Energy Facility DFP by mikesanye


									                         EUROPEAN COMMISSION
                         EuropeAid Co-operation Office

                         Sub-Saharan Africa, Caribbean, Pacific
                         Energy Facility

BENEFICIARY                     INTRA-ACP

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


1.1.           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

   COM(2000) 212
   COM(2002) 408

Energy Facility FP Draft.v5 - 11/04/2011                                                        1
priorities expressed at the EUEI “Energy for Africa” conference in Nairobi (November

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
    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.
    COM(2003) 829
    See page 4 COM (2004) 711 final.
    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

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.


     2.1. 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

     Page 5, COM (2004) 711

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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.


     3.1. 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

 -    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

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

 -    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

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

   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

     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

     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

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

     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.

     For proposals for integrated activities realised by Civil Society

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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.

     4.1. 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,

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

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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

 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

 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€
        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.

  The same applies to “entities” with the role of Regional Authorising Officer within the Cotonou

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

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.

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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

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.


Energy Facility FP Draft.v5 - 11/04/2011                                         16

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