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.

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.

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.

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 RFP is expected to be issued towards August 2019. The deadline for submission of proposals will be defined in the RFP document.

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.

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.

The generic budget allocation from the Project Appraisal Document should not be used to calculate backwards the maximum number of connections or subsidy in $/connection that may be supported by the program; the overall budget allocation, number of mini grids, and number of connections are all subject to change based on market conditions.

The terms and conditions for this particular tender will be clearly communicated in the RFP documents. The subsidy requirement for each lot will be competitively determined, and is not allocated per state in advance, but the Employer reserves the right to set a reserve price. The competitive process may result in different subsidy requirements for the different lots/states.

The total number of mini grid projects expected to be supported through minimum subsidy tenders, in multiple phases, is about 250. The minimum subsidy tender involves only the award of subsidies and does not involve technical assistance or any other type of funding.

“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 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..

Changes in qualifications of Applicants is addressed in paragraph 30.1 on page 21 of the Invitation for Initial Selection. As described in paragraph 30.1, changes in the composition of the consortium are subject to written approval from the Employer. One or more members of a joint venture may be permitted by the Employer to submit proposals separately if, as separate Applicants, they do not violate conditions (i)-(iv).

“30.1 Any change in the structure or formation of an Applicant after being initially selected in accordance with ITA 27 and invited to submit Proposal (including, in the case of a JV, any change in the structure or formation of any member and also including any change in any specialized subcontractor) shall be subject to the written approval of the Employer prior to the deadline for submission of Proposals. Such approval shall be denied if (i) an initially selected applicant proposes to associate with a disqualified applicant or in case of a disqualified joint venture, any of its members; (ii) as a consequence of the change, the Applicant no longer substantially meets the qualification criteria set forth in Section III – Initial Selection Criteria and Requirements Table 1- Qualification Criteria, and Requirements; or (iii) no longer continues to be in the list of Initially Selected Applicants as a result of the Employer’s re-evaluation of the Application in accordance with ITA 27; or (iv) in the opinion of the Employer, the change may result in a substantial reduction in competition. Any such change should be submitted to the Employer not later than fourteen (14) days after the date of the Request for Proposals.”

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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