Produce roadmap for the creation of the fund to remove congestion

REQUEST FOR EXPRESSIONS OF INTEREST

COUNTRY: Southern African Power Pool (SAPP) region

Projects Grant No.: H9890

Assignment Title: Establishment of a SAPP Transmission Infrastructure Development Financing Facility

Background

The Southern African Power Pool (SAPP) has been allocated grant funds (the “Grant”) from the International Development Association (IDA) (the “Bank”) and executed by the SAPP (“the Client”). The SAPP intends to apply part of the proceeds for the Establishment of a SAPP Transmission Infrastructure Development Financing Facility.

The Southern African Development Community (SADC) region is endowed with significant energy resources which can be developed to produce electricity that is critical for the development of the member countries and the region at large. Most of these resources are not being developed at a fast pace resulting in the region currently having a generation supply deficit. One of the major constraints in the development of these resources is the absence of an adequate integrated transmission system to evacuate the power and trade it regionally.

The Southern African Power Pool (SAPP) is experiencing transmission constraints especially through its central corridor. As a result, the system is not N-1 compliant, does not have redundancy and as a result seriously constrains the exchange of power due to limited transmission interconnection capacity within SAPP, impacting and severely constraining both regional short-term/spot and longer-term/bilateral markets.

Indeed, a readily accessible, reliable, and interconnected transmission system, with adequate redundancy, is a fundamental enabler to further development, expansion, and operation of a smoothly functioning regional electricity market in SAPP, thereby enabling development of robust competitive markets including underlying bilateral contracts market between its various member countries. Accordingly, SAPP has identified a number of regional transmission projects necessary to alleviate transmission congestion, improve accessibility to the SAPP network, create transmission corridors, and improve overall system reliability. Among others, these include high priority cross-border transmission interconnection projects, such as Central Transmission Corridor (CTC) Transmission Project, Zimbabwe-Zambia-Botswana-Namibia (ZIZABONA) Transmission Project, Mozambique-Zimbabwe-South Africa (MOZISA) Transmission Project, and Botswana-South Africa (BOSA) Transmission Project. Furthermore, SAPP is yet to interconnect three member countries, namely Angola, Malawi and Tanzania and the following transmission projects have been identified for this purpose: Angola-Namibia Interconnection Project, Mozambique–Malawi Interconnection project, and Zambia-Tanzania Interconnection project.

Key underlying factors for insufficient transmission infrastructure leading to limited regional power trade. Financing these projects on and off-balance sheet of the countries has been a challenge as most SAPP utilities are not in a financial position to do so due to various reasons (including lack of bankable balance sheets). In addition, the identified transmission projects may not necessarily be required by the respective countries where the lines would transit, but are needed mainly for regional transactions as opposed to national requirements.

The strategy that has traditionally been followed to date in order to implement these projects has been the use of sovereign borrowings and/or project finance structures. Latter approach requires that the financing be anchored through future cash flows that are generated from the project through wheeling revenues and would require wheeling agreements to be in place and the associated risks optimally shared among the transmission facility owners or operators, investors, and buyers and sellers involved in the transactions.

A common challenge and one of the main underlying causes of delayed implementation of these projects has been the difficulty in arranging financing. The balance sheets of the national utilities are overcommitted on other national imperatives. In addition, almost every country in the region finds itself constrained from accessing new long-term public-sector debt. As a result, countries are constrained in providing sovereign guarantees to backstop such new projects or public-sector loans to fund their portion of a cross-border transmission projects. Finally, it is difficult to mobilize financing for these projects on a limited recourse basis due to the absence of long term anchor transactions/contracts that can commit to the required revenue flows for loan repayments and operational costs for these transmission projects. This is despite the fact that there are a number of transactions (bilateral and spot market trades) that are currently failing to be executed /traded as a result of transmission constraints; a sign that once the lines are put in place the likelihood of them failing to be utilized would be slim.

Context behind establishing a regional transmission infrastructure financing mechanism/facility. In its three-year strategic plan (2017-2019), SAPP has agreed to explore the possibility of establishing a funding mechanism/guarantee facility to assist in the implementation of regional transmission projects in the SADC region. The World Bank, through the Program for Advancing Regional/Transformational Energy Projects (SAPP AREP Program) will finance the further development of this proposal from its current concept stage into an eventual establishment of the SAPP Transmission Infrastructure Funding Mechanism/Facility.

Objectives of the consultancy assignment

The objective of the proposed consultancy assignment is to help SAPP develop a financing mechanism/guarantee facility as appropriate, which leads to accelerated development of key regional transmission projects through the support of a regional entity. The key output of the consultancy assignment is the development of a conceptual framework and establishment of such a regional facility with a structure approved and mandated by SAPP and agreed to by all other key stakeholders. Such a facility should be structured to access funding/support from sources identified by the consultants, taking into account the regional and national constraints, and kick-start the development of key regional transmission projects.

Required Qualifications and Experience

The Consultant shall be a qualified, internationally recognized firm with at least 15 years general and specific experience in similar projects.

This shall involve at least 2 or more similar assignments executed/under execution by the firm, including at least 1 similar assignment in developing countries. The firm should be able to field registered highly experienced multinational team, covering at a minimum, the following key experts: Senior Financial Advisor – Team Leader; Power Transmission and Trade Expert and Legal Expert.

The SAPP now invites eligible consulting firms (“Consultants”) to indicate their interest in providing the Services. Interested Consultants should provide information demonstrating that they have the required qualifications and relevant experience to perform the Services. The shortlisting criteria are:

• Evidence of company registration

• Relevant experience

• Technical and managerial capacity – including an organogram or narrative

• Cost of assignments undertaken

• The available experts with experience and qualifications in similar assignments.

The attention of interested Consultants is drawn to paragraph 1.9 of the World Bank’s Guidelines: Selection and Employment of Consultants [under IBRD Loans and IDA Credits & Grants] by World Bank Borrowers (“Consultant Guidelines”)- January 2011, revised July 2014, setting forth the World Bank’s policy on conflict of interest.

Further information can be obtained at the address below during office hours from Monday to Friday 08:00 to 16:30 hours.

Expressions of interest must be delivered in a written form in English to the address below (in person, or by mail, or by e-mail) by 22 February 2018 at 15:00 hours Central African time and mention "Expression of Interest for Consultancy Services for the establishment of a SAPP Transmission Infrastructure Development Financing Facility “

Address and Contact:

Southern African Power Pool

Attention: Thembekani Luthuli, SAPP-PAU Procurement Specialist

222 Morningside Close

Morningside

Johannesburg

South Africa

Tel: +27 10 446 9600

Email Address: [email protected]

With a copy to [email protected]