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.
The Applications will be evaluated based on criterion 3.3. The Applicant must have raised debt successfully for at least two (2) projects in infrastructure since January 2014, for an amount of at least USD5 million or its Nigeria Naira equivalent for each project.
  • 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.

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.

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.

  • 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.

“Minimum subsidy” tender refers to a tendering process where, in their financial proposals, bidders would compete to request the lowest amount of subsidy they require to build and operate the mini grid projects. Developers requesting lower subsidy would be scored higher during evaluation of financial proposals

However, please note that the evaluation of proposals will be based on the quality of the technical proposal and the financial proposal (amount of subsidy requested).

Feed-in-tariffs are not applicable in this tender because the mini grid operator sells electricity to customers (domestic and commercial customers), and not to a utility.

This program does not prescribe the business structure for the mini grids to be built and operated. It is the developer’s responsibility to determine which business model would be suitable to ensure the continued operation of the mini grids it intends to develop under this sub component.

Please refer to the NERC Mini Grid Regulations 2016 on options available to mini grid developers in the event that the main grid comes to their site(s).

“It is up to the developer to determine the most suitable means of collecting payment for power generated from the mini grids. The communities that have been selected under this tender are all completely off grid and are not being served by any DisCo. The customers that will use the power generated from the mini grids are resident in these communities and so it is expected that the developer will charge in local currency, as payment to be collected from these customers will be in local currency..

Restrictions (if any) on the sale or transfer of projects will be described at the RFP stage.

If you have been financing projects only with your own resources, then you would not have experience raising debt. Having raised debt for any infrastructure project, not necessarily for mini grid projects, would satisfy this requirement.

Two (2) or more companies can form a joint venture depending on the parties involved. There is no restriction on the number of companies forming a joint venture. Joint ventures are encouraged in World Bank financed projects particularly if it will enhance their qualifications and capabilities. A joint venture may be for the long term (independent of any particular procurement), or for a specific procurement.
All the partners in a joint venture shall be jointly and severally liable for the entire contract.

The submission requirements of the entities within a JV are clearly stated in the Initial Selection Document (ISD) (section III) Some criteria should be met by each member of the joint venture, some should by all the members, and some criteria should be met by one member of the joint venture only

The document referred to, is the three (3) years audited financial statements of the company, duly signed and stamped by certified financial auditing firm.

The CBN restricts disbursement of the grants in Naira for companies registered in Nigeria. All the details of how the grant will be disbursed will be described at the RFP stage

Our focus for this REA-World Bank supported programme is the Nigeria Electrification Project (NEP). Kindly ensure that you review the qualification criteria as stated in the Initial Selection Document for the NEP to ensure that you meet the eligibility requirements.

Eligibility for the NEP has nothing to do with IMAS, so being in a particular JV for IMAS should not prevent a developer from being part of a different JV for NEP.

The subsidy that is competitively determined through the tender is provided to the winning developers as viability gap funding. Therefore, it is incumbent on the developer to specify the level of subsidy they require to make the projects viable when they bid. NEP cannot provide any guarantee that the developer will be able to achieve any specific level of returns.

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.

`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.”

`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.

The subsidy that is competitively determined through the tender is provided to the winning developers as viability gap funding. Therefore, it is incumbent on the developer to specify the level of subsidy they require to make the projects viable when they bid. NEP cannot provide any guarantee that the developer will be able to achieve any specific level of returns.

There is no specific equity requirement or particular governance or contractual relationship required to qualify as a joint venture; indeed, for an intended JV a simple letter of intent is sufficient. However, all members of a joint venture shall be jointly and severally liable for the execution of the entire Contract in accordance with the Contract terms.

An applicant does not have to be registered in Nigeria at the stage of Initial Selection. Please refer to ITA 4.5 and ITA 5.1..

Kindly refer to the Nigeria Electricity Regulatory Commission (NERC) website for more details.

https://www.nercng.org/index.php/home/operators/mini-grid

The three parties in a tripartite agreement are the Developer, the Distribution company operating in that area and the Community that will be receiving power from the mini grid.

For more details on Mini grid regulation please visit the link provided above.

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