Government of Nepal Alternative Energy Promotion Centre (AEPC)

Transcription

1 Government of Nepal Alternative Energy Promotion Centre (AEPC) Energy Sector Assistance Programme Phase II (ESAP-II) Annex 6: Component Description Mini Grid Rural Electrification NEPAL September 2006 Energy Sector Assistance Programme, Phase II i

2 Cover Page: Mini-Grid Electrification Country Sector Programme Title Component Title National Agency : Nepal : Energy Sector Assistance Programme Phase II : Technical Supports / Mini-Grid Electrification : Ministry of Finance, GON Starting Date : January 2007 Duration Funding Alternative Energy Promotion Centre, Ministry of Environment, Science and Technology, GON : 5 years : Euro 2.75 million Nepalese Contribution: External Funding: Euro 0.04 million Euro 2.71 million Sources of External Fund: Danida and Norway Energy Sector Assistance Programme, Phase II i

3 Energy Sector Assistance Programme, Phase II ii

4 Table of Contents TABLE OF CONTENTS...III LIST OF ABBREVIATIONS... IV EXECUTIVE SUMMARY... V 1 INTRODUCTION PERSPECTIVE AND RATIONALE COMPONENT DESCRIPTIONS SCOPE OF THE COMPONENT DEVELOPMENT OBJECTIVE IMMEDIATE OBJECTIVE IMPLEMENTATION STRATEGY OUTPUTS AND TARGETS ACTIVITIES OUTPUT INDICATORS INPUTS MANAGEMENT AND ORGANISATION ESAP MANAGEMENT AND ORGANISATION MANAGEMENT AND COORDINATION FINANCIAL MANAGEMENT RISK AND ASSUMPTIONS SUSTAINABILITY AND RISKS ASSUMPTIONS AND CONDITIONS INDICATORS MONITORING, REVIEW AND REPORTING MONITORING REVIEWS REPORTING EVALUATION GENERAL IMPLEMENTATION PLAN ANNEXES ANNEX 1: LOGICAL FRAMEWORK ANALYSIS OF THE MINI-GRID COMPONENT ANNEX 3: JOB DESCRIPTIONS ANNEX 4: ORGANISATION INVOLVED IN MINI-GRID ELECTRIFICATION45 ANNEX 5: IMPLEMENTATION PLAN Energy Sector Assistance Programme, Phase II iii

5 List of Abbreviations AEPC Alternative Energy Promotion Centre CBO Community Based Organisation CRED Centre for Rural Electrification Department of NEA Danida Danish International Development Assistance DASU Decentralisation Assistance Support Unit DDC District Development Committee DoED Department of Electricity Development ESAP Energy Sector Assistance Programme GIS Geographical Information System GPS Global Positioning System GoN Government of Nepal IEP Integrated Environmental Programme INGO International Non Governmental Organisation ISRE Institutional Strengthening for Rural Energy IWM Improved Water Mill KW Kilowatt LFA Logical Framework Analysis M&E Monitoring and Evaluation MGSP Mini-Grid Support Programme MH Micro Hydro Micro Hydro Hydro power plants with installed capacity below 100 kw Mini Hydro Hydro plants with installed capacity between kw MIS Management Information System MoEST Ministry of Environment, Science and Technology MoU Memorandum of Understanding MoWR Ministry of Water Resources MW Megawatt NEA Nepal Electricity Authority NGO Non-Governmental Organisation NRs Nepalese Rupees O&M Operation and Maintenance CM Component Manager PRSP Poverty Reduction Strategy Paper of GON PQ Pre-qualification RC Regional Centre EOD Embassy of Denmark REDS Rural Energy Development Section REDP Rural Energy Development Programme REF Rural Energy Fund RO Regional Office SC Steering Committee SNV Netherlands Development Organisation ToR Terms of Reference TRC Technical Review Committee UNDP United Nation Development Programme USD United State Dollar VDC Village Development Committee WB The World Bank Energy Sector Assistance Programme, Phase II iv

6 Executive Summary The mini-grid solutions based on micro-hydropower has in Phase I of the Energy Sector Assistance Programme and in the United Nation Development Programme and the World Bank financed Rural Energy Development Programme proven its validity as a viable electrification option for village communities not supposed to be reached by the country-wide electricity network within the period of 5 to 10 years. The term Mini-Grid has been adopted instead of micro-hydro in order to broaden the scope of technologies and means for electrification. The Mini-Grid may, furthermore, be seen as pre-grid electrification of the areas and when and if the national grid is extended to the area, the Mini-Grid can be directly connected to the national grid. With the scope of future grid connection, 1 MW is proposed as a new upper limit for schemes to be handled under Mini-Grid Electrification Component of Energy Sector Assistance Programme in Phase II. The scope of the Mini-Grid Electrification Component includes: Mini-grid electrification in rural areas by (short-time perspective through the following technologies; in the long-term other technologies could be used or integrated): o Mini-hydro schemes (100 kw to 1 MW) o Micro-hydro (5 kw to 100 kw) o Pico-hydro (up to 5 kw), including Improved Water Mill. Supporting Government of Nepal to achieve its objective of increasing the access of electricity services in rural areas, based on an equitable distribution of resources for rural electrification with regard to the level of poverty, i.e. economic and social opportunities, geography, etc. Integrating electrification activities on planning activities of local government. Eliminating the artificial boundary of programme support in the mini- and microhydropower by supporting development of the policy framework in harmonising the on- and off-grid rural electrification. Increasing public and private sector participation in programme supports, identification, implementation and operation. Proving rural electrification programme to be a tool for enhancing rural economic activities, environmental protection and providing social justice. The development objective of the Energy Sector Assistance Programme in Phase II, which is common to all components, is: The living conditions of the rural population improved through enhanced access and affordability to rural energy solutions that are efficient, environmentfriendly and that address social justice. Energy Sector Assistance Programme, Phase II v

7 The Component has the following two immediate objectives: 1. Enhanced sectoral framework for policy formulation, strategy development, planning, programme implementation, and harmonization of on- and off-grid rural electrification at national and local level. 2. Increased and sustainable access to and use of electricity in rural areas. ESAP Phase II is expected to be less oriented towards project field implementation (to be handed over to Regional Centres) and focus more on sector programme support and promotion of rural energy development. The main strategy is to focus on overall sector issues and enhancement of the procedures and framework for support to the rural energy sector. The component assists in increasing the access of electrification in additional 150,000 rural households in Nepal. Apart from this output, the component results in the following outputs: Inputs to various rural energy related policies and their updates. Rural electrification activities are integrated into local planning activities. Efficient and competitive service delivery mechanisms Institutionalized local ownership and use of electricity in rural areas not covered by national grid. Schemes identified, appraised and forwarded to REF for subsidy approval. Increased information about rural mini-grid schemes and electricity end-use possibilities. Danida and Government of Nepal (GoN) have funded the Phase I of ESAP and the Government of Norway joined the programme at the later stage in Danida and the Norway are extending its assistance to the Government of Nepal in implementing the ESAP II. The overall budget estimation for the programme implementation is about 2.75 million Euro for a period of five years. It is expected that other donors will be expected to participate in future. Mini-Grid Support Programme will manage the overall activities of the Mini-Grid Electrification Component. Energy Sector Assistance Programme, Phase II vi

8 1 Introduction The micro-hydropower sector in Nepal has a long history dates back to The private sector companies mainly the manufacturers were established and started providing services effectively from 70s. Initial micro-hydro schemes were primarily addressing the need for processing of agricultural products and subsequently rural communities installed a large number of turbine mills. Electricity generation from micro-hydropower, started after 1980s, was the add-on activities at that period. Microhydropower was recognised as a means of providing electricity in rural areas from 1990s and the sector started to expand since then (detailed in Background and Feasibility Document Volume IV). The mini-grid solutions based on micro-hydropower has in Phase I of the Energy Sector Assistance Programme (ESAP) and in the World Bank and United Nations Development Prpgramme financed Rural Energy Development Programme (REDP) proven its validity as a viable electrification option for village communities not supposed to be reached by the country-wide electricity network within the period of 5 to 10 years. In addition, incorporated into the Mini-Grid Electrification Component of ESAP Phase II is the understanding that this type of energy services provided serves the purpose as pre-grid preparation for interconnection of isolated mini-grids and with national grid electricity solutions in the future. Mini-Grid is defined as an independent network for the electrification with own generating capacity (one or several generators) and with local loads. Mini-grids are operated in isolated mode (like the present micro-hydropower) or may be connected to the national grid. Mini-grids can be made of various generators, transformers, and lines with different voltage levels, including 1.1 kv lines. The term Mini-Grid has been adopted instead of micro-hydro in order to broaden the scope of technologies and means for electrification. The Mini-Grid solutions focus on increasing access to electricity services to isolated areas irrespective of the technologies (Hydro, Solar, Wind or Fossil Fuels) or types (Micro- or Mini Hydro). The Mini-Grid may, furthermore, be seen as pre-grid electrification of the areas and when and if the national grid is extended to the area, the Mini-Grid can be directly connected to the national grid. With the scope of mini-grid operation and possible future grid connection, the 100 kw limitations of the present subsidy policy and barriers of institutional framework become an obstacle to proper natural resource utilization and, hence, 1 MW is proposed as a new upper limit for schemes to be handled under Mini-Grid Electrification Component of Energy Sector Assistance Programme in Phase II. Energy Sector Assistance Programme, Phase II 1

9 1.1 Perspective and Rationale The Government has ambitious targets when it comes to providing rural communities with access to electricity. The 10 th Five Year plan and the Poverty Reduction Strategy Paper (PRSP) of the Government set the scene for increasing the access to electricity in rural areas. Nationally, access to electricity is believed to reach 40% at the end of 9 th Five Year Plan, and is targeted to be increased to 55% by the end of the 10 th Five Year Plan period. In case of rural areas, presently 7% of the population are served by renewable energy and the government has a target of increasing it to 12% in the 10 th Five Year period. The Energy Sector Assistance Programme (ESAP) has been initiated with a longer-term perspective. The ESAP Phase I contributed to test a new model of supporting local structures, strengthening the national framework for scaling up the programme support activities and supported micro-hydropower projects with a better-defined approach to ensure sustainability of the implemented schemes. The present subsidy policy, implementation modalities and approach have been tested in the field. Despite the present severe political unrest, the Component has in Phase I been successful in meeting the targets of project development quite ahead of the stipulated period and also succeeded to create a large number of demands and subsequently projects in the pipeline. Phase II of ESAP for the Mini-Grid Electrification Component will witness the impacts of the rural electrification on the national level. Scaling up of the mini-grid village electrification has been recognised as an urgent need to improve access to electricity supply for the remote rural communities. This programme involves significant facilitation support activities and backstopping that will result in resource formation, skill development, and productive use of electricity is thus expected to create environment in alleviating poverty in the participating rural communities. One of the problems being faced by the micro-hydro programme is the uncoordinated effort of the Government for the on-grid and the off-grid electrifications. Micro-hydro schemes become obsolete once grid is extended to the area where it exists and also the coherent policy to harmonise the on and the off-grid electrification, and further having provision of grid connection will ensure the sustainability of the implemented mini-grid schemes and also help the Nepal Electricity Authority (NEA) to extend the grid, as the mini-grid system provides ample infrastructure of distribution networks and knowledge of the electrification to local people. The rural electrification target of the Government is partly be met by the micro-hydro programme to be supported by Power Development Programme of the World Bank. Without the commitment and support from the Danida, Norway and other donors, it will not be possible for the Government of Nepal to achieve the targets it set for the rural electrification in the 10 th Five Year (increase electricity access from present 40% to 55% population) and the subsequent future plans (80% at the end of 12 th Five Year Plan). Energy Sector Assistance Programme, Phase II 2

10 2 Component Descriptions 2.1 Scope of the Component The Mini-Grid Electrification Component (MGEC) will have a national coverage, including project identification, preparation and provision of providing facilitation support for mini-grid development. However, focus will be based on the needy areas, demand from the local areas, financial viability to sustain the scheme, etc. Further, the communities will have to explicitly develop electrification plans and approach the Component for assistance for their realisation. MGEC will provide technical supports for awareness, social mobilisation, and integrated resource identification activities that will help in creating demand at the local level. MGEC will also support for feasibility studies, technical assistance for quality assurance during construction and operation and management of interventions. The scope of the Mini-Grid Electrification Component includes the followings: Mini-grid electrification in rural areas by (short-time perspective through the following technologies; in the long-term other technologies could be used or integrated): o Mini-hydro schemes (100 kw to 1 MW) o Micro-hydro (5 kw to 100 kw) o Pico-hydro (up to 5 kw), including Improved Water Mill. Supporting Government of Nepal to achieve its objective of increasing the access of electricity services in rural areas, based on an equitable distribution of resources for rural electrification with regard to the level of poverty, i.e. economic and social opportunities, geography, etc. Integrating electrification activities on planning activities of local government. Eliminating the artificial boundary of programme support in the mini- and microhydropower by supporting development of the policy framework in harmonising the on- and off-grid rural electrification. Increasing public and private sector participation in programme supports, identification, implementation and operation. Proving rural electrification programme to be a tool for enhancing rural economic activities, environmental protection and providing social justice. 2.2 Development Objective The development objective of the Energy Sector Assistance Programme in Phase II, which is common to all components, is: The living conditions of the rural population improved through enhanced access and affordability to rural energy solutions that are efficient, environmentfriendly and that address social justice. Energy Sector Assistance Programme, Phase II 3

11 2.3 Immediate Objective The Component has the following two immediate objectives: 1. Enhanced sectoral framework for policy formulation, strategy development, planning, programme implementation, and harmonization of on- and off-grid rural electrification at national and local level. 2. Increased and sustainable access to and use of electricity in rural areas. 2.4 Implementation Strategy In order to achieve a substantial and sustainable growth and operation and maintenance of the development interventions in the electrification in rural areas, the Mini-Grid Electrification Component of ESAP II will be less oriented towards project field implementation (to be handed over to Regional Renewable Energy Service Centres or other local support organisation), but focus more on sector programme support and promotion of mini-grid electrification. The main strategy is to focus on overall sector issues and enhance the procedures and framework for support to the rural electrification rather than on implementation of individual project, as the sector relating to the rural electrification is expected to change dynamically over the next six-year period. The following are the strategic considerations for the Component implementation: Addressing Mini-Grid electrification schemes covering up to 1,000 kw in capacity One of the principal bottlenecks identified by the energy sector is the lack of a coherent national policy that addresses the problem of rural electrification from the wider national perspective. The programme will conduct advocacy and provide inputs to develop a rural electrification policy framework, which will address the issue of on- and off-grid rural electrification. With the aim of future grid connection of the mini-grid schemes, 1 MW will be the ultimate upper limit for schemes to be handled by the Component. Initial capacity limit will be 500 kw. The existing subsidy policy and the present practices in rural electrification have created some gaps for initiating/facilitating project implementation in the range between 100 to 1,000 kw. Neither the off-grid, nor the ongrid electrification programmes do attend to the schemes in this range at present. It fits exactly within the mandate of the Alternative Energy Promotion Centre (AEPC), which allows the Centre to support hydropower projects up to 1 MW for rural electrification. Extending the role of AEPC and correspondingly advocating for the changes in subsidy policy together with institutionalising the credit regime is expected to help in eliminating this gap. The Component will play a pro-active role in institutionalising the support structures and implementation procedures within the AEPC framework to accommodate the support activities for projects in this range. The Component will adopt pro-poor strategy and Public-Private Partnership (PPP), simultaneously. Energy Sector Assistance Programme, Phase II 4

12 The Programme will work together with Community Rural Electrification Department (CRED) of NEA and other relevant organisation, such as District Development Committees, etc. for reducing the artificial gap created within the field of on- and off - grid rural electrification Addressing the Broader Financial Framework The rural electrification programme is, in general, becoming highly dependent on subsidy. The Component will assist Rural Energy Fund/AEPC in addressing the financing issue, as a whole, which will cover the issue of subsidy, credit and mandatory equity contribution from the participating communities. The Component will provide policy inputs and advocate for the policy changes in this direction. In line with extending the role of AEPC to cover mini-grid schemes up to 1,000 kw capacity, the development of a framework for providing credit is very relevant and necessary to support the rural electrification programme. In a typical rural Nepal, it is hardly possible to find settlements that could alone consume the electricity generated from the scheme of above 100 kw in capacity. Credit is justified for extending the distribution network and transmission lines, especially if it is connecting to the grid (as the grid creates market for electricity buy and sell). In Nepal, initiatives are taking place in institutionalising the credit for cleaner energy technologies. Networking with financial institutions will be developed in making credit available in the sector both for micro- /mini-hydropower construction and capacity enhancement of the private manufacturing and installation companies Strengthening the Quality Assurance System Systems for quality assurance for the mini-grid schemes have already been developed and implemented for project identification, preparation, construction, as well as monitoring and evaluation for the scheme up to a capacity of 100 kw. The Component has also developed standards, guidelines, and expert systems; institutions and trained the private sector; and developed implementation modalities in which the mini-grid owner, community or the entrepreneur takes the overall responsibility for the implementation and operation of the mini-grid system. The Component will continue adopting its approach in enhancing the role of mini-grid owners (communities, cooperatives or enterprisers) to take the full responsibility in the project preparation, implementation and operation out sourcing the private sector capabilities. The present standards, manuals and guidelines will be updated and upgraded to address issues of quality in-line with developing full-fledged mini-grid concepts that are suitable for future grid connection. The Component will work for the technology transfer and enhancing the technical capability locally for the mini-grid manufacturing, installation and operation aiming to ensure the necessary quality for schemes up to 1 MW capacity. The role of the Mini-Grid Electrification Component will be, as stated, to focus on overall sector issues and enhancement of the procedures and framework for support to the rural electrification. By enhancing the role and capability of the owners and service providers and placing them in central position in project implementation, the role of the Component will be limited to develop standards, guidelines and make sure that these are adopted and followed fully by the implementers. By means of pre-qualification of Energy Sector Assistance Programme, Phase II 5

13 private service providers, monitoring of sectoral activities, training inputs, and allowing the import option for equipment that meets the mandated quality standard in competitive local price, the self-regulated quality assurance system, which is initiated in Phase I, will be further strengthened. There are some technical gaps/limitations identified in the sector such as addressing the lightening issues and load controlling. Technological transfer on such areas, which pose the limitations, will be promoted Stakeholders Participation in Project Implementation The Component will be pro-active in site identification and further removal of the barriers in the grey areas (which are attended to neither by the off-grid, nor the on-grid electrification options at present). A broad stakeholder involvement is ensured in the whole process of technology development to project identification, design, implementation, end-use promotion and operation of the mini-grid system. The private and public sector participation, including the communities, CBOs and NGOs, will be promoted. The private sector roles identified in the sector are mainly in project identification, preparation, studies/designs, and quality control/ supervision. The private companies carry out Manufacturing and installation works. The private sector will be more actively involved in engineering, procurement and construction of the micro-/mini-hydropower projects. Subsequently, private sector that has not participated in the past, such as turnkey contractors is expected to attract in the sector. Manufacturing and installation works are to become more specialised in the expanded scope of the Component, hence the capacities of both installers and manufacturers will be further enhanced to expedite the rural electrification. The private sector will be encouraged in the field of management (could be on lease contract) of the mini-grid systems at the local level where the ownership of the mini-grid systems largely rests with the communities or the cooperatives. The NGO sector will be involved in operating regional RRESC for providing facilitation supports. These Regional Centres will be providing the facilitation supports in the project identification, studies, social mobilisation and work as a bridge between the private sector and the micro-hydro developers. The Regional Centre will be developed also to take roles in project assessment, supervision and enhancing the use of productive end uses of the electricity.furthermore the Users Association (at present, micro-hydro owners associations have registered in 16 districts) is envisaged to evolve as the local service providers at the later stage The local communities registered as an NGO, cooperative or private company will play a major role in operating the mini-grid systems. The mini-grid programme will be linked with the local government, such as District Development Committees (DDCs) and Village Development Committees (VDCs), especially in integrating planning activities. The mini-grid schemes identified through the pro-active site identification will be the input for the local planning. Information regarding potential sites identified through this exercise will be integrated in annual Energy Sector Assistance Programme, Phase II 6

14 plans and programmes based on the local demand. The role of the local government will be strengthened to address the issues such as water right, land use and integration with other development programmes. The mini-grid scheme should obtain registration certificate from the District Water Resource Committee before undergoing the implementation. The social mobilisation frameworks will incorporate the coordination and communication with the local level development efforts where the crosscutting issues will be the major areas to be dealt with Decentralised Programme Support and Implementation The programme will adopt two-pronged strategy for decentralised programme support. Planning for and certification of water use by District Development Committees, and Provision of facilitation supports though Regional Centres. The main purpose of the decentralised support strategy of the programme implementation is that the prospective mini-grid developers should not need to reach Kathmandu or even go outside their region to get full information, submit requests, and find the list of qualified companies/service providers. They will be able to receive the necessary information in their district. The local NGOs will help them in every step of project implementation. Similarly, the District Development Committees will also get information on the potential of hydropower resources for mini-grid development in their district for putting them in their annual plan and issuing a certificate for the water right. The Component will also encourage DDCs/VDCs to become involved in a project by way of investment support in terms of equity participation in mini-grid systems so that DDCs/VDCs can get the opportunity to receive the benefits of the mini-grid systems Strategy to Work in Conflict/ Post-Conflict Situations Mini-Grid electrification systems are designed to fit the context they are to be used in (area, culture, gender issues, productive users, health, environment, and social equity). In the past the conflict situation has not only posed challenges, but also provided some ample opportunities to work together with the people to fulfil their development aspirations. The social configurations at the local level have transformed tremendously into a new dimension in the last few years. People s awareness level has increased by many folds. The programme will follow the strategy to assess the effects of the conflict at the local level from time to time and adjust the implementation strategy accordingly, without compromising on the overall principle and objectives of the programme. In brief, the Component follows the following strategic considerations to address the conflict /post-conflict situation: Keep local people at the front of the programme (ownership, operation management and decision-making lies with the local communities); Facilitation supports channelled through the locally operated organisations (Owners Association and Regional Centres); Energy Sector Assistance Programme, Phase II 7

15 Securing transparency in financial and programme supports. The Component has put the local people in front of the programme. The mini-grid schemes are owned and operated by the local people. The beneficiaries of the programme are the local people. The major decisions regarding the ownership, fund raising, carrying out of detailed studies, contract management for project construction lie with the local people. This strategy has worked well in the past and the Component will continue to follow this strategy to work in conflict /post-conflict situations. Local people, however, may not have adequate knowledge and information required for the project implementation. They need to be facilitated in almost every step in the project development, starting from the project identification to operation and management. The facilitation supports will be channelled through the help of Area/Regional Centres operated by local NGOs. Apart from that, at the later stage in ESAP Phase I, the programme initiated supporting the formation of micro-hydro users networks at the district level. This approach has had positive results at all the fronts. It has made it possible for any outsiders to get into the project site for studies and installation with fewer problems. The programme will continue to use the same strategy to facilitate programme implementation with securing participation of micro-hydro owners network members. Maintaining transparency in financial management is one of the pre-conditions to work in the conflict/post-conflict situation. Financial management issues are left completely with the local people and the Component has made clear provisions regarding the subsidy and other programme supports. Delivery of infrastructure services to rural communities is more effective and sustainable when the beneficiaries are able to secure ownership and to participate actively in project planning and implementation, including the financial management Strategy to Addressing Cross-Cutting Issues Energy interacts with all aspects of social and economic development, including livelihood, water, agriculture, environment, population, health, education, job creation and gender related issues. In order to halve the proportion of people living on less than one dollar per day by 2015, access to affordable energy services is a prerequisite (Million Development Goals). Modern energy services (as provided by mini-grid electrification) are also a prerequisite for increasing productivity and improving livelihood in rural areas. It is recognised that women play a crucial role in energy services at the household level; the poverty-energy-gender nexus is, however, inadequately understood. Therefore, the Component will examine gender roles and responsibilities and their impact on women. Based on the assessment, the programme will link mini-grid development activities for empowering women rather that a silent participant in the process of development. Women s active participation will be secured in making decisions (in cooperative, and users group formation), as well as in the operating process (as an operator or manager) for the mini-grid electrification. In the past, there has been greater attention to technical and economic issues and more recently to the environmental aspects of energy, with social concerns receiving less Energy Sector Assistance Programme, Phase II 8

16 attention. The Component, thus, focuses on improving access to energy services by covering all households in the communities in which the electricity services are going to be established. Improving the energy utilisation of household, as well as of the small and medium enterprises, has a high impact on poverty. For this reason, the Component will focus on end-use promotion and development at the household as well as the small enterprise levels. Need based adaptive projects will be piloted. Emphasis shall be on increasing the use of efficient energy at the household level. Financial gaps for developing mini-grid system are also widening. The subsidy alone cannot adequately address the needs of the sector. There is a need to engage the financial sector. Hence, the Component will work with financial facilities to see if their existing services can be expanded to include financing of energy services (especially for end uses) in rural areas so that this can contribute to addressing poverty reduction Synergy with Other Components/Programmes The Component will make its best effort for achieving synergy among the other components of ESAP and other programmes in Nepal. This type of interaction/coordination among intra and inter component/programme is expected in creating greater combined effect than the sum of their individual effects. The Mini-Grid Electrification Programme encourages all the participating programmes to meet and share information and knowledge. The Component will initiate the informal networking among the programme partners on a regular basis and an arrangement will be made to host the network meetings on a rotating basis. The already developed institutional structure of the forest user-group (FUG) can be useful in the mini-grid development. 2.5 Outputs and Targets The component results in the following outputs: Output 1: Output 2: Output 3: Output 4: Output 5: Output 6: Inputs to various rural energy related policies and their updates Rural electrification activities are integrated into local planning activities. Efficient and competitive service delivery mechanisms Institutionalized local ownership and use of electricity in rural areas not covered by national grid. Schemes identified, appraised and forwarded to REF for subsidy approval. Increased information about rural mini-grid schemes and electricity enduse possibilities. Energy Sector Assistance Programme, Phase II 9

17 The component has planned to increase the access of electrification in additional 150,000 rural households in Nepal, targeted as follows: Total HH electrified (000) MW equivalent MW Output 20 * This indicates the power supplied to household connection (18 MW) and surplus connected to grid (2 MW). 2.6 Activities The following paragraphs describes the activities and in sub-activities corresponding to the outputs: Output 1 Activity 1.1 Activity 1.2 Inputs to various rural energy related policies and their updates Provide inputs for the updating of various rural energy policies. Coordinate and assist ISRE Component of ESAP II for formulating coherent rural energy policy covering all alternative forms of electricity/energy, this activity addresses the specific aspects in relation to off- and on-grid electrification and their interconnections, harmonisation of subsidy policy based on household connections/power generation, extending role of AEPC catering schemes below 1 MW capacity and institutionalisation of credit framework. The issue related to water rights will also be dealt with. The following sub-activities are identified: Preparation of issue papers and conduct consultative meetings; Initiate policy dialogue for strengthening arrangements for purchasing of power produced by mini-grid systems; Assist the revision of subsidy policy by preparing analysis, concept papers; Develop mechanism for maintenance fund for the sustainability of projects; Assist in developing policy framework for credit mechanism as an integral part of the subsidy policy; Assist ISRE Component of ESAP II and AEPC in policy formulation. Formulate strategy for Mini-grid and grid connection. A strategy will be developed and implemented covering the Mini-grid electrification and securing a future operation of mini-grid production units when the national grid expands its network. The following are the specific activities: Prepare strategy for mini-grid and grid interconnections; Energy Sector Assistance Programme, Phase II 10

18 Prepare standards for mini-grid interconnections and connection to the national grid; Establish implementation procedures for mini-grid and grid interconnections; Prepare legal framework for mini-grid interconnections; Lead tariff discussions for standard power purchase agreement; Conduct consultative meetings/workshop; Activity 1.3 Output 2 Activity 2.1 Activity 2.2 Output 3 Activity 3.1 Advocate and implement Mini-grid and grid connection strategy. The advocacy for the mini-grid strategy will be at two level, (i) Local level integrating in local energy planning, and (ii) national level, making provision on policy to buy energy from mini-grid on the standard agreed power purchase agreement. The following are the specific activities: Pilot testing of mini-grid connection and grid connection of minigrid; Disseminate the result of lessons learnt on the pilot project. Rural electrification activities are integrated into local planning activities Assist integration of electrification plan on VDC/DDC planning. The feasible areas identified for mini-grid development, solar energy promotion and other options of rural electrification will be made available for DDC planning process. The DDCs will be assisted in delineated potential areas for grid line extension in close consultations with NEA. Assist DDC on information dissemination and facilitations for local users in electricity generation/transmission and grid connection in feasible areas. The programme will assist DDCs in disseminating the information on electricity plan to local people. Efficient and competitive service delivery mechanisms Monitoring project cycle duration annually The programme aims to smoothen the implementation process of mini-grid electrification. The project cost can be minimised by reducing the project realisation time. The following are the specific activities: Upgrade the MIS system; Collect the information; Feed the information on MIS; Assess the result and publish on the annual reports/progress report Energy Sector Assistance Programme, Phase II 11

19 Activity 3.2 Activity 3.3 Output 4 Activity 4.1 Conduct capacity building activities This activity consists of needs assessment, developing appropriate tools for capacity enhancement, trainings, exposures, etc. to service providers (private sector as well as NGOs). The following are the specific activities: Conduct needs assessment; Organise training programmes; Conduct exposure visits. Ensure quality assurance of mini-grid implementation (Standard, Guidelines, Monitoring, PQ, Assessment appraisal of the schemes, Monitoring and follow up and evaluations). This activity consists of developing specifications for micro- and mini hydropower plants to function in a manner that is suitable for connection to national grid at a later stage and for plants to be installed by cooperatives or users groups inside the existing grid connected schemes. Improving the standards for civil works and equipment to enhance the technical lifetime of the investment under assumption of continuous operation of the plants. This activity also consists of developing other standards, guidelines and expert systems that may be necessary to affect the cause of mini-grid development in the country. The following are the specific activities: Develop/update standards, guidelines, expert systems; Conduct consultative meetings; Pre-qualification, evaluation and certification of service providers; Monitor the implementation system; Provide feedback to refine the implementation strategy. Institutionalized local ownership and use of electricity in rural areas not covered by national grid. Conduct social facilitation activities with rural communities. This activity consists of the identification of suitable outfits, orientation, training and providing them with tools for project identification, preparation and assessment and integrating activities with local government planning processes. The institutional capacity of the local community is developed through providing backstopping support in information dissemination, user-group/cooperatives formation, registration in appropriate organisation, fund mobilisation, forming committees for executing construction and monitoring works and operate the plants after the installation. The following are the specific activities: Identify/Select the suitable local partners; Establishment of Regional Renewable Energy Service Centres; Conduct orientation/training for social facilitators; Refine/upgrade guidelines. Energy Sector Assistance Programme, Phase II 12

20 Activity 4.2 Activity 4.3 Output 5 Activity 5.1 Assist in formation of mini grid cooperatives/users group. Supporting development of institutional framework for rural electricity users, cooperatives, or associations for mobilisation and formation of by-laws and training packages. The following are the specific activities: Develop/upgrade guidelines/manuals; Support developing by-laws; Develop training packages; Facilitate cooperative formation; Provide training package and orientation; Develop institutional strengthening packages; Assist them in carrying out their activities at initial stage. Coordinate and interact with other programmes at local and national level. In coordination with ISRE Component, the Decentralisation Support Programme (DASU) of Danida, the Rural Energy Development Programme of AEPC and the Association of DDCs, a model is developed for the integration between demand driven electrification programme and the district level planning. The following are the specific activities: Take part in the planning workshop in targeted DDCs; Provide information, guidelines or manuals; Provide the information of identified sites for the planning purpose; Assist DDCs in information dissemination and interpretation; Prepare MoUs for collaborating partners at local and central level. Schemes identified, appraised and forwarded to REF for subsidy approval. Identify potential schemes. Developing systems for cost-effective and efficient identification for mini-grid schemes by use of global positioning system (GPS), geographical information system (GIS) and expert systems, which satisfy the requirement for the local energy planning and also for undergoing, detailed studies for further preparation. The conventional preliminary studies shall be completely replaced by the site identification adopting the pro-active site identification approach. The following are the specific activities: Prepare information on digital base map with attributes covering target areas; Preparation of hydrological model; Information collection at field; Updating information from field verification. Energy Sector Assistance Programme, Phase II 13

21 Activity 5.2 Prepare projects information documents for identified schemes. The identified schmes' documents will be prepared in readable information sheets and made available to potential communities, and DDCs. The following are the specific activities: Develop brief information sheets in GIS interface; Keep information on website/internet. Activity 5.3 Activity 5.4 Output.6 Activity 6.1 Assist conducting detailed feasibility studies of schemes. The scheme such prepared shall be put in the planning process of DDC and the potential communities/developers shall be informed about the potential. The local communities utilising the pre-qualified consulting companies carry out the detailed feasibility study for the scheme such identified and prepared. The Programme has been providing nominal financial support for carrying out detailed studies and be continue. The specific activities are as follows: Keep updated list of pre-qualified consultants; Provide financial assistance as per it s policy once the detailed feasibility study is approved. Forward proposals for schemes to TRC/REF. The project assessment work shall be delegated to local level organisation such as RRESC and after final quality check, projects (new and rehabilitation) shall be forwarded to REF with recommendation of the TRC. The following are the specific activities: Check the consistency in report preparation/design; Ensure the project fulfil the necessary criteria; Prepare brief assessment report the scheme to forward to REF after getting recommended by Micro-Hydro Technical Review Committee. Increased information about rural mini-grid schemes and electricity end-use possibilities Conduct information awareness campaign for mini-grid electrification in rural area. Energy Sector Assistance Programme, Phase II 14

22 In close collaboration with the service providers (such as regional centres, REDP, etc.), establishing a framework for information exchange and knowledge dissemination, this activity consists of identifying the target groups, preparation of the messages, identifying the proper tools and obtaining the regular feedback. The following are the specific activities: Develop/upgrade Management Information System; Publish Year Books and MH status report; Conduct evaluation and studies including impact assessment for poverty alleviation through mini-grid systems; Organise seminars/workshops and interaction meetings; Support sectoral publications such as news letters; Initiate setting up rural electrification sector coordination group. Activity 6.2 Conduct campaign and adaptive pilot projects for the promotion of End Uses. This activity is carried out together with financing institutions, the private sector and others organisations involved in rural development activities. The efforts will result in a set of information material that is useful from the users point of view so it gives clear information about the critical choices to be made, how to assess economical and financial viability, market orientation, production capacity, cost of investment and operation and maintenance, where to get further information and lists of suppliers and service organisations. This information is distributed at the time of establishment of cooperatives or community organisations along with parallel presentation of supporting institutions, like rural development banks and NGOs. The following are the specific activities: Facilitate to establish adaptive pilot projects with various end-use options Prepare/update guidelines/manuals; Prepare information materials; Develop training packages; Promotion of end use diversification; Organise exposure tours. Activity 6.3 Carry out technical reviews, and impact studies addressing the target issues. Energy Sector Assistance Programme, Phase II 15

23 2.7 Output Indicators In order to monitor and review the sectoral activities, the Component shall carry out various types of studies and reviews. The specific activities includes: Identification of issues; Preparation of terms of references; Contracting consultant; Monitoring the studies; Disseminate the study reports. Output 1. Inputs to various rural energy related policies and their updates 2 Rural electrification activities are integrated into local planning activities 3 Efficient and competitive service delivery mechanisms 4 Institutionalized local ownership and use of electricity in rural areas not covered by national grid 5 Schemes identified, appraised and forwarded to REF for subsidy approval 6 Increased information about rural mini-grid schemes and electricity end-use possibilities Indicators Input to draft rural energy policy forwarded to AEPC for approval by GoN Electrification plan appears in perspective and yearly planning of DDCs/VDCs Unit price of service delivery, Project cycle duration (time from identification to completion) Number of Pre-qualified companies, % of systems complying with standards Number of registered and renewed electricity related CBOs, user groups, cooperatives, and local electricity companies Projects received by REF for mini-grid electrification Applications for scheme support received 2.8 Inputs 1. Subsidy and credit facilities for the project implementation. 2. Financial supports according to budget throughout the programme implementation period. 3. Contributions from Mini-grid developers (the Corporative) in terms of funds (cash, human resource, services). 4. Human resources available to execute the programme, Component Manager and Programme Officers (2 or more on need basis) and one programme assistance. 5. Total budget to programme support from donors Euro 2.71 million- and government Euro 0.04 million. Total estimated program budget to be funded by EPD is 2.75 Million Euro Energy Sector Assistance Programme, Phase II 16

24 Table 4.1: Component budget and disbursement schedule 000 EUR All funding for programme cost is budgeted at Euro 2.75 million of which Euro 2.71 million will be born by the Danida and Norwegian committed fund. Detail budget and cash flow is given in Annex-2. Log Frame Analysis of the Mini-Grid Electrification Component is presented in Annex-1. Energy Sector Assistance Programme, Phase II 17

25 3 Management and Organisation AEPC will be the main national executing agency for the Mini-Grid Electrification Component. 3.1 ESAP Management and Organisation The overall coordination of the Energy Sector Assistance Programme (ESAP) remains with the ESAP Steering Committee (ESAP SC) consisting of representatives of Government of Nepal, external development partners, private sector, NGO, academic institutions, users organisations, credit organisations, etc. The role of the ESAP SC is to secure coordination among the stakeholders of the rural energy sector in Nepal. The ESAP SC is the formal mechanism for coordination and decision-making relating to the programme implementation. The ESAP SC ensures that the Programme is implemented, outputs achieved and funds managed efficiently and effectively, in accordance with the Programme Document, Government Agreement, and other legal documents. Where deviations from the Programme Document are considered necessary, the ESAP SC takes the decisions. However, the Programme objectives cannot be altered by the ESAP SC. Review Aide Memoires must be endorsed by the ESAP SC in the form of minutes from a Steering Committee meeting. The minutes will include all recommendations that the Steering Committee agrees to, and present arguments for the non-inclusion of recommendations, which cannot be endorsed. The mandate of the ESAP SC includes approval of annual work plans, budget approval and progress reports. The mandate of the ESAP SC also includes overall responsibility for monitoring of programme activities and output, monitoring of technical assistance, monitoring of auditing procedures and results, and decisions regarding major implementation issues not covered by annual work plans and budgets such as extraordinary procurement of services from international short-term consultants for studies and approval of major procurement decisions that exceed prescribed limits. Detailed terms of reference of the steering committee can be found in Annex 2 of the Programme Document. 3.2 Management and Coordination The Alternative Energy Promotion Centre is the national executing agency, representing the GoN for the Programme and subsequently the Component. Overall responsibility of the Component management is with the designated AEPC staff and day-to-day management of the Component is the responsibility of Component Energy Sector Assistance Programme, Phase II 18

26 Manager (CM) locally hired by ESAP. The Component unit (called the Mini-Grid Support Programme -- MGSP) will continue to take day-to-day management of the Mini-Grid Electrification Component. The ESAP funded CM, who works with the designated AEPC staff, will provide the executive coordination of the support activities and undertake coordination with other programme (ESAP II) activities. The CM will prepare work plans, budgets, proposals, ToRs, contracts and progress reports in coordination with the designated AEPC staff for the approval by the ED of AEPC and CA of ESAP, monitor and facilitate the execution of contracts. The designated AEPC staff will be further responsible for necessary coordination, follow up and reporting within the AEPC and other government institutions as for other inputs and participation securing the programme ownership of the Government. Table 3.1: Estimated MGSP staff AEPC ESAP Total Remarks Professional /Officer Level Officer-in-Charge 1 1 Designated from AEPC. Component Manager 1 1 Training Officer 1 1 Shared with other programme Socio economist 1 1 Shared with other programme Programme Officer Programme Assistant Including 1 existing permanent staff (overseer). In addition to the CM and the designated AEPC staff, programme funded programme officers (locally hired) will be employed to assist in day-to-day component activities. The MGSP will maintain coordination with the sectoral stakeholders and organise consultative meeting from time to time as per the requirements. Job descriptions of the locally hired CM and Programme Officers and organisations involved in Mini-Grid Electrification and are given in Annex-3 and Annex-4 respectively. Annual Work Plans will be prepared and presented to the ESAP Steering Committee for endorsement. Tendering and contracting of technical assistance services to be outsourced and will be done as per the approved guidelines and procedure described in the Programme Document. Energy Sector Assistance Programme, Phase II 19

27 4 Financial Management The Component Manager (CM), in consultation with the designated AEPC staff will be responsible for working out contracts and undertaking procurements directly related to the Component, including implementation and monitoring of tasks assigned to consultants. However, the overall authority for approval lies with the ED of the AEPC and the CA of the ESAP. The Component will adhere to the standard guidelines and practice of ESAP II in the overall financial management and procurement (Please refer Section 7 of the Programme Document). Energy Sector Assistance Programme, Phase II 20

28 5 Risk and Assumptions 5.1 Sustainability and Risks The following paragraphs highlight the risks and pre-conditions for the successful implementation of the programme activities and the corresponding mitigations measures are also presented: Security/conflict situation as a consequence of the political instability The present security situation (conflict /or post-conflict) poses high risk to the programme implementation as most of the activities are to be carried out in rural areas. It has, however, been experienced that the fieldwork relating to studies and surveys are least affected. People could manage to go to the fields with the help of local people, mostly with the assistance of the micro-hydro owner and Regional Centre staff.. Most of the Regional Centres have gained some level of experience working in conflict situations, and seem still to be confident in working with the situation Grid Extension in Mini-Grid Areas The Electricity Act of 1992 (clause 30) states that if distribution of electricity is extended into areas, which are already being electrified by the plant up to 1,000 kw, in such case the already existing plant has to be purchased on the price after deducting wear, tear and general depreciation as fixed by mutual agreement. This clause of the Act also poses some risk to the micro-hydro dissemination as the development of on-grid and off-grid electrification is almost going in parallel. Operating of micro-hydropower plant may not become viable once the grid is extended in the area. A few number of the microhydropower plants have already faced the problem and the problem is likely to have more numbers of plants in future. The Component in Phase I has already initiated activities targeting the interconnection of micro-mini hydropower and further possibility of grid connection. An understanding has been reached between the NEA and the AEPC to resolve this issue by finding necessary technical and legal solutions for grid connection. Once the mini-grid operation is well established, it is expected for the grid to buy power from the mini-grid system and resulting into the win-win situation for the both parties Harmonisation/Conflict with Other Programmes/Donors Presently, the Rural Energy Development Programme (REDP) under the support from the World Bank and the United Nations Development Programme (UNDP) is implementing the micro-hydropower programme in 25 districts covering about 150 Village Development Committees. The Alternative Energy Promotion Centre (AEPC) is the executing agency for the REDP. The Technical Review Committee (TRC) has been Energy Sector Assistance Programme, Phase II 21

29 institutionalised and functional within the AEPC to assure the quality of the micro-hydro schemes implemented by various programmes. The Agriculture Development Bank, REDP, MGSP, and the Nepal Micro-hydropower Development Association are represented in the TRC. AEPC is also the executing agency for the Energy Sector Assistance Programme, and subsequently the Mini-Grid Electrification Component. Hence conflicts with other donors and programmes are not expected to arise. At the same time, ESAP II is expected to be a multi-donor programme and at a later stage most of the donors are expected to follow the common code of conducts being prepared at the donor coordination meeting will be agreed and implemented Water Use Conflict Use of water for generating hydroelectricity is the fourth priority of the government (Water Resources Act. 2049, Clause 7) besides the use of water for drinking, irrigation and agriculture purpose. Conflicts relating to the use of water seem to be unavoidable, particularly at smaller river waters during the dry season. A provision in the present Act of de-licensing of hydropower plants up to 1,000 kw has eased the bureaucratic procedures. However, the District Development Committee (DDC) and the Department of Electricity Development (DoED) can issue certificates for the water use and hydropower development for on-grid developers respectively. The micro-hydro project should get registered in the Water Resource Committee of the District Development Committee (as per the Water Resource Regulation 1993) to be eligible for subsidy. However, a coherent policy is needed to enhance the coordination between the DDCs and DoED. The scenario of conflict situations and their subsequent consequences and mitigation measures can be seen as follows: Risk Risk Rating Risk Mitigation Measure 1. Conflict Situation 1.1 Status-quo conflict situation 1. 2 Worsened conflict situation 1.3 Eased conflict situation Low Low High The programme continues to work at the field level with the help of local communities, users groups, micro-hydro owners network and RegionalCentres. Field work might be reduced, but the programme will continue working on the activities such as identification, updating standards, trainings, minigrid connection, etc; and as the situation improve the programme activities can be scaled up without spending time on preliminary works. Field implementation will be speeded up with the support and high demand from the local organisations/communities. 2. Grid Extension Medium Programme continues working on non-grid areas; supporting mini-grid connection and grid connection of mini-grid systems, advocating policy for grid connection and coordination with Energy Sector Assistance Programme, Phase II 22

30 3. Conflict with other donors Low District Development Committees and Nepal Electricity Authority Advocating and supporting to strengthen the AEPC s central role of programme coordination. Integration of electrification activities with DDC shall relief the problem. 4. Water Use Conflict Medium Making water use certificate mandatory and further coordinating with district level planning. The coherent policy will also make clear on this issue. 5.2 Assumptions and Conditions The following paragraphs highlight the key assumptions, and pre-conditions for the successful implementation of the programme and their corresponding mitigations measures are also presented: Key Assumptions Major shift in state structure Following the election for the constitutional assembly, the state may experience transformation based on the popular peoples verdict. Role of the local people and local government will increase in all the governance issues including the resource mobilization. The programme implementation is largely based on the role of public, private and local government. A minor adjustment in the programme modalities might be warranted at the later stage, but that will not make any significant difference in the programme implementation modalities. Policy commitment from government through a coherent rural energy policy. The Government has continuously put rural electrification as its top priority. The present 10 th Five Year Plan has put an ambitious target of increasing the rural access of electricity. One of the main problems identified in the renewable energy sector is lacking of a coherent policy. Advocating for having a coherent energy policy will be the main point of departure for the ESAP possibly with multiple funding from Danida, Norway, and others. Inputs from AEPC and ESAP-II in supporting framing a coherent rural energy policy is very likely to be approved by the Government. Stakeholder commitment to implement the government policy and the objective of the Mini-grid programme. Once the Government adopts the policy, this assumption is likely to be resolved by donor and sectoral coordination, integrating programme activities in DDC planning process and regular monitoring of the sector by the executing authority (i.e., AEPC in coordination of other relevant stakeholders such as CRED of NEA, etc.). Energy Sector Assistance Programme, Phase II 23

31 Commitment from the private sector to provide efficient services supporting Minigrid development. This assumption is very much linked with the market expansion and providing opportunities by the programme for the private sector participation where it benefits from the programme directly or indirectly. The Programme together with the capacity building efforts will provide them opportunity to get involved in the sector. Creating a competitive market environment associated with regular monitoring efforts linked with bonus and punishment system will be instrumental for getting efficient services. The hydro scheme will sustain when the mini-grid is connected to the national transmission and distribution system. The present quality level, especially in the generating system, is sub-standard to be grid connected and sustained. The Programme s efforts of technology transfer; quality supports through the international consultant and capacity-building measures will be instrumental in fulfilling this assumption. Mini-grid developers (Cooperatives) that can afford mini-grid schemes. The off-grid electrification based on micro-mini hydro has already proven financial viability in many areas. The mini-grid concept will enhance the load factor of the system and make it likely to perform better in financial terms. The off-grid system connecting to grid further enhances the load factor. The main problem may lie with the quality to sustain the system and institutional set up. The Programme activities will focus on, along with other inputs, development of appropriate institutional arrangement with capacity building efforts. Suitable local partners exist in local communities and among the private sector. In the short run, this limitation may exist in some of the areas but in the long run the demonstration effects should spread in the vicinity and gradually this problem may be eliminated. The targeted information dissemination will furthermore help to solve this problem. Energy Sector Assistance Programme, Phase II 24

32 5.3 Indicators Figure 5.1: Immediate objective indicators for ESAP Mini-Grid Electrification Component Sub- Component 1.1 Mini-Grid Electrification Immediate objective indicators Harmonized national policy on- and off-grid rural electrification Mini-grid policies and programmes being a part of the national 5-year plan and DDCs annual plans Private sector capacity to participate in mini-grid electrification Owners networks/cooperatives established and registered. Active NGOs in the sector % of household with mini-grid electricity services Number of households electrified Number of VDCs electrified Use of electricity for economic activities (e.g. electricity based rural industries) Means of verification National energy policy documents National 5-year plan (PRSP) Yearbook / Annual Reports Rural electrification statistics Survey reports Impact studies Energy Sector Assistance Programme, Phase II 25

33 6 Monitoring, Review and Reporting 6.1 Monitoring Monitoring will be done to provide information for assessments of the progress and the impact of the Component. Monitoring will focus on Component supported activities, but will tie with general sector monitoring. The Monitoring and Evaluation (M&E) system developed within the Component in ESAP Phase I will be utilised after certain modifications to generate standardised monitoring results. Monitoring will be done in technical, financial and socio-economic terms linking with the PRS and national sector targets and indicators, based on GON, Danida, Norway and other donors reporting requirements. The Mini-Grid Support Programme will be responsible for the overall component level monitoring. The Component follows the overall AEPC/ESAP s monitoring system and practices wherever applicable. Two level of baselines will be prepared (i) Component Level representing the mini-grid sector, and (ii) Project level which will be prepared along with the site identification of individual projects. 6.2 Reviews Joint Programme Reviews will take place for the overall programme level and the individual Components will be reviewed accordingly. In case the individual Component wishes to have special reviews on particular matter such as Technical, the Component will request Steering Committee for their consideration and such special reviews will be organised on need basis. The Mini-Grid Support Programme will conduct reviews for the activities conducted by the partner organisations such as Regional Centres and pre-qualified NGOs, consultants, manufactures and installers on regular (scheduled) basis. 6.3 Reporting Reporting will be scheduled to provide input to the planning processes and will be presented in a format compatible with GoN, Danida, Norway and other donors reporting requirements. The Regional Centres will report quarterly to the Mini-Grid Support Programme and MGSP will prepare Semi-annual and Annual Progress reports. The Semi-annual and Annual Progress reports will be submitted to Steering Committee for review, evaluation and feedback to the Component. The Component will also prepare issues papers, or any other reports that may be required for the need of particular donors and sector reviews on time to time. Energy Sector Assistance Programme, Phase II 26

34 6.4 Evaluation The Component will conduct impact assessments in each two-year period. The initial impacts assessment will focus more on the activities implemented in ESAP I and in the subsequent evaluations; impact will be assessed due to resulting activities of ESAP II. Evaluations will be independent, in depth analyses of results and process focusing on relevance, effectiveness, social and environmental impact and sustainability of the activities supported. The assessment of the key indicators corresponding to the over all development objectives, which are (i) improved living standard in rural areas, (ii) increased access to affordable rural energy solutions, and (iii) increased productivity in the rural areas, is beyond the scope of one component and will be done at the overall programme level. The indicators presented in Figure 5.1 will correspond to the immediate objectives. The Programme will further elaborate the key indicators, verifiable indicators, benchmarks and success criteria within the first quarter of Phase II. Energy Sector Assistance Programme, Phase II 27

35 7 General Implementation Plan The Component Implementation Plan is presented in Annex 5 Energy Sector Assistance Programme, Phase II 28

36 Annexes 1. Log Frame Analysis of the Mini-Grid Electrification Component 2. Budget and Cash flow 3. Job Descriptions 4. Organisation Involved in Mini-Grid Electrification 5. Implementation Plan Energy Sector Assistance Programme, Phase II 29

37 Energy Sector Assistance Programme, Phase II 30

38 Annex 1: Logical Framework Analysis of the Mini-Grid Component 1. Development objective Indicators Means of verification External factors The living conditions of the rural population improved through enhanced Increase of households with access to rural energy solutions. National Statistics Human Development Report access and affordability to rural energy Impact studies Rural communities/ households using solutions that are efficient, Programme progress reports electricity for lighting, water pumping, environment-friendly and that address operation of radio, TV, cassette players social justice. etc., as well as productive end-use in relation to economic activity. Proportion of traditional fuel in total energy use. Per capita rural energy/electricity consumption. The economic situation of rural communities and households will not deteriorate compared to the situation at the start of the 5-year programme. The conflict situation will ease or not worsen. 2. Immediate objective Indicators Means of verification External factors 1. Enhanced sectoral framework for policy formulation, strategy development, Harmonized policy on on- and off-grid rural electrification National energy policy documents planning, programme implementation, and National 5-year plan (PRSP) harmonization of on- and off-grid rural Mini-grid polices and programmes being a electrification at national and local level. part of the national 5-year plan and DDCs Yearbook/Annual Reports annual plan. 2. Increased and sustainable access to and use of electricity in rural areas. Private sector capacity to participate in minigrid electrification Owners networks/cooperatives established and registered. Active NGOs in the sector % of household with mini-grid electricity services Number of households electrified Number of VDCs electrified. Use of electricity for economic activities (e.g. electricity based rural industries) Rural electrification statistics Survey report Impact studies Government will approve energy policies. Available of subsidy and credit for rural energy. Possible conflicts between off-grid and on-grid electrification resolved. Energy Sector Assistance Programme, Phase II 31

39 3. Outputs Indicators Means of verification External factors 1. Inputs to various rural energy related policies and their updates Input to draft rural energy policy forwarded to AEPC for approval by GoN Draft policy document 2. Rural electrification activities are integrated into local planning activities 3. Efficient and competitive service delivery mechanisms 4. Institutionalized local ownership and use of electricity in rural areas not covered by national grid 5. Schemes identified, appraised and forwarded to REF for subsidy approval 6. Increased information about rural minigrid schemes and electricity end-use possibilities Electricity plan appears in perspective and annual plan of DDCs/VDCs Service delivery strategy formulated Project cycle duration ( time from identification to completion) Programme performance Unit price of service delivery Number of pre-qualified companies % of systems complying with standards Number of registered and renewed electricity related CBOs, user groups, cooperatives, and local electricity companies Projects received by REF for mini-grid electrification Applications for scheme support received Strategy paper and MIS Service contract documents Company register Certificate register for CBOs etc, audit reports MIS, TRC minutes MIS MIS Policy commitment from GoN/AEPC and other governmental Institutions. Rural communities are interested in mini-grid electrification and will submit requests for assistance. Private sector companies are interested in rural energy business opportunities. institutions Energy Sector Assistance Programme, Phase II 32

40 4 Activities 5. Inputs External factors Output 1: Inputs to various rural energy related policies and their updates 1.1 Provide inputs for the updating of various rural energy policies 1.2 Formulate policy for mini-grid and grid connection 1.3 Advocate and implement mini-grid and grid connection strategy Donor budget Output 2: Rural electrification activities are integrated into local planning activities 2.1 Assist integration of electrification plan on VDC/DDC planning 2.2 Assist DDC on information dissemination and facilitations for local users in electricity generation/transmission and grid connection in feasible areas. Output 3: Efficient and competitive service delivery mechanisms 3.1 Monitor project cycle duration annually 3.2 Conduct capacity building activities 3.3 Perform quality assurance of mini-grid implementation (Standard, Guidelines, Monitoring, PQ, Assessment appraisal of the schemes, Monitoring and follow up and evaluations). Output 4: Institutionalized local ownership and use of electricity in rural areas not covered by national grid 4.1 Conduct social facilitation activities with rural communities 4.2 Assist in formation of mini-grid cooperatives/users group 4.3 Coordinate and interact with other programmes at local and national level Output 5: Schemes identified, appraised and forwarded to REF for subsidy approval 5.1 Identify potential schemes 5.2 Prepare project documents for schemes 5.3 Assist conducting detailed feasibility studies of schemes 5.4 Forward proposals for schemes to TRC/REF Output 6: Increased information about rural mini-grid schemes and electricity end-use possibilities 6.1 Conduct information awareness campaign for mini-grid electrification in rural area 6.2 Conduct campaign and adaptive pilot projects for the promotion of end uses 6.3 Carry out technical reviews and impact studies addressing the target issues Capital cost Euro 99,000 TA Euro 2.2 million Recurrent Cost Euro 395,000 TOTAL EURO 2.71 million National Budget Euro 4,000 (equivalent) for office rent, counter part staff, etc. Resources from donors will be made available. National resources will be made available. Support from NGOs, INGOs, DDCs and others will be forthcoming. Energy Sector Assistance Programme, Phase II 33

41 Energy Sector Assistance Programme, Phase II 34

42 Annex 2: Budget and Cashflow Energy Sector Assistance Programme, Phase II 35

43 Energy Sector Assistance Programme, Phase II 36

44 Annex 3: Job Descriptions Terms of Reference for Component Manager Job Title: Mini-Grid Electrification Component Manager Component: Mini-Grid Electrification Component of ESAP Duty Station: Alternative Energy Promotion Centre/ESAP, Kathmandu Report to: Executive Director, AEPC, and ESAP Chief Adviser, ESAP Working Relation: AEPC Assigned Officer Overall purpose: Plan, implement, monitor, coordinate, and promote the rural electrification activities in achieving the development objectives of Mini-Grid Electrification Component of AEPC/ESAP in the spirit of decentralized public private partnership. Main Task: The duties and responsibilities of the Component Manager includes, but are not limited to, the followings: 1. Relating to ESAP: Technical Supports a. Take responsibility for the day-to-day management and coordination of Mini- Grid Electrification Component or Mini-Grid Support Programme of AEPC/ESAP: Prepare work plans, budgets, proposals, ToRs, contract and progress report of the Component and recommend payments. Supervise TA staff employed under the Component and working for the component. b. Undertake activities for the outputs detailed in the LFA of the component. c. Undertake general programme activities to: Assist in integrating electricity planning in local planning of DDCs Assist local partner organisations with respect to preparing work plans and contracts, as well as defining conceptual and thematic divisions of work during implementation Ensure monitoring of partner organisations including the Regional Centres and Umbrella Cooperatives through: i. Review of work and activity plans, quarterly plans and financial statements ii. Activity monitoring, including adherence to legal frameworks with respect to fair competition and policy requirements d. Ensure quality control of services provided at field level, with special emphasis on the services rendered by partners organizations e. Ensure the preparation of standard documents and the streamlining of procedures and implementation modalities with respect to physical implementation f. Represent the Component on relevant coordination meetings 2. Relating to ESAP: Financial Supports a. Ensuring that projects comply with selection criteria, standards and national policy guidelines in recommending financial supports b. Assist (I)REF with regards to institutionalisation of credit mechanisms for rural electrification programmes Energy Sector Assistance Programme, Phase II 37

45 c. Assist (I)REF with regards to forecast the subsidy and other credit requirements for rural electrification programmes 3. Relating to Rural Electrification Sector a. Maintaining close coordination with other ESAP component and other relevant development programme activities b. Assist AEPC in preparing programme documents for securing funding for offgrid rural electrification programmes c. Assist AEPC in hosting secretariat for the coordination of central level electrification group comprising Nepal Electricity Authority, Department of Electricity Development, National Planning Commission and the Association of District Development Committee. d. Networking with relevant institutions conducting the similar activities relating to rural electrification. e. Maintaining close monitoring of technological and other development in the energy sector in general and rural electrification sector in particular f. Represent the programme in the seminar, workshop and meetings organized by other governmental, non-governmental, private and public sector organizations 4. Others a. The Component Manager shall maintain close liaison with relevant stakeholders b. Any other duties as assigned by the ED of AEPC and the ESAP Chief Adviser. Authority: To meet all the given tasks, the Component Manager shall judiciously exercise the authority as delegated by the ESAP CA and other Officials and those defined in the rules and regulations of ESAP/AEPC. Team Work: The MGECM shall work as a team, meaning that everybody will support each other's within any field required. This also implies that every team member has a responsibility actively to secure effective and pleasant co-operation within the team. Qualification and Experience Academic education at least Master s level in energy, or related discipline. A minimum of five years of senior management level work experience in the field of rural energy development, policy/planning/project implementation in partnership with government, private sector and NGOs. Conversant on standard computer software and fluency in spoken and written Nepali and English. Energy Sector Assistance Programme, Phase II 38

46 Terms of Reference for Programme Officer 1 Job Title : Hydrologist-cum-GIS Officer Component : Mini-Grid Electrification Component Duty Station : Alternative Energy Promotion Centre/ESAP, Kathmandu Report to : Component Manager: Mini-Grid Electrification Responsible to : ED of AEPC and Chief Adviser, ESAP Overall Purpose: Develop and implement systems for hydrological analysis in identification and verification of mini-grid schemes based on GIS for rural electrification; establish, update and maintain GIS system for rural energy development in general and rural electrification in specific. Main Task: The duties and responsibilities of the Hydrologist-cum- GIS Officer includes, but are not limited to, the following: 1. With regards to Hydrology and GIS system development and management a. Development of systems for hydrological documentation for investment in micro/mini hydropower projects involving: Calibration of spatial hydrological watershed models for different hydrological region based on run-off measurements and GIS based information Determination of variability of water available based on available data on the individual watershed. Establishment of models optimizing investment versus hydrological data based on TOD tariffs. Planning & management of temporary run-off measurement stations for model calibration. Training of operators of measurement stations in water level registration and establishment of rating curves. b. Development of GIS based project identification for rural electrification Development of GIS based models for identification of rural electrification project based on availability of natural resources, consumers and market access Supervising service providers in operation of models for data entry and quality assessment of the results Planning of field verification Preparation of results for presentation for local decision makers and facilitators 2. Relating Other ESAP activities a. Assist in regular and general monitoring of the Component activities, including Review of work and activity plans, and budget, Activity monitoring with respect to planning, progress report, review of programme, etc. Energy Sector Assistance Programme, Phase II 39

47 b. Assist in implementation and updating of existing MIS and integration with GIS system. 3. Relating Other AEPC Programme and Energy Programme a. Work in close cooperation with other Components of ESAP and other rural energy programmes/projects for possible complementarities and synergies. b. Coordinate with other on-going programmes in Nepal that has direct and indirect implication with ESAP activities in general and MGSP/GIS activities in specific. c. General Liaison for sector development. d. Follow-up of the technological and other developments in the sector and providing inputs to improve the Component. 4. Others c. The incumbent shall maintain close liaison with relevant stakeholders d. Any other duties as assigned by the ED of AEPC and the ESAP Chief Adviser. Authority: To meet all the given tasks, the Programme Officer shall judiciously exercise the authority as delegated by the ESAP CA and other Officials and those defined in the rules and regulations of ESAP/AEPC. Team Work: The Programme Officer shall contribute actively to AEPC/ESAP teamwork, supporting colleagues. Qualifications and Experience Education at least at Bachelor level in hydrology, or civil engineering with a minimum of five years of field experience or Masters degree with three years of related experience Conversant in computer operation including GIS, and GIS based modelling Fluency in spoken and written Nepali and English. Terms of Reference for Programme Officer 2 Job Title : Cooperative and Community Mobilization Officer Component : Mini-Grid Electrification Component Duty Station : Alternative Energy Promotion Centre/ESAP, Kathmandu Report to : Component Manager: Mini-Grid Electrification Responsible to : ED of AEPC and Chief Adviser, ESAP Overall Purpose: Capacity building of local electricity cooperatives and community organizations in owning, managing and operating grid and non-grid based rural electrification system with public-private partnership focus. Main Task: The duties and responsibilities of the Cooperative and Community Mobilisation Officer includes, but are not limited to, the following: Energy Sector Assistance Programme, Phase II 40

48 1. Relating to ESAP, technical supports a. Development of working modalities for electricity user cooperatives and groups based on public-private-partnership covering: Financial management including business plans, financing procedures, financial monitoring, etc Enhancing financial viability of rural electrification through efficient management, promotion of productive use of electricity and improved operational efficiency (formal administrative package). Procedures for community mobilization including creation of legal entities for cooperative/user group, sorting of power plants and distribution system ownership issues (community, entrepreneurs and joint) Assist in power purchase agreements, water rights and other legal formalities Assist in establishing Umbrella organizations, and district and national level organization of cooperatives/user-groups. Access to technical assistances Supporting development of by-laws and management systems b. Training of service providers (RRESC operated by local NGOs) Preparation of guidelines based on the above models Preparation of training materials Organising training Quality assurance on service delivery Collection on feed back for model revision 2. Relating Other ESAP activities a. Assist in regular and general monitoring of the Component activities, including Review of work and activity plans, and budget, Activity monitoring with respect to planning, progress report, review of programme, etc. b. Coordinate and assist in implementation institutional capacity building activities under ESAP/ Institutional Component. 3. Relating to other AEPC, NEA, and other Electrification Programme a. Work in close cooperation with other Components of ESAP and other rural energy programmes/projects, particularly, the Renewable Energy Project of AEPC with EC funding, for possible complementarities and synergies. b. Coordinate with other on-going programmes in Nepal that has direct and indirect implication with ESAP activities in general and community mobilisation activities in specific. c. General Liaison for sector s capacity development d. Follow up of the technological and other developments in the sector and providing inputs to improve the Component. e. Developing and supporting systems for interaction with local authorities including the DDCs, VDCs for integrating electrification in the local development plans 4. Others e. The incumbent shall maintain close liaison with relevant stakeholders Energy Sector Assistance Programme, Phase II 41

49 f. Any other duties as assigned by the ED of AEPC and the ESAP Chief Adviser. Authority: To meet all the given tasks, the Programme Officer shall judiciously exercise the authority as delegated by the ESAP CA and other Officials and those defined in the rules and regulations of ESAP/AEPC. Team Work: The Programme Officer shall contribute actively to AEPC/ESAP teamwork, supporting colleagues. Qualifications and Experience Education at least at Bachelor level in engineering, social science or development studies with a minimum of five years of field experience or Masters degree with three years of related experience Demonstrated relevant practical work experience in the field of cooperatives and social mobilisation.. Working experience with local organizations including NGO, CBO, VDC, DDC and private sector. Conversant in computer operation, and Fluency in spoken and written Nepali and English. Terms of Reference for Programme Officer 3 Job Title : Decentralized Power Production and Grid Electrification Officer Component : Mini-Grid Electrification Component Duty Station : Alternative Energy Promotion Centre/ESAP, Kathmandu Responsible to : ED of AEPC and Chief Adviser, ESAP Report to : Component Manager: Mini-Grid Electrification Overall Purpose: System is in place for delivery of quality/ reliable and decentralized electricity services to the rural people with a possibility of grid connection. Main Task: The duties and responsibilities of the Decentralized Power Production and Grid Electrification Officer include, but are not limited to, the following: 1. Relating ESAP MGSP Activities a. Development of technical criteria for successful implementation of projects covering: Technical system models for design, operation & maintenance Consistent selection of solutions for projects in the form of expert systems addressing the relevant issues Check lists for critical issues Guidelines for project preparation, implementation, operation & maintenance System for scheme assessment and monitoring activities Assist local organization in appraisal of mini-grid schemes Energy Sector Assistance Programme, Phase II 42

50 b. Development of a unit cost system available for planners automatically updated by cost indexes allowing project costs calculated historically to updated without involving new studies c. Support to development and updating of PPAs d. Updating of standard contracts e. Training of the private sector in implementation of public private partnership contracts f. Training of the private sector in quality assurance g. Screening of projects for technical and financial support h. Create a systematic information for the pipeline of electrification projects at the different stages in the implementation 2. Relating Other ESAP activities a. Assist in regular and general monitoring of the Component activities, including Review of work and activity plans, and budget, Activity monitoring with respect to planning, progress report, review of programme, etc. b. Coordinate and assist in implementation of various (Interim) Rural Energy Fund, (I) REF activities including subsidy disbursement 3. Relating to other AEPC, NEA, and other Electrification Programme a. Work in close cooperation with other Components of ESAP and other rural energy programmes/projects, particularly, the Renewable Energy Project of AEPC with EC funding, for possible complementarities and synergies. b. Coordinate with other on-going programmes in Nepal that has direct and indirect implication with ESAP activities in general and rural electrification in specific. c. General Liaison for sector s capacity development d. Follow up of the technological and other developments in the sector and providing inputs to improve the Component. e. Interact with local authorities including the DDCs, VDCs for integrating electrification in the local development plans 4. Others a. The incumbent shall maintain close liaison with relevant stakeholders b. Any other duties as assigned by the ED of AEPC and the ESAP Chief Adviser. Authority: To meet all the given tasks, the Programme Officer shall judiciously exercise the authority as delegated by the ESAP CA and other Officials and those defined in the rules and regulations of ESAP/AEPC. Team Work: The Programme Officer shall contribute actively to AEPC/ESAP teamwork, supporting colleagues. Qualifications and Experience Education at least at Bachelor level in Mechanical, Electrical, Civil or relevant Engineering discipline with a minimum of five years of field experience or three years of field experience with Masters degree in relevant discipline. Energy Sector Assistance Programme, Phase II 43

51 Demonstrated relevant practical work experience in the field of micro/mini/small Hydro and Mini-Grid electrification with focus on o Experience in survey, design, installation and quality assurance o Experience with working with private sector organisation Conversant in computer operation, and Fluency in spoken and written Nepali and English. Energy Sector Assistance Programme, Phase II 44

52 Annex 4: Organisation Involved in Mini-Grid Electrification Organisations Involved in Mini -Grid Electrification MoEST Coordination MoWR WB UNDP SNV REDP IWM TRC AEPC MGSP Bank REF ESAP Danida Norad NEA A CRED DoED Sector Resources Private Sector (consultant, manufactures, installers, quality supervisors, etc.) Regional Centre Regional Centre Regional Centre Regional Centre Regional Centre DDC/VDC Regional Centre Association Owners Community Bank Mini-Grid Cooperatives REDP Users RO RO RO RO RO REDS in 25 Districts Users Committees Energy Sector Assistance Programme, Phase II 45

53 Energy Sector Assistance Programme, Phase II 46

54 Annex 5: Implementation Plan Energy Sector Assistance Programme, Phase II 47

55 Energy Sector Assistance Programme, Phase II 48