Workshop on PPP (Public Private Partnership) for Mini-Grids · 2018-04-19 · Ministry of Economy Republic of Fiji Workshop on PPP (Public Private Partnership) for Mini-Grids 12th

Ministry of EconomyRepublic of Fiji

Workshop on PPP (Public Private Partnership) for Mini-Grids

12th December 2017

Training Prepared and Conducted by Grue + Hornstrup A/S

Overview of the Sessions

• 09:00 – 09:15 Welcome

• 09:15 – 09:30 Application of PPP models for mini-grids

• 09:30 – 10:00 Identification, screening, and appraisal process for PPP projects

with mini-grids

• 10:00 – 10:15 Tea break

• 10:15 – 10:45 Design of PPP projects and business models in rural communities

• 10:45 – 11:15 PPP Agreement and governance

• 11:15 – 11:45 Implementation and private sector set-up

• 11:45 – 12:30 Monitoring and evaluation of PPP projects with mini-grids

• 12:30 – 13:30 Lunch

Training Prepared and Conducted by Grue + Hornstrup A/S



Application of PPP models for mini-grids

Contents and Outcomes

The Big Question: What are we trying to aim for and achieve through the Application of PPP

models for mini-grids

Key Questions for PPP Model Framework

1. Scope of the Application:✓ What is the sector / technology,

✓ Type of energy assets,

✓ Geographical aspects,

✓ Scale/ capacity,

✓ Type of service (what gaps are to be filled),

✓ Payment conditions,

✓ Business models that need to be considered…

2. Overview of the Process:✓ How does the overall structure / relationship look like

✓ What are the steps for developing a PPP Framework


3. Identification, Screening and Appraisal✓ How do you identify the initial project / site

✓ What is needed for initial pre-screening

✓ What are the criteria when assessing the project

✓ Are there any tools such as SWOT analysis which can facilitate

the decision making process

4. Design and Business Models:What needs to be considered when defining:

✓ The stakeholder consultation process

✓ The legal and regulatory framework

✓ Proposed roles and responsibilities

✓ Income generating activities

✓ Determing baseline and demand

✓ Tariff setting structure / methodology

✓ Commercial and Financial considerations


5. PPP Agreement and Governance ✓ What goes into developing a PPP Agreement - Understand the

key elements of the PPP Agreement

✓ What does a PPP Governance structure need to consider with a

focus on parties invovled (incl. Government)

6. Implementation and MRV ✓ Understanding risks and mitigating them

✓ What does the PPP implementation plan look like

✓ What are the considerations from the Private Sector

✓ What are the cornerstones of the MRV system

✓ The key parameters and data that needs to be tracked

✓ What additional training and support is needed (follow-up)

7. And finally, Lessons Learned

The Big Picture

Questions and Comments



Identification, Screening and Appraisal

What is a PPP ?

A Public-Private Partnership (PPP) is a well proven model that is used globally typically for public infrastructure projects such as Renewable Energy Projects

The public partner is represented by the government at a local, state and/or national level. The private partner can be a privately-owned business, public corporation or consortium / JV of businesses with a specific area of expertise.

What is Unique in Fiji ?

The public partner of a PPP in Fiji can be the is represented by the Government of the Republic or the Native & Village government units.

National Government

District Government

Sud-ProvincialTikinaTowns / Cities

Village / Matangali

Provincial GovernmentsYasana

Supported by Ministry of iTaukei Affairs

Advantage PPP

The PPP Framework can support the development of RE power generation projects in Fiji to enable more investment by:

✓ Accessing private finance, ✓ Helping to achieve value for money in the provision of energy services, ✓ Improve accountability and reliability in the provision of the services, ✓ Harnessing private sector innovation and efficiency,✓ Stimulating growth and development, particularly in rural areas.

Scope of Application – with Focus on RE:

Note: The application in this Workshop is limited to the electricity sector in the form of RE power generation and/or distribution in mini-grids.

Pre-conditions for PPP Projects:

✓ PPP can be applied for hydro projects (up to 100 kW), ✓ Wind / hybrid proects and ✓ Solar / hybrid projects

Only mini-grids and fully off-grid projects are eligible.

The PPP model framework is NOT applicable for:

End-user RE systems (like solar home systems); Generation connected to the FEA grid systems.

Scope of Application - Continued

Type of Energy Assets

✓ Existing Energy assets and service areas for RE power generation and distribution

✓ New energy assets and service areas, or ✓ Existing energy assets and service areas which are to be extended,

For privately owned energy assets (e.g. Resorts)

Scale and Capacity:

✓ The service should benefit a minimum of 50 households / end-consumers

Payment Conditions:

✓ Private counterpart is paid mainly through collecting fees from end-users

Identification – The 2 Approaches

Top-down approach

Based on a selection of projects identified through a review of the public or private sectors infrastructure

planning processes or energy development plans.

Bottom-up approach

Potential sites and projects are proposed e.g. from a community, a development agency,

and/or a private sector company

Screening - Aspects to Consider:

Value for Money

Sustainability

Risk Transfer

Commercial Potential

Market Potential

Appraisal - Questions that need Answering:

✓ Who are the key stakeholders involved?

✓ What are most critical aspects/risks involved? (e.g. related to ownership, legal, financial or technical aspects)

✓ Capacities available vs. capacities required?

✓ What does it require in terms of logistics and coordinating for the PPP process?

✓ Is there potential private sector interest in the project/site? Generally, the private sector would consider the following aspects: - Is there sufficient demand for the underlying service (electricity) by the users and in the area?- What is the viability of the project?- What is the potential for revenue creation and future development?

✓ Is there a strong political commitment to support the PPP?

✓ Is a PPP the potentially best method to deliver the required services (power generation or power generation & distribution)?

Appraisal - Criteria for Investment Decision

Feasibility and economic viability of the project:

A project is economically viable if the economic benefits of the project exceed its economic cost.

Commercial Viability:

Would the project be attractive to the market and has good financial returns, or can break even if non-profit?

Would the PPP require the private party to bear only reasonable levels of risk?

Value for Money:

• Generation of additional revenues;• Improved service quality;• Faster implementation; • Reduced or Better allocation of risks; • Reduced life cycle costs.

Fiscal Responsibility:

Would the project’s overall revenue requirements be within the capacity of users, the public authority, or both, to pay for the infrastructure and service.



Business Models and Design

PPP Models – Components of Project Activity

Construction

Phase

Operation / Main

Phase

Project

Management

Ownership

Rights

Design

Build

Operate

Maintain

Finance

Manage

Transfer

Own

Technical design and

construction

of the project

Make sure that the

project provides

required services

Ensure appropriate

project funding and

oversight

Pertains to project

ownership

PPP Procurement Assessment

Planning & Implementation Post Project Review

Establish OutputSpecifications

Contract Award

Management and Review

Traditional Procurement Process

PPP Process

Project Operation

End of EconomicLife (i.e. ROI achieved)

ConstructionPhase

OwnershipRights

OperationPhase

Various Phases in Project Financeand Project Management

PPP Models – Comparison

In the context of improving access to energy through Renewable Energy in

Fiji via mini-grids, the following models are relevant:

Types of PPP Model relevant to Fiji / EnergyConstruction

Phase

Operation

Phase

Project

Management

Ownership

Rights

Operation and Maintenance (O&M) ✓

Operation, Maintenance and Management (OMM) ✓ ✓

Design Build Operate Maintain (DBOM) ✓ ✓

Design Build Finance Operate Maintain (DBFOM) ✓ ✓ ✓

Build Operate Transfer (BOT) ✓ ✓ ✓ ✓

Build Own Operate (BOO) ✓ ✓ ✓ ✓

• Public agency contracts a private entity to provide and/or maintain a specific service.

• Under the private operation and maintenance option, the public partner retains

ownership and overall management of the public facility or system.

• O&M are one of the most popular form of contracts globally and is even practiced by

private entities to outsource either non-essential or highly technical type of works.

• The private entity is usually a “small player” (e.g. local contractor with limited financial

resources or a specialized company offering a specific type of service) and undertake

repairs/servicing of equipment required to ensure the regular operation of the facility.

• O&M in context of Fiji will provide employment of local population to operate and

maintain decentralized and remote RE power plants.

O&MPPP Models – Operate & Maintain

Public agency contracts with a private partner to operate, maintain, and manage a

facility or system proving a service.

Under this contract option, the public partner retains ownership of the public facility

or system, but the private party may invest its own capital in the facility or system.

Any private investment is carefully calculated in relation to its contributions to

operational efficiencies and savings over the term of the contract.

Generally, the longer the contract term, the greater the opportunity for

increased private investment because there is more time available in which to

recoup any investment and earn a reasonable return.

In context of Fiji, OMM contract maybe awarded with the added responsibility to

collect payments for the services / energy provided.

OMM

PPP Models – Operate, Maintain & Manage

• The design-build-operate-maintain (DBOM) model is an integrated partnership

that combines the design and construction responsibilities of design-build

procurements with operations and maintenance.

• These project components are procured from the private section in a single

contract with financing secured by the public sector.

• The public agency maintains ownership and retains a significant level of

oversight of the operations through terms defined in the contract.

• In the context of Fiji, the DoE can choose to appoint a reputed private entity

(international or national) to design and build the power plant who can then be

made responsible to train local staff to ensure O&M of the facility.

DBOM

PPP Models – Design, Build, Operate & Maintain

• With the DBFOM approach, the responsibilities for designing, building, financing,

operating and maintaining are bundled together and transferred to private partner.

• There is a great deal of variety in DBFOM arrangements especially the degree to

which financial responsibilities are actually transferred to the private sector.

• One commonality that cuts across all DBFOM projects is that they are either partly

or wholly financed by debt leveraging revenue streams dedicated to the project.

• They are also often supplemented by public sector grants in the form of money or

contributions in kind, such as right-of-way. In certain cases, private partners may be

required to make equity investments as well.

DBFOM

PPP Models – Design, Build, Finance Operate & Maintain

• The private partner builds a facility to the specifications agreed to by the public

agency, operates the facility for a specified time period under a contract or

franchise agreement with the agency, and then transfers the facility to the

agency at the end of the specified period of time.

• The private partner will also provide some, or all, of the financing for the

facility, so the length of the contract or franchise must be sufficient to enable the

private partner to realize a reasonable return on its investment through user

charges.

• At the end of the franchise period, the public partner can assume operating

responsibility for the facility, contract the operations to the original franchise

holder, or award a new contract or franchise to a new private partner.

BOT

PPP Models – Build, Operate & Transfer

The contractor constructs and operates a facility without transferring ownership to

the public sector.

Legal title to the facility remains in the private sector, and there is no obligation for

the public sector to purchase the facility or take title.

BOO

PPP Models – Build, Operate & Own

Design Consideration - Stakeholder Consultation

Local Stakeholders:Service Users, local community

The Government:Ministries, FEA, FCC etc.

Land Owners & 3rd parties:e.g. Respective Matangalis

Private Sector:Potential service providers

And/or Suppliers

Community / Stakeholder Consultants (Bukuya)

Mission Key stakeholder engagement activities

1 Technical Assessment of Hydro Power Station;

Introduction of PPP concept (workshop with

stakeholders); Inputs/ concerns from

stakeholders;

2 Present the Bukuya PPP concept to the Bukuya

Cooperative and to gain feedback. Determination

of income generating activities

3 Present final Bukuya PPP concept and land lease /

easement issue.

4 Present SPC company structure, Coop decision on

PPP participation, elect SPC board members,

notification of prepaid meters and tariff.

5 Meet with SPC team and Coop Board to inform on

progresss, review of company operating structure,

and small business accounting training. Mid-

Review of pre-paid meter installation.

6 Meet with SPC team and Coop Board to inform on

progresss, sign employment contracts, and small

business accounting training. Final-Review of pre-

paid meter installation.

DOE held additional consultations and support for the rehabilitation, facilitating the PPP, and supervision of pre-paid meters installation.

Design Consideration – Roles & Responsibilities

Government of Fiji:

Supporting the development and implementation of the PPP relationship.

Oversee the PPP contract (PPP Agreement) over its lifetime. Includes enforcing the PPP contract requirements and managing the relationship between the public and the private party.

Enforcement is via the laws of Fiji, but also as a balanced member of the PPP Governance Board

Private Party:

Legal responsibility to manage, operate and maintain the renewable power plant under the PPP.

Other 3rd Parties:

Roles and Responsibilities are dependent on the type of 3rd party, for e.g. an External service provider may be appointed for installing, operating and maintaining the pre-paid meters, to conduct extraordinary and larger maintenance work and annual overhauls at the power plant or to verify the measured and reported data

Public Party:

Assigns the rights to provide the service, and is legally responsible to support the Private Party during implementation and operation, and in disputes with the community.

Roles & Responsibilities (Bukuya Example)

Design Considerations –Inclusion of Income Generation Activities

• Step 1: Discussions with national stakeholders incl. DOE and local stakeholders (Community, Village);

• Step 2: Identification of most relevant income generating activities; • Step 3: Costs and benefits of income generating activities; • Step 4: Income Generating Investment Plan.

Minimum Information that should be Provided:

• Description of what exactly is planned (incl. technology, amount, space required, location);

• Purpose of the activity;• How will it affect the village, community?; • Expected revenues per annum;• Other co- benefits (e.g. social, environmental, economic); • Expected investment costs and costs for operation and management (incl. salary).

Design Considerations – Tariff Setting

Identify & Quantify Cost Components

Measure or Assess Power Demand

Calculate annual revenue requirement

Calculate the Tariff based on revenue and power demand

Approval of Tariff

Design – Commercial / Financial Considerations

Major Maintenance Fund(Tariff Guarantee)

Income Generating Activity Fund

PPP Specific Funds

Established in form of an ESCROW-Bank Account, to ensure that the costs for major maintenance required can be ensured at any time of the operation of the PPP project

Established in form of a controlled bank account to accumulate the revenues required for investing in the selected and planned income generating activities in the service area of the PPP

Income Generating Activities (Bukuya Example)

Determining Electricity Demand

Services (Health Center, Nurses Quarters, Teacher Quarters)

Items Number Power Rating

(W)

Load hours (Hr) Daily Load (Wh)

CR Tube TV 1 150 4 600

Refrigerator 4 150 7 4200

Mobile charger 2 5 3 30

Iron 3 1000 1 3000

Laptop 3 75 3 675

Flat Screen TV 2 40 6 480

Washing machine 2 500 3.5 3500

Electric oven 1 2000 4 8000

LED/CFL Lights 12 11 9 1188

Small radio 1 30 15 450

Desktop computer 3 300 7 6300

Starlizer 1 1000 4 4000

Blood Pressure Machine 1 50 3 150

Electric Kettle 1 1000 3 3000

Fan 1 30 6 180

Total 35753

Number of households surveyd 23

Households

Items Number in

Households

Power Rating

(W)

Load hours (Hr) Daily Load (Wh)

CR Tube TV 20 150 5 15000

Refrigerator 10 150 7 10500

Stereo 8 300 6 14400

Rice cooker 2 650 1 1300

Mobile charger 23 5 3 345

Iron 16 1000 1 16000

Washing machine 5 500 2 5000

Laptop 1 75 4 300

Toaster 1 800 1 800

Flat Screen TV 2 40 3 240

Electric oven 1 2000 1 2000

LED/CFL Lights 69 11 9 6831

Frying Pan 1 1000 2 2000

Small radio 1 30 15 450

Corrected values

Total 75166

per Household 3268

Past Generation MethodEnd-Use Survey Method

Results = 3.4 kWh per HH Results = 1.9 kWh per HH

Determining Electricity Demand

Compairson Method

Results = 4.2 kWh per HH

✓ Different methods lead to a high level of uncertainly

✓ Direct measurement method is best, but not possible for greenfield projects

✓ Suppressed demand scenarios should be considered.

✓ Demand range between 1.9 – 4.2 kWh per HH

Tariff Setting

Itemized Annual Costs Conservative Demand Estimate

Tariff Components Annual Cost Part of Tariff Part of Tariff

FJD/kWh %

Daily Operational Costs 11,535 0.067 17%

Continual Maintenance Costs 4,500 0.026 7%

Company Management Costs (incl. Staff) 27,000 0.157 39%

Cooperative Costs (incl. easement) 6,000 0.035 9%

Major Maintenance Costs 10,167 0.059 15%

Investment in Income Generating Activities 9,753 0.057 14%

FJD FJD/kWh

TOTAL Annual 68,955

Electricty Generation 191,359

Electricty Supply (Generation - losses) 172,223 0.400

Final Tariff

Items Quantity Frequency Unit Price Annual Cost Total Cost

FJD

Continual Maintenance Costs 4,500

Turbine & Governor 1 1 3,000 3,000

Generator & Operating Panel 1 1 1,500 1,500

Daily Operation (Nominal Replacement Parts) 11,535

Oil to governor (34 l) 1 1 200 200

DC Battery replacement - 48V - 100Ah 1 4 2,500 625

Lighting (2x 200W, 3x 60/11W, 1x 100W 1 2 100 50

Painting of metal surfaces 1 4 1,500 375

Replace trash rack 1x 1 4 2,000 500

Replace panel circuit breakers 1x 60A, 4x 15A 1 4 500 125

O&M of pre-paid meters monthly fee 12 1 735 8,820

Replacement of village level electric meters 3 1 280 840

Private Company Annual Costs 27,000

Monthly Company Manager (full-time) 12 1 560 6,720

Accountant & Secretary (Full-time) 12 1 480 5,760

Daily Operator x1 (Full-time) 24 1 480 11,520

Outsourced electrical repairs 12 1 100 1,200

Additional company cost (materials, audit….etc.) 12 1 100 1,200

Private Company Profits 12 1 - -

Costs of Capital (e.g. for loan repayment, interest) 12 1 - -

Contingancy 12 1 50 600

Cooperative Annual Costs 6,000

Bukuya Cooperative Fee 12 1 400 4,800

Right-of-way / easement cost 4 1 300 1,200

TOTAL Annual Operating and Maintenance Costs FJD 49,035

Monthly breakdown FJD 4,086

Items Quantity Frequency Unit Price Annual Cost Total Cost [FJD]

Major Maintenance Costs 10,167

Overhaul Turbine & Governor & Operating Panel 1 12 72,000 6,000

Overhaul Generator 1 12 20,000 1,667

Repair Penstock, LP Conduit and Forebay 1 12 30,000 2,500

TOTAL Annual Operating and Maintenance Costs FJD 10,167

Monthly breakdown FJD 847

Example of Revenue Distribution Mechanism




Agreement and Governance

The PPP Agreement

The PPP agreement or contract is the central legal document of the PPP. It defines the relationship between the public and private party, their respective rights and responsibilities, risk allocation and providing

mechanisms for dealing with change.

The PPP Agreement should be between the public party and the private sector company.

The PPP Agreement - Contents

Element 1 : Performance Requirements:

Define clear performance targets or output requirements, including:

✓ How performance will be monitored;✓ Consequences for failure to reach the required performance targets;✓ Specifying payment deductions for poor performance (or bonuses);✓ Describe formal performance warning system;✓ Step-in rights for the public party or the PPP Board.

Element 2 : Duration

Define the period of validity

Element 3 : Guarantees on Risk Variables

Procedures should be described to compensate the private party for loss in revenue,

should a particular risk variable deviate from a contractually specified level.


Element 4 : Dispute Resolution:

Defining dispute resolution processes helps ensure resolving disputes quickly and

efficiently and reducing the risk of disruptions of the PPP process due to disputes.

✓ Mediation – a third Party gets involved to help resolve a dispute. Mediation is used in the hope of not having to enter formal arbitration. Or a special PPP Board is setup as a part of the PPP Agreement.

✓ Recourse to a sector regulator – e.g. for specific disputes on aspects if independent regulator exists (e.g. tariff)

✓ Judicial system – For PPPs in developing countries, it is recommended that the dispute resolutions avoids resorting to the court system as far as possible, as it the court system may be slow and lack technical expertise.

✓ Panel of experts and arbitrators – the PPP contract or law could designate a panel of independent experts for dissolving disputes.

✓ International arbitration – this would be the last option and would be under a permanent arbitration institution or could involve ad-hoc arrangements such as international expert panels.


Element 5 : Termination Commitments

A fair contract should ensure that the private party would not lose out in case of

the public party to default.

Three possible reasons for early termination: default by the private party,

termination by the public party (whether due to default or for reasons of public

interest), and early termination due to some external reason (force majeure).

✓ Define the contract term, handover provisions, and circumstances and implications of early termination and consequences.

Element 6 : Debt Guarantees and Other Credit Enhancements

Guarantees are used to provide more security to a lender so that a loan will be

repaid and should cover specific risk or event.


Element 7 : Payment Mechanisms

Define how the private party will be paid, through user charges, government

payments based on usage or availability, or a combination, and how bonuses and

penalties can be built in.

Element 8 : Adjustment Mechanisms

Should be built in to the PPP agreement for handling changes, such

as extraordinary reviews of tariffs, or changing service requirements

Element 9 : Contract Management

Procedures for dealing with change and establishing contract management

institutions , and defining and establishing the responsibilities and communication

mechanisms.

PPP Governance

PPP Unit:

To date there does not exist a special PPP Unit in Fiji that is in charge, oversees

and coordinates PPP projects in Fiji. In other countries, such a PPP unit coordinates

the PPP activities in different sectors (incl. transport, industry, energy). The past

PPP Act was dissolved and a new one may only address large projects.

For the Bukuya project the acting PPP Unit is currently the DOE

The functions of the PPP unit would include:

✓ Policy Guidance and capacity building (incl. providing templates or guidance documents for PPP);

✓ PPP Promotion (inside Government and for private sector/investors);

✓ Technical support (e.g. hand-holding for PPP preparation, design and implementation);

✓ Oversight and coordination.

PPP Governance

PPP Governing Board :

A PPP Governing Board shall be established as a part of the PPP agreement

between the Private Company and the Public Party of the service

area (or Community).

For the Bukuya project the PPP Governing Board shall be composed of four representatives as

follows:

✓ One representative of the DOE;

✓ One representative of another government agency (appointed by DOE), e.g. Cooperative

Department;

✓ One representative of the Private Party the Electricity Cooperative (or local

Community/Village representing the service area of the PPP);

✓ One representative of the Private Party (SPC) operating the renewable power plant and

distribution under PPP project.

PPP Governance

PPP Board of Directors: Roles and Responsibility

✓ Meet twice a year (at minimum)

✓ Selection of the private company based on Competitive process

✓ Agree of the final structure of the PPP framework

✓ Agree upon and prioritize income generating activities

✓ Agree on the tariff structure including price and revenue streams

✓ Review audited annual balance sheet for the PPP (e.g. SPC in the case of Bukuya)

✓ Review, allocate and authorize (or not) the payments for major maintenance activities from

Major Maintenance Fund

✓ Review, allocate and authorize (or not) the payments for unpaid revenue to the Private

Company from Major Maintenance Fund

✓ Act as an arbitrator in disputes between the Private Company and the Electricity

Cooperative of the PPP




Implementation and Set-Up

Private Party Selection

Procurement Process for Private Party:

Not in the case of Bukuya

✓ Preparation of tender and documents, ✓ Execution of bidding process, ✓ Review and evaluation of proposals,✓ Selection of Private Party, and entering into the PPP agreement

OR decision to create a Special Purpose Company (SPC):

In the case of Bukuya

✓ Needs✓ Board of Directors✓ Empolyees✓ Registration✓ Licenses✓ 3rd Party Suppliers

Private Company Set-Up

Needs ASSESSMENT:

✓ Staff and Skills✓ Hardware✓ Legal & accounting services✓ ….

Management and Board:

The Board of the Private Party engaged in the PPP should

consist of at least 3 board members, including one

chairman with an upper limit of 5 members.

✓ Representative of the private sector company / special purpose company

✓ Representative from the Community and/or Cooperative

✓ Representative based on Owner distribution of the SPC (if limited company)


Registration and Company Licenses:

The registration process of a company in Fiji has to be in full

compliance with the Fiji´s Company Act 2015, and/or the

Cooperative Act.

Steps include:

✓ Inception Phase✓ Company Registration Process✓ Securing local Tax Identification Number

Employment Process:

✓ Job descriptions of SPC staff✓ Job advertisements✓ Job interviews and hiring process✓ Contracts for SPC employees


Applicable Company Types:

Limited Company✓ Shareholder based company, with limited liability to capital of company✓ 33.3% Advanced Tax (PT) on realised profits✓ Capital gains tax of 10% of individual dividends applies if above FJ$ 16,000✓ Annual accounts required

Company Limited by Guarantee✓ Bounder under a guarantee (like a trust)✓ No taxes on profits✓ No dividends are paid out✓ Requires special Ministerial review✓ Annual accounts required

Cooperative Company✓ Income taxes apply as in the Tax Act✓ Annual accounts required (after grace period)

Other Taxation✓ VAT of 9% is applicable for any business achieving over FJ$ 100,000 per year

in revenues.✓ All companies are subject to the FNPF (gross 18%)


Electricity Licenses:

The license process under the Electricity Act 2017 (not in effect yet),

✓ Wireman’s license✓ Provider/distributer license

Private Service Providers (not part of PPP)

Selecting Private Service Providers :

Generation and Distribution Technology (installation of rehabilitation) Prepaid Metering System

✓ Preparation of tender and documents, ✓ Execution of bidding process, ✓ Review and evaluation of proposals,✓ Selection of Supplier, and entering into the agreement ✓ Implementation and supervision✓ Hand-over

Banking Services / Bank Accounts✓ Setting up accounts (checking and ESCROW)✓ Setting up automotive payments

Auditor / Accountant✓ Selection and contacting

Land and Access Rights

There must be an agreement with the

community on the use of land plus access to

energy assests (generation and tranmission).

This can be done either by a Lease Agreement

and/or an Easement/Right of Way Agreement.

Lease Agreement:

✓ Right of long term use of defined land✓ May require valuation✓ Approval through iTaukei Affairs✓ Agreed upfront or annual fee

Easement/Right of Way Agreement:

✓ Right of long term use of defined land

✓ Approval by Parties

✓ Agreed upfront or annual fee (or none)

Implementation Schedule

The main purpose of the implementation schedule is to provide information about

the duration that is required to achieve the individual activities.

✓ Baseline determination tariff setting;✓ Procurement (private company, staff, technology);✓ Private company set-up;✓ Service providers;✓ Licenses and official approvals;✓ Setting up Governing Body(ies);✓ PPP Agreement;✓ Measurement, Reporting and Verification (MRV);✓ Training.




Monitoring and Evaluation

MRV - Generation, Consumption & Revenues

Cornerstones of MRV System:

✓ Identification and setting of agreed upon parameters and their data requirements. Noting that the parameters should best align to existing and planned monitoring & accounting at the service area (i.e. villages) where the PPP is developed;

✓ Any calculation methodologies for the transformation of raw data into specific parameters;

✓ Baseline setting of parameters based on latest available data, as a measuring point for improvements and benefits;

✓ Defining the internal monitoring frequency of the parameters and the external reporting frequency to FDOE by responsible parties for the M&E (i.e. private company, service providers, Cooperative).

MRV – Identified Parameters

Typical set of Parameters include:

✓ TSE = Total sold electricity (kWh/a)✓ ER = Emission reductions achieved (tCO2e/a)✓ THC = Total household connections (no.)✓ IGA = Total number of active income generating activities (no.)✓ JCtotal and JCfemale = Reporting of total additional jobs created and total

additional female jobs created (no. and no.)✓ CS = Level of capital saving for investment in income generating activities (FJD)✓ QIP = Reporting qualitative implementation of the project components✓ UP = Unit price of electricity (FJD/kWh)

MRV – Identified Parameters

Template for Data Collection:

Parameter Value (base year) Explanation

TSE XXX kWh Description of base year and source of date

ER XXX tCO2e Emission reduction from generated electricity in

20XX

THC XXX Household connections in 20XX (base year)

IGA XXX Number of new income generating activities

using electricty in 20XX (base year)

JCtotal and

JCfemale

XXX and XXX Reporting only additional jobs created from the

project

CS XXX FJD Total value of capital savings for investment in

income generating activities in 20XX

QIP XXX Reporting implementation annually

UP X.XXX FJD / kWh Value for [date, month, year] and source

Evaluation Procedure

Annual Evaluation by PPP Governance Board:

An annual evaluation of the PPP should be addressed in the annual meeting of the

PPP Governance Board. The steps and content of the evaluation should include:

1. Before the annual meeting the Private Party (SPC) should provide the latest

annual financial statement, the MRV results for the year, a record of actions

taken in maintenance and operation, any new issues to be addressed in the

near future.

2. Before the annual meeting the Public Party should provide feedback from the

community on the quality of services provided and request any elements of

services or the PPP Agreement which may be changed.

3. Members of the PPP Governance Board shall review and appraise these items

in the points above and determine compliance with the PPP Agreement, and

expected results of the PPP.

4. The results of the evalution at the annual meeting shall be recorded in the

official notes the meeting.




Lesson Learned

Capacity Building Needs

Assess Capacity Needs

The following questions need to be answered:

✓ What are the required skills for achieving the objectives of the PPP project and the PPP model framework?

✓ What is the current status of capacities and skills in terms of PPP for renewable power generation in Fiji within the public/private entities involved?

✓ Who (which institution and which persons) holds the skills and know-how-how for the required skills?

✓ What would be required to improve the skills and know-how, so that the current and future PPP activities can be prepared, developed, implemented and managed?

Training Needs

Define Training Programme

The following questions need to be answered:

✓ What should be the training content? ✓ Who requires the training? ✓ Who should conduct the training (e.g. what skills, experience, and national or

international)?✓ What training methods, approaches and tools used? ✓ Extent, duration and frequency of training?✓ Monitoring and Evaluation measures (incl. reporting)✓ What resources (i.e. budget, logistics, skills, tools, time) are required to provide

the training programme?

Training

Conduct the Training

Training aspect Public Entity Private Entity

Introduction to PPP (Modalities, Scope, Purpose,

Benefits)

Case Studies and PPP experience

PPP Model Framework

Fundamentals of PPP identification and appraisal

Policy and legal aspects

PPP Management and Governance

PPP Contracts and PPP Contract Management

Risk Management

Financial Management

Private Sector Modalities

Procurement procedures

Technical training for RE technologies (Operation &

Maintenance)

Measurement, Reporting and Verification

Private company management and administration

Additional Services Required

✓ Legal (Fijian company - Siwatibau and Sloan) for company registration, employment contracts, review of PPP agreement & governance.

✓ Small Business accounting setup and training (done by G+H)

✓ Installation supervision of rehabilitation and pre-paid meters (by DOE)

✓ Banking service (BSP but pending company registration)

✓ Community engagement and translation (by DOE)

✓ Pre-paid meters and annual service contract (by Clay Energy)

Documents

Workshop on PPP (Public Private Partnership) for Mini-Grids · 2018-04-19 · Ministry of Economy Republic of Fiji Workshop on PPP (Public Private Partnership) for Mini-Grids 12th