Management of Activities related to Somaliland OffGrid Solar

Management of Activities related to. Somaliland Off-Grid Solar Grant Facility Project Awarded by: Project Awarded to:

2 Project Background ▰ Ministry of Energy & Minerals (Mo. EM), Go. SL has contracted on June 11, 2020 Dahabshil Bank International, Somaliland, as Grant Manager to manage, on behalf of Go. SL, activities related to the Somaliland Off-Grid Solar Grant Facility. ▰ The Facility will offer results-based Expansion Grants and Seed Grants to potential and already existing companies in the OGS Sector. ▰ The Project will last till June 30, 2022.

3 Objective of Facility: ▰ The main objectives of the facility include: supporting households and SMEs get affordable energy, supporting early stage solar service providers, enabling Solar Service Providers (SSPs) sell through Pay as you go, promoting energy access in remote and rural areas setting a foundation for SSPs for future funding. These activities are aimed at increasing access to electricity in Somaliland.

4 Objective of Facility Implementation Guideline ▰ Based on the facility objectives and ongoing guidance from Go. SL, DBI prepared FIG, defining responsibilities as below: Key facility processes Processes for sourcing applications, Processes and templates for applications, List of ineligible uses of funding; Business eligibility and selection criteria; Determination of initial per-unit RBF payment; Processes and templates for application evaluation: Continued … and

5 Objective of FIG ▰ key Facility processes and responsibilities: Processes and criteria for conducting due diligence on successful applicants Processes for disbursement of funds, including both Seed RBF and Expansion RBF, Contract or grant agreement templates; List of data requirements from successful applicants; Continued …

6 Objective of FIG ▰ key Facility processes and responsibilities: Working arrangements with the IVA; Environmental and social safeguards (E&S) risk management, monitoring, and implementation arrangements Cooperation arrangements with Go. SL safeguards staff on execution of the ESMF; Templates for Quarterly and semi-annual reporting to the project coordinator

7 Grant Facility Beneficiaries ▰ The project is expected to achieve the following numbers: Sr # 1 Description Expected Number of Households Numbers 1800 – 2000 2 Expected Number of Peoples 10, 000 – 12, 000 3 Expected Number of Female Beneficiaries. 4, 000 – 6, 000 4 Expected Number of SMEs 250 – 300 5 Expected Percentage of SMEs with Female Ownership 30% 6 Expected Average Generation Capacity provided through the 150 W Solar System Technologies funded by the Project.

8 Processes for Sourcing Applications

9 Eligible Uses of Grants ▰ Eligible uses will include: ▰ Operational costs related to provision of services. ▰ Recruitment of qualified personnel throughout the business’s value chain. ▰ Training of staff such as technicians, management & frontline staff e. g. customer service personnel etc. ▰ Marketing and distribution infrastructure expenses ▰ Development of PAYG consumer finance models ▰ Importation of Solar Panels & Batteries, light emitting diode (LED) lighting

10 Tentative Timeline Sr # Procurement Procedure Deadline 1. Conduction of Lunch Event November 10, 2020 2. Issuance of Bidding Documents November 16 -25, 2020 3. Return of Acknowledgement Form No later than November 25, 2020 4. Submission of Queries No Later than November 25, 2020 5. Pre-bid Conference November 30, 2020 6. Issuance of Clarifications December 05, 2020 7. Last date for acceptance of Bids December 20, 2020 8. Submission of Evaluation Report December 30, 2021 9. Completion of Due Diligence of Successful Applicants January 10, 2021 10. Announcement of Results January 11 -15, 2021 11. Award of Contract January 20, 2021

11 Ineligible uses of Funding ▰ ▰ A firm sanctioned by the World Bank ▰ All the items prohibited in the bank financing policy and procedures. Any firm found to have a conflict of interest shall be ineligible for award of a contract.

12 Business Eligibility Criteria The following table summarizes the eligibility criteria: Established Local Operations Local Companies with at least a one-year track record of selling OGS products and newly established OGS firms. Financial statements Including audited statements where available. Quality Products Eligible companies will be selling IEC certified solar products up to 350 Wp. Quality of operations Appropriate staff or commitment to deploy appropriate staff at a functional level. Warranty and after-sales service must offer a warranty in compliance with Lighting Global requirements for pico. PV and solar home system products and have an established and active aftersales service capability. Business plan Including a minimum one-year forecast balance sheet and P&L showing a wellmanaged cost structure and a clear path to break-even and profitability

13 Business Eligibility Criteria The following table summarizes the eligibility criteria : Compliance with relevant national regulations Pertaining to licensing, tax, legal, and accounting. Recycling Must have a policy and a plan for the recycling of system components at end of life, particularly batteries Customer. Data Companies must capture and track customer data in sufficient detail to allow for reliable verification of sales Collections and Portfolio Management Metrices and procedures to track portfolio quality, including a minimum of Pa. R 30, and adequate collection practices.

14 Business Eligibility Criteria Businesses having the following features will be given preference: Gender balance: OGS companies who provide solutions that has strong gender inclusivity will have added advantage in the form of extra points during the evaluations Environmental and Social integration OGS companies who have integrated E&S protocols in their operations or have a solid strategy to integrated E&S safeguards in their process will be considered exceptional. Peri urban and Rural customers: OGS with the ability to distribute products and services in rural areas including farmers and nomads will be considered exceptional in the evaluation.

15 Per Unit RBF ▰ Per Unit RBF: Per unit RBF is $ 1. 5/watt Total Grant is USD 700, 000 which will be awarded through the two distinct mechanisms.

16 Illustration of RBF Cycle

17 Grant Disbursement Mechanisms ▰ Types of Grants: Total Grant is USD 700, 000 which will be awarded through the two distinct mechanisms. 1. Expansion RBF : 2. Seed RBF:

18 Grant Disbursement Mechanisms ▰ Types of Grants: - 1. Expansion RBF : Results-based financing (RBF) to OGS distributors, with a fixed price perunit ($1. 5/watt) payment made for each IEC approved solar system sold, paid after successful verification of the sale. Expansion Grants will be primarily targeted at businesses specializing in solar home system distribution, or other institutions looking to enter the solar distribution market. The Facility will award up to $560, 000 in Expansion RBF

19 Grant Disbursement Mechanisms ▰ Types of Grants: - 1. Expansion RBF : Example: A distributor who has sold & installed 150 watts to a consumer shall be eligible for USD 225 after successful verification of sale. The applicant can apply for block of grant based on estimated unit sale during currency of contract award.

20 Grant Disbursement Mechanisms ▰ Types of Grants: - 2. Seed RBF: The Seed RBF will be paid out on the same per-unit basis i. e. , ($1. 5/watt) as the Expansion RBF , but unlike the Expansion RBF will be disbursed in advance of actual sales. Once the sales against which the Seed RBF was awarded have been made, grant awardees will be able to submit subsequent sales for Expansion RBF disbursement. The Facility will award up to $140, 000 in Seed RBF

21 Grant Disbursement Mechanisms ▰ Types of Grants: - 2. Seed RBF: Example: A distributor is eligible for USD 2, 000 and take the option for Seed RBF USD 500. If he manages to sale 4 units of 150 watts, he will be eligible for a Total Grant of USD 900. Of USD. 900/the first USD 500/- will be adjusted against seed grant and rest USD 400/ - will be given as expansion grant.

22 Disbursement of Funds Applicants in their Financial Application will apply for a fixed amount of Grant at the outset of the Grant Award and DBI will block that amount of funds for the particular applicants. Applicants will be able to withdraw some funds upfront through the Seed RBF (up to 20% of the total amount). The Seed RBF will be disbursed upon completion of grant application evaluations by the Grant Manager subject to approval from the Project Coordinator.

23 Disbursement of Funds ▰ For disbursementof funds under Seed RBF, the applicant will submit: P P Advance Fund Request to avail upfront payment under Seed RBF P Documentary evidence of expenses incurred Breakdown of cost against Line Items e. g. training of staff, market expenses, importation of inventories etc.

24 Disbursement of Funds ▰ P P For disbursementof funds under Expansion. RBF, the applicant at the end of each month will submit: Payment Request (PR) form for reimbursement of expenses against the sales Summary of Sales specifying Customer’s Name, Contact Details, Location of Installation, Product specification P P Original Sales Invoice Photographs of installation etc

25 Financial Models ▰ Different financial models which the Applicants can use to make the sales and under each model the funds will be disbursed accordingly.

26 Working Arrangements with IVA 1 2 3 4 Claims submitted by SSPs to DBI FOs review the claims and documents DBI forward the claims to IVA verifies the claims for further processing

27 Environmental & Social Safeguards (E&S) Risk Management, Monitoring & Implementation Arrangements ▰ The purpose is to guide accredited entities on the environmental and social screening of activities proposed for the project financing and its approval processes. ▰ The core elements of the E&S safeguards’ implementation approach are primarily adopted from SEAP- ESMF.

28 Environmental & Social Safeguards (E&S) Risk Management, Monitoring & Implementation Arrangements ▰ ▰ The project has three components, amongst them are: I. The Electrification of households and small businesses through standalone solar home system II. Enabling electrification through solar powered/hybrid mini-grids. III. Technical assistance, capacity building, and project management. The current activity of Somaliland Off-Grid facility is a program under financial guarantee by the World Bank and hence the safeguard policies and disclosure policy applies to the program.

29 Environmental & Social Safeguards (E&S) Risk Management, Monitoring & Implementation Arrangements ▰ The applicable Performance Standards (PSs)

30 Environmental & Social Safeguards (E&S) Risk Management, Monitoring & Implementation Arrangements ▰ The applicable Performance Standards (PSs)

31 Environmental & Social Safeguards (E&S) Risk Management, Monitoring & Implementation Arrangements ▰ Specific Requirements: § The solar roof project of the SEAP program is not envisaged to cause any loss to biodiversity or natural habitats. However, there may be situations where a neighbouring property’s tree (including protected species) may hinder the solar panel operation. Requirements of PS 6 would need to be met by the contractor(s).

32 Environmental & Social Safeguards (E&S) Risk Management, Monitoring & Implementation Arrangements ▰ Specific Requirements: § It will be important to ensure that the proposed solar project does not impact any buildings of heritage significance (for example, mosques, heritage sites, or cultural sites) in Somaliland. The investor and its contractors will be required to adhere to PS 8. § All contractors must comply with PS 4 in dealing with project-related workers.

33 Cooperative Arrangements with Go. SL & Other Stakeholder for ESMF ▰ Execution of the Environmental and Social Management Framework (ESMF) requires a collective effort from all concerned parties including government ministries led by the project holder; ▰ The Ministry of Energy and Minerals and the Ministry of Environment and Rural Development which is the mandated government ministry for environmental safeguards and other stakeholders including catalyst grant manager, private sector (SHS), the World Bank, and End project beneficiaries.

34 Cooperative Arrangements with Go. SL & Other Stakeholder for ESMF No 1 Parties Roles Responsible for the overall management of the project including ESMF, IPU will be closely monitoring the status of ESMF implementation. Mo. EM 2 Mo. ERD Periodic monitoring of status on implementing ESMF as a national environmental watchdog 3 Catalyst grant manager Responsible for implementation of ESMF on component 1, it will ensure SHS distributors adhere to ESMF at their level. 4 The World Bank SEAP-ESMF was built upon The World Bank safeguards policies and the bank will monitor ESMF implementation status. 5 SHS distributors As contracted implementing partners, they will implement all terms of their contracts including E&S requirements. 6 Beneficiaries End beneficiaries of the project will have a role to play throughout the lifecycle of the program.

35 Reporting DBI team will submit the Project Progress Reports to the Project Coordinator in the following schedule: Sr # Report Timeline 1. Inception Report At the inception of the Project 2. Quarterly Reports At the end of each quarter 3. Semi-annual Reports At the end of every Six Month Period 4. Final Report At the end of project 5. Other Mandatory Reports As and when required

36 Record Keeping ▰ DBI will maintain the records in soft and hard from and will ensure its availability as and when required by the Project Coordinator.

37 Lets add Light to People’s Life in Somaliland Thank You