National Training Programme For Rural Electricity Distribution Franchisees

10-12 October,2011 Venue: JKPDD,JAMMU

Bid-Process : NIT / RFP

Energy Division

Contents

Tendering Process and Commercial Arrangements Notice Inviting Tender Developing RFP

Elements of Contracts Agreement

Energy Division

Bid-Process : NIT / RFP

Energy Division

Tendering Process and Commercial Arrangements Selection of the franchisee should be done through competitive route i.e. bidding route to ensure fairness of the transaction

The Tendering Process is initiated once the following prerequisites are in place
Identifying the suitable franchisee model
Finalising Roles and Responsibilities of the Stakeholders

Scrutiny of the envisaged model among the Franchisers staff and their consensus-This is purely for the creation of a conducive system which go hand in hand with the Franchisee system
Energy Division

Defining the Franchisee Model Defining the Roles and Responsibilities of the Franchisee and Stakeholders Consensus by Franchiser Issue of Notice Inviting Tender Bid Submission Technical and Financial bid evaluation

Pre-Bid conference -

if required

Franchisee selection

Letter of Award Signing of Franchisee Agreement and Bank Guarantee Responsibility delegation and Asset Transfer to the Franchisee 6

Energy Division

Notice Inviting Tender

Notice inviting Tender-Advertisement for calling EOIs or bids for Franchising should cover the following information:
Objective in brief Name of the area Date of sale of tender document Last date and time for sale of tender document Last date and time of submission of bids Cost of purchase of tender document Address from where the tender document can be purchased Earnest Money Deposit (EMD) amount with details regarding bank draft, etc.

Energy Division

Developing RFP
Designing Bid Document- Covering all the details which needs to be communicated to the interested parties like;
Information about the Project Any legal provision under which the project is promoted The selection criteria for the bid Scope of work under the project The baseline detail of the commercial information Information for purchase of the document and its availability Fee submission and the form in which it needs to be provided

Formats for the bids are required to be submitted

The due dates of the submission of the bids and the opening

Energy Division

Baseline Information
The most critical factor that shall enable the franhcisee to bid realistically are the Commercial & Technical information.

The Level of information to be provided in the Bid document depends on the following factors:
Rural or Urban franchisee ? Franchisee Model being envisaged ? The size of the implementation ? area selected for the franchisee

Energy Division

Commercial Information
The Commercial Information should cover the following (should be based on more than one year data):
Number of consumers Connected load Units billed Amount billed Arrears Payments made by the consumers New connections/Disconnection Energy supplied to the area T&D losses Annual average expenses in the area
Energy Division

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Technical Information
The Technical Information should cover the following:
Number of Distribution Transformer installed/ damage record & their capacities HT/LT line length in the area Energy consumption pattern Supply schedule and breakdown history Substation and their transformation capacities Number of LT feeders and whether Rural/Urban

In case of any already running augmentation of other schemes planned should also be informed through the Bid Document

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Energy Division

Eligibility Criteria
Bid Submission and Earnest Money Deposit
In the sequence and according to the process designed

Establishing the eligibility criteria

Franchiser needs to select the candidate based on the already established criteria
These criteria depends on the following:
Franchisee Model- Rural/Urban Size of revenue billing and assessment Consumer mix in the area to be franchised Size of investments required over the term of contract period Financial capacity to cater to the investment requirements

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Energy Division

Objectives of the Agreement

Franchisee Agreement is a record that contains the details of roles and responsibility. The agreement needs to be answer the following questions clearly:
Whether contract protects the franchisee and the franchiser? Are the rights and obligations of both parties clearly stated? What is the legal framework within which both franchisee and franchiser have to function? Is the contract specific about the type and size of operation that the franchisee is expected to manage? Is the nature duration and extent of training to be imparted by the franchiser outlined in the contract? Whether the various payments to be made to the franchiser by the franchisee have been specified? Other fixed payments.

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Energy Division

Objectives of the Agreement

Source of essential supply for proper O&M of the system. If interrupted supply is provided by the utility, what are the arrangements for compensation to the franchisee? Various MIS reports needed to be submitted to the franchiser by the franchisee. Duration of the franchisee contract and terms for renewal of the contract.

Area allocated to the franchisee for the intended franchisee operation.

Reasons for termination of the contract and its terms and conditions. If there is any default in the contract, what are the measures that can be permitted to rectify the situation? Arbitration clause. Whether franchisee is prevented from engaging itself in any other business activity for the duration of the contract?
Energy Division

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Structure of an Agreement
The Agreement may be structures so as to cover the following details;
Information about the project and the area
Roles and responsibilities in detail of the parties Liabilities and duties in case of Force Majeur Contract period and Agreement validity Technical boundaries need be defined The agreed Bulk supply Tariff or incentive as the case may be and the provisions of its revision Responsibility shares in case of accidents and other commercial activities Targets (if any) for the Franchisee/Franchiser at the end of the contract period Termination of the agreement This documents needs to be signed on every page by the parties and in presence of witness from both parties

All of the above are subjective and may be changed according to the Model envisaged
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Energy Division

Thank You

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Energy Division