Package A: CONTEXT ASSSESSMENT
Pre-Financial Close: The LTA will perform a review of Project’s key stakeholders and provide an overview of Afghanistan’s energy market.
Afghanistan’s energy market analysis The LTA will provide an analysis of Afghanistan’s energy sector, including:
Relevant current and proposed regulation in the energy sector having an impact on the project. Details on merit of order in Afghanistan energy sector. Details on relationship with the regulator and other regulatory bodies (frequency of contacts, etc.). Review of the landscape of existing and upcoming fossil fuel and renewable energy Independent Power Producer (“IPP”) in Afghanistan
Package B: SCOPE OF WORK FOR THE KANDAHAR PROJECT
This scope of work applies to each individual project.
Project document review: The LTA will review the project documentation package provided by the Sponsors, to highlight potential technical risks and costs for the project and potential related mitigation measures.
Project permits review: Review of related permits and authorizations required for the construction, operations of the project (building permits, authorization for the substation, road access) and operating licenses as requested in Afghanistan.
Project studies review: Review of studies performed by the Sponsors including: Geological studies and containing information on topography, geology, hydrology of the terrain. Environmental and social impact study or any environment consents. Health, social and environmental studies (including water, waste management, overall human resources organization study)
Procurement process and EPC and suppliers remaining liabilities review: Review of the EPC and supply agreement to: understand the procurement process and to check remaining guarantees or obligations. check the contractual warrantees for PV modules, mounting structures, inverters, main electrical equipment.
PPA and grid connection agreement review: Review of the provisions of the PPA with the off-taker including energy sale and purchase provisions, pricing and conditions for operation. Review of the provision of the grid connection agreement with the grid operator including technical requirements, scheduled maintenance allowances. Assess the contractual technical constraints required by the project contracts, having a potential impact on the design, procurement or the operation of the project. Assess the technical aspects of the proposed contractual structure and the allocation of risks to the principal parties and to what extend contract are on a back-to-back with the O&M contract.
O&M contract review Post Financial Close: The LTA will: Visit the plant and prepare a quarterly report on its technical and operational status and annual site visits until the end of the Transaction. The review will include: operational performance of the plant, including production, availability, efficiency, details of major problems (if any), and review of any modifications proposed of the plant. Technical and budgetary issues that would be considered critical to the plant’s ability to repay the debt of the project. Review annual budget prepared by the project company and recommend to GuarantCo whether it is good for approval.
Package B2: HSES scope of work: This scope of work applies to each individual project. The LTA will report on the HSES aspects as indicated below:
• Review the adequacy of the Environmental and Social Impact Assessment (“ESIA”) process, the EIA report, the Environmental and Social Monitoring Plan (“ESMP”) and Environmental and Social Management System (“ESMS”) (if available), Resettlement Action Plan (“RAP”), Livelihoods Restoration Plan, and any other relevant documents and judge it against the IFC Performance Standards. Compliance with relevant national and international environmental and social guidelines, laws and regulations should also be assessed. The independent review must specifically address foreseeable risks and mitigation measures and should give an overall opinion on the ability of the project to meet IFC Performance Standards. The LTA will need to identify compliance gaps, necessary mitigation and follow-up actions / action plan, and outline a managing/monitoring regime.
• Review the adequacy of the project’s E&S monitoring report. Suggest E&S reporting format for the client to be used in monitoring reports for GuarantCo (if required). Review the adequacy of project staffing and expertise to properly execute and monitor the E&S aspects of the operational activities. Review labour policies, labour law compliance, working conditions, gender policy and social protection systems. Review the adequacy of the project’s security system including community health and safety concerns. Review the implementation status and adequacy of the ESMS. Review the general site condition and cleanliness, and work execution.
• Provide photographical and video evidence where necessary. Identify and report any known E&S contractual problems or concerns with respect to subcontractors. Identify and report any changes in the original operational plan and their impact. Assess the implementation status of ESMP and the ESAP and all related processes and documents, as well as any deviation.
• Confirm that the project will comply with the most recognized guidelines in the field of international Health and Safety regulations. Identify the main areas of operational risk relating to environmental, social, health & safety for such project with an emphasis on the security aspects of the project.
• Identify potential cumulative effects and whether these have been addressed or will be addressed.
• Assess the implementation status of local community benefit sharing and community development initiatives related to the project. Identify any indications for concerns with regard to the relation with local communities or workers,
• Review any fatalities, the analysis of causes, actions taken by the Client, and the adequacy of these measures.
• Review and monitor if the agreed safeguard requirements of the project is in place and are being adequately implemented. Identify any item of concern that GuarantCo should be aware of.
Package C: SCOPE OF WORK FOR THE GREENFIELD PROJECTS
The scope of work for this package is for the Greenfield Projects only. The timeline for services to be rendered each individual greenfield project will be discussed at a later stage.
Package C1: Technical scope of work (construction phase) Construction Review, Review the engineering and construction approach of the Sponsors, Assess the suitability of the technical specifications. Review their conformity to recognized industry standards. Review the proposed contractor guarantees and confirm their adequacy to demonstrate the performances of the project. Review and comment on the basis upon which the contractor guarantees will be evaluated. Review and comment on the penalties and liquidated damages resulting from failure to meet guarantees. Review the reporting requirements of the different construction contractors and the project company and their adequacy for the purpose of providing GuarantCo with an appropriate follow-up of the construction. Review the key project documents including amendments, and check that such documents are appropriately conformed to each other. Review and comment on the warranties under the project documents. Energy yield assessment: Review the energy yield assessment performed by the Company’s technical advisor. If necessary, generating a new energy yield assessment.
Change Orders: Review and consider for approval any construction variation or change order in excess of such threshold as may be specified in the financing documents and report these on a cumulative basis in the site visit reports. Assess the impact of proposed change on operational and maintenance costs, whether change in cost is reasonable, and the impact on project completion.
Procurement: Review the implementation of the overall procurement procedures, preparation of procurement documents, procurement contracts and packages in accordance with the Contracts and the overall project implementation schedule.
Schedule and Cost Deviations: Identify and report to GuarantCo any changes or events that could lead to deviations of the project schedule and costs from the agreed targets, due to unforeseen events such as: foundation conditions, accidents, disputes between contracting parties, design flaws, political events, unusual weather, equipment failures, factory strikes, construction labour disputes, and other similar events that might impact the project.
Certification of Disbursements and Certain Milestones: A short certificate to validate each disbursement. Monitor and report in the site visit report on the disbursement of project funds, disbursement program, project implementation schedule, and contractor’s drawdown schedule.
Preparation of Punch Lists: Towards the end of the project construction period, participate in the final “punch” lists and facility review to record all work requiring completion and defects needing correction, and monitor the completion of all outstanding work to ensure the achievement of a fully completed project of high quality. Agree on the work items transferred from the Punch Lists to the Completion List.
Performance Tests: Review testing methodology and schedule based on the performance testing procedures specified in the construction contract, PPA and other documents. Participate, as reasonably required, in such performance tests that relate directly to plant performance and reliability, including; (i) the site performance tests of the major equipment components; and (ii) testing of the complete plant upon completion.
Consultant Certificates and Construction Completion: Facilities Construction Completion – Certification that the facilities have been constructed in accordance with the original design criteria provided by the Company and agreed to on behalf of GuarantCo prior to Financial Closing. Operational Integrity of the project – Certification that the facilities have demonstrated their operational integrity by satisfying the completion, performance and operational tests, to be performed in the presence of GuarantCo’s Consultant. The tests’ definition and testing protocol shall be developed concurrently between GuarantCo and GuarantCo’s Consultant. Certification that the facilities, services and utilities will be made available to enable the project to commence operations. Guarantee / Warranty Issues – Advise GuarantCo’s on potential disputes related to guarantees and warranties, which may arise, and oversee corrective actions. Punch List Items – Review and sign-off on the punch list items as being acceptable for the completion of the plant.
PACKAGE D: FINANCIAL DUE DILIGENCE ASSISTANCE
Assist GuarantCo in collecting the quantitative and qualitative data required to conduct detailed financial due diligence on the following parties: DABS / Ministry of Finance, Project lender (beneficiary of GuarantCo Guarantee), Local project stakeholders