Solar Project

SOMALILAND ENERGY SECTOR

The Somaliland energy sector is one of the most underdeveloped in the world. Low electrification rates, high cost of power, high technical and commercial losses, and dependence on imported petroleum products for electricity generation mean that only a very small fraction of the population has access to affordable, safe, and reliable energy services. Unfavourable economics imply that it is likely that a large part of the Somaliland population will not be reached by the national grid or mini-grids even in the long term. Standalone off-grid solar (OGS) solutions are therefore a viable alternative for electrification. A recent study commissioned by the World Bank estimated the total market size for OGS products in both Somalia and Somaliland at $108 million. Despite its potential, however, the market for OGS continues to suffer from critical gaps and inefficiencies, including limited access to business and consumer finance, weak infrastructure, and market spoilage due to a proliferation of low-quality imitation products. Given the nascence of the sector, most Somaliland solar businesses are still entirely self-funded, and are unable to place larger inventory orders or invest in sales and distribution infrastructure. To help address these challenges, the Government of Somaliland (GoSL), with support from the World Bank, is setting up a Somaliland Off-Grid Solar Grant Facility to provide grant capital to Somaliland distributors of IEC certified products. Grants are intended to provide companies with flexible capital to invest into business growth.


GRANT FACILITY STRUCTURE

The overarching objectives of the Facility are: (i) to support household and SME access to IEC verified OGS systems across Somaliland; (ii) to support the growth of earlier-stage and/or local solar companies where possible; (iii) to enable distributors to sell products on a pay-as-you-go (PAYGO) basis where possible, thus increasing affordability; (iv) to promote off-grid energy access in remote and rural areas; and (v) to set a foundation for high-potential solar operators to access future funding to further scale operations in Somaliland. The Facility will award up to US$700,000 to compensate OGS product distributors for the initial, incremental, and opportunity costs associated with an expansion of operations in Somaliland. This amount may increase with future co-funding from other development partners. Under the Facility, successful grant applicants will be able to draw down on grant awards through two distinct mechanisms:

• Expansion RBF: Results-based financing (RBF) to OGS distributors, with a fixed per-unit payment made for each IEC approved solar system sold, paid after successful verification of the sale. These grants will provide distributors with much-needed capital to build internal capabilities, invest in sales and distribution infrastructure, pilot new and innovative businesses and customer service models (including pay-as-you-go models that enable customers to pay in installments), and build up liquidity to act as collateral for future debt finance from local banks. Expansion Grants will be primarily targeted at businesses specializing in solar home system distribution, or other institutions looking to enter the solar distribution market. The Facility will award up to $560,000 in Expansion RBF.

• Seed RBF: Since effective results-based financing requires that recipients have access to sufficient inventory, infrastructure, and capacity to self-finance initial operations, successful grant awardees will have the option to draw down on a portion of their grant award upfront in the form of a Seed RBF. The Seed RBF will be paid out on the same per-unit basis as the Expansion RBF, but unlike the Expansion RBF will be disbursed in advance of actual sales. Once the sales against which the Seed RBF was awarded have been made, grant awardees will be able to submit subsequent sales for Expansion RBF disbursement. The Facility will award up to $140,000 in Seed RBF.


GRANT FACILITY MANAGEMENT

Dahabshil Bank International (DBI) has being awarded the responsibility for the successful management of the grant Facility towards achieving the set deliverables. Dahabshil bank international is the first fully fledged Sharia Compliant bank to be approved and licensed by the Central Bank of Somalia and Somaliland offering banking services on a complete Sharia Compliant system. The Bank received formal approval from the Central Bank of Somalia and Somaliland, thereby opening the door for Sharia compliant banking not only inline the entire Somali region. Our value proposition is ‘‘Islamic bank you can trust’’ delivering innovative Sharia Compliant financial products, services and solutions to our valued clientele. We offer our banking services and solutions to every individual irrespective of their religion, race, colour and creed. The Bank has 20 fully fledged branches across Somali region and several counters at its Dahabshil money transfer and remittance company operating as agents of the bank. The changing business environment, insecurity, democratization, technological developments, globalization and societal dynamism present opportunities for those organizations positioned to take advantage of them whilst they can present threats to the unprepared. DBI is well positioned to exploit these opportunities. As time wears on, an organization must be aware of the change in its environment where necessary, must also be dynamic and adaptable to change. Therefore, as the bank prepares to embark on this journey, we have found it worthwhile to modify our future and bring on board likeminded partners to better share our future outlook. I have no doubt that the board and staff of the bank are more than willing in welcoming you as a strategic partner.


Business Eligibility & Selection Criteria

Individual companies’ small and medium companies (SME); for example, pay-as-you-go (PAYG) businesses, over-the-counter businesses, wholesale distributors, and partnerships that consist of a combination of these companies are eligible to apply for the Grant. The following table summarizes the eligibility criteria:

Established Local Operations – Local Companies with at least a one-year track record of selling OGS products and newly established OGS firms.

Financial statements – including audited statements where available.

Quality Products – eligible companies will be selling IEC certified solar products up to 350Wp.

Quality of operations – appropriate staff or commitment to deploy appropriate staff at a functional level.

Warranty and after-sales service – must offer a warranty in compliance with Lighting Global requirements for pico-PV and solar home system products and have an established and active after-sales service capability.

Business plan – including a minimum one-year forecast balance sheet and P&L showing a well-managed cost structure and a clear path to break-even and profitability.

Compliance with relevant national regulations pertaining to licensing, tax, legal, and accounting.

Recycling – must have a policy and a plan for the recycling of system components at end of life, particularly batteries.

Customer data – companies must capture and track customer data in sufficient detail to allow for reliable verification of sales.

Collections and portfolio management – metrics and procedures to track portfolio quality, including a minimum of PaR 30, and adequate collection practices.

• Businesses having the following features will be given preference:

Gender balance: -OGS companies who provide solutions that has strong gender inclusivity will have added advantage in the form of extra points during the evaluations

Environmental and Social integration: - OGS companies who have integrated E&S protocols in their operations or have a solid strategy to integrated E&S safeguards in their process will be considered exceptional.

Peri urban and Rural customers: - OGS with the ability to distribute products and services in rural areas including farmers and nomads will be considered exceptional in the evaluation.

Sr # Procurement Procedure Deadline
1. Conduction of Lunch Event November 10, 2020
2. Issuance of Bidding Documents December 06-19, 2020
3. Return of Acknowledgement Form No later than December 19, 2020
4. Submission of Queries No Later than December 19, 2020
5. Pre-bid Conference December 24, 2020
6. Issuance of Clarifications December 30, 2020
7. Last date for acceptance of Bids January 15, 2020
8. Submission of Evaluation Report January 25, 2021
9. Completion of Due Diligence of Successful Applicants February 05, 2021
10. Announcement of Results February 06-10, 2021
11. Award of Contract February 15, 2021

Project Documents:

1. Grant Facility Implementation Guidelines 2. Request for Expression of Interest
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