Overview of MCC and Compact in Nepal1

MCC IS A U.S. GOVERNMENT AGENCY THAT GIVES GRANTS TO INCREASE ECONOMIC GROWTH AND REDUCE POVERTY

Focused mandate: Reduce poverty through economic growth

Corporate structure: Led by a governing public/private Board of Directors• Secretary of State Mike Pompeo (chair)• Secretary of Treasury Steven T. Mnuchin (vice chair)• U.S. Trade Representative Robert E. Lightizer• USAID Administrator Mark Green• MCC Chief Executive Officer• 4 private sector members

2

Two types of MCC-funded programs:

Compact Programs (5-year grants)• Average grant - $360 Million USD

Threshold Programs (2-3 year grants)• Average grant - $23 million USD

MCC IS A UNIQUE DONOR THAT EMPHASIZES COUNTRY OWNERSHIP AND FOCUSES ON IMPACT

• Competitive selection: MCC’s Board selects countries based on performance on 20 independent and transparent policy indicators (e.g., political rights, control of corruption, gender in the economy)

3

• Country-led solutions: MCC countries identify priorities for sustainable economic growth and poverty reduction; develop investment proposals in broad consultation within society

• Country-led implementation: Upon compact signing, MCC countries establish local entity to manage and oversee all aspects of implementation, using MCC funds. MCA-Nepal is the implementing agency

• Focus on results: MCC only funds projects that are expected to have demonstrable impact on economic growth. • Methodical approach to project selection• Rigorous tracking and evaluation of projects

MCC IS SELECTIVE AND IS CURRENTLY ONLY WORKING WITH 18 COUNTRIES ON A COMPACT

4

*

* Indonesia compact closed on April 2, 2018

REASONS TO DO BUSINESS ON AN MCC COMPACT

• Payments directly from the U.S. Treasury to the Contractor’s account

• Emphasis on best value (quality, not just lowest price)

• Strict 5-year timeline for Compact completion

• Transparent and fair international competition (following MCC procurement guidelines and managed by external Procurement Agent, under MCC oversight)

• Emphasis on past performance and references

• Evaluation and selection by technical experts

• Compact fully funded at outset

An Introductory Presentation on theMCC Nepal Compact

Nepal Compact Highlights• MCC and the Government of Nepal entered into a Compact to help

facilitate poverty reduction through economic growth in the amount of $500 million USD.

• The Millennium Challenge Account-Nepal (MCA-Nepal) has been established as the legal and accountable entity in Nepal.

• As such, MCA-Nepal is responsible for implementation of the Compact.

• MCA-Nepal will procure all goods, works, and services funded under the Compact using the MCC Program Procurement Guidelines,and will enter into contracts and administer all such contracts.

• All program disbursements must be made within five years of entry-into-force (EIF) of the Compact, which is scheduled for June 2020.

9

Nepal Compact Projects

The Electricity Transmission (ETP) The Road Maintenance Project (RMP)

Nepal Compact Projects

Electricity Transmission Project (ETP)

• Approx. $398M value• Consists of 4 Activities:1.Transmission Lines Activity

(including Partnerships Program);

2.Substations Activity; 3.Power Sector Technical

Assistance (TA) Activity; and 4.Program Management and

Technical Oversight Activity

Road Maintenance Project (RMP)

• Approx. $52M value• Consists of 2 Activities:1. Strategic Road Maintenance

Works Activity (including pavement recycling and a matching fund to finance new periodic maintenance works); and

2. Technical Assistance Activity

GON is also contributing $130M to the compact’s

projects

Map of Approved Projects

Projects under the Compact: Electricity Transmission Project

• The objective of the Electricity Transmission Project (ETP) is to increase electricity consumption by improving the availability and reliability of electricity supply in Nepal’s electricity grid and by facilitating power trade:

• Investment in Nepal’s transmission network by constructing transmission lines and three substations to expand the high voltage transmission backbone inside Nepal and support increased supply of electricity to consumers, allowing more efficient movement of electricity across the grid, with lower technical losses, such that supply is better able to meet demand

• Investments in cross-border interconnection by constructing Nepal side of a second cross-border transmission line with India to facilitate increased electricity export when domestic generation exceeds domestic demand in the rainy season, and increased electricity import when domestic generation is at its lowest in the dry season

• Provide Technical Assistance (TA) to improve sustainability of the power sector and the infrastructure investments by enabling Nepal Electricity Authority (NEA) to operate, manage, and maintain the new 400kV system and to newly established Electricity Regulatory Commission

• The increase of electricity in Nepal’s grid is expected to allow consumers to use more electricity to meet their energy needs and incur less expenditures per unit of energy consumed than experienced currently.

The ETP has 3 Components312 km of Transmission Lines 3 Substations

Technical Assistance to NEA and Nepal ERC

Outputs and Outcomes

• 300 km of 400 kV lines added• 3,920 MW transmission capacity• 3,290 MVA substation capacity• TX losses reduced: 4.82% to 1.9%

• Regional integration and trade at scale

• Exports: 3.3 to 2,896 GWh• Cons/cap: 133394 500

kWh

Projects under the Compact: Road Maintenance Project

• The objective of the Road Maintenance Project (RMP) is to maintain road quality across the Strategic Road Network (SRN):

• Provide TA related to road maintenance planning, assessment, and implementation to strengthen the Department of Roads’ (DoR) and Roads Board Nepal’s (RBN) capacity to plan and execute routine and periodic maintenance

• Reinforced through a learning-by-doing approach to conducting maintenance on selected segments of the SRN

• Maintenance work will reduce road roughness and associated vehicle operating costs • Funds will be applied using a matching scheme aimed at incentivizing allocation and

expenditure of greater amounts of road maintenance resources

• By equipping the DoR with the data, skills, and experience necessary to plan and implement road maintenance, combined with an increased level of funding under an improved road maintenance funding regime, it is expected that the SRN will be adequately maintained and road quality will not deteriorate

The RMP has 2 activities1. Technical Assistance to DoR

2. Enhanced road maintenance on up to 305 km of roads (based on incentive matching from GoN)

Outputs and Outcomes

• Improved road maintenance system• Increased funding for road maintenance• New maintenance system applied to 300 km of Strategic Roads Network

Timeline and Current Status

CompactSigning

SEPT-2017 NowEntry-into-

ForceCompactCloseout

Dec-2014 –Sept-2017

Est. 33 Months + 5 Years from EIF

MCC BoDSelects Nepal

5-year clock starts ticking

here

CompactDesign

Project Preparation

Compact Implementation and Construction

Entry into Force Date

• MCC’s implementation method requires that enough time is allotted to the project preparatory phase so that all conditions for successful project delivery are met prior to the Entry into Force (EIF)

• Following EIF, all implementation activities must be completed within five-years, as there are no provisions for time extensions or cost increase

Some of the key conditions to EIF are:• Declaration of the Electricity Transmission Project as a National Pride Project - Completed• Passage of legislation to create an Electricity Regulatory Commission - Completed• Signing of a Project Implementation Agreement - Completed• Completion of a plan in agreement with the Government of India for the cross-border transmission line from

Butwal, Nepal to Gorakhpur, India - - Agreement in Place • Site Access to all project construction sites with environmental impact assessment (EIA) approval and

sufficient progress on land acquisition and forest clearance In Progress• Ratification of the Compact agreement by the Parliament In Progress

Millennium Challenge Account Nepal (MCA-Nepal)

Electricity Transmission Project (ETP)

Outreach Event

KathmanduNovember 18, 2019

Electricity Transmission ProjectOutcomes:• Add 3,920 MW Tx capacity; reduce losses to 1.9%• Support 3x increase in electricity consumption per capita • Approx. 312 km – 400 kV Tx lines (~857 towers)• 3 x 400 kV substations

Electricity Transmission Line Status

• Transmission Line Route Alignment frozen for all five segments

• Lapsiphedi ‐ Ratmate

• Ratmate ‐ New Hetauda

• Ratmate ‐ New Damauli

• New Damauli ‐ New Butwal

• New Butwal ‐ Nepal/India Border

• Geotechnical survey works completed

• Draft EIA document in advanced stage of preparation

Electricity Transmission Line (Works)

Transmission Lines• 400 kV D/C; lots 90‐115 km each• 3.5 year execution• Design‐Build (FIDIC Yellow Book)• Expected launch: Jan 2020• Quality‐Price Based Selection• Expected contract sign: Sep 2020

Segment wise physical information

TL SegmentsPhysiographic Zone (Length Percentile) Elevation (MASL)

Terai Siwalik Middle Mountain Minimum Maximum

India Border to New ButwalSubstation 100% 100 120

New Butwal to New DamauliSubstation 7% 21% 72% 115 1380

New Damauli to RatmateSubstation 100% 220 1780

Ratmate to New HetaudaSubstation 25% 75% 410 1840

Ratmate to LapsiphediSubstation 100% 490 1918

Lapsiphedi-Ratmate-New Hetauda 400kV D/C Transmission Line

• Lapsiphedi – Ratmate• Middle Mountain physiographic

zone (Ratmate to Lapsiphedi)• Section Length : Approx. 59 km• No. of towers: Approx. 163• 400 kV Quad Moose Double

Circuit

Lapsiphedi-Ratmate-New Hetauda 400kV D/C Transmission Line (contd...)

• Ratmate to New Hetauda• Middle Mountain zone and partly in Siwalik zone• Section Length : Approx. 56 km• No. of towers: Approx. 142• 400 kV Quad Moose Double Circuit• Possibility of few Quad Moose Quad Circuit towers

Ratmate-New Damauli 400kV D/C Transmission Line

• Middle Mountain physiographic zone (Ratmate to New Damauli)

• Section Length : Approx. 89 km• No. of towers: Approx. 251• 400 kV Quad Moose Double Circuit

New Damauli-New Butwal-Indo Nepal Border 400kV D/C Transmission Line

• New Damauli to New Butwal• Cuts across three physiographic zones ‐ Terai,

Siwalik, and Middle Mountains.• Section Length : Approx. 90 km• No. of towers: Approx. 248• 400 kV Quad Moose Double Circuit• Few Quad Moose Quad Circuit towers near New

Butwal substation

New Damauli-New Butwal-Indo Nepal Border 400kV D/C Transmission Line

• New Butwal to India Border• Terai physiographic zone• Section Length : Approx. 18 km• No. of towers: Approx. 52• 400 kV Quad Moose Double

Circuit

Transmission line towers

Probable tower types• Suspension• Tension (mostly)• Special Tower (for

long spans)• Multi Circuit (for

corridor issues)

ACCESS ROAD CLASSIFICATION

Category Width Turn radius

Slope percent

Remarks

1 ~5m min. 90 ft 0 to 15 Generally paved or unpaved and well maintained

2 ~3m Min. 45 ft 0 to 30 Unpaved road in fair condition3 ~2.5m Min. 20 ft 0 to 45 Unpaved narrow road in poor condition4 ~1.5m Min. 15 ft 0 to 45 Wide trail in fair condition5 ~0.5m‐

1mMin. 6ft 0 to 24 Narrow trail.

6 Aerial access in the only option

Length of Access Roads per Category in each Segment

SegmentRoad Category (in km)

1 2 3 4 5New Butwal to India Border 49.0 22.2 12.4 8.8New Butwal to New Damauli 216.2 86.0 115.1 41.1 45.2New Damauli to Ratmate 201.5 32.4 156.7 126.8 61.2Ratmate to Lapsephedi 21.1 65.6 97.3 57.3 25.9Ratmate to New Hetauda 187.6 96.6 52.9 29.7 28.5

Transmission Line Preliminary Assessment of Road Access

Resettlement and Land Acquisition

• Resettlement policy framework completed

• Entitlement Matrix completed

• RAP of Transmission lines will be completed by June 2020

• Land compensation payment to be completed by December 2020

Challenges

• Difficult Terrain/Transportation of materials: Elevations vary from 100 meters (330 ft.) to around 2000 meters (6563 ft.)

• Land Acquisition and securing Right of Way

• Heavy Monsoon Season of 3 months (9 months effective in a year)

• Forest Clearance• Major river crossing

• Trishuli• Kali Gandaki• Seti

MCA Partnership program• ETP includes the MCA Partnership

program as a benefit sharing component of ETP;

Intent: Benefit sharing is intended to ensure that the benefits from infrastructure development are equitably shared with people directly and indirectly affected by the project which goes beyond compensation and mitigation measures;

Thematic Areas

• Thematic Area 1: Extension and upgrading of grid‐based electricity distribution system Extension of grid‐based electricity distribution system Upgrading of grid‐based electricity distribution system

• Thematic Area 2: Provision of off‐grid electricity solutions Off‐grid solutions to households Off‐grid to public institutions (schools/hospitals) Multiple use of water (irrigation/drinking water)

• Thematic Area 3: Provision of capacity building support to increase benefits of electricity Municipal Energy Plans Trainings

MCA Partnership program Status

• Framework developed• Framework workshop conducted• Data collection for Sub‐Activity

ongoing• Sub‐activity consultation to be

done by December 2019• Expected date for construction

bid release for thematic area 1 by August 2020

• Expected date for Request for proposal for Thematic area 2 and 3 by March 2020

Additional Employer’s Requirements of Note

Respect IFC Performance

Standards

Respect environ. & social clauses

Abide by health & safety plans

Engage with stakeholders

Gender & Social

Inclusion Plan

Expected Timeline

Activities 2020 21 22 23 24 25Jan Feb Mar Apr MayJun Jul Aug SepOctNov Dec Jun Jul Jun

Bid Release (in web & Newspaper)Site visitPre-bid meetingBid SubmissionTechnical Bid openingFinancial Bid OpeningAward of contractConstruction PeriodDefect Notification Period

Future Outreach Event

• Delhi – November 29, 2019

For more information

• MCC-funded business opportunities, please visit:

www.mcc.gov/work-with-us

• For information on MCA-Nepal business opportunities, please visit

www.mcanp.org• For Q&A regarding the procurement, please contact

info@mcanp.org

Thank you

Environmental and Social Issues in Transmission Line

ETP Transmission Line Routes

Adverse Environmental and Social Impacts of Transmission Line

Land needs to be acquired for transmission towers – private land or forest.

Restriction on the use of RoW land –46m, 23m on each side.

Access roads needed for transporting construction materials.

Adverse Environmental and Social Impacts of Transmission LineLandslides/soil erosion

Pollution

Health and safety issues

Trafficking in Person

MCAN/MCC Policies

• Follow GoN rules and regulations including Land Acquisition Act, Environment Protection Act, and Regulations, Forest Acts.

• Follow MCC Environmental Guidelines and International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability.

• Follow MCC Gender Policy and Social and Gender Integration Guidelines.

• Follow avoid, Minimize, and Mitigate hierachy.

Avoidance (Examples)

• Avoid biodiversity hotspots.• Avoid settlements.• Avoid cultural heritages.

Minimize (Examples)

• Minimize forest clearance by appropriate tower designs, use of helicopters, drones, etc.

• Minimize the need for access roads by use of porters, helicopters, etc.

Mitigate (Examples)

• Use of bird diverters. • Reforestation.• Slope stabilization/rehabilitation works.

Thank You!

Electricity Transmission ProjectOutreach Event and Feedback Session-Kathmandu, Nepal

18 November 2019

PROCUREMENT ASPECTS

OBJECTIVES OF THE PRESENTATION

• Provide an overview of the Procurement Process under MCC Procurement Guidelines

• Provide Information regarding the Procurement Aspects• Receive Questions Clarifications from Participants

TABLE OF CONTENT

• MCC Procurement Guidelines and Procurement Principles• Procurement Method• Scoring Methodology

• Procurement Safeguards• Tentative Procurement Schedule

MCC Procurement Guidelines and Principles

• Conceptual Procurement Framework is taken from World Bank, with several differences

• Eligibility Criteria• More Emphasis in Quality Rather than Price• Involvement of the Donor and MCA Board• Price Reasonableness • Bid Challenge System• Awarding decisions made by Consensus rather than average• Procurement Agent (Independent) conducting all Procurements

MCC Procurement Guidelines and Principles

• Four Principles Shape the PPG (https://www.mcc.gov/resources/doc/program-procurement-guidelines

Open, fair and competitive procedures used in a transparent manner to solicit, award and administer contracts

Solicitations based on a clear and accurate description of the goods, works or services to be acquired

Contracts awarded only to qualified and capable suppliers and contractors that perform in accordance with the terms and conditions of the applicable contracts and on a cost-effective and timely basis

No more than a commercially reasonable price is paid to procure goods, works or services

MCC Procurement Guidelines and Principles• Nepal’s Government Procurement Act and Rules Does Not Apply• PPG’s Structure

• Fifteen (15) Parts • Two (2) Attachments• Ninety-Two Pages (March 2019 Release)• https://www.mcc.gov/resources/doc/program-procurement-guidelines

• Publication Requirements• DgMarket• UNDB• Local Newspapers• MCA-Nepal Web Page https://mcanp.org/• MCC Web Page• U.S. Embassy• Specialized Publications

GOE Policy

1. No Government-Owned Enterprises (GOE) allowed to bid for goods & works procurements

2. What is a GOE? “Government-Owned Enterprise” or “GOE” is any enterprise established for a commercial

or business purpose that is owned and/or controlled by a Government (whether directly or indirectly).

“Government” means one or more governments, including any agency, instrumentality, subdivision or other unit of government at any level of jurisdiction (national or subnational).

“Owned” means a majority or controlling interest (whether by value or voting interest) of the shares or other ownership interest of the entity is owned (whether directly or indirectly and whether through fiduciaries, agents, or other means).

7

Other Key Aspects

1. MCA runs procurements and manages contracts with Procurement Agent support

2. Firms must be eligible for U.S. funding: There is comprehensive verification process in place

3. 6 to 9 months from solicitation to contract award

4. Evaluation panel composed of technical experts

5. Best value procurement

6. Price evaluated for reasonableness

7. Infrastructure/Construction Projects require an external (non- MCA) projectmanager/Engineer

8

Procurement Method

• No Pre-Qualification-Shortlisting Process envisaged• The selected Method is Quality Price Based Selection (QPBS)• QPBS VS Lowest Evaluated Bidder

Quality and Price Based Selection (QPBS)

• Emphasis on best value (quality, not just lowest price)

• As an exception to the lowest evaluated bid principle MCA-Nepal will use a Quality and Price Based Selection (QPBS) methodology

• Two stage evaluation process- Technical and Financial (Combined Evaluation)

• “As such the contract shall be awarded to the qualified bidderwhose bid has been determined to have the highest combinedtechnical and financial score”

10

Evaluation Process

• Proposal’s Evaluation is conducted by a Technical Evaluation Panel• MCA-Nepal Staff• Project Partners Public Sector• Private Sector participation (Local/International)• Auxiliary Members Expertise Available

• Members of TEP selected by their technical competence• Facilitated by the Procurement Agent• Supervision from MCC• Many safeguards to keep the integrity of the evaluation process

• Impartiality and Confidentiality• No Conflict of Interest

Scoring Methodology and Evaluation

For works: Shall be fully disclosed in the bidding document. Usually for works Bidding Document for Design and Build Contracts procurement based on QPBS the Qualification and Evaluation Criteria are as follows:• Technical

• Administrative Compliance Review• Legal Status• Financial Criteria• Litigation and Poor Performance Criteria• Qualification Review• Reference and Past Performance Review• Technical Evaluation Criteria

• Financial• Review of Price and Price Reasonableness• Combined evaluation• Multiple Lots award determination

Bid Challenge System-Key Features

• A debriefing process in place• Two level for filing a protest• Level 1 Authority to decide on a protest is the MCA-Nepal Executive

Director• Level 2 Authority is an independent body, designed to review decision

of Level 1 Authority• To File a Level 2 Appeal, fees will apply.• Decisions of Level 2 Authority are final• Fraud and Corruption can not be used as reason to submit protest

MCC Procurement Guidelines and Principles

• Zero Tolerance to Fraud and Corruption• MCC has available several mechanism to deal with allegations of Fraud and

Corruption.• Fraud and corruption shall be reported as per MCC Policy of Preventing,

detecting and Remediating Fraud and Corruption.

Procurement Process Safeguard

• Several layers of review and approvals• International Expertise (on MCC procedures) for conducting the procurement• Independent private sector consultants participating in evaluation• Open access to Request For Proposal documents• Pre-proposal conference and Clarification Period• Mandatory procedure for debriefing to unsuccessful bidders• Bid Challenge System in place (see web page)

Tips for Winning Contracts

• In-country contractors and consultants are encouraged to form alliances with international firms to enrich and enhance their experience.

• MCA/MCC Bidding Documents should be reviewed carefully, as MCC uses its own bidding documents.

• Ensure your bid is signed and submitted before deadline of submission.• Bidders should, as best as possible, use the forms provided in the bidding documents,

rather than use their own.• Bidders are encouraged to read through the MCC Program Procurement Guidelines.

17

Tips for Winning Contracts

• Fixed Price Contracts. Understand that most MCC contracts are fixed-price contracts, andthe decision is price-sensitive, so put in your best possible price.

• Zero Tolerance to Fraud and Corruption.• Bidders are encouraged to request information and clarification from the MCA if there is

anything they do not understand, of if they require more information.• Understand MCA’s Bid Challenge System

18

Other Key Procurement Tips

• Bid Security required– ensure it accompanies the bid with the corresponding bank

enforceable in Nepal.

• Advance payment requires a bank guarantee, enforceable in Nepal.

• Performance bank guarantees, similar conditions apply.

• The standard bidding document (SBD) contract formats have been reviewed and

approved by MCC– agree to them before bidding.

19

Procurement Schedule

• Procurement to be Launched: Early 2020• Submission of Proposals: Mid 2020• Evaluation of Proposals: 2 months• Awarding Date: Third Quarter 2020• Commencement date: Early Fourth Quarter 2020• Completion of Works: Mid 2024• DLP : Ends on June 2025

Question and Answers

Questions and Answers

Thanks!!!

Millennium Challenge Account Nepal (MCA-Nepal)

Electricity Transmission Project (ETP)Substation Activity

Outreach Event

Kathmandu

18/11/2019 1

Electricity Transmission Project

Features:• Project supports to increase in country per capita

electricity consumption • 3 x 400 kV major substations

18/11/2019 2

Project Location(route map)

KTM-GALCHI-RATMATE S/S : 62km

KTM-MUGLING-NEW DAMAULI S/S : 153km

KTM-NARAYANGHAT-NEW BUTWAL S/S : 239km

18/11/2019 3

Substation Details-Ratmate S/S

ParameterLocation Nuwakot DistrictCoordinate 27°51'3.89"N, 85° 3'11.79"EType GISNominal Voltage 400 kV and 220 kVBus Configuration Breaker and half Capacity 1,000 MVA

18/11/2019 4

Substation Details-New Damauli S/S

ParameterLocation Tanahu District Coordinate 27°58'3.57"N, 84°17'41.25"EType GISNominal Voltage 400 kV

Bus Configuration Breaker and half configurationCapacity 1,000 MVA

18/11/2019 5

Substation Details-New Butwal S/S

ParameterLocation Nawalparasi-West DistrictCoordinate 27°34'25.63"N, 83°41'19.44"EType GISNominal Voltage 400 kVBus Configuration Breaker and half configurationCapacity 630 MVA

18/11/2019 6

Substation Works Key Features

Substations• 400 kV GIS Substation• 3.5 years construction period• Design-Build (FIDIC Yellow Book)• Expected date of bid launch: Jan 2020• Quality-Price Based Selection• Expected contract signing date: Oct 2020

18/11/2019 7

Project preparation and construction supervision

• Project preparation consultant in place to support project preparatory works

• Quality of Engineering as well as E&S related deliverables top priority

• As per FIDIC provisions, ENGINEER will be in place for reviewing design/drawings and

ensuring quality of construction works during project implementation phase

• Project end date is already defined and under no circumstance the same may be extended

18/11/2019 8

Resettlement and Land Acquisition

• Resettlement policy framework finalized and approved

• Entitlement Matrix approved

18/11/2019 9

Project Status

• Land acquisition status for three main substations

• New Butwal Substation: Land acquisition and compensation related issues resolved

• New Damauli Substation: NEA has initiated land acquisition process and is expected to

complete in few months time

• Ratmate Substation: it will be completed in advance of contractor mobilization just

because of some uncertainties

18/11/2019 10

Project Status contd…

• Land acquisition status for other two substations(Only some interface activities)

• New Hetauda Substation: Land acquisition and compensation related issues resolved

• Lapsiphedi Substation: Land acquisition and compensation related issues resolved

• Geotechnical investigation works at S/S locations mostly completed

• Draft EIA document in advanced stage of preparation

• Tender level Engineering Design/Drawing/Tech.Specs nearly complete

18/11/2019 11

Challenges

• Transportation of heavy and bulky equipment

• Design load bearing capacity of road, its condition and width

• Design load bearing capacity of bridge and its condition

• Land Acquisition for RatmateS/S

• it will be completed in advance of contractor mobilization just because of some uncertainties

• Active monsoon season of around three months in a year

• Major festival season affectingaround one month of work per year

• Defined project completion date i.e.June 29, 2025

18/11/2019 12

Expected Timeline

Activities2020 21 22 23 24 25

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec JunBid Release (in web & Newspaper)Site visitPre-bid meetingBid SubmissionTechnical Bid openingFinancial Bid OpeningAward of contractConstruction Period

18/11/2019 13

Possible adverse E&S impacts of substation construction

• Public and/or private land needs to be acquired for Substation and access roads.

• Pollution (Air, Water, Fuel, Lubricating Oil and Noise)

• SF6 Gas Leakage possibility

• Pressure on community resources (e.g. existing roads, water, trees etc)

• Trafficking in person.

18/11/2019 14

MCAN/MCC Policies

• Follow GoN rules and regulations including Land Acquisition Act, Environment Protection Act, and Regulations, Forest Acts.

• Follow MCC Environmental Guidelines and International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability.

• Follow MCC Gender Policy and Social and Gender Integration Guidelines.

• Follow avoid(settlements, cultural heritages, schools, health posts etc), minimize(land requirement by using GIS technology etc.) and mitigate(using good condition silent DG sets, water sprinkler etc) hierarchy.

18/11/2019 15

Additional Employer’s Requirements

Respect IFC Performance

Standards

Respect environ. & social clauses

Abide by health & safety plans

Engage with stakeholders

Gender & Social Inclusion

Plan

18/11/2019 16

Future Outreach Event

• Delhi – November 29, 2019

18/11/2019 17

For more information

• For MCC-funded business opportunities, please visit: www.mcc.gov/work-with-us

• For information on MCA-Nepal business opportunities, please visit: www.mcanp.org

• For Q&A regarding the procurement, please contact: info@mcanp.org

18/11/2019 18

Thank you

18/11/2019 19

Power Sector Technical Assistance Activity

NEA Readiness Assessment AndERC Support Assessment

18th November 2019

Outreach Event

1

Nepal Compact Highlights

• MCC and the Government of Nepal entered into a Compact to help facilitate poverty reduction through economic growth in the amount of $500 million USD.

• The Millennium Challenge Account-Nepal (MCA-Nepal) has been established as the legal and accountable entity in Nepal.

• As such, MCA-Nepal is responsible for implementation of the Compact.• MCA-Nepal will procure all goods, works, and services funded under the

Compact using the MCC Program Procurement Guidelines, and will enter into contracts and administer all such contracts.

• All program disbursements must be made within five years of entry- into-force (EIF) of the Compact, which is scheduled for June 2020. (July 2020 to June end 2025)

Reducing Poverty Through Growth19-Nov-19 2

Electricity Transmission Project

The overall objective of the MCC Compact with Nepal is“To increase domestic consumption of electricity and to support increased

regional power trade.”

Objective of Electricity Transmission Project (ETP) is “To increase domestic electricity supply for consumption by improving the

availability and reliability of electricity in Nepal’s electricity grid.”

Components of ETP:• Transmission Line Activity• Substation Activity• Power Sector Technical Assistance Activity• Program Management and Technical Oversight Activity

Outcomes:•Add 3,920 MW Tx capacity; reduce losses to 1.9%•Support 3x increase in electricity consumption per capita Approx. 312 km – 400 kV Tx lines (~850 towers)3 x 400 kV substations

Overview of ETP

4

The Parties will perform their responsibilities under this Agreement in accordance with the following documents, as amended from time to time (collectively, the “Key Documents”):

1. the Compact (US Government Grant Agreement); 2. the Program Implementation Agreement – addendum to the Compact; 3. the MCC Cost Principles for Government Affiliates Involved in Compact

Implementation; 4. the MCC Program Procurement Guidelines.

Guiding Key Documents

5

MCC Directives

MCC Technical Directive Nepal-01: Directives to assess needs for effective operation of newly formed ERC and NEA’s

readiness and ability to respond

MCC Technical Directive Nepal-11: Directives to assess gaps and areas for TA to NEA including its Environment and Social

Studies Department (ESSD)

6

Power Sector Technical Assistance ActivityDescription of the Project

Aim of the Activity is to Support the Electricity Regulatory Commission (ERC) and Nepal Electricity Authority (NEA)

Project For ERC/NEA- Directive 1 Analyze risks and opportunities to the Nepal Electricity Authority (NEA) presented by the

establishment of an Energy Regulatory Commission (ERC) and assess NEA readiness and ability to respond.

Support efforts to pre-position Compact to move forward with support to the ERC once operationalized.

Project For NEA-Directive 11 Helping NEA for improvement in transmission line business in the areas of regulatory cost recovery

and improved grid operation Training in system and market operation Financial Management for transmission transactions and assets Targeted human resources policies and job clarifications

7

Status of TA Activities to ERC/NEA

Activity to Support ERC and NEA, MCA is performing NeedsAssessment

Activities:Consultations with ERC and NEA has been completed

Joint high level workshop with NEA officials, ERC, Line Ministry & Bilateral Organization was completed

Draft report has been circulated to NEA for their comments and observations.

MCA- Nepal is planning to proceed the procurement process after receiving the final report from the consultant.

8

Status of TA Activities to NEA

To provide Technical Assistance (TA) to Nepal Electricity Authority (NEA)MCA is performing Needs Assessment

Activities:

Task 1: Technical Assistance to NEA

Consultations with NEA has been completedJoint high level workshop with NEA officials, ERC, Line Ministry & Bilateral Organization was

completedMCA- Nepal is planning to proceed the procurement process after receiving the final report

from consultant.Task 2 Sub-Transmission System Modeling and System Protection

Spatial load forecast, Sub-transmission expansion plan and system protection coordination study is ongoing

9

Technical Assistance to ERC/NEA

10

Implementation Framework For ERC TA

• Foundation Phase Activities• Advance Phase Activities

Note: Study is still ongoing and presented activities are based on the draft phase of the study. Activities may change / modify in the final phase of the Study.

11

Support to ERC/NEAOverall Logic of MCA’s Technical Assistance to ERC

12

Foundation Phase Support Activities

• Professional and organizational development (capacity building) for Members and senior staff, including,

• Assistance with the further development and implementation of the ERC’s Strategic and Organizational Plans.

• Service as embedded regulatory expert advisor to Members pending the development of expert advisors on ERC staff.

• Exposure to regional regulators; membership in regional regulatory organizations; reciprocal visits with regional regulators. Initial focus will be visits to jurisdictions with vertically integrated utilities similar to NEA, both successful and not.

• Publication, subscriptions and organizational memberships.• Attendance at relevant conferences.

• Support for establishing foundational documents at ERC• Rules of practice and procedure.• Costing and Pricing By-laws, Directives and Cost Models.• Additional substantive rules as needed.• Hardware and software for basic cost of service models for generation, transmission, distribution

and trading licensees available to Finance, Engineering and Economic staff. 13

Foundation Phase Support Activities

• Infrastructure• ERC Regulatory Information Management System (RIMS).• Docketing system and Document Management System (DMS).• Website with electronic filing and reporting, consumer information, access to DMS.• Hardware/software needs of permanent staff.

• Basic training for employees• Training in regulatory theory and practice for each discipline.• Training on elements of a tariff filing.• Training in embedded and marginal cost theories.• Training on elements of tariff design and evaluation for Generation,

Transmission, and Distribution services.• Establishment of internal training protocols for on boarding new employees;

developing in-house trainers.• Site visits to generation, transmission and distribution facilities.• International training visits, including travel to jurisdictions that are developing

competitive wholesale or retail markets14

Foundation Phase Support Activities

• Support in Technical Areas• Training in basic transmission and distribution grid planning and operations• Training in technical areas required to evaluate proposed technical codes; support in

designing and evaluating the grid code, other technical codes and cross border regulations.

• MCA Consultant to assist ERC staff on evaluation of technical filings, including reliability measures, interconnection standards and similar technical matters.

• Training on the functioning of competitive wholesale electricity markets, transmission open access regimes, financial transmission rights, compensation for wheeling, etc.

• Training on Open Access and Transmission Charges.• Training on Cross Border Electricity Trade

15

Foundation Phase Support Activities

• Management Function• Assist in developing a system for evaluating employee performance; develop

performance indicators; train supervising employees on employee performance evaluations.

• Formalize “3-tier” decision-making process; designate advisory staff and assist in their development.

• Supervise/manage staff of combined interim and permanent employees; advise the Commission Secretary.

• Advisory Function• Senior MCA Consultant develops and manages team of advisors to fulfill the

second tier of the decision-making process.

16

Advance Phase Support Activities

• Professional and Organizational Development• Advanced regulatory training in U.S. for Members.• Annual commission-wide planning retreats.• Participation in NARUC Commission international exchange program.• Commission Information Meetings (CIMs) with industry/consumer presentations.

• Advanced training for permanent staff• PURC/World Bank training at University of Florida or similar opportunities.• Ongoing in-house training on advanced technical and financial topics using expert

consultants.

17

Advance Phase Support Activities

• Additional Infrastructure• Provision of office automation system (IT-based workstations) in new offices, including

software/hardware/server and other necessary office logistics.• Pickup van and vehicles for ERC members and staff.• E-Court and E-Hearings capability.

• Guidance and capacity building for advanced topics; consultant-led in-house training modules on:

• Systematic approaches to reviewing utility filings.• Tariff modeling and analysis.• Open access transmission; developments of rules and tariffs.• Least cost planning• Training on theory of least cost planning• Training on system expansion software• Competitive bidding for IPPs.• Performance-based regulation.• Mitigation of market power with tools such as divestiture and pricing limits.

18

Advance Phase Support Activities

• Management Functions• Support and assist the develop permanent management staff, including

preparation of Terms of Reference and Position Descriptions for use in recruitment.

• Advise Members on legislative proposals• Training on E-court and E-hearing system.

19

Overall Logic of MCC’s Technical Assistance to NEA

20

Technical Assistance Activities for NEA

Technical Assistance Category

Illustrative Activities

Regulatory Readiness

⇒ Work with NEA management to design a regulatory compliance unit.⇒ Create job descriptions and/or terms of reference for personnel in the regulatory unit.⇒ Recruit or supply regulatory specialists to staff regulatory unit⇒ Support consultant to train and advise regulatory unit staff.⇒ Establish liaison to engage with ERC members and staff.

Regulatory Accounting⇒ Supply consultant with experience in regulatory accounting.⇒ Provide liaison to ERC financial technical staff on accounting requirements

Tariff filing

⇒ Embed consultant(s) to assist NEA staff in preparing a tariff filing;⇒ As needed, train NEA staff and assist staff in the preparation of a revenue requirements

study;⇒ As needed, train NEA staff and assist in the preparation of a marginal cost of service

study;⇒ As needed, train NEA staff and assist staff in the preparation of a class cost of service

study;⇒ Provide regulatory legal assistance in preparing application for a revised tariff. 21

Technical Assistance Activities for NEA

Technical Assistance Category Illustrative Activities

Rate design⇒ Fund consultant to produce or assist in producing TOU/Seasonal

studies. ⇒ Fund possible international visits to utilities for consultation.

Least cost planning

⇒ Fund vendor training on software; ⇒ consultant to review load forecast; ⇒ assist preparation of plan with sensitivity analyses, as required by

ERC.

Energy Efficiency & Demand Response

⇒ Fund EE and DR capacity study;⇒ Design EE program⇒ Identify all cost-effective measures⇒ Analyze impact on Low and Moderate Income (LMI) customers⇒ Integrate EE and DR into least cost planning effort

Seasonal Costing and Pricing Studies

⇒ Fund engineering consultant to provide marginal cost study with seasonal analysis.

22

Technical Assistance Activities for NEA

Technical Assistance Category Illustrative Activities

Data Analysis

⇒ Survey all system and customer data currently collected⇒ Assess quality of data⇒ Research use cases for data⇒ Fund consultant to design data use function within NEA⇒ Fund international exposure to utilities with successful data analytics.

Unbundling

⇒ Fund consultant to review progress of functional unbundling and to prepare plan for full unbundling in advance of the creation of a competitive wholesale market.

23

Key Investments: Regulatory Support

Activity Description Procure Launch (Expected)

Embedded Regulatory Advisors

• Up to 4 embedded technical and mgmt. advisors at ERC• Capacity building, analysis, guidance & mentoring

Early-2020

Tariff Study • Developing tariff methodology & guidelines• Assessment of subsidies & affordability

Early/mid-2020

Regulatory Info & Docket Mgmt. Systems

• Development of requirements/specs & scoping• Supply & installation of RIMS & DMS w/training

Mid-2020Early/Mid-2021

Technical Code Development Support

• Development of updated Grid Code, planning code• Training & consultations

Early-2021

Social Equity Integration & Consultation

• Study/analysis of key issues on social equity in electricity sector & integration in regulatory requirements

• Training on stakeholder engagement & social equity issues

TBD

Miscellaneous logistical support

• Basic hardware/software & other operational requirements TBD

24

Technical Assistance to NEA

25

NEA Challenges

• Achieving investment goals in generation and network expansion• Meeting network capacity requirements• Improving system reliability• Improving financial viability

26

Areas of Activities

• Business Operations – Asset Management• Network Planning• Network Operation• Network Maintenance• Engineering• Environment & Social Impact Management• Finance

Note: Study is still ongoing and presented activities are based on the draft phase of the study. Activities may change / modify in the final phase of the Study

27

Business Operations Overviews- Asset Management

Business ProcessEstablishing performance measures and managementAdopting the industry standard Asset Management Model

Activities on Asset Management:• Asset Management Model and Process Implementation• Asset Management Information System• Asset Maintenance Improvement Program

28

Network Planning

Activities on Network Planning:• Electricity Demand Forecasting (spatial demand forecasting) and

training• Upgrading of PSS/E facilities at NEA and training• Capacity Enhancement of Transmission Network Planning and

Function• Restructuring the system planning function to make it efficient

29

System Operation

Activities on System Operation:• Upgrade of the Grid Code, technical codes for transmission, distribution,

interconnection, etc• Capability EnhancementStructured training programs on all aspects of maintenance functions to maintain

competency level (off-site and on-job)Health and safety trainingTraining in System Operations areas for knowledge development

• INPS Protection Coordination Study• Implementation of Digital Fault Recorder in substations

30

Network Maintenance

Activities on Network Maintenance:• Enhanced Geographic Information System (GIS) Application• Aerial-based Maintenance Program Activities for inspections, restoration and commissioning

• Live Line Maintenance Program Activities for OH line and substation

• UAV-based Maintenance Program Inspection and aerial survey

• Mobile Information Technology Platform Information flow and reporting

• Specialized Testing and Measuring Devices Equipment testing, corona testing, real-time line rating and condition monitoring

31

Engineering

Activities are:• Consolidating project management function for

• Transmission line projects• Substation projects

• Improving staff technical skills in • design requirements and engineering of construction projects• project management, contract & procurement management

• Establishing centralized project data and drawings management system

32

Environment & Social Impact Management

Activities are:• Improvement of Social and Environmental Policies and Legal Framework

• Environmental and Social Polices and Program• Corporate Social Responsibility Program • Project Communication Plan

• Optimization of ESSD structure and role within NEA• Revision of the ESSD structure and effective• Establishment of a ESSD mission and system for interaction with other departments

• Improvement of the ESSD team and performance (personnel and equipment)• Development of methods and tools for ESIA and monitoring of transmission lines• Development and implementation of a training program• Development and implementation of a knowledge management system• Development and implementation of a simplified mechanism to acquire external consulting

services• Upgrade and modernization of equipment used for data collection and study reports 33

Support Activities : Finance

Need RecommendationImplementation of Fully Integrated ERP System

Identify and support in areas where additional resources and capacity could be supplement the ongoing ERP implementation process

Compliance with Accounting Standards Identify and support in areas where resources and capacity could be provided in compliance with Accounting Standards

Budget Management and Financial Forecasting

Review and improve financial forecasting, resource planning and budget management processes with capacity building and systems

Investment Analysis, Capital Budgeting and Funding

Organization-wide review; Development of Policies and Procedures; Implementation of streamlined and up-to-date techniques

Implementation of Cost-Reflective and Regulated Tariffs

Provide additional resources and capacity in ongoing tariff scheme changes and interface with the Regulator

34

Key Investments: Transmission Business Strengthening

Activity Description Procure Launch (Expected)

Asset Management Model Advisor

• Utility experts for analysis, process review & update, capacity building to introduce asset mgmt. model

Early-2020

Asset Management Info System

• Software/info system to support asset mgmt. model at NEA• Scoping & requirements/specs; supply & install

Mid-2020

Training & equipment to support Utility Operational Activities

• Network development including design standards/technology, environmental/social assessment & monitoring, project & contract management

• Asset maintenance including condition assessment, monitoring, live-line maintenance,

Mid/Late-2020

System Planning support • Software upgrades & training• Process strengthening & capacity building

TBD

System Operations • Protection & control coordination updates• Substation automation strengthening • Analysis & updates to scheduling, dispatching, settlement

TBD

35

Thank You

36