Frequently Asked Questions on Minimum Subsidy Tender View in PDF format
In Section III – Initial Selection Criteria and Requirements, the Applicant must use solar and solar hybrid mini grids, with generation capacity between 10kW and 10MW, and a network that distributes power to two or more customers, to show its experience in:
- Developing mini grids (criterion 4.1 and rated criterion 1)
- Operating mini grids (criterion 4.2 and rated criterion 2)
- State-owned enterprises are eligible as per clause 4.2 of the Instructions to Applicants (ITA).
- Further, as per clause 4.9 of the ITA, Applicants that are state-owned enterprises or institutions in the Employer’s Country may be eligible to be initially selected, compete and be awarded a Contract(s) only if they can establish, in a manner acceptable to the Bank, that they (i) are legally and financially autonomous (ii) operate under commercial law, and (iii) are not under supervision of the Employer.
3. On page 33 of the attached, requirement, 3.3 states that applicants must have twice raised $5 million in debt for infrastructure projects. The requirement seems rather narrowly tailored, so we wanted to ask how strict it will be on the specifics. Do the raises have to be debt, or can they be equity? Does it really have to be $5M twice, or could it be, say, $4M thrice?
4. On page 34, requirement 4.2 requires the operation of 2 minigrids since January 2014. Is this a continuous operation requirement- in other words, it is required that the applicant has been operating minigrids nonstop for the last 5 years straight- or is the requirement that the developer has spent some amount of time operating mini grids, and that operation wasn't all before 2014?
The requirement is for the Applicant to have operated at least two (2) mini grids in the past five (5) years (since January 2014).
There is no requirement of continuous operations of mini grids in the past 5 years. The Applicant may have operated the 2 mini grids during any period between January 2014 and the issuance of the initial selection document.
Further, for criterion 4.2, there is no restriction as to the commissioning date of the mini grids operated by the Applicant.
5. Page 59, Section A Overview of the Opportunity: “The REA, with support from the World Bank, will provide a subsidy to cover part of the capital expenditure to Successful Proposers. Proposers will compete on a minimum subsidy basis. This means that Proposers will propose the lowest amount of subsidy required to develop a portfolio of mini grids for a minimum number of connections." According to INVITATION LETTER, the subsidiary suggested by proposers will be highly considered who will be final competitive successor. Here to clarify based on what ground the subsidiary is calculated and compared, on the capacity of power plant or connector numbers? If different proposers bids for different lots, there is no comparability at all.
We understand “subsidiary” to mean “subsidy” in this context, for this clarification and for clarifications number 7.
The financial proposal, i.e., the subsidy request, is expected to be on a per connection basis. In other words, in their financial proposal for a given lot, Proposers would indicate the $/connection that they require to build and operate all of the mini grids in that lot. Proposals for each lot will be compared to other proposals for that particular lot, not across lots. Finally, the financial proposal is only one part of the evaluation. The evaluation will also take into account the technical proposal.. The specifics regarding the evaluation criteria will be disclosed with the Request for Proposals.
6. Page 63, Section A Overview of the Opportunity It is mentioned that “Applicants are encouraged to partner with local companies.” Page 23, ITA 4.2, “Any unincorporated single entity or Joint Venture will be required to be incorporated in the Federal Republic of Nigeria before signing the Grant Agreement with the REA” Does proposer have to register branch company in Nigeria for the implementation of proposed project according to regulations, is that a mandatory rules for bidding purpose?
Any single entity or Joint Venture may submit proposals, so incorporation in Nigeria is not required in order to bid. However, if selected, it would need to have been incorporated in Nigeria before REA will enter into a Grant Agreement with it. It is mandatory for the company entering into a contract with the REA to register with the Corporate Affairs Commission (CAC) in Nigeria for the purpose of tax remittances under the project to the Federal Government of Nigeria. It is a statutory requirement of the Federal Republic of Nigeria.
Details on the regulatory treatment of subsidies for asset compensation in case of grid arrival will be provided at RFP stage
- It is the responsibility of the developer to collect payments from the customers for electricity provided.
- As these communities are in Nigeria, it is expected that subscribers will pay in Nigerian Naira.
- There is no time limit for the operations of the mini grids.
It is up to the developer to design its financial model and incorporate any charges it expects its customers to make prior to determining its cost per connection.
Yes this is confirmed. There will be four (4) different lots, one per state (not region).
11. Component: Minimum Subsidy Tender Reference: Invitation for initial selection - 25.3 – 25.4, P.16-18 + ITA 25.3 P. 27 According to the Invitation for Initial selection applicants may submit proposals for multiple lots, requiring that they fulfill the aggregated financing requirements: • Could you please detail the requirements to bid for multiple lots, compared with 1 lot? Should applicants indicate which lots they are sub-mitting for at the pre-qualification stage or only at the RFP stage?
Details of how application for multiple lots should be submitted will be provided at RFP stage. Applicants are not required to indicate which lots they wish to bid for at the initial selection stage..
12. Component: Minimum Subsidy Tender & Performance based-grant Reference: General Could you please confirm that: • Minimum Subsidy Tender sites will be located only in Niger, Ogun, Sokoto and Cross Rivers State, both during phase I (57 sites) and phase II (250 sites)? Performance based-grant can be delivered for sites in any state in Nigeria?
The Minimum Subsidy Tender (Phase I) will be for sites located in Niger, Ogun, Sokoto and Cross River. The geographic scope for Phase II will be announced when Phase II is launched.
Applications for Performance Based Grants can be submitted for any of the developer’s site located in Nigeria.
13. Component: Minimum Subsidy Tender Reference: Invitation for initial selection - 24.1 Page 16. The Invitation for Initial selection refers to Nominated sub-contractors. It is not clear whether or not, nominated sub-contractors will be selected to perform part of the works (example: construction). Will there be any nominated sub-contractors participating in the Minimum Subsidy Tender? If yes, for which scope and in which case? If not, can you confirm applicants may select independently their own sub-contractors?
`As stated in the Initial Selection Data Sheet (ISDS), “The REA does not intend to execute certain specific parts of the contract by Subcontractors selected in advance.”
Applicants may select their own subcontractors so long as they comply with Instructions to Applicants (ITA) 24.2:
“The Applicant shall not propose to subcontract the whole of the contract. The Applicant may propose subcontractors for certain specialized parts of the contract. Applicants planning to use such specialized subcontractors shall specify, in the Application Submission Letter, the parts of the contract proposed to be subcontracted along with details of the proposed subcontractors including their qualification and experience.”
14. Component: Minimum Subsidy Tender Reference: Invitation for initial selection - 24.2 Page 16. The Invitation for Initial selection refers to sub-contractors that may be proposed by the applicants. Shall the applicants define their sub-contractors before signature of the Grant Agreement? If yes, at which stage shall sub-contract be determined (Pre-qualification, RFP, Grant agreement)?
`As stated in the Instructions to Applicants 24.2:
The Applicant shall not propose to subcontract the whole of the contract. The Applicant may propose subcontractors for certain specialized parts of the contract.
Applicants planning to use such specialized subcontractors shall specify, in the Application Submission Letter, the parts of the contract proposed to be subcontracted along with details of the proposed subcontractors including their qualification and experience.
Instructions regarding the Application Submission Letter are provided in Section C of the Instructions to Applicants (pp. 12-14):
12.1 The Applicant shall complete an Application Submission Letter as provided in Section IV, Application Forms. This Letter must be completed without any alteration to its format.
The Application Submission Letter template in Section IV includes the following paragraph:
(h) Subcontractors and Specialized Subcontractors: We, in accordance with ITA 24.2 and 25.2, plan to subcontract the following parts of the contract:
[Insert any part of the contract which the Applicant intends to subcontract along with complete details of the Specialized Subcontractors, their qualification, and experience]
This is where Applicants would need to define their subcontractors as part of their Initial Selection submission.
15. Sub-topic 3.1: Tenders & Performance based-grand exclusivity Reference: Invitation for initial selection – 4.4 P. 8 According to, “A firm and any of its affiliates (that directly or indirectly controls, are controlled by or are under common control with that firm) are not permitted to submit more than one application for initial selection for the same contract, either individually, as joint venture or as a subcontractor among them.” Can a firm still submit an application to the Minimum Tender Subsidy, and another application, in any form (similar or different) to the Performance Based Grant, with different partners, alone or in consortium?
Yes, a firm can submit an application for the Minimum Subsidy Tender and also submit another for the Performance Based Grant since these are different programs with different eligibility, qualification and technical capability requirements under the NEP.
16. Sub-topic 4.1: Minimum Subsidy Tender Incorporation Reference: Invitation for initial selection - ITA 4.2 P. 23 “Any unincorporated single entity or Joint Venture will be required to be incorporated in the Federal Republic of Nigeria before signing the Grant Agreement with the REA.” Does this mean an unincorporated single entity can still answer at the RFP level? Can you please confirm the exact stage at which incorporation will be needed? What is the actual definition of “incorporation”: - A Certificate of Incorporation? - A business permit? A tax clearance certificate?
Incorporation in Nigeria is not a requirement to bid for single entities and consortia.
Any single entity (pursuant to clause 4.2 of the Instructions to Applicants), either incorporated in Nigeria, or registered or incorporated in another country may bid. However, if selected in the tender process, such single entity will be required to be incorporated in Nigeria once the Grant Agreement is signed, in order for the Grant Agreement to be effective. Further details will be provided at RFP stage.
Any unincorporated Joint Venture selected in the tender process will be required to be incorporated in Nigeria prior to entering into a Grant Agreement with the REA.
It is mandatory for the company entering into transactions with the REA to register with the Corporate Affairs Commission (CAC) in Nigeria for the purpose of tax remittances under the project to the Federal Government of Nigeria. It is a statutory requirement of the Federal Republic of Nigeria.
The definition of incorporation is for the successful Proposer to register with the Corporate Affairs Commission and obtain the certificate of incorporation in Nigeria. In addition, the successful Proposer shall also register with the appropriate tax office (i.e Federal Inland Revenue Service) and obtain a Tax Identification Number (TIN) through which deductibles taxes shall be remitted to the Federal Government of Nigeria.
Members do not necessarily have to be incorporated in Nigeria but the joint venture (i.e. the contracting party) must be.
18. Sub-topic 6.1: Minimum Subsidy Tender Ranking & Consortiums Reference: Invitation for initial selection P36-39 According to the Invitation for initial selection “In case of a Joint Venture, all members combined will be evaluated.” What exactly is the implication on criteria 3 if for instance: - 1 consortium member has 2.5 M$ equivalent in Liquid asset, - 1 other consortium member has 1 M$ equivalent in Liquid asset: Does the consortium earn: - 100 points as members have combined more than 3.5M$ in liquid asset? 10 points because each applicant has 1,75M$ in liquid asset in average?
Since all members of a Joint Venture are evaluated combined, this means that the Joint Venture in the scenario described would have $3.5 equivalent in liquid assets and could therefore obtain the maximum weighting of 100 for this rated criterion.
19. Sub-topic 6.2: Minimum Subsidy Tender Ranking Applicant & Affiliates Reference: Invitation for initial selection – 25.5 P. 19 According to the Invitation for initial selection: “Only the qualifications of the Applicant shall be considered. The qualifications of other firms, including the Applicant’s subsidiaries, parent entities, affiliates, subcontractors (other than specialized subcontractors in accordance with ITA 25.2 above) or any other firm(s) different from the Applicant shall not be considered.” Given the nature of mini-grid financing: In case of a group, that for instance has developed and operated more than 6 mini-grids in multiple countries, through multiple fully-owned subsidiaries - Can the mother company apply, and qualify as a company that has developed and operated more than 6 mini-grids, and gain 2 x 100 points?
No, as stipulated in paragraph 25.5, only the qualifications of the Applicant shall be considered and not that of its parent company, or of its subsidiaries.
In the case of a group, the qualifications of several subsidiaries (and/or parent entity) can be used only if the different subsidiaries (and/or parent entity) form part of the joint venture as separate Joint Venture members.
20. Sub-topic 6.3: Minimum Subsidy Tender Ranking - Focus Reference: Invitation for initial selection – P. 36 - 39 What is actually meant by “Number of mini grids of at least 10kW in generation capacity operated since January 2014”. Does this mean mini-grids should have started being operated before or after January 2014?
This is not a continuous operation requirement, but rather seeks demonstration of recent experience in operating mini grids, i.e., the Applicant’s experience in operating mini grids used to meet this requirement has to be from January 2014 or after..
The Employer is the Rural Electrification Agency of Nigeria.
22. Sub-topic 6.6: Minimum Subsidy Tender Ranking – Application Submission letter Reference: Invitation for initial selection The application submission letter template (p.41-42) requires applicants to confirm that “We declare that the following commissions, gratuities, or fees have been paid or are to be paid with respect to the Initial Selection process, the corresponding RFP process or execution of the Contract, in accordance with ITA 11.2”. - Does this mean that Application Submission Letter is a deliverable only at the RFP stage? Could you provide with a clear list of required deliverables for the pre-qualification stage?
The Application Submission Letter must be submitted as part of the initial selection application.
The list of forms and associated documents that must be submitted as part of the initial selection application are listed in “Section III – Initial Selection Criteria and Requirements” and “Section IV – Application Forms” of the Invitation for Initial Selection.
The RFP is expected to be issued towards August 2019. The deadline for submission of proposals will be defined in the RFP document.
24. Sub-topic 7.2: Minimum Subsidy Tender sites information Reference: Invitation for initial selection – Invitation for initial selection (P.59) The Invitation for Initial selection refers to information on site (“such as” GPS coordinates, estimated load profiles, and estimated number of customers for each site): - Which information will be available exactly? When will this information be available exactly?
The location of each community, estimated number of customers by category of customer, and load profile will be provided at RFP stage on the Odyssey platform to initially selected applicants.
25. Sub-topic 7.3: Minimum Subsidy Tender RFP selection Reference: Invitation for initial selection Will the RFP selection criteria based: - On the minimum level of subsidies required? Yes/No? - The tariffs? Yes/No? - The mini-grid size? Yes/No? - The number of connections targeted? Yes/No? - The invested amount? Yes/No? - The community engagement plan? Yes/No? - The social and economic impact generated? Yes/No? Which will be priority criteria? Which will be secondary?
The evaluation criteria for technical and financial proposals will be disclosed at RFP stage.
26. Sub-topic 7.4: Minimum Subsidy Tender RFP – process with communities Reference: Invitation for initial selection – Invitation for initial selection (P.59) The Invitation for Initial selection refers to information on site (“such as” GPS coordinates, estimated load profiles, and estimated number of customers for each site). In order to define capital expenditures, and subsidies required, applicants may require to define tariffs. In order to define tariffs, applicants may need to reach agreements with communities. How does the employer intend to manage multiple applicants reaching multiple agreements with the same communities regarding tariffs? Will the applicants define themselves, or the Employer: - Tariffs? - Assets size? Number of connections?
Applicants are not expected to reach tariff agreements with communities prior to submission of proposals. Applicants will be required to negotiate the tariff after the contract award. Further details and requirements on tariff setting will be provided at RFP stage.
The asset size will be defined by applicants.
However, the number of connections to be made will be defined by the REA and indicated in the RFP package.
Further details on technical requirements and connections requirements will be made available in the RFP document.
27. Sub-topic 8.1: ESIA requirements Reference: Invitation for initial selection, Slides presented mention 2 types of sites: - Category I sites which require a ESIA as well as RAPs and Livelihood Restoration Plans (LRPs), if applicable - Category II sites, which require Proof of payment from Ministry of Environment as evidence that the Applicant has submitted its Environmental and Social Management Plan (ESMP) to the Ministry of Environment for approval Could you please explain: - What is the difference between Category I and Category II sites? Will sites part of the Minimum Subsidy Tender be part of Category I or Category II?
Category I and Category II refer to environmental and social (E&S) impact categories.
- Category I: with significant E&S impacts. High risk sites such as those in sensitive habitats, with potential physical and/or economic displacement, substantive number of migrant workers stationed in communities
- Category II: No high risk activities expected, overall medium or low E&S impacts.
While every precaution has been taken by the Employer to include only Category II sites in this tender, the winning developer will be responsible for ensuring that each site is correctly categorized, including into Category I if applicable.