EdM ZESA Eskom. Transaction Advisory Services for the

Transcription

1 EdM ZESA Eskom Transaction Advisory Services for the MO-ZI-SA TRANSMISSION PROJECT Terms of Reference for the consulting services for Feasibility Studies up to Financial Close 11 December 2014 TOR_MOZISA-11 December 2014 Page i

2 Contents 1. BACKGROUND INFORMATION Beneficiary Country and Promoter Contracting Authority Relevant Sector Background OBJECTIVES AND EXPECTED RESULTS Objectives of the Underlying Project Rationale for the Interconnection Projects Part-1: Scoping Study (Feb Apr 2015) Objective of Scoping / Conceptualization Study Results to be achieved by the Consultant Part-2: Feasibility to Project Information Memorandum (June 2015 June 2016) Part-3: PIM to EPC Procurement, Financial Closure and Project Implementation (Jul 2016 Dec 2016) TASKS TO BE REALISED General Description of the TA operation and relation to the underlying project Geographical area to be covered Location of the TA activities Management of the studies Coordination Management structure TIMING Commencement date Period of execution REQUIREMENTS Personnel Key experts Other expert(s) Support Staff and Backstopping TOR_MOZISA-11 December 2014 Page ii

3 5.2. Facilities to be provided by the Consultant Equipment Incidental expenditures REPORTS Reporting Requirements Submission and Approval of Reports Copyright Ownership of Documents TOR_MOZISA-11 December 2014 Page iii

4 1. BACKGROUND INFORMATION 1.1. Beneficiary Country and Promoter The beneficiary countries are Zimbabwe, Mozambique and South Africa. The Project is being sponsored by Eskom of South Africa ( Eskom ), Zesa Holdings of Zimbabwe ( ZESA ), and Electricicade De Mocambique of Mozambique (EdM ), (together, the Sponsors ). The project is being coordinated by Southern African Power Pool Coordination Centre ( SAPP CC ) Contracting Authority The Contracting Authority is the SAPP CC. The support funds, administered by the Development Bank of Southern Africa (DBSA), have been sourced from the Project Preparation and Feasibility Study (PPFS) Fund and Project Preparation and Development Fund (PPDF) Relevant Sector Background The Southern African Power Pool (SAPP) was created in April 1995 through the Southern African Development Community (SADC) treaty to optimize the use of available energy resources amongst the countries in the region and support one another during energy emergencies. There are four legal documents covering the rights and obligations of SAPP Members: Inter-Governmental Memorandum of Understanding (IGMOU); Inter-Utility Memorandum of Understanding (IUMOU); Agreement between Operating Members (ABOM); and Operating Guidelines (OG). Southern Africa has experienced a period of unprecedented growth in the utilization of electricity in the last 10 years largely as a result of the boom in prices of natural resources. The Region had enjoyed a long period of excess generation capacity and abundance of transmission facilities to evacuate power from the generation facilities to the customers. Since 2007, the Region has run out of excess generation capacity and many Regional transmission lines are now congested. There is now a realization among all the SAPP member utilities to cooperate in developing new generation and transmission facilities primarily to increase the efficient utilization of the sustainable sources of energy that exist throughout Southern Africa, a key requirement in bringing development to the people of the Region. The SAPP members ZESA of Zimbabwe, EdM of Mozambique and Eskom of South Africa have entered into memorandum of understanding (MOU) to develop the interconnectors and to this objective, have formed joint project development teams (Steering Committee, Technical and Commercial Teams) and have incorporated the SAPP Coordination Centre (SAPP-CC) in the above project teams. 2. OBJECTIVES AND EXPECTED RESULTS 2.1. Objectives of the Underlying Project The objective of the Interconnector projects has been defined as the projects that will: TOR_MOZISA-11 December 2014 Page 1

5 a. Complement other regional projects by increasing the power transfers within the SAPP network, b. Increase stability in the power pool through additional interconnection between the strong network in the South and the weak network in the North, which has been a source of SAPP grid instability, c. Improve system control and reliability, and d. Deepen regional integration that will facilitate improved trading. The Interconnector projects will involve the separate development of the following sections of the project: In Zimbabwe: a. 400/330 kv new substation at Triangle (Zimbabwe). b. 400/330 kv new substation at Orange Grove (Zimbabwe). Zimbabwe to South Africa: c. 275km 400kV line Triangle-Nzhelele Interconnector (Zimbabwe-RSA). d. New Nzhelele substation 400kV line bay Zimbabwe-Mozambique: e. 185km 400kV line Orange Grove-Inchope Interconnector (Zimbabwe- Mozambique) f. Establishment of the new 400/220kV Inchope Substation in Mozambique g. 360km 400kV Inchope-Matambo line h. 115km 400kV Matambo-Songo line i. A second Songo - Bindura line can be considered as an option 2.2. Rationale for the Interconnection Projects The interconnector projects are very strategic in terms of facilitating trade within the SAPP. Currently there are wheeling constraints on the existing Central Corridor covering ZESCO, ZESA, BPC and Eskom, and this hampers increased regional trade. The existing and future generation projects present opportunities for trade, which flows would utilise the two lines. By entering into Transmission Use of System Agreements, the investments on the projects can be recovered from such trade opportunities over and above the normal SAPP Wheeling arrangements for any other SAPP transactions. SADC has agreed that the projects to unlock wheeling constraints on the existing Central Corridor are regional Projects not only because of the transmission multi-countries interconnectors involved but also because of the numerous generation projects planned for development by SAPP. Once developed, these generation projects will see more power being wheeled through the proposed 400kV MoZiSA link. The development of additional generation capacity within SAPP is illustrated below: a. ZESA Generation Projects i) ZESA is working towards the expansion of Hwange Power Station by two additional units of 300 MW each. This expansion project is targeted for completion by ii) IPP s (China Africa Sunlight Energy Corporation and Southern Energy) are also developing two additional power plants with a combined capacity of 1260MW for completion by 2018 TOR_MOZISA-11 December 2014 Page 2

6 iii) ZESA is working towards having Kariba South Power Station expanded by two units of 150 MW each by iv) The other reinforcement within the ZESA network includes a separate project that the SAPP has termed the Central Transmission Corridor project which includes the second Alaska-Sherwood and Bindura-Mutorashanga line. v) It is assumed that some of the power from these projects is earmarked for regional trading through the proposed interconnectors. b. EdM Expansion of the HCB North Bank, Lupata Gorge, Gas and Coal Plants in Mozambique i) Currently HCB has power stranded at Songo due to constraints on the HVDC link. ii) There are plans by Hydro Carbora Bassa (HCB) of Mozambique to expand the North Bank by an additional 1,245 MW which would be exported mostly to Eskom, and the rest of other SAPP members in the South. Other generation options includes the Lupata Gorge, Gas and various coal power plants in Mozambique. iii) This also means that the ZESA network has to be reinforced to facilitate the evacuation of this power to the South by construction of the Inchope-Orange Grove, Triangle-Nzhelele interconnectors. Inchope-Orange Grove, Triangle-Nzhelele interconnectors i) For power to be wheeled from the North to the South following the successful commissioning of all the generation projects detailed above (along with the associated transmission strengthening projects in the respective countries), additional transmission capacity has to be created in the ZESA network. ii) ZESA, Eskom and EdM have created Technical and Commercial Joint Working Groups to spearhead the development of the Inchope-Orange Grove, Triangle- Nzhelele interconnectors with the objective of creating that additional wheeling capacity with some of the projects expected to be commissioned by end of The Technical working Group is now finalising the Technical Report. This will result in the construction of new lines to wheel power to Eskom, ZESA and other utilities in the region. To underpin and secure bankability of the transmission works, Eskom will sign long term wheeling agreements with ZESA and EdM. iii) EdM and other partners are developing MPNK and STE and this project should compliment these. New Transmission infrastructure to strengthen the Mozambique network and also to facilitate regional trading is vital. This Transmission network will consist of a HVDC and HVAC backbone from North to South to be known as STE project. The new proposed MoZiSA line will improve the reliability and stability for this Mozambique network. iv) Other options of interconnecting Mozambique and Zimbabwe like the second Songo - Bindura line should also be considered. c. ZESCO Generation Projects i) ZESCO is currently developing the Itezhi Tezhi Power Station of 120 MW. The power station is targeted for commissioning in ii) ZESCO is also developing the Kafue Lower Hydro Project of between MW. iii) In addition ZESCO expanded the Kariba North Hydro Power Station by two units of 180MW each. TOR_MOZISA-11 December 2014 Page 3

7 iv) ZESA and ZESCO are jointly developing Batoka Power Station capacity of 1600 MW which will be in place by v) The envisaged 2 500MW injection on the DRC/Zambia border from Grand Inga phase 1A and part of the power from these power stations is to be exported to BPC, Eskom, NamPower, ZESA and any other SAPP members through the proposed MoZiSA interconnector. d. BPC Generation Projects i) BPC have developed the Morupule-B Project in two phases with 4 x 150MW units to give a total of 600 MW. The four units were commissioned in 2013 of which 2 are online whilst the other two are under repair by the contractor. Morupule B units 5 and 6 (2 x 150MW) is being considered and Morupule A is being refurbished. ii) There is also the proposed 300 MW coal fired Greenfield development being considered e. NamPower Generation Projects i) NamPower has constructed the Caprivi Transmission Line that was commissioned in This project will benefit SAPP especially when the ZIZABONA project is integrated to it through the Sesheke 220kV line and through the Livingstone- Zambezi 400kV line. NamPower also expanded the Ruacana Power Station. The project was commissioned in 2013 with the new additional machine uprated to 95MW whilst the other machines are 80MW each. This development would still leave NamPower short of between MW which it would like to import from BPC, ZESCO and ZESA using the ZIZABONA and Inchope-Orange Grove, Triangle-Nzhelele interconnectors. ii) Kudu is a project in Namibia planned for an estimated 800MW output. The commissioning date is currently planned for around 2018 and the potential off takers will be Eskom, CEC, NamPower and other SAPP members f. SNEL s Rehabilitation of Inga Power Station i) While the ZIZABONA Project is under construction, SNEL of the Democratic Republic of Congo (DRC) will be working on the rehabilitation of generators at Inga Power Stations. This power station is capable of releasing additional capacity that will result in the import of power by other SAPP members down South. The wheeling of the power from Inga to BPC, Eskom, NamPower, ZESA and ZESCO may be done through the ZIZABONA and Inchope-Orange Grove, Triangle- Nzhelele interconnectors. ii) It must be noted that SNEL has already secured funding from the World Bank for the rehabilitation of the generators at Inga Power Stations. However, it is noted that there would be need to reinforce the transmission network between DRC and Zambia when these generation projects in DRC are realised. There are on-going efforts within SAPP to address these transmission challenges. The reinforcement of the line from the DRC to Zambia has been completed on the DRC side. On the Zambian side, CEC is expected to complete the work by iii) In addition, a treaty has been signed by the governments of the DRC and South Africa to develop the Grand Inga project. Eskom had been requested by the RSA government to propose a transmission solution to evacuate the power assigned to RSA from the DRC/Zambian border. The proposed interconnectors shall most probably be part of this solution TOR_MOZISA-11 December 2014 Page 4

8 g. Eskom s Role (as Off-taker) Eskom will anchor the transmission lines by entering into long term bankable wheeling agreements with ZESA and EdM for wheeling its imports from the region. Eskom will be a user of the transmission line Part-1: Scoping Study (Feb Apr 2015) Objective of Scoping / Conceptualization Study The objective for the PPFS and PPDF grant funding, is for the preparation of the projects through SAPP CC as follows: a) Review and comment on the Environmental Impact Assessment studies being carried out for the proposed lines in Zimbabwe, Mozambique and RSA; b) Review and comment on the social impact assessment of the proposed lines in Zimbabwe, Mozambique and South Africa c) Review and comment on the initial technical studies and work already done by Eskom ZESA and EdM and comment and advice on the technical work on the proposed transmission lines. d) Identify and recommend any technical studies that may be required in addition to the feasibility studies e.g. geotechnical and soil studies, etc. e) Review and confirm the parts of the transmission line proposed route and identify potential technical issues that could impact on the implementation of the project; i. Steady-state operation of the interconnected network, ii. The new transfer limits of the interconnectors, iii. Violation of voltage levels at various bus bars and remedial action, iv. Reinforcements required and the estimated costs, v. Stability of the SAPP network, and vi. Transient and dynamic performance f) Advise on the terms of reference of the market studies that should be undertaken for the projects, g) Assess and advise on the link between supply of electricity from the potential sources, the transmission route (in relation to other routes), and the market (main off-taker /(s) and identify current losses and the most effective way of reducing the transmission losses, and propose the ideal carrying capacity of the transmission Lines, h) Review and comment on the capital cost of major equipment i) To carry out and provide a desktop excel financial model and recommend the appropriate project financing modalities, projections and structure, (an economic modelling is not required at this stage) j) Review and comment on project governance, supervision and administration of the project until financial close and confirm whether communication structures and platforms are available for the management of the preparatory activities and coordination of the applicable stakeholders. k) Review and comment on all legal and regulatory requirements pertaining to the countries in question are adhered to up to this stage. l) To assess at a high level the risks inherent in the project at various stages of development. m) To identify and advise on any other areas / elements not outlined previously in order to formulate a robust inception report. TOR_MOZISA-11 December 2014 Page 5

9 These preparatory activities would enable the project sponsors and SAPP (CC) and funders to take the necessary and informed decisions regarding funding for the Bankable Feasibility Study the project. The outputs of the Scoping Study will determine the work requested by the Transaction Advisors to carry out the Bankable Feasibility Study Results to be achieved by the TA The overall deliverables are as follows: a. Project Scoping / Conceptualization Study covering: i. Status quo ii. Gaps in existing and current studies iii. Link between supply, transmission and market for electricity, and recommended carrying capacity of the transmission lines iv. Identify uncertainties and conduct a strategic risk assessment b. Undertake a Bankable Feasibility Study c. Advise on the approach to Feasibility which is most cost and time efficient (i.e. whether to carry out the study as one in three different countries, or as three separate studies, and splitting the costs and other variables by country and / or combined) d. Proposed timelines for the Feasibility study e. Costing of the Feasibility Study (provide split of costs by country and by work-stream) This section will involve the selection of a Transaction Advisor who will carry out a scoping/ inception study. This scoping study is usually a desktop study and is intended to identify the gaps in the existing work done in order to complete a full bankable feasibility including a Project Information Memorandum (PIM). The TA will model the MoZiSA transmission lines and incorporate them into the existing SAPP model and simulate the network to study the effects of the proposed lines on the existing SAPP transmission grid as part of the technical review. The TA will produce an Inception Report, between two to three months after commencement of the studies. The report will confirm the gaps to be filled by the Transaction Advisor (TA) during the bankable / full feasibility study stage. TOR_MOZISA-11 December 2014 Page 6

10 2.4. Part-2: Feasibility to Project Information Memorandum (June 2015 June 2016) Part-two generally takes about one to one and half years, maximum. The TA will produce the following reports: i. Revised Inception Report, ii. Monthly Reports, iii. Draft Feasibility Report iv. Final Draft Feasibility Report, and v. Final Feasibility Report and a PIM. The Environmental Specialist / Firm will produce the following reports: i. Report on the impact of the new transmission lines on the environment, ii. Resettlement and Compensation Action Plan (RECAP), if applicable iii. Environmental & Social Impact Assessment reports (Record of decisions as applicable in the respective sponsor countries) 2.5. Part-3: PIM to EPC Procurement, Financial Closure (Jul 2016 Dec 2016) In part three, the PIM has been developed. The TA assists SAPP CC and the sponsors to arrange the project finance The TA, in line with the relevant procurement policy/ies, can then proceed and procure an Engineering, Procurement and Construction (EPC) firm for the project implementation. The EPC contractor will provide the actual cost of the project and this will enable the project to reach financial closure as Sponsors of the Project and Debt Equity Firms will know the actual amounts of investments required for the project. The TA must also determine the best options for structuring the project finance and operations and resolve who the project owner/s will be and possible sources of funding and assist when required with the compilation of project agreements 3. TASKS TO BE REALISED 3.1. General Description of the TA operation and relation to the underlying project The Transaction Advisory service during the preparation of the project is a medium term analytical and infrastructure project advisory operation, which will entail: Collection of data and information, including data from Sponsors, potential customers, buyers of power and sources of power; Techno-economic and financial analysis; Status quo and future market review and analysis Evaluation of analytical results; Advise on the institutional and legal framework Reporting; Liaison with the SAPP CC and the Sponsors Management Committee. TOR_MOZISA-11 December 2014 Page 7

11 Geographical area to be covered Zimbabwe, South Africa, Mozambique and impacts on the remaining SAPP system Location of the TA activities SAPP offices in Harare, Sponsors countries ie Mozambique, Zimbabwe and South Africa Management of the studies Coordination The Manager 24 Golden Stairs Road Emerald Hill Harare, Zimbabwe Tel: /335558/ Fax: musaba@sapp.co.zw 3.3. Management structure The TA will carry out the assignment in close cooperation with the SAPP CC. SAPP CC was appointed by the Sponsors to coordinate the Project development and reports to the Sponsors Management Committee, which is comprised of senior executives from each Sponsor. The Management Committee reports to the Steering Committee, which is comprised of the Chief Executives (Managing Directors) of the Sponsors Facilities provided by the Promoter During the field visits in Zimbabwe, the TA will work in the premises of SAPP CC. SAPP CC shall provide the TA with all relevant available information such as: a. The Memorandum of Understanding for developing the Interconnectors; b. Feasibility studies carried by project sponsors; and c. The draft environmental studies 4. TIMING 4.1. Commencement date The assignment will commence no later than two weeks following the signature of the Contract Period of execution The period of execution is 2 years. TOR_MOZISA-11 December 2014 Page 8

12 5. REQUIREMENTS 5.1. Personnel The consultant / advisor (consortium) at a minimum must have: i. Legal specialist / firm, ii. Finance specialist iii. Economic specialist, iv. Regulatory specialist, v. Project Structuring specialist, vi. Environmental vii. Market specialist, and viii. Planning and Transmission Specialist Key experts The advisory services shall be provided on an interactive basis between the TA and SAPP CC and MoZiSA Management Committee. The Transaction Advisor will report to the SAPP CC headed by the Manager. The Advisory team shall include: Team leader - Degree level qualification with relevant experience in energy and infrastructure, specializing in power systems and transmission sectors; - Experience in project preparation for power projects and team leading; - Good written and spoken English; - Experience and presence in Southern Africa and deep understanding of the SAPP is considered an advantage; - Experience in transmission systems is considered an advantage. System Planner - Degree level qualification in engineering; - Appropriate experience in the power sector; - Appropriate experience related to the high voltage transmission systems design (10 years); - Good written and spoken English; - Experience in Africa considered an advantage. Transmission Systems Specialist - Degree level qualification in Engineering; - Appropriate experience in the development of high voltage transmission systems (10 years); - Good written and spoken English; - Experience in Africa considered an advantage; Financial analyst responsible for building the financial and economic models; - Degree level qualification in Finance or any other relevant area; TOR_MOZISA-11 December 2014 Page 9

13 - Appropriate experience in financial modeling with a good understanding of infrastructure projects; - Good written and spoken English; Energy Market Specialist experienced in energy and infrastructure projects. - Degree level qualification in relevant field; - Appropriate experience in power and infrastructure projects; - Good written and spoken English; - Experience in Africa considered an advantage; - Experience in the power sector and transmission systems is considered an advantage; Environmental and Social Analyst experienced in energy and infrastructure projects. - Degree level qualification in environmental and social studies; - Appropriate experience in power and infrastructure projects; - Good written and spoken English; - Experience in Africa considered an advantage; - Experience in the power sector and transmission systems is considered an advantage; Note: The TA does not necessarily have to nominate an expert for each field. An expert may cover several fields Other expert(s) As required to successfully produce a comprehensive bankable feasibility study Support Staff and Backstopping Support and backstopping shall be provided so as to ensure the Project can be completed within the maximum period of execution as specified above Facilities to be provided by the Consultant The Consultant shall be responsible for all material requirements for fulfillment of the work of the experts, including information technology, transport, accommodation, reproduction, etc Equipment No equipment requirements are foreseen pursuant to this assignment Incidental expenditures No incidental expenditure is foreseen and payable pursuant to this assignment. TOR_MOZISA-11 December 2014 Page 10

14 6. REPORTS 6.1. Reporting Requirements All reporting shall be provided in written English. Submission by electronic means is acceptable for all except the Draft Final Report and the Final Report which must also be provided in printed forms (9 copies two for each MOZISA member, one for SAPP CC, one for DBSA and one for the records). Note that all hard copy reports must be properly bound. The TA will be expected to be available to assist the SAPP CC and the Sponsors with the Project documentation until financial close. Format for all deliverables: electronic files WORD and/or EXCEL. Files are to be forwarded by or CD-ROM Submission and Approval of Reports The Consultant shall on the basis of the comments, recommendations and requests provided by SAPP CC, amend the reports and resubmit them within two weeks of receiving such comments Copyright The copyright for all studies, reports, designs and related documents furnished by the Consultant shall be owned by the Consultant. The Employer (i.e. SAPP CC and sponsors) is entitled to dispose freely of this material for all project-related purposes Ownership of Documents All studies, reports and related data and documents such as maps, diagrams, plans, statistics and supporting material made available to the Employer, as well as any software procured under the consulting assignment shall pass into the Employer's ownership. TOR_MOZISA-11 December 2014 Page 11