On Tuesday 16 February 2016, the Industrial Development Corporation Limited (IDC) formally issued a Request for Proposals (RFP) for a combined 100MW of solar PV power under Round 1 of the Scaling Solar Zambia program. This relates to the competitive procurement of two grid-scale solar PV power plants of up to 50 MW each project, and both projects will be located in the Lusaka-South Multi-Facility Economic Zone.
The RFP has been issued to the 11 highly qualified and experienced bidders that successfully navigated an initial prequalification phase held in November 2015. The 11 prequalified bidders are the following firms:
- EDF Energy Nouvelle
- Scatec Solar
- Access Eren Zambia 1
- Mulilo Zambia PV1 Consortium
- Enel Green Power
- International Power SA with Engie
- Neoen with First Solar
- Shanghai Electric Power with Avic
- Africa Infrastructure Fund2 with Old Mutual Life Insurance Company with Cobra and CDE
- Grupo-T Solar.
The 11 prequalified bidders are required to submit their final proposals within eight weeks by closing date of 08 April 2016. The bids will then be evaluated on the basis of their compliance with technical and commercial requirements as contained in the RFP. Two winning bidders will then be selected, one for each project. The winning bidders will be selected on the basis of the lowest electricity price (i.e. tariff) offered for each of the two projects. The winning bidders will be responsible for financing, construction, operation and maintenance of their respective plants under 25-year Power Purchase Agreements. Plant construction is expected to commence in 2016. The Zambian Government, through the IDC will retain a minority shareholding in each project for later offering to the Zambian public.
Launch of Round 2 for 200MW
Following the rapid success to date of Round 1 of the Scaling Solar Zambia program, IDC now expects to formally launch the commencement Round 2 of the program. This is expected to be made shortly after concluding administrative arrangements with the IFC, its transaction advisors. Round 2 will target a minimum of 200 MW of solar PV capacity, to be divided into four projects of 50 MW each. Round 2 would see IDC, working through ZESCO, identify four suitable locations across the major electricity load centers in Zambia, to ensure the grid can safely absorb the additional capacity and to invest in strengthening the grid where necessary. This procurement of solar PV power under Round 2 is expected to be similar in structure to Round 1, with an initial prequalification phase followed by a final RFP stage. Confirmation of the four identified sites and other information for potential bidders is expected to be publicized in April 2016.
About Scaling Solar
In July 2015, His Excellency the President of the Republic of Zambia, Mr. Edgar Chagwa Lungu, formally directed IDC to drive the urgent development and installation of at least 600 MW of solar power, in order to redress the current power deficit in Zambia and resultant national crisis.
IDC has engaged the International Finance Corporation (IFC), a member of the World Bank Group, as its lead transaction advisor. With IFC’s support, IDC has adopted the World Bank Group’s ‘Scaling Solar’ initiative as the fastest and most transparent procurement process to meet the President’s directive. Scaling Solar is an open, competitive and transparent approach that facilitates the rapid development of privately-owned, utility-scale solar PV projects in sub-Saharan Africa. It is capable of immediate implementation and offers a ‘one-stop-shop’ package of advisory services, contracts, financing, guarantees and insurance, enabling governments and utilities to procure solar power transparently and at the lowest possible cost. Scaling Solar is based on the principle of tariff minimization and uses a competitive auction bidding process to determine the lowest tariff and consequently the winning bid to develop the allocated amount of solar PV power at a given location.
The IDC is domestic development finance institution wholly owned by the Government of Zambia and was incorporated in early 2014. The mandate of the IDC is to play a catalytic role in deepening and supporting Zambia’s industrialization capacity in order to support job creation and domestic wealth formation across all key economic sectors. The IDC plays its role through evaluation, pricing and lowering of investment risk profile by serving as co-investor alongside private sector investors and facilitating provision and raising of long term finance for projects.
Simultaneously the IDC serves as an investment holding company for State Owned Enterprises and new investments and ultimately seeks to generate earnings for the proposed Zambia Sovereign Wealth Fund.
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