2. General description of the Consulting Services

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1 Reconstruction of Mingachevir Hydroelectric Power Plant Cascade 1. Introduction The main objectives of the Reconstruction of Mingachevir Hydroelectric Power Plant Cascade are to (a) rehabilitation of the both power plants of the Cascade: Mingachevir HPP and Varvara HPP, including completion of the replacement of two 60 MW units with the new 70 MW units as well as the Power Transformers at Mingachevir HPP, and the replacement of old 110 kv and 220 kv equipment at the Plant Switchyard with new one; (b) construction of new building at Mingachevir HPP for the Control Room, modernization and removing of the Plant Control System to the new building; (c) overhaul of hydro-technical facilities at head basin and lower pond of Varvara HPP; (d) reconstruction of Varvara HPP increasing its capacity up to MW; (e) modernization of the Plant Control System and Hydraulic Facilities Control System at the both stations. The procurement strategy is to purchase the required equipment, facilities, works and others, turnkey contract. This contract will be awarded through a two stage bidding process in accordance with the Bank standard bidding procedures. The first stage bidding documents will contain technical specifications. On this basis the bidders will develop a complete technical proposal and include both technical and commercial statements of compliance, but will not include any prices or pricing data. The Stage 1 bids will be evaluated to ascertain which bids are acceptable for the Stage 2. The technical proposals of each bidder will then be evaluated and discussed with the bidders to establish a common baseline for the second stage bids. The bidders will be invited to submit second stage bids in accordance with the modified technical/commercial conditions, together with complete prices. These bids will then be evaluated for compliance with the revised technical/commercial conditions and ranked in accordance with the stated bid evaluation criteria technical/price formula. The highest ranked bidder will then be invited to negotiate a contract. A vendor prequalification process, will precede bidding below. Task1&2&3 shall be carry out according to technical proposal previously submitted by Consultant. 2. General description of the Consulting Services The Consulting Services include the assistance to develop the draft tender documents, and an environmental assessment and management plan. Specifically, the consulting services include: (i) determine Azerenerji requirements and develop and cost technical aspects of all project components; (ii) develop/assemble adequate descriptions of those components; (iii) use the project preparation information to develop pre-project execution two stage bidding packages with technical specifications; (iv) assess implications for reconstruction of the existing facilities; and (v) carry out environmental assessment and prepare safeguard plans. In carrying out the assignment, the consulting team will coordinate their activities with project preparation and development activities being carried out by other international financial institutions, who are contemplating rehabilitation and construction works under other projects.

2 3. Scope of Work Consultant will assist Azerenerji in preparing an environmental assessment and management plan, technical specifications and bidding documents, bid evaluation and contract negotiation for the supply all equipment and facilities required and implementation the Project under the Bank procurement guidelines. The environmental assessment and management plan will assess the potential environmental impact of each component of the project. Careful attention must be paid to the need to remove and dispose of hazardous materials at the stations. The environmental management plan will define procedures for mitigation of local impacts during construction and disposal of waste materials. The plan should also consider the need to develop and implement general plans and procedures for the prevention and remediation of potential environmental damage associated with routine or emergency repair works on the network. Consultant shall ensure that bidding documents, bidding and awarding procedures are consistent with the Bank Procurement Guidelines, best engineering and commercial practices, international standards and with the specific conditions and needs of the power industry in Azerbaijan. Also the Consultant shall provide supervising, purchasing and management services during the Project Implementation. During the course of the assignment, Consultant shall work closely with the Azerenerji Project Implementation Unit (PIU) and other Consultant to keep Azerenerji fully informed of all the technical and commercial decisions and reasons affecting the subsequent recommendations. Consultant shall prepare bi-monthly project progress reports (in English and Azerbaijan languages) in co-operation with the PIU. 4. Tasks Specific tasks to be performed by the Consultant are as listed below 1. TASK l: PREPARATION OF BIDDING DOCUMENTS FOR RECONSTRUCTION OF MINGACHEVIR HYDROELECTRIC POWER PLANT 1 CASCADE Consultant shall prepare a complete set of bidding documents Reconstruction of Mingachevir Hydroelectric Power Plant Cascade procurement package (or packages) based on the Islamic Bank for Development Standard Bidding Document (SBD). The bidding documents will be prepared for two stage bidding and will include the following sections: 1- Invitation for Bids (IFB); 2- Instructions to Bidders (ITB), including Bid Evaluation Criteria and Procedures; 3- Bid Data Sheet (BOS); 4- List of Eligible Countries;

3 5-General Conditions of Contract (GCC); 6- Special Conditions of Contract (SCC); 7-Technical requirements (TRs); 8-Sample Forms. The technical requirements (Section 7 of the SBO) will include technical specifications as well as any other information required to clearly define the scope and requirements of the Reconstruction of Mingachevir Hydroelectric Power Plant Cascade. All bidding documents will be submitted by the Azerenerji PIU to the Bank for clearance. The documents will be issued to the qualified bidders after approval of the documents from the Bank. Deliverables for the Task 1. Draft Bidding Documents,. Final Bidding Documents TASK 2: BID EVALUATION AND CONTRACT NEGOTIATION FOR RECONSTRUCTION OF MINGACHEVIR HVDROELECTRIC POWER PLANT CASCADE The bid evaluation and contract negotiation task involves the following sub-tasks: Sub-Task 2-1 : Issuance of bidding Documents, Sub-Task 2-2: Stage I Bid Evaluation, Sub-Task 2-3: Generate Stage I Bid Evaluation Report, Sub-Task 2-4: Stage II Bid Evaluation, Sub-Task 2-5: Generate Stage II Bid Evaluation Report, Sub-Task 2-6: Contract negotiations. Sub-Task 2-1: Issuance of bidding Documents Typically in a project of this complexity, the Bidders will compile questions during review of the bid documentation. Consultant shall prepare responses to these questions and review the responses with Azerenerji prior to their transmission to the Bidders. Sub-Task 2-2: Stage I Bid Evaluation Consultant shall read the bids to identify essential information that was omitted and to identify statements that are vague and equivocal. A bidder meeting at Azerenerji offices is anticipated.. Consultant shall evaluate each qualified bid for compliance to the requirements of Technical Specifications and in accordance with the accepted evaluation methodology to ascertain which bids will be acceptable for Stage II bidding. The technical bids of each bidder will then evaluated and discussed with the bidders to establish a common baseline for the Stage II bidding. The bidders will then be invited to submit their price

4 bids on the modified technical/commercial conditions created by the establishment of the common baseline. Sub-Task 2-3: Generate Stage I Bid Evaluation Report After the Stage I bid evaluation has been completed Consultant shall prepare a bid evaluation report this report will be reviewed by Azerenerji project team and will then be sent for the Bank approval. Sub-Task 2-4: Stage II Bid Evaluation Consultant shall also assist the Azerenerji PIU to revise bid documents, conduct and evaluate Stage 2 bidding. At the conclusion of the Stage I bidding process resulting from the approval Stage I Evaluation report by the Bank, selected vendors will be asked to submit their price bids. The bid evaluation will be performed in accordance with the procedures already approved in Task 3 earlier. As a result of this evaluation the bidder with the lowest evaluated bid will be found. The definition of "lowest evaluated Bidder" will be established on the specific bid evaluation methodology agreed upon between the Consultant and Azerenerji. The evaluation results will be discussed with Azerenerji's project team, and this bidder will be recommended for contract negotiations. Sub-Task 2-5: Generate Stage II Bid Evaluation Report After the Stage II bid evaluation has been completed, Consultant shall prepare a bid evaluation report summarizing all evaluation factors considered for each Bidder, and ranking the Bidders. The report will be discussed with Azerenerji and submitted to Azerenerji for approval from the Bank. Sub-Task 2-6: Contract negotiations After the acceptance of the Stage II Bid Evaluation Report by the Bank, Consultant shall assist the Azerenerji PIU in contract negotiations with the selected bidder and preparation of contract documents. This work will all be performed in compliance with Bank procurement guidelines.. The negotiated contract document will also be submitted to the Bank for review and no- objection. TASK 3: SUPPORTING OF THE PROJECT IMPLEMENTATION (SUPERVISION, PURCHASING AND MANAGEMENT SERVICES DURING THE PROJECT IMPLEMENTATION) Sub-Task 3-1. Supervision of rehabilitation and civil works.

5 The Consultant will assist the Azerenerji Project Management Unit (PIU) in managing, planning, executing, and monitoring of rehabilitation and civil works during implementation, and more specifically: Ensure that Azerenerji's work under the Project is executed in accordance with agreed time schedules and according to best engineering and commercial practices and international standards, or other standards if justifiable under the circumstances and if consistent with no-objections from the Bank when required; Ensure that commercial as well as the technical elements of procurement packages for the project are in conformance with the requirements of the latest the Bank Procurement Rules'. Sub-Task 3-2. Update the project cost estimate, procurement plan and disbursement schedule, including IDB and Azerenerji funding, and maintain accurate project accounts. Sub-Task 3-3. Plan, coordinate, and supervise review and exchange of project design submittals and other documentation with the suppliers of the rehabilitation materials. Sub-Task 3-4. Acceptance of the works executed under the Project. Provide any other assistance related to the project that the PIU may reasonably request. The following deliverables should be provided by the Consultant under Task 3: Draft Quartrly Progress Reports Draft Mid-Term Project Report Draft Project Completion Report for completed components at the end of the Contract Draft correspondence with contractors and other Consultant as and when required Correspondence with the PIU as and when required.