrow Account that Purchaser (DABS) will maintain in favor of Seller (the selected IPP) will be established with an Escrow Agent that "shall be a licensed bank in Afghanistan that is authorized to receive payments due for electricity services from Purchaser."

Given the history of Afghan banks going out of business and/or being involved in corruption scandals, we request the following language be added after the above sentence into Section 9.6 on page 48 of the PPA:

"The Afghan bank used as the Escrow Agent shall be selected by the Seller, provided such bank is authorized to receive payments due for electricity services from the Purchaser. Should the creditworthiness and/or good standing of the Afghan bank being used as the Escrow Agent come into question, Seller shall have the right to move the Escrow Account to a different qualifying bank selected by Seller. Should no Afghan bank that meets the above criteria be in good standing, Seller may move the Escrow Account to a foreign bank selected by Seller."

RESPONSE:

The PPA has been revised at Pages 48 and 49 (Section 9.6) to ADD the following:

“(b)Purchaser shall provide Seller, promptly upon execution of this Agreement, a list of the banks in Afghanistan that receive payments due for electricity services from Purchaser of at least the amount of funds stated in Section 9.3(a), and Seller may choose from among those banks the bank it prefers to be party to the Escrow Agreement. From time to time throughout the Term Seller may by notice request from Purchaser a then‐current list of banks that receive payments due for electricity services from Purchaser of at least the amount of funds stated in Section 9.3(a), and by further notice request Purchaser to re‐establish the Escrow Agreement at a different bank from the then‐current list; provided, that if Seller makes more than one (1) such request during the Term, Seller shall reimburse Purchaser for its costs of re‐establishing the Escrow Agreement each additional time; provided further, that Purchaser shall be responsible for the costs of re‐establishing the Escrow Agreement in any event where the current Escrow Agreement is with a bank that no longer meets the receivables threshold set forth in Section 9.3(a).”

Question No. 14: 3. Reference: Definition of Force Majeure (Section 15.1 of PPA on p. 59‐60)

The only feasible way for the successful IPP to import the solar PV panels and other special equipment for constructing the Facility is via ground transport though Pakistan and border crossing at Spin Boldak. This border crossing has historically experienced closings and/or protracted delays for various reasons. To clarify that delays in Seller's performance caused by border closings/delays will, in fact, be treated as a force majeure event, please include the term "border closings or delays" in the definition of Force Majeure in Section 15.1.

The PPA has been revised at page 60 and 61 (Definition of Force Majeure, as set forth in Section I to this Amendment.

The PPA has been amended to include as a Force Majeure Event any excessive delay caused by GOA officials in clearing components or equipment at the Spin Boldak, Afghanistan border crossing prior to COD. Should the winning bidder prefer to use a different border crossing into Afghanistan, that border crossing can be named prior to signing the PPA. Should such a Force Majeure Event occur, the result would be an extension of the Required Commercial Operations Date on a day‐for‐day basis; provided, however, that the Seller demonstrates that (i) it had taken all reasonable steps to arrange shipping of the components or equipment to allow timely arrival for the construction schedule consistent with the then‐effective Scheduled Commercial Operations Date, (ii) had presented the GOA officials with the required information, in the proper format, to facilitate border clearance, and (iii) had complied with the notice requirements of PPA Section 15.2. Seller shall remain responsible for any customs or port clearance delays that occur outside of Afghanistan.

Question No. 15: 4. Reference: Degraded Output Threshold (PPA, p.10)

This definition in the PPA establish 19,500 MWh as the minimum annual capacity of the Facility over the term of the PPA.

Based on other solar PV projects we have completed and currently operate as an IPP, we find the 19,500 MWh figure to be somewhat higher than a reasonable 15‐year "Degraded Output Threshold” for a state‐of‐the‐art, well designed and maintained 10 MWAC solar PV plant given expected mean annual solar radiation and ambient weather conditions in Kandahar. Specifically, we see an inconsistency between these two measurements of SPV plant output. We could design and build a SVP plant to deliver at least 19,500 MWh per year under all ambient conditions over 15 years; but this plant would cost considerably more and have a higher peak output than the 10 MWAC of energy production specified in the RFP. Thus, if the 19,500 MWh annual minimum capacity figure remains in the PPA, we will have to bid a much higher Tariff to recover our investment. As noted in Question 1 above, we are skeptical that the current Grid System at SIP is capable of accepting and delivering to DABS customers even the peak 10 MWAC specified in the RFP. Indeed, as the attached U.S Army report shows, DABS was never able to take and use all 10 MWAC of "free electricity" that the U.S Army was willing and able to supply DABS at SIP in 2011‐13. Thus, if DABS sticks with the 19,500 MWh minimum annual capacity figure in the PPA, it will be paying much higher Tariff and the amount of "Non Project Missed Volume" that DABS pays over the term of the PPA for will be considerably higher than using the 10 MWAC capacity factor.

In our IPP experience in countries with unreliable grid systems, it is not desirable for the Purchaser to include a specified minimum annual outputs as MWh/year figure in the PPA. Instead, we recommend that DABB specify in the PPA: (a) minimum annual availability factor for the SPV plant that the Seller must achieve; and (b) a maximum allowed annual degradation factor in the performance ratio for the solar panels that the IPP specifies in its technical design. (These are the only two parameters affecting annual capacity determination that the IPP controls.) If you would like, we would be glad to provide you language from PPAs we currently have in effect in similar countries that is commonly used to address this issue in a mutually acceptable manner.

RESPONSE:

Please see response to Question 12 regarding improvements to the DABS Kandahar system.

Question No. 16: We kindly request you to clarify what does 10,000,000 USD Viability Gap Funding mean? Does it mean that government will only fund 10 M and rest is the contractor’s responsibility and the contractor shall collect its own money and profit within 15 years period by selling the power to the local community?

Correct.

Question No. 17: Reference: We are unclear how the following language in the revised RFP, dated March 16, 2016, in Section L.10 c), i) under the "Financial Capability" paragraph (page 82) applies to our factual situation:

"3. The Offeror must provide for itself or, where the Offeror is a team/JV/consor tium, for each partner: [financial statements evidencing compliance with financial criteria]".

Question: Given above business model, we assume that if The Meeco Group ‐‐ as the Prime Offeror with requisite Specialized Experience set out in the RFP ‐‐ submits audited financial statements and step‐by‐step calculations evidencing that it fully meets all Financial Capability criteria set out in the revised RFP; our project team will be deemed to have satisfied the Financial Capability requirements. If this is not true, please advise (i) what additional documents evidencing the financial capability of Mr. Helmandi as a "partner" in the JV company are required and/or (ii) what changes to our proposed business structure are required so that our project team will be deemed to fully meet the Financial Capability requirements in the RFP.

Please review the attached Revised Request for Proposals, which provides the required minimum documentation for evaluation of the financial capability of the Offeror. These instructions differ from the original Financial Capability instructions.

[End of Amendment #8]