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EUROPEAN COMMISSION EuropeAid Co-operation Office Sub-Saharan Africa, Caribbean, Pacific Energy Facility BENEFICIARY INTRA-ACP COUNTRY / REGION REQUESTING ACP-EC COUNCIL OF MINISTERS AUTHORITY TITLE ACP-EC ENERGY FACILITY TOTAL COST 220 M€ AID METHOD Project approach 8.6 % OF TOTAL IDENTIFICATION N° RPR/ 009/ 05 INTRA-ACP ALLOCATION INTRA-ACP (conditional OF 2563 M € billion – Natural resources) ENERGY GENERATION DAC-CODE 230 (multiple areas) SECTOR AND SUPPLY 1. RATIONALE 1.1. Strategic framework Energy in EC development policy The Commission‟s Communication of 2000 -“The European Community's Development Policy”1- recognised the importance of energy while focusing on the reduction of poverty. The commitment to energy and development was further reinforced in 2005 by the Joint Statement on Development2 and the Commission‟s Communication on an EU Strategy for Africa3 (adopted by the EU Council on 15/12/2005)4. Following the announcement of the EU Energy Initiative (EUEI) in February 2002, and in preparation of the World Summit on Sustainable Development (WSSD) in Johannesburg, the Communication “Energy Cooperation with the Developing Countries”5 established a framework for energy cooperation with these countries. The General Affairs Council conclusions in April 2004 requested the Commission to take the lead in responding to 1 COM(2000) 212 2 14820/05 3 COM(2005)489 4 D/05/04 5 COM(2002) 408 Energy Facility FP Draft.v5 - 11/04/2011 1 priorities expressed at the EUEI “Energy for Africa” conference in Nairobi (November 2003). Recognising the specificity of Caribbean and Pacific small island states, the focus will be on the promotion of energy efficiency and renewable energy options to help lift existing constraints to development. This was confirmed in the Mauritius UN conference “To tackle concerns of small island nations” in January 2005. The international policy framework – the EU Energy Initiative (EUEI) During the WSSD in 2002 in Johannesburg, the international community took an important step in recognising the crucial role of energy for reaching the Millennium Development Goals (MDG). At WSSD, the EU launched an EU Energy Initiative for Poverty Eradication and Sustainable Development (EUEI), to contribute to the achievement of MDGs, in particular the goal of halving the number of people in extreme poverty by 2015. This is to be achieved through the provision of adequate, affordable, sustainable energy services to the poor. The EUEI is a joint effort of the Commission and the Member States creating synergies between their respective development policies and activities. It is implemented through dialogue and specific partnerships with developing countries, including cooperation with civil society, the private sector and financial institutions. At the same time, the EU launched the Johannesburg Renewable Energy Coalition (JREC), i.e. high- level initiative focusing specifically on renewable energy issues and complementing EUEI and other EU-led energy partnerships. 6 Approval of the ACP-EC Energy Facility After Johannesburg, the Communication “The World Summit on Sustainable Development one year on: implementing our commitments”7 took stock of the EUEI development in late 2003, recognising the need for adequate funding. The scope for creating synergies between the EUEI and JREC was also recognised.8 In the Conclusions of the General Affairs Council (8566/04), April 2004, the EU Member States confirmed the need to provide adequate financing for the Initiative. The Council furthermore recognised the need for greater involvement of the Commission and the Member States to respond to the developing countries‟ priorities, expressed at the EUEI “Energy for Africa” conference. ACP countries confirmed the need for action in the energy field during the 29 th session of the ACP-EC Council of Ministers, held in Gaborone, Botswana, on 6 and 7 May 2004, and suggested the creation of an ACP-EC Energy Facility. In order to respond to these requests, the Commission, in October 2004, presented a Communication9 on the development of the EU Energy Initiative and the modalities for the establishment of an Energy Facility for ACP countries. On the basis of the communication, the ACP-EC Council formally approved the creation of an 220M€ ACP-EC Energy Facility (EF) on the 25th of June 2005. Africa-EU Partnership on Infrastructure 6 As of March 2005, JREC counted 91 member governments, including 57 developing countries. JREC members are committed to co-operate on the basis of national and regional targets and timetables towards achieving a significant increase in the share of renewable energy in the global energy mix as agreed at the WSSD. 7 COM(2003) 829 8 See page 4 COM (2004) 711 final. 9 COM (2004) 711 Energy Facility FP Draft.v5 - 11/04/2011 2 Future development of the Energy Facility should also be seen in the perspective of the Partnership on Infrastructure being developed between the African Union and the EU, in particular to respond to the regional networks priorities of the AU-NEPAD Action Plan, as well as ongoing initiatives focusing on innovative public-private financing partnerships focusing on developing country needs (JREC and elsewhere). 1.2. Lessons learned The work done under both the Finance Working Group of the EUEI, by the International Energy Agency for its‟ Energy and Development chapter of the “World Energy Outlook in 2004”, and expert groups under JREC, has shown that the present level of funding is not sufficient to meet the investment needs to comply with energy related MDG and WSSD targets. It also showed that new, innovative and flexible financing mechanisms have to be applied to use development aid to leverage other resources (private, development banks, financial institutions, users‟ contributions, remittances, etc) to finance energy needs. Achieving results in the energy sector will require progress in many different areas. Good governance, sector reforms, awareness raising, institutional strengthening and capacity building activities and expanding the knowledge base are essential to support planning and decision-making, while ensuring participation of all stakeholders and ownership of policies and strategies. Partnership between public, private and civil society actors have to be promoted, ensuring that those partnerships remain equitable and transparent. The promotion of new public-private financing mechanism that can help attracting private sector funding at affordable terms is essential. Experience shows that some key principles have to be taken into account in this process: ownership, flexibility, transparency and equal opportunity. The EF‟s sister facility WF (Water) is very similar in its approach and methodology. In particular, the principal mode is the Call for Proposals procedure of the EC. The first call under the €250 million allocation to the WF is currently under way and preliminary experiences/ early lessons, can already be learned. For instance, experience from the WF shows that the private sector is insufficiently mobilised by this modality of funding, a fact which justifies further study of the problem and enhanced public awareness of the possibilities in this regard. All lessons will be fed into the Guidelines to be prepared for EF in order to improve the effectiveness and the efficiency of the Call. Especially practical recommendations, such as public awareness campaigns prior to the Call for Proposals, measures to encourage private participation, well focused and announced selection criteria etc. will be reflected in the EF guidelines. 1.3. Complementary actions A limited number of preparatory activities in the energy sector are taking place and being prepared as part of the National and Regional Indicative Programmes of the EDF as well as part of EU bilateral programmes. Under the 9th EDF, five ACP Pacific countries have energy identified as a focal sector of cooperation in their Country Strategy Papers; approximately € 11.4 million have been allocated under these programmes. Other Commission-funded activities aiming to further stimulate dialogue and contribute to the creation of a framework for action include: (i) Regional projects to be financed by the intra-ACP allocation to energy. Energy Facility FP Draft.v5 - 11/04/2011 3 (ii) The COOPENER component of the Intelligent Energy-Europe programme, managed by DG Energy and Transport, co-finances projects aiming at creating the institutional conditions for improved access to energy in Sub-Saharan Africa. (iii) Similarly, DG Research supports a renewable energy partnership for poverty eradication and sustainable development in Africa (“Partners for Africa”) involving a number of European and African partners. (iv) Commission sponsored projects sponsored in the context of the JREC, including the work on innovative financing mechanisms (i.e. the Patient Capital Initiative), and on the global databases for renewable energy policies and measures10. (v) Finally, PROINVEST, an EC-ACP Group programme, has recently chosen energy as one of its focal areas for future work. Other bilaterally funded activities under the aegis of the EUEI have been initiated in several ACP countries. Some Member States have funded specific projects under the EUEI umbrella and multi-sector dialogues in several ACP countries, as well as expert studies and technical assistance. A number of EU Member States have created the EUEI Partnership Dialogue Facility (PDF) to fund upstream dialogue and policy development. Given the nature of issues and activities involved, additional funding from the Energy Facility will be used to leverage other resources allowing the energy sector to be expanded in a larger number of ACP countries. The aim is not to duplicate but rather to complement the ongoing bilateral and community EU-ACP cooperation activities as well as existing initiatives from EU and international financial institutions and instruments. 1.4. Donor coordination The development and implementation of the Energy Facility is undertaken in close coordination with the Informal Advisory Group for Energy (IAGE), which is composed of energy experts from Member States, from various concerned services of the Commission, the EIB and the ACP Secretariat. The IAGE, which has regular meetings and ensures regular consultation with other relevant donors and stakeholders, builds in particular on the coordination process established under the EUEI both at global and at country level. Coordination with EC delegations, the AfDB, the WB and other important bilateral non-EU donors is also ensured. 2. COUNTRY AND REGIONAL CONTEXT 2.1. Economic and social situation At present, 1.6 billion people in the world - concentrated mainly in rural and peri-urban areas of developing countries - do not have access to modern energy services. The development of poor communities is seriously limited by the present unsustainable use of wood and other forms of biomass for energy purposes, without the means or opportunity to obtain other forms of energy, such as electricity or liquid or gaseous fuels. Sub-Sahara Africa is a dramatic example of global inequality in the energy field, with over 80% of the population having limited access to modern forms of energy and relying on biomass, primarily fuel wood, as a basic source of energy. In some SSA countries, only 2-3 % of the 10 Page 5, COM (2004) 711 Energy Facility FP Draft.v5 - 11/04/2011 4 population has access to electricity. The lack of public and private investment, combined with population growth, results in an increase in the number of people without access to electricity in some of the poorest countries. The specific problem to be addressed by the Energy Facility, is how to ensure delivery of energy services as a response to the actual needs of the communities and to the political drive for improving energy access. More specifically, there is a need to address the shortage of financing options, including innovative models for public-private partnerships, the lack of capacity to address energy and poverty issues in the public sector, the private sector and civil society and the lack of policies and operational strategies at the regional, national and local level that will stimulate improved energy access for the poor, such as e.g. the integration of energy in poverty reduction strategies. 2.2. Development policy of beneficiary country There is a large variation in the level of energy policy and institutional development among ACP countries. The type of interventions required depends on the existing policy and institutional frameworks, the measures established by each country and region, the degree of access to sustainable energy, the needs and potential for economic and social development, the need for better management of the environment and natural resources, and other factors. Opportunities to achieve the MDGs and the WSSD targets in a sustainable way are highest in those ACP countries which already have a sound national energy policy or which are strongly committed to develop one, based on good governance principles. They are also higher where there is prioritization of spending towards energy as a basic service, and where the relevant indicators as part of the PRSP process are defined. However, countries with weak policies and an inadequate institutional environment must also be assisted to reform the energy sector, to strengthen their institutions and build up capacity in the sector. Several regional ACP policy initiatives recognise the need to improve energy access to poor and remote communities. At the all-Africa level, NEPAD has established an energy goal seeking to secure access for at least 35 per cent of the African population within 20 years, especially in rural areas. The African Energy Ministers have established a Forum for Energy Ministers of Africa (FEMA), and have on several occasions expressed interest in a dialogue between FEMA and the EUEI. The role of the Facility to support actual delivery will be central in this dialogue. The Pacific Island Energy Policy and Plan, adopted by the Pacific Energy Ministers in 2002, specifically focuses on the increased availability of adequate, affordable and environmentally sound energy services for the sustainable development of Pacific Island Countries. In the Caribbean, CARICOM is preparing a Regional Energy Policy, with recommendations to the Heads of Government, intending to reduce the dependence on fossil fuels and improving energy access. 2.3. Sector context Access to affordable, reliable and environmentally sound energy is essential to sustainable development. Solving energy problems will contribute to achieving progress across all pillars of sustainable development: economic, social and environmental and in meeting the UN Millennium Development Goals. Several recent international reports, including the report of the Millennium Development Project (the „Sachs Report‟), recognise the need for a significant increase in funding for Energy Facility FP Draft.v5 - 11/04/2011 5 energy to achieve the targets, as well as the need for new and innovative mechanisms to use development aid to leverage other resources. This is confirmed by the UN Secretary General in his report to the UN General Assembly on the follow-up of the Millennium Summit, which stresses that access to modern energy services is critical for reducing poverty both among the rural and urban poor. In this context, parallel enterprise focused initiatives could also help driving sector reform and increased access to energy, in particular in the area of renewable energy and energy efficiency. ACP countries face important challenges related to energy: high energy prices, energy shortages, unreliable supply, indoor air pollution and degradation of natural resources are among the problems which require greater attention and action. Almost half of the global investment required for improving supply capacity and replace existing and future supply facilities in the period up to the year 2030 is attributed to the needs of developing countries (including China and India). The required investment for Africa alone is app. 1.2 trillion US$, as calculated by the International Energy Agency (IEA). The financing gap is most acute in the area of risk capital. Even this would still leave 1.4 billion people without access to electricity in the year 2030. On average, oil- importing developing countries use more than twice as much oil to produce a unit of economic output as do OECD countries. Moreover, their financial situation (high levels of debt, fragile balances of payment) means that they are less able to weather turmoil on oil markets. Current sustained high prices on oil markets, price volatility and insecurity of supply affect developing countries more than others. Some of these countries spend up to 50% of their trade surpluses on energy imports – with devastating results for their national economies. A mere 10 US$ per oil barrel price increase can result in a 3% loss of GDP in some Sub-Saharan countries in the first year after the hike. Their remoteness and small markets make small island countries particularly vulnerable in the energy field. The further development of their societies depends to a large extent on access to transportation, ICT and energy. The high cost of shipping diesel oil to dispersed islands brings electricity production costs up to an average of 0.2–0.5 €/kWh, compared to typical international costs of 0.05 €/kWh. Some islands spend over 75% of their foreign currency earnings on fuel imports. At the same time there is untapped potential for increased energy efficiency and the use of renewable energy. 3. DESCRIPTION 3.1. Objectives The long-term overall objective of the ACP-EC Energy Facility is to contribute to achieving the Millennium Development Goals, in particular the goal on poverty, through increased access to energy services by the poor rural population, as well as to achieving the relevant WSSD goals and targets. In accordance with the broad objectives and areas of action set by the ACP-EC Council in its decision of June 2005, the three specific objectives are: - Improved access to modern energy services by poor rural people, with priority for the un-served population living in scattered settlements, villages, rural towns, peri-urban areas and remote islands, using the grant funds to leverage additional investment or scale up successful programmes. Energy Facility FP Draft.v5 - 11/04/2011 6 - Improved governance and management in the energy sector by strengthening poverty related policy making in the energy sector and across sectors, the institutional and legal framework and the capacity of key stakeholders - Facilitation of future large-scale investment programmes in cross-border interconnections, grid extensions and rural distribution 3.2. Expected results and main activities To achieve the three specific objectives, three main components can be distinguished: Component 1: Increased Access to Energy Services in Rural Areas Component 2: Improving Energy Management and Governance Component 3: Improve Cross-border Cooperation in the Energy Sector The results will be achieved through co-financing of investment projects/programmes selected via the Call for Proposals. The Call for Proposals is the fundamental mechanism of the Energy Facility. It provides appropriate means of ensuring a demand driven, flexible, open and transparent approach ensuring equal opportunities. 3.2.1 Results and activities related to the first specific objective: The first specific objective of the Facility will be achieved by contributing to increased and well-targeted investments that will provide access to energy services which are focused on the improvement of the economic and social conditions of poor communities. Component 1 of the Facility is intended to assist those ACP countries which have in place or are in the process of implementing a sound national energy policy, based on good governance principles, or alternatively have in place national energy framework conditions that are sufficiently advanced to allow a reasonable chance of success and/or have given adequate priority to poverty, for example within their PRSPs or within their economic development and health or education strategies. The type of activities that will be considered under component 1, will have to be targeted towards providing access to modern energy services, with priority being given to those currently un-served, living in scattered settlements, villages, rural towns, peri-urban areas and remote islands. The Facility will support the joint financing of delivery-oriented investment projects, in particular those capable of leveraging funds from Member States, other donors, NGOs IFIs and the private sector, including international, regional and local financial intermediaries such as banks and funds. Proposals should ensure the economic, social and environmental sustainability of the investment, if needed, through possible financing of institutional support and strengthening of management skills measures. A special attention will be given to trigger innovative approaches, in order to address energy needs, for example, in an integrated and cross-sectoral way. An important way to leverage resources for investments able to generate revenue at local level is to call upon local capital. In line with the background and objectives as stated above, the Facility may also consider, as part of the proposals, support for risk mitigation and promotion of local investment inter alia through development of local credit markets. The Facility may also wish to support microfinance activities, especially at grassroots level, Energy Facility FP Draft.v5 - 11/04/2011 7 excluding the provision of credit lines. These should be in line with current best practices and policy orientations issued by the EC. When necessary and applicable, output based approaches may be supported. This result will also be achieved via the support to civil society initiatives for integrated activities (smaller scale, community-based operations) in very poor areas. The latter may also be supported in countries with weaker policies/institutions. The co-financing of investment projects/programmes selected under component 1 will absorb the largest portion of the funds available under the Energy Facility. 3.2.2 Results and activities related to the second specific objective: The second specific objective of the Facility will be achieved through Component 2, which will assist those ACP countries where governance conditions are not in place for delivery oriented interventions in the energy field. For instance, countries in which improvements are needed, to develop or implement sound national energy policies and strategies, based on good governance principles, and where provision of appropriate priority to spending on energy, in the sector and across sectors, within the Poverty Reduction Strategies, needs to be addressed. Through this component, the Energy Facility will catalyse support to sound proposals at continental, regional, country or local levels to attain the following results: - integration of energy in poverty reduction strategies, - improved institutional, legal and regulatory framework to address the needs of the poor, - strengthened capacity of key stakeholders, in particular for the implementation and management of delivery-oriented energy programmes for the poor - Enhanced network building of local stakeholders in order to improve local coordination and participation. Activities will depend on the level of policy development and institutional framework, which vary among ACP States, and on the proposals that will be received. Additional opportunities for support from the Energy Facility within the Calls for Proposals may be identified through the work of the EU Energy Initiative, in particular through the dialogue with the Forum for Energy Ministers of Africa, the COOPENER programme, activities of Member States, such as the PDF, JREC, through the EUEI country dialogue process, through dialogue with the private sector (e.g. on PPP-development), and through the activities of EUEI on specific areas such as research, indicators and finance. 3.2.3 Results and activities related to the third specific objective: The third specific objective of the Facility will be achieved through component 3, which will focus on leveraging funds to facilitate cross-border interconnections. Activities under this component can include infrastructure as well as preparatory activities required to facilitate future essential investment plans for regional energy infrastructure, including, for instance, cross-border interconnections, grid extensions and rural distribution. Preparatory activities should facilitate financing by International Financing Institutions, in particular the EIB and EDFIs, as well as working together with the World Bank, the African Development Bank, European Member States and private sector businesses and finance Energy Facility FP Draft.v5 - 11/04/2011 8 institutions. Further more, market integration activities in the energy sector may be prepared, such as dismantling trade obstacles to technologies and relevant services, creating coordinated framework conditions and/or harmonisation of standards for decentralised supply technologies. In this way, the Facility will contribute to the future mobilisation of significant additional investment in the energy sector of Sub-Sahara Africa and the Island regions. Within this specific objective, another specific clearly targeted activity, which could be supported by the Energy Facility, has also been identified: The Africa-Europe Partnership on Infrastructure Given the strong link with the Africa-EU Partnership for Infrastructure, the Facility will co- finance, through the call for proposals, investment projects, and related preparatory activities that are part of the AU/NEPAD priorities within cross-boundary energy interconnections and -cooperation. It is foreseen that the Energy Facility could contribute to such projects up to an amount of € 20 million, and leverage substantial co-financing from e.g. the Private Sector, EU Member States and International Financing Institutions, such as the EIB, European Development Financing Institutions, the African Development Bank, the World Bank etc. In this way, the Facility will provide an early contribution to the Infrastructure Partnership. It is envisaged that the Facility will co-finance projects submitted e.g. by the Financing Institutions mentioned above with the CfP. Furthermore, an amount of up to € 10 million will be devoted to provide TA and institutional support to AU/NEPAD and to finance selected priority regional activities and programmes which are also in support of the Africa- EU Partnership on Infrastructure. Specific actions envisaged to be supported could include preparatory activities and capacity building for the West, Central, East and Southern Africa Power Pool. Activities in support of regional and continental institution such as the African Union, NEPAD, FEMA, AFUR, regulatory bodies etc. could also be envisaged. These actions would be initiated outside the Call for Proposals. 3.3. Stakeholders The main ultimate beneficiaries will be the un-served poor living in socially disadvantaged areas such as scattered settlements, villages, rural towns, peri-urban areas and remote islands, lacking access to sustainable energy services. Specific attention will be given within the relevant analysis of proposals to the needs of the target groups and of the final beneficiaries, to determine whether these are clearly defined and appropriately addressed. There is a wide range of stakeholders (state and non state actors) able and willing to be involved in the broader energy sector at country or regional level including cross-border connections. In order to leverage resources (not only financial), and as part of the innovative aspects of the Facility, proposals for co-financing may be presented by a range of actors working in the sector, such as national, international, local and regional public bodies, non-state actors11, including legal persons under private law, entrusted with a public function related to energy (e.g. public utilities, parastatal, semi-public or private with a 11 Non State actors are here defined as in the Cotonou Agreement art 6: Private sector, economic and social partners, civil society in all its forms according to national characteristics Energy Facility FP Draft.v5 - 11/04/2011 9 legally valid concession or other agreement, public-private financial intermediaries etc.12) at Municipal, Regional or State level. They can present proposals alone or in any sort of venture with others. However, if a private company (other than bodies under private law with a public service mission) presents a proposal, it must be in a joint venture with a public authority or an NGO. The applicants must have legal capacity to enter into financial agreement with the Commission, be accountable and have the necessary capacity to implement the actions foreseen in the grant agreement. The eligibility and capacity criteria of stakeholders will be defined in detail in the Guidelines for the Call for Proposals. The involvement of ACP state actors (via NAO) may become essential where public sector bodies do not have the legal status to enter into a grant agreement with the Commission or do not have the capacity to implement projects. In accordance with the Communication COM(2004)711, the stakeholders will be encouraged to associate with co-donors, private sector and other partners for their proposals. Partners and co-donors are the organizations whose role is to bring financial and/or technical and/or managerial support. They should preferably be from the EU (the EIB, a Development Finance Institution, an EU Member State Development Agency, a private company, a Non State Actor, a local regional or municipal Authority), but could also be an international organization, or a regional or local ACP body having a well proven capacity for project implementation. Partnerships between international and local Civil Society organizations and between local public and private actors are encouraged. Other organisations may be involved in the actions. Such associates play a real role in the action but may not receive funding from the co-financing. Local and international financial institutions and European banks or Funds may act as partner/co-donor. ACP and Member States may also provide a portion of grant or loan funding and take a role as partner/co-donor. The partner/co-donor will have to commit to assist/develop/implement the proposal and co-finance its realization. Co-financing may include technical/financial support during the identification/appraisal phase and financial support to the implementation either with loans or grants. The Commission will ensure equal access for all actors to pursue the objectives of the Facility in their own way and under the same principles and rules of sound financial management which are set out in the Cotonou agreement, its Internal Agreement on Financing and Administration, the 9th EDF Financial Regulation and other applicable legal texts. 3.4. Risks and assumptions There is a risk that an insufficient number of good quality proposals are received through the calls. This risk will be mitigated by a comprehensive communication and dissemination campaign (included in the intra-ACP TCF (Technical Cooperation Facility), as mentioned in 4.1, involving the key actors in ACP countries, in order to mobilise the potential applicants and partners. A second risk is that the EF may not generate sufficient co-financing of investments, the limit for EDF grant co-financing (up to 75% of total project/programme costs, in compliance with the EU Council conclusions) may be too low in order to address effectively the MDGs. Sound and relevant proposals may justify a higher level of overall 12 Private actors include, but are not limited to operators (e.g. also research companies etc.) Energy Facility FP Draft.v5 - 11/04/2011 10 grant co-financing. This risk will be mitigated by the provision of a maximum grant allocation over and above 75 % in certain justified cases.13 In the unlikely event of a smaller number of eligible quality proposals than the EF can support with available resources, the European Commission will inform the EDF committee about the proposed usage of unallocated funds. In the event that high scoring proposals cannot be supported due to EF resource limitations, these proposals will be made known to the wider international development community, for possible alternative funding. Of course, this funding cannot be guaranteed by the Commission. One of the main assumptions of the Energy Facility is that ownership is central to its success and that the process is fully demand–driven. Thematic priorities are derived from the EUEI, and more specifically for sub-Saharan Africa, from the recommendations of the Energy for Africa Conference held in Nairobi 2003. Other assumptions are the existence of a real political commitment to effectively implement national pro-poor integrated strategies and of strong political will for reform. Each proposal will be evaluated in particular regarding its sustainability (from the environmental, social, institutional and political, eco/financial and technical point of view) to ensure that the Energy Facility funding has multiplier effects and to ensure long lasting tangible/measurable impacts on target groups for present and future generations. Within this evaluation, specific risks for each individual proposal will be analysed. 3.5. Conditionalities In line with Communication COM(2004)711, the investment component of the Facility is intended to assist those ACP countries which have in place or are in the process of implementing a sound national energy policy, based on good governance principles, and have given priority to spending on energy e.g. within their PRSPs. In addition an appropriate level of co-financing will be required to ensure the catalytic role of the Facility. Detailed conditions and criteria to be met by the specific proposals are illustrated in the modalities and will be further detailed in the Guidelines for the Call for proposals. 3.6. Crosscutting issues Adequate account of poverty issues, environmental sustainability, gender equality and good governance are inherent in the modalities of the Energy Facility and in the criteria for assessment and selection of proposals. Access to energy is needed to alleviate poverty, e.g. to implement productive (income and job creation) and social activities, and to free time now spent for e.g. collection of fuel wood. Environmental sustainability can be achieved through the promotion of cleaner and more efficient use of energy. This will reduce indoor pollution and improve the health situation of women and children, as well as help to preserve the natural environment. Improved access for the poor to sustainable energy services should also be achieved through national policies, with strong stakeholder participation, a pro-poor emphasis, and gender sensitivity. 13 For proposals for integrated activities realised by Civil Society Energy Facility FP Draft.v5 - 11/04/2011 11 By nature, rural energy and poverty programs link up to service providers and energy end- users in other sectors such as agriculture, water, health, education, transport etc. Where relevant, these links must be an active part of Facility-supported activities, both at the policy level and at the level of practical implementation. Poverty Reduction Strategies provide a natural framework for a national level policy and strategy dialogue with the other sectors, to ensure a joint and coherent contribution to poverty alleviation. It should be supplemented by a more practical „bilateral‟ dialogue between sector programmes to ensure synergy. Examples of such synergies could be where agricultural credit schemes could finance investments in rural energy technologies or agricultural activities could produce energy, or where water schemes need energy for pumping or could produce hydro power. Where activities are going on at the community level, coordination and synergy should be ensured e.g. with agricultural extension services, rural institutions such as health centres and schools, as well as the activities of civil society and the private sector. Women suffer disproportionately from lack of access to energy. Gender mainstreaming in energy management, assessing the implications for women and men of any planned action, including legislation policies or programs, in all areas at all levels is essential so that women and men benefit equally, and inequality is not perpetuated. Gender issues, the links between gender, participation, demand and sustainability of energy services, especially at community level, are among the criteria on which proposals for Energy Facility support will be assessed and selected. The HIV/AIDS pandemic and its impact on the design of proposals, particularly the impacts on the sustainability of capacity building activities, will be among the criteria on which proposals for Energy Facility support will be assessed and selected. 4. IMPLEMENTATION ISSUES 4.1. Implementation method The implementation method will be a mix between centralised and decentralised management. This financing proposal covers all activities to be supported by the ACP-EC Energy Facility within allocation of 220 MEUR. If necessary, the call for proposals will be published with a „suspensive clause'. 1) Centralised management part First global financial commitment of 3 million € will be taken for technical assistance contracts (see budget table 4.2) Second global financial commitment will be taken to cover: i) an amount of up to € 10 million will be devoted to provide TA and institutional support to AU/NEPAD and to finance selected priority continental and regional activities and programmes which are in support of the Africa- EU Partnership on Infrastructure, also in the framework of EUEI. This amount can be committed without waiting for the results of the CfP. These activities are to be initiated outside the Call for Proposals, and they will be (see §3.2.3) in support of the West, Central, East and Southern African Power Pools and, regional and continental institutions such as African Union, NEPAD, regulatory bodies, etc”. ii) all the expected grants and contribution agreements respectively with international organisations and others than state actors, resulting from the proceedings of the call for Energy Facility FP Draft.v5 - 11/04/2011 12 proposals which will be launched by the Commission (Headquarters) and whose elements and criteria are summarised in Annex I. The documents of the call for proposals will have been submitted to the EDF Committee for information, in compliance with the EC Communication COM(2004)711. The EDF Committee will also be periodically informed on the outcome of the call. 2) Decentralised management part Additional global financial commitments will be taken to cover selected proposals presented by ACP States, selected under the same conditions and criteria as all others, and according to the legal basis governing relationships between the Community and ACP States. Due to the fact that proposals may not be fully ready at the same time it is possible that more than one global financial commitment will be needed with ex-ante information to the EDF Committee independently of the amount. Each proposal will generate, according to the Financial Regulation and the Agreement of Cotonou, a specific Financing Agreement with each selected ACP State14 based on previous given mandate of powers from the relevant ACP body. The management option for these proposals and financing agreements will be decentralised. 4.2. Budget and calendar Indicative breakdown of the overall amount by main project component and by global financial commitments: Item Description First global Second global Additional Total M € commitment commitment global commitment(s) 1. Components 1, 2 & 3 (call for 0 Part of 198 M € Other part of proposals) (grants to non- 198 M € 198 M € state actors, (proposals from European MS, ACP States) and International Organisations) 2. Component 3 - Proposals generated 0 10 M € (max) * 10 M € * in the context of the Africa-Europe Infrastructure Partnership, when outside the call for proposals. 4. TA (dissemination, 3 M€ 3M€ communications, appraisal of proposals generated by the call) 5. Monitoring and evaluation 2M€ 2M€ 6. Audit 2M€ 2M€ 7. Contingencies Part of 5 M€ Other part of 5 5M€ allocation M € allocation Total 3 M€ Total 220 M€ * maximum amount. Unspent balances will be used to finance activities under call for proposals. 14 The same applies to “entities” with the role of Regional Authorising Officer within the Cotonou Agreement. Energy Facility FP Draft.v5 - 11/04/2011 13 The tentative calendar for implementation of the Energy Facility is given in annex 3. Global financial commitments will be adopted in several stages after the financing decision has been taken. The implementation phase relating to this decision is planned for a maximal period of 72 months. The final date of implementation is set at 31/12/2013. The final date of execution is set at 31/12/2015. Any balance of funds remaining available under the EC grant shall be automatically cancelled six months after the end of the period of execution of this decision. 1) Centralised management part The Programme‟s contracts, grant agreements and programme estimates, must be concluded no later than the 31st of December of the year following the year of adoption of the corresponding global financial commitments. This deadline cannot be extended. This provision does not apply to contracts of audit and evaluation, which may be signed later. 2) Decentralised management part The Financing Agreements shall be concluded by 31 December of the year following the year in which the respective global financing commitment was adopted. Failing this, the corresponding appropriations shall be cancelled. The final date of implementation will be set in each Financing Agreement but will be at the latest 31/12/2013. The final date of execution of the respective Financing Agreement will be set 24 months after the final date of implementation. Any balance of funds remaining available under the EC grant shall be automatically cancelled six months after the end of the period of execution of the Financing Agreement. The Programme‟s contracts, grant agreements and programme estimates, must be concluded no later than three years from the adoption of the corresponding global financing commitment. This deadline cannot be extended. Contracts relating to audit and evaluation can be concluded after this deadline. 4.3. Procurement and award of grants procedures The Call for Proposals is the privileged implementation method that will be employed. All contracts implementing the financing agreements must be awarded and implemented in accordance with the General Regulations for works, supply and service contracts adopted by the ACP-EC Council of Ministers, supplemented by the General Conditions for contracts financed by EDF and the procedures and appropriate documents laid down and published by the Commission for the implementation of external operations, in force at the time of the launch of the procedure in question. All programme estimates must respect the procedures and standard documents laid down by the Commission, in force at the time of the adoption of the programme estimates in question. 4.3.1 First Global Commitment Technical Assistance (dissemination and appraisal of proposals) will be awarded and implemented in accordance with the standard procedures mentioned above. 4.3.2 Support to the EU-Africa Partnership on Infrastructure The Inter-service Agreement between DEV and AIDCO will apply to proposals to finance activities and programmes for support to the EU-Africa Partnership for Infrastructure. Energy Facility FP Draft.v5 - 11/04/2011 14 All implementation contracts and contribution agreements must be awarded and implemented in accordance with standard procedures mentioned above. 4.3.3. Proposals by eligible applicants other than ACP State actors to be financed via grant contracts and contribution agreements. All grant contracts and contribution agreements under the Financing Decision must be awarded and implemented in accordance with the Practical Guide to contract procedures for EC external actions, in force at the time of the launch of the procedure in question. After the decision on the award proposal by the Authorising Officer the grant contracts and contribution agreements will be passed to Delegations for signature and implementation in accordance with the applicable rules and principles of sound financial management. However due to the specificity of the ACP-EC Energy Facility, grant contracts related to the co-financing of investments, by their specific nature, may have to be implemented to a large extent by third parties (subcontracting). The applicants will have to subcontract works, supplies and services following the rules set out in the Practical Guide to contract procedures for EC external actions. Within limitations that will be fixed by the calls for proposals, this type of grant agreements will take place under the ex-ante control of Commission delegations. A guarantee for advance payment shall be requested in appropriate cases. In case of a grant contract, and if the operation is financed by several donors and one of the donors, whose contribution to the total cost of the operation is greater than that of the Commission, imposes procurement rules on the grant beneficiary that differ from those set out in the Practical Guide to contract procedures for the EC external actions, the grant beneficiary may apply the rules imposed by the other donor as far as these procedures offer guarantees equivalent to internationally accepted standards. However, in all cases, the rules on nationality and origin set out in the Practical Guide to contract procedures for EC external actions still apply. Proposals from International Organisations will be awarded on the basis of the standard contribution agreement. The procedures of the Organisation can only be applied if they are conform to the internationally accepted standards. 4.3.4 Additional global commitment(s) Further financial global commitments will be taken to cover proposals coming from ACP State actors for which separate financing agreements will be concluded. The implementation procedures will be specified case by case in principle following the current implementation modalities under decentralised management. Monitoring and evaluation, as well as audit contracts will be signed following the rules set out in the Practical Guide to contract procedures for EC external actions. 4.4. Performance monitoring All Proposals will include a detailed monitoring plan. Indicators will be determined for each and every operation. It is essential and it will be stipulated in the grant agreement, that operational, day-by-day monitoring as part of the management of the project shall be ensured by the applicants with the assistance of the partner/co-donor. Each legal agreement between the Commission and any other party will contain the reporting modalities to the effect of monitoring. The Energy Facility will also ensure an external monitoring of the activities at country and regional level. The Energy Facility will adopt all measures necessary to ensure a consistent monitoring of progresses through missions, fact finding Energy Facility FP Draft.v5 - 11/04/2011 15 reports also with the use of independent reviews and other means. Overall monitoring of the Facility will be linked, whenever possible, with the work of the monitoring/reporting working group of the EUEI. 4.5. Evaluation and audit The Commission will exert the right to audit and control by ex ante, ex post verification, or a combination of the two, unless otherwise stated. The Energy Facility Group in EuropeAid, as any other Department of the Commission, OLAF and the European Court of Auditors have the right to mobilize and execute extra checks and controls ex-ante, ex post or a combination of the two during execution in whatsoever form or timing. The Commission will perform a mid term and final evaluation of the EU –ACP Energy Facility. In addition to this global evaluation, each financing agreements concluded with the State Actors will include a mid term and final evaluation. At country and regional level the conclusions of these evaluations will be made public. Both evaluations will be combined with an impact assessment, covering areas such as livelihoods, health and hygiene, social-cultural impacts, programme sustainability, good governance and institutional capacity. The evaluation will use participatory qualitative and quantitative methods and will give the perception of the beneficiaries on the programme. Evaluation procedures will be determined on a case by case basis for the Grant Contracts and Contribution Agreements and where applicable will form part of the Contract/Agreements. A provision for audit is included in the budget for this financial proposal and will be divided over the different global financial commitments to be made. The Commission may use this provision to organise an independent audit of expenditure realised under the above mentioned Financing Decision. Audit, evaluation and framework contracts are always concluded by the Commission acting for and on behalf of ACP states concerned. ANNEXES ANNEX 1: DETAILED IMPLEMENTATION MODALITIES OF THE ACP-EC ENERGY FACILITY ANNEX 2: LOGICAL FRAMEWORK MATRIX ANNEX 3: INDICATIVE PLANNING OF ACTIVITIES Energy Facility FP Draft.v5 - 11/04/2011 16
"Energy Facility DFP"